FIDELITY INVESTMENT TRUST, N-30D, 1997-02-20

FIDELITY INVESTMENT TRUST
N-30D, 1997-02-20

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(2_FIDELITY_LOGOS)FIDELITY

NEW MARKETS INCOME
FUND
ANNUAL REPORT
DECEMBER 31, 1996
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.

REPORT OF INDEPENDENT 27 The auditors' opinion.
ACCOUNTANTS

THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
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:
Although stocks managed to post solid returns throughout 1996, signs of
strength in the economy have led to inflation fears, causing some
uncertainty in both the stock and bond markets. In 1995, both stock and
bond markets posted strong results, while the year before, stocks posted
below-average returns and bonds had one of the worst years in history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving for a college education, enables you to weather these ups and
downs in a long-term fund, which has higher potential returns.
An intermediate-length fund could be appropriate if your investment horizon
is two to four years, and 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, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide 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 the fund's 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 DECEMBER 31, 1996 PAST 1 LIFE OF
YEAR FUND

New Markets Income 41.39% 76.87%

J.P. Morgan Emerging Markets Bond Index Plus 39.30% n/a

Emerging Markets Debt Funds Average 40.70% n/a

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, or since the fund started on
May 4, 1993. For example, if you invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be $1,050.
You can compare the fund's returns to 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 16 mutual funds with similar objectives tracked
by Lipper Analytical Services, Inc. over the past one year. Both benchmarks
reflect reinvestment of dividends and capital gains, if any, and exclude
the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1996 PAST 1 LIFE OF
YEAR FUND

New Markets Income 41.39% 16.83%

J.P. Morgan Emerging Markets Bond Index Plus 39.30% n/a

Emerging Markets Debt Funds Average 40.70% n/a

$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity New Markets Income Fund on May 4, 1993, when the fund
started. As the chart shows, by December 31, 1996, the value of the
investment would have grown to $17,687 - a 76.87% increase on the initial
investment. For comparison, look at how the J.P. Morgan Emerging Markets
Bond Index did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 would have grown to $18,232 - a 82.32%
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 DECEMBER 31, 1996 PAST PAST 6 PAST 1
MONTH MONTHS YEAR

Dividends per share 16.29(cents) 51.03(cents) 93.18(cents)

Annualized dividend rate 14.80% 8.45% 8.33%

30-day annualized yield 7.77% - -

DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $12.96 over
the past month, $11.98 over the past six months and $11.18 over the past
year, you can compare the fund's income over these three periods. The past
month dividends per share include additional distributions required by
federal tax regulations. These distributions may not be reflected in future
monthly dividends.
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

MARKET RECAP
While low inflation and moderate
growth helped provide a positive
backdrop for most bond markets in
1996, performance in overseas
bond markets was mixed. The
Salomon Brothers World
Government Bond Index - a
measure of government bond
market performance in developed
nations - returned 3.62% for the
12 months ended December 31,
1996. In Europe, focus centered
on the continuing progress toward
the European Monetary Union
(EMU). Attractive opportunities
arose as countries worked to meet
the requirements for joining the
EMU. Many European nations -
especially Italy, Spain and Sweden
- - boasted strong returns.
However, Germany and Japan -
two of the larger components of the
Salomon Brothers World
Government Bond Index -
experienced currency problems
that hurt returns. When Japan's
trade surplus diminished during the
year, assets flowed out of the
country, with investors seeking
higher-yielding opportunities
elsewhere. In stark contrast to the
developed world, the often-volatile
emerging debt markets enjoyed a
particularly strong year, helped by
inflows of foreign capital, low
interest rates and the
implementation of country-specific
reforms - especially in Latin
America. The J.P. Morgan
Emerging Markets Bond Index -
of which Latin America is a large
component - posted a return of
34.16% during the period. In the
U.S., uncertainty over the direction
of the economy led to mixed bond
market performance. The Lehman
Brothers Aggregate Bond Index
returned 3.63% in 1996.
An interview with John Carlson, Portfolio Manager of Fidelity New Markets
Income Fund
Q. JOHN, HOW DID THE FUND PERFORM?
A. Very well. For the 12-month period that ended December 31, 1996, the
fund provided a total return of 41.39%. To get a sense of how the fund
fared relative to its peer group, the emerging markets debt funds average
returned 40.70% over the same period, according to Lipper Analytical
Services. The J.P. Morgan Emerging Markets Bond Index Plus had a 12-month
return of 39.30% for the period ending December 31.
Q. WHAT WERE SOME OF THE IMPORTANT THEMES IN EMERGING MARKET DEBT OVER THE
PAST YEAR?
A. There were really three key themes that helped drive asset prices in
emerging market debt in the past year. The first was the return of economic
growth to Latin America, particularly Mexico and Argentina. Our risk models
of different nations' sovereign debt have shown economic growth to be the
most important factor in a country's creditworthiness. The second recurring
theme was sharply rising crude oil prices, which improved the financial
position of the oil exporting countries. Of the major oil exporters,
Ecuador, Venezuela and Nigeria all performed well, while only Mexico
lagged. The significance of rising oil prices goes beyond the simple
revenue windfall: Venezuela and Ecuador have used the cash to help them
tackle significant structural economic reforms. The third major theme was
the dramatic outperformance of non-restructured loans versus Brady
securities - U.S. dollar-denominated bonds of developing countries.
Q. DID ANY OTHER SPECIFIC DEVELOPMENTS TAKE PLACE?
A. Three events deserve mention. First, Moody's re-rated all Brady bonds -
which had been rated just below the issuing country's Eurobond external
debt - up to the level of the sovereign issuer. This took place early in
the year. Second, the fund realized excellent performance from its
positions in pre-Brady bonds, most notably those of Russia and Panama. The
market-friendly election of Boris Yeltsin, the perception that economic
reform was progressing and an increased sense of stability combined to make
Russian loans attractive. My overweighting - relative to the J.P. Morgan
index - in Panama worked to the fund's benefit as low inflation and a
balanced budget, among other factors, made for good performance. The fund
also benefited from its exposure to the non-restructured loans of Vietnam
and the Ivory Coast. Lastly, both Mexico and the Philippines initiated debt
buybacks, which was viewed positively by the market.
Q. YOU MENTIONED PRE-BRADY BONDS AS HAVING PLAYED A SIGNIFICANT ROLE IN THE
PORTFOLIO. CAN YOU EXPLAIN HOW THESE INSTRUMENTS WORK?
A. Sure. Pre-Bradys are loans made by multinational banks to sovereign
governments. These loans usually have gone through a default process for
one reason or another and are traded in the market by banks and investment
banks. Typically, when emerging market countries undergo economic or
political reform and wish to re-enter the international capital markets,
the first step is to agree to terms and conditions on restructuring their
existing defaulted loans with the London Club - the group of issuing banks.
Once the parties come to an agreement, the pre-Brady loans become Brady
bonds.
Q. JOHN, ARE THERE ANY POCKETS OF THE WORLD THAT ARE RELATIVELY UNEXPLORED
FROM AN INVESTMENT STANDPOINT?
A. Africa, the world's poorest continent, has been largely ignored by
investors. Africa has extremely high debt levels, but the World Bank has
floated some debt relief proposals that may result in more opportunities
there.
Q. WHAT'S YOUR OUTLOOK?
A. I'm fairly optimistic. At present, the forces that have driven this bull
market remain in place; economic growth is picking up across our universe
of countries, and most countries are enjoying rising levels of liquidity
driven by capital inflows and stronger oil prices. The most important issue
to monitor is continued progress on economic reform. It is crucial for
these countries to keep building on the momentum of the last 18 months. Two
examples are labor reform in Argentina and the prospects for a currency
board in Bulgaria. Also important is international liquidity and the global
appetite for risk. Emerging markets could suffer if G7 interest rates -
those in the seven leading industrial nations - go up sharply or there's a
global recession.
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 December 31,
1996, more than $310 million
MANAGER: John Carlson,
since 1995; lead manager,
Fidelity Advisor Strategic
Income Fund, since 1995;
manager, Fidelity Advisor
Emerging Markets Income
Fund, since 1995; joined
Fidelity in 1995
(checkmark)
JOHN CARLSON ON BOND OPTIONS:
"The fund had a large cash
position at the end of the
period, but actually was much
closer to being fully invested
than it appeared. Of the 21%
cash position, approximately
6 percentage points were
being held to cover call options
bought on Argentine bonds,
and 4 percentage points were
held to cover call options
bought on Bulgarian bonds.
Because the cash set aside
covered the entire underlying
face amount at value of the
bonds, no leverage was
employed. These options
gave the fund the right, but
not the obligation, to buy
these bonds at an
agreed-upon price at a
future date. Thus, the fund
was effectively invested in
these markets even though
the money set aside was
listed as part of the fund's
cash component. The
investment in call options had
the added benefit of limiting
the downside risk to the fund
because if the price of the
bonds fell and the fund didn't
exercise the options, the loss
would be limited to the option
premium paid."
INVESTMENT CHANGES

