FIDELITY INVESTMENT TRUST, N-30D, 1997-08-19

FIDELITY INVESTMENT TRUST
N-30D, 1997-08-19

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(2_FIDELITY_LOGOS)FIDELITY

GLOBAL BOND
FUND
SEMIANNUAL REPORT
JUNE 30, 1997
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.

PERFORMANCE 4 How the fund has done over time.

FUND TALK 7 The managers' review of fund
performance, strategy and outlook.

INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.

INVESTMENTS 11 A complete list of the fund's
investments with their market
values.

FINANCIAL STATEMENTS 20 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.

NOTES 24 Notes to the financial statements.

THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
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.
PRESIDENT'S MESSAGE

(PHOTO_OF_EDWARD_C_JOHNSON_3D)DEAR SHAREHOLDER:
Through the first six months of 1997, stock and bond markets experienced
the kind of short-term volatility that can affect them periodically. The
stock market rebounded strongly from its early spring correction to
continue on its record-setting pace, as seen by the roughly 20%
year-to-date gain by the Standard & Poor's 500 Index. The bond market
posted moderate returns over the first half of the year, as positive news
on the inflation front helped soften the effects of a hike in short-term
interest rates by the Federal Reserve Board in late March.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
The longer your investment time frame, the less likely it is that you will
be affected by short-term market volatility. A 10-year investment horizon
appropriate for saving for a college education, for example, enables you to
weather market cycles in a long-term fund, which may have a higher risk
potential, but also has a higher potential rate of return.
An intermediate-length fund could make sense if your investment horizon is
two to four years, while a short-term bond fund could be the right choice
if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund. These funds seek
income and a stable share price by investing in high-quality, short-term
investments. Of course, it's important to remember that there is no
assurance that a money market fund will achieve its goal of maintaining a
stable net asset value of $1.00 per share, and that these types of funds
are neither insured nor guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are available
24 hours a day, seven days a week to provide you the information you need
to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
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. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). You can also look at the
fund's income, as reflected in its yield, to measure performance. If
Fidelity had not reimbursed certain fund expenses, the past 10 years total
return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1997 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS

Fidelity Global Bond -1.77% 2.66% 11.18% 83.87%

Salomon Brothers World Government -1.23% 3.88% 44.52% 134.37%
Bond Index, Unhedged

Global Income Funds Average % % % %

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be $1,050.
You can compare the fund's returns to the performance of the Salomon
Brothers World Government Bond Index, Unhedged - a market-capitalization
weighted index of debt issues traded in 14 world government bond markets.
Issues included in the index have fixed-rate coupons and maturities of at
least one year. To measure how the fund's performance stacked up against
its peers, you can compare it to the global income funds average, which
reflects the performance of mutual funds with similar objectives tracked by
Lipper Analytical Services, Inc. The past six months average represents a
peer group of ___ mutual funds. These benchmarks reflect reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

Fidelity Global Bond 2.66% 2.14% 6.28%

Salomon Brothers World Government 3.88% 7.64% 8.89%
Bond Index, Unhedged

Global Income Funds Average % % %

AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year. (Note: Lipper calculates average annual total returns by annualizing
each fund's total return, then taking an arithmetic average. This may
produce a slightly different figure than that obtained by averaging the
cumulative total returns and annualizing the result.)
$10,000 OVER 10 YEARS
1987/06/30 10000.00 10000.00
1987/07/31 9767.47 9800.58
1987/08/31 9973.23 9948.34
1987/09/30 9818.07 9668.43
1987/10/31 10368.69 10319.56
1987/11/30 10816.54 10678.16
1987/12/31 11254.98 11135.87
1988/01/31 10943.73 11075.20
1988/02/29 11024.05 11171.91
1988/03/31 11295.14 11371.34
1988/04/30 11285.10 11316.07
1988/05/31 11234.90 11209.75
1988/06/30 11114.41 10965.28
1988/07/31 11124.45 10898.61
1988/08/31 11044.13 10776.67
1988/09/30 11174.66 11054.78
1988/10/31 11516.02 11565.35
1988/11/30 11726.86 11742.55
1988/12/31 11667.46 11623.02
1989/01/31 11634.81 11453.03
1989/02/28 11536.86 11460.84
1989/03/31 11504.21 11301.66
1989/04/30 11656.58 11451.23
1989/05/31 11460.67 11209.75
1989/06/30 11700.12 11435.01
1989/07/31 12081.05 11955.79
1989/08/31 11906.91 11553.94
1989/09/30 12048.40 11773.19
1989/10/31 12211.66 11871.70
1989/11/30 12342.26 11979.22
1989/12/31 12592.59 12125.78
1990/01/31 12558.49 11965.40
1990/02/28 12399.38 11781.60
1990/03/31 12547.13 11665.06
1990/04/30 12547.13 11629.02
1990/05/31 12717.61 12015.26
1990/06/30 12990.37 12235.70
1990/07/31 13444.98 12618.93
1990/08/31 13365.42 12520.42
1990/09/30 13535.90 12660.38
1990/10/31 13854.12 13226.21
1990/11/30 14001.87 13445.46
1990/12/31 14138.53 13578.21
1991/01/31 14449.13 13917.59
1991/02/28 14585.80 13921.79
1991/03/31 14387.01 13416.03
1991/04/30 14585.80 13622.66
1991/05/31 14759.73 13605.24
1991/06/30 14585.80 13462.88
1991/07/31 14735.08 13750.60
1991/08/31 14873.85 14016.70
1991/09/30 15214.99 14565.11
1991/10/31 15420.94 14717.68
1991/11/30 15343.71 14947.74
1991/12/31 15944.25 15725.01
1992/01/31 15783.47 15445.70
1992/02/29 15850.46 15359.80
1992/03/31 15823.85 15197.02
1992/04/30 16038.96 15305.74
1992/05/31 16334.73 15775.47
1992/06/30 16537.23 16216.96
1992/07/31 16785.06 16594.79
1992/08/31 17029.23 17059.11
1992/09/30 16792.18 17230.30
1992/10/31 16683.02 16762.37
1992/11/30 16432.56 16496.28
1992/12/31 16645.32 16594.79
1993/01/31 16837.62 16884.31
1993/02/28 17096.90 17216.48
1993/03/31 17473.53 17480.78
1993/04/30 17639.70 17850.19
1993/05/31 17963.95 18029.19
1993/06/30 18324.59 17990.75
1993/07/31 18603.45 18041.81
1993/08/31 19073.41 18584.21
1993/09/30 19182.11 18804.66
1993/10/31 19679.01 18772.83
1993/11/30 19616.36 18638.27
1993/12/31 20291.72 18796.85
1994/01/31 20513.28 18948.22
1994/02/28 19396.45 18824.48
1994/03/31 17999.99 18797.45
1994/04/30 17645.52 18819.08
1994/05/31 17743.93 18653.89
1994/06/30 16979.45 18922.99
1994/07/31 17288.59 19073.76
1994/08/31 17503.33 19007.69
1994/09/30 17504.23 19145.24
1994/10/31 17583.98 19452.19
1994/11/30 17656.74 19184.89
1994/12/31 16981.84 19237.75
1995/01/31 16833.63 19641.40
1995/02/28 16786.07 20144.16
1995/03/31 16895.57 21340.70
1995/04/30 17180.48 21735.94
1995/05/31 17698.60 22347.43
1995/06/30 17864.41 22478.98
1995/07/31 17831.26 22531.84
1995/08/31 17280.50 21757.57
1995/09/30 17579.31 22243.51
1995/10/31 17794.93 22409.30
1995/11/30 17915.27 22662.78
1995/12/31 18112.18 22900.05
1996/01/31 17887.67 22617.13
1996/02/29 17895.53 22501.80
1996/03/31 17860.31 22470.57
1996/04/30 17796.44 22381.07
1996/05/31 17808.56 22385.87
1996/06/30 17910.87 22561.87
1996/07/31 18222.17 22994.35
1996/08/31 18252.89 23083.85
1996/09/30 18338.53 23177.56
1996/10/31 18611.44 23611.24
1996/11/30 18882.48 23922.39
1996/12/31 18718.63 23728.98
1997/01/31 18166.04 23094.67
1997/02/28 18046.82 22922.27
1997/03/31 17862.95 22747.48
1997/04/30 17728.38 22550.46
1997/05/31 18206.05 23160.74
1997/06/30 18386.57 23437.05
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Global Bond Fund on June 30, 1987. As the chart shows, by June
30, 1997, the value of the investment would have grown to $18,387 - a
83.87% increase on the initial investment. For comparison, look at how the
Salomon Brothers World Government Bond Index, Unhedged did over the same
period. With dividends and capital gains, if any, reinvested, the same
$10,000 would have grown to $23,437 - a 134.37% increase.
UNDERSTANDING
PERFORMANCE
Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets
means assuming greater risks
than investing in the United
States. Factors like changes
in a country's financial
markets, its local political and
economic climate, and the
fluctuating value of its
currency create these risks.
For these reasons an
international fund's
performance may be more
volatile than a fund that
invests exclusively in the
United States.
(checkmark)
DIVIDENDS AND YIELD
PERIODS ENDED JUNE 30, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR

Dividends per share 4.15(cents) 35.32(cents) 52.06(cents)

Annualized dividend rate % % %

30-day annualized yield % - -

DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on the fund's average share price of $9.29
over the past one month, $9.26 over the past six months and $9.48 over the
past one year, you can compare the fund's income over these three periods.
The 30-day annualized YIELD is a standard formula for all funds based on
the yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis. It does not reflect the cost of hedging and other
currency gains and losses.
FUND TALK: THE MANAGERS' OVERVIEW

