FIDELITY(REGISTERED TRADEMARK) ADVISOR
EMERGING MARKETS INCOME
FUND - CLASS A, CLASS T, CLASS B
AND CLASS C
ANNUAL REPORT
DECEMBER 31, 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 21 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 24 A summary of major shifts in
the fund's investments over
the past six months.
INVESTMENTS 25 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 34 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 43 Notes to financial statements.
REPORT OF INDEPENDENT 52 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 53
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Other third party marks appearing herein are the property of their
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All other marks appearing herein are registered or unregistered
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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:
The NASDAQ, S&P 500(Registered trademark) and Dow Jones Industrial
Average all closed 1999 at record highs. Investors should note,
however, that much of the year's returns were driven by a single
sector: technology. Most other stocks were flat or down in 1999.
Likewise, bond investors had little cause to celebrate at year's end.
Steadily rising interest rates left the benchmark 30-year Treasury at
its highest yield level in two years.
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.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
FIDELITY ADV EMERGING MARKETS 36.35% 86.43% 91.03%
INCOME - CL A
FIDELITY ADV EMERGING MARKETS 29.87% 77.57% 81.95%
INCOME - CL A (INCL. 4.75%
SALES CHARGE)
JP EMBI Global 24.18% 110.15% 89.80%
JP EMBI Plus 25.97% 115.36% 95.11%
Emerging Markets Debt Funds 24.51% 84.02% n/a
Average
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on 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 Global - a market
value-weighted index of U.S. dollar denominated Brady bonds,
Eurobonds, traded loans, and local market debt instruments issued by
emerging markets sovereign and quasi-sovereign entities. The index
currently covers 26 emerging market countries. You can also 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
one year average represents a peer group of 53 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 DECEMBER 31, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
FIDELITY ADV EMERGING MARKETS 36.35% 13.27% 11.78%
INCOME - CL A
FIDELITY ADV EMERGING MARKETS 29.87% 12.17% 10.84%
INCOME - CL A (INCL. 4.75%
SALES CHARGE)
JP EMBI Global 24.18% 16.01% 11.65%
JP EMBI Plus 25.97% 16.58% 12.18%
Emerging Markets Debt Funds 24.51% 12.76% 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 Global
00255 JP045
1994/03/10 9525.00 10000.00
1994/03/31 9128.32 8854.87
1994/04/30 9248.44 8696.06
1994/05/31 9844.60 9321.51
1994/06/30 9368.11 8769.57
1994/07/31 9578.30 8955.23
1994/08/31 10732.31 9684.79
1994/09/30 11038.76 9881.74
1994/10/31 10754.24 9595.37
1994/11/30 10530.74 9637.26
1994/12/31 9760.21 9031.92
1995/01/31 8639.66 8617.57
1995/02/28 8022.18 8204.98
1995/03/31 7787.58 8074.41
1995/04/30 8456.16 8891.47
1995/05/31 8960.63 9696.42
1995/06/30 9011.12 9801.47
1995/07/31 9026.46 9804.81
1995/08/31 9219.78 10078.14
1995/09/30 9586.60 10432.50
1995/10/31 9514.14 10331.83
1995/11/30 9831.92 10681.21
1995/12/31 10442.10 11414.47
1996/01/31 11211.15 12387.58
1996/02/29 10586.42 11676.70
1996/03/31 10686.18 11938.35
1996/04/30 11237.32 12528.79
1996/05/31 11532.65 12723.41
1996/06/30 11823.71 13076.33
1996/07/31 11956.95 13217.19
1996/08/31 12386.31 13636.05
1996/09/30 13395.58 14434.05
1996/10/31 13777.70 14552.77
1996/11/30 14543.65 15269.86
1996/12/31 14671.78 15435.62
1997/01/31 15288.34 15904.38
1997/02/28 15544.63 16163.91
1997/03/31 14908.02 15625.30
1997/04/30 15420.01 16084.32
1997/05/31 16079.19 16629.56
1997/06/30 16574.92 16993.71
1997/07/31 17288.48 17696.06
1997/08/31 17191.69 17610.12
1997/09/30 17741.43 18098.90
1997/10/31 15984.93 16181.04
1997/11/30 16562.96 16867.20
1997/12/31 17094.97 17279.73
1998/01/31 17114.76 17362.80
1998/02/28 17575.41 17821.66
1998/03/31 18039.84 18226.31
1998/04/30 18049.07 18268.46
1998/05/31 17302.88 17716.91
1998/06/30 16748.18 17267.96
1998/07/31 17001.72 17368.75
1998/08/31 10989.02 12620.00
1998/09/30 11969.35 13710.43
1998/10/31 12790.50 14586.25
1998/11/30 13759.46 15586.27
1998/12/31 13344.82 15284.88
1999/01/31 13003.97 14936.58
1999/02/28 13243.05 15084.29
1999/03/31 14403.21 16083.74
1999/04/30 15933.06 17072.89
1999/05/31 15075.30 16191.13
1999/06/30 15823.97 16813.26
1999/07/31 15386.34 16533.07
1999/08/31 15402.77 16543.84
1999/09/30 15740.66 17063.96
1999/10/31 16391.65 17668.47
1999/11/30 17147.11 18141.41
1999/12/31 18195.50 18980.49
IMATRL PRASUN SHR__CHT 19991231 20000210 111602 R00000000000073
$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 December 31, 1999, the value
of the investment would have grown to $18,195 - an 81.95% increase on
the initial investment. For comparison, look at how the J.P. Morgan
Emerging Markets Bond Index Global did over the same period. With
dividends and capital gains, if any, reinvested, the JP EMBI Global
would have grown to $18,980 - an 89.80% increase. Going forward, the
fund's performance will be compared to the J.P. Morgan Emerging
Markets Bond Index Global, rather than the J.P. Morgan Emerging
Markets Index Plus, because the J.P. Morgan Emerging Bond Index Global
includes a broader representation of the fund's investment universe.
(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
YEARS ENDED DECEMBER 31, SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF
CLASS A SHARES) TO DECEMBER
31,
1999 1998 1997 1996
Dividend returns 11.93% 8.10% 8.37% 2.32%
Capital returns 24.42% -30.04% 8.15% 15.39%
Total returns 36.35% -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 DECEMBER 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 19.92(cents) A 48.02(cents) 80.49(cents)
Annualized dividend rate 24.59% A 10.70% 9.39%
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 $9.54 over the past one month, $8.90 over the past six months, and
$8.57 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 THE PAST MONTH DIVIDENDS PER SHARE INCLUDE ADDITIONAL NONRECURRING
DISTRIBUTIONS REQUIRED BY FEDERAL TAX REGULATIONS. THESE DISTRIBUTIONS
MAY NOT BE REFLECTED IN FUTURE MONTHLY DIVIDENDS.
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.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
FIDELITY ADV EMERGING MARKETS 36.34% 85.91% 90.50%
INCOME - CL T
FIDELITY ADV EMERGING MARKETS 31.56% 79.41% 83.84%
INCOME - CL T (INCL. 3.50%
SALES CHARGE)
JP EMBI Global 24.18% 110.15% 89.80%
JP EMBI Plus 25.97% 115.36% 95.11%
Emerging Markets Debt Funds 24.51% 84.02% n/a
Average
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on 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 Global - a market
value-weighted index of U.S. dollar denominated Brady bonds,
Eurobonds, traded loans, and local market debt instruments issued by
emerging markets sovereign and quasi-sovereign entities. The index
currently covers 26 emerging market countries. You can also 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
one year average represents a peer group of 53 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 DECEMBER 31, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
FIDELITY ADV EMERGING MARKETS 36.34% 13.20% 11.72%
INCOME - CL T
FIDELITY ADV EMERGING MARKETS 31.56% 12.40% 11.04%
INCOME - CL T (INCL. 3.50%
SALES CHARGE)
JP EMBI Global 24.18% 16.01% 11.65%
JP EMBI Plus 25.97% 16.58% 12.18%
Emerging Markets Debt Funds 24.51% 12.76% 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 Global
00635 JP045
1994/03/10 9650.00 10000.00
1994/03/31 9248.12 8854.87
1994/04/30 9369.81 8696.06
1994/05/31 9973.79 9321.51
1994/06/30 9491.05 8769.57
1994/07/31 9704.00 8955.23
1994/08/31 10873.16 9684.79
1994/09/30 11183.62 9881.74
1994/10/31 10895.38 9595.37
1994/11/30 10668.94 9637.26
1994/12/31 9888.29 9031.92
1995/01/31 8753.04 8617.57
1995/02/28 8127.46 8204.98
1995/03/31 7889.78 8074.41
1995/04/30 8567.13 8891.47
1995/05/31 9078.23 9696.42
1995/06/30 9129.37 9801.47
1995/07/31 9144.92 9804.81
1995/08/31 9340.78 10078.14
1995/09/30 9712.41 10432.50
1995/10/31 9639.00 10331.83
1995/11/30 9960.95 10681.21
1995/12/31 10579.14 11414.47
1996/01/31 11358.28 12387.58
1996/02/29 10725.35 11676.70
1996/03/31 10826.42 11938.35
1996/04/30 11384.79 12528.79
1996/05/31 11684.00 12723.41
1996/06/30 11978.87 13076.33
1996/07/31 12113.86 13217.19
1996/08/31 12548.86 13636.05
1996/09/30 13572.33 14434.05
1996/10/31 13947.71 14552.77
1996/11/30 14723.78 15269.86
1996/12/31 14854.44 15435.62
1997/01/31 15480.72 15904.38
1997/02/28 15740.89 16163.91
1997/03/31 15095.79 15625.30
1997/04/30 15612.28 16084.32
1997/05/31 16280.02 16629.56
1997/06/30 16795.95 16993.71
1997/07/31 17517.42 17696.06
1997/08/31 17419.65 17610.12
1997/09/30 17975.36 18098.90
1997/10/31 16195.49 16181.04
1997/11/30 16765.19 16867.20
1997/12/31 17301.56 17279.73
1998/01/31 17318.97 17362.80
1998/02/28 17784.00 17821.66
1998/03/31 18254.99 18226.31
1998/04/30 18263.11 18268.46
1998/05/31 17506.64 17716.91
1998/06/30 16945.16 17267.96
1998/07/31 17201.57 17368.75
1998/08/31 11111.23 12620.00
1998/09/30 12098.20 13710.43
1998/10/31 12943.55 14586.25
1998/11/30 13905.35 15586.27
1998/12/31 13483.97 15284.88
1999/01/31 13155.42 14936.58
1999/02/28 13378.82 15084.29
1999/03/31 14554.32 16083.74
1999/04/30 16102.24 17072.89
1999/05/31 15233.80 16191.13
1999/06/30 16008.70 16813.26
1999/07/31 15547.72 16533.07
1999/08/31 15564.03 16543.84
1999/09/30 15922.45 17063.96
1999/10/31 16561.75 17668.47
1999/11/30 17326.98 18141.41
1999/12/31 18383.60 18980.49
IMATRL PRASUN SHR__CHT 19991231 20000210 111813 R00000000000073
$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 December 31, 1999, the value
of your investment would have grown to $18,384 - an 83.84% increase on
the initial investment. For comparison, look at how the J.P. Morgan
Emerging Markets Bond Index Global did over the same period. With
dividends and capital gains, if any, reinvested, the JP EMBI Global
would have grown to $18,980 - an 89.80% increase. Going forward, the
fund's performance will be compared to the J.P. Morgan Emerging
Markets Bond Index Global, rather than the J.P. Morgan Emerging
Markets Index Plus, because the J.P. Morgan Emerging Bond Index Global
includes a broader representation of the fund's investment universe.
(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.
TOTAL RETURN COMPONENTS
YEARS ENDED DECEMBER 31,
1999 1998 1997 1996 1995
Dividend returns 11.88% 7.99% 8.32% 9.46% 9.51%
Capital returns 24.46% -30.06% 8.15% 30.95% -2.52%
Total returns 36.34% -22.07% 16.47% 40.41% 6.99%
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 DECEMBER 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 19.71(cents) A 47.70(cents) 80.11(cents)
Annualized dividend rate 24.33% A 10.64% 9.36%
30-day annualized yield 7.23% - -
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 $9.54 over the past one month, $8.89 over the past six months and
$8.56 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 THE PAST MONTH DIVIDENDS PER SHARE INCLUDE ADDITIONAL NONRECURRING
DISTRIBUTIONS REQUIRED BY FEDERAL TAX REGULATIONS. THESE DISTRIBUTIONS
MAY NOT BE REFLECTED IN FUTURE MONTHLY DIVIDENDS.
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 one year, past five years
and life of fund total return figures are 5%, 2% and 1%, respectively.
If Fidelity had not reimbursed certain class expenses, the past five
year and life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
FIDELITY ADV EMERGING MARKETS 35.58% 80.20% 83.73%
INCOME - CL B
FIDELITY ADV EMERGING MARKETS 30.58% 78.20% 82.76%
INCOME - CL B (INCL.