TOP FIVE COUNTRIES AS OF DECEMBER 31, 1996
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

Brazil 13.3 22.7

Ecuador 13.0 4.7

Argentina 12.9 20.9

Venezuela 12.1 10.5

Mexico 4.9 6.3

TOP COUNTRIES ARE BASED ON THE LOCATION OF THE ISSUER OF EACH SECURITY,
INDICATING WHERE THE FUND IS EXPOSED TO POLITICAL AND CREDIT RISKS.
TOP FIVE HOLDINGS AS OF DECEMBER 31, 1996
(BY ISSUER, WITH MATURITIES % OF FUND'S % OF FUND'S
OF MORE THAN ONE YEAR) INVESTMENTS INVESTMENTS IN THESE
SECURITIES
6 MONTHS AGO

Ecuador Republic 13.0 4.7

Argentinian Republic 12.8 17.6

Venezuelan Republic 12.1 10.5

Brazilian Federative Republic 11.8 20.0

United Mexican States 4.9 5.2

AVERAGE YEARS TO MATURITY AS OF DECEMBER 31, 1996
6 MONTHS AGO

Years 14.0 14.0

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 DECEMBER 31, 1996 AS OF JUNE 30, 1996
Corporate bonds 3.0%
Foreign Government
obligations 67.6%
Stocks 0.0%
Other 7.7%
Short-term
investments 21.7%
Corporate bonds 9.7%
Foreign Government
obligations 67.7%
Stocks 0.1%
Other 16.3%
Short-term
investments 6.2%
Row: 1, Col: 1, Value: 21.7
Row: 1, Col: 2, Value: 7.7
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 67.59999999999999
Row: 1, Col: 5, Value: 3.0
Row: 1, Col: 1, Value: 6.2
Row: 1, Col: 2, Value: 16.3
Row: 1, Col: 3, Value: 1.1
Row: 1, Col: 4, Value: 66.7
Row: 1, Col: 5, Value: 9.699999999999999
INVESTMENTS DECEMBER 31, 1996

Showing Percentage of Total Value of Investment in Securities

NONCONVERTIBLE BONDS - 3.0%
MOODY'S RATINGS (C) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
BRAZIL - 1.5%
TV Filme, Inc. yankee 12 7/8%,
12/15/04 (e) B2 $ 2,250,000 $ 2,258,434
Tevecap SA 12 5/8%, 11/26/04 (e) B2 2,500,000 2,556,250
4,814,684
CHINA (PEOPLES REPUBLIC) - 1.0%
AES China Generating Ltd. yankee 10 1/8%,
12/15/06 Ba3 3,050,000 3,164,375
SOUTH AFRICA - 0.5%
Eskom 0%, 9/1/02 Baa3 ZAR 20,250,000 1,840,405
TOTAL NONCONVERTIBLE BONDS
(Cost $9,762,223) 9,819,464
FOREIGN GOVERNMENT OBLIGATIONS (H) - 67.6%
ARGENTINA - 12.8%
Argentinian Republic:
BOCON:
3.414%, 4/1/01 (g) BBB- ARS 11,535,193 10,056,476
3.414%, 9/1/02 (g) BBB- ARS 4,055,581 3,138,558
3.414%, 4/1/07 (g) BB- ARS 11,405,120 8,095,643
Brady par euro 5 1/4%, 3/31/23 (d) B1 31,565,000 19,905,678
41,196,355
BRAZIL - 11.8%
Brazilian Federative Republic Brady:
capitalization bond 8%, 4/15/14 B1 19,962,331 14,722,219
exit bond euro 6%, 9/15/13 B1 8,250,000 5,919,375
FLIRB 4 1/2%, 4/15/09 (bearer) (d) B1 4,500,000 3,217,500
FLIRB 4 1/2%, 4/15/09 (d) B1 7,000,000 5,005,000
par 5%, 4/15/24 (d) B1 14,500,000 9,125,938
37,990,032
FOREIGN GOVERNMENT OBLIGATIONS (H) - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
ECUADOR - 13.0%
Ecuador Republic Brady:
interest equalization bond euro
6 1/2%, 12/21/04 (bearer) (g) - $ 3,600,000 $ 3,132,000
par euro 3 1/4%, 2/28/25 (d) - 27,500,000 12,701,563
past due interest euro
6 1/2%, 2/28/15 (bearer) (g) - 39,440,647 24,157,396
past due interest 6 1/2%, 2/28/15 (g) - 2,643,475 1,619,128
41,610,087
KAZAKHSTAN - 1.0%
Kazakhstan Republic 9 1/4%, 12/20/99 (e) - 3,000,000 3,022,500
MEXICO - 4.9%
Mexico Value recovery rights - 9,847,000 -
United Mexican States:
Brady:
discount A 6.4531%, 12/31/19 (g) Ba2 4,150,000 3,569,000
discount D 6.4531%, 12/31/19 (g) Ba2 2,250,000 1,935,000
global bond 11 1/2%, 5/15/26 Ba2 9,605,000 10,142,979
15,646,979
PANAMA - 4.8%
Panamanian Republic Brady:
interest reduction bond euro
3 1/2%, 7/17/14 (g) BB 13,125,000 9,097,266
past due interest euro 6 3/4%, 7/17/19 (d) BB 8,099,000 6,317,220
15,414,486
PERU - 2.3%
Peruvian Republic:
FLIRB 0%, 10/13/16 (e)(f) - 8,000,000 4,375,000
past due interest 0%, 8/22/16 (e)(f) - 5,000,000 2,943,750
7,318,750
PHILIPPINES - 1.2%
Philippine Government:
15 1/2%, 1/25/03 BBB+ PHP 18,000,000 701,262
8 3/4%, 10/7/16 (e) B1 3,125,000 3,226,563
3,927,825
FOREIGN GOVERNMENT OBLIGATIONS (H) - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
RUSSIA - 2.9%
Russian Government:
interest notes 0%, 12/31/16 (e)(f) - $ 9,800,000 $ 6,786,500
Principal Loans 0%, 8/12/21 (f) - 4,400,000 2,568,500
9,355,000
SOUTH AFRICA - 0.8%
South African Republic 12%, 2/28/05 Baa1 ZAR 13,500,000 2,359,912
VENEZUELA - 12.1%
Venezuelan Republic oil recovery rights - 152,170 -
Venezuelan Republic Brady:
debt conversion bond 6 1/2%, 12/18/07 (g) Ba3 3,000,000 2,641,877
discount 6 3/8%, 3/31/20 (g) Ba3 3,000,000 2,493,750
FLIRB A 6 5/8%, 3/31/07 (g) Ba3 9,500,000 8,466,875
FLIRB B 6.4375%, 3/31/07 (g) Ba3 4,000,000 3,565,000
par A euro 6 3/4%, 3/31/20 Ba3 24,650,000 18,826,438
par B euro 6 3/4%, 3/31/20 Ba3 3,750,000 2,864,063
38,858,003
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $198,592,339) 216,699,929
SOVEREIGN LOAN PARTICIPATIONS - 7.4%
IVORY COAST - 2.2%
Ivory Coast restructured loan:
-Banque Paribas (a) 9,750,000 3,180,938
-The Chase Manhattan Bank (a) 3,000,000 978,750
-Morgan Grenfell & Co. Limited (a) 2,400,000 783,000
-Morgan Guaranty Trust Company of
New York (a) 6,750,000 2,202,188
7,144,876
PERU - 2.3%
Peruvian Republic loan participation under
1983 agreement:
-Citibank N.A. (a) 250,000 285,000
-ING Bank N.V. (a) 1,900,000 2,166,000
-Morgan Guaranty Trust Company of
New York (a) 4,250,000 4,845,000
7,296,000
SOVEREIGN LOAN PARTICIPATIONS - CONTINUED
PRINCIPAL VALUE
AMOUNT (B) (NOTE 1)
RUSSIA - 1.8%
Bank for Foreign Economic Affairs of Russia
(Vnesheconombank) final loan:
-The Chase Manhattan Bank (a) $ 1,500,000 $ 1,190,625
-ING Bank N.V. (a) 2,250,000 1,785,938
-Morgan Guaranty Trust Company of
New York (a) 3,500,000 2,778,125
5,754,688
VIETNAM - 1.1%
Socialist Republic of Vietnam loan
restructured under 1985 agreement -
ING Bank N.V. (a) DEM 5,350,000 3,435,939
TOTAL SOVEREIGN LOAN PARTICIPATIONS
(Cost $18,159,310) 23,631,503
CASH EQUIVALENTS - 21.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 6 3/4%, dated
12/31/96 due 1/2/97
(Cost $69,551,000) (Note 3) $ 69,577,082 69,551,000
PURCHASED OPTIONS - 0.3%
EXPIRATION DATE/ UNDERLYING FACE
STRIKE PRICE AMOUNT AT VALUE
ARGENTINA - 0.1 %
Merrill Lynch International Call Option on
$20,580,000 notional amount of Argentinian
Republic Brady floating rate bonds Jan. 97/
6 5/8%, 3/31/05 86 $ 17,891,738 306,642
PURCHASED OPTIONS - CONTINUED
EXPIRATION DATE/ UNDERLYING FACE VALUE
STRIKE PRICE AMOUNT AT VALUE (NOTE 1)
BULGARIA - 0.2%
First National Bank of Boston Call Option on
$16,250,000 notional amount of Bulgarian Feb. 97/
Republic Brady FLIRB 2 1/4%, 7/28/12 36 5/8 $ 6,195,313 $ 458,250
The Chase Manhattan Bank Call
Option on $16,250,000 notional amount
of Bulgarian Republic Brady FLIRB Mar. 97/
2 1/4%, 7/28/12 40 7/8 6,195,313 170,625
628,875
TOTAL PURCHASED OPTIONS
(Cost $1,128,800) $ 935,517
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $297,193,672) $ 320,637,413
SECURITY TYPE ABBREVIATIONS
FLIRB - Front Loaded Interest Reduction
Bonds
CURRENCY ABBREVIATIONS
ARS - Argentine peso
DEM - German deutsche mark
PHP - Philippine peso
ZAR - South African rand
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 at one coupon which converts to a
higher coupon at a specified 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 $25,168,997 or 8.1% of net
assets.
6. Security purchased on a delayed delivery or when issued-basis (see Note
2 of Notes to Financial Statements).
7. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
8. Some foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 0.0% AAA, AA, A 0.0%
Baa 1.3% BBB 5.6%
Ba 18.0% BB 20.4%
B 20.6% B 24.7%
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 26.5%. FMR has determined that unrated
debt securities that are lower quality account for 26.5% of the total value
of investment in securities.
INCOME TAX INFORMATION
At December 31, 1996, the aggregate cost of investment securities for
income tax purposes was $299,178,017. Net unrealized appreciation
aggregated $21,459,396, of which $22,054,232 related to appreciated
investment securities and $594,836 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>
DECEMBER 31, 1996

