SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 2-90649)
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 74 [X]
and
REGISTRATION STATEMENT (No. 811-4008)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 74 [X]
Fidelity Investment Trust
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: 617-563-7000
Arthur S. Loring, Secretary
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) immediately upon filing pursuant to paragraph (b).
(X) on (December 30, 1997) pursuant to paragraph (b).
( ) 60 days after filing pursuant to paragraph (a)(1).
( ) on ( ) pursuant to paragraph (a)(1) of Rule 485
( ) 75 days after filing pursuant to paragraph (a)(2).
( ) on ( ) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
( ) this post-effective amendment designates a new effective date
for a previously filed
post-effective amendment.
FIDELITY'S BROADLY DIVERSIFIED INTERNATIONAL EQUITY FUNDS
FIDELITY INTERNATIONAL GROWTH & INCOME FUND, FIDELITY DIVERSIFIED
INTERNATIONAL FUND, FIDELITY INTERNATIONAL VALUE FUND, FIDELITY
OVERSEAS FUND, AND FIDELITY WORLDWIDE FUND
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C>
1...................................... COVER PAGE
2A.................................... EXPENSES
B, C................................ CONTENTS; THE FUNDS AT A GLANCE; WHO MAY WANT TO
INVEST
3A.................................... FINANCIAL HIGHLIGHTS
B.................................... *
C,D................................... PERFORMANCE
4A I................................. CHARTER
II............................... THE FUNDS AT A GLANCE; INVESTMENT PRINCIPLES AND
RISKS
B..................................... INVESTMENT PRINCIPLES AND RISKS
C.................................... WHO MAY WANT TO INVEST; INVESTMENT PRINCIPLES AND
RISKS
5A.................................... CHARTER
B(I)................................ COVER PAGE: THE FUNDS AT A GLANCE; DOING BUSINESS
WITH FIDELITY; CHARTER
(II).............................. CHARTER
(III)........................... EXPENSES; BREAKDOWN OF EXPENSES
C................................ CHARTER
C, D................................ CHARTER; BREAKDOWN OF EXPENSES
E.................................... COVER PAGE; CHARTER
F.................................... EXPENSES
G(I).................................. CHARTER
(II)................................... *
5A.................................. PERFORMANCE
6A I................................. CHARTER
II................................ HOW TO BUY SHARES; HOW TO SELL SHARES; TRANSACTION
DETAILS; EXCHANGE RESTRICTIONS
III............................... CHARTER
B.................................... *
C.................................... EXCHANGE RESTRICTIONS; TRANSACTION DETAILS
D.................................... *
E.................................... DOING BUSINESS WITH FIDELITY; HOW TO BUY SHARES;
HOW TO SELL SHARES; INVESTOR SERVICES
F,G................................... DIVIDENDS, CAPITAL GAINS, AND TAXES
H...................................... *
7A.................................... COVER PAGE; CHARTER
B.................................... EXPENSES; HOW TO BUY SHARES; TRANSACTION DETAILS
C.................................... *
D.................................... HOW TO BUY SHARES
E.................................... *
F ................................ *
8...................................... HOW TO SELL SHARES; INVESTOR SERVICES; TRANSACTION
DETAILS; EXCHANGE RESTRICTIONS
9...................................... *
</TABLE>
* Not Applicable
CROSS REFERENCE SHEET
(continued)
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C>
10, 11.......................... COVER PAGE
12.................................... DESCRIPTION OF THE TRUST
13A - C............................ INVESTMENT POLICIES AND LIMITATIONS
D.................................. *
14A - C............................ TRUSTEES AND OFFICERS
15A.............................. *
B.................................. *
C.................................. TRUSTEES AND OFFICERS
16A I................................ FMR, PORTFOLIO TRANSACTIONS
II.............................. TRUSTEES AND OFFICERS
III............................. MANAGEMENT CONTRACTS
B................................. MANAGEMENT CONTRACTS
C, D............................. CONTRACTS WITH FMR AFFILIATES
E - G........................... *
H................................. DESCRIPTION OF THE TRUST
I................................. CONTRACTS WITH FMR AFFILIATES
17A - D............................ PORTFOLIO TRANSACTIONS
E.............................. *
18A.................................. DESCRIPTION OF THE TRUST
B................................. *
19A.................................. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
B.................................. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION;
VALUATION
C.................................. *
20.................................... DISTRIBUTIONS AND TAXES
21A, B.............................. CONTRACTS WITH FMR AFFILIATES
C................................. *
22A.............................. *
B.............................. PERFORMANCE
23.................................... FINANCIAL STATEMENTS
</TABLE>
* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how
each fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a
copy of each fund's most recent financial report and portfolio
listing, or a copy of the Statement of Additional Information (SAI)
dated December 30 , 1997. The SAI has been filed with the
Securities and Exchange Commission (SEC) and is available along with
other related materials on the SEC's Internet Web site
(http://www.sec.gov). The SAI is incorporated herein by reference
(legally forms a part of the prospectus). For a free copy of either
document, call Fidelity at 1-800-544-8888.
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.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
IBD-pro-1297
Each of these international funds is an equity fund. Each seeks to
increase the value of your investment over the long-term by investing
in securities around the world.
FIDELITY'S
BROADLY DIVERSIFIED
INTERNATIONAL EQUITY
FUNDS
Fund Trading
Number Symbol
Fidelity International Growth &
Income Fund 305 FIGRX
Fidelity Diversified International
Fund 325 FDIVX
Fidelity International Value
Fund 335 FIVFX
Fidelity Overseas Fund 094 FOSFX
Fidelity Worldwide Fund 318 FWWFX
PROSPECTUS
DECEMBER 30 , 1997(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET,
BOSTON, MA 02109
CONTENTS
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KEY FACTS THE FUNDS AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES EACH FUND'S YEARLY OPERATING EXPENSES.
FINANCIAL HIGHLIGHTS A SUMMARY OF EACH FUND'S FINANCIAL DATA.
PERFORMANCE HOW EACH FUND HAS DONE OVER TIME.
THE FUNDS IN DETAIL CHARTER HOW EACH FUND IS ORGANIZED.
INVESTMENT PRINCIPLES AND RISKS EACH FUND'S OVERALL
APPROACH TO INVESTING.
BREAKDOWN OF EXPENSES HOW OPERATING COSTS ARE CALCULATED
AND WHAT THEY INCLUDE.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
TYPES OF ACCOUNTS DIFFERENT WAYS TO SET UP YOUR ACCOUNT,
INCLUDING TAX-SHELTERED RETIREMENT PLANS.
HOW TO BUY SHARES OPENING AN ACCOUNT AND MAKING
ADDITIONAL INVESTMENTS.
HOW TO SELL SHARES TAKING MONEY OUT AND CLOSING YOUR
ACCOUNT.
INVESTOR SERVICES SERVICES TO HELP YOU MANAGE YOUR ACCOUNT.
SHAREHOLDER AND ACCOUNT POLICIES DIVIDENDS, CAPITAL GAINS, AND TAXES
TRANSACTION DETAILS SHARE PRICE CALCULATIONS AND THE TIMING
OF PURCHASES AND REDEMPTIONS.
EXCHANGE RESTRICTIONS
</TABLE>
KEY FACTS
THE FUNDS AT A GLANCE
These broadly diversified funds do not focus on any one region or
country. Instead, they span the globe looking for investments that fit
their criteria.
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946
and is now America's largest mutual fund manager. Foreign affiliates
of FMR may help choose investments for the funds.
As with any mutual fund, there is no assurance that a fund will
achieve its goal.
INTERNATIONAL GROWTH & INCOME FUND
GOAL: Growth of capital and current income.
STRATEGY: Invests mainly in foreign securities. While the fund focuses
on equity securities, it also invests a significant portion of its
assets in debt securities.
SIZE: As of October 31, 1997, the fund had over $ 1.0 billion in
assets.
DIVERSIFIED INTERNATIONAL FUND
GOAL: Long-term growth of capital.
STRATEGY: Invests mainly in foreign equity securities that are
determined, through both technical and fundamental analysis, to be
undervalued compared to others in their industries and countries.
SIZE: As of October 31, 1997, the fund had over $ 1.5 billion in
assets.
INTERNATIONAL VALUE FUND
GOAL: Long-term growth of capital.
STRATEGY: Invests mainly in equity securities of foreign issuers with
valuable assets or that FMR believes are undervalued in the
marketplace.
SIZE: As of October 31, 1997, the fund had over $ 402 million in
assets.
OVERSEAS FUND
GOAL: Long-term growth of capital.
STRATEGY: Invests mainly in equity securities outside the United
States.
SIZE: As of October 31, 1997, the fund had over $ 3.7 billion in
assets.
WORLDWIDE FUND
GOAL: Long-term growth of capital.
STRATEGY: Invests mainly in equity securities issued by companies of
all sizes anywhere in the world, including the United States.
SIZE: As of October 31, 1997, the fund had over $ 1.1 billion in
assets.
WHO MAY WANT TO INVEST
These funds may be appropriate for investors who want to pursue their
investment goals in markets outside the United States. By including
international investments in your portfolio, you can achieve
additional diversification and participate in growth opportunities
around the world. However, it is important to note that investments in
foreign securities involve risks in addition to those of U.S.
investments.
The value of the funds' investments will vary from day to day, and
generally reflect market conditions, interest rates, and other
company, political, or economic news both here and abroad. In the
short-term, stock prices can fluctuate dramatically in response to
these factors. Over time, however, stocks have shown greater growth
potential than other types of securities. Investments in foreign
securities may involve risks in addition to those of U.S. investments,
including increased political and economic risk, as well as exposure
to currency fluctuations. Bond values fluctuate based on changes in
interest rates and in the credit quality of the issuer.
In addition to those general risks, international investing involves
different or increased risks. The performance of international funds
depends upon currency values, the political and regulatory
environment, and overall economic factors in the countries in which a
fund invests. These risks are particularly significant for funds that
invest in emerging markets. See "INVESTMENT PRINCIPLES AND RISKS" on
page .
Broadly diversified funds could be appropriate for investors first
entering the international markets or those who are interested in
broad participation in multiple markets around the world. When you
sell your shares, they may be worth more or less than what you paid
for them. By themselves, the funds do not constitute a balanced
investment plan.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you may pay when you buy
or sell shares of a fund. In addition, you may be charged an annual
account maintenance fee if your account balance falls below $2,500.
See "Transaction Details," page , for an explanation of how and when
these charges apply.
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets.
Each fund pays a management fee to FMR that for Diversified
International, International Value, and Overseas varies based on its
performance. Each fund also incurs other expenses for services such as
maintaining shareholder records and furnishing shareholder statements
and financial reports. A fund's expenses are factored into its share
price or dividends and are not charged directly to shareholder
accounts (see "Breakdown of Expenses" page ).
The following figures are based on historical expenses of each fund
and are calculated as a percentage of average net assets of each fund.
A portion of the brokerage commissions that a fund pays is used to
reduce that fund's expenses. In addition, each fund has entered into
arrangements with its custodian and transfer agent whereby credits
realized as a result of uninvested cash balances are used to reduce
custodian and transfer agent expenses. Including these reductions, the
total fund operating expenses presented in the table would have been
as follows:
FUND
INTERNATIONAL GROWTH & INCOME 1.15 %
DIVERSIFIED INTERNATIONAL 1.23 %
INTERNATIONAL VALUE 1.28 %
OVERSEAS 1.20 %
WORLDWIDE 1.16 %
EXAMPLES: Let's say, hypothetically, that each fund's annual return is
5% and that your shareholder transaction expenses and each fund's
annual operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses
if you close your account after the number of years indicated.
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected expenses or returns, all of which may vary.
TRANSACTION EXPENSES OPERATING EXPENSES EXAMPLES
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INTERNAT
IONAL SALES CHARGE ON PURCHASES
AND NONE MANAGEMENT FEE 0.75 % 1 YEAR $ 12
GROWTH &
INCOME REINVESTED DISTRIBUTIONS
FUND
DEFERRED SALES CHARGE ON
REDEMPTIONS NONE 12B-1 FEE NONE 3 YEARS $ 37
ANNUAL ACCOUNT MAINTENANCE
FEE $12.00 OTHER EXPENSES 0.42 % 5 YEARS $ 64
(FOR ACCOUNTS UNDER $2,500)
TOTAL FUND OPERATING EXPENSES 1.17 % 10 YEARS $ 142
DIVERSI
FIED SALES CHARGE ON PURCHASES
AND NONE MANAGEMENT FEE 0.83 % 1 YEAR $ 13
INTERNATI
ONAL
FUND REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE ON
REDEMPTIONS NONE 12B-1 FEE NONE 3 YEARS $ 40
ANNUAL ACCOUNT MAINTENANCE
FEE $12.00 OTHER EXPENSES 0.42 % 5 YEARS $ 69
(FOR ACCOUNTS UNDER $2,500)
TOTAL FUND OPERATING EXPENSES 1.25 % 10 YEARS $ 151
INTERNAT
IONAL SALES CHARGE ON PURCHASES
AND NONE MANAGEMENT FEE 0.85 % 1 YEAR $ 13
VALUE
FUND REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE ON
REDEMPTIONS NONE 12B-1 FEE NONE 3 YEARS $ 41
ANNUAL ACCOUNT MAINTENANCE
FEE $12.00 OTHER EXPENSES 0.45 % 5 YEARS $ 71
(FOR ACCOUNTS UNDER $2,500)
TOTAL FUND OPERATING EXPENSES 1.30 % 10 YEARS $ 157
OVERSEAS
FUND SALES CHARGE ON PURCHASES
AND NONE MANAGEMENT FEE 0.84 % 1 YEAR $ 13
REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE ON
REDEMPTIONS NONE 12B-1 FEE NONE 3 YEARS $ 39
ANNUAL ACCOUNT MAINTENANCE
FEE $12.00 OTHER EXPENSES 0.39 % 5 YEARS $ 68
(FOR ACCOUNTS UNDER $2,500)
TOTAL FUND OPERATING EXPENSES 1.23 % 10 YEARS $ 149
WORLDWIDE
FUND SALES CHARGE ON PURCHASES
AND NONE MANAGEMENT FEE 0.75 % 1 YEAR $ 12
REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE ON
REDEMPTIONS NONE 12B-1 FEE NONE 3 YEARS $ 37
ANNUAL ACCOUNT MAINTENANCE
FEE $12.00 OTHER EXPENSES 0.43 % 5 YEARS $ 65
(FOR ACCOUNTS UNDER $2,500)
TOTAL FUND OPERATING EXPENSES 1.18 % 10 YEARS $ 143
</TABLE>
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow contain annual information
which has been audited by Coopers & Lybrand L.L.P. , independent
accountants. The funds' financial highlights, financial
statements, and report of the auditor are included in the funds'
Annual Report, and are incorporated by reference into (are legally a
part of) the funds' SAI. Contact Fidelity for a free copy of the
Annual Report or the SAI.
INTERNATIONAL GROWTH & INCOME
<TABLE>
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SELECTED PER-SHARE DATA AND
RATIOS
YEARS 1997 1996 1995 1994I 1993 1992 1991 1990 1989 1988
ENDED
OCTOBER 31
NET
ASSET $ 19.09 $ 17.83 $ 17.54 $ 17.25 $ 13.29 $ 13.99 $ 13.71 $ 12.87 $ 11.81 $ 10.42
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET .48D,M .54 .54 .38D .14D .31 .30B .25 .30 .16
INVESTMENT
INCOME
NET 1.97 1.32 .28H .02 4.14 (.84) .41 .75 .96 1.26
REALIZED
AND
UNREALIZED
GAIN
(LOSS)
TOTAL 2.45 1.86 .82 .40 4.28 (.53) .71 1.00 1.26 1.42
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTION
S
FROM NET (.29) (.60) (.21) (.03) (.31) (.16) (.38) (.16) (.13) --
INVESTMENT
INCOME
FROM NET (.37) -- (.32) (.05) (.01)C (.01)C (.05)C -- (.07)C (.03)C
REALIZED
GAIN
IN EXCESS -- -- -- (.03) -- -- -- -- -- --
OF NET
REALIZED
GAIN
TOTAL (.66) (.60) (.53) (.11) (.32) (.17) (.43) (.16) (.20) (.03)
DISTRIBUTIONS
NET ASSET $ 20.88 $ 19.09 $ 17.83 $ 17.54 $ 17.25 $ 13.29 $ 13.99 $ 13.71 $ 12.87 $ 11.81
VALUE, END
OF PERIOD
TOTAL 13.17% 10.66% 4.95% 2.33% 32.94%A (3.81)%A 5.43%A 7.79%A,G 10.85%A,G 13.68%A,G
RETURN F
NET
ASSETS, $ 1,067,169 $ 1,007,076 $ 903,235 $ 1,367,938 $ 1,002,847 $ 60,007 $ 49,738 $ 35,380 $ 26,333 $ 31,662
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.17% 1.16% 1.18% 1.21% 1.52% 1.62% 1.89% 1.98% 1.92%E 2.58%L
EXPENSES
TO
AVERAGE NET
ASSETS
RATIO OF 1.15%J 1.14%J 1.18% 1.21% 1.52% 1.62% 1.89% 1.98% 1.92% 2.58%
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF
NET 2.33% 2.76% 2.98% 2.16% .87% 2.78% 2.86% 2.31% 1.98% 1.08%
INVESTMENT
INCOME
TO AVERAGE
NET ASSETS
PORTFOLIO 70% 95% 141% 173% 24% 76% 117% 102% 147% 112%
TURNOVER
RATE
AVERAGE $ .0068 $ .0065
COMMISSIO
N RATEK
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B INCLUDES $.02 PER SHARE FROM RECOVERY OF FOREIGN TAXES PREVIOUSLY
WITHHELD ON DIVIDEND AND INTEREST PAYMENTS.
C INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN
CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FMR AND FSC AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE
RATIO WOULD HAVE BEEN HIGHER.
F THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
G TOTAL RETURNS DO NOT INCLUDE THE DEFERRED SALES CHARGE.
H THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING
OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
I EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2 "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
J FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
K FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
L LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
M INVESTMENT INCOME PER SHARE EFFECTS A SPECIAL DIVIDEND FROM BRITISH
GOS PLC ORD. WHICH AMOUNTED TO $.05 PER SHARE.
DIVERSIFIED INTERNATIONAL
<TABLE>
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SELECTED
PER-SHARE
DATA AND
RATIOS
YEARS 1997 1996 1995 1994F 1993 1992E
ENDED
OCTOBER 31
NET
ASSET $ 14.38 $ 12.73 $ 12.46 $ 11.32 $ 8.46 $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET .27I,J .15 .22 .05 .07 .07
INVESTMENT
INCOME
NET 2.43 2.13 .47 1.20 2.89 (1.61)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL 2.70 2.28 .69 1.25 2.96 (1.54)
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTION
S
FROM
NET (.15) (.22) (.03) (.01) (.10) --
INVESTMENT
INCOME
FROM
NET (.36) (.41) (.39) (.10) -- --
REALIZED
GAIN
TOTAL (.51) (.63) (.42) (.11) (.10) --
DISTRIBUTIONS
NET ASSET $ 16.57 $ 14.38 $ 12.73 $ 12.46 $ 11.32 $ 8.46
VALUE, END
OF PERIOD
TOTAL 19.30% 18.66% 6.02% 11.14% 35.38% (15.40)%
RETURNB,C
NET
ASSETS, $ 1,514,327 $ 665,492 $ 295,017 $ 351,152 $ 255,029 $ 36,439
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.25% 1.29% 1.13% 1.25% 1.47% 2.00%A,D
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.23%G 1.27%G 1.12%G 1.25% 1.47% 2.00%A
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF
NET 1.49% 1.53% 1.55% .96% .84% 1.38%A
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
PORTFOLIO 81% 94% 101% 89% 56% 56%A
TURNOVER
RATE
AVERAGE $ .0153 $ .0121
COMMISSIO
N RATEH
</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 FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FROM DECEMBER 27, 1991 (COMMENCEMENT OF OPERATIONS) TO OCTOBER
31, 1992.
F EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF
POSITION 93-2 "DETERMINATION, DISCLOSURE AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL
DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
I NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
J INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM
GENCOR LTD. WHICH AMOUNTED TO $.05 PER SHARE.
INTERNATIONAL VALUE
SELECTED
PER-SHARE
DATA AND
RATIOS
YEARS 1997 1996 1995D
ENDED
OCTOBER 31
NET ASSET $ 11.33 $ 10.63 $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET .13B .16F .11B
INVESTMENT
INCOME
NET 1.33 .85 .52
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL 1.46 1.01 .63
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTION
S
FROM NET (.10) (.01) --
INVESTMENT
INCOME
FROM NET (.22) (.30) --
REALIZED
GAIN
TOTAL (.32) (.31) --
DISTRIBUTIONS
NET ASSET $ 12.47 $ 11.33 $ 10.63
VALUE, END
OF PERIOD
TOTAL 13.20% 9.64% 6.30%
RETURNA
NET ASSETS, $ 402,747 $ 270,865 $ 56,828
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.30% 1.28% 1.72%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.28%C 1.26%C 1.72%
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET 1.03% 1.74% 1.08%
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
PORTFOLIO 86% 71% 109%
TURNOVER
RATE
AVERAGE $ .0133 $ .0264
COMMISSIO
N RATEE
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
D FROM NOVEMBER 1, 1994 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31,
1995.
E FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
F INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM
VOLVO AB WHICH AMOUNTED TO $.04 PER SHARE.
OVERSEAS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED
PER-SHARE
DATA AND
RATIOS
YEARS 1997 1996 1995 1994F 1993 1992A 1991 1990 1989 1988
ENDED
OCTOBER 31
NET
ASSET $ 31.08 $ 28.57 $ 29.17 $ 27.16 $ 21.96 $ 26.92 $ 27.47 $ 26.30 $ 25.30 $ 30.90
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET .43J .48I .31 .18 .27 .46 .54B .35 .30 .30
INVESTMENT
INCOME
NET 4.61 2.72 (.44) 2.26 7.40 (3.82) .45 2.16 1.28 2.34
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL 5.04 3.20 (.13) 2.44 7.67 (3.36) 99 2.51 1.58 2.64
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTION
S
FROM
NET (.37) (.34) (.02) (.15) (.37) (.44) (.46) (.21) (.24) --
INVESTMENT
INCOME
IN
EXCESS -- -- -- (.17) -- -- -- -- -- --
OF NET
INVESTMENT
INCOME
FROM
NET (1.63) (.35) (.45) (.11) (2.10)C (1.16) (1.08)C (1.13)C (.34)C (8.24)
REALIZED
GAIN
TOTAL (2.00) (.69) (.47) (.43) (2.47) (1.60) (1.54) (1.34) (.58) (8.24)
DISTRIBUTIONS
NET
ASSET $ 34.12 $ 31.08 $ 28.57 $ 29.17 $ 27.16 $ 21.96 $ 26.92 $ 27.47 $ 26.30 $ 25.30
VALUE, END
OF PERIOD
TOTAL 17.03% 11.41% (.34%) 9.13%E 39.01%E (13.05)%E 4.12%E 9.58%E 6.40%E 11.62%E
RETURND
NET
ASSETS, $3,777,452 $ 3,114,625 $ 2,276,306 $ 2,283,211 $ 1,490,666 $ 801,845 $ 969,436 $ 1,011,152 $ 876,567 $ 1,149,763
END OF
PERIOD
(000
OMITTED)
RATIO
OF 1.23% 1.14% 1.05% 1.24% 1.27% 1.52% 1.53% 1.26% 1.06% 1.38%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO
OF 1.20%G 1.12%G 1.05% 1.24% 1.27% 1.52% 1.53% 1.26% 1.06% 1.38%
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF
NET 1.28% 1.74% 1.78% .90% 1.00% 1.78% 2.19% 1.34% 1.06% 1.21%
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
PORTFOLIO 68% 82% 49% 49% 64% 122% 132% 96% 100% 115%
TURNOVER
RATE
AVERAGE $ .0109 $ .0134
COMMISSIO
N RATEH
</TABLE>
A AS OF NOVEMBER 1, 1991, THE FUND DISCONTINUED THE USE OF
EQUALIZATION ACCOUNTING.
B INCLUDES $.08 PER SHARE FROM RECOVERY OF FOREIGN TAXES PREVIOUSLY
WITHHELD ON DIVIDEND AND INTEREST PAYMENTS.
C INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN
CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
D THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
E TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
F EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2 "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
I INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM VOLVO
AB WHICH AMOUNTED TO $.08 PER SHARE.
J NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
WORLDWIDE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED
PER-SHARE
DATA AND
RATIOS
YEARS 1997 1996 1995 1994G 1993 1992 1991 1990F
ENDED
OCTOBER 31
NET ASSET $ 15.18 $ 13.32 $ 13.96 $ 12.76 $ 9.63 $ 9.61 $ 8.95 $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET .21K,L .22 .17 .08 .11 .20 .21 .05
INVESTMENT
INCOME
NET 2.43 1.79 (.08) 1.37 3.28 (.08) .53 (1.10)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL 2.64 2.01 .09 1.45 3.39 .12 .74 (1.05)
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTION
S
FROM NET (.17) (.15) (.16) (.10) (.24) (.10) (.08) --
INVESTMENT
INCOME
FROM NET (.38) -- (.57) (.15) (.02)B -- -- --
REALIZED
GAIN
TOTAL (.55) (.15) (.73) (.25) (.26) (.10) (.08) --
DISTRIBUTIONS
NET ASSET $ 17.27 $ 15.18 $ 13.32 $ 13.96 $ 12.76 $ 9.63 $ 9.61 $ 8.95
VALUE, END
OF PERIOD
TOTAL 17.95% 15.25% .95% 11.55% 36.10%J 1.32%J 8.33%J (10.50)%J
RETURNC,D
NET ASSETS, $ 1,161,191 $ 877,218 $ 659,045 $ 748,738 $ 287,278 $ 103,627 $ 105,029 $ 94,851
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.18% 1.19% 1.17% 1.32% 1.40% 1.51% 1.69% 2.00%A,E
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.16%H 1.18%H 1.16%H 1.32% 1.40% 1.51% 1.69% 2.00%A
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET 1.24% 1.71% 2.05% 1.40% 1.99% 2.02% 2.19% 2.09%A
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
PORTFOLIO 85% 49% 70% 69% 57% 130% 129% 123%A
TURNOVER
RATE
AVERAGE $ .0054 $ .0003
COMMISSIO
N RATEI
</TABLE>
A ANNUALIZED
B INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN
CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOLD
HAVE BEEN HIGHER.
F FROM MAY 30, 1990 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31,
1990.
G EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF
POSITION 93-2 "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL
DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
H FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
I FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
J TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
K NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
L INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM
GENCOR LTD. WHICH AMOUNTED TO $.06 PER SHARE.
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN. The
total returns that follow are based on historical fund results and do
not reflect the effect of taxes.
Each fund's fiscal year runs from November 1 through October 31.
The tables below show each fund's performance over past fiscal
years compared to different measures, including a comparative index
and a competitive funds average. The charts beginning on page
present calendar year performance.
<TABLE>
<CAPTION>
<S> <C> <C>
FISCAL PERIODS ENDED OCTOBER 31 AVERAGE ANNUAL TOTAL RETURN CUMULATIVE TOTAL RETURN
</TABLE>
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C>
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS/ PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS/
LIFE OF FUND LIFE OF FUND
INTERN
13.17 % 12.32%D 9.43%D,E ,F 13.17 % 78.78 %D 146.28%D,E ,F
ATIONA
L
GROWT
H &
INCOM
E
FUND
MORG
4.82 % 11.79 % 6.70 % 4.82 % 74.59 % 91.25 %
AN
STANLE
Y
CAPIT
AL
INTERN
ATIONA
L EAFE
INDEX
LIPPER
10.39 % 12.67 % 9.68% 10.39 % 82.99 % 158.84%
INTERN
ATIONA
L
FUNDS
AVERA
GE
DIVERS
19.30 % 17.70 % 11.70 %A,F 19.30 % 125.84 % 91.06 %A,F
IFIED
INTERN
ATIONA
L FUND
MORG
8.63 % 12.67 % 9.11 %A 8.63 % 81.61 % 66.51 %A
AN
STANLE
Y
CAPIT
AL
INTERN
ATIONA
L
GDP-
WEIG
HTED
EAFE
INDEX
LIPPER
10.39 % 12.67 % N/A 10.39 % 82.99 % N/A
INTERN
ATIONA
L
FUNDS
AVERA
GE
INTERN
13.20 % N/A 9.68 %B 13.20 % N/A 31.93 %B
ATIONA
L
VALUE
FUND
MORG
4.82 % N/A 4.93 %B 4.82 % N/A 15.53 %B
AN
STANLE
Y
CAPIT
AL
INTERN
ATIONA
L EAFE
INDEX
LIPPER
10.39 % N/A N/A 10.39 % N/A N/A
INTERN
ATIONA
L
FUNDS
AVERA
GE
OVERS
17.03 % 14.54 %D 8.79 %D 17.03 % 97.12 %D 132.25 %D
EAS
FUND
MORG
4.82 % 11.79 % 6.70 % 4.82 % 74.59 % 91.25 %
AN
STANLE
Y
CAPIT
AL
INTERN
ATIONA
L EAFE
INDEX
LIPPER
10.39 % 12.67 % 9.68 % 10.39 % 82.99 % 158.84 %
INTERN
ATIONA
L
FUNDS
AVERA
GE
WORLD
17.95 % 15.81%D 10.12 %C,D,F 17.95 % 108.35%D 104.67 %C,D,F
WIDE
FUND
MORG
16.77 % 15.24 % 9.58 %C 16.77 % 103.29 % 97.28 %C
AN
STANLE
Y
CAPIT
AL
INTERN
ATIONA
L
WORLD
INDEX
LIPPER
16.50 % 14.19 % N/A 16.50 % 96.26 % N/A
GLOBA
L
FUNDS
AVERA
GE
</TABLE>
A FROM DECEMBER 27, 1991
B FROM NOVEMBER 1, 1994
C FROM MAY 30, 1990
D PREVIOUSLY, THE FUND IMPOSED A SALES CHARGE. IF THIS SALES CHARGE
WERE TAKEN INTO ACCOUNT, TOTAL RETURNS WOULD HAVE BEEN LOWER.
E TOTAL RETURNS DO NOT INCLUDE THE DEFERRED SALES CHARGE OF 1% UPON
REDEMPTION ON SHARES PURCHASED PRIOR TO OCTOBER 12, 1990.
F IF FMR HAD NOT REIMBURSED CERTAIN FUND EXPENSES DURING THESE
PERIODS, TOTAL RETURNS WOULD HAVE BEEN LOWER.
EXAMPLE: Let's say, hypothetically, that you had $10,000
invested in International Growth & Income and Overseas Funds on
November 1, 198 7 , and you put $10,000 in Diversified
International, International Value, and Worldwide Funds on each fund's
start date. The charts below show the growth in value of your $10,000
investment in each fund through October 31, 1997.
INTERNATIONAL GROWTH & INCOME FUND
FISCAL YEARS 1987 1992 1997
ROW: 1, COL: 1, VALUE: 10000.0
ROW: 2, COL: 1, VALUE: 9740.879999999999
ROW: 3, COL: 1, VALUE: 10347.65
ROW: 4, COL: 1, VALUE: 9981.869999999999
ROW: 5, COL: 1, VALUE: 10434.28
ROW: 6, COL: 1, VALUE: 10886.69
ROW: 7, COL: 1, VALUE: 11175.46
ROW: 8, COL: 1, VALUE: 11031.07
ROW: 9, COL: 1, VALUE: 10905.94
ROW: 10, COL: 1, VALUE: 10905.94
ROW: 11, COL: 1, VALUE: 10366.9
ROW: 12, COL: 1, VALUE: 10742.3
ROW: 13, COL: 1, VALUE: 11367.98
ROW: 14, COL: 1, VALUE: 11570.12
ROW: 15, COL: 1, VALUE: 11544.22
ROW: 16, COL: 1, VALUE: 11759.64
ROW: 17, COL: 1, VALUE: 11798.8
ROW: 18, COL: 1, VALUE: 11798.8
ROW: 19, COL: 1, VALUE: 12092.55
ROW: 20, COL: 1, VALUE: 11749.85
ROW: 21, COL: 1, VALUE: 11789.01
ROW: 22, COL: 1, VALUE: 12905.25
ROW: 23, COL: 1, VALUE: 12729.0
ROW: 24, COL: 1, VALUE: 13238.16
ROW: 25, COL: 1, VALUE: 12601.71
ROW: 26, COL: 1, VALUE: 13071.7
ROW: 27, COL: 1, VALUE: 13751.61
ROW: 28, COL: 1, VALUE: 13513.83
ROW: 29, COL: 1, VALUE: 13038.27
ROW: 30, COL: 1, VALUE: 13028.36
ROW: 31, COL: 1, VALUE: 12998.64
ROW: 32, COL: 1, VALUE: 13840.78
ROW: 33, COL: 1, VALUE: 14276.71
ROW: 34, COL: 1, VALUE: 14940.51
ROW: 35, COL: 1, VALUE: 13662.44
ROW: 36, COL: 1, VALUE: 12344.74
ROW: 37, COL: 1, VALUE: 13583.18
ROW: 38, COL: 1, VALUE: 13276.05
ROW: 39, COL: 1, VALUE: 13307.75
ROW: 40, COL: 1, VALUE: 13778.64
ROW: 41, COL: 1, VALUE: 14556.63
ROW: 42, COL: 1, VALUE: 14034.55
ROW: 43, COL: 1, VALUE: 14249.53
ROW: 44, COL: 1, VALUE: 14229.05
ROW: 45, COL: 1, VALUE: 13543.19
ROW: 46, COL: 1, VALUE: 14014.08
ROW: 47, COL: 1, VALUE: 13962.9
ROW: 48, COL: 1, VALUE: 14413.31
ROW: 49, COL: 1, VALUE: 14321.18
ROW: 50, COL: 1, VALUE: 13921.95
ROW: 51, COL: 1, VALUE: 14377.4
ROW: 52, COL: 1, VALUE: 14356.67
ROW: 53, COL: 1, VALUE: 14377.4
ROW: 54, COL: 1, VALUE: 13910.94
ROW: 55, COL: 1, VALUE: 14522.52
ROW: 56, COL: 1, VALUE: 15175.57
ROW: 57, COL: 1, VALUE: 15030.45
ROW: 58, COL: 1, VALUE: 14543.25
ROW: 59, COL: 1, VALUE: 14802.4
ROW: 60, COL: 1, VALUE: 14553.62
ROW: 61, COL: 1, VALUE: 13776.18
ROW: 62, COL: 1, VALUE: 13745.09
ROW: 63, COL: 1, VALUE: 13897.06
ROW: 64, COL: 1, VALUE: 14024.46
ROW: 65, COL: 1, VALUE: 14406.66
ROW: 66, COL: 1, VALUE: 15478.93
ROW: 67, COL: 1, VALUE: 16338.87
ROW: 68, COL: 1, VALUE: 16721.07
ROW: 69, COL: 1, VALUE: 16498.12
ROW: 70, COL: 1, VALUE: 17050.18
ROW: 71, COL: 1, VALUE: 17941.97
ROW: 72, COL: 1, VALUE: 17825.19
ROW: 73, COL: 1, VALUE: 18313.55
ROW: 74, COL: 1, VALUE: 17687.17
ROW: 75, COL: 1, VALUE: 18772.16
ROW: 76, COL: 1, VALUE: 19755.1
ROW: 77, COL: 1, VALUE: 19402.53
ROW: 78, COL: 1, VALUE: 18366.16
ROW: 79, COL: 1, VALUE: 18611.89
ROW: 80, COL: 1, VALUE: 18953.79
ROW: 81, COL: 1, VALUE: 18494.37
ROW: 82, COL: 1, VALUE: 18804.21
ROW: 83, COL: 1, VALUE: 18985.84
ROW: 84, COL: 1, VALUE: 18547.79
ROW: 85, COL: 1, VALUE: 18740.1
ROW: 86, COL: 1, VALUE: 18163.16
ROW: 87, COL: 1, VALUE: 18233.15
ROW: 88, COL: 1, VALUE: 17615.45
ROW: 89, COL: 1, VALUE: 17736.78
ROW: 90, COL: 1, VALUE: 18751.57
ROW: 91, COL: 1, VALUE: 19093.51
ROW: 92, COL: 1, VALUE: 18850.85
ROW: 93, COL: 1, VALUE: 18894.97
ROW: 94, COL: 1, VALUE: 20009.03
ROW: 95, COL: 1, VALUE: 19777.39
ROW: 96, COL: 1, VALUE: 19920.79
ROW: 97, COL: 1, VALUE: 19667.09
ROW: 98, COL: 1, VALUE: 19964.91
ROW: 99, COL: 1, VALUE: 20463.49
ROW: 100, COL: 1, VALUE: 20520.5
ROW: 101, COL: 1, VALUE: 20474.89
ROW: 102, COL: 1, VALUE: 20816.9
ROW: 103, COL: 1, VALUE: 21341.32
ROW: 104, COL: 1, VALUE: 21364.12
ROW: 105, COL: 1, VALUE: 21512.32
ROW: 106, COL: 1, VALUE: 21010.71
ROW: 107, COL: 1, VALUE: 21272.91
ROW: 108, COL: 1, VALUE: 21785.93
ROW: 109, COL: 1, VALUE: 21763.13
ROW: 110, COL: 1, VALUE: 22846.15
ROW: 111, COL: 1, VALUE: 23059.71
ROW: 112, COL: 1, VALUE: 22882.78
ROW: 113, COL: 1, VALUE: 23154.07
ROW: 114, COL: 1, VALUE: 23154.07
ROW: 115, COL: 1, VALUE: 23177.66
ROW: 116, COL: 1, VALUE: 24333.59
ROW: 117, COL: 1, VALUE: 25406.96
ROW: 118, COL: 1, VALUE: 26055.7
ROW: 119, COL: 1, VALUE: 24486.93
ROW: 120, COL: 1, VALUE: 26055.7
ROW: 121, COL: 1, VALUE: 24628.47
$
$24,628
DIVERSIFIED INTERNATIONAL FUND
FISCAL YEARS 1992 1995 1997
ROW: 1, COL: 1, VALUE: 10000.0
ROW: 2, COL: 1, VALUE: 10060.0
ROW: 3, COL: 1, VALUE: 9860.0
ROW: 4, COL: 1, VALUE: 9680.0
ROW: 5, COL: 1, VALUE: 9140.0
ROW: 6, COL: 1, VALUE: 9240.0
ROW: 7, COL: 1, VALUE: 9750.0
ROW: 8, COL: 1, VALUE: 9540.0
ROW: 9, COL: 1, VALUE: 9190.0
ROW: 10, COL: 1, VALUE: 9350.0
ROW: 11, COL: 1, VALUE: 9140.0
ROW: 12, COL: 1, VALUE: 8460.0
ROW: 13, COL: 1, VALUE: 8460.0
ROW: 14, COL: 1, VALUE: 8671.06
ROW: 15, COL: 1, VALUE: 8873.42
ROW: 16, COL: 1, VALUE: 9176.959999999999
ROW: 17, COL: 1, VALUE: 9915.57
ROW: 18, COL: 1, VALUE: 10522.64
ROW: 19, COL: 1, VALUE: 10785.71
ROW: 20, COL: 1, VALUE: 10482.17
ROW: 21, COL: 1, VALUE: 10805.94
ROW: 22, COL: 1, VALUE: 11362.43
ROW: 23, COL: 1, VALUE: 11210.66
ROW: 24, COL: 1, VALUE: 11453.49
ROW: 25, COL: 1, VALUE: 11028.54
ROW: 26, COL: 1, VALUE: 11850.64
ROW: 27, COL: 1, VALUE: 12739.44
ROW: 28, COL: 1, VALUE: 12484.04
ROW: 29, COL: 1, VALUE: 12085.61
ROW: 30, COL: 1, VALUE: 12320.58
ROW: 31, COL: 1, VALUE: 12300.15
ROW: 32, COL: 1, VALUE: 12136.69
ROW: 33, COL: 1, VALUE: 12555.55
ROW: 34, COL: 1, VALUE: 12872.25
ROW: 35, COL: 1, VALUE: 12504.47
ROW: 36, COL: 1, VALUE: 12729.22
ROW: 37, COL: 1, VALUE: 12044.75
ROW: 38, COL: 1, VALUE: 11979.79
ROW: 39, COL: 1, VALUE: 11428.51
ROW: 40, COL: 1, VALUE: 11566.33
ROW: 41, COL: 1, VALUE: 12128.21
ROW: 42, COL: 1, VALUE: 12509.87
ROW: 43, COL: 1, VALUE: 12615.88
ROW: 44, COL: 1, VALUE: 12806.71
ROW: 45, COL: 1, VALUE: 13633.63
ROW: 46, COL: 1, VALUE: 13421.6
ROW: 47, COL: 1, VALUE: 13676.04
ROW: 48, COL: 1, VALUE: 13495.81
ROW: 49, COL: 1, VALUE: 13633.63
ROW: 50, COL: 1, VALUE: 14132.55
ROW: 51, COL: 1, VALUE: 14555.74
ROW: 52, COL: 1, VALUE: 14566.88
ROW: 53, COL: 1, VALUE: 14856.44
ROW: 54, COL: 1, VALUE: 15391.0
ROW: 55, COL: 1, VALUE: 15546.91
ROW: 56, COL: 1, VALUE: 15691.69
ROW: 57, COL: 1, VALUE: 15190.54
ROW: 58, COL: 1, VALUE: 15446.68
ROW: 59, COL: 1, VALUE: 15914.43
ROW: 60, COL: 1, VALUE: 16014.66
ROW: 61, COL: 1, VALUE: 16905.6
ROW: 62, COL: 1, VALUE: 16961.57
ROW: 63, COL: 1, VALUE: 17076.88
ROW: 64, COL: 1, VALUE: 17365.14
ROW: 65, COL: 1, VALUE: 17388.2
ROW: 66, COL: 1, VALUE: 17445.86
ROW: 67, COL: 1, VALUE: 18541.27
ROW: 68, COL: 1, VALUE: 19486.78
ROW: 69, COL: 1, VALUE: 20040.25
ROW: 70, COL: 1, VALUE: 18852.59
ROW: 71, COL: 1, VALUE: 20155.56
ROW: 72, COL: 1, VALUE: 19106.27
$19,106
$
INTERNATIONAL VALUE FUND
FISCAL YEARS 1994 1995 1997
ROW: 1, COL: 1, VALUE: 10000.0
ROW: 2, COL: 1, VALUE: 9700.0
ROW: 3, COL: 1, VALUE: 9790.0
ROW: 4, COL: 1, VALUE: 9440.0
ROW: 5, COL: 1, VALUE: 9530.0
ROW: 6, COL: 1, VALUE: 10000.0
ROW: 7, COL: 1, VALUE: 10170.0
ROW: 8, COL: 1, VALUE: 10030.0
ROW: 9, COL: 1, VALUE: 10040.0
ROW: 10, COL: 1, VALUE: 10830.0
ROW: 11, COL: 1, VALUE: 10800.0
ROW: 12, COL: 1, VALUE: 10860.0
ROW: 13, COL: 1, VALUE: 10630.0
ROW: 14, COL: 1, VALUE: 10820.0
ROW: 15, COL: 1, VALUE: 11150.86
ROW: 16, COL: 1, VALUE: 11253.73
ROW: 17, COL: 1, VALUE: 11294.88
ROW: 18, COL: 1, VALUE: 11521.18
ROW: 19, COL: 1, VALUE: 11912.08
ROW: 20, COL: 1, VALUE: 11840.07
ROW: 21, COL: 1, VALUE: 11973.8
ROW: 22, COL: 1, VALUE: 11562.33
ROW: 23, COL: 1, VALUE: 11562.33
ROW: 24, COL: 1, VALUE: 11870.93
ROW: 25, COL: 1, VALUE: 11654.91
ROW: 26, COL: 1, VALUE: 12251.54
ROW: 27, COL: 1, VALUE: 12219.78
ROW: 28, COL: 1, VALUE: 12198.62
ROW: 29, COL: 1, VALUE: 12452.54
ROW: 30, COL: 1, VALUE: 12547.75
ROW: 31, COL: 1, VALUE: 12568.91
ROW: 32, COL: 1, VALUE: 13394.15
ROW: 33, COL: 1, VALUE: 14060.68
ROW: 34, COL: 1, VALUE: 14409.82
ROW: 35, COL: 1, VALUE: 13351.83
ROW: 36, COL: 1, VALUE: 14187.64
ROW: 37, COL: 1, VALUE: 13193.13
$
$13,193
OVERSEAS FUND
FISCAL YEARS 1987 1992 1997
ROW: 1, COL: 1, VALUE: 10000.0
ROW: 2, COL: 1, VALUE: 9919.09
ROW: 3, COL: 1, VALUE: 10553.56
ROW: 4, COL: 1, VALUE: 10143.25
ROW: 5, COL: 1, VALUE: 10465.32
ROW: 6, COL: 1, VALUE: 11100.65
ROW: 7, COL: 1, VALUE: 11391.85
ROW: 8, COL: 1, VALUE: 11162.42
ROW: 9, COL: 1, VALUE: 10844.76
ROW: 10, COL: 1, VALUE: 10703.57
ROW: 11, COL: 1, VALUE: 10381.49
ROW: 12, COL: 1, VALUE: 10769.75
ROW: 13, COL: 1, VALUE: 11162.42
ROW: 14, COL: 1, VALUE: 11453.62
ROW: 15, COL: 1, VALUE: 11424.96
ROW: 16, COL: 1, VALUE: 11564.95
ROW: 17, COL: 1, VALUE: 11867.51
ROW: 18, COL: 1, VALUE: 11763.65
ROW: 19, COL: 1, VALUE: 12016.53
ROW: 20, COL: 1, VALUE: 11438.51
ROW: 21, COL: 1, VALUE: 11104.34
ROW: 22, COL: 1, VALUE: 12206.19
ROW: 23, COL: 1, VALUE: 11921.7
ROW: 24, COL: 1, VALUE: 12558.43
ROW: 25, COL: 1, VALUE: 11876.54
ROW: 26, COL: 1, VALUE: 12549.39
ROW: 27, COL: 1, VALUE: 13359.61
ROW: 28, COL: 1, VALUE: 13056.41
ROW: 29, COL: 1, VALUE: 12786.38
ROW: 30, COL: 1, VALUE: 13208.01
ROW: 31, COL: 1, VALUE: 13174.85
ROW: 32, COL: 1, VALUE: 14070.23
ROW: 33, COL: 1, VALUE: 14321.31
ROW: 34, COL: 1, VALUE: 15027.19
ROW: 35, COL: 1, VALUE: 13364.35
ROW: 36, COL: 1, VALUE: 11881.52
ROW: 37, COL: 1, VALUE: 13013.77
ROW: 38, COL: 1, VALUE: 12582.67
ROW: 39, COL: 1, VALUE: 12477.55
ROW: 40, COL: 1, VALUE: 12754.38
ROW: 41, COL: 1, VALUE: 13217.45
ROW: 42, COL: 1, VALUE: 12784.58
ROW: 43, COL: 1, VALUE: 12965.78
ROW: 44, COL: 1, VALUE: 12990.95
ROW: 45, COL: 1, VALUE: 12175.55
ROW: 46, COL: 1, VALUE: 12839.95
ROW: 47, COL: 1, VALUE: 12935.58
ROW: 48, COL: 1, VALUE: 13504.34
ROW: 49, COL: 1, VALUE: 13549.64
ROW: 50, COL: 1, VALUE: 13061.41
ROW: 51, COL: 1, VALUE: 13552.29
ROW: 52, COL: 1, VALUE: 13707.88
ROW: 53, COL: 1, VALUE: 13423.53
ROW: 54, COL: 1, VALUE: 13144.54
ROW: 55, COL: 1, VALUE: 13943.95
ROW: 56, COL: 1, VALUE: 14544.84
ROW: 57, COL: 1, VALUE: 14201.47
ROW: 58, COL: 1, VALUE: 13300.13
ROW: 59, COL: 1, VALUE: 13187.47
ROW: 60, COL: 1, VALUE: 12640.22
ROW: 61, COL: 1, VALUE: 11781.8
ROW: 62, COL: 1, VALUE: 11722.79
ROW: 63, COL: 1, VALUE: 11999.78
ROW: 64, COL: 1, VALUE: 12349.52
ROW: 65, COL: 1, VALUE: 12602.78
ROW: 66, COL: 1, VALUE: 13459.05
ROW: 67, COL: 1, VALUE: 14393.71
ROW: 68, COL: 1, VALUE: 14725.36
ROW: 69, COL: 1, VALUE: 14375.62
ROW: 70, COL: 1, VALUE: 15032.89
ROW: 71, COL: 1, VALUE: 15883.13
ROW: 72, COL: 1, VALUE: 15744.43
ROW: 73, COL: 1, VALUE: 16377.59
ROW: 74, COL: 1, VALUE: 15629.86
ROW: 75, COL: 1, VALUE: 16806.18
ROW: 76, COL: 1, VALUE: 18000.94
ROW: 77, COL: 1, VALUE: 17663.95
ROW: 78, COL: 1, VALUE: 17155.42
ROW: 79, COL: 1, VALUE: 17731.35
ROW: 80, COL: 1, VALUE: 17504.65
ROW: 81, COL: 1, VALUE: 17271.83
ROW: 82, COL: 1, VALUE: 17755.86
ROW: 83, COL: 1, VALUE: 18013.19
ROW: 84, COL: 1, VALUE: 17516.91
ROW: 85, COL: 1, VALUE: 17872.27
ROW: 86, COL: 1, VALUE: 17137.04
ROW: 87, COL: 1, VALUE: 17019.76
ROW: 88, COL: 1, VALUE: 16290.34
ROW: 89, COL: 1, VALUE: 16302.81
ROW: 90, COL: 1, VALUE: 16789.09
ROW: 91, COL: 1, VALUE: 17269.14
ROW: 92, COL: 1, VALUE: 17512.28
ROW: 93, COL: 1, VALUE: 17643.2
ROW: 94, COL: 1, VALUE: 18434.96
ROW: 95, COL: 1, VALUE: 17923.74
ROW: 96, COL: 1, VALUE: 18173.12
ROW: 97, COL: 1, VALUE: 17811.52
ROW: 98, COL: 1, VALUE: 18011.02
ROW: 99, COL: 1, VALUE: 18560.94
ROW: 100, COL: 1, VALUE: 18912.11
ROW: 101, COL: 1, VALUE: 18950.42
ROW: 102, COL: 1, VALUE: 19231.36
ROW: 103, COL: 1, VALUE: 19754.92
ROW: 104, COL: 1, VALUE: 19761.3
ROW: 105, COL: 1, VALUE: 19908.16
ROW: 106, COL: 1, VALUE: 19352.67
ROW: 107, COL: 1, VALUE: 19493.14
ROW: 108, COL: 1, VALUE: 20055.01
ROW: 109, COL: 1, VALUE: 19844.31
ROW: 110, COL: 1, VALUE: 20891.43
ROW: 111, COL: 1, VALUE: 20992.1
ROW: 112, COL: 1, VALUE: 21005.71
ROW: 113, COL: 1, VALUE: 21475.38
ROW: 114, COL: 1, VALUE: 21665.97
ROW: 115, COL: 1, VALUE: 21829.33
ROW: 116, COL: 1, VALUE: 23163.46
ROW: 117, COL: 1, VALUE: 24368.26
ROW: 118, COL: 1, VALUE: 25178.26
ROW: 119, COL: 1, VALUE: 23306.4
ROW: 120, COL: 1, VALUE: 24974.06
ROW: 121, COL: 1, VALUE: 23224.72
$
$23,225
WORLDWIDE FUND
Fiscal years 1990 1993 1997
Row: 1, Col: 1, Value: 10000.0
Row: 2, Col: 1, Value: 10030.0
Row: 3, Col: 1, Value: 10290.0
Row: 4, Col: 1, Value: 10570.0
Row: 5, Col: 1, Value: 9380.0
Row: 6, Col: 1, Value: 8450.0
Row: 7, Col: 1, Value: 8950.0
Row: 8, Col: 1, Value: 8950.0
Row: 9, Col: 1, Value: 8898.230000000001
Row: 10, Col: 1, Value: 9150.440000000001
Row: 11, Col: 1, Value: 9654.879999999999
Row: 12, Col: 1, Value: 9321.949999999999
Row: 13, Col: 1, Value: 9412.75
Row: 14, Col: 1, Value: 9483.369999999999
Row: 15, Col: 1, Value: 8807.43
Row: 16, Col: 1, Value: 9352.220000000001
Row: 17, Col: 1, Value: 9493.459999999999
Row: 18, Col: 1, Value: 9654.879999999999
Row: 19, Col: 1, Value: 9695.230000000001
Row: 20, Col: 1, Value: 9180.710000000001
Row: 21, Col: 1, Value: 9599.06
Row: 22, Col: 1, Value: 9701.07
Row: 23, Col: 1, Value: 9996.889999999999
Row: 24, Col: 1, Value: 9762.27
Row: 25, Col: 1, Value: 10190.71
Row: 26, Col: 1, Value: 10619.15
Row: 27, Col: 1, Value: 10251.92
Row: 28, Col: 1, Value: 10149.91
Row: 29, Col: 1, Value: 10007.1
Row: 30, Col: 1, Value: 10007.1
Row: 31, Col: 1, Value: 9823.48
Row: 32, Col: 1, Value: 9976.49
Row: 33, Col: 1, Value: 10194.86
Row: 34, Col: 1, Value: 10530.15
Row: 35, Col: 1, Value: 10781.62
Row: 36, Col: 1, Value: 11399.81
Row: 37, Col: 1, Value: 11682.71
Row: 38, Col: 1, Value: 12049.43
Row: 39, Col: 1, Value: 11923.7
Row: 40, Col: 1, Value: 12185.64
Row: 41, Col: 1, Value: 12950.52
Row: 42, Col: 1, Value: 12814.31
Row: 43, Col: 1, Value: 13369.63
Row: 44, Col: 1, Value: 13128.64
Row: 45, Col: 1, Value: 13920.64
Row: 46, Col: 1, Value: 14914.21
Row: 47, Col: 1, Value: 14689.86
Row: 48, Col: 1, Value: 14134.32
Row: 49, Col: 1, Value: 14625.76
Row: 50, Col: 1, Value: 14604.39
Row: 51, Col: 1, Value: 14305.25
Row: 52, Col: 1, Value: 14743.28
Row: 53, Col: 1, Value: 14989.0
Row: 54, Col: 1, Value: 14700.54
Row: 55, Col: 1, Value: 14914.21
Row: 56, Col: 1, Value: 14401.4
Row: 57, Col: 1, Value: 14332.82
Row: 58, Col: 1, Value: 14253.69
Row: 59, Col: 1, Value: 14423.25
Row: 60, Col: 1, Value: 14502.37
Row: 61, Col: 1, Value: 14864.08
Row: 62, Col: 1, Value: 15011.03
Row: 63, Col: 1, Value: 15214.49
Row: 64, Col: 1, Value: 15836.18
Row: 65, Col: 1, Value: 15440.56
Row: 66, Col: 1, Value: 15587.5
Row: 67, Col: 1, Value: 15056.24
Row: 68, Col: 1, Value: 15101.46
Row: 69, Col: 1, Value: 15363.09
Row: 70, Col: 1, Value: 15786.03
Row: 71, Col: 1, Value: 15991.79
Row: 72, Col: 1, Value: 16266.13
Row: 73, Col: 1, Value: 16746.23
Row: 74, Col: 1, Value: 17043.43
Row: 75, Col: 1, Value: 17032.0
Row: 76, Col: 1, Value: 16414.73
Row: 77, Col: 1, Value: 16849.1
Row: 78, Col: 1, Value: 17169.17
Row: 79, Col: 1, Value: 17352.06
Row: 80, Col: 1, Value: 18152.22
Row: 81, Col: 1, Value: 18239.31
Row: 82, Col: 1, Value: 18464.49
Row: 83, Col: 1, Value: 18974.1
Row: 84, Col: 1, Value: 18725.22
Row: 85, Col: 1, Value: 18689.67
Row: 86, Col: 1, Value: 19791.85
Row: 87, Col: 1, Value: 20834.77
Row: 88, Col: 1, Value: 21699.92
Row: 89, Col: 1, Value: 20538.49
Row: 90, Col: 1, Value: 22150.28
Row: 91, Col: 1, Value: 20467.38
$
$20,467
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 value of its currency
create these risks. Because these funds invest in
stocks, their performance is also related to
foreign stock markets. For these reasons an
international fund's performance may be more
volatile than that of a fund that invests exclusively
in the United States.
(checkmark)
YEAR-BY-YEAR TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CALENDAR 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
YEARS
INTERNA 8.33% 11.56% 19.12% -3.23% 8.04% -3.34% 35.08% -2.87% 12.23% 12.69%
TIONAL
GROWT
H &
INCOME
FUND
MORGA 24.63% 28.27% 10.53% -23.45% 12.13% -12.17% 32.56% 7.78% 11.21% 6.05%
N
STANLEY
CAPITAL
INTERNA
TIONAL
EAFE
INDEX
LIPPER 7.89% 16.24% 21.75% -11.74% 12.76% -4.77% 39.40% -0.71% 9.41% 11.78%
INTERNA
TIONAL
FUNDS
AVERAG
E
CONSU 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
MER
PRICE
INDEX
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 8.33
ROW: 4, COL: 1, VALUE: 11.56
ROW: 5, COL: 1, VALUE: 19.12
ROW: 6, COL: 1, VALUE: -3.23
ROW: 7, COL: 1, VALUE: 8.039999999999999
ROW: 8, COL: 1, VALUE: -3.34
ROW: 9, COL: 1, VALUE: 35.08
ROW: 10, COL: 1, VALUE: -2.87
ROW: 11, COL: 1, VALUE: 12.23
ROW: 12, COL: 1, VALUE: 12.69
(LARGE SOLID BOX) INTERNATIONAL GROWTH &
INCOME FUND
YEAR-BY-YEAR TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 19 92 199 3 199 4 199 5 199 6
YEARS
DIVERSI -13.81 % 36.67 % 1.09 % 17.97 % 20.02 %
FIED
INTERNA
TIONAL
FUND
MORGA -9.65 % 33.56 % 7.81 % 11.16 % 7.63 %
N
STANLEY
CAPITAL
INTERNA
TIONAL
GDP-
WEIGHT
ED
EAFE
INDEX
LIPPER -4.77 % 39.40 % -0.71 % 9.41 % 11.78 %
INTERNA
TIONAL
FUNDS
AVERAG
E
CONSU 2.90 % 2.75 % 2.67 % 2.54 % 3.32 %
MER
PRICE
INDEX
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: NIL
ROW: 8, COL: 1, VALUE: -13.81
ROW: 9, COL: 1, VALUE: 36.67
ROW: 10, COL: 1, VALUE: 1.09
ROW: 11, COL: 1, VALUE: 17.97
ROW: 12, COL: 1, VALUE: 20.02
(LARGE SOLID BOX) DIVERSIFIED INTERNATIONAL FUND
YEAR-BY-YEAR TOTAL RETURNS
CALENDAR 199 5 199 6
YEARS
INTERNA 13.90 % 9.59 %
TIONAL
VALUE
FUND
MORGA 11.21 % 6.05 %
N
STANLEY
CAPITAL
INTERNA
TIONAL
EAFE
INDEX
LIPPER 9.41 % 11.78 %
INTERNA
TIONAL
FUNDS
AVERAG
E
CONSU 2.54 % 3.32 %
MER
PRICE
INDEX
YEAR-BY-YEAR TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CALENDAR 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
YEARS
OVERSE 18.37% 8.26% 16.93% -6.60% 8.61% -11.46% 40.05% 1.27% 9.06% 13.10%
AS
FUND
MORGA 24.63% 28.27% 10.53% -23.45% 12.13% 12.17% 32.56% 7.78% 11.21% 6.05%
N
STANLEY
CAPITAL
INTERNA
TIONAL
EAFE
INDEX
LIPPER 7.89% 16.24% 21.75% -11.74% 12.76% -4.77% 39.40% -0.71% 9.41% 11.78%
INTERNA
TIONAL
FUNDS
AVERAG
E
CONSU 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
MER
PRICE
INDEX
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: 18.37
ROW: 3, COL: 1, VALUE: 8.26
ROW: 4, COL: 1, VALUE: 16.93
ROW: 5, COL: 1, VALUE: -6.6
ROW: 6, COL: 1, VALUE: 8.609999999999999
ROW: 7, COL: 1, VALUE: -11.46
ROW: 8, COL: 1, VALUE: 40.05
ROW: 9, COL: 1, VALUE: 1.27
ROW: 10, COL: 1, VALUE: 9.060000000000001
ROW: 11, COL: 1, VALUE: 13.1
(LARGE SOLID BOX) OVERSEAS FUND
YEAR-BY-YEAR TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1.CALENDAR 199 1 199 2 199 3 199 4 199 5 199 6
YEARS
WORLD 7.88 % 6.21 % 36.55 % 2.96 % 7.19 % 18.72 %
WIDE
FUND
MORGA 18.28 % -5.23 % 22.50 % 5.08 % 20.72 % 13.48 %
N
STANLEY
CAPITAL
INTERNA
TIONAL
WORLD
INDEX
LIPPER 18.44 % 0.01 % 31.04 % -3.03 % 16.05 % 16.51 %
GLOBAL
FUNDS
AVERAG
E
CONSU 3.06 % 2.90 % 2.75 % 2.67 % 2.54 % 3.32 %
MER
PRICE
INDEX
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: 7.88
ROW: 7, COL: 1, VALUE: 6.21
ROW: 8, COL: 1, VALUE: 36.55
ROW: 9, COL: 1, VALUE: 2.96
ROW: 10, COL: 1, VALUE: 7.19
ROW: 11, COL: 1, VALUE: 18.72
(LARGE SOLID BOX) WORLDWIDE FUND
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated
period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate
of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the
entire period. Average annual total returns smooth out variations in
performance; they are not the same as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. Yields
are calculated according to a standard that is required for all stock
and bond funds. Because this differs from other accounting methods,
the quoted yield may not equal the income actually paid to
shareholders. This difference may be significant for funds whose
investments are denominated in foreign currencies.
MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA, FAR EAST
(EAFE) INDEX is an unmanaged index that is designed to represent
the performance of developed stock markets outside of the United
States and Canada. The index may be compiled in two ways: a market
capitalization weighted (cap-weighted) and a gross domestic product
weighted (GDP-weighted) version. As of October 31, 1997, the
cap-weighted index included over 1,000 equity securities of companies
domiciled in 20 countries, and the GDP-weighted index included over
1,000 equity securities of companies domiciled in 20 countries.
MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX is a n unmanaged,
market capitalization weighted index that is designed to
represent the performance of developed stock markets throughout the
world. As of October 31, 1997, the index included over 1,500 equity
securities of companies domiciled in 22 countries.
Unlike each fund's returns, the total returns of each comparative
index do not include the effect of any brokerage commissions,
transaction fees, or other costs of investing.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. Government.
THE COMPETITIVE FUNDS AVERAGES are the Lipper International Funds
Average for International Growth & Income, Diversified International,
International Value and Overseas and the Lipper Global Funds Average
for Worldwide. As of October 31, 1997, the averages reflected
the performance of 406 and 175 mutual funds with similar
investment objectives, respectively. These averages, published
by Lipper Analytical Services, Inc., exclude the effect of sales
loads.
Other illustrations of equity fund performance may show moving
averages over specified periods.
The funds' recent strategies, performance, and holdings are detailed
twice a year in financial reports, which are sent to all
shareholders. For current performance or a free annual report,
call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders'
money and invests it toward a specified goal. Each fund is a
diversified fund of Fidelity Investment Trust, an open-end management
investment company organized as a Massachusetts business trust on
April 20, 1984.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet periodically throughout the year to oversee the
funds' activities, review contractual arrangements with companies that
provide services to the funds, and review the funds' performance. The
trustees serve as trustees for other Fidelity funds. The majority of
trustees are not otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL SHAREHOLDER MEETINGS AND MAIL PROXY
MATERIALS. These meetings may be called to elect or remove trustees,
change fundamental policies, approve a management contract, or for
other purposes. Shareholders not attending these meetings are
encouraged to vote by proxy. Fidelity will mail proxy materials
in advance, including a voting card and information about the
proposals to be voted on. The number of votes you are entitled to is
based upon the dollar value of your investment.
FMR AND ITS AFFILIATES
The funds are managed by FMR, which handles their business affairs
and, with the assistance of foreign affiliates, chooses their
investments.
Affiliates assist FMR with foreign securities:
(small solid bullet) Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England,
(small solid bullet) Fidelity Management & Research Far East Inc. (FMR
Far East), in Tokyo, Japan,
(small solid bullet) Fidelity International Investment Advisors
(FIIA), in Pembroke, Bermuda,
(small solid bullet) Fidelity International Investment Advisors (U.K.)
Limited (FIIA(U.K.)L), in London, England, and
(small solid bullet) Fidelity Investment Japan Ltd. (FIJ), in Tokyo,
Japan.
Richard Mace, Jr. is Vice President and manager of International Value
and Overseas, which he has managed since November 1994 and March 1996,
respectively. He also manages several other Fidelity funds. Since
joining Fidelity in 1987, Mr. Mace has worked as a manager and
analyst.
John R. Hickling is Vice President and manager of International Growth
& Income, which he has managed since March 1996. Previously, he
managed several other Fidelity funds. Since joining Fidelity in
1982, Mr. Hickling has worked as an analyst and manager.
Greg Fraser is Vice President and manager of Diversified
International, which he has managed since December 1991. Previously,
he managed other Fidelity funds. Mr. Fraser joined Fidelity in
1986.
Penelope A. Dobkin is Vice President and manager of Worldwide, which
she has managed since May 1990. Previously, she managed other
Fidelity funds. Ms. Dobkin join ed Fidelity in 1980.
Fidelity investment personnel may invest in securities for their own
accounts pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
Fidelity Distributors Corporation (FDC) distributes and markets
Fidelity's funds and services.
Fidelity Service Company, Inc. (FSC) performs transfer agent servicing
functions for the fund.
FMR Corp. is the ultimate parent company of FMR, FMR U.K., and FMR Far
East. Members of the Edward C. Johnson 3d family are the predominant
owners of a class of shares of common stock representing approximately
49% of the voting power of FMR Corp. Under the Investment Company Act
of 1940 (the 1940 Act), control of a company is presumed where one
individual or group of individuals owns more than 25% of the voting
stock of that company; therefore, the Johnson family may be deemed
under the 1940 Act to form a controlling group with respect to FMR
Corp.
Fidelity International Limited (FIL), is the parent company of FIIA,
FIJ, and FIIA(U.K.)L. The Johnson family group also owns, directly or
indirectly, more than 25% of the voting common stock of FIL.
FMR may use its broker-dealer affiliates and other firms that sell
fund shares to carry out a fund's transactions, provided that the fund
receives brokerage services and commission rates comparable to those
of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
These broadly diversified funds increase diversification by spreading
investments among securities of both developed and emerging markets,
different countries and geographic regions.
FMR determines where an issuer is located by looking at such factors
as its country of organization, the primary trading market for its
securities, and the location of its assets, personnel, sales, and
earnings.
The value of the funds' domestic and foreign investments varies in
response to many factors. Stock values fluctuate in response to the
activities of individual companies, and general market and economic
conditions. Bond values fluctuate based on changes in interest rates
and in the credit quality of the issuer. Investments in foreign
securities may involve risks in addition to those of U.S. investments,
including increased political and economic risk, as well as exposure
to currency fluctuations.
International funds have increased economic and political risks as
they are exposed to events and factors in the various world markets.
These risks may be greater for funds that invest in emerging markets.
Also, because many of the funds' investments are denominated in
foreign currencies, changes in the value of foreign currencies can
significantly affect a fund's share price. FMR may use a variety of
investment techniques to either increase or decrease a fund's exposure
to any currency.
FMR may use various investment techniques to hedge a portion of the
funds' risks, but there is no guarantee that these strategies will
work as FMR intends. As a mutual fund, each fund seeks to spread
investment risk by diversifying its holdings among many companies and
industries. Of course, when you sell your shares of a fund, they may
be worth more or less than what you paid for them. No one mutual fund,
however, can provide an appropriate balanced investment plan for all
investors.
FMR normally invests each fund's assets according to its investment
strategy. The funds may invest in short-term debt securities and money
market instruments for cash management purposes. Each fund also
reserves the right to invest without limitation in preferred stocks
and investment-grade debt instruments for temporary, defensive
purposes.
INTERNATIONAL GROWTH & INCOME FUND seeks capital growth and current
income by investing principally in foreign securities. FMR normally
invests at least 65% of the fund's total assets in these securities.
The fund may also invest in U.S. issuers.
The fund normally diversifies its investments across different
countries and regions. In allocating the fund's assets across
countries and regions, FMR will consider the size of the market in
each country and region relative to the size of the international
market as a whole.
FMR normally invests a majority of the fund's assets in equity
securities, selected generally for growth potential. In pursuit of
income, FMR normally invests at least 25% of the fund's total assets
in debt securities of any quality, money market securities, repurchase
agreements, or pooled accounts of repurchase agreements, and money
market funds managed by FMR or its affiliates.
DIVERSIFIED INTERNATIONAL FUND seeks capital growth by investing
primarily in equity securities of companies located anywhere outside
the United States. FMR normally invests at least 65% of the fund's
total assets in foreign securities. The fund may also invest in U.S.
issuers.
The fund normally diversifies its investments across different
countries and regions. In allocating the fund's assets across
countries and regions, FMR will consider the size of the market in
each country and region relative to the size of the international
market as a whole.
The fund may invest in the securities of any issuer, including
companies and other business organizations as well as governments and
government agencies. The fund, however, expects to invest primarily in
equity securities, but may also invest in debt securities of any
quality.
The fund invests in securities that FMR determines are undervalued
compared to industry norms within their countries. Using a highly
disciplined approach to help identify these instruments and focusing
on companies with market capitalizations of $100 million or more, FMR
hopes to generate more capital growth than that of the EAFE Index
(GDP-weighted).
The disciplined approach involves computer-aided, quantitative
analysis supported by fundamental research. FMR's computer model
systematically reviews thousands of stocks, using historical earnings,
dividend yield, earnings per share, and many other factors. Then,
potential investments are analyzed further using fundamental criteria,
such as the company's growth potential and estimates of current
earnings.
INTERNATIONAL VALUE FUND seeks long-term growth of capital by
investing in foreign securities. FMR normally invests at least 65% of
the fund's total assets in these securities. The fund may also invest
in U.S. issuers.
In selecting the fund's investments, FMR focuses on securities of
companies that it believes are undervalued in the marketplace or
possess valuable assets.
The fund normally diversifies its investments across different
countries and regions. In allocating the fund's assets across
countries and regions, FMR will consider the size of the market in
each country and region relative to the size of the international
market as a whole.
The fund may invest in the securities of any issuer, including
companies and other business organizations as well as governments and
government agencies. The fund, however, expects to invest primarily in
equity securities, but may also invest in debt securities of any
quality.
OVERSEAS FUND seeks long-term growth of capital by investing primarily
in foreign securities. The fund defines foreign securities as
securities of issuers whose principal activities are located outside
of the United States. Normally, at least 65% of the fund's total
assets will be invested in foreign securities. The fund may also
invest in U.S. issuers.
The fund normally diversifies its investments across different
countries and regions. In allocating the fund's assets across
countries and regions, FMR will consider the size of the market in
each country and region relative to the size of the international
market as a whole.
The fund may invest in the securities of any issuer, including
companies and other business organizations as well as governments and
government agencies. The fund, however, expects to invest primarily in
equity securities, but may also invest in debt securities of any
quality.
WORLDWIDE FUND seeks growth of capital by investing in securities
issued anywhere in the world.
The fund normally diversifies its investments across different
countries and regions, including the United States. In allocating the
fund's assets across countries and regions, FMR will consider the size
of the market in each country and region relative to the size of the
world market as a whole.
The fund may invest in the securities of any issuer, including
companies and other business organizations as well as governments and
government agencies. The fund, however, expects to invest primarily in
equity securities, but may also invest in debt securities of any
quality.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related
risks. Any restrictions listed supplement those discussed earlier in
this section. A complete listing of each fund's limitations and more
detailed information about each fund's investments are contained in a
fund's SAI. Policies and limitations are considered at the time of
purchase; the sale of instruments is not required in the event of a
subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these
techniques unless it believes that they are consistent with a fund's
investment objective and policies and that doing so will help a fund
achieve its goal. Fund holdings and recent investment strategies are
detailed in each fund's financial reports, which are sent to
shareholders twice a year. For a free SAI or financial report, call
1-800-544-8888.
EQUITY SECURITIES may include common stocks, preferred stocks,
convertible securities, and warrants. Common stocks, the most familiar
type, represent an equity (ownership) interest in a corporation.
Although equity securities have a history of long-term growth in
value, their prices fluctuate based on changes in a company's
financial condition and on overall market and economic conditions.
Smaller companies are especially sensitive to these factors.
RESTRICTIONS: With respect to 75% of total assets, each fund may not
purchase more than 10% of the outstanding voting securities of a
single issuer. This limitation does not apply to securities of other
investment companies.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers
to borrow money from investors. The issuer generally pays the investor
a fixed, variable, or floating rate of interest, and must repay the
amount borrowed at maturity. Some debt securities, such as zero coupon
bonds, do not pay current interest, but are sold at a discount from
their face values.
Debt securities have varying levels of sensitivity to changes in
interest rates and varying degrees of credit quality. In general, bond
prices rise when interest rates fall, and fall when interest rates
rise. Longer-term bonds and zero coupon bonds are generally more
sensitive to interest rate changes.
Lower-quality debt securities (sometimes called "junk bonds") are
considered to have speculative characteristics, and involve greater
risk of default or price changes due to changes in the issuer's
creditworthiness, or they may already be in default. The market prices
of these securities may fluctuate more than higher-quality securities
and may decline significantly in periods of general or regional
economic difficulty.
The table on the following page provides a summary of ratings
assigned to debt holdings (not including money market instruments) in
the funds' portfolios. These figures are dollar-weighted averages of
month-end portfolio holdings during the fiscal year ended October
1997, and are presented as a percentage of total security investments.
These percentages are historical and do not necessarily indicate a
fund's current or future debt holdings.
FISCAL YEAR ENDED 199 7 DEBT HOLDINGS (AS A % OF INVESTMENTS),
BY RATING
S&P RATING International Growth & Income Diversified International
International Value Overseas Worldwide
(Average of total investments)
INVESTMENT GRADE
Highest quality AAA
High quality AA 20.1 % -- 1.0 % 0.3 %
- --
Upper-medium grade A
Medium grade BBB 0.1 % -- -- --
--
LOWER QUALITY
Moderately speculative BB 0.6 % -- --
--
Speculative B -- -- -- --
0.2 %
Highly speculative CCC -- -- -- --
--
Poor quality CC
Lowest quality, no interest C -- -- --
-- --
In default, in arrears D -- -- -- --
--
20.8% -- 1.0% 0.3% 0.2%
MOODY'S RATING
(Average of total investments)
INVESTMENT GRADE
Highest quality Aaa
High quality Aa 21.0 % -- 1.1 % 0.3 %
--
Upper-medium grade A
Medium grade Baa 0.2 % -- -- --
--
LOWER QUALITY
Moderately speculative Ba -- -- --
-- --
Speculative B 0.6 % -- -- -- 0.2 %
Highly speculative Caa -- -- -- --
--
Poor quality Ca
Lowest quality, no interest C -- -- --
-- --
In default, in arrears - -- -- -- -- --
21.8% -- 1.1% 0.3% 0.2%
REFER TO THE FUNDS' SAI FOR A MORE COMPLETE DISCUSSION OF THESE
RATINGS.
THE FUNDS DO NOT NECESSARILY RELY ON THE RATINGS OF MOODY'S OR S&P TO
DETERMINE COMPLIANCE WITH THEIR DEBT QUALITY POLICIES. SECURITIES NOT
RATED BY MOODY'S OR S&P AMOUNTED TO 2.0% OF
INTERNATIONAL GROWTH & INCOME, 0.2% OF OVERSEAS AND 0.4% OF
INTERNATIONAL VALUE. THESE PERCENTAGES MAY INCLUDE SECURITIES
RATED BY OTHER NATIONALLY RECOGNIZED STATISTICAL RATING
ORGANIZATIONS, AS WELL AS UNRATED SECURITIES.
FOR FOREIGN GOVERNMENT SECURITIES NOT INDIVIDUALLY RATED BY A
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION, FMR
ASSIGNS THE RATING OF THE SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
RESTRICTIONS: Purchase of a debt security is consistent with the
fund's debt quality policy if it is rated at or above the stated level
by Moody's or rated in the equivalent categories by S&P, or is unrated
but judged to be of equivalent quality by FMR. Each fund currently
intends to limit its investments in lower than Baa-quality debt
securities to less than 35% of its assets.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies,
and securities issued by U.S. entities with substantial foreign
operations may involve additional risks and considerations. These
include risks relating to political , economic , or
regulatory conditions in foreign countries, fluctuations in
foreign currencies, withholding or other taxes, operational risks, and
the potentially less stringent investor protection and disclosure
standards of foreign markets. Additionally, governmental issuers of
foreign debt securities may be unwilling to pay interest and repay
principal when due and may require that the conditions for payment be
renegotiated. All of these factors can make foreign investments,
especially those in emerging markets, more volatile and
potentially less liquid, than U.S. investments.
EXPOSURE TO EMERGING MARKETS. Investing in emerging markets involves
risks in addition to and greater than those generally associated with
investing in developed foreign markets. The extent of economic
development; political stability; market depth, infrastructure, and
capitalization; and regulatory oversight is generally less than in
more developed markets. Emerging market economies may be subject to
greater social, economic, regulatory, and political uncertainties. All
of these factors generally make emerging market securities more
volatile and potentially less liquid than securities issued in more
developed markets.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a
security at one price and simultaneously agrees to sell it back at a
higher price. Delays or losses could result if the other party to the
agreement defaults or becomes insolvent.
FOREIGN REPURCHASE AGREEMENTS may be less well secured than U.S.
repurchase agreements, and may be denominated in foreign currencies.
They also may involve greater risk of loss if the counterparty
defaults. Some counterparties in these transactions may be less
creditworthy than those in U.S. markets.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices,
interest rates, currency exchange rates, commodity prices, or other
factors that affect security values. These techniques may involve
derivative transactions such as buying and selling options and futures
contracts, entering into currency exchange contracts or swap
agreements, purchasing indexed securities, and for International
Growth & Income, selling securities short.
FMR can use these practices to adjust the risk and return
characteristics of a fund's portfolio of investments. If FMR judges
market conditions incorrectly or employs a strategy that does not
correlate well with a fund's investments, these techniques could
result in a loss, regardless of whether the intent was to reduce risk
or increase return. These techniques may increase the volatility of a
fund and may involve a small investment of cash relative to the
magnitude of the risk assumed. In addition, these techniques could
result in a loss if the counterparty to the transaction does not
perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other
borrower. They have additional risks beyond conventional debt
securities because they may entail less legal protection for a fund,
or there may be a requirement that the fund supply additional cash to
a borrower on demand.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined
by FMR, under the supervision of the Board of Trustees, to be
illiquid, which means that they may be difficult to sell promptly at
an acceptable price. The sale of some illiquid securities and some
other securities may be subject to legal restrictions. Difficulty in
selling securities may result in a loss or may be costly to a fund.
RESTRICTIONS: A fund may not purchase a security if, as a
result, more than 15% of its assets would be invested in liiquid
securities.
OTHER INSTRUMENTS may include securities of closed-end investment
companies and real estate-related instruments.
CASH MANAGEMENT. A fund may invest in money market securities, in
repurchase agreements, and in a money market fund available only to
funds and accounts managed by FMR or its affiliates, whose goal is to
seek a high level of current income while maintaining a stable $1.00
share price. A major change in interest rates or a default on the
money market fund's investments could cause its share price to change.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce
the risks of investing. This may include limiting the amount of money
invested in any one issuer or, on a broader scale, in any one
industry.
RESTRICTIONS: With respect to 75% of its total assets, each
fund may not purchase a security if, as a result, more than 5% would
be invested in the securities of any issuer. This limitation
does not apply to U.S. Government securities or to securities of other
investment companies.
A fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government
securities.
BORROWING. Each fund may borrow from banks or from other funds advised
by FMR, or through reverse repurchase agreements. If a fund borrows
money, its share price may be subject to greater fluctuation until the
borrowing is paid off. If a fund makes additional investments while
borrowings are outstanding, this may be considered a form of leverage.
RESTRICTIONS: Each fund may borrow only for temporary or
emergency purposes, but not in an amount exceeding 331/3% of its total
assets.
LENDING securities to broker-dealers and institutions, including
Fidelity Brokerage Services, Inc. (FBSI), an affiliate of FMR, is a
means of earning income. This practice could result in a loss or a
delay in recovering a fund's securities. A fund may also lend
money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 331/3% of
a fund's total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages
are fundamental, that is, subject to change only by shareholder
approval. The following paragraphs restate all those that are
fundamental. All policies stated throughout this prospectus, other
than those identified in the following paragraphs, can be changed
without shareholder approval.
INTERNATIONAL GROWTH & INCOME FUND seeks capital growth and current
income, consistent with reasonable investment risk, by investing
principally in foreign securities.
DIVERSIFIED INTERNATIONAL FUND seeks capital growth by investing
primarily in equity securities of companies located anywhere outside
the U.S.
INTERNATIONAL VALUE FUND seeks long-term growth of capital.
OVERSEAS FUND seeks long-term growth of capital primarily through
investments in foreign securities.
WORLDWIDE seeks growth of capital by investing in securities issued
anywhere in the world.
With respect to 75% of its total assets, each fund may not purchase a
security if, as a result, more than 5% would be invested in the
securities of any one issuer and may not purchase more than 10% of the
outstanding voting securities of a single issuer. These limitations do
not apply to U.S. Government securities or to securities of other
investment companies.
Each fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government
securities.
Each fund may borrow only for temporary or emergency purposes, but not
in an amount exceeding 331/3% of its total assets.
Loans, in the aggregate, may not exceed 331/3% of each fund's total
assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its
share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments
and business affairs. FMR in turn pays fees to affiliates who provide
assistance with these services. Each fund also pays OTHER EXPENSES,
which are explained on page .
FMR may, from time to time, agree to reimburse the funds for
management fees and other expenses above a specified limit. FMR
retains the ability to be repaid by a fund if expenses fall below the
specified limit prior to the end of the fiscal year. Reimbursement
arrangements, which may be terminated at any time without notice, can
decrease a fund's expenses and boost its performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. For
International Growth & Income Fund and Worldwide Fund the fee is
calculated by adding a group fee rate to an individual fund fee rate,
and multiplying the result by each fund's average net assets.
For Diversified International Fund, International Value Fund, and
Overseas Fund t he amount of the fee is determined by taking a
BASIC FEE and then, applying a PERFORMANCE ADJUSTMENT.
MANAGEMENT = BASIC +/- PERFORMANCE
FEE FEE ADJUSTMENT
The performance adjustment either increases or decreases the
management fee, depending on how well the fund has performed relative
to its benchmark index.
DIVERSIFIED INTERNATIONAL EAFE INDEX/GDP WEIGHTED
INTERNATIONAL VALUE EAFE INDEX/CAP WEIGHTED
OVERSEAS EAFE INDEX/CAP WEIGHTED
THE BASIC FEE (calculated monthly) is calculated by adding a group fee
rate to an individual fund fee rate, and multiplying the result by a
fund's average net assets.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0 .52%,
and it drops as total assets under management increase.
For October 1997, the group fee rate was 0.2941 %. The
individual fund fee rate is 0.45% for each fund.
The basic fee rate for Diversified International Fund,
International Value Fund, and Overseas Fund for the fiscal year ended
October 31, 1997 was 0.74%, 0.75% and 0.75%, respectively.
THE PERFORMANCE ADJUSTMENT rate is calculated monthly by comparing
Diversified International Fund's, International Value Fund's, and
Overseas Fund's performance to that of its benchmark index over the
performance period. For Diversified International Fund and
Overseas Fund t he performance period is the most recent 36-month
period. For International Value Fund, the performance period began
on December 1, 1994 and will eventually include 36 months. The
performance adjustment took effect in November 1995. The
difference is translated into a dollar amount that is added to or
subtracted from the basic fee. The maximum annualized performance
adjustment rate is (plus/minus) 0.20% of a fund's average net
assets over the performance period .
The total management fee rate for the fiscal year ended October 1997
is outlined in the following chart.
FUND MANAGEMENT
FEE
INTERNATIONAL GROWTH & INCOME 0.75%
DIVERSIFIED INTERNATIONAL 0.83 %
INTERNATIONAL VALUE 0.85 %
OVERSEAS 0.84 %
WORLDWIDE 0.75%
FMR HAS SUB-ADVISORY AGREEMENTS with four affiliates: FMR U.K., FMR
Far East, FIJ, and FIIA. FIIA in turn has a sub-advisory agreement
with FIIA(U.K.)L. FMR U.K. focuses on issuers based in Europe. FMR Far
East focuses on issuers based in Asia and the Pacific Basin. FIJ
focuses on issuers based in Japan and elsewhere around the world. FIIA
focuses on issuers based in Hong Kong, Australia, New Zealand, and
Southeast Asia (other than Japan). FIIA(U.K.)L focuses on issuers
based in the United Kingdom and Europe.
The sub-advisers are compensated for providing investment research and
advice. FMR pays FMR U.K. and FMR Far East fees equal to 110% and
105%, respectively, of the costs of providing these services. FMR pays
FIJ and FIIA 30% of its management fee associated with investments for
which the sub-adviser provided investment advice. FIIA pays
FIIA(U.K.)L a fee equal to 110% of the cost of providing these
services.
The sub-advisers may also provide investment management services. In
return, FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a fee equal to
50% of its management fee rate with respect to a fund's investments
that the sub-adviser manages on a discretionary basis. FIIA pays
FIIA(U.K.)L a fee equal to 110% of the cost of providing these
services.
OTHER EXPENSES
While the management fee is a significant component of the funds'
annual operating costs, the funds have other expenses as well.
The funds contract with FSC to perform transfer agency, dividend
disbursing, shareholder servicing, and accounting functions. These
services include processing shareholder transactions, valuing each
fund's investments, handling securities loans for each fund, and
calculating each fund's share price and dividends.
For the fiscal year ended October 1997, transfer agency and pricing
and bookkeeping fees paid (as a percentage of average net assets)
amounted to the following.
TRANSFER AGENCY AND
PRICING AND BOOKKEEPING FEES
PAID BY FUND
INTERNATIONAL GROWTH & INCOME 0.34 %
DIVERSIFIED INTERNATIONAL 0.33 %
INTERNATIONAL VALUE 0.32 %
OVERSEAS 0.31 %
WORLDWIDE 0.34 %
Each fund also pays other expenses, such as legal, audit, and
custodian fees; in some instances, proxy solicitation costs; and the
compensation of trustees who are not affiliated with Fidelity. A
broker-dealer may use a portion of the commissions paid by a fund to
reduce that fund's custodian or transfer agent fees.
Each fund has adopted a DISTRIBUTION AND SERVICE PLAN. Each plan
recognizes that FMR may use its management fee revenues, as well as
its past profits or its resources from any other source, to pay FDC
for expenses incurred in connection with the distribution of fund
shares. FMR directly, or through FDC, may make payments to third
parties, such as banks or broker-dealers, that engage in the sale of,
or provide shareholder support services for, the fund's shares.
Currently, the Board of Trustees has not authorized such payments.
For the fiscal year ended October 1997, each fund's portfolio turnover
rate is outlined in the table below. These rates vary from year to
year.
FUND TURNOVER
INTERNATIONAL GROWTH & INCOME 70 %
DIVERSIFIED INTERNATIONAL 81 %
INTERNATIONAL VALUE 86 %
OVERSEAS 68 %
WORLDWIDE 85 %
(null)Doing Business with Fidelity
Fidelity Investments was established in 1946 to manage one of
America's first
mutual funds. Today, Fidelity is the largest mutual fund company in
the country,
and is known as an innovative provider of high-quality financial
services to
individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's
leading discount brokerage firms, FBSI. Fidelity is also a leader in
providing
tax-sheltered retirement plans for individuals investing on their own
or through
their employer.
Fidelity is committed to providing investors with practical
information to
make investment decisions. Based in Boston, Fidelity provides
customers with
complete service 24 hours a day, 365 days a year, through a network of
telephone
service centers around the country.
To reach Fidelity for general information, call these numbers:
S For mutual funds, 1-800-544-8888
S For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity
has
over 80 walk-in Investor Centers across the country.
(null)Types of Accounts
You may set up an account directly in a fund or, if you own or intend
to purchase
individual securities as part of your total investment portfolio, you
may consider
investing in a fund through a brokerage account.
You may purchase or sell shares of the funds through an investment
professional,
including a broker, who may charge you a transaction fee for this
service.
If you invest through FBSI, another financial institution, or an
investment
professional, read their program materials for any special provisions,
additional
service features or fees that may apply to your investment in a fund.
Certain
features of the fund, such as the minimum initial or subsequent
investment
amounts, may be modified.
The different ways to set up (register) your account with Fidelity are
listed
in the table that follows.
Fidelity Facts
Fidelity offers the broadest selection of mutual funds
in the world.
w Number of Fidelity mutual funds: over 227
w Assets in Fidelity mutual funds: over $510 billion
w Number of shareholder accounts: over 33 million
w Number of investment analysts and portfolio managers: over 275
3
The account guidelines that follow may not apply to certain retirement
accounts.
If you are investing through a retirement account or if your employer
offers
the funds through a retirement program, you may be subject to
additional fees.
For more information, please refer to your program materials, contact
your
employer, or call your retirement benefits number or Fidelity
directly, as
appropriate.
Ways to Set Up Your Account
Individual or Joint Tenant
For your general investment needs
Individual accounts are owned by one person. Joint accounts can have
two or
more owners (tenants).
Retirement
To shelter your retirement savings from taxes
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts
may be tax deductible. Retirement accounts require special
applications and
typically have lower minimums.
Individual Retirement Accounts (IRAs) allow anyone of legal age and
under 70 with earned income to invest
up to $2,000 per tax year. Individuals can also invest in a spouse's
IRA if
the spouse has earned income of less than $250.
Rollover IRAs retain special tax advantages for certain distributions
from employer-sponsored
retirement plans.
Keogh or Corporate Profit Sharing and Money Purchase Pension Plans
allow self-employed individuals or small business owners (and their
employees) to make tax-deductible contributions for themselves and any
eligible
employees up to $30,000 per year.
Simplified Employee Pension Plans (SEP-IRAs) provide small business
owners or those with self-employed income (and
their eligible employees) with many of the same advantages as a Keogh,
but
with fewer administrative requirements.
SIMPLE IRAs provide small business owners and those with
self-employed
income (and their eligible employees) with many of the advantages of a
401(k)
plan, but with fewer administrative requirements.
403(b) Custodial Accounts are available to employees of most
tax-exempt institutions, including
schools, hospitals, and other charitable organizations.
401(k) Programs allow employees of corporations of all sizes to
contribute a percentage
of their wages on a tax-deferred basis. These accounts need to be
established
by the trustee of the plan.
Gifts or Transfers to a Minor (UGMA, UTMA)
To invest for a child's education or other future needs
These custodial accounts provide a way to give money to a child and
obtain
tax benefits. An individual can give up to $10,000 a year per child
without
paying federal gift tax. Depending on state laws, you can set up a
custodial
account under the Uniform Gifts to Minors Act (UGMA) or the Uniform
Transfers
to Minors Act (UTMA).
Trust
For money being invested by a trust
The trust must be established before an account can be opened.
Business or Organization
For investment needs of corporations, associations, partnerships, or
other
groups
Requires a special application.
(null)How to Buy Shares
The price to buy one share of each fund is the fund's net asset value
per share
(NAV). Each fund's shares are sold without a sales charge.
Your shares will be purchased at the next NAV calculated after your
investment
is received in proper form. Each fund's NAV is normally calculated
each business
day at 4:00 p.m. Eastern time.
If you are new to Fidelity, complete and sign an account application
and mail it along with your check.
You may also open your account in person or by wire as described on
page 39.
If there is no application accompanying this prospectus, call
1-800-544-8888.
If you already have money invested in a Fidelity fund, you can:
S Mail in an application with a check, or
S Open your account by exchanging from another Fidelity fund.
If you are investing through a tax-sheltered retirement plan, such as
an IRA, for the first time, you will need a special application.
Retirement
investing also involves its own investment procedures. Call
1-800-544-8888
for more information and a retirement application.
If you buy shares by check or Fidelity Money LineR, and then sell
those shares
by any method other than by exchange to another Fidelity fund, the
payment
may be delayed for up to seven business days to ensure that your
previous investment
has cleared.
Minimum Investments
To Open an Account $2,500
For Fidelity IRA, Rollover IRA, SEP-IRA and Keogh accounts $500
To Add to an Account $250
For Fidelity IRA, Rollover IRA, SEP-IRA and Keogh accounts $250
Through regular investment plans* $100
Minimum Balance $2,000
For Fidelity IRA, Rollover IRA, SEP-IRA and Keogh accounts $500
*For more information about regular investment plans, please refer to
"Investor
Services," page 41.
These minimums may vary for investments through Fidelity Portfolio
Advisory
Services or a Fidelity Payroll Deduction Program account in Worldwide.
There
is no minimum account balance or initial or subsequent investment
minimum for
certain retirement accounts funded through salary deduction, or
accounts opened
with the proceeds of distributions from Fidelity retirement accounts.
Refer
to the program materials for details.
(null)(null)Key Information
Phone 1-800-544-7777
S To open an account, exchange from another Fidelity fund account with
the same
registration, including name, address, and taxpayer ID number.
S To add to an account, exchange from another Fidelity fund account
with the
same registration, including name, address, and taxpayer ID number.
You can
also use Fidelity Money Line to transfer from your bank account. Call
before
your first use to verify that this service is in place on your
account. Maximum
Money Line: $100,000.
Mail
S To open an account, complete and sign the application. Make your
check payable
to the complete name of the fund. Mail to the address indicated on the
application.
S To add to an account, make your check payable to the complete name
of the fund.
Indicate your fund account number on your check and mail to the
address printed
on your account statement.
S Exchange by mail: Call 1-800-544-6666 for instructions.
In Person
S To open an account, bring your application and check to a Fidelity
Investor
Center. Call 1-800-544-9797 for the center nearest you.
S To add to an account, bring your check to a Fidelity Investor
Center. Call
1-800-544-9797 for the center nearest you.
(null)(null)Wire
Not available for retirement accounts.
S To open an account, call 1-800-544-7777 to set up your account and
to arrange
a wire transaction. Wire within 24 hours to the wire address below.
Specify
the complete name of the fund and include your new account number and
your
name.
S To add to an account, wire to the wire address below. Specify the
complete
name of the fund and include your account number and your name.
S Wire address: Bankers Trust Company, Bank Routing #021001033,
Account # 00163053.
Automatically
New accounts cannot be opened with these services.
S Use Fidelity Automatic Account Builder. Sign up for these services
when opening
your account, or call 1-800-544-6666 to add to it.
TDD - Service for the Deaf and Hearing-Impaired: 1-800-544-0118
(null)How to Sell Shares
You can arrange to take money out of your fund account at any time by
selling
(redeeming) some or all of your shares.
The price to sell one share of each fund is the fund's NAV.
Your shares will be sold at the next NAV calculated after your order
is received
in proper form. Each fund's NAV is normally calculated each business
day at
4:00 p.m. Eastern time.
To sell shares in a non-retirement account, you may use any of the
methods described on these two pages.
To sell shares in a Fidelity retirement account, your request must be
made in writing, except for exchanges to other Fidelity
funds, which can be requested by phone or in writing. Call
1-800-544-6666 for
a retirement distribution form.
If you are selling some but not all of your shares, leave at least
$2,000 worth of shares in the account to keep it open ($500
for retirement accounts).
To sell shares by bank wire or Fidelity Money Line, you will need to
sign up for these services in advance.
Certain requests must include a signature guarantee. It is designed to
protect you and Fidelity from fraud. Your request must be
made in writing and include a signature guarantee if any of the
following situations
apply:
S You wish to redeem more than $100,000 worth of shares,
S Your account registration has changed within the last 30 days,
S The check is being mailed to a different address than the one on
your account
(record address),
S The check is being made payable to someone other than the account
owner, or
S The redemption proceeds are being transferred to a Fidelity account
with a
different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including
Fidelity Investor Centers), dealer, credit union (if authorized under
state
law), securities exchange or association, clearing agency, or savings
association.
A notary public cannot provide a signature guarantee.
Selling Shares in Writing
Write a "letter of instruction" with:
S Your name,
S The fund's name,
S Your fund account number,
S The dollar amount or number of shares to be redeemed, and
S Any other applicable requirements listed in the table that follows.
Unless otherwise instructed, Fidelity will send a check to the record
address.
Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fees and Key Information
Phone 1-800-544-7777
All account types except retirement
S Maximum check request: $100,000.
S For Money Line transfers to your bank account; minimum: $10;
maximum: $100,000.
All account types
S You may exchange to other Fidelity funds if both accounts are
registered with
the same name(s), address, and taxpayer ID number.
Mail or in Person
Individual, Joint Tenants, Sole Proprietorships, UGMA, UTMA
S The letter of instruction must be signed by all persons required to
sign for
transactions, exactly as their names appear on the account.
Retirement accounts
S The account owner should complete a retirement distribution form.
Call 1-800-544-6666
to request one.
Trusts
S The trustee must sign the letter indicating capacity as trustee. If
the trustee's
name is not in the account registration, provide a copy of the trust
document
certified within the last 60 days.
Businesses or Organizations
S At least one person authorized by corporate resolution to act on the
account
must sign the letter.
S Include a corporate resolution with corporate seal or a signature
guarantee.
Executors, Administrators, Conservators, Guardians
S Call 1-800-544-6666 for instructions.
Wire
All account types except retirement
S You must sign up for the wire feature before using it. To verify
that it is
in place, call 1-800-544-6666. Minimum wire: $5,000.
S Your wire redemption request must be received in proper form by
Fidelity before
4:00 p.m. Eastern time for money to be wired on the next business day.
TDD - Service for the Deaf and Hearing-Impaired: 1-800-544-0118
(null)Investor Services
Fidelity provides a variety of services to help you manage your
account.
Information Services
Fidelity's telephone representatives are available 24 hours a day, 365
days a year. Whenever you call, you can
speak with someone equipped to provide the information or service you
need.
Statements and reports that Fidelity sends to you include the
following:
S Confirmation statements (after every transaction, except
reinvestments, that
affects your account balance or your account registration)
S Account statements (quarterly)
S Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses
will be mailed to your household, even if you have more than one
account in
the fund. Call 1-800-544-6666 if you need copies of financial reports,
prospectuses,
or historical account information.
Transaction Services
Exchange privilege. You may sell your fund shares and buy shares of
other Fidelity funds by telephone
or in writing.
