(2_FIDELITY_LOGOS)FIDELITY'S
BROADLY DIVERSIFIED INTERNATIONAL EQUITY
FUNDS
FIDELITY INTERNATIONAL GROWTH & INCOME FUND
FIDELITY DIVERSIFIED INTERNATIONAL FUND
FIDELITY INTERNATIONAL VALUE FUND
FIDELITY OVERSEAS FUND
FIDELITY WORLDWIDE FUND
ANNUAL REPORT
FOR THE YEAR ENDING
OCTOBER 31, 1996
AND
PROSPECTUS
DATED DECEMBER 30, 1996
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
MARKET RECAP A-3 A REVIEW OF WHAT HAPPENED IN WORLD MARKETS
DURING THE LAST SIX MONTHS.
INTERNATIONAL GROWTH & INCOME FUND A-4 PERFORMANCE
A-5 FUND TALK: THE MANAGER'S OVERVIEW
A-7 INVESTMENT CHANGES
A-8 INVESTMENTS
A-13 FINANCIAL STATEMENTS
DIVERSIFIED INTERNATIONAL FUND A-15 PERFORMANCE
A-16 FUND TALK: THE MANAGER'S OVERVIEW
A-18 INVESTMENT CHANGES
A-19 INVESTMENTS
A-25 FINANCIAL STATEMENTS
INTERNATIONAL VALUE FUND A-27 PERFORMANCE
A-28 FUND TALK: THE MANAGER'S OVERVIEW
A-30 INVESTMENT CHANGES
A-31 INVESTMENTS
A-35 FINANCIAL STATEMENTS
OVERSEAS FUND A-37 PERFORMANCE
A-38 FUND TALK: THE MANAGER'S OVERVIEW
A-40 INVESTMENT CHANGES
A-41 INVESTMENTS
A-45 FINANCIAL STATEMENTS
WORLDWIDE FUND A-47 PERFORMANCE
A-48 FUND TALK: THE MANAGER'S OVERVIEW
A-50 INVESTMENT CHANGES
A-51 INVESTMENTS
A-55 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS A-57 NOTES TO THE FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS A-60 THE AUDITORS' OPINION
FIDELITY'S BROADLY DIVERSIFIED INTERNATIONAL P-1
EQUITY
FUNDS PROSPECTUS
</TABLE>
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MARKET RECAP
A world economic recovery and lower inflation in many areas of the globe
helped international markets produce mostly positive returns for the
one-year period ending October 31, 1996. Japan, however, proved to be the
major exception as an underperforming stock market and a weak yen
undermined the returns of U.S.-based investors. For the year, the Morgan
Stanley Capital International (MSCI) EAFE Index (capital weighted) - which
measures stock performance in Europe, Australia and the Far East - returned
10.47%.
EUROPE: Europe posted the most consistently strong equity markets when
compared to other regions. The UK's FT-SE 100 Index broke 4000 for the
first time and markets in Amsterdam, Brussels, Copenhagen, Dublin,
Frankfurt, Istanbul and Oslo all posted historical highs during the period.
Most European markets enjoyed stronger economic growth, low interest rates,
higher corporate earnings and the relative weakness of the Continent's
major currencies. In addition, a new emphasis on shareholder friendliness
by many of the region's corporations helped them raise the value of their
businesses. For the year ending October 31, 1996 the MSCI Europe Index was
up 17.47%.
JAPAN AND THE FAR EAST: The Japanese stock market underperformed on the
weakness of the economic recovery and the uncertainty for any substantial
economic reform. Many of the benefits of a weak yen had been priced into
the valuations of Japanese companies, and some investors became concerned
about domestic demand for Japanese goods. For the year, the MSCI Japan
Index was down 10.93% and the Tokyo Stock Exchange TOPIX Total Return
Index, another measure of the Japanese market, was off 1%. In contrast,
many markets in the rest of Asia had strong performance, although Korea,
Singapore, India and Thailand were notable laggards. The MSCI Far East
ex-Japan Free Index had a return of 9.89%. Top performing markets such as
Hong Kong benefited from the rising value of the property sector, solid
economic growth and stable interest rates. Despite shrinking trade deficits
in some countries, declining export growth in the region was a lingering
concern among investors.
EMERGING MARKETS: Despite the 6.48% return of the MSCI Emerging Markets
Free Index, emerging market equity returns ran the gamut from negative to
positive. As noted above, many of the Asian tiger markets had strong
returns for their region and thus also for the emerging markets category.
In Latin America, Venezuela was one of the world's top performing markets,
while Brazil and Mexico had relatively strong returns as investors began to
believe the worst might be over for the region. The mood in the region
wasn't entirely euphoric, however, as structural problems such as low
domestic savings and inefficient governments persisted. Looking at other
regions, South Africa lagged as the rand plummeted more than 30% in value
and Eastern European bourses had strong to moderately positive gains.
U.S. AND CANADA: The U.S. bull market celebrated its sixth birthday with
the Dow Jones Industrial Average breaking the 6000 point barrier for the
first time. For the period, the Standard & Poor's 500 Index returned
24.10%. The stock market was positively influenced by economic data
indicating a slowing in the economy. Investors took heart in the fact that
a slower economy would not spawn a rise in interest rates and thus crimp
corporate profits. Large-capitalization companies with long-term earnings
records were favored over small-caps as investors sought liquidity and
stability. This trend is evident when one compares the return of large-cap
S&P 500 to the 16.60% return of the small-cap-laden Russell 2000. The
Canadian stock market benefited from low interest rates, a stable currency
and the advent of an economic recovery. The Toronto Stock Exchange 300
Index surged 28.96% for the period.
BONDS: Emerging market debt - and particularly Brady bonds - continued
their dominance of the world fixed-income scene. The JP Morgan Emerging
Markets Bond Index returned 39.90%, soundly thrashing its developed-market
counterpart, the Salomon Brothers Non-U.S. World Government Bond Index,
which returned 5.45%. In the U.S., further signs of a slowing economy
pushed the 30-year Treasury bond out of the narrow trading range it had
maintained for several months. The long bond yield was as low as 6.64% on
October 31, 1996. For Europe, bond market returns were generally positive,
and the yields of countries such as Italy and Spain contracted relative to
countries such as Germany, which is expected to be a core participant in
the future European monetary union (EMU). Japanese bonds experienced great
volatility during the period, but at the end of October they continued to
reflect negative returns for U.S.-based investors, in part due to the weak
yen.
S&P 500 EAFE
* YEAR TO DATE THROUGH OCTOBER 31, 1996.
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
Row: 13, Col: 1, Value: 29.3
Row: 13, Col: 2, Value: 4.01
Row: 14, Col: 1, Value: 15.72
Row: 14, Col: 2, Value: 3.26
%
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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). If Fidelity had not reimbursed
certain fund expenses, the life of fund total returns would have been
lower. Prior to June 1, 1994, the fund imposed a 2% sales charge. If this
sales charge were taken into account, total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1996 YEAR YEARS FUND
INTERNATIONAL GROWTH & INCOME 10.66% 51.96% 127.83%
Morgan Stanley Capital 10.47% 44.54% 119.26%
International EAFE Index
JP Morgan Global 6.10% 56.96% 143.02%
Government Bond Index
International Funds Average 10.73% 57.53% 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 31, 1986. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Morgan Stanley Capital International Europe, Australasia, Far East (EAFE)
Index - a market capitalization weighted, unmanaged index of over 1,000
foreign stocks. You can also compare the fund's performance to the JP
Morgan Global Government Bond Index - a broad measure of bond performance
in developed countries including the United States. To measure how the
fund's performance stacked up against its peers, you can compare it to the
international funds average, which reflects the performance of 324 mutual
funds with similar objectives tracked by Lipper Analytical Services, Inc.
over the past 12 months. These benchmarks include reinvested dividends and
capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1996 YEAR YEARS FUND
INTERNATIONAL GROWTH & INCOME 10.66% 8.73% 8.72%
Morgan Stanley Capital 10.47% 7.65% 8.30%
International EAFE Index
JP Morgan Global 6.10% 9.44% 9.44%
Government Bond Index
International Funds Average 10.73% 9.36% 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
IMAHDR PRASUN SHR__CHT 19961031 19961204 120805 S00000000000001
Int'l Growth & Income MS EAFE Index
00305 MS001
1986/12/31 10000.00 10000.00
1987/01/31 10670.00 11091.44
1987/02/28 11140.00 11423.38
1987/03/31 11620.00 12359.45
1987/04/30 12070.00 13667.22
1987/05/31 12150.00 13667.17
1987/06/30 12269.85 13231.74
1987/07/31 12780.68 13208.62
1987/08/31 13131.25 14199.03
1987/09/30 13241.61 13975.49
1987/10/31 10468.71 12017.28
1987/11/30 10197.45 12135.62
1987/12/31 10832.65 12495.97
1988/01/31 10449.73 12719.07
1988/02/29 10923.34 13566.88
1988/03/31 11396.96 14401.06
1988/04/30 11699.26 14610.33
1988/05/31 11548.11 14141.98
1988/06/30 11417.11 13769.22
1988/07/31 11417.11 14201.21
1988/08/31 10852.81 13277.87
1988/09/30 11245.80 13858.05
1988/10/31 11900.80 15043.77
1988/11/30 12112.42 15939.87
1988/12/31 12085.31 16028.75
1989/01/31 12310.82 16310.76
1989/02/28 12351.82 16394.60
1989/03/31 12351.82 16072.84
1989/04/30 12659.34 16221.91
1989/05/31 12300.57 15339.38
1989/06/30 12341.57 15081.17
1989/07/31 13510.13 16974.95
1989/08/31 13325.62 16211.52
1989/09/30 13858.64 16949.99
1989/10/31 13192.36 16268.98
1989/11/30 13684.38 17086.82
1989/12/31 14396.16 17717.27
1990/01/31 14147.23 17058.04
1990/02/28 13649.38 15867.48
1990/03/31 13639.01 14214.47
1990/04/30 13607.90 14101.66
1990/05/31 14489.50 15710.68
1990/06/30 14945.87 15572.31
1990/07/31 15640.78 15791.65
1990/08/31 14302.81 14258.15
1990/09/30 12923.35 12271.07
1990/10/31 14219.84 14183.13
1990/11/30 13898.31 13346.50
1990/12/31 13931.49 13562.71
1991/01/31 14424.45 14001.39
1991/02/28 15238.91 15502.33
1991/03/31 14692.37 14571.68
1991/04/30 14917.41 14714.78
1991/05/31 14895.98 14868.32
1991/06/30 14177.97 13775.78
1991/07/31 14670.93 14452.61
1991/08/31 14617.35 14159.11
1991/09/30 15088.88 14957.10
1991/10/31 14992.43 15169.13
1991/11/30 14574.48 14460.97
1991/12/31 15051.28 15207.78
1992/01/31 15029.58 14882.94
1992/02/29 15051.28 14350.25
1992/03/31 14562.96 13402.90
1992/04/30 15203.21 13466.61
1992/05/31 15886.86 14368.01
1992/06/30 15734.94 13686.50
1992/07/31 15224.91 13336.22
1992/08/31 15496.20 14172.68
1992/09/30 15235.76 13892.81
1992/10/31 14421.88 13164.07
1992/11/30 14389.33 13287.94
1992/12/31 14548.43 13356.67
1993/01/31 14681.80 13355.03
1993/02/28 15081.91 13758.44
1993/03/31 16204.44 14957.71
1993/04/30 17104.69 16377.23
1993/05/31 17504.80 16723.11
1993/06/30 17271.40 16462.20
1993/07/31 17849.33 17038.46
1993/08/31 18782.92 17958.25
1993/09/30 18660.67 17554.02
1993/10/31 19171.92 18094.99
1993/11/30 18516.18 16513.30
1993/12/31 19652.02 17705.68
1994/01/31 20681.04 19202.61
1994/02/28 20311.94 19149.42
1994/03/31 19226.99 18324.63
1994/04/30 19484.25 19102.13
1994/05/31 19842.17 18992.46
1994/06/30 19361.21 19260.86
1994/07/31 19685.58 19446.09
1994/08/31 19875.72 19906.48
1994/09/30 19417.14 19279.52
1994/10/31 19618.47 19921.52
1994/11/30 19014.48 18964.09
1994/12/31 19087.75 19082.84
1995/01/31 18441.10 18349.76
1995/02/28 18568.12 18297.10
1995/03/31 19630.47 19438.31
1995/04/30 19988.44 20169.36
1995/05/31 19734.40 19928.93
1995/06/30 19780.59 19579.44
1995/07/31 20946.87 20798.38
1995/08/31 20704.38 20005.00
1995/09/30 20854.49 20395.70
1995/10/31 20588.90 19847.46
1995/11/30 20900.68 20399.69
1995/12/31 21422.63 21221.60
1996/01/31 21482.31 21308.72
1996/02/29 21434.57 21380.76
1996/03/31 21792.61 21834.80
1996/04/30 22341.60 22469.61
1996/05/31 22365.47 22056.13
1996/06/30 22520.62 22180.26
1996/07/31 21995.50 21531.99
1996/08/31 22269.99 21579.17
1996/09/30 22807.05 22152.44
1996/10/31 22783.18 21925.75
IMATRL PRASUN SHR__CHT 19961031 19961204 120807 R00000000000121
Let's say hypothetically that $10,000 was invested in Fidelity
International Growth & Income Fund on December 31, 1986, when the fund
started. As the chart shows, by October 31, 1996, the value of the
investment would have grown to $22,783 - a 127.83% increase on the initial
investment. For comparison, look at how both the Morgan Stanley Capital
International EAFE Index and the JP Morgan Global Government Bond Index did
over the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment in the EAFE index would have grown to $21,926 -
a 119.26% increase. If $10,000 was put in the bond index, it would have
grown to $24,302 - a 143.02% 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.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
INTERNATIONAL GROWTH & INCOME
FUND TALK: THE MANAGER'S OVERVIEW
An interview with John Hickling, Portfolio Manager of Fidelity
International Growth & Income Fund
Q. HOW DID THE FUND PERFORM, JOHN?
A. Pretty well. For the year ending October 31, 1996, the fund had a total
return of 10.66%. In order to evaluate performance, we can compare the
fund's return to two separate indexes because the fund invests in both
stocks and bonds - and no single index tracks both. For the past year, the
Morgan Stanley Capital International Europe, Australasia, Far East (EAFE)
Index returned 10.47%. The JP Morgan Global Government Bond Index - which
tracks the performance of government bonds in 13 developed countries
including the U.S. - returned 6.10% for the same period. Additionally, the
international funds average, as tracked by Lipper Analytical Services, was
10.73% for the same time period.
Q. WHY DO YOU THINK THE FUND HELD UP SO WELL AGAINST THE INDEXES?
A. It's a combination of underweighting Japan relative to the EAFE and JP
Morgan indexes and overweighting Europe in both equities and fixed income.
U.S.-based investors in Japan were hurt by the weakening yen and an
underperforming stock market. Additionally, Japanese bonds were very
volatile, and their paltry yields offered little compensation for that
volatility. Europe was just the opposite. European stocks and bonds did
fairly well with many well-managed, undervalued companies to choose from,
supported by an environment of moderate economic growth.
Q. O.K., JOHN. LET'S STEP BACK AND TAKE A LOOK AT SOME OF THESE MARKETS.
HOW DID YOU POSITION THE FUND IN EUROPE?
A. On the equity side, I tried to take advantage of mergers and
acquisitions, companies with oversold stocks and - to a certain extent -
cyclical companies. Let me give you some examples. Earlier in the year, the
fund participated in the price appreciation that resulted from the merger
announcement of CIBA-GEIGY and Sandoz, or Lucas and Varity. There were also
several once-high-flying growth stocks, such as Nokia and Ericsson, that
have been able to turn around their earnings declines. I also found value
in some cyclical stocks - or those that tend to perform better in the first
stages of an economic recovery. That's why the fund owned oil and gas
stocks such as Total, British Petroleum and Royal Dutch Petroleum during
the period.
Q. IN GENERAL, WHY DO YOU THINK EUROPEAN EQUITY MARKETS HAVE BEEN SOLID?
A. A year ago most analysts had given Europe up for dead. Many said Europe
was nothing more than an open air museum. I saw an exciting opportunity.
Governments and companies were beginning to realize a strong corporate
sector was necessary. Interest rates were low, and many companies were
cutting costs, consolidating, executing mutually beneficial mergers and
realizing their value. Combined with undervalued stocks, these are the
factors that drove the market this year.
Q. WHAT ABOUT EUROPEAN BONDS?
A. Equities outperformed bonds although slow-to-moderate growth and falling
interest rates helped bonds record positive returns. What's appealing about
Europe is the prospect for economic and monetary union in 1999 under the
Maastricht Treaty criteria. The treaty requires low budget deficits
relative to gross domestic product, as well as fiscal prudence. That's
great for bonds by itself. More importantly though, as countries with
higher-yielding debt such as Italy and Spain come closer to the Maastricht
criteria, their yield advantage relative to more stable bonds narrows and
their prices rise. We've already seen some evidence of this strong relative
performance of bonds from Italy and Spain this year.
Q. TURNING TO JAPAN, WHAT CAN YOU TELL US ABOUT THE
FUND'S HOLDINGS?
A. I still have some "core" equity positions in Japan. Honda, for example,
has shown the ability to cut costs and raise sales in a very tough domestic
market while remaining a global player. What concerns me about Japanese
companies is that back when the yen was strong, many companies were talking
about restructuring, cutting costs and raising the value of their
companies. Now that the yen is weak and Japanese exports are more
competitively priced, many of these same companies think the pressure is
off. That could prove detrimental in the long run.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Cookson Group, a UK conglomerate, was disappointing. The company's
electronics unit was adversely affected by the global semiconductor supply
glut and the resulting drop in memory chip prices.
Q. WHAT'S YOUR OUTLOOK?
A. As always, I will continue to look for undervalued securities around the
globe. For example, while positions in Europe have been good for the fund,
everyone likes Europe now. Therefore, there's the potential that stocks and
bonds could get too expensive. With Japan, however, you would be hard
pressed to find an analyst touting the Japanese market. Sometimes, when
most of the world is bearish on a particular region, that may be the time
to start getting back in. Additionally, I will continue to look for value
in the convertible securities market. As I said in the fund's last
shareholder report, convertibles - which can be bonds or preferred stock
that is convertible into common stock at a fixed price - can offer much of
the upside potential of equities with more of the downside protection
offered by bonds. I still believe this area can be inefficiently priced and
may, in the future, offer some opportunities to benefit the fund.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: growth of capital and current income by
investing mainly in foreign stocks and bonds
FUND NUMBER: 305
TRADING SYMBOL: FIGRX
START DATE: December 31, 1986
SIZE: as of October 31,1996, more than
$1.0 billion
MANAGER: John Hickling, since March 1996;
manager, Fidelity Overseas Fund, Fidelity Advisor
Overseas Fund and Fidelity VIP: Overseas,
1993-March 1996; Fidelity Advisor Annuity
Overseas Fund, 1995-1996; joined Fidelity
in 1982
(checkmark)
JOHN HICKLING ON SEARCHING FOR HIDDEN VALUE:
"Restructuring, consolidation and cost cutting are all
very positive developments an investor looks for in
a company. On the other hand, all these things are
usually very well publicized in the business media.
What I try to do is look for hidden value, or some
attributes of a company that may not be readily
apparent to the casual observer. For example, take
Telefonica de Espana. The Spanish company is an
international telecommunications provider. What
many people don't realize, though, is that the
company provides supplemental services such as
call waiting or voice mail. While these things are well
known in the U.S., they are just beginning to be
used in other parts of the world. The great thing about
these services is that they cost little or nothing to
maintain and are a constant source of revenue."
(solid bullet) The latest economic numbers point to slow- to
moderate-growth in Europe. According to THE
ECONOMIST, consumer-price inflation stood at an
annual rate of 1.5% in Germany, 1.8% in France
and 2.7% in Britain. Additionally, the 0.9%
increase in German producer prices for the year that
ended in October 31, 1996, is the first year-on-year
increase since September 1995.
DISTRIBUTIONS
The Board of Trustees of Fidelity International
Growth & Income Fund voted to pay on December 9,
1996, to shareholders of record at the opening of
business on December 6, 1996, a distribution of $.37
per share derived from capital gains realized from
sales of portfolio securities and a dividend of $.29
per share from net investment income.
A total of 10.57% of the dividends distributed during
the fiscal year was derived from interest on U.S.
government securities which is generally exempt
from state income tax.
A total of 2% of the dividends distributed during the
fiscal year qualifies for the dividends-received
deduction for corporate shareholders.
The fund will notify shareholders in January 1997 of
these percentages for use in preparing 1996 income
tax returns.
INTERNATIONAL GROWTH & INCOME
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
France 7.2%
United States 12.1%
Row: 1, Col: 1, Value: 12.1
Row: 1, Col: 2, Value: 17.9
Row: 1, Col: 3, Value: 4.5
Row: 1, Col: 4, Value: 29.5
Row: 1, Col: 5, Value: 3.6
Row: 1, Col: 6, Value: 15.2
Row: 1, Col: 7, Value: 10.0
Row: 1, Col: 8, Value: 7.2
Germany 10.0%
United
Kingdom 17.9%
Japan 15.2%
Sweden 4.5%
Netherlands 3.6%
Other 29.5%
AS OF APRIL 30, 1996
Australia 3.4%
United States 5.9%
Row: 1, Col: 1, Value: 5.9
Row: 1, Col: 2, Value: 11.5
Row: 1, Col: 3, Value: 6.3
Row: 1, Col: 4, Value: 23.4
Row: 1, Col: 5, Value: 3.3
Row: 1, Col: 6, Value: 26.8
Row: 1, Col: 7, Value: 10.1
Row: 1, Col: 8, Value: 9.300000000000001
Row: 1, Col: 9, Value: 3.4
France 9.3%
United Kingdom 11.5%
Sweden 6.3%
Germany 10.1%
Other 23.4%
Japan 26.8%
Netherlands 3.3%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 68.0 75.4
Bonds 4.3 1.1
Government obligations 20.4 22.8
Short-term investments 7.3 0.7
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Veba AG Ord. 1.4 1.2
(Germany, Electric Utility)
Canon, Inc. 1.3 1.4
(Japan, Computers & Office Equipment)
AKZO Nobel NV 1.3 1.2
(Netherlands, Chemicals & Plastics)
Total SA sponsored ADR 1.3 1.1
(France, Oil & Gas)
Honda Motor Co. Ltd. 1.2 0.6
(Japan, Autos, Tires, & Accessories)
British Petroleum PLC Ord. 1.1 0.9
(United Kingdom, Oil & Gas)
Huhtamaki Ord. 1.1 0.7
(Finland, Foods)
Pechiney SA Class A 1.1 1.2
(France, Metals & Mining)
Sony Corp. 1.0 1.8
(Japan, Consumer Electronics)
Volvo AB Class B 1.0 1.2
(Sweden, Autos, Tires, & Accessories)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 11.1 10.2
Durables 8.5 12.1
Basic Industries 8.4 10.5
Utilities 7.3 7.5
Technology 5.5 7.0
Industrial Machinery & Equipment 5.2 8.6
Energy 4.8 5.5
Retail & Wholesale 4.5 4.1
Nondurables 4.3 2.2
Construction & Real Estate 3.3 2.1
INTERNATIONAL GROWTH & INCOME
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 66.4%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.7%
Telefonica de Argentina SA
sponsored ADR 80,000 $ 1,860,000
YPF Sociedad Anonima sponsored ADR
representing Class D shares 241,000 5,482,750
7,342,750
AUSTRALIA - 1.1%
Brambles Industries Ltd. 145,000 2,398,489
Commonwealth Bank of Australia (b) 8,005 75,076
Commonwealth Bank of Australia
Final Installment Receipt (a)(g) 163,800 986,557
Fosters Brewing Group Ltd. 2,195,000 3,995,635
National Mutual Holdings Ltd. (a)(b) 407,000 579,816
QNI Ltd. 1,765,400 3,548,954
11,584,527
AUSTRIA - 0.7%
Austria Mikro Systeme International 2,150 136,559
EVN (Energie-Versor Nieder) 34,680 4,694,609
Mayr Melnhof Karton AG (a) 50,000 2,449,763
7,280,931
BELGIUM - 0.9%
Bekaert SA 3,960 3,197,173
Delhaize Freres & Cie Le Lion SA 50,000 2,789,813
Solvay & Cie SA 5,200 3,105,086
9,092,072
BERMUDA - 0.2%
Sakura Finance Bermuda Trust sponsored
ADR (b) 35 2,012,053
BRAZIL - 1.0%
Aracruz Celulose SA ADR 225,000 1,800,000
Compania Cervejaria Brahma PN
(Pfd. Reg.) 3,350,000 2,070,316
Multicanal Participacoes SA
sponsored ADR 57,000 798,000
Telebras ON 51,000,000 3,107,155
Telesp:
ON (a) 479,988 81,750
PN (Pfd. Reg.) 11,200,000 2,049,246
9,906,467
CANADA - 0.3%
AT Plastics, Inc. 74,900 721,887
Inco Ltd. 51,600 1,632,680
JDS Fitel, Inc. 45,000 689,230
Viridian, Inc. 2,000 26,000
Westaim Corp. 1,946 6,325
3,076,122
CHILE - 0.1%
Santa Isabel SA sponsored ADR 51,000 1,434,375
CHINA (PEOPLES REP) - 0.3%
Maanshan Iron & Steel Co. Ltd.
Class H 13,000,000 2,320,167
Shanghai Industrial Holdings Ltd.
Class H (a)(b) 443,000 1,005,490
3,325,657
DENMARK - 1.1%
International Service Systems AS,
Series B 245,000 6,932,535
Novo-Nordisk AS Class B 25,000 4,150,089
11,082,624
SHARES VALUE (NOTE 1)
FINLAND - 2.9%
America Group Ltd. Class A 140,000 $ 3,186,927
Huhtamaki Ord. 250,000 10,832,032
Nokia Corp. AB, Series A 140,000 6,447,753
Valmet OY 512,100 7,794,075
Valmet OY (b) 65,000 989,289
29,250,076
FRANCE - 5.5%
Accor SA 7,682 962,499
Alcatel Alsthom Compagnie Generale
d'Electricite SA 102,900 8,755,738
Assurance Generales De France
Vie SA (b) 115,000 3,384,465
Axime SA Ex Segin (a)(b) 30,000 3,108,899
BQE National Paris Ord. (a) 80,000 2,986,729
Carrefour Supermarche SA 1,800 996,604
Credit Lyonnais (a) 75,000 2,047,717
Elf Sanofi SA 3,100 280,174
Michelin SA (Compagnie Generale
des Etablissements) Class B 200,000 9,621,390
Pechiney SA Class A 250,000 10,709,407
Total SA sponsored ADR 327,192 12,760,488
55,614,110
GERMANY - 4.3%
BASF AG 100,000 3,231,991
Bayerische Hypotheken-und
Wechselbank AG 200,000 5,909,286
Continental Gummi-Werke AG 120,000 2,090,978
Daimler-Benz AG Ord. (a) 130,000 7,663,230
Dresdner Bank AG Ord. 110,000 2,934,879
Hornbach Baumarket AG (Bearer) 25,000 807,009
Puma AG (Rudolf Dassler Sport) (a)(b) 30,000 899,239
Siemens AG 90,000 4,651,932
Veba AG Ord. 260,000 13,873,975
Volkswagen AG 3,000 1,198,458
43,260,977
GREECE - 0.3%
OTE SA (b) 140,000 2,465,966
HONG KONG - 2.5%
HSBC Holdings PLC 119,543 2,448,710
Hong Kong & China Gas Co. Ltd. 3,165,600 5,567,906
Hong Kong & China Gas Co. Ltd.
(warrants) (a) 263,800 97,234
Hong Kong Electric Holdings Ord. 1,530,000 4,897,377
Johnson Electric Holdings Ltd. 2,350,000 5,136,313
South China Morning Post Holdings 4,180,000 3,567,937
Sun Hung Kai & Co. Ltd. 1,000 262
Sun Hung Kai & Co. Ltd. (rights) (a) 400 12
Wharf Holdings Ltd. (b) 744,000 3,069,450
24,785,201
INDONESIA - 1.2%
Astra International PT (For. Reg.) 1,941,000 4,041,498
Bank International Indonesia PT
(For. Reg.) 1,528,888 2,461,399
Inti Indorayon Utama PT (For. Reg.) (a) 2,068,000 1,864,425
Indah Kiat Pulp & Paper (For. Reg.) 3,475,089 2,722,726
Matahari Putra Prima PT (For. Reg.) 1,097,500 954,124
Matahari Putra Prima PT (For. Reg.)
(rights) (a) 1,097,500 482,951
12,527,123
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ITALY - 0.8%
Italcementi Fabbriche Ruinite
Cemento Spa 50,000 $ 265,179
Mediolanum Spa (a)(b) 228,000 2,244,444
Stet (Societa Finanziaria Telefonica)
Spa Ord. 600,000 2,077,582
Telecom Italia Spa 1,300,000 2,903,373
Telecom Italia Mobile Spa 310,000 638,458
8,129,036
JAPAN - 14.8%
Acom Co. Ltd. 95,000 3,640,868
Advantest Corp. (a) 105,000 3,959,658
Amway Japan Ltd. 58,400 2,325,245
Aoyama Trading Co. Ord. 85,200 2,174,365
Canon, Inc. 700,000 13,383,031
Daito Trust Construction Co. 100,000 1,262,881
Daiwa House Industry Co. Ltd. 200,000 2,771,322
Daiwa Securities Co. Ltd. 274,000 2,955,668
Fuji Electric Co. Ltd. 594,000 2,693,252
Fuji Photo Film Co. Ltd. 300,000 8,603,377
Higashi Nihon House Co. Ltd. 100,000 1,438,281
Hitachi Koki Co. Ltd. Ord. 100,000 837,536
Hitachi Maxell Ltd. 200,000 3,946,503
Honda Motor Co. Ltd. 491,000 11,712,520
Hoya Corp. 52,000 1,705,591
Ishikawajima-Harima Heavy
Industries Co. Ltd. 610,000 2,808,595
Jusco Co. Ltd. 149,000 4,416,751
Komatsu Ltd. Ord. 744,000 6,081,193
Konica Corp. 147,000 981,074
Matsushita Electric Industrial Co. Ltd. 300,000 4,788,424
Mitsubishi Electric Co. Ord. 245,000 1,415,961
Mitsui Trust and Banking Co. Ltd. 190,000 1,832,931
Namco Ltd. 98,000 2,930,761
Nitto Denko Corp. 200,000 2,964,262
Omron Corp. 300,000 5,340,934
Ricoh Co. Ltd. Ord. 250,000 2,477,527
Sankyo Co. Ltd. 160,000 3,957,027
Sekisui Chemical Co. Ltd. 750,000 8,353,432
Sekisui House Ltd. 300,000 3,157,203
Shimamura Corp. 65,000 2,382,811
Shin-Etsu Chemical Co. Ltd. 2,000 34,203
Sony Corp. 175,000 10,482,351
Takashimaya Co. Ltd. 184,000 2,630,300
Takeda Chemical Industries Ltd. (a) 335,000 5,729,007
Tokyo Electron Ltd. (a) 108,000 2,775,181
Toyota Motor Corp. 100,000 2,359,132
Uni Charm Corp. Ord. 121,000 2,939,443
Uny Co. Ltd. 300,000 5,183,074
Yamanouchi Pharmaceutical Co. Ltd. 50,000 1,012,936
150,444,611
MALAYSIA - 1.1%
Arab Malaysian Corp. BHD 720,000 3,191,009
Hong Leong Credit BHD 562,000 3,113,450
Malaysian Industrial Development
Finance BHD Ord. 418,000 711,250
TA Enterprise BHD 3,142,000 4,301,895
Tenega Nasional BHD 1,000 3,997
11,321,601
SHARES VALUE (NOTE 1)
MEXICO - 1.2%
BANACCI SA de CV Class B (a) 1,100,000 $ 2,346,299
Gruma SA Class B sponsored ADR (a)(b) 157,500 2,913,750
Grupo Financiero Bancomer Class B (a) 12,200,000 5,219,825
Grupo Financiero Inbursa SA Class B 479,000 1,562,610
Telefonos de Mexico SA sponsored ADR
representing Ord. Class L shares 1,000 30,500
12,072,984
NETHERLANDS - 3.6%
AKZO Nobel NV 105,300 13,236,405
ING Groep NV 100,000 3,110,210
KBB NV Ord. 45,000 3,135,197
KLM Royal Dutch Air Lines NV 30,000 712,585
Polynorm NV Ord. 10,000 858,394
Royal Dutch Petroleum Co.:
ADR 33,200 5,490,450
Ord. 40,000 6,589,646
Vendex International NV 80,243 3,231,705
36,364,592
NORWAY - 0.7%
Norsk Hydro AS ADR 10,000 458,750
Orkla AS Class B (non-vtg.) 40,000 2,331,578
Saga Petroleum AS Class B 138,000 2,145,771
Smedvig AS 76,800 1,722,242
Smedvig AS, Series B (a) 19,200 414,058
7,072,399
PERU - 0.1%
Compania de Minas Buenaventura SA
Class B sponsored ADR (a) 52,000 871,000
PHILIPPINES - 0.9%
Belle Resources Corp. (a) 6,256,000 1,666,363
Empire East Land, Inc. (a) 887,500 430,579
Guoco Holdings Philippines, Inc. 645,000 122,717
Megaworld Properties &
Holdings, Inc. (a) 17,306,250 6,585,331
8,804,990
PORTUGAL - 0.2%
Portugal Telecom SA 85,000 2,203,909
SINGAPORE - 0.2%
Far East-Levingston Shipbuilding Ltd. 167,000 806,861
Kim Engineering Holdings Ltd. 20,000 16,034
Sembawang Shipyard Ltd. 376,000 1,613,906
2,436,801
SPAIN - 2.9%
Banco Bilbao Vizcaya SA Ord. (Reg.) 100,000 4,852,659
Banco Popular Espanol 15,000 2,863,460
Corporacion Mapfre Compania
Internacional de Reaseguros SA 94,017 4,635,911
Dragados y Construcciones SA 225,000 3,011,388
FOCSA (Fomento Construcciones y
Contratas SA) 10,000 810,864
Iberdrola SA 250,000 2,651,352
Tabacalera SA, Series A 110,000 4,020,663
Telefonica de Espana SA Ord. 325,000 6,511,956
29,358,253
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWEDEN - 3.4%
Autoliv AB 50,000 $ 2,118,982
Ericsson (L.M.) Telephone Co.:
Class B 100,000 2,703,791
Class B ADR 85,000 2,348,125
Esselte AB Class B Free shares 139,000 3,103,739
Forcenergy AB Class B Free shares 138,400 1,513,637
Scania AB:
Class A 33,000 884,732
Class B 33,000 884,732
Svedala Industri Free shares 100,000 1,564,553
Svenska Handelsbanken 200,000 4,921,507
Swedish Match Co. 681,300 2,028,372
Swedish Match Co. ADR 10,000 297,500
Volvo AB:
ADR Class B 100,000 2,050,000
Class B 500,000 10,367,062
34,786,732
SWITZERLAND - 1.7%
CS Holding AG (Reg.) 50,000 4,978,509
CIBA-GEIGY AG (Reg.) 1,600 1,964,746
Julius Baer Holding AG 2,000 2,096,297
SIG AG (Reg.) 2,500 3,036,397
Surveillance, Societe Generale (Bearer) 2,400 5,432,391
17,508,340
THAILAND - 0.3%
Thai Military Bank Ltd. (For. Reg.) 1,331,700 3,079,377
UNITED KINGDOM - 11.4%
Aegis Group PLC 2,040,000 2,082,723
Albright & Wilson PLC 550,000 1,736,009
BBA Group PLC 650,000 3,786,029
BTR PLC Ord. 250,000 1,047,381
Bass PLC Ord. 330,000 4,230,851
British Aerospace PLC 200,000 3,786,843
British Gas PLC Ord. 1,400,000 4,350,598
British Petroleum PLC Ord. 1,038,023 11,150,719
British Telecommunications PLC Ord. 630,000 3,643,911
Cable & Wireless PLC Ord. 380,000 3,017,109
Caradon PLC 1,600,000 6,286,728
Cookson Group PLC 2,214,492 8,142,731
Glaxo Holdings PLC 275,000 4,317,651
Grand Metropolitan PLC 558,800 4,213,992
Kingfisher PLC 300,000 3,197,055
Ladbroke Group PLC Ord. 1,700,000 5,517,971
Lex Service PLC Ord. 350,000 2,072,798
Lloyds TSB Group PLC 350,000 2,218,008
Lucasvarity PLC (a) 1,215,909 4,916,036
National Grid Co. PLC 1,153,700 3,378,726
Rolls Royce PLC Ord. 1,050,000 4,347,751
Safeway PLC (a) 1,024,971 6,078,503
Shanks & McEwan Group PLC 500,000 935,525
Shell Transport & Trading Co.
PLC (Reg.) 40,000 655,356
Smith (W.H.) Group PLC Ord. 400,000 2,980,664
Royal & Sun Alliance Insurance
Group PLC 520,100 3,566,744
Tomkins PLC Ord. 1,233,333 5,177,113
Unilever PLC Ord. 150,000 3,150,686
Vodafone Group PLC 1,350,000 5,216,561
WPP Group PLC 33,200 123,157
115,325,929
TOTAL COMMON STOCKS
(Cost $622,423,047) 673,821,585
PREFERRED STOCKS - 1.6%
SHARES VALUE (NOTE 1)
CONVERTIBLE PREFERRED STOCKS - 0.4%
HONG KONG - 0.2%
Jardine Strategic
Holdings Ltd. 7 1/2% (a) 18,000 $ 1,966,500
JAPAN - 0.2%
AJL participating trust exchangeable 117,100 2,180,988
TOTAL CONVERTIBLE PREFERRED STOCKS 4,147,488
NONCONVERTIBLE PREFERRED STOCKS - 1.2%
GERMANY - 0.8%
Volkswagen AG 17,000 5,196,482
Wella AG 6,000 3,391,416
8,587,898
ITALY - 0.4%
Banco Ambro Veneto 1,800,000 2,767,343
Italmobiliare Spa 90,000 539,247
Stet (Societa Finanziaria Telefonica) Spa 225,000 599,690
3,906,280
TOTAL NONCONVERTIBLE PREFERRED STOCKS 12,494,178
TOTAL PREFERRED STOCKS
(Cost $15,710,573) 16,641,666
CORPORATE BONDS - 4.3%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) (F) AMOUNT (C)
CONVERTIBLE BONDS - 2.7%
ARGENTINA - 0.1%
Banco de Galicia y Buenos
Aires SA 7%, 8/1/02 B1 $ 1,000,000 970,000
BERMUDA - 0.6%
MBL International Finance of
Bermuda 3%, 11/30/02 Aa2 5,500,000 6,063,750
GRAND CAYMAN - 0.2%
Wharf Capital International
1993 Ltd. 5%, 7/15/00 Baa2 1,750,000 2,205,000
JAPAN - 0.2%
Matsushita Electric Works Co.
Ltd. 2.70%, 5/31/02 - JPY 81,000,000 852,445
Sony Corp. 0.15%, 3/30/01 Aa3 JPY 100,000,000 936,637
1,789,082
MEXICO - 0.6%
Alfa SA de CV
8%, 9/15/00 (b) - 1,900,000 1,957,000
Empresas Ica Sociedad
Controladora SA de CV
5%, 3/15/04 B3 6,000,000 3,990,000
5,947,000
NETHERLANDS ANTILLES - 0.1%
Sumitomo Bank International
Finance NV 0.75%,
5/31/01 (b) A2 JPY 62,000,000 595,396
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (F) AMOUNT (C) (NOTE 1)
CONVERTIBLE BONDS - CONTINUED
UNITED KINGDOM - 0.8%
Glaxo Wellcome PLC
4.30%, 9/28/98 A1 JPY 195,000,000 $ 2,009,428
Grand Metropolitan PLC euro
6 1/2%, 1/31/00 A2 2,500,000 2,931,250
Land Securities PLC
7%, 9/30/08 A1 GBP 2,000,000 3,709,560
8,650,238
UNITED STATES OF AMERICA - 0.1%
Unisys Corp.
8 1/4%, 3/15/06 B3 937,000 1,077,550
TOTAL CONVERTIBLE BONDS 27,298,016
NONCONVERTIBLE BONDS - 1.6%
AUSTRALIA - 1.6%
Queensland Treasury Corp.
8%, 8/14/01 Aaa AUD 20,000,000 16,409,924
TOTAL CORPORATE BONDS
(Cost $42,345,406) 43,707,940
GOVERNMENT OBLIGATIONS (E) - 20.4%
DENMARK - 0.5%
Danish Kingdom Bullet
8%, 5/15/03 Aaa DKK 29,000,000 5,428,797
FRANCE - 1.7%
French Government:
8 1/2%, 12/26/12 Aaa FRF 17,000,000 4,027,381
OAT:
7 1/4%, 4/25/06 Aaa FRF 20,000,000 4,272,834
6%, 10/25/25 Aaa FRF 35,000,000 6,120,219
Principal Strips 0%,
10/25/25 Aaa FRF 110,000,000 2,692,553
17,112,987
GERMANY - 4.9%
German Federal Republic:
8%, 7/22/02 Aaa DEM 9,300,000 6,925,604
6 5/8%, 7/9/03 Aaa DEM 12,200,000 8,478,395
6%, 6/20/16 Aaa DEM 32,600,000 19,925,742
Treuhandanstalt
7 1/2%, 9/9/04 Aaa DEM 20,000,000 14,519,582
49,849,323
ITALY - 1.7%
Italian Republic (d):
8 1/2%, 4/1/99 Aa3 ITL 15,600,000 10,607,236
10 1/2%, 9/1/05 Aa3 ITL 8,000,000 6,015,336
16,622,572
NEW ZEALAND - 0.1%
New Zealand Government
9%, 11/15/96 Aaa NZD 1,500,000 1,059,982
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (F) AMOUNT (C) (NOTE 1)
SWEDEN - 1.1%
Swedish Government
13%, 6/15/01 Aa1 SEK 60,000,000 $11,441,591
UNITED KINGDOM - 5.7%
United Kingdom, Great Britain &
Northern Ireland:
9 1/2%, 1/15/99 Aaa GBP 4,500,000 7,719,607
9 3/4%, 8/27/02 Aaa GBP 13,100,000 23,658,207
6 3/4%, 11/26/04 Aaa GBP 5,500,000 8,543,021
7 3/4%, 9/8/06 Aaa GBP 5,100,000 8,357,340
9%, 10/13/08 Aaa GBP 2,200,000 3,932,866
8 3/4%, 8/25/17 Aaa GBP 3,000,000 5,285,208
57,496,249
UNITED STATES OF AMERICA - 4.7%
U.S. Treasury Obligations:
6 1/2%, 5/15/97 Aaa 7,820,000 7,865,200
8 1/2%, 5/15/97 Aaa 7,535,000 7,656,238
9 1/4%, 8/15/98 Aaa 7,385,000 7,820,050
9 1/8%, 5/15/99 Aaa 7,400,000 7,961,956
7 3/4%, 12/31/99 Aaa 7,550,000 7,935,730
7 1/4%, 2/15/23 Aaa 750,000 784,335
6 1/4%, 8/15/23 Aaa 830,000 779,677
7 1/2%, 11/15/24 Aaa 1,570,000 1,722,086
7 5/8%, 2/15/25 Aaa 2,750,000 3,064,105
6 7/8%, 8/15/25 Aaa 1,860,000 1,901,552
47,490,929
TOTAL GOVERNMENT OBLIGATIONS
(Cost $198,528,118) 206,502,430
CASH EQUIVALENTS - 7.3%
MATURITY
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 73,809,357 73,798,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $952,805,144) $ 1,014,471,621
CURRENCY ABBREVIATIONS
AUD - Australian dollar
GBP - British pound
DKK - Danish krone
FRF - French franc
DEM - German deutsche mark
ITL - Italian lira
JPY - Japanese yen
NZD - New Zealand dollar
SEK - Swedish krona
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 $25,300,333 or 2.5% of net
assets.
(c) Principal amount is stated in United States dollars unless otherwise
noted.
(d) Principal amount in thousands.
(e) Some 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.
(f) Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
(g) Purchased on an installment basis. Market value reflects only those
payments made through October 31, 1996. The remaining installment
aggregating AUD 728,910 is due November 14, 1997.
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 22.5% AAA, AA, A 22.1%
Baa 0.2% BBB 0.0%
Ba 0.0% BB 0.5%
B 0.6% B 0.1%
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
both S&P and Moody's amounted to 0.3%.
Purchases and sales of securities, other than short-term securities,
aggregated $950,117,256 and $834,379,306, respectively, of which U.S.
government and government agency obligations aggregated $17,590,265 and
$17,188,681, respectively.
The market value of futures contracts opened and closed during the period
amounted to $86,965,988 and $149,507,809, respectively (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 $129,561 for the period (see Note 4 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $953,346,953. Net unrealized appreciation aggregated
$61,124,668, of which $82,398,759 related to appreciated investment
securities and $21,274,091 related to depreciated investment securities.
The fund hereby designates approximately $24,225,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
For the period, interest and dividends from foreign countries were
$30,886,301. Taxes accrued or paid to foreign countries were $1,870,778.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 1.0%
Basic Industries 8.4
Cash Equivalents 7.3
Conglomerates 0.4
Construction & Real Estate 3.3
Durables 8.5
Energy 4.8
Finance 11.1
Government Obligations . 20.4
Health 2.5
Holding Companies 1.1
Industrial Machinery & Equipment 5.2
Media & Leisure 1.4
Nondurables 4.3
Precious Metals 0.1
Retail & Wholesale 4.5
Services 2.3
Technology 5.5
Transportation 0.6
Utilities 7.3
100.0%
INTERNATIONAL GROWTH & INCOME
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at $ 1,014,471,621
value (including repurchase agreements of $73,798,000)
(cost $952,805,144) - See accompanying schedule
Cash 65,858
Receivable for investments sold 933,593
Receivable for fund shares sold 5,923,822
Dividends receivable 1,969,851
Interest receivable 4,916,884
TOTAL ASSETS 1,028,281,629
LIABILITIES
Payable for investments purchased $ 13,942,597
Payable for fund shares redeemed 6,216,937
Accrued management fee 640,886
Other payables and 405,559
accrued expenses
TOTAL LIABILITIES 21,205,979
NET ASSETS $ 1,007,075,650
Net Assets consist of:
Paid in capital $ 890,287,381
Undistributed net investment income 21,693,374
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 33,340,437
Net unrealized appreciation (depreciation) on investments 61,754,458
and assets and liabilities in
foreign currencies
NET ASSETS, for 52,749,383 $ 1,007,075,650
shares outstanding
NET ASSET VALUE, offering price $19.09
and redemption price per share ($1,007,075,650 (divided by) 52,749,383 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME $ 16,619,452
Dividends
Interest 23,524,888
40,144,340
Less foreign taxes withheld (1,870,778
)
TOTAL INCOME 38,273,562
EXPENSES
Management fee $ 7,427,387
Transfer agent fees 2,766,580
Accounting fees and expenses 541,422
Non-interested trustees' compensation 3,784
Custodian fees and expenses 463,057
Registration fees 59,869
Audit 51,300
Legal 12,645
Miscellaneous 17,049
Total expenses before reductions 11,343,093
Expense reductions (170,690 11,172,403
)
NET INVESTMENT INCOME 27,101,159
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 48,921,039
Foreign currency transactions (223,385
)
Futures contracts 9,384,170 58,081,824
Change in net unrealized appreciation (depreciation) on:
Investment securities 13,096,510
Assets and liabilities in 15,887
foreign currencies
Futures contracts 162,651 13,275,048
NET GAIN (LOSS) 71,356,872
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 98,458,031
OTHER INFORMATION $ 101,145
Expense reductions
Directed brokerage arrangements
Custodian interest credits 3,723
Transfer agent interest credits 65,822
$ 170,690
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 27,101,159 $ 30,974,801
Net investment income
Net realized gain (loss) 58,081,824 (23,050,406)
Change in net unrealized appreciation (depreciation) 13,275,048 21,918,171
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 98,458,031 29,842,566
Distributions to shareholders (30,254,272) (16,097,075)
From net investment income
From net realized gain - (24,102,957)
TOTAL DISTRIBUTIONS (30,254,272) (40,200,032)
Share transactions 756,874,122 548,686,974
Net proceeds from sales of shares
Reinvestment of distributions 29,614,909 39,646,248
Cost of shares redeemed (750,852,349) (1,042,678,966)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 35,636,682 (454,345,744)
TOTAL INCREASE (DECREASE) IN NET ASSETS 103,840,441 (464,703,210)
NET ASSETS
Beginning of period 903,235,209 1,367,938,419
End of period (including undistributed net investment income of $21,693,374 and
$24,058,046, respectively) $ 1,007,075,650 $ 903,235,209
OTHER INFORMATION
Shares
Sold 41,219,618 32,087,835
Issued in reinvestment of distributions 1,655,407 2,423,206
Redeemed (40,792,385) (61,852,870)
Net increase (decrease) 2,082,640 (27,341,829)
</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 1996 1995 1994 E 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.83 $ 17.54 $ 17.25 $ 13.29 $ 13.99
Income from Investment Operations
Net investment income .54 .54 .38 B .14 B .31
Net realized and unrealized gain (loss) 1.32 .28 D .02 4.14 (.84)
Total from investment operations 1.86 .82 .40 4.28 (.53)
Less Distributions
From net investment income (.60) (.21) (.03) (.31) (.16)
From net realized gain - (.32) (.05) (.01) C (.01) C
In excess of net realized gain - - (.03) - -
Total distributions (.60) (.53) (.11) (.32) (.17)
Net asset value, end of period $ 19.09 $ 17.83 $ 17.54 $ 17.25 $ 13.29
TOTAL RETURN A, I 10.66% 4.95% 2.33% 32.94% (3.81)%
H H
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,007,076 $ 903,235 $ 1,367,938 $ 1,002,847 $ 60,007
Ratio of expenses to average net assets 1.16% 1.18% 1.21% 1.52% 1.62%
Ratio of expenses to average net assets after expense reductions 1.14% F 1.18% 1.21% 1.52% 1.62%
Ratio of net investment income to average net assets 2.76% 2.98% 2.16% .87% 2.78%
Portfolio turnover rate 95% 141% 173% 24% 76%
Average commission rate G $ .0065
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY
RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
D THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF
SALES AND REPURCHASES
OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE
INVESTMENTS OF THE FUND.
E EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL
GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS
A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO
BOOK TO TAX DIFFERENCES.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS
WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
H TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
I TOTAL RETURNS DO NOT INCLUDE THE DEFERRED SALES CHARGE.
</TABLE>
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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). If Fidelity had not reimbursed
certain fund expenses, the life of fund total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1996 YEAR FUND
DIVERSIFIED INTERNATIONAL 18.66% 60.15%
Morgan Stanley Capital International 10.69% 54.47%
GDP-Weighted EAFE Index
International Funds Average 10.73% 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
December 27, 1991. For example, if you invested $1,000 in a fund that had a
5% return over the past year, the value of your investment would be $1,050.
You can compare the fund's returns to the performance of the Morgan Stanley
Capital International Europe, Australasia, Far East (EAFE) Index, a gross
domestic product weighted, unmanaged index of over 1,000 foreign stocks. To
measure how the fund's performance stacked up against its peers, you can
compare it to the international funds average, which reflects the
performance of 324 mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. over the past 12 months. These benchmarks include
reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1996 YEAR FUND
DIVERSIFIED INTERNATIONAL 18.66% 10.19%
Morgan Stanley Capital International 10.69% 9.38%
GDP-Weighted EAFE Index
International Funds Average 10.73% 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
IMAHDR PRASUN SHR__CHT 19961031 19961106 205313 S00000000000001
Diversified International MS GDP-Wtd. EAFE Index
00325 MS005
1991/12/27 10000.00 10000.00
1991/12/31 10060.00 10275.57
1992/01/31 9860.00 10188.63
1992/02/29 9680.00 10050.14
1992/03/31 9140.00 9554.95
1992/04/30 9240.00 9638.28
1992/05/31 9750.00 10205.78
1992/06/30 9540.00 9873.69
1992/07/31 9190.00 9524.06
1992/08/31 9350.00 9997.89
1992/09/30 9140.00 9631.08
1992/10/31 8460.00 9240.11
1992/11/30 8460.00 9285.20
1992/12/31 8671.06 9283.63
1993/01/31 8873.42 9391.13
1993/02/28 9176.96 9719.67
1993/03/31 9915.57 10383.39
1993/04/30 10522.64 11339.71
1993/05/31 10785.71 11516.97
1993/06/30 10482.17 11317.62
1993/07/31 10805.94 11658.22
1993/08/31 11362.43 12512.58
1993/09/30 11210.66 12250.09
1993/10/31 11453.49 12586.98
1993/11/30 11028.54 11584.19
1993/12/31 11850.64 12399.01
1994/01/31 12739.44 13347.09
1994/02/28 12484.04 13273.82
1994/03/31 12085.61 13083.23
1994/04/30 12320.58 13744.12
1994/05/31 12300.15 13428.70
1994/06/30 12136.69 13422.75
1994/07/31 12555.55 13734.43
1994/08/31 12872.25 13967.08
1994/09/30 12504.47 13476.08
1994/10/31 12729.22 13885.61
1994/11/30 12044.75 13266.77
1994/12/31 11979.79 13367.39
1995/01/31 11428.51 13024.96
1995/02/28 11566.33 13010.19
1995/03/31 12128.21 13599.39
1995/04/30 12509.87 14207.31
1995/05/31 12615.88 14069.97
1995/06/30 12806.71 13912.97
1995/07/31 13633.63 14822.36
1995/08/31 13421.60 14203.34
1995/09/30 13676.04 14371.87
1995/10/31 13495.81 13955.28
1995/11/30 13633.63 14249.36
1995/12/31 14132.55 14859.11
1996/01/31 14555.74 15047.94
1996/02/29 14566.88 15092.84
1996/03/31 14856.44 15292.91
1996/04/30 15391.00 15769.16
1996/05/31 15546.91 15536.30
1996/06/30 15691.69 15658.22
1996/07/31 15190.54 15208.75
1996/08/31 15446.68 15200.26
1996/09/30 15914.43 15618.28
1996/10/31 16003.52 15447.32
IMATRL PRASUN SHR__CHT 19961031 19961106 205315 R00000000000062
Let's say hypothetically that $10,000 was invested in Fidelity Diversified
International Fund on December 27, 1991, when the fund started. As the
chart shows, by October 31, 1996, the value of the investment would have
grown to $16,015 - a 60.15% increase on the initial investment. For
comparison, look at how the Morgan Stanley Capital International
GDP-weighted EAFE Index did over the same period. With dividends and
capital gains, if any, reinvested, the same $10,000 investment would have
grown to $15,447 - a 54.47% 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.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
DIVERSIFIED INTERNATIONAL
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Greg Fraser, Portfolio Manager of
Fidelity Diversified International Fund
Q. HOW DID THE FUND DO, GREG?
A. The fund returned 18.66% for the year ending October 31, 1996. For the
same time period, the Morgan Stanley Capital International GDP-weighted
Europe, Australasia, Far East (EAFE) Index, a broad measure of stock
performance in those regions, was up 10.69%, while the international funds
average returned 10.73%, according to Lipper Analytical Services.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S OUTPERFORMANCE?
A. Overall, the fund was helped by a low weighting in Japan relative to the
index and a large weighting in Canada. As most shareholders know, the fund
usually has a broadly diversified portfolio and rarely does any individual
company account for more than 2% of assets. So there were many moderate
successes over the course of the year rather than one large position that
happened to have worked out well. To use a baseball analogy, there were a
lot of singles and doubles rather than one grand slam. Now let's look at
some of those successes during the period. Many banks around the world -
especially those in Scandinavia, Canada and the Far East, other than Japan
- - performed well. Chemical and pharmaceutical companies such as Bayer and
BASF in Germany, SmithKline Beecham in the United Kingdom and AKZO Nobel in
the Netherlands were also successful investments. Another sector that
tended to do well was energy, including such companies as Royal Dutch
Petroleum and Total in Europe, and a variety of companies in Canada.
Finally, some stocks in emerging markets, such as Telebras, the Brazilian
telephone utility, helped the fund during the period.
Q. WHICH INVESTMENTS WERE DISAPPOINTING FOR THE FUND?
A. By and large, there were not too many disappointing investments during
this period. Typically, a few companies will suffer from government
regulatory or policy decisions. Thus, in France, Eramet, which is an
inexpensively priced nickel company operating in the South Pacific, came
under pressure after the government was said to have made comments many
investors felt were negative for the company. Most Japanese stocks provided
mediocre performance for dollar-based investors.
Q. DOES THE FUND HAVE TOO LARGE OF A HOLDING IN BANKS?
A. The fund owns about 12% in banks, so on the face of it, that might seem
like too much. But to really answer the question, one has to ask "Compared
to what?" to get a sense of calibration. There are several things to keep
in mind. First, in many countries banks are an extremely important part of
the economy, accounting for a much larger share of economic activity than
they do in the U.S. In several countries-notably, Japan, Germany and
France-banks not only will make loans but also will have large equity
investments in client companies. In Japan, for instance, the market value
of banks is almost one-third of the value of the whole stock market. For
the GDP-weighted EAFE index, banks account for about 16% of the index, so
the fund's holdings appear quite normal with respect to the index as a
whole. Second, it is also important to remember that the models the fund
uses tend to include less-expensive banks. So the fund owns very few
expensive Japanese banks, while it owns relatively more inexpensive banks,
such as those in Canada and Scandinavia. So even if the fund were to
overweight a particular industry in the future, its value orientation may
lessen the downside risk that results from the overweighting.
Q. WHY HAS JAPAN FALLEN TO ABOUT 16% OF THE FUND ON OCTOBER 31 FROM ABOUT
19% ON APRIL 30?
A. As long-time shareholders know, the fund uses two general types of
computer models to make investment decisions. One set of models, which I
call the top-down models, uses data such as market valuation levels,
interest rates, earnings growth rates and a host of other variables to
choose countries whose markets will outperform the typical market. The
other models, which I call the bottom-up models, focus on individual
companies. During the period, top-down models did not find the Japanese
market particularly compelling, even though interest rates were very low
and low interest rates often are associated with high stock valuation
levels. But the bottom-up models located a few opportunities among
individual stocks for the fund to invest in. Since Japan still accounts for
about 36% of the total stock market as defined by the GDP-weighted EAFE
index, I always want the fund to have some exposure there.
Q. WHY HAS THE FUND INVESTED SO MUCH IN CANADA?
A. Even though the Canadian market isn't part of the EAFE universe of
countries, it is a very important market for investors interested in
opportunities outside of the United States. I found a lot of very exciting
companies in Canada, ranging from very reasonably valued banks to rapidly
growing energy companies to state-of-the-art technology companies. One
added bonus is that the reporting standard for Canadian companies is about
the same as for those in the United States, which is among the best in the
world.
Q. HOW HAS THE STRENGTH OF THE DOLLAR AFFECTED THE FUND?
A. The strength of the dollar probably has modestly held back the
performance of the fund in the past year - especially for Japanese
holdings. But good price performance in most markets in local currency
terms resulted in strong dollar-based returns for shareholders. As I've
noted in previous reports, a change in the value of the dollar affects the
fund in several ways. First, there is an immediate currency translation
impact. So a share priced in deutsche marks that is worth a certain number
of dollars will be worth fewer dollars if the dollar is strong, assuming
that the price in deutsche marks remained the same. Often, the prices of
companies involved in exporting tend to do well in local currency terms
when their currency is weak. In theory, a relatively weak currency can
increase export competitiveness, leading to an increase in the expected
earnings for these types of companies. So the longer-term business impact
of a weak currency can sometimes offset the exchange rate impact, at least
for companies heavily involved in exports. In reality, of course, it's much
more complicated than this. It's very important for shareholders to
remember that because this fund generally doesn't hedge foreign currency
exposure, a strong dollar, especially if it happens at the same time that
foreign markets are falling in local currency terms, could cause
shareholders painful losses sometime in the future.
Q. WHAT IS A CLOSED-END INVESTMENT COMPANY AND WHY DOES THE FUND OWN THEM?
A. Closed-end funds are funds that trade on exchanges and issue a set
number of shares. A closed-end fund's net asset value - the value of the
fund's holdings divided by the number of shares outstanding - and its
market price aren't necessarily connected. So when the price of the share
drops below the value of its holdings, the shares are said to "trade at a
discount." Most of the closed-end funds the fund owns trade at a discount
of at least 15%. That means that the fund is buying assets worth $1 for 85
cents or less. Since the discounts can widen further, especially in the
near term, there is no guarantee of profits. Over time, however, there's
evidence that shows buying deeply discounted closed-end fund shares can add
value. So I try to buy funds that have reasonable expense levels at big
discounts.
Q. GREG, WHAT'S YOUR OUTLOOK FOR THE FUND?
A. While the valuation of many international companies continues to look
quite reasonable when compared to their U.S. peers, many companies around
the world look less compelling now on an absolute basis, often because
their share prices have risen. So I'm somewhat more cautious than I was six
months ago. If the U.S. market were to suffer a severe correction, as some
analysts have predicted, I believe that most foreign markets would also
follow suit. Also, interest rates have fallen around the world and are at
quite low levels in many countries. So if interest rates were to rise,
share prices would tend to be under pressure.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in foreign equity securities that are
determined, mainly through both technical and
fundamental analysis, to be undervalued
compared to others in their industries and
countries
FUND NUMBER: 325
TRADING SYMBOL: FDIVX
START DATE: December 27, 1991
SIZE: as of October 31, 1996, more than
$665 million
MANAGER: Greg Fraser, since 1991; manager,
Fidelity Select Defense and Aerospace
Portfolio, 1989-1990; Fidelity Select
Environmental Services Portfolio, 1991; joined
Fidelity in 1986
(checkmark)
GREG FRASER ON USING ACADEMIC RESEARCH TO HELP THE
FUND:
"There is a new interdisciplinary field called
"behavioral finance" that, over time, has the potential
to improve the models used to run the fund.
Behavioral finance is part finance, part psychology,
part economics and part statistics. The focus of this
research is to understand the decisions investors
DO make, and to understand the decisions that
they SHOULD make. These studies have focused on
areas such as how stock prices react to earnings
announcements, why some investors prefer cash
dividends and whether the price history of stocks
can be used to make superior profits. Often the
academic researchers are attempting to explain an
anomaly - that is, some behavior or result not
adequately explained by the current theoretical
framework. Our quantitative group here at Fidelity
cares less about explaining the anomalies and more
about exploiting them. We study these anomalies
to develop models to outperform the market.
Members of our group attend many conferences and
read the leading academic journals in finance to
search out ideas that can improve our existing
models or serve as the basis for new models."
DISTRIBUTIONS
The Board of Trustees of Fidelity Diversified
International Fund voted to pay on December 9, 1996,
to shareholders of record at the opening of business
on December 6, 1996, a distribution of $.36 per share
derived from capital gains realized from sales of
portfolio securities and a dividend of $.15 per share
from net investment income.
A total of 9% of the dividends distributed during the
fiscal year qualifies for the dividends-received
deduction for corporate shareholders.
The fund will notify shareholders in January 1997 of
these percentages for use in preparing 1996 income
tax returns.
DIVERSIFIED INTERNATIONAL
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
Australia 3.6%
United States 9.0%
Row: 1, Col: 1, Value: 9.0
Row: 1, Col: 2, Value: 6.0
Row: 1, Col: 3, Value: 3.4
Row: 1, Col: 4, Value: 7.5
Row: 1, Col: 5, Value: 27.6
Row: 1, Col: 6, Value: 5.4
Row: 1, Col: 7, Value: 16.3
Row: 1, Col: 8, Value: 7.3
Row: 1, Col: 9, Value: 4.2
Row: 1, Col: 10, Value: 9.699999999999999
Row: 1, Col: 11, Value: 3.6
Canada 9.7%
United Kingdom 6.0%
France 4.2%
Switzerland 3.4%
Sweden 7.5%
Germany 7.3%
Japan 16.3%
Other 27.6%
Netherlands 5.4%
AS OF APRIL 30, 1996
Canada 6.6%
United States 4.2%
United Kingdom 5.2%
Row: 1, Col: 1, Value: 4.2
Row: 1, Col: 2, Value: 5.2
Row: 1, Col: 3, Value: 6.4
Row: 1, Col: 4, Value: 33.7
Row: 1, Col: 5, Value: 5.8
Row: 1, Col: 6, Value: 19.3
Row: 1, Col: 7, Value: 3.9
Row: 1, Col: 8, Value: 8.300000000000001
Row: 1, Col: 9, Value: 6.6
Row: 1, Col: 10, Value: 6.6
France 6.6%
Sweden 6.4%
Germany 8.3%
Hong Kong 3.9%
Other 33.7%
Japan 19.3%
Netherlands 5.8%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks and closed-end 90.5 96.6
investment companies
Bonds 0.8 0.8
Short-term investments 8.7 2.6
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Veba AG Ord. 1.0 1.5
(Germany, Electric Utility)
Bayer AG 1.0 1.2
(Germany, Chemicals & Plastics)
AKZO Nobel NV 0.9 0.0
(Netherlands, Chemicals & Plastics)
SmithKline Beecham PLC ADR 0.9 0.7
(United Kingdom, Drugs & Pharmaceuticals)
Canadian Imperial Bank of Commerce 0.9 0.0
(Canada, Banks)
HSBC Holdings PLC 0.9 0.5
(Hong Kong, Banks)
CIBA-GEIGY AG (Reg.) 0.9 0.9
(Switzerland, Drugs & Pharmaceuticals)
Unilever NV ADR 0.9 0.8
(Netherlands, Household Products)
Fuji Photo Film Co. Ltd. 0.9 1.3
(Japan, Photographic Equipment)
Shell Transport & Trading Co. PLC (Reg.) 0.9 0.5
(United Kingdom, Oil & Gas)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 26.3 23.9
Energy 8.8 7.9
Basic Industries 7.6 9.1
Utilities 6.1 8.4
Health 5.7 6.7
Durables 5.5 6.6
Technology 5.5 7.4
Nondurables 5.0 5.6
Media & Leisure 4.1 4.2
Transportation 3.2 1.0
DIVERSIFIED INTERNATIONAL
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 82.1%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.6%
Banco de Galicia Y Buenos Aires SA
sponsored ADR representing
Class B shares 100,000 $ 1,812,500
Telefonica de Argentina SA sponsored
ADR 35,000 813,750
YPF Sociedad Anonima sponsored ADR
representing Class D shares 50,000 1,137,500
3,763,750
AUSTRALIA - 3.6%
Austereo Ltd. 200,000 324,495
Australia & New Zealand Banking
Group Ltd. 700,000 4,083,091
Australian Oil & Gas Corp. Ltd. 400,000 405,222
Burns Philp & Co. (a) 50,000 79,145
Caltex Australia Ltd. 443,386 1,459,818
Commonwealth Bank of Australia (b) 257,330 2,413,416
Consolidated Rutile Ltd. (a) 53,201 94,738
Foodland Associated Ltd. 450,000 1,944,593
Fosters Brewing Group Ltd. 1,500,000 2,730,503
Kurts (Peter) Properties Ltd. 100,000 121,883
National Australia Bank Ltd. 300,000 3,288,475
National Mutual Property Trust 500,000 407,597
News Corp. Ltd. ADR 60,000 1,357,500
Pacific Dunlop PLC 516,000 1,143,487
Santos Ltd. 300,000 1,196,672
Savage Resources Ltd. 300,597 297,384
Savage Resources Ltd. (warrants) (a) 5,500 1,393
Seven Network Ltd. 100,000 308,666
Siddons Ramset Ltd. 104,720 513,860
Sons of Gwalia NL 150,000 967,548
Tyndall Australia Ltd. 200,000 302,334
Western Mining Holdings Ltd. 101,460 636,783
24,078,603
AUSTRIA - 0.2%
OMV AG (b) 10,000 977,095
VA Technologie AG 4,000 558,340
1,535,435
BAHAMAS (NASSAU) - 0.9%
Sun International Hotels Ltd. Ord. (a) 120,000 5,670,000
BELGIUM - 0.8%
Delhaize Freres & Cie Le Lion SA 100,000 5,579,626
BERMUDA - 1.6%
Benor Tankers (a) 350,000 2,078,417
Lasalle Re Holdings Ltd. 50,000 1,450,000
Mid Ocean Ltd. 50,000 2,350,000
PartnerRe Ltd. 100,000 2,875,000
RenaissanceRE Holdings Ltd. 60,000 1,747,500
Smartone Telecommunications
Holdings Ltd. (b) 90,000 200,784
10,701,701
BRAZIL - 0.9%
Bradesco PN 60,000,000 511,530
Compania Cervejaria Brahma PN:
(Pfd. Reg.) (warrants) (a) 188,529 18,348
(Pfd. Reg.) 3,000,000 1,854,015
Multicanal Participacoes SA
sponsored ADR 38,000 532,000
Telebras sponsored ADR 45,000 3,352,500
6,268,393
SHARES VALUE (NOTE 1)
CANADA - 9.4%
Alberta Energy Co. Ltd. 130,000 $ 2,792,964
Agrium, Inc. 100,000 1,341,104
BCE, Inc. 80,000 3,678,882
Bank of Montreal 100,000 3,029,624
Beau Canada Exploration Ltd. (a) 1,000,000 1,830,476
Bombardier, Inc. Class B 30,000 484,142
Bre-X Minerals Ltd. (a) 200,000 3,347,155
Bresea Resources Ltd. (a) 175,000 1,634,353
Bro-X Minerals Ltd. 1,800 5,245
CHC Helicopter Corp. Class A 551,000 2,140,685
Canadian Fracmaster Ltd. (a) 35,000 158,205
Canadian Pacific Ltd. 50,000 1,270,126
Canadian Imperial Bank of Commerce 150,000 6,242,295
Canadian Natural Resources Ltd. (a) 125,000 3,109,941
Computalog Ltd. (a) 50,000 532,332
Dayton Mining Corp. (a) 150,000 969,405
Denbury Resources, Inc. (a) 52,800 688,378
Dundee Bancorp, Inc. Class A
(sub. vtg.) (a)(b) 100,000 1,550,301
Elan Energy, Inc. (a) 165,000 1,602,600
FCA International Ltd. (a) 150,300 241,432
Greenstone Resources Ltd. (a) 100,000 1,270,126
Imperial Oil Ltd. 50,000 2,205,910
Indochina Goldfields Ltd. (a) 100,000 713,512
International Murex Technologies
Corp. (a) 140,000 778,750
Laurentian Bank 50,000 672,420
London Insurance Group, Inc. 10,000 253,278
Methanex Corp. (a) 50,000 423,998
National Bank of Canada 200,000 1,942,545
Newbridge Networks Corp. (a) 15,000 474,375
Norcen Energy Resources Ltd. 60,000 1,286,563
Northrock Resources Ltd. (a) 100,000 851,731
Penn West Petroleum Ltd. (a) 150,000 1,372,857
Petro-Canada 50,000 678,023
Petro-Canada Final Installment Receipt (f) 125,000 1,298,143
Power Corporation of Canada 60,000 1,226,045
Power Financial Corp. 20,000 679,891
Rayrock Yellowknife Resources, Inc. (a) 100,000 552,878
Reitmans Canada Ltd. Class A 100,000 1,124,435
Rio Alto Exploration Ltd. (a) 190,000 1,284,695
Royal Bank of Canada 50,000 1,654,899
Royal Oak Mines, Inc. (a) 30,000 112,070
Royal Plastics Group Ltd. (a) 130,000 2,428,182
Russel Metals, Inc. Class A (a) 100,000 261,497
Trilon Financial Corp. Class A 150,000 694,834
Trizec Ltd. (a) 125,000 1,260,787
62,152,089
DENMARK - 1.3%
DFDS AS 700 480,176
Den Danske Bank Group AS 15,000 1,072,678
International Service Systems AS,
Series B 60,000 1,697,764
Jyske Bank AS (Reg.) 25,000 1,796,371
Novo-Nordisk AS Class B 8,000 1,328,029
Tele Danmark AS Class B 30,000 1,507,408
Unidanmark AS Class A 10,900 500,960
Wessel & Vett, Magasin du Nord, AS (a) 7,500 499,040
8,882,426
FINLAND - 2.2%
Cultor OY Ord., Series 2 30,000 1,359,228
Huhtamaki Ord. 60,000 2,599,688
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINLAND - CONTINUED
Instrumentarium OY Class B 35,000 $ 1,262,454
KCI (Konecranes International) (a)(b) 27,000 742,297
Kemira OY sponsored ADR (b) 50,000 1,081,250
Lassila & Tikahoja OY 5,000 295,819
Metsa-Serla Ltd. Class B 40,000 277,124
Neste Oy 125,000 2,598,038
TT Teito Oy 60,000 4,007,742
UPM-Kymmene Corp. (a) 25,000 505,861
14,729,501
FRANCE - 4.2%
Alcatel Alsthom sponsored ADR 70,000 1,190,000
Assurances Generales (Reg.) 50,000 1,471,507
Axime SA Ex Segin (a) 3,000 310,890
Carbonne-Lorraine (LE) 5,000 741,608
Credit National 15,000 790,398
Elf Aquitaine SA sponsored ADR 65,000 2,608,125
Eramet SA 30,000 1,388,759
Eurafrance (Societe) 5,000 2,180,913
Lagardere S.C.A. (Reg.) 39,000 1,229,215
Marine Wendel SA 20,000 1,800,156
Michelin SA (Compagnie Generale
des Etablissements) Class B 50,663 2,437,242
Nord Est 20,000 502,732
Pechiney SA Class A 25,719 1,101,741
Paribas SA (Cie Financiere) Class A 30,000 1,926,230
Rhone Poulenc SA Class A 25,000 739,169
Societe Generale Class A 15,000 1,612,998
Stolt Comex Seaway SA (a) 20,000 290,000
Total SA:
Class B 35,674 2,784,159
sponsored ADR 15,000 585,000
Salomon SA 5,000 446,916
Worms et Compagnie SA (Reg.) 30,000 1,533,958
27,671,716
GRAND CAYMAN - 0.0%
Anangel-American Shipholdings
Ltd. ADR 3,000 25,875
GERMANY - 5.3%
Adidas AG 15,000 1,284,627
Andrea-Noris Zahn 4,500 1,704,602
BASF AG 150,000 4,847,986
Bayer AG 170,000 6,406,008
Bayerische Vereinsbank AG Ord. 10,000 378,800
Buderus AG 8,000 3,610,132
Deutsche Bank AG 85,000 3,958,958
Hoechst AG Ord. 20,000 752,594
Pfeiffer Vacuum Technology AG
sponsored ADR (a) 30,500 488,000
SGL Carbon AG 10,000 1,123,225
Springer Axel Verlag AG (Reg.) 3,000 1,838,005
Thyssen AG Ord. 10,000 1,788,596
Veba AG Ord. 125,000 6,670,180
34,851,713
HONG KONG - 1.9%
Amoy Properties Ltd. 500,000 617,547
HSBC Holdings PLC 300,000 6,145,179
Hutchison Whampoa Ltd. Ord. 150,000 1,047,567
Jardine Matheson Holdings Ltd. Ord. 100,000 565,000
Jardine Strategic Holdings Ltd. Ord. 300,000 978,000
Peregrine Investments Holdings Ltd. 1,600,000 2,576,240
Yue Yuen Industrial Holdings Ltd. (a) 1,500,000 446,186
12,375,719
SHARES VALUE (NOTE 1)
INDIA - 0.1%
Tata Engineering & Locomotive GDR (b) 35,000 $ 420,000
INDONESIA - 0.0%
Barito Pacific Timber PT (For. Reg.) 70,000 40,570
Ramayana Lestari Sentosa PT (For. Reg.) (a) 100,000 169,579
Sampoerna Hanjaya Mandala (For. Reg.) 10,000 92,946
303,095
IRELAND - 0.6%
Bank of Ireland, Inc. 100,000 821,635
Elan Corp. PLC ADR (a) 20,000 555,000
FBD Holdings PLC 20,000 65,144
Independent Newspapers PLC 269,095 1,422,907
IAWS Group PLC Class A (Reg.) 180,000 506,648
Jurys Hotel Group PLC (UK) 150,000 622,328
3,993,662
ISRAEL - 0.2%
Koor Industries Ltd. sponsored ADR 39,500 686,313
OSHAP Technologies Ltd. (a) 10,000 31,875
Teva Pharmaceutical Industries Ltd. ADR 14,000 586,250
1,304,438
ITALY - 1.2%
Credito Italiano Ord. 900,000 919,090
Eni Spa sponsored ADR 22,700 1,078,250
Mondadori Arnoldo Editore Spa 120,000 883,575
Stet (Societa Finanziaria Telefonica)
Spa Ord. 800,000 2,770,109
Telecom Italia Spa 600,000 1,340,018
Telecom Italia Mobile Spa 600,000 1,235,725
8,226,767
JAPAN - 16.1%
Acom Co. Ltd. 50,000 1,916,247
Akita Bank Ltd. 125,000 806,841
Aichi Electric Co. Ltd. 50,000 243,368
Aoyama Trading Co. Ord. 50,000 1,276,036
Bunka Shutter Co. Ltd. 250,000 1,740,846
Canon, Inc. 250,000 4,779,654
Canon Chemicals, Inc. (warrants) (a) 500 69,009
Canon Sales Co., Inc. (warrants) (a) 500 55,207
Chiyoda Fire & Marine Insurance Co. Ltd. 200,000 1,029,599
Chubu Steel Plate Co. Ltd. 100,000 547,248
Chuo Trust & Banking Co. Ltd. 125,000 1,271,651
Citizen Watch Co. Ltd. Ord. 350,000 2,655,120
Dai-Tokyo Fire & Marine Insurance Ord. 650,000 4,053,059
Daiichi Pharmaceutical Co. Ltd. 200,000 2,876,562
Daiwa House Industry Co. Ltd. 75,000 1,039,246
Daito Trust Construction Co. 100,000 1,262,881
Dowa Fire & Marine Insurance
Co. Ltd. (a) 250,000 1,234,378
Eighteenth Bank 250,000 2,028,064
Fuji Photo Film Co. Ltd. 200,000 5,735,585
Fujitsu Ltd. 150,000 1,315,501
Hitachi Ltd. 300,000 2,657,312
Hokko Chemical Industry Co. Ltd. 104,000 641,193
Honda Motor Co. Ltd. 100,000 2,385,442
Ito-Yokado Co. Ltd. 30,000 1,494,409
Izumiya Co. Ltd. 100,000 1,587,371
Jamco Corp. 25,000 339,838
Kao Corp. 275,000 3,231,748
Kawagishi Bridge Works Co. Ltd. 35,000 262,442
Kirin Brewery Co. Ltd. 50,000 513,045
Konica Corp. 250,000 1,668,494
Makita Corp. 100,000 1,368,121
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Maruzen Showa Unyu Co. Ltd. 200,000 $ 976,979
Matsushita Electric Industrial Co. Ltd. 300,000 4,788,424
Mitsubishi Heavy Industries Ltd. 450,000 3,453,190
Mitsui Trust and Banking Co. Ltd. 100,000 964,701
Mitsubishi Oil Co. Ltd. 100,000 735,804
NKK Corp. (a) 400,000 1,003,289
Nintendo Co. Ltd. Ord. 43,700 2,790,055
Nittetsu Mining Co. Ltd. 200,000 1,710,151
Nitto Denko Corp. 100,000 1,482,131
Nomura Securities Co. Ltd. 120,000 1,978,514
Oita Bank Ltd. 70,000 506,468
Okinawa Bank Ltd. 73,200 2,632,055
Omron Corp. 175,000 3,115,545
Orient Finance Co. Ltd. 300,000 1,839,070
Ricoh Co. Ltd. Ord. 250,000 2,477,527
Royal Co. Ltd. 100,000 1,806,621
Sangetsu Company Ltd. 50,000 1,065,556
Sekisui House Ltd. 150,000 1,578,601
Sekisui Chemical Co. Ltd. 200,000 2,227,582
Shiseido Co. Ltd. 100,000 1,166,411
Shima Seiki Manufacturing Ltd. 5,000 254,769
Shinko Kogyo Co. Ltd. 50,000 292,041
Shintokogio Ltd. 12,000 98,926
Sony Corp. 50,000 2,994,957
Sotoh Co. Ltd. 50,000 521,815
TDK Corp. 40,000 2,343,346
Takeda Chemical Industries Ltd. (a) 270,000 4,617,409
Terumo Corp. 50,000 640,211
Toyota Motor Corp. 125,000 2,948,915
Tec Corp. (a) 100,000 464,810
Yokogawa Electric 100,000 885,771
Zojirushi Thermos 29,000 343,346
106,790,507
KOREA (SOUTH) - 0.3%
Korea Electric Power Corp. 60,000 1,764,598
Samsung Electronics Co. Ltd. (vtg.) 3,040 213,255
1,977,853
LUXEMBOURG - 0.2%
Espirito Santo Financial Holding SA ADR 110,000 1,333,750
MEXICO - 0.8%
Corporacion Geo SA de CV (a) 500,000 2,258,469
Corporacion Industrial Sanluis SA
de CV unit 110,000 556,211
DESC (Sociedad de Fomento Industrial
SA) Class B (a) 130,000 642,660
Gruma SA Class B sponsored ADR (a)(b) 26,250 485,625
Grupo Radio Centro SA de CV
sponsored ADR 25,000 171,875
Grupo Cementos Chihuahua Class B 400,000 451,694
Telefonos de Mexico SA sponsored ADR
representing Ord. Class L shares 20,000 610,000
5,176,534
NETHERLANDS - 5.4%
ABN-AMRO Holdings NV 50,000 2,819,179
AKZO Nobel NV 50,000 6,285,093
Baan Co. NV (a) 15,000 555,000
Core Laboratories NV (a) 600 9,150
DSM NV 35,000 3,343,916
IHC Caland NV 20,000 1,113,561
ING Groep NV 130,000 4,043,272
KLM Royal Dutch Air Lines NV 50,000 1,187,641
SHARES VALUE (NOTE 1)
NETHERLANDS - CONTINUED
Koninklijke Pakhoed NV 75,000 $ 2,328,248
Philips Electronics NV (Bearer) 15,000 527,383
Royal Dutch Petroleum Co. ADR 25,000 4,134,375
SGS Thomson Microelectronics NV (a) 25,000 1,309,375
Toolex Alpha NV 20,000 187,500
Unilever NV:
ADR 40,000 6,115,000
Ord. 6,500 985,978
Van Ommeren Ceteco NV 25,000 1,036,247
35,980,918
NETHERLANDS ANTILLES - 0.3%
Intrum Justitia NV (Reg.) 1,000,000 1,708,350
NEW ZEALAND - 1.1%
Air New Zealand Ltd.:
Class B 358,200 873,518
Class B (rights) (a) 97,690 101,507
Brierley Investments Ltd. 1,000,000 911,837
Fletcher Challenge Ltd. (Forestry Division) 500,000 834,083
Independent Newspapers Ltd. 292,000 1,413,841
Lion Nathan Ltd. 1,200,000 3,096,003
7,230,789
NORWAY - 2.7%
Aker ASA Class B 40,000 775,109
Color Lines 210,500 904,619
Elkem ASA 100,000 1,328,312
Ganger Rolf 69,200 2,335,828
Helikopter Services AS 250,000 2,773,828
I.M. Skaugen ASA (a) 800,000 472,566
Merkantildata 25,000 382,866
Nera AS sponsored ADR 1,000 35,625
Norsk Hydro AS ADR 20,000 917,500
Schibsted AS:
Series B 100,000 1,523,652
Class B (b) 50,000 761,826
Saga Petroleum AS Class B 130,000 2,021,378
Sparebanken Norway primary
shares certificates 125,000 3,555,187
17,788,296
PANAMA - 0.3%
McDermott (J. Ray) SA 70,000 1,898,750
PAPUA NEW GUINEA - 0.1%
Orogen Minerals Ltd. GDR (b) 30,000 475,110
PERU - 0.2%
Banco Wiese Ltd. sponsored ADR 96,500 506,625
Telefonica Del Peru SA Class B
sponsored ADR 25,000 515,625
1,022,250
PORTUGAL - 0.1%
Portugal Telecom SA sponsored ADR 20,000 517,500
RUSSIA - 0.1%
Luk Oil Co. sponsored ADR 25,000 962,500
SINGAPORE - 0.1%
DBS Land Ltd. 150,000 472,508
Singapore Bus Service 1978 Ltd.
(For. Reg.) 50,000 267,825
United Industrial Corp. Ltd. 300,000 249,024
989,357
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SOUTH AFRICA - 0.4%
Anglo American Corp. of South Africa
Ltd. (Reg.) 25,000 $ 1,502,929
Gencor Ltd. (Reg.) 300,000 1,041,534
Rustenberg Platinum Holdings
Ltd. ADR (a) 422 6,436
2,550,899
SPAIN - 1.7%
Argentaria Corporacion Bancaria
de Espana SA 25,000 978,359
Banco Bilbao Vizcaya SA Ord. (Reg.) 10,000 485,266
Banco De Santander SA de Credito ADR 20,000 1,037,500
Empresa Nacional De Electricidad SA
sponsored ADR 20,000 1,230,000
Hidroelectrica de Cantabrico SA 35,000 1,164,247
Iberdrola SA 100,000 1,060,541
Repsol SA sponsored ADR 20,000 652,500
Telefonica de Espana SA sponsored ADR 40,000 2,410,000
Union Electrica Fenosa SA 300,000 1,944,195
10,962,608
SWEDEN - 7.5%
Astra AB Class A Free shares 50,000 2,293,665
Autoliv AB 60,000 2,542,778
Avesta Sheffield AB Ord. Free shares 100,000 1,002,529
Bure Investment AB 300,000 3,212,650
Concordia Maritime AB Class B
Free shares (a) 300,000 783,795
Enator AB (a) 120,000 2,661,259
Forcenergy AB Class B Free shares 200,000 2,187,336
Forvaltnings AB Ratos Class B
Free shares 150,000 4,260,749
Incentive AB Class A 35,000 2,094,678
Investor AB Class B Free shares 90,000 3,622,776
Industrivarden AB, Series A 40,000 1,762,021
Kinnevik Investment B Free shares 15,000 406,708
Linjebuss AB Class A 61,200 836,656
Mo Och Domsjoe AB Class B 30,000 824,808
Nordstroem & Thulin AB Class B
Free shares (a) 600,000 1,613,160
Nordbanken AB 170,000 4,467,330
Skandinaviska Enskilda Banken Class A
Free shares 250,000 2,088,602
Swedbank Class A 125,000 1,974,679
Stadshypotek, Series A 50,000 1,310,123
Svedala Industri Free shares 66,700 1,043,557
Svenska Handelsbanken 120,000 2,952,904
Terra Mining AB 20,000 399,493
Volvo AB Class B 150,000 3,110,119
WM Data Nordic AB, Series B 30,000 2,141,767
49,594,142
SWITZERLAND - 3.4%
Adecco SA (Bearer) 5,000 1,399,897
Bank for International Settlements 500 4,456,012
Bucher Holding AG (Bearer) 1,500 1,086,005
CIBA-GEIGY AG (Reg.) 5,000 6,139,832
Nestle SA (Reg.) 3,500 3,789,976
Sandoz AG (Reg.) 4,000 4,609,015
Surveillance, Societe Generale (Bearer) 500 1,131,748
22,612,485
SHARES VALUE (NOTE 1)
THAILAND - 0.2%
PTT Exploration & Production
(For. Reg.) 100,000 $ 1,434,450
UNITED KINGDOM - 6.0%
Aegis Group PLC 50,000 51,047
Anglian Water PLC Ord. 50,000 442,544
British Petroleum PLC ADR 7,000 900,375
British Gas PLC Ord. 275,000 854,582
British Telecommunications PLC Ord. 200,000 1,156,797
Carlton Communications PLC 250,000 2,003,244
Comcast UK Cable Partners PLC
Class A (a) 206,000 2,600,750
Corporate Services Group PLC 1,000 2,864
Delphi Group PLC 1,000 9,193
Glaxo PLC sponsored ADR 10,000 315,000
Grand Metropolitan PLC 350,000 2,639,401
Hanson PLC sponsored ADR 200,300 1,276,913
Hogg Robinson Group 150,000 646,733
Huntingdon International Holdings
PLC Ord. (a) 200,000 338,416
London Pacific Group Ltd. 30,000 113,239
Lorien PLC 2,000 11,389
Lucasvarity PLC (a) 200,000 808,619
MAID (Market Analysis and Information
Database) PLC sponsored ADR (a) 10,000 178,125
Medeva PLC (a) 200,000 859,056
McBride PLC 600,000 1,464,300
Mirror Group Newspaper PLC 100,000 379,091
National Power PLC (b) 75,000 494,201
RJB Mining PLC 70,000 625,826
RTZ Corp. PLC Ord. 45,000 719,703
Railtrack Group PLC (b) 75,000 336,789
Royal & Sun Alliance Insurance
Group PLC 133,375 914,660
Shell Transport & Trading Co. PLC (Reg.) 350,000 5,734,362
Sema Group PLC 35,454 513,961
Severn Trent PLC Ord. 50,000 501,116
SmithKline Beecham PLC ADR 100,000 6,262,500
Thames Water PLC Ord. 50,000 450,679
Vodafone Group PLC sponsored ADR 50,000 1,931,250
WPP Group PLC 800,000 2,967,648
Waste Management International PLC
sponsored ADR (a) 80,000 730,000
39,234,373
UNITED STATES OF AMERICA - 0.1%
Ingram Micro, Inc. Class A 2,000 36,000
Prime Service, Inc. 30,000 705,000
741,000
TOTAL COMMON STOCKS
(Cost $479,229,822) 543,516,930
CLOSED-END INVESTMENT COMPANIES - 7.1%
AUSTRIA - 0.2%
Austria Fund, Inc. (a) 120,000 1,050,000
CANADA - 0.3%
Canadian General Investment Ltd. 185,000 1,990,362
CHILE - 0.2%
Five Arrows Chile Investment Trust Ltd. 500,000 1,450,000
CLOSED-END INVESTMENT COMPANIES - CONTINUED
SHARES VALUE (NOTE 1)
EMERGING MARKETS - 1.9%
Emerging Markets Infrastructure
Fund, Inc. 100,000 $ 1,050,000
GT Global Developing Markets Fund 425,000 4,675,000
Morgan Stanley Africa Investment
Fund, Inc. 70,000 892,500
Southern Africa Fund, Inc. 50,000 825,000
TCW/DW Emerging Markets
Opportunities Trust (SBI) 270,000 2,767,500
Templeton Dragon Fund, Inc. 160,000 2,240,000
12,450,000
FRANCE - 0.0%
France Growth Fund, Inc. 25,000 259,375
GERMANY - 1.2%
Emerging Germany Fund, Inc. (a) 325,000 2,559,375
The New Germany Fund, Inc. 400,000 5,500,000
8,059,375
MALAYSIA - 0.1%
Malaysia Fund, Inc. 30,000 566,250
MULTI-NATIONAL - 2.3%
Alliance Global Environment Fund 140,000 1,855,000
Americas Income Trust, Inc. 189,000 1,370,250
Blackrock North American Government
Income Trust, Inc. 250,000 2,531,250
Central European Equity Fund 142,058 2,787,888
European Warrant Fund, Inc. (a) 75,000 796,875
Global Health Sciences Fund (a) 70,000 1,190,000
Morgan Stanley Asia-Pacific Fund, Inc. 150,000 1,537,500
Strategic Global Income Fund, Inc. 150,000 1,800,000
Templeton Global Income Fund, Inc. 225,000 1,603,125
15,471,888
PHILIPPINES - 0.1%
First Philippine Fund 40,000 615,000
SPAIN - 0.7%
Growth Fund of Spain, Inc. 360,000 4,365,000
THAILAND - 0.1%
Thai Prime Fund 61,000 823,500
UNITED KINGDOM - 0.0%
Fleming Natural Resources Investment
Trust PLC 20,000 34,818
TOTAL CLOSED-END INVESTMENT COMPANIES
(Cost $43,212,125) 47,135,568
NONCONVERTIBLE PREFERRED STOCKS - 1.3%
GERMANY - 0.8%
Volkswagen AG 17,500 5,349,320
ITALY - 0.3%
Stet (Societa Finanziaria Telefonica) Spa 800,000 2,132,231
UNITED STATES OF AMERICA - 0.2%
Freeport McMoran Copper & Gold, Inc.:
Series B 20,000 657,500
depositary shares representing
gold pfd., Series II 20,000 620,000
1,277,500
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $7,549,359) 8,759,051
CONVERTIBLE BONDS - 0.2%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (F) AMOUNT (C) (NOTE 1)
JAPAN - 0.2%
Yamanouchi Pharmaceutical Co.
Ltd. euro 1 1/4%, 3/31/14
(Cost $1,594,394) Aa3 JPY 150,000,000 $ 1,529,270
GOVERNMENT OBLIGATIONS (C) - 0.6%
ARGENTINA - 0.3%
Argentina Republic BOCON
5.4453%, 4/1/01 (e) B1 2,081,052 1,906,408
NEW ZEALAND - 0.3%
New Zealand Government
9%, 11/15/96 Aaa NZD 3,000,000 2,119,915
TOTAL GOVERNMENT OBLIGATIONS
(Cost $3,079,785) 4,026,323
CASH EQUIVALENTS - 8.7%
MATURITY
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 57,158,795 57,150,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $591,815,485) $ 662,117,142
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
JPY - Japanese yen
NZD - New Zealand dollar
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 $9,938,694 or 1.5% of net
assets.
(c) Some 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.
(d) Principal amount is stated in United States dollars unless otherwise
noted.
(e) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(f) Purchased on an installment basis. Market value reflects only those
payments made through October 31, 1996. The remaining installment
aggregating CAD 531,250 is due March 24, 1997.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $676,713,902 and $418,622,254, 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 $156,096 for the period (see Note 4 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $592,438,629. Net unrealized appreciation aggregated
$69,678,513, of which $83,067,120 related to appreciated investment
securities and $13,388,607 related to depreciated investment securities.
The fund hereby designates approximately $11,767,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
For the period, interest and dividends from foreign countries were
$12,015,146. Taxes accrued or paid to foreign countries were $1,354,060.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.1%
Basic Industries 7.6
Cash Equivalents 8.7
Conglomerates 0.1
Construction & Real Estate 2.6
Durables 5.5
Energy 8.8
Finance 26.3
Government Obligations 0.6
Health 5.7
Holding Companies 3.1
Industrial Machinery & Equipment 2.3
Media & Leisure 4.1
Nondurables 5.0
Precious Metals 1.7
Retail & Wholesale 2.1
Services 0.9
Technology 5.5
Transportation 3.2
Utilities 6.1
100.0%
DIVERSIFIED INTERNATIONAL
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at $ 662,117,142
value (including repurchase agreements of $57,150,000)
(cost $591,815,485) - See accompanying schedule
Cash 4,544
Receivable for investments sold 7,136,151
Receivable for fund shares sold 9,209,897
Dividends receivable 1,152,252
Interest receivable 98,783
TOTAL ASSETS 679,718,769
LIABILITIES
Payable for investments purchased $ 8,757,364
Payable for fund shares redeemed 4,677,895
Accrued management fee 468,376
Other payables and 323,244
accrued expenses
TOTAL LIABILITIES 14,226,879
NET ASSETS $ 665,491,890
Net Assets consist of:
Paid in capital $ 562,497,021
Undistributed net investment income 6,896,785
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 25,799,222
Net unrealized appreciation (depreciation) on investments 70,298,862
and assets and liabilities in
foreign currencies
NET ASSETS, for 46,290,041 $ 665,491,890
shares outstanding
NET ASSET VALUE, offering price $14.38
and redemption price per share ($665,491,890 (divided by) 46,290,041 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME $ 12,594,911
Dividends
Interest 2,166,696
14,761,607
Less foreign taxes withheld (1,354,060
)
TOTAL INCOME 13,407,547
EXPENSES
Management fee $ 3,605,498
Basic fee
Performance adjustment 445,161
Transfer agent fees 1,305,020
Accounting fees and expenses 339,831
Non-interested trustees' compensation 1,849
Custodian fees and expenses 267,671
Registration fees 153,969
Audit 45,000
Legal 5,316
Miscellaneous 5,279
Total expenses before reductions 6,174,594
Expense reductions (88,386 6,086,208
)
NET INVESTMENT INCOME 7,321,339
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 27,094,507
Foreign currency transactions (53,527 27,040,980
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 39,541,943
Assets and liabilities in 9,329 39,551,272
foreign currencies
NET GAIN (LOSS) 66,592,252
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 73,913,591
OTHER INFORMATION $ 76,154
Expense reductions
Directed brokerage arrangements
Custodian interest credits 1,205
Transfer agent interest credits 11,027
$ 88,386
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 7,321,339 $ 4,593,024
Net investment income
Net realized gain (loss) 27,040,980 11,711,051
Change in net unrealized appreciation (depreciation) 39,551,272 (3,375,746)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 73,913,591 12,928,329
Distributions to shareholders (5,256,708) (804,584)
From net investment income
From net realized gain (9,796,447) (10,459,145)
TOTAL DISTRIBUTIONS (15,053,155) (11,263,729)
Share transactions 791,836,282 211,031,927
Net proceeds from sales of shares
Reinvestment of distributions 14,593,828 10,913,981
Cost of shares redeemed (494,815,255) (279,746,151)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 311,614,855 (57,800,243)
TOTAL INCREASE (DECREASE) IN NET ASSETS 370,475,291 (56,135,643)
NET ASSETS
Beginning of period 295,016,599 351,152,242
End of period (including undistributed net investment income of $6,896,785 and $5,148,992,
respectively) $ 665,491,890 $ 295,016,599
OTHER INFORMATION
Shares
Sold 58,603,680 17,615,508
Issued in reinvestment of distributions 1,169,376 980,592
Redeemed (36,651,694) (23,603,323)
Net increase (decrease) 23,121,362 (5,007,223)
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, DECEMBER 27,
1991
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA 1996 1995 1994 D 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.73 $ 12.46 $ 11.32 $ 8.46 $ 10.00
Income from Investment Operations
Net investment income .15 .22 .05 .07 .07
Net realized and unrealized gain (loss) 2.13 .47 1.20 2.89 (1.61)
Total from investment operations 2.28 .69 1.25 2.96 (1.54)
Less Distributions
From net investment income (.22) (.03) (.01) (.10) -
From net realized gain (.41) (.39) (.10) - -
Total distributions (.63) (.42) (.11) (.10) -
Net asset value, end of period $ 14.38 $ 12.73 $ 12.46 $ 11.32 $ 8.46
TOTAL RETURN B, C 18.66% 6.02% 11.14% 35.38% (15.40)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 665,492 $ 295,017 $ 351,152 $ 255,029 $ 36,439
Ratio of expenses to average net assets 1.29% 1.13% 1.25% 1.47% 2.00% A,
E
Ratio of expenses to average net assets after expense reductions 1.27% F 1.12% F 1.25% 1.47% 2.00% A
Ratio of net investment income to average net assets 1.53% 1.55% .96% .84% 1.38% A
Portfolio turnover rate 94% 101% 89% 56% 56% A
Average commission rate G $ .0121
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL
GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS
WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
INTERNATIONAL VALUE
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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(income) and capital gains (the profits the fund earns when it sells
securities that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1996 YEAR FUND
INTERNATIONAL VALUE 9.64% 16.55%
Morgan Stanley Capital 10.47% 10.06%
International EAFE Index
International Funds Average 10.73% 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
November 1, 1994. For example, if you invested $1,000 in a fund that had a
5% return over the past year, the value of your investment would be $1,050.
You can compare the fund's returns to the performance of the Morgan Stanley
Capital International Europe, Australasia, Far East (EAFE) Index, a market
capitalization weighted, unmanaged index of over 1,000 foreign stocks. To
measure how the fund's performance stacked up against its peers, you can
compare it to the international funds average, which reflects the
performance of 324 mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. over the past 12 months. These benchmarks include
reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1996 YEAR FUND
INTERNATIONAL VALUE 9.64% 7.95%
Morgan Stanley Capital 10.47% 4.90%
International EAFE Index
International Funds Average 10.73% 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
IMAHDR PRASUN SHR__CHT 19961031 19961107 160428 S00000000000001
International Value Fund MS EAFE Index
00335 MS001
1994/11/01 10000.00 10000.00
1994/11/30 9700.00 9519.40
1994/12/31 9790.00 9579.01
1995/01/31 9440.00 9211.02
1995/02/28 9530.00 9184.59
1995/03/31 10000.00 9757.44
1995/04/30 10170.00 10124.41
1995/05/31 10030.00 10003.72
1995/06/30 10040.00 9828.29
1995/07/31 10830.00 10440.16
1995/08/31 10800.00 10041.90
1995/09/30 10860.00 10238.02
1995/10/31 10630.00 9962.82
1995/11/30 10820.00 10240.03
1995/12/31 11150.86 10652.60
1996/01/31 11253.73 10696.33
1996/02/29 11294.88 10732.49
1996/03/31 11521.18 10960.41
1996/04/30 11912.08 11279.06
1996/05/31 11840.07 11071.51
1996/06/30 11973.80 11133.82
1996/07/31 11562.33 10808.41
1996/08/31 11562.33 10832.09
1996/09/30 11870.93 11119.85
1996/10/31 11654.91 11006.06
IMATRL PRASUN SHR__CHT 19961031 19961107 160430 R00000000000027
Let's say hypothetically that $10,000 was invested in Fidelity
International Value Fund on November 1, 1994, when the fund started. As the
chart shows, by October 31, 1996, the value of the investment would have
grown to $11,655 - a 16.55% increase on the initial investment. For
comparison, look at how the Morgan Stanley Capital International EAFE Index
did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $11,006 - a
10.06% 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.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
INTERNATIONAL VALUE
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Richard Mace, Portfolio Manager of Fidelity International
Value Fund
Q. RICK, HOW DID THE FUND PERFORM?
A. Not as well as I would have liked. For the year that ended October 31,
1996, the fund had a total return of 9.64%. For the same period, the Morgan
Stanley Capital International Europe, Australasia, Far East (EAFE) Index
returned 10.47%. Additionally, the international funds average, as tracked
by Lipper Analytical Services, stood at 10.73% for the one-year period.
Q. WHY DID THE FUND UNDERPERFORM?
A. Unfortunately, the fund was whipsawed by the weak yen and the
underperformance of the Japanese stock market. Additionally, it was a
difficult time for value investing. During the period, growth stocks
outperformed value stocks by a fairly substantial margin.
Q. WHAT WERE SOME MAJOR CHANGES YOU MADE DURING THE PERIOD?
A. I began underweighting Japanese stocks relative to the EAFE index for
the reasons I just stated. I then shifted assets from Japan to Europe -
particularly to mid-capitalization and large-capitalization stocks that
were undervalued and that I believed could benefit from an economic
recovery. As any investor knows, however, it's difficult to time the
financial markets and, in retrospect, I regret not making the shift from
Japan to Europe earlier in the period. Hindsight is always 20-20.
Q. GIVEN THESE CHANGES, WOULD YOU SAY YOU HAVE A NEGATIVE VIEW OF JAPAN?
A. No. In fact, I solidified the fund's position in what I consider my
"value" holdings in Japan. These are companies that I believe will benefit
from the weak yen, the nascent Japanese economic recovery and world
economic growth as well as companies intent on raising the value of the
business. Some examples include Toyota and Honda, retailer Ito-Yokado and
broad-based export companies such as Canon and Omron. I invest with
conviction, and I have a great belief in the fund's remaining Japanese
holdings.
Q. WHAT'S DEVELOPED IN EUROPE THAT HAS MADE YOU FOCUS ON EUROPEAN EQUITIES?
A. Earlier in the year I saw great potential in Europe. Stocks were
generally undervalued, there was the potential for economic recovery and
some companies were taking steps to raise shareholder value. Some stocks
have appreciated and fulfilled their underlying value. Economic growth has
come, although not as uniformly as I would have hoped. Additionally, many
more corporate managements have been proactive in growing the value of
their businesses by restructuring their balance sheets, selling off poorly
performing subsidiaries and redeploying excess cash more efficiently.
Q. YOU MENTIONED THAT YOU LIKED EUROPEAN MID-CAP AND LARGE-CAP COMPANIES.
WAS THERE A PARTICULAR TYPE YOU FAVORED?
A. I looked for cyclical names - especially in the energy sector - as they
have had the propensity to do well in the first stages of an economic
recovery. I believed many European energy stocks' prices did not reflect
rising oil prices and were discounting lower oil prices that never came to
pass. Some energy stocks in the fund during the period were Total, Royal
Dutch Petroleum, Shell and British Petroleum. Additionally, I added to
positions during the period that I have long considered "value" holdings in
Europe - such as Veba, Alcatel and Volvo - and that, exemplify some of the
themes I discussed before.
Q. GENERALLY, EMERGING MARKETS ARE NOT A BIG PART OF THE FUND. WHY WAS
TELEBRAS - BRAZIL'S LARGEST PRIVATIZED TELECOMMUNICATIONS COMPANY - IN THE
TOP 20 HOLDINGS DURING THE PERIOD?
A. I don't intend to make emerging markets a large part of the fund, but I
will buy an emerging market stock if I can get it on my terms - undervalued
and having a good risk/reward tradeoff. In the case of Telebras, recent
price declines made the stock a reasonably attractive buying opportunity.
Q. DID YOU ADD SOME CANADIAN POSITIONS TO THE FUND?
A. Yes. Many Canadian oil and gas, natural resources and bank stocks were
attractively priced during the period. Some additions during the period
include Canadian Natural Resources and Canadian Imperial Bank of Commerce.
Additionally, I added to the fund's position in Inco.
Q. WERE THERE ANY DISAPPOINTING DEVELOPMENTS OTHER THAN WHAT HAPPENED WITH
JAPAN?
A. Sure. There were the legal and governmental impediments to recognizing
shareholder value in Europe. For example, it's not yet legal in many
European countries for corporations to buy back stock, even though many
corporate managements wish to do so. I also continue to be disappointed by
the problems that arise from partial government ownership of companies.
Take the case of Eramet. It's been reported in the media that the French
government, a partial owner of Eramet, is pressuring the company's
management to sell a nickel mine it owns in the colony of New Caledonia.
The government has denied the report. However, it was also reported that
the government indicated it will take steps to oust the management if it
does not comply. I think it's unfortunate that the government is unduly
influencing management's decision making process and hurting the
performance of Eramet's stock.
Q. WHAT'S YOUR OUTLOOK?
A. The way I've positioned the fund is a function of my outlook. I'm
hopeful that the economic recoveries that have begun in Europe and Japan
will continue. A key determinant of a company's stock price will be
shareholder friendliness as reflected in stock buybacks or a proactive
management. I believe the fund is well positioned to take advantage of
these factors.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: growth of capital by investing mainly in
the stocks of foreign companies that own
valuable assets or are undervalued in the
marketplace
FUND NUMBER: 335
TRADING SYMBOL: FIVFX
START DATE: November 1, 1994
SIZE: as of October 31, 1996, more than
$270 million
MANAGER: Richard Mace, since November
1994; co-manager, Fidelity Global Balanced
Fund, February 1993-December 1993 and
1995-1996; manager, Fidelity Global
Balanced Fund, since March 1996; manager,
Fidelity International Growth & Income
Fund, 1994-March 1996; Fidelity Overseas,
Fidelity Advisor Overseas, VIP: Overseas,
Fidelity Advisor Annuity Overseas, since
March 1996; joined Fidelity in 1987
(checkmark)
RICK MACE ON THE MERITS OF INVESTING IN UNDERVALUED
COMPANIES:
"As an investor, one of the best investments you
can make is in an undervalued company with a
management that is committed to growing the value of
the business. For example, suppose you find a stock
that is 10% to 20% undervalued. If that company can
raise the value of the business 10% a year, you will
have a very attractive return.
"How do companies raise value? Companies
can raise value by growing the revenue,
restructuring the balance sheet, divesting
under-earning assets, buying back shares and
redeploying cash more efficiently. I try to find stocks of
companies taking these types of actions. Often, if
managements grow the value of the business, I can
own the stock for years. Then, hopefully I'll be able to
find new undervalued stocks with management
teams equally as impressive.
"In my opinion, economic growth in Europe has
materialized as a result of increasing sales, lower
short-term interest rates, stronger money supply
growth and falling bond yields. In fact, European
industrial production and leading economic indicators
have moved in a positive direction year to date after
slipping dramatically in 1994 and 1995.
DISTRIBUTIONS
The Board of Trustees of Fidelity International Value
Fund voted to pay on December 16, 1996, to
shareholders of record at the opening of business on
December 13, 1996, a distribution of $.22 per share
derived from capital gains realized from sales of
portfolio securities and a dividend of $.10 per share
from net investment income.
A total of 3.04% of the dividends distributed during the
fiscal year was derived from interest on U.S.
Government securities which is generally exempt
from state income tax.
A total of 1% of the dividends distributed during the
fiscal year qualifies for the dividends-received
deduction for corporate shareholders.
The fund will notify shareholders in January 1997 of
these percentages for use in preparing 1996 income
tax returns.
INTERNATIONAL VALUE
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
Canada 5.6%
United States 6.4%
Row: 1, Col: 1, Value: 6.4
Row: 1, Col: 2, Value: 10.0
Row: 1, Col: 3, Value: 8.699999999999999
Row: 1, Col: 4, Value: 17.5
Row: 1, Col: 5, Value: 4.6
Row: 1, Col: 6, Value: 31.4
Row: 1, Col: 7, Value: 6.4
Row: 1, Col: 8, Value: 9.4
Row: 1, Col: 9, Value: 5.6
United
Kingdom 10.0%
France 9.4%
Germany 6.4%
Sweden 8.7%
Japan 31.4%
Other 17.5%
Netherlands 4.6
%
AS OF APRIL 30, 1996
France 7.5%
Row: 1, Col: 1, Value: 22.1
Row: 1, Col: 2, Value: 5.1
Row: 1, Col: 3, Value: 5.5
Row: 1, Col: 4, Value: 16.9
Row: 1, Col: 5, Value: 38.6
Row: 1, Col: 6, Value: 4.3
Row: 1, Col: 7, Value: 7.5
Germany 4.3%
United States 22.1%
United
Kingdom 5.1%
Sweden 5.5%
Japan 38.6%
SF
Other 16.9%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks and equity futures 96.2 78.8
Bonds 1.5 1.5
Short-term investments 2.3 19.7
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Volvo AB Class B 3.4 2.0
(Sweden, Autos, Tires, & Accessories)
Veba AG Ord. 3.0 1.2
(Germany, Electric Utility)
Honda Motor Co. Ltd. 1.9 0.5
(Japan, Autos, Tires, & Accessories)
Pechiney SA Class A 1.8 1.2
(France, Metals & Mining)
Alcatel Alsthom Compagnie Generale 1.6 1.3
d'Electricite SA
(France, Electrical Equipment)
Takeda Chemical Industries Ltd. 1.3 0.9
(Japan, Drugs & Pharmaceuticals)
Total SA Class B 1.2 0.8
(France, Oil & Gas)
British Petroleum PLC Ord. 1.2 0.7
(United Kingdom, Oil & Gas)
Cookson Group PLC 1.2 0.4
(United Kingdom, Metals & Mining)
Canon, Inc. 1.1 0.7
(Japan, Computers & Office Equipment)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Durables 14.1 11.7
Basic Industries 14.0 10.2
Finance 12.2 13.1
Energy 11.1 5.0
Technology 7.2 7.0
Utilities 6.7 3.7
Industrial Machinery & Equipment 5.9 5.7
Construction & Real Estate 5.1 4.1
Nondurables 4.9 3.8
Retail & Wholesale 4.2 5.7
INTERNATIONAL VALUE
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.7%
SHARES VALUE (NOTE 1)
AUSTRALIA - 1.8%
CSR Ltd. 400,000 $ 1,342,304
QNI Ltd. 800,000 1,608,226
Western Mining Holdings Ltd. 304,382 1,910,362
4,860,892
BRAZIL - 1.2%
Multicanal Participacoes SA
sponsored ADR 15,000 210,000
Telebras sponsored ADR 40,000 2,980,000
Telesp PN (Pfd. Reg.) 350,000 64,039
3,254,039
CANADA - 5.4%
Alcan Aluminium Ltd. 36,100 1,186,746
Alliance Communications Corp.
Class B (non-vtg.) (a) 13,000 112,182
BCE, Inc. 15,800 726,579
Barrick Gold Corp. 24,800 650,364
Bre-X Minerals Ltd. (a) 52,200 873,608
Bresea Resources Ltd. (a) 150,000 1,400,874
Bro-X Minerals Ltd. 6,220 18,124
Canadian Imperial Bank of Commerce 11,800 491,061
Canadian Natural Resources Ltd. (a) 100,000 2,487,452
Canada Occidental Petroleum Ltd. 12,200 215,570
Canwest Global Communications
Corp. (sub-vtg.) 82,500 909,167
Elan Energy, Inc. (a) 109,500 1,063,544
Greenstone Resources Ltd. (a) 60,000 762,076
Inco Ltd. 58,700 1,857,331
Renaissance Energy Ltd. (a) 38,000 1,206,620
TVI Pacific, Inc. (a) 593,000 664,575
14,625,873
DENMARK - 1.0%
Den Danske Bank Group AS 5,800 414,769
International Service Systems AS,
Series B 66,600 1,884,518
Unidanmark AS Class A 10,000 459,597
2,758,884
FINLAND - 1.6%
Cultor OY Ord., Series 2 15,000 679,614
Huhtamaki Ord. 30,000 1,299,844
Metsa-Serla Ltd. Class B 19,300 133,712
Valmet OY 84,100 1,279,988
Valmet OY (b) 59,000 897,970
4,291,128
FRANCE - 9.4%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 50,598 4,305,372
Axa SA 14,000 872,404
Axime SA Ex Segin (a)(b) 7,000 725,410
Canal Plus SA 5,800 1,433,021
Credit Commercial de France Ord. 10,000 448,673
Elf Aquitaine SA sponsored ADR 40,000 1,605,000
Eramet SA 60,000 2,777,518
Generale des Eaux, Cie 4,078 486,272
Groupe Danone 3,000 409,836
Michelin SA (Compagnie Generale des
Etablissements) Class B 47,179 2,269,638
Pechiney SA Class A 113,838 4,876,550
Paribas SA (Cie Financiere) Class A 2,400 154,098
Societe Generale Class A 5,000 537,666
SHARES VALUE (NOTE 1)
Total SA:
Class B 42,382 $ 3,307,682
sponsored ADR 20,449 797,511
Usinor Sacilor 39,000 577,313
Valeo SA 1,000 59,875
25,643,839
GERMANY - 6.0%
BASF AG 33,000 1,066,557
Bayer AG 62,000 2,336,309
Continental Gummi-Werke AG 50,000 871,241
Daimler-Benz AG Ord. (a) 30,000 1,768,438
Hornbach Baumarket AG (Bearer) 5,000 161,402
Karstadt AG 2,500 911,591
Mannesmann AG Ord. 1,200 468,237
Veba AG Ord. 150,000 8,004,216
Volkswagen AG 1,700 679,126
16,267,117
HONG KONG - 0.9%
Cheung Kong Holdings Ltd. 36,000 288,663
Consolidated Electric Power Asia Ltd. 50,000 116,396
HSBC Holdings PLC 29,800 610,421
Hutchison Whampoa Ltd. Ord. 46,000 321,254
New World Development Co. Ltd. 22,000 128,036
Peregrine Investments Holdings Ltd. 400,000 644,060
Peregrine Investments Holdings Ltd.
(warrants) (a) 40,000 7,501
Wharf Holdings Ltd. (b) 74,000 305,295
2,421,626
INDONESIA - 0.0%
Pt Tambang Timah GDR unit 8,300 132,800
ITALY - 1.1%
Eni Spa 285,000 1,361,588
Italcementi Fabbriche Ruinite Cemento
Spa, Bergamo 5,000 26,518
Pirelli Spa Ord. 300,000 532,136
SAI (Sta Assieuratrice Industriale) Spa 30,000 236,360
Stet (Societa Finanziaria Telefonica)
Spa Ord. 240,000 831,033
Telecom Italia:
Mobile Spa 30,000 61,786
Spa 30,000 67,001
3,116,422
JAPAN - 29.3%
Acom Co. Ltd. 19,000 728,174
Akita Bank Ltd. 35,000 225,915
Aoki International Co. Ltd. 10,000 185,924
Amway Japan Ltd. sponsored ADR (a) 10,000 197,500
Aoyama Trading Co. Ord. 58,600 1,495,514
Asahi Chemical Industry Co. Ltd. 76,000 473,230
Asahi Breweries Ltd. 46,000 472,002
Bank of Tokyo-Mitsubishi Ltd. 77,000 1,566,674
Bridgestone Corp. 30,000 505,152
Canon, Inc. 160,000 3,058,478
Citizen Watch Co. Ltd. Ord. 108,000 819,294
Dai-Ichi Kangyo Bank 27,000 438,062
DDI Corp. Ord. 200 1,499,671
Dai-Tokyo Fire & Marine Insurance Ord. 170,000 1,060,031
Daiwa House Industry Co. Ltd. 150,000 2,078,492
Daiwa Securities Co. Ltd. 120,000 1,294,453
Daito Trust Construction Co. 171,900 2,170,892
Descente Ltd. 23,000 139,180
Fuji Bank Ltd. 80,000 1,438,281
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Fuji Photo Film Co. Ltd. 100,000 $ 2,867,792
Fujitsu Ltd. 39,000 342,030
Hitachi Koki Co. Ltd. Ord. 151,000 1,264,679
Hitachi Ltd. 324,000 2,869,897
Hitachi Maxell Ltd. 93,000 1,835,124
Honda Motor Co. Ltd. 220,000 5,247,972
Hoya Corp. 7,000 229,599
Ito-Yokado Co. Ltd. 55,000 2,739,750
Jusco Co. Ltd. 25,000 741,066
Kobe Steel Ltd. Ord. (a) 250,000 591,975
Komatsu Ltd. Ord. 150,000 1,226,047
Konica Corp. 18,000 120,132
Kyocera Corp. 4,000 263,451
Matsushita Electric Industrial Co. Ltd. 114,000 1,819,601
Minebea Co. Ltd. 153,000 1,286,797
Minolta Camera Co. Ltd. 116,000 698,899
Mitsubishi Electric Co. Ord. 267,000 1,543,109
Mitsubishi Heavy Industries Ltd. 160,000 1,227,801
Mitsui Marine & Fire Insurance Co. 30,000 192,326
Mitsui Trust and Banking Co. Ltd. 77,000 742,820
NEC Corp. 31,000 337,119
NKK Corp. (a) 430,000 1,078,535
Namco Ltd. 31,200 933,059
Nintendo Co. Ltd. Ord. 20,000 1,276,913
Nitto Denko Corp. 40,000 592,852
Nomura Securities Co. Ltd. 105,000 1,731,199
Nichicon Corp. 20,000 249,068
Nippon Zeon Co. Ltd. 95,000 462,399
Nichiei Co. Ltd. 15,000 997,150
Omron Corp. 100,000 1,780,311
Ricoh Co. Ltd. Ord. 100,000 991,011
Rohm Co. Ltd. 3,000 177,593
Sakura Bank Ltd. 194,000 1,837,492
Sankyo Co. Ltd. 20,000 494,628
Sekisui House Ltd. 150,000 1,578,601
Sekisui Chemical Co. Ltd. 121,000 1,347,687
Shimamura Corp. 10,000 366,586
Shimachu Co. Ltd. 25,000 686,253
Shimizu Construction Co. Ltd. 25,000 225,828
Sho Bond Corp. Ord. 27,400 853,059
Sony Corp. 20,000 1,197,983
TDK Corp. 30,000 1,757,509
Takeda Chemical Industries Ltd. (a) 209,000 3,574,216
Toyo Ink Manufacturing Co. Ltd. 150,000 755,098
Toyota Motor Corp. 126,000 2,972,021
Tostem Corp. 25,000 716,948
Uni Charm Corp. Ord. 21,000 510,151
Uny Co. Ltd. 70,000 1,209,384
York Benimaru Co. 27,600 905,275
Yoshinoya D&C Co. Ltd. Ord. 20 249,068
79,542,782
KOREA (SOUTH) - 0.1%
Korea Electric Power Corp. 10,000 294,100
MALAYSIA - 0.1%
Arab Malaysian Corp. BHD 62,000 274,781
MEXICO - 0.6%
Gruma SA Class B sponsored ADR (a)(b) 14,250 263,625
Telefonos de Mexico SA sponsored ADR
representing Ord. Class L shares 1,000 30,500
Tubos De Acero De Mexico ADR (a) 109,900 1,222,638
1,516,763
SHARES VALUE (NOTE 1)
NETHERLANDS - 4.6%
AKZO Nobel NV 13,800 $ 1,734,686
DSM NV 6,100 582,797
EVC International NV 9,000 248,170
ING Groep NV 80,392 2,500,360
KBB NV Ord. 6,000 418,026
Koninklijke Hoogovens NV 100 3,551
Koninklijke KNP BT NV 5,000 109,945
Philips Electronics NV (warrants) (a) 60,000 917,188
Royal Dutch Petroleum Co.:
Ord. 12,400 2,042,790
ADR 8,000 1,323,000
Unilever NV:
Ord. 6,800 1,031,484
ADR 1,000 152,875
Vendex International NV 33,906 1,365,530
12,430,402
NETHERLANDS ANTILLES - 0.3%
Schlumberger Ltd. 8,000 793,000
NORWAY - 3.0%
Braathens Safe 60,000 487,569
Den Norske Bank AS Class A
Free shares 426,700 1,406,974
Dyno Industrier AS 60,000 1,359,566
Elkem ASA 10,000 132,831
Helikopter Services AS 40,000 443,812
Norsk Hydro AS 6,000 275,664
Norsk Hydro AS ADR 30,000 1,376,250
Smedvig AS 4,800 107,640
Smedvig AS, Series B (a) 1,200 25,879
Schibsted AS, Series B 25,000 380,913
Selmer AS 6,400 188,026
Saga Petroleum AS Class B 120,000 1,865,887
8,051,011
PERU - 0.1%
Compania de Minas Buenaventura SA
Class B sponsored ADR (a) 14,000 234,500
PHILIPPINES - 0.1%
Belle Resources Corp. (a) 649,000 172,869
SPAIN - 3.1%
Acerinox SA (Reg.) 4,500 538,880
Banco Bilbao Vizcaya SA Ord. (Reg.) 40,000 1,941,064
Banco de Santander SA Ord. (Reg.) 20,000 1,025,320
FOCSA (Fomento Construcciones y
Contratas SA) 13,200 1,070,340
Prosegur, CIA de Seguridad SA (Reg.) 88,000 709,427
Tabacalera SA, Series A 50,000 1,827,574
Telefonica de Espana SA Ord. 60,000 1,202,207
8,314,812
SWEDEN - 8.7%
ABB AB, Series B 2,500 278,354
Bure Investment AB (b) 10,000 107,088
Diligentia AB (a) 93,500 1,200,111
Esselte AB Class B Free shares 85,300 1,904,669
Electrolux AB 27,000 1,501,059
Forcenergy AB Class B Free shares 200,000 2,187,336
Marieberg Tidnings Class A
Free shares 16,700 405,872
Scania AB:
Class A 7,500 201,075
Class B 110,000 2,949,106
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWEDEN - CONTINUED
Skandia Foersaekrings AB 36,800 $ 1,031,329
Svedala Industri Free shares 50,000 782,277
Svenska Cellulosa AB (SCA)
Class B Ord. 3,800 79,655
Swedish Match Co. 450,000 1,339,743
Volvo AB:
Class B 450,000 9,330,356
ADR Class B 20,000 410,000
23,708,030
SWITZERLAND - 1.9%
CS Holding AG (Reg.) 12,500 1,244,627
Julius Baer Holding AG 1,500 1,572,223
Nestle SA (Reg.) 700 757,995
Sandoz AG (Reg.) 1,400 1,613,155
5,188,000
UNITED KINGDOM - 10.0%
Bass PLC Ord. 90,000 1,153,868
Benson's Crisps PLC (a) 625,000 355,906
Blue Circle Industries PLC 102,500 662,567
Booker PLC 80,000 523,243
British Petroleum PLC Ord. 301,796 3,241,973
Caradon PLC 493,700 1,939,849
Christies International PLC 229,100 928,137
Cookson Group PLC 849,100 3,122,158
Courtaulds PLC Ord. 29,700 219,865
Glaxo Holdings PLC 100,000 1,570,055
Granada Group PLC 64,000 921,533
Grand Metropolitan PLC 80,000 603,292
ICI (Imperial Chemical Industries)
PLC Ord. 40,000 513,481
Lex Service PLC Ord. 200,000 1,184,456
Lloyds TSB Group PLC 250,700 1,588,727
Perkins Foods PLC 237,200 320,317
Redland PLC Ord. 125,000 854,175
Rugby Group PLC 365,400 597,478
Shell Transport & Trading Co.
PLC (Reg.) 175,000 2,867,181
SmithKline Beecham PLC Ord. 122,000 1,506,569
Unigate PLC 75,000 525,928
Unilever PLC Ord. 45,000 945,206
Vodafone Group PLC 187,000 722,591
Wickes PLC 455,000 296,114
27,164,669
UNITED STATES OF AMERICA - 2.4%
Alumax, Inc. (a) 53,000 1,702,625
Aluminum Co. of America 26,100 1,530,113
Duriron Co., Inc. 10,000 267,500
Freeport McMoRan Copper & Gold, Inc.:
Class A 10,000 290,000
Class B 10,000 303,750
Jefferson Smurfit Corp. (a) 1,700 23,800
Kaiser Aluminum Corp. (a) 25,000 278,125
Limited, Inc. (The) 9 165
Newmont Mining Corp. 18,000 832,500
Pharmacia & Upjohn, Inc. 14,900 536,400
Reynolds Metals Co. 11,000 618,750
6,383,728
TOTAL COMMON STOCKS
(Cost $251,149,164) 251,442,067
PREFERRED STOCKS - 1.8%
SHARES VALUE (NOTE 1)
CONVERTIBLE PREFERRED STOCKS - 0.9%
JAPAN - 0.3%
AJL participating trust exchangeable 43,500 $ 810,188
UNITED STATES OF AMERICA - 0.6%
Occidental Petroleum Corp.
Indexed $3.00 25,000 1,606,250
TOTAL CONVERTIBLE PREFERRED STOCKS 2,416,438
NONCONVERTIBLE PREFERRED STOCKS - 0.9%
GERMANY - 0.4%
Volkswagen AG 4,000 1,222,702
ITALY - 0.4%
Italmobiliare Spa (Milano) 10,000 59,916
Stet (Societa Finanziaria Telefonica) Spa 225,000 599,690
Telecom Italia Mobile Spa de Risp 398,000 455,708
1,115,314
UNITED STATES OF AMERICA - 0.1%
Freeport McMoran Copper & Gold, Inc.:
Series B 5,000 164,375
depositary shares representing
gold pfd., Series II 5,000 155,000
319,375
TOTAL NONCONVERTIBLE PREFERRED STOCKS 2,657,391
TOTAL PREFERRED STOCKS
(Cost $4,960,632) 5,073,829
CONVERTIBLE BONDS - 0.6%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (C)
BERMUDA - 0.2%
MBL International Finance of
Bermuda 3%, 11/30/02 Aa2 $ 600,000 661,500
CANADA - 0.2%
Horsham Corp. 3%,
1/29/21 - 500,000 500,000
JAPAN - 0.1%
Matsushita Electric Works Co. Ltd.
2.70%, 5/31/02 - JPY 15,000,000 157,860
UNITED STATES OF AMERICA - 0.1%
Unisys Corp. 8 1/4%, 3/15/06 B3 216,000 248,400
TOTAL CONVERTIBLE BONDS
(Cost $1,603,938) 1,567,760
GOVERNMENT OBLIGATIONS - 0.9%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (F) AMOUNT (C) (NOTE 1)
UNITED STATES OF AMERICA - 0.9%
U.S. Treasury Obligations:
6 1/2%, 5/15/97 (d) Aaa $ 390,000 $ 392,254
8 3/4%, 10/15/97 Aaa 370,000 380,985
9 1/4%, 8/15/98 Aaa 370,000 391,797
8 7/8%, 11/15/98 Aaa 404,000 427,735
8 7/8%, 2/15/99 Aaa 370,000 393,817
9 1/8%, 5/15/99 Aaa 360,000 387,338
TOTAL GOVERNMENT OBLIGATIONS
(Cost $2,410,021) 2,373,926
CASH EQUIVALENTS - 4.0%
MATURITY
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 10,853,670 10,852,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $270,975,755) $ 271,309,582
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
45 Nikkei 225 Stock
Index Contracts Dec. 1996 $ 4,628,250 $ (1,485)
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.7%
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 $2,299,388 or 0.8% of net
assets.
(c) Principal amount is stated in United States dollars unless otherwise
noted.
(d) Security pledged to cover margin requirements for futures contracts. At
the period end, the value of securities pledged amounted to $392,254.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $334,217,567 and $127,177,068, respectively, of which U.S.
government and government agency obligations aggregated $433,905 and
$402,633, respectively.
The market value of futures contracts opened and closed during the period
amounted to $45,011,076 and $46,804,390, respectively (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 $53,636 for the period (see Note 4 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $271,104,783. Net unrealized appreciation aggregated
$204,799, of which $14,780,718 related to appreciated investment securities
and $14,575,919 related to depreciated investment securities.
The fund hereby designates approximately $1,767,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
For the period, interest and dividends from foreign countries were
$4,733,534. Taxes accrued or paid to foreign countries were $505,812.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
Basic Industries 14.0%
Cash Equivalents 4.0
Construction & Real Estate 5.1
Durables 14.1
Energy 11.1
Finance 12.2
Government Obligations 0.9
Health 3.5
Holding Companies 0.1
Industrial Machinery & Equipment 5.9
Media & Leisure 2.5
Nondurables 4.9
Precious Metals 2.7
Retail & Wholesale 4.2
Services 0.6
Technology 7.2
Transportation 0.3
Utilities 6.7
100.0%
INTERNATIONAL VALUE
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at $ 271,309,582
value (including repurchase agreements of $10,852,000)
(cost $270,975,755) - See accompanying schedule
Cash 631
Receivable for investments sold 638,281
Receivable for fund shares sold 1,370,185
Dividends receivable 668,803
Interest receivable 73,441
TOTAL ASSETS 274,060,923
LIABILITIES
Payable for investments purchased $ 1,611,763
Payable for fund shares redeemed 1,184,345
Accrued management fee 185,349
Payable for daily variation on 11,250
futures contracts
Other payables and 203,029
accrued expenses
TOTAL LIABILITIES 3,195,736
NET ASSETS $ 270,865,187
Net Assets consist of:
Paid in capital $ 257,934,392
Undistributed net investment income 3,774,842
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 8,823,049
Net unrealized appreciation (depreciation) on investments 332,904
and assets and liabilities in
foreign currencies
NET ASSETS, for 23,906,732 $ 270,865,187
shares outstanding
NET ASSET VALUE, offering price $11.33
and redemption price per share ($270,865,187 (divided by) 23,906,732 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME $ 3,878,161
Dividends
Special dividend from Volvo AB 928,096
Interest 2,235,026
7,041,283
Less foreign taxes withheld (505,812
)
TOTAL INCOME 6,535,471
EXPENSES
Management fee $ 1,636,231
Basic fee
Performance adjustment 86,631
Transfer agent fees 581,960
Accounting fees and expenses 163,645
Non-interested trustees' compensation 749
Custodian fees and expenses 157,015
Registration fees 100,961
Audit 43,478
Legal 2,205
Miscellaneous 539
Total expenses before reductions 2,773,414
Expense reductions (24,726 2,748,688
)
NET INVESTMENT INCOME 3,786,783
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 7,849,881
Foreign currency transactions (15,732
)
Futures contracts 1,111,472 8,945,621
Change in net unrealized appreciation (depreciation) on:
Investment securities (1,264,473
)
Assets and liabilities in 2,246
foreign currencies
Futures contracts 10,592 (1,251,635
)
NET GAIN (LOSS) 7,693,986
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 11,480,769
OTHER INFORMATION $ 23,035
Expense reductions
Directed brokerage arrangements
Custodian interest credits 147
Transfer agent interest credits 1,544
$ 24,726
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED NOVEMBER 1,
OCTOBER 31, 1994
1996 (COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 3,786,783 $ 510,464
Net investment income
Net realized gain (loss) 8,945,621 1,988,292
Change in net unrealized appreciation (depreciation) (1,251,635) 1,584,539
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 11,480,769 4,083,295
Distributions to shareholders (56,772) -
From net investment income
From net realized gain (1,703,168) -
TOTAL DISTRIBUTIONS (1,759,940) -
Share transactions 592,069,913 164,834,882
Net proceeds from sales of shares
Reinvestment of distributions 1,730,074 -
Cost of shares redeemed (389,483,829) (112,089,977)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 204,316,158 52,744,905
TOTAL INCREASE (DECREASE) IN NET ASSETS 214,036,987 56,828,200
NET ASSETS
Beginning of period 56,828,200 -
End of period (including undistributed net investment income of $3,774,842 and $36,632,
respectively) $ 270,865,187 $ 56,828,200
OTHER INFORMATION
Shares
Sold 53,175,152 16,269,212
Issued in reinvestment of distributions 160,044 -
Redeemed (34,777,000) (10,920,676)
Net increase (decrease) 18,558,196 5,348,536
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
YEAR ENDED NOVEMBER 1,
OCTOBER 31, 1994
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA 1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Net asset value, beginning of period $ 10.63 $ 10.00
Income from Investment Operations
Net investment income .16 E .11 B
Net realized and unrealized gain (loss) .85 .52
Total from investment operations 1.01 .63
Less Distributions
From net investment income (.01) -
From net realized gain (.30) -
Total distributions (.31) -
Net asset value, end of period $ 11.33 $ 10.63
TOTAL RETURN A 9.64% 6.30%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 270,865 $ 56,828
Ratio of expenses to average net assets 1.28% 1.72%
Ratio of expenses to average net assets after expense reductions 1.26% C 1.72%
Ratio of net investment income to average net assets 1.74% 1.08%
Portfolio turnover rate 71% 109%
Average commission rate D $ .0264
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
D FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
E INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM VOLVO
AB WHICH AMOUNTED TO $.04 PER SHARE.
</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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). Prior to July 1, 1995, the fund
imposed a 3% sales charge. If this sales charge were taken into account,
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
OCTOBER 31, 1996 YEAR YEARS YEARS
OVERSEAS 11.41% 46.46% 155.47%
Morgan Stanley Capital 10.47% 44.54% 143.55%
International EAFE Index
International Funds Average 10.73% 57.53% 166.32%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or 10 years. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, the value of your investment would be $1,050. You can compare
the fund's returns to the performance of the Morgan Stanley Capital
International Europe, Australasia, Far East (EAFE) Index, a market
capitalization weighted, unmanaged index of over 1,000 foreign stocks. To
measure how the fund's performance stacked up against its peers, you can
compare it to the international funds average, which reflects the
performance of 324 mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. over the past 12 months. These benchmarks include
reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
OCTOBER 31, 1996 YEAR YEARS YEARS
OVERSEAS 11.41% 7.93% 9.83%
Morgan Stanley Capital 10.47% 7.65% 9.31%
International EAFE Index
International Funds Average 10.73% 9.36% 9.98%
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 TEN YEARS
IMAHDR PRASUN SHR__CHT 19961031 19961104 095449 S00000000000001
Overseas MS EAFE Index
00094 MS001
1986/10/31 10000.00 10000.00
1986/11/30 10936.45 10576.63
1986/12/31 11478.16 11137.02
1987/01/31 13244.59 12320.45
1987/02/28 13669.55 12689.18
1987/03/31 15215.24 13728.97
1987/04/30 16352.63 15181.65
1987/05/31 16290.14 15181.59
1987/06/30 15144.41 14697.91
1987/07/31 15369.39 14672.24
1987/08/31 16648.44 15772.39
1987/09/30 16444.29 15524.07
1987/10/31 12873.79 13348.88
1987/11/30 12769.63 13480.33
1987/12/31 13586.44 13880.61
1988/01/31 13058.20 14128.44
1988/02/29 13472.84 15070.19
1988/03/31 14290.75 15996.80
1988/04/30 14665.63 16229.26
1988/05/31 14370.27 15709.01
1988/06/30 13961.31 15294.95
1988/07/31 13779.56 15774.81
1988/08/31 13364.92 14749.16
1988/09/30 13864.75 15393.62
1988/10/31 14370.27 16710.73
1988/11/30 14745.15 17706.13
1988/12/31 14708.26 17804.85
1989/01/31 14888.48 18118.11
1989/02/28 15277.98 18211.24
1989/03/31 15144.27 17853.82
1989/04/30 15469.83 18019.41
1989/05/31 14725.70 17039.10
1989/06/30 14295.50 16752.27
1989/07/31 15714.00 18855.90
1989/08/31 15347.75 18007.88
1989/09/30 16167.46 18828.17
1989/10/31 15289.61 18071.70
1989/11/30 16155.83 18980.16
1989/12/31 17198.88 19680.47
1990/01/31 16808.55 18948.20
1990/02/28 16460.91 17625.71
1990/03/31 17003.72 15789.53
1990/04/30 16961.02 15664.23
1990/05/31 18113.71 17451.54
1990/06/30 18436.96 17297.83
1990/07/31 19345.69 17541.48
1990/08/31 17204.98 15838.06
1990/09/30 15296.03 13630.79
1990/10/31 16753.66 15754.73
1990/11/30 16198.66 14825.39
1990/12/31 16063.34 15065.55
1991/01/31 16419.73 15552.85
1991/02/28 17015.86 17220.10
1991/03/31 16458.60 16186.33
1991/04/30 16691.88 16345.28
1991/05/31 16724.27 16515.84
1991/06/30 15674.55 15302.24
1991/07/31 16529.88 16054.07
1991/08/31 16653.00 15728.04
1991/09/30 17385.21 16614.46
1991/10/31 17443.53 16849.98
1991/11/30 16814.99 16063.35
1991/12/31 17446.94 16892.91
1992/01/31 17647.24 16532.08
1992/02/29 17281.17 15940.36
1992/03/31 16922.01 14888.04
1992/04/30 17951.15 14958.81
1992/05/31 18724.73 15960.09
1992/06/30 18282.68 15203.06
1992/07/31 17122.31 14813.97
1992/08/31 16977.27 15743.11
1992/09/30 16272.76 15432.23
1992/10/31 15167.65 14622.74
1992/11/30 15091.67 14760.34
1992/12/31 15448.27 14836.69
1993/01/31 15898.52 14834.86
1993/02/28 16224.56 15282.98
1993/03/31 17326.90 16615.13
1993/04/30 18530.16 18191.95
1993/05/31 18957.12 18576.16
1993/06/30 18506.87 18286.33
1993/07/31 19353.03 18926.44
1993/08/31 20447.60 19948.15
1993/09/30 20269.06 19499.13
1993/10/31 21084.17 20100.05
1993/11/30 20121.56 18343.09
1993/12/31 21635.93 19667.59
1994/01/31 23174.03 21330.40
1994/02/28 22740.21 21271.32
1994/03/31 22085.53 20355.13
1994/04/30 22826.97 21218.78
1994/05/31 22535.13 21096.96
1994/06/30 22235.39 21395.10
1994/07/31 22858.52 21600.86
1994/08/31 23189.80 22112.26
1994/09/30 22550.90 21415.83
1994/10/31 23008.39 22128.97
1994/11/30 22061.86 21065.45
1994/12/31 21910.89 21197.35
1995/01/31 20971.85 20383.05
1995/02/28 20987.90 20324.55
1995/03/31 21613.93 21592.21
1995/04/30 22231.93 22404.27
1995/05/31 22544.94 22137.20
1995/06/30 22713.48 21748.98
1995/07/31 23732.78 23102.99
1995/08/31 23074.65 22221.70
1995/09/30 23395.69 22655.69
1995/10/31 22930.18 22046.70
1995/11/30 23187.02 22660.12
1995/12/31 23894.97 23573.11
1996/01/31 24347.06 23669.88
1996/02/29 24396.37 23749.90
1996/03/31 24758.05 24254.25
1996/04/30 25432.07 24959.40
1996/05/31 25440.29 24500.10
1996/06/30 25629.34 24638.00
1996/07/31 24914.22 23917.89
1996/08/31 25095.06 23970.30
1996/09/30 25818.40 24607.09
1996/10/31 25547.15 24355.28
IMATRL PRASUN SHR__CHT 19961031 19961104 095452 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Overseas
Fund on October 31, 1986. As the chart shows, by October 31, 1996, the
value of the investment would have grown to $25,547 - a 155.47% increase on
the initial investment. For comparison, look at how the Morgan Stanley
Capital International EAFE Index did over the period. With dividends and
capital gains, if any, reinvested, the same $10,000 investment would have
grown to $24,355 - a 143.55% 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.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
OVERSEAS
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Richard Mace, Portfolio Manager of Fidelity Overseas Fund
Q. HOW DID THE FUND PERFORM, RICK?
A. Pretty well. For the year ending October 31, 1996, the fund had a total
return of 11.41%. For the same period, the Morgan Stanley Capital
International Europe, Australasia, Far East (EAFE) Index returned 10.47%.
Additionally, the international funds average, as tracked by Lipper
Analytical Services, stood at 10.73% for the one year period.
Q. WHAT WOULD YOU SAY WERE SOME OF THE BIGGEST CHANGES YOU'VE MADE TO THE
FUND SINCE YOU BECAME THE MANAGER?
A. I continued to sell Japanese stocks in order to keep the fund
underweighted in Japan relative to the EAFE Index. I've placed the proceeds
from these sales into European cyclical stocks - which tend to benefit from
a strengthening economy - and short-term investments. This strategy has
been effective in moving the fund into undervalued European equities that I
believe have attractive risk/reward characteristics. It also has limited
the fund's exposure to the negative effects of the weak Japanese yen and
the underperforming Japanese stock market.
Q. ARE YOU SAYING YOU HAVE A NEGATIVE VIEW OF JAPAN?
A. No. In fact, I solidified the fund's position in what I consider my
"value" holdings in Japan. These are companies that I believe will benefit
from the weak yen, the nascent Japanese economic recovery, world economic
growth and good managements intent on raising the value of the business. I
only invest with conviction and I have a great belief in the fund's
remaining Japanese holdings. Some examples include Toyota and Honda,
retailer Ito-Yokado and broad-based export companies such as Canon and
Omron.
Q. BASED ON YOUR INVESTMENTS DURING THE PERIOD, YOU SAW OPPORTUNITIES IN
EUROPE . . .
A. Six months ago I saw great potential in Europe. Stocks were generally
undervalued, there was the potential for economic recovery and some
companies were taking steps to raise shareholder value. Some stocks have
appreciated and realized their underlying value. Economic growth has come,
although not as uniformly as I would have hoped. Additionally, many more
companies have been proactive in growing the value of their businesses by
restructuring their balance sheets, selling off poor performing
subsidiaries and redeploying excess cash more efficiently.
Q. WHAT TYPES OF COMPANIES DID YOU LIKE IN EUROPE?
A. As I said before, I looked for cyclical names - especially in the energy
sector. I believed many European energy stocks' prices did not reflect
rising oil prices and were discounting lower oil prices that never came to
pass. Some energy stocks in the fund were Total, Royal Dutch Petroleum,
Shell and British Petroleum. Additionally, I added to positions during the
period that I have long considered value holdings in Europe - such as Veba,
Alcatel and Volvo - and that, in my opinion, exemplify some of the themes I
discussed before.
Q. DID THE FUND OWN ANY STOCKS IN EMERGING MARKETS DURING THE PERIOD?
A. Yes, Telebras - Brazil's largest privatized telecommunications company -
is the fund's largest emerging market holding. I don't intend to make
emerging markets a large part of the fund, but I will buy an emerging
market stock if I can get it on my terms - undervalued and having a good
risk/reward tradeoff.
Q. IT APPEARS MANY OF YOUR CANADIAN POSITIONS ARE NEW TO THE FUND . . .
A. That's right. Many Canadian oil and gas, natural resources and bank
stocks were attractively priced during the period. Some additions include
Canadian Natural Resources, Inco, and Canadian Imperial Bank of Commerce.
Q. DID YOU HAVE ANY DISAPPOINTMENTS?
A. Sure. One would be the weakness of the Japanese market. I consider
another to be the legal and governmental impediments to recognizing
shareholder value in Europe. For example, it's not yet legal in many
European countries for corporations to buy back stock, even though many
corporate managements seek to do so. I also continue to be disappointed by
the problems that arise from partial government ownership of companies.
Take the case of Eramet. It's been reported in the media that the French
government, a partial owner of Eramet, is pressuring the company's
management to sell a nickel mine it owns in the colony of New Caledonia.
The government has denied the report. However, it was also reported that
the government indicated it will take steps to oust the management if they
do not comply. I think it's unfortunate that the government is unduly
influencing management's decision making process and hurting the
performance of Eramet's stock.
Q. WHAT DO YOU SEE GOING FORWARD?
A. I'm hopeful that the economic recoveries that have begun in Europe and
Japan will continue. A key determinant of a company's stock price will be
the company's shareholder friendliness as reflected in stock buybacks or a
proactive management. I will try to position the fund in companies that may
benefit from economic growth and that are focused on providing returns for
shareholders.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
in equity securities outside the United States
FUND NUMBER: 094
TRADING SYMBOL: FOSFX
START DATE: December 4, 1984
SIZE: as of October 31, 1996, more than
$3.1 billion
MANAGER: Richard Mace, since March 1996;
manager, Fidelity International Value Fund,
since 1994; co-manager, Fidelity Global
Balanced Fund, February 1993-December
1993 and January 1995-March 1996;
manager,
Fidelity Global Balanced Fund, since March
1996; manager, Fidelity International Growth &
Income Fund, 1994-March 1996; manager,
Fidelity Advisor Overseas, VIP: Overseas,
Fidelity Advisor Annuity Overseas, since
March 1996; joined Fidelity in 1987
(checkmark)
RICK MACE ON THE WEAK YEN AND THE PRICING POWER OF
JAPANESE COMPANIES:
"At the end of the period, the Japanese yen had
reached a three-year low against the dollar of 115 yen
- - that's a depreciation of 30% from a high of 80 yen
in the spring of 1995. The weakness of the yen
improves the competitiveness of Japanese exports
and favorably impacts reported profits after the
translation of overseas earnings back into yen.
"In theory, this works. Unfortunately, in practice, the
benefits of the weak yen have not been realized by
investors. Many companies instead are passing on
the benefits to customers in the form of lower prices in
an effort to boost market share. As such, they are
giving away a lot of the potential earnings gains.
Fortunately, the Japanese auto companies have not
taken this route, and that is why the fund has taken
substantial positions in the auto companies."
(solid bullet) According to THE ECONOMIST, Japan has the world's
largest amount of foreign assets relative to its foreign
debts at $742 billion or 16.7% of the country's GDP. In
contrast, the United States continued to be the
world's debtor nation, with net foreign debt of $814
billion or 11.3% of GDP.
DISTRIBUTIONS
The Board of Trustees of Fidelity Overseas Fund
voted to pay on December 9, 1996, to shareholders of
record at the opening of business on December 6,
1996, a distribution of $1.63 per share derived from
capital gains realized from sales of portfolio
securities and a dividend of $.37 per share from net
investment income.
A total of 4.84% of the dividends distributed during the
fiscal year was derived from interest on U.S.
Government securities which is generally exempt
from state income tax.
The fund will notify shareholders in January 1997 of
the applicable percentage for use in preparing
1996 income tax returns.
OVERSEAS
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
Canada 3.1%
United States 12.7%
Row: 1, Col: 1, Value: 12.7
Row: 1, Col: 2, Value: 12.1
Row: 1, Col: 3, Value: 6.6
Row: 1, Col: 4, Value: 3.5
Row: 1, Col: 5, Value: 17.0
Row: 1, Col: 6, Value: 5.4
Row: 1, Col: 7, Value: 23.7
Row: 1, Col: 8, Value: 6.5
Row: 1, Col: 9, Value: 9.4
Row: 1, Col: 10, Value: 3.1
France 9.4%
United
Kingdom 12.1%
Germany 6.5%
Sweden 6.6%
Japan 23.7%
Spain 3.5%
Netherlands 5.4%
Other 17.0%
AS OF APRIL 30, 1996
France 6.3%
Germany 4.3%
United States 19.7%
Row: 1, Col: 1, Value: 19.7
Row: 1, Col: 2, Value: 12.0
Row: 1, Col: 3, Value: 4.4
Row: 1, Col: 4, Value: 3.6
Row: 1, Col: 5, Value: 17.7
Row: 1, Col: 6, Value: 5.2
Row: 1, Col: 7, Value: 23.1
Row: 1, Col: 8, Value: 3.7
Row: 1, Col: 9, Value: 4.3
Row: 1, Col: 10, Value: 6.3
Hong
Kong 3.7%
United
Kingdom 12.0%
Japan 23.1%
Sweden 4.4%
Spain 3.6%
Netherlands 5.2%
Other 17.7%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks, closed-end investment 88.8 80.0
companies and equity futures
Bonds 0.3 0.3
Short-term investments 10.9 19.7
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Veba AG Ord. 3.0 0.6
(Germany, Electric Utility)
Volvo AB Class B 2.8 1.5
(Sweden, Autos, Tires, & Accessories)
Total SA Class B 2.2 0.9
(France, Oil & Gas)
Honda Motor Co. Ltd. 2.0 1.0
(Japan, Autos, Tires, & Accessories)
Alcatel Alsthom Compagnie Generale 1.6 1.3
d'Electricite SA
(France, Electrical Equipment)
Toyota Motor Corp. 1.6 0.9
(Japan, Autos, Tires, & Accessories)
Fuji Photo Film Co. Ltd. 1.4 0.6
(Japan, Photographic Equipment)
Takeda Chemical Industries Ltd. 1.3 0.6
(Japan, Drugs & Pharmaceuticals)
British Petroleum PLC Ord. 1.2 0.6
(United Kingdom, Oil & Gas)
Scania AB Class B 1.2 0.9
(Sweden, Autos, Tires, & Accessories)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 14.4 18.7
Durables 14.1 10.7
Basic Industries 10.1 5.4
Energy 8.9 4.6
Utilities 8.5 7.7
Technology 5.4 4.6
Nondurables 5.3 6.1
Industrial Machinery & Equipment 4.4 4.7
Health 4.4 2.4
Retail & Wholesale 4.3 5.2
OVERSEAS
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 86.8%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.7%
Perez Companc Class B 785,387 $ 4,991,110
Telecom Argentina Class B
sponsored ADR 212,930 8,038,108
Telecom Argentina Stet France
Telecom SA 473,300 1,786,993
YPF Sociedad Anonima sponsored ADR
representing Class D shares 296,200 6,738,550
21,554,761
AUSTRALIA - 1.6%
Brambles Industries Ltd. 724,700 11,987,484
CSR Ltd. 2,984,100 10,013,888
Coles Myer Ltd. 1,308,700 4,774,903
QNI Ltd. 3,103,000 6,237,908
Western Mining Holdings Ltd. 1,797,987 11,284,523
Woolworths Ltd. 2,206,600 5,082,063
49,380,769
BELGIUM - 0.4%
Bekaert SA 6,400 5,167,149
Delhaize Freres & Cie Le Lion SA 130,000 7,253,513
12,420,662
BERMUDA - 0.2%
Dickson Concepts International Ltd. 2,110,399 7,041,760
BRAZIL - 1.0%
Multicanal Participacoes SA
sponsored ADR 177,400 2,483,600
Telebras sponsored ADR 391,000 29,129,500
31,613,100
CANADA - 3.1%
Alcan Aluminium Ltd. 327,700 10,772,760
Alliance Communications Corp.
Class B (non-vtg.) (a) 136,400 1,177,048
BCE, Inc. 211,200 9,712,249
Barrick Gold Corp. 174,600 4,578,774
Bre-X Minerals Ltd. (a) 488,500 8,175,427
Bro-X Minerals Ltd. 81,770 238,263
Canadian Imperial Bank of Commerce 254,000 10,570,287
Canadian Natural Resources Ltd. (a) 672,600 16,733,968
Canada Occidental Petroleum Ltd. 131,100 2,316,497
Greenstone Resources Ltd. (a) 268,800 3,414,098
Inco Ltd. 798,500 25,265,400
Renaissance Energy Ltd. (a) 121,900 3,870,709
96,825,480
CHILE - 0.1%
Santa Isabel SA sponsored ADR 77,000 2,165,625
DENMARK - 0.6%
Den Danske Bank Group AS 63,100 4,512,399
International Service Systems AS,
Series B 439,900 12,447,438
Unidanmark AS Class A 65,500 3,010,358
19,970,195
FINLAND - 1.8%
Cultor OY, Series 1 143,900 6,567,236
Huhtamaki Ord. 345,100 14,952,537
Metsa-Serla Ltd. Class B 219,600 1,521,411
Nokia Corp. AB, Series A 61,900 2,850,828
Pohjola Class B 739,870 15,459,047
SHARES VALUE (NOTE 1)
Valmet OY 623,360 $ 9,487,433
Valmet OY (b) 342,200 5,208,226
56,046,718
FRANCE - 9.4%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 571,129 48,597,237
Axa SA 313,665 19,545,908
Canal Plus SA 79,800 19,716,393
Credit Commercial de France Ord. 102,600 4,603,384
Eramet SA 313,128 14,495,309
Generale des Eaux, Cie 61,600 7,345,355
Groupe Danone 32,600 4,453,552
Lafarge Coppee SA 85,100 5,095,371
Michelin SA (Compagnie Generale
des Etablissements) Class B 552,152 26,562,347
Nationale Elf Aquitaine 200,000 15,956,284
Pechiney SA Class A 736,154 31,535,090
Peugeot SA Ord. 34,900 3,630,308
Paribas SA (Cie Financiere) Class A 26,000 1,669,399
Societe Generale Class A 51,300 5,516,452
Total SA Class B 856,490 66,844,331
Usinor Sacilor 836,626 12,384,481
Valeo SA 9,500 568,813
288,520,014
GERMANY - 6.2%
BASF AG 246,800 7,976,553
Bayer AG 599,800 22,601,904
Continental Gummi-Werke AG 685,000 11,935,999
Daimler-Benz AG Ord. (a) 260,900 15,379,513
Hoechst AG Ord. 195,100 7,341,554
Karstadt AG 6,800 2,479,528
Mannesmann AG Ord. 16,900 6,594,334
Veba AG Ord. 1,755,100 93,654,666
Volkswagen AG 58,300 23,290,042
191,254,093
HONG KONG - 2.1%
Great Eagle Holdings Ltd. 1,922,000 6,176,987
HSBC Holdings PLC 1,348,000 27,612,337
Hong Kong & China Gas Co. Ltd. 4,275,600 7,520,261
Hutchison Whampoa Ltd. Ord. 462,000 3,226,507
Hysan Development Co. Ltd. 2,859,000 9,169,861
Oriental Press Group Ltd. (warrants) (a) 607,000 48,672
Peregrine Investments Holdings Ltd. 2,084,000 3,355,552
Sun Hung Kai Properties Ltd. 288,000 3,277,722
Wharf Holdings Ltd. (b) 750,000 3,094,203
63,482,102
INDONESIA - 0.1%
Pt Tambang Timah GDR unit 83,600 1,337,600
IRELAND - 0.8%
Bank of Ireland, Inc. 1,927,500 15,837,015
Independent Newspapers PLC 1,609,950 8,513,013
24,350,028
ITALY - 0.9%
Eni Spa 2,379,800 11,369,501
Magneti Marelli Spa 3,200,000 3,097,212
Montedison Spa Ord. (a) 2,239,758 1,466,445
Olivetti & Co. Spa Ord. (a) 8,727,400 2,528,948
Pirelli Spa Ord. 3,293,100 5,841,255
SAI (Sta Assieuratrice Industriale) Spa 456,300 3,595,035
27,898,396
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - 23.2%
Acom Co. Ltd. 43,600 $ 1,670,967
Amway Japan Ltd. 154,800 6,163,491
Aoyama Trading Co. Ord. 465,500 11,879,895
Asahi Chemical Industry Co. Ltd. 494,000 3,075,992
Asahi Breweries Ltd. 476,000 4,884,192
Bank of Tokyo-Mitsubishi Ltd. 237,000 4,822,101
Bridgestone Corp. 421,000 7,088,972
Canon, Inc. 1,850,000 35,369,438
Citizen Watch Co. Ltd. Ord. 859,000 6,516,422
DDI Corp. Ord. 1,917 14,374,348
Dai-Ichi Kangyo Bank 299,000 4,851,129
Daiwa House Industry Co. Ltd. 1,105,000 15,311,555
Daiwa Securities Co. Ltd. 1,600,000 17,259,374
Denny's Japan Co. Ltd. 131,000 4,147,424
Daito Trust Construction Co. 1,210,700 15,289,700
Fuji Bank Ltd. 402,000 7,227,363
Fuji Photo Film Co. Ltd. 1,463,000 41,955,801
Fujitsu Ltd. 327,000 2,867,792
Hitachi Koki Co. Ltd. Ord. 260,000 2,177,593
Hitachi Ltd. 2,045,000 18,114,011
Hitachi Maxell Ltd. 696,000 13,733,831
Honda Motor Co. Ltd. 2,552,000 60,876,477
Hoya Corp. 62,000 2,033,589
Ito-Yokado Co. Ltd. 583,000 29,041,352
Kao Corp. 236,000 2,773,427
Kobe Steel Ltd. Ord. (a) 1,541,000 3,648,937
Komatsu Ltd. Ord. 2,257,000 18,447,920
Matsushita Electric Industrial Co. Ltd. 1,905,000 30,406,491
Minebea Co. Ltd. 937,000 7,880,579
Minolta Camera Co. Ltd. 277,000 1,668,924
Mitsubishi Electric Co. Ord. 2,283,000 13,194,449
Mitsubishi Estate Co. Ltd. 511,000 6,363,692
Mitsubishi Heavy Industries Ltd. 2,137,000 16,398,817
Mitsui Trust and Banking Co. Ltd. 739,000 7,129,139
NEC Corp. 261,000 2,838,325
NKK Corp. (a) 1,412,000 3,541,609
Namco Ltd. 143,700 4,297,453
Nikko Securities Co. Ltd. 1,031,000 9,855,646
Nintendo Co. Ltd. Ord. 288,300 18,406,701
Nichiei Co. Ltd. 53,600 3,563,149Nitto Denko Corp. 184,000 2,727,121
Nomura Securities Co. Ltd. 1,455,000 23,989,477
Onward Kashiyama & Co. Ltd. 590,000 8,227,144
Omron Corp. 301,000 5,358,737
Orix Corp. 467,000 17,365,315
Ricoh Co. Ltd. Ord. 1,143,000 11,327,253
Rohm Co. Ltd. 100,000 5,919,755
Sakura Bank Ltd. 1,595,000 15,107,214
Sankyo Co. Ltd. 367,000 9,076,431
Sekisui Chemical Co. Ltd. 918,000 10,224,600
Sho Bond Corp. Ord. 52,700 1,640,737
Sony Corp. 278,800 16,699,882
TDK Corp. 207,000 12,126,815
Tadano Ltd. 29,000 248,989
Takeda Chemical Industries Ltd. (a) 2,302,000 39,367,685
Toyota Motor Corp. 2,024,000 47,748,829
Uni Charm Corp. Ord. 44,000 1,068,888
Uny Co. Ltd. 208,000 3,593,598
York Benimaru Co. 57,100 1,872,870
714,839,407
SHARES VALUE (NOTE 1)
KOREA (SOUTH) - 0.3%
Korea Electric Power Corp. 354,760 $ 10,433,482
MALAYSIA - 0.1%
Arab Malaysian Corp. BHD 711,000 3,151,122
MEXICO - 0.3%
BANACCI SA de CV Class B (a) 890,700 1,899,862
Cifra SA Class C (a) 3,236,100 4,182,162
Gruma SA Class B sponsored
ADR (a)(b) 163,000 3,015,500
9,097,524
NETHERLANDS - 5.4%
AKZO Nobel NV 220,800 27,754,970
DSM NV 170,900 16,327,865
ING Groep NV 843,267 26,227,371
KBB NV Ord. 67,500 4,702,796
KLM Royal Dutch Air Lines NV 270,000 6,413,264
Koninklijke KNP BT NV 64,200 1,411,694
Philips Electronics NV (Bearer) 404,100 14,207,708
Royal Dutch Petroleum Co. Ord. 205,900 33,920,205
Unilever NV Ord. 132,000 20,022,930
Vendex International NV (b) 372,900 15,018,167
166,006,970
NETHERLANDS ANTILLES - 0.4%
Schlumberger Ltd. 119,000 11,795,875
NORWAY - 1.5%
Den Norske Bank AS Class A Free shares 3,753,600 12,376,891
Orkla AS Class B (non-vtg.) 114,000 6,644,997Norsk Hydro AS 400,600
18,405,151
Saga Petroleum AS Class B 626,200 9,736,822
47,163,861
PERU - 0.1%
Compania de Minas Buenaventura SA
Class B sponsored ADR (a) 144,400 2,418,700
PHILIPPINES - 0.1%
Belle Resources Corp. (a) 7,117,000 1,895,700
SINGAPORE - 0.1%
Kim Engineering Holdings Ltd. 4,882,000 3,913,913
SPAIN - 3.5%
Acerinox SA (Reg.) 53,441 6,399,619
Banco Bilbao Vizcaya SA Ord. (Reg.) 600,000 29,115,956
Banco de Santander SA Ord. (Reg.) 378,000 19,378,547
Banco Intercontinental Espanol 60,400 7,228,240
FOCSA (Fomento Construcciones y
Contratas SA) 60,310 4,890,319
Tabacalera SA, Series A 549,700 20,092,350
Telefonica de Espana SA Ord. 1,001,300 20,062,835
107,167,866
SWEDEN - 6.6%
ABB AB, Series B 27,000 3,006,220
Bure Investment AB (b) 113,500 1,215,453
Diligentia AB (a) 159,400 2,045,964
Electrolux AB 226,700 12,603,340
Esselte AB Class B Free shares 165,700 3,699,925
Investor AB Class B Free shares 308,300 12,410,019
Scania AB:
Class A 243,400 6,525,568
Class B 1,327,900 35,601,077
Series B (warrants) (a) 300,000 282,531
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWEDEN - CONTINUED
Skandinaviska Enskilda Banken Class A
Free shares 1,470,000 $ 12,280,982
Skandia Foersaekrings AB 452,000 12,667,411
Svenska Cellulosa AB (SCA) Class B Ord. 43,700 916,038
Swedish Match Co. 3,977,900 11,843,035
Volvo AB Class B 4,209,100 87,272,005
202,369,568
SWITZERLAND - 2.3%
CS Holding AG (Reg.) 144,250 14,362,997
CIBA-GEIGY AG (Reg.) 15,865 19,481,687
Nestle SA (Reg.) 11,475 12,425,707
Roche Holding AG participation
certificates 1,200 9,047,675
Sandoz AG (Reg.) 13,300 15,324,973
70,643,039
UNITED KINGDOM - 12.1%
Barclays PLC Ord. 1,017,400 15,965,463
Barratt Developments PLC 2,877,900 11,916,564
Bass PLC Ord. 1,040,100 13,334,872
Blue Circle Industries PLC 784,100 5,068,478
Booker PLC 958,300 6,267,799
Boots Co. PLC (The) 586,100 5,940,833
British Airways PLC Ord. 789,600 7,104,276
British Petroleum PLC Ord. 3,468,667 37,261,344
British Telecommunications PLC Ord. 1,373,600 7,944,882
Cable & Wireless PLC Ord. 627,600 4,982,993
Caradon PLC 4,149,600 16,304,629
Christies International PLC 218,700 886,004
Cookson Group PLC 6,921,700 25,451,229
Courtaulds PLC Ord. 78,100 578,163
Dixons Group PLC 2,007,017 17,976,119
Glaxo Holdings PLC 1,179,200 18,514,089
Granada Group PLC 647,200 9,319,000
Grand Metropolitan PLC 2,594,811 19,567,846
ICI (Imperial Chemical Industries)
PLC Ord. 243,600 3,127,101
Lloyds TSB Group PLC 3,941,659 24,978,943
MFI Furniture Group PLC 963,400 3,134,904
National Westminster Bank PLC Ord. 885,280 10,104,059
Prudential Corp. PLC 748,105 5,659,826
Redland PLC Ord. 835,100 5,706,572
Rolls Royce PLC Ord. 1,824,647 7,555,343
Rugby Group PLC 2,895,300 4,734,206
Shell Transport & Trading Co.:
ADR 31,500 3,087,000
PLC (Reg.) 1,850,000 30,310,197
SmithKline Beecham PLC Ord. 1,304,900 16,114,119
Unigate PLC 605,500 4,245,990
Unilever PLC Ord. 473,300 9,941,463
Vodafone Group PLC sponsored ADR 36,400 1,405,950
Vodafone Group PLC 3,382,550 13,070,596
WPP Group PLC (b) 1,130,600 4,212,423
Wickes PLC 1,394,500 907,541
372,680,816
UNITED STATES OF AMERICA - 1.8%
Alumax, Inc. (a) 511,400 16,428,725
Aluminum Co. of America 359,300 21,063,963
Jefferson Smurfit Corp. (a) 19,900 278,600
Kaiser Aluminum Corp. (a) 676,300 7,523,838
SHARES VALUE (NOTE 1)
Newmont Mining Corp. 83,800 $ 3,875,750
Pharmacia & Upjohn, Inc. 192,700 6,937,200
56,108,076
TOTAL COMMON STOCKS
(Cost $2,428,556,986) 2,673,547,222
PREFERRED STOCKS - 1.6%
CONVERTIBLE PREFERRED STOCKS - 0.1%
JAPAN - 0.1%
AJL participating trust exchangeable 131,300 2,445,463
NONCONVERTIBLE PREFERRED STOCKS - 1.5%
GERMANY - 0.3%
Volkswagen AG 26,600 8,130,966
ITALY - 1.2%
SAI (Sta Assicuratrice Industriale) Spa 1,221,800 3,801,872
Stet (Societa Finanziaria Telefonica) Spa 10,889,400 29,023,389
Telecom Italia Mobile Spa de Risp 4,373,500 5,007,632
37,832,893
TOTAL NONCONVERTIBLE PREFERRED STOCKS 45,963,859
TOTAL PREFERRED STOCKS
(Cost $38,103,304) 48,409,322
CONVERTIBLE BONDS - 0.3%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (F) AMOUNT (C) (NOTE 1)
BERMUDA - 0.3%
MBL International Finance
of Bermuda 3%, 11/30/02
(Cost $9,095,888) Aa2 $ 8,031,000 8,854,178
GOVERNMENT OBLIGATIONS - 0.0%
UNITED STATES OF AMERICA - 0.0%
U.S. Treasury Bill, yield at date of purchase
5.33%, 3/6/97 (c)
(Cost $439,015) 450,000 439,015
CASH EQUIVALENTS - 11.3%
MATURITY
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 349,242,736 349,189,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $2,825,384,193) $ 3,080,438,737
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
127 Nikkei 225 Stock
Index Contracts Dec. 1996 $ 13,061,950 $ (483,049)
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.4%
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 $31,763,972 or 1.0% of net
assets.
(c) Security pledged to cover margin requirements for futures contracts. At
the period end, the value of securities pledged amounted to $439,015.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $2,483,605,024 and $1,974,318,186, respectively.
The market value of futures contracts opened during the period amounted to
$13,544,999 (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 $546,207 for the period (see Note 4 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $2,826,918,340. Net unrealized appreciation aggregated
$253,520,397, of which $370,670,814 related to appreciated investment
securities and $117,150,417 related to depreciated investment securities.
The fund hereby designates approximately $56,455,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
For the period, interest and dividends from foreign countries were
$67,637,806. Taxes accrued or paid to foreign countries were $8,543,085.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.2%
Basic Industries 10.1
Cash Equivalents 11.3
Construction & Real Estate 3.7
Durables 14.1
Energy 8.9
Finance 14.4
Health 4.4
Holding Companies 0.2
Industrial Machinery & Equipment 4.4
Media & Leisure 2.2
Nondurables 5.3
Precious Metals 1.1
Retail & Wholesale 4.3
Services 0.7
Technology 5.4
Transportation 0.8
Utilities 8.5
100.0%
OVERSEAS
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at $ 3,080,438,737
value (including repurchase agreements of $349,189,000) (cost $2,825,384,193) -
See accompanying schedule
Cash 83
Receivable for investments sold 38,398,999
Receivable for fund shares sold 14,123,618
Dividends receivable 8,341,471
Interest receivable 100,388
Other receivables 2,279
TOTAL ASSETS 3,141,405,575
LIABILITIES
Payable for investments purchased $ 13,197,963
Payable for fund shares redeemed 10,445,754
Accrued management fee 1,982,719
Payable for daily variation on futures contracts 31,750
Other payables and 1,121,904
accrued expenses
TOTAL LIABILITIES 26,780,090
NET ASSETS $ 3,114,625,485
Net Assets consist of:
Paid in capital $ 2,619,132,501
Undistributed net investment income 35,462,219
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 205,444,582
Net unrealized appreciation (depreciation) on investments 254,586,183
and assets and liabilities in foreign currencies
NET ASSETS, for 100,204,519 shares outstanding $ 3,114,625,485
NET ASSET VALUE, offering price $31.08
and redemption price per share ($3,114,625,485 (divided by) 100,204,519 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME $ 59,360,699
Dividends
Special dividend from Volvo AB 8,000,642
Interest 20,341,855
87,703,196
Less foreign taxes withheld (8,543,085
)
TOTAL INCOME 79,160,111
EXPENSES
Management fee $ 20,950,441
Basic fee
Performance adjustment 123,101
Transfer agent fees 7,733,505
Accounting fees and expenses 800,990
Non-interested trustees' compensation 10,514
Custodian fees and expenses 1,450,896
Registration fees 240,618
Audit 101,106
Legal 34,014
Miscellaneous 33,496
Total expenses before reductions 31,478,681
Expense reductions (517,618 30,961,063
)
NET INVESTMENT INCOME 48,199,048
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 209,028,757
Foreign currency transactions (200,349 208,828,408
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 20,773,510
Assets and liabilities in 21,176
foreign currencies
Futures contracts (483,049 20,311,637
)
NET GAIN (LOSS) 229,140,045
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 277,339,093
OTHER INFORMATION $ 241,952
Expense reductions
Directed brokerage arrangements
Custodian interest credits 4,558
Transfer agent interest credits 271,108
$ 517,618
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 48,199,048 $ 40,446,365
Net investment income
Net realized gain (loss) 208,828,408 20,268,754
Change in net unrealized appreciation (depreciation) 20,311,637 (60,667,177)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 277,339,093 47,942
Distributions to shareholders (27,336,910) (1,572,061)
From net investment income
From net realized gain (28,141,138) (35,371,378)
TOTAL DISTRIBUTIONS (55,478,048) (36,943,439)
Share transactions 2,267,210,371 1,320,123,274
Net proceeds from sales of shares
Reinvestment of distributions 53,404,640 36,074,820
Cost of shares redeemed (1,704,156,879) (1,326,207,752)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 616,458,132 29,990,342
TOTAL INCREASE (DECREASE) IN NET ASSETS 838,319,177 (6,905,155)
NET ASSETS
Beginning of period 2,276,306,308 2,283,211,463
End of period (including undistributed net investment income of $35,462,219 and
$17,366,722, respectively) $ 3,114,625,485 $ 2,276,306,308
OTHER INFORMATION
Shares
Sold 75,173,719 47,605,509
Issued in reinvestment of distributions 1,869,255 1,345,573
Redeemed (56,502,435) (47,560,838)
Net increase (decrease) 20,540,539 1,390,244
</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 1996 1995 1994 B 1993 1992 D
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 28.57 $ 29.17 $ 27.16 $ 21.96 $ 26.92
Income from Investment Operations
Net investment income .48 H .31 .18 .27 .46
Net realized and unrealized gain (loss) 2.72 (.44) 2.26 7.40 (3.82)
Total from investment operations 3.20 (.13) 2.44 7.67 (3.36)
Less Distributions
From net investment income (.34) (.02) (.15) (.37) (.44)
In excess of net investment income - - (.17) - -
From net realized gain (.35) (.45) (.11) (2.10) C (1.16)
Total distributions (.69) (.47) (.43) (2.47) (1.60)
Net asset value, end of period $ 31.08 $ 28.57 $ 29.17 $ 27.16 $ 21.96
TOTAL RETURN A 11.41% (.34)% 9.13% 39.01% (13.05)%
G G G
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 3,114,625 $ 2,276,306 $ 2,283,211 $ 1,490,666 $ 801,845
Ratio of expenses to average net assets 1.14% 1.05% 1.24% 1.27% 1.52%
Ratio of expenses to average net assets after expense reductions 1.12% E 1.05% 1.24% 1.27% 1.52%
Ratio of net investment income to average net assets 1.74% 1.78% .90% 1.00% 1.78%
Portfolio turnover rate 82% 49% 49% 64% 122%
Average commission rate F $ .0134
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). B EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF
POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF
INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
C INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY
RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. D AS OF NOVEMBER 1, 1991, THE FUND
DISCONTINUED THE USE OF EQUALIZATION ACCOUNTING. E FMR OR THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F FOR FISCAL YEARS
BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS
AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED.
THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING
ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER. G TOTAL RETURNS DO NOT INCLUDE THE ONE TIME
SALES CHARGE. H INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM VOLVO AB
WHICH AMOUNTED TO $.08 PER SHARE.
</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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). If Fidelity had not reimbursed
certain fund expenses, the life of fund total returns would have been
lower. Prior to July 1, 1995, the fund imposed a 3% sales charge. If this
sales charge were taken into account, total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1996 YEAR YEARS FUND
WORLDWIDE 15.25% 78.98% 73.52%
Morgan Stanley Capital 16.30% 64.98% 69.99%
International World Index
Global Funds Average 15.52% 69.58% 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 May 30, 1990. For example, if you invested $1,000 in a fund that
had a 5% return over the past year, the value of your investment would be
$1,050. You can compare the fund's returns to the performance of the Morgan
Stanley Capital International World Index, a market capitalization weighted
equity index of over 1,500 stocks traded in 22 world markets. Stocks are
selected for the index on the basis of industry representation, liquidity,
and sufficient float. To measure how the fund's performance stacked up
against its peers, you can compare it to the global funds average, which
reflects the performance of 153 mutual funds with similar objectives
tracked by Lipper Analytical Services, Inc. over the past 12 months. These
benchmarks include reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1996 YEAR YEARS FUND
WORLDWIDE 15.25% 12.35% 8.95%
Morgan Stanley Capital 16.30% 10.53% 8.60%
International World Index
Global Funds Average 15.52% 11.00% 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
IMAHDR PRASUN SHR__CHT 19961031 19961104 162201 S00000000000001
Worldwide Fund MS World Index
00318 MS004
1990/05/30 10000.00 10000.00
1990/05/31 10030.00 10038.61
1990/06/30 10290.00 9964.14
1990/07/31 10570.00 10051.93
1990/08/31 9380.00 9108.00
1990/09/30 8450.00 8144.51
1990/10/31 8950.00 8901.68
1990/11/30 8950.00 8752.34
1990/12/31 8898.23 8932.45
1991/01/31 9150.44 9255.96
1991/02/28 9654.88 10109.62
1991/03/31 9321.95 9808.57
1991/04/30 9412.75 9882.21
1991/05/31 9483.37 10103.10
1991/06/30 8807.43 9476.34
1991/07/31 9352.22 9920.84
1991/08/31 9493.46 9886.25
1991/09/30 9654.88 10142.44
1991/10/31 9695.23 10303.82
1991/11/30 9180.71 9851.69
1991/12/31 9599.06 10565.69
1992/01/31 9701.07 10366.97
1992/02/29 9996.89 10184.99
1992/03/31 9762.27 9702.08
1992/04/30 10190.71 9834.16
1992/05/31 10619.15 10222.20
1992/06/30 10251.92 9876.60
1992/07/31 10149.91 9898.58
1992/08/31 10007.10 10136.03
1992/09/30 10007.10 10039.86
1992/10/31 9823.48 9764.70
1992/11/30 9976.49 9936.32
1992/12/31 10194.86 10013.50
1993/01/31 10530.15 10043.98
1993/02/28 10781.62 10278.91
1993/03/31 11399.81 10871.83
1993/04/30 11682.71 11372.70
1993/05/31 12049.43 11631.78
1993/06/30 11923.70 11531.21
1993/07/31 12185.64 11765.78
1993/08/31 12950.52 12302.20
1993/09/30 12814.31 12071.96
1993/10/31 13369.63 12401.72
1993/11/30 13128.64 11697.27
1993/12/31 13920.64 12266.78
1994/01/31 14914.21 13072.98
1994/02/28 14689.86 12900.91
1994/03/31 14134.32 12341.84
1994/04/30 14625.76 12720.47
1994/05/31 14604.39 12750.32
1994/06/30 14305.25 12711.99
1994/07/31 14743.28 12950.75
1994/08/31 14989.00 13337.82
1994/09/30 14700.54 12984.42
1994/10/31 14914.21 13350.78
1994/11/30 14401.40 12768.79
1994/12/31 14332.82 12889.44
1995/01/31 14253.69 12692.88
1995/02/28 14423.25 12874.84
1995/03/31 14502.37 13492.27
1995/04/30 14864.08 13959.36
1995/05/31 15011.03 14075.61
1995/06/30 15214.49 14068.12
1995/07/31 15836.18 14768.84
1995/08/31 15440.56 14436.63
1995/09/30 15587.50 14854.00
1995/10/31 15056.24 14616.93
1995/11/30 15101.46 15121.27
1995/12/31 15363.09 15560.18
1996/01/31 15786.03 15838.45
1996/02/29 15991.79 15931.65
1996/03/31 16266.13 16193.46
1996/04/30 16746.23 16570.92
1996/05/31 17043.43 16581.92
1996/06/30 17032.00 16662.44
1996/07/31 16414.73 16070.23
1996/08/31 16849.10 16251.61
1996/09/30 17169.17 16884.55
1996/10/31 17352.06 16999.07
IMATRL PRASUN SHR__CHT 19961031 19961104 162203 R00000000000081
Let's say hypothetically that $10,000 was invested in Fidelity Worldwide
Fund on May 30, 1990, when the fund started. As the chart shows, by October
31, 1996, the value of the investment would have grown to $17,352 - a
73.52% increase on the initial investment. For comparison, look at how the
Morgan Stanley Capital International World Index did over the same period.
With dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $16,999 - a 69.99% 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.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
WORLDWIDE
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Penny Dobkin, Portfolio Manager of Fidelity Worldwide
Fund
Q. HOW DID THE FUND PERFORM, PENNY?
A. For the 12 months that ended on October 31, 1996, the fund had a total
return of 15.25%. The global funds average tracked by Lipper Analytical
Services returned 15.52% for the same time period, while the Morgan Stanley
Capital International World Index posted a total return of 16.30%.
Q. WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE?
A. The major factor influencing the fund's performance was stock selection.
On balance, the large holdings in the portfolio performed reasonably well,
though there were a couple of small holdings that were disappointments. In
general, I was pleased with the investment strategies I pursued during the
past year.
Q. WHAT WERE SOME OF THE STRATEGIES THAT REALLY WORKED FOR THE FUND?
A. While it hurt performance somewhat during the first half of the fiscal
year, remaining underinvested in Japan compared to the index really
benefited the fund during the past six months. The weakness of the yen is
nearly impossible to overcome with good stock selection since Japanese
companies whose returns are converted back into dollars don't give me the
return I'm looking for. In addition, I believe that the recovery in the
economy and the stock market of Japan will take place largely in domestic
stocks, which surely do not benefit from currency weakness.
Q. WHAT CHANGES HAVE YOU MADE TO THE FUND'S INVESTMENTS?
A. While I'm largely staying away from investing in Southeast Asia, due to
increasing production costs and slowing economic growth, I have made some
select investments in Hong Kong. I think Hong Kong will be less affected by
a slowdown in overall GNP from that region. Specifically, property
investment companies were attractive to me since I thought the market
didn't fully appreciate the improvement in asset values in residential real
estate and in retail real estate due to Chinese relocations. Stocks such as
Great Eagle Holdings and Amoy Properties have performed well during the
period. I thought that investors who were worried about China taking over
Hong Kong in 1997 and the possible threats of Hong Kong's capitalism would
begin to change their beliefs. So, I've also taken positions in some
consumer stocks in Hong Kong.
Q. WHERE ELSE DID YOU FIND OPPORTUNITIES?
A. I'm investing in Latin America again after selling most of the fund's
investments there in the summer of 1994. I initiated positions in some
infrastructure and consumption companies in Mexico. Cemex, a large cement
company, performed well during the period. I also added Acer Computec,
which was spun off by Acer, the Taiwanese computer maker. The company is
growing at a 25% rate and selling at 12 times earnings. As an initial
public offering (IPO), it was priced very attractively since there seems to
be a dearth of interest in Latin American IPOs.
Q. DID YOU INVEST IN ANY OTHER IPOS DURING THE PERIOD?
A. Yes. In fact, it was one of the broad investment themes of the fund. I
was particularly interested in IPOs in Europe and Latin America. IPOs are a
relatively new vehicle in overseas markets and some were very attractively
priced when you compare them to their counterparts in North America. Some
of the best companies in Europe have often been private, usually family
owned. For some of these families, it's too expensive to let the company go
public because of the hefty capital gains tax that the family would incur.
However, we're beginning to see changes of ownership within these families.
Two of the IPOs the fund participated in during the period were Carli Gry
International, a textile apparel company in Denmark, and Guangshen Railway
in China.
Q. THERE ARE A COUPLE OF STOCKS THAT ARE NEW TO THE FUND'S TOP 10 HOLDINGS.
WHAT CAN YOU TELL US ABOUT THEM?
A. BCE was an undervalued Canadian telecommunications company when the fund
first purchased the stock more than a year ago. I believed it was
undervalued given the sum of its various parts, and I added to the position
during the period. Honda Motor Co. was added during the summer. Sales are
very strong both in Japan and overseas, and some of its new products are
very interesting. The stock is very undervalued, despite its blue-chip name
recognition in Japan and abroad. Julius Baer is a commercial bank and
investment manager in Switzerland that was added to the fund during the
past six months. I believed the stock was undervalued relative to its
counterparts in the U.S. In addition, the company is committed to improving
profitability and may decide to buy back shares.
Q. HOW ABOUT AN UPDATE ON A COUPLE OF THE STOCKS THE FUND HAS HELD FOR SOME
TIME?
A. Sure. Huhtamaki is still the fund's largest holding. It was an
attractive restructuring story when first bought more than a year ago.
Since then, the Finnish company has sold several of the many diverse
businesses it owned - such as sports trading cards and pharmaceuticals -
and the stock has done incredibly well in a very short period of time.
Another top holding, Volker Stevin, has been in the portfolio for more than
three years. It is a construction company that has benefited from the
upturn in infrastructure spending in the Netherlands.
Q. WHICH INVESTMENTS DISAPPOINTED YOU DURING THE PAST YEAR?
A. A couple of consumer stocks the fund owned which were well regarded in
their industries had a terrible time after making acquisitions.
Accordingly, I sold the fund's holdings in these companies during the
period. Karstadt, in Germany, and Globus, in Switzerland, are examples and
each had trouble integrating key acquisitions they had made into their
businesses, which pointed out other structural problems in their companies.
This was especially disappointing in the case of Karstadt, which had been
one of the strongest retailers in Europe. Other disappointments were the
fund's holdings in Philip Morris, whose stock continues to be vulnerable
due to continuing litigation, and a couple of U.S. gaming stocks that had a
bumpy ride during the past six months.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD, PENNY?
A. I expect to continue to increase the fund's holdings in Japanese and
Latin American companies. I also hope to increase the fund's exposure to
consumer stocks across Europe. In any event, I will continue to try to own
the best stocks in the strongest sectors around the world.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in common stocks from around the
world
FUND NUMBER: 318
TRADING SYMBOL: FWWFX
START DATE: May 30, 1990
SIZE: as of October 31, 1996, more than
$877 million
MANAGER: Penelope Dobkin, since 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 STOCK SELECTION
"Lots of people ask me how I can keep on top of so
many markets - but what I really do is stay on top of
stocks. I've always used top-down,
macroeconomic research methods as a means to
identify countries that I don't want to invest in. For
example, this year Southeast Asian markets haven't
performed well for reasons that concerned me a
year earlier. It was the same technique that kept me
out of Latin America during 1994 and 1995. In
general, this fund doesn't make large country bets
or, if the fund does have large holdings in a
particular country, it's because of the attractiveness of
individual stocks in a country rather than an
investment opinion on the entire market.
"This fund was never intended to replicate a world
index. If it has similar country weightings as the
index, it will have different stocks, or if it has similar
stocks, the country weightings will be different. The
success of this fund is based on strong stock picking;
it's what I do best."
DISTRIBUTIONS
The Board of Trustees of Fidelity Worldwide Fund
voted to pay on December 16, 1996, to shareholders
of record at the opening of business on December 13,
1996, a distribution of $.38 per share derived from
capital gains realized from sales of portfolio
securities and a dividend of $.17 per share from net
investment income.
A total of 18.90% of the dividends distributed during
the fiscal year was derived from interest on U.S.
Government securities which is generally exempt
from state income tax.
A total of 27% of the dividends distributed during the
fiscal year qualifies for the dividends-received
deduction for corporate shareholders.
The fund will notify shareholders in January 1997 of
these percentages for use in preparing 1996 income
tax returns.
WORLDWIDE
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
Canada 7.1%
Row: 1, Col: 1, Value: 27.0
Row: 1, Col: 2, Value: 4.7
Row: 1, Col: 3, Value: 3.6
Row: 1, Col: 4, Value: 5.1
Row: 1, Col: 5, Value: 25.0
Row: 1, Col: 6, Value: 6.0
Row: 1, Col: 7, Value: 12.4
Row: 1, Col: 8, Value: 4.6
Row: 1, Col: 9, Value: 4.5
Row: 1, Col: 10, Value: 7.1
Finland 4.5%
United States 27.0%
France 4.6%
Japan 12.4%
United
Kingdom 4.7%
Switzerland 3.6
%
Netherlands 6.0%
Spain 5.1%
Other 25.0%
AS OF APRIL 30, 1996
Canada 4.4%
Finland 5.1%
Row: 1, Col: 1, Value: 33.9
Row: 1, Col: 2, Value: 5.1
Row: 1, Col: 3, Value: 18.7
Row: 1, Col: 4, Value: 8.6
Row: 1, Col: 5, Value: 11.6
Row: 1, Col: 6, Value: 3.2
Row: 1, Col: 7, Value: 4.1
Row: 1, Col: 8, Value: 5.3
Row: 1, Col: 9, Value: 5.1
Row: 1, Col: 10, Value: 4.4
France 5.3%
United States 33.9%
Germany 4.1%
Hong Kong 3.2%
Japan 11.6%
Spain 5.1%
Netherlands 8.6%
Other 18.7%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 92.6 85.2
Bonds 0.7 0.8
Short-term investments 6.7 14.0
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Huhtamaki Ord. 1.8 1.6
(Finland, Foods)
BCE, Inc. 1.6 0.2
(Canada, Telephone Services)
Volker Stevin NV 1.5 1.4
(Netherlands, Construction)
Honda Motor Co. Ltd. 1.5 0.0
(Japan, Autos, Tires, & Accessories)
Julius Baer Holding AG 1.3 0.0
(Switzerland, Banks)
Unilever PLC Ord. 1.2 0.0
(United Kingdom, Household Products)
Philip Morris Companies, Inc. 1.2 1.2
(United States of America, Tobacco)
AKZO Nobel NV 1.0 1.0
(Netherlands, Chemicals & Plastics)
Syd-Sonderjylland Holding 1.0 0.5
(Denmark, Banks)
Banco de Santander SA Ord. (Reg.) 0.9 0.9
(Spain, Banks)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 14.7 14.3
Durables 13.4 11.3
Basic Industries 10.2 12.9
Construction & Real Estate 10.0 10.4
Retail & Wholesale 9.6 9.5
Nondurables 7.5 5.1
Technology 5.3 3.4
Utilities 5.2 3.5
Industrial Machinery & Equipment 4.9 4.7
Energy 3.2 2.8
WORLDWIDE
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.3%
SHARES VALUE (NOTE 1)
AUSTRALIA - 2.8%
Aristocrat Leisure Ltd. 1,088,000 $ 3,229,118
CSR Ltd. 1,713,735 5,750,863
Capral Aluminum Ltd. 1,204,000 3,582,926
Pacific Dunlop PLC 575,923 1,276,280
Pacific Dunlop PLC ADR 14,600 131,400
Reinsurance Australia Corp. Ltd. 1,671,200 4,999,697
Southcorp Holdings Ltd. 1,859,900 5,652,549
24,622,833
BELGIUM - 0.6%
D'ieteren Trading SA 26,000 4,821,820
BRAZIL - 1.1%
Coteminas PN 6,100,000 2,048,175
Elevadores Atlas SA (a) 150,000 1,635,036
Elevadores Atlas SA (a)(b) 234,000 2,550,657
Multicanal Participacoes SA
sponsored ADR 49,000 686,000
Telesp PN (Pfd. Reg.) 14,800,000 2,707,932
9,627,800
CANADA - 7.1%
Alcan Aluminium Ltd. 130,000 4,273,600
BCE, Inc. 304,000 13,979,753
Brascan Ltd. Class A 216,600 4,620,217
Canadian Pacific Ltd. 148,500 3,772,274
Canadian Imperial Bank of Commerce 174,800 7,274,355
Canwest Global Communications
Corp. (non-vtg.) 441,000 4,695,170
Falconbridge Ltd. 220,000 4,972,169
Falconbridge Ltd.
Final Installment Receipt (d) 400,000 6,126,490
Imasco Ltd. 300,000 6,981,957
Inco Ltd. 135,000 4,271,545
Kinross Gold Corp. (a) 75,000 540,737
61,508,267
CHINA (PEOPLES REPUBLIC) - 0.8%
Guangshen Railway Ltd. ADR (a) 378,500 7,049,563
CROATIA - 0.5%
Pliva D.D. GDR (a)(b) 92,800 4,547,200
DENMARK - 1.9%
Carli Gry International AS (Reg.) (a) 176,366 7,954,496
Syd-Sonderjylland Holding 230,000 8,401,358
16,355,854
FINLAND - 4.5%
Enso OY Class R 450,000 3,513,537
Huhtamaki Ord. 370,000 16,031,407
KCI (Konecranes International) (a) 30,450 837,146
KCI (Konecranes International) (a)(b) 171,000 4,701,212
Kemira OY sponsored ADR (b) 93,600 2,024,100
Kemira OY 132,000 1,439,989
Merita Ltd. Class A (a) 2,500,000 7,367,981
Valmet OY 175,000 2,663,470
38,578,842
FRANCE - 4.6%
Bail Investissement SA 31,300 4,746,311
Carbonne-Lorraine (LE) 23,200 3,441,062
Compagnie des Machines Bull SA 200,000 1,217,799
Eramet SA 128,374 5,942,684
Klepierre SA 48,350 6,227,752
Michelin SA (Compagnie Generale des
Etablissements) Class B 144,818 6,966,752
SHARES VALUE (NOTE 1)
Pechiney SA Class A 137,576 $ 5,893,429
Unibail 57,000 5,662,178
40,097,967
GERMANY - 1.5%
Deutsche Bank AG 125,000 5,821,997
Fag Kugelfischer Georg Schaefer
Kommanditgesellschaft auf Aktien 333,550 4,504,611
Rhein West Electric 65,000 2,679,733
13,006,341
HONG KONG - 3.3%
Amoy Properties Ltd. 3,206,000 3,959,714
Great Eagle Holdings Ltd. 1,149,014 3,692,739
Jardine Matheson Holdings Ltd. Ord. 407,800 2,304,070
Jardine Strategic Holdings Ltd. Ord. 1,493,000 4,867,180
Kumagai Gumi Co. Ltd. 5,002,000 4,625,372
Kumagai Gumi Co. Ltd. (warrants) (a) 1,000,400 187,603
Liu Chong Hing Bank Ltd. 1,880,000 2,735,315
Peregrine Investments Holdings Ltd. 1,256,000 2,022,348
Sime Darby Hongkong Ltd. 3,428,000 4,056,569
28,450,910
INDIA - 0.0%
SCICI Ltd. 200 139
SCICI Ltd. (New) 117,750 14,339
14,478
INDONESIA - 0.6%
Inti Indorayon Utama PT (For. Reg.) (a) 2,031,500 1,831,518
Pt Tambang Timah GDR unit 212,100 3,393,600
5,225,118
IRELAND - 0.8%
Anglo-Irish Bank Corp. PLC 3,400,000 3,927,578
Woodchester Investments PLC unit 775,000 2,647,943
6,575,521
ITALY - 0.8%
Mediobanca Spa 440,000 2,313,007
Telecom Italia Spa 2,106,200 4,703,911
7,016,918
JAPAN - 12.4%
Akita Bank Ltd. 344,000 2,220,425
Aoyama Trading Co. Ord. 206,500 5,270,029
Arc Land Sakamoto Co. Ltd. 97,000 1,335,584
Bank of Saga Ord. 242,000 1,360,421
Canon, Inc. 284,000 5,429,687
Daiwa Securities Co. Ltd. 275,000 2,966,455
Daiichi Corp. Ord. 66,100 1,559,386
Daito Trust Construction Co. 423,000 5,341,987
FCC Co. Ltd. (a) 37,400 1,098,794
Fujitsu Ltd. 309,000 2,709,932
Fuji Machine Manufacturing Co.
Ltd. Ord. 183,000 4,317,211
Hanshin Department Store Ltd. 634,000 4,481,509
Honda Motor Co. Ltd. 554,000 13,215,348
Kokuyo Co. Ltd. 50,000 1,236,571
Maezawa Industries 118,400 2,834,747
Matsuya Co. Ltd. 251,000 1,507,871
Meiden Engineering Co. Ltd. 108,000 1,392,326
Ministop Co. Ltd. 77,700 1,969,331
Nikko Securities Co. Ltd. 390,000 3,728,130
Nikku Sangyo Co. Ltd. 96,000 926,113
Nintendo Co. Ltd. Ord. 81,300 5,190,651
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Nippon Zeon Co. Ltd. 373,000 $ 1,815,523
Nomura Securities Co. Ltd. 321,000 5,292,524
Obayashi Corp. 359,000 2,764,324
Omron Corp. 185,000 3,293,576
Paris Miki, Inc. 69,000 2,723,087
Sakai Chemical Industry Co. Ltd. 459,000 2,455,514
Sekisui House Ltd. 360,000 3,788,643
Shimachu Co. Ltd. 121,000 3,321,465
Sho Bond Corp. Ord. 112,200 3,493,181
Tokyo Nissan Auto Sales Co. Ltd. (a) 244,000 1,497,917
Yamaichi Securities Co. Ltd. 389,000 2,162,912
Yokogawa Electric 559,000 4,951,458
107,652,632
KOREA (SOUTH) - 0.2%
Samsung Electronics Co. Ltd. (vtg.) 21,460 1,509,017
MALAYSIA - 1.1%
Arab Malaysian Corp. BHD 655,000 2,902,932
Berjaya Group BHD 4,550,000 3,222,864
Berjaya Group BHD (rights) (a) 2,275,000 31,509
Oriental Holdings BHD 375,000 2,552,333
Oriental Holdings BHD (New) 150,000 1,013,514
9,723,152
MEXICO - 2.2%
Acer Computec Latino America
sponsored ADR (a)(b) 250,000 4,406,250
Cemex SA Class B sponsored ADR 600,000 4,275,000
Controladora Comercial Mexicana SA
de CV GDR (a) 217,000 3,824,625
Grupo Financiero Bancomer SA de CV
sponsored ADR, Series C (a)(b) 779,000 6,524,125
19,030,000
NETHERLANDS - 5.7%
AKZO Nobel NV 69,400 8,723,709
BAM Groep NV (a) 40,745 2,371,611
CVG (Crown Van Gelder) 26,000 2,407,620
Geveke NV 115,200 3,955,481
KBB NV Ord. 71,625 4,990,189
Royal Dutch Petroleum Co. ADR 15,000 2,480,625
Samas-Groep NV 93,613 3,192,259
Vendex International NV 160,000 6,443,837
Vendex International NV (b) 46,000 1,852,603
Volker Stevin NV 145,000 13,282,182
49,700,116
PANAMA - 0.8%
McDermott (J. Ray) SA 254,900 6,914,163
PERU - 0.1%
Compania de Minas Buenaventura SA
Class B sponsored ADR (a) 42,000 703,500
PHILIPPINES - 0.4%
Benpress Holdings Corp. GDR (a) 469,800 3,406,050
PORTUGAL - 0.5%
Portugal Telecom SA sponsored ADR 179,000 4,631,625
SPAIN - 5.1%
Argentaria Corporacion Bancaria de
Espana SA 91,100 3,565,139
Banco Bilbao Vizcaya SA Ord. (Reg.) 109,600 5,318,515
Banco de Santander SA Ord. (Reg.) 159,587 8,181,387
Banco Pastor SA 46,810 2,784,456
SHARES VALUE (NOTE 1)
Banco De Valencia SA (Reg.) 442,363 $ 7,547,853
Cristaleria Espanola SA 80,400 5,254,491
Cubiertas y MZOV SA 43,300 3,090,800
FOCSA (Fomento Construcciones y
Contratas SA) 86,900 7,046,406
Sevillana de Electricidad 175,000 1,671,037
44,460,084
SWEDEN - 2.6%
Catena AB Class A Free shares (a) 350,000 3,508,852
Forcenergy AB Class B Free shares 400,000 4,374,672
Iro, AB (b) 231,700 2,639,614Munksjo AB 265,000 2,616,449
Rottneros Bruk AB Free shares 1,850,000 2,135,691
Scania AB:
Class A 24,000 643,441
Class B 239,000 6,407,604
22,326,323
SWITZERLAND - 3.6%
CS Holdings AG (Reg.) 42,650 4,246,668
Julius Baer Holding AG 11,100 11,634,449
SIG AG (Reg.) 3,800 4,615,324
Swiss Bank Corp. (Reg.) 12,257 2,353,862
Swisslog Holding AG (Reg.) (a) 10,150 2,713,711
Tag-Heuer International SA
sponsored ADR (a) 24,000 384,000
Tag-Heuer International SA (a) 6,000 970,070
Valora Holding AG 16,900 2,852,321
Von Moos Holdings AG Ord. (a) 26,950 1,424,070
31,194,475
UNITED KINGDOM - 4.7%
BSG, Inc. 3,000,000 4,832,190
Grand Metropolitan PLC 540,000 4,072,218
Millennium & Copthorne Hotels PLC
sponsored ADR (b) 47,000 1,034,000
Millennium & Copthorne Hotels PLC (a) 400,000 2,199,704
Millennium & Copthorne Hotels PLC (b) 225,000 1,237,334
Nichols (Harvey) Group PLC (a)(b) 357,000 2,003,895
Railtrack Group PLC (b) 667,000 2,995,177
Shell Transport & Trading Co. PLC ADR 20,000 1,960,000
T & N PLC 2,208,800 4,635,896
Unilever PLC Ord. 480,000 10,082,194
Unichem PLC 1,373,600 5,587,118
40,639,726
UNITED STATES OF AMERICA - 19.0%
Alaska Air Group, Inc. (a) 100,000 2,200,000
Alliant Techsystems, Inc. (a) 80,000 3,910,000
Allstate Corp. 30,000 1,683,750
Alumax, Inc. (a) 152,300 4,892,638
Amerada Hess Corp. 72,700 4,025,763
America West Airlines, Inc. Class B (a) 100,000 1,150,000
Atlantic Southeast Airlines, Inc. 90,000 1,890,000
Augat, Inc. 130,000 3,575,000
BJ Services Co. (a) 50,239 2,254,475
Baker (J.), Inc. 151,000 811,625
Belco Oil & Gas Corp. (a) 50,000 1,243,750
Benton Oil & Gas Co. (a) 60,000 1,470,000
Books-A-Million, Inc. (a) 88,400 596,700
Burlington Industries, Inc. (a) 256,000 2,912,000
Burlington Resources, Inc. 70,000 3,526,250
CDI Corp. (a) 40,000 1,100,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - CONTINUED
Carson Pirie Scott & Co. (a) 64,300 $ 1,599,463
Coach USA, Inc. (a) 54,000 1,471,500
Continental Homes Holding Corp. 4,100 66,625
Cummins Engine Co., Inc. 38,200 1,590,075
Dayton Hudson Corp. 122,700 4,248,488
Dillard Department Stores, Inc.
Class A 125,000 3,968,750
Donnkenny, Inc. (a) 254,000 3,206,750
Ethan Allen Interiors, Inc. 70,000 2,502,500
Federated Department Stores, Inc. (a) 140,000 4,620,000
Forcenergy Gas Exploration, Inc. (a) 102,500 2,805,938
Furniture Brands International, Inc. (a) 350,000 4,681,250
Global Village Communication (a) 40,000 305,000
Grand Casinos, Inc. (a) 20,000 297,500
Heilig-Meyers Co. 83,600 1,086,800
Integrated Device Technology, Inc. (a) 200,000 1,650,000
International Business Machines Corp. 47,700 6,153,300
Kaiser Aluminum Corp. (a) 180,000 2,002,500
Kerr-McGee Corp. 54,600 3,426,150
Libbey, Inc. 105,000 2,520,000
Lo Jack Corp. (a) 150,000 1,556,250
Lucent Technologies, Inc. 55,000 2,585,000
Lyondell Petrochemical Co. 60,000 1,275,000
Meyer (Fred), Inc. (a) 150,000 5,268,750
Modine Manufacturing Co. 75,000 1,856,250
OM Group, Inc. 13,000 533,000
Philip Morris Companies, Inc. 108,000 10,003,500
Premark International, Inc. 100,000 2,087,500
Payless ShoeSource, Inc. (a) 125,000 4,235,945
President Riverboat Casinos, Inc. (a) 89,000 89,000
Quantum Corp. (a) 220,000 4,455,000
RJR Nabisco Holdings Corp. 138,740 4,006,118
Reebok International Ltd. 30,000 1,070,925
Reynolds Metals Co. 17,100 961,875
Ross Stores, Inc. 20,000 830,000
Ryerson Tull, Inc. Class A (a) 53,500 682,125
Santa Fe Pacific Gold Corp. 120,000 1,425,000
Sears, Roebuck & Co. 155,500 7,522,313
Sensormatic Electronics Corp. 155,000 2,538,125
Sodak Gaming, Inc. (a) 120,000 2,175,000
Station Casinos, Inc. (a) 189,900 2,112,638
Syratech Corp. (a) 100,000 3,112,500
Terra Nova (Bermuda) Holdings Ltd. 75,300 1,600,125
Toys "R" Us, Inc. (a) 238,600 8,082,575
UNUM Corp. 29,800 1,873,675
Unisys Corp. (a) 165,000 1,031,250
Warnaco Group, Inc. Class A 85,000 2,114,375
Westpoint Stevens, Inc. Class A (a) 155,400 4,137,525
164,665,879
TOTAL COMMON STOCKS
(Cost $692,548,777) 774,056,174
PREFERRED STOCKS - 3.3%
SHARES VALUE (NOTE 1)
CONVERTIBLE PREFERRED STOCKS - 0.9%
NETHERLANDS - 0.3%
Samas-Groep NV 59,306 $ 2,301,318
UNITED STATES OF AMERICA - 0.6%
Station Casinos, Inc. $3.50 60,000 3,060,000
Unisys Corp. $3.75, Series A 76,600 2,317,150
5,377,150
TOTAL CONVERTIBLE PREFERRED STOCKS 7,678,468
NONCONVERTIBLE PREFERRED STOCKS - 2.4%
GERMANY - 1.3%
Escada AG (non-vtg.) 34,690 5,599,032
RWE AG 145,000 4,909,911
Schwabengarage AG 63,071 934,875
11,443,818
ITALY - 1.1%
Telecom Italia Ord. 3,200,000 6,051,152
Telecom Italia Mobile Spa de Risp 2,800,000 3,205,983
9,257,135
TOTAL NONCONVERTIBLE PREFERRED STOCKS 20,700,953
TOTAL PREFERRED STOCKS
(Cost $27,075,859) 28,379,421
CONVERTIBLE BONDS - 0.7%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (F) AMOUNT (C) (NOTE 1)
INDIA - 0.0%
SCICI Ltd. 15%, 1/2/03 - INR 23,550,000 671,208
UNITED STATES OF AMERICA - 0.7%
Unisys Corp.:
8 1/4%, 8/1/00 B3 2,500,000 2,362,500
8 1/4%, 3/15/06 B3 3,000,000 3,450,000
5,812,500
TOTAL CONVERTIBLE BONDS
(Cost $6,260,354) 6,483,708
CASH EQUIVALENTS - 6.7%
MATURITY
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 58,199,955 58,191,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $784,075,990) $ 867,110,303
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
INR - Indian rupee
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 $36,516,167 or 4.2% of net
assets.
(c) Principal amount is stated in United States dollars unless otherwise
noted.
(d) Purchased on an installment basis. Market value reflects only those
payments made through October 31, 1996. The remaining installment
aggregating CAD 3,800,000 is due January 31, 1997.
(e)An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions with companies which are or
were affiliates are as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Geveke NV $ - $ 1,105,032 $ 123,573 $ -
Von Moos Holdings AG Ord. - - - -
TOTALS $ - $ 1,105,032 $ 123,573 $ -
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $525,213,636 and $321,300,123, 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 $106,192 for the period (see Note 4 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $784,467,662. Net unrealized appreciation aggregated
$82,642,641, of which $116,999,627 related to appreciated investment
securities and $34,356,986 related to depreciated investment securities.
The fund hereby designates approximately $9,935,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
For the period, interest and dividends from foreign countries were
$15,267,630. Taxes accrued or paid to foreign countries were $1,925,296.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.5%
Basic Industries 10.2
Cash Equivalents 6.7
Conglomerates 0.5
Construction & Real Estate 10.0
Durables 13.4
Energy 3.2
Finance 14.7
Health 1.1
Holding Companies 1.6
Industrial Machinery & Equipment 4.9
Media & Leisure 2.4
Nondurables 7.5
Precious Metals 0.2
Retail & Wholesale 9.6
Services 0.6
Technology 5.3
Transportation 2.4
Utilities 5.2
100.0%
WORLDWIDE
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at $ 867,110,303
value (including repurchase agreements of $58,191,000)
(cost $784,075,990) - See accompanying schedule
Cash 113
Receivable for investments sold 4,267,818
Receivable for fund shares sold 12,978,746
Dividends receivable 1,506,566
Interest receivable 142,946
Other receivables 43,152
TOTAL ASSETS 886,049,644
LIABILITIES
Payable for investments purchased $ 6,309,203
Payable for fund shares redeemed 1,591,290
Accrued management fee 549,176
Other payables and 381,920
accrued expenses
TOTAL LIABILITIES 8,831,589
NET ASSETS $ 877,218,055
Net Assets consist of:
Paid in capital $ 754,675,702
Undistributed net investment income 10,438,333
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 29,074,953
Net unrealized appreciation (depreciation) on investments 83,029,067
and assets and liabilities in
foreign currencies
NET ASSETS, for 57,776,010 $ 877,218,055
shares outstanding
NET ASSET VALUE, offering price $15.18
and redemption price per share ($877,218,055 (divided by) 57,776,010 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME $ 17,627,471
Dividends (including $123,573 received from affiliated issuers)
Interest 6,339,566
23,967,037
Less foreign taxes withheld (1,925,296
)
TOTAL INCOME 22,041,741
EXPENSES
Management fee $ 5,758,962
Transfer agent fees 2,397,172
Accounting fees and expenses 461,271
Non-interested trustees' compensation 3,132
Custodian fees and expenses 321,787
Registration fees 80,317
Audit 51,098
Legal 9,796
Miscellaneous 11,247
Total expenses before reductions 9,094,782
Expense reductions (87,337 9,007,445
)
NET INVESTMENT INCOME 13,034,296
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 28,878,784
Foreign currency transactions (105,684 28,773,100
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (including 64,197,374
realized gain of $427,905
on sales of investments in
affiliated issuers)
Assets and liabilities in (21,311 64,176,063
foreign currencies )
NET GAIN (LOSS) 92,949,163
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 105,983,459
OTHER INFORMATION $ 51,675
Expense reductions
Directed brokerage arrangements
Custodian interest credits 2,921
Transfer agent interest credits 32,741
$ 87,337
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 13,034,296 $ 14,426,321
Net investment income
Net realized gain (loss) 28,773,100 (4,454,119
)
Change in net unrealized appreciation (depreciation) 64,176,063 (3,656,058
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 105,983,459 6,316,144
Distributions to shareholders (7,253,442 (8,330,247
From net investment income ) )
From net realized gain - (29,879,122
)
TOTAL DISTRIBUTIONS (7,253,442 (38,209,369
) )
Share transactions 826,965,537 526,107,715
Net proceeds from sales of shares
Reinvestment of distributions 7,084,969 37,492,418
Cost of shares redeemed (714,607,691 (621,399,865
) )
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 119,442,815 (57,799,732
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 218,172,832 (89,692,957
)
NET ASSETS
Beginning of period 659,045,223 748,738,180
End of period (including undistributed net investment income of $10,438,333 and $5,414,914,
respectively) $ 877,218,055 $ 659,045,223
OTHER INFORMATION
Shares
Sold 57,492,786 39,931,110
Issued in reinvestment of distributions 532,304 2,980,274
Redeemed (49,735,743 (47,075,996
) )
Net increase (decrease) 8,289,347 (4,164,612
)
</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 1996 1995 1994 C 1993 1992
Net asset value, beginning of period $ 13.32 $ 13.96 $ 12.76 $ 9.63 $ 9.61
Income from Investment Operations
Net investment income .22 .17 .08 .11 .20
Net realized and unrealized gain (loss) 1.79 (.08) 1.37 3.28 (.08)
Total from investment operations 2.01 .09 1.45 3.39 .12
Less Distributions
From net investment income (.15) (.16) (.10) (.24) (.10)
From net realized gain - (.57) (.15) (.02) B -
Total distributions (.15) (.73) (.25) (.26) (.10)
Net asset value, end of period $ 15.18 $ 13.32 $ 13.96 $ 12.76 $ 9.63
TOTAL RETURN A 15.25% .95% 11.55% 36.10% F 1.32% F
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 877,218 $ 659,045 $ 748,738 $ 287,278 $ 103,627
Ratio of expenses to average net assets 1.19% 1.17% 1.32% 1.40% 1.51%
Ratio of expenses to average net assets after expense
reductions 1.18% 1.16% 1.32% 1.40% 1.51%
D D
Ratio of net investment income to average net assets 1.71% 2.05% 1.40% 1.99% 2.02%
Portfolio turnover rate 49% 70% 69% 57% 130%
Average commission rate E $ .0003
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE
5 OF NOTES TO FINANCIAL STATEMENTS).
B INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY
INCOME.
C EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL
STATEMENT PRESENTATION OF INCOME, CAPITAL
GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY
REFLECT CERTAIN RECLASSIFICATIONS RELATED
TO BOOK TO TAX DIFFERENCES.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
E FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE
PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
F TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity International Growth & Income Fund, Fidelity Diversified
International Fund, Fidelity International Value Fund, Fidelity Overseas
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 financial
statements have been prepared in conformity with generally accepted
accounting principles which permit management to make certain estimates and
assumptions at the date of the financial statements. 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.
Short-term securities with remaining maturities of sixty days or less for
which quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the funds 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. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. The effects of changes in foreign currency exchange
rates on investments in securities are included with the net realized and
unrealized gain or loss on investment securities.
INCOME TAXES. 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 substantially 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. Each fund
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. Non-cash dividends included in dividend income, if any,
are recorded at the fair market value of the securities received. Interest
income, which includes accretion of original issue discount, is accrued as
earned. Investment income is recorded net of foreign taxes withheld where
recovery of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are 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, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
transactions, foreign currency transactions, passive foreign investment
companies (PFIC), market discount, capital loss carryforwards 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 the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The funds generally use foreign
currency contracts to facilitate transactions in foreign securities and to
manage the funds' currency exposure. Contracts to sell generally are used
to hedge the funds' investments against currency fluctuations, while
contracts to buy generally are used to offset a previous contract to sell.
Also, a contract to buy can be used to acquire exposure to foreign
currencies and a contract to sell can be used to offset a previous contract
to buy. Losses may arise from changes in the value of the foreign currency
or if the counterparties do not perform under the contracts' terms.
2. OPERATING POLICIES - CONTINUED
FORWARD FOREIGN CURRENCY CONTRACTS - CONTINUED
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
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.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the funds, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase for U.S. Treasury or Federal
Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the funds, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the funds'
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
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. Losses
may arise due to changes in the market value of the underlying securities
or if the counterparty does not perform under the contract.
FUTURES CONTRACTS AND OPTIONS. The funds generally use futures contracts
and options to manage their exposure to the stock and bond markets and to
fluctuations in interest rates and currency values. Buying futures, writing
puts, and buying calls tend to increase the funds' exposure to the
underlying instrument. Selling futures, buying puts, and writing calls tend
to decrease the funds' exposure to the underlying instrument, or hedge
other fund investments. Futures contracts involve, to varying degrees, risk
of loss in excess of the futures variation margin reflected in the
Statement of Assets and Liabilities. The underlying face amount at value of
any open futures contracts is shown in the schedule of investments under
the caption "Futures Contracts." This amount reflects each contract's
exposure to the underlying instrument at period end. Losses may arise from
changes in the value of the underlying instruments, if there is an illiquid
secondary market for the contracts, or if the counterparties do not perform
under the contracts' terms. Futures contracts are valued at the settlement
price established
each day by the board of trade or exchange on which they are traded.
Exchange-traded options are valued using the last sale price or, in the
absence of a sale, the last offering price. Options traded over-the-counter
are valued using dealer-supplied valuations.
RESTRICTED SECURITIES. The funds are permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period, the
funds had no investments in restricted securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Information regarding purchases and sales of securities (other than
short-term securities), and the market value of future contracts opened and
closed are included under the caption "Other Information" at the end of
each applicable fund's schedule of investments.
4. 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 .2500% to .5200% for the period. In the event
that these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted in
the same or a lower management fee. The annual individual fund fee rate is
.45% for each fund.
The basic fee for Diversified International, International Value and
Overseas is subject to a performance adjustment (up to a maximum of
(plus/minus) .20% of the funds' average net assets over the performance
period) based on each fund's investment performance as compared to the
appropriate index over a specified period of time. International Value's
performance adjustment took effect in November 1995. For the period, each
fund's management fee was equivalent to the following annual rates
expressed as a percentage of average net assets after the performance
adjustment, if applicable:
Diversified International .85%
International Value .79%
International Growth & Income, Overseas, Worldwide .76%
SUB-ADVISER FEE. FMR, on behalf of the funds, entered into sub-advisory
agreements with Fidelity Management & Research (U.K.) Inc., Fidelity
Management & Research Far East Inc., Fidelity International Investment
Advisors (FIIA), and Fidelity Investment Japan Ltd. In addition, FIIA
entered into a sub-advisory agreement with its subsidiary, Fidelity
International Investment Advisors (U.K.) Limited (FIIAL U.K.). Under the
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SUB-ADVISER FEE - CONTINUED
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. Shares of International Growth &
Income purchased before October 12, 1990 are subject to a 1% deferred sales
charge upon redemption. For the period, FDC received no deferred sales
charges for redemption of shares of International Growth & Income.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the funds' transfer, dividend disbursing and shareholder servicing agent.
FSC receives account fees and asset-based fees that vary according to
account size and type of account. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements. For the
period, each fund's transfer agent fees were equivalent to the following
annual rates expressed as a percentage of average net assets:
International Growth & Income, Overseas .28%
Diversified International, International Value .27%
Worldwide .31%
ACCOUNTING FEES. 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.
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.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
certain funds' expenses.
In addition, certain funds have entered into arrangements with their
custodian and transfer agent whereby interest earned on uninvested cash
balances was used to offset a portion of certain funds' expenses.
Information regarding expense reductions are shown under the caption "Other
Information" on each applicable fund's Statement of Operations.
6. 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.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Investment Trust and the Shareholders of :
Fidelity International Growth & Income Fund,
Fidelity Diversified International Fund,
Fidelity International Value Fund,
Fidelity Overseas Fund,
and Fidelity Worldwide Fund:
We have audited the accompanying statements of assets and liabilities of
Fidelity Investment Trust: Fidelity International Growth & Income Fund,
Fidelity Diversified International Fund, Fidelity International Value Fund,
Fidelity Overseas Fund, and Fidelity Worldwide Fund, including the
schedules of portfolio investments, as of October 31, 1996, and the related
statements of operations for the year then ended, and the statements of
changes in net assets and the financial highlights for each of the periods
indicated therein. 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, 1996 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 International Growth & Income Fund,
Fidelity Diversified International Fund, Fidelity International Value Fund,
Fidelity Overseas Fund, and Fidelity Worldwide Fund as of October 31, 1996,
the results of their operations for the year then ended, and the changes in
their net assets and the financial highlights for each of the periods
indicated therein, in conformity with generally accepted accounting
principles.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 16, 1996
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc.,
London, England
Fidelity Management & Research (Far East) Inc.,
Tokyo, Japan
Fidelity Investments Japan Ltd.
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K.) Limited
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
Penelope A. Dobkin, VICE PRESIDENT, WORLDWIDE FUND
Gregory Fraser, VICE PRESIDENT, DIVERSIFIED INTERNATIONAL FUND
Richard Mace, Jr., VICE PRESIDENT, INTERNATIONAL VALUE FUND,
OVERSEAS FUND
John R. Hickling, VICE PRESIDENT, INTERNATIONAL GROWTH &
INCOME FUND
William J. Hayes, VICE PRESIDENT
Arthur S. Loring, SECRETARY
Kenneth A. Rathgeber, TREASURER
Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
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 *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Chase Manhattan Bank, N.A.
New York, NY
FIDELITY'S INTERNATIONAL EQUITY FUNDS
Canada Fund
Diversified International Fund
Emerging Markets Fund
Europe Fund
Europe Capital Appreciation Fund
France Fund
Germany Fund
Global Balanced Fund
Hong Kong and China Fund
International Growth & Income Fund
International Value Fund
Japan Fund
Japan Small Companies Fund
Latin America Fund
Nordic Fund
Pacific Basin Fund
Southeast Asia Fund
Overseas Fund
United Kingdom Fund
Worldwide Fund
CORPORATE HEADQUARTERS
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
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(registered trademark)
P.O. Box 193
Boston, MA 02101
(2_FIDELITY_LOGOS)FIDELITY'S
TARGETED INTERNATIONAL EQUITY
FUNDS
FIDELITY CANADA FUND
FIDELITY EMERGING MARKETS FUND
FIDELITY EUROPE FUND
FIDELITY EUROPE CAPITAL APPRECIATION FUND
FIDELITY FRANCE FUND
FIDELITY GERMANY FUND
FIDELITY HONG KONG AND CHINA FUND
FIDELITY JAPAN FUND
FIDELITY JAPAN SMALL COMPANIES FUND
FIDELITY LATIN AMERICA FUND
FIDELITY NORDIC FUND
FIDELITY PACIFIC BASIN FUND
FIDELITY SOUTHEAST ASIA FUND
FIDELITY UNITED KINGDOM FUND
ANNUAL REPORT
FOR THE YEAR ENDING
OCTOBER 31, 1996
AND
PROSPECTUS
DATED DECEMBER 30, 1996
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
MARKET RECAP A-4 A REVIEW OF WHAT HAPPENED IN WORLD MARKETS
DURING THE LAST SIX MONTHS.
CANADA FUND A-5 PERFORMANCE
A-6 FUND TALK: THE MANAGER'S OVERVIEW
A-8 INVESTMENT CHANGES
A-9 INVESTMENTS
A-11 FINANCIAL STATEMENTS
EMERGING MARKETS FUND A-13 PERFORMANCE
A-14 FUND TALK: THE MANAGER'S OVERVIEW
A-16 INVESTMENT CHANGES
A-17 INVESTMENTS
A-22 FINANCIAL STATEMENTS
EUROPE FUND A-24 PERFORMANCE
A-25 FUND TALK: THE MANAGER'S OVERVIEW
A-27 INVESTMENT CHANGES
A-28 INVESTMENTS
A-31 FINANCIAL STATEMENTS
EUROPE CAPITAL APPRECIATION FUND A-33 PERFORMANCE
A-34 FUND TALK: THE MANAGER'S OVERVIEW
A-36 INVESTMENT CHANGES
A-37 INVESTMENTS
A-40 FINANCIAL STATEMENTS
FRANCE FUND A-42 PERFORMANCE
A-43 FUND TALK: THE MANAGER'S OVERVIEW
A-45 INVESTMENT CHANGES
A-46 INVESTMENTS
A-48 FINANCIAL STATEMENTS
GERMANY FUND A-50 PERFORMANCE
A-51 FUND TALK: THE MANAGER'S OVERVIEW
A-53 INVESTMENT CHANGES
A-54 INVESTMENTS
A-56 FINANCIAL STATEMENTS
HONG KONG AND CHINA FUND A-58 PERFORMANCE
A-59 FUND TALK: THE MANAGER'S OVERVIEW
A-61 INVESTMENT CHANGES
A-62 INVESTMENTS
A-64 FINANCIAL STATEMENTS
JAPAN FUND A-66 PERFORMANCE
A-67 FUND TALK: THE MANAGER'S OVERVIEW
A-69 INVESTMENT CHANGES
A-70 INVESTMENTS
A-73 FINANCIAL STATEMENTS
JAPAN SMALL COMPANIES FUND A-75 PERFORMANCE
A-76 FUND TALK: THE MANAGER'S OVERVIEW
A-78 INVESTMENT CHANGES
A-79 INVESTMENTS
A-82 FINANCIAL STATEMENTS
LATIN AMERICA FUND A-84 PERFORMANCE
A-85 FUND TALK: THE MANAGER'S OVERVIEW
A-87 INVESTMENT CHANGES
A-88 INVESTMENTS
A-90 FINANCIAL STATEMENTS
NORDIC FUND A-92 PERFORMANCE
A-93 FUND TALK: THE MANAGER'S OVERVIEW
A-95 INVESTMENT CHANGES
A-96 INVESTMENTS
A-98 FINANCIAL STATEMENTS
PACIFIC BASIN FUND A-100 PERFORMANCE
A-101 FUND TALK: THE MANAGER'S OVERVIEW
A-103 INVESTMENT CHANGES
A-104 INVESTMENTS
A-107 FINANCIAL STATEMENTS
SOUTHEAST ASIA FUND A-109 PERFORMANCE
A-110 FUND TALK: THE MANAGER'S OVERVIEW
A-112 INVESTMENT CHANGES
A-113 INVESTMENTS
A-115 FINANCIAL STATEMENTS
UNITED KINGDOM FUND A-117 PERFORMANCE
A-118 FUND TALK: THE MANAGER'S OVERVIEW
A-120 INVESTMENT CHANGES
A-121 INVESTMENTS
A-123 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS A-125 NOTES TO THE FINANCIAL STATEMENTS
REPORTS OF INDEPENDENT ACCOUNTANTS A-129 THE AUDITORS' OPINION / COOPERS & LYBRAND L.L.P.
A-130 THE AUDITORS' OPINION / PRICE WATERHOUSE LLP
DISTRIBUTIONS A-131
FIDELITY'S TARGETED INTERNATIONAL EQUITY
FUNDS PROSPECTUS P-1
</TABLE>
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will begin eliminating duplicate
copies of most financial reports and prospectuses to most households, even
if they have more than one account in the fund. If additional copies of
financial reports, prospectuses or historical account information are
needed, please call 1-800-544-6666.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS
NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUNDS
UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUNDS 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.
MARKET RECAP
A world economic recovery and lower inflation in many areas of the globe
helped international markets produce mostly positive returns for the
one-year period ending October 31, 1996. Japan, however, proved to be the
major exception as an underperforming stock market and a weak yen
undermined the returns of U.S.-based investors. For the year, the Morgan
Stanley Capital International (MSCI) EAFE Index (capital weighted) - which
measures stock performance in Europe, Australia and the Far East - returned
10.47%.
EUROPE: Europe posted the most consistently strong equity markets when
compared to other regions. The UK's FT-SE 100 Index broke 4000 for the
first time and markets in Amsterdam, Brussels, Copenhagen, Dublin,
Frankfurt, Istanbul and Oslo all posted historical highs during the period.
Most European markets enjoyed stronger economic growth, low interest rates,
higher corporate earnings and the relative weakness of the Continent's
major currencies. In addition, a new emphasis on shareholder friendliness
by many of the region's corporations helped them raise the value of their
businesses. For the year ending October 31, 1996 the MSCI Europe Index was
up 17.47%.
JAPAN AND THE FAR EAST: The Japanese stock market underperformed on the
weakness of the economic recovery and the uncertainty for any substantial
economic reform. Many of the benefits of a weak yen had been priced into
the valuations of Japanese companies, and some investors became concerned
about domestic demand for Japanese goods. For the year, the MSCI Japan
Index was down 10.93% and the Tokyo Stock Exchange TOPIX Total Return
Index, another measure of the Japanese market, was off 1%. In contrast,
many markets in the rest of Asia had strong performance, although Korea,
Singapore, India and Thailand were notable laggards. The MSCI Far East
ex-Japan Free Index had a return of 9.89%. Top performing markets such as
Hong Kong benefited from the rising value of the property sector, solid
economic growth and stable interest rates. Despite shrinking trade deficits
in some countries, declining export growth in the region was a lingering
concern among investors.
EMERGING MARKETS: Despite the 6.48% return of the MSCI Emerging Markets
Free Index, emerging market equity returns ran the gamut from negative to
positive. As noted above, many of the Asian tiger markets had strong
returns for their region and thus also for the emerging markets category.
In Latin America, Venezuela was one of the world's top performing markets,
while Brazil and Mexico had relatively strong returns as investors began to
believe the worst might be over for the region. The mood in the region
wasn't entirely euphoric, however, as structural problems such as low
domestic savings and inefficient governments persisted. Looking at other
regions, South Africa lagged as the rand plummeted more than 30% in value
and Eastern European bourses had strong to moderately positive gains.
U.S. AND CANADA: The U.S. bull market celebrated its sixth birthday with
the Dow Jones Industrial Average breaking the 6000 point barrier for the
first time. For the period, the Standard & Poor's 500 Index returned
24.10%. The stock market was positively influenced by economic data
indicating a slowing in the economy. Investors took heart in the fact that
a slower economy would not spawn a rise in interest rates and thus crimp
corporate profits. Large-capitalization companies with long-term earnings
records were favored over small-caps as investors sought liquidity and
stability. This trend is evident when one compares the return of large-cap
S&P 500 to the 16.60% return of the small-cap-laden Russell 2000. The
Canadian stock market benefited from low interest rates, a stable currency
and the advent of an economic recovery. The Toronto Stock Exchange 300
Index surged 28.96% for the period.
BONDS: Emerging market debt - and particularly Brady bonds - continued
their dominance of the world fixed-income scene. The JP Morgan Emerging
Markets Bond Index returned 39.90%, soundly thrashing its developed-market
counterpart, the Salomon Brothers Non-U.S. World Government Bond Index,
which returned 5.45%. In the U.S., further signs of a slowing economy
pushed the 30-year Treasury bond out of the narrow trading range it had
maintained for several months. The long bond yield was as low as 6.64% on
October 31, 1996. For Europe, bond market returns were generally positive,
and the yields of countries such as Italy and Spain contracted relative to
countries such as Germany, which is expected to be a core participant in
the future European monetary union (EMU). Japanese bonds experienced great
volatility during the period, but at the end of October they continued to
reflect negative returns for U.S.-based investors, in part due to the weak
yen.
S&P 500 EAFE
* YEAR TO DATE THROUGH OCTOBER 31, 1996.
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
Row: 13, Col: 1, Value: 29.3
Row: 13, Col: 2, Value: 4.01
Row: 14, Col: 1, Value: 15.72
Row: 14, Col: 2, Value: 3.26
%
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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). The fund has a 3% sales charge. If
Fidelity had not reimbursed certain fund expenses, the past 5 years and
life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1996 YEAR YEARS FUND
CANADA 24.99% 43.82% 167.23%
CANADA (INCL. 3% SALES CHARGE) 21.24% 39.51% 159.22%
Toronto Stock Exchange 300 28.96% 52.35% 145.70%
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. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Toronto Stock Exchange 300 - a market capitalization weighted index of 300
stocks traded in the Canadian 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, 1996 YEAR YEARS FUND
CANADA 24.99% 7.54% 11.59%
CANADA (INCL. 3% SALES CHARGE) 21.24% 6.89% 11.21%
Toronto Stock Exchange 300 28.96% 8.78% 10.55%
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
IMAHDR PRASUN SHR__CHT 19961031 19961106 200815 S00000000000001
Canada DR Toronto Stock Exchange
00309 DR001
1987/11/17 9700.00 10000.00
1987/11/30 9767.90 10159.91
1987/12/31 10446.90 10902.20
1988/01/31 10340.20 10766.12
1988/02/29 11048.30 11455.09
1988/03/31 11737.00 12118.74
1988/04/30 12008.60 12276.06
1988/05/31 11436.30 11954.61
1988/06/30 12319.00 12914.95
1988/07/31 12144.40 12770.34
1988/08/31 11562.40 12147.56
1988/09/30 11804.90 12408.94
1988/10/31 12357.80 12761.49
1988/11/30 12212.30 12838.17
1988/12/31 12480.81 13196.56
1989/01/31 13422.57 14222.20
1989/02/28 13045.87 13890.22
1989/03/31 13263.96 14036.78
1989/04/30 13531.62 14355.44
1989/05/31 13987.63 14392.34
1989/06/30 14661.73 14855.07
1989/07/31 15553.93 15900.00
1989/08/31 15633.23 16157.57
1989/09/30 15534.10 15932.92
1989/10/31 15316.01 15960.00
1989/11/30 15405.23 16207.21
1989/12/31 15849.10 16485.03
1990/01/31 14563.76 15032.84
1990/02/28 14646.68 14930.11
1990/03/31 14895.46 15093.60
1990/04/30 14180.23 13939.41
1990/05/31 15113.14 14894.22
1990/06/30 15465.57 14917.50
1990/07/31 15589.96 15170.55
1990/08/31 14688.15 14244.12
1990/09/30 14449.74 13522.93
1990/10/31 14066.21 13082.07
1990/11/30 14522.30 13448.40
1990/12/31 14978.60 14028.62
1991/01/31 15045.02 14085.97
1991/02/28 16428.85 15109.86
1991/03/31 17148.44 15222.57
1991/04/30 17281.29 15203.81
1991/05/31 18045.17 15723.75
1991/06/30 18067.31 15483.78
1991/07/31 18011.95 15706.41
1991/08/31 17856.97 15784.70
1991/09/30 17259.15 15390.08
1991/10/31 18023.03 16127.28
1991/11/30 17347.72 15701.06
1991/12/31 17627.42 15774.02
1992/01/31 17945.14 15913.63
1992/02/29 18051.04 15788.30
1992/03/31 17545.05 15012.42
1992/04/30 17333.24 14759.32
1992/05/31 17486.21 14790.80
1992/06/30 17392.07 14908.57
1992/07/31 17839.23 15363.59
1992/08/31 17568.58 15082.56
1992/09/30 16815.48 14074.27
1992/10/31 16744.87 14340.45
1992/11/30 16697.80 13619.11
1992/12/31 17121.47 14136.15
1993/01/31 17027.21 13995.03
1993/02/28 18087.72 14854.14
1993/03/31 19077.54 15456.65
1993/04/30 19572.45 16116.48
1993/05/31 19843.47 16569.77
1993/06/30 20856.85 16833.20
1993/07/31 20102.71 16817.33
1993/08/31 20609.40 17117.80
1993/09/30 19596.02 16383.72
1993/10/31 20998.26 17665.94
1993/11/30 20515.13 17192.85
1993/12/31 21482.47 18016.96
1994/01/31 22427.27 18892.01
1994/02/28 21470.66 18105.20
1994/03/31 20679.39 17343.76
1994/04/30 20525.86 17117.74
1994/05/31 20620.34 17394.54
1994/06/30 19486.57 16229.92
1994/07/31 19864.49 16821.43
1994/08/31 20608.53 17748.84
1994/09/30 20714.82 18170.07
1994/10/31 20289.65 17794.46
1994/11/30 18813.40 16727.05
1994/12/31 18907.95 16957.49
1995/01/31 17584.40 16119.77
1995/02/28 18305.26 16786.00
1995/03/31 19451.56 17497.07
1995/04/30 20042.43 17923.40
1995/05/31 20668.76 18482.09
1995/06/30 20952.38 18834.82
1995/07/31 21673.24 19342.43
1995/08/31 21401.44 19243.97
1995/09/30 21708.69 19383.92
1995/10/31 20739.66 19052.21
1995/11/30 21590.52 19726.25
1995/12/31 22574.56 19959.52
1996/01/31 22954.36 20910.61
1996/02/29 23156.13 20846.27
1996/03/31 23512.19 21236.57
1996/04/30 23963.21 21958.20
1996/05/31 24532.92 22313.61
1996/06/30 23737.70 21597.87
1996/07/31 23049.31 20954.91
1996/08/31 24034.42 22000.79
1996/09/30 24687.21 22794.76
1996/10/31 25921.57 24569.51
IMATRL PRASUN SHR__CHT 19961031 19961106 200818 R00000000000111
Let's say hypothetically that $10,000 was invested in Fidelity Canada Fund
on November 17, 1987, when the fund started, and the 3% sales charge was
paid. As the chart shows, by October 31, 1996, the value of the investment
would have grown to $25,922 - a 159.22% increase on the initial investment.
For comparison, look at how the Toronto Stock Exchange 300 did over the
same period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $24,570 - a 145.70% 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.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
CANADA
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Thomas Sweeney, Portfolio Manager of Fidelity Canada Fund
Q. TOM, HOW HAS THE FUND PERFORMED?
A. It's been a great year for the Canadian stock market. For the 12-month
period that ended October 31, 1996, the fund had a total return of 24.99%.
That compared to the 28.96% return posted by the Toronto Stock Exchange 300
(TSE 300) over the same period.
Q. WHAT FACTORS FUELED THE CANADIAN MARKET'S RISE?
A. Over the past year, the Canadian dollar stabilized primarily due to the
defeat of the Quebec referendum in October 1995. From that point on, there
was a growing consensus that there wasn't likely to be another separatist
referendum any time soon, further helping to calm many residual
secessionary fears. The stabilization of the currency allowed the Canadian
government to push interest rates dramatically lower from their late-1995
levels. In fact, the Canadian government continued to cut rates several
times even after the Federal Reserve Board had stopped cutting U.S.
interest rates. What's more, the Canadian economy continued on the path of
recovery.
Q. AFTER PARING BACK THE FUND'S HOLDINGS IN ENERGY STOCKS WHEN YOU BEGAN
MANAGING THE FUND IN MARCH, YOU'VE BUILT ENERGY HOLDINGS BACK UP TO ABOUT
30% OF INVESTMENTS BY THE END OF THE PERIOD. WHY THE REVERSAL?
A. Let's start by addressing why I reduced the fund's holdings in energy
stocks in the first place. For one, I sold out of weaker, lower-quality
energy stocks because I wanted to concentrate on investing in
higher-quality companies. During the time I was selling, I became concerned
that Iraq might be allowed to come back into the world market and, as a
result, oil supply would increase and the price of oil would drop over the
short term. So I didn't immediately replace the energy companies I sold,
despite the fact that I remained bullish about the long-term prospects for
energy companies. When the humanitarian aid-for-oil deal was canceled by
the United Nations because of a military flare-up involving Iraq, I became
less concerned about short-term declines in oil prices, and I added to the
fund's
energy holdings. The price of oil and gas rose significantly during the
period, which helped many of the fund's energy stocks. By the end of the
period, the fund had more invested in energy stocks than the index.
Q. WHAT ENERGY COMPANIES DID YOU FIND ATTRACTIVE?
A. I emphasized high-quality E&P (exploration and production) companies
such as Canadian Natural Resources and Canadian Occidental. I also bought
Petro-Canada - which is a refiner as well as an E&P company - primarily
because of its new oil finds off the east coast of Canada with its Hibernia
and Terra Nova projects. Both are expected to start production within the
next two or three years.
Q. OTHER NATURAL RESOURCE STOCKS DIDN'T FARE AS WELL AS ENERGY STOCKS. HOW
DID THAT AFFECT THE FUND'S PERFORMANCE?
A. That's true and the performance of precious metals, base metals and
minerals, as well as paper and forest products stocks generally detracted
from the fund's performance. As far as the metals stocks are concerned,
their performance was hampered by a collapse in copper prices, which had a
spillover effect on other metal prices, including silver. Falling silver
prices were a negative for Pan American Silver, one of the fund's largest
holdings. The price of paper also has fallen dramatically, especially in
the areas that Canadians are big in: newsprint and pulp. Newsprint prices
fell from roughly $740 a ton at the beginning of the year to about $550 at
the end of the period. But interestingly, the falling price of newsprint
provided an opportunity that worked out well for the fund. Newspaper
publishers Torstar and Hollinger profited from falling newsprint prices -
their second biggest cost after labor. What's more, these stocks benefited
as ad linage - a measure of how much advertising a newspaper receives -
stopped trending downward.
Q. IN THE REPORT TO SHAREHOLDERS SIX MONTHS AGO, YOU EXPLAINED THAT YOUR
INVESTMENT APPROACH INCLUDES LOOKING FOR SECTORS THAT ARE DEPRESSED. DID
YOU FIND ANY SUCH SECTORS OVER THE PAST SIX MONTHS?
A. Yes, and I added fishing companies that harvest ground fish, such as
cod, from offshore Canada. Roughly six years ago, the Canadian government
decided those areas were being dramatically over-fished. To remedy that
situation, the government legislated the amount of fish that could be
harvested, dramatically reducing Canadian fishing companies' allocation.
Since their peak in the late 1980s, the stock prices of fishing companies
dropped anywhere from 50% to 90%. I bought FPI and National Sea Products
because their cost cutting efforts have finally caught up with their
shrinking revenue size. There's talk that the fish have come back and, in
my view, it's just a question of when these companies' allocations are
increased.
Q. SIX MONTHS AGO, BANKS WERE SOME OF THE FUND'S BEST PERFORMERS. WHY HAVE
YOU PARED BACK YOUR HOLDINGS IN BANKS OVER THE PAST SIX MONTHS?
A. When I looked at historical figures for the past 20 years, Canadian
banks' dividend yields had never been lower, and their stock prices seemed
fairly high relative to their book value and earnings. So I reduced the
fund's holdings in banks to find better values in other industries.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. I'm generally optimistic about the natural resource related stocks where
the fund has large weightings. I expect that oil, silver and some forest
products will benefit from tighter supply and demand, which could push many
commodity prices higher. Unless their business prospects turn negative,
I'll likely continue to keep the fund concentrated in these stocks.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long term growth of capital by investing
mainly in equity securities of Canadian issuers
FUND NUMBER: 309
TRADING SYMBOL: FICDX
START DATE: November 17, 1987
SIZE: as of October 31, 1996, more than
$129 million
MANAGER: Thomas Sweeney, since March
1996; manager, Fidelity Capital Appreciation
Fund, 1986-1996; Fidelity Select Paper and
Forest Products Portfolio, 1986; joined Fidelity
in 1985
(checkmark)
TOM SWEENEY ON HIS OUTLOOK FOR ENERGY STOCKS:
"I'm optimistic about the outlook for energy stocks,
primarily because of a favorable supply and demand
scenario. Demand for energy worldwide has been
growing about 2% to 3% annually over the past
several years. There's very little spare capacity to
produce more energy, except for Iraq. As you may
recall, Iraq has been prohibited from selling oil on the
world market. Granted, if that embargo were
removed, Iraq would add some supply to the market.
But the sum total of the country's production would
most likely only add about 2% to the world supply,
and I believe the return of Iraq wouldn't cause much
long-term disruption in oil prices. Another positive
is that inventories of different grades of oil - crude,
unleaded gas and heating oil - are currently at very
low levels. If we get a very cold winter, we could see
some draw down of these inventories, and energy
prices could rise over the short term. In my view,
the prices of many energy stocks don't yet reflect the
positive supply/demand trends that have taken place
already, and they aren't overvalued - meaning that
their stock prices haven't overly optimistically
reflected their business prospects."
CANADA
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
(% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
United States 15.7%
Row: 1, Col: 1, Value: 15.7
Row: 1, Col: 2, Value: 84.3
Canada 84.3%
AS OF APRIL 30, 1996
United States 20.2%
Row: 1, Col: 1, Value: 20.2
Row: 1, Col: 2, Value: 79.8
Canada 79.8%
ASSET ALLOCATION
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 95.3 90.0
Short-term investments 4.7 10.0
TOP TEN STOCKS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
BCE, Inc. 4.3 4.7
(Telephone Services)
Pan American Silver Corp. 4.2 4.2
(Precious Metals)
FPI Ltd. 4.0 0.0
(Foods)
Canadian Natural Resources Ltd. 3.8 1.6
(Oil & Gas)
Bresea Resources Ltd. 3.8 0.0
(Precious Metals)
Torstar Corp. Class B 3.4 4.0
(Publishing)
Canada Occidental Petroleum Ltd. 3.4 0.3
(Oil & Gas)
Petro-Canada 3.2 1.6
(Oil & Gas)
Rio Alto Exploration Ltd. 3.1 0.4
(Oil & Gas)
Genlyte Group, Inc. 3.1 2.5
(Electrical Equipment)
TOP TEN MARKET SECTORS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Energy 31.0 18.3
Precious Metals 18.6 14.8
Finance 9.8 17.8
Basic Industries 7.6 9.2
Utilities 7.6 10.9
Nondurables 7.4 1.5
Media & Lesiure 6.2 7.0
Industrial Machinery & Equipment 3.1 3.7
Retail & Wholesale 2.0 3.2
Technology 1.0 1.8
CANADA
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.3%
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 7.6%
CHEMICALS & PLASTICS - 0.5%
Potash Corp. of Saskatchewan 10,000 $ 709,029
METALS & MINING - 4.9%
Alcan Aluminium Ltd. 75,000 2,465,534
Cominco Ltd. 25,000 584,631
Inco Ltd. 50,000 1,582,054
Noranda, Inc. 10,000 220,404
South Crofty Holdings Ltd. (a)(f) 2,150,000 1,526,019
6,378,642
PAPER & FOREST PRODUCTS - 2.2%
MacMillan Bloedel Ltd. 200,000 2,809,220
TOTAL BASIC INDUSTRIES 9,896,891
DURABLES - 1.0%
TEXTILES & APPAREL - 1.0%
Dominion Textile, Inc. 210,000 1,247,338
ENERGY - 31.0%
OIL & GAS - 31.0%
Abacan Resource Corp. 43,800 333,975
Alberta Energy Co. Ltd. 60,000 1,288,804
Anderson Exploration Ltd. 50,000 582,764
Barrington Petroleum Ltd. (a) 125,000 537,002
Baytex Energy Ltd. Class A (a) 25,000 229,743
Beau Canada Exploration Ltd. (a) 1,250,000 2,288,095
Canadian 88 Energy Corp. (a) 100,000 425,866
Canadian Natural Resources Ltd. (a) 200,000 4,975,905
Canada Occidental Petroleum Ltd. 250,000 4,417,423
Cavell Energy Corp. 105,000 223,580
Cimarron Petroleum Ltd. (a) 200,000 2,502,895
Denbury Resources, Inc. (a) 100,000 1,303,747
Elan Energy, Inc. (a) 100,000 971,273
Grad & Walker Energy Corp. (a) 125,000 994,621
Newport Petroleum Corp. (a) 100,000 526,729
Newport Petroleum Corp. (a)(b) 50,000 263,364
Norcen Energy Resources Ltd. 50,000 1,072,136
Northrock Resources Ltd. (a) 75,000 638,799
Parkland Industries Ltd. 150,000 756,472
Penn West Petroleum Ltd. (a) 250,000 2,288,094
Petro-Canada 2nd installment receipt (c) 400,000 4,154,059
Poco Petroleums Ltd. (a) 20,000 185,289
Renaissance Energy Ltd. (a) 80,000 2,540,252
Rio Alto Exploration Ltd. (a) 600,000 4,056,932
Suncor, Inc. 2nd installment receipt (e) 50,000 1,447,570
Ulster Petroleums Ltd. (a) 160,000 1,135,642
40,141,031
FINANCE - 9.8%
BANKS - 8.2%
Bank of Montreal 60,000 1,817,774
Bank of Nova Scotia Halifax 60,000 1,893,982
Canadian Imperial Bank of Commerce 40,000 1,664,612
National Bank of Canada 150,000 1,456,909
Royal Bank of Canada 60,000 1,985,879
Toronto Dominion Bank 80,000 1,873,809
10,692,965
INSURANCE - 1.6%
Acceptance Insurance Co., Inc. (a) 100,000 2,025,000
TOTAL FINANCE 12,717,965
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 3.1%
ELECTRICAL EQUIPMENT - 3.1%
Genlyte Group, Inc. (a) 420,000 $ 4,042,500
MEDIA & LEISURE - 6.2%
BROADCASTING - 1.6%
Cogeco, Inc. 350,000 1,738,952
Cogeco Cable, Inc. 50,000 345,549
2,084,501
PUBLISHING - 4.6%
Hollinger, Inc. 150,000 1,540,962
Torstar Corp. Class B 200,000 4,467,855
6,008,817
TOTAL MEDIA & LEISURE 8,093,318
NONDURABLES - 7.4%
AGRICULTURE - 1.0%
Saskatchewan Wheat Pool Class B
(non-vtg.) (a) 100,000 1,288,804
FOODS - 6.4%
FPI Ltd. (a)(f) 1,150,000 5,155,217
National Sea Products Ltd. (a)(f) 679,500 3,096,828
8,252,045
TOTAL NONDURABLES 9,540,849
PRECIOUS METALS - 18.6%
Agnico Eagle Mines Ltd. 40,000 560,350
Argosy Mining Corp. 16,100 19,487
Bresea Resources Ltd. (a) 525,000 4,903,060
Consolidated Nevada Goldfields Corp.
(special warrants) (a) 1,000,000 1,027,308
Crystallex International Corp. (a) 100,000 206,209
Euro-Nevada Mining Corp. Ltd. 15,000 443,797
First Dynasty Mines Ltd. (a) 50,000 143,823
Golden Knight Resources, Inc. (a) 24,600 148,874
Golden Star Resources Ltd. (a) 10,000 186,036
Greenstone Resources Ltd. (a) 300,000 3,810,378
Indochina Goldfields Ltd. (a) 30,000 214,054
Kinross Gold Corp. (a) 100,000 720,983
Meridian Gold, Inc. installment receipt (d) 200,000 500,579
Minorca Resources Ltd. (a) 250,000 709,776
Nevsun Resources Ltd. (a) 10,000 76,208
Oliver Gold Corp. (a) 20,000 73,966
Pan American Silver Corp. (a) 780,000 5,477,978
Philex Gold Inc. (b) 25,000 200,792
Prime Resources Group, Inc. 250,000 1,839,815
Repadre Capital Corp. (a) 40,000 227,128
Silver Standard Resources, Inc. (a) 140,000 679,891
Sutton Resources (a) 25,000 310,994
Trillion Resources Ltd. (a) 20,000 73,219
TVI Pacific, Inc. (a) 300,000 336,210
War Eagle Mining, Inc. (a) 300,000 470,694
William Resources, Inc. (a) 600,000 726,213
24,087,822
COMMON STOCKS - CONTINUED
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - 2.0%
RETAIL & WHOLESALE, MISCELLANEOUS - 2.0%
Hancock Fabrics, Inc. 310,000 $ 2,635,000
TECHNOLOGY - 1.0%
ELECTRONIC INSTRUMENTS - 1.0%
Medar, Inc. (a) 225,000 1,293,750
UTILITIES - 7.6%
ELECTRIC UTILITY - 3.3%
Centerior Energy Corp. 150,000 1,462,500
Ohio Edison Co. 40,000 835,000
Tucson Electric Power Co. (a) 100,000 1,975,000
4,272,500
TELEPHONE SERVICES - 4.3%
BCE, Inc. 120,000 5,518,323
TOTAL UTILITIES 9,790,823
TOTAL COMMON STOCKS
(Cost $110,346,467) 123,487,287
CASH EQUIVALENTS - 4.7%
(% OF FUND'S INVESTMENTS)
MATURITY AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 6,108,940 6,108,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $116,454,467) $ 129,595,287
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 $464,156 or 0.4% of net
assets.
(c) Purchased on an installment basis. Market value reflects only those
payments made through October 31, 1996. The remaining installment
aggregating CAD 1,700,000 is due March 24, 1997.
(d) Purchased on an installment basis. Market value reflects only those
payments made through October 31, 1996. The remaining installment
aggregating CAD 500,000 is due July 31, 1997.
(e) Purchased on an installment basis. Market value reflects only those
payments made through October 31, 1996. The remaining installment
aggregating CAD 650,000 is due December 30, 1996.
(f) An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions during the period with
companies which are or were affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Exco Technologies Ltd. $ - $ 924,191 $ - $ -
FPI Ltd. 647,756 - - 5,155,217
National Sea Products Ltd. 309,868 - - 3,096,828
South Crofty Holdings Ltd. 184,298 - - 1,526,019
TOTALS $ 1,141,922 $ 924,191 $ - $ 9,778,064
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $201,284,416 and $403,951,191, 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 $42,312 for the period.
The fund participated in the bank borrowing program. The maximum loan and
the average daily balances during the period for which loans were
outstanding amounted to $14,684,000 and $4,474,581 respectively. The
weighted average interest rate was 6.3% (see Note 6 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $117,135,981. Net unrealized appreciation aggregated
$12,459,306, of which $17,659,633 related to appreciated investment
securities and $5,200,327 related to depreciated investment securities.
The fund hereby designates approximately $7,949,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
For the period, interest and dividends from foreign countries were
$1,781,919. Taxes accrued or paid to foreign countries were $255,944.
CANADA
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at $ 129,595,287
value (including repurchase agreements of $6,108,000)
(cost $116,454,467) - See accompanying schedule
Cash 293
Receivable for investments sold 529,284
Receivable for fund shares sold 968,112
Dividends receivable 87,198
TOTAL ASSETS 131,180,174
LIABILITIES
Payable for investments purchased $ 1,174,833
Payable for fund shares redeemed 212,453
Accrued management fee 38,893
Other payables and 82,798
accrued expenses
TOTAL LIABILITIES 1,508,977
NET ASSETS $ 129,671,197
Net Assets consist of:
Paid in capital $ 82,136,781
Undistributed net investment income 783,201
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 33,609,675
Net unrealized appreciation (depreciation) on investments 13,141,540
and assets and liabilities in
foreign currencies
NET ASSETS, for 5,937,394 $ 129,671,197
shares outstanding
NET ASSET VALUE and redemption price per share ($129,671,197 (divided by) 5,937,394 shares) $21.84
Maximum offering price per share (100/97.00 of $21.84) $22.52
</TABLE>
STATEMENT OF OPERATIONS
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME $ 1,917,148
Dividends
Interest 360,673
2,277,821
Less foreign taxes withheld (255,944
)
TOTAL INCOME 2,021,877
EXPENSES
Management fee $ 1,105,063
Basic fee
Performance adjustment (447,517
)
Transfer agent fees 545,661
Accounting fees and expenses 105,266
Non-interested trustees' compensation 701
Custodian fees and expenses 64,605
Registration fees 21,257
Audit 42,185
Legal 2,629
Interest 24,090
Miscellaneous 4,391
Total expenses before reductions 1,468,331
Expense reductions (34,839 1,433,492
)
NET INVESTMENT INCOME 588,385
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including 44,555,228
realized loss of $113,527
on sales of investments in
affiliated issuers)
Foreign currency transactions (2,139 44,553,089
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (9,157,684
)
Assets and liabilities in (850 (9,158,534
foreign currencies ) )
NET GAIN (LOSS) 35,394,555
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 35,982,940
OTHER INFORMATION $ 96,367
Sales charges paid to FDC
Deferred sales charges withheld $ 5,748
by FDC
Expense reductions $ 33,077
Directed brokerage arrangements
Transfer agent interest credits 1,762
$ 34,839
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 588,385 $ 920,357
Net investment income
Net realized gain (loss) 44,553,089 (4,225,424)
Change in net unrealized appreciation (depreciation) (9,158,534) 10,769,055
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 35,982,940 7,463,988
Distributions to shareholders from net investment income (772,736) (211,418)
Share transactions 38,234,017 261,903,643
Net proceeds from sales of shares
Reinvestment of distributions 759,773 205,156
Cost of shares redeemed (271,428,450) (310,934,479)
Redemption fees 132,635 6,103
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (232,302,025) (48,819,577)
TOTAL INCREASE (DECREASE) IN NET ASSETS (197,091,821) (41,567,007)
NET ASSETS
Beginning of period 326,763,018 368,330,025
End of period (including undistributed net investment income of $783,201 and $748,004,
respectively) $ 129,671,197 $ 326,763,018
OTHER INFORMATION
Shares
Sold 1,931,430 15,725,874
Issued in reinvestment of distributions 41,292 12,903
Redeemed (14,656,999) (18,554,447)
Net increase (decrease) (12,684,277) (2,815,670)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31,
SELECTED PER-SHARE DATA 1996 1995 1994 D 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.55 $ 17.18 $ 17.82 $ 14.23 $ 16.28
Income from Investment Operations
Net investment income (loss) .08 C .05 - (.15) (.02) C
Net realized and unrealized gain (loss) 4.27 .33 (.60) 3.76 (1.11)
Total from investment operations 4.35 .38 (.60) 3.61 (1.13)
Less Distributions
From net investment income (.08) (.01) - (.02) -
From net realized gain - - - - (.92)
In excess of net realized gain - - (.04) - -
Total distributions (.08) (.01) (.04) (.02) (.92)
Redemption fees added to paid in capital .02 .00 - - -
Net asset value, end of period $ 21.84 $ 17.55 $ 17.18 $ 17.82 $ 14.23
TOTAL RETURN A, B 24.99% 2.22% (3.37)% 25.40% (7.09)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 129,671 $ 326,763 $ 368,330 $ 95,977 $ 21,701
Ratio of expenses to average net assets 1.01% 1.09% 1.57% 2.00% 2.00%
E E E
Ratio of expenses to average net assets after expense reductions 1.08% 1.57% 2.00% 2.00%
F
Ratio of net investment income to average net assets .40% .26% (.14)% (.66)% (.11)%
Portfolio turnover rate 139% 75% 59% 131% 55%
Average commission rate G $ .0276
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES
TO FINANCIAL STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL
GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS
A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED
TO BOOK TO TAX DIFFERENCES.
E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(income) and capital gains (the profits the fund earns when it sells
securities 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, 1996 YEAR YEARS FUND
EMERGING MARKETS 11.69% 70.60% 78.12%
EMERGING MARKETS 8.34% 65.48% 72.78%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital 6.48% 93.14% 178.88%
International Emerging
Markets Free Index
Emerging Markets 9.11% 63.31% n/a
Funds Average
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 1, 1990. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Morgan Stanley Capital International Emerging Markets Free Index - a market
capitalization weighted index of over 850 stocks traded in 22 world
markets. 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, to measure how the fund's
performance stacked up against its peers, you can compare it to the
emerging markets funds average, which reflects the performance of 80
mutual funds with similar objectives tracked by Lipper Analytical Services,
Inc. over the past 12 months. 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, 1996 YEAR YEARS FUND
EMERGING MARKETS 11.69% 11.27% 10.09%
EMERGING MARKETS 8.34% 10.60% 9.53%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital 6.48% 14.07% 18.62%
International Emerging
Markets Free Index
Emerging Markets 9.11% 10.27% n/a
Funds Average
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
IMAHDR PRASUN SHR__CHT 19961031 19961111 165559 S00000000000001
Emerging Markets MS Emerging Markets Free
00322 MS006
1990/11/01 9700.00 10000.00
1990/11/30 9564.20 9479.74
1990/12/31 9777.33 9880.37
1991/01/31 9709.16 10679.30
1991/02/28 10118.17 12260.21
1991/03/31 10108.44 12766.06
1991/04/30 10332.42 12903.41
1991/05/31 10332.42 13918.67
1991/06/30 9972.10 13421.82
1991/07/31 10186.34 14119.08
1991/08/31 10108.44 14418.70
1991/09/30 10225.30 13869.26
1991/10/31 10127.91 14439.40
1991/11/30 9991.58 14225.77
1991/12/31 10438.08 15824.40
1992/01/31 10517.68 17656.36
1992/02/29 10826.15 18442.83
1992/03/31 10806.24 19068.46
1992/04/30 11064.96 18940.35
1992/05/31 11542.58 18873.02
1992/06/30 11522.68 17002.12
1992/07/31 11144.56 17189.36
1992/08/31 10865.95 16390.47
1992/09/30 10796.29 16450.88
1992/10/31 10995.30 17332.58
1992/11/30 10905.75 17144.49
1992/12/31 11048.91 17652.99
1993/01/31 11201.38 17738.37
1993/02/28 11770.60 18033.91
1993/03/31 12095.86 18628.41
1993/04/30 12482.12 19056.85
1993/05/31 12756.56 19581.32
1993/06/30 12919.19 20162.41
1993/07/31 13142.82 20705.31
1993/08/31 14057.63 22457.49
1993/09/30 14372.73 23058.76
1993/10/31 16446.31 25127.66
1993/11/30 17096.84 26239.62
1993/12/31 20082.32 30576.92
1994/01/31 19501.26 31133.23
1994/02/28 18950.78 30579.38
1994/03/31 17115.84 27812.28
1994/04/30 16952.74 27255.97
1994/05/31 17391.08 28188.79
1994/06/30 16167.79 27411.79
1994/07/31 17401.28 29116.21
1994/08/31 19613.39 32729.91
1994/09/30 20112.90 33101.88
1994/10/31 19623.58 32504.77
1994/11/30 18267.77 30814.71
1994/12/31 16480.81 28339.78
1995/01/31 14212.53 25324.70
1995/02/28 14376.01 24675.15
1995/03/31 14089.92 24831.93
1995/04/30 14386.23 25945.92
1995/05/31 15837.11 27326.23
1995/06/30 16021.03 27407.06
1995/07/31 16828.21 28022.26
1995/08/31 16317.33 27362.19
1995/09/30 16245.81 27232.33
1995/10/31 15469.28 26189.87
1995/11/30 14968.62 25722.82
1995/12/31 15956.70 26863.68
1996/01/31 17548.21 28773.20
1996/02/29 17340.17 28315.72
1996/03/31 17464.99 28536.26
1996/04/30 18359.57 29677.21
1996/05/31 18349.17 29544.70
1996/06/30 18276.35 29729.19
1996/07/31 16840.87 27697.39
1996/08/31 17517.00 28406.35
1996/09/30 17901.88 28652.43
1996/10/31 17277.76 27888.27
IMATRL PRASUN SHR__CHT 19961031 19961111 165601 R00000000000075
Let's say hypothetically that $10,000 was invested in Fidelity Emerging
Markets Fund on November 1, 1990, when the fund started, and the 3% sales
charge was paid. As the chart shows, by October 31, 1996, the value of the
investment would have grown to $17,278 - a 72.78% increase on the initial
investment. For comparison, look at how the Morgan Stanley Capital
International Emerging Markets Free Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $27,888 - a 178.88% 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.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
EMERGING MARKETS
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Richard Hazlewood, Portfolio Manager of Fidelity Emerging
Markets Fund
Q. HOW DID THE FUND PERFORM, RICHARD?
A. Very well. For the year that ended October 31, 1996, the fund had a
total return of 11.69%. For the same period, the Morgan Stanley Capital
International Emerging Markets Free Index returned 6.48% and the emerging
markets funds average return, as tracked by Lipper Analytical Services, was
9.11%. The fund's performance was a result of overweighting in Malaysia and
Brazil relative to the index and underweighting in less attractive markets
such as Korea, South Africa, India and Israel.
Q. THE FINANCIAL SECTOR IN THAILAND CONTINUES TO PLAY A BIG PART IN THE
FUND. WHAT'S ATTRACTED YOU TO THESE COMPANIES?
A. Well, I continued to favor banks. One problem that developed with the
Thai banks during the period was the fear of many investors that Thailand
was becoming another bubble economy like Japan was in the late 1980s - with
high property values and easy credit. While I thought this fear was
somewhat overstated, I did believe that there could be lending problems
with the family-run banks and finance companies. Therefore, I reduced the
fund's weighting in those banks and raised it in large, government-linked
banks. These banks are better managed and tend to lend responsibly. An
example of a Thai bank I favored included Thai Military Bank.
Q. WHAT WAS INTERESTING TO YOU ABOUT MALAYSIA?
A. In Malaysia, the trade deficit has been greatly reduced and the country
has maintained a high savings rate with very little debt. With a savings
rate of about 35% of GDP, the country has the money to increase investments
in productive ventures such as roads, airports and telephone systems.
Q. WHAT ABOUT THE PHILIPPINES? INVESTORS HAVE BEEN CONCERNED RECENTLY ABOUT
AN OVERHEATED PROPERTY MARKET.
A. Actually, I'm very excited about the Philippines. I think there are many
opportunities there that investors may not be aware of. As for the concerns
about the Philippine property market, I think they may be painting the
market with too big of a brush - and pushing down the stock prices of
property companies as a result. While the high end of the market is indeed
overpriced and oversupplied, there is almost limitless demand for low-cost
and middle-income housing as well as office space. Keep in mind, there
hasn't been a building boom in the Philippines in over 30 years.
Q. EARLIER, YOU MENTIONED SOME UNDERPERFORMING MARKETS YOU AVOIDED. WHY DID
YOU STEER CLEAR OF THESE MARKETS?
A. In general, I avoided countries that had low savings rates, low currency
reserves and a depreciating exchange rate, and those with companies that,
in my opinion, are not run for the benefit of shareholders. Let me take you
through some of these markets. Although Korea is probably going to be one
of the world's top five manufacturing powers at the beginning of the next
century and has a solid industrial infrastructure, it's a difficult
environment to invest in because the Korean companies typically don't look
out for shareholders. South Africa is also a problem because the country
has a very low savings rate. Historically, economies with high savings
rates tend to have attractive equity markets. Additionally, the government
has little or no reserves to defend its depreciating currency and, with
such paltry reserves, its central bank is powerless to control the exchange
rate.
Q. HOW HAVE YOU POSITIONED THE FUND IN LATIN AMERICA?
A. My main interests for the fund in Latin America are in Brazil and
Mexico. In Brazil, I've tried to take advantage of the success of some
privatized companies. Telebras, which has been in the fund for some time,
was the best example of successful privatization. In Mexico, I'm still
concerned about the stability of the peso. However, many of the companies
the fund owns there have had good earnings growth.
Q. WHAT WAS YOUR BIGGEST DISAPPOINTMENT IN THE PAST YEAR?
A. My stock picking in Malaysia. You see, with international funds, you can
pick the right country, but you can do better by picking the right stocks.
In this case, it was a good move to highlight Malaysia in the fund;
however, with large-cap stocks and small-cap stocks performing well in that
country, the fund missed out on some additional return by owning
mid-capitalization stocks.
Q. WHAT ARE YOU LOOKING FOR GOING FORWARD?
A. Well, I'm quite hopeful that my stock selection in countries such as
Malaysia will begin to pay off. While investments in emerging markets are
subject to an array of risks, I firmly believe that stock prices follow
earnings over time. Therefore, I've positioned the fund in companies that
have had good long-term earnings growth. Additionally, the attractiveness
of the emerging markets in the future
will have a lot to do with what's going on in the U.S. At some point in
time, greater relative returns in emerging markets are going to draw money
out of the U.S. The question is just when.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of emerging market
issuers which can be found in regions such
as Southeast Asia, Latin America and
Eastern Europe
FUND NUMBER: 322
TRADING SYMBOL: FEMKX
START DATE: November 1, 1990
SIZE: as of October 31, 1996, more than
$1.2 billion
MANAGER: Richard Hazlewood, since 1993;
assistant, Fidelity Low-Priced Stock Fund
and Fidelity Contrafund, 1992-93; analyst,
Japanese stocks, 1991-92; joined Fidelity in
1991
(checkmark)
RICHARD HAZLEWOOD ON HIS CRITERIA FOR DE-EMPHASIZING
CERTAIN COUNTRIES AND MARKETS:
"I look at many factors in determining whether or not
the fund should be involved in a certain country or own
a certain stock. Here are three key points a country or
a company must meet before I will take an interest:
(solid bullet) CURRENCY RESERVES. I am always wary of countries
that have low reserves and weak currencies. Take
Mexico. They have $150 billion in debt and only $15
billion in reserves. Not good. In fact, in Mexico they
have this wonderful expression for borrowing -
`external savings.' Or look at South Africa: not only
do they have meager reserves and a low savings
rate, they also are willing to depreciate the currency.
Why? They're looking for a free economic lunch.
(solid bullet) ARE THE COMPANIES RUN FOR SHAREHOLDERS? In
many places in the world, company managements
view their stocks as cheap forms of debt. The
companies are run for the families in charge or the
employees, but the shareholders are given little or no
consideration. In this type of situation, no matter how
good the business is, as a shareholder, you will never
enjoy any of its growth.
(solid bullet) EQUITY MARKET RESTRICTIONS. I'm wary of any
market that puts restrictions on foreign ownership.
Some markets with ownership restrictions
include Korea, China, Taiwan and India.
"Investors should keep in mind that these are broad
factors and there are certainly exceptions. For
example, I've found some good growth companies in
South Africa where management teams have big
equity stakes in them. However, as long-term
investors have seen, asset allocation decisions I've
made with the fund are greatly influenced by these
three factors."
EMERGING MARKETS
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
(% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
4.6.86.8
Argentina 2.4%
Thailand 9.2%
Row: 1, Col: 1, Value: 9.300000000000001
Row: 1, Col: 2, Value: 5.9
Row: 1, Col: 3, Value: 4.7
Row: 1, Col: 4, Value: 16.4
Row: 1, Col: 5, Value: 5.8
Row: 1, Col: 6, Value: 32.6
Row: 1, Col: 7, Value: 2.6
Row: 1, Col: 8, Value: 5.2
Row: 1, Col: 9, Value: 15.1
Row: 1, Col: 10, Value: 2.4
South Africa 5.9%
Brazil 15.1%
Philippines 4.7
%
Indonesia 5.2%
Korea (South) 2.6%
Other 16.5
%
Malaysia 32.6%
Mexico 5.8%
AS OF APRIL 30, 1996
4.6.86.8
Thailand 12.4
%
Brazil 12.4
%
Row: 1, Col: 1, Value: 12.4
Row: 1, Col: 2, Value: 6.6
Row: 1, Col: 3, Value: 4.4
Row: 1, Col: 4, Value: 17.7
Row: 1, Col: 5, Value: 8.0
Row: 1, Col: 6, Value: 25.5
Row: 1, Col: 7, Value: 4.1
Row: 1, Col: 8, Value: 4.6
Row: 1, Col: 9, Value: 4.3
Row: 1, Col: 10, Value: 12.4
South Africa 6.6%
India 4.3%
Indonesia 4.6%
Philippines 4.4
%
Korea (South) 4.1%
Other 17.7
%
Malaysia 25.5%
Mexico 8.0%
ASSET ALLOCATION
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 96.6 96.7
Bonds 0.6 0.6
Short-term investments 2.8 2.7
TOP TEN STOCKS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Telebras sponsored ADR 7.7 5.1
(Brazil, Telephone Services)
Hong Leong Bank BHD 3.8 2.6
(Malaysia, Banks)
Malaysian Resources Corp. BHD 3.8 1.7
(Malaysia, Real Estate)
YTL Corp. BHD 3.7 1.7
(Malaysia, Construction)
Industrial Finance Corp. (For. Reg.) 3.1 3.2
(Thailand, Credit & Other Finance)
Hong Leong Credit BHD 2.7 1.7
(Malaysia, Credit & Other Finance)
Arab Malaysian Corp. BHD 2.5 1.7
(Malaysia, Credit & Other Finance)
Hume Industries BHD 2.4 1.5
(Malaysia, Building Materials)
Thai Military Bank Ltd. (For. Reg.) 2.2 2.3
(Thailand, Banks)
Grupo Carso SA de CV Class A-1 2.0 3.2
(Mexico, Tobacco)
TOP TEN MARKET SECTORS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 40.1 39.8
Construction & Real Estate 14.4 9.5
Utilities 14.4 12.3
Basic Industries 7.1 9.9
Nondurables 7.0 7.5
Holding Companies 5.0 5.8
Retail & Wholesale 2.2 3.1
Durables 1.9 2.7
Energy 1.9 0.5
Media & Leisure 1.8 2.5
EMERGING MARKETS
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.5%
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
ARGENTINA - 2.4%
Banco de Galicia Y Buenos Aires SA
sponsored ADR representing
Class B shares 797,506 $ 14,454,796
Central Costanera SA ADR (b) 36,200 1,122,200
Interamericania de Auto Ord. (a) 181,500 813,250
IRSA (Inversiones Y Representa) SA GDR 22,700 692,350
Perez Companc Class B 2,212,710 14,052,957
31,135,553
AUSTRALIA - 0.0%
Overseas & General Ltd. (a) 280,750 51,106
BANGLADESH - 0.1%
Advanced Chemical Industries 26,900 223,267
Beximco Pharmaceuticals Ltd. 98,170 871,851
1,095,118
BERMUDA - 0.6%
AES China Generating Co. Class A (a) 10,000 133,750
Central European Media Class C (a) 21,000 588,000
Credicorp Ltd. 204,488 3,578,540
FPB Bank Holding Co. Ltd. 7,250,000 3,117,644
7,417,934
BRAZIL - 15.1%
Bradesco PN 1,502,925,354 12,813,190
Centrais Electricas Brasileiras SA 46,640,800 15,115,705
Compania Cervejaria Brahma PN
(Pfd. Reg.) (warrants) (a) 1,297,021 126,231
Compania Cervejaria Brahma PN
(Pfd. Reg.) 32,025,648 19,792,007
Compania Cervejaria Brahma ON (Reg.)(a) 130,097 80,401
Compania Paulista de Forca Luz Ord. (a) 34,602,260 3,182,733
Iven SA (a) 2,320,000 1,162,822
Itaubanco PN (Pfd. Reg.) 25,799,000 11,173,289
Itausa Investimentos Itau SA 2,843,900 2,241,907
Karsten PN 1,451,638 19,214
Klabin Industria de Papel e Celulose PN 1,413,887 1,403,567
Lojas Americanas SA 165,754,800 2,605,301
Multicanal Participacoes SA
sponsored ADR 72,000 1,008,000
Perdigao SA Comercio e Industria PDG
(Pfd. shares) 9,292,745 17,364
Perdigao SA Comercio e Industria PDG 427,455 749
Petrobras PN (Pfd. Reg.) (a) 34,900,000 4,517,470
Souza Cruz Industria Comerico 893,600 5,374,645
Telebras sponsored ADR 1,313,400 97,848,300
Telesp PN (Pfd. Reg.) 44,247,308 8,095,859
Telesp ON (a) 1,896,269 322,966
Unibanco PN 154,257,658 4,278,676
Votorantim Celulose E Paper SA
(Pfd. Reg.) 47,768,505 822,875
Votorantim Celulose E Papel SA (rights) (a) 12,163,488 5,919
192,009,190
CANADA - 0.2%
Indochina Goldfields Ltd. (a) 150,000 1,070,268
Indochina Goldfields Ltd. (a)(b) 139,000 991,782
2,062,050
CHILE - 1.8%
Banco Santander Chile SA,
Series A sponsored ADR 182,800 2,582,050
Empresa Nacional de Electricidad SA
sponsored ADR 100,200 1,841,175
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
Enersis SA sponsored ADR 389,900 $ 11,453,313
Madeco SA ADR 39,400 945,600
Santa Isabel SA sponsored ADR 3,400 95,625
Soc Quimica y Minera de Chile ADR 98,000 5,635,000
Vina Concha Stet y Toro SA
sponsored ADR 20,200 404,000
22,956,763
CHINA (PEOPLES REPUBLIC) - 0.5%
China Southern Glass Co. Ltd. Class B 30,000 13,463
Guangdong Electric Power
Development Co. Ltd. Class B 3,169,910 2,193,298
Heilongjiang Electric Power Co. Ltd.
Class B (d) 8,000,000 3,104,000
Inner Mongolia Erdos Cashmere
Products Co. Ltd. Class B (a) 1,203,689 572,956
5,883,717
COLOMBIA - 0.7%
Banc Industrial Colombiano
sponsored ADR 113,000 2,062,250
Banco de Bogota 58,622 357,648
Compania Nacional de Chocolates 130,000 1,092,164
Noel (Industria Alimenticias) 79,337 226,144
Suramericana de Seguros SA 270,000 4,995,749
8,733,955
CROATIA - 0.1%
Pliva DD GDR unit (Reg.) (a) 18,000 882,000
CZECH REPUBLIC - 0.0%
Komercni Banka AS 1,400 103,904
GREECE - 1.2%
Alpha Credit Bank 142,000 9,041,177
Ergo Bank SA (Reg.) 50,000 2,924,853
Hellenic Bottling Co. SA 91,250 2,927,890
14,893,920
HONG KONG - 1.4%
Dao Heng Bank Group Ltd. 100,000 439,720
Dah Sing Financial Holdings Ltd. 500,000 1,768,578
Guoco Group Ltd. 300,000 1,586,870
HSBC Holdings PLC 100,000 2,048,393
International Bank of Asia Ltd. 4,710,000 2,878,191
JCG Holdings Ltd. 1,000,000 931,171
Kumagai Gumi 200,000 184,941
Lai Sun Development Co. Ltd. 1,428,000 1,846,822
Liu Chong Hing Bank Ltd. 200,000 290,991
Liu Chong Hing Investment Ltd. 4,906,000 5,361,437
Magnum International Holdings Ltd. (a) 3,750,000 123,671
Magnum International Holdings Ltd.
(warrants) (a) 250,000 -
17,460,785
HUNGARY - 0.0%
OTP Bank GDR unit 10,000 172,000
Pannonplast Plastic Industries PLC 10,000 326,457
498,457
INDIA - 2.0%
Bharti Telecom Ltd. 14,000 30,040
Bajaj Auto 106,300 2,847,321
Chemplast Sanmar Ltd. (b) 315,000 485,294
Chemplast Sanmar Ltd. 210,000 289,016
Crompton Greaves Ltd. 300,000 1,176,471
COMMON STOCKS - CONTINUED
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
INDIA - CONTINUED
HDFC Bank Ltd. (a) 500 $ 529
Industrial Credit & Investments Corp. Ltd. (a) 3,631,550 6,103,445
Industrial Development Bank of India 365,000 1,068,417
Larsen and Toubro Ltd. 1,400 8,349
Mahindra & Mahindra Ltd. GDR 83,333 791,664
Mahanagar Telephone Nigam Ltd. (a) 531,100 3,351,701
Maral Overseas Ltd. 255,000 142,857
Oriental Bank of Commerce (a) 222,000 423,993
Prime Securities 300,000 260,504
Ranbaxy Laboratories Ltd. 10,250 177,765
Reliance Industries Ltd. 5,997 30,814
SCICI Ltd. 928,100 720,948
Shriram Industrial Enterprises Ltd.
GDR (a)(b) 105,600 79,200
State Bank of India 1,090,000 7,011,200
Tata Engineering & Locomotive Co. Ltd. 11,130 127,962
Zee Telefilms Ltd. 88,300 309,336
25,436,826
INDONESIA - 5.2%
APAC Centertex Corp. PT (For. Reg.) (d) 38,676,000 13,698,424
APAC Centertex Corp. PT
(For. Reg.) (warrants) (a) 5,838,375 501,299
Astra International PT (For. Reg.) 2,637,500 5,491,731
Bank Bali PT:
(For. Reg.) 175,000 360,624
(For. Reg) (warrants) (a) 100,000 44,005
Bank Dagang Nasional Indonesia PT 6,200,000 4,391,882
Bank International Indonesia PT
(For. Reg.) 1,632,385 2,628,022
Bank Niaga PT 1,281,000 3,382,200
Bimantara Citra (For. Reg.) 2,313,500 2,607,197
Matahari Putra Prima PT:
(For. Reg.) 8,971,500 7,799,471
(For. Reg.) (rights) (a) 8,971,500 3,947,881
Panin Bank PT (For. Reg.) 4,214,750 4,206,974
PT Bhuwanatala Indah Permai (For. Reg.)(d) 5,040,000 3,624,269
PT Perdanacipta Multi Finance (For. Reg.)(d) 14,500,000 10,582,590
Super Indah Makmur PT (Loc. Reg.) 2,139,000 2,479,417
SUCACO (PT Supreme Cable
Manufacturing Corp.) (For. Reg.) 75,000 67,617
65,813,603
ISRAEL - 0.3%
Bank Hapoalim BM (a) 600,000 812,963
Elbit Computer Ltd. 7,500 86,250
First International Bank of Israel 17,900 1,862,214
Gilat Satellite Networks Ltd. (a) 5,000 97,500
Koor Industries Ltd. 10,640 915,029
3,773,956
KOREA (SOUTH) - 2.6%
Cho Hung Bank Co. Ltd. 310,174 3,253,588
Chosun Brewery Co. Ltd. (a) 37,348 994,440
Hanchang Co. Ltd. (a) 370 13,210
Han Kook Cosmetics Company 20,000 595,461
Hyundai Fire & Marine Insurance Co. 7,100 332,551
Housing & Commercial Bank (a) 86,300 1,660,720
Hyundai Motor Co. Ltd. 40,000 1,393,476
Korea Mobile Telecommunications Corp. 8,090 8,092,445
Korea Exchange Bank 148,500 1,457,591
Kookmin Bank 142,701 2,735,713
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
LG Insurance Co. Ltd. 26,700 $ 1,970,871
Oriental Fire & Marine Insurance 17,030 496,730
Samsung Electronics Co. Ltd. 6,000 421,906
Suheung Capsule Co. Ltd. 20,000 1,255,552
Shinhan Bank 97,450 1,945,107
Samsung Fire & Marine Insurance 8,195 4,276,772
Yeonab Insupanel 973 16,722
Yukong Ltd. NV GDR (b) 185,932 1,162,075
Yukong Ltd. GDR (b) 11,657 136,145
Youl Chon Chemical Co. 19,000 673,767
32,884,842
MALAYSIA - 32.4%
Arab Malaysian Corp. BHD 7,131,000 31,604,290
Arab Malaysian Finance BHD (For. Reg.) 4,150,666 22,337,485
Advance Synergy BHD 2,340,000 3,685,331
Affin Holdings BHD 5,398,000 13,884,294
Boustead Holdings BHD 3,475,000 7,287,998
Buildcon BHD 966,000 4,739,979
Hlg Capital BHD 4,031,333 13,001,213
Hong Leong Bank BHD 15,769,000 48,359,682
Hong Leong Bank BHD (warrants) (a) 3,931,200 5,257,986
Hospital Pantai BHD (a) 388,000 1,704,246
Hume Industries BHD 4,850,000 30,515,215
Hume Industries BHD (warrants) (a) 1,520 3,500,560
Hong Leong Credit BHD 6,311,000 34,962,606
Industrial Oxygen, Inc. BHD 3,603,000 5,674,467
IOI Corp. BHD (warrants) (a) 750 326
Kamunting Corp. BHD 8,421,000 5,764,841
Leisure Management BHD 1,433,333 5,359,897
Malakoff BHD 497,000 2,242,017
Malaysian Industrial Development
Finance BHD Ord. 1,502,000 2,555,736
Malaysian Plantations BHD 14,072,000 18,487,215
Malaysian Resources Corp. BHD 12,505,000 47,999,089
Multi-Purpose Holdings BHD (rights) (a) 5,706,000 -
Multi-Purpose Holdings BHD 5,706,000 9,754,233
Oyl Industries BHD 456,200 5,054,648
Public Finance BHD (For. Reg.) 4,021,600 6,206,418
Sungei Bagen Rubber Co. BHD 10,000 563,887
TA Enterprise BHD 15,713,000 21,513,584
Tongkah Holdings BHD 2,917,600 5,010,688
United Merchant Group BHD (a) 40,000 59,515
YTL Corp. BHD 8,862,600 47,695,525
YTL Corp. BHD (warrants) (a) 1,726,200 7,923,675
412,706,646
MEXICO - 5.8%
BANACCI SA de CV Class B (a) 2,541,000 5,419,950
Carso Global Telecom, Series A-1 (a) 4,936,885 12,078,953
Cifra SA Class C (a) 3,215,300 4,155,281
Corporacion Geo SA de CV Class B
sponsored ADR (a)(b) 12,700 215,900
Corporacion Geo SA de CV (a) 417,960 1,887,899
Emvasa del Valle de Enah Ord. (a) 1,172,000 749,962
Gruma SA Class B
sponsored ADR (a)(b) 157,500 2,913,750
Grupo Carso SA de CV Class A-1 5,520,000 25,279,799
Grupo Financiero Bancomer Class B (a) 24,153,900 10,334,355
Grupo Modelo SA de CV Class C Ord. 935,300 4,887,735
Grupo Financiero Inbursa SA Class B 1,488,208 4,854,882
Sears Roebuck de Mexico SA de CV (a) 681,000 1,221,870
74,000,336
COMMON STOCKS - CONTINUED
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
PAKISTAN - 0.6%
Adamjee Insurance Ltd. 201,406 $ 453,516
Askari Commercial Bank (a) 41,398 22,976
Askari Leasing Ltd. (a) 384,400 141,309
Bank of Punjab (a) 9,945 3,428
Dandot Cement Co. Ltd. (a) 593,750 67,069
DG Kahn Cement Ltd. (a) 212,865 41,824
Engro Chemical Pakistan Ltd. 4,800 16,407
Fauji Fertilizer Co. Ltd. (a) 850,000 1,664,800
First Grindlays Modarba 490 118
Hub Power Co. Ltd. GDR (a) 102,600 2,077,650
Ibrahim Energy Ltd. (a) 296,250 57,284
Maple Leaf Cement Factory Ltd. (a) 270,000 69,050
Maple Leaf Cement Factory Ltd. (rights) (a) 108,000 674
Muslim Commercial Bank Ltd. (a) 61,065 57,896
Pakland Cement Ltd. (a) 30,000 8,252
Pakistan State Oil Co. Ltd. 196,932 1,700,066
PEL Appliances Ltd. (a) 9,900 12,350
Sunflo Cit-Russ Ltd. (a) 100 12
Sui Southern Gas Pipelines Ltd. (a) 956,754 798,012
Trust Leasing Corp. Ltd. (a) 20,666 2,552
Union Bank Ltd. (a) 71,850 16,519
7,211,764
PERU - 0.7%
Banco Wiese Ltd. 209,720 317,326
Banco Wiese Ltd. sponsored ADR 342,518 1,798,220
Compania de Minas Buenaventura SA:
Class A 83,863 651,707
Class B (a) 20,966 178,140
Class B sponsored ADR (a) 363,700 6,091,975
Class T 58,331 454,880
9,492,248
PHILIPPINES - 4.6%
Aboitiz Equity Ventures, Inc. (a) 21,049,080 2,523,006
Aboitiz Equity Ventures, Inc. (a)(b) 1,955,720 234,418
Ayala Corp. Class B 128,829 122,554
Ayala Land, Inc. Class B 139,765 148,912
Belle Resources Corp. (a) 1,000,000 266,362
Centennial City, Inc. 14,814,200 2,029,342
Guoco Holdings Philippines, Inc. 49,268,000 9,373,671
House of Investments, Inc. 9,118,000 1,283,737
JG Summit Holdings, Inc. Class B 100,000 27,778
Lepanto Consolidated Mining Co. (a) 72,170,000 906,246
Liberty Telecoms Holdings, Inc. (a) (d) 91,427,000 4,174,749
Liberty Telecoms Holdings, Inc. (a)(b) 20,919,000 955,205
Megaworld Properties & Holdings, Inc. (a) 23,073,200 8,779,756
Metro Pacific, Inc. Class B 31,268,366 7,614,823
Mondragon International
Philippines, Inc. (a) 8,869,000 4,893,474
Negros Navigation Co. (a) 1,000,000 78,387
PICOP Resources (a) (d) 28,146,900 5,033,882
Private Development Corp. of the
Philippines (a) 1,496,000 1,166,971
Robinson's Land Corp. (a) 46,799,000 8,547,762
Sanitary Wares Manufacturing Corp. (a) 119,000 9,056
SM Prime Holdings, Inc. (a) 286,000 60,944
Steniel Manufacturing Corp. 1,030,750 73,737
United Paragon Mining Corp. (a) 4,500,000 1,027
58,305,799
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
POLAND - 0.2%
Bank Slaski SA 6,000 $ 554,135
BRE (Bank Rozwoju Eksportu) 40,000 1,186,417
Wedel SA 15,000 745,951
2,486,503
PORTUGAL - 0.0%
CIN 8,750 283,306
Mague (Constru Metalom) 1,586 31,513
Unicer (Uniao Cervejeira) SA 10,000 179,805
494,624
SINGAPORE - 1.7%
ABR Holdings Ltd. 2,200,000 2,747,073
Amcol Holdings Ltd. 50,000 66,690
Asiamatrix Ltd. (a) (d) 1,670,000 1,504,718
Focal Finance Ltd. 263,200 485,506
Focal Finance Ltd. (warrants) (a) 78,960 23,528
Hong Leong Finance Ltd. (warrants) (a) 424,600 239,487
Keppel Finance Ltd. (warrants) (a) 212,000 99,269
Kim Engineering Holdings Ltd. 500,000 400,851
L&M Group Investments Ltd. 7,150,000 8,623,626
Overseas Union Trust Ltd. (For. Reg.) 1,047,200 1,634,509
Overseas Union Trust Ltd.
(For. Reg.) (rights) (a) 119,000 73,452
Singapore Finance Ltd. 204,480 293,047
Tat Lee Finance Ltd. 1,042,000 1,271,543
Tat Lee Finance Ltd. (warrants) (a) 494,023 192,772
United Pulp & Paper Co. Ltd. 3,450,000 4,136,573
Van Der Horst Ltd. 62,000 228,734
22,021,378
SOUTH AFRICA - 5.9%
Amalgamated Banks of South Africa Ltd. 662,991 3,374,970
Anglo American Coal Corp. Ltd. 307 22,821
Anglovaal Ltd. Class N (b) 72,600 2,226,709
Barlow Rand Ltd. Ord. 20,000 174,228
Cashbuild Ltd. (a) 10,000 10,437
Centenary Depositary AG unit 120,000 3,539,936
Energy Africa Ltd. (a) 637,418 1,873,561
First National Bank Holdings Ltd. 80,000 438,765
Fedsure Holdings Ltd. 316,700 2,097,842
Gencor Ltd. (Reg.) 840,000 2,916,294
Liberty Life Association of Africa Ltd. 531,406 14,516,042
Metropolitan Life Ltd. 248,100 4,227,476
Nedcor Ltd. 472,684 6,896,455
Nedcor Ltd. (warrants) (b) 85,000 233,750
Nedcor Ltd. GDR (b) 100,722 1,410,108
Polifin Ltd. 45,702 77,289
Rembrandt Group Ltd. 848,600 7,410,564
Sage Group Ltd. 30,778 117,999
Sasol Ltd. 1,270,900 15,497,130
Smith (CG) Ltd. 20,000 96,273
South African Breweries Ltd.
Sponsored ADR 5,105 130,816
South African Breweries Ltd. 204,306 5,308,910
Southern Life Association Ltd., (The) 256,515 2,772,766
Standard Bank Investment Corp. 5,000 191,693
75,562,834
SRI LANKA - 0.2%
Aitken Spence & Co. Ltd. 95,000 216,477
Asia Capital Ltd. (a) 90,310 11,477
Development Finance Corp. of Ceylon 289,288 1,394,465
COMMON STOCKS - CONTINUED
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
SRI LANKA - CONTINUED
John Keells Holdings Ltd. (a) 98,857 $ 315,372
John Keells Holdings Ltd. GDR 88,571 464,998
Lanka Tiles Ltd. (a) 89,000 28,081
National Development Bank 196,600 671,989
Sampath Bank Ltd. 90,000 72,568
3,175,427
SWITZERLAND - 0.2%
Financiere Richemont AG unit 165,000 2,539,137
THAILAND - 9.2%
Ayudhya Life Assurance Co. (For. Reg.) 7,500 29,394
Ayudhya Insurance Co. 291,000 2,007,290
Bangkok Bank Ltd. (For. Reg.) 365,700 3,898,507
Bangkok Union Insurance Co. Ltd.
(For. Reg.) 50,000 84,264
Bumrungrad Hospital PCL (For. Reg.) 75,000 52,910
Berli Jucker PCL 55,000 204,782
Charan Insurance PCL (For. Reg.) 317,300 851,854
Deves Insurance Co. Ltd. 60,000 164,609
Industrial Finance Corp. (For. Reg.) 13,246,866 38,938,466
Kiatnakin Finance & Securities PCL
(warrants) (a) 24,516 24,742
Krung Thai Bank Ltd. (For. Reg.) 5,392,910 14,795,363
Nithipat Capital PCL 1,015,300 1,392,730
Nithipat Capital PCL (For. Reg.)
(warrants) (a) 160,866 115,062
Pacific Insurance PCL 66 123
Phatra Insurance PCL (For. Reg.) 26,000 175,269
Property Perfect PCL (For. Reg.)
(warrants) (a) 4,444 1,568
S Khon Kaen Food Industry PCL
(For. Reg.) 30,700 87,835
Safety Insurance PCL (For. Reg.) (a) 363,200 341,634
Siam City Bank PCL (For. Reg.) 10,352,650 11,868,117
Siam Commercial Life Assurance
(For. Reg.) 215,100 160,176
Thai Farmers Bank PCL 1,696,800 12,967,901
Thai Farmers Bank PCL (For. Reg.)
(warrants) (a) 123,987 -
Thai Military Bank Ltd. (For. Reg.) 12,181,260 28,167,523
Thai Reinsurance Co. Ltd. (For. Reg.) 340,000 1,066,040
Tong Hua Daily News Co. Ltd. (For. Reg.) 657,500 521,825
117,917,984
TURKEY - 0.4%
Akbank 28,650,000 3,493,289
Aksigorta (b) 1,385,250 44,562
Altinyildiz Mensucat Ve Konfeksiyon
Fabrikalari AS 1,080,000 165,306
Anadolu Anonim Turk Sigoria SK 17,294,000 681,947
Bossa Ticaret Ve Sanayi
Isletmeleri (b) 1,500,000 130,750
Turkiye Garanti Bankasi AS 9,034,312 449,995
4,965,849
UNITED KINGDOM - 0.0%
Bakyrchik Gold PLC (a) 85,000 262,761
VENEZUELA - 0.4%
Electricidad de Caracas 2,683,970 2,940,129
Mavesa SA sponsored ADR (b) 408,975 2,453,850
5,393,979
TOTAL COMMON STOCKS
(Cost $1,135,475,836) 1,229,630,948
CONVERTIBLE PREFERRED STOCKS - 0.1%
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
PHILIPPINES - 0.1%
PDCP Development Bank (a)
(Cost $859,496) 2,252,138 $ 856,978
CONVERTIBLE BONDS - 0.6%
(% OF FUND'S INVESTMENTS)
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (C)
MALAYSIA - 0.2%
Arab Malaysia Corp. BHD
5%, 5/02/02 - $ 500,000 308,654
Arab Malaysian Finance BHD
unsecured 7 1/2%, 11/20/99
(For. Reg.) - 3,242,666 2,335,346
Hospital Pantai BHD
5% 9/22/01 - 388,000 515,880
3,159,880
NETHERLANDS - 0.4%
Liblife International NV euro
6 1/2%, 9/30/04 - 4,500,000 5,310,000
TOTAL CONVERTIBLE BONDS
(Cost $7,165,564) 8,469,880
CASH EQUIVALENTS - 2.8%
(% OF FUND'S INVESTMENTS)
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 35,174,412 35,169,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,178,669,896) $1,274,126,806
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 $14,795,698 or 1.2% of net
assets.
(c) Principal amount is stated in U.S. dollars unless otherwise noted.
(d) An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions during the period with
companies which are or were affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
APAC Centertex Corp. PT (For. Reg.). $ 14,204,184 $ 192,528 $ 7,101 $
13,698,424
Asiamatrix Ltd. 539,120 - - 1,504,718
Askari Leasing Ltd. - 630,159 - -
China First Pencil Co. Ltd. Class B 797,956 899,488 - -
DG Kahn Cement Ltd. - - - -
Guoco Holdings Philippines, Inc. - - - -
Heilongjiang Electric Power Co. Ltd. Cl. B 758,953 - - 3,104,000
Liberty Telecoms Holdings, Inc. 829,093 - - 4,174,749
Malaysian Plantations BHD - - - -
PICOP Resources 714,390 1,605,574 - 5,033,882
PT Bhuwanatala Indah Permai (For. Reg.) - - - 3,624,269
PT Perdanacipta Multi Finance (For. Reg.) 901,664 - - 10,582,590
Shanghai Hero Ltd. Class B - 515,320 - -
Shanghai Refrigerator Compressor
Co. Class B - 135,804 - -
Shanghai Vacuum Electron
Devices Co. Ltd. - - - -
Sunflo Cit-Russ Ltd. - 999,650 - -
Transmarco Ltd. - 720,149 - -
TOTALS $ 18,745,360 $ 5,698,672 $ 7,101 $ 41,722,632
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,054,322,797 and $991,197,520, 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 $29,103 for the period.
The fund participated in the interfund lending program as a borrower. The
maximum loan and the average daily loan balance during the period for which
the loan was outstanding amounted to $4,468,000. The weighted average
interest rate was 5.7% (see Note 5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $1,186,179,852. Net unrealized appreciation aggregated
$87,946,954, of which $219,478,731 related to appreciated investment
securities and $131,531,777 related to depreciated investment securities.
For the period, interest and dividends from foreign countries were
$29,335,639. Taxes accrued or paid to foreign countries were $3,772,439.
At October 31, 1996, the fund has a capital loss carryforward of
approximately $116,433,000, of which $11,421,000 and $105,012,000 will
expire on September 30, 2002 and 2004, respectively.
The fund intends to elect to defer to its taxable year ending September 30,
1997 approximately $22,403,000 of losses recognized during the period
October 1, 1995 to September 30, 1996.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
Basic Industries 7.1%
Cash Equivalents 2.8
Construction & Real Estate 14.4
Durables 1.9
Energy 1.9
Finance 40.1
Health 0.4
Holding Companies 5.0
Media & Leisure 1.8
Nondurables 7.0
Precious Metals 0.8
Retail & Wholesale 2.2
Services 0.1
Technology 0.1
Utilities 14.4
100.0%
EMERGING MARKETS
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at $ 1,274,126,806
value (including repurchase agreements of $35,169,000)
(cost $1,178,669,896) -
See accompanying schedule
Foreign currency held at value New Taiwan dollars (cost $5,000,000) 4,992,193
Receivable for investments sold 9,064,894
Receivable for fund shares sold 961,487
Dividends receivable 3,142,945
Interest receivable 24,375
Redemption fees receivable 351
TOTAL ASSETS 1,292,313,051
LIABILITIES
Payable to custodian bank $ 7,380
Payable for investments purchased 22,169,603
Payable for fund shares redeemed 5,297,055
Accrued management fee 835,484
Other payables and 839,750
accrued expenses
TOTAL LIABILITIES 29,149,272
NET ASSETS $ 1,263,163,779
Net Assets consist of:
Paid in capital $ 1,319,693,034
Distributions in excess of net investment income (1,970,323)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (149,937,383)
Net unrealized appreciation (depreciation) on investments 95,378,451
and assets and liabilities in
foreign currencies
NET ASSETS, for 76,044,028 $ 1,263,163,779
shares outstanding
NET ASSET VALUE and redemption price per share ($1,263,163,779 (divided by) 76,044,028 shares) $16.61
Maximum offering price per share (100/97.00 of $16.61) $17.12
</TABLE>
STATEMENT OF OPERATIONS
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME $ 28,928,441
Dividends (including $7,101 received from affiliated issuers)
Interest 1,847,115
30,775,556
Less foreign taxes withheld (3,772,439
)
TOTAL INCOME 27,003,117
EXPENSES
Management fee $ 10,054,929
Transfer agent fees 4,078,175
Accounting fees and expenses 671,062
Non-interested trustees' compensation 5,032
Custodian fees and expenses 2,246,500
Registration fees 87,054
Audit 80,499
Legal 17,793
Interest 713
Miscellaneous 26,259
Total expenses before reductions 17,268,016
Expense reductions (92,855 17,175,161
)
NET INVESTMENT INCOME 9,827,956
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including (11,819,086
realized loss of $1,516,121 )
on sales of investments in
affiliated issuers)
Foreign currency transactions (1,163,584 (12,982,670
) )
Change in net unrealized appreciation (depreciation) on:
Investment securities 124,820,660
Assets and liabilities in foreign currencies (12,328 124,808,332
)
NET GAIN (LOSS) 111,825,662
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 121,653,618
OTHER INFORMATION $ 2,179,378
Sales charges paid to FDC
Expense reductions $ 76,584
Directed brokerage arrangements
Custodian interest credits 4,578
Transfer agent interest credits 11,693
$ 92,855
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 9,827,956 $ 6,340,874
Net investment income
Net realized gain (loss) (12,982,670) (108,431,665)
Change in net unrealized appreciation (depreciation) 124,808,332 (290,729,259)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 121,653,618 (392,820,050)
Distributions to shareholders (12,640,733) (3,891,795)
From net investment income
In excess of net investment income (6,384,938) -
(19,025,671) (3,891,795)
Share transactions 640,979,260 402,587,670
Net proceeds from sales of shares
Reinvestment of distributions 18,581,507 3,798,329
Cost of shares redeemed (595,850,851) (892,234,446)
Redemption fees 1,242,758 1,772,044
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 64,952,674 (484,076,403)
TOTAL INCREASE (DECREASE) IN NET ASSETS 167,580,621 (880,788,248)
NET ASSETS
Beginning of period 1,095,583,158 1,976,371,406
End of period (including under (over) distribution of net investment income of $(1,970,323) $ 1,263,163,779 $ 1,095,583,158
and $2,812,777, respectively)
OTHER INFORMATION
Shares
Sold 38,644,131 25,937,062
Issued in reinvestment of distributions 1,242,911 218,179
Redeemed (36,185,962) (56,461,457)
Net increase (decrease) 3,701,080 (30,306,216)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31,
SELECTED PER-SHARE DATA 1996 1995 1994 C 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.14 $ 19.25 $ 16.18 $ 11.05 $ 10.40
Income from Investment Operations
Net investment income .12 F .05 .06 .06 F .08
Net realized and unrealized gain (loss) 1.60 (4.13) 2.97 5.28 .76
Total from investment operations 1.72 (4.08) 3.03 5.34 .84
Less Distributions
From net investment income (.18) (.04) (.04) (.08) (.08)
In excess of net investment income (.09) - (.01) - -
From net realized gain - - - (.15) (.14)
Total distributions (.27) (.04) (.05) (.23) (.22)
Redemption fees added to paid in capital .02 .01 .09 .02 .03
Net asset value, end of period $ 16.61 $ 15.14 $ 19.25 $ 16.18 $ 11.05
TOTAL RETURN A, B 11.69% (21.17)% 19.32% 49.58% 8.56%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,263,164 $ 1,095,583 $ 1,976,371 $ 757,737 $ 13,732
Ratio of expenses to average net assets 1.30% 1.28% 1.52% 1.91% 2.60%
G
Ratio of expenses to average net assets after expense reductions 1.29% D 1.28% 1.52% 1.91% 2.60%
Ratio of net investment income to average net assets .74% .46% .39% .44% .90%
Portfolio turnover rate 77% 78% 107% 57% 159%
Average commission rate E $ .0017
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS). B TOTAL
RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. C EFFECTIVE
NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND
FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN, AND
RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A
RESULT, NET INVESTMENT INCOME PER
SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES. D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 7 OF NOTES
TO FINANCIAL STATEMENTS). E FOR FISCAL YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS
WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
F NET INVESTMENT
INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. G LIMITED IN ACCORDANCE WITH A STATE
EXPENSE LIMITATION.
</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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). The fund has a 3% sales charge. If
Fidelity had not reimbursed certain fund expenses, the past 5 years and
past 10 years total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
OCTOBER 31, 1996 YEAR YEARS YEARS
EUROPE 20.14% 90.59% 221.91%
EUROPE (INCL. 3% SALES CHARGE) 16.54% 84.87% 212.25%
Morgan Stanley Capital 17.47% 82.41% 214.00%
International Europe Index
European Region Funds Average 17.03% 77.62% 167.39%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or 10 years. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, the value of your investment would be $1,050. You can compare
the fund's returns to the performance of the Morgan Stanley Capital
International Europe Index - a market capitalization weighted index of over
550 stocks traded in 14 European markets. To measure how the fund's
performance stacked up against its peers, you can compare it to the
European region funds average, which reflects the performance of 43 mutual
funds with similar objectives tracked by Lipper Analytical Services, Inc.
over the past 12 months. 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 PAST 10
OCTOBER 31, 1996 YEAR YEARS YEARS
EUROPE 20.14% 13.77% 12.40%
EUROPE (INCL. 3% SALES CHARGE) 16.54% 13.08% 12.06%
Morgan Stanley Capital 17.47% 12.77% 12.12%
International Europe Index
European Region Funds Average 17.03% 12.03% 10.23%
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 10 YEARS
IMAHDR PRASUN SHR__CHT 19961031 19961108 151107 S00000000000001
Europe MS Europe Index
00301 MS002
1986/10/31 9700.00 10000.00
1986/11/30 10088.39 10535.65
1986/12/31 10496.20 10800.00
1987/01/31 11574.64 11278.26
1987/02/28 12313.24 11680.35
1987/03/31 12935.21 12257.39
1987/04/30 13469.73 12737.20
1987/05/31 13693.25 12666.33
1987/06/30 14247.20 13027.39
1987/07/31 15267.63 13466.09
1987/08/31 15588.34 13577.60
1987/09/30 16152.01 13666.09
1987/10/31 11749.57 11067.83
1987/11/30 11224.77 10580.70
1987/12/31 12060.56 11196.17
1988/01/31 11487.17 10736.87
1988/02/29 11545.48 11368.70
1988/03/31 12079.99 11681.46
1988/04/30 12420.14 11899.13
1988/05/31 12284.08 11676.52
1988/06/30 12011.96 11558.75
1988/07/31 11885.63 11584.64
1988/08/31 11263.65 11058.78
1988/09/30 11788.44 11660.63
1988/10/31 12595.07 12740.57
1988/11/30 12750.56 12897.69
1988/12/31 12764.59 12966.96
1989/01/31 13370.53 13436.52
1989/02/28 13400.33 13283.95
1989/03/31 13628.80 13380.23
1989/04/30 14214.88 13751.60
1989/05/31 13827.47 13046.96
1989/06/30 14204.95 13585.25
1989/07/31 15476.44 15184.35
1989/08/31 15357.24 14994.68
1989/09/30 16052.58 15252.17
1989/10/31 14940.03 14252.17
1989/11/30 15814.18 15043.48
1989/12/31 16891.72 16662.70
1990/01/31 17102.74 16618.05
1990/02/28 16660.60 16219.84
1990/03/31 17163.03 16448.70
1990/04/30 16821.38 16012.17
1990/05/31 17856.38 17315.34
1990/06/30 18599.98 17923.48
1990/07/31 19725.43 18678.26
1990/08/31 17374.05 16826.33
1990/09/30 15655.74 14844.68
1990/10/31 16359.14 16095.65
1990/11/30 16339.04 16257.39
1990/12/31 16116.22 16022.61
1991/01/31 16435.04 16561.74
1991/02/28 17432.67 18010.43
1991/03/31 16496.75 16801.74
1991/04/30 16455.61 16626.09
1991/05/31 16527.61 17116.52
1991/06/30 15077.46 15680.00
1991/07/31 15838.53 16765.22
1991/08/31 16157.36 17071.30
1991/09/30 16743.59 17584.35
1991/10/31 16383.62 17213.91
1991/11/30 15889.95 16808.70
1991/12/31 16786.68 18123.48
1992/01/31 16861.09 18118.26
1992/02/29 17063.09 18187.83
1992/03/31 16478.37 17551.30
1992/04/30 17562.75 18520.00
1992/05/31 18423.88 19573.91
1992/06/30 18253.78 19209.39
1992/07/31 17594.65 18523.10
1992/08/31 17647.80 18462.70
1992/09/30 17371.39 18157.34
1992/10/31 16074.38 16890.43
1992/11/30 16063.75 16882.19
1992/12/31 16363.07 17269.48
1993/01/31 16276.38 17298.49
1993/02/28 16373.91 17496.40
1993/03/31 17446.72 18396.47
1993/04/30 18021.05 18802.21
1993/05/31 18237.78 19004.49
1993/06/30 17728.46 18726.85
1993/07/31 17739.30 18791.13
1993/08/31 19180.55 20440.07
1993/09/30 19158.88 20376.57
1993/10/31 19971.61 21225.46
1993/11/30 19581.50 20767.29
1993/12/31 20808.06 22326.45
1994/01/31 22309.90 23463.44
1994/02/28 21787.52 22632.50
1994/03/31 21178.08 21991.93
1994/04/30 21787.52 22902.59
1994/05/31 20949.54 21929.04
1994/06/30 20699.23 21698.80
1994/07/31 21646.05 22836.03
1994/08/31 22331.67 23560.33
1994/09/30 22026.95 22626.09
1994/10/31 23049.94 23611.76
1994/11/30 22190.19 22707.32
1994/12/31 22109.84 22836.40
1995/01/31 21634.47 22657.62
1995/02/28 22021.40 23170.97
1995/03/31 22552.03 24246.23
1995/04/30 23314.82 25021.62
1995/05/31 23779.13 25533.93
1995/06/30 24453.48 25774.64
1995/07/31 25547.91 27118.12
1995/08/31 25061.50 26069.79
1995/09/30 26166.99 26857.32
1995/10/31 25990.11 26730.47
1995/11/30 25824.29 26920.54
1995/12/31 26274.24 27773.65
1996/01/31 26354.84 27955.22
1996/02/29 27321.99 28464.49
1996/03/31 27989.78 28804.85
1996/04/30 28415.79 29013.27
1996/05/31 29233.26 29237.46
1996/06/30 29544.13 29559.39
1996/07/31 28979.96 29189.13
1996/08/31 29958.62 30055.30
1996/09/30 30465.22 30687.70
1996/10/31 31213.61 31400.14
IMATRL PRASUN SHR__CHT 19961031 19961108 151110 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Europe Fund
on October 31, 1986 and the 3% sales charge was paid. As the chart shows,
by October 31, 1996, the value of the investment would have grown to
$31,225 - a 212.25% increase on the initial investment. For comparison,
look at how the the Morgan Stanley Capital International Europe Index did
over the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $31,400 - a 214.00%
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.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
EUROPE
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Sally Walden, Portfolio Manager of
Fidelity Europe Fund
Q. HOW DID THE FUND PERFORM, SALLY?
A. It has done pretty well. For the 12-month period ending October 31,1996,
the fund returned 20.14%. For comparison purposes, the Morgan Stanley
Capital International Europe Index had a return of 17.47% over the same
period. The European region funds average, as tracked by Lipper Analytical
Services, had a 12-month return of 17.03% as of October 31, 1996.
Q. WHAT FACTORS INFLUENCED EUROPEAN STOCK MARKETS DURING THE PAST 12
MONTHS?
A. European stock markets have been among the best-performing markets over
the last 12 months. This has been true despite weaker-than-expected
economic growth, which has adversely affected profits growth. In fact,
estimates of profits growth have been revised down throughout most of the
period. However, the weak economic environment has meant that interest
rates have fallen to very low levels, and this has been positive for stock
markets. For example, in Switzerland the discount rate is currently 1.0%,
and in Germany it is 3.0%, while interest rates in Sweden have been cut 20
times this year. These low interest rates have encouraged investors to
shift their investments into equities in order to enhance returns. The one
notable exception has been the United Kingdom, where economic growth has
been accelerating. Interest rates in the U.K. were recently raised by a
quarter of a percent to 6.0%. Another factor that has been favorable for
equities is the sharp decline in bond yields to levels not seen since the
beginning of the year. Again, this has encouraged investors to shift into
equities. Other positive factors include a stronger U.S. stock market,
continued merger and takeover activity, and companies announcing moves to
restructure their businesses to become more profitable.
Q. HAS THERE BEEN MUCH DIFFERENCE IN PERFORMANCE AMONG THE DIFFERENT
MARKETS?
A. Most markets in Europe performed well during the period. The U.S. dollar
strengthened against many European currencies over the year and, though
this resulted in reduced returns for dollar-based investors, total returns
were still very attractive. The best-performing markets were Spain and
Sweden, with each returning around 30%. The U.K. and France returned just
over 20%, while Germany rose about 15%. The laggard was Italy, which posted
a return under 10%.
Q. WHICH HOLDINGS HELPED THE PORTFOLIO PERFORM WELL?
A. One of the holdings within the portfolio that performed well was
Securitas, Europe's leading security services business. A combination of
strong growth within its existing businesses and several well-chosen
acquisitions were viewed positively by investors. Kuoni Reisen, a
Swiss-based travel-related company, also performed well thanks to a
positive business environment and its achievements in turning around a
number of unprofitable operations. Kuoni Reisen is also one of the
companies becoming increasingly open with its shareholders - a trend that
investors have greeted warmly. The French media company, Canal Plus, also
contributed to the portfolio's strong performance. The recent launch of its
digital satellite service surprised many with the number of new subscribers
it attracted. Such developments have transformed the company from the
French niche player of a year ago to the pan-European pay-TV operator we
see today.
Q. HAVE THERE BEEN ANY DISAPPOINTMENTS?
A. The performance of a number of technology companies was disappointing
early on in the period, as the sector as a whole suffered. Companies such
as Nokia and SGS Thomson were affected by the volatility in technology
stocks seen around the world - and I subsequently sold the holdings in
these companies. Quick Restaurants, operator of fast-food outlets in
France, Belgium and Luxembourg, was hit by the uncertainty over "mad cow"
disease, which led to a slump in demand for hamburgers.
Q. CAN YOU DESCRIBE SOME OF THE LARGEST HOLDINGS?
A. A number of the larger companies in the portfolio are well-known
blue-chip names. They include: Sandoz, a Swiss pharmaceutical company that
is merging with Ciba-Geigy and will be renamed Novartis; British Petroleum,
Shell Transport & Trading and Total, all multinational oil companies;
Glaxo, a U.K.-based pharmaceutical company; Bayer, a German chemical
company that is creating shareholder value; Kuoni Reisen; Lloyds TSB, a
U.K. bank going through a cost-cutting process with a strong position in
the sector; and Granada Group, which has a strong position in the U.K.
media sector and recently acquired a chain of hotels.
Q. HOW IS THE FUND INVESTED?
A. The fund has remained underweighted in cyclical or economy-sensitive
companies due to their volatile nature. In addition, cyclical industries
may find it difficult to produce strong profit growth given the slow growth
environment likely to persist in Europe.The cyclical stocks held in the
portfolio tend to have managements with proven track records in both good
times and bad. Such companies also have a strong position in their
respective industries. In terms of sector weightings, media remains a
significant part of the portfolio. Holdings include French, British and
Swedish TV companies, as well as newspaper publishers across the continent.
I've also invested in a number of multinational drug companies, as well as
a drug distribution company. Retailing is another large sector weighting,
including U.K. food and clothing retailers. Finally, the finance sector is
the largest concentration in the portfolio. Holdings include banks,
particularly Nordic banks, financial services companies and insurance
companies. Generally speaking, the portfolio is biased towards medium-sized
growth companies. This sector of the European market tends to be
under-researched and, therefore, one can find more valuation anomalies and,
hence, attractive investment opportunities.
Q. WHAT IS THE OUTLOOK FOR EUROPEAN STOCK MARKETS?
A. We expect some recovery in economic growth over the coming year. We have
already seen growth pick up in the U.K., the Netherlands and Norway, and
there is more evidence that a modest recovery is occurring in Germany.
Growth should be stimulated by low interest rates, a stronger U.S. dollar -
which makes exports from Europe more attractive - and stronger growth
outside Europe. However, growth is expected to be gradual rather than
robust given the spending cuts many European governments are making in
their budgets. Inflation is unlikely to be a problem, and so interest rates
should remain low for some time. We are beginning to see signs that profits
growth estimates are no longer being revised down, which is positive for
equities. On the corporate front, there are also some positive
developments. There is a movement among some company managements to create
more value for their shareholders by selling off unprofitable or non-core
businesses and cutting costs. In addition, laws are changing to allow
companies to buy back their own shares, another positive development for
the stock markets.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Western
European issuers
FUND NUMBER: 301
TRADING SYMBOL: FIEUX
START DATE: October 1, 1986
SIZE: as of October 31, 1996, more than
$691 million
MANAGER: Sally Walden, since 1992; also
manages various funds for non-U.S. investors;
joined Fidelity in 1984
(checkmark)
SALLY WALDEN ON CURRENT TRENDS IN WESTERN
EUROPEAN ECONOMIES AND STOCK MARKETS:
"One factor that has had a major influence on
European economies and stock markets is the
European Monetary Union (EMU). Its influence on
economies can be seen in slow growth, a weaker
deutsche mark and sharply lower bond yields in the
peripheral markets, with Spanish and Italian bond
yields now below those in the U.K. The political will
in Europe to forge ahead with the introduction of a
single European currency is so great that many
market commentators now believe it is inevitable.
"EMU has forced governments to restrict their
spending, which is likely to continue in the years to
come. Therefore, economic growth should remain
modest. On the positive side, slower spending
means inflationary pressures should remain benign,
which in turn means interest rates and bond yields
should remain relatively low. This is a good
environment for the stock market.
"In this economic environment, corporations are
likely to experience modest sales growth and limited
pricing power. Therefore, companies will have to
look at the operating efficiency of each part of their
business in order to generate higher profits growth.
For those companies willing to do this, the rewards
are likely to be found in an improvement in
competitiveness and a better quality of earnings. For
investors, rewards should come from identifying
those companies changing their structures and
operations to compete in this new environment.
"Fidelity's European investment research department
is located in London. In the last three years, we
have trebled our investment research department.
There are 44 equity analysts, 35 of whom cover
sectors on a pan-European basis. Analysts are
organized in this way so as to identify the most
attractive "European" companies in their respective
sectors - not just in their domestic market. Fidelity
covers 1,850 companies in Europe and owns 1,200
securities.
"These resources, coupled with an extensive
coverage of companies, should enable us to identify
those companies that are in a strong position to
prosper in the competitive environment which we
foresee."
EUROPE
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENT)
(% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
United States 7.2%
France 11.2%
Row: 1, Col: 1, Value: 7.2
Row: 1, Col: 2, Value: 33.4
Row: 1, Col: 3, Value: 9.5
Row: 1, Col: 4, Value: 9.9
Row: 1, Col: 5, Value: 3.9
Row: 1, Col: 6, Value: 10.7
Row: 1, Col: 7, Value: 4.7
Row: 1, Col: 8, Value: 3.0
Row: 1, Col: 9, Value: 6.5
Row: 1, Col: 10, Value: 11.2
Germany 6.5%
United Kingdom 33.4%
Italy 3.0%
Netherlands 4.7%
Other 10.7%
Spain 3.9%
Switzerland 9.5%
Sweden 9.9%
AS OF APRIL 30, 1996
United States 9.5%
France 11.5%
Row: 1, Col: 1, Value: 9.5
Row: 1, Col: 2, Value: 31.8
Row: 1, Col: 3, Value: 8.199999999999999
Row: 1, Col: 4, Value: 9.199999999999999
Row: 1, Col: 5, Value: 4.6
Row: 1, Col: 6, Value: 11.9
Row: 1, Col: 7, Value: 6.0
Row: 1, Col: 8, Value: 7.3
Row: 1, Col: 9, Value: 11.5
United Kingdom 31.8%
Germany 7.3%
Netherlands 6.0%
Other 11.9%
Spain 4.6%
Switzerland 8.2%
Sweden 9.2%
ASSET ALLOCATION
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 93.0 91.2
Bonds 0.1 0.1
Short-term investments 6.9 8.7
TOP TEN STOCKS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENT INVESTMENTS
S 6 MONTHS
AGO
Sandoz AG (Reg.) 2.6 1.7
(Switzerland, Drugs & Pharmaceuticals)
British Petroleum PLC Ord. 2.5 1.0
(United Kingdom, Oil & Gas)
Shell Transport & Trading Co. PLC (Reg.) 2.1 0.0
(United Kingdom, Oil & Gas)
Canal Plus SA 1.9 2.0
(France, Broadcasting)
Total SA Class B 1.7 0.6
(France, Oil & Gas)
Glaxo Holdings PLC 1.6 0.0
(United Kingdom, Drugs & Pharmaceuticals)
Bayer AG 1.5 1.5
(Germany, Chemicals & Plastics)
Lloyds TSB Group PLC 1.5 0.7
(United Kingdom, Banks)
Kuoni Reisen Holding AG Class B (Reg.) 1.5 1.9
(Switzerland, Entertainment)
Skandia Foersaekrings AB 1.3 1.3
(Sweden, Insurance)
TOP TEN MARKET SECTORS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENT INVESTMENTS
S 6 MONTHS
AGO
Finance 23.1 21.5
Media & Leisure 13.1 15.4
Health 12.5 10.1
Energy 7.2 2.4
Retail & Wholesale 6.6 6.0
Utilities 5.2 5.8
Services 4.7 5.0
Durables 4.6 5.4
Construction & Real Estate 4.3 3.7
Nondurables 3.9 5.1
EUROPE
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.8%
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
BELGIUM - 1.3%
Generale de Banque SA 15,862 $ 5,528,333
Quick Restaurants SA 46,745 3,116,383
8,644,716
BERMUDA - 0.4%
Bona Shipholdings Ltd. (a) 203,570 2,608,607
DENMARK - 2.9%
Den Danske Bank Group AS 45,000 3,218,034
International Service Systems AS,
Series B 135,000 3,819,968
Kobenhaven Lufthave AS 34,230 3,551,439
Novo-Nordisk AS Class B 22,300 3,701,880
Unidanmark AS Class A 115,310 5,299,609
19,590,930
FINLAND - 1.4%
Cultor OY Ord., Series 2 64,900 2,940,462
KCI (Konecranes International) (a) 122,500 3,367,827
Spontel OY Class A 463,700 3,365,540
9,673,829
FRANCE - 11.2%
Axa SA 92,857 5,786,347
BIC 20,620 3,086,561
Castorama Dubois Investissements SA 14,800 2,527,322
Canal Plus SA 52,300 12,921,897
Christian Dior SA 26,000 3,450,429
Credit Commercial de France Ord. 131,000 5,877,615
Credit Local de France (b) 43,150 3,703,624
Elf Sanofi SA 78,900 7,130,872
Groupe Photo Services GPS 29,300 4,248,614
Seita 78,200 3,142,346
Societe Generale Class A 27,700 2,978,669
Salomon SA 37,840 3,382,264
Total SA Class B 147,028 11,474,726
Television Francaise 1 SA 69,320 7,359,500
77,070,786
GERMANY - 4.8%
Bayer AG 275,960 10,398,835
Gehe AG 92,410 6,240,011
IVG Holding AG 39,700 1,409,684
Mannesmann AG Ord. 8,540 3,332,285
Rhoen Klinikum AG 27,600 3,309,200
Tarkett AG (b) 38,000 821,107
Tarkett AG 25,000 540,202
Veba AG Ord. 128,710 6,868,151
32,919,475
IRELAND - 2.8%
Bank of Ireland, Inc. 497,100 4,084,348
CRH PLC 482,760 4,971,902
IWP International (UK Reg.) 735,060 2,989,857
Independent Newspapers PLC 1,399,700 7,401,264
19,447,371
ITALY - 2.5%
De Rigo Spa sponsored ADR (a) 101,628 1,105,205
Eni Spa 1,410,200 6,737,233
Italgas Spa 890,300 3,287,952
Telecom Italia Mobile Spa 3,080,940 6,345,322
17,475,712
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
NETHERLANDS - 4.7%
ABN-AMRO Holdings NV 117,100 $ 6,602,516
Ahold NV 56,600 3,294,470
ING Groep NV 214,250 6,663,624
Unilever NV ADR 38,400 5,870,400
Vendex International NV 82,000 3,302,466
VNU Ord. 368,200 6,667,584
32,401,060
NORWAY - 1.8%
Den Norske Bank AS Class A Free shares 1,002,100 3,304,263
Fokus Bank AS 471,250 2,739,526
Hafslund AS:
Series A 43,000 335,985
Series B 90,000 661,030
Schibsted AS, Series B 91,200 1,389,570
UNI Storebrand AS (a) 637,800 3,727,668
12,158,042
SPAIN - 3.9%
Banco Popular Espanol 35,400 6,757,767
Banco Intercontinental Espanol 29,400 3,518,382
Corporacion Financiera Alba SA 38,370 3,243,424
Empresa Nacional De Electricidad
SA Ord. 48,660 2,974,481
FOCSA (Fomento Construcciones y
Contratas SA) 29,435 2,386,777
Tabacalera SA, Series A 123,000 4,495,832
Telefonica de Espana SA Ord. 186,500 3,736,861
27,113,524
SWEDEN - 9.9%
Autoliv AB 136,000 5,763,632
Assa Abloy AB Class B 163,150 2,503,004
Astra AB Class A Free shares 151,125 6,932,603
Hennes & Mauritz AB Class B Free shares 25,100 3,244,564
ICB Shipping Class B 351,160 4,160,569
Incentive Fund, Inc. 83,700 4,983,846
Naeckebro AB (a) 19,900 311,346
Nordbanken AB 160,900 4,228,197
Nordbanken AB (b) 29,500 775,213
Scania AB:
Class A 32,300 865,965
Class B 66,100 1,772,145
Securitas AB Class B 275,100 7,103,830
Skandia Foersaekrings AB 323,113 9,055,321
Svenska Handelsbanken 213,400 5,251,247
TV 4 AB Class A 128,930 2,516,577
Trygg Hansa AB Class B 190,300 3,439,844
Volvo AB Class B 248,120 5,144,551
68,052,454
SWITZERLAND - 9.5%
Adecco SA (Bearer) (a) 1,700 475,965
Adecco SA (a) 21,128 5,970,598
Ares Serono Class B (Bearer) 8,740 8,512,875
Baloise-Holding (Reg.) 2,275 4,736,780
C. S. Holdings AG (Reg.) 64,700 6,442,190
Kuoni Reisen Holding AG Class B (Reg.) 4,556 10,222,659
Nestle SA (Reg.) 5,100 5,522,536
Sandoz AG (Reg.) 15,600 17,975,157
Swiss Reinsurance Corp. (Reg.) 5,253 5,617,783
65,476,543
COMMON STOCKS - CONTINUED
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
UNITED KINGDOM - 33.4%
Angerstein Underwriting Trust PLC 1,356,770 $ 2,582,734
Asda Group PLC 4,034,000 7,679,082
BAA PLC Ord. 331,034 2,666,032
Barclays PLC Ord. 218,370 3,426,753
Barratt Developments PLC 1,032,875 4,276,841
Boots Co. PLC 635,930 6,445,920
British Petroleum PLC Ord. 1,608,023 17,273,811
Burton Group PLC Ord. 1,297,700 3,156,480
Cable & Wireless PLC Ord. 376,800 2,991,702
Capital Shopping Centres PLC 626,521 3,435,208
Carlton Communications PLC 401,750 3,219,213
CLM Insurance Fund PLC 1,219,500 2,688,491
Compass Group PLC Ord. 643,577 6,397,780
Cookson Group PLC 548,000 2,015,007
Daily Mail & General Trust PLC Class A 125,700 2,740,486
EMAP PLC 287,500 3,353,857
Electrocomponents PLC 635,520 4,275,553
Flextech PLC (a) 727,580 7,280,202
Glaxo Holdings PLC 682,100 10,709,345
Granada Group PLC 505,000 7,271,470
Grand Metropolitan PLC 627,800 4,734,331
Great Universal Stores PLC Ord. Class A 304,300 3,039,890
Lloyds TSB Group PLC 1,634,800 10,359,997
London Insurance Market Investment
Trust PLC 3,189,770 7,551,095
Mercury Asset Management Group PLC 204,100 3,750,739
Next PLC 453,300 4,115,357
Prudential Corp. PLC 410,470 3,105,431
Rentokil Group PLC 735,500 4,936,216
Reuters Holdings PLC Ord. (a) 556,180 6,922,522
Royal & Sun Alliance Insurance
Group PLC 519,093 3,559,839
Safeway PLC (a) 530,800 3,147,864
Scottish Television PLC 561,430 6,659,026
Shell Transport & Trading Co. PLC (Reg.) 867,800 14,217,940
Smiths Industries PLC Ord. 318,570 4,250,170
SmithKline Beecham PLC Ord. 532,560 6,576,546
Standard Chartered Bank PLC 664,260 7,165,379
Tesco PLC Ord. 1,018,620 5,518,791
3I Group PLC 187,500 1,474,977
United Newspapers PLC Ord. (a) 445,374 4,883,962
Vendome Luxury Group PLC SA 464,200 4,380,470
Vodafone Group PLC 1,204,625 4,654,822
Westminster Health Care Holdings PLC 448,870 2,044,872
Wolseley PLC Ord. 423,850 3,289,411
Zeneca Group PLC Ord. 208,680 5,676,814
229,902,428
UNITED STATES OF AMERICA - 0.3%
Pharmacia & Upjohn, Inc. unit 67,900 2,367,040
TOTAL COMMON STOCKS
(Cost $471,441,662) 624,902,517
NONCONVERTIBLE PREFERRED STOCKS - 2.2%
(% OF FUND'S INVESTMENTS)
GERMANY - 1.7%
Boss (Hugo) AG 3,950 4,756,810
Volkswagen AG 22,800 6,969,400
11,726,210
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
ITALY - 0.5%
Stet (Societa Finanziaria Telefonica) Spa 1,249,000 $ 3,328,945
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $10,663,707) 15,055,155
CONVERTIBLE BONDS - 0.1%
(% OF FUND'S INVESTMENTS)
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (C)
LUXEMBOURG - 0.1%
Audiofina 5%, 12/31/96
(Cost $764,460) - BEF 26,010,000 671,205
CASH EQUIVALENTS - 6.9%
(% OF FUND'S INVESTMENTS)
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 47,383,291 47,376,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $530,245,829) $ 688,004,877
CURRENCY ABBREVIATIONS
BEF - Belgian franc
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 $5,299,944 or 0.8% of net
assets.
(c) Principal amount is stated in United States dollars unless otherwise
noted.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $313,672,829 and $232,638,484, 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 $34,043 for the period.
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $530,548,223. Net unrealized appreciation aggregated
$157,456,654, of which $165,485,457 related to appreciated investment
securities and $8,028,803 related to depreciated investment securities.
The fund hereby designates approximately $6,012,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
For the period, interest and dividends from foreign countries were
$13,622,942. Taxes accrued or paid to foreign countries were $1,882,928.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.6%
Basic Industries 2.3
Cash Equivalents 6.9
Construction & Real Estate 4.3
Durables 4.6
Energy 7.2
Finance 23.1
Health 12.5
Holding Companies 0.6
Industrial Machinery & Equipment 0.9
Media & Leisure 13.1
Nondurables 3.9
Retail & Wholesale 6.6
Services 4.7
Technology 1.6
Transportation 1.9
Utilities 5.2
100.0%
EUROPE
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at $ 688,004,877
value (including repurchase agreements of $47,376,000)
(cost $530,245,829) - See accompanying schedule
Cash 2,442
Receivable for investments sold 5,060,304
Receivable for fund shares sold 3,019,333
Dividends receivable 1,994,860
Interest receivable 34,653
Redemption fees receivable 116
TOTAL ASSETS 698,116,585
LIABILITIES
Payable for investments purchased $ 4,597,047
Payable for fund shares redeemed 976,747
Accrued management fee 494,077
Other payables and 286,910
accrued expenses
TOTAL LIABILITIES 6,354,781
NET ASSETS $ 691,761,804
Net Assets consist of:
Paid in capital $ 476,636,749
Undistributed net investment income 6,366,458
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 50,962,532
Net unrealized appreciation (depreciation) on investments 157,796,065
and assets and liabilities in
foreign currencies
NET ASSETS, for 25,510,950 $ 691,761,804
shares outstanding
NET ASSET VALUE and redemption price per share ($691,761,804 (divided by) 25,510,950 shares) $27.12
Maximum offering price per share (100/97.00 of $27.12) $27.96
</TABLE>
STATEMENT OF OPERATIONS
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME $ 13,547,768
Dividends
Interest 2,124,823
15,672,591
Less foreign taxes withheld (1,882,928
)
TOTAL INCOME 13,789,663
EXPENSES
Management fee $ 4,217,698
Basic fee
Performance adjustment 484,945
Transfer agent fees 1,626,949
Accounting fees and expenses 385,848
Non-interested trustees' compensation 2,285
Custodian fees and expenses 277,483
Registration fees 41,913
Audit 56,550
Legal 6,805
Miscellaneous 7,496
Total expenses before reductions 7,107,972
Expense reductions (34,444 7,073,528
)
NET INVESTMENT INCOME 6,716,135
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 51,641,212
Foreign currency transactions (52,639 51,588,573
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 45,218,233
Assets and liabilities in 33,433 45,251,666
foreign currencies
NET GAIN (LOSS) 96,840,239
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 103,556,374
OTHER INFORMATION $ 434,089
Sales charges paid to FDC
Deferred sales charges withheld $ 43,501
by FDC
Expense reductions $ 24,653
Directed brokerage arrangements
Custodian interest credits 400
Transfer agent interest credits 9,391
$ 34,444
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 6,716,135 $ 5,294,356
Net investment income
Net realized gain (loss) 51,588,573 26,527,724
Change in net unrealized appreciation (depreciation) 45,251,666 24,425,665
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 103,556,374 56,247,745
Distributions to shareholders (2,532,705) (4,575,941)
From net investment income
From net realized gain (17,095,667) (2,516,901)
TOTAL DISTRIBUTIONS (19,628,372) (7,092,842)
Share transactions 240,208,198 382,348,507
Net proceeds from sales of shares
Reinvestment of distributions 19,284,800 6,951,448
Cost of shares redeemed (144,811,084) (453,061,566)
Redemption fees 284,527 13,949
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 114,966,441 (63,747,662)
TOTAL INCREASE (DECREASE) IN NET ASSETS 198,894,443 (14,592,759)
NET ASSETS
Beginning of period 492,867,361 507,460,120
End of period (including undistributed net investment income of $6,366,458 and $3,463,355,
respectively) $ 691,761,804 $ 492,867,361
OTHER INFORMATION
Shares
Sold 9,582,175 18,216,804
Issued in reinvestment of distributions 860,545 354,493
Redeemed (5,896,676) (21,565,625)
Net increase (decrease) 4,546,044 (2,994,328)
</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 1996 1995 1994 C 1993 1992 G
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 23.51 $ 21.18 $ 18.43 $ 15.12 $ 15.93
Income from Investment Operations
Net investment income .30 H .27 .18 .25 .27
Net realized and unrealized gain (loss) 4.23 2.37 2.65 3.35 (.57)
Total from investment operations 4.53 2.64 2.83 3.60 (.30)
Less Distributions
From net investment income (.12) (.20) (.08) (.29) (.48)
From net realized gain (.81) (.11) - - (.03) F
Total distributions (.93) (.31) (.08) (.29) (.51)
Redemption fees added to paid in capital .01 .00 - - -
Net asset value, end of period $ 27.12 $ 23.51 $ 21.18 $ 18.43 $ 15.12
TOTAL RETURN A, B 20.14% 12.76% 15.41% 24.24% (1.89)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 691,762 $ 492,867 $ 507,460 $ 528,929 $ 431,223
Ratio of expenses to average net assets 1.27% 1.18% 1.35% 1.25% 1.22%
D
Ratio of net investment income to average net assets 1.20% 1.12% .85% 1.44% 2.38%
Portfolio turnover rate 45% 38% 49% 76% 95%
Average commission rate E $ .0299
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF
POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL
GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
F INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN
CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
G AS OF NOVEMBER 1, 1991 THE FUND DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
H NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
</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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). The fund has a 3% sales charge.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1996 YEAR FUND
EUROPE CAPITAL APPRECIATION 18.74% 43.44%
EUROPE CAPITAL APPRECIATION 15.18% 39.14%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital 17.47% 42.50%
International Europe Index
European Region Funds Average 17.03% 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 21, 1993. For example, if you invested $1,000 in a fund that had a
5% return over the past year, the value of your investment would be $1,050.
You can compare the fund's returns to the performance of the Morgan Stanley
Capital International Europe Index - a market capitalization weighted index
of over 550 stocks traded in 14 European markets. To measure how the fund's
performance stacked up against its peers, you can compare it to the
European region funds average, which reflects the performance of 43 mutual
funds with similar objectives tracked by Lipper Analytical Services, Inc.
over the past 12 months. 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, 1996 YEAR FUND
EUROPE CAPITAL APPRECIATION 18.74% 13.41%
EUROPE CAPITAL APPRECIATION 15.18% 12.21%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital 17.47% 13.15%
International Europe Index
European Region Funds Average 17.03% 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
IMAHDR PRASUN SHR__CHT 19961031 19961111 154341 S00000000000001
Europe Cap. Appreciation MS Europe Index
00341 MS002
1993/12/21 9700.00 10000.00
1993/12/31 9729.10 10132.25
1994/01/31 11145.30 10648.25
1994/02/28 10670.00 10271.15
1994/03/31 10786.40 9980.44
1994/04/30 11242.30 10393.72
1994/05/31 10825.20 9951.90
1994/06/30 10602.10 9847.41
1994/07/31 11145.30 10363.51
1994/08/31 11339.30 10692.22
1994/09/30 10941.60 10268.23
1994/10/31 11009.50 10715.55
1994/11/30 10534.20 10305.10
1994/12/31 10398.40 10363.68
1995/01/31 10272.30 10282.54
1995/02/28 10563.30 10515.52
1995/03/31 10786.40 11003.49
1995/04/30 11300.50 11355.38
1995/05/31 11475.10 11587.88
1995/06/30 11640.00 11697.12
1995/07/31 12241.40 12306.82
1995/08/31 11737.00 11831.07
1995/09/30 12086.20 12188.47
1995/10/31 11717.60 12130.90
1995/11/30 11649.70 12217.16
1995/12/31 11926.02 12604.32
1996/01/31 12005.13 12686.72
1996/02/29 12311.69 12917.83
1996/03/31 12509.47 13072.30
1996/04/30 12865.47 13166.88
1996/05/31 13152.25 13268.63
1996/06/30 13221.47 13414.73
1996/07/31 12954.47 13246.69
1996/08/31 13439.03 13639.78
1996/09/30 13735.69 13926.78
1996/10/31 13923.58 14250.10
IMATRL PRASUN SHR__CHT 19961031 19961111 154342 R00000000000038
Let's say hypothetically that $10,000 was invested in Fidelity Europe
Capital Appreciation Fund on December 21, 1993, when the fund started and
the 3% sales charge was paid. As the chart shows, by October 31, 1996, the
value of the investment would have grown to $13,914 - a 39.14% increase on
the initial investment. For comparison, look at how the Morgan Stanley
Capital International Europe Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment would
have grown to $14,250 - a 42.50% 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.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
EUROPE CAPITAL APPRECIATION
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Kevin McCarey, Portfolio Manager of Fidelity Europe
Capital Appreciation Fund
Q. HOW DID THE FUND PERFORM, KEVIN?
A. The fund did well. For the year that ended October 31, 1996, the fund
returned 18.74%, while the European region funds average was 17.03% for the
same time period, according to Lipper Analytical Services. For another
comparison, the Morgan Stanley Capital International Europe Index returned
17.47%.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG PERFORMANCE?
A. The major factor influencing the fund's performance was good stock
selection; it was a stock picker's market. It's important to note that
during 1995 most Europe funds - including this one - underperformed the
index because only the very largest growth stocks performed well. For funds
like this one that tend to invest in large- and medium-cap stocks, 1995 was
an extremely difficult year to outperform the market. However, for most of
1996, many of the best performers were mid-cap names across a variety of
sectors and countries. Because this fund uses a bottom-up style of
investing, without being overly concerned about country weightings, the
fund was able to outperform the market averages by choosing some of the
strongest stocks across a broad range of countries and sectors.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE DURING THE PERIOD?
A. Much of Europe was in a recession during the first half of 1996, and I
believe the recession bottomed out and European economies began to grow,
albeit slowly, during the third quarter. The turnaround was caused by a
sharp reduction in long- and short-term interest rates in many countries
during the past 12 months. Despite the rate cuts, many economically
sensitive stocks suffered during the beginning of 1996 because of weak
business outlooks and investors' continued focus on growth stocks. During
the period, I took the opportunity to buy some economically sensitive
stocks at good prices.
Q. CAN YOU GIVE A COUPLE OF EXAMPLES?
A. Sure. I increased the fund's holdings in Lafarge, a French cement
company, based on the realization that cement volumes had been declining
and would probably start to increase. Lafarge is one
of the better companies in the industry. Though its performance was flat
during the period, it produced decent levels of free cash flow, and I have
had a lot of confidence in the company. I've also increased the fund's
investments in select specialty chemical and pharmaceutical stocks. A good
example is Akzo, based in the Netherlands. While its chemical business is
well-run, Akzo had some problems with its pharmaceuticals division. But the
problems appeared to be nearly over, and the company began unveiling some
exciting new products. Among chemical-pharmaceutical hybrid stocks, Akzo
has been overlooked and its valuation is favorable when you compare it to
similar companies.
Q. WHAT OTHER FACTORS INFLUENCED THE FUND'S STRONG PERFORMANCE?
A. As I've mentioned in previous reports, one of the on-going themes in the
fund is to own companies that are undergoing some kind of restructuring
that is positive for shareholders. There is a trend in Europe in which
managements are increasing their focus on shareholder value by
restructuring, buying back shares, spinning off unprofitable divisions or
some combination of the above. If done properly, these actions can be good
news for investors, regardless of the sector or country in which the
company competes. A good example is Pechiney, a French aluminum company.
The business prospects for aluminum stocks weren't compelling during the
period since aluminum prices have been weak, but the company announced a
restructuring and cost-cutting program that should benefit investors.
Another example is Nordbanken which, along with some other Swedish banks,
was a spectacular performer during the past six months. The company cut
costs, bought back 15% of its outstanding shares and increased its
dividend. The fund reduced its holdings in Nordbanken during the period as
valuations approached target levels. I increased the fund's holding in
Vendex, a retailer in the Netherlands, when it began to cut costs and sell
excess real estate. The stock became especially interesting during the
summer when the company decided to sell one of its non-strategic
businesses, a move that left the company debt-free and poised to expand its
core business or buy back more shares.
Q. WHAT ABOUT SOME OF THE LARGER HOLDINGS IN THE FUND? HOW DID THEY PERFORM
DURING THE PERIOD?
A. One of the best restructuring stories, and best performers, in the fund
was Huhtamaki, a Finnish conglomerate that has recently made a number of
strategic decisions to improve shareholder value. It sold off its
loss-making baseball card business. It also sold off one of its main
businesses, a pharmaceutical company, received a very good price for it and
announced a buyback of 10 percent of its shares with the proceeds from the
sale. In addition, the company announced that it was selling half of its
confectionery business to Hershey. Huhtamaki has very shareholder-friendly
management, and the stock has doubled from its low nine months ago. The
British oil company, Shell, another large holding, benefited from rising
oil prices and internal restructuring.
Q. WHICH INVESTMENTS WERE DISAPPOINTING PERFORMERS DURING THE PERIOD?
A. Alcatel, a French equipment company, underperformed the market during
the period, but is a strong restructuring story that I continued to have a
lot of faith in. The company achieved tremendous momentum during the period
in trying to cut costs and restore profitability. Unfortunately, sometimes
it takes the market longer than investors would like to reward companies
that are undergoing turnarounds. Another detractor from fund performance
was the Dutch airline KLM. The airline was hurt by renewed price pressure
in its European operations after deregulation and increasing fuel prices
due to the rising cost of oil. Its growing expenses had a negative impact
on profits, and the fund sold most of its holdings in the stock by the end
of the period.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD, KEVIN?
A. I think the coming year should be an exciting time for select European
companies as the economic backdrop continues to improve across Europe. I'm
especially interested in economically sensitive stocks in industries such
as retailing and industrial materials that tend to perform well when the
economy is picking up. I also intend to continue to capitalize on the
continuing acceleration of restructuring activities by managements in
Europe to increase shareholder value. This is a trend that should be a
positive for stock prices over the next six to 12 months.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Eastern and
Western European issuers
FUND NUMBER: 341
TRADING SYMBOL: FECAX
START DATE: December 21, 1993
SIZE: as of October 31, 1996, more than
$170 million
MANAGER: Kevin McCarey, since inception;
manager, Fidelity Advisor Overseas Fund
(formerly Plymouth Europe Fund),
1992-1993; Fidelity Select Financial Services
Portfolio, 1988-1990; Fidelity Select Automotive
Portfolio, 1988-1990; Fidelity Select Regional
Banks Portfolio, 1986-1989; joined Fidelity in
1985
(checkmark)
KEVIN MCCAREY ON UNITING EUROPEAN CURRENCIES:
"A plan is in the works for a union of European
countries to unite their currencies in a couple of
years. If it actually happens, it should be a net
positive for European economies and another step
for European economic integration. In the past six
months, interest rates have dropped dramatically in
countries such as Italy, Spain and Sweden in
anticipation of such a move. For example, rates in
Italy have fallen from about 10.5% a year ago to
about 7.5% at the end of October.
"This is good news for investors. Countries with
weaker economies and less stable governments
could benefit tremendously by anchoring their
currency to a country - most likely Germany -
which is largely perceived as a country that
maintains prudent monetary conditions and fiscal
policy. This would probably allow interest rates to fall
further in participating countries, which could help
stocks, boost capital formation and improve the
investment prospects in Europe as a whole.
"While the benefit for countries with less stable
economies is clear, there is also a benefit for
countries with strong economic and political
systems, such as Germany and the Netherlands. A
unified currency would improve their relationships
with their trading partners and limit smaller,
less-stable countries from devaluing their currencies
to obtain a competitive advantage. Business
prospects could improve between European
countries, which would be a positive for strong
companies of varying sizes in many industries
across Europe.
"In general, a more stable environment for planning
and competing within Europe would be beneficial not
only for European countries, but also for North
American investors who are interested in owning
foreign stocks and mutual funds as a way to diversify
their investment portfolios."
EUROPE CAPITAL APPRECIATION
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
(% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
United States 5.1
Finland 4.0%
Row: 1, Col: 1, Value: 5.1
Row: 1, Col: 2, Value: 27.5
Row: 1, Col: 3, Value: 5.5
Row: 1, Col: 4, Value: 9.699999999999999
Row: 1, Col: 5, Value: 4.2
Row: 1, Col: 6, Value: 8.6
Row: 1, Col: 7, Value: 13.6
Row: 1, Col: 8, Value: 6.4
Row: 1, Col: 9, Value: 15.4
Row: 1, Col: 10, Value: 4.0
United Kingdom 27.5%
France 15.4%
Germany 6.4%
Netherlands 13.6%
Switzerland 5.5%
Sweden 9.7%
Other 8.6%
Spain 4.2%
AS OF APRIL 30, 1996
Finland 3.7%
Row: 1, Col: 1, Value: 26.0
Row: 1, Col: 2, Value: 4.2
Row: 1, Col: 3, Value: 10.9
Row: 1, Col: 4, Value: 6.6
Row: 1, Col: 5, Value: 11.4
Row: 1, Col: 6, Value: 11.1
Row: 1, Col: 7, Value: 6.1
Row: 1, Col: 8, Value: 4.6
Row: 1, Col: 9, Value: 15.4
Row: 1, Col: 10, Value: 3.7
United Kingdom 26.0%
France 15.4%
Germany 4.6%
Italy 6.1%
Switzerland 4.2%
Sweden 10.9
%
Netherlands 11.1%
Spain 6.6%
Other 11.4%
ASSET ALLOCATION
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 95.3 97.3
Short-term investments 4.7 2.7
TOP TEN STOCKS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Sandoz AG (Reg.) 3.5 2.9
(Switzerland, Drugs & Pharmaceuticals)
Huhtamaki Ord. 3.4 3.0
(Finland, Foods)
SGS Thomson Microelectronics NV 2.9 0.0
(Netherlands, Electronics)
Alcatel Alsthom Compagnie Generale 2.6 1.6
d'Electricite SA
(France, Electrical Equipment)
Volvo AB ADR Class B 2.5 2.4
(Sweden, Autos, Tires, & Accessories)
Philips Electronics NV (warrants) 2.3 1.1
(Netherlands, Electrical Equipment)
Shell Transport & Trading Co. PLC (Reg.) 2.2 3.4
(United Kingdom, Holding Companies)
Vendex International NV 2.1 0.7
(Netherlands, Retail & Wholesale, Misc.)
Total SA Class B 2.0 2.5
(France, Oil & Gas)
Granada Group PLC 1.9 0.0
(United Kingdom, Entertainment)
TOP TEN MARKET SECTORS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 17.4 22.7
Basic Industries 8.7 6.2
Energy 8.4 6.3
Durables 7.5 12.5
Health 6.8 5.2
Nondurables 6.5 6.5
Retail & Wholesale 6.4 5.0
Utilities 5.8 7.1
Industrial Machinery & Equipment 5.4 5.2
Media & Leisure 5.3 6.1
EUROPE CAPITAL APPRECIATION
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.3%
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
DENMARK - 1.4%
Novo-Nordisk AS Class B 1,900 $ 315,407
Sophus Berendsen AS, Series B 12,100 1,489,882
Unidanmark AS Class A 11,000 505,556
2,310,845
FINLAND - 4.0%
Fiskars OY, Series A 7,100 523,127
Huhtamaki Ord. 130,000 5,632,657
KCI (Konecranes International) (a)(b) 12,500 343,656
Nokia Corp. AB sponsored ADR 1,000 46,375
UPM-Kymmene Corp. (a) 1,000 20,234
6,566,049
FRANCE - 15.4%
Axa SA 11,544 719,360
Alcatel Alsthom Compagnie Generale
d'Electricite SA 50,000 4,254,489
BQE National Paris Ord. (a) 37,000 1,381,362
Canal Plus SA 900 222,365
Cap Gemini Sogeti SA (a) 7,500 364,461
Credit Commercial de France Ord. 30,000 1,346,019
Elf Sanofi SA 6,100 551,310
Eramet SA 31,600 1,462,826
Havas Advertising 2,500 291,764
Lafarge Coppee SA 22,719 1,360,302
Lagardere S.C.A. (Reg.) 50,000 1,575,917
Michelin SA (Compagnie Generale des
Etablissements) Class B 23,000 1,106,460
Nationale Elf Aquitaine 24,000 1,914,754
NRJ SA 9,600 1,232,787
Pechiney SA Class A 50,000 2,141,881
Peugeot SA Ord. 100 10,402
Paribas SA (Cie Financiere) Class A 13,500 866,803
Axime SA Ex Segin (a) 13,571 1,406,362
Total SA Class B 42,033 3,280,444
25,490,068
GERMANY - 4.9%
BASF AG 64,000 2,068,474
Bayer AG 23,000 866,695
Bayerische Hypotheken-und
Wechselbank AG 56,000 1,654,600
Daimler-Benz AG Ord. (a) 11,000 648,427
Dresdner Bank AG Ord. 32,000 853,783
Lufthansa 6,000 79,173
Munich Reinsurance AG (Reg.) 150 359,696
Veba AG Ord. 28,000 1,494,120
8,024,968
GREECE - 0.6%
Alpha Credit Bank 14,000 891,384
IRELAND - 2.7%
Anglo-Irish Bank Corp. PLC 985,000 1,137,842
Bank of Ireland, Inc. 140,000 1,150,289
Jurys Hotel Group PLC 172,000 713,602
Woodchester Investments PLC unit 400,000 1,366,680
4,368,413
ITALY - 1.8%
Banca Fideuram Spa 100,000 211,814
Credito Italiano Ord. 100,000 102,121
Eni Spa 300,000 1,433,251
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
Rinascente per l'Esercizio di Grandi
Magazzini Spa 120,000 $ 709,593
Telecom Italia Spa 235,000 524,841
2,981,620
NETHERLANDS - 13.6%
AKZO Nobel NV 13,000 1,634,124
ASM Lithography Holding NV (a) 12,500 450,000
Baan Co. NV (a) 5,000 185,202
DSM NV 7,100 678,337
EVC International NV 40,500 1,116,765
ING Groep NV 75,000 2,332,657
KBB NV Ord. 23,000 1,602,434
KLM Royal Dutch Airlines NV 7,500 180,000
Macintosh Confectie NV 1,000 23,518
Philips Electronics NV (warrants) (a) 250,000 3,821,619
SGS Thomson Microelectronics NV (a) 90,000 4,758,197
VNU Ord. 124,000 2,245,465
Vendex International NV 86,487 3,483,176
22,511,494
NORWAY - 0.6%
Dyno Industrier AS 24,900 564,220
Tomra Systems AS (a) 30,000 424,278
988,498
SPAIN - 4.2%
Banco Bilbao Vizcaya SA Ord. (Reg.) 18,900 917,153
Banco de Santander SA Ord. (Reg.) 21,000 1,076,586
Corporacion Mapfre Compania
Internacional de Reaseguros SA (Reg.) 8,700 428,991
Cortefiel SA 27,000 752,319
FOCSA (Fomento Construcciones y
Contratas SA) 3,200 259,476
Prosegur, CIA de Seguridad SA (Reg.) 56,000 451,454
Tabacalera SA, Series A 28,800 1,052,683
Telefonica de Espana SA
sponsored ADR 34,000 2,048,500
6,987,162
SWEDEN - 9.7%
ABB AB, Series B 7,500 835,061
Atlas Copco AB Class A Free shares 7,000 144,607
Autoliv AB 8,800 372,941
Esselte AB Class B Free shares 90,000 2,009,615
Foreningsbanken AB Class A Ord. 150,000 615,188
Frontec AB, Series B 25,000 356,961
Forcenergy AB Class B Free shares 70,000 765,568
Incentive Fund, Inc. 16,200 964,615
Mo Och Domsjoe AB Class B 5,000 137,468
Nordbanken AB 51,000 1,340,199
Scania AB Class A 45,000 1,206,453
Skandia Foersaekrings AB 1,000 28,025
Scancem AB, Series A 16,000 595,442
Svenska Handelsbanken 58,000 1,427,237
Swedish Match Co. 123,900 368,876
Svedala Industri Free shares 19,300 301,959
Trygg Hansa AB Class B 22,500 406,708
Volvo AB ADR Class B 204,000 4,182,000
16,058,923
SWITZERLAND - 5.5%
Adecco SA (a) 678 191,597
CS Holding AG (Reg.) 7,600 756,733
Julius Baer Holding AG 1,500 1,572,223
COMMON STOCKS - CONTINUED
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
SWITZERLAND - CONTINUED
Nestle SA (Reg.) 100 $ 108,285
Oerlikon-Buhrle Holding Ltd. (Reg.) (a) 4,500 442,742
Sandoz AG (Reg.) 5,000 5,761,268
Surveillance, Societe Generale
(Bearer) 100 226,350
9,059,198
UNITED KINGDOM - 27.5%
Aegis Group PLC 1,000,000 1,020,943
Bank of Scotland 200,000 917,628
Bass PLC Ord. 17,500 224,363
Benson's Crisps PLC (a) 500,000 284,725
British Aerospace PLC 156,000 2,953,737
British Petroleum PLC Ord. 266,200 2,859,591
British Land Co. PLC (The) Ord. 100,000 745,166
Caradon PLC 330,000 1,296,638
Carpetright PLC 46,100 468,779
Cookson Group PLC 480,000 1,764,970
Cresta Care Ltd. 450,800 179,696
Dixons Group PLC 150,000 1,343,495
Glaxo PLC sponsored ADR 55,000 1,732,500
Granada Group PLC 215,000 3,095,774
Grand Metropolitan PLC 150,000 1,131,172
Great Universal Stores PLC Ord.
Class A 7,000 69,928
HSBC Holdings PLC Ord. 128,611 2,701,419
Kingfisher PLC 60,000 639,411
Ladbroke Group PLC Ord. 382,400 1,241,219
Lloyd Thompson Group PLC 120,200 336,372
Lex Service PLC Ord. 187,500 1,110,428
Lloyds TSB Group PLC 1,012 6,413
Lucasvarity PLC (a) 182,800 739,078
Marley Ltd. PLC 351,300 751,608
Medeva PLC (a) 120,000 515,434
Meyer International PLC Ord. 63,000 425,379
National Grid Co. PLC 190,000 556,434
Next PLC 75,000 680,900
Nichols (Harvey) Group PLC (a)(b) 53,000 297,497
Perkins Foods PLC 144,100 194,594
Perkins Foods PLC (rights) 24,016 0
RTZ Corp. PLC Ord. 34,500 551,773
Redland PLC Ord. 20,000 136,668
Rentokil Group PLC 15,000 100,671
Rolls Royce PLC Ord. 250,000 1,035,179
Sainsbury (J.) PLC Ord. 12,500 73,622
Sears PLC 675,000 955,456
Shell Transport & Trading Co.
PLC (Reg.) 225,000 3,686,375
SmithKline Beecham PLC Ord. 63,551 784,787
TC Group PLC 96,900 225,449
Thames Water PLC Ord. 1,000 9,014
Tomkins PLC Ord. 265,000 1,112,380
Unichem PLC 117,800 479,152
Unilever PLC Ord. 100,000 2,100,457
Vodafone Group PLC 300,000 1,159,238
WPP Group PLC 341,300 1,266,073
Wickes PLC 1,000 651
Yorkshire Water PLC Ord. 150,000 1,508,229
45,470,465
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - 0.4%
Pharmacia & Upjohn, Inc. unit 20,000 $ 697,213
TOTAL COMMON STOCKS
(Cost $137,881,947) 152,406,300
NONCONVERTIBLE PREFERRED STOCKS - 3.0%
(% OF FUND'S INVESTMENTS)
GERMANY - 1.5%
Friedrich Grohe AG 1,600 443,756
Volkswagen AG 6,900 2,109,160
2,552,916
ITALY - 1.5%
Telecom Italia Mobile Spa de Risp 2,100,000 2,404,485
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $5,077,985) 4,957,401
CASH EQUIVALENTS - 4.7%
(% OF FUND'S INVESTMENTS)
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 7,771,185 7,770,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $150,729,932) $ 165,133,701
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 $641,153 or 0.4% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $248,376,807 and $306,035,154, 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 $19,477 for the period.
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 $2,663,000 and $1,483,550, respectively. The
weighted average interest rate was 5.9% (see Note 6 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $150,877,449. Net unrealized appreciation aggregated
$14,256,252, of which $18,520,250 related to appreciated investment
securities and $4,263,998 related to depreciated investment securities.
The fund hereby designates approximately $2,970,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
For the period, interest and dividends from foreign countries were
$5,185,267. Taxes accrued or paid to foreign countries were $579,187.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 2.7%
Basic Industries 8.7
Cash Equivalents 4.7
Conglomerates 0.7
Construction & Real Estate 3.5
Durables 7.5
Energy 8.4
Finance 17.4
Health 6.8
Holding Companies 1.8
Industrial Machinery & Equipment 5.4
Media & Leisure 5.3
Nondurables 6.5
Retail & Wholesale 6.4
Services 3.3
Technology 4.9
Transportation 0.2
Utilities 5.8
100.0%
EUROPE CAPITAL APPRECIATION
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at value (including repurchase agreements of $7,770,000)
(cost $150,729,932) - See $ 165,133,701
accompanying schedule
Cash 818
Receivable for investments sold 6,513,732
Receivable for fund shares sold 234,325
Dividends receivable 529,765
Redemption fees receivable 257
TOTAL ASSETS 172,412,598
LIABILITIES
Payable for investments purchased $ 1,734,636
Payable for fund shares redeemed 295,736
Accrued management fee 114,085
Other payables and 76,386
accrued expenses
TOTAL LIABILITIES 2,220,843
NET ASSETS $ 170,191,755
Net Assets consist of:
Paid in capital $ 134,688,126
Undistributed net investment income 2,652,862
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 18,435,822
Net unrealized appreciation (depreciation) on investments 14,414,945
and assets and liabilities in
foreign currencies
NET ASSETS, for 12,091,964 $ 170,191,755
shares outstanding
NET ASSET VALUE and redemption price per share ($170,191,755 (divided by) 12,091,964 shares) $14.07
Maximum offering price per share (100/97.00 of $14.07) $14.51
</TABLE>
STATEMENT OF OPERATIONS
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME $ 4,642,517
Dividends
Special dividend from Volvo AB 548,250
Interest 362,887
5,553,654
Less foreign taxes withheld (579,187
)
TOTAL INCOME 4,974,467
EXPENSES
Management fee $ 1,270,995
Basic fee
Performance adjustment 67,995
Transfer agent fees 541,493
Accounting fees and expenses 122,201
Non-interested trustees' compensation 725
Custodian fees and expenses 147,608
Registration fees 36,661
Audit 40,490
Legal 1,473
Interest 4,863
Miscellaneous 3,664
Total expenses before reductions 2,238,168
Expense reductions (48,228 2,189,940
)
NET INVESTMENT INCOME 2,784,527
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 20,520,983
Foreign currency transactions (43,853 20,477,130
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 5,035,092
Assets and liabilities in 10,615 5,045,707
foreign currencies
NET GAIN (LOSS) 25,522,837
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 28,307,364
OTHER INFORMATION $ 90,306
Sales charges paid to FDC
Expense reductions $ 47,843
Directed brokerage arrangements
Custodian interest credits 254
Transfer agent interest credits 131
$ 48,228
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 2,784,527 $ 3,699,888
Net investment income
Net realized gain (loss) 20,477,130 (1,148,907)
Change in net unrealized appreciation (depreciation) 5,045,707 9,340,723
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 28,307,364 11,891,704
Distributions to shareholders from net investment income (3,490,608) -
Share transactions 31,758,801 303,427,272
Net proceeds from sales of shares
Reinvestment of distributions 3,381,925 -
Cost of shares redeemed (84,225,438) (473,746,104)
Redemption fees 26,923 4,997
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (49,057,789) (170,313,835)
TOTAL INCREASE (DECREASE) IN NET ASSETS (24,241,033) (158,422,131)
NET ASSETS
Beginning of period 194,432,788 352,854,919
End of period (including undistributed net investment income of $2,652,862 and $3,687,757,
respectively) $ 170,191,755 $ 194,432,788
OTHER INFORMATION
Shares
Sold 2,457,375 26,489,106
Issued in reinvestment of distributions 286,361 -
Redeemed (6,752,442) (41,479,214)
Net increase (decrease) (4,008,706) (14,990,108)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, DECEMBER 21,
1993
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA 1996 1995 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Net asset value, beginning of period $ 12.08 $ 11.35 $ 10.00
Income from Investment Operations
Net investment income .22 G .23 .08 D
Net realized and unrealized gain (loss) 2.00 .50 1.27
Total from investment operations 2.22 .73 1.35
Less Distributions
From net investment income (.23) - -
Net asset value, end of period $ 14.07 $ 12.08 $ 11.35
TOTAL RETURN B, C 18.74% 6.43% 13.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 170,192 $ 194,433 $ 352,855
Ratio of expenses to average net assets 1.33% 1.36% 1.54%
A
Ratio of expenses to average net assets after expense reductions 1.30% E 1.36% 1.54%
A
Ratio of net investment income to average net assets 1.66% 1.45% .79%
A
Portfolio turnover rate 155% 176% 317%
A
Average commission rate F $ .0245
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS
OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
F FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
G INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM VOLVO
AB WHICH AMOUNTED TO $.04 PER SHARE.
</TABLE>
FRANCE
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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). The fund has a 3% sales charge. If
Fidelity had not reimbursed certain fund expenses during the period shown,
the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED PAST 1 LIFE OF
OCTOBER 31, 1996 YEAR FUND
FRANCE 22.89% 22.89%
FRANCE (INCL. 3% SALES CHARGE) 19.20% 19.20%
Soci<UNDEF>t<UNDEF> des Bourses Fran<UNDEF>aises 250 Index 18.36% 18.36%
European Region Funds Average 17.03% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, the one year period since the fund
started on November 1, 1995. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Soci<UNDEF>t<UNDEF> des Bourses Fran<UNDEF>aises 250 Index (SBF 250 Index)
- - a market capitalization weighted index of the stocks of the 250 largest
companies in the French market. To measure how the fund's performance
stacked up against its peers, you can compare the fund's performance to the
European region funds average, which reflects the performance of 43 mutual
funds with similar objectives tracked by Lipper Analytical Services, Inc.
during the past 12 months. 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, 1996 YEAR FUND
FRANCE 22.89% 22.89%
FRANCE (INCL. 3% SALES CHARGE) 19.20% 19.20%
Soci<UNDEF>t<UNDEF> des Bourses Fran<UNDEF>aises 250 Index 18.36% 18.36%
European Region Funds Average 17.03% 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
IMAHDR PRASUN SHR__CHT 19961031 19961129 124458 S00000000000001
France EX SBF 250
00345 EX001
1995/11/01 9700.00 10000.00
1995/11/30 9515.70 9952.81
1995/12/31 9952.70 10286.04
1996/01/31 10381.19 10571.27
1996/02/29 10799.95 10979.69
1996/03/31 11150.53 11209.26
1996/04/30 11403.73 11416.12
1996/05/31 11647.19 11466.83
1996/06/30 11803.01 11725.21
1996/07/31 11559.54 11471.58
1996/08/31 11393.99 11240.25
1996/09/30 11617.98 11636.67
1996/10/31 11919.87 11835.93
IMATRL PRASUN SHR__CHT 19961031 19961129 124500 R00000000000015
Let's say hypothetically that $10,000 was invested in Fidelity France Fund
on November 1, 1995, when the fund started and the 3% sales charge was
paid. As the chart shows, by October 31, 1996, the value of the investment
would have grown to $11,920 - a 19.20% increase on the initial investment.
For comparison, look at how the Soci<UNDEF>t<UNDEF> des Bourses
Fran<UNDEF>aises 250 Index did over the same period. With dividends and
capital gains, if any, reinvested, the same $10,000 investment would have
grown to $11,836 - an 18.36% 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.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
FRANCE
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Renaud Saleur, Portfolio Manager of Fidelity France Fund
Q. HOW DID THE FUND PERFORM, RENAUD?
A. The fund has performed well. For the year that ended on October 31,
1996, it returned 22.89%. That compares favorably with the European region
funds average, which returned 17.03% for the same time period, according to
Lipper Analytical Services. For another comparison, the Soci<UNDEF>t<UNDEF>
des Bourses Fran<UNDEF>aises 250 Index, which specifically measures the
overall performance of the French stock market, returned 18.36% during the
past year.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE DURING THE PAST SIX MONTHS?
A. It has been a very challenging environment for stock pickers. The market
in France has been very concentrated and investors have been extremely
focused on growth stocks, rather than in the undervalued stocks in which
this fund tends to invest. This is difficult for me since I generally like
to buy stocks that are undervalued for one reason or another - perhaps the
company is just beginning a long-overdue restructuring or something else
that will help change investor sentiment. Even though the fund has
performed well, it's been frustrating to me that some very good,
undervalued companies are being overlooked while investors continue to pay
very high prices for growth stocks.
Q. WHAT FACTORS HAVE HELPED THE FUND TO OUTPERFORM ITS PEERS?
A. The investment strategy that has most helped the fund's strong
performance was its investments in food distribution, pharmaceuticals and
cosmetics, all of which performed well during the period. I dramatically
increased the fund's holding in Carrefour Supermarche, a supermarket chain,
so that by the end of the period it was the fund's second-largest
investment. Carrefour did well because it is gaining global market share
and is establishing itself as one of the leading food distributors in the
world, with an especially strong presence in emerging markets in Latin
America and Southeast Asia. Another positive was the fund's investment in
Clarins, a cosmetic company whose stock has strengthened based on strong
sales of some of its new products.
Q. THE FINANCE SECTOR IS STILL THE LARGEST SECTOR IN THE FUND. WHAT'S BEEN
HAPPENING THERE?
A. While it's true that financial stocks were the largest sector in the
fund at the end of the period, the fund is not overweighted in these stocks
versus the index. In general, financial stocks performed badly during the
past six months due to declining interest rates in France. But there has
been some positive news; bad loans are being reduced, real estate prices
are beginning to climb and the restructuring of the banking industry within
France is underway. I reduced the fund's holding in Societe Generale, which
fared particularly poorly during the period.
Q. WHAT CHANGES HAVE YOU MADE TO YOUR INVESTMENT PHILOSOPHY DURING THE PAST
SIX MONTHS?
A. I haven't made any. I just keep visiting companies and trying to uncover
the stocks that I think will be winners over time, based on their intrinsic
value and future growth prospects. One area in which I found opportunity
was computer services and software. Businesses throughout France have begun
to increase their spending on software due to the limitations of the
programs they used in the past. The fund's investment in Cap Gemini Sogeti
performed well, as it did in Compagnie des Machines Bull, a hardware
company that's begun to restructure.
Q. WHAT CAN YOU TELL US ABOUT THE FUND'S ENERGY HOLDINGS?
A. The fund's two largest energy holdings, Total and Elf Aquitaine are also
two of France's best-run companies. I continued to hold both stocks during
the past six months because of the favorable supply/demand scenario for
energy and because of the restructuring programs that each company has
undertaken during the past year.
Q. DID YOU SPOT ANY OTHER TRENDS DURING THE PERIOD?
A. While it's still not a large weighting in the fund, I have increased the
fund's holding in aerospace and defense from 1.8% of investments six months
ago to 3.5% at the end of October. There has been an upswing in the
ordering of new planes after a very long period of depressed demand for
airplanes and airplane peripherals. As a result, I increased the fund's
holdings in Industrielle d'Aviation Latecoere and maintained the fund's
position in Dassault.
Q. WHAT INVESTMENTS WERE MOST DISAPPOINTING?
A. Two, in particular, come to mind despite the fund's strong performance.
First, Danone, a food products company with more favorable valuations than
either Nestle or Unilver - its competitors in Europe - failed to perform
well. Despite its strong competitive stance and optimistic business
outlook, the stock didn't move up because investors simply weren't
interested in food producers. The disappointing performance of Danone
echoes the point I made earlier in this report about the market favoring
growth companies over strong value stories. Another disappointment was the
banking industry. Despite the fact that interest rates have decreased
markedly and the notion that bad loans are a thing of the past, the banks
have performed poorly. One reason for this poor performance was the banks'
slim loan growth because of the reluctance to extend loan commitments to
small- and medium-sized companies.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. Each year investors hope that a strong industrial recovery will begin
in earnest in the following year. I tend to believe that there will be some
recovery, but I don't expect economic growth to exceed 2% in the next year,
with a continued low rate of inflation. I do expect to see some rotation
from consumer cyclicals and from pharmaceuticals, cosmetics and healthcare
stocks to more industrial stocks such as oil, gas and building materials.
Stocks in the energy sector should benefit from the rising price of oil,
while building materials could perform well if construction increases from
its rather depressed levels. Whatever economic scenario unfolds, however, I
hope to continue to outperform the market with superior stock picking.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of French issuers
FUND NUMBER: 345
TRADING SYMBOL: FFRAF
START DATE: November 1, 1995
SIZE: as of October 31, 1996, more than
$5 million
MANAGER: Renaud Saleur, since inception;
portfolio manager and senior analyst, Fidelity
International, Limited, since 1986; joined
Fidelity in 1986
* TEMPORARY TRADING SYMBOL
(checkmark)
*
RENAUD SALEUR ON THE FRENCH ECONOMY:
"The economy in France was fairly sluggish and the
recovery frustratingly slow during the past six months.
Interest rates have been declining sharply and at the
end of October stood at historically low levels.
"The declining value of the French franc relative to
other European currencies strengthens what had
been a weak competitive position for France
compared to its European neighbors. For these
reasons, I feel that improved competitive
conditions for France both internally and externally
should be a net positive for investors interested in
French companies."
FRANCE
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
(% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
United States 5.9%
Row: 1, Col: 1, Value: 5.9
Row: 1, Col: 2, Value: 94.09999999999999
France 94.1%
AS OF APRIL 30, 1996
United States 8.1%
Row: 1, Col: 1, Value: 8.1
Row: 1, Col: 2, Value: 91.90000000000001
France 91.9%
ASSET ALLOCATION
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 87.8 88.9
Bonds 6.3 3.0
Short-term investments 5.9 8.1
TOP TEN STOCKS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Total SA Class B 4.0 2.3
(Oil & Gas)
Carrefour Supermarche SA 3.5 0.9
(General Merchandise Stores)
Nationale Elf Aquitaine 3.5 2.8
(Oil & Gas)
Groupe Danone 3.3 2.1
(Foods)
Credit Commercial de France Ord. 3.0 3.1
(Banks)
Rhone Poulenc SA Class A 3.0 2.4
(Drugs & Pharmaceuticals)
Societe Generale Class A 2.9 3.6
(Banks)
Canal Plus SA 2.5 1.7
(Broadcasting)
Credit Local de France 2.5 0.0
(Banks)
Schneider SA 2.5 1.8
(Electronics)
TOP TEN MARKET SECTORS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 20.2 19.1
Durables 9.2 5.2
Energy 8.7 5.9
Health 7.9 4.9
Technology 7.6 2.8
Media & Leisure 7.1 11.2
Retail & Wholesale 7.1 9.4
Nondurables 5.4 8.2
Industrial Machinery & Equipment 5.2 4.0
Construction & Real Estate 4.6 6.9
FRANCE
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 87.8%
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 3.5%
AEROSPACE & DEFENSE - 1.1%
Industrielle d'Aviation Latecoere SA 665 $ 60,673
DEFENSE ELECTRONICS - 2.4%
Dassault Electronique SA 950 80,631
Europeene De Propulsion SA 503 47,119
127,750
TOTAL AEROSPACE & DEFENSE 188,423
BASIC INDUSTRIES - 2.6%
CHEMICALS & PLASTICS - 1.2%
L'Air Liquide 418 64,364
METALS & MINING - 1.4%
Eramet SA 712 32,960
Pechiney SA Class A 1,000 42,838
75,798
TOTAL BASIC INDUSTRIES 140,162
CONSTRUCTION & REAL ESTATE - 4.6%
BUILDING MATERIALS - 1.9%
Lafarge Coppee SA 1,710 102,386
CONSTRUCTION - 1.4%
Compagnie de Saint Gobain 570 76,756
REAL ESTATE - 0.7%
Immeubles de France, Ste Des 570 36,042
REAL ESTATE INVESTMENT TRUSTS - 0.6%
Societe Francaise d'Investissements Immobiliers
et de Gescion (SEFIMEG) (Reg.) 380 29,294
TOTAL CONSTRUCTION & REAL ESTATE 244,478
DURABLES - 9.2%
AUTOS, TIRES, & ACCESSORIES - 3.3%
Sylea SA 760 87,658
Valeo SA 1,453 86,999
174,657
CONSUMER DURABLES - 1.3%
l'Europeenne d'Extincteurs 1,192 70,022
HOME FURNISHINGS - 1.3%
Strafor Facom SA 950 71,936
TEXTILES & APPAREL - 3.3%
Alain Manoukian SA 3,779 59,001
Christian Dior SA 903 119,836
178,837
TOTAL DURABLES 495,452
ENERGY - 8.7%
ENERGY SERVICES - 1.2%
Compagnie Generale de
Geophysique SA (a) 950 67,672
OIL & GAS - 7.5%
Nationale Elf Aquitaine 2,360 188,284
Total SA Class B 2,722 212,437
400,721
TOTAL ENERGY 468,393
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
FINANCE - 17.8%
BANKS - 12.9%
Credit Commercial de France Ord. 3,610 $ 161,971
Credit Local de France (c) 1,545 132,609
Credit Lyonnais (a) 1,140 31,125
Paribas SA (Cie Financiere) Class A 1,900 121,995
Societe Generale Class A 1,440 154,848
Union Financiere de France SA 722 88,770
691,318
CREDIT & OTHER FINANCE - 2.1%
Compagnie Europenne de
Telesecurite (C.E.T.) 570 45,609
Axime SA Ex Segin (a) 665 68,914
114,523
INSURANCE - 2.8%
Cardif SA 570 77,869
Scor SA 1,900 72,863
150,732
TOTAL FINANCE 956,573
HEALTH - 5.4%
DRUGS & PHARMACEUTICALS - 5.4%
Rhone Poulenc SA Class A 5,385 159,217
Synthelabo 1,373 130,762
TOTAL HEALTH 289,979
HOLDING COMPANIES - 1.4%
HOLDING COMPANIES - 1.4%
Lagardere S.C.A. (Reg.) 2,330 73,438
INDUSTRIAL MACHINERY & EQUIPMENT - 3.8%
ELECTRICAL EQUIPMENT - 2.0%
Alcatel Alsthom Compagnie
Generale d'Electricite SA 1,264 107,553
INDUSTRIAL MACHINERY & EQUIPMENT - 1.8%
Sidel SA 1,445 96,192
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 203,745
MEDIA & LEISURE - 7.1%
BROADCASTING - 4.5%
Canal Plus SA 545 134,655
NRJ SA 820 105,301
239,956
LEISURE DURABLES & TOYS - 1.0%
Zodiac SA 200 55,425
PUBLISHING - 1.6%
Filipacchi Medias 400 85,870
TOTAL MEDIA & LEISURE 381,251
NONDURABLES - 5.4%
FOODS - 3.3%
Groupe Danone 1,292 176,503
HOUSEHOLD PRODUCTS - 2.1%
Clarins SA 725 99,610
Clarins SA (rights) (a) 800 13,755
113,365
TOTAL NONDURABLES 289,868
COMMON STOCKS - CONTINUED
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - 7.1%
GENERAL MERCHANDISE STORES - 5.5%
Carrefour Supermarche SA 341 $ 188,801
Galeries Lafayette SA (a) 293 105,386
294,187
GROCERY STORES - 1.6%
Guyenne et Gascogne SA 240 86,417
TOTAL RETAIL & WHOLESALE 380,604
SERVICES - 2.4%
LEASING & RENTAL - 0.9%
Cipe France SA 380 46,499
SERVICES - 1.5%
Publicis SA 950 81,577
TOTAL SERVICES 128,076
TECHNOLOGY - 7.6%
COMMUNICATIONS EQUIPMENT - 1.2%
Com 1 SA 1,186 64,114
COMPUTER SERVICES & SOFTWARE - 2.9%
Cap Gemini Sogeti SA (a) 1,140 55,398
Cegid SA 560 54,317
Infogrames Entertainment SA (a) 427 47,667
157,382
COMPUTERS & OFFICE EQUIPMENT - 1.0%
Compagnie des Machines Bull SA 8,550 52,061
ELECTRONICS - 2.5%
Schneider SA 2,708 132,123
TOTAL TECHNOLOGY 405,680
UTILITIES - 1.2%
WATER - 1.2%
Lyonnaise des Eaux Dumez SA (a) 760 67,042
TOTAL COMMON STOCKS
(Cost $4,320,243) 4,713,164
CONVERTIBLE BONDS - 6.3%
(% OF FUND'S INVESTMENTS)
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (B)
FINANCE - 2.4%
INSURANCE - 2.4%
Axa SA 6%, 1/1/01 - FRF 497,295 128,245
HEALTH - 2.5%
DRUGS & PHARMACEUTICALS - 2.5%
Sanofi SA 4%, 1/1/00 - FRF 421,600 136,159
INDUSTRIAL MACHINERY & EQUIPMENT - 1.4%
Carbone Lorrane, Le
3 1/4%, 1/1/01 - FRF 250,000 75,917
TOTAL CONVERTIBLE BONDS
(Cost $307,707) 340,321
CASH EQUIVALENTS - 5.9%
(% OF FUND'S INVESTMENTS)
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 315,048 $ 315,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $4,942,950) $ 5,368,485
CURRENCY ABBREVIATIONS
FRF - French franc
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 $132,609 or 2.4% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $10,626,832 and $6,261,907, 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 $1,234 for the period.
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $4,955,192. Net unrealized appreciation aggregated
$413,293 of which $527,011 related to appreciated investment securities and
$113,718 related to depreciated investment securities.
For the period, interest and dividends from foreign countries were
$200,952. Taxes accrued or paid to foreign countries were $28,052.
FRANCE
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at value (including repurchase agreements of $315,000) (cost $4,942,950) - See $ 5,368,485
accompanying schedule
Cash 205
Receivable for investments sold 153,758
Receivable for fund shares sold 1,445
Dividends receivable 54,722
Receivable from investment adviser for expense reductions 11,846
TOTAL ASSETS 5,590,461
LIABILITIES
Payable for fund shares redeemed $ 23,520
Accrued management fee 3,529
Other payables and 21,631
accrued expenses
TOTAL LIABILITIES 48,680
NET ASSETS $ 5,541,781
Net Assets consist of:
Paid in capital $ 4,616,316
Undistributed net investment income 87,666
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 415,033
Net unrealized appreciation (depreciation) on investments 422,766
and assets and liabilities in
foreign currencies
NET ASSETS, for 452,619 $ 5,541,781
shares outstanding
NET ASSET VALUE and redemption price per share ($5,541,781 (divided by) 452,619 shares) $12.24
Maximum offering price per share (100/97.00 of $12.24) $12.62
</TABLE>
STATEMENT OF OPERATIONS
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1996
INVESTMENT INCOME $ 195,545
Dividends
Interest 36,250
231,795
Less foreign taxes withheld (28,052
)
TOTAL INCOME 203,743
EXPENSES
Management fee $ 41,011
Transfer agent fees 17,581
Accounting fees and expenses 57,381
Non-interested trustees' compensation 20
Custodian fees and expenses 67,765
Registration fees 42,908
Audit 28,906
Legal 50
Miscellaneous 96
Total expenses before reductions 255,718
Expense reductions (146,894 108,824
)
NET INVESTMENT INCOME 94,919
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 418,090
Foreign currency transactions 377 418,467
Change in net unrealized appreciation (depreciation) on:
Investment securities 425,535
Assets and liabilities in foreign currencies (2,769 422,766
)
NET GAIN (LOSS) 841,233
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 936,152
OTHER INFORMATION $ 29,370
Sales charges paid to FDC
Expense reductions $ 135
Custodian interest credits
FMR reimbursement 146,759
$ 146,894
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS NOVEMBER 1, 1995
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1996
<TABLE>
<CAPTION>
<S> <C>
Operations $ 94,919
Net investment income
Net realized gain (loss) 418,467
Change in net unrealized appreciation (depreciation) 422,766
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 936,152
Distributions to shareholders from net investment income (10,687)
Share transactions 11,366,476
Net proceeds from sales of shares
Reinvestment of distributions 10,618
Cost of shares redeemed (6,790,666)
Redemption fees 29,888
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 4,616,316
TOTAL INCREASE (DECREASE) IN NET ASSETS 5,541,781
NET ASSETS
Beginning of period -
End of period (including undistributed net investment income of $87,666) $ 5,541,781
OTHER INFORMATION
Shares
Sold 1,041,015
Issued in reinvestment of distributions 1,052
Redeemed (589,448)
Net increase (decrease) 452,619
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
NOVEMBER 1, 1995
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA 1996
<TABLE>
<CAPTION>
<S> <C>
Net asset value, beginning of period $ 10.00
Income from Investment Operations
Net investment income .23
Net realized and unrealized gain (loss) 1.98
Total from investment operations 2.21
Less Distributions
From net investment income (.04)
Redemption fees added to paid in capital .07
Net asset value, end of period $ 12.24
TOTAL RETURN A, B 22.89%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 5,542
Ratio of expenses to average net assets 2.00% C
Ratio of net investment income to average net assets 1.74%
Portfolio turnover rate 129%
Average commission rate D $ .1932
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS
SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE
NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
D A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
</TABLE>
GERMANY
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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). The fund has a 3% sales charge. If
Fidelity had not reimbursed certain fund expenses during the period shown,
the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED PAST 1 LIFE OF
OCTOBER 31, 1996 YEAR FUND
GERMANY 13.40% 13.40%
GERMANY (INCL. 3% SALES CHARGE) 10.00% 10.00%
Deutscher Aktienindex 100 12.88% 12.88%
European Region Funds Average 17.03% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, the one year period since the fund
started on November 1, 1995. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Deutscher Aktienindex (DAX) 100 - a market capitalization weighted index of
the 100 most heavily traded stocks in the German market. To measure how the
fund's performance stacked up against its peers, you can compare the fund's
performance to the European region funds average, which reflects the
performance of 43 mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. over the past 12 months. 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, 1996 YEAR FUND
GERMANY 13.40% 13.40%
GERMANY (INCL. 3% SALES CHARGE) 10.00% 10.00%
Deutscher Aktienindex 100 12.88% 12.88%
European Region Funds Average 17.03% 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
IMAHDR PRASUN SHR__CHT 19961031 19961108 142647 S00000000000001
Germany EX DAX 100
00346 EX002
1995/11/01 9700.00 10000.00
1995/11/30 9622.40 9965.44
1995/12/31 9835.80 10210.69
1996/01/31 10320.80 10660.65
1996/02/29 10369.30 10743.29
1996/03/31 10495.40 10726.01
1996/04/30 10194.70 10329.62
1996/05/31 10573.00 10594.27
1996/06/30 10650.60 10868.98
1996/07/31 10524.50 10834.10
1996/08/31 10660.30 11091.29
1996/09/30 10747.60 11192.08
1996/10/31 10999.80 11287.60
IMATRL PRASUN SHR__CHT 19961031 19961108 142648 R00000000000015
Let's say hypothetically that $10,000 was invested in Fidelity Germany Fund
on November 1, 1995, when the fund started and the 3% sales charge was
paid. As the chart shows, by October 31, 1996, the value of the investment
would have grown to $11,000 - a 10.00% increase on the initial investment.
For comparison, look at how the Deutscher Aktienindex 100 did over the same
period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $11,288 - a 12.88% 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.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
GERMANY
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Alexandra Edzard became portfolio manager of the
Fidelity Germany Fund on September 1, 1996.
Q. HOW HAS THE FUND PERFORMED, ALEXANDRA?
A. For the year that ended October 31, 1996, the fund returned 13.40%. The
fund's benchmark - the Deutscher Aktienindex 100 - returned 12.88% for the
same 12-month period. The total return for the European region funds
average was 17.03% for the same period, according to Lipper Analytical
Services.
Q. WHAT HAS THE INVESTMENT ENVIRONMENT BEEN LIKE FOR THE GERMAN MARKET
DURING THE PAST SIX MONTHS?
A. From a microeconomic point of view, I'd characterize the environment as
slowly improving, with German companies beginning to make changes for the
better. Across the country, some companies' top management teams are
learning to more carefully focus their efforts on their core businesses and
to set return targets comparable with other international companies. For
many companies, a period of too low returns due to "diworsefication" -
where companies have made acquisitions outside their core businesses -
appears to be coming to an end. They have restructured, set reasonable
return targets and implemented new strategies. From a macroeconomic point
of view, on the other hand, the environment continued to be tough. The
country's unemployment rate remained above 11%, and the end of the period
left many investors still waiting for some signs that the economy was
picking up steam. There was a small indication of improvement when business
sentiment strengthened very late in the period.
Q. HOW HAVE YOU STRUCTURED THE PORTFOLIO SO FAR?
A. I mainly invested in blue chip companies with proactive management
teams, clear strategies, and restructuring programs with realistic and
achievable return goals. One example is electric utility Veba. Another is
Volkswagen, which has embarked on a restructuring/platform consolidation
program cutting costs and revamping its product lines. I also have found
opportunities in a few smaller companies that are special situations, have
attractive valuations or are growth stocks. An example is MLP, an insurance
broker that had high growth rates due to a unique format in Germany.
Another example is Rhoen Klinikum, a private hospital company which
benefited in a regulated environment from its low cost and high service
approach.
Q. WHERE ELSE DID YOU FIND OPPORTUNITIES?
A. Porsche, the sports car manufacturer, was a strong performer. As a
company producing only 30,000 units annually, it benefited from strong
volumes and the lower cost of its two new models.
Q. TWO CHEMICAL COMPANIES - BASF AND HOECHST - REPRESENTED ABOUT 9% OF THE
FUND'S INVESTMENTS AT THE END OF THE PERIOD. WHAT MADE THESE COMPANIES
ATTRACTIVE?
A. These companies have presented very credible cost-cutting targets and,
as a result, return goals. That was reflected in their recent strong share
price performance.
Q. WHERE HAS THE FUND BEEN UNDERWEIGHTED COMPARED TO THE INDEX?
A. Since taking over the fund, I have maintained a lighter weighting than
the index in engineering companies and department stores. Many engineering
companies - especially the smaller ones - are heavily dependent on revenues
generated from exports. Those that are export-dependent still struggle
under an unfavorable cost structure after a number of years of an
appreciating deutsche mark. Retailers, on the other hand, weren't helped by
high unemployment and very low levels of consumer spending on nondurable
goods.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. The software maker SAP was a disappointment. As SAP's customers made
structural changes, their demand for SAP products declined. That surprised
many market participants, myself included. Fortunately, I was underweighted
in SAP relative to the fund's benchmark. Another weak performer was the
semiconductor chip manufacturer Siemens, which was hurt by the dramatic
decline in DRAM prices.
Q. WHAT IS YOUR OUTLOOK FOR THE GERMAN MARKET?
A. The market already appears to be anticipating the benefits that will
come from restructuring, although in many cases, those benefits have yet to
materialize. Even so, I believe that further structural and managerial
changes could have a very positive effect on stock prices over the next few
years. What's more, the prospects for an economic recovery don't appear to
be factored into stock prices yet. That said, continued improvement in
business confidence would likely be a positive for German stock prices.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of German issuers
FUND NUMBER: 346
TRADING SYMBOL: FGERF *
START DATE: November 1, 1995
SIZE: as of October 31, 1996, more than
$7 million
MANAGER: Alexandra Edzard, since September
1, 1996; joined Fidelity in 1994
* TEMPORARY TRADING SYMBOL
(checkmark)
ALEXANDRA EDZARD ON HER INVESTMENT STYLE:
"When selecting stocks for the fund, I follow purely a
bottom-up approach, meaning that I don't invest
with a broad view of the economy or sectors.
Instead, I invest stock by stock, looking at the
fundamentals or business prospects for each
company in which I invest.
"In this type of environment, the management team of
a given company is very important in my stock
selection. I try to find companies with proactive
management teams that focus on generating cash,
have adequate and realistic return targets, are
committed to restructuring, and are willing to change
in order to create shareholder value."
GERMANY
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
(% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
Other 5.6%
Row: 1, Col: 1, Value: 5.6
Row: 1, Col: 2, Value: 94.40000000000001
Germany 94.4%
AS OF APRIL 30, 1996
Other 3.3%
Row: 1, Col: 1, Value: 3.3
Row: 1, Col: 2, Value: 96.7
Germany 96.7%
ASSET ALLOCATION
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Common Stocks 82.2 81.2
Preferred Stocks 14.2 18.8
Short-term investments 3.6 0.0
TOP TEN STOCKS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Allianz Versich Holdings Ord. (Reg.) 8.6 0.0
(Insurance)
Veba AG Ord. 7.3 6.3
(Electric Utility)
Bayer AG 5.9 5.7
(Chemicals & Plastics)
Siemens AG 5.4 5.3
(Electrical Equipment)
Daimler-Benz AG Ord. 5.2 6.2
(Autos, Tires, & Accessories)
BASF AG 4.7 0.0
(Chemicals & Plastics)
RWE AG 4.5 4.7
(Electric Utility)
Volkswagen AG 4.5 4.5
(Autos, Tires, & Accessories)
Hoechst AG Ord. 4.1 0.0
(Chemicals & Plastics)
Deutsche Bank AG 3.4 6.6
(Banks)
TOP TEN MARKET SECTORS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 27.3 18.3
Durables 19.8 20.3
Basic Industries 19.5 23.6
Utilities 11.8 11.7
Health 6.2 8.0
Industrial Machinery & Equipment 5.4 6.7
Transportation 2.1 2.6
Technology 1.9 0.0
Retail & Wholesale 1.0 5.9
Nondurables 0.9 0.0
GERMANY
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 82.2%
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 19.5%
CHEMICALS & PLASTICS - 15.8%
BASF AG 10,400 $ 336,128
Bayer AG 11,300 425,811
Hoechst AG Ord. 7,800 293,512
Sommer-Allibert Industrie AG 1,400 74,245
1,129,696
IRON & STEEL - 2.2%
Mannesmann AG Ord. 400 156,079
METALS & MINING - 1.5%
Metallgesellschaft AG Ord. (a) 6,000 111,348
TOTAL BASIC INDUSTRIES 1,397,123
CONSTRUCTION & REAL ESTATE - 0.5%
BUILDING MATERIALS - 0.5%
Tarkett AG 1,600 34,573
DURABLES - 11.0%
AUTOS, TIRES, & ACCESSORIES - 8.8%
Bayerische Motoren Werke (BMW) AG 150 87,997
Continental Gummi-Werke AG 5,200 90,609
Daimler-Benz AG Ord. (a) 6,300 371,372
Kolbenschmidt AG (a) 5,900 75,404
625,382
HOME FURNISHINGS - 1.1%
Moebel Walther AG 1,400 80,701
TEXTILES & APPAREL - 1.1%
Adidas AG 920 78,790
TOTAL DURABLES 784,873
FINANCE - 27.3%
BANKS - 14.1%
ABN-AMRO Holdings NV 1,900 107,129
Bayerische Hypotheken-und
Wechselbank AG 4,700 138,868
Bayerische Vereinsbank AG Ord. 2,250 85,230
Commerzbank AG 8,000 179,294
Deutsche Bank AG 5,200 242,195
Dresdner Bank AG Ord. 8,200 218,782
Julius Baer Holding AG 35 36,685
1,008,183
INSURANCE - 13.2%
Allianz Versich Holdings Ord. (Reg.) 340 613,498
Koelnische Ruckesich (Reg.) 72 55,970
Marschollek Lautenschlaeger und
Partner AG 700 106,064
Marschollek Lautenschlaeger und
Partner AG (rights) 700 1,153
Munich Reinsurance AG (Reg.) 70 167,858
944,543
TOTAL FINANCE 1,952,726
HEALTH - 6.2%
DRUGS & PHARMACEUTICALS - 0.4%
Schwarz Pharma AG 400 30,726
MEDICAL EQUIPMENT & SUPPLIES - 1.9%
Gehe AG 2,000 135,051
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
MEDICAL FACILITIES MANAGEMENT - 3.9%
Fresenius Medical Care AG
sponsored ADR (a) 4,781 $ 142,235
Rhoen Klinikum AG 1,150 137,883
280,118
TOTAL HEALTH 445,895
INDUSTRIAL MACHINERY & EQUIPMENT - 5.4%
ELECTRICAL EQUIPMENT - 5.4%
Siemens AG 7,500 387,661
RETAIL & WHOLESALE - 1.0%
RETAIL & WHOLESALE, MISCELLANEOUS - 1.0%
Eurobike AG (a) 3,300 72,828
TECHNOLOGY - 1.9%
COMPUTER SERVICES & SOFTWARE - 1.9%
SAP (Systeme Anwendungen
Produkte) AG 1,050 137,445
TRANSPORTATION - 2.1%
AIR TRANSPORTATION - 2.1%
Lufthansa 11,300 149,108
UTILITIES - 7.3%
ELECTRIC UTILITY - 7.3%
Veba AG Ord. 9,800 522,942
TOTAL COMMON STOCKS
(Cost $5,650,968) 5,885,174
NONCONVERTIBLE PREFERRED STOCKS - 14.2%
(% OF FUND'S INVESTMENTS)
DURABLES - 8.8%
AUTOS, TIRES, & ACCESSORIES - 8.8%
Bayerische Motoren Werke (BMW) AG 450 186,172
Porsche AG (a) 180 121,546
Volkswagen AG 1,050 320,959
628,677
NONDURABLES - 0.9%
BEVERAGES - 0.9%
Berentzen-Gruppe AG (a) 1,900 68,718
UTILITIES - 4.5%
ELECTRIC UTILITY - 4.5%
RWE AG 9,500 321,684
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $923,792) 1,019,079
CASH EQUIVALENTS - 3.6%
(% OF FUND'S INVESTMENTS)
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 256,039 256,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $6,830,760) $ 7,160,253
LEGEND
(a) Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $13,088,853 and $6,799,161, 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 $8,857 for the period.
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $6,832,219. Net unrealized appreciation aggregated
$328,034, of which $460,430 related to appreciated investment securities
and $132,396 related to depreciated investment securities.
For the period, interest and dividends from foreign countries were
$117,370. Taxes accrued or paid to foreign countries were $11,645.
GERMANY
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at value (including repurchase agreements of $256,000) (cost $6,830,760) - See $ 7,160,253
accompanying schedule
Cash 139
Receivable for fund shares sold 49,859
Dividends receivable 3,316
Receivable from investment adviser for expense reductions 7,822
TOTAL ASSETS 7,221,389
LIABILITIES
Payable for fund shares redeemed $ 24,333
Accrued management fee 4,460
Other payables and 14,326
accrued expenses
TOTAL LIABILITIES 43,119
NET ASSETS $ 7,178,270
Net Assets consist of:
Paid in capital $ 6,557,357
Undistributed net investment income 6,207
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 285,262
Net unrealized appreciation (depreciation) on investments 329,444
and assets and liabilities in
foreign currencies
NET ASSETS, for 632,821 $ 7,178,270
shares outstanding
NET ASSET VALUE and redemption price per share ($7,178,270 (divided by) 632,821 shares) $11.34
Maximum offering price per share (100/97.00 of $11.34) $11.69
</TABLE>
STATEMENT OF OPERATIONS
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1996
INVESTMENT INCOME $ 117,370
Dividends
Interest 10,409
127,779
Less foreign taxes withheld (11,645
)
TOTAL INCOME 116,134
EXPENSES
Management fee $ 41,319
Transfer agent fees 19,261
Accounting fees and expenses 57,381
Non-interested trustees' compensation 19
Custodian fees and expenses 26,357
Registration fees 43,501
Audit 28,906
Legal 55
Miscellaneous 7
Total expenses before reductions 216,806
Expense reductions (107,232 109,574
)
NET INVESTMENT INCOME 6,560
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 285,262
Foreign currency transactions (353 284,909
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 329,493
Assets and liabilities in (49 329,444
foreign currencies )
NET GAIN (LOSS) 614,353
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 620,913
OTHER INFORMATION $ 53,774
Sales charges paid to FDC
Expense reductions $ 228
Custodian interest credits
FMR reimbursement 107,004
$ 107,232
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS NOVEMBER 1, 1995
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1996
<TABLE>
<CAPTION>
<S> <C>
Operations $ 6,560
Net investment income
Net realized gain (loss) 284,909
Change in net unrealized appreciation (depreciation) 329,444
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 620,913
Share transactions 9,994,580
Net proceeds from sales of shares
Cost of shares redeemed (3,453,139
)
Redemption fees 15,916
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 6,557,357
TOTAL INCREASE (DECREASE) IN NET ASSETS 7,178,270
NET ASSETS
Beginning of period -
End of period (including undistributed net investment income of $6,207) $ 7,178,270
OTHER INFORMATION
Shares
Sold 951,953
Redeemed (319,132
)
Net increase (decrease) 632,821
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
NOVEMBER 1, 1995
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA 1996
<TABLE>
<CAPTION>
<S> <C>
Net asset value, beginning of period $ 10.00
Income from Investment Operations
Net investment income .01
Net realized and unrealized gain (loss) 1.31
Total from investment operations 1.32
Redemption fees added to paid in capital .02
Net asset value, end of period $ 11.34
TOTAL RETURN A, B 13.40%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 7,178
Ratio of expenses to average net assets 2.00% C
Ratio of net investment income to average net assets .12%
Portfolio turnover rate 133%
Average commission rate D $ .1714
A THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE
NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
D A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER
SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT
MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
</TABLE>
HONG KONG AND CHINA
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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). The fund has a 3% sales charge.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED PAST 1 LIFE OF
OCTOBER 31, 1996 YEAR FUND
HONG KONG AND CHINA 29.83% 29.83%
HONG KONG AND CHINA (INCL. 3% SALES CHARGE) 25.93% 25.93%
Hang Seng Index 31.55% 31.55%
Pacific Ex-Japan Funds Average 5.45% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, the one year period since the fund
started on November 1, 1995. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Hang Seng Index - a market capitalization weighted index of the stocks of
the 33 largest companies in the Hong Kong market. You can also compare the
fund's performance to the Pacific Ex-Japan funds average, which reflects
the performance of 52 mutual funds with similar objectives tracked by
Lipper Analytical Services, Inc. during the past 12 months. 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, 1996 YEAR FUND
HONG KONG AND CHINA 29.83% 29.83%
HONG KONG AND CHINA (INCL. 3% SALES CHARGE) 25.93% 25.93%
Hang Seng Index 31.55% 31.55%
Pacific Ex-Japan Funds Average 5.45% 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
IMAHDR PRASUN SHR__CHT 19961031 19961108 142828 S00000000000001
Hong Kong and China EX Hang Seng
00352 EX004
1995/11/01 9700.00 10000.00
1995/11/30 9729.10 10056.30
1995/12/31 9942.65 10356.20
1996/01/31 11136.94 11708.58
1996/02/29 11001.00 11494.93
1996/03/31 10787.39 11345.73
1996/04/30 10816.52 11378.92
1996/05/31 11156.36 11718.38
1996/06/30 11010.71 11486.92
1996/07/31 10738.84 11173.46
1996/08/31 11272.87 11704.20
1996/09/30 12010.80 12514.94
1996/10/31 12593.38 13154.67
IMATRL PRASUN SHR__CHT 19961031 19961108 142830 R00000000000015
Let's say hypothetically that $10,000 was invested in Fidelity Hong Kong
and China Fund on November 1, 1995, when the fund started and the 3% sales
charge was paid. As the charts shows, by October 31, 1996, the value of the
investment would have grown to $12,593 - a 25.93% increase on the initial
investment. For comparison, look at how the Hang Seng Index did over the
same period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $13,155 - a
31.55% 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.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
HONG KONG AND CHINA
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Joseph Tse, Portfolio Manager of Fidelity Hong Kong and
China Fund
Q. HOW DID THE FUND PERFORM, JOSEPH?
A. The fund did pretty well during its first year, significantly
outperforming its peer group, but slightly lagging its benchmark index.
During the 12 months that ended on October 31, 1996, the fund returned
29.83%, while the Pacific Ex-Japan funds average had a return of 5.45%
during the same period, according to Lipper Analytical Services. The Hang
Seng Index was up 31.55% during the same period.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE IN THE AREA OVER THE PAST SIX
MONTHS?
A. During the first half of the past six months, the market was uneventful,
more or less moving sideways and consolidating the steep gains from the
first quarter of calendar 1996. Inflows to the market were negligible
during this three-month period. Over the past three months, however, the
market has moved almost straight up based, I think, on three factors.
First, there was a strengthening of the property market, particularly on
the residential side. The property - or real estate - market in Hong Kong
is the most important sector of the stock market by far. The property
market here may be unique in all the world. Hong Kong has more than
7,000,000 people in an area less than half the size of Rhode Island. Land
is finite and everyone wants to own their own home. So the property market
is a good indication of the state of the Hong Kong economy. The second
factor was that encouraging figures began to come out of China confirming
the trend of lowering interest rates there. Finally, the concern about the
potential rise in U.S. interest rates - which the Hong Kong rates generally
are pegged to - subsided. These three factors, combined with some stronger
investment inflows, produced a pretty encouraging investment environment in
Hong Kong. In general, the stock market was led upward by the larger, blue
chip companies.
Q. AGAINST THIS BACKDROP, WHAT WERE THE KEYS TO THE FUND'S PERFORMANCE?
A. The fund had a strong position in property companies that did quite well
during the period. I was about as invested in this sector, which makes up
more than 40% of the Hang Seng Index, as the fund's prospectus allows, and
the choice of stocks I invested in and the fund's weightings in them worked
out well. These stocks included a number of the fund's larger holdings,
such as Sun Hung Kai Properties, Henderson Land Development, Cheung Kong
Holdings and New World Development, which are all among the largest
property companies in Hong Kong. The larger companies have a clear
long-term advantage over their smaller competitors in that they have the
financial resources to purchase land cheaply and invest in major projects
that may not provide returns for years to come. Another property company,
Great Eagle, which specializes in the rental of office space, was flat
during most of the period, which hurt performance, but began a dramatic
rise as the period was ending. Finally, the fund was underweighted in the
utilities, which performed poorly during the period. In this case, what I
didn't hold helped the fund's performance.
Q. THE FUND'S LARGEST HOLDING, HSBC, PERFORMED WELL DURING THE PERIOD . . .
A. HSBC, a global bank and the leading financial institution in Hong Kong,
performed very well, up close to 40% over the past six months. In my
opinion, it's a low-risk way to play the Hong Kong-China market because of
its numerous investments and gives investors an excellent entree into Asia.
This stock was relatively flat during the prior six months, but saw
investments from London-based institutions over the most recent six months,
which helped the stock. However, I was limited in how much of the fund's
holdings I could invest in any one security and, in this case, HSBC made up
more of the fund's index than I could invest in it. To compensate for this
differential, I invested in some smaller Hong Kong banks. However, these
positions did not perform nearly as well as HSBC, and they were a drag on
the fund's performance.
Q. LET'S FOCUS FOR A MINUTE ON SOME OF YOUR LARGER HOLDINGS IN THE PROPERTY
SECTOR . . .
A. Sun Hung Kai generally is known as the best-managed property company in
Hong Kong, with a long history of accumulating valuable land. It's also the
only such company with a real franchise in building apartments, which
otherwise are viewed as commodities. So Sun Hung Kai can command a premium
for their properties, can sell them better during down periods and can earn
higher net margins. Unlike Sun Hung Kai, whose business is 40% rental and
60% sales of properties, Henderson Land Development is strictly a property
development and sales company, with no rental business. It's probably been
the best performing stock in Hong Kong over the past decade, and it
appreciated over 24% during the past six months. It's success has been
based on a focus on doing one thing - property development and sales - very
well, as well as on the accumulation of inexpensive land that can be
developed in the future.
Q. LET'S SHIFT GEARS AND LOOK AT A TOP HOLDING IN ANOTHER SECTOR. IT LOOKS
LIKE YOU TRIPLED THE FUND'S HOLDINGS IN HONG KONG TELECOMMUNICATIONS . . .
A. Hong Kong Telecom is one of the most important companies in the market
but, similar to other utilities in Hong Kong, its stock had performed
poorly for some time and the fund held only a small position entering the
past six months. I increased my holdings over the past six months for a
couple of reasons. First, I thought the company began to look inexpensive
in both absolute and relative terms after a period of severe
underperformance. Second, I saw the company as a good, liquid way to invest
in China. In fact, Chinese phone traffic makes up more than half of Hong
Kong Telecom's traffic, and continues to grow.
Q. IS THE FUND INVESTING DIRECTLY IN CHINA?
A. All of Hong Kong is China, meaning that the main way to make money in
Hong Kong is through China, but not directly, at least not through listed
investment vehicles. There are a few companies in China that are reasonable
investments, but for the most part they are very rare. However, the money
made in China flows back to the Hong Kong property market as I mentioned
earlier. So in effect, investing in the Hong Kong property market is one of
the best ways to invest in China.
Q. HOW DO YOU SEE THE MARKET OVER THE NEXT SIX MONTHS OR SO?
A. I'm pretty positive about the future, but the market has had a very good
run over the past year, up about 30%. I wouldn't call the market dirt cheap
at the moment. To stay healthy, I'd say the market should take a rest and
consolidate its gains for the next few months. That said, we haven't yet
seen many marginal investors - traditionally from the U.S. and Japan -
pouring money into this market as they did in 1993 when the market doubled.
I think a moderate version of that could happen again, but I don't know
when.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Hong Kong and
Chinese issuers
FUND NUMBER: 352
TRADING SYMBOL: FHKCX
START DATE: November 1, 1995
SIZE: as of October 31, 1996, more than
$109 million
MANAGER: Joseph Tse, since inception;
director of research, Fidelity Investments
Management [Hong Kong], since 1994;
manager, Asian portion of various global
equity funds, since 1993; analyst covering
Hong Kong and Chinese equities, 1990 to
1993; joined Fidelity in 1990
(checkmark)
JOSEPH TSE ON THE CHANGE IN GOVERNANCE OF HONG KONG
NEXT JUNE:
"So far, the coming changeover from British to
Chinese rule next June has proven to be a positive
for the stock market. The bull market over the past
three months has had a lot to do with investors'
optimism about the changeover. The market
sentiment has turned from mostly undecided at the
beginning of this year and last year to positive, and
almost a consensus that the changeover will
produce a better investment environment at least for
the foreseeable future.
"Investors believe that China would not want the
Hong Kong market to go down the drain immediately
after June 1997. The stock market is a very good
indicator of that sentiment. If things weren't going
well, the stock market would have responded very
negatively. Yet investors see money continuing to
come into the Hong Kong property and financial
markets from China. They're also seeing political
events - such as the election of a new governor of
the Special Administrative Region - as non-events,
more or less, which is different from how they saw
such events in past years. In essence, investors now
realize that the changeover really has taken place
already, and has taken place for some time. It's not
an overnight thing and never should have been seen
that way.
"Ten years ago, we saw people moving out of Hong
Kong to the United States, Canada and Australia, for
example, because they were concerned about the
changeover a decade away. Today, we're seeing
those people move back - and they're bringing
human and financial resources with them. When the
official day comes for the changeover in June, it's
going to be uneventful, a non-event. In fact, there are
agreements between Hong Kong, China and Great
Britain that Hong Kong will be kept status quo for 50
years. People finally are believing that."
HONG KONG AND CHINA
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
(% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
Other 7.4%
Row: 1, Col: 1, Value: 7.4
Row: 1, Col: 2, Value: 92.59999999999999
Hong Kong 92.6%
AS OF APRIL 30, 1996
Other 3.6%
Row: 1, Col: 1, Value: 3.6
Row: 1, Col: 2, Value: 96.40000000000001
Hong Kong 96.4%
ASSET ALLOCATION
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 95.8 98.3
Short-term investments 4.2 1.7
TOP TEN STOCKS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
HSBC Holdings PLC 14.8 12.6
(Banks)
Sun Hung Kai Properties Ltd. 9.8 10.0
(Real Estate)
Hutchison Whampoa Ltd. Ord. 9.7 8.8
(Electrical Equipment)
Henderson Land Development Co. Ltd. 9.6 5.0
(Real Estate)
Cheung Kong Holdings Ltd. 4.8 6.1
(Real Estate)
New World Development Co. 4.8 2.4
(Real Estate)
Hang Seng Bank Ltd. 4.7 5.0
(Banks)
Great Eagle Holdings Ltd. 4.3 4.2
(Real Estate)
Wharf Holdings Ltd. 4.1 4.9
(Real Estate)
Hong Kong Telecommunications Ltd. 3.8 2.0
(Telephone Services)
TOP TEN MARKET SECTORS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Construction & Real Estate 43.9 35.8
Finance 22.5 22.2
Industrial Machinery & Equipment 10.6 10.0
Utilities 5.6 8.5
Transportation 4.3 4.3
Retail & Wholesale 3.1 2.3
Holding Companies 2.3 9.9
Durables 1.6 0.0
Media & Leisure 1.3 4.1
Nondurables 0.6 1.0
HONG KONG AND CHINA
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.8%
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
CONSTRUCTION & REAL ESTATE - 43.9%
CONSTRUCTION - 2.8%
Cheung Kong Infrastructure
Holdings Ltd. (a) 1,196,000 $ 2,227,361
Hopewell Holdings Ltd. 1,280,000 860,816
3,088,177
REAL ESTATE - 41.1%
Cheung Kong Holdings Ltd. 664,000 5,324,229
Great Eagle Holdings Ltd. 1,475,532 4,742,114
Henderson Land Development Co. Ltd. 1,194,700 10,622,543
Henderson Investment Ltd. 586,000 640,400
Hong Kong Land Holdings Ltd. 290,000 646,700
Hysan Development Co. Ltd. 494,000 1,584,439
Hysan Development Co. Ltd.
(warrants) (a) 49,600 23,895
Kerry Properties Ltd. (a) 136,000 320,116
New World Development Co. Ltd. 913,307 5,315,281
Sino Land Co. Ltd. (a) 864,000 960,968
Sun Hung Kai Properties Ltd. 949,000 10,800,548
Wharf Holdings Ltd. (b) 1,096,000 4,521,663
45,502,896
TOTAL CONSTRUCTION & REAL ESTATE 48,591,073
DURABLES - 1.6%
AUTOS, TIRES, & ACCESSORIES - 1.6%
Gold Peak Industries Ltd. 706,000 438,271
Sime Darby Hongkong Ltd. 1,154,000 1,365,601
1,803,872
FINANCE - 22.5%
BANKS - 21.8%
Bank of East Asia 214,200 836,611
Dao Heng Bank Group Ltd. 246,000 1,081,710
FPB Bank Holding Co. Ltd. 604,000 259,732
Hang Seng Bank Ltd. 436,900 5,184,239
HSBC Holdings PLC 796,676 16,319,055
Liu Chong Hing Bank Ltd. 129,000 187,689
Wing Hang Bank Ltd. 61,500 247,362
24,116,398
SECURITIES INDUSTRY - 0.7%
Guoco Group Ltd. 148,000 782,856
TOTAL FINANCE 24,899,254
HOLDING COMPANIES - 2.3%
Citic Pacific Ltd. Ord. 130,000 632,162
Wheelock & Co. Ltd. 854,000 1,921,782
2,553,944
INDUSTRIAL MACHINERY & EQUIPMENT - 10.6%
ELECTRICAL EQUIPMENT - 10.6%
Harbin Power Equipment Co. Ltd. Class H 786,000 104,702
Hutchison Whampoa Ltd. Ord. 1,541,000 10,762,008
Johnson Electric Holdings Ltd. 369,000 806,510
11,673,220
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
Dongfang Electrical Machinary Co.
Class H 126,000 30,636
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 11,703,856
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - 1.3%
LODGING & GAMING - 1.3%
Mandarin Oriental International Ltd. 941,866 $ 1,271,519
Sino Hotels Holdings Ltd. 348,000 151,897
1,423,416
NONDURABLES - 0.6%
FOODS - 0.6%
Tingyi Holding Co. (a) 3,102,000 686,017
RETAIL & WHOLESALE - 3.1%
APPAREL STORES - 2.7%
Esprit Asia Holdings Ltd. 1,034,000 447,984
Giordano Holdings Ltd. Ord. 863,000 870,567
Goldlion Holdings Ltd. 2,057,000 1,675,991
2,994,542
RETAIL & WHOLESALE, MISCELLANEOUS - 0.4%
Dickson Concepts International Ltd. 113,600 379,049
TOTAL RETAIL & WHOLESALE 3,373,591
TRANSPORTATION - 4.3%
AIR TRANSPORTATION - 2.3%
Swire Pacific Ltd. Class A 292,500 2,581,817
TRUCKING & FREIGHT - 2.0%
New World Infrastructure Ltd. (a) 883,400 2,199,303
TOTAL TRANSPORTATION 4,781,120
UTILITIES - 5.6%
ELECTRIC UTILITY - 0.8%
Huaneng Power International, Inc.
Class N sponsored ADR (a) 48,000 732,000
Shandong Huaneng Power Development Ltd.
Class N sponsored ADR 9,100 83,038
815,038
GAS - 1.0%
Hong Kong & China Gas Co. Ltd. 608,000 1,069,398
Hong Kong & China Gas Co. Ltd.
(warrants) (a) 135,600 49,981
1,119,379
TELEPHONE SERVICES - 3.8%
Hong Kong Telecommunications Ltd. 2,398,800 4,227,882
TOTAL UTILITIES 6,162,299
TOTAL COMMON STOCKS
(Cost $94,781,914) 105,978,442
CASH EQUIVALENTS - 4.2%
(% OF FUND'S INVESTMENTS)
MATURITY
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 4,597,707 4,597,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $99,378,914) $ 110,575,442
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 $4,521,663 or 4.1% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $159,228,406 and $65,423,638, respectively.
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $99,513,001. Net unrealized appreciation depreciation
aggregated $11,062,441, of which $11,588,254 related to appreciated
investment securities and $525,813 related to depreciated investment
securities.
For the period, interest and dividends from foreign countries were
$2,294,078. Taxes accrued or paid to foreign countries were $47,254.
HONG KONG AND CHINA
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at $ 110,575,442
value (including repurchase agreements of $4,597,000)
(cost $99,378,914) - See accompanying schedule
Cash 358
Receivable for investments sold 903,879
Receivable for fund shares sold 801,445
Dividends receivable 471,865
Redemption fees receivable 1,929
TOTAL ASSETS 112,754,918
LIABILITIES
Payable for investments purchased $ 2,523,378
Payable for fund shares redeemed 213,885
Accrued management fee 61,557
Other payables and 75,876
accrued expenses
TOTAL LIABILITIES 2,874,696
NET ASSETS $ 109,880,222
Net Assets consist of:
Paid in capital $ 96,234,814
Undistributed net investment income 1,471,740
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 977,146
Net unrealized appreciation (depreciation) on investments 11,196,522
and assets and liabilities in
foreign currencies
NET ASSETS, for 8,470,615 $ 109,880,222
shares outstanding
NET ASSET VALUE and redemption price per share ($109,880,222 (divided by) 8,470,615 shares) $12.97
</TABLE>
Maximum offering price per share (100/97.00 of $12.97) $13.37
STATEMENT OF OPERATIONS
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1996
INVESTMENT INCOME $ 2,294,078
Dividends
Interest 185,609
2,479,687
Less foreign taxes withheld (47,254
)
TOTAL INCOME 2,432,433
EXPENSES
Management fee $ 439,689
Transfer agent fees 198,170
Accounting fees and expenses 57,751
Non-interested trustees' compensation 199
Custodian fees and expenses 122,476
Registration fees 100,172
Audit 30,000
Legal 566
Miscellaneous 51
Total expenses before reductions 949,074
Expense reductions (324 948,750
)
NET INVESTMENT INCOME 1,483,683
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 977,146
Foreign currency transactions (646 976,500
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 11,196,528
Assets and liabilities in (6 11,196,522
foreign currencies )
NET GAIN (LOSS) 12,173,022
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 13,656,705
OTHER INFORMATION $ 575,460
Sales charges paid to FDC
Expense reductions $ 324
Transfer agent interest credits
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS NOVEMBER 1, 1995
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1996
<TABLE>
<CAPTION>
<S> <C>
Operations $ 1,483,683
Net investment income
Net realized gain (loss) 976,500
Change in net unrealized appreciation (depreciation) 11,196,522
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 13,656,705
Distributions to shareholders from net investment income (11,297
)
Share transactions 148,300,504
Net proceeds from sales of shares
Reinvestment of distributions 11,187
Cost of shares redeemed (52,326,724
)
Redemption fees 249,847
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 96,234,814
TOTAL INCREASE (DECREASE) IN NET ASSETS 109,880,222
NET ASSETS
Beginning of period -
End of period (including undistributed net investment income of $1,471,740) $ 109,880,222
OTHER INFORMATION
Shares
Sold 13,096,572
Issued in reinvestment of distributions 1,110
Redeemed (4,627,067
)
Net increase (decrease) 8,470,615
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
NOVEMBER 1, 1995
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA 1996
<TABLE>
<CAPTION>
<S> <C>
Net asset value, beginning of period $ 10.00
Income from Investment Operations
Net investment income .29 C
Net realized and unrealized gain (loss) 2.64
Total from investment operations 2.93
Less Distributions
From net investment income (.01)
Redemption fees added to paid in capital .05
Net asset value, end of period $ 12.97
TOTAL RETURN A 29.83%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 109,880
Ratio of expenses to average net assets 1.62%
Ratio of net investment income to average net assets 2.53%
Portfolio turnover rate 118%
Average commission rate B $ .0049
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
C 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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). The fund has a 3% sales charge. If
Fidelity had not reimbursed certain fund expenses, the life of fund total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1996 YEAR FUND
JAPAN -3.31% 24.10%
JAPAN (INCL. 3% SALES CHARGE) -6.21% 20.38%
Tokyo Stock Exchange Index -0.52% 26.50%
Japanese Funds Average -0.93% 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. For example, if you invested $1,000 in a fund that had
a 5% return over the past year, the value of your investment would be
$1,050. You can compare the fund's returns to the performance of the Tokyo
Stock Exchange (TOPIX) Index - a market capitalization weighted index of
over 1,100 stocks traded in the Japanese market. To measure how the fund's
performance stacked up against its peers, you can compare it to the
Japanese funds average, which reflects the performance of 15 mutual funds
with similar objectives - in this case, a very small peer group - tracked
by Lipper Analytical Services, Inc. over the past 12 months. 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, 1996 YEAR FUND
JAPAN -3.31% 5.36%
JAPAN (INCL. 3% SALES CHARGE) -6.21% 4.59%
Tokyo Stock Exchange Index -0.52% 5.85%
Japanese Funds Average -0.93% 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
IMAHDR PRASUN SHR__CHT 19961031 19961111 143741 S00000000000001
Japan Fund TOPIX Total Return Index
00350 TK001
1992/09/15 9700.00 10000.00
1992/09/30 9641.80 9811.27
1992/10/31 9544.80 9332.17
1992/11/30 9641.80 9572.82
1992/12/31 9661.20 9433.21
1993/01/31 9748.50 9384.24
1993/02/28 10301.40 9811.42
1993/03/31 11484.80 11248.65
1993/04/30 13036.80 13164.83
1993/05/31 13405.40 13960.79
1993/06/30 12610.00 13384.04
1993/07/31 13453.90 14324.51
1993/08/31 13686.70 14644.62
1993/09/30 13318.10 13883.59
1993/10/31 12949.50 13630.65
1993/11/30 11252.00 11425.15
1993/12/31 11637.09 11710.09
1994/01/31 13010.29 13580.32
1994/02/28 13621.71 14243.17
1994/03/31 13391.17 13839.98
1994/04/30 13701.90 14380.65
1994/05/31 14082.78 14642.50
1994/06/30 14934.77 15458.92
1994/07/31 14443.62 14904.58
1994/08/31 14393.51 14941.03
1994/09/30 14042.69 14546.44
1994/10/31 14303.30 14931.14
1994/11/30 13331.03 14046.14
1994/12/31 13552.55 14293.80
1995/01/31 12387.96 13541.08
1995/02/28 11810.82 12774.70
1995/03/31 12758.98 13878.24
1995/04/30 12913.57 14542.52
1995/05/31 12181.84 13603.56
1995/06/30 12016.94 12954.90
1995/07/31 12820.82 13954.75
1995/08/31 12769.29 13412.04
1995/09/30 12738.37 13423.28
1995/10/31 12449.80 12716.06
1995/11/30 12594.08 13459.05
1995/12/31 13263.98 14061.61
1996/01/31 13171.23 13926.68
1996/02/29 12810.51 13703.32
1996/03/31 13171.23 14163.25
1996/04/30 14016.33 15115.19
1996/05/31 13511.33 14383.22
1996/06/30 13748.37 14452.27
1996/07/31 13068.16 13750.93
1996/08/31 12573.47 13172.22
1996/09/30 12862.04 13551.64
1996/10/31 12037.55 12650.04
IMATRL PRASUN SHR__CHT 19961031 19961111 143743 R00000000000053
Let's say hypothetically that $10,000 was invested in Fidelity Japan Fund
on September 15, 1992, when the fund started and the 3% sales charge was
paid. As the chart shows, by October 31, 1996, the value of the investment
would have grown to $12,038 - a 20.38% increase on the initial investment.
For comparison, look at how the Tokyo Stock Exchange Index did over the
same period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $12,650 - a 26.50% 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.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
JAPAN
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Shigeki Makino, Portfolio Manager of Fidelity Japan Fund
Q. HOW DID THE FUND PERFORM, SHIGEKI?
A. The fund had a total return of -3.31% for the 12 months that ended
October 31, 1996. That trailed the Tokyo Stock Exchange Index (TOPIX) - a
measure of the overall performance of the Japanese stock market - which
returned -0.52% over the same period. In addition, the fund's performance
lagged that of the Japanese funds average, which returned -0.93% over the
same period, according to Lipper Analytical Services.
Q. WHAT FACTORS LED TO THE FUND'S UNDERPERFORMANCE RELATIVE TO THE INDEX
AND THE AVERAGE?
A. The reason the fund underperformed the index was the poor performance of
the fund's electronics and semiconductor stocks at the very beginning of
the period, specifically November and December 1995 and the beginning of
January 1996. At that time, the fund had more invested in these kinds of
stocks than the index, and they fell as a group when it became clear that
the electronics and semiconductor booms were coming to a pause, if not an
end. During the same time frame, the sector in the index that performed the
best was finance - and banks, specifically - an area where the fund had
less invested than the index. Compared to the funds average, the main cause
for underperformance was currency depreciation. The yen depreciated about
12% during the 12-month period. While some funds use currency hedging to
prevent currency losses, Japan Fund does not. As a result, the fund lost
ground against the average due to the weakness of the Japanese market, as
well as to the weakening yen.
Q. WHAT HAS THE JAPANESE MARKET BEEN LIKE OVER THE PAST SIX MONTHS?
A. It has struggled, with both the market and the value of the yen
declining. A number of factors contributed. First, business prospects
overall have worsened since July, although not dramatically. Corporate
earnings weakened, including poor performance from the electronics and
related industries. These industries, you'll remember,
carried the market and corporate earnings in 1995. With a slowdown in
semiconductor profits, we saw a significant downturn in corporate earnings.
Second, the Japanese government historically has issued supplemental
budgets authorizing additional spending, but this year didn't produce any.
This fall-off from the public sector hurt the economy and corporate
prospects. Third, at the end of July there was a scare revolving around a
bacterial epidemic that severely cut into consumer spending, which had been
a major driver of the economy this year. Finally, some of the expectations
and positive implications of a weaker yen were not realized by many
businesses.
Q. CAN YOU EXPLAIN WHY A WEAKER YEN DIDN'T NECESSARILY PRODUCE A MORE
POSITIVE BACKDROP?
A. Many companies that should have benefited from a weakening yen -
especially exporters - didn't benefit, instead giving back that benefit in
the form of lower pricing overseas. Japanese companies in the consumer
electronics and associated industries were fighting price wars against each
other. As soon as the yen weakened, they slashed prices in a fight for
market share. On the other hand, companies with international competitors -
such as auto makers - were able to keep their overseas pricing steady and
realize currency-related gains. In sum, I believe the market - and the
fund, somewhat - overestimated the positive effects of the yen's weakness.
At the same time, one of my strategies was to invest in those companies
that were able to benefit from yen depreciation.
Q. WERE THERE OTHER BROAD INVESTMENT STRATEGIES THAT YOU PURSUED?
A. I shifted the fund away from economically sensitive investments to those
that were more growth-oriented and shareholder-friendly. I believe we'll
see an economic recovery in Japan, but it's going to be very gradual.
Because of that, I don't think it's best to position the fund to be very
sensitive to economic improvements. Rather, I've focused on increasing
investments in companies that have significant business franchises and that
can extract very high returns on investment over the long haul. In addition
to providing opportunities for growth, these companies also have
managements that are very shareholder-friendly. This was an especially
important focus six months ago when the market was accelerating. At that
point, I decided to focus on these long-term, two- to three-year ideas
because I felt that if the market dropped I could add to the positions more
easily than if I bought investments with a shorter-term horizon. I made
exactly those kinds of purchases when the market dropped. As the market
declined, I concentrated more of the fund on those businesses that I had
identified as having significant business franchises, shareholder-oriented
management and good growth opportunities.
Q. TWO OF THE FUND'S TOP 10 INVESTMENTS ARE BANKING STOCKS, MITSUI TRUST
AND SAKURA BANK. WHAT'S YOUR FEELING ABOUT THE BANK SECTOR AT THIS POINT?
A. While I didn't think many banks were attractive, I found that these two
were, because they became more oriented toward providing a solid return on
assets and return on equity. Looking at the sector as a whole, some
investors felt prospects were dim due to unidentified bad loans, high stock
valuations and poor loan growth. On the other hand, some banks were
actually very cheap when their share prices were compared to the value of
their deposits - the sources of loans and profits. Generally speaking,
banks also were finally looking to cut costs, restructure their loans, rid
themselves of nonperforming loans and refocus their loan portfolios away
from large corporations and more toward small- or medium-sized companies
where interest margins tend to be much wider.
Q. WHAT'S YOUR OUTLOOK?
A. I'm generally optimistic. First, we're approaching the November to May
season, which historically has been a strong season for this market.
Second, I think we'll start to see more of the benefits of the yen's
weakness. Third, interest rates continued to decline - and bond prices to
rise - over the past six months, and it's very rare to see the bond market
rally without some sort of beneficial effect on stocks. Fourth, stock
valuations have become very cheap, especially when compared to bonds.
Finally, I believe the economy will improve somewhat going forward. If you
put all of these influences together, I believe we'll see the market trade
up over the next six months, and that it will be a good time to be invested
in the Japanese market.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Japanese issuers
FUND NUMBER: 350
TRADING SYMBOL: FJAPX
START DATE: September 15, 1992
SIZE: as of October 31, 1996, more than
$290 million
MANAGER: Shigeki Makino, since 1994;
manager, Fidelity Pacific Basin Fund, since
May 1996; analyst, Fidelity Japan Fund,
1993- 1994; joined Fidelity in 1990
(checkmark)
SHIGEKI MAKINO ON THE LONG-TERM FUTURE OF THE JAPANESE
STOCK MARKET:
"I believe the market in Japan will improve slowly. If
you want to invest in Japan, you have to focus on the
long term, because the variables over the long term
make prospects in Japan very interesting. First,
sentiment toward Japan is very bearish, or negative.
Foreign investors who had been slightly bullish, or
optimistic, have pulled back since the summer,
because the market went down, the yen was
weakening and the economy was slower than six
months before. Japanese investors also have
continued to be bearish about their own market.
"According to studies, domestic Japanese
investors have the lowest percentage of net worth
invested in equities in over a decade. These
investors have been hurt dramatically, suffering from
a huge shrinkage of wealth during the collapse of the
equity and real estate markets. Additionally, they
have a significant disdain for both of these markets,
but more so for the stock market. In fact, one study
showed that 80% or more of Japanese investors
preferred bank deposits over stocks, even though
banks were offering less than 1% annual interest.
"I'm a contrarian investor, favoring securities and
markets that are out of favor in the belief that most
signs of good news can cause a rebound. As a
result, I find this overall backdrop to be quite
favorable. For things to turn around, the market
needs to show some signs of recovery, with
corporate earnings improving steadily. Domestic
Japanese investors will need to experience making
money again because they haven't for a while. On
top of all of these problems, these investors lost
money overseas for quite some time when the yen
was appreciating and cutting into gains. We're finally
starting to see investors making money on
Japanese and foreign bonds because of the recent
yen weakness, and that's a good sign."
JAPAN
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
(% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
Other 1.7%
United States 2.0%
Row: 1, Col: 1, Value: 2.0
Row: 1, Col: 2, Value: 1.7
Row: 1, Col: 3, Value: 96.3
Japan 96.3%
AS OF APRIL 30, 1996
United States 4.3%
Other 1.8%
Row: 1, Col: 1, Value: 4.3
Row: 1, Col: 2, Value: 1.8
Row: 1, Col: 3, Value: 93.90000000000001
Japan 93.9%
ASSET ALLOCATION
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks, closed-end investment
companies and equity futures 97.2 95.6
Bonds 0.8 1.3
Short-term investments 2.0 3.1
TOP TEN STOCKS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Fuji Photo Film Co. Ltd. 3.4 2.8
(Photographic Equipment)
Matsushita Electric Industrial Co. Ltd. 3.2 2.3
(Consumer Electronics)
Toyota Motor Corp. 3.1 2.4
(Autos, Tires, & Accessories)
Sakura Bank Ltd. 2.9 2.4
(Banks)
DDI Corp. Ord. 2.8 1.5
(Telephone Services)
Honda Motor Co. Ltd. 2.5 2.0
(Autos, Tires, & Accessories)
Canon, Inc. 2.2 1.4
(Computers & Office Equipment)
Omron Corp. 2.1 2.1
(Electrical Equipment)
Mitsui Trust and Banking Co. Ltd. 2.1 2.4
(Banks)
Nomura Securities Co. Ltd. 2.0 2.0
(Securities Industry)
TOP TEN MARKET SECTORS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Durables 16.9 15.8
Finance 15.2 15.7
Technology 14.7 11.7
Construction & Real Estate 10.2 9.6
Industrial Machinery & Equipment 9.1 9.3
Retail & Wholesale 6.5 6.1
Health 6.2 5.4
Basic Industries 6.2 10.2
Nondurables 4.0 2.7
Media & Leisure 3.0 2.1
JAPAN
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.2%
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 6.2%
CHEMICALS & PLASTICS - 2.3%
Aronkasei Co. Ltd. 80,000 $ 841,921
Nippon Zeon Co. Ltd. 121,000 588,950
Riken Vinyl Industry Co. Ltd. 75,000 607,761
Sakai Chemical Industry Co. Ltd. 200,000 1,069,941
Sekisui Chemical Co. Ltd. 250,000 2,784,477
Tenma Corp. 56,000 992,063
6,885,113
IRON & STEEL - 3.9%
Bunka Shutter Co. Ltd. 230,000 1,601,579
Bunka Shutter Co. Ltd. (warrants)(a) 200 73,750
Godo Steel Ltd. (a) 100,000 565,665
Kobe Steel Ltd. Ord. (a) 1,847,000 4,373,515
Sumitomo Metal Industries Ltd. 1,700,000 4,666,521
11,281,030
TOTAL BASIC INDUSTRIES 18,166,143
CONSTRUCTION & REAL ESTATE - 10.2%
BUILDING MATERIALS - 1.0%
Arc Land Sakamoto Co. Ltd. 200 2,754
C.I. Holdings BHD 85,000 343,081
Maezawa Industries 80,000 1,915,370
Toyo Shutter Co. Ltd. 100,000 745,451
3,006,656
CONSTRUCTION - 5.2%
Daiwa House Industry Co. Ltd. 300,000 4,156,983
Daito Trust Construction Co. 230,100 2,905,889
Higashi Nihon House Co. Ltd. 65,000 934,883
JGC Corp. 100,000 1,052,401
Mitsui Wood Systems, Inc. 110,000 1,119,053
Sho Bond Corp. Ord. 30,000 934,006
Sumitomo Forestry Co. Ltd. 150,000 2,117,957
Toda Construction Co. 260,000 2,054,462
15,275,634
ENGINEERING - 2.9%
Dai-Dan Co. Ltd. 140,000 2,001,316
Nippon Computer Systems Corp. 114,000 1,459,680
Okumura Gumi 50,000 350,800
Sanki Engineering Co. Ltd. 210,000 2,467,880
Takasago Thermal Engineering Co. 154,000 2,133,918
8,413,594
REAL ESTATE - 1.1%
Cesar Co. 150,000 1,120,807
Daiwa Kosho Lease Co. Ltd. 160,000 1,459,329
Sumitomo Warehouse Co. Ltd. 78,000 490,471
3,070,607
TOTAL CONSTRUCTION & REAL ESTATE 29,766,491
DURABLES - 16.9%
AUTOS, TIRES, & ACCESSORIES - 6.7%
Denso Corp. 45,000 931,375
Honda Motor Co. Ltd. 300,000 7,156,326
Nissan Motor Co. Ltd. Ord. 190,000 1,434,685
Toyota Motor Corp. 378,000 8,917,519
Toyoda Gosei Co. 140,000 1,062,048
19,501,953
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
CONSUMER DURABLES - 1.8%
Aderans Co. Ltd. 140,000 $ 3,388,731
Sankyo Co. Ltd. 55,000 1,910,108
5,298,839
CONSUMER ELECTRONICS - 6.7%
Citizen Watch Co. Ltd. Ord. 220,000 1,668,932
Makita Corp. 90,000 1,231,309
Matsushita Electric Industrial Co. Ltd. 580,000 9,257,619
Rinnai Corp. Ord. 100,000 2,131,112
Sony Corp. 87,400 5,235,186
19,524,158
HOME FURNISHINGS - 0.7%
Shimachu Co. Ltd. 77,000 2,113,659
TEXTILES & APPAREL - 1.0%
Danto Corp. 38,000 419,908
Descente Ltd. 35,000 211,796
Komatsu Seiren Co. Ltd. 13,000 115,150
Maruko Co. Ltd. 36,500 1,504,495
Roda Vivatex PT (For. Reg.) 661,000 475,326
2,726,675
TOTAL DURABLES 49,165,284
ENERGY - 0.2%
OIL & GAS - 0.2%
Nippon Oil Co. Ltd. 120,000 684,061
FINANCE - 14.4%
BANKS - 9.0%
Akita Bank Ltd. 301,000 1,942,872
Bank of Tokyo-Mitsubishi Ltd. 241,000 4,903,486
Dai-Ichi Kangyo Bank 110,000 1,784,696
Fuji Bank Ltd. 125,000 2,247,314
Hyakugo Bank 150,000 907,696
Mitsui Trust and Banking Co. Ltd. 620,000 5,981,145
Sakura Bank Ltd. 880,000 8,335,015
26,102,224
CREDIT & OTHER FINANCE - 1.6%
Acom Co. Ltd. 70,000 2,682,745
Nichiei Co. Ltd. 30,000 1,994,300
4,677,045
SECURITIES INDUSTRY - 3.8%
Ace Koeki Co. Ltd. 47,000 556,457
Daiwa Securities Co. Ltd. 370,000 3,991,230
Nomura Securities Co. Ltd. 351,000 5,787,152
Osaka Securities Finance Co. Ltd. Ord. 165,000 868,231
11,203,070
TOTAL FINANCE 41,982,339
HEALTH - 6.2%
DRUGS & PHARMACEUTICALS - 3.3%
Banyu Pharmaceutical Co. Ltd. 150,000 1,907,477
Daiichi Pharmaceutical Co. Ltd. 100,000 1,438,281
Sankyo Co. Ltd. 70,000 1,731,199
Takeda Chemical Industries Ltd. (a) 270,000 4,617,409
9,694,366
COMMON STOCKS - CONTINUED
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - 2.9%
Hitachi Medical Corp. Ord. 45,000 $ 702,478
Hoya Corp. 87,000 2,853,585
Seed Co. Ltd. (a) 50,000 745,451
Terumo Corp. 330,000 4,225,389
8,526,903
TOTAL HEALTH 18,221,269
INDUSTRIAL MACHINERY & EQUIPMENT - 9.1%
ELECTRICAL EQUIPMENT - 3.7%
Hitachi Koki Co. Ltd. Ord. 148,000 1,239,553
Mirai Industry Co. Ltd. 60,000 1,710,151
Mitsubishi Electric Co. Ord. 301,000 1,739,610
Omron Corp. 342,000 6,088,665
10,777,979
INDUSTRIAL MACHINERY & EQUIPMENT - 5.4%
Aida Engineering Ltd. Ord. 110,000 781,408
Amada Metrecs Co. Ltd. 110,000 1,302,346
Amadasonoike Co. Ltd. 146,000 825,872
Fuji Machine Manufacturing Co. Ltd. Ord. 40,000 943,653
Heiwa Corp. 85,000 1,483,447
Hitachi Conststruction Machinery Co. Ltd. 35,000 383,688
Komatsu Ltd. Ord. 600,000 4,904,188
Okuma Corp. (a) 274,000 2,619,250
Shintokogio Ltd. 169,000 1,393,203
Tsudakoma Corp. 178,000 986,591
15,623,646
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 26,401,625
MEDIA & LEISURE - 3.0%
ENTERTAINMENT - 0.3%
Sony Music Entertainment Japan, Inc. 24,000 924,008
LEISURE DURABLES & TOYS - 2.1%
Namco Ltd. 40,000 1,196,229
Nintendo Co. Ltd. Ord. 37,000 2,362,289
Shimano, Inc. 137,000 2,439,027
5,997,545
RESTAURANTS - 0.6%
Ohsho Food Service Corp. 38,000 663,188
Yoshinoya D&C Co. Ltd. Ord. 86 1,070,993
1,734,181
TOTAL MEDIA & LEISURE 8,655,734
NONDURABLES - 4.0%
BEVERAGES - 1.2%
Asahi Breweries Ltd. 350,000 3,591,318
FOODS - 0.9%
Chubu Suisan Co. Ltd. 50,000 249,945
Ezaki Glicko Co. Ltd. 200,000 1,859,241
Sonton Food Industry Co. Ltd. 37,000 451,041
2,560,227
HOUSEHOLD PRODUCTS - 1.9%
Shiseido Co. Ltd. 300,000 3,499,233
Uni Charm Corp. Ord. 85,000 2,064,898
5,564,131
TOTAL NONDURABLES 11,715,676
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - 6.5%
APPAREL STORES - 0.5%
Charle Co. Ltd. 74,000 $ 947,512
Esprit Asia Holdings Ltd. 1,436,000 622,151
1,569,663
GENERAL MERCHANDISE STORES - 3.4%
Aoyama Trading Co. Ord. 110,000 2,807,279
Ito-Yokado Co. Ltd. 70,000 3,486,955
Izumiya Co. Ltd. 230,000 3,650,954
9,945,188
GROCERY STORES - 0.4%
Chain Store Okuwa Co. Ltd. 70,000 1,019,075
RETAIL & WHOLESALE, MISCELLANEOUS - 2.2%
Amway Japan Ltd. 63,000 2,508,397
Kahma Co. Ltd. 14,800 214,164
Senshukai Co. Ltd. 96,000 1,347,073
Uny Co. Ltd. 136,000 2,349,660
6,419,294
TOTAL RETAIL & WHOLESALE 18,953,220
SERVICES - 2.7%
LEASING & RENTAL - 1.4%
Orix Corp. 115,000 4,276,255
PRINTING - 0.5%
Riso Kagaku Corp. 20,000 1,422,495
SERVICES - 0.8%
Benesse Corp. 15,000 920,851
Meitec Corp. 65,000 1,333,918
2,254,769
TOTAL SERVICES 7,953,519
TECHNOLOGY - 14.7%
COMMUNICATIONS EQUIPMENT - 0.7%
Japan Radio Co. Ltd. 160,000 2,132,866
COMPUTER SERVICES & SOFTWARE - 0.7%
Daitec Co. Ltd. 15,000 874,808
ISR Group Ltd. (a) 70,000 40,997
Multipolar PT (For. Reg.) 2,760,000 1,214,529
2,130,334
COMPUTERS & OFFICE EQUIPMENT - 3.1%
Canon, Inc. 330,000 6,309,143
NEC Corp. 250,000 2,718,702
9,027,845
ELECTRONICS - 5.5%
Hirose Electric Co. Ltd. 40,000 2,371,410
Hitachi Ltd. 500,000 4,428,854
Hitachi Maxell Ltd. 208,000 4,104,363
Nichicon Corp. 160,000 1,992,546
Rohm Co. Ltd. 35,000 2,071,914
Wako Electric Co. Ltd. 60,000 815,611
15,784,698
PHOTOGRAPHIC EQUIPMENT - 4.7%
Fuji Photo Film Co. Ltd. 350,000 10,037,273
Konica Corp. 250,000 1,668,494
Minolta Camera Co. Ltd. 330,000 1,988,248
13,694,015
TOTAL TECHNOLOGY 42,769,758
COMMON STOCKS - CONTINUED
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
TRANSPORTATION - 0.3%
SHIPPING - 0.3%
Kawasaki Kisen Kaisha Ltd. (a) 350,000 $ 926,990
UTILITIES - 2.8%
TELEPHONE SERVICES - 2.8%
DDI Corp. Ord. 1,100 8,248,191
TOTAL COMMON STOCKS
(Cost $305,057,093) 283,610,300
CONVERTIBLE BONDS - 0.8%
(% OF FUND'S INVESTMENTS)
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (B)
FINANCE - 0.8%
CREDIT & OTHER FINANCE - 0.8%
MBL International Finance of
Bermuda 3%, 11/30/02
(Cost $2,324,050) Aa2 $ 2,050,000 2,260,120
CASH EQUIVALENTS - 2.0%
(% OF FUND'S INVESTMENTS)
MATURITY
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 5,759,886 5,759,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $313,140,143) $ 291,629,420
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $287,578,300 and $309,716,365 respectively.
The market value of futures contracts opened and closed during the period
amounted to $58,525,214 and $75,223,530, respectively.
The fund participated in the bank borrowing program. The maximum loan and
the average daily balances during the period for which loans were
outstanding amounted to $2,494,000 and $ 2,201,600, respectively. The
weighted average interest rate was 5.5% (see Note 6 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $313,313,305. Net unrealized depreciation aggregated
$21,683,885, of which $9,362,412 related to appreciated investment
securities and $31,046,297 related to depreciated investment securities.
At October 31, 1996 the fund has a capital loss carryforward of
approximately $31,995,000 all of which will expire on October 31, 2003.
For the period, interest and dividends from foreign countries were
$2,769,627. Taxes accrued or paid to foreign countries were $400,370.
JAPAN
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at $ 291,629,420
value (including repurchase agreements of $5,759,000)
(cost $313,140,143) - See accompanying schedule
Cash 597
Receivable for investments sold 1,457,648
Receivable for fund shares sold 285,304
Dividends receivable 754,522
Interest receivable 25,625
TOTAL ASSETS 294,153,116
LIABILITIES
Payable for investments purchased $ 1,853,883
Payable for fund shares redeemed 1,436,108
Accrued management fee 194,598
Other payables and 173,741
accrued expenses
TOTAL LIABILITIES 3,658,330
NET ASSETS $ 290,494,786
Net Assets consist of:
Paid in capital $ 344,552,414
Accumulated net investment (loss) (345,296
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (32,167,843
)
Net unrealized appreciation (depreciation) on investments (21,544,489
and assets and liabilities in )
foreign currencies
NET ASSETS, for 24,866,152 $ 290,494,786
shares outstanding
NET ASSET VALUE and redemption price per share ($290,494,786 (divided by) 24,866,152 shares) $11.68
Maximum offering price per share (100/97.00 of $11.68) $12.04
</TABLE>
STATEMENT OF OPERATIONS
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME $ 2,811,073
Dividends
Interest 1,396,956
4,208,029
Less foreign taxes withheld (400,370
)
TOTAL INCOME 3,807,659
EXPENSES
Management fee $ 2,836,844
Basic fee
Performance adjustment (283,515
)
Transfer agent fees 1,143,761
Accounting fees and expenses 273,877
Non-interested trustees' compensation 1,427
Custodian fees and expenses 228,069
Registration fees 45,548
Audit 40,845
Legal 4,737
Interest 1,691
Miscellaneous 6,084
Total expenses before reductions 4,299,368
Expense reductions (38,175 4,261,193
)
NET INVESTMENT INCOME (LOSS) (453,534
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 1,283,055
Foreign currency transactions (75,681
)
Futures contracts 1,929,562 3,136,936
Change in net unrealized appreciation (depreciation) on:
Investment securities (14,018,276
)
Assets and liabilities in (12,577
foreign currencies )
Futures contracts 106,804 (13,924,049
)
NET GAIN (LOSS) (10,787,113
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (11,240,647
)
OTHER INFORMATION $ 821,892
Sales charges paid to FDC
Expense reductions $ 31,213
Directed brokerage arrangements
Transfer agent interest credits 6,962
$ 38,175
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (453,534) $ (219,808)
Net investment income (loss)
Net realized gain (loss) 3,136,936 (38,392,615)
Change in net unrealized appreciation (depreciation) (13,924,049) (19,488,375)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (11,240,647) (58,100,798)
Distributions to shareholders from net realized gains - (10,783,293)
Share transactions 208,233,225 328,361,252
Net proceeds from sales of shares
Reinvestment of distributions - 10,600,847
Cost of shares redeemed (251,007,290) (396,639,291)
Redemption fees 528,384 903,307
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (42,245,681) (56,773,885)
TOTAL INCREASE (DECREASE) IN NET ASSETS (53,486,328) (125,657,976)
NET ASSETS
Beginning of period 343,981,114 469,639,090
End of period (including accumulated net investment loss of $345,296 and $419,251, respectively) $ 290,494,786 $ 343,981,114
OTHER INFORMATION
Shares
Sold 16,223,064 26,845,585
Issued in reinvestment of distributions - 830,825
Redeemed (19,823,608) (32,128,159)
Net increase (decrease) (3,600,544) (4,451,749)
</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, SEPTEMBER 15, 1992
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA 1996 1995 1994 E 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.08 $ 14.27 $ 13.35 $ 9.84 $ 10.00
Income from Investment Operations
Net investment income (loss) (.02) D (.02) (.04) D (.09) -
Net realized and unrealized gain (loss) (.40) (1.89) 1.31 3.60 (.16)
Total from investment operations (.42) (1.91) 1.27 3.51 (.16)
Less Distributions
From net realized gain - (.36) (.39) - -
Redemption fees added to paid in capital .02 .08 .04 - -
Net asset value, end of period $ 11.68 $ 12.08 $ 14.27 $ 13.35 $ 9.84
TOTAL RETURN B, C (3.31)% (12.96)% 10.45% 35.67% (1.60)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 290,495 $ 343,981 $ 469,639 $ 118,195 $ 2,953
Ratio of expenses to average net assets 1.15% 1.15% 1.42% 1.71% 2.00% A,
F
Ratio of expenses to average net assets after expense reductions 1.14% G 1.15% 1.42% 1.71% 2.00% A
Ratio of net investment income to average net assets (.12)% (.06)% (.32)% (.77)% .03% A
Portfolio turnover rate 83% 86% 153% 257% -
Average commission rate H $ .0364
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS
OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT
COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT
CERTAIN RECLASSIFICATIONS
RELATED TO BOOK TO TAX DIFFERENCES.
F FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
JAPAN SMALL COMPANIES
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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). The fund has a 3% sales charge.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED PAST 1 LIFE OF
OCTOBER 31, 1996 YEAR FUND
JAPAN SMALL COMPANIES -8.70% -8.70%
JAPAN SMALL COMPANIES -11.44% -11.44%
(INCL. 3% SALES CHARGE)
Tokyo Stock Exchange Index -0.52% -0.52%
Japanese Funds Average -0.93% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, the one year period since the fund
started on November 1, 1995. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Tokyo Stock Exchange Index (TOPIX) - a market capitalization weighted index
of over 1,100 stocks trade in the Japanese market. To measure how the
fund's performance stacked up against its peers, you can compare the fund's
performance to the Japanese funds average, which reflects the performance
of 15 mutual funds with similar objectives - in this case, a very small
peer group - tracked by Lipper Analytical Services, Inc. over the past 12
months. 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, 1996 YEAR FUND
JAPAN SMALL COMPANIES -8.70% -8.70%
JAPAN SMALL COMPANIES -11.44% -11.44%
(INCL. 3% SALES CHARGE)
Tokyo Stock Exchange Index -0.52% -0.52%
Japanese Funds Average -0.93% 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
IMAHDR PRASUN SHR__CHT 19961031 19961108 142948 S00000000000001
Japan Small Companies TOPIX Total Return Index
00360 TK001
1995/11/01 9700.00 10000.00
1995/11/30 9661.20 10584.29
1995/12/31 10262.60 11058.14
1996/01/31 10107.40 10952.04
1996/02/29 9894.00 10776.38
1996/03/31 10272.30 11138.08
1996/04/30 11028.90 11886.69
1996/05/31 10602.10 11311.06
1996/06/30 10679.70 11365.36
1996/07/31 10185.00 10813.83
1996/08/31 9709.70 10358.73
1996/09/30 9632.10 10657.10
1996/10/31 8856.10 9948.07
IMATRL PRASUN SHR__CHT 19961031 19961108 142949 R00000000000015
Let's say hypothetically that $10,000 was invested in Fidelity Japan Small
Companies Fund on November 1, 1995, when the fund started and the 3% sales
charge was paid. As the chart shows, by October 31, 1996, the value of the
investment would have been $8,856 - an 11.44% decrease on the initial
investment. For comparison, look at how the Tokyo Stock Exchange Index did
over the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have been $9,948 - a 0.52% decrease.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
JAPAN SMALL COMPANIES
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Simon Fraser, Portfolio Manager of
Japan Small Companies Fund
Q. SIMON, HOW DID THE FUND PERFORM?
A. During the 12 months that ended on October 31, 1996, the fund returned
- -8.70%. Over the same period, the Japanese funds average returned -0.93%,
according to Lipper Analytical Services. The Tokyo Stock Exchange Index
(TOPIX) - a measure of the overall performance of the Japanese stock market
- - returned -0.52% during the same period. While these are the best
comparisons available, no existing index currently measures performance of
the kinds of stocks this fund owns, and small stocks have been
underperforming.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE DURING THE PAST SIX MONTHS?
A. The past six months were a poor time for investors in the Japanese
market. While the economy showed gradual signs of recovery in late 1995 and
early 1996, investor sentiment toward that recovery turned downward during
the summer. Stronger-than-expected economic statistics came out in the
spring showing that the economy was extremely robust and accelerating. But
during June, July and August, the numbers began to level off, suggesting
that it was unrealistic to expect them to continue. A scare caused by a
viral infection in some fresh foods slowed down consumer demand not only in
food products, but in other consumer products as well. By September and
October the economy began to strengthen again, and it looks as if the
economy is continuing its painfully slow, rather fragile recovery. However,
investor sentiment toward that recovery went from being very strong earlier
in the year to very skeptical by the end of the period.
Q. HOW HAVE SMALL COMPANIES IN JAPAN ENDURED THESE ECONOMIC CHALLENGES?
A. Not surprisingly, the sell-off in small companies has been more
exaggerated than that of large companies. As is often the case in a down
market, small companies have underperformed. There are a couple of reasons
for this. One is that demand for small company stocks, which had originally
come from foreigners, has slowed down dramatically. In addition, many
Japanese investors who
have historically invested in small stocks have been much less active in
the past four or five months.
Q. SO, WHAT WAS YOUR INVESTMENT STRATEGY IN THIS TOUGH MARKET ENVIRONMENT?
A. It's no different from any other time. I just keep visiting companies
and trying to uncover the stocks that will be future winners. I still
believe that the economic recovery is showing itself. While it's been very
gradual, low interest rates and the weak yen have had a positive impact on
earnings in some sectors. Auto sales, for instance, and housing starts have
been very strong. I'm discovering some new names that I like very much.
Q. WHERE, SPECIFICALLY, DID YOU FIND OPPORTUNITIES?
A. Meitec, a software services company, is a new holding in the fund. It
has a new management team and its sales and earnings have been growing
quite impressively. The company is capitalizing on the trend toward
outsourcing by helping companies update or replace their software.
Q. SOME OF THE TOP HOLDINGS IN THE FUND ARE THE SAME AS THEY WERE SIX
MONTHS AGO. WHAT'S THE UPDATE ON THEM?
A. The fund's largest holding, Sony Music, has had a bumpy six months
because of a management shake-up within the company. The company has taken
the opportunity to do some internal restructuring, which includes reducing
the number of artists it manages and building them up to be greater
contributors to earnings. Some of the earnings disappointment in the music
side of the business were offset by the company's 50% stake in Sony
Computer Entertainment, a video game business that competes with Nintendo
and Sega and that performed very well during the period. Acom, the fund's
second-largest holding, did well during the period, especially compared to
other small stocks. The company lends to consumers through credit cards and
ATM machines, filling an interesting market niche since banks in Japan
aren't set up to meet short-term borrowing needs of individuals. While this
is not a new industry, Acom has proved adept at growing its market share
and managing loan losses. In addition to its loan growth, the company has
benefited from the decline in borrowing costs in the low interest rate
environment of the Japanese economy.
Q. CONSTRUCTION AND REAL ESTATE STILL MAKE UP THE LARGEST PORTION OF THE
FUND'S INVESTMENTS . . .
A. That's true. The low interest rate environment in Japan has provided a
favorable market backdrop for construction, and the fund's investments are
primarily concentrated in housing-related companies. While the short-term
performance of some housing stocks has been somewhat disappointing, the
industry itself is still relatively strong. In a related investment, the
fund increased its position in Bunka Shutter, an iron and steel company
that also makes shutters and window sashes for private homes. The company
benefited from the rapid growth in housing starts, but its stock remained
attractively priced throughout the period.
Q. IT'S BEEN A FRUSTRATING SIX MONTHS. ANY PARTICULAR DISAPPOINTMENTS?
A. The Tokyo Stock Exchange Second Section restructured in September and
nearly 25 companies representing about 30% of the index were "promoted" to
the Tokyo Stock Exchange First Section because they met certain market
capitalization, shareholder and dividend criteria. While this is a common
enough occurrence, it's rare that it happens in such quantity. I
underestimated the number of pure index funds that would sell these 25
stocks and, as a result, held the securities a bit too long. This had a
negative impact on the fund's performance as the huge volume of selling
forced the stock prices down.
Q. WHAT'S YOUR OUTLOOK FOR THE FUND, SIMON?
A. I think there are plenty of opportunities in Japanese small companies
and that the long-term outlook is still positive. The oversold nature of
the market presents many opportunities. It's impossible to predict when
sentiment will turn around, but I think it will. In the meantime, I'll
continue to look for attractive companies to invest in under any market
conditions.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Japanese issuers
with small market capitalizations
FUND NUMBER: 360
TRADING SYMBOL: FJSCX
START DATE: November 1, 1995
SIZE: as of October 31, 1996, more than
$105 million
MANAGER: Simon Fraser, since inception;
manager, Fidelity Pacific Basin Fund,
1993-May, 1996; also manages various funds
for non-U.S. investors; joined Fidelity in 1981
(checkmark)
SIMON FRASER ON THE IMPACT OF CURRENCY SWINGS ON
FOREIGN INVESTORS IN JAPANESE STOCKS:
"The weak Japanese yen affects shareholders of this
fund because, when translated back to the dollar,
returns are weaker since the value of the yen has
declined relative to the U.S. dollar. But a weaker yen
isn't necessarily bad news. A weaker yen makes
Japanese companies more competitive with foreign
ones because it keeps costs lower and makes
Japanese goods more competitive in the export
market.
"There's another way to view the weak yen. There's a
theory that if you get hurt as an American investor by
the decline in value of a currency, you would make it
up in the increased value of that country's stock
market. That's because the decreased value of the
currency has a positive impact on the earnings of the
country's companies and increases the liquidity of
the market. This is especially true in countries such as
Japan that are large exporters.
"While we haven't seen the impact on earnings
occur in Japan yet, it is likely to happen going forward.
The decline in the value of the yen has had a positive
impact on the earnings of Japanese companies that
have yet to be reflected in their stock price.
"My hope for the yen is that it stays where it is or
declines a bit more. From here on, I don't expect it to
be as big a negative from the investors' point of view
as it has been in the past, and at some point I think it
will begin to appreciate."
EFFECTIVE DECEMBER 19, 1996, KENICHI MIZUSHITA
SUCCEEDED SIMON FRASER AS MANAGER OF THE FUND.
JAPAN SMALL COMPANIES
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
(% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
Other 0.1%
Row: 1, Col: 1, Value: 1.0
Row: 1, Col: 2, Value: 98.90000000000001
Japan 99.9%
AS OF APRIL 30, 1996
United
States 16.6%
Row: 1, Col: 1, Value: 16.6
Row: 1, Col: 2, Value: 83.40000000000001
Japan 83.4%
ASSET ALLOCATION
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 99.5 82.5
Bonds 0.5 0.9
Short-term investments 0.0 16.6
TOP TEN STOCKS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Sony Music Entertainment Japan, Inc. 3.2 4.4
(Entertainment)
Acom Co. Ltd. 3.0 3.0
(Credit & Other Finance)
Cesar Co. 2.2 1.9
(Real Estate)
Bunka Shutter Co. Ltd. 2.1 0.8
(Iron & Steel)
Amway Japan Ltd. 2.1 2.1
(Retail & Wholesale, Miscellaneous)
Oi Electric Co. Ltd. 1.9 1.3
(Communications Equipment)
Japan Industrial Land Development 1.8 0.6
Co. Ltd.
(Engineering)
Fujitsu Denso 1.8 0.6
(Communications Equipment)
Nissei Build Kogyo Co. Ltd. 1.8 0.6
(Construction)
Matsumotokiyoshi Co. Ltd. 1.7 1.0
(General Merchandise Stores)
TOP TEN MARKET SECTORS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Construction & Real Estate 23.2 13.7
Retail & Wholesale 12.7 9.1
Technology 10.9 11.1
Basic Industries 9.7 4.6
Durables 9.5 10.5
Media & Leisure 8.4 7.0
Finance 8.4 9.3
Industrial Machinery & Equipment 6.1 5.1
Services 3.0 1.2
Health 2.4 0.9
JAPAN SMALL COMPANIES
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 99.5%
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 2.3%
AEROSPACE & DEFENSE - 0.9%
Jamco Corp. 65,000 $ 883,578
SHIP BUILDING & REPAIR - 1.4%
Namura Shipbuilding Co. Ltd. 176,000 654,453
Sasebo Heavy Industries Co. Ltd. 325,000 840,824
1,495,277
TOTAL AEROSPACE & DEFENSE 2,378,855
BASIC INDUSTRIES - 9.7%
CHEMICALS & PLASTICS - 2.5%
Canon Chemicals, Inc. (warrants) (a) 600 82,811
Nippon Zeon Co. Ltd. 133,000 647,358
Sakai Chemical Industry Co. Ltd. 151,000 807,805
Tenma Corp. 57,000 1,009,779
2,547,753
IRON & STEEL - 4.4%
Bunka Shutter Co. Ltd. 315,000 2,193,466
Bunka Shutter Co. Ltd. (warrants) (a) 300 110,625
Chubu Steel Plate Co. Ltd. 193,000 1,056,189
Mitsubishi Steel (a) 227,000 1,156,650
4,516,930
METALS & MINING - 0.2%
Kanamoto Co. Ltd. 18,700 231,239
PACKAGING & CONTAINERS - 0.8%
Tomoku Co. Ltd. 149,000 785,345
PAPER & FOREST PRODUCTS - 1.8%
Seven Industry Co. Ltd. 30,000 170,752
Tokushu Paper Manufacturing Co. Ltd. 72,000 620,706
Ube-Nitto Kasei Co. Ltd. 113,000 1,100,022
1,891,480
TOTAL BASIC INDUSTRIES 9,972,747
CONSTRUCTION & REAL ESTATE - 22.8%
BUILDING MATERIALS - 6.2%
Almetax Manufacturing Co. Ltd. 88,580 854,532
Almetax Manufacturing Co. Ltd.
(warrants) (a) 1,500 197,563
Chofu Seisaku Co. Ltd. 71,000 1,618,943
Fujisash Co. Ltd. 41,300 416,531
Hibiya Engineering Ltd. (warrants) (a) 1,900 199,298
Kawagishi Bridge Works Co. Ltd. 38,000 284,938
Kikusui Chemical Industries Co. Ltd. 28,000 260,294
Kondotec, Inc. 83,000 1,019,075
Oriental Construction Co. Ltd. 73,400 1,075,010
Shin Nikkei Co. Ltd. 56,000 358,518
Shinko Kogyo Co. Ltd. 8,000 46,727
6,331,429
CONSTRUCTION - 6.0%
Daiwa Danchi Co. Ltd. 102,000 559,088
Ichiken Co. (a) 35,000 237,886
Kitano Construction Corp. 95,000 523,219
Mitsui Home Co. Ltd. 97,000 1,293,050
Mitsui Wood Systems, Inc. 117,000 1,190,265
Nissei Build Kogyo Co. Ltd. 166,000 1,805,218
Ohmoto Gumi Co. Ltd. 37,600 567,174
6,175,900
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
ENGINEERING - 3.9%
Ataka Construction & Engineering
Co. Ltd. 86,000 $ 724,052
Dai-Dan Co. Ltd. 38,000 543,214
Japan Industrial Land Development
Co. Ltd. 65,200 1,875,519
Kawasaki Setsubi Kogyo Co. Ltd. (a) 83,000 786,143
Nippon Engineering Consultants
Co. Ltd. (a) 1,200 20,838
3,949,766
REAL ESTATE - 6.7%
Cesar Co. 299,000 2,234,142
Chubu Sekiwa Real Estate Ltd.
(warrants) (a) 500 20,900
Inui Tatemono Co. Ltd. 11,000 110,941
Keihanshin Real Estate Co. Ltd. 25,000 183,293
Kansai Sekiwa Real Estate Ltd. 77,400 1,092,866
Recruit Cosmos Co. Ltd. 138,000 1,044,455
Sekiwa Real Estate Ltd. 42,000 348,082
Taisei Prefab Construction Co. 96,000 492,524
Toc Company Ltd. 84,000 920,851
Tohoku Misawa Homes Co. Ltd. 36,000 451,480
6,899,534
TOTAL CONSTRUCTION & REAL ESTATE 23,356,629
DURABLES - 9.5%
AUTOS, TIRES, & ACCESSORIES - 3.9%
FCC Co. Ltd. (a) 39,600 1,163,429
Hirata Technical Co. Ltd. 12,000 146,284
Mitsuba Electric Manufacturing Co.
Ltd. (warrants) (a) 700 169,486
Murakami Corp. 25,000 317,913
NGK Spark Plug Co. Ltd. (warrants) (a) 200 70,000
Royal Ltd. 40,300 908,318
Toyoda Gosei Co. 119,000 902,741
Yorozu Corp. 26,600 377,917
4,056,088
CONSUMER DURABLES - 2.2%
Aderans Co. Ltd. 50,000 1,210,261
Kuramoto Seisakusho Co. Ltd. 27,000 752,993
Maruwa Ceramic Co. Ltd. 300 8,682
Sankyo Co. Ltd. 7,900 274,361
2,246,297
CONSUMER ELECTRONICS - 0.1%
Sogo Denki Co. Ltd. 17,000 81,254
TEXTILES & APPAREL - 3.3%
Descente Ltd. 183,000 1,107,389
Impact 21 Co. Ltd. 29,000 574,786
Jeans Mate Corp. 6,600 208,375
Maruko Co. Ltd. 17,100 704,845
Sotoh Co. Ltd. 11,000 114,799
Tokai Senko Kk, Nagoya (a) 129,000 641,465
3,351,659
TOTAL DURABLES 9,735,298
COMMON STOCKS - CONTINUED
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
FINANCE - 8.4%
CREDIT & OTHER FINANCE - 4.2%
Acom Co. Ltd. 80,600 $ 3,088,989
Credia Co. Ltd. 15,000 367,025
Japan Associated Finance Co. 10,000 821,750
SHH International Ltd. (warrants) (a) 1,150 59,860
4,337,624
SECURITIES INDUSTRY - 4.2%
Ace Koeki Co. Ltd. 43,000 509,099
Ichiyoshi Securities 69,000 335,847
Kankaku Securities (a) 225,000 710,371
Kokusai Securities Co. Ltd. (a) 65,000 780,969
New Japan Securities (a) 330,000 1,554,133
Wako Securities 58,000 365,218
4,255,637
TOTAL FINANCE 8,593,261
HEALTH - 2.4%
DRUGS & PHARMACEUTICALS - 1.2%
JCR Pharmaceuticals Co. Ltd. 24,000 347,292
Sanseido Co. Ltd. 6,400 60,618
Teikoku Hormone Manufacturing Co. Ltd. 60,000 836,659
1,244,569
MEDICAL EQUIPMENT & SUPPLIES - 1.2%
Fukuda Denshi Co. Ltd. 42,000 917,167
Seed Co. Ltd. (a) 20,000 298,180
1,215,347
TOTAL HEALTH 2,459,916
INDUSTRIAL MACHINERY & EQUIPMENT - 6.1%
ELECTRICAL EQUIPMENT - 1.0%
Icom, Inc. 8,000 73,668
Inaba Denkisangyo Co. Ltd. 20,000 422,714
Shinko Electric Industries Co. Ltd. 18,000 552,510
1,048,892
INDUSTRIAL MACHINERY & EQUIPMENT - 5.1%
Asahi Diamond Industrial Co. Ltd. 600 6,209
Fuji Oozx, Inc. 16,000 86,998
Kito Corp. 38,000 543,214
Kyoritsu Air Technology, Inc. 12,000 134,707
Nitto Kohki Co. Ltd. 42,900 1,410,875
Shinko Pantec Co. Ltd. 30,000 219,689
Takuma Co. Ltd. 116,000 1,322,517
Tsubaki Nakashima Co. Ltd. 81,000 795,615
Tsubakimoto Chain Co. 60,000 367,814
Union Tool Co. 19,000 366,586
5,254,224
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 6,303,116
MEDIA & LEISURE - 8.3%
ENTERTAINMENT - 3.2%
Sony Music Entertainment Japan, Inc. 85,000 3,272,528
LEISURE DURABLES & TOYS - 1.7%
Roland Corp. 71,000 1,450,822
Takasago Electric Industries Co. Ltd. 15,000 335,453
1,786,275
PUBLISHING - 0.4%
Takara Printing Co. Ltd. 42,000 372,024
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
RESTAURANTS - 3.0%
Daisyo Corp. 2,000 $ 30,695
Kentucky Fried Chicken Japan 46,000 774,567
Saint Marc Co. Ltd. 18,800 1,417,935
Yoshinoya D&C Co. Ltd. Ord. 70 871,739
3,094,936
TOTAL MEDIA & LEISURE 8,525,763
NONDURABLES - 1.7%
FOODS - 1.7%
Katokichi Co. Ltd. 75,000 1,493,094
Yonekyu Corp. 26,000 296,426
1,789,520
RETAIL & WHOLESALE - 12.7%
APPAREL STORES - 0.8%
Marutomi Group Co. Ltd. 91,000 806,051
Marutomi Group Co. Ltd. (warrants) (a) 700 59,072
865,123
GENERAL MERCHANDISE STORES - 2.4%
Hanshin Department Store Ltd. 91,000 643,245
Matsumotokiyoshi Co. Ltd. 58,800 1,768,770
2,412,015
GROCERY STORES - 2.4%
Chain Store Okuwa Co. Ltd. 57,000 829,818
Echo Trading Co. Ltd. 12,000 250,471
U Store Co. Ltd. 35,000 445,078
York Benimaru Co. 28,100 921,675
2,447,042
RETAIL & WHOLESALE, MISCELLANEOUS - 7.1%
Amway Japan Ltd. 55,000 2,189,871
Daimon Co. Ltd. 38,000 1,349,704
Juel Verite Ohkubo Co. Ltd. 34,000 256,137
Laox Co. Ltd. 45,100 755,457
Maruzen Co. Ltd. 81,000 994,519
Salomon & Taylor Made Co. Ltd. 69,000 659,592
Tachibana Shokai Ltd. (warrants) (a) 1,350 107,536
Yamada Denki Co. Ltd. 43,000 965,402
7,278,218
TOTAL RETAIL & WHOLESALE 13,002,398
SERVICES - 3.0%
LEASING & RENTAL - 0.6%
Kawasho Gecoss Corp. 48,900 570,375
SERVICES - 2.4%
Cats, Inc. 77,000 904,889
Ishikawajima Hanyoki Service Co. Ltd. 10,000 160,491
Meitec Corp. 60,000 1,231,309
Shinki Co. Ltd. 6,000 157,860
2,454,549
TOTAL SERVICES 3,024,924
TECHNOLOGY - 10.9%
COMMUNICATIONS EQUIPMENT - 4.0%
Fujitsu Denso 56,000 1,841,701
Oi Electric Co. Ltd. 110,000 1,929,402
Tohoku Telecommunications Construction
Co. Ltd. 69,000 344,924
4,116,027
COMMON STOCKS - CONTINUED
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - 0.6%
OA System Plaza Co. Ltd. (a) 34,000 $ 611,269
COMPUTERS & OFFICE EQUIPMENT - 1.9%
Kanematsu Electronics Ltd. 111,000 983,205
Nissho Electronics Corp. 60,000 973,471
1,956,676
ELECTRONIC INSTRUMENTS - 0.1%
Shibaura Electronics Co. 5,500 57,400
ELECTRONICS - 3.6%
Apic Yamada Corp. 42,000 755,098
Daishinku Corp. (warrants) (a) 1,300 69,719
Fujitsu Kiden Ltd. 1,000 12,190
Meiden Engineering Co. Ltd. 59,400 765,779
Mimasu Semiconductor Industries
Co. Ltd. 90,000 1,381,276
Nippon Ceramic Co. Ltd. 13,000 245,122
Tokyo Denpa Co. Ltd. 15,000 513,045
3,742,229
PHOTOGRAPHIC EQUIPMENT - 0.7%
Minolta Camera Co. Ltd. 122,000 735,049
TOTAL TECHNOLOGY 11,218,650
TRANSPORTATION - 1.7%
AIR TRANSPORTATION - 0.3%
Airport Facilities Co. Ltd. 34,000 269,555
RAILROADS - 0.2%
Hankyu Corp. (warrants) (a) 450 67,500
Tobu Railway Co. Ltd. (warrants) (a) 900 112,500
180,000
SHIPPING - 1.2%
Kawasaki Kisen Kaisha Ltd. (a) 300,000 794,563
Navix Line Ltd. (a) 200,000 477,088
1,271,651
TOTAL TRANSPORTATION 1,721,206
TOTAL COMMON STOCKS
(Cost $120,333,838) 102,082,283
CONVERTIBLE BONDS - 0.5%
(% OF FUND'S INVESTMENTS)
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (B)
CONSTRUCTION & REAL ESTATE - 0.4%
REAL ESTATE - 0.4%
Cesar Co. 1/8%, 9/30/00 - $ 550,000 409,919
MEDIA & LEISURE - 0.1%
RESTAURANTS - 0.1%
Daisyo Corp.
0.70%, 2/28/03 - JPY 14,000,000 121,552
TOTAL CONVERTIBLE BONDS
(Cost $590,656) 531,471
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $120,924,494) $ 102,613,754
CURRENCY ABBREVIATIONS
JPY - Japanese yen
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $181,422,829 and $61,205,819, respectively.
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $120,949,862. Net unrealized depreciation aggregated
$18,336,108, of which $1,925,128 related to appreciated investment
securities and $20,261,236 related to depreciated investment securities.
For the period, interest and dividends from foreign countries were
$677,660. Taxes accrued or paid to foreign countries were $101,367.
JAPAN SMALL COMPANIES
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at value $ 102,613,754
(cost $120,924,494) - See accompanying schedule
Receivable for investments sold 2,316,864
Receivable for fund shares sold 1,293,880
Dividends receivable 239,043
Interest receivable 189
Redemption fees receivable 253
TOTAL ASSETS 106,463,983
LIABILITIES
Payable to custodian bank $ 44,325
Payable for investments purchased 63,944
Payable for fund shares redeemed 525,368
Accrued management fee 71,488
Other payables and 94,427
accrued expenses
TOTAL LIABILITIES 799,552
NET ASSETS $ 105,664,431
Net Assets consist of:
Paid in capital $ 123,620,837
Accumulated net investment (loss) (105,103
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 470,634
Net unrealized appreciation (depreciation) on investments (18,321,937
and assets and liabilities in )
foreign currencies
NET ASSETS, for 11,576,565 shares outstanding $ 105,664,431
NET ASSET VALUE and redemption price per share ($105,664,431 (divided by) 11,576,565 shares) $9.13
Maximum offering price per share (100/97.00 of $9.13) $9.41
</TABLE>
STATEMENT OF OPERATIONS
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1996
INVESTMENT INCOME $ 675,778
Dividends
Interest 500,805
1,176,583
Less foreign taxes withheld (101,367
)
TOTAL INCOME 1,075,216
EXPENSES
Management fee $ 789,872
Transfer agent fees 319,420
Accounting fees and expenses 82,444
Non-interested trustees' compensation 380
Custodian fees and expenses 85,719
Registration fees 100,738
Audit 29,151
Legal 915
Miscellaneous 66
Total expenses before reductions 1,408,705
Expense reductions (113 1,408,592
)
NET INVESTMENT INCOME (LOSS) (333,376
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 707,484
Foreign currency transactions (8,577 698,907
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (18,310,740
)
Assets and liabilities in (11,197 (18,321,937
foreign currencies ) )
NET GAIN (LOSS) (17,623,030
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (17,956,406
)
OTHER INFORMATION $ 694,227
Sales charges paid to FDC
Expense reductions $ 113
Custodian interest credits
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS NOVEMBER 1, 1995
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1996
<TABLE>
<CAPTION>
<S> <C>
Operations $ (333,376
Net investment income (loss) )
Net realized gain (loss) 698,907
Change in net unrealized appreciation (depreciation) (18,321,937
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (17,956,406
)
Share transactions 207,082,528
Net proceeds from sales of shares
Cost of shares redeemed (83,815,966
)
Redemption fees 354,275
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 123,620,837
TOTAL INCREASE (DECREASE) IN NET ASSETS 105,664,431
NET ASSETS
Beginning of period -
End of period (including accumulated net investment loss of $105,103) $ 105,664,431
OTHER INFORMATION
Shares
Sold 19,679,280
Redeemed (8,102,715
)
Net increase (decrease) 11,576,565
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
NOVEMBER 1, 1995
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA 1996
<TABLE>
<CAPTION>
<S> <C>
Net asset value, beginning of period $ 10.00
Income from Investment Operations
Net investment income (loss) (.03) C
Net realized and unrealized gain (loss) (.87)
Total from investment operations (.90)
Redemption fees added to paid in capital .03
Net asset value, end of period $ 9.13
TOTAL RETURN A (8.70)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 105,664
Ratio of expenses to average net assets 1.34%
Ratio of net investment income (loss) to average net assets (.32)%
Portfolio turnover rate 66%
Average commission rate B $ .0578
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
</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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). The fund has a 3% sales charge.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1996 YEAR FUND
LATIN AMERICA 30.69% 28.28%
LATIN AMERICA 26.77% 24.43%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital International 23.34% 52.50%
Emerging Markets Free -
Latin America Index
Latin American Region Funds Average 26.06% 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. For example, if you invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be $1,050.
You can compare the fund's returns to the performance of the Morgan Stanley
Capital International Emerging Markets Free - Latin America Index- a market
capitalization weighted index of approximately 170 stocks traded in seven
Latin American markets. To measure how the fund's performance stacked up
against its peers, you can compare it to the Latin American region funds
average, which reflects the performance of 23 mutual funds with similar
objectives - in this case, a very small peer group - tracked by Lipper
Analytical Services, Inc. over the past 12 months. 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, 1996 YEAR FUND
LATIN AMERICA 30.69% 7.29%
LATIN AMERICA 26.77% 6.37%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital International 23.34% 12.66%
Emerging Markets Free -
Latin America Index
Latin American Region Funds Average 26.06% 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
IMAHDR PRASUN SHR__CHT 19961031 19961112 093026 S00000000000001
Latin America MS Latin America Free
00349 MS007
1993/04/19 9700.00 10000.00
1993/04/30 9641.80 9568.13
1993/05/31 9874.60 9818.14
1993/06/30 10379.00 10436.73
1993/07/31 10737.90 10716.71
1993/08/31 11746.70 11640.43
1993/09/30 11960.10 11844.71
1993/10/31 12881.60 12314.07
1993/11/30 13861.30 13120.91
1993/12/31 15722.24 14784.37
1994/01/31 16981.97 17217.49
1994/02/28 16093.32 16719.16
1994/03/31 14462.50 15584.66
1994/04/30 13437.14 14395.32
1994/05/31 14169.54 15245.68
1994/06/30 12851.22 14269.20
1994/07/31 14042.59 15621.61
1994/08/31 16132.38 18162.47
1994/09/30 16679.24 18941.58
1994/10/31 15829.65 18005.81
1994/11/30 15360.92 17492.25
1994/12/31 12079.76 14879.00
1995/01/31 10331.75 13254.17
1995/02/28 8710.70 11334.14
1995/03/31 8564.22 10943.14
1995/04/30 9618.88 12522.51
1995/05/31 9667.71 12807.01
1995/06/30 9804.43 13006.60
1995/07/31 10331.75 13409.01
1995/08/31 10527.06 13562.20
1995/09/30 10361.05 13446.57
1995/10/31 9521.23 12364.71
1995/11/30 9863.02 12586.91
1995/12/31 10090.87 12969.47
1996/01/31 11504.18 14299.20
1996/02/29 10901.30 13475.78
1996/03/31 11316.40 13644.77
1996/04/30 11800.68 14400.27
1996/05/31 12373.92 14863.45
1996/06/30 12709.95 15244.82
1996/07/31 12186.13 14644.02
1996/08/31 12561.70 15056.16
1996/09/30 12759.37 15400.36
1996/10/31 12443.10 15250.18
IMATRL PRASUN SHR__CHT 19961031 19961112 093028 R00000000000046
Let's say hypothetically that $10,000 was invested in Fidelity Latin
America Fund on April 19, 1993, when the fund started, and the 3% sales
charge was paid. As the chart shows, by October 31, 1996, the value of the
investment would have grown to $12,443 - a 24.43% increase on the initial
investment. For comparison, look at how the Morgan Stanley Capital
International Emerging Markets Free - Latin America Index did over the same
period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $15,250- a 52.50% 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.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
LATIN AMERICA
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Patti Satterthwaite, Portfolio Manager of Fidelity Latin
America Fund
Q. HOW HAS THE FUND PERFORMED, PATTI?
A. The fund's performance was good on both an absolute and relative basis.
For the 12-month period that ended October 31, 1996, the fund had a total
return of 30.69%. That beat the Latin American region funds average return
of 26.06%, as tracked by Lipper Analytical Services. The fund also beat the
Morgan Stanley Capital International Emerging Markets Free - Latin America
Index, which returned 23.34% for the 12-month period.
Q. HOW HAS THE LATIN AMERICAN INVESTMENT ENVIRONMENT CHANGED OVER THE PAST
YEAR?
A. You may recall that in the first half of the period the Latin American
markets performed very well. What contributed most to their success was
falling interest rates and the prudent fiscal policies instituted by many
individual governments, namely a greater focus on improving their
respective budget and trade surpluses. Satisfied that the region was making
progress on these fronts, investors began to look for economic growth to
sustain the markets' momentum in the second half of the year.
Unfortunately, the anticipated economic growth didn't materialize to any
great extent, and the Latin American markets made much smaller gains in the
second half of the year than they did in the first. While Mexico has
experienced some economic growth, it's been at a very slow pace. Brazil and
Argentina, two of the other larger markets in the region, grew, but at a
slower pace than many market observers had originally anticipated. That's
why most of the Latin American markets' - and the fund's - gains came in
the first half of the period.
Q. WHAT CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. One of the major factors influencing the fund's performance was stock
selection, with its holdings in Brazilian and Mexican stocks performing
particularly well. In terms of country weightings, the fund had a lighter
weighting than the index in Chilean stocks, which generally lagged the
performance of the region as a whole. That was an additional positive for
the fund's performance. Finally, several individual large holdings from
other countries in the region performed well.
Q. LET'S START WITH BRAZIL, THE FUND'S LARGEST COUNTRY WEIGHTING AT THE END
OF THE PERIOD. WHICH OF THE FUND'S HOLDINGS THERE PERFORMED WELL?
A. Telecommunications companies were some of the best performers in the
Brazilian market, thanks to a unique opportunity that occurs every so often
in this region. What typically has happened in industries that undergo
privatization in Latin America is that a given government will levy tariff
increases as a way to improve an entity's profitability. They do that in
order to make a company more attractive to investors at the point of
privatization. Generally speaking, higher tariffs have led to several years
of very strong earnings growth for many of these state-run companies. That
recently was the case with Telebras, the state holding company that
controls 28 telephone operating subsidiaries and has a monopoly position in
supplying local and long distance services in the country, with its stock
price rising more than 50% over the past year. Telebras and its
subsidiaries - including Telesp, Telepar and Telemig - accounted for
roughly 20% of the fund's investments at the end of the period. Another
strong performer during the year was Petrobras, the large oil production
company. Petrobras was helped by regulatory changes and an increase in its
oil production. Finally, many of the fund's Brazilian bank holdings
performed well as interest rates fell.
Q. A NEW ADDITION TO THE FUND'S TOP TEN HOLDINGS WAS CENTRAIS ELECTRICAS.
WHAT MADE THIS BRAZILIAN ELECTRIC UTILITY ATTRACTIVE?
A. My view was that moves toward privatization in the electric industry
could benefit Centrais Electricas. After keeping a relatively light
weighting in this stock for several years when it was a poor performer, I
significantly increased the fund's holdings in it throughout the past
several months. The stock has performed relatively well since I bought it.
Q. TURNING TO MEXICO, WHICH STOCKS IN THAT COUNTRY PERFORMED WELL?
A. As was the case with Brazil, Mexican banks, particularly Grupo
Financiero Inbursa, performed well. Falling interest rates spurred lending
and other activity, helping to improve the banks' profits. Grupo Carso was
another good performer. Recently, the broad-based Mexican conglomerate with
interests in auto parts manufacturing, mining, telecommunications and
construction, among other businesses, spun off its telecommunications
holdings into a company called Global Telecom. In my view, that was a
positive for Grupo Carso, and after the transaction occurred, I bought more
shares of it. The fund's holdings in Grupo Carso performed well because the
company continued to show strength from improving export profits.
Q. WITH ARGENTINA AS ONE OF THE BEST-PERFORMING LATIN AMERICAN MARKETS
DURING THE PAST YEAR, WHY DID YOU REDUCE THE FUND'S HOLDINGS THERE?
A. It's important to remember that the vast majority of the Argentine
market's gains came in the first half of the period. Since then, the market
has been rather lackluster. What was troubling investors was the economy's
rather weak performance. Additionally, the country's long-term finance
minister resigned and many investors
started to question the prospects for further economic improvement. In the
spring, I began to sell some Argentine stocks in order to lock in their
previous gains. I sold some of the bank holdings, and increased the fund's
stake in the oil company YPF.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. I would say my biggest regret was keeping a relatively small weighting
in the Venezuelan market, which performed very well. But I felt that there
were good reasons for doing so. The Venezuelan government had enacted
currency exchange controls, and there was no convertibility between the
U.S. dollar and the Venzuelan currency. Given that, I felt that my ability
to trade in and out of stocks was very limited. Even after the controls
were removed, I was reluctant to buy more stocks because I believed there
wasn't enough liquidity in the market.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. In the past several months, the market has been fairly narrow,
characterized by rather light trading and greater fluctuations in stock
prices relative to volume than would be the case if trading was active. So
until I see some broadening out of the market, I'll most likely stick with
a relatively small number of large, high-quality companies. And until
economic growth accelerates, I expect to focus on companies that can do
well in slow-growth environments, such as telecommunication companies and
utilities. Finally, I'll continue to seek out opportunities in Mexico and
Brazil, particularly telecommunications, utilities and oil companies where
earnings growth has been strong despite slow economic growth.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: high total investment return by investing
mainly in equity and debt securities of Latin
American issuers
FUND NUMBER: 349
TRADING SYMBOL: FLATX
START DATE: April 19, 1993
SIZE: as of October 31, 1996, more than
$557 million
MANAGER: Patti Satterthwaite, since 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 ON THE INFLUENCE OF THE U.S. ECONOMY
ON LATIN AMERICA:
"There are a couple of reasons why I'm optimistic
about the prospects for Latin American stocks. One
is that earnings growth for many Latin American
companies - especially those in Brazil and Mexico
- - have been strong despite a slow-growing
economy. Another reason for my optimism is that
many investors have shied away from the Latin
American region over the past year, concentrating
instead on the large gains posted by the U.S. stock
market. If investors start to look for value outside the
U.S., they may find Latin American stocks attractive.
More investor money coming into Latin American
stocks would almost certainly be a positive for the
market. And if regional economic growth improves,
earnings growth should also improve.
"The U.S. economy's better-than-expected 1996
growth has been a positive for the Latin American
region, since so many companies there rely on
profits generated from exports to the United States.
If the U.S. economy weakens significantly, it could
be problematic for Latin American countries. On the
other hand, U.S. economic growth only has to stay at
current moderate levels and be sustainable in order
to be a plus for Latin American exporters.
Additionally, significantly higher U.S. interest rates
might mean trouble for Latin American companies
with a fair amount of debt, since their capital
borrowing costs could increase. But if U.S. and
domestic interest rates stay in the range they've
been so far this year, debt costs should remain
manageable."
LATIN AMERICA
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
(% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
United States 5.7%
Row: 1, Col: 1, Value: 5.7
Row: 1, Col: 2, Value: 6.0
Row: 1, Col: 3, Value: 22.3
Row: 1, Col: 4, Value: 7.2
Row: 1, Col: 5, Value: 48.6
Row: 1, Col: 6, Value: 10.2
Argentina 10.2%
Other 6.0%
Mexico 22.3%
Brazil 48.6%
Chile 7.2%
AS OF APRIL 30, 1996
United States 8.0%
Argentina 14.9%
Row: 1, Col: 1, Value: 8.0
Row: 1, Col: 2, Value: 3.4
Row: 1, Col: 3, Value: 7.5
Row: 1, Col: 4, Value: 23.4
Row: 1, Col: 5, Value: 5.4
Row: 1, Col: 6, Value: 37.4
Row: 1, Col: 7, Value: 14.9
Panama 3.4%
Other 7.5%
Brazil 37.4%
Mexico 23.4%
Chile 5.4%
ASSET ALLOCATION
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 94.3 91.6
Bonds 0.0 0.4
Short-term investments 5.7 8.0
TOP TEN STOCKS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Telebras sponsored ADR 6.7 4.0
(Brazil, Telephone Services)
Centrais Electricas Brasileiras SA 5.6 2.2
(Brazil, Electric Utility)
Telesp PN (Pfd. Reg.) 4.4 3.5
(Brazil, Telephone Services)
Compania Cervejaria Brahma PN 4.3 2.7
(Pfd. Reg)
(Brazil, Beverages)
Grupo Carso SA de CV Class A-1 3.9 4.6
(Mexico, Tobacco)
Telebras ON 3.7 2.4
(Brazil, Telephone Services)
Telebras PN (Pfd. Reg) 3.7 2.5
(Brazil, Telephone Services)
YPF Sociedad Anonima sponsored 3.5 2.1
ADR representing Class D shares
(Argentina, Oil & Gas)
Bradesco PN 3.1 3.4
(Brazil, Banks)
Perez Companc Class B 2.8 2.8
(Argentina, Oil & Gas)
TOP TEN MARKET SECTORS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Utilities 34.3 27.9
Finance 15.4 17.0
Nondurables 15.4 17.1
Energy 8.9 4.7
Basic Industries 8.0 8.9
Retail & Wholesale 3.7 4.0
Construction & Real Estate 3.1 5.2
Holding Companies 2.0 2.2
Precious Metals 1.2 0.3
Durables 1.0 2.9
LATIN AMERICA
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.3%
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
ARGENTINA - 10.2%
Bansud SA Class B (a) 204,552 $ 2,045,847
Banco de Galicia Y Buenos Aires
SA sponsored ADR representing
Class B shares 333,788 6,049,908
Central Costanera SA ADR (b) 19,500 604,500
IRSA (Inversiones Y Representa) SA GDR 29,200 890,600
Interamericania de Auto Ord. (a) 179,062 802,322
Mirgor Sacifia Class C sponsored
ADR (a)(b) 146,010 233,616
Perez Companc Class B 2,427,930 15,419,823
Telecom Argentina Class B
sponsored ADR 168,600 6,364,650
Telecom Argentina Stet France
Telecom SA 1,184,400 4,471,825
TGS (Transportadora de Gas del Sur)
SA Class B sponsored ADR 94,200 1,095,075
YPF Sociedad Anonima sponsored
ADR representing Class D shares 852,100 19,385,275
57,363,441
BERMUDA - 1.0%
Credicorp Ltd. 308,265 5,394,638
BRAZIL - 48.6%
Aracruz Celulose SA ADR 438,100 3,504,800
Bradesco PN 2,009,804,377 17,134,683
Celesc PN Class B Ord. (a) 433,000 366,628
Centrais Electricas Brasileiras SA 96,143,110 31,158,789
Cimento Itau PN Ord. 6,044,000 1,588,204
Compania Cervejaria Brahma:
ON (Reg.) (a) 117,827 72,818 PN (Pfd. Reg.) (warrants) (a) 1,895,770
184,503
PN (Pfd. Reg.) 38,829,523 23,996,835
Compania Energertica Minas Gerais 251,248,000 7,995,922
Compania Paulista de Forca Luz Ord. 77,489,597 7,127,537
Compania Vale do Rio Doce PN Ord. 309,000 6,405,547
Coteminas PN 14,365,310 4,823,388
Dixie Toga SA 1,904,400 1,427,142
Elevadores Atlas SA (a)(b) 68,000 741,217
Itaubanco PN (Pfd. Reg.) 20,905,100 9,053,790
Itausa Investimentos Itau SA 7,196,000 5,672,759
Iven SA (a) 4,963,300 2,487,688
Klabin Industria de Papel e Celulose PN 5,775,165 5,733,011
Light Participacoes SA (a) 11,695,400 1,840,532
Minas Gerais State Preference
(warrants) (a)(b) 2,000 116,000
Multicanal Participacoes SA
sponsored ADR 32,000 448,000
Perdigao SA Comercio e Industria PDG
(Pfd. shares) 1,461,114,630 2,730,258
Perdigao SA Comercio e Industria PDG 23,222,143 40,681
Petrobras PN (Pfd. Reg.) (a) 114,881,000 14,870,242
Souza Cruz Industria Comerico 804,600 4,839,346
Telebras:
ON 341,974,800 20,834,669
PN (Pfd. Reg.) 279,196,597 20,732,555
sponsored ADR 506,100 37,704,450
Telepar PN 9,135,764 4,169,998
Telesp PN (Pfd. Reg.) 133,530,857 24,431,923
Telecomunicacoes de Minas
Gerais (Telemig) SA 395,698 47,368
Telecomunicacoes de Minas
Gerais (Telemig) SA Class B (a) 20,600,000 2,299,582
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
Unibanco PN 187,757,074 $ 5,207,860
Votorantim Celulose E Paper SA:
(Pfd. Reg.) 145,251,499 2,502,143
(rights) 36,985,978 17,998
272,308,866
CHILE - 7.2%
Banco Santander Chile SA, Series A
sponsored ADR 395,000 5,579,375
Cristalerias de Chile SA sponsored ADR 124,700 2,649,875
Empresa Nacional de Electricidad
SA sponsored ADR 93,500 1,718,063
Enersis SA sponsored ADR 438,200 12,872,125
Madeco SA ADR 94,900 2,277,600
Santa Isabel SA sponsored ADR 158,000 4,443,750
Soc Quimica y Minera de Chile ADR 172,300 9,907,250
Vina Concha Stet y Toro
SA sponsored ADR 37,200 744,000
40,192,038
COLOMBIA - 1.4%
Banc Industrial Colombiano
sponsored ADR 159,300 2,907,225
Banco de Bogota 25,737 157,019
Compania Nacional de Chocolates 136,000 1,142,571
Noel (Industria Alimenticias) 94,613 269,687
Suramericana de Seguros SA 175,750 3,251,863
7,728,365
LUXEMBOURG - 0.2%
Quilmes Industrial SA sponsored ADR 129,800 1,362,900
MEXICO - 22.3%
BANACCI SA de CV Class B (a) 2,919,000 6,226,223
Carso Global Telecom, Series A-1 (a) 1,816,224 4,443,710
Cemex SA, Series B 1,054,613 3,824,130
Cifra SA Class C (a) 8,508,200 10,995,541
Corporacion Geo SA de CV Class B
sponsored ADR (a)(b) 40,800 693,600
Corporacion Geo SA de CV (a) 840,873 3,798,171
Emvasa del Valle de Enah Ord. (a) 2,160,600 1,382,567
Far-Ben SA de CV, Series B 1,032,700 1,946,192
Fomento Economico Mexicano SA de
CV Class B 1,615,600 4,946,128
Gruma SA Class B (a) 1,558,766 7,813,388
Grupo Carso SA de CV Class A-1 4,737,100 21,694,373
Grupo Cementos Chihuahua Class B 5,479,300 6,187,415
Grupo Elektra SA 1,042,200 7,165,942Grupo Financiero Bancomer Class B (a)
24,944,300 10,672,530
Grupo Financiero Inbursa SA Class B 3,391,900 11,065,169
Grupo Modelo SA de CV Class C Ord. 1,849,500 9,665,204Grupo Televisa SA
de CV
sponsored ADR (a) 164,600 4,320,750
Sears Roebuck de Mexico SA de CV (a) 461,900 828,754
Tubos De Acero De Mexico ADR (a) 668,000 7,431,500
125,101,287
PANAMA - 0.9%
Panamerican Beverages, Inc. Class A 111,000 4,842,375
PERU - 1.6%
Banco Wiese Ltd. 304,773 461,150
Banco Wiese Ltd. sponsored ADR 186,219 977,650
Compania de Cementos Lima SA
Class C 40,258 550,102
COMMON STOCKS - CONTINUED
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
PERU - CONTINUED
Compania de Minas Buenaventura SA:
Class A 100,526 $ 781,197
Class B (a) 33,551 285,070
Class B sponsored ADR (a) 293,300 4,912,775 Class T 98,541 768,448
8,736,392
VENEZUELA - 0.9%
Electricidad de Caracas 1,631,114 1,786,788
Mavesa SA sponsored ADR (b) 513,933 3,083,598
4,870,386
TOTAL COMMON STOCKS
(Cost $452,454,829) 527,900,688
CASH EQUIVALENTS - 5.7%
(% OF FUND'S INVESTMENTS)
Taxable Central Cash Fund (c) 31,794,480 31,794,480
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $484,249,309) $ 559,695,168
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 $5,472,531 or 1.0% of net
assets.
(c) At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.33%. The yield refers to the income earned by investing in the Fund
over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $386,918,166 and $424,487,572, 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 $29,528 for the period.
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $486,727,660. Net unrealized appreciation aggregated
$72,967,508, of which $113,602,927 related to appreciated investment
securities and $40,635,419 related to depreciated investment securities.
At October 31, 1996, the fund had a capital loss carryforward of
approximately $185,031,000 of which $147,415,000, and $37,616,000 will
expire on October 31, 2003, and 2004, respectively.
For the period, interest and dividends from foreign countries were
$16,179,286. Taxes accrued or paid to foreign countries were $1,595,489.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
Basic Industries 8.0%
Cash Equivalents 5.7
Construction & Real Estate 3.1
Durables 1.0
Energy 8.9
Finance 15.4
Holding Companies 2.0
Industrial Machinery & Equipment 0.1
Media & Leisure 0.9
Nondurables 15.4
Precious Metals 1.2
Retail & Wholesale 3.7
Services 0.3
Utilities 34.3
100.0%
LATIN AMERICA
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at value (cost $484,249,309) - See accompanying schedule $ 559,695,168
Receivable for investments sold 5,175,944
Receivable for fund shares sold 374,091
Dividends receivable 901,088
Redemption fees receivable 354
Other receivables 9,750
TOTAL ASSETS 566,156,395
LIABILITIES
Payable for investments purchased $ 2,752,387
Payable for fund shares redeemed 4,732,754
Accrued management fee 391,232
Other payables and 390,708
accrued expenses
TOTAL LIABILITIES 8,267,081
NET ASSETS $ 557,889,314
Net Assets consist of:
Paid in capital $ 661,423,275
Undistributed net investment income 8,572,867
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (187,527,926
)
Net unrealized appreciation (depreciation) on investments 75,421,098
and assets and liabilities in
foreign currencies
NET ASSETS, for 44,301,055 shares outstanding $ 557,889,314
NET ASSET VALUE and redemption price per share ($557,889,314 (divided by) 44,301,055 shares) $12.59
Maximum offering price per share (100/97.00 of $12.59) $12.98
</TABLE>
STATEMENT OF OPERATIONS
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME $ 15,546,988
Dividends
Interest 3,032,657
18,579,645
Less foreign taxes withheld (1,595,489
)
TOTAL INCOME 16,984,156
EXPENSES
Management fee $ 4,580,255
Transfer agent fees 2,039,211
Accounting fees and expenses 402,734
Non-interested trustees' compensation 2,206
Custodian fees and expenses 860,701
Registration fees 51,665
Audit 64,569
Legal 2,651
Miscellaneous 13,797
Total expenses before reductions 8,017,789
Expense reductions (28,663 7,989,126
)
NET INVESTMENT INCOME 8,995,030
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (32,663,535
)
Foreign currency transactions (807,759 (33,471,294
) )
Change in net unrealized appreciation (depreciation) on:
Investment securities 168,532,752
Assets and liabilities in 43,273 168,576,025
foreign currencies
NET GAIN (LOSS) 135,104,731
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 144,099,761
OTHER INFORMATION $ 968,514
Sales Charges Paid to FDC
Expense reductions $ 14,682
Directed brokerage arrangements
Custodian interest credits 8,857
Transfer agent interest credits 5,124
$ 28,663
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 8,995,030 $ 5,687,217
Net investment income
Net realized gain (loss) (33,471,294) (150,178,950)
Change in net unrealized appreciation (depreciation) 168,576,025 (183,907,107)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 144,099,761 (328,398,840)
Distributions to shareholders from net investment income (5,626,729) -
Share transactions 348,744,157 430,328,990
Net proceeds from sales of shares
Reinvestment of distributions 5,493,619 -
Cost of shares redeemed (401,997,197) (526,564,610)
Redemption fees 886,945 2,393,237
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (46,872,476) (93,842,383)
TOTAL INCREASE (DECREASE) IN NET ASSETS 91,600,556 (422,241,223)
NET ASSETS
Beginning of period 466,288,758 888,529,981
End of period (including undistributed net investment income of $8,572,867 and $4,391,206,
respectively) $ 557,889,314 $ 466,288,758
OTHER INFORMATION
Shares
Sold 29,713,125 41,302,837
Issued in reinvestment of distributions 552,485 -
Redeemed (33,772,507) (48,312,015)
Net increase (decrease) (3,506,897) (7,009,178)
</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, APRIL 19, 1993
(COMMENCEME
NT
OF OPERATIONS)
TO
OCTOBER 31,
SELECTED PER-SHARE DATA 1996 1995 1994 C 1993
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.75 $ 16.21 $ 13.28 $ 10.00
Income from Investment Operations
Net investment income .22 .04 .07 .03
Net realized and unrealized gain (loss) 2.72 (6.52) 2.82 3.23
Total from investment operations 2.94 (6.48) 2.89 3.26
Less Distributions
From net investment income (.12) - (.05) -
From net realized gain - - (.05) -
Total distributions (.12) - (.10) -
Redemption fees added to paid in capital .02 .02 .14 .02
Net asset value, end of period $ 12.59 $ 9.75 $ 16.21 $ 13.28
TOTAL RETURN B 30.69% (39.85)% 22.89% 32.80%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 557,889 $ 466,289 $ 888,530 $ 342,934
Ratio of expenses to average net assets 1.32% 1.41% 1.48% 1.94%
A
Ratio of net investment income to average net assets 1.48% .97% .47% 1.21%
A
Portfolio turnover rate 70% 57% 77% 72%
A
Average commission rate D $ .0004
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 EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL
GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
D FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
NORDIC
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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). The fund has a 3% sales charge. If
Fidelity had not reimbursed certain fund expenses during the period shown,
the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED PAST 1 LIFE OF
OCTOBER 31, 1996 YEAR FUND
NORDIC 27.70% 27.70%
NORDIC (INCL. 3% SALES CHARGE) 23.87% 23.87%
FT - Actuaries World Nordic Index 21.20% 21.20%
European Region Funds Average 17.03% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, the one year period since the fund
started on November 1, 1995. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the FT
- - Actuaries World Nordic Index - a market capitalization weighted index of
over 90 stocks traded in four Scandinavian markets. The index is designed
to provide coverage of approximately 85% of investable equity available in
each market. To measure how the fund's performance stacked up against its
peers, you can compare the fund's performance to the European region funds
average, which reflects the performance of 43 mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. over the past 12
months. 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, 1996 YEAR FUND
NORDIC 27.70% 27.70%
NORDIC (INCL. 3% SALES CHARGE) 23.87% 23.87%
FT - Actuaries World Nordic Index 21.20% 21.20%
European Region Funds Average 17.03% 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
IMAHDR PRASUN SHR__CHT 19961031 19961108 143123 S00000000000001
Nordic FT Nordic
00342 FT002
1995/11/01 9700.00 10000.00
1995/11/30 9845.50 10102.71
1995/12/31 9554.50 9837.68
1996/01/31 9612.70 9736.81
1996/02/29 10204.40 10379.35
1996/03/31 10340.20 10486.03
1996/04/30 10476.00 10527.60
1996/05/31 10990.10 10896.56
1996/06/30 11106.50 10976.95
1996/07/31 10980.40 10742.19
1996/08/31 11630.30 11353.24
1996/09/30 12018.30 11682.46
1996/10/31 12396.60 12120.19
IMATRL PRASUN SHR__CHT 19961031 19961108 143124 R00000000000015
Let's say hypothetically that $10,000 was invested in Fidelity Nordic Fund
on November 1, 1995, when the fund started, and the 3% sales charge was
paid. As the chart shows, by October 31, 1996, the value of the investment
would have grown to $12,387 - a 23.87% increase on the initial investment.
For comparison, look at how the FT-Actuaries World Nordic Index did over
the same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would have grown to $12,120 - a 21.20% 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.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
NORDIC
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Colin Stone, Portfolio Manager of Fidelity Nordic Fund
Q. HOW DID THE FUND PERFORM, COLIN?
A. The fund did quite well providing a return of 27.70% for the one-year
period that ended October 31, 1996. In contrast, the fund's benchmark, the
FT - Actuaries World Nordic Index, was up 21.20% during the period. The
fund's peer group, as measured by the European region funds average, was up
17.03%, according to Lipper Analytical Services.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE IN THE REGION DURING THE PERIOD?
A. We should begin by discussing the Swedish market because almost half of
the fund is invested in that nation, and Swedish stocks make up about 60%
of the FT benchmark. I would say that a real key to the Nordic stock
markets' performance over the past year was the strong bond markets across
the region, particularly in Sweden, as markets anticipated the creation of
a single European currency. As evidence, the yield spread between Swedish
and German bonds closed by more than 100 basis points during the period.
So, the strength of the Nordic bond markets provided a solid underpinning
for strong performance by stocks.
Q. ON THE OTHER HAND, THE SWEDISH CURRENCY STRENGTHENED DURING THE PERIOD.
WHAT DID THE STRONGER CURRENCY MEAN TO THE FUND'S PERFORMANCE?
A. While it gave a boost to the fund's return as measured in dollars, it
hurt the competitiveness of Swedish-based cyclical companies - companies
whose performance generally mirrors the state of the economy. With the
strengthening currency, I kept the fund somewhat underweighted in Sweden
relative to my benchmark, and also reduced my investments in Swedish
cyclical companies. I should also note that the fund almost quadrupled in
size over the past six months. I believe that a portion of the inflows was
hot money - meaning investors chasing the strong performance of the region
- - and so I attempted to keep the fund liquid by investing in
larger-capitalization stocks.
Q. THE FUND HAD ITS LARGEST INVESTMENTS IN THE TECHNOLOGY SECTOR, AT OVER
20% OF THE FUND'S HOLDINGS. HOW DID THIS SECTOR CONTRIBUTE TO PERFORMANCE?
A. The technology sector was strong over the past six months, and I was
overweighted in some of the key companies relative to my benchmark. The
fund's largest holding at the end of the period, Ericsson, the Swedish
mobile communications supplier and mobile handset manufacturer, has had
very strong fundamentals over the period. The company made quite
significant market share gains within the handset business, while holding
on to very high market share levels within the mobile telecommunications
infrastructure business. While the mobile market did not show much growth
in the U.S. during the period, it's booming in much of the rest of the
world, and Ericsson has a phenomenal competitive position. Nokia, the
Finnish handset manufacturer, was also a top holding of the fund and did
well during the period. I was somewhat underweighted in Nokia compared to
my benchmark, though, because much of its business comes from mobile
handsets and I'm somewhat concerned about the quality of earnings from that
side of the business. Allgon, another Swedish telecommunications supplier,
bounced back nicely during the period and Nera, a Norwegian manufacturer of
microwave and satellite technology, also contributed to performance.
Q. GIVEN THE STRONG BOND MARKETS IN THE REGION, THE FUND'S HOLDINGS IN
FINANCIAL STOCKS MUST HAVE DONE WELL . . .
A. Yes, that's quite true indeed. There have been some positive earnings
surprises from Swedish banks over the last two quarters, with
Foreningsbanken being a good example. The smallest of the big banks in
Sweden, it's the last of the workout - or recovery - stories in that
country and continues to improve its balance sheet. Two insurance
companies, Swedish-based Skandia Foersaekrings and Finnish-based Pohjola,
also performed well. Insurance was a strong sector generally, due to the
strong financial markets and speculation on the value of insurance-related
businesses as the industry prepares for possible restructuring and
consolidation.
Q. A COUPLE OF THE FUND'S HOLDINGS OUTSIDE OF YOUR LARGEST SECTORS WERE
REAL STANDOUTS IN TERMS OF PERFORMANCE . . .
A. That's right, Hennes & Mauritz, a Swedish retailer I've spoken of
before, was probably the single best contributor to the fund. The stock
more than doubled during the year and, while it's still a sizable holding,
I did take profits in the stock. Falck and Autoliv are two other examples
from different sectors altogether. Falck, a Danish security services
business with operations across the region, made two substantial
acquisitions during the period that offer good margin improvement
potential. The company also is expanding its range of services.
Swedish-based Autoliv manufactures seat belts and air bags for cars and
performed quite well after the announcement of a merger with Morton, its
largest U.S. competitor. Both Falck and Autoliv saw their stocks appreciate
significantly over the past six months.
Q. WHAT WERE THE DISAPPOINTMENTS DURING THE FUND'S FIRST YEAR?
A. Volvo, one of the fund's larger positions, was a disappointment due to
weakness in its North American truck business. Scania, the Swedish truck
company, didn't fare as well as I anticipated either. The European truck
market was weaker than I believed it would be, and Scania's margins were
hurt by the costs of introducing a new model. The fund's holdings in the
forest products sector, although underweighted compared to the benchmark,
were also disappointing. The market was expecting a sharper recovery in
paper prices than what came to pass.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SEVERAL MONTHS?
A. In the near term, some of the growth companies seem pretty fully priced.
The more cyclical companies, I think, are cheap, but haven't shown much
earnings or growth momentum. The financials are attractively valued, but
I'm concerned that we've seen the best performance from them already, and
that there's little opportunity for the bond markets to do better,
particularly in Sweden. Where I still do have conviction is in some of the
technology companies, where valuations have not gone to excessive levels
and where our estimates are still ahead of the consensus. I still think
Nordic stocks in general are attractively valued in relation to their
European peers. While we have seen a dramatic convergence in bond market
valuations between different European markets, equity valuations have not
converged to the same degree yet. Twelve months ago, I would not have
thought the fund would have performed as well as it did; I'd be surprised
if the same thing happened over the next 12 months, but it is still
possible to find strong stock ideas and I remain optimistic on the outlook.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of issuers in
Denmark, Finland, Norway and Sweden
FUND NUMBER: 342
TRADING SYMBOL: FNORX
START DATE: November 1, 1995
SIZE: as of October 31, 1996, more than
$30 million
MANAGER: Colin Stone, since inception;
manager, Fidelity International, Limited's
Fidelity Nordic Fund, since 1990, Fidelity
Iberia Fund, since 1993, Fidelity New Europe
Fund, since 1995; analyst covering oil, oil
service, leisure and engineering industries,
1987-1993; joined Fidelity in 1987
(checkmark)
COLIN STONE ON HIS INVESTING STYLE:
"Fundamentally, I'm a growth investor, where growth
is driven by sales rather than by the economic cycle
or margin recovery. So you're unlikely ever to find
50% of the fund in cyclicals. I focus on companies
that are going to grow earnings per share faster
than their local market, and that can do so across
broader economic cycles. I do make some effort to
own cyclicals at the right time and to own growth
stocks at the right time. I also have a basic
preference for service businesses because they are
inherently cash-generative, and so it's easier for
good management in a service business to make
value-enhancing acquisitions. These types of
companies have the free cash flow to augment the
natural growth of the business.
"The first things I look for are whether Fidelity's
earnings estimates are above or below consensus.
That's the biggest single driver for me. I work very
closely with our team of 44 analysts in London and
get great support from them. The second thing I
look for is any sign of change that has yet to be
recognized by the market. I believe that markets
are often slow to discount change. It can come in any
number of forms: change in the management team,
in the business environment, in accounting rules or
in new product offerings that have been
underestimated. A good example here would be
Tomra, in Norway, a stock I recently sold, where the
market was slow to recognize a change in the mix of
business from simply selling recycling equipment to
U.S. food retailers to controlling the entire flow of
recycled beverage containers. This gave the
company a more predictable and faster growing
revenue stream. The stock more than doubled in the
last 12 months.
"In looking at a company's management, I like to see
a number of qualities. I prefer to see the managers
be shareholders in the business, so I know there's a
unity of effort. I like them to be open in the
information they give us, and I look for a balanced
presentation of how their company is doing.
"I make it a point to always meet the management of
every company I invest in, and our analysts meet or
talk with the companies we invest in at least four
times a year. I average a day a week on the road
visiting companies, and between a dozen and two
dozen companies come to our offices each week. At
the end of the day, I think we're quite well informed
about the firms and markets in which we invest our
shareholders' funds."
NORDIC
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
(% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
United States
15.4%
Denmark 9.9%
Row: 1, Col: 1, Value: 15.4
Row: 1, Col: 2, Value: 49.5
Row: 1, Col: 3, Value: 8.800000000000001
Row: 1, Col: 4, Value: 16.4
Row: 1, Col: 5, Value: 9.9
Finland 16.4%
Norway 8.8%
Sweden 49.5
%
AS OF APRIL 30, 1996
United States
8.3%
Denmark 12.4%
Row: 1, Col: 1, Value: 8.300000000000001
Row: 1, Col: 2, Value: 52.8
Row: 1, Col: 3, Value: 12.5
Row: 1, Col: 4, Value: 14.0
Row: 1, Col: 5, Value: 12.4
Finland 14.0%
Norway 12.5%
Sweden 52.8
%
ASSET ALLOCATION
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 85.7 92.8
Short-term investments 14.3 7.2
TOP TEN STOCKS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Ericsson (L.M.) Telephone Co. Class B 8.5 5.8
(Sweden, Communications Equipment)
Astra AB Class A Free shares 5.4 8.3
(Sweden, Drugs & Pharmaceuticals)
ABB AB, Series A 4.2 0.0
(Sweden, Holding Companies)
Volvo AB Class B 3.9 5.3
(Sweden, Autos, Tires & Accessories)
Nokia Corp. AB, Series A 3.1 0.0
(Finland, Communications Equipment)
Den Danske Bank Group AS 2.6 2.2
(Denmark, Banks)
Autoliv AB 2.4 1.8
(Sweden, Autos, Tires & Accessories)
Skandia Foersaekrings AB 2.1 2.6
(Sweden, Insurance)
Falck A/S 2.0 1.6
(Denmark, Services)
Foreningsbanken AB Class A Ord. 2.0 2.4
(Sweden, Banks)
TOP TEN MARKET SECTORS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Technology 20.3 18.3
Finance 15.2 17.5
Durables 9.9 9.4
Health 7.0 12.0
Holding Companies 4.8 0.7
Basic Industries 4.8 7.2
Construction & Real Estate 4.4 4.1
Nondurables 4.4 4.8
Services 3.5 1.6
Media & Leisure 3.0 2.8
NORDIC
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.7%
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
DENMARK - 9.9%
Crisplant Industries AS (a) 1,300 $ 91,405
Danisco AS 100 5,711
Den Danske Bank Group AS 11,829 845,914
Falck A/S 2,450 659,641
Fredgaard Radio A/S 2,300 220,881
Incentive AS 1,778 113,732
International Service Systems AS,
Series B 8,350 236,272
Sondagsavisen AS 500 83,173
Sophus Berendsen AS, Series B 3,740 460,509
Syd-Sonderjylland Holding 2,100 76,708
Unidanmark AS Class A 9,017 414,418
3,208,364
FINLAND - 16.4%
Cultor OY, Series 1 11,192 510,775
Efore Oy Class A 17,240 428,469
Fiskars OY, Series A 2,800 206,303
Hartwall Oy AB Class A 3,513 119,760
Huhtamaki Ord. 13,469 583,587
Martela Oy Class A 1,200 25,363
Nokia Corp. AB, Series A 21,590 994,336
Pohjola Class B 25,651 535,959
Raision Tehtaat Class V 3,400 202,652
Spontel OY Class A 26,500 192,337
Talentum Oy Class B 3,400 27,295
TT Teito Oy 8,549 571,036
UPM-Kymmene Corp. (a) 31,090 629,089
Vaisala Oy Class A 3,200 197,066
Yit-Yhtymae Oy 8,100 94,420
5,318,447
NORWAY - 8.8%
A-Pressen AS, Series A 12,200 266,913
Ark AS 11,733 282,365
Den Norske Bank AS Class A
Free shares 122,500 403,924
Ekornes AS 10,000 218,781
Fokus Bank AS 23,000 133,706
Nera AS 17,270 619,378
NCL Holdings AS (a) 123,300 254,342
SE (System Etikettering) AS 4,269 60,708
Saga Petroleum AS Class B 3,380 52,556
Sparebanken Midt-Norge 5,900 159,507
Sparebanken Norway primary
shares certificates 8,617 245,080
Steen & Stroem Invest AS 13,635 149,154
2,846,414
SWEDEN - 49.5%
ABB AB, Series A 12,050 1,363,629
Allgon AB Class B Free shares 15,800 320,399
ASG AB Class B Free shares Ord. 21,845 454,596
Astra AB Class A Free shares 38,024 1,744,286
Autoliv AB 18,320 776,395
Beijer AG (G&L), Series B 10,200 113,104
Bergman & Beving AB Class B
Free shares 1,344 38,789
Dahl International AB (a) 4,000 75,038
Electrolux AB 8,180 454,765
Ericsson (L.M.) Telephone Co. Class B 102,386 2,768,303
Foreningsbanken AB Class A Ord. 160,600 658,662
Frontec AB, Series B 44,852 640,417
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
Hennes & Mauritz AB B Free shares 4,355 $ 562,951
IBS (International Business Systems) AB
Class B Free shares 3,800 153,539
Incentive Fund, Inc. 7,800 464,444
Mo Och Domsjoe AB Class B 11,780 323,875
Naeckebro AB (a) 218 3,411
NCC AB Class B Free shares 39,000 515,391
Nordictel Holding AB (a) 15,400 278,369
Pricer AB Class B (a) 4,757 97,548
SKF AB Ord. 8,874 196,126
Scancem AB, Series A 3,339 124,261
Scania AB Class A 13,700 367,298
Skandia Foersaekrings AB 24,660 691,103
Stora Kopparbergs Bergslags AB
Class A Free shares 46,950 613,320
Svedala Industri Free shares 24,240 379,248
Svenska Handelsbanken 5,787 142,404
Swedbank Class A 25,700 405,994
TV 4 AB Class A 6,025 117,602
Volvo AB Class B 60,578 1,256,032
16,101,299
UNITED STATES OF AMERICA - 1.1%
Pharmacia & Upjohn, Inc. 846 30,456
Pharmacia & Upjohn, Inc. unit 9,190 320,370
350,826
TOTAL COMMON STOCKS
(Cost $25,498,656) $ 27,825,350
CASH EQUIVALENTS - 14.3%
(% OF FUND'S INVESTMENTS)
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 4,661,717 4,661,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $30,159,656) $ 32,486,350
LEGEND
(a) Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $28,421,959 and $3,218,952, 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 $3,427 for the period.
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $30,170,889. Net unrealized appreciation aggregated
$2,315,461, of which $2,876,847 related to appreciated investment
securities and $561,386 related to depreciated investment securities.
For the period, interest and dividends from foreign countries were
$313,272. Taxes accrued or paid to foreign countries were $27,205.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
Basic Industries 4.8%
Cash Equivalents 14.3
Construction & Real Estate 4.4
Durables 9.9
Energy 0.2
Finance 15.2
Health 7.0
Holding Companies 4.8
Industrial Machinery & Equipment 2.3
Media & Leisure 3.0
Nondurables 4.4
Retail & Wholesale 1.7
Services 3.5
Technology 20.3
Transportation 1.4
Utilities 2.8
100.0%
NORDIC
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at $ 32,486,350
value (including repurchase agreements of $4,661,000)
(cost $30,159,656) - See accompanying schedule
Cash 454
Receivable for fund shares sold 422,601
Dividends receivable 3,797
Redemption fees receivable 1,714
TOTAL ASSETS 32,914,916
LIABILITIES
Payable for investments purchased $ 1,800,114
Payable for fund shares redeemed 200,999
Accrued management fee 16,800
Other payables and 26,407
accrued expenses
TOTAL LIABILITIES 2,044,320
NET ASSETS $ 30,870,596
Net Assets consist of:
Paid in capital $ 28,104,416
Undistributed net investment income 143,841
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 295,649
Net unrealized appreciation (depreciation) on investments 2,326,690
and assets and liabilities in
foreign currencies
NET ASSETS, for 2,417,424 $ 30,870,596
shares outstanding
NET ASSET VALUE and redemption price per share ($30,870,596 (divided by) 2,417,424 shares) $12.77
Maximum offering price per share (100/97.00 of $12.77) $13.16
</TABLE>
STATEMENT OF OPERATIONS
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME $ 177,848
Dividends
Special dividend from 52,730
Volvo AB
Special dividend from Steen & 83,666
Stroem Invest AS
Interest 49,144
363,388
Less foreign taxes withheld (27,205
)
TOTAL INCOME 336,183
EXPENSES
Management fee $ 71,158
Transfer agent fees 31,192
Accounting fees and expenses 57,387
Non-interested trustees' compensation 30
Custodian fees and expenses 69,426
Registration fees 50,326
Audit 28,208
Legal 65
Miscellaneous 8
Total expenses before reductions 307,800
Expense reductions (116,886 190,914
)
NET INVESTMENT INCOME 145,269
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 295,649
Foreign currency transactions (1,428 294,221
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 2,326,694
Assets and liabilities in (4 2,326,690
foreign currencies )
NET GAIN (LOSS) 2,620,911
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 2,766,180
OTHER INFORMATION $ 71,880
Sales charges paid to FDC
Expense reductions $ 107
Custodian interest credits
FMR reimbursement 116,779
$ 116,886
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS NOVEMBER 1, 1995
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1996
<TABLE>
<CAPTION>
<S> <C>
Operations $ 145,269
Net investment income
Net realized gain (loss) 294,221
Change in net unrealized appreciation (depreciation) 2,326,690
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,766,180
Share transactions 32,616,632
Net proceeds from sales of shares
Cost of shares redeemed (4,541,434
)
Redemption fees 29,218
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 28,104,416
TOTAL INCREASE (DECREASE) IN NET ASSETS 30,870,596
NET ASSETS
Beginning of period -
End of period (including undistributed net investment income of $143,841) $ 30,870,596
OTHER INFORMATION
Shares
Sold 2,814,140
Redeemed (396,716
)
Net increase (decrease) 2,417,424
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
NOVEMBER 1, 1995
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA 1996
<TABLE>
<CAPTION>
<S> <C>
Net asset value, beginning of period $ 10.00
Income from Investment Operations
Net investment income .17 E, F
Net realized and unrealized gain (loss) 2.57
Total from investment operations 2.74
Redemption fees added to paid in capital .03
Net asset value, end of period $ 12.77
TOTAL RETURN A, B 27.70%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 30,871
Ratio of expenses to average net assets 2.00% C
Ratio of net investment income to average net assets 1.52%
Portfolio turnover rate 35%
Average commission rate D $ .0523
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIOD SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE
NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
D A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
E INVESTMENT INCOME PER SHARE REFLECTS SPECIAL DIVIDENDS FROM VOLVO AB
AND STEEN & STROEM INVEST AS, WHICH AMOUNTED TO $.06 AND $.10 PER SHARE,
RESPECTIVELY.
F NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
</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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). The fund has a 3% sales charge. If
Fidelity had not reimbursed certain fund expenses, the past 5 years and
past 10 years total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
OCTOBER 31, 1996 YEAR YEARS YEARS
PACIFIC BASIN -1.55% 29.92% 85.45%
PACIFIC BASIN -4.50% 26.03% 79.89%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital 3.31% 16.26% 93.63%
International Pacific Index
Pacific Region Funds Average 5.10% 49.49% 136.62%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or 10 years. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, the value of your investment would be $1,050. You can compare
the fund's returns to the performance of the Morgan Stanley Capital
International Pacific Index - a market capitalization weighted index of
over 400 stocks traded in six Pacific-region markets. To measure how the
fund's performance stacked up against its peers, you can compare it to the
Pacific region funds average, which reflects the performance of 38 mutual
funds with similar objectives tracked by Lipper Analytical Services, Inc.
over the past 12 months. 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 PAST
OCTOBER 31, 1996 YEAR YEARS 10
YEARS
PACIFIC BASIN -1.55% 5.37% 6.37%
PACIFIC BASIN -4.50% 4.74% 6.05%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital 3.31% 3.06% 6.83%
International Pacific Index
Pacific Region Funds Average 5.10% 8.21% 8.81%
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 10 YEARS
IMAHDR PRASUN SHR__CHT 19961031 19961111 160123 S00000000000001
Pacific Basin MS Pacific Index
00302 MS003
1986/10/31 9700.00 10000.00
1986/11/30 10248.69 10606.04
1986/12/31 10718.99 11383.50
1987/01/31 12425.08 13088.32
1987/02/28 12817.34 13432.89
1987/03/31 14092.21 14818.13
1987/04/30 15504.38 16996.51
1987/05/31 15553.41 16996.51
1987/06/30 14474.67 15928.70
1987/07/31 14553.13 15552.59
1987/08/31 15357.28 17400.52
1987/09/30 15151.33 16896.92
1987/10/31 12179.91 15059.27
1987/11/30 12464.30 15657.18
1987/12/31 13398.00 15897.73
1988/01/31 13398.00 16693.03
1988/02/29 13952.95 17864.03
1988/03/31 14725.91 19255.60
1988/04/30 15270.94 19499.13
1988/05/31 14725.91 18754.97
1988/06/30 13883.58 18117.51
1988/07/31 13616.01 18940.52
1988/08/31 13566.46 17538.52
1988/09/30 13764.66 18215.70
1988/10/31 13863.76 19712.96
1988/11/30 14755.64 21339.83
1988/12/31 14797.45 21460.78
1989/01/31 15077.02 21658.11
1989/02/28 15406.52 21934.86
1989/03/31 15047.07 21238.20
1989/04/30 15436.48 21250.76
1989/05/31 14837.39 20063.34
1989/06/30 14148.44 19168.83
1989/07/31 15835.87 21656.54
1989/08/31 14987.16 20316.69
1989/09/30 16225.28 21558.40
1989/10/31 15755.99 20981.41
1989/11/30 16265.21 21980.24
1989/12/31 16490.57 22004.14
1990/01/31 15929.45 20759.13
1990/02/28 14931.91 18744.48
1990/03/31 14007.11 15368.97
1990/04/30 13851.25 15472.40
1990/05/31 15191.69 17621.63
1990/06/30 15420.29 16911.68
1990/07/31 15939.84 16783.27
1990/08/31 13820.07 15182.24
1990/09/30 11565.22 12801.96
1990/10/31 13394.04 15567.69
1990/11/30 12167.90 13841.37
1990/12/31 12002.93 14430.56
1991/01/31 12234.57 14880.30
1991/02/28 13340.10 16714.70
1991/03/31 13171.64 15804.18
1991/04/30 13740.20 16210.34
1991/05/31 13645.44 16147.59
1991/06/30 13413.80 15092.39
1991/07/31 13582.27 15601.39
1991/08/31 12666.25 14809.99
1991/09/30 13455.92 15975.01
1991/10/31 13845.49 16654.85
1991/11/30 13192.70 15583.38
1991/12/31 13508.56 16061.59
1992/01/31 13161.11 15439.28
1992/02/29 13034.76 14357.93
1992/03/31 12213.51 12992.45
1992/04/30 12087.16 12396.86
1992/05/31 13055.82 13363.74
1992/06/30 12782.07 12312.88
1992/07/31 12213.51 12141.72
1992/08/31 12571.49 13805.07
1992/09/30 12487.26 13488.76
1992/10/31 12634.67 13012.50
1992/11/30 12582.02 13257.90
1992/12/31 12479.46 13106.15
1993/01/31 12607.02 13081.75
1993/02/28 13340.48 13716.01
1993/03/31 14244.02 15372.96
1993/04/30 15689.68 17822.21
1993/05/31 16455.03 18340.69
1993/06/30 15604.64 18040.01
1993/07/31 16433.77 19106.57
1993/08/31 17188.49 19671.69
1993/09/30 17231.01 18935.97
1993/10/31 18581.00 19356.35
1993/11/30 17666.83 16625.32
1993/12/31 20454.91 17784.25
1994/01/31 21009.81 19842.87
1994/02/28 21216.53 20354.42
1994/03/31 19628.01 19230.83
1994/04/30 20172.03 20062.38
1994/05/31 20770.44 20539.65
1994/06/30 20683.40 21211.55
1994/07/31 20639.88 20756.46
1994/08/31 21619.10 21117.20
1994/09/30 21336.22 20588.66
1994/10/31 21717.02 21109.44
1994/11/30 19932.66 19931.48
1994/12/31 19879.49 20065.59
1995/01/31 18037.66 18798.40
1995/02/28 17742.97 18332.82
1995/03/31 18307.80 19740.33
1995/04/30 18516.54 20579.90
1995/05/31 18406.03 19756.74
1995/06/30 18234.12 18919.45
1995/07/31 19425.17 20283.52
1995/08/31 19216.43 19519.48
1995/09/30 18995.41 19700.29
1995/10/31 18270.96 18742.36
1995/11/30 18111.34 19663.88
1995/12/31 18663.88 20623.64
1996/01/31 18946.30 20658.62
1996/02/29 18541.10 20425.51
1996/03/31 19032.25 21051.96
1996/04/30 20039.12 22123.95
1996/05/31 19474.29 21163.89
1996/06/30 19732.15 21168.27
1996/07/31 18725.28 20195.58
1996/08/31 18356.91 19663.90
1996/09/30 18897.18 20305.62
1996/10/31 17976.27 19363.04
IMATRL PRASUN SHR__CHT 19961031 19961111 160126 R00000000000123
Let's say hypothetically that $10,000 was invested in Fidelity Pacific
Basin Fund on October 31, 1986, and the 3% sales charge was paid. As the
chart shows, by October 31, 1996, the value of the investment would have
grown to $17,989 - a 79.89% increase on the initial investment. For
comparison, look at how the Morgan Stanley Capital International Pacific
Index did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $19,363 - a
93.63% 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.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
PACIFIC BASIN
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Shigeki Makino, Portfolio Manager of Fidelity Pacific
Basin Fund
Q. SHIGEKI, HOW DID THE FUND PERFORM?
A. For the 12 months ending October 31, 1996, the fund had a total return
of -1.55%. For the same period, the Morgan Stanley Capital International
Pacific Index returned 3.31%, while the Pacific region funds average
tracked by Lipper Analytical Services posted a return of 5.10%.
Q. WHY DID THE FUND'S RETURN TRAIL THAT OF THE INDEX AND THE AVERAGE?
A. The fund trailed the index for two reasons. First, the fund experienced
a very large inflow of cash from November 1995 through December 1995.
During that period, the stocks that made up the index posted very strong
gains, while the fund held a substantial cash position that posted a much
lower return. This underinvestment hurt the fund's performance relative to
the index. Second, the fund suffered from having a significant investment
in Japanese electronics and semiconductor stocks at the very beginning of
the period, specifically from November 1995 to the beginning of January
1996. These stocks fell as a group when it became clear that the
electronics and semiconductor booms were coming to a pause, if not an end.
The fund trailed the average because it had less invested in Southeast Asia
than comparable funds. Over the one-year period, Southeast Asia performed
better than Japan, where the fund had most of its investments.
Q. OVER THE PAST YEAR, THE FUND'S INVESTMENTS IN SOUTHEAST ASIA DROPPED
FROM MORE THAN 43% OF THE FUND TO AROUND 16%, AND INVESTMENTS IN JAPAN
INCREASED FROM AROUND 40% TO MORE THAN 70%. WHY IS THAT?
A. It all has to do with the relative attractiveness of the markets. At
this point, none of the markets is exceedingly attractive, so I'm keeping
the fund's country weightings fairly close to those you'll find in the
index, which includes almost an 80% stake in Japan. Southeast Asian
economies are growing faster than Japan's. And, because they have faster
growth, you would expect Southeast Asian companies to have faster earnings
growth, usually the main driver of stock prices. While many funds are
overweighted in Asia relative to the index because their managers are
bullish or optimistic about future prospects, I find valuations -stock
prices relative to other measures such as earnings - in Southeast Asia to
be reasonably expensive, and therefore unattractive. In addition, several
economies are starting to slow down. Finally, it's important to remember
that almost all of the countries in the Pacific region except for Hong
Kong, Japan and Australia have regulated economies. Governments can change
the "playing field" or the "ground rules" at any time.
Q. THEN WHAT'S THE ATTRACTIVENESS OF JAPAN?
A. I am a contrarian investor. That is, out-of-favor stocks and
down-and-out markets appeal to me. These kinds of situations generally have
one way to go - up. That being said, Japan is attractive to me because
sentiment there is exceedingly negative, valuations are reasonably
attractive and business prospects are slowly improving.
Q. WHAT WAS THE FOCUS OF YOUR JAPANESE INVESTMENTS?
A. I moved the fund away from economically sensitive stocks. The Japanese
economy stumbled over the past six months, and even though I believe we'll
see an economic recovery going forward, it looks as if it will be gradual.
I moved the fund more toward growth-oriented stocks with
shareholder-friendly managements. The companies I've been looking for are
those with significant business franchises that can extract very high
returns on investment over the long term. The decline in much of the
Japanese market over the past six months provided me with a buying
opportunity. As a result, I was able to increase the size of the fund's
investments in my favorite stocks. If you look at the fund's top 10
investments, you'll see even larger stakes in some of the same names that
were there six months ago, including Fuji Photo Film and Matsushita
Electric. I also targeted companies that I felt would benefit from the
depreciation in the yen that we saw over the period. These companies
largely were those that were able to maintain their price levels abroad and
fully benefit from currency-related gains. Among these stocks was the auto
maker Honda.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE OUTSIDE OF JAPAN?
A. While it has been better than Japan, most of the region has seen
material deterioration in the pace of economic growth. Thailand, for
example, is mired in a financial crisis. The two areas that were most
attractive to me were Hong Kong and Australia, two of the larger components
of the index. I overweighted investments in these two countries relative to
the index because I believed their economic downturns were bottoming out,
and that they would start to show some improvement.
Q. WHAT SECTORS WERE YOU TARGETING IN HONG KONG AND AUSTRALIA?
A. There were a couple of sectors that I focused on in these two countries,
where the fund's stock selection benefited its performance. In Hong Kong, I
targeted property companies and banks, with Hang Seng Bank, Sun Hung Kai
Properties and HSBC Holdings among the better performers. In Australia, I
also focused on banks, which posted strong performance because of merger
and acquisition rumors. National Australia Bank and Australia and New
Zealand Banking Group performed well for the fund.
Q. WHAT'S YOUR OUTLOOK?
A. I'm fairly optimistic about Japan. That market is entering the time of
year from November through May when it historically has posted the best
returns. In addition, I believe the yen's weakness will start to prove more
beneficial to exporters. The interest rate environment there also is quite
positive, and the bond market has sustained a solid rally. When the bond
market does well it usually has a positive effect on stocks. Stock
valuations remain cheap, and I believe we'll see some gradual improvements
in the economy. In the rest of the Pacific region, I think the major
non-Japanese economies - Australia and Hong Kong - also will see some
improvements in their economies and markets, especially when compared to
alternatives in Southeast Asia. Most of the impetus in Hong Kong should
come from an increase in consumer spending, while Australia's rebound
should be helped by strength in the building materials sector.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Pacific Basin
issuers
FUND NUMBER: 302
TRADING SYMBOL: FPBFX
START DATE: October 1, 1986
SIZE: as of October 31, 1996, more than
$572 million
MANAGER: Shigeki Makino, since May 1996;
manager, Fidelity Japan Fund, since 1994;
analyst, Fidelity Japan Fund, 1993-1994;
joined Fidelity in 1990
(checkmark)
SHIGEKI MAKINO ON HONG KONG'S REVERSION TO CHINESE
CONTROL IN 1997:
"There are some risks and unknowns regarding the
British cession of Hong Kong to the Chinese next
year. Overall, though, residents of Hong Kong and
investors generally are more relaxed and positive
about the situation than they were several years
ago. Before, stocks in the Hong Kong market sold at
a fairly significant discount to the rest of Southeast
Asia, largely because of the China factor.
"However, people are starting to become more
positive because they feel the inflow of Chinese
firms and population will help create new demand for
residential real estate, office space and goods.
Temporarily, anyway, there should be an upsurge in
demand, along with the benefit of a Chinese
government that wants at least the first year of the
handover to go very well, and probably will bend over
backwards to make sure that it does. The last thing
the Chinese government wants is for the Hong Kong
economy to fall flat on its face."
PACIFIC BASIN
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
(% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
Australia 7.8%
Other 7.3%
Row: 1, Col: 1, Value: 7.4
Row: 1, Col: 2, Value: 4.1
Row: 1, Col: 3, Value: 72.2
Row: 1, Col: 4, Value: 8.6
Row: 1, Col: 5, Value: 7.7
Malaysia 4.1%
Hong Kong 8.6%
Japan 72.2%
AS OF APRIL 30, 1996
United States 4.3%
Row: 1, Col: 1, Value: 4.3
Row: 1, Col: 2, Value: 5.6
Row: 1, Col: 3, Value: 3.2
Row: 1, Col: 4, Value: 75.09999999999999
Row: 1, Col: 5, Value: 6.5
Row: 1, Col: 6, Value: 5.3
Australia 5.3%
Other 5.6%
Hong Kong 6.5%
Malaysia 3.2%
Japan 75.1%
ASSET ALLOCATION
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks, equity futures and 97.0 94.8
closed-end investment companies
Bonds 1.4 0.9
Short-term investments 1.6 4.3
TOP TEN STOCKS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Fuji Photo Film Co. Ltd. 2.7 2.1
(Japan, Photographic Equipment)
Matsushita Electric Industrial Co. Ltd. 2.4 1.6
(Japan, Consumer Electronics)
Toyota Motor Corp. 2.3 1.9
(Japan, Autos, Tires, & Accessories)
Honda Motor Co. Ltd. 2.1 1.6
(Japan, Autos, Tires, & Accesories)
DDI Corp. Ord. 2.1 1.2
(Japan, Telephone Services)
Sakura Bank Ltd. 2.1 1.9
(Japan, Banks)
Canon, Inc. 1.5 1.1
(Japan, Computer Services & Software)
Mitsui Trust and Banking Co. Ltd. 1.5 1.9
(Japan, Banks)
Nomura Securities Co. Ltd. 1.5 1.6
(Japan, Securities Industry)
Omron Corp 1.5 1.5
(Japan, Electrical Equipment)
TOP TEN MARKET SECTORS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 19.2 17.6
Construction & Real Estate 13.4 11.5
Durables 12.9 12.0
Technology 11.2 9.0
Industrial Machinery & Equipment 8.2 8.1
Basic Industries 6.0 9.1
Retail & Wholesale 5.0 4.6
Media & Leisure 4.8 3.3
Health 4.6 4.2
Utilities 4.0 3.2
PACIFIC BASIN
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.7%
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
AUSTRALIA - 7.8%
Australian Gas Light Co. 354,000 $ 1,938,791
Australia & New Zealand Banking
Group Ltd. 531,000 3,097,316
Brambles Industries Ltd. 217,647 3,600,165
Broken Hill Proprietary Co. Ltd. (The) 168,639 2,235,611
Crown Ltd. (a) 359,170 778,886
Erg Ltd. 1 1
Harvey Norman Holdings Ltd. 503,197 2,449,270
James Hardie Industries Ltd. Ord. 746,100 1,948,653
Leighton Holdings Ltd. 383,000 1,742,971
Memtec Ltd. Ord. 333 10,898
National Australia Bank Ltd. 390,000 4,275,017
News Corp. Ltd. 307,898 1,749,665
Publishing & Broadcasting Ltd. 619,000 2,782,675
QNI Ltd. 758,500 1,524,800
QBE Insurance Group Ltd. Ord. 702,797 3,715,608
Reinsurance Australia Corp. Ltd. 613,657 1,835,866
Tabcorp Holdings Ltd. 516,000 2,429,910
Western Mining Holdings Ltd. 452,190 2,838,034
Westpac Banking Corp. 531,000 3,025,872
Woodside Petroleum Ltd. 380,161 2,677,818
44,657,827
BERMUDA - 0.1%
FPB Bank Holding Co. Ltd. 789,084 339,322
Mandarin Oriental International Ltd. 195,000 263,250
602,572
HONG KONG - 8.6%
Cheung Kong Holdings Ltd. 748,000 5,997,776
Dah Sing Financial Holdings Ltd. 224,124 792,762
Great Eagle Holdings Ltd. 331,172 1,064,332
HSBC Holdings PLC 80,438 1,647,686
Hang Seng Bank Ltd. 457,600 5,429,865
Hong Kong & China Gas Co. Ltd. 1,792,800 3,153,317
Hong Kong Telecommunications Ltd. 881,200 1,553,115
Hutchison Whampoa Ltd. Ord. 562,000 3,924,886
Hysan Development Co. Ltd. 341,000 1,093,712
Hysan Development Co. Ltd. (warrants) (a) 17,050 8,214
Hong Kong & Shanghai Hotels 385,000 707,043
JCG Holdings Ltd. 912,000 849,228
Johnson Electric Holdings Ltd. 145,000 316,921
Manhattan Card Co. Ltd. 1,314,000 650,016
National Mutual Asia Ltd. 412,000 346,344
New World Development Co. Ltd. 673,189 3,917,838
Sime Darby Hongkong Ltd. 242,000 286,374
Sun Hung Kai Properties Ltd. 711,000 8,091,876
Swire Pacific Ltd. Class A 648,000 5,719,718
Television Broadcast Ltd. Ord. 167,000 585,306
Varitronix International Ltd. 148,000 269,884
Wharf Holdings Ltd. (c) 559,000 2,306,213
Wing Hang Bank Ltd. 152,000 611,365
49,323,791
INDIA - 0.3%
State Bank of India GDR (a) (c) 103,000 1,519,250
JAPAN - 72.2%
Acom Co. Ltd. 100,400 3,847,823
Ace Koeki Co. Ltd. 79,000 935,321
Aderans Co. Ltd. 200,000 4,841,044
Aida Engineering Ltd. Ord. 180,000 1,278,667
Akita Bank Ltd. 420,000 2,710,985
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
Amada Metrecs Co. Ltd. 110,000 $ 1,302,346
Amadasonoike Co. Ltd. 150,000 848,498
Amway Japan Ltd. 80,000 3,185,267
Aoyama Trading Co. Ord. 160,000 4,083,315
Asahi Breweries Ltd. 500,000 5,130,454
Aronkasei Co. Ltd. 100,000 1,052,401
Bank of Tokyo-Mitsubishi Ltd. 315,000 6,409,121
Banyu Pharmaceutical Co. Ltd. 220,000 2,797,632
Benesse Corp. 21,000 1,289,191
Bunka Shutter Co. Ltd. 300,000 2,089,016
Bunka Shutter Co. Ltd. (warrants) (a) 200 73,750
Canon, Inc. 460,000 8,794,563
Chain Store Okuwa Co. Ltd. 110,000 1,601,403
Cesar Co. 210,000 1,569,130
Charle Co. Ltd. 25,000 320,105
Chofu Seisaku Co. Ltd. 48,500 1,105,898
Citizen Watch Co. Ltd. Ord. 260,000 1,972,375
Dai-Ichi Kangyo Bank 180,000 2,920,412
DDI Corp. Ord. 1,600 11,997,370
Daiichi Pharmaceutical Co. Ltd. 130,000 1,869,765
Daiwa House Industry Co. Ltd. 400,000 5,542,644
Daiwa Securities Co. Ltd. 480,000 5,177,812
Dai-Dan Co. Ltd. 200,000 2,859,022
Daitec Co. Ltd. 30,000 1,749,616
Denso Corp. 60,000 1,241,833
Daito Trust Construction Co. 342,100 4,320,316
Descente Ltd. 61,000 369,130
Daiwa Kosho Lease Co. Ltd. 230,000 2,097,786
Ezaki Glicko Co. Ltd. 280,000 2,602,938
FCC Co. Ltd. (a) 57,600 1,692,261
Fuji Bank Ltd. 180,000 3,236,133
Fuji Photo Film Co. Ltd. 540,000 15,486,078
Fuji Machine Manufacturing Co. Ltd. Ord. 80,000 1,887,306
Godo Steel Ltd. (a) 250,000 1,414,164
Heiwa Corp. 120,000 2,094,278
Hyakugo Bank 210,000 1,270,774
Higashi Nihon House Co. Ltd. 90,000 1,294,453
Hitachi Koki Co. Ltd. Ord. 200,000 1,675,071
Hirose Electric Co. Ltd. 53,000 3,142,118
Hitachi Ltd. 700,000 6,200,395
Hitachi Maxell Ltd. 314,000 6,196,010
Honda Motor Co. Ltd. 510,000 12,165,754
Hitachi Medical Corp. Ord. 60,000 936,637
Hoya Corp. 130,000 4,263,977
Hitachi Conststruction Machinery Co. Ltd. 63,000 690,638
Ito-Yokado Co. Ltd. 110,000 5,479,500
Izumiya Co. Ltd. 350,000 5,555,799
Japan Radio Co. Ltd. 260,000 3,465,907
Japan Industrial Land Development
Co. Ltd. 200 5,753
JGC Corp. 150,000 1,578,601
Kahma Co. Ltd. 12,000 173,646
Kawasaki Kisen Kaisha Ltd. (a) 550,000 1,456,698
Kobe Steel Ltd. Ord. (a) 2,559,000 6,059,461
Komatsu Ltd. Ord. 980,000 8,010,174
Konica Corp. 402,000 2,682,938
Komatsu Seiren Co. Ltd. 24,000 212,585
Maezawa Industries 115,000 2,753,344
Makita Corp. 100,000 1,368,121
Maruko Co. Ltd. 53,900 2,221,706
Matsushita Electric Industrial Co. Ltd. 870,000 13,886,429
Meitec Corp. 100,000 2,052,182
Minolta Camera Co. Ltd. 480,000 2,891,998
Mirai Industry Co. Ltd. 90,200 2,570,928
COMMON STOCKS - CONTINUED
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Mitsubishi Electric Co. Ord. 500,000 $ 2,889,717
Mitsui Trust and Banking Co. Ltd. 901,000 8,691,954
Mitsui Wood Systems, Inc. 140,000 1,424,249
NEC Corp. 450,000 4,893,664
Namco Ltd. 100,000 2,990,572
Nintendo Co. Ltd. Ord. 56,000 3,575,356
Nippon Oil Co. Ltd. 200,000 1,140,101
Nippon Suisan Kaisha Ltd. (a) 300,000 1,147,117
Nissan Motor Co. Ltd. Ord. 240,000 1,812,234
Nomura Securities Co. Ltd. 520,000 8,573,559
Nichicon Corp. 210,000 2,615,216
Nippon Zeon Co. Ltd. 188,000 915,063
Nippon Computer Systems Corp. 190,000 2,432,800
Nichiei Co. Ltd. 40,000 2,659,066
Okuma Corp. (a) 420,000 4,014,909
Okumura Gumi 100,000 701,601
Omron Corp. 470,000 8,367,464
Orix Corp. 165,200 6,142,934
Rinnai Corp. Ord. 132,100 2,815,199
Riken Vinyl Industry Co. Ltd. 100,000 810,349
Riso Kagaku Corp. 27,000 1,920,368
Rohm Co. Ltd. 50,000 2,959,877
Sakura Bank Ltd. 1,260,000 11,934,226
Sakai Chemical Industry Co. Ltd. 320,000 1,711,905
Sankyo Co. Ltd. 100,000 2,473,142
Sanki Engineering Co. Ltd. 230,000 2,702,916
Sanwa Shutter Corp. 200,000 1,650,515
Sekisui Chemical Co. Ltd. 450,000 5,012,059
Senshukai Co. Ltd. 143,000 2,006,578
Seed Co. Ltd. (a) 40,000 596,360
Sankyo Co. Ltd. 80,000 2,778,338
Shimachu Co. Ltd. 100,000 2,745,012
Shiseido Co. Ltd. 440,000 5,132,208
Shimano, Inc. 185,000 3,293,576
Sho Bond Corp. Ord. 56,600 1,762,158
Sony Corp. 125,500 7,517,343
Sony Music Entertainment Japan, Inc. 32,500 1,251,261
Sumitomo Forestry Co. Ltd. 195,000 2,753,344
Sumitomo Metal Industries Ltd. 2,550,000 6,999,781
Sumitomo Warehouse Co. Ltd. 154,000 968,367
Shintokogio Ltd. 221,000 1,821,881
Takeda Chemical Industries Ltd. (a) 390,000 6,669,590
Takasago Thermal Engineering Co. 214,000 2,965,315
Tasaki Shinju Co. Ltd. Ord. 50,000 432,361
Terumo Corp. 511,000 6,542,951
Tsudakoma Corp. 220,000 1,219,382
Toda Construction Co. 360,000 2,844,639
Toyo Ink Manufacturing Co. Ltd. 300,000 1,510,195
Toyota Motor Corp. 557,000 13,140,365
Toyo Shutter Co. Ltd. 150,000 1,118,176
Toyoda Gosei Co. 49,000 371,717
Tenma Corp. 82,000 1,452,664
Uni Charm Corp. Ord. 110,000 2,672,221
Uny Co. Ltd. 201,000 3,472,660
Wako Electric Co. Ltd. 75,000 1,019,513
Yamatake Honeywell Co. Ltd. 100,000 1,675,071
Yokogawa Electric 60,000 531,462
Yoshinoya D&C Co. Ltd. Ord. 125 1,556,676
413,858,063
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
KOREA (SOUTH) - 0.2%
Samsung Electronics Co. Ltd.
(bonus issue 3/96) (a) 14,200 $ 971,013
Sam Yang Co. Ltd. (warrants) (a) 300 15,000
986,013
MALAYSIA - 4.1%
Affin Holdings BHD 250,000 643,030
Berjaya Sports Toto BHD 468,000 1,759,329
Carlsberg Brewery BHD 45,000 315,183
Ekran BHD Ord. 136,000 570,456
EON (Edaran Otomobil Nasional) BHD 226,000 2,110,562
Jaya Tiasa Holdings BHD 48,000 271,616
Kian Joo Can Factory BHD 189,000 1,032,092
Kwong Yik Bank BHD 101,000 277,769
Magnum Corp. BHD 404,500 697,883
Malayan Banking BHD 155,000 1,533,378
Nylex Malaysia SDN BHD 106,500 233,895
Oriental Holdings BHD 53,000 360,730
Oriental Holdings BHD (New) 21,200 143,243
Petronas Dagangan BHD 109,000 321,337
Public Bank BHD (For. Reg.) 616,666 1,156,661
Resorts World BHD 187,000 1,072,969
Rothmans of Pall Mall Malaysia BHD 184,000 1,812,987
Sime Darby BHD (a) 635,000 2,248,922
Tanjong PLC (For. Reg.) 93,000 360,651
Telekom Malaysia BHD 218,000 1,923,707
Time Engineering BHD 123,000 240,442
United Engineers BHD 300,000 2,374,263
YTL Corp. BHD 366,000 1,969,689
23,430,794
NEW ZELAND - 0.3%
Telecom Corp. 402,000 2,088,530
PAKISTAN - 0.0%
Bank of Punjab (a) 12,870 4,929
National Development Leasing Corp. (a) 45,871 7,532
12,461
PHILIPPINES - 0.2%
Ayala Land, Inc. Class B 413,187 440,230
Oriental Petroleum & Mineral Corp.
Class B (a) 7,771,657 2,957
Pilipino Telephone Corp. (a) 1,008,000 891,781
1,334,968
SINGAPORE - 2.6%
Cerebos Pacific Ltd. 9,000 69,599
City Developments Ltd. 200,000 1,575,027
Cycle & Carriage Ltd. 31,000 325,505
Datacraft Asia Ltd. 514,000 606,520
DBS Land Ltd. 338,000 1,064,718
Development Bank of Singapore Ltd.
(For. Reg.) 146,000 1,750,550
Hong Leong Finance Ltd. (For. Reg.) 295,000 899,965
Keppel Corp. Ltd. 176,000 1,311,103
Overseas Union Bank Ltd. (For . Reg.) 195,000 1,328,131
Overseas Chinese Banking Corp. 113,000 1,290,741
Singapore International Airlines Ltd. 150,000 1,319,617
Singapore Finance Ltd. 76,000 108,918
Singapore Press Holdings Ltd. (For. Reg.) 96,000 1,593,757
United Industrial Corp. Ltd. 485,000 402,590
United Overseas Bank Ltd. (For. Reg.) 161,000 1,564,881
15,211,622
COMMON STOCKS - CONTINUED
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
SRI LANKA - 0.0%
Ceylon Tea Services Ltd. 215,000 $ 201,621
THAILAND - 0.3%
Finance One PCL (For. Reg.) 245,000 691,358
Krung Thai Bank Ltd. (For. Reg.) 200,110 548,999
Thai Military Bank Ltd. (For. Reg.) 177,300 409,982
1,650,339
TOTAL COMMON STOCKS
(Cost $565,889,566) 554,877,851
CLOSED-END INVESTMENT COMPANIES - 0.3%
(% OF FUND'S INVESTMENTS)
KOREA (SOUTH) - 0.3%
Korea Fund, Inc. (Cost $1,967,735) 97,400 1,643,625
CORPORATE BONDS - 1.4%
(% OF FUND'S INVESTMENTS)
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (B)
CONVERTIBLE BONDS - 1.3%
BERMUDA - 1.3%
MBL International Finance
of Bermuda 3%, 11/30/02 Aa2 $6,860,000 7,563,150
INDONESIA - 0.0%
Modernland Realty Ltd. 6%,
10/20/03 - IDR 247,000 77,277
TOTAL CONVERTIBLE BONDS 7,640,427
NONCONVERTIBLE BONDS - 0.1%
THAILAND - 0.1%
Finance One PCL unsecured
3 3/4%, 3/15/01 (For. Reg.) - THB 818,000 23,527
Thai German Ceramic Industries
PCL 3%, 7/08/99 - THB 6,660,000 208,029
TOTAL NONCONVERTIBLE BONDS 231,556
TOTAL CORPORATE BONDS
(Cost $8,443,349) 7,871,983
CASH EQUIVALENTS - 1.6%
(% OF FUND'S INVESTMENTS)
MATURITY
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 9,100,400 9,099,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $585,399,650) $ 573,492,459
CURRENCY ABBREVIATIONS
IDR - Indonesian rupiah
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 $3,825,463 and 0.7% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $743,516,867 and $462,020,011, respectively.
The market value of futures contracts opened and closed amounted to
$138,350,272 and $139,906,048, 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 $180 for the period.
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $586,371,560. Net unrealized depreciation aggregated
$12,879,101, of which $34,166,033 related to appreciated investment
securities and $47,045,134 related to depreciated investment securities.
At October 31, 1996, the fund had a capital loss carryforward of
approximately $27,666,000 of which $10,407,000 and $17,259,000 will expire
on October 31, 2003 and 2004, respectively.
For the period, interest and dividends from foreign countries were
$6,941,011. Taxes accrued or paid to foreign countries were $754,275.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.2%
Basic Industries 6.0
Cash Equivalents 1.6
Construction & Real Estate 13.4
Durables 12.9
Energy 0.7
Finance 19.2
Health 4.6
Holding Companies 0.1
Industrial Machinery & Equipment 8.2
Media & Leisure 4.8
Nondurables 3.3
Precious Metals 0.5
Retail & Wholesale 5.0
Services 2.1
Technology 11.2
Transportation 2.2
Utilities 4.0
100.0%
PACIFIC BASIN
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at $ 573,492,459
value (including repurchase agreements of $9,099,000)
(cost $585,399,650) - See accompanying schedule
Receivable for investments sold 2,568,523
Receivable for fund shares sold 579,125
Dividends receivable 1,363,845
Interest receivable 86,263
Redemption fees receivable 133
TOTAL ASSETS 578,090,348
LIABILITIES
Payable to custodian bank $ 69,528
Payable for investments purchased 2,830,335
Payable for fund shares redeemed 2,317,095
Accrued management fee 353,367
Other payables and 370,134
accrued expenses
TOTAL LIABILITIES 5,940,459
NET ASSETS $ 572,149,889
Net Assets consist of:
Paid in capital $ 612,211,115
Undistributed net investment income 363,575
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (28,469,058
)
Net unrealized appreciation (depreciation) on investments (11,955,743
and assets and liabilities in )
foreign currencies
NET ASSETS, for 39,061,661 $ 572,149,889
shares outstanding
NET ASSET VALUE and redemption price per share ($572,149,889 (divided by) 39,061,661 shares) $14.65
Maximum offering price per share (100/97.00 of $14.65) $15.10
</TABLE>
STATEMENT OF OPERATIONS
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME $ 6,721,896
Dividends
Interest 3,342,693
10,064,589
Less foreign taxes withheld (754,275
)
TOTAL INCOME 9,310,314
EXPENSES
Management fee $ 4,578,588
Basic fee
Performance adjustment (8,198
)
Transfer agent fees 2,018,919
Accounting fees and expenses 400,980
Non-interested trustees' compensation 2,320
Custodian fees and expenses 452,190
Registration fees 96,653
Audit 52,570
Legal 7,331
Miscellaneous 7,151
Total expenses before reductions 7,608,504
Expense reductions (102,581 7,505,923
)
NET INVESTMENT INCOME 1,804,391
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (17,649,797
)
Foreign currency transactions (166,519
)
Futures contracts 1,555,776 (16,260,540
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (1,105,707
)
Assets and liabilities in (38,512 (1,144,219
foreign currencies ) )
NET GAIN (LOSS) (17,404,759
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (15,600,368
)
OTHER INFORMATION $ 2,123,204
Sales charges paid to FDC
Deferred sales charges withheld $ 23,652
by FDC
Expense reductions $ 88,383
Directed brokerage arrangements
Custodian interest credits 222
Transfer agent interest credits 13,976
$ 102,581
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 1,804,391 $ 1,790,520
Net investment income
Net realized gain (loss) (16,260,540) (10,059,188)
Change in net unrealized appreciation (depreciation) (1,144,219) (70,801,516)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (15,600,368) (79,070,184)
Distributions to shareholders
In excess of net investment income - (583,259)
From net realized gain - (52,235,883)
TOTAL DISTRIBUTIONS - (52,819,142)
Share transactions 529,218,224 535,543,498
Net proceeds from sales of shares
Reinvestment of distributions - 51,819,678
Cost of shares redeemed (259,448,198) (691,649,929)
Redemption fees 345,316 278,855
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 270,115,342 (104,007,898)
TOTAL INCREASE (DECREASE) IN NET ASSETS 254,514,974 (235,897,224)
NET ASSETS
Beginning of period 317,634,915 553,532,139
End of period (including under (over) distribution of net investment income of $363,575 and
$(67,351), $ 572,149,889 $ 317,634,915
respectively)
OTHER INFORMATION
Shares
Sold 34,672,919 34,934,955
Issued in reinvestment of distributions - 3,265,306
Redeemed (16,960,967) (44,583,739)
Net increase (decrease) 17,711,952 (6,383,478)
</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 1996 1995 1994 E 1993 1992 C
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.88 $ 19.96 $ 17.48 $ 12.00 $ 13.15
Income from Investment Operations
Net investment income .05 D .07 D .10 .20 .08 D
Net realized and unrealized gain (loss) (.29) (3.12) 2.78 5.39 (1.23)
Total from investment operations (.24) (3.05) 2.88 5.59 (1.15)
Less Distributions
From net investment income - - (.01) (.11) -
In excess of net investment income - (.02) (.11) - -
From net realized gain - (2.02) (.28) - -
Total distributions - (2.04) (.40) (.11) -
Redemption fees added to paid in capital .01 .01 - - -
Net asset value, end of period $ 14.65 $ 14.88 $ 19.96 $ 17.48 $ 12.00
TOTAL RETURN A, B (1.55)% (15.87)% 16.88% 47.06% (8.75)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 572,150 $ 317,635 $ 553,532 $ 493,533 $ 116,277
Ratio of expenses to average net assets 1.26% 1.32% 1.54% 1.59% 1.84%
F
Ratio of expenses to average net assets after expense reductions 1.24% G 1.32% 1.54% 1.59% 1.84%
Ratio of net investment income to average net assets .30% .44% .04% .15% .65%
Portfolio turnover rate 85% 65% 88% 77% 105%
Average commission rate H $ .0151
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS). B TOTAL
RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. C AS OF NOVEMBER
1, 1991 THE FUND DISCONTINUED THE USE OF EQUALIZATION ACCOUNTING. D
NET INVESTMENT INCOME
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED
STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF
INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT,
NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS
RELATED TO BOOK TO TAX DIFFERENCES. F FMR AGREED TO REIMBURSE A
PORTION OF THE FUND'S EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER. G FMR OR THE FUND HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS). H FOR FISCAL YEARS
BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE
CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY
DIFFER.
</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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). The fund has a 3% sales charge. If
Fidelity had not reimbursed certain fund expenses, the life of fund total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1996 YEAR FUND
SOUTHEAST ASIA 7.59% 50.04%
SOUTHEAST ASIA 4.36% 45.53%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital 9.89% 67.05%
International Combined
Far East Ex-Japan Free Index
Pacific Ex-Japan Funds Average 5.45% 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. For example, if you invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be $1,050.
You can compare the fund's returns to the performance of the Morgan Stanley
Capital International Combined Far East Ex-Japan Free Index - a market
capitalization weighted index of over 450 stocks traded in eight Asian
markets, excluding Japan. The index is weighted by each country's market
capitalization (or the total value of its outstanding shares). To measure
how the fund's performance stacked up against its peers, you can compare it
to the Pacific Ex-Japan funds average, which reflects the performance of 52
mutual funds with similar objectives tracked by Lipper Analytical Services,
Inc. over the past 12 months. 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, 1996 YEAR FUND
SOUTHEAST ASIA 7.59% 12.14%
SOUTHEAST ASIA 4.36% 11.18%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital 9.89% 15.60%
International Combined
Far East Ex-Japan Free Index
Pacific Ex-Japan Funds Average 5.45% 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
IMAHDR PRASUN SHR__CHT 19961031 19961113 173536 S00000000000001
Southeast Asia MS Far East ex Japan Free
00351 MS008
1993/04/19 9700.00 10000.00
1993/04/30 9651.50 10378.31
1993/05/31 10078.30 10975.91
1993/06/30 9835.80 10687.54
1993/07/31 9826.10 10760.98
1993/08/31 10543.90 11661.43
1993/09/30 10873.70 12024.42
1993/10/31 12842.80 14239.20
1993/11/30 13240.50 14143.38
1993/12/31 15992.99 17581.63
1994/01/31 14696.78 16380.67
1994/02/28 14004.83 15439.89
1994/03/31 12221.33 13760.40
1994/04/30 12533.20 14408.66
1994/05/31 13069.22 15023.00
1994/06/30 12299.30 14355.17
1994/07/31 12952.27 15156.89
1994/08/31 14141.27 16391.33
1994/09/30 14131.52 16127.43
1994/10/31 14238.73 16440.91
1994/11/30 12845.07 14875.07
1994/12/31 12513.71 14507.62
1995/01/31 11198.01 12951.63
1995/02/28 12162.86 14260.59
1995/03/31 12318.79 14329.01
1995/04/30 12309.04 14193.40
1995/05/31 13712.45 15922.73
1995/06/30 13702.71 15683.30
1995/07/31 14053.56 15930.93
1995/08/31 13507.79 15172.95
1995/09/30 13683.21 15436.24
1995/10/31 13527.28 15201.74
1995/11/30 13293.38 15042.07
1995/12/31 14038.25 15790.56
1996/01/31 15771.98 17237.77
1996/02/29 15425.24 17178.58
1996/03/31 15296.45 17316.85
1996/04/30 15623.38 17801.45
1996/05/31 15682.82 17628.21
1996/06/30 15237.00 17273.01
1996/07/31 14038.25 16028.58
1996/08/31 14672.30 16607.31
1996/09/30 15147.84 17026.73
1996/10/31 14553.42 16705.08
IMATRL PRASUN SHR__CHT 19961031 19961113 173538 R00000000000046
Let's say hypothetically that $10,000 was invested in Fidelity Southeast
Asia Fund on April 19, 1993, when the fund started, and the 3% sales charge
was paid. As the chart shows, by October 31, 1996, the value of the
investment would have grown to $14,553 - a 45.53% increase on the initial
investment. For comparison, look at how the Morgan Stanley Capital
International Combined Far East Ex-Japan Free Index did over the same
period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $16,705 - a 67.05% 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.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
SOUTHEAST ASIA
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Allan Liu, Portfolio Manager of Fidelity Southeast Asia
Fund
Q. ALLAN, HOW DID THE FUND PERFORM?
A. Reasonably well. For the year that ended October 31, 1996, the fund had
a total return of 7.59%. This was better than the Pacific Ex-Japan funds
average return, which was 5.45%, but worse than the Morgan Stanley Capital
International Combined Far East Ex-Japan Free Index, which returned 9.89%.
Q. HOW DID THE SOUTHEAST ASIAN MARKETS DO OVER THE PAST YEAR?
A. In general, they performed quite well, with many markets seeing returns
in the double digits. However, there were large deviations among the
individual markets, with domestic factors playing an increasing role in
market returns. For example, Hong Kong, one of the best performing markets
in the region, saw a return of about 28%. This was the result of a recovery
in the local property market, a favorable interest rate environment and
signs of an economic recovery in China. On the other end of the spectrum,
the Thai market performed poorly, falling about 28% for the year. Weak and
nervous investor sentiment resulted in stocks being sold regardless of
their fundamentals. The market was hurt by high interest rates, corporate
earnings downgrades and political uncertainty.
Q. TURNING TO THE FUND'S PERFORMANCE, LET'S TALK ABOUT FACTORS THAT HELPED,
AS WELL AS HURT PERFORMANCE.
A. On the positive side, strong stock selection added value in almost all
markets, especially Hong Kong. This was particularly true in the Hong Kong
property sector. Top holdings such as Sun Hung Kai Properties (+43% for the
year), New World Development (+50%), and Cheung Kong Holdings (+42%) were
significant contributors to the fund's performance. Outside of Hong Kong,
Berjaya Sports Toto in Malaysia rose 79%. Looking at market weightings that
helped performance, two countries stand out. The first was the fund's
overweighted position relative to its index in Hong Kong. The second market
selection that helped performance was the fund's underweighted position in
Korea, which dropped 24% during the past 12 months. In contrast, an
overweighted position in the Thai market hurt the fund's performance.
Thailand was the worst performing market during the period under review, as
persistently high interest rates slowed the economy more than expected.
Since Thai companies generally carry a high level of debt, higher interest
rates resulted in higher interest payments and lower cash flow. Much of the
market over the past year was driven by sentiment more than fundamentals
and, as a result, many quality companies saw sharp drops in their share
prices.
Q. WHY DID THE HONG KONG PROPERTY SECTOR DO SO WELL?
A. After a two-year decline, property prices began to recover in early
1996. This was largely a result of increasing affordability arising from
rising incomes, lower property prices and lower interest rates. In
addition, increasing competition among banks led to more affordable
mortgage packages for apartment buyers. A second factor contributing to the
strength of this sector has been a simple supply/demand imbalance. We
estimate that the supply of new apartments coming to the market will be low
in 1997 compared to historical averages. The final factor is that top
property companies in Hong Kong are generally well managed with strong
balance sheets. The fund's top holdings include Sun Hung Kai Properties,
New World Development and Cheung Kong Holdings, which as I mentioned
earlier, all had significant appreciation during the period. The fund's
exposure to the Hong Kong market has grown to more than 39%, compared to
28% 12 months ago.
Q. HOW ABOUT THE OTHER MARKETS IN THE REGION?
A. Across the region, we've seen economic and earnings growth slow.
However, growth rates are now more sustainable, and this is encouraging. In
the fast growing countries of Malaysia, Indonesia and the Philippines,
economic growth and earnings growth continue to be higher than that found
in more industrialized countries around the world. I've found particularly
good investment opportunities in the gaming sector in Malaysia - where
earnings growth is higher than the market average and cash flow remains
strong - and in selected consumer companies in Indonesia. Both sectors are
benefiting from rising incomes and consumer activity in their domestic
markets.
Q. WHAT'S YOUR OUTLOOK FOR THE SOUTHEAST ASIA REGION?
A. When looking at valuations, most markets are trading at levels below
their historical averages and, therefore, are relatively attractive. My
main concerns are the high levels of corporate debt and political
uncertainties in some of these countries. As a stock picker, however, I've
been able to find fundamentally sound companies in the region, particularly
in the finance, property and infrastructure sectors. Attractive consumer
stocks can also be found in selected markets, but I am carefully monitoring
the slowdown in economic growth for its impact on these stocks. I continue
to have an overweighted position in the Hong Kong market, where companies
are expected to benefit from continued strength in the local property
market, credit easing in China and increasing confidence toward the 1997
changeover from British to Chinese rule. Exposure to the Thai market is
also relatively high, as many companies with strong fundamentals were
oversold, and I believe that political uncertainty has bottomed. Given the
valuations and outlook for corporate earnings growth, I remain confident
that attractive investment opportunities can be identified for long-term
investors in this region.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Southeast Asian
issuers; the fund does not anticipate
investing in Japan
FUND NUMBER: 351
TRADING SYMBOL: FSEAX
START DATE: April 19, 1993
SIZE: as of October 31,1996, more than
$755 million
MANAGER: Allan Liu, since inception;
manager, various funds for non-U.S.
investors; analyst, Southeast Asian markets,
1987-1990; joined Fidelity in 1987
(checkmark)
ALLAN LIU ON THE SOUTHEAST ASIAN ECONOMY:
"Export growth in most countries in this region has
become subdued, as the weak demand from the
U.S. electronics sector was reflected in the weak
export numbers of Singapore, Taiwan and Korea.
One of the biggest debates regarding the Southeast
Asian economies is whether or not the current
economic and export slowdown are cyclical or long
term. I believe the slowdown is more cyclical given
the high standard of the past, a slowdown in key
industries, slow external demand and a strong U.S.
dollar.
"Despite this slowdown, however, underlying
fundamentals of most Southeast Asian economies
and companies remain healthy. Although there are
some issues that need to be addressed, the
long-term outlook for the region remains excellent,
with economic growth well above that of more
industrialized countries."
SOUTHEAST ASIA
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
(% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
United States 4.8%
Row: 1, Col: 1, Value: 4.8
Row: 1, Col: 2, Value: 11.6
Row: 1, Col: 3, Value: 9.1
Row: 1, Col: 4, Value: 3.8
Row: 1, Col: 5, Value: 4.4
Row: 1, Col: 6, Value: 22.3
Row: 1, Col: 7, Value: 4.9
Row: 1, Col: 8, Value: 39.1
Thailand 11.6%
Hong Kong 39.1%
Singapore 9.1%
Philippines 3.8%
Other 4.4%
Indonesia 4.9%
Malaysia 22.3%
AS OF APRIL 30, 1996
United States 3.6%
Row: 1, Col: 1, Value: 3.6
Row: 1, Col: 2, Value: 15.9
Row: 1, Col: 3, Value: 12.1
Row: 1, Col: 4, Value: 3.0
Row: 1, Col: 5, Value: 2.6
Row: 1, Col: 6, Value: 20.9
Row: 1, Col: 7, Value: 4.6
Row: 1, Col: 8, Value: 37.3
Thailand 15.9%
Hong Kong 37.3%
Singapore 12.1%
Philippines 3.0%
Indonesia 4.6%
Other 2.6%
Malaysia 20.9%
ASSET ALLOCATION
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 95.2 96.4
Short-term investments 4.8 3.6
TOP TEN STOCKS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Sun Hung Kai Properties Ltd. 7.9 5.1
(Hong Kong, Real Estate)
Hutchison Whampoa Ltd. Ord. 6.0 2.1
(Hong Kong, Electrical Equipment)
Hang Seng Bank Ltd. 5.1 4.1
(Hong Kong, Banks)
New World Development Co. Ltd. 4.5 1.2
(Hong Kong, Real Estate)
Cheung Kong Holdings Ltd. 4.2 4.4
(Hong Kong, Real Estate)
Telekom Malaysia BHD 2.9 1.3
(Malaysia, Telephone Services)
Berjaya Sports Toto BHD 2.7 2.2
(Malaysia, Entertainment)
Henderson Land Development Co. Ltd. 2.7 1.6
(Hong Kong, Real Estate)
EON (Edaran Otomobil Nasional) BHD 2.2 1.3
(Malaysia, Autos, Tires & Accessories)
Overseas Chinese Banking Corp. 2.1 1.5
(Singapore, Banks)
TOP TEN MARKET SECTORS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Construction & Real Estate 26.5 22.9
Finance 25.4 29.6
Utilities 11.3 10.4
Industrial Machinery & Equipment 8.2 3.9
Media & Leisure 7.2 10.5
Transportation 4.3 3.2
Durables 3.3 2.4
Technology 1.7 0.5
Holding Companies 1.7 5.8
Services 1.7 0.9
SOUTHEAST ASIA
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.2%
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
CHINA (PEOPLES REPUBLIC) - 0.6%
Qingling Motors Co. Ltd. Class H 11,400,000 $ 4,791,650
HONG KONG - 39.1%
Cheung Kong Holdings Ltd. 3,905,000 31,311,916
China Light & Power Co. Ltd. 544,000 2,525,749
Citic Pacific Ltd. Ord. 1,332,000 6,477,225
Dao Heng Bank Group Ltd. 1,057,000 4,647,836
HSBC Holdings PLC 482,725 9,888,105
Hang Seng Bank Ltd. 3,187,200 37,819,198
Harbour Ring International Holdings
Ltd. (warrants) (a) 333 1
Henderson Land Development Co. Ltd. 2,247,000 19,978,952
Hong Kong & Shanghai Hotels 1,738,000 3,191,795
Hong Kong Telecommunications Ltd. 2,427,200 4,277,939
Hutchison Whampoa Ltd. Ord. 6,404,000 44,724,141
Hysan Development Co. Ltd. 654,000 2,097,618
New World Development Co. Ltd. 5,758,731 33,514,769
New World Infrastructure Ltd. (a) 301,300 750,113
New World Infrastructure Ltd. (a)(b) 720,000 1,792,504
Sun Hung Kai Properties Ltd. 5,180,000 58,953,467
Swire Pacific Ltd. Class A 1,737,000 15,332,021
Wharf Holdings Ltd. (b) 3,564,000 14,703,655
291,987,004
INDONESIA - 4.9%
Bank International Indonesia PT
(For. Reg.) 1,786,385 2,875,950
Bimantara Citra (For. Reg.) 1,595,000 1,797,484
Ciputra Development PT
(For. Reg.) 500,000 364,917
(For. Reg.) (rights) (a) 369,000 37,228
Citra Marga Nusadhala Persada PT
(For. Reg.) 3,566,000 2,602,587
Gudang Garam PT Perusahaan
(For. Reg.) 2,768,000 11,051,573
PT Lippo Land Development (For. Reg.) 57,000 116,237
SUCACO (PT Supreme Cable
Manufacturing Corp.) (For. Reg.) 287,000 258,748
Telkom PT (For. Reg) 4,067,000 6,067,420
Telekomunikasiindo (Persero) PT, Series B
sponsored ADR 371,600 11,148,000
36,320,144
KOREA (SOUTH) - 2.8%
Hyundai Engineering & Construction
Co. Ltd. (a) 8 246
Hyundai Motor Co. Ltd. GDR
(RFD) (a) 169,000 1,774,500
Hyundai Motor Co. Ltd. sponsored GDR
(a)(b) 34,000 357,000
Korea Electric Power Corp. 199,510 5,867,584
Korea Mobile Telecommunications Corp. 7,240 7,242,188
Pohang Iron & Steel Co. Ltd. 44,105 2,810,442
SAMSUNG Display Divices 24,780 1,559,527
Samsung Electronics Co. Ltd. 189 13,290
Samsung Co. Ltd. sponsored GDR (a) 21 79
Seoul City Gas Co. Ltd. (a) 20,000 1,464,447
Shinhan Bank 2,740 54,691
21,143,994
MALAYSIA - 22.3%
Affin Holdings BHD 405,000 1,041,708
Berjaya Sports Toto BHD 5,352,833 20,122,636
Commerce Asset Holding BHD 205,000 1,338,491
Ekran BHD Ord. 2,763,000 11,589,490
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
EON (Edaran Otomobil Nasional) BHD 1,751,000 $ 16,352,182
Genting International 583,000 1,422,520
Hicom Holdings BHD 1,173,000 3,133,137
Kwong Yik Bank BHD 122,000 335,523
Leader Universal Holdings BHD 228,000 509,754
MBF Capital BHD 4,490,000 6,183,056
Magnum Corp. BHD 8,239,000 14,214,729
Malayan Banking BHD 826,000 8,171,422
Malaysia International Shipping BHD
(For. Reg.) 795,000 2,375,153
Pilecon Engineering BHD 1,228,000 1,652,170
Prime Utilities BHD 201,000 1,988,445
Prime Utilities BHD (warrants) (a) 124,000 343,477
Public Bank BHD (For. Reg.) 1,079,666 2,025,095
PWE Industries BHD 233,000 10,971,865
Resorts World BHD 860,000 4,934,510
Samanda Holdings BHD 408,000 2,228,008
Tanjong PLC (MLAY Reg.) 389,000 1,508,528
Telekom Malaysia BHD 2,426,000 21,407,859
Time Engineering BHD 3,741,000 7,312,944
Time Engineering BHD (warrants) (a) 2,203,500 1,055,057
UMW Holdings BHD (a) 299,000 1,372,482United Engineers BHD 1,466,000
11,602,232
YTL Corp. BHD 2,077,500 11,180,404
YTL Corp. BHD (warrants) (a) 54,500 250,168
166,623,045
PHILIPPINES - 3.8%
Ayala Land, Inc. Class B 3,257,000 3,470,167
Benpress Holdings Corp. GDR (a)(b) 79,200 574,200
C & P Homes, Inc. (b) 707,850 323,219
Empire East Land, Inc (a). 79,000 38,328
Filinvest Land, Inc. Ord. (a) 1,734,500 587,407
Guoco Holdings Philippines, Inc. 4,539,000 863,585
House of Investments, Inc. 7,616,000 1,072,268
Manila Electric Co. Class B 564,501 4,145,688
Megaworld Properties & Holdings,
Inc. (a). 938,600 357,154
Petron Corp. 2,846,131 833,912
Philippine Commercial International Bank 52,000 672,755
Philippine Long Distance Telephone Co.
sponsored ADR 33,100 1,981,863
Philippine Long Distance Telephone 62,900 3,769,692
Philippine National Bank (a) 272,000 3,130,898
Pilipino Telephone Corp. (a) 6,452,000 5,708,105
SM Prime Holdings, Inc. (a) 515,040 109,750
San Miguel Corp. Class B 279,000 1,008,562
28,647,553
SINGAPORE - 9.1%
Cerebos Pacific Ltd. 56,000 433,061
Delifrance Asia Ltd. 1,070,000 812,274
Development Bank of Singapore Ltd.
(For. Reg.) 640,000 7,673,643
Keppel Corp. Ltd. 262,000 1,951,756
Overseas Union Bank Ltd. (For. Reg.) 1,366,000 9,303,725
Overseas Chinese Banking Corp. 1,373,200 15,685,364
Parkway Holdings Ltd. (a) 510,000 1,899,610
Singapore International Airlines Ltd. 1,413,000 12,430,791
Singapore Press Holdings Ltd. (For. Reg.) 494,800 8,214,483United
Overseas Bank Ltd. (For. Reg.) 822,000 7,989,642
Van Der Horst Ltd. 521,000 1,922,100
68,316,449
COMMON STOCKS - CONTINUED
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
TAIWAN (FREE CHINA) - 1.0%
Cathay Life Insurance Co. Ltd. 991,000 $ 5,937,364
China Motor Co. Ltd. 988,000 1,524,691
7,462,055
THAILAND - 11.6%
Bank of Ayudhya PCL (For. Reg.) 987,000 2,823,868
Bangkok Bank Ltd. (For. Reg.) 1,020,200 10,875,736
Bangkok Metropolitan Bank PCL
(For. Reg.) 33,645 17,142
Dhana Siam Finance & Securities PCL:
(For. Reg.) 1,769,000 4,679,894
(For. Reg.) (warrants) (a) 163,700 442,693
Ekachart Finance & Securities Co. Ltd.
(For. Reg.) (warrants) (a) 20,280 12,519
Electricity Generating PCL (For. Reg.) 498,760 1,446,531
Finance One PCL:
(For. Reg.) 1,206,800 3,405,432
(For. Reg.) (warrants) (a) 315,350 556,173
General Finance & Securities PCL
(For. Reg.) 132,400 303,563
Industrial Finance Corp. of Thailand:
(For. Reg.) 380,000 1,116,990
Series F (warrants) (a) 665,000 807,956
Krung Thai Bank Ltd. (For. Reg.) 4,261,810 11,692,208
National Finance & Securities PCL
(For. Reg.) 1,796,100 3,414,104
(For. Reg.) (warrants) (a) 160,000 184,989
Nithipat Capital PCL 130,700 179,287
Nithipat Capital PCL
(For. Reg.) (warrants) (a) 80,000 57,221
PTT Exploration & Production (For. Reg.) 361,300 5,182,669
Phatra Thanakit PCL (For. Reg.) 1,073,400 3,975,556
Property Perfect PCL
(For. Reg.) (warrants) (a) 66,800 23,563
Seamico Securities PCL (For. Reg.) (a) 364,500 414,286
Securities One PCL (For. Reg.) 249,200 1,015,748
Siam Cement PCL (For. Reg.) 129,500 4,425,789
Siam Commercial Bank PCL (For. Reg.) 785,700 7,144,127
TPI Polene PCL (For. Reg.) 369,800 789,892
Telecomasia Corp. PCL (For. Reg.) (a) 779,800 1,497,558
Thai Farmers Bank PCL 380,100 2,904,938
Thai Farmers Bank PCL (For. Reg.) (a):
(warrants 9/30/99) 580,000 880,854
(warrants 9/15/02) 74,187 -
Thai Military Bank Ltd. (For. Reg.) 3,397,660 7,856,631
Total Access Communication PCL 807,000 5,568,300
United Communication Industry PCL
(For. Reg.) 323,800 2,690,402
Univest Land PCL (For. Reg.) (a) 332,100 108,032
86,494,651
TOTAL COMMON STOCKS
(Cost $694,063,601) 711,786,545
CASH EQUIVALENTS - 4.8%
(% OF FUND'S INVESTMENTS)
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 35,585,475 $ 35,580,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $729,643,601) $ 747,366,545
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 $17,750,578 or 2.3% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $863,672,482 and $812,994,560, respectively.
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $730,737,932. Net unrealized appreciation aggregated
$16,628,613, of which $81,662,529 related to appreciated investment
securities and $65,033,916 related to depreciated investment securities.
The fund hereby designates approximately $4,254,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
For the period, interest and dividends from foreign countries were
$16,627,115. Taxes accrued or paid to foreign countries were $1,472,099.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.3%
Basic Industries 0.8
Cash Equivalents 4.8
Construction & Real Estate 26.5
Durables 3.3
Energy 0.8
Finance 25.4
Holding Companies 1.7
Industrial Machinery & Equipment 8.2
Media & Leisure 7.2
Nondurables 1.7
Retail & Wholesale 0.3
Services 1.7
Technology 1.7
Transportation 4.3
Utilities 11.3
100.0%
SOUTHEAST ASIA
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at $ 747,366,545
value (including repurchase agreements of $35,580,000)
(cost $729,643,601) - See accompanying schedule
Cash 738
Foreign currency held at value 2,655,617
New Taiwan dollars
(cost $2,659,769)
Receivable for investments sold 9,719,552
Receivable for fund shares sold 330,527
Dividends receivable 1,302,284
Redemption fees receivable 433
TOTAL ASSETS 761,375,696
LIABILITIES
Payable for investments purchased $ 2,044,299
Payable for fund shares redeemed 3,082,912
Accrued management fee 443,153
Other payables and 459,370
accrued expenses
TOTAL LIABILITIES 6,029,734
NET ASSETS $ 755,345,962
Net Assets consist of:
Paid in capital $ 710,949,464
Undistributed net investment income 4,729,540
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 21,951,743
Net unrealized appreciation (depreciation) on investments 17,715,215
and assets and liabilities in
foreign currencies
NET ASSETS, for 51,430,711 $ 755,345,962
shares outstanding
NET ASSET VALUE and redemption price per share ($755,345,962 (divided by) 51,430,711 shares) $14.69
Maximum offering price per share (100/97.00 of $14.69) $15.14
</TABLE>
STATEMENT OF OPERATIONS
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME $ 16,615,857
Dividends
Interest 2,365,161
18,981,018
Less foreign taxes withheld (1,472,099
)
TOTAL INCOME 17,508,919
EXPENSES
Management fee $ 6,424,434
Basic fee
Performance adjustment (882,709
)
Transfer agent fees 2,405,622
Accounting fees and expenses 510,752
Non-interested trustees' compensation 3,385
Custodian fees and expenses 969,358
Registration fees 77,870
Audit 63,618
Legal 11,334
Miscellaneous 11,399
Total expenses before reductions 9,595,063
Expense reductions (112,681 9,482,382
)
NET INVESTMENT INCOME 8,026,537
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 55,841,378
Foreign currency transactions (147,126 55,694,252
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (24,932,345
)
Assets and liabilities in (5,218 (24,937,563
foreign currencies ) )
NET GAIN (LOSS) 30,756,689
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 38,783,226
OTHER INFORMATION $ 1,880,183
Sales charges paid to FDC
Expense reductions $ 104,197
Directed brokerage arrangements
Custodian interest credits 672
Transfer agent interest credits 7,812
$ 112,681
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 8,026,537 $ 5,996,540
Net investment income
Net realized gain (loss) 55,694,252 (21,052,271)
Change in net unrealized appreciation (depreciation) (24,937,563) (40,284,105)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 38,783,226 (55,339,836)
Distributions to shareholders from net investment income (10,551,466) -
Share transactions 546,524,731 315,850,011
Net proceeds from sales of shares
Reinvestment of distributions 10,313,913 -
Cost of shares redeemed (481,254,069) (437,770,027)
Redemption fees 1,661,583 1,393,801
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 77,246,158 (120,526,215)
TOTAL INCREASE (DECREASE) IN NET ASSETS 105,477,918 (175,866,051)
NET ASSETS
Beginning of period 649,868,044 825,734,095
End of period (including undistributed net investment income of $4,729,540 and $5,866,341,
respectively) $ 755,345,962 $ 649,868,044
OTHER INFORMATION
Shares
Sold 35,716,913 23,184,715
Issued in reinvestment of distributions 741,474 -
Redeemed (31,850,201) (32,874,037)
Net increase (decrease) 4,608,186 (9,689,322)
</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, APRIL 19, 1993
(COMMENCEME
NT
OF OPERATIONS)
TO
OCTOBER 31,
SELECTED PER-SHARE DATA 1996 1995 1994 D 1993
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.88 $ 14.61 $ 13.24 $ 10.00
Income from Investment Operations
Net investment income .14 H .15 .04 .01
Net realized and unrealized gain (loss) .87 (.91) 1.23 3.22
Total from investment operations 1.01 (.76) 1.27 3.23
Less Distributions
From net investment income (.23) - (.04) -
In excess of net investment income - - (.03) -
Total distributions (.23) - (.07) -
Redemption fees added to paid in capital .03 .03 .17 .01
Net asset value, end of period $ 14.69 $ 13.88 $ 14.61 $ 13.24
TOTAL RETURN B, C 7.59% (5.00)% 10.87% 32.40%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 755,346 $ 649,868 $ 825,734 $ 499,669
Ratio of expenses to average net assets 1.13% 1.10% 1.47% 2.00% A,
E
Ratio of expenses to average net assets after expense reductions 1.12% F 1.10% 1.47% 2.00% A
Ratio of net investment income to average net assets .95% .90% .22% .45% A
Portfolio turnover rate 102% 94% 157% 14% A
Average commission rate G $ .0129
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS
OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL
GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A
RESULT,
NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS
RELATED TO BOOK TO TAX DIFFERENCES.
E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS
WHERE
TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
H NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
</TABLE>
UNITED KINGDOM
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. A fund's total
return includes changes in 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. If Fidelity had
not reimbursed certain fund expenses during the period shown, the total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED PAST 1 LIFE OF
OCTOBER 31, 1996 YEAR FUND
UNITED KINGDOM 19.38% 19.38%
UNITED KINGDOM 15.80% 15.80%
(INCL. 3% SALES CHARGE)
FT - All Shares Index 21.94% 21.94%
European Region Funds Average 17.03% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, the one year period since the fund
started on November 1, 1995. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the FT
- - All Shares Index - a market capitalization weighted index of over 750
stocks traded in the U.K. market. The index covers more than 90% of the
total capitalization of the U.K. market. To measure how the fund's
performance stacked up against its peers, you can compare the fund's
performance to the European region funds average, which reflects the
performance of 43 mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. over the past 12 months. 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, 1996 YEAR FUND
UNITED KINGDOM 19.38% 19.38%
UNITED KINGDOM 15.80% 15.80%
(INCL. 3% SALES CHARGE)
FT - All Shares Index 21.94% 21.94%
European Region Funds Average 17.03% 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
IMAHDR PRASUN SHR__CHT 19961031 19961108 143237 S00000000000001
United Kingdom FT SE A All Shares
00344 FT001
1995/11/01 9700.00 10000.00
1995/11/30 9573.90 10022.83
1995/12/31 9778.19 10308.85
1996/01/31 9729.49 10286.94
1996/02/29 9963.23 10436.92
1996/03/31 10099.58 10556.26
1996/04/30 10411.24 10758.55
1996/05/31 10722.89 10974.18
1996/06/30 10596.28 10872.40
1996/07/31 10430.72 10814.03
1996/08/31 10927.42 11398.04
1996/09/30 11005.33 11615.18
1996/10/31 11579.95 12194.21
IMATRL PRASUN SHR__CHT 19961031 19961108 143238 R00000000000015
Let's say hypothetically that $10,000 was invested in Fidelity United
Kingdom Fund on November 1, 1995, when the fund started, and the 3% sales
charge was paid. As the chart shows, by October 31, 1996, the value of the
investment would have grown to $11,580 - a 15.80% increase on the initial
investment. For comparison, look at how the FT - All Shares Index did over
the same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would have grown to $12,194 - a 21.94% 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.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
UNITED KINGDOM
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Samuel Morse, Portfolio Manager of Fidelity United
Kingdom Fund
Q. HOW DID THE FUND PERFORM, SAM?
A. For the year that ended October 31, 1996, the fund had a total return of
19.38%. For the same period, the FT - All Shares Index returned 21.94%.
Additionally, the European region funds average return, as tracked by
Lipper Analytical Services, was 17.03%.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S RETURN?
A. On the positive side, companies related to the Lloyd's of London
insurance market - such as managing agent Ockham Holdings and London
Insurance Market Investment Trust - were able to perform well despite
concerns earlier in the period about problematic claims that have plagued
Lloyd's for some time. The fund also benefited from the takeover of
Southern Water by Scottish Power. Additionally, the fund was the
beneficiary of the strong performance of British media stocks and
news-syndicate stocks - particularly Reuters - and the underweighting
relative to the index of BAT Industries and British Gas.
Q. WHAT HURT THE FUND?
A. In some instances, my stock selection was disappointing. For example,
Iceland Group saw sales drop as the company lost market share to big
superstore retailers. Additionally, the fund was underweighted in some
areas that did better than expected, such as pharmaceutical companies and
British banks with Far East operations.
Q. JUST TO BACK UP FOR A MOMENT, WHAT'S HAPPENED IN THE U.K. MARKET
RECENTLY?
A. For much of the year, the British equity market has been driven by a
stronger economy, higher corporate profits, a strong U.S. market and
receding fears about the tax program of a possible Labor party government.
In fact, the U.K.'s FT-SE 100 Index broke through an all-time high of 4000
in early October. The markets were taken by surprise, however, when
Chancellor of the Exchequer Kenneth Clarke raised short-term interest rates
by a quarter of a percentage point to 6%. Although the pound sterling has
strengthened because of these recent developments, British bond and equity
markets have underperformed the U.S. and European markets following the
policy change.
Q. UNTIL RECENTLY, WHY HAS THE PERFORMANCE OF U.K. STOCKS BEEN CLOSELY
RELATED TO THE U.S.?
A. There are several reasons. First, many U.K. companies - such as oil
companies and pharmaceuticals - do a lot of business in the U.S. Second,
many U.K. companies trade as American Depository Receipts (ADRs) on
American stock exchanges and so there's a carryover effect on U.K.
listings. Finally, U.S. interest rates play a big part in the flow of money
around the globe and thus play a part in the attractiveness of the U.K.
market. Now, however, with its interest rates rising, the U.K. has
decoupled from the U.S. and Europe, where interest rates are steady or
falling.
Q. A BIG EVENT IN OCTOBER WAS THE ANNOUNCEMENT OF A $20.88 BILLION MERGER
AGREEMENT BETWEEN BRITISH TELECOMMUNICATIONS AND U.S. LONG-DISTANCE
PROVIDER MCI. WHAT'S YOUR ASSESSMENT OF THE NEWS?
A. It could be very positive. BT is buying a business it already knows,
because it owns 20% of MCI. Additionally, MCI gives BT greater marketing
expertise and a more entrepreneurial approach to the long-distance market.
On the other hand, BT gives MCI the local market experience necessary to
compete in the recently deregulated U.S. market; MCI and other U.S.
long-distance providers' stock prices have been hurt by the belief they may
have trouble entering the local markets.
Q. LOOKING AT BROAD SECTOR THEMES, HAVE YOU MADE ANY SUBSTANTIAL CHANGES?
A. Not really. Recently, I've reduced the fund's exposure to the Lloyd's
insurance market as the positive developments I outlined before became
incorporated into the stocks' prices. I have also maintained a strong
position in oil stocks such as Shell Transport and British Petroleum. In
the last shareholder report, I spoke of the many oil companies that had
effectively cut costs, reduced debt and focused on improving profit
margins. Since then, oil prices have risen, and the lower oil prices many
investors were anticipating never came to pass.
Q. WHAT DO YOU SEE GOING FORWARD?
A. Although there is a lot of pessimism in the market and many pundits are
looking for a correction, I'm reasonably positive. Let's look at what we
know. A Labor party victory in the next election is already priced into the
market, given its big lead in the polls and the quickly dwindling majority
of the Tories in Parliament. While the recent interest rate hike shocked
the British bond and stock markets, I believe the Chancellor of the
Exchequer will propose a prudent budget that calms the bond market and
therefore gives support to equity valuations. Finally, corporate earnings
have been good and equity valuations, in my opinion, are still reasonable
relative to historical measures and other asset classes.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of British issuers
FUND NUMBER: 344
TRADING SYMBOL: FUTYF
START DATE: November 1, 1995
SIZE: as of October 31,1996, more than
$2 million
MANAGER: Samuel Morse, since inception;
manager, several United Kingdom equity
income funds for Fidelity International,
Limited, since 1993; joined Fidelity in 1990
* TEMPORARY TRADING SYMBOL
(checkmark)
*
SAM MORSE ON THE U.K. AND THE EUROPEAN ECONOMY:
"In the recent past, the economies of many
European countries have endured slow growth.
Much of this slow growth is attributable to the
stagnation of the manufacturing and service sectors.
In contrast to much of Europe, the U.K. has not
suffered the slow growth found on the Continent and,
thus, its equity market has done fairly well. Part of
the reason for the contrast is the fact that the U.K.'s
monetary policy is not as tight as the rest of Europe,
for a simple reason - Britain has not adjusted its
monetary policy to be in sync with the European
economic and monetary union under the Maastricht
Treaty. Additionally, until recently, the pound sterling
has been weak relative to other currencies. This had
the effect of raising the competitiveness of British
exports and encouraging inward investment. Finally,
the U.K. simply has a more flexible labor force in that
British companies aren't hampered by unions and
strikes to the same extent as France and Germany."
(solid bullet) According to THE ECONOMIST, unemployment in
Britain fell to 7.2% in October. That's the lowest rate
since February 1991. Additionally, the 12-month rate
of consumer price inflation in Britain was 2.7%
compared to 1.5% in Germany and 1.8% in France.
UNITED KINGDOM
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
(% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996
Other 2.3%
United States 2.3%
Row: 1, Col: 1, Value: 2.3
Row: 1, Col: 2, Value: 2.3
Row: 1, Col: 3, Value: 95.40000000000001
United Kingdom 95.4%
AS OF APRIL 30, 1996
Other 3.3%
Row: 1, Col: 1, Value: 2.3
Row: 1, Col: 2, Value: 96.7
United Kingdom 96.7%
ASSET ALLOCATION
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 97.7 100.0
Short-term investments 2.3 0.0
TOP TEN STOCKS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Shell Transport & Trading Co. PLC (Reg.) 4.7 3.4
(Oil & Gas)
British Petroleum PLC Ord. 4.7 4.5
(Oil & Gas)
British Telecommunications PLC Ord. 4.3 4.2
(Telephone Services)
Lloyds TSB Group PLC 3.3 2.0
(Banks)
Reuters Holdings PLC Ord. 3.2 3.1
(Computer Services & Software)
SmithKline Beecham PLC Ord. 3.2 2.8
(Drugs & Pharmaceuticals)
Boots Co. PLC (The) 3.1 2.8
(Retail & Wholesale, Miscellaneous)
Unilever PLC Ord. 2.9 2.8
(Household Products)
Prudential Corp. PLC 2.3 2.0
(Insurance)
Barclays PLC Ord. 2.3 2.1
(Banks)
TOP TEN MARKET SECTORS
(% OF FUND'S INVESTMENTS)
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 19.1 16.0
Nondurables 11.9 9.2
Utilities 11.1 14.5
Energy 9.5 4.5
Retail & Wholesale 8.3 8.3
Media & Leisure 7.4 6.9
Constuction & Real Estate 5.9 6.3
Technology 5.5 5.4
Health 4.6 4.3
Services 3.5 4.3
UNITED KINGDOM
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.7%
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.7%
British Aerospace PLC 2,409 $ 45,613
BASIC INDUSTRIES - 2.0%
CHEMICALS & PLASTICS - 1.4%
Albright & Wilson PLC 5,800 18,307
BOC Group PLC 1,400 19,737
38,044
METALS & MINING - 0.6%
Cookson Group PLC 4,191 15,410
TOTAL BASIC INDUSTRIES 53,454
CONGLOMERATES - 1.4%
Tomkins PLC Ord. 8,469 35,550
CONSTRUCTION & REAL ESTATE - 5.9%
BUILDING MATERIALS - 3.7%
Baynes (Charles) PLC 8,000 17,376
Blue Circle Industries PLC 3,000 19,392
CRH PLC 3,963 40,815
Polypipe PLC 6,000 19,914
97,497
CONSTRUCTION - 2.2%
Barratt Developments PLC 4,800 19,875
Persimmon PLC Ord. 5,700 19,336
Taylor Woodrow PLC 7,300 18,410
57,621
TOTAL CONSTRUCTION & REAL ESTATE 155,118
DURABLES - 3.0%
AUTOS, TIRES, & ACCESSORIES - 2.2%
BBA Group PLC 10,230 59,586
TEXTILES & APPAREL - 0.8%
Tie Rack PLC 6,800 20,246
TOTAL DURABLES 79,832
ENERGY - 9.5%
OIL & GAS - 9.5%
British Petroleum PLC Ord. 11,554 124,116
Shell Transport & Trading Co. PLC (Reg.) 7,600 124,518
248,634
FINANCE - 19.1%
BANKS - 7.8%
Anglo-Irish Bank Corp. PLC 17,763 20,519
Barclays PLC Ord. 3,828 60,071
Lloyds TSB Group PLC 13,757 87,180
National Westminster Bank PLC Ord. 3,369 38,452
206,222
CREDIT & OTHER FINANCE - 3.6%
Cattles Holdings 4,300 17,420
London Forfaiting Co. 4,100 19,245
Perpetual PLC 1,000 38,235
Provident Financial Group 2,400 17,982
92,882
INSURANCE - 6.9%
Hogg Robinson Group 4,100 17,677
Lloyd Thompson Group PLC 7,600 21,268
London Insurance Market Investment
Trust PLC 7,900 18,702
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
Ockham Holdings PLC 14,100 $ 20,876
Prudential Corp. PLC 8,057 60,956
Royal & Sun Alliance Insurance
Group PLC 6,178 42,368
181,847
SECURITIES INDUSTRY - 0.8%
Mercury Asset Management Group PLC 1,150 21,134
TOTAL FINANCE 502,085
HEALTH - 4.6%
DRUGS & PHARMACEUTICALS - 3.2%
SmithKline Beecham PLC Ord. 6,744 83,281
MEDICAL FACILITIES MANAGEMENT - 1.4%
TC Group PLC 8,100 18,846
Westminster Health Care Holdings PLC 3,900 17,767
36,613
TOTAL HEALTH 119,894
INDUSTRIAL MACHINERY & EQUIPMENT - 1.4%
ELECTRICAL EQUIPMENT - 1.4%
Premier Farnell PLC 3,400 37,893
MEDIA & LEISURE - 7.4%
BROADCASTING - 1.9%
Capital Radio PLC 1,700 16,042
GWR Group PLC 5,000 16,677
Yorkshire TV Holdings PLC 900 18,743
51,462
ENTERTAINMENT - 2.2%
EMI Group PLC 1,759 34,543
London Clubs International PLC 4,400 22,479
57,022
PUBLISHING - 2.5%
Bemrose 900 5,945
EMAP PLC 2,050 23,914
Reed International 1,900 35,364
65,223
RESTAURANTS - 0.8%
Compass Group PLC Ord. 2,200 21,870
TOTAL MEDIA & LEISURE 195,577
NONDURABLES - 11.9%
BEVERAGES - 3.9%
Bass PLC Ord. 3,350 42,950
Bulmer (HP) Holdings PLC 2,325 19,860
Cadbury-Schweppes PLC Ord. 4,775 39,777
102,587
FOODS - 2.9%
Grand Metropolitan PLC 6,959 52,479
Man (E D & F) Group PLC 8,300 22,957
75,436
HOUSEHOLD PRODUCTS - 3.8%
Eyecare Products PLC 5,400 2,987
London International Group PLC (a) 8,575 21,764
Unilever PLC Ord. 3,600 75,616
100,367
TOBACCO - 1.3%
BAT Industries PLC Ord. 5,000 34,655
TOTAL NONDURABLES 313,045
COMMON STOCKS - CONTINUED
(% OF FUND'S INVESTMENTS)
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - 8.3%
GENERAL MERCHANDISE STORES - 1.4%
Kingfisher PLC 3,400 $ 36,233
GROCERY STORES - 3.0%
Iceland Group PLC 12,900 18,050
Safeway PLC (a) 3,517 20,857
Tesco PLC Ord. 7,473 40,488
79,395
RETAIL & WHOLESALE, MISCELLANEOUS - 3.9%
Boots Co. PLC (The) 8,000 81,090
Goldsmiths Group PLC 3,400 20,910
102,000
TOTAL RETAIL & WHOLESALE 217,628
SERVICES - 3.5%
LEASING & RENTAL - 0.7%
National Parking Corp. Ltd. 2,700 19,548
SERVICES - 2.8%
Business Post Group PLC 3,300 24,966
Hays PLC 3,000 25,137
Securicor Group PLC (a) 5,200 23,562
73,665
TOTAL SERVICES 93,213
TECHNOLOGY - 5.5%
COMPUTER SERVICES & SOFTWARE - 3.2%
Reuters Holdings PLC Ord. (a) 6,800 84,637
ELECTRONIC INSTRUMENTS - 0.8%
Sanderson Electronics PLC 8,000 21,607
ELECTRONICS - 1.5%
Electrocomponents PLC 5,700 38,348
TOTAL TECHNOLOGY 144,592
TRANSPORTATION - 1.4%
SHIPPING - 0.6%
Associated British Ports PLC Ord. 3,700 16,344
TRUCKING & FREIGHT - 0.8%
Ocean Group PLC 2,700 20,207
TOTAL TRANSPORTATION 36,551
UTILITIES - 11.1%
CELLULAR - 1.5%
Vodafone Group PLC 10,494 40,550
ELECTRIC UTILITY - 3.2%
East Midland Electricity PLC 2,200 19,508
National Grid Co. PLC 14,980 43,870
Northern Ireland Electric PLC 3,800 19,970
83,348
TELEPHONE SERVICES - 4.3%
British Telecommunications PLC Ord. 19,500 112,788
WATER - 2.1%
Hyder PLC 1,500 17,181
Severn Trent PLC Ord. 2,061 20,656
Yorkshire Water PLC Ord. 1,850 18,601
56,438
TOTAL UTILITIES 293,124
TOTAL COMMON STOCKS
(Cost $2,262,226) 2,571,803
CASH EQUIVALENTS - 2.3%
(% OF FUND'S INVESTMENTS)
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 61,009 $ 61,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $2,323,226) $ 2,632,803
LEGEND
(a) Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $3,158,385 and $954,301, 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 $124 for the period.
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $2,327,392. Net unrealized appreciation aggregated
$305,411, of which $342,255 related to appreciated investment securities
and $36,844 related to depreciated investment securities.
For the period, interest and dividends from foreign countries were $78,603.
Taxes accrued or paid to foreign countries were $8,604.
UNITED KINGDOM
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at value (including repurchase agreements of $61,000) (cost $2,323,226) - See $ 2,632,803
accompanying schedule
Cash 472
Receivable for investments sold 36,169
Receivable for fund shares sold 15,075
Dividends receivable 11,265
Receivable from investment adviser for expense reductions 13,323
TOTAL ASSETS 2,709,107
LIABILITIES
Payable for investments purchased $ 17,601
Payable for fund shares redeemed 21,702
Accrued management fee 1,665
Other payables and 12,628
accrued expenses
TOTAL LIABILITIES 53,596
NET ASSETS $ 2,655,511
Net Assets consist of:
Paid in capital $ 2,257,774
Undistributed net investment income 26,710
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 60,998
Net unrealized appreciation (depreciation) on investments 310,029
and assets and liabilities in
foreign currencies
NET ASSETS, for 223,304 $ 2,655,511
shares outstanding
NET ASSET VALUE and redemption price per share ($2,655,511 (divided by) 223,304 shares) $11.89
Maximum offering price per share (100/97.00 of $11.89) $12.26
</TABLE>
STATEMENT OF OPERATIONS
(% OF FUND'S INVESTMENTS)
<TABLE>
<CAPTION>
<S> <C> <C>
NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1996
INVESTMENT INCOME $ 78,603
Dividends
Interest 3,806
82,409
Less foreign taxes withheld (8,604
)
TOTAL INCOME 73,805
EXPENSES
Management fee $ 15,497
Transfer agent fees 5,997
Accounting fees and expenses 57,374
Non-interested trustees' compensation 7
Custodian fees and expenses 31,140
Registration fees 42,202
Audit 28,896
Legal 19
Miscellaneous 5
Total expenses before reductions 181,137
Expense reductions (140,696 40,441
)
NET INVESTMENT INCOME 33,364
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 60,998
Foreign currency transactions (212 60,786
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 309,577
Assets and liabilities in 452 310,029
foreign currencies
NET GAIN (LOSS) 370,815
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 404,179
OTHER INFORMATION $ 13,869
Sales charges paid to FDC
Expense reductions $ 653
Custodian interest credits
FMR reimbursement 140,043
$ 140,696
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS NOVEMBER 1, 1995
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1996
<TABLE>
<CAPTION>
<S> <C>
Operations $ 33,364
Net investment income
Net realized gain (loss) 60,786
Change in net unrealized appreciation (depreciation) 310,029
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 404,179
Distributions to shareholders from net investment income (6,442
)
Share transactions 3,047,222
Net proceeds from sales of shares
Reinvestment of distributions 6,442
Cost of shares redeemed (799,432
)
Redemption fees 3,542
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 2,257,774
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,655,511
NET ASSETS
Beginning of period -
End of period (including undistributed net investment income of $26,710) $ 2,655,511
OTHER INFORMATION
Shares
Sold 295,808
Issued in reinvestment of distributions 651
Redeemed (73,155
)
Net increase (decrease) 223,304
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
NOVEMBER 1, 1995
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA 1996
<TABLE>
<CAPTION>
<S> <C>
Net asset value, beginning of period $ 10.00
Income from Investment Operations
Net investment income .16
Net realized and unrealized gain (loss) 1.75
Total from investment operations 1.91
Less Distributions
From net investment income (.04)
Redemption fees added to paid in capital .02
Net asset value, end of period $ 11.89
TOTAL RETURN A, B 19.38%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 2,656
Ratio of expenses to average net assets 2.00% C
Ratio of expenses to average net assets after expense reductions 1.97% D
Ratio of net investment income to average net assets 1.62%
Portfolio turnover rate 50%
Average commission rate E $ .0086
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE
NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
E A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Canada Fund, Fidelity Emerging Markets Fund, Fidelity Europe Fund,
Fidelity Europe Capital Appreciation Fund, Fidelity France Fund, Fidelity
Germany Fund, Fidelity Hong Kong and China Fund, Fidelity Japan Fund,
Fidelity Japan Small Companies Fund, Fidelity Latin America Fund, Fidelity
Nordic Fund, Fidelity Pacific Basin Fund, Fidelity Southeast Asia Fund and
Fidelity United Kingdom 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 financial statements
have been prepared in conformity with generally accepted accounting
principles which permit management to make certain estimates and
assumptions at the date of the financial statements. 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.
Short-term securities with remaining maturities of sixty days or less for
which quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value. Equity securities that have reached the limit for aggregate foreign
ownership may trade at a premium to the local share price. If the
broker-quoted premium is not readily available as a result of limited share
activity, the securities are valued at the last sale price of the local
shares in the principal market in which securities are normally traded.
FOREIGN CURRENCY TRANSLATION. The accounting records of the funds 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. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, 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. The effects of changes in foreign
currency exchange rates on investments in securities are included with the
net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As qualified regulated investment companies under Subchapter
M of the Internal Revenue Code, Canada, Emerging Markets, Europe, Europe
Capital Appreciation, Japan, Latin America, Pacific Basin and Southeast
Asia are not subject to U.S. federal income taxes to the extent that each
fund distributes substantially all of its taxable income for its fiscal
year. France, Germany, Hong Kong and China, Japan Small Companies, Nordic
and United Kingdom intend to qualify as regulated investment companies
under Subchapter M of the Internal Revenue Code. Each fund may be subject
to foreign taxes on income, gains on investments or currency repatriation.
Each fund 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. Non-cash dividends included in dividend income, if any,
are recorded at the fair market value of the securities received. Interest
income, which includes accretion of original issue discount, is accrued as
earned. Investment income is recorded net of foreign taxes withheld where
recovery of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are 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, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
and options transactions, foreign currency transactions, passive foreign
investment companies (PFIC), capital loss carryforwards, net operating
losses and losses deferred due to wash sales and excise tax regulations.
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 the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income (loss),
distributions in excess of net investment income, and accumulated
undistributed net realized gain (loss)
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
on investments and foreign currency transactions may include temporary book
and tax basis differences which will reverse in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed in the
following year.
REDEMPTION FEES. Shares held in Canada, Emerging Markets, France, Germany,
Hong Kong and China, Japan, Japan Small Companies, Latin America, Nordic,
Southeast Asia and United Kingdom less than 90 days are subject to a
redemption fee equal to 1.50% of the proceeds of the redeemed shares (1.00%
for shares purchased prior to February 1, 1996 for Canada and Japan).
Shares held in Europe, Europe Capital Appreciation, and Pacific Basin less
than 90 days are subject to a redemption fee equal to 1.00% of the proceeds
of the redeemed shares. These fees, which are retained by the funds, are
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.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The funds may use foreign currency
contracts to facilitate transactions in foreign securities. Losses may
arise from changes in the value of the foreign currency or if the
counterparties do not perform under the contracts' terms. The U.S. dollar
value of forward foreign currency contracts is determined using forward
currency exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the funds, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase for U.S. Treasury or Federal
Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the funds, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the funds'
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive order issued by the
SEC, each fund may invest in the Taxable Central Cash Fund (the Cash Fund)
managed by FMR. The Cash Fund is
an open-end money market fund available only to investment companies and
other accounts managed by FMR and its affiliates. The Cash Fund seeks
preservation of capital, liquidity, and current income by investing in U.S.
Treasury securities and repurchase agreements for these securities, and may
be utilized by the fund as an additional cash management option. Dividends
from the Cash Fund are declared daily and paid monthly from net interest
income. Income distributions received by each applicable fund are recorded
as interest income.
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 from, or lend money to, other participating funds.
FUTURES CONTRACTS AND OPTIONS. The funds generally use futures contracts
and options to manage their exposure to the stock and bond markets and to
fluctuations in interest rates and currency values. Buying futures, writing
puts, and buying calls tend to increase the funds' exposure to the
underlying instrument. Selling futures, buying puts, and writing calls tend
to decrease the funds' exposure to the underlying instrument, or hedge
other fund investments. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparties do not perform under the contracts'
terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options are valued using the last sale price or, in the absence of a sale,
the last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations.
RESTRICTED SECURITIES. The funds are permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period,
restricted securities (excluding 144A issues) are shown under the caption
"Other Information" at the end of each applicable fund's schedule of
investments.
3. PURCHASES AND SALES OF INVESTMENTS.
Information regarding purchases and sales of securities (other than
short-term securities) and the market value of future contracts opened and
closed during the period is included under the caption "Other Information"
at the end of each applicable fund's schedule of investments.
4. 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 .2500% to .5200% for the period. In the event
that these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted in
the same or a lower management fee. The annual individual fund fee rate is
.45% for each fund. The basic fee for Canada, Europe, Europe Capital
Appreciation, Japan, Pacific Basin, and Southeast Asia is subject to a
performance adjustment (up to a maximum of (plus/minus) .20% of each fund's
average net assets over the performance period) based on each fund's
investment performance as compared to the appropriate index over a
specified period of time.
For the period, each fund's management fee was equivalent to the following
annual rates expressed as a percentage of average net assets after the
performance adjustment, if applicable:
Canada .45%
Emerging Markets .76%
Europe .84%
Europe Capital Appreciation .80%
France .75%
Germany .75%
Hong Kong and China .75%
Japan .68%
Japan Small Companies .75%
Latin America .76%
Nordic .75%
Pacific Basin .75%
Southeast Asia .65%
United Kingdom .75%
SUB-ADVISER FEE. FMR, on behalf of the funds, entered into sub-advisory
agreements with Fidelity Management & Research (U.K.) Inc., Fidelity
Management & Research Far East Inc., Fidelity International Investment
Advisors (FIIA), and Fidelity Investment Japan Ltd. (Japan, Japan Small
Companies, Southeast Asia, Hong Kong and China only). In addition, 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. For the period, Fidelity Distributors Corporation (FDC), an
affiliate of FMR and the general distributor of the funds, is paid a 3%
sales charge on sales of shares of each fund.
Shares of Canada, Europe, and Pacific Basin purchased before October 12,
1990 are subject to a 1% deferred sales charge upon redemption.
The amount received by FDC for sales charges and deferred sales charges is
shown under the caption "Other Information" on each applicable fund's
Statement of Operations.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
each fund's transfer, dividend disbursing and shareholder servicing agent.
FSC receives account fees and asset-
based fees that vary according to account size and type of account. FSC
pays for typesetting, printing and mailing of all shareholder reports,
except proxy statements.
For the period, each fund's transfer agent fees were equivalent to the
following annual rates expressed as a percentage of average net assets:
Canada .37%
Emerging Markets .31%
Europe .29%
Europe Capital Appreciation .32%
France .32%
Germany .35%
Hong Kong and China .34%
Japan .31%
Japan Small Companies .30%
Latin America .34%
Nordic .33%
Pacific Basin .33%
Southeast Asia .28%
United Kingdom .29%
ACCOUNTING FEES. FSC maintains each fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. 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.
5. INTERFUND LENDING PROGRAM.
Certain funds participated in the interfund lending program as borrowers.
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.
6. 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
6. BANK BORROWINGS - CONTINUED
220% of the total bank borrowings. The interest rate on the borrowings is
the bank's base rate, as revised from time to time. Information regarding
each fund's participation in the program is included under the caption
"Other Information" at the end of each applicable fund's schedule of
investments.
7. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse certain funds' operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above an annual rate of 2.00% of average net assets.
FMR has directed certain portfolio trades to brokers who paid a portion of
certain funds' expenses. In addition, the funds have entered into
arrangements with their custodians and transfer agents whereby interest
earned on uninvested cash balances was used to offset a portion of certain
funds' expenses.
For the period, the reductions under these arrangements are shown under the
caption "Other Information" on each applicable fund's Statement of
Operations.
8. BENEFICIAL INTEREST.
At the end of the period, FMR and its subsidiaries, were the record owners
of more than 5% of the outstanding shares of the following funds:
FMR FUND % OF OWNERSHIP
France 22
Germany 16
Japan 8
United Kingdom 45
9. 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.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Investment Trust and
the Shareholders of:
Fidelity Canada Fund,
Fidelity Emerging Markets Fund,
Fidelity Europe Fund,
Fidelity Japan Fund,
Fidelity Pacific Basin Fund:
We have audited the accompanying statements of assets and liabilities of
Fidelity Investment Trust: Fidelity Canada Fund, Fidelity Emerging Markets
Fund, Fidelity Europe Fund, Fidelity Japan Fund, and Fidelity Pacific Basin
Fund, including the schedule of portfolio investments, as of October 31,
1996, 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
therein. These financial statements and financial highlights are the
responsibility of the Fidelity Investment Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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, 1996, 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 Emerging
Markets Fund, Fidelity Europe Fund, Fidelity Japan Fund, and Fidelity
Pacific Basin Fund as of October 31, 1996, 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 therein, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 16, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Investment Trust and
the Shareholders of:
Fidelity Europe Capital Appreciation Fund,
Fidelity France Fund,
Fidelity Germany Fund,
Fidelity Hong Kong and China Fund,
Fidelity Japan Small Companies Fund,
Fidelity Latin America Fund,
Fidelity Nordic Fund,
Fidelity Southeast Asia Fund,
Fidelity United Kingdom 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 France Fund, Fidelity
Germany Fund, Fidelity Hong Kong and China Fund, Fidelity Japan Small
Companies Fund, Fidelity Latin America Fund, Fidelity Nordic Fund, Fidelity
Southeast Asia Fund and Fidelity United Kingdom Fund (funds of Fidelity
Investment Trust) at October 31, 1996, the results of each of their
operations, 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
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 at October 31, 1996 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 16, 1996
DISTRIBUTIONS
The Board of Trustees of the following funds voted to pay to shareholders
of record at the opening of business on record date, the following
distributions derived from capital gains realized from sales of portfolio
securities, and dividends derived from net investment income:
PAY DATE RECORD DATE DIVIDENDS CAPITAL GAINS
Canada 12/9/96 12/6/96 $.13 $4.29
Emerging Markets 12/16/96 12/13/96 $.25 $.00
Europe 12/9/96 12/6/96 $.24 $1.73
Europe Capital Appreciation 12/16/96 12/13/96 $.23 $1.29
France 12/9/96 12/6/96 $.16 $.61
Germany 12/16/96 12/13/96 $.01 $.35
Hong Kong and China 12/9/96 12/6/96 $.14 $.08
Japan 12/9/96 12/6/96 $.01 $.00
Japan Small Companies 12/16/96 12/13/96 $.00 $.04
Latin America 12/9/96 12/6/96 $.23 $.00
Nordic 12/16/96 12/13/96 $.05 $.10
Pacific Basin 12/16/96 12/13/96 $.08 $.00
Southeast Asia 12/9/96 12/6/96 $.17 $.40
United Kingdom 12/9/96 12/6/96 $.13 $.20
A percentage of the dividends distributed during the fiscal year for the
following funds qualifies for the dividends-received deduction for
corporate shareholders:
Canada 25%
Europe 1%
Europe Captial Appreciation 1%
Latin America 1%
The funds will notify shareholders in January 1997 of the applicable
percentages for use in preparing 1996 income tax returns.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc.,
London, England
Fidelity Management & Research (Far East) Inc.,
Tokyo, Japan
Fidelity Investments Japan Ltd.
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K.) Limited
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
Richard Hazlewood, VICE PRESIDENT, EMERGING MARKETS FUND
Allan Liu, VICE PRESIDENT, SOUTHEAST ASIA FUND
Shigeki Makino, VICE PRESIDENT, JAPAN FUND, PACIFIC BASIN FUND
Kevin McCarey, VICE PRESIDENT, EUROPE CAPITAL APPRECIATION FUND
Patricia Satterthwaite, VICE PRESIDENT, LATIN AMERICA FUND
Thomas Sweeney, VICE PRESIDENT, CANADA FUND
Sally Walden, VICE PRESIDENT, EUROPE FUND
Arthur S. Loring, SECRETARY
Kenneth A. Rathgeber, TREASURER
Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
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 *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER SERVICING AGENT
Fidelity Service Co.
Boston, MA
* INDEPENDENT TRUSTEES
CUSTODIANS
The Chase Manhattan Bank
Brooklyn, NY
EMERGING MARKETS FUND, EUROPE FUND, EUROPE CAPITAL APPRECIATION FUND, JAPAN
FUND, PACIFIC BASIN FUND, SOUTHEAST ASIA FUND
Brown Brothers Harriman & Co.
Boston, MA
CANADA FUND, FRANCE FUND, GERMANY FUND, HONG KONG AND CHINA FUND, JAPAN
SMALL COMPANIES FUND, LATIN AMERICA FUND, NORDIC FUND, UNITED KINGDOM FUND
FIDELITY'S INTERNATIONAL EQUITY FUNDS
Canada Fund
Diversified International Fund
Emerging Markets Fund
Europe Fund
Europe Capital Appreciation Fund
France Fund
Germany Fund
Hong Kong and China Fund
International Growth and Income Fund
International Value Fund
Japan Fund
Japan Small Companies Fund
Latin America Fund
Nordic Fund
Overseas Fund
Pacific Basin Fund
Southeast Asia Fund
United Kingdom Fund
Worldwide Fund
CORPORATE HEADQUARTERS
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
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)
TouchTone Xpress 1-800-544-5555
SM
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P A I D
F I D E L I T Y
INVESTMENTS
(registered trademark)
P.O. Box 193
Boston, MA 02101
