(2_FIDELITY_LOGOS)FIDELITY
INTERNATIONAL EQUITY
FUNDS
Broadly Diversified Funds
FIDELITY DIVERSIFIED INTERNATIONAL FUND
FIDELITY INTERNATIONAL GROWTH & INCOME FUND
FIDELITY OVERSEAS FUND
FIDELITY WORLDWIDE FUND
Regional/Single Country Funds
FIDELITY CANADA FUND
FIDELITY EUROPE FUND
FIDELITY EUROPE CAPITAL
APPRECIATION FUND
FIDELITY JAPAN FUND
FIDELITY PACIFIC BASIN FUND
Emerging Markets Funds
FIDELITY EMERGING MARKETS FUND
FIDELITY LATIN AMERICA FUND
FIDELITY SOUTHEAST ASIA FUND
ANNUAL REPORT
AND PROSPECTUS
OCTOBER 31, 1994
CONTENTS
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PRESIDENT'S MESSAGE NED JOHNSON ON OVERSEAS INVESTING.
MARKET RECAP A-5 A REVIEW OF WHAT HAPPENED IN WORLD MARKETS
DURING THE LAST YEAR.
BROADLY DIVERSIFIED FUNDS
DIVERSIFIED INTERNATIONAL FUND A-6 PERFORMANCE
A-7 FUND TALK: THE MANAGER'S OVERVIEW
A-9 INVESTMENT CHANGES
A-10 INVESTMENTS
A-14 FINANCIAL STATEMENTS
INTERNATIONAL GROWTH & INCOME FUND A-16 PERFORMANCE
A-17 FUND TALK: THE MANAGER'S OVERVIEW
A-19 INVESTMENT CHANGES
A-20 INVESTMENTS
A-25 FINANCIAL STATEMENTS
OVERSEAS FUND A-27 PERFORMANCE
A-28 FUND TALK: THE MANAGER'S OVERVIEW
A-30 INVESTMENT CHANGES
A-31 INVESTMENTS
A-36 FINANCIAL STATEMENTS
WORLDWIDE FUND A-38 PERFORMANCE
A-39 FUND TALK: THE MANAGER'S OVERVIEW
A-41 INVESTMENT CHANGES
A-42 INVESTMENTS
A-46 FINANCIAL STATEMENTS
REGIONAL/SINGLE COUNTRY FUNDS
CANADA FUND A-48 PERFORMANCE
A-49 FUND TALK: THE MANAGER'S OVERVIEW
A-51 INVESTMENT CHANGES
A-52 INVESTMENTS
A-56 FINANCIAL STATEMENTS
EUROPE FUND A-58 PERFORMANCE
A-59 FUND TALK: THE MANAGER'S OVERVIEW
A-61 INVESTMENT CHANGES
A-62 INVESTMENTS
A-65 FINANCIAL STATEMENTS
EUROPE CAPITAL APPRECIATION FUND A-67 PERFORMANCE
A-68 FUND TALK: THE MANAGER'S OVERVIEW
A-70 INVESTMENT CHANGES
A-71 INVESTMENTS
A-74 FINANCIAL STATEMENTS
JAPAN FUND A-76 PERFORMANCE
A-77 FUND TALK: THE MANAGER'S OVERVIEW
A-79 INVESTMENT CHANGES
A-80 INVESTMENTS
A-85 FINANCIAL STATEMENTS
PACIFIC BASIN FUND A-87 PERFORMANCE
A-88 FUND TALK: THE MANAGER'S OVERVIEW
A-90 INVESTMENT CHANGES
A-91 INVESTMENTS
A-97 FINANCIAL STATEMENTS
EMERGING MARKETS FUNDS
EMERGING MARKETS FUND A-99 PERFORMANCE
A-100 FUND TALK: THE MANAGER'S OVERVIEW
A-102 INVESTMENT CHANGES
A-103 INVESTMENTS
A-113 FINANCIAL STATEMENTS
LATIN AMERICA FUND A-115 PERFORMANCE
A-116 FUND TALK: THE MANAGER'S OVERVIEW
A-118 INVESTMENT CHANGES
A-119 INVESTMENTS
A-123 FINANCIAL STATEMENTS
SOUTHEAST ASIA FUND A-125 PERFORMANCE
A-126 FUND TALK: THE MANAGER'S OVERVIEW
A-128 INVESTMENT CHANGES
A-129 INVESTMENTS
A-133 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS A-135 NOTES TO THE FINANCIAL STATEMENTS
REPORTS OF INDEPENDENT ACCOUNTANTS A-139 THE AUDITORS' OPINION / COOPERS & LYBRAND
A-140 THE AUDITORS' OPINION / PRICE WATERHOUSE
FIDELITY INTERNATIONAL EQUITY P-1
FUNDS PROSPECTUS
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THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS
PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE
NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY
INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING
CHARGES AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT
CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Overseas stock markets have proven volatile - but in some instances quite
rewarding - over the past 12 months. Foreign stocks generally outperformed
their U.S. counterparts during the period. The Morgan Stanley Europe,
Australia and Far East (EAFE) index returned 10.09% during the period,
while the Standard & Poor's 500 index - a common proxy of U.S. stocks -
rose 3.87%. In my last report, I suggested that volatility is a fact of
life in international markets. Events since then have provided further
proof.
Emerging markets are a good example. For the 12 months ended October 31,
1994, the Morgan Stanley Latin America Free Index had a total return of
46.22%. That's a solid return, but how it was achieved demonstrates the
volatility inherent in investing in these markets. From November through
January, the index rose 39.82%. In the next three months, the markets
corrected and the index fell 16.39%. The index rose 32.74% through
September,
but lost nearly 5% in October. Investors who hung on during
this period enjoyed substantial returns. But they endured a bumpy ride.
Even within the same geographic region, markets can behave quite
differently. In Latin America, Brazilian stocks rose 101.59% in U.S.
dollars during the past 12 months. Yet Mexican stocks were flat by
comparison, returning 12.70 % in U.S. dollars. In Europe, selected
Scandinavian markets had strong gains. Finland was up 64.15%; Sweden was up
20.22%; Norway was up
16.48%. By comparison, some other European markets were weak. Spain
returned 1.30% for the year and France had only a 4.15% return.
Interestingly, returns in most foreign markets had one thing in common:
they were boosted by a weak U.S. dollar. The disparity between returns in
local currency and U.S. dollars varied from market to market, but the net
effect was favorable for U.S. investors. For example, Japanese stocks had a
total return, in yen, of -2.62% over the past 12 months. In U.S. dollars,
however, the market was up 8.78%. The German market, meanwhile, returned
- -0.85% in deutsche marks, but rose 10.15% in dollars. No one knows, of
course, if these enhanced foreign returns due to the weak dollar will
continue.
You may wish to keep a few time-tested principles in mind when investing
overseas. If you can tolerate the increased volatility of foreign markets
in comparison with the U.S., you may be favorably rewarded. It can help if
you diversify your investments.
You may already be diversified by holding a portion of your portfolio
overseas. You can further diversify by making sure your foreign stake
includes markets in different regions of the world. Remember that
diversification cannot eliminate risk, but may reduce it.
Finally, you may want to consider a plan for making regular investments.
Investing a fixed amount each month or each quarter cannot guarantee a
profit or protect against a loss in a declining market. It may, however,
keep you from investing large amounts when markets are at high levels.
If we can be of any assistance, please contact us at 1-800-544-8888. We
look forward to hearing from you.
Sincerely,
Edward C. Johnson 3d
S&P 500 EAFE
* YEAR TO DATE THROUGH OCTOBER 31, 1994
Row: 1, Col: 1, Value: 22.38
Row: 1, Col: 2, Value: 23.69
Row: 2, Col: 1, Value: 6.1
Row: 2, Col: 2, Value: 7.38
Row: 3, Col: 1, Value: 31.57
Row: 3, Col: 2, Value: 56.16
Row: 4, Col: 1, Value: 18.56
Row: 4, Col: 2, Value: 69.44000000000001
Row: 5, Col: 1, Value: 5.1
Row: 5, Col: 2, Value: 24.63
Row: 6, Col: 1, Value: 16.61
Row: 6, Col: 2, Value: 28.27
Row: 7, Col: 1, Value: 31.69
Row: 7, Col: 2, Value: 10.53
Row: 8, Col: 1, Value: -3.1
Row: 8, Col: 2, Value: -23.45
Row: 9, Col: 1, Value: 30.47
Row: 9, Col: 2, Value: 12.13
Row: 10, Col: 1, Value: 7.619999999999999
Row: 10, Col: 2, Value: -12.17
Row: 11, Col: 1, Value: 10.08
Row: 11, Col: 2, Value: 32.56
Row: 12, Col: 1, Value: -2.56
Row: 12, Col: 2, Value: 7.89
%
MARKET RECAP
After producing unusually strong returns in 1993, many overseas markets saw
increased volatility during 1994. Several emerging markets experienced
corrections after reaching high levels in 1993. Returns in other markets
were dampened by rising interest rates and fears of inflation that could
result from expanding economies. For the 12 months ended October 31, 1994,
the Morgan Stanley EAFE index - which measures stock performance in Europe,
Australia and the Far East - had a total return of 10.09%.
AVERAGE ANNUAL STOCK MARKET RETURNS
TEN YEARS
Row: 1, Col: 1, Value: 20.79
Row: 2, Col: 1, Value: 20.3
Row: 3, Col: 1, Value: 20.17
Row: 4, Col: 1, Value: 19.61
Row: 5, Col: 1, Value: 18.64
Row: 6, Col: 1, Value: 18.19
Row: 7, Col: 1, Value: 17.68
Row: 8, Col: 1, Value: 17.64
Row: 9, Col: 1, Value: 13.59
Row: 10, Col: 1, Value: 13.6
Row: 11, Col: 1, Value: 7.94
50%
40%
30%
20%
10%
0%
ONE YEAR
Row: 1, Col: 1, Value: 17.0
Row: 2, Col: 1, Value: 4.149999999999999
Row: 3, Col: 1, Value: 12.33
Row: 4, Col: 1, Value: 1.3
Row: 5, Col: 1, Value: 10.89
Row: 6, Col: 1, Value: 10.15
Row: 7, Col: 1, Value: 8.779999999999999
Row: 8, Col: 1, Value: 18.64
Row: 9, Col: 1, Value: 11.51
Row: 10, Col: 1, Value: 3.72
Row: 11, Col: 1, Value: 3.09
50%
40%
30%
20%
10%
0%
CHARTS SHOW THE PERFORMANCE OF THE MORGAN STANLEY CAPITAL INTERNATIONAL'S
UNMANAGED STOCK INDEXES FOR THE 10 LARGEST INTERNATIONAL MARKETS PLUS THE
UNITED STATES. AVERAGE ANNUAL TOTAL RETURNS, AS MEASURED IN U.S. DOLLARS,
INCLUDE PRICE CHANGES, DIVIDENDS PAID ON THE STOCKS, AND THE EFFECT OF
REINVESTING DIVIDENDS (NET OF FOREIGN TAXES). BROKERAGE COMMISSIONS AND
OTHER
FEES ARE NOT INCLUDED. RESULTS ARE HISTORICAL FOR THE PERIODS ENDED OCTOBER
31,
1994 AND DO NOT INDICATE FUTURE MARKET OR FIDELITY FUND PERFORMANCE.
EUROPE: European markets produced mixed results. The Morgan Stanley Europe
index rose 11.24% during the 12 months ended October 31. Many European
economies began to recover in 1994. In several nations, however, the
positive effects of that growth on corporate earnings were outweighed by
the negative effects of higher interest rates. Rates rose both on fears
that improving economies might trigger inflation and in sympathy to rate
hikes in the United States. Generally, major European markets such as
France and the U.K. produced lackluster returns; Germany fared somewhat
better. Conversely, Scandinavian markets surged. Finland, Norway and Sweden
experienced strong export growth. Previous currency devaluations and
effective cost cutting made Scandinavian companies more competitive in the
world marketplace.
JAPAN AND THE FAR EAST: Japan's stock market showed improvement in 1994 as
the country's economy appeared to emerge from a long recession. According
to Morgan Stanley Capital International, Japanese stocks rose 8.78% in U.S.
dollars over the 12 months ended October 31. In late 1993, the Japanese
stock market was historically inexpensive. A large inflow of foreign
capital combined with the spark of economic growth caused stocks to surge
in January and February 1994. The rally couldn't be sustained, however, and
Japanese stocks gave back some of their gains over the summer. Meanwhile,
the Morgan Stanley Far East ex-Japan index - a measure of Far East markets
excluding Japan - rose 15.46% during the period, mainly on the strength of
gains made in late 1993. Hong Kong stocks, in particular, corrected sharply
in 1994, but still rose nearly 5% for 12-month period.
EMERGING MARKETS: Emerging markets were among the most volatile - but
ultimately the most rewarding - over the past year. The Morgan Stanley
Emerging Markets Free index had a total return of 29.36% for the 12 months
ended October 31. Most of these markets - from the Pacific Rim to Latin
America - had strong gains in late 1993, thanks to positive government
reforms that fueled economic growth and to a huge inflow of money from
foreign investors. As stock prices relative to earnings reached high levels
by early 1994, many emerging markets began corrections that lasted several
months. Over the summer, however, strong earnings growth and more
attractive valuations gave rise to another rally in many emerging markets.
The top performing market through October 1994 was Brazil, whose government
recently implemented a successful plan to fight inflation. Other emerging
markets making strong gains in 1994 included Chile, South Korea and India.
U.S. AND CANADA: Rising interest rates contributed to below average returns
in the U.S. stock market during the period. The Standard & Poor's Composite
Index of 500 Stocks was up 3.87% - below its historical annual average
return of more than 10%. When the U.S. market did make upward moves, it did
so largely on the strength of improving corporate earnings. Many U.S.
corporations recorded record profits in 1994. Canadian stocks fared
somewhat worse over the past 12 months. Stocks included in the Toronto
Stock Exchange 300 Index returned 0.73% for the period.
BONDS: Many global bond markets were hurt by rising interest rates during
the 12 months ended October 31. Yields rose - and prices fell - on most
fixed-income investments. From February through August 1994, the Federal
Reserve Board raised U.S. short-term interest rates five times. Higher
rates followed in many foreign countries; the sell-off was most pronounced
in emerging markets such as Argentina. For the 12 months ended October 31,
the J.P. Morgan Emerging Markets Bond Index had a total return of -9.41%.
That trailed the Lehman Brothers Aggregate Bond Index - a broad measure of
taxable bonds in the U.S. market - which returned -3.67%.
DIVERSIFIED INTERNATIONAL
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
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (income) and capital gains (the profits the
fund earns when it sells stocks that have grown in value). Diversified
International has a 3% sales charge, which has been waived since the fund's
start on December 27, 1991 through June 30, 1995.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1994 YEAR FUND
DIVERSIFIED INTERNATIONAL 11.14% 27.29%
Morgan Stanley GDP-
weighted EAFE Index 10.32% 38.86%
Average International Fund 10.59% n/a
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
December 27, 1991. You can compare the fund figures to the performance of
the Morgan Stanley GDP-weighted EAFE index - a broad measure of the
performance of stocks in Europe, Australia, and the Far East, weighted by
each country's gross domestic product. You can also compare the fund's
performance to the average international fund which currently reflects the
performance of 149 funds with similar objectives tracked by Lipper
Analytical Services. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1994 YEAR FUND
DIVERSIFIED INTERNATIONAL 11.14% 8.84%
Morgan Stanley GDP-
weighted EAFE Index 10.32% 12.21%
Average International Fund 10.59% n/a
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
Diversified International (325) Morgan Stanley GDP
12/27/91 10000.00 10000.00
12/31/91 10060.00 10275.57
01/31/92 9860.00 10188.63
02/29/92 9680.00 10050.14
03/31/92 9140.00 9554.95
04/30/92 9240.00 9638.28
05/31/92 9750.00 10205.78
06/30/92 9540.00 9873.69
07/31/92 9190.00 9524.06
08/31/92 9350.00 9997.89
09/30/92 9140.00 9631.08
10/31/92 8460.00 9240.11
11/30/92 8460.00 9285.20
12/31/92 8671.06 9283.63
01/31/93 8873.42 9391.13
02/28/93 9176.95 9719.67
03/31/93 9915.56 10383.39
04/30/93 10522.64 11339.71
05/31/93 10785.70 11516.97
06/30/93 10482.17 11317.62
07/31/93 10805.94 11658.22
08/31/93 11362.42 12512.58
09/30/93 11210.66 12250.09
10/31/93 11453.49 12586.98
11/30/93 11028.53 11584.19
12/31/93 11850.64 12399.01
01/31/94 12739.44 13347.09
02/28/94 12484.04 13273.82
03/31/94 12085.61 13083.23
04/30/94 12320.58 13744.12
05/31/94 12300.15 13428.70
06/30/94 12136.69 13422.75
07/31/94 12555.55 13734.43
08/31/94 12872.25 13967.08
09/30/94 12504.47 13476.08
10/31/94 12729.22 13885.61
Let's say you invested $10,000 in Fidelity Diversified International Fund
on its start date. By October 31, 1994, it would have grown to $12,729 - a
27.29% increase on your initial investment. That compares to $10,000
invested in the Morgan Stanley GDP-weighted EAFE index, which would have
grown to $13,886 over the same period - a 38.86% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
(checkmark)
DIVERSIFIED INTERNATIONAL
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Greg Fraser,
Portfolio Manager of Fidelity Diversified International Fund
Q. GREG, HOW DID THE FUND DO?
A. The fund returned 11.14% for the year ended October 31, 1994. That's
right in line with the average international fund tracked by Lipper
Analytical Services, which was up 10.59%. It's also slightly better than
the Morgan Stanley GDP-weighted EAFE index, a broad measure of stock
performance in Europe, Australia and the Far East adjusted to reflect the
size of each country's economy, which was up 10.32% for the same time
period.
Q. WHAT FACTORS CONTRIBUTED TO PERFORMANCE?
A. The factors mostly had to do with country weightings. As I've discussed
in past reports, a variety of computer models help me to decide which
country weightings to change. I reduced investments in some countries over
the past six months either because their recoveries were late in the cycle
and I didn't see much growth potential, or because their interest rate
environments became much less positive. Conversely, in countries where
weightings increased, it was because I found compelling stock stories by
using individually stock-oriented computer models. Based on that
information I added to my holdings, rather than intentionally increasing
investments in that particular country due to external economic influences.
Q. CAN YOU GIVE US SOME EXAMPLES?
A. Sure. Japan's weighting, still the largest in the fund at around 26%,
has slightly decreased because I found attractive investments in other
markets. One of those markets was Canada. In the past six months I've
increased my stake in Canada from about 2.4% to 5.4% of the fund. It's not
the investing environment in Canada per se - just a couple of good stock
finds. The first is Alcan Aluminium, which I bought when the demand for
aluminum began to increase. Another is Dominion Textile, a company that
does a lot of business in the U.S., yet is traded at a much lower valuation
compared to similar U.S. companies. Both stocks are new to the fund. In
France, however, the story is different. France's weighting fell from 10.3%
to 7.9% in the past six months because I was looking for further interest
rate declines that just didn't happen. Around the start of the year, rates
began to rise in the United States, and the rest of the world, and France
became a less attractive market.
Q. HAVE YOU INCREASED YOUR INVESTMENTS IN EMERGING MARKETS?
A. Last year at this time I stated that emerging markets were an area in
which the fund's stake was likely to increase - and it did. My total
exposure to emerging markets, excluding Hong Kong, was under 5% six months
ago, now it's near 10%. I expect to increase my exposure in the months to
come.
Q. WHAT'S YOUR STRATEGY IN THE SOMETIMES VOLATILE EMERGING MARKETS?
A. I think there continues to be growth opportunities in the emerging
markets. As I find reasonable ways to make use of those opportunities, the
weightings will increase. One of my strategies is to play the emerging
markets through large infrastructure companies. In that way, the political
and economic risks associated with emerging markets are tempered because
these companies are extremely important to their country's well-being. One
example is Korea Electric Power, one of the largest names in Korea, which
just listed on the New York Stock Exchange. It is a very effective way to
play growth in the Korean economy since consumption of electricity should
continue to rise as the economy develops. Another company that fits into
this strategy is Telebras, the Brazilian telephone company. I'm taking it
slow, but my investments in emerging markets probably will continue to grow
in prudent and measured ways.
Q. WHAT ROLE HAVE DERIVATIVES PLAYED IN THE FUND?
A. Derivatives, which are financial instruments whose value "derives" from
something else such as currencies, interest rates or indices, have played a
minor role in the fund this year. I need to be convinced that a derivative
will add value to my fund before I decide to use it. Occasionally, I use
foreign currency contracts to hedge the fund's currency exposure, and for
this fiscal year, a portion of the fund's yen and deutsche mark exposure
was hedged.
Q. ANY DISAPPOINTMENTS RECENTLY?
A. Generally, the rapid increase of interest rates in Europe was a
disappointment. With high levels of unemployment across Europe, I thought
that higher interest rates would be unacceptable. A more specific
disappointment was that the Deutsche Bank saga continued. In the last
report, I explained that the bank's stock price declined after it sustained
losses from a loan it made to a German developer who fled the country. I
held on to the stock, believing it would be a solid performer as the German
economy continued to recover. And it would have performed better had the
bank not made a series of large loans to Metallgesellschaft, whose U.S.
affiliate lost more than $1.0 billion from misplaced bets on oil futures. I
thought the problems were over with the German developer; it just goes to
show, international investing is not without risk. While I still like
Deutsche Bank, I've trimmed my holdings somewhat.
Q. OUTSIDE OF DEUTSCHE BANK, WHY DO THERE CONTINUE TO BE ONLY MODEST
AMOUNTS OF CHANGE IN THE FUND'S TOP 10 INVESTMENTS?
A. The few changes in the holdings reflect the fund's value philosophy.
There's a moderate amount of turnover because I believe that companies that
are undervalued can stay undervalued for a period of time. I've
intentionally accumulated positions in more liquid stocks, a reflection of
caution on my part since names such as Hitachi and Matsushita could be sold
to raise cash if necessary.
Q. WHAT DO YOU SEE HAPPENING IN THE COMING MONTHS?
A. I'm being cautious in the near term. As interest rates continue to rise
worldwide, bonds and other fixed-income alternatives become increasingly
competitive with stock investments. However, in the long term I continue to
expect investment in foreign markets to do well, especially the emerging
markets. The fund is being positioned for greater growth in the years
ahead.
FUND FACTS
GOAL: to increase the value of the fund's shares
by investing mainly in countries included in the
Morgan Stanley GDP-weighted EAFE (Europe,
Australia, Far East) index, with help from
quantitative computer models
START DATE: December 27, 1991
SIZE: as of October 31, 1994, more than $351 million
MANAGER: Gregory Fraser, since December
1991; manager, Fidelity Select Defense and
Aerospace Portfolio, 1989-1990; and Fidelity Select
Environmental Services Portfolio, 1991; joined
Fidelity in 1986
(checkmark)
GREG FRASER ON FOREIGN CURRENCY EXPOSURE:
"Somewhat unexpectedly, the dollar has been weak
against most major currencies. For U.S. dollar-based
investors who have invested in funds such as Fidelity
Diversified International - which have hedged only
modestly or not at all - the weak dollar has really
helped returns. In the nearly 10 years that the dollar
has been generally weak, dollar depreciation has
been the wind in the sails of international funds. What
investors have to understand is that this trend can
reverse itself quickly and forcefully. To illustrate my
point, imagine this scenario: a trade agreement
between the U.S. and Japan combined with a forceful
lift in U.S. interest rates could lead to a significant
increase in the dollar's value vis-a-vis the yen. Unless
I hedged the Japanese exposure, a development such
as this could be quite painful to the fund's
shareholders. Over time, there is probably some cost
to performance from hedging, akin to buying
insurance. So I only hedge occasionally and modestly.
It's also important for shareholders to know that
currency values don't go up and down in a straight
line."
DISTRIBUTIONS
The Board of Trustees of Fidelity Diversified
International Fund voted to pay on December 12,
1994, to shareholders of record at the opening of
business on December 9, 1994, a distribution of $.39
derived from capital gains realized from sales of
portfolio securities and a dividend of $.03 from net
investment income.
DIVERSIFIED INTERNATIONAL
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION
AS OF OCTOBER 31, 1994
United States 7.5%
Netherlands 3.8%
United
Kingdom 5.1%
Row: 1, Col: 1, Value: 7.5
Row: 1, Col: 2, Value: 5.1
Row: 1, Col: 3, Value: 5.4
Row: 1, Col: 4, Value: 24.3
Row: 1, Col: 5, Value: 3.0
Row: 1, Col: 6, Value: 25.6
Row: 1, Col: 7, Value: 3.7
Row: 1, Col: 8, Value: 4.4
Row: 1, Col: 9, Value: 9.300000000000001
Row: 1, Col: 10, Value: 7.9
Row: 1, Col: 11, Value: 3.8
France 7.9%
Canada 5.4%
Germany 9.3%
Italy 4.4%
Hong Kong 3.7%
Other 24.3%
Spain 3.0%
Japan 25.6%
AS OF APRIL 30, 1994
United States 7.0%
Australia 4.7%
United
Kingdom 7.2%
Row: 1, Col: 1, Value: 7.0
Row: 1, Col: 2, Value: 7.2
Row: 1, Col: 3, Value: 3.7
Row: 1, Col: 4, Value: 22.4
Row: 1, Col: 5, Value: 3.3
Row: 1, Col: 6, Value: 28.0
Row: 1, Col: 7, Value: 4.4
Row: 1, Col: 8, Value: 9.0
Row: 1, Col: 9, Value: 10.3
Row: 1, Col: 10, Value: 4.7
France 10.3%
Switzerland 3.7%
Germany 9.0%
Italy 4.4%
Other 22.4%
Netherlands 3.3%
Japan 28.0%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks and closed-end
investment companies 92.5 92.5
Bonds - 0.5
Short-term investments 7.5 7.0
TOP TEN STOCKS
<TABLE>
<CAPTION>
<S> <C> <C>
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Veba AG Ord.
(Germany, Electric Utilities) 1.9 -
Hitachi Ltd.
(Japan, Electronics) 1.8 2.2
Matsushita Electric Industrial Co. Ltd.
(Japan, Consumer Electronics) 1.4 1.9
Bayer AG
(Germany, Chemicals & Plastics) 1.4 1.4
TDK Corp.
(Japan, Electronics) 1.4 1.0
Sony Corp.
(Japan, Consumer Electronics) 1.4 1.7
Nomura Securities Co. Ltd.
(Japan, Securities Industry) 1.3 1.3
Nokia AB Free shares
(Finland, Industrial Machinery & Equipment)
1.3 1.3
Toyota Motor Corp.
(Japan, Autos, Tires, & Accessories) 1.2 1.1
Stet (Societa Finanziaria Telefonica Spa) Ord.
(Italy, Telephone Services)
1.2 1.5
</TABLE>
TOP TEN INDUSTRIES
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 16.7 17.9
Durables 10.3 12.0
Utilities 9.7 6.1
Basic Industries 9.6 8.4
Energy 6.6 5.4
Technology 6.5 9.2
Industrial Machinery & Equipment 6.2 6.2
Health 5.8 3.7
Nondurables 5.1 7.2
Construction & Real Estate 5.0 4.6
DIVERSIFIED INTERNATIONAL
INVESTMENTS OCTOBER 31, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.7%
SHARES VALUE (NOTE 1)
ARGENTINA - 1.7%
Banco de Galicia Y Buenos Aires SA
sponsored ADR representing Class B
shares 70,000 $ 1,890,161 05953820
Banco Frances del Rio de la
Plata SA ADR 70,000 1,793,750 05959110
Telecom Argentina Stet France
Telecom SA 200,000 1,216,426 90899992
YPF Sociedad Anonima sponsored ADR
representing Class D shares 50,000 1,206,250 98424510
6,106,587
AUSTRALIA - 1.5%
Alcan Australia Ltd. (a) 250,000 573,775 06099G92
Boral Ltd. Ord. 308,700 774,991 09950910
CSR Ltd. 300,000 1,042,821 12639610
Caltex Australia Ltd. 500,000 1,151,265 13199392
National Australia Bank Ltd. 50,000 395,143 63252510
Pioneer International Ltd. 100,000 242,137 72371110
Santos Ltd. 419,899 1,235,045 80302110
5,415,177
BELGIUM - 0.6%
Union Miniere SA (a) 20,000 1,772,602 90707392
Union Miniere SA (warrants) (a) 20,000 186,317 90707393
1,958,919
BERMUDA - 0.3%
Jardine Strategic Holdings Ltd. Ord. 300,000 1,153,101 47199020
BRAZIL - 0.6%
Telebras PN (Pfd. Reg.) 45,000,000 2,168,550 95499792
CANADA - 4.9%
Alcan Aluminium Ltd. 100,000 2,678,538 01371610
American Barrick Resources Corp. 90,000 2,144,678 02451E10
Cambridge Shopping Centres Ltd. 78,400 774,818 13250910
Canadian Tire Corp. Ltd. Series A 50,000 411,017 13668120
Dominion Textile, Inc. (a) 400,000 2,660,064 25754310
FCA International Ltd. (a) 150,300 455,337 30290110
Hudsons Bay Co. Ord. 50,000 997,525 44420410
Intera Information Technologies Corp.
Class A (a) 49,000 199,136 45837K10
Noranda, Inc. 100,000 1,958,104 65542210
Norcen Energy Resources Ltd. 100,000 1,293,088 65549285
Nowsco Well Service Ltd. 51,600 724,425 67012210
Placer Dome, Inc. 95,000 2,053,238 72590610
Royal Oak Mines, Inc. 45,000 182,880 78051D10
TVX Gold, Inc. 85,000 612,369 87308K10
Wascana Energy, Inc. (a) 50,000 438,726 93690110
17,583,943
FINLAND - 2.4%
Cultor OY Series 2 Ord. 30,000 880,244 23099093
Instrumentarium OY Class B 57,200 1,417,257 45780510
Metsa-Serla Ltd. Class B 20,000 930,233 59299992
Nokia AB Free shares 30,000 4,518,583 65599992
Repola OY 38,700 811,682 75999A92
8,557,999
FRANCE - 7.9%
Alcatel Alsthom Cie Generale
d' Electricite SA 8,253 756,906 01390492
BHV (Bazar de l'Hotel de Ville) SA 10,000 1,103,663 06690099
Bon Marche SA 10,000 1,713,786 09799492
SHARES VALUE (NOTE 1)
CGIP 12,000 $ 2,784,028 12506610
Credit Commercial de France Ord. 277 834 22499398
De Dietrich et CIE 2,500 1,258,137 24699293
Elf Sanofi SA 32,000 1,616,011 91399A92
Eridania Beghin Say Group Ord. 10,000 1,354,319 07720310
Europeene de Propulsion SA 21,455 1,250,656 29899792
Finextel 50,000 971,534 32299292
I.D.I.A. SA 23,500 739,726 45199D22
Lafarge Coppee SA 22,419 1,778,622 50586310
Peugeot SA Ord. (a) 12,000 1,797,727 71682510
Radiotechnique 10,000 979,306 75044610
Schneider SA 20,833 1,566,574 80687410
Societe Generale Class A 20,000 2,257,845 83357799
Technip SA (b) 40,000 1,996,698 87899D23
Total SA Class B 40,160 2,605,542 20434510
Vallourec SA (a) 30,000 1,629,263 92017610
28,161,177
GERMANY - 8.4%
Andreae-Noris Zahn AG 15,000 3,600,998 03499892
Bayer AG 21,000 4,914,314 07273010
Commerzbank AG 9,000 1,894,264 20259710
Continental Gummi-Werke AG 10,000 1,470,989 21199010
Deutsche Bank AG 8,000 3,942,145 25152592
Hoechst AG Ord. 15,000 3,284,788 43439010
Karstadt AG 4,000 1,651,870 48576499
Pfaff (G.M.) AG Ord. (a) 4,000 484,123 71699592
Thyssen AG Ord. 10,000 1,910,557 88629110
Veba AG Ord. 20,000 6,703,242 92239110
29,857,290
HONG KONG - 3.7%
Cheung Kong Holdings Ltd. 500,000 2,407,145 16674410
China Light & Power Co. Ltd. 210,000 1,092,533 16940010
Dairy Farm International Holdings
Ltd. Ord. 566,038 736,206 23385910
Henderson Land Development Co. Ltd. 100,000 653,552 42599010
Hong Kong Telecommunications Ltd. 500,000 1,070,920 43857991
Hong Kong Electric Holdings Ltd. Ord. 150,000 471,723 43858010
Hong Kong Land Holdings Ltd. 2,917 7,475 43858292
Hutchison Whampoa Ltd. Ord. 500,000 2,310,080 44841510
Jardine Matheson Holdings Ltd. Ord. 150,024 1,247,450 47111510
Lai Sun Garment International Ltd. 300,000 572,667 50699093
Mandarin Oriental International
Ltd. Ord. 400,000 528,020 56259499
Sun Hung Kai Properties Ltd. 200,500 1,530,930 86676H10
Winsor Industrial Corp. Ltd. 300,000 396,015 97551099
13,024,716
INDIA - 0.3%
Bajaj Auto Ltd. GDR (b) 16,000 405,280 05710010
Reliance Industries Ltd. GDR (b) 30,000 757,500 75947010
1,162,780
IRELAND - 0.9%
Bank of Ireland U.S. Holdings, Inc. 150,000 697,001 06278793
Elan Corp PLC ADR (a) 12,400 457,250 28413120
Independent Newspapers PLC 192,496 881,867 45399E92
IAWS Group PLC Class A (UK Reg.) 200,000 294,508 45399H23
Waterford Foods PLC Class A 500,000 736,265 94199392
3,066,891
ITALY - 3.9%
Assicurazioni Generali Spa 110,000 2,748,891 04542910
Fiat Spa (a) 550,000 2,249,038 31562110
Istituto Mobiliare Italiano 100,000 656,427 45777M92
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ITALY - CONTINUED
Stet (Societa Finanziaria Telefonica
Spa) Ord. 1,400,000 $ 4,233,264 85982510
Telecom Italia Ord. 1,476,010 4,038,496 87999R22
13,926,116
JAPAN - 25.6%
Akita Bank Ltd. 100,000 834,838 00999692
Aisin Seiki Co. Ltd. 50,000 758,475 00999999
Aplus Co. Ltd. 150,000 735,257 03899A92
Canon, Inc. 120,000 2,228,987 13780199
Daidoh Ltd. 150,000 1,424,075 56299292
Dai-Tokyo Fire & Marine Insurance Ord. 300,000 2,287,809 23399210
Daiwa Securities Co. Ltd. 175,000 2,546,308 23499010
Dowa Fire & Marine Industries Co. Ltd. 100,000 674,888 26099192
Ezaki Glicko Co. Ltd. 75,000 789,433 30199492
Fuji Photo Film Co. Ltd. 50,000 1,191,889 35958610
Fuji Oil Co. Ltd. 150,000 1,391,570 35999310
Hanshin Department Store Ltd. 242,000 1,960,374 41199292
Hitachi Ltd. 600,000 6,253,548 43357810
Honda Motor Co. Ltd. 100,000 1,743,976 43812810
House Food Industrial Co. Ltd. 55,000 1,163,511 44144610
Hisamitsu Pharmaceutical Co., Inc. 100,000 846,190 46699092
Izumiya Co. Ltd. 100,000 1,888,447 46599310
Kao Corp. 275,000 3,263,505 48599210
Kasumi Stores 80,000 738,868 48599310
Kirin Brewery Co. Ltd. 225,000 2,693,360 49712510
Konica Corp. 150,000 1,164,027 50046M10
Matsushita Electric Industrial Co. Ltd. 300,000 4,984,263 57687910
Matsuyadenki Co. Ltd. (a) 60,000 712,037 57699890
Mitsubishi Heavy Industries Ltd. 200,000 1,628,398 60699310
Nomura Securities Co. Ltd. 225,000 4,713,379 65536110
Nissei Sangyo Co. Ltd. 100,000 1,444,714 66699592
Obayashi Corp. 200,000 1,428,202 67090410
Omron Corp. 100,000 1,805,892 68215110
Pokka Corp. 50,000 712,038 73299999
Renown Look, Inc. 70,000 635,674 75999J22
Ricoh Co. Ltd. Ord. 200,000 1,991,642 76565999
Royal Co. Ltd. 150,000 2,430,215 77999110
Sekisui House Ltd. 150,000 1,702,698 81607810
Sekisui Chemical Co. Ltd. 250,000 2,566,948 81699210
Shintokogio Ltd. 80,000 734,740 97199392
Shionogi & Co. Ltd. 100,000 927,713 82434910
Sony Corp. 80,000 4,879,006 83569999
TDK Corp. 100,000 4,912,027 87235110
Takeda Chemical Industries Ltd. 300,000 3,714,978 87405810
Tokyo Style Co. Ltd. 100,000 1,733,657 88999410
Toshiba Corp. 275,000 2,168,103 89149310
Toyota Motor Corp. 200,000 4,416,696 89399999
Toenec Corp. 55,000 647,026 96599592
Yamaha Motor Co. Ltd. 100,000 919,457 98456092
Yamatake-Honeywell Co. Ltd. 130,000 1,945,204 98491099
Zenitaka Corp. 150,000 1,191,890 64099292
91,525,932
KOREA (SOUTH) - 1.4%
Korea Electric Power Corp. ADR 155,760 3,037,320 50063110
Samsung Electronics Co. Ltd.:
GDS (b) 30,000 1,800,000 79605020
GDR (New) (a)(b) 1,516 90,960 79605030
GDR Part Dividend (b) 1,305 42,415 79605080
4,970,695
LUXEMBOURG - 0.2%
Minorco SA sponsored ADR 30,000 798,750 60434030
SHARES VALUE (NOTE 1)
MEXICO - 1.5%
BANACCI SA de CV Class C 124,000 $ 851,193 06399893
Cemex SA, Series B 218,750 2,016,980 15299293
Grupo Carso SA de CV Class A-1 (a) 130,000 1,382,053 40099594
Grupo Financiero Bancomer SA de CV
sponsored ADR, Series C (b) 50,000 1,150,000 40048610
5,400,226
NETHERLANDS - 3.8%
ABN-AMRO Holdings NV 25,500 906,337 00399192
AKZO Nobel NV Ord. 7,000 884,294 01019910
Borsumij Wehry NV 26,225 434,153 09985610
Internationale Nederlanden Groep NV 25,375 1,187,971 46099892
Koninklijke PTT Nederland (b) 42,300 1,347,837 72699423
KLM Royal Dutch Airlines (a) 33,900 940,725 48251610
Philips Electronics 55,000 1,821,041 71833799
Pirelli Tyre Holdings NV Ord. 46,000 319,349 72499092
Royal Dutch Petroleum Co. 25,000 2,912,500 78025770
Telegraaf 15,000 1,691,094 87940410
Twentsche Kabel Holding NV 10,000 1,157,064 91030099
13,602,365
NETHERLANDS ANTILLES - 0.6%
Intrum Justtia NV (Reg.) 160,000 201,574
Schlumberger Ltd. 35,000 2,056,250
2,257,824
NEW ZEALAND - 1.3%
Brierley Investments Ltd. 5,078,459 3,818,747 10901410
Fletcher Challenge Ltd. (Reg.) 300,000 809,883 33999592
4,628,630
NORWAY - 1.7%
Orkla AS Class B (non-vtg.) 20,000 573,526 39299192
Norsk Hydro AS ADR 82,956 3,338,979 65653160
Saga Petroleum AS Class B 100,000 1,139,405 84099794
Unitor AS 60,500 1,091,840 91699392
6,143,750
PANAMA - 0.3%
Banco Latino Americano de Exportaciones
SA Class E 25,000 928,125 06199A92
SINGAPORE - 0.1%
Hour Glass Ltd. 394,500 451,470 44199E22
SOUTH AFRICA - 0.3%
Rustenberg Platinum Holding Ltd. ADR (a) 35,000 997,500 78307820
SPAIN - 2.3%
Banco Popular Espanol 2,500 313,573 05999110
Corporacion Bancaria de Espana SA
sponsored ADR 60,000 1,155,000 21991310
Empresa Nacional de Electricidad SA
sponsored ADR 15,000 688,125 29244720
Electric Zaragosa 9,375 238,024 29599192
Hidroelectrisa de Cantabrico SA 50,000 1,516,966 42899999
Repsol SA sponsored ADR 30,000 975,000 76026T20
Telefonica de Espana SA sponsored ADR 35,000 1,417,500 87938220
Union Electrica Fenosa SA 400,000 1,839,520 90659510
8,143,708
SWEDEN - 2.1%
Astra AB Class A Free shares 100,000 2,717,220 04632292
Mo Och Domsjoe (Modo) AB (a) 20,000 916,451 61399792
Pharmacia AB Class A Free shares 200,000 3,799,918 71713093
7,433,589
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWITZERLAND - 2.3%
Also Holding AG (Reg.) (a) 5,400 $ 1,031,437 02199F93
Bank of International Settlements 100 811,779 06299B22
Bucher Holding AG : 08699292
(Bearer) 1,800 1,017,111 08699292
(warrants) (a) 2,000 2,388 08699293
CIBA-GEIGY AG (Reg.) 320 186,423 17199492
CIBA-GEIGY AG (warrants) (a) 120 315 17199494
Georg Fischer AG (Bearer) (a) 700 807,799 33771110
Industrieholding Cham AG (Reg.) 1,200 792,678 85599922
Nestle SA (Reg.) 1,000 934,341 64106992
Oerlikon-Buhrle Holding Ltd. (Reg.) (a) 10,000 1,034,620 67199092
Prodega AG (Bearer) 800 713,092 74599992
Sandoz AG (Reg.) 500 249,105 80005292
Sulzer Gebrueder AG (Part. Cert.) 1,000 688,420 86557799
Swiss Reinsurance Corp. Class B
(warrants) (a) 1,000 7,959 87099399
8,277,467
UNITED KINGDOM - 5.1%
Amstrad PLC 600,000 274,872 03299110
ASDA Group PLC 100,000 99,805 04399110
BAT Industries PLC Ord. 90,000 644,971 05527010
British Petroleum PLC: 11088940
ADR 35,236 2,995,060 11088940
Ord. 3 21 11088910
British Telecommunications PLC Ord. 125,000 805,804 11102110
Clinton Cards PLC 92,900 148,959 18799292
Finlay (James) PLC 200,000 245,422 31799F92
Guinness PLC Ord. 100,000 767,354 40203310
Imperial Chemical Industries PLC Ord. 100,000 1,307,284 45270440
Invesco Mim PLC 400,000 1,066,768 46199C92
Lonrho PLC Ord. 155,067 332,364 54337410
Northumbtian Water Croup PLC Ord. 150,000 1,725,320 67299295
Royal Insurance Holdings PLC 405,084 1,938,627 78074910
Standard Chartered Bank PLC 206,358 992,640 85256810
Tesco PLC Ord. 44,939 172,788 88157510
Vsel Consortium PLC 40,000 912,972 91828599
WPP Group PLC ADR 450,000 1,603,125 92930920
Welsh Water PLC Ord. 100,000 1,056,135 94999395
Zeneca Group PLC sponsored ADR 25,000 1,053,125 98934D10
18,143,416
TOTAL COMMON STOCKS
(Cost $273,862,298) 305,846,693
NONCONVERTIBLE PREFERRED STOCKS - 2.2%
AUSTRIA - 0.3%
Creditanstal Bankverein 17,000 1,014,280 22539210
BELGIUM - 0.2%
Cockerill Sambre SA (a) 100,000 627,527 19199392
CANADA - 0.5%
Trilon Financial Corp. Class 1,
Series A 167,200 1,775,963 89590330
FINLAND - 0.3%
Nokia AB 7,000 1,057,379 65599910
GERMANY - 0.4%
Wella AG 2,000 1,336,658 94599999
ITALY - 0.5%
Fiat Spa (a) 800,000 1,938,432 31562120
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $5,792,761) 7,750,239
CLOSED-END INVESTMENT COMPANIES - 4.6%
SHARES VALUE (NOTE 1)
AUSTRALIA - 0.5%
Kleinwort Benson Australia Income Fund 192,100 $ 1,752,913 49857710
CHILE - 0.5%
Five Arrows Chile Investment Trust Ltd. 500,000 1,360,000 33899422
GT Chile Growth Fund Ltd. 7,500 251,250 49899E22
1,611,250
GERMANY - 0.5%
New Germany Fund, Inc. (The) 150,000 1,893,750 64446510
INDIA - 0.3%
Himalayan Fund (a) 45,000 770,400 43299792
India Fund 20,000 257,500 45408910
1,027,900
MALAYSIA - 0.7%
Malaysia Equity Fund Ltd. 145,000 2,610,000 56099S22
PAKISTAN - 0.1%
Pakistan Investment Fund, Inc. 35,000 380,625 69584410
PHILIPPINES - 0.6%
First Philippine Fund, Inc. 100,000 2,262,500 33610010
REGIONAL AFRICA - 0.2%
Morgan Stanley Africa Investment
Fund, Inc. 70,000 857,500 61744410
SPAIN - 0.7%
Growth Fund of Spain, Inc. (a) 250,000 2,562,500 39987710
THAILAND - 0.5%
Thai Euro Fund IDR 52 1,778,400 94499C23
TOTAL CLOSED-END INVESTMENT COMPANIES
(Cost $16,177,651) 16,737,338
REPURCHASE AGREEMENTS - 7.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 4.78% dated
10/31/94 due 11/1/94 26,671,541 26,668,000 99799N9L
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $322,500,710) $ 357,002,270
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
1,700,625,000 JPY 1/11/95 $ 17,667,363 $ 55,074
(Payable amount $17,612,289)
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 4.9%
CONTRACTS TO SELL
1,700,625,000 JPY 1/11/95 $ 17,667,363 (440,610)
(Receivable amount $17,226,753)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 4.9%
$ (385,536)
CURRENCY ABBREVIATIONS
JPY - Japanese yen
LEGEND
(a) Non-income producing
(b) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $7,590,690 or 2.2% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $332,256,933 and $258,701,956, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $23,550 for the period (see Note 5 of Notes to Financial
Statements).
The fund participated in the bank borrowing program. The maximum loan and
the average daily loan balances during the period for which loans were
outstanding amounted to $3,190,000. The weighted average interest rate was
4.19% (see Note 7 of Notes to Financial Statements).
INCOME TAX INFORMATION
At October 31, 1994, the aggregate cost of investment securities for income
tax purposes was $322,918,762. Net unrealized appreciation aggregated
$34,083,508, of which $42,627,853 related to appreciated investment
securities and $8,544,345 related to depreciated investment securities.
The fund hereby designates $5,462,566 as a capital gain dividend for the
purpose of the dividend paid deduction.
For the period, interest and dividends from foreign countries were
$6,949,557, or $0.25 per share. Taxes paid to foreign countries were
$937,803 or $0.03 per share.
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Investments (Unaudited)
Aerospace & Defense 1.0%
Basic Industries 9.6
Construction & Real Estate 5.0
Durables 10.3
Energy 6.6
Finance 16.7
Health 5.8
Holding Companies 2.1
Industrial Machinery & Equipment 6.2
Media & Leisure 1.7
Nondurables 5.1
Precious Metals 1.4
Retail & Wholesale 3.5
Services 1.0
Repurchase Agreements 7.5
Technology 6.5
Transportation 0.3
Utilities 9.7
100.0%
DIVERSIFIED INTERNATIONAL
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $26,668,000) (cost $322,500,710) - See $ 357,002,270
accompanying schedule
Cash 220
Receivable for investments sold 8,356,963
Unrealized appreciation on foreign currency contracts 55,074
Receivable for fund shares sold 1,323,366
Dividends receivable 1,402,627
TOTAL ASSETS 368,140,520
LIABILITIES
Payable for investments purchased $ 13,267,580
Unrealized depreciation on foreign currency contracts 440,610
Payable for fund shares redeemed 2,784,031
Accrued management fee 196,678
Other payables and accrued expenses 299,379
TOTAL LIABILITIES 16,988,278
NET ASSETS $ 351,152,242
Net Assets consist of:
Paid in capital $ 303,607,025
Undistributed net investment income 819,988
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 12,601,893
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 34,123,336
NET ASSETS, for 28,175,902 shares outstanding $ 351,152,242
NET ASSET VALUE, offering price and redemption price per share ($351,152,242 (divided by) 28,175,902 shares) $12.46
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1994
INVESTMENT INCOME $ 6,878,460
Dividends
Interest 1,037,857
7,916,317
Less foreign taxes withheld (937,803
)
TOTAL INCOME 6,978,514
EXPENSES
Management fee $ 2,441,324
Basic fee
Performance adjustment (169,790
)
Transfer agent fees 1,075,053
Accounting fees and expenses 191,050
Non-interested trustees' compensation 1,797
Custodian fees and expenses 269,885
Registration fees 96,411
Audit 35,694
Legal 2,367
Interest 1,113
Miscellaneous 3,145
Total expenses before reductions 3,948,049
Expense reductions (2,633 3,945,416
)
NET INVESTMENT INCOME 3,033,098
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 13,079,970
Foreign currency transactions (2,194,708 10,885,262
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 14,120,268
Assets and liabilities in foreign currencies (378,224 13,742,044
)
NET GAIN (LOSS) 24,627,306
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 27,660,404
OTHER INFORMATION $191,050
Accounting fees paid to FSC
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1994 1993
INCREASE (DECREASE) IN NET ASSETS
Operations $ 3,033,098 $ 998,691
Net investment income
Net realized gain (loss) 10,885,262 2,534,162
Change in net unrealized appreciation (depreciation) 13,742,044 24,127,201
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 27,660,404 27,660,054
Distributions to shareholders: (57,277 (425,331
From net investment income ) )
From net realized gain (2,281,540 -
)
TOTAL DISTRIBUTIONS (2,338,817 (425,331
) )
Share transactions 439,644,650 368,965,606
Net proceeds from sales of shares
Reinvestment of distributions 2,282,423 411,649
Cost of shares redeemed (371,125,272 (178,021,677
) )
Net increase (decrease) in net assets resulting from share transactions 70,801,801 191,355,578
TOTAL INCREASE (DECREASE) IN NET ASSETS 96,123,388 218,590,301
NET ASSETS
Beginning of period 255,028,854 36,438,553
End of period (including undistributed net investment income of $819,988 and $893,244,
respectively) $ 351,152,242 $ 255,028,854
OTHER INFORMATION
Shares
Sold 36,516,172 35,207,206
Issued in reinvestment of distributions 201,263 48,543
Redeemed (31,079,116 (17,022,973
) )
Net increase (decrease) 5,638,319 18,232,776
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEARS ENDED OCTOBER DECEMBER 27, 1991
31, (COMMENCEMENT
OF OPERATIONS) TO
SELECTED PER-SHARE DATA 1994 1993 OCTOBER 31, 1992
Net asset value, beginning of period $ 11.32 $ 8.46 $ 10.00
Income from Investment Operations
Net investment income .05 .07 .07
Net realized and unrealized gain (loss) 1.20 2.89 (1.61)
Total from investment operations 1.25 2.96 (1.54)
Less Distributions (.01) (.10) -
From net investment income
From net realized gain (.10) - -
Total distributions (.11) (.10) -
Net asset value, end of period $ 12.46 $ 11.32 $ 8.46
TOTAL RETURNB, C 11.14% 35.38% (15.40)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 351,152 $ 255,029 $ 36,439
Ratio of expenses to average net assets 1.25% 1.47% 2.00% A
Ratio of expenses to average net assets before expense reductions 1.25% 1.47% 2.34% A
Ratio of net investment income to average net assets .96% .84% 1.38% A
Portfolio turnover rate 89% 56% 56% A
</TABLE>
<TABLE>
<CAPTION>
<S><C>
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
</TABLE>
INTERNATIONAL GROWTH & INCOME
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
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (income) and capital gains (the profits the
fund earns when it sells stocks that have grown in value). International
Growth & Income had a 2% sales charge, which was waived through May 31,
1994. The sales charge was eliminated effective June 1, 1994.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1994 YEAR YEARS FUND
INTERNATIONAL GROWTH & INCOME 2.33% 48.71% 96.18%
INTERNATIONAL GROWTH & INCOME
(INCL. 2% SALES CHARGE) 0.28% 45.74% 92.26%
Morgan Stanley EAFE Index 10.09% 22.45% 98.70%
JP Morgan Global Bond Index 2.62% 58.21% 97.83%
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 31, 1986. You can compare the fund's figures to the
performance of the Morgan Stanley EAFE index - a broad measure of the
performance of stocks in Europe, Australia, and the Far East. You can also
compare the fund's performance to the JP Morgan Global Traded Government
Bond Index - a broad measure of bond performance in developed countries,
including the United States. These benchmarks include reinvested dividends
and capital gains, if any, and exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1994 YEAR YEARS FUND
INTERNATIONAL GROWTH & INCOME 2.33% 8.26% 8.97%
INTERNATIONAL GROWTH & INCOME
(INCL. 2% SALES CHARGE) 0.28% 7.82% 8.69%
Morgan Stanley EAFE Index 10.09% 4.13% 9.15%
JP Morgan Global Bond Index 2.62% 9.61% 9.09%
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
Int'l G&I (305)MS EAFE JP Morgan Gl. Bon
12/31/86 9800.00 10000.00 10000.00
01/31/87 10456.60 11062.61 10257.00
02/28/87 10917.20 11393.69 10377.01
03/31/87 11387.60 12327.33 10565.87
04/30/87 11828.60 13631.69 10575.38
05/31/87 11907.00 13631.64 10475.97
06/30/87 12024.45 13197.34 10430.92
07/31/87 12525.06 13174.29 10305.75
08/31/87 12868.62 14162.12 10418.08
09/30/87 12976.78 13939.16 10164.92
10/31/87 10259.33 11925.20 10730.09
11/30/87 9993.50 12104.07 11008.00
12/31/87 10616.00 12463.49 11382.28
01/31/88 10240.74 12686.01 11440.33
02/29/88 10704.88 13531.62 11545.58
03/31/88 11169.02 14363.62 11636.79
04/30/88 11465.28 14572.35 11582.09
05/31/88 11317.15 14105.22 11457.01
06/30/88 11188.77 13733.43 11355.04
07/31/88 11188.77 14164.30 11266.47
08/31/88 10635.75 13243.36 11186.48
09/30/88 11020.89 13822.02 11465.02
10/31/88 11662.79 15004.67 11916.74
11/30/88 11870.17 15898.44 12021.61
12/31/88 11843.61 15987.08 11949.48
01/31/89 12064.61 16268.36 11831.18
02/28/89 12104.79 16351.98 11812.25
03/31/89 12104.79 16031.06 11711.85
04/30/89 12406.16 16179.74 11905.09
05/31/89 12054.56 15299.51 11776.52
06/30/89 12094.75 15041.96 12043.84
07/31/89 13239.93 16930.83 12523.19
08/31/89 13059.11 16169.38 12152.50
09/30/89 13581.48 16905.93 12344.51
10/31/89 12928.52 16226.69 12503.76
11/30/89 13410.70 17042.40 12615.04
12/31/89 14108.24 17671.22 12762.64
01/31/90 13864.30 17013.70 12572.47
02/28/90 13376.40 15826.23 12436.69
03/31/90 13366.24 14177.52 12360.83
04/30/90 13335.75 14065.01 12312.62
05/31/90 14199.72 15669.84 12706.62
06/30/90 14646.96 15531.83 12936.61
07/31/90 15327.98 15750.60 13316.95
08/31/90 14016.76 14221.09 13213.08
09/30/90 12664.89 12239.17 13337.28
10/31/90 13935.45 14146.27 13864.10
11/30/90 13620.35 13311.80 14108.11
12/31/90 13652.87 13527.45 14264.71
01/31/91 14135.97 13965.00 14588.52
02/28/91 14934.14 15462.03 14603.11
03/31/91 14398.53 14533.81 14147.49
04/30/91 14619.08 14676.53 14318.68
05/31/91 14598.07 14829.67 14331.56
06/30/91 13894.42 13739.97 14139.52
07/31/91 14377.53 14415.04 14437.86
08/31/91 14325.01 14122.30 14738.17
09/30/91 14787.11 14918.22 15276.12
10/31/91 14692.59 15129.70 15427.35
11/30/91 14283.01 14423.38 15678.81
12/31/91 14750.27 15168.25 16470.59
01/31/92 14729.00 14844.25 16147.77
02/29/92 14750.27 14312.95 16100.94
03/31/92 14271.71 13368.06 15952.81
04/30/92 14899.16 13431.61 16085.22
05/31/92 15569.14 14330.66 16542.04
06/30/92 15420.26 13650.92 16993.64
07/31/92 14920.43 13301.55 17367.50
08/31/92 15186.29 14135.84 17829.48
09/30/92 14931.06 13856.69 17811.65
10/31/92 14133.46 13129.85 17366.36
11/30/92 14101.56 13253.40 17058.97
12/31/92 14257.48 13321.95 17221.03
01/31/93 14388.19 13320.31 17513.79
02/28/93 14780.29 13722.68 17795.76
03/31/93 15880.38 14918.82 18069.82
04/30/93 16762.62 16334.66 18398.69
05/31/93 17154.73 16679.64 18516.44
06/30/93 16926.00 16419.41 18531.25
07/31/93 17492.38 16994.17 18538.66
08/31/93 18407.29 17911.56 19087.41
09/30/93 18287.48 17508.39 19289.73
10/31/93 18788.51 18047.95 19280.09
11/30/93 18145.89 16470.37 19139.34
12/31/93 19259.02 17659.65 19334.57
01/31/94 20267.46 19152.69 19516.31
02/28/94 19905.74 19099.65 19301.63
03/31/94 18842.49 18277.00 19212.84
04/30/94 19094.60 19052.47 19197.47
05/31/94 19445.36 18943.09 19038.13
06/30/94 18974.03 19210.79 19264.69
07/31/94 19291.91 19395.54 19445.78
08/31/94 19478.25 19854.73 19395.22
09/30/94 19028.83 19229.40 19490.25
10/31/94 19226.14 19869.74 19782.61
Let's say you invested $10,000 in Fidelity International Growth & Income
Fund on its start date and paid the 2% sales charge. By October 31, 1994,
it would have grown to $19,226 - a 92.26% increase on your initial
investment. That compares to $10,000 invested in the Morgan Stanley EAFE
index, which would have grown to $19,870 over the same period - a 98.70%
increase. If you had put $10,000 in the J.P. Morgan Global Bond index, it
would have grown to $19,783 - a 97.83% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
(checkmark)
INTERNATIONAL GROWTH & INCOME
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Richard Mace,
Portfolio Manager of International Growth & Income Fund
Q. RICK, HOW DID THE FUND PERFORM?
A. The fund had a total return of 2.33% for the 12 months ended October 31,
1994. When looking at performance, it's important to keep in mind that the
fund invests in both stocks and bonds, and maintains at least a 25%
investment in fixed-income investments. Because no index tracks both
international stocks and bonds, we can look at the performance of two
separate indexes. First, the Morgan Stanley EAFE index - which tracks the
performance of stocks in Europe, Australia and the Far East - rose 10.09%
during the period. The JP Morgan Global Government Bond Index, which tracks
the performance of government bonds in 13 developed countries including the
U.S., had a total return of 2.62% for the same 12 months.
Q. WHY DID THE FUND TRAIL BOTH INDEXES?
A. In a word: bonds. Over the past six months, the fund has maintained
roughly a 35% stake in bonds, which is actually below its neutral mix of
40% bonds and 60% stocks. However, most bond markets around the world have
fallen anywhere from 10% to 30% year-to-date through October. It all
started back in February, when the Federal Reserve Board began raising
short-term interest rates in the United States. The Fed was attempting to
control future inflation that might result from an expanding U.S. economy.
Once rates went up in the U.S., they rose around the world, and the extent
of the correlation of these foreign markets to the U.S. market was
surprising. In addition, one key reason why the fund underperformed the JP
Morgan Global Bond index over the 12-month period is that roughly 10% of
the fund's investments were in emerging market bonds during 1994. Markets
such as Argentina were among the hardest hit during the worldwide sell-off.
Because there are no emerging markets represented in the index, the fund
suffered disproportionately.
Q. BECAUSE OF THE PERFORMANCE OF BONDS, HAVE YOU CUT BACK ON THE FUND'S
INVESTMENTS?
A. No, just the opposite; the fund's stake in bonds has increased slightly
over the past six months. It's important to point out that the reasons I
found bonds in many foreign countries attractive earlier this year were
even more pronounced by the end of October. Now that yields have risen -and
prices have fallen - bonds offer very compelling value. In Argentina, for
example, government bonds are offering yields that are roughly 7% higher
than those of U.S. Treasuries with comparable maturities. In addition,
inflation, which is a bond investor's worst enemy, is only 3 1/2%, while
GNP is growing at 6%.
Q. WHERE ELSE ARE YOU FINDING THE BEST VALUE IN BONDS?
A. Behind Argentina, which made up 7.4% of the fund's investments on
October 31, the largest countries represented on the bond side included
Canada, France, Japan, Germany and the United States. In Canada and France
especially, as in Argentina, the value story is quite compelling. Real
yields - a bond's interest rate minus the rate of inflation - are at
historically high levels. For that reason, I believe that bonds may offer
favorable returns over the next year.
Q. LET'S TURN TO STOCKS. JAPAN HAS REMAINED THE LARGEST COUNTRY
REPRESENTED ON THE STOCK SIDE OVER THE PAST SIX MONTHS - 21.5% OF THE FUND
ON OCTOBER 31. HOW DID THIS STRATEGY WORK OUT?
A. Very well. Japan has been one of the world's best performing markets
this year, while Southeast Asian markets - which the fund largely avoided -
corrected sharply after a strong 1993. Earlier this year, I focused on
major Japanese exporters that had effectively cut costs and were poised to
benefit as Japan emerged from a long recession. Stocks such as Hitachi,
Matsushita, Sony and Suzuki performed well during the first six months
1994. However, I began favoring companies that have more exposure to the
domestic economy, believing that they will benefit once the Japanese
recovery gains momentum. Examples include Ito-Yokado, which owns several
retailers; and Mitsubishi Electric, a maker of consumer electronic goods.
Q. WHERE ELSE HAVE YOU FOUND OPPORTUNITIES IN STOCKS?
A. In Europe, I've focused largely on cyclical stocks - those that tend to
rise and fall with the economy. Although they've turned in mixed results
over the past six months, I believe there is plenty of potential going
forward. Strengthening European economies have driven up the stocks of
cyclical commodity-related companies such as DSM, a Dutch chemical company,
and Hoogovens, another Dutch company that manufactures aluminum and steel.
In fact, I've recently found many inexpensive stocks in the Netherlands.
The fund's largest stock investment on October 31 was Koninklijke PPT
Nederland (KPN), which runs the country's post office and the phone
company. KPN just went public earlier this year when the government decided
to privatize the company. The company has done an excellent job cutting
costs, and that's especially clear on the telephone side of the business.
Q. RICK, ARE YOU STILL USING DERIVATIVE INSTRUMENTS KNOWN AS FORWARD
FOREIGN CURRENCY CONTRACTS TO HEDGE OVERSEAS INVESTMENTS?
A. I am. Currently, I'm hedging a portion of both the fund's stock and bond
investments. These contracts reduce the fund's exposure to foreign currency
risk - the chance that movements in a country's currency will negatively
affect the fund's investments there - by tying the value of selected
foreign investments to the U.S. dollar.
Q. ARE THERE RISKS ASSOCIATED WITH HEDGING?
A. The biggest risk is that the U.S. dollar will fall in value relative to
the currencies of countries in which the fund is hedged. And that has
happened over the past year. For foreign investments that were hedged, a
weak dollar has meant the fund has given up a portion of any gains made by
those investments in their local currency. So in that sense, the weak
dollar has caused a lost opportunity in return for decreased volatility and
currency risk. However, since hedging losses count against the fund's
income for tax purposes, dividends this year will be lower than they might
have been. I believe this is a temporary situation. If the dollar again
strengthens relative to foreign currencies the fund has hedged, we should
be back on track.
Q. HAVE YOU USED ANY OTHER TYPES OF DERIVATIVES?
A. Yes, on a limited basis. Over the past six months, I sold a roughly 3%
stake in indexed securities, or structured notes. These securities are like
customized bonds, and were constructed in a way that tied their value to
short-term interest rates in Europe. They did very well when rates fell in
1993. However, when rates suddenly reversed in 1994, they negatively
affected the fund's total return. In addition, the fund had a small stake
in Japanese futures tied to the Nikkei stock index. These investments
mirror the performance of the market to which they're tied, and allow the
fund to take part in broad market moves until I find specific investments
to replace them.
Q. LET'S TALK ABOUT THE NEXT SIX MONTHS. WHAT'S YOUR OUTLOOK?
A. Again, at some point down the line, I feel strongly that bonds will turn
the corner and yields will begin to fall, and prices rise, once again. The
valuations that exist in most worldwide bond markets are simply too
attractive - relative to the risk of higher inflation - for investors to
stay on the sidelines much longer. As for stocks, I believe that we could
see some choppy markets going forward. Improving economies in Japan and
Europe should boost corporate earnings. However, higher interest rates have
drawn the prospect of higher stock prices into question.
FUND FACTS
GOAL: to increase the value of the fund's shares
by investing in stocks and bonds, mainly in
Europe, the Far East and Pacific Basin
START DATE: December 31, 1986
SIZE: as of October 31, 1994, more than
$1.3 billion
MANAGER: Richard Mace, since January 1994;
manager, Fidelity International Value Fund, since
November 1994; co-manager, Fidelity Global
Balanced Fund, February 1993-December 1993;
Manager, Fidelity Select Chemicals and
Industrial Materials Portfolios, January
1992-August 1992; Fidelity Select
Transportation Portfolio, June 1989- December
1991; joined Fidelity in 1987
(checkmark)
RICK MACE ON GLOBAL CONSOLIDATION:
"There's growing evidence that industry consolidation
- - prevalent in the U.S. in recent years - is spreading
worldwide. In this country, we've seen consolidation in
the banking, food and railroad industries. The
companies that have deep pockets and excellent
balance sheets, and that have established themselves
as the low-cost producers within their industries, are
coming out on top. As trade barriers come down and
restrictions are eased, I believe we'll see
consolidation across Europe. German companies will
be buying Dutch companies, Italian companies will be
buying German companies, and so forth. The auto
industry has been consolidated for years, with a few
key players such as G.M., Toyota, Chrysler and
Honda battling for worldwide sales. But it hasn't been
this way for, say, chemicals. You've always had your
U.S. chemical companies and your European
chemical companies. But again, as access to world
markets increases and trade barriers come down, I
think you'll see a few dominant players emerge.
"What does this mean for the fund? There should be
opportunities surrounding both the predators and the
prey. First, I'll want to emphasize the strong
companies that are dominating their industries, but
whose stocks appear inexpensive relative to earnings
and cash flow. In addition, I'll want to search out super
cheap stocks of companies that are ripe for takeover.
As world markets come together, it'll be interesting to
see which players can emerge as the low-cost,
successful producers within their given industries."
(solid bullet) Following Japan, the largest countries represented
among the fund's stock investments were the
Netherlands, at 6.3% on October 31, Canada, at 4.0%,
and Germany, at 4.0%. In Germany, the fund has
leaned toward cyclical stocks - those that tend to do
well as the economy improves - such as auto maker
BMW. A notable exception is Deutsche Bank. The
stock became more attractively valued after its price
fell recently due to concerns over rising interest rates.
In Canada, the stocks of commodity-related
companies have performed well. Examples include
aluminum producer Alcan and methanol producer
Methanex.
DISTRIBUTIONS
The Board of Trustees of Fidelity International Growth
& Income Fund voted to pay on December 12, 1994,
to shareholders of record at the opening of business
on December 9, 1994, a distribution of $.53 derived
from capital gains realized from sales of portfolio
securities.
INTERNATIONAL GROWTH & INCOME
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION
AS OF OCTOBER 31, 1994
Argentina 7.4%
Row: 1, Col: 1, Value: 15.6
Row: 1, Col: 2, Value: 16.3
Row: 1, Col: 3, Value: 7.6
Row: 1, Col: 4, Value: 27.5
Row: 1, Col: 5, Value: 7.3
Row: 1, Col: 6, Value: 6.1
Row: 1, Col: 7, Value: 5.6
Row: 1, Col: 8, Value: 8.6
Row: 1, Col: 9, Value: 7.4
United States 15.8%
Canada 8.6%
United Kingdom
5.6%
Other 14.1%
France 6.1%
Germany 7.3%
Netherlands 7.6%
Japan 27.5%
AS OF APRIL 30, 1994
Argentina 6.7%
United States 10.7%
Row: 1, Col: 1, Value: 10.7
Row: 1, Col: 2, Value: 2.3
Row: 1, Col: 3, Value: 14.5
Row: 1, Col: 4, Value: 3.9
Row: 1, Col: 5, Value: 37.5
Row: 1, Col: 6, Value: 5.2
Row: 1, Col: 7, Value: 5.5
Row: 1, Col: 8, Value: 5.3
Row: 1, Col: 9, Value: 3.1
Row: 1, Col: 10, Value: 5.3
Row: 1, Col: 11, Value: 6.7
Canada 5.3%
Sweden 2.3%
Denmark 3.1%
France 5.3%
Other 14.5%
Germany 5.5%
Italy 5.2%
Netherlands 3.9%
Japan 37.5%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks and equity futures 56.0 60.5
Bonds 35.0 31.6
Short-term investments 9.0 7.9
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Koninklijke PPT Nederland
(Netherlands, Telephone Services) 2.3 -
Hitachi Ltd. ADR
(Japan, Electronics) 1.7 1.2
Alcan Aluminium Ltd.
(Canada, Metals & Mining) 1.5 0.7
Veba AG Ord.
(Germany, Electric Utilities) 1.5 1.2
Honda Motor Co. Ltd.
(Japan, Autos, Tires, & Accessories) 1.3 1.2
British Petroleum PLC Ord.
(United Kingdom, Oil and Gas) 1.3 1.0
Schlumberger Ltd.
(Netherlands, Energy Services) 1.2 1.1
Sony Corp.
(Japan, Consumer Electronics) 1.2 1.0
Omron Corp.
(Japan, Electrical Equipment) 1.1 -
Toyota Motor Corp.