Note that exchanges out of a fund are limited to four per calendar
year, and
that they may have tax consequences for you. For details on policies
and restrictions
governing exchanges, including circumstances under which a
shareholder's exchange
privilege may be suspended or revoked, see page 44.
Systematic withdrawal plans let you set up periodic redemptions from
your account.
Fidelity Money Liner enables you to transfer money by phone between
your bank account and your
fund account. Most transfers are complete within three business days
of your
call.
24-Hour Service
Account Assistance 1-800-544-6666
Account Transactions 1-800-544-7777
Product Information 1-800-544-8888
Retirement Account Assistance 1-800-544-4774
TouchTone XpressSM 1-800-544-5555
Automated service
3
Regular Investment Plans
One easy way to pursue your financial goals is to invest money
regularly. Fidelity
offers convenient services that let you transfer money into your fund
account,
or between fund accounts, automatically. While regular investment
plans do
not guarantee a profit and will not protect you against loss in a
declining
market, they can be an excellent way to invest for retirement, a home,
educational
expenses, and other long-term financial goals. Certain restrictions
apply for
retirement accounts. Call 1-800-544-6666 for more information.
Regular Investment Plans
Fidelity Automatic Account BuilderSM
To move money from your bank account to a Fidelity fund
Minimum
$100
Frequency
Monthly or quarterly
Setting up or changing
S For a new account, complete the appropriate section on the fund
application.
S For existing accounts, call 1-800-544-6666 for an application.
S To change the amount or frequency of your investment, call
1-800-544-6666 at
least three business days prior to your next scheduled investment
date.
Direct Deposit
To send all or a portion of your paycheck or government check to a
Fidelity
fundA
Minimum
$100
Frequency
Every pay period
Setting up or changing
S Check the appropriate box on the fund application, or call
1-800-544-6666 for
an authorization form.
S Changes require a new authorization form.
Fidelity Automatic Exchange Service
To move money from a Fidelity money market fund to another Fidelity
fund
Minimum
$100
Frequency
Monthly, bimonthly, quarterly, or annually
Setting up or changing
S To establish, call 1-800-544-6666 after both accounts are opened.
S To change the amount or frequency of your investment, call
1-800-544-6666.
A Because their share prices fluctuate, these funds may not be
appropriate
choices for direct deposit of your entire check.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net income and capital
gains to shareholders each year. Normally, dividends and capital gains
are distributed in December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on
the application, call 1-800-544-6666 for instructions. Each fund
offers four options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions
will be automatically reinvested in additional shares of the fund. If
you do not indicate a choice on your application, you will be assigned
this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each
dividend distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital
gain distributions.
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
FOR RETIREMENT ACCOUNTS, all distributions are automatically
reinvested. When you are over 59 years old, you can receive
distributions in cash.
When a fund deducts a distribution from its NAV, the reinvestment
price is the fund's NAV at the close of business that day. Cash
distribution checks will be mailed within seven days.
TAXES
As with any investment, you should consider how your investment in a
fund will be taxed. If your account is not a tax-deferred retirement
account, you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income
tax, and may also be subject to state or local taxes. If you live
outside the United States, your distributions could also be taxed by
the country in which you reside. Your distributions are taxable when
they are paid, whether you take them in cash or reinvest them.
However, distributions declared in December and paid in January are
taxable as if they were paid on December 31.
For federal tax purposes, each fund's income and short-term capital
gains are distributed as dividends and taxed as ordinary income;
capital gain distributions are taxed as long-term capital gains. Every
January, Fidelity will send you and the IRS a statement showing the
tax characterization of distributions paid to you in the previous
year.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or
loss is the difference between the cost of your shares and the price
you receive when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a
confirmation statement showing how many shares you sold and at what
price. You will also receive a consolidated transaction statement
every January. However, it is up to you or your tax preparer to
determine whether this sale resulted in a capital gain and, if so, the
amount of tax to be paid. Be sure to keep your regular account
statements; the information they contain will be essential in
calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares when a fund has realized but
not yet distributed income or capital gains, you will pay the full
price for the shares and then receive a portion of the price back in
the form of a taxable distribution.
UNDERSTANDING DISTRIBUTIONS
As a fund shareholder, you are entitled to your share of the fund's
net income and gains on its investments. The fund passes its earnings
along to its investors as DISTRIBUTIONS.
Each fund earns dividends from stocks and interest from bond, money
market, and other investments. These are passed along as DIVIDEND
DISTRIBUTIONS. The fund realizes capital gains whenever it
sells securities for a higher price than it paid for them. These are
passed along as CAPITAL GAIN DISTRIBUTIONS.
(checkmark)
CURRENCY CONSIDERATIONS. If a fund's dividends exceed its taxable
income in any year, which is sometimes the result of currency-related
losses, all or a portion of the fund's dividends may be treated as a
return of capital to shareholders for tax purposes. To minimize the
risk of a return of capital, the funds may adjust their dividends to
take currency fluctuations into account, which may cause the dividends
to vary. Any return of capital will reduce the cost basis of your
shares, which will result in a higher reported capital gain or a lower
reported capital loss when you sell your shares. The statement you
receive in January will specify if any distributions included a return
of capital.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on a
fund and its investments, and these taxes generally will reduce a
fund's distributions. However, if you meet certain holding period
requirements with respect to your fund shares, an offsetting tax
credit may be available to you. If you do not meet such holding period
requirements, you may still be entitled to a deduction for certain
foreign taxes. In either case, your tax statement will show more
taxable income or capital gains than were actually distributed by the
fund, but will also show the amount of the available offsetting credit
or deduction.
There are tax requirements that all funds must follow in order to
avoid federal taxation. In its effort to adhere to these requirements,
a fund may have to limit its investment activity in some types of
instruments.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange
(NYSE) is open. FSC normally calculates each fund's NAV as of the
close of business of the NYSE, normally 4:00 p.m. Eastern time.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the
number of shares outstanding.
Each fund's assets are valued primarily on the basis of market
quotations. Short-term securities with remaining maturities of sixty
days or less for which quotations are not readily available are valued
on the basis of amortized cost. This method minimizes the effect of
changes in a security's market value. Foreign securities are valued on
the basis of quotations from the primary market in which they are
traded, and are translated from the local currency into U.S. dollars
using current exchange rates. In addition, if quotations are not
readily available,or if the values have been materially affected by
events occurring after the closing of a foreign market assets may be
valued by another method that the Board of Trustees believes
accurately reflects fair value.
EACH FUND'S OFFERING PRICE (price to buy one share) is its NAV. Each
fund's REDEMPTION PRICE (price to sell one share) is its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require a fund to withhold 31% of your taxable distributions and
redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity may only be
liable for losses resulting from unauthorized transactions if it does
not follow reasonable procedures designed to verify the identity of
the caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy
of your confirmation statements immediately after you receive them. If
you do not want the ability to redeem and exchange by telephone, call
Fidelity for instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during
periods of unusual market activity), consider placing your order by
mail or by visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a
period of time. Each fund also reserves the right to reject any
specific purchase order, including certain purchases by exchange. See
"Exchange Restrictions" on page . Purchase orders may be refused if,
in FMR's opinion, they would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be
purchased at the next NAV calculated after your investment is received
in proper form. Note the following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number
of checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will
be canceled and you could be liable for any losses or fees a fund or
its transfer agent has incurred.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money
order, U.S. Treasury check, Federal Reserve check, or direct deposit
instead.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements
with FDC may enter confirmed purchase orders on behalf of customers by
phone, with payment to follow no later than the time when a fund is
priced on the following business day. If payment is not received by
that time, the financial institution could be held liable for
resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at
the next NAV calculated after your order is received in proper
form . Note the following:
(small solid bullet) Normally, redemption proceeds will be mailed to
you on the next business day, but if making immediate payment could
adversely affect a fund, it may take up to seven days to pay you.
(small solid bullet) Fidelity Money Line redemptions generally will be
credited to your bank account on the second or third business day
after your phone call.
(small solid bullet) Each fund may hold payment on redemptions until
it is reasonably satisfied that investments made by check or Fidelity
Money Line have been collected, which can take up to seven business
days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
FIDELITY RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE of
$12.00 from accounts with a value of less than $2,500, subject to an
annual maximum charge of $24.00 per shareholder. It is expected that
accounts will be valued on the second Friday in November of each year.
Accounts opened after September 30 will not be subject to the fee for
that year. The fee, which is payable to the transfer agent, is
designed to offset in part the relatively higher costs of servicing
smaller accounts. This fee will not be deducted from Fidelity
brokerage accounts, retirement accounts (except non-prototype
retirement accounts), accounts using regular investment plans, or if
total assets with Fidelity exceed $30,000. Eligibility for the $30,000
waiver is determined by aggregating Fidelity accounts maintained by
FSC or FBSI which are registered under the same social security number
or which list the same social security number for the custodian of a
Uniform Gifts/Transfers to Minors Act account.
IF YOUR ACCOUNT BALANCE FALLS BELOW $2,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send
the proceeds to you. Your shares will be redeemed at the NAV on the
day your account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to
qualified recipients who support the sale of shares of the funds
without reimbursement from the funds. Qualified recipients are
securities dealers who have sold fund shares or others, including
banks and other financial institutions, under special arrangements in
connection with FDC's sales activities. In some instances, these
incentives may be offered only to certain institutions whose
representatives provide services in connection with the sale or
expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a
fund for shares of other Fidelity funds. However, you should note the
following:
(small solid bullet) The fund you are exchanging into must be
available for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund, read its
prospectus.
(small solid bullet) If you exchange into a fund with a sales charge,
you pay the percentage-point difference between that fund's sales
charge and any sales charge you have previously paid in connection
with the shares you are exchanging. For example, if you had already
paid a sales charge of 2% on your shares and you exchange them into a
fund with a 3% sales charge, you would pay an additional 1% sales
charge.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund
performance and shareholders, each fund reserves the right to
temporarily or permanently terminate the exchange privilege of any
investor who makes more than four exchanges out of the fund per
calendar year. Accounts under common ownership or control, including
accounts with the same taxpayer identification number, will be counted
together for purposes of the four exchange limit.
(small solid bullet) The exchange limit may be modified for accounts
in certain institutional retirement plans to conform to plan exchange
limits and Department of Labor regulations. See your plan materials
for further information.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would
be unable to invest the money effectively in accordance with its
investment objective and policies, or would otherwise potentially be
adversely affected.
(small solid bullet) Your exchanges may be restricted or refused if a
fund receives or anticipates simultaneous orders affecting significant
portions of the fund's assets. In particular, a pattern of exchanges
that coincides with a "market timing" strategy may be disruptive to a
fund.
Although the funds will attempt to give you prior notice whenever they
are reasonably able to do so, they may impose these restrictions at
any time. The funds reserve the right to terminate or modify the
exchange privilege in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to 1 . 00% and trading fees of
up to 1.50% of the amount exchanged . Check each fund's
prospectus for details.
FIDELITY'S BROADLY DIVERSIFIED INTERNATIONAL EQUITY FUNDS
FIDELITY INTERNATIONAL GROWTH & INCOME FUND, FIDELITY DIVERSIFIED
INTERNATIONAL FUND,
FIDELITY INTERNATIONAL VALUE FUND, FIDELITY OVERSEAS FUND AND FIDELITY
WORLDWIDE FUND
FUNDS OF FIDELITY INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
December 30 , 1997
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the funds' current Prospectus
(dated December 30 , 1997). Please retain this document for
future reference. To obtain a free additional copy of the Prospectus
and Annual Report, please call Fidelity at 1-800-544-8888.
<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS PAGE
INVESTMENT POLICIES AND LIMITATIONS
SPECIAL CONSIDERATIONS AFFECTING EUROPE
SPECIAL CONSIDERATIONS AFFECTING JAPAN, THE PACIFIC BASIN, AND SOUTHEAST ASIA
SPECIAL CONSIDERATIONS AFFECTING CANADA
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICA
SPECIAL CONSIDERATIONS AFFECTING AFRICA
SPECIAL CONSIDERATIONS AFFECTING THE RUSSIAN FEDERATION
PORTFOLIO TRANSACTIONS
VALUATION
PERFORMANCE
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
DISTRIBUTIONS AND TAXES
FMR
TRUSTEES AND OFFICERS
MANAGEMENT CONTRACTS
DISTRIBUTION AND SERVICE PLANS
CONTRACTS WITH FMR AFFILIATES
DESCRIPTION OF THE TRUST
FINANCIAL STATEMENTS
APPENDIX
</TABLE>
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
Fidelity International Investment Advisors (FIIA)
Fidelity International Investment Advisors (U.K.) Limited
(FIIA(U.K.)L)
Fidelity Investments Japan Ltd. (FIJ)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Service Company, Inc. (FSC)
IBD-ptb-1297
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in
the Prospectus. Unless otherwise noted, whenever an investment policy
or limitation states a maximum percentage of a fund's assets that may
be invested in any security or other asset, or sets forth a policy
regarding quality standards, such standard or percentage limitation
will be determined immediately after and as a result of the fund's
acquisition of such security or other asset. Accordingly, any
subsequent change in values, net assets, or other circumstances will
not be considered when determining whether the investment complies
with the fund's investment policies and limitations.
A fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 (1940
Act)) of the fund. However, except for the fundamental investment
limitations listed below, the investment policies and limitations
described in this SAI are not fundamental and may be changed without
shareholder approval.
INVESTMENT LIMITATIONS OF INTERNATIONAL GROWTH & INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others (except to the extent that
the fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(5) purchase the securities of any issuer (other than obligations
issued or guaranteed by the government of the United States or its
agencies or instrumentalities, or by foreign governments or their
political subdivisions, or by supranational organizations) if, as a
result, more than 25% of the fund's total assets (taken at current
value) would be invested in the securities of issuers having their
principal business activities in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties (but
this limitation does not apply to purchases of debt securities or to
repurchase agreements).
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements).
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT POLICIES AND LIMITATIONS OF DIVERSIFIED INTERNATIONAL FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures and options are not deemed to constitute
selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any
security if, as a result, more than 15% of its net assets would be
invested in securities that are deemed to be illiquid because they are
subject to legal or contractual restrictions on resale or because they
cannot be sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other
than securities to other parties, except by (a) lending money (up to
5% of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser
or (b) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments to the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its
assets in the securities of a single open-end management investment
company managed by Fidelity Management & Research Company or an
affiliate or successor with substantially the same fundamental
investment objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF INTERNATIONAL VALUE FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, not withstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objectives, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements).
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objectives, policies,
and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF OVERSEAS FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties (but
this limitation does not apply to purchases of debt securities or to
repurchase agreements).
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements).
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF WORLDWIDE FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others (except to the extent that
the fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties (but
this limitation does not apply to purchases of debt securities or to
repurchase agreements).
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements).
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related
risks. FMR may not buy all of these instruments or use all of these
techniques unless it believes that doing so will help the fund achieve
its goal.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be,
"affiliated persons" of the fund under the Investment Company Act of
1940. These transactions may include repurchase agreements with
custodian banks; short-term obligations of, and repurchase agreements
with, the 50 largest U.S. banks (measured by deposits); municipal
securities; U.S. Government securities with affiliated financial
institutions that are primary dealers in these securities; short-term
currency transactions; and short-term borrowings. In accordance with
exemptive orders issued by the Securities and Exchange Commission
(SEC), the Board of Trustees has established and periodically reviews
procedures applicable to transactions involving affiliated financial
institutions.
ASSET-BACKED SECURITIES. Asset-backed securities represent interests
in pools of consumer loans (generally unrelated to mortgage loans) and
most often are structured as pass-through securities. Interest and
principal payments ultimately depend upon payment of the underlying
loans by individuals, although the securities may be supported by
letters of credit or other credit enhancements. The value of
asset-backed securities may also depend on the creditworthiness of the
servicing agent for the loan pool, the originator of the loans, or the
financial institution providing the credit enhancement.
CLOSED-END INVESTMENT COMPANIES. Each fund may purchase the shares of
closed-end investment companies to facilitate investment in certain
countries. Shares of closed-end investment companies may trade at a
premium or a discount to their net asset value.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign
currencies, and securities issued by U.S. entities with substantial
foreign operations may involve significant risks in addition to the
risks inherent in U.S. investments.
Foreign investments involve risks relating to local political,
economic, regulatory, or social instability, military action or
unrest, or adverse diplomatic developments, and may be affected by
actions of foreign governments adverse to the interests of U.S.
investors. Such actions may include the possibility of expropriation
or nationalization of assets, confiscatory taxation, restrictions on
U.S. investment or on the ability to repatriate assets or convert
currency into U.S. dollars, or other government intervention. There is
no assurance that FMR will be able to anticipate these potential
events or counter their effects. In addition, the value of securities
denominated in foreign currencies and of dividends and interest paid
with respect to such securities will fluctuate based on the relative
strength of the U.S. dollar.
It is anticipated that in most cases the best available market for
foreign securities will be on an exchange or in over-the-counter
markets (OTC) located outside of the United States. Foreign stock
markets, while growing in volume and sophistication, are generally not
as developed as those in the United States, and securities of some
foreign issuers may be less liquid and more volatile than securities
of comparable U.S. issuers. Foreign security trading practices,
including those involving securities settlement where fund assets may
be released prior to receipt of payment, may result in increased risk
in the event of a failed trade or the insolvency of a foreign
broker-dealer, and may involve substantial delays. In addition, the
costs associated with foreign investments, including withholding
taxes, brokerage commissions and custodial costs, are generally higher
than with U.S. investments.
Foreign markets may offer less protection to investors than U.S.
markets. Foreign issuers are generally not bound by uniform
accounting, auditing, and financial reporting requirements and
standards of practice comparable to those applicable to U.S. issuers.
Adequate public information on foreign issuers may not be available,
and it may be difficult to secure dividends and information regarding
corporate actions on a timely basis. In general, there is less overall
governmental supervision and regulation of securities exchanges,
brokers, and listed companies than in the United States. OTC markets
tend to be less regulated than stock exchange markets and, in certain
countries, may be totally unregulated. Regulatory enforcement may be
influenced by economic or political concerns, and it also may be
difficult for an investor to enforce its legal rights in foreign
countries.
Some foreign securities impose restrictions on transfer within the
United States or to U.S. persons. Although securities subject to such
transfer restrictions may be marketable abroad, they may be less
liquid than foreign securities of the same class that are not subject
to such restrictions.
American Depositary Receipts (ADRs) as well as other "hybrid" forms
of ADRs, including European Depositary Receipts (EDRs) and Global
Depositary Receipts (GDRs), are certificates evidencing ownership of
shares of a foreign issuer. These certificates are issued by
depository banks and generally trade on an established market in the
United States or elsewhere. The underlying shares are held in trust by
a custodian bank or similar financial institution in the issuer's home
country. The depository bank may not have physical custody of the
underlying securities at all times and may charge fees for various
services, including forwarding dividends and interest and corporate
actions. ADRs are an alternative to directly purchasing the underlying
foreign securities in their national markets and currencies. However,
ADRs continue to be subject to many of the risks associated with
investing directly in foreign securities. These risks include foreign
exchange risk as well as the political and economic risks of the
underlying issuer's country.
The risks of foreign investing may be magnified for investments in
emerging markets. Security prices in emerging markets can be
significantly more volatile than those in more developed markets,
reflecting the greater uncertainties of investing in less established
markets and economies. In particular, countries with emerging markets
may have relatively unstable governments, may present the risk of
nationalization of businesses, restrictions on foreign ownership or
prohibitions on the repatriation of assets, and may have less
protection of property rights than more developed countries. The
economies of countries with emerging markets may be predominantly
based on only a few industries, may be highly vulnerable to changes in
local or global trade conditions, and may suffer from extreme and
volatile debt burdens or inflation rates. Local securities markets may
trade a small number of securities and may be unable to respond
effectively to increases in trading volume, potentially making prompt
liquidation of substantial holdings difficult or impossible at
times.
FOREIGN CURRENCY TRANSACTIONS. A fund may conduct foreign currency
transactions on a spot (i.e., cash) or forward basis (i.e., by
entering into forward contracts to purchase or sell foreign
currencies). Although foreign exchange dealers generally do not charge
a fee for such conversions, they do realize a profit based on the
difference between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign
currency at one rate, while offering a lesser rate of exchange should
the counterparty desire to resell that currency to the dealer. Forward
contracts are customized transactions that require a specific amount
of a currency to be delivered at a specific exchange rate on a
specific date or range of dates in the future. Forward contracts are
generally traded in an interbank market directly between currency
traders (usually large commercial banks) and their customers. The
parties to a forward contract may agree to offset or terminate the
contract before its maturity, or may hold the contract to maturity and
complete the contemplated currency exchange. A fund may use currency
forward contracts for any purpose consistent with its investment
objective.
The following discussion summarizes the principal currency management
strategies involving forward contracts that could be used by a fund. A
fund may also use swap agreements, indexed securities, and options and
futures contracts relating to foreign currencies for the same
purposes.
A "settlement hedge" or "transaction hedge" is designed to protect a
fund against an adverse change in foreign currency values between the
date a security is purchased or sold and the date on which payment is
made or received. Entering into a forward contract for the purchase or
sale of the amount of foreign currency involved in an underlying
security transaction for a fixed amount of U.S. dollars "locks in" the
U.S. dollar price of the security. Forward contracts to purchase or
sell a foreign currency may also be used by a fund in anticipation of
future purchases or sales of securities denominated in foreign
currency, even if the specific investments have not yet been selected
by FMR.
A fund may also use forward contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. For
example, if a fund owned securities denominated in pounds sterling, it
could enter into a forward contract to sell pounds sterling in return
for U.S. dollars to hedge against possible declines in the pound's
value. Such a hedge, sometimes referred to as a "position hedge,"
would tend to offset both positive and negative currency fluctuations,
but would not offset changes in security values caused by other
factors. A fund could also hedge the position by selling another
currency expected to perform similarly to the pound sterling. This
type of hedge, sometimes referred to as a "proxy hedge," could offer
advantages in terms of cost, yield, or efficiency, but generally would
not hedge currency exposure as effectively as a direct hedge into U.S.
dollars. Proxy hedges may result in losses if the currency used to
hedge does not perform similarly to the currency in which the hedged
securities are denominated.
A fund may enter into forward contracts to shift its investment
exposure from one currency into another. This may include shifting
exposure from U.S. dollars to a foreign currency, or from one foreign
currency to another foreign currency. This type of strategy, sometimes
known as a "cross-hedge," will tend to reduce or eliminate exposure to
the currency that is sold, and increase exposure to the currency that
is purchased, much as if a fund had sold a security denominated in one
currency and purchased an equivalent security denominated in another.
Cross-hedges protect against losses resulting from a decline in the
hedged currency, but will cause a fund to assume the risk of
fluctuations in the value of the currency it purchases.
Under certain conditions, SEC guidelines require mutual funds to set
aside appropriate liquid assets in a segregated custodial account to
cover currency forward contracts. As required by SEC guidelines, a
fund will segregate assets to cover currency forward contracts, if
any, whose purpose is essentially speculative. A fund will not
segregate assets to cover forward contracts entered into for hedging
purposes, including settlement hedges, position hedges, and proxy
hedges.
Successful use of currency management strategies will depend on FMR's
skill in analyzing currency values. Currency management strategies may
substantially change a fund's investment exposure to changes in
currency exchange rates and could result in losses to a fund if
currencies do not perform as FMR anticipates. For example, if a
currency's value rose at a time when FMR had hedged a fund by selling
that currency in exchange for dollars, a fund would not participate in
the currency's appreciation. If FMR hedges currency exposure through
proxy hedges, a fund could realize currency losses from both the hedge
and the security position if the two currencies do not move in tandem.
Similarly, if FMR increases a fund's exposure to a foreign currency
and that currency's value declines, a fund will realize a loss. There
is no assurance that FMR's use of currency management strategies will
be advantageous to a fund or that it will hedge at appropriate times.
FOREIGN REPURCHASE AGREEMENTS. Foreign repurchase agreements may
include agreements to purchase and sell foreign securities in exchange
for fixed U.S. dollar amounts, or in exchange for specified amounts of
foreign currency. Unlike typical U.S. repurchase agreements, foreign
repurchase agreements may not be fully collateralized at all times.
The value of a security purchased by a fund may be more or less than
the price at which the counterparty has agreed to repurchase the
security. In the event of default by the counterparty, the fund may
suffer a loss if the value of the security purchased is less than the
agreed-upon repurchase price, or if the fund is unable to successfully
assert a claim to the collateral under foreign laws. As a result,
foreign repurchase agreements may involve higher credit risks than
repurchase agreements in U.S. markets, as well as risks associated
with currency fluctuations. In addition, as with other emerging market
investments, repurchase agreements with counterparties located in
emerging markets or relating to emerging markets may involve issuers
or counterparties with lower credit ratings than typical U.S.
repurchase agreements.
FUNDS' RIGHTS AS A SHAREHOLDER. The funds do not intend to direct or
administer the day-to-day operations of any company. Each fund,
however, may exercise its rights as a shareholder and may communicate
its views on important matters of policy to management, the Board of
Directors, and shareholders of a company when FMR determines that such
matters could have a significant effect on the value of the fund's
investment in the company. The activities that a fund may engage in,
either individually or in conjunction with others, may include, among
others, supporting or opposing proposed changes in a company's
corporate structure or business activities; seeking changes in a
company's directors or management; seeking changes in a company's
direction or policies; seeking the sale or reorganization of the
company or a portion of its assets; or supporting or opposing third
party takeover efforts. This area of corporate activity is
increasingly prone to litigation and it is possible that a fund could
be involved in lawsuits related to such activities. FMR will monitor
such activities with a view to mitigating, to the extent possible, the
risk of litigation against a fund and the risk of actual liability if
a fund is involved in litigation. No guarantee can be made, however,
that litigation against a fund will not be undertaken or liabilities
incurred.
FUTURES AND OPTIONS. The following sections pertain to futures and
options: Asset Coverage for Futures and Options Positions, Combined
Positions, Correlation of Price Changes, Futures Contracts, Futures
Margin Payments, Limitations on Futures and Options Transactions,
Liquidity of Options and Futures Contracts, Options and Futures
Relating to Foreign Currencies, OTC Options, Purchasing Put and Call
Options, and Writing Put and Call Options.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The funds will
comply with guidelines established by the Securities and Exchange
Commission with respect to coverage of options and futures strategies
by mutual funds, and if the guidelines so require will set aside
appropriate liquid assets in a segregated custodial account in the
amount prescribed. Securities held in a segregated account cannot be
sold while the futures or option strategy is outstanding, unless they
are replaced with other suitable assets. As a result, there is a
possibility that segregation of a large percentage of a fund's assets
could impede portfolio management or the fund's ability to meet
redemption requests or other current obligations.
COMBINED POSITIONS. A fund may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the
overall position. For example, a fund may purchase a put option and
write a call option on the same underlying instrument, in order to
construct a combined position whose risk and return characteristics
are similar to selling a futures contract. Another possible combined
position would involve writing a call option at one strike price and
buying a call option at a lower price, in order to reduce the risk of
the written call option in the event of a substantial price increase.
Because combined options positions involve multiple trades, they
result in higher transaction costs and may be more difficult to open
and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely
that the standardized contracts available will not match a fund's
current or anticipated investments exactly. The funds may invest in
options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in
which they typically invest, which involves a risk that the options or
futures position will not track the performance of a fund's other
investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a
fund's investments well. Options and futures prices are affected by
such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time
remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result
from differing levels of demand in the options and futures markets and
the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price
fluctuation limits or trading halts. A fund may purchase or sell
options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to
attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in
all cases. If price changes in a fund's options or futures positions
are poorly correlated with its other investments, the positions may
fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees
to purchase a specified underlying instrument at a specified future
date. When a fund sells a futures contract, it agrees to sell the
underlying instrument at a specified future date. The price at which
the purchase and sale will take place is fixed when the fund enters
into the contract. Futures can be held until their delivery dates, or
can be closed out before then if a liquid secondary market is
available.
The fund may invest in futures based on such indexes as the CAC 40
(France), DAX 30 (Germany), EuroTop 100 (Europe), IBEX (Spain), FTSE
100 (United Kingdom), All Ordinary (Australia), Hang Seng (Hong Kong),
and Nikkei 225, Nikkei 300 and TOPIX (Japan).
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore,
purchasing futures contracts will tend to increase a fund's exposure
to positive and negative price fluctuations in the underlying
instrument, much as if it had purchased the underlying instrument
directly. When a fund sells a futures contract, by contrast, the value
of its futures position will tend to move in a direction contrary to
the market. Selling futures contracts, therefore, will tend to offset
both positive and negative market price changes, much as if the
underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless
the contract is held until the delivery date. However, both the
purchaser and seller are required to deposit "initial margin" with a
futures broker, known as a futures commission merchant (FCM), when the
contract is entered into. Initial margin deposits are typically equal
to a percentage of the contract's value. If the value of either
party's position declines, that party will be required to make
additional "variation margin" payments to settle the change in value
on a daily basis. The party that has a gain may be entitled to receive
all or a portion of this amount. Initial and variation margin payments
do not constitute purchasing securities on margin for purposes of a
fund's investment limitations. In the event of the bankruptcy of an
FCM that holds margin on behalf of a fund, the fund may be entitled to
return of margin owed to it only in proportion to the amount received
by the FCM's other customers, potentially resulting in losses to the
fund.
Although futures exchanges generally operate similarly in the U.S.
and abroad, foreign futures exchanges may follow different trading,
settlement and margin procedures than U.S. exchanges do. Futures
contracts traded outside the United States may involve greater risk of
loss than U.S.-traded contracts, including potentially greater risks
of losses due to insolvency of a futures broker, exchange member or
other party that may owe initial or variation margin to a fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading
Commission (CFTC) and the National Futures Association, which regulate
trading in the futures markets. The funds intend to comply with Rule
4.5 under the Commodity Exchange Act, which limits the extent to which
the funds can commit assets to initial margin deposits and option
premiums.
In addition, each fund will not: (a) sell futures contracts, purchase
put options, or write call options if, as a result, more than 25% of
the fund's total assets would be hedged with futures and options under
normal conditions; (b) purchase futures contracts or write put options
if, as a result, the fund's total obligations upon settlement or
exercise of purchased futures contracts and written put options would
exceed 25% of its total assets; or (c) purchase call options if, as a
result, the current value of option premiums for call options
purchased by the fund would exceed 5% of the fund's total assets.
These limitations do not apply to options attached to or acquired or
traded together with their underlying securities, and do not apply to
securities that incorporate features similar to options.
The above limitations on the funds' investments in futures contracts
and options, and the funds' policies regarding futures contracts and
options discussed elsewhere in this SAI, may be changed as regulatory
agencies permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or
futures contract at any particular time. Options may have relatively
low trading volume and liquidity if their strike prices are not close
to the underlying instrument's current price. In addition, exchanges
may establish daily price fluctuation limits for options and futures
contracts, and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days
when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible for a fund to enter into new positions
or close out existing positions. If the secondary market for a
contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require a fund to continue to hold a
position until delivery or expiration regardless of changes in its
value. As a result, a fund's access to other assets held to cover its
options or futures positions could also be impaired.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except
that they are traded on exchanges (and have margin requirements) and
are standardized as to contract size and delivery date. Most currency
futures contracts call for payment or delivery in U.S. dollars. The
underlying instrument of a currency option may be a foreign currency,
which generally is purchased or delivered in exchange for U.S.
dollars, or may be a futures contract. The purchaser of a currency
call obtains the right to purchase the underlying currency, and the
purchaser of a currency put obtains the right to sell the underlying
currency.
The uses and risks of currency options and futures are similar to
options and futures relating to securities or indices, as discussed
above. The funds may purchase and sell currency futures and may
purchase and write currency options to increase or decrease their
exposure to different foreign currencies. A fund may also purchase and
write currency options in conjunction with each other or with currency
futures or forward contracts. Currency futures and options values can
be expected to correlate with exchange rates, but may not reflect
other factors that affect the value of a fund's investments. A
currency hedge, for example, should protect a Yen-denominated security
from a decline in the Yen, but will not protect a fund against a price
decline resulting from deterioration in the issuer's creditworthiness.
Because the value of a fund's foreign-denominated investments changes
in response to many factors other than exchange rates, it may not be
possible to match the amount of currency options and futures to the
value of the fund's investments exactly over time.
OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract
size, and strike price, the terms of over-the-counter (OTC) options
(options not traded on exchanges) generally are established through
negotiation with the other party to the option contract. While this
type of arrangement allows the funds greater flexibility to tailor an
option to its needs, OTC options generally involve greater credit risk
than exchange-traded options, which are guaranteed by the clearing
organization of the exchanges where they are traded.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund
obtains the right (but not the obligation) to sell the option's
underlying instrument at a fixed strike price. In return for this
right, the fund pays the current market price for the option (known as
the option premium). Options have various types of underlying
instruments, including specific securities, indices of securities
prices, and futures contracts. The fund may terminate its position in
a put option it has purchased by allowing it to expire or by
exercising the option. If the option is allowed to expire, the fund
will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the
strike price. A fund may also terminate a put option position by
closing it out in the secondary market at its current price, if a
liquid secondary market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying
instrument's price does not fall enough to offset the cost of
purchasing the option, a put buyer can expect to suffer a loss
(limited to the amount of the premium paid, plus related transaction
costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right
to purchase, rather than sell, the underlying instrument at the
option's strike price. A call buyer typically attempts to participate
in potential price increases of the underlying instrument with risk
limited to the cost of the option if security prices fall. At the same
time, the buyer can expect to suffer a loss if security prices do not
rise sufficiently to offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it
takes the opposite side of the transaction from the option's
purchaser. In return for receipt of the premium, the fund assumes the
obligation to pay the strike price for the option's underlying
instrument if the other party to the option chooses to exercise it.
When writing an option on a futures contract, the fund will be
required to make margin payments to an FCM as described above for
futures contracts. A fund may seek to terminate its position in a put
option it writes before exercise by closing out the option in the
secondary market at its current price. If the secondary market is not
liquid for a put option the fund has written, however, the fund must
continue to be prepared to pay the strike price while the option is
outstanding, regardless of price changes, and must continue to set
aside assets to cover its position.
If security prices rise, a put writer would generally expect to
profit, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it
is likely that the writer will also profit, because it should be able
to close out the option at a lower price. If security prices fall, the
put writer would expect to suffer a loss. This loss should be less
than the loss from purchasing the underlying instrument directly,
however, because the premium received for writing the option should
mitigate the effects of the decline.
Writing a call option obligates a fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise
of the option. The characteristics of writing call options are similar
to those of writing put options, except that writing calls generally
is a profitable strategy if prices remain the same or fall. Through
receipt of the option premium, a call writer mitigates the effects of
a price decline. At the same time, because a call writer must be
prepared to deliver the underlying instrument in return for the strike
price, even if its current value is greater, a call writer gives up
some ability to participate in security price increases.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed
of in the ordinary course of business at approximately the prices at
which they are valued. Under the supervision of the Board of Trustees,
FMR determines the liquidity of a fund's investments and, through
reports from FMR, the Board monitors investments in illiquid
instruments. In determining the liquidity of a fund's investments, FMR
may consider various factors, including (1) the frequency of trades
and quotations, (2) the number of dealers and prospective purchasers
in the marketplace, (3) dealer undertakings to make a market, (4) the
nature of the security (including any demand or tender features), and
(5) the nature of the marketplace for trades (including the ability to
assign or offset the fund's rights and obligations relating to the
investment).
Investments currently considered by the funds to be illiquid include
repurchase agreements not entitling the holder to payment of principal
and interest within seven days, over-the-counter options, and
non-government stripped fixed-rate mortgage-backed securities. Also,
FMR may determine some restricted securities, government-stripped
fixed-rate mortgage-backed securities, loans and other direct debt
instruments, emerging market securities, and swap agreements to be
illiquid. However, with respect to over-the-counter options a fund
writes, all or a portion of the value of the underlying instrument may
be illiquid depending on the assets held to cover the option and the
nature and terms of any agreement the fund may have to close out the
option before expiration.
In the absence of market quotations, illiquid investments are priced
at fair value as determined in good faith by a committee appointed by
the Board of Trustees. If through a change in values, net assets, or
other circumstances, a fund were in a position where more than 15% of
its net assets was invested in illiquid securities, it would seek to
take appropriate steps to protect liquidity.
INDEXED SECURITIES. Each fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices,
currencies, precious metals or other commodities, or other financial
indicators. Indexed securities typically, but not always, are debt
securities or deposits whose value at maturity or coupon rate is
determined by reference to a specific instrument or statistic.
Gold-indexed securities, for example, typically provide for a maturity
value that depends on the price of gold, resulting in a security whose
price tends to rise and fall together with gold prices.
Currency-indexed securities typically are short-term to
intermediate-term debt securities whose maturity values or interest
rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed
securities may be positively or negatively indexed; that is, their
maturity value may increase when the specified currency value
increases, resulting in a security that performs similarly to a
foreign-denominated instrument, or their maturity value may decline
when foreign currencies increase, resulting in a security whose price
characteristics are similar to a put on the underlying currency.
Currency-indexed securities may also have prices that depend on the
values of a number of different foreign currencies relative to each
other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which
they are indexed, and may also be influenced by interest rate changes
in the United States and abroad. At the same time, indexed securities
are subject to the credit risks associated with the issuer of the
security, and their values may decline substantially if the issuer's
creditworthiness deteriorates. Recent issuers of indexed securities
have included banks, corporations, and certain U.S. Government
agencies. Indexed securities may be more volatile than the underlying
instruments.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, each fund has received permission to lend
money to, and borrow money from, other funds advised by FMR or its
affiliates. Interfund loans and borrowings normally extend overnight,
but can have a maximum duration of seven days. Loans may be called on
one day's notice. A fund will lend through the program only when the
returns are higher than those available from an investment in
repurchase agreements, and will borrow through the program only when
the costs are equal to or lower than the cost of bank loans. A fund
may have to borrow from a bank at a higher interest rate if an
interfund loan is called or not renewed. Any delay in repayment to a
lending fund could result in a lost investment opportunity or
additional borrowing costs.
ISSUER LOCATION. FMR determines where an issuer or its principal
business activities are located by looking at such factors as its
country of organization, the primary trading market for its
securities, and the location of its assets, personnel, sales, and
earnings. The issuer of a security is considered to be located in a
particular country if (1) the security is issued or guaranteed by the
government of the country or any of its agencies, political
subdivisions, or instrumentalities; (2) the security has its primary
trading market in that country; or (3) the issuer is organized under
the laws of that country, derives at least 50% of its revenues or
profits from goods sold, investments made, or services performed in
the country, or has at least 50% of its assets located in the country.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other
borrower to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or
other receivables), or to other parties. Direct debt instruments are
subject to each fund's policies regarding the quality of debt
securities.
Purchasers of loans and other forms of direct indebtedness depend
primarily upon the creditworthiness of the borrower for payment of
principal and interest. Direct debt instruments may not be rated by
any nationally recognized rating service. If a fund does not receive
scheduled interest or principal payments on such indebtedness, the
fund's share price and yield could be adversely affected. Loans that
are fully secured offer a fund more protections than an unsecured loan
in the event of non-payment of scheduled interest or principal.
However, there is no assurance that the liquidation of collateral from
a secured loan would satisfy the borrower's obligation, or that the
collateral could be liquidated. Indebtedness of borrowers whose
creditworthiness is poor involves substantially greater risks and may
be highly speculative. Borrowers that are in bankruptcy or
restructuring may never pay off their indebtedness, or may pay only a
small fraction of the amount owed. Direct indebtedness of developing
countries also involves a risk that the governmental entities
responsible for the repayment of the debt may be unable, or unwilling,
to pay interest and repay principal when due.
Investments in loans through direct assignment of a financial
institution's interests with respect to a loan may involve additional
risks to a fund. For example, if a loan is foreclosed, the fund could
become part owner of any collateral, and would bear the costs and
liabilities associated with owning and disposing of the collateral. In
addition, it is conceivable that under emerging legal theories of
lender liability, the fund could be held liable as a co-lender. Direct
debt instruments may also involve a risk of insolvency of the lending
bank or other intermediary. Direct debt instruments that are not in
the form of securities may offer less legal protection to a fund in
the event of fraud or misrepresentation. In the absence of definitive
regulatory guidance, each fund relies on FMR's research in an attempt
to avoid situations where fraud or misrepresentation could adversely
affect the fund.
A loan is often administered by a bank or other financial institution
that acts as agent for all holders. The agent administers the terms of
the loan, as specified in the loan agreement. Unless, under the terms
of the loan or other indebtedness, each fund has direct recourse
against the borrower, it may have to rely on the agent to apply
appropriate credit remedies against a borrower. If assets held by the
agent for the benefit of a fund were determined to be subject to the
claims of the agent's general creditors, the fund might incur certain
costs and delays in realizing payment on the loan or loan
participation and could suffer a loss of principal or interest.
Direct indebtedness purchased by each fund may include letters of
credit, revolving credit facilities, or other standby financing
commitments obligating the fund to pay additional cash on demand.
These commitments may have the effect of requiring the fund to
increase its investment in a borrower at a time when it would not
otherwise have done so, even if the borrower's condition makes it
unlikely that the amount will ever be repaid. Each fund will set aside
appropriate liquid assets in a segregated custodial account to cover
its potential obligations under standby financing commitments.
Each fund limits the amount of total assets that it will invest in any
one issuer or in issuers within the same industry (see limitations (1)
and (5). For purposes of these limitations, each fund generally will
treat the borrower as the "issuer" of indebtedness held by the fund.
In the case of loan participations where a bank or other lending
institution serves as financial intermediary between each fund and the
borrower, if the participation does not shift to the fund the direct
debtor-creditor relationship with the borrower, SEC interpretations
require the fund, in appropriate circumstances, to treat both the
lending bank or other lending institution and the borrower as
"issuers" for these purposes. Treating a financial intermediary as an
issuer of indebtedness may restrict a fund's ability to invest in
indebtedness related to a single financial intermediary, or a group of
intermediaries engaged in the same industry, even if the underlying
borrowers represent many different companies and industries.
LOWER-QUALITY DEBT SECURITIES. While the market for high-yield
corporate debt securities has been in existence for many years and has
weathered previous economic downturns, the 1980s brought a dramatic
increase in the use of such securities to fund highly leveraged
corporate acquisitions and restructurings. Past experience may not
provide an accurate indication of the future performance of the
high-yield bond market, especially during periods of economic
recession.
The market for lower-quality debt securities may be thinner and less
active than that for higher-quality debt securities, which can
adversely affect the prices at which the former are sold. If market
quotations are not available, lower-quality debt securities will be
valued in accordance with procedures established by the Board of
Trustees, including the use of outside pricing services. Judgment
plays a greater role in valuing high-yield corporate debt securities
than is the case for securities for which more external sources for
quotations and last-sale information are available. Adverse publicity
and changing investor perceptions may affect the ability of outside
pricing services to value lower-quality debt securities and a fund's
ability to dispose of these securities.
Since the risk of default is higher for lower-quality debt securities,
FMR's research and credit analysis are an especially important part of
managing securities of this type held by a fund. In considering
investments for the fund, FMR will attempt to identify those issuers
of high-yielding securities whose financial condition is adequate to
meet future obligations, has improved, or is expected to improve in
the future. FMR's analysis focuses on relative values based on such
factors as interest or dividend coverage, asset coverage, earnings
prospects, and the experience and managerial strength of the issuer.
Each fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security
holder to seek to protect the interests of security holders if it
determines this to be in the best interest of the fund's shareholders.
REAL ESTATE-RELATED INSTRUMENTS include real estate investment trusts,
commercial and residential mortgage-backed securities, and real estate
financings. Real estate-related instruments are sensitive to factors
such as real estate values and property taxes, interest rates, cash
flow of underlying real estate assets, overbuilding, and the
management skill and creditworthiness of the issuer. Real
estate-related instruments may also be affected by tax and regulatory
requirements, such as those relating to the environment.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. The resale price reflects the
purchase price plus an agreed-upon incremental amount which is
unrelated to the coupon rate or maturity of the purchased security. To
protect the fund from the risk that the original seller will not
fulfill its obligation, the securities are held in an account of the
fund at a bank, marked-to-market daily, and maintained at a value at
least equal to the sale price plus the accrued incremental amount.
While it does not presently appear possible to eliminate all risks
from these transactions (particularly the possibility that the value
of the underlying security will be less than the resale price, as well
as delays and costs to a fund in connection with bankruptcy
proceedings), it is each fund's current policy to engage in repurchase
agreement transactions with parties whose creditworthiness has been
reviewed and found satisfactory by FMR.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part
of the registration expense and a considerable period may elapse
between the time it decides to seek registration and the time it may
be permitted to sell a security under an effective registration
statement. If, during such a period, adverse market conditions were to
develop, a fund might obtain a less favorable price than prevailed
when it decided to seek registration of the security.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
fund sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the
instrument at a particular price and time. While a reverse repurchase
agreement is outstanding, the fund will maintain appropriate liquid
assets in a segregated custodial account to cover its obligation under
the agreement. A fund will enter into reverse repurchase agreements
only with parties whose creditworthiness has been found satisfactory
by FMR. Such transactions may increase fluctuations in the market
value of the fund's assets and may be viewed as a form of leverage.
SECURITIES LENDING. A fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity
Brokerage Services, Inc. (FBSI). FBSI is a member of the New York
Stock Exchange and a subsidiary of FMR Corp.
Securities lending allows a fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there
may be delays in the recovery of loaned securities, or even a loss of
rights in collateral supplied should the borrower fail financially,
loans will be made only to parties deemed by FMR to be of good
standing. Furthermore, they will only be made if, in FMR's judgment,
the consideration to be earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that a
fund may engage in loan transactions only under the following
conditions: (1) the fund must receive 100% collateral in the form of
cash or cash equivalents (e.g., U.S. Treasury bills or notes) from the
borrower; (2) the borrower must increase the collateral whenever the
market value of the securities loaned (determined on a daily basis)
rises above the value of the collateral; (3) after giving notice, the
fund must be able to terminate the loan at any time; (4) the fund must
receive reasonable interest on the loan or a flat fee from the
borrower, as well as amounts equivalent to any dividends, interest, or
other distributions on the securities loaned and to any increase in
market value; (5) the fund may pay only reasonable custodian fees in
connection with the loan; and (6) the Board of Trustees must be able
to vote proxies on the securities loaned, either by terminating the
loan or by entering into an alternative arrangement with the borrower.
Cash received through loan transactions may be invested in any
security in which a fund is authorized to invest. Investing this cash
subjects that investment, as well as the security loaned, to market
forces (i.e., capital appreciation or depreciation).
SHORT SALES "AGAINST THE BOX." A fund may sell securities short when
it owns or has the right to obtain securities equivalent in kind or
amount to the securities sold short. Such short sales are known as
short sales "against the box." If a fund enters into a short sale
against the box, it will be required to set aside securities
equivalent in kind and amount to the securities sold short (or
securities convertible or exchangeable into such securities) and will
be required to hold such securities while the short sale is
outstanding. The fund will incur transaction costs, including interest
expenses, in connection with opening, maintaining, and closing short
sales against the box.
SHORT SALES. A fund may enter into short sales with respect to stocks
underlying its convertible security holdings. For example, if FMR
anticipates a decline in the price of the stock underlying a
convertible security a fund holds, it may sell the stock short. If the
stock price subsequently declines, the proceeds of the short sale
could be expected to offset all or a portion of the effect of the
stock's decline on the value of the convertible security. Each fund
currently intends to hedge no more than 15% of its total assets with
short sales on equity securities underlying its convertible security
holdings under normal circumstances.
When a fund enters into a short sale, it will be required to set aside
securities equivalent in kind and amount to those sold short (or
securities convertible or exchangeable into such securities) and will
be required to hold them aside while the short sale is outstanding. A
fund will incur transaction costs, including interest expenses, in
connection with opening, maintaining, and closing short sales.
SOVEREIGN DEBT OBLIGATIONS. Each fund may purchase sovereign debt
instruments issued or guaranteed by foreign governments or their
agencies, including debt of Latin American nations or other developing
countries. Sovereign debt may be in the form of conventional
securities or other types of debt instruments such as loans or loan
participations. Sovereign debt of developing countries may involve a
high degree of risk, and may be in default or present the risk of
default. Governmental entities responsible for repayment of the debt
may be unable or unwilling to repay principal and interest when due,
and may require renegotiation or rescheduling of debt payments. In
addition, prospects for repayment of principal and interest may depend
on political as well as economic factors.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease a fund's exposure to long- or
short-term interest rates (in the United States or abroad), foreign
currency values , mortgage securities, corporate borrowing rates, or
other factors such as security prices or inflation rates. Swap
agreements can take many different forms and are known by a variety of
names. A fund is not limited to any particular form of swap agreement
if FMR determines it is consistent with the fund's investment
objective and policies.
In a typical cap or floor agreement, one party agrees to make payments
only under specified circumstances, usually in return for payment of a
fee by the other party. For example, the buyer of an interest rate cap
obtains the right to receive payments to the extent that a specified
interest rate exceeds an agreed-upon level, while the seller of an
interest rate floor is obligated to make payments to the extent that a
specified interest rate falls below an agreed-upon level. An interest
rate collar combines elements of buying a cap and selling a floor.
Swap agreements will tend to shift a fund's investment exposure from
one type of investment to another. For example, if the fund agreed to
exchange payments in dollars for payments in foreign currency, the
swap agreement would tend to decrease the fund's exposure to U.S.
interest rates and increase its exposure to foreign currency and
interest rates. Caps and floors have an effect similar to buying or
writing options. Depending on how they are used, swap agreements may
increase or decrease the overall volatility of a fund's investments
and its share price.
The most significant factor in the performance of swap agreements is
the change in the specific interest rate, currency, or other factors
that determine the amounts of payments due to and from a fund. If a
swap agreement calls for payments by the fund, the fund must be
prepared to make such payments when due. In addition, if the
counterparty's creditworthiness declined, the value of a swap
agreement would be likely to decline, potentially resulting in losses.
Each fund expects to be able to eliminate its exposure under swap
agreements either by assignment or other disposition, or by entering
into an offsetting swap agreement with the same party or a similarly
creditworthy party.
Each fund will maintain appropriate liquid assets in a segregated
custodial account to cover its current obligations under swap
agreements. If a fund enters into a swap agreement on a net basis, it
will segregate assets with a daily value at least equal to the excess,
if any, of the fund's accrued obligations under the swap agreement
over the accrued amount the fund is entitled to receive under the
agreement. If a fund enters into a swap agreement on other than a net
basis, it will segregate assets with a value equal to the full amount
of the fund's accrued obligations under the agreement.
WARRANTS. Warrants are securities that give a fund the right to
purchase equity securities from the issuer at a specific price (the
strike price) for a limited period of time. The strike price of
warrants typically is much lower than the current market price of the
underlying securities, yet they are subject to similar price
fluctuations. As a result, warrants may be more volatile investments
than the underlying securities and may offer greater potential for
capital appreciation as well as capital loss.
Warrants do not entitle a holder to dividends or voting rights with
respect to the underlying securities and do not represent any rights
in the assets if the issuing company. Also, the value of the warrant
does not necessarily change with the value of the underlying
securities and a warrant ceases to have value if it is not exercised
prior to expiration date. These factors can make warrants more
speculative than other types of investments.
SPECIAL CONSIDERATIONS AFFECTING EUROPE
Europe can be divided into 2 categories of market development: the
developed economies of Western Europe1, and the transition economies
of Eastern Europe2. As a whole, Europe witnessed a slowdown in growth
in 1996, down to 1.7% from its 1995 level of 2.5%. Inflation decreased
to 4.6%, down from 5.1% in 1995. The weak growth performance in
Germany had an effect on the region as a whole, largely due to the
role Germany plays as a primary trading partner to most European
countries.
In the west, GDP growth averaged 2.5%, unemployment 9.2% and inflation
6.8% 3 . Twelve of the countries enjoy both positive trade
balances and positive current accounts balances, while seven do not.
Likewise, in the east growth averaged 3.1%, while inflation averaged
26%4. All countries save Bulgaria saw trade and current accounts
deficits.
Stock market performance in the western countries was strong. Over
9100 firms, both foreign and domestic, are listed on the exchanges
throughout the region. Total market capitalization in the west was
over $9 trillion in 1996. Market capitalization totals grew over their
1995 levels on an average of 31%, with notable performances by Turkey
and Greece, both growing by almost 50%. Trading value turnover
increased in all countries save Austria and Ireland, and the average
increase across the region was 29%.
The European Union (EU) consists of 15 countries of western Europe:
Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland,
Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden and the UK.
The 6 founding countries first formed an economic community in the
1950's to bring down trade barriers such as taxes and quotas, to
eliminate technical restrictions such as special standards and
regulations for foreigners, and coordinate various industrial
policies, such as agriculture. The group has admitted new members in
the 1970's and most recently in 1995 when Austria, Finland and Sweden
joined. By that time the community had changed its legal status to the
European Union (EU) and reaffirmed their goal of creating a single,
unified market that would, at 372.6 million people, be the largest in
the developed world. The notion is to create a union through which
goods, people, and capital could move freely. A second component of
the EU is the creation of a single currency to replace each of the
member countries' domestic currencies. In preparation for the creation
of this currency, to be called the Euro, the Exchange Rate Mechanism
(ERM) was established to keep the various national currencies with a
pre-specified value relative to each other. In 1999 there is planned
the establishment of the Economic and Monetary Union (EMU), as set
forth by the Maastricht Treaty. At this point the Euro will be
introduced and those countries which both qualify and desire to join
will join. Beyond 1999 there will be opportunities for new countries
to join the EMU.
The year 1997 is significant for members of the EU as it is the
initial reference year for evaluating debt levels and deficits within
the criteria set forth by the Maastricht treaty. Specifically, the
Maastricht criteria includes, amongst other indicators, an inflation
rate below 3.3%, a public debt below 60% of GDP, and a deficit of 3%
or less of GDP. Failure to meet the Maastricht levels could delay the
realization of EMU by 1999. Many political battles are currently being
waged over the issue of how much debt and deficit reducing policies
should be undertaken. Pressure to increase fiscal spending is strong,
particularly given the slow growth and high unemployment. Indeed,
unemployment rates, which range from 3.2% in Luxembourg to 22% in
Spain and which average 9.9%, are currently seen as the biggest
threats to EMU.
In 1996, the EU averaged a 6.85% inflation rate, a 75.98% government
debt, and a 3.62% budget deficit. Only three countries meet the
necessary debt levels, four countries meet the required deficit
levels, and only 1 meets both (Luxembourg). Broadly speaking, the
success of left of center parties in recent elections in various
countries is a signal that citizens and at least some politicians are
now more hesitant to move rapidly toward EMU.
Many foreign and domestic firms are establishing themselves or
increasing their activity in Europe in anticipation of the unified
single market. Clear, confident signals of what a diverse,
multi-industrial, unified market under a single currency could look
like have been the impetus for increases in market activity, corporate
development and mergers and acquisitions. A successful EMU could prove
be an engine for sustained growth.
Nevertheless, much discussion of liberalizing the Maastricht criteria
is coming about as 1999 approaches and the prospects of achieving a
successful implementation of the EMU is seen by many as slim. Should
this happen, the political ramifications and the strength of the EMU
would become unpredictable, as many politicians have staked their
credibility on meeting the EMU deadline.
In the meantime, the expansion of the EU to include other countries in
western and Eastern Europe serves as a strong political impetus for
many governments to employ tight fiscal and monetary policies.
Particularly for the eastern European countries, aspirations to join
the EU are likely to push governments to act decisively. At the same
time, there could become an increasingly obvious gap between rich and
poor both within the aspiring countries and also between those
countries who are close to meeting membership criteria and those who
are not. Realigning traditional alliances could result in altering
trading relationships and potentially provoking divisive
socio-economic splits.
The economies of the east are embarking on the transition from
communism at different paces with appropriately different
characteristics. War torn Croatia's economy crossed firmly into
positive growth levels for the first time since it split from
Yugoslavia while the rapidly developing Polish and Czech economies
continued their strong advance, responded to rising levels of
investment, domestic consumption, exchange rate stability, and export
growth. To be sure, one country's recipe for success is unique from
all other countries. Inflation and unemployment levels differ widely,
and the search for a `transition strategy' remains confined to the
dictates of local conditions.
In some countries, such as Albania and Romania, political events and
policy failures severely hindered economic recovery. In others, such
as Serbia, extreme political events prevent the gathering of accurate
macroeconomic data. Politically, what separates these countries from
the rest is not that they have relied on the leadership of former
communists, but that these politicians have continued to reject the
libertarian economic principles that their counterparts in other
eastern countries have been implementing. Part of this rejection
includes the failure to establish an effective and legitimate legal
infrastructure. This position isolates these countries from both the
west and their multinational organizations.
For the more developed eastern economies, partnership with western
institutions such as the EU and NATO serve as incentives to balance
the demands of the citizens with fiscal austerity. As relationships
develop and confidence rises, investment in these economies increases.
In the east established stock markets now exist in Bulgaria, Croatia,
Czech Republic, Hungary, Poland, Slovenia and Slovakia. Over 330 firms
are listed on the various exchanges, and in 1996 total market
capitalization was $38.3 billion. This represents an average increase
of 193% over 1995. Trading value turnover in 1996 went up 287% on
average.
Strong sectors for these economies are mostly industrial such as
automotives and machinery. Also strong are manufacturing sectors,
chemicals and pharmaceuticals. Service industries are not extensively
developed, but financial services are increasing. Natural resources,
particularly oil and minerals, are weak.
As this region continues to develop, it is possible that the massive
drops in output that followed the collapse of the Soviet Union are
well behind and that for many economies a significant corner has been
turned toward positive growth. Economies, which work to tie their
future to an integrated, global economy, are likely to continue to
receive the aid and investment from the west that has helped bring
them along so far. Still, the key component of a successful transition
for all of these countries is political commitment to support the
civil institutions that will ultimately replace the monolithic welfare
state. With 113 million people, diverse industry and an well-educated
work force, Eastern Europe is a promising market.
REAL GDP ANNUAL RATE OF GROWTH (ANNUAL % CHANGE)
1996
DENMARK 1.8%
FRANCE 0.9%
GERMANY 1.3%
ITALY 0.8%
NETHERLANDS 2.2%
SPAIN 2.1%
SWITZERLAND 0.0%
UNITED 2.2%
KINGDOM
Source: The Economist. The LGT Guide to World Equity Markets 1997.
For national stock market index performance, please see the section on
Performance beginning on page .
1. Austria, Belgium, Denmark, Finland, France, Germany, Greece,
Iceland, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal,
Spain, Sweden, Switzerland, Turkey, United Kingdom.
2. Albania, Bulgaria, Croatia, Czech Republic, Estonia, Hungary,
Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia.
3. This average inflation rate includes the exceptionally high rate in
Turkey (86.0%). Without this outlier, inflation across the region
averaged 2.4%.
4. This average inflation rate includes the exceptionally high rate in
Bulgaria (125.0%). Without this outlier, inflation across the region
averaged 17.0%.
SPECIAL CONSIDERATIONS AFFECTING JAPAN, THE PACIFIC BASIN, AND
SOUTHEAST ASIA
Asia has undergone an impressive economic transformation in the past
decade. Many developing economies, utilizing massive foreign
investments, established themselves as inexpensive producers of
manufactured and re-manufactured consumer goods for export. As
household incomes rose, birth was given to rising middle classes,
stimulating domestic consumption. More recently, large projects in
infrastructure and energy resource development have been undertaken,
again utilizing cheap labor, foreign investment, and a business
friendly regulatory environment. During the course of development,
governments, which are democratic, at least in a formal sense, fought
to maintain the stability and control necessary to attract investment
and provide labor. Subsequently, Asian countries today are coming
under increasing, if inconsistent, pressure from western governments
regarding human rights practices.
GDP growth in Asia increased in 1996 to 4.9% over its 1995 level of
3.2%. It is the fastest growing region of the world, with China
leading the way at 9.1%. Of the 20 fastest growing economies in the
world, half of them are in Asia. Inflation in 1996 was reduced to
2.6%, down from 3.0% the previous year. Nevertheless it is a
significant concern given the areas high levels of domestic
consumption and capital inflows.
Manufacturing exports declined significantly in 1996, due to drops in
demand, increased competition, and also strong US dollar performance.
This is particularly true of electronics, a critical industry for
several Asian economies. Declines in exports reveal how much of the
recent growth in these countries is dependent on their trading
partners. Many Asian exports are priced in dollars, while the majority
of its imports are paid for in local currencies. A stable exchange
rate between the dollar and other Asian currencies is important to
Asian trade balances.
Despite the impressive economic growth experienced by Asia's emerging
economies, currency and economic concerns have recently roiled these
markets. Over the summer of 1997, a plunge in Thailand's currency set
off a wave of currency depreciations throughout South and Southeast
Asia. The Thai crisis was brought on by the country's failure to take
steps to curb its current-account deficit, reduce short-term foreign
borrowing and strengthen its troubled banking industry, which was
burdened by speculative property loans. Most of the area's stock
markets tumbled in reaction to these events. Investors were heavy
sellers as they became increasingly concerned that other countries in
the region, faced with similar problems, would have to allow their
currencies to weaken further or take steps that would chok e off
economic growth and erode company profits. For U.S. investors, the
impact of the market declines were further exacerbated by the effect
of the decline in the value of their local currencies versus the U.S.
dollar.
JAPAN. A country of 126 million with a labor force of 64 million
people, Japan is renowned as the preeminent economic miracle of the
post war era. Fueled by public investment, protectionist trade
policies, and innovative management styles, the Japanese economy has
transformed itself since the war into the world's second largest
economy. An island nation with limited natural resources, Japan has
developed a strong heavy industrial sector and is highly dependent on
international trade. Strong domestic industries are automotive,
electronics, and metals. Needed imports revolve around raw materials
such as oil, forest products, and iron ore. Subsequently, Japan is
sensitive to fluctuations in commodity prices. With only 19% of its
land suitable for cultivation, the agricultural industry is small and
largely protected. While the U.S. is Japan's largest single trading
partner, close to half of Japan's trade is conducted with developing
nations, almost all of which are in southeast Asia. Investment
patterns generally mirror these trade relationships. Japan has over
$100 billion of direct investment in the United States.
The Tokyo Stock Exchange (TSE) is the largest of eight exchanges in
Japan. The exchanges divide the market for domestic stocks into two
sections, with larger companies assigned to the first section and
newly listed or smaller companies assigned to the second. In 1996,
1,833 firms were listed on the TSE, 96% of which were domestic. Some
believe that the TSE has a tendency to be strongly influenced by the
performance of a small circle of large cap firms that dominate the
market. The two key indexes are the Tokyo Stock Price Index (TOPIX)
and the Nikkei. In 1996, TSE performance was lackluster, with the
TOPIX down about 7%.
CHINA AND HONG KONG. China is one of the world's last remaining
communist systems, and the only one that appears poised to endure due
to its measured embrace of capitalist institutions. It is the world's
most populous nation, with 1.3 billion people creating a work force of
630 million. Today's Chinese economy, roughly separated between the
largely agricultural interior provinces and the more industrialized
coastal and southern provinces, has its roots in the reforms of the
recently deceased communist leader Deng Xiaoping. Originally an
orthodox communist system, China undertook economic reforms in 1978 by
providing broad autonomy to certain industries and establishing
special economic zones (SEZ's) to attract foreign investment (FDI).
Attracted to low labor costs and favorable government policies,
investment flowed from many sources, with Hong Kong, Taiwan, and the
United States leading the way. Most of the investment, totaling $37
billion by the end of 1995, has located in the southern provinces,
establishing manufacturing facilities to process goods for re-export.
The result has been a steadily high level of real GDP growth,
averaging 11.35% per year so far this decade. With this growth has
come a doubling of total consumption, a tripling of real incomes for
many workers, and a reduction in the number of people living in
absolute poverty from 270 to 100 million. Today there is a market of
more that 80 million who are now able to afford middle class western
goods.
China has two stock exchanges that are set up to accommodate foreign
investment, in Shenzhen and in Shanghai. In both cases, foreign
trading is limited to a special class of shares (Class B) which was
created for that purpose. Only foreign investors may own Class B
shares, but the government must approve sales of Class B shares among
foreign investors. As of December 1996, there were 42 companies with
Class B shares on the two exchanges, for a total Class B market
capitalization of U.S. $4.7 billion.
AUSTRALIA. Australia is a 3 million sq. mile continent (about the size
of the 48 continental United States) with a predominantly European
ethnic population of 18.2 million people. A member of the British
Commonwealth, its government is a democratic, federal-state system.
The country has a western style capitalist economy with a work force
of 9.2 million that is concentrated in services, mining, and
agriculture. Australia's natural resources are bauxite, coal, iron
ore, copper, tin, silver, uranium, nickel, tungsten, mineral sands,
lead, zinc, diamonds, natural gas, and oil. Primary trading partners
are the US, Japan, South Korea, New Zealand, UK and Germany. Imports
revolve around machinery and high technology equipment, while exports
are heavy in the agricultural and mineral products, making them
sensitive to world commodity prices.
Historically, Australia's strong points were its agricultural and
mining sectors. While this is still true to a large extent, the
government managed to boost its manufacturing sector by undertaking
protective measures in the 1970's and early 1980's. These have
subsequently been liberalized in an effort to kindle growth in the
industrial sector. Today's economy is more diverse, as manufactures'
share of total exports is increasing. Part of the government's effort
to make manufacturing more competitive was a floating of the
Australian dollar in 1984, precipitating an initial depreciation, and
a campaign to reduce taxes. Such reforms have attracted foreign
investment, particularly in the transport and manufacturing sectors.
Restrictions do exist on investment in certain areas as media, mining
and some real estate. In 1995, cumulative US investment in Australia
totaled more than $65 billion and accounted for 21% of total foreign
investment.
GDP growth reached 3.6% in 1996; a steady increase over the days of
the early 1990's which saw a recession. The recession was followed in
1992 by a jump in growth (from 0.4-2.8%), but this initial boost seems
to have leveled off. The election of a new Liberal/National coalition
government after 13 years of Labor rule has brought with it new
efforts to cut public spending and eliminate the projected $6 billion.
budget deficit. This step, coupled with a steady unemployment rate
(8%), could slow down the recent ascent in growth.
Australia is fully integrated into the world economy, participating in
GATT and also more regional trade associations such as the Asia and
the Pacific Economic Cooperation (APEC) forum. Future growth could
result from their movement towards regional economic liberalization,
but a countervailing force is the reality that some export markets in
Europe could be lost to continued European economic integration.
INDONESIA. Indonesia is a country that encompasses over 17,000 islands
on which live 195 million people. It is a mixed economy that balances
free enterprise with significant government intervention. Deregulation
policies, diversification of strong domestic sectors, and investment
in infrastructure projects have all contributed to high levels of
growth since the late 1980's. Indonesia's economy grew at 7.1% in
1996, the exact average if its performance for the current decade.
Growth in the 1990's has been fairly steady, hovering between 6.5-7.5%
for the most part, peaking at 8.1% in 1995. Moderate growth in
investment, including public investment, and also in import growth,
helped to slowdown GDP growth. Growth has been accompanied by
moderately high levels of inflation, ranging from the recent high of
9.7% in 1993 to a low of 7.1%, as witnessed last year.
Indonesia is currently undergoing a diversification of the core of its
economy. No longer strictly revolving around oil and textiles, it now
gaining strength in high technology manufactures, such as electronics.
Indonesia consistently runs a positive trade balance. Strong export
performers are oil, gas, and textiles and apparel. Oil, once
responsible for 80% of export revenues, now accounts for only 25%, an
indication of how far other (mostly manufacturing and apparel) sectors
have developed. Main imports are raw materials and capital goods.
In 1994 the country underwent deregulation measures which further
boosted investment. By 1996, FDI levels dropped from the record high
in 1995, and the trend was away from large projects including
infrastructure to smaller more manageable projects. Many consider this
a reflection of a desire to avoid the notoriously nepotism ridden
bureaucracy.
The Indonesian government is strongly authoritarian. Treatment of
political opponents, workers and ethnic minorities has put Indonesia
in the world spotlight with criticism of its human rights practices.
One source of outspoken popular discontent is the glaring discrepancy
in income distribution, particularly across ethnic lines. World
attention to the problems in Indonesia has given support to the
various causes, but it does not seem to have had much impact on the
government. Efforts to impose sanctions on the country by both federal
and state level politicians in the US have so far proven unsuccessful,
but are likely to continue to persist.
Politically, the ruling party, Golkar, faces frequent challenges from
unofficially sanctioned opposition parties, but these efforts are
effectively marginalized. The key political question in Indonesia is
who will replace the aging ruler, President Suharto who, at 76, has
been the county's only leader for over 30 years. His long tenure and
the country's nascent democratic institutions leave the question of
proper succession open. During his career he has amassed support from
a directly appointed insider bureaucracy of political and business
elites which features immediate members of his family. As well, he has
relied strongly upon the army to provide the force necessary to
contain social unrest. Which amongst these two institutions will
emerge to replace Suharto is far from clear, and the surrounding
intrigue could lead to some instability. As economic policies have
been crafted to benefit Suharto's supporters in the business
community, any deviation from Suharto's position would likely impact
the economy. Additionally, a key ingredient to Indonesia's success has
been their ability to contain social unrest. Maintaining this control,
especially in the face of recently escalated tensions and political
uncertainty, is an important anchor for economic performance. Proof of
this is the Jakarta Stock Exchange's volatile reaction to riots in
July 1995.
MALAYSIA. 1996 saw Malaysia's GDP growth slow to 8.3%, down from over
9% in 1994 and 1995. Inflation has been kept relatively low at 3.8%.
Performance in 1996 avoided the economy's potential overheating as
export growth, investment, and consumption all slowed. This helped to
bring the current account deficit down by $1.7 billion to settle at
approximately 6.0% of GDP.
A large part of Malaysia's recent growth is due to its manufacturing
industries, particularly electronics and especially semiconductors.
This has led to an increased reliance on imports; thus the economy is
sensitive to shifts in foreign production and demand. This is
particularly true regarding its main trading partners: the US, Japan,
and Singapore. Such shifts were partly responsible for the slowdown in
1996. In addition, monetary policies to stem the threat of overheating
were evident, but the country still needs massive public and private
investment to finance several large infrastructure projects.
Government industrial policy seeks investment to create more value
added high technology manufacturing and service sectors in order to
decrease the emphasis on low skilled manufacturing. Already US
investors have invested over $9 billion, and most of this is in
electronics and energy projects.
Unemployment remains extremely low (2.6%) and labor for completing the
various projects is becoming costly, especially as industry has to go
abroad to search for higher skilled workers. Wages have soared so high
that Malaysia no longer qualifies for the special trading benefits
that the US and the EU bestow upon developing nations. This could hurt
exports. A further catch is that rapidly increasing wages could cause
inflationary pressures, yet a shortage of labor could threaten
development.
The political situation in Malaysia is stable and could possibly
remain so up to and including the next election in the year 2000.
SINGAPORE. Since achieving independence from the British in 1965,
Singapore has repeatedly elected the People's Action Party (PAP) as
their government. It is a party that is so consistent it has only
offered up two prime ministers in this 32-year period. Elections in
January 1997 returned the PAP to power, signaling satisfaction with
their policy of close coordination with the private sector to
stimulate investment. Typical policies include selective tax
incentives, subsidies for R&D, and joint ventures with private firms.
While the combination of consistent leadership and interventionist
policies is sometimes seen as impeding civil liberties and
laissez-faire economics, it has produced an attractive investment
environment.
The Singapore economy is almost devoid of agriculture and natural
resources, not surprising given the island nation's geographic size.
Its strongest sector is manufacturing, particularly of electronics,
machinery and petroleum and chemical products. They produce 45% of the
world's computer disk drives. Major trading partners are Japan,
Malaysia and the US.
The economic situation in Singapore registered a passable year in
1996. The regional trend toward slowed electronics exports made clear
the country's strong reliance on this sector. GDP growth dropped from
8.8% to 6.5%, while inflation remained low (1.4%) and the current
account balance maintained its large surplus. Property values have
gone up recently, partially in response to uncertainty surrounding
Hong Kong. Interest rates are consistently low, and wages high,
leaving some at a loss to explain the repeatedly low inflation rate.
SOUTH KOREA. South Korea is one of the more spectacular economic
stories of the post war period. Coming out of a civil war in the
mid-1950's the country found itself with a destroyed economy and
boundaries that excluded most of the peninsula's mineral and
industrial resources. It proceeded over the next 40 years to create a
society that includes a highly skilled and educated labor force and an
economy that exploited the large amounts of foreign aid given to it by
the US and other countries. Exports of labor intensive products such
as textile initially drove the economy, to be replaced later by heavy
industries such as automobiles.
Hostile relations with North Korea dictate large expenditures on the
military, and political uncertainty and potential famine in the north
has put the south on high alert. Any kind of significant military
effort could have multiple effects, both positive and negative, on the
economy. South Korea's lack of natural resources put a premium on
imported energy products, making the economy very sensitive to oil
prices.
Since 1991, GDP growth has fluctuated widely between 5% and 9%,
settling down at 6.8% last year. Currently the labor market is in need
of restructuring, and its rigidity has hurt performance. Relations
between labor and the large conglomerates, or Chaebols, could prove to
be a significant influence on future growth. Inflation in the same
period has been consistently dropping, save a brief rise in 1994, and
finished the year at 4.5%. The country consistently runs trade
deficits, and the current account deficit widened sharply in 1996,
more than doubling to $19.3 billion. South Korea's strong domestic
sectors are electronics, textiles and industrial machinery. Exports
revolve around electronics, textiles, automobiles, steel and footwear,
while imports focus on oil, food, chemicals and metals.
The stock market (Korea Stock Exchange) is currently undergoing
liberalization to include more foreign participation, which was only
first allowed in 1992, but the bond market remains off limits until
1999. Liberalization is in response to the KSE 1996 performance, which
was down 18%. While the number of listed companies increased by 39 in
1996, total market capitalization fell 24% from its 1995 level.
THAILAND. The political situation in Thailand is tenuous.
Democracy has a short history in the country, and power is
alternatively obtained by the military, a non-elected bureaucratic
elite, and democratically elected officials. The frequent transfers of
power have generally gone without divisive, bloody conflicts, but
there are bitter differences between the military and the political
parties. Free elections in 1992 and again in 1995 have produced
non-military democratic leaders from different parties, a healthy sign
of party competition. While democratic institutions are stabilizing,
the current government is under increasing pressure due to recent poor
economic performance.
The Thai economy has witnessed a fundamental transition in recent
years. Traditionally it was a strong producer of textiles, minerals
and agricultural products, but more recently it has tried to build
high tech export industries. This proved particularly fortuitous in
the mid 1990's when flooding wiped out much of their traditional
exports, but the newer industries remained strong, keeping the growth
rate above 8%. (This level had been achieved through the 1990's,
giving the economy a name as one of the fastest growing in the
region.) The government has also taken steps toward reducing the
influence of central planning, opening its market to foreigners and
abandoning five-year plans. This restructuring is still underway, and
the change can cause difficulty at times.
GDP growth slowed a bit last year to 7.2%, down from 8.6% in 1995. The
current account deficit was 7.9% of GDP, and inflation was 5.8%, both
considered high but steady and controllable results in line with
recent years' performance. One cause for the slowdown was a decline in
export growth as its manufacturing industry faces stiff competition
from low priced competitors and its agriculture suffers drops in
production. In 1996, Thailand's currency, the baht, was linked to a US
dollar dominated basket, and monetary policy had remained tight to
keep that link strong and avoid inflationary pressures.
The situation changed in early 1997, however, with the revelation of
many bad bank loans and a bubbling of property prices due to
over-investment. Many companies, faced with slowing exports, stopped
servicing their debts. Many other firms have stayed alive only with
infusions of public cash, and the government has been slow to let many
property laden financial firms fail. The stock market has reacted
strongly, dropping to new lows for the decade. Reluctant to float the
baht, indeed promising that it wouldn't, the government relented in
early July hoping to revive export and stock market growth. The
subsequent devaluation (approximately 20% against the dollar in the
first month) led to the need for a $16 billion loan coordinated by the
IMF to shore up foreign reserves. Most of the loan came from
neighboring countries led by Japan, indicating their desire to both
protect their own investments in Thailand, and also mitigate the
effect of the devaluation on their home currencies
The total impact of the entire situation is negative, particularly on
inflation, unemployment and foreign debt. Significant turnover and a
major gamble on the currency has put the government in a precarious
position, especially given the fact that it is a six party coalition.
Dissatisfaction amongst the military, always a political factor, is
high.
INDIA. Although India's economy has grown at an average rate of 7%
over the past three years, growth has slowed to about 6% during 1997.
Economic growth, which had been fueled by strong industrial and export
sectors, slowed along with growth in these sectors. It is uncertain
whether India will be able to sustain the high growth rates it
experienced through 1996. Subsidies amount to almost 15% of GDP, while
agriculture accounts for about 25%. In 1997, annual inflation has been
approximately 3.8% down from about 6.6% the previous year. During
1997, the current account deficit has been roughly 1.2% of GDP, down
from 1.5% in 1996. The exchange rate has been gradually devalued in
the 1980's and 1990's, and could be devalued further. Beginning in
1992, industry, financial markets, and the country's trade have been
gradually liberalized. Fifty-five percent of India's population is
illiterate, roughly half live in poverty, and unemployment remains
high.
Since the dissolution of the Narasimha Rao government in early
1996, India has experienced several weak, coalition governments that
have been unable to consolidate their position for an extended period.
Partially as a result, economic reforms have proceeded slowly though
gradually. Future changes in government could weaken or set back the
reform process.
India does not enjoy trouble-free relations with its neighbors.
India and Pakistan have fought two wars since their independence in
1947 and have yet to resolve a continuing dispute over the status of
the northern Indian state of Kashmir. Various Kashmiri separatist
groups, Indian, and Pakistani military been involved in armed conflict
within the state. Neither India nor Pakistan have signed the
Comprehensive Nuclear Test Ban Treaty, which prohibits nuclear weapons
testing. A border dispute with China and questions over the
involvement of elements within India in the internal affairs of Sri
Lanka also affect India's relations with these countries.
PAKISTAN, BANGLADESH, AND SRI LANKA. The other, smaller South Asian
countries of Pakistan, Bangladesh, and Sri Lanka share with India the
challenges of reducing poverty and illiteracy and improving
infrastructure and economic growth. While each of these countries has
taken steps to liberalize their economies, their economies are far
from mature, as are their legal and regulatory systems. In addition,
because they have small and relatively less diversified economies and
public markets, they are susceptible to external economic shocks,
which may result in currency declines. Sri Lanka has been plagued by
internal challenges to its security, while Pakistan has faced
significant political infighting and instability. Bangladesh's largely
agricultural economy is heavily dependent on the severity of the
monsoons.
EMERGING MARKETS: ASIA
MARKET CAPITALIZATION IN U.S. DOLLARS
DECEMBER 1996
BILLIONS:
INDIA $ 132.97
INDONESIA 91.00
KOREA 138.91
MALAYSIA 322.00
PAKISTAN 11.75
PHILIPPINES 80.69
SINGAPORE 182.00
TAIWAN 274.00
THAILAND 95.92
Source: The Economist. The LGT Guide to World Equity Markets 1997.
REAL GDP ANNUAL RATE OF GROWTH
(ANNUAL % CHANGE) 1996
CHINA 9.1%
HONG KONG 4.3%
INDIA 5.7%
INDONESIA 7.1%
JAPAN 3.9%
KOREA 6.8%
MALAYSIA 8.3%
PHILIPPINES 5.5%
SINGAPORE 6.5%
TAIWAN 5.8%
THAILAND 7.2%
Source: The Economist. The LGT Guide to World Equity Markets 1997.
For national stock market index performance, please see the section on
Performance beginning on page .
SPECIAL CONSIDERATIONS AFFECTING CANADA
Canada is one of the richest nations in the world in terms of natural
resources. Within this sector particularly strong commodities are
forest products, mining and metals products, and agricultural products
such as grains. Additionally, energy related products such as oil, gas
and hydroelectricity are important components of their economy.
Accordingly, the Canadian stock market is strongly represented by such
basic materials stocks, and movements in the supply and demand of
industrial materials, agriculture, and energy, both domestically and
internationally, can have a strong effect on market performance.
Canada is a confederation of 10 provinces with a parliamentary system
of government. The area, the world's second largest nation by
landmass, is inhabited by 30.2 million people, most of whom are
decedents of France, the United Kingdom and indigenous peoples. The
country has a work force of over 15 million, spread out over a variety
of industries from trade, manufacturing, and mining to finance,
construction and government. While the country has many institutions
which closely parallel the US, such as a transparent stock market and
similar accounting practices, it differs from the US in that it has an
extensive social welfare system, much more akin to European welfare
states.
The confederated structures combined with recent financial pressure on
the federal government have pushed some provinces, Quebec in
particular, to call for a reevaluation of the legal and financial
relationships between the federal government in Ottawa and the
provinces. This issue came to a head in 1995 with a referendum on
Quebec sovereignty, which was ultimately won by Ottawa
(50.56%-49.44%). The very narrow defeat of the referendum and the
return of Bloc Quebecois to parliament with a lower but still
substantial number of seats indicate that the issue is far from
resolved. Accordingly, a large amount of the government's energy is
spent considering new constitutional arrangements. In the meantime,
markets react to the periodic escalations of separatist calls with
caution.
The current government of the Liberal party was reelected in June 1997
with a clear majority of 155 of the 301 parliamentary seats. This is a
drop in majority status during their previous government, during which
they held 60% of the seats. Opposition is currently divided amongst 4
parties, none of which occupies more than 60 seats. The historical
opposition to the Liberals, the Conservatives, has had to fight back
onto the political stage after being marginalized in the 1993
elections. Reclaiming enough seats in 1997 to be restored to official
status, the Conservatives currently hold 20 seats.
Economically, GDP growth in Canada was 1.5% in 1996, down from 2.3% in
1995. Driving growth was optimism in the government's stability and
fiscal health following the Quebec referendum and the achievement of a
current account surplus (which was subsequently lost, then regained in
early 1997). Particularly strong market performers were financial
services, real estate, utilities and merchandising. Consumer demand
was strong in 1996, financed by borrowing.
The Bank of Canada is fairly independent from the government and has
the latitude to manipulate interest rates to keep inflation within its
self imposed target of less than 3%. The Canadian dollar has benefited
from internal fiscal successes, specifically the balancing of the
current account. Despite the strong link to the US dollar, the Bank of
Canada won't automatically raise rates in response to US hikes.
The US is Canada's biggest trading partner, representing over 75% of
total trade. Strong export industries are energy, mining and forest
products. Canada is the largest energy supplier to the US. Main
imports are industrial machinery and chemicals. The US is also
Canada's largest foreign investor, responsible for 71% of all FDI in
Canada (worth approximately $87 billion). Main targets for investment
are metals and mining industries, energy, and finance.
Recently the Finance Ministry has kept demands for spending on social
programs at bay in the name of eradicating the budget deficit. Once
they feel this is firmly behind them, social spending could possibly
resume.
Privatization programs, meeting gathering opposition from trade
unions, interest groups and the general public, are slowly shrinking,
with many large-scale services remaining public.
There are four primary securities exchanges in Canada: Toronto,
Montreal, Vancouver, and Alberta. The Toronto and Montreal exchanges
list the older, larger, more established firms. Combined, these two
exchanges accounted for 95.2% of the total trading value in 1996. The
Vancouver and Alberta exchanges list smaller, younger start up firms
which tend to represent the natural resource sectors. In 1996 these
two exchanges accounted for 4.8% of the total value of equity trading.
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICA
Latin America represents one of the world's more advanced emerging
markets. With a total population of 427 million and its abundant
natural resources, the area is a prime trading partner for the US and
Canada. In Latin America exports represent, on average, 16.6% of GDP.
Strong export sectors are petroleum, manufactured goods, agricultural
commodities such as coffee and beef, and metals and mining products.
GDP growth in Latin America as a region was 3.4% in 1996, up from 0.1%
in 1995. Recognizing the important role of international trade as a
component of GDP, the countries of Latin America have formed strong
regional trade organizations, notably MERCOSUR. Talk of extending
NAFTA down through Latin America indicates some desire to tie the
economies even closer to those of the north.
Politically, Latin American countries generally have strong
presidential systems closely modeled on the US. Their transition to
democracy, largely complete in most countries, nevertheless allows for
a considerable military influence, reflecting the strong authoritarian
leanings of a large portion of the population. The countries all enjoy
good relations with the United States, with whom they cooperate on a
range of non-economic matters, such as preservation of the environment
and drug control. Monetarist minded governments were responsible for
the successful staving off of contagion from the recent currency
crisis in Mexico, increasing their stature in the eyes of most capital
market participants.
ARGENTINA. Prior to 1989, Argentine politics were characterized by
populist leaders, sometimes democratically elected and sometimes not,
who ruled with the overt support of the military. Coups and outright
military rule were not uncommon. Economic polices were highly
protectionist, with significant barriers and restrictions on foreign
trade and investment. Markets were highly regulated and the state was
heavily involved in many industries. Inflation was routinely high and
growth stagnant.
President Carlos Menem was first elected to office in 1989 and
undertook a program of deregulation, liberalization and macroeconomic
reform. The results have been positive. Growth in 1996 was 4.4%, up
from -4.4% in 1995. Argentina's growth, averaging over 7% from 1991 to
1994, has been driven primarily by domestic consumption. In the wake
of the Mexican currency crisis, however, banking liquidity has been
restrained. While deposits have increased in reaction to peso
stabilization, lending has not, putting downward pressure on consumer
spending. The positive effect is that inflation, well over 150% at the
beginning of the decade, was 0.4% in 1996. Still troublesome for
Argentina is unemployment, quite high at 17%. Menem's economic
liberalization policies have succeeded in attracting foreign
investment. From the US alone, approximately $10 billion was invested
by 1996. Investors have been most attracted to the telecommunications,
finance, and energy sectors.
Argentina enjoys a positive trade balance. The export economy is
heavily weighted toward agriculture, which represents 60% of the total
value of all Argentine exports. Primary products are livestock,
oilseeds, and grain. Argentina's single biggest trading partner is
Brazil, and the US is the second. Primary imports are machinery,
vehicles and chemicals.
The resignation of Economy Minister Domingo Cavallo in July 1996 was
initially greeted with skepticism from the markets. Cavallo was widely
recognized as the man responsible for ensuring the convertibility of
the peso by pegging it to the dollar, a move which saved Argentina
from the hyperinflation and continuous drops in output which could
have followed from the Mexican crisis in 1994. Confidence was quickly
restored, however, with the appointment of Roque Fernandez, who
promptly reaffirmed commitment to Cavallo's plan and introduced
further measures for fiscal stability.
Other objectives of the administration of the current President,
Fernando Henrique Cardoso, are trade liberalization and privatization,
but these efforts are sporadic and often stalled by special interests
in the legislature. Some privatization efforts are performing well,
particularly in the utilities sector. Utilities and telecommunications
have been key draws for foreign investment, and foreign direct
investment (FDI) is coming in at record levels. In 1996 the country
received over $9.5 billion, with $2.4 billion coming from the US.
Still, there are restrictions against investments in certain
industries, such as metals and mining.
Similarly with trade liberalization, the government increased import
restrictions in an effort to shrink the trade deficit and slow the
growth of import consumption. This consumption was a main contributor
to GDP growth in 1996, though growth was down 1% to 3.2%.
Traditionally a primarily agricultural economy, a strong industrial
sector has developed which produces metals, chemical, and manufactured
consumer goods. Agriculture still plays a significant role, however,
representing 11% of the GDP, 40% of exports and employing over 35% of
the work force. Primary agricultural products are grains, coffee, and
cattle. Regarding energy and utilities, the country is a leading
producer of hydroelectric power, but they are dependent on imports for
oil.
Presidential elections will be held in 1998. President Cardoso hopes
to stand for re-election but currently is unable to, given a
constitutional provision on term limits. Efforts to gather
congressional support for constitutional reform, allowing Cardoso to
stand, could result in a great deal of special interest concessions,
translating into more public spending and horse-trading over fiscal
reforms.
CHILE. Chile is a transition economy which has recently made great
strides toward putting its authoritarian, statist, past behind itself.
In all of Latin America, it is the country with the highest rates of
growth. Averaging 7.3% so far this decade, GDP grew at 6.7% in 1996,
down from 8.5% the previous year. Inflation has been steadily
declining and is down over 15% in the last five years. Inflation in
1996 was 7.4%, a 0.8% drop over 1995. Unemployment in 1996 was 6.6%,
particularly low for the Latin American region. Despite the fact that
market capitalization fell $8 billion in 1996 to $64 billion, Chile is
still considered to have one of the best performing stock markets in
the region.
Chile has a strong, interventionist central bank which focuses more on
the investment community than it does on the government. Active steps
are taken to control demand and inflation. One example is the practice
of restricting short-term flows of foreign capital through the
country.
Interest rate hikes in 1996 are said to have restrained growth, but
other factors include unfavorable weather conditions that hurt
agricultural and hydroelectric power production. Mining and metals
were strong performers in 1996. Of particular note was the strong
showing of the country's copper industry.
Eduardo Frei is President and is due for reelection in 1999. President
Frei has been trying to decentralize the government but encounters
stiff opposition from the powerful trade unions. Also high on Frei's
agenda is tax reform.
There is a considerable military component to political life in Chile.
In the legislature there is strong representation by parties with
authoritarian views. As part of the negotiated settlement with coup
leader General Augusto Pinochet in 1990, the army chain of command
ends with General Pinochet, not an elected official. Furthermore,
certain seats are reserved in the Senate for appointed officials from
the military. Pinochet must resign in 1998, and shortly thereafter the
reserved Senate seats will fall open to election. There are
constitutional reforms currently in progress further diminishing the
role and influence of the military, and thus the political transition
is still underway. A successful outcome requires that the military
acquiesce as it is stripped of its political powers.
MEXICO. The Mexican economy recovered fairly well in 1996 from the
currency crisis of December 1994 thanks in large part to growth in
exports, peso stabilization, and massive financial assistance from the
United States. Growth rebounded from its negative position of -6.2% in
1995 to reach 5.1% in 1996. The peso devaluation of 1994, prompted by
mounting foreign debt, was effective in reducing the current account
deficit from $30 billion to just over $1 billion, and it also pushed
Mexico into a positive trade balance. The current account deficit
increased in 1996 to $3.7 billion, but the trade surplus was
maintained. Inflation jumped from 7% to over 50% in the year after the
crisis, but was controlled in 1996, registering a drop to 28%.
Inflation is the chief concern of the central bank, which takes active
measures such as the setting of wage ceilings and manipulation of
interest rates to control it. Domestic consumption is sluggish and has
yet to return to pre-1994 levels, also contributing to the containment
inflation.
The Mexican economy is very strong in manufacturing and natural
resources, specifically oil. Manufacturing alone counts for 22% of the
Mexican GDP and 21% of all urban employment. The economy is also very
closely tied to the US, which is responsible for 60% of all foreign
investment and with whom it conducts over 75% of all trade. Trade
pacts such as the North American Free Trade Agreement further
integrate the economies, giving the US strong incentives to provide
assistance in times of crisis. NAFTA also enabled the recent recovery,
given the ease with which it allows increases in exports and
investment. The Mexican stock market listed 193 companies with total
capitalization of $106 billion in 1996, a 17% rise over 1995.
Internally, the various people of the Mexican states have recently
experienced a great deal of dissatisfaction with their relationship to
the federal government. Most notably, in Chiapas there have been armed
uprisings by indigenous groups demanding further autonomy. While the
rebellions have not strongly shaken financial markets, they serve as a
reminder of the diversity of Mexico, of the vast socio-economic gaps
between various peoples, and of the potential for such groups to
demand the attention of both their government and the world.
Politically, the landscape changed fundamentally in July 1997. The
defeat of candidates from the Institutional Revolutionary Party (PRI)
in legislative elections signaled the end of decades of one party
rule. Citizens now have the confidence that their votes count and that
the PRI is no longer invincible. Winning every presidential election
since its founding in 1929, the PRI was the country's monolithic
political machine, maintaining power through rigged elections and
ruling in an environment rife with intrigue and corruption. Internal
pressures including armed rebellion from domestic interest groups,
extensive crises and scandals caused by intra-party rivalries and
corruption, and deteriorating relationships with foreign countries
over financial mismanagement and mutual social problems all
contributed to the establishment of fully free and unfettered
elections. The response from the Mexican people was clear. Though they
took the most votes (39%) for the 500-member Lower House of congress,
the PRI has lost their majority, and the President is now forced to
accommodate the interests of the opposition parties. Market reaction
to the new Mexican political world was positive. The IPC index,
consisting of 35 of the most representative stocks on the Mexican
Stock Exchange, rose 3.25% the day after the election. Further
financial implications of the new landscape are as yet uncertain.
Relevant considerations are the effect of the new configurations on
government consensus and policy making, the demands of newly empowered
groups on economic and other resources, the balance of power between
the executive and the legislature, and the ability of the government
to maintain law and order.
EMERGING MARKETS: LATIN AMERICA
MARKET CAPITALIZATION IN U.S. DOLLARS DECEMBER 1996
BILLIONS:
ARGENTINA $ 44.7
BRAZIL 429.3
CHILE 65.6
MEXICO 107.0
PERU 13.8
VENEZUELA 10.0
Source: The Economist, The LGT Guide to World Equity Markets, 1997
For national stock market index performance, please see the section on
Performance beginning on page .
SPECIAL CONSIDERATIONS AFFECTING AFRICA
Africa is a highly diverse and politically unstable continent of over
50 countries and 720 million people. Much of this region has been
beset by civil wars, coups and even genocidal warfare in recent years.
Nevertheless, it is home to an abundance of natural resources,
including natural gas, aluminum, crude oil, copper, iron, bauxite,
cotton, diamonds and timber. Wealthier countries generally have strong
connections to European partners, and evidence of these relationships
is seen in the growing market capitalization and foreign investment.
Economic performance is closely tied to world commodity markets,
particularly oil, and also to agricultural conditions, such as
drought.
Five African countries are among the 20 FASTEST GROWING IN THE WORLD
(UGANDA, IVORY COAST, BOTSWANA, ANGOLA AND ZIMBABWE), with 1996
GDP growth rates ranging from 5. 0 % to 6.2 %.
Several African countries in the north have substantial oil reserves
and accordingly their economies react strongly to world oil prices.
They share a regional and sometimes religious identification with the
oil producing nations of the Middle East and can be strongly affected
by political and economic developments in those countries. As in the
south, weather conditions also have a strong impact on many of their
natural resources, and, as was the case in 1995, severe drought can
adversely effect economic growth.
Ten African countries have active equity markets (Botswana, Egypt,
Ghana, Kenya, Morocco, Nigeria, South Africa, Tunisia, Zambia,
Zimbabwe). The oldest market, in Egypt, was established in 1883, while
the youngest, in Zambia, was established in 1994. Four additional
markets have been established since 1989, and the mean age for all
equity markets is 40 years old. A total of 1,697 firms are listed on
the respective exchanges. Total market capitalization for these
countries in 1996 was 280 billion, an average increase of 63% over
1995 levels.
SPECIAL CONSIDERATIONS AFFECTING THE RUSSIAN FEDERATION
The Russian Federation is the largest republic of the Commonwealth
of Independent States with a 1995 population of 147,500,000. It is
about one and four fifths of the land area of the United States and
occupies most of eastern Europe and north Asia.
Russia has had a long history of political and economic turbulence.
The U.S.S.R. lasted 69 years and for more than half that time it
ranked as a nuclear superpower. In the 1930's tens of millions of its
citizens were collectivized under state agricultural and industrial
enterprises and millions died in political purges and the vast penal
and labor system or in state-created famines. During World War II, as
many as 20 million Soviet citizens died. After decades of communist
rule the Soviet Union was dissolved on December 8, 1991 following a
failed coup attempt against the government of Mikhail Gorbachev. On
the day that the leaders declared that the Soviet Union ceased to
exist, the Soviet republics were invited to join with Russia in the
Commonwealth of Independent states (CIS). At one time or another those
that have agreed to join have included the Ukraine, Belarus, Moldova,
Georgia, Armenia, Azerbaijan, Uzbekistan, Turkmenistan, Tajikistan,
Kazakhstan and Kyrgyzstan, but a number have dropped out since or have
only observer status. Each of the republics is a sovereign state that
controls its own economy and natural resources and collects its own
taxes, providing only minimal support to the CIS.
Boris Yeltsin, President of Russia, inherited the mantle of
economic and political chaos. With the freeing of most prices he
staked his political life on the rapid creation of a free market
economy. Since 1991 Yeltsin and his Russian reformers have been faced
with the daunting task of stabilizing the Russian economy while
transforming it into a modern and efficient structure able to compete
in international markets and respond to the needs of the Russian
people. To date, their efforts have yielded widely mixed results. On
the one hand, they have made some impressive progress. Since 1992,
they have abolished central planning, decontrolled prices, unified the
foreign exchange market, made the ruble convertible, and privatized
two thirds of the economy. They have accomplished this in spite of the
crushing burdens inherited from the communist system: huge industrial
enterprises that are unprofitable; an obsolete capital stock; a
crumbling energy sector, huge external debt; and armies that had to be
repatriated and resettled at home.
Russia remains a paradox among the major economies of the world in
that it is a country marked by stagnation in production levels, but
has few constraints on growth. Labor supply is adequate and savings
are high. In addition, there is almost unlimited scope for increasing
productivity through the introduction of improved technologies,
production process and market-oriented managerial development. There
are 147 million consumers who are slowly increasing their buying power
and education standards are high. Russia is also rich in natural
resources. It has 40% of the world's natural gas reserves, 6% of its
oil, 25% of coal, diamonds, gold and nickel, and 30% of timber and
bauxite. Approximately ten million people are engaged in agriculture
and they produce half of the region's grain, meat, milk, and other
dairy products.
The main reason for the continued poor performance of the Russian
economy is the country's failure to mobilize the resources that are
available. While the official unemployment rate was at 10.6% in 1996,
up to half of the working population is, in effect, unemployed or, to
a significant degree, underemployed in inefficient and unproductive
industries. Much of the country's savings have been siphoned off
through capital flight. Russia's technological potential for
assimilating both domestic and foreign technologies is not being
exploited. Industry privatization and restructuring initiatives have
generally failed to mobilize the available factors of production as
the country's privatization program virtually ensures the predominance
of the old management teams that are largely non market-oriented in
their management approach. Approximately 80% of Russian privatized
companies continue to be majority-owned by insiders and only 10% are
owned by investors with large enough stakes to influence the running
of the company.
In July 1996, Boris Yeltsin was re-elected for a second term and it
was hoped that the election would mark the start of a more stable
period of economic growth. However, macroeconomic indicators in 1996
proved contradictory. On the one hand, the Russian government
continued its strict credit policies, and the annual inflation rate
for 1996 dropped to 23%, down from 131% in 1995. Inflation has since
remained below 3% a month through the first half of 1997. In addition,
expenditure cuts trimmed the budget deficit to 7% of GDP for the first
nine months of 1996. On the other hand, however, GDP fell by 6%
following 1995's 4% fall, while industrial production was down by 5%
and real investment dropped by approximately 19%. Non-payment
continues to represent a serious problem for the economy, particularly
in the energy sector.
