SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 2-90649)
UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 52 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [x]
Amendment No. [ ]
Fidelity Investment Trust
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address Of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: 617-570-7000
Arthur S. Loring, Esq., 82 Devonshire Street, Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
( ) Immediately upon filing pursuant to paragraph (b)
(x) On February 24, 1994 pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)
( ) On ( ) pursuant to paragraph (a) of Rule 485
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and filed the notice required by such Rule
on February 16, 1994.
FIDELITY INVESTMENT TRUST:
FIDELITY SHORT-TERM WORLD INCOME FUND
FIDELITY GLOBAL BOND FUND
FIDELITY NEW MARKETS INCOME FUND
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER
PROSPECTUS PROSPECTUS SECTION
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1................................................. Cover Page
...
2a................................................ Expenses
..
Contents; The Funds at a Glance; Who May Want to Invest
b,c...............................................
3a............................................... Financial Highlights
*
b.................................................
.
Performance
c.................................................
.
4a(i) Charter
..............................................
The Funds at a Glance; Investment Principles; Securities and
(ii).............................................. Investment Practices; Fundamental Investment Policies and
Restrictions
Securities and Investment Practices
b.................................................
.
Who May Want to Invest; Investment Principles; Securities and
c................................................. Investment Practices
.
5a Charter
.................................................
Doing Business with Fidelity; Charter
b(i)..............................................
b(ii) Charter; Your Account
............................................
Expenses; Breakdown of Expenses
b(iii)...........................................
.
Charter
c,d...............................................
FMR and Its Affiliates
d.................................................
.
Expenses; Breakdown of Expenses
e.................................................
.
Charter
f..................................................
.
6a(i)............................................ Charter
...
a(ii) How to Buy Shares; How to Sell Shares; Transaction Details;
............................................ Exchange Privilege
*
a(iii)...........................................
*
b.................................................
Exchange Privilege
c................................................
*
d.................................................
Doing Business with Fidelity; How to Buy Shares; How to Sell
e................................................. Shares; Investor Services
Dividends, Capital Gains, and Taxes
f,g...............................................
7a................................................ Charter
..
How to Buy Shares; Transaction Details
b.................................................
.
*
c.................................................
.
How to Buy Shares
d.................................................
.
*
e.................................................
.
Breakdown of Expenses
f..................................................
.
8................................................. How to Buy Shares, Investor Services; Transaction Details;
.. Exchange Privilege
9................................................. *
..
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* Not Applicable
Part B Statement of Additional Information Section
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10, Cover Page
11........................................
12............................................. *
.
13a-c....................................... Investment Policies and Limitations
Portfolio Transactions
d............................................
14a, Trustees and Officers
b........................................
*
c.............................................
15a, *
b.........................................
Trustees and Officers
c.............................................
16a(i)....................................... FMR
..
Trustees and Officers
a(ii)........................................
a(iii), Management Contracts
b...................................
*
c............................................
*
d,e..........................................
Distribution and Service Plans
f............................................
*
g.............................................
Description of the Trust
h.............................................
Contracts with Companies Affiliated with FMR
i.............................................
17a........................................... Portfolio Transactions
.
*
b............................................
Portfolio Transactions
c............................................
*
d,e.........................................
18a........................................... Description of the Trust
..
*
b.............................................
19a........................................... Additional Purchase and Redemption Information
..
Valuation of Portfolio Securities; Additional Purchase and
b............................................ Redemption Information
*
c.............................................
20............................................. Distributions and Taxes
..
21a(i),(ii).................................. Contracts with Companies Affiliated with FMR
..
*
a(iii),b,c..................................
22a........................................... *
..
Performance
b.............................................
23............................................. Financial Statements
..
</TABLE>
* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
A Statement of Additional Information dated February 24, 1994 has been
filed with the Securities and Exchange Commission, and is incorporated
herein by reference (is legally considered a part of this prospectus). The
Statement of Additional Information is available free upon request by
calling Fidelity at 1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or endorsed or
guaranteed by, any bank, savings association, insured depositary
institution, or government agency, nor are they federally insured or
otherwise protected by the FDIC, the Federal Reserve Board, or any other
agency. Investments in the funds involve investment risk, including
possible loss of principal. The value of the investment and its return will
fluctuate and are not guaranteed. When sold, the value of the investment
may be higher or lower than the amount originally invested.
These funds invest in debt securities around
the world.
FIDELITY'S
INTERNATIONAL BOND
FUNDS
FIDELITY SHORT-TERM WORLD INCOME FUND seeks high current income and
preservation of capital by investing in short-term securities.
FIDELITY GLOBAL BOND FUND seeks high total return by focusing on a broad
range of debt securities.
FIDELITY NEW MARKETS INCOME FUND seeks high current income and capital
appreciation by focusing on issuers in emerging markets. Many of the fund's
investments are lower-quality debt securities, which carry increased risk
of default and price volatility, and may present problems of liquidity and
valuation.
PROSPECTUS
FEBRUARY 24, 1994(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
LIKE ALL MUTUAL FUNDS,
THESE SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND
EXCHANGE COMMISSION OR
ANY STATE SECURITIES
COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY
REPRESENTATION TO THE
CONTRARY IS A CRIMINAL
OFFENSE.
ITL-pro-294
CONTENTS
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KEY FACTS THE FUNDS AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES AND PERFORMANCE EXPENSES Each fund's yearly operating expenses.
FINANCIAL HIGHLIGHTS A summary of each fund's
financial data.
PERFORMANCE How each fund has done over time.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
TYPES OF ACCOUNTS Different ways to set up your
account, including tax-sheltered retirement plans.
HOW TO BUY SHARES Opening an account and making
additional investments.
HOW TO SELL SHARES Taking money out and closing
your account.
INVESTOR SERVICES Services to help you manage
your account.
DIVIDENDS, CAPITAL GAINS, AND TAXES
SHAREHOLDER AND TRANSACTION DETAILS Share price calculations and the
ACCOUNT POLICIES timing of purchases and redemptions.
EXCHANGE RESTRICTIONS
THE FUNDS IN DETAIL CHARTER How each fund is organized.
BREAKDOWN OF EXPENSES How operating costs are
calculated and what they include.
INVESTMENT PRINCIPLES Each fund's overall approach
to investing.
SECURITIES AND INVESTMENT PRACTICES
</TABLE>
<r>KEY FACTS</r>
THE FUNDS AT A GLANCE
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager. Foreign affiliates of FMR
help choose investments for the funds.
As with any mutual fund, there is no assurance that a fund will achieve its
goal.
SHORT-TERM WORLD INCOME
GOAL: High current income with preservation of capital.
STRATEGY: Invests in short-term securities and money market instruments
issued anywhere in the world.
SIZE: As of December 31, 1993, the fund had over $ 422 million in
assets.
GLOBAL BOND
GOAL: High total investment return with an emphasis on income.
STRATEGY: Invests in a broad range of debt securities issued anywhere in
the world.
SIZE: As of December 31, 1993, the fund had over $686 m illion in
assets.
NEW MARKETS INCOME
GOAL: High current income, although the fund also pursues capital
appreciation.
STRATEGY: Invests mainly in debt securities and other instruments of
issuers in emerging markets around the world.
SIZE: As of December 31, 1993, the fund had over $ 286 million in
assets.
WHO MAY WANT TO INVEST
These non-diversified funds may be appropriate for investors who want to
invest in debt securities issued around the world. Short-Term World Income
is designed for investors looking for income from short-term securities.
Global Bond is designed for those looking for both income and the potential
for capital growth, and can accept a higher degree of risk. New Markets
Income is designed for investors seeking higher income and capital
appreciation than both Short-Term World Income or Global Bond, but who are
also willing to accept the even greater risks and volatility from
investments in emerging market securities.
By themselves, these funds do not constitute a balanced investment
plan. The value of the funds' investments and the income they generate will
vary from day to day, generally reflecting changes in interest rates,
market conditions, and other political and economic news. Each fund's
performance will also depend on currency values, foreign economies, and
other factors related to foreign investments. When you sell your shares,
they may be worth more or less than what you paid for them.
EXPENSES AND PERFORMANCE
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund.
Maximum sales charge on purchases and
reinvested dividends None
Deferred sales charge on redemptions None
Exchange fee None
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to FMR. The funds also incur other
expenses for services such as maintaining shareholder records and
furnishing shareholder statements and fund reports. A fund's expenses are
factored into its share price or dividends and are not charged directly to
shareholder accounts (see page ).
The following are projections based on historical expenses, and are
calculated as a percentage of average net assets.
SHORT-TERM WORLD INCOME
Management fee .62 %
12b-1 fee None
Other expenses .38 %
Total fund operating expenses 1.00 %
GLOBAL BOND
Management fee .71 %
12b-1 fee None
Other expenses .46 %
Total fund operating expenses 1.17 %
NEW MARKETS INCOME
Management fee (after reimbursement) .28 %
12b-1 fee None
Other expenses .92 %
Total fund operating expenses 1.20 %
EXAMPLES: Let's say, hypothetically, that each fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses if you
close your account after the number of years indicated:
After 1 After 3 After 5 After 10
year years years years
Short-Term World $ 10 $ 32 $ 55 $ 122
Global Bond $ 12 $ 37 $ 64 $ 142
New Markets $ 12 $ 38 n/a n/a
Income
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
FMR has voluntarily agreed to temporarily limit New Markets Income 's
operating expenses to 1.20 % of the fund's average net
assets. If this agreement were not in effect, estimates of the
fund's management fee, other expenses, and total operating expenses
would be .58 %, .92 %, and 1.50 %, respectively.
Expenses eligible for reimbursement do not include interest, taxes,
brokerage commissions, or extraordinary expenses.
FINANCIAL HIGHLIGHTS
The tables that follow have been audited by Coopers & Lybrand,
independent accountants, for Short-Term World Income and Global Bond, and
by Price Waterhouse, independent accountants, for New Markets Income .
Their unqualified reports are included in each fund's Annual Report.
Each fund's Annual Report is incorporated by reference into (is legally
a part of) the Statement of Additional Information.
SHORT-TERM WORLD INCOME
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1.Selected Per-Share Data and Ratios
2.Periods ended December 31 1991A 1992B 1992G 1993
3.Net asset value, beginning of period $ 10.000 $ 10.040 $ 9.800 $ 9.680
4.Income from Investment Operations .061 .835 .191 .564
Net investment income
5. Net realized and unrealized gain (loss) on
investments .037 (.338) (.203) .621
6. Total from investment operations .098 .497 (.012) 1.185
7.Less Distributions (.058) (.737) (.108) (.543)
From net investment income
8. In excess of net investment income - - - (.132)
9. Total distributions (.058) (.737) (.108) (.675)
10.Net asset value, end of period $ 10.040 $ 9.800 $ 9.680 $ 10.190
11.Total returnC,D .98% 5.10% (.12)% 12.59%
12.Net assets, end of period (000 omitted) $ 44,318 $ 648,448 $ 458,846 $ 422,602
13.Ratio of expenses to average net assets 1.00%E, 1.09% 1.20%E, 1.00%
F F
14.Ratio of expenses to average net assets before
expense reductions 2.87%E, 1.09% 1.23%E, 1.00%
F F
15.Ratio of net investment income to average net
assets 9.07%F 9.04% 8.63%F 8.00%
16.Portfolio turnover rate 62%F 154% 117%F 160%
</TABLE>
A FROM OCTOBER 4, 1991 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31,
1991.
B FISCAL YEAR ENDED OCTOBER 31
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
D THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
E DURING THE PERIODS SHOWN, FMR VOLUNTARILY REIMBURSED THE FUND FOR
TOTAL OPERATING EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS,
AND EXTRAORDINARY EXPENSES) ABOVE A CERTAIN RATE OF AVERAGE NET ASSETS.
F ANNUALIZED
G TWO-MONTH PERIOD ENDED DECEMBER 31, 1992
GLOBAL BOND
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17.Selected Per-Share Data and Ratios
1987I 1988J 1989J 1990J 1991J 1992D,J 1992K 1993
Periods ended December 31
18.Net asset value, beginning of period
$ 10.00 $ 10.45 $ 11.47 $ 11.22 $ 12.19 $ 11.980 $ 11.830 $11.340
19.Income from Investment Operations
.56 1.08 .82E .89E .74 .839 .145 .731
20. Net realized and unrealized gain (loss) on investments
.45 .07 (.17) .57 .52 .110H (.173) 1.648
21. Total from investment operations
1.01 1.15 .65 1.46 1.26 .949 (.028) 2.379
22.Less Distributions
(.56) (.13) (.81) (.49) (1.03) (1.099) (.332) (.629)
From net investment income
23. From net realized gain on investments
- - (.09) - (.44) - (.130)B (.280)
B B
24. In excess of net realized gain
- - - - - - - (.200)
25. Total distributions (.56) (.13) (.90)
(.49) (1.47) (1.099) (.462) (1.109)
26.Net asset value, end of period
$ 10.45 $ 11.47 $ 11.22 $ 12.19 $ 11.98 $ 11.830 $ 11.340 $12.610
27.Total returnF,G
10.30 11.07 6.04 13.45 11.31 8.18 (.23) 21.91
% % % % % % % %
28.Net assets, end of period (000 omitted)
$ 43,846 $ 56,180 $ 56,520 $ 126,44 $ 160,08 $ 332,33 $ 279,204 $686,25
4 3 3 2
29.Ratio of expenses to average net assetsC
.95 1.14 1.50 1.40 1.35 1.23 1.37% 1.17
% % % % % % A %
30.Ratio of expenses to average net assets before expense
1.74 1.68 1.65 1.40 1.35 1.23 1.37% 1.17
reductionsC
% % % % % % A %
31.Ratio of net investment income to average net assets
7.14 7.61 7.56 7.82 7.92 8.02 6.92% 6.79
% % % % % % A %
32.Portfolio turnover rate
297 227 150 154 228 81 142% 198
% % % % % % A %
</TABLE>
NEW MARKETS INCOME
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33.Selected Per-Share Data and Ratios
1993L
Period ended December 31
34.Net asset value, beginning of period $ 10.000
35.Income from Investment Operations
.486E
Net investment income
36. Net realized and unrealized gain (loss) on investments 3.302
37. Total from investment operations 3.788
38.Less Distributions
(.486)
From net investment income
39. In excess of net investment income (.062)
40. From net realized gain on investments (.170)
41. Total distributions (.718)
42.Net asset value, end of period $ 13.070
43.Total returnF,G 38.84%
44.Net assets, end of period (000 omitted) $ 286,593
45.Ratio of expenses to average net assets 1.24%A
,M
46.Ratio of expenses to average net assets before expense reductions 1.68%A
,M
47.Ratio of net investment income to average net assets 6.29%A
48.Portfolio turnover rate 324%A
</TABLE>
A ANNUALIZED
B INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN
CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
C DURING THE PERIOD JULY 15, 1988 THROUGH OCTOBER 31, 1989, THE FUND'S
INVESTMENT ADVISER VOLUNTARILY REIMBURSED THE FUND TO THE EXTENT THAT THE
AGGREGATE OPERATING EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE
COMMISSIONS AND EXTRAORDINARY EXPENSES) OF THE FUND WERE IN EXCESS OF AN
ANNUAL RATE OF 1.50% OF THE AVERAGE NET ASSETS. DURING THE PERIOD MAY 1,
1988 TO JULY 14, 1988, FMR VOLUNTARILY REIMBURSED THE FUND TO THE EXTENT
THAT THE AGGREGATE OPERATING EXPENSES OF THE FUND WERE IN EXCESS OF AN
ANNUAL RATE OF 1.25% OF THE AVERAGE NET ASSETS. PRIOR TO MAY 1, 1988, FMR
VOLUNTARILY REIMBURSED THE FUND TO THE EXTENT THAT THE AGGREGATE OPERATING
EXPENSES OF THE FUND WERE IN EXCESS OF AN ANNUAL RATE OF .95% OF THE
AVERAGE NET ASSETS.
D EFFECTIVE JULY 1, 1992 DIVIDENDS FROM NET INVESTMENT INCOME WERE
DECLARED DAILY AND PAID MONTHLY.
E NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED USING AVERAGE
SHARES OUTSTANDING DURING THE YEAR.
F TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
G THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
H THE AMOUNT IN THIS CAPTION, WHILE MATHEMATICALLY DETERMINABLE BY THE
SUMMATION OF AMOUNTS COMPUTED DAILY AS SHARES WERE SOLD OR REPURCHASED, IS
ALSO THE BALANCING FIGURE DERIVED FROM THE OTHER FIGURES IN THE STATEMENT
AND HAS BEEN SO COMPUTED. THE AMOUNT SHOWN FOR THE YEAR ENDED OCTOBER 31,
1992 FOR A SHARE OUTSTANDING THROUGHOUT THIS PERIOD DOES NOT ACCORD WITH
THE NET LOSS ON INVESTMENTS FOR THE PERIOD, BECAUSE OF THE TIMING OF SALES
AND REPURCHASES OF THE FUND'S SHARES IN RELATION TO FLUCTUATING MARKET
VALUES FOR THE INVESTMENTS OF THE FUND.
I FROM DECEMBER 30, 1986 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31,
1987
J FISCAL YEAR ENDED OCTOBER 31
K TWO-MONTH PERIOD ENDED DECEMBER 31, 1992
L FROM MAY 4, 1993 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1993
M DURING THE PERIODS SHOWN, FMR VOLUNTARILY REIMBURSED THE FUND FOR
TOTAL OPERATING EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS,
AND EXTRAORDINARY EXPENSES) ABOVE A CERTAIN RATE OF AVERAGE NET ASSETS.
PERFORMANCE
Bond fund performance can be measured as TOTAL RETURN or YIELD. The
total returns that follow are based on historical fund results and do not
reflect the effect of taxes.
Each fund's fiscal year runs from January 1 through December
31 . The tables below show each fund's performance over past fiscal years
compared to a measure of inflation. To help you compare these funds to
other funds, the charts on page display calendar-year performance.
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods ended Past 1 Past 5 Life of
December 31, 1993 year years fund
Short-Term World Income 12.59% .n/a 8.19%A
Global Bond 21.91% 11.70% 11.60%B
New Markets Income .n/a .n/a .n/a
Consumer Price Index 2.75% 3.89% .n/a
CUMULATIVE TOTAL RETURNS
Fiscal periods ended Past 1 Past 5 Life of
December 31, 1993 year years fund
Short-Term World Income 12.59% .n/a 19.35%A
Global Bond 21.91% 73.92% 115.87%B
New Markets Income .n/a .n/a 38.84%C
Consumer Price Index 2.75% 21.00% .n/a
A FROM OCTOBER 4, 1991
B FROM DECEMBER 30, 1986
C FROM MAY 4, 1993
EXPLANATION OF TERMS
UNDERSTANDING PERFORMANCE
Because these funds invest in fixed-income
securities, their performance is related to changes
in interest rates. Funds that hold short-term bonds
are usually less affected by changes in interest
rates than long-term bond funds. For that reason,
long-term bond funds typically offer higher
returns and carry more risk than short-term bond
funds.
(checkmark)
TOTAL RETURN is the change in value of an investment in a fund over a
given period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results. Average annual total returns covering
periods of less than one year assume that performance will remain constant
for the rest of the year.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all stock and bond
funds. Because this differs from other accounting methods, the quoted yield
may not equal the income actually paid to shareholders. This difference may
be significant for funds whose investments are denominated in foreign
currencies.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGES, which assume reinvestment of
distributions, are published by Lipper Analytical Services, Inc.
Short-Term World Income compares its performance to the Lipper
Short World Multi-Market Income Funds Average , and Global Bond
and New Markets Income compare to the Lipper General World Income Funds
Average . These averages currently reflect the performance of over 39 and
65 mutual funds with similar objectives, respectively.
The funds' recent strategies, performance, and holdings are detailed
twice a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
SHORT-TERM WORLD INCOME
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Calendar year total returns
1992 1993
SHORT-TERM WORLD INCOME
4.83% 12.59
%
Competitive Funds Average
-0.73 5.44%
%
</TABLE>
Row: 1, Col: 1, Value: 0.0
Row: 1, Col: 2, Value: 0.0
Row: 2, Col: 1, Value: 0.0
Row: 2, Col: 2, Value: 0.0
Row: 3, Col: 1, Value: 0.0
Row: 3, Col: 2, Value: 0.0
Row: 4, Col: 1, Value: 0.0
Row: 4, Col: 2, Value: 0.0
Row: 5, Col: 1, Value: 0.0
Row: 5, Col: 2, Value: 0.0
Row: 6, Col: 1, Value: 0.0
Row: 6, Col: 2, Value: 0.0
Row: 7, Col: 1, Value: 0.0
Row: 7, Col: 2, Value: 0.0
Row: 8, Col: 1, Value: 0.0
Row: 8, Col: 2, Value: 0.0
Row: 9, Col: 1, Value: 4.83
Row: 9, Col: 2, Value: -0.7300000000000001
Row: 10, Col: 1, Value: 12.59
Row: 10, Col: 2, Value: 5.44
%
SHORT-TERM WORLD INCOME
Competitive Funds Average
%
%
%
GLOBAL BOND
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Calendar year total returns
1987 1988 1989 1990 1991 1992 1993
GLOBAL BOND
19.14 3.66% 7.93% 12.28 12.77 4.40% 21.91
% % % %
Competitive Funds Average
17.30 5.40% 6.61% 12.86 14.33 2.82% 17.05
% % % %
</TABLE>
Row: 1, Col: 1, Value: 0.0
Row: 1, Col: 2, Value: 0.0
Row: 2, Col: 1, Value: 0.0
Row: 2, Col: 2, Value: 0.0
Row: 3, Col: 1, Value: 0.0
Row: 3, Col: 2, Value: 0.0
Row: 4, Col: 1, Value: 19.14
Row: 4, Col: 2, Value: 17.3
Row: 5, Col: 1, Value: 3.66
Row: 5, Col: 2, Value: 5.4
Row: 6, Col: 1, Value: 7.930000000000001
Row: 6, Col: 2, Value: 6.609999999999999
Row: 7, Col: 1, Value: 12.28
Row: 7, Col: 2, Value: 12.86
Row: 8, Col: 1, Value: 12.77
Row: 8, Col: 2, Value: 14.33
Row: 9, Col: 1, Value: 4.4
Row: 9, Col: 2, Value: 2.82
Row: 10, Col: 1, Value: 21.91
Row: 10, Col: 2, Value: 17.05
%
GLOBAL BOND
Competitive Funds Average
%
%
%
NEW MARKETS INCOME IS NOT INCLUDED IN THE CHARTS BECAUSE IT HAS NOT
COMPLETED ONE FULL CALENDAR YEAR OF OPERATIONS.
YOUR ACCOUNT
YOUR ACCOUNT
DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage Services,
Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(bullet) For mutual funds, 1-800-544-8888
(bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over 75 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in a fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in a fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed at right.
The account guidelines that follow may not apply to certain retirement
accounts. If your employer offers a fund through a retirement program,
contact your employer for more information. Otherwise, call Fidelity
directly.
FIDELITY FACTS
Fidelity offers the broadest selection of mutual
funds in the world.
(bullet) Number of Fidelity mutual funds: over 200
(bullet) Assets in Fidelity mutual funds: over $ 225 billion
(bullet) Number of shareholder accounts: over
15 million
(bullet) Number of investment analysts and portfolio
managers: over 200
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WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal age
and under 70 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(bullet) KEOGH OR CORPORATE PROFIT SHARING AND MONEY PURCHASE PENSION PLANS
allow self-employed individuals or small business owners (and their
employees) to make tax-deductible contributions for themselves and any
eligible employees up to $30,000 per year.
(bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(bullet) 403(B) CUSTODIAL ACCOUNTS are available to employees of most
tax-exempt institutions, including schools, hospitals, and other charitable
organizations.
(bullet) 401(K) PROGRAMS allow employees of corporations of all sizes to
contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. Each fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described in the chart at right . If there is no
application accompanying this prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an
IRA, for the first time, you will need a special application. Retirement
investing also involves its own investment procedures. Call 1-800-544-8888
for more information and a retirement application.
If you buy shares by check or Fidelity Money Line(Registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business
days to ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For Fidelity retirement accounts $500
TO ADD TO AN ACCOUNT $250
For Fidelity retirement accounts $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000
For Fidelity retirement accounts $500
Key Information
(phone_graphic) Phone 1-800-544-7777
(bullet)
To open an account, exchange from another Fidelity fund account with the
same
registration, including name, address, and taxpayer ID number.
(bullet)
To add to an account, exchange from another Fidelity fund account with the
same registration, including name, address, and taxpayer ID number. You can
also use Fidelity Money Line to transfer from your bank account. Call
before
your first use to verify that this service is in place on your account.
Maximum
Money Line $50,000
(mail_graphic) Mail
(bullet)
To open an account, complete and sign the application. Make your check
payable
to the complete name of the fund. Mail to the address indicated on the
application.
(bullet)
To add to an account, make your check payable to the complete name of the
fund
of your choice. Indicate your fund account number on your check<r> and
m</r>ail to
the address printed on your account statement. Call 1-800-544-6666 for
instructions.
(hand_graphic) In Person
(bullet)
To open an account, bring your application and check to a Fidelity Investor
Center. Call 1-800-544-9797 for the center nearest you.
(bullet)
To add to an account, bring your check to a Fidelity Investor Center. Call
1-800-544-9797 for the center nearest you.
(wire_graphic) Wire
Not available for retirement accounts.
(bullet)
To open an account, call 1-800-544-7777 to set up your account and to
arrange
a wire transaction. Wire within 24 hours to the wire address below. Specify
the complete name of the fund and include your new account number and your
name.
(bullet)
To add to an account, wire to the wire address below. Specify the complete
name of the fund and include your account number and your name.
(bullet)
Wire address: Bankers Trust Company, Bank Routing #021001033, Account #
00163053.
(automatic_graphic) Automatically
New accounts cannot be opened with these services.
(bullet)
Use Fidelity Automatic Account Builder or Direct Deposit to automatically
purchase
more shares. Sign up for these services when opening your account, or call
1-800-544-6666.
(bullet)
Use Directed Dividends or Fidelity Automatic Exchange Service to
automatically
send money from one Fidelity fund into another. Call 1-800-544-6666 for
instructions.
(tdd_graphic) TDD - Service for the Deaf and Hearing-Impaired:
1-800-544-0118
YOUR ACCOUNT
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods
described on this page.
TO SELL SHARES IN A FIDELITY RETIREMENT ACCOUNT, your request must be made
in writing, except for exchanges to other Fidelity funds, which can be
requested by phone or in writing. Call 1-800-544-6666 for a retirement
distribution form.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000
worth of shares in the account to keep it open ($500 for retirement
accounts).
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments, P.O. Box 660602, Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account in Short-Term World Income, you
may write an unlimited number of checks. Do not, however, try to close out
your account by check.
KEY INFORMATION
<TABLE>
<CAPTION>
<S> <C>
PHONE 1-800-544-7777
ALL ACCOUNT TYPES EXCEPT RETIREMENT
(bullet) Maximum check request: $100,000.
(bullet) For Money Line transfers to your bank account; minimum: $ 10 ; maximum: $100,000.
ALL ACCOUNT TYPES
(bullet) You may exchange to other Fidelity funds if both accounts are registered with the same name(s), address, and
taxpayer ID number.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
MAIL OR IN PERSON
INDIVIDUAL, JOINT TENANT, SOLE PROPRIETORSHIP, UGMA, UTMA
(bullet) The letter of instruction must be signed by all persons required to sign for transactions, exactly as their names
appear on the account.
RETIREMENT ACCOUNT
(bullet) The account owner should complete a retirement distribution form. Call 1-800-544-6666 to request one.
TRUST
(bullet) The trustee must sign the letter indicating capacity as trustee. If the trustee's name is not in the account
registration, provide a copy of the trust document certified within the last 60 days.
BUSINESS OR ORGANIZATION
(bullet) At least one person authorized by corporate resolution to act on the account must sign the letter.
(bullet) Include a corporate resolution with corporate seal or a signature guarantee.
EXECUTOR, ADMINISTRATOR, CONSERVATOR, GUARDIAN
(bullet) Call 1-800-544-6666 for instructions.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
WIRE
ALL ACCOUNT TYPES EXCEPT RETIREMENT
(bullet) You must sign up for the wire feature before using it. To verify that it is in place, call 1-800-544-6666. Minimum
wire: $5,000.
(bullet) Your wire redemption request must be received by Fidelity before 4 p.m. Eastern time for money to be wired on
the next business day.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
CHECK
ALL ACCOUNT TYPES EXCEPT RETIREMENT
(bullet) Minimum check : $ 500 .
(bullet) All account owners must sign a signature card to receive a checkbook.
</TABLE>
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days
a year. Whenever you call, you can speak with someone equipped to provide
the information or service you need.
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(bullet) Confirmation statements (after every transaction, except
reinvestments, that affects your account balance or your account
registration)
(bullet) Account statements (quarterly)
(bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing.
Note that exchanges out of a fund are limited to four per calendar year,
and that they may have tax consequences for you. For complete policies and
restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up monthly or quarterly redemptions
from your account.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
24-HOUR SERVICE
ACCOUNT ASSISTANCE 1-800-544-6666
ACCOUNT BALANCES 1-800-544-7544
ACCOUNT TRANSACTIONS 1-800-544-7777
PRODUCT INFORMATION 1-800-544-8888
QUOTES 1-800-544-8544
RETIREMENT ACCOUNT ASSISTANCE 1-800-544-4774
AUTOMATED SERVICE
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REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for
retirement, a home, educational expenses, and other long-term financial
goals. Certain restrictions apply for retirement accounts. Call
1-800-544-6666 for more information.
REGULAR INVESTMENT PLANS
FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly or (bullet) For a new account,
quarterly complete the
appropriate section on
the fund application.
(bullet) For existing accounts,
call 1-800-544-6666
for an application.
(bullet) To change the amount
or frequency of your
investment, call
1-800-544-6666 at
least three business
days prior to your next
scheduled investment
date.
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY
FUNDA
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Every pay (bullet) Check the appropriate
period box on the fund
application, or call
1-800-544-6666 for an
authorization form.
(bullet) Changes require a new
authorization form.
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, (bullet) To establish, call
bimonthly, 1-800-544-6666 after
quarterly, or both accounts are
annually opened.
(bullet) To change the amount
or frequency of your
investment, call
1-800-544-6666.
A BECAUSE THEIR SHARE PRICES FLUCTUATE, THESE FUNDS MAY NOT BE APPROPRIATE
CHOICES FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains to shareholders each year. Income dividends are declared
daily and paid monthly. Capital gains are normally distributed in
December and February.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. Each fund offers four
options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions will
be automatically reinvested in additional shares of the fund. If you do not
indicate a choice on your application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each dividend
distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions.
4. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you are entitled to your
share of the fund's net income and gains on its
investments. The fund passes its earnings along to
its investors as DISTRIBUTIONS.
Each fund earns interest from its investments.
These are passed along as DIVIDEND DISTRIBUTIONS.
The fund may realize capital gains if it sells
securities for a higher price than it paid for them.
These are passed along as CAPITAL GAIN
DISTRIBUTIONS.
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FOR RETIREMENT ACCOUNTS, all distributions are automatically reinvested.
When you are over 59 years old, you can receive distributions in cash.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions will be reinvested at the NAV as of the
date the fund deducts the distribution from its NAV. The mailing of
distribution checks will begin within seven days , or longer for a
December ex-dividend date.
TAXES
As with any investment, you should consider how your investment in a fund
will be taxed. If your account is not a tax-deferred retirement account,
you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax,
and may also be subject to state or local taxes. If you live outside the
United States, your distributions could also be taxed by the country in
which you reside. Your distributions are taxable when they are paid,
whether you take them in cash or reinvest them. However, distributions
declared in December and paid in January are taxable as if they were paid
on December 31.
For federal tax purposes, each fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions
are taxed as long-term capital gains. Every January, Fidelity will send you
and the IRS a statement showing the taxable distributions paid to you in
the previous year.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or loss
is the difference between the cost of your shares and the price you receive
when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a
distribution from its NAV, you will pay the full price for the shares and
then receive a portion of the price back in the form of a taxable
distribution.
CURRENCY CONSIDERATIONS. If a fund's dividends exceed its taxable income
in any year, which is sometimes the result of currency-related losses, all
or a portion of the fund's dividends may be treated as a return of capital
to shareholders for tax purposes. To minimize the risk of a return of
capital, the funds may adjust their dividends to take currency fluctuations
into account, which may cause the dividends to vary. Any return of capital
will reduce the cost basis of your shares, which will result in a higher
reported capital gain or a lower reported capital loss when you sell your
shares. The statement you receive in January will specify if any
distributions included a return of capital.
EFFECT OF FOREIGN TAXES. A fund sometimes pays withholding or other taxes
to foreign governments during the year. These taxes reduce the fund's
dividends, but are included in the taxable income reported on your tax
statement. You may be able to claim an offsetting tax credit or itemized
deduction for foreign taxes paid by the fund. Your tax statement will
generally show the amount of foreign tax for which a credit or
deduction may be available.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
SHAREHOLDER AND ACCOUNT POLICIES
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates each fund's NAV as of the
close of business of the NYSE, normally 4 p.m. Eastern time.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
Each fund's assets are valued primarily on the basis of market quotations.
If quotations are not readily available, assets are valued by a method that
the Board of Trustees believes accurately reflects fair value. Foreign
securities are valued on the basis of quotations from the primary market in
which they are traded, and are translated from the local currency into U.S.
dollars using current exchange rates.
EACH FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they are of
a size that would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) Each fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees a fund or its transfer agent has
incurred.
(bullet) You begin to earn dividends as of the first business day
following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUNDS THROUGH A BROKER, who may charge
you a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
Fidelity Distributors Corporation (FDC) may enter confirmed purchase orders
on behalf of customers by phone, with payment to follow no later than the
time when a fund is priced on the following business day. If payment is not
received by that time, the financial institution could be held liable for
resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect a
fund, it may take up to seven days to pay you.
(bullet) Shares will earn dividends through the date of redemption;
however, shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) Each fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
(bullet) If you sell shares by writing a check and the amount of the check
is greater than the value of your account, your check will be returned to
you and you may be subject to additional charges.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the funds without
reimbursement from the funds. Qualified recipients are securities dealers
who have sold fund shares or others, including banks and other financial
institutions, under special arrangements in connection with FDC's sales
activities. In some instances, these incentives may be offered only to
certain institutions whose representatives provide services in connection
with the sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, each fund reserves the right to temporarily or permanently
terminate the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(bullet) The exchange limit may be modified for accounts in certain
institutional retirement plans to conform to plan exchange limits and
Department of Labor regulations. See your plan materials for further
information.
(bullet) Each fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if a fund receives or
anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund ' s prospectus for details.
<
r>THE FUNDS IN DETAIL</r>
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. In technical terms, each fund is
currently a non-diversified fund of Fidelity Investment Trust, an open-end
management investment company organized as a Massachusetts business trust
on April 20, 1984.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
Fidelity will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. You are entitled to one
vote for each share you own.
FMR AND ITS AFFILIATES
The funds are managed by FMR, which handles their business affairs
and, with the assistance of foreign affiliates, chooses each fund's
investments.
Judy Pagliuca is vice president and manager of Short-Term World Income,
which she has managed since October 1991. Ms. Pagliuca also manages
Deutsche Mark, Sterling, and Yen funds. Previously, she managed
Global Bond, Intermediate Bond, and Puritan. Ms. Pagliuca joined Fidelity
in 1985.
Jonathan Kelly is manager of Global Bond, which he has managed since
October 1993. Mr. Kelly also co-manages Advisor Income & Growth.
Previously, he served as an analyst following international fixed-income
and foreign exchange. He joined Fidelity in 1991, after receiving his
M.B.A. from the Wharton School at the University of Pennsylvania. Mr. Kelly
worked in the money management field for four years prior to business
school.
Robert Citrone is manager of New Markets Income, which he has managed since
May 1993. He also serves as strategist for Fidelity's emerging market
fixed-income investments. Mr. Citrone joined Fidelity in 1990 as a
fixed-income analyst, after receiving an M.B.A. from the University of
Virginia in 1990.
Affiliates assist FMR with foreign securities: Fidelity Management &
Research (U.K.) Inc. (FMR U.K.), Fidelity Management & Research (Far
East) Inc. (FMR Far East), Fidelity International Investment Advisors
(FIIA), Fidelity International Investment Advisors (U.K.) Limited (FIIAL
U.K.), and Fidelity Investments Japan Ltd. (FIJ).
FDC distributes and markets Fidelity's funds and services. Fidelity Service
Co. (FSC) performs transfer agent servicing functions for the funds.
FMR Corp., or Fidelity International Limited (FIL), is the parent company
of these organizations. Through ownership of voting common stock, Edward C.
Johnson 3d (President and a trustee of the trust), Johnson family members,
and various trusts for the benefit of the Johnson family form a controlling
group with respect to FMR Corp. This group also owns, directly or
indirectly, more than 25% of the voting common stock of FIL.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn may pay fees to affiliates who provide
assistance with these services. Each fund also pays OTHER EXPENSES, which
are explained on page .
FMR may, from time to time, agree to reimburse the funds for management
fees and other expenses above a specified limit. FMR retains the ability to
be repaid by a fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fee is
calculated by adding a group fee rate to an individual fund fee rate, and
multiplying the result by the fund's average net assets.
The group fee rate is based on the average net assets of all the mutual
funds advised by FMR. This rate cannot rise above .37%, and it drops as
total assets under management increase.
For December 1993, the group fee rate was .1621 %. The individual
fund fee rate is .45% for Short-Term World Income and .55% for
Global Bond and New Markets Income. The total management fee rate
for fiscal 1993 for Short-Term World Income and Global Bond was .62 %
and .71 % respectively. Because of a reimbursement arrangement, the
total management fee rate for fiscal 1993 was .28 % (annualized) for
New Markets Income.
FMR HAS SUB-ADVISORY AGREEMENTS with four affiliates: FMR U.K., FMR Far
East, FIIA, and, for New Markets Income only, FIJ. FIIA in turn has a
sub-advisory agreement with FIIAL U.K. FMR U.K. focuses on companies based
in Europe. FMR Far East focuses on companies based in Asia and the Pacific
Basin. FIJ focuses on companies based in Japan. FIIA focuses on
companies based in Hong Kong, Australia, New Zealand, and Southeast Asia
(other than Japan). FIIAL U.K. focuses on companies based in the United
Kingdom and Europe.
The sub-advisers are compensated for providing investment research and
advice. FMR pays FMR U.K. and FMR Far East fees equal to 110% and 105%,
respectively, of the costs of providing these services. FMR pays FIJ and
FIIA 30% of its management fee associated with investments for which the
sub-adviser provided investment advice. FIIA pays FIIAL U.K. a fee equal to
110% of the cost of providing these services.
The sub-advisers may also provide investment management services. In
return, FMR pays FMR U.K., FMR Far East, FIJ, and FIIA 50% of its
management fee rate with respect to a fund's investments that the
sub-adviser manages on a discretionary basis. FIIA pays FIIAL U.K. a fee
equal to 110% of the cost of providing these services.
OTHER EXPENSES
While the management fee is a significant component of the funds' annual
operating costs, the funds have other expenses as well.
The funds contract with FSC to perform many transaction and accounting
functions. These services include processing shareholder transactions,
valuing each fund's investments, and handling securities loans. In fiscal
1993, Short-Term World Income, Global Bond, and New Markets Income (on an
annualized basis) paid FSC fees equal to .28 %, .31 %, and
.52 %, respectively, of average net assets.
The funds also pay other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity.
Each fund has adopted a Distribution and Service Plan. These plans
recognize that FMR may use its resources, including management fees, to pay
expenses associated with the sale of fund shares. This may include payments
to third parties, such as banks or broker-dealers, that provide shareholder
support services or engage in the sale of the fund's shares. It is
important to note, however, that the funds do not pay FMR any separate fees
for this service.
For fiscal 1993, the portfolio turnover rates for Short-Term World
Income and Global Bond were 160 % and 198 %,
respectively, and the annualized portfolio turnover rate for New
Markets Income was 324 %. These rates vary from year to year. High
turnover rates increase transaction costs and may increase taxable capital
gains. FMR considers these effects when evaluating the anticipated benefits
of short-term investing.
INVESTMENT PRINCIPLES
SHORT-TERM WORLD INCOME seeks as high a level of current income as is
consistent with preservation of capital. The fund focuses on short-term
securities and money market instruments issued anywhere in the world.
GLOBAL BOND seeks high total investment return by investing principally in
debt securities issued anywhere in the world. FMR invests at least 65% of
the fund's assets in debt securities at all times, but may also invest in
convertible securities, warrants, and other instruments. Although FMR
emphasizes income when selecting the fund's investments, the potential for
capital appreciation is also considered.
NEW MARKETS INCOME seeks high current income and, as a secondary objective,
capital appreciation, by investing mainly in debt securities and other
instruments of issuers in emerging markets. FMR normally invests at least
65% of the fund's total assets in debt securities of emerging markets
issuers . Countries with emerging markets include the following:
(bullet) countries that have an emerging stock market, as defined by the
International Finance Corporation,
(bullet) countries with low- to middle-income economies, according to the
World Bank,
(bullet) countries listed in World Bank publications as developing.
The fund emphasizes countries with relatively low gross national product
per capita and with the potential for rapid economic growth. This strategy
tends to lead to investments in Latin America and, to a lesser extent,
Asia, Africa, and emerging European nations. FMR determines where an
issuer is located by looking at such factors as its country of
organization, the primary trading market for its securities, and the
location of its assets, personnel, sales, and earnings.
The fund may also invest a portion of its assets in common and preferred
stocks of emerging market issuers, debt securities of non-emerging market
foreign issuers, and lower-quality debt securities of U.S. issuers.
Although the fund may invest up to 35% of its total assets in these
securities, FMR does not currently anticipate that these investments will
exceed approximately 20% of the fund's total assets. Though common and
preferred stocks and convertible securities present the possibility for
significant capital appre ci ation over the long term, they may
fluctuate dramatically in the short term and entail a high degree of risk.