(Japan, Autos, Tires & Accessories) 1.1 1.0
TOP TEN INDUSTRIES
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Basic Industries 10.1 6.6
Durables 8.0 14.9
Technology 7.2 8.4
Utilities 7.1 3.7
Energy 5.5 4.1
Industrial Machinery & Equipment 5.4 2.7
Finance 5.4 10.2
Nondurables 2.2 1.2
Health 1.8 0.4
Retail & Wholesale 1.6 2.6
INTERNATIONAL GROWTH & INCOME
INVESTMENTS OCTOBER 31, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 53.6%
SHARES VALUE (NOTE 1)
AUSTRALIA - 1.1%
BTR Nylex Ltd. 1,000 $ 1,775 05587099
Goodman Fielder Ltd. Ord. 9,623,000 9,077,280 38238210
Pacific Dunlop 1,953,500 5,934,440 69418510
15,013,495
AUSTRIA - 0.6%
Mayr Melnhof Karton AG (a) 54,200 2,937,462 57847192
Wienerberger Baustoffindustrie AG 14,000 4,948,395 98399292
7,885,857
BELGIUM - 0.2%
Tessenderlo Chemie NV 8,900 2,835,678 88161299
BERMUDA - 0.3%
Ace Ltd. 200,000 4,550,000 00499G92
CANADA - 4.0%
Alcan Aluminium Ltd. 791,600 21,203,307 01371610
American Barrick Resources Corp. 35,500 845,956 02451E10
Canadian Natural Resources
Ltd. (a)(e) 140,000 1,900,839 13638592
Canada Occidental Petroleum Ltd. 143,700 3,490,699 13642010
Canadian Pacific Ltd. Ord. 244,700 3,910,029 13644030
Inco Ltd. 1,000 30,110 45325840
Methanex Corp. (a) 926,300 13,860,106 59151K10
Midland Walwyn, Inc. 500,000 2,955,630 59780110
Quno Corp. (a) 58,900 1,088,041 74726H10
Rio Alto Exploration Ltd. (a) 36,600 212,971 76689210
Rio Alto Exploration Ltd. (a)(e) 89,000 517,881 76689292
Sherritt Gordon Ltd. (a) 450,500 4,868,337 82428010
54,883,906
DENMARK - 0.4%
Den Danske Bank Group AS 25,000 1,341,598 24820692
FLS Industries (Smidth) Class B 24,800 1,642,524 35599092
Unidanmark AS Class A (a) 75,000 3,005,859 92399792
5,989,981
FINLAND - 0.5%
Enso-Gutzeit OY Class R Free shares 215,000 1,911,215 29357810
Kone Corp. Class B Ord. 14,600 1,738,926 50400092
Kymmene Corp. 48,600 1,330,928 50699692
Repola OY 75,000 1,573,028 75999A92
Valmet OY Ord. (a) 50,100 1,088,894 92029991
7,642,991
FRANCE - 1.8%
Accor SA 71,000 8,429,224 00439991
Eramet SA (a)(e) 8,000 584,475 29499H23
Lagardere Groupe SA (Reg.) 115,000 2,714,952 50699D22
Total SA:
Class B 34,500 2,238,327 20434510
sponsored ADR 250,000 8,250,000 89151E10
Ugine SA (e) 36,300 2,729,642 90299G23
24,946,620
GERMANY - 4.0%
Bayer AG 19,600 4,586,693 07273010
BMW AG 14,500 7,472,984 05528310
Deutsche Bank AG 16,600 8,179,950 25152592
Hoechst AG Ord. 24,400 5,343,255 43439010
Karstadt AG 5,000 2,064,838 48576499
Kaufhof Holding AG 8,700 2,950,623 48615210
SHARES VALUE (NOTE 1)
Schering AG 2,300 $ 1,536,392 80658510
Veba AG:
Ord. 59,400 19,908,628 92239110
(warrants) (a) 24,000 2,725,985 92239194
54,769,348
HONG KONG - 0.1%
Sun Hung Kai Properties Ltd. 3,678,000 1,892,074 86690810
INDIA - 0.1%
ITC Ltd. GDS (warrants) (a)(e) 78,000 887,640 45031810
IRELAND - 0.1%
Smurfit (Jefferson) Group PLC 241,300 1,473,800 84699793
Smurfit (Jefferson) Group PLC (rights) (a) 24,130 13,818 84699794
1,487,618
ITALY - 0.5%
Telecom Italia Ord. 2,310,000 6,320,368 87999R22
JAPAN - 21.5%
Aiwa Co. Ltd. 100,000 2,724,318 00959999
Amada Metrecs Co. Ltd. 7,000 130,747 02299292
Canon, Inc. 430,000 7,987,203 13780199
Casio Computer Co. Ltd. Ord. 115,000 1,530,881 14761893
Daifuku Co. Ltd. 1,000 15,273 23299210
Daicel Chemical Industries Ltd. 256,000 1,561,283 23398110
Daiwa Securities Co. Ltd. 689,000 10,025,177 23499010
Daihatsu Motor Co. Ltd. 500,000 3,353,800 24199092
Ezaki Glicko Co. Ltd. 274,000 2,884,061 30199492
Fujitsu Ltd. 834,000 9,553,070 35959010
Fuji Electric Co. Ltd. 1,839,000 10,532,431 36599492
Hitachi Koki Co. Ltd. Ord. 312,000 3,348,434 43299492
Hitachi Ltd. ADR 2,260,000 23,555,031 43357810
Hitachi Maxell Ltd. 1,000 17,853 43358990
Hitachi Cable Ltd. 424,000 3,710,356 43399010
Hitachi Transport System Co. 267,000 3,058,357 43699992
Honda Motor Co. Ltd. 1,056,000 18,416,387 43812810
Ito-Yokado Co. Ltd. 96,000 5,240,597 46571410
Kaneka Corp. 377,000 3,065,643 48418199
Kawasaki Heavy Industries Ltd. 640,000 3,143,699 48639991
Kenwood Corp. 1,000 9,545 49178692
Kokuyo Co. Ltd. 38,000 976,420 50033399
Kyocera Corp. 1,000 76,157 50155610
Kokusai Securities Co. Ltd. 1,000 16,614 50299092
Matsushita Electric Industrial Co. Ltd. 510,000 8,473,247 57687910
Matsushita Electric Works Co. Ltd. 1,000 11,042 57688110
Matsuzakaya Co. Ltd. 8,000 113,926 57699492
Mazda Motor Corp. (a) 1,000 5,934 57878592
Mitsubishi Electric Co. Ord. 1,811,000 13,549,087 60673220
Mitsubishi Heavy Industries Ltd. 1,253,000 10,201,913 60699310
Nikko Securities Co. Ltd. 419,000 4,929,158 65399010
Nifco, Inc. 242,000 3,945,720 66099892
Nisshinbo Industries 615,000 7,171,460 65411310
Nippon Shokubai Co. Ltd. 143,000 1,564,213 65461299
Nissan Motor Co. Ltd. Ord. 135,000 1,152,108 65474491
Nitto Denko Corp. 407,000 7,013,982 65480230
Nomura Securities Co. Ltd. 619,000 12,967,029 65536110
Nichicon Corp. 100,000 1,434,395 66199793
Omron Corp. 845,000 15,259,787 68215110
Pioneer Electronic Corp. 1,000 26,108 72365710
Rohm Co. Ltd. 26,000 1,145,658 77536110
Sankyo Co. Ltd. 476,000 12,378,309 80029710
Sekisui Chemical Co. Ltd. 1,000 10,268 81699210
Shinetsu Chemical 228,000 4,846,808 82499210
COMMON STOCKS- CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Sony Corp. 267,500 $ 16,314,175 83569999
Sumitomo Chemical Co. Ltd. 180,000 1,062,484 86599610
Suzuki Motor Corp. 495,000 6,282,956 86958592
Taiyo Yuden Co. Ltd. 1,000 11,455 87404799
Takeda Chemical Industries Ltd. 236,000 2,922,449 87405810
Tokai Rika Denki Co. Ltd. 653,000 7,547,185 88199192
Toppan Printing Co. Ltd. 365,000 5,386,203 89074799
Toshiba Corp. 801,000 6,315,092 89149310
Toyoda Automatic Loom Works Ltd. 43,000 900,779 89200910
Toyota Motor Corp. 668,000 14,751,765 89399999
Toyobo Co. Ltd. 280,000 1,233,786 90899392
Uny Co. Ltd. 475,000 7,548,629 91529010
Yamanouchi Pharmaceutical Co. Ltd. 151,000 2,976,215 98414010
Zexel Corp. 1,000 6,697 99099392
294,393,359
MALAYSIA - 0.0%
Tenaga Nasional BHD 1,000 5,320 92099992
MEXICO - 0.1%
Telefonos de Mexico SA sponsored ADR
representing shares Ord. Class L 37,500 2,067,188 87940378
NETHERLANDS - 6.3%
AKZO Nobel NV Ord. 50,300 6,354,281 01019910
DSM NV 87,400 7,571,590 23332H92
Heineken NV 26,000 3,802,884 42301210
Hoogovens en Staalfabrieken NV (a) 27,000 1,259,242 43888410
Internationale Nederlanden Groep NV 45,000 2,106,747 46099892
KBB NV Ord. 57,100 3,581,243 48130092
KLM Royal Dutch Airlines Ord. (a) 297,300 8,273,523 48251620
Koninklijke PPT Nederland 1,010,000 32,182,398 72699422
Pirelli Tyre Holdings NV Ord. 822,200 5,708,025 72499092
Schlumberger Ltd. 279,200 16,403,000 80685710
87,242,933
NEW ZEALAND - 0.4%
Brierley Investments Ltd. 7,147,211 5,374,345 10901410
NORWAY - 1.3%
Helikopter Services AS 206,600 2,590,991 42499192
Norsk Hydro AS 194,600 7,842,333 65653150
Orkla AS Class A Free shares 165,100 4,848,084 39299193
Saga Petroleum AS Class B 188,000 2,142,081 84099794
17,423,489
SINGAPORE - 0.1%
Kim Engineering Holdings Ltd. 620,000 772,886 49499D92
SOUTH AFRICA - 0.8%
Anglo-American Corp. of South
Africa (Reg.) 30,700 1,800,050 03486110
Buffelsfontein Gold Mining Co.Ltd. ADR 76,300 877,450 11987120
Driefontein Consolidated Ltd.:
Ord. 75,500 1,200,497 26202630
ADR 42,500 666,719 26202640
Free State Consolidated Gold Mines Ltd.:
ADR 148,382 2,392,660 35614220
Ord. 25,578 432,125 35614210
Vaal Reefs Exploration and Mining Co.
Ltd.:
ADR 60,000 607,500 91850640
(Reg.) 9,400 971,528 91850610
SHARES VALUE (NOTE 1)
Western Deep Levels Ltd.:
ADR 18,300 $ 969,042 95807720
Ord. 14,700 781,565 95807710
10,699,136
SPAIN - 1.3%
Argentaria Corporacion Bancaria
de Espana SA 214,000 8,278,085 21991392
FECSA (Fuerzas Electricas de Cataluna SA)
Class A 750,000 4,257,488 35899E22
Telefonica de Espana SA Ord. 75,000 1,014,970 87938210
Union Electrica Fenosa SA 900,000 4,138,920 90659510
Viscofan Envolturas Celulo SA 40,000 707,385 92899999
18,396,848
SWEDEN - 1.1%
Avesta Sheffield AB Ord. Free shares (a) 200,000 1,997,750 05399892
Celsius Industrier AB Class B 150,000 3,457,646 15199D22
Electrolux AB 40,000 2,087,161 01019810
Pharmacia AB Class A Free shares 240,000 4,559,902 71713093
SKF AB Ord. (a) 60,000 1,098,064 78437530
Stora Kopparbergs Bergslags AB Class A
Free shares 35,000 2,185,651 86210999
15,386,174
SWITZERLAND - 0.2%
Nestle SA (Reg.) 2,500 2,335,854 64106992
UNITED KINGDOM - 3.6%
BET PLC Ord. 3,967,100 7,139,868 05538H10
British Petroleum PLC Ord. 2,502,365 17,809,957 11088910
British Petroleum PLC ADR 98,702 8,389,670 11088940
Forte PLC 1,785,000 6,702,604 34999592
Tomkins PLC Ord. 300,000 1,032,690 89003010
WPP Group PLC 735,700 1,324,091 92930910
WPP Group PLC (e) 3,660,000 6,587,158 92930997
48,986,038
UNITED STATES OF AMERCIA - 3.2%
Aluminum Co. of America 111,300 9,488,325 02224910
Amerada Hess Corp. 59,300 2,950,175 02355110
American Express Co. 233,000 7,164,750 02581610
Ameritech Corp. 73,000 2,947,375 03095410
Great Lakes Chemical Corp. 78,500 4,611,875 39056810
Imo Industries, Inc. (a) 19,200 182,400 45254010
International Business Machines Corp. 59,000 4,395,500 45920010
Lockheed Corp. 40,000 2,880,000 53982110
Martin Marietta Corp. 80,000 3,670,000 57290010
RJR Nabisco Holdings Corp. (a) 595,000 4,090,625 74960K10
Reynolds Metals Co. 25,700 1,423,138 76176310
43,804,163
TOTAL COMMON STOCKS
(Cost $677,867,004) 735,993,309
PREFERRED STOCKS - 0.4%
CONVERTIBLE PREFERRED STOCKS - 0.4%
UNITED STATES OF AMERICA - 0.4%
Occidental Petroleum Corp. Indexed
$3.00 Class A 56,100 2,819,025 67459979
Reynolds Metals Co. $3.31 50,600 2,656,500 76176350
5,475,525
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONCONVERTIBLE PREFERRED STOCKS - 0.0%
ITALY - 0.0%
Fiat Spa Ord. 1,000 $ 2,294 31599C95
TOTAL PREFERRED STOCKS
(Cost $5,305,306) 5,477,819
CORPORATE BONDS - 7.1%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (B)
CONVERTIBLE BONDS - 6.1%
ITALY - 0.8%
Softe SA euro 4 1/4%,
7/30/98 (c) - ITL 15,865,000 11,357,960 84499DAA
JAPAN - 4.0%
Canon, Inc. 1.30%,
12/19/08 (c) A JPY 2,209,000 27,126,741 1378019A
Matsushita Electric Works Co.
Ltd. 2.70%, 5/31/02 (c) - JPY 1,479,000 17,246,471 5768819A
Mazda Motor Corp. 6 1/2%,
3/31/99 (c) Baa3 JPY 215,000 2,606,940 5787859A
Nitto Denko Corp.
3.90%, 3/30/01 (c) - JPY 414,000 5,639,342 6548029A
Shin-Etsu Chemical Co. Ltd.
1.30%, 3/31/99 (c) A2 JPY 181,000 2,095,690 824992AA
54,715,184
NETHERLANDS - 1.3%
Hoogovens en Staalfabrieken
NV 4 1/2%, 4/11/01 (c) - NLG 27,130 17,426,112 4388849A
TOTAL CONVERTIBLE BONDS 83,499,256
NONCONVERTIBLE BONDS - 1.0%
MEXICO - 1.0%
Bancomext:
euro:
8%, 4/14/00 Ba2 1,000,000 913,750 0596129A
7 1/4% 2/2/04 Ba2 1,500,000 1,250,625 0596129D
8%, 8/5/03 (e) Ba2 1,500,000 1,278,750 059612AD
El Puerto de Liverpool SA de CV
7 1/4%, 10/19/96 (e) - 1,000,000 968,750 28383QAA
Empaques Ponderosa SA
euro 8 3/4%, 12/6/96 - 1,530,000 1,487,925 2915789B
Empresas La Moderna SA
10 1/4%, 11/12/97 (e) - 1,000,000 1,005,000 292449AA
Grupo Industrial Durango
12%, 7/15/01 B1 750,000 742,500 40048EAA
MC-Cuernavaca Trust 9 1/4%,
7/25/01 (e) A 1,500,000 1,451,250 579010AA
Nacional Financiera SNC euro
10 5/8%, 11/22/01 Ba2 1,800,000 1,836,000 6295989S
Tolmex SA 8 3/8%,
11/1/03 Ba2 3,000,000 2,603,790 889557AA
TOTAL NONCONVERTIBLE BONDS 13,538,340
TOTAL CORPORATE BONDS
(Cost $95,197,071) 97,037,596
GOVERNMENT OBLIGATIONS (G) - 27.7%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
ARGENTINA - 7.4%
Province of Chaco 11 7/8%,
9/10/97 (d) - $ 300,000 $ 303,000 74399JAA
Argentina Republic (f):
BOCON 5.0625%, 4/1/01 B1 2,653,920 1,890,539 039995AF
BOTE:
1.85%, 5/31/96 - 3,925,000 1,542,023 0401149D
3.2375%, 9/1/97 - 22,550,000 15,107,418 0401149V
euro 6 1/2%, 3/31/05 BB- 83,550,000 60,260,438 039995AU
Brady euro 4 1/4%,
3/31/23 B1 48,000,000 22,260,000 039995AD
101,363,418
CANADA - 4.6%
Canadian Government (c):
7 1/2%, 12/1/03 Aaa CAD 19,000 12,691,890 135087UZ
9%, 12/1/04 Aaa CAD 69,245 50,771,653 135087VG
63,463,543
CZECH REPUBLIC - 0.1%
Czech Republic 14%,
7/8/96 (c) - CSK 30,000 1,157,289 23299BAB
FRANCE - 4.3%
French Government (c):
BTAN 7%, 11/12/99 Aaa FRF 45,000 8,463,132 351996CC
8 1/2%, 12/26/12 Aaa FRF 199,000 38,261,053 3517779J
Strips 4/25/23 Aaa FRF 757,500 12,265,440 351996BL
58,989,625
GERMANY - 3.3%
Federal Republic of Germany
9%, 10/20/00 (c) Aaa DEM 63,600 45,292,931 093992BJ
ITALY - 1.0%
Italian Government (c):
8 1/2%, 4/1/99 A1 ITL 19,600,000 11,428,341 46599BBL
10%, 8/1/03 A1 ITL 4,700,000 2,776,760 46599BAW
14,205,101
MEXICO - 0.4%
Mexico Value Recovery
(rights) (a) - 6,699,000 67 59304893
Mexican Government Brady
6.63%, 12/31/19 Ba2 FRF 54,750,000 6,170,216 597998VQ
6,170,283
NEW ZEALAND - 1.6%
New Zealand Government
8%, 4/15/04 Aaa NZD 37,100,000 21,388,488 6501629K
UNITED KINGDOM - 2.0%
United Kingdom Treasury
10%, 2/26/01 Aaa GBP 15,900,000 27,372,432 9107689G
UNITED STATES OF AMERICA - 3.0%
U.S. Treasury Notes:
9 1/4%, 1/15/96 (h) Aaa 2,000,000 2,064,680 912827XB
6 1/4%, 2/15/03 Aaa 42,500,000 38,655,025 912827J7
40,719,705
TOTAL GOVERNMENT OBLIGATIONS
(Cost $399,080,066) 380,122,815
INDEXED SECURITIES - 0.2%
PRINCIPAL VALUE
AMOUNT (B) (NOTE 1)
UNITED STATES OF AMERICA - 0.2%
Merrill Lynch & Co. Inc. Japan Index
equity participation securities
0%, 1/31/00 (Cost $2,730,000) $ 2,730,000 $ 2,470,650 590188FE
REPURCHASE AGREEMENTS - 11.0%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 4.78%
dated 10/31/94 due 11/1/94 $ 150,708,008 150,688,000 99799N9L
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,330,867,447) $ 1,371,790,189
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
274 Nikkei Stock Average
Contracts Dec., 94 $ 27,365,750 $ (18,790)
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.0%
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATES VALUE GAIN/(LOSS)
CONTRACTS TO BUY
47,682,800 FRF 11/2/94
to 11/16/94 $ 9,264,414 $ 118,946
15,081,500 CHF 11/2/94 12,002,785 34,291
TOTAL CONTRACTS TO BUY
(Payable amount $21,113,962) $ 21,267,199 153,237
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES --1.6%
CONTRACTS TO SELL
12,192,497 GBP 11/28/94 $ 19,940,182 (944,338)
17,065,234 CAD 1/30/95 12,612,992 65,488
117,514,599 DEM 11/14/94
to 1/18/95 78,182,080 (1,948,564)
12,514,291,386 ITL 1/17/95 8,090,936 (163,725)
27,490,415,417 JPY 11/30/94
to 12/8/94 284,460,747 (7,469,816)
425,363,950 FRF 11/2/94
to 2/2/95 82,613,375 (2,802,142)
30,163,000 CHF 11/2/94
to 2/2/95 24,019,916 (787,273)
42,525,794 NLG 12/13/94 25,242,304 (742,633)
TOTAL CONTRACTS TO SELL
(Receivable amount $520,369,529) $ 535,162,532 (14,793,003)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 39.0%
$ (14,639,766)
CURRENCY ABBREVIATIONS
GBP - British pound
CAD - Canadian dollar
CSK - Czech koruna
NLG - Dutch guilder
FRF - French franc
DEM - German deutsche mark
ITL - Italian lira
JPY - Japanese yen
NZD - New Zealand dollar
CHF - Swiss franc
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) Principal amount in thousands.
(d) Restricted securities - Investment in securities not registered under
the Securities Act of 1933.
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Province of Chaco 11 7/8%,
9/10/97 3/9/94 $ 308,208
(e) 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 $17,911,385 or 1.3% of net
assets.
(f) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(g) Most foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
(h) Security pledged to cover margin requirements for futures contracts, At
the period end, the value of securities pledged amounted to $2,064,680.
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 21.9% AAA, AA, A 21.9%
Baa 0.2% BBB 0.0%
Ba 1.0% BB 5.2%
B 1.8% 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 5.5% including long-term debt categorized
as other securities. FMR has determined that unrated debt securities that
are lower quality account for 5.1% of the total value of investment in
securities.
At the end of the period, restricted securities (excluding 144A issues)
amounted to $303,000 or .02% of net assets (see Note 2 of Notes to
Financial Statements).
Purchases and sales of securities, other than short-term securities,
aggregated $2,199,682,957 and $1,876,898,733, respectively.
The market value of futures contracts opened and closed during the period
amounted to $454,351,685 and $436,557,460, respectively (see Note 2 of
Notes to Financial Statements).
OTHER INFORMATION - CONTINUED
The following is a summary of the fund's written options activity:
NUMBER OF AGGREGATE
CONTRACTS OF CONTRACTS FACE VALUE
Call options on JPY
Outstanding at November 1, 1993 - -
Contracts opened 3 $ 71,432,942
Contracts closed (3) (71,432,942)
Outstanding at October 31, 1994 - $ -
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $60,703 for the period (see Note 5 of Notes to Financial
Statements).
The fund participated in the bank borrowing program. The maximum loan and
the average daily loan balances during the period for which loans were
outstanding amounted to $14,177,000. The weighted average interest rate was
3 7/8% (see Note 7 of Notes to Financial Statements).
INCOME TAX INFORMATION
At October 31, 1994, the aggregate cost of investment securities for income
tax purposes was $1,332,350,093. Net unrealized appreciation aggregated
$39,440,096, of which $81,326,141 related to appreciated investment
securities and $41,886,045 related to depreciated investment securities.
The fund hereby designates $17,199,532 as a capital gain dividend for the
purpose of the dividend paid deduction.
For the period, interest and dividends from foreign countries were
$31,936,387, or $0.41 per share. Taxes paid to foreign countries were
$1,721,529 or $0.02 per share.
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Investments (Unaudited)
Aerospace & Defense 0.7%
Basic Industries 10.1
Conglomerates 0.2
Construction & Real Estate 0.7
Durables 8.0
Energy 5.5
Finance 5.4
Government Obligations 27.7
Health 1.8
Holding Companies 0.6
Industrial Machinery & Equipment 5.4
Media & Leisure 1.1
Nondurables 2.2
Precious Metals 0.8
Retail & Wholesale 1.6
Services 1.5
Repurchase Agreements 11.0
Technology 7.2
Transportation 1.4
Utilities 7.1
100.0%
INTERNATIONAL GROWTH & INCOME
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $150,688,000) (cost $1,330,867,447) 1,371,790,189
- - See accompanying schedule
Cash 794
Receivable for investments sold 27,834,784
Unrealized appreciation on foreign currency contracts 309,057
Receivable for fund shares sold 3,079,409
Dividends receivable 2,114,462
Interest receivable 9,837,312
Receivable for daily variation on futures contracts 27,400
TOTAL ASSETS 1,414,993,407
LIABILITIES
Payable for investments purchased $ 21,639,917
Unrealized depreciation on foreign currency contracts 14,948,823
Payable for fund shares redeemed 8,508,909
Accrued management fee 882,943
Other payables and accrued expenses 1,074,396
TOTAL LIABILITIES 47,054,988
NET ASSETS 1,367,938,419
Net Assets consist of:
Paid in capital 1,286,697,069
Undistributed net investment income 11,175,791
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 43,504,320
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 26,561,239
NET ASSETS, for 78,008,572 shares outstanding 1,367,938,419
NET ASSET VALUE, offering price and redemption price per share ($1,367,938,419 (divided by) 78,008,572 shares) $17.54
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1994
INVESTMENT INCOME $ 13,191,097
Dividends
Interest 33,226,711
46,417,808
Less foreign taxes withheld (1,721,529
)
TOTAL INCOME 44,696,279
EXPENSES
Management fee $ 10,246,289
Transfer agent fees 4,042,671
Accounting fees and expenses 555,323
Non-interested trustees' compensation 7,516
Custodian fees and expenses 899,151
Registration fees 197,917
Audit 43,300
Legal 8,790
Interest 1,526
Miscellaneous 12,416
Total expenses before reductions 16,014,899
Expense reductions (10,070 16,004,829
)
NET INVESTMENT INCOME 28,691,450
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 63,142,227
Foreign currency transactions (42,211,115
)
Futures contracts 9,590,315
Written options (764,826 29,756,601
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (29,816,160
)
Futures contracts (18,790
)
Assets and liabilities in foreign currencies (15,769,402 (45,604,352
) )
NET GAIN (LOSS) (15,847,751
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 12,843,699
OTHER INFORMATION $6,314
Deferred sales charge withheld
by FDC
Accounting fees paid to FSC $548,580
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1994 1993
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 28,691,450 $ 2,629,481
Net investment income
Net realized gain (loss) 29,756,601 1,087,001
Change in net unrealized appreciation (depreciation) (45,604,352) 73,793,319
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 12,843,699 77,509,801
Distributions to shareholders: (1,769,894) (1,389,982)
From net investment income
From net realized gain (2,997,808) (29,697)
In excess of net realized gain (1,647,620) -
TOTAL DISTRIBUTIONS (6,415,322) (1,419,679)
Share transactions 1,287,341,882 1,037,700,151
Net proceeds from sales of shares
Reinvestment of distributions 6,281,612 1,310,736
Cost of shares redeemed (934,960,509) (172,260,456)
Net increase (decrease) in net assets resulting from share transactions 358,662,985 866,750,431
TOTAL INCREASE (DECREASE) IN NET ASSETS 365,091,362 942,840,553
NET ASSETS
Beginning of period 1,002,847,057 60,006,504
End of period (including undistributed net investment income of $11,175,791 and $3,611,891, $ 1,367,938,419 $ 1,002,847,057
respectively)
OTHER INFORMATION
Shares
Sold 72,892,665 64,336,913
Issued in reinvestment of distributions 363,939 99,073
Redeemed (53,381,201) (10,819,492)
Net increase (decrease) 19,875,403 53,616,494
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31,
SELECTED PER-SHARE DATA 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.25 $ 13.29 $ 13.99 $ 13.71 $ 12.87
Income from Investment Operations
Net investment income .38 C .14 C .31 .30 E .25
Net realized and unrealized gain (loss) .02 F 4.14 (.84) .41 .75
Total from investment operations .40 4.28 (.53) .71 1.00
Less Distributions (.03) (.31) (.16) (.38) (.16)
From net investment income
From net realized gain (.05) (.01) (.01) (.05) -
D D D
In excess of net realized gain (.03) - - - -
Total distributions (.11) (.32) (.17) (.43) (.16)
Net asset value, end of period $ 17.54 $ 17.25 $ 13.29 $ 13.99 $ 13.71
TOTAL RETURN A, B 2.33% 32.94% (3.81) 5.43% 7.79%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,367,938 $ 1,002,847 $ 60,007 $ 49,738 $ 35,380
Ratio of expenses to average net assets 1.21% 1.52% 1.62% 1.89% 1.98%
Ratio of net investment income to average
net assets 2.16% .87% 2.78% 2.86% 2.31%
Portfolio turnover rate 173% 24% 76% 117% 102%
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE .
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
E INCLUDES $.02 PER SHARE FROM RECOVERY OF FOREIGN TAXES PREVIOUSLY WITHHELD ON DIVIDEND AND INTEREST PAYMENTS.
F 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 FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND.
</TABLE>
OVERSEAS
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
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (income) and capital gains (the profits the
fund earns when it sells stocks that have grown in value). Overseas has a
3% sales charge, which, beginning May 31, 1994, has been waived through
June 30, 1995.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1994 YEAR YEARS FUND
OVERSEAS 9.13% 50.48% 523.75%
OVERSEAS (INCL. 3% SALES CHARGE) 5.85% 45.97% 505.04%
Morgan Stanley EAFE Index 10.09% 22.45% 435.93%
Average International Fund 10.59% 52.74% n/a
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 4, 1984. You can compare the fund's figures to the
performance of the Morgan Stanley EAFE index - a broad measure of the
performance of stocks in Europe, Australia, and the Far East. You can also
compare the fund's performance to the average international fund which
currently reflects the performance of 149 funds with similar objectives
tracked by Lipper Analytical Services. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effects of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1994 YEAR YEARS FUND
OVERSEAS 9.13% 8.52% 20.28%
OVERSEAS (INCL. 3% SALES CHARGE) 5.85% 7.86% 19.91%
Morgan Stanley EAFE Index 10.09% 4.13% 18.45%
Average International Fund 10.59% 8.61% n/a
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
Overseas (094) Europe, Asia, and t
12/04/84 9700.00 10000.00
12/31/84 9981.30 10193.53
01/31/85 10689.40 10422.65
02/28/85 10640.90 10361.03
03/31/85 11067.70 11164.76
04/30/85 11504.20 11126.55
05/31/85 12464.50 11599.34
06/30/85 12697.30 11897.35
07/31/85 13473.30 12511.82
08/31/85 14055.30 12913.71
09/30/85 14559.70 13669.40
10/31/85 15442.40 14599.44
11/30/85 16548.20 15198.76
12/31/85 17833.85 15918.65
01/31/86 18371.30 16317.71
02/28/86 21078.14 18125.28
03/31/86 24703.54 20674.06
04/30/86 25465.75 22027.83
05/31/86 24654.68 21048.78
06/30/86 26579.76 22481.82
07/31/86 29579.75 23869.90
08/31/86 31543.92 26221.76
09/30/86 30078.12 25952.02
10/31/86 26296.37 24218.32
11/30/86 28758.91 25614.83
12/31/86 30183.41 26972.00
01/31/87 34828.46 29838.08
02/28/87 35945.95 30731.05
03/31/87 40010.55 33249.27
04/30/87 43001.48 36767.40
05/31/87 42837.14 36767.26
06/30/87 39824.30 35595.88
07/31/87 40415.91 35533.69
08/31/87 43779.34 38198.08
09/30/87 43242.50 37596.71
10/31/87 33853.39 32164.65
11/30/87 33579.50 32647.11
12/31/87 35727.39 33616.52
01/31/88 34338.32 34216.71
02/29/88 35428.67 36497.48
03/31/88 37579.48 38741.56
04/30/88 38565.27 39304.55
05/31/88 37788.59 38044.60
06/30/88 36713.18 37041.81
07/31/88 36235.22 38203.95
08/31/88 35144.88 35719.99
09/30/88 36459.26 37280.76
10/31/88 37788.59 40470.59
11/30/88 38774.38 42881.27
12/31/88 38677.38 43120.36
01/31/89 39151.29 43879.03
02/28/89 40175.55 44104.58
03/31/89 39823.94 43238.97
04/30/89 40680.04 43639.99
05/31/89 38723.24 41265.84
06/30/89 37591.96 40571.18
07/31/89 41322.11 45665.83
08/31/89 40359.00 43612.06
09/30/89 42514.54 45598.67
10/31/89 40206.13 43766.63
11/30/89 42483.96 45966.76
12/31/89 45226.82 47662.81
01/31/90 44200.40 45889.35
02/28/90 43286.24 42686.52
03/31/90 44713.61 38239.61
04/30/90 44601.34 37936.14
05/31/90 47632.50 42264.70
06/30/90 48482.51 41892.44
07/31/90 50872.16 42482.52
08/31/90 45242.86 38357.11
09/30/90 40223.00 33011.49
10/31/90 44056.06 38155.31
11/30/90 42596.61 35904.60
12/31/90 42240.75 36486.24
01/31/91 43177.92 37666.39
02/28/91 44745.54 41704.18
03/31/91 43280.15 39200.58
04/30/91 43893.57 39585.54
05/31/91 43978.77 39998.59
06/30/91 41218.38 37059.46
07/31/91 43467.59 38880.26
08/31/91 43791.34 38090.68
09/30/91 45716.79 40237.43
10/31/91 45870.15 40807.83
11/30/91 44217.32 38902.74
12/31/91 45879.11 40911.80
01/31/92 46405.83 40037.93
02/29/92 45443.20 38604.89
03/31/92 44498.74 36056.33
04/30/92 47204.99 36227.73
05/31/92 49239.22 38652.66
06/30/92 48076.80 36819.27
07/31/92 45025.46 35876.95
08/31/92 44644.04 38127.18
09/30/92 42791.44 37374.28
10/31/92 39885.40 35413.83
11/30/92 39685.61 35747.08
12/31/92 40623.32 35931.97
01/31/93 41807.32 35927.55
02/28/93 42664.70 37012.81
03/31/93 45563.45 40239.06
04/30/93 48727.57 44057.85
05/31/93 49850.33 44988.34
06/30/93 48666.33 44286.43
07/31/93 50891.43 45836.67
08/31/93 53769.76 48311.07
09/30/93 53300.25 47223.62
10/31/93 55443.69 48678.94
11/30/93 52912.39 44423.89
12/31/93 56894.62 47631.62
01/31/94 60939.26 51658.65
02/28/94 59798.47 51515.57
03/31/94 58076.90 49296.72
04/30/94 60026.62 51388.34
05/31/94 59259.18 51093.30
06/30/94 58470.99 51815.35
07/31/94 60109.59 52313.66
08/31/94 60980.75 53552.19
09/30/94 59300.66 51865.54
10/31/94 60503.68 53592.66
Let's say you invested $10,000 in Fidelity Overseas Fund on its start date
and paid the 3% sales charge. By October 31, 1994, it would have grown to
$60,504 - a 505.04% increase on your initial investment. That compares to
$10,000 invested in the Morgan Stanley EAFE index, which would have grown
to $53,593 over the same period - a 435.93% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
(checkmark)
OVERSEAS
FUND TALK: THE MANAGER'S OVERVIEW
An interview with John Hickling,
Portfolio Manager of Fidelity Overseas Fund
Q. JOHN, HOW DID THE FUND DO?
A. About average. For the year ended October 31, 1994, the fund had a total
return of 9.13%. In contrast, the EAFE index - a broad measure of stocks in
Europe, Australia and the Far East - returned 10.09%. Over the same period,
the average international fund had a return of 10.59%, according to Lipper
Analytical Services.
Q. WHY DID THE EAFE INDEX OUTPERFORM THE FUND OVER THE PAST YEAR?
A. There were two main reasons. The first was a matter of timing in the
Southeast Asian markets. I reduced the fund's holdings there late in 1993
and increased its weighting in Japan. At that point, the Southeast Asian
markets appeared to me to be overvalued and speculative. But, in fact, they
significantly outperformed Japan until the end of 1993. However, in 1994,
nearly all Southeast Asian markets experienced a notable correction and
Japan's performance improved. So essentially, I got out of Southeast Asia
too early in 1993, but was well positioned for Japanese growth in 1994.
Q. WHAT WAS THE OTHER MAIN REASON?
A. The strong Japanese yen versus the weak U.S. dollar. During 1994, the
EAFE index was weighted about 50% in Japan. The fund also held many
Japanese securities, but was underweighted in Japan compared to the index
due to stock selection. For example, I focused on auto and electronics
companies, but stayed away from stocks like large Japanese city banks,
which I didn't think were attractive. These banks underperformed as I
expected. However, because Japanese securities are denominated in yen, and
the yen was very strong against the dollar, these stocks actually ended up
boosting the performance of the index in dollar terms.
Q. AS YOU NOTED, THE JAPANESE MARKET PICKED UP EARLY IN 1994. HOW DID
JAPAN'S ECONOMY LOOK OVERALL AND WHAT STOCKS DID YOU LIKE?
A. Over this calendar year, the economy has been slowly recovering. My goal
during this period was to look for stocks whose earnings were recovering
faster than the economy. One good example was automotive stocks, such as
Toyota and Honda. These cyclical stocks - those that tend to perform well
when an economy picks up and poorly when an economy falls - benefited from
Japan's economic upturn. In addition, they took a number of cost-cutting
measures that helped them reduce production costs. Another company that
rode on the success of the auto industry was Tokio Marine and Fire
Insurance Company, a large insurance company that has half of its business
in auto insurance. This stock was still inexpensive at the end of the
period, despite an increase in car premium rates and in the number of new
cars on the road. I should also note that Japanese electrical companies,
such as Hitachi and Toshiba, also looked good for much of the period
because they were inexpensive and were benefiting from improving global and
Japanese trends in the electronics industry.
Q. STAYING WITH THAT PART OF THE WORLD, HOW HAVE THE SOUTHEAST ASIAN
MARKETS LOOKED SINCE THEY PLUMMETED EARLY IN 1994?
A. For the first six months of 1994, they fell badly, and I avoided the
region, especially Hong Kong, which dropped dramatically. But around
September of this year, some Southeast Asian markets started picking up
noticeably. My approach in this environment was to look for value on a
stock-by-stock basis. One standout was Matahari department store, which is
known as the Wal-Mart of Indonesia. Matahari is benefiting from an emerging
middle class that is demanding more consumer goods. Siam City Bank in
Thailand also looked good because its stock was cheap, and it performed
well over the past six months. It's also important to note that stock
prices of many Southeast Asian companies have fallen significantly, and, at
the end of the period, many companies there started looking like good buys.
Q. LET'S SWITCH TO EUROPE. HOW DID THE MARKETS THERE LOOK?
A. European markets went down hill during the period largely because
European bond prices tumbled along with U.S. bonds and European stocks
followed suit. I should note that many analysts were puzzled by the drop in
European markets. That's because many of these countries are about a year
behind the United States in the economic cycle and there is virtually no
threat of inflation - a big enemy of bondholders since it eats away at a
bond's fixed interest payments. Despite falling stock and bond prices,
corporate earnings in Europe have generally come through and been positive.
A lot of companies have been cutting costs and increasing productivity, and
a number of industries started to recover in terms of demand and pricing.
Q. YOU WERE BIG ON EUROPEAN CYCLICAL STOCKS SIX MONTHS AGO. HOW DID THEY DO
IN THIS ENVIRONMENT?
A. Like the U.S. economy, the European economy was growing despite the weak
stock market. And cyclicals, such as chemical and automobile companies,
benefited from the increasing demand for their products. However, early
this fall, I thought they had begun to more fully reflect their earnings
recovery. Around this time, I started to shift more of the fund into banks
and financial stocks, which had been battered by the market and were very
cheap. Many investors think that cyclical stocks will continue to perform
well, but I think they're expensive and most of the money has already been
made in them.
Q. WHICH EUROPEAN FINANCIALS APPEALED TO YOU?
A. I liked Deutsche Bank, Germany's pre-eminent bank. It had a tough year,
but looks good going forward. Its stock price was low, and it took
cost-cutting steps that I think may improve its performance. In addition,
if anyone is going to benefit from the longer-term monetary trends in
Eastern Europe, such as the growth in loans and investment, brokerage and
underwriting services, I believe that it will be Deutsche Bank.
Q. JOHN, LET'S TALK ABOUT DERIVATIVES. HOW DOES YOUR FUND
USE THEM?
A. As I've noted in previous reports, the fund has the authority to use
derivatives to manage its investments more efficiently. I currently have an
investment of 7.7% of the fund in forward foreign currency contracts to
hedge the fund against currency volatility in both Japan and Europe. I
should point out that this is one of the fund's first times hedging the
highly volatile yen. Since the yen has appreciated against the dollar, my
currency contracts have had a somewhat negative impact on the fund.
Q. HOW DO YOU THINK THESE MARKETS LOOK GOING FORWARD?
A. In terms of Japan, I think it looks great for 1995 since I expect the
economy to continue improving. I'm also fairly optimistic about European
markets because I expect - barring any major interest rate increase in the
United States - that the stock and bond markets will begin recovering in
1995. However, as far as Southeast Asia goes, I remain cautious. That's
because all the market optimists have jumped back on the bandwagon, and I
think there's reason to be concerned that stock prices could become overly
inflated. I fear this could lead to another correction in the region like
we saw early in 1994. I should note, however, that we might see another
correction as a buying opportunity to rebuild some of the fund's Southeast
Asian holdings at inexpensive prices.
FUND FACTS
GOAL: to increase the value of the fund's
shares by investing mainly in stocks in
Europe, the Far East, and the Pacific Basin
START DATE: December 4, 1984
SIZE: As of October 31, 1994, more than
$2.2 billion
MANAGER: John Hickling, since January 1993;
manager Advisor Overseas, since February 1993;
VIP: Overseas, since January 1993; previously
managed the Fidelity Japan, Fidelity Europe,
International Growth and Income, International
Opportunities (now Emerging Markets), and
Pacific Basin funds; joined Fidelity in 1982
(checkmark)
JOHN HICKLING ON SOME INTERESTING NEW STOCKS:
"I tend to choose the fund's investments on a
stock-by-stock basis. This summer I had the
opportunity to discover a number of interesting stocks
in Europe during an extended visit to Fidelity's London
office. Although I am frequently overseas for company
visits, this extended trip gave me the opportunity to
spend more time with our London-based analysts as
well as with a number of smaller companies, which the
fund ended up investing in. While these companies
didn't make up large positions in the fund, they have
turned out to be very profitable investments.
"Some of the standout companies I found were Arjo
Wiggins, a U.K. paper distributor and manufacturer;
Duerr, a German machinery company; and Rhone
Poulenc, a chemical company that I feel is just
beginning to turn in its strongest performance. Food
retailers based in the United Kingdom, such as Tesco
and Sainsbury, were also good values because they
were just plain unfairly oversold and cheap."
(solid bullet) Italy, which was a strong performer six months ago,
turned in a fairly weak performance over the period.
This was the result of a combination of falling stock
and bond prices and political problems at home.
Specifically, many Italians were nervous about the
sustainability and longevity of the government leaders
they had thought would improve the business
environment in their country.
(solid bullet) Over the period, the fund invested in several
European oil companies, including the French
company Total.
(solid bullet) While the stock of Japanese investment house
Nomura experienced a correction over the past few
months, the company may remain well positioned to
benefit from expected growth in Japan. That's why
Nomura is one of the fund's top 10 stocks.
(solid bullet) At the end of the period ended October 31, 1994,
the fund had 12.3% in cash and short-term
investments. This compares to 9.5% one year ago.
DISTRIBUTIONS
The Board of Trustees of Fidelity Overseas Fund
voted to pay on December 12, 1994 to shareholders of
record at the opening of business on December 9,
1994, a distribution of $.47 derived from capital gains
realized from sales of portfolio securities.
OVERSEAS
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION
AS OF OCTOBER 31, 1994
United States 12.3%
Row: 1, Col: 1, Value: 12.3
Row: 1, Col: 2, Value: 10.0
Row: 1, Col: 3, Value: 6.9
Row: 1, Col: 4, Value: 3.7
Row: 1, Col: 5, Value: 21.1
Row: 1, Col: 6, Value: 4.9
Row: 1, Col: 7, Value: 23.2
Row: 1, Col: 8, Value: 3.5
Row: 1, Col: 9, Value: 7.1
Row: 1, Col: 10, Value: 7.3
France 7.3%
Germany 7.0%
Italy 3.5%
United
Kingdom 10.0%
Switzerland 6.9%
Japan 23.2%
Spain 3.7%
Other 21.2%
Netherlands 4.9%
AS OF APRIL 30, 1994
Australia 2.0%
United States 16.4%
Row: 1, Col: 1, Value: 16.4
Row: 1, Col: 2, Value: 8.800000000000001
Row: 1, Col: 3, Value: 5.7
Row: 1, Col: 4, Value: 3.7
Row: 1, Col: 5, Value: 4.7
Row: 1, Col: 6, Value: 13.5
Row: 1, Col: 7, Value: 5.1
Row: 1, Col: 8, Value: 20.5
Row: 1, Col: 9, Value: 5.4
Row: 1, Col: 10, Value: 7.3
Row: 1, Col: 11, Value: 6.9
Row: 1, Col: 12, Value: 2.0
France 6.9%
Germany 7.3%
United
Kingdom 8.8%
Italy 5.4%
Switzerland 5.7%
Japan 20.5%
Sweden 3.7%
Spain 4.7%
Other 13.5%
Netherlands 5.1%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks and closed-end
investment companies 86.1 81.6
Bonds 1.6 2.0
Short-term investments 12.3 16.4
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Deutsche Bank AG
(Germany, Banks) 1.3 0.8
Hitachi Ltd.
(Japan, Electronics) 1.0 1.2
Hoechst AG Ord.
(Germany, Chemicals & Plastics) 1.0 1.1
Nomura Securities Co. Ltd
(Japan, Securities Industry) 1.0 0.8
Stet (Societa Finanziaria
Telefonica) Spa
(Italy, Telephone Services) 0.9 1.8
Holderbank Financiere Glarus AG (Bearer)
(Switzerland, Building Materials)
0.9 1.0
Toshiba Corp.
(Japan, Electronics) 0.9 1.0
Total SA Class B
(France, Oil & Gas) 0.9 0.5
Tokio Marine &
Fire Insurance Co. Ltd. (The)
(Japan, Insurance) 0.9 0.4
Telefonica de Espana SA Ord.
(Spain, Telephone Services) 0.9 1.0
TOP TEN INDUSTRIES
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 20.7 17.5
Durables 10.6 12.6
Basic Industries 10.5 11.4
Utilities 7.1 7.8
Technology 6.1 7.6
Energy 4.2 3.6
Industrial Machinery & Equipment 4.0 3.8
Retail & Wholesale 3.8 2.0
Transportation 3.5 3.0
Construction & Real Estate 3.4 4.4
OVERSEAS
INVESTMENTS OCTOBER 31, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 82.9%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.6%
Buenos Aires Embotelladora SA
sponsored ADR 72,200 $ 2,770,675 11942420
Perez Companc Class B 500,700 2,704,726 71399723
Telecom Argentina Stet France
Telecom SA 443,600 2,698,033 90899992
YPF Sociedad Anonima sponsored ADR
representing Class D shares 185,800 4,482,425 98424510
12,655,859
AUSTRALIA - 1.7%
Ampolex Ltd. Ord. 1,631,500 4,944,130 03212792
Brambles Industries Ltd. 404,000 4,044,957 10599010
FAI Insurance Ltd. Ord. 3,866,800 2,211,500 30239330
Lend Lease Corp. Ltd. 190,000 2,342,634 52599292
Pioneer International Ltd. 966,700 2,340,738 72371110
TNT Ltd. 3,141,200 5,622,842 93599292
Westpac Banking Corp. 4,924,181 16,568,183 96121410
38,074,984
AUSTRIA - 0.8%
Mayr Melnhof Karton AG (a) 60,100 3,257,222 57847192
OEMV AG (a) 128,800 11,751,581 67399592
Steyr-Daimler-Puch AG (a) 83,500 1,550,450 86099322
VA Technologie AG (a) (c) 24,000 2,467,977 96399A23
19,027,230
BELGIUM - 1.3%
Bekaert SA 3,670 2,843,167 07799A22
Delhaize Freres & Cie Le Lion SA 137,700 5,532,052 24650010
Petrofina SA 22,100 6,812,647 71648510
Petrofina SA (warrants) (a) 1,105 24,091 71648592
Solvay & Cie SA 27,505 13,656,857 83425810
28,868,814
BERMUDA - 0.2%
Consolidated Electric Power Asia Ltd.
sponsored ADR (a)(c) 67,400 1,550,200 20855210
Jardine Strategic Holdings Ltd. Ord. 894,500 3,438,163 47199020
4,988,363
BRAZIL - 0.6%
Coteminas PN 4,900,000 2,088,772 22199692
Telebras PN (Pfd. Reg.) 217,135,515 10,464,672 95499792
12,553,444
CANADA - 0.6%
Abitibi Price, Inc. (a) 274,700 3,678,972 00368010
Midland Walwyn, Inc. 277,800 1,642,148 59780110
Noranda, Inc. 460,700 9,020,985 65542210
14,342,105
CHILE - 0.0%
Vina Concha y Toro SA
sponsored ADR (a) 46,100 824,038 92719110
FINLAND - 0.4%
Outokumpu OY Class A (a) 270,100 5,723,703 69099992
Valmet OY Ord. (a) 108,700 2,362,530 92029991
8,086,233
FRANCE - 7.0%
Accor SA 93,418 11,090,721 00439991
BNP Ord. 328,020 16,246,440 05599996
Carnaudmetalbox SA 96,900 3,458,764 20999092
SHARES VALUE (NOTE 1)
Club Mediterranee SA Ord. 29,300 $ 2,507,850 18947230
Compagnie Bancaire Ord. 32,600 3,179,870 20427310
Credit Lyonnais 40,400 3,650,248 22799392
Elf Aquitaine 254,544 18,819,390 28627199
Eramet SA (a)(c) 11,500 840,183 29499H23
GAN (Groupe des Assur. Natl.) 113,000 6,268,629 36599792
Havas SA 93,000 7,750,452 00822292
Lafarge Coppee SA 198,600 15,756,024 50586310
Pechiney International SA 85,100 2,634,106 71099094
Peugeot SA Ord. (a) 101,300 15,175,809 71682510
Rhone Poulenc SA Class A 605,750 14,959,844 76242695
Societe Generale Class A 78,200 8,828,175 83357799
Total SA Class B 330,500 21,442,523 20434510
Valeo SA 109,000 5,919,654 91899010
Vallourec SA (a) 66,800 3,627,825 92017610
162,156,507
GERMANY - 6.4%
Allianz Versich Holdings Ord. (Reg.) 3,650 5,599,701 01882495
BASF AG 47,800 10,117,865 05526230
BMW AG 21,272 10,963,125 05528310
Continental Gummi-Werke AG 52,400 7,707,983 21199010
Deutsche Bank AG 61,900 30,502,344 25152592
Duerr Beteiligungs AG (RFD) 13,350 5,726,185 26499292
Gildemeister AG (a) 32,100 3,031,222 37550099
Gildemeister AG (RFD) (rights) (a) 25,680 1,753,253 37550092
Hoechst Krupp, Fried Krupp AG Ord. 101,300 22,183,269 43439010
Kolbenschmidt AG (a) 26,600 3,449,377 50799792
MAN AG Ord. 35,450 9,606,567 56154210
Schmalbach-Lubeca AG 14,350 3,893,466 80899792
Sixt AG Ord. 6,035 1,850,131 83002199
Thyssen AG Ord. 81,700 15,609,250 88629110
Veba AG Ord. 47,130 15,796,189 92239110
147,789,927
HONG KONG - 1.3%
Amoy Properties Ltd. 2,785,000 3,460,084 03199192
Dickson Concepts International Ltd. 4,277,000 3,321,091 25399210
HSBC Holdings PLC 566,000 6,702,340 42199192
Hong Kong Land Holdings Ltd. 3,330,000 8,532,925 43858292
Hopewell Holdings Ltd. 3,310,000 3,405,527 44099999
Jardine Matheson Holdings Ltd. Ord. 528,000 4,390,320 47111510
29,812,287
INDIA - 0.2%
ITC Ltd. GDS (warrants) (a)(c) 19,000 156,750 45031811
Reliance Industries Ltd. GDS 181,700 4,587,925 75947094
4,744,675
INDONESIA - 0.8%
Astra International PT (For. Reg.) 440,000 972,770 04699894
Bank International Indonesia PT Ord. 1,556,300 5,268,605 06199B92
Jakarta International Hotels &
Development Ord. 3,017,400 4,099,862 47399693
Matahari Putra Prima PT (For. Reg.) 805,500 1,706,629 57699C92
Sampoerna, Hanjaya Mandala
(For. Reg.) 1,455,000 7,036,686 82299893
19,084,552
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
IRELAND - 0.7%
Bank of Ireland U.S. Holdings, Inc. 894,200 $ 4,155,052 06278793
Fyffes PLC 2,367,000 3,872,767 34999G22
Independent Newspapers PLC 940,650 4,309,325 45399E92
Smurfit (Jefferson) Group PLC 356,100 2,174,970 84699793
Smurfit (Jefferson) Group PLC (rights) (a) 35,610 20,392 84699794
Waterford Wedgwood PLC Unit (a) 2,426,200 2,262,687 94151393
16,795,193
ITALY - 1.6%
Alitalia Linee Aeree Italiane Class A (a) 3,333,000 2,060,761 01608910
Assicurazioni Generali Spa 391,160 9,775,057 04542910
Editoriale L'Espresso Spa 527,300 1,510,003 28199K22
Istituto Mobiliare Italiano 545,700 3,582,122 45777M92
Istituto Nazionale Delle
Assicurazionl Spa (a) 2,134,000 3,090,245 46523492
Montedison Spa Ord. 5,637,300 4,641,189 61237610
SAI Sta Assieuratrice Industriale Spa 355,000 4,617,659 78399110
Telecom Italia Ord. 3,031,600 8,294,730 87999R22
37,571,766
JAPAN - 23.2%
Ado Electronic Industrial Co. Ltd. 76,000 2,588,102 00699992
Advantest Corp. 143,000 5,017,285 00799010
Aida Engineering Ltd. Ord. 54,000 492,606 00871210
Akita Bank Ltd. 144,000 1,202,167 00999692
Alps Electric Co. Ltd. 271,000 3,663,484 02199292
Amada Metrecs Co. Ltd. 54,000 1,008,617 02299292
Amadasonoike Co. Ltd. 495,000 4,469,583 02499492
Aoyama Trading Co. Ord. Ltd. 136,000 4,182,241 03799092
Autobacs Seven Co. Ltd. 34,700 4,368,609 05299392
Bridgestone Corp. 692,000 11,425,626 10844110
Canon, Inc. 984,000 18,277,692 13780199
Daicel Chemical Industries Ltd. 592,000 3,610,466 23398110
Daiwa House Industry Co. Ltd.
(warrants) (a) 75 28,875 23406297
East Japan Railway Co. Ord. 1,100 5,482,689 27399722
Fanuc Ltd. 58,100 2,817,914 30729599
Fujitsu Ltd. 1,274,000 14,593,058 35959010
Futaba Industrial Co. Ltd. 245,000 5,284,040 38299192
Hanshin Department Store Ltd. 72,000 583,252 41199292
Hachijuni Bank Ltd. 93,000 1,170,837 58799292
Higo Bank Ltd. Ord. 133,000 1,125,433 43299192
Hitachi Ltd. 2,213,000 23,065,170 43357810
Honda Motor Co. Ltd. 622,000 10,847,531 43812810
Ishihara Sangyo Kaisha Ltd. (a) 657,000 2,935,667 46427899
Izumi Co. Ord. 86,000 2,218,668 46399292
Japan Airlines Co. Ltd. 623,000 4,821,733 47103420
Joshin Denki Co. Ltd. Ord. 178,000 2,296,063 48199999
Kawasaki Steel Corp. 1,694,000 7,936,390 48636810
Komatsu Ltd. Ord. 693,000 6,579,224 50045899
Kyocera Corp. 26,000 1,980,084 50155610
Marubeni Corp. 662,000 3,825,605 57381010
Marukyo Corp. 55,000 1,946,752 57899792
Matsushita Electric Industrial Co. Ltd. 513,000 8,523,090 57687910
Minebea Co. Ltd. 924,000 8,019,026 60299392
Mitsubishi Chemical Industries Ltd. (a) 756,600 4,465,975 60799D22
Mitsubishi Estate Co. Ltd. 226,000 2,658,687 60678310
Mitsubishi Heavy Industries Ltd. 898,000 7,311,507 60699310
Mitsubishi Trust & Banking Corp. 750,000 11,609,310 60699410
Mitsui OSK Lines Ltd. 636,000 2,789,331 60799792
Mitsui Petrochemical Industries, Ltd. 493,000 4,649,937 60691110
Mitsui Trust and Banking Co. Ltd. 206,000 2,380,888 60684699
Murata Manufacturing Co. Ltd. Ord. 323,400 13,215,663 62699110
Nichido Fire & Marine Insurance Co. Ltd. 912,000 7,990,178 65399920
SHARES VALUE (NOTE 1)
Nikko Securities Co. Ltd. 612,000 $ 7,199,629 65399010
Nintendo Co. Ltd. Ord. 42,000 2,357,773 65443999
Nippon Shinpan Co. Ltd. 226,000 1,777,122 65461710
Nippon Telegraph & Telephone
Corp. Ord. 696 6,499,974 65462492
Nippon Yusen Kabushiki Kaisha 450,000 3,055,572 65463310
Nippon Zeon Co. Ltd. (a) 368,000 2,248,141 66499692
Nissan Motor Co. Ltd. Ord. 1,009,000 8,610,937 65474491
Nisshinbo Industries 447,000 5,212,427 65411310
Nitto Denko Corp. 175,000 3,015,840 65480230
Nomura Securities Co. Ltd. 1,058,000 22,163,354 65536110
Oji Paper Co. Ltd. 359,000 4,001,033 67811810
Omron Corp. 242,000 4,370,259 68215110
Orix Corp. 441,000 17,657,292 68616710
Pioneer Electronic Corp. 490,000 12,792,940 72365710
Rohm Co. Ltd. 207,000 9,121,200 77536110
Sankyo Co. Ltd. 615,000 15,992,983 80029710
Sanwa Bank Ltd. 183,000 3,833,548 80399410
Seino Transpotation Co. Ltd. 248,000 4,888,087 81605210
Sharp Corp. 246,000 4,594,810 81989991
Sony Corp. 155,700 9,495,765 83569999
Sumitomo Marine and Fire
Insurance Co. Ltd. 655,000 5,927,816 94599392
Sumitomo Realty & Development Co. Ltd. 901,000 5,764,616 86562310
Sumitomo Rubber Industries Ltd. 330,000 3,439,451 86699892
Sumitomo Trust & Banking Co. Ltd. 535,000 7,784,427 86599310
Suzuki Motor Corp. 443,000 5,622,928 86958592
TDK Corp. 144,000 7,073,319 87235110
Tadano Ltd. 29,000 289,985 87357899
Takashimaya Co. Ltd. 342,000 4,835,046 87346710
Takeda Chemical Industries Ltd. 883,000 10,934,419 87405810
Tanabe Seiyaku Co. Ltd. 9,000 76,157 87599010
Tokio Marine &
Fire Insurance Co. Ltd. (The) 1,738,000 20,625,350 88909099
Tokyo Electron Ltd. 75,000 2,507,611 89499999
Tokyo Steel Manufacturing Co. Ltd. 310,300 7,781,117 88998799
Tokyo Style Co. Ltd. 575,000 9,968,528 88999410
Toppan Printing Co. Ltd. (warrants) (a) 200 105,000 89074792
Toshiba Corp. 2,749,000 21,673,143 89149310
Toyobo Co. Ltd. 713,000 3,141,749 90899392
Toyota Motor Corp. 886,000 19,565,963 89399999
Tsugami Corp. 336,000 2,194,809 89853699
Yamanouchi Pharmaceutical Co. Ltd. 591,000 11,648,628 98414010
533,307,803
KOREA (SOUTH) - 0.7%
Cho Hung Bank Co. Ltd. 79,000 1,397,155 17099E22
Cho Hung Bank Co. Ltd. (New) (a) 17,362 280,963 17099E25
Korea Electric Power Corp. ADR 285,000 10,832,967 50099B92
Korea First Securities Co. Ltd. (a) 6,422 116,009 50099K22
Korea First Securities Co. Ltd. (New) (a) 661 11,194 50099K24
Kyungki Bank (a) 135,000 1,524,180 61999922
Seoul Securities Co. (a) 120,870 2,122,788 83599P22
16,285,256
LUXEMBOURG - 0.1%
Quilmes Industries SA 94,974 2,493,068 74899692
MALAYSIA - 1.0%
Aokam Perdana BHD 101,000 833,682 01899792
Hong Leong Credit BHD 105,000 624,352 44699492
Kuala Lumpar Industries
Holdings BHD (a) 570,000 1,088,159 49799B92
Magnum Corp. BHD 960,000 2,159,414 55999392
Malaysan Banking BHD 227,000 1,545,155 56090499
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MALAYSIA - CONTINUED
Resorts World BHD 769,000 $ 4,873,468 76199592
Sime Darby BHD 1,343,000 3,703,927 82861792
Telekom Malaysia BHD 977,000 7,911,551 94099892
Time Engineering BHD 317,000 942,476 93099592
23,682,184
MEXICO - 1.4%
Cemex SA, Series B 594,300 5,479,731 15299293
Cifra SA Class C 2,428,100 6,539,917 17178594
Consorcio G Grupo Dina SA ADR 117,200 1,508,950 21030610
Grupo Dina Sponsored ADR, Series L (a) 42,244 427,721 21030620
Grupo Financiero Bancomer SA de CV
sponsored ADR, Series C (c) 189,800 4,365,400 40048610
Telefonos de Mexico SA sponsored ADR
representing shares Ord. Class L 230,400 12,700,800 87940378
31,022,519
NETHERLANDS - 4.9%
AKZO Nobel NV Ord. 113,300 14,312,924 01019910
DSM NV 108,800 9,425,503 23332H92
Frans Maas Groep NV 113,400 3,606,622 35399322
Hoogovens en Staalfabrieken NV (a) 121,400 5,661,924 43888410
Internationale Nederlanden Groep NV 325,045 15,217,498 46099892
KLM Royal Dutch Airlines Ord. (a) 552,600 15,378,234 48251620
Koninklijke PPT Nederland 264,500 8,427,965 72699422
Koninklijke PPT Nederland (c) 143,300 4,566,077 72699423
Oce Van der Grinten NV 288,500 12,821,843 67462710
Philips Electronics 388,800 12,873,102 71833799
Pirelli Tyre Holdings NV Ord. 1,628,100 11,302,889 72499092
113,594,581
NEW ZEALAND - 0.2%
Fletcher Challenge Ltd. (Reg.) 1,665,500 4,496,200 33999592
NORWAY - 2.1%
Bergesen Group:
Class A 168,800 3,665,917 08399010
Class B 408,700 8,938,457 08399011
Christiania Bank Free shares Ord. (a) 1,760,000 3,445,446 17100792
Den Norske Bank Class A Free shares (a) 1,267,700 3,295,995 25299792
Norsk Hydro AS 162,300 6,540,651 65653150
Norsk Hydro AS ADR 129,400 5,208,350 65653160
Norske Skogindustrier AS Class A
Free shares 139,920 3,873,292 66499594
Orkla AS Class B (non-vtg.) 152,400 4,370,268 39299192
Saga Petroleum AS Class B 330,200 3,762,315 84099794
Unitor AS 286,300 5,166,842 91699392
48,267,533
PAKISTAN - 0.1%
Pakistan Telecommunications Voucher
GDR (a)(c) 14,900 2,458,500 69584910
SINGAPORE - 1.0%
Kim Engineering Holdings Ltd. 4,950,000 6,170,609 49499D92
Neptune Orient Lines Ltd. 9,003,000 13,430,905 64099610
Overseas Union Bank Ltd. (For.) 456,000 2,609,264 68990192
Van Der Horst Ltd. 244,000 1,097,002 92099C22
23,307,780
SPAIN - 3.7%
ACERINOX SA (Reg.) 35,775 3,958,814 00499192
Banco Bilbao Vizcaya SA Ord. (Reg.) 534,900 14,050,470 05945891
Banco Intercontinental Espanol 100,750 9,298,763 24699592
SHARES VALUE (NOTE 1)
Corporacion Mapfrecia International de
Reaseguros SA (Reg.) 287,150 $ 12,678,161 16899192
Iberdrola SA 729,500 4,805,092 45499892
Repsol SA Ord. 158,800 5,077,797 76026T10
Tabacalera SA, Series A 141,200 3,799,154 87399410
Telefonica de Espana SA Ord. 1,465,300 19,829,802 87938210
Union Electrica Fenosa SA 1,827,000 8,402,008 90659510
Uralita SA (a) 350,450 3,665,385 91799310
85,565,446
SWEDEN - 2.7%
Electrolux AB 280,300 14,625,779 01019810
Investor AB Class B Free shares 401,000 10,083,751 46199A92
Marieberg Tidnings AB Class A
Free shares 84,000 2,077,102 56799392
SKF AB Ord. (a) 504,300 9,229,230 78437530
Skandia International Holding 114,600 2,097,303 83055510
Skandinaviska Enskilada Banken Class A
Free shares 1,178,600 7,738,723 88099222
Volvo AB Class B 759,100 15,058,882 92885630
60,910,770
SWITZERLAND - 6.9%
Adia SA (Bearer) 94,000 16,608,038 00699793
Alusuisse-Lonza Holding AG (Reg.) 37,611 18,738,150 02239994
Ascom Holding AG (Bearer) (a) 2,820 3,422,602 04364492
Baloise Holding:
(Reg.) 9,600 18,069,240 05899195
(warrants) (a) 6,700 87,983 05899196
CIBA-GEIGY AG:
(Reg.) 22,765 13,262,220 17199492
(warrants) (a) 1,480 3,887 17199494
C. S. Holdings:
(Bearer) 43,700 19,093,752 17599792
(Reg.) 135,600 11,493,354 17599795
(Bearer) (warrants) (a) 25,700 214,763 15099427
(Reg.) (warrants) (a) 135,600 199,649 15099428
Fischer (Georg) AG (Reg.) 23,300 5,006,765 33771192
Globus Magazine (Part. Cert.) 9,400 6,246,717 37957792
Holderbank Financiere Glarus AG:
(Bearer) 28,325 21,843,951 43479593
(warrants) (a) 141,625 197,250 43479595
Oerlikon-Buhrle Holding Ltd. (Reg.) (a) 22,100 2,286,510 67199092
Surveillance, Societe Generale (Bearer) 1,690 2,447,911 86901193
Swiss Bank Corp. (Bearer) 63,950 18,424,115 87083610
157,646,857
THAILAND - 0.7%
Bank of Asia PCL (For. Reg.) 511,600 1,395,849 06199D22
Krung Thai Bank:
(Loc. Reg.) 632,500 2,157,141 50599292
(For. Reg.) 1,369,700 4,671,362 50599293
Phatra Thanakit PCL:
(For Reg.) 11,300 116,976 71799593
(For. Reg.) (rights) (a) 45,200 449,769 71799595
Siam City Bank PCL (For. Reg.) 5,542,100 7,838,504 81199593
16,629,601
TURKEY - 0.0%
Cimentas AS 900,000 579,519 17199G22
Tofas Turkey Otomobil Fabrikasi AS ADR (c) 150,900 528,150 90011010
1,107,669
UNITED KINGDOM - 10.0%
Amstrad PLC 625,400 286,508 03299110
Argyll Group PLC Ord. 1,146,000 4,893,821 04099210
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Arjo Wiggins Appleton PLC 1,225,100 $ 5,371,916 04199592
Avon Rubber PLC 157,100 1,370,019 05399010
BET PLC Ord. 4,801,000 8,640,696 05538H10
Barclays PLC Ord. 1,607,200 15,304,389 06738E10
Bass PLC Ord. 1,012,600 9,228,188 06990492
Boots Co. PLC 769,400 6,671,929 09999410
British Gas PLC Ord. 533,200 2,556,118 11090199
British Steel PLC Ord. 4,476,000 11,735,759 11101510
British Vita PLC Ord. 1,356,000 5,258,134 11199192
De La Rue PLC 469,200 7,523,279 24642110
Dixons Group PLC 2,273,000 7,289,170 25587592
Electrocomponents PLC 429,400 3,238,814 28599192
English China Clay PLC 1,479,294 8,785,853 29321792
Forte PLC 3,051,200 11,457,134 34999592
General Electric Co. PLC Ord. 1,165,100 5,261,324 36963940
Great Universal Stores PLC Ord. Class A 658,400 6,032,550 39133420
Hanson Trust PLC Ord. 1,101,300 4,162,374 41135210
Ladbroke Group PLC Ord. 3,180,300 7,909,247 50572799
Lloyds Abbey Life PLC 887,900 5,084,586 53801099
London International Group PLC 4,668,400 6,607,046 54183310
Morrison (WM) Supermarkets PLC 478,700 1,041,139 61899894
National Westminster Bank PLC Ord. 1,438,980 11,842,561 63853930
North West Water Group PLC Ord. 721,600 6,658,845 67299195
Rolls Royce PLC Ord. 1,600,399 4,556,176 77577910
Royal Insurance Holdings PLC 1,652,600 7,908,914 78074910
Sainsbury (J.) PLC Ord. 1,197,800 7,819,526 78710310
Shanks & Mcewan Group PLC 1,553,300 2,338,120 81999294
Spring Ram Corp. PLC 2,317,600 1,668,454 83899492
Sturge Holdings PLC 176,400 213,576 86399822
Taylor Woodrow PLC 1,177,500 2,485,267 87667410
Tesco PLC Ord. 2,409,200 9,263,254 88157510
Transport Development Group PLC 930,600 3,304,049 89399610
Vickers PLC Ord. units 3,421,075 9,599,527 92549310
Vodafone Group PLC 1,470,000 5,092,889 92857T92
Whitbread Co. PLC Class A 1,346,600 12,580,464 96341499
231,041,615
TOTAL COMMON STOCKS
(Cost $1,622,749,409) 1,909,193,359
NONCONVERTIBLE PREFERRED STOCKS - 3.0%
AUSTRIA - 0.4%
Creditanstaldt Bankverein 160,500 9,575,993 22539210
GERMANY - 0.6%
Boss (Hugo) AG 4,250 2,667,997 44451094
FAG Kugelfischer Georg Schaef 46,200 6,851,272 50105492
Fuchs Petrolub AG Oel & Chemie 14,738 1,715,146 36499F22
Porsche AG Ord. (a) 7,200 3,073,925 73380110
14,308,340
ITALY - 1.9%
Banco Ambro Veneto 2,320,900 3,551,209 06399592
Fiat Spa (a) 4,001,600 9,696,037 31562120
SAI Sta Assicuratrice Industriale Spa 1,190,200 8,066,093 78399192
Stet (Societa Finanziaria Telefonica) Spa 8,823,000 21,855,091 85982592
Telecom Italia 350,000 777,903 87999R24
43,946,333
KOREA (SOUTH) - 0.1%
Korea First Securities Co. Ltd. (a) 66,140 846,300 50099K23
Korea First Securities Co. Ltd. (New) (a) 6,814 98,472 50099K25
944,772
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $52,217,098) 68,775,438
CLOSED-END INVESTMENT COMPANIES - 0.2%
SHARES VALUE (NOTE 1)
THAILAND - 0.2%
Ruam Pattana Fund II (For. Reg.) 2,683,000 $ 1,910,806 76999523
Ruang Khao Unit Trust (For. Reg.) (a) 2,633,900 1,796,583 77399393
TOTAL CLOSED-END INVESTMENT COMPANIES
(Cost $2,651,231) 3,707,389
CORPORATE BONDS - 0.0%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (B)
GRAND CAYMAN - 0.0%
CT II Overseas Finance Ltd. euro
4 1/4%, 11/18/98 (c)
(Cost $605,000) -- $ 605,000 484,000 126995AA
GOVERNMENT OBLIGATIONS (E) - 1.6%
ARGENTINA - 0.4%
Argentina Republic BOCON
5 1/8%, 4/1/01 (d) B1 15,000,414 10,685,770 039995AF
BRAZIL - 0.5%
Brazil Federative Republic IDU
euro 6.0625%, 1/1/01 (d) B2 13,181,000 10,758,991 1057569E
DENMARK - 0.4%
Danish Government Bullet 7%,
12/15/04 Aa1 DKK 62,500,000 9,244,713 249998AV
FRANCE - 0.3%
French Government Strips
0%, 4/25/23 Aaa FRF 420,000,000 6,800,640 351996BL
TOTAL GOVERNMENT OBLIGATIONS
(Cost $40,867,728) 37,490,114
REPURCHASE AGREEMENTS - 12.3%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 4.78% dated
10/31/94 due 11/1/94 $282,397,491 282,360,000 99799N9L
TOTAL INVESTMENT IN SECURITIES -100%
(Cost $2,001,450,466) $2,302,010,300
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO SELL
425,178,909 FRF 11/16/94 $ 82,599,004 $ (3,154,525)
7,966,217,000 JPY 1/11/95 82,759,012 (2,208,368)
21,434,578 NLG 12/13/94 12,723,058 (374,315)
TOTAL CONTRACTS TO SELL
(Receivable amount $172,343,866) $178,081,074 $(5,737,208)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 7.7%
CURRENCY ABBREVIATIONS
DKK - Danish krone
NLG - Dutch guilder
FRF - French franc
JPY - Japanese yen
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $17,417,237 or 0.8% of net
assets.