While Russia is widely believed to be one of the most risky markets
in eastern Europe, it is also recognized for its potential for
positive returns. In 1996 the Russian market delivered the world's
best stock market performance and was among the top performing markets
in the first half of 1997. However, the market has been essentially
liquidity driven and concentrated in a very few of the country's
largest companies. At just $65 billion, the total capitalization of
the stock market accounts for just 12 percent of GDP. The majority of
investors in Russian equities are small and medium-sized US hedge
funds. In addition, several country specific funds have been
established to make direct and portfolio investments in Russian
companies. To facilitate foreign investment, a number of the larger
Russian companies have issued equity in the form of American
depositary receipts while six big firms have issued securities in the
form of Russian depositary certificates. These certificates are issued
and marketed by the Bank of New York. Any investment in Russia is
risky and deciding which companies will perform well at this stage of
the country's transformation is far from easy. A combination of poor
accounting standards, inept management, limited shareholder rights and
the criminalization of large sectors of the economy pose a significant
risk, particularly to foreign investors.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of each fund by FMR pursuant to authority contained in the
management contract. If FMR grants investment management authority to
the sub-advisers (see the section entitled "Management Contract"), the
sub-advisers are authorized to place orders for the purchase and sale
of portfolio securities, and will do so in accordance with the
policies described below. FMR is also responsible for the placement of
transaction orders for other investment companies and accounts for
which it or its affiliates act as investment adviser. In selecting
broker-dealers, subject to applicable limitations of the federal
securities laws, FMR considers various relevant factors, including,
but not limited to: the size and type of the transaction; the nature
and character of the markets for the security to be purchased or sold;
the execution efficiency, settlement capability, and financial
condition of the broker-dealer firm; the broker-dealer's execution
services rendered on a continuing basis; the reasonableness of any
commissions; and arrangements for payment of fund expenses. Generally,
commissions for investments traded on foreign exchanges will be higher
than for investments traded on U.S. exchanges and may not be subject
to negotiation.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts
over which FMR or its affiliates exercise investment discretion. Such
services may include advice concerning the value of securities; the
advisability of investing in, purchasing, or selling securities; and
the availability of securities or the purchasers or sellers of
securities. In addition, such broker-dealers may furnish analyses and
reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; effect
securities transactions, and perform functions incidental thereto
(such as clearance and settlement). The selection of such
broker-dealers generally is made by FMR (to the extent possible
consistent with execution considerations) in accordance with a ranking
of broker-dealers determined periodically by FMR's investment staff
based upon the quality of research and execution services provided.
The receipt of research from broker-dealers that execute transactions
on behalf of the funds may be useful to FMR in rendering investment
management services to the funds or its other clients, and conversely,
such research provided by broker-dealers who have executed transaction
orders on behalf of other FMR clients may be useful to FMR in carrying
out its obligations to the funds. The receipt of such research has not
reduced FMR's normal independent research activities; however, it
enables FMR to avoid the additional expenses that could be incurred if
FMR tried to develop comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that
are in excess of the amount of commissions charged by other
broker-dealers in recognition of their research and execution
services. In order to cause each fund to pay such higher commissions,
FMR must determine in good faith that such commissions are reasonable
in relation to the value of the brokerage and research services
provided by such executing broker-dealers, viewed in terms of a
particular transaction or FMR's overall responsibilities to the funds
and its other clients. In reaching this determination, FMR will not
attempt to place a specific dollar value on the brokerage and research
services provided, or to determine what portion of the compensation
should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided
assistance in the distribution of shares of the funds or shares of
other Fidelity funds to the extent permitted by law. FMR may use
research services provided by and place agency transactions with
National Financial Services Corporation (NFSC) and Fidelity Brokerage
Services (FBS), indirect subsidiaries of FMR Corp., if the commissions
are fair, reasonable, and comparable to commissions charged by
non-affiliated, qualified brokerage firms for similar services. From
September 1992 through December 1994, FBS operated under the name
Fidelity Brokerage Services Limited (FBSL). As of January 1995, FBSL
was converted to an unlimited liability company and assumed the name
FBS.
FMR may allocate brokerage transactions to broker-dealers who have
entered into arrangements with FMR under which the broker-dealer
allocates a portion of the commissions paid by each fund toward
payment of the fund's expenses, such as transfer agent fees or
custodian fees. The transaction quality must, however, be comparable
to those of other qualified broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions
for accounts which they or their affiliates manage, unless certain
requirements are satisfied. Pursuant to such requirements, the Board
of Trustees has authorized NFSC to execute portfolio transactions on
national securities exchanges in accordance with approved procedures
and applicable SEC rules.
Each fund's Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio
transactions on behalf of the funds and review the commissions paid by
each fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the fund.
Each fund's turnover rates for the fiscal periods ended October 31,
1997 and 1996 are indicated in the table below. Because a high
turnover rate increases transaction costs and may increase taxable
gains, FMR carefully weighs the anticipated benefits of short-term
investing against these consequences. An increased turnover rate is
due to a greater volume of shareholder purchase orders, short-term
interest rate volatility and other special market conditions.
TURNOVER 1997 1996
RATES
INTERNATIONAL 70 % 95%
GROWTH &
INCOME
DIVERSIFIED 81 % 94%
INTERNATIONAL
INTERNATIONAL 86 % 71%
VALUE
OVERSEAS 68 % 82%
WORLDWIDE 85 % 49%
BROKERAGE COMMISSIONS. The table below lists the total brokerage
commissions and the dollar amount of commissions paid to NFSC and FBS
and FBSL for the fiscal periods ended October 31, 1997, 1996, and
1995.
TOTAL TO NFSC TO FBS/FBSL
INTERNATIONAL
GROWTH &
INCOME
1997 $ 2,995,171 $ 0 $ 140,274
1996 $ 3,004,001 $ 5,530 $ 124,031
1995 $ 2,887,378 $ 19,397 $ 216,219
DIVERSIFIED
INTERNATIONAL
1997 $ 4,502,575 $ 70,400 $ 178,643
1996 $ 2,192,851 $ 75,564 $ 80,532
1995 $ 1,413,822 $ 66,332 $ 61,995
INTERNATIONAL
VALUE
1997 $ 1,076,317 $ 2,896 $ 71,388
1996 $ 927,266 $ 7,878 $ 45,758
1995 $ 273,209 $ 2,231 $ 14,110
OVERSEAS
1997 $ 8,282,544 $ 14,838 $ 611,587
1996 $ 8,266,411 $ 45,887 $ 500,320
1995 $ 4,412,811 $ 12,927 $ 486,380
WORLDWIDE
1997 $ 3,341,959 $ 61,353 $ 152,700
1996 $ 1,736,992 $ 36,270 $ 69,922
1995 $ 1,705,701 $ 55,908 $ 57,267
The table below lists for the fiscal period ended October 1997, the
percentage of aggregate brokerage commissions paid to NFSC, FBS and
FBSL and the percentage of the aggregate dollar amount of transactions
for which each fund paid brokerage commissions to NFSC, FBS, and FBSL.
The difference in the percentage of the brokerage commissions paid to
and the percentage of the dollar amount of transactions effected
through NFSC and FBSL is a result of the low commission rates charged
by NFSC and FBSL. The table also includes the amount of brokerage
commissions paid to brokerage firms that provided research services;
and the approximate amount of transactions effected through brokerage
firms that provided research services. The provision of research
services was not necessarily a factor in the placement of all this
business with such firms.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FISCAL % OF % OF % OF % OF COMMISSIONS TRANSACTIONS WITH
PERIOD COMMISSIO COMMISSIONS TRANSACTIONS TRANSACTIONS PAID TO FIRMS BROKERAGE FIRMS
ENDED NS PAID TO PAID EFFECTED EFFECTED PROVIDING PROVIDING RESEARCH
OCTOB NFSC TO FBS/FBSL THROUGH THROUGH RESEARCH SERVICES
ER 31, NFSC FBS/FBSL SERVICES
1997
INTERNA 0 % 4.68 % 0 % 5.73 % $ 2,852,820 $ 1,211,799,288
TIONAL
GROWT
H &
INCOM
E
DIVERS 1.56 % 3.97 % 2.26 % 4.52 % $ 4,312,562 $ 1,743,547,783
IFIED
INTERN
ATIONAL
INTERN .27 % 6.63 % .73 % 6.95 % $ 1,027,906 $ 487,462,168
ATIONAL
VALUE
OVERS .18 % 7.38 % .62 % 7.61 % $ 7,959,483 $ 3,904,831,822
EAS
WORLD 1.83 % 4.57 % 4.00 % 4.67 % $ 3,123,460 $ 1,317,376,232
WIDE
</TABLE>
From time to time the Trustees will review whether the recapture for
the benefit of the funds of some portion of the brokerage commissions
or similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at
present no other recapture arrangements are in effect. The Trustees
intend to continue to review whether recapture opportunities are
available and are legally permissible and, if so, to determine in the
exercise of their business judgment whether it would be advisable for
each fund to seek such recapture.
Although the Trustees and officers of each fund are substantially the
same as those of other funds managed by FMR, investment decisions for
each fund are made independently from those of other funds managed by
FMR or accounts managed by FMR affiliates. It sometimes happens that
the same security is held in the portfolio of more than one of these
funds or accounts. Simultaneous transactions are inevitable when
several funds and accounts are managed by the same investment adviser,
particularly when the same security is suitable for the investment
objective of more than one fund or account.
When two or more funds are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in
accordance with procedures believed to be appropriate and equitable
for each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as each fund is
concerned. In other cases, however, the ability of the funds to
participate in volume transactions will produce better executions and
prices for the funds. It is the current opinion of the Trustees that
the desirability of retaining FMR as investment adviser to each fund
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
VALUATION
Portfolio securities are valued by various methods depending on the
primary market or exchange on which they trade. Most equity securities
for which the primary market is the United States are valued at last
sale price or, if no sale has occurred, at the closing bid price. Most
equity securities for which the primary market is outside the United
States are valued using the official closing price or the last sale
price in the principal market in which they are traded. If the last
sale price (on the local exchange) is unavailable, the last evaluated
quote or last bid price normally is used. Securities of other open-end
investment companies are valued at their respective NAVs.
Fixed-income securities and other assets for which market quotations
are readily available may be valued at market values determined by
such securities' most recent bid prices (sales prices if the principal
market is an exchange) in the principal market in which they normally
are traded, as furnished by recognized dealers in such securities or
assets. Or, fixed-income securities and convertible securities may be
valued on the basis of information furnished by a pricing service that
uses a valuation matrix which incorporates both dealer-supplied
valuations and electronic data processing techniques. Use of pricing
services has been approved by the Board of Trustees. A number of
pricing services are available, and the funds may use various pricing
services or discontinue the use of any pricing service.
Futures contracts and options are valued on the basis of market
quotations, if available.
Foreign securities are valued based on prices furnished by independent
brokers or quotation services which express the value of securities in
their local currency. FSC gathers all exchange rates daily at the
close of the NYSE using the last quoted price on the local currency
and then translates the value of foreign securities from their local
currencies into U.S. dollars. Any changes in the value of forward
contracts due to exchange rate fluctuations and days to maturity are
included in the calculation of NAV. If an extraordinary event that is
expected to materially affect the value of a portfolio security occurs
after the close of an exchange on which that security is traded, then
that security will be valued as determined in good faith by a
committee appointed by the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which market quotations and information furnished by a pricing
service are not readily available are valued either at amortized cost
or at original cost plus accrued interest, both of which approximate
current value. In addition, securities and other assets for which
there is no readily available market value may be valued in good faith
by a committee appointed by the Board of Trustees. The procedures set
forth above need not be used to determine the value of the securities
owned by a fund if, in the opinion of a committee appointed by the
Board of Trustees, some other method would more accurately reflect the
fair market value of such securities.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is
not intended to indicate future returns. Each fund's share price,
yield, and total return fluctuate in response to market conditions and
other factors, and the value of fund shares when redeemed may be more
or less than their original cost.
YIELD CALCULATIONS. Yields for a fund are computed by dividing the
fund's interest and dividend income for a given 30-day or one-month
period, net of expenses, by the average number of shares entitled to
receive distributions during the period, dividing this figure by the
fund's net asset value (NAV) at the end of the period, and annualizing
the result (assuming compounding of income) in order to arrive at an
annual percentage rate. Income is calculated for purposes of yield
quotations in accordance with standardized methods applicable to all
stock and bond funds. Dividends from equity investments are treated as
if they were accrued on a daily basis, solely for the purposes of
yield calculations. In general, interest income is reduced with
respect to bonds trading at a premium over their par value by
subtracting a portion of the premium from income on a daily basis, and
is increased with respect to bonds trading at a discount by adding a
portion of the discount to daily income. For a fund's investments
denominated in foreign currencies, income and expenses are calculated
first in their respective currencies, and are then converted to U.S.
dollars, either when they are actually converted or at the end of the
30-day or one month period, whichever is earlier. Capital gains and
losses generally are excluded from the calculation as are gains and
losses from currency exchange rate fluctuations.
Income calculated for the purposes of calculating a fund's yield
differs from income as determined for other accounting purposes.
Because of the different accounting methods used, and because of the
compounding of income assumed in yield calculations, a fund's yield
may not equal its distribution rate, the income paid to your account,
or the income reported in the fund's financial statements.
In calculating the fund's yield, a fund may from time to time use a
portfolio security's coupon rate instead of its yield to maturity in
order to reflect the risk premium on that security. This practice will
have the effect of reducing the fund's yield.
Yield information may be useful in reviewing a fund's performance and
in providing a basis for comparison with other investment
alternatives. However, each fund's yield fluctuates, unlike
investments that pay a fixed interest rate over a stated period of
time. When comparing investment alternatives, investors should also
note the quality and maturity of the portfolio securities of
respective investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest rates
a fund's yield will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates the fund's yield will
tend to be somewhat lower. Also, when interest rates are falling, the
inflow of net new money to a fund from the continuous sale of its
shares will likely be invested in instruments producing lower yields
than the balance of the fund's holdings, thereby reducing the fund's
current yield. In periods of rising interest rates, the opposite can
be expected to occur.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect
all aspects of a fund's return, including the effect of reinvesting
dividends and capital gain distributions, and any change in the fund's
NAV over a stated period. Average annual total returns are calculated
by determining the growth or decline in value of a hypothetical
historical investment in a fund over a stated period, and then
calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had
been constant over the period. For example, a cumulative total return
of 100% over ten years would produce an average annual total return of
7.18%, which is the steady annual rate of return that would equal 100%
growth on a compounded basis in ten years. While average annual total
returns are a convenient means of comparing investment alternatives,
investors should realize that a fund's performance is not constant
over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to the actual
year-to-year performance of the fund.
In addition to average annual total returns, a fund may quote
unaveraged or cumulative total returns reflecting the simple change in
value of an investment over a stated period. Average annual and
cumulative total returns may be quoted as a percentage or as a dollar
amount, and may be calculated for a single investment, a series of
investments, or a series of redemptions, over any time period. Total
returns may be broken down into their components of income and capital
(including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions
to total return. Total returns may be quoted on a before-tax or
after-tax basis. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
Total return figures do not include the effects of each fund's
sales charge which was eliminated as of July 1, 1995. Sales charges
for Diversified International, International Value, Overseas, and
Worldwide were waived through June 30, 1995 and International Growth &
Income's sales charge was in effect November 1, 1993 through May 31,
1994. Total returns for International Growth & Income and Overseas
also do not include the effect of paying the fund's $25.00 exchange
fee, which was in effect from December 1, 1987 through October 1,
1989. Additionally, the total return figures for International Growth
& Income do not include the 1% deferred sales charge on shares
purchased prior to October 12, 1990.
NET ASSET VALUE. Charts and graphs using a fund's net asset values,
adjusted net asset values, and benchmark indices may be used to
exhibit performance. An adjusted NAV includes any distributions paid
by a fund and reflects all elements of its return. Unless otherwise
indicated, a fund's adjusted NAVs are not adjusted for sales charges,
if any.
MOVING AVERAGES. A fund may illustrate performance using moving
averages. A long-term moving average is the average of each week's
adjusted closing NAV for a specified period. A short-term moving
average is the average of each day's adjusted closing NAV for a
specified period. Moving Average Activity Indicators combine adjusted
closing NAVs from the last business day of each week with moving
averages for a specified period to produce indicators showing when an
NAV has crossed, stayed above, or stayed below its moving average. On
October 31, 1997, the 13-week and 39-week long-term moving averages
for each fund are outlined in the chart below.
FUND NAME 13 WEEK LONG-TERM 39 WEEK LONG-TERM
MOVING AVERAGE MOVING AVERAGE
INTERNATIONAL $ 21.60 $ 20.83
GROWTH &
INCOME
DIVERSIFIED $ 17.06 $ 16.26
INTERNATIONAL
INTERNATIONAL $ 13.11 $ 12.67
VALUE
OVERSEAS $ 35.74 $ 34.27
WORLDWIDE $ 18.11 $ 17.12
HISTORICAL FUND RESULTS. The following table shows the funds' total
returns for periods ended October 31, 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
</TABLE>
ONE FIVE TEN ONE FIVE TEN
YEAR YEARS YEARS YEAR YEARS YEARS
INTERN 13.17% 12.32% 9.43% 13.17% 78.78% 146.28%
ATIONAL
GROWT
H &
INCOM
E
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
ONE FIVE LIFE OF ONE FIVE LIFE OF
YEAR YEARS FUND* YEAR YEARS FUND*
DIVERS 19.30% 17.70% 11.70% 19.30% 125.84% 91.06%
IFIED
INTERN
ATIONAL
</TABLE>
* From December 27, 1991 (commencement of operations).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
ONE FIVE LIFE OF ONE FIVE LIFE OF
YEAR YEARS FUND* YEAR YEARS FUND*
INTERN 13.20% N/A 9. 68 % 13.20% N/A 31.93%
ATIONAL
VALUE
</TABLE>
* From November 1, 1994 (commencement of operations).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
</TABLE>
ONE FIVE TEN ONE FIVE TEN
YEAR YEARS YEARS YEAR YEARS YEARS
OVERS 17.03% 14.54% 8.79% 17.03% 97.12% 132.25%
EAS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
</TABLE>
ONE FIVE LIFE OF ONE FIVE LIFE OF
YEAR YEARS FUND* YEAR YEARS FUND*
WORLD 17.95% 15.81% 10.12% 17.95% 108.35% 104.67%
WIDE
FUND
* From May 30, 1990 (commencement of operations)
The following tables show the income and capital elements of each
fund's cumulative total return. The tables compare each fund's return
to the record of the Standard & Poor's 500 Index (S&P 500 ) , the
Dow Jones Industrial Average (DJIA), and the cost of living, as
measured by the Consumer Price Index (CPI), over the same period. The
CPI information is as of the month-end closest to the initial
investment date for each fund. The S&P 500 and DJIA comparisons are
provided to show how each fund's total return compared to the record
of a broad unmanaged index of common stocks and a narrower set of
stocks of major industrial companies, respectively, over the same
period. Each fund has the ability to invest in securities not included
in either index, and its investment portfolio may or may not be
similar in composition to the indexes. The S&P 500 and DJIA returns
are based on the prices of unmanaged groups of stocks and, unlike each
fund's returns, do not include the effect of brokerage commissions or
other costs of investing.
The following tables show the growth in value of a hypothetical
$10,000 investment in each fund during the past 10-year period ended
October 31, 1997 or life of each fund, as applicable, assuming all
distributions were reinvested. The figures below reflect the
fluctuating interest rates, bond prices, and stock prices of the
specified periods and should not be considered representative of the
dividend income or capital gain or loss that could be realized from an
investment in a fund today. Tax consequences of different investments
(with the exception of foreign tax withholdings) have not been
factored into the figures below.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Fidelity International Growth & Income Fund
would have grown to $ 24,628.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY INTERNATIONAL GROWTH AND INCOME FUND INDICES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR VALUE OF VALUE OF VALUE OF TOTAL S&P 500 DJIA COST OF
ENDED INITIAL REINVESTED REINVESTED VALUE LIVING*
OCTOB $10,000 DIVIDEND CAPITAL GAIN
ER 31 INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
1 $ 20,038 $ 3,341 $ 1,249 $ 24,628 $ 48,782 $ 50,221 $ 14,016
9
9
7
1 $ 19,090 $ 2,940 $ 733 $ 22,7 63 $ 39,172 $ 42,758 $ 1 3,729
9
9
6
1 $ 17,830 $ 2,055 $ 704 $ 20,589 $ 31,566 $ 33,003 $ 1 3,330
9
9
5
1 $ 17,540 $ 2,022 $ 56 $ 19,618 $ 24,965 $ 26,452 $ 1 2,966
9
9
4
1 $ 17,250 $ 1,922 $ 0 $ 19,172 $ 24,036 $ 24,244 $ 12,637
9
9
3
1 $ 13,290 $ 1,132 $ 0 $ 14,422 $ 20,910 $ 20,643 $ 1 2,298
9
9
2
1 $ 13,990 $ 1,002 $ 0 $ 14,992 $ 19,014 $ 19,069 $ 1 1,917
9
9
1
1 $ 13,710 $ 510 $ 0 $ 14,220 $ 14,241 $ 14,660 $ 1 1,578
9
9
0
1 $ 12,870 $ 322 $ 0 $ 13,192 $ 15,395 $ 15,276 $ 1 0,893
9
8
9
1 $ 11,810 $ 91 $ 0 $ 11,901 $ 12,179 $ 11,958 $ 1 0,425
9
8
8
</TABLE>
* From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Fidelity
International Growth & Income Fund on October 31, 1987, the net amount
invested in Fidelity International Growth & Income Fund was $10,000.
The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amount to $ 13,407 . If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $ 2,169 for dividends and $ 912 for capital
gain distributions. The figures in the table do not include the effect
of the fund's 2% sales charge, which was in effect from January 1,
1991 through June 1, 1994, its 1% deferred sales charge on shares
purchased prior to October 12, 1990, and the $25 exchange fee in
effect from December 1, 1987 through October 1, 1989. Prior to April
1991, the fund imposed a 2% sales charge which is no longer in effect
and is not reflected in the figures above.
During the period from December 27, 1991 (commencement of operations)
to October 31, 1997, a hypothetical $10,000 investment in Fidelity
Diversified International Fund would have grown to $ 19,106 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY DIVERSIFIED INTERNATIONAL FUND INDICES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR VALUE OF VALUE OF VALUE OF TOTAL S&P 500 DJIA COST OF
ENDED INITIAL REINVESTED REINVESTED VALUE LIVING**
OCTOB $10,000 DIVIDEND CAPITAL GAIN
ER 31 INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
1 $ 16,570 $ 757 $ 1,779 $ 19,106 $ 26,124 $ 27 ,766 $ 11,719
9
9
7
1 $ 14,380 $ 491 $ 1,144 $ 16,015 $ 19,774 $ 22, 084 $ 11,479
9
9
6
1 $ 12,730 $ 197 $ 569 $ 13,496 $ 15 ,934 $ 17, 047 $ 11,146
9
9
5
1 $ 12,460 $ 158 $ 111 $ 12,729 $ 12 ,602 $ 13, 663 $ 10,841
9
9
4
1 $ 11,320 $ 133 $ 0 $ 11,453 $ 12,1 33 $ 12,5 23 $ 10,566
9
9
3
1 $ 8,460 $ 0 $ 0 $ 8,460 $ 10,5 55 $ 10, 663 $ 10,283
9
9
2
*
</TABLE>
* From December 27, 1991 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Fidelity
Diversified International Fund in December 27, 1991, the net amount
invested in fund shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to
$ 11,876 . If distributions had not been reinvested, the amount
of distributions earned from the fund over time would have been
smaller, and cash payments for the period would have amounted to
$ 510 for dividends and $ 1,260 for capital gain
distributions.
During the period from November 1, 1994 (commencement of operations)
to October 31, 199 7 , a hypothetical $10,000 investment in
Fidelity International Value Fund would have grown to $ 13,193 .
FIDELITY INTERNATIONAL VALUE FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR VALUE OF VALUE OF VALUE OF TOTAL S&P 500 DJIA COST OF
ENDED INITIAL REINVESTED REINVESTED VALUE LIVING**
OCTOB $10,000 DIVIDEND CAPITAL GAIN
ER 31 INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
1 $ 12,470 $ 126 $ 597 $ 13,193 $ 20,901 $ 20,555 $
10,809
9
9
7
1 $ 11,330 $ 10 $ 315 $ 11,655 $ 15, 820 $ 16, 349 $ 10,589
9
9
6
1 $ 10,630 $ 0 $ 0 $ 10,630 $ 12, 749 $ 12, 620 $ 10,281
9
9
5
*
</TABLE>
* From November 1, 1994 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Fidelity
International Value Fund on November 1, 1994, the net amount invested
in fund shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 10,639 . If
distributions had not been reinvested, the amount of distributions
earned from the fund over time would have been smaller, and cash
payments for the period would have amounted to $110 for
dividends and $ 520 for capital gain distributions.
During the 10 year period ending October 31, 1997, a hypothetical
$10,000 investment in Fidelity Overseas Fund would have grown to
$ 23,225.
FIDELITY OVERSEAS FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR VALUE OF VALUE OF VALUE OF TOTAL S&P 500 DJIA COST OF
ENDED INITIAL REINVESTED REINVESTED VALUE LIVING*
OCTOB $10,000 DIVIDEND CAPITAL GAIN
ER 31 INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
1 $ 11,042 $ 2,459 $ 9,724 $ 23,225 $ 48,782 $ 50,221 $ 14,016
9
9
7
1 $ 11,550 $ 2,571 $ 11,426 $ 25,547 $ 39,291 $ 43,713 $ 14,352
9
9
6
1 $ 10,617 $ 2,091 $ 10,222 $ 22,930 $ 31,622 $ 33,740 $ 13,935
9
9
5
1 $ 10,840 $ 2,135 $ 10,033 $ 23,008 $ 25,041 $ 27,043 $ 13,554
9
9
4
1 $ 10,093 $ 1,649 $ 9,342 $ 21,084 $ 24,109 $ 24,786 $ 13,209
9
9
3
1 $ 8,161 $ 1,052 $ 5,955 $ 15,168 $ 20,974 $ 21,104 $ 12,856
9
9
2
1 $ 10,004 $ 973 $ 6,467 $ 17,444 $ 19,071 $ 19,495 $ 12,457
9
9
1
1 $ 10,208 $ 531 $ 6,015 $ 16,754 $ 14,284 $ 14,987 $ 12,103
9
9
0
1 $ 9,773 $ 351 $ 5,166 $ 15,290 $ 15,441 $ 15,617 $ 11,387
9
8
9
1 $ 9,402 $ 0 $ 4,968 $ 14,370 $ 12,216 $ 12,225 $ 10,898
9
8
8
</TABLE>
* From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Fidelity
Overseas Fund on November 1, 1987, the net amount invested in fund
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 18,642 . If
distributions had not bee reinvested, the amount of distributions
earned from the fund over time would have been smaller, and cash
payments for the period would have amounted to $ 1,129 for
dividends and $ 5,136 for capital gain distributions. The
figures in the table do not include the effect of the fund's 3% sales
charge which was waived through June 30, 1995 and eliminated as of
July 1, 1995 and the fund's $25 exchange fee, which was in effect from
December 1, 1987 through October 1, 1989. Prior to May 1994, the fund
imposed a 3% sales charge which is no longer in effect and is not
included in the figures above.
During the period from May 30, 1990 (commencement of operations) to
October 31, 1997, a hypothetical $10,000 investment in Fidelity
Worldwide Fund would have grown to $ 20,467.
FIDELITY WORLDWIDE FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR VALUE OF VALUE OF VALUE OF TOTAL S&P 500 DJIA COST OF
ENDED INITIAL REINVESTED REINVESTED VALUE LIVING**
OCTOB $10,000 DIVIDEND CAPITAL GAIN
ER 31 INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
1 $ 17,270 $ 1,514 $ 1,683 $ 20,467 $ 31,033 $ 31,634 $
12,508
9
9
7
1 $ 15,180 $ 1,134 $ 1,038 $ 17,352 $ 23, 490 $ 25,1 6 0 $ 12,252
9
9
6
1 $ 13,320 $ 825 $ 911 $ 15,056 $ 18,9 29 $ 19,4 22 $ 11,896
9
9
5
1 $ 13,960 $ 782 $ 172 $ 14,914 $ 14, 971 $ 15, 566 $ 11,571
9
9
4
1 $ 12,760 $ 610 $ 0 $ 13,370 $ 14,4 13 $ 14, 267 $ 11,277
9
9
3
1 $ 9,630 $ 193 $ 0 $ 9,823 $ 12,5 39 $ 12,1 48 $ 10,975
9
9
2
1 $ 9,610 $ 85 $ 0 $ 9,695 $ 11,4 07 $ 11,2 22 $ 10,635
9
9
1
1 $ 8,950 $ 0 $ 0 $ 8,950 $ 8,54 0 $ 8,6 27 $ 10,333
9
9
0
*
</TABLE>
* From May 30, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Fidelity
Worldwide Fund on May 30, 1990, the net amount invested in fund shares
was $10,000. The cost of the initial investment ($10,000) together
with the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 12,286 . If distributions had
not been reinvested, the amount of distributions earned from the fund
over time would have been smaller, and cash payments for the period
would have amounted to $ 930 for dividends and $ 1,190 for
capital gain distributions.
INTERNATIONAL INDICES, MARKET CAPITALIZATION, AND NATIONAL
STOCK MARKET RETURN
The following tables show the total market capitalization of certain
countries according to the Morgan Stanley Capital International
Indices database, the total market capitalization of Latin American
countries according to the Morgan Stanley Capital International
Emerging Markets database, and the performance of national stock
markets as measured in U.S. dollars by the Morgan Stanley Capital
International stock market indices for the twelve months ended October
31, 1997. Of course, these results are not indicative of future stock
market performance or the funds' performance. Market conditions during
the periods measured fluctuated widely. Brokerage commissions and
other fees are not factored into the values of the indices.
MARKET CAPITALIZATION. Companies outside the U.S. now make up over
one-half of the world's stock market capitalization. According to
Morgan Stanley Capital International, the size of the markets as
measured in U.S. dollars grew from $ 5,749.5 ($10,078.9 including
the U.S.) billion in 1996 to $ 6,207.8 ($12,040.3 including the
U.S.) billion in 1997.
The following table measures the total market capitalization of
certain countries according to the Morgan Stanley Capital
International Indices database. The value of the markets is
measured in billions of U.S. dollars as of October 31, 1997.
TOTAL MARKET CAPITALIZATION
AUSTRA $ 152.6 JAPAN $ 1,693.1
LIA
AUSTRI 24.6 NETHER 327.9
A LANDS
BELGIU 73.4 NORWA 34.2
M Y
CANAD 308.3 SINGAP 54.0/62.8
A ORE/M
ALAYSIA
DENM 61.8 SPAIN 146.1
ARK
FRANCE 419.5 SWEDE 155.8
N
GERMA 543.1 SWITZE 428.3
NY RLAND
HONG 167.7 UNITED 1,246.6
KONG KINGD
OM
ITALY 215.6 UNITED 5,832.5
STATES
The following table measures the total market capitalization of Latin
American countries according to the Morgan Stanley Capital
International Emerging Markets database. The value of the markets
is measured in billions of U.S. dollars as of October 31, 1997.
TOTAL MARKET - LATIN AMERICA
ARGENT $ 33.1
INA
BRAZIL 122.1
CHILE 36.3
COLOM 8.7
BIA
MEXIC 94.7
O
VENEZ 14.0
UELA
PERU 10.0
TOTAL $ 318.9
LATIN
AMERI
CA
NATIONAL STOCK MARKET PERFORMANCE. Certain national stock markets have
outperformed the U.S. stock market. The first table below represents
the performance of national stock markets as measured in U.S. dollars
by the Morgan Stanley Capital International stock market indices for
the twelve months ended October 31, 1997. The second table shows the
same performance as measured in local currency. Each table measures
total return based on the period's change in price, dividends paid on
stocks in the index, and the effect of reinvesting dividends net of
any applicable foreign taxes. These are unmanaged indices composed of
a sampling of selected companies representing an approximation of the
market structure of the designated country.
STOCK MARKET PERFORMANCE (CUMULATIVE TOTAL RETURNS)
MEASURED IN U.S. DOLLARS
AUSTRA -7.7 % JAPAN -18.2 %
LIA
AUSTRI 5.8 NETHER 32.4
A LANDS
BELGIU 13.7 NORWA 31.5
M Y
CANAD 17.5 SINGAP -26.9/-57.2
A ORE/M
ALAYSIA
DENM 31.6 SPAIN 37.8
ARK
FRANCE 12.6 SWEDE 22.9
N
GERMA 20.6 SWITZE 30.9
NY RLAND
HONG -17.5 UNITED 28.6
KONG KINGD
OM
ITALY 33.2 UNITED 32.3
STATES
STOCK MARKET PERFORMANCE (CUMULATIVE TOTAL RETURNS)
MEASURED IN LOCAL CURRENCY
AUSTRA 3.9 % JAPAN -13.5 %
LIA
AUSTRI 20.3 NETHER 51.5
A LANDS
BELGIU 29.4 NORWA 44.4
M Y
CANAD 23.5 SINGAP -18.4/-43.2
A ORE/M
ALAYSIA
DENM 48.4 SPAIN 57.1
ARK
FRANCE 26.9 SWEDE 40.1
N
GERMA 37.1 SWITZE 45.3
NY RLAND
HONG -17.5 UNITED 24.9
KONG KINGD
OM
ITALY 48.4 UNITED 32.3
STATES
The following table shows the average annualized stock market returns
measured in U.S. dollars as of October 31, 1997.
STOCK MARKET PERFORMANCE
FIVE YEARS ENDED TEN YEARS ENDED
OCTOBER 31, 1997 OCTOBER 31, 1997
GERMA 17.57% 13.97%
NY
HONG 35.86% 30.10%
KONG
JAPAN 8.03% 2.29%
SPAIN 23.72% 10.90%
UNITED 17.87% 13.55%
KINGD
OM
UNITED 17.67% 16.51%
STATES
PERFORMANCE COMPARISONS. A fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed
as mutual fund rankings prepared by Lipper Analytical Services, Inc.
(Lipper), an independent service located in Summit, New Jersey that
monitors the performance of mutual funds. Generally, Lipper rankings
are based on total return, assume reinvestment of distributions, do
not take sales charges or trading fees into consideration, and are
prepared without regard to tax consequences. In addition to the mutual
fund rankings, a fund's performance may be compared to stock, bond,
and money market mutual fund performance indices prepared by Lipper or
other organizations. When comparing these indices, it is important to
remember the risk and return characteristics of each type of
investment. For example, while stock mutual funds may offer higher
potential returns, they also carry the highest degree of share price
volatility. Likewise, money market funds may offer greater stability
of principal, but generally do not offer the higher potential returns
available from stock mutual funds.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and
periodicals. For example, the fund may quote Morningstar, Inc. in its
advertising materials. Morningstar, Inc. is a mutual fund rating
service that rates mutual funds on the basis of risk-adjusted
performance. Rankings that compare the performance of Fidelity funds
to one another in appropriate categories over specific periods of time
may also be quoted in advertising.
A fund's performance may also be compared to that of a benchmark index
representing the universe of securities in which the fund may invest.
The total return of a benchmark index reflects reinvestment of all
dividends and capital gains paid by securities included in the index.
Unlike a fund's returns, however, the index returns do not reflect
brokerage commissions, transaction fees, or other costs of investing
directly in the securities included in the index.
Diversified International may compare its performance to that of
the Morgan Stanley Capital International GDP-Weighted Europe,
Australasia, Far East Index, an unmanaged, gross domestic product
weighted index that is designed to represent the performance of
developed stock markets outside of the United States and Canada. The
index returns for periods after January 1, 1997 are adjusted for tax
withholding rates applicable to U.S.-based mutual funds organized as
Massachusetts business trusts.
Each of International Value, Overseas and International Growth &
Income may compare its performance to that of the Morgan Stanley
Capital International Europe, Australasia, Far East (EAFE) Index, an
unmanaged, market capitalization weighted index that is designed to
represent the performance of developed stock markets outside of the
United States and Canada. The index returns for periods after January
1, 1997 are adjusted for tax withholding rates applicable to
U.S.-based mutual funds organized as Massachusetts business
trusts.
Worldwide may compare its performance to that of the Morgan Stanley
Capital International World Index, an unmanaged, market capitalization
weighted index that is designed to represent the performance of
developed stock markets throughout the world.
A fund may be compared in advertising to Certificates of Deposit (CDs)
or other investments issued by banks or other depository institutions.
Mutual funds differ from bank investments in several respects. For
example, a fund may offer greater liquidity or higher potential
returns than CDs, a fund does not guarantee your principal or your
return, and fund shares are not FDIC insured.
Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial
strategies. Such information may include information about current
economic, market, and political conditions; materials that describe
general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; questionnaires
designed to help create a personal financial profile; worksheets used
to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and action plans offering investment
alternatives. Materials may also include discussions of Fidelity's
asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides
historical returns of the capital markets in the United States,
including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term
government bonds, Treasury bills, the U.S. rate of inflation (based on
the Consumer Price Index), and combinations of various capital
markets. The performance of these capital markets is based on the
returns of different indices.
Fidelity funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with
the security types in any capital market may or may not correspond
directly to those of the funds. Ibbotson calculates total returns in
the same method as the funds. The funds may also compare performance
to that of other compilations or indices that may be developed and
made available in the future.
In advertising materials, Fidelity may reference or discuss its
products and services, which may include other Fidelity funds;
retirement investing; brokerage products and services; model
portfolios or allocations; saving for college or other goals ;
and charitable giving . In addition, Fidelity may quote or
reprint financial or business publications and periodicals as they
relate to current economic and political conditions, fund management,
portfolio composition, investment philosophy, investment techniques,
the desirability of owning a particular mutual fund, and Fidelity
services and products. Fidelity may also reprint, and use as
advertising and sales literature, articles from Fidelity
Focus(Registered trademark), a quarterly magazine provided free of
charge to Fidelity fund shareholders.
A fund may present its fund number, Quotron(trademark) number, and
CUSIP number, and discuss or quote its current portfolio manager.
VOLATILITY. A fund may quote various measures of volatility and
benchmark correlation in advertising. In addition, the fund may
compare these measures to those of other funds. Measures of volatility
seek to compare the fund's historical share price fluctuations or
total returns to those of a benchmark. Measures of benchmark
correlation indicate how valid a comparative benchmark may be. All
measures of volatility and correlation are calculated using averages
of historical data. In advertising, a fund may also discuss or
illustrate examples of interest rate sensitivity.
MOMENTUM INDICATORS indicate a fund's price movements over specific
periods of time. Each point on the momentum indicator represents the
fund's percentage change in price movements over that period.
A fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a
program, an investor invests a fixed dollar amount in a fund at
periodic intervals, thereby purchasing fewer shares when prices are
high and more shares when prices are low. While such a strategy does
not assure a profit or guard against loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers
of shares are purchased at the same intervals. In evaluating such a
plan, investors should consider their ability to continue purchasing
shares during periods of low price levels.
A fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which
may produce superior after-tax returns over time. For example, a
$1,000 investment earning a taxable return of 10% annually would have
an after-tax value of $1,949 after ten years, assuming tax was
deducted from the return each year at a 31% rate. An equivalent
tax-deferred investment would have an after-tax value of $2,100 after
ten years, assuming tax was deducted at a 31% rate from the
tax-deferred earnings at the end of the ten-year period.
As of October 31, 1997, FMR advised over $ 29 billion in
tax-free fund assets, $ 98 billion in money market fund assets,
$ 378 billion in equity fund assets, $ 72 billion in
international fund assets, and $ 23 billion in Spartan fund
assets. The funds may reference the growth and variety of money market
mutual funds and the adviser's innovation and participation in the
industry. The equity funds under management figure represents the
largest amount of equity fund assets under management by a mutual fund
investment adviser in the United States, making FMR America's leading
equity (stock) fund manager. FMR, its subsidiaries, and affiliates
maintain a worldwide information and communications network for the
purpose of researching and managing investments abroad.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
On October 12, 1990, International Growth and Income changed its sales
charge policy from a 1% sales charge upon purchase and a 1% deferred
sales charge upon redemption, to a 2% sales charge upon purchase. On
June 1, 1994, the 2% sales charge was eliminated. If you purchased
shares prior to October 12, 1990, when you redeem those shares a
deferred sales charge of 1% of the redemption amount will be deducted.
Each fund is open for business and its net asset value per share (NAV)
is calculated each day the New York Stock Exchange (NYSE) is open for
trading. The NYSE has designated the following holiday closings for
1998: New Year's Day, Martin Luther King's Birthday, Presidents' Day,
Good Friday, Memorial Day, Independence Day (observed), Labor Day,
Thanksgiving Day, and Christmas Day. Although FMR expects the same
holiday schedule to be observed in the future, the NYSE may modify its
holiday schedule at any time. In addition, the funds will not process
wire purchases and redemptions on days when the Federal Reserve Wire
System is closed.
FSC normally determines each fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated
earlier if trading on the NYSE is restricted or as permitted by the
Securities and Exchange Commission (SEC). To the extent that portfolio
securities are traded in other markets on days when the NYSE is
closed, a fund's NAV may be affected on days when investors do not
have access to the fund to purchase or redeem shares. In addition,
trading in some of a fund's portfolio securities may not occur on days
when the fund is open for business.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are
valued in computing a fund's NAV. Shareholders receiving securities or
other property on redemption may realize a gain or loss for tax
purposes, and will incur any costs of sale, as well as the associated
inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the
1940 Act), each fund is required to give shareholders at least 60
days' notice prior to terminating or modifying its exchange privilege.
Under the Rule, the 60-day notification requirement may be waived if
(i) the only effect of a modification would be to reduce or eliminate
an administrative fee, redemption fee, or deferred sales charge
ordinarily payable at the time of an exchange, or (ii) the fund
suspends the redemption of the shares to be exchanged as permitted
under the 1940 Act or the rules and regulations thereunder, or the
fund to be acquired suspends the sale of its shares because it is
unable to invest amounts effectively in accordance with its investment
objective and policies.
In the Prospectus, each fund has notified shareholders that it
reserves the right at any time, without prior notice, to refuse
exchange purchases by any person or group if, in FMR's judgment, the
fund would be unable to invest effectively in accordance with its
investment objective and policies, or would otherwise potentially be
adversely affected.
On October 12, 1990, International Growth and Income changed its
sales charge policy from a 1% sales charge upon purchase and a 1%
deferred sales charge upon redemption, to a 2% sales charge upon
purchase. On June 1, 1994, the 2% sales charge was eliminated. If you
purchased shares prior to October 12, 1990, when you redeem those
shares a deferred sales charge of 1% of the redemption amount will be
deducted.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and
the U.S. Postal Service cannot deliver your checks, or if your checks
remain uncashed for six months, Fidelity may reinvest your
distributions at the then-current NAV. All subsequent distributions
will then be reinvested until you provide Fidelity with alternate
instructions.
DIVIDENDS. Because each fund invests significantly in foreign
securities, corporate shareholders should not expect fund dividends to
qualify for the dividends-received deduction. Short-term capital gains
are distributed as dividend income, but do not qualify for the
dividends-received deduction. Each fund will notify corporate
shareholders annually of the percentage of fund dividends that qualify
for the dividends-received deduction. Gains (losses) attributable to
foreign currency fluctuations are generally taxable as ordinary
income, and therefore will increase (decrease) dividend distributions.
Each fund will send each shareholder a notice in January describing
the tax status of dividend and capital gain distributions for the
prior year.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by each
fund on the sale of securities and distributed to shareholders are
federally taxable as long-term capital gains, regardless of the length
of time shareholders have held their shares. If a shareholder receives
a capital gain distribution on shares of a fund, and such shares are
held six months or less and are sold at a loss, the portion of the
loss equal to the amount of the capital gain distribution will be
considered a long-term loss for tax purposes. Short-term capital gains
distributed by each fund are taxable to shareholders as dividends, not
as capital gains.
The following table displays each fund's capital gain dividend
designations for the purpose of the dividend paid deduction as of
October 31, 1997.
INTERNATIONAL GROWTH & INCOME $ 38,778,000
DIVERSIFIED INTERNATIONAL $ 24,554,000
INTERNATIONAL VALUE $ 8,522,000
OVERSEAS $ 126,103,000
WORLDWIDE $ 60,674,000
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Foreign governments
may also impose taxes on other payments or gains with respect to
foreign securities. If, at the close of its fiscal year, more than 50%
of a fund's total assets are invested in securities of foreign
issuers, the fund may elect to pass through foreign taxes paid and
thereby allow shareholders to take a credit or deduction on their
individual tax returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company
and avoid being subject to federal income or excise taxes at the fund
level, each fund intends to distribute substantially all of its net
investment income and net realized capital gains within each calendar
year as well as on a fiscal year basis, and intends to comply with
other tax rules applicable to regulated investment companies.
Each fund is treated as a separate entity from the other funds of
Fidelity Investment Trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some
of the tax consequences generally affecting each fund and its
shareholders, and no attempt has been made to discuss individual tax
consequences. In addition to federal income taxes, shareholders may be
subject to state and local taxes on fund distributions, and shares may
be subject to state and local personal property taxes. Investors
should consult their tax advisers to determine whether a fund is
suitable to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two
classes. Class B is held predominantly by members of the Edward C.
Johnson 3d family and is entitled to 49% of the vote on any matter
acted upon by the voting common stock. Class A is held predominantly
by non-Johnson family member employees of FMR Corp. and its affiliates
and is entitled to 51% of the vote on any such matter. The Johnson
family group and all other Class B shareholders have entered into a
shareholders' voting agreement under which all Class B shares will be
voted in accordance with the majority vote of Class B shares. Under
the Investment Company Act of 1940 (1940 Act), control of a company is
presumed where one individual or group of individuals owns more than
25% of the voting stock of that company. Therefore, through their
ownership of voting common stock and the execution of the
shareholders' voting agreement, members of the Johnson family may be
deemed, under the 1940 Act, to form a controlling group with respect
to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by its division, Fidelity Investments Retail Marketing
Company, which provides marketing services to various companies within
the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
accounts pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures
for personal investing and restricts certain transactions. For
example, all personal trades in most securities require pre-clearance,
and participation in initial public offerings is prohibited. In
addition, restrictions on the timing of personal investing in relation
to trades by Fidelity funds and on short-term trading have been
adopted.
TRUSTEES AND OFFICERS
The Trustees, Members of the Advisory Board, and executive officers of
the trust are listed below. Except as indicated, each individual has
held the office shown or other offices in the same company for the
last five years. All persons named as Trustees and Members of the
Advisory Board also serve in similar capacities for other funds
advised by FMR. The business address of each Trustee, Member of the
Advisory Board, and officer who is an "interested person" (as defined
in the Investment Company Act of 1940) is 82 Devonshire Street,
Boston, Massachusetts 02109, which is also the address of FMR. The
business address of all the other Trustees is Fidelity Investments,
P.O. Box 9235, Boston, Massachusetts 02205-9235. Those Trustees who
are "interested persons" by virtue of their affiliation with either
the trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (67), Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman
of the Board and of the Executive Committee of FMR; Chairman and a
Director of FMR Texas Inc., Fidelity Management & Research (U.K.)
Inc., and Fidelity Management & Research (Far East) Inc.
J. GARY BURKHEAD (56), Member of the Advisory Board (1997), is Vice
Chairman and a Member of the Board of Directors of FMR Corp. (1997)
and President of Fidelity Personal Investments and Brokerage Group
(1997). Previously, Mr. Burkhead served as President of Fidelity
Management & Research Company.
RALPH F. COX (65), Trustee, is President of RABAR Enterprises
(management consulting-engineering industry, 1994). Prior to February
1994, he was President of Greenhill Petroleum Corporation (petroleum
exploration and production). Until March 1990, Mr. Cox was President
and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of USA Waste Services,
Inc. (non-hazardous waste, 1993), CH2M Hill Companies (engineering),
Rio Grande, Inc. (oil and gas production), and Daniel Industries
(petroleum measurement equipment manufacturer). In addition, he is a
member of advisory boards of Texas A&M University and the University
of Texas at Austin.
PHYLLIS BURKE DAVIS (65), Trustee (1992). Prior to her retirement in
September 1991, Mrs. Davis was the Senior Vice President of Corporate
Affairs of Avon Products, Inc. She is currently a Director of
BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores),
and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she is a member of
the President's Advisory Council of The University of Vermont School
of Business Administration.
ROBERT M. GATES (54), Trustee (1997), is a consultant, author, and
lecturer (1993). Mr. Gates was Director of the Central Intelligence
Agency (CIA) from 1991-1993. From 1989 to 1991, Mr. Gates served as
Assistant to the President of the United States and Deputy National
Security Advisor. Mr. Gates is currently a Trustee for the Forum For
International Policy, a Board Member for the Virginia Neurological
Institute, and a Senior Advisor of the Harvard Journal of World
Affairs. In addition, Mr. Gates also serves as a member of the
corporate board for LucasVarity PLC (automotive components and diesel
engines), Charles Stark Draper Laboratory (non-profit), NACCO
Industries, Inc. (mining and manufacturing), and TRW Inc. (original
equipment and replacement products).
E. BRADLEY JONES (69), Trustee. Prior to his retirement in 1984, Mr.
Jones was Chairman and Chief Executive Officer of LTV Steel Company.
He is a Director of TRW Inc. (original equipment and replacement
products), Consolidated Rail Corporation, Birmingham Steel
Corporation, and RPM, Inc. (manufacturer of chemical products), and he
previously served as a Director of NACCO Industries, Inc. (mining and
manufacturing, 1985-1995), Hyster-Yale Materials Handling, Inc.
(1985-1995), and Cleveland-Cliffs Inc (mining), and as a Trustee of
First Union Real Estate Investments. In addition, he serves as a
Trustee of the Cleveland Clinic Foundation, where he has also been a
member of the Executive Committee as well as Chairman of the Board and
President, a Trustee and member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
DONALD J. KIRK (64), Trustee, is Executive-in-Residence (1995) at
Columbia University Graduate School of Business and a financial
consultant. From 1987 to January 1995, Mr. Kirk was a Professor at
Columbia University Graduate School of Business. Prior to 1987, he was
Chairman of the Financial Accounting Standards Board. Mr. Kirk is a
Director of General Re Corporation (reinsurance), and he previously
served as a Director of Valuation Research Corp. (appraisals and
valuations, 1993-1995). In addition, he serves as Chairman of the
Board of Directors of the National Arts Stabilization Fund, Chairman
of the Board of Trustees of the Greenwich Hospital Association, a
Member of the Public Oversight Board of the American Institute of
Certified Public Accountants' SEC Practice Section (1995), and as a
Public Governor of the National Association of Securities Dealers,
Inc. (1996).
*PETER S. LYNCH (54), Trustee, is Vice Chairman and Director of FMR
(1992). Prior to May 31, 1990, he was a Director of FMR and Executive
Vice President of FMR (a position he held until March 31, 1991); Vice
President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). In addition, he
serves as a Trustee of Boston College, Massachusetts Eye & Ear
Infirmary, Historic Deerfield (1989) and Society for the Preservation
of New England Antiquities, and as an Overseer of the Museum of Fine
Arts of Boston.
WILLIAM O. McCOY (64), Trustee (1997), is the Vice President of
Finance for the University of North Carolina (16-school system, 1995).
Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman
of the Board of BellSouth Corporation (telecommunications, 1984) and
President of BellSouth Enterprises (1986). He is currently a Director
of Liberty Corporation (holding company, 1984), Weeks Corporation of
Atlanta (real estate, 1994), Carolina Power and Light Company
(electric utility, 1996), and the Kenan Transport Co. (1996).
Previously, he was a Director of First American Corporation (bank
holding company, 1979-1996). In addition, Mr. McCoy serves as a member
of the Board of Visitors for the University of North Carolina at
Chapel Hill (1994) and for the Kenan-Flager Business School
(University of North Carolina at Chapel Hill, 1988).
GERALD C. McDONOUGH (68), Trustee and Chairman of the non-interested
Trustees, is Chairman of G.M. Management Group (strategic advisory
services). Mr. McDonough is a Director of York International Corp.
(air conditioning and refrigeration), Commercial Intertech Corp.
(hydraulic systems, building systems, and metal products, 1992), CUNO,
Inc. (liquid and gas filtration products, 1996), and Associated
Estates Realty Corporation (a real estate investment trust, 1993). Mr.
McDonough served as a Director of ACME-Cleveland Corp. (metal working,
telecommunications, and electronic products) from 1987-1996, and of
Brush Wellman Corp. (engineered metals) from 1983-1997.
MARVIN L. MANN (64), Trustee (1993) is Chairman of the Board,
President, and Chief Executive Officer of Lexmark International, Inc.
(office machines, 1991). Prior to 1991, he held the positions of Vice
President of International Business Machines Corporation ("IBM") and
President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993), Imation Corp. (imaging and information storage, 1997), and
Infomart (marketing services, 1991), a Trammell Crow Co. In addition,
he serves as the Campaign Vice Chairman of the Tri-State United Way
(1993) and is a member of the University of Alabama President's
Cabinet.
*ROBERT C. POZEN (51), Trustee (1997) and Senior Vice President, is
also President and a Director of FMR (1997); and President and a
Director of FMR Texas Inc. (1997), Fidelity Management & Research
(U.K.) Inc. (1997), and Fidelity Management & Research (Far East) Inc.
(1997). Previously, Mr. Pozen served as General Counsel, Managing
Director, and Senior Vice President of FMR Corp.
THOMAS R. WILLIAMS (69), Trustee, is President of The Wales Group,
Inc. (management and financial advisory services). Prior to retiring
in 1987, Mr. Williams served as Chairman of the Board of First
Wachovia Corporation (bank holding company), and Chairman and Chief
Executive Officer of The First National Bank of Atlanta and First
Atlanta Corporation (bank holding company). He is currently a Director
of BellSouth Corporation (telecommunications), ConAgra, Inc.
(agricultural products), Fisher Business Systems, Inc. (computer
software), Georgia Power Company (electric utility), Gerber Alley &
Associates, Inc. (computer software), National Life Insurance Company
of Vermont, American Software, Inc., and AppleSouth, Inc.
(restaurants, 1992).
WILLIAM J. HAYES (63), Vice President (1994), is Vice President of
Fidelity's equity funds; Senior Vice President of FMR; and Managing
Director of FMR Corp.
ROBERT A. LAWRENCE (45), is Vice President of certain Equity Funds
(1997), Vice President of Fidelity Real Estate High Income (1995)
and Fidelity Real Estate High Income Fund II (199 6 )
and Senior Vice President of FMR (1993).
RICHARD SPILLANE (46), is Vice President of certain Equity Funds and
Senior Vice President of FMR (1997). Since joining Fidelity, Mr.
Spillane was Chief Investment Officer for Fidelity International,
Limited. Prior to that position, Mr . Spillane served Director
of Research.
RICHARD MACE, JR. (3 5 ), is Vice President of Fidelity
International Value Fund (1995), Fidelity Overseas Fund (1996) and
other funds advised by FMR. Prior to his current responsibilities, Mr.
Mace has managed a variety of Fidelity funds.
JOHN R. HICKLING (38) is Vice President of Fidelity
International Growth & Income Fund (1996). Prior to his
current responsibilities, Mr. Hickling has managed a variety of
Fidelity funds.
GREGORY FRASER (37) is Vice President of Fidelity Diversified
International Fund (1994). Prior to his current responsibilities,
Mr. Fraser has managed a variety of Fidelity funds.
PENELOPE A. DOBKIN (43) is Vice President of Fidelity Worldwide
Fun d. Prior to her current responsibilities, Ms. Dobkin has managed
a variety of Fidelity funds.
ARTHUR S. LORING (50), Secretary, is Senior Vice President (1993) and
General Counsel of FMR, Vice President-Legal of FMR Corp., and Vice
President and Clerk of FDC.
RICHARD A. SILVER (50), Treasurer (1997), is Treasurer of the Fidelity
funds and is an employee of FMR (1997). Before joining FMR, Mr. Silver
served as Executive Vice President, Fund Accounting & Administration
at First Data Investor Services Group, Inc. (1996-1997). Prior to
1996, Mr. Silver was Senior Vice President and Chief Financial Officer
at The Colonial Group, Inc. Mr. Silver also served as Chairman of the
Accounting/Treasurer's Committee of the Investment Company Institute
(1987-1993).
ROBERT H. MORRISON (57), Manager of Security Transactions of
Fidelity's equity funds is Vice President of FMR.
JOHN H. COSTELLO (51), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (51), Assistant Treasurer (1994), is an employee of
FMR (1994). Prior to becoming Assistant Treasurer of the Fidelity
funds, Mr. Rush was Chief Compliance Officer of FMR Corp. (1993-1994)
and Chief Financial Officer of Fidelity Brokerage Services, Inc.
(1990-1993).
The following table sets forth information describing the compensation
of each Trustee and Member of the Advisory Board of each fund for his
or her services for the fiscal year ended October 31, 1997 or calendar
year ended December 31, 1996, as applicable.
COMPENSATION TABLE
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AGGREGATE
COMPENSAT
ION FORM A
FUND
J. GARY RALPH PHYLLIS RICHARD ROBERT EDWARD E. DONALD PETER WILLIAM GERALD EDWARD MARVIN ROBERT THOMAS
F. COX BURKE J. M. C. BRADLEY J. KIRK S. O. C. H. L. MANN C. R.
BURKHE DAVIS FLYNN GATES JOHNSON JONES LYNCH MCCOY MCDONOUG MALONE POZEN WILLIAMS
AD** *** **** 3D** ** ***** H *** **
INTERNAT
IONAL
$ 0 $ 451 $ 441 $ 60 $ 312 $ 0 $ 444 $ 444 $ 0 $ 449 $ 538 $ 66 $ 451 $ 0 $ 448
GROWTH &
INCOMEB,C
DIVERSIFIED
0 423 415 39 331 0 418 418 0 427 510 42 423 0 421
INTERNATIONALB,
D
INTERNATIONAL
0 122 120 16 87 0 121 121 0 122 146 17 122 0 121
VALUEB,E
OVERSEASB,F,H
0 1,455 1,425 185 1,042 0 1,436 1,436 0 1,462 1,740 201 1,455 0 1,445
WORLDWIDEB,G
0 431 422 52 312 0 425 425 0 431 516 56 431 0 428
TOTAL
$ 0 $137,000 $134,700 $168,000 $ 0 $ 0 $134,700 $136,200 $ 0 $85,333 $ 136,200 $ 136,200 $ 134,700 $ 0 $136,200
COMPENSAT
ION FROM
THE FUND
COMPLEX*A
</TABLE>
* Information is for the calendar year ended December 31, 1996 for 235
funds in the complex.
** Interested Trustees of the funds and Mr. Burkhead are compensated
by FMR.
*** Richard J. Flynn and Edward H. Malone served on the Board of
Trustees through December 31, 1996.
**** Mr. Gates was appointed to the Board of Trustees of
Fidelity Investment Trust effective March 1, 1997.
***** During the period from May 1, 1996 through December 31, 1996,
William O. McCoy served as a Member of the Advisory Board of the
trust. Mr. McCoy was appointed to the Board of Trustees Fidelity
Investment Trust effective January 1, 1997.
A Compensation figures include cash, a pro rata portion of benefits
accrued under the retirement program for the period ended December 30,
1996 and required to be deferred, and may include amounts deferred at
the election of Trustees.
B Compensation figures include cash, and may include amounts required
to be deferred, a pro rata portion of benefits accrued under the
retirement program for the period ended December 30, 1996 and required
to be deferred, and amounts deferred at the election of Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 13 , Phyllis Burke Davis, $ 13 , Richard J. Flynn,
$0, Robert M. Gates, $ 0 , E. Bradley Jones, $ 13 , Donald
J. Kirk, $ 13 , William O. McCoy, $ 0 , Gerald C. McDonough,
$ 13 , Edward H. Malone, $ 13 , Marvin L. Mann, $ 13 ,
and Thomas R. Williams, $ 13 .
D The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 7 , Phyllis Burke Davis, $ 7 , Richard J. Flynn,
$0, Robert M. Gates, $ 0 , E. Bradley Jones, $ 7 ,
Donald J. Kirk, $ 7 , William O. McCoy, $ 0 , Gerald C.
McDonough, $ 7 , Edward H. Malone, $ 7 , Marvin L. Mann,
$ 7 , and Thomas R. Williams, $ 7 .
E The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 3 , Phyllis Burke Davis, $ 3 , Richard J. Flynn,
$0, Robert M. Gates, $ 0 , E. Bradley Jones, $ 3 ,
Donald J. Kirk, $ 3 , William O. McCoy, $ 0 , Gerald C.
McDonough, $ 3 , Edward H. Malone, $ 3 , Marvin L. Mann,
$ 3 , and Thomas R. Williams, $ 3 .
F The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 634 , Phyllis Burke Davis, $ 634 , Richard J. Flynn,
$0, Robert M. Gates, $ 493 , E. Bradley Jones, $ 634 ,
Donald J. Kirk, $ 634 , William O. McCoy, $ 613 , Gerald C.
McDonough, $ 734 , Edward H. Malone, $ 37 , Marvin L. Mann,
$ 634 , and Thomas R. Williams, $ 634 .
G The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 10 , Phyllis Burke Davis, $ 10 , Richard J. Flynn,
$0, Robert M. Gates, $ 0 , E. Bradley Jones, $ 10 , Donald
J. Kirk, $ 10 , William O. McCoy, $ 0 , Gerald C. McDonough,
$ 10 , Edward H. Malone, $ 10 , Marvin L. Mann, $ 10 ,
and Thomas R. Williams, $ 10 .
H For the fiscal year ended October 31, 1997, certain of the
non-interested Trustees' aggregate compensation from a fund includes
accrued voluntary deferred compensation as follows: Ralph F. Cox,
$649, Overseas; Marvin L. Mann, $649, Overseas; Edward H. Malone,
$164, Overseas; and Thomas R. Williams, $496, Overseas.
Under a retirement program adopted in July 1988 and modified in
November 1995 and November 1996, each non-interested Trustee who
retired before December 30, 1996 may receive payments from a Fidelity
fund during his or her lifetime based on his or her basic trustee fees
and length of service. The obligation of a fund to make such payments
is neither secured nor funded. A Trustee became eligible to
participate in the program at the end of the calendar year in which he
or she reached age 72, provided that, at the time of retirement, he or
she had served as a Fidelity fund Trustee for at least five years.
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (the Plan), non-interested Trustees must
defer receipt of a portion of, and may elect to defer receipt of an
additional portion of, their annual fees. Amounts deferred under the
Plan are treated as though equivalent dollar amounts had been invested
in shares of a cross-section of Fidelity funds including funds in each
major investment discipline and representing a majority of Fidelity's
assets under management (the Reference Funds). The amounts ultimately
received by the Trustees under the Plan will be directly linked to the
investment performance of the Reference Funds. Deferral of fees in
accordance with the Plan will have a negligible effect on a fund's
assets, liabilities, and net income per share, and will not obligate a
fund to retain the services of any Trustee or to pay any particular
level of compensation to the Trustee. A fund may invest in the
Reference Funds under the Plan without shareholder approval.
As of December 30, 1996, the non-interested Trustees terminated the
retirement program for Trustees who retire after such date. In
connection with the termination of the retirement program, each
then-existing non-interested Trustee received a credit to his or her
Plan account equal to the present value of the estimated benefits that
would have been payable under the retirement program. The amounts
credited to the non-interested Trustees' Plan accounts are subject to
vesting and are treated as though equivalent dollar amounts had been
invested in shares of the Reference Funds. The amounts ultimately
received by the Trustees in connection with the credits to their Plan
accounts will be directly linked to the investment performance of the
Reference Funds. The termination of the retirement program and related
crediting of estimated benefits to the Trustees' Plan accounts did not
result in a material cost to the funds.
As of October 31, 1997 , the Trustees, Members of the Advisory
Board, and officers of each fund owned, in the aggregate, less than
1 % of each fund's total outstanding shares.
As of October 31, 1997, the following owned of record or
beneficially 5% or more of a fund's outstanding shares:
International Growth & Income: National Financial Services
Corporation, Boston, MA (12.33%).
International Value: National Financial Services Corporation, Boston,
MA (25.52%).
A shareholder owning of record or beneficially more than 25% of a
fund's outstanding shares may be considered a controlling person. That
shareholder's vote could have a more significant effect on matters
presented at a shareholders' meeting than votes of other shareholders.
MANAGEMENT CONTRACTS
FMR is each fund's manager pursuant to management contracts dated
October 1, 1997, which were approved by shareholders on September 17,
1997.
Prior to October 1, 1997, FMR was Diversified International,
International Growth & Income, Overseas, and Worldwide's manager
pursuant to management contracts dated March 1, 1992, which were
approved by shareholders on February 19, 1992 and International Value
Fund's manager pursuant to a management contract dated September 16,
1994, which was approved by FMR, then the sole shareholder of the fund
on September 23, 1994.
MANAGEMENT SERVICES. Each fund employs FMR to furnish investment
advisory and other services. Under the terms of its management
contract with each fund, FMR acts as investment adviser and, subject
to the supervision of the Board of Trustees, directs the investments
of the fund in accordance with its investment objective, policies, and
limitations. FMR also provides each fund with all necessary office
facilities and personnel for servicing the fund's investments,
compensates all officers of each fund and all Trustees who are
"interested persons" of the [trust/trusts] or of FMR, and all
personnel of each fund or FMR performing services relating to
research, statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of each fund. These services include
providing facilities for maintaining each fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with each fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining each fund's records and the
registration of each fund's shares under federal securities laws and
making necessary filings under state securities laws; developing
management and shareholder services for each fund; and furnishing
reports, evaluations, and analyses on a variety of subjects to the
Trustees.
MANAGEMENT-RELATED EXPENSES. In addition to the management fee payable
to FMR and the fees payable to the transfer, dividend disbursing, and
shareholder servicing agent, pricing and bookkeeping agent, and
securities lending agent, each fund pays all of its expenses that are
not assumed by those parties. Each fund pays for the typesetting,
printing, and mailing of its proxy materials to shareholders, legal
expenses, and the fees of the custodian, auditor and non-interested
Trustees. Each fund's management contract further provides that the
fund will pay for typesetting, printing, and mailing prospectuses,
statements of additional information, notices, and reports to
shareholders; however, under the terms of each fund's transfer agent
agreement, the transfer agent bears the costs of providing these
services to existing shareholders. Other expenses paid by each fund,
include interest, taxes, brokerage commissions, the fund's
proportionate share of insurance premiums and Investment Company
Institute dues, and the costs of registering shares under federal
securities laws and making necessary filings under state securities
laws. Each fund is also liable for such non-recurring expenses as may
arise, including costs of any litigation to which the fund may be a
party, and any obligation it may have to indemnify its officers and
Trustees with respect to litigation.
MANAGEMENT FEES. For the services of FMR under the management
contract, International Growth & Income and Worldwide pay FMR a
monthly management fee which has two components: a group fee rate and
an individual fund fee rate.
For the services of FMR under the management contract, Diversified
International, International Value and Overseas pay FMR a monthly
management fee which has two components: a basic fee, which is the sum
of a group fee rate and an individual fund fee rate, and a performance
adjustment based on a comparison of each fund's performance to that of
Morgan Stanley Capital International Europe, Australasia, Far East
Index (the EAFE Index).
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts.
The following is the fee schedule for each fund.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
AVERAGE GROUP ANNUALIZED GROUP NET EFFECTIVE ANNUAL
ASSETS RATE ASSETS FEE RATE
0 - $3 BILLION .5200% $ 0.5 BILLION .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3253
36 - 42 .3400 250 .3223
42 - 48 .3350 275 .3198
48 - 66 .3250 300 .3175
66 - 84 .3200 325 .3153
84 - 102 .3150 350 .3133
102 - 138 .3100
138 - 174 .3050
174 - 228 .3000
228 - 282 .2950
282 - 336 .2900
OVER 336 .2850
Prior to October 1, 1997, the group fee rate was based on a schedule
with breakpoints ending at .3000% for average group assets in excess
of $174 billion. The group fee rate breakpoints shown above for
average group assets in excess of $138 billion and under $228 billion
were voluntarily adopted by FMR on January 1, 1992. The additional
breakpoints shown above for average group assets in excess of $228
billion were voluntarily adopted by FMR on November 1, 1993.
On August 1, 1994, FMR voluntarily revised the prior extensions to the
group fee rate schedule, and added new breakpoints for average group
assets in excess of $210 billion and under $390 billion as shown in
the schedule below. The revised group fee rate schedule is identical
to the above schedule for average group assets under $210 billion.
On January 1, 1996, FMR voluntarily added new breakpoints to the
revised schedule for average group assets in excess of $390 billion.
The revised group fee rate schedule and its extensions provide for
lower management fee rates as FMR's assets under management increase.
Each fund's current management contract reflects the group fee rate
schedule above for average group assets under $210 billion and the
group fee rate schedule below for average group assets in excess of
$210 billion.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
AVERAGE GROUP ANNUALIZED GROUP NET EFFECTIVE ANNUAL
ASSETS RATE ASSETS FEE RATE
$138 - $174 BILLION .3050% $150 BILLION .3371%
174 - 210 .3000 175 .3325
210 - 246 .2950 200 .3284
246 - 282 .2900 225 .3249
282 - 318 .2850 250 .3219
318 - 354 .2800 275 .3190
354 - 390 .2750 300 .3163
390 - 426 .2700 325 .3137
426 - 462 .2650 350 .3113
462 - 498 .2600 375 .3090
498 - 534 .2550 400 .3067
OVER 534 .2500 425 .3046
450 .3024
475 .3003
500 .2982
525 .2962
550 .2942
The group fee rate is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown above on the left. The schedule
above on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $ 550 billion of group net assets - the approximate
level for October 1997 - was 0.2941 %, which is the weighted
average of the respective fee rates for each level of group net assets
up to $ 550 billion.
The individual fund fee rate for International Growth & Income and
Worldwide is 0.45%. Based on the average group net assets of the funds
advised by FMR for October 1997, each fund's annual management fee
rate would be calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
GROUP FEE RATE INDIVIDUAL FUND FEE RATE MANAGEMENT FEE RATE
INTERNA .2941 % + 0.45% = .7441 %
TIONAL
GROWT
H &
INCOM
E
WORLD .2941 % 0.45% .7441 %
WIDE
</TABLE>
The individual fund fee rate for Diversified International,
International Value, and Overseas is 0.45%. Based on the average group
net assets of the funds advised by FMR for October 1997, each fund's
annual basic fee rate would be calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
GROUP FEE RATE INDIVIDUAL FUND FEE RATE BASIC FEE RATE
DIVERS .2941 % + 0.45% = .7441 %
IFIED
INTERN
ATIONAL
INTERN .2941 % 0.45% .7441 %
ATIONAL
VALUE
OVERS .2941 % 0.45% .7441 %
EAS
</TABLE>
One-twelfth of this annual basic fee rate or management fee rate,
as applicable, is applied to each fund's net assets averaged for the
most recent month, giving a dollar amount, which is the fee for that
month.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee for Diversified
International, International Value and Overseas is subject to upward
or downward adjustment, depending upon whether, and to what extent,
each fund's investment performance for the performance period exceeds,
or is exceeded by, the record of the EAFE Index (the Index) over the
same period. The performance period consists of the most recent month
plus the previous 35 months. The performance period for International
Value commenced on November 1, 1994. Starting with the twelfth month,
the performance adjustment takes effect. Each month subsequent to the
twelfth month, a new month is added to the performance period until
the performance period includes 36 months.
Each percentage point of difference, calculated to the nearest 0.01%
(up to a maximum difference of (plus/minus)10.00) is multiplied by a
performance adjustment rate of 0.02%.
The performance comparison is made at the end of each month. One
twelfth (1/12) of this rate is then applied to each fund's average net
assets for the entire performance period, giving a dollar amount which
will be added to (or subtracted from) the basic fee.
The maximum annualized adjustment rate is (plus/minus)0.20% of a
fund's average net assets over the performance period.
A fund's performance is calculated based on change in NAV. For
purposes of calculating the performance adjustment, any dividends or
capital gain distributions paid by the fund are treated as if
reinvested in fund shares at the NAV as of the record date for
payment. The record of the Index is based on change in value and is
adjusted for any cash distributions from the companies whose
securities compose the Index.
Because the adjustment to the basic fee is based on a fund's
performance compared to the investment record of the Index, the
controlling factor is not whether the fund's performance is up or down
per se, but whether it is up or down more or less than the record of
the Index. Moreover, the comparative investment performance of the
fund is based solely on the relevant performance period without regard
to the cumulative performance over a longer or shorter period of time.
For each of Morgan Stanley Capital International Europe, Australasia,
Far East Index and the Morgan Stanley Capital International
GDP-Weighted Europe, Australasia, Far East Index, the index returns
for periods prior to January 1, 1997 are adjusted for tax withholding
at non-treaty rates. The index returns for periods after January 1,
1997 are adjusted for tax withholding at treaty rates applicable to
U.S.-based mutual funds organized as Massachusetts business trusts.
The following table shows the amount of management fees paid by
each fund to FMR for the past three fiscal years by International
Growth & Income and Worldwide.
FUND FISCAL YEARS ENDED
MANAGEMENT FEES
OCTOBER 31 PAID TO FMR
INTERNATIONAL 1997 $ 8,152,782
GROWTH &
INCOME
1996 $ 7,427,387
1995 $ 7,967,320
WORLDWIDE 1997 $ 7,971,278
1996 $ 5,758,962
1995 $ 5,378,156
The following table shows the amount of management fee s
paid by each fund to FMR for the past three fiscal years and the
amount of negative or positive performance adjustments to the
management fees paid by Diversified International, International Value
and Overseas.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FUND FISCAL YEARS ENDED PERFORMANCE MANAGEMENT FEES
OCTOBER 31 ADJUSTMENT PAID TO FMR
DIVERSIFIED 1997 $ 954,599 $ 9,176,455 *
INTERNATIONAL
1996 $ 445,161 $ 4,050,659*
1995 $ (211,273) $ 2,058,906*
INTERNATIONAL 1997 $ 318,389 $ 2,596,428 *
VALUE
1996 $ 86,631 $ 1,722,862*
1995 N/A $ 361,109*
OVERSEAS 1997 $ 3,286,953 $ 29,984,950 *
1996 $ 123,101 $ 21,073,542*
1995 $ (1,750,190) $ 15,598,603*
</TABLE>
* Including the amount of the performance adjustment.
FMR may, from time to time, voluntarily reimburse all or a portion of
a fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to
be repaid for these expense reimbursements in the amount that expenses
fall below the limit prior to the end of the fiscal year.
Expense reimbursements by FMR will increase a fund's total returns and
yield, and repayment of the reimbursement by a fund will lower its
total returns and yield.
SUB-ADVISERS. On behalf of each fund, FMR has entered into
sub-advisory agreements with FMR U.K., FMR Far East, FIJ, and FIIA.
FIIA, in turn, has entered into a sub-advisory agreement with
FIIA(U.K.)L Pursuant to the sub-advisory agreements, FMR may receive
investment advice and research services outside the United States from
the sub-advisers.
On behalf of each fund, FMR may also grant the sub-advisers investment
management authority as well as the authority to buy and sell
securities if FMR believes it would be beneficial to the funds.
Currently, FMR U.K., FMR Far East, FIJ, FIIA, and FIIA(U.K.)L each
focus on issuers in countries other than the United States such as
those in Europe, Asia, and the Pacific Basin.
FMR U.K. and FMR Far East, which were organized in 1986, are wholly
owned subsidiaries of FMR. FIJ and FIIA are wholly owned subsidiaries
of Fidelity International Limited (FIL), a Bermuda company formed in
1968 which primarily provides investment advisory services to non-U.S.
investment companies and institutional investors investing in
securities throughout the world. Edward C. Johnson 3d, Johnson family
members, and various trusts for the benefit of the Johnson family own,
directly or indirectly, more than 25% of the voting common stock of
FIL. FIJ was organized in Japan in 1986. FIIA was organized in Bermuda
in 1983. FIIA(U.K.)L was organized in the United Kingdom in 1984, and
is a direct subsidiary of Fidelity Investments Management Limited and
an indirect subsidiary of FIL.
Under the sub-advisory agreements FMR pays the fees of FMR U.K., FMR
Far East, FIJ, and FIIA. FIIA, in turn, pays the fees of FIIA(U.K.)L
For providing non-discretionary investment advice and research
services the sub-advisers are compensated as follows:
(small solid bullet) FMR pays FMR U.K. and FMR Far East fees equal to
110% and 105%, respectively, of FMR U.K.'s and FMR Far East's costs
incurred in connection with providing investment advice and research
services.
(small solid bullet) FMR pays FIIA and FIJ fees equal to 30% of FMR's
monthly management fee with respect to the average net assets held by
the fund for which the sub-adviser has provided FMR with investment
advice and research services.
(small solid bullet) FIIA pays FIIA(U.K.)L a fee equal to 110% of
FIIA(U.K.)L's costs incurred in connection with providing investment
advice and research services.
For providing discretionary investment management and executing
portfolio transactions, the sub-advisers are compensated as follows:
(small solid bullet) FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a
fee equal to 50% of its monthly management fee (including any
performance adjustment) with respect to the fund's average net assets
managed by the sub-adviser on a discretionary basis.
(small solid bullet) FIIA pays FIIA(U.K.)L a fee equal to 110% of
FIIA(U.K.)L's costs incurred in connection with providing
discretionary investment management services.
For providing investment advice and research services, fees paid to
the sub-advisers by FMR on behalf of the funds for the past three
fiscal years are shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FISCAL YEAR FMR U.K. FMR FAR EAST FIIA FIIA(U.K.)L FIJ
ENDED
OCTOBER 31
INTERNATION
AL GROWTH
& INCOME
1997 $ 583,525 $ 548,949 $ 0 $ 0 N/A
1996 $ 568,043 $ 581,491 $ 0 $ 0 N/A
1995 $ 565,989 $ 508,935 $ 0 $ 0 N/A
DIVERSIFIED
INTERNATION
AL
1997 $ 529,480 $ 509,732 $ 0 $ 0 N/A
1996 $ 261,591 $ 263,574 $ 0 $ 0 N/A
1995 $ 163,681 $ 148,965 $ 0 $ 0 N/A
INTERNATIONA
L VALUE
1997 $ 165,017 $ 157,421 $ 0 $ 0 N/A
1996 $ 132,491 $ 130,310 $ 0 $ 0 N/A
1995 $ 25,758 $ 24,224 $ 0 $ 0 N/A
OVERSEAS
1997 $ 1,884,543 $ 1,789,326 $ 0 $ 0 N/A
1996 $ 1,624,527 $ 1,648,516 $ 0 $ 0 N/A
1995 $ 1,303,012 $ 1,193,082 $ 0 $ 0 N/A
WORLDWIDE
1997 $ 416,867 $ 395,729 $ 0 $ 0 N/A
1996 $ 321,179 $ 324,985 $ 0 $ 0 N/A
1995 $ 249,660 $ 231,114 $ 0 $ 0 N/A
</TABLE>
For discretionary investment management and execution of portfolio
transactions, no fees were paid to the sub-advisers by FMR on behalf
of the funds for the past three fiscal years.
DISTRIBUTION AND SERVICE PLANS
The Trustees have approved a Distribution and Service Plan on behalf
of each fund (the Plans) pursuant to Rule 12b-1 under the 1940 Act
(the Rule). The Rule provides in substance that a mutual fund may not
engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of the fund except
pursuant to a plan approved on behalf of the fund under the Rule. The
Plans, as approved by the Trustees, allow the funds and FMR to incur
certain expenses that might be considered to constitute indirect
payment by the funds of distribution expenses.
Under each Plan, if the payment of management fees by the fund to FMR
is deemed to be indirect financing by the fund of the distribution of
its shares, such payment is authorized by the Plan. Each Plan
specifically recognizes that FMR may use its management fee revenue,
as well as its past profits or its other resources, to pay FDC for
expenses incurred in connection with the distribution of fund shares.
In addition, each Plan provides that FMR, directly or through FDC, may
make payments to third parties, such as banks or broker-dealers, that
engage in the sale of fund shares, or provide shareholder support
services. Currently, the Board of Trustees has not authorized such
payments for each fund's shares.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and
determined that there is a reasonable likelihood that the Plan will
benefit the fund and its shareholders. In particular, the Trustees
noted that each Plan does not authorize payments by the fund other
than those made to FMR under its management contract with the fund. To
the extent that each Plan gives FMR and FDC greater flexibility in
connection with the distribution of shares, additional sales of fund
shares may result. Furthermore, certain shareholder support services
may be provided more effectively under the Plans by local entities
with whom shareholders have other relationships.
The Plans for each fund were approved by shareholders of each fund on
September 17, 1997.
The Glass-Steagall Act generally prohibits federally and state
chartered or supervised banks from engaging in the business of
underwriting, selling, or distributing securities. Although the scope
of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, FDC believes
that the Glass-Steagall Act should not preclude a bank from performing
shareholder support services, or servicing and recordkeeping
functions. FDC intends to engage banks only to perform such functions.
However, changes in federal or state statutes and regulations
pertaining to the permissible activities of banks and their affiliates
or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions,
if any, would be necessary to continue to provide efficient and
effective shareholder services. In such event, changes in the
operation of the funds might occur, including possible termination of
any automatic investment or redemption or other services then provided
by the bank. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these
occurrences. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein, and
banks and other financial institutions may be required to register as
dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase
securities issued by, depository institutions that receive payments
under the Plans. No preference for the instruments of such depository
institutions will be shown in the selection of investments.
CONTRACTS WITH FMR AFFILIATES
Each fund has entered into a transfer agent agreement with FSC, an
affiliate of FMR. Under the terms of the agreements, FSC performs
transfer agency, dividend disbursing, and shareholder services for
each fund.
For providing transfer agency services, FSC receives an annual account
fee and an asset-based fee each based on account size and fund type
for each retail account and certain institutional accounts. With
respect to certain institutional retirement accounts, FSC receives an
annual account fee and an asset-based fee based on account type or
fund type. These annual account fees are subject to increase based on
postal rate changes.
The asset-based fees are subject to adjustment if the year-to-date
total return of the S&P 500 exceeds a positive or negative 15%.
FSC also collects small account fees from certain accounts with
balances of less than $2,500.
In addition, FSC receives the pro rata portion of the transfer agency
fees applicable to shareholder accounts in each Fidelity Freedom Fund,
a fund of funds managed by an FMR affiliate, according to the
percentage of the Freedom Fund's assets that is invested in a fund.
FSC pays out-of-pocket expenses associated with providing transfer
agent services. In addition, FSC bears the expense of typesetting,
printing, and mailing prospectuses, statements of additional
information, and all other reports, notices, and statements to
existing shareholders, with the exception of proxy statements.
Each fund has also entered into a service agent agreement with FSC, an
affiliate of FMR. Under the terms of the agreements, FSC calculates
the NAV and dividends for each fund, maintains each fund's portfolio
and general accounting records, and administers each fund's securities
lending program.
For providing pricing and bookkeeping services, FSC receives a monthly
fee based on each fund's average daily net assets throughout the
month. The annual fee rates for pricing and bookkeeping services are
.0750% of the first $500 million of average net assets and .0375% of
average net assets in excess of $500 million. The fee, not including
reimbursement for out-of-pocket expenses, is limited to a minimum of
$60,000 and a maximum of $800,000 per year.
Pricing and bookkeeping fees, including reimbursement for
out-of-pocket expenses, paid by the funds to FSC for the past three
fiscal years are shown in the table below.
1997 1996 1995
INTERNATION $ 600,005 $ 541,422 $ 462,071
AL GROWTH
& INCOME
DIVERSIFIED $ 603,478 $ 339,831 $ 177,924
INTERNATION
AL
INTERNATION $ 229,548 $ 163,645 $ 43,939
AL VALUE
OVERSEAS $ 813,270 $ 800,990 $ 750,000
WORLDWIDE $ 590,839 $ 461,271 $ 360,752
For administering each fund's securities lending program, FSC receives
fees based on the number and duration of individual securities loans.
For the fiscal years ended October 31, 1997, 1996, and 1995 the
funds paid no securities lending fees.
Each fund has entered into a distribution agreement with FDC, an
affiliate of FMR organized as a Massachusetts corporation on July 18,
1960. FDC is a broker-dealer registered under the Securities Exchange
Act of 1934 and a member of the National Association of Securities
Dealers, Inc. The distribution agreements call for FDC to use all
reasonable efforts, consistent with its o ther business, to secure
purchasers for shares of the funds, which are continuously offered at
NAV. Promotional and administrative expenses in connection with
the offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Fidelity International Growth & Income, Fidelity
Diversified International Fund, Fidelity International Value Fund,
Fidelity Overseas Fund, and Fidelity Worldwide Fund are funds of
Fidelity Investment Trust, an open-end management investment company
originally organized as a Massachusetts business trust on April 20,
1984. On November 3, 1986, the trust's name was changed from Fidelity
Overseas Fund to Fidelity Investment Trust. Currently, there are
twenty-one funds of the trust: Fidelity Overseas Fund, Fidelity Europe
Fund, Fidelity Europe Capital Appreciation Fund, Fidelity Pacific
Basin Fund, Fidelity New Markets Income Fund, Fidelity International
Growth & Income Fund, Fidelity Global Bond Fund, Fidelity Canada Fund,
Fidelity Worldwide Fund, Fidelity Diversified International Fund,
Fidelity International Value Fund, Fidelity Japan Fund, Fidelity
Emerging Markets Fund, Fidelity Latin America Fund, Fidelity Southeast
Asia Fund, Fidelity France Fund, Fidelity Germany Fund, Fidelity Japan
Small Companies Fund, Fidelity Hong Kong and China Fund, Fidelity
Nordic Fund, and Fidelity United Kingdom Fund. The Declaration of
trust permits the Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to the trust
or a fund, the right of the trust or fund to use the identifying name
"Fidelity" may be withdrawn. There is a remote possibility that one
fund might become liable for any misstatement in its prospectus or
statement of additional information about another fund.
The assets of the trust received for the issue or sale of shares of
each fund and all income, earnings, profits, and proceeds thereof,
subject only to the rights of creditors, are especially allocated to
such fund, and constitute the underlying assets of such fund. The
underlying assets of each fund are segregated on the books of account,
and are to be charged with the liabilities with respect to such fund
and with a share of the general expenses of the trust. Expenses with
respect to the trust are to be allocated in proportion to the asset
value of the respective funds, except where allocations of direct
expense can otherwise be fairly made. The officers of the trust,
subject to the general supervision of the Board of Trustees, have the
power to determine which expenses are allocable to a given fund, or
which are general or allocable to all of the funds. In the event of
the dissolution or liquidation of the trust, shareholders of each fund
are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as "Massachusetts business trust." Under Massachusetts
law, shareholders of such a trust may, under certain circumstances, be
held personally liable for the obligations of the trust. The
Declaration of Trust provides that the trust shall not have any claim
against shareholders except for the payment of the purchase price of
shares and requires that each agreement, obligation, or instrument
entered into or executed by the trust or the Trustees shall include a
provision limiting the obligations created thereby to the trust and
its assets. The Declaration of Trust provides for indemnification out
of each fund's property of any shareholder held personally liable for
the obligations of the fund. The Declaration of Trust also provides
that each fund shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of the fund and
satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which the fund itself would be unable to
meet its obligations. FMR believes that, in view of the above, the
risk of personal liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they
have exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees
against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of their
office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you receive one vote for each dollar value
of net asset value you own. The shares have no preemptive or
conversion rights; the voting and dividend rights, the right of
redemption, and the privilege of exchange are described in the
Prospectus. Shares are fully paid and nonassessable, except as set
forth under the heading "Shareholder and Trustee Liability" above.
Shareholders representing 10% or more of the trust or a fund may, as
set forth in the Declaration of Trust, call meetings of the trust or a
fund for any purpose related to the trust or fund, as the case may be,
including, in the case of a meeting of the entire trust, the purpose
of voting on removal of one or more Trustees. The trust or any fund
may be terminated upon the sale of its assets to another open-end
management investment company, or upon liquidation and distribution of
its assets, if approved by vote of the holders of a majority of the
trust or the fund as determined by the current value of each
shareholder's investment in the fund or trust. If not so terminated,
the trust and the funds will continue indefinitely. Each fund may
invest all of its assets in another investment company.
CUSTODIAN. The Chase Manhattan Bank, 1 Chase Manhattan Plaza, New
York, New York , is custodian of the assets of the funds. The
custodian is responsible for the safekeeping of a fund's assets and
the appointment of any subcustodian banks and clearing agencies. The
custodian takes no part in determining the investment policies of a
fund or in deciding which securities are purchased or sold by a fund.
However, a fund may invest in obligations of the custodian and may
purchase securities from or sell securities to the custodian. The Bank
of New York, headquartered in New York, also may serve as a special
purpose custodian of certain assets in connection with repurchase
agreement transactions.
FMR, its officers and directors, its affiliated companies, and the
Board of Trustees may, from time to time, conduct transactions with
various banks, including banks serving as custodians for certain funds
advised by FMR. Transactions that have occurred to date include
mortgages and personal and general business loans. In the judgment of
FMR, the terms and conditions of those transactions were not
influenced by existing or potential custodial or other fund
relationships.
AUDITOR. Coopers & Lybrand L.L.P. , One Post Office Square,
Boston, Massachusetts serves as the funds' independent accountant. The
auditor examines financial statements for the funds and provides other
audit, tax, and related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the
fiscal period ended October 31, 1997, and report of the auditor, are
included in the funds' Annual Report, which is a separate report
supplied with this SAI. The funds' financial statements, including the
financial highlights, and report of the auditor are incorporated
herein by reference. For a free additional copy of the funds' Annual
Report, contact Fidelity at 1-800-544-8888, 82 Devonshire Street,
Boston, MA 02109.
APPENDIX
DESCRIPTION OF MOODY'S INVESTORS SERVICE CORPORATE BOND RATINGS:
AAA - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than the Aaa securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
BAA - Bonds which are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
BA - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
CAA - Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect
to principal or interest.
CA - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked short-comings.
C - Bonds which are rated C are the lowest-rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic
rating classification from Aa through B in its corporate bond rating
system. The modifier 1 indicates that the security ranks in the higher
end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks
in the lower end of its generic rating category.
DESCRIPTION OF STANDARD & POOR'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher-rated issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in
higher-rated categories.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or
B- rating.
CC - Debt rated CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated
to senior debt which is assigned an actual or implied CCC- debt
rating. The C rating may be used to cover a situation where a
bankruptcy petition has been filed but debt service payments are
continued.
CI - The rating CI is reserved for income bonds on which no interest
is being paid.
D - Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
D rating will also be used upon the filing of a bankruptcy petition if
debt service payments are jeopardized.
FIDELITY'S TARGETED INTERNATIONAL EQUITY FUNDS
FIDELITY CANADA FUND, FIDELITY EMERGING MARKETS FUND, FIDELITY EUROPE
FUND, FIDELITY EUROPE CAPITAL APPRECIATION FUND, FIDELITY FRANCE FUND,
FIDELITY GERMANY FUND, FIDELITY HONG KONG & CHINA FUND, FIDELITY JAPAN
FUND, FIDELITY JAPAN SMALL COMPANIES FUND, FIDELITY LATIN AMERICA
FUND, FIDELITY NORDIC FUND, FIDELITY PACIFIC BASIN FUND, FIDELITY
SOUTHEAST ASIA FUND, FIDELITY UNITED KINGDOM FUND
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C>
1...................................... COVER PAGE
2A.................................... EXPENSES
B, C................................ CONTENTS; THE FUNDS AT A GLANCE; WHO MAY WANT TO
INVEST
3A.................................... FINANCIAL HIGHLIGHTS
B.................................... *
C,D................................... PERFORMANCE
4A I................................. CHARTER
II............................... THE FUNDS AT A GLANCE; INVESTMENT PRINCIPLES AND
RISKS
B..................................... INVESTMENT PRINCIPLES AND RISKS
C.................................... WHO MAY WANT TO INVEST; INVESTMENT PRINCIPLES AND
RISKS
5A.................................... CHARTER
B(I)................................ COVER PAGE: THE FUNDS AT A GLANCE; DOING BUSINESS
WITH FIDELITY; CHARTER
(II).............................. CHARTER
(III)........................... EXPENSES; BREAKDOWN OF EXPENSES
C................................ CHARTER
C, D................................ CHARTER; BREAKDOWN OF EXPENSES
E.................................... COVER PAGE; CHARTER
F.................................... EXPENSES
G(I).................................. CHARTER
(II)................................... *
5A.................................. PERFORMANCE
6A I................................. CHARTER
II................................ HOW TO BUY SHARES; HOW TO SELL SHARES; TRANSACTION
DETAILS; EXCHANGE RESTRICTIONS
III............................... CHARTER
B.................................... *
C.................................... EXCHANGE RESTRICTIONS; TRANSACTION DETAILS
D.................................... *
E.................................... DOING BUSINESS WITH FIDELITY; HOW TO BUY SHARES;
HOW TO SELL SHARES; INVESTOR SERVICES
F,G................................... DIVIDENDS, CAPITAL GAINS, AND TAXES
7A.................................... COVER PAGE; CHARTER
B.................................... EXPENSES; HOW TO BUY SHARES; TRANSACTION DETAILS
C.................................... SALES CHARGE REDUCTIONS AND WAIVERS
D.................................... HOW TO BUY SHARES
E.................................... *
F ................................ *
8...................................... HOW TO SELL SHARES; INVESTOR SERVICES; TRANSACTION
DETAILS; EXCHANGE RESTRICTIONS
9...................................... *
</TABLE>
* Not Applicable
FIDELITY'S TARGETED INTERNATIONAL EQUITY FUNDS
FIDELITY CANADA FUND, FIDELITY EMERGING MARKETS FUND, FIDELITY EUROPE
FUND, FIDELITY EUROPE CAPITAL APPRECIATION FUND, FIDELITY FRANCE FUND,
FIDELITY GERMANY FUND, FIDELITY HONG KONG & CHINA FUND, FIDELITY JAPAN
FUND, FIDELITY JAPAN SMALL COMPANIES FUND, FIDELITY LATIN AMERICA
FUND, FIDELITY NORDIC FUND, FIDELITY PACIFIC BASIN FUND, FIDELITY
SOUTHEAST ASIA FUND, FIDELITY UNITED KINGDOM FUND
CROSS REFERENCE SHEET
(continued)
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C>
10, 11.......................... COVER PAGE
12.................................... DESCRIPTION OF THE TRUST
13A - C............................ INVESTMENT POLICIES AND LIMITATIONS
D.................................. PORTFOLIO TRANSACTIONS
14A - C............................ TRUSTEES AND OFFICERS
15A.............................. *
B.................................. *
C.................................. TRUSTEES AND OFFICERS
16A I................................ FMR, PORTFOLIO TRANSACTIONS
II.............................. TRUSTEES AND OFFICERS
III............................. MANAGEMENT CONTRACTS
B................................. MANAGEMENT CONTRACTS
C, D............................. CONTRACTS WITH FMR AFFILIATES
E - G........................... *
H................................. DESCRIPTION OF THE TRUST
I................................. CONTRACTS WITH FMR AFFILIATES
17A - D............................ PORTFOLIO TRANSACTIONS
E.............................. *
18A.................................. DESCRIPTION OF THE TRUST
B................................. *
19A.................................. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
B.................................. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION;
VALUATION
C.................................. *
20.................................... DISTRIBUTIONS AND TAXES
21A, B.............................. CONTRACTS WITH FMR AFFILIATES
C................................. *
22A.............................. *
B.............................. PERFORMANCE
23.................................... FINANCIAL STATEMENTS
</TABLE>
* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how
each fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a
copy of each fund's most recent financial report and portfolio
listing, or a copy of the Statement of Additional Information (SAI)
dated December 30, 1997. The SAI has been filed with the Securities
and Exchange Commission (SEC) and is available along with other
related materials on the SEC's Internet Web site (http://www.sec.gov).
The SAI is incorporated herein by reference (legally forms a part of
the prospectus). For a free copy of either document, call Fidelity at
1-800-544-8888.
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.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
TIF-pro-1297
Each of these international funds is a growth fund and seeks to
increase the value of your investment over the long-term by investing
mainly in equity securities.
FIDELITY'S
TARGETED
INTERNATIONAL
EQUITY
FUNDS
Fund Trading
Number Symbol
Fidelity Canada Fund 309 FICDX
Fidelity Emerging Markets Fund 322 FEMKX
Fidelity Europe Fund 301 FIEUX
Fidelity Europe Capital 341 FECAX
Appreciation Fund
Fidelity France Fund 345 FFRAF
Fidelity Germany Fund 346 FGERF
Fidelity Hong Kong and 352 FHKCX
China Fund
Fidelity Japan Fund 350 FJAPX
Fidelity Japan Small 360 FJSCX
Companies Fund
Fidelity Latin America Fund 349 FLATX
Fidelity Nordic Fund 342 FNORX
Fidelity Pacific Basin Fund 302 FPBFX
Fidelity Southeast Asia Fund 351 FSEAX
Fidelity United Kingdom Fund 344 FUTYF
PROSPECTUS
DECEMBER 30, 1997(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON,
MA 02109
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
KEY FACTS THE FUNDS AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES EACH FUND'S SALES CHARGE (LOAD) AND ITS YEARLY
OPERATING EXPENSES.
FINANCIAL HIGHLIGHTS A SUMMARY OF EACH FUND'S FINANCIAL DATA.
PERFORMANCE HOW EACH FUND HAS DONE OVER TIME.
THE FUNDS IN DETAIL CHARTER HOW EACH FUND IS ORGANIZED.
INVESTMENT PRINCIPLES AND RISKS EACH FUND'S OVERALL
APPROACH TO INVESTING.
BREAKDOWN OF EXPENSES HOW OPERATING COSTS ARE CALCULATED
AND WHAT THEY INCLUDE.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
TYPES OF ACCOUNTS DIFFERENT WAYS TO SET UP YOUR ACCOUNT,
INCLUDING TAX-SHELTERED RETIREMENT PLANS.
HOW TO BUY SHARES OPENING AN ACCOUNT AND MAKING
ADDITIONAL INVESTMENTS.
HOW TO SELL SHARES TAKING MONEY OUT AND CLOSING YOUR ACCOUNT.
INVESTOR SERVICES SERVICES TO HELP YOU MANAGE YOUR ACCOUNT.
SHAREHOLDER AND ACCOUNT POLICIES DIVIDENDS, CAPITAL GAINS, AND TAXES
TRANSACTION DETAILS SHARE PRICE CALCULATIONS AND THE TIMING
OF PURCHASES AND REDEMPTIONS.
EXCHANGE RESTRICTIONS
SALES CHARGE REDUCTIONS AND WAIVERS
</TABLE>
KEY FACTS
THE FUNDS AT A GLANCE
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946
and is now America's largest mutual fund manager. Foreign affiliates
of FMR may help choose investments for the funds.