For cash management purposes, the fund will ordinarily invest a portion of
its assets in high-quality, short-term debt securities and money market
instruments, including repurchase agreements and bank deposits denominated
in U.S. or foreign currencies.
A FUND'S risk and reward potential depends on the quality and maturity of
its investments. Short-Term World Income invests in higher-quality
instruments, and its dollar-weighted average maturity is limited to three
years, making it less risky and lower yielding than the other funds. Global
Bond can invest in lower-quality securities, and FMR expects that
its dollar-weighted average maturity will not be greater than
fifteen years under current market conditions . New Markets Income
has even more flexibility as to the quality and maturity of its
investments. In addition, since New Markets Income invests primarily
in securities of emerging markets, which can be considered speculative, it
tends to offer higher income and total return potential, but significantly
greater risk. Lower quality, longer term investments typically offer higher
yields, but also carry more risk.
Each fund can invest in the securities of any type of issuer, including
U.S. and foreign governments, corporations, banks, and supranational
organizations. There is no limit on investments in any region, country, or
currency, although each fund normally invests in at least three different
cou n tries.
Each fund's yield and share price will change based on changes in domestic
or foreign interest rates and in an issuer's creditworthiness. In general,
bond prices rise when interest rates fall, and vice versa. Because many of
the funds' investments are denominated in foreign currencies, changes in
the value of foreign currencies can significantly affect a fund's share
price. Although Short-Term World Income tries to minimize this effect, it
will not eliminate its exposure to changing currency values. General
economic and political factors in the various world markets can also impact
the value of your investment, especially for securities in emerging
markets.
Each fund's performance therefore depends on FMR's skill in selecting
investments and in recognizing and predicting these factors. FMR may use
various investment techniques to hedge a fund's risks, but there is no
guarantee that these strategies will work as intended. When you sell your
shares, they may be worth more or less than what you paid for them.
FMR normally invests each fund's assets according to its investment
strategy. When FMR considers it appropriate for defensive purposes ,
however, Short-Term World Income and Global Bond may temporarily
invest substantially in U.S. financial markets or in U.S.
dollar-denominated instruments. New Markets Income may invest substantially
in money market instruments, U.S. government securities, or
investment-grade obligations of U.S. companies.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, and strategies FMR may
employ in pursuit of a fund ' s investment objectives. A
summary of risks and restrictions associated with these instrument types
and investment practices is included as well. Policies and limitations are
considered at the time of purchase; the sale of instruments is not required
in the event of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
funds achieve their goals. As a shareholder, you will receive financial
reports every six months detailing fund holdings and describing recent
investment activities.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. Debt
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally
more sensitive to interest rate changes than short-term bonds.
U.S. government securities are high-quality instruments issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the
U.S. government. Not all U.S. government securities are backed by the full
faith and credit of the United States. Some are supported only by the
credit of the agency that issued them.
Lower-quality debt securities ( sometimes called "junk bonds") are
often considered to be speculative and involve greater risk of default or
price changes due to changes in the issuer's creditworthiness. The market
prices of these securities may fluctuate more than higher-quality
securities and may decline significantly in periods of general economic
difficulty.
The tables on pages and 21 provide a summary of ratings assigned to
debt holdings (not including money market instruments) in each fund's
portfolio. These figures are dollar-weighted averages of month-end
portfolio holdings during fiscal 1993, and are presented as a percentage of
total investments. These percentages are historical and do not necessarily
indicate a fund's current or future debt holdings.
SHORT-TERM WORLD INCOME FISCAL 1993 DEBT HOLDINGS, BY RATING
MOODY'S STANDARD &
POOR'S
INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE
Highest quality Aaa AAA
High quality Aa 51.04% AA 51.90%
Upper-medium grade A A
Medium grade Baa 3.38% BBB 1.07%
LOWER QUALITY
Moderately speculative Ba 0.40% BB 0.27%
Speculative B 0.00% B 0.00%
Highly speculative Caa 0.00% CCC 0.00%
Poor quality Ca CC
Lowest quality, no interest C C
In default, in arrears -- D 0.00%
54.82% 53.24%
0.00%
0.00%
GLOBAL BOND FISCAL 1993 DEBT HOLDINGS, BY RATING
MOODY'S STANDARD &
POOR'S
INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE
Highest quality Aaa AAA
High quality Aa 40.18 % AA 39.32 %
Upper-medium grade A A
Medium grade Baa 0.75 % BBB 0.00 %
LOWER QUALITY
Moderately speculative Ba 6.03 % BB 3.31 %
Speculative B 9.64 % B 0.08 %
Highly speculative Caa 0.00 % CCC 0.00 %
Poor quality Ca CC
Lowest quality, no interest C C
In default, in arrears -- D 0.00 %
56.60 % 42.71 %
A FOR SOME FOREIGN GOVERNMENT OBLIGATIONS, FMR HAS ASSIGNED THE RATINGS
OF THE SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED DIRECTLY OR
INDIRECTLY BY MOODY'S OR S&P AMOUNTED TO 10.62% FOR
SHORT-TERM WORLD INCOME AND 23.60% FOR GLOBAL BOND. THIS MAY INCLUDE
SECURITIES RATED BY OTHER NATIONALLY RECOGNIZED RATING
SERVICES, AS WELL AS UNRATED SECURITIES. FMR HAS DETERMINED THAT UNRATED
SECURITIES THAT ARE LOWER QUALILTY ACCOUNT FOR .44% OF
SHORT-TERM WORLD INCOME'S AND 14.00% OF GLOBAL BOND'S TOTAL INVESTMENTS.
REFER TO THE FUNDS' STATEMENT OF ADDITIONAL
INFORMATION FOR A MORE COMPLETE DISCUSSION OF THESE RATINGS.
0.00%
0.00%
NEW MARKETS INCOME FISCAL 1993 DEBT HOLDINGS, BY RATING
MOODY'S STANDARD &
POOR'S
INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE
Highest quality Aaa AAA
High quality Aa 2.60 % AA 2.60 %
Upper-medium grade A A
Medium grade Baa 0.12 % BBB 0.00 %
LOWER QUALITY
Moderately speculative Ba 10.95 % BB 12.54 %
Speculative B 22.54 % B 0.07 %
Highly speculative Caa 0.00 % CCC 0.00 %
Poor quality Ca CC
Lowest quality, no interest C C
In default, in arrears -- D 0.00 %
36.21 % 15.21 %
A FOR SOME FOREIGN GOVERNMENT OBLIGATIONS, FMR HAS ASSIGNED THE RATINGS OF
THE SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED DIRECTLY OR
INDIRECTLY BY MOODY'S OR S&P AMOUNTED TO 37.15% FOR NEW
MARKETS INCOME. THIS MAY INCLUDE SECURITIES RATED BY OTHER NATIONALLY
RECOGNIZED RATING SERVICES, AS WELL AS UNRATED SECURITIES.
FMR HAS DETERMINED THAT UNRATED SECURITIES THAT ARE LOWER QUALITY
ACCOUNT FOR 18.09% OF THE FUND'S TOTAL INVESTMENTS. REFER TO
THE FUNDS' STATEMENT OF ADDITIONAL INFORMATION FOR A MORE COMPLETE
DISCUSSION OF THESE RATINGS.
0.00%
0.00%
RESTRICTIONS: Short-Term World Income does not currently intend to
invest more than 35% of its total assets in debt securities that are rated
lower than A or its equivalent by Moody's, S&P, or any other nationally
recognized rating service, or judged by FMR to be of equivalent quality if
unrated. The fund does not currently intend to invest in securities
rated below Ba or BB or their equivalent and currently intends to
limit its investments in securities rated Ba or BB or their equivalent to
10% of its total assets. Global Bond does not currently intend to
invest more than 35% of its total assets in securities rated lower than Baa
or BBB or their equivalent.
FOREIGN SECURITIES and foreign currencies may involve additional risks.
These include currency fluctuations, risks relating to political or
economic conditions in the foreign country, and the potentially less
stringent investor protection and disclosure standards of foreign markets.
In addition to the political and economic factors that can affect foreign
securities, a governmental issuer may be unwilling to repay principal and
interest when due, and may require that the conditions for payment be
renegotiated. These factors could make foreign investments, especially
those in developing countries, more volatile.
ASSET-BACKED AND MORTGAGE SECURITIES may include pools of consumer loans
or mortgages, such as collateralized mortgage obligations and stripped
mortgage-backed securities. The value of these securities may be
significantly affected by changes in interest rates, the market's
perception of the issuers, and the creditworthiness of the parties
involved. These securities may also be subject to prepayment risk.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, and
purchasing indexed securities.
FMR can use these practices to adjust the risk and return
characteristics of a fund's portfolio of investments. If FMR judges market
conditions incorrectly or employs a strategy that does not correlate well
with the fund's investments, these techniques could result in a loss,
regardless of whether the intent was to reduce risk or increase return.
These techniques may increase the volatility of the fund and may involve a
small investment of cash relative to the magnitude of the risk assumed. In
addition, these techniques could result in a loss if the counterparty to
the transaction does not perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other borrower.
They have additional risks beyond conventional debt securities because they
may entail less legal protection for a fund, or there may be a requirement
that a fund supply additional cash to a borrower on demand.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect a fund's yield.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security
at one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
FOREIGN REPURCHASE AGREEMENTS may be less well secured than U.S.
repurchase agreements, and may be denominated in foreign currencies. They
also may involve greater risk of loss if the counterparty defaults. Some
counterparties in these transactions may be less creditworthy than those in
U.S. markets.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities may be subject to legal restrictions.
Difficulty in selling securities may result in a loss or may be costly to a
fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
15% of its assets would be invested in illiquid securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry. A fund that
is not diversified may be more sensitive to changes in the market value of
a single issuer or industry.
RESTRICTIONS: The funds are considered non-diversified. Generally, to
meet federal tax requirements at the close of each quarter, a fund does not
invest more than 25% of its total assets in any one issuer and, with
respect to 50% of total assets, does not invest more than 5% of its total
assets in any one issuer. A fund may also not invest more than 25% of
its total assets in any one industry (other than the financial services
industry for Short-Term World Income). These limitations do not apply to
U.S. government securities.
FINANCIAL SERVICES INDUSTRY. Companies in the financial services industry
are subject to various risks related to that industry, such as government
regulation, changes in interest rates, and exposure on loans, including
loans to foreign borrowers. If a fund invests substantially in this
industry, its performance may be affected by conditions affecting the
industry.
RESTRICTIONS: Short-Term World Income may not invest less than 25% of its
total assets in the financial services industry under normal conditions.
BORROWING. A fund may borrow from banks or from other funds advised by FMR,
or through reverse repurchase agreements. If a fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: A fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
LENDING. Lending securities to broker-dealers and institutions, including
FBSI, an affiliate of FMR, is a means of earning income. This practice
could result in a loss or a delay in recovering a fund's securities. A fund
may also lend money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 33% of a fund's total
assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
SHORT-TERM WORLD INCOME seeks as high a level of current income as is
consistent with preservation of capital.
GLOBAL BOND seeks high total investment return by investing principally in
debt securities issued anywhere in the world.
NEW MARKETS INCOME seeks high current income. As a secondary objective, the
fund seeks capital appreciation.
EACH FUND may not invest more than 25% of its total assets in any one
industry, except that Short-Term World Income will invest at least 25% of
its assets in the financial services industry. Each fund may borrow only
for temporary or emergency purposes, but not in an amount exceeding 33% of
its total assets. Loans, in the aggregate, may not exceed 33% of a fund's
total assets.
NOTES
This prospectus is printed on recycled paper using soy-based inks.
FIDELITY'S INTERNATIONAL BOND FUNDS
FIDELITY SHORT-TERM WORLD INCOME FUND
FIDELITY GLOBAL BOND FUND
FIDELITY NEW MARKETS INCOME FUND
FUNDS OF FIDELITY INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 24, 1994
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated February 24, 1994). Please retain this
document for future reference. The Annual Report of each fund for the
fiscal year ended December 31, 199 3 is incorporated herein by
reference. To obtain an additional copy of the Prospectus or an Annual
Report, please call Fidelity Distributors Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Special Considerations Affecting Europe
Special Considerations Affecting Japan, the Pacific Basin , and
Southeast Asia
Special Considerations Affecting Latin America
Special Considerations Affecting Africa
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contract
Distribution and Service Plan
Contracts With Companies Affiliated With FMR
Description of the Trust
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
Fidelity International Investment Advisors (FIIA)
Fidelity International Investment Advisors (U.K.) Limited (FIIAL U.K.)
Fidelity Investments Japan Limited (FIJ) (New Markets Income only)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Service Co. (FSC)
ITL-ptb-294
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may
be invested in any security or other asset, or sets forth a policy
regarding quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in values,
net assets, or other circumstances will not be considered when determining
whether the investment complies with the fund's investment policies and
limitations.
Each fund's fundamental investment policies and limitations cannot
be changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the fund.
However, except for the fundamental investment limitations set forth below,
the investment policies and limitations described in this Statement of
Additional Information are not fundamental and may be changed without
shareholder approval.
INVESTMENT LIMITATIONS OF FIDELITY SHORT-TERM WORLD INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) sell securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short, and
provided that transactions in futures contracts and options are not deemed
to constitute selling securities short;
(3) purchase securities on margin, except that the fund may obtain such
short-term credits as are necessary for the clearance of transactions, and
provided that margin payments in connection with futures contracts and
options on futures contracts shall not constitute purchasing securities on
margin;
(4) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(5) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(6) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that the fund will
invest more than 25% of its total assets in the financial services
industry;
(7) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(8) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(9) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties (but this limit
does not apply to purchases of debt securities or to repurchase
agreements).
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (4)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
INVESTMENT LIMITATIONS OF FIDELITY GLOBAL BOND FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940 (1940 Act);
(2) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of the value of its total assets (including the amount
borrowed), less liabilities (other than borrowings). Any borrowings that
come to exceed 33 1/3% of the fund's total assets by reason of a decline in
net assets will be reduced within three business days to the extent
necessary to comply with the 33 1/3% limitation;
(3) underwrite securities issued by others (except to the extent that the
fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(4) purchase the securities of any issuer (other than obligations issued or
guaranteed by the government of the United States or its agencies or
instrumentalities, or by foreign governments or their political
subdivisions, or by supranational organizations) if, as a result, more than
25% of the fund's total assets (taken at current value) would be invested
in the securities of issuers having their principal business activities in
the same industry;
(5) purchase or sell real estate (but this shall not prevent the fund from
investing in marketable securities issued by companies such as real estate
investment trusts which deal in real estate or interests therein and
participation interests in pools of real estate mortgage loans);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
Investment limitation (2) is construed in conformity with the 1940 Act,
and, accordingly, "three business days" means three days exclusive of
Sundays and holidays.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(x) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 10% of the fund's net assets.
Included in that amount, but not to exceed 2% of net assets, are warrants
whose underlying securities are not traded on principal domestic or foreign
exchanges. Warrants acquired by the fund in units or attached to securities
are not subject to these restrictions.
(xi) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
INVESTMENT LIMITATIONS OF FIDELITY NEW MARKETS INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements).
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(x) The fund does not currently intend to purchase warrants, valued at
the lower of cost or market, in excess of 5% of the fund's net assets.
Included in that amount, but not to exceed 2% of net assets, are warrants
whose underlying securities are not traded on principal domestic or foreign
exchanges. Warrants acquired by the fund in units or attached to securities
are not subject to these restrictions.
(xi) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
For the funds' limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page 10.
AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by the
Securities and Exchange Commission (SEC), each fund may engage in
transactions with banks that are, or may be considered to be, "affiliated
persons" of the fund under the Investment Company Act of 1940. Such
transactions may be entered into only pursuant to procedures established
and periodically reviewed by the Board of Trustees. These transactions may
include repurchase agreements with custodian banks; purchases, as
principal, of short-term obligations of, and repurchase agreements with,
the 50 largest U.S. banks (measured by deposits); transactions in municipal
securities; and transactions in U.S. government securities with affiliated
banks that are primary dealers in these securities.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed upon price on an agreed upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is
in effect secured by the value (at least equal to the amount of the agreed
upon resale price and marked to market daily) of the underlying security.
A fund may engage in a repurchase agreement with respect to any
security in which it is authorized to invest. While it does not presently
appear possible to eliminate all risks from these transactions
(particularly the possibility of a decline in the market value of the
underlying securities, as well as delays and costs to the fund in
connection with bankruptcy proceedings), it is each fund's current
policy to limit repurchase agreement transactions to parties whose
creditworthiness has been reviewed and found satisfactory by FMR.
Each fund may invest in repurchase agreements with foreign parties,
or in repurchase agreements based on securities denominated in foreign
currencies. Legal structures in foreign countries, including bankruptcy
laws, may offer less protection to investors such as the fund s , and
foreign repurchase agreements generally involve greater risks than
repurchase agreements in the U.S.
FOREIGN REPURCHASE AGREEMENTS. Foreign repurchase agreements may include
agreements to purchase and sell foreign securities in exchange for fixed
U.S. dollar amounts, or in exchange for specified amounts of foreign
currency. Unlike typical U.S. repurchase agreements, foreign repurchase
agreements may not be fully collateralized at all times. The value of the
security purchased by the fund may be more or less than the price at which
the counterparty has agreed to repurchase the security. In the event of a
default by the counterparty, the fund may suffer a loss if the value of the
security purchased is less than the agreed-upon repurchase price, or if the
fund is unable to successfully assert a claim to the collateral under
foreign laws. As a result, foreign repurchase agreements may involve higher
credit risks than repurchase agreements in U.S. markets, as well as risks
associated with currency fluctuations. In addition, as with other emerging
market investments, repurchase agreements with counterparties located in
emerging markets or relating to emerging market securities may involve
issuers or counterparties with lower credit ratings than typical U.S.
repurchase agreements.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement.
A fund will enter into reverse repurchase agreements only with
parties whose creditworthiness has been found satisfactory by FMR. Such
transactions may increase fluctuations in the market value of the fund's
assets and may be viewed as a form of leverage.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other borrower
to lenders or lending syndicates (loans and loan participations), to
suppliers of goods or services (trade claims or other receivables), or to
other parties. Direct debt instruments are subject to each fund's
policies regarding the quality of debt securities.
Purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the borrower for payment of principal and
interest. Direct debt instruments may not be rated by any nationally
recognized rating service. If a fund does not receive scheduled
interest or principal payments on such indebtedness, th e fund's
share price and yield could be adversely affected. Loans that are fully
secured offer a fund more protection than an unsecured loan in the
event of non-payment of scheduled interest or principal. However, there is
no assurance that the liquidation of collateral from a secured loan would
satisfy the borrower's obligation, or that the collateral can be
liquidated. Indebtedness of borrowers whose creditworthiness is poor
involves substantially greater risks, and may be highly speculative.
Borrowers that are in bankruptcy or restructuring may never pay off their
indebtedness, or may pay only a small fraction of the amount owed. Direct
indebtedness of developing countries will also involve a risk that the
governmental entities responsible for the repayment of the debt may be
unable, or unwilling, to pay interest and repay principal when due.
Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to a
fund. For example, if a loan is foreclosed, a fund could become part
owner of any collateral, and would bear the costs and liabilities
associated with owning and disposing of the collateral. In addition, it is
conceivable that under emerging legal theories of lender liability,
a fund could be held liable as a co-lender. Direct debt instruments
may also involve a risk of insolvency of the lending bank or other
intermediary. Direct debt instruments that are not in the form of
securities may offer less legal protection to a fund in the event of
fraud or misrepresentation. In the absence of definitive regulatory
guidance, the fund s rel y on FMR's research in an attempt to
avoid situations where fraud or misrepresentation could adversely affect
the fund s .
A loan is often administered by a bank or other financial institution that
acts as agent for all holders. The agent administers the terms of the loan,
as specified in the loan agreement. Unless, under the terms of the loan or
other indebtedness, a fund has direct recourse against the borrower,
it may have to rely on the agent to apply appropriate credit remedies
against a borrower. If assets held by the agent for the benefit of a
fund were determined to be subject to the claims of the agent's general
creditors, a fund might incur certain costs and delays in realizing
payment on the loan or loan participation and could suffer a loss of
principal or interest .
Direct indebtedness purchased by a fund may include letters of
credit, revolving credit facilities, or other standby financing commitments
obligating the fund to pay additional cash on demand. These commitments may
have the effect of requiring a fund to increase its investment in a
borrower at a time when it would not otherwise have done so. Each
fund will set aside appropriate liquid assets in a segregated custodial
account to cover its potential obligations under standby financing
commitments.
Each fund limits the amount of total assets that it will invest in
any one issuer or in issuers within the same industry (see limitation (6)
for Short-Term World Income and (4) for Global Bond and New Markets
Income ). For purposes of these limitations, a fund generally
will treat the borrower as the " issuer" of indebtedness held by
the fund. In the case of loan participations where a bank or other
lending institution serves as financial intermediary between a fund
and the borrower, if the participation does not shift to the fund the
direct debtor-creditor relationship with the borrower, SEC interpretations
require a fund, in appropriate circumstances, to treat both the
lending bank or other lending institution and the borrower as "issuers" for
th is purpose . Treating a financial intermediary as an issuer
of indebtedness may restrict a fund's ability to invest in
indebtedness related to a single financial intermediary, or a group of
intermediaries engaged in the same industry, even if the underlying
borrowers represent many different companies and industries.
DELAYED-DELIVERY TRANSACTIONS. The fund s may buy and sell securities
on a delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security (and more than
seven days in the future). Typically, no interest accrues to the purchaser
until the security is delivered. A fund may receive fees for
entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, a fund
assumes the rights and risks of ownership, including the risk of price and
yield fluctuations. Because a fund is not required to pay for the
securities until the delivery date, these risks are in addition to the
risks associated with the fund's other investments. If a fund
remains substantially fully invested at a time when delayed-delivery
purchases are outstanding, the delayed-delivery purchases may result in a
form of leverage. When delayed-delivery purchases are outstanding,
each fund will set aside appropriate liquid assets in a segregated
custodial account to cover its purchase obligations. When a fund has
sold a security on a delayed-delivery basis, the fund does not participate
in further gains or losses with respect to the security. If the other party
to a delayed-delivery transaction fails to deliver or pay for the
securities, the fund could miss a favorable price or yield opportunity, or
could suffer a loss.
Each fund may renegotiate delayed-delivery transactions after they
are entered into, and may sell underlying securities before they are
delivered, which may result in capital gains or losses.
ZERO COUPON BONDS. Zero coupon bonds do not make interest payments;
instead, they are sold at a deep discount from their face value and are
redeemed at face value when they mature. Because zero coupon bonds do not
pay current income, their prices can be very volatile when interest rates
change. In calculating its daily dividend, each fund takes into
account as income a portion of the difference between a zero coupon bond's
purchase price and its face value.
MORTGAGE-BACKED SECURITIES. The fund s may purchase mortgage-backed
securities issued by government and non-government entities such as banks,
mortgage lenders, or other financial institutions. A mortgage-backed
security may be an obligation of the issuer backed by a mortgage or pool of
mortgages or a direct interest in an underlying pool of mortgages. Some
mortgage-backed securities, such as collateralized mortgage obligations or
CMOs, make payments of both principal and interest at a variety of
intervals; others make semiannual interest payments at a predetermined rate
and repay principal at maturity (like a typical bond). Mortgage-backed
securities are based on different types of mortgages including those on
commercial real estate or residential properties. Other types of
mortgage-backed securities will likely be developed in the future, and the
fund s may invest in them if FMR determines they are consistent
with each fund's investment objective and policies.
The value of mortgage-backed securities may change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Non-government
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
government issues. Mortgage-backed securities are subject to prepayment
risk. Prepayment, which occurs when unscheduled or early payments are made
on the underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns.
ASSET-BACKED SECURITIES. Asset-backed securities represent interests in
pools of consumer loans (generally unrelated to mortgage loans) and most
often are structured as pass-through securities. Interest and principal
payments ultimately depend on payment of the underlying loans by
individuals, although the securities may be supported by letters of credit
or other credit enhancements. The value of asset-backed securities may also
depend on the creditworthiness of the servicing agent for the loan pool,
the originator of the loans, or the financial institution providing the
credit enhancement.
INTERFUND BORROWING PROGRAM. The fund s ha ve received
permission from the SEC to lend money to and borrow money from other funds
advised my FMR or its affiliates. Interfund loans and borrowings normally
will extend overnight, but can have a maximum duration of seven days. Loans
may be called on one day's notice. A fund will lend through the
program only when the returns are higher than those available at the same
time from other short-term instruments (such as repurchase agreements), and
will borrow through the program only when the costs are equal to or lower
than the cost of bank loans. A fund may have to borrow from a bank
at a higher interest rate if an interfund loan is called or not renewed.
Any delay in repayment to a lending fund could result in a lost investment
opportunity or additional borrowing costs.
SECURITIES LENDING. The fund s may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange and
a subsidiary of FMR Corp.
Securities lending allows a fund to retain ownership of the
securities loaned and, at the same time, to earn additional income. Since
there may be delays in the recovery of loaned securities, or even a loss of
rights in collateral supplied should the borrower fail financially, loans
will be made only to parties deemed by FMR to be of good standing.
Furthermore, they will only be made if, in FMR's judgment, the
consideration to be earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that a
fund may engage in loan transactions only under the following conditions:
(1) a fund must receive 100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of
the collateral; (3) after giving notice, a fund must be able to
terminate the loan at any time; (4) a fund must receive reasonable
interest on the loan or a flat fee from the borrower, as well as amounts
equivalent to any dividends, interest, or other distributions on the
securities loaned and to any increase in market value; (5) a fund
may pay only reasonable custodian fees in connection with the loan; and (6)
the Board of Trustees must be able to vote proxies on the securities
loaned, either by terminating the loan or by entering into an alternative
arrangement with the borrower.
Cash received through loan transactions may be invested in any security in
which a fund is authorized to invest. Investing this cash subjects
that investment, as well as the security loaned, to market forces (i.e.,
capital appreciation or depreciation).
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease a fund's exposure to long- or
short-term interest rates (in the U.S. or abroad), foreign currency values,
mortgage securities, corporate borrowing rates, or other factors such as
security prices or inflation rates. Swap agreements can take many different
forms and are known by a variety of names. A fund is not
limited to any particular form of swap agreement if FMR determines it is
consistent with the fund's investment objective and policies.
In a typical cap or floor agreement, one party agrees to make payments
only under specified circumstances, usually in return for payment of a fee
by the other party. For example, the buyer of an interest rate cap obtains
the right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines elements
of buying a cap and selling a floor.
Swap agreements will tend to shift a fund's investment exposure from
one type of investment to another. For example, if a fund agreed to
exchange payments in dollars for payments in foreign currency, the swap
agreement would tend to decrease t he fund's exposure to U.S.
interest rates and increase its exposure to foreign currency and interest
rates. Caps and floors have an effect similar to buying or writing
options. Depending on how they are used, swap agreements may increase
or decrease the overall volatility of a fund's investments and its
share price and yield.
The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from a fund. If a swap
agreement calls for payments by the fund, the fund must be prepared
to make such payments when due. In addition, if the counterparty's
creditworthiness declined, the value of a swap agreement would be likely to
decline, potentially resulting in losses. Each fund expects to be
able to eliminate its exposure under swap agreements either by assignment
or other disposition, or by entering into an offsetting swap agreement with
the same party or a similarly creditworthy party.
Each fund will maintain appropriate liquid assets in a segregated
custodial account to cover its current obligations under swap agreements.
If a fund enters into a swap agreement on a net basis, it will
segregate assets with a daily value at least equal to the excess, if any,
of the fund's accrued obligations under the swap agreement over the accrued
amount the fund is entitled to receive under the agreement. If a
fund enters into a swap agreement on other than a net basis, it will
segregate assets with a value equal to the full amount of the fund's
accrued obligations under the agreement.
INDEXED SECURITIES. Each fund may purchase securities whose prices
are indexed to the prices of other securities, securities indices,
currencies, precious metals or other commodities, or other financial
indicators. Indexed securities typically, but not always, are debt
securities or deposits whose value at maturity or coupon rate is determined
by reference to a specific instrument or statistic. Gold-indexed
securities, for example, typically provide for a maturity value that
depends on the price of gold, resulting in a security whose price tends to
rise and fall together with gold prices. Currency-indexed securities
typically are short-term to intermediate-term debt securities whose
maturity values or interest rates are determined by reference to the values
of one or more specified foreign currencies, and may offer higher yields
than U.S. dollar-denominated securities of equivalent issuers.
Currency-indexed securities may be positively or negatively indexed; that
is, their maturity value may increase when the specified currency value
increases, resulting in a security that performs similarly to a
foreign-denominated instrument, or their maturity value may decline when
foreign currencies increase, resulting in a security whose price
characteristics are similar to a put on the underlying currency.
Currency-indexed securities may also have prices that depend on the values
of a number of different foreign currencies relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the
credit risks associated with the issuer of the security, and their values
may decline substantially if the issuer's creditworthiness deteriorates.
Recent issuers of indexed securities have included banks, corporations, and
certain U.S. government agencies. Indexed securities may be more
volatile than the underlying instruments.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of each fund's investments and, through reports from
FMR, the Board monitors investments in illiquid instruments. In determining
the liquidity of a fund's investments, FMR may consider various
factors, including (1) the frequency of trades and quotations, (2) the
number of dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset each fund's rights
and obligations relating to the investment). Investments currently
considered by the fund s to be illiquid include repurchase agreements
not entitling the holder to payment of principal and interest within seven
days, non-government stripped fixed-rate mortgage-backed securities, and
over-the-counter options. Also FMR may determine some restricted
securities, government-stripped fixed-rate mortgage-backed securities,
loans and other direct debt instruments, and swap agreements to be
illiquid. However, with respect to over-the-counter options a fund
writes, all or a portion of the value of the underlying instrument may be
illiquid depending on the assets held to cover the option and the nature
and terms of any agreement the fund may have to close out the option
before expiration. In the absence of market quotations, illiquid
investments are priced at fair value as determined in good faith by a
committee appointed by the Board of Trustees. If through a change in
values, net assets, or other circumstances, a fund w ere in a
position where more than 15% of its net assets were invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, the fund s may be obligated to pay all or
part of the registration expense and a considerable period may elapse
between the time it decides to seek registration and the time a fund
may be permitted to sell a security under an effective registration
statement. If, during such a period, adverse market conditions were to
develop, a fund might obtain a less favorable price than prevailed
when it decided to seek registration of the security.
FOREIGN SECURITIES. The funds will normally invest in at least three
different countries, one of which may be the U.S. Investing in securities
issued by companies or other issuers whose principal activities are outside
the United States may involve significant risks not present in U.S.
investments. The value of securities denominated in foreign currencies, and
of dividends and interest paid with respect to such securities, will
fluctuate based on the relative strength of the U.S. dollar. In addition,
there is generally less publicly available information about foreign
issuers, particularly those not subject to the disclosure and reporting
requirements of the U.S. securities laws. Foreign issuers are generally not
bound by uniform accounting, auditing, and financial reporting requirements
and standards of practice comparable to those applicable to U.S. issuers.
Investments in foreign securities also involve the risk of possible adverse
changes in investment or exchange control regulations, expropriation or
confiscatory taxation, limitation on the removal of monies or other
assets of a fund, political or financial instability , or
diplomatic and other developments which could affect such investments.
Further, economies of particular countries or areas of the world may differ
favorably or unfavorably from the economy of the U .S .
It is anticipated that in most cases the best available market for foreign
securities will be on exchanges or in over-the-counter markets located
outside of the U .S . Foreign markets, while growing in volume and
sophistication, are generally not as developed as those in the U .S. ,
and securities of some foreign issuers (particularly those located in
developing countries) may be less liquid and more volatile than securities
of comparable U.S. issuers. Foreign security trad ing practices,
including those involving securities settlement where fund assets may be
released prior to receipt of payment, may expose a fund to increased risk
in the event of a failed trade or the insolvency of a foreign
broker-dealer. In addition, foreign brokerage commissions and other fees
are generally higher than for securities traded in the U .S. and may
be non-negotiable. In general, there is less overall government supervision
and regulation of securities exchanges, brokers, and listed companies than
in the United States.
The fund s may invest in foreign securities that impose restrictions
on transfer within the U .S. or to U .S. persons. Although
securities subject to such transfer restrictions may be marketable abroad,
they may be less liquid than foreign securities of the same class that are
not subject to such restrictions.
The funds may also invest in American Depositary Receipts and European
Depositary Receipts (ADRs and EDRs) which are certificates evidencing
ownership of shares of a foreign-based issuer held in trust by a bank or
similar financial institution. Designed for use in U.S. and European
securities markets, respectively, ADRs and EDRs are alternatives to the
purchase of the underlying securities in their national markets and
currencies.
FMR determines where an issuer is located by looking at such factors as
its country of organization, the primary trading market for its securities,
and the location of its assets, personnel, sales, and earnings. A security
is located in a particular country if: 1) the security is issued or
guaranteed by the government of the country or any of its agencies,
political subdivisions or instrumentalities or has its primary trading
market in that country; or 2) the issuer is organized under the laws of the
country, derives at least 50% of its revenues or profits from goods sold,
investments made or services performed in the country, or has at least 50%
of its assets located in the country.
Currently, the countries not considered to have emerging market
economies are as follows: Australia, Austria, Belgium, Canada, Denmark,
Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New
Zealand, Norway, Spain, Sweden, Switzerland, the United Kingdom, and the
United States.
The risks of international investing may be intensified in the case of
investments in emerging markets or countries with limited or developing
capital markets. Security prices in emerging markets can be significantly
more volatile than in the more developed nations of the world, reflecting
the greater uncertainties of investing in less established markets and
economies. In particular, countries with emerging markets may have
relatively unstable governments, present the risk of nationalization of
businesses, restrictions on foreign ownership, or prohibitions of
repatriation of assets, and may have less protection of property rights
than more developed countries. The economies of countries with emerging
markets may be predominantly based on only a few industries, may be highly
vulnerable to changes in local or global trade conditions, and may suffer
from extreme and volatile debt burdens or inflation rates. Local securities
markets may trade a small number of securities and may be unable to respond
effectively to increases in trading volume, potentially making prompt
liquidation of substantial holdings difficult or impossible at times.
Securities of issuers located in countries with emerging markets may have
limited marketability and may be subject to more abrupt or erratic price
movements.
FOREIGN CURRENCY TRANSACTIONS. The fund s may conduct foreign
currency transactions on a spot (i.e., cash) basis, or by entering into
forward contracts to purchase or sell foreign currencies at a future date
and price. Each fund will convert currency on a spot basis from time
to time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers generally do not charge a fee for
conversion, they do realize a profit based on the difference between the
prices at which they are buying and selling various currencies. Thus, a
dealer may offer to sell a foreign currency to a fund at one rate,
while offering a lesser rate of exchange should th e fund desire to
resell that currency to the dealer. Forward contracts are generally traded
in an interbank market conducted directly between currency traders (usually
large commercial banks) and their customers. The parties to a forward
contract may agree to offset or terminate the contract before its maturity,
or may hold the contract to maturity and complete the contemplated currency
exchange.
Each fund may use currency forward contracts for any purpose
consistent with its investment objective. The following discussion
summarizes some, but not all, of the possible currency management
strategies involving forward contracts that could be used by a fund.
A fund may also use options and futures contracts relating to
foreign currencies for the same purposes.
When a fund agrees to buy or sell a security denominated in a
foreign currency, it may desire to "lock in" the U.S. dollar price of the
security. By entering into a forward contract for the purchase or sale, for
a fixed amount of U.S. dollars, of the amount of foreign currency involved
in the underlying security transaction, the fund will be able to protect
itself against an adverse change in foreign currency values between the
date the security is purchased or sold and the date on which payment is
made or received. This technique is sometimes referred to as a "settlement
hedge" or "transaction hedge." The funds may also enter into forward
contracts to purchase or sell a foreign currency in anticipation of future
purchases or sales of securities denominated in that currency, even if the
specific investments have not yet been selected by FMR.
The fund s may also use forward contracts to hedge against a
decline in the value of existing investments denominated in foreign
currency. For example, if a fund owned securities denominated in
pounds sterling, that fund could enter into a forward contract to
sell pounds sterling in return for U.S. dollars to hedge against possible
declines in the pound's value. Such a hedge, sometimes referred to as a
"position hedge," would tend to offset both positive and negative currency
fluctuations, but would not offset changes in security values caused by
other factors. A fund could also hedge the position by selling
another currency expected to perform similarly to the pound sterling, for
example, by entering into a forward contract to sell Deutsche Marks or
European Currency Units in return for U.S. dollars. This type of hedge,
sometimes referred to as a "proxy hedge," could offer advantages in
terms of cost, yield or efficiency, but generally will not hedge currency
exposure as effectively as a simple hedge into U.S. dollars. Proxy hedges
may result in losses if the currency used to hedge does not perform
similarly to the currency in which the hedged securities are denominated.
The funds may enter into forward contracts to shift its investment
exposure from one currency into another currency that is expected to
perform better relative to the U.S. dollar. For example, if a fund
held investments denominated in Deutsche Marks, the fund could enter into
forward contracts to sell Deutsche Marks and purchase Swiss Francs. This
type of strategy, sometimes known as a "cross-hedge," will tend to reduce
or eliminate exposure to the currency that is sold, and increase exposure
to the currency that is purchased, much as if the fund had sold a security
denominated in one currency and purchased an equivalent security
denominated in another. Cross-hedges protect against losses resulting from
a decline in the hedged currency, but will cause a fund to assume
the risk of fluctuations in the value of the currency it purchases.
Under certain conditions, SEC guidelines require mutual funds to set aside
appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the fund s
will segregate assets to cover currency forward contracts, if any, whose
purpose is essentially speculative. The fund s will not segregate
assets to cover forward contracts entered into for hedging purposes,
including settlement hedges, position hedges, and proxy hedges.
Successful use of forward currency contracts will depend on FMR's skill in
analyzing and predicting currency values. Forward contracts may
substantially change a fund's investment exposure to changes in
currency exchange rates, and could result in losses to the fund if
currencies do not perform as FMR anticipates. For example, if a currency's
value rose at a time when FMR had hedged a fund by selling that currency in
exchange for dollars, th e fund would be unable to participate in the
currency's appreciation. If FMR hedges currency exposure through proxy
hedges, a fund could realize currency losses from the hedge and the
security position at the same time if the two currencies do not move in
tandem. Similarly, if FMR increases a fund's exposure to a foreign
currency, and that currency's value declines, the fund will realize a loss.
There is no assurance that FMR's use of forward currency contracts will be
advantageous to the fund s or that they will hedge at an appropriate
time.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund intends to file
a notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets, before engaging in any purchases or sales of futures
contracts or options on futures contracts. Each fund intends to comply with
Section 4.5 of the regulations under the Commodity Exchange Act, which
limits the extent to which a fund can commit assets to initial
margin deposits and option s premiums.
In addition, each fund will not: (a) sell futures contracts,
purchase put options, or write call options if, as a result, more than 25%
of the fund's total assets would be hedged with futures and options under
normal conditions; (b) purchase futures contracts or write put options if,
as a result, th e fund's total obligations upon settlement or
exercise of purchased futures contracts and written put options would
exceed 25% of its total assets; or (c) purchase call options if, as a
result, the current value of option premiums for call options purchased by
a fund would exceed 5% of the fund's total assets. These limitations
do not apply to options attached to, or acquired or traded together with,
their underlying securities, and do not apply to securities that
incorporate features similar to options.
The above limitations on the funds' investments in futures contracts and
options, and each fund ' s policies regarding futures contracts
and options discussed elsewhere in this Statement of Additional Information
may be changed as regulatory agencies permit.
FUTURES CONTRACTS. When a fund purchases a futures contract, it
agrees to purchase a specified underlying instrument at a specified future
date. When the fund sells a futures contract, it agrees to sell the
underlying instrument at a specified future date. The price at which the
purchase and sale will take place is fixed when the fund enters into the
contract. Futures can be held until their delivery dates, or can be closed
out before then if a liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase a fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When a fund sells a
futures contract, by contrast, the value of its futures position will tend
to move in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on
margin for purposes of each fund's investment limitations. In
the event of the bankruptcy of an FCM that holds margin on behalf of
a fund, th e fund may be entitled to return of margin owed to it
only in proportion to the amount received by the FCM's other customers,
potentially resulting in losses to the fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund pays
the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. A
fund may terminate its position in a put option it has purchased by
allowing it to expire or by exercising the option. If the option is allowed
to expire, the fund will lose the entire premium it paid. If a fund
exercises the option, it completes the sale of the underlying instrument at
the strike price. A fund may also terminate a put option position by
closing it out in the secondary market at its current price, if a liquid
secondary market exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it
takes the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the fund assumes the obligation
to pay the strike price for the option's underlying instrument if the other
party to the option chooses to exercise it. When writing an option on a
futures contract , a fund will be required to make margin
payments to an FCM as described above for futures contracts. A fund
may seek to terminate its position in a put option it writes before
exercise by closing out the option in the secondary market at its current
price. If the secondary market is not liquid for a put option a fund
has written, however, th e fund must continue to be prepared to pay
the strike price while the option is outstanding, regardless of price
changes, and must continue to set aside assets to cover its position.
If security prices rise, a put writer would expect to profit, although its
gain would be limited to the amount of the premium it received. If security
prices remain the same over time, it is likely that the writer will also
profit, because it should be able to close out the option at a lower price.
If security prices fall, the put writer would expect to suffer a loss. This
loss should be less than the loss from purchasing the underlying instrument
directly, however, because the premium received for writing the option
should mitigate the effects of the decline.
Writing a call option obligates a fund to sell or deliver the
option's underlying instrument, in return for the strike price, upon
exercise of the option. The characteristics of writing call options are
similar to those of writing put options, except that writing calls
generally is a profitable strategy if prices remain the same or fall.
Through receipt of the option premium, a call writer mitigates the effects
of a price decline. At the same time, because a call writer must be
prepared to deliver the underlying instrument in return for the strike
price, even if its current value is greater, a call writer gives up some
ability to participate in security price increases.