CONTINGENT DEFERRED SALES
CHARGE)
JP EMBI Global 24.18% 110.15% 89.80%
JP EMBI Plus 25.97% 115.36% 95.11%
Emerging Markets Debt Funds 24.51% 84.02% n/a
Average
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on 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 Global - a market
value-weighted index of U.S. dollar denominated Brady bonds,
Eurobonds, traded loans, and local market debt instruments issued by
emerging markets sovereign and quasi-sovereign entities. The index
currently covers 26 emerging market countries. You can also 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 one year average
represents a peer group of 53 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 DECEMBER 31, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
FIDELITY ADV EMERGING MARKETS 35.58% 12.50% 11.03%
INCOME - CL B
FIDELITY ADV EMERGING MARKETS 30.58% 12.25% 10.93%
INCOME - CL B (INCL.
CONTINGENT DEFERRED SALES
CHARGE)
JP EMBI Global 24.18% 16.01% 11.65%
JP EMBI Plus 25.97% 16.58% 12.18%
Emerging Markets Debt Funds 24.51% 12.76% 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 Global
00637 JP045
1994/03/10 10000.00 10000.00
1994/03/31 9583.54 8854.87
1994/04/30 9709.65 8696.06
1994/05/31 10335.54 9321.51
1994/06/30 9835.28 8769.57
1994/07/31 10042.78 8955.23
1994/08/31 11243.37 9684.79
1994/09/30 11566.18 9881.74
1994/10/31 11270.66 9595.37
1994/11/30 11019.23 9637.26
1994/12/31 10195.80 9031.92
1995/01/31 9040.37 8617.57
1995/02/28 8379.79 8204.98
1995/03/31 8129.96 8074.41
1995/04/30 8821.79 8891.47
1995/05/31 9341.02 9696.42
1995/06/30 9398.54 9801.47
1995/07/31 9408.41 9804.81
1995/08/31 9603.44 10078.14
1995/09/30 9967.22 10432.50
1995/10/31 9896.87 10331.83
1995/11/30 10220.12 10681.21
1995/12/31 10846.22 11414.47
1996/01/31 11637.09 12387.58
1996/02/29 10984.00 11676.70
1996/03/31 11081.11 11938.35
1996/04/30 11645.35 12528.79
1996/05/31 11956.55 12723.41
1996/06/30 12239.00 13076.33
1996/07/31 12370.24 13217.19
1996/08/31 12818.89 13636.05
1996/09/30 13841.33 14434.05
1996/10/31 14226.85 14552.77
1996/11/30 15019.85 15269.86
1996/12/31 15142.84 15435.62
1997/01/31 15770.43 15904.38
1997/02/28 16024.74 16163.91
1997/03/31 15360.81 15625.30
1997/04/30 15876.94 16084.32
1997/05/31 16543.60 16629.56
1997/06/30 17055.87 16993.71
1997/07/31 17775.74 17696.06
1997/08/31 17666.48 17610.12
1997/09/30 18218.22 18098.90
1997/10/31 16396.61 16181.04
1997/11/30 16991.95 16867.20
1997/12/31 17520.59 17279.73
1998/01/31 17513.16 17362.80
1998/02/28 17988.29 17821.66
1998/03/31 18450.12 18226.31
1998/04/30 18448.18 18268.46
1998/05/31 17676.74 17716.91
1998/06/30 17101.39 17267.96
1998/07/31 17348.20 17368.75
1998/08/31 11210.43 12620.00
1998/09/30 12197.71 13710.43
1998/10/31 13022.87 14586.25
1998/11/30 13997.31 15586.27
1998/12/31 13551.29 15284.88
1999/01/31 13214.92 14936.58
1999/02/28 13449.18 15084.29
1999/03/31 14615.52 16083.74
1999/04/30 16171.38 17072.89
1999/05/31 15277.37 16191.13
1999/06/30 16042.26 16813.26
1999/07/31 15573.24 16533.07
1999/08/31 15580.75 16543.84
1999/09/30 15928.87 17063.96
1999/10/31 16559.11 17668.47
1999/11/30 17312.58 18141.41
1999/12/31 18276.00 18980.49
IMATRL PRASUN SHR__CHT 19991231 20000210 112132 R00000000000073
$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 December
31, 1999, the value of the investment including the effect of the
applicable contingent deferred sales charge, would have been $18,276 -
an 82.76% increase on the initial investment. For comparison, look at
how the J.P. Morgan Emerging Markets Bond Index Global did over the
same period. With dividends and capital gains, if any, reinvested, the
JP EMBI Global would have grown to $18,980 - an 89.80% increase.
Going forward, the fund's performance will be compared to the J.P.
Morgan Emerging Markets Bond Index Global, rather than the J.P. Morgan
Emerging Markets Index Plus, because the J.P. Morgan Emerging Bond
Index Global includes a broader representation of the fund's
investment universe.
(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.
TOTAL RETURN COMPONENTS
YEARS ENDED DECEMBER 31,
1999 1998 1997 1996 1995
Dividend returns 10.97% 7.45% 7.57% 8.54% 8.69%
Capital returns 24.61% -30.11% 8.13% 31.07% -2.31%
Total returns 35.58% -22.66% 15.70% 39.61% 6.38%
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 DECEMBER 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 19.22(cents) A 44.93(cents) 74.54(cents)
Annualized dividend rate 23.62% A 9.98% 8.67%
30-day annualized yield 6.78% - -
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 $9.58 over the past one month, $8.93 over the past six months, and
$8.60 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 THE PAST MONTH DIVIDENDS PER SHARE INCLUDE ADDITIONAL NONRECURRING
DISTRIBUTIONS REQUIRED BY FEDERAL TAX REGULATIONS. THESE DISTRIBUTIONS
MAY NOT BE REFLECTED IN FUTURE MONTHLY DIVIDENDS.
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 one year, five year and life of fund total
return figures are 1%, 0% and 0%, respectively. If Fidelity had not
reimbursed certain class expenses, the past five year and life of fund
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
FIDELITY ADV EMERGING MARKETS 35.31% 80.14% 83.67%
INCOME - CL C
FIDELITY ADV EMERGING MARKETS 34.31% 80.14% 83.67%
INCOME - CL C (INCL.
CONTINGENT DEFERRED SALES
CHARGE)
JP EMBI Global 24.18% 110.15% 89.80%
JP EMBI Plus 25.97% 115.36% 95.11%
Emerging Markets Debt Funds 24.51% 84.02% n/a
Average
CUMULATIVE TOTAL RETURNS show Class C's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on 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 Global - a market
value-weighted index of U.S. dollar denominated Brady bonds,
Eurobonds, traded loans, and local market debt instruments issued by
emerging markets sovereign and quasi-sovereign entities. The index
currently covers 26 emerging market countries. You can also 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 one year average
represents a peer group of 53 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 DECEMBER 31, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
FIDELITY ADV EMERGING MARKETS 35.31% 12.49% 11.02%
INCOME - CL C
FIDELITY ADV EMERGING MARKETS 34.31% 12.49% 11.02%
INCOME - CL C (INCL.
CONTINGENT DEFERRED SALES
CHARGE)
JP EMBI Global 24.18% 16.01% 11.65%
JP EMBI Plus 25.97% 16.58% 12.18%
Emerging Markets Debt Funds 24.51% 12.76% 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 Global
00488 JP045
1994/03/10 10000.00 10000.00
1994/03/31 9583.54 8854.87
1994/04/30 9709.65 8696.06
1994/05/31 10335.54 9321.51
1994/06/30 9835.28 8769.57
1994/07/31 10042.78 8955.23
1994/08/31 11243.37 9684.79
1994/09/30 11566.18 9881.74
1994/10/31 11270.66 9595.37
1994/11/30 11019.23 9637.26
1994/12/31 10195.80 9031.92
1995/01/31 9040.37 8617.57
1995/02/28 8379.79 8204.98
1995/03/31 8129.96 8074.41
1995/04/30 8821.79 8891.47
1995/05/31 9341.02 9696.42
1995/06/30 9398.54 9801.47
1995/07/31 9408.41 9804.81
1995/08/31 9603.44 10078.14
1995/09/30 9967.22 10432.50
1995/10/31 9896.87 10331.83
1995/11/30 10220.12 10681.21
1995/12/31 10846.22 11414.47
1996/01/31 11637.09 12387.58
1996/02/29 10984.00 11676.70
1996/03/31 11081.11 11938.35
1996/04/30 11645.35 12528.79
1996/05/31 11956.55 12723.41
1996/06/30 12239.00 13076.33
1996/07/31 12370.24 13217.19
1996/08/31 12818.89 13636.05
1996/09/30 13841.33 14434.05
1996/10/31 14226.85 14552.77
1996/11/30 15019.85 15269.86
1996/12/31 15142.84 15435.62
1997/01/31 15770.43 15904.38
1997/02/28 16024.74 16163.91
1997/03/31 15360.81 15625.30
1997/04/30 15876.94 16084.32
1997/05/31 16543.60 16629.56
1997/06/30 17055.87 16993.71
1997/07/31 17775.74 17696.06
1997/08/31 17666.48 17610.12
1997/09/30 18218.22 18098.90
1997/10/31 16396.61 16181.04
1997/11/30 16977.03 16867.20
1997/12/31 17506.75 17279.73
1998/01/31 17508.74 17362.80
1998/02/28 17968.54 17821.66
1998/03/31 18432.44 18226.31
1998/04/30 18428.80 18268.46
1998/05/31 17653.68 17716.91
1998/06/30 17075.09 17267.96
1998/07/31 17319.09 17368.75
1998/08/31 11194.28 12620.00
1998/09/30 12184.82 13710.43
1998/10/31 13011.47 14586.25
1998/11/30 13987.53 15586.27
1998/12/31 13573.71 15284.88
1999/01/31 13221.04 14936.58
1999/02/28 13471.47 15084.29
1999/03/31 14637.27 16083.74
1999/04/30 16178.68 17072.89
1999/05/31 15299.84 16191.13
1999/06/30 16045.91 16813.26
1999/07/31 15591.12 16533.07
1999/08/31 15579.91 16543.84
1999/09/30 15927.35 17063.96
1999/10/31 16573.55 17668.47
1999/11/30 17326.02 18141.41
1999/12/31 18367.05 18980.49
IMATRL PRASUN SHR__CHT 19991231 20000210 112547 R00000000000073
$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 December
31, 1999, the value of the investment would have been $18,367 - an
83.67% increase on the initial investment. For comparison, look at how
the J.P. Morgan Emerging Markets Bond Index Global did over the same
period. With dividends and capital gains, if any, reinvested, the JP
EMBI Global would have grown to $18,980 - an 89.80% increase. Going
forward, the fund's performance will be compared to the J.P. Morgan
Emerging Markets Bond Index Global, rather than the J.P. Morgan
Emerging Markets Index Plus, because the J.P. Morgan Emerging Bond
Index Global includes a broader representation of the fund's
investment universe.
(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
YEARS ENDED DECEMBER 31, NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF
CLASS C SHARES) TO DECEMBER
31,
1999 1998 1997
Dividend returns 10.79% 7.41% 2.48%
Capital returns 24.52% -29.88% 1.68%
Total returns 35.31% -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 DECEMBER 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 19.06(cents) A 44.17(cents) 73.33(cents)
Annualized dividend rate 23.45% A 9.82% 8.54%
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 $9.57 over the past one month, $8.92 over the past six months, and
$8.59 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 THE PAST MONTH DIVIDENDS PER SHARE INCLUDE ADDITIONAL NONRECURRING
DISTRIBUTIONS REQUIRED BY FEDERAL TAX REGULATIONS. THESE DISTRIBUTIONS
MAY NOT BE REFLECTED IN FUTURE MONTHLY DIVIDENDS.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Unlike 1998, emerging markets were
generally a much sounder investment in
1999. For the 12-month period
ending December 31, 1999, the
JP Morgan Emerging Markets Bond
Index was up 21.56%, ending the
year as one of the best-performing
asset classes. A year ago, that
same index closed 1998 with a
negative 11.04% annual return.
A variety of factors sparked the
recovery in emerging markets in
1999, including rising commodity
prices, particularly oil; the
continuation of a strong U.S.
economy; stable-to-lower interest
rates; tame inflation; and greater
political stability. On a country
specific level, Russia was the year's
biggest comeback story.
Devastated by its devaluation of the
ruble and loan defaults in 1998,
Russia steadily improved, aided by
higher oil prices, continued debt
negotiations and a new prime
minister, making it the
best-performing country in the index
in 1999. Despite a currency
devaluation in the opening month of
1999, Brazil also was a strong
performer. Both Brazil and Mexico
enjoyed relatively low inflation and
an improved economy. Turkey also
performed strongly as the
government's reform plans, IMF
financial support, and the
announcement that it would be
accepted in the European Union all
combined to boost the country's
prospects.
(photograph of John Carlson)
An interview with John Carlson, Portfolio Manager of Fidelity Advisor
Emerging Markets Income Fund
Q. HOW DID THE FUND PERFORM, JOHN?
A. Very well, relative to its benchmark and peers. For the 12 months
ending December 31, 1999, the fund's Class A, Class T, Class B and
Class C shares returned 36.35%, 36.34%, 35.58% and 35.31%,
respectively. The emerging market debt funds average, as tracked by
Lipper Inc., returned 24.51% during the period, while the J.P. Morgan
Emerging Markets Bond Index Plus returned 25.97%. The fund's new
benchmark, the J.P. Morgan Emerging Markets Bond Index Global,
returned 24.18%.