ASSETS

Investment in securities, at value (including repurchase $ 320,637,413
agreements of $69,551,000) (cost $297,193,672) -
See accompanying schedule

Cash 2,099,542

Receivable for investments sold 5,791,562
Regular delivery

Delayed delivery 7,121,406

Interest receivable 3,478,069

Redemption fees receivable 961

Other receivables 15,575

TOTAL ASSETS 339,144,528

LIABILITIES

Payable for investments purchased $ 8,417,405
Regular delivery

Delayed delivery 20,036,906

Distributions payable 272,848

Accrued management fee 175,284

Other payables and accrued expenses 97,283

TOTAL LIABILITIES 28,999,726

NET ASSETS $ 310,144,802

Net Assets consist of:

Paid in capital $ 287,598,346

Undistributed net investment income 5,295,341

Accumulated undistributed net realized gain (loss) on (6,192,182)
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on 23,443,297
investments and assets and liabilities in foreign
currencies

NET ASSETS, for 23,925,456 shares outstanding $ 310,144,802

NET ASSET VALUE, offering price and redemption price per $12.96
share ($310,144,802 (divided by) 23,925,456 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1996

INVESTMENT INCOME $ 19,448,602
Interest Income

EXPENSES

Management fee $ 1,541,411

Transfer agent fees 473,605

Accounting fees and expenses 167,132

Non-interested trustees' compensation 830

Custodian fees and expenses 85,567

Registration fees 50,835

Audit 82,168

Legal 4,137

Interest 5,856

Miscellaneous 5,397

Total expenses before reductions 2,416,938

Expense reductions (8,690) 2,408,248

NET INVESTMENT INCOME 17,040,354

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

Investment securities 47,248,855

Foreign currency transactions (67,310) 47,181,545

Change in net unrealized appreciation (depreciation) on:

Investment securities 11,369,069

Assets and liabilities in foreign currencies 2,447 11,371,516

NET GAIN (LOSS) 58,553,061

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 75,593,415
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1995

INCREASE (DECREASE) IN NET ASSETS

Operations $ 17,040,354 $ 15,583,912
Net investment income

Net realized gain (loss) 47,181,545 (31,111,821)

Change in net unrealized appreciation (depreciation) 11,371,516 27,836,979

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 75,593,415 12,309,070
FROM OPERATIONS

Distributions to shareholders from net investment income (18,678,021) (16,705,028)

Share transactions 249,711,880 196,063,449
Net proceeds from sales of shares

Reinvestment of distributions 16,989,502 15,014,270

Cost of shares redeemed (190,785,299) (209,771,056)

Redemption fees 813,848 474,977

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 76,729,931 1,781,640
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 133,645,325 (2,614,318)

NET ASSETS

Beginning of period 176,499,477 179,113,795

End of period (including undistributed net investment $ 310,144,802 $ 176,499,477
income of $5,295,341 and $5,102,448, respectively)

OTHER INFORMATION
Shares

Sold 21,889,153 22,179,711

Issued in reinvestment of distributions 1,486,315 1,656,239

Redeemed (17,185,701) (23,674,517)

Net increase (decrease) 6,189,767 161,433

</TABLE>

FINANCIAL HIGHLIGHTS
YEARS ENDED DECEMBER 31, MAY 4, 1993
(COMMENCEMEN
T
OF OPERATIONS)
TO
DECEMBER 31,

1996 1995 1994 1993

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

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

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

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

Total from investment operations 3.901 .639 (2.114) 3.788

Less Distributions

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

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

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

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

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

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

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

RATIOS AND SUPPLEMENTAL DATA

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

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

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

Portfolio turnover rate 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.
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1996