COMBINED POSITIONS. The fund s may purchase and write options
in combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the overall
position. For example, a fund may purchase a put option and write a
call option on the same underlying instrument, in order to construct a
combined position whose risk and return characteristics are similar to
selling a futures contract. Another possible combined position would
involve writing a call option at one strike price and buying a call option
at a lower price, in order to reduce the risk of the written call option in
the event of a substantial price increase. Because combined options
positions involve multiple trades, they result in higher transaction costs
and may be more difficult to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match a fund's current or
anticipated investments exactly. Each fund may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which it typically invests,
which involves a risk that the options or futures position will not track
the performance of the fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a
fund's investments well. Options and futures prices are affected by such
factors as current and anticipated short-term interest rates, changes in
volatility of the underlying instrument, and the time remaining until
expiration of the contract, which may not affect security prices the same
way. Imperfect correlation may also result from differing levels of demand
in the options and futures markets and the securities markets, from
structural differences in how options and futures and securities are
traded, or from imposition of daily price fluctuation limits or trading
halts. A fund may purchase or sell options and futures contracts
with a greater or lesser value than the securities it wishes to hedge or
intends to purchase in order to attempt to compensate for differences in
volatility between the contract and the securities, although this may not
be successful in all cases. If price changes in a fund's options or
futures positions are poorly correlated with its other investments, the
positions may fail to produce anticipated gains or result in losses that
are not offset by gains in other investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular options or futures contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for a
fund to enter into new positions or close out existing positions. If the
secondary market for a contract is not liquid because of price fluctuation
limits or otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require a fund to continue to hold
a position until delivery or expiration regardless of changes in its value.
As a result, a fund's access to other assets held to cover its
options or futures positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (options not traded on
exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows
a fund greater flexibility to tailor an option to its needs, OTC
options generally involve greater credit risk than exchange-traded options,
which are guaranteed by the clearing organization of the exchanges where
they are traded.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above.
Each fund may purchase and sell currency futures and may purchase
and write currency options to increase or decrease its exposure to
different foreign currencies. A fund may also purchase and write
currency options in conjunction with each other or with currency futures or
forward contracts. Currency futures and options values can be expected to
correlate with exchange rates, but may not reflect other factors that
affect the value of the fund's investments. A currency hedge, for
example, should protect a Yen-denominated security from a decline in the
Yen, but will not protect the fund against a price decline resulting
from deterioration in the issuer's creditworthiness. Because the value of
a fund's foreign-denominated investments changes in response to many
factors other than exchange rates, it may not be possible to match the
amount of currency options and futures to the value of the fund's
investments exactly over time.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The fund s will
comply with guidelines established by the S EC with respect to
coverage of options and futures strategies by mutual funds, and if the
guidelines so require will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held in a
segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with other suitable assets. As a
result, there is a possibility that segregation of a large percentage of
a fund's assets could impede portfolio management or a fund's
ability to meet redemption requests or other current obligations.
WARRANTS. Warrants are securities that give a fund the right to purchase
equity securities from the issuer at a specific price (the strike price)
for a limited period of time. The strike price of warrants typically is
much lower than the current market price of the underlying securities, yet
they are subject to similar price fluctuations. As a result, warrants may
be more volatile investments than the underlying securities and may offer
greater potential for capital appreciation as well as capital loss.
Warrants do not entitle a holder to dividends or voting rights with
respect to the underlying securities and do not represent any rights in the
assets of the issuing company. Also, the value of the warrant does not
necessarily change with the value of the underlying securities and a
warrant ceases to have value if it is not exercised prior to the expiration
date. These factors can make warrants more speculative than other types of
investments.
SPECIAL CONSIDERATIONS AFFECTING EUROPE
New developments surrounding the creation of a unified common market in
Europe have helped to reduce physical and economic barriers promoting the
free flow of goods and services throughout Western Europe. These new
developments could make this new unified market one of the largest in the
world. However, encouraging signs of stronger growth in North America
contrasted with marked deterioration in economic performance in Europe,
where recessionary tendencies persisted through much of 1993. The sharp
slowing of growth in Europe reflects a range of adverse factors, including
tight monetary conditions, inadequate progress toward inflation convergence
and budgetary consolidation in many countries, and the attendant weakness
of consumer and business confidence. More generally, the turbulence in
foreign exchange markets since the middle of 1992 and an escalation of
tensions over trade have contributed to increased uncertainty in many
countries.
The economic situation also remains difficult for countries in
transition from central planning, following what has already been a sizable
decline in output. The contraction now appears to be bottoming out in
parts of central Europe, where some countries are projected to register
positive growth in 1994. But key aspects of the reform and stabilization
efforts have not yet been fully implemented, and there remain risks of
policy slippages. In the Russian Federation and most other countries of
the former Soviet Union, economic conditions are of particular concern
because of economic instability due to political unrest and armed conflicts
in many regions.
Notwithstanding the continued economic difficulties in many countries,
recent positive developments offer hope for a cooperative growth strategy
in the near term, which could also permit a strengthening of global
economic performance over the medium term. Many developing countries are
reaping the fruits of sustained reform and stabilization efforts. There
are now early signs of recovery in some of the economies in transition.
Efforts to enhance assistance to countries affected by the transition to
market-based trading systems occurring in central Europe and the former
Soviet Union, and to low-income countries to support strengthened
stabilization and restructuring efforts, are moving forward. In Europe,
exchange market tensions have eased, and interest rates have been falling
and should continue to do so as evidence accumulates of the waning of
inflationary pressures.
The European Community (EC) consists of Belgium, Denmark, France,
Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal,
Spain, and the United Kingdom (the member states). In 1986, the member
states of the EC signed the "Single European Act," an agreement committing
these countries to the establishment of a market among themselves,
unimpeded by internal barriers or hindrances to the free movement of goods,
persons, services, or capital. To meet this goal, a series of directives
have been issued to the member states. Compliance with these directives is
designed to eliminate three principal categories of barriers: 1) physical
frontiers, such as customs posts and border controls; 2) technical barriers
(which include restrictions operating within national territories) such as
regulations and norms for goods and services (product standards);
discrimination against foreign bids (bids by other EC members) on public
purchases; or restrictions on foreign requests to establish subsidiaries;
and (3) fiscal frontiers, notably the need to levy value-added taxes,
tariffs, or excises on goods or services imported from other EC states.
The ultimate goal of this project is to achieve a large unified domestic
European market in which available resources would be more efficiently
allocated through the elimination of the above-mentioned barriers and the
added costs associated with those barriers. Elimination of these barriers
would simplify product distribution networks, allow economies of scale to
be more readily achieved, and free the flow of capital and other resources.
The Maastricht Treaty on economic and monetary union (EMU) attempts to
provide its members with a stable monetary framework consistent with the
EC's broad economic goals. But until the EMU takes effect, which is
intended to occur between 1997 and 1999, the community will face the need
to reinforce monetary cooperation in order to reduce the risk of a
recurrence of tensions between domestic and external policy objectives.
The total European market, as represented by both EC and non-EC
countries, consists of over 328 million consumers, making it larger
currently than either the United States or Japanese markets. European
businesses compete nationally and internationally in a wide range of
industries including: telecommunications and information services, roads
and transportation, building materials, food and beverages, broadcast and
media, financial services, electronics, and textiles. Actual and
anticipated actions on the part of member states to conform to the unified
Europe directives has prompted interest and activity not only by European
firms, but also by foreign entities anxious to establish a presence in
Europe that will result from these changes. Indications of the effect of
this response to a unified Europe can be seen in the areas of mergers and
acquisitions, corporate expansion and development, GNP growth, and national
stock market activity.
The early experience of the former centrally planned economies has
already demonstrated the crucially important link between structural
reforms, macroeconomic stabilization, and successful economic
transformation. Among the central European countries, the Czech Republic,
Hungary, and Poland have made the greatest progress in structural reform;
inflationary pressures there have abated following price liberalization,
and output has begun to recover. These achievements will be difficult to
sustain, however, in the absence of strong efforts to contain the large
fiscal deficits that have accompanied the considerable losses of output and
tax revenue since the start of the reform process.
In the Baltic countries there are encouraging signs that reforms are
taking hold and are being supported by strong stabilization efforts. In
most other countries of the former Soviet Union, in contrast, inadequate
stabilization efforts now threaten to lead to hyper-inflation, which could
derail the reform process. Inflation, which had abated following the
immediate impact of price liberalization in early 1992, surged to extremely
high levels in late 1992 and early 1993. The main reason for this
development has been excessive credit expansion to the government and to
state enterprises. The transformation process is being seriously hampered
by the widespread subsidization of inefficient enterprises and the
resulting misallocation of resources. The lack of effective economic and
monetary cooperation among the countries of the former Soviet Union
exacerbates other problems by severely constraining trade flows and
impeding inflation control. Partly as a result of these difficulties, some
countries have decided that the introduction of separate currencies offers
the best scope for avoiding hyper-inflation and for improving economic
conditions. This development can facilitate the implementation of stronger
stabilization programs. Economic conditions appear to have improved for
some of the transition economies of central Europe during the past year.
Following three successive years of output declines, there are preliminary
indications of a turnaround in the former Czech and Slovak Federal
Republic, Hungary, and Poland; growth in private sector activity and strong
exports, especially to Western Europe, now appear to have contained the
fall in output. Most central European countries in transition, however,
are expected to achieve positive real growth in 1994 as market reforms
deepen. The strength of the projected output gains will depend crucially
on the ability of the reforming countries to contain fiscal deficits and
inflation and on their continued access to, and success in, export markets.
Economic conditions in the former Soviet Union have continued to
deteriorate. Real GDP in Russia is estimated to have fallen 19 percent in
1992, after a 9 percent decline in 1991. In many other countries of the
region, output losses have been even larger. These declines reflect the
adjustment difficulties during the early stages of the transition, high
rates of inflation, the compression of imports, disruption in trade among
the countries of the former Soviet Union, and uncertainties about the
reform process itself. Large-scale subsidies are delaying industrial
restructuring and are exacerbating the fiscal situation. A reversal of
these adverse factors is not anticipated in the near term, and output is
expected to decline further in most of these countries. A number of their
governments, including those of Hungary and Poland, are currently
implementing or considering reforms directed at political and economic
liberalization, including efforts to foster multi-party political systems,
decentralize economic planning, and move toward free market economies. At
present, no Eastern European country has a developed stock market, but
Poland, Hungary and the Czech Republic have small securities markets in
operation. Ethnic and civil conflict currently rage throughout the former
Yugoslavia. The outcome is uncertain.
Both the EC and Japan, among others, have made overtures to establish
trading arrangements and assist in the economic development of the Eastern
European nations. In the rest of Europe, monetary policy and financial
market developments have been dominated by the currency turmoil that began
in September 1992. At the same time, conditions are improving for
significant reductions of official interest rates in Europe, which should
help to contain recessionary forces and ensure that recovery takes hold by
1994. There is also an urgent need for positive steps to resist
protectionist pressures, especially by bringing the multilateral trade
negotiations under the Uruguay Round of the General Agreement on Trade and
Tariffs (GATT) to a successful conclusion. Determined action to alleviate
short-term difficulties and to achieve key medium-term objectives would
unquestionably strengthen consumer and business confidence. Interest rates
generally have declined somewhat with the easing of tensions in the
Exchange Rate Mechanism (ERM), but for most countries tight monetary
conditions remain an obstacle to stronger growth and a threat to exchange
market stability. However, in the long-term, reunification could prove to
be an engine for domestic and international growth.
The conditions that have given rise to these developments are
changeable, and there is no assurance that reforms will continue or that
their goals will be achieved.
REAL GNP / GDP ANNUAL RATE OF GROWTH
OCTOBER 1993
Denmark 0.0%
France 1.3
Germany 1.2
Italy 2.9
Netherlands 3.6
Spain 0.1
Switzerland (1.1)
United Kingdom 1.1
Source: International Monetary Fund
(Figures are quoted based on each country's domestic currency.)
NATIONAL INDICES* (OCTOBER 1993)
EUROPE
1 month 12 months 5 years
Greece 10.45 24.86 14.74
Portugal 22.39 27.11 (1.69)
Turkey 50.18 156.34 35.59
*Growth in U.S. dollars.
Source: Morgan Stanley
NATIONAL INDICES(see note) (OCTOBER 1993)
EUROPE
1 month 12 months 5 years
Greece 23.04 49.41 26.64
Portugal 43.86 59.07 1.55
Turkey 101.04 322.29 104.04
(see note)Growth in local currency.
Source: Morgan Stanley
SPECIAL CONSIDERATIONS AFFECTING JAPAN, THE PACIFIC BASIN, AND SOUTHEAST
ASIA
Many Asian countries may be subject to a greater degree of social,
political and economic instability than is the case in the United States
and Western European countries. Such instability may result from (i)
authoritarian governments or military involvement in political and economic
decision-making; (ii) popular unrest associated with demands for improved
political, economic and social conditions; (iii) internal insurgencies;
(iv) hostile relations with neighboring countries; and (v) ethnic,
religious and racial disaffection.
The economies of most of the Asian countries are heavily dependent upon
international trade and are accordingly affected by protective trade
barriers and the economic conditions of their trading partners,
principally, the United States, Japan, China and the European Community.
The enactment by the United States or other principal trading partners of
protectionist trade legislation, reduction of foreign investment in the
local economies and general declines in the international securities
markets could have a significant adverse effect upon the securities markets
of the Asian countries.
Thailand has one of the fastest-growing stock markets in the world. The
manufacturing sector is becoming increasingly sophisticated and is
benefiting from export-oriented investing. The manufacturing and service
sectors continue to account for the bulk of Thailand's economic growth.
The agricultural sector continues to become less important. The government
has followed fairly sound fiscal and monetary policies, aided by increased
tax receipts from a fast moving economy. The government also continues to
move ahead with new projects - especially telecommunications, roads and
port facilities - needed to refurbish the country's overtaxed
infrastructure. Nonetheless, political unrest coupled with the shooting of
antigovernment demonstrators in May 1992 has caused many international
businesses to question Thailand's political stability.
Hong Kong's impending return to Chinese dominion in 1997 has not
initially had a positive effect on its economic growth which was vigorous
in the 1980s. Although China has committed by treaty to preserve the
economic and social freedoms enjoyed in Hong Kong for 50 years after
regaining control of Hong Kong, the continuation of the current form of the
economic system in Hong Kong after the reversion will depend on the actions
of the government of China. Business confidence in Hong Kong, therefore,
can be significantly affected by such developments, which in turn can
affect markets and business performance. In preparation for 1997, Hong
Kong has continued to develop trade with China, where it is the largest
foreign investor, while also maintaining its long-standing export
relationship with the United States. Spending on infrastructure
improvements is a significant priority of the colonial government while
the private sector continues to diversify abroad based on its position as
an established international trade center in the Far East.
In terms of GDP, industrial standards and level of education, South
Korea is second only to Japan in Asia. It enjoys the benefits of a
diversified economy with well-developed sectors in electronics,
automobiles, textiles and shoe manufacture, steel and shipbuilding among
others. The driving force behind the economy's dynamic growth has been the
planned development of an export-oriented economy in a vigorously
entrepreneurial society. Real GDP grew about 4.3% in 1993. Labor unrest
was noticeably calmer, unemployment averaged a low of 2.3%, and investment
was strong. Inflation rates, however, are beginning to challenge South
Korea's strong economic performance. Both Koreas joined the United Nations
separately in late 1991, creating another forum for negotiation and joint
cooperation. Reunification of North Korea and South Korea could have a
detrimental effect on the economy of South Korea.
Indonesia is a mixed economy with many socialist institutions and
central planning but with a recent emphasis on deregulation and private
enterprise. Like Thailand, Indonesia has extensive natural wealth, yet
with a large and rapidly increasing population, it remains a poor country.
Indonesia's dependence on commodity exports makes it vulnerable to a fall
in world commodity prices.
Malaysia has one of the fastest-growing economies in the Asian-Pacific
region. Malaysia has become the world's third-largest producer of
semiconductor devices (after the U.S. and Japan) and the world's largest
exporter of semiconductor devices. More remarkable is the country's
ability to achieve rapid economic growth with relative price stability (2%
inflation over the past five years) as the government followed prudent
fiscal/monetary policies. Malaysia's high export dependence level leaves
it vulnerable to a recession in the Organization for Economic Cooperation
and Development countries or a fall in world commodity prices.
Singapore has an open entrepreneurial economy with strong service and
manufacturing sectors and excellent international trading links derived
from its history. During the 1970s and the early 1980s, the economy
expanded rapidly, achieving an average annual growth rate of 9%. Per
capita GDP is among the highest in Asia. Singapore holds a position as a
major oil refining and services center.
Japan currently has the second-largest GDP in the world. The Japanese
economy has grown substantially over the last three decades. Its growth
rate averaged over 5% in the 1970s and 1980s. However, in 1992, the growth
rate in Japan slowed to 0.6% and their budget showed a deficit of 11/2%
percent of GDP. Despite small rallies and market gains, Japan has been
plagued with economic sluggishness. Economic conditions have weakened
considerably in Japan since October 1992. The boom in Japan's equity and
property markets during the expansion of the late 1980's supported high
rates of investment and consumer spending on durable goods, but both of
these components of demand have now retreated sharply following the decline
in asset prices. Profits have fallen sharply, the previously tight labor
market conditions have eased considerably, and consumer confidence is low.
The banking sector has experienced a sharp rise in non-performing loans,
and strains in the financial system are likely to continue. The decline in
interest rates and the two large fiscal stimulus packages should help to
contain the recessionary forces, but substantial uncertainties remain. The
general government position has deteriorated as a result of weakening
economic growth, as well as stimulative measures taken recently to support
economic activity and to restore financial stability.
Although Japan's economic growth has declined significantly since 1990,
many Japanese companies seem capable of rebounding due to increased
investments, smaller borrowings, increased product development and
continued government support. Growth is expected to recover in 1994.
Japan's economic growth in the early 1980s was due in part to government
borrowings. Japan is heavily dependent upon international trade and,
accordingly, has been and may continue to be adversely affected by trade
barriers, and other protectionist or retaliatory measures of, as well as
economic conditions in, the U.S. and other countries with which they trade.
Industry, the most important sector of the economy, is heavily dependent on
imported raw materials and fuels. Japan's major industries are in the
engineering, electrical, textile, chemical, automobile, fishing, and
telecommunication fields. Japan imports iron ore, copper, and many forest
products. Only 19% of its land is suitable for cultivation. Japan's
agricultural economy is subsidized and protected. It is about 50%
self-sufficient in food production. Even though Japan produces a minute
rice surplus, it is dependent upon large imports of wheat, sorghum, and
soybeans from other countries. Japan's high volume of exports such as
automobiles, machine tools, and semiconductors have caused trade tensions
with other countries, particularly the United States. Attempts to approve
trading agreements between the countries may reduce the friction caused by
the current trade imbalance.
Australia has a prosperous Western-style capitalist economy, with a per
capita GDP comparable to levels in industrialized Western European
countries. It is rich in natural resources and is the world's largest
exporter of beef and wool, second-largest for mutton, and is among the top
wheat exporters. Australia is also a major exporter of minerals, metals
and fossil fuels. Due to the nature of its exports, a downturn in world
commodity prices can have a big impact on its economy.
EMERGING MARKETS: ASIA
MARKET CAPITALIZATION IN U.S. DOLLARS
SEPTEMBER 1993
Billions:
India 29.25
Indonesia 10.85
Korea 70.61
Malaysia 87.76
Pakistan 4.74
Philippines 14.28
Sri Lanka .79
Taiwan 52.34
Thailand 48.82
NATIONAL INDICES* OCTOBER 1993
ASIA
1 month 12 months 5 years
India 30.20 n/a n/a
Indonesia 42.45 39.03 26.80
Israel 6.50 n/a n/a
Jordan 7.41 34.15 4.70
Korea .30 19.89 (4.08)
Malaysia 42.47 67.80 23.91
Pakistan 29.19 n/a n/a
Philippines 32.73 47.36 24.44
Sri Lanka 57.91 n/a n/a
Taiwan (13.43) 5.81 (8.48)
Thailand 41.73 42.95 24.47
*Growth in U.S. dollars.
Source: Morgan Stanley
NATIONAL INDICES(see note) OCTOBER 1993
ASIA
1 month 12 months 5 years
India 30.32 n/a n/a
Indonesia 43.96 42.84 32.09
Israel 12.52 n/a n/a
Jordan 9.92 36.89 13.63
Korea 1.79 23.82 (1.33)
Malaysia 41.95 70.92 22.83
Pakistan 45.39 n/a n/a
Philippines 46.90 74.26 32.75
Sri Lanka 62.12 n/a n/a
Taiwan (10.24) 12.01 (9.56)
Thailand 42.47 42.83 24.48
(see note)Growth in local currency.
Source: Morgan Stanley
ASIAN STOCK MARKET RETURNS (OCTOBER 1993)
<TABLE>
<CAPTION>
<S> <C> <C>
Average annual stock market Stock market returns
return (Local currency %)
(Local currency%)
1989-1992 11 months to November 30, 1993
China n/a n/a
Hong Kong 17.9 64.6
India 36.9 27.6
Indonesia 4.0 80.5
Japan (14.2) 5.6
Korea (9.0) 19.7
Malaysia 12.2 67.8
Philippines 25.4 86.9
Singapore 7.1 32.2
Taiwan (11.2) 32.0
Thailand 22.5 53.6
</TABLE>
REAL GDP (OCTOBER 1993)
Average Real GDP
Growth for the Period
Nominal GDP
1980-1992 1992
% (US$ billions)
China 9.7 435(a)
Hong Kong 6.8 96
India 5.3 266
Indonesia 5.6 126
Japan 4.0 3,670
Korea 9.2 297
Malaysia 5.9 55
Philippines 1.0 52
Singapore 6.5 46
Taiwan 7.6 207
Thailand 7.9 104
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICA
Latin America is a region rich in natural resources such as oil, copper,
tin, silver, iron ore, forestry, fishing, livestock, and agriculture. The
region has a large population (roughly 300 million) representing a large
domestic market. Economic growth was strong in the 1960s and 1970s, but
slowed dramatically in the 1980s as a result of poor economic policies,
higher international interest rates and the denial of access to new foreign
capital. Capital flight has proven a persistent problem and external debt
has been forcibly rescheduled. Political turmoil, high inflation, capital
repatriation restrictions and nationalization have further exacerbated
conditions.
Changes in political leadership, the implementation of market-oriented
economic policies, such as privatization, trade reform and fiscal and
monetary reform are among the recent steps taken to renew economic growth.
External debt is being restructured and flight capital (domestic capital
that has left the home country) has begun to return. Inflation control
efforts have also been implemented. A Free trade zone has been established
in various areas around the region, the most notable being a free zone
between Mexico, the U.S. and Canada. Latin American equity markets can be
extremely volatile and in the past have shown little correlation with the
U.S. market. Currencies are typically weak, but most are now relatively
free floating, and it is not unusual for the currencies to undergo wide
fluctuations in value over short periods of time due to changes in the
market.
Mexico's economy is a mixture of state-owned industrial plants (notably
oil), private manufacturing and services, and both large-scale and
traditional agriculture. In the 1980s, Mexico experienced severe economic
difficulties: the nation accumulated large external debts as world
petroleum prices fell; rapid population growth outstripped the domestic
food supply; and inflation, unemployment, and pressures to emigrate became
more acute. Growth in national output, however, appears to be recovering,
rising from 1.4% in 1988 to 3.9% in 1990. The U.S. is Mexico's major
trading partner, accounting for two-thirds of its exports and imports. In
fact, the U.S. now exports more goods to Mexico than to Japan. After
petroleum, border assembly plants and tourism are the largest earners of
foreign exchange. The government, in consultation with international
economic agencies, is implementing programs to stabilize the economy and
foster growth. Mexico, the U.S. and Canada will implement the North
American Free Trade Agreement, beginning in 1994. This cooperation is
expected to lead to increased trade and reduced barriers.
Brazil entered the 1990s with declining real growth, runaway inflation,
an unserviceable foreign debt of $122 billion, and a lack of policy
direction. A major long-run strength is Brazil's natural resources. Iron
ore, bauxite, tin, gold, and forestry products make up some of Brazil's
basic natural resource base, which includes some of the largest mineral
reserves in the world. A vibrant private sector is marred by an inefficient
public sector. The government has embarked on an ambitious reform program
that seeks to modernize and reinvigorate the economy by stabilizing prices,
deregulating the economy, and opening it to increased foreign competition.
In terms of population, Brazil is the sixth-largest in the world with about
155 million people and represents a huge domestic market.
Chile, like Brazil, is endowed with considerable mining resources, in
particular copper. Economic reform has been ongoing in Chile for at least
15 years, but political democracy has only recently returned to Chile.
Privatization of the public sector beginning in the early 1980s has
bolstered the equity market. A well-organized pension system has created a
long-term domestic investor base.
Argentina is strong in wheat production and other foodstuffs and
livestock ranching. A well-educated and skilled population boasts one of
the highest literacy rates in the region. The country has been ravaged by
decades of extremely high inflation and political instability. Recent
attempts by the present political regime to slow inflation and rationalize
government spending appear to be meeting with some success. Privatization
is ongoing and should reduce the amount of external debt outstanding.
Venezuela has substantial oil reserves. External debt is being
renegotiated, and the government is implementing economic reform in order
to reduce the size of the public sector. Internal gasoline prices, which
are one-third those of international prices, are being increased in order
to reduce subsidies. Plans for privatization and exchange and interest
rate liberalization are examples of recently introduced reforms.
EMERGING MARKETS: LATIN AMERICA
MARKET CAPITALIZATION IN U.S. DOLLARS
SEPTEMBER 1993
Billions:
Argentina 24.99
Brazil 48.62
Chile 22.77
Colombia 4.89
Mexico 89.46
Peru 3.00
Venezuela 4.83
NATIONAL INDICES* OCTOBER 1993
LATIN AMERICA
1 month 12 months 5 years
Argentina 38.32 57.19 43.89
Brazil 34.75 59.55 17.76
Chile 22.52 5.29 39.10
Colombia 28.01 n/a n/a
Mexico 19.14 23.46 55.30
Peru 49.87 n/a n/a
Venezuela (2.97) n/a n/a
*Growth in U.S. dollars.
Source: Morgan Stanley
NATIONAL INDICES(see note) OCTOBER 1993
LATIN AMERICA
1 month 12 months 5 years
Argentina 38.54 58.79 427.44
Brazil 626.43 3354.77 1434.40
Chile 24.74 16.14 54.05
Colombia 35.13 n/a n/a
Mexico 19.87 23.74 65.40
Peru 66.63 n/a n/a
Venezuela 13.46 n/a n/a
(see note)Growth in local currency.
Source: Morgan Stanley
SPECIAL CONSIDERATIONS AFFECTING AFRICA
Africa is a continent of roughly 50 countries with a total population of
approximately 840 million people. Literacy rates (the percentage of people
who are over 15 years of age and who can read and write) are relatively
low, ranging from 20% to 60%. The primary industries include crude oil,
natural gas, manganese ore, phosphate, bauxite, copper, iron, diamond,
cotton, coffee, cocoa, timber, tobacco, sugar, tourism, and cattle.
Many of the countries are fraught with political instability. However,
there has been a trend over the past five years toward democratization.
Many countries are moving from a military style, Marxist, or single party
government to a multi-party system. Still, there remain many countries that
do not have a stable political process. Other countries have been enmeshed
in civil wars and border clashes.
Economically, the Northern Rim countries (including Morocco, Egypt, and
Algeria) and Nigeria, Zimbabwe, and South Africa are the wealthier
countries on the continent due to their strong ties with the European
nations. The market capitalization of these countries has been growing
recently as more international companies invest in Africa and as local
companies start to list on the exchanges. However, religious strife has
been a significant source of instability.
On the other end of the economic spectrum are countries, such as Burkina,
Madagascar, and Malawi, that are considered to be among the poorest or
least developed in the world. These countries are generally landlocked or
have poor natural resources. The economies of many African countries are
heavily dependent on international oil prices. Of all the African
industries, oil has been the most lucrative, accounting for 40% to 60% of
many countries' Gross Domestic Product. However, general decline in oil
prices has had an adverse impact on many economies.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the fund s by FMR pursuant to authority contained in
each fund's management contract. If FMR grants investment management
authority to the sub-advisers (see the section entitled "Management
Contract" beginning on page ), the sub-advisers will be authorized
to place orders for the purchase and sale of portfolio securities, and will
do so in accordance with the policies described below. FMR is also
responsible for the placement of transaction orders for other investment
companies and accounts for which it or its affiliates act as investment
adviser. In selecting broker-dealers, subject to applicable limitations of
the federal securities laws, FMR will consider various relevant factors,
including, but not limited to, the size and type of the transaction; the
nature and character of the markets for the security to be purchased or
sold; the execution efficiency, settlement capability, and financial
condition of the broker-dealer firm; the broker-dealer's execution services
rendered on a continuing basis; and the reasonableness of any commissions.
Commissions for foreign investments traded on foreign exchanges will
generally be higher than for U.S. investments and may not be subject to
negotiation.
The fund s may execute portfolio transactions with broker-dealers who
provide research and execution services to the fund s or other
accounts over which FMR or its affiliates exercise investment discretion.
Such services may include advice concerning the value of securities; the
advisability of investing in, purchasing, or selling securities; the
availability of securities or the purchasers or sellers of securities;
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and performance of
accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). The selection of
such broker-dealers is generally made by FMR (to the extent possible
consistent with execution considerations) in accordance with a ranking of
broker-dealers determined periodically by FMR's investment staff and
is based upon the quality of research and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the fund s may be useful to FMR in rendering investment
management services to the fund s or its other clients, and
conversely, such information provided by broker-dealers who have executed
transaction orders on behalf of other FMR clients may be useful to FMR in
carrying out its obligations to the funds. The receipt of such research has
not reduced FMR's normal independent research activities; however, it
enables FMR to avoid additional expenses that could be incurred if FMR
tried to develop comparable information through its own efforts.
Subject to the applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research or execution services. In order to cause
a fund to pay such higher commissions, FMR must determine in good
faith that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the fund and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the fund s or shares of other
Fidelity funds to the extent permitted by law. FMR may use research
services provided by and place agency transactions with Fidelity Brokerage
Services, Inc. (FBSI) and Fidelity Brokerage Services, Ltd. (FBSL),
subsidiaries of FMR Corp., if the commissions are fair, reasonable, and
comparable to commissions charged by non-affiliated, qualified brokerage
firms for similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except if certain
requirements are satisfied. Pursuant to such requirements , the
Board of Trustees has authorized FBSI to execute fund portfolio
transactions on national securities exchange s in accordance with
approved procedures and applicable SEC rules. For the fiscal year ended
December 31, 1993, and the fiscal periods November 1, 1992 through December
31, 1992 and November 1, 1991 through October 31, 1992, Short-Term World
Income and Global Bond paid no brokerage commissions to FBSI or FBSL. From
May 4, 1993 (commencement of operations) to December 31, 1993, no brokerage
commissions were paid by New Markets Income to FBSI or FBSL.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
fund s and review the commissions paid by the fund s over
representative periods of time to determine if they are reasonable in
relation to the benefits to the fund s .
For fiscal 1993 and 1992, the annual portfolio turnover rates amounted to:
1993 1992
Short-Term World Income 160% 117%+
Global Bond 198% 142%+
New Markets Income 324%*+ n/a
* Commencement of operations 5/4/93.
+ Annualized
From time to time, the Trustees will review whether the recapture for the
benefit of a fund of some portion of the brokerage commissions or
similar fees paid by a fund on portfolio transactions is legally
permissible and advisable. The fund s seek to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine in the exercise of their business
judgment whether it would be advisable for the fund s to seek such
recapture.
Although the Trustees and officers of each fund are substantially
the same as those of other funds managed by FMR, investment decisions for
the fund s are made independently from those of other funds managed
by FMR or accounts managed by FMR affiliates. It sometimes happens that the
same security is held in the portfolio of more than one of these funds or
accounts. Simultaneous transactions are inevitable when several funds are
managed by the same investment adviser, particularly when the same security
is suitable for the investment objective of more than one fund.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as a fund is
concerned. In other cases, however, the ability of a fund to
participate in volume transactions will produce better executions and
prices for th e fund. It is the current opinion of the Trustees that
the desirability of retaining FMR as investment adviser to the fund s
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
Each fund's portfolio securities, including ADRs, EDRs and other forms of
depositary receipts, are valued (i) by appraising portfolio securities that
are traded on the New York Stock Exchange (NYSE) or American Stock Exchange
at the closing bid price, or, if no closing price is available, at the last
traded bid price; and (ii) by appraising foreign securities as nearly as
possible in the manner described in clause (i) if traded on any other U.S.,
Canadian, or foreign exchange, and, if not so traded, on the basis of
closing over-the-counter bid prices, if available.
U.S. Treasury securities are valued on the basis of valuations furnished by
a pricing service which utilizes both dealer-supplied valuations and
electronic data processing techniques. Such techniques take into account
appropriate factors such as institutional-size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics, and other market data, without exclusive reliance upon
quoted prices or exchange or over-the-counter prices, since such valuations
are believed to reflect more accurately the fair value of such securities.
Foreign securities are valued at the closing bid price in the principal
market where they are traded, or, if closing prices are unavailable, at the
last traded bid price available prior to the time each fund's net
asset value (NAV) is determined. Foreign portfolio security prices are
furnished by quotation services expressed in the local currency's value.
FSC translates the value of foreign securities from the local currency into
U.S. dollars. Foreign security prices that cannot be obtained by the
quotation services are priced individually by FSC using dealer-supplied
quotations. Short-term obligations that mature in sixty days or less are
valued at amortized cost, which constitutes fair value. All other
securities and other assets are appraised at their fair value as determined
in good faith under consistently applied procedures under the general
supervision of the Board of Trustees.
Generally, trading in foreign securities, as well as corporate bonds, U.S.
government securities, money market instruments, and repurchase agreements,
is substantially completed each day at various times prior to the close of
the NYSE. The values of any such securities held by the fund s are
determined as of such times for the purpose of computing each fund's
NAV. The procedures set forth in (i) and (ii) above need not be used to
determine the value of debt securities owned by a fund if, in the
opinion of the Board of Trustees, some other method (e.g., based on closing
over-the-counter bid prices in the case of debt instruments traded on an
exchange) would more accurately reflect the fair market value of such debt
securities. Foreign currency exchange rates are also generally determined
prior to the close of the NYSE. If an extraordinary event that is expected
to affect the value of a portfolio security materially occurs after the
close of an exchange on which that security is traded, then the security
will be valued at fair value as determined in good faith under the
direction of the Board of Trustees.
PERFORMANCE
The fund s may quote performance in various ways. All
performance information supplied by a fund in advertising is
historical and is not intended to indicate future returns. Each
fund's share price, yield, and total returns fluctuate in response to
market conditions and other factors, and the value of fund shares when
redeemed may be more or less than their original cost.
YIELD CALCULATIONS. Yields for each fund used in advertising are
computed by dividing a fund's interest income for a given 30-day or
one-month period, net of expenses, by the average number of shares entitled
to receive dividends during the period, dividing this figure by the fund's
net asset value per share at the end of the period and annualizing the
result (assuming compounding of income) in order to arrive at an annual
percentage rate. Income is calculated for purposes of yield quotations in
accordance with standardized methods applicable to all stock and bond
funds. In general, interest income is reduced with respect to bonds trading
at a premium over their par value by subtracting a portion of the premium
from income on a daily basis, and is increased with respect to bonds
trading at a discount by adding a portion of the discount to daily income.
For a fund's investments denominated in foreign currencies, income
and expenses are calculated first in their respective currencies, and are
then converted to U.S. dollars, either when they are actually converted or
at the end of the 30-day or one - month period, whichever is earlier.
Capital gains and losses generally are excluded from the calculation as are
gains and losses from currency exchange rate fluctuations.
Income calculated for the purposes of calculating a fund's yield
differs from income as determined for other accounting purposes. Because of
the different accounting methods used, and because of the compounding of
income assumed in yield calculations, a fund's yield may not equal
its distribution rate, the income paid to your account, or the income
reported in fund's financial statements.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a fund's returns, including the effect of reinvesting
dividends and capital gain distributions (if any), and any change in
a fund's net asset value per share (NAV) over the period. Average
annual returns are calculated by determining the growth or decline in value
of a hypothetical historical investment in the fund over a stated period,
and then calculating the annually - compounded percentage rate that
would have produced the same result if the rate of growth or decline in
value had been constant over the period. For example, a cumulative return
of 100% over ten years would produce an average annual return of 7.18%,
which is the steady annual return that would equal 100% growth on a
compounded basis in ten years. While average annual total returns are a
convenient means of comparing investment alternatives, investors should
realize that a fund's performance is not constant over time, but
changes from year to year, and that average annual total returns represent
averaged figures as opposed to the actual year-to-year performance of
a fund.
In addition to average annual returns, each fund may quote
unaveraged or cumulative total returns reflecting the simple change in
value of an investment over a stated period. Average annual and cumulative
total returns may be quoted as a percentage or as a dollar amount, and may
be calculated for a single investment, a series of investments, or a series
of redemptions over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. E xample s of this
type of illustration are given on pages and . Total returns
may be quoted on a before-tax or after-tax basis. Total returns, yields,
and other performance information may be quoted numerically, or in a table,
graph, or similar illustration.
NET ASSET VALUE. Charts and graphs using a fund's net asset values,
adjusted net asset values , and benchmark indices may be used
to exhibit performance. An adjusted NAV includes any distributions paid by
a fund and reflects all elements of its return. Unless otherwise
indicated, a fund's adjusted NAVs are not adjusted for sales
charges, if any.
HISTORICAL FUND RESULTS. The following table shows the funds' 30-day yield
and total returns for the periods ended December 31, 1993.
Average Annual Total Returns Cumulative Total Returns
30-Day One Five Life of One Five Life of
Yield Year Years Fund ** Year Years Fund **
Short-Term World
Income * 5.94% 12.59% n/a 8.19% 12.59% n/a
19.35 %
Global Bond 6.21% 21.91% 11.70% 11.60% 21.91% 73.92% 115.87%
New Markets Income* 7.54% n/a n/a n/a n/a n/a 38.84%
____________
* If FMR had not reimbursed certain fund expenses, returns would have
been lower.
** From commencement of operations: Short-Term World Income - October 4,
1991; Global Bond - December 30, 1986; New Markets Income - May 4,
1993.
The following tables show the income and capital elements of each fund's
total return and compares them to the record of the Standard & Poor's
500 Composite Stock Price Index (S&P), the Dow Jones Industrial Average
(DJIA), and the cost of living (measured by the Consumer Price Index, or
CPI) over the same periods. The S&P and DJIA comparisons are provided
to show how each fund's return compared to the return of a broad
range of common stocks and a narrower set of stocks of major industrial
companies, respectively, over the same periods. Of course, since the
fund s invest in fixed-income securities, common stocks represent a
different type of investment from the fund s . Common stocks generally
offer greater growth potential than the fund s , but generally
experience greater price volatility which means a greater potential for
loss. In addition, common stocks generally provide lower income than bond
investment s such as the fund s . The S&P and DJIA are based
on the prices of unmanaged groups of stocks and, unlike each fund's
returns, their returns do not include the effect of paying brokerage
commissions and other costs of investing. During the periods quoted bond
prices and interest rates fluctuated widely and should not be considered
representative of the dividend income or capital gain or loss that could be
realized by an investment in the funds today.
SHORT-TERM WORLD INCOME. During the period from October 4, 1991
(commencement of operations) to December 31, 1993, a hypothetical
investment of $10,000 in Fidelity Short-Term World Income Fund would have
grown to $1 1,935 , assuming all distributions were reinvested.
FIDELITY SHORT-TERM WORLD INCOME FUND INDICES
Value of Value of Value of
Initial Reinvested Reinvested Cost
$10,000 Income Capital Gain Total of
Period ended Investment Distributions Distributions Value S&P DJIA
Living**
10/04/91* $10,000 $ 0 $ 0 $10,000 $10,000 $10,000 $10,000
12/31/91 9,930 182 0 10,112 10,932 10,693 10,051
12/31/92 9,680 920 0 10,600 11,768 11,474 10,343
12/31/93 10,190 1,745 0 11,935 12,954 13,428 10,627
* Date of initial $10,000 investment.
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on October
4 , 1991, the net amount invested in fund shares was $10,000. The
cost of the initial investment ($10,000), together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested), amounted to
$1 1,705 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
the cash payments (dividends) for the period would have amounted to
$ 1,578 . There were no capital gain s distributions during this
period. Tax consequences of different investments have not been factored
into the above figures.
GLOBAL BOND. During the period from December 30, 1986 (commencement of
operations) to December 31, 1993, a hypothetical investment of $10,000 in
Fidelity Global Bond Fund would have grown to $ 21,587 , assuming all
distributions were reinvested.
FIDELITY GLOBAL BOND FUND INDICES
Value of Value of Value of
Initial Reinvested Reinvested Cost
$10,000 Income Capital Gain Total of
Period ended Investment Distributions Distributions Value S&P DJIA
Living**
12/30/86* $10,000 $ 0 $ 0 $10,000 $10,000 $10,000 $10,000
12/31/86 10,050 0 0 10,050 9,872 9,917 10,000
12/31/87 11,210 763 0 11,973 10,392 10,456 10,443
12/31/88 10,720 1,692 0 12,412 12,118 12,121 10,905
12/31/89 11,080 2,316 0 13,396 15,957 15,971 11,412
12/31/90 11,380 3,661 0 15,041 15,460 15,885 12,109
12/31/91 11,900 5,062 0 16,962 20,173 19,752 12,480
12/31/92 11,340 6,368 0 17,708 21,715 21,193 12,842
12/31/93 12,610 8,550 427 21,587 23,903 24,804 13,195
* Date of initial $10,000 investment.
** From month - end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on
December 30, 1986 the net amount invested in fund shares was
$10,000. The cost of the initial investment ($10,000), together with the
aggregate cost of reinvested dividends and capital gain distributions for
the period covered (their cash value at the time they were reinvested),
amounted to $1 8,131 . If distributions had not been reinvested, the
amount of distributions earned from the fund over time would have been
smaller, and the cash payments for the period would have amounted to
$5, 971 for income dividends and $250 for capital gains . Tax
consequences of different investments have not been factored into the above
figures.