As with any mutual fund, there is no assurance that a fund will
achieve its goal.
CANADA FUND
GOAL: Long-term growth of capital.
STRATEGY: Invests mainly in equity securities of Canadian issuers.
SIZE: As of October 31, 1997, the fund had over $ 96 million in
assets.
EMERGING MARKETS FUND
GOAL: Long-term growth of capital.
STRATEGY: Invests mainly in equity securities of emerging market
issuers. These countries can be found in regions such as Southeast
Asia, Latin America, and Eastern Europe.
SIZE: As of October 31, 1997, the fund had over $ 499 m illion in
assets.
EUROPE FUND
GOAL: Long-term growth of capital.
STRATEGY: Invests mainly in equity securities of European issuers.
SIZE: As of October 31, 1997, the fund had over $ 916 million in
assets.
EUROPE CAPITAL APPRECIATION FUND
GOAL: Long-term growth of capital.
STRATEGY: Invests mainly in equity securities of Eastern and Western
European issuers.
SIZE: As of October 31, 1997, the fund had over $ 372 million in
assets.
FRANCE FUND
GOAL: Long-term growth of capital.
STRATEGY: Invests mainly in equity securities of French issuers.
SIZE: As of October 31, 1997, the fund had over $ 5 million in
assets.
GERMANY FUND
GOAL: Long-term growth of capital.
STRATEGY: Invests mainly in equity securities of German issuers.
SIZE: As of October 31, 1997, the fund had over $ 12 million in
assets.
HONG KONG AND CHINA FUND
GOAL: Long-term growth of capital.
STRATEGY: Invests mainly in equity securities of Hong Kong and Chinese
issuers.
SIZE: As of October 31, 1997, the fund had over $ 177 million in
assets.
JAPAN FUND
GOAL: Long-term growth of capital.
STRATEGY: Invests mainly in equity securities of Japanese issuers.
SIZE: As of October 31, 1997, the fund had over $ 255 million in
assets.
JAPAN SMALL COMPANIES FUND
GOAL: Long-term growth of capital.
STRATEGY: Invests mainly in equity securities of Japanese issuers with
small market capitalizations.
SIZE: As of October 31, 1997, the fund had over $ 84 million in
assets.
LATIN AMERICA FUND
GOAL: High total investment return.
STRATEGY: Invests mainly in equity and debt securities of Latin
American issuers.
SIZE: As of October 31, 1997, the fund had over $ 808 million in
assets.
NORDIC FUND
GOAL: Long-term growth of capital.
STRATEGY: Invests mainly in equity securities of issuers in Denmark,
Finland, Norway, and Sweden.
SIZE: As of October 31, 1997, the fund had over $ 73 million in
assets.
PACIFIC BASIN FUND
GOAL: Long-term growth of capital.
STRATEGY: Invests mainly in equity securities of Pacific Basin
issuers.
SIZE: As of October 31, 1997, the fund had over $ 239 million in
assets.
SOUTHEAST ASIA FUND
GOAL: Long-term growth of capital.
STRATEGY: Invests mainly in equity securities of Southeast Asian
issuers. The fund does not anticipate investing in Japan.
SIZE: As of October 31, 1997, the fund had over $ 278 million in
assets.
UNITED KINGDOM FUND
GOAL: Long-term growth of capital.
STRATEGY: Invests mainly in equity securities of British issuers.
SIZE: As of October 31, 1997, the fund had over $ 5 million in
assets.
WHO MAY WANT TO INVEST
The funds are designed for investors looking to target a particular
region, country, or emerging market. By including international
investments in your portfolio, you can achieve additional
diversification and participate in growth opportunities around the
world. However, it is important to note that investments in foreign
securities involve risks in addition to those of U.S. investments.
The value of the funds' investments will vary from day to day, and
generally reflect market conditions, interest rates, and other
company, political, or economic news both here and abroad. In the
short-term, stock prices can fluctuate dramatically in response to
these factors. The securities of small, less well-known companies may
be more volatile than those of larger companies. Over time, however,
stocks have shown greater growth potential than other types of
securities. Investments in foreign securities may involve risks in
addition to those of U.S. investments, including increased political
and economic risk, as well as exposure to currency fluctuations. When
you sell your shares, they may be worth more or less than what you
paid for them. By themselves, the funds do not constitute a balanced
investment plan.
France Fund, Germany Fund, Hong Kong and China Fund, Japan Small
Companies Fund, Nordic Fund and United Kingdom Fund are
non-diversified funds. Non-diversified funds may invest a greater
portion of their assets in securities of individual issuers than
diversified funds. As a result, changes in the market value of a
single issuer could cause greater fluctuations in share value than
would occur in a more diversified fund.
(CHECKMARK)
THE SPECTRUM OF FIDELITY FUNDS
BROAD CATEGORIES OF FIDELITY FUNDS ARE PRESENTED HERE IN ORDER OF
ASCENDING RISK. GENERALLY, INVESTORS SEEKING TO MAXIMIZE RETURN MUST
ASSUME GREATER RISK. THE FUNDS IN THIS PROSPECTUS ARE IN THE
GROWTH CATEGORY.
(SOLID BULLET) MONEY MARKET SEEKS INCOME AND STABILITY BY INVESTING IN
HIGH-QUALITY, SHORT-TERM INVESTMENTS.
(SOLID BULLET) INCOME SEEKS INCOME BY INVESTING IN BONDS.
(SOLID BULLET) GROWTH AND INCOME SEEKS LONG-TERM GROWTH AND INCOME BY
INVESTING IN STOCKS AND BONDS.
(RIGHT ARROW) GROWTH SEEKS LONG-TERM GROWTH BY INVESTING MAINLY IN
STOCKS.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you may pay when you buy
or sell shares of a fund. In addition, you may be charged an annual
account maintenance fee if your account balance falls below $2,500.
Lower sales charges may be available for accounts over $250,000. See
"Transaction Details," page , and "Sales Charge Reductions and
Waivers," page , for an explanation of how and when these charges
apply.
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets.
Each fund pays a management fee to FMR that, for Canada Fund, Europe
Fund, Europe Capital Appreciation Fund, Japan Fund, Pacific Basin Fund
and Southeast Asia Fund, varies based on its performance. Each fund
also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and
financial reports. A fund's expenses are factored into its share price
or dividends and are not charged directly to shareholder accounts (see
"Breakdown of Expenses" page ).
The following figures are based on historical expenses of each fund
and are calculated as a percentage of average net assets of each fund.
A portion of the brokerage commissions that a fund pays is used to
reduce that fund's expenses. In addition, certain fund s
ha ve entered into arrangements with their
custodian s and transfer agent s whereby credits realized
as a result of uninvested cash balances are used to reduce custodian
and transfer agent expenses. Including these reductions, the total
fund operating expenses for the affected funds presented in the table
would have been as follows:
FUND %
CANADA FUND .92 %
EMERGING 1.35 %
MARKETS FUND
EUROPE FUND 1.18%
EUROPE CAPITAL 1.07 %
APPRECIATION FUND
JAPAN FUND 1.40 %
JAPAN SMALL 1.34%
COMPANIES FUND
LATIN AMERICA 1.29%
FUND
PACIFIC BASIN 1.31 %
FUND
UNITED KINGDOM 1.99 %
FUND
EXAMPLES: Let's say, hypothetically, that each fund's annual return is
5% and that your shareholder transaction expenses and each fund's
annual operating expenses are exactly as just described. For every
$1,000 you invested, the tables below show how much you would pay in
total expenses if you close your account after the number of years
indicated.
The examples illustrate the effect of expenses, but are not meant to
suggest actual or expected expenses or returns, all of which may vary.
TRANSACTION EXPENSES OPERATING EXPENSES EXAMPLES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
CANA MAXIMUM SALES CHARGE 3.00% MANAGEMENT FEE .39 % 1 YEAR $ 39
DA ON PURCHASES
FUND (AS A % OF OFFERING
PRICE)
SALES CHARGE ON NONE 12B-1 FEE NONE 3 YEARS $ 59
REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE ON NONE OTHER EXPENSES .54 % 5 YEARS $ 80
REDEMPTIONS
REDEMPTION FEE 1.50% TOTAL FUND OPERATING .93 % 10 YEARS $ 141
(SHORT-TERM TRADING FEE) EXPENSES
ON SHARES HELD LESS THAN
90 DAYS (AS A % OF
AMOUNT REDEEMED)
EXCHANGE FEE NONE
ANNUAL ACCOUNT $12.00
MAINTENANCE FEE
(FOR ACCOUNTS UNDER
$2,500)
EMER MAXIMUM SALES CHARGE 3.00% MANAGEMENT FEE .75 % 1 YEAR $ 43
GING ON PURCHASES
MARK (AS A % OF OFFERING
ETS PRICE)
FUND
SALES CHARGE ON NONE 12B-1 FEE NONE 3 YEARS $ 72
REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE ON NONE OTHER EXPENSES .61 % 5 YEARS $ 102
REDEMPTIONS
REDEMPTION FEE 1.50% TOTAL FUND OPERATING 1.36 % 10 YEARS $ 189
(SHORT-TERM TRADING FEE) EXPENSES
ON SHARES HELD LESS THAN
90 DAYS (AS A % OF
AMOUNT REDEEMED)
EXCHANGE FEE NONE
ANNUAL ACCOUNT $12.00
MAINTENANCE FEE
(FOR ACCOUNTS UNDER
$2,500)
</TABLE>
TRANSACTION EXPENSES OPERATING EXPENSES EXAMPLES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
EUROP MAXIMUM SALES CHARGE 3.00% MANAGEMENT FEE .78 % 1 YEAR $ 42
E ON PURCHASES
FUND (AS A % OF OFFERING
PRICE)
SALES CHARGE ON NONE 12B-1 FEE NONE 3 YEARS $ 67
REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE ON NONE OTHER EXPENSES .41 % 5 YEARS $ 93
REDEMPTIONS
REDEMPTION FEE 1.00% TOTAL FUND OPERATING 1.19 % 10 YEARS $ 170
(SHORT-TERM TRADING FEE) EXPENSES
ON SHARES HELD LESS THAN
90 DAYS (AS A % OF
AMOUNT REDEEMED)
EXCHANGE FEE NONE
ANNUAL ACCOUNT $12.00
MAINTENANCE FEE
(FOR ACCOUNTS UNDER
$2,500)
EUROP MAXIMUM SALES CHARGE 3.00% MANAGEMENT FEE .65 % 1 YEAR $ 41
E ON PURCHASES
CAPIT (AS A % OF OFFERING
AL PRICE)
APPR
ECIATI
ON
FUND
SALES CHARGE ON NONE 12B-1 FEE NONE 3 YEARS $ 64
REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE ON NONE OTHER EXPENSES .45 % 5 YEARS $ 89
REDEMPTIONS
REDEMPTION FEE 1.00% TOTAL FUND OPERATING 1.10 % 10 YEARS $ 160
(SHORT-TERM TRADING FEE) EXPENSES
ON SHARES HELD LESS THAN
90 DAYS (AS A % OF
AMOUNT REDEEMED)
EXCHANGE FEE NONE
ANNUAL ACCOUNT $12.00
MAINTENANCE FEE
(FOR ACCOUNTS UNDER
$2,500)
FRANC MAXIMUM SALES CHARGE 3.00% MANAGEMENT FEE .00 % 1 YEAR $ 50
E ON PURCHASES (AFTER REIMBURSEMENT)
FUND (AS A % OF OFFERING
PRICE)
SALES CHARGE ON NONE 12B-1 FEE NONE 3 YEARS $ 91
REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE ON NONE OTHER EXPENSES 2.00 % 5 YEARS $ 135
REDEMPTIONS (AFTER
REIMBURSEMENT)
REDEMPTION FEE 1.50% TOTAL FUND OPERATING 2.00 % 10 YEARS $ 256
(SHORT-TERM TRADING FEE) EXPENSES
ON SHARES HELD LESS THAN (AFTER
90 DAYS (AS A % OF REIMBURSEMENT)
AMOUNT REDEEMED)
EXCHANGE FEE NONE
ANNUAL ACCOUNT $12.00
MAINTENANCE FEE
(FOR ACCOUNTS UNDER
$2,500)
GERM MAXIMUM SALES CHARGE 3.00% MANAGEMENT FEE .48 % 1 YEAR $ 50
ANY ON PURCHASES (AFTER REIMBURSEMENT)
FUND (AS A % OF OFFERING
PRICE)
SALES CHARGE ON NONE 12B-1 FEE NONE 3 YEARS $ 91
REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE ON NONE OTHER EXPENSES 1.52 % 5 YEARS $ 135
REDEMPTIONS (AFTER
REIMBURSEMENT)
REDEMPTION FEE 1.50% TOTAL FUND OPERATING 2.00 % 10 YEARS $ 256
(SHORT-TERM TRADING FEE) EXPENSES
ON SHARES HELD LESS THAN (AFTER
90 DAYS (AS A % OF REIMBURSEMENT)
AMOUNT REDEEMED)
EXCHANGE FEE NONE
ANNUAL ACCOUNT $12.00
MAINTENANCE FEE
(FOR ACCOUNTS UNDER
$2,500)
</TABLE>
TRANSACTION EXPENSES OPERATING EXPENSES EXAMPLES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
HONG MAXIMUM SALES CHARGE 3.00% MANAGEMENT FEE .75 % 1 YEAR $ 43
KONG ON PURCHASES
AND (AS A % OF OFFERING
CHINA PRICE)
FUND
SALES CHARGE ON NONE 12B-1 FEE NONE 3 YEARS $ 70
REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE ON NONE OTHER EXPENSES .56 % 5 YEARS $ 100
REDEMPTIONS
REDEMPTION FEE 1.50% TOTAL FUND OPERATING 1.31 % 10 YEARS $ 183
(SHORT-TERM TRADING FEE) EXPENSES
ON SHARES HELD LESS THAN
90 DAYS (AS A % OF
AMOUNT REDEEMED)
EXCHANGE FEE NONE
ANNUAL ACCOUNT $12.00
MAINTENANCE FEE
(FOR ACCOUNTS UNDER
$2,500)
JAPA MAXIMUM SALES CHARGE 3.00% MANAGEMENT FEE .93 % 1 YEAR $ 44
N ON PURCHASES
FUND (AS A % OF OFFERING
PRICE)
SALES CHARGE ON NONE 12B-1 FEE NONE 3 YEARS $ 74
REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE ON NONE OTHER EXPENSES .49 % 5 YEARS $ 105
REDEMPTIONS
REDEMPTION FEE 1.50% TOTAL FUND OPERATING 1.42 % 10 YEARS $ 195
(SHORT-TERM TRADING FEE) EXPENSES
ON SHARES HELD LESS THAN
90 DAYS (AS A % OF
AMOUNT REDEEMED)
EXCHANGE FEE NONE
ANNUAL ACCOUNT $12.00
MAINTENANCE FEE
(FOR ACCOUNTS UNDER
$2,500)
JAPA MAXIMUM SALES CHARGE 3.00% MANAGEMENT FEE .75 % 1 YEAR $ 43
N ON PURCHASES
SMALL (AS A % OF OFFERING
COMP PRICE)
ANIES
FUND
SALES CHARGE ON NONE 12B-1 FEE NONE 3 YEARS $ 71
REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE ON NONE OTHER EXPENSES .60 % 5 YEARS $ 102
REDEMPTIONS
REDEMPTION FEE 1.50% TOTAL FUND OPERATING 1.35 % 10 YEARS $ 188
(SHORT-TERM TRADING FEE) EXPENSES
ON SHARES HELD LESS THAN
90 DAYS (AS A % OF
AMOUNT REDEEMED)
EXCHANGE FEE NONE
ANNUAL ACCOUNT $12.00
MAINTENANCE FEE
(FOR ACCOUNTS UNDER
$2,500)
LATIN MAXIMUM SALES CHARGE 3.00% MANAGEMENT FEE .75 % 1 YEAR $ 43
AMER ON PURCHASES
ICA (AS A % OF OFFERING
FUND PRICE)
SALES CHARGE ON NONE 12B-1 FEE NONE 3 YEARS $ 70
REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE ON NONE OTHER EXPENSES .55 % 5 YEARS $ 99
REDEMPTIONS
REDEMPTION FEE 1.50% TOTAL FUND OPERATING 1.30 % 10 YEARS $ 182
(SHORT-TERM TRADING FEE) EXPENSES
ON SHARES HELD LESS THAN
90 DAYS (AS A % OF
AMOUNT REDEEMED)
EXCHANGE FEE NONE
ANNUAL ACCOUNT $12.00
MAINTENANCE FEE
(FOR ACCOUNTS UNDER
$2,500)
</TABLE>
TRANSACTION EXPENSES OPERATING EXPENSES EXAMPLES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
NORDI MAXIMUM SALES CHARGE 3.00% MANAGEMENT FEE .75 % 1 YEAR $ 44
C ON PURCHASES
FUND (AS A % OF OFFERING
PRICE)
SALES CHARGE ON NONE 12B-1 FEE NONE 3 YEARS $ 74
REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE ON NONE OTHER EXPENSES .67 % 5 YEARS $ 105
REDEMPTIONS
REDEMPTION FEE 1.50% TOTAL FUND OPERATING 1.42 % 10 YEARS $ 195
(SHORT-TERM TRADING FEE) EXPENSES
ON SHARES HELD LESS THAN
90 DAYS (AS A % OF
AMOUNT REDEEMED)
EXCHANGE FEE NONE
ANNUAL ACCOUNT $12.00
MAINTENANCE FEE
(FOR ACCOUNTS UNDER
$2,500)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
PACIFI MAXIMUM SALES CHARGE 3.00% MANAGEMENT FEE .70 % 1 YEAR $ 43
C ON PURCHASES
BASIN (AS A % OF OFFERING
FUND PRICE)
SALES CHARGE ON NONE 12B-1 FEE NONE 3 YEARS $ 71
REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE ON NONE OTHER EXPENSES .62 % 5 YEARS $ 100
REDEMPTIONS
REDEMPTION FEE 1.00% TOTAL FUND OPERATING 1.32 % 10 YEARS $ 184
(SHORT-TERM TRADING FEE) EXPENSES
ON SHARES HELD LESS THAN
90 DAYS (AS A % OF
AMOUNT REDEEMED)
EXCHANGE FEE NONE
ANNUAL ACCOUNT $12.00
MAINTENANCE FEE
(FOR ACCOUNTS UNDER
$2,500)
SOUTH MAXIMUM SALES CHARGE 3.00% MANAGEMENT FEE .76 % 1 YEAR $ 43
EAST ON PURCHASES
ASIA (AS A % OF OFFERING
FUND PRICE)
SALES CHARGE ON NONE 12B-1 FEE NONE 3 YEARS $ 71
REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE ON NONE OTHER EXPENSES .56 % 5 YEARS $ 100
REDEMPTIONS
REDEMPTION FEE 1.50% TOTAL FUND OPERATING 1.32 % 10 YEARS $ 184
(SHORT-TERM TRADING FEE) EXPENSES
ON SHARES HELD LESS THAN
90 DAYS (AS A % OF
AMOUNT REDEEMED)
EXCHANGE FEE NONE
ANNUAL ACCOUNT $12.00
MAINTENANCE FEE
(FOR ACCOUNTS UNDER
$2,500)
UNITE MAXIMUM SALES CHARGE 3.00% MANAGEMENT FEE .00 % 1 YEAR $ 50
D ON PURCHASES (AFTER REIMBURSEMENT)
KING (AS A % OF OFFERING
DOM PRICE)
FUND
SALES CHARGE ON NONE 12B-1 FEE NONE 3 YEARS $ 91
REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE ON NONE OTHER EXPENSES 2.00 % 5 YEARS $ 135
REDEMPTIONS (AFTER
REIMBURSEMENT)
REDEMPTION FEE 1.50% TOTAL FUND OPERATING 2.00 % 10 YEARS $ 256
(SHORT-TERM TRADING FEE) EXPENSES
ON SHARES HELD LESS THAN (AFTER
90 DAYS (AS A % OF REIMBURSEMENT)
AMOUNT REDEEMED)
EXCHANGE FEE NONE
ANNUAL ACCOUNT $12.00
MAINTENANCE FEE
(FOR ACCOUNTS UNDER
$2,500)
</TABLE>
FMR has voluntarily agreed to reimburse France Fund, Germany
Fund, and United Kingdom Fund to the extent that total
operating expenses exceed 2.00 % of each fund's average net
assets. If these agreements were not in effect, the management fee,
other expenses, and total operating expenses would have been .75%,
2.86%, and 3.61%, respectively, for France Fund; .75%, 1.52 % ,
and 2.27%, respectively, for Germany Fund, and .75 %,
3.11 %, and 3.86 %, respectively, for United Kingdom
Fund . Expenses eligible for reimbursement do not include interest,
taxes, brokerage commissions, or extraordinary expenses.
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow have been audited by
either Coopers & Lybrand L.L.P. (Canada Fund, Emerging Markets Fund,
Europe Fund, Japan Fund, and Pacific Basin Fund) or Price Waterhouse
LLP (Europe Capital Appreciation Fund, France Fund, Germany Fund, Hong
Kong and China Fund, Japan Small Companies Fund, Latin America Fund,
Nordic Fund, Southeast Asia Fund, and United Kingdom Fund),
independent accountants. The funds' financial highlights, financial
statements, and reports of the auditors are included in the funds'
Annual Report, and are incorporated by reference into (are legally a
part of) the funds' SAI. Contact Fidelity for a free copy of the
Annual Report or the SAI.
CANADA FUND
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED
PER-SHARE
DATA AND
RATIOS
YEARS ENDED
1997 1996 1995 1994 H 1993 1992 1991 1990 1989 1988F
OCTOBER 31
NET ASSET
$ 21.84 $ 17.55 $ 17.18 $ 17.82 $ 14.23 $ 16.28 $ 13.57 $ 15.45 $ 12.74 $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET
.03B .08 B .05 -- (.15) (.02)B .03B .05B .02B .32
INVESTMENT
INCOME
(LOSS)
NET
1.39 4.27 .33 (.60) 3.76 (1.11) 3.59 (1.24) 2.96 2.42
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL
1.42 4.35 .38 (.60) 3.61 (1.13) 3.62 (1.19) 2.98 2.74
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTION
S
FROM NET
(.13) (.08) (.01) -- (.02) -- (.06) (.01) (.12) --
INVESTMENT
INCOME
FROM NET
(4.29) -- -- -- -- (.92) (.85) (.68) (.15)C --
REALIZED
GAIN
IN EXCESS
-- -- -- (.04) -- -- -- -- -- --
OF NET
REALIZED
GAIN
TOTAL
(4.42) (.08) (.01) (.04) (.02) (.92) (.91) (.69) (.27) --
DISTRIBUTIONS
REDEMPTIO
.04 .02 -- -- -- -- -- -- -- --
N FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET
$ 18.88 $ 21.84 $ 17.55 $ 17.18 $ 17.82 $ 14.23 $ 16.28 $ 13.57 $ 15.45 $ 12.74
VALUE, END
OF PERIOD
TOTAL
8.21% 24.99% 2.22% (3.37)% 25.40% (7.09)% 28.13% (8.16)% 23.94% 27.40%
RETURNE,G
NET ASSETS,
$ 96,458 $ 129,671 $ 326,763 $ 368,330 $ 95,977 $ 21,701 $ 23,327 $ 17,736 $ 24,331 $ 10,802
END OF
PERIOD
(000
OMITTED)
RATIO OF
.93% 1.01% 1.09% D 1.57% 2.00% D 2.00%D 2.01%D 2.05%D 2.06%D 2.02%A,D
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF
.92%I .98%I 1.08%I 1.57% 2.00% 2.00% 2.01% 2.05% 2.06% 2.02%A
EXPENSES
TO AVERAGE
NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET
.18% .40% .26% (.14)% (.66)% (.11)% .17% .34% .16% 4.24%A
INVESTMENT
INCOME
(LOSS)
TO AVERAGE
NET ASSETS
PORTFOLIO
139% 139% 75% 59% 131% 55% 68% 164% 152% 401%A
TURNOVER
RATE
AVERAGE
$ .0242 $ .0276
COMMISSIO
N RATEJ
</TABLE>
A ANNUALIZED
B NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
C INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN
CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
F FROM NOVEMBER 17, 1987 (COMMENCEMENT OF OPERATIONS) TO OCTOBER
31, 1988.
G TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED AND DO NOT INCLUDE THE ONE TIME SALES CHARGE.
H EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF
POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL
DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
I FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
J FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED
PER-SHARE
DATA AND
RATIOS
YEARS ENDED 1997 1996 1995 1994E 1993 1992 1991D
OCTOBER 31
NET ASSET $ 16.61 $ 15.14 $ 19.25 $ 16.18 $ 11.05 $ 10.40 $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET .15C .12 C .05 .06 .06C .08 .12
INVESTMENT
INCOME
NET (6.17) 1.60 (4.13) 2.97 5.28 .76 .30
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL (6.02) 1.72 (4.08) 3.03 5.34 .84 .42
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTION
S
FROM NET (.13) (.18) (.04) (.04) (.08) (.08) (.04)
INVESTMENT
INCOME
IN EXCESS (.12) (.09) -- (.01) -- -- --
OF NET
INVESTMENT
INCOME
FROM NET -- -- -- -- (.15) (.14) --
REALIZED
GAIN
TOTAL (.25) (.27) (.04) (.05) (.23) (.22) (.04)
DISTRIBUTIONS
REDEMPTIO .01 .02 .01 .09 .02 .03 .02
N FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 10.35 $ 16.61 $ 15.14 $ 19.25 $ 16.18 $ 11.05 $ 10.40
VALUE, END
OF PERIOD
TOTAL (36.74)% 11.69% (21.17)% 19.32% 49.58% 8.56% 4.41%
RETURNA,F
NET ASSETS, $ 499,168 $ 1,263,164 $ 1,095,583 $ 1,976,371 $ 757,737 $ 13,732 $ 6,450
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.36% 1.30% 1.28% 1.52% 1.91% 2.60%B 2.60%B
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.35%G 1.29%G 1.28% 1.52% 1.91% 2.60% 2.60%
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET .89% .74% .46% .39% .44% .90% 1.34%
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
PORTFOLIO 69% 77% 78% 107% 57% 159% 45%
TURNOVER
RATE
AVERAGE $ .0020 $ .0017
COMMISSIO
N RATEH
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D FROM NOVEMBER 1, 1990 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31,
1991.
E EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF
POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL
DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
F THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
EUROPE FUND
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED
PER-SHARE
DATA AND
RATIOS
YEARS ENDED
1997 1996 1995 1994G 1993 1992D 1991 1990 1989 1988
OCTOBER 31
NET ASSET
$ 27.12 $ 23.51 $ 21.18 $ 18.43 $ 15.12 $ 15.93 $ 16.28 $ 15.04 $ 12.96 $ 12.09
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET
.44I .30I .27 .18 .25 .27 .43F .46 .25H .12
INVESTMENT
INCOME
NET
5.44 4.23 2.37 2.65 3.35 (.57) (.40) .97 2.11 .75
REALIZED AND
UNREALIZED
GAIN (LOSS)
TOTAL
5.88 4.53 2.64 2.83 3.60 (.30) .03 1.43 2.36 .87
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTION
S
FROM NET
(.24) (.12) (.20) (.08) (.29) (.48) (.35) (.19) (.24) --
INVESTMENT
INCOME
FROM NET
(1.73) (.81) (.11) -- -- (.03)B (.03)B -- (.04)B --
REALIZED
GAIN
TOTAL
(1.97) (.93) (.31) (.08) (.29) (.51) (.38) (.19) (.28) --
DISTRIBUTIONS
REDEMPTIO
.02 .01 -- -- -- -- -- -- -- --
N FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET
$ 31.05 $ 27.12 $ 23.51 $ 21.18 $ 18.43 $ 15.12 $ 15.93 $ 16.28 $ 15.04 $ 12.96
VALUE, END
OF PERIOD
TOTAL
23.35% 20.14% 12.76% 15.41% 24.24% (1.89)% .15% 9.50% 18.62% 7.20%
RETURNC,E
NET ASSETS,
$ 916,108 $ 691,762 $ 492,867 $ 507,460 $ 528,929 $ 431,223 $ 297,831 $ 389,273 $ 97,288 $ 102,029
END OF
PERIOD
(000
OMITTED)
RATIO OF
1.19% 1.27% 1.18%H 1.35% 1.25% 1.22% 1.31% 1.45% 1.89%H 2.66%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF
1.18%J 1.27% 1.18% 1.35% 1.25% 1.22% 1.31% 1.45% 1.89% 2.66%
EXPENSES TO
AVERAGE NET
ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET
1.53% 1.20% 1.12% .85% 1.44% 2.38% 2.83% 2.87% 1.67% .97%
INVESTMENT
INCOME TO
AVERAGE
NET ASSETS
PORTFOLIO
57% 45% 38% 49% 76% 95% 80% 148% 160% 180%
TURNOVER
RATE
AVERAGE
$ .0344 $ .0299
COMMISSIO
N RATEA
</TABLE>
A FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
B INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN
CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
D AS OF NOVEMBER 1, 1991, THE FUND DISCONTINUED THE USE OF
EQUALIZATION ACCOUNTING.
E THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
F INCLUDES $.05 PER SHARE FROM RECOVERY OF FOREIGN TAXES PREVIOUSLY
WITHHELD ON DIVIDEND AND INTEREST PAYMENTS.
G EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF
POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL
DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
H FMR OR FSC 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.
I NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
J FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
EUROPE CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SELECTED
PER-SHARE
DATA AND
RATIOS
YEARS ENDED 1997 1996 1995 1994B
OCTOBER 31
NET ASSET $ 14.07 $ 12.08 $ 11.35 $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET .20E .22 H .23 .08E
INVESTMENT
INCOME
NET 3.81 2.00 .50 1.27
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL 4.01 2.22 .73 1.35
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET (.23) (.23) -- --
INVESTMENT
INCOME
FROM NET (1.29) -- -- --
REALIZED
GAIN
TOTAL (1.52) (.23) -- --
DISTRIBUTIONS
REDEMPTIO .01 -- -- --
N FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 16.57 $ 14.07 $ 12.08 $ 11.35
VALUE, END
OF PERIOD
TOTAL 31.57% 18.74% 6.43% 13.50%
RETURNC,F
NET ASSETS, $ 372,049 $ 170,192 $ 194,433 $ 352,855
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.10% 1.33% 1.36% 1.54%A
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.07% G 1.30%G 1.36% 1.54% A
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET 1.33% 1.66% 1.45% .79%A
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
PORTFOLIO 189% 155% 176% 317%A
TURNOVER
RATE
AVERAGE $ .0254 $ .0245
COMMISSIO
N RATED
</TABLE>
A ANNUALIZED
B DECEMBER 21, 1993 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31,
1994.
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED AND DO NOT INCLUDE THE ONE TIME SALES CHARGE.
D FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
E NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
F THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
H INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.04 PER SHARE.
FRANCE FUND
SELECTED
PER-SHARE
DATA AND
RATIOS
YEARS ENDED 1997 1996E
OCTOBER 31
NET ASSET $ 12.24 $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET .10F .23
INVESTMENT
INCOME
NET 1.66 1.98
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL 1.76 2.21
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET (.16) (.04)
INVESTMENT
INCOME
FROM NET (.61) --
REALIZED
GAIN
TOTAL (.77) (.04)
DISTRIBUTIONS
REDEMPTIO .04 .07
N FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 13.27 $ 12.24
VALUE, END
OF PERIOD
TOTAL 15.63% 22.89%
RETURNA,B
NET ASSETS, $ 5,578 $ 5,542
END OF
PERIOD
(000
OMITTED)
RATIO OF 2.00%C 2.00%C
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF NET .78% 1.74%
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
PORTFOLIO 150% 129%
TURNOVER
RATE
AVERAGE $ .1749 $ .1932
COMMISSIO
N RATED
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
D A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER
SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES
AND COMMISSION RATE STRUCTURES MAY DIFFER.
E FROM NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31,
1996.
F NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
GERMANY FUND
SELECTED
PER-SHARE
DATA AND
RATIOS
YEARS ENDED 1997 1996E
OCTOBER 31
NET ASSET $ 11.34 $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET (.02)F .01
INVESTMENT
INCOME
(LOSS)
NET 2.21 1.31
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL 2.19 1.32
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET (.01) --
INVESTMENT
INCOME
FROM NET (.35) --
REALIZED
GAIN
TOTAL (.36) --
DISTRIBUTIONS
REDEMPTIO .07 .02
N FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 13.24 $ 11.34
VALUE, END
OF PERIOD
TOTAL 20.47% 13.40%
RETURNA,B
NET ASSETS, $ 12,732 $ 7,178
END OF
PERIOD
(000
OMITTED)
RATIO OF 2.00%C 2.00%C
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF NET (.18)% .12%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE NET
ASSETS
PORTFOLIO 120% 133%
TURNOVER
RATE
AVERAGE $ .1517 $ .1714
COMMISSIO
N RATED
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
D A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER
SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES
AND COMMISSION RATE STRUCTURES MAY DIFFER.
E FROM NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31,
1996.
F NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
HONG KONG AND CHINA FUND
SELECTED
PER-SHARE
DATA AND
RATIOS
YEARS ENDED 1997 1996C
OCTOBER 31
NET ASSET $ 12.97 $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET .17 .29
INVESTMENT
INCOMED
NET (1.95) 2.64
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL (1.78) 2.93
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET (.14) (.01)
INVESTMENT
INCOME
FROM NET (.08) --
REALIZED
GAIN
TOTAL (.22) (.01)
DISTRIBUTIONS
REDEMPTIO .09 .05
N FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 11.06 $ 12.97
VALUE, END
OF PERIOD
TOTAL (13.36)% 29.83%
RETURNA
NET ASSETS, $ 177,416 $ 109,880
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.31% 1.62%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF NET 1.18% 2.53%
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
PORTFOLIO 174% 118%
TURNOVER
RATE
AVERAGE $ .0034 $ .0049
COMMISSIO
N RATEB
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER
SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES
AND COMMISSION RATE STRUCTURES MAY DIFFER.
C FROM NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31,
1996.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
JAPAN FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED
PER-SHARE
DATA AND
RATIOS
YEARS ENDED 1997 1996 1995 1994 G 1993 1992D
OCTOBER 31
NET ASSET $ 11.68 $ 12.08 $ 14.27 $ 13.35 $ 9.84 $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET (.06)E (.02) E (.02) (.04)E (.09) --
INVESTMENT
INCOME
(LOSS)
NET (.55) (.40) (1.89) 1.31 3.60 (.16)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
ON
INVESTMENTS
TOTAL (.61) (.42) (1.91) 1.27 3.51 (.16)
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET (.01) -- -- -- -- --
INVESTMENT
INCOME
FROM NET -- -- (.36) (.39) -- --
REALIZED
GAIN
TOTAL (.01) -- (.36) (.39) -- --
DISTRIBUTIONS
REDEMPTIO .04 .02 .08 .04 -- --
N FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 11.10 $ 11.68 $ 12.08 $ 14.27 $ 13.35 $ 9.84
VALUE, END
OF PERIOD
TOTAL (4.89)% (3.31)% (12.96)% 10.45% 35.67% (1.60)%
RETURNC,F
NET ASSETS, $ 255,555 $ 290,495 $ 343,981 $ 469,639 $ 118,195 $ 2,953
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.42% 1.15% 1.15% 1.42% 1.71% 2.00%A ,B
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.40%H 1.14%H 1.15% 1.42% 1.71% 2.00% A
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.54)% (.12)% (.06)% (.32)% (.77)% .03%A
INVESTMENT
INCOME
(LOSS) TO
AVERAGE NET
ASSETS
PORTFOLIO 70% 83% 86% 153% 257% --
TURNOVER
RATE
AVERAGE $ .0269 $ .0364
COMMISSIO
N RATEI
</TABLE>
A ANNUALIZED
B 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.
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED AND DO NOT INCLUDE THE ONE TIME SALES CHARGE.
D FROM SEPTEMBER 15, 1992 (COMMENCEMENT OF OPERATIONS) TO OCTOBER
31, 1992.
E NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
F THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
G EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF
POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL
DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
H FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
I FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
JAPAN SMALL COMPANIES FUND
SELECTED
PER-SHARE
DATA AND
RATIOS
YEARS ENDED 1997 1996D
OCTOBER 31
NET ASSET $ 9.13 $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET (.03) (.03)
INVESTMENT
INCOME
(LOSS)A
NET (2.63) (.87)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL (2.66) (.90)
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
IN EXCESS (.01)F --
OF NET
INVESTMENT
INCOME
FROM NET (.03)F --
REALIZED
GAIN
TOTAL (.04) --
DISTRIBUTIONS
REDEMPTIO .04 .03
N FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 6.47 $ 9.13
VALUE, END
OF PERIOD
TOTAL (28.80)% (8.70)%
RETURNB,G
NET ASSETS, $ 84,274 $ 105,664
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.35% 1.34%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.34%E 1.34%
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.46)% (.32)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE NET
ASSETS
PORTFOLIO 101% 66%
TURNOVER
RATE
AVERAGE $ .0511 $ .0578
COMMISSIO
N RATEC
A NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER
SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES
AND COMMISSION RATE STRUCTURES MAY DIFFER.
D FROM NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31,
1996.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
F THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO
BOOK TO TAX DIFFERENCES.
G THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
LATIN AMERICA FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SELECTED
PER-SHARE
DATA AND
RATIOS
YEARS ENDED 1997 1996 1995 1994D 1993C
OCTOBER 31
NET ASSET $ 12.59 $ 9.75 $ 16.21 $ 13.28 $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET .20G .22 .04 .07 .03
INVESTMENT
INCOME
NET 2.92 2.72 (6.52) 2.82 3.23
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL 3.12 2.94 (6.48) 2.89 3.26
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET (.23) (.12) -- (.05) --
INVESTMENT
INCOME
FROM NET -- -- -- (.05) --
REALIZED
GAIN
TOTAL (.23) (.12) -- (.10) --
DISTRIBUTIONS
REDEMPTIO .03 .02 .02 .14 .02
N FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 15.51 $ 12.59 $ 9.75 $ 16.21 $ 13.28
VALUE, END
OF PERIOD
TOTAL 25.42% 30.69% (39.85)% 22.89% 32.80%
RETURNB,H
NET ASSETS, $ 808,542 $ 557,889 $ 466,289 $ 888,530 $ 342,934
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.30% 1.32% 1.41% 1.48% 1.94%A
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.29%F 1.32% 1.41% 1.48% 1.94%A
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET 1.19% 1.48% .97% .47% 1.21%A
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
PORTFOLIO 64% 70% 57% 77% 72%A
TURNOVER
RATE
AVERAGE $ .0005 $ .0004
COMMISSIO
N RATEE
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED
AND DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C FROM APRIL 19, 1993 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31,
1993.
D EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF
POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL
DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
E FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
G NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
H THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
NORDIC FUND
SELECTED
PER-SHARE
DATA AND
RATIOS
YEARS ENDED 1997 1996E
OCTOBER 31
NET ASSET $ 12.77 $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET .10 .17F
INVESTMENT
INCOMEG
NET 3.19 2.57
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL 3.29 2.74
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET (.05) --
INVESTMENT
INCOME
FROM NET (.10) --
REALIZED
GAIN
TOTAL (.15) --
DISTRIBUTIONS
REDEMPTIO .03 .03
N FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 15.94 $ 12.77
VALUE, END
OF PERIOD
TOTAL 26.24% 27.70%
RETURNA,B
NET ASSETS, $ 73,278 $ 30,871
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.42% 2.00%C
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF NET .67% 1.52%
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
PORTFOLIO 74% 35%
TURNOVER
RATE
AVERAGE $ .0485 $ .0523
COMMISSIO
N RATED
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIOD SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
D A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER
SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES
AND COMMISSION RATE STRUCTURES MAY DIFFER.
EFROM NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31,
1996.
F INVESTMENT INCOME PER SHARE REFLECTS SPECIAL DIVIDENDS WHICH
AMOUNTED TO $.16 PER SHARE.
G NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
PACIFIC BASIN FUND
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED
PER-SHARE
DATA AND
RATIOS
YEARS ENDED
1997 1996 1995 1994A 1993 1992B 1991 1990 1989 1988
OCTOBER 31
NET ASSET
$ 14.65 $ 14.88 $ 19.96 $ 17.48 $ 12.00 $ 13.15 $ 12.89 $ 15.78 $ 13.99 $ 12.42
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET
(.01)D .05D .07D .10 .20 .08D .02D .12 (.027)D --D
INVESTMENT
INCOME
(LOSS)
NET
(1.16) (.29) (3.12) 2.78 5.39 (1.23) .40 (2.37) 1.927 1.71
REALIZED AND
UNREALIZED
GAIN (LOSS)
TOTAL
(1.17) (.24) (3.05) 2.88 5.59 (1.15) .42 (2.25) 1.900 1.71
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTION
S
FROM NET
(.01) -- -- (.01) (.11) -- (.16) (.01) (.003) --
INVESTMENT
INCOME
IN EXCESS
(.07) -- (.02) (.11) -- -- -- -- -- --
OF NET
INVESTMENT
INCOME
FROM NET
- -- -- (2.02) (.28) -- -- -- (.63) (.107)C (.14)C
REALIZED
GAIN
TOTAL
(.08) -- (2.04) (.40) (.11) -- (.16) (.64) (.110) (.14)
DISTRIBUTIONS
REDEMPTIO
.01 .01 .01 -- -- -- -- -- -- --
N FEE
ADDED TO
PAID IN
CAPITAL
NET ASSET
$ 13.41 $ 14.65 $ 14.88 $ 19.96 $ 17.48 $ 12.00 $ 13.15 $ 12.89 $ 15.78 $ 13.99
VALUE, END
OF PERIOD
TOTAL
(7.97)% (1.55)% (15.87)% 16.88% 47.06% (8.75)% 3.37% (14.99)% 13.65% 13.82%
RETURNE,H
NET ASSETS,
$ 239,517 $ 572,150 $ 317,635 $ 553,532 $ 493,533 $ 116,277 $ 95,051 $ 86,354 $ 111,811 $ 136,060
END OF
PERIOD
(000
OMITTED)
RATIO OF
1.32% 1.26% 1.32%I 1.54% 1.59% 1.84% 1.88% 1.59% 1.40% 1.80%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF
1.31%F 1.24%F 1.32% 1.54% 1.59% 1.84% 1.88% 1.59% 1.40% 1.80%
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET
(.04)% .30% .44% .04% .15% .65% .12% .88% (.18)% .04%
INVESTMENT
INCOME
(LOSS)
TO AVERAGE
NET ASSETS
PORTFOLIO
42% 85% 65% 88% 77% 105% 143% 118% 133% 228%
TURNOVER
RATE
AVERAGE $ .0204 $ .0151
COMMISSIO
N RATEG
</TABLE>
A EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF
POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL
DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
B AS OF NOVEMBER 1, 1991, THE FUND DISCONTINUED THE USE OF
EQUALIZATION ACCOUNTING.
C INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN
CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
H THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
I 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.
SOUTHEAST ASIA FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SELECTED
PER-SHARE
DATA AND
RATIOS
YEARS ENDED 1997 1996 1995 1994 F 1993D
OCTOBER 31
NET ASSET $ 14.69 $ 13.88 $ 14.61 $ 13.24 $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET .04I,J .14 I .15 .04 .01
INVESTMENT
INCOME
NET (4.62) .87 (.91) 1.23 3.22
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL (4.58) 1.01 (.76) 1.27 3.23
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTION
S
FROM NET (.10) (.23) -- (.04) --
INVESTMENT
INCOME
IN EXCESS (.07) -- -- (.03) --
OF NET
INVESTMENT
INCOME
FROM NET (.40) -- -- -- --
REALIZED
GAIN
TOTAL (.57) (.23) -- (.07) --
DISTRIBUTIONS
REDEMPTIO .01 .03 .03 .17 .01
N FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 9.55 $ 14.69 $ 13.88 $ 14.61 $ 13.24
VALUE, END
OF PERIOD
TOTAL (32.48)% 7.59% (5.00)% 10.87% 32.40%
RETURNB,C
NET ASSETS, $ 278,847 $ 755,346 $ 649,868 $ 825,734 $ 499,669
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.32% 1.13% 1.10% 1.47% 2.00%A ,E
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.32% 1.12%G 1.10% 1.47% 2.00%A
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET .22% .95% .90% .22% .45%A
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
PORTFOLIO 141% 102% 94% 157% 14%A
TURNOVER
RATE
AVERAGE $ .0063 $ .0129
COMMISSIO
N RATEH
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED
AND DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FROM APRIL 19, 1993 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31,
1993.
E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF
POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL
DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
I NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
J INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM SUN
HUNG KAI PROPERTIES LTD. WHICH AMOUNTED TO $.02 PER SHARE.
UNITED KINGDOM FUND
SELECTED
PER-SHARE
DATA AND
RATIOS
YEARS ENDED 1997 1996F
OCTOBER 31
NET ASSET $ 11.89 $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME
FROM
INVESTMENT
OPERATIONS
NET .31G .16
INVESTMENT
INCOME
NET 2.31 1.75
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL 2.62 1.91
FROM
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET (.13) (.04)
INVESTMENT
INCOME
FROM NET (.20) --
REALIZED
GAIN
TOTAL (.33) (.04)
DISTRIBUTIONS
REDEMPTIO .03 .02
N FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 14.21 $ 11.89
VALUE, END
OF PERIOD
TOTAL 22.87 19.38%
RETURNA,B
NET ASSETS, $ 5,709 $ 2,656
END OF
PERIOD
(000
OMITTED)
RATIO OF 2.00%C 2.00%C
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.99%D 1.97%D
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET 2.36% 1.62%
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
PORTFOLIO 96% 50%
TURNOVER
RATE
AVERAGE $ .0105 $ .0086
COMMISSIO
N RATEE
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
E A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER
SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES
AND COMMISSION RATE STRUCTURES MAY DIFFER.
F FROM NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31,
1996.
G NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN. The
total returns that follow are based on historical fund results and do
not reflect the effect of taxes.
Each fund's fiscal year runs from November 1 through October 31. The
tables below show each fund's performance over past fiscal years
compared to different measures, including a comparative index and a
competitive funds average. The charts on page present calendar year
performance.
<TABLE>
<CAPTION>
<S> <C> <C>
FISCAL YEARS ENDED OCTOBER 31 AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PAST 1 YEAR PAST 5 YEARS LIFE OF FUND PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
CANA 8.2 1 % 10.8 7 %H 11.2 5 %H 8. 21 % 67. 51 %H 189.1 6 %H
DA
FUNDB
CANA 4. 96 % 10.1 9 %H 10.9 1 %H 4. 96 % 62. 48 %H 180. 49 %H
DA
FUND
(LOAD
ADJ.A)
TORONT 18.18% 15.15% 11. 43 % 18.18% 102.44% 19 3 . 90 %
O
STOCK
EXCHA
NGE
INDEX
EMERG -36.74% -0.12% 1.72% -36.74% -0.59% 12.68%
ING
MARK
ETS
FUNDC
EMERG -38.63% -0.72% 1.28% -38.63% -3.57% 9.30%
ING
MARK
ETS
FUND
(LOAD
ADJ.A)
MSCI -8.48% 8.05% 14. 47 % -8.48% 47.25% 15 7 . 68 %
EMERG
ING
MARKE
TS FREE
INDEX
LIPPER 3.17 % 7.29 % N/A 3.17 % 44.17 % N/A
EMERG
ING
MARKE
TS
FUNDS
AVERA
GE
EUROP 23.35% 19.10%H 12.61%H,I 23.35% 139.61%H 227.80%H,I
E
FUND
EUROP 19.65% 18.37%H 12.26%H,I 19.65% 132.42%H 217.97%H,I
E
FUND
(LOAD
ADJ.A)
MSCI 26.30% 18.61% 13.61%I 26.30% 134.80% 258.32%I
EUROP
E
INDEX
LIPPER 20.38 % 17.72 % 9.83 %I 20.38 % 127.37 % 160.27 %I
EUROP
EAN
REGIO
N
FUNDS
AVERA
GE
EUROP 31.57% N/A 17.8 7 % 31.57% N/A 88.72%
E
CAPIT
AL
APPRE
CIATIO
N
FUND D
EUROP 27.62% N/A 16.9 4 % 27.62% N/A 83.06%
E
CAPITA
L
APPRE
CIATION
FUND
(LOAD
ADJ.A)
MSCI 26.30% N/A 16. 30 % 26.30% N/A 79. 18 %
EUROP
E
INDEX
LIPPER 20.38 % N/A N/A 20.38 % N/A N/A
EUROP
EAN
REGIO
N
FUNDS
AVERA
GE
FRANC 15.63%H N/A 19. 20 %H 15.63%H N/A 42.09%H
E
FUNDG
FRANC 12.16%H N/A 17. 40 %H 12.16%H N/A 37.83%H
E
FUND
(LOAD
ADJ.A)
SBF 12.83% N/A 15. 82 % 12.83% N/A 3 4 . 14 %
250
INDEX
LIPPER 20.38 % N/A N/A 20.38 % N/A N/A
EUROP
EAN
REGIO
N
FUNDS
AVERA
GE
GERM 20.47%H N/A 16.86%H 20.47%H N/A 36.62%H
ANY
FUND G
GERM 16.86%H N/A 15. 12 %H 16.86% N/A 32.52%H
ANY
FUND
(LOAD
ADJ.A)
DAX 21.04% N/A 1 7.36 % 21.04% N/A 3 7 . 73 %
100
INDEX
LIPPER 20.38 % N/A N/A 20.38 % N/A N/A
EUROP
EAN
REGIO
N
FUNDS
AVERA
GE
HONG -13. 36 % N/A 6. 06 % -13. 36 % N/A 12. 48 %
KONG
AND
CHINA
FUNDG
HONG -15. 96 % N/A 4.4 5 % -15. 96 % N/A 9. 11 %
KONG
AND
CHINA
FUND
(LOAD
ADJ.A)
HANG -12.53% N/A 7.26% -12.53% N/A 15. 05 %
SENG
INDEX
LIPPER -25.68 % N/A N/A -25.68 % N/A N/A
PACIFIC
EX-JAP
AN
FUNDS
AVERA
GE
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FISCAL YEARS ENDED OCTOBER 31 AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PAST 1 YEAR PAST 5 YEARS LIFE OF FUND PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
JAPAN -4.89% 3.71% 3.2 9 %H -4.89% 19.95% 18.04%H
FUNDE
JAPAN -7.74% 3.08% 2.67%H -7.74% 16.36% 14.49%H
FUND
(LOAD
ADJ.A)
TOPIX -21.48% 1.26% -0.1 2 % -21.48% 6.44% -0.6 3 %
INDEX
LIPPER -10.54 % 1.53% N/A -10.54 % 9.06% N/A
JAPAN
ESE
FUNDS
AVERA
GE
JAPAN -2 8.80 % N/A -19. 37 % -28. 80 % N/A -34. 99 %
SMALL
COMP
ANIES
FUNDG
JAPAN -30. 93 % N/A -20. 59 % -30. 93 % N/A -36. 9 4%
SMALL
COMP
ANIES
FUND
(LOAD
ADJ.A)
TOPIX -21.48% N/A -11. 12 % -21.48% N/A -21. 00 %
INDEX
LIPPER -10.54 % N/A N/A -10.54 % N/A N/A
JAPAN
ESE
FUNDS
AVERA
GE
LATIN 25. 42 % N/A 11.0 5 % 25. 42 % N/A 60. 88 %
AMERI
CA
FUNDF
LATIN 21. 65 % N/A 10.31% 21. 65 % N/A 56. 06 %
AMERI
CA
FUND
(LOAD
ADJ.A)
MSCI 24.05% N/A 15. 25 % 24.05% N/A 90.39 %
LATIN
AMERI
CA
FREE
INDEX
LIPPER 19.47% N/A N/A 19.47% N/A N/A
LATIN
AMERI
CAN
REGIO
N
FUNDS
AVERA
GE
NORDI 26. 24 % N/A 26.97%H 26.24% N/A 61. 2 0%H
C
FUND G
NORDI 22. 45 % N/A 2 5.05 %H 22. 45 % N/A 56. 37 %H
C
FUND
(LOAD
ADJ.A)
FT-A- 27.30% N/A 24. 68 % 27.30% N/A 5 5.44 %
NORDI
C
INDEX
LIPPER 20.38 % N/A N/A 20.38 % N/A N/A
EUROP
EAN
REGIO
N
FUNDS
AVERA
GE
PACIFIC -7.97% 5.55%H 3.12%H,I -7.97% 31.03%H 35.92%H,I
BASIN
FUND
PACIFIC -10.73% 4.91%H 2.80%H,I -10.73% 27.10%H 31.85%H,I
BASIN
FUND
(LOAD
ADJ.A)
MSCI -19.63% 3.64% 0.33%I -19.63% 19.60% 3.34%I
PACIFIC
INDEX
LIPPER -18.52 % 5.18 % 5.90 %I -18.52 % 29.45 % 84.05 %I
PACIFIC
REGIO
N
FUNDS
AVERA
GE
SOUTH -32.48% N/A 0.2 9 %H -32.48% N/A 1.30%H
EAST
ASIA
FUND F
SOUTH -34.51% N/A -0.39%H -34.51% N/A -1.74%H
EAST
ASIA
FUND
(LOAD
ADJ.A)
MSCI -34.59% N/A 1. 88 % -34.59% N/A 8.81 %
FAR
EAST
EX-JAP
AN
FREE
INDEX
LIPPER -25.68 % N/A N/A -25.68 % N/A N/A
PACIFIC
EX-JAP
AN
FUNDS
AVERA
GE
UNITE 22.87%H N/A 21. 11 %H 22.87%H N/A 46.68%H
D
KINGD
OM
FUNDG
UNITE 19.18%H N/A 19.2 8 %H 19.18%H N/A 42.28%H
D
KINGD
OM
FUND
(LOAD
ADJ.A)
FT-ALL 24.78% N/A 23. 49 % 24.78% N/A 52. 51 %
SHARES
INDEX
LIPPER 20.38 % N/A N/A 20.38 % N/A N/A
EUROP
EAN
REGIO
N
FUNDS
AVERA
GE
</TABLE>
A LOAD-ADJUSTED RETURNS INCLUDE THE EFFECT OF EACH FUND'S SALES
CHARGE.
B FROM NOVEMBER 17, 1987 (COMMENCEMENT OF OPERATIONS)
C FROM NOVEMBER 1, 1990 (COMMENCEMENT OF OPERATIONS)
D FROM DECEMBER 21, 1993 (COMMENCEMENT OF OPERATIONS)
E FROM SEPTEMBER 15, 1992 (COMMENCEMENT OF OPERATIONS)
F FROM APRIL 19, 1993 (COMMENCEMENT OF OPERATIONS)
G FROM NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS)
H IF FMR HAD NOT REIMBURSED CERTAIN FUND EXPENSES DURING THESE
PERIODS, TOTAL RETURNS WOULD HAVE BEEN LOWER.
I 10 YEAR RETURN
MYEAR-BY-YEAR TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CALENDAR 1988 1989 1990 1991 1992 1993 1994 1995 1996
YEARS
CANAD 19.47% 26.99% -5.49% 17.68% -2.87% 25.47% -11.98% 19.39% 15.96%
A FUND
TORONTO 21.01% 24.80% -14.82% 12.42% -10.39% 27.46% -5.88% 17.68% 27.74%
STOCK
EXCHAN
GE
(TSE)
300
CONSU 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
MER
PRICE
INDEX
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 0.0
ROW: 4, COL: 1, VALUE: 19.47
ROW: 5, COL: 1, VALUE: 26.99
ROW: 6, COL: 1, VALUE: -5.49
ROW: 7, COL: 1, VALUE: 17.68
ROW: 8, COL: 1, VALUE: -2.87
ROW: 9, COL: 1, VALUE: 25.47
ROW: 10, COL: 1, VALUE: -11.98
ROW: 11, COL: 1, VALUE: 19.39
ROW: 12, COL: 1, VALUE: 15.96
(LARGE SOLID BOX) CANADA FUND
NYEAR-BY-YEAR TOTAL RETURNS
CALENDAR 1991 1992 1993 1994 1995 1996
YEARS
EMERGI 6.76% 5.85% 81.76% -17.93% -3.18% 10.00%
NG
MARKET
S FUND
MSCI 60.16% 11.56% 73.21% -7.32% -5.21% 6.03%
EMERGI
NG
MARKET
S FREE
INDEX
LIPPER 15.06% 0.18% 72.17% -9.62% -4.59% 11.21%
EMERGI
NG
MARKET
S
FUNDS
AVG.
CONSU 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
MER
PRICE
INDEX
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 0.0
ROW: 4, COL: 1, VALUE: 0.0
ROW: 5, COL: 1, VALUE: 0.0
ROW: 6, COL: 1, VALUE: 0.0
ROW: 7, COL: 1, VALUE: 6.76
ROW: 8, COL: 1, VALUE: 5.85
ROW: 9, COL: 1, VALUE: 81.76000000000001
ROW: 10, COL: 1, VALUE: -17.93
ROW: 11, COL: 1, VALUE: -3.18
ROW: 12, COL: 1, VALUE: 10.0
(LARGE SOLID BOX) EMERGING MARKETS FUND
OYEAR-BY-YEAR TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CALENDAR 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
YEARS
EUROPE 14.90% 5.84% 32.33% -4.59% 4.16% -2.52% 27.16% 6.26% 18.84% 25.63%
FUND
MSCI 3.67% 15.82% 28.50% -3.84% 13.11% -4.71% 29.28% 2.28% 21.62% 21.09%
EUROPE
INDEX
LIPPER 17.12% 7.23% 25.22% -3.51% 6.60% -7.93% 25.76% 1.22% 16.85% 23.88%
EUROPE
AN
REGION
FUNDS
AVG.
CONSU 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
MER
PRICE
INDEX
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 14.9
ROW: 4, COL: 1, VALUE: 5.84
ROW: 5, COL: 1, VALUE: 32.33
ROW: 6, COL: 1, VALUE: -4.59
ROW: 7, COL: 1, VALUE: 4.159999999999999
ROW: 8, COL: 1, VALUE: -2.52
ROW: 9, COL: 1, VALUE: 27.16
ROW: 10, COL: 1, VALUE: 6.26
ROW: 11, COL: 1, VALUE: 18.84
ROW: 12, COL: 1, VALUE: 25.63
(LARGE SOLID BOX) EUROPE FUND
PYEAR-BY-YEAR TOTAL RETURNS
CALENDAR 1994 1995 1996
YEARS
EUROPE 6.88% 14.69% 25.89%
CAPITAL
APPRE
CIATION
FUND
MSCI 2.28% 21.62% 21.09%
EUROPE
INDEX
LIPPER 1.22% 16.85% 23.88%
EUROPE
AN
REGION
FUNDS
AVG.
CONSU 2.67% 2.54% 3.32%
MER
PRICE
INDEX
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 0.0
ROW: 4, COL: 1, VALUE: 0.0
ROW: 5, COL: 1, VALUE: 0.0
ROW: 6, COL: 1, VALUE: 0.0
ROW: 7, COL: 1, VALUE: 0.0
ROW: 8, COL: 1, VALUE: 0.0
ROW: 9, COL: 1, VALUE: 0.0
ROW: 10, COL: 1, VALUE: 6.88
ROW: 11, COL: 1, VALUE: 14.69
ROW: 12, COL: 1, VALUE: 25.89
(LARGE SOLID BOX) EUROPE CAPITAL
APPRECIATION FUND
QYEAR-BY-YEAR TOTAL RETURNS
CALENDAR 1996
YEARS
FRANCE 25.44%
FUND
SBF 22.85%
250
INDEX
LIPPER 23.88%
EUROPE
AN
REGION
FUNDS
AVG.
CONSU 3.32%
MER
PRICE
INDEX
RYEAR-BY-YEAR TOTAL RETURNS
CALENDAR 1996
YEARS
GERMA 18.45%
NY
FUND
DAX 16.65%
100
INDEX
LIPPER 23.88%
EUROPE
AN
REGION
FUNDS
AVG.
CONSU 3.32%
MER
PRICE
INDEX
SYEAR-BY-YEAR TOTAL RETURNS
CALENDAR 1996
YEARS
HONG 40.99%
KONG
AND
CHINA
FUND
HANG 37.50%
SENG
INDEX
LIPPER 11.11%
PACIFIC
EX-JAP
AN
FUNDS
AVG.
CONSU 3.32%
MER
PRICE
INDEX
TYEAR-BY-YEAR TOTAL RETURNS
CALENDAR 1993 1994 1995 1996
YEARS
JAPAN 20.45% 16.46% -2.13% -11.19%
FUND
TOKYO 24.14% 22.06% -1.62% -16.26%
STOCK
EXCHAN
GE
INDEX
(TOPIX
)
LIPPER 22.94% 15.39% -1.85% -11.98%
JAPANE
SE
FUNDS
AVG.
CONSU 2.75% 2.67% 2.54% 3.32%
MER
PRICE
INDEX
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 0.0
ROW: 4, COL: 1, VALUE: 0.0
ROW: 5, COL: 1, VALUE: 0.0
ROW: 6, COL: 1, VALUE: 0.0
ROW: 7, COL: 1, VALUE: 0.0
ROW: 8, COL: 1, VALUE: 0.0
ROW: 9, COL: 1, VALUE: 20.45
ROW: 10, COL: 1, VALUE: 16.46
ROW: 11, COL: 1, VALUE: -2.13
ROW: 12, COL: 1, VALUE: -11.19
(LARGE SOLID BOX) JAPAN FUND
UYEAR-BY-YEAR TOTAL RETURNS
CALENDAR 1996
YEARS
JAPAN -24.59%
SMALL
COMPA
NIES
FUND
TOKYO -16.26%
STOCK
EXCHAN
GE
INDEX
(TOPIX)
LIPPER -11.98%
JAPANE
SE
FUNDS
AVG.
CONSU 3.32%
MER
PRICE
INDEX
VYEAR-BY-YEAR TOTAL RETURNS
CALENDAR 1994 1995 1996
YEARS
LATIN -23.17% -16.46% 30.72%
AMERIC
A FUND
MSCI 0.64% -12.83% 22.21%
EMG.
MKTS.
FREE-LAT
IN
AMERIC
A INDEX
LIPPER -14.24% -20.56% 27.40%
LATIN
AMERIC
A
REGION
FUNDS
AVG.
CONSU 2.67% 2.54% 3.32%
MER
PRICE
INDEX
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 0.0
ROW: 4, COL: 1, VALUE: 0.0
ROW: 5, COL: 1, VALUE: 0.0
ROW: 6, COL: 1, VALUE: 0.0
ROW: 7, COL: 1, VALUE: 0.0
ROW: 8, COL: 1, VALUE: 0.0
ROW: 9, COL: 1, VALUE: 0.0
ROW: 10, COL: 1, VALUE: -23.17
ROW: 11, COL: 1, VALUE: -16.46
ROW: 12, COL: 1, VALUE: 30.72
(LARGE SOLID BOX) LATIN AMERICA FUND
WYEAR-BY-YEAR TOTAL RETURNS
CALENDAR YEARS 1996
NORDIC FUND 41.69%
FT-ACTUARIES WORLD NORDIC INDEX 34.03%
LIPPER EUROPEAN REGION FUNDS AVG. 23.88%
CONSUMER PRICE INDEX 3.32%
XYEAR-BY-YEAR TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CALENDAR 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
YEARS
PACIFIC 24.99% 10.45% 11.44% -27.21% 12.54% -7.62% 63.91% -2.81% -6.11% -2.76%
BASIN
FUND
MSCI 39.66% 34.99% 2.53% -34.42% 11.30% -18.40% 35.69% 12.83% 2.78% -8.58%
PACIFIC
INDEX
LIPPER 17.54% 21.34% 24.47% -16.05% 17.04% 1.14% 63.81% -12.45% 1.97% 4.10%
PACIFIC
REGION
FUNDS
AVG.
CONSU 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
MER
PRICE
INDEX
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 24.99
ROW: 4, COL: 1, VALUE: 10.45
ROW: 5, COL: 1, VALUE: 11.44
ROW: 6, COL: 1, VALUE: -27.21
ROW: 7, COL: 1, VALUE: 12.54
ROW: 8, COL: 1, VALUE: -7.619999999999999
ROW: 9, COL: 1, VALUE: 63.91
ROW: 10, COL: 1, VALUE: -2.81
ROW: 11, COL: 1, VALUE: -6.109999999999999
ROW: 12, COL: 1, VALUE: -2.76
(LARGE SOLID BOX) PACIFIC BASIN FUND
YYEAR-BY-YEAR TOTAL RETURNS
CALENDAR 1994 1995 1996
YEARS
SOUTHE -21.76% 12.18% 10.16%
AST
ASIA
FUND
MSCI -17.48% 8.84% 11.14%
FAR
EAST EX
JAPAN
FREE
INDEX
LIPPER -19.14% 1.95% 11.11%
PACIFIC
EX-JAP
AN
FUNDS
AVG.
CONSU 2.67% 2.54% 3.32%
MER
PRICE
INDEX
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 0.0
ROW: 4, COL: 1, VALUE: 0.0
ROW: 5, COL: 1, VALUE: 0.0
ROW: 6, COL: 1, VALUE: 0.0
ROW: 7, COL: 1, VALUE: 0.0
ROW: 8, COL: 1, VALUE: 0.0
ROW: 9, COL: 1, VALUE: 0.0
ROW: 10, COL: 1, VALUE: -21.76
ROW: 11, COL: 1, VALUE: 12.18
ROW: 12, COL: 1, VALUE: 10.16
(LARGE SOLID BOX) SOUTHEAST ASIA FUND
ZYEAR-BY-YEAR TOTAL RETURNS
CALENDAR 1996
YEARS
UNITED 28.61%
KINGDO
M
FUND
FT-ALL 28.58%
SHARES
INDEX
LIPPER 23.88%
EUROPE
AN
REGION
FUNDS
AVG.
CONSU 3.32%
MER
PRICE
INDEX
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated
period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate
of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the
entire period. Average annual total returns smooth out variations in
performance; they are not the same as actual year-by-year results.
TORONTO STOCK EXCHANGE (TSE) 300 is a market capitalization weighted
index of 300 stocks traded in the Canadian market.
MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS FREE INDEX is
an unmanaged, market capitalization weighted index that is designed to
represent the performance of emerging stock markets throughout the
world. As of October 31, 1997, the index included over 850 equity
securities of companies domiciled in 22 countries.
MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE INDEX is an unmanaged,
market capitalization weighted index that is designed to represent the
performance of developed stock markets in Europe. As of October 31,
1997, the index included over 550 equity securities of companies
domiciled in 14 European countries.
SOCIETE DES BOURSES FRANCAISES (SBF) 250 is a market capitalization
weighted index of the stocks of the 250 largest companies in the
French market.
DEUTSCHER AKTEININDEX (DAX) 100 is a market capitalization weighted
index of the 100 most heavily traded stocks in the German market.
HANG SENG INDEX is a market capitalization weighted index of the
stocks of the 33 largest companies in the Hong Kong market.
TOKYO STOCK EXCHANGE INDEX (TOPIX) is a market capitalization weighted
index of over 1100 stocks traded in the Japanese market.
MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS FREE - LATIN
AMERICA INDEX is a market capitalization weighted index of
approximately 170 stocks traded in seven Latin American markets.
FT - ACTUARIES WORLD NORDIC INDEX is a market capitalization weighted
index of over 90 stocks traded in four Scandinavian markets.
MORGAN STANLEY CAPITAL INTERNATIONAL PACIFIC INDEX is a market
capitalization weighted index of over 400 stocks traded in six
Pacific-region markets.
MORGAN STANLEY CAPITAL INTERNATIONAL FAR EAST EX JAPAN FREE INDEX is a
market capitalization weighted index of over 450 stocks traded in
eight Asian markets, excluding Japan.
FT - ALL SHARES INDEX is a market capitalization weighted index of
over 750 stocks traded in the U.K. market.
Unlike each fund's returns, the total returns of each comparative
index do not include the effect of any brokerage commissions,
transaction fees, or other costs of investing.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. Government.
THE COMPETITIVE FUNDS AVERAGES reflect the performance of mutual funds
with similar investment objectives. These averages, published by
Lipper Analytical Services, Inc., exclude the effect of sales loads.
(small solid bullet) Emerging Markets Fund is compared to the Lipper
Emerging Markets Funds Average, which reflects the performance of
117 funds investing in emerging markets.
(small solid bullet) Europe Fund, Europe Capital Appreciation Fund,
France Fund, Germany Fund, Nordic Fund and United Kingdom Fund are
compared to the Lipper European Region Funds Average, which reflects
the performance of 68 funds investing in Europe.
(small solid bullet) Hong Kong and China Fund and Southeast Asia Fund
are compared to the Lipper Pacific ex-Japan Funds Average, which
reflects the performance of 76 funds investing in the Pacific
region excluding Japan.
(small solid bullet) Japan Fund and Japan Small Companies Fund are
compared to the Lipper Japanese Funds Average, which reflects the
performance of 31 funds investing in Japan.
(small solid bullet) Latin America Fund is compared to the Lipper
Latin American Region Funds Average, which reflects the performance of
34 funds investing in Latin America.
(small solid bullet) Pacific Basin Fund is compared to the Lipper
Pacific Region Funds Average, which reflects the performance of
41 funds investing in the Pacific region.
Other illustrations of equity fund performance may show moving
averages over specified periods.
The funds' recent strategies, performance, and holdings are detailed
twice a year in financial reports, which are sent to all shareholders.
For current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS ARE BASED ON PAST RESULTS AND ARE NOT AN INDICATION OF
FUTURE PERFORMANCE.
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 value of its currency
create these risks. Because these funds invest in
stocks, their performance is also related to
foreign stock markets. For these reasons an
international fund's performance may be more
volatile than that of a fund that invests exclusively
in the United States.
(checkmark)
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders'
money and invests it toward a specified goal. France Fund, Germany
Fund, Hong Kong and China Fund, Japan Small Companies Fund, Nordic
Fund, and United Kingdom Fund are currently non-diversified funds of
Fidelity Investment Trust and Canada Fund, Emerging Markets Fund,
Europe Fund, Europe Capital Appreciation Fund, Japan Fund, Latin
America Fund, Pacific Basin Fund, and Southeast Asia Fund are
currently diversified funds of Fidelity Investment Trust, an open-end
management investment company organized as a Massachusetts business
trust on April 20, 1984.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet periodically throughout the year to oversee the
funds' activities, review contractual arrangements with companies that
provide services to the funds, and review the funds' performance. The
trustees serve as trustees for other Fidelity funds. The majority of
trustees are not otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL SHAREHOLDER MEETINGS AND MAIL PROXY
MATERIALS. These meetings may be called to elect or remove trustees,
change fundamental policies, approve a management contract, or for
other purposes. Shareholders not attending these meetings are
encouraged to vote by proxy. Fidelity will mail proxy materials in
advance, including a voting card and information about the proposals
to be voted on. The number of votes you are entitled to is based upon
the dollar value of your investment.
FMR AND ITS AFFILIATES
The funds are managed by FMR, which handles their business affairs
and, with the assistance of foreign affiliates, chooses their
investments.
Affiliates assist FMR with foreign securities:
(small solid bullet) Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England, serves as a sub-adviser for all the funds.
(small solid bullet) Fidelity Management & Research Far East Inc. (FMR
Far East), in Tokyo, Japan, serves as a sub-adviser for all the funds.
(small solid bullet) Fidelity International Investment Advisors
(FIIA), in Pembroke, Bermuda, serves as a sub-adviser for all the
funds. Currently, FIIA exercises discretionary management authority
over Southeast Asia Fund, Hong Kong and China Fund, Japan Fund, and
Pacific Basin Fund in its capacity as sub-adviser.
(small solid bullet) Fidelity International Investment Advisors (U.K.)
Limited (FIIA(U.K.)L), in Kent, England, serves as a sub-adviser for
all the funds. Currently, FIIA(U.K.)L exercises discretionary
management authority over Emerging Markets Fund, Europe Fund,
France Fund, Germany Fund, Nordic Fund, and United Kingdom Fund in its
capacity as sub-adviser.
(small solid bullet) Fidelity Investment Japan Ltd. (FIJ), in Tokyo,
Japan serves as a sub-adviser for Emerging Markets Fund, Hong Kong and
China Fund, Japan Fund, Japan Small Companies Fund, Pacific Basin Fund
and Southeast Asia Fund. Currently, FIJ exercises discretionary
management authority over Japan Small Companies Fund.
Thomas Sweeney is Vice President and manager of Canada, which he has
managed since March 1996. Previously, he managed other Fidelity funds.
Since joining Fidelity in 1985, Mr. Sweeney has worked as an analyst
and manager.
David Stewart is manager of Emerging Markets, which he has managed
since November 1997. Since joining Fidelity in 1994, Mr. Stewart has
worked as an analyst, portfolio manager and director for Fidelity
International Limited (FIL). Previously, he was an analyst with James
Capel, in London and Japan, from 1986 to 1994.
Sally Walden is Vice President and manager of Europe, which she has
managed since July 1992. She also manages various funds for Fidelity
International, Limited. Ms. Walden joined Fidelity in 1984.
Kevin McCarey is Vice President and manager of Europe Capital
Appreciation, which he has managed since December 1993. He also
manages another Fidelity fund. Since joining Fidelity in 1985, Mr.
McCarey has worked as an analyst and manager.
Renaud Saleur is manager of France, which he has managed since
November 1995. Previously, he managed other Fidelity funds. Since
joining Fidelity in 1986, Mr. Saleur has worked as a senior analyst
and manager.
Alexandra Edzard is manager of Germany, which she has managed since
September 1996. Ms. Edzard joined Fidelity International, Limited as
an analyst in 1994. Previously, she was an investment officer for
Deutsche Bank AG, in London, from 1991 to 1994.
Joseph Tse is manager of Hong Kong and China, which he has managed
since November 1995. He also manages various funds for Fidelity
International Investment Services, Limited. Since joining Fidelity in
1990, Mr. Tse has worked as an analyst and manager.
Shigeki Makino is Vice President and manager of Japan and Pacific
Basin, which he has managed since October 1994 and May 1996,
respectively. Since joining Fidelity in 1990, Mr. Makino has worked as
an analyst, manager, and interim research director.
Patricia Satterthwaite is Vice President and manager of Latin America,
which she has managed since April 1993. She also manages another
Fidelity fund. Since joining Fidelity in 1986, Ms. Satterthwaite has
worked as an analyst and manager.
Alexander Colin Stone is manager of Nordic, which he has managed since
November 1995. Since joining Fidelity in 1987, Mr. Stone has worked as
an analyst and manager.
Trygve Toraasen is associate portfolio manager of Nordic, which he has
managed since October 1997. Mr. Toraasen joined Fidelity in 1994 as a
research analyst, after receiving his MSBA from the University of
Southern California.
Kenichi Mizushita is manager of Japan Small Companies, which he has
managed since December 1996. He also manages several funds for
Fidelity International, Limited. Since joining Fidelity in 1985, Mr.
Mizushita has worked as a research analyst and manager.
FIDELITY FACTS
Fidelity offers the broadest selection of mutual
funds in the world.
(solid bullet) Number of Fidelity mutual funds: over 227
(solid bullet) Assets in Fidelity mutual funds: over
$ 510 billion
(solid bullet) Number of shareholder accounts: over
33 million
(solid bullet) Number of investment analysts and portfolio
managers: over 275
(checkmark)
Allan Liu is Vice President and manager of Southeast Asia, which he
has managed since April 1993. Since joining Fidelity in 1986, Mr. Liu
has worked as an analyst, manager, and associate director of Fidelity
Investments Management Ltd.
Simon Roberts is manager of United Kingdom, which he has managed since
July 1997. Previously, he managed another Fidelity fund. Since joining
Fidelity in 1992, Mr. Roberts has worked as a manager and analyst.
Previously, he was an investment analyst for Schroeder Securities
Limited from 1989 to 1992.
Fidelity investment personnel may invest in securities for their own
accounts pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
Fidelity Distributors Corporation (FDC) distributes and markets
Fidelity's funds and services.
Fidelity Service Company, Inc. (FSC) performs transfer agent servicing
functions for each fund.
FMR Corp. is the ultimate parent company of FMR, FMR U.K., and FMR Far
East. Members of the Edward C. Johnson 3d family are the predominant
owners of a class of shares of common stock representing approximately
49% of the voting power of FMR Corp. Under the Investment Company Act
of 1940 (the 1940 Act), control of a company is presumed where one
individual or group of individuals owns more than 25% of the voting
stock of that company; therefore, the Johnson family may be deemed
under the 1940 Act to form a controlling group with respect to FMR
Corp.
Fidelity International Limited (FIL), is the parent company of FIIA,
FIJ, and FIIA(U.K.)L. The Johnson family group also owns, directly or
indirectly, more than 25% of the voting common stock of FIL.
As of October 3 1 , 1997, approximately 25.45 %
and 25.46% of each of France Fund's and United Kingdom
Fund's total outstanding shares , respectively, w ere
held by an FMR affiliate.
FMR may use its broker-dealer affiliates and other firms that sell
fund shares to carry out a fund's transactions, provided that the fund
receives brokerage services and commission rates comparable to those
of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
The funds offer investors the ability to concentrate an investment in
a particular country or group of countries that they believe to offer
strong long-term growth potential. The country or group of countries
in which each fund focuses is the fund's "focal area." Each fund's
performance is expected to be closely tied to economic and political
conditions within its focal area. Because each fund invests in one
country or group of related countries, each fund's performance is
expected to be more volatile than more geographically diversified
funds. Changes in regulatory, tax, or economic policy in a country
could significantly affect the market in that country, and therefore a
fund's performance. Many foreign stock markets are more concentrated
than the U.S. market, with a small number of companies making up a
large percentage of the local market. As a result, the performance of
one company or a small number of companies could have a relatively
large effect on a fund's performance.
FMR determines where an issuer or its principal activities are
located by looking at such factors as its country of organization, the
primary trading market for its securities, and the location of its
assets, personnel, sales, and earnings.
The funds may invest in the securities of any issuer, including
companies and other business organizations as well as governments and
government agencies. The funds, however, expect to invest primarily in
equity securities, but may also invest in debt securities of any
quality.
The value of the funds' domestic and foreign investments varies in
response to many factors. Stock values fluctuate in response to the
activities of individual companies, and general market and economic
conditions. Investments in foreign securities may involve risks in
addition to those of U.S. investments, including increased political
and economic risk, as well as exposure to currency fluctuations.
International funds have increased economic and political risks as
they are exposed to events and factors in the various world markets.
These risks may be greater for funds that invest in emerging markets.
Also, because a substantial portion of the funds' investments are
denominated in foreign currencies, changes in the value of foreign
currencies can significantly affect a fund's share price. FMR may use
a variety of investment techniques to either increase or
decrease a fund's exposure to any currency.
FMR may use various investment techniques to hedge a portion of a
fund's risks, but there is no guarantee that these strategies will
work as FMR intends. Of course, when you sell your shares of a fund,
they may be worth more or less than what you paid for them.
FMR normally invests each fund's assets according to its investment
strategy. The funds may invest in short-term debt securities and money
market instruments for cash management purposes. Each fund also
reserves the right to invest without limitation in preferred stocks
and investment-grade debt instruments for temporary, defensive
purposes.
CANADA FUND seeks growth of capital over the long term by investing in
securities of issuers that have their principal activities in Canada
or are registered in Canadian markets. FMR normally invests at least
65% of the fund's total assets in these securities. The fund may also
invest in U.S. issuers.
Canadian securities are sensitive to conditions within Canada, but
also tend to follow the U.S. market. The country's economy relies
strongly on the production and processing of natural resources. Also,
the government has attempted to reduce restrictions against foreign
investment, and its recent trade agreements with the United States and
Mexico are expected to increase trade. Demand by many citizens in the
Province of Quebec for secession from Canada may significantly impact
the Canadian economy.
EMERGING MARKETS FUND seeks capital appreciation aggressively by
investing in securities of emerging markets issuers. FMR normally
invests at least 65% of the fund's total assets in these securities.
Countries with emerging markets include those that have an emerging
stock market as defined by the International Finance Corporation,
those with low- to middle- income economies according to the World
Bank, and those listed in World Bank publications as developing.
The fund normally diversifies its investments across different
countries. In allocating the fund's assets across countries, FMR will
consider the size of the market in each country relative to the size
of the markets in countries considered emerging markets as a whole.
FMR expects to emphasize countries with relatively low gross national
product per capita compared to the world's major economies, and
countries with the potential for rapid economic growth.
EUROPE FUND seeks growth of capital over the long term by investing in
securities of issuers that have their principal activities in Europe.
FMR normally invests at least 65% of the fund's total assets in these
securities.
The fund normally diversifies its investments across different
countries. In allocating the fund's assets across countries, FMR will
consider the size of the market in each country relative to the size
of the markets in Europe as a whole. FMR will also consider such
factors as the potential for economic growth, expected levels of
inflation, governmental policies, and the outlook for currency
relationships.
The fund's performance is closely tied to economic and political
conditions within Europe and the European Economic Area (formerly the
Common Market). Some European countries, particularly those in eastern
Europe, have less stable economies than those in western Europe. A
majority of the European economies continue to be weak, and business
and consumer confidence remains low. The movement of many eastern
European countries toward market economies, and the movement toward a
unified common market may significantly affect European economies and
markets. Eastern European countries are considered emerging markets.
EUROPE CAPITAL APPRECIATION FUND seeks capital appreciation over the
long term by investing in securities of issuers that have their
principal activities in Europe. FMR normally invests at least 65% of
the fund's total assets in these securities.
The fund normally diversifies its investments across different
countries. In allocating the fund's assets across countries, FMR will
consider the size of the market in each country relative to the size
of the markets in Europe as a whole.
The fund's investments are subject to the same risks as discussed for
Europe Fund.
FRANCE FUND seeks long-term growth of capital by investing in
securities of French issuers. FMR normally invests at least 65% of the
fund's total assets in these securities. The fund may also
invest in securities of other European issuers.
French commercial, corporate, and securities laws govern the sale and
resale of securities, while contractual and corporate restrictions may
also apply. Planned privatizations and possible government incentives
may result in major changes in the French market and increased
investments by private individuals. However, a future change in
government, market, or economic factors could result in an unfavorable
change in the policy on privatization. In addition, a small number of
companies represent a large percentage of the market.
GERMANY FUND seeks long-term growth of capital by investing in
securities of German issuers. FMR normally invests at least 65% of the
fund's total assets in these securities. The fund may also
invest in securities of other European issuers.
The German economy is still relatively weak, with year on year growth
at a little over 1% and inflation at historically low levels. German
key interest rates have been kept at historically low levels to
stimulate growth. In addition, a small number of companies represent a
large percentage of the market.
HONG KONG AND CHINA FUND seeks long-term growth of capital by
investing in securities of Hong Kong and Chinese issuers. FMR normally
invests at least 65% of the fund's total assets in these
securities . T he fund may also invest in securities of
other Southeast Asian issuers. Currently, the fund anticipates that
most of its investments will be in Hong Kong issuers. In the future,
more of its investments may be in shares of companies listed on
mainland Chinese exchanges.
Although China has committed by treaty to preserve the economic and
social freedoms enjoyed in Hong Kong for 50 years after regaining
control of Hong Kong in 1997, the continuation of the current form of
the economic system in Hong Kong will depend on the actions of the
government of China. Business confidence in Hong Kong, therefore, can
be significantly affected by such developments, which in turn can
affect markets and business performance. In addition, a small number
of companies represent a large percentage of the market. For example,
as of October 31 , 1997, Hong Kong & Shanghai Banking
Corporation (HSBC), the largest company traded in the Hong Kong
market, represented approximately 17 % of the market's total
capitalization, and the ten largest companies traded in the Hong Kong
market represented approximately 53 % of the market's
capitalization. As of October 31 , 1997, HSBC represented
approximately 18% of the fund's portfolio. Developments that could
negatively affect the value of the fund's investment in HSBC include,
among others, further interest rate deregulation, a decrease in
earnings from HSBC's overseas subsidiaries, and potential instability
in the Hong Kong real estate market. It is important to note that a
substantial portion of the companies listed on the Hong Kong Stock
Exchange are involved in real estate-related businesses. The
securities market in China is relatively new and China has yet to
develop comprehensive securities, corporate or commercial laws; or to
adhere to internationally accepted accounting principles. There is
greater risk of expropriation, naturalization, freezes, or
confiscation in China than in many other countries. Foreign ownership
limits exist on all securities.
JAPAN FUND seeks long-term growth of capital by investing in
securities of Japanese issuers. FMR normally invests at least 65% of
the fund's total assets in these securities. The fund may also
invest in securities of other Southeast Asian issuers.
Japan's economic growth has declined significantly since 1990. The
general government position has deteriorated as a result of weakening
economic growth and unsuccessful stimul us measures taken
to support economic activity and to restore financial stability.
Although the decline in interest rates and fiscal stimulus packages
have helped to contain recessionary forces, uncertainties remain.
Japan is also heavily dependent upon international trade, so its
economy is especially sensitive to trade barriers. In addition,
Japan's banking industry is undergoing problems related to bad loans
and declining values of real estate.
JAPAN SMALL COMPANIES FUND seeks long-term growth of capital by
investing in securities of Japanese issuers with small market
capitalizations. FMR normally invests at least 65% of the fund's total
assets in these securities. The fund may also invest in
securities of other Southeast Asian issuers or Japanese issuers with
larger market capitalizations.
FMR defines Japanese small market capitalization companies as those
with market capitalizations of 100 billion Yen (approximately US
$ 802 million as of October 31, 199 7 ) or less at the time
of the fund's investment. Companies whose capitalization exceeds 100
billion Yen after purchase will continue to be considered
small-capitalized for purposes of the 65% policy.
In addition to the risks associated with investing in Japan, investing
in small capitalization stocks may involve greater risk than investing
in medium and large capitalization stocks, because they can be subject
to more abrupt or erratic movements. Small capitalization companies
may have more limited product lines, markets, or financial resources.
LATIN AMERICA FUND seeks high total investment return by investing in
securities of Latin American issuers. FMR normally invests at least
65% of the fund's total assets in these securities. Latin America
includes Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru,
Panama, and Venezuela.
The fund normally diversifies its investments across different
countries. In allocating the fund's assets across countries, FMR will
consider the size of the market in each country relative to the size
of the markets in Latin America as a whole.
Although there has been significant improvement in some Latin American
economies, others continue to struggle with high interest and
inflation rates. Recovery will depend on stability of the Brazilian
Real , economic conditions in other countries and on world
commodity prices. This region is vulnerable to political instability.
The North American Free Trade Agreement will also continue to have a
significant impact on the region.
NORDIC FUND seeks long-term growth of capital by investing in
securities of Danish, Finnish, Norwegian, and Swedish issuers. FMR
normally invests at least 65% of the fund's total assets in these
securities. The fund may also invest in securities of other
European issuers.
The fund normally diversifies its investments across different
countries. In allocating the fund's assets across countries, FMR will
consider the size of the market in each country relative to the size
of the markets in the Nordic region as a whole.
The Nordic region is differentiated from the rest of Europe by its
high exposure to cyclical industries such as oil, shipping, and pulp
and paper. In addition, a small number of companies represent a large
percentage of each of the Danish, Finnish, Norwegian and Swedish
markets.
PACIFIC BASIN FUND seeks growth of capital over the long term by
investing in securities of issuers that have their principal
activities in the Pacific Basin. FMR normally invests at least 65% of
the fund's total assets in these securities. The Pacific Basin
includes Australia, Hong Kong, Indonesia, Japan, South Korea,
Malaysia, New Zealand, the People's Republic of China, the
Philippines, Singapore, Taiwan, and Thailand. The fund may also
invest in securities of issuers in other Asian countries.
The fund normally diversifies its investments across different
countries. In allocating the fund's assets across countries, FMR will
consider the size of the market in each country relative to the size
of the markets in the Pacific Basin as a whole. FMR will also consider
such factors as the potential for economic growth, expected levels of
inflation, governmental policies, and the outlook for currency
relationships.
Countries in the Pacific Basin are in various stages of economic
development - some are considered emerging markets - but each has
unique risks. Because the fund normally invests a significant
percentage of its assets in Japanese issuers, the Japanese market will
significantly impact the performance of the fund. Most countries in
the Pacific Basin are heavily dependent on international trade. Some
have prosperous economies, but are sensitive to world commodity
prices. Others are especially vulnerable to recession in other
countries. Some countries in the Pacific Basin have experienced rapid
growth, although many have immature financial sectors ,
economic problems, or archaic legal systems. The return of Hong Kong
to Chinese dominion will continue to affect the entire Pacific
Basin.
SOUTHEAST ASIA FUND seeks capital appreciation by investing in
securities of Southeast Asian issuers. FMR normally invests at least
65% of the fund's total assets in these securities. Southeast Asia
includes Hong Kong, Indonesia, South Korea, Malaysia, the Philippines,
the People's Republic of China, Singapore, Taiwan, and Thailand.
The fund may also invest in securities of other Asian and South
Pacific issuers, but the fund does not anticipate investing in Japan.
The fund normally diversifies its investments across different
countries. In allocating the fund's assets across countries, FMR will
consider the size of the market in each country relative to the size
of the markets in Southeast Asia as a whole.
The fund's investments are subject to the same risks as discussed for
Pacific Basin Fund.
UNITED KINGDOM FUND seeks long-term growth of capital by investing in
securities of British issuers. FMR normally invests at least 65% of
the fund's total assets in these securities. The fund may also
invest in securities of other European issuers.
The United Kingdom economy has shown signs of improvement, fueled by
consumer spending. Inflation may rise slightly if growth
continues to pick up over the coming year.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related
risks. Any restrictions listed supplement those discussed earlier in
this section. A complete listing of each fund's limitations and more
detailed information about each fund's investments are contained in a
fund's SAI. Policies and limitations are considered at the time of
purchase; the sale of instruments is not required in the event of a
subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these
techniques unless it believes that they are consistent with a fund's
investment objective and policies and that doing so will help a fund
achieve its goal. Fund holdings and recent investment strategies are
detailed in each fund's financial reports, which are sent to
shareholders twice a year. For a free SAI or financial report, call
1-800-544-8888.
EQUITY SECURITIES may include common stocks, preferred stocks,
convertible securities, and warrants. Common stocks, the most familiar
type, represent an equity (ownership) interest in a corporation.
Although equity securities have a history of long-term growth in
value, their prices fluctuate based on changes in a company's
financial condition and on overall market and economic conditions.
Smaller companies are especially sensitive to these factors.
RESTRICTIONS: With respect to 75% of its total assets, each of Canada
Fund, Emerging Markets Fund, Europe Fund, Europe Capital Appreciation
Fund, Japan Fund, Latin America Fund, Pacific Basin Fund, and
Southeast Asia Fund may not purchase more than 10% of the outstanding
voting securities of a single issuer. This limitation does not apply
to securities of other investment companies.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers
to borrow money from investors. The issuer generally pays the investor
a fixed, variable, or floating rate of interest, and must repay the
amount borrowed at maturity. Some debt securities, such as zero coupon
bonds, do not pay current interest, but are sold at a discount from
their face values.
Debt securities have varying levels of sensitivity to changes in
interest rates and varying degrees of credit quality. In general, bond
prices rise when interest rates fall, and fall when interest rates
rise. Longer-term bonds and zero coupon bonds are generally more
sensitive to interest rate changes.
Lower-quality debt securities (sometimes called "junk bonds") are
considered to have speculative characteristics, and involve greater
risk of default or price changes due to changes in the issuer's
creditworthiness, or they may already be in default. The market prices
of these securities may fluctuate more than higher-quality securities
and may decline significantly in periods of general or regional
economic difficulty.
The table on page provides a summary of ratings
assigned to debt holdings (not including money market instruments) in
the funds' portfolios. These figures are dollar-weighted averages of
month-end portfolio holdings during the fiscal year ended October
1997, and are presented as a percentage of total security investments.
These percentages are historical and do not necessarily indicate a
fund's current or future debt holdings.
RESTRICTIONS: Purchase of a debt security is consistent with a fund's
debt quality policy if it is rated at or above the stated level by
Moody's or rated in the equivalent categories by S&P, or is unrated
but judged to be of equivalent quality by FMR. Each fund currently
intends to limit its investments in lower than Baa-quality debt
securities to less than 35% of its assets.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies,
and securities issued by U.S. entities with substantial foreign
operations may involve additional risks and considerations. These
include risks relating to political , economic , or
regulatory conditions in foreign countries, fluctuations in
foreign currencies, withholding or other taxes, operational risks, and
the potentially less stringent investor protection and disclosure
standards of foreign markets. Additionally, governmental issuers of
foreign debt securities may be unwilling to pay interest and repay
principal when due and may require that the conditions for payment be
renegotiated. All of these factors can make foreign investments,
especially those in emerging markets, more volatile and
potentially less liquid than U.S. investments.
EXPOSURE TO EMERGING MARKETS. Investing in emerging markets involves
risks in addition to and greater than those generally
associated with investing in developed foreign markets . The
extent of economic development ; political stability ;
market depth , infrastructure, and capitalization; and regulatory
oversight is generally less than in more developed markets.
Emerging market economies may be subject to greater social,
economic, regulatory, and political uncertainties. All of these
factors generally make emerging market securities more volatile
and potentially less liquid than securities issued in more
developed markets .
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a
security at one price and simultaneously agrees to sell it back at a
higher price. Delays or losses could result if the other party to the
agreement defaults or becomes insolvent.
FOREIGN REPURCHASE AGREEMENTS may be less well secured than U.S.
repurchase agreements, and may be denominated in foreign currencies.
They also may involve greater risk of loss if the counterparty
defaults. Some counterparties in these transactions may be less
creditworthy than those in U.S. markets.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices,
interest rates, currency exchange rates, commodity prices, or other
factors that affect security values. These techniques may involve
derivative transactions such as buying and selling options and futures
contracts, entering into currency exchange contracts or swap
agreements, and purchasing indexed securities.
FMR can use these practices to adjust the risk and return
characteristics of a fund's portfolio of investments. If FMR judges
market conditions incorrectly or employs a strategy that does not
correlate well with a fund's investments, these techniques could
result in a loss, regardless of whether the intent was to reduce risk
or increase return. These techniques may increase the volatility of a
fund and may involve a small investment of cash relative to the
magnitude of the risk assumed. In addition, these techniques could
result in a loss if the counterparty to the transaction does not
perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other
borrower. They have additional risks beyond conventional debt
securities because they may entail less legal protection for a fund,
or there may be a requirement that the fund supply additional cash to
a borrower on demand.
FISCAL YEAR ENDED OCTOBER 1997 DEBT HOLDINGS (AS A % OF
INVESTMENTS), BY RATING
S&P RATING AA Emerging Europe Hong Kong Japan Small Latin
Pacific Southeast United
(Average of total Canada Markets Europe Capital Appre- France
Germany and China Japan Companies America Nordic Basin Asia Kingdom
investments) Fund Fund Fund ciation Fund Fund Fund Fund Fund
Fund Fund Fund Fund Fund Fund
INVESTMENT GRADE
Highest quality AAA
High quality AA -- -- -- -- -- -- -- 1.22% -- -- -- 1.12% -- --
Upper-medium grade A
Medium grade BBB -- -- -- -- -- -- -- -- -- -- -- -- -- --
LOWER QUALITY
Moderately speculative BB -- -- -- -- -- -- -- -- -- -- -- -- -- --
Speculative B -- -- -- -- -- -- -- -- -- -- -- -- -- --
Highly speculative CCC -- -- -- -- -- -- -- -- -- -- -- -- -- --
Poor quality CC
Lowest quality, no interest C -- -- -- -- -- -- -- -- -- -- -- --
- -- --
In default, in arrears D -- -- -- -- -- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- 1.22% -- -- -- 1.12% -- --
MOODY'S RATING AB Emerging Europe Hong Kong Japan Small Latin
Pacific Southeast United
(Average of total Canada Markets Europe Capital Appre- France
Germany and China Japan Companies America Nordic Basin Asia Kingdom
investments) Fund Fund Fund ciation Fund Fund Fund Fund Fund Fund
Fund Fund Fund Fund Fund
INVESTMENT GRADE
Highest quality Aaa
High quality Aa -- -- -- -- 1.09% -- -- 1.22% -- -- -- 1.12% -- --
Upper-medium grade A
Medium grade Baa -- -- -- -- -- -- -- -- -- -- -- -- -- --
LOWER QUALITY
Moderately speculative Ba -- -- -- -- -- -- -- -- -- -- -- -- -- --
Speculative B -- -- -- -- -- -- -- -- -- -- -- -- -- --
Highly speculative Caa -- -- -- -- -- -- -- -- -- -- -- -- -- --
Poor quality Ca
Lowest quality, no interest C -- -- -- -- -- -- -- -- -- -- -- --
- -- --
In default, in arrears --- -- -- -- -- -- -- -- -- -- -- -- -- --
- --
-- -- -- -- 1.09% -- -- 1.22% -- -- -- 1.12% -- --
REFER TO THE FUNDS' SAI FOR A MORE COMPLETE DISCUSSION OF THESE
RATINGS.
THE FUNDS DO NOT NECESSARILY RELY ON THE RATINGS OF MOODY'S OR S&P
TO DETERMINE COMPLIANCE WITH THEIR DEBT QUALITY POLICIES. SECURITIES
NOT RATED BY MOODY'S OR S&P AMOUNTED TO .03%, 1.56%
.01%, .02%, 3.25%, .17% AND .01% OF CANADA FUND'S, EMERGING MARKETS
FUND'S, EUROPE FUND'S, EUROPE CAPITAL APPRECIATION FUND'S,FRANCE
FUND'S, JAPAN SMALL COMPANIES FUND'S, AND
SOUTHEAST ASIA FUND'S INVESTMENTS, RESPECTIVELY. THESE PERCENTAGES
MAY INCLUDE SECURITIES RATED BY OTHER NATIONALLY RECOGNIZED
STATISTICAL RATING ORGANIZATIONS, AS WELL AS UNRATED SECURITIES.
UNRATED LOWER-QUALITY SECURITIES AMOUNTED TO .03%, 1.56%, .01%
.02%, 3.25%, .17% AND .01% OF CANADA FUND'S, EMERGING MARKETS FUND'S,
EUROPE FUND'S, EUROPE CAPITAL APPRECIATION
FUND'S,FRANCE FUND'S, JAPAN SMALL COMPANIES FUND'S, AND SOUTHEAST
ASIA FUND'S INVESTMENTS, RESPECTIVELY.
FOR FOREIGN GOVERNMENT SECURITIES NOT INDIVIDUALLY RATED BY A
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION, FMR ASSIGNS THE
RATING OF THE SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined
by FMR, under the supervision of the Board of Trustees, to be
illiquid, which means that they may be difficult to sell promptly at
an acceptable price. The sale of some illiquid securities and some
other securities may be subject to legal restrictions. Difficulty in
selling securities may result in a loss or may be costly to a fund.