An interview with Ian Spreadbury, who is responsible for managing Fidelity
Global Bond Fund's international investments, and Christine Thompson,
manager of the fund's U.S. investments
Q. HOW DID THE FUND PERFORM, IAN?
I.S. Not as well as we would have liked. For the six months that ended June
30, 1997, the fund had a return of -1.77%. Over the same period, the
Salomon Brothers World Government Bond Index, Unhedged, returned -1.23%,
and the global income funds average, as tracked by Lipper Analytical
Services, returned 0.89%. For the 12 months that ended June 30, 1997, the
fund returned 2.66%, while the index and Lipper group returned 3.88% and
9.34%, respectively.
Q. WHY ARE THE FUND'S RETURNS CLOSER TO THAT OF ITS INDEX THAN ITS PEER
GROUP?
I.S. We manage the fund to closely approximate the duration characteristics
of the index, so returns between the two tend to be more comparable. In
fact, if expenses were not taken into account, the fund actually
outperformed the index by a slight margin. The peer group, on the other
hand, consists of a variety of funds with different investment disciplines.
Unlike Global Bond, some peer funds invest in lower-quality, emerging
market securities - which have had a terrific run recently - or engage in
currency hedging. The situation in Japan is an example. Japan's economic
and currency woes continued through much of the period, and while the
economy showed some encouraging signs toward the end of the second quarter,
the fund's significant Japanese exposure still hurt performance. Some peer
funds, meanwhile, may have had the ability to minimize their losses by
hedging their yen-denominated investments into the stronger U.S. dollar. As
a final note, I'd add that while our strategy won't help the fund beat the
index or peer group every period, we feel strongly that it will generate
solid, long-term results.
Q. WERE THERE ANY OTHER SPECIFIC DEVELOPMENTS THAT INFLUENCED PERFORMANCE?
I.S. The disappointing performance of several "core" European countries
played a key role, as increased uncertainty concerning the implementation
of the European Monetary Union (EMU) took hold. Over the past year or so,
debate has raged as to which countries will meet the criteria for joining
EMU and which won't. Any time you have speculation running rampant, it's
bound to have negative effects. Germany, which is waiting to see if Spain
and Italy join the EMU fray, saw a decline in the Deutsche mark relative to
the dollar, and Austria, Finland and Belgium posted bland returns during
the period.
Q. HOW ABOUT POSITIVES?
I.S. The fund's positions in the United Kingdom - which comprised around
__% of the fund as of the end of the period - were swept up in the wave of
optimism surrounding the election of a new government and its decision to
declare the Bank of England independent. The fund's U.S. positions, the
single largest country exposure in the portfolio at __%, performed well as
inflation levels in the U.S. remained subdued.
Q. SPEAKING OF THE U.S., CHRIS, COULD YOU DISCUSS THE BOND MARKET CLIMATE
DURING THE PERIOD AND HOW IT AFFECTED THE FUND?
C.T. The U.S. bond market's fluctuating performance followed investor
sentiment, as market interest rates adjusted to the growth pace of the
underlying economy. Throughout the period, the market was focused on
Federal Reserve Board monetary policy and any relevant economic data that
would affect the Fed's decision-making. Following the interest rate hike in
March 1997, the market's initial response was to sell off, reflecting the
view that the increase was just one of a series of Fed moves. As economic
growth waned a bit, though, the expectation for further rate increases
diminished and the market rallied. Within the U.S. market, the
non-government sectors - most notably mortgage-backed bonds and corporate
bonds - performed very well. Mortgages
enjoyed predictable prepayment patterns, while corporates prospered in a
fundamentally supportive environment of steady earnings growth, improving
credit trends and good liquidity. My strategy was to invest a greater
portion of the fund's U.S. dollar holdings into these non-government asset
groups. Going forward, investors are still very focused on the Fed and the
potential for a readjustment of short-term interest rates. There's a
general concern pervading the market that continued economic growth will
lead to increased inflationary pressure. As for my investment focus, I'll
continue to look for `value' opportunities in those non-government, U.S.
sectors that can offer higher returns and a variety of rate environments.
Q. IAN, WHAT'S IN STORE FOR THE COMING MONTHS?
I.S. Similar to U.S. concerns, the threat of inflation will be monitored
internationally as well. So far, the U.S. and other world governments have
done a commendable job staving off inflation and will hopefully continue to
do so. Inflation - which erodes bond valuations - is the bane of any bond
manager's existence. As for managing the fund, Chris and I will continue to
rely on quantitative analysis and our credit research capabilities to
uncover promising opportunities.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.

FUND FACTS
GOAL: high total return by
investing in
investment-grade debt
securities from around the
world
FUND NUMBER: 451
TRADING SYMBOL: FGBDX
START DATE: December 30, 1986
SIZE: as of June 30, 1997,
more than $93 million
MANAGER: Ian Spreadbury,
since 1996; manager,
various funds for Fidelity
International Limited; joined
Fidelity in 1995; Christine
Thompson, since 1996;
manager, various Fidelity
funds; joined Fidelity in 1985
(checkmark)
IAN SPREADBURY DISCUSSES THE
ONGOING EMU PROCESS:
"The push for countries to join
the European Monetary Union
- - or EMU - continued to be
the dominant theme
throughout Europe during the
period. The EMU is a collection
of countries that have agreed
to align their fiscal and monetary
philosophies and to utilize a
uniform currency known as
the `euro.'
"As countries continued to try to
meet the requirements for
joining EMU - as outlined by
the Maastricht Treaty -
uncertainty over which
countries would meet those
requirements reigned. One of
the provisions for joining is that
a country cannot have a
budget deficit of greater than
3%. This limit is seen as a
challenge for both France and
Germany, and people are
wondering if a looser
interpretation of this criteria
may be required. If the rules
were relaxed a bit, there's a
common feeling that the `euro'
would lose some of its
strength.
"The EMU has its advantages
and disadvantages. For some
countries, EMU membership
presents a chance to reduce
interest rates through a
uniform fiscal and monetary
discipline, thus improving their
fiscal and monetary situations;
for others, such as the U.K.,
independent monetary and fiscal
policy is the preference.
Despite this uncertainty,
though, the EMU appears
ready to be in place by 1999."
INVESTMENT CHANGES

TOP FIVE COUNTRIES AS OF JUNE 30, 1997
The charts below highlight three different aspects of the fund's
investments: the country where they were issued, their sensitivity to
interest rate changes, and their currency exposure. The top countries in
each table differ because some securities have more interest rate risk than
others, and because securities issued in one country may be denominated in
another country's currency.
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE COUNTRIES
6 MONTHS AGO

United States 29 32

Germany 10 14

France 8 8

United Kingdom 8 7

Netherlands 5 4

TOP COUNTRIES ARE BASED UPON LOCATION OF ISSUER OF EACH SECURITY, INCLUDING
WHERE THE FUND IS EXPOSED TO POTENTIAL POLITICAL AND CREDIT RISKS.
PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF OPEN FUTURES CONTRACTS, IF
APPLICABLE.
TOP INTEREST RATE EXPOSURES AS OF JUNE 30, 1997
(ESTIMATED BY COUNTRY) % OF FUND'S % OF INTEREST RATE
TOTAL INTEREST EXPOSURE
RATE 6 MONTHS AGO
EXPOSURE

United States 32 32

Japan 24 21

Germany 9 10

United Kingdom 8 8

France 7 8

FIDELITY INVESTMENTS ESTIMATES INTEREST RATE EXPOSURE BASED ON THE
DURATION, OR INTEREST RATE SENSITIVITY, OF THE FUND'S HOLDINGS. AS OF JUNE
30, 1997, THE FUND WAS MOST SENSITIVE TO INTEREST RATE MOVEMENTS IN <THE
LARGEST COUNTRY>, WHICH ACCOUNTS FOR X% OF THE FUND'S INTEREST RATE
EXPOSURE.
TOP CURRENCY EXPOSURES AS OF JUNE 30, 1997
(ESTIMATED BY CURRENCY) % OF FUND'S % OF NET ASSETS
NET ASSETS 6 MONTHS AGO

U.S. dollar 33 32

Japanese yen 20 19

German deutsche mark 10 11

French franc 7 8

Italian lira 7 6

THE <LARGEST FOREIGN CURRENCY>, AT APPROXIMATELY X% OF NET ASSETS, WAS THE
FUND'S LARGEST FOREIGN CURRENCY EXPOSURE AS OF MONTH DAY, YEAR.
INVESTMENTS JUNE 30, 1997 (UNAUDITED)