NEW MARKETS INCOME. During the period from May 4, 1993 (commencement of
operations) to December 31, 1993, a hypothetical investment of $10,000 in
Fidelity New Markets Income Fund would have grown to $ 13,884 ,
assuming all distributions were reinvested.
FIDELITY NEW MARKETS INCOME FUND INDICES
Value of Value of Value of
Initial Reinvested Reinvested Cost
$10,000 Income Capital Gain Total of
Period ended Investment Distributions Distributions Value S&P DJIA
Living**
5/4/93* $10,000 $0 $0 $10,000 $10,000 $10,000 $10,000
12/31/93 13,070 632 182 13,884 10,749 11,098 10,125
* Date of initial $10,000 investment.
** From month - end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on May 4,
1993, the net amount invested in fund shares was $10,000. The cost of the
initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to
$ 10,736 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
the cash payments (dividends) for the period would have amounted to $ 548
for income dividends and $170 for capital gains . There were no capital
gain distributions during this period. Tax consequences of different
investments have not been factored into the above figures.
The fund s may be compared in advertising to Certificates of Deposit
(CDs), the Bank Rate Monitor National Index, an average of the quoted rates
for 100 leading banks and thrifts in ten U.S. cities chosen to represent
the ten largest Consumer Metropolitan Statistical Areas, three-month Euro
Deposit rates according to Reuters, and other investments issued by banks.
The Euro Deposit rates according to Reuters are quoted by foreign banks
rated " A" or better. The fund s differ from bank investments
in several respects. A fund may offer greater liquidity and higher
potential returns than CDs; but unlike CDs, a fund is not FDIC-insured and
its share price, yield, and return will fluctuate.
A fund's performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings
prepared by Lipper Analytical Services, Inc. (Lipper), an independent
service located in Summit, New Jersey that monitors the performance of
mutual funds. Lipper generally ranks funds on the basis of total return,
assuming reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank funds based on yield. In addition to
the mutual fund rankings, a fund's performance may be compared to mutual
fund performance indices prepared by Lipper.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in
advertising.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
A fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC/Donoghue's MONEY FUND AVERAGES (Trademark)/All
Taxable, which is reported in the MONEY FUND REPORT(Registered Trademark),
covers over 200 taxable money market funds. The Bond Fund Report
AverageS(trademark)/All Taxable, which is reported in the BOND FUND
REPORT(trademark), covers over 357 taxable bond funds. When evaluating
comparisons to money market funds, investors should consider the relevant
differences in investment objectives and policies. Specifically, money
market funds invest in short-term, high-quality instruments and seek to
maintain a stable $1.00 share price. The funds, however, invest in
longer-term instruments and their share prices change daily in response to
a variety of factors.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund
shareholders.
A fund may present its fund number, Quotron(trademark) number, and CUSIP
number, and discuss or quote its current portfolio manager.
A fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a
program, an investor invests a fixed dollar amount in a fund at periodic
intervals, thereby purchasing fewer shares when prices are high and more
shares when prices are low. While such a strategy does not assure a profit
or guard against loss in a declining market, the investor's average cost
per share can be lower than if fixed numbers of shares are purchased at the
same intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price
levels.
A fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which may
produce superior after-tax returns over time. For example, a $1,000
investment earning a taxable return of 10% annually would have an after-tax
value of $1,949 after ten years, assuming tax was deducted from the return
each year at a 31% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,100 after ten years, assuming tax was deducted at
a 31% rate from the tax-deferred earnings at the end of the ten-year
period.
As of December 31, 1993, FMR managed approximately $ 130 billion in
equity fund assets as defined and tracked by Lipper Analytical Services,
Inc. This figure represents the largest amount of equity fund assets under
management by a mutual fund investment adviser in the United States, making
FMR America's leading equity (stock) fund manager.
FMR and its subsidiaries and affiliates maintain a worldwide
information and communications network for the purpose of researching and
managing investments abroad. As of December 31, 1993, FMR managed
foreign assets totaling approximately $ 35 billion.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each fund is open for business and its net asset value per share
(NAV) is calculated each day the New York Stock Exchange (NYSE) is open for
trading. The NYSE has designated the following holiday closings for 1994:
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day
(observed). Although FMR expects the same holiday schedule, with the
addition of New Year's Day, to be observed in the future, the NYSE may
modify its holiday schedule at any time.
FSC normally determines each fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted, or as permitted by the SEC. To the
extent that portfolio securities are traded in other markets on days the
NYSE is closed, a fund's NAV may be affected on days when investors
do not have access to the fund to purchase or redeem shares.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a fund's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the 1940
Act), each fund is required to give shareholders at least 60 days'
notice prior to terminating or modifying its exchange privilege. Under the
Rule, the 60-day notification requirement may be waived if (i) the only
effect of a modification would be to reduce or eliminate an administrative
fee, redemption fee, or deferred sales charge ordinarily payable at the
time of an exchange, or (ii) a fund suspends the redemption of
shares to be exchanged as permitted under the 1940 Act or the rules and
regulations thereunder , or the fund to be acquired suspends the sale of
its shares because it is unable to invest amounts effectively in accordance
with its investment objective and policies.
In the Prospectus, each fund ha s notified shareholders that
it reserve s the right at any time, without prior notice, to
refuse exchange purchases by any person or group if, in FMR's judgment,
the fund would be unable to invest effectively in accordance with its
investment objective and policies, or would otherwise potentially be
adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. Because the funds invest significantly in foreign securities,
corporate shareholders should not expect dividends from the fund s to
qualify for the dividends-received deduction. If a fund earns qualifying
dividends from U.S. corporations, th at fund will notify corporate
shareholders annually of the percentage of fund dividends that qualify for
the dividends - received deduction.
Gains (losses) attributable to foreign currency fluctuations are generally
taxable as ordinary income, and therefore will increase (decrease) dividend
distributions. I f foreign currency losses exceed a fund's net
investment income during a taxable year, all or a portion of the
distributions made in the same taxable year would be
re - characterized as a return of capital to shareholders, thereby
reducing each shareholder's cost basis in his fund shares. In order to
minimize the risk of a return of capital, FMR may adjust a fund's income
distributions to reflect the effect of currency fluctuations.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by a fund on the
sale of securities and distributed to shareholders are federally taxable as
long-term capital gains, regardless of the length of time shareholders have
held their shares. If a shareholder receives a long-term capital gain
distribution on shares of a fund and such shares are held for six
months or less and are sold at a loss, the portion of the loss equal to the
amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes.
Short-term capital gains distributed by a fund are taxable to
shareholders as dividends, not as capital gains. Distributions from
short-term capital gains do not qualify for the dividends-received
deduction.
FOREIGN TAXES. Foreign governments may withhold taxes from dividends or
interest paid with respect to foreign securities, typically at a rate
between 10% and 35%. Each fund intends to elect to pass through foreign
taxes paid in order for a shareholder to take a credit or deduction if, at
the close of its fiscal year, more than 50% of a fund's total assets
are invested in securities of foreign issuers.
TAX STATUS OF THE FUND S. Each fund has qualified and intends to
continue to qualify each year as a "regulated investment company" for tax
purposes, so that it will not be liable for federal tax on income and
capital gains distributed to shareholders. In order to qualify as a
regulated investment company and avoid being subject to federal income or
excise taxes at the fund level, each fund intends to distribute
substantially all of its net investment income and net realized capital
gains within each calendar year as well as on a fiscal year basis. Each
fund also intends to comply with other tax rules applicable to regulated
investment companies, including a requirement that capital gains from the
sale of securities held less than three months constitute less than 30% of
a fund's gross income for each fiscal year. Gains from some forward
currency contracts, futures contracts, and options are included in this 30%
calculation, which may limit a fund's investments in such
instruments.
If a fund purchases shares in certain foreign investment entities, defined
as passive foreign investment companies (PFIC's) in the Internal Revenue
Code, it may be subject to U.S. federal income tax on a portion of any
excess distribution or gain from the disposition of such shares. Interest
charges may also be imposed on the fund with respect to deferred
taxes arising from such distributions or gains.
Each fund is treated as a separate entity from the other funds of Fidelity
Investment Trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting each fund and its
shareholders, and no attempt has been made to discuss individual tax
consequences. In addition to federal income taxes, shareholders , may
be subject to state and local taxes on fund distributions. Investors
should consult their tax advis e rs to determine whether a fund
is suitable to their particular tax situation.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: FSC, which is the
transfer and shareholder servicing agent for certain of the funds advised
by FMR; Fidelity Investments Institutional Operations Company, which
performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. FMR U.K. and FMR Far East, both wholly owned
subsidiaries of FMR formed in 1986, supply investment research, and may
supply portfolio management services to FMR in connection with certain
funds advised by FMR. Analysts employed by FMR, FMR U.K., and FMR Far East
research and visit thousands of domestic and foreign companies each year.
FMR Texas Inc., a wholly owned subsidiary of FMR formed in 1989, supplies
portfolio management and research services in connection with certain money
market funds advised by FMR.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trust are listed below. Except
as indicated, each individual has held the office shown or other offices in
the same company for the last five years. All persons named as Trustees
also serve in similar capacities for other funds advised by FMR. Unless
otherwise noted, the business address of each Trustee and officer is 82
Devonshire Street, Boston, Massachusetts 02109, which is also the address
of FMR. Those Trustees who are "interested persons" (as defined in the
Investment Company Act of 1940) by virtue of their affiliation with either
the trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman of
the Board and of the Executive Committee of FMR; Chairman and a Director of
FMR Texas Inc. (1989), Fidelity Management & Research (U.K.) Inc., and
Fidelity Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc. (1989), Fidelity
Management & Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is a
consultant to Western Mining Corporation (1994). Prior to February 1994, he
was President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Until March 1990, Mr. Cox was President and Chief
Operating Officer of Union Pacific Resources Company (exploration and
production). He is a Director of Bonneville Pacific Corporation
(independent power, 1989), Sanifill Corporation (non-hazardous waste,
1993), and CH2M Hill Companies (engineering). In addition, he served on
the Board of Directors of the Norton Company (manufacturer of industrial
devices, 1983-1990) and continues to serve on the Board of Directors of the
Texas State Chamber of Commerce, and is a member of advisory boards of
Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton, NY, Trustee (1992).
Prior to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she serves as a Director of the New York
City Chapter of the National Multiple Sclerosis Society, and is a member of
the Advisory Council of the International Executive Service Corps. and the
President's Advisory Council of The University of Vermont School of
Business Administration.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation, Hyster-Yale Materials Handling, Inc. (1989), and RPM,
Inc. (manufacturer of chemical products, 1990). In addition, he serves as
a Trustee of First Union Real Estate Investments, Chairman of the Board of
Trustees and a member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and a member of the Executive Committee of University
School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance) and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of the National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwich Hospital Association.
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior
to his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction). In addition, he serves as a Trustee of
Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield
(1989) and Society for the Preservation of New England Antiquities, and as
an Overseer of the Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989),
is Chairman of G.M. Management Group (strategic advisory services). Prior
to his retirement in July 1988, he was Chairman and Chief Executive Officer
of Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee.
Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company.
He is a Director of Allegheny Power Systems, Inc. (electric utility),
General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer).
He is also a Trustee of Rensselaer Polytechnic Institute and of Corporate
Property Investors and a member of the Advisory Boards of Butler Capital
Corporation Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee, is President of The Wales Group, Inc. (management and financial
advisory services). Prior to retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia Corporation (bank holding company),
and Chairman and Chief Executive Officer of The First National Bank of
Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), Georgia Power Company (electric utility), Gerber Alley
& Associates, Inc. (computer software), National Life Insurance Company
of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General
Counsel of FMR, Vice President-Legal of FMR Corp., and Vice President and
Clerk of FDC.
JUDY PAGLIUCA,Vice President of Short-Term World Income (1993) and other
funds advised by FMR, is an employee of FMR.
Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the fund based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
MANAGEMENT CONTRACT
The funds employ FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with its
investment objective, policies, and limitations. FMR also provides the
fund s with all necessary office facilities and personnel for
servicing each fund's investments, and compensates all officers of
the t rust, all Trustees who are " interested persons" of the
t rust or of FMR, and all personnel of the t rust or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of each fund. These services include providing
facilities for maintaining each fund's organization; supervising relations
with custodians, transfer and pricing agents, accountants, underwriters,
and other persons dealing with the fund s ; preparing all general
shareholder communications and conducting shareholder relations;
maintaining the funds ' records and the registration of the
funds ' shares under federal and state law; developing management and
shareholder services for the fund s ; and furnishing reports,
evaluations, and analyses on a variety of subjects to the Board of
Trustees.
In addition to the management fee payable to FMR and the fees payable to
FSC, each fund pays all of its expenses, without limitation, that
are not assumed by those parties. Each fund pays for typesetting,
printing, and mailing proxy material s to shareholders, legal
expenses, and the fees of the custodian s , auditor s , and
non-interested Trustees. Although each fund's management contract
provides that the fund will pay for typesetting, printing, and
mailing prospectuses, statements of additional information, notices, and
reports to existing shareholders, the t rust has entered into
a transfer agent agreement with FSC, pursuant to which FSC bears
the cost of providing these services to existing shareholders. Other
expenses paid by each fund include interest, taxes, brokerage
commissions, the fund's proportionate share of insurance premiums and
Investment Company Institute dues, and the costs of registering shares
under federal and state securities laws. Each fund is also liable
for such nonrecurring expenses as may arise, including costs of any
litigation to which a fund may be a party , and any obligation
it may have to indemnify the t rust's officers and Trustees with
respect to litigation.
FMR is Short-Term World Income's and Global Bond's manager pursuant to
management contract s dated March 1, 1992, which were approved by
shareholders on February 19, 1992. FMR is also New Market Income's manager
pursuant to a management contract dated April 15, 1993, which was approved
by FMR, then the sole shareholder , on April 29, 1993. For the
services of FMR under the contracts, each fund pay s FMR a
monthly management fee composed of the sum of two elements: a group fee
rate and an individual fund fee rate.
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts and is calculated on a cumulative basis pursuant to the
graduated fee schedule shown on the left . On the
right, effective fee rate schedules show the results of
cumulatively applying the annualized rates at various asset levels . For
example, the effective annual group fee rate at $ 232 billion of
average group net assets - their approximate level for December,
1993 - was . 1621 %, which is the weighted average of the respective
fee rates for each level of group net assets up to $232 billion.
GROUP FEE SCHEDULE* EFFECTIVE ANNUAL FEE RATES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AVERAGE GROUP ASSETS ANNUALIZED RATE GROUP NET ASSETS EFFECTIVE ANNUAL FEE RATE
$ 0 - 3 billion .3700% $ 0.5 billion .3700%
3 - 6 .3400 25 .2664
6 - 9 .3100 50 .2188
9 - 12 .2800 75 .1986
12 - 15 .2500 100 .1869
15 - 18 .2200 125 .1793
18 - 21 .2000 150 .1736
21 - 24 .1900 175 .1695
24 - 30 .1800 200 .1658
30 - 36 .1750 225 .1629
36 - 42 .1700 250 .1604
42 - 48 .1650 275 .1583
48 - 66 .1600 300 .1565
66 - 84 .1550 325 .1548
84 - 120 .1500 350 .1533
120 - 174 .1450
174 - 228 .1400
228 - 282 .1375
282 - 336 .1350
Over 336 .1325
</TABLE>
* The rates shown for average group assets in excess of $174 billion
were adopted by FMR on a voluntary basis on November 1, 1993, pending
shareholder approval of a new management contract reflecting the extended
schedule. The extended schedule provides for lower management fees as total
assets under management increase.
The individual fund fee rate for Short-Term World Income is .45%, and for
Global Bond and New Markets Income the individual fund fee rate is
.55%. Based on the average net assets of funds advised by FMR for December
1993, the annual management fee rates for the funds would be calculated as
follows:
Group Fee Rate Individual Fund Fee Rate Management Fee Rate
Short-Term World Income .1621% + .45% = .6121%
Global Bond .1621% + .55% = .7121%
New Markets .1621% + .55% = .7121%
One twelfth (1/12) of this annual management fee rate is then applied to
each fund's average net assets for the current month, giving a
dollar amount which is the fee for that month.
On February 19, 1992, shareholders of Short-Term World Income and Global
Bond voted to adopt the new contracts, minus the breakpoints voluntarily
added November 1, 1993 . Prior to January 1, 1992, these funds paid FMR
a management fee based on a former group fee rate schedule. The terms of
current contract s are identical to those of the former
contract s with the exception of rates added for average group assets
in excess of $120 billion.
For the fiscal year ended December 31, 1993, and for the
periods November 1, 1992 through December 31, 1992, and November 1,
1991 through October 31, 1992, FMR received $2,464,314, $582,978,
and $2,665,270, respectively , before reimbursement, for its
services as investment adviser to Short-Term World Income . These
fees were equivalent to .62% of the average net assets of the fund for
those periods. For the same fiscal periods FMR received $3,097,304,
$360,846, and $1,823,125, respectively, before reimbursement for its fees
as investment adviser to Global Bond. These fees were equivalent to .71%,
.72%, and .72%, respectively of the average net assets of the fund for
those periods. For the period May 4, 1993 through December 31, 1993, FMR
received $538,269, before reimbursement, for its services as investment
adviser to New Markets Income. This fee was equivalent to .71% of average
net assets of the fund.
FMR may, from time to time, voluntarily reimburse all or a portion of
a fund's operating expenses (excluding interest, taxes, brokerage
commissions, and voluntary expenses). The table on page outlines
expense limitations (as a percentage of a fund's average net assets) in
effect during the last three fiscal periods. The table also shows the
amount of management fees incurred and the amounts reimbursed by FMR for
each fiscal period.
From To Expense Limitations
Short-Term World Income: July 1, 1992 -- 1.20%
May 1, 1992 June 30, 1992 1.10%
October 4, 1991 April 30, 1992 1.00%
Fiscal Period Management Fees Amount of
Ended, Before Reimbursement Reimbursement
December 31, 1993 $2,464,314 $ 0
December 31, 1992 $ 582,978 $24,908
October 31, 1992 $2,665,270 $ 0
From To Expense Limitations
New Markets Income: May 1993 -- 1.20%
Fiscal Period Management Fees Amount of
Ended Before Reimbursement Reimbursement
December 31, 1993 * $ 538,269 $327,595
* From commencement of operations 5/4/93.
To comply with the California Code of Regulations, FMR will reimburse
each fund if and to the extent that each fund's aggregate
annual operating expenses exceed specified percentages of its average net
assets. The applicable percentages are 2 1/2% of the first $30 million, 2%
of the next $70 million, and 1 1/2% of average net assets in excess of $100
million. When calculating each fund's expenses for purposes of this
regulation, the fund may exclude interest, taxes, brokerage commissions,
and extraordinary expenses, as well as a portion of its distribution plan
expenses and custodian fees attributable to investments in foreign
securities.
SUB- A DVISERS. FMR has entered into sub-advisory agreements with FMR
U.K., FMR Far East, and FIIA. FIIA in turn, has entered into a sub-advisory
agreement with FIIAL U.K., its wholly owned subsidiary. In
addition, FMR has entered into a sub-advisory agreement with FIJ on behalf
of New Markets Income. Pursuant to the sub-advisory agreements, FMR may
receive investment advice and research services with respect to companies
based outside the U.S. from the sub-advisers and may grant them investment
management authority as well as the authority to buy and sell securities if
FMR believe s it would be beneficial to a fund.
Currently, FMR U.K., FMR Far East , FIIA , FIIAL U.K. ,
and FIJ each focus on companies in countries other than the
United States including countries in Europe, Asia, and the Pacific
Basin .
FMR U.K. and FMR Far East are wholly owned subsidiaries of FMR. FIIA
is a wholly-owned subsidiary of Fidelity International Limited (FIL), a
Bermuda company formed in 1968 which primarily provides investment advisory
services to non-U.S. investment companies and institutional investors
investing in securities of issuers throughout the world. Edward C. Johnson
3d, Johnson family members , and various trusts for the benefit of the
Johnson family own, directly or indirectly, more than 25% of the voting
stock of FIL. FIIA was organized in Bermuda in 1983 and FIIAL U.K. was
organized in the United Kingdom in 1984.
Under the sub-advisory agreements FMR, and not each fund, pays the
fees of FMR U.K., FMR Far East, and FIIA. FIIA in turn pays the fees of
FIIAL U.K.
For providing investment advice and research services the sub-advisers are
compensated as follows:
FMR pays FMR U.K. and FMR Far East fees equal to 110% and 105%,
respectively, of FMR U.K.'s and FMR Far East's cost incurred in connection
with providing such services.
FMR pays FIIA 30% of FMR's monthly management fee with respect to the
average market value of investments held by the fund for which FIIA has
provided FMR with investment advice.
FIIA pays FIIAL U.K. a fee equal to 110% of FIIAL U.K.'s costs incurred in
connection with providing such services.
FMR pays FIJ 30% of FMR's monthly management fee with respect to the
average market value of investments held by New Markets Income for
which FIJ has provided FMR with investment advice.
For providing investment management and executing portfolio
transactions , the sub-advisers are compensated as follows:
FMR pays FMR U.K., FMR Far East, FIIA, and FIJ 50% of its monthly
management fee with respect to the average net assets managed by the
sub-adviser on a discretionary basis.
FIIA pays FIIAL U.K. 110% of FIIAL U.K.'s costs incurred with providing
investment management.
FMR entered into the sub-advisory agreements described above with respect
to Short-Term World Income and Global Bond on March 1, 1992
following shareholder approval of the agreements on February 19, 1992.
With respect to New Markets Income, the sub-advisory agreements above,
dated April 15, 1993, were approved by FMR, then the sole shareholder, on
April 29, 1993.
Prior to March 1, 1992, FMR had sub-advisory agreements with FMR U.K. and
FMR Far East on behalf of the fund, pursuant to which, FMR U.K. and FMR Far
East provided FMR with investment advice and research services. Under those
agreements, FMR U.K. and FMR Far East were compensated for their services
according to the same formulas as they are compensated currently for
providing investment advice and research services.
DISTRIBUTION AND SERVICE PLAN
Each fund has adopted a distribution and service plan (the
p lan s ) under Rule 12b-1 (the rule) of the Investment
Company Act of 1940. The rule provides in substance that a mutual
fund may not engage directly or indirectly in financing any activity that
is primarily intended to result in the sale of shares of a fund
except pursuant to a plan adopted by a fund under the rule .
Each fund's Board of Trustees has adopted the plan to allow
a fund and FMR to incur certain expenses that might be considered to
constitute indirect payment by a fund of distribution expenses.
Under the plan , if the payment by a fund to FMR of management
fees should be deemed to be indirect financing by the fund of the
distribution of its shares, such payment is authorized by the plan .
The plan specifically recognizes that FMR, either directly or
through FDC, may use its management fee revenue, past profits or other
resources, without limitation, to pay promotional and administrative
expenses in connection with the offer and sale of shares of fund. In
addition, the plan provides that FMR may use its resources,
including its management fee revenues, to make payments to third parties
that provide assistance in selling shares of a fund, or to third
parties, including banks, that render shareholder support services. The
Trustees have not approved such payments to date.
Each fund's plan has been approved by the Trustees. As
required by the rule , the Trustees carefully considered all
pertinent factors relating to the implementation of the plan prior
to its approval, and have determined that there is a reasonable likelihood
that the plan will benefit each fund and its shareholders. In
particular, the Trustees noted that the plan does not authorize
payments by a fund other than those made to FMR under its management
contract s with the fund s . To the extent that the plan
gives FMR and FDC greater flexibility in connection with the distribution
of shares of the fund, s additional sales of a fund's shares
may result. Additionally, certain shareholder support services may be
provided more effectively under the plan by local entities with whom
shareholders have other relationships. The plans for Short-Term World
Income and Global Bond were approved by each fund's shareholders on
February 19, 1992 and November 12, 1987, respectively. The plan for New
Markets Income was approved by FMR as the initial shareholder on April 29,
1993.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services,
and servicing and recordkeeping functions. FDC intends to engage banks only
to perform such functions. However, changes in federal or state statutes
and regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of a
fund might occur, including possible termination of any automatic
investment or redemption or other services then provided by the bank. It is
not expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences. A fund may
execute portfolio transactions with and purchase securities issued by
depository institutions that receive payments under the plan . No
preference will be shown in the selection of investments for the
instruments of such depository institutions. In addition, state securities
laws on this issue may differ from the interpretations of federal law
expressed herein, and banks and other financial institutions may be
required to register as dealers pursuant to state law.
CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
FSC is transfer, dividend disbursing and shareholder servicing agent for
the fund s . Under the trust's contract with FSC, each fund
pays an annual fee of $25.50 per basic retail account with a balance of
$5,000 or more, $15.00 per basic retail account with a balance of less than
$5,000 , and a supplemental activity charge of $5.61 for monetary
transactions. These fees and charges are subject to annual cost escalation
based on postal rate changes and changes in wage and price levels as
measured by the National Consumer Price Index for Urban Areas. With respect
to certain institutional client master accounts, the fund s pay FSC a
per-account fee of $95 and monetary transaction charges of $20
or $17.50, depending on the nature of services provided. With
respect to certain broker-dealer master accounts, the funds pay FSC a
per-account fee of $30 and a charge of $6 for monetary transactions.
Fees for certain institutional retirement plan accounts are based on
the net assets of all such accounts in a fund.
Under the contract, FSC pays out-of-pocket expenses associated with
providing transfer agent services. In addition, FSC bears the expense of
typesetting, printing and mailing of prospectuses, statements of additional
information, and all other reports, notices and statements to shareholders,
with the exception of proxy statements.
The table below shows the transfer agent fees paid to FSC during each
fund's last three fiscal periods.
12/31/93 12/31/92 10/31/92
TRANSFER AGENT TRANSFER AGENT TRANSFER AGENT
FEES FEES FEES
Short-Term World Income $862,626 $175,664* $1,029,429
Global Bond $1,091,926 $128,305* $725,539
New Markets Income $339,764** n/a n/a
* From November 1, 1992
** From commencement of operations (May 4, 1993).
The trust's contract with FSC also provides that FSC will perform the
calculations necessary to determine each fund's net asset value per share
and dividends, and maintain the fund's accounting records. Prior to July 1,
1991, the annual fee for these pricing and bookkeeping services was based
on two schedules, one pertaining to each fund's average net assets, and one
pertaining to the type and number of transactions the fund made. The fee
rates in effect as of July 1, 1991 are based on each fund's average net
assets, specifically, .06% for the first $500 million of average net assets
and .03% for average net assets in excess of $500 million. The fee is
limited to a minimum of $45,000 and a maximum of $75,000 per year.
The table below shows the fees paid to FSC for pricing and bookkeeping
services, including related out-of-pocket expenses during each fund's last
three fiscal periods:
12/31/93 12/31/92 10/31/92
PRICING AND PRICING AND PRICING AND
BOOKKEEPING FEES BOOKKEEPING FEES BOOKKEEPING FEES
Short-Term World Income $245,437 $52,463* $270,628
Global Bond $255,949 $30,148* $171,143
New Markets Income $52,922** n/a n/a
* From November 1, 1992
** From commencement of operations (May 4, 1993).
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreement s
call for FDC to use all reasonable efforts, consistent with its other
business, to secure purchasers for shares of each fund, which are
continuously offered at net asset value. Promotional and administrative
expenses in connection with the offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Short-Term World Income, Global Bond, and New
Markets Income are funds of Fidelity Investment Trust (the
trust) , an open-end management investment company organized as a
Massachusetts business trust on April 20, 1984. On November 3, 1986, the
trust's name was changed from Fidelity Overseas Fund to Fidelity Investment
Trust to reflect the multiple funds within the trust. Currently, there are
fourteen funds of the trust: Fidelity Overseas Fund, Fidelity Europe Fund,
Fidelity Europe Capital Appreciation Fund, Fidelity Pacific Basin Fund,
Fidelity International Growth & Income Fund, Fidelity Global Bond Fund,
Fidelity Canada Fund, Fidelity Worldwide Fund, Fidelity Emerging Markets
Fund, Fidelity Short-Term World Income Fund, Fidelity Diversified
International Fund, Fidelity Managed Currency Fund, Fidelity New Markets
Income Fund, and Fidelity Japan Fund. The Declaration of Trust permits the
Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to the trust or a
fund, the right of the trust or fund to use the identifying name "Fidelity"
may be withdrawn. There is a remote possibility that one fund might
become liable for any misstatement in its prospectus or statement of
additional information about another fund.
The assets of the trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trust are to be
allocated in proportion to the asset value of the respective funds, except
where allocations of direct expense can otherwise be fairly made. The
officers of the trust, subject to the general supervision of the Board of
Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as a "Massachusetts business trust." Under Massachusetts
law, shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of
Trust provides that the trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
trust or the Trustees include a provision limiting the obligations created
thereby to the trust and its assets. The Declaration of Trust provides for
indemnification out of each fund's property of any shareholders held
personally liable for the obligations of a fund. The Declaration of
Trust also provides that each fund shall, upon request, assume the defense
of any claim made against any shareholder for any act or obligation of
a fund and satisfy any judgment thereon. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which a fund itself would be unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees
against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. The shares have no preemptive or conversion rights; the voting
and dividend rights, the right of redemption, and the privilege of exchange
are described in the Prospectus. Shares are fully paid and nonassessable,
except as set forth under the heading "Shareholder and Trustee Liability"
above. Shareholders representing 10% or more of the trust or a fund may, as
set forth in the Declaration of Trust, call meetings of the trust or a fund
for any purpose related to the trust or fund, as the case may be,
including, in the case of a meeting of the entire trust, the purpose of
voting on removal of one or more Trustees. The trust or any fund may be
terminated upon the sale of its assets to another open-end management
investment company, or upon liquidation and distribution of its assets, if
approved by vote of the holders of a majority of the outstanding shares of
the trust or the fund. If not so terminated, the trust and its funds will
continue indefinitely.
CUSTODIAN. Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts, is custodian of the assets of Short-Term World Income. The
Chase Manhattan Bank, N.A., 1211 Avenue of the Americas, New York, New
York, is custodian of the assets of Global Bond and New Markets Income. The
custodian is responsible for the safekeeping of a fund's assets and
the appointment of subcustodian banks and clearing agencies. The custodian
takes no part in determining the investment policies of the fund or in
deciding which securities are purchased or sold by the fund. The fund may,
however, invest in obligations of the custodian and may purchase securities
from or sell securities to the custodian.
FMR, its officers and directors, its affiliated companies, and the trust's
Trustees may from time to time have transactions with various banks,
including banks serving as custodian for certain of the funds advised by
FMR. The Boston branch of Short-Term World Income's custodian leases
its office space from an affiliate of FMR at a lease payment which, when
entered into, was consistent with prevailing market rates. Other
transactions that have occurred to date have included mortgages and
personal and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
AUDITOR. Coopers and Lybrand, One Post Office Square, Boston,
Massachusetts, serves as Short-Term World Income and Global Bond's
independent accountant. Price Waterhouse, 160 Federal Street, Boston,
Massachusetts, serves as New Market Income's independent accountant.
The auditors examine financial statements for the fund s and provide
other audit, tax, and related services.
FINANCIAL STATEMENTS
The fund s' Annual Reports for the fiscal year ended December 31,
1993 are separate reports supplied with this Stateme nt of Additional
Information and are incorporated herein by reference.
APPENDIX
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA - Bonds rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of
other terms of the contract over any long period of time may be small.
CAA - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
CA - Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked
short-comings.
C - Bonds rated C are the lowest-rated class of bonds and issued so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rate BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed but
debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The D rating will
also be used upon the filing of a bankruptcy petition if debt service
payments are jeopardized.
The ratings from AA to CCC may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) (1) Financial Statements for Fidelity Short-Term World Income Fund
for the fiscal year ended December 31, 1993 are incorporated by
reference into the funds' Statement of Additional Information and
are filed herein as Exhibit 24(a)(1).
(2) Financial Statements for Fidelity Global Bond Fund for the fiscal
year ended December 31, 1993 are incorporated by reference into the
funds' Statement of Additional Information and are filed herein as
Exhibit 24(a)(2).
(3) Financial Statements for Fidelity New Markets Income Fund for the
fiscal year ended Decem- ber 31, 1993 are incorporated by reference
into the funds' Statement of Additional Informa- tion and are filed
herein as Exhibit 24(a)(3).
(b) Exhibits:
(1) (a) Declaration of Trust dated April 20, 1984 is incorporated herein by
reference to Exhibit 1 to Registration Statement No. 2-90649.
(b) Amended and Restated Declaration of Trust dated August 2, 1984 is
incorporated herein by reference to Exhibit 1(b) to Pre-Effective Amendment
No. 1.
(c) Supplement to the Declaration of Trust dated October 18, 1984 is
incorporated herein by reference to Exhibit 1(c) to Pre-Effective Amendment
No 2.
(d) Supplement to the Declaration of Trust dated November 1, 1986 is
incorporated herein by reference to Exhibit 1(d) to Post-Effective
Amendment No. 6.
(e) Supplement to the Declaration of Trust dated December 3, 1987 is
incorporated herein by reference to Exhibit 1(e) to Post-Effective
Amendment No. 11.
(f) Supplement to the Declaration of Trust dated November 1, 1988 is
incorporated herein by reference to Exhibit 1(f) to Post-Effective No. 18.
(g) Supplement to the Declaration of Trust dated November 1, 1989 is
incorporated herein by reference to Exhibit 1(g) to Post-Effective
Amendment No. 19.
(2) By-Laws of the Trust are incorporated herein by reference to Exhibit 2
to Registration Statement No. 2-90649.
(a) Supplement to the By-Laws of the Trust is incorporated herein by
reference to Exhibit 2(a) to Post-Effective Amendment No. 16.
(3) Not applicable.
(4) Not applicable.
(5) (a) Management Contract between Fidelity Emerging Markets Fund
(formerly "Fidelity International Opportunities Fund") and Fidelity
Management & Research Company dated March 1, 1992 is incorporated
herein by reference to Exhibit 5(c) to Post-Effective Amendment No. 38.
(b) Management Contract between Fidelity Overseas Fund and Fidelity
Management & Research Company dated March 1, 1992 is incorporated
herein by reference to Exhibit 5(g) to Post-Effective Amendment No. 38.
(c) Management Contract between Fidelity Worldwide Fund and Fidelity
Management & Research Company dated March 1, 1992 is incorporated
herein by reference to Exhibit 5(h) to Post-Effective Amendment No. 38.
(d) Management Contract between Fidelity International Growth & Income
Fund and Fidelity Management & Research Company dated March 1, 1992 is
incorporated herein by reference to Exhibit 5(i) to Post-Effective
Amendment No. 38.
(e) Management Contract between Fidelity Canada Fund and Fidelity
Management & Research Company dated March 1, 1992 is incorporated
herein by reference to Exhibit 5(j) to Post-Effective Amendment No. 38.
(f) Management Contract between Fidelity Europe Fund and Fidelity
Management & Research Company dated March 1, 1992 is incorporated
herein by reference to Exhibit 5(k) to Post-Effective Amendment No. 38.
(g) Management Contract between Fidelity Pacific Basin Fund and Fidelity
Management & Research Company dated March 1, 1992 is incorporated
herein by reference to Exhibit 5(l) to Post-Effective Amendment No. 38.
(h) Management Contract between Fidelity Diversified International Fund and
Fidelity Management & Research Company dated October 1, 1992 is
incorporated herein by reference to Exhibit 5(a) to Post-Effective
Amendment No. 41.
(i) Form of Management Contract between Fidelity Global Bond Fund and
Fidelity Management & Research Company was filed as Exhibit 5(b) to
Post-Effective Amendment No. 38.
(j) Form of Management Contract between Fidelity Short-Term World Income
Fund and Fidelity Management & Research Company was filed as Exhibit
5(d) to Post-Effective Amendment No. 38.
(k) Management Contract between Fidelity Japan Fund and Fidelity Management
& Research Company dated July 16, 1992 is incorporated herein by
reference to Exhibit 5(k) to Post-Effective Amendment No. 51.
(l) Management Contract between Fidelity Latin America Fund and Fidelity
Management & Research Company dated March 18, 1993 is incorporated
herein by reference to Exhibit 5(l) to Post-Effective Amendment No. 48.
(m) Management Contract between Fidelity Southeast Asia Fund and Fidelity
Management & Research Company dated March 18, 1993 is incorporated
herein by reference to Exhibit 5(m) to Post-Effective Amendment No. 48.
(n) Management Contract between Fidelity New Markets Income Fund and
Fidelity Management & Research Company dated April 15, 1993 is
incorporated herein by reference to Exhibit 5(n) to Post-Effective
Amendment No. 48.
(o) Management Contract between Fidelity Europe Capital Appreciation Fund
and Fidelity Management & Research Company dated November 18, 1993 is
incorporated herein by reference to Exhibit 5(o) to Post-Effective
Amendment No. 51.
(p) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf of
Fidelity Diversified International Fund dated October 1, 1992 is
incorporated herein by reference to Exhibit 5(p) to Post-Effective
Amendment No. 51.
(q) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf of
Fidelity Overseas Fund dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(o) to Post-Effective Amendment No. 38.
(r) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf of
Fidelity Europe Fund dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(p) to Post-Effective Amendment No. 38.
(s) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf of
Fidelity Pacific Basin Fund dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(q) to Post-Effective Amendment No. 38.
(t) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf of
Fidelity Canada Fund dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(r) to Post-Effective Amendment No. 38.
(u) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf of
Fidelity International Growth & Income Fund dated April 1, 1992 is
incorporated herein by reference to Exhibit 5(s) to Post-Effective
Amendment No. 38.
(v) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf of
Fidelity Worldwide Fund dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(t) to Post-Effective Amendment No. 38.
(w) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf of
Fidelity Emerging Markets Fund (formerly "Fidelity International
Opportunities Fund") dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(u) to Post-Effective Amendment No. 38.
(x) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf of
Fidelity Global Bond Fund dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(v) to Post-Amendment No. 38.
(y) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf of
Fidelity Short-Term World Income Fund dated April 1, 1992 is incorporated
herein by reference to Exhibit 5(w) to Post-Effective Amendment No. 38.
(z) Form of Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity Management & Research (Far East) Inc. on
behalf of Fidelity Japan Fund was filed as Exhibit 5(m) to Post-Effective
Amendment No. 35.
(aa) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf of
Fidelity Latin America Fund dated March 18, 1993 is incorporated herein by
reference to Exhibit 5(z) to Post-Effective Amendment No. 48.
(bb) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf of
Fidelity Southeast Asia Fund dated March 18, 1993 is incorporated herein by
reference to Exhibit 5(aa) to Post-Effective Amendment No. 48.
(cc) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf of
Fidelity New Markets Income Fund dated April 15, 1993 is incorporated
herein by reference to Exhibit 5(bb) to Post-Effective Amendment No. 48.
(dd) Form of Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity Management & Research (Far East) Inc. on
behalf of Fidelity Europe Capital Appreciation Fund was filed as Exhibit
5(dd) to Post-Effective Amendment No. 49.
(ee) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity Overseas Fund dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(x) to Post-Effective Amendment No. 38.
(ff) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity Europe Fund dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(y) to Post-Effective Amendment No. 38.
(gg) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity Pacific Basin Fund dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(z) to Post-Effective Amendment No. 38.
(hh) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity Canada Fund dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(aa) to Post-Effective Amendment No. 38.
(ii) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity International Growth & Income Fund dated April 1, 1992 is
incorporated herein by reference to Exhibit 5(bb) to Post-Effective
Amendment No. 38.
(jj) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity Worldwide Fund dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(cc) to Post-Effective Amendment No. 38.
(kk) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity Emerging Markets Fund (formerly "Fidelity International
Opportunities Fund") dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(dd) to Post-Effective Amendment No. 38.
(ll) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity Global Bond Fund dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(ee) to Post-Effective Amendment No. 38.
(mm) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) on behalf of Fidelity
Short-Term World Income Fund dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(ff) to Post-Effective Amendment No. 38.
(nn) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity Diversified International Fund dated October 1, 1992 is
incorporated herein by reference to Exhibit 5(nn) to Post-Effective
Amendment No. 51.
(oo) Form of Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity Management & Research (U.K.) Inc. on
behalf of Fidelity Japan Fund was filed as Exhibit 5(n) to Post-Effective
Amendment No. 35.
(pp) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity Latin America Fund is incorporated herein by reference to Exhibit
5(nn) to Post-Effective Amendment No. 48.
(qq) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity Southeast Asia Fund dated March 18, 1993 is incorporated herein by
reference to Exhibit 5(oo) to Post-Effective Amendment No. 48.
(rr) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. dated April 15,
1993 on behalf of Fidelity New Markets Income Fund date April 15, 1993, is
incorporated herein by reference to Exhibit 5(pp) to Post-Effective
Amendment No. 48.
(ss) Form of Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity Management & Research (U.K.) Inc. on
behalf of Fidelity Europe Capital Appreciation Fund was filed as Exhibit
5(ss) to Post-Effective Amendment No. 49.
(tt) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited on
behalf of Fidelity Overseas Fund dated April 1, 1992 is incorporated herein
by reference to Exhibit 5(gg) to Post-Effective Amendment No. 38.
(uu) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited on
behalf of Fidelity Europe Fund dated April 1, 1992 is incorporated herein
by reference to Exhibit 5(hh) to Post-Effective Amendment No. 38.
(vv) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited on
behalf of Fidelity Pacific Basin Fund dated April 1, 1992 is incorporated
herein by reference to Exhibit 5(ii) to Post-Effective Amendment No. 38.
(ww) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited on
behalf of Fidelity Canada Fund dated April 1, 1992 is incorporated herein
by reference to Exhibit 5(jj) to Post-Effective Amendment No. 38.
(xx) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited on
behalf of Fidelity International Growth & Income Fund dated April 1,
1992 is incorporated herein by reference to Exhibit 5(kk) to Post-Effective
Amendment No. 38.
(yy) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited on
behalf of Fidelity Worldwide Fund dated April 1, 1992 is incorporated
herein by reference to Exhibit 5(ll) to Post-Effective Amendment No. 38.
(zz) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited on
behalf of Fidelity Emerging Markets Fund (formerly "Fidelity International
Opportunities Fund") dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(mm) to Post-Effective Amendment No. 38.