Q. WHY DID THE FUND CHANGE ITS BENCHMARK?
A. The new benchmark, the J.P. Morgan Emerging Markets Bond Index
Global, tracks total returns for U.S. dollar-denominated debt
instruments issued by emerging-market countries, such as Brady bonds,
loans, eurobonds and local market instruments. The new index is a
broader measure of the investment universe for emerging-market debt
than the old one. More specifically, it includes a larger number of
countries, 26, than the previous benchmark, which included 16. In
addition, it uses different guidelines for selecting countries and
allows more securities to be included. J.P. Morgan created the index
as a result of the large number of emerging-market issuers that have
come into the market in the last few years. I will discuss more
specific characteristics of the EMBI Global index in the callout box
at the end of this report.
Q. WOULD YOU PROVIDE AN UPDATE ON RUSSIA'S PERFORMANCE IN 1999?
A. I'd be happy to. Russia was the big story in 1998, and it was again
in 1999. However, this time the story was good - after having been
oversold and distressed in 1998, the Russian market is recovering.
Russian debt prices rebounded as the year progressed, due to stronger
commodity prices, particularly oil, and better-than-expected economic
growth. Its government adopted a number of prudent fiscal and monetary
policies, with the result being that Russia ended the year as the
best-performing country in the index. The fund's overweighted position
in Russia was the largest contributor to performance.
Q. WHAT WERE SOME OF THE OTHER EVENTS THAT ADDED TO THE FUND'S
OUTPERFORMANCE FOR THE PERIOD?
A. In addition to Russia, the fund's holdings in Brazil helped
performance. In January 1999, Brazil devalued its local currency, the
real, sending valuations downward. The markets responded quickly to
the anticipated move and priced securities accordingly. The Brazilian
government used the crisis to enact reforms in its social security
system. The economy reacted better than expected, inflation was
relatively low and, as a result, valuations rebounded by year's end.
The fund held a market-weight position in Mexico, another strong
performer in 1999. Mexico's inflation rate decreased, while trade
increased, employment was up and the peso was stable. Security
selection within Mexico helped the position outperform its benchmark.
The worldwide rally in the commodities markets was another significant
factor in the fund's performance; most notably, the near doubling of
oil prices during the year had a positive effect on many
emerging-market countries since most of them are commodity exporters.
Q. WERE THERE ANY NEGATIVE STORIES IN 1999?
A. Ecuador - in August it became the first country to default on its
Brady bonds, largely because its government was unwilling to carry out
needed reforms to its banking sector. These reforms would have
attracted much needed foreign capital into that country. As a result,
Ecuador was the only country in the index to have finished the year
with negative returns. While the fund did have very slight exposure to
Ecuador that affected absolute performance, our dramatic
underweighting of the country compared to the benchmark helped
relative performance.
Q. JOHN, WHAT IS YOUR OUTLOOK FOR THE FUND?
A. More of the same - and by that I mean the fund's investment
strategy will remain constant. Emphasis will continue to be placed on
individual security selection utilizing Fidelity's extensive credit
research capabilities. We look for sustained growth from emerging
markets - aided by additional good economic news from developed
markets, such as Japan, and continued non-inflationary growth in the
U. S. economy. We will continue to watch international events with
interest, including the effect of Russia's announcement prior to
year-end that Vladimir Putin was named interim president and called
for elections in the first quarter of 2000.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: seeks high current
income; as a secondary
objective, the fund seeks
capital appreciation
START DATE: March 10, 1994
SIZE: as of December 31,
1999, more than $85 million
MANAGER: John Carlson,
since 1995; also lead
manager, Fidelity Advisor
Strategic Income Fund, since
1996; joined Fidelity in
1995
JOHN CARLSON ON THE NEWEST
EMERGING-MARKET DEBT
BENCHMARK:
"During the 1990s, J.P. Morgan
established itself as a leading provider
of emerging-market debt indexes. The
first index, the Emerging Markets
Bond Index (EMBI), was introduced
in August 1992 and focused principally
on Brady bonds. As the nature and the
composition of the market changed,
J.P. Morgan updated its indexes. The
Emerging Markets Bond Index Plus
(EMBI+), introduced in July 1995,
expanded the scope of the EMBI to
include sovereign eurobonds, U.S.
dollar-denominated domestic bonds
and loans.
"In August 1999, J.P. Morgan
introduced its newest index, the EMBI
Global. The EMBI Global is similar to
the EMBI+, but includes a wider range
of countries, 26 in all, versus 16 for the
EMBI+. The EMBI Global also
includes more individual issues as a
result of its differing pricing criteria:
To be included in the EMBI+, a
security must have quotes from
several dealers and meet a maximum
bid/offer spread test, while the EMBI
Global only requires that quotes be
readily available. This paved the way
for 10 additional countries to join,
resulting in increased exposure to
Asian countries (15% of total) while
decreasing exposure to Latin
American countries (66% of total) as
compared to its other indexes.
"Comparing the fund's performance to
the EMBI Global will not change how
the fund is managed. Indeed, the new
index is closer in spirit to the
approach used in the past given the
fund's experience investing in the 10
additional countries now included in
the index."
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE COUNTRIES AS OF
DECEMBER 31, 1999
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
Brazil 21.0 20.4
Argentina 15.7 14.3
Mexico 14.1 14.5
Russia 11.3 11.7
Venezuela 4.6 9.2
</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 RISK.
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE HOLDINGS AS OF
DECEMBER 31, 1999
(BY ISSUER, EXCLUDING CASH % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
EQUIVALENTS) MONTHS AGO
Federative Republic of Brazil 15.3 12.4
Republic of Argentina 11.6 10.0
United Mexican States 11.3 8.3
Russian Federation 6.3 5.4
Republic of Venezuela 4.6 9.2
49.1 45.3
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION (% OF FUND'S
NET ASSETS)
AS OF DECEMBER 31, 1999 AS OF JUNE 30, 1999
Corporate Bonds 13.4% Corporate Bonds 19.1%
Government Obligations 64.3% Government Obligations 59.9%
Supranational Obligations 0.1% Supranational Obligations 0.0%
Stocks 3.5% Stocks 5.0%
Other Investments 5.7% Other Investments 6.3%
Short-Term Investments and Short-Term Investments and
Net Other Assets 13.0% Net Other Assets 9.7%
Row: 1, Col: 1, Value: 13.4 Row: 1, Col: 1, Value: 19.1
Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 64.3 Row: 1, Col: 3, Value: 59.9
Row: 1, Col: 4, Value: 0.1 Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 3.5 Row: 1, Col: 5, Value: 5.0
Row: 1, Col: 6, Value: 5.7 Row: 1, Col: 6, Value: 6.3
Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 13.0 Row: 1, Col: 8, Value: 9.699999999999999
</TABLE>
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE
OF THE FUND'S INVESTMENTS.
INVESTMENTS DECEMBER 31, 1999
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS - 13.4%
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
CONVERTIBLE BONDS - 1.4%
MALAYSIA - 1.4%
Telekom Malaysia BHD 4% Baa3 $ 1,430,000 $ 1,229,800
10/3/04
NONCONVERTIBLE BONDS - 12.0%
ARGENTINA - 1.7%
Compania Internacional de BB ARS 1,740,000 1,444,402
Telecomunicaciones 10.375%
8/1/04 (Reg. S)
BRAZIL - 4.4%
Banco Nacional de
Desenvolvimento Economico e
Social:
12.193% 6/16/08 (g)(h) B2 980,000 886,900
12.193% 6/16/08 (Reg. S) (h) B2 3,135,000 2,837,175
3,724,075
INDONESIA - 1.7%
APP International Finance Co. Caa1 1,770,000 1,491,225
11.75% 10/1/05
MALAYSIA - 1.4%
Petroliam Nasional BHD
(Petronas):
7.625% 10/15/26 (Reg. S) A2 840,000 743,400
yankee 7.625% 10/15/26 (g) Baa3 490,000 433,650
1,177,050
MAURITIUS - 0.9%
APP International Finance
(Mauritius) Ltd.:
0% 7/7/00 (g) Caa1 460,000 423,200
0% 7/7/00 (Reg. S) Caa1 380,000 349,600
772,800
MEXICO - 1.5%
Alestra S. de R.L de CV B2 540,000 545,400
12.625% 5/15/09
Petroleos Mexicanos 9.5% BB 760,000 744,800
9/15/27
1,290,200
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
NONCONVERTIBLE BONDS -
CONTINUED
NETHERLANDS ANTILLES - 0.4%
Astra Overseas Finance BV - $ 950,000 $ 327,750
(Reg. S) 0% 6/30/06
TOTAL NONCONVERTIBLE BONDS 10,227,502
TOTAL CORPORATE BONDS 11,457,302
(Cost $10,291,885)
GOVERNMENT OBLIGATIONS (I) -
64.3%
ARGENTINA - 14.0%
City of Buenos Aires euro B1 ARS 2,450,000 2,033,785
10.5% 5/28/04
Republic of Argentina:
BOCON 2.7696% 4/1/07 (h) B1 ARS 4,769,699 3,268,737
Brady:
discount euro 6.875% 3/31/23 B1 1,510,000 1,200,450
(h)
par euro 6% 3/31/23 B1 2,470,000 1,630,200
9.75% 9/19/27 B1 2,590,000 2,331,000
11.75% 2/12/07 B1 ARS 850,000 760,857
12.125% 2/25/19 B1 630,000 664,650
11,889,679
BRAZIL - 15.3%
Federative Republic of Brazil:
Brady:
capitalization bond 8% 4/15/14 B2 3,481,912 2,620,139
debt conversion bond euro 7% B2 3,670,000 2,724,975
4/15/12 (h)
discount euro 6.9375% 4/15/24 B2 1,710,000 1,297,463
(h)
new money bond L 7% 4/15/09 B2 3,600,000 2,916,000
(Bearer) (h)
6.9375% 4/15/06 (h) B2 1,833,000 1,610,749
14.5% 10/15/09 B2 1,660,000 1,840,525
13,009,851
BULGARIA - 2.9%
Bulgarian Republic Brady:
discount A 6.5% 7/28/24 (h) B2 1,230,000 988,613
GOVERNMENT OBLIGATIONS (I) -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
BULGARIA - CONTINUED
Bulgarian Republic Brady: -
continued
FLIRB A 2.75% 7/28/12 (h) B2 $ 940,000 $ 674,450
interest arrears bond 6.5% B2 1,000,000 791,250
7/28/11 (h)
2,454,313
COLOMBIA - 1.4%
Republic of Colombia 8.7% Ba2 1,500,000 1,162,500
2/15/16
CROATIA - 0.2%
Republic of Croatia 6.4563% Baa3 207,706 190,051
7/31/06 (h)
ECUADOR - 0.7%
Ecuador Republic Brady:
discount euro 6.75% 2/28/25 Caa3 500,000 192,500
(c)(h)
par euro 4% 2/28/25 (c)(f) Caa3 500,000 171,875
past due interest euro 6.75% Caa3 1,071,202 259,766
2/28/15 (bearer) (c)(h)
624,141
JORDAN - 1.6%
Jordanian Kingdom Brady par Ba3 2,000,000 1,330,000
6% 12/23/23 (h)
KAZAKHSTAN - 0.4%
Kazakhstan Republic 13.625% B1 360,000 378,450
10/18/04 (g)
MEXICO - 11.3%
United Mexican States:
Brady:
discount A 6.9325% 12/31/19 Ba1 250,000 234,375
(h)
discount C 6.8363% 12/31/19 Ba1 470,000 440,625
(h)
discount D 6.4531% 12/31/19 Ba1 560,000 525,000
(h)
par A 6.25% 12/31/19 unit Ba1 1,270,000 1,003,300
Brady par B 6.25% 12/31/19 Ba1 4,820,000 3,807,796
unit
global bond 11.5% 5/15/26 Ba1 3,010,000 3,589,425
value recovery rights 6/30/03:
discount A (j) - 385,000 4
discount C (j) - 725,000 7
discount D (j) - 861,000 9
9,600,541
GOVERNMENT OBLIGATIONS (I) -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
PERU - 1.5%
Peruvian Republic Brady:
FLIRB 3.75% 3/7/17 (h) Ba3 $ 920,000 $ 573,850
past due interest 4.5% 3/7/17 Ba3 1,050,000 728,438
(h)
1,302,288
PHILIPPINES - 1.0%
Bangko Sentral Pilipinas 8.6% Ba1 995,000 828,338
6/15/27
POLAND - 0.4%
Republic of Poland 0% 12/21/01 A PLN 2,020,000 374,201
RUSSIA - 8.2%
Bank for Foreign Economic Ca 2,880,000 511,200
Affairs of Russia
(Vnesheconombank) interest
notes 6.9063% 12/15/15 (c)(h)
City of St. Petersburg Russia Caa1 1,340,000 857,600
9.5% 6/18/02 (Reg. S)
Russian Federation:
euro 12.75% 6/24/28 (Reg. S) B3 1,550,000 1,085,000
8.75% 7/24/05 B3 1,630,000 1,022,825
9.25% 11/27/01 B3 1,100,000 902,000
10% 6/26/07 B3 1,250,000 790,625
11% 7/24/18 (Reg. S) B3 1,800,000 1,102,500
11.75% 6/10/03 B3 640,000 496,000
Russian Federation Ministry Ca 690,000 222,525
of Finance 3% 5/14/03
6,990,275
SOUTH AFRICA - 0.5%
South African Republic 13% Baa1 ZAR 2,545,000 398,800
8/31/10
TURKEY - 0.4%
Turkish Republic 20.27% - TRL 185,439,000 355,737
7/24/02 (e)(h)
VENEZUELA - 4.5%
Republic of Venezuela:
Brady:
FLIRB A 6.875% 3/31/07 (h) B2 892,850 700,887
par W-B euro 6.75% 3/31/20 B2 1,550,000 1,059,813
global bond 13.625% 8/15/18 B2 1,310,000 1,160,988
GOVERNMENT OBLIGATIONS (I) -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
VENEZUELA - CONTINUED
Republic of Venezuela: -
continued
Oil recovery rights 4/15/20 - $ 16,705 $ 0
(j)
9.25% 9/15/27 B2 1,320,000 887,700
3,809,388
TOTAL GOVERNMENT OBLIGATIONS 54,698,553
(Cost $47,753,718)
SUPRANATIONAL OBLIGATIONS -
0.1%
International Bank for AAA PLN 340,000 80,992
Reconstruction & Development
15.5% 11/22/00 (Cost $80,022)
</TABLE>
COMMON STOCKS - 3.5%
SHARES
BRAZIL - 1.3%
Petrobras PN (Pfd. Reg.) 2,072,000 527,606
Telebras sponsored ADR (PFD 4,400 565,400
Holder)
1,093,006
HONG KONG - 0.5%
China Telecom (Hong Kong) 3,400 437,113
Ltd. sponsored ADR (a)
MEXICO - 1.3%
Cemex SA de CV:
ADR (a) 1,368 5,643
sponsored ADR (a) 14,200 395,825
Fomento Economico Mexicano SA 9,900 440,550
de CV sponsored ADR
Telefonos de Mexico SA de CV 2,100 236,250
Series L sponsored ADR
1,078,268
SINGAPORE - 0.4%
Pacific Internet Ltd. 7,600 356,725
TOTAL COMMON STOCKS 2,965,112
(Cost $2,114,486)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SOVEREIGN LOAN PARTICIPATIONS
- - 4.5%
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
ALGERIA - 0.7%
Algerian Republic loan
participation:
Series 1 - Deutsche Bank - $ 240,000 $ 183,600
6.625% 9/4/06 (h)
Series 1 - The Chase - 320,000 244,800
Manhattan Bank 6.625% 9/4/06
(h)
Series 1- Societe Generale - 240,000 183,600
6.625% 9/4/06 (h)
612,000
ANGOLA - 0.3%
Banco Nacional de Angola loan - 1,596,127 255,380
participation - Societe
Generale (a)
CAMEROON - 0.2%
Cameroon Republic:
loan participation - Societe - FRF 1,960,000 39,091
Generale (a)
loan participation - Societe - DEM 1,430,000 95,652
Generale (a)
134,743
CONGO - 0.2%
Congo Republic loan - 1,056,047 137,286
participation - Societe
Generale (a)
MOROCCO - 1.1%
Moroccan Kingdom loan
participation:
Series A - Merrill Lynch, - 307,619 278,396
Pierce, Fenner & Smith, Inc.