Showing Percentage of Total Value of Investment in Securities

CORPORATE NONCONVERTIBLE BONDS - 28.0%
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (A) (NOTE 1)
AUSTRALIA - 1.2%
Queensland Treasury Corp.:
8%, 8/14/01 Aaa AUD 1,000,000 $ 800,558
8%, 5/14/03 Aaa AUD 350,000 280,538
1,081,096
CANADA - 2.9%
British Columbia Hydro & Power Authority
yankee 12 1/2%, 1/15/14 Aa2 140,000 157,717
Broadcast Central Trust 7.53%, 5/1/27 AAA CAD 1,143,646 870,418
Ford Credit CDA Ltd. 8 3/4%, 3/20/00 A1 CAD 1,000,000 784,630
Methanex Corp. yankee 8 7/8%, 11/15/01 A2 480,000 509,362
Trizec Hahn Corp. 7.45%, 6/1/04 - CAD 500,000 368,957
2,691,084
FINLAND - 0.4%
Merita Bank Ltd. yankee 6 1/2%, 1/15/06 A3 350,000 333,575
FRANCE - 0.7%
Total Cie Francaise des Petroles
8 1/4%, 2/26/02 Aa3 DEM 1,000,000 650,530
GERMANY - 3.0%
Lake Baden Wuerttemberg Finance NV euro
3 3/4%, 6/21/99 (e) Aaa JPY 300,000 2,750,229
JAPAN - 3.0%
Export-Import Bank of Japan euro
2 7/8%, 7/28/05 (e) Aaa JPY 310,000 2,793,231
KOREA (SOUTH) - 0.3%
Korea Development Bank yankee
7%, 7/15/99 A1 300,000 303,396
NETHERLANDS - 2.2%
Bank Voor Nederlandse he Gemeenten NV
6 1/2%, 8/25/99 AAA DEM 1,000,000 604,411
Dresdner Finance BV Amsterdam
6 1/4%, 3/11/04 Aa1 DEM 2,000,000 1,202,865
Ford Capital BV gtd. yankee 9%, 8/15/98 A1 250,000 257,343
2,064,619
CORPORATE NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (A) (NOTE 1)
PANAMA - 0.1%
Banco Latinoamer Exportaciones Euro
6.90%, 12/6/99 (c) Baa2 $ 100,000 $ 100,813
UNITED KINGDOM - 3.1%
Bell Cablemedia PLC yankee
0%, 9/15/05 (f) Baa3 100,000 83,500
Ford Credit Europe PLC 11.70%, 11/18/98 A1 ITL 1,185,000 746,328
Guaranteed Export Finance Corp. PLC euro
10 5/8%, 9/15/01 - GBP 250,000 461,434
Lloyds Bank PLC 7 3/8%, 3/11/04 Aa2 GBP 500,000 820,447
Midland Bank PLC yankee 7 5/8%, 6/15/06 A1 270,000 278,060
Rolls-Royce PLC 11 5/8%, 7/30/98 A3 GBP 250,000 433,321
2,823,090
UNITED STATES OF AMERICA - 11.1%
AMR Corp. 7 3/4%, 12/1/97 Baa3 200,000 201,358
AT&T Capital Corp. 6.65%, 4/30/99 Baa3 250,000 250,700
Aristar, Inc. 7 1/2%, 7/1/99 Baa1 250,000 254,905
Banc One Corp. 6.70%, 3/24/00 Aa3 120,000 120,559
BanPonce Finance Corp. 6.642%, 4/8/99 A3 320,000 321,501
BanPonce Corp. 6.488%, 3/3/00 A3 100,000 99,677
Chrysler Financial Corp. 6 3/8%, 1/28/00 A3 180,000 179,460
Columbia Gas System, Inc. 6.61%, 11/28/02 Baa1 130,000 128,531
Comdisco, Inc.:
6 1/2%, 6/15/00 Baa1 600,000 598,554
5 3/4%, 2/15/01 Baa1 200,000 193,384
Commonwealth Edison Co. 6 5/8%, 7/15/03 Baa2 150,000 146,717
Dayton Hudson Corp. 6.80%, 10/1/01 Baa1 150,000 149,744
Edison Mission Energy Funding Corp.
6.77%, 9/15/03 (c) Baa1 246,370 245,387
Enron Corp. 10%, 6/1/98 Baa2 100,000 103,388
Federated Department Stores, Inc.
10%, 2/15/01 Baa2 150,000 164,096
First Fidelity Bancorporation
9 5/8%, 8/15/99 A2 181,000 192,242
First Hawaiian, Inc. 6 1/4%, 8/15/00 Baa1 270,000 265,378
First Tennessee National Corp.
6 3/4%, 11/15/05 Baa1 100,000 97,463
Firstar Corp. 7.15%, 9/1/00 A3 320,000 321,891
Fleet Financial Group, Inc. 7 5/8%, 12/1/99 A3 40,000 40,869
Ford Credit Grantor Trust 5.90%, 10/15/00 Aaa 365,293 364,837
CORPORATE NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (A) (NOTE 1)
UNITED STATES OF AMERICA - CONTINUED
Golden West Financial Corp. 9.15%, 5/23/98 A3 $ 150,000 153,848
Green Tree Financial Corp.:
6.45%, 5/15/27 Aaa 160,000 160,299
6.65%, 7/15/27 Aaa 180,000 180,787
Kansallis-Osake-Pankki 10%, 5/1/02 A3 100,000 112,145
KeyCorp 8.40%, 4/1/99 A2 250,000 257,970
LCI International, Inc. 7 1/4%, 6/15/07 Ba1 100,000 99,050
Levi Strauss & Co. 6.80%, 11/1/03 (c) Baa2 350,000 347,015
Limited, Inc. 9 1/8%, 2/1/01 Baa2 80,000 84,622
Long Island Savings Bank 7%, 6/13/02 Baa3 250,000 252,085
MCN Investment Corp.:
5.84%, 2/1/99 Baa2 210,000 208,667
6.03%, 2/1/01 Baa2 280,000 273,496
Manufacturers Hanover Corp. 8 1/2%, 2/15/99 A1 130,000 134,388
Massachusetts Electric Co. 6.78%, 11/20/06 A2 250,000 244,420
MFS Communications, Inc.
0%, 1/15/04 (f) Ba3 300,000 279,240
Occidental Petroleum Corp.:
5.85%, 11/9/98 Baa3 90,000 89,465
5. 93%, 11/9/98 Baa3 130,000 129,360
6 3/4%, 9/16/99 Baa3 120,000 120,300
6.09%, 11/29/99 Baa3 150,000 148,094
Penney (J.C.), Inc. 6.95%, 4/1/00 A2 150,000 151,263
Petroleum Enhanced Trust Receivables Offering
Petroleum Trust 6.1875%, 2/5/03 (c) Baa2 199,927 199,927
Provident Bank 6 1/8%, 12/15/00 A3 510,000 500,489
Shawmut National Corp. 8 5/8%, 12/15/99 A3 290,000 302,531
Southwest Gas Corp. 9 3/4%, 6/15/02 Baa2 90,000 100,023
Standard Credit Card Master Trust I
5 1/2%, 9/7/98 participation certificate A2 85,000 84,977
TCI Communication, Inc. 7 1/4%, 6/15/99 Ba1 250,000 251,910
360 Degrees Communications Co.
7 1/8%, 3/1/03 Ba1 200,000 198,898
Time Warner, Inc. 7.95%, 2/1/00 Ba1 260,000 267,303
Union Planters Corp. 6 3/4%, 11/1/05 Baa2 200,000 193,724
WFS Financial Owner Trust 7.05%, 11/20/03 Aaa 270,000 271,125
10,238,062
TOTAL CORPORATE BONDS
(Cost $26,526,332) 25,829,725
GOVERNMENT OBLIGATIONS (D) - 59.3%
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (A) (NOTE 1)
AUSTRIA - 1.9%
Austrian Republic euro 4 1/2 %, 9/28/05 (e) Aaa JPY 170,000 1,708,971
BELGIUM - 2.4%
Belgian Kingdom:
7%, 4/29/99 Aa1 BEF 15,000,000 440,968
9%, 3/28/03 Aa1 BEF 35,000,000 1,165,500
7 1/2%, 7/29/08 Aa1 BEF 20,000,000 626,007
2,232,475
CANADA - 1.2%
Canadian Government:
10%, 5/1/02 Aa1 CAD 570,000 485,882
10 1/4%, 2/1/04 Aa1 CAD 705,000 625,776
1,111,658
DENMARK - 1.7%
Danish Kingdom:
8%, 3/15/06 Aaa DKK 2,000,000 338,352
Bullet:
6%, 12/10/99 Aaa DKK 2,000,000 313,689
8%, 5/15/03 Aaa DKK 5,500,000 935,603
1,587,644
FINLAND - 0.5%
Finnish Government 10%, 9/15/01 Aaa FIM 2,000,000 460,406
FRANCE - 7.1%
French Government:
4 3/4%, 4/12/99 Aaa FRF 4,750,000 822,659
8 1/2%, 12/26/12 Aaa FRF 5,000,000 1,064,079
OAT:
9 1/2%, 1/25/01 Aaa FRF 9,500,000 1,894,281
8 1/2%, 4/25/03 Aaa FRF 2,200,000 442,155
5 1/2%, 4/25/04 Aaa FRF 7,500,000 1,302,889
7 1/2%, 4/25/05 Aaa FRF 5,500,000 1,064,420
6,590,483
GOVERNMENT OBLIGATIONS (D) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (A) (NOTE 1)
GERMANY - 7.3%
Germany Federal Republic:
6 1/2%, 1/2/99 Aaa DEM 3,250,000 1,943,856
8 3/8%, 5/21/01 Aaa DEM 3,600,000 2,356,345
6 1/2%, 10/14/05 Aaa DEM 1,500,000 912,804
6%, 6/20/16 Aaa DEM 1,500,000 828,674
Treuhandstalt 7 3/4%, 10/1/02 Aaa DEM 1,100,000 714,701
6,756,380
ITALY - 5.3%
Italian Republic:
12 1/2%, 1/1/98 Aa3 ITL 1,100,000 660,998
12%, 9/1/01 Aa3 ITL 1,400,000 989,461
12%, 1/1/03 (e) Aa3 ITL 470,000 344,628
9 1/2%, 1/1/05 Aa3 ITL 4,250,000 2,883,625
4,878,712
NETHERLANDS - 3.1%
Dutch Government:
6 3/4%, 2/15/99 AAA NLG 1,900,000 1,013,894
7%, 6/15/05. AAA NLG 1,850,000 1,038,076
8 1/4%,2/15/07 AAA NLG 1,400,000 851,576
2,903,546
SPAIN - 4.7%
Spanish Kingdom (e):
11.45%, 8/30/98 Aa2 ESP 120,000 869,141
10.90%, 8/30/03 Aa2 ESP 140,000 1,192,218
10.15%, 1/31/06 Aa2 ESP 50,000 424,911
3.10% 9/20/06 Aa2 JPY 200,000 1,815,866
4,302,136
SWEDEN - 1.5%
Swedish Kingdom 6%, 2/9/05 Aa1 SEK 4,200,000 531,258
Swedish National Housing Finance Corp.
9%, 6/15/01 A1 SEK 5,800,000 831,050
1,362,308
GOVERNMENT OBLIGATIONS (D) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (A) (NOTE 1)
UNITED KINGDOM - 4.7%
United Kingdom, Great Britain &
Northern Ireland:
11 3/4%, 1/22/07 Aaa GBP 900,000 1,808,645
9%, 10/13/08 Aaa GBP 600,000 1,140,840
8 3/4%, 8/25/17 Aaa GBP 700,000 1,359,110
4,308,595
UNITED STATES OF AMERICA - 17.9%
Federal Farm Credit Bank 8.06%, 1/4/05 Aaa 1,000,000 1,075,310
Federal Home Loan Mortgage Corporation
7%, 6/1/01 Aaa 101,152 101,734
Government Trust Certificates (assets of Trust
guaranteed by U.S. Government through
Defense Security Assistance Agency):
Class 1-C, 9 1/4%, 11/15/01 Aaa 501,023 531,971
Class 2-E, 9.40%, 5/15/02 Aaa 667,328 708,108
Guaranteed Export Trust Certificates (assets of
Trust guaranteed by U.S. Government
through Export-Import Bank):
Series 1993-C, 5.20%, 10/15/04 Aaa 62,667 60,003
Series 1993-D, 5.23%, 5/15/05 Aaa 108,936 103,928
Series 1994-C, 6.61%, 9/15/99 Aaa 30,623 30,751
Series 1994-A, 7.12%, 4/15/06 Aaa 123,453 125,691
Israel Export Trust Certificates (assets of
Trust guaranteed by U.S. Government
through Export-Import Bank) Series 1994-1,
6.88%, 1/26/03 Aaa 120,000 120,934
Overseas Private Investment Corp.
(U.S. Government guaranteed participation
certificate) Series 1994-95, 6.08%, 8/15/04
(callable) Aaa 230,000 224,903
State of Israel (guaranteed by U.S. Government
through Agency for International Development):
8%, 11/15/01 Aaa 740,000 780,086
6 1/8%, 3/15/03 Aaa 162,000 157,783
U.S. Treasury:
9 1/4%, 8/15/98 Aaa 1,915,000 1,983,519
7 3/4%, 12/31/99 Aaa 39,000 40,395
7 7/8%, 8/15/01 Aaa 1,120,000 1,180,379
10 3/4%, 5/15/03 Aaa 430,000 519,294
12 3/8%, 5/15/04 Aaa 344,000 454,455
12 3/4%, 11/15/10 (callable) Aaa 400,000 555,064
GOVERNMENT OBLIGATIONS (D) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (A) (NOTE 1)
UNITED STATES OF AMERICA - CONTINUED
U.S. Treasury: - continued
12%, 8/15/13 (callable) Aaa 600,000 844,596
9 7/8%, 11/15/15 Aaa 2,600,000 3,419,000
9%, 11/15/18 Aaa 115,000 142,258
71/4%, 2/15/23 Aaa 3,200,000 3,296,000
16,456,162
TOTAL GOVERNMENT OBLIGATIONS
(Cost $57,295,695) 54,659,476
SUPRANATIONAL OBLIGATIONS - 10.6%
African Development Bank
7 3/4%, 12/15/01 Aa1 340,000 353,994
Asian Development Bank (e):
3 1/8%, 6/29/05 Aaa JPY 100,000 915,871
euro 5%, 2/5/03 Aaa JPY 280,000 2,823,324
Banque Europeenne d'Investissement
3%, 9/20/06 (e) Aaa JPY 335,000 3,041,868
Intermediate American Development
6 3/4%, 2/20/01 (e) Aaa JPY 250,000 2,577,522
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost $9,696,262) 9,712,579
COMMERCIAL MORTGAGE SECURITIES - 0.3%
Resolution Trust Corp. Series 1995-C2
Class A-1B, 6 1/4%, 5/25/27 Aaa 151,193 150,744
Structured Asset Securities Corp.
sequential pay:
Series 1995-C4 Class A-1A,
6.90%, 6/25/26 AAA 102,958 102,732
Series 1996 Class A-1B,
5.751%, 2/25/28 AAA 39,770 39,596
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $293,995) 293,072
CASH EQUIVALENTS - 1.8%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.93%, dated
6/30/97 due7/1/97 $ 1,641,270 $ 1,641,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $95,453,284) $ 92,135,852
CURRENCY ABBREVIATIONS
AUD - Australian dollar
BEF - Belgian franc
GBP - British pound
CAD - Canadian dollar
DKK - Danish krone
NLG - Dutch guilder
FIM - Finnish markka
FRF - French franc
DEM - German deutsche mark
ITL - Italian lira
JPY - Japanese yen
ESP - Spanish peseta
SEK - Swedish krona
LEGEND
1. Principal amount is stated in United States dollars unless otherwise
noted.
2. Principal amount in thousands.
3. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
4. Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
5. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $893,142 or 1.0% of net
assets.
6. Principal amount shown is original face amount and does not reflect the
inflation adjustments.
7. For foreign government obligations not individually rated by S&P or
Moody's, the ratings listed are assigned to securities by FMR, the fund's
investment adviser, based principally on S&P and Moody's ratings of the
sovereign credit of the issuing government.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 85.7% AAA, AA, A 84.4%
Baa 5.6% BBB 9.3%
Ba 1.2% BB 0.5%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings of
the sovereign credit of the issuing government. The percentage not rated by
both S&P and Moody's amounted to 0.9%.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.5%
Basic Industries 0.5
Cash Equivalents 1.8
Commercial Mortgage Securities 0.3
Construction & Real Estate 0.4
Durables 0.4
Energy 1.2
Finance 19.4
Government Obligations 59.3
Media & Leisure 0.6
Retail & Wholesale 0.6
Services 1.7
Supranational Obligations 10.6
Technology 0.9
Transportation 0.2
Utilities 1.6
100.0%
INCOME TAX INFORMATION
At June 30, 1997, the aggregate cost of investment securities for income
tax purposes was $95,453,325. Net unrealized depreciation aggregated
$3,317,473, of which $1,125,305 related to appreciated investment
securities and $4,442,778 related to depreciated investment securities.
At December 31, 1996, the fund had a capital loss carryforward of
approximately $94,618,000 of which $81,824,000, and $12,794,000 will expire
on December 31, 2002 and 2003, respectively.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1997 (UNAUDITED)