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, gains on investments or currency repatriation. 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 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 and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include
temporary book and tax basis differences which will reverse in a subsequent
period. Any taxable income or gain remaining at fiscal year end is
distributed in the following year.
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.
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 balances
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
are invested in one or more repurchase agreements that mature in 60 days or
less from the date of purchase for U.S. Treasury or Federal Agency
obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the 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.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the
SEC, the fund, along with other registered investment companies having
management contracts with FMR, may participate in an interfund lending
program. This program provides an alternative credit facility allowing the
fund to borrow from, or lend money to, other participating funds.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities 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 accompanying
balance sheet 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 and currency values. Writing puts and
buying calls tend to increase the fund's exposure to the underlying
instrument. Buying puts and writing calls tend to decrease the fund's
exposure to the underlying instrument, or hedge other fund investments. The
underlying face amount at value of any open options at period end is shown
in the schedule of investments under the caption "Purchased Options." This
amount reflects each contract's exposure to the underlying instrument at
period end. Losses may arise from
2. OPERATING POLICIES - CONTINUED
OPTIONS - CONTINUED
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.
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 $23,631,503 or 7.6% of net assets.
3. JOINT TRADING ACCOUNT.
At the end of the period, the fund had 20% or more of its total investments
in repurchase agreements through a joint trading account. These repurchase
agreements were with entities whose creditworthiness has been reviewed and
found satisfactory by FMR. The maturity values of the joint trading account
investments were $69,577,082 at 6 3/4%. The investments in repurchase
agreements through the joint trading account are summarized as follows:
SUMMARY OF JOINT TRADING
(DOLLAR AMOUNTS IN THOUSANDS)
Dated December 31, 1996, due January 2, 1997
Number of dealers or banks 20
Maximum amount with one dealer or bank 17.6%
Aggregate principal amount of agreements $19,054,743
Aggregate maturity amount of agreements $19,061,891
Aggregate market value of transferred assets $19,440,452
Coupon rates of transferred assets 0% to 15 3/4%
Maturity dates of transferred assets 1/15/97 to 11/15/26
4. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $853,490,941 and $819,068,909, respectively.
5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1100% to .3700% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .55%. For
the period, the management fee was equivalent to an annual rate of .69% 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 Investment Japan Ltd. In addition, FIIA
entered into a sub-advisory agreement with its subsidiary, Fidelity
International Investment
Advisors (U.K.) Limited (FIIAL U.K.). Under the 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 Co. (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 annual rate of .21%
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.
6. INTERFUND LENDING PROGRAM.
The fund participated in the interfund lending program as a borrower. The
maximum loan and the average daily loan balances during the period for
which loans were outstanding amounted to $7,822,000 and $4,020,556,
respectively. The weighted average interest rate was 5.83%.
7. EXPENSE REDUCTIONS.
The fund has entered into arrangements with its custodian and transfer
agent whereby interest earned on uninvested cash balances was used to
offset a portion of the fund's expenses. During the period, the fund's
custodian and transfer agent fees were reduced by $7,582 and $1,108,
respectively, under these arrangements.
8. CREDIT RISK.
The fund's relatively large investment in countries with limited or
developing capital markets may involve greater risks than investments in
more developed markets and the prices of such investments may be volatile.
The yields of emerging market debt obligations reflect, among other things,
perceived credit risk. The consequences of political, social or economic
changes in these markets may have disruptive effects on the market prices
of the fund's investments and the income they generate, as well as the
fund's ability to repatriate such amounts.
9. 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.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Investment Trust and the Shareholders of
Fidelity New Markets Income Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments (except for Moody's and Standard &
Poor's ratings), and the related statements of operations and of changes in
net assets and the financial highlights present fairly, in all material
respects, the financial position of Fidelity New Markets Income Fund (a
fund of Fidelity Investment Trust) at December 31, 1996, the results of its
operations for the year then ended, and the changes in its net assets and
the financial highlights for the periods indicated in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fidelity New Markets Income Fund's management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial statements
in accordance with generally accepted auditing standards which require that
we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at December 31, 1996
by correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 12, 1997
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)(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)(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)(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
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)(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)(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)(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
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
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For directions and hours,
please call 1-800-544-9797.
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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
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 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
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
2701 Drexel Drive
Houston, TX
1010 Lamar Street
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, 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
1775 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
J. Gary Burkhead, Senior Vice President
John H. Carlson, Vice President
Robert A. Lawrence, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank
Brooklyn, NY
FIDELITY'S TAXABLE BOND FUNDS
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Mortgage Securities
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
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
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(registered trademark)
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SM
AUTOMATED LINE FOR QUICKEST SERVICE

(2_FIDELITY_LOGOS)FIDELITY

GLOBAL BOND
FUND
ANNUAL REPORT
DECEMBER 31, 1996
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.

REPORT OF INDEPENDENT 28 The auditors' opinion.
ACCOUNTANTS

DISTRIBUTIONS 29

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 income
as reflected in the fund's 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 DECEMBER 31, 1996 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

Global Bond 3.35% 17.40% 98.14%

Salomon Brothers World Government 3.62% 50.90% 152.31%
Bond Index, Unhedged

Global Income Funds Average 10.40% 38.96% 129.98%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years or 10 years. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, the value of your investment would be $1,050. You can compare
the fund's returns to the performance of the 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 131 mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. over the past one year. Both benchmarks reflect
reinvestment of dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1996 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

Global Bond 3.35% 3.26% 7.08%

Salomon Brothers World Government 3.62% 8.58% 9.70%
Bond Index, Unhedged

Global Income Funds Average 10.40% 6.75% 8.56%

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
IMAHDR PRASUN SHR__CHT 19961231 19970114 163618 S00000000000001
Global Bond SB World Government Bond
00451 SB006
1986/12/31 10000.00 10000.00
1987/01/31 10311.24 10300.19
1987/02/28 10451.57 10461.77
1987/03/31 10698.66 10703.84
1987/04/30 10786.19 10826.47
1987/05/31 10625.67 10719.17
1987/06/30 10585.27 10632.94
1987/07/31 10339.13 10420.90
1987/08/31 10556.94 10578.02
1987/09/30 10392.69 10280.39
1987/10/31 10975.54 10972.73
1987/11/30 11449.59 11354.03
1987/12/31 11913.69 11840.71
1988/01/31 11584.23 11776.20
1988/02/29 11669.26 11879.03
1988/03/31 11956.20 12091.08
1988/04/30 11945.58 12032.32
1988/05/31 11892.44 11919.27
1988/06/30 11764.91 11659.32
1988/07/31 11775.53 11588.43
1988/08/31 11690.51 11458.77
1988/09/30 11828.67 11754.49
1988/10/31 12190.02 12297.37
1988/11/30 12413.20 12485.79
1988/12/31 12350.32 12358.69
1989/01/31 12315.76 12177.94
1989/02/28 12212.07 12186.24
1989/03/31 12177.51 12016.99
1989/04/30 12338.80 12176.02
1989/05/31 12131.43 11919.27
1989/06/30 12384.89 12158.78
1989/07/31 12788.12 12712.52
1989/08/31 12603.78 12285.24
1989/09/30 12753.55 12518.36
1989/10/31 12926.37 12623.11
1989/11/30 13064.62 12737.43
1989/12/31 13329.59 12893.27
1990/01/31 13293.50 12722.74
1990/02/28 13125.08 12527.30
1990/03/31 13281.47 12403.40
1990/04/30 13281.47 12365.08
1990/05/31 13461.93 12775.76
1990/06/30 13750.66 13010.16
1990/07/31 14231.87 13417.64
1990/08/31 14147.66 13312.90
1990/09/30 14328.11 13461.71
1990/10/31 14664.96 14063.36
1990/11/30 14821.35 14296.48
1990/12/31 14966.02 14437.63
1991/01/31 15294.80 14798.49
1991/02/28 15439.46 14802.96
1991/03/31 15229.04 14265.18
1991/04/30 15439.46 14484.89
1991/05/31 15623.57 14466.37
1991/06/30 15439.46 14315.00
1991/07/31 15597.48 14620.94
1991/08/31 15744.37 14903.88
1991/09/30 16105.47 15487.00
1991/10/31 16323.48 15649.23
1991/11/30 16241.73 15893.85
1991/12/31 16877.42 16720.32
1992/01/31 16707.23 16423.33
1992/02/29 16778.14 16331.99
1992/03/31 16749.97 16158.91
1992/04/30 16977.66 16274.51
1992/05/31 17290.75 16773.97
1992/06/30 17505.10 17243.41
1992/07/31 17767.43 17645.14
1992/08/31 18025.90 18138.85
1992/09/30 17774.98 18320.88
1992/10/31 17659.43 17823.34
1992/11/30 17394.30 17540.40
1992/12/31 17619.52 17645.14
1993/01/31 17823.07 17952.99
1993/02/28 18097.52 18306.19
1993/03/31 18496.21 18587.21
1993/04/30 18672.10 18980.01
1993/05/31 19015.32 19170.34
1993/06/30 19397.07 19129.46
1993/07/31 19692.25 19183.75
1993/08/31 20189.71 19760.49
1993/09/30 20304.78 19994.89
1993/10/31 20830.76 19961.04
1993/11/30 20764.44 19817.97
1993/12/31 21479.33 19986.59
1994/01/31 21713.86 20147.54
1994/02/28 20531.66 20015.97
1994/03/31 19053.47 19987.23
1994/04/30 18678.26 20010.22
1994/05/31 18782.43 19834.58
1994/06/30 17973.21 20120.71
1994/07/31 18300.43 20281.02
1994/08/31 18527.75 20210.77
1994/09/30 18528.69 20357.03
1994/10/31 18613.12 20683.40
1994/11/30 18690.13 20399.18
1994/12/31 17975.74 20455.39
1995/01/31 17818.85 20884.59
1995/02/28 17768.50 21419.17
1995/03/31 17884.41 22691.45
1995/04/30 18186.00 23111.71
1995/05/31 18734.45 23761.90
1995/06/30 18909.95 23901.77
1995/07/31 18874.86 23957.97
1995/08/31 18291.87 23134.70
1995/09/30 18608.17 23651.40
1995/10/31 18836.41 23827.68
1995/11/30 18963.79 24097.21
1995/12/31 19172.22 24349.49
1996/01/31 18934.57 24048.67
1996/02/29 18942.90 23926.04
1996/03/31 18905.61 23892.83
1996/04/30 18838.01 23797.66
1996/05/31 18850.84 23802.77
1996/06/30 18959.13 23989.91
1996/07/31 19288.66 24449.77
1996/08/31 19321.18 24544.93
1996/09/30 19411.83 24644.57
1996/10/31 19700.70 25105.70
1996/11/30 19987.62 25436.55
1996/12/31 19834.49 25230.89
IMATRL PRASUN SHR__CHT 19961231 19970114 163621 R00000000000123