6.8438% 1/1/09 (h)
Series A - Morgan Guaranty - 367,100 332,226
Trust Co. 6.8438% 1/1/09 (h)
Series A - Paribas Capital - 360,000 325,800
Markets 6.8438% 1/1/09 (h)
936,422
RUSSIA - 2.0%
Bank for Foreign Economic
Affairs of Russia
(Vnesheconombank) loan
participation restructured
under 1997 Agreement:
- - BankBoston Corp. 6.9063% - 20,000 3,200
12/15/20 (c)(h)
- - Deutsche Bank 6.9063% - 380,000 60,800
12/15/20 (c)(h)
- - ING Bank NV 6.9063% - 730,000 116,800
12/15/20 (c)(h)
- - Lehman Commercial Paper, - 170,000 27,200
Inc. 6.9063% 12/15/20 (c)(h)
- - Merrill Lynch, Pierce, - 760,000 121,600
Fenner & Smith, Inc. 6.9063%
12/15/20 (c)(h)
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) loan
participation restructured
under 1997 Agreement: -
continued
- - Morgan (J.P.) Securities, - $ 3,880,000 $ 620,800
Inc. 6.9063% 12/15/20 (c)(h)
- - Paribas Capital Markets - 2,860,000 457,600
6.9063% 12/15/20 (c)(h)
- - The Chase Manhattan Bank - 2,040,000 326,400
6.9063% 12/15/20 (c)(h)
1,734,400
TOTAL SOVEREIGN LOAN 3,810,231
PARTICIPATIONS
(Cost $4,180,373)
</TABLE>
CASH EQUIVALENTS - 12.0%
MATURITY AMOUNT
Investments in repurchase $ 10,219,874 10,217,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 3.38%,
dated 12/31/99 due 1/3/00
(Cost $10,217,000)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
PURCHASED OPTIONS - 1.2%
EXPIRATION DATE/ STRIKE PRICE UNDERLYING FACE AMOUNT
RUSSIA - 1.1%
The Deutsche Bank Call Option April/00 8.75 $ 2,064,000 961,050
on $12,900,000 notional
amount of Bank for Foreign
Economic Affairs of Russia
(Vnesheconombank) loan
participation restructured
under 1997 Agreement -
Deutsche Bank 6.9063%
12/15/20
PURCHASED OPTIONS - CONTINUED
EXPIRATION DATE/ STRIKE PRICE UNDERLYING FACE AMOUNT VALUE (NOTE 1)
VENEZUELA - 0.1%
The Deutsche Bank Call Option January/00 78.25 $ 5,476,580 $ 83,785
on $7,285,680 notional
amount of Republic of
Venezuela Brady debt
conversion bond euro 6.3125%
12/18/07
TOTAL PURCHASED OPTIONS 1,044,835
(Cost $480,278)
TOTAL INVESTMENT PORTFOLIO - 84,274,025
99.0% (Cost $75,117,762)
NET OTHER ASSETS - 1.0% 814,137
NET ASSETS - 100% $ 85,088,162
</TABLE>
SECURITY TYPE ABBREVIATION
FLIRB - Front Loaded Interest
Reduction Bonds
CURRENCY ABBREVIATIONS
ARS - Argentine peso
DEM - German deutsche mark
FRF - French franc
PLN - Polish zloty
TRL - Turkish lira
ZAR - South African rand
LEGEND
(a) Non-income producing
(b) S&P 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) Principal amount in thousands.
(f) 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.
(g) 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 $2,122,200 or 2.5% of net assets.
(h) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(i) 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.
(j) Quantity represents share amount.
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 0.9% AAA, AA, A 0.5%
Baa 2.7% BBB 8.3%
Ba 16.9% BB 32.8%
B 48.9% B 24.4%
Caa 4.4% CCC 5.3%
Ca, C 0.9% CC, C 4.2%
D 0.9%
The percentage not rated by Moody's or S&P amounted to 5.3%. FMR has
determined that unrated debt securities that are lower quality account
for 5.3% of the total value of investment in securities.
INCOME TAX INFORMATION
At December 31, 1999, the aggregate cost of investment securities for
income tax purposes was $75,673,517. Net unrealized appreciation
aggregated $8,600,508, of which $10,117,504 related to appreciated
investment securities and $1,516,996 related to depreciated investment
securities.
At December 31, 1999, the fund had a capital loss carryforward of
approximately $24,164,000 of which $20,267,000 and $3,897,000 will
expire on December 31, 2006 and 2007, respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
ASSETS
Investment in securities, at $ 84,274,025
value (including repurchase
agreements of $10,217,000)
(cost $75,117,762) - See
accompanying schedule
Cash 541,870
Receivable for fund shares 167,126
sold
Dividends receivable 2,456
Interest receivable 1,458,774
TOTAL ASSETS 86,444,251
LIABILITIES
Payable for investments $ 665,125
purchased
Payable for fund shares 288,202
redeemed
Distributions payable 246,490
Accrued management fee 45,970
Distribution fees payable 27,343
Other payables and accrued 82,959
expenses
TOTAL LIABILITIES 1,356,089
NET ASSETS $ 85,088,162
Net Assets consist of:
Paid in capital $ 100,874,944
Undistributed net investment 332,924
income
Accumulated undistributed net (25,271,321)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 9,151,615
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 85,088,162
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
DECEMBER 31, 1999
CALCULATION OF MAXIMUM $9.68
OFFERING PRICE CLASS A: NET
ASSET VALUE and redemption
price per share
($2,139,563 (divided by)
220,927 shares)
Maximum offering price per $10.16
share (100/95.25 of $9.68)
CLASS T: NET ASSET VALUE and $9.67
redemption price per share
($55,714,796 (divided by)
5,759,854 shares)
Maximum offering price per $10.02
share (100/96.50 of $9.67)
CLASS B: NET ASSET VALUE and $9.72
offering price per share
($19,054,130 (divided by)
1,960,442 shares) A
CLASS C: NET ASSET VALUE and $9.70
offering price per share
($2,401,943 (divided by)
247,522 shares) A
INSTITUTIONAL CLASS: NET $9.62
ASSET VALUE, offering price
and redemption price per
share ($5,777,730 (divided
by) 600,705 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
INVESTMENT INCOME $ 105,209
Dividends
Interest 8,165,254
8,270,463
Less foreign taxes withheld (8,769)
TOTAL INCOME 8,261,694
EXPENSES
Management fee $ 511,880
Transfer agent fees 177,742
Distribution fees 308,306
Accounting fees and expenses 60,633
Non-interested trustees' 361
compensation
Custodian fees and expenses 37,955
Registration fees 55,493
Audit 46,450
Legal 707
Interest 298
Miscellaneous 1,103
Total expenses before 1,200,928
reductions
Expense reductions (5,723) 1,195,205
NET INVESTMENT INCOME 7,066,489
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 2,903,309
Foreign currency transactions 39,212 2,942,521
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 13,268,430
Assets and liabilities in 2,118 13,270,548
foreign currencies
NET GAIN (LOSS) 16,213,069
NET INCREASE (DECREASE) IN $ 23,279,558
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1999 YEAR ENDED DECEMBER 31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 7,066,489 $ 9,556,479
income
Net realized gain (loss) 2,942,521 (24,724,723)
Change in net unrealized 13,270,548 (7,288,547)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 23,279,558 (22,456,791)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (6,921,285) (8,112,285)
From net investment income
Return of capital - (1,692,592)
TOTAL DISTRIBUTIONS (6,921,285) (9,804,877)
Share transactions - net (6,842,513) (12,668,733)
increase (decrease)
TOTAL INCREASE (DECREASE) 9,515,760 (44,930,401)
IN NET ASSETS
NET ASSETS
Beginning of period 75,572,402 120,502,803
End of period (including $ 85,088,162 $ 75,572,402
under (over) distribution
of net investment income of
$332,924 and $(632,109),
respectively)
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED DECEMBER 31, 1999 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 .821 .943 .953 .274
Net realized and unrealized 1.884 (3.275) .891 1.574
gain (loss)
Total from investment 2.705 (2.332) 1.844 1.848
operations
Less Distributions
From net investment income (.805) (.834) (.984) (.238)
From net realized gain - - (1.460) (.410)
Return of capital - (.174) - -
Total distributions (.805) (1.008) (2.444) (.648)
Net asset value, end of period $ 9.680 $ 7.780 $ 11.120 $ 11.720
TOTAL RETURN B, C 36.35% (21.94)% 16.52% 17.71%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,140 $ 2,829 $ 2,313 $ 478
(000 omitted)
Ratio of expenses to average 1.40% F 1.40% F 1.40% F 1.40% A, F
net assets
Ratio of expenses to average 1.40% 1.39% G 1.38% G 1.40% A
net assets after expense
reductions
Ratio of net investment 9.57% 10.05% 7.74% 7.31% A
income to average net assets
Portfolio turnover rate 275% 514% 660% 410%
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
YEARS ENDED DECEMBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 7.770 $ 11.110 $ 11.710 $ 9.280 $ 9.520
of period
Income from Investment
Operations
Net investment income .815 C .975 C .877 C .758 C .860
Net realized and unrealized 1.886 (3.319) .961 2.832 (.323)
gain (loss)
Total from investment 2.701 (2.344) 1.838 3.590 .537
operations
Less Distributions
From net investment income (.801) (.824) (.978) (.750) (.777)
From net realized gain - - (1.460) (.410) -
Return of capital - (.172) - - -
Total distributions (.801) (.996) (2.438) (1.160) (.777)
Net asset value, end of period $ 9.670 $ 7.770 $ 11.110 $ 11.710 $ 9.280
TOTAL RETURN A, B 36.34% (22.07)% 16.47% 40.41% 6.99%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 55,715 $ 53,643 $ 93,228 $ 78,861 $ 36,205
(000 omitted)
Ratio of expenses to average 1.42% 1.50% 1.47% 1.49% 1.50%D
net assets
Ratio of expenses to average 1.42% 1.48% E 1.45% E 1.48% E 1.50%
net assets after expense
reductions
Ratio of net investment 9.54% 9.96% 7.08% 7.23% 9.32%
income to average net assets
Portfolio turnover rate 275% 514% 660% 410% 305%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E 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
YEARS ENDED DECEMBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 7.800 $ 11.160 $ 11.750 $ 9.300 $ 9.520
of period
Income from Investment
Operations
Net investment income .761 C .907 C .806 C .686 C .835
Net realized and unrealized 1.904 (3.334) .956 2.853 (.342)
gain (loss)
Total from investment 2.665 (2.427) 1.762 3.539 .493
operations
Less Distributions
From net investment income (.745) (.772) (.892) (.679) (.713)
From net realized gain - - (1.460) (.410) -
Return of capital - (.161) - - -
Total distributions (.745) (.933) (2.352) (1.089) (.713)
Net asset value, end of period $ 9.720 $ 7.800 $ 11.160 $ 11.750 $ 9.300
TOTAL RETURN A, B 35.58% (22.66)% 15.70% 39.61% 6.38%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 19,054 $ 16,703 $ 23,576 $ 17,746 $ 9,486
(000 omitted)
Ratio of expenses to average 2.10% 2.15% D 2.15% 2.15% D 2.25% D
net assets
Ratio of expenses to average 2.10% 2.13% E 2.13% E 2.15% 2.25%
net assets after expense
reductions
Ratio of net investment 8.86% 9.36% 6.48% 6.56% 8.48%
income to average net assets
Portfolio turnover rate 275% 514% 660% 410% 305%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
FINANCIAL HIGHLIGHTS - CLASS C
YEARS ENDED DECEMBER 31, 1999 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 .750 .792 .154
Net realized and unrealized 1.893 (3.191) .322
gain (loss)
Total from investment 2.643 (2.399) .476
operations
Less Distributions
From net investment income (.733) (.762) (.286)
From net realized gain - - (1.270)
Return of capital - (.159) -
Total distributions (.733) (.921) (1.556)
Net asset value, end of period $ 9.700 $ 7.790 $ 11.110
TOTAL RETURN B, C 35.31% (22.47)% 4.16%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,402 $ 964 $ 66
(000 omitted)
Ratio of expenses to average 2.23% 2.25% F 2.25% A, F
net assets
Ratio of expenses to average 2.23% 2.23% G 2.25% A
net assets after expense
reductions
Ratio of net investment 8.73% 9.30% 9.04% A
income to average net assets
Portfolio turnover rate 275% 514% 660%
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
YEARS ENDED DECEMBER 31, 1999 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 .837 D .931 D .860 D .786 D .393
Net realized and unrealized 1.868 (3.229) 1.008 2.779 .876
gain (loss)
Total from investment 2.705 (2.298) 1.868 3.565 1.269
operations
Less Distributions
From net investment income (.825) (.846) (.998) (.785) (.389)
From net realized gain - - (1.460) (.410) -
Return of capital - (.176) - - -
Total distributions (.825) (1.022) (2.458) (1.195) (.389)
Net asset value, end of period $ 9.620 $ 7.740 $ 11.060 $ 11.650 $ 9.280
TOTAL RETURN B, C 36.59% (21.75)% 16.84% 40.21% 15.52%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 5,778 $ 1,434 $ 1,320 $ 2,639 $ 201
(000 omitted)
Ratio of expenses to average 1.14% 1.25% F 1.25% F 1.25% F 1.25% A, F
net assets
Ratio of expenses to average 1.13% G 1.24% G 1.23% G 1.25% 1.25% A
net assets after expense
reductions
Ratio of net investment 9.83% 10.02% 6.85% 7.46% 9.09% A
income to average net assets
Portfolio turnover rate 275% 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 December 31, 1999
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. Foreign
governments may also impose taxes on other payments or transactions
with respect to foreign securities. 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, 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 reductions in
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. The underlying face amount at value of any open options
at period end is shown in the schedule of investments under the
caption "Purchased Options." This amount reflects each contract's
exposure to the underlying instrument at period end. Losses may arise
from changes in the value of the underlying instruments, 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
2. OPERATING POLICIES - CONTINUED
OPTIONS - CONTINUED
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.