(aaa) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited on
behalf of Fidelity Global Bond Fund dated April 1, 1992 is incorporated
herein by reference to Exhibit 5(nn) to Post-Effective Amendment No. 38.
(bbb) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited on
behalf of Fidelity Short-Term World Income Fund dated April 1, 1992 is
incorporated herein by reference to Exhibit 5(oo) to Post-Effective
Amendment No. 38.
(ccc) Form of Sub-Advisory Agreement between Fidelity International
Investment Advisors and Fidelity International Investment Advisors (U.K.)
Limited on behalf of Fidelity Japan Fund was filed as Exhibit 5(o) to
Post-Effective Amendment No. 35.
(ddd) Form of Sub-Advisory Agreement between Fidelity International
Investment Advisors and Fidelity International Investment Advisors (U.K.)
Limited on behalf of Fidelity Latin America Fund was filed as Exhibit 5(g)
to Post-Effective Amendment No. 42.
(eee) Form of Sub-Advisory Agreement between Fidelity International
Investment Advisors and Fidelity International Investment Advisors (U.K.)
Limited on behalf of Fidelity Southeast Asia Fund was filed as Exhibit 5(h)
to Post-Effective Amendment No. 42.
(fff) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited on
behalf of Fidelity New Markets Income Fund is incorporated herein by
reference to Exhibit 5(fff) to Post-Effective Amendment No. 50.
(ggg) Form of Sub-Advisory Agreement between Fidelity International
Investment Advisors and Fidelity International Investment Advisors (U.K.)
Limited on behalf of Fidelity Europe Capital Appreciation Fund was filed as
Exhibit 5(ggg) to Post-Effective Amendment No. 49.
(hhh) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity Overseas Fund dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(pp) to Post-Effective Amendment No. 38.
(iii) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity Europe Fund dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(qq) to Post-Effective Amendment No. 38.
(jjj) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity Pacific Basin Fund dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(rr) to Post-Effective Amendment No. 38.
(kkk) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidel ity International Investment Advisors on behalf of
Fidelity Canada Fund dated April 1, 1992 is incorporated herein
by reference to Exhibit 5(ss) to Post-Effective Amendment No. 38.
(lll) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity International Growth & Income Fund dated April 1, 1992 is
incorporated herein by reference to Exhibit 5(tt) to Post-Effective
Amendment No. 38.
(mmm) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity Worldwide Fund dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(uu) to Post-Effective Amendment No. 38.
(nnn) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity Emerging Markets Fund (formerly "Fidelity International
Opportunities Fund") dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(vv) to Post-Effective Amendment No. 38.
(ooo) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity Global Bond Fund dated April 1, 1992 is incorporated herein by
reference to Exhibit 5(ww) to Post-Effective Amendment No. 38.
(ppp) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity Short-Term World Income Fund dated April 1, 1992 is incorporated
herein by reference to Exhibit 5(xx) to Post-Effective Amendment No. 38.
(qqq) Form of Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity International Investment Advisors on behalf
of Fidelity Japan Fund was filed as Exhibit 5(p) to Post-Effective
Amendment No. 35.
(rrr) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity Latin America Fund dated March 18, 1993 is incorporated herein by
reference to Exhibit 5(rrr) to Post-Effective Amendment No. 51.
(sss) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity Southeast Asia Fund dated March 18, 1993 is incorporated herein by
reference to Exhibit 5(sss) to Post-Effective Amendment No. 51.
(ttt) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity New Markets Income Fund is incorporated by reference to Exhibit
5(ttt) to Post-Effective Amendment No. 50.
(uuu) Form of Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity International Investment Advisors on behalf
of Fidelity Europe Capital Appreciation Fund was filed as Exhibit 5(uuu) to
Post-Effective Amendment No. 49.
(vvv) Form of Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity Investments Japan Limited on behalf of
Fidelity Southeast Asia Fund was filed as Exhibit 5(i) to Post-Effective
Amendment No. 42.
(www) Form of Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity Investments Japan Limited on behalf of
Fidelity New Markets Income Fund was filed as Exhibit 5(rrr) to
Post-Effective Amendment No. 45.
(xxx) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity Diversified International Fund dated October 1, 1992 is
incorporated herein by reference to Exhibit 5(xxx) to Post-Effective
Amendment No. 51.
(yyy) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited on
behalf of Fidelity Diversified International Fund dated October 1, 1992 is
incorporated herein by reference to Exhibit 5(yyy) to Post-Effective
Amendment No. 51.
(6) (a) General Distribution Agreement between Fidelity Overseas Fund and
Fidelity Distributors Corporation dated April 1, 1987 is incorporated
herein by reference to Exhibit 6(a) to Post-Effective Amendment No. 11.
(b) General Distribution Agreement between Fidelity Europe Fund and
Fidelity Distributors Corporation dated April 1, 1987 is incorporated
herein by reference to Exhibit 6(b) to Post-Effective Amendment No. 11.
(c) General Distribution Agreement between Fidelity Pacific Basin Fund and
Fidelity Distributors Corporation dated April 1, 1987 is incorporated
herein by reference to Exhibit 6(c) to Post-Effective Amendment No. 11.
(d) General Distribution Agreement between Fidelity International Growth
& Income Fund and Fidelity Distributors Corporation dated April 1, 1987
is incorporated herein by reference to Exhibit 6(d) to Post-Effective
Amendment No. 11.
(e) General Distribution Agreement between Fidelity Global Bond Fund and
Fidelity Distributors Corporation dated April 1, 1987 is incorporated
herein by reference to Exhibit 6(e) to Post-Effective Amendment No. 11.
(f) General Distribution Agreement between Fidelity Canada Fund and
Fidelity Distributors Corporation dated November 14, 1987 is incorporated
herein by reference to Exhibit 6(f) to Post-Effective Amendment No. 11.
(g) Amendment to General Distribution Agreement between Registrant and
Fidelity Distributors Corporation dated January 1, 1988 is incorporated
herein by reference to Exhibit 6(h) to Post-Effective Amendment No. 12.
(h) General Distribution Agreement between Fidelity Worldwide Fund and
Fidelity Distributors Corporation dated May 19, 1990 is incorporated herein
by reference to Exhibit 6(h) to Post-Effective Amendment No. 24.
(i) General Distribution Agreement between Fidelity Emerging Markets Fund
(formerly "Fidelity International Opportunities Fund") and Fidelity
Distributors Corporation dated September 30, 1990 is incorporated herein by
reference to Exhibit 6(i) to Post-Effective Amendment No. 24.
(j) General Distribution Agreement between Fidelity Short-Term World Income
Fund and Fidelity Distributors Corporation dated September 20, 1991 is
incorporated by reference to Exhibit 6(j) to Post-Effective Amendment No.
44.
(k) General Distribution Agreement between Fidelity Diversified
International Fund and Fidelity Distributors Corporation dated December 12,
1991 is incorporated herein by reference to Exhibit 6(k) to Post-Effective
Amendment No. 38.
(l) Form of General Distribution Agreement between Fidelity Japan Fund and
Fidelity Distributors Corporation was filed as Exhibit 6(l) to
Post-Effective Amendment No. 35.
(m) Form of General Distribution Agreement between Fidelity Latin America
Fund and Fidelity Distributors Corporation was filed as Exhibit 6(a) to
Post-Effective Amendment No. 42.
(n) Form of General Distribution Agreement between Fidelity Southeast Asia
Fund and Fidelity Distributors Corporation was filed as Exhibit 6(b) to
Post-Effective Amendment No. 42.
(o) General Distribution Agreement between Fidelity New Markets Income Fund
and Fidelity Distributors Corporation is incorporated by reference to
Exhibit 6(o) to Post-Effective Amendment No. 50.
(p) Form of General Distribution Agreement between Fidelity Europe Capital
Appreciation Fund and Fidelity Distributors Corporation was filed as
Exhibit 6(p) to Post-Effective Amendment No. 49.
(7) Retirement Plan for Non-Interested Person Trustees, Directors or
General Partners, effective November 1, 1989, is incorporated herein by
reference to Exhibit 7 to Post-Effective Amendment No. 29.
(8)(a) Custodian Agreement between Fidelity Investment Trust and the Chase
Manhattan Bank, N.A. dated July 18, 1991 is incorporated herein by
reference to Exhibit 8(a) to Post-Effective Amendment No. 38.
(9) (a) Amended Service Agreement between the Registrant, FMR Corp., and
Fidelity Service Co. dated June 1, 1989 is incorporated herein by reference
to Exhibit 9(a) to Post-Effective Amendment No. 18.
(b) Schedules A, B, and C to the Amended Service Agreement for Fidelity
Europe Fund, dated June 1, 1989, are incorporated herein by reference to
Exhibit 9(b) to Post-Effective Amendment No. 18.
(c) Schedules A, B, and C to the Amended Service Agreement for Fidelity
Pacific Basin Fund, dated June 1, 1989, are incorporated herein by
reference to Exhibit 9(c) to Post-Effective Amendment No. 18.
(d) Schedules A, B, and C to the Amended Service Agreement for Fidelity
International Growth & Income Fund, dated June 1, 1989, are
incorporated herein by reference to Exhibit 9(d) to Post-Effective
Amendment No. 18.
(e) Schedules A, B, and C to the Amended Service Agreement for Fidelity
Global Bond Fund, dated June 1, 1989, are incorporated herein by reference
to Exhibit 9(e) to Post-Effective Amendment No. 18.
(f) Schedules A, B, and C to the Amended Service Agreement for Fidelity
Canada Fund, dated June 1, 1989, are incorporated herein by reference to
Exhibit 9(f) to Post-Effective Amendment No. 18.
(g) Schedules A, B, and C to the Amended Service Agreement for Fidelity
Overseas Fund, dated June 1, 1989, are incorporated herein by reference to
Exhibit 9(g) to Post-Effective Amendment No. 18.
(h) Schedules A, B, and C to the Amended Service Agreement for Fidelity
Worldwide Fund, dated May 19, 1990, are incorporated herein by reference to
Exhibit 9(h) to Post-Effective Amendment No. 24.
(i) Schedules A, B, and C to the Amended Service Agreement for Fidelity
Emerging Markets Fund (formerly "Fidelity International Opportunities
Fund"), dated September 30, 1990, are incorporated herein by reference to
Exhibit 9(i) to Post-Effective Amendment No. 24.
(j) Form of Schedules A, B, and C to the Amended Service Agreement for
Fidelity Short-Term World Income Fund was filed as Exhibit 9(j) to
Post-Effective Amendment No. 27.
(k) Form of Schedules A, B, and C to the Amended Service Agreement for
Fidelity Diversified International Fund was filed as Exhibit 9(k) to
Post-Effective Amendment No. 29.
(l) Form of Schedules A, B, and C to the Amended Service Agreement for
Fidelity Japan Fund was filed as Exhibit 9(l) to Post-Effective Amendment
No. 35.
(n) Form of Schedules A, B, and C to the Amended Service Agreement for
Fidelity Latin America Fund was filed as Exhibit 9(a) to Post-Effective
Amendment No. 42.
(o) Form of Schedules A, B, and C to the Amended Service Agreement for
Fidelity Southeast Asia Fund was filed as Exhibit 9(b) to Post-Effective
Amendment No. 42.
(p) Form of Schedules A, B, and C to the Amended Service Agreement for
Fidelity New Markets Income Fund was filed as Exhibit 9(p) to
Post-Effective Amendment No. 45.
(q) Form of Schedules A, B, and C to the Amended Service Agreement for
Fidelity Europe Capital Appreciation Fund was filed as Exhibit 9(q) to
Post-Effective Amendment No. 49.
(10) Not applicable.
(11) (a) Consent of Coopers & Lybrand is filed herein as Exhibit 11(a).
(b) Consent of Price Waterhouse is filed herein as Exhibit
11(b).
(12) Not applicable.
(13) Not applicable.
(14) (a) Fidelity Individual Retirement Account Custodial Agreement and
Disclosure Statement, as currently in effect, is incorporated herein by
reference to Exhibit 14(a) to Post-Effective Amendment No. 38.
(b) Fidelity Defined Contribution Retirement Plan and Trust
Agreement, as currently in effect, is incorporated herein by reference to
Exhibit 14(c) to Post-Effective Amendment No. 23.
(c) Fidelity Defined Benefit Pension Plan and Trust, as currently in
effect, is incorporated herein by reference to Exhibit 14(d) to
Post-Effective Amendment No. 23.
(d) Fidelity 401(a) Prototype Plan for Tax-Exempt Employers, as
currently in effect, is incorporated herein by reference to Exhibit 14(e)
to Post-Effective Amendment No. 23.
(e) Fidelity Group Individual Retirement Account Custodial Agreement
and Disclosure Statement, as currently in effect, is incorporated herein by
reference to Exhibit 14(g) to Post-Effective Amendment No. 23.
(f) Fidelity Master Plan for Savings and Investments, as currently
in effect, is incorporated herein by reference to Exhibit 14(f) to
Post-Effective Amendment No. 27.
(g) Fidelity 403(b)(7) Custodial Agreement, as currently in effect,
is incorporated herein by reference to Exhibit 14(g) to Post-Effective
Amendment No. 27.
(15) (a) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Global Bond Fund is incorporated herein by reference to Exhibit 15 to
Post-Effective Amendment No. 7.
(b) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Short-Term World Income Fund is incorporated herein by reference to Exhibit
15(b) to Post-Effective Amendment No. 27.
(c) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity New
Markets Income Fund is incorporated herein by reference to Exhibit 15(c) to
Post-Effective Amendment No. 45.
(16) (a) A schedule for computation of performance quotations is
incorporated herein by reference to Exhibit 16 to Post-Effective Amendment
No. 16.
(b) A schedule for computation of performance quotations regarding
adjusted net asset value is incorporated herein by reference to Exhibit
16(b) to Post-Effective Amendment No. 43.
.
Item 25. Persons Controlled by or Under Common Control with Registrant
The Board of Trustees of Registrant is the same as the Board of Trustees
of other funds advised by FMR, each of which has Fidelity Management &
Research Company as its investment adviser. In addition, the officers of
these funds are substantially identical. Nonetheless, Registrant takes the
position that it is not under common control with these other funds since
the power residing in the respective boards and officers arises as the
result of an official position with the respective funds.
Item 26. Number of Holders of Securities: As of December 31, 1993
Title of Class: Shares of Beneficial Interest
Name of Series Number of Record Holders
Fidelity Overseas Fund 287,413
Fidelity Europe Fund 91,859
Fidelity Pacific Basin Fund 64,314
Fidelity International Growth & Income Fund 95,731
Fidelity Global Bond Fund 42,407
Fidelity Canada Fund 20,820
Fidelity Worldwide Fund 35,333
Fidelity Emerging Markets Fund 108,369
Fidelity New Markets Income Fund 16,256
Fidelity Short-Term World Income Fund 29,285
Fidelity Diversified International Fund 30,068
Fidelity Japan Fund 28,526
Fidelity Diversified Global Fund 0
Fidelity Latin America Fund 55,134
Fidelity South East Asia Fund 71,239
Fidelity Europe Capital Appreciation Fund 502
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification shall be
provided to any past or present Trustee or officer. It states that the
Registrant shall indemnify any present or past Trustee, or officer to the
fullest extent permitted by law against liability and all expenses
reasonably incurred by him in connection with any claim, action, suit or
proceeding in which he is involved by virtue of his service as a trustee,
an officer, or both. Additionally, amounts paid or incurred in settlement
of such matters are covered by this indemnification. Indemnification will
not be provided in certain circumstances, however. These include instances
of willful misfeasance, bad faith, gross negligence, and reckless disregard
of the duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman of
the Board and a Director of FMR, FMR Corp., FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.)
Inc. and Fidelity Management & Research (Far East)
Inc.; President and Trustee of funds advised by FMR;
J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc. (1989), Fidelity
Management & Research (U.K.) Inc. and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.
Peter S. Lynch Vice Chairman of FMR (1992).
David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.
Stephan Campbell Vice President of FMR (1993).
Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR;
Corporate Preferred Group Leader.
Will Danof Vice President of FMR (1993) and of a fund advised by
FMR.
Scott DeSano Vice President of FMR (1993).
Penelope Dobkin Vice President of FMR (1990) and of a fund advised by
FMR.
Larry Domash Vice President of FMR (1993).
George Domolky Vice President of FMR (1993) and of a fund advised by
FMR.
Charles F. Dornbush Senior Vice President of FMR (1991); Chief Financial
Officer of the Fidelity funds; Treasurer of FMR Texas Inc.
(1989), Fidelity Management & Research (U.K.) Inc.,
and Fidelity Management & Research (Far East) Inc.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.
Kathryn L. Eklund Vice President of FMR (1991).
Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Daniel R. Frank Vice President of FMR and of funds advised by FMR.
Gary L. French Vice President of FMR (1991) and Treasurer of the funds
advised by FMR (1991). Prior to assuming the position as
Treasurer he was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991)
(Vice President, 1990-1991); and Senior Vice President,
Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
William J. Hayes Senior Vice President of FMR (1989); Income/Growth
Group Leader (1990) and International Group Leader
(1990).
Robert Haber Vice President of FMR (1991) and of funds advised by
FMR.
Daniel Harmetz Vice President of FMR (1991) and of a fund advised by
FMR.
Ellen S. Heller Vice President of FMR (1991).
</TABLE>
John Hickling Vice President of FMR (1993) and of funds advised by
FMR.
<TABLE>
<CAPTION>
<S> <C>
Robert F. Hill Vice President of FMR (1989); and Director of Technical
Research.
Stephan Jonas Vice President of FMR (1993).
David B. Jones Vice President of FMR (1993).
Steven Kaye Vice President of FMR (1993) and of a fund advised by
FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); and High Income
Group Leader.
Alan Leifer Vice President of FMR and of a fund advised by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund advised by
FMR.
Bradford E. Lewis Vice President of FMR (1991) and of funds advised by
FMR.
Robert H. Morrison Vice President of FMR and Director of Equity Trading.
David Murphy Vice President of FMR (1991) and of funds advised by
FMR.
Jacques Perold Vice President of FMR (1991).
Brian Posner Vice President of FMR (1993) and of a fund advised by
FMR.
Anne Punzak Vice President of FMR (1990) and of funds advised by
FMR.
Richard A. Spillane Vice President of FMR (1990) and of funds advised by
FMR; and Director of Equity Research (1989).
Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.
Thomas Steffanci Senior Vice President of FMR (1993); and Fixed-Income
Division Head.
Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.
Donald Taylor Vice President of FMR (1993) and of funds advised by
FMR.
Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised
by FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund advised by
FMR.
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; and Growth Group Leader (1990).
Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Guy E. Wickwire Vice President of FMR and of a fund advised by FMR.
Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of
FMR; Vice President, Legal of FMR Corp.; and Secretary
of funds advised by FMR.
</TABLE>
(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.)
FMR U.K. provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following positions
of a substantial nature during the past two fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR U.K.; Chairman of the
Executive Committee of FMR; Chief Executive Officer of FMR
Corp.; Chairman of the Board and a Director of FMR, FMR
Corp., FMR Texas Inc., and Fidelity Management &
Research (Far East) Inc.; President and Trustee of funds advised
by FMR.
J. Gary Burkhead President and Director of FMR U.K.; President of FMR;
Managing Director of FMR Corp.; President and a Director of
FMR Texas Inc. and Fidelity Management & Research (Far
East) Inc.; Senior Vice President and Trustee of funds advised
by FMR.
Richard C. Habermann Senior Vice President of FMR U.K. (1991); Senior Vice
President of Fidelity Management & Research (Far East)
Inc. (1991); Director of Worldwide Research of FMR.
Charles F. Dornbush Treasurer of FMR U.K.; Treasurer of Fidelity Management
& Research (Far East) Inc.; Treasurer of FMR Texas Inc.,
Senior Vice President and Chief Financial Officer of the Fidelity
funds.
David Weinstein Clerk of FMR U.K.; Clerk of Fidelity Management &
Research (Far East) Inc.; Secretary of FMR Texas Inc.
</TABLE>
(3) FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. (FMR Far East)
FMR Far East provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following positions
of a substantial nature during the past two fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Far East; Chairman of the
Executive Committee of FMR; Chief Executive Officer of
FMR Corp.; Chairman of the Board and a Director of
FMR, FMR Corp., FMR Texas Inc. and Fidelity
Management & Research (U.K.) Inc.; President and
Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR Far East; President of
FMR; Managing Director of FMR Corp.; President and a
Director of FMR Texas Inc. and Fidelity Management
& Research (U.K.) Inc.; Senior Vice President and
Trustee of funds advised by FMR.
Richard C. Habermann Senior Vice President of FMR Far East (1991); Senior
Vice President of Fidelity Management & Research
(U.K.) Inc. (1991); Director of Worldwide Research of
FMR.
William R. Ebsworth Vice President of FMR Far East.
Bill Wilder Vice President of FMR Far East (1993).
Charles F. Dornbush Treasurer of FMR Far East; Treasurer of Fidelity
Management & Research (U.K.) Inc.; Treasurer of
FMR Texas Inc.; Senior Vice President and Chief
Financial Officer of the Fidelity funds.
David C. Weinstein Clerk of FMR Far East; Clerk of Fidelity Management
& Research (U.K.) Inc.; Secretary of FMR Texas
Inc. .
</TABLE>
(4) FIDELITY INTERNATIONAL INVESTMENT ADVISORS
Pembroke Hall, 42 Crow Lane, Pembroke, Bermuda
The directors and officers of Fidelity International Investment Advisors
(FIIA) have held, during the past two fiscal years, the following positions
of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Anthony Bolton Director of FIIA and FIIAL (U.K.); Director of Fidelity
International Management Holdings Limited.
Martin P. Cambridge Director of FIIAand FIIAL (U.K.); Chief Financial
Officer of Fidelity International Ltd. and Fidelity
Investment Services Ltd..
Kirk Caza Vice President of FIIA (1991).
Charles T. M. Collis Director and Secretary of FIIA; Partner in Conyers, Dill
& Pearman, Hamilton, Bermuda; Secretary to many
companies in the Fidelity international group of
companies.
Stephen A. DeSilva Treasurer of FIIA and Fidelity International Limited.
Geoffrey J. Mansfield Director of FIIA.
Frank Mutch Assistant Secretary of FIIA.
David J. Saul President, Director, and Controller of FIIA; Director of
Fidelity International Limited.
Michael Sommerville Vice President of FIIA; Vice President of Fidelity
International Limited.
Toshiaki Wakabayashi Director of FIIA.
</TABLE>
(5) FIDELITY INTERNATIONAL INVESTMENT ADVISORS (U.K.) LIMITED
27-28 Lovat Lane, London, England
The directors and officers of Fidelity International Investment Advisors
(U.K.) Limited (FIIAL (U.K.)) have held, during the past two fiscal years,
the following positions of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Anthony Bolton Director of FIIAL (U.K.) and FIIA; Director of Fidelity
International Management Holdings Limited.
Martin P. Cambridge Director and Secretary of FIIAL (U.K.) and FIIA; Chief
Financial Officer of Fidelity International Ltd. and
Fidelity Investment Services Ltd..
C. Bruce Johnstone Director of FIIAL (U.K.) (1991).
</TABLE>
(6) FIDELITY INVESTMENTS JAPAN LIMITED
Hibiya Park Building, 1-8-1 Yuraku-cho, Chiyoda-Ku, Tokyo, Japan
The directors and officers of Fidelity Investments Japan Limited have
held, during the past two fiscal years, the following positions of a
substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Far East; Chairman of the
Executive Committee of FMR; Chief Executive Officer of FMR
Corp.; Chairman of the Board and a Director of FMR, FMR Corp.,
FMR Texas Inc. (1989) and Fidelity Management & Research
(U.K.) Inc.; President and Trustee of funds advised by FMR.
Glen R. Moreno President of Fidelity International Limited; Chairman of Fidelity
International Management Holdings Limited.
Yasuo Kuramoto Vice Chairman of Fidelity Investments Japan Limited (1988),
Chairman of Fidelity International Investment Advisors (Japan)
Limited (1991).
Yasukazu Akamatsu
Masaharu Izumi
Hiroshi Yamashita
Kozo Tango
Yoshiharu Okazaki President of Fidelity International Investment Advisors (Japan)
Limited (1992), Director of Fidelity Investments Japan Limited
(1989), Managing Director of Fidelity International Management
Holding Limited (1988-1992)
Takashi Kato
Nobuhide Kamiyama
Arthur M. Jesson
Noboru Kawai
Shinobu Kasaya
</TABLE>
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
CrestFunds, Inc.
The Victory Funds
ARK Funds
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Nita B. Kincaid Director None
W. Humphrey Bogart Director None
Kurt A. Lange President and Treasurer None
William L. Adair Senior Vice President None
Thomas W. Littauer Senior Vice President None
Arthur S. Loring Vice President and Clerk Secretary
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Co., 82 Devonshire Street, Boston, MA 02109, or the funds'
respective custodians, The Chase Manhattan Bank, 1211 Avenue of the
Americas, New York, N.Y. and Brown Brothers Harriman & Co., 40 Water
Street, Boston, MA.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) The Registrant on behalf of Fidelity Overseas Fund, Fidelity Europe
Fund, Fidelity Pacific Basin Fund, Fidelity International Growth &
Income Fund, Fidelity Global Bond Fund, Fidelity Canada Fund, Fidelity
Worldwide Fund, Fidelity Emerging Markets Fund, Fidelity New Markets Income
Fund, Fidelity Short-Term World Income Fund, Fidelity Diversified
International Fund, Fidelity Japan Fund, Fidelity Diversified Global Fund,
Fidelity Latin America Fund, Fidelity Southeast Asia Fund, and Fidelity
Europe Capital Appreciation Fund undertakes, provided the information
required by Item 5A is contained in the annual report, to furnish each
person to whom a prospectus has been delivered, upon their request and
without charge, a copy of the Registrant's latest annual report to
shareholders.
(b) The Registrant undertakes to file Post-Effective Amendments, using
financial statements which need not be certified, within six months of
Fidelity Diversified Global Fund's and Fidelity Europe Capital Appreciation
Fund's effectiveness.
(c) Each Registrant undertakes: 1) to call a meeting of shareholders for
the purpose of voting upon the question of removal of a trustee or
trustees, when requested to do so by record holders of not less than 10% of
its outstanding shares; and 2) to assist in communications with other
shareholders pursuant to Section 16(c)(1) and (2), whenever shareholders
meeting the qualifications set forth in 16(c) seek the opportunity to
communicate with other shareholders with a view toward requesting a
meeting.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No.52 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston, and the Commonwealth of Massachusetts, on the 23rd
day of February 1994.
FIDELITY INVESTMENT TRUST
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee February 23, 1994
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Gary L. French Treasurer February 23, 1994
Gary L. French
/s/J. Gary Burkhead Trustee February 23, 1994
J. Gary Burkhead
/s/Ralph F. Cox * Trustee February 23, 1994
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee February 23, 1994
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee February 23, 1994
Richard J. Flynn
/s/E. Bradley Jones * Trustee February 23, 1994
E. Bradley Jones
/s/Donald J. Kirk * Trustee February 23, 1994
Donald J. Kirk
/s/Peter S. Lynch * Trustee February 23, 1994
Peter S. Lynch
/s/Edward H. Malone * Trustee February 23, 1994
Edward H. Malone
/s/Marvin L. Mann_____* Trustee February 23, 1994
Marvin L. Mann
/s/Gerald C. McDonough* Trustee February 23, 1994
Gerald C. McDonough
/s/Thomas R. Williams * Trustee February 23, 1994
Thomas R. Williams
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated October 20, 1993 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated October 20, 1993 and filed herewith.
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individuals serve as Board Members (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, our true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for us and in our names in the appropriate capacities, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
our names and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS our hands on this twentieth day of October, 1993.
/s/Edward C. Johnson 3d /s/Peter S. Lynch
Edward C. Johnson 3d Peter S. Lynch
/s/J. Gary Burkhead /s/Edward H. Malone
J. Gary Burkhead Edward H. Malone
/s/Richard J. Flynn /s/Gerald C. McDonough
Richard J. Flynn Gerald C. McDonough
/s/E. Bradley Jones /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
/s/Donald J. Kirk
Donald J. Kirk
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as President and Board Member (collectively, the
"Funds"), hereby severally constitute and appoint J. Gary Burkhead, my true
and lawful attorney-in-fact, with full power of substitution, and with full
power to sign for me and in my name in the appropriate capacity, all
Pre-Effective Amendments to any Registration Statements of the Funds, any
and all subsequent Post-Effective Amendments to said Registration
Statements, any Registration Statements on Form N-14, and any supplements
or other instruments in connection therewith, and generally to do all such
things in my name and behalf in connection therewith as said
attorney-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission. I hereby ratify and confirm all that said attorneys-in-fact or
their substitutes may do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d October 20, 1993
Edward C. Johnson 3d
POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment cmpanies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Magellan Fund
Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series IV Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Select Portfolios
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Devonshire Trust Fidelity U.S. Investments-Government Securities
Fidelity Financial Trust Fund, L.P.
Fidelity Fixed-Income Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Government Securities Fund Spartan U.S. Treasury Money Market
Fidelity Hastings Street Trust Fund
Fidelity Income Fund Variable Insurance Products Fund
Fidelity Institutional Trust Variable Insurance Products Fund II
Fidelity Investment Trust
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Ralph F. Cox October 20, 1993
Ralph F. Cox
POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series IV Fidelity School Street Trust
Fidelity Advisor Series VI Fidelity Select Portfolios
Fidelity Advisor Series VIII Fidelity Sterling Performance Portfolio, L.P.
Fidelity Beacon Street Trust Fidelity Trend Fund
Fidelity Capital Trust Fidelity Union Street Trust
Fidelity Commonwealth Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Contrafund Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Yen Performance Portfolio, L.P.
Fidelity Devonshire Trust Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Institutional Trust
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Phyllis Burke Davis October 20, 1993
Phyllis Burke Davis
POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Special Situations Fund
Fidelity Advisor Series IV Fidelity Sterling Performance Portfolio, L.P.
Fidelity Advisor Series VI Fidelity Trend Fund
Fidelity Advisor Series VII Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Advisor Series VIII Fidelity U.S. Investments-Government Securities
Fidelity Contrafund Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Yen Performance Portfolio, L.P.
Portfolio, L.P. Spartan U.S. Treasury Money Market
Fidelity Fixed-Income Trust Fund
Fidelity Government Securities Fund Variable Insurance Products Fund
Fidelity Hastings Street Trust Variable Insurance Products Fund II
Fidelity Institutional Trust
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Marvin L. Mann October 20, 1993
Marvin L. Mann
(2_FIDELITY_LOGOS)FIDELITY
SHORT-TERM WORLD INCOME
FUND
ANNUAL REPORT
DECEMBER 31, 1993
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the fund's
investments over the last six months.
INVESTMENTS 11 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 21 Statements of assets and liabilities,
operations, and changes in net assets, as
well as financial highlights.
NOTES 25 Footnotes to the financial statements.
REPORT OF INDEPENDENT 29 The auditor's opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A
BANK, AND FUND
SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED BY THE FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider adding to your tax-free investments, either municipal bonds
or municipal bond funds. Often these can provide higher after-tax yields
than comparable taxable investments. For example, if you're in the new 36%
federal income tax bracket and invest $10,000 in a taxable investment
yielding 7%, you'll pay $252 in federal taxes and receive $448 in income.
That same $10,000 invested in a tax-free bond fund yielding 5.5% would
allow you to keep $550 in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, as well as reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells bonds that have grown in value). You can also look at the fund's
dividends and yield.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 LIFE OF
YEAR FUND
Short-Term World Income 12.59% 19.35%
Lehman Brothers 1-3 Year Government Bond Index 5.39% n/a
Average Short World Multi-Market Income Fund 5.41% n/a
Consumer Price Index 2.75% 6.27%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, or since the fund started on
October 4, 1991. For example, if you had invested $1,000 in a fund that had
a 5% return over the past year, you would have $1,050. You can compare the
fund's returns to the performance of the Lehman Brothers 1-3 Year
Government Bond Index - a broad measure of the performance of short-term
U.S. government bonds. To measure how the fund stacked up against its
peers, you can compare these figures to the average short world
multi-market income fund, which reflects the performance of 48 funds
tracked by Lipper Analytical Services. Both benchmarks include reinvested
dividends and capital gains, if any, and excludes sales charges. Comparing
the fund's performance to the consumer price index helps show how your fund
did compared to inflation. (The periods covered by the CPI numbers are the
closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 LIFE OF
YEAR FUND
Short-Term World Income 12.59% 8.19%
Lehman Brothers 1-3 Year Government Bond Index 5.39% n/a
Average Short World Multi-Market Income Fund 5.41% n/a
Consumer Price Index 2.75% 2.73%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
10/31/91 10000.00 10000.00
11/30/91 9953.55 10103.00
12/31/91 10013.89 10256.57
01/31/92 10073.94 10243.23
02/29/92 10167.77 10273.96
03/31/92 10203.64 10270.88
04/30/92 10340.53 10364.34
05/31/92 10393.31 10460.73
06/30/92 10450.56 10566.39
07/31/92 10563.78 10687.90
08/31/92 10594.05 10774.47
09/30/92 10348.12 10875.75
10/31/92 10510.46 10813.76
11/30/92 10442.46 10797.54
12/31/92 10497.72 10897.96
01/31/93 10595.47 11012.39
02/28/93 10718.77 11100.48
03/31/93 10825.85 11134.90
04/30/93 10901.97 11202.82
05/31/93 11019.77 11175.93
06/30/93 11203.36 11259.75
07/31/93 11348.51 11284.52
08/31/93 11487.10 11378.18
09/30/93 11471.76 11414.59
10/31/93 11633.29 11439.71
11/30/93 11676.62 11441.99
12/31/93 11819.17 11487.76
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Short-Term World Income Fund on October 31, 1991, shortly after the fund
started. As the chart shows, by December 31, 1993, the value of your
investment would have grown to $11,819 - a 18.19% increase on your initial
investment. For comparison, look at how the Lehman Brothers 1-3 Year
Government Bond Index did over the same period. With dividends reinvested,
the same $10,000 investment would have grown to $11,488 - a 14.88%
increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. Bond prices, for
example, move in the opposite
direction of interest rates. In
turn, the share price, return, and
yield of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and downs,
you may have a gain.
(checkmark)
DIVIDENDS AND YIELD
PERIODS ENDED DECEMBER 31, 1993 PAST 30 PAST 6 PAST 1
DAYS MONTHS YEAR
Dividends per share n/a 37.33(cents) 67.52(cents)
Annualized dividend rate n/a 7.30% 6.76%
Annualized yield 5.94% n/a n/a
DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $10.14 over
the past six months and $9.99 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized YIELD is a
standard formula for all 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 and
helps you compare funds from different companies on an equal basis. It does
not reflect the costs of hedging and other currency gains and losses.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Most international bond markets
richly rewarded investors in 1993,
easily outpacing U.S. bond returns.
Falling interest rates and low
inflation fueled strong returns in both
developed nations and, more notably,
in emerging markets. For example, in
Europe and Japan, weak economic
environments led rates to drop, which
benefited bond investors. The
passage of the North American Free
Trade Agreement in November
boosted returns in Latin American
countries, many of which were
already having a strong year. The
Salomon Brothers World
Government Bond Index - which
measures government bond market
performance in developed nations,
including the United States - rose
13.27% for the year. That figure was
dwarfed by the J.P. Morgan
Emerging Markets Bond Index,
which was up 44.17% in 1993. For
comparison, the Lehman Brothers
Aggregate Bond Index - a broad
measure of taxable bonds in the U.S.
market - returned 9.75% for the
year. Though providing returns that
appeared weak compared to those in
overseas markets, the U.S. bond
market posted relatively strong
numbers on a historical basis. Falling
interest rates through most of the year
fueled gains. The yield on the
benchmark 30-year Treasury bond
hit a three decade low in
mid-October, yielding 5.79%. By
year end, mild inflation fears, fueled
by a strengthening economy, had
pushed up the yield on the 30-year
bond to 6.35%.
An interview with Judy Pagliuca, Portfolio Manager of Fidelity
Short-Term World Income Fund
Q. JUDY, HOW DID THE FUND PERFORM?
A. It was a very good year. The fund's total return for the year ended
December 31, 1993 was 12.59%. Meanwhile, the average short world
multi-market income fund had a total return of 5.41%, according to Lipper
Analytical Services.
Q. HOW DO YOU ACCOUNT FOR SUCH A WIDE DISPARITY?
A. The simplest explanation may be the fund's concentration in countries
and regions of the world where I had firm convictions. For example, I
rotated assets during the period in and out of Thailand, Malaysia and
Indonesia; yet the fund's stake in Southeast Asia remained fairly constant
all year at about 25%. Another example would be Mexico, where the fund's
stake in short-term, peso-denominated bonds ranged as high as 27% at times
during the year. So when I've seen what looks like an excellent opportunity
for the fund, I've been willing to commit a large portion of the fund's
assets. Of course, there's always the risk that if I overweight a
particular region that then has economic problems, the fund would suffer
more than other funds with less of a commitment.
Q. WERE THERE OTHER STRATEGIES THAT HELPED?
A. Yes. The fund focuses, of course, on short-term investments. That said,
its average maturity may not exceed three years. In part, that's how the
fund seeks to achieve one of its primary goals - to minimize share-price
fluctuations. But when interest rates are falling and bond prices are
rising - as was the case dramatically in Europe last year - it helps to
have a longer maturity. So I went as far as I could last year in
accumulating longer-term European bonds - right up to the fund's maturity
limit. As of December 31, the fund's average maturity was 2.85 years.
Q. WHAT ABOUT THE IMPACT OF LOWER-RATED BONDS?
A. These bonds have added to the income portion of the fund's return,
although they've also added some risk. On September 1, the fund gained the
authority to invest up to 35% of its assets in bonds rated BBB or BB, but
no more than 10% in BBs alone. With the change, I was able for the first
time to buy corporate and government bonds of certain emerging-market
countries with great potential. For example, I bought both dollar-
denominated Mexican bonds and dollar-and peso-denominated Argentinean
bonds. Both countries have made great strides down the path of economic
reform. That process received a significant boost in October with the
passage of the North American Free Trade Agreement (NAFTA), which helped
the bonds' prices.
Q. HOW DID THE FUND WEATHER THE TURBULENCE THAT PRECEDED THE NAFTA VOTE?
A. Quite well. While I bought dollar-denominated Mexican corporate bonds, I
avoided Mexican peso-denominated bonds in the months leading up to the
vote. Last summer, feeling that the currency risks outweighed the potential
rewards, I also began reducing the fund's stake in Mexican money market
instruments, which are considered AA securities. As a result, the fund
sacrificed some income. But it more than made up for that when I was able
to buy back into the market at reduced prices on the eve of the vote, and
then catch the wave of euphoria that followed NAFTA's passage.
Q. THE FUND HAD A 6.3% STAKE IN INDEXED SECURITIES AT THE END OF DECEMBER.
WHAT ROLE DID THEY PLAY?
A. Indexed securities, a type of structured note, are like customized
bonds. They allow me to make highly specific bets aimed at capitalizing on
the insights of Fidelity's global research staff. For example, European
interest rates are widely expected to continue falling in 1994. But because
I feel that short-term interest rates may fall more quickly than long-term
rates, I've invested in indexed securities that vary in price with
short-term European rates but have the volatility of longer-term bonds.
Q. WERE CURRENCY ISSUES A FACTOR IN THE FUND'S PERFORMANCE LAST YEAR?
A. Yes, although not as much as 1992, when broad devaluations throughout
Europe greatly reduced the value of many investments in U.S. dollars. As a
rule, I try to minimize the impact of currency fluctuations. Sometimes that
involves hedging - either directly by buying forward currency contracts or
indirectly by making offsetting investments in currencies apt to move in
the opposite direction.
Q. WHAT'S YOUR OUTLOOK FOR THE FUND?
A. I'm optimistic that we'll be able to deliver better than money market
returns, with low volatility. But shareholders shouldn't necessarily expect
1994's results to match those of 1993, which were unusually good due to
global bond market conditions. That said, the outlook for next year looks
positive. Interest rates seem likely to keep falling in Europe; and I
continue to see opportunities for further gains in emerging markets.
FUND FACTS
GOAL: high current income with
preservation of capital by
investing in short-term securities
around the world
START DATE: October 4, 1991
SIZE: as of December 31, 1993,
over $422 million
MANAGER: Judy Pagliuca, since
October 1991; manager, Fidelity
Yen, Deutsche Mark, and
Sterling Performance Portfolios,
since November 1989; Fidelity
Global Bond Fund, December
1986 - October 1993
(checkmark)
JUDY PAGLIUCA ON INCOME VS. PRICE
RETURNS:
"The fund's share price suffered
as a result of the 1992 currency
crisis in Europe. So up through
May 1993, one of my primary
aims was to return the fund's
share price to its previous level.
In fact, the market was such that
it lent itself well to that strategy,
and we more than met our goal.
Lately, though, as conditions
have changed, so has the focus
of the fund - back towards
income. Looking ahead, I plan
to pursue more share-price
stability in 1994 and perhaps a
slightly higher income."
(bullet) As of December 31, 1993, the
fund had investments in 17
countries around the world.
(bullet) At the end of December, the
fund was 35% in corporate
securities, 37% in government
securities, 13% in other
(including indexed securities),
and 15% in cash and short-term
investments.
(bullet) In 1993, three factors
contributed roughly equally to
the fund's total return: currency
strategies, interest-rate
movements, and other income
sources.
INVESTMENT CHANGES
The charts below highlight three different aspects of the fund's
investments: the country where they were issued, their sensitivity to
interest-rate changes, and their currency exposure. The top countries in
each table differ because some securities have more interest-rate risk than
others, because securities issued in one country may be denominated in
another country's currency, and because of the effects of currency hedging.
TOP COUNTRIES AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
<S> <C> <C>
(BY LOCATION OF ISSUER) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
SIX MONTHS AGO
Mexico 29 24
United States 15 19
Canada 9 9
Ireland 8 0
France 7 6
</TABLE>
TOP COUNTRIES ARE BASED ON THE LOCATION OF THE ISSUER OF EACH SECURITY,
INDICATING WHERE THE FUND IS EXPOSED TO POLITICAL AND CREDIT RISKS. THE
FUND'S LARGEST POSITION AS OF DECEMBER 31 WAS IN SECURITIES OF MEXICAN
ISSUERS.