RESTRICTIONS: Each fund may not purchase a security if, as a result,
more than 15% of its assets would be invested in illiquid securities.
OTHER INSTRUMENTS may include securities of closed-end investment
companies and real estate-related instruments.
CASH MANAGEMENT. A fund may invest in money market securities, in
repurchase agreements, and in a money market fund available only to
funds and accounts managed by FMR or its affiliates, whose goal is to
seek a high level of current income while maintaining a stable $1.00
share price. A major change in interest rates or a default on the
money market fund's investments could cause its share price to change.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce
the risks of investing. This may include limiting the amount of money
invested in any one issuer or, on a broader scale, in any one
industry. A fund that is not diversified may be more sensitive to
changes in the market value of a single issuer or industry.
RESTRICTIONS: With respect to 75% of its total assets, each of Canada
Fund, Emerging Markets Fund, Europe Fund, Europe Capital Appreciation
Fund, Japan Fund, Latin America Fund, Pacific Basin Fund, and
Southeast Asia Fund may not purchase a security if, as a result, more
than 5% would be invested in the securities of any issuer. This
limitation does not apply to U.S. Government securities or to
securities of other investment companies.
France Fund, Germany Fund, Hong Kong and China Fund, Japan Small
Companies Fund, Nordic Fund, and United Kingdom Fund are considered
non-diversified. Generally, to meet federal tax requirements at the
close of each quarter, each fund does not invest more than 25% of its
total assets in any issuer and, with respect to 50% of total assets,
does not invest more than 5% of its total assets in any issuer. These
limitations do not apply to U.S. Government securities or to
securities of other investment companies.
Each fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government
securities.
BORROWING. Each fund may borrow from banks or from other funds advised
by FMR, or through reverse repurchase agreements. If a fund borrows
money, its share price may be subject to greater fluctuation until the
borrowing is paid off. If a fund makes additional investments while
borrowings are outstanding, this may be considered a form of leverage.
RESTRICTIONS: Each fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
LENDING securities to broker-dealers and institutions, including
Fidelity Brokerage Services, Inc. (FBSI), an affiliate of FMR, is a
means of earning income. This practice could result in a loss or a
delay in recovering a fund's securities. A fund may also lend money to
other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 331/3% of a
fund's total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages
are fundamental, that is, subject to change only by shareholder
approval. The following paragraphs restate all those that are
fundamental. All policies stated throughout this prospectus, other
than those identified in the following paragraphs, can be changed
without shareholder approval.
CANADA FUND seeks growth of capital over the long term through
investments in securities of issuers that have their principal
activities in Canada or are registered in Canadian markets.
EMERGING MARKETS FUND seeks capital appreciation.
EUROPE FUND seeks growth of capital over the long-term through
investments in securities of issuers that have their principal
activities in Europe.
EUROPE CAPITAL APPRECIATION FUND seeks long-term capital appreciation.
FRANCE FUND seeks long-term growth of capital.
GERMANY FUND seeks long-term growth of capital.
HONG KONG AND CHINA FUND seeks long-term growth of capital.
JAPAN FUND seeks long-term growth of capital.
JAPAN SMALL COMPANIES FUND seeks long-term growth of capital.
LATIN AMERICA FUND seeks high total investment return.
NORDIC FUND seeks long-term growth of capital.
PACIFIC BASIN FUND seeks growth of capital over the long-term through
investments in securities of issuers that have their principal
activities in the Pacific Basin.
SOUTHEAST ASIA FUND seeks capital appreciation.
UNITED KINGDOM FUND seeks long-term growth of capital.
With respect to 75% of its total assets, each of Canada Fund, Emerging
Markets Fund, Europe Fund, Europe Capital Appreciation Fund, Japan
Fund, Latin America Fund, Pacific Basin Fund, and Southeast Asia Fund
may not purchase a security if, as a result, more than 5% would be
invested in the securities of any issuer, and may not purchase more
than 10% of the outstanding voting securities of a single issuer.
These limitations do not apply to U.S. Government securities or to
securities of other investment companies.
Each fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government
securities.
Each fund may borrow only for temporary or emergency purposes, but not
in an amount exceeding 33% of its total assets.
Loans, in the aggregate, may not exceed 33% of a fund's total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its
share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments
and business affairs. FMR in turn pays fees to affiliates who provide
assistance with these services. Each fund also pays OTHER EXPENSES,
which are explained on page .
FMR may, from time to time, agree to reimburse the funds for
management fees and other expenses above a specified limit. FMR
retains the ability to be repaid by a fund if expenses fall below the
specified limit prior to the end of the fiscal year. Reimbursement
arrangements, which may be terminated at any time without notice, can
decrease a fund's expenses and boost its performance.
MANAGEMENT FEE
EMERGING MARKETS FUND, FRANCE FUND, GERMANY FUND, HONG KONG AND CHINA
FUND, JAPAN SMALL COMPANIES FUND, LATIN AMERICA FUND, NORDIC FUND, AND
UNITED KINGDOM FUND. The management fee is calculated and paid to FMR
every month. The fee for each fund is calculated by adding a group fee
rate to an individual fund fee rate, and multiplying the result by the
fund's average net assets.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52%, and it
drops as total assets under management increase.
For October 1997, the group fee rate was 0. 2941 %. The
individual fund fee rate is 0.45% for each fund. The total management
fee rate for the fiscal year ended October 1997 was 0. 75 % for
Emerging Markets Fund, France Fund, Germany Fund, Hong Kong and
China Fund, Japan Small Companies Fund, Latin America Fund,
Nordic Fund, and United Kingdom Fund. Because of a reimbursement
arrangement, the total management fee rate for the fiscal year ended
October 1997 was 0.0 % , 0.48%, and 0.0% for France
Fund, Germany Fund, and United Kingdom Fund , respectively .
CANADA FUND, EUROPE FUND, EUROPE CAPITAL APPRECIATION FUND, JAPAN
FUND, PACIFIC BASIN FUND, AND SOUTHEAST ASIA FUND. The management fee
is calculated and paid to FMR every month. The amount of the fee is
determined by taking a BASIC FEE and then applying a PERFORMANCE
ADJUSTMENT. The performance adjustment either increases or decreases
the management fee, depending on how well a fund has performed
relative to its benchmark index.
MANAGEMENT = BASIC +/- PERFORMANCE
FEE FEE ADJUSTMENT
THE BASIC FEE (calculated monthly) is calculated by adding a group fee
rate to an individual fund fee rate, and multiplying the result by a
fund's average net assets.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52%, and it
drops as total assets under management increase.
For October 1997, the group fee rate was 0. 2941 %. The
individual fund fee rate for each fund is 0.45%.
The basic fee rate for the fiscal year ended October 1997 was
0. 75 % for Canada Fund, Europe Fund, Europe Capital
Appreciation Fund, Japan Fund, Pacific Basin Fund, and Southeast
Asia Fund.
THE PERFORMANCE ADJUSTMENT rate is calculated monthly by comparing
each fund's performance to that of its benchmark index over the
performance period.
The performance period is the most recent 36-month period.
The difference is translated into a dollar amount that is added to or
subtracted from the basic fee. The maximum annualized performance
adjustment rate is (plus/minus).20% of a fund's average net assets
over the performance period.
FUND BENCHMARK
CANADA FUND TSE 300 INDEX
EUROPE FUND MSCI EUROPE INDEX
EUROPE CAPITAL APPRECIATION FUND MSCI EUROPE INDEX
JAPAN FUND TOPIX INDEX
PACIFIC BASIN FUND MSCI PACIFIC INDEX
SOUTHEAST ASIA FUND MSCI FAR EAST EX-JAPAN FREE INDEX
FUND MANAGEMENT
FEE
CANADA FUND 0. 39 %
EUROPE FUND 0. 78 %
EUROPE CAPITAL APPRECIATION FUND 0. 65 %
JAPAN FUND 0. 93 %
PACIFIC BASIN FUND 0. 70 %
SOUTHEAST ASIA FUND 0. 76 %
FMR HAS SUB-ADVISORY AGREEMENTS with four affiliates: FMR U.K., FMR
Far East, FIJ, and FIIA. FIIA in turn has a sub-advisory agreement
with FIIA(U.K.)L. FMR U.K. focuses on issuers based in Europe. FMR Far
East focuses on issuers based in Asia and the Pacific Basin. FIJ
focuses on issuers based in Japan and elsewhere around the world. FIIA
focuses on issuers based in Hong Kong, Australia, New Zealand, and
Southeast Asia (other than Japan). FIIA(U.K.)L focuses on issuers
based in the United Kingdom and Europe.
The sub-advisers are compensated for providing investment research and
advice. FMR pays FMR U.K. and FMR Far East fees equal to 110% and
105%, respectively, of the costs of providing these services. FMR pays
FIJ and FIIA 30% of its management fee associated with investments for
which the sub-adviser provided investment advice. FIIA pays
FIIA(U.K.)L a fee equal to 110% of the cost of providing these
services.
The sub-advisers may also provide investment management services. In
return, FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a fee equal to
50% of its management fee rate with respect to a fund's investments
that the sub-adviser manages on a discretionary basis. FIIA pays
FIIA(U.K.)L a fee equal to 110% of the cost of providing these
services.
OTHER EXPENSES
While the management fee is a significant component of the funds'
annual operating costs, the funds have other expenses as well.
The funds contract with FSC to perform transfer agency, dividend
disbursing, shareholder servicing, and accounting functions. These
services include processing shareholder transactions, valuing each
fund's investments, handling securities loans for each fund, and
calculating each fund's share price and dividends.
For the fiscal year ended October 1997, transfer agency and pricing
and bookkeeping fees paid (as a percentage of average net assets)
amounted to the following. These amounts are before expense
reductions, if any.
TRANSFER AGENCY AND
PRICING AND BOOKKEEPING FEES
PAID BY FUND
CANADA FUND .41 %
EMERGING MARKETS FUND .38 %
EUROPE FUND .32%
EUROPE CAPITAL APPRECIATION FUND .34 %
FRANCE FUND 1.33 %
GERMANY FUND .84 %
HONG KONG AND CHINA FUND .39 %
JAPAN FUND .38 %
JAPAN SMALL COMPANIES FUND .41 %
LATIN AMERICA FUND .32 %
NORDIC FUND .40 %
PACIFIC BASIN FUND .49 %
SOUTHEAST ASIA FUND .38%
UNITED KINGDOM FUND 1.51 %
Each fund also pays other expenses, such as legal, audit, and
custodian fees; in some instances, proxy solicitation costs; and the
compensation of trustees who are not affiliated with Fidelity. A
broker-dealer may use a portion of the commissions paid by a fund to
reduce that fund's custodian or transfer agent fees.
For the fiscal year ended October 1997, the portfolio turnover rates
are outlined in the following table. These rates vary from year to
year. High turnover rates increase transaction costs and may increase
taxable capital gains. FMR considers these effects when evaluating the
anticipated benefits of short-term investing.
FUND TURNOVER %
CANADA FUND 139 %
EMERGING MARKETS FUND 69 %
EUROPE FUND 57 %
EUROPE CAPITAL APPRECIATION FUND 189 %
FRANCE FUND 150 %
GERMANY FUND 120 %
HONG KONG AND CHINA FUND 174 %
JAPAN FUND 70 %
JAPAN SMALL COMPANIES FUND 101 %
LATIN AMERICA FUND 64 %
NORDIC FUND 74 %
PACIFIC BASIN FUND 42 %
SOUTHEAST ASIA FUND 141 %
UNITED KINGDOM FUND 96 %
(null)Doing Business with Fidelity
Fidelity Investments was established in 1946 to manage one of
America's first
mutual funds. Today, Fidelity is the largest mutual fund company in
the country,
and is known as an innovative provider of high-quality financial
services to
individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's
leading discount brokerage firms, FBSI. Fidelity is also a leader in
providing
tax-sheltered retirement plans for individuals investing on their own
or through
their employer.
Fidelity is committed to providing investors with practical
information to
make investment decisions. Based in Boston, Fidelity provides
customers with
complete service 24 hours a day, 365 days a year, through a network of
telephone
service centers around the country.
To reach Fidelity for general information, call these numbers:
S For mutual funds, 1-800-544-8888
S For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity
has
over 80 walk-in Investor Centers across the country.
(null)Types of Accounts
You may set up an account directly in a fund or, if you own or intend
to purchase
individual securities as part of your total investment portfolio, you
may consider
investing in a fund through a brokerage account.
You may purchase or sell shares of the funds through an investment
professional,
including a broker, who may charge you a transaction fee for this
service.
If you invest through FBSI, another financial institution, or an
investment
professional, read their program materials for any special provisions,
additional
service features or fees that may apply to your investment in a fund.
Certain
features of the fund, such as the minimum initial or subsequent
investment
amounts, may be modified.
The different ways to set up (register) your account with Fidelity are
listed
in the table that follows.
The account guidelines that follow may not apply to certain retirement
accounts.
If you are investing through a retirement account or if your employer
offers
the funds through a retirement program, you may be subject to
additional fees.
For more information, please refer to your program materials, contact
your
employer, or call your retirement benefits number or Fidelity
directly, as
appropriate.
Ways to Set Up Your Account
Individual or Joint Tenant
For your general investment needs
Individual accounts are owned by one person. Joint accounts can have
two or
more owners (tenants).
Retirement
To shelter your retirement savings from taxes
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts
may be tax deductible. Retirement accounts require special
applications and
typically have lower minimums.
w Individual Retirement Accounts (IRAs) allow anyone of legal age and
under 70 with earned income to invest
up to $2,000 per tax year. Individuals can also invest in a spouse's
IRA if
the spouse has earned income of less than $250.
w Rollover IRAs retain special tax advantages for certain
distributions from employer-sponsored
retirement plans.
w Keogh or Corporate Profit Sharing and Money Purchase Pension Plans
allow self-employed individuals or small business owners (and their
employees) to make tax-deductible contributions for themselves and any
eligible
employees up to $30,000 per year.
w Simplified Employee Pension Plans (SEP-IRAs) provide small business
owners or those with self-employed income (and
their eligible employees) with many of the same advantages as a Keogh,
but
with fewer administrative requirements.
w SIMPLE IRAs provide small business owners and those with
self-employed income
(and their eligible employees) with many of the advantages of a 401(k)
plan,
but with fewer administrative requirements.
w 403(b) Custodial Accounts are available to employees of most
tax-exempt institutions, including
schools, hospitals, and other charitable organizations.
w 401(k) Programs allow employees of corporations of all sizes to
contribute a percentage
of their wages on a tax-deferred basis. These accounts need to be
established
by the trustee of the plan.
Gifts or Transfers to a Minor (UGMA, UTMA)
To invest for a child's education or other future needs
These custodial accounts provide a way to give money to a child and
obtain
tax benefits. An individual can give up to $10,000 a year per child
without
paying federal gift tax. Depending on state laws, you can set up a
custodial
account under the Uniform Gifts to Minors Act (UGMA) or the Uniform
Transfers
to Minors Act (UTMA).
Trust
For money being invested by a trust
The trust must be established before an account can be opened.
Business or Organization
For investment needs of corporations, associations, partnerships, or
other
groups
Requires a special application.
(null)How to Buy Shares
The price to buy one share of each fund is the fund's offering price
or the
fund's net asset value per share (NAV), depending on whether you pay a
sales
charge. If you pay a sales charge, your price will be the fund's
offering price.
When you buy shares of a fund at the offering price, Fidelity deducts
the appropriate
sales charge and invests the rest in the fund. If you qualify for a
sales charge
waiver, your price will be the fund's NAV. See "Sales Charge
Reductions and
Waivers," page 75, for an explanation of how and when the sales
charge and
waivers apply.
Shares are purchased at the next share price calculated after your
investment
is received in proper form. Share price is normally calculated at 4:00
p.m.
Eastern time.
If you are new to Fidelity, complete and sign an account application
and mail it along with your check.
You may also open your account in person or by wire as described on
page 69.
If there is no application accompanying this prospectus, call
1-800-544-8888.
If you already have money invested in a Fidelity fund, you can:
S Mail in an application with a check, or
S Open your account by exchanging from another Fidelity fund.
If you are investing through a tax-sheltered retirement plan, such as
an IRA, for the first time, you will need a special application.
Retirement
investing also involves its own investment procedures. Call
1-800-544-8888
for more information and a retirement application.
If you buy shares by check or Fidelity Money LineR, and then sell
those shares
by any method other than by exchange to another Fidelity fund, the
payment
may be delayed for up to seven business days to ensure that your
previous investment
has cleared.
Minimum Investments
To Open an Account $2,500
For Fidelity IRA, Rollover IRA, SEP-IRA and Keogh accounts $500
To Add to an Account $250
For Fidelity IRA, Rollover IRA, SEP-IRA and Keogh accounts $250
Through regular investment plans* $100
Minimum Balance $2,000
For Fidelity IRA, Rollover IRA, SEP-IRA and Keogh accounts $500
*For more information about regular investment plans, please refer to
"Investor
Services," page 71.
These minimums may vary for investments through Fidelity Portfolio
Advisory
Services. There is no minimum account balance or initial or subsequent
investment
minimum for certain retirement accounts funded through salary
deduction, or
accounts opened with the proceeds of distributions from Fidelity
retirement
accounts. Refer to the program materials for details.
(null)Key Information
Phone 1-800-544-7777
S To open an account, exchange from another Fidelity fund account with
the same
registration, including name, address, and taxpayer ID number.
S To add to an account, exchange from another Fidelity fund account
with the
same registration, including name, address, and taxpayer ID number.
You can
also use Fidelity Money Line to transfer from your bank account. Call
before
your first use to verify that this service is in place on your
account. Maximum
Money Line: $100,000.
Mail
S To open an account, complete and sign the application. Make your
check payable
to the complete name of the fund of your choice. Mail to the address
indicated
on the application.
S To add to an account, make your check payable to the complete name
of the fund.
Indicate your fund account number on your check. Mail to the address
printed
on your account statement.
S Exchange by mail: Call 1-800-544-6666 for instructions.
In Person
S To open an account, bring your application and check to a Fidelity
Investor
Center. Call 1-800-544-9797 for the center nearest you.
S To add to an account, bring your check to a Fidelity Investor
Center. Call
1-800-544-9797 for the center nearest you.
(null)(null)Wire
Not available for retirement accounts.
S To open an account, call 1-800-544-7777 to set up your account and
to arrange
a wire transaction. Wire within 24 hours to the wire address below.
Specify
the complete name of the fund and include your new account number and
your
name.
S To add to an account, wire to the wire address below. Specify the
complete
name of the fund and include your account number and your name.
S Wire address: Bankers Trust Company, Bank Routing #021001033,
Account # 00163053.
Automatically
New accounts cannot be opened with these services.
S Use Fidelity Automatic Account Builder or Direct Deposit to
automatically purchase
more shares. Sign up for these services when opening your account, or
call
1-800-544-6666.
S Use Directed Dividends or Fidelity Automatic Exchange Service to
automatically
send money from one Fidelity fund into another. Call 1-800-544-6666
for instructions.
TDD - Service for the Deaf and Hearing-Impaired: 1-800-544-0118
(null)How to Sell Shares
You can arrange to take money out of your fund account at any time by
selling
(redeeming) some or all of your shares.
The price to sell one share of each fund is the fund's NAV minus the
short-term trading fee, if applicable.
If you sell shares of a fund after holding them less than 90 days, the
fund
will deduct a short-term trading fee equal to 1.5% (1.0% for Europe,
Europe
Capital Appreciation and Pacific Basin) of the value of those shares.
Your shares will be sold at the next NAV calculated after your order
is received
in proper form, minus the short-term trading fee, if applicable. Each
fund's
NAV is normally calculated each business day at 4:00 p.m. Eastern
time.
To sell shares in a non-retirement account, you may use any of the
methods described on these two pages.
To sell shares in a Fidelity retirement account, your request must be
made in writing, except for exchanges to other Fidelity
funds, which can be requested by phone or in writing. Call
1-800-544-6666 for
a retirement distribution form.
If you are selling some but not all of your shares, leave at least
$2,000 worth of shares in the account to keep it open ($500
for retirement accounts).
To sell shares by bank wire or Fidelity Money Line, you will need to
sign up for these services in advance.
Certain requests must include a signature guarantee. It is designed to
protect you and Fidelity from fraud. Your request must be
made in writing and include a signature guarantee if any of the
following situations
apply:
S You wish to redeem more than $100,000 worth of shares,
S Your account registration has changed within the last 30 days,
S The check is being mailed to a different address than the one on
your account
(record address),
S The check is being made payable to someone other than the account
owner, or
S The redemption proceeds are being transferred to a Fidelity account
with a
different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including
Fidelity Investor Centers), dealer, credit union (if authorized under
state
law), securities exchange or association, clearing agency, or savings
association.
A notary public cannot provide a signature guarantee.
Selling Shares in Writing
Write a "letter of instruction" with:
S Your name,
S The fund's name,
S Your fund account number,
S The dollar amount or number of shares to be redeemed, and
S Any other applicable requirements listed in the table that follows.
Unless otherwise instructed, Fidelity will send a check to the record
address.
Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fees and Key Information
If you sell shares of Canada Fund, Emerging Markets Fund, France Fund,
Germany
Fund, Hong Kong and China Fund, Japan Fund, Japan Small Companies
Fund, Latin
America Fund, Nordic Fund, Southeast Asia Fund, and United Kingdom
Fund after
holding them less than 90 days, the fund will deduct a short-term
trading fee
equal to 1.50% of the value of those shares. If you sell shares of
Europe Fund,
Europe Capital Appreciation Fund, and Pacific Basin Fund after holding
them
less than 90 days, the fund will deduct a short-term trading fee equal
to 1.00%
of the value of the shares.
Phone 1-800-544-7777
All account types except retirement
S Maximum check request: $100,000.
S For Money Line transfers to your bank account; minimum: $10;
maximum: $100,000.
All account types
S You may exchange to other Fidelity funds if both accounts are
registered with
the same name(s), address, and taxpayer ID number.
Mail or in Person
Individual, Joint Tenants, Sole Proprietorships, UGMA, UTMA
S The letter of instruction must be signed by all persons required to
sign for
transactions, exactly as their names appear on the account.
Retirement accounts
S The account owner should complete a retirement distribution form.
Call 1-800-544-6666
to request one.
Trusts
S The trustee must sign the letter indicating capacity as trustee. If
the trustee's
name is not in the account registration, provide a copy of the trust
document
certified within the last 60 days.
Businesses or Organizations
S At least one person authorized by corporate resolution to act on the
account
must sign the letter.
S Include a corporate resolution with corporate seal or a signature
guarantee.
Executors, Administrators, Conservators, Guardians
S Call 1-800-544-6666 for instructions.
Wire
All account types except retirement
S You must sign up for the wire feature before using it. To verify
that it is
in place, call 1-800-544-6666. Minimum wire: $5,000.
S Your wire redemption request must be received in proper form by
Fidelity before
4 p.m. Eastern time for money to be wired on the next business day.
TDD - Service for the Deaf and Hearing-Impaired: 1-800-544-0118
(null)Investor Services
Fidelity provides a variety of services to help you manage your
account.
Information Services
Fidelity's telephone representatives are available 24 hours a day, 365
days a year. Whenever you call, you can
speak with someone equipped to provide the information or service you
need.
Statements and reports that Fidelity sends to you include the
following:
S Confirmation statements (after every transaction, except
reinvestments, that
affects your account balance or your account registration)
S Account statements (quarterly)
S Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses
will be mailed to your household, even if you have more than one
account in
the fund. Call 1-800-544-6666 if you need copies of financial reports,
prospectuses,
or historical account information.
Transaction Services
Exchange privilege. You may sell your fund shares and buy shares of
other Fidelity funds by telephone
or in writing. The shares you exchange will carry credit for any sales
charge
you previously paid in connection with their purchase.
Note that exchanges out of a fund are limited to four per calendar
year, and
that they may have tax consequences for you. For details on policies
and restrictions
governing exchanges, including circumstances under which a
shareholder's exchange
privilege may be suspended or revoked, see page 74.
Systematic withdrawal plans let you set up periodic redemptions from
your account. Because of the funds'
sales charge, you may not want to set up a systematic withdrawal plan
during
a period when you are buying shares on a regular basis.
Fidelity Money Liner enables you to transfer money by phone between
your bank account and your
fund account. Most transfers are complete within three business days
of your
call.
24-Hour Service
Account Assistance 1-800-544-6666
Account Transactions 1-800-544-7777
Product Information 1-800-544-8888
Retirement Account Assistance 1-800-544-4774
TouchTone XpressSM 1-800-544-5555
Automated service
3
Regular Investment Plans
One easy way to pursue your financial goals is to invest money
regularly. Fidelity
offers convenient services that let you transfer money into your fund
account,
or between fund accounts, automatically. While regular investment
plans do
not guarantee a profit and will not protect you against loss in a
declining
market, they can be an excellent way to invest for retirement, a home,
educational
expenses, and other long-term financial goals. Certain restrictions
apply for
retirement accounts. Call 1-800-544-6666 for more information.
Regular Investor Plans
Fidelity Automatic Account Builder SM
To move money from your bank account to a Fidelity fund
Minimum
$100
Frequency
Monthly or quarterly
Setting up or changing
S For a new account, complete the appropriate section on the fund
application.
S For existing accounts, call 1-800-544-6666 for an application.
S To change the amount or frequency of your investment, call 1-800-
544-6666
at least three business days prior to your next scheduled investment
date.
Direct Deposit
To send all or a portion of your paycheck or government check to a
Fidelity
fundA
Minimum
$100
Frequency
Every pay period
Setting up or changing
S Check the appropriate box on the fund application, or call
1-800-544-6666 for
an authorization form.
S Changes require a new authorization form.
Fidelity Automatic Exchange Service
To move money from a Fidelity money market fund to another Fidelity
fund
Minimum
$100
Frequency
Monthly, bimonthly, quarterly, or annually
Setting up or changing
S To establish, call 1-800-544-6666 after both accounts are opened.
S To change the amount or frequency of your investment, call
1-800-544-6666.
A Because their share prices fluctuate, these funds may not be
appropriate
choices for direct deposit of your entire check.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net income and capital
gains to shareholders each year. Normally, dividends and capital gains
are distributed in December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on
the application, call 1-800-544-6666 for instructions. Each fund
offers four options:
5. REINVESTMENT OPTION. Your dividend and capital gain distributions
will be automatically reinvested in additional shares of the fund. If
you do not indicate a choice on your application, you will be assigned
this option.
6. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each
dividend distribution.
7. CASH OPTION. You will be sent a check for your dividend and capital
gain distributions.
8. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
FOR RETIREMENT ACCOUNTS, all distributions are automatically
reinvested. When you are over 59 years old, you can receive
distributions in cash.
SHARES PURCHASED THROUGH REINVESTMENT of dividend and capital gain
distributions are not subject to the funds' 3% sales charge. Likewise,
if you direct distributions to a fund with a sales charge, you will
not pay a sales charge on those purchases.
UNDERSTANDING DISTRIBUTIONS
As a fund shareholder, you are entitled to your
share of the fund's net income and gains on its
investments. The fund passes these earnings
along to its investors as DISTRIBUTIONS.
Each fund earns dividends from stocks and
interest from bond, money market and other
investments. These are passed along as
DIVIDEND DISTRIBUTIONS. A fund realizes capital
gains whenever it sells securities for a higher
price than it paid for them. These are passed
along as CAPITAL GAIN DISTRIBUTIONS.
(checkmark)
When a fund deducts a distribution from its NAV, the reinvestment
price is the fund's NAV at the close of business that day. Cash
distribution checks will be mailed within seven days
TAXES
As with any investment, you should consider how your investment in a
fund will be taxed. If your account is not a tax-deferred retirement
account, you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income
tax, and may also be subject to state or local taxes. If you live
outside the United States, your distributions could also be taxed by
the country in which you reside. Your distributions are taxable when
they are paid, whether you take them in cash or reinvest them.
However, distributions declared in December and paid in January are
taxable as if they were paid on December 31.
For federal tax purposes, each fund's income and short-term capital
gain s are distribut ed as dividends and taxed as
ordinary income; capital gain distributions are taxed as
long-term capital gains. Every January, Fidelity will send you and the
IRS a statement showing the tax characterization of
distributions paid to you in the previous year.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or
loss is the difference between the cost of your shares and the price
you receive when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a
confirmation statement showing how many shares you sold and at what
price. You will also receive a consolidated transaction statement
every January. However, it is up to you or your tax preparer to
determine whether this sale resulted in a capital gain and, if so, the
amount of tax to be paid. Be sure to keep your regular account
statements; the information they contain will be essential in
calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares when a fund has realized but
not yet distributed income or capital gains, you will pay the full
price for the shares and then receive a portion of the price back in
the form of a taxable distribution.
CURRENCY CONSIDERATIONS. If a fund's dividends exceed its taxable
income in any year, which is sometimes the result of currency-related
losses, all or a portion of the fund's dividends may be treated as a
return of capital to shareholders for tax purposes. To minimize the
risk of a return of capital, the funds may adjust their dividends to
take currency fluctuations into account, which may cause the dividends
to vary. Any return of capital will reduce the cost basis of your
shares, which will result in a higher reported capital gain or a lower
reported capital loss when you sell your shares. The statement you
receive in January will specify if any distributions included a return
of capital.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on a
fund and its investments , and these taxes generally will reduce
the fund's distributions. However, if you meet certain holding
period requirements with respect to your fund shares, an
offsetting tax credit may be available to you. If you do not meet
such holding period requirements, you may still be entitled to a
deduction for certain foreign taxes. In either case , your tax
statement will show more taxable income or capital gains than were
actually distributed by the fund, but will also show the amount of the
available offsetting credit or deduction.
There are tax requirements that all funds must follow in order to
avoid federal taxation. In its effort to adhere to these requirements,
a fund may have to limit its investment activity in some types of
instruments.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange
(NYSE) is open. FSC normally calculates each fund's NAV and offering
price, as applicable, as of the close of business of the NYSE,
normally 4 :00 p.m. Eastern time.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the
number of shares outstanding.
Each fund's assets are valued primarily on the basis of market
quotations. Short-term securities with remaining maturities of sixty
days or less for which quotations are not readily available are valued
on the basis of amortized cost. This method minimizes the effect of
changes in a security's market value. Foreign securities are valued on
the basis of quotations from the primary market in which they are
traded, and are translated from the local currency into U.S. dollars
using current exchange rates. In addition, if quotations are not
readily available, or if the values have been materially affected by
events occurring after the closing of a foreign market, assets may be
valued by another method that the Board of Trustees believes
accurately reflects fair value.
THE OFFERING PRICE of each fund is its NAV divided by the difference
between one and the applicable sales charge percentage. The maximum
sales charge is 3% of the offering price.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require a fund to withhold 31% of your taxable distributions and
redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE OR
ELECTRONICALLY . Fidelity will not be responsible for
any losses resulting from unauthorized transactions if it
follow s reasonable security procedures designed to
verify the identity of the investor . Fidelity will request
personalized security codes or other information, and may also record
calls. For transactions conducted through the Internet, Fidelity
recommends the use of an Internet browser with 128-bit encryption.
You should verify the accuracy of your confirmation statements
immediately after you receive them. If you do not want the ability to
redeem and exchange by telephone, call Fidelity for instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during
periods of unusual market activity), consider placing your order by
mail or by visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a
period of time. Each fund also reserves the right to reject any
specific purchase order, including certain purchases by exchange. See
"Exchange Restrictions" on page . Purchase orders may be refused if,
in FMR's opinion, they would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be purchased
at the next offering price or NAV, as applicable, calculated after
your investment is received in proper form. Note the following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number
of checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will
be cancelled and you could be liable for any losses or fees a fund or
its transfer agent has incurred.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money
order, U.S. Treasury check, Federal Reserve check, or direct deposit
instead.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements
with FDC may enter confirmed purchase orders on behalf of customers by
phone, with payment to follow no later than the time when a fund is
priced on the following business day. If payment is not received by
that time, the financial institution could be held liable for
resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at
the next NAV calculated after your order is received in proper
form , minus the short-term trading fee, if applicable. Note the
following:
(small solid bullet) Normally, redemption proceeds will be mailed to
you on the next business day, but if making immediate payment could
adversely affect a fund, it may take up to seven days to pay you.
(small solid bullet) Fidelity Money Line redemptions generally will be
credited to your bank account on the second or third business day
after your phone call.
(small solid bullet) Each fund may hold payment on redemptions until
it is reasonably satisfied that investments made by check or Fidelity
Money Line have been collected, which can take up to seven business
days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
A SHORT-TERM TRADING FEE of 1.5% (1.0% for Europe, Europe Capital
Appreciation and Pacific Basin) will be deducted from the redemption
amount if you sell your shares after holding them less than 90 days.
This fee is paid to the fund rather than Fidelity, and is designed to
offset the brokerage commissions, market impact, and other costs
associated with fluctuations in fund asset levels and cash flow caused
by short-term shareholder trading.
The short-term trading fee, if applicable, is charged on exchanges out
of a fund. If you bought shares on different days, the shares you held
longest will be redeemed first for purposes of determining whether the
short-term trading fee applies. The short-term trading fee does not
apply to shares that were acquired through reinvestment of
distributions.
FIDELITY RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE of
$12.00 from accounts with a value of less than $2,500 (including any
amount paid as a sales charge), subject to an annual maximum charge of
$24.00 per shareholder. It is expected that accounts will be valued on
the second Friday in November of each year. Accounts opened after
September 30 will not be subject to the fee for that year. The fee,
which is payable to the transfer agent, is designed to offset in part
the relatively higher costs of servicing smaller accounts. This fee
will not be deducted from Fidelity brokerage accounts, retirement
accounts (except non-prototype retirement accounts), accounts using
regular investment plans, or if total assets with Fidelity exceed
$30,000. Eligibility for the $30,000 waiver is determined by
aggregating Fidelity accounts maintained by FSC or FBSI which are
registered under the same social security number or which list the
same social security number for the custodian of a Uniform
Gifts/Transfers to Minors Act account.
IF YOUR ACCOUNT BALANCE FALLS BELOW $2,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send
the proceeds to you. Your shares will be redeemed at the NAV minus the
short-term trading fee, if applicable, on the day your account is
closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC collects the proceeds from each fund's 3% sales charge and may pay
a portion of them to securities dealers who have sold the fund's
shares, or to others, including banks and other financial institutions
(qualified recipients), under special arrangements in connection with
FDC's sales activities. The sales charge paid to qualified recipients
is 1.50% of the fund's offering price.
FDC may, at its own expense, provide promotional incentives to
qualified recipients who support the sale of shares of the funds
without reimbursement from the funds. In some instances, these
incentives may be offered only to certain institutions whose
representatives provide services in connection with the sale or
expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a
fund for shares of other Fidelity funds. However, you should note the
following:
(small solid bullet) The fund you are exchanging into must be
available for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund, read its
prospectus.
(small solid bullet) If you exchange into a fund with a sales charge,
you pay the percentage-point difference between that fund's sales
charge and any sales charge you have previously paid in connection
with the shares you are exchanging. For example, if you had already
paid a sales charge of 2% on your shares and you exchange them into a
fund with a 3% sales charge, you would pay an additional 1% sales
charge.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund
performance and shareholders, each fund reserves the right to
temporarily or permanently terminate the exchange privilege of any
investor who makes more than four exchanges out of the fund per
calendar year. Accounts under common ownership or control, including
accounts with the same taxpayer identification number, will be counted
together for purposes of the four exchange limit.
(small solid bullet) The exchange limit may be modified for accounts
in certain institutional retirement plans to conform to plan exchange
limits and Department of Labor regulations. See your plan materials
for further information.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would
be unable to invest the money effectively in accordance with its
investment objective and policies, or would otherwise potentially be
adversely affected.
(small solid bullet) Your exchanges may be restricted or refused if a
fund receives or anticipates simultaneous orders affecting significant
portions of the fund's assets. In particular, a pattern of exchanges
that coincides with a "market timing" strategy may be disruptive to a
fund.
Although the funds will attempt to give you prior notice whenever they
are reasonably able to do so, they may impose these restrictions at
any time. The funds reserve the right to terminate or modify the
exchange privilege in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
fees of up to 1.00% on purchases, administrative fees of up to $7.50,
and trading fees of up to 1.50% on exchanges. Check each fund's
prospectus for details.
SALES CHARGE REDUCTIONS AND WAIVERS
REDUCTIONS. A fund's sales charge may be reduced if you invest
directly with Fidelity or through prototype or prototype-like
retirement plans sponsored by FMR or FMR Corp. The amount you invest,
plus the value of your account, must fall within the ranges shown
below. However, purchases made with assistance or intervention from a
financial intermediary are not eligible. Call Fidelity to see if your
purchase qualifies.
<TABLE>
<CAPTION>
<S> <C> <C>
SALES CHARGE
RANGES AS A % OF OFFERING PRICE AS AN APPROXIMATE % OF NET AMOUNT INVESTED
$0 - 249,999 3.00% 3.09%
$250,000 - 499,999 2.00% 2.04%
$500,000 - 999,999 1.00% 1.01%
$1,000,000 OR MORE NONE NONE
</TABLE>
The sales charge will also be reduced by the percentage of any sales
charge you previously paid on investments in other Fidelity funds (not
including Fidelity's Foreign Currency Funds). Similarly, your shares
carry credit for any sales charge you would have paid if the
reductions in the table above had not existed. These sales charge
credits only apply to purchases made in one of the ways listed below,
and only if you continuously owned Fidelity fund shares or a Fidelity
brokerage core account, or participated in The CORPORATEplan for
Retirement Program.
1. By exchange from another Fidelity fund.
2. With proceeds of a transaction within a Fidelity brokerage core
account, including any free credit balance, core money market fund, or
margin availability, to the extent such proceeds were derived from
redemption proceeds from another Fidelity fund.
3. With redemption proceeds from one of Fidelity's Foreign Currency
Funds, if the Foreign Currency Fund shares were originally purchased
with redemption proceeds from a Fidelity fund.
4. Through the Directed Dividends Option (see page ).
5. By participants in The CORPORATEplan for Retirement Program when
shares are purchased through plan-qualified loan repayments, and for
exchanges into and out of the Managed Income Portfolio.
WAIVERS. A fund's sales charge will not apply:
1. If you buy shares as part of an employee benefit plan having more
than 200 eligible employees or a minimum of $3 million in plan assets
invested in Fidelity mutual funds.
2. To shares in a Fidelity account purchased with the proceeds of a
distribution from an employee benefit plan, provided that at the time
of the distribution, the employer or its affiliate maintained a plan
that both qualified for waiver (1) above and had at least some of its
assets invested in Fidelity-managed products. (Distributions
transferred to an IRA account must be transferred within 60 days from
the date of the distribution. All other distributions must be
transferred directly into a Fidelity account).
3. If you are a charitable organization (as defined for purposes of
Section 501(c)(3) of the Internal Revenue Code) investing $100,000 or
more.
4. If you purchase shares for a charitable remainder trust or life
income pool established for the benefit of a charitable organization
(as defined for purposes of Section 501(c)(3) of the Internal Revenue
Code).
5. If you are an investor participating in the Fidelity Trust
Portfolios program.
6. To shares purchased by a mutual fund for which FMR or an affiliate
serves as investment manager.
7. To shares purchased through Portfolio Advisory Services or Fidelity
Charitable Advisory Services.
8. If you are a current or former trustee or officer of a Fidelity
fund or a current or retired officer, director, or regular employee of
FMR Corp. or Fidelity International Limited or their direct or
indirect subsidiaries (a Fidelity trustee or employee), the spouse of
a Fidelity trustee or employee, a Fidelity trustee or employee acting
as custodian for a minor child, or a person acting as trustee of a
trust for the sole benefit of the minor child of a Fidelity trustee or
employee.
9. If you are a bank trust officer, registered representative, or
other employee of a qualified recipient, as defined on page .
10. To contributions and exchanges to a prototype or prototype-like
retirement plan sponsored by FMR Corp. or FMR and which is marketed
and distributed directly to plan sponsors or participants without any
assistance or intervention from any intermediary distribution channel.
11. If you invest through a non-prototype pension or profit-sharing
plan that maintains all of its mutual fund assets in Fidelity mutual
funds, provided the plan executes a Fidelity non-prototype sales
charge waiver agreement confirming its qualification.
12. If you are a registered investment adviser (RIA) purchasing for
your discretionary accounts, provided you execute a Fidelity RIA load
waiver agreement which specifies certain aggregate minimum and
operating provisions. Except for correspondents of National Financial
Services Corporation, this waiver is available only for shares
purchased directly from Fidelity, and is unavailable if the RIA is
part of an organization principally engaged in the brokerage business.
13. If you are a trust institution or bank trust department purchasing
for your non-discretionary, non-retirement fiduciary accounts,
provided you execute a Fidelity Trust load waiver agreement which
specifies certain aggregate minimum and operating provisions. This
waiver is available only for shares purchased either directly from
Fidelity or through a bank-affiliated broker, and is unavailable if
the trust department or institution is part of an organization not
principally engaged in banking or trust activities.
These waivers must be qualified through FDC in advance. More detailed
information about waivers (1), (2), (5), (9), (10) and (12) is
contained in the Statement of Additional Information. A representative
of your plan or organization should call Fidelity for more
information.
This prospectus is printed on recycled paper using soy-based inks.
FIDELITY'S TARGETED INTERNATIONAL EQUITY FUNDS
FIDELITY CANADA FUND, FIDELITY EMERGING MARKETS FUND, FIDELITY EUROPE
FUND, FIDELITY EUROPE CAPITAL APPRECIATION FUND, FIDELITY FRANCE FUND,
FIDELITY GERMANY FUND, FIDELITY HONG KONG AND CHINA FUND, FIDELITY
JAPAN FUND, FIDELITY JAPAN SMALL COMPANIES FUND, FIDELITY LATIN
AMERICA FUND, FIDELITY NORDIC FUND, FIDELITY PACIFIC BASIN FUND,
FIDELITY SOUTHEAST ASIA FUND, AND FIDELITY UNITED KINGDOM FUND
FUNDS OF FIDELITY INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 30, 1997
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the funds' current Prospectus
(dated December 30, 1997). Please retain this document for future
reference. The funds' Annual Report is a separate document supplied
with this SAI. To obtain a free additional copy of the Prospectus or
an Annual Report, please call Fidelity at 1-800-544-8888.
<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS PAGE
INVESTMENT POLICIES AND LIMITATIONS
SPECIAL CONSIDERATIONS AFFECTING EUROPE
SPECIAL CONSIDERATIONS AFFECTING JAPAN, THE PACIFIC BASIN, AND SOUTHEAST ASIA
SPECIAL CONSIDERATIONS AFFECTING CANADA
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICA
SPECIAL CONSIDERATIONS AFFECTING THE RUSSIAN FEDERATION
PORTFOLIO TRANSACTIONS
VALUATION
PERFORMANCE
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
DISTRIBUTIONS AND TAXES
FMR
TRUSTEES AND OFFICERS
MANAGEMENT CONTRACTS
CONTRACTS WITH FMR AFFILIATES
DESCRIPTION OF THE TRUST
FINANCIAL STATEMENTS
APPENDIX
</TABLE>
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
Fidelity International Investment Advisors (FIIA)
Fidelity International Investment Advisors (U.K.) Limited
(FIIA(U.K.)L)
Fidelity Investments Japan Ltd. (FIJ)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Service Company, Inc. (FSC)
TIF-ptb-1297
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in
the Prospectus. Unless otherwise noted, whenever an investment policy
or limitation states a maximum percentage of a fund's assets that may
be invested in any security or other asset, or sets forth a policy
regarding quality standards, such standard or percentage limitation
will be determined immediately after and as a result of the fund's
acquisition of such security or other asset. Accordingly, any
subsequent change in values, net assets, or other circumstances will
not be considered when determining whether the investment complies
with the fund's investment policies and limitations.
A fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 (1940
Act)) of the fund. However, except for the fundamental investment
limitations listed below, the investment policies and limitations
described in this SAI are not fundamental and may be changed without
shareholder approval.
INVESTMENT LIMITATIONS OF CANADA FUND
(CANADA FUND)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others (except to the extent that
the fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business).
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements).
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF EMERGING MARKETS FUND
(EMERGING MARKETS FUND)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others except to the extent that
the fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in companies whose principal business
activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin;
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (5)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF EUROPE FUND
(EUROPE FUND)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business).
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of the fund's total assets would be lent to other
parties, but this limitation does not apply to purchases of debt
securities or to repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements).
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF EUROPE CAPITAL APPRECIATION FUND
(EUROPE CAPITAL APPRECIATION FUND)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements).
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF FRANCE FUND
(FRANCE FUND)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more than 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF GERMANY FUND
(GERMANY FUND)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more than 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF HONG KONG AND CHINA FUND
(HONG KONG AND CHINA FUND)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more than 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF JAPAN FUND
(JAPAN FUND)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements).
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF JAPAN SMALL COMPANIES FUND
(JAPAN SMALL COMPANIES FUND)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more than 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF LATIN AMERICA FUND
(LATIN AMERICA FUND)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements).
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF NORDIC FUND
(NORDIC FUND)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more than 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF PACIFIC BASIN FUND
(PACIFIC BASIN FUND)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business).
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of the fund's total assets would be lent to other
parties, but this limitation does not apply to purchases of debt
securities or to repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements).
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF SOUTHEAST ASIA FUND
(SOUTHEAST ASIA FUND)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements).
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF UNITED KINGDOM FUND
(UNITED KINGDOM FUND)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more than 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT POLICIES FOR FIDELITY EMERGING MARKETS FUND
COUNTRIES NOT CONSIDERED TO HAVE EMERGING MARKETS. As of October
31, 1997, countries not considered to have an emerging market
economy are as follows: Australia, Austria, Belgium, Canada, Denmark,
Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New
Zealand, Norway, Por tugal, Spain, Sweden, Switzerland, the
United Kingdom, and the United States.
INVESTMENT POLICIES SHARED BY THE FUNDS
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related
risks. FMR may not buy all of these instruments or use all of these
techniques unless it believes that doing so will help the fund achieve
its goal.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be,
"affiliated persons" of the fund under the Investment Company Act of
1940. These transactions may include repurchase agreements with
custodian banks; short-term obligations of, and repurchase agreements
with, the 50 largest U.S. banks (measured by deposits); municipal
securities; U.S. Government securities with affiliated financial
institutions that are primary dealers in these securities; short-term
currency transactions; and short-term borrowings. In accordance with
exemptive orders issued by the Securities and Exchange Commission
(SEC), the Board of Trustees has established and periodically reviews
procedures applicable to transactions involving affiliated financial
institutions.
CLOSED-END INVESTMENT COMPANIES. Each fund may purchase the shares of
closed-end investment companies to facilitate investment in certain
countries. Shares of closed-end investment companies may trade at a
premium or a discount to their net asset value.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign
currencies, and securities issued by U.S. entities with substantial
foreign operations may involve significant risks in addition to the
risks inherent in U.S. investments.
Foreign investments involve risks relating to local political,
economic, regulatory, or social instability, military action or
unrest, or adverse diplomatic developments, and may be affected by
actions of foreign governments adverse to the interests of U.S.
investors. Such actions may include the possibility of expropriation
or nationalization of assets, confiscatory taxation, restrictions on
U.S. investment or on the ability to repatriate assets or convert
currency into U.S. dollars, or other government intervention. There is
no assurance that FMR will be able to anticipate these potential
events or counter their effects. In addition, the value of securities
denominated in foreign currencies and of dividends and interest paid
with respect to such securities will fluctuate based on the relative
strength of the U.S. dollar.
It is anticipated that in most cases the best available market for
foreign securities will be on an exchange or in over-the-counter
markets (OTC) located outside of the United States. Foreign stock
markets, while growing in volume and sophistication, are generally not
as developed as those in the United States, and securities of some
foreign issuers may be less liquid and more volatile than securities
of comparable U.S. issuers. Foreign security trading practices,
including those involving securities settlement where fund assets may
be released prior to receipt of payment, may result in increased risk
in the event of a failed trade or the insolvency of a foreign
broker-dealer, and may involve substantial delays. In addition, the
costs associated with foreign investments, including withholding
taxes, brokerage commissions and custodial costs, are generally higher
than with U.S. investments.
Foreign markets may offer less protection to investors than U.S.
markets. Foreign issuers are generally not bound by uniform
accounting, auditing, and financial reporting requirements and
standards of practice comparable to those applicable to U.S. issuers.
Adequate public information on foreign issuers may not be available,
and it may be difficult to secure dividends and information regarding
corporate actions on a timely basis. In general, there is less overall
governmental supervision and regulation of securities exchanges,
brokers, and listed companies than in the United States. OTC markets
tend to be less regulated than stock exchange markets and, in certain
countries, may be totally unregulated. Regulatory enforcement may be
influenced by economic or political concerns, and it also may be
difficult for an investor to enforce its legal rights in foreign
countries.
Some foreign securities impose restrictions on transfer within the
United States or to U.S. persons. Although securities subject to such
transfer restrictions may be marketable abroad, they may be less
liquid than foreign securities of the same class that are not subject
to such restrictions.
American Depositary Receipts (ADRs) as well as other "hybrid" forms
of ADRs, including European Depositary Receipts (EDRs) and Global
Depositary Receipts (GDRs), are certificates evidencing ownership of
shares of a foreign issuer. These certificates are issued by
depository banks and generally trade on an established market in the
United States or elsewhere. The underlying shares are held in trust by
a custodian bank or similar financial institution in the issuer's home
country. The depository bank may not have physical custody of the
underlying securities at all times and may charge fees for various
services, including forwarding dividends and interest and corporate
actions. ADRs are an alternative to directly purchasing the underlying
foreign securities in their national markets and currencies. However,
ADRs continue to be subject to many of the risks associated with
investing directly in foreign securities. These risks include foreign
exchange risk as well as the political and economic risks of the
underlying issuer's country.
The risks of foreign investing may be magnified for investments in
emerging markets. Security prices in emerging markets can be
significantly more volatile than those in more developed markets,
reflecting the greater uncertainties of investing in less established
markets and economies. In particular, countries with emerging markets
may have relatively unstable governments, may present the risk of
nationalization of businesses, restrictions on foreign ownership or
prohibitions on the repatriation of assets, and may have less
protection of property rights than more developed countries. The
economies of countries with emerging markets may be predominantly
based on only a few industries, may be highly vulnerable to changes in
local or global trade conditions, and may suffer from extreme and
volatile debt burdens or inflation rates. Local securities markets may
trade a small number of securities and may be unable to respond
effectively to increases in trading volume, potentially making prompt
liquidation of substantial holdings difficult or impossible at
times.
FOREIGN CURRENCY TRANSACTIONS. A fund may conduct foreign currency
transactions on a spot (i.e., cash) or forward basis (i.e., by
entering into forward contracts to purchase or sell foreign
currencies). Although foreign exchange dealers generally do not charge
a fee for such conversions, they do realize a profit based on the
difference between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign
currency at one rate, while offering a lesser rate of exchange should
the counterparty desire to resell that currency to the dealer. Forward
contracts are customized transactions that require a specific amount
of a currency to be delivered at a specific exchange rate on a
specific date or range of dates in the future. Forward contracts are
generally traded in an interbank market directly between currency
traders (usually large commercial banks) and their customers. The
parties to a forward contract may agree to offset or terminate the
contract before its maturity, or may hold the contract to maturity and
complete the contemplated currency exchange. A fund may use currency
forward contracts for any purpose consistent with its investment
objective.
The following discussion summarizes the principal currency management
strategies involving forward contracts that could be used by a fund. A
fund may also use swap agreements, indexed securities, and options and
futures contracts relating to foreign currencies for the same
purposes.
A "settlement hedge" or "transaction hedge" is designed to protect a
fund against an adverse change in foreign currency values between the
date a security is purchased or sold and the date on which payment is
made or received. Entering into a forward contract for the purchase or
sale of the amount of foreign currency involved in an underlying
security transaction for a fixed amount of U.S. dollars "locks in" the
U.S. dollar price of the security. Forward contracts to purchase or
sell a foreign currency may also be used by a fund in anticipation of
future purchases or sales of securities denominated in foreign
currency, even if the specific investments have not yet been selected
by FMR.
A fund may also use forward contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. For
example, if a fund owned securities denominated in pounds sterling, it
could enter into a forward contract to sell pounds sterling in return
for U.S. dollars to hedge against possible declines in the pound's
value. Such a hedge, sometimes referred to as a "position hedge,"
would tend to offset both positive and negative currency fluctuations,
but would not offset changes in security values caused by other
factors. A fund could also hedge the position by selling another
currency expected to perform similarly to the pound sterling. This
type of hedge, sometimes referred to as a "proxy hedge," could offer
advantages in terms of cost, yield, or efficiency, but generally would
not hedge currency exposure as effectively as a direct hedge into U.S.
dollars. Proxy hedges may result in losses if the currency used to
hedge does not perform similarly to the currency in which the hedged
securities are denominated.
A fund may enter into forward contracts to shift its investment
exposure from one currency into another. This may include shifting
exposure from U.S. dollars to a foreign currency, or from one foreign
currency to another foreign currency. This type of strategy, sometimes
known as a "cross-hedge," will tend to reduce or eliminate exposure to
the currency that is sold, and increase exposure to the currency that
is purchased, much as if a fund had sold a security denominated in one
currency and purchased an equivalent security denominated in another.
Cross-hedges protect against losses resulting from a decline in the
hedged currency, but will cause a fund to assume the risk of
fluctuations in the value of the currency it purchases.
Under certain conditions, SEC guidelines require mutual funds to set
aside appropriate liquid assets in a segregated custodial account to
cover currency forward contracts. As required by SEC guidelines, a
fund will segregate assets to cover currency forward contracts, if
any, whose purpose is essentially speculative. A fund will not
segregate assets to cover forward contracts entered into for hedging
purposes, including settlement hedges, position hedges, and proxy
hedges.
Successful use of currency management strategies will depend on FMR's
skill in analyzing currency values. Currency management strategies may
substantially change a fund's investment exposure to changes in
currency exchange rates and could result in losses to a fund if
currencies do not perform as FMR anticipates. For example, if a
currency's value rose at a time when FMR had hedged a fund by selling
that currency in exchange for dollars, a fund would not participate in
the currency's appreciation. If FMR hedges currency exposure through
proxy hedges, a fund could realize currency losses from both the hedge
and the security position if the two currencies do not move in tandem.
Similarly, if FMR increases a fund's exposure to a foreign currency
and that currency's value declines, a fund will realize a loss. There
is no assurance that FMR's use of currency management strategies will
be advantageous to a fund or that it will hedge at appropriate times.
FOREIGN REPURCHASE AGREEMENTS. Foreign repurchase agreements may
include agreements to purchase and sell foreign securities in exchange
for fixed U.S. dollar amounts, or in exchange for specified amounts of
foreign currency. Unlike typical U.S. repurchase agreements, foreign
repurchase agreements may not be fully collateralized at all times.
The value of a security purchased by a fund may be more or less than
the price at which the counterparty has agreed to repurchase the
security. In the event of default by the counterparty, the fund may
suffer a loss if the value of the security purchased is less than the
agreed-upon repurchase price, or if the fund is unable to successfully
assert a claim to the collateral under foreign laws. As a result,
foreign repurchase agreements may involve higher credit risks than
repurchase agreements in U.S. markets, as well as risks associated
with currency fluctuations. In addition, as with other emerging market
investments, repurchase agreements with counterparties located in
emerging markets or relating to emerging markets may involve issuers
or counterparties with lower credit ratings than typical U.S.
repurchase agreements.
FUNDS' RIGHTS AS A SHAREHOLDER. The funds do not intend to direct or
administer the day-to-day operations of any company. Each fund,
however, may exercise its rights as a shareholder and may communicate
its views on important matters of policy to management, the Board of
Directors, and shareholders of a company when FMR determines that such
matters could have a significant effect on the value of the fund's
investment in the company. The activities that a fund may engage in,
either individually or in conjunction with others, may include, among
others, supporting or opposing proposed changes in a company's
corporate structure or business activities; seeking changes in a
company's directors or management; seeking changes in a company's
direction or policies; seeking the sale or reorganization of the
company or a portion of its assets; or supporting or opposing third
party takeover efforts. This area of corporate activity is
increasingly prone to litigation and it is possible that a fund could
be involved in lawsuits related to such activities. FMR will monitor
such activities with a view to mitigating, to the extent possible, the
risk of litigation against a fund and the risk of actual liability if
a fund is involved in litigation. No guarantee can be made, however,
that litigation against a fund will not be undertaken or liabilities
incurred.
FUTURES AND OPTIONS. The following sections pertain to futures and
options: Asset Coverage for Futures and Options Positions, Combined
Positions, Correlation of Price Changes, Futures Contracts, Futures
Margin Payments, Limitations on Futures and Options Transactions,
Liquidity of Options and Futures Contracts, Options and Futures
Relating to Foreign Currencies, OTC Options, Purchasing Put and Call
Options, and Writing Put and Call Options.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The funds will
comply with guidelines established by the Securities and Exchange
Commission with respect to coverage of options and futures strategies
by mutual funds, and if the guidelines so require will set aside
appropriate liquid assets in a segregated custodial account in the
amount prescribed. Securities held in a segregated account cannot be
sold while the futures or option strategy is outstanding, unless they
are replaced with other suitable assets. As a result, there is a
possibility that segregation of a large percentage of a fund's assets
could impede portfolio management or the fund's ability to meet
redemption requests or other current obligations.
COMBINED POSITIONS. A fund may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the
overall position. For example, a fund may purchase a put option and
write a call option on the same underlying instrument, in order to
construct a combined position whose risk and return characteristics
are similar to selling a futures contract. Another possible combined
position would involve writing a call option at one strike price and
buying a call option at a lower price, in order to reduce the risk of
the written call option in the event of a substantial price increase.
Because combined options positions involve multiple trades, they
result in higher transaction costs and may be more difficult to open
and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely
that the standardized contracts available will not match a fund's
current or anticipated investments exactly. The funds may invest in
options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in
which they typically invest, which involves a risk that the options or
futures position will not track the performance of a fund's other
investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a
fund's investments well. Options and futures prices are affected by
such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time
remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result
from differing levels of demand in the options and futures markets and
the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price
fluctuation limits or trading halts. A fund may purchase or sell
options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to
attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in
all cases. If price changes in a fund's options or futures positions
are poorly correlated with its other investments, the positions may
fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees
to purchase a specified underlying instrument at a specified future
date. When a fund sells a futures contract, it agrees to sell the
underlying instrument at a specified future date. The price at which
the purchase and sale will take place is fixed when the fund enters
into the contract. Futures can be held until their delivery dates, or
can be closed out before then if a liquid secondary market is
available.
The funds may invest in futures based on such indexes as the CAC 40
(France), DAX 30 (Germany), EuroTop 100 (Europe), IBEX (Spain), FTSE
100 (United Kingdom), All Ordinary (Australia), Hang Seng (Hong Kong),
and Nikkei 225, Nikkei 300 and TOPIX (Japan).
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore,
purchasing futures contracts will tend to increase a fund's exposure
to positive and negative price fluctuations in the underlying
instrument, much as if it had purchased the underlying instrument
directly. When a fund sells a futures contract, by contrast, the value
of its futures position will tend to move in a direction contrary to
the market. Selling futures contracts, therefore, will tend to offset
both positive and negative market price changes, much as if the
underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless
the contract is held until the delivery date. However, both the
purchaser and seller are required to deposit "initial margin" with a
futures broker, known as a futures commission merchant (FCM), when the
contract is entered into. Initial margin deposits are typically equal
to a percentage of the contract's value. If the value of either
party's position declines, that party will be required to make
additional "variation margin" payments to settle the change in value
on a daily basis. The party that has a gain may be entitled to receive
all or a portion of this amount. Initial and variation margin payments
do not constitute purchasing securities on margin for purposes of a
fund's investment limitations. In the event of the bankruptcy of an
FCM that holds margin on behalf of a fund, the fund may be entitled to
return of margin owed to it only in proportion to the amount received
by the FCM's other customers, potentially resulting in losses to the
fund.
Although futures exchanges generally operate similarly in the U.S.
and abroad, foreign futures exchanges may follow different trading,
settlement and margin procedures than U.S. exchanges do. Futures
contracts traded outside the United States may involve greater risk of
loss than U.S.-traded contracts, including potentially greater risks
of losses due to insolvency of a futures broker, exchange member or
other party that may owe initial or variation margin to a fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading
Commission (CFTC) and the National Futures Association, which regulate
trading in the futures markets. The funds intend to comply with Rule
4.5 under the Commodity Exchange Act, which limits the extent to which
the funds can commit assets to initial margin deposits and option
premiums.
In addition, each fund will not: (a) sell futures contracts, purchase
put options, or write call options if, as a result, more than 25% of
the fund's total assets would be hedged with futures and options under
normal conditions; (b) purchase futures contracts or write put options
if, as a result, the fund's total obligations upon settlement or
exercise of purchased futures contracts and written put options would
exceed 25% of its total assets; or (c) purchase call options if, as a
result, the current value of option premiums for call options
purchased by the fund would exceed 5% of the fund's total assets.
These limitations do not apply to options attached to or acquired or
traded together with their underlying securities, and do not apply to
securities that incorporate features similar to options.
The above limitations on the funds' investments in futures contracts
and options, and the funds' policies regarding futures contracts and
options discussed elsewhere in this SAI, may be changed as regulatory
agencies permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or
futures contract at any particular time. Options may have relatively
low trading volume and liquidity if their strike prices are not close
to the underlying instrument's current price. In addition, exchanges
may establish daily price fluctuation limits for options and futures
contracts, and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days
when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible for a fund to enter into new positions
or close out existing positions. If the secondary market for a
contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require a fund to continue to hold a
position until delivery or expiration regardless of changes in its
value. As a result, a fund's access to other assets held to cover its
options or futures positions could also be impaired.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except
that they are traded on exchanges (and have margin requirements) and
are standardized as to contract size and delivery date. Most currency
futures contracts call for payment or delivery in U.S. dollars. The
underlying instrument of a currency option may be a foreign currency,
which generally is purchased or delivered in exchange for U.S.
dollars, or may be a futures contract. The purchaser of a currency
call obtains the right to purchase the underlying currency, and the
purchaser of a currency put obtains the right to sell the underlying
currency.
The uses and risks of currency options and futures are similar to
options and futures relating to securities or indices, as discussed
above. The funds may purchase and sell currency futures and may
purchase and write currency options to increase or decrease their
exposure to different foreign currencies. A fund may also purchase and
write currency options in conjunction with each other or with currency
futures or forward contracts. Currency futures and options values can
be expected to correlate with exchange rates, but may not reflect
other factors that affect the value of a fund's investments. A
currency hedge, for example, should protect a Yen-denominated security
from a decline in the Yen, but will not protect a fund against a price
decline resulting from deterioration in the issuer's creditworthiness.
Because the value of a fund's foreign-denominated investments changes
in response to many factors other than exchange rates, it may not be
possible to match the amount of currency options and futures to the
value of the fund's investments exactly over time.
OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract
size, and strike price, the terms of over-the-counter (OTC) options
(options not traded on exchanges) generally are established through
negotiation with the other party to the option contract. While this
type of arrangement allows the funds greater flexibility to tailor an
option to its needs, OTC options generally involve greater credit risk
than exchange-traded options, which are guaranteed by the clearing
organization of the exchanges where they are traded.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund
obtains the right (but not the obligation) to sell the option's
underlying instrument at a fixed strike price. In return for this
right, the fund pays the current market price for the option (known as
the option premium). Options have various types of underlying
instruments, including specific securities, indices of securities
prices, and futures contracts. The fund may terminate its position in
a put option it has purchased by allowing it to expire or by
exercising the option. If the option is allowed to expire, the fund
will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the
strike price. A fund may also terminate a put option position by
closing it out in the secondary market at its current price, if a
liquid secondary market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying
instrument's price does not fall enough to offset the cost of
purchasing the option, a put buyer can expect to suffer a loss
(limited to the amount of the premium paid, plus related transaction
costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right
to purchase, rather than sell, the underlying instrument at the
option's strike price. A call buyer typically attempts to participate
in potential price increases of the underlying instrument with risk
limited to the cost of the option if security prices fall. At the same
time, the buyer can expect to suffer a loss if security prices do not
rise sufficiently to offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it
takes the opposite side of the transaction from the option's
purchaser. In return for receipt of the premium, the fund assumes the
obligation to pay the strike price for the option's underlying
instrument if the other party to the option chooses to exercise it.
When writing an option on a futures contract, the fund will be
required to make margin payments to an FCM as described above for
futures contracts. A fund may seek to terminate its position in a put
option it writes before exercise by closing out the option in the
secondary market at its current price. If the secondary market is not
liquid for a put option the fund has written, however, the fund must
continue to be prepared to pay the strike price while the option is
outstanding, regardless of price changes, and must continue to set
aside assets to cover its position.
If security prices rise, a put writer would generally expect to
profit, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it
is likely that the writer will also profit, because it should be able
to close out the option at a lower price. If security prices fall, the
put writer would expect to suffer a loss. This loss should be less
than the loss from purchasing the underlying instrument directly,
however, because the premium received for writing the option should
mitigate the effects of the decline.
Writing a call option obligates a fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise
of the option. The characteristics of writing call options are similar
to those of writing put options, except that writing calls generally
is a profitable strategy if prices remain the same or fall. Through
receipt of the option premium, a call writer mitigates the effects of
a price decline. At the same time, because a call writer must be
prepared to deliver the underlying instrument in return for the strike
price, even if its current value is greater, a call writer gives up
some ability to participate in security price increases.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed
of in the ordinary course of business at approximately the prices at
which they are valued. Under the supervision of the Board of Trustees,
FMR determines the liquidity of a fund's investments and, through
reports from FMR, the Board monitors investments in illiquid
instruments. In determining the liquidity of a fund's investments, FMR
may consider various factors, including (1) the frequency of trades
and quotations, (2) the number of dealers and prospective purchasers
in the marketplace, (3) dealer undertakings to make a market, (4) the
nature of the security (including any demand or tender features), and
(5) the nature of the marketplace for trades (including the ability to
assign or offset the fund's rights and obligations relating to the
investment).
Investments currently considered by the funds to be illiquid include
repurchase agreements not entitling the holder to payment of principal
and interest within seven days, over-the-counter options, and
non-government stripped fixed-rate mortgage-backed securities. Also,
FMR may determine some restricted securities, government-stripped
fixed-rate mortgage-backed securities, loans and other direct debt
instruments, emerging market securities, and swap agreements to be
illiquid. However, with respect to over-the-counter options a fund
writes, all or a portion of the value of the underlying instrument may
be illiquid depending on the assets held to cover the option and the
nature and terms of any agreement the fund may have to close out the
option before expiration.
In the absence of market quotations, illiquid investments are priced
at fair value as determined in good faith by a committee appointed by
the Board of Trustees. If through a change in values, net assets, or
other circumstances, a fund were in a position where more than 15% of
its net assets was invested in illiquid securities, it would seek to
take appropriate steps to protect liquidity.
INDEXED SECURITIES. Each fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices,
currencies, precious metals or other commodities, or other financial
indicators. Indexed securities typically, but not always, are debt
securities or deposits whose value at maturity or coupon rate is
determined by reference to a specific instrument or statistic.
Gold-indexed securities, for example, typically provide for a maturity
value that depends on the price of gold, resulting in a security whose
price tends to rise and fall together with gold prices.
Currency-indexed securities typically are short-term to
intermediate-term debt securities whose maturity values or interest
rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed
securities may be positively or negatively indexed; that is, their
maturity value may increase when the specified currency value
increases, resulting in a security that performs similarly to a
foreign-denominated instrument, or their maturity value may decline
when foreign currencies increase, resulting in a security whose price
characteristics are similar to a put on the underlying currency.
Currency-indexed securities may also have prices that depend on the
values of a number of different foreign currencies relative to each
other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which
they are indexed, and may also be influenced by interest rate changes
in the United States and abroad. At the same time, indexed securities
are subject to the credit risks associated with the issuer of the
security, and their values may decline substantially if the issuer's
creditworthiness deteriorates. Recent issuers of indexed securities
have included banks, corporations, and certain U.S. Government
agencies. Indexed securities may be more volatile than the underlying
instruments.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, each fund has received permission to lend
money to, and borrow money from, other funds advised by FMR or its
affiliates. Interfund loans and borrowings normally extend overnight,
but can have a maximum duration of seven days. Loans may be called on
one day's notice. A fund will lend through the program only when the
returns are higher than those available from an investment in
repurchase agreements, and will borrow through the program only when
the costs are equal to or lower than the cost of bank loans. A fund
may have to borrow from a bank at a higher interest rate if an
interfund loan is called or not renewed. Any delay in repayment to a
lending fund could result in a lost investment opportunity or
additional borrowing costs.
ISSUER LOCATION. FMR determines where an issuer or its principal
activities are located by looking at such factors as its country of
organization, the primary trading market for its securities, and the
location of its assets, personnel, sales, and earnings. The issuer of
a security is considered to be located in a particular country if (1)
the security is issued or guaranteed by the government of the country
or any of its agencies, political subdivisions, or instrumentalities;
(2) the security has its primary trading market in that country; or
(3) the issuer is organized under the laws of that country, derives at
least 50% of its revenues or profits from goods sold, investments
made, or services performed in the country, or has at least 50% of its
assets located in the country.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other
borrower to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or
other receivables), or to other parties. Direct debt instruments are
subject to each fund's policies regarding the quality of debt
securities.
Purchasers of loans and other forms of direct indebtedness depend
primarily upon the creditworthiness of the borrower for payment of
principal and interest. Direct debt instruments may not be rated by
any nationally recognized rating service. If a fund does not receive
scheduled interest or principal payments on such indebtedness, the
fund's share price and yield could be adversely affected. Loans that
are fully secured offer a fund more protections than an unsecured loan
in the event of non-payment of scheduled interest or principal.
However, there is no assurance that the liquidation of collateral from
a secured loan would satisfy the borrower's obligation, or that the
collateral could be liquidated. Indebtedness of borrowers whose
creditworthiness is poor involves substantially greater risks and may
be highly speculative. Borrowers that are in bankruptcy or
restructuring may never pay off their indebtedness, or may pay only a
small fraction of the amount owed. Direct indebtedness of developing
countries also involves a risk that the governmental entities
responsible for the repayment of the debt may be unable, or unwilling,
to pay interest and repay principal when due.
Investments in loans through direct assignment of a financial
institution's interests with respect to a loan may involve additional
risks to a fund. For example, if a loan is foreclosed, the fund could
become part owner of any collateral, and would bear the costs and
liabilities associated with owning and disposing of the collateral. In
addition, it is conceivable that under emerging legal theories of
lender liability, the fund could be held liable as a co-lender. Direct
debt instruments may also involve a risk of insolvency of the lending
bank or other intermediary. Direct debt instruments that are not in
the form of securities may offer less legal protection to a fund in
the event of fraud or misrepresentation. In the absence of definitive
regulatory guidance, each fund relies on FMR's research in an attempt
to avoid situations where fraud or misrepresentation could adversely
affect the fund.
A loan is often administered by a bank or other financial institution
that acts as agent for all holders. The agent administers the terms of
the loan, as specified in the loan agreement. Unless, under the terms
of the loan or other indebtedness, each fund has direct recourse
against the borrower, it may have to rely on the agent to apply
appropriate credit remedies against a borrower. If assets held by the
agent for the benefit of a fund were determined to be subject to the
claims of the agent's general creditors, the fund might incur certain
costs and delays in realizing payment on the loan or loan
participation and could suffer a loss of principal or interest.
Direct indebtedness purchased by each fund may include letters of
credit, revolving credit facilities, or other standby financing
commitments obligating the fund to pay additional cash on demand.
These commitments may have the effect of requiring the fund to
increase its investment in a borrower at a time when it would not
otherwise have done so, even if the borrower's condition makes it
unlikely that the amount will ever be repaid. Each fund will set aside
appropriate liquid assets in a segregated custodial account to cover
its potential obligations under standby financing commitments.
Each fund limits the amount of total assets that it will invest in any
one issuer or in issuers within the same industry (see limitations (1)
and (5) for Canada Fund, Emerging Markets Fund, Europe Fund, Europe
Capital Appreciation Fund, Japan Fund, Latin America Fund, Pacific
Basin Fund and Southeast Asia Fund; and limitations (4) and (i) for
France Fund, Germany Fund, Hong and China Fund, Japan Small Companies
Fund, Nordic Fund and United Kingdom Fund). For purposes of these
limitations, each fund generally will treat the borrower as the
"issuer" of indebtedness held by the fund. In the case of loan
participations where a bank or other lending institution serves as
financial intermediary between each fund and the borrower, if the
participation does not shift to the fund the direct debtor-creditor
relationship with the borrower, SEC interpretations require the fund,
in appropriate circumstances, to treat both the lending bank or other
lending institution and the borrower as "issuers" for these purposes.
Treating a financial intermediary as an issuer of indebtedness may
restrict a fund's ability to invest in indebtedness related to a
single financial intermediary, or a group of intermediaries engaged in
the same industry, even if the underlying borrowers represent many
different companies and industries.
LOWER-QUALITY DEBT SECURITIES. While the market for high-yield
corporate debt securities has been in existence for many years and has
weathered previous economic downturns, the 1980s brought a dramatic
increase in the use of such securities to fund highly leveraged
corporate acquisitions and restructurings. Past experience may not
provide an accurate indication of the future performance of the
high-yield bond market, especially during periods of economic
recession.
The market for lower-quality debt securities may be thinner and less
active than that for higher-quality debt securities, which can
adversely affect the prices at which the former are sold. If market
quotations are not available, lower-quality debt securities will be
valued in accordance with procedures established by the Board of
Trustees, including the use of outside pricing services. Judgment
plays a greater role in valuing high-yield corporate debt securities
than is the case for securities for which more external sources for
quotations and last-sale information are available. Adverse publicity
and changing investor perceptions may affect the ability of outside
pricing services to value lower-quality debt securities and a fund's
ability to dispose of these securities.
Since the risk of default is higher for lower-quality debt securities,
FMR's research and credit analysis are an especially important part of
managing securities of this type held by a fund. In considering
investments for the fund, FMR will attempt to identify those issuers
of high-yielding securities whose financial condition is adequate to
meet future obligations, has improved, or is expected to improve in
the future. FMR's analysis focuses on relative values based on such
factors as interest or dividend coverage, asset coverage, earnings
prospects, and the experience and managerial strength of the issuer.
Each fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security
holder to seek to protect the interests of security holders if it
determines this to be in the best interest of the fund's shareholders.
REAL ESTATE-RELATED INSTRUMENTS include real estate investment trusts,
commercial and residential mortgage-backed securities, and real estate
financings. Real estate-related instruments are sensitive to factors
such as real estate values and property taxes, interest rates, cash
flow of underlying real estate assets, overbuilding, and the
management skill and creditworthiness of the issuer. Real
estate-related instruments may also be affected by tax and regulatory
requirements, such as those relating to the environment.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. The resale price reflects the
purchase price plus an agreed-upon incremental amount which is
unrelated to the coupon rate or maturity of the purchased security. To
protect the fund from the risk that the original seller will not
fulfill its obligation, the securities are held in an account of the
fund at a bank, marked-to-market daily, and maintained at a value at
least equal to the sale price plus the accrued incremental amount.
While it does not presently appear possible to eliminate all risks
from these transactions (particularly the possibility that the value
of the underlying security will be less than the resale price, as well
as delays and costs to a fund in connection with bankruptcy
proceedings), it is each fund's current policy to engage in repurchase
agreement transactions with parties whose creditworthiness has been
reviewed and found satisfactory by FMR.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part
of the registration expense and a considerable period may elapse
between the time it decides to seek registration and the time it may
be permitted to sell a security under an effective registration
statement. If, during such a period, adverse market conditions were to
develop, a fund might obtain a less favorable price than prevailed
when it decided to seek registration of the security.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
fund sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the
instrument at a particular price and time. While a reverse repurchase
agreement is outstanding, the fund will maintain appropriate liquid
assets in a segregated custodial account to cover its obligation under
the agreement. A fund will enter into reverse repurchase agreements
only with parties whose creditworthiness has been found satisfactory
by FMR. Such transactions may increase fluctuations in the market
value of the fund's assets and may be viewed as a form of leverage.
SECURITIES LENDING. A fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity
Brokerage Services, Inc. (FBSI). FBSI is a member of the New York
Stock Exchange and a subsidiary of FMR Corp.
Securities lending allows a fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there
may be delays in the recovery of loaned securities, or even a loss of
rights in collateral supplied should the borrower fail financially,
loans will be made only to parties deemed by FMR to be of good
standing. Furthermore, they will only be made if, in FMR's judgment,
the consideration to be earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that a
fund may engage in loan transactions only under the following
conditions: (1) the fund must receive 100% collateral in the form of
cash or cash equivalents (e.g., U.S. Treasury bills or notes) from the
borrower; (2) the borrower must increase the collateral whenever the
market value of the securities loaned (determined on a daily basis)
rises above the value of the collateral; (3) after giving notice, the
fund must be able to terminate the loan at any time; (4) the fund must
receive reasonable interest on the loan or a flat fee from the
borrower, as well as amounts equivalent to any dividends, interest, or
other distributions on the securities loaned and to any increase in
market value; (5) the fund may pay only reasonable custodian fees in
connection with the loan; and (6) the Board of Trustees must be able
to vote proxies on the securities loaned, either by terminating the
loan or by entering into an alternative arrangement with the borrower.
Cash received through loan transactions may be invested in any
security in which a fund is authorized to invest. Investing this cash
subjects that investment, as well as the security loaned, to market
forces (i.e., capital appreciation or depreciation).
SECURITIES OF SMALL CAPITALIZATION COMPANIES. Smaller capitalization
companies may have limited product lines, markets, or financial
resources. These conditions may make them more susceptible to setbacks
and reversals. Therefore, their securities may have limited
marketability and may be subject to more abrupt or erratic market
movements than securities of larger companies.
SHORT SALES "AGAINST THE BOX." A fund may sell securities short when
it owns or has the right to obtain securities equivalent in kind or
amount to the securities sold short. Such short sales are known as
short sales "against the box." If a fund enters into a short sale
against the box, it will be required to set aside securities
equivalent in kind and amount to the securities sold short (or
securities convertible or exchangeable into such securities) and will
be required to hold such securities while the short sale is
outstanding. The fund will incur transaction costs, including interest
expenses, in connection with opening, maintaining, and closing short
sales against the box.
SOVEREIGN DEBT OBLIGATIONS. Each fund may purchase sovereign debt
instruments issued or guaranteed by foreign governments or their
agencies, including debt of Latin American nations or other developing
countries. Sovereign debt may be in the form of conventional
securities or other types of debt instruments such as loans or loan
participations. Sovereign debt of developing countries may involve a
high degree of risk, and may be in default or present the risk of
default. Governmental entities responsible for repayment of the debt
may be unable or unwilling to repay principal and interest when due,
and may require renegotiation or rescheduling of debt payments. In
addition, prospects for repayment of principal and interest may depend
on political as well as economic factors.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease a fund's exposure to long- or
short-term interest rates (in the United States or abroad), foreign
currency values, mortgage securities, corporate borrowing rates, or
other factors such as security prices or inflation rates. Swap
agreements can take many different forms and are known by a variety of
names. A fund is not limited to any particular form of swap agreement
if FMR determines it is consistent with the fund's investment
objective and policies.
In a typical cap or floor agreement, one party agrees to make payments
only under specified circumstances, usually in return for payment of a
fee by the other party. For example, the buyer of an interest rate cap
obtains the right to receive payments to the extent that a specified
interest rate exceeds an agreed-upon level, while the seller of an
interest rate floor is obligated to make payments to the extent that a
specified interest rate falls below an agreed-upon level. An interest
rate collar combines elements of buying a cap and selling a floor.
Swap agreements will tend to shift a fund's investment exposure from
one type of investment to another. For example, if the fund agreed to
exchange payments in dollars for payments in foreign currency, the
swap agreement would tend to decrease the fund's exposure to U.S.
interest rates and increase its exposure to foreign currency and
interest rates. Caps and floors have an effect similar to buying or
writing options. Depending on how they are used, swap agreements may
increase or decrease the overall volatility of a fund's investments
and its share price.
The most significant factor in the performance of swap agreements is
the change in the specific interest rate, currency, or other factors
that determine the amounts of payments due to and from a fund. If a
swap agreement calls for payments by the fund, the fund must be
prepared to make such payments when due. In addition, if the
counterparty's creditworthiness declined, the value of a swap
agreement would be likely to decline, potentially resulting in losses.
Each fund expects to be able to eliminate its exposure under swap
agreements either by assignment or other disposition, or by entering
into an offsetting swap agreement with the same party or a similarly
creditworthy party.
Each fund will maintain appropriate liquid assets in a segregated
custodial account to cover its current obligations under swap
agreements. If a fund enters into a swap agreement on a net basis, it
will segregate assets with a daily value at least equal to the excess,
if any, of the fund's accrued obligations under the swap agreement
over the accrued amount the fund is entitled to receive under the
agreement. If a fund enters into a swap agreement on other than a net
basis, it will segregate assets with a value equal to the full amount
of the fund's accrued obligations under the agreement.
WARRANTS. Warrants are instruments which entitle the holder to buy
an equity security at a specific price for a specific period of time.
Changes in the value of a warrant do not necessarily correspond to
changes in the value of its underlying security. The price of a
warrant may be more volatile than the price of its underlying
security, and a warrant may offer greater potential for capital
appreciation as well as capital loss.
Warrants do not entitle a holder to dividends or voting rights with
respect to the underlying security and do not represent any rights in
the assets of the issuing company. A warrant ceases to have value if
it is not exercised prior to its expiration date. These factors can
make warrants more speculative than other types of investments.
SPECIAL CONSIDERATIONS AFFECTING EUROPE
Europe can be divided into 2 categories of market development: the
developed economies of Western Europe1, and the transition economies
of Eastern Europe2. As a whole, Europe witnessed a slowdown in growth
in 1996, down to 1.7% from its 1995 level of 2.5%. Inflation decreased
to 4.6%, down from 5.1% in 1995. The weak growth performance in
Germany had an effect on the region as a whole, largely due to the
role Germany plays as a primary trading partner to most European
countries.
In the west, GDP growth averaged 2.5%, unemployment 9.2% and inflation
6.8% 3 . Twelve of the countries enjoy both positive trade
balances and positive current accounts balances, while seven do not.
Likewise, in the east growth averaged 3.1%, while inflation averaged
26%4. All countries save Bulgaria saw trade and current accounts
deficits.
Stock market performance in the western countries was strong. Over
9100 firms, both foreign and domestic, are listed on the exchanges
throughout the region. Total market capitalization in the west was
over $9 trillion in 1996. Market capitalization totals grew over their
1995 levels on an average of 31%, with notable performances by Turkey
and Greece, both growing by almost 50%. Trading value turnover
increased in all countries save Austria and Ireland, and the average
increase across the region was 29%.
1. Austria, Belgium, Denmark, Finland, France, Germany, Greece,
Iceland, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal,
Spain, Sweden, Switzerland, Turkey, United Kingdom.
2. Albania, Bulgaria, Croatia, Czech Republic, Estonia, Hungary,
Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia.
3. This average inflation rate includes the exceptionally high rate in
Turkey (86.0%). Without this outlier, inflation across the region
averaged 2.4%.
4. This average inflation rate includes the exceptionally high rate in
Bulgaria (125.0%). Without this outlier, inflation across the region
averaged 17.0%.
The European Union (EU) consists of 15 countries of western Europe:
Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland,
Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden and the UK.
The 6 founding countries first formed an economic community in the
1950's to bring down trade barriers such as taxes and quotas, to
eliminate technical restrictions such as special standards and
regulations for foreigners, and coordinate various industrial
policies, such as agriculture. The group has admitted new members in
the 1970's and most recently in 1995 when Austria, Finland and Sweden
joined. By that time the community had changed its legal status to the
European Union (EU) and reaffirmed their goal of creating a single,
unified market that would, at 372.6 million people, be the largest in
the developed world. The notion is to create a union through which
goods, people, and capital could move freely. A second component of
the EU is the creation of a single currency to replace each of the
member countries' domestic currencies. In preparation for the creation
of this currency, to be called the Euro, the Exchange Rate Mechanism
(ERM) was established to keep the various national currencies with a
pre-specified value relative to each other. In 1999 there is planned
the establishment of the Economic and Monetary Union (EMU), as set
forth by the Maastricht Treaty. At this point the Euro will be
introduced and those countries which both qualify and desire to join
will join. Beyond 1999 there will be opportunities for new countries
to join the EMU.
The year 1997 is significant for members of the EU as it is the
initial reference year for evaluating debt levels and deficits within
the criteria set forth by the Maastricht treaty. Specifically, the
Maastricht criteria include, amongst other indicators, an inflation
rate below 3.3%, a public debt below 60% of GDP, and a deficit of 3%
or less of GDP. Failure to meet the Maastricht levels could delay the
realization of EMU by 1999. Many political battles are currently being
waged over the issue of how much debt and deficit reducing policies
should be undertaken. Pressure to increase fiscal spending is strong,
particularly given the slow growth and high unemployment. Indeed,
unemployment rates, which range from 3.2% in Luxembourg to 22% in
Spain and which average 9.9%, are currently seen as the biggest
threats to EMU.
In 1996, the EU averaged a 6.85% inflation rate, a 75.98% government
debt, and a 3.62% budget deficit. Only three countries meet the
necessary debt levels, four countries meet the required deficit
levels, and only 1 meets both (Luxembourg). Broadly speaking, the
success of left of center parties in recent elections in various
countries is a signal that citizens and at least some politicians are
now more hesitant to move rapidly toward EMU.
Many foreign and domestic firms are establishing themselves or
increasing their activity in Europe in anticipation of the unified
single market. Clear, confident signals of what a diverse,
multi-industrial, unified market under a single currency could look
like have been the impetus for increases in market activity, corporate
development and mergers and acquisitions. A successful EMU could prove
to be an engine for sustained growth.
Nevertheless, much discussion of liberalizing the Maastricht criteria
is coming about as 1999 approaches and the prospects of achieving a
successful implementation of the EMU is seen by many as slim. Should
this happen, the political ramifications and the strength of the EMU
would become unpredictable, as many politicians have staked their
credibility on meeting the EMU deadline.
In the meantime, the expansion of the EU to include other countries in
western and Eastern Europe serves as a strong political impetus for
many governments to employ tight fiscal and monetary policies.
Particularly for the eastern European countries, aspirations to join
the EU are likely to push governments to act decisively. At the same
time, there could become an increasingly obvious gap between rich and
poor both within the aspiring countries and also between those
countries who are close to meeting membership criteria and those who
are not. Realigning traditional alliances could result in altering
trading relationships and potentially provoking divisive
socio-economic splits.
The economies of the east are embarking on the transition from
communism at different paces with appropriately different
characteristics. War torn Croatia's economy crossed firmly into
positive growth levels for the first time since it split from
Yugoslavia while the rapidly developing Polish and Czech economies
continued their strong advance, responded to rising levels of
investment, domestic consumption, exchange rate stability, and export
growth. To be sure, one country's recipe for success is unique from
all other countries. Inflation and unemployment levels differ widely,
and the search for a `transition strategy' remains confined to the
dictates of local conditions.
In some countries, such as Albania and Romania, political events and
policy failures severely hindered economic recovery. In others, such
as Serbia, extreme political events prevent the gathering of accurate
macroeconomic data. Politically, what separates these countries from
the rest is not that they have relied on the leadership of former
communists, but that these politicians have continued to reject the
libertarian economic principles that their counterparts in other
eastern countries have been implementing. Part of this rejection
includes the failure to establish an effective and legitimate legal
infrastructure. This position isolates these countries from both the
west and their multinational organizations.
For the more developed eastern economies, partnership with western
institutions such as the EU and NATO serve as incentives to balance
the demands of the citizens with fiscal austerity. As relationships
develop and confidence rises, investment in these economies increases.
In the east established stock markets now exist in Bulgaria, Croatia,
Czech Republic, Hungary, Poland, Slovenia and Slovakia. Over 330 firms
are listed on the various exchanges, and in 1996 total market
capitalization was $38.3 billion. This represents an average increase
of 193% over 1995. Trading value turnover in 1996 went up 287% on
average.
Strong sectors for these economies are mostly industrial such as
automotives and machinery. Also strong are manufacturing sectors,
chemicals and pharmaceuticals. Service industries are not extensively
developed, but financial services are increasing. Natural resources,
particularly oil and minerals, are weak.
As this region continues to develop, it is possible that the massive
drops in output that followed the collapse of the Soviet Union are
well behind and that for many economies a significant corner has been
turned toward positive growth. Economies, which work to tie their
future to an integrated, global economy, are likely to continue to
receive the aid and investment from the west that has helped bring
them along so far. Still, the key component of a successful transition
for all of these countries is political commitment to support the
civil institutions that will ultimately replace the monolithic welfare
state. With 113 million people, diverse industry and an well-educated
work force, Eastern Europe is a promising market.
FRANCE. France is a republic of over 58 million people in the historic
if not geographic center of Western Europe. The Fifth French Republic,
established in the early post war period under Charles de Gaulle,
provides for a strong Presidency which can appoint its own cabinet but
must win the approval of a parliamentary majority. The government was
founded upon the French cultural values of liberty, brotherhood and
egalitarianism. In France, this latter value often translates into a
government burden of providing job security. The result is a large,
vast bureaucracy in the public sector and strict employment and labor
laws in the private sector. In addition, a significant portion of
government economic policy revolves around regulating and protecting
domestic industries, particularly farming and manufacturing. Finally,
the French government frequently owns high majority or minority
interests in large companies, particularly utility, transport and
communications concerns. While privatization has been a popular
movement in many other European countries, it has encountered a
stalled stop and go cycle in France.
The French economy is the world's fourth largest, with a GDP of $1,551
billion which grew at 0.9% in 1996. Growth has been fairly low in
France during the 1990's. It has hovered between 0 and 1%, dipped
below zero in 1993, peaked the next year at 2.2% and has declined
since. A significant detractor has been unemployment, which reached
12% in 1996, and the resultant lackluster demand.
Primary industries in France are steel, aluminum, chemicals and
machinery. The agricultural sector is the strongest in Western Europe,
and is second in the world only to the United States. French policies
regarding planning and regulation have helped to preserve their
agricultural advantage, often to the ire of their trading partners.
Their policies have had the benefit of keeping inflation low, between
1.7% and 2.1% over the last 4 years. This has helped promote their
exports, a strong point of the economy, giving them trade surpluses in
each of the last 5 years. Their main trading partners are the US,
Japan, and other EU countries, which account for 60% of their trade.
In 1996, France exported $273 billion worth of goods, with
particularly strong showings in chemicals, electronics and automotive
and aircraft machinery. Imports cost $258 billion and were represented
by petroleum, machinery and electronics. The country is devoid of oil
production and relies heavily on domestic nuclear power and imported
petroleum.
The stock market in France has undergone both gradual and dramatic
changes in recent years, keeping pace with global trends toward
deregulation, privatization, and cross border activities. Until 1996,
the Paris Bourse was the country's sole stock exchange, providing
access to all listed French securities. Last year the `Nouveau Marche'
was created, and together these markets listed 891 domestic firms in
1996, representing a capitalization of stocks and bonds of $1,471
billion. While 30% of the listings are in finance companies, the
market is considered fairly diverse. Foreign firms account for 21% of
listings. The system underwent many regulatory changes in the late
1980's, taking steps toward combating insider trading and ensuring
market transparency. Previously independent brokers are now tied more
directly to larger financial institutions.
Personal investing is becoming more popular in France, with the number
of private investors increasing almost six fold over the past 20
years. Between this development, the desire to seek foreign investment
in privatized firms, and in response to the world wide boom of capital
intensive start up firms, France added the `Nouveau Marche', which is
modeled on the US NASDAQ and is designed to raise equity for new
ventures.
France went to the polls in 1997 after a surprise decision to hold
early elections by President Jacques Chirac of the conservative Rally
for the Republic Party. Chirac's calculation was to capitalize on
current popular support before he was forced to undertake austere
fiscal measures to meet the Maastricht criteria. Voters responded that
they were more concerned about the country's high level of
unemployment. President Chirac now has to work with a government which
is led by Socialist Party leader Lionel Jospin and includes 2 members
of the Communist Party. Although the new government has stated its
commitment to monetary union, it has expressed its desire to loosen
the necessary criteria. This could jeopardize the previous
government's pledges to continue privatization, restrain spending,
support the franc, and endure fiscal austerity. Efforts to lower
unemployment may result in rising labor costs, acting as a drag on
exports. Jospin's ascent has cast new doubts on a timely and
successful EMU implementation.
GERMANY. Germany is the largest economy in all of Europe and with a
1996 GDP of $2,360.8 billion it is the third largest economy in the
world behind the US and Japan. The country's size, location and proven
industrial ability have historically thrust it to the center of
European economic life, a position it was able to re-attain in the
wake of the post war period. More recently, Germany has used this
position as a platform to champion the cause of the European Union,
and also to absorb and transform the devastated economy of it's former
communist eastern half.
The German economy is heavily industrialized, with a strong emphasis
on manufacturing. In Germany 45.6% of its GDP came from the
manufacturing, construction and transportation sectors, and less than
1% from agriculture. Machinery and automotives constituted over 55% of
their foreign trade, both imports and exports. Five out of their top
six trading partners are fellow EU members (the sixth is the USA),
while very low levels of trade are conducted with Asian and Latin
American countries.
The German economy is described as an `insider' `social market'
system. While it is essentially a free market economy with an
underlying ethos of competition and entrepreneurship, there are
significant subsidies and social welfare provisions provided by the
state. Additionally, public financial disclosure laws do not allow for
the market transparency which exists in the US or UK. Privatization
efforts for major infrastructure sectors such as transportation and
communication have attracted foreign interest, and liberal policies
have further encouraged foreign investment. In 1996 the USA, at $41
billion, was the largest foreign investor.
Germany has one of the lowest ratios of market capitalization to GDP
in Europe. In 1996, market capitalization was $665 billion. A total of
1,971 companies are listed, and an unusually high number (66%) are
foreign. This total number of firms is relatively few compared to
economies of comparable size. Many people attribute this to their
history, which has seen political events destroy the market entirely,
and to their culture, which is heavily oriented toward savings. Recent
years have seen a change in this trend and today more money is being
invested in equities.
The German Central bank is one of the world's strongest and most
independent. Their high interest rates have contributed to a
controlled growth of the stock market and a steadily decreasing
inflation rate (1.7% in 1996, down from over 5% in 1992). Keeping the
deutschemark (DM) strong in leading up to EMU has been a priority for
the bank. Nevertheless, exports have thrived despite the currency's
strong position.
Evaluating the recent performance of the German economy must be done
within the context of the 1990 reunification of the eastern and
western states. GDP growth, which hit 5.0% in 1991, dropped rapidly
during the early years of reunification, hitting a low of -1.2% in
1993. It quickly rebounded to 2.9% in 1994, but has been in decline
since, settling at 1.3% in 1996.
Recent weak indicators have included domestic consumption, which,
following from disposable income, is low partly due to the high taxes
which have been necessary to bankroll reunification. Unemployment has
also been a rough point in Germany recently, with uncomfortably high
rates of 8.2% and 9.3% in the past 2 years respectively. Further
reunification austerity combined with increasing world competitiveness
could cause Germany to drift toward a leaner labor force. Already
unemployment rates have caused some discontent amongst German citizens
whose culture generally places strong emphasis on a `social compact'.
While this has manifested itself in violence in the past, the
government has effectively suppressed most extremist activity. A more
likely expression of dissatisfaction could be seen at the polls during
next year's elections.
One of the byproducts of assimilating East Germany into the state has
been the need to restructure many of the government services to
accommodate the new and substantially less affluent citizens.
Significant tax and welfare reforms have yet to be undertaken, and
pressure is mounting on the government to address these issues.
The economy has benefited from a strong export performance throughout
the current decade. Exports, weighted heavily in the industrial
machinery, autos and chemicals sectors, have provided the economy with
positive trade balances increasing from $18.5 billion in 1991 to $69.1
billion last year. Exports are the main engine of GDP growth,
highlighting Germany's dependence on the prosperity of its trading
partners. Germany stands very well poised to supply the emerging
markets of central Europe. It is already the largest European foreign
investor in the Czech Republic and the largest trade partner for
Poland and Hungary. Equally, any failure of the emerging markets to be
prosperous enough to demand German goods could hurt the German export
economy. As most of these emerging markets aspire to join the EU,
there is also the consideration that a larger EU could alter Germany's
trading relationships due to the new quotas, tax rates, exchange rates
and other such factors which would come with EU membership.
A founding member of the EC and the most ardent proponent of EMU,
Germany is seen as the primary player in Union economics and politics.
Seeking to consolidate this position as a first amongst equals, recent
government policy has put a strong emphasis on the maintenance of a
strong currency and the achievement of the Maastricht criteria.
Chancellor Helmut Kohl, due for national elections before October of
1998, has openly staked his political future on the success of EMU,
and thus there is currently strong political pressure to attain the
appropriate rates of growth, unemployment, and inflation. Any change
in the ruling coalition could result in different fiscal and monetary
policies, as well as a new relationship with the central bank.
NORDIC COUNTRIES. Increasing economic globalization and the expansion
of the EU have forced the Nordic countries to scale back their
historically liberal welfare spending policies. While public spending
has dropped from average levels of over 40% of national GDP's, the
cutbacks in social programs have sparked drops in domestic demand and
increases in unemployment. Nevertheless the Nordic economies are
experiencing positive growth fueled largely by strong exports and low
interest rates. The approaching EMU deadline is putting pressure on
each nation to bring their economies in line with the requirements for
entry and the fiscal and political issues remain central in political
debates.
Of the Nordic countries, Finland, Denmark and Sweden are all members
of the EU. Only Norway has elected not to join. However, the decision
not to join will not isolate the Norwegian economy from its Nordic
neighbors. Protectionist policies do make some goods more expensive
for its citizens, but domestic consumption is also higher there than
elsewhere. Fellow European markets continue to constitute over 70% of
Norway's trade. One significant aspect of opting out of the EU is that
the central bank is free to pursue its own agenda, such as setting
inflation targets as opposed to exchange rate targets. Inflation
patterns and currency stability could prove to be issues which may
separate the policy decisions of Norway from the other Nordic
countries.
Politically, the countries of this region are historically known for
their approach to policy making that emphasizes consensus. Long
standing, left of center parties are the most common type of
government, often allying with smaller centrist parties for majority
support. The landscape, however, is so fractured that ruling from a
minority position is common. The absence of a clear majority party
causes policy making to be slow going and sometimes stagnant. The
strongest opposition comes from traditional European conservative
parties, which have gained support in recent years with the decline of
the welfare state and the need for the libertarian policies necessary
to compete and integrate with free markets. Currently, the governments
of Denmark, Sweden, and Norway are in such a position and each will
face strong conservative opposition in their upcoming elections.