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 $3,810,231 or 4.5% of net
assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $192,450,827 and $201,420,489, 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 .0920% 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 annual rate of .68% of average net assets.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SUB-ADVISER FEE. FMR, on behalf of the fund, entered into sub-advisory
agreements with Fidelity Management & Research (U.K.) Inc., Fidelity
Management & Research (Far East) Inc., Fidelity International
Investment Advisors (FIIA), and Fidelity Investments Japan Limited
(FIJ). In addition, FIIA entered into a sub-advisory agreement with
its subsidiary, Fidelity International Investment Advisors (U.K.)
Limited (FIIA(U.K.)L). Under the sub-advisory arrangements, FMR may
receive investment advice and research services and may grant the
sub-advisers investment management authority to buy and sell
securities. FMR pays its sub-advisers either a portion of its
management fee or a fee based on costs incurred for these services.
FIIA pays FIIA(U.K.)L a fee based on costs incurred for either
service.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Board of Trustees has adopted separate Distribution and
Service 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 $ 3,226 $ 40
CLASS T 128,769 22,142
CLASS B 157,802 113,994
CLASS C 18,509 14,763
$ 308,306 $ 150,939
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.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
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 is paid to securities dealers, banks and other financial
institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO FDC RETAINED BY FDC
CLASS A $ 6,995 $ 2,324
CLASS T 32,261 13,636
CLASS B 64,093 64,093*
CLASS C 1,717 1,717*
$ 105,066 $ 81,770
* 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
(collectively referred to as the transfer agent). 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 $ 7,687 .36
CLASS T 115,484 .22
CLASS B 44,838 .26
CLASS C 5,317 .29
INSTITUTIONAL CLASS 4,416 .19
$ 177,742
ACCOUNTING FEES. Fidelity Service Company, Inc., an affilate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
5. 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 the Class A's operating expenses
(excluding interest, taxes, certain securities lending fees, brokerage
commissions and extraordinary expenses, if any) above an annual rate
of 1.40% of average net assets. For the period, the reimbursement
reduced the expenses by $1,148.
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 $2,560 under this arrangement.
In addition, through an arrangement with the fund's custodian, 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 $2,015 under this 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 of shares for the periods
were as follows:
YEAR ENDED DECEMBER 31,
1999 1998
FROM NET INVESTMENT INCOME
Class A $ 198,550 $ 219,978
Class T 4,792,465 6,143,721
Class B 1,508,455 1,620,830
Class C 159,916 37,441
Institutional Class 261,899 90,315
Total $ 6,921,285 $ 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
$ 6,921,285 $ 9,804,877
10. SHARE TRANSACTIONS.
Transactions for each class of shares for the periods were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED
DECEMBER 31,
1999 1998 1999 1998
CLASS A Shares sold 85,049 235,098 $ 725,615 $ 2,083,069
Reinvestment of distributions 19,735 24,274 172,036 221,948
Shares redeemed (247,480) (103,745) (1,984,096) (983,680)
Net increase (decrease) (142,696) 155,627 $ (1,086,445) $ 1,321,337
CLASS T Shares sold 2,796,838 2,933,653 $ 23,706,190 $ 27,650,341
Reinvestment of distributions 476,741 698,169 4,150,699 6,462,132
Shares redeemed (4,418,691) (5,118,827) (37,034,387) (49,719,962)
Net increase (decrease) (1,145,112) (1,487,005) $ (9,177,498) $ (15,607,489)
CLASS B Shares sold 565,451 816,033 $ 4,858,849 $ 7,761,777
Reinvestment of distributions 134,352 175,037 1,179,380 1,605,746
Shares redeemed (879,623) (964,234) (7,521,597) (9,294,273)
Net increase (decrease) (179,820) 26,836 $ (1,483,368) $ 73,250
CLASS C Shares sold 255,248 170,399 $ 2,187,018 $ 1,580,351
Reinvestment of distributions 12,291 4,144 108,919 34,839
Shares redeemed (143,693) (56,813) (1,240,277) (482,761)
Net increase (decrease) 123,846 117,730 $ 1,055,660 $ 1,132,429
INSTITUTIONAL CLASS Shares 749,979 330,391 $ 6,571,465 $ 2,916,407
sold
Reinvestment of distributions 24,724 10,655 223,316 96,223
Shares redeemed (359,249) (275,152) (2,945,643) (2,600,890)
Net increase (decrease) 415,454 65,894 $ 3,849,138 $ 411,740
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series VIII and the Shareholders
of Fidelity Advisor Emerging Markets Income Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Advisor Emerging Markets Income Fund (a fund of Fidelity
Advisor Series VIII) at December 31, 1999, and the results of its
operations, the changes in its net assets and the financial
highlights for the periods indicated, in conformity with accounting
principles generally accepted in the United States. These financial
statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fidelity Advisor
Emerging Markets Income Fund's management; our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States which
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation
of securities at December 31, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion
expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 15, 2000
DISTRIBUTIONS
The percentage of dividends distributed during the fiscal year
representing income derived from sources within, and taxes paid to,
foreign countries or possessions of the United States are as follows:
INCOME TAXES
Class A 100% less than 1%
Class T 100% less than 1%
Class B 100% less than 1%
Class C 100% less than 1%
The fund will notify shareholders in January 2000 of amounts for use
in preparing 1999 income tax returns.
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
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
* 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
Ned C. Lautenbach
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
EMI-ANN-0200 88338
1.540210.102
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 High Income 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
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(2_FIDELITY_LOGOS)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
FIDELITY (REGISTERED TRADEMARK) ADVISOR
EMERGING MARKETS INCOME
FUND - INSTITUTIONAL CLASS
ANNUAL REPORT
DECEMBER 31, 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 9 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 12 A summary of major shifts in
the fund's investments over
the past six months.
INVESTMENTS 13 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 22 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 31 Notes to financial statements.
REPORT OF INDEPENDENT 40 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 41
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:
The NASDAQ, S&P 500(Registered trademark) and Dow Jones Industrial
Average all closed 1999 at record highs. Investors should note,
however, that much of the year's returns were driven by a single
sector: technology. Most other stocks were flat or down in 1999.
Likewise, bond investors had little cause to celebrate at year's end.
Steadily rising interest rates left the benchmark 30-year Treasury at
its highest yield level in two years.
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 five year and life
of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
FIDELITY ADV EMERGING MARKETS 36.59% 87.56% 92.19%
INCOME - INST CL
JP EMBI Global 24.18% 110.15% 89.80%
JP EMBI Plus 25.97% 115.36% 95.11%
Emerging Markets Debt Funds 24.51% 84.02% n/a
Average
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, one year, five
years or since the fund started on 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 Global - a market value-weighted index of U.S.
dollar denominated Brady bonds, Eurobonds, traded loans, and local
market debt instruments issued by emerging markets sovereign and
quasi-sovereign entities. The index currently covers 26 emerging
market countries. You can also 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 one year average represents a peer group of 53 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 DECEMBER 31, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
FIDELITY ADV EMERGING MARKETS 36.59% 13.40% 11.89%
INCOME - INST CL
JP EMBI Global 24.18% 16.01% 11.65%
JP EMBI Plus 25.97% 16.58% 12.18%
Emerging Markets Debt Funds 24.51% 12.76% 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 Global
00607 JP045
1994/03/10 10000.00 10000.00
1994/03/31 9583.54 8854.87
1994/04/30 9709.65 8696.06
1994/05/31 10335.54 9321.51
1994/06/30 9835.28 8769.57
1994/07/31 10055.96 8955.23
1994/08/31 11267.52 9684.79
1994/09/30 11589.24 9881.74
1994/10/31 11290.55 9595.37
1994/11/30 11055.90 9637.26
1994/12/31 10246.94 9031.92
1995/01/31 9070.51 8617.57
1995/02/28 8422.24 8204.98
1995/03/31 8175.93 8074.41
1995/04/30 8877.85 8891.47
1995/05/31 9407.49 9696.42
1995/06/30 9460.49 9801.47
1995/07/31 9478.29 9804.81
1995/08/31 9683.27 10078.14
1995/09/30 10070.53 10432.50
1995/10/31 10009.09 10331.83
1995/11/30 10344.64 10681.21
1995/12/31 10975.98 11414.47
1996/01/31 11786.94 12387.58
1996/02/29 11132.52 11676.70
1996/03/31 11239.43 11938.35
1996/04/30 11817.53 12528.79
1996/05/31 12141.13 12723.41
1996/06/30 12409.00 13076.33
1996/07/31 12552.11 13217.19
1996/08/31 13008.06 13636.05
1996/09/30 14076.23 14434.05
1996/10/31 14441.53 14552.77
1996/11/30 15251.78 15269.86
1996/12/31 15389.41 15435.62
1997/01/31 16045.33 15904.38
1997/02/28 16318.80 16163.91
1997/03/31 15666.08 15625.30
1997/04/30 16195.03 16084.32
1997/05/31 16893.07 16629.56
1997/06/30 17418.65 16993.71
1997/07/31 18174.39 17696.06
1997/08/31 18074.50 17610.12
1997/09/30 18657.53 18098.90
1997/10/31 16803.76 16181.04
1997/11/30 17430.57 16867.20
1997/12/31 17981.09 17279.73
1998/01/31 18002.45 17362.80
1998/02/28 18492.36 17821.66
1998/03/31 18987.43 18226.31
1998/04/30 18999.68 18268.46
1998/05/31 18212.32 17716.91
1998/06/30 17627.52 17267.96
1998/07/31 17898.02 17368.75
1998/08/31 11585.73 12620.00
1998/09/30 12607.92 13710.43
1998/10/31 13479.33 14586.25
1998/11/30 14507.78 15586.27
1998/12/31 14070.24 15284.88
1999/01/31 13729.74 14936.58
1999/02/28 13965.43 15084.29
1999/03/31 15202.03 16083.74
1999/04/30 16824.58 17072.89
1999/05/31 15919.19 16191.13
1999/06/30 16716.28 16813.26
1999/07/31 16256.22 16533.07
1999/08/31 16258.10 16543.84
1999/09/30 16637.06 17063.96
1999/10/31 17313.57 17668.47
1999/11/30 18122.30 18141.41
1999/12/31 19218.78 18980.49
IMATRL PRASUN SHR__CHT 19991231 20000210 111347 R00000000000073
$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 December 31, 1999, the value of the investment would
have grown to $19,219 - a 92.19% increase on the initial investment.