TOP INTEREST-RATE EXPOSURES AS OF DECEMBER 31, 1993
(ESTIMATED, BY COUNTRY) % OF FUND'S TOTAL % OF INTEREST-RATE
INTEREST-RATE EXPOSURE EXPOSURE SIX MONTHS AGO
United States 23 14
France 12 10
Sweden 11 15
Finland 10 9
Ireland 10 0
FIDELITY ESTIMATES INTEREST-RATE EXPOSURES BASED ON THE DURATION, OR
INTEREST-RATE SENSITIVITY, OF THE FUND'S HOLDINGS. AS OF DECEMBER 31, THE
FUND WAS MOST SENSITIVE TO INTEREST-RATE MOVEMENTS IN THE U.S., WHICH
ACCOUNTED FOR APPROXIMATELY 23% OF THE FUND'S INTEREST-RATE EXPOSURE.
TOP CURRENCY EXPOSURES AS OF DECEMBER 31, 1993
(ESTIMATED, BY CURRENCY) % OF FUND'S NET ASSETS % OF NET ASSETS
SIX MONTHS AGO
U.S. dollar 64 41
Malaysian ringgit 10 5
Mexican peso 10 12
Indonesian rupiah 8 4
Italian lira 5 7
ESTIMATED CURRENCY EXPOSURES INCLUDE THE IMPACT OF HEDGING, WHICH REDUCES
FOREIGN CURRENCY RISK AND INCREASES THE FUND'S U.S. DOLLAR POSITION. THE
MALAYSIAN RINGGIT AND MEXICAN PESO, EACH AT APPROXIMATELY 10% OF ASSETS,
WERE THE FUND'S LARGEST FOREIGN CURRENCY EXPOSURES AS OF DECEMBER 31.
INVESTMENTS DECEMBER 31, 1993
Showing Percentage of Total Value of Investments
NONCONVERTIBLE BONDS - 34.6%
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (A)
ARGENTINA - 0.8%
Acindar Industria Argentina De Aceros:
euro 9 1/2%, 10/23/95 - $ 350,000 $ 343,000 0045149G
10 1/2%, 12/10/94 (g) - 250,000 245,000 004514AA
Alpargatas SAIC 9%, 11/26/96 (g) - 2,000,000 1,990,000 020545AB
Invertrad SA 9 1/4%, 10/14/94 (g) - 780,000 778,050 46127RAA
3,356,050
CANADA - 3.9%
Ford Motor Credit Canada:
euro 13 1/8%, 6/7/95 A2 CAD 3,400,000 2,838,585 34599AAA
10 1/2%, 5/17/96 Aa3 CAD 4,300,000 3,606,242 34599AAJ
General Motors Acceptance Corp. Canada Ltd.
10%, 8/30/95 A1 CAD 2,400,000 1,940,155 379992AB
11 7/8%, 9/7/95 A1 CAD 3,900,000 3,220,322 379992AA
General Motors Canada 10.85%, 7/24/96 - CAD 4,000,000 3,358,578
375997AA
Montreal Canada Ltd. euro 11 1/4%, 3/7/96 A+ CAD 1,400,000 1,177,726
6148529A
16,141,608
COLOMBIA - 1.0%
Financiera Energetica Nacional 6 5/8%,
12/13/96 (g) - 4,000,000 3,980,000 317703AA
CZECH REPUBLIC - 0.3%
Komercni Banka 17%, 5/3/98 (b)(f) - CSK 40,000,000 1,338,884 50499CAB
FRANCE - 4.8%
Credit Local De France 8 7/8%, 6/10/02 (c) Aaa FRF 100,000 20,162,190
226998AG
INDONESIA - 1.2%
Indorayon Yankee 9 1/8%, 10/15/00 BB 2,000,000 2,010,000 69364LAB
PT Semen Cibinong 9%, 12/15/98 (g) - 3,000,000 3,030,000 69364UAA
5,040,000
MEXICO - 12.9%
Apasco SA euro 10 1/4%, 12/11/96 Ba2 385,000 408,100 037993AA
Banco Nacional de Comercio Exterior SNC
7 1/2%, 7/1/00 Ba2 1,400,000 1,417,500 059612AC
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (A)
MEXICO - CONTINUED
Bancomer SNC euro:
8%, 7/7/98 - $ 7,450,000 $ 7,822,500 05999KAT
8%, 4/14/00 Ba2 2,475,000 2,543,062 0596129A
8%, 8/5/03 Ba2 1,050,000 1,078,875 0596129C
Cemex SA notes 8 7/8%, 6/10/98 (g) Ba2 2,000,000 2,152,500 151290AG
Controladora Comercial Mexicana SA de CV
euro 8 3/4%, 4/21/98 - 110,000 115,637 212996AA
Desc (Soc De Fomento Indust) euro 11%,
12/15/97 - 6,480,000 7,354,800 252996AB
El Puerto de Liverpool SA de CV
7 1/4%, 10/19/96 (g) . - 3,000,000 3,037,500 28383QAA
Empresas ICA Sociedad Controladora
SA de CV 9 3/4%, 2/11/98 (g) - 5,220,000 5,768,100 292448AA
First Mexican Acceptance Corp. 8 3/4%,
9/15/96 - 2,900,000 2,993,902 321998AB
Fomento Economico Mexicano SA de CV
euro 9 1/2%, 7/22/97 - 2,530,000 2,751,375 3444189A
Grupo Condumex SA de CV:
6 1/4%, 7/27/96 (g) - 1,500,000 1,492,500 399904AA
6 1/4%, 7/27/96 - 750,000 746,250 3999049A
Grupo Simec 8 7/8%, 12/15/98 (g) - 3,000,000 3,056,250 40049LAA
Grupo Televisa SA euro 10%, 11/9/97 Ba2 2,600,000 2,879,500 40049J9C
Hylsa SA De CV 0%, 4/28/94 (g) - 2,000,000 1,962,688 4490869B
ICA euro 9 3/4%, 2/11/98 - 2,980,000 3,292,900 2924489A
Nafin Finance Trust II 6%, 3/31/99 (b)(g) - 3,000,000 2,992,500
62971RAA
53,866,439
NEW ZEALAND - 0.3%
Telecommunication Corp. of New Zealand
euro 10%, 7/10/98 Aa1 NZD 2,000,000 1,271,156 8792789A
SWEDEN - 0.4%
Svenska Fastighetskredit AB 12%, 9/18/96 Aa2 SEK 6,000,000 802,766
953995AC
Swedish National Housing Finance Corp.
mtg. 12 1/2%, 1/23/97 - SEK 7,000,000 960,723 956995AA
1,763,489
THAILAND - 1.0%
Industrial Finance Corp. Thailand 7 1/4%,
12/2/96 (c) - THB 100,000 3,923,970 457998AB
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (A)
UNITED STATES OF AMERICA - 8.0%
Aristar, Inc. 8.55%, 6/1/95 Baa1 $ 1,000,000 $ 1,054,000 040420AK
Associates Corp. of North America 6%, 12/1/95 A1 2,250,000 2,308,792
046003ED
Commercial Credit Group, Inc. 9 7/8%, 12/1/95 A2 7,000,000 7,651,070
201615BP
Ford Motor Credit Co.:
7.9%, 9/26/95 A2 3,000,000 3,163,590 3454005S
9.55%, 10/5/95 A2 1,000,000 1,081,250 34599BFJ
General Motors Acceptance Corp. 6%, 1/25/95 Baa1 5,000,000 5,087,700
37042MG7
Supervalu, Inc. 5 7/8%, 11/15/95 A3 10,500,000 10,716,825 868536AA
U.S. Leasing International, Inc. 8 3/4%, 5/1/96 A2 2,000,000 2,164,300
912129AB
33,227,527
TOTAL NONCONVERTIBLE BONDS
(Cost $144,284,310) 144,071,313
GOVERNMENT OBLIGATIONS - 37.5%
ARGENTINA - 2.9%
Argentina Republic BOCON:
Peso 3.64%, 9/1/02 - ARP 3,230,784 2,381,208 039995AJ
3.64%, 4/1/01 - ARP 12,257,337 9,726,778 039995AH
12,107,986
CANADA - 5.5%
Alberta Finance Corp.:
0%, 6/15/96 Aa1 CAD 3,250,000 2,165,027 012993AG
0%, 6/15/97 Aa1 CAD 1,300,000 806,310 012993AK
Canadian Government 9 1/4%, 5/1/96
Series H80 Aaa CAD 7,500,000 6,214,715 135087RR
Ontario Hydro euro 10 5/8%, 1/8/96 Aa2 CAD 8,900,000 7,496,402 683078DT
Ontario Province 8 3/4%, 4/16/97 Aa2 CAD 6,720,000 5,568,894 6832349G
Quebec Province 10 1/4%, 4/7/98 Aa3 CAD 1,000,000 872,707 748148KF
23,124,055
DENMARK - 6.1%
Denmark Government:
9%, 11/15/95 Aa1 DKK 55,000,000 8,515,210 249998AE
9%, 11/15/00 Aa1 DKK 29,000,000 4,980,648 2485059A
GOVERNMENT OBLIGATIONS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (A)
DENMARK - CONTINUED
Kingdom of Denmark:
9%, 11/15/96 Aa1 DKK 44,300,000 $ 7,078,325 249998AK
9%, 11/15/98 Aa1 DKK 29,000,000 4,841,941 249998AQ
25,416,124
FINLAND - 0.4%
Finland Republic 11 3/4%, 3/15/96 Aa2 FIM 8,000,000 1,537,270 3178739F
FRANCE - 1.7%
Republic of France:
BTAN 8 1/2%, 11/12/97 Aaa FRF 30,000,000 5,682,210 351996AT
OAT 8 1/2%, 4/25/03 Aaa FRF 7,000,000 1,428,029 351996AQ
7,110,239
INDONESIA - 2.9%
Indonesia 0%, 1/27/94 (c) - IDR 13,000,000 6,098,887
Indonesia 0%, 5/19/94 (c) - IDR 13,125,000 5,974,160
12,073,047
IRELAND - 7.8%
Ireland Government:
9%, 7/30/96 Aa3 IEP 12,500,000 18,907,842 4626779E
9%, 7/15/01 Aa3 IEP 6,300,000 10,314,444 4626779J
9 1/4%, 7/11/03 Aa3 IEP 2,000,000 3,381,416 4626779H
32,603,702
MEXICO - 2.7%
Mexican Bondes 12.73%, 9/22/94 (g) - MXN 24,500,000 7,918,564 597998TE
Mexican Government Cetes, 5/26/94 - MXN 10,000,000 3,086,381 597998UK
11,004,945
SWEDEN - 2.7%
Kingdom of Sweden 10 3/4%, 1/23/97 Aa2 SEK 83,000,000 11,107,915
8702009Q
TRINIDAD AND TOBAGO - 0.2%
Trinidad and Tobago 9.75%, 11/3/00 Ba2 906,000 935,445
GOVERNMENT OBLIGATIONS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (A)
UNITED KINGDOM - 4.6%
United Kingdom Treasury 12%, 11/20/98 Aaa GBP 10,300,000 $ 19,158,998
9107689R
TOTAL GOVERNMENT OBLIGATIONS
(Cost $157,420,346) 156,179,726
OTHER SECURITIES - 13.0%
COLLATERALIZED NOTES - 6.7%
MEXICO - 6.7%
Wilton Investments Ltd. sr. (collateralized by
Mexican and U.S. govt. securities) (f)
Series B, 0%, 3/4/94 12,010,000 11,905,273 972998AB
Series C, 0%, 6/3/94 16,330,000 15,959,799 972998AD
27,865,072
INDEXED SECURITIES - 6.3%
FINLAND - 1.6%
Finnish Export Credit note 3.5628%, 4/19/94
(inversely indexed to 1-year FIM HELIBOR
rate, multiplied by 10) (b)(h) 5,000,000 6,584,500 31899HAF
UNITED KINGDOM - 0.6%
Barclays Bank PLC note 3 5/8%, 3/25/94
(inversely indexed to 1-year FIM HELIBOR rate,
multiplied by 10) (b)(h) 2,000,000 2,647,600 06738C9S
UNITED STATES OF AMERICA - 4.1%
AIG Matched Funding Corp. note 2.88%, 9/23/94
(coupon inversely indexed to HELIBOR and
principal indexed to value of 2-year Finnish
securities both multiplied by 6) (b)(h) 1,900,000 2,046,110 012994AH
Bankers Trust Company note:
4.2075%, 8/31/94 (coupon inversely
indexed to 6-month HELIBOR
rate, multiplied by 6) (b)(h) 300,000 329,400 0669918F
14.4375% 7/15/94 (indexed to
CSK denom. CEZ a.s. bond
16 1/2%, 6/25/98) (b)(h) 3,000,000 3,074,100 0669917L
OTHER SECURITIES - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (A)
INDEXED SECURITIES - CONTINUED
UNITED STATES OF AMERICA - CONTINUED
Citibank Nassau 22.01%, 8/31/94 (coupon inversely
indexed to 1-month CAD Bankers' Acceptance
rate, multiplied by 11) (b)(h) $ 1,000,000 $ 1,188,000 223991AM
ITT Corp. Note:
3.465%, 2/25/94 (inversely indexed to
1-year SEK swap rate, multiplied
by 10) (b)(h) 3,700,000 4,462,940 4506799D
3.66%, 6/27/94 (inversely indexed
to 1-year SEK swap rate, multiplied
by 10) (b)(h) 5,000,000 5,469,500 4506799M
Merck & Co. note 3.78%, 1/25/95 (inversely
indexed to 2-year SEK swap rate, multiplied
by 10) (b)(h) 500,000 561,800 5893319P
17,131,850
TOTAL INDEXED SECURITIES 26,363,950
TOTAL OTHER SECURITIES
(Cost $50,122,570) 54,229,022
CERTIFICATES OF DEPOSIT - 2.5%
THAILAND - 2.5%
Siam Comm. Bank Co. Ltd. 7 3/8%, 11/7/94 (c) THB 150,000 5,897,670
7885109P
Thai Military Bank Ltd. 8.52%, 9/20/96 THB 10,000,000 402,195 901999AD
Thai Military Bank TCD 8%, 10/21/96 (c) THB 100,000 3,975,310 901999AA
TOTAL CERTIFICATES OF DEPOSIT
(Cost $10,372,439) 10,275,175
COMMERCIAL PAPER - 9.0%
ARGENTINA - 1.4%
Bridas Energy Corp. 0%, 6/14/94 5,890,000 5,695,630 107995AA
MEXICO - 6.9%
Bancomer SNC 0%, 2/3/94 MXN 19,391,290 6,175,246 05999KBE
Nacional Financiera:
SNC 0%, 6/2/94 MXN 53,035,348 16,263,035 66299CAH
0%, 3/1/94 MXN 20,184,079 6,379,624 66299CAC
28,817,905
COMMERCIAL PAPER - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (A)
NETHERLANDS - 0.7%
Unilever (Czech) 0%, 10/05/94 (c) CSK 100,000 $ 3,092,515 9047849B
TOTAL COMMERCIAL PAPER
(Cost $37,334,829) 37,606,050
REPURCHASE AGREEMENTS - 3.4%
MATURITY
AMOUNT
UNITED STATES - 3.4%
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 3.23%
dated 12/31/93 due 1/3/94 $ 14,205,823 14,202,000
CALL OPTION ON MEXICAN TREASURY BONDS - 0.0%
EXPIRATION DATE/ UNDERLYING FACE
STRIKE PRICE AMOUNT AT VALUE
1 Call Option (Cost $26,000) Feb. 94/78 $ 1,000,000 55,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $413,762,494) $ 416,618,286
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
39,945,550 FIM 2/17/94 $6,868,867 $ 31,217
37,486,360 FRF 2/2/94 6,312,366 (89,744)
4,849,837 DEM 1/4/94 to 1/19/94 2,787,438 (91,472)
43,586,500,000 IDR 1/26/94 to 5/31/94 20,316,095 41,575
36,890,919,276 ITL 2/28/94 21,319,429 (145,003)
364,939,038 JPY 1/10/94 to 1/19/94 3,264,352 (119,237)
109,111,950 MYR 1/31/94 to 4/29/94 40,552,796 (977,963)
31,369,480 NZD 3/1/94 17,488,485 453,289
TOTAL CONTRACTS TO BUY
(Payable amount $119,807,166) $ 118,909,828 $ (897,338)
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 28.5%
CONTRACTS TO SELL
459,908,922 BEF 1/26/94 $ 12,649,305 $ 176,390
10,123,801. GBP 2/28/94 14,903,348 19,134
51,316,925 CAD 1/13/94 to 1/27/94 38,811,758 (289,352)
133,300,267 DKK 2/1/94 19,554,210 (200,269)
46,274,361 FIM 2/17/94 7,957,142 (87,353)
319,603,419 FRF 2/2/94 53,818,341 2,092,109
11,427,673 DEM 1/4/94 to 2/28/94 6,564,183 220,529
22,937,356 IEP 1/31/94 32,189,139 (171,267)
1,528,921,838 JPY 1/10/94 to 2/28/94 13,874,537 188,840
108,996,123 SEK 2/25/94 12,983,349 35,957
TOTAL CONTRACTS TO SELL
(Receivable amount $215,290,030) $ 213,305,312 $ 1,984,718
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 51.2%
CURRENCY TYPE ABBREVIATIONS
ARP - Argentinean peso
BEF - Belgian franc
GBP - British pound
CAD - Canadian dollar
CSK - Czech koruna
DKK - Danish krone
FIM - Finnish markka
FRF - French franc
DEM - German Deutsche mark
IDR - Indonesian rupiah
IEP - Irish pound
ITL - Italian lira
JPY - Japanese yen
MYR - Malaysian ringgit
MXN - Mexican peso
NZD - New Zealand dollar
SGD - Singapore dollar
SEK - Swedish krona
CHF - Swiss franc
THB - Thai baht
LEGEND
1. Principal amount is stated in United States dollars unless otherwise
noted.
2. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
3. Principal amount in thousands.
4. Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
5. Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
6. Restricted securities - investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Wilton Investments, Ltd.
sr. (collateralized by
Mexican and U.S.
govt. securities):
Series B, 0%, 3/4/94 3/3/93 $ 11,114,174
Series C, 0%, 6/3/94 3/3/93 14,824,211
Komercni Banka
17%, 5/3/98 10/14/93 1,387,543
7. 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 $30,485,088 or 7.2% of net
assets.
8. An Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate multiplied by a specified
factor. If the floating rate is high enough, the coupon rate may be zero or
be a negative amount that is carried forward to reduce future interest
and/or principal payments. The price may be considerably more volatile than
the price of a comparable fixed rate security.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 44.2% AAA, AA, A 44.2%
Baa 1.5% BBB 1.3%
Ba 2.7% BB 1.5%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings of
the sovereign credit of the issuing government. The percentage not rated by
either S&P or Moody's amounted to 18% including long-term debt
categorized as other securities.
INCOME TAX INFORMATION
At December 31, 1993, the aggregate cost of investment securities for
income tax purposes was $413,905,257. Net unrealized appreciation
aggregated $2,713,029, of which $8,253,758 related to appreciated
investment securities and $5,540,729 related to depreciated investment
securities.
At December 31, 1993, the fund had a capital loss carryforward of
approximately $2,673,000 which will expire on December 31, 1999.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1993
ASSETS 9. 10.
11.Investment in securities, at value (including repurchase 12. $ 416,618,286
agreements of $14,202,000) (cost $413,762,494) (Notes 1
and 2) - See accompanying schedule
13.Long foreign currency contracts held, at value (cost 14. 118,909,828
$119,807,166) (Note 2)
15.Short foreign currency contracts (Note 2) $ (213,305,312) 16.
Contracts held, at value
17. Receivable for contracts held 215,290,030 1,984,718
18.Receivable for investments sold 19. 125,000
20.Net receivable for closed foreign currency contracts 21. 24,877
(Note 2)
22.Receivable for fund shares sold 23. 1,731,604
24.Interest receivable 25. 7,814,555
26. TOTAL ASSETS 27. 547,208,868
LIABILITIES 28. 29.
30.Payable to custodian bank 23,902 31.
32.Payable for foreign currency contracts held (Note 1) 119,807,166 33.
34.Payable for investments purchased 3,896,127 35.
36.Accrued management fee 210,832 37.
38.Other payables and accrued expenses 669,271 39.
40. TOTAL LIABILITIES 41. 124,607,298
42.NET ASSETS 43. $ 422,601,570
44.Net Assets consist of (Note 1): 45. 46.
47.Paid in capital 48. $ 424,619,777
49.Distributions in excess of net investment income 50. (3,288,856)
51.Accumulated undistributed net realized gain (loss) on 52. (2,672,523)
investments
53.Net unrealized appreciation (depreciation) on: 54. 55.
56. Investment securities 57. 2,855,792
58. Foreign currency contracts 59. 1,087,380
60.NET ASSETS, for 41,461,833 shares outstanding 61. $ 422,601,570
62.NET ASSET VALUE, offering price and redemption price per 63. $10.19
share ($422,601,570 (divided by) 41,461,833 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1993
INVESTMENT INCOME 65. $ 37,638,738
64.Interest
66.Foreign exchange gain (loss) 67. (613,706)
68. 69. 37,025,032
70.Less foreign taxes withheld 71. (994,447)
72. TOTAL INCOME 73. 36,030,585
EXPENSES 74. 75.
76.Management fee (Note 4) $ 2,464,314 77.
78.Transfer agent fees (Note 4) 862,626 79.
80.Accounting fees and expenses (Note 4) 245,437 81.
82.Non-interested trustees' compensation 2,814 83.
84.Custodian fees and expenses 273,579 85.
86.Registration fees 12,572 87.
88.Audit 92,673 89.
90.Legal 7,857 91.
92.Interest (Note 5) 44,629 93.
94.Miscellaneous 5,873 95.
96. TOTAL EXPENSES 97. 4,012,374
98.NET INVESTMENT INCOME 99. 32,018,211
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 101. 102.
(NOTES 1, 2 AND 3)
100.Net realized gain (loss) on:
103. Investment securities (17,088,634) 104.
105. Foreign currency contracts 8,465,389 106.
107. Foreign currency transactions 176,232 (8,447,013)
108.Change in net unrealized appreciation (depreciation) 109. 110.
on:
111. Investment securities 29,714,624 112.
113. Foreign currency contracts (5,823,894) 23,890,730
114.NET GAIN (LOSS) 115. 15,443,717
116.NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM 117. $ 47,461,928
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED TWO MONTH YEAR ENDED
DECEMBER 31, PERIOD ENDED OCTOBER 31,
1993 DECEMBER 31, 1992
1992
INCREASE (DECREASE) IN NET ASSETS
118.Operations $ 32,018,211 $ 8,126,054 $ 38,756,712
Net investment income
119. Net realized gain (loss) on (8,447,013) 3,287,861 (16,023,720)
investments
120. Change in net unrealized 23,890,730 (12,461,165) (7,631,729)
appreciation
(depreciation) on investments
121. 47,461,928 (1,047,250) 15,101,263
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS
122.Distributions to shareholders
123.From net investment income (21,723,094) (6,086,464) (32,109,150)
124.In excess of net investment income (5,275,639) - -
125. TOTAL DISTRIBUTIONS (26,998,733) (6,086,464) (32,109,150)
126.Share transactions 244,787,159 38,446,142 1,156,316,627
Net proceeds from sales of shares
127. Reinvestment of distributions from 23,206,212 4,931,388 27,808,282
net
investment income
128. Cost of shares redeemed (324,700,962) (225,845,601) (562,987,710)
129. (56,707,591) (182,468,071) (621,137,199)
Net increase (decrease) in net assets
resulting from share transactions
130. (36,244,396) (189,601,785) 604,129,312
TOTAL INCREASE (DECREASE) IN NET
ASSETS
NET ASSETS 131. 132. 133.
134. Beginning of period 458,845,966 648,447,751 44,318,439
135. $ 422,601,570 $ 458,845,966 $ 648,447,751
End of period (including under (over)
distribution of net investment income
of $(3,288,856), $8,700,435
and $6,660,845 respectively)
OTHER INFORMATION 137. 138. 139.
136.Shares
140. Sold 24,404,726 3,952,074 115,938,949
141. Issued in reinvestment of 2,318,125 508,846 2,801,913
distributions
from net investment income
142. Redeemed (32,640,159) (23,265,233) (56,973,558)
143. Net increase (decrease) (5,917,308) (18,804,313) 61,767,304
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
144. YEAR ENDED TWO MONTH YEAR ENDED OCTOBER 4, 1991
DECEMBER 31, PERIOD ENDED OCTOBER 31, (COMMENCEMENT
DECEMBER 31, OF OPERATIONS) TO
OCTOBER 31,
145. 1993 1992 1992 1991
146. 147. 148. 149.
150.SELECTED PER-SHARE DATA
151.Net asset value, beginning $ 9.680 $ 9.800 $ 10.040 $ 10.000
of period
152.Income from Investment .564 .191 .835 .061
Operations
Net investment income
153. Net realized and .621 (.203) (.338) .037
unrealized
gain (loss) on investments
154. Total from investment 1.185 (.012) .497 .098
operations
155.Less Distributions (.543) (.108) (.737) (.058)
From net investment income
156. In excess of net investment (.132) - - -
income
157. Total distributions (.675) (.108) (.737) (.058)
158.Net asset value, end of $ 10.190 $ 9.680 $ 9.800 $ 10.040
period
159.TOTAL RETURN (dagger)(double dagger) 12.59% (.12)% 5.10% .98%
160.RATIOS AND SUPPLEMENTAL
DATA
161.Net assets, end of period $ 423 $ 459 $ 648 $ 44
(in millions)
162.Ratio of expenses to average 1.00% 1.20%* 1.09 1.00%*
net assets
163.Ratio of expenses to average 1.00% 1.23%* 1.09 2.87%*
net assets before expense
reductions
164.Ratio of net investment 8.00% 8.63%* 9.04 9.07%*
income to average net assets
165.Portfolio turnover rate 160% 117%* 154 62%*
</TABLE>
* ANNUALIZED
(dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(double dagger) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1993
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Short-Term World Income Fund (the fund) is a fund of Fidelity
Investment Trust (the trust) and is authorized to issue an unlimited number
of shares. The trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which quotations are readily available
are valued at the last sale price, or if no sale price, at the closing bid
price in the principal market in which such securities are normally traded.
Securities (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 maturing within sixty days 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, other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. 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 not assured.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net interest income. Distributions from realized gains, if
any, are recorded on the ex-dividend date.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency transactions, market discount and losses deferred due to
wash sales. Permanent book and tax differences relating to shareholder
distributions will result in reclassifications to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective January
1, 1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of December 31, 1992 have been reclassified to
reflect a decrease in paid in capital of $2,763,265 , a decrease in
undistributed net interest income of $7,186,738 and a decrease in
accumulated net realized loss on investments of $9,950,003.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Federal Agency obligations.
INDEXED SECURITIES. The fund may invest in indexed securities whose value
is linked either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices, or other reference instruments.
Indexed securities may be more volatile than the reference instrument
itself, but any loss is limited to the amount of the original investment.
RESTRICTED SECURITIES. The fund is permitted to invest in privately placed
restricted securities. These securities 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, restricted securities (excluding 144A issues) amounted
to $29,203,956 or 6.9% of net assets.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other
than short-term securities, aggregated $511,713,786 and $502,643,241,
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 ranging from
.1325% to .37% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .45%.
For the period, the management fee was equivalent to an annual rate of .62%
of average net assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2850% to .5200%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
SUB-ADVISER FEE. FMR, on behalf of the fund, entered into sub-advisory
agreements with affiliates of FMR. In addition, one of the sub-advisers,
Fidelity International Investment Advisors (FIIA), entered into a
sub-advisory agreement with its subsidiary, Fidelity International
Investment Advisors (U.K.) Limited (FIIAL U.K.). Under the sub-advisory
arrangements, FMR may receive investment advice and research services and
may grant the sub-advisers investment management authority to buy and sell
securities. FMR pays its sub-advisers either a portion of its management
fee or a fee based on costs incurred for these services. FIIA pays FIIAL
U.K. a fee based on costs incurred for either service.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $1,763 for the
period.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
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. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $14,993,000 and $5,533,773,
respectively. The weighted average interest rate was 3.73%.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Investment Trust and the Shareholders of
Fidelity Short-Term World Income Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Investment Trust: Fidelity Short-Term World Income Fund, including
the schedule of portfolio investments, as of December 31, 1993, and the
related statement of operations for the year then ended, the statement of
changes in net assets for the year then ended, for the two month period
ended December 31, 1992, and for the year ended October 31, 1992, and the
financial highlights for the year then ended, for the two month period
ended December 31, 1992, for the year ended October 31, 1992 and for the
period October 4, 1991 (commencement of operations) to December 31, 1991.
These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1993 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Investment Trust: Fidelity Short-Term World Income Fund, as of
December 31, 1993, the results of its operations for the year then ended,
the changes in its net assets for the year then ended, for the two month
period ended December 31, 1992, and for the year ended October 31, 1992,
and the financial highlights for the year then ended, for the two month
period ended December 31, 1992, for the year ended October 31, 1992 and for
the period October 4, 1991 (commencement of operations) to December 31,
1991, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
February 4, 1994
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND
QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios.(Registered trademark)
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND
ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL VARY
AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY
HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT
MONEY MARKET
FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A
MONEY MARKET FUND
IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE
HISTORICAL AND
INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL
GAINS, AND THE
EFFECTS OF ANY SALES CHARGES. FOR MORE INFORMATION ON ANY FIDELITY FUND
INCLUDING
MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS.
READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
TO WRITE FIDELITY
Please locate the address that is closest to you. We'll give your
correspondence immediate attention and send you written confirmation upon
completion of your request. Please send ALL correspondence about retirement
accounts to Dallas.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 2269
Boston, MA 02107-2269
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30280
Salt Lake City, UT 84130-0280
(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
Additional Payments
P.O. Box 2656
Boston, MA 02293-0656
Fidelity Investments
Additional Payments
P.O. Box 620024
Dallas, TX 75262-0024
Fidelity Investments
Additional Payments
P.O. Box 31455
Salt Lake City, UT 84131-0455
OVERNIGHT EXPRESS
Fidelity Investments
Additional Payments
World Trade Center
164 Northern Avenue
Boston, MA 02210
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02103-0878
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02101-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 620024
Dallas, TX 75262-0024
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc. London, England
Fidelity Management & Research
(Far East) Inc. Tokyo, Japan
Fidelity International Investment
Advisors
Fidelity International Investment
Advisors (U.K.) Limited
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Judy Pagliuca, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S TAXABLE BOND FUNDS
Capital & Income Fund
Ginnie Mae Portfolio
Global Bond Fund
Government Securities Fund
Intermediate Bond Fund
Investment Grade Bond Fund
Mortgage Securities Portfolio
New Markets Income Fund
Short-Intermediate Government Fund
Short-Term Bond Portfolio
Short-Term World Income Fund
Spartan(Registered trademark) Ginnie Mae Fund
Spartan Government Income Fund
Spartan High Income Fund
Spartan Investment Grade Bond Fund
Spartan Limited Maturity
Government Fund
Spartan Long-Term Government Bond
Fund
Spartan Short-Intermediate
Government Fund
Spartan Short-Term Income Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)FIDELITY
SHORT-TERM WORLD INCOME
FUND
ANNUAL REPORT
DECEMBER 31, 1993
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the fund's
investments over the last six months.
INVESTMENTS 11 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 22 Statements of assets and liabilities,
operations, and changes in net assets, as
well as financial highlights.
NOTES 26 Footnotes to the financial statements.
REPORT OF INDEPENDENT 31 The auditor's opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A
BANK, AND FUND
SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED BY THE FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider adding to your tax-free investments, either municipal bonds
or municipal bond funds. Often these can provide higher after-tax yields
than comparable taxable investments. For example, if you're in the new 36%
federal income tax bracket and invest $10,000 in a taxable investment
yielding 7%, you'll pay $252 in federal taxes and receive $448 in income.
That same $10,000 invested in a tax-free bond fund yielding 5.5% would
allow you to keep $550 in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, as well as reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells bonds that have grown in value). You can also look at the fund's
income.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Global Bond 21.91% 73.92% 115.87%
Salomon Brothers World
Government Bond Index 13.27% 61.81% n/a
Average General World Income Fund 17.03% 64.86% n/a
Consumer Price Index 2.75% 21.00% 31.95%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years or since the fund
started on December 30, 1986. For example, if you had invested $1,000 in a
fund that had a 5% return over the past year, you would have $1,050. You
can compare these figures to the performance of the Salomon Brothers World
Government Bond Index - a widely used world government bond indicator. You
can also compare them to the average general world income fund, which
reflects the performance of 91 funds tracked by Lipper Analytical Services.
Both benchmarks include reinvested dividends and capital gains, if any, and
exclude sales charges. Comparing the fund's performance to the consumer
price index helps show how your fund did compared to inflation. (The
periods covered by the CPI numbers are the closest available match to those
covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Global Bond 21.91% 11.70% 11.60%
Salomon Brothers World
Government Bond Index 13.27% 10.10% n/a
Average General World Income Fund 17.03% 10.45% n/a
Consumer Price Index 2.75% 3.89% 4.04%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
Global Bond SB World Govt Bond
12/31/86 10000.00 10000.00
01/31/87 10311.24 10300.00
02/28/87 10451.57 10460.68
03/31/87 10698.66 10702.32
04/30/87 10786.19 10825.40
05/31/87 10625.67 10718.23
06/30/87 10585.26 10632.48
07/31/87 10339.12 10419.83
08/31/87 10556.93 10577.17
09/30/87 10392.69 10279.95
10/31/87 10975.54 10972.82
11/30/87 11449.60 11354.68
12/31/87 11913.70 11840.66
01/31/88 11584.24 11776.72
02/29/88 11669.26 11879.17
03/31/88 11956.21 12091.81
04/30/88 11945.58 12032.56
05/31/88 11892.44 11919.45
06/30/88 11764.91 11659.61
07/31/88 11775.54 11588.49
08/31/88 11690.51 11458.70
09/30/88 11828.67 11754.33
10/31/88 12190.02 12297.38
11/30/88 12413.20 12485.53
12/31/88 12350.33 12358.18
01/31/89 12315.77 12177.75
02/28/89 12212.08 12186.27
03/31/89 12177.52 12016.88
04/30/89 12338.81 12175.51
05/31/89 12131.43 11918.60
06/30/89 12384.89 12158.17
07/31/89 12788.12 12712.58
08/31/89 12603.79 12285.44
09/30/89 12753.56 12517.63
10/31/89 12926.37 12622.78
11/30/89 13064.62 12737.65
12/31/89 13329.61 12894.32
01/31/90 13293.51 12724.12
02/28/90 13125.09 12528.16
03/31/90 13281.48 12404.14
04/30/90 13281.48 12365.68
05/31/90 13461.94 12777.46
06/30/90 13750.67 13012.56
07/31/90 14231.88 13419.86
08/31/90 14147.67 13315.18
09/30/90 14328.12 13462.98
10/31/90 14664.97 14064.78
11/30/90 14821.37 14298.25
12/31/90 14966.03 14439.80
01/31/91 15294.81 14800.80
02/28/91 15439.47 14805.24
03/31/91 15229.05 14267.81
04/30/91 15439.47 14487.53
05/31/91 15623.59 14468.70
06/30/91 15439.47 14318.23
07/31/91 15597.50 14624.64
08/31/91 15744.39 14908.35
09/30/91 16105.49 15491.27
10/31/91 16323.50 15653.93
11/30/91 16241.75 15899.70
12/31/91 16877.45 16726.48
01/31/92 16707.26 16430.42
02/29/92 16778.17 16338.41
03/31/92 16749.99 16165.22
04/30/92 16977.69 16280.00
05/31/92 17290.77 16779.79
06/30/92 17505.13 17249.63
07/31/92 17767.47 17651.54
08/31/92 18025.93 18145.79
09/30/92 17775.02 18327.24
10/31/92 17659.47 17828.74
11/30/92 17394.34 17545.27
12/31/92 17619.56 17650.54
01/31/93 17823.11 17959.42
02/28/93 18097.55 18313.22
03/31/93 18496.24 18595.25
04/30/93 18672.13 18987.61
05/31/93 19015.36 19177.48
06/30/93 19397.12 19137.21
07/31/93 19692.29 19190.79
08/31/93 20189.75 19768.44
09/30/93 20304.83 20003.68
10/31/93 20830.81 19969.67
11/30/93 20764.50 19827.89
12/31/93 21479.39 19996.43
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Global Bond Fund on December 31, 1986, shortly after the fund started. As
the chart shows, by December 31, 1993, the value of your investment would
have grown to $21,479 - a 114.79% increase on your initial investment. For
comparison, look at how the Salomon Brothers World Government Bond Index
did over the same period. With dividends reinvested, the same $10,000 would
have grown to $19,996 - a 99.96% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. Bond prices, for
example, move in the opposite
direction of interest rates. In
turn, the share price, return, and
yield of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
(checkmark)
DIVIDENDS AND YIELD
PERIODS ENDED DECEMBER 31, 1993 PAST 30 PAST 6 PAST 1
DAYS MONTHS YEAR
Dividends per share n/a 28.49(cents) 62.88(cents)
Annualized dividend rate n/a 4.58% 5.25%
Annualized yield 6.21% n/a n/a
DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $12.33 over
the past six months and $11.97 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized YIELD is a
standard formula for all 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 and
helps you compare funds from different companies on an equal basis. It does
not reflect the costs of hedging and other currency gains and losses.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Most all international bond markets
richly rewarded investors in 1993. In
general, returns in overseas markets
easily outpaced those in the United
States. Falling interest rates and low
inflation fueled strong returns in both
developed nations and, more notably,
in emerging markets. For example, in
Europe and Japan, weak economic
environments led rates to drop, which
benefited bond investors. The passage
of the North American Free Trade
Agreement in November boosted
interest and bettered returns in Latin
American countries, many of which
were already having a strong year. The
Salomon Brothers World Government
Bond Index - which measures bond
market performance in developed
nations and includes U.S. issues -
rose 13.27% for the year. That figure
was dwarfed by the J.P. Morgan
Emerging Markets Bond Index, which
was up 44.17% in 1993. For
comparison, the Lehman Brothers
Aggregate Bond Index - a broad
measure of taxable bonds in the U.S.
market - returned 9.75% for the year.
Though providing returns that
appeared weak compared to those in
overseas markets, the U.S. bond market
posted relatively strong numbers on a
historical basis. Falling interest rates
through most of the year fueled gains.
The yield on the benchmark 30-year
Treasury bond hit a three decade low in
mid-October, yielding 5.79%. By
year-end, mild inflation fears, fueled by
a strengthening economy, had pushed
up the yield on the 30-year bond to
6.35%. This slightly dampened overall
1993 results for U.S. bond investors.
An interview with Jonathan Kelly, Portfolio Manager of Fidelity Global Bond
Fund
Q. JONATHAN, ALTHOUGH YOU JUST STARTED RUNNING THE FUND LAST OCTOBER, CAN
YOU REVIEW ITS PERFORMANCE FOR 1993?
A. Sure. The total return for the year ended December 31, 1993 was 21.91%.
The average general world income fund had a total return during the same
period of 17.03%, according to Lipper Analytical Services, while the
Salomon Brothers World Government Bond Index was up 13.27%.
Q. WHAT BOOSTED PERFORMANCE?
A. There were three main factors. First was the fund's stake in European
bonds, which averaged about 40% during the period. As interest rates fell
across Europe, bond prices across the continent rose between 20% and 30%
when measured in local currency. In some cases, those currencies declined
relative to the dollar, which made hedging necessary to preserve gains. But
nearly every country provided attractive returns, including traditionally
high-yielding countries - Italy, Spain and Sweden - and so-called core
markets with their more stable currencies: Germany, France and Denmark.
Q. WHAT ELSE HELPED BESIDES EUROPE?
A. The second most important factor was the fund's average 30% stake in
emerging markets, mainly Mexico and Argentina. During the course of 1993,
Argentina surpassed Mexico as the fund's primary focus in Latin America.
Both countries appear to be on the right track in terms of fiscal and
monetary policies. But because Argentina is still much cheaper than Mexico,
the potential rewards could be that much greater. In both countries, I
invested in local currency instruments, which tend to be short-term issues,
as well as so-called Brady Bonds. Brady Bonds are long-term,
dollar-denominated and backed by the U.S. government.
Q. AND THE THIRD FACTOR?
A. Third would be a type of structured notes, which are listed among the
fund's investments under "indexed securities." They totaled about 7.5% of
the fund's investments by the end of December. Indexed securities are like
customized bonds. The most common variety in the fund have been designed to
take advantage of falling interest rates in Europe; specifically the
possibility that short-term interest rates in countries like Sweden,
Finland and Italy may fall more dramatically than long-term rates. I might
have just bought short-term bonds, but then the potential for price gains
would have been negligible. Instead, I bought indexed securities designed
to produce a return tied to changes in short-term interest rates but with
the added volatility of a longer-term bond. These are pure interest-rate
bets, fully hedged to minimize the effect of currency fluctuations.
Q. ANY REGRETS THIS PERIOD?
A. Very few. Bonds performed so well in countries around the world during
1993 that it was hard to do anything wrong. We did experience some
turbulence during the first two weeks in November, caused by uncertainty
over the prospects of the North American Free Trade Agreement (NAFTA).
However, because I believed strongly all along that NAFTA would pass, I
preserved the fund's Latin American exposure. Once NAFTA passed, the fund
recovered, and later rode the wave of post-NAFTA euphoria. With the benefit
of hindsight, I might have lightened up in Latin America prior to the vote
to avoid the dip in the fund's share price.
Q. YOU'VE ESTABLISHED A POSITION IN NEW ZEALAND IN RECENT MONTHS. WHAT'S
THE STORY THERE?
A. New Zealand may be one of the most exciting bond markets in the world
today. Uncertainty surrounding last fall's national elections led to a
sharp selloff of both currency and bonds. Immediately after the election,
the 10-year bond was yielding 6.4%; this in a country with 1.3% inflation
and a strong central bank determined to keep inflation low. Since then, the
value of the fund's 6.7% stake in New Zealand bonds has risen as interest
rates have fallen more than half a percentage point and the currency has
rallied.