$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Global Bond Fund on December 31, 1986. As the chart shows, by
December 31, 1996, the value of the investment would have grown to $19,814
- - a 98.14% 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 $25,231 - a 152.31% increase.
UNDERSTANDING
PERFORMANCE
Many markets around the
globe offer the potential for
significant growth over time;
however, investing in foreign
markets means assuming
greater risks than investing in
the United States. Factors like
changes in a country's financial
markets, its local political and
economic climate, and the
fluctuating value of its currency
create these risks. For these
reasons an international fund's
performance may be more
volatile than a fund that invests
exclusively in the United
States.
(checkmark)
DIVIDENDS AND YIELD
PERIODS ENDED DECEMBER 31, 1996 PAST PAST 6 PAST 1
MONTH MONTHS YEAR

Dividends per share A 4.46(cents) 26.74(cents) 54.61(cents)

Annualized dividend rate 5.39% 5.47% 5.64%

30-day annualized yield 4.12% - -

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 $9.74
over the past month, $9.69 over the past six months and $9.68 over the past
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.
A NON-TAXABLE DIVIDENDS: DIVIDENDS PAID ARE BASED ON THE FUND'S INVESTMENT
INCOME AND DO NOT REFLECT CURRENCY-RELATED LOSSES. AS A RESULT OF CURRENCY
LOSSES, DIVIDENDS OF APPROXIMATELY 45(CENTS) PER SHARE PAID DURING 1996
WERE A NON-TAXABLE RETURN OF CAPITAL. THE EXACT NON-TAXABLE AMOUNT TO USE
IN PREPARING YOUR INCOME TAX RETURN WILL DEPEND ON YOUR SHARE ACTIVITY AND
WAS REPORTED TO YOU IN JANUARY, 1997.
FUND TALK: THE MANAGERS' OVERVIEW

MARKET RECAP
While low inflation and moderate
growth helped provide a positive
backdrop for most bond markets in
1996, performance in overseas
bond markets was mixed. The
Salomon Brothers World
Government Bond Index - a
measure of government bond
market performance in developed
nations - returned 7.11% for the
12 months ended December 31,
1996. In Europe, focus centered
on the continuing progress toward
the European Monetary Union
(EMU). Attractive opportunities
arose as countries worked to meet
the requirements for joining the
EMU. Many European nations -
especially Italy, Spain and Sweden
- - boasted strong returns.
However, Germany and Japan -
two of the larger components of the
Salomon Brothers World
Government Bond Index -
experienced currency problems
that hurt returns. When Japan's
trade surplus diminished during the
year, assets flowed out of the
country, with investors seeking
higher-yielding opportunities
elsewhere. In stark contrast to the
developed world, the often-volatile
emerging debt markets enjoyed a
particularly strong year, helped by
inflows of foreign capital, low
interest rates and the
implementation of country-specific
reforms - especially in Latin
America. The JP Morgan
Emerging Markets Bond Index -
of which Latin America is a large
component - posted a return of
34.16% during the period. In the
U.S., uncertainty over the direction
of the economy led to mixed bond
market performance. The Lehman
Brothers Aggregate Bond Index
returned 3.63% in 1996.
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. IAN, HOW DID THE FUND PERFORM?
I.S. For the year ended December 31, 1996, the fund had a total return of
3.35%, trailing the Salomon Brothers World Government Bond Index, Unhedged,
which returned 3.62%. The global income funds average had a return of
10.40% during the same period, according to Lipper Analytical Services.
Q. WHAT FACTORS AFFECTED PERFORMANCE?
I.S. Because we manage the fund to have approximately the same duration
characteristics as the Salomon Brothers index, we feel the index is a more
accurate comparison for the fund than the peer group. The peer group
comprises a variety of funds: some can invest in emerging markets, which
had a terrific year, and many hedge their investments back into U.S. dollar
terms. Global Bond, however, does not purchase below-investment-grade
securities and does not engage in hedging. Any value that we add will
almost assuredly come from individual security selection. In terms of
specific performance factors, European countries such as Italy, Spain and
Sweden turned in strong years. Japan, however, continued to struggle.
Q. WHAT WAS THE STORY WITH JAPAN?
I.S. The return of the Japanese component of the Salomon Brothers index was
approximately -5% in 1996. Since the fund maintains a significant weighting
in Japanese issues, this exposure hurt. Japan's main source of
consternation was the yen. While the local bond market itself performed
pretty well, the yen's lackluster performance was the dominant story. I'd
point to a couple of reasons for the yen's slide. In 1996, Japan's trade
surplus shrank, and a lot of money flowed out of the country. These
developments, combined with low interest rates, encouraged investors to
look elsewhere for higher-yielding opportunities. The Japanese government
expressed its concern as the period came to a close, but investors still
lacked confidence in the country's economy.
Q. CAN YOU GIVE US AN UPDATE ON THE PROGRESS OF THE EUROPEAN MONETARY UNION
(EMU)?
I.S. It's still not clear which countries are going to be members of the
EMU. The next milestone in the process will be the Amsterdam summit, where
decisions will be made concerning voting structures and membership
enlargement. In order to take part in the EMU - which will establish a
uniform European currency - countries are required to fulfill certain steps
outlined by the Maastricht Treaty. As countries have moved to meet these
requirements, we've seen a "convergence trade" throughout Europe - yield
spreads between countries such as Sweden, Italy and Spain have narrowed
relative to the larger markets of Germany and the U.S. This development has
made for attractive investment opportunities.
Q. CHRIS, CAN YOU GIVE AN OVERVIEW OF THE U.S. BOND MARKET?
C.T. In 1996, the U.S. bond market saw shifting investor sentiment
regarding monetary policy, due mostly to fluctuating economic growth
patterns. Throughout the period, the non-government sectors of the market,
namely corporate and mortgage-backed bonds, performed well. The mortgage
sector experienced low levels of spread volatility, as the market's
prepayment expectations proved reasonably accurate. In the corporate area,
we saw an overall tightening of quality spreads despite an increase in
issuance. New issuance was concentrated in certain pockets of the sector,
primarily in yankee bonds and banks, and most of the issuance was
longer-term. Overall, demand for corporates absorbed the new supply,
translating into good performance. Going forward, I expect more of the
same. Demand conditions should continue to favor the corporate and mortgage
sectors and, from a technical standpoint, market conditions should be
supportive. I'll continue to emphasize yield spread opportunities in
non-government sectors.
Q. WHAT'S IN STORE IN THE COMING MONTHS, IAN?
I.S. One of the key indicators when monitoring the world's bond markets is
inflation. Though investors are always concerned about potential upticks in
inflation at this stage of the economic cycle, I believe the U.S. and other
governments will respond to ensure that inflation levels remain moderate.
We'll continue to combine quantitative analysis and our credit research
capabilities as we seek attractive 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.