For comparison, look at how the J.P. Morgan Emerging Markets Bond
Index Global did over the same period. With dividends and capital
gains, if any, reinvested, the same JP EMBI Global would have grown to
$18,980 an 89.80% increase. Going forward, the fund's performance
will be compared to the J.P. Morgan Emerging Markets Bond Index
Global, rather than the J.P. Morgan Emerging Markets Index Plus,
because the J.P. Morgan Emerging Bond Index Global includes a broader
representation of the fund's investment universe.
(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
YEARS ENDED DECEMBER 31, JULY 3, 1995 (COMMENCEMENT OF
SALE OF INSTITUTIONAL CLASS
SHARES) TO DECEMBER 31,
1999 1998 1997 1996 1995
Dividend returns 12.30% 8.27% 8.54% 9.89% 5.04%
Capital returns 24.29% -30.02% 8.30% 30.32% 10.48%
Total returns 36.59% -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 DECEMBER 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 20.03(cents) A 49.15(cents) 82.54(cents)
Annualized dividend rate 24.85% A 11.02% 9.68%
30-day annualized yield 7.87% - -
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 $9.49 over the past one month, $8.85 over the past six months, and
$8.53 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 THE PAST MONTH DIVIDENDS PER SHARE INCLUDE ADDITIONAL NONRECURRING
DISTRIBUTIONS REQUIRED BY FEDERAL TAX REGULATIONS. THESE DISTRIBUTIONS
MAY NOT BE REFLECTED IN FUTURE MONTHLY DIVIDENDS.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Unlike 1998, emerging markets were
generally a much sounder investment in
1999. For the 12-month period
ending December 31, 1999, the
JP Morgan Emerging Markets Bond
Index was up 21.56%, ending the
year as one of the best-performing
asset classes. A year ago, that
same index closed 1998 with a
negative 11.04% annual return.
A variety of factors sparked the
recovery in emerging markets in
1999, including rising commodity
prices, particularly oil; the
continuation of a strong U.S.
economy; stable-to-lower interest
rates; tame inflation; and greater
political stability. On a country
specific level, Russia was the year's
biggest comeback story.
Devastated by its devaluation of the
ruble and loan defaults in 1998,
Russia steadily improved, aided by
higher oil prices, continued debt
negotiations and a new prime
minister, making it the
best-performing country in the index
in 1999. Despite a currency
devaluation in the opening month of
1999, Brazil also was a strong
performer. Both Brazil and Mexico
enjoyed relatively low inflation and
an improved economy. Turkey also
performed strongly as the
government's reform plans, IMF
financial support, and the
announcement that it would be
accepted in the European Union all
combined to boost the country's
prospects.
(photograph of John Carlson)
An interview with John Carlson, Portfolio Manager of Fidelity Advisor
Emerging Markets Income Fund
Q. HOW DID THE FUND PERFORM, JOHN?
A. Very well, relative to its benchmark and peers. For the 12 months
ending December 31, 1999, the fund's Institutional Class shares
returned 36.59 %. The emerging market debt funds average as tracked by
Lipper Inc., returned 24.51% during the period, while the J.P. Morgan
Emerging Markets Bond Index Plus returned 25.97%. The fund's new
benchmark, the J.P. Morgan Emerging Markets Bond Index Global,
returned 24.18%.
Q. WHY DID THE FUND CHANGE ITS BENCHMARK?
A. The new benchmark, the J.P. Morgan Emerging Markets Bond Index
Global, tracks total returns for U.S. dollar-denominated debt
instruments issued by emerging-market countries, such as Brady bonds,
loans, eurobonds and local market instruments. The new index is a
broader measure of the investment universe for emerging-market debt
than the old one. More specifically, it includes a larger number of
countries, 26, than the previous benchmark, which included 16. In
addition, it uses different guidelines for selecting countries and
allows more securities to be included. J.P. Morgan created the index
as a result of the large number of emerging-market issuers that have
come into the market in the last few years. I will discuss more
specific characteristics of the EMBI Global index in the callout box
at the end of this report.
Q. WOULD YOU PROVIDE AN UPDATE ON RUSSIA'S PERFORMANCE IN 1999?
A. I'd be happy to. Russia was the big story in 1998, and it was again
in 1999. However, this time the story was good - after having been
oversold and distressed in 1998, the Russian market is recovering.
Russian debt prices rebounded as the year progressed, due to stronger
commodity prices, particularly oil, and better-than-expected economic
growth. Its government adopted a number of prudent fiscal and monetary
policies, with the result being that Russia ended the year as the
best-performing country in the index. The fund's overweighted position
in Russia was the largest contributor to performance.
Q. WHAT WERE SOME OF THE OTHER EVENTS THAT ADDED TO THE FUND'S
OUTPERFORMANCE FOR THE PERIOD?
A. In addition to Russia, the fund's holdings in Brazil helped
performance. In January 1999, Brazil devalued its local currency, the
real, sending valuations downward. The markets responded quickly to
the anticipated move and priced securities accordingly. The Brazilian
government used the crisis to enact reforms in its social security
system. The economy reacted better than expected, inflation was
relatively low and, as a result, valuations rebounded by year's end.
The fund held a market-weight position in Mexico, another strong
performer in 1999. Mexico's inflation rate decreased, while trade
increased, employment was up and the peso was stable. Security
selection within Mexico helped the position outperform its benchmark.
The worldwide rally in the commodities markets was another significant
factor in the fund's performance; most notably, the near doubling of
oil prices during the year had a positive effect on many
emerging-market countries since most of them are commodity exporters.
Q. WERE THERE ANY NEGATIVE STORIES IN 1999?
A. Ecuador - in August it became the first country to default on its
Brady bonds, largely because its government was unwilling to carry out
needed reforms to its banking sector. These reforms would have
attracted much needed foreign capital into that country. As a result,
Ecuador was the only country in the index to have finished the year
with negative returns. While the fund did have very slight exposure to
Ecuador that affected absolute performance, our dramatic
underweighting of the country compared to the benchmark helped
relative performance.
Q. JOHN, WHAT IS YOUR OUTLOOK FOR THE FUND?
A. More of the same - and by that I mean the fund's investment
strategy will remain constant. Emphasis will continue to be placed on
individual security selection utilizing Fidelity's extensive credit
research capabilities. We look for sustained growth from emerging
markets - aided by additional good economic news from developed
markets, such as Japan, and continued non-inflationary growth in the
U. S. economy. We will continue to watch international events with
interest, including the effect of Russia's announcement prior to
year-end that Vladimir Putin was named interim president and called
for elections in the first quarter of 2000.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: seeks high current
income; as a secondary
objective, the fund seeks
capital appreciation
START DATE: March 10, 1994
SIZE: as of December 31,
1999, more than $85 million
MANAGER: John Carlson,
since 1995; also lead
manager, Fidelity Advisor
Strategic Income Fund, since
1996; joined Fidelity in
1995
JOHN CARLSON ON THE NEWEST
EMERGING-MARKET DEBT
BENCHMARK:
"During the 1990s, J.P. Morgan
established itself as a leading provider
of emerging-market debt indexes. The
first index, the Emerging Markets
Bond Index (EMBI), was introduced
in August 1992 and focused principally
on Brady bonds. As the nature and the
composition of the market changed,
J.P. Morgan updated its indexes. The
Emerging Markets Bond Index Plus
(EMBI+), introduced in July 1995,
expanded the scope of the EMBI to
include sovereign eurobonds, U.S.
dollar-denominated domestic bonds
and loans.
"In August 1999, J.P. Morgan
introduced its newest index, the EMBI
Global. The EMBI Global is similar to
the EMBI+, but includes a wider range
of countries, 26 in all, versus 16 for the
EMBI+. The EMBI Global also
includes more individual issues as a
result of its differing pricing criteria:
To be included in the EMBI+, a
security must have quotes from
several dealers and meet a maximum
bid/offer spread test, while the EMBI
Global only requires that quotes be
readily available. This paved the way
for 10 additional countries to join,
resulting in increased exposure to
Asian countries (15% of total) while
decreasing exposure to Latin
American countries (66% of total) as
compared to its other indexes.
"Comparing the fund's performance to
the EMBI Global will not change how
the fund is managed. Indeed, the new
index is closer in spirit to the
approach used in the past given the
fund's experience investing in the 10
additional countries now included in
the index."
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE COUNTRIES AS OF
DECEMBER 31, 1999
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
Brazil 21.0 20.4
Argentina 15.7 14.3
Mexico 14.1 14.5
Russia 11.3 11.7
Venezuela 4.6 9.2
</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 RISK.
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE HOLDINGS AS OF
DECEMBER 31, 1999
(BY ISSUER, EXCLUDING CASH % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
EQUIVALENTS) MONTHS AGO
Federative Republic of Brazil 15.3 12.4
Republic of Argentina 11.6 10.0
United Mexican States 11.3 8.3
Russian Federation 6.3 5.4
Republic of Venezuela 4.6 9.2
49.1 45.3
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION (% OF FUND'S
NET ASSETS)
AS OF DECEMBER 31, 1999 AS OF JUNE 30, 1999
Corporate Bonds 13.4% Corporate Bonds 19.1%
Government Obligations 64.3% Government Obligations 59.9%
Supranational Obligations 0.1% Supranational Obligations 0.0%
Stocks 3.5% Stocks 5.0%
Other Investments 5.7% Other Investments 6.3%
Short-Term Investments and Short-Term Investments and
Net Other Assets 13.0% Net Other Assets 9.7%
Row: 1, Col: 1, Value: 13.4 Row: 1, Col: 1, Value: 19.1
Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 64.3 Row: 1, Col: 3, Value: 59.9
Row: 1, Col: 4, Value: 0.1 Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 3.5 Row: 1, Col: 5, Value: 5.0
Row: 1, Col: 6, Value: 5.7 Row: 1, Col: 6, Value: 6.3
Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 13.0 Row: 1, Col: 8, Value: 9.699999999999999
</TABLE>
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE
OF THE FUND'S INVESTMENTS.