(d) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(e) Most foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,319,975,904 and $835,927,611, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $4,808 for the period (see Note 5 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At October 31, 1994 the aggregate cost of investment securities for income
tax purposes was $2,001,593,454. Net unrealized appreciation aggregated
$300,416,846, of which $353,123,838 related to appreciated investment
securities and $52,706,992 related to depreciated investment securities.
The fund hereby designates $19,039,080 as a capital gain dividend for the
purpose of the dividend paid deduction.
For the period, interest and dividends from foreign countries were
$41,166,131 or $0.53 per share. Taxes paid to foreign countries were
$6,624,148 or $0.08 per share.
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Investments (Unaudited)
Aerospace & Defense 0.3%
Basic Industries 10.5
Conglomerates 0.2
Construction & Real Estate 3.4
Durables 10.6
Energy 4.2
Finance 20.7
Government Obligations 1.6
Health 2.9
Holding Companies 0.8
Industrial Machinery & Equipment 4.0
Media & Leisure 2.4
Nondurables 2.4
Retail & Wholesale 3.8
Services 3.2
Repurchase Agreements 12.3
Technology 6.1
Transportation 3.5
Utilities 7.1
100.0%
OVERSEAS
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $282,360,000) (cost $2,001,450,466) $ 2,302,010,300
- - See accompanying schedule
Cash 280
Receivable for investments sold 8,159,196
Receivable for fund shares sold 12,467,350
Dividends receivable 5,079,066
Interest receivable 1,503,034
Other receivables 15,417
TOTAL ASSETS 2,329,234,643
LIABILITIES
Payable for investments purchased $ 9,171,567
Unrealized depreciation on foreign currency contracts 5,737,208
Payable for fund shares redeemed 28,143,770
Accrued management fee 1,454,843
Other payables and accrued expenses 1,515,792
TOTAL LIABILITIES 46,023,180
NET ASSETS $ 2,283,211,463
Net Assets consist of:
Paid in capital $ 1,947,583,433
Distributions in excess of net investment income (5,581,700)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 46,268,007
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 294,941,723
NET ASSETS, for 78,273,736 shares outstanding $ 2,283,211,463
NET ASSET VALUE and redemption price per share ($2,283,211,463 (divided by) 78,273,736 shares) $29.17
Maximum offering price per share (100/97.00 of $29.17) $30.07
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1994
INVESTMENT INCOME $ 35,100,087
Dividends
Interest 12,058,570
47,158,657
Less foreign taxes withheld (6,624,148
)
TOTAL INCOME 40,534,509
EXPENSES
Management fee 14,621,202
Basic fee
Performance adjustment 516,209
Transfer agent fees 5,826,092
Accounting fees and expenses 715,901
Non-interested trustees' compensation 10,587
Custodian fees and expenses 1,530,829
Registration fees 226,189
Audit 76,165
Legal 14,045
Miscellaneous 17,302
Total expenses 23,554,521
NET INVESTMENT INCOME 16,979,988
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 102,628,790
Foreign currency transactions (15,872,042 86,756,748
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 52,241,564
Assets and liabilities in foreign currencies (9,176,697 43,064,867
)
NET GAIN (LOSS) 129,821,615
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 146,801,603
OTHER INFORMATION $1,120,737
Sales charges paid to FDC
Accounting fees paid to FSC $715,901
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1994 1993
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 16,979,988 $ 10,233,528
Net investment income
Net realized gain (loss) 86,756,748 (49,776,636)
Change in net unrealized appreciation (depreciation) 43,064,867 370,524,952
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 146,801,603 330,981,844
Distributions to shareholders: (8,339,198) (11,187,669)
From net investment income
In excess of net investment income (9,043,942) -
From net realized gain (6,172,422) (75,938,524)
TOTAL DISTRIBUTIONS (23,555,562) (87,126,193)
Share transactions 1,731,601,947 854,803,474
Net proceeds from sales of shares
Reinvestment of distributions 22,888,570 84,813,750
Cost of shares redeemed (1,085,191,412) (494,651,306)
Net increase (decrease) in net assets resulting from share transactions 669,299,105 444,965,918
TOTAL INCREASE (DECREASE) IN NET ASSETS 792,545,146 688,821,569
NET ASSETS
Beginning of period 1,490,666,317 801,844,748
End of period (including under (over) distribution of net investment income of $(5,581,700) $ 2,283,211,463 $ 1,490,666,317
and $7,779,873, respectively)
OTHER INFORMATION
Shares
Sold 60,924,762 35,327,981
Issued in reinvestment of distributions 855,349 4,255,602
Redeemed (38,395,055) (21,200,545)
Net increase (decrease) 23,385,056 18,383,038
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31,
SELECTED PER-SHARE DATA 1994 1993 1992 D 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 27.16 $ 21.96 $ 26.92 $ 27.47 $ 26.30
Income from Investment Operations
Net investment income .18 .27 .46 .54 C .35
Net realized and unrealized gain (loss) 2.26 7.40 (3.82) .45 2.16
Total from investment operations 2.44 7.67 (3.36) .99 2.51
Less Distributions (.15) (.37) (.44) (.46) (.21)
From net investment income
In excess of net investment income (.17) - - - -
From net realized gain (.11) (2.10) (1.16) (1.08) (1.13)
B B B
Total distributions (.43) (2.47) (1.60) (1.54) (1.34)
Net asset value, end of period $ 29.17 $ 27.16 $ 21.96 $ 26.92 $ 27.47
TOTAL RETURN A 9.13% 39.01% (13.05) 4.12% 9.58%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 2,283,211 $ 1,490,666 $ 801,845 $ 969,436 $ 1,011,152
Ratio of expenses to average net assets 1.24% 1.27% 1.52% 1.53% 1.26%
Ratio of net investment income to average net assets.90% 1.00% 1.78% 2.19% 1.34%
Portfolio turnover rate 49% 64% 122% 132% 96%
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
C INCLUDES $0.08 PER SHARE FROM RECOVERY OF FOREIGN TAXES PREVIOUSLY WITHHELD ON DIVIDEND AND INTEREST PAYMENTS.
D AS OF NOVEMBER 1, 1991, THE FUND DISCONTINUED THE USE OF EQUALIZATION ACCOUNTING.
</TABLE>
WORLDWIDE
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
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (income) and capital gains (the profits the
fund earns when it sells stocks that have grown in value). Worldwide has a
3% sales charge, which has been waived through June 30, 1995.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1994 YEAR FUND
WORLDWIDE 11.55% 49.14%
WORLDWIDE (INCL. 3% SALES CHARGE) 8.21% 44.67%
Morgan Stanley World Index 7.65% 33.51%
Average Global Fund 8.09% n/a
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 May
30, 1990. You can compare the fund's figures to the performance of the
Morgan Stanley World index,
a broad measure of the performance of stocks across the world, weighted by
each country's market capitalization (or the total value of its outstanding
shares). You can also compare the fund's performance to the average global
fund, which currently reflects the performance of 85 funds with similar
objectives tracked by Lipper Analytical Services. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effects of
sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1994 YEAR FUND
WORLDWIDE 11.55% 9.45%
WORLDWIDE (INCL. 3% SALES CHARGE) 8.21% 8.70%
Morgan Stanley World Index 7.65% 6.75%
Average Global Fund 8.09% n/a
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
Worldwide Fund (318) World Index
05/30/90 9700.00 10000.00
05/31/90 9729.10 10038.61
06/30/90 9981.30 9964.14
07/31/90 10252.90 10051.93
08/31/90 9098.60 9108.00
09/30/90 8196.50 8144.51
10/31/90 8681.50 8901.68
11/30/90 8681.50 8752.34
12/31/90 8631.28 8932.45
01/31/91 8875.93 9255.96
02/28/91 9365.23 10109.62
03/31/91 9042.29 9808.57
04/30/91 9130.37 9882.21
05/31/91 9198.87 10103.10
06/30/91 8543.20 9476.34
07/31/91 9071.65 9920.84
08/31/91 9208.65 9886.25
09/30/91 9365.23 10142.44
10/31/91 9404.37 10303.82
11/30/91 8905.29 9851.69
12/31/91 9311.08 10565.69
01/31/92 9410.03 10366.97
02/29/92 9696.98 10184.99
03/31/92 9469.40 9702.08
04/30/92 9884.99 9834.16
05/31/92 10300.57 10222.20
06/30/92 9944.35 9876.60
07/31/92 9845.41 9898.58
08/31/92 9706.88 10136.03
09/30/92 9706.88 10039.86
10/31/92 9528.77 9764.70
11/30/92 9677.19 9936.32
12/31/92 9889.02 10013.50
01/31/93 10214.25 10043.98
02/28/93 10458.17 10278.91
03/31/93 11057.81 10871.83
04/30/93 11332.22 11372.70
05/31/93 11687.94 11631.78
06/30/93 11565.98 11531.21
07/31/93 11820.07 11765.78
08/31/93 12562.00 12302.20
09/30/93 12429.87 12071.96
10/31/93 12968.54 12401.72
11/30/93 12734.78 11697.27
12/31/93 13503.03 12266.78
01/31/94 14466.79 13072.98
02/28/94 14249.17 12900.91
03/31/94 13710.29 12341.84
04/30/94 14186.99 12720.47
05/31/94 14166.26 12750.32
06/30/94 13876.10 12711.99
07/31/94 14300.98 12950.75
08/31/94 14539.33 13337.82
09/30/94 14259.53 12984.42
10/31/94 14466.79 13350.78
Let's say you invested $10,000 in Fidelity Worldwide Fund on its start date
and paid a 3% sales charge. By October 31, 1994, it would have grown to
$14,467 - a 44.67% increase on your initial investment. That compares to
$10,000 invested in the Morgan Stanley World index, which would have grown
to $13,351 over the same period - a 33.51% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
(checkmark)
WORLDWIDE
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Penny Dobkin,
Portfolio Manager of Fidelity Worldwide Fund
Q. HOW HAS THE FUND PERFORMED, PENNY?
A. It has done well, besting the average global fund. For the year ended
October 31, 1994, the fund had a total return of 11.55%. According to
Lipper Analytical Services, the average global fund returned 8.09% during
the same period.
Q. WHAT CONTRIBUTED TO THE FUND'S SUCCESS?
A. The fund's favorable performance was due largely to a strong first six
months. During that period, the fund benefited from its concentration on
small- and medium-sized European growth stocks, and its underweighting in
investments in Southeast Asian markets, which were battered from the end of
December 1993 to April 1994. As you would gather, Europe did quite well at
that time. For the last six months, that situation has reversed. Overall,
small European growth stocks have struggled, while the markets in Asia have
rebounded well. I've also kept more of the fund in short-term cash
instruments than usual, because, frankly, most of the markets are less
attractive than I've seen in more than 10 years of managing money.
Q. WHY HAVEN'T YOU SWITCHED MORE ASSETS OVER TO ASIA?
A. Because the stocks are very expensive. In hindsight, the fund would
have benefited from more investment in Asia from the end of April through
the summer, as those stock markets rallied. But I'm not convinced that
it's an area that will pay off over the next year. My premise has been and
remains that European economic growth is going to surprise on the upside
this year and next. I've also believed since last autumn that interest
rates would rise. Therefore, my focus has been on small or medium
capitalization stocks that are not sensitive to interest rate movements but
rather to economic demand.
Q. WHAT ARE SOME EXAMPLES?
A. Volker Stevin, a Dutch construction company involved in public sector
construction, is one. In order to maintain its status as the distribution
headquarters of Europe, the Netherlands has to build more rail and tunnel
capacity. The country is terribly short of such infrastructure, having
seen no growth in real terms since around 1986. This stock is inexpensive
and the company is already growing earnings at about 15% per year due to
its involvement in private housing. The stock is down a bit in the last
six months, but it's crucial to be patient. Smaller companies haven't
performed as well as some of the European blue chips, because rising
interest rates this year tended to pull investors away from the less
tradable, but higher potential, smaller names.
Q. WHAT ABOUT POSITIVE PERFORMERS?
A. The fund profited from the sale of two stocks it no longer owns, Grupo
Tribasa, a Mexican public works company; and Fidis Spa, an Italian
financial services company the fund sold out of before the Italian market
turned back down. Bremer Vulkan, a German shipbuilding company, is still
in the fund. Management has turned the company around by cutting costs in
the shipbuilding business and by developing related technical services.
Q. ANY DISAPPOINTMENTS?
A. Three French property companies - Bail, Unibail and Klepierre - have
been among the disappointments. French interest rates have actually come
down, property demand has increased, and supply and demand should have come
into better balance. The expected take-up of office space in France has
occurred, but at discounts to market rates. France has turned out to be a
country whose growth has lagged the rest of Europe. Even though these
stocks hurt performance, the fund still holds these investments because the
trends are intact, but they have taken considerably longer to pay off than
I thought. And even though the fund has tried to avoid interest
rate-sensitive investments, its investment in Banco Pastor, a Spanish
regional bank - susceptible to rising interest rates, naturally - hurt
performance a bit.
Q. WHAT ABOUT OPPORTUNITIES IN THE U.S.?
A. I find the U.S. market intriguing. If there is going to be a worldwide
problem with inflation in the next year, then it seems the Federal Reserve
Board has gone further than other countries in trying to contain it. It is
interesting that the U.S. is the only country that has raised short-term
interest rates by more than 1%. I believe there is less of a downside to
this market than to others. At the moment, the fund has about 14% of its
assets in U.S. equities, and I'd like to buy more. I may buy futures
contracts which participate in the movement of the stock market, if I can't
find enough specific stocks to buy quickly. At present, IBM,
Schering-Plough and Pfizer are three American stocks that are in the fund.
IBM is attractive after its restructuring, while Schering-Plough and
Pfizer, both pharmaceutical companies, should benefit from cutting costs
and the lack of health care legislation in the foreseeable future.
Q. ARE YOU STILL USING DERIVATIVE INSTRUMENTS KNOWN AS FORWARD FOREIGN
CURRENCY CONTRACTS TO HEDGE OVERSEAS INVESTMENTS?
A. I am, but I use them selectively and not very often. These contracts
reduce the fund's exposure to foreign currency risk - the chance that
movements in a country's currency will negatively affect the fund's
investment there. Although they reduce the possibility of negative effects,
they also reduce the possibility of positive currency effects. In August,
the fund initiated a Japanese yen/U.S. dollar hedge with the expectation
that, at 99 to 100 yen per dollar, there was little risk left of the yen
rising further. The fund's holdings are of domestic Japanese companies
whose earnings do not benefit if the yen weakens against the dollar. If
that occurs, these investments will be worth less in dollar terms unless
there is a currency hedge in place.
Q. THE FUND'S ASSETS HAVE GROWN MARKEDLY. DOES THIS INCREASE AFFECT YOUR
STRATEGY?
A. Yes, it does. I will focus on larger companies. I used to look at
companies with what I call a free flow of publicly traded stock of $100
million and up. Going forward, that size consideration will be over $200
million. In general, a bigger fund will have fewer smaller capitalization
names because one can't buy enough shares to create a meaningful position.
The alternative is to increase dramatically the number of holdings in the
fund, making it very difficult to stay well-informed of fundamental
business developments.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. There could be some trading rallies in European markets, but otherwise
I think it will be a waiting period. Managers will want to nail down a
forecast for 1995 based on 1994 business trends, but year-end earnings
reports won't be out until February or March in the U.S., and March and
April elsewhere. I wouldn't be surprised if economic growth in the fourth
quarter were stronger than expected and long-term interest rates were to
rise further. Should long-term rates rise, the market could drop some
more, but I think that drop would be modest. I don't see Southeast Asia
continuing its strong performance. I'll watch producer price indexes to
get a read on whether inflation will be a problem. I prefer to invest in
countries with hard currency that hasn't depreciated, such as Germany, the
Netherlands and Switzerland.
FUND FACTS
GOAL: to increase the value of the fund's
shares by investing mainly in common stocks
from around the world.
START DATE: May 30, 1990
SIZE: as of October 31, 1994, more than
$748 million
MANAGER: Penelope Dobkin, since May 1990;
manager Fidelity Europe Fund, 1986-1990;
Fidelity United Kingdom Fund, 1987-1989;
Fidelity Select Financial Services Portfolio,
1983-1986; joined Fidelity in 1980
(checkmark)
PENNY DOBKIN ON THE DOLLAR AND THE U.S. MARKET:
"The U.S. dollar is a very cheap currency at the
moment. If American companies start showing better
earnings in 1995, overseas investors could start to
increase their investments in the U.S. One of the
standard strategies in global investing is to buy in a
country where earnings are continuing to grow well or
turning positive, and where the currency has
depreciated. It has been some time since these
factors have combined to make the U.S. attractive.
The U.S. dollar certainly fits the inexpensive category
for European and Japanese investors. This potential
scenario is one reason I will be focusing
considerably more time on the U.S. going forward.
"While some in the U.S have bemoaned the drop in
the dollar's value, the situation has also been painful
for those overseas. During the summer, it was
reported that a number of export-oriented companies
in Japan urged their government to alter monetary
policy to bring the yen and the dollar into better
balance, actually threatening to curtail exports
because they were losing money on transactions. I've
never heard of a group of companies curtailing
business and thought it was amazing that they would
publicly consider doing so. The Japanese
government has responded by steadily purchasing
dollars. If the dollar shows signs of strengthening and
U.S. companies report better-than-expected 1994
earnings, then that could be the impetus for
overseas investors to buy U.S. securities."
(solid bullet) Political violence characterized by two
assassinations and the Chiapas uprising may have
long-term ramifications for the Mexican market, with
respect to flows of foreign capital and stock market
volatility. As a result, the fund's investments in Mexico
have been reduced to 0.8% as of October 31, 1994.
On April 30, 1994, Mexico led all other emerging
markets with 4.6% of investments. India is now the
emerging market with the largest representation in the
fund, at 1.3% as of October 31, 1994, followed by
Argentina (1.0%) and Mexico (0.8%).
(solid bullet) A total of 32.5% of the fund is invested in short-term
cash instruments, awaiting lower prices before buying
stocks.
(solid bullet) Sweden's recent market history may be a precursor
to a general trend in Europe. The currency was
devalued the last two years - thereby helping exports
- - but there has been a corresponding increase in
both export and domestic product prices recently.
Short-term interest rates tend to climb with inflation,
making the opportunity to invest in cash and bonds
more attractive than stocks. Going forward, the
fund's European investments will try to target stocks
that are not sensitive to increases in interest rates.
DISTRIBUTIONS
The Board of Trustees of Fidelity Worldwide Fund
voted to pay on December 12, 1994, to shareholders
of record at the opening of business on December 9,
1994, a distribution of $.66 derived from capital gains
realized from sales of portfolio securities and a
dividend of $.07 from net investment income.
WORLDWIDE
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION
AS OF OCTOBER 31, 1994
France 3.4%
Row: 1, Col: 1, Value: 46.1
Row: 1, Col: 2, Value: 5.2
Row: 1, Col: 3, Value: 3.5
Row: 1, Col: 4, Value: 3.4
Row: 1, Col: 5, Value: 12.7
Row: 1, Col: 6, Value: 7.2
Row: 1, Col: 7, Value: 11.6
Row: 1, Col: 8, Value: 6.9
Row: 1, Col: 9, Value: 3.4
Germany 6.9%
United States 46.1%
Japan 11.6%
Netherlands 7.2%
Other 12.7%
Spain 3.4%
Switzerland 5.2%
Sweden 3.5%
AS OF APRIL 30, 1994
France 4.3%
Row: 1, Col: 1, Value: 30.8
Row: 1, Col: 2, Value: 3.5
Row: 1, Col: 3, Value: 3.9
Row: 1, Col: 4, Value: 7.6
Row: 1, Col: 5, Value: 3.0
Row: 1, Col: 6, Value: 15.1
Row: 1, Col: 7, Value: 5.3
Row: 1, Col: 8, Value: 4.6
Row: 1, Col: 9, Value: 14.3
Row: 1, Col: 10, Value: 7.6
Row: 1, Col: 11, Value: 4.3
Germany 7.6%
United States 30.8%
Japan 14.3%
Mexico 4.6%
United
Kingdom 3.5%
Netherlands 5.3%
Switzerland 3.9%
Sweden 7.6%
Other 15.1%
Spain 3.0%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 65.8 80.1
Bonds 1.7 3.8
Short-term investments 32.5 16.1
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Volker Stevin NV
(Netherlands, Construction) 1.1 0.4
AKZO Nobel NV Ord.
(Netherlands, Chemicals & Plastics) 1.0 0.2
Bremer Vulkan AG
(Germany, Ship Building & Repair) 0.9 1.2
KBB NV Ord.
(Netherlands, Apparel Stores) 0.8 0.2
Banco de Santander SA Ord. (Reg.)
(Spain, Banks) 0.8 0.1
Banco Pastor SA
(Spain, Banks) 0.8 0.7
Kone Corp. Class B Ord.
(Finland, Industrial Machinery &
Equipment) 0.7 0.3
Fuchs Petrolub AG (Bearer)
(Switzerland, Chemicals & Plastics) 0.7 -
Bail Investissement SA
(France, Real Estate) 0.7 0.9
NCC AB Class B Free shares
(Sweden,Construction) 0.7 0.8
TOP TEN INDUSTRIES
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 14.5 18.9
Basic Industries 9.4 10.2
Construction & Real Estate 7.5 12.5
Retail & Wholesale 7.0 8.6
Durables 6.9 8.5
Industrial Machinery & Equipment 3.8 3.0
Energy 3.4 3.7
Media & Leisure 3.4 3.1
Technology 2.0 3.1
Nondurables 1.9 1.5
WORLDWIDE
INVESTMENTS OCTOBER 31, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 62.7%
SHARES VALUE (NOTE 1)
AUSTRALIA - 0.5%
Tabcorp Holding Ltd.
sponsored (ADR) (a) (d) 211,000 $ 3,603,606 87330610
BELGIUM - 1.1%
D'Ieteren Trading BV 49,000 3,708,879 24999592
D'Ieteren Trading BV (VVPR) (a) 4,339 328,425 24999596
GIB Holdings Ltd. 100,000 3,907,488 37499A23
7,944,792
CANADA - 1.1%
Imasco Ltd. 150,000 4,419,588 45245170
Methanex Corp. (a) 265,600 3,974,138 59151K10
8,393,726
DENMARK - 0.6%
Unidanmark AS Class A (a) 115,000 4,608,984 92399792
FINLAND - 2.4%
Enso-Gutzeit OY Class R Free shares 430,000 3,822,429 29357810
Kansallis-Osake-Pankki 1,380,000 2,576,446 48199210
Kone Corp. Class B Ord. 47,050 5,603,869 50400092
Repola OY 167,600 3,515,192 75999A92
Unitas Bank Ltd. Class B Free shares 841,700 2,469,666 90499123
17,987,602
FRANCE - 3.4%
Bail Investissement SA 31,300 5,291,169 05699092
Eramet SA (a) 3,500 255,708 29499H22
Eramet SA (a) (d) 4,000 292,237 29499H23
Immeubles de France, Ste Des 55,432 4,631,451 44999C22
Klepierre SA 48,350 4,894,657 49899822
UFB Locabail SA 24,000 1,720,781 90599B92
Ugine SA 19,345 1,454,681 90299G22
Ugine SA (d) 27,000 2,030,312 90299G23
Unibail 57,000 4,873,215 90499123
25,444,211
GERMANY - 4.6%
Bayer AG 7,200 1,684,908 07273010
Bremer Vulkan AG (a) 98,000 6,706,035 10689999
Deutsche Babcock AG (a) 13,500 2,003,791 25159991
Deutsche Bank AG 6,700 3,301,546 25152592
Deutsche Bank AG (warrants) (a) 23,000 2,997,839 25152596
Felten & Guilleaume Energietechnik AG 5,900 1,326,151 31499292
Hoesch-Krupp, Fried Krupp AG (a) 39,100 5,070,324 43438199
Karstadt AG 6,300 2,601,696 48576499
Kaufhof Holding AG 2,000 678,304 48615210
Linotype AG (Bearer) (a) 6,950 1,548,296 53599092
Metallgesellschaft AG Ord. 19,000 1,986,234 59124810
Rheinhold & Mahla AG 9,700 2,193,184 76299692
Sixt AG 16,000 1,090,607 83002195
Sixt AG Ord. 748 229,312 83002199
Thyssen AG Ord. 4,200 802,434 88629110
34,220,661
HONG KONG - 0.3%
Cheung Kong Holdings Ltd. 212,000 1,016,850 16674410
Luks Industrial Co. Ltd. 4,886,000 910,555 54999492
1,927,405
INDIA - 1.0%
Arvind Mills Ltd. GDR (a) (d) 335,800 1,806,604 04334810
Bajaj Auto Ltd. GDR (d) 33,000 835,890 05710010
Indian Aluminum Ltd. GDR (a) (d) 213,700 2,164,781 45410110
Shriram Industries Ltd. GDR (a) (d) 56,800 2,343,000 82554620
7,150,275
SHARES VALUE (NOTE 1)
INDONESIA - 0.4%
Barito Pacific Timber PT (For. Reg.) 372,000 $ 633,959 06799F23
Dharmala International Land PT 1,462,500 2,004,005 25399592
2,637,964
ITALY - 0.4%
Cementerie di Sardegna Spa 278,000 832,282 15199F22
Fila Holding Spa sponsored ADR 108,000 1,795,500 31685010
2,627,782
JAPAN - 11.6%
Akita Bank Ltd. 257,000 2,145,534 00999692
Alps Electric Co. Ltd. 230,000 3,109,230 02199292
Aomori Bank Ltd. 470,000 2,958,565 02399592
Bandai Co. Ltd. 56,000 2,305,764 06099192
Bank of the Ryukyus Ltd. 51,900 3,159,899 83499192
Charle Co. Ltd. 40,000 866,828 15999392
Daihatsu Motor Co. Ltd. 340,000 2,280,584 24199092
Daiichi Corp. Ord. 122,000 2,643,827 23599B92
Daito Trust Construction 83,000 1,130,592 24999492
Daiwa Securities Co. Ltd. 233,000 3,390,227 23499010
Fukushima Bank Ltd. 467,000 2,592,705 36099A92
Hankyu Department Stores, Inc. 237,000 2,861,462 41099192
Hanshin Department Store Ltd. 403,000 3,264,590 41199292
Higo Bank Ltd. Ord. 278,000 2,352,408 43299192
Hyogo Sogo Bank Ltd. (a) 722,000 2,421,444 44999292
Iwate Bank 45,000 2,507,611 45699392
Kajima Corp. 240,000 2,278,519 48311110
Kaneshita Construction Co. Ltd Ord. 145,000 2,364,171 49099592
Kanto Auto Works Ltd., Yokosuka 172,000 1,306,352 48599092
Keio Teito Electric Railway Co. Ltd. 117,000 674,919 48766710
Kokuyo Co. Ltd. 60,000 1,541,716 50033399
Kumagai Gumi Co. Ltd. (warrants) (a) 6,400 80,000 50125193
Matsuya Co. Ltd. 251,000 1,709,508 57699E22
Mazda Motor Corp. (a) 255,000 1,513,081 57878592
Michinoku Bank 370,000 2,959,082 59499392
Mitsubishi Motors Corp. 198,000 1,851,173 60899692
Namura Shipbuilding Co. Ltd. 261,000 2,022,713 62999892
Nikko Securities Co. Ltd. 151,000 1,776,379 65399010
Nikku Sangyo Co. Ltd. 88,000 1,580,104 68799G22
Nomura Securities Co. Ltd. 156,000 3,267,943 65536110
Sankyo Co. Ltd. 145,000 3,770,703 80029710
Sekisui House Ltd. 220,000 2,497,290 81607810
Shimizu Bank Ltd. 32,000 2,569,114 82499592
Sogo Co. Ltd. 387,000 2,655,745 83599K22
Tachi-S Co. Ltd. 120,000 1,263,092 88099392
Toho Bank Ltd. Ord. 320,000 2,559,206 91799192
Tokyo Nissan Automatic Sales Co. Ltd. 244,000 2,351,748 88998599
Toyoda Automatic Loom Works Ltd. 130,000 2,723,286 89200910
Yorozu Corp. 80,000 2,055,622 99199792
87,362,736
MEXICO - 0.8%
BANACCI SA de CV:
Class L 182,000 1,206,980 06399895
Class B 210,000 1,282,722 06399896
Grupo Financiero Bancomer SA de CV
sponsored ADR, Series C (d) 89,000 2,047,000 40048610
Telefonos de Mexico SA sponsored ADR
representing shares Ord. Class L 33,000 1,819,125 87940378
6,355,827
NETHERLANDS - 7.2%
AKZO Nobel NV Ord. 56,400 7,124,880 01019910
BAM Groep NV 18,832 1,173,299 05999892
CVG (Crown Van Gelder) NV 41,000 3,357,266 12699292
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NETHERLANDS - CONTINUED
Draka Holding NV 28,700 $ 677,778 26199B22
Econosto NV (c) 320,000 4,158,310 27903299
Geveke NV (a)(c) 215,200 4,405,387 37431310
KBB NV Ord. 97,525 6,116,651 48130092
Kempen & Co. NV 329,000 2,811,131 48899D22
Koninklijke PPT Nederland 43,000 1,370,142 72699422
Koninklijke PPT Nederland (d) 74,400 2,370,664 72699423
MacIntosh Confectionary Works 149,900 3,949,184 58199292
Pirelli Tyre Holdings NV:
Ord. 328,666 2,281,724 72499092
(warrants) (a) 57,166 45,453 72499096
Samas-Groep NV 57,250 1,953,287 79499110
Telegraaf 17,600 1,984,216 87940410
Volker Stevin NV 165,000 8,439,446 92868894
Wereldhave NV 37,000 2,096,659 95199E22
54,315,477
NORWAY - 1.0%
Den Norske Bank Class A Free shares (a) 874,700 2,274,203 25299792
Mosvold Shipping AS Class B 221,700 1,729,249 62099294
Petroleum Geo Services AS (a) 133,000 3,356,275 71699E92
7,359,727
PAKISTAN - 0.2%
Pakistan Telecommunications Voucher
GDR (a) (d) 10,100 1,666,500 69584910
SPAIN - 3.4%
Banco Bilbao Vizcaya SA Ord. (Reg.) 179,600 4,717,638 05945891
Banco Central SA (Reg.) 91,000 2,179,641 05947010
Banco de Santander SA:
Ord. (Reg.) 150,000 6,095,808 05957410
(RFD) (a) 9,587 375,443 05957494
Banco de Valencia SA (Reg.) 290,000 3,484,631 13499292
Banco Pastor SA 120,475 5,771,257 05999792
Conservera Campofrio SA 44,250 2,614,371 20899292
25,238,789
SWEDEN - 3.5%
Arjo AB (d) 118,000 2,143,042 04069792
Avesta Sheffield AB Ord. Free shares (a) 491,428 4,908,751 05399892
Celsius Industrier AB Class B 135,000 3,111,881 15199D22
Marieberg Tidnings AB Class A
Free shares 183,400 4,535,005 56799392
Munksjoe AB 445,200 3,793,937 62599922
NCC AB Class B Free shares (a) 539,000 5,120,387 63399192
Skandinaviska Enskilada Banken Class A
Free shares 400,000 2,626,412 88099222
26,239,415
SWITZERLAND - 5.2%
C. S. Holdings (Bearer) 11,130 4,863,008 17599792
Fuchs Petrolub AG (Bearer) 14,750 5,399,920 37899222
Industrieholding Cham AG (Reg.) 3,100 2,047,752 85599922
Jelmoli Grand Magasins SA (Reg.) 5,400 687,624 47469993
Merkur Holdings AG Ord. (Reg.) 8,500 2,225,627 59099393
Reisebuero Kuoni Part. Cert. 3,000 4,035,018 75999592
SMH (Schweizerische
Geselischaft) (Bearer) 7,500 4,178,273 80899294
SIG AG (Reg.) 2,500 2,427,378 83199893
Swiss Bank Corp.:
(Reg.) 27,257 3,763,700 87083694
(warrants) (a) 321 1,788 87087294
Swiss Reinsurance Corp.:
(Reg.) 1,100 652,209 87099393
Class B (warrants) (a) 1,500 11,938 87099399
Swisslog Holding AG (Reg.) 9,000 2,514,127 87099G22
SHARES VALUE (NOTE 1)
Von Moos Holdings AG Ord. (a) (c) 33,500 $ 3,599,284 94099293
Winterthur Schweizerische
Versicherungs-Gesellschaft (Reg.) 5,250 2,502,786 97629994
38,910,432
UNITED KINGDOM - 1.2%
Brown & Jackson PLC 19,000,000 932,520 11599092
Ladbroke Group PLC Ord. 1,325,000 3,295,209 50572799
Trafalgar House PLC Ord. 1,725,000 2,328,440 89270710
Wates City of London Properties PLC (a) 2,624,999 2,834,631 94299092
9,390,800
UNITED STATES OF AMERICA - 12.8%
AMR Corp. (a) 47,000 2,590,875 00176510
Allstate Corp. 56,700 1,367,888 02000210
Amerada Hess Corp. 92,700 4,611,825 02355110
American Eagle Outfitters, Inc. 21,000 606,375 02553D10
American Ecology Corp. 25,400 215,900 02553310
Armco, Inc. (a) 660,400 4,705,350 04217010
BJ Services Co. (a) 19,300 393,238 05548210
Baker (J.), Inc. 171,000 2,885,625 05723210
Bruno's, Inc. 150,000 1,443,750 11688110
Burlington Industries, Inc. (a) 221,000 2,071,875 12169310
Caldor Corp. (a) 85,800 2,456,025 12878710
Casino America, Inc. (a) 144,400 1,552,300 14757510
Castech Aluminum Group 10,800 159,300 14838010
Chemical Banking Corp. 55,000 2,090,000 16372210
Cliffs Drilling Co. (a) 18,000 234,000 18682C10
Cobra Industries, Inc. (a) 71,000 310,625 19104E10
Dayton Hudson Corp. 32,900 2,549,750 23975310
Dresser Industries, Inc. 38,000 802,750 26159710
Enterra Corp. (a) 25,600 585,654 29380510
Exxon Corp. 61,000 3,835,375 30229010
GEON Co. 28,000 840,000 37246W10
Halliburton Co. 34,000 1,258,000 40621610
Harveys Casino Resorts 66,300 837,038 41782610
Helmerich & Payne, Inc. 32,000 1,000,000 42345210
International Business Machines Corp. 53,700 4,000,650 45920010
Kentucky Electric Steel, Inc. (a) 28,600 293,150 49127B10
Kerr-McGee Corp. 66,600 3,271,725 49238610
Kroger Co. (The) (a) 70,000 1,828,750 50104410
Lafarge Corp. 51,343 975,517 50586210
Liz Claiborne, Inc. 115,000 2,659,375 53932010
Medusa Corp. 47,400 1,078,350 58507230
Mellon Bank Corp. 16,589 922,763 58550910
OM Group, Inc. 90,000 1,800,000 67087210
Pfizer, Inc. 57,300 4,247,363 71708110
Philip Morris Companies, Inc. 26,000 1,592,500 71815410
RJR Nabisco Holdings Corp. (a) 468,700 3,222,313 74960K10
Reynolds Metals Co. 55,100 3,051,163 76176310
Ross Stores, Inc. 100,800 1,398,600 77829610
Santa Fe Pacific Corp. 21,700 333,638 80218310
Schering-Plough Corp. 47,000 3,348,750 80660510
Sears, Roebuck & Co. 96,000 4,752,000 81238710
Shawmut National Corp. 106,240 2,191,200 82048410
Station Casinos, Inc. (a) 199,900 2,598,700 85768910
Stop & Shop Companies, Inc. (a) 27,700 692,500 86209910
Sundstrand Corp. 23,000 1,046,500 86732310
Texaco, Inc. 34,300 2,242,363 88169410
Tidewater, Inc. 17,000 388,875 88642310
Tuboscope Vetco Corp. (a) 151,000 962,625 89860010
UAL Corp. 10,000 945,000 90254950
UDC Homes, Inc. (a) 60,200 142,975 90264610
Union Planters Corp. 63,542 1,461,466 90806810
Unisys Corp. (a) 105,000 1,115,625 90921410
United State Banknote Corp. (a) 125,000 328,125 91162310
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - CONTINUED
Western Co. of North America (a) 55,000 $ 976,250 95804340
Westpoint Stevens, Inc. Class A (a) 95,400 1,419,075 96123810
Whitney Holding Corp. 27,000 600,750 96661210
Wolverine Tube, Inc. (a) 36,000 904,500 97809310
96,196,654
TOTAL COMMON STOCKS
(Cost $446,551,083) 469,583,365
PREFERRED STOCKS - 3.1%
CONVERTIBLE PREFERRED STOCKS - 0.8%
UNITED STATES OF AMERICA - 0.8%
Consolidated Freightways, Inc., Series C,
$1.54 67,300 1,489,013 20923720
Reynolds Metals Co. $3.31 21,500 1,128,750 76176350
Unisys Corp., Series A, $3.75 96,600 3,344,775 90921420
TOTAL CONVERTIBLE PREFERRED STOCKS 5,962,538
NONCONVERTIBLE PREFERRED STOCKS - 2.3%
GERMANY - 2.3%
BMW AG 5,563 2,034,680 05528393
Escada AG (non-vtg.) 22,000 4,359,767 29605192
FAG Kugelfischer Georg Schaef 16,000 2,372,735 50105492
Herlitz AG 10,000 1,822,111 42799393
Kaufhof Holding AG 9,300 2,331,571 48615294
Moebel Walther AG 3,900 1,828,429 61099B22
Schwabengarage AG 10,086 2,448,140 80899392
TOTAL NONCONVERTIBLE PREFERRED STOCKS 17,197,433
TOTAL PREFERRED STOCKS
(Cost $20,585,613) 23,159,971
CORPORATE BONDS - 0.7%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (B)
CONVERTIBLE BONDS - 0.6%
GRAND CAYMAN - 0.3%
Filinvest Cayman Island Ltd.
3 3/4%, 2/28/04 (d) - $ 3,000,000 2,520,000 317015AA
INDIA - 0.3%
SCICI Ltd. euro 3 1/2%,
4/1/04 - 2,400,000 2,376,000 79599KAB
TOTAL CONVERTIBLE BONDS 4,896,000
NONCONVERTIBLE BONDS - 0.1%
ITALY - 0.1%
Consorzio di Credito per le Opere
Pubbliche 6%, 3/31/99 - ITL 1,300,000 676,863 210999AA
TOTAL CORPORATE BONDS
(Cost $6,853,672) 5,572,863
GOVERNMENT OBLIGATIONS (F) - 1.0%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
ARGENTINA - 1.0%
Argentina Repubic:
6 1/2%, 3/31/05 (d) (e) - $ 187,000 $ 134,874 039995AT
BOCON 5.0625%, 4/1/01 B1 1,500,041 1,068,577 039995AF
Brady Euro
4 1/4%, 3/31/23 B1 13,315,000 6,174,832 039995AD
TOTAL GOVERNMENT OBLIGATIONS
(Cost $7,911,879) 7,378,283
REPURCHASE AGREEMENTS - 32.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 4.78% dated
10/31/94 due 11/1/94 $ 243,588,339 243,556,000 99799N9L
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $725,458,247) $ 749,250,482
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO SELL
4,431,990,000 JPY 11/7/94 to
1/10/95 $ 45,873,861 $ (1,090,732)
33,265,250 NOK 1/30/95 5,075,865 (220,333)
TOTAL CONTRACTS TO SELL
(Receivable amount $49,638,661) $ 50,949,726 $ (1,311,065)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES -- 6.8%
CURRENCY ABBREVIATIONS
ITL - Italian lira
JPY - Japanese yen
NOK - Norwegian krone
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. A summary of the transactions during
the period in which the issuers were affiliates is a follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Econosto NV $ $ 644,540 $ 102,055 $ 4,158,310
Geveke NV (a) 855,153 - - 4,405,387
Von Moos Holdings AG Ord. (a) - - - 3,599,284
TOTALS $ 855,153 $ 644,540 $ 102,055 $ 12,162,981
(d) 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 $23,958,510 or 3.2% of net
assets.
(e) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(f) Most foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $499,611,929 and $275,297,269, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $46,548 for the period (see Note 5 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At October 31, 1994, the aggregate cost of investment securities for income
tax purposes was $725,564,224. Net unrealized appreciation aggregated
$23,686,258, of which $50,493,585 related to appreciated investment
securities and $26,807,327 related to depreciated investment securities.
The fund hereby designates $14,230,731 as a capital gain dividend for the
purpose of the dividend paid deduction.
For the period, interest and dividends from foreign countries were
$7,957,704 or $0.15 per share. Taxes paid to foreign countries were
$974,864 or $0.02 per share.
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Investments (Unaudited)
Aerospace & Defense 1.7%
Basic Industries 9.4
Construction & Real Estate 7.5
Durables 6.9
Energy 3.4
Finance 14.5
Government Obligations 1.0
Health 1.8
Holding Companies 0.3
Industrial Machinery & Equipment 3.8
Media & Leisure 3.4
Nondurables 1.9
Retail & Wholesale 7.0
Services 0.8
Repurchase Agreements 32.5
Technology 2.0
Transportation 1.1
Utilities 1.0
100.0%
WORLDWIDE
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $243,556,000) (cost $725,458,247) - $ 749,250,482
See accompanying schedule
Cash 875,333
Receivable for investments sold 6,758,750
Receivable for fund shares sold 5,967,606
Dividends receivable 1,279,242
Interest receivable 367,546
Other receivables 7,487
TOTAL ASSETS 764,506,446
LIABILITIES
Payable for investments purchased $ 6,485,685
Unrealized depreciation on foreign currency contracts 1,311,065
Payable for fund shares redeemed 6,892,359
Accrued management fee 470,041
Other payables and accrued expenses 609,116
TOTAL LIABILITIES 15,768,266
NET ASSETS $ 748,738,180
Net Assets consist of:
Paid in capital 678,743,633
Undistributed net investment income 5,498,260
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 41,987,225
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign
currencies 22,509,062
NET ASSETS, for 53,651,275 shares outstanding $ 748,738,180
NET ASSET VALUE, offering price and redemption price per share ($748,738,180 (divided by) 53,651,275 shares) $13.96
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1994
INVESTMENT INCOME $ 8,405,722
Dividends (including $102,055 received from affiliated issuers)
Interest 7,002,209
15,407,931
Less foreign taxes withheld (974,864
)
TOTAL INCOME 14,433,067
EXPENSES
Management fee $ 4,088,335
Transfer agent fees 1,903,267
Accounting fees and expenses 298,078
Non-interested trustees' compensation 2,758
Custodian fees and expenses 399,207
Registration fees 260,278
Audit 45,517
Legal 3,001
Miscellaneous 5,204
Total expenses before reductions 7,005,645
Expense reductions (15,367 6,990,278
)
NET INVESTMENT INCOME 7,442,789
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including 41,752,702
realized loss of $58,355
on sales of investment in affiliated
issuers)
Foreign currency transactions (820,648 40,932,054
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (3,222,085
)
Assets and liabilities in foreign (1,461,921 (4,684,006
currencies ) )
NET GAIN (LOSS) 36,248,048
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 43,690,837
OTHER INFORMATION $296,919
Accounting fees paid to FSC
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1994 1993
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 7,442,789 $ 2,970,026
Net investment income
Net realized gain (loss) 40,932,054 10,114,657
Change in net unrealized appreciation (depreciation) (4,684,006 31,061,709
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 43,690,837 44,146,392
Distributions to shareholders: (2,354,702 (2,497,555
From net investment income ) )
From net realized gain (3,532,293 (158,811
) )
TOTAL DISTRIBUTIONS (5,886,995 (2,656,366
) )
Share transactions 948,710,537 277,973,551
Net proceeds from sales of shares
Reinvestment of distributions 5,746,798 2,587,340
Cost of shares redeemed (530,801,158 (138,399,750
) )
Net increase (decrease) in net assets resulting from share transactions 423,656,177 142,161,141
TOTAL INCREASE (DECREASE) IN NET ASSETS 461,460,019 183,651,167
NET ASSETS
Beginning of period 287,278,161 103,626,994
End of period (including undistributed net investment income of $5,498,260 and $3,525,845,
respectively) $ 748,738,180 $ 287,278,161
OTHER INFORMATION
Shares
Sold 69,814,518 23,493,059
Issued in reinvestment of distributions 451,414 270,077
Redeemed (39,135,881 (11,997,236
) )
Net increase (decrease) 31,130,051 11,765,900
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31, MAY 30, 1990
(COMMENCEMENT
OF
OPOERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.76 $ 9.63 $ 9.61 $ 8.95 $ 10.00
Income from Investment Operations
Net investment income .08 .11 .20 .21 .05
Net realized and unrealized gain (loss) 1.37 3.28 (.08) .53 (1.10)
Total from investment operations 1.45 3.39 .12 .74 (1.05)
Less Distributions (.10) (.24) (.10) (.08) -
From net investment income
From net realized gain (.15) (.02) C - - -
Total distributions (.25) (.26) (.10) (.08) -
Net asset value, end of period $ 13.96 $ 12.76 $ 9.63 $ 9.61 $ 8.95
TOTAL RETURN A, B 11.55% 36.10% 1.32% 8.33% (10.50)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 748,738 $ 287,278 $ 103,627 $ 105,029 $ 94,851
Ratio of expenses to average net assets 1.32% 1.40% 1.51% 1.69% 2.00% D
Ratio of expenses to average net assets before expense reductions 1.32% 1.40% 1.51% 1.69% 2.46% D
Ratio of net investment income to average net assets 1.40% 1.99% 2.02% 2.19% 2.09% D
Portfolio turnover rate 69% 57% 130% 129% 123% D
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
D ANNUALIZED.
</TABLE>
CANADA
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
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (income) and capital gains (the profits the
fund earns when it sells stocks that have grown in value). Canada Fund has
a 3% sales charge, which has been waived through June 30, 1995.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1994 YEAR YEARS FUND
CANADA -3.37% 32.47% 109.17%
CANADA (INCL. 3% SALES CHARGE) -6.27% 28.50% 102.90%
TSE 300 (Toronto Stock
Exchange 300) Index 0.73% 11.49% 77.83%
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 November 17, 1987. You can compare the fund's figures to the
performance of the Toronto Stock Exchange (TSE) 300 index - a broad measure
of the performance of the Canadian stock market. This index includes
reinvested dividends and capital gains, if any, and excludes the effects of
sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1994 YEAR YEARS FUND
CANADA -3.37% 5.79% 11.18%
CANADA (INCL. 3% SALES CHARGE) -6.27% 5.14% 10.70%
TSE 300 (Toronto Stock
Exchange 300) Index 0.73% 2.20% 8.62%
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
Canada (309) Toronto Stock Excha
11/17/87 9700.00 10000.00
11/30/87 9767.90 10153.53
12/31/87 10446.90 10895.36
01/31/88 10340.20 10759.36
02/29/88 11048.30 11447.90
03/31/88 11737.00 12111.13
04/30/88 12008.60 12268.35
05/31/88 11436.30 11947.11
06/30/88 12319.00 12906.84
07/31/88 12144.40 12762.32
08/31/88 11562.40 12139.94
09/30/88 11804.90 12401.15
10/31/88 12357.80 12753.48
11/30/88 12212.30 12830.11
12/31/88 12480.81 13188.28
01/31/89 13422.57 14213.27
02/28/89 13045.86 13881.50
03/31/89 13263.96 14027.96
04/30/89 13531.61 14346.43
05/31/89 13987.62 14383.31
06/30/89 14661.73 14845.75
07/31/89 15553.92 15890.01
08/31/89 15633.23 16147.42
09/30/89 15534.09 15922.92
10/31/89 15316.00 15949.98
11/30/89 15405.22 16197.04
12/31/89 15849.09 16474.68
01/31/90 14563.75 15023.40
02/28/90 14646.68 14920.74
03/31/90 14895.45 15084.12
04/30/90 14180.22 13930.65
05/31/90 15113.13 14884.87
06/30/90 15465.56 14908.13
07/31/90 15589.95 15161.03
08/31/90 14688.14 14235.18
09/30/90 14449.73 13514.44
10/31/90 14066.20 13073.85
11/30/90 14522.29 13439.96
12/31/90 14978.59 14019.82
01/31/91 15045.01 14077.13
02/28/91 16428.84 15100.37
03/31/91 17148.44 15213.01
04/30/91 17281.28 15194.26
05/31/91 18045.16 15713.88
06/30/91 18067.30 15474.06
07/31/91 18011.95 15696.55
08/31/91 17856.96 15774.78
09/30/91 17259.14 15380.42
10/31/91 18023.02 16117.15
11/30/91 17347.71 15691.20
12/31/91 17627.42 15764.11
01/31/92 17945.13 15903.64
02/29/92 18051.04 15778.39
03/31/92 17545.04 15003.00
04/30/92 17333.23 14750.06
05/31/92 17486.21 14781.51
06/30/92 17392.07 14899.21
07/31/92 17839.23 15353.94
08/31/92 17568.58 15073.09
09/30/92 16815.47 14065.44
10/31/92 16744.87 14331.45
11/30/92 16697.80 13610.56
12/31/92 17121.47 14127.27
01/31/93 17027.20 13986.24
02/28/93 18087.72 14844.82
03/31/93 19077.54 15446.95
04/30/93 19572.44 16106.36
05/31/93 19843.46 16559.37
06/30/93 20856.85 16822.63
07/31/93 20102.70 16806.78
08/31/93 20609.39 17107.05
09/30/93 19596.01 16373.43
10/31/93 20998.25 17654.85
11/30/93 20515.13 17182.05
12/31/93 21482.46 18005.65
01/31/94 22427.27 18880.15
02/28/94 21470.65 18093.83
03/31/94 20679.38 17332.87
04/30/94 20525.85 17106.99
05/31/94 20620.33 17383.62
06/30/94 19486.57 16219.73
07/31/94 19864.49 16810.87
08/31/94 20608.52 17737.69
09/30/94 20714.81 18158.66
10/31/94 20289.65 17783.29
Let's say you invested $10,000 in Fidelity Canada Fund on its start date
and paid the 3% sales charge. By October 31, 1994, it would have grown to
$20,290 - a 102.90% increase on your initial investment. That compares to
$10,000 invested in the Toronto Stock Exchange (TSE) 300 index, which would
have grown to $17,783 over the same period - a 77.83% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
(checkmark)
CANADA
FUND TALK: THE MANAGER'S OVERVIEW
An interview with George Domolky,
Portfolio Manager of Fidelity Canada Fund
Q. GEORGE, HOW HAS THE FUND PERFORMED?
A. For the year ended October 31, 1994, the fund had a total return of
- -3.37%. That lagged the Toronto Stock Exchange 300 index, the fund's
benchmark index, which posted a return of 0.73% for the same period.
Q. WHAT WERE THE REASONS BEHIND THE FUND'S PERFORMANCE?
A. Throughout the year, the fund and the Canadian market have seesawed, as
Canada's economic recovery and rising interest rates have had
countervailing influences on performance. At some times the fund's
performance has surpassed the index; at others, it has trailed. Over the
past six months, the fund's concentration on energy companies and small
emerging growth companies has been the most important factor influencing
the fund.
Q. AND THOSE TYPES OF STOCKS HAVEN'T DONE AS WELL?
A. Right. Energy stocks such as Canadian Natural Resources, Renaissance
Energy and Morrison Petroleums were hurt by the mild, cool summer weather
and the increased use of nuclear fuel by utilities. Natural gas prices
dropped precipitously from around $210 to about $135 per thousand cubic
feet. Over the long term, however, I believe the natural gas story,
specifically, and the energy story, in general, are intact. More and more
energy users are switching to natural gas, a cleaner fossil fuel than many
others including oil. Canada is the largest exporter of natural gas to the
U.S. I believe that over the long run, as the Texas Panhandle runs out of
natural gas, increased supply to the U.S. should significantly improve the
cash flow and earnings of Canadian natural gas companies. And, as the
global economic recovery expands, worldwide demand for oil and gasoline
will help boost prices.
Q. WHAT ABOUT THE SMALL EMERGING GROWTH COMPANIES?
A. They were hurt by market uncertainty caused by rising interest rates.
Investors tended to flock more to the larger capitalized stocks as a safety
net. In addition, as rates rose, fixed-income investments offering higher
yields may have been more appealing to some investors than the riskier
small company stocks. Paramount Resources, Rio Alto Exploration and Archer
Resources were three smaller stocks that disappointed. They all happen to
be energy companies as well. And Rogers Communications, a diversified media
company listed under utilities, underperformed because of increased
competition and an unfavorable cable pricing environment. Nevertheless, the
fund has retained a solid weighting in communications, newspaper, cable and
cellular companies because these are high growth areas that should benefit
from the economic turnaround.
Q. WHERE DID YOU FIND POSITIVE RESULTS?
A. Companies that deal with base metals - such as Alcan Aluminium, Noranda
and Inco - were some of the stronger performers during the period. They did
well because the economic recovery fueled demand. I've increased the fund's
investments in this sector because it is believed economies will continue
to grow worldwide. Periods of economic growth benefited North America and
Europe in the 1980s, but this time Third World countries such as China,
India, Malaysia and Indonesia are benefiting from expansion. I believe
these countries will use more base metals as their economies reach a higher
level and such goods as household products and automobiles become more
attainable.
Q. THIS IDEA OF TAKING ADVANTAGE OF ECONOMIC RECOVERY SEEMS TO BE A
PREVAILING THEME.
A. Absolutely. Canadian natural resource companies are well-positioned to
take advantage of domestic and international growth. The fund has benefited
from an infusion of new assets because investors like the natural resource
orientation of Canada at this point in the cycle, as an inflation hedge.
The country can supply the rest of the world with base metals, energy, gold
and forest products, as the demand for housing, cars and household goods
increases. Although at times the fund had substantial cash that couldn't be
employed immediately, I've been successful at remaining nearly fully
invested.
Q. LET'S TOUCH UPON FOREST PRODUCTS AND GOLD.
A. Paper and forest products generally do well at this point in the
economic cycle. Newsprint, market pulp and fine paper prices are going up.
Lumber prices have declined recently because of a surplus due to a
short-term tapering off of the Canadian and U.S. housing markets. Timber
companies that the fund is invested in, such as Riverside Forest Products
and Slocan Forest Products, have suffered as prices have dropped, but still
are good long-term prospects. The fund is also heavily weighted in gold
stocks. Gold is an important commodity in Canada, especially now when
investors are turning to it as a hedge against inflation. It's important to
note, however, that if you added up all the world's gold stocks, they would
not even match the market capitalization of Coca-Cola.
Q. HOW HAS CANADA'S POLITICAL CLIMATE AFFECTED ITS STOCK
MARKET AND CURRENCY?
A. Canada should be very attractive to the investor because it has a stable
government and a stable currency. The latest elections, which the Liberal
party won, have been a positive influence. The new premier is Jean
Chretien, a Quebecois who supports keeping the Canadian Federation
together, and who has enjoyed a favorability rating of around 60%. The
Canadian dollar declined this year before elections in Quebec, when it was
feared voters in that province would select candidates who want to create a
separate Quebec government. The separatist party won the provincial
elections, but received only 45% of the popular vote. In order to secede,
more than 50% of the voters would have to approve such a measure, which is
seen as being rather difficult. After the Quebec election, the Canadian
dollar rallied somewhat and the market responded favorably as well. Going
forward, with separation apparently not as probable as it seemed before,
the political backdrop is positive for both the market and the currency.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. Overall, I'm optimistic. Even though the past six months haven't gone as
well as I would have liked, I manage the fund for long-term performance. I
still believe the natural resource story will make the Canadian market
quite attractive, as worldwide demand increases because of economic growth.
Canada is a stable country with a democratic government, closely allied
politically and economically with the U.S. Its markets tend to be more
predictable than other foreign ones. Canada is participating nicely in the
global economic recovery, and its own economic growth bodes well for the
foreseeable future.
FUND FACTS
GOAL: to increase the value of the fund's
shares by investing mainly in Canadian
common stocks and convertible securities
START DATE: November 17, 1987
SIZE: as of October 31, 1994, more than
$368 million
MANAGER: George Domolky, since November 17,
1987; manager, Fidelity Select Food and
Agriculture Portfolio, 1985-87; assistant,
Fidelity Magellan Fund, 1983-86; joined
Fidelity in 1981
(checkmark)
GEORGE DOMOLKY ON THE CANADIAN ECONOMY:
"The Canadian economy is presently recovering
about as strongly as the American economy. The two
economic systems are closely tied, with the U.S.
usually about six to nine months ahead of Canada in
the economic cycle. If one considers the U.S.
economy to be strong now, it could mean that the
Canadian economy may be very strong by late June
1995.
"The Canadian stock market offers less choices than
those in the U.S. Sometimes it takes a bit longer to
develop positions in stocks because not as much is
available. Canada's stock market did very well in
1993, but in 1994 it has been more inconsistent, what I
would call a `Show Me' kind of market; stocks really
had to be compelling in order to attract investor
interest. The domestic economy is recovering, but not
many sectors showed much upside. The only sector
that did well was base metals, because prices were
heading up due to mild inflationary pressures. I expect
other sectors, such as energy, could have a better
pricing environment going forward. Stronger growth in
Canada as well as the U.S. should help the whole
national economy.
"Canada and the U.S. are strong trading partners.
About 75% of Canadian exports go to the U.S. and
roughly 25% of Canadian imports come from the U.S.
Of course, the North American Free Trade Agreement
has served to solidify this relationship. The Canadian
dollar historically aligns with the U.S. dollar, and has
been a stable currency. Going forward, it is hoped the
Canadian dollar will strengthen as the economy
grows, giving foreign investors an added, positive
bump. Canada's gross domestic product is expected
to reach a strong 4% for the next two years, with
inflation under 2%, a very unusual combination. I
remain optimistic about Canada's potential."
(solid bullet) The fund's net assets increased significantly during
the period, from $173 million on April 30, 1994, to
$368 million
on October 31, 1994.
(solid bullet) Energy (21.6%), Basic Industries (20.8%) and
Finance (10.0%) were the top three industries
represented in the fund as of October 31, 1994.
(solid bullet) The fund has the authority to invest in derivative
instruments such as futures and currency forward
contracts, but held no such investments during the
period.
CANADA
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION
AS OF OCTOBER 31, 1994
United States 8.1%
Row: 1, Col: 1, Value: 8.1
Row: 1, Col: 2, Value: 91.90000000000001
Canada 91.9%
AS OF APRIL 30, 1994
United States 5.8%
Row: 1, Col: 1, Value: 5.8
Row: 1, Col: 2, Value: 94.2
Canada 94.2%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 93.3 96.6
Bonds 3.3 1.8
Short-term investments 3.4 1.6
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
American Barrick Resources Corp.
(Precious Metals) 4.8 0.6
Alcan Aluminium Ltd.
(Metals & Mining) 4.7 1.8
Seagram Co. Ltd.
(Beverages) 4.4 -
Noranda, Inc.
(Metals & Mining) 4.1 3.1
Inco Ltd.
(Metals & Mining) 3.2 -
Renaissance Energy Ltd.
(Oil & Gas) 2.7 2.0
Canadian Natural Resources Ltd.
(Oil & Gas) 2.5 0.6
Nova Corp.
(Gas) 2.4 -
Bank of Nova Scotia Halifax
(Banks) 2.2 -
Rogers Communications, Inc. Class B
(Cellular) 2.2 1.8
TOP TEN INDUSTRIES
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Energy 21.6 24.4
Basic Industries 20.8 21.3
Finance 10.0 2.9
Precious Metals 9.9 6.4
Nondurables 7.3 3.1
Utilities 5.6 3.1
Media & Leisure 5.2 8.4
Industrial Machinery & Equipment 3.3 6.9
Services 2.1 1.5
Retail & Wholesale 2.1 5.2
CANADA
INVESTMENTS OCTOBER 31, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.1%
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 20.8%
CHEMICALS & PLASTICS - 1.3%
Dupont Canada Inc., Class A, Series 1 26,700 $ 369,915 26590210
Intertape Polymer Group, Inc. 100,500 1,670,854 46091910
Maax, Inc. (a) (c) 278,300 2,364,835 57777C10
Maax, Inc. (warrant) (a) 8,333 35,405 57777C11
Winpak Ltd. 30,000 493,220 97535P10
4,934,229
IRON & STEEL - 0.7%
Linamar Corp. (a) 157,700 2,068,330 53278L10
Samuel Manu-Tech, Inc. 25,000 443,344 79606J10
2,511,674
METALS & MINING - 15.1%
Alcan Aluminium Ltd. 643,110 17,225,946 01371610
Cominco Ltd. (a) 190,600 3,644,123 20043510
Dia Met Minerals Ltd.:
Class A (a) 7,000 87,930 25243K20
Class B (a) 28,000 372,409 25243K30
Falconbridge Ltd. (a) 416,000 7,185,131 30609910
Inco Ltd. 390,477 11,757,446 45325840
Noranda, Inc. 765,744 14,994,064 65542210
55,267,049
PAPER & FOREST PRODUCTS - 3.7%
Ainsworth Lumber Ltd. (a) 50,000 480,290 00891410
Canfor Corp. (a) 36,000 512,063 13790210
Doman Industries Ltd. Class B (non-vtg.),
Series 2 40,000 350,981 25703930
Donohue, Inc. Class B 41,600 453,393 25804110
Harmac Pacific, Inc. (special unit
warrants) (a) 1,000 1,265,379 41290411
International Forest Products Class A (a) 50,000 475,672 45953E10
MacMillan Bloedel Ltd. 300,000 4,211,772 55478320
Merfin Hygenic Products Ltd. (a) 456,200 1,365,210 58950K10
Noranda Forest, Inc. 179,000 1,537,574 65542L10
Riverside Forest Products 134,400 2,234,455 76890410
Slocan Forest Products Ltd. 73,800 736,173 83158C10
13,622,962
TOTAL BASIC INDUSTRIES 76,335,914
CONGLOMERATES - 1.8%
Brascan Ltd. Class A 410,000 6,361,991 10550240
Federal Industries Ltd. Class A (a) 49,800 248,383 31345330
6,610,374
CONSTRUCTION & REAL ESTATE - 1.4%
BUILDING MATERIALS - 0.1%
Global Stone (a) 100,000 378,690 37936Q10
CONSTRUCTION - 0.2%
Firan Corp. (a) 140,000 393,099 31809110
Royal Lepage Ltd. (a) 100,000 232,756 78033W10
625,855
REAL ESTATE - 0.3%
Cambridge Shopping Centres Ltd. 105,900 1,046,597 13250910
Markborough Properties, Inc. (a) 200,000 344,330 57052F10
1,390,927
REAL ESTATE INVESTMENT TRUSTS - 0.8%
Trizec Ltd. 400,000 2,918,684 89693310
TOTAL CONSTRUCTION & REAL ESTATE 5,314,156
SHARES VALUE (NOTE 1)
DURABLES - 1.3%
AUTOS, TIRES, & ACCESSORIES - 0.8%
Armor All Products Corp. 24,400 $ 552,050 04225610
Discount Auto Parts, Inc. (a) 22,900 349,225 25464210
Meridian Technologies, Inc. (a) 214,600 852,312 58978510
Stackpole Ltd. (a) 85,000 722,282 85232N10
UAP, Inc. Class A 45,150 467,063 90255810
2,942,932
CONSUMER DURABLES - 0.2%
Unican Security Systems Ltd. Class B 45,000 689,954 90458940
HOME FURNISHINGS - 0.3%
Dorel Industries Class A (vtg.) (a)(d) 105,000 630,380 25822C30
Leons Furniture Ltd. 60,000 465,512 52668210
1,095,892
TOTAL DURABLES 4,728,778
ENERGY - 21.6%
ENERGY SERVICES - 1.0%
Akita Drilling Ltd. Class A
(non-vtg.) (a) 60,700 188,377 00990510
Dreco Energy Services Ltd. Class A (a) 200 1,750 26152820
Enserv Corp. (a) 94,700 787,214 29357B10
Nowsco Well Service Ltd. 127,700 1,792,811 67012210
Precision Drilling Class A (a) 53,900 597,407 74022D10
Veritas Energy Service, Inc. (a) 40,000 251,228 92343H10
3,618,787
OIL & GAS - 20.6%
Anderson Exploration Ltd. (a) 352,000 4,161,524 03390110
Archer Resources Ltd. (a) 199,700 2,434,736 03950K10
Barrett Resources Corp. (a) 45,000 894,375 06848020
Barrington Petroleum Ltd. (a) 153,000 650,054 06862610
Beau Canada Exploration 908,300 1,375,857 07428010
Blue Range Resource Corp. Class A (a) 30,900 242,593 09579K10
Canadian Natural Resources Ltd. (a) 671,600 9,118,595 13638510
Canadian Occidental Petroleum Ltd. 55,000 1,336,036 13642010
Chancellor Energy Resources (a) 380,000 631,765 15882910
Conwest Exploration Ltd. 53,200 953,264 21291010
DEKALB Energy Corp. Class B (a) 79,500 1,291,875 24487410
Ensign Resource Service Group Ord. (a) 68,100 236,502 29357T10
Excel Energy, Inc. (warrants) (a) 25,000 185 30065492
Gardiner Oil & Gas, Ltd. (a) 86,600 391,935 36553R10
Grad & Walker Energy Corp. 174,100 1,511,564 38391010
Gulf Canada Corp. (a) 80,000 302,952 40218L30
Home Oil Co. Ltd. (a) 130,000 1,820,000 43727F10
Intensity Resources Ltd. (a) 50,500 102,243 45816E10
Inverness Petroleum Ltd. (a) 475,200 3,686,853 46190810
Morgan Hydrocarbons, Inc. (a) 347,000 1,314,054 61790010
Morrison Petroleums Ltd. 654,000 4,349,205 61847310
Newfield Exploration Co. (a) 34,500 832,313 65129010
Northern Reef Exploration (a) 68,600 310,471 66566H10
Northstar Energy Corp. (a) 189,500 1,942,818 66703R10
Pan East Petroleum Corp., Inc. (a) 430,000 1,239,148 69790520
Pancanadian Petroleum Ltd. 96,700 3,063,518 69890020
Paramount Resources Ltd. 301,400 3,312,760 69932010
Petromet Resources Ltd. Ord. (a) 20,000 134,851 71673110
Poco Petroleums Ltd. (a) 190,000 1,193,335 73036110
Ranger Oil Ltd. 100,000 665,016 75280510
Renaissance Energy Ltd. (a) 419,722 9,730,503 75966610
Renaissance Energy Ltd. (a)(d) 15,000 347,748 75966692
Rigel Energy Corp. (a) 143,000 1,967,987 76655L10
Rio Alto Exploration Ltd. (a) 576,300 3,353,426 76689210
Rio Alto Exploration Ltd. (a)(d) 11,000 64,008 76689292
Serenpet, Inc. (a) 50,000 249,381 81750M10
Strike Energy, Inc. (a) 264,000 497,431 86331L10
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Summit Resources Ltd. 218,300 $ 1,411,406 86624610
Talisman Energy, Inc. (a) 125,000 2,655,448 87425E10
Tarragon Oil & Gas Ltd. (a) 341,500 4,100,472 87629E20
Transwest Energy, Inc. (a) 311,100 514,917 89392110
Tri Link Resources Ltd. Class A (a) 84,900 815,532 89557D10
Ulster Petroleums Ltd. (a) 120,000 407,876 90384010
75,616,532
TOTAL ENERGY 79,235,319
FINANCE - 9.9%
BANKS - 6.9%
Bank of Montreal 170,000 3,156,057 06367110
Bank of Nova Scotia Halifax 400,000 8,127,980 06414910
Canadian Imperial Bank of Commerce 210,000 4,965,456 13606910
Royal Bank of Canada 180,000 3,773,968 78008710
Toronto Dominion Bank 340,000 5,150,184 89116050
25,173,645
CREDIT & OTHER FINANCE - 1.4%
Power Corporation of Canada 65,000 900,543 73923910
Trimark Financial Corp. 145,300 4,133,484 89621H10
5,034,027
SECURITIES INDUSTRY - 1.6%
First Marathon, Inc. Class A (non-vtg.) 154,300 1,482,173 32076L20
Investors Group, Inc. 170,000 2,009,827 46152H10
Mackenzie Financial Corp. 321,000 2,075,406 55453110
Power Financial Corp. 20,000 426,719 73927C10
5,994,125
TOTAL FINANCE 36,201,797
HEALTH - 0.8%
DRUGS & PHARMACEUTICALS - 0.6%
Bristol-Myers Squibb Co. 23,600 1,377,650 11012210
Noven Pharmaceuticals, Inc. (a) 23,500 358,375 67000910
Zenon Environmental, Inc. (a) 65,600 345,365 98942B10
2,081,390
MEDICAL EQUIPMENT & SUPPLIES - 0.2%
Owens and Minor, Inc. 55,000 818,125 69073210
MEDICAL FACILITIES MANAGEMENT - 0.0%
Spectral Diagnostics, Inc. (a) 10,000 164,407 84757410
TOTAL HEALTH 3,063,922
INDUSTRIAL MACHINERY & EQUIPMENT - 3.3%
Champion Road Machinery Ltd. (d) 20,000 181,032 15864C92
Eagle Precision Tech. 159,400 706,690 26990010
Enerflex Systems Ltd. 15,000 196,734 29265B10
Exco Technologies Ltd. (a) (c) 972,800 5,930,169 30150P10
Finning Ltd. 128,300 1,967,137 31807140
Osmonics, Inc. 25,000 362,500 68835010
Trojan Technologies Corp. (a) 290,400 1,931,206 89692410
Valmont Industries, Inc. 48,700 815,738 92025310
12,091,206
MEDIA & LEISURE - 5.2%
BROADCASTING - 0.3%
Cogeco, Inc. 40,000 232,756 19238T10
Shaw Cablesystems Ltd. Class B (d) 88,000 666,494 82028K20
Videotron Group Ltd. 36,800 353,493 92558H10
1,252,743
SHARES VALUE (NOTE 1)
ENTERTAINMENT - 0.2%
Alliance Communications Corp. (a) 10,000 $ 124,691 01855R10
Cinar Films, Inc. (a) 82,000 416,559 17190510
541,250
LODGING & GAMING - 1.1%
Four Seasons Hotels, Inc. 351,500 4,123,148 35100E10
PUBLISHING - 3.5%
Hollinger, Inc. 21,500 210,496 43556C10
Thomson Corp. 457,598 5,494,489 88490310
Torstar Corp. Class B 409,000 7,026,452 89147420
12,731,437
RESTAURANTS - 0.1%
Cara Operations Ltd. 91,500 236,635 14075420
Spectra Group of Great Restaurants, Inc.