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.
TOP COUNTRIES AS OF DECEMBER 31, 1996
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
SIX MONTHS AGO

United States 32 33

Germany 14 16

France 8 8

United Kingdom 7 6

Netherlands 4 4

TOP COUNTRIES ARE BASED ON THE LOCATION OF THE ISSUER OF EACH SECURITY,
INDICATING WHERE THE FUND IS EXPOSED TO POLITICAL AND CREDIT RISKS.
PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF OPEN FUTURES CONTRACTS, IF
APPLICABLE.
TOP INTEREST RATE EXPOSURES AS OF DECEMBER 31, 1996
(ESTIMATED, BY COUNTRY) % OF FUND'S % OF INTEREST
TOTAL INTEREST RATE EXPOSURE
RATE EXPOSURE SIX MONTHS AGO

United States 32 33

Japan 21 22

Germany 10 10

United Kingdom 8 7

France 8 8

FIDELITY ESTIMATES INTEREST-RATE EXPOSURES BASED ON THE DURATION, OR
INTEREST RATE SENSITIVITY, OF THE FUND'S HOLDINGS. AS OF DECEMBER 31, 1996,
THE FUND WAS MOST SENSITIVE TO INTEREST RATE MOVEMENTS IN THE U.S., WHICH
ACCOUNT FOR APPROXIMATELY 32% OF THE FUND'S INTEREST RATE EXPOSURE.
TOP CURRENCY EXPOSURES AS OF DECEMBER 31, 1996
(ESTIMATED, BY CURRENCY) % OF FUND'S % OF NET ASSETS
NET ASSETS SIX MONTHS AGO

U.S. dollar 32 32

Japanese yen 19 19

German deutsche mark 11 11

French franc 8 7

Italian lira 7 6

THE JAPANESE YEN, AT APPROXIMATELY 19% OF NET ASSETS, WAS THE FUND'S
LARGEST FOREIGN CURRENCY EXPOSURE AS OF DECEMBER 31, 1996.
INVESTMENTS DECEMBER 31, 1996

Showing Percentage of Total Value of Investment in Securities

CORPORATE BONDS - 26.7%
MOODY'S RATINGS (C) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
AUSTRALIA - 1.2%
Queensland Treasury Corp.:
8%, 8/14/01 Aaa AUD 1,390,000 $ 1,145,812
8%, 5/14/03 Aaa AUD 350,000 287,804
1,433,616
CANADA - 1.2%
British Columbia Hydro & Power Authority
yankee 12 1/2%, 1/15/14 Aa2 140,000 161,699
Ford Credit CDA Ltd. 8 3/4%, 3/20/00 A1 CAD 1,000,000 796,002
Methanex Corp. yankee 8 7/8%, 11/15/01 A2 480,000 515,371
1,473,072
FINLAND - 0.3%
Merita Bank Ltd. yankee 6 1/2%, 1/15/06 A3 350,000 333,442
GERMANY - 3.9%
Deutsche Bank Finance NV
4 1/8%, 11/15/99 (e) Aa1 JPY 110,000 1,027,615
Lake Baden Wuerttemberg Finance NV
euro 3 3/4%, 6/21/99 (e) Aaa JPY 400,000 3,677,792
4,705,407
JAPAN - 4.3%
Export-Import Bank of Japan euro
2 7/8%, 7/28/05 (e) Aaa JPY 580,000 5,079,689
KOREA (SOUTH) - 0.4%
Korea Development Bank:
9.29%, 3/13/98 A1 120,000 124,550
yankee:
9 1/4%, 6/15/98 A1 150,000 156,699
7%, 7/15/99 A1 150,000 152,274
433,523
NETHERLANDS - 0.9%
Bank Voor Nederlandse he Gemeenten
NV 6 1/2%, 8/25/99 AAA DEM 1,000,000 687,642
Ford Capital BV:
gtd. 9%, 8/15/98 A1 250,000 260,808
yankee 9 3/8%, 1/1/98 A1 100,000 103,291
1,051,741
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
SWEDEN - 0.8%
Swedish National Housing Finance Corp.
9%, 6/15/01 A1 SEK 5,800,000 $ 946,820
UNITED KINGDOM - 2.6%
Ford Credit Europe PLC:
11.70%, 11/18/98 (e) A1 ITL 1,185,000 845,035
euro 8 5/8%, 11/21/97 A1 GBP 200,000 346,454
Guaranteed Export Finance Corp. PLC euro
10 5/8%, 9/15/01 - GBP 250,000 477,071
Lloyds Bank PLC 7 3/8%, 3/11/04 Aa3 GBP 500,000 823,525
Midland Bank PLC yankee 7 5/8%, 6/15/06 A1 120,000 124,255
Rolls-Royce PLC 11 5/8%, 7/30/98 A3 GBP 250,000 454,630
3,070,970
UNITED STATES OF AMERICA - 11.1%
AMR Corp. 7 3/4%, 12/1/97 Baa3 200,000 202,652
AT&T Capital Corp. 6.02%, 12/4/98 Baa3 240,000 239,057
Aristar, Inc. 7 1/2%, 7/1/99 Baa1 250,000 256,343
Bank of Boston Corp. 9 1/2%, 8/15/97 Baa1 320,000 326,918
Banponce Financial Corp. 6.34%, 3/29/99 A3 70,000 69,889
Banponce Corp.:
5 3/4%, 3/1/99 A3 130,000 128,019
6.378%, 4/8/99 A3 120,000 119,497
Columbia Gas System, Inc. 6.61%, 11/28/02 Baa3 130,000 128,993
Comdisco, Inc.:
6 1/2%, 6/15/00 Baa1 600,000 598,998
5 3/4%, 2/15/01 Baa1 200,000 193,598
Edison Mission Energy Funding Corp.
6.77%, 9/15/03 (c) Baa1 260,000 260,437
Enron Corp.:
10%, 6/1/98 Baa2 100,000 105,040
8 1/2%, 2/1/00 Baa2 90,000 90,153
First Fidelity Bancorp.:
8 1/2%, 4/1/98 A2 240,000 246,610
9 5/8%, 8/15/99 A2 40,000 43,059
First Hawaiian, Inc. 6 1/4%, 8/15/00 Baa1 270,000 265,904
First Tennessee National Corp.
6 3/4%, 11/15/05 Baa1 100,000 97,065
Firstar Corp. 7.15%, 9/1/00 A3 320,000 322,995
Fleet Financial Group, Inc. 7 5/8%, 12/1/99 A3 40,000 41,282
Ford Credit Grantor Trust 5.90%, 10/15/00 Aaa 477,090 477,015
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
UNITED STATES OF AMERICA - CONTINUED
General Electric Capital Corp.
7 3/8%, 2/8/99 (e) Aaa ITL 2,150,000 $ 1,445,374
Golden West Financial Corp. 9.15%, 5/23/98 A3 150,000 155,690
Green Tree Financial Corp.:
6.45%, 5/15/27 Aaa 160,000 160,600
6.65%, 7/15/27 Aaa 180,000 181,292
HSBC Americas, Inc. 7%, 11/1/06 Baa1 150,000 148,080
Kansallis-Osake-Pankki 10%, 5/1/02 A3 100,000 113,490
Levi Strauss & Co. 6.80%, 11/1/03 (c) Baa2 350,000 348,131
Limited, Inc. 9 1/8%, 2/1/01 Baa2 80,000 85,525
MBNA Master Credit Card Trust
7 1/4%, 6/15/99 Aaa 390,000 391,825
MCN Investment Corp.:
5.84%, 2/1/99 Baa2 210,000 208,181
6.03%, 2/1/01 Baa2 280,000 274,075
Manufacturers Hanover Corp.
8 1/2%, 2/15/99 A2 130,000 135,612
Massachusetts Electric Co. 6.78%, 11/20/06 A2 250,000 245,800
Morgan Guaranty Trust Co.
11 3/8%, 10/6/97 (e) Aa1 ITL 2,000,000 1,364,296
Occidental Petroleum Corp.:
5.85%, 11/9/98 Baa3 90,000 89,274
5.90%, 11/9/98 Baa3 200,000 198,556
5.93%, 11/9/98 Baa3 130,000 129,129
6 3/4%, 9/16/99 Baa3 120,000 120,695
6.09%, 11/29/99 Baa3 150,000 148,188
Premier Auto Trust 6%, 5/6/00 Aaa 110,000 110,000
Provident Bank 6 1/8%, 12/15/00 A3 510,000 501,187
Quaker Oats Co.:
6.91%, 5/15/03 A3 80,000 80,259
7.51%, 5/2/05 A3 80,000 82,591
Ralcorp Holdings, Inc. 8 3/4%, 9/15/04 Ba1 225,000 245,869
Shawmut National Corp. 8 5/8%, 12/15/99 A3 290,000 305,498
Southwest Gas Corp. 9 3/4%, 6/15/02 Baa2 90,000 101,506
Standard Credit Card Master Trust I:
5 1/2%, 9/7/98 participation certificate A2 85,000 84,761
6 1/4%, 9/7/98 A2 650,000 651,117
Time Warner, Inc. 7.95%, 2/1/00 Ba1 260,000 268,499
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
UNITED STATES OF AMERICA - CONTINUED
Union Planters Corp. 6 3/4%, 11/1/05 Baa2 $ 200,000 $ 193,892
WFS Financial Owner Trust 7.05%, 11/20/03 Aaa 270,000 271,636
360 Degrees Communications Co.
7 1/8%, 3/1/03 Ba2 200,000 197,582
13,251,734
TOTAL CORPORATE BONDS
(Cost $32,266,762) 31,780,014
GOVERNMENT OBLIGATIONS (D) - 65.1%
AUSTRIA - 4.1%
Austrian Republic euro (e):
11%, 12/16/97 Aaa ITL 800,000 548,090
4 1/2 %, 9/28/05 Aaa JPY 440,000 4,339,284
4,887,374
BELGIUM - 2.7%
Belgian Kingdom:
7%, 4/29/99 AAA BEF 25,000,000 845,266
9%, 3/28/03 AAA BEF 35,000,000 1,323,079
7 1/2%, 7/29/08 AAA BEF 30,000,000 1,045,886
3,214,231
CANADA - 2.5%
Canadian Government:
8 1/2%, 4/1/02 Aa1 CAD 1,150,000 948,120
7 1/2%, 12/1/03 Aa1 CAD 1,410,000 1,113,621
7%, 12/1/06 Aa1 CAD 1,200,000 915,636
2,977,377
DENMARK - 1.7%
Danish Kingdom:
9%, 11/15/98 Aaa DKK 2,500,000 461,193
8%, 3/15/06 Aaa DKK 4,000,000 746,459
Bullet:
9%, 11/15/00 Aaa DKK 1,750,000 338,095
8%, 5/15/03 Aaa DKK 2,700,000 508,257
2,054,004
GOVERNMENT OBLIGATIONS (D) - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
FINLAND - 0.5%
Finish Government 9 1/2%, 3/15/04 AAA FIM 2,000,000 $ 526,563
FRANCE - 7.5%
French Government:
8 1/2%, 12/26/12 Aaa FRF 12,000,000 2,822,890
OAT:
9.70%, 12/13/97 Aaa FRF 9,750,000 1,984,566
9 1/2%, 1/25/01 Aaa FRF 9,500,000 2,168,343
8 1/2%, 4/25/03 Aaa FRF 2,200,000 498,624
5 1/2%, 4/25/04 Aaa FRF 7,500,000 1,451,012
8,925,435
GERMANY - 10.5%
German Federal Republic:
6 1/8%, 3/20/98 Aaa DEM 3,300,000 2,211,203
8 3/8%, 5/21/01 Aaa DEM 3,600,000 2,673,318
8%, 1/21/02 Aaa DEM 1,700,000 1,254,350
6 1/2%, 10/14/05 Aaa DEM 1,500,000 1,019,981
6%, 6/20/16 Aaa DEM 1,500,000 919,170
Treuhandstalt:
7 3/4%, 10/1/02 Aaa DEM 3,600,000 2,634,317
6 5/8%, 7/9/03 Aaa DEM 2,500,000 1,731,268
12,443,607
ITALY - 3.3%
Italian Republic (e):
10 1/2%, 7/15/00 Aa3 ITL 650,000 479,750
10 1/2%, 9/1/05 Aa3 ITL 4,400,000 3,461,454
3,941,204
NETHERLANDS - 3.5%
Dutch Government:
6 3/4%, 2/15/99 AAA NLG 2,600,000 1,598,843
7%, 6/15/05 AAA NLG 2,500,000 1,576,694
8 1/4%, 2/15/07 AAA NLG 1,400,000 959,174
4,134,711
GOVERNMENT OBLIGATIONS (D) - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
SPAIN - 2.8%
Spanish Kingdom (e):
11.45%, 8/30/98 AAA ESP 120,000 $ 997,767
10.90%, 8/30/03 AAA ESP 200,000 1,899,761
10.15%, 1/31/06 AAA ESP 50,000 469,128
3,366,656
SWEDEN - 1.0%
Swedish Kingdom:
11%, 1/21/99 Aa1 SEK 3,000,000 492,069
6%, 2/9/05 Aa1 SEK 5,200,000 735,705
1,227,774
UNITED KINGDOM - 4.2%
United Kingdom, Great Britain & Northern Ireland:
11 3/4%, 1/22/07 Aaa GBP 900,000 1,860,639
9%, 10/13/08 Aaa GBP 750,000 1,424,467
8 3/4%, 8/25/17 Aaa GBP 900,000 1,710,805
4,995,911
UNITED STATES OF AMERICA - 20.8%
Farm Credit System Financial Assistance
Corporation 9 3/8%, 7/21/03 Aaa 310,000 356,791
Federal Farm Credit Bank:
6.56%, 8/5/02 Aaa 140,000 140,832
6.20%, 9/23/02 Aaa 210,000 207,703
8.06%, 1/4/05 Aaa 1,000,000 1,083,440
Federal Home Loan Mortgage Corporation
7%, 6/1/01 Aaa 108,520 109,265
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 556,055 595,191
Class 2-E, 9.40%, 5/15/02 Aaa 721,479 773,721
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 66,844 64,118
Series 1993-D, 5.23%, 5/15/05 Aaa 115,745 110,681
Series 1994-A, 7.12%, 4/15/06 Aaa 128,277 131,403
Series 1994-C, 6.61%, 9/15/99 Aaa 37,623 37,930
Series 1994-F, 8.187%, 12/15/04 Aaa 185,876 196,098
GOVERNMENT OBLIGATIONS (D) - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
UNITED STATES OF AMERICA - CONTINUED
Guaranteed Trade Trust Certificates (assets of Trust
guaranteed by U.S. Government through Export-
Import Bank) Series 1994-A, 7.39%, 6/26/06 Aaa $ 126,667 $ 130,970
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 130,000 131,624
Overseas Private Investment Corp. (U.S.
Government guaranteed participation certificate)
Series 1994-195, 6.08%, 8/15/04 (callable) Aaa 230,000 225,816
Private Export Funding Corp. secured
6.90%, 1/31/03 Aaa 100,000 101,874
State of Israel (guaranteed by U.S. Government
through Agency for International Development):
8%, 11/15/01 Aaa 740,000 789,018
6 1/8%, 3/15/03 Aaa 162,000 158,682
U.S. Treasury:
9 1/4%, 8/15/98 Aaa 2,605,000 2,740,538
7 3/4%, 12/31/99 Aaa 334,000 349,344
8 1/2%, 2/15/00 Aaa 1,410,000 1,505,838
7 7/8%, 8/15/01 Aaa 1,530,000 1,630,888
10 3/4%, 5/15/03 Aaa 2,200,000 2,706,682
11 5/8%, 11/15/04 Aaa 500,000 660,155
12 3/4%, 11/15/10 (callable) Aaa 1,100,000 1,557,017
8 7/8%, 2/15/19 Aaa 6,653,000 8,259,101
24,754,720
TOTAL GOVERNMENT OBLIGATIONS
(Cost $77,135,168) 77,449,567
SUPRANATIONAL OBLIGATIONS - 7.5%
African Development Bank
7 3/4%, 12/15/01 Aa1 340,000 356,738
Asian Development Bank (e):
3 1/8%, 6/29/05 Aaa JPY 130,000 1,160,974
euro 5%, 2/5/03 Aaa JPY 280,000 2,802,415
SUPRANATIONAL OBLIGATIONS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
European Investment Bank (e):
4 1/4%, 7/16/99 Aaa JPY 130,000 $ 1,181,828
5 7/8%, 11/26/99 Aaa JPY 200,000 1,957,740
International Bank Reconstruction &
Development 4 3/4%, 1/15/04 (e) Aaa JPY 150,000 1,505,175
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost $9,238,870) 8,964,870
COMMERCIAL MORTGAGE SECURITIES - 0.4%
UNITED STATES OF AMERICA - 0.4%
Resolution Trust Corp. Series 1995-C2
Class A-1B, 6 1/4%, 5/25/27 Aaa 190,000 188,338
Structured Asset Securities Corp.:
Series 1995-C4 Class A-1A, 6.90%, 6/25/26 AAA 129,627 129,810
Series 1996 Class A-1B, 5.751%, 2/25/28 AAA 108,514 107,429
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $428,237) 425,577
CASH EQUIVALENTS - 0.3%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 6.75%, dated
12/31/96 due 1/2/97 $ 318,119 318,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $119,387,037) $ 118,938,028
CURRENCY ABBREVIATIONS
AUD - Australian dollar
BEF - Belgian franc
CAD - Canadian dollar
DEM - German deutsche mark
DKK - Danish krone
ESP - Spanish peseta
FIM - Finnish markka
FRF - French franc
GBP - British pound
ITL - Italian lira
JPY - Japanese yen
NLG - Dutch guilder
SEK - Swedish krona
LEGEND
9. Principal amount is stated in United States dollars unless otherwise
noted.
10. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
11. 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 $608,568 or 0.5% of net
assets.
12. Some foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
13. Principal amount in thousands.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 84.5% AAA, AA, A 90.3%
Baa 4.0% BBB 6.6%
Ba 0.6% BB 0.2%
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 0.4%.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities (Unaudited)
Aerospace & Defense 0.4%
Basic Industries 0.4
Cash Equivalents 0.3
Commercial Mortgage Securities 0.4
Durables 0.3
Energy 0.6
Finance 21.1
Government Obligations 65.1
Media & Leisure 0.2
Nondurables 0.3
Retail & Wholesale 0.1
Services 1.5
Supranational Obligations 7.5
Technology 0.7
Transportation 0.2
Utilities 0.9
100.0%
INCOME TAX INFORMATION
At December 31, 1996, the aggregate cost of investment securities for
income tax purposes was $119,574,972. Net unrealized depreciation
aggregated $636,944, of which $3,446,020 related to appreciated investment
securities and $4,082,964 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>
DECEMBER 31, 1996

ASSETS

Investment in securities, at value (including repurchase $ 118,938,028
agreements of $318,000) (cost $119,387,037) -
See accompanying schedule

Cash 561

Receivable for investments sold 3,032,599

Interest receivable 3,097,323

Other receivables 2,151

TOTAL ASSETS 125,070,662

LIABILITIES

Payable for investments purchased $ 2,438,977

Payable for fund shares redeemed 8,783,664

Accrued management fee 72,317

Other payables and accrued expenses 144,807

TOTAL LIABILITIES 11,439,765

NET ASSETS $ 113,630,897

Net Assets consist of:

Paid in capital $ 209,604,127

Distributions in excess of net investment income (573,011)

Accumulated undistributed net realized gain (loss) on (94,927,910)
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on (472,309)
investments and assets and liabilities in foreign
currencies

NET ASSETS, for 11,696,899 shares outstanding $ 113,630,897

NET ASSET VALUE, offering price and redemption price per $9.71
share ($113,630,897 (divided by) 11,696,899 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1996

INVESTMENT INCOME $ 10,705,441
Interest

EXPENSES

Management fee $ 1,018,449

Transfer agent fees 498,152

Accounting fees and expenses 107,720

Non-interested trustees' compensation 5,091

Custodian fees and expenses 35,148

Registration fees 25,553

Audit 84,506

Legal 4,052

Interest 5,799

Miscellaneous 7,035

Total expenses before reductions 1,791,505

Expense reductions (2,070) 1,789,435

NET INVESTMENT INCOME 8,916,006

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

Investment securities (6,835,363)

Foreign currency transactions (179,985) (7,015,348)

Change in net unrealized appreciation (depreciation) on:

Investment securities 1,149,664

Assets and liabilities in foreign currencies 32,596 1,182,260

NET GAIN (LOSS) (5,833,088)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 3,082,918
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1995

INCREASE (DECREASE) IN NET ASSETS

Operations $ 8,916,006 $ 15,711,403
Net investment income

Net realized gain (loss) (7,015,348) (4,219,694)

Change in net unrealized appreciation (depreciation) 1,182,260 1,926,842

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 3,082,918 13,418,551
FROM OPERATIONS

Distributions to shareholders (1,498,070) (13,319,937)
From net investment income

Return of capital (6,776,101) (1,562,828)

TOTAL DISTRIBUTIONS (8,274,171) (14,882,765)

Share transactions 84,390,375 156,242,005
Net proceeds from sales of shares

Reinvestment of distributions 7,117,696 13,157,522

Cost of shares redeemed (169,547,782) (353,875,967)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING (78,039,711) (184,476,440)
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS (83,230,964) (185,940,654)

NET ASSETS

Beginning of period 196,861,861 382,802,515

End of period (including distributions in excess of net $ 113,630,897 $ 196,861,861
investment income of $573,011 and $1,052,357,
respectively)

OTHER INFORMATION
Shares

Sold 8,703,025 15,810,366

Issued in reinvestment of distributions 735,927 1,337,071

Redeemed (17,554,058) (36,076,255)

Net increase (decrease) (8,115,106) (18,928,818)

</TABLE>

FINANCIAL HIGHLIGHTS
YEARS ENDED DECEMBER 31, TWO MONTHS YEAR
ENDED ENDED
DECEMBER 31, OCTOBER
31,

1996 1995 1994 1993 E 1992 1992 D

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

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

Income from .550 .745 F .569 F .731 .145 .839
Investment
Operations
Net investment
income

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

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

operations

Less Distributions

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

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

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

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

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

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

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

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

RATIOS AND SUPPLEMENTAL DATA

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

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

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

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

</TABLE>

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY
RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
D EFFECTIVE JULY 1, 1992, DIVIDENDS FROM NET INVESTMENT INCOME WERE
DECLARED DAILY AND PAID MONTHLY.
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 CERTAIN PER-SHARE AMOUNTS HAVE BEEN RECLASSIFIED TO PERMIT COMPARISON
WITH CURRENT YEAR PRESENTATION.
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1996

10. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Global Bond Fund (the fund) is a fund of Fidelity Investment Trust
(the trust) and is authorized to issue an unlimited number of shares. The
trust is registered under the Investment Company Act of 1940, as amended
(the 1940 Act), as an open-end management investment company organized as a
Massachusetts business trust. The 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, gains on investments or currency repatriation. 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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
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, 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 and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). 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 periods ended December 31, 1995 and 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. (The tax treatment of distributions
for the 1996 calendar year was reported to shareholders prior to February
1, 1997.)
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.
11. 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 balances are invested in
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
one or more repurchase agreements that mature in 60 days or less from the
date of purchase for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the 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).
12. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $128,419,226 and $194,493,459, respectively, of which U.S.
government and government agency obligations aggregated $63,282,846 and
$78,070,869, respectively.
13. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1100% to .3700% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .55%. For
the period, the management fee was equivalent to an annual 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.)
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
SUB-ADVISER FEE - CONTINUED
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 Co. (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 annual rate of .34%
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.
14. 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 $7,136,000 and $6,179,167,
respectively. The weighted average interest rate was 5.63%.
15. EXPENSE REDUCTIONS.
The fund has entered into arrangements with its custodian and transfer
agent whereby interest earned on uninvested cash balances was used to
offset a portion of the fund's expenses. During the period, the fund's
custodian and transfer agent fees were reduced by $1,161 and $909,
respectively, under these arrangements.
16. 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.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Investment Trust and the Shareholders of
Fidelity Global Bond Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Investment Trust: Fidelity Global Bond Fund, including the
schedule of portfolio investments, as of December 31, 1996, and the related
statement of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended and the
financial highlights for each of the four years in the period then ended,
for the two month period ended December 31, 1992 and the year ended October
31, 1992. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1996 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Investment Trust: Fidelity Global Bond Fund as of December 31,
1996, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the four years in the period then ended,
for the two month period ended December 31, 1992 and the year ended October
31, 1992, in conformity with generally accepted accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 13, 1997
DISTRIBUTIONS

A total of 15.58% of the dividends distributed during the fiscal year was
derived from interest on U.S. Government securities which is generally
exempt from state income tax.
The fund notified shareholders in January 1997 of the applicable percentage
for use in preparing 1996 income tax returns.
MANAGING YOUR INVESTMENTS

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
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
* INDEPENDENT TRUSTEES
CUSTODIAN
The Chase Manhattan Bank
Brooklyn, NY
FIDELITY'S TAXABLE BOND FUNDS
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Spartan Government Income
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Spartan Investment Grade Bond
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Spartan Short-Intermediate Government
Spartan Short-Term Bond
Target Timeline 1999, 2001 & 2003
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