INVESTMENTS DECEMBER 31, 1999
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS - 13.4%
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
CONVERTIBLE BONDS - 1.4%
MALAYSIA - 1.4%
Telekom Malaysia BHD 4% Baa3 $ 1,430,000 $ 1,229,800
10/3/04
NONCONVERTIBLE BONDS - 12.0%
ARGENTINA - 1.7%
Compania Internacional de BB ARS 1,740,000 1,444,402
Telecomunicaciones 10.375%
8/1/04 (Reg. S)
BRAZIL - 4.4%
Banco Nacional de
Desenvolvimento Economico e
Social:
12.193% 6/16/08 (g)(h) B2 980,000 886,900
12.193% 6/16/08 (Reg. S) (h) B2 3,135,000 2,837,175
3,724,075
INDONESIA - 1.7%
APP International Finance Co. Caa1 1,770,000 1,491,225
11.75% 10/1/05
MALAYSIA - 1.4%
Petroliam Nasional BHD
(Petronas):
7.625% 10/15/26 (Reg. S) A2 840,000 743,400
yankee 7.625% 10/15/26 (g) Baa3 490,000 433,650
1,177,050
MAURITIUS - 0.9%
APP International Finance
(Mauritius) Ltd.:
0% 7/7/00 (g) Caa1 460,000 423,200
0% 7/7/00 (Reg. S) Caa1 380,000 349,600
772,800
MEXICO - 1.5%
Alestra S. de R.L de CV B2 540,000 545,400
12.625% 5/15/09
Petroleos Mexicanos 9.5% BB 760,000 744,800
9/15/27
1,290,200
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
NONCONVERTIBLE BONDS -
CONTINUED
NETHERLANDS ANTILLES - 0.4%
Astra Overseas Finance BV - $ 950,000 $ 327,750
(Reg. S) 0% 6/30/06
TOTAL NONCONVERTIBLE BONDS 10,227,502
TOTAL CORPORATE BONDS 11,457,302
(Cost $10,291,885)
GOVERNMENT OBLIGATIONS (I) -
64.3%
ARGENTINA - 14.0%
City of Buenos Aires euro B1 ARS 2,450,000 2,033,785
10.5% 5/28/04
Republic of Argentina:
BOCON 2.7696% 4/1/07 (h) B1 ARS 4,769,699 3,268,737
Brady:
discount euro 6.875% 3/31/23 B1 1,510,000 1,200,450
(h)
par euro 6% 3/31/23 B1 2,470,000 1,630,200
9.75% 9/19/27 B1 2,590,000 2,331,000
11.75% 2/12/07 B1 ARS 850,000 760,857
12.125% 2/25/19 B1 630,000 664,650
11,889,679
BRAZIL - 15.3%
Federative Republic of Brazil:
Brady:
capitalization bond 8% 4/15/14 B2 3,481,912 2,620,139
debt conversion bond euro 7% B2 3,670,000 2,724,975
4/15/12 (h)
discount euro 6.9375% 4/15/24 B2 1,710,000 1,297,463
(h)
new money bond L 7% 4/15/09 B2 3,600,000 2,916,000
(Bearer) (h)
6.9375% 4/15/06 (h) B2 1,833,000 1,610,749
14.5% 10/15/09 B2 1,660,000 1,840,525
13,009,851
BULGARIA - 2.9%
Bulgarian Republic Brady:
discount A 6.5% 7/28/24 (h) B2 1,230,000 988,613
GOVERNMENT OBLIGATIONS (I) -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
BULGARIA - CONTINUED
Bulgarian Republic Brady: -
continued
FLIRB A 2.75% 7/28/12 (h) B2 $ 940,000 $ 674,450
interest arrears bond 6.5% B2 1,000,000 791,250
7/28/11 (h)
2,454,313
COLOMBIA - 1.4%
Republic of Colombia 8.7% Ba2 1,500,000 1,162,500
2/15/16
CROATIA - 0.2%
Republic of Croatia 6.4563% Baa3 207,706 190,051
7/31/06 (h)
ECUADOR - 0.7%
Ecuador Republic Brady:
discount euro 6.75% 2/28/25 Caa3 500,000 192,500
(c)(h)
par euro 4% 2/28/25 (c)(f) Caa3 500,000 171,875
past due interest euro 6.75% Caa3 1,071,202 259,766
2/28/15 (bearer) (c)(h)
624,141
JORDAN - 1.6%
Jordanian Kingdom Brady par Ba3 2,000,000 1,330,000
6% 12/23/23 (h)
KAZAKHSTAN - 0.4%
Kazakhstan Republic 13.625% B1 360,000 378,450
10/18/04 (g)
MEXICO - 11.3%
United Mexican States:
Brady:
discount A 6.9325% 12/31/19 Ba1 250,000 234,375
(h)
discount C 6.8363% 12/31/19 Ba1 470,000 440,625
(h)
discount D 6.4531% 12/31/19 Ba1 560,000 525,000
(h)
par A 6.25% 12/31/19 unit Ba1 1,270,000 1,003,300
Brady par B 6.25% 12/31/19 Ba1 4,820,000 3,807,796
unit
global bond 11.5% 5/15/26 Ba1 3,010,000 3,589,425
value recovery rights 6/30/03:
discount A (j) - 385,000 4
discount C (j) - 725,000 7
discount D (j) - 861,000 9
9,600,541
GOVERNMENT OBLIGATIONS (I) -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
PERU - 1.5%
Peruvian Republic Brady:
FLIRB 3.75% 3/7/17 (h) Ba3 $ 920,000 $ 573,850
past due interest 4.5% 3/7/17 Ba3 1,050,000 728,438
(h)
1,302,288
PHILIPPINES - 1.0%
Bangko Sentral Pilipinas 8.6% Ba1 995,000 828,338
6/15/27
POLAND - 0.4%
Republic of Poland 0% 12/21/01 A PLN 2,020,000 374,201
RUSSIA - 8.2%
Bank for Foreign Economic Ca 2,880,000 511,200
Affairs of Russia
(Vnesheconombank) interest
notes 6.9063% 12/15/15 (c)(h)
City of St. Petersburg Russia Caa1 1,340,000 857,600
9.5% 6/18/02 (Reg. S)
Russian Federation:
euro 12.75% 6/24/28 (Reg. S) B3 1,550,000 1,085,000
8.75% 7/24/05 B3 1,630,000 1,022,825
9.25% 11/27/01 B3 1,100,000 902,000
10% 6/26/07 B3 1,250,000 790,625
11% 7/24/18 (Reg. S) B3 1,800,000 1,102,500
11.75% 6/10/03 B3 640,000 496,000
Russian Federation Ministry Ca 690,000 222,525
of Finance 3% 5/14/03
6,990,275
SOUTH AFRICA - 0.5%
South African Republic 13% Baa1 ZAR 2,545,000 398,800
8/31/10
TURKEY - 0.4%
Turkish Republic 20.27% - TRL 185,439,000 355,737
7/24/02 (e)(h)
VENEZUELA - 4.5%
Republic of Venezuela:
Brady:
FLIRB A 6.875% 3/31/07 (h) B2 892,850 700,887
par W-B euro 6.75% 3/31/20 B2 1,550,000 1,059,813
global bond 13.625% 8/15/18 B2 1,310,000 1,160,988
GOVERNMENT OBLIGATIONS (I) -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
VENEZUELA - CONTINUED
Republic of Venezuela: -
continued
Oil recovery rights 4/15/20 - $ 16,705 $ 0
(j)
9.25% 9/15/27 B2 1,320,000 887,700
3,809,388
TOTAL GOVERNMENT OBLIGATIONS 54,698,553
(Cost $47,753,718)
SUPRANATIONAL OBLIGATIONS -
0.1%
International Bank for AAA PLN 340,000 80,992
Reconstruction & Development
15.5% 11/22/00 (Cost $80,022)
</TABLE>
COMMON STOCKS - 3.5%
SHARES
BRAZIL - 1.3%
Petrobras PN (Pfd. Reg.) 2,072,000 527,606
Telebras sponsored ADR (PFD 4,400 565,400
Holder)
1,093,006
HONG KONG - 0.5%
China Telecom (Hong Kong) 3,400 437,113
Ltd. sponsored ADR (a)
MEXICO - 1.3%
Cemex SA de CV:
ADR (a) 1,368 5,643
sponsored ADR (a) 14,200 395,825
Fomento Economico Mexicano SA 9,900 440,550
de CV sponsored ADR
Telefonos de Mexico SA de CV 2,100 236,250
Series L sponsored ADR
1,078,268
SINGAPORE - 0.4%
Pacific Internet Ltd. 7,600 356,725
TOTAL COMMON STOCKS 2,965,112
(Cost $2,114,486)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SOVEREIGN LOAN PARTICIPATIONS
- - 4.5%
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
ALGERIA - 0.7%
Algerian Republic loan
participation:
Series 1 - Deutsche Bank - $ 240,000 $ 183,600
6.625% 9/4/06 (h)
Series 1 - The Chase - 320,000 244,800
Manhattan Bank 6.625% 9/4/06
(h)
Series 1- Societe Generale - 240,000 183,600
6.625% 9/4/06 (h)
612,000
ANGOLA - 0.3%
Banco Nacional de Angola loan - 1,596,127 255,380
participation - Societe
Generale (a)
CAMEROON - 0.2%
Cameroon Republic:
loan participation - Societe - FRF 1,960,000 39,091
Generale (a)
loan participation - Societe - DEM 1,430,000 95,652
Generale (a)
134,743
CONGO - 0.2%
Congo Republic loan - 1,056,047 137,286
participation - Societe
Generale (a)
MOROCCO - 1.1%
Moroccan Kingdom loan
participation:
Series A - Merrill Lynch, - 307,619 278,396
Pierce, Fenner & Smith, Inc.
6.8438% 1/1/09 (h)
Series A - Morgan Guaranty - 367,100 332,226
Trust Co. 6.8438% 1/1/09 (h)
Series A - Paribas Capital - 360,000 325,800
Markets 6.8438% 1/1/09 (h)
936,422
RUSSIA - 2.0%
Bank for Foreign Economic
Affairs of Russia
(Vnesheconombank) loan
participation restructured
under 1997 Agreement:
- - BankBoston Corp. 6.9063% - 20,000 3,200
12/15/20 (c)(h)
- - Deutsche Bank 6.9063% - 380,000 60,800
12/15/20 (c)(h)
- - ING Bank NV 6.9063% - 730,000 116,800
12/15/20 (c)(h)
- - Lehman Commercial Paper, - 170,000 27,200
Inc. 6.9063% 12/15/20 (c)(h)
- - Merrill Lynch, Pierce, - 760,000 121,600
Fenner & Smith, Inc. 6.9063%
12/15/20 (c)(h)
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) loan
participation restructured
under 1997 Agreement: -
continued
- - Morgan (J.P.) Securities, - $ 3,880,000 $ 620,800
Inc. 6.9063% 12/15/20 (c)(h)
- - Paribas Capital Markets - 2,860,000 457,600
6.9063% 12/15/20 (c)(h)
- - The Chase Manhattan Bank - 2,040,000 326,400
6.9063% 12/15/20 (c)(h)
1,734,400
TOTAL SOVEREIGN LOAN 3,810,231
PARTICIPATIONS
(Cost $4,180,373)
</TABLE>
CASH EQUIVALENTS - 12.0%
MATURITY AMOUNT
Investments in repurchase $ 10,219,874 10,217,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 3.38%,
dated 12/31/99 due 1/3/00
(Cost $10,217,000)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
PURCHASED OPTIONS - 1.2%
EXPIRATION DATE/ STRIKE PRICE UNDERLYING FACE AMOUNT
RUSSIA - 1.1%
The Deutsche Bank Call Option April/00 8.75 $ 2,064,000 961,050
on $12,900,000 notional
amount of Bank for Foreign
Economic Affairs of Russia
(Vnesheconombank) loan
participation restructured
under 1997 Agreement -
Deutsche Bank 6.9063%
12/15/20
PURCHASED OPTIONS - CONTINUED
EXPIRATION DATE/ STRIKE PRICE UNDERLYING FACE AMOUNT VALUE (NOTE 1)
VENEZUELA - 0.1%
The Deutsche Bank Call Option January/00 78.25 $ 5,476,580 $ 83,785
on $7,285,680 notional
amount of Republic of
Venezuela Brady debt
conversion bond euro 6.3125%
12/18/07
TOTAL PURCHASED OPTIONS 1,044,835
(Cost $480,278)
TOTAL INVESTMENT PORTFOLIO - 84,274,025
99.0% (Cost $75,117,762)
NET OTHER ASSETS - 1.0% 814,137
NET ASSETS - 100% $ 85,088,162
</TABLE>
SECURITY TYPE ABBREVIATION
FLIRB - Front Loaded Interest
Reduction Bonds
CURRENCY ABBREVIATIONS
ARS - Argentine peso
DEM - German deutsche mark
FRF - French franc
PLN - Polish zloty
TRL - Turkish lira
ZAR - South African rand
LEGEND
(a) Non-income producing
(b) S&P 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) Principal amount in thousands.
(f) 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.
(g) 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 $2,122,200 or 2.5% of net assets.
(h) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(i) 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.
(j) Quantity represents share amount.
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 0.9% AAA, AA, A 0.5%
Baa 2.7% BBB 8.3%
Ba 16.9% BB 32.8%
B 48.9% B 24.4%
Caa 4.4% CCC 5.3%
Ca, C 0.9% CC, C 4.2%
D 0.9%
The percentage not rated by Moody's or S&P amounted to 5.3%. FMR has
determined that unrated debt securities that are lower quality account
for 5.3% of the total value of investment in securities.
INCOME TAX INFORMATION
At December 31, 1999, the aggregate cost of investment securities for
income tax purposes was $75,673,517. Net unrealized appreciation
aggregated $8,600,508, of which $10,117,504 related to appreciated
investment securities and $1,516,996 related to depreciated investment
securities.