Q. WHAT'S YOUR OUTLOOK FOR THE GLOBAL BOND MARKET IN 1994?
A. It's positive. In Europe, real interest rates - interest minus inflation
- - remain high. With most major European economies still mired in recession,
chances are we'll see bond yields decline. It won't be as easy to make
money in Europe as it was last year; some countries will do better than
others. But in general, I think the European markets could continue to
produce strong, if not as spectacular, results in 1994. I feel the same way
about the emerging markets. NAFTA is behind us now, which is a plus.
Moreover, Mexico, which currently has a country rating of BB, may receive
an investment-grade rating of BBB before the year is over. That would open
the way for new money to invest in Mexico that can't invest there now,
which could strengthen prices. In other emerging markets - Argentina,
Malaysia, Indonesia - the trends still favor lower interest rates and
stronger currencies. But again, 1993 was a fantastic year; it will be hard
to match in 1994.
FUND FACTS
GOAL: high total return by
investing in debt securities
from around the world
START DATE: December 30, 1986
SIZE: as of December 31, 1993,
over $686 million
NEW MANAGER: Jonathan Kelly,
since October 1993; international
fixed-income assistant, Fidelity
Advisor Income and Growth
Portfolio, since May 1993, and
Fidelity International Growth
and Income Fund, since
December 1993; analyst,
international fixed-income and
foreign exchange, since 1991
(checkmark)
JONATHAN KELLY ON HEDGING
CURRENCIES:
"Generally, I try not to take a lot
of currency risk. For example, I
happen to believe that the
outlook for the dollar is quite
strong in 1994 relative to most
European currencies.
Continental Europe - and
Germany in particular - seems
unlikely to emerge from
recession, at least through the
first half of the year. Moreover,
interest rates could easily
continue falling across Europe.
Neither prospect bodes well for
the value of European
currencies. That's why I've
hedged more than two-thirds of
the fund's European
investments, and would consider
hedging the whole position if I
felt the dollar was set to make
another big move."
(bullet) At the end of December, 40%
of the fund's investments were
securities issued in Europe (or
indexed securities tied in one way
or another to European countries),
35% in Latin America and 5% in
Asia.
(bullet) The emphasis in Europe was
on French and Danish bonds.
France has kept inflation low by
pursuing a tight monetary
policy, despite the recession.
The fund selectively
emphasized Italy and Spain at
different times during the year.
DISTRIBUTIONS
The Board of Trustees of
Fidelity Global Bond Fund
voted to pay on February 7,
1994, to shareholders of record
at the opening of business on
February 4, 1994, a distribution
of $.02 derived from capital
gains realized from sales of
portfolio securities.
INVESTMENT CHANGES
The charts below highlight three different aspects of the fund's
investments: the country where they were issued, their sensitivity to
interest-rate changes, and their currency exposure. The top countries in
each table differ because some securities have more interest-rate risk than
others, because securities issued in one country may be denominated in
another country's currency, and because of the effects of currency hedging.
TOP COUNTRIES AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
<S> <C> <C>
(BY LOCATION OF ISSUER) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
SIX MONTHS AGO
Argentina 20 16
Mexico 18 21
Denmark 9 3
Canada 7 1
United States 7 15
</TABLE>
TOP COUNTRIES ARE BASED ON THE LOCATION OF THE ISSUER OF EACH SECURITY,
INDICATING WHERE THE FUND IS EXPOSED TO POLITICAL AND CREDIT RISKS. THE
FUND'S LARGEST POSITION AS OF DECEMBER 31 WAS IN SECURITIES OF ARGENTINEAN
ISSUERS.
TOP INTEREST-RATE EXPOSURES AS OF DECEMBER 31, 1993
(ESTIMATED, BY COUNTRY) % OF FUND'S TOTAL % OF INTEREST-
INTEREST-RATE EXPOSURE RATE EXPOSURE
SIX MONTHS AGO
United States 29 44
France 17 11
Canada 11 1
Denmark 9 5
Finland 8 6
FIDELITY ESTIMATES INTEREST-RATE EXPOSURES BASED ON THE DURATION, OR
INTEREST-RATE SENSITIVITY, OF THE FUND'S HOLDINGS. AS OF DECEMBER 31, THE
FUND WAS MOST SENSITIVE TO INTEREST-RATE MOVEMENTS IN THE U.S., WHICH
ACCOUNTED FOR APPROXIMATELY 29% OF THE FUND'S INTEREST-RATE EXPOSURE.
TOP CURRENCY EXPOSURES AS OF DECEMBER 31, 1993
(ESTIMATED, BY CURRENCY) % OF FUND'S NET ASSETS % OF NET ASSETS
SIX MONTHS AGO
U.S. dollar 63 55
Malaysian ringgit 11 4
Danish krone 9 3
Indonesian rupiah 7 4
New Zealand dollar 7 2
ESTIMATED CURRENCY EXPOSURES INCLUDE THE IMPACT OF HEDGING, WHICH REDUCES
FOREIGN CURRENCY RISK AND INCREASES THE FUND'S U.S. DOLLAR POSITION. THE
MALAYSIAN RINGGIT, AT APPROXIMATELY 11% OF ASSETS, WAS THE FUND'S LARGEST
FOREIGN CURRENCY EXPOSURE AS OF DECEMBER 31.
INVESTMENTS DECEMBER 31, 1993
Showing Percentage of Total Value of Investments
CORPORATE BONDS - 10.6%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (A)
CONVERTIBLE BONDS - 1.5%
ARGENTINA - 0.4%
Alpargatas SAIC 9%, 3/15/98 (e) - $ 3,070,000 $ 2,931,850 020545AA
FRANCE - 0.5%
Alcatel Alsthom 6 1/2%, 1/1/00 - FRF 12,500 1,974,573 20436392
Promodes 5 1/2%, 1/1/00 - FRF 4,900 997,550 74699693
2,972,123
NEW ZEALAND - 0.1%
Brierley Investments Ltd. 9%, 6/30/98 - NZD 1,257,300 913,259 1090149A
PHILIPPINES - 0.4%
International Container Term Services, Inc.
unsecured 6%, 2/19/00 (e) - 1,800,000 2,718,000 459360AA
THAILAND - 0.1%
Asia Credit 3 3/4%, 11/17/03 (e) - 305,000 448,350 044909AA
TOTAL CONVERTIBLE BONDS 9,983,582
NONCONVERTIBLE BONDS - 9.1%
ARGENTINA - 1.8%
Alto Parana:
euro 12%, 3/4/95 - 1,000,000 980,000 021999AB
12%, 3/4/95 (e) - 1,000,000 980,000 021999AA
12%, 3/4/95 - 3,000,000 2,940,000 021999AE
Brid Sapic euro 11 3/4%, 2/24/97 - 3,000,000 3,120,000 107994AA
Invertrad SA 9 1/4%, 10/14/94 (e) - 2,100,000 2,094,750 46127RAA
Petrolera Argentina San Jorge SA secured
11%, 2/9/98 (e) - 1,500,000 1,563,750 71654PAA
11,678,500
CZECH REPUBLIC - 0.2%
Komercni Banka 17%, 5/3/98 (d)(f) - CSK 30,000,000 1,004,163 50499CAB
MEXICO - 5.4%
Bancomer SA 9%, 6/1/00 (e) - 4,000,000 4,300,000 059682AA
Controladors Comercial Mexicana SA de CV
euro 8 3/4%, 4/21/98 (e) - 750,000 788,437 21238AAA
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (A)
NONCONVERTIBLE BONDS - CONTINUED
MEXICO - CONTINUED
Empresas La Moderna SA 10 1/4%,
11/12/97 (e) - $ 2,000,000 $ 2,180,000 292449AA
First Mexican Acceptance Corp. euro
10 3/4%, 9/15/96 - 1,500,000 1,564,920 321998AA
Grupo Dina (Consorcio G):
10 1/2%, 11/18/97 (e) - 4,000,000 4,400,000 210996AA
euro 10 1/2%, 11/18/97 - 900,000 990,000 210996AB
Grupo Imsa SA de CV euro 8 3/4%, 7/7/98 (e) - 2,500,000 2,568,750
40048TAA
Nacional Financiera SA 9 3/8%,
7/15/02 (e) - 3,000,000 3,292,500 6295989A
Offshore Mexican Bond Ltd. secured new peso
linked 0%, 7/20/94 (e) - 4,020,000 5,231,025 676257AA
Tolmex SA de CV 8 3/8%, 11/1/03 Ba2 10,000,000 10,500,000 889557AA
35,815,632
THAILAND - 0.3%
Industrial Finance Corp. Thailand 7 1/2%,
12/2/98 - THB 50,000,000 1,967,470 457998AC
UNITED KINGDOM - 0.8%
Abbey National Treasury Services PLC 7 3/4%,
6/23/98 Aa2 GBP 1,250,000 1,961,641 010998AG
Hanson PLC 10 3/8%, 10/20/97 A1 GBP 1,000,000 1,678,610 411996EM
Leeds Permanent Building Society 7 3/8%,
5/6/98 Aa3 GBP 1,250,000 1,929,331 524992FV
5,569,582
UNITED STATES OF AMERICA - 0.6%
PDV America, Inc. gtd. 7 7/8%, 8/1/03 Baa3 3,650,000 3,636,312 69329RAC
TOTAL NONCONVERTIBLE BONDS 59,671,659
TOTAL CORPORATE BONDS
(Cost $65,385,692) 69,655,241
GOVERNMENT OBLIGATIONS - 75.3%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (A)
ARGENTINA - 17.8%
Argentina Republic:
Brady:
euro 4%, 3/31/23 B1 $ 55,000,000 $ 37,743,750 039995AD
4%, 3 /31/23 (e) - 2,212,000 1,517,985 0401149Y
4%, 3/31/23 (e) - 5,250,000 3,615,937 0401149G
BOCON:
3 1/4%, 4/1/01 (f) B1 50,539,247 43,797,312 039995AF
3.80%, 4/1/01 (f) - ARP 14,703,600 11,668,004 039995AH
3 1/4%, 9/1/02 (f) - 5,177,315 4,249,022 039995AM
3.80%, 4/1/07 (f) - ARP 20,991,655 14,310,628 039995AW
FRB 4.1875%, 3/31/05 (e)(f) - 458,511 402,344 0401149U
117,304,982
AUSTRIA - 1.9%
Austrian Government 7%, 1/20/03 - ATS 144,000,000 12,607,747 0525919D
BRAZIL - 6.0%
Brazil Federative Republic IDU euro 4.3125%,
1/1/01 (f) B2 38,000,000 31,587,500 1057569E
Siderurgica Brasileiras SA inflation indexed
6%, 8/15/99 - BRC 51,502,300 8,021,205 82599PAA
39,608,705
CANADA - 7.3%
Canadian Government 11.75%, 2/1/03 Aaa CAD 29,000,000 29,378,476
136992QX
Ontario Province 7 3/4%, 12/8/03 Aa2 CAD 25,000,000 19,699,452 6832349H
49,077,928
DENMARK - 8.7%
Denmark Government:
9%, 11/15/00 Aa1 DKK 118,000,000 20,266,087 2485059A
8%, 5/15/03 Aa1 DKK 159,800,000 26,586,693 249998AG
7%, 12/15/04 Aa1 DKK 68,000,000 10,705,029 249998AV
57,557,809
FRANCE - 6.2%
French Government:
Oat:
8 1/2%, 11/25/02 Aaa FRF 16,000,000 3,244,872 3517779U
8 1/2%, 4/25/03 Aaa FRF 27,500,000 5,610,113 351996AQ
GOVERNMENT OBLIGATIONS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (A)
FRANCE - CONTINUED
French Government - continued
OAT - continued
8 1/2%, 10/25/19 Aaa FRF 43,000,000 $ 9,349,722 3517779Q
8 1/2%, 4/25/23 Aaa FRF 70,000,000 15,338,743 351996AC
Strips 4/25/23 Aaa FRF 280,000,000 7,455,308 351996BL
40,998,758
INDONESIA - 1.2%
Indonesian Bank (SBI):
0%, 4/28/94 (b) - IDR 13,000,000 5,951,741 351996BL
0%, 5/19/94 (b) - IDR 4,400,000 2,002,766 06099MAC
7,954,507
IRELAND - 3.2%
Ireland Government 9 1/4%, 7/11/03 Aa3 IEP 12,500,000 21,133,847
4626779H
ITALY - 1.0%
Italian Government 11%, 6/1/03 (b) - ITL 10,000,000 6,629,772 4626779H
MEXICO - 7.5%
Mexican Government:
Brady:
Par A, 6 1/4%, 12/31/19 Ba3 31,500,000 26,302,500 597998MM
Par B, 6 1/4%, 12/31/19 Ba3 10,550,000 8,809,250 597998PF
Par FF, 6.63%, 12/31/19 Ba2 FRF 77,000,000 10,602,299 597998VQ
Cetes, 3/10/94 - MXN 13,000,000 4,101,278 597998VH
49,815,327
MOROCCO - 1.6%
Morocco Trust 4.3125%, 1/3/09 (e)(f) - 13,000,000 10,513,750 617727AA
NETHERLANDS - 3.7%
Netherland Government 7 1/2%, 1/15/23 Aaa NLG 40,650,000 24,559,202
001994AP
NEW ZEALAND - 6.6%
New Zealand Government:
10%, 3/15/02 Aa3 NZD 6,000,000 4,252,410 6501629D
8%, 4/15/04 Aa3 NZD 60,000,000 39,002,988 6501629K
43,255,398
GOVERNMENT OBLIGATIONS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (A)
UNITED KINGDOM - 2.6%
United Kingdom Treasury:
12%, 11/20/98 Aaa GBP 4,000,000 $ 7,440,388 9107689R
9 3/4%, 8/27/02 Aaa GBP 5,270,000 9,595,954 467991AR
17,036,342
TOTAL GOVERNMENT OBLIGATIONS
(Cost $469,668,702) 498,054,074
COMMON STOCKS - 0.5%
SHARES
MEXICO - 0.5%
Grupo Carso SA de CV Class A-1 (h) 310,800 3,392,183 40099594
Mexico Value Recovery rights 6/30/03 (h) 31,025,000 311 59304893
TOTAL COMMON STOCKS
(Cost $2,143,726) 3,392,494
CONVERTIBLE PREFERRED STOCKS - 0.3%
NETHERLANDS - 0.3%
ABN-AMRO Holdings NV 6% (Cost $1,980,514) 52,000 1,910,586 00399194
OTHER SECURITIES - 8.6%
PRINCIPAL
AMOUNT (A)
COLLATERALIZED NOTES - 1.0%
MEXICO - 1.0%
Wilton Investments Ltd. sr. notes (collateralized by
Mexican govt. and U.S. govt. securities)
Series B, 0%, 3/4/94 (d) $ 6,600,000 6,542,448 972998AB
INDEXED SECURITIES - 7.5%
FINLAND - 0.4%
Finnish Export Credit note 3.5628%, 4/19/94
(inversely indexed to 1-year FIM HELIBOR
rate, multiplied by 10) 2,000,000 2,633,800 31899HAF
OTHER SECURITIES - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (A)
INDEXED SECURITIES - CONTINUED
UNITED KINGDOM - 0.6%
Barclays Bank PLC note 3 5/8%, 3/25/94
(inversely indexed to 1-year FIM HELIBOR rate,
multiplied by 10) $ 2,700,000 $ 3,574,260 06738C9S
UNITED STATES OF AMERICA - 6.5%
AIG Matched Funding Corp. note 2.8805%, 9/23/94
(coupon inversely indexed to HELIBOR and principal
indexed to value of 2-year Finnish securities,
both multiplied by 6) (f)(g) 1,800,000 1,938,420 012994AH
Bankers Trust Company note:
1.1386%, 11/14/94 (coupon inversely indexed
to HELIBOR and principal indexed to value
of 2-year Finnish securities, both
multiplied by 8) (f)(g) 600,000 619,320 0669919C
1.1125%, 11/16/94 (coupon inversely
indexed to HELIBOR and principal indexed to
value of 2-year Finnish securities, both
multiplied by 8) (f)(g) 1,000,000 1,032,200 0669919F
0%, 12/5/94 (coupon inversely indexed
to ITL LIBOR and principal indexed to value
of 2-year Italian securities, both
multiplied by 8) (g) 1,000,000 1,133,100 0669919G
3.282%, 12/5/94 (coupon inversely indexed
to value of HELIBOR and principal indexed to
value of 2-year Finnish securities, both
multiplied by 8) (f)(g) 1,200,000 1,227,600 0669919H
2.77%, 12/6/94 (coupon inversely indexed
to HELIBOR and principal indexed to value of
2-year Finnish securities, both
multiplied by 8) (f)(g) 600,000 614,280 0669919J
14.4375%, 7/15/94 (indexed to CSK denom.
CEZ a.s. bond 16 1/2%, 6/25/98) 1,000,000 1,024,700 0669917L
4.2075%, 8/31/94 (coupon inversely indexed
to HELIBOR and principal indexed to value of
2-year Finnish securities, both
multiplied by 6) (f)(g) 300,000 329,400 0669918F
3.09%, 12/7/94 (coupon inversely indexed to
HELIBOR and principal indexed to value of 2-year
Finnish securities, both multiplied by 8) (f)(g) 900,000 923,670
0669919K
3.3125%, 12/8/94 (coupon inversely indexed
to HELIBOR and principal indexed to value of
2-year Finnish securities, both multiplied by
8) (f)(g) 1,300,000 1,333,540 0669919M
OTHER SECURITIES - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (A)
INDEXED SECURITIES - CONTINUED
UNITED STATES OF AMERICA - CONTINUED
Bankers Trust Company note - continued
13.3825, 12/23/94 (coupon inversely indexed
to CAD Bankers' Acceptance rate and
principal indexed to value of 1-year
Canadian securities, both multiplied
by 13) (f)(g) $ 2,000,000 $ 2,063,800 0669919R
4.81%,12/29/94 (coupon inversely indexed
to HELIBOR and principal indexed to value of
2-year Finnish securities, both multiplied by
8) (f)(g) 1,000,000 998,400 0669919S
Bayerische Landesbank cert. of dep.:
4.9525%, 12/22/94 (coupon inversely
indexed to HELIBOR and principal indexed to
value of 2-year Finnish securities, both
multiplied by 8) (f)(g) 1,000,000 1,019,700 072999AP
6.0725%,12/22/94 (coupon inversely
indexed to HELIBOR and principal indexed
to value of 2-year Finnish securities, both
multiplied by 8) (f)(g) 2,500,000 2,635,750 072999AN
Citibank Nassau:
0%, 10/20/94 (coupon inversely indexed to
STIBOR and principal indexed to value of
2-year Swedish securities, both multiplied
by 9) (g) 3,000,000 3,178,500 223991AR
14.47625%, 10/20/94 (coupon inversely indexed
to CAD Bankers' Acceptance rate and principal
indexed to value of 3-year Canadian securities,
both multiplied by 5.5) (f)(g) 4,000,000 4,476,400 223991AS
0%, 10/25/94 (coupon inversely indexed to
STIBOR and principal indexed to value of
2-year Swedish securities, both multiplied
by 9) (g) 3,000,000 3,173,400 223991AT
0%, 11/4/94 (coupon inversely indexed to ITL
LIBOR and principal indexed to value of 2-year
Italian securities, both multiplied by 8) (g) 1,900,000 1,971,630
223991AW
0%, 11/10/94 (coupon inversely indexed to ITL
LIBOR and principal indexed to value of 2-year
Italian securities, both multiplied by 8) (g) 3,000,000 3,089,100
223991AY
0%, 11/17/94 (coupon inversely indexed to
LIBOR and principal indexed to value of
2-year Italian securities, both multiplied
by 8.5) (g) 2,000,000 2,146,200 223991BC
OTHER SECURITIES - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (A)
INDEXED SECURITIES - CONTINUED
UNITED STATES OF AMERICA - CONTINUED
Citibank Nassau - continued
0%, 12/5/94 (coupon inversely indexed to
LIBOR and principal indexed to value of
2-year Italian securities, both multiplied
by 8) (g) $ 1,000,000 $ 1,121,300 223991BG
0%, 12/23/94 (coupon inversely indexed to
STIBOR and principal indexed to value of
2-year Swedish securities, both
multiplied by 9) (g) 1,000,000 1,029,500 223991BM
16.1825%, 12/29/94 (coupon inversely
indexed to CAD Bankers Acceptance rate
and principal indexed to value of 1-year
Canadian securities, both multiplied
by 13) (f)(g) 1,000,000 1,042,600 223991BP
ITT Corp. note:
3.465%, 2/25/94 (inversely indexed to
1-year SEK swap rate, multiplied by 10) 2,000,000 2,412,400 4506799D
3.66%, 6/27/94 (inversely indexed to
1-year SEK swap rate, multiplied by 10) 1,300,000 1,422,070 4506799M
Sara Lee Corp. 0%, 11/4/94 (inversely indexed
to ITL LIBOR and principal indexed to 2-year
Italian securities, both multiplied by 8) (g) 1,100,000 1,146,200
8031119V
43,103,180
TOTAL INDEXED SECURITIES 49,311,240
PURCHASED BANK DEBT - 0.1%
COLOMBIA - 0.1%
Republic of Colombia amortizing loan
participation 6 3/8%, 1/31/98 (f) 800,385 760,366 1953259E
TOTAL OTHER SECURITIES
(Cost $52,494,141) 56,614,054
CERTIFICATES OF DEPOSIT - 1.1%
THAILAND - 1.1%
Siam Commercial Bank 7 1/4%, 11/29/96 THB 70,000,000 $ 2,751,714
7885109N
Thai Military Bank Ltd.:
8.52%, 9/20/96 THB 20,000,000 804,390 901999AD
8%, 10/21/96 THB 100,000,000 3,975,310 901999AA
TOTAL CERTIFICATES OF DEPOSIT
(Cost $7,600,536) 7,531,414
COMMERCIAL PAPER - 3.6%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (A)
MEXICO - 3.6%
Bancomer 0%, 2/24/94 MXN 16,518,906 $ 5,228,452 05999KBG
Citibank Mexico 0%, 3/24/94 MXN 16,148,740 5,063,768 17699AAJ
National Financiera:
0%, 5/12/94 MXN 23,224,438 7,168,546 66299CAL
0%, 6/1/94 MXN 19,911,765 6,107,834 66299CAG
TOTAL COMMERCIAL PAPER
(Cost $23,412,288) 23,568,600
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $622,685,599) $ 660,726,463
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
10,842,973 CAD 1/20/94 $ 8,200,767 $ 93,664
101,604,500 DEM 1/20/94 to 2/16/94 58,282,245 (1,717,755)
202,714,122 DKK 2/9/94 29,713,763 (109,140)
666,985,978 ESP 1/14/94 4,647,592 (81,799)
116,950,000 FIM 2/16/94 20,111,469 (95,177)
228,763,750 FRF 1/27/94 38,542,198 (246,250)
1,544,100,000 GRD 2/28/94 6,011,079 (77,644)
85,663,000,000 IDR 1/26/94 to 6/30/94 39,877,609 102,333
15,263,025,000 ITL 2/3/94 to 3/8/94 8,823,298 (141,279)
2,533,552,370 JPY 1/24/94 22,672,184 (864,794)
223,505,200 MYR 1/31/94 to 9/30/94 82,756,351 (3,130,796)
80,227,129 SEK 1/20/94 to 2/25/94 9,583,748 (211,123)
7,962,500 SGD 3/21/94 4,943,871 (56,129)
TOTAL CONTRACTS TO BUY
(Payable amount $340,702,063) $ 334,166,174 $ (6,535,889)
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 50.6%
FORWARD FOREIGN CURRENCY CONTRACTS - CONTINUED
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO SELL
49,042,000 ATS 4/5/94 $ 3,998,353 $ 1,647
2,004,447,561 BEF 1/13/94 to 3/31/94 55,119,971 27,225
58,947,278 CAD 1/20/94 to 3/29/94 44,566,635 13,994
103,828,681 DEM 1/18/94 to 2/28/94 59,559,135 949,700
202,714,122 DKK 2/9/94 29,713,763 199,905
666,985,978 ESP 1/14/94 4,647,592 346,500
116,950,000 FIM 2/16/94 20,111,469 (111,469)
465,477,325 FRF 1/27/94 to 3/28/94 78,302,486 1,156,774
1,544,100,000 GRD 2/28/94 6,011,079 (11,079)
9,804,473 IEP 1/31/94 13,759,107 (17,063)
20,920,093,750 ITL 2/3/94 to 3/8/94 12,102,509 288,050
7,036,374,258 JPY 1/19/94 to 3/24/94 63,057,221 1,323,246
7,884,593 GBP 1/14/94 to 3/29/94 11,616,394 162,884
23,314,000 MYR 1/31/94 to 2/14/94 8,670,309 369,055
29,129,500 NLG 4/5/94 14,888,120 111,880
80,227,129 SEK 1/20/94 to 2/25/94 9,583,748 261,943
70,000,000 THB 1/25/94 2,740,250 23,271
TOTAL CONTRACTS TO SELL
(Receivable amount $443,544,604) $ 438,448,141 $ 5,096,463
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 66.4%
CURRENCY TYPE ABBREVIATIONS
ARP - Argentinean peso
ATS - Austrian schilling
BEF - Belgian franc
BRC - Brazilian cruzeiro
GBP - British pound
CAD - Canadian dollar
CSK - Czech koruna
DKK - Danish krone
NLG - Dutch guilder
FIM - Finnish markka
FRF - French franc
DEM - German Deutsche mark
GRD - Greek drachma
IDR - Indonesian rupiah
IEP - Irish pound
ITL - Italian lira
JPY - Japanese yen
MYR - Malaysian ringgit
MXN - Mexican peso
NZD - New Zealand dollar
SGD - Singapore dollar
ESP - Spanish peseta
SEK - Swedish krona
THB - Thai baht
USD - United States dollar
LEGEND
1. Principal amount is stated in United States dollars unless otherwise
noted.
2. Principal amount in thousands.
3. Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
4. Restricted securities - investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Komercni Banka 17%,
5/3/98 10/14/93 $ 1,040,657
Wilton Investments Ltd.
sr. notes (collateralized
by Mexican gov't. and
U.S. govt. securities)
Series B, 0%,
3/4/94 3/3/93 6,107,706
5. 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 $49,547,428 or 7.2% of net
assets.
6. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
7. Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate multiplied by a specified
factor. If the floating rate is high enough, the coupon rate may be zero or
be a negative amount that is carried forward to reduce future interest
and/or principal payments. The price may be considerably more volatile than
the price of a comparable fixed rate security.
8. Non-income producing
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 39.2% AAA, AA, A 38.9%
Baa 0.6% BBB 0.0%
Ba 8.5% BB 3.5%
B 17.1% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings of
the sovereign credit of the issuing government. The percentage not rated by
either S&P or Moody's amounted to 19.9% including long-term debt
categorized as other securities.
Non-rated securities considered to be Baa or better quality by FMR are 9.4%
of the fund's total investments.
INCOME TAX INFORMATION
At December 31, 1993, the aggregate cost of investment securities for
income tax purposes was $623,005,230. Net unrealized appreciation
aggregated $37,721,233, of which $39,214,535 related to appreciated
investment securities and $1,493,302 related to depreciated investment
securities.
The fund hereby designates $2,000,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
At December 31, 1993, the fund was required to defer $3,940,000 of losses
on futures contracts, options and foreign currency transactions.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1993
ASSETS 9. 10.
11.Investment in securities, at value (cost $622,685,599) 12. $ 660,726,463
(Notes 1 and 2) - See accompanying schedule
13.Long foreign currency contracts held, at value (cost 14. 334,166,174
$340,702,063) (Note 2)
15.Short foreign currency contracts (Note 2) $ (438,448,141) 16.
Contracts held, at value
17. Receivable for contracts held 443,544,604 5,096,463
18.Receivable for investments sold 19. 34,481,888
20.Receivable for fund shares sold 21. 3,620,162
22.Interest receivable 23. 13,752,933
24.Other receivables 25. 134,804
26. TOTAL ASSETS 27. 1,051,978,887
LIABILITIES 28. 29.
30.Payable to custodian bank 949,402 31.
32.Payable for foreign currency contracts held (Note 1) 340,702,063 33.
34.Payable for investments purchased 20,410,609 35.
36.Net payable for closed foreign currency contracts (Note 2) 422,282 37.
38.Payable for fund shares redeemed 1,417,225 39.
40.Dividends payable 1,013,277 41.
42.Accrued management fee 386,326 43.
44.Other payables and accrued expenses 426,038 45.
46. TOTAL LIABILITIES 47. 365,727,222
48.NET ASSETS 49. $ 686,251,665
50.Net Assets consist of (Note 1): 51. 52.
53.Paid in capital 54. $ 654,410,342
55.Distributions in excess of net investment income 56. (5,486,305)
57.Accumulated undistributed net realized gain (loss) on 58. 726,190
investments
59.Net unrealized appreciation (depreciation) on: 60. 61.
62. Investment securities 63. 38,040,864
64. Foreign currency contracts 65. (1,439,426)
66.NET ASSETS, for 54,410,932 shares outstanding 67. $ 686,251,665
68.NET ASSET VALUE, offering price and redemption price per 69. $12.61
share ($686,251,665 (divided by) 54,410,932 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1993
INVESTMENT INCOME 71. $ 16,600
70.Dividends
72.Interest 73. 34,206,827
74.Foreign exchange gain (loss) 75. 601,542
76. 34,824,969
77.Less foreign taxes withheld 78. (245,761)
79. TOTAL INCOME 80. 34,579,208
EXPENSES 81. 82.
83.Management fee (Note 4) $ 3,097,304 84.
85.Transfer agent fees (Note 4) 1,091,926 86.
87.Accounting fees and expenses (Note 4) 255,949 88.
89.Non-interested trustees' compensation 2,658 90.
91.Custodian fees and expenses 382,013 92.
93.Registration fees 175,456 94.
95.Audit 69,741 96.
97.Legal 6,249 98.
99.Interest (Note 5) 7,303 100.
101.Miscellaneous 5,105 102.
103. TOTAL EXPENSES 104. 5,093,704
105.NET INVESTMENT INCOME 106. 29,485,504
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 108. 109.
(NOTES 1, 2 AND 3)
107.Net realized gain (loss) on:
110. Investment securities 12,747,307 111.
112. Foreign currency contracts (596,495) 113.
114. Foreign currency transactions (1,374,748) 115.
116. Written options 692,000 117.
118. Futures contracts (206,142) 11,261,922
119.Change in net unrealized appreciation (depreciation) on: 120. 121.
122. Investment securities 50,606,393 123.
124. Foreign currency contracts (4,282,440) 125.
126. Written options (248,816) 127.
128. Assets and liabilities denominated in foreign (189,424) 45,885,713
currencies
129.NET GAIN (LOSS) 130. 57,147,635
131.NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM 132. $ 86,633,139
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED TWO MONTH YEAR ENDED
DECEMBER 31, PERIOD ENDED OCTOBER 31,
1993 DECEMBER 31, 1992
1992
INCREASE (DECREASE) IN NET ASSETS
133.Operations $ 29,485,504 $ 3,473,330 $ 20,251,049
Net investment income
134. Net realized gain (loss) on investments 11,261,922 2,233,829 (830,180)
135. Change in net unrealized appreciation 45,885,713 (6,815,456) (3,171,471)
(depreciation) on investments
136. 86,633,139 (1,108,297) 16,249,398
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
137.Distributions to shareholders (22,241,596) (8,450,422) (22,178,081)
From net investment income
138. From net realized gain (11,261,922) (3,133,512) -
139. In excess of net realized gain (8,138,598) - -
140. (41,642,116) (11,583,934) (22,178,081)
TOTAL DISTRIBUTIONS
141.Share transactions 684,294,760 27,096,394 398,366,459
Net proceeds from sales of shares
142. Reinvestment of distributions 37,152,801 9,907,186 20,198,683
143. Cost of shares redeemed (359,391,059) (77,439,904) (240,386,472)
144. 362,056,502 (40,436,324) 178,178,670
Net increase (decrease) in net assets resulting
from share transactions
145. 407,047,525 (53,128,555) 172,249,987
TOTAL INCREASE (DECREASE) IN NET ASSETS
NET ASSETS 146. 147. 148.
149. Beginning of period 279,204,140 332,332,695 160,082,708
150. $ 686,251,665 $ 279,204,140 $ 332,332,695
End of period (including distributions in
excess of net investment income of
$5,486,305 and $2,041,681and $2,935,411,
respectively)
OTHER INFORMATION 152. 153. 154.
151.Shares
155. Sold 56,470,051 2,332,660 33,211,702
156. Issued in reinvestment of distributions 3,054,696 869,030 1,693,232
157. Redeemed (29,744,063) (6,669,796) (20,165,177)
158. Net increase (decrease) 29,780,684 (3,468,106) 14,739,757
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS YEAR ENDED TWO MONTH YEARS ENDED OCTOBER 31,
DECEMBER 31, PERIOD ENDED
DECEMBER 31,
159. 1993 1992 1992(double dagger) 1991 1990 1989
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
160.SELECTED PER-SHARE DATA
161.Net asset value, beginning of period $ 11.340 $ 11.830 $ 11.980 $ 12.19 $ 11.22 $ 11.47
162.Income from Investment Operations
163. Net investment income .731 .145 .839 .74 .89(diamond) .82(diamond)
164. Net realized and unrealized gain (loss) on
investments 1.648 (.173) .110# .52 .57 (.17)
165. Total from investment operations 2.379 (.028) .949 1.26 1.46 .65
166.Less Distributions
167. From net investment income (.629) (.332) (1.099) (1.03) (.49) (.81)
168. From net realized gain (.280) (.130)** - (.44)** - (.09)**
169. In excess of net realized gain (.200) - - - - -
170. Total distributions (1.109) (.462) (1.099) (1.47) (.49) (.90)
171.Net asset value, end of period $ 12.610 $ 11.340 $ 11.830 $ 11.98 $ 12.19 $ 11.22
172.TOTAL RETURN (dagger) 21.91% (.23)% 8.18% 11.31% 13.45% 6.04%
(pound)
173.RATIOS AND SUPPLEMENTAL DATA
174.Net assets, end of period (in millions) $ 686 $ 279 $ 332 $ 160 $ 126 $ 57
175.Ratio of expenses to average net assets 1.17% 1.37%* 1.23% 1.35% 1.40% 1.50%
176.Ratio of expenses to average net assets before
expense reductions 1.17% 1.37%* 1.23% 1.35% 1.40% 1.65%
177.Ratio of net investment income to average net assets 6.79% 6.92%* 8.02% 7.92% 7.82% 7.56%
178.Portfolio turnover rate 198% 142%* 81% 228% 154% 150%
</TABLE>
* ANNUALIZED ** INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON
FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. (dagger)
TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(diamond) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIOD SHOWN. (double dagger) EFFECTIVE JULY 1,
1992, DIVIDENDS FROM NET INVESTMENT INCOME WERE DECLARED DAILY AND PAID
MONTHLY. (pound) FOR THE PERIODS ENDED OCTOBER 31, 1990 AND 1989, NET
INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED USING AVERAGE SHARES
OUTSTANDING DURING THE YEAR. # THE AMOUNT SHOWN FOR A SHARE OUTSTANDING
DOES NOT CORRESPOND WITH THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE
PERIOD ENDED DUE TO THE TIMING OF SALES AND REPURCHASES OF THE FUND IN
RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND.
25
ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1993
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Global Bond Fund (the fund) is a fund of Fidelity Investment Trust
(the trust) and is authorized to issue an unlimited number of shares. The
trust is registered under the Investment Company Act of 1940, as amended
(the 1940 Act), as an open-end management investment company organized as a
Massachusetts business trust. The following summarizes the significant
accounting policies of the fund:
SECURITY VALUATION. Securities for which quotations are readily available
are valued at the last sale price, or if no sale price, at the closing bid
price in the principal market in which such securities are normally traded.
Securities (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 maturing within sixty days 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, other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income, which includes accretion of original
issue discount, is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is not assured.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
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 and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
futures and options transactions, foreign currency transactions, market
discount and losses deferred due to wash sales. Permanent book and tax
differences relating to shareholder distributions will result in
reclassifications to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective January
1, 1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of December 31, 1992 have been reclassified to
reflect an increase in paid in capital of $706,680, an increase in
distributions in excess of net investment income of $2,954,786 and a
decrease in accumulated net realized loss on investments of $2,248,106.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser,
2. OPERATING POLICIES -
CONTINUED
REPURCHASE AGREEMENTS - CONTINUED
Fidelity Management & Research Company (FMR), is responsible for
determining that the value of these underlying securities remains at least
equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Federal Agency obligations.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve, to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statement
of Assets and Liabilities. The face or contract amounts reflect the extent
of the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary
market for the instruments, or due to the inability of counterparties to
perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange 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.
INDEXED SECURITIES. The fund may invest in indexed securities whose value
is linked either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices, or other reference instruments.
Indexed securities may be more volatile than the reference instrument
itself, but any loss is limited to the amount of the original investment.
RESTRICTED SECURITIES. The fund is permitted to invest in privately placed
restricted securities. These securities 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, restricted securities (excluding 144A issues) amounted
to $7,546,611 or 1.1% of net assets.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,048,879,671 and $786,270,685, respectively.
The face value of futures contracts opened and closed amounted to
$6,318,531.
The following is a summary of the fund's written options activity:
SUMMARY OF WRITTEN OPTIONS
NUMBER OF AGGREGATE FACE VALUE
CONTRACTS OF CONTRACTS
Put Options on DEM:
Outstanding at December 31, 1992 - $ -
Contracts opened 1 20,000,000
Contracts closed (1) (20,000,000)
Outstanding at December 31, 1993 - $ -
Put Options on Argentine Collateralized Par Bonds:
Outstanding at December 31, 1992 (1) $ 16,000,000
Contracts opened - -
Contracts closed (1) (16,000,000)
Outstanding at December 31, 1993 - $ -
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 ranging from
.14% to .37% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .55%.
For the period, the management fee was equivalent to an annual rate of
.71% of average net assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .1325% to .3700%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
SUB-ADVISER FEE. FMR, on behalf of the fund, entered into sub-advisory
agreements with affiliates of FMR. In addition, one of the sub-advisers,
Fidelity International Investment Advisors (FIIA), entered into a
sub-advisory agreement with its subsidiary, Fidelity International
Investment Advisors (U.K.) Limited (FIIAL U.K.). Under the sub-advisory
arrangements, FMR may receive investment advice and research services and
may grant the sub-advisers investment management authority to buy and sell
securities. FMR pays its sub-advisers
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SUB-ADVISER FEE - CONTINUED
either a portion of its management fee or a fee based on costs incurred for
these services. FIIA pays FIIAL U.K. a fee based on costs incurred for
either service.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $16,923 for the
period.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
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. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $10,955,000 and $5,171,786,
respectively. The weighted average interest rate was 3.63%.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Investment Trust and the Shareholders of
Fidelity Global Bond Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Investment Trust: Fidelity Global Bond Fund, including the
schedule of portfolio investments, as of December 31, 1993, and the related
statement of operations for the year then ended, the statement of changes
in net assets for the year then ended, for the two month period ended
December 31, 1992, and for the year ended October 31, 1992, and the
financial highlights for the year then ended, for the two month period
ended December 31, 1992 and for the four years ended October 31, 1992.
These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1993 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Investment Trust: Fidelity Global Bond Fund, as of December 31,
1993, the results of its operations for the year then ended, the changes in
its net assets for the year then ended, for the two month period ended
December 31, 1992, and for the year ended October 31, 1992, and the
financial highlights for the year then ended, for the two month period
ended December 31, 1992 and for the four years ended October 31, 1992, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
February 4, 1994
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc. London, England
Fidelity Management & Research
(Far East) Inc. Tokyo, Japan
Fidelity International Investment
Advisors
Fidelity International Investment Advisors (U.K.) Limited
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
CUSTODIAN
The Chase Manhattan Bank, N.A.
New York, NY
FIDELITY'S TAXABLE BOND FUNDS
Capital & Income Fund
Ginnie Mae Portfolio
Global Bond Fund
Government Securities Fund
Intermediate Bond Fund
Investment Grade Bond Fund
Mortgage Securities Portfolio
New Markets Income Fund
Short-Intermediate Government Fund
Short-Term Bond Portfolio
Short-Term World Income Fund
Spartan(Registered trademark) Ginnie Mae Fund
Spartan Government Income Fund
Spartan High Income Fund
Spartan Investment Grade Bond Fund
Spartan Limited Maturity
Government Fund
Spartan Long-Term Government Bond
Fund
Spartan Short-Intermediate
Government Fund
Spartan Short-Term Income Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(2_FIDELITY_LOGOS)FIDELITY
SHORT-TERM WORLD INCOME
FUND
ANNUAL REPORT
DECEMBER 31, 1993
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the fund's
investments over the last six months.
INVESTMENTS 11 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 20 Statements of assets and liabilities,
operations, and changes in net assets, as
well as financial highlights.
NOTES 24 Footnotes to the financial statements.
REPORT OF INDEPENDENT 29 The auditor's opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A
BANK, AND FUND
SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED BY THE FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider adding to your tax-free investments, either municipal bonds
or municipal bond funds. Often these can provide higher after-tax yields
than comparable taxable investments. For example, if you're in the new 36%
federal income tax bracket and invest $10,000 in a taxable investment
yielding 7%, you'll pay $252 in federal taxes and receive $448 in income.
That same $10,000 invested in a tax-free bond fund yielding 5.5% would
allow you to keep $550 in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, as well as reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells investments that have grown in value). You can also look at the
fund's income.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED DECEMBER 31, 1993 LIFE OF
FUND
New Markets Income 38.84%
J.P. Morgan Emerging Markets Bond Index n/a
Average General World Income Fund n/a
Consumer Price Index 1.25%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, since the fund began on May 4, 1993. You
can compare these figures to the J.P. Morgan Emerging Markets Bond Index -
a broad measure of bond performance in developing countries available at
month end. You can also compare them to the average general world income
fund, which reflects the performance of 91 funds tracked by Lipper
Analytical Services. Both benchmarks include reinvested dividends and
capital gains, if any, and exclude sales charges. (Neither comparison is
available as of the fund's exact start date. However, six-month and
one-year comparisons will appear in the fund's next report.) Comparing the
fund's performance to the consumer price index helps show how your fund did
compared to inflation.