ASSETS

Investment in securities, at value (including repurchase $ 92,135,852
agreements of $1,641,000) (cost $95,453,284) -
See accompanying schedule

Cash 343

Receivable for investments sold 3,428,237

Interest receivable 2,143,111

Other receivables 2,151

TOTAL ASSETS 97,709,694

LIABILITIES

Payable for investments purchased $ 3,441,144

Payable for fund shares redeemed 1,029,313

Accrued management fee 54,336

Other payables and accrued expenses 73,891

TOTAL LIABILITIES 4,598,684

NET ASSETS $ 93,111,010

Net Assets consist of:

Paid in capital $ 194,086,685

Distributions in excess of net investment income (580,117)

Accumulated undistributed net realized gain (loss) on (97,022,381)
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on (3,373,177)
investments and assets and liabilities in foreign
currencies

NET ASSETS, for 10,038,075 shares outstanding $ 93,111,010

NET ASSET VALUE, offering price and redemption price per $9.28
share ($93,111,010 (divided by) 10,038,075 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)

INVESTMENT INCOME 3,273,793
Interest

EXPENSES

Management fee $ 340,525

Transfer agent fees 159,352

Accounting fees and expenses 37,568

Non-interested trustees' compensation 249

Custodian fees and expenses 11,510

Registration fees 15,746

Audit 26,453

Legal 277

Interest 4,446

Miscellaneous 1,168

Total expenses before reductions 597,294

Expense reductions (893) 596,401

NET INVESTMENT INCOME 2,677,392

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:

Investment securities (1,937,886)

Foreign currency transactions (156,585) (2,094,471)

Change in net unrealized appreciation (depreciation) on:

Investment securities (2,868,423)

Assets and liabilities in foreign currencies (32,445) (2,900,868)

NET GAIN (LOSS) (4,995,339)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (2,317,947)
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
1997 1996
(UNAUDITED)

INCREASE (DECREASE) IN NET ASSETS

Operations $ 2,677,392 $ 8,916,006
Net investment income

Net realized gain (loss) (2,094,471) (7,015,348)

Change in net unrealized appreciation (depreciation) (2,900,868) 1,182,260

NET INCREASE (DECREASE) IN NET ASSETS RESULTING (2,317,947) 3,082,918
FROM OPERATIONS

Distributions to shareholders (2,684,498) (1,498,070)
From net investment income

Return of capital - (6,776,101)

TOTAL DISTRIBUTIONS (2,684,498) (8,274,171)

Share transactions 11,872,533 84,390,375
Net proceeds from sales of shares

Reinvestment of distributions 2,307,553 7,117,696

Cost of shares redeemed (29,697,528) (169,547,782)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING (15,517,442) (78,039,711)
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS (20,519,887) (83,230,964)

NET ASSETS

Beginning of period 113,630,897 196,861,861

End of period (including distributions in excess of net $ 93,111,010 $ 113,630,897
investment income of $580,117 and $573,011,
respectively)

OTHER INFORMATION
Shares

Sold 1,282,032 8,703,025

Issued in reinvestment of distributions 250,186 735,927

Redeemed (3,191,042) (17,554,058)

Net increase (decrease) (1,658,824) (8,115,106)

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS SIX MONTHS YEARS ENDED DECEMBER 31, TWO MONTHS YEAR ENDED
ENDED JUNE 30, ENDED DECEMBER OCTOBER 31,
1997 31, 1992 C
(UNAUDITED) 1992

1996 1995 1994 1993 E

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period $ 9.710 $ 9.940 $ 9.880 $ 12.610 $ 11.340 $ 11.830 $ 11.980

Income from Investment Operations .253 D .550 .745 G .569 G .731 .145 .839
Net investment income

Net realized and unrealized gain (loss) (.430) (.234) (.109) G (2.589) G 1.648 (.173) .110

Total from investment operations (.177) .316 .636 (2.020) 2.379 (.028) .949

Less Distributions

From net investment income (.253) (.096) (.516) (.225) (.629) (.332) (1.099)

In excess of net investment income - - - (.054) - - -

From net realized gain - - - - (.280) (.130) F -

In excess of net realized gain - - - (.020) (.200) - -

Return of capital - (.450) (.060) (.411) - - -

Total distributions (.253) (.546) (.576) (.710) (1.109) (.462) (1.099)

Net asset value, end of period $ 9.280 $ 9.710 $ 9.940 $ 9.880 $ 12.610 $ 11.340 $ 11.830