Class A (non-vtg.) (a) 4,900 24,892 84756E20
261,527
TOTAL MEDIA & LEISURE 18,910,105
NONDURABLES - 7.3%
AGRICULTURE - 0.0%
DEKALB Genetics Corp. Class B 4,700 141,000 24487820
BEVERAGES - 4.9%
Dr. Pepper/Seven-Up Companies, Inc. (a) 82,900 2,103,588 25613130
Seagram Co. Ltd. 521,700 16,045,932 81185010
18,149,520
FOODS - 2.4%
Ault Foods Ltd. 197,300 2,259,689 05150E10
Corporate Foods Ltd. 55,300 597,601 21989210
RalCorp Holdings, Inc. 25,900 524,612 75102510
Ralston Purina Co. 30,000 1,275,000 75127730
Stokeley USA, Inc. (a) 10,000 93,750 86150210
SYSCO Corp. 28,300 703,963 87182910
Tootsie Roll Industries, Inc. 24,937 1,549,211 89051610
Weston George Ltd. 55,000 1,645,916 96114850
8,649,742
TOTAL NONDURABLES 26,940,262
PRECIOUS METALS - 9.7%
Aber Resources Ltd. 38,600 221,044 00291610
Agnico Eagle Mines Ltd. 246,100 3,136,828 00847410
American Barrick Resources Corp. 737,400 17,572,065 02451E10
Battle Mountain Gold Co. 37,500 417,188 07159310
Euro-Nevada Mining Corp. 43,000 1,163,686 29870P10
Franco Nevada Mining Corp. 35,600 2,137,289 35186010
Kinross Gold Corp. (a) 256,000 1,442,348 49690210
Placer Dome, Inc. 330,000 7,132,300 72590610
Prime Resources Group, Inc. (a) 70,300 551,918 74157L10
Rayrock Yellowknife Resources, Inc. (a) 46,200 571,803 75509N10
Teck Corp. Class B (sub.-vtg.) 50,000 955,961 87874220
Viceroy Resources Corp. (a) 10,000 62,807 92564C10
35,365,237
RETAIL & WHOLESALE - 2.1%
GENERAL MERCHANDISE STORES - 1.0%
Hudsons Bay Co. Ord. 116,000 2,314,257 44420410
Sears Canada, Inc. 200,000 1,256,142 81234D10
3,570,399
GROCERY STORES - 1.1%
Loblaw Companies Ltd. 141,800 2,200,318 53948110
Van Houtte (A.L.) 175,500 1,750,656 92090410
3,950,974
TOTAL RETAIL & WHOLESALE 7,521,373
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 2.1%
ADVERTISING - 0.1%
ADVO-Systems, Inc. 30,000 $ 532,500 00758510
PRINTING - 1.3%
Moore Corporation Ltd. 245,000 4,457,920 61578510
Paxar Corp. (a) 21,375 227,109 70422710
4,685,029
SERVICES - 0.7%
Arbor Memorial Services, Inc.
Class B (non-vtg.) 43,300 543,909 03891620
G & K Services, Inc. Class A 117,500 1,938,750 36126810
2,482,659
TOTAL SERVICES 7,700,188
TECHNOLOGY - 0.2%
COMMUNICATIONS EQUIPMENT - 0.2%
Northern Telecom Ltd. 10,047 361,910 66581510
SR Telecom, Inc. 44,100 386,956 78464P10
748,866
UTILITIES - 5.6%
CELLULAR - 3.2%
BCE Mobile Communications, Inc. 46,900 1,442,504 05534G10
Call-Net Enterprises, Inc. (a) 78,000 489,895 13091010
Call-Net Enterprises Class B
(non-vtg.) (a) 78,000 446,669 13091020
Rogers Cantel Mobile Communications,
Inc. Class B (non-vtg.) (a) 40,000 1,219,197 77510210
Rogers Communications, Inc. Class B (a) 548,600 8,056,619 77510920
11,654,884
GAS - 2.4%
Nova Corp. 895,070 8,845,869 66994310
TOTAL UTILITIES 20,500,753
TOTAL COMMON STOCKS
(Cost $329,699,311) 341,268,250
PREFERRED STOCKS - 0.2%
CONVERTIBLE PREFERRED STOCKS - 0.1%
PRECIOUS METALS - 0.1%
Battle Gold Co. 2,000 126,250 07159330
NONCONVERTIBLE PREFERRED STOCKS - 0.1%
FINANCE - 0.1%
SECURITIES INDUSTRY - 0.1%
A G F Management Ltd. Class A 41,400 428,271 00109210
TOTAL PREFERRED STOCKS
(Cost $584,121) 554,521
CORPORATE BONDS - 0.5%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (B)
CONVERTIBLE BONDS - 0.4%
CONSTRUCTION & REAL ESTATE - 0.4%
REAL ESTATE - 0.4%
Markborough Properties, Inc.
6%, 3/14/04 - CAD 2,700,000 1,615,990 57052FAA
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - 0.1%
PRECIOUS METALS - 0.1
Agnico Eagle Mines Ltd. yankee
3 1/2%, 1/27/04 B1 $ 220,000 $ 182,600 008474AA
TOTAL CORPORATE BONDS
(Cost $2,183,331) 1,798,590
GOVERNMENT OBLIGATIONS (E) - 2.8%
Canadian Government 7 3/4%,
9/01/99 (Cost $10,004,948) Aaa CAD 14,500,000 10,382,015 135087VE
REPURCHASE AGREEMENTS - 3.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 4.78% dated
10/31/94 due 11/1/94 $ 12,412,648 12,411,000 99799N9L
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $354,882,711) $ 366,414,376
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. A summary of the transactions during
the period in which the issuers were affiliates is a follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Exco Technologies Ltd. (a) $ 1,542,435 $ - $ - $ 5,930,169
Maax, Inc. (a) - - - 2,364,835
TOTALS $ 1,542,435 $ - $ - $ 8,295,004
(d) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $1,889,662 or 0.5% of net
assets.
(e) Most foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $390,158,264 and $124,567,870, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $76,201 for the period (see Note 5 of Notes to Financial
Statements).
The fund participated in the bank borrowing program. The maximum loan and
the average daily loan balances during the period for which loans were
outstanding amounted to $3,867,000 and $1,799,400, respectively. The
weighted average interest rate was 4.15% (see Note 7 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At October 31, 1994, the aggregate cost of investment securities for income
tax purposes was $355,554,959. Net unrealized appreciation aggregated
$10,859,417, of which $24,911,151 related to appreciated investment
securities and $14,051,734 related to depreciated investment securities.
For the period, interest and dividends from foreign countries were
$2,982,714 or $0.14 per share. Taxes paid to foreign countries were
$403,620 or $0.02 per share.
At October 31, 1994, the fund had a capital loss carryforward of
approximately $5,787,129 all of which will expire on October 31, 2002.
CANADA
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $12,411,000) (cost $354,882,711) - See $ 366,414,376
accompanying schedule
Cash 258
Receivable for investments sold 6,108,148
Receivable for fund shares sold 4,005,609
Dividends receivable 581,689
Interest receivable 154,882
Other receivables 417,242
TOTAL ASSETS 377,682,204
LIABILITIES
Payable for investments purchased $ 4,439,443
Payable for fund shares redeemed 4,359,632
Accrued management fee 238,877
Other payables and accrued expenses 314,227
TOTAL LIABILITIES 9,352,179
NET ASSETS $ 368,330,025
Net Assets consist of:
Paid in capital $ 363,269,721
Accumulated net investment (loss) (11,337
)
Accumulated undistributed net realized gain (loss) on investments (6,459,378
)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 11,531,019
NET ASSETS, for 21,437,341 shares outstanding $ 368,330,025
NET ASSET VALUE, offering price and redemption price per share ($368,330,025 (divided by) 21,437,341 shares) $17.18
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1994
INVESTMENT INCOME $ 2,768,354
Dividends
Interest 721,856
3,490,210
Less foreign taxes withheld (403,620
)
TOTAL INCOME 3,086,590
EXPENSES
Management fee 1,653,893
Basic fee
Performance adjustment 60,175
Transfer agent fees 1,267,509
Accounting fees and expenses 129,531
Non-interested trustees' compensation 1,042
Custodian fees and expenses 67,942
Registration fees 165,228
Audit 30,998
Legal 1,107
Interest 1,037
Miscellaneous 2,624
Total expenses before reductions 3,381,086
Expense reductions (2,288 3,378,798
)
NET INVESTMENT INCOME (LOSS) (292,208
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (5,854,478
)
Foreign currency transactions 10,377 (5,844,101
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 1,033,207
Assets and liabilities in foreign currencies (646 1,032,561
)
NET GAIN (LOSS) (4,811,540
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (5,103,748
)
OTHER INFORMATION $5,130
Deferred sales charges withheld
by FDC
Accounting Fees paid by FSC $129,038
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1994 1993
INCREASE (DECREASE) IN NET ASSETS
Operations $ (292,208 $ (406,210
Net investment income (loss) ) )
Net realized gain (loss) (5,844,101 (215,792
) )
Change in net unrealized appreciation (depreciation) 1,032,561 9,798,514
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (5,103,748 9,176,512
)
Distributions to shareholders: - (30,615
From net investment income )
In excess of net realized gain (242,990 -
)
TOTAL DISTRIBUTIONS (242,990 (30,615
) )
Share transactions 568,300,531 232,403,520
Net proceeds from sales of shares
Reinvestment of distributions 238,390 29,289
Cost of shares redeemed (290,839,654 (167,302,323
) )
Net increase (decrease) in net assets resulting from share transactions 277,699,267 65,130,486
TOTAL INCREASE (DECREASE) IN NET ASSETS 272,352,529 74,276,383
NET ASSETS
Beginning of period 95,977,496 21,701,113
End of period (including accumulated net investment loss of $11,337 and $237,885, respectively) $ 368,330,025 $ 95,977,496
OTHER INFORMATION
Shares
Sold 32,698,397 13,751,993
Issued in reinvestment of distributions 13,408 2,020
Redeemed (16,658,932 (9,894,449
) )
Net increase (decrease) 16,052,873 3,859,564
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31,
SELECTED PER-SHARE DATA 1994 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.82 $ 14.23 $ 16.28 $ 13.57 $ 15.45
Income from Investment Operations
Net investment income (loss) - (.15) (.02) C .03 C .05 C
Net realized and unrealized gain (loss) (.60) 3.76 (1.11) 3.59 (1.24)
Total from investment operations (.60) 3.61 (1.13) 3.62 (1.19)
Less Distributions - (.02) - (.06) (.01)
From net investment income
From net realized gain - - (.92) (.85) (.68)
In excess of net realized gain (.04) - - - -
Total distributions (.04) (.02) (.92) (.91) (.69)
Net asset value, end of period $ 17.18 $ 17.82 $ 14.23 $ 16.28 $ 13.57
TOTAL RETURN A, B (3.37)% 25.40% (7.09)% 28.13% (8.16)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 368,330 $ 95,977 $ 21,701 $ 23,327 $ 17,736
Ratio of expenses to average net assets 1.57% 2.00% 2.00% 2.01% 2.05%
Ratio of expenses to average net assets before expense reductions 1.57% 2.00% 2.07% 2.26% 2.31%
Ratio of net investment income to average net assets (.14)% (.66)% (.11)% .17% .34%
Portfolio turnover rate 59% 131% 55% 68% 164%
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD(S) SHOWN.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
</TABLE>
EUROPE
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
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (income) and capital gains (the profits the
fund earns when it sells stocks that have grown in value). The fund has a
3% sales charge.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1994 YEAR YEARS FUND
EUROPE 15.41% 54.28% 137.39%
EUROPE (INCL. 3% SALES CHARGE) 11.95% 49.65% 130.27%
Morgan Stanley Europe Index 11.24% 65.67% 137.56%
Average European Region Fund 9.13% 44.57% 105.77%
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 October 1, 1986. You can compare the fund's figures to the
performance of the Morgan Stanley Europe index - a broad measure of the
performance of stocks in Europe, weighted by each country's market
capitalization (or the total value of its outstanding shares). You can also
compare the fund's performance to the average European region fund which
currently reflects the performance of 30 funds with similar objectives
tracked by Lipper Analytical Services. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effects of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1994 YEAR YEARS FUND
EUROPE 15.41% 9.06% 11.28%
EUROPE (INCL. 3% SALES CHARGE) 11.95% 8.40% 10.86%
Morgan Stanley Europe Index 11.24% 10.62% 11.29%
Average European Region Fund 9.13% 7.52% 9.24%
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
Europe (301) Europe Index
10/01/86 9700.00 10000.00
10/31/86 9690.30 10061.24
11/30/86 10078.30 10600.17
12/31/86 10485.70 10866.14
01/31/87 11563.06 11347.33
02/28/87 12300.92 11751.88
03/31/87 12922.28 12332.46
04/30/87 13456.26 12815.21
05/31/87 13679.56 12743.90
06/30/87 14232.95 13107.17
07/31/87 15252.37 13548.56
08/31/87 15572.75 13660.75
09/30/87 16135.86 13749.78
10/31/87 11737.82 11135.61
11/30/87 11213.55 10645.49
12/31/87 12048.50 11264.74
01/31/88 11475.68 10802.62
02/29/88 11533.94 11438.32
03/31/88 12067.91 11753.00
04/30/88 12407.72 11972.00
05/31/88 12271.80 11748.03
06/30/88 11999.95 11629.54
07/31/88 11873.74 11655.59
08/31/88 11252.38 11126.51
09/30/88 11776.65 11732.04
10/31/88 12582.48 12818.60
11/30/88 12737.81 12976.68
12/31/88 12751.83 13046.37
01/31/89 13357.17 13518.81
02/28/89 13386.94 13365.30
03/31/89 13615.18 13462.17
04/30/89 14200.67 13835.82
05/31/89 13813.65 13126.86
06/30/89 14190.75 13668.45
07/31/89 15460.97 15277.34
08/31/89 15341.89 15086.51
09/30/89 16036.54 15345.58
10/31/89 14925.09 14339.46
11/30/89 15798.37 15135.61
12/31/89 16874.84 16764.74
01/31/90 17085.65 16719.83
02/28/90 16643.95 16319.18
03/31/90 17145.88 16549.43
04/30/90 16804.57 16110.24
05/31/90 17838.54 17421.38
06/30/90 18581.39 18033.25
07/31/90 19705.71 18792.65
08/31/90 17356.69 16929.38
09/30/90 15640.09 14935.59
10/31/90 16342.79 16194.23
11/30/90 16322.71 16356.96
12/31/90 16100.11 16120.73
01/31/91 16418.62 16663.17
02/28/91 17415.24 18120.73
03/31/91 16480.27 16904.64
04/30/91 16439.17 16727.91
05/31/91 16511.09 17221.35
06/30/91 15062.39 15776.03
07/31/91 15822.70 16867.89
08/31/91 16141.21 17175.85
09/30/91 16726.85 17692.04
10/31/91 16367.25 17319.34
11/30/91 15874.07 16911.64
12/31/91 16769.90 18234.47
01/31/92 16844.24 18229.22
02/29/92 17046.03 18299.21
03/31/92 16461.90 17658.79
04/30/92 17545.20 18633.42
05/31/92 18405.47 19693.79
06/30/92 18235.54 19327.03
07/31/92 17577.06 18636.54
08/31/92 17630.16 18575.77
09/30/92 17354.03 18268.54
10/31/92 16058.32 16993.88
11/30/92 16047.70 16985.58
12/31/92 16346.72 17375.24
01/31/93 16260.11 17404.43
02/28/93 16357.54 17603.55
03/31/93 17429.28 18509.13
04/30/93 18003.04 18917.36
05/31/93 18219.55 19120.87
06/30/93 17710.75 18841.54
07/31/93 17721.57 18906.21
08/31/93 19161.38 20565.25
09/30/93 19139.73 20501.36
10/31/93 19951.65 21355.45
11/30/93 19561.93 20894.47
12/31/93 20787.26 22463.18
01/31/94 22287.60 23607.14
02/28/94 21765.74 22771.11
03/31/94 21156.91 22126.61
04/30/94 21765.74 23042.85
05/31/94 20928.60 22063.34
06/30/94 20678.54 21831.69
07/31/94 21624.41 22975.89
08/31/94 22309.34 23704.62
09/30/94 22004.93 22764.65
10/31/94 23026.90 23756.36
Let's say you invested $10,000 in Fidelity Europe Fund on its start date
and paid the 3% sales charge. By October 31, 1994, it would have grown to
$23,027 - a 130.27% increase on your initial investment. That compares to
$10,000 invested in the Morgan Stanley Europe index, which would have grown
to $23,756 over the same period - a 137.56% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
(checkmark)
EUROPE
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Sally Walden,
Portfolio Manager of Fidelity Europe Fund
Q. SALLY, HOW DID THE FUND DO?
A. The fund has performed well. It returned 15.41% for the year ending
October 31, 1994. That is more than both the average European fund which
returned 9.13% according to Lipper Analytical Services and the Morgan
Stanley Europe index which returned 11.24% for the same time period.
Q. WHAT FACTORS CONTRIBUTED TO PERFORMANCE?
A. The strength of European markets and the weakness of the U.S. dollar
contributed to returns. I think the fund did well because I'm a stock
picker and several of the stocks I own have done very well.
Q. WHAT IS AN EXAMPLE?
A. Nokia, a cellular communications company and the fund's largest holding,
is up nearly 75% from six months ago and has had a large impact on overall
performance. The cellular phone industry is growing all over the globe, and
Nokia is a manufacturer of GSM, a digital standard in Europe and the
fastest growing segment of the cellular business. Nokia is located in
Finland where a low-cost manufacturing base has given it an advantage over
its competitors in the export business.
Q. HAS YOUR INVESTMENT STRATEGY CHANGED RECENTLY?
A. Not really. My focus remains on growth stocks. I prefer to pick strong,
growing companies and hold them at least 12-18 months and often much
longer. I continue to be heavily invested in media stocks since
deregulation and technology are always creating new opportunities.
Financial service companies, especially those with exposure to the fast
growing areas of life insurance and other savings products, continue to
hold my interest.
Q. HOW DO YOU DETERMINE THE COUNTRY DIVERSIFICATION WITHIN THE FUND?
A. The fund is a mix of stocks that are held for their own individual
reasons; where the stock happens to be listed is secondary. That said, I
have recently noticed some disparity of performance among the different
markets in Europe. The strongest performers have tended to be in the Nordic
area in countries such as Sweden and Finland where the export boom started.
In the major markets, Germany and Switzerland have done well while France
and the United Kingdom have been weak. The U.K. is the largest market in
Europe - 35% of the European index. Shareholders of the fund should
understand that the fund is underweighted in the U.K. even though it's the
fund's largest position with 26.5% of the fund invested there.
Q. HOW HAVE RISING INTEREST RATES IN EUROPE INFLUENCED YOUR STOCK PICKING?
A. Interest rates themselves haven't influenced my selection although they
are the reason that some stocks have performed as badly as they have. Since
I don't rotate the fund through sectors, I'm not likely to own financial
stocks when rates are going down and vice versa. Higher rates haven't made
me want to own different kinds of stocks.
Q. CAN YOU DESCRIBE OTHER TOP 10 INVESTMENTS IN THE FUND?
A. Of course. VNU is a Dutch publishing company that owns major stakes in
two dominant commercial television stations. Its recent cost cutting has
improved margins in its magazine and newspaper activities. Another is
Skandia, a Swedish insurance company which is experiencing tremendous
growth in the sale of its unit-linked life insurance policies in the U.S.
and Europe. International Cabletel is a NASDAQ-listed cable company doing
business in the U.K. Cable television is still in its infancy in the U.K.,
but the stock is very attractive due to the company's ability to offer
telephone as well as television services. Natuzzi - which is not part of
the top 10 - is an Italian company and is the world leader in leather
furniture manufacturing. Its sophisticated systems and skilled work force
give it a significant cost advantage over its competitors. It has a major
market share in the United States and is now rapidly increasing its market
share in Europe and the Far East.
Q. WHAT STOCK PICKS HAVE BEEN DISAPPOINTING?
A. Schering comes to mind as a stock that hasn't done as well as it should
have. A German pharmaceutical company, Schering has been a long-term
holding of this fund. I still own a lot of it but recent performance has
been listless. Investors are skeptical of the company's plans to double its
profit margins. I think it's possible, but lingering doubts are keeping the
stock's price down. The stock price is much more affected by the fact that
the company has recently introduced a drug for multiple sclerosis.
Investors are questioning whether or not there's a competing drug coming
out and whether pricing will be sustained. Once investors begin focusing on
the underlying pharmaceutical business, the stock price should improve.
Q. YOU HAVE RECENTLY ADDED SEVERAL STAINLESS STEEL STOCKS TO YOUR
PORTFOLIO. WHAT'S THE ATTRACTION?
A. In a nutshell, stainless steel is a growth market while there is
structural erosion of the carbon steel market. Of the three stainless steel
stocks that the fund currently owns, none was previously available to
investors in its current form. Ugine, a French company, was a new issue in
June; Outokumpu was recently privatized by the Finnish government; and
Avesta Sheffield, a Swedish company, is a product of a merger. Due to their
unfamiliarity with the sector, it took European investors a while to
realize that stainless steel is very different from ordinary carbon steel
and in fact replaces carbon in some manufactured products.
Q. WHAT'S YOUR OUTLOOK FOR THE FUND?
A. Increasing interest rates across Europe have made the markets nervous.
However, company profits are booming and earnings are growing in many
European markets. The earnings momentum should be the driving force going
forward and I expect the fund's holdings to profit from it.
FUND FACTS
GOAL: to increase the value of the fund's
shares by investing mainly in common stocks
in Western Europe
START DATE: October 1, 1986
SIZE: as of October 31, 1994, more than
$507 million
MANAGER: Sally Walden, since July 1992; also
manages various funds for non-U.S. investors,
joined Fidelity in 1984
(checkmark)
SALLY WALDEN ON GROWTH STOCKS IN
SMALL INDUSTRIES:
"I prefer growth stocks to recovery stocks. One of the
most pleasant situations for me is to find a good
growth company with a niche in an industry that's not
big enough for a larger company to enter and
compete. A good example is Ares Serono, a Swiss
company that has created a drug to treat infertility. It
dominates the world in infertility treatment and has a
70% global market share. Because infertility treatment
is generally not reimbursable, it is not affected by
healthcare reform. In addition to the fact that Ares
Serono's effective drugs are also well-priced, the
company is also positively impacted by worldwide
demographics. Often, couples who experience
infertility problems are older and more affluent and in a
much better position to pay for uncovered medical
treatments. Though infertility treatment is a
worldwide market, it's a fairly small therapeutic area,
hardly worth the barriers of entry to compete against
a company that dominates such a large portion of
the market.
"Another dominant company in a small industry is
Arjo, a Swedish company. Arjo owns massive market
share in lifting equipment, apparatus that lifts
incapacitated patients in hospitals. This is a company
that, along with having a dominant product in a
relatively small industry, is benefitting from structural
change. In this case, the change is legislative. More
working days are lost in hospitals due to nurses and
orderlies who are stricken with back problems
resulting from lifting and moving patients. Nursing
unions in Europe have been vocal about hospitals
installing this type of equipment. As a result, hospitals
and nursing homes which install patient lifting
equipment pay lower insurance premiums for their
workers. In the U.K. it's obligatory for hospitals to have
the equipment, and Germany is beginning to
implement the same regulations. I expect that many
other European countries won't be far behind. Arjo
and Ares Serono are great investments because they
manufacture products that are in great demand in
markets that aren't large enough for anyone else to
compete."
DISTRIBUTIONS
The Board of Trustees of Fidelity Europe Fund voted
to pay on December 12, 1994, to shareholders of
record at the opening of business on December 9,
1994, a distribution of $.11 derived from capital gains
realized from sales of portfolio securities and a
dividend of $.20 from net investment income.
EUROPE
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION
AS OF OCTOBER 31, 1994
United States 6.3%
Sweden 7.9%
Row: 1, Col: 1, Value: 6.3
Row: 1, Col: 2, Value: 26.5
Row: 1, Col: 3, Value: 6.6
Row: 1, Col: 4, Value: 5.2
Row: 1, Col: 5, Value: 5.9
Row: 1, Col: 6, Value: 4.3
Row: 1, Col: 7, Value: 4.5
Row: 1, Col: 8, Value: 10.3
Row: 1, Col: 9, Value: 6.9
Row: 1, Col: 10, Value: 5.1
Row: 1, Col: 11, Value: 10.5
Row: 1, Col: 12, Value: 7.9
France 10.5%
United
Kingdom 26.5%
Belgium 5.1%
Finland 6.9%
Switzerland 6.6%
Germany 10.3%
Netherlands 4.5%
Spain 5.2%
Other 5.9%
Italy 4.3%
AS OF APRIL 30, 1994
United States 3.6%
Belgium 6.1%
Row: 1, Col: 1, Value: 3.6
Row: 1, Col: 2, Value: 24.8
Row: 1, Col: 3, Value: 9.699999999999999
Row: 1, Col: 4, Value: 6.2
Row: 1, Col: 5, Value: 6.6
Row: 1, Col: 6, Value: 4.6
Row: 1, Col: 7, Value: 3.9
Row: 1, Col: 8, Value: 5.1
Row: 1, Col: 9, Value: 11.5
Row: 1, Col: 10, Value: 11.3
Row: 1, Col: 11, Value: 6.6
Row: 1, Col: 12, Value: 6.1
Finland 6.6%
United
Kingdom 24.8%
France 11.3%
Germany 11.5%
Switzerland 9.7%
Netherlands 5.1%
Sweden 6.2%
Italy 3.9%
Spain 6.6%
Other 4.6%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 94.8 97.3
Bonds 0.2 0.1
Short-term investments 5.0 2.6
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Nokia AB Free shares
(Finland, Electrical Equipment) 3.5 2.9
Schering AG
(Germany, Drugs &
Pharmaceuticals) 1.9 2.2
Telecom Italia Ord.
(Italy, Telephone Services) 1.7 2.2
Skandia International Holding Co. ADR
(Sweden, Insurance)
1.6 0.8
Audiofina
(Belgium, Broadcasting) 1.3 1.8
International Cabletel, Inc.
(United States, Broadcasting) 1.2 1.0
Gehe AG
(Germany, Medical Equipment & Supplies)
1.2 1.2
Reisebuero Kuoni AG Part. Cert.
(Switzerland, Entertainment) 1.2 1.6
TF-1
(France, Broadcasting) 1.1 1.0
VNU Ord.
(Netherlands, Publishing) 1.1 1.1
TOP TEN INDUSTRIES
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 15.5 16.3
Media & Leisure 14.0 14.6
Health 9.2 9.4
Durables 7.6 6.9
Industrial Machinery & Equipment 7.6 5.0
Retail & Wholesale 7.3 6.8
Utilities 6.8 8.2
Nondurables 5.4 6.9
Transportation 4.5 4.0
Construction & Real Estate 4.5 5.8
EUROPE
INVESTMENTS OCTOBER 31, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.4%
SHARES VALUE (NOTE 1)
BELGIUM - 4.9%
Audiofina 12,606 $ 6,707,705 05099292
Colruyt SA 11,840 2,723,028 19681599
Generale de Banque SA 16,112 3,913,994 37199592
GIB Holdings Ltd. 80,835 3,158,618 37499A23
Immob de Belgique 22,255 2,015,656 45099592
Quick Restaurants SA 50,185 3,887,856 74899B22
UCB Group 3,507 2,711,218 90262799
25,118,075
BERMUDA - 0.4%
Bona Shipholdings Ltd. (a) 237,760 1,999,971 09776C93
DENMARK - 1.7%
Kobenhaven Lufthave AS 47,090 2,734,955 49999B22
Teledanmark AS Class B 57,045 3,284,072 87924292
Unidanmark AS Class A (a) 65,400 2,621,109 92399792
8,640,136
FINLAND - 6.1%
America Group Ltd. Class A 114,835 2,770,416 02351210
Kone Corp. Class B Ord. 26,000 3,096,718 50400092
Nokia AB Free shares 118,430 17,837,859 65599992
Outokumpu OY Class A (a) 130,820 2,772,213 69099992
Repola OY 126,000 2,642,686 75999A92
WSOY (Werner Soderstrom) Class B 23,360 1,675,462 94299J23
30,795,354
FRANCE - 10.5%
Assurances Generales (Reg.) 67,810 2,770,901 04557510
BIC 38,590 4,761,420 08899292
BNP Ord. 92,045 4,558,879 05599996
BQE National Paris Ord. (a) 10,698 2,147,291 05599994
Ecco SA 32,243 4,166,248 27399292
Eiffage SA 11,282 1,918,148 27599522
Eurafrance (Ste) 395 136,771 29899892
Immeubles de France, Ste Des 33,036 2,760,222 44999C22
Omnium Gestion Financement SA 17,416 2,541,420 68099792
Publications Filippachi 13,070 2,460,863 75599999
Renault SA Part. Cert. 6,700 2,250,909 75999F92
Salomon SA Class A 6,504 2,516,169 93099292
Scor SA 93,370 2,050,094 80999992
TF-1 56,120 5,823,002 90399999
Taittinger SA 3,980 1,925,619 87657794
Thomson C.S.F (a) 82,100 2,228,577 88431610
Total SA Class B 58,758 3,812,163 20434510
Ugine SA 38,691 2,909,437 90299G22
Ugine SA (c) 21,000 1,579,132 90299G23
53,317,265
GERMANY - 7.9%
Bayer AG 18,416 4,309,620 07273010
BMW AG 7,927 4,085,403 05528310
Duerr Beteiligungs AG (RFD) (a) 9,150 3,924,688 26499292
Gehe AG 17,881 6,111,943 68199492
Holsten Brauerei AG 6,005 1,385,692 43899D92
Otto Reichelt AG 16,720 3,780,416 69199A92
Rhoen Klinikum AG 2,600 2,330,707 76299494
Schering AG 14,210 9,492,233 80658510
Veba AG Ord. 14,091 4,722,769 92239110
40,143,471
SHARES VALUE (NOTE 1)
IRELAND - 1.1%
CRH PLC 653,650 $ 3,636,196 12626K10
IWP International (U.K. Reg.) 405,370 2,155,551 45199A93
5,791,747
ITALY - 4.3%
Fila Holding Spa sponsored ADR 168,650 2,803,806 31685010
Industrie Natuzzi Spa ADR 160,700 5,182,575 45647810
Istituto Mobiliare Italiano 160,990 1,056,782 45777M92
Istituto Nazionale Delle Assicurazionl
Spa (a) 1,500,000 2,172,150 46523492
Mondadori (Arnoldo) Editore Spa (c) 216,900 1,962,195 60999B23
Telecom Italia Ord. 3,125,400 8,551,376 87999R22
21,728,884
NETHERLANDS - 4.5%
Heineken NV 35,535 5,197,518 42301210
Internationale Nederlanden Groep NV 97,370 4,558,531 46099892
PolyGram NV Ord. 78,600 3,497,893 73173392
Unilever NV ADR 33,310 3,955,563 90478450
VNU Ord. 50,860 5,432,149 92399010
22,641,654
NORWAY - 2.0%
Bergesen Group : 08399010
Class A 71,780 1,558,884 08399010
Class B 32,480 710,353 08399011
Color Lines (a) 560,465 2,074,365 19699492
Helikopter Service AS 152,465 1,912,079 42499192
Oslo Havnelager (a) 48,700 18,620 68499D22
Smedvig Tankships Ltd. (a) 268,850 2,097,017 83169E92
Veidekke AS 106,100 1,817,420 93699592
10,188,738
PORTUGAL - 0.7%
Banco Espirito Santo e Commercial
de Lisboa (Reg.) 167,200 3,427,764 06699M22
SPAIN - 5.2%
Banco Popular Espanol 21,130 2,650,318 05999110
Corporacion Financiera Alba SA 89,870 4,376,903 15199010
Corporacion Mapfre Cia International
de Reaseguros SA (Reg.) 91,170 4,025,310 16899192
El Aguila SA (a) 177,063 1,378,335 28299292
Empresa Nacional de Electricidad SA
Ord. 56,810 2,603,508 29244710
FOCSA (Fomento de Obras Y
Construcciones SA) 44,295 4,456,024 34418599
Hidroelectrica del Cantabrico SA Class C 63,540 1,927,760 42899999
Iberdrola SA 280,275 1,846,124 45499892
Repsol SA Ord. 99,970 3,196,646 76026T10
26,460,928
SWEDEN - 7.9%
Arjo AB (c) 222,820 4,046,716 04069792
Astra AB Class A Free shares 154,615 4,201,230 04632292
Autoliv AB (a) 78,000 2,767,793 05279892
Avesta Sheffield AB Ord. Free shares (a) 410,021 4,095,597 05399892
Bergman & Beving AB Class B
Free shares 133,580 2,593,950 08399622
Catena AB Class A Free shares 209,800 1,934,438 14999G22
Custos AB Class A Free shares 127,270 1,653,539 23299A22
ICB Shipping Class B 410,270 3,095,056 44999B92
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWEDEN - CONTINUED
SKF AB Ord. (a) 140,240 $ 2,566,542 78437530
Skandia International Holding Co.
ADR 448,543 8,208,817 83055510
Volvo AB Class B 239,800 4,757,107 92885630
39,920,785
SWITZERLAND - 6.6%
Ares Serono SA Class B (Bearer) 8,240 4,459,371 03999392
Baloise Holding (Reg.) 1,765 3,322,105 05899195
Baloise Holding (warrants) (a) 2,405 31,582 05899196
BBC Brown Boveri & Cie (Bearer) 5,640 4,838,774 05599099
Intershop Holding AG (Bearer) 4,740 2,082,356 46299592
Nestle SA (Reg.) 3,286 3,070,246 64106992
Oerlikon-Buhrle Holding Ltd. (Reg.) (a) 45,525 4,710,108 67199092
Reisebuero Kuoni AG : 75999593
(Bearer) 50 1,432,551 75999593
Part. Cert. 4,516 6,074,047 75999592
Swiss Reinsurance Corp. (Reg.) 6,353 3,766,801 87099393
33,787,941
UNITED KINGDOM - 26.3%
Abbey National PLC Ord. 410,810 2,792,769 00281099
Allied Lyons PLC 265,660 2,594,919 01925510
Angerstein Underwriting Trust PLC 1,584,400 2,203,473 03499A22
Argyll Group PLC Ord. 656,901 2,805,197 04099210
Arjo Wiggins Appleton PLC 500,530 2,194,764 04199592
Associated British Ports Holdings
PLC Ord. 718,670 3,233,591 04599392
BAA PLC Ord. 412,034 3,471,869 10999999
Barclays PLC Ord. 398,500 3,794,672 06738E10
Boots Co. PLC 425,000 3,685,430 09999410
Burton Group PLC Ord. 1,981,030 2,123,030 12304910
Cadbury-Schweppes PLC Ord. 327,516 2,331,013 12720910
Chubb Security PLC 450,060 2,363,733 17299B92
CLM Insurance Fund PLC 1,424,100 2,050,433 18899322
Comcast UK Cable Partners PLC
Class A (a) 86,000 1,720,000 20099622
Compass Group PLC Ord. 617,807 3,285,183 20499192
De La Rue PLC 168,303 2,698,616 24642110
Flextech PLC (a) 356,810 2,796,377 33999392
Hazlewood Foods PLC Ord. 798,700 1,620,427 42199292
Kwik Save Group PLC Ord. 184,085 1,647,513 50124310
London Insurance Market Investment
Trust PLC 1,615,390 2,484,438 54199F22
MFI Furniture Group PLC 1,176,297 2,540,472 55299392
Mirror Group Newspaper PLC 2,190,690 5,053,856 60499792
Pearson PLC 246,010 2,551,908 70509991
Prudential Corp. PLC 1,007,000 5,255,855 74399992
Racal Electronics PLC Ord. 631,500 2,634,732 74981510
Rank Organization PLC 479,700 3,178,689 75304110
Reuters Holdings PLC Ord. 338,000 2,654,490 76132410
Royal Bank of Scotland Group PLC Ord. 536,890 3,847,536 78009792
Scottish & Newcastle Brewers PLC 471,802 3,992,856 80987810
Scottish Hydro-Electric PLC Ord. 255,925 1,339,941 81013395
Scottish Power PLC ADR (c) 39,200 2,303,000 81013T40
Scottish Television PLC 220,400 1,568,642 81099210
Smith (W.H.) Group PLC Ord. 326,110 2,481,077 83199393
Smithkline Beecham PLC Ord. Units 603,600 3,676,860 83237850
Standard Chartered Bank PLC 810,000 3,896,327 85256810
Storehouse PLC 715,000 2,538,572 86211210
Takare PLC Ord. 1,141,380 4,229,817 94499792
Tesco PLC Ord. 1,192,510 4,585,141 88157510
Ulster Television PLC Ord. 256,800 2,962,152 94299492
United Newspapers PLC Ord. 238,960 1,986,149 91120210
Vendome Luxury Group PLC SA 358,189 3,041,605 92299E22
SHARES VALUE (NOTE 1)
Vodafone Group PLC 1,551,745 $ 5,376,098 92857T92
Westminster Health Care Holdings PLC 455,000 2,694,901 96099B92
Wickes PLC 1,674,390 2,424,500 96699392
Woolworth Holdings PLC Ord. 296,654 2,300,656 98088610
Zeneca Group PLC Ord. 180,670 2,539,231 98934D92
133,552,510
UNITED STATES OF AMERICA - 1.3%
International Cabletel, Inc. (a) 204,000 6,324,000 45921610
TOTAL COMMON STOCKS
(Cost $381,014,674) 463,839,223
PREFERRED STOCKS - 3.4%
CONVERTIBLE PREFERRED STOCKS - 0.2%
UNITED KINGDOM - 0.2%
MAI PLC 5.90% cumulative 507,530 772,268 55699093
NONCONVERTIBLE PREFERRED STOCKS - 3.2%
FINLAND - 0.8%
Nokia AB 26,300 3,972,723 65599910
GERMANY - 2.4%
Boss (Hugo) AG 5,310 3,333,426 44451094
Hornback AG 2,360 2,511,056 44050799
Moebel Walther AG 6,785 3,180,998 61099B22
Porsche AG: 73380110
Ord. (a) 6,610 2,822,025 73380110
(RFD) (a) 1,287 524,642 73380193
12,372,147
TOTAL NONCONVERTIBLE PREFERRED STOCKS 16,344,870
TOTAL PREFERRED STOCKS
(Cost $11,943,203) 17,117,138
CONVERTIBLE BONDS - 0.2%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (B)
BELGIUM - 0.2%
Audiofina 5%,
12/31/96 -- LUF 26,010,000 846,220 050992AE
NORWAY - 0.0%
Color Lines 7 1/2%,
12/31/00 -- NOK 2,433 364,645 196994AB
TOTAL CONVERTIBLE BONDS
(Cost $1,113,542) 1,210,865
REPURCHASE AGREEMENTS - 5.0%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 4.78%
dated 10/31/94 due 11/1/94 $ 25,445,378 25,442,000 99799N9L
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $419,513,419) $ 507,609,226
CURRENCY ABBREVIATIONS
LUF - Luxembourg franc
NOK - Norwegian krone
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $9,891,043 or 1.9% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $230,608,703 and $319,489,637, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $182 for the period (see Note 5 of Notes to Financial
Statements).
The fund participated in the bank borrowing program. The maximum loan and
the average daily loan balances during the period for which loans were
outstanding amounted to $61,887,000 and $19,804,595, respectively. The
weighted average interest rate was 3.58% (see Note 7 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At October 31, 1994, the aggregate cost of investment securities for income
tax purposes was $420,108,215. Net unrealized appreciation aggregated
$87,501,011, of which $102,016,259 related to appreciated investment
securities and $14,515,248 related to depreciated investment securities.
The fund hereby designates $2,243,378 as a capital gain dividend for the
purpose of the dividend paid deduction.
For the period, interest and dividends from foreign countries were
$11,195,540 of $0.47 per share. Taxes paid to foreign countries were
$1,489,986 or $0.06 per share.
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Investments (Unaudited)
Aerospace & Defense 1.4%
Basic Industries 4.0
Construction & Real Estate 4.5
Durables 7.6
Energy 1.4
Finance 15.5
Health 9.2
Holding Companies 1.9
Industrial Machinery & Equipment 7.6
Media & Leisure 14.0
Nondurables 5.4
Retail & Wholesale 7.3
Services 2.9
Repurchase Agreements 5.0
Technology 1.0
Transportation 4.5
Utilities 6.8
100.0%
EUROPE
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $25,442,000) (cost $419,513,419) - See $ 507,609,226
accompanying schedule
Cash 881
Receivable for investments sold 11,899,629
Receivable for fund shares sold 7,531,624
Dividends receivable 2,992,439
Interest receivable 17,434
TOTAL ASSETS 530,051,233
LIABILITIES
Payable for investments purchased $ 14,061,535
Payable for fund shares redeemed 7,766,268
Accrued management fee 340,792
Other payables and accrued expenses 422,518
TOTAL LIABILITIES 22,591,113
NET ASSETS $ 507,460,120
Net Assets consist of:
Paid in capital $ 415,052,130
Undistributed net investment income 2,640,665
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 1,648,591
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 88,118,734
NET ASSETS, for 23,959,234 shares outstanding 507,460,120
NET ASSET VALUE and redemption price per share ($507,460,120 (divided by) 23,959,234 shares) $21.18
Maximum offering price per share (100/97.00 of $21.18) $21.84
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1994
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 11,298,493
Dividends
Interest 1,030,869
12,329,362
Less foreign taxes withheld (1,489,986
)
TOTAL INCOME 10,839,376
EXPENSES
Management fee 3,321,337
Basic fee
Performance adjustment 243,702
Transfer agent fees 2,242,731
Accounting fees and expenses 296,042
Non-interested trustees' compensation 2,949
Custodian fees and expenses 355,372
Registration fees 73,260
Audit 41,330
Legal 5,044
Interest 72,956
Miscellaneous 6,025
Total expenses before reductions 6,660,748
Expense reductions (3,406 6,657,342
)
NET INVESTMENT INCOME 4,182,034
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 52,588,570
Foreign currency transactions (820,442 51,768,128
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 12,898,390
Assets and liabilities in foreign (1,574,714 11,323,676
currencies )
NET GAIN (LOSS) 63,091,804
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 67,273,838
OTHER INFORMATION $814,169
Sales charges paid to FDC
Deferred sales charges withheld $85,678
by FDC
Accounting fees paid to FSC $294,804
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1994 1993
Operations $ 4,182,034 $ 7,012,018
Net investment income
Net realized gain (loss) 51,768,128 (2,768,371
)
Change in net unrealized appreciation (depreciation) 11,323,676 93,922,600
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 67,273,838 98,166,247
Distributions to shareholders from net investment income (2,098,083 (8,045,499
) )
Share transactions 549,191,101 549,154,003
Net proceeds from sales of shares
Reinvestment of distributions 2,047,747 7,889,216
Cost of shares redeemed (637,883,238 (549,458,481
) )
Net increase (decrease) in net assets resulting from share transactions (86,644,390 7,584,738
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (21,468,635 97,705,486
)
NET ASSETS
Beginning of period 528,928,755 431,223,269
End of period (including undistributed net investment income of $2,640,665 and $9,334,982,
respectively) $ 507,460,120 $ 528,928,755
OTHER INFORMATION
Shares
Sold 27,996,564 33,375,671
Issued in reinvestment of distributions 109,623 525,251
Redeemed (32,845,483 (33,714,940
) )
Net increase (decrease) (4,739,296 185,982
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31,
SELECTED PER-SHARE DATA 1994 1993 1992 E 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 18.43 $ 15.12 $ 15.93 $ 16.28 $ 15.04
Income from Investment Operations
Net investment income .18 .25 .27 .43 D .46
Net realized and unrealized gain (loss) 2.65 3.35 (.57) (.40) .97
Total from investment operations 2.83 3.60 (.30) .03 1.43
Less Distributions (.08) (.29) (.48) (.35) (.19)
From net investment income
From net realized gain - - (.03) C (.03) C -
Total distributions (.08) (.29) (.51) (.38) (.19)
Net asset value, end of period $ 21.18 $ 18.43 $ 15.12 $ 15.93 $ 16.28
TOTAL RETURN A, B 15.41% 24.24% (1.89)% .15% 9.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 507,460 $ 528,929 $ 431,223 $ 297,831 $ 389,273
Ratio of expenses to average net assets 1.35% 1.25% 1.22% 1.31% 1.45%
Ratio of net investment income to average net assets .85% 1.44% 2.38% 2.83% 2.87%
Portfolio turnover rate 49% 76% 95% 80% 148%
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
D INCLUDES $.05 PER SHARE FROM RECOVERY OF FOREIGN TAXES PREVIOUSLY WITHHELD ON DIVIDEND AND INTEREST PAYMENTS.
E AS OF NOVEMBER 1, 1991, THE FUND DISCONTINUED THE USE OF EQUALIZATION ACCOUNTING.
</TABLE>
EUROPE CAPITAL APPRECIATION
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
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (income) and capital gains (the profits the
fund earns when it sells stocks that have grown in value). Europe Capital
Appreciation Fund has a 3% sales charge, which has been waived since the
fund's start on December 21, 1993 through June 30, 1995.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
OCTOBER 31, 1994 FUND
EUROPE CAPITAL APPRECIATION 13.50%
Morgan Stanley Europe Index 7.16%
Average European Region Fund 5.17%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case since the fund started on December 21,
1993. You can compare the fund's figures to the performance of the Morgan
Stanley Europe index - a broad measure of the performance of stocks in
Europe, weighted by each country's market capitalization (or the total
value of its outstanding shares). You can also compare the fund's
performance to the average European region fund which currently reflects
the performance of 42 funds with similar objectives tracked by Lipper
Analytical Services. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
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. In the fund's next report we'll report these
numbers for the fund and the benchmarks.
$10,000 OVER LIFE OF FUND
Europe Capital Appreciation (341)Europe Index
12/21/93 10000.00 10000.00
12/31/93 10030.00 10132.25
01/31/94 11490.00 10648.24
02/28/94 11000.00 10271.14
03/31/94 11120.00 9980.44
04/30/94 11590.00 10393.71
05/31/94 11160.00 9951.90
06/30/94 10930.00 9847.41
07/31/94 11490.00 10363.51
08/31/94 11690.00 10692.21
09/30/94 11280.00 10268.23
10/31/94 11360.00 10715.55
Let's say you invested $10,000 in Fidelity Europe Capital Appreciation Fund
on its start date. By October 31, 1994, it would have grown to $11,350 - a
13.50% increase on your initial investment. That compares to $10,000
invested in the Morgan Stanley Europe index, which would have grown to
$10,716 over the same period - a 7.16% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
(checkmark)
EUROPE CAPITAL APPRECIATION
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Kevin McCarey,
Portfolio Manager of Fidelity Europe Capital
Appreciation Fund
Q. KEVIN, HOW HAS THE FUND PERFORMED?
A. Quite well. The fund was launched on December 21, 1993, and since then
has returned 13.50%. That beats the Morgan Stanley Europe index which
returned 7.16% for the same period.
Q. HOW DO YOU EXPLAIN THE FUND'S OUTPERFORMING ITS BENCHMARK?
A. As a stock picker, I try to choose stocks that outperform the market.
During this period, several of the fund's large positions, such as Philips,
were discovered by other investors as having good earnings. Thus, the
stocks outperformed. I only have 13.7% of the fund in the U.K. - a market
which has disappointed investors recently - far less than the 35% of U.K.
stocks in the benchmark. Finally, owning cyclicals, especially steels and
chemicals, helped the fund outperform the index in the past six months,
although I've recently moved out of many of them.
Q. HOW IMPORTANT IS COUNTRY ALLOCATION IN YOUR DECISION
MAKING PROCESS?
A. I look for stocks first; the country is secondary. However, with regard
to countries, I must consider the external events that may be happening
there. For example, Sweden is 7.9% of the fund's investments, nearly double
that of the index. I need to think about whether or not there are some
special risks in a particular country - such as an election - and whether
or not it will matter to the market and whether those effects are positive
or negative. I try to de-emphasize those kinds of decisions because they're
virtually impossible to predict. Instead, I try to pick companies that are
doing well on their own.
Q. HAVE YOU MADE ANY STRATEGIC ADJUSTMENTS TO THE FUND'S HOLDINGS?
A. Because investors got too enthusiastic about cyclical stocks such as
paper, chemicals and steel, I have trimmed back my exposure to those areas.
Though the sales and profits in these industries are good, these positive
attributes are already reflected in the stock prices. I've also reversed my
underweighted position in financial stocks and am now buying banks and
insurance companies. Investors became too pessimistic about the outlook for
financial companies, but I think companies such as Swiss Bank are
performing far better than most people will credit. I also continue to have
a large position in the Netherlands, which reflects my interest in the
stocks there. The biggest is Philips Electronics, which is a leader in the
European market for consumer electronics. Management has done a great job
of restructuring and the company sells nearly one-third of its goods to
emerging markets. An interesting new element in the fund is the
introduction of pharmaceuticals. Though I didn't hold any six months ago,
pharmaceuticals are now 7.2% of the fund. One of the most interesting
stocks in that sector is Schering, a medium-sized German company that has
recently introduced a drug to treat multiple sclerosis and has ambitious
plans to expand operating profit margins with it's new state-of-the-art
plant in Germany. Importantly, management's efforts to improve operating
margins should help earnings grow faster than most investors are expecting.
Q. WHAT ARE SOME OTHER CHANGES TO THE FUND'S TOP 10
INVESTMENTS?
A. Pechiney, a French aluminum producer, is new to the fund's top 10
holdings. I have a positive outlook on aluminum demand and pricing over the
next few years and think that Pechiney - currently the largest producer in
Europe - is the best play on aluminum in Europe. The French government is
the majority owner but will be privatizing it over the next few years. I
have faith in the new management and the restructuring it is undertaking
and think that compared to other aluminum companies in the world, Pechiney
is attractively priced. I also dramatically reduced my position in Elf
Acquitaine, a French oil producer. There are certain industry sectors - oil
is one - in which stock prices tend to be greatly correlated with the
underlying commodity. Like countries and currencies, their prices are much
harder to predict than the earnings of an individual company. I replaced
Elf Acquitaine with two other oil companies with stronger earnings growth.
British Petroleum is new to the top 10 and Norsk Hydro is new to the fund.
Though its difficult to predict, I believe that the price of oil should
rebound and I want to be in a position to profit when it does.
Q. WHAT INVESTMENTS HAVE BEEN DISAPPOINTING?
A. Well, Pirelli Tyre Holdings has been a poor performer. The company is a
real turnaround story and is currently moving from losses to profits.
However, growth is happening more slowly than I anticipated despite the
fact that the demand for tires continues to grow in Latin America, Europe
and the United States. One problem is that the cost of raw materials to
make tires - rubber and carbon black - is going up. Another problem is that
the company has become somewhat withdrawn and less communicative to outside
shareholders.
Q. HAVE YOU VENTURED INTO THE EMERGING MARKETS AREA?
A. Yes, although emerging markets for this fund refer mainly to European
countries such as Poland, Turkey and the Czech Republic. I have done some
very limited investing in those countries which, to date, has not greatly
benefited the fund. Lately there's been a shift of investor attention from
the countries I just mentioned over to Russia, which is a much more
speculative market. With the lack of interest in stock markets in Poland
and the Czech Republic, stocks there have been lackluster at best. Though
the markets in those countries haven't been great performers, I think that
over the next couple of years the companies in those economies will turn
around and some exposure to those markets will help the fund.
Q. HOW DO YOU USE DERIVATIVES IN THE FUND?
A. The fund can use foreign exchange hedges to try to protect against
declining foreign currencies. I used some of these instruments as a hedge
against foreign currency exposure during the past six months when I thought
the dollar might increase in value.
Q. WHAT IS YOUR OUTLOOK FOR THE FUND?
A. In general, I think that European markets are very linked to the U.S.
stock market. The rise in interest rates in Europe has been fairly closely
linked to those in the U.S., despite what looks like different economic
cycles. In general, I think that the next six months could be a tricky time
for most stock markets. However, it's becoming a more favorable environment
for stock pickers to deal well. With markets flat to down, investors must
make their bets on specific companies rather than economies, currencies or
countries - and that's what this fund does.
FUND FACTS
GOAL: to increase the value of the fund's shares
by investing mainly in common stocks in Europe
START DATE: December 21, 1993
SIZE: as of October 31, 1994, more than
$352 million
MANAGER: Kevin McCarey, since December
1993; manager, Plymouth Europe Fund (Now
Fidelity Advisor Overseas Fund), 1992-1993;
Fidelity Select Regional Banks Portfolio,
1986-1989; joined Fidelity in 1985
(checkmark)
KEVIN MCCAREY ON FOREIGN INVESTING:
"One of the major advantages of managing a European
fund out of Boston is that you can observe domestic
trends and see how they unfold throughout the world.
I've found that many global trends often start in the
United States because U.S. companies are more
accountable to shareholders and the U.S. economy is
the most competitive in the world - you have to be
efficient to produce here. An example is consumers
being less willing to pay extra for branded products and
buying generic ones instead. This trend began in the
United States several years ago. It spread first to Anglo
markets such as the U.K. and Australia and is still
trickling through other markets such as Japan and the
rest of continental Europe. In a number of global
industries, many major players have penetrated
markets throughout the world. They'll often introduce a
new program or product in the U.S. and then export it
around the world, thus creating another kind of global
trend. More generally, in the past few years the U.S.
economy was ahead of other countries in the global
recovery. Some of the same trends - such as
consumers buying homes or cars before apparel -
started in the U.S. and are playing out in Europe and
Japan. Being aware of these kinds of trends gives an
international observer an edge. Recognizing trends
and acting on them are two of the keys to
international investing."
EUROPE CAPITAL APPRECIATION
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION
AS OF OCTOBER 31, 1994
Ireland 3.0%
United States 4.1%
United
Kingdom 13.7%
Row: 1, Col: 1, Value: 4.1
Row: 1, Col: 2, Value: 13.7
Row: 1, Col: 3, Value: 8.0
Row: 1, Col: 4, Value: 7.9
Row: 1, Col: 5, Value: 7.4
Row: 1, Col: 6, Value: 9.300000000000001
Row: 1, Col: 7, Value: 16.9
Row: 1, Col: 8, Value: 6.4
Row: 1, Col: 9, Value: 8.699999999999999
Row: 1, Col: 10, Value: 14.6
Row: 1, Col: 11, Value: 3.0
France 14.6%
Switzerland 8.0%
Germany 8.7%
Italy 6.4%
Sweden 7.9%
Spain 7.4%
Netherlands 16.9%
Other 9.3%
AS OF APRIL 30, 1994
Belgium 2.5%
Row: 1, Col: 1, Value: 14.3
Row: 1, Col: 2, Value: 5.5
Row: 1, Col: 3, Value: 3.0
Row: 1, Col: 4, Value: 8.199999999999999
Row: 1, Col: 5, Value: 7.2
Row: 1, Col: 6, Value: 7.7
Row: 1, Col: 7, Value: 16.8
Row: 1, Col: 8, Value: 7.0
Row: 1, Col: 9, Value: 12.3
Row: 1, Col: 10, Value: 15.5
Row: 1, Col: 11, Value: 2.5
United
States 14.3%
France 15.5%
United
Kingdom 5.5%
Switzerland 3.0%
Germany 12.3%
Sweden 8.2%
Italy 7.0%
Spain 7.2%
Other 7.7%
Netherlands 16.8%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 95.9 85.7
Bonds - -
Short-term investments 4.1 14.3
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Schering AG
(Germany, Drugs & Pharmaceuticals) 2.8 -
Philips Electronics
(Netherlands, Electrical Equipment) 2.8 4.7
Baloise Holding (Reg.)
(Switzerland, Insurance) 2.1 0.4
Swiss Bank Corp. (Bearer)
(Switzerland, Banks) 2.0 -
Bank of Ireland U.S. Holdings, Inc.
(Ireland, Banks) 1.9 -
Pechiney International SA
(France, Metals & Mining) 1.9 -
Pirelli Tyre Holdings NV Ord.
(Netherlands, Autos, Tires,
& Accessories) 1.7 2.2
British Petroleum PLC Ord.
(United Kingdom, Oil & Gas) 1.7 0.1
Norsk Hydro AS
(Norway, Oil & Gas) 1.7 -
Internationale Nederlanden Groep NV
(Netherlands, Insurance) 1.6 -
TOP TEN INDUSTRIES
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 25.4 13.8
Basic Industries 8.3 13.9
Retail & Wholesale 8.0 7.2
Health 7.2 0.9
Utilities 6.9 8.1
Durables 6.9 8.9
Industrial Machinery & Equipment 6.1 7.9
Energy 5.5 6.1
Nondurables 5.1 0.7
Construction & Real Estate 4.1 5.4
EUROPE CAPITAL APPRECIATION
INVESTMENTS OCTOBER 31, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.0%
SHARES VALUE (NOTE 1)
AUSTRIA - 1.1%
Bau Holding AG 10,000 $ 838,870 07199922
Hemingway Holding AG (a) 6,500 312,456 42399F22
Leykam Muerztaler Papier
und Zelstoff AG Ord. (a) 17,500 692,775 52899092
Maculan Holding AG Ord. 20,000 2,035,911 55699592
3,880,012
CZECH REPUBLIC - 1.3%
CEZ AS (a) 49,000 2,817,527 15721492
Fatra AS (a) 1,000 112,818 31199622
IPS AS 13,914 974,760 44999H22
ZPS Zlin (a) 9,600 641,095 98999T22
4,546,200
DENMARK - 1.0%
Unidanmark AS Class A (a) 90,000 3,607,031 92399792
FINLAND - 1.7%
Outokumpu OY Class A (a) 201,000 4,259,401 69099992
Tampella AB (a) 400,000 1,304,064 87532099
Valmet OY Ord. (a) 32,400 704,195 92029991
6,267,660
FRANCE - 14.6%
Assurances Generales (Reg.) 70,000 2,860,390 04557510
BIS SA Ord. (a) 50,000 3,011,756 05528110
BNP Ord. 75,000 3,714,661 05599996
CERUS (Cie European Reunies) Ord. (a) 58,333 1,161,786 15799592
Credit Commercial de France Ord. 60,000 2,524,045 22499392
Dollfus Mieg & Cie (DMC) 13,000 815,894 25699392
Ecco Travaille Tempoire SA 20,000 1,255,222 27599292
Eramet SA (a) 24,000 1,753,425 29499H22
Eramet SA (a) (b) 2,000 146,119 29499H23
Guilbert SA 10,550 838,424 40199792
LVMH 24,000 3,870,592 50244199
Michel Thierry SA 12,185 1,917,779 60099492
Pechiney International SA 90,700 6,917,274 70599310
Plastic Omnium 4,950 610,755 72799622
Rexel SA 8,000 1,109,880 76199B22
Roussel-Uclaf Ord. 33,500 3,742,835 77929991
SAGA (Societe de Gerance & D'Armen) 30,000 2,972,894 78599E22
Societe Generale Class A 35,000 3,951,229 83357799
Sommers-Allibert SA 3,000 1,119,207 83530010
Synthelabo 90,925 3,674,808 93699794
Ugine SA 18,000 1,353,541 90299G22
Unibail 10,000 854,950 90499592
Vallourec SA (a) 45,000 2,443,894 92017610
52,621,360
GERMANY - 8.0%
BASF AG 10,000 2,116,708 05526230
Deutsche Bank AG 3,500 1,724,688 25152592
Ex-Cell-O Holding AG Ord. 5,000 864,505 30099392
Gildemeister AG (rights) (a) 5,600 382,330 37550092
Gildemeister AG (a) 7,000 661,014 37550099
Hoechst Krupp, Fried Krupp AG Ord. 10,000 2,189,859 43439010
MAN AG Ord. 6,000 1,625,935 56154210
Schering AG 15,000 10,019,950 80658510
Sixt AG Ord. 3,757 1,151,772 83002199
Springer Axel Verlag AG (Reg.) 2,500 1,064,007 85029999
Thyssen Industries AG (a) 27,000 3,070,324 94499892
Veba AG Ord. 12,000 4,021,945 92239110
28,893,037
SHARES VALUE (NOTE 1)
GREECE - 0.3%
Hellenic Bottling Co. SA 34,000 $ 1,055,527 42399A92
HUNGARY - 0.3%
FOTEX (First Hungarian-American Photo
Service Co.) Ord. 211,000 735,850 35099293
Pick Szeged RT sponsored GDS (b) 7,300 496,400 71957110
1,232,250
IRELAND - 3.0%
Bank of Ireland U.S. Holdings, Inc. 1,500,000 6,970,005 06278793
Grafton Group PLC (U.K. Reg.) 200,000 1,210,752 38499723
Green Property Co. (U.K. Reg.) 400,000 1,014,412 39399223
Irish Continental Group PLC (U.K. Reg.) 70,000 503,934 46299C92
Jurys Hotel Group PLC (U.K. Reg.) 500,000 1,268,015 48299E22
10,967,118
ITALY - 6.2%
Banca Fideuram Spa 3,000,000 3,563,280 06399E22
Editoriale L'Espresso Spa 350,000 1,002,278 28199K22
FIDIS Spa Ord. 320,000 809,530 31650010
Istituto Bancario San Paolo 200,000 1,188,416 45399622
Istituto Mobiliare Italiano 600,000 3,938,562 45777M92
Marzotto & Figli Spa Ord. 250,000 1,766,678 57418910
Mondadori (Arnoldo) Editore Spa (a) 300,000 2,713,962 60999B25
Montedison Spa Ord. 2,500,000 2,058,250 61237610
SOGEFI Spa 237,500 577,636 83499L22
Telecom Italia Ord. 1,680,000 4,596,631 87999R22
22,215,223
NETHERLANDS - 16.9%
BAM Groep NV 32,703 2,037,510 05999892
Borsumij Wehry NV 75,000 1,241,619 09985610
Ceteco Holdings NV (a) 22,000 574,378 15799G22
Hoogovens en Staalfabrieken NV (a) 40,000 1,865,543 43888410
Internationale Nederlanden
Groep NV 120,000 5,617,991 46099892
KBB NV Ord. 80,000 5,017,504 48130092
KLM Royal Dutch Airlines Ord. (a) 200,000 5,565,774 48251620
Koninklijke PPT Nederland 160,000 5,098,202 72699422
MacIntosh Confectionary Works 150,000 3,951,819 58199292
Nijverdal-Ten Cate NV 30,000 1,482,822 67299B22
Norit NV 130,000 1,519,610 61089099
Philips Electronics 300,000 9,932,949 71833799
Pirelli Tyre Holdings NV Ord. 888,500 6,168,305 72499092
Polynorm NV Ord. 31,100 3,358,571 73199E22
Royal Dutch Petroleum Co. Ord. 30,000 3,492,553 78025710
Samas-Groep NV 80,000 2,729,484 79499110
Schuttersveld Holding NV 49,650 1,252,077 80899C22
60,906,711
NORWAY - 2.0%
Norsk Forsvarsteknologi AS 35,000 663,761 67599G22
Norsk Hydro AS 150,000 6,044,964 65653150
Tomra Systems AS 230,000 548,750 95699692
7,257,475
POLAND - 0.7%
Bank Slaski SA (a) 10,000 467,942 06599M22
Polifarb Cieszyn SA (a) 100,000 476,608 73199F22
Wedel SA 20,000 1,598,803 94899F22
2,543,353
PORTUGAL - 0.9%
Banco Comercial Portugues SA (Reg.) 170,000 2,317,177 07299493
Unicer (Uniao Cervejeira) SA 33,000 498,113 93399A93
Unicer (Uniao Cervejeira) SA (New) 33,000 498,113 93399A95
3,313,403
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SPAIN - 7.4%
Banco Bilbao Vizcaya SA Ord. (Reg.) 150,000 $ 3,940,121 05945891
Banco de Santander SA Ord. (Reg.) 125,000 5,079,840 05957410
Banco Popular Espanol 16,000 2,006,866 05999110
Banco Intercontinental Espanol 22,000 2,030,499 24699592
Corporacion Financiera Alba SA 31,000 1,509,781 15199010
Corporacion Mapfrecia International
de Reaseguros SA (Reg.) 35,000 1,545,310 16899192
Fasa Renault Ord. 50,000 2,395,210 31199292
Hidroelectrica del Cantabrico SA 47,350 1,436,567 42899999
Prosegur Cia de Securidad SA (Reg.) 74,500 1,472,156 74291699
Telefonica de Espana SA Ord. 300,000 4,059,879 87938210
Uralita SA (a) 95,000 993,613 91799310
26,469,842
SWEDEN - 7.9%
Electrolux AB 100,000 5,217,902 01019810
Atlas Copco AB Class A Free shares 143,000 1,967,784 04925599
ASG AB Class B Free shares 80,000 1,173,504 16599C22
Investor AB Class B Free shares 150,000 3,771,977 46199A92
Pharmacia AB Class A Free shares 175,000 3,324,928 71713093
Skandia International Holding Co.
ADR 220,000 4,026,235 83055510
Skane-Gripen AB Ord. 72,000 528,077 93056099
Svedala 111,000 2,589,672 91199A92
Trelleborg AB Class C Free shares (a) 100,000 1,669,449 89499G23
Volvo AB Class B 200,000 3,967,561 92885630
28,237,089
SWITZERLAND - 8.0%
Adia SA (Bearer) 25,000 4,417,032 00699793
Baloise Holding (Reg.) 4,000 7,528,850 05899195
Daetwyler Holdings AG 600 978,910 23799A92
Danzas Holding AG (Part. Cert.) 6,000 1,408,675 23799792
Interdiscount Holding AG (Part. Cert.) 7,700 1,072,423 45899594
Nestle SA (Reg.) 2,000 1,868,683 64106992
Swiss Bank Corp. (Bearer) 25,000 7,202,547 87083610
Swiss Reinsurance Corp. (Reg.) 7,000 4,150,418 87099393
Zschokke Holding AG (Reg.) (a) 375 214,883 98999R24
28,842,421
UNITED KINGDOM - 13.7%
Argyll Group PLC Ord. 900,000 3,843,315 04099210
BET PLC Ord. 800,000 1,439,816 05538H10
British Borneo Petroleum PLC 225,000 791,487 11099D22
British Gas PLC Ord. 600,000 2,876,352 11090199
British Petroleum PLC Ord. 850,000 6,049,663 11088910
Chubb Security PLC 300,000 1,575,612 17299B92
Fisons PLC Ord. 1,000,000 1,897,930 33812310
Hambros Ord. 650,000 2,446,048 40699292
Hanson Trust PLC Ord. 1,000,000 3,779,510 41135210
Hartstone Group PLC Ord. (a) 2,520,000 577,231 41722610
Ibstock Johnsen PLC 1,200,000 1,511,808 45905799
London Clubs International PLC (a) 300,000 1,202,571 54199H22
Next PLC 650,000 2,605,571 64399999
Perkins Foods PLC 2,300,000 2,784,725 71499492
Prudential Corp. PLC 700,000 3,653,524 74399992
Smith (W. H.) Group PLC Ord. 700,000 5,325,670 83199393
Stakis PLC 1,500,000 1,914,300 85299092
Taunton Cider PLC 500,000 1,251,655 87699A92
Tesco PLC Ord. 1,000,000 3,844,950 88157510
49,371,738
TOTAL COMMON STOCKS
(Cost $341,667,332) 342,227,450
NONCONVERTIBLE PREFERRED STOCKS - 0.9%
SHARES VALUE (NOTE 1)
GERMANY - 0.7%
Fresenius AG 6,000 $ 2,513,716 35899B92
ITALY - 0.2%
Banco di Napoli Ord. 1,000,000 707,450 42799594
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $3,643,564) 3,221,166
INDEXED SECURITIES - 0.0%
PRINCIPAL VALUE
AMOUNT (B) (NOTE 1)
Salomon Brothers Holding Company, Inc.
note 6 1/2%, 10/7/96 (indexed to
common stock of Yuganskenftegas,
a Russian joint-stock company) (c)
(Cost $240,000) 240,000 105,432 79599CAB
REPURCHASE AGREEMENTS - 4.1%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 4.78% dated
10/31/94 due 11/1/94 $ 14,823,968 14,822,000 99799N9L
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $360,372,896) $ 360,376,048
LEGEND
(a) Non-income producing
(b) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $642,519 or 0.2% of net
assets.
(c) Restricted securities - Investment in securities not registered under
the Securities Act of 1933.
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Salomon Brothers Holding
Company, Inc. note 6 1/2%,
10/7/96 (indexed to common
stock of Yuganskneftegas, a
Russian joint-stock company) 9/9/94 $240,000
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,039,026,087 and $695,780,710, respectively.
At the end of the period, restricted securities (excluding 144A issues)
amounted to $105,432 or .03% of net assets (see Note 2 of Notes to
Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $7,959 for the period (see Note 5 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At October 31, 1994, the aggregate cost of investment securities for income
tax purposes was $361,094,970. Net unrealized depreciation aggregated
$718,922, of which $13,279,674 related to appreciated investment securities
and $13,998,596 related to depreciated investment securities.
For the period, interest and dividends from foreign countries were
$5,362,993 of $0.17 per share. Taxes paid to foreign countries were
$894,266 or $0.03 per share.
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Investments (Unaudited)
Aerospace & Defense 0.2%
Basic Industries 8.3
Conglomerates 1.1
Construction & Real Estate 4.1
Durables 6.9
Energy 5.5
Finance 25.4
Health 7.2
Holding Companies 0.9
Industrial Machinery & Equipment 6.1
Media & Leisure 2.5
Nondurables 5.1
Retail & Wholesale 8.0
Services 4.0
Repurchase Agreements 4.1
Technology 0.5
Transportation 3.2
Utilities 6.9
100.0%
EUROPE CAPITAL APPRECIATION
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $14,822,000) (cost $360,372,896) - See $ 360,376,048
accompanying schedule
Cash 805
Receivable for investments sold 6,078,890
Receivable for fund shares sold 2,470,396
Dividends receivable 964,174
Interest receivable 580
Prepaid expenses 4,845
TOTAL ASSETS 369,895,738
LIABILITIES
Payable for investments purchased $ 6,417,632
Payable for fund shares redeemed 9,806,911
Accrued management fee 229,466
Other payables and accrued expenses 586,810
TOTAL LIABILITIES 17,040,819
NET ASSETS $ 352,854,919
Net Assets consist of:
Paid in capital $ 350,801,806
Accumulated net investment loss (168,912
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 2,193,510
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 28,515
NET ASSETS, for 31,090,778 shares outstanding $ 352,854,919
NET ASSET VALUE, offering price and redemption price per share ($352,854,919 (divided by) 31,090,778 shares) $11.35
</TABLE>
STATEMENT OF OPERATIONS
DECEMBER 21,
1993
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1994
INVESTMENT INCOME $ 5,362,993
Dividends
Interest 1,325,862
6,688,855
Less foreign taxes withheld (894,266)
TOTAL INCOME 5,794,589
EXPENSES
Management fee $ 1,908,662
Transfer agent fees 1,211,476
Accounting fees and expenses 152,111
Non-interested trustees' 1,175
compensation
Custodian fees and expenses 297,779
Registration fees 227,973
Audit 24,054
Legal 549
Miscellaneous 1,975
Total expenses 3,825,754
NET INVESTMENT INCOME 1,968,835
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 2,305,519
Foreign currency transactions (2,249,756) 55,763
Change in net unrealized
appreciation (depreciation) on:
Investment securities 3,152
Assets and liabilities in foreign 25,363 28,515
currencies
NET GAIN (LOSS) 84,278
NET INCREASE (DECREASE) IN NET $ 2,053,113
ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION $151,780
Accounting fees paid by FSC
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C>
DECEMBER 21,
1993
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1994
INCREASE (DECREASE) IN NET ASSETS
Operations $ 1,968,835
Net investment income
Net realized gain (loss) 55,763
Change in net unrealized appreciation (depreciation) 28,515
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,053,113
Share transactions 942,473,601
Net proceeds from sales of shares
Cost of shares redeemed (591,671,795)
Net increase (decrease) in net assets resulting from share transactions 350,801,806
TOTAL INCREASE (DECREASE) IN NET ASSETS 352,854,919
NET ASSETS
Beginning of period -
End of period (including accumulated net investment loss of $168,912) $ 352,854,919
OTHER INFORMATION
Shares
Sold 83,509,152
Redeemed (52,418,374)
Net increase (decrease) 31,090,778
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
DECEMBER 21,
1993
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
<TABLE>
<CAPTION>
<S> <C>
SELECTED PER-SHARE DATA 1994
Net asset value, beginning of period $ 10.00
Income from Investment Operations
Net investment income .08 D
Net realized and unrealized gain (loss) 1.27 C
Total from investment operations 1.35
Net asset value, end of period $ 11.35
TOTAL RETURN A 13.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 352,855
Ratio of expenses to average net assets 1.54% B
Ratio of net investment income to average net assets .79% B
Portfolio turnover rate 317% B
A TOTAL RETURNS FOR PERIODS OF LESS THAN THE YEAR ARE NOT ANNUALIZED AND DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B ANNUALIZED.
C THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET GAIN ON INVESTMENTS FOR THE
PERIOD ENDED DUE TO THE
TIMING OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
</TABLE>
JAPAN
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
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (income) and capital gains (the profits the
fund earns when it sells stocks that have grown in value). Japan Fund has a
3% sales charge, which has been waived since the fund's start on September
15, 1992 through June 30, 1995.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1994 YEAR FUND
JAPAN 10.45% 47.46%
TOPIX Index 9.54% 49.31%
Average Japanese Fund 9.73% n/a
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
September 15, 1992. You can compare the fund's figures to the performance
of the TOPIX index - a broad measure of the Japanese stock market's
performance, similar to the Standard & Poor's 500 stock index in the U.S.
You can also compare the fund's performance to the average Japanese fund
which currently reflects the performance of seven funds with similar
objectives - in this case, a very small peer group - tracked by Lipper
Analytical Services. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1994 YEAR FUND
JAPAN 10.45% 20.01%
TOPIX Index 9.54% 20.72%
Average Japanese Fund 9.73% n/a
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
Fidelity Japan Fund (350)TOPIX Total Ret
09/15/92 10000.00 10000.00
09/30/92 9940.00 9811.27
10/31/92 9840.00 9332.17
11/30/92 9940.00 9572.82
12/31/92 9960.00 9433.21
01/31/93 10050.00 9384.24
02/28/93 10620.00 9811.42
03/31/93 11840.00 11248.65
04/30/93 13440.00 13164.83
05/31/93 13820.00 13960.79
06/30/93 13000.00 13384.04
07/31/93 13870.00 14324.51
08/31/93 14110.00 14644.62
09/30/93 13730.00 13883.59
10/31/93 13350.00 13630.65
11/30/93 11600.00 11425.15
12/31/93 11997.00 11710.09
01/31/94 13412.66 13580.32
02/28/94 14043.00 14243.17
03/31/94 13805.33 13839.98
04/30/94 14125.66 14380.65
05/31/94 14518.33 14642.50
06/30/94 15396.66 15458.92
07/31/94 14890.33 14904.58
08/31/94 14838.66 14941.03
09/30/94 14477.00 14546.44
10/31/94 14745.66 14931.14
Let's say you invested $10,000 in Fidelity Japan Fund on its start date. By
October 31, 1994, it would have grown to $14,746 - a 47.46% increase on
your initial investment. That compares to $10,000 invested in the TOPIX
index, which would have grown to $14,931 over the same period - a 49.31%
increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
(checkmark)
JAPAN
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Shigeki Makino,
Portfolio Manager of Japan Fund
Q. HOW DID THE FUND PERFORM OVER THE PAST YEAR, SHIGEKI?
A. Relatively well. The fund had a total return of 10.45% for the year
ended October 31, 1994, outperforming the TOPIX index - a measure of the
overall performance of the Japanese market - which returned 9.54%. It also
beat the average Japanese Fund, which returned 9.73%, according to Lipper
Analytical Services.
Q. SO IT DID BETTER THAN THE INDEX. HOW DO YOU ACCOUNT FOR THE FUND'S
OVERALL PERFORMANCE DURING THE PAST YEAR?
A. I think there are a lot of factors - both positive and negative - that
affected how the fund performed over the period. Before we talk about why
the fund beat the index, it's important to point out two negative factors.
The first was that the fund experienced tremendous cash volatility in
February of 1994 caused by political uncertainty. As a result, shareholder
inflows and outflows were much higher than usual during this period. The
second negative for the fund was the strength of the Japanese yen. I
believed that the yen would not continue to strengthen against the dollar
over the period so I hedged some of the fund's investments. But I was
wrong: the yen appreciated about 8% compared to the dollar in 1994. I
estimate that the fund lost a few percentage points compared to the index
because of these two factors.
Q. STILL, THE FUND TURNED IN A STRONGER PERFORMANCE THAN THE INDEX AND
SIMILAR FUNDS. LET'S TALK ABOUT THE POSITIVE FACTORS . . .
A. I hate to simplify it like this, but I think the fund did well because
of good stock picking. For the most part, the fund was overweighted versus
the index on the right Japanese stocks and underweighted on the stocks that
were weak performers. By overweighted or underweighted, I mean that the
fund had more or less invested in these stocks than the index did.
Q. WHICH JAPANESE SECTORS WERE MOST ATTRACTIVE?
A. In 1994, the Japanese economy began improving and the performance of
cyclical stocks picked up. Cyclical stocks tend to do well when the economy
picks up and poorly when it slows down. Some cyclicals that I liked were
automakers and electronics companies. This year, I also had a significant
investment in companies that make electrical or auto components, which also
were benefiting from the improving cyclical environment. Many of these
companies were way ahead of the rest of the market in cutting costs. On top
of this, these stocks were very inexpensive - some of the cheapest in the
market.
Q. ELECTRONICS COMPANIES MADE UP MANY OF YOUR TOP 10 STOCKS. WHICH ONES
WERE THE STANDOUTS?
A. Nichicon and Hitachi looked great. Nichicon, an electrical components
company that makes capacitors, is attractive because it's one of the
cheapest electrical companies in Japan, yet it's well-managed and its
business has been taking off on the audiovisual as well as communications
side. I like this company because it's underfollowed and may have growth
potential going forward. World-class electronics company Hitachi was also a
standout. It was inexpensive compared to its Japanese competitors and even
to competitors in Europe and the United States. In addition, I expect
Hitachi to do well because it's a very sensitive cyclical company that will
benefit from any upturn in the economy. I should also point out that
consumer electronics companies Matsushita and Sony - my top holdings -
continued to turn in strong performances over the period.
Q. WHICH OTHER SECTORS WERE YOU HEAVILY INVESTED IN?
A. I increased my weighting in basic industries, such as steel and chemical
companies, which are also considered cyclical stocks. Another sector that I
increased my holdings in was real estate. The industry has been hurting in
Japan over the past few years. However, in the past six months, stock
prices of real estate companies have come down a lot, and real estate
yields looked fairly attractive compared to long-term bond yields. On top
of this, it looks like rents in the central part of Tokyo have bottomed out
and are geared to pick up, and I expect there to be very little quality
supply in central Tokyo next year. This bodes well for Mitsubishi Estate
Company because it owns many properties in central Tokyo. This company is
also attractive based on the sentiment that no one is buying real estate
companies right now, which brings down the stock price.
Q. YOU ALSO SAID YOU WERE UNDERWEIGHTED IN SOME SECTORS . . .
A. I was referring to financial stocks. I shifted out of them in late 1993
and early 1994. In the past, these stocks had proven themselves to be good
investments when interest rates came down, but bad investments when they
went up. My decision to get out of financial stocks when I did paid off.
Interest rates did increase and these stocks turned in poor performances in
1994.
Q. SHIGEKI, IN OCTOBER OF THIS YEAR, YOU BECAME THE MANAGER OF THIS FUND
AFTER SERVING AS THE FUND'S ANALYST FOR ONE YEAR. HAVE YOU MADE ANY
CHANGES?
A. No. There have been no material changes to the operation of this fund
since I became its sole manager.
Q. OVERALL, WHEN WE LOOK AT JAPAN, IT'S IMPOSSIBLE NOT TO TALK ABOUT THE
STRONG YEN VERSUS THE WEAK DOLLAR. HOW HAS THIS DYNAMIC AFFECTED JAPAN'S
ECONOMY?
A. When the yen first started appreciating at the beginning of the year, a
lot of people worried that it was so strong it would hurt the Japanese
economy. That's because a strong yen often hurts Japanese exporters since
it makes their products more expensive in overseas markets. In addition, a
strong yen usually isn't good for Japan's domestic economy either because
it usually causes prices to go down, which leads to deflation. Right now
people have a wait-and-see attitude because the yen has not had a
significant impact on the economy. This may be because Japanese companies
have taken significant cost-cutting steps.
Q. LET'S SWITCH DIRECTION A BIT AND TALK ABOUT THE FUND'S
HOLDINGS IN DERIVATIVES . . .
A. Over the past year, the fund has held a small portion of futures
contracts, a type of financial derivative that helped the fund obtain
exposure to the broad Japanese market. The fund didn't hold any futures at
the end of the period. However, on October 31, 1994, roughly 16% of the
fund's investments were hedged using forward foreign currency contracts.
Q. HOW DO YOU THINK THE FUND LOOKS GOING FORWARD?
A. I'm very bullish if I look at the Japanese market in yen terms over the
next six months. That's because the economy is improving steadily, and, in
the six months from November to May, the Japanese market usually
experiences a seasonal high. That said, I think its important to remember
that the fund looks at Japan from both short-term and long-term
perspectives. Short term, Japan is experiencing a cyclical recovery. But
over the long term, it is going through a transition from a fully automated
manufacturing economy to a service economy. I keep both of these
perspectives in mind when I plan the fund's strategy going forward.
FUND FACTS
GOAL: To increase the value of the fund's
shares by investing mainly in Japanese
securities
START DATE: September 15, 1992
SIZE: As of October 31, 1994, more than
$469 million
MANAGER: Shigeki Makino, since October
1994; Analyst, Fidelity Japan Fund 1993 to
October 1994; joined Fidelity in 1990
(checkmark)
SHIGEKI MAKINO ON HOW MOST JAPANESE
COMPANIES CUT COSTS:
"Over the past year, many Japanese companies have
been taking steps to cut costs, but most of them have
taken a very Japanese, as opposed to Western,
approach.
"The Japanese approach to cost cutting is much more
deliberate and involves more steps than the American
approach. When a Japanese company first realizes that
business is weaker than expected, it starts cutting back
on things such as entertainment and smaller items, like
paper and pencils. If it becomes clear that the situation is
going to stay bad, the company cuts out capital
spending. After this, the company may admit that it
needs to take more difficult steps. It may hire fewer
people or not replace people who are retiring. It may
also reevaluate the profitability of the way it's conducting
business. This might mean taking steps like
reorganizing unprofitable areas and redesigning
unprofitable products.
"While this approach may not improve company
performance
as quickly as Western cost-cutting methods, it's
working. For instance, several Japanese auto parts
companies that have cut their costs dramatically look
like they will hit peak profitability in 1995 even though
their sales are expected to be lower than in prior years.
Since Japan is a consensus driven country, as more
companies cut costs, more are likely to follow suit.
"As I see it, things are changing in Japan. Companies
used to have a different motive: they wanted to maintain
lifetime employment and grow sales. Now increasing
profits is just as important to Japanese companies.
"Omron, which makes control systems for factory
automation equipment, is a very interesting company
because it is starting to undertake some very
Western-style restructuring, which is almost unheard of
in Japan. Omron is attempting to cut its production costs
in half over the next three years, as well as to reduce its
head count and administrative overhead."
(solid bullet) As of October 1994, Shigeki Makino became the
fund's manager. Mr. Makino was previously the fund's
analyst.
(solid bullet) While top 10 stock investment house Nomura
experienced a correction over the past few months, it
may remain well positioned to benefit from expected
growth in Japan.
DISTRIBUTIONS
The Board of Trustees of Fidelity Japan Fund voted to
pay on December 5, 1994, to shareholders of record at
the opening of business on December 2, 1994, a
distribution of $.36 derived from capital gains realized
from sales of portfolio securities.
JAPAN
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION
AS OF OCTOBER 31, 1994
United States 3.8%
Row: 1, Col: 1, Value: 3.8
Row: 1, Col: 2, Value: 6.5
Row: 1, Col: 3, Value: 89.7
Other 6.5%
Japan 89.7%
AS OF APRIL 30, 1994
United States 10.0%
Row: 1, Col: 1, Value: 10.0
Row: 1, Col: 2, Value: 1.5
Row: 1, Col: 3, Value: 88.5
Other 0.5%
Japan 89.5%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks and closed-end
investment companies 96.3 89.9
Bonds 0.2 0.6
Short-term investments 3.5 9.5
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Matsushita Electric Industrial Co. Ltd.
(Consumer Electronics) 2.0 2.9
Sony Corp.
(Consumer Electronics) 1.7 2.2
Hitachi Ltd.
(Electronics) 1.5 1.0
Nichicon Corp.
(Electronics) 1.2 0.8
Aiwa Co. Ltd.
(Electronics) 1.2 -
Murata Manufacturing Co. Ltd. Ord.
(Electrical Equipment) 1.1 -
Nomura Securities Co. Ltd.
(Securities Industry) 1.1 1.9
Rohm Co. Ltd.
(Electronics) 1.0 -
Kyocera Corp.
(Electronics) 1.0 0.3
Canon, Inc.
(Computers & Office Equipment) 1.0 1.2
TOP TEN INDUSTRIES
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Durables 19.3 21.3
Technology 13.1 12.9
Basic Industries 13.0 4.2
Industrial Machinery & Equipment 11.5 6.8
Retail & Wholesale 7.8 4.2
Finance 6.8 11.0
Construction & Real Estate 6.7 3.7
Transportation 4.8 3.0
Nondurables 4.8 4.6
Services 2.5 2.1
JAPAN
INVESTMENTS OCTOBER 31, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.0%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.4%
SHIP BUILDING & REPAIR - 0.4%
Namura Shipbuilding Co. Ltd. 117,000 $ 906,703 62999892
Sasebo Heavy Industries Co. Ltd. 219,100 945,280 80398910
1,851,983
BASIC INDUSTRIES - 13.0%
CHEMICALS & PLASTICS - 4.0%
Daicel Chemical Industries Ltd. 355,000 2,165,060 23398110
Denki Kagaku Kogyo (a) 242,000 1,081,326 24899092
Gun-Ei Chemical Industries Co. Ltd. Ord. 200,000 1,114,494 40280799
JSP Corp. 51,000 852,587 47399492
Kanegafuchi Chemical Industry Co. Ltd. 288,000 2,341,924 48418199
Kureha Chemical Industries Co. Ltd. 258,000 1,490,946 50156010
Mitsui Petrochemical Industries Ltd. 113,000 1,065,811 60691110
Reliance Industries Ltd. GDS 35,500 896,375 75947094
Shin-Etsu Chemical Co. Ltd. 214,000 4,549,197 82499210
Tokuyama Corp. 294,000 1,838,544 88909199
Tayca Corp. (a) 299,000 1,357,618 94799392
18,753,882
IRON & STEEL - 2.9%
Araya Industrial Co. Ltd. 83,000 392,281 03899592
Bunka Shutter Co. Ltd. 64,000 486,745 12099192
Kawasaki Steel Corp. 291,000 1,363,335 48636810
Nakayama Steel Works Ltd. 128,000 965,569 62999310
Nippon Yakin Kogyo Co. Ltd. (a) 342,000 2,071,658 65467010
Nisshin Steel Co. Ltd. 269,000 1,412,941 65476310
Sumitomo Metal Industries Ltd. 240,000 908,930 86599999
Tadano Ltd. 143,000 1,429,926 87357899
Tokyo Steel Manufacturing Co. Ltd. 179,500 4,501,162 88998799
13,532,547
METALS & MINING - 3.4%
Broken Hill Proprietary Co. Ltd. (The) 100,000 1,534,522 05599810
Dowa Mining Co. Ltd. 263,000 1,574,118 26099292
Kanamoto Co. Ltd. 114,400 2,644,404 48399B22
Mitsubishi Materials Corp. 600,000 3,411,588 60680092
Nittetsu Mining Co. Ltd. 220,000 2,204,426 65479099
Pacific Metals Co. Ltd. (a) 400,000 2,063,876 69455699
QNI Ltd. 547,600 927,344 74799B92
Teikoku Oil Co. Ltd. 200,000 1,601,568 87999692
15,961,846
PACKAGING & CONTAINERS - 0.5%
Carnaudmetalbox Asia Ltd. 157,000 577,520 17699C22
Dainippon Shigyo Co. Ltd. 9,000 100,304 23599592
Singamas Containers Holdings Ltd. 1,900,000 620,882 83399C22
Sinocan Holdings Ltd. 5,000,000 1,242,400 84999422
2,541,106
PAPER & FOREST PRODUCTS - 2.2%
Chuetsu Pulp & Paper Co. Ltd. 429,000 2,505,690 17199092
Daio Paper Corp. 37,000 523,090 24299492
Hokushin Co. Ltd. 58,000 969,609 43799392
Indah Kiat Pulp & Paper (For. Reg.) 868,000 1,029,465 45499B23
Kokuyo Co. Ltd. 139,000 3,571,643 50033399
Rengo Co. Ltd. 225,000 1,871,420 75999292
Tjiwa Kimia Pabrik Kertas PT (For. Reg.) 10,000 25,793 95499293
10,496,710
TOTAL BASIC INDUSTRIES 61,286,091
SHARES VALUE (NOTE 1)
CONSTRUCTION & REAL ESTATE - 6.7%
BUILDING MATERIALS - 2.6%
Berger International (a) 1,161,000 $ 605,020 08499J22
C.I. Holdings BHD 85,000 329,193 12099492
Cphofu Seisakusho Co. Ltd. 99,000 2,635,777 16999999
Chugoku Marine Paints Ltd. Ord. 144,000 863,361 17199392
Gantan Beauty Industries Co. Ltd. 45,000 1,277,024 36499E22
Ishikawajima Construction
Materials Co. 62,000 1,247,614 46599492
Kansai Paint Co. Ltd. 215,000 1,324,544 48499492
Nakakita Seisakusho Co. Ltd. 47,000 239,111 62899492
Natoco Paint Co. Ltd. 15,000 626,903 63199C22
Tostem Corp. 90,000 2,554,048 89299110
Tsuruya Co. Ltd. 19,000 509,778 93099L22
12,212,373
CONSTRUCTION - 1.6%
Dia Kensetsu Co. Ltd. (a) 19,000 303,906 25299492
Japan Foundation Engineering Co. Ltd. 150,000 3,374,439 47399892
Kaneshita Construction Co. Ltd. Ord. 102,000 1,663,072 49099592
Subaru Enterprise Co. Ltd. Ord. 72,000 638,976 86499292
Taisei Rotec Corp. 109,000 953,842 87599492
Tsuken Corp. 50,000 851,350 90699A92
7,785,585
ENGINEERING - 0.4%
C-Cubu Corp. 40,100 467,602 17499793
Nippon Denwa Shisetsu Co. Ltd. Ord. 92,000 1,376,606 68599292
1,844,208
REAL ESTATE - 2.1%
Filinvest Land, Inc. Ord. (a) 1,420,000 642,081 31699J22
Hankyu Realty Co. Ltd. Ord. 58,000 494,980 41099292
Hwasung Industrial Co. 1,000 58,835 44899G22
Keihanshin Real Estate Co. Ltd. 79,000 766,317 48799692
Mitsubishi Estate Co. Ltd. 358,000 4,211,548 60678310
Mitsui Real Estate Sales Co. Ltd. 32,000 627,419 60999892
Mitsui Fudosan Co. 80,000 899,850 61399492
Nichimo Corp. (a) 152,000 627,418 68599492
Tachihi Enterprise Co. Ltd. 29,000 1,197,049 88699792
TOC Co. Ltd. 25,000 490,171 88889910
10,015,668
TOTAL CONSTRUCTION & REAL ESTATE 31,857,834
DURABLES - 19.2%
AUTOS, TIRES, & ACCESSORIES - 7.2%
Aisin Seiki Co. Ltd. 125,000 1,896,188 00999999
Aichi Toyoto Motor Co. Ltd. 20,000 379,753 02199393
Calsonic Corp. 335,000 2,713,741 13199292
Chuo Malleable Iron Co. Ltd. 27,000 242,124 17299392
Daido Metal Co. Ltd. 232,000 2,025,406 45599792
Gastec Service, Inc. 40,000 334,348 37599292
Gifu Hino Motor Co. Ltd. 1,000 28,894 38199K22
Honda Motor Co. Ltd. 147,000 2,563,645 43812810
Izumi Industries Ltd. 10,000 154,791 46499G22
Jidosha Denki Kogyo Co. Ltd. 94,000 675,135 47799092
Kansei Corp. 114,000 1,132,883 48540099
Kasai Kogyo Co. Ltd. 305,000 1,982,869 31699192
Keihin Seiki Manufacturing Co. Ltd. 103,000 733,399 48799792
Kiriu Machine Manufacturing Co. Ltd. 1,000 9,814 49799493
Meiwa Industry Co. Ltd. 2,000 13,725 58699592
Mitsuba Electric Manufacturing Co. Ltd. 63,000 845,158 60899392
Nippon Cable Systems, Inc. 33,000 483,566 65799392
Ohi Seisakusho Co. 9,000 107,734 69699392
Royal Ltd. 35,000 1,516,950 78099B22
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DURABLES - CONTINUED
AUTOS, TIRES, & ACCESSORIES - CONTINUED
SNT Corp. 80,000 $ 1,015,427 96399093
Sumitomo Rubber Industries Ltd. 186,000 1,938,600 86699892
Tokai Rika Denki Co. Ltd. 180,000 2,080,388 88199192
Tokyu Car Corp. (a) 104,000 687,932 88799792
Tokyo Nissan Auto Sales Co. Ltd. 9,000 86,745 88998599
Toyota Motor Corp. 204,000 4,505,030 89399999
Toyo Tire & Rubber Co. Ltd. (a) 147,000 732,686 90299892
Toyota Corrolla Gifu Co. Ltd. 2,000 81,730 90399J22
Toyoda Gosei Co. 186,000 1,813,839 90399292
Toyoda Machine Works Ltd. 208,000 1,888,860 90799692
Unisia Jecs Corp. 105,000 736,801 91699E22
Yorozu Corp. 25,000 642,382 99199792
34,050,543
CONSUMER DURABLES - 0.5%
Aderans Co. Ltd. 81,000 2,256,850 00699092
CONSUMER ELECTRONICS - 6.3%
Alpine Electronics, Inc. Ord. 110,000 2,247,562 02099192
Daiichi Corp. Ord. 90,000 1,950,364 23599B92
Hana Microelectronics Co. Ltd. (For. Reg.) 52,000 367,211 40999693
Matsushita Electric Industrial Co. Ltd. 569,000 9,453,485 57687910
Rinnai Corp. Ord. 110,000 2,565,399 76681999
Sharp Corp. 220,000 4,109,180 81989991
Sony Corp. 132,000 8,050,359 83569999
Zojirushi Thermos 64,000 997,265 91199492
29,740,825
HOME FURNISHINGS - 1.5%
Home Wide Corp. 42,000 910,170 43799A92
Komatsu Wall Industry Co. Ltd. 70,000 1,964,811 50299K22
Lilycolor Co. Ltd. 35,000 433,414 53299592
Matsuyadenki Co. Ltd. (a) 74,000 878,179 57699890
Okamura Corp. 184,000 1,697,498 67899010
Pricerite Group Ltd. 740,000 130,247 74199D22
Shimachu Co. Ltd. 30,000 1,021,619 82399010
7,035,938
TEXTILES & APPAREL - 3.7%
Bridgestone Metalpha Corp. 45,000 873,020 10899722
Daidoh Ltd. 69,000 655,074 56299292
Daiwabo Spinning Co. Ltd. 601,000 1,966,021 23699792
Japan Wool Textile Co. Ltd. 130,000 1,582,993 47084510
Kimuratan Co. Ltd. 162,000 977,968 49439999
Kurabo Industries Ltd. 400,000 1,894,640 50157710
Komatsu Seiren Co. Ltd. 51,000 778,907 50299592
Miyuki Keori Co. Ltd. 58,000 487,797 60299292
Morishita Co. Ltd. 44,000 699,241 61799N22
Nisshinbo Industries 245,000 2,856,923 65411310
Nippon Felt Co. Ltd. 54,000 344,936 65899592
Nigai Co. Ltd. 265,000 1,824,003 66299092
Roda Vivatex PT (For. Reg.) (a) 710,000 1,569,696 77499293
Sangetsu Co. Ltd. 45,000 1,337,392 80019999
17,848,611
TOTAL DURABLES 90,932,767
ENERGY - 0.3%
OIL & GAS - 0.3%
Ampolex Ltd. Ord. 210,000 636,388 03212792
Hokuriku Gas Co. 40,000 206,800 43899592
Portman Minning Ltd. 1,150,000 614,997 73699422
1,458,185
SHARES VALUE (NOTE 1)
FINANCE - 6.5%
BANKS - 2.3%
Akita Bank Ltd. 337,000 $ 2,813,404 00999692
Bank of the Ryukyus Ltd. 5,400 328,776 83499192
Mitsubishi Trust & Banking Corp. 265,000 4,101,956 60699410
Okinawa Bank (a) 4,600 246,840 67899792
Sumitomo Trust & Banking Co. Ltd. 200,000 2,910,066 86599310
Union Bank of Philippines (a) 310,500 574,074 90499E92
10,975,116
CREDIT & OTHER FINANCE - 0.3%
World Co. Ltd. 25,000 1,184,150 98199923
INSURANCE - 1.5%
Dai-Tokyo Fire & Marine
Insurance Ord. 306,000 2,333,565 23399210
Sumitomo Marine and Fire
Insurance Co. Ltd. 260,000 2,353,026 94599392
Tokio Marine & Fire Insurance
Co. Ltd. (The) 190,000 2,254,785 88909099
6,941,376
SECURITIES INDUSTRY - 2.4%
Boo Kook Securities Co. Ltd. (a) 448 9,498 09899122
Daiwa Securities Co. Ltd. 310,000 4,510,602 23499010
Nomura Securities Co. Ltd. 241,000 5,048,552 65536110
Osaka Shoken Daiko Co. Ltd. 21,000 253,547 68799C22
Osaka Securities Finance Co.
Ltd. Ord. 165,000 972,241 68799192
Seoul Securities Co. (a) 1,000 17,563 83599P22
Tokyo Securities Co. Ltd. 107,000 845,798 89799C92
11,657,801
TOTAL FINANCE 30,758,443
HEALTH - 1.2%
DRUGS & PHARMACEUTICALS - 0.9%
Fujirebio, Inc. 58,000 622,465 35999410
Sankyo Co. Ltd. 138,000 3,588,669 80029710
4,211,134
MEDICAL EQUIPMENT & SUPPLIES - 0.3%
Hitachi Medical Corp Ord. 52,000 1,003,457 43999792
Nishimoto Sangyo Co. Ltd. 40,000 676,952 66899B92
1,680,409
TOTAL HEALTH 5,891,543
HOLDING COMPANIES - 0.0%
Seven Network Ltd. 60,000 136,814 81799F22
INDUSTRIAL MACHINERY & EQUIPMENT - 11.5%
ELECTRICAL EQUIPMENT - 6.2%
Hitachi Koki Co. Ltd. Ord. 240,000 2,575,718 43299492
Hokuetsu Industries Co. Ltd. 38,000 239,595 43699392
Icom, Inc. 117,000 1,750,684 44999A92
Inaba Denkisangyo Co. Ltd. 77,000 2,121,563 45399D92
Mitsubishi Electric Co. Ord. 600,000 4,488,930 60673220
Mori Seiki Co. Ltd. Ord. 81,000 2,281,926 61799999
Murata Manufacturing Co. Ltd. Ord. 131,000 5,353,284 62699110
Nifco, Inc. 150,000 2,445,695 66099892
Nippo Ltd. 35,000 794,593 68699992
Omron Corp. 250,000 4,514,730 68215110
Stanley Electric Co. Ltd. 238,000 1,908,322 85499092
Yaesu Musen Co. Ltd. 42,000 710,799 98499F92
29,185,839
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 5.0%
Aida Engineering Ltd. Ord. 142,000 $ 1,295,372 00871210
Amada Co. Ltd. 150,000 1,981,322 02263110
Amada Metrecs Co. Ltd. 51,000 952,583 02299292
Amadasonoike Co. Ltd. 119,000 1,074,506 02499492
Fuji Machine Manufacturing Co.
Ltd. Ord. 60,000 1,968,938 36099892
Fujitec Co. Ltd. 250,400 2,971,569 37199292
Hamada Printing Press Co. Ltd. (a) 47,000 426,810 40699B22
Hitachi Construction Machinery Co. Ltd. 134,000 1,783,809 47199692
Kato Works Co. Ltd. 47,000 332,233 48699192
Kito Corp. 36,000 635,261 49899A22
Kobe Diesel Co. Ltd. 51,000 184,201 49999692
Kyokuto Kaihatsu Kogyo Co.
Ltd. Ord. 50,000 1,573,706 74599692
Okuma Corp. (a) 237,000 2,389,443 67999192
Seirei Industry Co. Ltd. 48,000 284,320 81699592
Shibuya Industries 28,000 343,842 88699092
Shintokogio Ltd. 99,000 909,241 97199392
Star Micronics Co. Ltd. Ord. 97,000 1,081,059 58999492
Tsugami Corp. 120,000 783,860 89853699
Toshiba Machine Co. Ltd. 200,000 1,539,652 90199892
Toyo Machinery & Metal Co. Ltd. 28,000 169,898 92299792
Zuiko Corp. 46,000 901,914 91399892
23,583,539
POLLUTION CONTROL - 0.3%
Maezawa Industries, Inc. 47,000 1,576,286 55899392
TOTAL INDUSTRIAL MACHINERY &
EQUIPMENT 54,345,664
MEDIA & LEISURE - 2.4%
BROADCASTING - 0.2%
Asahi Broadcasting Corp. 5,000 644,962 04399292
Nine Network Australia Ltd. 156,000 470,429 68999792
1,115,391
ENTERTAINMENT - 0.2%
Ten Allied Co. Ltd. 40,000 1,073,216 88299492
LEISURE DURABLES & TOYS - 0.5%
Combi Corp. 7,000 91,017 20099522
Shimano, Inc. 60,000 1,194,985 82498099
Shimano, Inc. (warrants) (a) 180 216,811 82498093
Takara Co. Ltd. 77,000 790,620 87599892
2,293,433
PUBLISHING - 0.2%
Fairfax (John) Holdings Ltd. 335,000 691,725 30399692
RESTAURANTS - 1.3%
Aiya Co. Ltd. 13,000 362,210 00999J22
Green House Co. Ltd. 23,000 947,010 39399192
Joyfull Co. Ltd. 17,000 471,906 49499F22
Ohsho Food Service Corp. 84,000 2,557,144 68899992
Royal Co. Ltd. 51,000 826,273 77999110
Yoshinoya D&C Co. Ltd. Ord. 90 1,114,450 98999192
Yaohan International Caterers Ltd. 300,000 91,239 99099692
6,370,232
TOTAL MEDIA & LEISURE 11,543,997
NONDURABLES - 4.8%
BEVERAGES - 0.2%
Hokkaido Coca-Cola Bottling Co. Ltd. 26,000 397,090 43499C22
Kinki Coca-Cola Bottling Co. Ltd. 10,000 151,695 49699392
SHARES VALUE (NOTE 1)
Shikoku Coca-Cola Bottling Co. Ltd. 12,000 $ 182,034 80099B22
Sanyo Coca-Cola Bottling Co. Ltd. 31,000 447,861 80399999
1,178,680
FOODS - 3.4%
Ariake Japan Co. Ltd. 49,000 2,149,012 04099992
Burns Philp & Co. Ltd. 606,000 1,548,366 12239310
Chubu Suisan Co. Ltd. 200,000 1,095,918 17199A22
Ezaki Glicko Co. Ltd. 393,000 4,136,628 30199492
Marudai Food Co. Ltd. 151,000 1,162,437 57381110
Morozoff Ltd. 86,000 504,969 61744010
Nippon Suisan Kaisha Ltd. (a) 532,000 2,651,626 65462010
Nong Shim Co. 23,650 1,252,776 65599C22
Sonton Food Industry Co. Ltd. 59,000 852,381 83599692
Toho Co. Ltd. 45,000 506,166 94499B22
15,860,279
HOUSEHOLD PRODUCTS - 0.6%
Comany, Inc. 48,000 847,015 19999192
Matsumoto Yushi-Seiyaku Co. Ltd. 18,000 668,696 58099192
Metro Drug, Inc. Class B (a) 4,400,000 831,204 59699292
Pigeon Corp. 16,000 511,841 72099292
2,858,756
TOBACCO - 0.6%
Sampoerna, Hanjaya Mandala
(For. Reg.) 540,000 2,611,553 82299893
TOTAL NONDURABLES 22,509,268
PRECIOUS METALS - 0.2%
Plutonic Resources Ltd. 159,900 773,164 72999192
RETAIL & WHOLESALE - 7.7%
APPAREL STORES - 1.0%
Charle Co. Ltd. 70,000 1,516,950 15999392
Esprit Asia Holdings Ltd. 2,020,000 954,187 29699522
Marutomi Group Co. Ltd. 34,300 438,904 57899292
Xebio Co. Ltd. 40,000 1,651,102 98399192
4,561,143
APPLIANCE STORES - 0.5%
Eidensha Co. Ltd. 110,000 1,521,078 26849999
Japan CBM Corp. 28,000 1,126,877 47099B22
2,647,955
GENERAL MERCHANDISE STORES - 1.8%
Ito Yokado Co. Ltd. 70,000 3,821,269 46571410
Matsuzakaya Co. Ltd. 64,000 911,408 57699492
Marui Co. Ltd. 96,000 1,753,470 60444310
Nikku Sangyo Co. Ltd. 30,000 538,672 68799G22
Robinson & Co. Ltd. 334,000 1,547,138 77099392
8,571,957
GROCERY STORES - 2.1%
Davids Ltd. 490,000 484,051 23899F22
Heiwado Co. Ltd. 92,000 1,746,866 42399492
Heromini Supermarket PT (For. Reg.) (a) 430,000 970,467 42799494
Izumi Co. Ord. 160,000 4,127,754 46399292
Marukyo Corp. 48,000 1,698,984 57899792
U Store Co. Ltd. 14,000 223,931 95599292
Yamae Hisano Co. Ltd. 35,000 512,874 98899392
9,764,927
RETAIL & WHOLESALE, MISCELLANEOUS - 1.9%
Belluna Co. Ltd. (a) 22,000 973,944 07999522
Komeri Co. Ltd. 26,000 692,224 50699292
Modern Photo Film PT 98,000 537,141 61299792
Senshukai Co. Ltd. 68,000 1,999,897 81719999
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED
Tachibana Shokai Ltd. 41,000 $ 486,559 88699192
Uny Co. Ltd. 260,000 4,131,881 91529010
8,821,646
TRADING COMPANIES - 0.4%
Kanematsu-Gosho Ltd. 295,000 1,659,098 48418999
Li & Fung Ltd. 670,000 398,864 51899592
Namsung Corp. 1,200 24,086 63299D22
2,082,048
TOTAL RETAIL & WHOLESALE 36,449,676
SERVICES - 2.5%
LEASING & RENTAL - 0.9%
Nishio Rent All Co. Ltd. Ord. 37,000 855,271 68399692
Orix Corp. 89,000 3,563,490 68616710
4,418,761
PRINTING - 0.5%
Komori Corp. 83,000 2,218,358 50046299
SERVICES - 1.1%
Secom Co. Ltd. 35,000 2,336,825 81399292
Tasaki Shinju Co. Ltd. Ord. 140,000 1,921,469 87899392
Wesco, Inc. 24,000 1,010,474 95099B92
5,268,768
TOTAL SERVICES 11,905,887
TECHNOLOGY - 13.1%
COMMUNICATIONS EQUIPMENT - 0.4%
Japan Radio Co. Ltd. 95,000 1,784,222 47199210
COMPUTER SERVICES & SOFTWARE - 0.4%
Ines Corp. Ord. 32,000 409,473 45699192
ISR Group Ltd. (a) 338,500 351,989 46499F22
Multipolar PT (For. Reg.) 790,000 755,027 62599492
Sumisho Computer Service Corp. 21,000 314,225 86899692
1,830,714
COMPUTERS & OFFICE EQUIPMENT - 1.9%
Canon, Inc. 245,000 4,550,848 13780199
Fujitsu Ltd. 200,000 2,290,904 35959010
Nihon Unisys Ltd. 121,000 1,598,266 66899292
Nissho Electronics Corp. 31,000 575,822 68299892
9,015,840
ELECTRONIC INSTRUMENTS - 0.6%
Kaga Electronics Co. Ltd. 130,000 2,374,490 48299392
Ono Sokki Co. Ltd. (a) 33,000 287,756 68299192
Topcon Corp. (a) 38,000 309,788 89599592
2,972,034
ELECTRONICS - 9.8%
Aiwa Co. Ltd. 202,000 5,503,122 00959999
Alps Electric Co. Ltd. 138,000 1,865,538 02199292
Fujitsu Business Systems Ltd. 30,000 996,853 38199592
Hirose Electric Co. Ltd. 69,000 4,094,216 43354399
Hitachi Ltd. 700,000 7,295,806 43357810
Kinseki Ltd. Ord. 20,000 418,967 49799092
Kyocera Corp. 60,000 4,569,424 50155610
Nitto Denko Corp. 64,000 1,102,936 65480230
Nichicon Corp. 405,000 5,809,300 66199793
Ryoyo Electro Corp. Ord. 136,000 3,803,312 74999999
Rohm Co. Ltd. 110,000 4,847,015 77536110
Ryoden Trading Co. Ltd. 135,000 1,198,080 78379999
Ryosan Co. Ltd. 55,000 1,498,375 78399999
Sanshin Electronics Co. Ltd. 96,000 1,188,793 80199892
SHARES VALUE (NOTE 1)
U-Shin Ltd. 51,000 $ 499,448 91399293
Varitronix International Ltd. 440,000 652,001 95099792
Wako Electric Co. Ltd. 58,000 1,089,314 93199292
46,432,500
TOTAL TECHNOLOGY 62,035,310
TRANSPORTATION - 4.8%
AIR TRANSPORTATION - 0.6%
Japan Airlines Co. Ltd. 270,000 2,089,676 47103420
Japan Airport Terminal Co. 40,000 520,097 47299892
Korea Air Terminal Service (a) 1,320 35,602 52299422
Technology Resources Industries BHD (a) 100,000 389,242 93699692
3,034,617
RAILROADS - 0.2%
Hanshin Electric Railway Co. Ltd. 150,000 724,421 41899492
SHIPPING - 2.7%
Howard Smith 85,000 391,429 44178699
Isewan Terminal Service Co. Ltd. 46,000 345,101 46499D22
Kawasaki Kisen Kaisha Ltd. 686,000 2,951,981 48639892
Mitsui OSK Lines Ltd. 722,000 3,166,504 60799792
Neptune Orient Lines Ltd. 1,306,000 1,948,330 64099610
Nippon Yusen Kabushiki Kaisha 380,000 2,580,261 65463310
Shinwa Kaiun Kaisha Ltd. (a) 338,000 1,339,372 98499092
Tokyo Kisen Co. Ltd. 19,000 178,422 88999999
12,901,400
TRUCKING & FREIGHT - 1.3%
Daito Koun Co. Ltd. 30,000 352,923 23799G22
Fukuyama Transporting Co. Ltd. 27,000 325,524 35959110
Hitachi Transport System Co. 239,000 2,737,630 43699992
Nippon Konpo Unyu Soko Co. Ltd. 100,000 989,629 65457599
Yamato Transport Co. Ltd. 140,000 1,762,551 99399892
6,168,257
TOTAL TRANSPORTATION 22,828,695
UTILITIES - 1.7%
TELEPHONE SERVICES - 1.7%
DDI Corp. Ord. 370 3,352,355 23399J22
Nippon Telegraph & Telephone
Corp. Ord. 450 4,202,570 65462492
Pakistan Telecommunications Voucher
GDR (c) 2,900 478,500 69584910
8,033,425
TOTAL COMMON STOCKS
(Cost $442,183,314) 454,598,746
CLOSED-END INVESTMENT COMPANIES - 0.3%
FINANCE - 0.3%
Morgan Stanley Asia-Pacific Fund, Inc.
(Cost $1,330,587) 105,000 1,299,375 61744U10
CONVERTIBLE BONDS - 0.2%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (B)
DURABLES - 0.1%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Kiriu Machine Manufacturing
Co. Ltd. 5 1/5%, 9/30/98 - JPY 40,000,000 553,120 497994AA
CONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
RETAIL & WHOLESALE - 0.1%
GENERAL MERCHANDISE STORES - 0.1%
Aoyama Trading Co. Ltd.
0%, 9/30/97 - JPY 30,000,000 $ 278,622 037990AB
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Laox Co. Ltd. 1.90%, 3/31/03 - JPY 10,000,000 100,098 539993AA
TOTAL RETAIL & WHOLESALE 378,720
TECHNOLOGY - 0.0%
COMMUNICATIONS EQUIPMENT - 0.0%
Uniden Corp. 1.60%, 3/30/01 - JPY 5,000,000 48,243 904993AA
TOTAL CONVERTIBLE BONDS
(Cost $919,879) 980,083
U.S. TREASURY OBLIGATIONS - 0.3%
U.S. Treasury Bill yield at time of
purchase 4.063%,
12/8/94 (Cost $1,244,155) 1,250,000 1,244,250 912794P4
REPURCHASE AGREEMENTS - 3.2%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 4.78% dated
10/31/94 due 11/1/94 $ 15,218,020 15,216,000 99799N9L
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $460,893,935) $ 473,338,454
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
3,422,765,000 JPY 11/1/94 $ 35,320,826 $ (36,490)
(Payable amount $35,357,316)
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 7.5%
CONTRACTS TO SELL
10,795,810,000 JPY 11/1/94 to
2/1/95 $ 112,031,434 (558,291)
(Receivable amount $111,473,143)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 23.7%
$ (594,781)
CURRENCY ABBREVIATIONS
JPY - Japanese yen
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $478,500 or 0.1% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $779,732,394 and $471,404,842, respectively.
The market value of futures contracts opened and closed during the period
amounted to $177,670,563 and $178,438,825, respectively (see Note 2 of
Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
the average daily loan balances during the period for which loans were
outstanding amounted to $5,604,000 and $2,478,200, respectively. The
weighted average interest rate was 3.99% (see Note 7 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At October 31, 1994, the aggregate cost of investment securities for income
tax purposes was $461,333,625. Net unrealized appreciation aggregated
$12,004,829, of which $28,237,338 related to appreciated investment
securities and $16,232,509 related to depreciated investment securities.
The fund hereby designates $3,639,498 as a capital gain dividend for the
purpose of the dividend paid deduction.
For the period, interest and dividends from foreign countries were
$2,483,091, or $0.08 per share. Taxes paid to foreign countries were
$360,912 or $0.01 per share.
JAPAN
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $15,216,000) (cost $460,893,935) - See $ 473,338,454
accompanying schedule
Cash 752
Receivable for investments sold 4,136,298
Receivable for fund shares sold 3,205,426
Dividends receivable 951,481
Interest receivable 3,036
Redemption fees receivable 2,156
TOTAL ASSETS 481,637,603
LIABILITIES
Payable for investments purchased $ 3,466,711
Unrealized depreciation on foreign currency contracts 594,781
Payable for fund shares redeemed 7,112,078
Accrued management fee 289,070
Other payables and accrued expenses 535,873
TOTAL LIABILITIES 11,998,513
NET ASSETS $ 469,639,090
Net Assets consist of:
Paid in capital $ 439,242,946
Undistributed net investment income 316,078
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 18,212,131
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 11,867,935
NET ASSETS, for 32,918,445 shares outstanding $ 469,639,090
NET ASSET VALUE, offering price $14.27
and redemption price per share ($469,639,090 (divided by) 32,918,445 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1994
INVESTMENT INCOME $ 2,460,214
Dividends
Interest 1,887,550
4,347,764
Less foreign taxes withheld (360,912
)
TOTAL INCOME 3,986,852
EXPENSES
Management fee 2,776,170
Basic fee
Performance adjustment (76,576
)
Transfer agent
Fees 1,752,382
Redemption fees (48,874
)
Accounting fees and expenses 208,339
Non-interested trustees' compensation 1,989
Custodian fees and expenses 306,033
Registration fees 202,453
Audit 31,783
Legal 1,845
Interest 1,374
Miscellaneous 4,680
TOTAL EXPENSES 5,161,598
NET INVESTMENT INCOME (LOSS) (1,174,746
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 22,187,546
Foreign currency transactions (2,079,598
)
Futures contracts 768,262 20,876,210
Change in net unrealized appreciation (depreciation) on:
Investment securities 10,557,017
Assets and liabilities in foreign currencies (962,040 9,594,977
)
NET GAIN (LOSS) 30,471,187
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 29,296,441
OTHER INFORMATION $208,003
Accounting fees paid to FSC
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1994 1993
INCREASE (DECREASE) IN NET ASSETS
Operations $ (1,174,746 $ (757,305
Net investment income (loss) ) )
Net realized gain (loss) 20,876,210 4,923,789
Change in net unrealized appreciation (depreciation) 9,594,977 2,318,483
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 29,296,441 6,484,967
Distributions to shareholders from net realized gains (2,956,786 -
)
Share transactions 1,298,877,029 473,221,868
Net proceeds from sales of shares
Reinvestment of distributions 2,893,660 -
Cost of shares redeemed (977,683,984 (364,464,963
) )
Redemption fees 1,017,597 -
Net increase (decrease) in net assets resulting from share transactions 325,104,302 108,756,905
TOTAL INCREASE (DECREASE) IN NET ASSETS 351,443,957 115,241,872
NET ASSETS
Beginning of period 118,195,133 2,953,261
End of period (including undistributed net investment income (loss) of $316,078 and ($757,225),
respectively) $ 469,639,090 $ 118,195,133
OTHER INFORMATION
Shares
Sold 95,609,478 36,026,261
Issued in reinvestment of distributions 247,321 -
Redeemed (71,792,044 (27,472,802
) )
Net increase (decrease) 24,064,755 8,553,459
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER SEPTEMBER 15,
31, 1992
(COMMENCEMENT
OF OPERATIONS) TO
SELECTED PER-SHARE DATA 1994 1993 OCTOBER 31, 1992
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Net asset value, beginning of period $ 13.35 $ 9.84 $ 10.00
Income from Investment Operations
Net investment loss (.04) B (.09) -
Net realized and unrealized gain (loss) 1.31 3.60 (.16)
Total from investment operations 1.27 3.51 (.16)
Less Distributions from net realized gain (.39) - -
Redemption fees added to paid in capital .04 - -
Net asset value, end of period $ 14.27 $ 13.35 $ 9.84
TOTAL RETURNC 10.45% 35.67% (1.60)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 469,639 $ 118,195 $ 2,953
Ratio of expenses to average net assets 1.42% 1.71% 2.00% A
Ratio of expenses to average net assets before expense reductions 1.42% 1.71% 3.59% A,
D
Ratio of net investment income to average net assets (.32)% (.77)% .03% A
Portfolio turnover rate 153% 257% -%
A ANNUALIZED
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. TOTAL RETURN WOULD HAVE BEEN LOWER HAD THE LIMITATION NOT
BEEN IN EFFECT.
</TABLE>
PACIFIC BASIN
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
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (income) and capital gains (the profits the
fund earns when it sells stocks that have grown in value). Pacific Basin
has a 3% sales charge which, beginning May 31, 1994, has been waived
through June 30, 1995.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1994 YEAR YEARS FUND
PACIFIC BASIN 16.88% 37.83% 121.65%
PACIFIC BASIN
(INCL. 3% SALES CHARGE) 13.37% 33.70% 115.00%
Morgan Stanley Pacific Index 9.06% .61% 87.07%
Average Pacific Region Fund 9.41% 60.46% n/a
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 October 1, 1986. You can compare the fund's figures to the
performance of the Morgan Stanley Pacific index, a broad measure of the
performance of stocks in the Pacific region, weighted by each country's
market capitalization (or total value of its outstanding shares). You can
also compare the fund's performance to the average Pacific region fund
which currently reflects the performance of 36 funds with similar
objectives tracked by Lipper Analytical Services. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effects of
sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1994 YEAR YEARS FUND
PACIFIC BASIN 16.88% 6.63% 10.34%
PACIFIC BASIN
(INCL. 3% SALES CHARGE) 13.37% 5.98% 9.92%
Morgan Stanley Pacific Index 9.06% 0.12% 8.05%
Average Pacific Region Fund 9.41% 9.53% n/a
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
Pacific Basin (302) Pacific Index
10/01/86 9700.00 10000.00
10/31/86 9603.00 8862.00
11/30/86 10146.20 9399.07
12/31/86 10611.80 10088.05
01/31/87 12300.82 11598.87
02/28/87 12689.17 11904.22
03/31/87 13951.29 13131.82
04/30/87 15349.33 15062.31
05/31/87 15397.87 15062.31
06/30/87 14329.92 14116.01
07/31/87 14407.59 13782.70
08/31/87 15203.70 15420.34
09/30/87 14999.82 14974.05
10/31/87 12058.11 13345.52
11/30/87 12339.66 13875.39
12/31/87 13264.01 14088.57
01/31/88 13264.01 14793.36
02/29/88 13813.41 15831.10
03/31/88 14578.64 17064.31
04/30/88 15118.23 17280.12
05/31/88 14578.64 16620.65
06/30/88 13744.73 16055.73
07/31/88 13479.85 16785.08
08/31/88 13430.79 15542.64
09/30/88 13627.01 16142.75
10/31/88 13725.11 17469.62
11/30/88 14608.07 18911.35
12/31/88 14649.47 19018.54
01/31/89 14926.24 19193.41
02/28/89 15252.45 19438.67
03/31/89 14896.59 18821.29
04/30/89 15282.10 18832.42
05/31/89 14689.01 17780.12
06/30/89 14006.95 16987.42
07/31/89 15677.50 19192.02
08/31/89 14837.28 18004.64
09/30/89 16063.01 19105.05
10/31/89 15598.42 18593.72
11/30/89 16102.55 19478.89
12/31/89 16325.64 19500.06
01/31/90 15770.14 18396.74
02/28/90 14782.58 16611.35
03/31/90 13867.02 13619.98
04/30/90 13712.72 13711.64
05/31/90 15039.75 15616.28
06/30/90 15266.07 14987.13
07/31/90 15780.43 14873.33
08/31/90 13681.86 13454.50
09/30/90 11449.55 11345.09
10/31/90 13260.08 13796.09
11/30/90 12046.21 12266.22
12/31/90 11882.89 12788.36
01/31/91 12112.21 13186.92
02/28/91 13206.69 14812.56
03/31/91 13039.91 14005.66
04/30/91 13602.78 14365.60
05/31/91 13508.97 14309.99
06/30/91 13279.65 13374.87
07/31/91 13446.43 13825.95
08/31/91 12539.58 13124.61
09/30/91 13321.35 14157.05
10/31/91 13707.02 14759.53
11/30/91 13060.76 13809.99
12/31/91 13373.47 14233.78
01/31/92 13029.49 13682.29
02/29/92 12904.40 12724.00
03/31/92 12091.36 11513.90
04/30/92 11966.28 10986.10
05/31/92 12925.25 11842.95
06/30/92 12654.24 10911.67
07/31/92 12091.36 10759.99
08/31/92 12445.77 12234.05
09/30/92 12362.38 11953.73
10/31/92 12508.31 11531.67
11/30/92 12456.19 11749.15
12/31/92 12354.65 11614.67
01/31/93 12480.93 11593.05
02/28/93 13207.06 12155.13
03/31/93 14101.56 13623.52
04/30/93 15532.76 15794.04
05/31/93 16290.46 16253.52
06/30/93 15448.57 15987.05
07/31/93 16269.41 16932.23
08/31/93 17016.58 17433.05
09/30/93 17058.67 16781.05
10/31/93 18395.17 17153.59
11/30/93 17490.14 14733.35
12/31/93 20250.33 15760.40
01/31/94 20799.67 17584.75
02/28/94 21004.33 18038.08
03/31/94 19431.70 17042.36
04/30/94 19970.27 17779.27
05/31/94 20562.70 18202.23
06/30/94 20476.53 18797.67
07/31/94 20433.44 18394.37
08/31/94 21402.87 18714.06
09/30/94 21122.81 18245.66
10/31/94 21499.81 18707.18
Let's say you invested $10,000 in Fidelity Pacific Basin Fund on its start
date and paid the 3% sales charge. By October 31, 1994, it would have grown
to $21,500 - a 115.00% increase on your initial investment. That compares
to $10,000 invested in the Morgan Stanley Pacific index, which would have
grown to $18,707 over the same period - an 87.07% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
(checkmark)
PACIFIC BASIN
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Simon Fraser,
Portfolio Manager of Pacific Basin Fund
Q. SIMON, HOW DID THE FUND DO?
A. Very well. For the year ended October 31, 1994, the fund had a total
return of 16.88%, nearly doubling the 9.06% return of the Morgan Stanley
Pacific index. It also outperformed the average Pacific region fund, which
was up 9.41% over the year, according to Lipper Analytical Services.
Q. WHY DID IT PERFORM SO MUCH BETTER THAN THE INDEX?
A. There were two factors. First, Japan made up roughly 80% of the index
during the period. So late in 1993, when the Japanese market fell hard, the
index fell with it. Meanwhile, the fund was more heavily invested in the
Southeast Asian markets, which turned in stellar performances at the end of
1993. In fact, a number of Southeast Asian markets, such as Hong Kong and
Malaysia, were up by as much as 25% in December of 1993 alone. In 1994,
when the Japanese market picked up, the fund increased its weighting there
to more closely match the index. I think I should point out that in some
ways the fund and the index are a mismatch. If Japan performs well, the
index will most likely outperform the fund. That's because the fund would
have to invest more than 80% of its assets in Japan to beat the index. To
my way of thinking, that would virtually make it a Japan fund. On the other
hand, if Southeast Asia does well, the fund usually beats the index.
Q. WHAT WAS THE OTHER FACTOR BEHIND THE FUND'S STRONG PERFORMANCE?
A. Good stock picking. Within each of the countries where the fund had a
large holding, the stocks we chose outperformed the local index. That
sounds like a simple explanation, but stock picking is definitely the key
to the success of any mutual fund.
Q. BEFORE WE TALK ABOUT SOME OF THE STOCKS YOU LIKED, CAN YOU PROVIDE A
QUICK OVERVIEW OF HOW JAPAN AND SOUTHEAST ASIA PERFORMED IN 1994?
A. Sure. We've already touched on it, but here's a broader picture. For the
three years before 1994, Southeast Asia consistently outperformed Japan.
Then, at the beginning of 1994, the situation turned around. Prices of
Southeast Asian stocks were highly-inflated, and, as a result, they
corrected at the beginning of the year. Around the same time, Japan's
economy started picking up. For the first six months of 1994, Japanese
stocks had a big jump, and the Southeast Asian markets generally fell. In
June of 1994, Japan stumbled a little as some analysts started to question
whether earnings were really going to come through as expected. About that
time, several Southeast Asian markets experienced a recovery. When you look
at it objectively, I suppose it all seems like a seesaw, with Japan and
Southeast Asia going in opposite directions.
Q. SIMON, WHY DOES THERE SEEM TO BE AN INVERSE RELATIONSHIP BETWEEN THE
PERFORMANCE OF SOUTHEAST ASIA AND JAPAN?
A. The most obvious reason is that their economies are way out of sync.
Japan was going through a severe recession during part of the period (that
it was just beginning to emerge from at the end of the period), while
Southeast Asia was one of the fastest growing parts of world. That means
that in Japan there were fears of deflation and in Southeast Asia fears of
inflation. It also means that when interest rates rose and bond prices fell
around the world, which caused world stock markets to tumble as well, Japan
was considered a safe haven. That's because inflation - which is considered
the worst enemy of bonds because it eats away at fixed-interest payments -
was not a problem there. Just the opposite is true in Southeast Asia. As a
result, the worldwide fall of bond prices negatively impacted Southeast
Asia, but may have even benefited Japan in relative terms.
Q. JAPAN IS STILL THE FUND'S LARGEST COUNTRY HOLDING - ABOUT 41% OF THE
FUND IS INVESTED THERE. TELL US ABOUT THE OVERALL ECONOMY AND WHAT STOCKS
YOU PICKED THERE.
A. I believe that a recovery was just beginning to happen in Japan near the
end of the period. This recovery is similar to the one the U.S. market has
experienced over the past few years. Along with its own recovering economy,
Japan got a boost from the improving global economy. As a result of these
two factors, industrial production in Japan since the beginning of 1994
improved for the first time in four years. In this environment, I invested
in mostly steel and chemical companies, which are cyclical stocks - those
that tend to do well when the economy is improving or poorly when the
economy is weak. This approach worked out very well, especially during the
third quarter when steel and chemical companies turned in strong
performances, even though the overall Japanese market had weakened.
Q. WHICH COMPANIES DID YOU OWN?
A. I thought Sumitomo Metals was the best pick of the top four or five
Japanese steel companies that the fund invested in. During this period,
Sumitomo - like other steel companies - was a major beneficiary of the
increasing global demand for steel. In 1993, Korea and other countries were
exporting their steel - which was much less expensive than Japanese steel -
into Japan. However, in 1994, Korean steel companies exported less steel to
Japan because they needed it at home to support their own growing economy.
Also as the Korean economy recovered, its steel increased in price, and the
price gap between Japanese and Korean steel narrowed. What this meant for
Japanese steel companies was that there was less of a threat from cheap
imported steel and more demand for their steel. Another sector that we
expect to benefit from the recovery is Japanese construction companies,
such as Obayashi, one of the fund's top holdings. Construction companies
were hit hard by the Japanese recession but now their stock prices have
become very cheap.
Q. WHAT OTHER SOUTHEAST ASIAN COUNTRIES LOOKED GOOD?
A. Malaysia was a standout. In fact, in the third quarter it was one of the
best performing markets in the region, if not the world. That's mostly
because the rise in interest rates worldwide, which worsened the economic
situation in Southeast Asian markets, didn't affect Malaysia. In that
country, interest rates stayed low over the past year, and the economy and
money supply continued to grow. In this environment, the real estate market
was strong since many people had more money to spend on new homes. One of
the Malaysian property developers the fund owns is Land & General. This
large company has benefited from the increased demand for middle-class
housing.
Q. LET'S MOVE TO ANOTHER TOPIC THAT CONTINUED TO BE IN THE NEWS -
DERIVATIVES. DOES THE FUND HOLD THEM?
A. The fund can use currency contracts - a type of derivative - to hedge
its currency exposure and futures contracts to manage its market exposure,
but in the last 12 months I have not used them because of my commitment to
picking stocks rather than predicting broad market movements.
Q. ANY REGRETS OVER THE PERIOD?
A. Sure. I wish I had moved out of Southeast Asia and into Japan faster at
the very beginning of 1994. I also wish I'd cut back on my position in
Japan when it experienced a somewhat disappointing third quarter.
Q. HOW DOES THE FUND LOOK GOING FORWARD?
A. I'm relatively optimistic. In 1994, my biggest concern in most of the
Southeast Asian equity markets was inflation. However, I think that the
effects of inflation have already been discounted in many markets, and that
they will now focus on growth. The bottom line is that economic growth in
Southeast Asia combined with a cyclical recovery in Japan means that the
12-month outlook is pretty positive.
FUND FACTS
GOAL: To increase the value of the fund's shares
by investing mainly in stocks in the Pacific Basin
region
START DATE: October 1, 1986
SIZE: As of October 31, 1994, more than
$553 million
MANAGER: Simon Fraser, since May 1993;
also manages various funds for non-U.S.
investors; joined Fidelity in 1981
(checkmark)
SIMON FRASER ON THE TREND AWAY FROM HONG KONG
PROPERTY STOCKS:
"Office space in several Southeast Asian countries -
specifically Singapore and Malaysia - has started to
look very attractive to companies interested in locating
their headquarters outside of Hong Kong. There are
two reasons some companies are considering a move.
The first is the highly inflated property prices in Hong
Kong. As an example, property is eight to 10 times
more expensive in Hong Kong than it is in the
Malaysian capital of Kuala Lumpur.
"The second reason is that business leaders have not
forgotten who will be in charge of Hong Kong in 1997.
While they may not expect a dramatic change, they are
not certain how the Chinese Government will behave.
As a result, a number of companies are looking for
second offices in places like Singapore.
"I should note that most companies looking to relocate
favor Singapore over Malaysia because they consider
the Malaysian infrastructure to be less developed. The
fund owns several property companies in Singapore,
including Wing Tai Holdings, a very inexpensive
holding that could turn in strong results going forward."
(solid bullet) Sampoerna, an Indonesian cigarette company, was
a large and unique fund holding. The company makes
hand-rolled clove cigarettes, which are smoked almost
exclusively in Indonesia. Sampoerna is considered to
make the most "macho" brand in the country. This
brand is favored by workers, who most frequently
purchase single cigarettes, as opposed to packs.
(solid bullet) The fund was not heavily invested in China because
the country's economy was overheated. In fact, there
are some concerns that China's inflationary
environment could have an effect on the entire region.
China's economic situation could mean that investors
there could see losses. It could also mean that the flow of
money from China to Hong Kong could dry up.
DISTRIBUTIONS
The Board of Trustees of Fidelity Pacific Basin Fund
voted to pay on December 5, 1994, to shareholders of
record at the opening of business on December 2,
1994, a distribution of $2.02 derived from capital gains
realized from sales of portfolio securities and a
dividend of $.02 from net investment income.
PACIFIC BASIN
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION
AS OF OCTOBER 31, 1994
United
States 3.7%
Australia 8.8%
Thailand 6.3%
Row: 1, Col: 1, Value: 3.7
Row: 1, Col: 2, Value: 6.3
Row: 1, Col: 3, Value: 8.1
Row: 1, Col: 4, Value: 6.3
Row: 1, Col: 5, Value: 8.800000000000001
Row: 1, Col: 6, Value: 3.7
Row: 1, Col: 7, Value: 40.8
Row: 1, Col: 8, Value: 7.7
Row: 1, Col: 9, Value: 5.8
Row: 1, Col: 10, Value: 8.800000000000001
Hong Kong 5.8%
Singapore 8.1%
Other 6.3%
Indonesia 7.7%
Malaysia 8.8%
Korea (South) 3.7%
Japan 40.8%
AS OF APRIL 30, 1994
United
States 4.1%
Australia 7.9%
Thailand 7.0%
Row: 1, Col: 1, Value: 4.1
Row: 1, Col: 2, Value: 7.0
Row: 1, Col: 3, Value: 5.8
Row: 1, Col: 4, Value: 6.0
Row: 1, Col: 5, Value: 11.8
Row: 1, Col: 6, Value: 3.7
Row: 1, Col: 7, Value: 38.0
Row: 1, Col: 8, Value: 6.7
Row: 1, Col: 9, Value: 8.9
Row: 1, Col: 10, Value: 7.9
Hong Kong 8.9%
Singapore 5.9%
Other 6.0%
Indonesia 6.7%
Malaysia 11.8%
Korea (South) 3.7%
Japan 38.0%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks and closed-end
investment companies 93.1 92.6
Bonds 3.2 3.3
Short-term investments 3.7 4.1
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Sumitomo Metal Industries Ltd.
(Japan, Iron & Steel) 1.7 1.0
East Japan Railway Co.
(Japan, Railroads) 1.4 0.4
Obayashi Corp.
(Japan, Construction) 1.3 1.4
Sampoerna, Hanjaya Mandala
(For. Reg.)
(Indonesia, Tobacco) 1.3 1.1
Taisei Corp.
(Japan, Construction) 1.2 0.4
Wing Tai Holdings Ltd.
(Singapore, Textiles & Apparel) 1.1 1.1
Nippon Shokubai Co. Ltd.
(Japan, Chemical & Plastics) 1.1 -
Toshiba Corp.
(Japan, Electronics) 1.0 0.9
Kawasaki Kisen Kaisha Ltd.
(Japan, Shipping) 1.0 0.9
Toyo Communication Equipment Ltd.
(Japan, Communications Equipment) 0.9 -
TOP TEN INDUSTRIES
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Construction & Real Estate 17.4 15.3
Basic Industries 15.5 12.9
Finance 13.9 19.8
Technology 5.6 5.1
Durables 5.6 6.9
Retail & Wholesale 5.4 3.0
Industrial Machinery & Equipment 5.3 9.6
Transportation 4.9 3.8
Nondurables 4.9 5.1
Media & Leisure 4.0 3.8
PACIFIC BASIN
INVESTMENTS OCTOBER 31, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.8%
SHARES VALUE (NOTE 1)
AUSTRALIA - 8.6%
Accor Asia Pacific Ltd. 775,979 $ 553,304 00499N22
Amcor Ltd. 126,885 844,425 02341R10
Ampolex Ltd. Ord. 1,700,000 5,151,714 03212792
Australian National Industries Ltd. (a) 1,451,935 1,563,719 05290110
Broken Hill Proprietary Co. Ltd. (The) 329,741 5,059,948 05599810
Burns Philp & Co. Ltd. 215,412 550,391 12239310
CRA Ltd. Ord. 41,000 583,475 12627210
CSR Ltd. 154,257 536,208 12639610
Coca-Cola Amatil Ltd. 127,543 805,227 19108593
Comalco Ltd. 652,000 2,784,568 19983099
Commonwealth Bank of Australia (c) 341,763 1,891,142 20299492
Country Road Ltd. 766,163 574,760 22299392
Fosters Brewing Group Ltd. 2,000,000 1,767,740 35025810
Gold Mines Kalgoorlie Ltd. 479,390 437,961 38065310
Memtec Ltd. Ord. 837,700 933,307 58699192
North Broken Hill Holdings Ltd. 150,000 420,026 65786499
Nine Network Australia Ltd. 350,000 1,055,450 68999792
Oil Search Ltd. 4,038,000 2,879,256 67799992
Pacific BBA Ltd. (c) 1,119,832 3,135,720 69399292
Parbury Ltd. 16,180 8,412 69999392
Plutonic Resources Ltd. 658,125 3,182,232 72999192
QNI Ltd. 1,694,880 2,870,228 74799B92
Rothmans Holdings Ltd. Ord. 344,500 1,325,447 77869910
Shomega Ltd. 715,000 929,364 82599M22
TNT Ltd. (a) 500,000 895,015 93599292
VOX Ltd. 1,010,000 127,533 92899B92
W.D. & H.O. Wills Holdings Ltd. 155,700 416,326 94299892
Western Mining Corp. Holdings Ltd. 364,680 2,272,565 95869410
Woodside Petroleum Ltd. 500,000 1,864,305 98022810
Woolworths Ltd. 1,296,098 2,772,509 98088892
48,192,277
GRAND CAYMAN - 0.0%
Sanzo Finance Ltd. (warrants) (a) 250 115,625 80599B22
HONG KONG - 5.2%
Allan International Holdings Ltd. 100,000 6,341 01699522
Applied International Holding Ord. 2,000,000 302,840 03792310
Associated International Hotels Ltd. 300,000 215,478 04599492
Benelux International Ltd. 3,250,000 290,225 08199922
CDL Hotels International Ltd. 978,465 449,536 14999792
Chinney Investments Ltd. 5,682,000 1,007,419 16999B22
Chow Sang Sang Holdings
International Ltd. 2,000,000 776,500 17399K92
China Paint Holdings Ltd. 2,000,000 178,600 17799392
Culturecom Holdings Ltd. 2,000,664 160,533 23099322
Culturecom Holdings Ltd. (warrants) (a) 1,523,332 23,657 23099324
Denway Investment Ltd. 1,000,000 155,300 24999C23
Dickson Concepts International Ltd. 3,150,000 2,445,975 25399210
Esprit Asia Holdings Ltd. 500,000 236,185 29699522
First Pacific Co. Ltd. 1,309,752 923,794 33699192
Fortei Holdings Ltd. 1,500,000 229,065 34999D22
Grand Hotel Holdings Ltd. Class A 1,500,000 621,195 38599292
Great Eagle Holdings Ltd. 3,000,000 1,708,290 39099394
Great Wall Electronic International Ltd. 750,000 82,500 39199922
Great Wall Electriconic International
Ltd. (warrants) (a) 75,000 2,330 39199923
Guangzhou Investment Co. Ltd. 920,000 294,685 40099G22
Herald Holdings Ltd. 1,000,000 144,950 42699892
Hong Kong Ferry Holdings Ltd. 525,000 733,793 43899A92
Hopewell Holdings Ltd. 456,000 469,160 44099999
HKR International Ltd. 2,249,600 2,241,749 43999192
International Bank of Asia Ltd. 2,184,000 911,536 45899E22
International Tak Cheung Holdings Ltd. 3,000,067 772,637 46399892
SHARES VALUE (NOTE 1)
JCG Holdings Ltd. 330,000 $ 215,672 46799792
Jardine International Motor Corp. 918,000 1,128,644 47499292
K. Wah International Holdings
Ltd. Ord. 7,000,288 2,242,262 49099292
Kumagai Gumi Co. Ltd. 600,000 671,670 50099210
Lam Soon Food Industries Ltd. 1,624,000 380,406 51299592
Lamex Holdings Ltd. 750,000 325,155 51399292
Le Saunda Holdings Ltd. (c) 900,000 111,816 52199792
Leefung Asco Printers Holdings Ltd. 2,387,000 376,883 52499692
Mingly Corp. Ltd. 1,642,000 331,503 60399C22
M.C. Packaging Hong Kong Ltd. 1,213,333 451,445 62399092
National Mutual Asia Ltd. 3,000,000 1,941,240 63699592
Prod-Art Technology Holdings Ltd. 2,659,500 199,622 74499C92
Sime Darby Hong Kong Ltd. 200,000 271,774 82899392
Siu-Fung Ceramics Holdings Ltd. 1,000,000 231,660 82999G22
South China Brokerage Co. Ltd. 530,000 74,078 83799E22
Star Paging International
Holdings Ltd. 636,000 218,116 85599692
Star Paging International
Holdings Ltd. (warrants) (a) 143,600 6,784 85599693
Stone Electronic Technology Ltd. 200,000 41,154 86199B22
SHK Hong Kong Industries Ltd. 363,000 36,641 90699B92
SHK Convertibles Ltd. 3,630 3,171 90699G22
Shougang Concord International
Enterprises Co. Ltd. 2,000,000 685,900 99099L22
S. Megga International Holdings Ltd. 2,000,000 308,020 99999C92
S. Megga International Holdings Ltd.
(warrants) (a) 1,250,000 54,188 99999C93
Tai Cheung Holdings Ltd. 525,767 707,646 93499892
Wah Kwong Shipping Holdings Ltd. 1,026,000 2,177,613 93056692
Wing Shan International Ltd. 1,000,000 248,480 97499722
Yaohan International Caterers Ltd. 542,000 164,838 99099692
Yips Hang Cheung Holdings Ltd. 784,817 281,851 99599592
29,272,505
INDIA - 1.0%
Bombay Dyeing & Manufacturing
Co. GDR 35,000 498,750 09799H23
CESC Ltd. GDR (c) 95,000 1,045,000 15712810
CESC Ltd. GDR (warrants) (a)(c) 38,000 95,000 15712811
Great Eastern Shipping Co. Ltd. GDR 25,000 318,750 39099823
Himalayan Fund (a) 67,299 1,152,159 43299792
Himalayan Fund (warrants) (a) 13,459 33,648 43299793
Indo Gulf Fertilizer and Chemicals
Corp. Ltd. GDR (a)(c) 17,000 50,150 45577P10
Southern Petrochemical Industries
Corp. GDS (a) 130,000 1,852,500 84361310
Tata Electric Companies GDR (a)(c) 210 88,200 87656610
Tube Investments of India Ltd. GDR (a) 110,000 770,000 90699F23
5,904,157
INDONESIA - 7.4%
Argha Karya Prima PT 150,000 193,448 01099992
Andayani Megah PT 400,000 829,064 03399722
Astra International PT (For. Reg.) 1,286,400 2,844,025 04699894
Bakrie & Bros. PT Ord. (For. Reg.) 970,000 3,194,433 05799292
Bank Dagang Nas Indonesia PT 525,000 1,015,602 06099Q22
Bank International Indonesia PT Ord. 760,000 2,572,858 06199B92
Bank Mashill Utama PT (For. Reg.) (a) 276,500 292,913 06399L22
Bank Tiara Asia PT (a) 290,000 520,927 06599J22
Barito Pacific Timber PT (For. Reg.) 480,000 818,011 06799F23
Dharmala International Land PT 180,000 246,647 25399592
Duta Anggada Realty Ord. 554,166 561,536 26699192
Duta Pertiwi Nusantara PT (For. Reg.) 85,000 114,515 26699922
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDONESIA - CONTINUED
Gadjah Tunggal PT (For. Reg.) 242,000 $ 412,414 36599294
Indah Kiat Pulp & Paper (For. Reg.) 3,073,000 3,644,639 45499B23
Indosat (Indonesia Satellite) sponsored
ADR 15,600 612,300 71568010
Inti Indorayon Utama PT (For. Reg.) 200,000 543,498 69364L94
Jaya Real Property (For. Reg.) (a) 25,000 101,042 47399B22
Kabel Metal PT 360,000 518,166 84599B92
Kalbe Farma (For. Reg.) 100,000 442,167 48699994
Mayorma Indah PT 405,600 2,241,788 83099A92
Medco Energi Corp. (For. Reg.) (a) 1,234,500 3,070,436 58399C22
Modernland Realty PT 247,000 864,621 60999A92
Modern Photo Film PT 442,500 2,425,356 61299792
Mulia Industrindo PT (For.) (a) 225,000 658,069 62499B23
Pakuwon Jati PT (For. Reg.) (a) 1,229,000 1,316,099 69599393
Panin Bank PT (For. Reg.) 1,300,000 2,275,325 69899823
PT Inco 93,000 274,144 78999992
Semen Cibinong PT (For. Reg.) 324,000 1,149,082 81799693
Sampoerna, Hanjaya Mandala
(For. Reg.) 1,459,500 7,058,448 82299893
Sumalindo Lestari Jaya PT (For. Reg.) (a) 100,000 299,384 86599G22
SUCACO PT 61,300 204,698 89399292
Unilever PT 12,802 229,963 94399592
41,545,618
JAPAN - 40.8%
Acom Co. Ltd. 57,000 2,094,010 00499M22
Aida Engineering Ltd. Ord. 12,000 109,468 00871210
Aim Services Co. Ltd. (a) 50,000 1,620,144 01999522
Amway Japan Ltd. 70,000 2,268,201 03399592
Aplus Co. Ltd. 110,000 539,188 03899A92
Bandai Co. Ltd. (warrants) (a) 100 125,000 06099193
CMK Corp. 179,000 3,306,434 12580599
Catena Corp. 28,000 690,573 14899792
Charle Co. Ltd. 26,000 563,438 15999392
Chofu Seisakusho Co. Ltd. 45,000 1,198,080 16999999
Chiyoda Corp. 150,000 2,027,759 17098910
Chiyoda Fire & Marine Insurance
Co., Inc. 200,000 1,322,946 17099010
Chuo Trust & Banking Co. Ltd. 85,000 1,447,294 17499492
Citizens Watch Co. Ltd. (warrants) (a) 500 218,750 17560092
C Itoh Fuel (warrants) (a) 360 265,500 73299194
Daicel Chemical Industries Ltd. 250,000 1,524,690 23398110
Daiwa House Industry Co. Ltd.