At December 31, 1999, the fund had a capital loss carryforward of
approximately $24,164,000 of which $20,267,000 and $3,897,000 will
expire on December 31, 2006 and 2007, respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
ASSETS
Investment in securities, at $ 84,274,025
value (including repurchase
agreements of $10,217,000)
(cost $75,117,762) - See
accompanying schedule
Cash 541,870
Receivable for fund shares 167,126
sold
Dividends receivable 2,456
Interest receivable 1,458,774
TOTAL ASSETS 86,444,251
LIABILITIES
Payable for investments $ 665,125
purchased
Payable for fund shares 288,202
redeemed
Distributions payable 246,490
Accrued management fee 45,970
Distribution fees payable 27,343
Other payables and accrued 82,959
expenses
TOTAL LIABILITIES 1,356,089
NET ASSETS $ 85,088,162
Net Assets consist of:
Paid in capital $ 100,874,944
Undistributed net investment 332,924
income
Accumulated undistributed net (25,271,321)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 9,151,615
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 85,088,162
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
DECEMBER 31, 1999
CALCULATION OF MAXIMUM $9.68
OFFERING PRICE CLASS A: NET
ASSET VALUE and redemption
price per share
($2,139,563 (divided by)
220,927 shares)
Maximum offering price per $10.16
share (100/95.25 of $9.68)
CLASS T: NET ASSET VALUE and $9.67
redemption price per share
($55,714,796 (divided by)
5,759,854 shares)
Maximum offering price per $10.02
share (100/96.50 of $9.67)
CLASS B: NET ASSET VALUE and $9.72
offering price per share
($19,054,130 (divided by)
1,960,442 shares) A
CLASS C: NET ASSET VALUE and $9.70
offering price per share
($2,401,943 (divided by)
247,522 shares) A
INSTITUTIONAL CLASS: NET $9.62
ASSET VALUE, offering price
and redemption price per
share ($5,777,730 (divided
by) 600,705 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
INVESTMENT INCOME $ 105,209
Dividends
Interest 8,165,254
8,270,463
Less foreign taxes withheld (8,769)
TOTAL INCOME 8,261,694
EXPENSES
Management fee $ 511,880
Transfer agent fees 177,742
Distribution fees 308,306
Accounting fees and expenses 60,633
Non-interested trustees' 361
compensation
Custodian fees and expenses 37,955
Registration fees 55,493
Audit 46,450
Legal 707
Interest 298
Miscellaneous 1,103
Total expenses before 1,200,928
reductions
Expense reductions (5,723) 1,195,205
NET INVESTMENT INCOME 7,066,489
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 2,903,309
Foreign currency transactions 39,212 2,942,521
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 13,268,430
Assets and liabilities in 2,118 13,270,548
foreign currencies
NET GAIN (LOSS) 16,213,069
NET INCREASE (DECREASE) IN $ 23,279,558
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1999 YEAR ENDED DECEMBER 31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 7,066,489 $ 9,556,479
income
Net realized gain (loss) 2,942,521 (24,724,723)
Change in net unrealized 13,270,548 (7,288,547)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 23,279,558 (22,456,791)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (6,921,285) (8,112,285)
From net investment income
Return of capital - (1,692,592)
TOTAL DISTRIBUTIONS (6,921,285) (9,804,877)
Share transactions - net (6,842,513) (12,668,733)
increase (decrease)
TOTAL INCREASE (DECREASE) 9,515,760 (44,930,401)
IN NET ASSETS
NET ASSETS
Beginning of period 75,572,402 120,502,803
End of period (including $ 85,088,162 $ 75,572,402
under (over) distribution
of net investment income of
$332,924 and $(632,109),
respectively)
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED DECEMBER 31, 1999 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 .821 .943 .953 .274
Net realized and unrealized 1.884 (3.275) .891 1.574
gain (loss)
Total from investment 2.705 (2.332) 1.844 1.848
operations
Less Distributions
From net investment income (.805) (.834) (.984) (.238)
From net realized gain - - (1.460) (.410)
Return of capital - (.174) - -
Total distributions (.805) (1.008) (2.444) (.648)
Net asset value, end of period $ 9.680 $ 7.780 $ 11.120 $ 11.720
TOTAL RETURN B, C 36.35% (21.94)% 16.52% 17.71%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,140 $ 2,829 $ 2,313 $ 478
(000 omitted)
Ratio of expenses to average 1.40% F 1.40% F 1.40% F 1.40% A, F
net assets
Ratio of expenses to average 1.40% 1.39% G 1.38% G 1.40% A
net assets after expense
reductions
Ratio of net investment 9.57% 10.05% 7.74% 7.31% A
income to average net assets
Portfolio turnover rate 275% 514% 660% 410%
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
YEARS ENDED DECEMBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 7.770 $ 11.110 $ 11.710 $ 9.280 $ 9.520
of period
Income from Investment
Operations
Net investment income .815 C .975 C .877 C .758 C .860
Net realized and unrealized 1.886 (3.319) .961 2.832 (.323)
gain (loss)
Total from investment 2.701 (2.344) 1.838 3.590 .537
operations
Less Distributions
From net investment income (.801) (.824) (.978) (.750) (.777)
From net realized gain - - (1.460) (.410) -
Return of capital - (.172) - - -
Total distributions (.801) (.996) (2.438) (1.160) (.777)
Net asset value, end of period $ 9.670 $ 7.770 $ 11.110 $ 11.710 $ 9.280
TOTAL RETURN A, B 36.34% (22.07)% 16.47% 40.41% 6.99%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 55,715 $ 53,643 $ 93,228 $ 78,861 $ 36,205
(000 omitted)
Ratio of expenses to average 1.42% 1.50% 1.47% 1.49% 1.50%D
net assets
Ratio of expenses to average 1.42% 1.48% E 1.45% E 1.48% E 1.50%
net assets after expense
reductions
Ratio of net investment 9.54% 9.96% 7.08% 7.23% 9.32%
income to average net assets
Portfolio turnover rate 275% 514% 660% 410% 305%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E 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
YEARS ENDED DECEMBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 7.800 $ 11.160 $ 11.750 $ 9.300 $ 9.520
of period
Income from Investment
Operations
Net investment income .761 C .907 C .806 C .686 C .835
Net realized and unrealized 1.904 (3.334) .956 2.853 (.342)
gain (loss)
Total from investment 2.665 (2.427) 1.762 3.539 .493
operations
Less Distributions
From net investment income (.745) (.772) (.892) (.679) (.713)
From net realized gain - - (1.460) (.410) -
Return of capital - (.161) - - -
Total distributions (.745) (.933) (2.352) (1.089) (.713)
Net asset value, end of period $ 9.720 $ 7.800 $ 11.160 $ 11.750 $ 9.300
TOTAL RETURN A, B 35.58% (22.66)% 15.70% 39.61% 6.38%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 19,054 $ 16,703 $ 23,576 $ 17,746 $ 9,486
(000 omitted)
Ratio of expenses to average 2.10% 2.15% D 2.15% 2.15% D 2.25% D
net assets
Ratio of expenses to average 2.10% 2.13% E 2.13% E 2.15% 2.25%
net assets after expense
reductions
Ratio of net investment 8.86% 9.36% 6.48% 6.56% 8.48%
income to average net assets
Portfolio turnover rate 275% 514% 660% 410% 305%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
FINANCIAL HIGHLIGHTS - CLASS C
YEARS ENDED DECEMBER 31, 1999 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 .750 .792 .154
Net realized and unrealized 1.893 (3.191) .322
gain (loss)
Total from investment 2.643 (2.399) .476
operations
Less Distributions
From net investment income (.733) (.762) (.286)
From net realized gain - - (1.270)
Return of capital - (.159) -
Total distributions (.733) (.921) (1.556)
Net asset value, end of period $ 9.700 $ 7.790 $ 11.110
TOTAL RETURN B, C 35.31% (22.47)% 4.16%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,402 $ 964 $ 66
(000 omitted)
Ratio of expenses to average 2.23% 2.25% F 2.25% A, F
net assets
Ratio of expenses to average 2.23% 2.23% G 2.25% A
net assets after expense
reductions
Ratio of net investment 8.73% 9.30% 9.04% A
income to average net assets
Portfolio turnover rate 275% 514% 660%
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
YEARS ENDED DECEMBER 31, 1999 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 .837 D .931 D .860 D .786 D .393
Net realized and unrealized 1.868 (3.229) 1.008 2.779 .876
gain (loss)
Total from investment 2.705 (2.298) 1.868 3.565 1.269
operations
Less Distributions
From net investment income (.825) (.846) (.998) (.785) (.389)
From net realized gain - - (1.460) (.410) -
Return of capital - (.176) - - -
Total distributions (.825) (1.022) (2.458) (1.195) (.389)
Net asset value, end of period $ 9.620 $ 7.740 $ 11.060 $ 11.650 $ 9.280
TOTAL RETURN B, C 36.59% (21.75)% 16.84% 40.21% 15.52%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 5,778 $ 1,434 $ 1,320 $ 2,639 $ 201
(000 omitted)
Ratio of expenses to average 1.14% 1.25% F 1.25% F 1.25% F 1.25% A, F
net assets
Ratio of expenses to average 1.13% G 1.24% G 1.23% G 1.25% 1.25% A
net assets after expense
reductions
Ratio of net investment 9.83% 10.02% 6.85% 7.46% 9.09% A
income to average net assets
Portfolio turnover rate 275% 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 December 31, 1999
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. Foreign
governments may also impose taxes on other payments or transactions
with respect to foreign securities. 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, 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 reductions in
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. The underlying face amount at value of any open options
at period end is shown in the schedule of investments under the
caption "Purchased Options." This amount reflects each contract's
exposure to the underlying instrument at period end. Losses may arise
from changes in the value of the underlying instruments, 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
2. OPERATING POLICIES - CONTINUED
OPTIONS - CONTINUED
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.
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 $3,810,231 or 4.5% of net
assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $192,450,827 and $201,420,489, 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 .0920% 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 annual rate of .68% of average net assets.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SUB-ADVISER FEE. FMR, on behalf of the fund, entered into sub-advisory
agreements with Fidelity Management & Research (U.K.) Inc., Fidelity
Management & Research (Far East) Inc., Fidelity International
Investment Advisors (FIIA), and Fidelity Investments Japan Limited
(FIJ). In addition, FIIA entered into a sub-advisory agreement with
its subsidiary, Fidelity International Investment Advisors (U.K.)
Limited (FIIA(U.K.)L). Under the sub-advisory arrangements, FMR may
receive investment advice and research services and may grant the
sub-advisers investment management authority to buy and sell
securities. FMR pays its sub-advisers either a portion of its
management fee or a fee based on costs incurred for these services.
FIIA pays FIIA(U.K.)L a fee based on costs incurred for either
service.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Board of Trustees has adopted separate Distribution and
Service 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 $ 3,226 $ 40
CLASS T 128,769 22,142
CLASS B 157,802 113,994
CLASS C 18,509 14,763
$ 308,306 $ 150,939
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.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
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 is paid to securities dealers, banks and other financial
institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO FDC RETAINED BY FDC
CLASS A $ 6,995 $ 2,324
CLASS T 32,261 13,636
CLASS B 64,093 64,093*
CLASS C 1,717 1,717*
$ 105,066 $ 81,770
* 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
(collectively referred to as the transfer agent). 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 $ 7,687 .36
CLASS T 115,484 .22
CLASS B 44,838 .26
CLASS C 5,317 .29
INSTITUTIONAL CLASS 4,416 .19
$ 177,742
ACCOUNTING FEES. Fidelity Service Company, Inc., an affilate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
5. 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 the Class A's operating expenses
(excluding interest, taxes, certain securities lending fees, brokerage
commissions and extraordinary expenses, if any) above an annual rate
of 1.40% of average net assets. For the period, the reimbursement
reduced the expenses by $1,148.
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 $2,560 under this arrangement.
In addition, through an arrangement with the fund's custodian, 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 $2,015 under this 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 of shares for the periods
were as follows:
YEAR ENDED DECEMBER 31,
1999 1998
FROM NET INVESTMENT INCOME
Class A $ 198,550 $ 219,978
Class T 4,792,465 6,143,721
Class B 1,508,455 1,620,830
Class C 159,916 37,441
Institutional Class 261,899 90,315
Total $ 6,921,285 $ 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
$ 6,921,285 $ 9,804,877
10. SHARE TRANSACTIONS.
Transactions for each class of shares for the periods were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED
DECEMBER 31,
1999 1998 1999 1998
CLASS A Shares sold 85,049 235,098 $ 725,615 $ 2,083,069
Reinvestment of distributions 19,735 24,274 172,036 221,948
Shares redeemed (247,480) (103,745) (1,984,096) (983,680)
Net increase (decrease) (142,696) 155,627 $ (1,086,445) $ 1,321,337
CLASS T Shares sold 2,796,838 2,933,653 $ 23,706,190 $ 27,650,341
Reinvestment of distributions 476,741 698,169 4,150,699 6,462,132
Shares redeemed (4,418,691) (5,118,827) (37,034,387) (49,719,962)
Net increase (decrease) (1,145,112) (1,487,005) $ (9,177,498) $ (15,607,489)
CLASS B Shares sold 565,451 816,033 $ 4,858,849 $ 7,761,777
Reinvestment of distributions 134,352 175,037 1,179,380 1,605,746
Shares redeemed (879,623) (964,234) (7,521,597) (9,294,273)
Net increase (decrease) (179,820) 26,836 $ (1,483,368) $ 73,250
CLASS C Shares sold 255,248 170,399 $ 2,187,018 $ 1,580,351
Reinvestment of distributions 12,291 4,144 108,919 34,839
Shares redeemed (143,693) (56,813) (1,240,277) (482,761)
Net increase (decrease) 123,846 117,730 $ 1,055,660 $ 1,132,429
INSTITUTIONAL CLASS Shares 749,979 330,391 $ 6,571,465 $ 2,916,407
sold
Reinvestment of distributions 24,724 10,655 223,316 96,223
Shares redeemed (359,249) (275,152) (2,945,643) (2,600,890)
Net increase (decrease) 415,454 65,894 $ 3,849,138 $ 411,740
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series VIII and the Shareholders
of Fidelity Advisor Emerging Markets Income Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Advisor Emerging Markets Income Fund (a fund of Fidelity
Advisor Series VIII) at December 31, 1999, and the results of its
operations, the changes in its net assets and the financial
highlights for the periods indicated, in conformity with accounting
principles generally accepted in the United States. These financial
statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fidelity Advisor
Emerging Markets Income Fund's management; our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States which
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation
of securities at December 31, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion
expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 15, 2000
DISTRIBUTIONS
The percentage of dividends distributed during the fiscal year
representing income derived from sources within, and taxes paid to,
foreign countries or possessions of the United States are as follows:
INCOME TAXES
Institutional Class 100% less than 1%
The fund will notify shareholders in January 2000 of amounts for use
in preparing 1999 income tax returns.
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
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
* 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
Ned C. Lautenbach
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-ANN-0200 88339
1.540212.102
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 High Income 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
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(2_FIDELITY_LOGOS)(registered trademark)
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82 Devonshire St., Boston, MA 02109
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