TOTAL RETURN B (1.77)% 3.35% 6.66% (16.31)% 21.91% (.23)% 8.18%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (000 omitted) $ 93,111 $ 113,631 $ 196,862 $ 382,803 $ 686,252 $ 279,204 $ 332,333

Ratio of expenses to average net assets 1.22% A 1.22% 1.16% 1.14% 1.17% 1.37% A 1.23%

Ratio of net investment income to average
net assets 5.48% A 6.09% 6.19% 6.50% 6.79% 6.92% A 8.02%

Portfolio turnover rate 85% A 91% 322% 367% 198% 142% A 81%

</TABLE>

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C EFFECTIVE JULY 1, 1992, DIVIDENDS FROM NET INVESTMENT INCOME WERE
DECLARED DAILY AND PAID MONTHLY.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E EFFECTIVE JANUARY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
F INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY
RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
G CERTAIN PER-SHARE AMOUNTS HAVE BEEN RECLASSIFIED TO PERMIT COMPARISON
WITH CURRENT YEAR PRESENTATION.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1997 (Unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Global Bond (the fund) is a fund of Fidelity Investment Trust (the
trust) and is authorized to issue an unlimited number of shares. The trust
is registered under the Investment Company Act of 1940, as amended (the
1940 Act), as an open-end management investment company organized as a
Massachusetts business trust. The 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 fund:
SECURITY VALUATION. Securities for which quotations are readily available
are valued at the last sale price, or if no sale price, at the closing bid
price in the principal market in which such securities are normally traded.
Securities (including restricted securities) for which quotations are not
readily available are valued primarily using dealer-supplied valuations or
at their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less for
which quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities
and other assets and liabilities denominated in a foreign currency are
translated into U.S. dollars at the prevailing rates of exchange at period
end. 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, the fund is not subject to U.S. federal
income taxes to the extent that it distributes substantially all of its
taxable income for its fiscal year. The fund may be subject to foreign
taxes on income and gains on investments which are accrued based upon the
fund's understanding of the tax rules and regulations that exist in the
markets in which it invests. The fund accrues such taxes as applicable. The
schedule of investments includes information regarding income taxes under
the caption "Income Tax Information."
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
INVESTMENT INCOME. Interest income, which includes accretion of original
issue discount, is accrued as earned. Interest 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 declared daily and paid
monthly from net investment income. Distributions from realized gains, if
any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for paydown
gains/losses on certain securities, foreign currency transactions, market
discount, and losses deferred due to wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Distributions in excess of net investment income and accumulated
undistributed net realized gain (loss) on investments and foreign currency
transactions may include temporary book and tax basis differences that will
reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
For the period ended December 31, 1996, the fund's distributions exceeded
the aggregate amount of taxable income and net realized gains resulting in
a return of capital. This was due to certain foreign currency losses which
decreased taxable income available for distribution after certain
distributions had been made.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated securities.
Losses may arise from changes in the value of the foreign currency or if
the counterparties do not perform under the contracts' terms. The U.S.
dollar value of foreign currency contracts is determined using contractual
currency exchange rates established at the time of each trade. 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 SEC), the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR), may
transfer uninvested cash balances into one or more joint trading accounts.
These
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
balances are invested in one or more repurchase agreements for U.S.
Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
RESTRICTED SECURITIES. The fund is permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period, the
fund had no investments in restricted securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $40,613,738 and $64,664,875, respectively, of which U.S.
government and government agency obligations aggregated $6,657,284 and
$18,649,918, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (FMR) receives a monthly fee that is calculated on the
basis of a group fee rate plus a fixed individual fund fee rate applied to
the average net assets of the fund. The group fee rate is the weighted
average of a series of rates and is based on the monthly average net assets
of all the mutual funds advised by FMR. The rates ranged from .1100% to
.3700% for the period. The annual individual fund fee rate is .55%. In the
event that these rates were lower than the contractual rates in effect
during the period, FMR voluntarily implemented the above rates, as they
resulted in the same or a lower management fee. For the period, the
management fee was equivalent to an annualized rate of .70% of average net
assets.
SUB-ADVISER FEE. FMR, on behalf of the fund, entered into sub-advisory
agreements with Fidelity Management & Research (U.K.) Inc., Fidelity
Management & Research Far East Inc., and Fidelity International Investment
Advisors (FIIA). 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
SUB-ADVISER FEE - CONTINUED
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.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, is the 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, the transfer agent fees were equivalent to an annualized rate of
.33% of average net assets.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
5. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the period for
which loans were outstanding amounted to $6,232,000 and $_____,
respectively. The weighted average interest rate was 5.71%.
6. EXPENSE REDUCTIONS.
The fund has entered into arrangements with its custodian and transfer
agent whereby credits realized as a result of uninvested cash balances were
used to reduce a portion of the fund's expenses. During the period, the
fund's custodian and transfer agent fees were reduced by $697 and $196,
respectively, under these arrangements.
7. LITIGATION.
The fund is engaged in litigation against the obligor on the inflation
adjusted debt of Siderurgica Brasileiras SA, contesting the calculation of
the principal adjustment. The probability of success of this litigation
cannot be predicted and the amount of recovery cannot be estimated. Any
recovery from this litigation would inure to the benefit of the fund. As of
period end, the fund no longer holds Siderurgica Brasileiras SA debt
securities.

INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
Fidelity International Investment
Advisors
Fidelity International Investment
Advisors (U.K.) Limited
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President
Arthur S. Loring, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank
New York, NY
FIDELITY'S TAXABLE BOND FUNDS
Capital & Income
Ginnie Mae
Global Bond
Government Securities
Intermediate Bond
Investment Grade Bond
New Markets Income
Short-Intermediate Government
Short-Term Bond
Spartan(registered trademark) Ginnie Mae
Spartan Government Income
Spartan High Income
Spartan Investment Grade Bond
Spartan Limited Maturity Government
Spartan Short-Intermediate Government
Spartan Short-Term Bond
Target Timeline 1999, 2001 & 2003
SM
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
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(8 a.m. - 9 p.m.)
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(2_FIDELITY_LOGOS)FIDELITY

NEW MARKETS INCOME
FUND
SEMIANNUAL REPORT
JUNE 30, 1997
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.

PERFORMANCE 4 How the fund has done over time.

FUND TALK 7 The manager's review of fund
performance, strategy and outlook.

INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.

INVESTMENTS 11 A complete list of the fund's
investments with their market
values.

FINANCIAL STATEMENTS 17 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.

NOTES 21 Notes to the financial statements.

NOTE TO SHAREHOLDERS: In connection with the proxy statement mailed to you
in July, please note the change in fiscal year-end for the fund in 1992
minimized the return of capital risk to the fund. The proposed
reorganization of the fund - from a series of Investment Trust to a series
of School Street Trust - will consolidate and streamline the production and
mailing of certain legal documents, resulting in increased efficiency.
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.

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. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). You can also look at the
fund's income, as reflected in its yield, to measure performance. If
Fidelity had not reimbursed certain expenses, the life of fund total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1997 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND

Fidelity New Markets Income 13.59% 40.94% 100.91%

J.P. Morgan Emerging Markets Bond Index 10.27% 33.04% n/a
Plus

Emerging Markets Debt Funds Average 12.12% 38.65% n/a

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year or since the fund
started on May 4, 1993. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to those of the J.P. Morgan
Emerging Markets Bond Index Plus - a market capitalization weighted total
return index of U.S. dollar- and other external currency-denominated Brady
bonds, loans, Eurobonds, and local market debt instruments traded in
emerging markets. To measure how the fund's performance stacked up against
its peers, you can compare it to the emerging markets debt funds average,
which reflects the performance of mutual funds with similar objectives
tracked by Lipper Analytical Services, Inc. The past six months average
represents a peer group of 23 mutual funds. These benchmarks reflect
reinvestment of dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1997 PAST 1 LIFE OF
YEAR FUND

Fidelity New Markets Income 40.94% 18.25%

J.P. Morgan Emerging Markets Bond Index Plus 33.04% n/a

Emerging Markets Debt Funds Average 38.65% n/a

Dividends per share 7.22(cents) 44.29(cents) 95.32(cents)

Annualized dividend rate 6.19% 6.61% 7.48%

30-day annualized yield 7.56% - -

DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $14.18 over
the past one month, $13.51 over the past six months and $12.74 over the
past one year, you can compare the fund's income over these three periods.
The 30-day annualized YIELD is a standard formula for all bond funds based
on the yields of the bonds in the fund, averaged over the past 30 days.
This figure shows you the yield characteristics of the fund's investments
at the end of the period. It also helps you compare funds from different
companies on an equal basis. It does not reflect the cost of hedging and
other currency gains and losses.
FUND TALK: THE MANAGER'S OVERVIEW