(warrants) (a) 1,000 200,000 23406298
Daiki Co. Ltd. 31,200 743,739 23999D22
Denki Kagaku Kogyo (a) 429,000 1,916,896 24899092
Daiwa Industries (warrants) (a) 250 131,250 24899693
Denki Kogyo Co. Ltd. 200,000 2,456,014 24899792
Denki Kogyo Co. Ltd. (warrants) (a) 2,500 226,821 24899793
Denyo Co. Ltd. (warrants) (a) 740 666,000 24999193
Daito Trust Construction 120,000 1,634,591 24999492
Dia Kensetsu Co. Ltd. (a) 24,000 383,881 25299492
East Japan Railway Co. Ord. 1,600 7,974,821 27399722
Enix Corp. 15,000 569,630 29399A22
FCC Co. Ltd. (a) 47,000 1,930,344 30199822
Fanuc Ltd. 40,000 1,940,044 30729599
Fujikura Ltd. (warrants) (a) 3,000 470,354 35958793
Fujisawa Pharmaceutical Co. Ltd. 50,000 577,886 35999110
Fuji Oil Co. Ltd. (warrants) (a) 200 45,000 35999392
Fujisash Co. Ltd. 14,700 216,924 36099C22
Fuso Pharmaceutical Industries Ltd. 97,000 806,790 36113299
Fuji Coca-Cola Bottling Co. Ltd. 27,000 378,928 36499D22
Funai Research & Development, Inc. 32,000 495,331 36499492
Fujitsu Kiden Ltd. 15,000 278,623 39599092
Heiwa Corp. 50,000 1,253,806 42399792
Hitachi Ltd. ADR 23,800 2,433,550 43357850
SHARES VALUE (NOTE 1)
Hokko Chemical Industries Co. Ltd. 69,000 $ 433,631 43599592
Hitachi Transport System Co. 150,000 1,718,178 43699992
Honda Motor Co. Ltd. 150,000 2,615,964 43812810
IDEC Izumi Corp. 1,000 9,948 45199392
Impact 21 Co. Ltd. 23,000 450,957 45299C22
Inui Tatemono Co. Ltd. 27,000 345,493 46299892
Japan Associated Finance Co. 2,000 295,134 47099692
Japan Radio Co. Ltd. (warrants) (a) 4,000 346,996 47199223
Kagoshima Bank Ltd. 150,000 1,191,890 48299592
Katokichi Co. Ltd. 25,000 614,004 48579610
Kawasaki Kisen Kaisha Ltd. (a) 1,250,000 5,378,975 48639892
Kawasaki Heavy Industries Ltd. 500,000 2,456,015 48639991
Kawasaki Heavy Industries Ltd.
(warrants) (a) 1,000 237,500 48639992
Keiyo Co. Ltd. 30,000 489,139 48779210
Kinki Nippon Railway Co. Ltd. #3
(warrants) (a) 4,000 471,150 49570093
Koa Fire & Marine Insurance Co. Ltd. 11,000 77,189 49999010
Komatsu Ltd. Ord. 350,000 3,322,841 50045899
Kumagai Gumi Co. Ltd. 800,000 4,020,432 50125110
Kyushu Matsushita Electric Co. Ltd. 130,000 3,273,309 50199110
Mabuchi Motors Co. 100 7,657 55409799
Matsushita Electric Works Co.
Ltd. (warrants) (a) 400 400,000 57688192
Maruha Corp. 300,000 1,318,818 57699G22
Matsuzakaya Co. Ltd. 113,000 1,609,205 57699492
Marukyo Corp. 27,000 955,678 57899792
Miyosha Oil & Fat Co. Ltd. Ord. 150,000 820,391 59999192
Marui Co. Ltd. 200,000 3,653,062 60444310
Miroku Jyoho Service Co. Ltd. 14,000 452,196 60499D92
Mitsubishi Kasei (warrants) (a) 400 380,000 60675092
Mitsubishi Corp. 355,000 4,835,664 60676910
Mitsubishi Estate Co. Ltd. 150,000 1,764,615 60678310
Mitsubishi Rayon Co. Ltd. 200,000 934,936 60681010
Mitsui Mining & Smelting Co. Ltd. 300,000 1,374,543 60684410
Mitsui Mining & Smelting Co.
Ltd. (warrants) (a) 1,200 402,215 60684492
Mitsui Engineer & Shipbuilding Co. Ltd. 1,000,000 3,580,830 60700099
Mitsubishi Chemical Industries Ltd. (a) 426,000 2,514,546 60799D22
Mitsui OSK Lines Ltd. 500,000 2,192,870 60799792
Mitsuba Electric Manufacturing Co.
Ltd. (warrants) (a) 3,000 1,157,979 60899394
Mitsubishi Kakoki Kaisha
Ltd. (warrants) (a) 4,000 388,380 60999793
Mitsui High-Tec, Inc. 76,000 2,133,223 61099092
Mori Seiki Co. Ltd. Ord. 125,000 3,521,490 61799999
NEC Corp. 125,000 1,599,505 62999410
Nakayama Steel Works Ltd. 122,000 920,303 62999310
Namura Shipbuilding Co. Ltd. 430,000 3,332,440 62999892
Navix Line Ltd. (a) 500,000 1,981,320 63899592
NGK Insulators Ltd. (warrants) (a) 2,650 1,225,625 64350093
Nichii Co. Ltd. (warrants) (a) 2,000 100,279 65299195
Nichicon Corp. 160,000 2,295,032 66199793
Nintendo Co. Ltd. Ord. 15,000 842,062 65443999
Nippon Crane Works Ltd. (a) 100,000 309,582 68299492
Nippon Computer Systems Corp. 200,000 2,930,706 68599692
Nippon Kokan KK (a) 1,000,000 3,085,500 65457410
Nippon Shokubai Co. Ltd. 552,000 6,038,080 65461299
Nippon Telegraph & Telephone
Corp. Ord. 300 2,801,713 65462492
Nippon Yakin Kogyo Co. Ltd. 25,000 151,437 65467010
Nippon Shokubai Kagaku Kagyo 200,000 1,523,142 65499710
Nippon Shinyaku Co. Ltd.
(warrants) (a) 3,000 346,200 65699094
Nippon Zeon Co. Ltd. (a) 152,000 928,580 66499692
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Nissan Chemical Industries Ltd. 155,000 $ 1,225,221 65699692
Nissan Fire & Marine Insurance Co. Ltd. 200,000 1,533,460 66699492
Nissha Printing Co. Ltd. 52,000 1,110,779 66999492
Nissei Build Kogyo Co. Ltd. 41,000 537,330 67299792
Nomura Securities Co. Ltd. 200,000 4,189,670 65536110
Obayashi Corp. 1,000,000 7,141,010 67090410
Oliver Corp. (warrants) (a) 2,000 160,764 68099193
Olympus Optical Co. Ltd. 100,000 1,104,174 68162710
Omron Corp. (warrants) (a) 400 200,000 68215192
Ono Pharmaceutical Co. Ltd. 15,000 702,750 68299010
Orient Finance Co. Ltd. 300,000 1,965,843 68616610
Promise Co. Ltd. 70,000 3,900,728 74499E22
Sampei Construction Co. Ltd. 3 30,649 79599G22
San-In Godo Bank Ltd. 30,000 284,815 79999492
Sankyo Co. Ltd. 152,000 3,952,737 80029710
Shikoku Coca-Cola Bottling Co. Ltd. 24,000 364,068 80099B22
Sanwa Shutter Corp. (warrants) (a) 1,500 112,500 80302493
Sanyo Coca-Cola Bottling Co. Ltd. 41,000 592,333 80399999
Sekisui House Ltd. (warrants) (a) 500 112,500 81607897
Seiren Co. Ltd. 150,000 1,609,824 81699692
Senko Co. Ltd. (warrants) (a) 450 61,875 81799293
Shimizu Construction Co. Ltd. 102,000 1,052,578 82499110
Shinko Shoji Co. Ltd. 50,000 706,878 90699492
Sony Corp. 50,000 3,049,379 83569999
Sumitomo Cement Co. Ltd.
(warrants) (a) 750 253,388 86560593
Sumitomo Realty & Development Co. Ltd. 750,000 4,798,515 86562310
Sumitomo Chemical Co. Ltd. 200,000 1,180,538 86599610
Sumitomo Chemical Co. Ltd.
(warrants) (a) 2,000 445,553 86599692
Sumitomo Metal Industries Ltd. 2,550,000 9,657,386 86599999
Sumitomo Sitix Corp. 200,000 3,240,286 68799692
Sun Wave Co. Ltd. (warrants) (a) 300 82,500 86699B93
Super Daiei Co. Ltd. 12,000 163,459 98499H22
Taisei Corp. 1,000,000 6,697,280 87346610
Tada Corp. 80,000 491,202 87499592
Tanseisha Co. Ltd. 30,000 492,235 87599292
Tasaki Shinju Co. Ltd. Ord. 50,000 686,239 87899392
Tokyo Electric Power Co., Inc. 20,000 586,141 88910710
Tohoku Telecommunications
Construction Co. Ltd. 20,000 224,963 89099792
Toshiba Corp. 750,000 5,913,008 89149310
Toshoku Co. Ltd. 93,500 709,174 89191190
Tokyo Electron Ltd. 30,000 1,003,044 89499999
Tokyo Securities Co. Ltd. 234,000 1,849,688 89799C92
Tomoku Co. Ltd. 43,000 316,382 90099892
Toshiba Chemical Corp. 16,000 189,877 90199792
Toyo Communication Equipment Ltd. (a) 164,000 5,330,994 90999392
Tokyo Kososushi Co. Ltd. 27,000 529,384 91599C22
Valor Co. Ltd. 6,000 102,162 92099B22
Techno Ryowa Ltd. 19,000 527,424 95999892
Yamanouchi Pharmaceutical Co. Ltd. 170,000 3,350,705 98414010
Yamaichi Securities Co. Ltd. 200,000 1,585,058 98499210
Yamaha Corp. 250,000 3,328,003 98463499
Yaohan Japan Corp. (warrants) (a) 200 62,500 98899894
Yoshinoya D&C Co. Ltd. Ord. 30 371,498 98999192
Yorozu Corp. 10,000 256,953 99199792
229,738,651
KOREA (SOUTH) - 3.5%
Boram Bank (a) 30,000 391,394 09999322
Boram Bank (New) 7,130 86,760 09999325
Boram Securities Co. Ltd. 25,000 423,383 18599622
Coryo Securities 100,000 1,906,793 22199822
SHARES VALUE (NOTE 1)
Daeyu Securities 71,820 $ 1,627,133 23399G22
Daewoo Electronics (a) 40,000 662,360 23899C22
Daewoo Electronics (New) 1,200 18,968 23899C23
Dong Ah Construction Industries
Co. Ltd. (a) 21,277 798,071 25799K22
Hanjin Engineering & Construction
Co. Ltd. (a) 35,020 878,630 41099822
Jaeil Investment Finance (a) 30,000 477,953 16399B22
Hanshin Securities Co. Ltd. 440 15,222 41899722
Kia Motors Corp. GDR (a)(c) 71,500 1,340,625 49373820
Kolon Industries, Inc. 9,882 433,635 50899292
Korean Air 45,000 1,665,308 52299522
Korean Air (RFD) (a) 5,700 147,657 52299526
Miwon Co. Ltd. 26,028 803,223 61299693
Namsung Corp. 52,000 1,043,718 63299D22
Nong Shim Co. 26,857 1,422,656 65599C22
Ssangyong Cement Co. 19,712 846,640 76899392
Ssangyong Investment & Securities
Co. Ltd. 41,200 1,085,367 77699522
Ssangyong Investment & Securities Co.
Ltd. (New) (a) 4,124 99,330 77699524
Sam Yang Co. Ltd. (warrants) (a) 300 213,750 83999B23
Tong Yang Investment &
Finance Co. Ltd. (a) 45,000 1,010,475 93899D22
Tong Yang Securities Co. Ltd. 20,400 412,018 93999B22
Yukong Ltd. 25,000 1,565,640 98899K22
Yukong Ltd. (New) 1,504 83,016 98899K25
19,459,725
MALAYSIA - 8.3%
Affin Holdings BHD 352,000 592,117 00899492
Aokam Perdana BHD 150,000 1,238,142 01899792
Aokam Perdana BHD Class A
(RFD) (a) 40,000 312,958 01899795
Bandar Raya Development BHD
(warrants) (a) 891,000 1,122,357 06000292
Berjaya Leisure BHD (warrants) (a) 265,000 149,282 08410594
Bolton Properties BHD 1,135,000 1,776,037 09799592
CHG Industries BHD 453,000 1,417,700 16699892
CHG Industries BHD (warrants) (a) 142,500 197,340 16699893
Commerce Asset Holding
BHD (warrants) (a) 66,666 134,310 20099493
Daiman Development BHD 200,000 336,430 23499C23
Development & Commercial Bank BHD 500,000 1,378,975 25199692
Ekovest BHD 200,000 1,017,114 28299922
General Lumber Fabric &
Building BHD (a) 738,000 1,587,873 37099B22
Genting BHD 187,500 1,723,716 37245210
Golden Pharos BHD (a) 799,000 2,766,218 38299D22
Hong Leong Properties BHD 235,000 398,983 43899L22
Hume Industries BHD 280,000 1,172,030 44599692
Kuala Lumpur Kepong BHD Ord. 430,000 1,042,935 49399792
Kumpulan Guthrie BHD 1,300,000 2,339,363 53999492
Kim Hin Industry BHD 143,750 781,662 49499C92
Kim Hin Industry BHD (warrants) (a) 18,750 30,073 49499C95
Land & General BHD 350,000 1,725,185 51499693
Lingui Development BHD 89,333 300,543 53599722
Malakoff BHD 200,000 492,910 56099J22
Mycom BHD 250,000 586,798 63199892
New Straits Times Press BHD 200,000 782,396 64999592
Olympia Industries BHD 130,000 164,772 68199D92
Pengkalen Holdings BHD 2,000 3,951 70799322
Perlis Plantations BHD 332,000 1,168,899 71390092
Phileo Allied BHD 125,000 586,798 71899822
Phileo Allied BHD (rights) (a) 100,000 176,039 71899823
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MALAYSIA - CONTINUED
Public Finance BHD: 87799994
(For. Reg.) 111,000 $ 217,115 87799994
(Loc. Reg.) 154,000 296,402 87799992
Resorts World BHD 200,000 1,267,482 76199592
Rothmans of Pallmall Malysia BHD Ord. 100,000 657,213 77869810
Sime Darby BHD 495,000 1,365,185 82861792
Sime UEP Properties BHD 331,000 763,971 82899492
Sitt Tatt BHD 200,000 586,798 82999392
Sriwani Holdings BHD 175,000 400,489 84499592
Sriwani Holdings BHD (rights) (a) 62,500 35,941 84499593
Sungei Way Holdings BHD 1,011,500 3,996,538 86799892
Sungei Way Holdings BHD
(warrants) (a) 144,500 236,288 89499H22
Tanjong PLC 415,000 1,623,472 87599993
Tan & Tan Development BHD 2,500,000 3,716,375 89699B22
Telekom Malaysia BHD 100,000 809,780 94099892
Tongkah Holdings BHD (warrants) (a) 133,333 128,313 94999C96
Westmont BHD (a) 150,000 1,062,102 98499G22
YTL Corp. BHD 340,000 1,928,606 98799092
46,595,976
NEW ZEALAND - 1.0%
Brierley Investments Ltd. 2,153,738 1,619,503 10901410
Carter Holt Harvey Ltd. 1,342,263 3,259,578 14699292
Ceramco Corp. Ltd. 314,300 712,886 15699692
U-Bix Business Machines Ltd. 105,858 105,045 90299J22
5,697,012
PAKISTAN - 0.6%
Adamjee Insurance Ltd. (a) 119,520 952,431 00599492
Bank of Punjab (a) 42,900 98,075 79899A92
National Development Leasing Corp. (a) 451,750 634,411 63599492
Pakistan State Oil Co. Ltd. 108,720 1,569,405 34799292
Pakistan Suzuki Motors Ltd. (a) 26,000 43,943 43499A92
Pakistan International Airlines (a) 247,500 103,059 69599B92
3,401,324
PHILIPPINES - 1.5%
Ayala Corp. Class B 240,000 424,438 05499092
Ayala Land, Inc. Class B 1,655,500 2,595,029 05499392
Basic Petroleum & Mineral, Inc. (a) 91,000,000 65,520 06999122
Benpress Holdings Corp. GDR 59,220 681,030 08230093
Filinvest Land, Inc. Ord. (a) 1,875,000 847,819 31699J22
JG Summit Holdings, Inc. Class B 2,450,000 984,729 46615292
Manila Mining Corp. Class B 26,635,000 192,571 59399C22
Oriental Petroleum & Mineral
Corp. Class B (a) 45,000,000 56,250 69499F22
Oriental Petroleum & Mineral
Corp. (New) (a) 3,000,000 2,400 69499F24
Petrofields Exploration &
Development Corp., Inc. (a) 136,000,000 48,960 71699H22
Philex Mining Corp. (a) 2,389,000 403,287 71814230
SM Prime Holdings, Inc. (a) 2,216,000 757,074 83160592
Universal Robina Corp. (a) 1,270,500 1,110,671 91399F22
8,169,778
SINGAPORE - 7.9%
Avimo Singapore Ltd. 635,000 769,957 05399A92
Bukit Sembawang Estates Ltd. (a) 32,000 706,267 12099892
Clipsal Industries Ltd. 558,000 2,901,600 18899192
Clipsal Industries Ltd. (warrants) (a) 41,600 76,544 18899193
Courts Singapore Ltd. 500,000 705,040 22299992
Creative Technology Corp. Ltd. (a) 60,000 862,500 22599992
DBS Land Ltd. 1,100,000 3,858,987 24399292
Falmac Ltd. 150,000 74,081 30699722
Far East-Levingston Shipbuilding Ltd. 455,000 2,247,104 30799192
First Capital Corp. Ltd. 493,015 1,947,878 31999792
SHARES VALUE (NOTE 1)
Genting International 810,000 $ 1,320,300 37245393
Hotel Plaza Ltd. (Loc. Reg.) 300,000 245,232 58099392
Hotel Properties Ltd. 760,000 1,553,136 44199492
Hotel Properties Ltd. (warrants) (a) 190,000 252,385 44199494
Informatics Holdings Ltd. 401,000 314,135 45699D22
Jurong Shipyard Ltd. 274,000 2,463,761 48254699
Kim Engineering Holdings Ltd. 1,000,000 1,246,590 49499D92
Malayan Credit Ltd. 20,000 52,589 56099092
Overseas Chinese Banking Corp. 469,693 5,055,278 68999610
Pacific Can Investment Holdings Ltd. 400,000 362,396 69499C22
Pacific Can Investment Holdings
Ltd. (warrants) (a) 60,000 26,771 69499C24
Parkway Holdings Ltd. 1,000,000 2,479,560 70199192
Parkway Holdings Ltd. (warrants) (a) 550,000 741,824 70199193
Pentex Schweizer Circuits Ltd. 256,000 413,297 70999222
Resource Development Corp. 125,000 532,186 76199492
Robinson & Co. Ltd. 100,000 463,215 77099392
Singapore Press Holdings Ltd. Class A
(For. Reg.) 80,000 1,449,591 82999993
Singapore Computer Systems Ltd. 400,000 316,076 83899A92
Steamers Maritime Holdings Ltd. 200,000 162,126 85799192
United Overseas Bank Ltd. (warrants) (a) 379,043 2,246,372 91199E92
United Overseas Land Ltd. 850,000 1,783,377 91199292
United Overseas Land Ltd. (warrants) (a) 545,000 568,015 91199294
Wing Tai Holdings Ltd. 2,984,000 6,098,102 97499392
44,296,272
SRI LANKA - 0.9%
Associated Motorways Ltd. (a) 13,500 35,116 04599H22
Ceylon Tea Services Ltd. (a) 100,000 503,461 15799B22
Development Finance Corp. of Ceylon (a) 214,933 2,502,366 25199C92
Distilleries Co. of Sri Lanka Ltd. (a) 2,542,000 533,261 25499D92
John Keells Holdings Ltd. GDR (c) 70,000 822,500 48730210
Kelani Tyres Ltd. (Loc. Reg.) (a) 233,000 295,710 48799N22
National Development Bank 47,000 435,788 63599B22
5,128,202
TAIWAN (FREE CHINA) - 0.5%
Yageo Corp. GDR (a)(c) 150,000 3,112,500 98432610
THAILAND - 4.6%
Asia Fiber Co. PCL (For. Reg.) 400,000 397,224 04499592
Asia Securities Trading (For. Reg.) 450,000 1,625,004 04599D23
Bank of Ayudhya PCL (For. Reg.) 120,000 469,446 05999998
Bangkok Steel Industry Co. Ltd. (For. Reg) 250,000 641,978 06099P23
Bangkok Metropolitan Bank PCL
(For. Reg.) 1,200,000 1,600,932 06199E23
Dhana Siam Finance & Securities
PCL (For. Reg.) 10,500 279,742 24299593
Finance One PCL:
(For. Reg.) 45,000 910,003 31799E93
(For. Reg.) (warrants) (a) 8,180 78,771 31799E96
First Bangkok City Bank PCL (For. Reg.) 790,000 760,746 31899D93
Five Star Property Co. Ltd. (For. Reg.) (a) 200,000 890,744 33899223
Goodyear (Thailand) Ltd. 23,600 388,236 38399893
International Engineering PCL (For. Reg.) 81,000 832,003 46299A93
Kiatnakin Finance & Securities
PCL (For. Reg.) 19,000 106,729 49699794
Kiatnakin Finance & Securities PCL (a) 57,000 300,746 49699797
Krisda Mahanakorn Company
PCL (For. Reg.) (a) 400,000 1,139,508 50199D93
Krung Thai Bank (For. Reg.) 752,100 2,565,037 50599293
Land & House PCL (For. Reg.) 105,000 2,157,043 51499393
MDX PCL (For. Reg.) 242,000 1,359,387 55699293
Padaeng Industry Co. Ltd. (For. Reg.) 460,000 885,928 69199922
Phatra Thanakit PCL (For. Reg.) 15,100 156,313 71799593
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
THAILAND - CONTINUED
Phatra Thanakit PCL (For. Reg.)
(rights) (a) 60,400 $ 601,019 71799595
Pizza PCL:
(For. Reg.) 150,000 418,289 72599593
(warrants) (a) 37,500 0 72599596
Precious Shipping Ltd.:
(Loc. Reg.) (a) 1,900 24,395 73999622
(For. Reg.) 30,000 385,187 73999623
Saha Union Corp. Ltd. (For. Reg.) 401,363 454,941 78699594
Siam Cement PCL (For. Reg.) 15,000 865,466 78799010
Siam City Bank PCL (For. Reg.) 800,000 1,131,488 81199593
Telecomasia Corp. PCL (For. Reg.) 150,000 607,872 87928D93
Thai Farmers Bank PCL 100,000 882,719 90199010
Thai Military Bank Ltd. (For. Reg.) 200,000 930,868 90199989
Thai President Food Ltd. (For. Reg.) (a) 30,500 330,418 90299992
Thai Airways International Ltd.:
(Loc. Reg.) 18,000 40,445 90799C92
(For. Reg.) 361,700 812,711 90799C93
Thai German Ceramic Industry Co. Ltd.:
(For. Reg.) 200,000 810,496 94699893
(warrants) (a) .. 59,940 112,434 94699894
United Foods Co. Ltd. (For. Reg.) 114,200 160,374 91699B93
26,114,642
TOTAL COMMON STOCKS
(Cost $456,915,526) 516,744,264
PREFERRED STOCKS - 0.5%
CONVERTIBLE PREFERRED STOCKS - 0.2%
AUSTRALIA - 0.2%
Ampolex Ltd. 8% 300,000 958,149 03210593
NONCONVERTIBLE PREFERRED STOCKS - 0.3%
KOREA (SOUTH) - 0.1%
Dongbu Construction Co. Ltd. (a) 10,910 139,600 25799M23
Hanshin Securities Co. Ltd. (a) 22,000 375,337 41899724
514,937
THAILAND - 0.2%
Thai Prime Fund Ltd. 75,000 1,275,000 92599B23
TOTAL NONCONVERTIBLE PREFERRED STOCKS 1,789,937
TOTAL PREFERRED STOCKS
(Cost $2,635,086) 2,748,086
CLOSED-END INVESTMENT COMPANIES - 0.8%
INDONESIA - 0.1%
Indonesia Development Fund Ltd. (SG) 70,000 602,000 71499722
SINGAPORE - 0.2%
Singapore SESDAQ Fund Ltd. 50,000 850,000 94899G22
TAIWAN (FREE CHINA) - 0.1%
R.O.C. Taiwan Fund (SBI) 52,500 597,188 74965110
THAILAND - 0.4%
Kamrai Tawee Capital Fund
(For. Reg.) (a) 947,900 912,799 48399E25
Ruang Khao Unit Trust (For. Reg.) (a) 2,282,200 1,556,689 77399393
2,469,488
TOTAL CLOSED-END INVESTMENT
COMPANIES (Cost $3,631,331) 4,518,676
CORPORATE BONDS - 3.2%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (B)
CONVERTIBLE BONDS - 3.1%
GRAND CAYMAN - 0.5%
Bangkok Land euro 4 1/2%,
10/13/03 (c) - $ 900,000 $ 643,500 06099LAA
Henderson Capital
International Ltd. euro
4%, 10/27/96 (c) - 1,500,000 1,466,250 4247309A
JG Summit Cayman Ltd.
euro 3 1/2%, 12/23/03 - 1,000,000 777,500 46699CAA
2,887,250
HONG KONG - 0.6%
Hon Kwok Land Treasury Ltd.
euro 4 7/8%, 12/15/00 - 1,000,000 740,000 43899JAA
Lai Fung Overseas Finance Ltd.
euro 5 1/4%, 2/5/98 (d) - 500,000 400,000 50699CAA
Sino Land Co. Ltd. euro 5%,
10/21/00 (c) - 1,000,000 1,257,500 8293109A
Stelux Holdings Ltd. 1 3/4%,
3/31/01 - CHF 2,000,000 970,951 858991AA
3,368,451
INDIA - 0.2%
Jindal Strips Ltd. euro 4 1/4%
3/31/99 (c) - 280,000 364,000 642994AA
SCICI Ltd. euro 3 1/2%,
4/1/04 - 640,000 633,600 79599KAB
997,600
INDONESIA - 0.2%
Inti Indorayon Utama PT
7%, 5/2/06 - 1,000,000 990,000 69364L9C
KOREA (SOUTH) - 0.1%
Ssangyong Oil Refining
euro 3 3/4%, 12/8/08 - 550,000 715,000 78099AAA
MALAYSIA - 0.5%
Land & General BHD
euro 4 1/2%, 7/26/04 - 1,600,000 1,984,000 514996AB
United Engineers Malaysia
BHD 2%, 3/1/04 (c) - 880,000 875,600 910213AA
2,859,600
THAILAND - 1.0%
Asia Credit PCL 3 3/4%,
11/17/03 (c) - 505,000 621,150 044909AA
Hemaraj Land and
Development PCL
euro 3 1/2%, 9/9/03 - 500,000 426,250 42399BAA
Juldis Development PCL euro
4 1/4%, 12/22/03 - 700,000 525,000 48199AAA
Phatra Thanakit PCL
euro 3 1/2%, 12/13/03 - 1,100,000 1,498,750 717995AA
Thai Central Chemical PCL
euro 3 3/4% 10/25/03 - 1,250,000 1,140,625 94299GAA
Wattachak PCL euro 3 1/2%,
12/6/03 - 1,800,000 1,566,000 94299HAA
5,777,775
TOTAL CONVERTIBLE BONDS 17,595,676
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (B)
NONCONVERTIBLE BONDS - 0.1%
MALAYSIA - 0.0%
Berjaya Leisure BHD 5%,
1/18/99 - MYR 265,000 $ 84,489 0841059A
Tongkah Holdings BHD 5%
5/26/99 - MYR 133,333 39,641 94999CAA
124,130
SINGAPORE - 0.0%
Hotel Properties Ltd. 3 1/2%,
10/15/98 - SGD 304,000 192,589 441994AA
Pacific Can Investment Holdings
Ltd. 2 1/2%, 4/30/99 - SGD 60,000 29,837 69499CAA
222,426
THAILAND - 0.1%
Finance One PCL
3 3/4%, 2/7/01 - CHF 818 32,821 31799EAA
Thai German Ceramic Industry
PCL 3%, 7/8/99 - THB 666 267,631 946998AA
300,452
TOTAL NONCONVERTIBLE BONDS 647,008
TOTAL CORPORATE BONDS
(Cost $19,092,684) 18,242,684
REPURCHASE AGREEMENTS - 3.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 4.78% dated
10/31/94 due 11/1/94 $ 20,964,783 20,962,000 99799N9L
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $503,236,627) $563,215,710
CURRENCY ABBREVIATIONS
MYR - Malaysian ringgit
SGD - Singapore dollar
CHF - Swiss franc
THB - Thai baht
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $16,920,653 or 3.1% of net
assets.
(d) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $431,522,832 and $448,264,433, respectively.
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 $33,549,00 and $28,085,143,
respectively. The weighted average interest rate was 3.38% (see Note 2 of
Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
the average daily loan balances during the period for which loans were
outstanding amounted to $15,712,000 and $4,681,174, respectively. The
weighted average interest rate was 4.05%. Interest expense includes $12,121
paid under the bank borrowing program (see Note 7 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At October 31, 1994, the aggregate cost of investment securities for income
tax purposes was $503,584,874. Net unrealized appreciation aggregated
$59,630,836, of which $96,333,912 related to appreciated investment
securities and $36,703,076 related to depreciated investment securities.
The fund hereby designates $30,576,305 as a capital gain dividend for the
purpose of the dividend paid deduction.
For the period, interest and dividends from foreign countries were
$8,376,038 or $0.30 per share. Taxes paid to foreign countries were
$974,027 or $0.04 per share.
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Investments (Unaudited)
Aerospace & Defense 2.1%
Basic Industries 15.5
Conglomerates 0.2
Construction & Real Estate 17.4
Durables 5.6
Energy 3.2
Finance 13.9
Health 2.1
Holding Companies 2.2
Industrial Machinery & Equipment 5.3
Media & Leisure 4.0
Nondurables 4.9
Precious Metals 1.2
Retail & Wholesale 5.4
Services 1.4
Repurchase Agreements 3.7
Technology 5.6
Transportation 4.9
Utilities 1.4
100.0%
PACIFIC BASIN
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $20,962,000) (cost $503,236,627) - See $ 563,215,710
accompanying schedule
Cash 301
Receivable for investments sold 5,982,675
Receivable for fund shares sold 10,929,267
Dividends receivable 966,674
Interest receivable 366,819
TOTAL ASSETS 581,461,446
LIABILITIES
Payable for investments purchased $ 3,708,982
Payable for fund shares redeemed 23,244,843
Accrued management fee 398,227
Other payables and accrued expenses 577,255
TOTAL LIABILITIES 27,929,307
NET ASSETS $ 553,532,139
Net Assets consist of:
Paid in capital $ 400,629,774
Distributions in excess of net investment income (352,101
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 93,264,474
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 59,989,992
NET ASSETS, for 27,733,187 shares outstanding $ 553,532,139
NET ASSET VALUE, offering price $19.96
and redemption price per share ($553,532,139 (divided by) 27,733,187 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1994
INVESTMENT INCOME $ 7,764,339
Dividends
Interest 1,305,366
9,069,705
Less foreign taxes withheld (974,027
)
TOTAL INCOME 8,095,678
EXPENSES
Management fee 3,932,158
Basic fee
Performance adjustment 443,566
Transfer agent fees 2,151,218
Accounting fees and expenses 302,476
Non-interested trustees' compensation 2,911
Custodian fees and expenses 869,471
Registration fees 85,005
Audit 41,820
Legal 4,273
Interest 30,577
Miscellaneous 5,136
Total expenses 7,868,611
NET INVESTMENT INCOME 227,067
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 95,915,294
Foreign currency transactions (23,112 95,892,182
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (23,614,927
)
Assets and liabilities in foreign currencies 10,909 (23,604,018
)
NET GAIN (LOSS) 72,288,164
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 72,515,231
OTHER INFORMATION $1,709,242
Sales Charges Paid to FDC
Deferred sales charges withheld $24,748
by FDC
Accounting fees paid to FSC $299,541
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
INCREASE (DECREASE) IN NET ASSETS OCTOBER 31, OCTOBER 31,
1994 1993
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 227,067 $ 382,796
Net investment income
Net realized gain (loss) 95,892,182 17,437,804
Change in net unrealized appreciation (depreciation) (23,604,018 80,580,451
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 72,515,231 98,401,051
Distributions to shareholders: (256,048 (1,023,177
From net investment income ) )
In excess of net investment income (2,801,167 -
)
From net realized gain (6,809,163 -
)
TOTAL DISTRIBUTIONS (9,866,378 (1,023,177
) )
Share transactions 965,069,943 607,340,439
Net proceeds from sales of shares
Reinvestment of distributions 9,613,028 1,000,772
Cost of shares redeemed (977,332,983 (328,462,549
) )
Net increase (decrease) in net assets resulting from share transactions (2,650,012 279,878,662
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 59,998,841 377,256,536
NET ASSETS
Beginning of period 493,533,298 116,276,762
End of period (including distributions in excess of net investment income of $352,101 and
$2,348,481, $ 553,532,139 $ 493,533,298
respectively)
OTHER INFORMATION
Shares
Sold 51,298,442 40,739,229
Issued in reinvestment of distributions 566,134 87,252
Redeemed (52,364,846 (22,282,360
) )
Net increase (decrease) (500,270 18,544,121
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31,
SELECTED PER-SHARE DATA 1994 1993 1992 C 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.48 $ 12.00 $ 13.15 $ 12.89 $ 15.78
Income from Investment Operations
Net investment income .10 .20 .08 B .02 B .12
Net realized and unrealized gain (loss) 2.78 5.39 (1.23) .40 (2.37)
Total from investment operations 2.88 5.59 (1.15) .42 (2.25)
Less Distributions (.01) (.11) - (.16) (.01)
From net investment income
In excess of net investment income (.11) - - - -
From net realized gain (.28) - - - (.63)
Total distributions (.40) (.11) - (.16) (.64)
Net asset value, end of period $ 19.96 $ 17.48 $ 12.00 $ 13.15 $ 12.89
TOTAL RETURN A 16.88% 47.06% (8.75)% 3.37% (14.99)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 553,532 $ 493,533 $ 116,277 $ 95,051 $ 86,354
Ratio of expenses to average net assets 1.54% 1.59% 1.84% 1.88% 1.59%
Ratio of net investment income to average net assets .04% .15% .65% .12% .88%
Portfolio turnover rate 88% 77% 105% 143% 118%
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
C AS OF NOVEMBER 1, 1991 THE FUND DISCONTINUED THE USE OF EQUALIZATION ACCOUNTING.
</TABLE>
EMERGING MARKETS
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
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (income) and capital gains (the profits the
fund earns when it sells stocks that have grown in value). Emerging Markets
Fund has a 3% sales charge, which had been waived through May 31, 1994.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1994 YEAR FUND
EMERGING MARKETS 19.32% 102.30%
EMERGING MARKETS
(INCL. 3% SALES CHARGE) 15.74% 96.24%
Morgan Stanley Emerging Markets
Free Index 29.36% 225.05%
Average Emerging Markets Fund 22.53% 110.52%
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
November 1, 1990. You can compare the fund's figures to the performance of
the Morgan Stanley Emerging Markets Free Index - a broad measure of the
performance of stocks in developing countries, weighted by each country's
market capitalization (or the total value of its outstanding shares).
Mexico, Malaysia, Brazil, and Thailand are most heavily weighted, and
together account for over 60% of the index. Keep in mind that before
February 1992, the fund's objective was more broadly defined, and did not
focus specifically on emerging markets. However, you can also compare the
fund's performance to the average emerging markets fund, which currently
reflects the performance of 14 funds with similar objectives tracked by
Lipper Analytical Services. These benchmarks include reinvested dividends
and capital gains, if any, and exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1994 YEAR FUND
EMERGING MARKETS 19.32% 19.25%
EMERGING MARKETS
(INCL. 3% SALES CHARGE) 15.74% 18.34%
Morgan Stanley Emerging Markets Free Index 29.36% 34.27%
Average Emerging Markets Fund 22.53% 20.44%
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
Fidelity Emerging Mkts FuMorgan Stanley EMF
11/01/90 9700.00 10000.00
11/30/90 9564.20 9479.74
12/31/90 9777.33 9880.37
01/31/91 9709.16 10679.30
02/28/91 10118.18 12260.21
03/31/91 10108.44 12766.06
04/30/91 10332.42 12903.41
05/31/91 10332.42 13918.67
06/30/91 9972.10 13421.82
07/31/91 10186.35 14119.08
08/31/91 10108.44 14418.70
09/30/91 10225.30 13869.26
10/31/91 10127.92 14439.40
11/30/91 9991.58 14225.77
12/31/91 10438.07 15824.40
01/31/92 10517.68 17656.36
02/29/92 10826.14 18442.83
03/31/92 10806.24 19068.46
04/30/92 11064.96 18940.35
05/31/92 11542.58 18873.02
06/30/92 11522.68 17002.12
07/31/92 11144.56 17189.36
08/31/92 10865.95 16390.47
09/30/92 10796.29 16450.88
10/31/92 10995.30 17332.58
11/30/92 10905.75 17144.49
12/31/92 11048.91 17652.99
01/31/93 11201.38 17738.37
02/28/93 11770.60 18033.91
03/31/93 12095.86 18628.41
04/30/93 12482.12 19056.85
05/31/93 12756.56 19581.32
06/30/93 12919.19 20162.41
07/31/93 13142.81 20705.31
08/31/93 14057.63 22457.49
09/30/93 14372.73 23058.76
10/31/93 16446.31 25127.66
11/30/93 17096.84 26239.62
12/31/93 20082.32 30576.92
01/31/94 19501.26 31133.23
02/28/94 18950.78 30579.38
03/31/94 17115.84 27812.28
04/30/94 16952.74 27255.97
05/31/94 17391.08 28188.79
06/30/94 16167.80 27411.79
07/31/94 17401.28 29116.21
08/31/94 19613.39 32729.91
09/30/94 20112.90 33101.88
10/31/94 19623.58 32504.77
Let's say you invested $10,000 in Fidelity Emerging Markets Fund on its
start date and paid the 3% sales charge. By October 31, 1994, it would have
grown to $19,624 - a 96.24% increase on your initial investment. That
compares to $10,000 invested in the Morgan Stanley Emerging Markets Free
Index, which would have grown to $32,505 over the same period - a 225.05%
increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
(checkmark)
EMERGING MARKETS
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Richard Hazlewood,
Portfolio Manager of Fidelity Emerging Markets Fund
Q. RICHARD, HOW HAS THE FUND PERFORMED OVER THE PAST YEAR?
A. It has been a pretty volatile year for emerging market stocks, which is
not unusual. Despite wide market swings in both directions, the fund
returned 19.32% for the 12 months ended October 31, 1994. The Morgan
Stanley Emerging Markets Free Index rose 29.36% during the same period,
while the average emerging markets fund tracked by Lipper Analytical
Services was up 22.53%.
Q. IT SOUNDS LIKE THE FUND HAD ITS SHARE OF UPS AND DOWNS. CAN YOU
ELABORATE?
A. Sure. Emerging market stocks soared during the final two months of 1993.
Many investors were still discovering these markets for the first time, and
heavy inflows of money helped drive stock prices to historically high
levels. We then saw a consolidation in the markets during the first few
months of 1994, as prices adjusted downward to more reasonable levels
relative to company earnings. During this time, some newer investors jumped
ship at the first sign of trouble. That created heavy outflows of money
from the emerging markets and from the fund, which further fueled the
correction. Keep in mind that emerging market companies were still
reporting very strong earnings - that hadn't changed. By late summer, stock
valuations - their prices relative to earnings - had fallen to quite
attractive levels. That allowed earnings to drive the market, and emerging
market stocks staged a late-summer rally. This flurry of activity
illustrates a key point: investors in these markets should have a long-term
outlook. While the fund has the potential for excellent returns over time,
it is prone to volatility.
Q. WHY, SPECIFICALLY, DID THE FUND TRAIL THE INDEX AND THE
AVERAGE FUND?
A. As I mentioned in the last report, the index includes several countries
to which the fund has very limited access due to trading restrictions. In
addition, the stocks in many of these smaller markets often are bought and
sold very infrequently. I can't invest in several countries because I must
maintain a reasonable level of liquidity within the fund. For example, the
index's top performing countries over the past year included Chile,
Colombia and India - three countries in which I'm able to make only a
limited amount of investments. Liquidity issues also had to do with why the
fund slightly underperformed its peers. Brazil has been the best performing
market in the world this year, thanks to an effective inflation fighting
plan and a more stable currency. However, the fund was underweighted there
early in 1994. Brazil is another market in which it can be difficult to
trade, and considering the fund's volatile asset inflows and outflows
earlier this year, I didn't think it wise to invest there any more heavily
than I did. However, as the year wore on, I felt increasingly comfortable
making the move, and the fund did catch much of the run-up in Brazilian
stocks over the summer. The fund had a 13.3% stake in Brazil on October 31,
compared to a 7.8% stake six months ago.
Q. WHERE ELSE HAVE YOU FOUND OPPORTUNITIES LATELY?
A. If you look at any country in which the fund is invested, you'll
probably see stocks in three fast-growing emerging market industries:
telecommunications, electricity generation and banking. A story comes to
mind that illustrates my optimism about the telecommunications industry.
Recently, I returned to a hotel in the Philippines whose restaurant is
finally serving meals now that electricity is running with regularity
there. I was amazed at the scene; it was as if the "power breakfast" had
arrived in the Philippines. I was surrounded by business people, all with
cellular phones on their tables. It's easier to get a cellular phone line
than a fixed line in the Philippines, and I've invested in First Pacific, a
Hong Kong company, which has a major cellular license in the Philippines.
Research among Far East cellular companies then led me to Nokia, a Finnish
company that is a favorite provider of phones. And these cellular companies
are selling the phones as fast as Nokia can make them.
Q. HOW ABOUT THE ELECTRIC COMPANIES?
A. Another compelling story. Consider that Asia will have to spend roughly
$300 billion dollars over the next six years to build electric power plants
to keep up with growing demand. Governments won't lay out that kind of
money. So they're contracting with private electric companies to build and
run these plants at guaranteed rates of return on their investment. The
growth potential among these so-called independent power producers is
almost limitless. For example, Consolidated Electric Power Asia (CEPA) -
one of the fund's top 10 investments at the end of October - is building
plants in India, Indonesia, Pakistan and the Philippines. Ban Pu Coal of
Thailand and YTL in Malaysia are two more electricity generating companies
that are experiencing tremendous growth.
Q. AND THE BANKS?
A. It doesn't matter whether you're in Buenos Aires or Bangkok, banks in
emerging market countries are always crowded. People in these countries use
banks much more often than we do; for example, that's where they pay
electric and phone bills. These banks are anything but automated. They're
just beginning to implement computer technology that will allow them to
lower staffing levels and expand their branches. As this technology
expands, banks will become more efficient, which reduces costs. On the
revenue side, banks are seeing increasing loan demand due to the explosion
of infrastructure projects in these countries. That boosts revenues derived
from fees that the banks charge. Banks such as Bangkok Bank and Thai
Farmers Bank in Thailand are growing earnings at an annual rate of 25% to
30%, and their stocks are still attractively valued.
Q. OVER THE PAST YEAR, MALAYSIA HAS REMAINED THE COUNTRY IN WHICH THE FUND
HAD THE LARGEST STAKE. WHY?
A. Malaysia breaks the mold of the three investment themes I've been
describing. Although the performance of the Malaysian market has been
relatively flat this year, there still are more excellent stock stories
here than anywhere else in the emerging markets. Part of the reason is the
government's willingness to foster development by privatizing assets. Any
company in Malaysia can approach the government with a proposal to
privatize something. If the proposal is sound, the company can suddenly
jump into what is often a very lucrative project.
Q. CAN YOU GIVE US AN EXAMPLE?
A. No problem. If you wanted to drive the length of Malaysia in past years
- - from the Singapore border to the Thai border - you had to navigate a very
primitive and rustic road. It was an arduous journey, often taking up to 18
hours - longer in heavy rain. Well, a few years ago a company called United
Engineers (UE) won a government concession to build a new road. The company
recently finished the project, and the driving time for that same trip has
been cut to just seven hours. Now everybody wants a car, and UE is making a
bundle from tolls. The stock has performed well for the fund and I see
excellent earnings prospects going forward. Meanwhile, UE's parent company
- - Renong Group - has a proposal on the table in India to build 10,000
kilometers of new roads. It's a $25 billion dollar project, in U.S.
dollars. These types of huge construction projects are happening all across
Asia. In fact, the joke in Shanghai these days is that the national bird of
China is the "crane."
Q. LET'S TALK ABOUT YOUR OUTLOOK FOR THE FUND. WHAT DO YOU SEE ON THE
HORIZON?
A. I'm optimistic. As painful as it was, many emerging markets needed the
consolidation we've seen in 1994. They were simply overbought, meaning
there were fewer buyers left to drive up prices further. Through it all,
though, most of the fund's companies have continued to show excellent
earnings growth. And historically, stock prices follow earnings over time.
That said, there are so many economic, political and psychological factors
that influence these markets in the short term. The key is that if I've
picked companies that continue to expand their earnings, stock prices - in
the long run - should reflect that growth.
FUND FACTS
GOAL: to increase the value of the fund's
shares by investing mainly in common stocks
of emerging economies and developing capital
markets
START DATE: November 1, 1990
SIZE: As of October 31, 1994, more than
$1.9 billion
MANAGER: Richard Hazlewood, since July 1993;
assistant, Fidelity Low Priced Stock Fund and
Fidelity Contrafund, 1992-1993; analyst,
Japanese stocks, 1991-1992; joined Fidelity in
1991
(checkmark)
RICHARD HAZLEWOOD ON EMERGING MARKET
INVESTMENT OPPORTUNITIES:
"Just within the past year, I've seen many emerging
markets become gradually more accessible to foreign
investors. It's slow going, but the door appears to be
opening even in unsophisticated markets such as
Pakistan and very restrictive markets such as Korea.
"Often, the process begins when governments begin to
privatize industry. Companies that take on infrastructure
projects and the like can raise equity in New York by
issuing American Depository Receipts (ADRs). ADRs
are simply receipts for the shares of a foreign-based
corporation that entitle the shareholder to all dividends
and capital gains from that company's stock. The fund
often can invest in these companies much more freely
through ADRs than by buying stock in their native
countries. In addition, companies that issue ADRs have
reporting requirements that make it easier to learn about
their business prospects. I think as economies continue
to grow in these countries, we'll see bigger stock
markets and better access."
(solid bullet) The fund's stake in Hong Kong was reduced from
10.9% to 5.7% over the past six months. Because of
the tremendous development happening across
China - in Shanghai, for example - the fund is
focusing on Hong Kong companies whose business
extends into the rest of China. That has meant a
reduction in the stocks of Hong Kong banks and
property companies, whose businesses tend to be
highly localized.
(solid bullet) The fund's investment in emerging market bonds
was 4.4% on October 31, down from 11.3% six
months ago. These bonds appeared to offer attractive
value compared to stocks early in 1994. However,
when interest rates rose in the U.S., the subsequent
sell-off in bonds was magnified in emerging markets.
(solid bullet) Although the fund is allowed to use derivative
investments such as futures and forward foreign
currency contracts, it had only a very small stake in
derivatives on October 31. This was a 0.1% investment
in indexed securities, or structured notes, tied to the
performance of Russian stocks. Structured notes
are like customized bonds; they often are used to
reflect an investor's view on the direction of interest
rates. However, in this case, they are used to gain
customized exposure to a foreign market that would
otherwise be inaccessible.
DISTRIBUTIONS
The Board of Trustees of Fidelity Emerging Markets
Fund voted to pay on December 5, 1994, to
shareholders of record at the opening of business on
December 2, 1994, a dividend of $.04 from net
investment income.
EMERGING MARKETS
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION
AS OF OCTOBER 31, 1994
India 5.8%
Argentina 4.1%
Row: 1, Col: 1, Value: 5.8
Row: 1, Col: 2, Value: 13.1
Row: 1, Col: 3, Value: 3.5
Row: 1, Col: 4, Value: 15.1
Row: 1, Col: 5, Value: 15.1
Row: 1, Col: 6, Value: 20.9
Row: 1, Col: 7, Value: 3.4
Row: 1, Col: 8, Value: 5.7
Row: 1, Col: 9, Value: 13.3
Row: 1, Col: 10, Value: 4.1
Brazil 13.3
%
Thailand 13.1
%
Philippines 3.5
%
Hong Kong 5.7%
Korea (South) 3.4%
Other 15.1
%
Malaysia 20.9%
Mexico 15.1%
AS OF APRIL 30, 1994
United
States 7.9%
Argentina 9.4%
Row: 1, Col: 1, Value: 7.9
Row: 1, Col: 2, Value: 9.300000000000001
Row: 1, Col: 3, Value: 3.4
Row: 1, Col: 4, Value: 11.9
Row: 1, Col: 5, Value: 17.2
Row: 1, Col: 6, Value: 18.5
Row: 1, Col: 7, Value: 3.7
Row: 1, Col: 8, Value: 10.9
Row: 1, Col: 9, Value: 7.8
Row: 1, Col: 10, Value: 9.4
Thailand 9.3
%
Brazil 7.8%
Singapore 3.4%
Hong Kong 10.9%
Other 11.9%
Korea (South) 3.7%
Mexico 17.2%
Malaysia 18.5%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks and closed-end
investment companies 94.2 80.8
Bonds 4.4 11.3
Short-term investments 1.4 7.9
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Grupo Carso SA de CV Class A-1
(Mexico, Holding Companies) 1.9 2.0
Telebras PN (Pfd. Reg.)
(Brazil, Telephone Services) 1.8 0.9
Cemex SA, Series B
(Mexico, Building Materials) 1.8 1.3
Consolidated Electric Power Asia Ltd.
(Hong Kong, Electric Utility) 1.5 0.9
Technology Resources BHD
(Malaysia, Air Transportation) 1.4 1.9
Bangkok Bank Ltd.
(Thailand, Banks) 1.3 0.5
Telefonos de Mexico SA sponsored
ADR representing shares Ord. Class L
(Mexico, Telephone Services) 1.3 2.0
Thai Farmers Bank PCL
(Thailand, Banks) 1.3 0.2
Petrobras PN (Pfd. Reg.)
(Brazil, Oil and Gas) 1.3 0.8
Electrobras PN Class B
(Brazil, Electric Utility) 1.3 0.4
TOP TEN INDUSTRIES
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 22.8 23.1
Basic Industries 15.6 10.5
Construction & Real Estate 13.9 15.8
Utilities 12.6 10.6
Holding Companies 8.5 -
Nondurables 5.3 4.7
Durables 4.9 3.1
Energy 3.6 2.8
Retail & Wholesale 3.0 3.4
Media & Leisure 2.5 4.7
EMERGING MARKETS
INVESTMENTS OCTOBER 31, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.8%
SHARES VALUE (NOTE 1)
ARGENTINA - 4.1%
Astra Comp Argentina de
Petroleum (Reg.) 1,812,720 $ 3,808,053 04699B94
Bagley Y Cia Ltd. SA Class B (Reg.) 117,760 471,205 05699C23
Banco de Galicia Y Buenos Aires SA
sponsored ADR representing
Class B shares 96,385 2,602,395 05953820
Banco del Sud SA 23,652 331,244 05957M92
Banco Frances del Rio de la Prata
SA (Reg.) 421,859 3,587,059 21199692
Buenos Aires Embotelladora SA
sponsored ADR 109,200 4,190,550 11942420
Capex SA Class A (a) (e) 100,000 970,340 13961293
Central Costanera SA ADR (e) 118,300 4,066,563 15324M10
Central Puerto SA ADR (e) 22,300 719,175 15503810
Commercial del Plata 1,088,940 3,671,013 20199392
Interamericania de Auto Ord. 515,854 7,198,681 26899722
Mirgor Sacifia Class C
sponsored ADR (e) 208,000 1,846,000 60470110
Molinos Rio de La Plata SA (Reg.) (a) 710,615 6,205,843 60899C22
Perez Companc Class B 1,998,850 10,797,568 71399723
Telefonica de Argentina SA Class B 666,200 4,111,893 87999D92
Transportadora de Gas del Sur SA:
Class B 95,000 227,130 89387092
Class B (e) 185,000 434,902 89387093
Telecom Argentina Stet France Telecome SA 2,304,979 14,019,182 90899992
YPF Sociedad Anonima sponsored
ADR representing Class D shares 507,500 12,243,438 98424510
81,502,234
BANGLADESH - 0.1%
Beximco Pharmaceuticals Ltd. (a) 39,268 1,400,741 08899522
Bangladesh Lamps Ltd. (a) 161 5,880 52799322
Padma Textile Mills Ltd. (a) 55,000 648,617 69399G22
2,055,238
BERMUDA - 0.7%
Central European Media Class A (a) 36,000 585,000 15399422
Consolidated Electric Power Asia Ltd.
sponsored ADR (e) 76,800 1,766,400 20855210
Jardine Strategic Holdings Ltd. Ord. 2,922,000 11,231,204 47199020
13,582,604
BRAZIL - 13.3%
Acesita Cia Acos Especiais Itabira Ord. 22,111,700 2,094,641 00499L22
Aracruz Celulose SA ADR (a) 290,050 3,698,138 03849610
Bradesco PN 1,518,824,420 14,208,067 10599992
Brahma (Cia Cervejaria):
PN (Pfd. Reg.) Class B 31,070,087 10,927,039 15799492
ON (warrants) (a) 1,676,255 148,885 15799494
PN (warrants) (a) 130,763 4,802 15799498
Brasmotor PN 28,575,500 11,843,116 10599892
Casa Anglo PN Ord. (a) 12,031,557 3,134,341 13599392
Cimento Itau PN Ord. 1,234,000 540,652 14799392
Celesc PN Class B Ord. (a) 890,000 948,482 15199E22
CESP (Cia Energetica de Sao Paulo) PN 180,000 249,912 20440P92
Compania Energertica Minas Gerais 38,054,500 3,875,470 15199992
Companhia Paran de Energetica-Copel 75,341,100 747,384 20441B92
Compania Vale do Rao Doce PN Ord. 111,090,500 24,073,311 20499792
Compania Paulista de Forca Luz Ord. 34,602,260 3,073,027 20499922
Copene-Petroquimica do Nordeste SA 800,000 748,368 21799722
Coteminas PN 12,156,252 5,181,967 22199692
Compania Siderurgica Nacional ON 530,990,000 24,395,988 24499523
Duratex Corp. PN 20,365,000 1,495,198 26699493
Electrobras:
PN Class B 64,895,784 24,820,691 69699993
ON 6,491,811 2,529,080 69699998
SHARES VALUE (NOTE 1)
Iochpe Maxion PN Ord. 1,540,000 $ 1,066,789 46199F22
Itaubanco PN (Pfd. Reg.) 16,056,900 5,152,659 46599A92
Karsten PN 1,451,638 73,061 48599B92
Klabin Industria de Papel e Celulose PN 1,351,810 2,369,074 45599A22
Light Servicos de Electricidade SA Ord. 17,817,100 6,920,162 53299892
Lojas Americanas (Reg.) 4,410,000 151,969 54199A92
Lojas Americanas 28,772,262 885,898 54199A93
Moinho Santista-Industrias Gerais SA
Ord. (a) 343,700 1,343,056 60899F22
Multibras Electrodomesticos PN 116,150 178,798 62599B22
Papel Simao, Industries De SA PN 24,340,000 1,126,442 69899792
Petrobras PN (Pfd. Reg.) 163,252,600 25,131,105 71699794
Sadia Concordia PN (Pfd. Reg.) 94,750 144,173 78699B93
Souza Cruz Industria Comerico 70,000 663,114 84599D92
Telebras:
PN (Pfd. Reg.) 723,149,209 34,851,059 95499792
ON 111,055,700 4,511,083 95499795
Telesp PN:
(Pfd. Reg.) 35,516,900 18,084,495 87999B93
(rights) (a) 525,236 5,778 90999C24
Telepar PN 1,009,095 370,419 87999F22
Unibanco PN 51,278,034 1,621,411 90599A94
Usiminas PN sponsored ADS (a) (e) 57,000 954,750 91730210
Usiminas PN (Pfd. Reg.) 661,993,600 17,549,048 97199693
261,892,902
CANADA - 0.0%
Bolivar Goldfields Ltd. (a) 51,750 82,213 09760Q10
CHILE - 1.6%
Chilgener SA sponsored ADR 34,000 960,500 16889410
Compania Cervecerias Unidas SA ADR 397,700 10,588,763 20442910
Cristalerias de Chile SA
sponsored ADR 73,200 1,573,800 22671410
Embotelladora Andina SA
sponsored ADR 72,700 2,008,338 29081P10
Empresa Nacional de Electricidad SA 83,000 2,334,375 29244T10
Empresas Telex Chile SA
sponsored ADR (a) 63,600 1,168,650 29245D10
Enersis SA sponsored ADR 235,000 6,903,125 29274F10
Madeco SA ADR 55,100 1,721,875 55630410
Maderas Y Sinteticos SA sponsored ADR 123,100 3,446,800 55646510
Soc. Quimica y Minera de Chile ADR 38,900 1,317,738 83363510
Vina Concha y Toro SA
sponsored ADR (a) 20,200 361,075 92719110
32,385,039
CHINA (PEOPLES REP.) - 0.6%
China First Pencil Co. Ltd. Class B (c) 3,199,802 1,209,525 19099622
Dongfang Electrical Machinery Co.
Class H (a) 1,200,000 660,024 25899C22
Huaneng Power International, Inc.
Class N sponsored ADR 10,000 185,000 44330410
Luoyang Glass Ltd Class H (a) (e) 1,200,000 691,080 55043410
Luoyang Glass Ltd. Class H 600,000 345,540 55043492
Qingling Motors Ltd. Class H (a) (e) 2,007,000 850,647 74727395
Shandong Huaneng Power
Development Ltd. Class N
sponsored ADR 70,170 754,328 81941910
Shanghai Petrochemical Co. Ltd.
Class H ADR 10,000 337,500 81942410
Shanghai Diesel Engine Class B (a) 896,800 959,576 84299A22
Shanghai Hero Ltd. Class B (a)(c) 2,549,600 963,749 84399B22
Shanghai Industrial Sewing Machine Corp.
Class B (a) 1,135,600 595,054 84399D22
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CHINA (PEOPLES REP.) - CONTINUED
Shanghai Refrigerator Compressor Co.
Ltd. Class B (c) 2,703,400 $ 1,157,055 84599H92
Shanghai Jin Jiang Tower Co. Ltd. 13 8 84599U22
Shanghai Vacuum Electron
Devices Co. Ltd. (c) 5,119,598 1,146,790 84599992
Tsingtao Brewery Co. Ltd. 1,732,000 1,300,057 87299922
Yizheng Chemical Fibre Co. Ltd. Class H 1,000,000 397,960 99599E22
11,553,893
COLOMBIA - 0.4%
Banco Ganadero SA ADR (a)(e) 58,000 1,696,500 05959410
Carulla & CIA SA Class B sponsored
ADR (a)(e) 88,100 1,321,500 14679410
Cementos Diamante SA Class B
ADR (a)(e) 50,000 1,150,000 15126110
Cementos Paz del Rio sponsored
ADR (a)(e) 102,000 2,499,000 15126410
Corporacion Financiera del Valle ADR
Class B (a) (e) 7,747 170,434 21986910
6,837,434
FINLAND - 0.1%
Nokia Corp. sponsored ADR (a) 20,000 1,502,500 65490220
GREECE - 0.0%
Hellenic Bottling Co. SA 7,500 232,837 42399A92
HONG KONG - 5.4%
CDL Hotels International Ltd. 5,159,583 2,370,467 14999792
Chevalier International Holdings Ltd. 3,302,000 542,717 16699B22
Chevalier International Holdings Ltd.
(warrants) (a) 660,400 17,091 16699B23
Chevalier (OA) International Ltd. 1,000,000 91,890 16699E22
Chinney Investments Ltd. 1,984,000 351,763 16999B22
Consolidated Electric Power Asia Ltd. 12,408,723 28,986,281 20855292
Dao Heng Bank Group Ltd. 702,000 2,330,310 23799F22
Dah Sing Financial Holdings Ltd. 766,875 1,955,148 23899892
Esprit Asia Holdings Ltd. 2,204,000 1,041,103 29699522
First Pacific Co. Ltd. 16,475,346 11,620,391 33699192
First Pacific Bancshares Holding Ltd. 3,050,000 588,132 33699292
Glynhill International Ltd. (a) 500,000 23,620 37199492
Grand Hotel Holdings Ltd. Class A 4,675,000 1,936,058 38599292
Great Eagle Holdings Ltd. 200,000 113,886 39099394
Guoco Group Ltd. 1,424,000 6,726,549 40299692
Henderson Investment Ltd. 3,900,000 3,583,554 42599422
Hong Kong Ferry Holdings Ltd. 350,000 489,195 43899A92
Hopewell Holdings Ltd. 19,883,439 20,457,275 44099999
International Bank of Asia Ltd. 1,710,000 713,703 45899E22
Island Dyeing & Printing Co. Ltd. (a) 151,000 235,480 46099C22
JCG Holdings Ltd. 8,286,000 5,415,315 46799792
Jardine International Motor Corp. 558,000 686,039 47499292
Kwong Sang Hong International Ltd. 2,000,000 666,500 50599192
Lai Sun Development Co. Ltd. 500,000 91,885 50699992
Liu Chong Hing Bank Ltd. (a) 1,100,000 1,437,821 54399A22
Liu Chong Hing Investment Ltd. 1,100,000 1,345,278 54999592
Mingly Corp. Ltd. 5,010,000 1,011,469 60399C22
Nanyang Holdings Ltd. (a) 430,000 612,139 63099D22
Peregrine Investments Holdings Ltd. 1,827,000 3,191,988 71399492
Pricerite Group Ltd. 2,756,000 485,084 74199D22
Regal Hotels International Holdings Ltd. 1,120,000 272,496 75999110
San Miguel Brewery Ltd. 300,000 264,009 79999K22
Shaw Bros. Hong Kong Ltd. 1,712,000 2,979,993 82028710
Shangri-La Asia Ltd. 300,000 432,897 84599M22
Tian Teck Land Ltd. 2,800,000 692,132 93699C22
Tai Ping Carpets International Ltd. 50,000 31,060 94099A22
SHARES VALUE (NOTE 1)
Watary International Holdings Ltd. 2,500,000 $ 287,950 94199D22
Wing On Co. International Ltd. 1,603,000 2,136,783 97499092
106,215,451
INDIA - 5.0%
Alacrity Housing Ltd. (a) 160,000 305,963 01199C22
Apollo Hospitals Enterprises Ltd. (a) 100,000 137,046 03799722
Bharti Telecom Ltd. (a) 14,000 46,851 05599K22
Bajaj Auto Ltd. GDR (e) 88,000 2,229,040 05710010
Bombay Dyeing & Manufacturing Co. GDR 69,000 983,250 09799H23
Century Textiles & Industries
GDR (a) (e) 30,500 6,862,500 15669010
CESC Ltd. GDR (e) 37,500 412,500 15712810
Chemicals & Plastics India Ltd. (a) (e) 315,000 2,560,059 16399D23
Core Parenterals Ltd. GDR (a) 348,000 3,264,240 21899123
Cosmo Films Ltd. (a) 20,275 109,852 22199B22
Crompton Greaves Ltd. (a) 300,000 2,103,501 22799522
East India Hotels Ltd. GDR (a) (e) 180,000 2,597,400 27315110
Finolex Cables Ltd. GDR (a) (e) 240,000 4,711,200 31790610
Finolex Cables Ltd. GDR (a) 55,000 1,079,650 31790693
Grasim Industries Ltd. GDR (RFD) (a) (e) 212,000 5,088,000 38870620
Great Eastern Shipping Co. Ltd. GDR 97,700 1,245,675 39099823
Gujarat Ambuja Cement Ltd. GDR (a) 20,000 420,000 40204293
Himachal Futuristic Communications
Ltd. (a) 20,000 95,614 43299A22
Hindalco Industries Ltd. GDR (a) (e) 77,000 2,656,500 43306410
Hindalco Industries Ltd. (RFD) GDR (a) (e) 10,000 345,000 43306430
Hindalco Industries Ltd. (RFD) GDR (a) 20,000 690,000 43306494
Housing Development Finance
Corp. Ltd. (a) 21,000 1,840,564 44299U22
ITC Ltd. GDS (warrants) (a) (e) 142,000 1,615,960 45031810
India Cements Ltd. GDR (a) (e) 236,500 2,365,000 45408P10
Indian Aluminum Ltd. GDR (a) (e) 85,000 861,050 45410110
Indian Rayon & Industries, Inc. GDR (a) 110,000 2,062,500 45435293
Indo Gulf Fertilizer and Chemicals
Corp. Ltd. GDR (a) (e) 387,000 1,141,650 45577P10
Industrial Credit & Investments
Corp. Ltd. (a) 17,000 780,208 45605292
JCT Ltd. GDR (a) (e) 218,000 4,796,000 46612510
JCT Ltd. GDR (a) 23,000 506,000 46612593
JK Corp. Ltd. GDR (e) 250,000 1,900,000 46618810
JCT Electronics Ltd. (a) 50,000 147,405 46899122
Mahindra & Mahindra Ltd. GDR (a) 125,000 1,360,000 55999923
Maral Overseas Ltd. (a) 405,000 839,010 56599722
Mukand Ltd. 95,000 1,059,718 62499D22
Nicholas Piramal India Ltd. (a) 25,000 438,230 66699922
NIIT Ltd. (a) 10,000 95,614 66999922
Ranbaxy Laboratories Ltd. GDR (a) (e) 260,000 5,395,000 75188110
Reliance Industries Ltd. GDR (e) 90,000 2,272,500 75947010
Reliance Industries Ltd. (a) 1,000,000 12,549,300 75947092
Reliance Industries Ltd. GDS (a) 120,000 3,030,000 75947094
SIV Industries Ltd. GDR (a) (e) 104,000 2,288,000 78427P20
Sanghi Polyesters Ltd. GDR (a) (e) 333,400 2,333,800 80100P10
Shriram Industries Ltd. GDR (a)(e) 45,200 1,864,500 82554620
Southern Petrochemical Industries Corp.
GDS (a) 50,000 712,500 84361310
State Bank Of India (a) 20,000 127,485 85599E22
Tata Electric Companies GDR (a) (e) 700 294,000 87656610
Tata Engineering & Locomotive
Ltd. GDR (a) (e) 307,000 4,835,250 87656810
Tata Engineering & Locomotive Ltd.
(warrants) (a) (e) 282,000 1,305,660 87656811
Tube Investments of India Ltd. GDR (e) 37,000 259,000 90699F24
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDIA - CONTINUED
Unitech Ltd. 254,350 $ 1,013,308 90799M22
United Phosphorus GDR (a) 10,000 290,000 91199K24
Zee Telefilms Ltd. (a) 58,300 464,523 98999X22
98,787,576
INDONESIA - 2.8%
Andayani Megah PT 44,000 91,197 03399722
Astra International PT (For. Reg.) 1,317,600 2,913,003 04699894
Bank Dagang Nas Indonesia PT 2,025,000 3,917,322 06099Q22
Bank Niaga PT 261,000 1,081,929 06399C22
Barito Pacific Timber PT (For. Reg.) 160,000 272,670 06799F23
Dharmala International Land PT 455,000 623,468 25399592
Duta Anggada Realty Ord. 295,000 298,924 26699192
Gudang Garam PT Perusahaan 1,096,500 7,222,042 40199393
Heromini Supermarket PT (For. Reg.) (a) 447,000 1,008,834 42799494
Indah Kiat Pulp & Paper (For. Reg.) 449,400 532,997 45499B23
Indo Rama Synthetics PT (For. Reg.) 250,000 1,001,785 57099794
Indosat (Indonesia Satellite)
sponsored ADR 75,200 2,951,600 71568010
Jakarta International Hotels &
Development Ord. 50,000 67,937 47399693
Lippo Bank (For. Reg.) (a) 1,393,050 2,983,565 53699A23
Matahari Putra Prima PT (For. Reg.) 2,100,000 4,449,312 57699C92
Pakuwon Jati PT (For. Reg.) (a) 656,500 703,026 69599393
Panin Bank PT (For. Reg.) 1,771,000 3,099,693 69899823
Roda Vivatex PT (For. Reg.) (a) 1,040,000 2,299,274 77499293
Sampoerna Hanjaya Mandala (For. Reg.) 3,091,250 14,949,934 82299893
SUCACO PT 50,000 166,964 89399292
Trias Sentosa (For. Reg.) 803,000 1,664,346 89599D22
United Tractors PT (For Reg.) 984,000 2,538,041 91599594
54,837,863
KOREA (SOUTH) - 3.2%
Boram Bank 27,067 329,361 09999325
Central Investment & Finance Corp. (a) 19,897 409,347 15499422
Cho Hung Bank Co. Ltd. (a) 13,537 219,065 17099E25
Cho Kwang Paint Industry Co. Ltd. (a) 8,600 571,787 17399N22
Chosun Brewery Co. Ltd. (a) 10,728 368,748 22899822
Chosun Refractories Co. (a) 10,000 420,247 28099322
Chosun Refractories Co. (RFD) (a) 11,824 444,985 28099323
Dae Chang Industrial Co. 69,150 1,509,390 23399M22
Dai Han Investment & Finance (a) 30,000 583,328 23399P22
Daewoo Electronics
Components Co. Ltd. 1,800 27,548 23799E23
Daewoo Heavy Industries Ltd. (a) 49,510 906,788 23999492
Daewoo Heavy Industries Ltd. (RFD) (a) 490 8,852 23999497
Daewoo Metal Co. Ltd. 28,180 512,589 24999B22
Dong Chang Paper Mfg. Co. Ltd. (a) 20,000 204,478 25799Y22
Dong-A Investment & Finance (a) 38,603 590,800 25899822
Hanjin Engineering & Construction
Co. Ltd. (a) 3,300 82,795 41099822
Han Shin Construction (a) 2,465 27,521 41199D23
Hyundai Engineering &
Construction Co. Ltd. 44,808 2,473,251 41599122
Hyundai Corp. (a) 20,000 649,815 40999922
Hyundai Corp. (New) (a) 6,135 180,090 40999923
Hyundai Securities Co. Ltd. (a) 30,294 918,454 42699A22
Hung Chang Products Co. (a) 20,000 1,156,620 44599A22
Jinro Ltd. 28,000 906,228 73299422
Keumkang Development
Industries Co. Ltd. (a) 40,110 956,018 49299F22
KLB Securities Co. 919 17,062 49899C22
Korea Electric Power Corp. ADR 431,450 8,413,275 50063110
Korea Electric Power Corp. 199,410 7,579,656 50099B92
Korea First Securities Co. Ltd. (a) 19,922 359,878 50099K22
SHARES VALUE (NOTE 1)
Korea First Securities Co. Ltd. (New) (a) 2,052 $ 34,751 50099K24
Korea Iron & Steel Co Ltd. (a) 50,644 1,492,986 50099N22
Korea Iron & Steel Co. Ltd. (New) (a) 13,986 364,936 50099N23
Korea Line Corp. 38,060 1,179,304 50599N22
Korea Tungsten Mining Co. 600 27,849 50599S24
Korean Air 61,500 2,275,921 52299522
Korean Air (RFD) (a) 7,790 201,798 52299526
Kukdong Construction Co. 106,104 1,943,321 50199L22
Kumkang Industrial Co. Ltd. 30,600 548,931 50299H22
Kumkang Industrial Co. Ltd. (RFD) (a) 7,833 124,793 50299H24
Lucky Co. Ltd. (a) 134,000 4,488,239 54999E22
Lucky Co. Ltd. (FP) (a) 6,190 165,864 54999E24
Midopa Co. (a) 31,164 590,323 59899E22
Miwon Co. Ltd. 10,300 317,857 61299693
Naewae Semiconductor Co. 16,647 538,785 63099E22
Naewae Semiconductor Co. (New) (a) 5,216 143,953 63099E23
Namsung Corp. 37,000 742,646 63299D22
Onyang Pulp Co. 35,000 583,955 53499222
Oriental Chemical Industries Co. Ltd.
(RFD) (a) 613 19,994 68999C24
Samsung Heavy Industries Co. Ltd. 30,000 1,554,287 82199C22
Samsung Heavy Industries Co. Ltd (FP) 3,722 134,985 82199C23
Seoul Securities Co. (a) 800 14,050 83599P22
Samyang Foods Co. (a) 30,000 1,354,826 84699F22
Shinhan Investment & Finance (a) 39,045 1,053,086 95599C22
Ssangyong Cement Co. 40,258 1,729,102 76899392
Ssangyong Heavy Industries Co. Ltd. (a) 34,312 563,868 77299122
Taeyoung Corp. (a) 13,780 1,161,658 90899D22
Taekwang Industrial Co. 60 34,247 91099F22
Tai Han Electric Wire Co. Ltd. (a) 30,000 963,432 95199G22
Taihan Textile Co. (a) 5,000 293,546 95199H22
Yeonhap Insupanel Co. 31,500 580,882 98699C22
Yu Hwa Securities Co. (a) 79,030 1,417,712 98799E22
Yukong Ltd. GDR (a) (e) 192,000 4,800,000 98849K10
Yukong Ltd. (New) 1,384 76,392 98899K25
Youl Chon Chemical Co. 30,000 1,223,107 99399P22
63,569,362
LUXEMBOURG - 0.1%
Banque Indosuez Luxembourg
SA (warrants) (a)(e) 1,500 15 06674N11
Quilmes Industries SA 37,700 989,625 74899692
989,640
MALAYSIA - 20.1%
Arab Malaysian Corp. BHD 1,600,000 5,257,696 00499F92
Arab Malaysian Finance BHD
(For. Reg.) (a) 1,242,666 3,986,249 00699A93
Advance Synergy BHD (a) 3,700,000 10,276,787 00799B22
Affin Holdings BHD 1,564,000 2,630,883 00899492
Amalgamated Steel Mills BHD 200,000 334,866 02499692
Amalgamated Steel Mills BHD
(rights) (a) 25,000 5,379 02499696
Bandar Raya Development BHD 2,636,000 4,991,002 06000210
Berjaya Group BHD 7,900,000 12,547,254 08199A22
Berjaya Sports Toto BHD 1,022,000 1,591,223 08499E22
Berjaya South Island BHD (c) 1,721,000 18,851,060 08499G22
Berjaya Textile BHD 298,000 1,352,294 08499H22
British-American Life Insurance BHD 836,000 3,155,950 11099E22
Buildcon BHD 52,000 321,408 11999322
Carlsberg Brewery BHD 50,000 240,587 14299522
CHG Industries BHD 744,000 2,328,408 16699892
Commerce Asset Holding BHD 100,000 445,966 20099492
Construction & Supplies House BHD (a) 110,000 303,375 21099722
Development & Commercial Bank BHD 1,440,000 3,971,448 25199692
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MALAYSIA - CONTINUED
Dunlop Estates BHD 350,000 $ 1,143,275 26599392
Ekran BHD:
Ord. 1,433,000 5,830,103 28299792
Class A (a) 1,433,000 5,549,808 28299793
Faber Group BHD (a) 200,000 226,112 30299892
Gadek BHD 1,053,000 7,167,613 36399D22
Gamuda BHD 200,000 1,017,114 36499A92
Ganda Holdings BHD (a) 4,600,000 13,316,402 36999C22
Genting BHD 3,000 27,579 37245210
Glenealy Plantations BHD 50,000 224,939 37899322
Golden Pharos BHD (a) 1,585,000 5,487,429 38299D22
Golden Plus Holdings BHD 50,000 242,543 38399492
Grand United Holding BHD (a) 42,000 65,721 38699922
Granite Industries BHD (a) 1,600,000 4,350,128 38799522
Ho Hup Construction Co. BHD 108,000 464,743 40899592
Hock Hua Bank BHD 755,000 2,392,369 43499B22
Hong Leong Industries BHD 544,000 2,915,519 43859992
Hong Leong Properties BHD 1,000 1,698 43899L22
Hume Industries BHD 3,299,000 13,809,020 44599692
Hong Leong Credit BHD 3,391,000 20,163,598 44699492
IGB Corp. BHD (Reg.) 50,000 49,682 44960092
Idris Hydraulic BHD (a) 1,665,000 3,113,433 45199B92
IJM Corp. BHD 37,000 139,677 45499592
Island & Peninsular BHD 370,000 1,027,679 45699592
Industrial Oxygen, Inc. BHD 1,650,000 2,104,262 45999892
Johan Holdings BHD 4,500,000 5,052,330 92599D22
Johan Holdings BHD (warrants) (a) 465,000 318,339 92599D24
Kamunting Corp. BHD 2,000,000 1,971,640 48399C22
Kelanamas Industries BHD 1,672,000 4,022,615 48799K22
Kelanamas Industries BHD (warrants) (a) 16,000 27,791 48799K25
Kent (George) BHD 650,000 1,767,240 49099792
Kent (George) BHD (warrants) (a) 10,000 9,819 49099793
Kuala Lumpur Kepong BHD Ord. 400,000 970,172 49399792
Kuala Lumpur Industries Holdings
BHD 4,570,000 8,724,359 49799B92
Land & General BHD 1,123,000 5,535,379 51499693
Larut Consolidated BHD 276,000 647,824 51799222
Leong Hup Holdings BHD 62,400 136,700 52699692
Leong Hup Holdings BHD (warrants) (a) 10,400 12,856 52699695
Lien Hoe Corp. BHD 100,000 154,914 53199722
Lingui Development BHD 729,999 2,455,936 53599722
London & Pacific Insurance Co. BHD 226,500 788,596 54199E22
Long Huat Timber Industry BHD 342,000 551,215 54299592
MGR Corp. BHD 665,000 4,916,771 55399492
Magnum Corp. BHD 1,000 2,249 55999392
Malaysian Airlines System BHD 200,000 535,942 56084110
Malakoff BHD 3,584,000 8,832,947 56099J22
Malaysia Industrial Development Finance
BHD Ord. 1,401,000 2,290,929 56099L22
Malaysia Industrial Development Finance
BHD (rights) (a) 560,400 372,688 56099L23
Malaysian Helicopter Services BHD 2,648,400 6,527,114 56099M22
Malaysia British Assurance BHD 173,000 389,144 56099N22
Malaysian Plantations BHD 4,582,000 4,857,607 56099R22
Malaysian Plantations BHD (rights) (a) 2,291,000 1,093,403 56099R23
Malaysian Resources Corp. BHD 6,011,000 13,403,508 56099793
Maruichi Malaysia Steel Tube BHD 550,000 1,613,695 57388699
Mentiga Corp. BHD 100,000 365,770 58799B22
Metacorp BHD 1,105,000 4,279,510 59099E92
Metroplex BHD 50,000 50,856 59299G22
Minho BHD 20,000 49,682 60399822
Mycom BHD 641,000 1,504,549 63199892
Multi-Purpose Holdings BHD 1,630,000 2,754,667 00099292
SHARES VALUE (NOTE 1)
Multi-Purpose Holdings BHD
(warrants) (a) 582,000 $ 537,320 00099295
Negara Properties BHD 336,000 1,708,752 63999822
North Borneo Timber BHD (c) 3,158,000 14,577,770 65799B22
OSK Holdings BHD 913,000 5,321,740 67899922
OSK Holdings BHD
(warrants) (a) 207,500 917,262 67899926
Omega Holdings BHD 1,000,000 2,914,430 68199G22
Oyl Industries BHD 1,000,000 7,080,680 69599492
Park May BHD 1,063,000 3,243,574 70099222
Pelangi BHD 400,000 491,344 70699492
Perlis Plantations BHD 100,000 352,078 71390092
Pernas International Hotel &
Property BHD 85,000 121,701 71499392
Promet BHD 2,000,000 2,441,080 74399G22
Public Finance BHD (For. Reg.) 899,000 1,758,435 87799994
Rashid Hussain BHD 1,378,000 4,258,654 75399492
Red Box BHD 1,000 1,815 75699922
Renong BHD 1,860,000 2,910,509 75999H22
Resorts World BHD 600,000 3,802,446 76199592
Samanda Holdings BHD 950,000 3,121,757 91599193
Syarikat Kayu Wangi BHD 326,000 573,887 93599F22
Southern Bank BHD 207,000 603,287 84199992
Sungei Way Holdings BHD 1,557,250 6,152,850 86799892
Sungei Way Holdings BHD
(warrants) (a) 236,750 387,136 89499H22
Sungei Bagen Rubber Co. BHD 10,000 567,237 88599B22
Super Enterprise Holdings BHD 19,000 40,137 98999Q22
Taiping Consolidated BHD 100,000 224,939 95599B22
Tan & Tan Development BHD 1,131,000 1,681,288 89699B22
Time Engineering BHD 427,000 1,269,518 93099592
Technology Resources BHD (a) 7,321,000 28,496,407 93699692
TA Enterprise BHD 2,940,000 9,546,004 94899892
Tongkah Holdings BHD 1,619,600 2,914,486 94999C92
Tongkah Holdings BHD (warrants) (a) 302,666 291,271 94999C96
Uniphone Telecommunications BHD 18,000 44,010 95499A92
Uniphone Telecommunications BHD
(warrants) (a) 9,000 880 95499A94
United Engineers BHD 1,616,000 8,724,024 93099692
United Merchant Group BHD (a) 4,605,800 10,810,688 91099L22
Wing Tiek Holdings BHD 200,000 735,452 97499292
Yeo Hiap Seng BHD 150,000 756,968 98581093
YTL Corp. BHD 1,336,600 7,581,690 98799092
YTL Corp. BHD (warrants) (a) 217,200 866,676 98799094
Zalik BHD 1,233,000 6,945,797 98899P22
395,187,016
MEXICO - 15.1%
BANACCI SA de CV:
Class C 2,490,400 17,095,251 06399893
Class B 501,800 3,065,095 06399896
Bufete Industrial SA de CV sponsored
ADR representing 3 ordinary
certificate Banco 49,700 2,012,850 11942H10
Cementos Apasco SA de CV Class A 1,076,400 10,018,851 15299392
Cemex SA, Series B 3,772,200 34,781,495 15299293
Cifra SA Class C 6,143,600 16,547,357 17178594
Consorcio G Grupo Dina SA ADR 113,700 1,463,888 21030610
Controladora Commercial Mexicana
SA Class B-1 1,174,800 2,139,111 21299692
Corporacion Geo SA de CV (a) 234,000 1,599,477 21986V92
DESC (Soc. de Fomento Industrial SA):
Class B 1,270,000 9,382,785 25299692
Class C 402,348 2,785,306 25299693
Elektra (Grupo) SA (a) 188,700 2,115,876 62799425
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEXICO - CONTINUED
Empresas Ica Sociedad Controladora SA
de CV sponsored ADR representing
Ord. (Part. Cert.) 414,900 $ 12,291,413 29244810
Emvasa del Valle de Enah Ord. (a) 317,000 1,512,160 29299E22
Farmacia Benevides SA de CV Ord. 575,800 2,143,755 31299422
Fomento Economico Mexicano SA
(FEMSA) Class B 1,614,000 7,088,833 34441892
Gruma SA Class B (a) 62,200 417,923 40013192
Grupo Carso SA de CV Class A-1 (a) 3,498,900 37,197,436 40099594
Grupo Casa Autrey SA sponsored ADR 93,700 2,857,850 40048P10
Grupo Dina sponsored ADR, Series L (a) 40,983 414,953 21030620
Grupo Embotellador de Mexico SA
GDR (a) 187,250 4,751,469 40048J30
Grupo Financiero Bancomer SA de CV
sponsored ADR, Series C (e) 296,500 6,819,500 40048610
Grupo Financiero Banorte SA
Grupo Financiero GBM Atantico SA
sponsored ADR (e) 16,100 309,925 40048F10
Grupo Financiero Inbursa SA
Class C (a) 50,000 215,242 44499922
Grupo Financiero Probursa SA
Class B Ord. 309,000 179,755 48999K22
Grupo Financiero Serfin SA sponsored
ADR 220,600 3,915,650 40049A10
Grupo Industrial Bimbo SA de CV,
Series A Ord. 212,830 1,727,154 60899995
Grupo Industrial Maseca SA de CV
ADR 14,000 346,500 40048840
Grupo Iusacell SA
Class D ADR (a) 19,790 554,120 40049W20
Grupo Mexicano de Desarrollo SA
Class L ADR (a) 198,410 4,017,803 40048G20
Grupo Modelo SA de CV Class C Ord. 22,500 484,293 40099M22
Class L 28,737 37,614 48999K23
CLass B 922,900 1,503,266 57899894
Grupo Posadas SA de CV Class L (a) 390,000 406,107 40048992
Class B (a) 487,000 1,929,304 44499923
Grupo Radio Centro SA de CV
sponsored ADR 39,800 671,625 40049C10
Grupo Sidek SA de CV
Class B Ord. 2,007,400 8,583,120 40099F22
Grupo Simec SA de CV ADR (a) 59,000 1,460,250 40049110
Grupo Situr SA de CV Class B (a) 1,998,113 6,044,312 40049292
Grupo Tribasa SA de CV
sponsored ADR (a) 25,179 789,991 40049F10
Grupo Televisa SA de CV 46,000 1,016,870 40049J97
Grupo Televisa SA de CV GDS (e) 81,200 3,603,250 40049J20
Class L ADR (a) 46,185 1,420,189 40049W30
Class L 44,572 191,875 40099F25
Class C Ord. 1,565,200 7,639,334 40099H22
Herdez SA de CV Class A 1,321,407 1,153,060 42799F22
Hylsamex SA sponsored ADR (e) 68,000 1,462,000 44891910
Kimberly Clark de Mexico SA Class A 477,000 9,462,312 49499392
Sanluis Corp. Ord., Series A-2 74,000 811,460 21987020
Sears Roebuck de Mexico SA de CV
ADR representing Series B-1 (a) (e) 52,700 1,231,863 81240K10
Sears Roebuck de Mexico SA de CV (a) 689,600 8,083,443 81240K92
Servicios Financieros Quadrum SA
sponsored ADR (a) 3,200 46,400 81763810
Sigma Alimentos Class B (a) (e) 28,400 487,376 80599G23
Telefonos de Mexico SA sponsored ADR
representing shares Ord. Class L 478,400 26,371,800 87940378
Tolmex SA Class B2 1,213,500 17,648,343 94399492
SHARES VALUE (NOTE 1)
Transportacion Maritima Mexicana SA
de CV Class A 99,000 $ 696,859 94899592
Vitro SA sponsored ADR 174,200 3,592,875 92850230
Vitro SA 96,900 677,864 92850292
297,275,838
PAKISTAN - 1.7%
Adamjee Insurance Ltd. (a) 128,900 1,027,178 00599492
Al-Faysal Investment Bank Ltd. (a) 320,000 846,522 01099F22
Askari Commercial Bank (a) 359,200 797,715 03999C22
Askari Leasing Ltd. (a) 384,400 790,911 04299322
Bank of Punjab (a) 33,150 75,785 79899A92
Crescent Investment Bank Ltd. (a) 500,000 1,110,405 22599B22
Crescent Investment Bank Ltd. (rights) (a) 150,000 235,145 22599B23
Dandot Cement Co. Ltd. (a) 300,000 1,420,668 23699K22
DG Kahn Cement Ltd. (a) (c) 795,000 1,759,057 23999E22
DG Kahn Cement Ltd. (rights) (a) 88,000 36,643 23999E23
Engro Chemical Pakistan Ltd. (a) 20,000 173,093 29399E22
Fauji Fertilizer Co. Ltd. (a) 850,000 2,748,254 31199822
First Grindlays Modarba (a) 565,200 544,536 32099E22
Ibrahim Energy Ltd. (a) 237,000 549,553 45499J22
Maple Leaf Cement Factory Ltd. (a) 80,000 399,746 56599622
Muslim Commercial Bank Ltd. (a) 225,000 595,211 62899D22
Muslim Commercial Bank Ltd. (rights) (a) 33,750 45,192 62899D23
National Development Leasing Corp. (a) 347,625 488,184 63599492
Nishat Tek Ltd. (a) 47,000 72,911 65999C22
Packages Ltd. (a) 10,000 58,786 69599Q22
Pakistan State Oil Co. Ltd. 240,800 3,476,017 34799292
Pakistan Telecommunications Voucher
GDR (a) (e) 63,890 10,541,850 69584910
Pak Electron Ltd. (a) 40,000 192,035 69599P22
Pakland Cement Ltd. (a) 200,000 1,097,344 47799622
PEL Appliances Ltd. (a) 27,500 197,363 70599922
Sunflo Cit-Russ Ltd. (a) 2,350,000 997,740 80599E22
Sui Southern Gas Pipelines Ltd. (a) 462,200 1,037,782 89499F22
Trust Leasing Corp. Ltd. (a) 231,200 388,865 89899F22
Trust Leasing Corp. Ltd. (rights) (a) 59,350 41,674 89899F23
Union Bank Ltd. (a) 493,600 673,029 90499P22
32,419,194
PANAMA - 0.5%
Banco Latino Americano de Exportaciones
SA Class E 127,100 4,718,588 06199A92
Panamerican Beverages, Inc. Class A 141,700 4,888,650 69829W10
9,607,238
PERU - 0.7%
Banco Wiese sponsored ADR 40,000 850,000 05965110
Banco Wiese Ltd. 101,711 534,960 05999T22
Banco de Credito del Peru Class T 1,209,245 2,870,228 06899B22
Cementos Lima SA Class C (e) 2,920 1,191,221 15199M22
Cementos No Pacasmayo Class T 9,100 34,086 15199N22
Compania Peruana Telefonos Class T 2,645,639 3,675,004 24499622
La Fabril SA Class T 462,985 884,551 50399B23
Minsur SA Class T (a) 123,893 1,461,987 60499F22
Southern Peru Copper Corp. Class T (a) 452,149 2,784,646 84399F22
14,286,683
PHILIPPINES - 3.5%
Ayala Corp. Class B 4,719,040 8,345,575 05499092
Ayala Land, Inc. Class B 5,003,625 7,843,282 05499392
Bacnotan Cement Corp. 320,000 456,592 07499222
Belle Resources Corp. (a) 7,760,000 2,027,300 07899324
Belle Resources Corp. (rights) (a) 1,253,333 226,690 07899323
Benpress Holdings Corp. GDR (e) 175,000 2,012,500 08230010
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PHILIPPINES - CONTINUED
Benpress Holdings Corp. GDR 81,000 $ 931,500 08230093
Filinvest Land, Inc. Ord. (a) 9,562,750 4,323,989 31699J22
First Phillipines Holdings Corp. 1,256,850 6,314,565 33699492
First Phillipines Holdings Corp.
(rights) (a) 418,950 1,334,477 33699494
Guoco Holdings, Inc. 30,140,000 8,601,052 40299A22
House of Investments, Inc. 1,019,000 2,129,741 44199C92
Interport Resources Corp. Class B (a) 100,000,000 104,501 46099E22
Kuok Phil Properties, Inc. Class B (a) 192,000 15,588 60599792
Lepanto Consolidated Mining Co. 92,170,000 1,000,045 52673292
Liberty Telecoms Holdings, Inc. 13,594,000 1,748,460 53199822
Liberty Telecoms Holdings, Inc. (a) (e) 20,919,000 2,690,602 53199823
Manila Electric Co. Class B 81,165 1,141,790 58799A92
Metropolitan Bank & Trust Co. 4,700 138,846 59199D22
Metropolitan Bank & Trust Co.
(rights) (a) 940 20,213 59199D23
Manila Mining Corp. Class B 291,788,000 2,109,627 59399C22
Metro Drug, Inc. Class B (a) 51,687,166 9,764,223 59699292
Mondragon International
Philippines, Inc. (a)(c) 6,380,000 1,871,956 60999D22
Negros Navigation Co. (a) 1,000,000 452,170 63999D22
Philex Mining Corp. (a) 8,500,000 1,434,885 71814230
Robinson's Land Corp. (a) 7,770,000 1,452,213 77099492
San Miguel Corp. Class B 5,000 27,130 79908540
Sanitary Wares Manufacturing Corp. 186,000 114,007 81099792
SM Prime Holdings, Inc. (a) 1,700,000 580,788 83160592
Steniel Manufacturing Corp. 520,500 194,558 85899622
69,408,865
PORTUGAL - 0.0%
CIN 6,250 161,028 17599592
Mague (Constru Metalom) 1,586 40,243 55999192
Unicer (Uniao Cervejeira) SA 5,000 75,472 93399A93
Unicer (Uniao Cervejeira) SA (New) 5,000 75,472 93399A95
352,215
SINGAPORE - 1.5%
Chuan Hup Holdings Ltd. 100,000 98,774 14899992
Courts Singapore Ltd. 50,000 70,504 22299992
DBS Land Ltd. 20,000 70,163 24399292
Falmac Ltd. 50,000 24,694 30699722
Focal Finance Ltd. 403,200 983,280 34499B22
Hong Leong Finance Ltd.
(warrants) (a) 424,600 543,764 44999D23
Hong Leong Finance Ltd. (For. Reg.) 894,000 3,410,351 44999D26
Informatics Holdings Ltd. 1,480,000 1,159,402 45699D22
Ipco International Ltd. 80,000 400,000 46299D22
Jurong Cement Ltd. 41,750 163,530 48299792
Kay Hian James Capel
Holding (For. Reg.) 267,400 389,808 48699B22
Keppel Finance Ltd. 1,848,000 3,033,843 49299D22
Kim Engineering Holdings Ltd. 2,776,000 3,460,534 49499D92
Malayan Credit Ltd. 150,000 394,415 56099092
Overseas Union Trust Ltd. (For. Reg.) 712,000 2,260,166 69499B23
Parkway Holdings Ltd. 100,000 247,956 70199192
Sal Industrial Leasing Ltd. 200,000 162,126 81499792
Sembawang Maritime Ltd. 130,000 624,319 81799592
Singapore Finance Ltd. 226,000 409,510 41499722
Singapore Finance Ltd. (warrants) (a) 2,351,400 2,338,585 41499725
Tat Lee Finance Ltd. 576,000 1,169,263 87699E22
Tat Lee Finance Ltd. (warrants) (a) 300,000 237,057 87699E23
Transmarco Ltd. 907,000 3,985,113 89499492
Van Der Horst Ltd. (a) 957,000 4,302,586 92099C22
29,939,743
SHARES VALUE (NOTE 1)
SOUTH AFRICA - 0.7%
Anglovaal Ltd. Class N (e) 102,000 $ 3,091,620 03599723
Cashbuild Ltd. 10,000 37,267 14799622
First National Bank Holdings Ltd. 50,000 254,659 99599F22
Genbel Investments Ltd. Ord. 100,000 236,025 36867310
ISCOR Ltd. 404,800 470,673 46499C22
Nedcor Ltd. 30,000 244,100 00099E22
Pepkor Ltd. 320,000 1,868,323 71335092
Sasol Ltd. 421,800 3,720,225 80386610
Sentrachem Ltd. 150,000 559,007 81799J22
Sappi Ltd. 150,000 2,515,529 82799B92
South African Breweries Ltd. ADR 5,000 116,250 83621620
South African Brewers Ltd. 22,529 526,143 83621692
Southern Life Association Ltd., The 10,000 81,988 84399H22
Standard Bank Investment Corp. 5,000 127,950 85399A22
13,849,759
SRI LANKA - 0.3%
Aitken Spence & Co. Ltd. 95,000 717,432 00999F22
Asia Capital Ltd. (a) 903,100 592,027 04499D22
Blue Diamond Jewelry
Worldwide Ltd. (a) 443,630 362,943 09599222
Blue Diamond Jewelry
Worldwide Ltd. (rights) (a) 80,660 23,689 09599223
Development Finance Corp. of Ceylon (a) 157,866 1,837,961 25199C92
John Keells Holdings Ltd. GDR (a) 86,500 537,110 44499822
John Keells Holdings Ltd. (a) 15,000 176,250 48730292
Kelani Tyres Ltd. (Loc. Reg.) (a) 114,100 144,809 48799N22
Lanka Tiles Ltd. (a) 181,100 332,416 51599722
Lanka Ceramic Ltd. (a) 101,300 204,003 51599922
National Development Bank 100,800 934,626 63599B22
Sampath Bank Ltd. (a) 90,000 99,119 79599N22
Vanik, Inc. Ltd. (a) 38,400 63,638 92199E22
6,026,023
TAIWAN (FREE CHINA) - 0.2%
Hocheng Corp. GDR (a) (e) 12,800 355,200 43414110
Shanghai Tyre & Rubber Class B
shares (a) 150,000 87,000 84599R22
Taiwan Fund, Inc. 55,500 1,526,250 87403610
Yageo Corp. GDR (a) (e) 44,000 913,000 98432610
2,881,450
THAILAND - 11.7%
Advanced Information Services
(Loc. Reg.) 143,000 2,478,675 00799792
(For. Reg.) 241,200 4,258,236 00799793
Bangkok Bank Ltd. 2,435,400 26,383,589 06099210
Bank of Ayudhya PCL (For. Reg.) 2,000,000 7,824,100 05999998
Bank of Asia PCL:
(Loc. Reg.) 780,600 2,129,789 06199D22
(For. Reg.) 4,483,800 12,233,600 06199D23
Bangkok Metropolitan Bank
PLC (For. Reg.) 5,153,600 6,875,469 06199E23
Ban Pu Coal (For. Reg.) 542,000 13,744,090 06199593
Berli Jucker PCL 5,000 18,858 08499F23
Electricity Generating Authority
of Thailand (e) 614,000 547,074 28599C23
Finance One PCL:
(For. Reg) 50,000 1,011,114 31799E93
(warrants) (For. Reg.) (a) 2,720 26,193 31799E96
First Bangkok City Bank PCL (For. Reg.) 231,200 222,639 31899D93
General Engineering Ltd. (a) 20,000 58,179 36999D23
Hana Microelectronics Co. Ltd. (For. Reg.) 223,200 1,576,183 40999693
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
THAILAND - CONTINUED
Industrial Finance Corp.
(Loc. Reg.) (a) 4,000,000 $ 10,351,880 45799893
(For. Reg.) 5,743,500 14,864,006 45799896
International Broadcasting
Corp. (For. Reg.) 20,000 150,062 45999E93
Kiatnakin Finance & Securities PCL
(For. Reg.) 12,000 67,408 49699794
Kiatnakin Finance & Securities PCL (a) 36,000 189,945 49699797
Krung Thai Bank:
(Loc. Reg.) 5,500,000 18,757,750 50599292
(For. Reg.) 5,492,300 18,731,489 50599293
Lanna Lignite PCL (For. Reg.) 10,000 136,420 51599A23
Loxley PCL:
(Loc. Reg.) 84,200 1,608,121 54899522
(For. Reg.) 100,000 1,909,882 54899523
Nithipat Capital PCL (Loc. Reg.) 100,000 750,311 67399922
Nithipat Capital PCL (a) 70,000 525,218 67399923
OCC Co. (For. Reg.) (a) 46,500 139,931 68999593
Pacific Insurance PCL 66 358 69599L23
Phatra Thanakit PCL:
(For. Reg.) 4,200 43,478 71799593
(For. Reg.) (rights) (a) 16,800 167,171 71799595
Property Perfect Co. PCL (For. Reg.)
(warrants) (a) 4,444 16,761 74399F24
Quality Houses PCL (warrants) (a) 60,000 223,889 74799G25
Renown Leatherwears PCL (a) 295,600 1,755,359 75999K23
Safety Insurance PCL (For. Reg.) 179,200 427,813 79899393
Shinawatra Computer &
Communication PCL 10,000 311,359 94799192
Shinawatra Computer &
Communication PCL (For. Reg.) 20,000 622,718 94799193
Shinawatra Satellite PCL:
(Loc. Reg.) (a) 670,000 3,279,704 95199K22
(For. Reg.) (a) 180,000 881,114 95199K23
Siam Cement PCL (For. Reg.) 6,600 380,805 78799010
Siam City Bank PCL (For. Reg.) 8,046,300 11,380,365 81199593
Siam City Cement Co. Ltd. (For. Reg.) 218,560 4,700,404 82570798
Siam Commercial Bank PCL (For. Reg.) 100,000 1,035,188 78851090
Siam City Credit Finance &
Securities PCL (a) 220,000 2,418,649 82699D23
Siam Commercial Life
Assurance (For. Reg.) 215,100 440,159 82799293
Siam General Factoring PCL (For. Reg.) 25,000 114,352 82899C23
Siam Makro (For. Reg.) (a) 250,000 1,023,153 83099E23
S Khon Kaen Food Industry PCL
(For. Reg.) 30,700 99,775 56499F23
Swedish Motors Corp. PCL (For. Reg.) 128,400 783,083 87099593
Thai Farmers Bank PCL 2,909,400 25,681,827 90199010
Thai Military Bank Ltd. (For. Reg.) 2,005,900 9,336,141 90199989
Thai Wah Resorts Development PCL
(For. Reg.) (a) 400,000 413,272 91099E23
Thai Wah Food Products PCL (For. Reg.) 211,300 423,906 93699B23
Thai Reinsurance Co. Ltd. (For. Reg.) 120,000 390,001 93799D23
Thai German Ceramic Industry Co. Ltd.
(warrants) (a) 36,990 69,385 94699894
Tong Hua Communications PCL
(For. Reg.) 669,000 1,066,995 92199D23
TPI Polene Co. Ltd.:
(For. Reg.) 386,000 4,181,681 94799093
(rights) (a) 96,500 1,006,701 94799094
Tipco Asphalt PCL (Loc. Reg.) Ord. 20,000 163,704 95499592
United Communication Industry PCL:
(For. Reg.) 272,700 8,053,093 91399E23
(Loc. Reg.) 97,500 2,879,269 91399E22
231,341,843
SHARES VALUE (NOTE 1)
TURKEY - 0.1%
Adana Cimento (a) 127,710 $ 67,932 00699B92
Akcimento AS 100,000 162,377 00999H22
Alarko Holding 238,000 163,244 01199B22
Anadolu Anonim Turk Sigorta SK 3,000,000 419,940 03299J22
Arcelik AS 312,500 87,488 03999B22
Aygaz AS 250,000 47,593 05499822
Brisa Bridgestone Sabanci Lastik
San & Tic SA 500,000 95,185 10999822
Cimentas AS 760,000 489,372 17199G22
Cukurova Electrik AS (a) 85,000 16,657 22999192
Goodyear (a) 287,250 118,617 68999992
Guney Biraciliu (a) 498,800 198,991 40299792
Maret (a) 306,000 57,396 56899692
Medya Holdings AS Class C 100,000 5,039 58699922
Migros 50,000 113,384 59899C22
Sarkuysan Elektronik Bakir Sanayi AS 200,000 114,784 80499C22
Teletas (a) 120,000 31,915 87999C92
Turkiye Garanti Bankasi AS 1,400,000 333,158 90014892
Turkiye Garanti Bankasi AS:
ADR (e) 35,000 83,125
(New) 17,250 4,105 90014896
Turk Demir Dokum 115,999 17,212 90099A92
Turk Demir Dokum (New) 69,599 1,949 90099A95
USAS (Ucak Servisi Anonim Sirketi) 10,000 81,188 93899G22
2,710,651
UNITED KINGDOM - 0.0%
Cathay International Holdings PLC (a) 1,296,385 636,331 14999D22
UNITED STATES OF AMERICA - 0.1%
Capco Automotive Products Corp. (a) 168,600 2,086,425 13916810
VENEZUELA - 0.2%
CA Venepal GDR Class A ADR (a)(e) 2,864 8,950 12477610
Corimon SA CA sponsored ADR 16,700 167,000 21872820
Electricidad de Caracas 1,179,914 2,285,621 42799922
Mavesa SA sponsored ADR (e) 266,000 1,463,000 57771720
Venezolana de Prerreducidos Caroni
Venpreca CA GDR (e) 1,500 8,813 92264410
3,933,384
TOTAL COMMON STOCKS
(Cost $1,582,057,902) $ 1,847,969,444
NONCONVERTIBLE PREFERRED STOCKS - 0.2%
BRAZIL - 0.0%
COSIPA (Cia Siderurgica Paulista)
Class B (a) 194,000 590,385 13299622
KOREA (SOUTH) - 0.2%
Daelim Industrial Co. (a) 59,460 984,598 23699F23
Daewoo Heavy Industries Ltd. 2,300 27,150 23999494
Dongbu Steel Co. Ltd. 57,230 1,148,692 25799L23
Hyundai Motor Service Co. Ltd. (a) 39,000 1,443,267 42199424
Korea First Securities Co. Ltd. (a) 20,000 255,912 50099K23
Korea First Securities Co. Ltd. (New) (a) 2,060 29,770 50099K25
Kolon International Corp. (a) 20,000 303,581 73099423
4,192,970
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $6,443,627) 4,783,355
CLOSED-END INVESTMENT COMPANIES - 0.2%
SHARES VALUE
(NOTE 1)
CHILE -0.1%
Chile Fund, Inc. 47,556 $ 2,365,911 16883410
INDIA - 0.1%
Morgan Stanley India Investment Fund 50,000 700,000 61745C10
PHILIPPINES -0.0%
Private Development Corp. of
Philippines Class B (a) 200,000 265,274 74299B22
TOTAL CLOSED-END INVESTMENT COMPANIES
(Cost $2,919,528) 3,331,185
CORPORATE BONDS - 4.2%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
CONVERTIBLE BONDS - 4.2%
GRAND CAYMAN - 0.8%
Bank Of Asia PCL
3 3/4%, 2/09/04 - $ 2,500,000 2,425,000 06199GAA
Filinvest Cayman Islands Ltd.:
3 3/4%, 2/28/04 (e) - 4,000,000 3,360,000 317015AA
euro 3 3/4%, 2/28/04 (e) - 2,500,000 2,100,000 3170159A
Henderson Capital euro 4%
10/27/96 (e) - 2,050,000 2,003,875 4247309A
House of Investments
Cayman Island Ltd. 4%,
10/17/01 (e) - 3,000,000 2,947,500 44176PAA
JG Summit Cayman Ltd.
3 1/2%, 12/23/03 (e) - 3,050,000 2,371,375 466149AA
15,207,750
HONG KONG - 0.3%
Lai Fung Overseas Finance Ltd.
euro 5 1/4%, 2/5/98 (f) - 5,290,000 4,232,000 50699CAA
Regal International Ltd. euro
5 1/4%, 12/5/08 - 500,000 467,500 759991AB
4,699,500
INDIA - 0.7%
Ballarpur Industries Ltd.
4%, 4/1/99 - 500,000 557,500 0585889A
Essar Gujarat Ltd.
euro 5 1/2%, 8/5/98 - 1,940,000 3,860,600 296994AA
Gujarat Ambuja Cement Ltd.:
3 1/2%, 6/30/99 (e) - 190,000 336,300 402042AA
euro 3 1/2%, 6/30/99 - 2,000,000 3,540,000 4020429A
Jindal Strips Ltd. euro 4 1/4%
3/31/99 (e) - 460,000 598,000 642994AA
Nippon Denro Ispat Ltd.:
3%, 4/1/01 (e) - 2,535,000 2,066,025 654554AA
euro 3%, 4/1/01 (e) - 550,000 448,250 6545549A
Reliance Industries Ltd. euro
3 1/2%, 11/3/99 (e) - 200,000 268,000 7594709A
SCICI Ltd. euro 3 1/2%,
4/1/04 - 1,370,000 1,356,300 79599KAB
13,030,975
MALAYSIA - 0.8%
Arab Malyasian Finance BHD
7 1/2%, 12/31/99 - MYR 1,242,666 413,209 00699AAB
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
Land & General BHD 4 1/2%,
7/26/04 (e) - $ 4,000,000 $ 4,960,000 51462QAA
Renong BHD 2 1/2%,
1/15/05 (e) - 10,000,000 10,025,000 759883AA
15,398,209
MEXICO - 0.0%
Grupo Financiero Invermexico
7 1/2%, 6/16/01 (e) - 1,000,000 860,000 40048LAA
PAKISTAN - 0.0%
Dewan Salman Fibre Ltd. 5%,
5/5/01 - 1,000,000 890,000 25199MAA
PHILIPPINES - 0.0%
Bacnotan Consolidated
Industries, Inc. 5 1/2%,
6/21/04 (e) - 1,000,000 957,500 056395AA
TAIWAN (FREE CHINA) - 0.2%
Cheng Loong Ltd. 2 1/2%,
10/11/01 (e) - 1,000,000 960,000 16411PAA
Formosa Chemicals & Fibre
Corp. 1 3/4%, 7/19/01 - 475,000 446,500 3463979A
Kinpo Electronics, Inc.
euro 3%, 7/21/01 - 1,600,000 1,664,000 4971269A
Nan Ya Plastics Corp.
1 3/4%, 7/19/01 - 490,000 456,925 630995AA
Walsin Lihwa Corp.
3 1/4% 6/16/04 (e) - 1,000,000 1,002,500 933133AA
4,529,925
THAILAND - 1.4%
Asia Credit PCL:
3 3/4%, 11/17/03 (e) - 1,300,000 1,599,000 044909AA
euro 3 3/4%, 11/17/03 - 1,000,000 1,230,000 047994AA
CMIC Finance & Securities
PCL euro 3 1/2%,
11/8/03 - 1,500,000 1,878,750 125993AA
Dhana Siam Finance &
Securities PCL euro 4%,
10/6/03 - 300,000 675,000 242995AA
Kiatnakin Finance & Securities PCL
euro 4%, 11/30/03 - 1,000,000 990,000 496997AA
Phatra Thanakit PCL:
3 1/2%, 12/13/03 (e) - 3,000,000 4,087,500 717227AA
euro 3 1/2%, 12/13/03 - 4,420,000 6,022,250 717995AA
Siam Commercial Bank PCL
3 1/4%, 1/24/04 (e) - 1,000,000 927,500 825715AA
Siam Syntech Construction PCL
4 1/2%, 2/25/02 (e) - 500,000 305,000 825719AA
Somprasong Land & Development
PCL 3 7/8%, 1/21/04 euro - 3,000,000 2,160,000 83599CAA
Wall St. Finance and Securities
PCL 3 3/4%,
2/3/04 (e) - 480,000 319,200 93299BAB
Wattachak PCL euro 3 1/2%,
12/6/03 - 9,000,000 7,830,000 94299HAA
28,024,200
TOTAL CONVERTIBLE BONDS 83,598,059
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - 0.0%
THAILAND - 0.0%
Finance One 3 3/4%, 2/7/01 - THB 272 $ 10,914 31799EAA
Quality Houses PCL 5 3/4%,
1/01/00 - 6,000 1,810 74799GAB
Thai German Ceramic
Industry Co. Ltd. 3%, 7/08/99 - THB 411 164,908 946998AA
TOTAL NONCONVERTIBLE BONDS 177,632
TOTAL CORPORATE BONDS
(Cost $85,856,082) 83,775,691
INDEXED SECURITIES - 0.1%
UNITED STATES OF AMERICA - 0.1%
Salomon Brothers Holding
Company, Inc. note 6 1/2%,
10/7/96 (indexed to
common stock of
Yuganskneftegas, a Russian
joint-stock company) (d) 590,000 259,187 79599CAB
Salomon Brothers Holding
Company, Inc. note 6 1/2%,
10/7/96 (indexed
to common stock of
EAO Edinaya Energeticheskay
Saa Sistema Rosii, a
Russian joint-stock company)(d) 1,800,000 1,177,740 79599CAD
Salomon Brothers Holding
Company, Inc. note 6 1/2%,
10/17/96 (indexed to
common stock of
Komineft, a Russian
joint-stock company)(d) 670,000 264,784 79599CAE
TOTAL INDEXED SECURITIES
(Cost $3,060,000) 1,701,711
PURCHASED BANK DEBT - 0.1%
ECUADOR - 0.1%
Republic of Equador:
loan participation under
1983 and 1984 extension
and refinancing
agreements (a) 1,750,000 925,750 88399HAH
loan participation (a) 1,000,000 605,300 88399HAG
TOTAL PURCHASED BANK DEBT
(Cost $1,345,191) 1,531,050
REPURCHASE AGREEMENTS - 1.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 4.78% dated
10/31/94 due 11/1/94 $ 27,937,709 $ 27,934,000 99799N9L
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,709,616,330) $1,971,026,436
CURRENCY ABBREVIATIONS
MYR - Malaysian ringgit
THB - Thai baht
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. A summary of the transactions during
the period in which the issuers were affiliates is a follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Berjaya South Island BHD $ 588,464 $ - $ - $ 18,851,060
China First Pencil Co. Ltd.
Class B 168,612 - - 1,209,525
DG Kahn Cement Ltd. (a) 563,420 - 21,652 1,759,057
Mondragon International
Philippines, Inc. (a) 542,624 - - 1,871,956
North Borneo Timber BHD 1,161,326 297,882 8,110 14,577,770
Shanghai Hero Ltd.
Class B (a) 343,816 - - 963,749
Shanghai Refrigerator
Compressor Co.
Ltd. Class B 48,875 - - 1,157,055
Shanghai Vacuum Electron
Devices Co. Ltd. - - - 1,146,790
TOTALS $ 3,417,137 $ 297,882 $ 29,762 $ 41,536,962
(d) Restricted securities - Investment in securities not registered under
the Securities Act of 1933
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Salomon Brothers Holding
Company, Inc. note 6 1/2%,
10/7/96 (indexed to
common stock of
Yuganskneftegas, a Russian
joint-stock company) 9/9/94 79599CAB$ 590,000
Salomon Brothers Holding
Company, Inc. note 6 1/2%,
10/7/96 (indexed
to common stock of
EAO Edinaya Energeticheskay
Saa Sistema Rosii, a
Russian joint-stock company) 9/13/94 79599CAD 79599CAB 1,800,000
Salomon Brothers Holding
Company, Inc. note 6 1/2%,
10/17/96 (indexed to
common stock of
Komineft, a Russian
joint-stock company) 9/16/94 670,000
LEGEND - CONTINUED
(e) 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 $164,250,269 or 8.3% of net
assets.
(f) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
OTHER INFORMATION
At the end of the period, restricted securities (excluding 144A issues)
amounted to $1,701,711 or 0.1% of net assets (see Note 2 of Notes to
Financial Statements).
Purchases and sales of securities, other than short-term securities,
aggregated $2,726,100,583 and $1,619,121,214, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $52,584 for the period (see Note 5 of Notes to Financial
Statements).
The fund participated in the interfund lending program as a lender. The
maximum loan and the average daily loan balances during the period for
which loans were outstanding amounted to $31,339,000. The weighted average
interest rate was 4.075%. Interest earned from the interfund lending
program amounted to $2,996 and is included in interest income on the
Statement of Operations (see Note 2 of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
the average daily loan balances during the period for which loans were
outstanding amounted to $3,464,000. The weighted average interest rate was
3 7/8% (see Note 7 of Notes to Financial Statements).
INCOME TAX INFORMATION
At October 31, 1994, the aggregate cost of investment securities for income
tax purposes was $1,719,189,521. Net unrealized appreciation aggregated
$251,836,914, of which $335,373,375 related to appreciated investment
securities and $83,536,461 related to depreciated investment securities.
The fund hereby designates $8,760,524 as a capital gain dividend for the
purpose of the dividend paid deduction.
The fund has elected to defer to its tax fiscal year ending September 30,
1995 $19,417,143 of losses recognized during the period November 1, 1993 to
September 30, 1994.
For the period ended October 31, 1994, interest and dividends from foreign
countries were $23,612,062, or $0.23 per share. Taxes paid to foreign
countries were $1,067,117 or $0.01 per share.
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Investments (Unaudited)
Aerospace & Defense 0.1%
Basic Industries 15.6
Construction & Real Estate 13.9
Durables 4.9
Energy 3.6
Finance 22.8
Government Obligations 0.1
Health 0.5
Holding Companies 8.5
Industrial Machinery & Equipment 1.8
Media & Leisure 2.5
Nondurables 5.3
Precious Metals 0.1
Retail & Wholesale 3.0
Services 0.5
Repurchase Agreements 1.4
Technology 0.6
Transportation 2.2
Utilities 12.6
100.0%
EMERGING MARKETS
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $27,934,000) (cost $1,709,616,330) - $ 1,971,026,435
See accompanying schedule
Cash 1,988,411
Receivable for investments sold 42,692,960
Receivable for fund shares sold 9,879,924
Dividends receivable 1,601,347
Interest receivable 1,735,770
Redemption fees receivable 20,826
TOTAL ASSETS 2,028,945,673
LIABILITIES
Payable for investments purchased $ 34,040,496
Payable for fund shares redeemed 14,313,914
Accrued management fee 1,284,186
Other payables and accrued expenses 2,935,671
TOTAL LIABILITIES 52,574,267
NET ASSETS $ 1,976,371,406
Net Assets consist of:
Paid in capital $ 1,730,192,184
Undistributed net investment income 2,603,242
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (17,723,398)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 261,299,378
NET ASSETS, for 102,649,164 shares outstanding $ 1,976,371,406
NET ASSET VALUE and redemption price per share ($1,976,371,406 (divided by) 102,649,164 shares) $19.25
Maximum offering price per share (100/97.00 of $19.25) $19.85
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1994
INVESTMENT INCOME $ 20,031,945
Dividends (including $29,762 received from affiliated issuers)
Interest 12,257,512
32,289,457
Less foreign taxes withheld (1,067,117
)
TOTAL INCOME 31,222,340
EXPENSES
Management fee $ 12,659,735
Transfer agent
Fees 6,698,076
Redemption fees (336,508
)
Accounting fees and expenses 645,238
Non-interested trustees' compensation 9,755
Custodian fees and expenses 4,525,032
Registration fees 599,921
Audit 55,472
Legal 8,721
Interest 373
Miscellaneous 12,141
Total expenses before reductions 24,877,956
Expense reductions (2,803 24,875,153
)
NET INVESTMENT INCOME 6,347,187
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized gain of $242,990 on sales of investments in affiliated
issuers and net of (15,438,264
Brazilian IPMF tax of $474,544) )
Foreign currency transactions (2,996,213 (18,434,477
) )
Change in net unrealized appreciation (depreciation) on:
Investment securities 152,117,540
Assets and liabilities in foreign currencies (110,727 152,006,813
)
NET GAIN (LOSS) 133,572,336
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 139,919,523
OTHER INFORMATION $2,416,374
Sales charges paid to FDC
Accounting fees paid to FSC $641,914
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1994 1993
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 6,347,187 $ 630,663
Net investment income
Net realized gain (loss) (18,434,477) (387,679)
Change in net unrealized appreciation (depreciation) 152,006,813 109,236,178
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 139,919,523 109,479,162
Distributions to shareholders: (2,588,073) (101,676)
From net investment income
In excess of net investment income (549,335) -
From net realized gain - (191,171)
TOTAL DISTRIBUTIONS (3,137,408) (292,847)
Share transactions 2,784,381,422 671,166,140
Net proceeds from sales of shares
Reinvestment of distributions 3,076,294 282,611
Cost of shares redeemed (1,715,598,654) (36,857,488)
Redemption fees 9,993,085 227,559
Net increase (decrease) in net assets resulting from share transactions 1,081,852,147 634,818,822
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,218,634,262 744,005,137
NET ASSETS
Beginning of period 757,737,144 13,732,007
End of period (including undistributed net investment income of $2,603,242 and $628,805,
respectively) $ 1,976,371,406 $ 757,737,144
OTHER INFORMATION
Shares
Sold 151,470,579 48,273,320
Issued in reinvestment of distributions 178,437 26,476
Redeemed (95,823,026) (2,719,187)
Net increase (decrease) 55,825,990 45,580,609
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31, NOVEMBER 1, 1990
(COMMENCEMENT
OF
OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.18 $ 11.05 $ 10.40 $ 10.00
Income from Investment Operations
Net investment income .06 .06 C .08 .12
Net realized and unrealized gain (loss) 2.97 5.28 .76 .30
Total from investment operations 3.03 5.34 .84 .42
Less Distributions (.04) (.08) (.08) (.04)
From net investment income
In excess of net investment income (.01) - - -
From net realized gain - (.15) (.14) -
Total distributions (.05) (.23) (.22) (.04)
Redemption fees added to paid in capital .09 .02 .03 .02
Net asset value, end of period $ 19.25 $ 16.18 $ 11.05 $ 10.40
TOTAL RETURN A, B 19.32% 49.58% 8.56% 4.41%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,976,371 $ 757,737 $ 13,732 $ 6,450
Ratio of expenses to average net assets 1.52% 1.91% 2.60% D 2.60% D
Ratio of net investment income to average net assets .39% .44% .90% 1.34%
Portfolio turnover rate 107% 57% 159% 45%
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
</TABLE>
LATIN AMERICA
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
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (income) and capital gains (the profits the
fund earns when it sells stocks that have grown in value). Latin America
Fund has a 3% sales charge, which had been waived since the fund's start on
April 19, 1993 through May 31, 1994.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED PAST 1 LIFE OF
OCTOBER 31, 1994 YEAR FUND
LATIN AMERICA 22.89% 63.19%
LATIN AMERICA (INCL. 3% SALES CHARGE) 19.20% 58.30%
Morgan Stanley Latin America Free Index 46.22% 80.06%
Average Latin America Fund 30.56% n/a
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
April 19, 1993. You can compare the fund's figures to the performance of
the Morgan Stanley Latin America Free index, a broad measure of the
performance of stocks in Latin American markets weighted by each country's
market capitalization (or the total value of the shares outstanding). You
can also compare the fund's performance to the average Latin American fund,
which currently reflects the performance of nine funds with similar
objectives - in this case, a very small peer group - tracked by Lipper
Analytical Services. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIOD ENDED PAST 1 LIFE OF
OCTOBER 31, 1994 YEAR FUND
LATIN AMERICA 22.89% 37.53%
LATIN AMERICA (INCL. 3% SALES CHARGE) 19.20% 34.83%
Morgan Stanley Latin America Free Index 46.22% 46.61%
Average Latin American Fund 30.56% n/a
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
Fidelity Latin America FuMorgan Stanley EMF
04/19/93 9700.00 10000.00
04/30/93 9641.80 9568.13
05/31/93 9874.60 9818.14
06/30/93 10379.00 10436.73
07/31/93 10737.90 10716.71
08/31/93 11746.70 11640.43
09/30/93 11960.10 11844.71
10/31/93 12881.60 12314.07
11/30/93 13861.30 13120.91
12/31/93 15722.23 14784.37
01/31/94 16981.96 17217.49
02/28/94 16093.31 16719.16
03/31/94 14462.50 15584.66
04/30/94 13437.14 14395.32
05/31/94 14169.54 15245.68
06/30/94 12851.21 14269.20
07/31/94 14042.59 15621.61
08/31/94 16132.37 18162.47
09/30/94 16679.23 18941.58
10/31/94 15829.65 18005.81
Let's say you invested $10,000 in Fidelity Latin America Fund on its start
date and paid the 3% sales charge. By October 31, 1994, it would have grown
to $15,830 - a 58.30% increase on your initial investment. That compares to
$10,000 invested in the Morgan Stanley Latin America Free index, which
would have grown to $18,006 over the same period - a 80.06% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
(checkmark)
LATIN AMERICA
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Patti Satterthwaite,
Portfolio Manager of Fidelity Latin America Fund
Q. PATTI, HOW HAS THE FUND PERFORMED?
A. The Latin American investment environment continues to be volatile. The
fund's total return for the 12 months ended October 31, 1994, was 22.89%.
That trailed the average Latin America fund, which returned 30.56% during
the same time period, according to Lipper Analytical Services. The fund
also lagged the Morgan Stanley Latin America Free index, which returned
46.22%.
Q. WHY HAS THE FUND TRAILED THE INDEX OVER THE PAST
12 MONTHS?
A. There are three key reasons why the fund underperformed the index and
its peer group average. First, although the fund's stake in Brazil totaled
roughly 29% by the end of October, it was significantly lower than that -
and lower than the index weighting - through the first half of the period.
This is important because Brazil was one of the top performing markets in
the world over the past 12 months - up more than 100% in U.S. dollars.
Second, the fund had more than 19.1% stake in Latin American bonds a year
ago. I bought these bonds not only because I felt they offered excellent
value, but also to help give the fund flexibility. However, when interest
rates rose sharply in the U.S., both Latin American stocks - and to a
greater extent, bonds - suffered corrections. That resulted in significant
shareholder redemptions in February and March, and I sold these bonds in a
falling market. In fact, heavy inflows and outflows of cash is the third
key to the fund's underperformance relative to the index. Rapid shifts in
the fund's assets can disrupt long-term investment strategies because the
fund is often forced to buy or sell stocks and bonds when market conditions
are negative.
Q. HOW DO YOU THINK CASH FLOWS WILL AFFECT THE FUND
GOING FORWARD?
A. The fund's performance actually was quite volatile during the month of
October yet there were not many redemptions. I think since the days when
international mutual funds were first introduced, investors have become
more savvy and better educated about the risks and rewards in these
markets. It may be that investors realize that a long-term investment
approach is necessary in these types of funds. Going forward, I don't see
cash flows having as significant of an impact on performance. As the size
of the fund continues to grow, I believe that redemption issues will become
less significant.
Q. WHY DIDN'T YOU HAVE MORE OF THE FUND INVESTED IN BRAZIL SINCE THAT
MARKET DID SO WELL?
A. The answer again ties in with managing the fund's shifting assets. Early
in the year when assets surged, I had concerns about the liquidity of
Brazilian stocks, meaning how frequently they are bought and sold. As it
turned out, I feel that I made the right decision. Given the magnitude of
redemptions the fund experienced from February through April - the months
during which the fund's performance suffered most - it would not have been
prudent to have been heavily invested in Brazil. However, as the year went
on, I gained more confidence in the stability of the Brazilian economy and
the liquidity of its stock market. I then felt more comfortable increasing
the fund's investments, and the fund did participate more fully in large,
upward moves in the Brazilian market over the summer.
Q. WHY WAS THE BRAZILIAN MARKET UP SO MUCH?
A. Brazil implemented an economic plan to reduce inflation that was very
successful. This helped elect the reform candidate Fernando Henrique
Cardoso, to the country's presidency in October 1994. During the election,
inflation fell to historically low levels and the market rallied. The fact
that many companies in Brazil are likely candidates for privatization also
had a positive impact on the market because privatization can lead to
profitability and growth. These types of stocks currently account for about
half of the fund's investment in Brazil.
Q. HOW DID SOME OF THE FUND'S LARGEST STOCK INVESTMENTS PERFORM?
A. My individual stock selections were very good. Two of the fund's Mexican
investments, which are currently the top two holdings in the fund, had
strong performance. Cemex - a building materials company - returned 18.9%
and Grupo Carso - a large conglomerate - returned 38% for the 12 months
ending October 31, 1994. This compares to a 12.7% return for the Mexican
stock market during the same time period. By the end of October, Grupo
Carso represented 4% of the fund's investments and Cemex, 3.7%.
Q. WHAT ARE THE FUND'S LARGEST COUNTRY ALLOCATIONS?
A. The largest is Mexico - about 40% of the fund at the end of October. As
I mentioned earlier, Brazil accounts for 29% while the next largest
allocation is Argentina, at 12.5%. One reason why the fund has its largest
stake in Mexico is that Mexican stocks are among the most frequently traded
in Latin America. That, again, helped give the fund flexibility in a period
of volatility. In addition, I felt that there were a lot of attractively
valued stocks in Mexico.
Q. WHAT IS YOUR OUTLOOK FOR MEXICO?
A. This has been a difficult year for Mexico. In January, the Chiapas
peasants staged a rebellion. Then popular presidential candidate Colosio
was assassinated, adding uncertainty to the August elections. In addition,
the Mexican peso remained weak relative to other currencies. All of these
situations caused the market to underperform. Now that those events have
passed, I think the economic and political climates have improved. Over the
past year, many of the fund's Mexican stocks delivered excellent
performance and my expectations going forward are positive.
Q. WHAT ARE YOUR VIEWS GOING FORWARD ON LATIN AMERICA?
A. After the spectacular returns experienced in the Latin American markets
in 1993, my belief is that 1994 was a year of consolidation. This
geographical area created a lot of headlines with important elections in
Mexico, Brazil and Colombia that have resulted in positive economic news
and new political climates. Moving into 1995, the focus will turn to the
political and economic agendas of these newly elected leaders and how
effective they are at implementing their plans. Overall, I think these new
leaders will act upon their election promises which should produce
enthusiasm in the stock and bond markets of these countries.
FUND FACTS
GOAL: to increase the value of the fund's
shares by investing mainly in Latin American
securities.
START DATE: April 19, 1993
SIZE: as of October 31, 1994, more than
$888 million
MANAGER: Patti Satterthwaite, since April
1993; assistant manager, Latin American
portion of Fidelity Emerging Markets Fund,
since 1990; securities and Latin American
analyst, 1986-1990; joined Fidelity in 1986.
(checkmark)
PATTI SATTERTHWAITE'S 1995 OUTLOOK:
"As far as my investment strategy, I'm focusing on
medium-sized companies because in many cases
they offer the best value. I will continue to the use the
"bottom-up" approach - picking stocks on the merits
of individual companies, rather than choosing
industries or countries first. Similar to 1994, I think that
the highest risks and rewards in the coming year will
be in Brazil. Although I plan to invest in this country
more fully than in the past year, my basic approach to
investing in Brazil most likely will remain somewhat
cautious."
(solid bullet) As of October 31, 1994, the fund had stock
investments in the following countries from highest to
lowest, based on the percentage of net assets
invested: Mexico, Brazil, Argentina, Chile, Peru,
Panama, Colombia, and Ecuador.
(solid bullet) Despite political and economical uncertainties,
operating profits in Mexico have grown 15% as of
October 31, 1994. The fund's investments in Mexico,
such as Cemex and Grupo Carso, were star
performers as a result of improving earnings.
(solid bullet) Although Chile's market index returned roughly
79.29% for the 12 months ended on October 31, the
fund had 4.9% of its assets invested in this country.
This is because Chile restricts the ability of investors
to remove money from its stock market.
LATIN AMERICA
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION
AS OF OCTOBER 31, 1994
United States 6.7%
Argentina 12.5%
Row: 1, Col: 1, Value: 6.7
Row: 1, Col: 2, Value: 7.1
Row: 1, Col: 3, Value: 39.8
Row: 1, Col: 4, Value: 4.9
Row: 1, Col: 5, Value: 29.0
Row: 1, Col: 6, Value: 12.5
Other 7.1%
Brazil 29.0%
Mexico 39.8%
Chile 4.9%
AS OF APRIL 30, 1994
United States 9.1%
Row: 1, Col: 1, Value: 9.1
Row: 1, Col: 2, Value: 2.5
Row: 1, Col: 3, Value: 3.9
Row: 1, Col: 4, Value: 42.9
Row: 1, Col: 5, Value: 4.9
Row: 1, Col: 6, Value: 18.3
Row: 1, Col: 7, Value: 18.4
Panama 2.5%
Argentina 18.4%
Other 3.8%
Brazil 18.5%
Mexico 42.8%
Chile 4.9%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks and closed-end
investment companies 90.8 84.7
Bonds 3.1 5.1
Short-term investments 6.1 10.2
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Grupo Carso SA de CV Class A-1
(Mexico, Holding Companies) 4.0 4.8
Cemex SA, Series B
(Mexico, Building Materials) 3.7 3.0
Telebras PN (Pfd. Reg.)
(Brazil, Telephone Services) 3.5 1.6
Telefonos de Mexico SA sponsored
ADR representing shares Ord. Class L
(Mexico, Telephone Services) 3.4 3.4
Compania Siderurgica National
(Brazil, Iron & Steel) 2.8 2.1
Tolmex SA Class B2
(Mexico, Building Materials) 2.3 1.9
Telesp PN (Pfd. Reg.)
(Brazil, Telephone Services) 2.1 1.6
Grupo Sidek SA de CV Class B Ord.
(Mexico, Holding Companies) 2.1 2.6
BANACCI SA de CV Class C
(Mexico, Banks) 2.0 2.3
Compania Vale do Rao Doce PN Ord.
(Brazil, Metals & Mining) 1.9 -
TOP TEN INDUSTRIES
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Utilities 21.0 17.3
Basic Industries 15.5 11.8
Nondurables 10.7 11.8
Finance 10.5 21.1
Construction & Real Estate 10.1 8.4
Holding Companies 7.1 -
Durables 4.7 3.9
Energy 4.5 5.1
Retail & Wholesale 4.5 4.7
Media & Leisure 2.5 2.5
LATIN AMERICA
INVESTMENTS OCTOBER 31, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.4%
SHARES VALUE (NOTE 1)
ARGENTINA - 12.1%
Astra Comp Argentina de Petroleum
(Reg.) 2,865,800 $ 6,022,292 04699B94
Bagley Y Cia Ltd. SA Class B (Reg.) 440,119 1,761,092 05699C23
Banco de Galicia Y Buenos Aires SA
sponsored ADR representing
Class B shares 181,075 4,889,025 05953820
Banco del Sud SA 169,700 2,376,632 05957M92
Banco del Sud SA (rights) 169,700 2 05957M93
Banco Frances del Rio de la Prata
SA (Reg.) 576,800 4,904,519 21199692
Buenos Aires Embotelladora SA
sponsored ADR 144,100 5,529,838 11942420
Capex SA Class A (a) (c) 100,000 970,340 13961293
Central Costanera SA ADR (c) 130,200 4,475,625 15324M10
Central Puerto SA ADR (c) 28,800 928,800 15503810
Citicorp Equity Investment Class B 146,700 719,082 17399P22
Commercial del Plata 1,804,580 6,083,564 20199392
Interamericania de Auto Ord. 741,423 10,346,469 26899722
Mirgor Sacifia Class C sponsored
ADR (c) 245,710 2,180,676 60470110
Molinos Rio de La Plata SA (Reg.) (a) 1,123,273 9,809,611 60899C22
Perez Companc Class B 2,594,225 14,013,718 71399723
Telecom Argentina Stet France
Telecom SA 1,915,200 11,648,495 90899992
Telefonica de Argentina SA Class B 1,478,900 9,128,007 87999D92
Transportadora de Gas Del Sur SA:
Class B 95,000 227,130 89387092
Class B (c) 185,000 434,902 89387093
YPF Sociedad Anonima sponsored
ADR representing Class D shares 502,400 12,120,400 98424510
108,570,219
BRAZIL - 27.7%
Acesita Cia Acos Especiais Itabira Ord. 52,245,900 4,949,254 00499L22
Aracruz Celulose SA ADR (a) 319,350 4,071,713 03849610
Bradesco PN 1,056,290,428 9,881,224 10599992
Brahma (Cia Cervejaria):
PN Class B (Pfd. Reg.) 30,428,254 10,701,233 15799492
ON (warrants) (a) 1,510,428 134,156 15799494
PN (warrants) (a) 117,827 4,327 15799498
Brasmotor PN 24,800,100 10,278,401 10599892
BR Petrobras Distribuidora PN (Pfd. Reg.) 3,000 170 11299622
Casa Anglo PN Ord. (a) 3,192,269 831,618 13599392
Celesc PN Class B Ord. (a) 5,371,000 5,723,928 15199E22
CESP (Cia Energetica de Sao Paulo) PN 480,000 794,015 20440P92
Companhia Paran de Energetica-Copel 75,341,200 747,385 20441B92
Compania Siderurgica Nacional 545,390,000 25,057,587 24499523
Compania Energertica Minas Gerais 35,874,400 3,653,449 15199992
Compania Paulista de Forca Luz Ord. 66,873,597 5,939,044 20499922
Compania Vale do Rao Doce PN Ord. 76,855,500 16,654,300 20499792
Copene Petroquimica do Nordeste SA 2,070,000 1,936,402 21799722
Coteminas PN 22,725,310 9,687,345 22199692
Duratex Corp. PN 19,017,000 1,396,228 26699493
Electrobras PN Class B 38,294,010 14,646,316 69699993
Electrobras ON 2,700,000 1,073,736 69699998
Fertilizantes Fosfatados PN 73,365,200 477,607 65599N22
Iochpe Maxion PN Ord. 3,075,311 2,130,329 46199F22
Itaubanco PN (Pfd. Reg.) 10,602,500 3,402,342 46599A92
Klabin Industriade Papel e Celulose PN 2,260,932 3,962,329 45599A22
Light Servicos de Electricidade SA Ord. 27,989,900 10,871,277 53299892
Lojas Americanas 24,000,000 738,960 54199A93
Marco Polo PN Ord. Class B 4,052,000 1,007,611 56699692
Moinho Santista-Industrias
Gerais SA Ord. (a) 610,700 2,386,396 60899F22
Papel Simao, Industries De SA PN 24,340,000 1,224,926 69899792
Petrobras PN (Pfd. Reg.) 105,664,500 16,265,984 71699794
SHARES VALUE (NOTE 1)
Sadia Concordia PN (Pfd. Reg.) 230,000 $ 349,970 78699B93
Souza Cruz Industria Comerico 28,000 265,246 84599D92
Telebras
ON 250,462,800 10,173,771 95499795
PN (Pfd. Reg.) 649,874,297 31,317,442 95499792
Telepar PN 7,029,944 2,580,552 87999F22
Telecomunicacoes do
Rio Janeiro PN (rights) (a) 117,541 1 87999N24
Telerj SA PN 1,747,000 114,184 87999N22
Telesp PN (Pfd. Reg.) 37,741,300 19,217,115 87999B93
Telesp ON 290,000 144,229 87999B98
Telesp PN (rights) (a) 562,419 6,187 90999C24
Unibanco PN 59,279,808 1,874,428 90599A94
Usinimas PN ADS (a)(c) 66,600 1,115,550 91730210
Usiminas PN (Pfd. Reg.) 5,691,711,900 9,368,241 97199693
Vidraria Santa Marina Cia 179,600 1,010,184 92699992
248,166,692
CANADA - 0.0%
Bolivar Goldfields Ltd. (a) 51,750 82,213 09760Q10
CHILE - 4.6%
Chilgener SA sponsored ADR 42,000 1,186,500 16889410
Compania Cervecerias Unidas SA ADR 504,600 13,434,975 20442910
Compania de Telefonos de Chile SA
sponsored ADR (a) 100 9,413 20444920
Cristalerias de Chile SA sponsored ADR 124,700 2,681,050 22671410
Embotelladora Andina SA sponsored
ADR 33,200 917,150 29081P10
Empresa Nacional de Electricidad SA 93,000 2,615,625 29244T10
Empresas Telex Chile SA
sponsored ADR (a) 75,400 1,385,475 29245D10
Enersis SA sponsored ADR 273,300 8,028,188 29274F10
Madeco SA ADR 123,000 3,843,750 55630410
Maderas Y Sinteticos SA sponsored ADR 111,400 3,119,200 55646510
Soc. Quimica y Minera de Chile ADR 103,300 3,499,288 83363510
Vina Concha y Toro SA sponsored
ADR (a) 24,100 430,788 92719110
41,151,402
COLOMBIA - 1.1%
Banco Ganadero SA ADR (a) (c) 81,800 2,392,650 05959410
Carulla & CIA SA Class B sponsored
ADR (a) (c) 88,200 1,323,000 14679410
Cementos Diamante SA Class B
ADR (a) (c) 25,000 575,000 15126110
Cementos Paz del Rio sponsored
ADR (a) (c) 122,000 2,989,000 15126410
Compania Nacional de Chocolates 96,000 1,031,642 20499E22
Suramericana de Seguros SA 63,250 1,427,374 91499J22
9,738,666
LUXEMBOURG - 0.5%
Quilmes Industries SA 155,550 4,083,188 74899692
MEXICO - 39.5%
Altos Hornos de Mexico SA
(AHAMSA) (a) 90,000 458,115 02206992
BANACCI SA de CV:
Class C 2,625,100 18,019,894 06399893
Class B 404,100 2,468,324 06399896
Bufete Industrial SA de CV sponsored
ADR representing 3 ordinary
certificates Banco 90,200 3,653,100 11942H10
Cementos Apasco SA de CV Class A 1,040,300 9,682,842 15299392
Cemex SA, Series B 3,585,113 33,056,463 15299293
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEXICO - CONTINUED
Cifra SA Class C 5,516,700 $ 14,858,845 17178594
Consorcio G Grupo Dina SA ADR 120,200 1,547,575 21030610
Corporacion Geo SA de CV Class B
sponsored ADR (a) (c) 25,000 675,000 21986V10
Corporaction Geo SA de CV (a) 286,640 1,959,290 21986V92
DESC (Soc. de Fomento Industrial SA)
Class B 1,508,700 11,146,306 25299692
Class C 554,648 3,839,623 25299693
Empaques Ponderosa SA Class B Ord. 190,600 767,279 29157892
Empresas Ica Sociedad Controladora SA
de CV sponsored ADR representing
Ord. (Part. Cert). 406,600 12,045,525 29244810
Emvasa del Valle de Enah Ord. (a) 2,243,600 10,702,466 29299E22
Farmacia Benevides SA de CV Ord. 1,698,700 6,324,413 31299422
Fomento Economico Mexicano SA
(FEMSA) Class B 1,343,000 5,898,577 34441892
Fondo Opcion SA de CV Class 2,
Series B (a) 142,000 358,510 34499892
Gruma SA Class B (a) 461,800 3,102,843 40013192
Grupo Casa Autrey SA sponsored ADR 60,000 1,830,000 40048P10
Grupo Carso SA de CV Class A-1 (a) 3,360,100 35,721,828 40099594
Grupo Dina Sponsored ADR, Series L (a) 43,326 438,676 21030620
Grupo Elektra SA 272,500 3,055,518 62799425
Grupo Embotellador de Mexico SA GDR 363,500 9,223,813 40048J30
Grupo Financiero Bancomer SA
de CV sponsored ADR, Series C (c) 360,300 8,286,900 40048610
Grupo Financiero Banorte SA
Class C Ord. 1,190,000 5,808,081 40099H22
Grupo Financiero GBM Atantico SA
de CV sponsored ADR (c) 139,000 2,675,750 40048F10
Grupo Financiero Inbursa SA:
Class B (a) 318,200 1,260,584 44499923
Class C (a) 1,018,800 4,385,761 44499922
Groupo Financiero Serfin SA
sponsored ADR 226,100 4,013,275 40049A10
Grupo Industrial Alfa SA Class A 240,000 3,280,978 44499692
Grupo Industrial Bimbo SA de CV
Ord., Series A 311,765 2,530,029 60899995
Grupo Industrial Maseca SA de CV
Class B 909,500 1,481,439 57899894
Grupo Iusacell SA:
Class D ADR (a) 9,200 257,600 40049W20
Class L ADR (a) 21,400 658,050 40049W30
Grupo Mexicano de Desarrollo SA
Class L ADR (a) 195,769 3,964,322 40048G20
Grupo Posadas SA de CV Ord. (a) 1,520,000 1,494,358 40048993
Grupo Radio Centro SA de CV
sponsored ADR 118,700 2,003,063 40049C10
Grupo Sidek SA de CV:
Class B Ord. 4,337,700 18,546,877 40099F22
Class L 102,772 442,416 40099F25
Grupo Simec SA de CV ADR (a) 146,400 3,623,400 40049110
Grupo Situr SA de CV Class B (a) 3,841,545 11,620,712 40049292
Grupo Televisa SA de CV 58,500 1,293,194 40049J97
Grupo Televisa SA de CV GDS (c) 110,100 4,885,688 40049J20
Grupo Tribasa SA de CV
sponsored ADR (a) 19,472 610,934 40049F10
Herdez SA de CV Class A 1,567,900 1,368,150 42799F22
Hylsamex SA sponsored ADR (c) 80,325 1,726,988 44891910
Kimberly Clark de Mexico SA Class A 385,800 7,653,157 49499392
SHARES VALUE (NOTE 1)
Sanluis Corp. Ord., Series A-2 488,200 $ 5,353,445 21987020
Sears Roebuck de Mexico SA de CV (a) 638,900 7,489,141 81240K92
Servicios Financieros Quadrum SA
sponsored ADR (a) 21,700 314,650 81763810
Sigma Alimentos Class B (a) (c) 28,400 487,376 80599G23
Telefonos de Mexico SA sponsored ADR
representing shares Ord. Class L 544,500 30,015,563 87940378
Tolmex SA Class B2 1,400,900 20,373,765 94399492
Transportacion Maritima Mexicana
SA de CV:
Class A 104,500 735,573 94899592
Class L 36,000 294,241 94899593
ADR representing L share 87,100 696,800 89386820
Vitro SA sponsored ADR 78,900 1,627,313 92850230
Vitro SA 221,200 1,547,372 92850292
353,641,770
PANAMA - 1.9%
Banco Latino Americano de Exportaciones
SA Class E 159,900 5,936,288 06199A92
Panamerican Beverages, Inc. CLass A 332,600 11,474,700 69829W10
17,410,988
PERU - 2.0%
Banco Wiese Ltd. 147,810 777,423 05999T22
Banco Wiese sponsored ADR 48,000 1,020,000 05965110
Banco de Credito del Peru Class T 1,797,908 4,267,460 06899B22
Cementos Lima SA Class C (c) 1,100 448,748 15199M22
Cementos No Pacasmayo Class T 8,400 31,466 15199N22
Compania Peruana Telefonos Class T 2,663,732 3,700,137 24499622
La Fabril SA Class T 759,903 1,451,825 50399B23
Minsur SA Class T (a) 123,893 1,461,987 60499F22
Southern Peru Copper Corp. Class T (a) 621,134 3,825,372 84399F22
Tele 2000 SA (a) 221,102 611,274 87999M22
17,595,692
UNITED STATES OF AMERICA - 0.6%
Capaco Automotive Products Corp. (a) 265,700 3,288,038 13916810
Duty Free International, Inc. 130,800 1,749,450 26708410
5,037,488
VENEZUELA - 0.4%
Electricidad de Caracas 717,109 1,401,547 42799922
Mavesa SA sponsored ADR (c) 334,266 1,838,463 57771720
3,240,010
TOTAL COMMON STOCKS
(Cost $716,728,135) 808,718,328
NONCONVERTIBLE PREFERRED STOCKS - 0.1%
BRAZIL - 0.1%
COSIPA (Cia Siderurgica Paulista) Class B (a)
(Cost $305,958) 194,000 590,385 13299622
CLOSED-END INVESTMENT COMPANIES - 0.3%
CHILE - 0.3%
Chile Fund, Inc.
(Cost $2,519,133) 52,456 2,609,686 16883410
CORPORATE BONDS - 0.2%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (B)
CONVERTIBLE BONDS - 0.1%
MEXICO - 0.1%
Grupo Financiero Invermexico
7 1/2%, 6/16/01 (c) -- $ 1,000,000 $ 860,000 40048LAA
NONCONVERTIBLE BONDS - 0.1%
MEXICO - 0.1%
Bancomer SA 9%
6/1/00 (c) Ba2 500,000 475,000 059682AA
First Mexican Acceptance Corp.
euro 10 3/4%, 9/15/96 - 500,000 495,780 321998AA
970,780
TOTAL CORPORATE BONDS
(Cost $1,984,625) 1,830,780
GOVERNMENT OBLIGATIONS (G) - 2.0%
ARGENTINA - 0.4%
Province of Cordoba
10%, 1/28/95 (f) - 775,002 761,439 74399HAC
Province of Chaco
11 7/8%, 9/10/97 (f) - 2,600,000 2,626,000 74399JAA
3,387,439
BRAZIL - 1.2%
Brazil Federative Republic
euro 6.0625%, 1/1/01 (d) B2 735,000 599,944 1057569E
Brazil Federative Republic euro
6 3/4%, 4/15/12 (d) - 5,000,000 3,100,000 1057569J
Minas Gerais State
(warrants) (a) (c) - 2,000 160,000 60251711
Siderurgica Brasileiras Inflation
Indexed 6%, 8/15/99 (e) - BRR 43,398,700 7,148,530 82599PAB
11,008,474
ECUADOR - 0.2%
Republic of Ecuador New Money
Bonds (Final) - 4,000,000 1,860,000 88399HAK
PANAMA - 0.2%
Republic of Panama (Final) - 2,500,000 1,412,500 6982999D
Republic of Panama 0%,
10/31/05 - 1,250,000 709,375 6982999C
2,121,875
TOTAL GOVERNMENT OBLIGATIONS
(Cost $17,508,757) 18,377,788
PURCHASED BANK DEBT - 0.8%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
ECUADOR - 0.5%
Republic of Equador:
loan participation under 1983
and 1984 extension and
refinancing agreements (a) $ 500,000 $ 264,500 88399HAH
loan participation (a) 3,500,000 2,118,550 88399HAA
loan participation (a) 2,500,000 1,453,250 88399HAB
consilidated (Final) (d) 1,000,000 605,300 88399HAG
4,441,600
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
PERU - 0.3%
Empressa de Electricidad
del Peru SA loan
participation 0% (a) $ 5,250,000 $ 2,926,875 28599BAA
TOTAL PURCHASED BANK DEBT
(Cost $7,799,914) 7,368,475
CERTIFICATES OF DEPOSIT - 0.1%
MEXICO - 0.1%
Ridgefield Investments Ltd. sub.
participating notes 0%, 2/2/95
(collateralized by Mexican
gov't securities) (c)(Cost $2,530,000) 3,660,000 690,276 76599AAB
REPURCHASE AGREEMENTS - 6.1%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations),
in a joint trading account
at 4.78% dated 10/31/94
due 11/1/94 $ 54,808,276 54,801,000 99799N9L
TOTAL INVESTMENTS IN SECURITIES - 100%
(Cost $804,177,522) $ 894,986,718
CURRENCY ABBREVIATIONS
BRR - Brazilian real
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $40,595,732 or 4.6% of net
assets.
(d) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(e) Principal amount shown is original face amount and does not reflect the
inflation adjustments.
(f) 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
Province of Cordoba
10%, 1/28/95 1/27/94 $ 775,002
Province of Chaco
11 7/8%, 9/10/97 3/9/94 $ 2,717,987
(g) Most foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
OTHER INFORMATION
At the end of the period, restricted securities (excluding 144A issues)
amounted to $3,387,439 or 0.4% of net assets (see Note 2 of Notes to
Financial Statements).
Purchases and sales of securities, other than short-term securities,
aggregated $985,500,129 and $538,575,368, respectively.
The following is a summary of the fund's written options activity:
AGGREGATE NUMBER OF FACE VALUE
CONTRACTS OF CONTRACTS
Call Options on Republic of Venezuela
Debt Conversion Bonds:
Outstanding at November 1, 1993 - $ -
Contracts opened 1 1,000,000
Contracts closed (1) (1,000,000
Outstanding at October 31, 1994 - -
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $57,533 for the period (see Note 5 of Notes to Financial
Statements).
The fund participated in the interfund lending program as a lender. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $17,304,000 and $13,788,143,
respectively. The weighted average interest rate was 3.66%. Interest earned
from the interfund lending program amounted to $ 9,814 and is included in
interest income on the Statement of Operations (see Note 2 of Notes to
Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
the average daily loan balances during the period for which loans were
outstanding amounted to $6,884,000. The weighted average interest rate was
4.0% (see Note 7 of Notes to Financial Statements).
INCOME TAX INFORMATION
At October 31, 1994, the aggregate cost of investment securities for income
tax purposes was $808,958,895. Net unrealized appreciation aggregated
$86,027,823, of which $133,857,244 related to appreciated investment
securities and $47,829,421 related to depreciated investment securities.
The fund hereby designates $333,391 as a capital gain dividend for the
purpose of the dividend paid deduction.
For the period, interest and dividends from foreign countries were
$12,598,034 or $0.23 per share. Taxes paid to foreign countries were
$306,026 or $0.01 per share.
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Investments (Unaudited)
Basic Industries 15.5%
Construction & Real Estate 10.1
Durables 4.7
Energy 4.5
Finance 10.5
Holding Companies 7.1
Government Obligations 2.6
Media & Leisure 2.5
Nondurables 10.7
Retail & Wholesale 4.5
Repurchase Agreements 6.1
Transportation 0.2
Utilities 21.0
100.0%
LATIN AMERICA
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $54,801,000) (cost $804,177,522) - $ 894,986,718
See accompanying schedule
Cash 826
Receivable for investments sold 7,432,481
Regular delivery
Delayed delivery 2,536,875
Receivable for fund shares sold 3,214,375
Dividends receivable 119,631
Interest receivable 265,757
Redemption fees receivable 8,788
Other receivables 2,971
TOTAL ASSETS 908,568,422
LIABILITIES
Payable for investments purchased $ 10,484,124
Payable for fund shares redeemed 7,798,291
Accrued management fee 597,105
Other payables and accrued expenses 1,158,921
TOTAL LIABILITIES 20,038,441
NET ASSETS $ 888,529,981
Net Assets consist of:
Paid in capital $ 793,347,450
Undistributed net investment income 2,630,483
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 1,799,868
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 90,752,180
NET ASSETS, for 54,817,130 shares outstanding $ 888,529,981
NET ASSET VALUE and redemption price per share ($888,529,981 (divided by) 54,817,130 shares) $16.21
Maximum offering price per share (100/97.00 of $16.21) $16.71
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1994
INVESTMENT INCOME $ 8,138,918
Dividends
Interest 7,382,789
15,521,707
Less foreign taxes withheld (306,026
)
TOTAL INCOME 15,215,681
EXPENSES
Management fee $ 6,050,004
Transfer agent 3,235,475
Fees
Redemption fees (223,359
)
Accounting fees and expenses 384,868
Non-interested trustees' compensation 4,691
Custodian fees and expenses 1,704,617
Registration fees 320,092
Audit 57,661
Legal 12,856
Interest 765
Miscellaneous 5,812
Total expenses before reductions 11,553,482
Expense reductions (7,604 11,545,878
)
NET INVESTMENT INCOME 3,669,803
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (net of Brazilian IPMF tax of $663,125) 3,109,836
Foreign currency transactions (818,697
)
Written options 21,000 2,312,139
Change in net unrealized appreciation (depreciation) on:
Investment securities 58,437,238
Assets and liabilities in foreign currencies (57,016 58,380,222
)
NET GAIN (LOSS) 60,692,361
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 64,362,164
OTHER INFORMATION $1,245,387
Sales charges paid to FDC
Accounting fees paid to FSC $382,374
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED APRIL 19, 1993
OCTOBER 31, (COMMENCEMENT
1994 OF OPERATIONS) TO
OCTOBER 31, 1993
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 3,669,803 $ 750,722
Net investment income
Net realized gain (loss) 2,312,139 1,877,469
Change in net unrealized appreciation (depreciation) 58,380,222 32,371,958
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 64,362,164 35,000,149
Distributions to shareholders: (1,988,207) -
From net investment income
From net realized gain (1,988,193) -
TOTAL DISTRIBUTIONS (3,976,400) -
Share transactions 1,515,609,862 360,615,904
Net proceeds from sales of shares
Reinvestment of distributions 3,877,609 -
Cost of shares redeemed (1,041,351,744) (53,208,347)
Redemption fees 7,074,858 525,926
Net increase (decrease) in net assets resulting from share transactions 485,210,585 307,933,483
TOTAL INCREASE (DECREASE) IN NET ASSETS 545,596,349 342,933,632
NET ASSETS
Beginning of period 342,933,632 -
End of period (including undistributed net investment income of $2,630,483 and $750,722,
respectively) $ 888,529,981 $ 342,933,632
OTHER INFORMATION
Shares
Sold 95,990,469 30,145,557
Issued in reinvestment of distributions 261,277 -
Redeemed (67,265,359) (4,314,814)
Net increase (decrease) 28,986,387 25,830,743
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA YEAR ENDED APRIL 19, 1993
OCTOBER 31, (COMMENCEMENT
1994 OF OPERATIONS) TO
OCTOBER 31, 1993
Net asset value, beginning of period $ 13.28 $ 10.00
Income from Investment Operations
Net investment income .07 .03
Net realized and unrealized gain (loss) 2.82 3.23
Total from investment operations 2.89 3.26
Less Distributions (.05) -
From net investment income
From net realized gain (.05) -
Total distributions (.10) -
Redemption fees added to paid in capital .14 .02
Net asset value, end of period $ 16.21 $ 13.28
TOTAL RETURN A, C 22.89% 32.80%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 888,530 $ 342,934
Ratio of expenses to average net assets 1.48% 1.94% B
Ratio of net investment income to average net assets .47% 1.21% B
Portfolio turnover rate 77% 72% B
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
B ANNUALIZED
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
</TABLE>
SOUTHEAST ASIA
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
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (income) and capital gains (the profits the
fund earns when it sells stocks that have grown in value). Southeast Asia
Fund has a 3% sales charge, which had been waived since the fund's start on
April 19, 1993 through May 31, 1994.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED PAST 1 LIFE OF
OCTOBER 31, 1994 YEAR FUND
SOUTHEAST ASIA 10.87% 46.79%
SOUTHEAST ASIA (INCL. 3% SALES CHARGE) 7.54% 42.39%
Morgan Stanley Far East ex-Japan
Free Index 15.46% 64.41%
Average Pacific Region Fund 9.41% n/a
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
April 19, 1993. You can compare the fund's figures to the performance of
the Morgan Stanley Far East ex-Japan Free index, a broad measure of the
performance of stocks in the Far East region, excluding Japan. The index is
weighted by each country's market capitalization (or the total value of its
outstanding shares). You can also compare the fund's performance to the
average Pacific region fund which currently reflects the performance of 36
funds with similar objectives tracked by Lipper Analytical Services. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIOD ENDED PAST 1 LIFE OF
OCTOBER 31, 1994 YEAR FUND
SOUTHEAST ASIA 10.87% 28.37%
SOUTHEAST ASIA (INCL. 3% SALES CHARGE) 7.54% 25.85%
Morgan Stanley Far East ex-Japan
Free Index 15.46% 36.74%
Average Pacific Region Fund 9.41% n/a
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
Fidelity Southeast Asia Fund (351Morgan Stanley EMF C
04/19/93 9700.00 10000.00
04/30/93 9651.50 10378.31
05/31/93 10078.30 10975.91
06/30/93 9835.80 10687.54
07/31/93 9826.10 10760.98
08/31/93 10543.90 11661.43
09/30/93 10873.70 12024.42
10/31/93 12842.80 14239.20
11/30/93 13240.50 14143.38
12/31/93 15992.99 17581.63
01/31/94 14696.79 16380.67
02/28/94 14004.83 15439.89
03/31/94 12221.33 13760.40
04/30/94 12533.20 14408.66
05/31/94 13069.23 15023.00
06/30/94 12299.30 14355.17
07/31/94 12952.27 15156.89
08/31/94 14141.27 16391.33
09/30/94 14131.53 16127.43
10/31/94 14238.73 16440.91
Let's say you invested $10,000 in Fidelity Southeast Asia Fund on its start
date. By October 31, 1994, it would have grown to $14,239 - a 42.39%
increase on your initial investment. That compares to $10,000 invested in
the Morgan Stanley Far East ex-Japan Free index, which would have grown to
$16,441 over the same period - a 64.41% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
(checkmark)
SOUTHEAST ASIA
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Allan Liu,
Portfolio Manager of Fidelity Southeast Asia Fund
Q. HOW DID THE FUND PERFORM, ALLAN?
A. It turned in mixed results. For the year ended October 31, 1994, the
fund had a total return of 10.87%. It underperformed the Morgan Stanley Far
East ex-Japan Free index, which returned 15.46%, but outperformed the
average Pacific region fund, which returned 9.41%, according to Lipper
Analytical Services.
Q. WHY DID THE INDEX PERFORM BETTER THAN THE FUND?
A. There were three main reasons. The biggest reason is that the fund
experienced dramatic capital inflows and outflows over the period. During
the fourth quarter of 1993 - when the Southeast Asian markets were some of
the best performing markets in the world - investors poured a massive
amount of money into the fund. I had a very short amount of time to invest
this money. As a result, the fund was not fully invested during this period
and couldn't take full advantage of the strong markets. Conversely, heavy
investor redemptions during the first quarter of 1994 - when the Southeast
Asian markets plummeted - forced me to sell the fund's investments in a
falling market. To give you an idea of the scope of the problem, the fund's
total net assets increased over 11 times in the second half of 1993 and
dropped 42% in the first six months of 1994.
Q. WHAT WERE THE OTHER TWO REASONS?
A. The second reason is that the fund is constrained by legal requirements
that limit it to investing no more than 15% in illiquid markets, or markets
where it is extremely difficult to trade securities. This meant that when
the fund size increased sharply late in 1993, it couldn't even build a
neutral weighting in Malaysia - where the index had over a 20% weighting -
which was one of the region's best performers in 1993. That's because
Malaysian shares are classified as illiquid initially, since, in most
cases, it takes six to eight weeks after the stocks are purchased for them
to be able to be traded. The third reason for the fund's relative
underperformance was that it held many growth stocks. Stocks of these
companies outperformed market averages in 1993. However, in early 1994,
when the markets retreated, their prices fell faster than market averages.
Q. IN LIGHT OF THIS ENVIRONMENT, HAVE YOU CHANGED THE
FUND'S STRATEGY?
A. Yes. I've replaced a number of my growth stocks with more defensive, big
capitalization stocks. This way, if there's another drain of cash out of
the fund, fund performance won't be affected as badly as it was at the
beginning of the year. That's because these stocks are liquid - meaning
they are easy to sell - and their selling prices often fluctuate less than
those of smaller capitalization stocks. I should also note that I reduced
the fund's cash during the summer of 1994, when some Southeast Asian
markets saw an upturn. At that time, I could buy stocks at more reasonable
prices and the fund's inflows and outflows appeared to have stabilized.
Q. CLEARLY, SOUTHEAST ASIA EXPERIENCED SOME DRAMATIC UPS AND DOWNS OVER THE
PERIOD. HOW DID ITS OVERALL ECONOMIC PICTURE LOOK?
A. Despite the correction at the beginning of 1994, economic growth in the
region continued to be buoyant throughout the year. And, as I just
mentioned, prices of stocks came down to more reasonable levels as a result
of the correction. In addition, we saw stock markets in some Southeast
Asian countries - such as Korea and Thailand - pick up in the third quarter
of 1994. The only country that I believe is in pretty rough shape is China,
which has been plagued by inflation. I should note that China's overheated
economy has also affected Hong Kong, which is closely connected to the
Chinese economy. Throughout this period, the fund continued to focus on
infrastructure plays, banks and economically sensitive companies.
Q. IF, AS YOU JUST MENTIONED, HONG KONG FELT THE EFFECTS OF
CHINA'S INFLATIONARY ECONOMY, WHY IS IT STILL YOUR TOP COUNTRY?
A. Actually, the fund's investments in Hong Kong dropped from 33.1% of the
fund six months ago to 27.4% at the end of the period. Currently, the fund
is underweighted in Hong Kong compared to the index. There are two reasons
for this. First, as I mentioned, Hong Kong didn't look as attractive
because of its connection to China. Secondly, Hong Kong's property market
was problematic, dropping throughout 1994. However, at the end of the
period, it looked like the price of residential property - not office space
- - had probably bottomed out. That meant that some property company stocks
were inexpensive and had the potential to do well going forward. I thought
Sun Hung Kai Properties looked attractive. I was also bullish on Hong
Kong-based conglomerate Hutchison Whampoa, which owns property companies as
well as a number of other successful ventures. Stepping back to the issue
of China, I should point out that if China can slow down and control
inflation, it could still be a very good potential market for many
Southeast Asian countries. One of the fund's top investments in Hong Kong
that already has its foot in the door in China is Hong Kong
Telecommunications. China desperately needs a better telephone system, and
this company is trying to negotiate a role in that massive communications
project.
Q. WHAT ABOUT YOUR SECOND LARGEST COUNTRY - THAILAND?
A. A couple of different sectors were attractive in Thailand. The banking
and financial sectors reported excellent earnings growth due to the
country's still buoyant economy. In addition, the recovery of construction
material companies, especially cement companies, was better than expected.
My top Thai holding, Siam Cement, was attractive because it was well
positioned to take advantage of a pickup in building projects in the
country. At the end of the period, most Southeast Asian countries were
experiencing a shortage of cement - a major building material in the region
- - because of continuing economic growth. Cement is used to build homes,
roads, seaports and other building projects to support Southeast Asia's
growing infrastructure.
Q. THERE CLEARLY WERE FACTORS AFFECTING THE FUND THAT YOU COULDN'T CONTROL
- - SUCH AS THE FLOW OF ASSETS IN AND OUT OF THE FUND - BUT WERE THERE
INVESTMENT DECISIONS YOU MADE THAT YOU REGRET?
A. Yes, I wish the fund had not been so heavily invested in growth stocks,
such as Berjaya Singer, a Malaysian consumer electronics distributor, when
the market corrected in 1994. These stocks fell much harder than other
Southeast Asian stocks during this period.
Q. HOW DO YOU THINK THE FUND LOOKS GOING FORWARD?
A. I'm still cautiously optimistic. As I noted earlier, the drop in the
stock market has not really done much damage to the real economies, and
some Southeast Asian countries picked up significantly in the second half
of 1994. However, I still think it's wise for investors to take a
long-term, not a short-term, approach to these markets. Keep in mind, that
these and other foreign markets tend to be more volatile than the U.S.
market.
FUND FACTS
GOAL: to increase the value of the fund's
shares by investing mainly in Southeast Asian
stocks, including those from Thailand, Hong
Kong, South Korea, Malaysia, Indonesia,
Singapore, the Philippines, China and Taiwan
START DATE: April 19, 1993
SIZE: as of October 31, 1994, more than
$825 million
MANAGER: Allan Liu, since April 1993; manager,
various funds for non-U.S. investors; analyst,
Southeast Asian markets, 1987-1990; joined
Fidelity in 1987
(checkmark)
ALLAN LIU ON INVESTING IN SINGAPORE:
"Since the beginning of 1994, Singapore has turned in
decent performance compared to the rest of the
region. Its economy was stronger over the period than
most people expected it to be, which benefited a
number of sectors, especially banks and property
companies.
"Banks, such as United Overseas Bank, were some of
the main beneficiaries of Singapore's improving
economy. Banks like United were enjoying strong loan
growth both in Singapore and throughout the region.
They also saw substantial increases in non-interest
income.
"One of the reasons that the office property market is
picking up in Singapore is that some businesses are
beginning to move their offices from Hong Kong to
Singapore, where rents and the costs of doing
business are much less expensive. This also means
that the costs of maintaining an expatriate employee
there are significantly lower. Also keep in mind that
businesses have not forgotten that control of Hong
Kong will fall into China's hands in 1997. As a result,
some Hong Kong-based companies are considering
opening a second office elsewhere in Asia."
(solid bullet) Malaysian casino operators were still doing well at
the end
of the period, but company stocks were no longer
cheap. The other gaming companies, which focus on
lottery operation, have been negatively affected by
new government regulations, such as a gaming tax.
(solid bullet) As of October 31, 1994, the fund's top five countries
were Hong Kong (27.4%), Thailand (18.4%), Malaysia
(14.6%), Korea (13.8%), and Singapore (13.3%).
SOUTHEAST ASIA
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION
AS OF OCTOBER 31, 1994
United States 2.3%
Row: 1, Col: 1, Value: 2.7
Row: 1, Col: 2, Value: 18.4
Row: 1, Col: 3, Value: 13.4
Row: 1, Col: 4, Value: 3.0
Row: 1, Col: 5, Value: 1.75
Row: 1, Col: 6, Value: 14.6
Row: 1, Col: 7, Value: 13.8
Row: 1, Col: 8, Value: 6.3
Row: 1, Col: 9, Value: 27.4
Row: 1, Col: 10, Value: 0.0
Thailand 18.4%
Hong Kong 27.4%
Singapore 13.3%
Indonesia 6.3%
Philippines 3.0%
Other 0.9%
Korea (South) 13.8%
Malaysia 14.6%
AS OF APRIL 30, 1994
United States 7.4%
Row: 1, Col: 1, Value: 7.4
Row: 1, Col: 2, Value: 12.7
Row: 1, Col: 3, Value: 5.0
Row: 1, Col: 4, Value: 4.5
Row: 1, Col: 5, Value: 1.75
Row: 1, Col: 6, Value: 18.9
Row: 1, Col: 7, Value: 15.2
Row: 1, Col: 8, Value: 2.6
Row: 1, Col: 9, Value: 33.1
Row: 1, Col: 10, Value: nil
Thailand 12.7%
Hong Kong 33.1%
Singapore 5.0%
Philippines 4.5%
Other 0.6%
Indonesia 2.6%
Malaysia 18.9%
Korea (South) 15.2%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks and closed-end
investment companies 96.6 88.7
Bonds 1.1 3.9
Short-term investments 2.3 7.4
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Sun Hung Kai Properties Ltd.
(Hong Kong, Real Estate) 3.5 2.9
Hutchison Whampoa Ltd. Ord.
(Hong Kong, Electrical Equipment) 3.2 3.7
Hong Kong Telecommunications Ltd.
(Hong Kong, Telephone Services) 2.7 1.0
United Overseas Bank (For. Reg.)
(Singapore, Banks) 2.5 -
Overseas Union Bank Ltd. (For. Reg.)
(Singapore, Banks) 2.5 0.3
Swire Pacific Ltd. Class A
(Hong Kong, Air Transportation) 2.5 2.6
Jardine Matheson Holdings Ltd. Ord.
(Hong Kong, Holding Companies) 2.5 0.6
Samsung Electronics Co. Ltd. GDS
(Korea (South), Electronics) 2.1 0.4
Keppel Corp. Ltd.
(Singapore, Ship Building & Repair) 2.1 -
HSBC Holdings PLC Corp.
(Hong Kong, Banks) 1.9 1.6
TOP TEN INDUSTRIES
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 21.5 22.7
Construction & Real Estate 20.5 24.5
Utilities 10.8 7.0
Basic Industries 7.5 8.1
Media & Leisure 6.3 8.3
Transportation 6.1 4.3
Industrial Machinery & Equipment 5.9 6.6
Holding Companies 4.8 -
Technology 4.6 2.2
Nondurables 4.1 2.3
SOUTHEAST ASIA
INVESTMENTS OCTOBER 31, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.3%
SHARES VALUE (NOTE 1)
CHINA (PEOPLES REP.) - 0.6%
Huaneng Power International, Inc.
Class N sponsored ADR (a) 223,250 $ 4,130,159 44330410
Shandong Huaneng Power Development
Ltd. Class N sponsored ADR 63,500 682,625 81941910
4,812,784
GRAND CAYMAN - 0.0%
Four Seas Mercantile Holdings Ltd. 600,000 194,124 35099622
HONG KONG - 27.4%
Associates International Hotels Ltd. 1,840,000 1,321,598 04599492
Cheung Kong Holdings Ltd. 2,840,000 13,672,584 16674410
China Light & Power Co. Ltd. 1,070,000 5,566,718 16940010
Citic Pacific Ltd. Ord. 1,800,000 5,416,074 45299792
Consolidated Electric Power Asia Ltd. 1,300,000 3,036,748 20855292
Dah Sing Financial Holdings Ltd. 680,000 1,733,660 23899892
Dao Heng Bank Group Ltd. 162,550 539,590 23799F22
First Pacific Co. Ltd. 1,788,255 1,261,292 33699192
Furama Hotel Enterprises Ltd. 245,000 380,485 36199E22
Grand Hotel Holdings Ltd. Class A 4,460,000 1,847,020 38599292
HSBC Holdings PLC 1,347,844 15,960,616 42199192
Hang Seng Bank 400,000 2,898,924 40987820
Hanny Magnetics Holding Ltd. 500,000 68,590 41099592
Harbour Ring International Holdings Ltd.
(warrants) (a) 333 6 41199B93
Henderson Investment Ltd. 1,640,000 1,506,930 42599422
Henderson Land Development Co. Ltd. 1,324,000 8,653,028 42599010
Hong Kong & Shanghai Hotels Ltd. 1,000,000 1,410,640 71899292
Hong Kong Electric Holdings Ltd. Ord. 2,700,000 8,491,014 43858010
Hong Kong Land Holdings Ltd. 1,918,485 4,916,003 43858292
Hong Kong Telecommunications Ltd. 10,550,000 22,596,412 43857991
Hopewell Holdings Ltd. 4,300,000 4,424,098 44099999
Hutchison Whampoa Ltd. Ord. 5,759,000 26,607,501 44841510
Hysan Development Co. Ltd. 1,180,000 3,145,856 44916510
Jardine Matheson Holdings Ltd. Ord. 2,445,366 20,333,218 47111510
Ka Wah Bank Ltd. 2,522,500 1,338,464 48999G22
Kong Wah Holdings Ltd. 3,000,000 399,900 50599B92
Mandarin Oriental International Ltd. Ord. 786,000 1,037,559 56259499
Manhattan Card Co. Ltd. 3,416,000 1,392,567 56299B22
Oriental Press Group Ltd. 2,000,000 1,235,920 68620099
Orient Telecom & Technology
Holdings Ltd. (a) 200,000 90,592 69599F22
Peregrine Investments Holdings Ltd. 1,100,000 1,921,832 71399492
Regal Hotels International Holdings Ltd. 8,500,000 2,068,050 75999110
Siu-Fung Ceramics Holdings Ltd. 5,000,000 1,158,300 82999G22
Sun Hung Kai Properties Ltd. 3,829,000 29,236,559 86676H10
Swire Pacific Ltd. Class A 2,670,000 20,386,945 87079410
Swire Pacific Ltd. 1,400,000 1,657,824 87079492
Television Broadcast Ltd Ord. 990,000 4,573,958 87953110
Wharf Holdings Ltd. (c) 1,100,000 4,341,920 96299110
226,628,995
INDONESIA - 6.3%
Andayani Megah PT 200,000 414,532 03399722
Astra International PT (For. Reg.) 2,068,000 4,572,017 04699894
Bank Dagang Nas Indonesia PT (a) 600,000 1,160,688 06099Q22
Dharmala International Land PT 1,897,500 2,600,068 25399592
Duta Anggada Realty Ord. 1,166,666 1,182,183 26699192
Enseval Puttera Megatrading PT
(For. Reg.) (a) 100,000 391,502 29399D22
Indah Kiat Pulp & Paper (For. Reg.) 770,000 913,235 45499B23
Indocement Tungaal Prakarsa PT (For. Reg.) 1,253,000 5,194,086 68399093
Indofood Sukses Makmur (For. Reg.) (a) 1,400,000 6,190,338 71099122
Indosat (Indonesia Satellite) sponsored
ADR 24,200 949,850 71568010
SHARES VALUE (NOTE 1)
Jakarta International Hotels &
Development Ord. 580,000 $ 788,069 47399693
Kalbe Farma (For. Reg.) 260,000 1,149,634 48699994
Mayora Indah PT 644,000 3,559,446 83099A92
Multibreeder Adirama Indo PT (a) 55,000 92,464 62599A22
Sampoerna, Hanjaya Mandala (For. Reg.) 2,820,000 13,638,112 82299893
Semen Gresik (For. Reg.) 347,000 1,869,952 84399693
SUCACO PT 350,000 1,168,748 89399292
Tempo-Scan Pacific (For. Reg.) 110,000 582,648 87999P22
Tjiwa Kimia Pabrik Kertas PT (For. Reg.) 1,000,500 2,580,600 95499293
United Tractors PT (For Reg.) 1,195,000 3,082,275 91599594
52,080,447
KOREA (SOUTH) - 13.0%
Anam Electronics Co. Ltd. (a) 30,000 703,757 03399492
Boram Bank (New) 24,457 297,601 09999325
Cheil Foods & Chemical Industries 82,660 6,103,453 16399C22
Cho Hung Bank Co. Ltd. (New) (a) 76,130 1,231,985 17099E25
Chosun Brewery Co. Ltd. (a) 6,380 219,296 22899822
Dae Chang Industrial Co. 872 19,034 23399M22
Daewoo Corp. (a) 22,507 458,554 23799B22
Daewoo Corp. (RFD) 1,011 18,390 23799B26
Daewoo Corp. (warrants) (a) 1,150 1,523,750 23799B25
Daewoo Electronics 3,462 54,721 23899C23
Daewoo Heavy Industries Ltd. (a) 450,162 8,244,830 23999492
Daewoo Heavy Industries Ltd. (RFD) (a) 6,326 114,275 23999497
Daewoo Metal Co. Ltd. 3,868 70,358 24999B22
Daewoo Securities Co. Ltd. 42,230 1,880,656 25999322
Daewoo Telecommunication Co. Ltd. 9,743 152,779 27999193
Daeyu Securities 19,620 444,505 23399G22
Daeyoung Electronics Industries (a) 611 27,900 30999122
Dong Ah Securities Co. (a) 20,160 338,887 25799X22
Dongbu Securities Co. Ltd. 400 6,473 25899A22
Dongkuk Steel Mill Co. Ltd. 21,000 1,034,213 25799S22
Dongsuh Securities Co. (a) 50,000 997,303 25799P22
Gold Star Co. Ltd. 56,050 2,894,786 38099392
Gold Star Co. Ltd. GDS (a) 57,070 970,190 38099394
Hanil Cement Manufacturing Co. Ltd. (a) 36,940 2,456,025 41099D22
Hanjin Engineering & Construction Co.
Ltd. (a) 3,600 90,322 41099822
Hanshin Securities Co. Ltd. 500 17,297 41899722
Hyundai Engineering &
Construction Co. Ltd. 10,000 551,966 41599122
Hyundai Motor Service Co. Ltd. (a) 11,590 705,156 42199422
Il Shin Spinning Co. Ltd. (a) 3,159 356,658 45199F22
Inchon Iron & Steel Co. Ltd. 107,920 5,777,778 45399J22
Keang Nam Enterprises 471 11,758 48699D22
Korea Container Terminal Co. 3,290 222,869 50099L22
Korea Electric Power Corp. 394,510 14,995,487 50099B92
Korea First Securities Co. Ltd. (a) 898 16,222 50099K22
Korea First Securities Co. Ltd. (New) (a) 92 1,558 50099K24
Korea Mobile
Telecommunications Corp. (a) 7,400 7,783,855 50599W22
Korean Air 42,000 1,554,287 52299522
Korean Air (RFD) (a) 7,854 203,456 52299526
Kyung Nam Woolen Textile
Industries (a) 2,650 62,830 61699A22
Lotte Confectionary Co. 5,600 840,193 54499692
Midopa Co. (a) 4,352 82,438 59899E22
Miwon Co. Ltd. 4,500 138,870 61299693
Orion Electric Co. Ltd. 60,000 1,821,489 68699H22
Pohang Iron & Steel Co. Ltd. 77,855 8,590,518 73045092
Pohang Iron & Steel Co. Ltd.
sponsored ADR 20,500 673,938 73045010
Samsung Construction Co. Ltd. 49,887 1,983,840 90499J22
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
KOREA (SOUTH) - CONTINUED
Samsung Electronics Co. Ltd. 94,070 $ 17,278,127 79611092
GDR Part Dividend (c) 2,983 96,953 79605080
GDR (a) 8,765 525,900 79611094
GDS (c) 72,000 4,320,000 79605020
(RFD) (a) 2,952 494,376 79611098
Samsung Engineering &
Construction Co. Ltd. (a) 12,606 461,764 90499J25
Sangup Securities Co. Ltd. (a) 153,650 3,488,760 80099C22
Sangup Securities Co. Ltd. (New) (a) 24,159 521,276 80099C23
Seoul Securities Co. (a) 2,800 49,175 83599P22
Shin Won Corp. 33,670 1,744,428 98499D92
Ssangyong Cement Co. 36,620 1,572,848 76899392
Tong Yang Cement Co. 5,000 203,851 93899C22
Yukong Ltd. 3,129 172,710 98899K25
107,676,674
MALAYSIA - 14.2%
Aokam Perdana BHD 168,000 1,386,719 01899792
Aokam Perdana BHD Class A (RFD) (a) 132,000 1,032,763 01899795
Bandar Raya Development BHD 1,000,000 1,893,400 06000210
Bandar Raya Development BHD
(warrants) (a) 1,080,000 1,360,433 06000292
Berjaya Sports Toto BHD 2,738,000 4,262,984 08499E22
Commerce Asset Holding BHD 1,000,000 4,459,660 20099492
Country Heights Holdings BHD 400,000 977,996 22299D22
Daiman Development BHD 550,000 925,183 23499C23
EON (Edaran Otomobil Nasional) BHD 486,000 3,460,223 29599292
Econstates BHD (a) 1,410,000 3,750,812 27999222
Ekran BHD Ord. (a) 800,000 3,254,768 28299792
Ekran BHD Class A 1,026,000 3,973,554 28299793
Gamuda BHD 110,000 559,413 36499A92
Genting BHD 1,375,500 12,645,178 37245210
Kim Hin Industry BHD (warrants) (a) 40,000 64,156 49499C95
Land & General BHD 2,240,000 11,041,184 51499693
Leader Universal Holdings BHD 564,000 3,133,026 52199192
Malaysian Airlines System 2,290,000 6,136,536 56084110
Malaysia Assurance Alliance BHD (a) 1,233,000 2,725,263 56099Q22
Malayan Banking BHD 200,000 1,361,370 56090499
Malaysian Helicopter Services BHD 824,000 2,030,789 56099M22
Metacorp BHD 190,000 735,843 59099E92
Pacific Chemicals BHD 1,049,000 6,360,685 69599H22
Press Metal BHD 100,000 234,719 74199B22
Rashid Hussain BHD 300,000 927,138 75399492
Resorts World BHD 2,037,000 12,909,304 76199592
Sungei Way Holdings BHD 313,250 1,237,682 86799892
Sungei Way Holdings BHD
(warrants 1997) (a) 374,934 1,026,716 86799894
(warrants 1999) (a) 44,750 73,176 89499H22
TH Loy Industries BHD (a) 330,000 1,258,679 87799A22
Taiping Consolidated BHD 1,200,000 2,699,268 95599B22
Technology Resources Industries BHD (a) 2,140,000 8,329,779 93699692
Tenaga Nasional BHD 300,000 1,596,087 92099992
United Engineers BHD 1,070,000 5,776,427 93099692
Westmont BHD (a) 50,800 359,699 98499G22
YTL Corp. BHD 550,000 3,119,804 98799092
YTL Corp. BHD (warrants) (a) 120,000 478,826 98799094
117,559,242
PAKISTAN - 0.2%
Pakistan Telecommunications Voucher
GDR (a) (c) 11,135 1,837,275 69584910
PHILIPPINES - 3.0%
Bacnotan Consolidated Industries, Inc. 37,660 450,316 08099423
Benpress Holdings Corp. GDR (c) 72,000 777,600 08230010
First Phillipines Holdings Corp. 622,420 3,127,113 33699492
SHARES VALUE (NOTE 1)
First Phillipines Holdings Corp. (rights) (a) 230,540 $ 734,337 33699494
House of Investments, Inc. 2,062,000 4,309,642 44199C92
Manila Electric Co. Class B 174,185 2,450,351 58799A92
Metropolitan Bank & Trust Co. 140,000 4,135,852 59199D22
Metropolitan Bank & Trust Co. (rights) (a) 28,000 602,090 59199D23
Philippine Long Distance Telephone Co. 100,000 5,700,000 71825210
Philippine National Bank 60 941 71899392
SM Prime Holdings, Inc. (a) 987,000 337,199 83160592
Universal Robina Corp. (a) 2,071,500 1,810,905 91399F22
24,436,346
SINGAPORE - 13.3%
City Developments Ltd. 1,010,400 5,953,651 17799010
City Developments Ltd. (warrants) (a) 5,913 23,362 17799025
Comfort Group Ltd. (a) 1,000,000 735,690 20099722
DBS Land Ltd. 900,000 3,157,353 24399292
Development Bank of Singapore Ltd.
(For. Reg.) 340,000 3,613,078 25159493
Hong Leong Finance Ltd. (For. Reg.) 540,000 2,059,943 44999D26
Ipco International Ltd. 200,000 1,000,000 46299D22
Intraco Ltd. 465,000 864,747 46099992
Jurong Cement Ltd. 500,000 1,958,445 48299792
Jurong Engineering Ltd. 335,000 2,270,607 49499692
Keppel Corp. Ltd. 1,870,000 17,196,875 49205199
O 41499725verseas Chinese Banking Corp. 350,000 3,767,029 68999610
Overseas Union Bank Ltd. (For. Reg.) 3,580,000 20,485,011 68990192
Singapore Finance Ltd. (warrants) (a) 54,000 53,706
Singapore International Airlines Ltd. 350,000 3,361,715 82868910
Singapore Press Holdings Ltd. (For. Reg.) 580,000 10,628,065 82999910
Singapore Shipbuilding & Engineering
(For. Reg.) 33,600 82,856 96599192
Ssangyong Cement Ltd. 1,140,000 4,271,113 75299093
Straits Steamship Co. Ltd. Ord. 1,900,000 6,794,951 86299292
United Overseas Bank Ltd. (For. Reg.) 1,900,000 20,837,870 91128092
Van Der Horst Ltd. (a) 252,000 1,132,969 92099C22
110,249,036
THAILAND - 18.3%
Advanced Information Service (For. Reg.)(a) 510,000 9,003,734 00799793
Bangkok Bank Ltd. 940,700 10,190,951 06099210
Bangkok Metropolitan Bank PCL (For. Reg.) 3,968,100 5,293,882 06199E23
Dhana Siam Finance & Securities PCL
(For. Reg.) 170,900 4,553,128 24299593
Dhana Siam Finance & Securities PCL
(warrrants) (For. Reg.) (a) 210,000 3,623,159 24299599
Ekachart Finance & Security Co.
Ltd. (warrants) (For. Reg.) (a) 20,280 94,390 28199J24
Finance One PCL (For. Reg.) 310,100 6,270,929 31799E93
Finance One PCL (warrants) (For. Reg.) (a) 176,350 1,698,191 31799E96
First Pacific Land PCL (warrants) (a) 199,400 77,606 70699194
General Finance & Securities PCL
(For. Reg.) 332,800 3,685,464 36999693
Hemeraj Land & Development PCL
(For. Reg.) 81,500 392,409 42399B23
Industrial Finance Corp. (For. Reg.) 400,000 1,035,188 45799896
International Broadcasting Corp.
(For. Reg.) 363,200 2,725,130 45999E93
(Loc. Reg.) (a) 16,800 126,052 45999E92
Italian Thai Development PCL
(For. Reg.) (a) 160,000 2,105,685 46599F22
Krung Thai Bank:
(For. Reg.) 1,940,900 6,619,439 50599293
(Loc. Reg.) 169,900 579,444 50599292
COMMON STOCKS - CONTINUED
SHARES VALUE
(NOTE 1)
THAILAND - CONTINUED
NTS Steel Group PCL (For. Reg.) 553,000 $ 1,364,583 64999893
National Finance & Securities PCL
(For. Reg.) 160,000 943,707 63199593
National Finance & Securities PCL
(rights) (a) 480,000 2,651,429 63599822
Nava Finance & Securities
Co. Ltd (For. Reg.) 110,000 856,237 63999B23
One Holding PCL (For. Reg.) 2,050,000 7,443,919 68299B23
Phatra Thanakit PCL (For. Reg.) 38,000 393,371 71799593
Phatra Thanakit PCL (rights) (For. Reg.) (a) 152,000 1,512,499 71799595
Property Perfect PCL (For. Reg.) 300,600 3,907,812 74399F23
Property Perfect PCL (warrants)
(For. Reg.) (a) 66,800 251,944 74399F24
Quality Houses Co. Ltd. (For. Reg.) 250,000 1,745,375 74799G23
Sammakorn Co. Ltd. (For. Reg.) 140,000 814,509 79599F23
Securities One PCL (For. Reg.) 190,000 5,946,314 81399693
Shinawatra Computer &
Communication PCL 10,000 311,359 94799192
Shinawatra Computer &
Communication PCL (For. Reg.) 273,000 8,500,101 94799193
Siam Cement PCL (For. Reg.) 210,000 12,116,519 78799010
Siam City Cement Co. Ltd. (For. Reg.) 421,800 9,071,332 82570798
Siam Commercial Bank PCL (For. Reg.) 473,300 4,899,545 78851090
Supalai PCL (For. Reg.) 80,000 475,063 97199923
TPI Polene Co. Ltd. (For. Reg.) 709,900 7,690,609 94799093
TPI Polene Co. Ltd. (rights) (a) 177,475 1,851,442 94799094
Telecomasia Corp. PCL (a) 200,000 810,496 87928D92
Thai Airways International Ltd. (For. Reg.) 109,500 246,038 90799C93
Thai Farmers Bank PCL 901,900 7,961,243 90199010
Thai Military Bank Ltd. (For. Reg.) 1,346,400 6,266,603 90199989
United Communication Industry:
(For. Reg.) 17,600 519,745 91399E23
(Loc. Reg.) 12,400 366,184 91399E22
Univest Land PCL (For. Reg.) 1,070,000 3,992,694 91599F22
Wattachak PCL (For. Reg.) (a) 131,500 316,574 94299H23
151,302,027
TOTAL COMMON STOCKS
(Cost $713,146,764) 796,776,950
NONCONVERTIBLE PREFERRED STOCKS - 0.2%
KOREA (SOUTH) - 0.2%
Baik Yang Co. (a) 4,290 361,581 05699D23
Cheil Food & Chemical Industries (a) 13,500 509,754 16399C23
Samsung Electronics Co. Ltd. 11,040 1,101,022 79611095
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $2,161,449) 1,972,357
CLOSED-END INVESTMENT COMPANIES - 0.1%
UNITED KINGDOM - 0.1%
Korea Europe Fund IDR (Cost $690,000) 150 618,750 50799893
CORPORATE BONDS - 1.1%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
CONVERTIBLE BONDS - 1.1%
KOREA (SOUTH) - 0.6%
Daewoo Corp. euro 0.25%,
12/31/08 - KRW 2,510,000 $ 2,698,250 23799BAB
Haitai Confectionary Co.
0.25%, 5/31/99 - CHF 1,250,000 785,913 404996AB
Jinro Ltd. euro 0.25%,
9/30/09 - 500,000 451,250 732994AA
Samsung Electro-Mechanics Co.
Ltd. 0.25%, 12/31/00 (c) - CHF 500,000 270,593 95099DAA
Shin Won Corp. euro 0.5%
12/31/08 - 350,000 367,500 98499DAA
4,573,506
MALAYSIA - 0.4%
Berjaya Sport Culs 9%,
10/30/97 - MYR 1,225,000 1,763,521 08499EAB
Land & General BHD 4 1/2%,
12/31/94 - MYR 970,000 1,798,650 514996AA
3,562,171
THAILAND - 0.1%
Siam Syntech Construction PCL
4 1/2%, 2/25/02 (c) - 1,500,000 915,000 825719AA
TOTAL CONVERTIBLE BONDS 9,050,677
NONCONVERTIBLE BONDS - 0.0%
THAILAND - 0.0%
Finance One PCL
3 3/4%, 2/7/01 - THB 5,635 226,096 31799EAA
TOTAL CORPORATE BONDS
(Cost $9,716,304) 9,276,773
REPURCHASE AGREEMENTS - 2.3%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 4.78%
dated 10/31/94 due 11/1/94 $ 18,969,518 18,967,000 99799N9L
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $744,681,517) $ 827,611,830
CURRENCY ABBREVIATIONS
KRW - Korean won
MYR - Malaysian ringgit
CHF - Swiss franc
THB - Thai baht
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $12,559,341 or 1.5% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,519,490,570 and $1,200,682,832, respectively.
The fund participated in the interfund lending program as a lender. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $28,748,000 and $20,019,000,
respectively. The weighted average interest rate was 3.92%. Interest earned
from the interfund lending program amounted to $26,162 and is included in
interest income on the Statement of Operations (see Note 2 of Notes to
Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
the average daily loan balances during the period for which loans were
outstanding amounted to $5,861,000 and $5,361,000, respectively. The
weighted average interest rate was 3.70% (see Note 7 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At October 31, 1994, the aggregate cost of investment securities for income
tax purposes was $750,182,911. Net unrealized appreciation aggregated
$77,428,919, of which $117,000,860 related to appreciated investment
securities and $39,571,941 related to depreciated investment securities.
The fund hereby designates $2,547,765 as a capital gain dividend for the
purpose of the dividend paid deduction.
For the period, interest and dividends from foreign countries were
$13,400,297, or $0.24 per share. Taxes paid to foreign countries were
$1,111,840 or $0.02 per share.
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Investments (Unaudited)
Aerospace & Defense 2.1%
Basic Industries 7.5
Construction & Real Estate 20.5
Durables 2.5
Finance 21.5
Health 0.2
Holding Companies 4.8
Industrial Machinery & Equipment 5.9
Media & Leisure 6.3
Nondurables 4.1
Retail & Wholesale 0.7
Services 0.1
Repurchase Agreements 2.3
Technology 4.6
Transportation 6.1
Utilities 10.8
100.0%
SOUTHEAST ASIA
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1994
ASSETS
Investment in securities, at value (including repurchase agreements of $18,967,000) (cost $744,681,517) - $ 827,611,830
See accompanying schedule
Cash 663,506
Receivable for investments sold 6,576,295
Receivable for fund shares sold 2,035,310
Dividends receivable 872,941
Interest receivable 73,435
Redemption fees receivable 10,480
TOTAL ASSETS 837,843,797
LIABILITIES
Payable for investments purchased $ 5,108,116
Payable for fund shares redeemed 5,399,749
Accrued management fee 431,983
Other payables and accrued expenses 1,169,854
TOTAL LIABILITIES 12,109,702
NET ASSETS $ 825,734,095
Net Assets consist of:
Paid in capital $ 738,891,731
Distributions in excess of net investment income (1,366,477
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 5,271,958
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 82,936,883
NET ASSETS, for 56,511,847 shares outstanding $ 825,734,095
NET ASSET VALUE and redemption price per share ($825,734,095 (divided by) 56,511,847 shares) $14.61
Maximum offering price per share (100/97.00 of $14.61) $15.06
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1994
INVESTMENT INCOME $ 13,029,171
Dividends
Interest 1,711,124
14,740,295
Less foreign taxes withheld (1,111,840
)
TOTAL INCOME 13,628,455
EXPENSES
Management fee 6,231,794
Basic fee
Performance adjustment (633,730
)
Transfer agent 3,529,853
Fees
Redemption fees (249,341
)
Accounting fees and expenses 395,097
Non-interested trustees' compensation 4,338
Custodian fees and expenses 2,235,995
Registration fees 250,274
Audit 55,994
Legal 5,161
Interest 1,103
Miscellaneous 7,016
TOTAL EXPENSES 11,833,554
NET INVESTMENT INCOME 1,794,901
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 7,032,810
Foreign currency transactions (906,930 6,125,880
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 8,847,826
Assets and liabilities in foreign currencies 6,570 8,854,396
NET GAIN (LOSS) 14,980,276
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 16,775,177
OTHER INFORMATION $763,269
Sales Charges Paid to FDC
</TABLE>
Accounting fees paid to FSC $395,097
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED APRIL 19, 1993
OCTOBER 31, (COMMENCEMENT
1994 OF OPERATIONS) TO
OCTOBER 31, 1993
Operations $ 1,794,901 $ 338,637
Net investment income
Net realized gain (loss) 6,125,880 (386,089)
Change in net unrealized appreciation (depreciation) 8,854,396 74,082,487
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 16,775,177 74,035,035
Distributions to shareholders: (2,133,538) -
From net investment income
In excess of net investment income (1,834,307) -
TOTAL DISTRIBUTIONS (3,967,845) -
Share transactions 1,349,887,034 464,080,850
Net proceeds from sales of shares
Reinvestment of distributions 3,847,389 -
Cost of shares redeemed (1,048,177,751) (38,754,143)
Redemption fees 7,700,655 307,694
Net increase (decrease) in net assets resulting from share transactions 313,257,327 425,634,401
TOTAL INCREASE (DECREASE) IN NET ASSETS 326,064,659 499,669,436
NET ASSETS
Beginning of period 499,669,436 -
End of period (including under (over) distribution of net investment income of $(1,366,477)
and $338,637, $ 825,734,095 $ 499,669,436
respectively)
OTHER INFORMATION
Shares
Sold 92,561,106 41,377,754
Issued in reinvestment of distributions 259,959 -
Redeemed (74,053,904) (3,633,068)
Net increase (decrease) 18,767,161 37,744,686
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA YEAR ENDED APRIL 19, 1993
OCTOBER 31, (COMMENCEMENT
1994 OF OPERATIONS) TO
OCTOBER 31, 1993
Net asset value, beginning of period $ 13.24 $ 10.00
Income from Investment Operations
Net investment income .04 .01
Net realized and unrealized gain (loss) 1.23 3.22
Total from investment operations 1.27 3.23
Less Distributions (.04) -
From net investment income
In excess of net investment income (.03) -
Total distributions (.07) -
Redemption fees added to paid in capital .17 .01
Net asset value, end of period $ 14.61 $ 13.24
TOTAL RETURN B, C 10.87% 32.40%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 825,734 $ 499,669
Ratio of expenses to average net assets 1.47% 2.00% A
Ratio of expenses to average net assets before expense reductions 1.47% 2.06% A
Ratio of net investment income to average net assets .22% .45% A
Portfolio turnover rate 157% 14% A
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1994
a SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Canada Fund, Fidelity Diversified International Fund, Fidelity
Emerging Markets Fund, Fidelity Europe Fund, Fidelity Europe Capital
Appreciation Fund, Fidelity International Growth & Income Fund, Fidelity
Japan Fund, Fidelity Latin America Fund, Fidelity Overseas Fund, Fidelity
Pacific Basin Fund, Fidelity Southeast Asia Fund and Fidelity Worldwide
Fund (the funds) are funds of Fidelity Investment Trust (the trust). 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. Each fund is authorized to issue an unlimited
number of shares. The following summarizes the significant accounting
policies of the funds:
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. Korean
equity securities that have reached the limit for aggregate foreign
ownership and for which premiums to the local exchange prices may be paid
by foreign investors are valued 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
of their purchase date are valued at amortized cost or original cost plus
accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of each fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Effective November 1, 1993, the funds adopted Statement of Position (SOP)
93-4: Foreign Currency Accounting and Financial Statement Presentation for
Investment Companies. In accordance with this SOP, reported net realized
gains and losses on foreign currency transactions represent net gains and
losses from sales and maturities of forward currency contracts and foreign
currency options, disposition of foreign currencies, currency gains and
losses realized between the trade and settlement dates on securities
transactions, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received. Further, as
permitted under the SOP, the effects of changes in foreign currency
exchange rates on investments in securities are not segregated in the
Statement of Operations from the effects of changes in market prices of
those securities, but are included with the net realized and unrealized
gain or loss on investment in securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to U.S. federal
income taxes to the extent that it distributes all of its taxable income
for its fiscal year. Each fund may be subject to foreign taxes on income,
gains on investments or currency repatriation and accrues such taxes as
applicable. The schedules of investments include 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 withheld where recovery of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
PREPAID EXPENSES. FMR bears all organizational expenses except for
registering and qualifying a fund and shares of a fund for distribution
under federal and state securities law. These expenses were borne by Europe
Capital Appreciation and are being amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Certain foreign currency gains (losses) are taxable as
ordinary income and, therefore, increase (decrease) taxable ordinary income
available for distribution.
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 transactions, foreign currency transactions, passive foreign
investment companies (PFIC), and losses deferred due to wash sales. Certain
funds 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 and may
affect net investment income per share. Undistributed net investment
income, accumulated net investment loss, or distributions in excess of net
investment income may include temporary book and tax basis differences
which will reverse in a subsequent period. Any taxable income or gain
remaining at fiscal year end is distributed in the following year.
REDEMPTION FEES. Shares held in Emerging Markets, Latin America and
Southeast Asia less than 90 days are subject to a redemption fee equal to
1.50% of the proceeds of the redeemed shares. Shares held in Japan less
than 90 days are subject to a
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
REDEMPTION FEES - CONTINUED
redemption fee equal to 1.00% of the proceeds of the redeemed shares. A
portion of the fee is accounted for as a reduction of transfer agent
expenses. This portion of the redemption fee is used to offset the
transaction costs and other expenses that short-term trading imposes on
those funds and their shareholders. The remainder of the redemption fee is
accounted for as an addition 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 November
1, 1993, the funds 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 funds 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 October 31, 1993 have been reclassified as
follows:
INCREASE (DECREASE) (INCREASE) DECREASE INCREASE (DECREASE) (INCREASE)
DECREASE
INCREASE (DECREASE) IN UNDISTRIBUTED IN ACCUMULATED IN ACCUMULATED IN
ACCUMULATED
FUND IN PAID IN CAPITAL NET INVESTMENT INCOME NET INVESTMENT LOSS NET
REALIZED GAIN NET REALIZED LOSS
Canada $ 992,455 $ - $ 237,762 $ (1,230,217) $ -
Diversified
International 2,234 (1,181,221) - 1,178,987 -
Emerging Markets 50,022 (120,832) - - 70,810
Europe 17,123,165 (8,962,504) - - (8,160,661)
International
Growth & Income 941,401 (3,608,501) - 2,667,100 -
Japan 166 - (364,505) 364,339 -
Latin America - 26,874 - (26,874) -
Overseas 391,398,948 (4,020,684) - (387,378,264) -
Pacific Basin 40,875,663 - 2,434,566 (43,310,229) -
Southeast Asia - (97,222) - - 97,222
Worldwide (47,579) (689,914) - 737,493 -
No adjustments were necessary for the Europe Capital Appreciation Fund.
b OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The funds may enter into forward
foreign currency contracts. These contracts involve market risk in excess
of the amount reflected in each applicable fund's Statement of Assets and
Liabilities. The face or contract amount in U.S. dollars, as reflected in
each applicable fund's schedule of investments under the caption "Forward
Foreign Currency Contracts", 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 any realized gain (loss) is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The funds, through their respective custodians,
receive 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 funds' 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 funds, along with other
affiliated entities of FMR, may transfer uninvested cash balances into one
or more joint trading accounts. These balances are invested in one or more
repurchase agreements that mature in 60 days or less from the date of
purchase, and are collateralized by U.S. Treasury or Federal Agency
obligations.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the
SEC, the funds, along with other registered investment companies having
management contracts with FMR, may participate in an interfund lending
program. This program provides an alternative credit facility allowing the
funds to borrow
2. OPERATING POLICIES - CONTINUED
INTERFUND LENDING PROGRAM - CONTINUED
from, or lend money to, other participating funds. The schedules of
investments include information regarding interfund lending for the
applicable funds under the caption "Other Information."
DELAYED DELIVERY TRANSACTIONS. Each fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. Each fund
identifies securities as segregated in its custodial records with a value
at least equal to the amount of the purchase commitment.
FUTURES CONTRACTS AND OPTIONS. The funds may invest in futures contracts,
and may also write options. These investments involve to varying degrees,
elements of market risk and risks in excess of the amount recognized in
each applicable fund's Statement of Assets and Liabilities. The face or
contract amounts, as reflected in each applicable fund's schedule of
investments under the captions "Purchased Options," "Written Options," or
"Futures Contracts," reflect the extent of the involvement each 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 funds 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 funds are 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. Restricted securities (excluding 144A issues) at the end of the
period are shown under the caption "Other Information" at the end of each
applicable fund's schedule of investments.
c JOINT TRADING ACCOUNT.
At the end of the period, Worldwide had 20% or more of its total
investments in repurchase agreements through a joint trading account. These
repurchase agreements were with entities whose creditworthiness has been
reviewed and found satisfactory by FMR. The repurchase agreements were
dated October 31, 1994 and due November 1, 1994. The maturity values of the
joint trading account investments were $243,588,330 at 4.78%. The
investments in repurchase agreements through the joint trading account are
summarized as follows:
SUMMARY OF JOINT TRADING ACCOUNT
Number of dealers or banks 26
Maximum amount with one dealer or bank 10.3%
Aggregate principal amount of agreements $18,074,295,000
Aggregate maturity amount of agreements $18,076,694,215
Aggregate market value of collateral $18,470,937,775
Coupon rates of collateral 3% to 15 3/4%
Maturity dates of collateral 11/3/94 to 11/15/24
d PURCHASES AND SALES OF INVESTMENTS.
Information regarding purchases and sales of securities (other than
short-term securities), the market value of future contracts opened and
closed, and written options is included under the caption "Other
Information" at the end of each applicable fund's schedule of investments.
e FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of each fund.
The group fee rate is the weighted average of a series of rates and is
based on the monthly average net assets of all the mutual funds advised by
FMR. The rates ranged from .2850% to .5200% for the period November 1, 1993
to July 31, 1994 and .2700% to .5200% for the period August 1, 1994 to
October 31, 1994. In the event that these rates were lower than the
contractual rates in effect during those periods, FMR voluntarily
implemented the above rates, as they resulted in the same or a lower
management fee. The annual individual fund fee rate is .45% for each fund
in the trust.
The basic fee for Canada, Diversified International, Europe, Japan,
Overseas, Pacific Basin, and Southeast Asia is subject to a performance
adjustment (up to a maximum of (plus/minus) .20%) based on each fund's
investment performance as compared to the appropriate index over a
specified period of time.
5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
For the period, each fund's management fee was equivalent to the following
annual rates expressed as a percentage of average net assets:
Canada .80%
Diversified International .72%
Emerging Markets, International
Growth & Income, Latin America and
Worldwide .77%
Europe Capital Appreciation .77%*
Europe .72%
Japan .75%
Overseas .80%
Pacific Basin .86%
Southeast Asia .69%
* Annualized
SUB-ADVISER FEE. FMR, on behalf of the funds, 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.
SALES LOAD. Fidelity Distributors Corporation (FDC), an affiliate of FMR,
is the general distributor of the funds. FDC is paid a 3% sales charge on
sales of shares of each fund, except for International Growth & Income
which, effective June 1, 1994, became a no-load fund. Prior to May 31,
1994, FDC was paid a 2% sales charge on sales of shares of International
Growth & Income. The sales charge for Emerging Markets, Latin America and
Southeast Asia was waived through May 31, 1994. The sales charge for
Canada, Diversified International, Europe Capital Appreciation, Japan and
Worldwide has been waived through June 30, 1995. Additionally, beginning
May 31, 1994, the sales charge for Overseas and Pacific Basin has been
waived through June 30, 1995.
Shares of Canada, Europe, Pacific Basin and International Growth & Income
purchased before October 12, 1990 are subject to the deferred sales charge
upon redemption.
The amount received by FDC for sales charges and deferred sales charges are
shown under the caption "Other Information" on each applicable fund's
Statement of Operations.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
funds' 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 funds' accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses. The accounting and pricing fees paid to FSC are shown under the
caption "Other Information" on each fund's Statement of Operations.
BROKERAGE COMMISSIONS. Certain funds placed a portion of their portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms are shown under the caption
"Other Information" at the end of each applicable fund's schedule of
investments.
f TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Information regarding affiliated
companies is included under the caption "Other Information" at the end of
each applicable fund's schedule of investments.
g BANK BORROWINGS.
Each fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. Each fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, each 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 are shown under the caption "Other
Information" at the end of each applicable fund's schedule of investments.
h EXPENSE REDUCTIONS.
FMR directed certain portfolio trades to brokers who paid a portion of
certain funds' expenses. For the period, the expenses of Canada,
Diversified International, Emerging Markets, Europe, International Growth &
Income, Latin America, and Worldwide were reduced by $2,288, $2,633,
$2,803, $3,406, $10,070, $7,604 and $15,367, respectively, under this
arrangement.
i CONCENTRATION OF RISK.
The relatively large investments of Emerging Markets, Latin America and
Southeast Asia 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 consequences of political,
social or economic changes in these markets may have disruptive effects on
the market prices of these funds' investments and the income they generate,
as well as the fund's ability to repatriate such amounts.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Investment Trust
and the Shareholders of:
Fidelity Canada Fund,
Fidelity Diversified International Fund,
Fidelity Emerging Markets Fund,
Fidelity Europe Fund,
Fidelity International Growth & Income Fund,
Fidelity Japan Fund,
Fidelity Overseas Fund,
Fidelity Pacific Basin Fund
and Fidelity Worldwide Fund:
We have audited the accompanying statements of assets and liabilities of
Fidelity Investment Trust: Fidelity Canada Fund, Fidelity Diversified
International Fund, Fidelity Emerging Markets Fund, Fidelity Europe Fund,
Fidelity International Growth & Income Fund, Fidelity Japan Fund,
Fidelity Overseas Fund, Fidelity Pacific Basin Fund, and Fidelity Worldwide
Fund, including the schedules of portfolio investments, as of October 31,
1994, and the related statements of operations for the year then ended,
the statements of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the periods
indicated. These financial statements and financial highlights are the
responsibility of the funds' 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 audits 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 October 31, 1994 by correspondence with the
custodians 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 Canada Fund, Fidelity Diversified
International Fund, Fidelity Emerging Markets Fund, Fidelity Europe Fund,
Fidelity International Growth & Income Fund, Fidelity Japan Fund, Fidelity
Overseas Fund, Fidelity Pacific Basin Fund, and Fidelity Worldwide Fund as
of October 31, 1994, the results of their operations for the year then
ended, the changes in their net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 13, 1994
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Investment Trust and the Shareholders of
Fidelity Europe Capital Appreciation Fund, Fidelity Latin America Fund and
Fidelity Southeast Asia Fund:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Europe Capital Appreciation Fund, Fidelity Latin America Fund and
Fidelity Southeast Asia Fund (funds of Fidelity Investment Trust) at
October 31, 1994, the results of each of their operations for the period
then ended, the changes in each of their net assets and the financial
highlights for the periods indicated, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of
the Fidelity Investment Trust's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities owned at October 31, 1994 by
correspondence with the custodians 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 LLP
Boston, Massachusetts
December 13, 1994
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 Investments Japan Ltd. (FIJ)
Fidelity International Investment Advisors (FIIA)
Fidelity International Investment Advisors
(U.K.) Limited (FIIAL U.K.)
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
Penelope Dobkin, VICE PRESIDENT, WORLDWIDE FUND
George C. Domolky, VICE PRESIDENT, CANADA FUND
Gregory Fraser, VICE PRESIDENT, DIVERSIFIED INTERNATIONAL
Simon Fraser, VICE PRESIDENT, PACIFIC BASIN FUND
Richard Hazelwood,, VICE PRESIDENT, EMERGING MARKETS
John R. Hickling, VICE PRESIDENT, OVERSEAS FUND
Patricia Satterthwaite, VICE PRESIDENT, LATIN AMERICA FUND
Sally Walden, VICE PRESIDENT, EUROPE FUND
Gary L. French, TREASURER
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
Arthur S. Loring, SECRETARY
Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS
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
CUSTODIANS
Chase Manhattan Bank, N.A.
New York, NY
DIVERSIFIED INTERNATIONAL FUND, INTERNATIONAL GROWTH & INCOME FUND,
OVERSEAS FUND, WORLDWIDE FUND, EUROPE FUND, EUROPE CAPITAL APPRECIATION
FUND, JAPAN FUND, PACIFIC BASIN FUND, EMERGING MARKETS FUND, SOUTHEAST ASIA
FUND
Brown Brothers Harriman & Co.
Boston, MA
CANADA FUND, LATIN AMERICA FUND
FIDELITY INTERNATIONAL EQUITY FUNDS
Canada Fund
Emerging Markets Fund
Europe Fund
Europe Capital Appreciation Fund
Diversified International Fund
International Growth and Income Fund
International Value Fund
Japan Fund
Latin America Fund
Pacific Basin Fund
Southeast Asia Fund
Overseas Fund
Worldwide Fund
CORPORATE HEADQUARTERS
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
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
BULK RATE
U.S. POSTAGE
P A I D
F I D E L I T Y
INVESTMENTS
(registered trademark)
P.O. Box 193
Boston, MA 02101
INT-12-94A