AVERAGE ANNUAL TOTAL RETURNS
PERIOD ENDED DECEMBER 31, 1993 LIFE OF
FUND
New Markets Income 64.04%
J.P. Morgan Emerging Markets Bond Index n/a
Average General World Income Fund n/a
Consumer Price Index 1.87%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year. Since the fund is less than a year old, the return
is an annualized number.
$10,000 OVER LIFE OF FUND
New Mkts Inc JPM Emerging Mkts
05/31/93 10000.00 10000.00
06/30/93 10397.83 10350.00
07/31/93 10924.43 10781.60
08/31/93 11248.31 10998.31
09/30/93 11606.79 11142.38
10/31/93 12523.78 12081.69
11/30/93 12661.09 11960.87
12/31/93 13478.16 12691.68
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity New
Markets Income Fund on May 31, 1993, shortly after the fund started. As the
chart shows, by December 31, 1993, the value of your investment would have
grown to $13,478 - a 34.78% increase on your initial investment. For
comparison, look at how the J.P. Morgan Emerging Markets Bond Index did
over the same period. With dividends reinvested, the same $10,000 would
have grown to $12,692 - a 26.92% increase
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. Bond prices, for
example, move in the opposite
direction of interest rates. In
turn, the share price, return, and
yield of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
(checkmark)
INCOME
MAY 4, 1993
(START OF OPERATIONS)
TO DECEMBER 31,
1993
Income return 6.32%
Capital gain return 1.82%
Change in share price 30.70%
Total return 38.84%
INCOME returns, capital gain returns, and changes in share price are all
part of a bond fund's total return. An income return reflects the dividends
paid by the fund. A capital gain return reflects the amount paid by the
fund to shareholders based on the profits realized from selling bonds that
have grown in value. The returns assume the dividends or gains are
reinvested. Changes in the fund's share price include changes in the prices
of the fund's bonds and any capital gains the fund pays.
DIVIDENDS AND YIELD
PERIODS ENDED DECEMBER 31, 1993 PAST 30 PAST 6
DAYS MONTHS
Dividends per share n/a 41.94(cents)
Annualized dividend rate n/a 7.04%
Annualized yield 7.54% n/a
DIVIDENDS per share show the income paid by the fund for a set period. You
can annualize this number, based on an average share price of $11.82 over
the past six months. The 30-day annualized YIELD is a standard formula for
all 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.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Most international bond markets
richly rewarded investors in 1993,
easily outpacing U.S. bond markets.
Falling interest rates and low
inflation fueled strong returns in both
developed nations and, more notably,
in emerging markets. For example, in
Europe and Japan, weak economic
environments led rates to drop, which
benefited bond investors. The
passage of the North American Free
Trade Agreement in November
boosted returns in Latin American
countries, many of which were
already having a strong year. The
Salomon Brothers World
Government Bond Index - which
measures government bond market
performance in developed nations,
including the United States - rose
13.27% for the year. That figure was
dwarfed by the J.P. Morgan
Emerging Markets Bond Index,
which was up 44.17% in 1993. For
comparison, the Lehman Brothers
Aggregate Bond Index - a broad
measure of taxable bonds in the U.S.
market - returned 9.75% for the
year. Though providing returns that
appeared weak compared to those in
overseas markets, the U.S. bond
market posted relatively strong
numbers on a historical basis. Falling
interest rates through most of the year
fueled gains. The yield on the
benchmark 30-year Treasury bond
hit a three decade low in
mid-October, yielding 5.79%. By
year end, mild inflation fears, fueled
by a strengthening economy, had
pushed up the yield on the 30-year
bond to 6.35%.
An interview with Rob Citrone,
Portfolio Manager of Fidelity New Markets Income Fund
Q. ROB, WHAT ARE THE LATEST PERFORM-ANCE NUMBERS?
A. New Markets Income is not yet one year old, but the results so far have
been encouraging. The fund's total return from its start date on May 4,
1993 through December 31, 1993 was 38.84%. The best comparison I can make
with the fund's peers covers the period from May 31, 1993 through the end
of December. During that time, the fund's total return was 34.78%, compared
to 8.89% for the average general world income fund, according to Lipper
Analytical Services.
Q. WHY DID NEW MARKETS INCOME DO SO MUCH BETTER THAN MOST OTHER
INTERNATIONAL BOND FUNDS?
A. To be fair, the fund shone in part because its aim is to invest mainly
in emerging markets; most other funds in the general world income category
do not have the same goal. To understand what that meant last year,
consider that during 1993 the J.P. Morgan Emerging Markets Bond Index rose
44.17%, while the broader-based Salomon Brothers World Government Bond
Index was up only 13.27%. Beyond that, though, I focused the fund on two
countries whose markets excelled even by comparison with other emerging
markets: Argentina and Mexico.
Q. ARGENTINA FIRST. WHAT WAS YOUR STRATEGY THERE?
A. Probably the most significant bet the fund made was in a group of
Argentine government bonds called BOCONs. When I bought them they were
yielding three or four percentage points more than other Argentine
government bonds which I felt carried about the same overall risk.
Eventually, the market concurred: yields on the BOCONs fell, prices rose,
and the fund profited. The first BOCONs I bought were denominated in U.S.
dollars. But following the Argentine mid-term elections in October - which
led to a strengthening of the ruling party's hand - I moved into
peso-denominated debt, and that, too, paid off for the fund. All told,
Argentine securities totaled about 30% of the fund's investments at the end
of December.
Q. AND MEXICO?
A. Mexican investments as a percentage of the fund have actually declined
over the last six months, from more than 20% to about 14%. I still think
the country is a good risk/reward trade, and that's why it remains a focus
of the fund. But the big bet in Mexico was on the country's improving
credit quality; as that has been factored into the market, I've taken
profits and looked for new opportunities elsewhere.
Q. WHERE HAVE YOU FOUND THEM?
A. In Brazil, for example, where the fund's stake has more than doubled
since last June to almost 15%. Among my largest investments in Brazil have
been IDU bonds, which stands for interest due and unpaid. These are bonds
that were created as a result of debt restructuring during the late 1980s
and early 1990s. Like the Argentine BOCONs, the IDUs were yielding
significantly more than comparable Brazilian bonds when I bought them; as
the yield spread has narrowed, the fund has made money. IDUs, by the way,
are dollar-denominated. Lately, as my outlook for Brazil has improved, I've
moved increasingly into bonds denominated in the local currency.
Q. ISN'T THAT MORE RISKY?
A. It can be. Non-dollar denominated bonds carry currency risk - the risk
that the currency in the issuer's country may become less valuable compared
to the dollar. That can happen quickly in many Latin American markets due
to sudden changes in the political or economic landscapes of these
countries. Brazil has elections upcoming, and the next few months are key.
The country is moving toward positive economic reform, and I think most
Brazilians see this and want to sustain the momentum. But there are leftist
parties that are campaigning hard for positions of power. If they succeed,
Brazil's financial markets will face a lot of uncertainty. So I'm watching
the situation very closely.
Q. WHAT'S AHEAD FOR THE FUND?
A. Lately I've begun to diversify, more than doubling the number of
countries where the fund has investments. In countries like Jordan,
Ecuador, Panama and Peru, I've been adding securities that are candidates
to become so-called Brady bonds. Brady bonds are created when a portion of
a country's bad debt is converted into dollar-denominated bonds backed by
the U.S. Treasury; once the deal goes through, the price of the bonds goes
up. Around the world, the process is accelerating. Probably my biggest
regret this period is that I didn't begin investing more in these kinds of
bonds sooner. But the fact that I believe many such opportunities still
exist is a major reason why my outlook for the fund remains positive - even
if I don't expect to be able to match last year's performance.
FUND FACTS
GOAL: high current income,
followed by share price gains;
by investing largely in bonds
and other fixed-income
securities from countries with
emerging markets
START DATE: May 4, 1993
SIZE: as of December 31, 1993,
over $286 million
MANAGER: Rob Citrone, since
May 4, 1993; strategist,
emerging markets
fixed-income investments,
since 1990, M.B.A.,
University of Virginia, 1990
(checkmark)
ROB CITRONE ON NAFTA:
"NAFTA was viewed by the
investment community as either
a confirmation or a denial of
economic progress - not just in
Mexico, but throughout Latin
America. So it was as much
about market psychology as it
was about trade. I regarded
NAFTA as critical for the
region, and positioned the fund
aggressively on the assumption
that it would pass. Basically, that
meant preserving a large stake in
dollar-denominated bonds,
which have longer maturities
and therefore tend to be more
volatile than either bonds
denominated in local currency
or new issue debt. As a result,
the fund's performance suffered
during the final weeks of the
debate, but has since performed
better than it might have had I
taken a more conservative
approach."
(bullet) As of December 31, 1993,
29% of the fund's bonds were
non-dollar denominated (issued
in local currencies). Of these,
more than half were bonds
issued in either Argentina or
Brazil.
DISTRIBUTION
The Board of Trustees of
Fidelity New Markets Income
Fund voted to pay on February
7, 1994, to shareholders of
record at the opening of business
on February 4, 1994, a
distribution of $.20 derived from
capital gains realized from sale
of portfolio securities.
INVESTMENT CHANGES
TOP COUNTRIES AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
<S> <C> <C>
(BY LOCATION OF ISSUER) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
SIX MONTHS AGO
Argentina 29 25
Brazil 14 7
Mexico 14 21
United States 13 10
Nigeria 5 5
</TABLE>
TOP COUNTRIES ARE BASED ON THE LOCATION OF THE ISSUER OF EACH SECURITY,
INDICATING WHERE THE FUND IS EXPOSED TO POLITICAL AND CREDIT RISKS. THE
FUND'S LARGEST POSITION AS OF DECEMBER 31 WAS IN SECURITIES OF ARGENTINIAN
ISSUERS.
CURRENCY EXPOSURE AS OF DECEMBER 31, 1993
(ESTIMATED, BY CURRENCY) % OF FUND'S NET ASSETS % OF NET ASSETS
SIX MONTHS AGO
U.S. dollar 71 72
Argentinian peso 14 0
Brazilian cruzeiro 7 0
Mexican peso 4 21
South African rand 2 0
ESTIMATED CURRENCY EXPOSURES INCLUDE THE IMPACT OF HEDGING, WHICH REDUCES
FOREIGN CURRENCY RISK AND INCREASES THE FUND'S U.S. DOLLAR POSITION. THE
ARGENTINIAN PESO, AT APPROXIMATELY 14% OF ASSETS, WAS THE FUND'S LARGEST
FOREIGN CURRENCY EXPOSURE AS OF DECEMBER 31.
AVERAGE MATURITY AS OF DECEMBER 31, 1993
SIX MONTHS AGO
Years 10.5 7.3
THIS IS THE AVERAGE MATURITY OF THE BONDS IN THE FUND'S PORTFOLIO, WEIGHTED
BY DOLLAR AMOUNT.
ASSET ALLOCATION
AS OF DECEMBER 31, 1993 AS OF JUNE 30, 1993
Row: 1, Col: 1, Value: 21.2
Row: 1, Col: 2, Value: 6.0
Row: 1, Col: 3, Value: 54.3
Row: 1, Col: 4, Value: 18.5
Corporate bonds 18.5%
Government
obligations 54.3%
Common stocks 6.0%
Short term and
other investments 21.2%
Corporate bonds 38.7%
Government
obligations 29.1%
Common stocks 0.7%
Short term and
other investments 31.5%
Row: 1, Col: 1, Value: 30.5
Row: 1, Col: 2, Value: 1.7
Row: 1, Col: 3, Value: 29.1
Row: 1, Col: 4, Value: 38.7
INVESTMENTS DECEMBER 31, 1993
Showing Percentage of Total Value of Investment in Securities
CORPORATE BONDS - 18.5%
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (A)
CONVERTIBLE BONDS - 4.2%
ARGENTINA - 2.4%
Alpargatas SA euro 9%, 3/15/98 - $ 3,500,000 $ 3,342,500 0205459A
Alpargatas SAIC 9%, 3/15/98 (f) - 3,760,000 3,590,800 020545AA
6,933,300
INDIA - 0.1%
Scici Ltd. euro 3 1/2%, 4/1/04 (f) - 270,000 359,775 79599KAA
INDONESIA - 0.9%
Indorayon euro 7%, 5/2/06 - 2,500,000 2,500,000 467994AA
PHILIPPINES - 0.8%
International Container Term Services, Inc.
unsecured 6%, 2/19/00 (f) - 1,500,000 2,265,000 459360AA
TOTAL CONVERTIBLE BONDS 12,058,075
NONCONVERTIBLE BONDS - 14.3%
ARGENTINA - 1.3%
Acindar Industria Argentina De Aceros euro
9 1/4%, 11/12/98 (f) - 1,000,000 990,000 004514AE
Brid Sapic euro 11 3/4%, 2/24/97 - 1,700,000 1,768,000 107994AA
Invertrad SA 9 1/4%, 10/14/94 (f) - 920,000 917,700 46127RAA
Petrolera Argentina San Jorge SA, secured
11%, 2/9/98 (f) - 100,000 104,250 71654PAA
3,779,950
BRAZIL - 0.9%
Telebras 17 1/2%, 7/1/05 (g) B2 BRC 132,857,816 2,529,560 954997AE
CANADA - 0.3%
Sears Canada, Inc. 11.7%, 7/10/00 - CAD 1,000,000 897,484 81234DAB
CZECH REPUBLIC - 0.3%
Komercni Banka 17%, 5/3/98 (e)(g) - CSK 30,000,000 1,004,163 50499CAB
INDONESIA - 1.2%
Indorayon Yankee 9 1/8%, 10/15/00 BB 1,500,000 1,507,500 69364LAB
PT Semen Cibinong 9%, 12/15/98 (f) - 2,000,000 2,020,000 69364UAA
3,527,500
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (A)
NONCONVERTIBLE BONDS - CONTINUED
MALAYSIA - 0.5%
Public Bank Malaysia 6 1/2%, 9/14/94 - MYR 4,000,000 $ 1,483,598 844996AA
MEXICO - 4.4%
Bancomer SA 9%, 6/1/00 (f) - 1,500,000 1,612,500 059682AA
First Mexican Acceptance Corp. euro
10 3/4%, 9/15/96 - 2,000,000 2,086,560 321998AA
Grupo Imsa SA de CV euro 8 3/4%, 7/7/98 (f) - 500,000 513,750 40048TAA
Grupo Simec 8 7/8%, 12/15/98 (f) - 1,000,000 1,018,750 40049LAA
Hylsa de CV 11%, 2/23/98 (f) - 500,000 543,750 449086AA
Offshore Mexican Bond Ltd. jr. secured new peso
linked 0%, 7/20/94 (f) - 500,000 650,625 676257AA
Third Mexican Acceptance Corp. coll. notes gtd.
by Grupo Sidek SA and Grupo Situr SA
10 1/2%, 3/15/98 (f) - 250,000 261,982 884149AB
Transport Maritima Mexicana 9 1/4%, 5/12/03 Ba2 1,000,000 1,042,500
893868AA
Tribasa Toll Road Trust 10 1/2%, 12/1/11 (f) - 4,750,000 4,928,125
896015AA
12,658,542
PHILIPPINES - 1.2%
Subic Power Corp. 9 1/2%, 12/28/08 (f) - 3,500,000 3,552,500 86482AA6
VENEZUELA - 4.2%
Venezuela Republic 7 3/8%, 12/18/07 (g) Ba1 17,000,000 12,303,750
9226469A
TOTAL NONCONVERTIBLE BONDS 41,737,047
TOTAL CORPORATE BONDS
(Cost $52,198,534) 53,795,122
GOVERNMENT OBLIGATIONS - 54.3%
ARGENTINA - 22.3%
Argentina Republic:
BOCON:
3.64%, 4/1/01 - ARP 21,559,115 17,108,465 039995AH
3.1875%, 4/1/07 B1 12,312,300 9,402,903 039995AQ
3.8%, 4/1/07 - ARP 28,419,582 19,375,147 039995AW
GOVERNMENT OBLIGATIONS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (A)
ARGENTINA - CONTINUED
Argentina Republic - continued
Brady euro 4%, 3/31/23 B1 $ 500,000 $ 343,125 039995AD
euro 4.1875%, 3/31/05 B1 16,750,000 14,698,125 039995AU
euro 4 1/4%, 3/31/05 (g) B1 1,500,000 1,316,250 039995AK
4.1875%, 3/31/05 (f)(g) - 3,000,000 2,632,500 039995AT
64,876,515
BRAZIL - 13.2%
Brazil Federative Republic IDU euro 4.3125%,
1/1/01 (g) - 24,460,000 20,332,375 1057569E
Siderurgica Brasileira SA inflation indexed
6%, 8/15/99 - BRC 115,175,600 17,937,978 82599PAA
38,270,353
FRANCE - 0.7%
French Government Strips 0%, 4/25/23 Aaa FRF 80,000,000 2,130,088
351996BL
INDONESIA - 0.6%
Indonesian Bank (SBI) 0%, 4/28/94 (c) - IDR 4,000,000 1,831,305 06099MAB
MEXICO - 6.9%
Mexican Government Brady:
6 1/4%, 12/31/19 Ba3 16,750,000 13,986,250 597998MM
6.63%, 12/31/19 Ba2 FRF 44,000,000 6,058,457 597998VQ
20,044,707
MOROCCO - 1.6%
Morocco Trust 4.3125%, 1/3/09 (f)(g) - 5,750,000 4,650,312 617727AA
NIGERIA - 4.5%
Central Bank of Nigeria promissory note
5.092%, 1/5/10 - 7,000,000 3,080,000 997999AF
Nigeria Brady 5 1/2%, 11/15/20 - 16,750,000 9,987,187 997999AC
13,067,187
RUSSIA - 0.3%
Vnesheconombank 7 1/2%, 9/27/96 - DEM 2,000,000 937,752 88399HAA
SOUTH AFRICA - 2.4%
South African Government 13%, 8/31/10 - ZAR 28,000,000 6,983,682
760998AA
GOVERNMENT OBLIGATIONS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (A)
TRINIDAD AND TOBAGO - 1.8%
Trinidad and Tobago:
euro 11 1/2%, 11/20/97 Ba2 $ 2,000,000 $ 2,170,000
9 3/4%, 11/03/00 Ba2 3,038,000 3,136,735
5,306,735
TOTAL GOVERNMENT OBLIGATIONS
(Cost $147,401,612) 158,098,636
COMMON STOCKS - 6.0%
SHARES
ARGENTINA - 2.8%
Alpargatas SA Industrias Y Commercial (Reg.) 430,000 374,831 02054592
Banco Frances Del Rio PL (Reg.) 25,518 324,712 21199692
Molinos Rio de La Plata (Reg.) 33,120 424,764 60899C22
Perez Companc Class B (b) 50,000 313,110 71399723
Telecom Argentina Stet France (b) 160,000 1,006,763 90899992
Telefonica Argentina Class B 55,000 403,938 87999D92
YPF Sociedad Anonima (b) 206,268 5,284,586 98424593
8,132,704
BRAZIL - 0.1%
Telebras PN (Reg.) 7,300,000 248,889 95499792
CHILE - 0.1%
Soc Quimica Y Minera de Chile ADR (b) 5,800 176,900 83363510
MEXICO - 2.2%
Banacci SA de CV Class C 32,000 278,171 06399893
Cemex SA, Series B (b) 13,000 387,572 15299293
Desc (Soc. de Fomento Indus.) Class B 20,000 144,237 25299692
Emvasa Del Valle de Enah Ord. (b) 98,000 452,769 29299E22
Farmacia Benevides SA de CV Ord (b) 52,000 277,077 31299422
Fomento Economico Mexicano SA (FEMSA) 'B' 58,000 381,874 34441892
Fondo Opcion SA de CV CL2 Series B (b) 322,000 901,932 34499892
Grupo Carso SA de CV Class A-1 (b) 82,000 894,978 40099594
Grupo Casa Autrey SA sponsored ADR (b) 6,000 146,250 40048P10
Grupo Embotellador de Mexico Class B (b) 64,000 1,174,501 40048J94
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEXICO - CONTINUED
Grupo Financiero Bancomer SA de CV sponsored ADR,
Series C (b)(f) 3,200 $ 133,600 40048610
Grupo Tribasa SA de CV sponsored ADR (b) 6,300 218,138 40049F10
Mexico Value Recovery rights (b) 12,136,000 121 59304893
Sears Roebuck de Mexico SA (b) 28,000 539,086 81240K92
Telefonos de Mexico SA sponsored ADR representing shares
Ord. Class L (b) 5,400 364,500 87940378
Tolmex B2 SA (b) 18,000 250,644 94399492
6,545,450
PANAMA - 0.2%
Panamerican Beverages, Inc. Class A 12,500 478,125 69829W10
TURKEY - 0.6%
Turkiye Garanti Bankasi ADR (b)(f) 260,000 1,820,000 90014810
TOTAL COMMON STOCKS
(Cost $14,514,498) 17,402,068
OTHER SECURITIES - 14.8%
PRINCIPAL
AMOUNT (A)
INDEXED SECURITIES - 8.0%
UNITED STATES OF AMERICA - 8.0%
Bankers Trust Company note 18.62%, 9/26/94
(coupon inversely indexed to CAD Banker's
Acceptance rate and principal indexed to
value of 1-year Canadian securities multiplied
by 13) (g)(h) $ 1,000,000 1,227,200 0669918M
Disney Corp. 0%, 9/30/94 (coupon inversely
indexed to STIBOR and principal indexed to
value of 2-year Swedish securities, both
multiplied by 8.5) (g)(h) 2,000,000 2,198,600 25469HBB
General Electric Capital Corp.:
13.31%, 10/29/96 (indexed to MXN) (g) 2,000,000 2,000,000 36962FPE
13.31%, 10/29/96 (indexed to MXN) (f)(g) 1,500,000 1,500,000 369995YN
Morgan Guaranty Trust Co.:
cert. of dep. .748%, 1/4/94 (indexed to the
change in yield on Argentina Par Bonds) 5,282,111 6,278,319 06099MAB
cert. of dep. 0%, 3/14/94 (indexed to the
change in yield on Argentina Par Bonds) 2,313,799 3,124,323 61799KAA
OTHER SECURITIES - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (A)
INDEXED SECURITIES - CONTINUED
UNITED STATES OF AMERICA - CONTINUED
Morgan Guaranty Trust Co. - continued
cert. of dep. 8.816%, 3/16/94 (indexed to the
change in yield on Mexican Par Bonds) $ 3,295,323 $ 4,387,723 61799FAH
cert. of dep. 0%, 6/6/94 (indexed to $482 par
of Westport Investments Ltd. sr. notes,
collateralized by Mexican govt. securities,
per $100 par) 1,843,443 1,767,862 61799FAE
cert. of dep. 0%, 8/22/94 (indexed to $481
par of Westport Investments Ltd. sr. notes,
collateralized by Mexican govt. securities,
per $100 par) 1,000,000 944,000 61799FAF
TOTAL INDEXED SECURITIES 23,428,027
PURCHASED BANK DEBT - 6.8%
COLOMBIA - 0.0%
Republic of Colombia amortizing
loan participation 6 3/8% 1/31/98 (g) 160,621 152,591 1953259E
ECUADOR - 2.7%
Republic of Ecuador amortizing
loan particpation 0%, 8/15/06 (g) 12,000,000 7,860,000 88399HAA
JAMAICA - 0.3%
Government of Jamaica amortizing
loan participation 4.0625%, 10/15/00 (g) 951,219 813,293 4701609B
JORDAN - 1.5%
Jordan loan participation 8 3/4%, 12/23/00 KUD 1,797,000 3,609,038
Jordan loan participation, past due interest KUD 357,511 718,013
4,327,051
POLAND - 0.8%
Polish People's Republic, past due interest CHF 1,787,467 597,624
732996AB
Polish People's Republic loan participation
6 3/8%, 1/20/02 CHF 5,000,000 1,671,707 732996AA
2,269,331
OTHER SECURITIES - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (A)
PURCHASED BANK DEBT - CONTINUED
TRINIDAD AND TOBAGO - 1.5%
Republic of Trinidad & Tobago loan participation:
Tranche A, 8.6425%, 9/30/01 (g) JPY 298,375,000 $ 2,321,361
Tranche B, 8.6425%, 9/30/01 (g) JPY 246,750,000 1,919,719
4,241,080
TOTAL PURCHASED BANK DEBT 19,663,346
TOTAL OTHER SECURITIES
(Cost $37,247,166) 43,091,373
CERTIFICATES OF DEPOSIT - 1.4%
THAILAND - 1.4%
Siam Commercial Bank TCD 7 1/4%,
11/29/96 (Cost $3,958,075) THB 100,000,000 3,931,020 7885109N
COMMERCIAL PAPER - 0.3%
MEXICO - 0.3%
Banco Nacional De Mexico SA 0%, 12/8/94
(Cost $845,533) MXN 3,090,000 894,289 0596179M
REPURCHASE AGREEMENTS - 4.7%
MATURITY
AMOUNT
UNITED STATES - 4.7%
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 3.23% dated
12/31/93 due 1/3/94 $ 13,620,665 13,617,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $269,782,418) $ 290,829,508
WRITTEN OPTIONS
EXPIRATION DATE/ UNDERLYING FACE UNREALIZED
STRIKE PRICE AMOUNT AT VALUE GAIN/(LOSS)
CALL
Call Option on VZB
(Premium received $325,500) Jan. 1994/70.75 $ 271,250 $ 54,250
THE VALUE OF WRITTEN CALL OPTIONS AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.1%
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
11,174,778 DKK
(Payable amount $1,649,049) 1/28/94 $ 1,639,891 $ (9,158)
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.6%
CONTRACTS TO SELL
181,879,080 BEF 1/26/94 to 3/16/94 $ 4,993,391 $ (17,890)
11,174,778 DKK 1/28/94 1,639,891 18,087
20,035,585 FRF 1/21/94 3,377,695 84,331
583,117,500 JPY 3/28/94 5,230,952 19,048
100,000,000 THB 1/25/94 3,914,644 33,244
TOTAL CONTRACTS TO SELL
(Receivable amount $19,293,393) $ 19,156,573 $ 136,820
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 6.6%
CURRENCY TYPE ABBREVIATIONS
ARP - Argentinean peso
BEF - Belgian franc
BRC - Brazilian cruzeiro
CAD - Canadian dollar
CSK - Czeck koruna
DKK - Danish krone
FRF - French franc
DEM - German Deutsche mark
IDR - Indonesian rupiah
JPY - Japanese yen
KUD - Kuwaiti dinar
MYR - Malaysian ringgit
MXN - Mexican peso
ZAR - South African rand
CHF - Swiss franc
THB - Thai baht
VZB - Venezuelan bolivar
LEGEND
1. Principal amount is stated in United States dollars unless otherwise
noted.
2. Non-income producing
3. Principal amount in thousands.
4. Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
5. Restricted securities - investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on the holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Komercni Banka
17%, 5/3/98 10/14/93 $ 1,040,670
6. 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 $34,065,919 or 11.9% of net
assets.
7. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
8. Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate multiplied by a specified
factor. If the floating rate is high enough, the coupon rate may be zero or
be a negative amount that is carried forward to reduce future interest
and/or principal payments. The price may be considerably more volatile than
the price of a comparable fixed rate security.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 0.7% AAA, AA, A 0.7%
Baa 0.0% BBB 0.0%
Ba 13.3% BB 16.3%
B 9.7% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings of
the sovereign credit of the issuing government. The percentage not rated by
either S&P or Moody's amounted to 56.3% including long-term debt
categorized as other securities. Non-rated securities considered to be Baa
or better quality by FMR are 23.4% of the fund's total investments.
INCOME TAX INFORMATION
At December 31, 1993, the aggregate cost of investment securities for
income tax purposes was $270,118,293. Net unrealized appreciation
aggregated $20,711,215, of which $21,251,364 related to appreciated
investment securities and $540,149 related to depreciated investment
securities.
The fund hereby designates $3,250,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS DECEMBER 31, 1993
9.Investment in securities, at value (including repurchase 10. $ 290,829,508
agreements of $13,617,000) (cost $269,782,418) (Notes 1
and 2) - See accompanying schedule
11.Long foreign currency contracts held, at value (cost 12. 1,639,891
$1,649,049) (Note 2)
13.Short foreign currency contracts (Note 2) $ (19,156,573) 14.
Contracts held, at value
15. Receivable for contracts held 19,293,393 136,820
16.Receivable for investments sold 17. 12,546,924
18.Net receivable for closed foreign currency contracts 19. 31,124
20.Receivable for fund shares sold 21. 832,295
22.Dividends receivable 23. 45,467
24.Interest receivable 25. 5,060,129
26.Receivable from investment adviser for expense 27. 63,259
reductions (Note 7)
28. TOTAL ASSETS 29. 311,185,417
LIABILITIES 30. 31.
32.Payable to custodian bank 7,357,846 33.
34.Payable for foreign currency contracts held (Note 2) 1,649,049 35.
36.Payable for investments purchased 14,515,340 37.
38.Dividends payable 389,485 39.
40.Accrued management fee 148,551 41.
42.Written options, at value (premium received $325,500) 271,250 43.
44.Other payables and accrued expenses 260,785 45.
46. TOTAL LIABILITIES 47. 24,592,306
48.NET ASSETS 49. $ 286,593,111
50.Net Assets consist of (Note 1): 51. 52.
53.Paid in capital 54. $ 257,454,650
55.Distributions in excess of net investment income 56. (119,792)
57.Accumulated undistributed net realized gain (loss) on 58. 8,029,251
investments
59.Net unrealized appreciation (depreciation) on: 60. 61.
62. Investment securities 63. 21,047,090
64. Foreign currency contracts 65. 127,662
66. Written options 67. 54,250
68.NET ASSETS, for 21,920,123 shares outstanding 69. $ 286,593,111
70.NET ASSET VALUE, offering price and redemption price per 71. $13.07
share ($286,593,111 (divided by) 21,920,123 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
MAY 4, 1993 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1993
INVESTMENT INCOME 73. $ 121,686
72.Dividends
74.Interest 75. 5,747,886
76. 77. 5,869,572
78.Less foreign taxes withheld 79. (143,616)
80. TOTAL INCOME 81. 5,725,956
EXPENSES 82. 83.
84.Management fee (Note 4) $ 538,269 85.
86.Transfer agent fees (Note 4) 339,764 87.
88.Accounting fees and expenses (Note 4) 52,922 89.
90.Non-interested trustees' compensation 342 91.
92.Custodian fees and expenses 129,189 93.
94.Registration fees 153,476 95.
96.Audit 24,431 97.
98.Legal 243 99.
100.Interest (Notes 5 and 6) 33,710 101.
102.Miscellaneous 511 103.
104. Total expenses before reductions 1,272,857 105.
106. Expense reductions (Note 7) (327,595) 945,262
107.NET INVESTMENT INCOME 108. 4,780,694
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 110. 111.
(NOTES 1, 2 AND 3)
109.Net realized gain (loss) on:
112. Investment securities 12,104,510 113.
114. Foreign currency contracts (205,595) 11,898,915
115.Change in net unrealized appreciation (depreciation) on: 116. 117.
118. Investment securities 21,047,090 119.
120. Foreign currency contracts 127,662 121.
122. Written options 54,250 21,229,002
123.NET GAIN (LOSS) 124. 33,127,917
125.NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM 126. $ 37,908,611
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C>
MAY 4, 1993
(COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31, 1993
INCREASE (DECREASE) IN NET ASSETS
127.Operations $ 4,780,694
Net investment income
128. Net realized gain (loss) on investments 11,898,915
129. Change in net unrealized appreciation (depreciation) on investments 21,229,002
130. 37,908,611
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
131.Distributions to shareholders (4,780,694)
From net investment income
132. In excess of net investment income (740,943)
133. From net realized gain (3,248,513)
134. (8,770,150)
TOTAL DISTRIBUTIONS
135.Share transactions 484,045,051
Net proceeds from sales of shares
136. Reinvestment of distributions from: 4,825,257
Net investment income
137. 3,048,378
Net realized gain
138. Cost of shares redeemed (234,464,036)
139. 257,454,650
Net increase (decrease) in net assets resulting from share transactions
140. 286,593,111
TOTAL INCREASE (DECREASE) IN NET ASSETS
NET ASSETS 141.
142. Beginning of period -
143. End of period (including distributions in excess of net investment $ 286,593,111
income
of $119,792)
OTHER INFORMATION 145.
144.Shares
146. Sold 40,919,744
147. Issued in reinvestment of distributions from: 391,513
Net investment income
148. 239,841
Net realized gain
149. Redeemed (19,630,975)
150. Net increase (decrease) 21,920,123
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C>
151. MAY 4, 1993
(COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31, 1993
152.SELECTED PER-SHARE DATA
153.Net asset value, beginning of period $ 10.000
154.Income from Investment Operations .486
Net investment income (double dagger)(double dagger)
155. Net realized and unrealized gain (loss) on investments 3.302
156. Total from investment operations 3.788
157.Less Distributions (.486)
From net investment income
158. In excess of net investment income (.062)
159. From net realized gain on investments (.170)
160. Total distributions (.718)
161.Net asset value, end of period $ 13.070
162.TOTAL RETURN (dagger)(double dagger) 38.84%
163.RATIOS AND SUPPLEMENTAL DATA
164.Net assets, end of period (000 omitted) $ 286,593
165.Ratio of expenses to average net assets (dagger)(dagger) 1.24%*
166.Ratio of expenses to average net assets before expense reductions (dagger)(dagger) 1.68%*
167.Ratio of net investment income to average net assets 6.29%*
168.Portfolio turnover rate 324%*
</TABLE>
* ANNUALIZED
(dagger) TOTAL RETURN FOR A PERIOD OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(dagger)(dagger) SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS.
(double dagger) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIOD SHOWN.
(double dagger)(double dagger) NET INVESTMENT INCOME PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE SHARE OUTSTANDING DURING THE PERIOD.
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1993
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity New Markets Income Fund (the fund) is a fund of Fidelity
Investment Trust (the trust) and is authorized to issue an unlimited number
of shares. The trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which quotations are readily available
are valued at the last sale price, or if no sale price, at the closing bid
price in the principal market in which such securities are normally traded.
Securities (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 maturing within sixty days 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, other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. The fund intends to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code. By so qualifying, the fund
will not be subject to income taxes to the extent that it distributes all
of its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income Tax
Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the funds are informed of the
ex-dividend date. Interest income, which includes accretion of original
issue discount, is accrued as earned. Investment income is recorded net of
foreign taxes where recovery of such taxes is not assured.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between 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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
mortgage-backed securities, foreign currency transactions, market discount
and losses deferred due to wash sales. The fund also utilized earnings and
profits distributed to shareholders on redemption of shares as a part of
the dividends paid deduction for income tax purposes. Permanent book and
tax basis differences relating to shareholder distributions will result in
reclassifications to paid in capital.
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.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service.
Losses may arise due to changes in the value of the foreign currency or if
the counterparty does not perform under the contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
registered investment companies having management contracts with FMR, may
transfer uninvested cash balances into a joint trading account. These
balances are invested in one or more repurchase agreements that are
collateralized by U.S. Treasury or Federal Agency obligations.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the
SEC, the fund, along with other registered investment companies having
management contracts with FMR, may
2. OPERATING POLICIES - CONTINUED
INTERFUND LENDING PROGRAM - CONTINUED
participate in an interfund lending program. This program provides an
alternative credit facility allowing the fund to borrow from, or lend money
to, other participating funds.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve, to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statement
of Assets and Liabilities. The face or contract amounts reflect the extent
of the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary
market for the instruments, or due to the inability of counterparties to
perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange 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.
INDEXED SECURITIES. The fund may invest in indexed securities whose value
is linked either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices, or other reference instruments.
Indexed securities may be more volatile than the reference instrument
itself, but any loss is limited to the amount of the original investment.
RESTRICTED SECURITIES. The fund is permitted to invest in privately placed
restricted securities. These securities 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, restricted securities
(excluding 144A issues) amounted to $1,004,163 or .4% of net assets.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $495,904,261 and $231,518,832, respectively.
THE FOLLOWING IS A SUMMARY OF THE FUND'S WRITTEN OPTIONS ACTIVITY:
SUMMARY OF WRITTEN OPTIONS
NUMBER OF AGGREGATE FACE VALUE
CONTRACTS OF CONTRACTS
Call Options on VZB:
Outstanding at May 4, 1993 - -
Contracts opened 1 $ 271,250
Contracts closed - -
Outstanding at December 31, 1993 1 $ 271,250
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 ranging from
.14% to .37% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .55%.
For the period, the management fee was equivalent to an annualized rate of
.71% of average net assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .1325% to .3700%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
SUB-ADVISER FEE. FMR, on behalf of the fund, entered into sub-advisory
agreements with affiliates of FMR. In addition, one of the sub-advisers,
Fidelity International Investment Advisors (FIIA), entered into a
sub-advisory agreement with its subsidiary, Fidelity International
Investment Advisors (U.K.) Limited (FIIAL U.K.). Under the sub-advisory
arrangements, FMR may receive investment advice and research services and
may grant the sub-advisers investment management authority to buy and sell
securities. FMR pays its sub-advisers either a portion of its management
fee or a fee based on costs incurred for these services. FIIA pays FIIAL
U.K. a fee based on costs incurred for either service.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
5. INTERFUND LENDING PROGRAM.
The fund participated in the interfund lending program as a borrower. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $17,400,000 and $7,245,600,
respectively. The weighted average interest rate was 3.56%. Interest
expense includes $21,419 paid under the interfund lending program.
6. 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. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $26,857,000 and $16,164,250,
respectively. The weighted average interest rate was 3.42%. Interest
expense includes $12,291 paid under the bank borrowing program.
7. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse the fund's operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above an annual rate of 1.20% of average net assets. For the
period, the reimbursement reduced the expenses by $327,595.
8. 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.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Investment Trust and the Shareholders of
Fidelity New Markets Income Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments (except for Moody's and Standard
& Poor's ratings), and the related statements of operation and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Fidelity New Markets Income
Fund (a fund of Fidelity Investment Trust) at December 31, 1993, and the
results of its operations, the changes in its net assets and the financial
highlights for the period indicated in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of
the Fidelity New Markets Income Fund's management; our responsibility is to
express an opinion on these financial statements based on our audit. We
conducted our audit of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit, which included
confirmation of securities owned at December 31, 1993 by correspondence
with the custodian and brokers and the application of alternative auditing
procedures where confirmations from brokers were not received, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
Boston, Massachusetts
February 7, 1994
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND
QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios.(Registered trademark)
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND
ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL VARY
AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY
HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT
MONEY MARKET
FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A
MONEY MARKET FUND
IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE
HISTORICAL AND
INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL
GAINS, AND THE
EFFECTS OF ANY SALES CHARGES. FOR MORE INFORMATION ON ANY FIDELITY FUND
INCLUDING
MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS.
READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
TO WRITE FIDELITY
Please locate the address that is closest to you. We'll give your
correspondence immediate attention and send you written confirmation upon
completion of your request. Please send ALL correspondence about retirement
accounts to Dallas.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 2269
Boston, MA 02107-2269
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30280
Salt Lake City, UT 84130-0280
(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
Additional Payments
P.O. Box 2656
Boston, MA 02293-0656
Fidelity Investments
Additional Payments
P.O. Box 620024
Dallas, TX 75262-0024
Fidelity Investments
Additional Payments
P.O. Box 31455
Salt Lake City, UT 84131-0455
OVERNIGHT EXPRESS
Fidelity Investments
Additional Payments
World Trade Center
164 Northern Avenue
Boston, MA 02210
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02103-0878
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02101-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 620024
Dallas, TX 75262-0024
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc. (FMR U.K.)
London, England
Fidelity Management & Research
(Far East) Inc. (FMR Far East)
Tokyo, Japan
Fidelity International Investment
Advisors (FIIA)
Fidelity International Investment
Advisors (U.K.) Limited (FIIAL U.K.)
Fidelity Investments Japan Ltd. (FIJ)
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
CUSTODIAN
Chase Manhattan Bank, N.A.
New York, NY
FIDELITY'S TAXABLE BOND FUNDS
Capital & Income Fund
Ginnie Mae Portfolio
Global Bond Fund
Government Securities Fund
Intermediate Bond Fund
Investment Grade Bond Fund
Mortgage Securities Portfolio
New Markets Income Fund
Short-Intermediate Government Fund
Short-Term Bond Portfolio
Short-Term World Income Fund
Spartan Ginnie Mae Fund
Spartan Government Income Fund
Spartan High Income Fund
Spartan Investment Grade Bond Fund
Spartan Limited Maturity Government
Fund
Spartan Long-Term Government Bond
Fund
Spartan Short-Intermediate Government Fund
Spartan Short-Term Income Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Exhibit 11(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting part of this
Post-Effective Amendment No. 52 to the Registration Statement on Form N-1A
(the "Registration Statement") of Fidelity Investment Trust: Fidelity
Short-Term World Income Fund and Fidelity Global Bond Fund of our reports
dated February 4, 1994, relating to the financial statements and financial
highlights, which are incorporated by reference in such Registration
Statement.
We further consent to the references to our Firm in the Prospectus and
Statement of Additional Information under the headings "Financial
Highlights" and "Auditor".
COOPERS & LYBRAND
Boston, Massachusetts
February 22, 1994
EXHIBIT 11(B)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting part of this
Post-Effective Amendment No. 52 to the registration statement on Form N-1A
(the "registration statement") of Fidelity New Markets Income Fund of our
report dated February 7, 1994 relating to the financial statements and
financial highlights appearing in the December 31, 1993 Annual Report to
Shareholders of Fidelity New Markets Income Fund which is incorporated by
reference in such Registration Statement. We further consent to the
references to us under the headings "Auditor" in the Statement of
Additional Information and "Financial Highlights" in the Prospectus.
PRICE WATERHOUSE
Boston, Massachusetts
February 18, 1994