An interview with John Carlson, Portfolio Manager of Fidelity New Markets
Income Fund
Q. HOW DID THE FUND PERFORM, JOHN?
A. Very well. For the six months that ended June 30, 1997, the fund
generated a return of 13.59%. This beat both the emerging markets debt
funds average, which returned 12.12% during that time according to Lipper
Analytical Services, and the J.P. Morgan Emerging Markets Bond Index Plus,
which had a six-month return of 10.27%. For the 12 months that ended June
30, 1997, the fund returned 40.94%, while the peer group and index returned
38.65% and 33.04%, respectively.
Q. WHAT WAS BEHIND THE CONTINUED STRENGTH OF EMERGING MARKET SECURITIES?
A. Among other factors, the favorable backdrop of low interest rate levels
and increased economic reform in emerging market countries remained in
place. The market started off strongly in early 1997. In fact, after
Federal Reserve Board chairman Alan Greenspan made his warning remarks in
late December concerning "irrational exuberance" in the U.S. equity
markets, emerging markets seemed to be one of the few asset groups that
actually took heed. Credit spreads - or the risk/reward tradeoff - between
emerging market bonds and the 30-year Treasury bond widened significantly.
After the Fed raised interest rates in early March, credit spreads
tightened. As the period closed, we had pretty much gone back to where we
started the year in terms of interest rate levels. In terms of the fund
itself, countries such as Bulgaria and Russia turned in strong
performances. I'd also tip my cap to our research team, which did a
tremendous job identifying opportunities and managing the higher risks
inherent in emerging market bonds.
Q. WHAT HAPPENED IN BULGARIA? DID YOU REDUCE HOLDINGS IN OTHER REGIONS IN
ORDER TO ADD TO THE FUND'S BULGARIAN POSITIONS?
A. Bulgaria turned out to be a great story. After some periods of economic
difficulty, the country elected a new government and adopted a currency
board. The new government came in and immediately closed a number of
inefficient state agencies, and the currency board has been instrumental in
bringing Bulgaria's inflation levels back down. As a result, Bulgarian
credits were viewed favorably by the market, returning approximately 44%
during the period. While I was adding positions in Bulgaria and Russia,
political turmoil in Ecuador prompted a reduction there. At one point
during the period, Ecuador had three `presidents' claiming power. The
situation has been peacefully resolved, but continued economic reform and
privatization in Ecuador may be put on hold for awhile.
Q. WERE THERE ANY OTHER REGIONAL DEVELOPMENTS THAT INFLUENCED PERFORMANCE?
A. The fund's Ivory Coast positions, which made up approximately 2% of the
fund's investments as of the period's end, enjoyed a continued bull run.
The Ivory Coast is one of the last major restructurings, in terms of going
from defaulted loans to Brady bonds, which are bonds issued by sovereign
governments but denominated in U.S. dollars. Interest was high in this area
of the world and the fund's stake appreciated. In Latin America, the
fallout from the 1994 Mexican crisis pretty much has subsided. In Brazil,
economic reform continued to be stuck in Congress, but the country did
execute a "debt exchange," retiring expensive Brady bond debt and issuing
cheaper bonds.
Q. YOU MENTIONED RUSSIA EARLIER. WHAT HAPPENED THERE TO ATTRACT YOUR
INTEREST?
A. President Yeltsin has done a number of things to improve investing
prospects in Russia. His main accomplishment was appointing a new cabinet
whose members were intent on improving the country's tax collection
problems. With tax evasion a concern, many Russian workers have been
working without a paycheck. The new cabinet hopes to have all wage arrears
eradicated by the end of the year and, if it can pull it off, it will
create better social stability in Russia. Reflecting my optimism, the
fund's Russian position rose from around 5% to approximately 10% at period
end. The fund's Russian exposure - including options- was approximately 16%
at the end of the period.
Q. IN THE LAST REPORT, YOU MENTIONED THE IMPORTANCE OF CRUDE OIL PRICES TO
EMERGING MARKET PERFORMANCE. WHAT WAS THE STORY WITH CRUDE?
A. Crude oil actually weakened during the period, with prices starting the
year at around $22 per barrel, but ending the period at approximately $19.
This decline was significant, but not enough to be a huge performance
detriment. Crude oil prices are particularly important to the well-being of
Latin American countries such as Venezuela, Argentina and Ecuador, each of
which is a heavy producer of crude.
Q. WHAT'S YOUR OUTLOOK?
A. I know it's a clich<UNDEF>, but I'm cautiously optimistic. Since the
Mexican crisis, emerging market debt securities have achieved equity-like
returns while treading in volatile waters. I think it's going to be very
difficult to top the returns we've seen over the last year or so and that
we may move to more of a credit-driven type of market. U.S. interest rate
policy will be closely watched, as will the state of the U.S. equity
market, but I think it will take a rather significant interest rate change
to have an overall impact on emerging markets. Regardless, we'll continue
to search the globe for good credit stories and do our homework.
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: a high level of current
income by investing primarily
in debt securities and other
instruments of issuers in
emerging markets; as a
secondary objective, the
fund may seek capital
appreciation
FUND NUMBER: 331
TRADING SYMBOL: FNMIX
START DATE: May 4, 1993
SIZE: as of June 30, 1997,
more than $402 million
MANAGER: John Carlson,
since 1995; joined Fidelity in
1995
(checkmark)
JOHN CARLSON DISCUSSES HIS
INVESTMENT PROCESS:
"When considering a potential
investment, we'll typically
begin with a research trip.
From that, we'll obtain local
contacts who can aid our
assessment of the current
economic, political and
investment climate in a
particular region. Depending on
the country, we may identify
which development `models'
are being pursued in that
region and which ones can
help us compare countries to
one another.
"Romania and the Ukraine, for
instance, are late "emergers"
amongst transition countries
in eastern Europe. Now that
clearer policies are emerging
there, we can compare these
countries to Poland or Russia
to monitor their progress. A
top-down, fundamental
analysis of the economic
situation is key, including
identifying reforms that can
achieve sustainable growth
levels. We also use in-house
tools to ascertain a country's
ability to service its debt
obligations.
"If an investment is
dollar-denominated, we assess
a country's foreign-exchange
earnings capability and its
international liquidity position.
Local currency investing
demands knowledge of
investment instruments
available, having a view of the
currency, monitoring foreign
reserves, understanding the
depth and liquidity of the market
and being aware of relevant
foreign investment laws. In
some cases, the necessary
infrastructure for us to invest
- - including adequate
custody and settlement
operations - may not yet
exist. We put those countries
on our radar screen for the
future."
INVESTMENT CHANGES

TOP FIVE COUNTRIES AS OF JUNE 30, 1997
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE COUNTRIES
6 MONTHS AGO

Argentina 14.7 12.9

Brazil 13.3 13.3

Venezuela 10.5 12.1

Russia 9.6 4.7

Mexico 9.0 4.9

TOP COUNTRIES ARE BASED UPON LOCATION OF ISSUER OF EACH SECURITY, INCLUDING
WHERE THE FUND IS EXPOSED TO POTENTIAL POLITICAL AND CREDIT RISKS.
TOP FIVE HOLDINGS AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
(BY ISSUER, EXCLUDING CASH EQUIVALENTS) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE HOLDINGS
6 MONTHS AGO

Argentinian Republic 12.8 12.8

Brazilian Federative Republic 11.6 11.8

Venezuelan Republic 10.5 12.1

United Mexican States 9.0 4.9

Bank for Foreign Economic Affairs of Russia 5.3 1.8
(Vnesheconombank)

AVERAGE YEARS TO MATURITY AS OF JUNE 30, 1997
6 MONTHS AGO

Years 14.4 14.0
</TABLE>
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JUNE 30, 1997 AS OF DECEMBER 31, 1996

Corporate bonds 4.8%
Foreign government
obligations 68.6%
Other 12.5%
Short-term
investments 14.1%
Corporate bonds 3.0%
Foreign government
obligations 67.6%
Other 7.7%
Short-term
investments 21.7%
Row: 1, Col: 1, Value: 14.1
Row: 1, Col: 2, Value: 12.5
Row: 1, Col: 3, Value: 68.59999999999999
Row: 1, Col: 4, Value: 4.8
Row: 1, Col: 1, Value: 21.7
Row: 1, Col: 2, Value: 7.7
Row: 1, Col: 3, Value: 67.59999999999999
Row: 1, Col: 4, Value: 3.0

INVESTMENTS JUNE 30, 1997 (UNAUDITED)