Finland currently has a broad coalition, placing an extra premium on
cooperation. The ability of opposition parties to join in alliances
and for ruling parties to remain united on issues such as fiscal
policy are two strong considerations in assessing the future
elections. Also likely to be central in most elections are the various
positions on EU and specifically target dates for entry to the EMU.
While the general direction of economic policy is known, the pace and
the methods for achieving Maastricht criteria while simultaneously
undertaking systemic reforms is yet to be determined. Currently, none
of the countries is certain to join EMU in 1999.
Economically, the Nordic countries are strong export economies that
take advantage of their abundant natural resources. They are also very
closely tied both to each other and to the rest of Europe. Last years
growth ranged from 4.8% in Norway to 2.0% in Sweden, placing them on a
par with Europe as a whole. Most countries have witnessed low levels
of positive growth in the last 5 years, generally between 1% and 4%.
Finland is the exception. As a significant portion of its trade is
with Russia, Finland suffered in the early years of the collapse of
the Soviet Union, with growth falling to -7.1% in 1991. By 1996 growth
had recovered to a 2.3% rate. Export performance was a lead cause of
growth in 1996 for the Nordics. All countries have run consistent
trade surpluses in the 1990's, as well as current account surpluses
for the last three years. Strong export sectors are forestry products,
electronics, pharmaceuticals, and mining and manufacturing. Norway in
particular is heavily dependent on their oil and gas, which account
for 43% of all their exports. They currently are considering
strategies for the time, due to arrive early in the next century, when
their vast reserves run out. The reliance on exports concentrated in a
few sectors tie these countries closely to both relevant world prices
and the economic health of their neighbors, particularly Germany. A
similar dependence is seen in the need for these countries to import
raw materials, especially those that are needed for the electronics
industry.
Another cause for growth has been the investments which have been made
possible by the low interest rates of the respective countries, but
how long these last is uncertain. The central banks, once focusing on
exchange rate stability, are now adhering to inflation targets. As a
consequence, inflation in these countries is almost negligible,
ranging from 0.5% in Sweden to 2.1% in Denmark, better performance
than most of their European neighbors. As EMU criteria has been a
strong impetus for fiscal policies, repeated prolonging of ascension
could weaken the political will which has created the current
environment.
The biggest economic problem in all of these countries is
unemployment, particularly given the cultural ethic which was advanced
during the years of the welfare state. Partly caused by drops in
public spending, unemployment rates in 1996 ranged from 4.4% in Norway
to 16.3% in Denmark. A portion of the unemployment comes from sectors
that traditionally rely on large government spending, such as the
health sector. Labor market reform is a critical issue in these
countries as public spending is cut back. Pensions and structural
issues such as union regulations all need to be reformed, a task,
which brings both challenges and unpopularity to the government that,
accepts it. Not only will labor market reforms give governments a
daunting challenge; they could also cause the public to rethink the
idea of EMU. One positive point is that the countries boast very high
standards of living, which create healthy and highly educated work
forces.
The stock markets in Scandinavia are of medium size, and frequently
are strongly influenced by a small number of large multinational
firms. For example, in Sweden twenty firms constituted 63% of the
market capitalization and 80% of market turnover. Weighing heavily in
the equity markets are the electronics, forest products, mining and
manufacturing sectors. Market capitalization is highest in Sweden at
$245 billion, while the others are between $60-70 billion. Denmark
leads in numbers of firms listed, listing 261 firms. Other countries
average range from 71 (Finland) to 229 (Sweden). The markets are also
active. Turnover rates were 38% higher than those of 1995 for Sweden
were and Denmark. In Norway the figure was 48%, and only Finland
registered a low 22% turnover rate. With the exception of Finland,
foreign investors constitute one third of ownership in each market.
UNITED KINGDOM. The United Kingdom is the world's sixth largest
economy and is home to one of the oldest, most established, and most
active stock markets. An island nation, it built an empire of
strategically located trading posts such as Hong Kong and India. While
today the empire is largely dissolved, trade remains a very key
component of the UK economy, with over $520 billion in goods passing
through its borders last year. Strong domestic sectors are services,
natural energy resources, and heavy industry, including steel, autos,
and machinery. Imports generally emphasize food and manufacturing
components. Their trading partners are predominately established
market economies, such as the US, Japan, and other member countries of
the European Union. The UK, via the North Sea, also has substantial
petroleum resources.
The London Stock Exchange is comprised of six offices scattered
throughout Great Britain and Northern Ireland. It lists over 2700
firms, and trades both foreign and domestic securities as well as
securities issued by the British Government. A vast majority of the
firms listed (80%) are from the UK. Total market capitalization in
1996 was over $5,440 billion. Such size prevents the stock market from
being overly sensitive to the performance of individual firms.
The exchange underwent a significant deregulation in 1986 during which
it abolished the division between brokers working as agents and market
makers working for themselves. This initially caused a rush of firms
entering the market. Soon after, however, with the crash of 1987, many
of these groups were forced to pull out.
Economic performance in 1996 was positive with GDP growth up 2.2%,
reflecting strong consumer spending. The British Pound Sterling has
held steady between $1.5-$1.6 dollars during the past 5 years.
Inflation is low, dropping from 3.4% in 1995 to 2.5% in 1996, making
the country attractive for foreign investment. Investment is
especially attractive to the US, with which the UK shares many market
similarities. Each country is the others' largest foreign investment
partner. In 1995, $252 billion in investment traveled between the two
countries. The year 1996 saw a shrinking of the budget deficit to
- -4.8% of GDP and also of the current account deficit, which settled at
- -$3.1 billion, down from over -$17 billion five years ago.
Under Conservative Party leadership in the early 1980's, the UK
privatized many state run utilities, such as British Gas and British
Telecom. Success of these efforts is evidence both of the strong
entrepreneurial spirit of British society, and also a fundamental
rejection of the welfare state policies that dominated the scene in
the early post war period. Even today, the Labour Party has shed much
of its socialist economic platform, reflecting a strong break away
from policies that continue to be popular in other European countries.
On May 1, 1997, the Labour Party was swept to power after 18 years in
opposition. Their decisive victory gave them a 176-seat majority in
the 650 seat House of Commons. Market reaction to the new
administration was not particularly marked, with the FTSE 100 stock
index registering a 0.25% increase the day after the election. Eager
to attract foreign investment, the new government may not radically
alter economic policies. Some changes could include an increase in
spending on social programs, a slowing of privatization, and an
increase in corporate taxes. Tight monetary policy and interest rate
hikes could be used to keep inflation below the government's
self-imposed 2.5% ceiling. The Bank of England works closely with the
government regarding the setting of interest rates.
The political scene in London is largely shaped by positions regarding
EMU. Pro Europe MPs in the Tory opposition leadership were
marginalized after the election, further polarizing the positions of
the two parties. Despite this expression of support, the UK continues
to be overtly less enthusiastic about EMU than other countries in
Europe and has not committed itself to immediately joining the new
currency once it is established. While the new government has stated
that it hopes to meet the Maastricht criteria, it is less a
self-imposed pressure on the UK governments than it is for other
countries in the Union. Signing on to the EU Social Charter would
neutralize the policies which have set the UK above other countries in
attracting investment, such as wages and employment conditions.
The ever-present problem of Northern Ireland took a turn for the worse
in 1996 as the IRA broke its cease-fire in February. The peace process
continues to move along at a halting and frequently interrupted pace,
with confidence in reaching a solution hitting new lows. Financially,
a stalled process means that extra security precautions have to be
taken to protect the financial district, a favorite target for the IRA
given the potential for economic havoc.
REAL GDP ANNUAL RATE OF GROWTH (ANNUAL % CHANGE)
1996
DENMARK 1.8%
FRANCE 0.9%
GERMANY 1.3%
ITALY 0.8%
NETHERLANDS 2.2%
SPAIN 2.1%
SWITZERLAND 0.0%
UNITED KINGDOM 2.2%
Source: The Economist. The LGT Guide to World Equity Markets 1997.
For national stock market index performance, please see the section on
Performance beginning on page .
SPECIAL CONSIDERATIONS AFFECTING JAPAN, THE PACIFIC BASIN, AND
SOUTHEAST ASIA
Asia has undergone an impressive economic transformation in the past
decade. Many developing economies, utilizing massive foreign
investments, established themselves as inexpensive producers of
manufactured and re-manufactured consumer goods for export. As
household incomes rose, birth was given to rising middle classes,
stimulating domestic consumption. More recently, large projects in
infrastructure and energy resource development have been undertaken,
again utilizing cheap labor, foreign investment, and a business
friendly regulatory environment. During the course of development,
governments, which are democratic, at least in a formal sense, fought
to maintain the stability and control necessary to attract investment
and provide labor. Subsequently, Asian countries today are coming
under increasing, if inconsistent, pressure from western governments
regarding human rights practices.
GDP growth in Asia increased in 1996 to 4.9% over its 1995 level of
3.2%. It is the fastest growing region of the world, with China
leading the way at 9.1%. Of the 20 fastest growing economies in the
world, half of them are in Asia. Inflation in 1996 was reduced to
2.6%, down from 3.0% the previous year. Nevertheless it is a
significant concern given the areas high levels of domestic
consumption and capital inflows.
Manufacturing exports declined significantly in 1996, due to drops in
demand, increased competition, and also strong US dollar performance.
This is particularly true of electronics, a critical industry for
several Asian economies. Declines in exports reveal how much of the
recent growth in these countries is dependent on their trading
partners. Many Asian exports are priced in dollars, while the majority
of its imports are paid for in local currencies. A stable exchange
rate between the dollar and other Asian currencies is important to
Asian trade balances.
Despite the impressive economic growth experienced by Asia's emerging
economies, currency and economic concerns have recently roiled these
markets. Over the summer of 1997, a plunge in Thailand's currency set
off a wave of currency depreciations throughout South and Southeast
Asia. The Thai crisis was brought on by the country's failure to take
steps to curb its current-account deficit, reduce short-term foreign
borrowing and strengthen its troubled banking industry, which was
burdened by speculative property loans. Most of the area's stock
markets tumbled in reaction to these events. Investors were heavy
sellers as they became increasingly concerned that other countries in
the region, faced with similar problems, would have to allow their
currencies to weaken further or take steps that would choke off
economic growth and erode company profits. For U.S. investors, the
impact of the market declines were further exacerbated by the effect
of the decline in the value of their local currencies versus the U.S.
dollar.
JAPAN. A country of 126 million with a labor force of 64 million
people, Japan is renowned as the preeminent economic miracle of the
post war era. Fueled by public investment, protectionist trade
policies, and innovative management styles, the Japanese economy has
transformed itself since the war into the world's second largest
economy. An island nation with limited natural resources, Japan has
developed a strong heavy industrial sector and is highly dependent on
international trade. Strong domestic industries are automotive,
electronics, and metals. Needed imports revolve around raw materials
such as oil, forest products, and iron ore. Subsequently, Japan is
sensitive to fluctuations in commodity prices. With only 19% of its
land suitable for cultivation, the agricultural industry is small and
largely protected. While the U.S. is Japan's largest single trading
partner, close to half of Japan's trade is conducted with developing
nations, almost all of which are in southeast Asia. Investment
patterns generally mirror these trade relationships. Japan has over
$100 billion of direct investment in the United States.
After 5 years of over 4% growth, Japan hit a recession in 1992, which
it is now putting behind itself. Between 1993-1995 the country never
achieved more than 1% GDP growth until 1996, when the figure hit 3.9%.
Credit for the acceleration goes to increased domestic demand,
supported in part by public investment. Additionally, the central bank
undertook a lowering of interest rates and a depreciation of the yen.
These steps were possible because inflation, never exceeding 1.6%
since 1992, hovered at 0.3% in 1996. As well, the country consistently
sees surpluses in both its trade balance and current accounts.
Unemployment, at 3.3%, is low but could be a ffected by future
market liberalizations. A large factor in determining the pace and
scope of the current recovery is the government's handling of
deregulation efforts, a delicate task given the recent changes in
Japanese politics.
The Tokyo Stock Exchange (TSE) is the largest of eight exchanges in
Japan. The exchanges divide the market for domestic stocks into two
sections, with larger companies assigned to the first section and
newly listed or smaller companies assigned to the second. In 1996,
1,833 firms were listed on the TSE, 96% of which were domestic. Some
believe that the TSE has a tendency to be strongly influenced by the
performance of a small circle of large cap firms that dominate the
market. The two key indexes are the Tokyo Stock Price Index (TOPIX)
and the Nikkei. In 1996, TSE performance was lackluster, with the
TOPIX down about 7%.
Recent political initiatives in Japan have fundamentally transformed
Japanese political life, ushering in a new attitude which is strongly
reverberating in the economy. Until recently, the Japanese Parliament
(the Diet) had been consistently dominated by the Liberal Democratic
Party (LDP) since 1955. The LDP dynasty, recently fraught with
scandal, corruption, accusations of maintaining a virtual monopoly,
effectively ended in 1994 thanks to electoral reform measures that
brought Diet seats to previously underrepresented areas. The first
election under this new system was held in October 1996. While the LDP
is still the ruling party, it does so from a minority position. A key
result of the electoral reforms has been a strengthening of ideas of
opposition parties. Indeed, many of the LDP's recent reforms
originated with the leaders of the opposition New Frontier Party. The
LDP's ability to consistently produce bold innovations in a
political ly competitive environment is untested. Regarding the
opposition parties, they suffer from structural and organizational
weaknesses. Infighting and defections are common. This inexperience
with a true multi-party system has caused the rise and fall of four
coalition governments in recent years. Between the adjusting of the
monolithic LDP to a more demanding and competitive system and the
settling of the opposition parties, Japan's political environment
remains unstable.
The desire for electoral reform arose out of what many see as a basic
change in Japanese public opinion in recent years. Faced with
recurring scandal and corruption, Japanese society has come to demand
more accountability from their leaders, more transparency in their
institutions, and less interference from their intensely bureaucratic
government. This attitude is reflected in recent economic and
financial initiatives, including wide scale deregulation and civil
service downsizing.
The results so far have been impressive. Banks, forced to disclose bad
loans, have collapsed or merged, mitigating the effect of such
liabilities on the economy. This is of particular concern in a country
with such a low official discount rate (0.5%). Deregulation of many
service industries has increased their productivity, potentially
providing a new source of growth. In addition, a new law was passed in
1997, giving the Bank of Japan more autonomy over monetary policy.
However, the central bank will still have less autonomy than does the
U.S. Federal Reserve Bank.
Further steps toward complete financial liberalization, known amongst
watchers as the "big bang" and due anytime between now and 2001, bode
well for foreign firms. Proposals under consideration could lower many
barriers allowing foreign firms greater and cheaper access to funds.
Relaxation of restrictions on the insurance market promise s
greater access to foreign firms. When exactly these liberalizations
will fall into place is hard to tell, as the Finance Ministry has some
history of defending the country's banks in the face of foreign
competition.
Nevertheless, sustaining reforms and recovery are not guaranteed.
Drops in consumption, increased budget deficits, or halting
deregulation could all reverse recent performance. This is
additionally complicated by political uncertainty. Furthermore, as a
trade dependent nation long used to high levels of government
protection, it is unclear how the Japanese economy will react to the
potential adoption of the trade liberalization measures which are
constantly promoted by their trading partners. Finally, as the largest
economy in a rapidly changing and often volatile region of the world,
external events such as the Korean conflict could effect Japan. As
many of the governments of Southeast Asia frequently face domestic
discontent, and as many of these countries are Japanese trading
partners and investment recipients, their internal stability and its
impact on regional security are of tremendous importance to Japan.
CHINA AND HONG KONG. China is one of the world's last remaining
communist systems, and the only one that appears poised to endure due
to its measured embrace of capitalist institutions. It is the world's
most populous nation, with 1.3 billion people creating a work force of
630 million. Today's Chinese economy, roughly separated between the
largely agricultural interior provinces and the more industrialized
coastal and southern provinces, has its roots in the reforms of the
recently deceased communist leader Deng Xiaoping. Originally an
orthodox communist system, China undertook economic reforms in 1978 by
providing broad autonomy to certain industries and establishing
special economic zones (SEZ's) to attract foreign investment (FDI).
Attracted to low labor costs and favorable government policies,
investment flowed from many sources, with Hong Kong, Taiwan, and the
United States leading the way. Most of the investment, totaling $37
billion by the end of 1995, has located in the southern provinces,
establishing manufacturing facilities to process goods for re-export.
The result has been a steadily high level of real GDP growth,
averaging 11.35% per year so far this decade. With this growth has
come a doubling of total consumption, a tripling of real incomes for
many workers, and a reduction in the number of people living in
absolute poverty from 270 to 100 million. Today there is a market of
more than 80 million who are now able to afford middle class western
goods.
Such success has not come without negatives. As a communist system in
transition, there still exist high levels of subsidies to state owned
enterprises (SOE) which are not productive. At the end of 1996, it was
reported that close to half of the SOE's run losses. In addition, the
inefficiencies endemic to communist systems, with their parallel (thus
redundant) political, economic and governmental policy bodies,
contribute to high levels of inflation (24%, 17% and 10% in the past 3
years, respectively). Fighting inflation and attempting to cool
runaway growth has forced the government to repeatedly implement
periods of fiscal and monetary austerity. Periodic intervention seems
to be their chosen method of guarding against overheating.
Performance in 1996 reflects this dynamic between growth, inflation,
and the government's attempts to control them. Growth slowed to 9.1%,
largely as a result of a tightening of credits to SOE's. Policy was a
mix between a loose monetary stance and some relatively austere fiscal
positions. While growth was a priority, it came at the cost of
double-digit inflation.
China has two stock exchanges that are set up to accommodate foreign
investment, in Shenzhen and in Shanghai. In both cases, foreign
trading is limited to a special class of shares (Class B) which was
created for that purpose. Only foreign investors may own Class B
shares, but the government must approve sales of Class B shares among
foreign investors. As of December 1996, there were 42 companies with
Class B shares on the two exchanges, for a total Class B market
capitalization of U.S. $4.7 billion.
In Shanghai, all "B" shares are denominated in Chinese renminbi but
all transactions in "B" shares must be settled in US dollars. All
distributions made on "B" shares are also payable in U.S. dollars, the
exchange rate being the weighted average exchange rate for the U.S.
dollar as published by the Shanghai Foreign Exchange Adjustment
Center. In Shenzhen, the purchase and sale prices for "B" shares are
quoted in Hong Kong dollars. Dividends and other lawful revenue
derived from "B" shares are calculated in renminbi but payable in Hong
Kong dollars, the rate of exchange being the average rate published by
the Shenzhen Foreign Exchange Adjustment Center. There are no foreign
exchange restrictions on the repatriation of gains made on or income
derived from "B" shares, subject to the repayment of taxes imposed by
China thereon.
China's proven ability to nurture domestic consumption and expand
export markets leads many to believe that the bulk of its growth has
yet to be seen. Most sources, notably the World Bank, predict future
growth levels through the year 2000 of over 7%. This auspicious
indicator notwithstanding, there are a few special considerations
regarding China's future. While this list is not all-inclusive, it
does highlight some internal and external forces that have a strong
influence on the country's future.
To begin with the internal issues, one matter is that infrastructure
bottlenecks could prove to be a problem, as most FDI has been
concentrated in manufacturing and industry at the expense of badly
needed transportation and power improvements. Secondly, as with all
transition economies, the ability to develop and sustain a credible
legal, regulatory, and tax system could influence the course of
investments. Third, environmentalists warn of the current and looming
problems regarding pollution and resource destruction, a common result
of such industrial growth in developing economies which can't afford
effective environmental protection. This is a particularly noteworthy
issue, given the size of the country's agricultural sector.
Lastly, given China's unique method of transition there exists the
possibility that further economic liberalization could give rise to
new social issues which have heretofore been effectively mitigated.
One such issue is the possible dismantling of inefficient state owned
enterprises, something which is potentially socially explosive given
the communist policy of providing social welfare through the firm.
Exposing what many economists feel is a high level of open
unemployment and widening the gap between the newly empowered business
class and the disenfranchised could pressure the government to retreat
on the road to reform and continue with massive state spending.
Regarding external issues, China's position in the world economy and
its relationship with the United States also have a strong influence
on it's economic performance. The country has recently enjoyed an
almost uninterrupted positive trade balance, averaging $6.5 billion
since 1991. As the largest country amidst the fastest growing region
in the world, China and its multimillion person ethnic diaspora have a
significant role to play in Asian growth. Should China ascend to
become a member of the World Trade Organization (WTO), as it desires,
such movements of capital and goods will become easier.
Export growth in China has recently been subject to fluctuations
caused by external political events, such as the US elections and
debates over human rights issues. US policy (specifically most favored
nation status) is frequently reconsidered by various elements of the
US government in reaction to a variety of issues, from nuclear
proliferation to Tibetan rights. Significant changes in US policy
could impact China's growth, as close to 9% of their GDP is trade with
the US and the US represents the third biggest investor in China.
Perhaps the strongest influence on the Chinese economy is the policy
that is set by the political leaders in Beijing and this is somewhat
of an open question as the death of Deng has created a slight vacuum
in Chinese political society. A large part of Deng's strength derived
from a newly empowered business class endeared to him and it is
unclear if any of his successors can harness this loyalty as
effectively as he did. Sustained growth is one possible way to win
over this constituency, leading many to believe that the future
Chinese leadership will respect market forces at least as much as Deng
did. Choosing between double digit growth and reduced inflation could
continue to be a central economic question, with 1996 (Deng
influenced) decisions pointing to an acceptance of lower, albeit still
high, GDP growth.
Another key political player is the Chinese army. With provocative
situations occurring in Taiwan and the Korean peninsula, and with ever
present pressure from internal democrats, the military is in a
position of leverage regarding the shaping of the future political
scene. Finally, there is the communist party, long seen as a loser
amongst the beneficiaries of Deng's reforms. Many view the battle
between the party and the middle class as a zero sum game and as the
leadership settles, respective alliances and constituencies could
determine how much the government pursues its growth strategy.
The last significant force in the Chinese economy is the acquisition
on July 1, 1997 of Hong Kong as a Special Autonomous Region (SAR). For
the past 99 years as a British Colony, Hong Kong has established
itself as the world's freest market and more recently as an economic
gateway between China and the west.
A tiny, 814 square mile area adjacent to the coast of southern China
with a population of 6 million, Hong Kong has a long established
history as a global trading center. Originally a manufacturing based
economy, most of these business have migrated to southern China. In
their place has emerged a developed, mature service economy which
currently accounts for 83% of it's $16 billion GDP. Hong Kong trades
over $400 billion in goods and services each year with countries
throughout the world, notably China, Japan, and the US. Its leading
exports are textiles and electronics while imports tend to revolve
around foodstuffs and raw materials. Hong Kong's currency, the HK
dollar, was pegged to the US dollar at HK7.7=$1 in 1983 and investors
consider it to be a stable mechanism in enduring confidence lapses and
speculator attacks. Part of this stability is due to the currency
board the colony operates and the US dollar reserves its monetary fund
accumulates on a regular basis. The stock market, (SEHK) listed 583
publicly traded companies by the end of 1996, with total
capitalization at US $451 billion. It is the only stock exchange in
Hong Kong, and rights and restrictions regarding market participation
are the same as those in the UK. A significant portion of SEHK firms
are in real estate, and the Hang Seng index, with 10 of it's 33 firms
involved in real estate, is sensitive to fluctuations in the property
markets.
GDP growth has been steadily slowing since its 1992 level of 6.3%. By
the end of 1996 it settled at 4.3%, down 0.5% from 1995. Still, in
1996 the Hang Seng reached a new high, passing the 13,000 mark in
November. The accompanying increase in sales during this period was
partially due to an inflation rate which, in a consistent straight
line decline, came to rest at 6.3%, its lowest point of the decade.
Another factor of Hang Seng performance was the property market, up
30% over 1995. Finally, despite the fact that unemployment continues
to rise, reaching 3.5% in 1996, and many economists think that this
recent trend is soon to be reversed, as the workforce has become
almost fully adjusted to the structural shifts in the economy since
the beginning of the 1980's.
As a trade center, Hong Kong's economy is very closely tied to that of
its trading partners, particularly China and the United States. In the
wake of Deng's reforms, Hong Kong and China have become increasingly
interdependent economically. Currently, China is Hong Kong's largest
trading partner with over $114 billion in bilateral trade occurring in
1994. After Taiwan, Hong Kong is the largest foreign investor in
China, accounting for about 60 percent of overall foreign direct
investment for a total of over $230 billion. China's investment in
Hong Kong is estimated at US$25 billion. Hong Kong plays a
particularly significant role as an intermediary in US-China trade. In
1996, it handled 56% of China's exports to the U.S and 49% of Chinese
imports from the US.
Regarding the United States, Hong Kong traded over 45 billion worth of
goods in 1994, the most prominent imports being agriculture and
transport equipment, while the concentration of exports was in
electronics and textiles. The United States is responsible for a
cumulative total of $12.5 billion in FDI in Hong Kong, with over 1000
firms located there.
The critical question regarding the future of Hong Kong is how the
Chinese leadership will exert its influence once it becomes a Special
Autonomous Region (SAR). This new status is in accordance with pledges
made at the Joint Declaration on the Question of Hong Kong made by the
Chinese and British governments in 1984. Leading up to the hand over
of the colony, the Chinese government has pledged to uphold the Basic
Law of 1990 which states that Hong Kong's status as an unfettered
financial center will remain in tact for at least 50 years after 1997.
Part of this status includes retaining the legal, financial and
monetary systems (specifically the HK$/US$ peg) which guarantee
economic freedom and foster market expansion.
Many investors and citizens are closely monitoring Chinese actions in
order to assess their actual commitment to these principles. Already
there is evidence of a clear, if slow, current of political change
coming from Beijing. Certain actions, such as the curbing of media
freedoms, indicate that there is the possibility of significant
interference from communist authorities. More significant is the
recent clash between the UK and Chinese governments over China's
abolition of the elected legislature and subsequent installation of
governmental leaders in both the executive and the legislature who are
directly appointed by Beijing. Mr. Tung Chee-hwa, appointed as the
first Chief Executive of the SAR, has surrounded himself with like
minded Machiavellian figures who have strong ties to both market
successes and Beijing leaders. They are portrayed as believing in the
powers of capitalism and central authority, if not democracy, leading
some to speculate that the SAR could develop into a South Korean style
of corporatism which preserves the economic status quo without
incorporating further political freedoms.
In assessing the prospects for Hong Kong's future, it must be noted
that China has a very strong interest in a prosperous SAR.
Particularly if Beijing pursues a growth strategy as it has in the
past, Hong Kong can be a key agent in China's economic policy. Desire
for investment and new technologies necessary for modernization is a
strong incentive to send positive signals through the treatment of
Hong Kong. This is reinforced by the respect Hong Kong is due given
its role in China's recent dynamic performance.
It is possible that consumption will take a brief drop immediately
after July 1 as residents judge the first days under new rule.
However, any slowdown could be offset by efforts by Beijing to
preserve the image of Hong Kong. What may be lost in foreign
investment could be mitigated by mainland investment. Between
investor's uncertainty and Beijing's interest in projecting
confidence, modest growth in the short term is likely. Recent
emigration trends, with many former residents returning having secured
citizenship elsewhere, indicate further growth in the property market.
To be sure, there are more adamant concerns over the effect of the
acquisition. Many are skeptical of Beijing's ability to leave the
currency alone. Some note the continuous drop in GDP as evidence that
Hong Kong has yet to mature as a service economy and that the
workforce hasn't fully adjusted to the switch out of manufacturing.
There are questions as to how profitable the SEHK would be in the
event of a downturn in the real estate market. Additionally, by tying
Hong Kong so closely with China, it now must weather the ups and downs
of Beijing's relationship with the US. Most Favored Nation Status now
means just as much, if not more, to the SAR than it does to Beijing,
with some asserting that revoking MFN could result in losses of up to
$31.8 billion in trade, $4.4 billion in income, and 86,000 in jobs.
Hong Kong's competitive advantage has traditionally been a mix of
geography, market freedoms and entrepreneurial spirit. The
preservation of these advantages is now a function of the island's
independence from Beijing. Today's investors will be vigilant in
measuring how much of that independence is retained after July 1,
1997.
AUSTRALIA. Australia is a 3 million sq. mile continent (about the size
of the 48 continental United States) with a predominantly European
ethnic population of 18.2 million people. A member of the British
Commonwealth, its government is a democratic, federal-state system.
The country has a western style capitalist economy with a work force
of 9.2 million that is concentrated in services, mining, and
agriculture. Australia's natural resources are bauxite, coal, iron
ore, copper, tin, silver, uranium, nickel, tungsten, mineral sands,
lead, zinc, diamonds, natural gas, and oil. Primary trading partners
are the US, Japan, South Korea, New Zealand, UK and Germany. Imports
revolve around machinery and high technology equipment, while exports
are heavy in the agricultural and mineral products, making them
sensitive to world commodity prices.
Historically, Australia's strong points were its agricultural and
mining sectors. While this is still true to a large extent, the
government managed to boost its manufacturing sector by undertaking
protective measures in the 1970's and early 1980's. These have
subsequently been liberalized in an effort to kindle growth in the
industrial sector. Today's economy is more diverse, as manufactures'
share of total exports is increasing. Part of the government's effort
to make manufacturing more competitive was a floating of the
Australian dollar in 1984, precipitating an initial depreciation, and
a campaign to reduce taxes. Such reforms have attracted foreign
investment, particularly in the transport and manufacturing sectors.
Restrictions do exist on investment in certain areas as media, mining
and some real estate. In 1995, cumulative US investment in Australia
totaled more than $65 billion and accounted for 21% of total foreign
investment.
GDP growth reached 3.6% in 1996; a steady increase over the days of
the early 1990's which saw a recession. The recession was followed in
1992 by a jump in growth (from 0.4-2.8%), but this initial boost seems
to have leveled off. The election of a new Liberal/National coalition
government after 13 years of Labor rule has brought with it new
efforts to cut public spending and eliminate the projected $6 billion.
budget deficit. This step, coupled with a steady unemployment rate
(8%), could slow down the recent ascent in growth.
Australia is fully integrated into the world economy, participating in
GATT and also more regional trade associations such as the Asia and
the Pacific Economic Cooperation (APEC) forum. Future growth could
result from their movement towards regional economic liberalization,
but a countervailing force is the reality that some export markets in
Europe could be lost to continued European economic integration.
INDONESIA. Indonesia is a country that encompasses over 17,000 islands
on which live 195 million people. It is a mixed economy that balances
free enterprise with significant government intervention. Deregulation
policies, diversification of strong domestic sectors, and investment
in infrastructure projects have all contributed to high levels of
growth since the late 1980's. Indonesia's economy grew at 7.1% in
1996, the exact average if its performance for the current decade.
Growth in the 1990's has been fairly steady, hovering between 6.5-7.5%
for the most part, peaking at 8.1% in 1995. Moderate growth in
investment, including public investment, and also in import growth,
helped to slowdown GDP growth. Growth has been accompanied by
moderately high levels of inflation, ranging from the recent high of
9.7% in 1993 to a low of 7.1%, as witnessed last year.
Indonesia is currently undergoing a diversification of the core of its
economy. No longer strictly revolving around oil and textiles, it now
gaining strength in high technology manufactures, such as electronics.
Indonesia consistently runs a positive trade balance. Strong export
performers are oil, gas, and textiles and apparel. Oil, once
responsible for 80% of export revenues, now accounts for only 25%, an
indication of how far other (mostly manufacturing and apparel) sectors
have developed. Main imports are raw materials and capital goods.
In 1994 the country underwent deregulation measures which further
boosted investment. By 1996, FDI levels dropped from the record high
in 1995, and the trend was away from large projects including
infrastructure to smaller more manageable projects. Many consider this
a reflection of a desire to avoid the notoriously nepotism ridden
bureaucracy.
The Indonesian government is strongly authoritarian. Treatment of
political opponents, workers and ethnic minorities has put Indonesia
in the world spotlight with criticism of its human rights practices.
One source of outspoken popular discontent is the glaring discrepancy
in income distribution, particularly across ethnic lines. World
attention to the problems in Indonesia has given support to the
various causes, but it does not seem to have had much impact on the
government. Efforts to impose sanctions on the country by both federal
and state level politicians in the US have so far proven unsuccessful,
but are likely to continue to persist.
Politically, the ruling party, Golkar, faces frequent challenges from
unofficially sanctioned opposition parties, but these efforts are
effectively marginalized. The key political question in Indonesia is
who will replace the aging ruler, President Suharto who, at 76, has
been the county's only leader for over 30 years. His long tenure and
the country's nascent democratic institutions leave the question of
proper succession open. During his career he has amassed support from
a directly appointed insider bureaucracy of political and business
elites which features immediate members of his family. As well, he has
relied strongly upon the army to provide the force necessary to
contain social unrest. Which amongst these two institutions will
emerge to replace Suharto is far from clear, and the surrounding
intrigue could lead to some instability. As economic policies have
been crafted to benefit Suharto's supporters in the business
community, any deviation from Suharto's position would likely impact
the economy. Additionally, a key ingredient to Indonesia's success has
been their ability to contain social unrest. Maintaining this control,
especially in the face of recently escalated tensions and political
uncertainty, is an important anchor for economic performance. Proof of
this is the Jakarta Stock Exchange's volatile reaction to riots in
July 1995.
MALAYSIA. 1996 saw Malaysia's GDP growth slow to 8.3%, down from over
9% in 1994 and 1995. Inflation has been kept relatively low at 3.8%.
Performance in 1996 avoided the economy's potential overheating as
export growth, investment, and consumption all slowed. This helped to
bring the current account deficit down by $1.7 billion to settle at
approximately 6.0% of GDP.
A large part of Malaysia's recent growth is due to its manufacturing
industries, particularly electronics and especially semiconductors.
This has led to an increased reliance on imports; thus the economy is
sensitive to shifts in foreign production and demand. This is
particularly true regarding its main trading partners: the US, Japan,
and Singapore. Such shifts were partly responsible for the slowdown in
1996. In addition, monetary policies to stem the threat of overheating
were evident, but the country still needs massive public and private
investment to finance several large infrastructure projects.
Government industrial policy seeks investment to create more value
added high technology manufacturing and service sectors in order to
decrease the emphasis on low skilled manufacturing. Already US
investors have invested over $9 billion, and most of this is in
electronics and energy projects.
Unemployment remains extremely low (2.6%) and labor for completing the
various projects is becoming costly, especially as industry has to go
abroad to search for higher skilled workers. Wages have soared so high
that Malaysia no longer qualifies for the special trading benefits
that the US and the EU bestow upon developing nations. This could hurt
exports. A further catch is that rapidly increasing wages could cause
inflationary pressures, yet a shortage of labor could threaten
development.
The political situation in Malaysia is stable and could possibly
remain so up to and including the next election in the year 2000.
SINGAPORE. Since achieving independence from the British in 1965,
Singapore has repeatedly elected the People's Action Party (PAP) as
their government. It is a party that is so consistent it has only
offered up two prime ministers in this 32-year period. Elections in
January 1997 returned the PAP to power, signaling satisfaction with
their policy of close coordination with the private sector to
stimulate investment. Typical policies include selective tax
incentives, subsidies for R&D, and joint ventures with private firms.
While the combination of consistent leadership and interventionist
policies is sometimes seen as impeding civil liberties and
laissez-faire economics, it has produced an attractive investment
environment.
The Singapore economy is almost devoid of agriculture and natural
resources, not surprising given the island nation's geographic size.
Its strongest sector is manufacturing, particularly of electronics,
machinery and petroleum and chemical products. They produce 45% of the
world's computer disk drives. Major trading partners are Japan,
Malaysia and the US.
The economic situation in Singapore registered a passable year in
1996. The regional trend toward slowed electronics exports made clear
the country's strong reliance on this sector. GDP growth dropped from
8.8% to 6.5%, while inflation remained low (1.4%) and the current
account balance maintained its large surplus. Property values have
gone up recently, partially in response to uncertainty surrounding
Hong Kong. Interest rates are consistently low, and wages high,
leaving some at a loss to explain the repeatedly low inflation rate.
SOUTH KOREA. South Korea is one of the more spectacular economic
stories of the post war period. Coming out of a civil war in the
mid-1950's the country found itself with a destroyed economy and
boundaries that excluded most of the peninsula's mineral and
industrial resources. It proceeded over the next 40 years to create a
society that includes a highly skilled and educated labor force and an
economy that exploited the large amounts of foreign aid given to it by
the US and other countries. Exports of labor intensive products such
as textile initially drove the economy, to be replaced later by heavy
industries such as automobiles.
Hostile relations with North Korea dictate large expenditures on the
military, and political uncertainty and potential famine in the north
has put the south on high alert. Any kind of significant military
effort could have multiple effects, both positive and negative, on the
economy. South Korea's lack of natural resources put a premium on
imported energy products, making the economy very sensitive to oil
prices.
Since 1991, GDP growth has fluctuated widely between 5% and 9%,
settling down at 6.8% last year. Currently the labor market is in need
of restructuring, and its rigidity has hurt performance. Relations
between labor and the large conglomerates, or Chaebols, could prove to
be a significant influence on future growth. Inflation in the same
period has been consistently dropping, save a brief rise in 1994, and
finished the year at 4.5%. The country consistently runs trade
deficits, and the current account deficit widened sharply in 1996,
more than doubling to $19.3 billion. South Korea's strong domestic
sectors are electronics, textiles and industrial machinery. Exports
revolve around electronics, textiles, automobiles, steel and footwear,
while imports focus on oil, food, chemicals and metals.
The stock market (Korea Stock Exchange) is currently undergoing
liberalization to include more foreign participation, which was only
first allowed in 1992, but the bond market remains off limits until
1999. Liberalization is in response to the KSE 1996 performance, which
was down 18%. While the number of listed companies increased by 39 in
1996, total market capitalization fell 24% from its 1995 level.
THAILAND. The political situation in Thailand is tenuous. Democracy
has a short history in the country, and power is alternatively
obtained by the military, a non-elected bureaucratic elite, and
democratically elected officials. The frequent transfers of power have
generally gone without divisive, bloody conflicts, but there are
bitter differences between the military and the political parties.
Free elections in 1992 and again in 1995 have produced non-military
democratic leaders from different parties, a healthy sign of party
competition. While democratic institutions are stabilizing, the
current government is under increasing pressure due to recent poor
economic performance.
The Thai economy has witnessed a fundamental transition in recent
years. Traditionally it was a strong producer of textiles, minerals
and agricultural products, but more recently it has tried to build
high tech export industries. This proved particularly fortuitous in
the mid 1990's when flooding wiped out much of their traditional
exports, but the newer industries remained strong, keeping the growth
rate above 8%. (This level had been achieved through the 1990's,
giving the economy a name as one of the fastest growing in the
region.) The government has also taken steps toward reducing the
influence of central planning, opening its market to foreigners and
abandoning five-year plans. This restructuring is still underway, and
the change can cause difficulty at times.
GDP growth slowed a bit last year to 7.2%, down from 8.6% in 1995. The
current account deficit was 7.9% of GDP, and inflation was 5.8%, both
considered high but steady and controllable results in line with
recent years' performance. One cause for the slowdown was a decline in
export growth as its manufacturing industry faces stiff competition
from low priced competitors and its agriculture suffers drops in
production. In 1996, Thailand's currency, the baht, was linked to a US
dollar dominated basket, and monetary policy had remained tight to
keep that link strong and avoid inflationary pressures.
The situation changed in early 1997, however, with the revelation of
many bad bank loans and a bubbling of property prices due to
over-investment. Many companies, faced with slowing exports, stopped
servicing their debts. Many other firms have stayed alive only with
infusions of public cash, and the government has been slow to let many
property laden financial firms fail. The stock market has reacted
strongly, dropping to new lows for the decade. Reluctant to float the
baht, indeed promising that it wouldn't, the government relented in
early July hoping to revive export and stock market growth. The
subsequent devaluation (approximately 20% against the dollar in the
first month) led to the need for a $16 billion loan coordinated by the
IMF to shore up foreign reserves. Most of the loan came from
neighboring countries led by Japan, indicating their desire to both
protect their own investments in Thailand, and also mitigate the
effect of the devaluation on their home currencies
The total impact of the entire situation is negative, particularly on
inflation, unemployment and foreign debt. Significant turnover and a
major gamble on the currency has put the government in a precarious
position, especially given the fact that it is a six party coalition.
Dissatisfaction amongst the military, always a political factor, is
high.
INDIA. Although India's economy has grown at an average rate of 7%
over the past three years, growth has slowed to about 6% during 1997.
Economic growth, which had been fueled by strong industrial and export
sectors, slowed along with growth in these sectors. It is uncertain
whether India will be able to sustain the high growth rates it
experienced through 1996. Subsidies amount to almost 15% of GDP, while
agriculture accounts for about 25%. In 1997, annual inflation has been
approximately 3.8% down from about 6.6% the previous year. During
1997, the current account deficit has been roughly 1.2% of GDP, down
from 1.5% in 1996. The exchange rate has been gradually devalued in
the 1980's and 1990's, and could be devalued further. Beginning in
1992, industry, financial markets, and the country's trade have been
gradually liberalized. Fifty-five percent of India's population is
illiterate, roughly half live in poverty, and unemployment remains
high.
Since the dissolution of the Narasimha Rao government in early
1996, India has experienced several weak, coalition governments that
have been unable to consolidate their position for an extended period.
Partially as a result, economic reforms have proceeded slowly though
gradually. Future changes in government could weaken or set back the
reform process.
India does not enjoy trouble-free relations with its neighbors.
India and Pakistan have fought two wars since their independence in
1947 and have yet to resolve a continuing dispute over the status of
the northern Indian state of Kashmir. Various Kashmiri separatist
groups, Indian, and Pakistani military have been involved in armed
conflict within the state. Neither India nor Pakistan have signed the
Comprehensive Nuclear Test Ban Treaty, which prohibits nuclear weapons
testing. A border dispute with China and questions over the
involvement of elements within India in the internal affairs of Sri
Lanka also affect India's relations with these countries.
PAKISTAN, BANGLADESH, AND SRI LANKA. The other, smaller South Asian
countries of Pakistan, Bangladesh, and Sri Lanka share with India the
challenges of reducing poverty and illiteracy and improving
infrastructure and economic growth. While each of these countries has
taken steps to liberalize their economies, their economies are far
from mature, as are their legal and regulatory systems. In addition,
because they have small and relatively less diversified economies and
public markets, they are susceptible to external economic shocks,
which may result in currency declines. Sri Lanka has been plagued by
internal challenges to its security, while Pakistan has faced
significant political infighting and instability. Bangladesh's largely
agricultural economy is heavily dependent on the severity of the
monsoons.
EMERGING MARKETS: ASIA
MARKET CAPITALIZATION IN U.S. DOLLARS
DECEMBER 1996
$ BILLIONS
INDIA 132.97
INDONESIA 91.00
KOREA 138.91
MALAYSIA 322.00
PAKISTAN 11.75
PHILIPPINES 80.69
SINGAPORE 182.00
TAIWAN 274.00
THAILAND 95.92
Source: The Economist. The LGT Guide to World Equity Markets 1997.
REAL GDP ANNUAL RATE OF GROWTH
(ANNUAL % CHANGE)
1996
CHINA 9.1%
HONG KONG 4.3%
INDIA 5.7%
INDONESIA 7.1%
JAPAN 3.9%
KOREA 6.8%
MALAYSIA 8.3%
PHILIPPINES 5.5%
SINGAPORE 6.5%
TAIWAN 5.8%
THAILAND 7.2%
Source: The Economist. The LGT Guide to World Equity Markets 1997.
For national stock market index performance, please see the section on
Performance beginning on page .
SPECIAL CONSIDERATIONS AFFECTING CANADA
Canada is one of the richest nations in the world in terms of natural
resources. Within this sector particularly strong commodities are
forest products, mining and metals products, and agricultural products
such as grains. Additionally, energy related products such as oil, gas
and hydroelectricity are important components of their economy.
Accordingly, the Canadian stock market is strongly represented by such
basic materials stocks, and movements in the supply and demand of
industrial materials, agriculture, and energy, both domestically and
internationally, can have a strong effect on market performance.
Canada is a confederation of 10 provinces with a parliamentary system
of government. The area, the world's second largest nation by
landmass, is inhabited by 30.2 million people, most of whom are
decedents of France, the United Kingdom and indigenous peoples. The
country has a work force of over 15 million, spread out over a variety
of industries from trade, manufacturing, and mining to finance,
construction and government. While the country has many institutions
which closely parallel the US, such as a transparent stock market and
similar accounting practices, it differs from the US in that it has an
extensive social welfare system, much more akin to European welfare
states.
The confederated structures combined with recent financial pressure on
the federal government have pushed some provinces, Quebec in
particular, to call for a reevaluation of the legal and financial
relationships between the federal government in Ottawa and the
provinces. This issue came to a head in 1995 with a referendum on
Quebec sovereignty, which was ultimately won by Ottawa
(50.56%-49.44%). The very narrow defeat of the referendum and the
return of Bloc Quebecois to parliament with a lower but still
substantial number of seats indicate that the issue is far from
resolved. Accordingly, a large amount of the government's energy is
spent considering new constitutional arrangements. In the meantime,
markets react to the periodic escalations of separatist calls with
caution.
The current government of the Liberal party was reelected in June 1997
with a clear majority of 155 of the 301 parliamentary seats. This is a
drop in majority status during their previous government, during which
they held 60% of the seats. Opposition is currently divided amongst 4
parties, none of which occupies more than 60 seats. The historical
opposition to the Liberals, the Conservatives, has had to fight back
onto the political stage after being marginalized in the 1993
elections. Reclaiming enough seats in 1997 to be restored to official
status, the Conservatives currently hold 20 seats.
Economically, GDP growth in Canada was 1.5% in 1996, down from 2.3% in
1995. Driving growth was optimism in the government's stability and
fiscal health following the Quebec referendum and the achievement of a
current account surplus (which was subsequently lost, then regained in
early 1997). Particularly strong market performers were financial
services, real estate, utilities and merchandising. Consumer demand
was strong in 1996, financed by borrowing.
The Bank of Canada is fairly independent from the government and has
the latitude to manipulate interest rates to keep inflation within its
self imposed target of less than 3%. The Canadian dollar has benefited
from internal fiscal successes, specifically the balancing of the
current account. Despite the strong link to the US dollar, the Bank of
Canada won't automatically raise rates in response to US hikes.
The US is Canada's biggest trading partner, representing over 75% of
total trade. Strong export industries are energy, mining and forest
products. Canada is the largest energy supplier to the US. Main
imports are industrial machinery and chemicals. The US is also
Canada's largest foreign investor, responsible for 71% of all FDI in
Canada (worth approximately $87 billion). Main targets for investment
are metals and mining industries, energy, and finance.
Recently the Finance Ministry has kept demands for spending on social
programs at bay in the name of eradicating the budget deficit. Once
they feel this is firmly behind them, social spending could possibly
resume.
Privatization programs, meeting gathering opposition from trade
unions, interest groups and the general public, are slowly shrinking,
with many large-scale services remaining public.
There are four primary securities exchanges in Canada: Toronto,
Montreal, Vancouver, and Alberta. The Toronto and Montreal exchanges
list the older, larger, more established firms. Combined, these two
exchanges accounted for 95.2% of the total trading value in 1996. The
Vancouver and Alberta exchanges list smaller, younger start up firms
which tend to represent the natural resource sectors. In 1996 these
two exchanges accounted for 4.8% of the total value of equity trading.
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICA
Latin America represents one of the world's more advanced emerging
markets. With a total population of 427 million and its abundant
natural resources, the area is a prime trading partner for the US and
Canada. In Latin America exports represent, on average, 16.6% of GDP.
Strong export sectors are petroleum, manufactured goods, agricultural
commodities such as coffee and beef, and metals and mining products.
GDP growth in Latin America as a region was 3.4% in 1996, up from 0.1%
in 1995. Recognizing the important role of international trade as a
component of GDP, the countries of Latin America have formed strong
regional trade organizations, notably MERCOSUR. Talk of extending
NAFTA down through Latin America indicates some desire to tie the
economies even closer to those of the north.
Politically, Latin American countries generally have strong
presidential systems closely modeled on the US. Their transition to
democracy, largely complete in most countries, nevertheless allows for
a considerable military influence, reflecting the strong authoritarian
leanings of a large portion of the population. The countries all enjoy
good relations with the United States, with whom they cooperate on a
range of non-economic matters, such as preservation of the environment
and drug control. Monetarist minded governments were responsible for
the successful staving off of contagion from the recent currency
crisis in Mexico, increasing their stature in the eyes of most capital
market participants.
ARGENTINA. Prior to 1989, Argentine politics were characterized by
populist leaders, sometimes democratically elected and sometimes not,
who ruled with the overt support of the military. Coups and outright
military rule were not uncommon. Economic polices were highly
protectionist, with significant barriers and restrictions on foreign
trade and investment. Markets were highly regulated and the state was
heavily involved in many industries. Inflation was routinely high and
growth stagnant.
President Carlos Menem was first elected to office in 1989 and
undertook a program of deregulation, liberalization and macroeconomic
reform. The results have been positive. Growth in 1996 was 4.4%, up
from -4.4% in 1995. Argentina's growth, averaging over 7% from 1991 to
1994, has been driven primarily by domestic consumption. In the wake
of the Mexican currency crisis, however, banking liquidity has been
restrained. While deposits have increased in reaction to peso
stabilization, lending has not, putting downward pressure on consumer
spending. The positive effect is that inflation, well over 150% at the
beginning of the decade, was 0.4% in 1996. Still troublesome for
Argentina is unemployment, quite high at 17%. Menem's economic
liberalization policies have succeeded in attracting foreign
investment. From the US alone, approximately $10 billion was invested
by 1996. Investors have been most attracted to the telecommunications,
finance, and energy sectors.
Argentina enjoys a positive trade balance. The export economy is
heavily weighted toward agriculture, which represents 60% of the total
value of all Argentine exports. Primary products are livestock,
oilseeds, and grain. Argentina's single biggest trading partner is
Brazil, and the US is the second. Primary imports are machinery,
vehicles and chemicals.
The resignation of Economy Minister Domingo Cavallo in July 1996 was
initially greeted with skepticism from the markets. Cavallo was widely
recognized as the man responsible for ensuring the convertibility of
the peso by pegging it to the dollar, a move which saved Argentina
from the hyperinflation and continuous drops in output which could
have followed from the Mexican crisis in 1994. Confidence was quickly
restored, however, with the appointment of Roque Fernandez, who
promptly reaffirmed commitment to Cavallo's plan and introduced
further measures for fiscal stability.
The central bank's main priority is maintaining convertibility against
the dollar. It is very active in the foreign exchange market and even
assists local firms with liquidity problems.
Legislative elections to be held in October, 1997 could prove to be
critical for Menem, who still has an extensive economic reform agenda
which includes further privatizations, labor market reforms and a
revamped tax policy. Failure to retain a friendly majority in the
Lower House of congress could deprive Menem of the support he needs to
pass such reforms.
The next presidential election is due in 1999. In accordance with the
constitution, Menem, a member of the Peronist party, can not seek a
third consecutive term. The next election is likely to present a third
candidate to the voters beyond the traditional contestants from the
Peronist and Radical parties. Frepaso, a center-left alliance, first
emerged in the 1995 elections and by 1999 could build itself up enough
to promote a viable alternative to the older parties. It is uncertain
how policies would be effected by the systemic change from a
predominantly two party system to a three way game.
BRAZIL. Brazil is the largest country in South America and is home to
vast amounts of natural resources. Its 155 million people are
descendants from indigenous tribes and European immigrants. They live
in diverse socio-economic conditions, from the urban cities of Sao
Paolo to the undeveloped trading posts of the distant regions.
Industrial development has been concentrated in specific areas. The
disenfranchised population is quite large and is a source of many of
Brazil's social problems.
The Brazilian economy is currently undergoing extensive reforms,
stemming from a 1994 effort to stabilize the currency called the Real
Plan. With the aim of curbing inflation, a new currency, the Real, was
introduced and supported via a floating exchange band. The plan has
stabilized the exchange rate and controlled inflation, which was
reeling out of control in 1994 at 2,700%. Inflation in 1995 dropped to
81%, and fell even further in 1996, settling at 18.7%. At the same
time, however, the Real Plan has sent the trade and current account
balances into a deficit. The current account soared from $1 billion to
$18 billion, and increased further in 1996 to $27 billion.
Other objectives of the administration of the current President,
Fernando Henrique Cardoso, are trade liberalization and privatization,
but these efforts are sporadic and often stalled by special interests
in the legislature. Some privatization efforts are performing well,
particularly in the utilities sector. Utilities and telecommunications
have been key draws for foreign investment, and foreign direct
investment (FDI) is coming in at record levels. In 1996 the country
received over $9.5 billion, with $2.4 billion coming from the US.
Still, there are restrictions against investments in certain
industries, such as metals and mining.
Similarly with trade liberalization, the government increased import
restrictions in an effort to shrink the trade deficit and slow the
growth of import consumption. This consumption was a main contributor
to GDP growth in 1996, though growth was down 1% to 3.2%.
Traditionally a primarily agricultural economy, a strong industrial
sector has developed which produces metals, chemical, and manufactured
consumer goods. Agriculture still plays a significant role, however,
representing 11% of the GDP, 40% of exports and employing over 35% of
the work force. Primary agricultural products are grains, coffee, and
cattle. Regarding energy and utilities, the country is a leading
producer of hydroelectric power, but they are dependent on imports for
oil.
Presidential elections will be held in 1998. President Cardoso hopes
to stand for re-election but currently is unable to, given a
constitutional provision on term limits. Efforts to gather
congressional support for constitutional reform, allowing Cardoso to
stand, could result in a great deal of special interest concessions,
translating into more public spending and horse-trading over fiscal
reforms.
CHILE. Chile is a transition economy which has recently made great
strides toward putting its authoritarian, statist, past behind itself.
In all of Latin America, it is the country with the highest rates of
growth. Averaging 7.3% so far this decade, GDP grew at 6.7% in 1996,
down from 8.5% the previous year. Inflation has been steadily
declining and is down over 15% in the last five years. Inflation in
1996 was 7.4%, a 0.8% drop over 1995. Unemployment in 1996 was 6.6%,
particularly low for the Latin American region. Despite the fact that
market capitalization fell $8 billion in 1996 to $64 billion, Chile is
still considered to have one of the best performing stock markets in
the region.
Chile has a strong, interventionist central bank which focuses more on
the investment community than it does on the government. Active steps
are taken to control demand and inflation. One example is the practice
of restricting short-term flows of foreign capital through the
country.
Interest rate hikes in 1996 are said to have restrained growth, but
other factors include unfavorable weather conditions that hurt
agricultural and hydroelectric power production. Mining and metals
were strong performers in 1996. Of particular note was the strong
showing of the country's copper industry.
Eduardo Frei is President and is due for reelection in 1999. President
Frei has been trying to decentralize the government but encounters
stiff opposition from the powerful trade unions. Also high on Frei's
agenda is tax reform.
There is a considerable military component to political life in Chile.
In the legislature there is strong representation by parties with
authoritarian views. As part of the negotiated settlement with coup
leader General Augusto Pinochet in 1990, the army chain of command
ends with General Pinochet, not an elected official. Furthermore,
certain seats are reserved in the Senate for appointed officials from
the military. Pinochet must resign in 1998, and shortly thereafter the
reserved Senate seats will fall open to election. There are
constitutional reforms currently in progress further diminishing the
role and influence of the military, and thus the political transition
is still underway. A successful outcome requires that the military
acquiesce as it is stripped of its political powers.
MEXICO. The Mexican economy recovered fairly well in 1996 from the
currency crisis of December 1994 thanks in large part to growth in
exports, peso stabilization, and massive financial assistance from the
United States. Growth rebounded from its negative position of -6.2% in
1995 to reach 5.1% in 1996. The peso devaluation of 1994, prompted by
mounting foreign debt, was effective in reducing the current account
deficit from $30 billion to just over $1 billion, and it also pushed
Mexico into a positive trade balance. The current account deficit
increased in 1996 to $3.7 billion, but the trade surplus was
maintained. Inflation jumped from 7% to over 50% in the year after the
crisis, but was controlled in 1996, registering a drop to 28%.
Inflation is the chief concern of the central bank, which takes active
measures such as the setting of wage ceilings and manipulation of
interest rates to control it. Domestic consumption is sluggish and has
yet to return to pre-1994 levels, also contributing to the containment
inflation.
The Mexican economy is very strong in manufacturing and natural
resources, specifically oil. Manufacturing alone counts for 22% of the
Mexican GDP and 21% of all urban employment. The economy is also very
closely tied to the US, which is responsible for 60% of all foreign
investment and with whom it conducts over 75% of all trade. Trade
pacts such as the North American Free Trade Agreement further
integrate the economies, giving the US strong incentives to provide
assistance in times of crisis. NAFTA also enabled the recent recovery,
given the ease with which it allows increases in exports and
investment. The Mexican stock market listed 193 companies with total
capitalization of $106 billion in 1996, a 17% rise over 1995.
Internally, the various people of the Mexican states have recently
experienced a great deal of dissatisfaction with their relationship to
the federal government. Most notably, in Chiapas there have been armed
uprisings by indigenous groups demanding further autonomy. While the
rebellions have not strongly shaken financial markets, they serve as a
reminder of the diversity of Mexico, of the vast socio-economic gaps
between various peoples, and of the potential for such groups to
demand the attention of both their government and the world.
Politically, the landscape changed fundamentally in July 1997. The
defeat of candidates from the Institutional Revolutionary Party (PRI)
in legislative elections signaled the end of decades of one party
rule. Citizens now have the confidence that their votes count and that
the PRI is no longer invincible. Winning every presidential election
since its founding in 1929, the PRI was the country's monolithic
political machine, maintaining power through rigged elections and
ruling in an environment rife with intrigue and corruption. Internal
pressures including armed rebellion from domestic interest groups,
extensive crises and scandals caused by intra-party rivalries and
corruption, and deteriorating relationships with foreign countries
over financial mismanagement and mutual social problems all
contributed to the establishment of fully free and unfettered
elections. The response from the Mexican people was clear. Though they
took the most votes (39%) for the 500-member Lower House of congress,
the PRI has lost their majority, and the President is now forced to
accommodate the interests of the opposition parties. Market reaction
to the new Mexican political world was positive. The IPC index,
consisting of 35 of the most representative stocks on the Mexican
Stock Exchange, rose 3.25% the day after the election. Further
financial implications of the new landscape are as yet uncertain.
Relevant considerations are the effect of the new configurations on
government consensus and policy making, the demands of newly empowered
groups on economic and other resources, the balance of power between
the executive and the legislature, and the ability of the government
to maintain law and order.
EMERGING MARKETS: LATIN AMERICA
MARKET CAPITALIZATION IN U.S. DOLLARS
DECEMBER 1996
$ BILLIONS:
ARGENTINA 44.7
BRAZIL 429.3
CHILE 65.6
MEXICO 107.0
PERU 13.8
VENEZUELA 10.0
Source: The Economist, The LGT Guide to World Equity Markets, 1997
For national stock market index performance, please see the section on
Performance beginning on page .
SPECIAL CONSIDERATIONS AFFECTING THE RUSSIAN FEDERATION
The Russian Federation is the largest republic of the Commonwealth
of Independent States with a 1995 population of 147,500,000. It is
about one and four fifths of the land area of the United States and
occupies most of eastern Europe and north Asia.
Russia has had a long history of political and economic turbulence.
The U.S.S.R. lasted 69 years and for more than half that time it
ranked as a nuclear superpower. In the 1930's tens of millions of its
citizens were collectivized under state agricultural and industrial
enterprises and millions died in political purges and the vast penal
and labor system or in state-created famines. During World War II, as
many as 20 million Soviet citizens died. After decades of communist
rule the Soviet Union was dissolved on December 8, 1991 following a
failed coup attempt against the government of Mikhail Gorbachev. On
the day that the leaders declared that the Soviet Union ceased to
exist, the Soviet republics were invited to join with Russia in the
Commonwealth of Independent states (CIS). At one time or another those
that have agreed to join have included the Ukraine, Belarus, Moldova,
Georgia, Armenia, Azerbaijan, Uzbekistan, Turkmenistan, Tajikistan,
Kazakhstan and Kyrgyzstan, but a number have dropped out since or have
only observer status. Each of the republics is a sovereign state that
controls its own economy and natural resources and collects its own
taxes, providing only minimal support to the CIS.
Boris Yeltsin, President of Russia, inherited the mantle of
economic and political chaos. With the freeing of most prices he
staked his political life on the rapid creation of a free market
economy. Since 1991 Yeltsin and his Russian reformers have been faced
with the daunting task of stabilizing the Russian economy while
transforming it into a modern and efficient structure able to compete
in international markets and respond to the needs of the Russian
people. To date, their efforts have yielded widely mixed results. On
the one hand, they have made some impressive progress. Since 1992,
they have abolished central planning, decontrolled prices, unified the
foreign exchange market, made the ruble convertible, and privatized
two thirds of the economy. They have accomplished this in spite of the
crushing burdens inherited from the communist system: huge industrial
enterprises that are unprofitable; an obsolete capital stock; a
crumbling energy sector, huge external debt; and armies that had to be
repatriated and resettled at home.
Russia remains a paradox among the major economies of the world in
that it is a country marked by stagnation in production levels, but
has few constraints on growth. Labor supply is adequate and savings
are high. In addition, there is almost unlimited scope for increasing
productivity through the introduction of improved technologies,
production process and market-oriented managerial development. There
are 147 million consumers who are slowly increasing their buying power
and education standards are high. Russia is also rich in natural
resources. It has 40% of the world's natural gas reserves, 6% of its
oil, 25% of coal, diamonds, gold and nickel, and 30% of timber and
bauxite. Approximately ten million people are engaged in agriculture
and they produce half of the region's grain, meat, milk, and other
dairy products.
The main reason for the continued poor performance of the Russian
economy is the country's failure to mobilize the resources that are
available. While the official unemployment rate was at 10.6% in 1996,
up to half of the working population is, in effect, unemployed or, to
a significant degree, underemployed in inefficient and unproductive
industries. Much of the country's savings have been siphoned off
through capital flight. Russia's technological potential for
assimilating both domestic and foreign technologies is not being
exploited. Industry privatization and restructuring initiatives have
generally failed to mobilize the available factors of production as
the country's privatization program virtually ensures the predominance
of the old management teams that are largely non market-oriented in
their management approach. Approximately 80% of Russian privatized
companies continue to be majority-owned by insiders and only 10% are
owned by investors with large enough stakes to influence the running
of the company.
In July 1996, Boris Yeltsin was re-elected for a second term and it
was hoped that the election would mark the start of a more stable
period of economic growth. However, macroeconomic indicators in 1996
proved contradictory. On the one hand, the Russian government
continued its strict credit policies, and the annual inflation rate
for 1996 dropped to 23%, down from 131% in 1995. Inflation has since
remained below 3% a month through the first half of 1997. In addition,
expenditure cuts trimmed the budget deficit to 7% of GDP for the first
nine months of 1996. On the other hand, however, GDP fell by 6%
following 1995's 4% fall, while industrial production was down by 5%
and real investment dropped by approximately 19%. Non-payment
continues to represent a serious problem for the economy, particularly
in the energy sector.
While Russia is widely believed to be one of the most risky markets
in eastern Europe, it is also recognized for its potential for
positive returns. In 1996 the Russian market delivered the world's
best stock market performance and was among the top performing markets
in the first half of 1997. However, the market has been essentially
liquidity driven and concentrated in a very few of the country's
largest companies. At just $65 billion, the total capitalization of
the stock market accounts for just 12 percent of GDP. The majority of
investors in Russian equities are small and medium-sized US hedge
funds. In addition, several country specific funds have been
established to make direct and portfolio investments in Russian
companies. To facilitate foreign investment, a number of the larger
Russian companies have issued equity in the form of American
depositary receipts while six big firms have issued securities in the
form of Russian depositary certificates. These certificates are issued
and marketed by the Bank of New York. Any investment in Russia is
risky and deciding which companies will perform well at this stage of
the country's transformation is far from easy. A combination of poor
accounting standards, inept management, limited shareholder rights and
the criminalization of large sectors of the economy pose a significant
risk, particularly to foreign investors.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of each fund by FMR pursuant to authority contained in the
management contract. If FMR grants investment management authority to
the sub-advisers (see the section entitled "Management Contracts"),
the sub-advisers are authorized to place orders for the purchase and
sale of portfolio securities, and will do so in accordance with the
policies described below. FMR is also responsible for the placement of
transaction orders for other investment companies and accounts for
which it or its affiliates act as investment adviser. In selecting
broker-dealers, subject to applicable limitations of the federal
securities laws, FMR considers various relevant factors, including,
but not limited to: the size and type of the transaction; the nature
and character of the markets for the security to be purchased or sold;
the execution efficiency, settlement capability, and financial
condition of the broker-dealer firm; the broker-dealer's execution
services rendered on a continuing basis; the reasonableness of any
commissions; and arrangements for payment of fund expenses. Generally,
commissions for investments traded on foreign exchanges will be higher
than for investments traded on U.S. exchanges and may not be subject
to negotiation.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts
over which FMR or its affiliates exercise investment discretion. Such
services may include advice concerning the value of securities; the
advisability of investing in, purchasing, or selling securities; and
the availability of securities or the purchasers or sellers of
securities. In addition, such broker-dealers may furnish analyses and
reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; effect
securities transactions, and perform functions incidental thereto
(such as clearance and settlement). The selection of such
broker-dealers generally is made by FMR (to the extent possible
consistent with execution considerations) in accordance with a ranking
of broker-dealers determined periodically by FMR's investment staff
based upon the quality of research and execution services provided.
The receipt of research from broker-dealers that execute transactions
on behalf of the funds may be useful to FMR in rendering investment
management services to the funds or its other clients, and conversely,
such research provided by broker-dealers who have executed transaction
orders on behalf of other FMR clients may be useful to FMR in carrying
out its obligations to the funds. The receipt of such research has not
reduced FMR's normal independent research activities; however, it
enables FMR to avoid the additional expenses that could be incurred if
FMR tried to develop comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that
are in excess of the amount of commissions charged by other
broker-dealers in recognition of their research and execution
services. In order to cause each fund to pay such higher commissions,
FMR must determine in good faith that such commissions are reasonable
in relation to the value of the brokerage and research services
provided by such executing broker-dealers, viewed in terms of a
particular transaction or FMR's overall responsibilities to the funds
and its other clients. In reaching this determination, FMR will not
attempt to place a specific dollar value on the brokerage and research
services provided, or to determine what portion of the compensation
should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided
assistance in the distribution of shares of the funds or shares of
other Fidelity funds to the extent permitted by law. FMR may use
research services provided by and place agency transactions with
National Financial Services Corporation (NFSC) and Fidelity Brokerage
Services (FBS), indirect subsidiaries of FMR Corp., if the commissions
are fair, reasonable, and comparable to commissions charged by
non-affiliated, qualified brokerage firms for similar services. From
September 1992 through December 1994, FBS operated under the name
Fidelity Brokerage Services Limited (FBSL). As of January 1995, FBSL
was converted to an unlimited liability company and assumed the name
FBS.
FMR may allocate brokerage transactions to broker-dealers who have
entered into arrangements with FMR under which the broker-dealer
allocates a portion of the commissions paid by each fund toward
payment of the fund's expenses, such as transfer agent fees or
custodian fees. The transaction quality must, however, be comparable
to those of other qualified broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions
for accounts which they or their affiliates manage, unless certain
requirements are satisfied. Pursuant to such requirements, the Board
of Trustees has authorized NFSC to execute portfolio transactions on
national securities exchanges in accordance with approved procedures
and applicable SEC rules.
Each fund's Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio
transactions on behalf of the funds and review the commissions paid by
each fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the fund.
Each fund's turnover rates for the fiscal years ended October 31, 1997
and 1996 are presented in the table below. Because a high turnover
rate increases transaction costs and may increase taxable gains, FMR
carefully weighs the anticipated benefits of short-term investing
against these consequences. An increased turnover rate is due to a
greater volume of shareholder purchase orders, short-term interest
rate volatility and other special market conditions.
TURNOVER RATES 1997 1996
CANADA FUND 139% 139%
EMERGING 69% 77%
MARKETS FUND
EUROPE FUND 57% 45%
EUROPE CAPITAL 189% 155%
APPRECIATION
FUND
FRANCE FUND 150% 129%
GERMANY FUND 120% 133%
HONG KONG AND 174% 118%
CHINA FUND
JAPAN FUND 70% 83%
JAPAN SMALL 101% 66%
COMPANIES
FUND
LATIN AMERICA 64% 70%
FUND
NORDIC FUND 74% 35%
PACIFIC BASIN 42% 85%
FUND
SOUTHEAST ASIA 141% 102%
FUND
UNITED 96% 50%
KINGDOM FUND
BROKERAGE COMMISSIONS. The table below lists the total brokerage
commissions; and the dollar amount of commissions paid to NFSC, FBS
and FBSL for the fiscal periods ended October 31, 1997, 1996, and
1995. Each fund pays both commissions and spreads in connection with
the placement of portfolio transactions. NFSC is paid on a commission
basis.
FISCAL TOTAL TO NFSC TO FBS/FBSL
PERIOD
ENDED
OCTOBE
R 31
CANA
DA
FUND
1997 $ 774,591 $ 2,560 $ 0
1996 $ 1,231,212 $ 42,312 $ 0
1995 $ 941,962 $ 120,137 $ 0
EMERGING MARKETS
FUND
1997 $ 6,781,007 $ 12,752 $ 0
1996 $ 8,100,767 $ 29,103 $ 0
1995 $ 11,637,638 $ 86,207 $ 0
EUROP
E
FUND
1997 $ 2,000,945 $ 0 $ 196,495
1996 $ 1,026,293 $ 0 $ 34,043
1995 $ 1,033,151 $ 36 $ 3,490
EUROPE CAPITAL APPRECIATION
FUND
1997 $ 2,281,777 $ 3,728 $ 150,145
1996 $ 1,087,777 $ 0 $ 19,477
1995 $ 2,336,212 $ 3,628 $ 70,372
FRANC
E
FUND
1997 $ 35,607 $ 0 $ 601
19961 $ 43,305 $ 0 $ 1,234
GERM
ANY
FUND
1997 $ 69,561 $ 0 $ 12,760
19961 $ 32,333 $ 0 $ 8,857
HONG
KONG
AND
CHINA
FUND
1997 $ 1,985,116 $ 710 $ 0
19961 $ 554,367 $ 0 $ 0
JAPAN
FUND
1997 $ 1,040,186 $ 0 $ 0
1996 $ 1,626,469 $ 0 $ 0
1995 $ 2,422,928 $ 0 $ 0
JAPAN
SMALL
COMP
ANIES
FUND
1997 $ 733,241 $ 0 $ 0
19961 $ 939,743 $ 0 $ 0
LATIN AMERICA
FUND
1997 $ 2,772,375 $ 10,387 $ 0
1996 $ 2,141,519 $ 29,528 $ 0
1995 $ 2,102,089 $ 53,346 $ 0
NORDI
C
FUND
1997 $ 298,910 $ 0 $ 25,958
19961 $ 81,759 $ 0 $ 3,427
PACIFIC BASIN FUND
1997 $ 1,749,948 $ 0 $ 0
1996 $ 3,943,996 $ 0 $ 180
1995 $ 2,937,153 $ 0 $ 0
SOUTHEAST ASIA
FUND
1997 $ 7,465,380 $ 0 $ 0
1996 $ 7,130,181 $ 0 $ 0
1995 $ 6,876,440 $ 0 $ 0
UNITE
D
KINGD
OM
FUND
1997 $ 10,578 $ 0 $ 0
19961 $ 5,284 $ 0 $ 124
1 From November 1, 1995 (commencement of operations).
The table below lists for the fiscal period ended October 1997, the
percentage of aggregate brokerage commissions paid to NFSC and FBS and
the percentage of the aggregate dollar amount of transactions for
which each fund paid brokerage commissions to NFSC and FBS. The
difference in the percentage of the brokerage commissions paid to and
the percentage of the dollar amount of transactions effected through
NFSC and FBS is a result of the low commission rates charged by NFSC
and FBS. The table also includes the amount of brokerage commissions
paid to brokerage firms that provided research services; and the
approximate amount of transactions effected through brokerage firms
that provided research services. The provision of research services
was not necessarily a factor in the placement of all this business
with such firms.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FISCAL % OF % OF % OF % OF COMMISSIONS TRANSACTIONS
PERIOD COMMISSION COMMISSION TRANSACTIONS TRANSACTIONS PAID TO FIRMS WITH
ENDED S S EFFECTED EFFECTED PROVIDING BROKERAGE FIRMS
PAID PAID TO THROUGH THROUGH RESEARCH PROVIDING
OCTOB TO NFSC FBS NFSC FBS SERVICES RESEARCH
ER 31,
SERVICES
1997
CANADA .33% 0% .66% 0% $ 688,766 $ 283,591,769
FUND
EMERGI .19% 0% 1.84% 0% $ 6,496,011 $ 1,556,908,629
NG
MARKET
S FUND
EUROPE 0% 9.82% 0% 11.33% $ 1,896,449 $ 813,035,865
FUND
EUROPE .16% 6.58% .38% 6.92% $ 2,196,860 $ 1,056,627,336
CAPITAL
APPRECI
ATION
FUND
FRANCE 0% 1.69% 0% 2.15% $ 35,564 $ 14,524,254
FUND
GERMA 0% 18.34% 0% 20.44% $ 69,561 $ 28,093,824
NY
FUND
HONG .04% 0% .06% 0% $ 1,836,552 $ 713,821,850
KONG
AND
CHINA
FUND
JAPAN 0% 0% 0% 0% $ 1,000,223 $ 379,139,575
FUND
JAPAN 0% 0% 0% 0% $ 721,923 $ 172,117,343
SMALL
COMPA
NIES
FUND
LATIN .37% 0% 1.75% 0% $ 2,601,411 $ 938,911,937
AMERIC
A FUND
NORDIC 0% 8.68% 0% 11.29% $ 268,027 $ 101,225,979
FUND
PACIFIC 0% 0% 0% 0% $ 1,647,596 $ 541,990,000
BASIN
FUND
SOUTHEA 0% 0% 0% 0% $ 6,571,412 $ 1,651,798,762
ST ASIA
FUND
UNITED 0% 0% 0% 0% $ 9,607 $ 5,838,617
KINGDO
M FUND
</TABLE>
From time to time the Trustees will review whether the recapture for
the benefit of the funds of some portion of the brokerage commissions
or similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at
present no other recapture arrangements are in effect. The Trustees
intend to continue to review whether recapture opportunities are
available and are legally permissible and, if so, to determine in the
exercise of their business judgment whether it would be advisable for
each fund to seek such recapture.
Although the Trustees and officers of each fund are substantially the
same as those of other funds managed by FMR, investment decisions for
each fund are made independently from those of other funds managed by
FMR or accounts managed by FMR affiliates. It sometimes happens that
the same security is held in the portfolio of more than one of these
funds or accounts. Simultaneous transactions are inevitable when
several funds and accounts are managed by the same investment adviser,
particularly when the same security is suitable for the investment
objective of more than one fund or account.
When two or more funds are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in
accordance with procedures believed to be appropriate and equitable
for each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as each fund is
concerned. In other cases, however, the ability of the funds to
participate in volume transactions will produce better executions and
prices for the funds. It is the current opinion of the Trustees that
the desirability of retaining FMR as investment adviser to each fund
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
VALUATION
FSC normally determines each fund's net asset value per share (NAV) as
of the close of the New York Stock Exchange (NYSE) (normally 4:00 p.m.
Eastern time). The valuation of portfolio securities is determined as
of this time for the purpose of computing each fund's NAV.
Portfolio securities are valued by various methods depending on the
primary market or exchange on which they trade. Most equity securities
for which the primary market is the United States are valued at last
sale price or, if no sale has occurred, at the closing bid price. Most
equity securities for which the primary market is outside the United
States are valued using the official closing price or the last sale
price in the principal market in which they are traded. If the last
sale price (on the local exchange) is unavailable, the last evaluated
quote or last bid price normally is used. Securities of other open-end
investment companies are valued at their respective NAVs.
Fixed-income securities and other assets for which market quotations
are readily available may be valued at market values determined by
such securities' most recent bid prices (sales prices if the principal
market is an exchange) in the principal market in which they normally
are traded, as furnished by recognized dealers in such securities or
assets. Or, fixed-income securities and convertible securities may be
valued on the basis of information furnished by a pricing service that
uses a valuation matrix which incorporates both dealer-supplied
valuations and electronic data processing techniques. Use of pricing
services has been approved by the Board of Trustees. A number of
pricing services are available, and the funds may use various pricing
services or discontinue the use of any pricing service.
Futures contracts and options are valued on the basis of market
quotations, if available.
Foreign securities are valued based on prices furnished by independent
brokers or quotation services which express the value of securities in
their local currency. FSC gathers all exchange rates daily at the
close of the NYSE using the last quoted price on the local currency
and then translates the value of foreign securities from their local
currencies into U.S. dollars. Any changes in the value of forward
contracts due to exchange rate fluctuations and days to maturity are
included in the calculation of NAV. If an extraordinary event that is
expected to materially affect the value of a portfolio security occurs
after the close of an exchange on which that security is traded, then
that security will be valued as determined in good faith by a
committee appointed by the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which market quotations and information furnished by a pricing
service are not readily available are valued either at amortized cost
or at original cost plus accrued interest, both of which approximate
current value. In addition, securities and other assets for which
there is no readily available market value may be valued in good faith
by a committee appointed by the Board of Trustees. The procedures set
forth above need not be used to determine the value of the securities
owned by a fund if, in the opinion of a committee appointed by the
Board of Trustees, some other method would more accurately reflect the
fair market value of such securities.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is
not intended to indicate future returns. Each fund's share price,
yield, and total return fluctuate in response to market conditions and
other factors, and the value of fund shares when redeemed may be more
or less than their original cost.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect
all aspects of a fund's return, including the effect of reinvesting
dividends and capital gain distributions, and any change in the fund's
NAV over a stated period. Average annual total returns are calculated
by determining the growth or decline in value of a hypothetical
historical investment in a fund over a stated period, and then
calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had
been constant over the period. For example, a cumulative total return
of 100% over ten years would produce an average annual total return of
7.18%, which is the steady annual rate of return that would equal 100%
growth on a compounded basis in ten years. While average annual total
returns are a convenient means of comparing investment alternatives,
investors should realize that a fund's performance is not constant
over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to the actual
year-to-year performance of the fund.
In addition to average annual total returns, a fund may quote
unaveraged or cumulative total returns reflecting the simple change in
value of an investment over a stated period. Average annual and
cumulative total returns may be quoted as a percentage or as a dollar
amount, and may be calculated for a single investment, a series of
investments, or a series of redemptions, over any time period. Total
returns may be broken down into their components of income and capital
(including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions
to total return. Total returns may be quoted on a before-tax or
after-tax basis and may be quoted with or without taking each fund's
3% maximum sales charge into account and may or may not include the
effect of Europe Fund's, Europe Capital Appreciation Fund's, and
Pacific Basin Fund's 1.00% short-term trading fee or Canada Fund's,
Emerging Markets Fund's, France Fund's, Germany Fund's, Hong Kong and
China Fund's, Japan Fund's, Japan Small Companies Fund's, Latin
America Fund's, Nordic Fund's, Southeast Asia Fund's, and United
Kingdom Fund's 1.5% short-term trading fee on shares held less than 90
days. Excluding a fund's sales charge or short-term trading fee from a
total return calculation produces a higher total return figure. Total
returns, yields, and other performance information may be quoted
numerically or in a table, graph, or similar illustration.
NET ASSET VALUE. Charts and graphs using a fund's net asset values,
adjusted net asset values, and benchmark indices may be used to
exhibit performance. An adjusted NAV includes any distributions paid
by a fund and reflects all elements of its return. Unless otherwise
indicated, a fund's adjusted NAVs are not adjusted for sales charges,
if any.
MOVING AVERAGES. A fund may illustrate performance using moving
averages. A long-term moving average is the average of each week's
adjusted closing NAV for a specified period. A short-term moving
average is the average of each day's adjusted closing NAV for a
specified period. Moving Average Activity Indicators combine adjusted
closing NAVs from the last business day of each week with moving
averages for a specified period to produce indicators showing when an
NAV has crossed, stayed above, or stayed below its moving average. On
October 31, 1997, the 13-week and 39-week long-term moving averages
for the funds are outlined in the chart below.
FUND NAME 13 WEEK LONG-TERM 39 WEEK LONG-TERM
MOVING AVERAGE MOVING AVERAGE
CANADA FUND $ 19.34 $ 18.75
EMERGING 12.91 15.52
MARKETS FUND
EUROPE FUND 31.24 29.50
EUROPE CAPITAL 16.65 15.58
APPRECIATION
FUND
FRANCE FUND 13.56 13.12
GERMANY FUND 13.78 13.17
HONG KONG AND 15.25 14.81
CHINA FUND
JAPAN FUND 12.17 11.95
JAPAN SMALL 6.96 7.31
COMPANIES
FUND
LATIN AMERICA 18.39 17.11
FUND
NORDIC FUND 16.35 15.28
PACIFIC BASIN 15.03 14.97
FUND
SOUTHEAST ASIA 12.90 14.10
FUND
UNITED 13.91 13.24
KINGDOM FUND
HISTORICAL FUND RESULTS. The following table shows the
funds' total returns for the periods ended October 31, 1997. Total
return figures include the effect of each funds' 3% sales charge.
Total returns do not include the effect of paying a fund's $25
exchange fee, which was in effect from December 1, 1987 through
October 23, 1989, or other charges for special transactions or
services, such as Europe Fund's, Europe Capital Appreciation Fund's,
and Pacific Basin Fund's 1.00% short-term trading fee for shares held
less than 90 days, or Canada Fund's, Emerging Markets Fund's, France
Fund's, Germany Fund's, Hong Kong and China Fund's, Japan Fund's,
Japan Small Companies Fund's, Latin America Fund's, Nordic Fund's,
Southeast Asia Fund's, and United Kingdom Fund's 1.5% short-term
trading fee for shares held less than 90 days.
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
ONE FIVE LIFE OF ONE FIVE LIFE OF
YEAR YEARS FUND YEAR YEARS FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
CANAD 4 .96 % 10.1 9 % 10.9 1 % 4.9 6 % 62.4 8 % 180. 49 %
A FUND
(11/17
/87)*
EMERG -38.63% -0.72% 1.28% -38.63% -3.57% 9.30%
ING
MARKE
TS
FUND
(11/1/
90)*
EUROP 19.65% 18.37% 12.26%+ 19.65% 132.42% 217.97%+
E FUND
EUROP 27.62% N/A 16.9 4 % 27.62% N/A 83.06%
E
CAPITA
L
APPRE
CIATION
FUND
(12/21
/93)*
FRANCE 12.16% N/A 17. 40 % 12.16% N/A 37.83%
FUND
(11/1/
95)*
GERMA 16.86% N/A 15. 12 % 16.86% N/A 32.52%
NY
FUND
(11/1/
95)*
HONG -15 .96 % N/A 4.4 5 % -15 .96 % N/A 9. 11 %
KONG
AND
CHINA
FUND
(11/1/
95)*
JAPAN -7.74% 3.08% 2.67% -7.74% 16.36% 14.49%
FUND
(9/15/
92)*
JAPAN -30 .93 % N/A -20.5 9 % -30. 93 % N/A -36. 94 %
SMALL
COMP
ANIES
FUND
(11/1/
95)*
LATIN 21 .65 % N/A 10.31% 21 .65 % N/A 56. 06 %
AMERI
CA
FUND
(4/19/
93)*
NORDIC 22. 45 % N/A 25.0 5 % 22 .45 % N/A 56. 37 %
FUND
(11/1/
95)*
PACIFIC -10.73% 4.91% 2.80%+ -10.73% 27.10% 31.85%+
BASIN
FUND
SOUTHE -34.51% N/A -0.39% -34.51% N/A -1.74%
AST
ASIA
FUND
(4/19/
93)*
UNITED 19.18% N/A 19.28 % 19.18% N/A 42.28%
KINGD
OM
FUND
(11/1/
95)*
</TABLE>
* Commencement of Operations
+ 10 year return
Note: If FMR had not reimbursed certain fund expenses during these
periods, Canada Fund's, Europe Fund's, France Fund's, Germany Fund's,
Japan Fund's, Nordic Fund's, Pacific Basin Fund's, Southeast Asia
Fund's, and United Kingdom Fund's total returns would have been lower.
The following tables show the income and capital elements of each
fund's cumulative total return. The tables compare each fund's return
to the record of the Standard & Poor's 500 Index (S&P 500(registered
trademark)), the Dow Jones Industrial Average (DJIA), and the cost of
living, as measured by the Consumer Price Index (CPI), over the same
period. The CPI information is as of the month end closest to the
initial investment date for each fund. The S&P 500 and DJIA
comparisons are provided to show how each fund's total return compared
to the record of a broad unmanaged index of common stocks and a
narrower set of stocks of major industrial companies, respectively,
over the same period. Each fund has the ability to invest in
securities not included in either index, and its investment portfolio
may or may not be similar in composition to the indexes. The S&P 500
and DJIA returns are based on the prices of unmanaged groups of stocks
and, unlike each fund's returns, do not include the effect of
brokerage commissions or other costs of investing.
The following tables show the growth in value of a hypothetical
$10,000 investment in each fund during the 10-year period ended
October 31, 1997 or life of each fund, as applicable, assuming all
distributions were reinvested. The figures below reflect the
fluctuating stock prices of the specified periods and should not be
considered representative of the dividend income or capital gain or
loss that could be realized from an investment in a fund today. Tax
consequences of different investments (with the exception of foreign
tax withholdings) have not been factored into the figures below.
CANADA FUND: During the period from November 17, 1987 (commencement of
operations) to October 31, 1997, a hypothetical $10,000 investment in
Fidelity Canada Fund would have grown to $28,049, including the
effect of the fund's 3% sales charge.
FIDELITY CANADA FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
INITIAL REINVESTED REINVESTED
YEAR $10,000 DIVIDEND CAPITAL GAIN TOTAL
ENDED
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 DJIA CPI**
ER 31
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1997 $ 18,3 1 4 $ 58 7 $ 9,14 8 $ 28,0 49 $ 50,446 $ 51, 992 $
14,003
1996 21,185 487 4,250 25,922 38,184 4 1,352 13,718
1995 17,024 301 3,415 20,740 30,770 31, 921 13,319
1994 16,665 282 3,343 20,290 24,336 25, 585 12,955
1993 17,285 292 3,421 20,998 23,430 23, 449 12,626
1992 13,803 210 2,732 16,745 20,383 19 ,966 12,288
1991 15,792 241 1,990 18,023 18,534 18, 444 11,906
1990 13,163 138 765 14,066 13,882 1 4,179 11,568
1989 14,987 146 183 15,316 15,006 14, 775 10,884
19 12,358 0 0 12,358 11,872 11, 566 10,416
88
*
</TABLE>
* From November 17, 1987 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Canada
Fund on November 17, 1987, assuming the 3% sales charge had been in
effect, the net amount invested in fund shares was $9,700. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested), amounted
to $ 18,331. If distributions had not been reinvested, the
amount of distributions earned from the fund over time would have been
smaller, and cash payments for the period would have amounted to
$417 for dividends and $6,722 f or capital gains distributions.
The figures in the table do not include the effect of the fund's 1.5%
short-term trading fee applicable to shares held less than 90 days.
EMERGING MARKETS FUND: During the period from November 1, 1990
(commencement of operations) to October 31, 1997, a hypothetical
$10,000 investment in the Fidelity Emerging Markets Fund would have
grown to $10,930, including the effect of the fund's 3% sales
charge.
FIDELITY EMERGING MARKETS FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
INITIAL REINVESTED REINVESTED
YEAR $10,000 DIVIDEND CAPITAL GAIN TOTAL
ENDED
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 DJIA CPI**
ER 31
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1997 $ 10,040 $ 60 6 $ 284 $ 10,930 $ 3 5,976 $ 36, 475 $ 12,105
1996 16,112 710 456 17,278 27, 231 29, 011 11,858
1995 14,686 368 415 15,469 2 1,944 22, 394 11,513
1994 18,673 422 529 19,624 17, 355 1 7,949 11,199
1993 15,695 307 444 16,446 16, 709 16 ,451 10,914
1992 10,719 128 148 10,995 14, 536 14,0 07 10,622
19 10,088 40 0 10,128 13, 218 1 2,939 10,292
91
*
</TABLE>
* From November 1, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Emerging
Markets Fund on November 1, 1990, assuming the 3% sales charge had
been in effect, the net amount invested in fund shares was $9,700. The
cost of the initial investment ($10,000), together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested),
amounted to $ 11,109 If distributions had not been reinvested,
the amount of distributions earned from the fund over time would have
been smaller, and cash payments for the period would have amounted to
$ 786 for dividends and $281 f or capital gains
distributions. The figures in the table do not include the effect of
the fund's 1.5% short-term trading fee applicable to shares held less
than 90 days.
EUROPE FUND: During the 10-year period ended October 31, 1997, a
hypothetical $10,000 investment in Fidelity Europe Fund would have
grown to $ 31,797, including the effect of the fund's 3% sales
charge.
FIDELITY EUROPE FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
INITIAL REINVESTED REINVESTED
YEAR $10,000 DIVIDEND CAPITAL GAIN TOTAL
ENDED
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 DJIA CPI**
ER 31
1997 $ 24,912 $ 3,700 $ 3,185 $ 31,797 $ 48,782 $ 50,221 $ 14,016
1996 21,759 2,988 1,031 25,778 36,924 39,944 13,729
1995 18,862 2,476 118 21,456 29,755 30,834 13,330
1994 16,993 2,036 0 19,029 23,533 24,713 12,966
1993 14,787 1,701 0 16,488 22,657 22,651 12,637
1992 12,131 1,139 0 13,270 19,710 19,286 12,298
1991 12,781 745 0 13,526 17,923 17,816 11,917
1990 13,062 443 0 13,505 13,424 13,696 11,578
1989 12,067 267 0 12,334 14,511 14,271 10,893
1988 10,398 0 0 10,398 11,481 11,172 10,425
</TABLE>
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Europe
Fund on October 31, 1987, assuming the 3% sales charge had been in
effect, the net amount invested in fund shares was $9,700. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested), amounted
to $ 14,455 If distributions had not been reinvested, the amount
of distributions earned from the fund over time would have been
smaller, and cash payments for the period would have amounted to
$1,837 for dividends and $2,126 for capital gains distributions.
The figures in the table do not include the effect of the fund's 1.0%
short-term trading fee applicable to shares held less than 90 days.
EUROPE CAPITAL APPRECIATION FUND: During the period from December 21,
1993 (commencement of operations) to October 31, 1997, a hypothetical
$10,000 investment in Fidelity Europe Capital Appreciation Fund would
have grown to $18,306, including the effect of the fund's 3% sales
charge.
FIDELITY EUROPE CAPITAL APPRECIATION FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
INITIAL REINVESTED REINVESTED
YEAR $10,000 DIVIDEND CAPITAL GAIN TOTAL
ENDED
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 DJIA CPI**
ER 31
1997 $ 16,073 $ 60 3 $ 1,630 $ 18,306 $ 21,5 44 $ 2 1 , 710 $ 11,084
1996 13,648 266 0 13,914 1 6 , 308 17,2 67 10,857
1995 11,718 0 0 11,718 13,1 41 13 ,329 10,542
1994 11,010 0 0 11,010 10,3 93 10,6 83 10,254
*
</TABLE>
* From December 21, 1993 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Europe
Capital Appreciation Fund on December 21, 1993, assuming the 3% sales
charge had been in effect, the net amount invested in fund shares was
$9,700. The cost of the initial investment ($10,000), together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested), amounted to $ 11,726. I f distributions
had not been reinvested, the amount of distributions earned from the
fund over time would have been smaller, and cash payments for the
period would have amounted to $ 446 fo r dividends and
$ 1,251 for capital gains distributions. The figures in the
table do not include the effect of the fund's 1.0% short-term trading
fee applicable to shares held less than 90 days.
FRANCE FUND: During the period from November 1, 1995
(commencement of operations) to October 31, 1997, a hypothetical
$10,000 investment in Fidelity France Fund would have grown to
$13,783, including the effect of the fund's 3% sales charge.
FIDELITY FRANCE FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
INITIAL REINVESTED REINVESTED
YEAR $10,000 DIVIDEND CAPITAL GAIN TOTAL
ENDED
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 DJIA CPI**
ER 31
1997 $ 12,872 $ 230 $ 681 $ 13,783 $ 16,3 17 $ 16,2 48 $ 10,514
1996 11,873 47 0 11,920 12, 350 12,9 23 10,299
*
</TABLE>
* From November 1, 1995 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in France
Fund on November 1, 1995, assuming the 3% sales charge had been in
effect, the net amount invested in fund shares was $9,700. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested), amounted
to $10 ,789. If distributions had not been reinvested, the
amount of distributions earned from the fund over time would have been
smaller, and cash payments for the period would have amounted to
$ 194 for dividends and $592 for capital gains distributions.
The figures in the table do not include the effect of the fund's 1.5%
short-term trading fee applicable to shares held less than 90 days.
GERMANY FUND: During the period from November 1, 1995 (commencement of
operations) to October 31, 1997, a hypothetical $10,000 investment in
Fidelity Germany Fund would have grown to $13,252 , including
the effect of the fund's 3% sales charge.
FIDELITY GERMANY FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
INITIAL REINVESTED REINVESTED
YEAR $10,000 DIVIDEND CAPITAL GAIN TOTAL
ENDED
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 DJIA CPI**
ER 31
1997 $ 12,843 $ 11 $ 398 $ 13,252 $ 1 6,317 $ 16,2 4 8 $ 10,514
1996 11,000 0 0 11,000 1 2 , 350 12,9 23 10,299
*
</TABLE>
* From November 1, 1995 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Germany
Fund on November 1, 1995, assuming the 3% sales charge had been in
effect, the net amount invested in fund shares was $9,700. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested), amounted
to $10,349 . If distributions had not been reinvested, the
amount of distributions earned from the fund over time would have been
smaller, and cash payments for the period would have amounted to
$10 for dividends and $340 for capital gains
distributions. The figures in the table do not include the effect of
the fund's 1.5% short-term trading fee applicable to shares held less
than 90 days.
HONG KONG AND CHINA FUND: During the period from November 1, 1995
(commencement of operations) to October 31, 1997, a hypothetical
$10,000 investment in Fidelity Hong Kong and China Fund would have
grown to $10,911 , including the effect of the fund's 3% sales
charge.
FIDELITY HONG KONG AND CHINA FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
INITIAL REINVESTED REINVESTED
YEAR $10,000 DIVIDEND CAPITAL GAIN TOTAL
ENDED
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 DJIA CPI**
ER 31
1997 $ 10,7 2 8 $ 1 21 $ 62 $ 10,9 11 $ 16,3 17 $16,2 48 $
10,514
1996 12,581 12 0 12,593 1 2,350 12,9 23 10,299
*
</TABLE>
* From November 1, 1995 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Hong Kong
and China Fund on November 1, 1995, assuming the 3% sales charge had
been in effect, the net amount invested in fund shares was $9,700. The
cost of the initial investment ($10,000), together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested),
amounted t o $10,223 . If distributions had not been reinvested,
the amount of distributions earned from the fund over time would have
been smaller, and cash payments for the period would have amounted to
$ 146 for dividends and $78 for capital gains
distributions. The figures in the table do not include the effect of
the fund's 1.5% short-term trading fee applicable to shares held less
than 90 days.
JAPAN FUND: During the period from September 15, 1992 (commencement of
operations) to October 31, 1997, a hypothetical $10,000 investment in
Fidelity Japan Fund would have grown to $ 11,449, including the
effect of the fund's 3% sales charge.
FIDELITY JAPAN FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
INITIAL REINVESTED REINVESTED
YEAR $10,000 DIVIDEND CAPITAL GAIN TOTAL
ENDE
D
OCTO INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 DJIA CPI**
BER
31
1997 $ 10,767 $ 9 $ 673 $ 11,449 $ 24, 752 $ 2 5,344 $ 11,437
1996 $ 11,330 0 708 12,038 18, 736 20,158 11,203
1995 11,718 0 732 12,450 1 5,098 15, 560 10,878
1994 13,842 0 461 14,303 11, 941 12, 472 10,580
1993 12,950 0 0 12,950 11, 496 11, 431 10,311
1 9,545 0 0 9,545 10,001 9, 733 10,035
9
9
2
*
</TABLE>
* From September 15, 1992 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Japan Fund
on September 15, 1992, assuming the 3% sales charge had been in
effect, the net amount invested in fund shares was $9,700. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested), amounted
to $ 10,749 . If distributions had not been reinvested, the
amount of distributions earned from the fund over time would have been
smaller, and cash payments for the period would have amounted to
$ 10 for dividends and $728 for capital gains distributions. The
figures in the table do not include the effect of the fund's 1.5%
short-term trading fee applicable to shares held less than 90 days.
JAPAN SMALL COMPANIES FUND: During the period from November 1, 1995
(commencement of operations) to October 31, 1997, a hypothetical
$10,000 investment in Fidelity Japan Small Companies Fund would have
been $ 6,306 , including the effect of the fund's 3% sales
charge.
FIDELITY JAPAN SMALL COMPANIES FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
INITIAL REINVESTED REINVESTED
YEAR $10,000 DIVIDEND CAPITAL GAIN TOTAL
ENDE
D
OCTO INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 DJIA CPI**
BER
31
1997 $ 6,2 76 $ 0 $ 30 $ 6,3 06 $ 16,3 17 $ 16,2 48 $
10,514
1996 8,856 0 0 8,856 12, 350 12,9 23 10,299
*
</TABLE>
* From November 1, 1995 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Japan
Small Companies Fund on November 1, 1995, assuming the 3% sales charge
had been in effect, the net amount invested in fund shares was $9,700.
The cost of the initial investment ($10,000), together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested), amounted to $1 0,039 . If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $0 fo r dividends and $ 39 for capital gains
distributions. The figures in the table do not include the effect of
the fund's 1.5% short-term trading fee applicable to shares held less
than 90 days.
LATIN AMERICA FUND: During the period from April 19, 1993
(commencement of operations) to October 31, 1997, a hypothetical
$10,000 investment in Fidelity Latin America Fund would have grown
t o $15,606, including the effect of the fund's 3% sales charge.
FIDELITY LATIN AMERICA FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
INITIAL REINVESTED REINVESTED
YEAR $10,000 DIVIDEND CAPITAL GAIN TOTAL
ENDED
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 DJIA CPI**
ER 31
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
19 $ 15,0 45 $ 51 1 $ 5 0 $ 15,6 06 $ 22, 848 $ 23, 893 $ 11,222
97
19 12,212 190 41 12,443 17,2 95 1 9,004 10,993
96
19 9,458 31 32 9,521 13, 937 14, 670 10,674
95
19 15,724 53 53 15,830 1 1,022 11,7 58 10,382
94
19 12,882 0 0 12,882 10, 612 10, 776 10,118
93
*
</TABLE>
* From April 19, 1993 (commencement of operations) through October 31,
1993.
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Latin
America Fund on April 19, 1993, assuming the 3% sales charge had been
in effect, the net amount invested in fund shares was $9,700. The cost
of the initial investment ($10,000), together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested), amounted
to $10,442 . If distributions had not been reinvested, the
amount of distributions earned from the fund over time would have been
smaller, and cash payments for the period would have amounted to
$388 for dividends and $49 for capital gains distributions. The
figures in the table do not include the effect of the fund's 1.5%
short-term trading fee applicable to shares held less than 90 days.
NORDIC FUND: During the period from November 1, 1995 (commencement of
operations) to October 31, 1997, a hypothetical $10,000 investment in
Fidelity Nordic Fund would have grown to $1 5,637, including the
effect of the fund's 3% sales charge.
FIDELITY NORDIC FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
INITIAL REINVESTED REINVESTED
YEAR $10,000 DIVIDEND CAPITAL GAIN TOTAL
ENDE
D
OCTO INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 DJIA CPI**
BER
31
1997 $ 15, 462 $ 58 $ 117 $ 15,6 37 $ 1 6,317 $ 1 6,248 $ 10,514
1996 12,387 0 0 12,387 1 2,350 12,923 10,299
*
</TABLE>
* From November 1, 1995 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Nordic
Fund on November 1, 1995, assuming the 3% sales charge had been in
effect, the net amount invested in fund shares was $9,700. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested), amounted
to $ 10,14 6. If distributions had not been reinvested, the
amount of distributions earned from the fund over time would have been
smaller, and cash payments for the period would have amounted to
$ 49 for dividends and $97 f or capital gains distributions. The
figures in the table do not include the effect of the fund's 1.5%
short-term trading fee applicable to shares held less than 90 days.
PACIFIC BASIN FUND: During the 10-year period ended October 31, 1997,
a hypothetical $10,000 investment in Fidelity Pacific Basin Fund would
have grown to $13,185, in cluding the effect of the fund's 3%
sales charge.
FIDELITY PACIFIC BASIN FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
INITIAL REINVESTED REINVESTED
YEAR $10,000 DIVIDEND CAPITAL GAIN TOTAL
ENDED
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 DJIA CPI**
ER 31
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1997 $ 10,473 $ 611 $ 2,101 $ 13,185 $ 48,782 $ 50,221 $ 14,016
1996 11,442 589 2,295 14,326 36,924 39,944 13,729
1995 11,621 59 9 2,331 14,551 29,755 30,834 13,330
1994 15,589 78 0 926 17,295 23,533 24,713 12,966
1993 13,652 570 576 14,798 22,657 22,651 12,637
1992 9,372 295 395 10,062 19,710 19,286 12,298
1991 10,270 323 433 11,026 17,923 17,816 11,917
1990 10,067 175 425 10,667 13,424 13,696 11,578
1989 12,324 207 17 12,548 14,511 14,271 10,893
1988 10,926 115 0 11,041 11,481 11,172 10,425
</TABLE>
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Pacific
Basin Fund on October 31, 1986, assuming the 3% sales charge had been
in effect, the net amount invested in fund shares was $9,700. The cost
of the initial investment ($10,000), together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested), amounted
to $13,114 . If distributions had not been reinvested, the
amount of distributions earned from the fund over time would have been
smaller, and cash payments for the period would have amounted to
$5 78 for dividends and $2,296 for capital gains distributions.
The figures in the table do not include the effect of the fund's 1.0%
short-term trading fee applicable to shares held less than 90 days.
SOUTHEAST ASIA FUND: During the period from April 19, 1993
(commencement of operations) to October 31, 1997, a hypothetical
$10,000 investment in Fidelity Southeast Asia Fund would have been
$9,826, including the effect of the fund's 3% sales charge.
FIDELITY SOUTHEAST ASIA FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
INITIAL REINVESTED REINVESTED
YEAR $10,000 DIVIDEND CAPITAL GAIN TOTAL
ENDED
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 DJIA CPI**
ER 31
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
19 $ 9,264 $ 30 6 $ 256 $ 9,826 $ 22 ,848 $ 23, 893 $ 11,222
97
19 14,249 304 0 14,553 17,2 95 1 9,004 10,993
96
19 13,464 63 0 13,527 13, 937 14, 670 10,674
95
19 14,172 67 0 14,239 1 1,022 11, 758 10,382
94
19 12,843 0 0 12,843 10, 612 10, 776 10,118
93
*
</TABLE>
* From April 19, 1993 (commencement of operations) through October 31,
1993.
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Southeast
Asia Fund on April 19, 1993, assuming the 3% sales charge had been in
effect, the net amount invested in fund shares was $9,700. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested), amounted
to $10,857. If distributions had not been reinvested, the
amount of distributions earned from the fund over time would have
been smaller, and cash payments for the period would have amounted to
$456 for dividends and $388 for capital gains distributions. The
figures in the table do not include the effect of the fund's 1.5%
short-term trading fee applicable to shares held less than 90 days.
UNITED KINGDOM FUND: During the period from November 1, 1995
(commencement of operations) to October 31, 1997, a hypothetical
$10,000 investment in Fidelity United Kingdom Fund would have grown to
$ 14,22 8, including the effect of the fund's 3% sales charge.
FIDELITY UNITED KINGDOM FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
INITIAL REINVESTED REINVESTED
YEAR $10,000 DIVIDEND CAPITAL GAIN TOTAL
ENDED
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 DJIA CPI**
ER 31
1997 $ 13,784 $ 209 $ 235 $ 14,228 $ 1 6 , 317 $ 16,2 48 $ 10,514
1996 11,533 47 0 11,580 1 2 , 350 12,9 23 10,299
*
</TABLE>
* From November 1, 1995 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in United
Kingdom Fund on November 1, 1995, assuming the 3% sales charge had
been in effect, the net amount invested in fund shares was $9,700. The
cost of the initial investment ($10,000), together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested),
amounted to $10,360. If distributions had not been reinvested,
the amount of distributions earned from the fund over time would have
been smaller, and cash payments for the period would have amounted
to $165 for dividends and $194 for capital gains distributions.
The figures in the table do not include the effect of the fund's 1.5%
short-term trading fee applicable to shares held less than 90 days.
INTERNATIONAL INDICES, MARKET CAPITALIZATION, AND NATIONAL
STOCK MARKET RETURN
The following tables show the total market capitalization of certain
countries according to the Morgan Stanley Capital International
Indices database, the total market capitalization of Latin American
countries according to the Morgan Stanley Capital International
Emerging Markets database, and the performance of national stock
markets as measured in U.S. dollars by the Morgan Stanley Capital
International stock market indices for the twelve months ended October
31, 1997. Of course, these results are not indicative of future stock
market performance or the funds' performance. Market conditions during
the periods measured fluctuated widely. Brokerage commissions and
other fees are not factored into the values of the indices.
MARKET CAPITALIZATION. Companies outside the U.S. now make up over
one - half of the world's stock market capitalization.
According to Morgan Stanley Capital International, the size of the
markets as measured in U.S. dollars grew from $ 5,749.5
($ 10,078.9 including the U.S.) billion in 1996 to
$ 6,207.8 ($ 12,040.3 including the U.S.) billion in 1997.
The following table measures the total market capitalization of
certain countries according to the Morgan Stanley Capital
International Indices database. The value of the markets are measured
in billions of U.S. dollars as of October 31, 1997.
TOTAL MARKET CAPITALIZATION
AUSTRALIA $ 152.6 JAPAN $ 1,693.1
AUSTRIA 24.6 NETHERLAND 327.9
S
BELGIUM 73.4 NORWAY 34.2
CANADA 308.3 SINGAPORE/ 54.0/62.8
MALAYSIA
DENMARK 61.8 SPAIN 146.1
FRANCE 419.5 SWEDEN 155.8
GERMANY 543.1 SWITZERLAN 428.3
D
HONG KONG 167.7 UNITED 1,246.6
KINGDOM
ITALY 215.6 UNITED 5,832.5
STATES
The following table measures the total market capitalization of Latin
American countries according to the Morgan Stanley Capital
International Emerging Markets database. The value of the markets
is measured in billions of U.S. dollars as of October 31, 1997.
TOTAL MARKET CAPITALIZATION - LATIN AMERICA
ARGENTINA $ 33.1
BRAZIL 122.1
CHILE 36.3
COLOMBIA 8.7
MEXICO 94.7
VENEZUELA 14.0
PERU 10.0
TOTAL LATIN AMERICA $ 318.9
NATIONAL STOCK MARKET PERFORMANCE. Certain national stock markets have
outperformed the U.S. stock market. The first table below represents
the performance of national stock markets as measured in U.S. dollars
by the Morgan Stanley Capital International stock market indices for
the twelve months ended October 31, 1997. The second table shows the
same performance as measured in local currency. Each table measures
total return based on the period's change in price, dividends paid on
stocks in the index, and the effect of reinvesting dividends net of
any applicable foreign taxes. These are unmanaged indices composed of
a sampling of selected companies representing an approximation of the
market structure of the designated country.
STOCK MARKET PERFORMANCE
MEASURED IN U.S. DOLLARS
AUSTRALIA -7.7% JAPAN -18.2%
AUSTRIA 5.8 NETHERLAND 32.4
S
BELGIUM 13.7 NORWAY 31.5
CANADA 17.5 SINGAPORE/ -26.9/-57.2
MALAYSIA
DENMARK 31.6 SPAIN 37.8
FRANCE 12.6 SWEDEN 22.9
GERMANY 20.6 SWITZERLAN 30.9
D
HONG KONG -17.5 UNITED 28.6
KINGDOM
ITALY 33.2 UNITED 32.3
STATES
STOCK MARKET PERFORMANCE
MEASURED IN LOCAL CURRENCY
AUSTRALIA 3.9% JAPAN -13.5%
AUSTRIA 20.3 NETHERLAND 51.5
S
BELGIUM 29.4 NORWAY 44.4
CANADA 23.5 SINGAPORE/ -18.4/-43.2
MALAYSIA
DENMARK 48.4 SPAIN 57.1
FRANCE 26.9 SWEDEN 40.1
GERMANY 37.1 SWITZERLAN 45.3
D
HONG KONG -17.5 UNITED 24.9
KINGDOM
ITALY 48.4 UNITED 32.3
STATES
The following table shows the average annualized stock market returns
measured in U.S. dollars as of October 31, 1997.
STOCK MARKET PERFORMANCE
FIVE YEARS ENDED TEN YEARS ENDED
OCTOBER 31, 1997 OCTOBER 31, 1997
GERMANY 17.57% 13.97%
HONG KONG 35.86 30.10
JAPAN 8.03 2.29
SPAIN 23.72 10.90
UNITED 17.87 13.55
KINGDOM
UNITED 17.67 16.51
STATES
PERFORMANCE COMPARISONS. A fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed
as mutual fund rankings prepared by Lipper Analytical Services, Inc.
(Lipper), an independent service located in Summit, New Jersey that
monitors the performance of mutual funds. Generally, Lipper rankings
are based on total return, assume reinvestment of distributions, do
not take sales charges or trading fees into consideration, and are
prepared without regard to tax consequences. In addition to the mutual
fund rankings, a fund's performance may be compared to stock, bond,
and money market mutual fund performance indices prepared by Lipper or
other organizations. When comparing these indices, it is important to
remember the risk and return characteristics of each type of
investment. For example, while stock mutual funds may offer higher
potential returns, they also carry the highest degree of share price
volatility. Likewise, money market funds may offer greater stability
of principal, but generally do not offer the higher potential returns
available from stock mutual funds.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and
periodicals. For example, the fund may quote Morningstar, Inc. in its
advertising materials. Morningstar, Inc. is a mutual fund rating
service that rates mutual funds on the basis of risk-adjusted
performance. Rankings that compare the performance of Fidelity funds
to one another in appropriate categories over specific periods of time
may also be quoted in advertising.
A fund's performance may also be compared to that of a benchmark index
representing the universe of securities in which the fund may invest.
The total return of a benchmark index reflects reinvestment of all
dividends and capital gains paid by securities included in the index.
Unlike a fund's returns, however, the index returns do not reflect
brokerage commissions, transaction fees, or other costs of investing
directly in the securities included in the index.
Canada Fund may compare its performance to that of the Toronto Stock
Exchange (TSE) 300, a market capitalization weighted index of 300
stocks traded in the Canadian market.
Emerging Markets may compare its performance to that of the Morgan
Stanley Capital International Emerging Markets Free Index, a n
unmanaged, market capitalization weighted index that is
designed to represent the performance of emerging stock markets
throughout the world.
Each of Europe Fund and Europe Capital Appreciation Fund may compare
its performance to that of the Morgan Stanley Capital International
Europe Index, a n unmanaged, market capitalization weighted
index that is designed to represent the performance of developed
stock markets in Europe. The index returns for periods after
January 1, 1997 are adjusted for tax withholding rates applicable to
U.S.-based mutual funds organized as Massachusetts business trusts.
France Fund may compare its performance to that of the Societe des
Bourses Francaises (SBF) 250, a market capitalization weighted index
of the stocks of the 250 largest companies in the French market.
Germany Fund may compare its performance to that of the Deutscher
Akteinindex (DAX) 100, a market capitalization weighted index of the
100 most heavily traded stocks in the German market.
Hong Kong and China Fund may compare its performance to that of the
Hang Seng Index, a market capitalization weighted index of the stocks
of the 33 largest companies in the Hong Kong market.
Each of Japan Fund and Japan Small Companies Fund may compare its
performance to that of the Tokyo Stock Price Index (TOPIX), a market
capitalization weighted index of over 1100 stocks traded in the
Japanese market.
Latin America Fund may compare its performance to that of the Morgan
Stanley Capital International Emerging Markets Free - Latin America
Index, a market capitalization weighted index of approximately 170
stocks traded in seven Latin American markets.
Nordic Fund may compare its performance to that of the FT - Actuaries
World Nordic Index, a market capitalization weighted index of over 90
stocks traded in four Scandinavian markets.
Pacific Basin Fund may compare its performance to that of the Morgan
Stanley Capital International Pacific Index, a market capitalization
weighted index of over 400 stocks traded in six Pacific-region
markets. The index returns for periods after January 1, 1997 are
adjusted for tax withholding rates applicable to U.S.-based mutual
funds organized as Massachusetts business trusts.
Southeast Asia Fund may compare its performance to that of the Morgan
Stanley Capital International Far East ex Japan Free Index, a market
capitalization weighted index of over 450 stocks traded in eight Asian
markets, excluding Japan.
United Kingdom Fund may compare its performance to that of the FT -
All Shares Index, a market capitalization weighted index of over 750
stocks traded in the U.K. market.
Stocks are selected for the Morgan Stanley Capital International
(MSCI) indexes on the basis of industry representation, liquidity,
sufficient float, and avoidance of cross-ownership. The MSCI Free
indexes exclude those stocks that cannot be purchased by foreign
investors in otherwise free markets.
A fund may be compared in advertising to Certificates of Deposit (CDs)
or other investments issued by banks or other depository institutions.
Mutual funds differ from bank investments in several respects. For
example, a fund may offer greater liquidity or higher potential
returns than CDs, a fund does not guarantee your principal or your
return, and fund shares are not FDIC insured.
Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial
strategies. Such information may include information about current
economic, market, and political conditions; materials that describe
general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; questionnaires
designed to help create a personal financial profile; worksheets used
to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and action plans offering investment
alternatives. Materials may also include discussions of Fidelity's
asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides
historical returns of the capital markets in the United States,
including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term
government bonds, Treasury bills, the U.S. rate of inflation (based on
the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
Fidelity funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with
the security types in any capital market may or may not correspond
directly to those of the funds. Ibbotson calculates total returns in
the same method as the funds. The funds may also compare performance
to that of other compilations or indices that may be developed and
made available in the future.
In advertising materials, Fidelity may reference or discuss its
products and services, which may include other Fidelity funds;
retirement investing; brokerage products and services; model
portfolios or allocations; saving for college or other goals;
and charitable giving. In addition, Fidelity may quote or reprint
financial or business publications and periodicals as they relate to
current economic and political conditions, fund management, portfolio
composition, investment philosophy, investment techniques, the
desirability of owning a particular mutual fund, and Fidelity services
and products. Fidelity may also reprint, and use as advertising and
sales literature, articles from Fidelity Focus(Registered trademark),
a quarterly magazine provided free of charge to Fidelity fund
shareholders.
A fund may present its fund number, Quotron(trademark) number, and
CUSIP number, and discuss or quote its current portfolio manager.
VOLATILITY. A fund may quote various measures of volatility and
benchmark correlation in advertising. In addition, the fund may
compare these measures to those of other funds. Measures of volatility
seek to compare the fund's historical share price fluctuations or
total returns to those of a benchmark. Measures of benchmark
correlation indicate how valid a comparative benchmark may be. All
measures of volatility and correlation are calculated using averages
of historical data.
MOMENTUM INDICATORS indicate a fund's price movements over specific
periods of time. Each point on the momentum indicator represents the
fund's percentage change in price movements over that period.
A fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a
program, an investor invests a fixed dollar amount in a fund at
periodic intervals, thereby purchasing fewer shares when prices are
high and more shares when prices are low. While such a strategy does
not assure a profit or guard against loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers
of shares are purchased at the same intervals. In evaluating such a
plan, investors should consider their ability to continue purchasing
shares during periods of low price levels.
A fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which
may produce superior after-tax returns over time. For example, a
$1,000 investment earning a taxable return of 10% annually would have
an after-tax value of $1,949 after ten years, assuming tax was
deducted from the return each year at a 31% rate. An equivalent
tax-deferred investment would have an after-tax value of $2,100 after
ten years, assuming tax was deducted at a 31% rate from the
tax-deferred earnings at the end of the ten-year period.
As of October 31, 1997, FMR advised over $29 billion in tax-free
fund assets, $98 billion in money market fund assets, $378 billion in
equity fund assets, $72 billion in international fund assets, and $23
billion in Spartan fund assets. The funds may reference the growth
and variety of money market mutual funds and the adviser's innovation
and participation in the industry. The equity funds under management
figure represents the largest amount of equity fund assets under
management by a mutual fund investment adviser in the United States,
making FMR America's leading equity (stock) fund manager. FMR, its
subsidiaries, and affiliates maintain a worldwide information and
communications network for the purpose of researching and managing
investments abroad.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Pursuant to Rule 22d-1 under the Investment Company Act of 1940 (the
1940 Act), FDC exercises its right to waive each fund's front-end
sales charge on shares acquired through reinvestment of dividends and
capital gain distributions or in connection with the fund's merger
with or acquisition of any investment company or trust. In addition,
FDC has chosen to waive each fund's sales charge in certain instances
because of efficiencies involved in those sales of shares. The sales
charge will not apply:
1. to shares purchased in connection with an employee benefit plan
(including the Fidelity-sponsored 403(b) and corporate IRA programs
but otherwise as defined in the Employee Retirement Income Security
Act) maintained by a U.S. employer and having more than 200 eligible
employees, or a minimum of $3,000,000 in plan assets invested in
Fidelity mutual funds, or as part of an employee benefit plan
maintained by a U.S. employer that is a member of a parent-subsidiary
group of corporations (within the meaning of Section 1563(a)(1) of the
Internal Revenue Code, with "50%" substituted for "80%") any member of
which maintains an employee benefit plan having more than 200 eligible
employees, or a minimum of $3,000,000 in plan assets invested in
Fidelity mutual funds, or as part of an employee benefit plan
maintained by a non-U.S. employer having 200 or more eligible
employees, or a minimum of $3,000,000 in assets invested in Fidelity
mutual funds, the assets of which are held in a bona fide trust for
the exclusive benefit of employees participating therein;
2. to shares purchased by an insurance company separate account used
to fund annuity contracts purchased by employee benefit plans
(including 403(b) programs, but otherwise as defined in the Employee
Retirement Income Security Act), which, in the aggregate, have either
more than 200 eligible employees or a minimum of $3,000,000 in assets
invested in Fidelity funds;
3. to shares in a Fidelity account purchased (including purchases by
exchange) with the proceeds of a distribution from an employee benefit
plan provided that: (i) at the time of the distribution, the employer,
or an affiliate (as described in exemption 1 above) of such employer,
maintained at least one employee benefit plan that qualified for
exemption 1 and that had at least some portion of its assets invested
in one or more mutual funds advised by FMR, or in one or more accounts
or pools advised by Fidelity Management Trust Company; and (ii) either
(a) the distribution is transferred from the plan to a Fidelity IRA
account within 60 days from the date of the distribution or (b) the
distribution is transferred directly from the plan into another
Fidelity account;
4. to shares purchased by a charitable organization (as defined for
purposes of Section 501(c)(3) of the Internal Revenue Code) investing
$100,000 or more;
5. to shares purchased for a charitable remainder trust or life income
pool established for the benefit of a charitable organization (as
defined for purposes of Section 501(c)(3) of the Internal Revenue
Code);
6. to shares purchased by an investor participating in the Fidelity
Trust Portfolios program (these investors must make initial
investments of $100,000 or more in the Trust Portfolios funds and
must, during the initial six-month period, reach and maintain an
aggregate balance of at least $500,000 in all accounts and subaccounts
purchased through the Trust Portfolios program);
7. to shares purchased by a mutual fund for which FMR or an affiliate
serves as investment manager;
8. to shares purchased through Portfolio Advisory Services or Fidelity
Charitable Advisory Services;
9. to shares purchased by a current or former Trustee or officer of a
Fidelity fund or a current or retired officer, director, or regular
employee of FMR Corp. or Fidelity International Limited or their
direct or indirect subsidiaries (a Fidelity Trustee or employee), the
spouse of a Fidelity Trustee or employee, a Fidelity Trustee or
employee acting as custodian for a minor child, or a person acting as
trustee of a trust for the sole benefit of the minor child of a
Fidelity Trustee or employee;
10. to shares purchased by a bank trust officer, registered
representative, or other employee of a qualified recipient. Qualified
recipients are securities dealers or other entities, including banks
and other financial institutions, who have sold the fund's shares
under special arrangements in connection with FDC's sales activities;
11. to shares purchased by contributions and exchanges to the
following prototype or prototype-like retirement plans sponsored by
FMR Corp. or FMR and that are marketed and distributed directly to
plan sponsors or participants without any intervention or assistance
from any intermediary distribution channel: The Fidelity IRA, the
Fidelity Rollover IRA, The Fidelity SEP-IRA and SARSEP, The Fidelity
SIMPLE IRA, The Fidelity Retirement Plan, Fidelity Defined Benefit
Plan, The Fidelity Group IRA, The Fidelity 403(b) Program, The
Fidelity Investments 401(a) Prototype Plan for Tax-Exempt Employers,
and The CORPORATEplan for Retirement (Profit Sharing and Money
Purchase Plan);
12. to shares purchased as part of a pension or profit-sharing plan as
defined in Section 401(a) of the Internal Revenue Code that maintains
all of its mutual fund assets in Fidelity mutual funds, provided the
plan executes a Fidelity non-prototype sales charge waiver request
form confirming its qualification;
13. to shares purchased by a registered investment adviser (RIA) for
his or her discretionary accounts, provided he or she executes a
Fidelity RIA load waiver agreement which specifies certain aggregate
minimum and operating provisions. This waiver is available only for
shares purchased directly from Fidelity, without a broker, unless
purchased through a brokerage firm which is a correspondent of
National Financial Services Corporation (NFSC). The waiver is
unavailable, however, if the RIA is part of an organization
principally engaged in the brokerage business, unless the brokerage
firm in the organization is an NFSC correspondent; or
14. to shares purchased by a trust institution or bank trust
department for its non-discretionary, non-retirement fiduciary
accounts, provided it executes a Fidelity Trust load waiver agreement
which specifies certain aggregate minimum and operating provisions.
This waiver is available only for shares purchased either directly
from Fidelity or through a bank-affiliated broker, and is unavailable
if the trust department or institution is part of an organization not
principally engaged in banking or trust activities.
Each fund's sales charge may be reduced to reflect sales charges
previously paid, or that would have been paid absent a reduction for
some purchases made directly with Fidelity as noted in the prospectus,
in connection with investments in other Fidelity funds. This includes
reductions for investments in prototype-like retirement plans
sponsored by FMR or FMR Corp., which are listed above.
On October 12, 1990, each of Canada Fund, Europe Fund, and Pacific
Basin Fund changed its sales charge policy from a 2% sales charge upon
purchase and a 1% deferred sales charge upon redemption, to a 3% sales
charge upon purchase. If you purchased your shares prior to that date,
when you redeem those shares a deferred sales charge of 1% of the
redemption amount will be deducted.
Each fund is open for business and its net asset value per share (NAV)
is calculated each day the New York Stock Exchange (NYSE) is open for
trading. The NYSE has designated the following holiday closings for
1998: New Year's Day, Martin Luther King's Birthday, Presidents' Day,
Good Friday, Memorial Day, Independence Day (observed), Labor Day,
Thanksgiving Day, and Christmas Day. Although FMR expects the same
holiday schedule to be observed in the future, the NYSE may modify its
holiday schedule at any time. In addition, the funds will not process
wire purchases and redemptions on days when the Federal Reserve Wire
System is closed.
FSC normally determines each fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated
earlier if trading on the NYSE is restricted or as permitted by the
Securities and Exchange Commission (SEC). To the extent that portfolio
securities are traded in other markets on days when the NYSE is
closed, a fund's NAV may be affected on days when investors do not
have access to the fund to purchase or redeem shares. In addition,
trading in some of a fund's portfolio securities may not occur on days
when the fund is open for business.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are
valued in computing a fund's NAV. Shareholders receiving securities or
other property on redemption may realize a gain or loss for tax
purposes, and will incur any costs of sale, as well as the associated
inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the
1940 Act), each fund is required to give shareholders at least 60
days' notice prior to terminating or modifying its exchange privilege.
Under the Rule, the 60-day notification requirement may be waived if
(i) the only effect of a modification would be to reduce or eliminate
an administrative fee, redemption fee, or deferred sales charge
ordinarily payable at the time of an exchange, or (ii) the fund
suspends the redemption of the shares to be exchanged as permitted
under the 1940 Act or the rules and regulations thereunder, or the
fund to be acquired suspends the sale of its shares because it is
unable to invest amounts effectively in accordance with its investment
objective and policies.
In the Prospectus, each fund has notified shareholders that it
reserves the right at any time, without prior notice, to refuse
exchange purchases by any person or group if, in FMR's judgment, the
fund would be unable to invest effectively in accordance with its
investment objective and policies, or would otherwise potentially be
adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and
the U.S. Postal Service cannot deliver your checks, or if your checks
remain uncashed for six months, Fidelity may reinvest your
distributions at the then-current NAV. All subsequent distributions
will then be reinvested until you provide Fidelity with alternate
instructions.
DIVIDENDS. Because each fund invests significantly in foreign
securities, corporate shareholders should not expect fund dividends to
qualify for the dividends-received deduction. Short-term capital gains
are distributed as dividend income, but do not qualify for the
dividends-received deduction. Each fund will notify corporate
shareholders annually of the percentage of fund dividends that qualify
for the dividends-received deduction. Gains (losses) attributable to
foreign currency fluctuations are generally taxable as ordinary
income, and therefore will increase (decrease) dividend distributions.
Each fund will send each shareholder a notice in January describing
the tax status of dividend and capital gain distributions for the
prior year.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by each
fund on the sale of securities and distributed to shareholders are
federally taxable as long-term capital gains, regardless of the length
of time shareholders have held their shares. If a shareholder receives
a capital gain distribution on shares of a fund, and such shares are
held six months or less and are sold at a loss, the portion of the
loss equal to the amount of the capital gain distribution will be
considered a long-term loss for tax purposes. Short-term capital gains
distributed by each fund are taxable to shareholders as dividends, not
as capital gains.
As of October 31, 1997, Canada Fund hereby designates approximately
$3,658,000 as a capital gain dividend for the purpose of the dividend
paid deduction.
As of October 31, 1997, Emerging Markets Fund had a capital loss
carryforward aggregating approximately $97,011,000. This loss
carryforward which will expire on September 30, 2004, is available to
offset future capital gains.
As of October 31, 1997, Europe Fund hereby designates approximately
$12,843,000 as a capital gain dividend for the purpose of the dividend
paid deduction.
As of October 31, 1997, Europe Capital Appreciation Fund hereby
designates approximately $16,118,000 as a capital gain dividend for
the purpose of the dividend paid deduction.
As of October 31, 1997, France Fund hereby designates approximately
$284,000 as a capital gain dividend for the purpose of the dividend
paid deduction.
As of October 31, 1997, Germany Fund hereby designates
approximately $568,000 as a capital gain dividend for the purpose of
the dividend paid deduction.
As of October 31, 1997, Hong Kong and China Fund hereby designates
approximately $3,773,000 as a capital gain dividend for the purpose of
the dividend paid deduction.
As of October 31, 1997, Japan Fund had a capital loss carryforward
aggregating approximately $52,268,000. This loss carryforward, of
which $31,995,000 and $20,273,000 will expire on October 31, 2003 and
2005, respectively, is available to offset future capital gains.
As of October 31, 1997, Japan Small Companies Fund had a capital
loss carryforward aggregating approximately $38,186,000. This loss
carryforward which will expire on October 31, 2005, is available to
offset future capital gains.
As of October 31, 1997, Latin America Fund had a capital loss
carryforward aggregating approximately $117,765,000. This loss
carryforward, of which $80,150,000 and $37,615,000 will expire on
October 31, 2003 and 2004, respectively, is available to offset future
capital gains.
As of October 31, 1997, Nordic Fund hereby designates approximately
$1,983,000 as a capital gain dividend for the purpose of the dividend
paid deduction.
As of October 31, 1997, Pacific Basin Fund had a capital loss
carryforward aggregating approximately $62,709,000. This loss
carryforward, of which $10,408,000, $17,259,000 and $35,042,000 will
expire on October 31, 2003, 2004 and 2005, respectively, is available
to offset future capital gains.
As of October 31, 1997, Southeast Asia Fund had a capital loss
carryforward aggregating approximately $32,652,000. This loss
carryforward which will expire on October 31, 2005, is available to
offset future capital gains.
As of October 31, 1997, United Kingdom Fund hereby designates
approximately $109,000 as a capital gain dividend for the purpose of
the dividend paid deduction.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Foreign governments
may also impose taxes on other payments or gains with respect to
foreign securities. If, at the close of its fiscal year, more than 50%
of a fund's total assets are invested in securities of foreign
issuers, the fund may elect to pass through foreign taxes paid and
thereby allow shareholders to take a credit or deduction on their
individual tax returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company
and avoid being subject to federal income or excise taxes at the fund
level, each fund intends to distribute substantially all of its net
investment income and net realized capital gains within each calendar
year as well as on a fiscal year basis. Each fund intends to comply
with other tax rules applicable to regulated investment companies,
including a requirement that capital gains from the sale of securities
held less than three months constitute less than 30% of the fund's
gross income for each fiscal year. Gains from some forward currency
contracts, futures contracts, and options are included in this 30%
calculation, which may limit a fund's investments in such instruments.
If a fund purchases shares in certain foreign investment entities,
defined as passive foreign investment companies (PFICs) in the
Internal Revenue Code, it may be subject to U.S. federal income tax on
a portion of any excess distribution or gain from the disposition of
such shares. Interest charges may also be imposed on a fund with
respect to deferred taxes arising from such distributions or gains.
Generally, each fund will elect to mark-to-market any PFIC shares.
Unrealized gains will be recognized as income for tax purposes and
must be distributed to shareholders as dividends.
Each fund is treated as a separate entity from the other funds of
Fidelity Investment Trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some
of the tax consequences generally affecting each fund and its
shareholders, and no attempt has been made to discuss individual tax
consequences. In addition to federal income taxes, shareholders may be
subject to state and local taxes on fund distributions, and shares may
be subject to state and local personal property taxes. Investors
should consult their tax advisers to determine whether a fund is
suitable to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two
classes. Class B is held predominantly by members of the Edward C.
Johnson 3d family and is entitled to 49% of the vote on any matter
acted upon by the voting common stock. Class A is held predominantly
by non-Johnson family member employees of FMR Corp. and its affiliates
and is entitled to 51% of the vote on any such matter. The Johnson
family group and all other Class B shareholders have entered into a
shareholders' voting agreement under which all Class B shares will be
voted in accordance with the majority vote of Class B shares. Under
the Investment Company Act of 1940 (1940 Act), control of a company is
presumed where one individual or group of individuals owns more than
25% of the voting stock of that company. Therefore, through their
ownership of voting common stock and the execution of the
shareholders' voting agreement, members of the Johnson family may be
deemed, under the 1940 Act, to form a controlling group with respect
to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by its division, Fidelity Investments Retail Marketing
Company, which provides marketing services to various companies within
the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
accounts pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures
for personal investing and restricts certain transactions. For
example, all personal trades in most securities require pre-clearance,
and participation in initial public offerings is prohibited. In
addition, restrictions on the timing of personal investing in relation
to trades by Fidelity funds and on short-term trading have been
adopted.
TRUSTEES AND OFFICERS
The Trustees, Members of the Advisory Board, and executive officers of
the trust are listed below. Except as indicated, each individual has
held the office shown or other offices in the same company for the
last five years. All persons named as Trustees and Members of the
Advisory Board also serve in similar capacities for other funds
advised by FMR. The business address of each Trustee, Member of the
Advisory Board, and officer who is an "interested person" (as defined
in the Investment Company Act of 1940) is 82 Devonshire Street,
Boston, Massachusetts 02109, which is also the address of FMR. The
business address of all the other Trustees is Fidelity Investments,
P.O. Box 9235, Boston, Massachusetts 02205-9235. Those Trustees who
are "interested persons" by virtue of their affiliation with either
the trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (67), Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman
of the Board and of the Executive Committee of FMR; Chairman and a
Director of FMR Texas Inc., Fidelity Management & Research (U.K.)
Inc., and Fidelity Management & Research (Far East) Inc.
J. GARY BURKHEAD (56), Member of the Advisory Board (1997), is Vice
Chairman and a Member of the Board of Directors of FMR Corp. (1997)
and President of Fidelity Personal Investments and Brokerage
Gr oup (1997). Previously, Mr. Burkhead served as President of
Fidelity Management & Research Company.
RALPH F. COX (65), Trustee, is President of RABAR Enterprises
(management consulting-engineering industry, 1994). Prior to February
1994, he was President of Greenhill Petroleum Corporation (petroleum
exploration and production). Until March 1990, Mr. Cox was President
and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of USA Waste Services,
Inc. (non-hazardous waste, 1993), CH2M Hill Companies (engineering),
Rio Grande, Inc. (oil and gas production), and Daniel Industries
(petroleum measurement equipment manufacturer). In addition, he is a
member of advisory boards of Texas A&M University and the University
of Texas at Austin.
PHYLLIS BURKE DAVIS (65), Trustee (1992). Prior to her retirement in
September 1991, Mrs. Davis was the Senior Vice President of Corporate
Affairs of Avon Products, Inc. She is currently a Director of
BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores),
and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she is a member of
the President's Advisory Council of The University of Vermont School
of Business Administration.
ROBERT M. GATES (54), Trustee (1997), is a consultant, author, and
lecturer (1993). Mr. Gates was Director of the Central Intelligence
Agency (CIA) from 1991-1993. From 1989 to 1991, Mr. Gates served as
Assistant to the President of the United States and Deputy National
Security Advisor. Mr. Gates is currently a Trustee for the Forum For
International Policy, a Board Member for the Virginia Neurological
Institute, and a Senior Advisor of the Harvard Journal of World
Affairs. In addition, Mr. Gates also serves as a member of the
corporate board for LucasVarity PLC (automotive components and diesel
engines), Charles Stark Draper Laboratory (non-profit), NACCO
Industries, Inc. (mining and manufacturing), and TRW Inc. (original
equipment and replacement products).
E. BRADLEY JONES (69), Trustee. Prior to his retirement in 1984, Mr.
Jones was Chairman and Chief Executive Officer of LTV Steel Company.
He is a Director of TRW Inc. (original equipment and replacement
products), Consolidated Rail Corporation, Birmingham Steel
Corporation, and RPM, Inc. (manufacturer of chemical products), and he
previously served as a Director of NACCO Industries, Inc. (mining and
manufacturing, 1985-1995), Hyster-Yale Materials Handling, Inc.
(1985-1995), and Cleveland-Cliffs Inc (mining), and as a Trustee of
First Union Real Estate Investments. In addition, he serves as a
Trustee of the Cleveland Clinic Foundation, where he has also been a
member of the Executive Committee as well as Chairman of the Board and
President, a Trustee and member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
DONALD J. KIRK (64), Trustee, is Executive-in-Residence (1995) at
Columbia University Graduate School of Business and a financial
consultant. From 1987 to January 1995, Mr. Kirk was a Professor at
Columbia University Graduate School of Business. Prior to 1987, he was
Chairman of the Financial Accounting Standards Board. Mr. Kirk is a
Director of General Re Corporation (reinsurance), and he previously
served as a Director of Valuation Research Corp. (appraisals and
valuations, 1993-1995). In addition, he serves as Chairman of the
Board of Directors of the National Arts Stabilization Fund, Chairman
of the Board of Trustees of the Greenwich Hospital Association, a
Member of the Public Oversight Board of the American Institute of
Certified Public Accountants' SEC Practice Section (1995), and as a
Public Governor of the National Association of Securities Dealers,
Inc. (1996).
*PETER S. LYNCH (54), Trustee, is Vice Chairman and Director of FMR
(1992). Prior to May 31, 1990, he was a Director of FMR and Executive
Vice President of FMR (a position he held until March 31, 1991); Vice
President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). In addition, he
serves as a Trustee of Boston College, Massachusetts Eye & Ear
Infirmary, Historic Deerfield (1989) and Society for the Preservation
of New England Antiquities, and as an Overseer of the Museum of Fine
Arts of Boston.
WILLIAM O. McCOY (54), Trustee (1997), is the Vice President of
Finance for the University of North Carolina (16-school system, 1995).
Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman
of the Board of BellSouth Corporation (telecommunications, 1984) and
President of BellSouth Enterprises (1986). He is currently a Director
of Liberty Corporation (holding company, 1984), Weeks Corporation of
Atlanta (real estate, 1994), Carolina Power and Light Company
(electric utility, 1996), and the Kenan Transport Co. (1996).
Previously, he was a Director of First American Corporation (bank
holding company, 1979-1996). In addition, Mr. McCoy serves as a member
of the Board of Visitors for the University of North Carolina at
Chapel Hill (1994) and for the Kenan-Flager Business School
(University of North Carolina at Chapel Hill, 1988).
GERALD C. McDONOUGH (68), Trustee and Chairman of the non-interested
Trustees, is Chairman of G.M. Management Group (strategic advisory
services). Mr. McDonough is a Director of York International Corp.
(air conditioning and refrigeration), Commercial Intertech Corp.
(hydraulic systems, building systems, and metal products, 1992), CUNO,
Inc. (liquid and gas filtration products, 1996), and Associated
Estates Realty Corporation (a real estate investment trust, 1993). Mr.
McDonough served as a Director of ACME-Cleveland Corp. (metal
working, telecommunications, and electronic products) from 1987-1996
and Brush-Wellman Inc. (metal refining) from 1983-1997.
MARVIN L. MANN (64), Trustee (1993) is Chairman of the Board,
President, and Chief Executive Officer of Lexmark International, Inc.
(office machines, 1991). Prior to 1991, he held the positions of Vice
President of International Business Machines Corporation ("IBM") and
President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993), Imation Corp. (imaging and information storage, 1997), and
Infomart (marketing services, 1991), a Trammell Crow Co. In addition,
he serves as the Campaign Vice Chairman of the Tri-State United Way
(1993) and is a member of the University of Alabama President's
Cabinet.
*ROBERT C. POZEN (51), Trustee (1997) and Senior Vice President, is
also President and a Director of FMR (1997); and President and a
Director of FMR Texas Inc. (1997), Fidelity Management & Research
(U.K.) Inc. (1997), and Fidelity Management & Research (Far East) Inc.
(1997). Previously, Mr. Pozen served as General Counsel, Managing
Director, and Senior Vice President of FMR Corp.
THOMAS R. WILLIAMS (69), Trustee, is President of The Wales Group,
Inc. (management and financial advisory services). Prior to retiring
in 1987, Mr. Williams served as Chairman of the Board of First
Wachovia Corporation (bank holding company), and Chairman and Chief
Executive Officer of The First National Bank of Atlanta and First
Atlanta Corporation (bank holding company). He is currently a Director
of ConAgra, Inc. (agricultural products), Georgia Power Company
(electric utility), National Life Insurance Company of Vermont,
American Software, Inc., and AppleSouth, Inc. (restaurants, 1992).
WILLIAM J. HAYES (63), Vice President (1994), is Vice President of
Fidelity's equity funds; Senior Vice President of FMR; and Managing
Director of FMR Corp.
RICHARD A. SPILLANE, JR. (46), is Vice President of certain equity
funds and Senior Vice President of FMR (1997). Since joining Fidelity,
Mr. Spillane was chief investment officer for Fidelity International,
Limited. Prior to that position, Mr. Spillane served as D irector
of Research.
PATRICIA SATTERTHWAITE (38), Vice President, Latin America Fund
(1993), is a vice president of FMR.
SALLY WALDEN (38), Vice President, Europe Fund (1992), is an employee
of FMR.
KEVIN McCAREY (37), Vice President, Europe Capital Appreciation Fund
(1993), is an employee of FMR.
ALLAN LIU (36), Vice President, Southeast Asia fund (1993), is an
employee of FMR.
THOMAS SWEENEY (41), Vice President, Canada Fund (1996), is an
employee of FMR.
SHIGEKI MAKINO (31), Vice President, Japan Fund (1994), and Pacific
Basin Fund (1996), is an employee of FMR.
ARTHUR S. LORING (50), Secretary, is Senior Vice President (1993) and
General Counsel of FMR, Vice President-Legal of FMR Corp., and Vice
President and Clerk of FDC.
RICHARD A. SILVER (50), Treasurer (1997), is Treasurer of the Fidelity
funds and is an employee of FMR (1997). Before joining FMR, Mr. Silver
served as Executive Vice President, Fund Accounting & Administration
at First Data Investor Services Group, Inc. (1996-1997). Prior to
1996, Mr. Silver was Senior Vice President and Chief Financial Officer
at The Colonial Group, Inc. Mr. Silver also served as Chairman of the
Accounting/Treasurer's Committee of the Investment Company Institute
(1987-1993).
ROBERT H. MORRISON (57), Manager of Security Transactions of
Fidelity's equity funds is Vice President of FMR.
JOHN H. COSTELLO (51), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (51), Assistant Treasurer (1994), is an employee of
FMR (1994). Prior to becoming Assistant Treasurer of the Fidelity
funds, Mr. Rush was Chief Compliance Officer of FMR Corp. (1993-1994)
and Chief Financial Officer of Fidelity Brokerage Services, Inc.
(1990-1993).
The following table sets forth information describing the compensation
of each Trustee and Member of the Advisory Board of each fund for his
or her services for the fiscal year ended October 31, 1997, or
calendar year ended December 31, 1996, as applicable.
COMPENSATION TABLE
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AGGREGATE
COMPENSAT
ION FORM A
FUND
J. GARY RALPH PHYLLIS RICHARD ROBERT EDWARD E. DONALD PETER WILLIAM GERALD EDWARD MARVIN ROBERT THOMAS
F. COX BURKE J. M. C. BRADLEY J. KIRK S. O. C. H. L. MANN C. R.
BURKHE DAVIS FLYNN GATES JOHNSON JONES LYNCH MCCOY MCDONOUG MALONE POZEN WILLIAMS
AD** *** **** 3D** ** ***** H *** **
Canada
$ 0 $ 55 $ 54 $ 8 $ 37 $ 0 $ 54 $ 54 $ 0 $ 54 $ 65 $ 9 $ 55 $ 0 $ 55
Fund B, C
Emerging
0 473 462 76 304 0 466 466 0 467 560 85 473 0 469
Markets
Fund B, D
Europe
0 353 346 41 258 0 349 349 0 356 424 43 353 0 351
Fund B, E
Europe
0 131 128 10 107 0 129 129 0 133 159 11 131 0 131
Capital
Appreciati
on Fund B,
F
France
0 3 3 0 2 0 3 3 0 3 3 0 3 0 3
Fund B, G
Germany
0 5 5 0 4 0 5 5 0 5 6 0 5 0 5
Fund B, H
Hong
0 87 85 6 66 0 85 85 0 88 104 7 87 0 86
Kong and
China
Fund B, I
Japan
0 124 122 18 87 0 123 123 0 122 148 21 124 0 123
Fund B, J
Japan
0 40 39 6 27 0 40 40 0 39 47 8 40 0 40
Small
Companie
s Fund B,
K
Latin
0 344 338 34 270 0 340 340 0 346 415 38 344 0 342
America
Fund B, L
Nordic
0 26 26 2 22 0 26 26 0 27 32 2 27 0 26
Fund B, M
Pacific
0 158 155 33 89 0 156 156 0 153 185 37 158 0 156
Basin
Fund B, N
Southeast
0 266 259 46 160 0 261 261 0 260 313 51 266 0 263
Asia Fund
B, O
United
0 2 2 0 2 0 2 2 0 2 2 0 2 0 2
Kingdom
Fund B, P
TOTAL
$ 0 $137,000 $134,700 $168,000 $0 $0 $ 134,700 $ 136,200 $ 0 $ 85,333 $ 136,200 $ 136,200 $ 134,700 $ 0 $ 136,200
COMPE
NSATIO
N FROM
THE
FUND
COMPLE
X*, A
</TABLE>
* Information is for the calendar year ended December 31, 1996 for 235
funds in the complex.
** Interested Trustees of the funds and Mr. Burkhead are compensated
by FMR.
*** Richard J. Flynn and Edward H. Malone served on the Board of
Trustees through December 31, 1996.
**** Mr. Gates was appointed to the Board of Trustees of Fidelity
Investment Trust effective March 1, 1997. Mr. Gates was elected to the
Board of Trustees of Fidelity Investment Trust on September 17, 1997.
***** During the period from May 1, 1996 through December 31, 1996,
William O. McCoy served as a Member of the Advisory Board of the
trust. Mr. McCoy was appointed to the Board of Trustees of Fidelity
Investment Trust effective January 1, 1997. Mr. McCoy was elected to
the Board of Trustees of Fidelity Investment Trust on September 17,
1997.
A Compensation figures include cash, a pro rata portion of benefits
accrued under the retirement program for the period ended December 30,
1996 and required to be deferred, and may include amounts deferred at
the election of Trustees.
B Compensation figures include cash, and may include amounts required
to be deferred, a pro rata portion of benefits accrued under the
retirement program for the period ended December 30, 1996 and required
to be deferred, and amounts deferred at the election of Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 2 , Phyllis Burke Davis, $ 2 , Richard J. Flynn, $0,
Robert M. Gates, $ 0 , E. Bradley Jones, $ 2 , Donald J.
Kirk, $ 2 , William O. McCoy, $ 0 , Gerald C. McDonough,
$ 2 , Edward H. Malone, $ 2 , Marvin L. Mann, $ 2 , and
Thomas R. Williams, $ 2 .
D The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 18 , Phyllis Burke Davis, $ 18 , Richard J. Flynn,
$0, Robert M. Gates, $ 0 , E. Bradley Jones, $ 18 , Donald
J. Kirk, $ 18 , William O. McCoy, $ 0 , Gerald C. McDonough,
$ 18 , Edward H. Malone, $ 18 , Marvin L. Mann, $ 18 ,
and Thomas R. Williams, $ 18 .
E The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 7 , Phyllis Burke Davis, $ 7 , Richard J. Flynn, $0,
Robert M. Gates, $ 0 , E. Bradley Jones, $ 7 , Donald J.
Kirk, $ 7 , William O. McCoy, $ 0 , Gerald C. McDonough,
$ 7 , Edward H. Malone, $ 7 , Marvin L. Mann, $ 7 , and
Thomas R. Williams, $ 7 .
F The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 2 , Phyllis Burke Davis, $ 2 , Richard J. Flynn, $0,
Robert M. Gates, $ 0 , E. Bradley Jones, $ 2 , Donald J.
Kirk, $ 2 , William O. McCoy, $ 0 , Gerald C. McDonough,
$ 2 , Edward H. Malone, $ 2 , Marvin L. Mann, $ 2 , and
Thomas R. Williams, $ 2 .
G The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 0 , Phyllis Burke Davis, $ 0 , Richard J. Flynn, $0,
Robert M. Gates, $ 0 , E. Bradley Jones, $ 0 , Donald J.
Kirk, $ 0 , William O. McCoy, $ 0 , Gerald C. McDonough,
$ 0 , Edward H. Malone, $ 0 , Marvin L. Mann, $ 0 , and
Thomas R. Williams, $ 0 .
H The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 0 , Phyllis Burke Davis, $ 0 , Richard J. Flynn, $0,
Robert M. Gates, $ 0 , E. Bradley Jones, $ 0 , Donald J.
Kirk, $ 0 , William O. McCoy, $ 0 , Gerald C. McDonough,
$0 , Edward H. Malone, $ 0 , Marvin L. Mann, $ 0 , and
Thomas R. Williams, $ 0 .
I The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 1 , Phyllis Burke Davis, $ 1 , Richard J. Flynn, $0,
Robert M. Gates, $ 0 , E. Bradley Jones, $ 1 , Donald J.
Kirk, $ 1 , William O. McCoy, $ 0 , Gerald C. McDonough,
$ 1 , Edward H. Malone, $ 1 , Marvin L. Mann, $ 1 , and
Thomas R. Williams, $ 1 .
J The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 5 , Phyllis Burke Davis, $ 5 , Richard J. Flynn, $0,
Robert M. Gates, $ 0 , E. Bradley Jones, $ 5 , Donald J.
Kirk, $ 5 , William O. McCoy, $ 0 , Gerald C. McDonough,
$ 5 , Edward H. Malone, $ 5 , Marvin L. Mann, $ 5 , and
Thomas R. Williams, $ 5 .
K The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 2 , Phyllis Burke Davis, $ 2 , Richard J. Flynn, $0,
Robert M. Gates, $ 0 , E. Bradley Jones, $ 2 , Donald J.
Kirk, $ 2 , William O. McCoy, $ 0 , Gerald C. McDonough,
$ 2 , Edward H. Malone, $ 2 , Marvin L. Mann, $ 2 , and
Thomas R. Williams, $ 2 .
L The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 8 , Phyllis Burke Davis, $ 8 , Richard J. Flynn, $0,
Robert M. Gates, $ 0 , E. Bradley Jones, $ 8 , Donald J.
Kirk, $ 8 , William O. McCoy, $ 0 , Gerald C. McDonough,
$ 8 , Edward H. Malone, $ 8 , Marvin L. Mann, $ 8 , and
Thomas R. Williams, $ 8 .
M The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 0 , Phyllis Burke Davis, $ 0 , Richard J. Flynn, $0,
Robert M. Gates, $ 0 , E. Bradley Jones, $ 0 , Donald J.
Kirk, $ 0 , William O. McCoy, $ 0 , Gerald C. McDonough,
$ 0 , Edward H. Malone, $ 0 , Marvin L. Mann, $ 0 , and
Thomas R. Williams, $ 0 .
N The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 8 , Phyllis Burke Davis, $ 8 , Richard J. Flynn, $0,
Robert M. Gates, $ 0 , E. Bradley Jones, $ 8 , Donald J.
Kirk, $ 8 , William O. McCoy, $ 0 , Gerald C. McDonough,
$ 8 , Edward H. Malone, $ 8 , Marvin L. Mann, $ 8 , and
Thomas R. Williams, $ 8 .
O The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 11 , Phyllis Burke Davis, $ 11 , Richard J. Flynn,
$0, Robert M. Gates, $ 0 , E. Bradley Jones, $ 11 , Donald
J. Kirk, $ 11 , William O. McCoy, $ 0 , Gerald C. McDonough,
$ 11 , Edward H. Malone, $ 11 , Marvin L. Mann, $ 11,
and Thomas R. Williams, $ 11 .
P The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 0 , Phyllis Burke Davis, $ 0 , Richard J. Flynn, $0,
Robert M. Gates, $ 0 , E. Bradley Jones, $ 0, Donald J.
Kirk, $ 0 , William O. McCoy, $ 0 , Gerald C. McDonough,
$ 0 , Edward H. Malone, $ 0 , Marvin L. Mann, $ 0 , and
Thomas R. Williams, $ 0 .
Under a retirement program adopted in July 1988 and modified in
November 1995 and November 1996, each non-interested Trustee who
retired before December 30, 1996 may receive payments from a Fidelity
fund during his or her lifetime based on his or her basic trustee fees
and length of service. The obligation of a fund to make such payments
is neither secured nor funded. A Trustee became eligible to
participate in the program at the end of the calendar year in which he
or she reached age 72, provided that, at the time of retirement, he or
she had served as a Fidelity fund Trustee for at least five years.
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (the Plan), non-interested Trustees must
defer receipt of a portion of, and may elect to defer receipt of an
additional portion of, their annual fees. Amounts deferred under the
Plan are treated as though equivalent dollar amounts had been invested
in shares of a cross-section of Fidelity funds including funds in each
major investment discipline and representing a majority of Fidelity's
assets under management (the Reference Funds). The amounts ultimately
received by the Trustees under the Plan will be directly linked to the
investment performance of the Reference Funds. Deferral of fees in
accordance with the Plan will have a negligible effect on a fund's
assets, liabilities, and net income per share, and will not obligate a
fund to retain the services of any Trustee or to pay any particular
level of compensation to the Trustee. A fund may invest in the
Reference Funds under the Plan without shareholder approval.
As of December 30, 1996, the non-interested Trustees terminated the
retirement program for Trustees who retire after such date. In
connection with the termination of the retirement program, each
then-existing non-interested Trustee received a credit to his or her
Plan account equal to the present value of the estimated benefits that
would have been payable under the retirement program. The amounts
credited to the non-interested Trustees' Plan accounts are subject to
vesting and are treated as though equivalent dollar amounts had been
invested in shares of the Reference Funds. The amounts ultimately
received by the Trustees in connection with the credits to their Plan
accounts will be directly linked to the investment performance of the
Reference Funds. The termination of the retirement program and related
crediting of estimated benefits to the Trustees' Plan accounts did not
result in a material cost to the funds.
As of October 31, 1997, approximately 25.45% of France Fund's,
10.71% of Germany Fund's, 8.86% of Japan Fund's, 23.04% of Japan Small
Companies Fund's, and 25.46% of United Kingdom Fund's total
outstanding shares were held by FMR affiliates. FMR Corp. is the
ultimate parent company of these FMR affiliates. By virtue of his
ownership interest in FMR Corp., as described in the "FMR" section on
page , Mr. Edward C. Johnson 3d, President and Trustee of each fund,
may be deemed to be a beneficial owner of these shares. As of the
above date, with the exception of Mr. Johnson 3d's deemed ownership of
France Fund's, Germany Fund's, Japan Fund's, Japan Small Companies
Fund's, and United Kingdom Fund's shares, the Trustees, Members of the
Advisory Board, and officers of the funds owned, in the aggregate,
less than 1% of each fund's total outstanding shares.
As of October 31, 1997, the following owned of record or
beneficially 5% or more of a fund's outstanding shares:
Canada Fund: National Financial Services Corporation, Boston, MA
(25.79%).
Europe Fund: National Financial Services Corporation, Boston, MA
(15.31%).
Europe Capital Appreciation Fund: National Financial Services
Corporation, Boston, MA (31.08%).
France Fund: National Financial Services Corporation, Boston, MA
(49.99%).
Germany Fund: National Financial Services Corporation, Boston, MA
(38.71%); Gianni Montezemolo, England, (5.03%) .
Hong Kong & China Fund: National Financial Services Corporation,
Boston, MA (16.10%).
Japan Fund: National Financial Services Corporation, Boston, MA
(24.38%).
Japan Small Companies Fund: National Financial Services
Corporation, Boston, MA (18.55%).
Latin America Fund: National Financial Services Corporation,
Boston, MA (16.97%).
Nordic Fund: National Financial Services Corporation, Boston, MA
(26.23%).
Pacific Basin Fund: National Financial Services Corporation,
Boston, MA (5.62%).
Southeast Asia Fund: National Financial Services Corporation,
Boston, MA (5.80%).
United Kingdom Fund: National Financial Services Corporation,
Boston, MA (50.78%).
A shareholder owning of record or beneficially more than 25% of a
fund's outstanding shares may be considered a controlling person. That
shareholder's vote could have a more significant effect on matters
presented at a shareholders' meeting than votes of other
shareholders.
MANAGEMENT CONTRACTS
FMR is each fund's manager pursuant to management contracts dated
October 1, 1997, which were approved by shareholders on September 17,
1997.
MANAGEMENT SERVICES. Each fund employs FMR to furnish investment
advisory and other services. Under the terms of its management
contract with each fund, FMR acts as investment adviser and, subject
to the supervision of the Board of Trustees, directs the investments
of the fund in accordance with its investment objective, policies, and
limitations. FMR also provides each fund with all necessary office
facilities and personnel for servicing the fund's investments,
compensates all officers of each fund and all Trustees who are
"interested persons" of the trust or of FMR, and all personnel of each
fund or FMR performing services relating to research, statistical, and
investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of each fund. These services include
providing facilities for maintaining each fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with each fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining each fund's records and the
registration of each fund's shares under federal securities laws and
making necessary filings under state securities laws; developing
management and shareholder services for each fund; and furnishing
reports, evaluations, and analyses on a variety of subjects to the
Trustees.
MANAGEMENT-RELATED EXPENSES. In addition to the management fee payable
to FMR and the fees payable to the transfer, dividend disbursing, and
shareholder servicing agent, pricing and bookkeeping agent, and
securities lending agent, as applicable, each fund pays all of its
expenses that are not assumed by those parties. Each fund pays for the
typesetting, printing, and mailing of its proxy materials to
shareholders, legal expenses, and the fees of the custodian, auditor
and non-interested Trustees. Each fund's management contract further
provides that the fund will pay for typesetting, printing, and mailing
prospectuses, statements of additional information, notices, and
reports to shareholders; however, under the terms of each fund's
transfer agent agreement, the transfer agent bears the costs of
providing these services to existing shareholders. Other expenses paid
by each fund include interest, taxes, brokerage commissions, the
fund's proportionate share of insurance premiums and Investment
Company Institute dues, and the costs of registering shares under
federal securities laws and making necessary filings under state
securities laws. Each fund is also liable for such non-recurring
expenses as may arise, including costs of any litigation to which the
fund may be a party, and any obligation it may have to indemnify its
officers and Trustees with respect to litigation.
MANAGEMENT FEES. For the services of FMR under the management
contract, Emerging Markets Fund, France Fund, Germany Fund, Hong Kong
and China Fund, Japan Small Companies Fund, Latin America Fund, Nordic
Fund, and United Kingdom Fund each pays FMR a monthly management fee
which has two components: a group fee rate and an individual fund fee
rate.
For the services of FMR under the management contract, Canada Fund,
Europe Fund, Europe Capital Appreciation Fund, Japan Fund, Pacific
Basin Fund, and Southeast Asia Fund each pays FMR a monthly management
fee which has two components: a basic fee, which is the sum of a group
fee rate and an individual fund fee rate, and a performance adjustment
based on a comparison of each fund's performance to that of its
comparative index.
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
0 - $3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3253
36 - 42 .3400 250 .3223
42 - 48 .3350 275 .3198
48 - 66 .3250 300 .3175
66 - 84 .3200 325 .3153
84 - 102 .3150 350 .3133
102 - 138 .3100
138 - 174 .3050
174 - 228 .3000
228 - 282 .2950
282 - 336 .2900
Over 336 .2850
Prior to October 1, 1997, the group fee rate was based on a schedule
with breakpoints ending at .3000% for average group assets in excess
of $174 billion. The group fee rate breakpoints shown above for
average group assets in excess of $138 billion and under $228 billion
were voluntarily adopted by FMR on January 1, 1992. The additional
breakpoints shown above for average group assets in excess of $228
billion were voluntarily adopted by FMR on November 1, 1993.
On August 1, 1994, FMR voluntarily revised the prior extensions to the
group fee rate schedule, and added new breakpoints for average group
assets in excess of $210 billion and under $390 billion as shown in
the schedule below. The revised group fee rate schedule is identical
to the above schedule for average group assets under $210 billion.
On January 1, 1996, FMR voluntarily added new breakpoints to the
revised schedule for average group assets in excess of $390 billion.
The revised group fee rate schedule and its extensions provide for
lower management fee rates as FMR's assets under management increase.
Each fund's current management contract reflects the group fee rate
schedule above for average group assets under $210 billion and the
group fee rate schedule below for average group assets in excess of
$210 billion.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
138 - 174 billion .3050% $150 billion .3371%
174 - 210 .3000 175 .3325
210 - 246 .2950 200 .3284
246 - 282 .2900 225 .3249
282 - 318 .2850 250 .3219
318 - 354 .2800 275 .3190
354 - 390 .2750 300 .3163
390 - 426 .2700 325 .3137
426 - 462 .2650 350 .3113
462 - 498 .2600 375 .3090
498 - 534 .2550 400 .3067
Over 534 .2500 425 .3046
450 .3024
475 .3003
500 .2982
525 .2962
550 .2942
The group fee rate is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown above on the left. The schedule
above on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $550 billion of group net assets - the approximate level for
October 1997 - was .2941%, which is the weighted average of the
respective fee rates for each level of group net assets up to $550
billion.
The individual fund fee rate for Emerging Markets Fund, France Fund,
Germany Fund, Hong Kong and China Fund, Japan Small Companies Fund,
Latin America Fund, Nordic Fund, and United Kingdom Fund is 0.45%.
Based on the average group net assets of the funds advised by FMR for
October 1997, each fund's annual management fee rate would be
calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Group Fee Rate Individual Fund Management Fee
Fee Rate Rate
Emerging Markets Fund, France Fund, 0. 2941 % + 0.45% = 0. 7441 %
Germany Fund, Hong Kong and China Fund,
Japan Small Companies Fund, Latin America
Fund, Nordic Fund, and United Kingdom Fund
</TABLE>
The individual fund fee rate for Canada Fund, Europe Fund, Europe
Capital Appreciation Fund, Japan Fund, Pacific Basin Fund, and
Southeast Asia Fund is 0.45%. Based on the average group net assets of
the funds advised by FMR for October 1997, each fund's annual basic
fee rate would be calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Group Fee Rate Individual Fund Basic Fee Rate
Fee Rate
Canada Fund, Europe Fund, Europe Capital 0. 2941 % + 0.45% = 0. 7441 %
Appreciation Fund, Japan Fund, Pacific Basin
Fund, and Southeast Asia Fund
</TABLE>
One-twelfth of this annual basic fee rate or management fee rate, as
applicable, is applied to each fund's net assets averaged for the most
recent month, giving a dollar amount, which is the fee for that month.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee for Canada Fund,
Europe Fund, Europe Capital Appreciation Fund, Japan Fund, Pacific
Basin Fund and Southeast Asia Fund is subject to upward or downward
adjustment, depending upon whether, and to what extent, each fund's
investment performance for the performance period exceeds, or is
exceeded by, the record of the Toronto Stock Exchange (TSE) 300,
Morgan Stanley Capital International Europe Index, Morgan Stanley
Capital International Europe Index, Tokyo Stock Exchange Index, Morgan
Stanley Capital International Pacific Index, and Morgan Stanley
Capital International Combined Far East ex-Japan Free Index,
respectively, (the Index) over the same period. The performance period
consists of the most recent month plus the previous 35 months.
Each percentage point of difference, calculated to the nearest 0.01%
(up to a maximum difference of (plus/minus)10.00) is multiplied by a
performance adjustment rate of 0.02%.
The performance comparison is made at the end of each month. One
twelfth (1/12) of this rate is then applied to each fund's average net
assets for the entire performance period, giving a dollar amount which
will be added to (or subtracted from) the basic fee.
The maximum annualized adjustment rate is (plus/minus)0.20% of a
fund's average net assets over the performance period.
A fund's performance is calculated based on change in NAV. For
purposes of calculating the performance adjustment, any dividends or
capital gain distributions paid by the fund are treated as if
reinvested in fund shares at the NAV as of the record date for
payment. The record of the Index is based on change in value and is
adjusted for any cash distributions from the companies whose
securities compose the Index.
Because the adjustment to the basic fee is based on a fund's
performance compared to the investment record of the Index, the
controlling factor is not whether the fund's performance is up or down
per se, but whether it is up or down more or less than the record of
the Index. Moreover, the comparative investment performance of the
fund is based solely on the relevant performance period without regard
to the cumulative performance over a longer or shorter period of time.
For each of Morgan Stanley Capital International Pacific Index and
Morgan Stanley Capital International Europe Index, the index returns
for periods prior to January 1, 1997 are adjusted for tax withholding
at non-treaty rates. The index returns for periods after January 1,
1997 are adjusted for tax withholding at treaty rates applicable to
U.S.-based mutual funds organized as Massachusetts business trusts.
The following table shows the amount of management fees paid by each
fund to FMR for the past three fiscal years, and the amount of
negative or positive performance adjustments to the management fees
paid by Canada Fund, Europe Fund, Europe Capital Appreciation Fund,
Japan Fund, Pacific Basin Fund, and Southeast Asia Fund.
Fund Fiscal Years Ended Performance Management Fees
October 31 Adjustment Paid to FMR
Canada 1997 $ (460,868) $ 498,327 *
Fund
1996 $ (447,517) $ 657,546 *
1995 $ (167,417) $ 2,498,644 *
Emerging 1997 $ -- $ 7,910,780
Markets
Fund
1996 $ -- $ 10,054,929
1995 $ -- $ 10,483,318
Europe 1997 $ 327,476 $ 6,862,932 *
Fund
1996 $ 484,945 $ 4,702,643 *
1995 $ 145,908 $ 3,767,736 *
Europe 1997 $ (301,878) $ 2,196,708 *
Capital
Appreciati
on Fund
1996 $ 67,995 $ 1,338,990 *
1995 $ 208,549 $ 2,171,262 *
France 1997 $ -- $ 46,846
Fund
1996** $ -- $ 41,011
Germany 1997 $ -- $ 88,900
Fund
1996** $ -- $ 41,319
Hong Kong 1997 $ -- $ 1,625,465
and China
Fund
1996** $ -- $ 439,689
Japan Fund 1997 $ 528,549 $ 2,732,904 *
1996 $ (283,515) $ 2,553,329 *
1995 $ (362,948) $ 2,258,147 *
Japan 1997 $ -- $ 702,501
Small
Companies
Fund
1996** $ -- $ 789,872
Latin 1997 $ -- $ 6,463,852
America
Fund
1996 $ -- $ 4,580,255
1995 $ -- $ 4,473,579
Nordic 1997 $ -- $ 510,905
Fund
1996** $ -- $ 71,158
Pacific 1997 $ (195,610) $ 2,424,887 *
Basin Fund
1996 $ (8,198) $ 4,570,390 *
1995 $ 86,567 $ 3,184,306 *
Southeast 1997 $ 52,908 $ 4,464,710 *
Asia Fund
1996 $ (882,709) $ 5,541,725 *
1995 $ (1,128,697) $ 3,949,976 *
United 1997 $ -- $ 38,193
Kingdom
Fund
1996** $ -- $ 15,497
* Including the amount of the performance adjustment.
** From November 1, 1995 (commencement of operations)
FMR may, from time to time, voluntarily reimburse all or a portion of
a fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to
be repaid for these expense reimbursements in the amount that expenses
fall below the limit prior to the end of the fiscal year.
Expense reimbursements by FMR will increase a fund's total returns,
and repayment of the reimbursement by a fund will lower its total
returns.
During the past three fiscal periods, FMR voluntarily agreed, subject
to revision or termination, to reimburse certain of the funds if and
to the extent that its aggregate operating expenses, including
management fees, were in excess of an annual rate of its average net
assets. The table below shows the periods of reimbursement and levels
of expense limitations for the applicable funds; the dollar amount of
management fees incurred under each fund's contract before
reimbursement; and the dollar amount of management fees reimbursed by
FMR under the expense reimbursement for each period.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Name of Fund Periods of To Aggregate Fiscal Year Management Amount of
Expense Operating Ended Fee Management
Limitation Expense Before Fee
From Limitation Reimbursement Reimbursement
France Nov. 1, 1996 Oct. 31, 1997 2.0% 1997 $ 46,846 $ 46,846
Germany Nov. 1, 1996 Oct. 31, 1997 2.0% 1997 $ 88,900 $ 32,849
United Kingdom Nov. 1, 1996 Oct. 31, 1997 2.0% 1997 $ 38,193 $ 38,193
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Name of
Fund Periods of Aggregate Fiscal Year Management Amount of
Expense To Operating Ended Fee Management
Limitation Expense Before Fee
To Limitation Reimbursement Reimbursement
France Nov. 1, 1995 Oct. 31, 1996 2.0 % 199 6 $ 41,011 $ 41,011
Germany Nov. 1, 1995 Oct. 31, 1996 2.0% 1996 $ 41,319 $ 41,319
Nordic Nov. 1, 1995 Oct. 31, 1996 2.0% 1996 $ 71,158 $ 71,158
United
Kingdom Nov. 1, 1995 Oct. 31, 1996 2.0 % 199 6 $ 15,497 $ 15,497
</TABLE>
SUB-ADVISERS. On behalf of the funds, FMR has entered into
sub-advisory agreements with FMR U.K., FMR Far East, and FIIA. FIIA,
in turn, has entered into a sub-advisory agreement with FIIA(U.K.)L.
On behalf of Emerging Markets Fund, Hong Kong and China Fund, Japan
Fund, Japan Small Companies Fund, Pacific Basin Fund, and Southeast
Asia Fund, FMR also entered into a sub-advisory agreement with FIJ.
Pursuant to the sub-advisory agreements, FMR may receive investment
advice and research services outside the United States from the
sub-advisers.
On behalf of each fund, FMR may also grant the sub-advisers investment
management authority as well as the authority to buy and sell
securities if FMR believes it would be beneficial to the funds.
Currently, FMR U.K., FMR Far East, FIJ, FIIA, and FIIA(U.K.)L each
focus on issuers in countries other than the United States such as
those in Europe, Asia, and the Pacific Basin.
FMR U.K. and FMR Far East, which were organized in 1986, are wholly
owned subsidiaries of FMR. FIJ and FIIA are wholly owned subsidiaries
of Fidelity International Limited (FIL), a Bermuda company formed in
1968 which primarily provides investment advisory services to non-U.S.
investment companies and institutional investors investing in
securities throughout the world. Edward C. Johnson 3d, Johnson family
members, and various trusts for the benefit of the Johnson family
owns, directly or indirectly, more than 25% of the voting common stock
of FIL. FIJ was organized in Japan in 1986. FIIA was organized in
Bermuda in 1983. FIIA(U.K.)L was organized in the United Kingdom in
1984, and is a direct subsidiary of Fidelity Investments Management
Limited and an indirect subsidiary of FIL.
Under the sub-advisory agreements FMR pays the fees of FMR U.K., FMR
Far East, FIJ, and FIIA. FIIA, in turn, pays the fees of FIIA(U.K.)L.
For providing non-discretionary investment advice and research
services the sub-advisers are compensated as follows:
(small solid bullet) FMR pays FMR U.K. and FMR Far East fees equal to
110% and 105%, respectively, of FMR U.K.'s and FMR Far East's costs
incurred in connection with providing investment advice and research
services.
(small solid bullet) FMR pays FIIA and FIJ fees equal to 30% of FMR's
monthly management fee with respect to the average net assets held by
the fund for which the sub-adviser has provided FMR with investment
advice and research services.
(small solid bullet) FIIA pays FIIA(U.K.)L a fee equal to 110% of
FIIA(U.K.)L's costs incurred in connection with providing investment
advice and research services.
For providing discretionary investment management and executing
portfolio transactions, the sub-advisers are compensated as follows:
(small solid bullet) FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a
fee equal to 50% of its monthly management fee (including any
performance adjustment) with respect to the fund's average net assets
managed by the sub-adviser on a discretionary basis.
(small solid bullet) FIIA pays FIIA(U.K.)L a fee equal to 110% of
FIIA(U.K.)L's costs incurred in connection with providing
discretionary investment management services.
Currently, FIIA exercises discretionary management authority over
Southeast Asia Fund, Hong Kong and China Fund, Japan Fund, and Pacific
Basin Fund in its capacity as sub-adviser. Currently, FIIAL U.K.
exercises discretionary management authority over Emerging Markets
Fund, Europe Fund, France Fund, Germany Fund, Nordic Fund, and United
Kingdom Fund in its capacity as sub-adviser. Currently, FIJ exercises
discretionary management authority over Japan Small Companies Fund in
its capacity as sub-adviser.
For providing investment advice and research services, fees paid to
FMR U.K. and FMR Far East by FMR on behalf of Emerging Markets Fund
and Europe Capital Appreciation Fund for the past three fiscal
years are shown in the table below.
Fiscal Year FMR U.K. FMR Far East
Ended
October 31
Emergi
ng
Market
s Fund
1997 $ 442,55 2 $ 405,858
1996 $ 658,192 $ 674,758
1995 $ 662,777 $ 631,093
Europe
Capital
Appreci
ation
Fund
1997 $ 195,609 $ 0
1996 $ 108,871 $ 0
1995 $ 160,714 $ 0
For discretionary investment management and execution of portfolio
transactions, fees paid to FIIA, FIIA (U.K.) L, and FIJ for the past
three fiscal years are shown in the table below.
Fund Fiscal Year FIIA FIIA(U.K.)L FIJ
Name Ended
October 31
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Canada 1997 $ 0 $ 0 $ 0
Fund
1996 $ 0 $ 0 $ 0
1995 $ 0 $ 0 $ 0
Emerg 1997 $ 0 $ 0 $ 0
ing
Marke
ts
Fund
1996 $ 0 $ 0 $ 0
1995 $ 0 $ 0 $ 0
Europ 1997 $ 3,469,914 $ 1,630,394 $ 0
e Fund
1996 $ 2,343,797 $ 1,178,141 $ 0
1995 $ 1,812,402 $ 0 $ 0
Europ 1997 $ 0 $ 0 $ 0
e
Capita
l
Appre
ciation
Fund
1996 $ 0 $ 0 $ 0
1995 $ 0 $ 0 $ 0
Fund Fiscal Year FIIA FIIA(U.K.)L FIJ
Name Ended
October 31
France 1997 $ 23,423 $ 12,702 $ 0
Fund
1996 $ 20,506 $ 9,746 $ 0
1995 $ 0 $ 0 $ 0
Germa 1997 $ 44,450 $ 21,182 $ 0
ny
Fund
1996 $ 20,660 $ 9,580 $ 0
1995 $ 0 $ 0 $ 0
Hong 1997 $ 812,733 $ 0 $ 0
Kong
and
China
Fund
1996 $ 219,845 $ 0 $ 0
1995 $ 0 $ 0 $ 0
Japan 1997 $ 1,337,897 $ 0 $ 0
Fund
1996 $ 675,784 $ 0 $ 596,553
1995 $ 1,311,538 $ 0 $ 0
Japan 1997 $ 0 $ 0 $ 351,251
Small
Comp
anies
Fund
1996 $ 278,610 $ 144,816 $ 80,585
1995 $ 0 $ 0 $ 0
Latin 1997 $ 0 $ 0 $ 0
Ameri
ca
Fund
1996 $ 0 $ 0 $ 0
1995 $ 0 $ 0 $ 0
Nordic 1997 $ 255,453 $ 149,480 $ 0
Fund
1996 $ 35,579 $ 14,299 $ 0
1995 $ 0 $ 0 $ 0
Pacific 1997 $ 1,186,431 $ 0 $ 0
Basin
Fund
1996 $ 2,317,762 $ 0 $ 0
1995 $ 1,550,062 $ 0 $ 0
Southe 1997 $ 2,191,832 $ 0 $ 0
ast
Asia
Fund
1996 $ 2,773,021 $ 0 $ 0
1995 $ 2,541,446 $ 0 $ 0
United 1997 $ 19,096 $ 12,642 $ 0
Kingd
om
Fund
1996 $ 7,749 $ 3,597 $ 0
1995 $ 0 $ 0 $ 0
</TABLE>
CONTRACTS WITH FMR AFFILIATES
Each fund has entered into a transfer agent agreement with FSC, an
affiliate of FMR. Under the terms of the agreements, FSC performs
transfer agency, dividend disbursing, and shareholder services for
each fund.
For providing transfer agency services, FSC receives an annual account
fee and an asset-based fee each based on account size and fund type
for each retail account and certain institutional accounts. With
respect to certain institutional retirement accounts, FSC receives an
annual account fee and an asset-based fee based on account type or
fund type. These annual account fees are subject to increase based on
postal rate changes.
The asset-based fees are subject to adjustment if the year-to-date
total return of the S&P 500 exceeds a positive or negative 15%.
FSC also collects small account fees from certain accounts with
balances of less than $2,500.
In addition, FSC receives the pro rata portion of the transfer agency
fees applicable to shareholder accounts in each Fidelity Freedom Fund,
a fund of funds managed by an FMR affiliate, according to the
percentage of the Freedom Fund's assets that is invested in a fund.
FSC pays out-of-pocket expenses associated with providing transfer
agent services. In addition, FSC bears the expense of typesetting,
printing, and mailing prospectuses, statements of additional
information, and all other reports, notices, and statements to
existing shareholders, with the exception of proxy statements.
Each fund has also entered into a service agent agreement with FSC.
Under the terms of the agreements, FSC calculates the NAV and
dividends for each fund, maintains each fund's portfolio and general
accounting records, and administers each fund's securities lending
program.
For providing pricing and bookkeeping services, FSC receives a monthly
fee based on each fund's average daily net assets throughout the
month. The annual fee rates for pricing and bookkeeping services are
.0750% of the first $500 million of average net assets and .0375% of
average net assets in excess of $500 million. The fee, not including
reimbursement for out-of-pocket expenses, is limited to a minimum of
$60,000 and a maximum of $800,000 per year.
Pricing and bookkeeping fees, including reimbursement for
out-of-pocket expenses, paid by the funds to FSC for the past three
fiscal years are shown in the table below.
Pricing and Bookkeeping Fees
1997 1996 1995
Canada $ 96,809 $ 105,266 $ 209,805
Fund
Emerging $ 588,031 $ 671,062 $ 560,714
Markets
Fund
Europe $ 518,194 $ 385,848 $ 283,887
Fund
Europe $ 251,788 $ 122,201 $ 153,762
Capital
Appreciati
on Fund
France $ 60,010 $ 57,381* N/A
Fund
Germany $ 60,017 $ 57,381* N/A
Fund
Hong $ 164,562 $ 57,751* N/A
Kong and
China
Fund
Japan Fund $ 222,118 $ 273,877 $ 205,394
Japan $ 74,385 $ 82,444* N/A
Small
Companies
Fund
Latin $ 514,541 $ 402,734 $ 323,090
America
Fund
Nordic $ 60,492 $ 57,387* N/A
Fund
Pacific $ 261,996 $ 400,980 $ 242,212
Basin Fund
Southeast $ 401,403 $ 510,752 $ 349,043
Asia Fund
United $ 60,007 $ 57,374* N/A
Kingdom
Fund
* From November 1, 1995 (commencement of operations).
For administering each fund's securities lending program, FSC receives
fees based on the number and duration of individual securities loans.
For the fiscal years ended October 31, 1997, 1996, and 1995, the
funds paid no securities lending fees.
Each fund has entered into a distribution agreement with FDC, an
affiliate of FMR organized as a Massachusetts corporation on July 18,
1960. FDC is a broker-dealer registered under the Securities Exchange
Act of 1934 and a member of the National Association of Securities
Dealers, Inc. The distribution agreements call for FDC to use all
reasonable efforts, consistent with its other business, to secure
purchasers for shares of the fund, which are continuously offered.
Promotional and administrative expenses in connection with the offer
and sale of shares are paid by FMR.
Sales charge revenues collected by FDC for the past three fiscal years
are shown in the table below.
PAID TO FDC
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Sales Charge Revenue Deferred Sales Charge Revenue
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1997 1996 1995 1997 1996 1995
Canada $ 131,248 $ 96,367 $ 872,526 $ 3,646 $ 5,748 $ 3,075
Fund
Emerging $ 756,295 $ 2,179,378 $ 2,207,409 N/A N/A N/A
Markets
Fund
Europe $ 729,707 $ 434,089 $ 389,484 $ 20,431 $ 43,501 $ 66,854
Fund
Europe $ 887,094 $ 90,306 $ 155,891 N/A N/A N/A
Capital
Appreciati
on Fund
France $ 15,163 $ 29,370 N/A N/A N/A N/A
Fund
Germany $ 53,819 $ 53,774 N/A N/A N/A N/A
Fund
Hong $ 1,509,043 $ 575,460 N/A N/A N/A N/A
Kong and
China
Fund
Japan $ 592,638 $ 821,892 $ 375,382 N/A N/A N/A
Fund
Japan $ 274,403 $ 694,227 N/A N/A N/A N/A
Small
Companies
Fund
Latin $ 2,213,110 $ 968,514 $ 1,673,435 N/A N/A N/A
America
Fund
Nordic $ 348,689 $ 71,880 N/A N/A N/A N/A
Fund
Pacific $ 218,156 $ 2,123,204 $ 94,810 $ 15,796 $ 23,652 $ 10,008
Basin Fund
Southeast $ 381,009 $ 1,880,183 $ 805,224 N/A N/A N/A
Asia Fund
United $ 26,135 $ 13,869 N/A N/A N/A N/A
Kingdom
Fund
</TABLE>
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Fidelity Canada Fund, Fidelity Emerging Markets
Fund, Fidelity Europe Fund, Fidelity Europe Capital Appreciation Fund,
Fidelity France Fund, Fidelity Germany Fund, Fidelity Hong Kong and
China Fund, Fidelity Japan Fund, Fidelity Japan Small Companies Fund,
Fidelity Latin America Fund, Fidelity Nordic Fund, Fidelity Pacific
Basin Fund, Fidelity Southeast Asia Fund, and Fidelity United Kingdom
Fund are funds of Fidelity Investment Trust (the trust), an open-end
management investment company originally organized as a Massachusetts
business trust on April 20, 1984. On November 3, 1986, the trust's
name was changed from Fidelity Overseas Fund to Fidelity Investment
Trust. Currently, there are 21 funds of the trust: Fidelity Canada
Fund, Fidelity Diversified International Fund, Fidelity Emerging
Markets Fund, Fidelity Europe Fund, Fidelity Europe Capital
Appreciation Fund, Fidelity France Fund, Fidelity Germany Fund,
Fidelity Global Bond Fund, Fidelity Hong Kong and China Fund, Fidelity
International Growth & Income Fund, Fidelity International Value Fund,
Fidelity Japan Fund, Fidelity Japan Small Companies Fund, Fidelity
Latin America Fund, Fidelity New Markets Income Fund, Fidelity Nordic
Fund, Fidelity Overseas Fund, Fidelity Pacific Basin Fund, Fidelity
Southeast Asia Fund, Fidelity United Kingdom Fund, and Fidelity
Worldwide Fund. The Declaration of Trust permits the Trustees to
create additional funds.
In the event that FMR ceases to be the investment adviser to the trust
or a fund, the right of the trust or fund to use the identifying name
"Fidelity" may be withdrawn. There is a remote possibility that one
fund might become liable for any misstatement in its prospectus or
statement of additional information about another fund.
The assets of the trust received for the issue or sale of shares of
each fund and all income, earnings, profits, and proceeds thereof,
subject only to the rights of creditors, are especially allocated to
such fund, and constitute the underlying assets of such fund. The
underlying assets of each fund are segregated on the books of account,
and are to be charged with the liabilities with respect to such fund
and with a share of the general expenses of the trust. Expenses with
respect to the trust are to be allocated in proportion to the asset
value of the respective funds, except where allocations of direct
expense can otherwise be fairly made. The officers of the trust,
subject to the general supervision of the Board of Trustees, have the
power to determine which expenses are allocable to a given fund, or
which are general or allocable to all of the funds. In the event of
the dissolution or liquidation of the trust, shareholders of each fund
are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as "Massachusetts business trust." Under Massachusetts
law, shareholders of such a trust may, under certain circumstances, be
held personally liable for the obligations of the trust. The
Declaration of Trust provides that the trust shall not have any claim
against shareholders except for the payment of the purchase price of
shares and requires that each agreement, obligation, or instrument
entered into or executed by the trust or the Trustees shall include a
provision limiting the obligations created thereby to the trust and
its assets. The Declaration of Trust provides for indemnification out
of each fund's property of any shareholder held personally liable for
the obligations of the fund. The Declaration of Trust also provides
that each fund shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of the fund and
satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which the fund itself would be unable to
meet its obligations. FMR believes that, in view of the above, the
risk of personal liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they
have exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees
against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of their
office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you receive one vote for each dollar value
of net asset value you own. The shares have no preemptive or
conversion rights; the voting and dividend rights, the right of
redemption, and the privilege of exchange are described in the
Prospectus. Shares are fully paid and nonassessable, except as set
forth under the heading "Shareholder and Trustee Liability" above.
Shareholders representing 10% or more of the trust or a fund may, as
set forth in the Declaration of Trust, call meetings of the trust or a
fund for any purpose related to the trust or fund, as the case may be,
including, in the case of a meeting of the entire trust, the purpose
of voting on removal of one or more Trustees. The trust or any fund
may be terminated upon the sale of its assets to another open-end
management investment company, or upon liquidation and distribution of
its assets, if approved by vote of the holders of a majority of the
trust or the fund, as determined by the current value of each
shareholder's investment in the fund or trust. If not so terminated,
the trust and the funds will continue indefinitely. Each fund may
invest all of its assets in another investment company.
CUSTODIAN. The Chase Manhattan Bank, 1 Chase Manhattan Plaza, New
York , New York is custodian of the assets of Emerging Markets
Fund, Europe Fund, Europe Capital Appreciation Fund, Japan Fund,
Pacific Basin Fund, and Southeast Asia Fund. Brown Brothers Harriman &
Co., 40 Water Street, Boston, Massachusetts is custodian of the assets
of Canada Fund, France Fund, Germany Fund, Hong Kong and China Fund,
Japan Small Companies Fund, Latin America Fund, Nordic Fund, and
United Kingdom Fund. Each custodian is responsible for the safekeeping
of a fund's assets and the appointment of any subcustodian banks and
clearing agencies. A custodian takes no part in determining the
investment policies of a fund or in deciding which securities are
purchased or sold by a fund. However, a fund may invest in obligations
of its custodian and may purchase securities from or sell securities
to the custodian. The Bank of New York and The Chase Manhattan Bank,
each headquartered in New York, also may serve as special purpose
custodians of certain assets in connection with repurchase agreement
transactions.
FMR, its officers and directors, its affiliated companies, and the
Board of Trustees may, from time to time, conduct transactions with
various banks, including banks serving as custodians for certain funds
advised by FMR. The Boston branch of Canada Fund's, France Fund's,
Germany Fund's, Hong Kong and China Fund's, Japan Small Companies
Fund's, Latin America Fund's, Nordic Fund's, and United Kingdom Fund's
custodian leases its office space from an affiliate of FMR at a lease
payment which, when entered into, was consistent with prevailing
market rates. Transactions that have occurred to date include
mortgages and personal and general business loans. In the judgment of
FMR, the terms and conditions of those transactions were not
influenced by existing or potential custodial or other fund
relationships.
AUDITOR. Coopers & Lybrand L.L.P., One Post Office Square, Boston,
Massachusetts serves as Canada Fund's, Emerging Markets Fund's, Europe
Fund's, Japan Fund's and Pacific Basin Fund's independent accountant.
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts
serves as Europe Capital Appreciation Fund's, France Fund's, Germany
Fund's, Hong Kong and China Fund's, Japan Small Companies Fund's,
Latin America Fund's, Nordic Fund's, Southeast Asia Fund's and United
Kingdom Fund's independent accountant. The auditor examines financial
statements for the funds and provides other audit, tax, and related
services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the
fiscal year ended October 31, 1997, and reports of the auditors, are
included in the funds' Annual Report, which is a separate report
supplied with this SAI. The funds' financial statements, including the
financial highlights, and reports of the auditors are incorporated
herein by reference. For a free additional copy of the funds' Annual
Report, contact Fidelity at 1-800-544-8888.
APPENDIX
Moody's ratings for obligations with an original remaining maturity in
excess of one year fall within nine categories. They range from Aaa
(highest quality) to C (lowest quality). Moody applies numerical
modifiers of 1, 2, or 3 to each generic rating classification from Aa
through B. The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks
on the lower end of its generic rating category.
AAA - Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than the Aaa securities.
A - Bonds that are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
BAA - Bonds that are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
BA - Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
CAA - Bonds that are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect
to principal or interest.
CA - Bonds that are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked short-comings.
C - Bonds that are rated C are the lowest-rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF CORPORATE BONDS
Debt issues may be designated by Standard & Poor's as either
investment grade ("AAA" through "BBB") or speculative grade ("BB"
through "D"). While speculative grade debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions. Ratings from
AA to CCC may be modified by the addition of a plus sign (+) or minus
sign (-) to show relative standing within the major rating categories.
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher-rated issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in
higher-rated categories.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or
B- rating.
CC - Debt rated CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C
rating may be used to cover a situation where a bankruptcy petition
has been filed but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest
is being paid.
D - Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
D rating will also be used upon the filing of a bankruptcy petition if
debt service payments are jeopardized.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a)(1) Financial Statements for Fidelity Canada Fund for the fiscal
year ended October 31, 1997 are incorporated herein by reference to
the fund's Statement of Additional Information and were filed on
December 22, 1997 for Fidelity Investment Trust (File No. 2-90649)
pursuant to Rule 30d-1 under the Investment Company Act of 1940 and
are incorporated herein by reference.
(a)(2) Financial Statements for Fidelity Diversified International
Fund for the fiscal year ended October 31, 1997 are incorporated
herein by reference to the fund's Statement of Additional Information
and were filed on December 22, 1997 for Fidelity Investment Trust
(File No. 2-90649) pursuant to Rule 30d-1 under the Investment Company
Act of 1940 and are incorporated herein by reference.
(a)(3) Financial Statements for Fidelity Emerging Markets Fund for
the fiscal year ended October 31, 1997 are incorporated herein by
reference to the fund's Statement of Additional Information and were
filed on December 22, 1997 for Fidelity Investment Trust (File No.
2-90649) pursuant to Rule 30d-1 under the Investment Company Act of
1940 and are incorporated herein by reference.
(a)(4) Financial Statements for Fidelity Europe Fund for the fiscal
year ended October 31, 1997 are incorporated herein by reference to
the fund's Statement of Additional Information and were filed on
December 22, 1997 for Fidelity Investment Trust (File No. 2-90649)
pursuant to Rule 30d-1 under the Investment Company Act of 1940 and
are incorporated herein by reference.
(a)(5) Financial Statements for Fidelity Europe Capital Appreciation
Fund for the fiscal year ended October 31, 1997 are incorporated
herein by reference to the fund's Statement of Additional Information
and were filed on December 22, 1997 for Fidelity Investment Trust
(File No. 2-90649) pursuant to Rule 30d-1 under the Investment Company
Act of 1940 and are incorporated herein by reference.
(a)(6) Financial Statements for Fidelity France Fund for the fiscal
year ended October 31, 1997 are incorporated herein by reference to
the fund's Statement of Additional Information and were filed on
December 22, 1997 for Fidelity Investment Trust (File No. 2-90649)
pursuant to Rule 30d-1 under the Investment Company Act of 1940 and
are incorporated herein by reference.
(a)(7) Financial Statements for Fidelity Germany Fund for the fiscal
year ended October 31, 1997 are incorporated herein by reference to
the fund's Statement of Additional Information and were filed on
December 22, 1997 for Fidelity Investment Trust (File No. 2-90649)
pursuant to Rule 30d-1 under the Investment Company Act of 1940 and
are incorporated herein by reference.
(a)(8) Financial Statements for Fidelity Hong Kong and China Fund for
the fiscal year ended October 31, 1997 are incorporated herein by
reference to the fund's Statement of Additional Information and were
filed on December 22, 1997 for Fidelity Investment Trust (File No.
2-90649) pursuant to Rule 30d-1 under the Investment Company Act of
1940 and are incorporated herein by reference.
(a)(9) Financial Statements for Fidelity International Growth &
Income Fund for the fiscal year ended October 31, 1997 are
incorporated herein by reference to the fund's Statement of Additional
Information and were filed on December 22, 1997 for Fidelity
Investment Trust (File No. 2-90649) pursuant to Rule 30d-1 under the
Investment Company Act of 1940 and are incorporated herein by
reference.
(a)(10) Financial Statements for Fidelity International Value Fund for
the fiscal year ended October 31, 1997 are incorporated herein by
reference to the fund's Statement of Additional Information and were
filed on December 22, 1997 for Fidelity Investment Trust (File No.
2-90649) pursuant to Rule 30d-1 under the Investment Company Act of
1940 and are incorporated herein by reference.
(a)(11) Financial Statements for Fidelity Japan Fund for the fiscal
year ended October 31, 1997 are incorporated herein by reference to
the fund's Statement of Additional Information and were filed on
December 22, 1997 for Fidelity Investment Trust (File No. 2-90649)
pursuant to Rule 30d-1 under the Investment Company Act of 1940 and
are incorporated herein by reference.
(a)(12) Financial Statements for Fidelity Japan Small Companies Fund
for the fiscal year ended October 31, 1997 are incorporated herein by
reference to the fund's Statement of Additional Information and were
filed on December 22, 1997 for Fidelity Investment Trust (File No.
2-90649) pursuant to Rule 30d-1 under the Investment Company Act of
1940 and are incorporated herein by reference.
(a)(13) Financial Statements for Fidelity Latin America Fund for the
fiscal year ended October 31, 1997 are incorporated herein by
reference to the fund's Statement of Additional Information and were
filed on December 22, 1997 for Fidelity Investment Trust (File No.
2-90649) pursuant to Rule 30d-1 under the Investment Company Act of
1940 and are incorporated herein by reference.
(a)(14) Financial Statements for Fidelity Nordic Fund for the fiscal
year ended October 31, 1997 are incorporated herein by reference to
the fund's Statement of Additional Information and were filed on
December 22, 1997 for Fidelity Investment Trust (File No. 2-90649)
pursuant to Rule 30d-1 under the Investment Company Act of 1940 and
are incorporated herein by reference.
(a)(15) Financial Statements for Fidelity Overseas Fund for the fiscal
year ended October 31, 1997 are incorporated herein by reference to
the fund's Statement of Additional Information and were filed on
December 22, 1997 for Fidelity Investment Trust (File No. 2-90649)
pursuant to Rule 30d-1 under the Investment Company Act of 1940 and
are incorporated herein by reference.
(a)(16) Financial Statements for Fidelity Pacific Basin Fund for the
fiscal year ended October 31, 1997 are incorporated herein by
reference to the fund's Statement of Additional Information and were
filed on December 22, 1997 for Fidelity Investment Trust (File No.
2-90649) pursuant to Rule 30d-1 under the Investment Company Act of
1940 and are incorporated herein by reference.
(a)(17) Financial Statements for Fidelity Southeast Asia Fund for the
fiscal year ended October 31, 1997 are incorporated herein by
reference to the fund's Statement of Additional Information and were
filed on December 22, 1997 for Fidelity Investment Trust (File No.
2-90649) pursuant to Rule 30d-1 under the Investment Company Act of
1940 and are incorporated herein by reference.
(a)(18) Financial Statements for Fidelity United Kingdom Fund for the
fiscal year ended October 31, 1997 are incorporated herein by
reference to the fund's Statement of Additional Information and were
filed on December 22, 1997 for Fidelity Investment Trust (File No.
2-90649) pursuant to Rule 30d-1 under the Investment Company Act of
1940 and are incorporated herein by reference.
(a)(19) Financial Statements for Fidelity Worldwide Fund for the
fiscal year ended October 31, 1997 are incorporated herein by
reference to the fund's Statement of Additional Information and were
filed on December 22, 1997 for Fidelity Investment Trust (File No.
2-90649) pursuant to Rule 30d-1 under the Investment Company Act of
1940 and are incorporated herein by reference.
(b) Exhibits:
(1)(a) Restated Declaration of Trust, dated February 16, 1995, is
incorporated herein by reference to Exhibit 1 of Post-Effective
Amendment No. 58.
(b) Supplement, dated October 15, 1997, to the Restated
Declaration of Trust is incorporated herein by reference to Exhibit
1(b) of Post-Effective Amendment No. 73.
(2) By-Laws of the Trust are incorporated herein by reference to
Exhibit 2 of Fidelity Union Street Trust Post-Effective Amendment No.
87 (File No. 2-50318).
(3) Not applicable.
(4) Not applicable.
(5)(a) Management Contract, dated October 1, 1997, between Fidelity
Diversified International Fund and Fidelity Management & Research
Company is incorporated herein by reference to Exhibit 5(a) of
Post-Effective Amendment No. 73.
(b) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf
of Fidelity Diversified International Fund dated October 1, 1992 is
incorporated herein by reference to Exhibit 5(p) of Post-Effective
Amendment No. 51.
(c) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity Diversified International Fund dated October 1, 1992 is
incorporated herein by reference to Exhibit 5(nn) of Post-Effective
Amendment No. 51.
(d) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited
on behalf of Fidelity Diversified International Fund dated October 1,
1992 is incorporated herein by reference to Exhibit 5(yyy) of
Post-Effective Amendment No. 51.
(e) Sub-Advisory Agreement, dated October 1, 1997, between Fidelity
Investments Japan Limited, Fidelity Management & Research Company, and
Fidelity Investment Trust on behalf of Fidelity Diversified
International Fund is filed herein as Exhibit 5(e).
(f) Management Contract, dated October 1, 1997, between Fidelity
International Growth & Income Fund and Fidelity Management & Research
Company is incorporated herein by reference to Exhibit 5(f) of
Post-Effective Amendment No. 73.
(g) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity Management & Research (Far
East) Inc. on behalf of Fidelity International Growth & Income Fund is
incorporated herein by reference to Exhibit 5(f) of Post-Effective
Amendment No. 57.
(h) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity Management & Research
(U.K.) Inc. on behalf of Fidelity International Growth & Income Fund
is incorporated herein by reference to Exhibit 5(g) of Post-Effective
Amendment No. 57.
(i) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
International Investment Advisors and Fidelity International
Investment Advisors (U.K.) Limited on behalf of Fidelity International
Growth & Income Fund is incorporated herein by reference to Exhibit
5(h) of Post-Effective Amendment No. 57.
(j) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity International Investment
Advisors on behalf of Fidelity International Growth & Income Fund is
incorporated herein by reference to Exhibit 5(i) of Post-Effective
Amendment No. 57.
(k) Sub-Advisory Agreement, dated October 1, 1997, between Fidelity
Investments Japan Limited, Fidelity Management & Research Company, and
Fidelity Investment Trust on behalf of Fidelity International Growth &
Income Fund is filed herein as Exhibit 5(k).
(l) Management Contract, dated October 1, 1997, between Fidelity
International Value Fund and Fidelity Management & Research Company is
incorporated herein by reference to Exhibit 5(l) of Post-Effective
Amendment No. 73.
(m) Sub-Advisory Agreement, dated September 16, 1994, between Fidelity
Management & Research Company and Fidelity Management & Research (Far
East) Inc. on behalf of Fidelity International Value Fund is
incorporated herein by reference to Exhibit 5(k) of Post-Effective
Amendment No. 57.
(n) Sub-Advisory Agreement, dated September 16, 1994, between Fidelity
Management & Research Company and Fidelity Management & Research
(U.K.) Inc. on behalf of Fidelity International Value Fund is
incorporated herein by reference to Exhibit 5(l) of Post-Effective
Amendment No. 57.
(o) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited
on behalf of Fidelity International Value Fund is incorporated herein
by reference to Exhibit 5(m) of Post-Effective Amendment No. 64.
(p) Sub-Advisory Agreement, dated September 16, 1994, between
Fidelity Management & Research Company and Fidelity International
Investment Advisors on behalf of Fidelity International Value Fund is
incorporated herein by reference to Exhibit 5(n) of Post-Effective
Amendment No. 57.
(q) Sub-Advisory Agreement, dated September 16, 1994, between Fidelity
Management & Research Company and Fidelity Investments Japan Limited
on behalf of Fidelity International Value Fund is incorporated herein
by reference to Exhibit 5(o) of Post-Effective Amendment No. 57.
(r) Management Contract, dated October 1, 1997, between Fidelity
Overseas Fund and Fidelity Management & Research Company is
incorporated herein by reference to Exhibit 5(r) of Post-Effective
Amendment No. 73.
(s) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity Management & Research (Far
East) Inc. on behalf of Fidelity Overseas Fund is incorporated herein
by reference to Exhibit 5(q) of Post-Effective Amendment No. 57.
(t) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity Management & Research
(U.K.) on behalf of Fidelity Overseas Fund is incorporated herein by
reference to Exhibit 5(r) of Post-Effective Amendment No. 57.
(u) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
International Investment Advisors and Fidelity International
Investment Advisors (U.K.) Limited on behalf of Fidelity Overseas Fund
is incorporated herein by reference to Exhibit 5(s) of Post-Effective
Amendment No. 57.
(v) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity International Investment
Advisors on behalf of Fidelity Overseas Fund is incorporated herein by
reference to Exhibit 5(t) of Post-Effective Amendment No. 57.
(w) Sub-Advisory Agreement, dated October 1, 1997, between Fidelity
Investments Japan Limited, Fidelity Management & Research Company, and
Fidelity Investment Trust on behalf of Fidelity Overseas Fund is filed
herein as Exhibit 5(w).
(x) Management Contract dated, October 1, 1997, between Fidelity
Worldwide Fund, and Fidelity Management & Research Company is
incorporated herein by reference to Exhibit 5(x) of Post-Effective
Amendment No. 73.
(y) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity Management & Research (Far
East) Inc. on behalf of Fidelity Worldwide Fund is incorporated herein
by reference to Exhibit 5(v) of Post-Effective Amendment No. 57.
(z) Sub-Advisory Agreement dated, April 1, 1992, between Fidelity
Management & Research Company and Fidelity Management & Research
(U.K.) Inc. on behalf of Fidelity Worldwide Fund is incorporated
herein by reference to Exhibit 5(w) of Post-Effective Amendment No.
57.
(aa) Sub-Advisory Agreement dated, April 1, 1992, between Fidelity
International Investment Advisors and Fidelity International
Investment Advisors (U.K.) Limited on behalf of Fidelity Worldwide
Fund is incorporated herein by reference to Exhibit 5(x) of
Post-Effective Amendment No. 57.
(bb) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity International Investment
Advisors on behalf of Fidelity Worldwide Fund is incorporated herein
by reference to Exhibit 5(y) of Post-Effective Amendment No. 57.
(cc) Sub-Advisory Agreement, dated October 1, 1997, between Fidelity
Investments Japan Limited, Fidelity Management & Research Company, and
Fidelity Investment Trust on behalf of Fidelity Worldwide Fund is
filed herein as Exhibit 5(cc).
(dd) Management Contract, dated October 1, 1997, between Fidelity
Canada Fund and Fidelity Management & Research Company is incorporated
herein by reference to Exhibit 5(dd) of Post-Effective Amendment No.
73.
(ee) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity Management & Research (Far
East) Inc. on behalf of Fidelity Canada Fund is incorporated herein by
reference to Exhibit 5(aa) of Post-Effective Amendment No. 57.
(ff) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity Management & Research
(U.K.) Inc. on behalf of Fidelity Canada Fund is incorporated herein
by reference to Exhibit 5(bb) of Post-Effective Amendment No. 57.
(gg) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
International Investment Advisors and Fidelity International
Investment Advisors (U.K.) Limited on behalf of Fidelity Canada Fund
is incorporated herein by reference to Exhibit 5(cc) of Post-Effective
Amendment No. 57.
(hh) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity International Investment
Advisors on behalf of Fidelity Canada Fund is incorporated herein by
reference to Exhibit 5(dd) of Post-Effective Amendment No. 57.
(ii) Management Contract, dated October 1, 1997, between Fidelity
Europe Fund and Fidelity Management & Research Company is incorporated
herein by reference to Exhibit 5(ii) of Post-Effective Amendment No.
73.
(jj) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity Management & Research (Far
East) Inc. on behalf of Fidelity Europe Fund is incorporated herein by
reference to Exhibit 5(ff) of Post-Effective Amendment No. 57.
(kk) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity Management & Research
(U.K.) Inc. on behalf of Fidelity Europe Fund is incorporated herein
by reference to Exhibit 5(gg) of Post-Effective Amendment No. 57.
(ll) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
International Investment Advisors and Fidelity International
Investment Advisors (U.K.) Limited on behalf of Fidelity Europe Fund
is incorporated herein by reference to Exhibit 5(hh) of Post-Effective
Amendment No. 57.
(mm) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity International Investment
Advisors on behalf of Fidelity Europe Fund is incorporated herein by
reference to Exhibit 5(ii) of Post-Effective Amendment No. 57.
(nn) Management Contract, dated October 1, 1997, between Fidelity
Europe Capital Appreciation Fund and Fidelity Management & Research
Company is incorporated herein by reference to Exhibit 5(nn) of
Post-Effective Amendment No. 73.
(oo) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf
of Fidelity Europe Capital Appreciation Fund dated November 18, 1993
is incorporated herein by reference to Exhibit 5(dd) of Post-
Effective Amendment No. 53.
(pp) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity Europe Capital Appreciation Fund dated November 18, 1993 is
incorporated herein by reference to Exhibit 5(ss) of Post- Effective
Amendment No. 53.
(qq) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited
on behalf of Fidelity Europe Capital Appreciation Fund, dated November
18, 1993, is incorporated herein by reference to Exhibit 5(ggg) of
Post-Effective Amendment No. 55.
(rr) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity Europe Capital Appreciation Fund dated November 18, 1993 is
incorporated herein by reference to Exhibit 5(uuu) of Post-Effective
Amendment No. 55.
(ss) Management Contract, dated October 1, 1997, between Fidelity
Japan Fund and Fidelity Management & Research Company is incorporated
herein by reference to Exhibit 5(ss) of Post-Effective Amendment No.
73.
(tt) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf
of Fidelity Japan Fund dated July 16, 1992 is incorporated herein by
reference to Exhibit 5(z) of Post-Effective Amendment No. 53.
(uu) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity Japan Fund dated July 16, 1992 is incorporated herein by
reference to Exhibit 5(oo) of Post Effective Amendment No. 53.
(vv) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited
on behalf of Fidelity Japan Fund dated July 16, 1992, is incorporated
herein by reference to Exhibit 5(ccc) of Post-Effective Amendment No.
55.
(ww) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity Japan Fund dated July 16, 1992 is incorporated herein by
reference to Exhibit 5(qqq) of Post-Effective Amendment No. 55.
(xx) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Investments Japan Limited on behalf of Fidelity
Japan Fund dated April 12, 1994 is incorporated herein by reference to
Exhibit No. 5(ss)(i) of Post-Effective Amendment No. 57.
(yy) Management Contract, dated October 1, 1997, between Fidelity
Pacific Basin Fund and Fidelity Management & Research Company is
incorporated herein by reference to Exhibit 5(yy) of Post-Effective
Amendment No. 73.
(zz) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity Management & Research (Far
East) Inc. on behalf of Fidelity Pacific Basin Fund is incorporated
herein by reference to Exhibit 5(uu) of Post-Effective Amendment No.
57.
(aaa) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity Management & Research
(U.K.) Inc. on behalf of Fidelity Pacific Basin Fund is incorporated
herein by reference to Exhibit 5(vv) of Post-Effective Amendment No.
57.
(bbb) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
International Investment Advisors and Fidelity International
Investment Advisors (U.K.) Limited on behalf of Fidelity Pacific Basin
Fund is incorporated herein by reference to Exhibit 5(ww) of
Post-Effective Amendment No. 57.
(ccc) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity International Investment
Advisors on behalf of Fidelity Pacific Basin Fund is incorporated
herein by reference to Exhibit 5(xx) of Post-Effective Amendment No.
57.
(ddd) Sub-Advisory Agreement, dated October 1, 1997, between Fidelity
Investments Japan Limited, Fidelity Management & Research Company, and
Fidelity Investment Trust on behalf of Fidelity Pacific Basin Fund is
filed herein as Exhibit 5(ddd).
(eee) Management Contract, dated October 1, 1997, between Fidelity
Emerging Markets Fund and Fidelity Management & Research Company is
incorporated herein by reference to Exhibit 5(eee) of Post-Effective
Amendment No. 73.
(fff) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity Management & Research (Far
East) Inc. on behalf of Fidelity Emerging Markets Fund is incorporated
herein by reference to Exhibit 5(zz) of Post-Effective Amendment No.
57.
(ggg) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity Management & Research
(U.K.) Inc. on behalf of Fidelity Emerging Markets Fund is
incorporated herein by reference to Exhibit 5(aaa) of Post-Effective
Amendment No. 57.
(hhh) Sub-Advisory Agreement dated April 1, 1992 between Fidelity
International Investment Advisors and Fidelity International
Investment Advisors (U.K.) Limited on behalf of Fidelity Emerging
Markets Fund is incorporated herein by reference to Exhibit 5(bbb) of
Post-Effective Amendment No. 57.
(iii) Sub-Advisory Agreement, dated April 1, 1992, between Fidelity
Management & Research Company and Fidelity International Investment
Advisors on behalf of Fidelity Emerging Markets Fund is incorporated
herein by reference to Exhibit 5(ccc) of Post-Effective Amendment No.
57.
(jjj) Sub-Advisory Agreement, dated October 1, 1997, between Fidelity
Investments Japan Limited, Fidelity Management & Research Company, and
Fidelity Investment Trust on behalf of Fidelity Emerging Markets Fund
is filed herein as Exhibit 5(jjj).
(kkk) Management Contract, dated October 1, 1997, between Fidelity
Latin America Fund and Fidelity Management & Research Company is
incorporated herein by reference to Exhibit 5(kkk) of Post-Effective
Amendment No. 73.
(lll) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf
of Fidelity Latin America Fund dated March 18, 1993 is incorporated
herein by reference to Exhibit 5(z) of Post-Effective Amendment No.
48.
(mmm)Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity Latin America Fund is incorporated herein by reference to
Exhibit 5(nn) of Post-Effective Amendment No. 48.
(nnn) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited
on behalf of Fidelity Latin America Fund dated March 18, 1993 is
incorporated herein by reference to Exhibit 5(ddd) of Post-Effective
Amendment No. 55.
(ooo) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity Latin America Fund dated March 18, 1993 is incorporated
herein by reference to Exhibit 5(rrr) of Post-Effective Amendment No.
51.
(ppp) Management Contract, dated October 1, 1997, between Fidelity
Southeast Asia Fund and Fidelity Management & Research Company is
incorporated herein by reference to Exhibit 5(ppp) of Post-Effective
Amendment No. 73.
(qqq) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf
of Fidelity Southeast Asia Fund dated March 18, 1993 is incorporated
herein by reference to Exhibit 5(aa) of Post-Effective Amendment No.
48.
(rrr) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity Southeast Asia Fund dated March 18, 1993 is incorporated
herein by reference to Exhibit 5(oo) of Post-Effective Amendment No.
48.
(sss) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited
on behalf of Fidelity Southeast Asia Fund dated March 18, 1993 is
incorporated herein by reference to Exhibit 5(eee) of Post-Effective
Amendment No. 55.
(ttt) Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity
International Investment Advisors on behalf of Fidelity Southeast
Asia Fund dated March
18, 1993 is incorporated herein by reference to Exhibit 5(sss) of
Post-Effective Amendment
No. 51.
(uuu) Sub-Advisory Agreement dated March 18, 1993, between
Fidelity Management & Research Company and Fidelity International
Investment Advisors on behalf of Fidelity Southeast Asia Fund dated
March 18, 1993 is incorporated herein by reference to Exhibit 5(nnn)
of Post-Effective Amendment No. 57.
(vvv) Management Contract, dated October 1, 1997, between Fidelity
Global Bond Fund and Fidelity Management & Research Company, is
incorporated herein by reference to Exhibit 5(vvv) of Post-Effective
Amendment No. 73.
(www)Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf
of Fidelity Global Bond Fund dated April 1, 1992 is incorporated
herein by reference to Exhibit 5(ppp) of Post-Effective Amendment No.
58.
(xxx) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity Global Bond Fund dated April 1, 1992 is incorporated herein
by reference to Exhibit 5(qqq) of Post-Effective Amendment No. 58.
(yyy) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited
on behalf of Fidelity Global Bond Fund dated April 1, 1992 is
incorporated herein by reference to Exhibit 5(rrr) of Post-Effective
Amendment No. 58.
(zzz) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity Global Bond Fund dated April 1, 1992 is incorporated herein
by reference to Exhibit 5(sss) of Post-Effective Amendment No. 58.
(aaaa) Sub-Advisory Agreement, dated October 1, 1997, between
Fidelity Investments Japan Limited, Fidelity Management & Research
Company, and Fidelity Investment Trust on behalf of Fidelity Global
Bond Fund is filed herein as Exhibit 5(aaaa).
(bbbb) Management Contract, dated October 1, 1997, between Fidelity
New Markets Income Fund and Fidelity Management & Research Company is
incorporated herein by reference to Exhibit 5(bbbb) of Post-Effective
Amendment No. 73.
(cccc) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf
of Fidelity New Markets Income Fund dated April 15, 1993 is
incorporated herein by reference to Exhibit 5(bb) of Post-Effective
Amendment No. 48.
(dddd) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. dated April 15,
1993 on behalf of Fidelity New Markets Income Fund is incorporated
herein by reference to Exhibit 5(pp) of Post-Effective Amendment No.
48.
(eeee) Sub-Advisory Agreement between Fidelity International
Investment Advisors and Fidelity International Investment Advisors
(U.K.) Limited on behalf of Fidelity New Markets Income Fund is
incorporated herein by reference to Exhibit 5(fff) of Post-Effective
Amendment No. 50.
(ffff) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity New Markets Income Fund is incorporated herein by reference
to Exhibit 5(ttt) of Post-Effective Amendment No. 50.
(gggg)Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Investments Japan Limited on behalf of Fidelity
New Markets Income Fund dated April 15, 1993 is incorporated herein by
reference to Exhibit 5(dddd) of Post-Effective Amendment No. 58.
(hhhh) Management Contract, dated October 1, 1997, between Fidelity
France Fund and Fidelity Management & Research Company is incorporated
herein by reference to Exhibit 5(hhhh) of Post-Effective Amendment No.
73.
(iiii) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf
of Fidelity France Fund is incorporated herein by reference to Exhibit
5(gggg) of Post-Effective Amendment No. 62.
(jjjj) Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity Management & Research (U.K.) Inc. on
behalf of Fidelity France Fund is incorporated herein by reference to
Exhibit 5(hhhh) of Post-Effective Amendment No. 62.
(kkkk)Sub-Advisory Agreement between Fidelity International
Investment Advisors and Fidelity International Investment Advisors
(U.K.) Limited on behalf of Fidelity France Fund is incorporated
herein by reference to Exhibit 5(iiii) of Post-Effective Amendment No.
62.
(llll) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity France Fund is incorporated herein by reference to Exhibit
5(jjjj) of Post-Effective Amendment No. 62.
(mmmm)Management Contract, dated October 1, 1997, between Fidelity
Germany Fund and Fidelity Management & Research Company is
incorporated herein by reference to Exhibit 5(mmmm) of Post-Effective
Amendment No. 73.
(nnnn) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf
of Fidelity Germany Fund is incorporated herein by reference to
Exhibit 5(llll) of Post-Effective Amendment No. 62.
(oooo) Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity Management & Research (U.K.) Inc. on
behalf of Fidelity Germany Fund is incorporated herein by reference to
Exhibit 5(mmmm) of Post-Effective Amendment No. 62.
(pppp) Sub-Advisory Agreement between Fidelity International
Investment Advisors and Fidelity International Investment Advisors
(U.K.) Limited on behalf of Fidelity Germany Fund is incorporated
herein by reference to Exhibit 5(nnnn) of Post-Effective Amendment No.
62.
(qqqq) Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity International Investment Advisors on
behalf of Fidelity Germany Fund is incorporated herein by reference to
Exhibit 5(ffff) of Post-Effective Amendment No. 62.
(rrrr) Management Contract, dated October 1, 1997, between
Fidelity United Kingdom Fund and Fidelity Management & Research
Company is incorporated herein by reference to Exhibit 5(rrrr) of
Post-Effective Amendment No. 73.
(ssss) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf
of Fidelity United Kingdom Fund is incorporated herein by reference to
Exhibit 5(qqqq) of Post-Effective Amendment No. 62.
(tttt) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity United Kingdom Fund is incorporated herein by reference to
Exhibit 5(rrrr) of Post-Effective Amendment No. 62.
(uuuu) Sub-Advisory Agreement between Fidelity International
Investment Advisors and Fidelity International Investment Advisors
(U.K.) Limited on behalf of Fidelity United Kingdom Fund is
incorporated herein by reference to Exhibit 5(ssss) of Post-Effective
Amendment No. 62.
(vvvv) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity United Kingdom Fund is incorporated herein by reference to
Exhibit 5(ffff) of Post-Effective Amendment No. 62.
(wwww)Management Contract, dated October 1, 1997, between Fidelity
Japan Small Companies Fund and Fidelity Management & Research Company
is incorporated herein by reference to Exhibit 5(wwww) of
Post-Effective Amendment No. 73.
(xxxx) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf
of Fidelity Japan Small Companies Fund is incorporated herein by
reference to Exhibit 5(vvvv) of Post-Effective Amendment No. 62.
(yyyy)Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity Management & Research (U.K.) Inc. on
behalf of Fidelity Japan Small Companies Fund is incorporated herein
by reference to Exhibit 5(wwww) of Post-Effective Amendment No. 62.
(zzzz)Sub-Advisory Agreement between Fidelity International
Investment Advisors and Fidelity International Investment Advisors
(U.K.) Limited on behalf of Fidelity Japan Small Companies Fund is
incorporated herein by reference to Exhibit 5(xxxx) of Post-Effective
Amendment No. 62.
(aaaaa) Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity International Investment Advisors on
behalf of Fidelity Japan Small Companies Fund is incorporated herein
by reference to Exhibit 5(yyyy) of Post-Effective Amendment No. 62.
(bbbbb)Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity Investments Japan Limited on behalf of
Fidelity Japan Small Companies Fund is incorporated herein by
reference to Exhibit 5(zzzz) of Post-Effective Amendment No. 66.
(ccccc) Management Contract, dated October 1, 1997, between
Fidelity Hong Kong and China Fund and Fidelity Management & Research
Company is incorporated herein by reference to Exhibit 5(wwww) of
Post-Effective Amendment No. 73.
(ddddd) Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity Management & Research (Far East) Inc. on
behalf of Fidelity Hong Kong and China Fund is incorporated herein by
reference to Exhibit 5(bbbbb) of Post-Effective Amendment No. 62.
(eeeee)Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity Management & Research (U.K.) Inc. on
behalf of Fidelity Hong Kong and China Fund is incorporated herein by
reference to Exhibit 5(ccccc) of Post-Effective Amendment No. 62.
(fffff) Sub-Advisory Agreement between Fidelity International
Investment Advisors and Fidelity International Investment Advisors
(U.K.) Limited on behalf of Fidelity Hong Kong and China Fund is
incorporated herein by reference to Exhibit 5(ddddd) of Post-Effective
Amendment No. 62.
(ggggg)Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity International Investment Advisors on
behalf of Fidelity Hong Kong and China Fund is incorporated herein by
reference to Exhibit 5(eeeee) of Post-Effective Amendment No. 62.
(hhhhh)Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity Investments Japan Limited on behalf of
Fidelity Hong Kong and China Fund is incorporated herein by reference
to Exhibit 5(fffff) of Post-Effective Amendment No. 66.
(iiiii) Management Contract, dated October 1, 1997, between Fidelity
Nordic Fund and Fidelity Management & Research Company is incorporated
herein by reference to Exhibit 5(iiiii) of Post-Effective Amendment
No. 73.
(jjjjj) Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity Management & Research (Far East) Inc. on
behalf of Fidelity Nordic Fund is incorporated herein by reference to
Exhibit 5(hhhhh) of Post-Effective Amendment No. 62.
(kkkkk) Sub-Advisory Agreement between Fidelity Management &
Research Company and Fidelity Management & Research (U.K.) Inc. on
behalf of Fidelity Nordic Fund is incorporated herein by reference to
Exhibit 5(iiiii) of Post-Effective Amendment No. 62.
(lllll) Sub-Advisory Agreement between Fidelity International
Investment Advisors and Fidelity International Investment Advisors
(U.K.) Limited on behalf of Fidelity Nordic Fund is incorporated
herein by reference to Exhibit 5(jjjjj) of Post-Effective Amendment
No. 62.
(mmmmm)Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity International Investment Advisors on behalf of
Fidelity Nordic Fund is incorporated herein by reference to Exhibit
5(kkkkk) of Post-Effective Amendment No. 62.
(6) (a) General Distribution Agreement dated April 1, 1987 between
Fidelity Overseas Fund, Fidelity Europe Fund, Fidelity Pacific Basin
Fund, Fidelity International Growth & Income Fund, Fidelity Canada
Fund, dated May 19, 1990, between Fidelity Worldwide Fund, dated
September 30, 1990, between Fidelity Emerging Markets Fund (formerly
"Fidelity International Opportunities Fund", and dated December 12,
between Fidelity Diversified International Fund and Fidelity
Distributors Corporation are incorporated herein by reference to
Exhibit Nos. 6(a)(1-8) of Post-Effective Amendment No. 57.
(b) General Distribution Agreement between Fidelity Global Bond Fund
and Fidelity Distributors Corporation dated April 1, 1987 is
incorporated herein by reference to Exhibit 6(b) of Post-Effective
Amendment No. 58.
(c) Amendment, dated January 1, 1988, to General Distribution
Agreement between Fidelity Global Bond Fund and Fidelity Distributors
Corporation dated April 1, 1987 is incorporated herein by reference to
Exhibit 6(c) of Post-Effective Amendment No. 58.
(d) General Distribution Agreement between Fidelity Diversified
International Fund and Fidelity Distributors Corporation dated
December 12, 1991 is incorporated herein by reference to Exhibit 6(k)
of Post-Effective Amendment No. 38.
(e) General Distribution Agreement between Fidelity Japan Fund and
Fidelity Distributors Corporation dated July 16, 1992, is incorporated
herein by reference to Exhibit 6(l) of Post-Effective Amendment No.
55.
(f) General Distribution Agreement between Fidelity Latin America Fund
and Fidelity Distributors Corporation dated March 18, 1993, is
incorporated herein by reference to Exhibit 6(m) of Post-Effective
Amendment No. 55.
(g) General Distribution Agreement between Fidelity Southeast Asia
Fund and Fidelity Distributors Corporation dated March 18, 1993, is
incorporated herein by reference to Exhibit 6(n) of Post-Effective
Amendment No. 55.
(h) General Distribution Agreement between Fidelity New Markets Income
Fund and Fidelity Distributors Corporation is incorporated herein by
reference to Exhibit 6(o) of Post-Effective Amendment No. 50.
(i) General Distribution Agreement between Fidelity Europe Capital
Appreciation Fund and Fidelity Distributors Corporation dated November
18, 1993, is incorporated herein by reference to Exhibit 6(p) of
Post-Effective Amendment No. 55.
(j) General Distribution Agreement between Fidelity International
Value Fund and Fidelity Distributors Corporation, dated September 16,
1994, is incorporated herein by reference to Exhibit 6(j) of
Post-Effective Amendment No. 58.
(k) General Distribution Agreement between Fidelity France Fund and
Fidelity Distributors Corporation, dated September 14, 1995, is
incorporated herein by reference to Exhibit 6(m) of Post-Effective
Amendment No. 66.
(l) General Distribution Agreement between Fidelity Germany Fund and
Fidelity Distributors Corporation, dated September 14, 1995, is
incorporated herein by reference to Exhibit 6(n) of Post-Effective
Amendment No. 66.
(m) General Distribution Agreement between Fidelity United Kingdom
Fund and Fidelity Distributors Corporation, dated September 14, 1995,
is incorporated herein by reference to Exhibit 6(o) of Post-Effective
Amendment No. 66.
(n) General Distribution Agreement between Fidelity Japan Small
Companies Fund and Fidelity Distributors Corporation, dated September
14, 1995, is incorporated herein by reference to Exhibit 6(p) of
Post-Effective Amendment No. 66.
(o) General Distribution Agreement between Fidelity Hong Kong and
China Fund and Fidelity Distributors Corporation, dated September 14,
1995, is incorporated herein by reference to Exhibit 6(q) of
Post-Effective Amendment No. 66.
(p) General Distribution Agreement between Fidelity Nordic Fund and
Fidelity Distributors Corporation, dated September 14, 1995, is
incorporated herein by reference to Exhibit 6(r) of Post-Effective
Amendment No. 66.
(q) Amendments to the General Distribution Agreement between Fidelity
Investment Trust on behalf of Fidelity France Fund, Fidelity Germany
Fund, Fidelity Hong Kong and China Fund, Fidelity International Value
Fund, Fidelity Japan Small Companies Fund, Fidelity Nordic Fund, and
Fidelity United Kingdom Fund and Fidelity Distributors Corporation,
dated March 14, 1996 and July 15, 1996, are incorporated herein by
reference to Exhibit 6(k) of Fidelity Select Portfolios'
Post-Effective Amendment No. 57 (File No. 2-69972).
(r) Amendments to the General Distribution Agreement between Fidelity
Investment Trust on behalf of Fidelity Canada Fund, Fidelity
Diversified International Fund, Fidelity Emerging Markets Fund,
Fidelity Europe Fund, Fidelity Europe Capital Appreciation Fund,
Fidelity International Growth & Income Fund, Fidelity Japan Fund,
Fidelity Latin America Fund, Fidelity Overseas Fund, Fidelity Pacific
Basin Fund, Fidelity Southeast Asia Fund, and Fidelity Worldwide Fund
and Fidelity Distributors Corporation, dated March 14, 1996 and July
15, 1996, are incorporated herein by reference to Exhibit 6(l) of
Fidelity Select Portfolios' Post-Effective Amendment No. 57 (File No.
2-69972).
(s) Amendments to the General Distribution Agreement between Fidelity
Investment Trust on behalf of Fidelity Global Bond Fund and Fidelity
New Markets Income Fund and Fidelity Distributors Corporation, dated
March 14, 1996 and July 15, 1996, are incorporated herein by reference
to Exhibit 6(a) of Fidelity Court Street Trust's Post-Effective
Amendment No. 61 (File No. 2-58774).
(t) Form of Bank Agency Agreement (most recently revised January,
1997) is incorporated herein by reference to Exhibit 6(t) of
Post-Effective Amendment No. 73.
(u) Form of Selling Dealer Agreement for Bank-Related Transactions
(most recently revised January, 1997) is incorporated herein by
reference to Exhibit 6(u) of Post-Effective Amendment No. 73.
(7)(a) Retirement Plan for Non-Interested Person Trustees, Directors
or General Partners, as amended on November 16, 1995, is incorporated
herein by reference to Exhibit 7(a) of Fidelity Select Portfolio's
(File No. 2-69972) Post-Effective Amendment No. 54.
(b) The Fee Deferral Plan for Non-Interested Person Directors and
Trustees of the Fidelity Funds, effective as of September 14, 1995 and
amended through November 14, 1996, is incorporated herein by reference
to Exhibit 7(b) of Fidelity Aberdeen Street Trust's (File No.
33-43529) Post-Effective Amendment No. 19.
(8)(a) Custodian Agreement and Appendix C, dated August 1, 1994,
between The Chase Manhattan Bank, N.A. and Fidelity Investment Trust
on behalf of Fidelity Diversified Global Fund, Fidelity Diversified
International Fund, Fidelity Emerging Markets Fund, Fidelity Europe
Capital Appreciation Fund, Fidelity Europe Fund, Fidelity Global Bond
Fund, Fidelity International Growth & Income Fund, Fidelity
International Value Fund, Fidelity Japan Fund, Fidelity New Markets
Income Fund, Fidelity Overseas Fund, Fidelity Pacific Basin Fund,
Fidelity Southeast Asia Fund, and Fidelity Worldwide Fund is
incorporated herein by reference to Exhibit 8(a) of Post-Effective
Amendment No. 59.
(8)(b) Appendix A, dated October 17, 1996, to the Custodian Agreement,
dated August 1, 1994, between The Chase Manhattan Bank, N.A. and
Fidelity Investment Trust on behalf of Fidelity Diversified Global
Fund, Fidelity Diversified International Fund, Fidelity Emerging
Markets Fund, Fidelity Europe Capital Appreciation Fund, Fidelity
Europe Fund, Fidelity Global Bond Fund, Fidelity International Growth
& Income Fund, Fidelity International Value Fund, Fidelity Japan Fund,
Fidelity New Markets Income Fund, Fidelity Overseas Fund, Fidelity
Pacific Basin Fund, Fidelity Southeast Asia Fund, and Fidelity
Worldwide Fund is incorporated herein by reference to Exhibit 8(c) of
Fidelity Charles Street Trust's Post-Effective Amendment No. 57 (File
No. 2-73133).
(8)(c) Appendix B, dated September 18, 1997, to the Custodian
Agreement, dated August 1, 1994, between The Chase Manhattan Bank,
N.A. and Fidelity Investment Trust on behalf of Fidelity Diversified
Global Fund, Fidelity Diversified International Fund, Fidelity
Emerging Markets Fund, Fidelity Europe Capital Appreciation Fund,
Fidelity Europe Fund, Fidelity Global Bond Fund, Fidelity
International Growth & Income Fund, Fidelity International Value Fund,
Fidelity Japan Fund, Fidelity New Markets Income Fund, Fidelity
Overseas Fund, Fidelity Pacific Basin Fund, Fidelity Southeast Asia
Fund, and Fidelity Worldwide Fund is incorporated herein by reference
to Exhibit 8(b) of Fidelity Charles Street Trust's Post-Effective
Amendment No. 62 (File No. 2-73133).
(8)(d) Custodian Agreement and Appendix C, dated September 1, 1994,
between Brown Brothers Harriman & Company and Fidelity Investment
Trust on behalf of Fidelity France Fund, Fidelity Germany Fund,
Fidelity Japan Small Companies Fund, Fidelity United Kingdom Fund,
Fidelity Hong Kong and China Fund, Fidelity Nordic Fund, Fidelity
Canada Fund, and Fidelity Latin America Fund is incorporated herein by
reference to Exhibit 8(a) of Fidelity Commonwealth Trust's
Post-Effective Amendment No. 56 (File No. 2-52322).
(8)(e) Appendix A, dated October 16, 1997, to the Custodian Agreement,
dated September 1, 1994, between Brown Brothers Harriman & Company and
Fidelity Investment Trust on behalf of Fidelity France Fund, Fidelity
Germany Fund, Fidelity Japan Small Companies Fund, Fidelity United
Kingdom Fund, Fidelity Hong Kong and China Fund, Fidelity Nordic Fund,
Fidelity Canada Fund, and Fidelity Latin America Fund is incorporated
herein by reference to Exhibit 8(b) of Fidelity Contrafund's
Post-Effective Amendment No. 50 (File No. 2-25235).
(8)(f) Appendix B, dated September 18, 1997, to the Custodian
Agreement, dated September 1, 1994, between Brown Brothers Harriman &
Company and Fidelity Investment Trust on behalf of Fidelity France
Fund, Fidelity Germany Fund, Fidelity Japan Small Companies Fund,
Fidelity United Kingdom Fund, Fidelity Hong Kong and China Fund,
Fidelity Nordic Fund, Fidelity Canada Fund, and Fidelity Latin America
Fund is incorporated herein by reference to Exhibit 8(c) of Fidelity
Contrafund's Post-Effective Amendment No. 50 (File No. 2-25235).
(8)(g) Fidelity Group Repo Custodian Agreement among The Bank of New
York, J. P. Morgan Securities, Inc., and the Registrant, dated
February 12, 1996, is incorporated herein by reference to Exhibit 8(d)
of Fidelity Institutional Cash Portfolios' (File No. 2-74808)
Post-Effective Amendment No. 31.
(8)(h) Schedule 1 to the Fidelity Group Repo Custodian Agreement
between The Bank of New York and the Registrant, dated February 12,
1996, is incorporated herein by reference to Exhibit 8(e) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(8)(i) Fidelity Group Repo Custodian Agreement among Chemical Bank,
Greenwich Capital Markets, Inc., and the Registrant, dated November
13, 1995, is incorporated herein by reference to Exhibit 8(f) of
Fidelity Institutional Cash Portfolios' (File No. 2-74808)
Post-Effective Amendment No. 31.
(8)(j) Schedule 1 to the Fidelity Group Repo Custodian Agreement
between Chemical Bank and the Registrant, dated November 13, 1995, is
incorporated herein by reference to Exhibit 8(g) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(8)(k) Joint Trading Account Custody Agreement between The Bank of New
York and Fidelity Investment Trust on behalf of Fidelity Canada Fund,
Fidelity Diversified International Fund, Fidelity Emerging Markets
Fund, Fidelity Europe Fund, Fidleity Europe Capital Appreciation Fund,
Fidelity Global Bond Fund, Fidelity International Growth & Income
Fund, Fidelity International Value Fund, Fidelity Japan Fund, Fidelity
Latin America Fund, Fidelity New Markets Income Fund, Fidelity
Overseas Fund, Fidelity Pacific Basin Fund, Fidelity Southeast Asia
Fund and Fidelity Worldwide Fund, dated May 11, 1995, is incorporated
herein by reference to Exhibit 8(h) of Fidelity Institutional Cash
Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(8)(l) First Amendment to Joint Trading Account Custody Agreement
between The Bank of New York and Fidelity Investment Trust on behalf
of Fidelity Canada Fund, Fidelity Diversified International Fund,
Fidelity Emerging Markets Fund, Fidelity Europe Fund, Fidelity Europe
Capital Appreciation Fund, Fidelity Global Bond Fund, Fidelity
International Growth & Income Fund, Fidelity International Value Fund,
Fidelity Japan Fund, Fidelity Latin America Fund, Fidelity New Markets
Income Fund, Fidelity Overseas Fund, Fidelity Pacific Basin Fund,
Fidelity Southeast Asia Fund and Fidelity Worldwide Fund, dated July
14, 1995, is incorporated herein by reference to Exhibit 8(i) of
Fidelity Institutional Cash Portfolios' (File No. 2-74808)
Post-Effective Amendment No. 31.
(9) Not applicable.
(10) Not applicable.
(11)(a) Consent of Coopers & Lybrand L.L.P. is filed herein as
Exhibit 11(a).
(11)(b) Consent of Price Waterhouse LLP is filed herein as Exhibit
11(b).
(12) Not applicable.
(13) Not applicable.
(14) (a) Fidelity Individual Retirement Account Custodial Agreement
and Disclosure Statement, as currently in effect, is incorporated
herein by reference to Exhibit 14(a) of Fidelity Union Street Trust's
(File No. 2-50318) Post-Effective Amendment No. 87.
(b) Fidelity Institutional Individual Retirement Account Custodial
Agreement and Disclosure Statement, as currently in effect, is
incorporated herein by reference to Exhibit 14(d) of Fidelity Union
Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(c) National Financial Services Corporation Individual Retirement
Account Custodial Agreement and Disclosure Statement, as currently in
effect, is incorporated herein by reference to Exhibit 14(h) of
Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(d) Fidelity Portfolio Advisory Services Individual Retirement
Account Custodial Agreement and Disclosure Statement, as currently in
effect, is incorporated herein by reference to Exhibit 14(i) of
Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(e) Fidelity 403(b)(7) Custodial Account Agreement, as currently in
effect, is incorporated herein by reference to Exhibit 14(e) of
Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(f) National Financial Services Corporation Defined Contribution
Retirement Plan and Trust Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(k) of Fidelity Union
Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(g) The CORPORATEplan for Retirement Profit Sharing/401K Plan, as
currently in effect, is incorporated herein by reference to Exhibit
14(l) of Fidelity Union Street Trust's (File No. 2-50318)
Post-Effective Amendment No. 87.
(h) The CORPORATEplan for Retirement Money Purchase Pension Plan, as
currently in effect, is incorporated herein by reference to Exhibit
14(m) of Fidelity Union Street Trust's (File No. 2-50318)
Post-Effective Amendment No. 87.
(i) Fidelity Investments Section 403(b)(7) Individual Custodial
Account Agreement and Disclosure Statement, as currently in effect, is
incorporated herein by reference to Exhibit 14(f) of Fidelity
Commonwealth Trust's (File No. 2-52322) Post Effective Amendment No.
57.
(j) Plymouth Investments Defined Contribution Retirement Plan and
Trust Agreement, as currently in effect, is incorporated herein by
reference to Exhibit 14(o) of Fidelity Commonwealth Trust's (File No.
2-52322) Post Effective Amendment No. 57.
(k) The Fidelity Prototype Defined Benefit Pension Plan and Trust
Basic Plan Document and Adoption Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(d) of Fidelity
Securities Fund's (File No. 2-93601) Post Effective Amendment No. 33.
(l) The Institutional Prototype Plan Basic Plan Document,
Standardized Adoption Agreement, and Non-Standardized Adoption
Agreement, as currently in effect, is incorporated herein by reference
to Exhibit 14(o) of Fidelity Securities Fund's (File No. 2-93601) Post
Effective Amendment No. 33.
(m) The CORPORATEplan for Retirement 100SM Profit Sharing/401(k)
Basic Plan Document, Standardized Adoption Agreement, and
Non-Standardized Adoption Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(f) of Fidelity
Securities Fund's (File No. 2-93601) Post Effective Amendment No. 33.
(n) The Fidelity Investments 401(a) Prototype Plan for Tax-Exempt
Employers Basic Plan Document, Standardized Profit Sharing Plan
Adoption Agreement, Non-Standardized Discretionary Contribution Plan
No. 002 Adoption Agreement, and Non-Standardized Discretionary
Contribution Plan No. 003 Adoption Agreement, as currently in effect,
is incorporated herein by reference to Exhibit 14(g) of Fidelity
Securities Fund's (File No. 2-93601) Post Effective Amendment No. 33.
(o) Fidelity Investments 403(b) Sample Plan Basic Plan Document and
Adoption Agreement, as currently in effect, is incorporated herein by
reference to Exhibit 14(p) of Fidelity Securities Fund's (File No.
2-93601) Post Effective Amendment No. 33.
(p) Fidelity Defined Contribution Retirement Plan and Trust
Agreement, as currently in effect, is incorporated herein by reference
to Exhibit 14(c) of Fidelity Securities Fund's (File No. 2-93601) Post
Effective Amendment No. 33.
(q) Fidelity SIMPLE-IRAPlan Adoption Agreement, Company Profile Form,
and Plan Document, as currently in effect, is incorporated herein by
reference to Exhibit 14(q) of Fidelity Aberdeen Street Trust's (File
No. 33-43529) Post-Effective Amendment No. 19.
(15) (a) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Global Bond Fund is incorporated herein by reference to
Exhibit 15(a) of Post-Effective Amendment No. 73.
(b) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
New Markets Income Fund is incorporated herein by reference to Exhibit
15(b) of Post-Effective Amendment No. 73.
(c) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Diversified International Fund is incorporated herein by reference to
Exhibit 15(c) of Post-Effective Amendment No. 73.
(d) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
International Value Fund is incorporated herein by reference to
Exhibit 15(d) of Post-Effective Amendment No. 73.
(e) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
International Growth & Income Fund is incorporated herein by reference
to Exhibit 15(e) of Post-Effective Amendment No. 73.
(f) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Overseas Fund is incorporated herein by reference to Exhibit 15(f) of
Post-Effective Amendment No. 73.
(g) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Worldwide Fund is incorporated herein by reference to Exhibit 15(g) of
Post-Effective Amendment No. 73.
(16) (a) Schedule for computation of total return calculations for
Fidelity Canada Fund is incorporated herein by reference to Exhibit
16(a) of Post-Effective Amendment No. 66.
(b) Schedule for computation of moving averages is incorporated
herein by reference to Exhibit 16(c) of Post-Effective Amendment No.
53.
(17) Financial Data Schedules are filed herein as Exhibit 27.
(18) Not applicable.
Item 25. Persons Controlled by or Under Common Control with
Registrant
The Board of Trustees of Registrant is the same as the Board of
Trustees of other funds advised by FMR, each of which has Fidelity
Management & Research Company as its investment adviser. In addition,
the officers of these funds are substantially identical. Nonetheless,
Registrant takes the position that it is not under common control with
these other funds since the power residing in the respective boards
and officers arises as the result of an official position with the
respective funds.
Item 26. Number of Holders of Securities: October 31, 1997
Title of Class: Shares of Beneficial Interest
Name of Series Number of Record Holders
<TABLE>
<CAPTION>
<S> <C> <C>
Fidelity Canada Fund 12,986
Fidelity Diversified International 260,529
Fidelity Emerging Markets Fund 102,405
Fidelity Europe Capital Appreciation Fund 30,869
Fidelity Europe Fund 109,054
Fidelity France Fund 785
Fidelity Germany Fund 1,723
Fidelity Global Bond Fund 15,380
Fidelity Hong Kong and China Fund 25,888
Fidelity International Growth & Income Fund 177,847
Fidelity International Value Fund 28,978
Fidelity Japan Fund 27,730
Fidelity Japan Small Companies Fund 8,800
Fidelity Latin America Fund 81,560
Fidelity New Markets Income Fund 35,847
Fidelity Nordic Fund 9,344
Fidelity Overseas Fund 707,371
Fidelity Pacific Basin Fund 56,860
Fidelity Southeast Asia Fund 40,870
Fidelity United Kingdom Fund 674
Fidelity Worldwide Fund 203,665
</TABLE>
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification
shall be provided to any past or present Trustee or officer. It states
that the Registrant shall indemnify any present or past Trustee or
officer to the fullest extent permitted by law against liability and
all expenses reasonably incurred by him in connection with any claim,
action, suit, or proceeding in which he is involved by virtue of his
service as a Trustee, an officer, or both. Additionally, amounts paid
or incurred in settlement of such matters are covered by this
indemnification. Indemnification will not be provided in certain
circumstances, however. These include instances of willful
misfeasance, bad faith, gross negligence, and reckless disregard of
the duties involved in the conduct of the particular office involved.
Pursuant to Section 11 of the Distribution Agreement, the Registrant
agrees to indemnify and hold harmless the Distributor and each of its
directors and officers and each person, if any, who controls the
Distributor within the meaning of Section 15 of the 1933 Act against
any loss, liability, claim, damages or expense arising by reason of
any person acquiring any shares, based upon the ground that the
registration statement, Prospectus, Statement of Additional
Information, shareholder reports or other information filed or made
public by the Registrant included a materially misleading statement or
omission. However, the Registrant does not agree to indemnify the
Distributor or hold it harmless to the extent that the statement or
omission was made in reliance upon, and in conformity with,
information furnished to the Registrant by or on behalf of the
Distributor. The Registrant does not agree to indemnify the parties
against any liability to which they would be subject by reason of
willful misfeasance, bad faith, gross negligence, and reckless
disregard of the obligations and duties under the Distribution
Agreement.
Pursuant to the agreement by which Fidelity Service Company, Inc.
("Service") is appointed transfer agent, the Registrant agrees to
indemnify and hold Service harmless against any losses, claims,
damages, liabilities or expenses (including reasonable counsel fees
and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other
than the Registrant, including by a shareholder, which names the
Service and/or the Registrant as a party and is not based on and does
not result from Service's willful misfeasance, bad faith or negligence
or reckless disregard of duties, and arises out of or in connection
with Service's performance under the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent
contributed to by Service's willful misfeasance, bad faith or
negligence or reckless disregard of duties) which results from the
negligence of the Registrant, or from Service's acting upon any
instruction(s) reasonably believed by it to have been executed or
communicated by any person duly authorized by the Registrant, or as a
result of Service's acting in reliance upon advice reasonably believed
by Service to have been given by counsel for the Registrant, or as a
result of Service's acting in reliance upon any instrument or stock
certificate reasonably believed by it to have been genuine and signed,
countersigned or executed by the proper person.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY (FMR)
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held,
during the past two fiscal years, the following positions of a
substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Board of FMR; President and Chief
Executive Officer of FMR Corp.; Chairman of the
Board and Director of FMR, FMR Corp., FMR Texas
Inc., FMR (U.K.) Inc., and FMR (Far East) Inc.;
Chairman of the Board and Representative Director of
Fidelity Investments Japan Limited; President and
Trustee of funds advised by FMR.
Robert C. Pozen President and Director of FMR; Senior Vice President
and Trustee of funds advised by FMR; President and
Director of FMR Texas Inc., FMR (U.K.) Inc., and
FMR (Far East) Inc.; General Counsel, Managing
Director, and Senior Vice President of FMR Corp.
Peter S. Lynch Vice Chairman of the Board and Director of FMR.
Marta Amieva Vice President of FMR.
John Carlson Vice President of FMR.
Dwight D. Churchill Senior Vice President of FMR.
Barry Coffman Vice President of FMR.
Arieh Coll Vice President of FMR.
Stephen G. Manning Assistant Treasurer of FMR
William Danoff Senior Vice President of FMR and of a fund advised by
FMR.
Scott E. DeSano Vice President of FMR.
Craig P. Dinsell Vice President of FMR.
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
George C. Domolky Vice President of FMR.
Bettina Doulton Vice President of FMR and of funds advised by FMR.
Margaret L. Eagle Vice President of FMR and a fund advised by FMR.
Richard B. Fentin Senior Vice President of FMR and Vice President of a
fund advised by FMR.
Gregory Fraser Vice President of FMR and of a fund advised by FMR.
Jay Freedman Assistant Clerk of FMR; Clerk of FMR Corp., FMR
(U.K.) Inc., and FMR (Far East) Inc.; Secretary of FMR
Texas Inc.
Robert Gervis Vice President of FMR.
David L. Glancy Vice President of FMR and of a fund advised by FMR.
Kevin E. Grant Vice President of FMR and of funds advised by FMR.
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
Boyce I. Greer Senior Vice President of FMR.
Bart A. Grenier Vice President of FMR and of High-Income Funds
advised by FMR.
Robert Haber Vice President of FMR.
Richard C. Habermann Senior Vice President of FMR; Vice President of funds
advised by FMR.
William J. Hayes Senior Vice President of FMR; Vice President of Equity
funds advised by FMR.
Richard Hazlewood Vice President of FMR and of a fund advised by FMR.
Fred L. Henning Jr. Senior Vice President of FMR; Vice President of
Fixed-Income funds advised by FMR.
Bruce Herring Vice President of FMR.
John R. Hickling Vice President of FMR and of a fund advised by FMR.
Robert F. Hill Vice President of FMR; Director of Technical Research.
Curt Hollingsworth Vice President of FMR and of funds advised by FMR.
Abigail P. Johnson Senior Vice President of FMR and of a fund advised by
FMR; Associate Director and Senior Vice President of
Equity funds advised by FMR.
David B. Jones Vice President of FMR.
Steven Kaye Vice President of FMR and of a fund advised by FMR.
Francis V. Knox Vice President of FMR; Compliance Officer of FMR
(U.K.) Inc.
David P. Kurrasch Vice President of FMR.
Robert A. Lawrence Senior Vice President of FMR; Associate Director and
Senior Vice President of Equity funds advised by FMR;
Vice President of High Income funds advised by FMR.
Harris Leviton Vice President of FMR and of a fund advised by FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Mark G. Lohr Vice President of FMR; Treasurer of FMR, FMR (U.K.)
Inc., FMR (Far East) Inc., and FMR Texas Inc.
Arthur S. Loring Senior Vice President, Clerk, and General Counsel of
FMR; Vice President/Legal, and Assistant Clerk of
FMR Corp.; Secretary of funds advised by FMR.
Richard R. Mace Jr. Vice President of FMR and of funds advised by FMR.
Charles Mangum Vice President of FMR.
Kevin McCarey Vice President of FMR.
Diane McLaughlin Vice President of FMR.
Neal P. Miller Vice President of FMR.
Robert H. Morrison Vice President of FMR; Director of Equity Trading.
David L. Murphy Vice President of FMR and of funds advised by FMR.
Scott Orr Vice President of FMR.
Jacques Perold Vice President of FMR.
Anne Punzak Vice President of FMR.
Kenneth A. Rathgeber Vice President of FMR; Treasurer of funds advised by
FMR.
Kennedy P. Richardson Vice President of FMR.
Mark Rzepczynski Vice President of FMR.
Lee H. Sandwen Vice President of FMR.
Patricia A. Satterthwaite Vice President of FMR and of a fund advised by FMR.
Fergus Shiel Vice President of FMR.
Carol Smith-Fachetti Vice President of FMR.
Steven J. Snider Vice President of FMR.
Thomas T. Soviero Vice President of FMR and of a fund advised by FMR.
Richard Spillane Senior Vice President of FMR; Associate Director and
Senior Vice President of Equity funds advised by FMR;
Senior Vice President and Director of Operations and
Compliance of FMR (U.K.) Inc.
Thomas Sprague Vice President of FMR.
Robert E. Stansky Senior Vice President of FMR; Vice President of a fund
advised by FMR.
Scott Stewart Vice President of FMR.
Cythia Straus Vice President of FMR.
Thomas Sweeney Vice President of FMR and of a fund advised by FMR.
Beth F. Terrana Senior Vice President of FMR; Vice President of a fund
advised by FMR.
Yoko Tilley Vice President of FMR.
Joel C. Tillinghast Vice President of FMR and of a fund advised by FMR.
Robert Tuckett Vice President of FMR.
Jennifer Uhrig Vice President of FMR and of funds advised by FMR.
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR.
</TABLE>
(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.)
25 Lovat Lane, London, EC3R 8LL, England
FMR U.K. provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following
positions of a substantial nature during the past two fiscal years.
Edward C. Johnson 3d Chairman of the Board and Director of FMR U.K.,
FMR, FMR Corp., FMR Texas Inc., and FMR (Far
East) Inc.; Chairman of the Executive Committee of
FMR; President and Chief Executive Officer of FMR
Corp.; Chairman of the Board and Representative
Director of Fidelity Investments Japan Limited;
President and Trustee of funds advised by FMR.
Robert C. Pozen President and Director of FMR; Senior Vice President
and Trustee of funds advised by FMR; President and
Director of FMR Texas Inc., FMR (U.K.) Inc., and
FMR (Far East) Inc.; General Counsel, Managing
Director, and Senior Vice President of FMR Corp.
Mark G. Lohr Treasurer of FMR U.K., FMR, FMR (Far East) Inc., and
FMR Texas Inc.; Vice President of FMR.
Stephen G. Manning Assistant Treasurer of FMR U.K., FMR, FMR (Far
East) Inc., and FMR Texas Inc.; Treasurer of FMR
Corp.
Francis V. Knox Compliance Officer of FMR U.K.; Vice President of
FMR.
Jay Freedman Clerk of FMR U.K., FMR (Far East) Inc., and FMR
Corp.; Assistant Clerk of FMR; Secretary of FMR
Texas Inc.
(3) FIDELITY MANAGEMENT & RESEARCH COMPANY (FAR EAST) INC. (FMR FAR
EAST)
Shiroyama JT Mori Bldg., 4-3-1 Toranomon Minato-ku, Tokyo 105,
Japan
FMR Far East provides investment advisory services to Fidelity
Management & Research Company and Fidelity Management Trust Company.
The directors and officers of the Sub-Adviser have held the following
positions of a substantial nature during the past two fiscal years.
Edward C. Johnson 3d Chairman of the Board and Director of FMR Far
East, FMR, FMR Corp., FMR Texas Inc., and
FMR (U.K.) Inc.; Chairman of the Executive
Committee of FMR; President and Chief
Executive Officer of FMR Corp.; Chairman of
the Board and Representative Director of Fidelity
Investments Japan Limited; President and
Trustee of funds advised by FMR.
Robert C. Pozen President and Director of FMR; Senior Vice
President and Trustee of funds advised by FMR;
President and Director of FMR Texas Inc., FMR
(U.K.) Inc., and FMR (Far East) Inc.; General
Counsel, Managing Director, and Senior Vice
President of FMR Corp.
Bill Wilder Vice President of FMR Far East; President and
Representative Director of Fidelity Investments
Japan Limited.
Mark G. Lohr Treasurer of FMR Far East, FMR, FMR (U.K.)
Inc., and FMR Texas Inc.; Vice President of
FMR.
Stephen G. Manning Assistant Treasurer of FMR Far East, FMR,
FMR (U.K.) Inc., and FMR Texas Inc.; Vice
President and Treasurer of FMR Corp.
Jay Freedman Clerk of FMR Far East, FMR (U.K.) Inc., and
FMR Corp.; Assistant Clerk of FMR; Secretary
of FMR Texas Inc.
Robert Auld Vice President of FMR Far East.
(5) FIDELITY INTERNATIONAL INVESTMENT ADVISORS
Pembroke Hall, 42 Crow Lane, Pembroke HM19, Bermuda
The directors and officers of Fidelity International Investment
Advisors (FIIA) have held, during the past two fiscal years, the
following positions of a substantial nature.
Anthony J. Bolton Director of FIIA, FIIA (U.K.) L, FIML (U.K.),
FISL (U.K.), and Fidelity Investments
International.
Charles T. Collis Director of FIIA and numerous other companies
in the Fidelity International Group of Companies
(FIL); Partner in Conyers, Dill & Pearman,
Hamilton, Bermuda.
William R. Ebsworth Director of FIIA and numerous Fidelity
Investment Far East Companies; Vice President
of FMR (Far East) Inc.
Brett P. Goodin Director, Vice President, Secretary and Chief
Legal Officer of many FIL companies.
Simon Haslam Director of FIIA, FISL (U.K.), and FII; Chief
Financial Officer of FIL; Company Secretary of
Fidelity Investments Group of Companies
(U.K.).
K.C. Lee Director of FIIA and Fidelity Investments
Management (Hong Kong) Limited.
Peter Phillips Director of FIIA and Fidelity Investments
Management (Hong Kong) Limited.
Terrence V. Richards Assistant Secretary of FIIA.
David J. Saul President and Director of FIIA; Director of
Fidelity International Limited; and numerous
companies and funds in the FIL group.
(6) FIDELITY INTERNATIONAL INVESTMENT ADVISORS (U.K.) LIMITED
26 Lovat Lane, London, EC3R 8LL, England
The directors and officers of Fidelity International Investment
Advisors (U.K.) Limited (FIIA (U.K.) L) have held, during the past two
fiscal years, the following positions of a substantial nature.
Anthony J. Bolton Director of FIIA (U.K.) L, FIIA, FIML (U.K.),
FISL (U.K.), and Fidelity Investments
International.
Pamela Edwards Director of FIIA (U.K.) L, FISL (U.K.), and FII;
Director of Legal Services for Europe.
Simon Haslam Director of FIIA, FISL (U.K.), and FII; Chief
Financial Officer of FIL (U.K.); Company
Secretary of Fidelity Investments Group of
Companies (U.K.).
Sally Walden Director of FIIA (U.K.) L and FISL (U.K.).
Sally Williams Assistant Company Secretary of Fidelity
International Group of Companies (U.K.).
Emma Barratt Assistant Company Secretary of Fidelity
International Group of Companies (U.K.).
(7) FIDELITY INVESTMENTS JAPAN LIMITED
Shiroyama JT Mori Bldg., 4-3-1 Toranomon Minato-ku, Tokyo 105,
Japan
The directors and officers of Fidelity Investments Japan Limited
(FIJ) have held, during the past two fiscal years, the following
positions of a substantial nature.
Edward C. Johnson 3d Chairman of the Board and Representative
Director of FIJ; Chairman of the Board and
Director of FMR (Far East) Inc., FMR, FMR
Corp., FMR (U.K.) Inc., and FMR Texas Inc.;
Chairman of the Executive Committee of FMR;
President and Chief Executive Officer of FMR
Corp.; President and Trustee of funds advised
by FMR.
Yasuo Kuramoto Vice Chairman, Representative Director of FIJ.
Billy Wilder President and Representative Director of FIJ;
Vice President of FMR (Far East) Inc.
Simon Fraser Director and Chief Investment Officer of FIJ.
Simon Haslam Director of FIJ; Chief Financial Officer of
Fidelity International Limited.
Nobuhide Kamiyama Director and General Manager of Planning and
Marketing of FIJ.
Noboru Kawai Director and General Manager of
Administration of FIJ.
Lawrence Repeta Director and General Manager of Information
Systems and Trading of FIJ.
Hiroshi Yamashita Managing Director and Portfolio Manager of
FIJ.
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for
most funds advised by FMR.
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Michael Mlinac Director None
James Curvey Director None
Martha B. Willis President None
Arthur S. Loring Vice President and Clerk Secretary
Caron Ketchum Treasurer and Controller None
Gary Greenstein Assistant Treasurer None
Jay Freedman Assistant Clerk None
Linda Holland Compliance Officer None
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Company, Inc., 82 Devonshire Street, Boston, MA 02109, or the
funds' respective custodian: The Chase Manhattan Bank, 1 Chase
Manhattan Plaza, New York, N.Y. and Brown Brothers Harriman & Co., 40
Water Street, Boston, MA.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant on behalf of Fidelity Canada Fund, Fidelity
Diversified International Fund, Fidelity Emerging Markets Fund,
Fidelity Europe Fund, Fidelity Europe Capital Appreciation Fund,
Fidelity France Fund, Fidelity Germany Fund, Fidelity Global Bond
Fund, Fidelity Hong Kong and China Fund, Fidelity International Growth
& Income Fund, Fidelity International Value Fund, Fidelity Japan Fund,
Fidelity Japan Small Companies Fund, Fidelity Latin America Fund,
Fidelity New Markets Income Fund, Fidelity Nordic Fund, Fidelity
Overseas Fund, Fidelity Pacific Basin Fund, Fidelity Southeast Asia
Fund, Fidelity United Kingdom Fund, and Fidelity Worldwide Fund,
provided the information required by Item 5A is contained in the
annual report, undertakes to furnish each person to whom a prospectus
has been delivered, upon their request and without charge, a copy of
the Registrant's latest annual report to shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for the effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this Post-Effective Amendment No. 74 to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston, and Commonwealth of
Massachusetts, on the 24th day of December 1997.
FIDELITY INVESTMENT TRUST
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d (dagger) President and Trustee December 24, 1997
Edward C. Johnson 3d (Principal Executive Officer)
/s/Richard A. Silver Treasurer December 24, 1997
Richard A. Silver
/s/Robert C. Pozen Trustee December 24, 1997
Robert C. Pozen
/s/Ralph F. Cox * Trustee December 24, 1997
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee December 24, 1997
Phyllis Burke Davis
/s/Robert M. Gates ** Trustee December 24, 1997
Robert M. Gates
/s/E. Bradley Jones * Trustee December 24, 1997
E. Bradley Jones
/s/Donald J. Kirk * Trustee December 24, 1997
Donald J. Kirk
/s/Peter S. Lynch * Trustee December 24, 1997
Peter S. Lynch
/s/Marvin L. Mann * Trustee December 24, 1997
Marvin L. Mann
/s/William O. McCoy * Trustee December 24, 1997
William O. McCoy
/s/Gerald C. McDonough * Trustee December 24, 1997
Gerald C. McDonough
/s/Thomas R. Williams * Trustee December 24, 1997
Thomas R. Williams
</TABLE>
(dagger) Signatures affixed by Robert C. Pozen pursuant to a power of
attorney dated July 17, 1997 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated December 19, 1996 and filed herewith.
** Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated March 6, 1997 and filed herewith.
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee, or General
Partner, as the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Hereford Street Trust
Fidelity Advisor Series I Fidelity Income Fund
Fidelity Advisor Series II Fidelity Institutional Cash Portfolios
Fidelity Advisor Series III Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series IV Fidelity Investment Trust
Fidelity Advisor Series V Fidelity Magellan Fund
Fidelity Advisor Series VI Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series VII Fidelity Money Market Trust
Fidelity Advisor Series VIII Fidelity Mt. Vernon Street Trust
Fidelity Beacon Street Trust Fidelity Municipal Trust
Fidelity Boston Street Trust Fidelity Municipal Trust II
Fidelity California Municipal Trust Fidelity New York Municipal Trust
Fidelity California Municipal Trust II Fidelity New York Municipal Trust II
Fidelity Capital Trust Fidelity Phillips Street Trust
Fidelity Charles Street Trust Fidelity Puritan Trust
Fidelity Commonwealth Trust Fidelity Revere Street Trust
Fidelity Concord Street Trust Fidelity School Street Trust
Fidelity Congress Street Fund Fidelity Securities Fund
Fidelity Contrafund Fidelity Select Portfolios
Fidelity Corporate Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Court Street Trust Fidelity Summer Street Trust
Fidelity Court Street Trust II Fidelity Trend Fund
Fidelity Covington Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Daily Money Fund Fidelity U.S. Investments-Government Securities
Fidelity Destiny Portfolios Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity Union Street Trust II
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Newbury Street Trust
Fidelity Financial Trust Variable Insurance Products Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund II
Fidelity Government Securities Fund Variable Insurance Products Fund III
Fidelity Hastings Street Trust
</TABLE>
in addition to any other investment company for which Fidelity
Management & Research Company or an affiliate acts as investment
adviser and for which the undersigned individual serves as President
and Director, Trustee, or General Partner (collectively, the "Funds"),
hereby constitute and appoint Robert C. Pozen my true and lawful
attorney-in-fact, with full power of substitution, and with full power
to him to sign for me and in my name in the appropriate capacity, all
Registration Statements of the Funds on Form N-1A, Form N-8A, or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A, Form N-8A, or any successor thereto, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such
things in my name and on my behalf in connection therewith as said
attorney-in-fact deems necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and the Investment Company
Act of 1940, and all related requirements of the Securities and
Exchange Commission. I hereby ratify and confirm all that said
attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof. This power of attorney is effective for all documents
filed on or after August 1, 1997.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d_ July 17, 1997
Edward C. Johnson 3d
POWER OF ATTORNEY
I, the undersigned Director, Trustee, or General Partner, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Government Securities Fund
Fidelity Advisor Annuity Fund Fidelity Hastings Street Trust
Fidelity Advisor Series I Fidelity Hereford Street Trust
Fidelity Advisor Series II Fidelity Income Fund
Fidelity Advisor Series III Fidelity Institutional Cash Portfolios
Fidelity Advisor Series IV Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series V Fidelity Institutional Trust
Fidelity Advisor Series VI Fidelity Investment Trust
Fidelity Advisor Series VII Fidelity Magellan Fund
Fidelity Advisor Series VIII Fidelity Massachusetts Municipal Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust
Fidelity Boston Street Trust Fidelity Mt. Vernon Street Trust
Fidelity California Municipal Trust Fidelity Municipal Trust
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Capital Trust Fidelity New York Municipal Trust
Fidelity Charles Street Trust Fidelity New York Municipal Trust II
Fidelity Commonwealth Trust Fidelity Phillips Street Trust
Fidelity Congress Street Fund Fidelity Puritan Trust
Fidelity Contrafund Fidelity Revere Street Trust
Fidelity Corporate Trust Fidelity School Street Trust
Fidelity Court Street Trust Fidelity Securities Fund
Fidelity Court Street Trust II Fidelity Select Portfolios
Fidelity Covington Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Daily Money Fund Fidelity Summer Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity Trend Fund
Fidelity Destiny Portfolios Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity U.S. Investments-Government Securities
Portfolio, L.P. Fund, L.P.
Fidelity Devonshire Trust Fidelity Union Street Trust
Fidelity Exchange Fund Fidelity Union Street Trust II
Fidelity Financial Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Variable Insurance Products Fund II
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Director, Trustee, or
General Partner (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to
sign for me and in my name in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in my name
and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after March 1,
1997.
WITNESS my hand on the date set forth below.
/s/Robert M. Gates March 6, 1997
Robert M. Gates
POWER OF ATTORNEY
We, the undersigned Directors, Trustees, or General Partners, as the
case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Government Securities Fund
Fidelity Advisor Annuity Fund Fidelity Hastings Street Trust
Fidelity Advisor Series I Fidelity Hereford Street Trust
Fidelity Advisor Series II Fidelity Income Fund
Fidelity Advisor Series III Fidelity Institutional Cash Portfolios
Fidelity Advisor Series IV Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series V Fidelity Institutional Trust
Fidelity Advisor Series VI Fidelity Investment Trust
Fidelity Advisor Series VII Fidelity Magellan Fund
Fidelity Advisor Series VIII Fidelity Massachusetts Municipal Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust
Fidelity Boston Street Trust Fidelity Mt. Vernon Street Trust
Fidelity California Municipal Trust Fidelity Municipal Trust
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Capital Trust Fidelity New York Municipal Trust
Fidelity Charles Street Trust Fidelity New York Municipal Trust II
Fidelity Commonwealth Trust Fidelity Phillips Street Trust
Fidelity Congress Street Fund Fidelity Puritan Trust
Fidelity Contrafund Fidelity Revere Street Trust
Fidelity Corporate Trust Fidelity School Street Trust
Fidelity Court Street Trust Fidelity Securities Fund
Fidelity Court Street Trust II Fidelity Select Portfolios
Fidelity Covington Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Daily Money Fund Fidelity Summer Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity Trend Fund
Fidelity Destiny Portfolios Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity U.S. Investments-Government Securities
Portfolio, L.P. Fund, L.P.
Fidelity Devonshire Trust Fidelity Union Street Trust
Fidelity Exchange Fund Fidelity Union Street Trust II
Fidelity Financial Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Variable Insurance Products Fund II
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Directors, Trustees, or
General Partners (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, our true and lawful attorneys-in-fact,
with full power of substitution, and with full power to each of them,
to sign for us and in our names in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in our names
and behalf in connection therewith as said attorneys-in-fact deems
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after January
1, 1997.
WITNESS our hands on this nineteenth day of December, 1996.
/s/Edward C. Johnson 3d___________ /s/Peter S. Lynch________________
Edward C. Johnson 3d Peter S. Lynch
/s/J. Gary Burkhead_______________ /s/William O. McCoy______________
J. Gary Burkhead William O. McCoy
/s/Ralph F. Cox __________________ /s/Gerald C. McDonough___________
Ralph F. Cox Gerald C. McDonough
/s/Phyllis Burke Davis_____________ /s/Marvin L. Mann________________
Phyllis Burke Davis Marvin L. Mann
/s/E. Bradley Jones________________ /s/Thomas R. Williams ____________
E. Bradley Jones Thomas R. Williams
/s/Donald J. Kirk __________________
Donald J. Kirk
POWER OF ATTORNEY
I, the undersigned Secretary of the investment companies for which
Fidelity Management & Research Company or an affiliate acts as
investment adviser (collectively, the "Funds"), hereby severally
constitute and appoint Arthur J. Brown, Arthur C. Delibert, Stephanie
A. Djinis, Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips,
and Dana L. Platt, each of them singly, my true and lawful
attorneys-in-fact, with full power of substitution, and with full
power to each of them, to sign for me and in my name in the
appropriate capacity, any and all representations with respect to the
consistency of foreign language translation prospectuses with the
original prospectuses filed in connection with the Post-Effective
Amendments for the Funds as said attorneys-in-fact deem necessary or
appropriate to comply with the provisions of the Securities Act of
1933 and the Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission. I hereby
ratify and confirm all that said attorneys-in-fact, or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after January
1, 1997.
WITNESS my hand on this nineteenth day of December, 1996.
/s/Arthur S. Loring
Arthur S. Loring
SUB-ADVISORY AGREEMENT
between
FIDELITY INVESTMENTS JAPAN LIMITED
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
and
FIDELITY INVESTMENT TRUST ON BEHALF OF
FIDELITY DIVERSIFIED INTERNATIONAL FUND
AGREEMENT made this 1st day of October, 1997, by and between Fidelity
Management & Research Company, a Massachusetts corporation with
principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); Fidelity Investments Japan
Limited, a Japanese company with principal offices at Shiroyama JT
Mori Building, 19th Floor, 3-1 Toranomon 4-chome, Minato-ku, Tokyo
105, Japan (hereinafter called the "Sub-Advisor"); and Fidelity
Investment Trust, a Massachusetts business trust which may issue one
or more series of shares of beneficial interest (hereinafter called
the "Trust") on behalf of Fidelity Diversified International Fund
(hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of the Portfolio, pursuant to which the Advisor is
to act as investment manager of the Portfolio; and
WHEREAS the Sub-Advisor has been formed in part for the purpose of
researching and compiling information and recommendations with respect
to the economies of various countries, and securities of issuers
located in such countries, and providing investment advisory services
in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Trust, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the
Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and the Advisor with respect to all or a portion of the
investments of the Portfolio, and in connection with such advice shall
furnish the Portfolio and the Advisor such factual information,
research reports and investment recommendations as the Advisor may
reasonably require. Such information may include written and oral
reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940
(the"1940 Act") and rules thereunder, as amended from time to time,
and such other limitations as the Trust or Advisor may impose with
respect to the Portfolio by notice to the Sub-Advisor. With respect
to the portion of the investments of the Portfolio under its
management, the Sub-Advisor is authorized to make investment decisions
on behalf of the Portfolio with regard to any stock, bond, other
security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as
the Sub-Advisor may select. The Sub-Advisor may also be authorized,
but only to the extent such duties are delegated in writing by the
Advisor, to provide additional investment management services to the
Portfolio, including but not limited to services such as managing
foreign currency investments, purchasing and selling or writing
futures and options contracts, borrowing money, or lending securities
on behalf of the Portfolio. All investment management and any other
activities of the Sub-Advisor shall at all times be subject to the
control and direction of the Advisor and the Trust's Board of
Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on
the following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to: (i) 30% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is
obligated to pay the Advisor under its Management Contract with the
Advisor, multiplied by (ii) the fraction equal to the net assets of
the Portfolio as to which the Sub-Advisor shall have provided
investment advice divided by the net assets of the Portfolio for that
month. The Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from
time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefor; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers,
and shareholders of the Trust are or may be or become interested in
the Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Trust,
and that the Advisor or the Sub-Advisor may be or become interested in
the Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations hereunder. The Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor or
the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder
of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio
by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly
put on notice of the limitation of shareholder liability as set forth
in the Declaration of Trust or other organizational document of the
Trust and agrees that any obligations of the Trust or the Portfolio
arising in connection with this Agreement shall be limited in all
cases to the Portfolio and its assets, and the Sub-Advisor shall not
seek satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Advisor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee.
11. Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Massachusetts, without giving effect to the choice of laws provisions
thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, all as of the date written above.
FIDELITY INVESTMENTS JAPAN LIMITED
BY: /s/ Billy Wilder
Billy Wilder
President
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: /s/ Robert C. Pozen
Robert C. Pozen
President
INVESTMENT TRUST
on behalf of Fidelity Diversified International Fund
BY: /s/ Robert C. Pozen
Robert C. Pozen
Senior Vice President
SUB-ADVISORY AGREEMENT
between
FIDELITY INVESTMENTS JAPAN LIMITED
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
and
FIDELITY INVESTMENT TRUST ON BEHALF OF
FIDELITY INTERNATIONAL GROWTH & INCOME FUND
AGREEMENT made this 1st day of October, 1997, by and between Fidelity
Management & Research Company, a Massachusetts corporation with
principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); Fidelity Investments Japan
Limited, a Japanese company with principal offices at Shiroyama JT
Mori Building, 19th Floor, 3-1 Toranomon 4-chome, Minato-ku, Tokyo
105, Japan (hereinafter called the "Sub-Advisor"); and Fidelity
Investment Trust, a Massachusetts business trust which may issue one
or more series of shares of beneficial interest (hereinafter called
the "Trust") on behalf of Fidelity International Growth & Income Fund
(hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of the Portfolio, pursuant to which the Advisor is
to act as investment manager of the Portfolio; and
WHEREAS the Sub-Advisor has been formed in part for the purpose of
researching and compiling information and recommendations with respect
to the economies of various countries, and securities of issuers
located in such countries, and providing investment advisory services
in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Trust, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor,
the Sub-Advisor shall provide investment advice to the Portfolio and
the Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the
Portfolio and the Advisor such factual information, research reports
and investment recommendations as the Advisor may reasonably require.
Such information may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940
(the"1940 Act") and rules thereunder, as amended from time to time,
and such other limitations as the Trust or Advisor may impose with
respect to the Portfolio by notice to the Sub-Advisor. With respect to
the portion of the investments of the Portfolio under its management,
the Sub-Advisor is authorized to make investment decisions on behalf
of the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor may also be authorized, but only to the extent
such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction
of the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph
(a) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be
equal to: (i) 30% of the monthly management fee rate (including
performance adjustments, if any) that the Portfolio is obligated to
pay the Advisor under its Management Contract with the Advisor,
multiplied by (ii) the fraction equal to the net assets of the
Portfolio as to which the Sub-Advisor shall have provided investment
advice divided by the net assets of the Portfolio for that month. The
Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from
time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefor; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the
Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Trust,
and that the Advisor or the Sub-Advisor may be or become interested in
the Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations hereunder. The Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor or
the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder
of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio
by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put
on notice of the limitation of shareholder liability as set forth in
the Declaration of Trust or other organizational document of the Trust
and agrees that any obligations of the Trust or the Portfolio arising
in connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Advisor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts,
without giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, all as of the date written above.
FIDELITY INVESTMENTS JAPAN LIMITED
BY: /s/ Billy Wilder
Billy Wilder
President
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: /s/ Robert C. Pozen
Robert C. Pozen
President
FIDELITY INVESTMENT TRUST
on behalf of Fidelity International Growth & Income Fund
BY: /s/ Robert C. Pozen
Robert C. Pozen
Senior Vice President
SUB-ADVISORY AGREEMENT
between
FIDELITY INVESTMENTS JAPAN LIMITED
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
and
FIDELITY INVESTMENT TRUST ON BEHALF OF
FIDELITY OVERSEAS FUND
AGREEMENT made this 1st day of October, 1997, by and between Fidelity
Management & Research Company, a Massachusetts corporation with
principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); Fidelity Investments Japan
Limited, a Japanese company with principal offices at Shiroyama JT
Mori Building, 19th Floor, 3-1 Toranomon 4-chome, Minato-ku, Tokyo
105, Japan (hereinafter called the "Sub-Advisor"); and Fidelity
Investment Trust, a Massachusetts business trust which may issue one
or more series of shares of beneficial interest (hereinafter called
the "Trust") on behalf of Fidelity Overseas Fund (hereinafter called
the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of the Portfolio, pursuant to which the Advisor is
to act as investment manager of the Portfolio; and
WHEREAS the Sub-Advisor has been formed in part for the purpose of
researching and compiling information and recommendations with respect
to the economies of various countries, and securities of issuers
located in such countries, and providing investment advisory services
in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Trust, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor,
the Sub-Advisor shall provide investment advice to the Portfolio and
the Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the
Portfolio and the Advisor such factual information, research reports
and investment recommendations as the Advisor may reasonably require.
Such information may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940
(the"1940 Act") and rules thereunder, as amended from time to time,
and such other limitations as the Trust or Advisor may impose with
respect to the Portfolio by notice to the Sub-Advisor. With respect to
the portion of the investments of the Portfolio under its management,
the Sub-Advisor is authorized to make investment decisions on behalf
of the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor may also be authorized, but only to the extent
such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction
of the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph
(a) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be
equal to: (i) 30% of the monthly management fee rate (including
performance adjustments, if any) that the Portfolio is obligated to
pay the Advisor under its Management Contract with the Advisor,
multiplied by (ii) the fraction equal to the net assets of the
Portfolio as to which the Sub-Advisor shall have provided investment
advice divided by the net assets of the Portfolio for that month. The
Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from
time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefor; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the
Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Trust,
and that the Advisor or the Sub-Advisor may be or become interested in
the Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations hereunder. The Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor or
the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder
of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio
by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put
on notice of the limitation of shareholder liability as set forth in
the Declaration of Trust or other organizational document of the Trust
and agrees that any obligations of the Trust or the Portfolio arising
in connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Advisor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts,
without giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, all as of the date written above.
FIDELITY INVESTMENTS JAPAN LIMITED
BY: /s/ Billy Wilder
Billy Wilder
President
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: /s/ Robert C. Pozen
Robert C. Pozen
President
FIDELITY INVESTMENT TRUST
on behalf of Fidelity Overseas Fund
BY: /s/ Robert C. Pozen
Robert C. Pozen
Senior Vice President
SUB-ADVISORY AGREEMENT
between
FIDELITY INVESTMENTS JAPAN LIMITED
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
and
FIDELITY INVESTMENT TRUST ON BEHALF OF
FIDELITY WORLDWIDE FUND
AGREEMENT made this 1st day of October, 1997, by and between Fidelity
Management & Research Company, a Massachusetts corporation with
principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); Fidelity Investments Japan
Limited, a Japanese company with principal offices at Shiroyama JT
Mori Building, 19th Floor, 3-1 Toranomon 4-chome, Minato-ku, Tokyo
105, Japan (hereinafter called the "Sub-Advisor"); and Fidelity
Investment Trust, a Massachusetts business trust which may issue one
or more series of shares of beneficial interest (hereinafter called
the "Trust") on behalf of Fidelity Worldwide Fund (hereinafter called
the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of the Portfolio, pursuant to which the Advisor is
to act as investment manager of the Portfolio; and
WHEREAS the Sub-Advisor has been formed in part for the purpose of
researching and compiling information and recommendations with respect
to the economies of various countries, and securities of issuers
located in such countries, and providing investment advisory services
in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Trust, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor,
the Sub-Advisor shall provide investment advice to the Portfolio and
the Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the
Portfolio and the Advisor such factual information, research reports
and investment recommendations as the Advisor may reasonably require.
Such information may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940
(the"1940 Act") and rules thereunder, as amended from time to time,
and such other limitations as the Trust or Advisor may impose with
respect to the Portfolio by notice to the Sub-Advisor. With respect to
the portion of the investments of the Portfolio under its management,
the Sub-Advisor is authorized to make investment decisions on behalf
of the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor may also be authorized, but only to the extent
such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction
of the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph
(a) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be
equal to: (i) 30% of the monthly management fee rate (including
performance adjustments, if any) that the Portfolio is obligated to
pay the Advisor under its Management Contract with the Advisor,
multiplied by (ii) the fraction equal to the net assets of the
Portfolio as to which the Sub-Advisor shall have provided investment
advice divided by the net assets of the Portfolio for that month. The
Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from
time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefor; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the
Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Trust,
and that the Advisor or the Sub-Advisor may be or become interested in
the Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations hereunder. The Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor or
the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder
of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio
by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put
on notice of the limitation of shareholder liability as set forth in
the Declaration of Trust or other organizational document of the Trust
and agrees that any obligations of the Trust or the Portfolio arising
in connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Advisor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts,
without giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, all as of the date written above.
FIDELITY INVESTMENTS JAPAN LIMITED
BY: /s/ Billy Wilder
Billy Wilder
President
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: /s/ Robert C. Pozen
Robert C. Pozen
President
FIDELITY INVESTMENT TRUST
on behalf of Fidelity Worldwide Fund
BY: /s/ Robert C. Pozen
Robert C. Pozen
Senior Vice President
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY INVESTMENTS JAPAN LIMITED
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY INVESTMENT TRUST ON BEHALF OF
FIDELITY PACIFIC BASIN FUND
AGREEMENT made this 1st day of October, 1997, by and between Fidelity
Management & Research Company, a Massachusetts corporation with
principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); Fidelity Investments Japan
Limited, a Japanese company with principal offices at Shiroyama JT
Mori Bldg., 4-3-1 Toranomon, Minato-ku, Tokyo 105, Japan (hereinafter
called the "Sub-Advisor"); and Fidelity Investment Trust, a
Massachusetts business trust which may issue one or more series of
shares of beneficial interest (hereinafter called the "Trust") on
behalf of Fidelity Pacific Basin Fund (hereinafter called the
"Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of the Portfolio, pursuant to which the Advisor is
to act as investment manager of the Portfolio; and
WHEREAS the Sub-Advisor has been formed in part for the purpose of
researching and compiling information and recommendations with respect
to the economies of various countries, and securities of issuers
located in such countries, and providing investment advisory services
in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Trust, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the
Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and the Advisor with respect to all or a portion of the
investments of the Portfolio, and in connection with such advice shall
furnish the Portfolio and the Advisor such factual information,
research reports and investment recommendations as the Advisor may
reasonably require. Such information may include written and oral
reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940
(the"1940 Act") and rules thereunder, as amended from time to time,
and such other limitations as the Trust or Advisor may impose with
respect to the Portfolio by notice to the Sub-Advisor. With respect to
the portion of the investments of the Portfolio under its management,
the Sub-Advisor is authorized to make investment decisions on behalf
of the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor may also be authorized, but only to the extent
such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction
of the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to: (i) 30% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is
obligated to pay the Advisor under its Management Contract with the
Advisor, multiplied by (ii) the fraction equal to the net assets of
the Portfolio as to which the Sub-Advisor shall have provided
investment advice divided by the net assets of the Portfolio for that
month. The Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from
time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefor; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the
Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Trust,
and that the Advisor or the Sub-Advisor may be or become interested in
the Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations hereunder. The Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor or
the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder
of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio
by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put
on notice of the limitation of shareholder liability as set forth in
the Declaration of Trust or other organizational document of the Trust
and agrees that any obligations of the Trust or the Portfolio arising
in connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Advisor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts,
without giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, all as of the date written above.
FIDELITY INVESTMENTS JAPAN LIMITED
BY: /s/ Billy Wilder
President
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: /s/Robert C. Pozen
President
FIDELITY INVESTMENT TRUST
on behalf of Fidelity Pacific Basin Fund
BY: /s/Robert C. Pozen
Senior Vice President
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY INVESTMENTS JAPAN LIMITED
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY INVESTMENT TRUST ON BEHALF OF
FIDELITY EMERGING MARKETS FUND
AGREEMENT made this 1st day of October, 1997, by and between Fidelity
Management & Research Company, a Massachusetts corporation with
principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); Fidelity Investments Japan
Limited, a Japanese company with principal offices at Shiroyama JT
Mori Bldg., 4-3-1 Toranomon, Minato-ku, Tokyo 105, Japan (hereinafter
called the "Sub-Advisor"); and Fidelity Investment Trust, a
Massachusetts business trust which may issue one or more series of
shares of beneficial interest (hereinafter called the "Trust") on
behalf of Fidelity Emerging Markets Fund (hereinafter called the
"Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of the Portfolio, pursuant to which the Advisor is
to act as investment manager of the Portfolio; and
WHEREAS the Sub-Advisor has been formed in part for the purpose of
researching and compiling information and recommendations with respect
to the economies of various countries, and securities of issuers
located in such countries, and providing investment advisory services
in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Trust, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the
Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and the Advisor with respect to all or a portion of the
investments of the Portfolio, and in connection with such advice shall
furnish the Portfolio and the Advisor such factual information,
research reports and investment recommendations as the Advisor may
reasonably require. Such information may include written and oral
reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940
(the"1940 Act") and rules thereunder, as amended from time to time,
and such other limitations as the Trust or Advisor may impose with
respect to the Portfolio by notice to the Sub-Advisor. With respect to
the portion of the investments of the Portfolio under its management,
the Sub-Advisor is authorized to make investment decisions on behalf
of the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor may also be authorized, but only to the extent
such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction
of the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to: (i) 30% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is
obligated to pay the Advisor under its Management Contract with the
Advisor, multiplied by (ii) the fraction equal to the net assets of
the Portfolio as to which the Sub-Advisor shall have provided
investment advice divided by the net assets of the Portfolio for that
month. The Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from
time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefor; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the
Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Trust,
and that the Advisor or the Sub-Advisor may be or become interested in
the Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations hereunder. The Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor or
the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder
of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio
by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put
on notice of the limitation of shareholder liability as set forth in
the Declaration of Trust or other organizational document of the Trust
and agrees that any obligations of the Trust or the Portfolio arising
in connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Advisor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts,
without giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, all as of the date written above.
FIDELITY INVESTMENTS JAPAN LIMITED
BY: /s/Billy Wilder
President
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: /s/Robert C. Pozen
President
FIDELITY INVESTMENT TRUST
on behalf of Fidelity Emerging Markets Fund
BY: /s/Robert C. Pozen
Senior Vice President
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY INVESTMENTS JAPAN LIMITED
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY INVESTMENT TRUST ON BEHALF OF
FIDELITY GLOBAL BOND FUND
AGREEMENT made this 1st day of October, 1997, by and between Fidelity
Management & Research Company, a Massachusetts corporation with
principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); Fidelity Investments Japan
Limited, a Japanese company with principal offices at Shiroyama JT
Mori Bldg., 4-3-1 Toranomon, Minato-ku, Tokyo 105, Japan (hereinafter
called the "Sub-Advisor"); and Fidelity Investment Trust, a
Massachusetts business trust which may issue one or more series of
shares of beneficial interest (hereinafter called the "Trust") on
behalf of Fidelity Global Bond Fund (hereinafter called the
"Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of the Portfolio, pursuant to which the Advisor is
to act as investment manager of the Portfolio; and
WHEREAS the Sub-Advisor has been formed in part for the purpose of
researching and compiling information and recommendations with respect
to the economies of various countries, and securities of issuers
located in such countries, and providing investment advisory services
in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Trust, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the
Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and the Advisor with respect to all or a portion of the
investments of the Portfolio, and in connection with such advice shall
furnish the Portfolio and the Advisor such factual information,
research reports and investment recommendations as the Advisor may
reasonably require. Such information may include written and oral
reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940
(the"1940 Act") and rules thereunder, as amended from time to time,
and such other limitations as the Trust or Advisor may impose with
respect to the Portfolio by notice to the Sub-Advisor. With respect to
the portion of the investments of the Portfolio under its management,
the Sub-Advisor is authorized to make investment decisions on behalf
of the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor may also be authorized, but only to the extent
such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction
of the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to: (i) 30% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is
obligated to pay the Advisor under its Management Contract with the
Advisor, multiplied by (ii) the fraction equal to the net assets of
the Portfolio as to which the Sub-Advisor shall have provided
investment advice divided by the net assets of the Portfolio for that
month. The Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from
time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefor; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the
Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Trust,
and that the Advisor or the Sub-Advisor may be or become interested in
the Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations hereunder. The Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor or
the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder
of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio
by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put
on notice of the limitation of shareholder liability as set forth in
the Declaration of Trust or other organizational document of the Trust
and agrees that any obligations of the Trust or the Portfolio arising
in connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Advisor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts,
without giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, all as of the date written above.
FIDELITY INVESTMENTS JAPAN LIMITED
BY: /s/Billy Wilder
President
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: /s/Robert C. Pozen
President
FIDELITY INVESTMENT TRUST
on behalf of Fidelity Global Bond Fund
BY: /s/Robert C. Pozen
Senior Vice President
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the
Prospectuses and Statements of Additional Information constituting
part of Post-Effective Amendment No. 74 to the Registration Statement
on Form N-1A of Fidelity Investment Trust: Fidelity Canada Fund,
Fidelity Diversified International Fund, Fidelity Emerging Markets
Funds, Fidelity Europe Fund, Fidelity International Growth & Income
Fund, Fidelity International Value Fund, Fidelity Japan Fund, Fidelity
Overseas Fund, Fidelity Pacific Basin Fund, and Fidelity Worldwide
Fund, of our reports dated December 16, 1997 on the financial
statements and financial highlights included in the October 31, 1997
Annual Reports to Shareholders of the aforementioned funds.
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectuses and "Auditor" in the
Statements of Additional Information.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 24, 1997
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the
Prospectus and Statement of Additional Information constituting part
of Post-Effective Amendment No. 74 to the Registration Statement on
Form N-1A of Fidelity Investment Trust: Fidelity Europe Capital
Appreciation Fund, Fidelity France Fund, Fidelity Germany Fund,
Fidelity Hong Kong and China Fund, Fidelity Japan Small Companies
Fund, Fidelity Latin America Fund, Fidelity Nordic Fund, Fidelity
Southeast Asia Fund, and Fidelity United Kingdom Fund, of our report
dated December 18, 1997 on the financial statements and financial
highlights included in the October 31, 1997 Annual Report to
Shareholders of the aforementioned funds.
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectus and "Auditor" in the
Statement of Additional Information.
/s/PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
December 18, 1997
[ARTICLE] 6
[CIK] 0000744822
[NAME] Fidelity Investment Trust
[SERIES]
[NUMBER] 11
[NAME] Fidelity Overseas Fund
[MULTIPLIER] 1,000
<TABLE>
<S>
<C>
[PERIOD-TYPE] year
[FISCAL-YEAR-END] oct-31-1997
[PERIOD-END] oct-31-1997
[INVESTMENTS-AT-COST] 3,258,631
[INVESTMENTS-AT-VALUE] 3,754,218
[RECEIVABLES] 140,349
[ASSETS-OTHER] 1,744
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 3,896,311
[PAYABLE-FOR-SECURITIES] 64,838
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 54,021
[TOTAL-LIABILITIES] 118,859
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 2,996,113
[SHARES-COMMON-STOCK] 110,720
[SHARES-COMMON-PRIOR] 100,205
[ACCUMULATED-NII-CURRENT] 41,157
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 246,303
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 493,879
[NET-ASSETS] 3,777,452
[DIVIDEND-INCOME] 75,068
[INTEREST-INCOME] 21,652
[OTHER-INCOME] (8,109)
[EXPENSES-NET] 43,002
[NET-INVESTMENT-INCOME] 45,609
[REALIZED-GAINS-CURRENT] 255,298
[APPREC-INCREASE-CURRENT] 239,293
[NET-CHANGE-FROM-OPS] 540,200
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 36,607
[DISTRIBUTIONS-OF-GAINS] 161,279
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 132,728
[NUMBER-OF-SHARES-REDEEMED] 128,556
[SHARES-REINVESTED] 6,343
[NET-CHANGE-IN-ASSETS] 662,827
[ACCUMULATED-NII-PRIOR] 35,462
[ACCUMULATED-GAINS-PRIOR] 205,444
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 29,985
[INTEREST-EXPENSE] 1
[GROSS-EXPENSE] 43,802
[AVERAGE-NET-ASSETS] 3,574,283
[PER-SHARE-NAV-BEGIN] 31.080
[PER-SHARE-NII] .430
[PER-SHARE-GAIN-APPREC] 4.610
[PER-SHARE-DIVIDEND] .370
[PER-SHARE-DISTRIBUTIONS] 1.630
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 34.120
[EXPENSE-RATIO] 123
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000744822
<NAME> Fidelity Investment Trust
<SERIES>
<NUMBER> 21
<NAME> Fidelity Europe Fund
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> year
<FISCAL-YEAR-END> oct-31-1997
<PERIOD-END> oct-31-1997
<INVESTMENTS-AT-COST> 651,002
<INVESTMENTS-AT-VALUE> 895,539
<RECEIVABLES> 25,086
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 920,625
<PAYABLE-FOR-SECURITIES> 991
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,526
<TOTAL-LIABILITIES> 4,517
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 579,544
<SHARES-COMMON-STOCK> 29,501
<SHARES-COMMON-PRIOR> 25,511
<ACCUMULATED-NII-CURRENT> 12,951
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 79,010
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 244,603
<NET-ASSETS> 916,108
<DIVIDEND-INCOME> 25,725
<INTEREST-INCOME> 1,380
<OTHER-INCOME> (3,335)
<EXPENSES-NET> 10,365
<NET-INVESTMENT-INCOME> 13,405
<REALIZED-GAINS-CURRENT> 79,961
<APPREC-INCREASE-CURRENT> 86,807
<NET-CHANGE-FROM-OPS> 180,173
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,428
<DISTRIBUTIONS-OF-GAINS> 46,295
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,685
<NUMBER-OF-SHARES-REDEEMED> 10,730
<SHARES-REINVESTED> 2,034
<NET-CHANGE-IN-ASSETS> 224,346
<ACCUMULATED-NII-PRIOR> 6,366
<ACCUMULATED-GAINS-PRIOR> 50,963
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,863
<INTEREST-EXPENSE> 15
<GROSS-EXPENSE> 10,419
<AVERAGE-NET-ASSETS> 874,766
<PER-SHARE-NAV-BEGIN> 27.120
<PER-SHARE-NII> .440
<PER-SHARE-GAIN-APPREC> 5.440
<PER-SHARE-DIVIDEND> .240
<PER-SHARE-DISTRIBUTIONS> 1.730
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 31.050
<EXPENSE-RATIO> 119
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000744822
<NAME> Fidelity Investment Trust
<SERIES>
<NUMBER> 31
<NAME> Fidelity Pacific Basin Fund
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> year
<FISCAL-YEAR-END> oct-31-1997
<PERIOD-END> oct-31-1997
<INVESTMENTS-AT-COST> 241,934
<INVESTMENTS-AT-VALUE> 239,841
<RECEIVABLES> 5,187
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 245,028
<PAYABLE-FOR-SECURITIES> 3,059
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,452
<TOTAL-LIABILITIES> 5,511
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 304,984
<SHARES-COMMON-STOCK> 17,867
<SHARES-COMMON-PRIOR> 39,062
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 336
<ACCUMULATED-NET-GAINS> (62,737)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2,394)
<NET-ASSETS> 239,517
<DIVIDEND-INCOME> 4,224
<INTEREST-INCOME> 566
<OTHER-INCOME> (371)
<EXPENSES-NET> 4,543
<NET-INVESTMENT-INCOME> (124)
<REALIZED-GAINS-CURRENT> (32,319)
<APPREC-INCREASE-CURRENT> 9,562
<NET-CHANGE-FROM-OPS> (22,881)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,524
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,377
<NUMBER-OF-SHARES-REDEEMED> 27,740
<SHARES-REINVESTED> 169
<NET-CHANGE-IN-ASSETS> (332,632)
<ACCUMULATED-NII-PRIOR> 364
<ACCUMULATED-GAINS-PRIOR> (28,469)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,425
<INTEREST-EXPENSE> 14
<GROSS-EXPENSE> 4,603
<AVERAGE-NET-ASSETS> 347,505
<PER-SHARE-NAV-BEGIN> 14.650
<PER-SHARE-NII> (.010)
<PER-SHARE-GAIN-APPREC> (1.160)
<PER-SHARE-DIVIDEND> .080
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.410
<EXPENSE-RATIO> 132
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000744822
<NAME> Fidelity Investment Trust
<SERIES>
<NUMBER> 51
<NAME> Fidelity International Growth & Income Fund
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> year
<FISCAL-YEAR-END> oct-31-1997
<PERIOD-END> oct-31-1997
<INVESTMENTS-AT-COST> 946,702
<INVESTMENTS-AT-VALUE> 1,042,053
<RECEIVABLES> 37,369
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,079,422
<PAYABLE-FOR-SECURITIES> 1,954
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,299
<TOTAL-LIABILITIES> 12,253
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 877,206
<SHARES-COMMON-STOCK> 51,120
<SHARES-COMMON-PRIOR> 52,749
<ACCUMULATED-NII-CURRENT> 22,267
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 72,251
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 95,445
<NET-ASSETS> 1,067,169
<DIVIDEND-INCOME> 20,074
<INTEREST-INCOME> 19,912
<OTHER-INCOME> (2,023)
<EXPENSES-NET> 12,545
<NET-INVESTMENT-INCOME> 25,418
<REALIZED-GAINS-CURRENT> 73,244
<APPREC-INCREASE-CURRENT> 33,690
<NET-CHANGE-FROM-OPS> 132,352
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 15,358
<DISTRIBUTIONS-OF-GAINS> 19,594
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 70,794
<NUMBER-OF-SHARES-REDEEMED> 74,211
<SHARES-REINVESTED> 1,787
<NET-CHANGE-IN-ASSETS> 60,093
<ACCUMULATED-NII-PRIOR> 21,693
<ACCUMULATED-GAINS-PRIOR> 33,340
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,153
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,752
<AVERAGE-NET-ASSETS> 1,090,095
<PER-SHARE-NAV-BEGIN> 19.090
<PER-SHARE-NII> .480
<PER-SHARE-GAIN-APPREC> 1.970
<PER-SHARE-DIVIDEND> .290
<PER-SHARE-DISTRIBUTIONS> .370
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.880
<EXPENSE-RATIO> 117
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000744822
<NAME> Fidelity Investment Trust
<SERIES>
<NUMBER> 71
<NAME> Fidelity Canada Fund
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> year
<FISCAL-YEAR-END> oct-31-1997
<PERIOD-END> oct-31-1997
<INVESTMENTS-AT-COST> 89,461
<INVESTMENTS-AT-VALUE> 97,242
<RECEIVABLES> 2,871
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 100,113
<PAYABLE-FOR-SECURITIES> 3,044
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 611
<TOTAL-LIABILITIES> 3,655
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 75,593
<SHARES-COMMON-STOCK> 5,110
<SHARES-COMMON-PRIOR> 5,937
<ACCUMULATED-NII-CURRENT> 323
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,764
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,778
<NET-ASSETS> 96,458
<DIVIDEND-INCOME> 1,091
<INTEREST-INCOME> 431
<OTHER-INCOME> (116)
<EXPENSES-NET> 1,178
<NET-INVESTMENT-INCOME> 228
<REALIZED-GAINS-CURRENT> 13,786
<APPREC-INCREASE-CURRENT> (5,364)
<NET-CHANGE-FROM-OPS> 8,650
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 783
<DISTRIBUTIONS-OF-GAINS> 26,589
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,742
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<SHARES-REINVESTED> 1,541
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<NAME> Fidelity Investment Trust
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<NAME> Fidelity Investment Trust
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<NAME> Fidelity Japan Fund
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<NAME> Fidelity Investment Trust
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<NAME> Fidelity Latin America Fund
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<NAME> Fidelity Investment Trust
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<NAME> Fidelity Southeast Asia Fund
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<NAME> Fidelity Investment Trust
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<NAME> Fidelity Europe Capital Appreciation Fund
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<NAME> Fidelity Investment Trust
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<NAME> Fidelity International Value Fund
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<NAME> Fidelity Investment Trust
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<NAME> Fidelity France Fund
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