Showing Percentage of Total Value of Investment in Securities

CORPORATE BONDS - 4.8%
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (A) (NOTE 1)
CONVERTIBLE BONDS - 2.8%
CHINA (PEOPLES REPUBLIC) - 0.9%
Huaneng Power International, Inc.
1 3/4%, 5/21/04 - $ 3,600,000 $ 3,690,000
POLAND - 0.9%
BPH Finance BV 3%, 5/22/02 (f) - 3,690,000 3,892,950
RUSSIA - 1.0%
Lukinter Finance BV 3 1/2%, 5/6/02 (f) - 3,205,000 3,974,200
TOTAL CONVERTIBLE BONDS 11,557,150
NONCONVERTIBLE BONDS - 2.0%
BRAZIL - 1.7%
Cia Egy Sao Paulo 9 1/8%, 6/26/07 (f) - 2,770,000 2,728,450
Tevecap SA 12 5/8%, 11/26/04 (Reg.) B2 3,910,000 4,217,913
6,946,363
CANADA - 0.2%
Telesystem International Wireless, Inc.
0%, 6/30/07 (d)(f) B- 1,030,000 548,470
NETHERLANDS - 0.1%
PTC International Finance BV
0%, 7/1/07 (d)(f) B3 720,000 436,500
TOTAL NONCONVERTIBLE BONDS 7,931,333
TOTAL CORPORATE BONDS
(Cost $18,836,700) 19,488,483
FOREIGN GOVERNMENT OBLIGATIONS (I) - 68.6%
ARGENTINA - 14.7%
Argentinian Republic:
8 3/4%, 5/9/02 - 3,910,000 3,911,955
11 3/4%, 2/12/07 B1 ARS 2,000,000 2,225,323
11 3/4%, 2/12/07 (f) B1 ARS 14,520,000 16,155,843
FOREIGN GOVERNMENT OBLIGATIONS (I) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (A) (NOTE 1)
ARGENTINA - CONTINUED
Argentinian Republic: - continued
Brady par euro 5 1/2%, 3/31/23 (e) B1 $ 31,155,000 $ 21,604,123
global bond 11 3/8%, 1/30/17 B1 7,280,000 8,108,100
City of Buenos Aires 11 1/4%, 4/11/07 (f) B1 7,000,000 7,595,000
59,600,344
BRAZIL - 11.6%
Brazilian Federative Republic:
Brady:
capitalization bond 8%, 4/15/14 B1 21,000,980 16,892,663
debt conversion bond euro
6.9375%, 4/15/12 (h) B1 22,550,000 18,631,938
global bond 10 1/8%, 5/15/27 B1 12,022,000 11,589,208
47,113,809
BULGARIA - 5.2%
Bulgarian Republic (h):
6.0625%, 7/28/11 B3 4,350,000 3,134,719
FLIRB A 2 1/4%, 7/28/12 B3 32,050,000 18,248,469
21,383,188
ECUADOR - 3.6%
Ecuador Republic:
11 1/4%, 4/25/02 (f) - 9,200,000 9,683,000
Brady:
par euro 3 1/4%, 2/28/25 (e) - 6,530,000 3,087,449
past due interest euro
6.4375%, 2/28/15 (bearer) (h) - 2,760,737 1,783,271
14,553,720
JAMAICA - 1.0%
Jamaica Government 9 5/8%, 7/2/02 (f) - 4,065,000 4,085,325
MEXICO - 9.0%
Mexico Value recovery rights 6/30/03:
discount A - 2,068,000 -
discount B - 12,307,000 -
discount C - 6,076,000 -
discount D - 11,462,000 -
FOREIGN GOVERNMENT OBLIGATIONS (I) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (A) (NOTE 1)
MEXICO - CONTINUED
United Mexican States:
Brady (h):
discount A, 6.8672%, 12/31/19 Ba2 $ 1,345,000 $ 1,250,009
discount B, 6.4531%, 12/31/19 Ba2 8,000,000 7,435,000
discount C, 6.8203%, 12/31/19 Ba2 3,950,000 3,671,031
discount D, 6.4531%, 12/31/19 Ba2 7,450,000 6,923,844
global bond 11 1/2%, 5/15/26 Ba2 15,075,000 17,227,276
36,507,160
PANAMA - 3.9%
Panamanian Republic Brady (h):
interest reduction bond euro
3 1/2%, 7/17/14 Ba1 13,000,000 10,026,250
past due interest euro 6.5625%, 7/17/16 Ba1 6,591,390 5,796,304
15,822,554
PERU - 5.1%
Peruvian Republic Brady (h):
FLIRB:
3 1/4%, 3/7/17 - 25,875,000 15,492,656
3 1/4%, 3/7/17 (f) - 5,200,000 3,113,500
past due interest 4%, 3/7/17 (f) - 3,154,000 2,050,100
20,656,256
RUSSIA - 2.8%
City of St. Petersburg Russia
9 1/2%, 6/18/02 (f) - 1,970,000 1,967,538
Russian Government interest notes
0%, 12/31/16 (f)(g) Ba2 12,450,000 9,508,688
11,476,226
URUGUAY - 1.2%
Banco Central Del Uruguay:
Brady:
6 3/4%, 2/19/21 Ba1 3,000,000 2,692,500
debt conversion note 6.8125%, 2/18/07 (h) Baa 2,250,000 2,221,875
recovery rights 2/18/21 (a) - 3,000,000 30
4,914,405
FOREIGN GOVERNMENT OBLIGATIONS (I) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (A) (NOTE 1)
VENEZUELA - 10.5%
Venezuelan Republic:
Brady (h):
debt conversion bond 6 3/4%, 12/18/07 Ba2 $ 8,250,000 $ 7,646,719
discount A, 6.8125%, 3/31/20 Ba2 10,525,000 9,308,049
discount B, 6.8125%, 3/31/20 Ba2 12,500,000 11,054,688
par A euro 6 3/4%, 3/31/20 Ba2 13,165,000 10,367,438
par B euro 6 3/4%, 3/31/20 Ba2 5,750,000 4,528,125
Oil recovery rights 3/31/20 - 247,726 -
42,905,019
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $262,696,381) 279,018,006
SOVEREIGN LOAN PARTICIPATIONS - 12.0%
ALGERIA - 2.0%
Algerian Republic loan participation (h):
- - The Chase Manhattan Bank
7.3125%, 9/4/06 - 6,160,000 5,374,600
- Morgan Guaranty Trust Company of New York
7.3125%, 9/4/06 - 3,000,000 2,617,500
7,992,100
IVORY COAST - 1.9%
Ivory Coast restructured loan (a):
- - Morgan (J.P.) Securities, Inc. - 6,750,000 2,801,250
- Morgan Grenfeld - 2,400,000 996,000
- Paribas Capital Markets - 9,500,000 3,942,500
7,739,750
MOROCCO - 2.0%
Moroccan Kingdom loan participation (h):
- The Chase Manhattan Bank
6.8125%, 1/1/09 - 2,460,000 2,240,138
- ING Bank NV 6.8125%, 1/1/09 - 3,000,000 2,731,875
- Merrill Lynch, Pierce, Fenner & Smith, Inc.
6.8125%, 1/1/09 - 3,250,000 2,975,781
7,947,794
SOVEREIGN LOAN PARTICIPATIONS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (A) (NOTE 1)
RUSSIA - 5.3%
Bank for Foreign Economic Affairs of Russia
(Vnesheconombank) final loan (a):
- The Chase Manhattan Bank - $ 15,500,000 $ 14,182,500
- ING Baring Securities, Inc. - 1,500,000 1,372,500
- Morgan (J.P.) Securities, Inc. - 6,750,000 6,176,250
21,731,250
VIETNAM- 0.8%
Socialist Republic of Vietnam loan restructured
under 1985 agreement - ING Baring
Securities, Inc. - DEM 5,350,000 3,218,276
TOTAL SOVEREIGN LOAN PARTICIPATIONS
(Cost $42,481,040) 48,629,170
CASH EQUIVALENTS - 14.1%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.93%, dated
6/30/97 due 7/1/97 (Cost $57,238,000) $ 57,247,428 57,238,000
PURCHASED OPTIONS - 0.5%
EXPIRATION DATE/ UNDERLYING FACE
STRIKE PRICE AMOUNT AT VALUE
RUSSIA - 0.5%
The Chase Manhattan Bank Call Option
on $20,000,000 notional amount of
Russian Government interest notes July 97/
0%, 12/31/16 69 $ 15,275,000 1,500,000
Merrill Lynch International Call Option
on $19,250,000 notional amount of
Russian Government principal Oct. 97/
loans 0%, 8/12/21 66 3/8 12,825,313 462,000
TOTAL PURCHASED OPTIONS
(cost $925,050) 1,962,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $382,177,171) $ 406,335,659
SECURITY TYPE ABBREVIATIONS
FLIRB - Front Loaded Interest Reduction
Bonds
CURRENCY ABBREVIATIONS
ARS - Argentine peso
DEM - German deutsche mark
LEGEND
1. Non-income producing
2. Principal amount is stated in United States dollars unless otherwise
noted.
3. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
4. Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
5. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
6. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $65,739,564 or 16.3% of net
assets.
7. Security purchased on a delayed delivery or when-issued basis (see Note
2 of Notes to Financial Statements).
8. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
9. For foreign government obligations not individually rated by S&P or
Moody's, the ratings listed are assigned to securities by FMR, the fund's
investment adviser, based principally on S&P and Moody's ratings of the
sovereign credit of the issuing government.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 0.0% AAA, AA, A 0.0%
Baa 0.5% BBB 4.5%
Ba 26.4% BB 36.5%
B 31.7% B 11.8%
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 26.6%. FMR has determined that unrated
debt securities that are lower quality account for 26.6% of the total value
of investment in securities.
INCOME TAX INFORMATION
At June 30, 1997, the aggregate cost of investment securities for income
tax purposes was $382,177,171. Net unrealized appreciation aggregated
$24,158,488, of which $24,332,517 related to appreciated investment
securities and $174,029 related to depreciated investment securities.
At December 31, 1996, the fund had a capital loss carryforward of
approximately $7,934,000 which will expire on December 31, 2003.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1997 (UNAUDITED)

ASSETS

Investment in securities, at value (including repurchase $ 406,335,659
agreements of $57,238,000) (cost $382,177,171) -
See accompanying schedule

Cash 1,667,795

Receivable for investments sold 27,278,783
Regular delivery

Delayed delivery 31,779,878

Interest receivable 4,995,689

Redemption fees receivable 1,772

Other receivables 72,023

TOTAL ASSETS 472,131,599

LIABILITIES

Payable for investments purchased $ 32,092,502
Regular delivery

Delayed delivery 37,176,021

Distributions payable 140,923

Accrued management fee 225,081

Other payables and accrued expenses 151,173

TOTAL LIABILITIES 69,785,700

NET ASSETS $ 402,345,899

Net Assets consist of:

Paid in capital $ 347,684,496

Undistributed net investment income 5,701,799

Accumulated undistributed net realized gain (loss) on 24,799,714
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on 24,159,890
investments and assets and liabilities in foreign
currencies

NET ASSETS, for 28,231,699 shares outstanding $ 402,345,899

NET ASSET VALUE, offering price and redemption price per $14.25
share ($402,345,899 (divided by) 28,231,699 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)

INVESTMENT INCOME $ 14,034,486
Interest Income

EXPENSES

Management fee $ 1,233,453

Transfer agent fees 385,231

Accounting fees and expenses 133,114

Non-interested trustees' compensation 785

Custodian fees and expenses 71,890

Registration fees 49,680

Audit 45,161

Legal 653

Miscellaneous 1,462

Total expenses before reductions 1,921,429

Expense reductions (3,265) 1,918,164

NET INVESTMENT INCOME 12,116,322

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:

Investment securities 30,968,726

Foreign currency transactions 23,170 30,991,896

Change in net unrealized appreciation (depreciation) on:

Investment securities 714,747

Assets and liabilities in foreign currencies 1,846 716,593

NET GAIN (LOSS) 31,708,489

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 43,824,811
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
1997 1996
(UNAUDITED)

INCREASE (DECREASE) IN NET ASSETS

Operations $ 12,116,322 $ 17,040,354
Net investment income

Net realized gain (loss) 30,991,896 47,181,545

Change in net unrealized appreciation (depreciation) 716,593 11,371,516

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 43,824,811 75,593,415
FROM OPERATIONS

Distributions to shareholders from net investment income (11,709,864) (18,678,021)

Share transactions 160,205,448 249,711,880
Net proceeds from sales of shares

Reinvestment of distributions 10,792,711 16,989,502

Cost of shares redeemed (111,321,931) (190,785,299)

Redemption fees 409,922 813,848

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 60,086,150 76,729,931
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 92,201,097 133,645,325

NET ASSETS

Beginning of period 310,144,802 176,499,477

End of period (including undistributed net investment $ 402,345,899 $ 310,144,802
income of $5,701,799 and $5,295,341, respectively)

OTHER INFORMATION
Shares

Sold 11,846,518 21,889,153

Issued in reinvestment of distributions 794,800 1,486,315

Redeemed (8,335,075) (17,185,701)

Net increase (decrease) 4,306,243 6,189,767

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED DECEMBER 31, MAY 4, 1993
ENDED JUNE 30, (COMMENCEMEN
1997 T
OF OPERATIONS)
TO
DECEMBER 31,

(UNAUDITED) 1996 1995 1994 1993

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning $ 12.960 $ 9.950 $ 10.190 $ 13.070 $ 10.000
of period

Income from Investment .458 D .866 1.222 .573 .486 D
Operations
Net investment income

Net realized and unrealized 1.260 3.035 (.583) (2.687) 3.302
gain (loss)

Total from investment 1.718 3.901 .639 (2.114) 3.788
operations

Less Distributions

From net investment (.443) (.932) (.916) (.529) (.486)
income

In excess of net - - - (.057) (.062)
investment income

From net realized gain - - - (.180) (.170)

Total distributions (.443) (.932) (.916) (.766) (.718)

Redemption fees added to .015 .041 .037 - -
paid in capital

Net asset value, end of period $ 14.250 $ 12.960 $ 9.950 $ 10.190 $ 13.070

TOTAL RETURN B, C 13.59% 41.39% 7.97% (16.55)% 38.84%

RATIOS AND SUPPLEMENTAL
DATA

Net assets, end of period $ 402,346 $ 310,145 $ 176,499 $ 179,114 $ 286,593
(000 omitted)

Ratio of expenses to 1.09% A 1.09% 1.17% 1.28% E 1.24% A,
average net assets E

Ratio of expenses to 1.08% A, 1.09% 1.17% 1.28% 1.24% A
average net assets after f
expense reductions

Ratio of net investment 6.85% A 7.68% 9.51% 5.87% 6.29% A
income to average net
assets

Portfolio turnover rate 470% A 405% 306% 409% 324% A

</TABLE>

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
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).
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1997 (Unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity New Markets Income Fund (the fund) is a fund of Fidelity
Investment Trust (the trust) and is authorized to issue an unlimited number
of shares. The trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The 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 fund:
SECURITY VALUATION. Securities for which quotations are readily available
are valued at the last sale price, or if no sale price, at the closing bid
price in the principal market in which such securities are normally traded.
Securities (including restricted securities) for which quotations are not
readily available are valued primarily using dealer-supplied valuations or
at their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less for
which quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. 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, the fund is not subject to U.S. federal
income taxes to the extent that it distributes substantially all of its
taxable income for its fiscal year. The fund may be subject to foreign
taxes on income and gains on investments which are accrued based upon the
fund's understanding of the tax rules and regulations that exist in the
markets in which
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
INCOME TAXES - CONTINUED
it invests. The fund accrues such taxes as applicable. The schedule of
investments includes information regarding income taxes under the caption
"Income Tax Information."
INVESTMENT INCOME. Interest income, which includes accretion of original
issue discount, is accrued as earned. Interest 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 declared daily and paid
monthly from net investment income. Distributions from realized gains, if
any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for the
recognition of gains/losses on certain securities, foreign currency
transactions, market discount, capital loss carryforwards and losses
deferred due to wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions may
include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
REDEMPTION FEES. Shares held in the fund less than 180 days are subject to
a redemption fee equal to 1% of the proceeds of the redeemed shares. The
fee, which is retained by the fund, is accounted for as an addition to paid
in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated securities.
Losses may arise from changes in the value of the foreign currency or if
the counterparties do not perform under the contracts' terms. The U.S.
dollar value of foreign currency contracts is determined using contractual
currency exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements for U.S.
Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or more
after the date of the transaction. The price of the underlying securities
is fixed at the time the transaction is negotiated. The market values of
the securities purchased on a when-issued or forward commitment basis are
identified as such in the fund's schedule of investments. The fund may
receive compensation for interest forgone in the purchase of a when-issued
security. With respect to purchase commitments, the fund identifies
securities as segregated in its custodial records with a value at least
equal to the amount of the commitment. The payables and receivables
associated with the purchases and sales of when-issued securities having
the same settlement date and broker are offset. When-issued securities that
have been purchased from and sold to different brokers are reflected as
both payables and receivables in the statement of assets and liabilities
under the caption "Delayed delivery." Losses may arise due to changes in
the market value of the underlying securities, if the counterparty does not
perform under the contract, or if the issuer does not issue the securities
due to political, economic, or other factors.
OPTIONS. The fund may use options to manage its exposure to the bond market
and to fluctuations in interest rates. Writing puts and buying calls tend
to increase the fund's exposure to the underlying instrument. Buying puts
and writing calls tend to decrease the fund's exposure to the underlying
instrument, or hedge other fund investments. The underlying face amount at
value of any open options at period end is shown in the schedule of
investments under the caption "Purchased Options." This amount reflects
each contract's exposure to the underlying instrument at period end. Losses
may arise from changes in the value of the underlying instruments, if there
is an illiquid secondary market for the contracts, or if the counterparties
do not perform under the contracts' terms.
2. OPERATING POLICIES -
CONTINUED
OPTIONS - CONTINUED
Gains and losses are realized upon the expiration or closing of the
options. Realized gains (losses) on purchased options are included in
realized gains (losses) on investment securities.
Exchange-traded options are valued using the last sale price or, in the
absence of a sale, the last offering price. Options traded over-the-counter
are valued using dealer-supplied valuations.
RESTRICTED SECURITIES. The fund is permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period, the
fund had no investments in restricted securities (excluding 144A issues).
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. The fund is permitted to invest in
loans and loan participations, trade claims or other receivables. These
investments may include standby financing commitments that obligate the
fund to supply additional cash to the borrower on demand. Loan
participations involve a risk of insolvency of the lending bank or other
financial intermediary. At the end of the period, these investments
amounted to $48,629,170 or 12.1% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $810,966,004 and $ 746,094,991, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the 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 the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1100% to .3700% for the period. The annual individual
fund fee rate is .55%. In the event that these rates were lower than the
contractual rates in effect during the period, FMR voluntarily implemented
the above rates, as they resulted in the same or a lower management fee.
For the period, the management fee was equivalent to an annualized rate of
.70% of average net assets.
SUB-ADVISER FEE. FMR, on behalf of the fund, entered into sub-advisory
agreements with Fidelity Management & Research (U.K.) Inc., Fidelity
Management & Research Far East Inc., Fidelity International Investment
Advisors (FIIA), and Fidelity Investments Japan Ltd. In addition, FIIA
entered into a sub-advisory agreement with its subsidiary,
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SUB-ADVISER FEE - CONTINUED
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.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, is the 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, the transfer agent fees were equivalent to an annualized rate of
.22% of average net assets.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
5. EXPENSE REDUCTIONS.
The fund has entered into arrangements with its custodian and transfer
agent whereby credits realized as a result of uninvested cash balances were
used to reduce a portion of the fund's expenses. During the period, the
fund's custodian and transfer agent fees were reduced by $175 and $3,090,
respectively, under these arrangements.
6. CREDIT RISK.
The fund's relatively large investment in countries with limited or
developing capital markets may involve greater risks than investments in
more developed markets and the prices of such investments may be volatile.
The yields of emerging market debt obligations reflect, among other things,
perceived credit risk. The consequences of political, social or economic
changes in these markets may have disruptive effects on the market prices
of the fund's investments and the income they generate, as well as the
fund's ability to repatriate such amounts.
7. LITIGATION.
The fund is engaged in litigation against the obligor on the inflation
adjusted debt of Siderurgica Brasileiras SA, contesting the calculation of
the principal adjustment. The probability of success of this litigation
cannot be predicted and the amount of recovery cannot be estimated. Any
recovery from this litigation would inure to the benefit of the fund. As of
period end, the fund no longer holds Siderurgica Brasileiras SA debt
securities.
MANAGING YOUR INVESTMENTS

Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a day.
BY PHONE
Fidelity TouchTone Xpressprovides a single toll-free number to access
account balances, positions, quotes and trading. It's easy to navigate the
service, and on your first call, the system will help you create a personal
identification number (PIN) for security.
SM
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
1
For quotes.*
2
For account balances and holdings.
3
To review orders and mutual
fund activity.
4
To change your PIN.
5
To speak to a Fidelity representative.
*
0
BY PC
Fidelity's Web site on the Internet provides a wide range of information,
including daily financial news, fund performance, interactive planning
tools and news about Fidelity products and services.
(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at 1-800-544-7272
for significant savings on Web access from internetMCI.
SM
(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity at
1-800-544-7272 or visit our Web site for more information on how to manage
your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
TO WRITE FIDELITY

If more than one address is listed, please locate the address that is
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(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
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OVERNIGHT EXPRESS
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SELLING SHARES
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P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
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Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
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Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
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please call 1-800-544-9797.
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Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
4001 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
1903 East Ninth Street
Cleveland, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI

INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
Fidelity International Investment
Advisors
Fidelity International Investment
Advisors (U.K.) Limited
Fidelity Investments Japan Limited
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
John H. Carlson, Vice President
Robert A. Lawrence, Vice President
Arthur S. Loring, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank
New York, NY
FIDELITY'S TAXABLE BOND FUNDS
Capital & Income
Ginnie Mae
Global Bond
Government Securities
Intermediate Bond
Investment Grade Bond
New Markets Income
Short-Intermediate Government
Short-Term Bond
Spartan(registered trademark) Ginnie Mae
Spartan Government Income
Spartan High Income
Spartan Investment Grade Bond
Spartan Limited Maturity Government
Spartan Short-Intermediate Government
Spartan Short-Term Bond
Target Timeline(trademark) 1999, 2001 & 2003
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)
(registered trademark)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE