(2_FIDELITY_LOGOS)FIDELITY'S
BROADLY DIVERSIFIED INTERNATIONAL EQUITY
FUNDS
FIDELITY INTERNATIONAL GROWTH & INCOME FUND
FIDELITY DIVERSIFIED INTERNATIONAL FUND
FIDELITY INTERNATIONAL VALUE FUND
FIDELITY OVERSEAS FUND
FIDELITY WORLDWIDE FUND
SEMIANNUAL REPORT
APRIL 30, 1997
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
MARKET RECAP 3 A REVIEW OF WHAT HAPPENED IN WORLD MARKETS
DURING THE LAST SIX MONTHS.
INTERNATIONAL GROWTH & INCOME FUND 4 PERFORMANCE
5 FUND TALK: THE MANAGER'S OVERVIEW
7 INVESTMENT CHANGES
8 INVESTMENTS
14 FINANCIAL STATEMENTS
DIVERSIFIED INTERNATIONAL FUND 16 PERFORMANCE
17 FUND TALK: THE MANAGER'S OVERVIEW
19 INVESTMENT CHANGES
20 INVESTMENTS
26 FINANCIAL STATEMENTS
INTERNATIONAL VALUE FUND 28 PERFORMANCE
29 FUND TALK: THE MANAGER'S OVERVIEW
31 INVESTMENT CHANGES
32 INVESTMENTS
37 FINANCIAL STATEMENTS
OVERSEAS FUND 39 PERFORMANCE
40 FUND TALK: THE MANAGER'S OVERVIEW
42 INVESTMENT CHANGES
43 INVESTMENTS
48 FINANCIAL STATEMENTS
WORLDWIDE FUND 50 PERFORMANCE
51 FUND TALK: THE MANAGER'S OVERVIEW
53 INVESTMENT CHANGES
54 INVESTMENTS
57 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS 59 NOTES TO THE FINANCIAL STATEMENTS
</TABLE>
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MARKET RECAP
Low interest rates, controlled inflation and steady growth helped many
international markets post healthy gains during the six months ended April
30, 1997. The exceptions proved to be some markets in the Far East. In
addition, a strong U.S. dollar ate into the returns for U.S.-based
investors. For the six months, the Morgan Stanley Capital International
(MSCI) EAFE Index (capital weighted) - which measures stock market
performance in Europe, Australia and the Far East - returned 1.57%.
EUROPE: The combination of a strong U.S. dollar, low interest rates,
increased corporate restructurings and scant inflationary concern
translated into a healthy period for much of Europe. For the six months
ended April 30, 1997, the MSCI Europe Index was up 11.77%. The United
Kingdom - Europe's largest stock market - displayed hints of an improving
economy, but the market itself trailed many of its European counterparts.
Germany, on the other hand, performed exceptionally well, as did Italy,
Spain and the Scandinavian countries.
JAPAN AND THE FAR EAST: While the Japanese stock market showed some
glimpses of strength over the past six months, it continued to struggle.
Even though exporters benefiting from a weak yen and corporations that
focused on increasing shareholder value saw some share price gains, the
overall market dropped sharply for dollar-based investors. The Tokyo Stock
Exchange Index (TOPIX), a measure of the Japanese market, was down 16.36%.
Many other markets in the region also experienced troubles. The MSCI
Combined Far East ex-Japan Free Index returned -1.45%. Export growth was
sluggish and fears of interest rate hikes in the U.S. stalled the markets,
as many of the countries in the region link their currencies and interest
rates to the U.S.
EMERGING MARKETS: While the MSCI Emerging Markets Free Index posted a
strong 10.98% return for the six months ended April 30, 1997, most of that
performance came as a result of healthy returns in Latin America. As
mentioned previously, emerging markets in Asia encountered difficulties.
Stock markets in Thailand and Malaysia, in particular, experienced sharp
drops, while Taiwan posted strong returns. In Latin America, a combination
of stable economic growth, low interest rates, government reforms and
positive investor sentiment helped to bolster stock markets. Markets in
Eastern Europe and the Middle East tended to post fairly strong gains over
the six months.
U.S. AND CANADA: Concerns in March and April over higher interest rates and
the possibility of weaker corporate earnings provided the only significant
pause in the U.S. stock market's upward climb during the six-month period.
The Standard & Poor's 500 Index returned 14.72% over that time. In
February, Federal Reserve Board Chairman Alan Greenspan indicated the Fed's
inclination to raise short-term interest rates to head off inflation.
Because higher interest rates tend to slow economic growth and increase
borrowing costs, the stock market faltered as the Fed's March 25 Open
Market Committee approached. At that meeting, the Fed raised a key
short-term interest rate. The stock market, already at historically high
valuations, reacted coolly. It sold off sharply through mid-April, when
positive news on inflation emerged. The market recovered, almost to the
peak it had reached in March, when the Dow Jones Industrial Average closed
above 7000 for the first time. While the Canadian stock market tends to
move closely with the U.S. market, the Toronto Stock Exchange 300 was
hampered by its large natural resources component. For the six month
period, this index posted a return of 3.15%.
BONDS: Emerging market debt, particularly Brady bonds - bonds issued by
governments of developing countries that are denominated in U.S. dollars -
continued to dominate the world's fixed-income markets. The JP Morgan
Emerging Markets Bond Index returned 11.90% during the six-month period,
beating its developed-market counterpart, the Salomon Brothers Non-U.S.
World Government Bond Index, which fell 7.29%. Emerging market debt
instruments were helped by strong domestic product growth, declining
inflation and positive steps by governments to streamline debt management
policies. Non-dollar-denominated bonds in the developed world were hurt by
the relative strength of the U.S. dollar. Bond markets in such countries as
Sweden and Italy that imposed strict fiscal policies in order to meet the
requirements for membership in the European monetary union tended to post
positive results. In the U.S., a relatively favorable inflation backdrop
steadied fears of higher interest rates, helping to spark an April rally
that bolstered the performance of the U.S. taxable bond market.
S&P 500 EAFE
* YEAR TO DATE THROUGH APRIL 30, 1997.
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: 6.1
Row: 2, Col: 2, Value: 7.38
Row: 3, Col: 1, Value: 31.57
Row: 3, Col: 2, Value: 56.16
Row: 4, Col: 1, Value: 18.56
Row: 4, Col: 2, Value: 69.44000000000001
Row: 5, Col: 1, Value: 5.1
Row: 5, Col: 2, Value: 24.63
Row: 6, Col: 1, Value: 16.61
Row: 6, Col: 2, Value: 28.27
Row: 7, Col: 1, Value: 31.69
Row: 7, Col: 2, Value: 10.53
Row: 8, Col: 1, Value: -3.1
Row: 8, Col: 2, Value: -23.45
Row: 9, Col: 1, Value: 30.47
Row: 9, Col: 2, Value: 12.13
Row: 10, Col: 1, Value: 7.619999999999999
Row: 10, Col: 2, Value: -12.17
Row: 11, Col: 1, Value: 10.08
Row: 11, Col: 2, Value: 32.56
Row: 12, Col: 1, Value: 1.32
Row: 12, Col: 2, Value: 7.78
Row: 13, Col: 1, Value: 29.3
Row: 13, Col: 2, Value: 11.21
Row: 14, Col: 1, Value: 15.72
Row: 14, Col: 2, Value: 3.26
Row: 15, Col: 1, Value: 8.81
Row: 15, Col: 2, Value: -1.04
%
INTERNATIONAL GROWTH & INCOME
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would have
been lower. Prior to June 1, 1994, the fund imposed a 2% sales charge. If
this sales charge were taken into account, total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 PAST 10
APRIL 30, 1997 MONTH YEAR YEARS YEARS
S
INTERNATIONAL GROWTH & INCOME 6.50% 8.60% 59.60% 101.03%
Morgan Stanley Capital 1.57% -0.89% 65.37% 62.94%
International EAFE Index
J.P. Morgan Global -3.76% 1.91% 44.87% 120.31%
Government Bond Index
International Funds Average 6.17% 5.43% 66.38% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five or 10 years. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, the value of your investment would be $1,050. You can compare
the fund's returns to the performance of the Morgan Stanley Capital
International (MSCI) Europe, Australasia, Far East (EAFE) Index - a market
capitalization weighted, unmanaged index of over 1,000 foreign stocks. You
can also compare the fund's performance to the J.P. Morgan Global
Government Bond Index - a broad measure of bond performance in developed
countries including the United States. To measure how the fund's
performance stacked up against its peers, you can compare it to the
international funds average, which reflects the performance of mutual funds
with similar objectives tracked by Lipper Analytical Services, Inc. The
past six months average represents a peer group of 396 mutual funds. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
APRIL 30, 1997 YEAR YEARS YEARS
INTERNATIONAL GROWTH & INCOME 8.60% 9.80% 7.23%
Morgan Stanley Capital -0.89% 10.58% 5.00%
International EAFE Index
J.P. Morgan Global 1.91% 7.70% 8.22%
Government Bond Index
International Funds Average 5.43% 10.58% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER 10 YEARS
Int'l Growth & Income MS EAFE Index (Net) JP Global Bond Index
00305 MS001 JP002
1987/04/30 10000.00 10000.00
10000.00
1987/05/31 10066.28 9999.96
9905.62
1987/06/30 10165.58 9681.37
9862.68
1987/07/31 10588.80 9664.46
9744.83
1987/08/31 10879.24 10389.12
9851.38
1987/09/30 10970.68 10225.55
9611.70
1987/10/31 8673.33 8792.78
10146.04
1987/11/30 8448.59 8879.36
10408.42
1987/12/31 8974.86 9143.02
10762.06
1988/01/31 8657.61 9306.26
10817.06
1988/02/29 9049.99 9926.59
10916.39
1988/03/31 9442.38 10536.93
11002.70
1988/04/30 9692.84 10690.05
10951.58
1988/05/31 9567.61 10347.37
10833.84
1988/06/30 9459.08 10074.63
10737.31
1988/07/31 9459.08 10390.71
10654.01
1988/08/31 8991.55 9715.13
10578.46
1988/09/30 9317.15 10139.62
10842.02
1988/10/31 9859.82 11007.19
11268.95
1988/11/30 10035.14 11662.85
11368.61
1988/12/31 10012.68 11727.88
11300.16
1989/01/31 10199.52 11934.22
11188.35
1989/02/28 10233.49 11995.57
11169.94
1989/03/31 10233.49 11760.14
11075.35
1989/04/30 10488.27 11869.21
11257.76
1989/05/31 10191.03 11223.49
11136.04
1989/06/30 10225.00 11034.55
11389.27
1989/07/31 11193.14 12420.20
11842.79
1989/08/31 11040.28 11861.61
11492.38
1989/09/30 11481.89 12401.93
11674.15
1989/10/31 10929.88 11903.65
11824.28
1989/11/30 11337.52 12502.04
11929.53
1989/12/31 11927.22 12963.33
12068.79
1990/01/31 11720.99 12480.99
11888.74
1990/02/28 11308.52 11609.88
11760.35
1990/03/31 11299.93 10400.41
11688.14
1990/04/30 11274.15 10317.87
11642.40
1990/05/31 12004.56 11495.16
12014.66
1990/06/30 12382.66 11393.91
12232.05
1990/07/31 12958.39 11554.40
12591.40
1990/08/31 11849.89 10432.37
12493.25
1990/09/30 10707.00 8978.47
12610.12
1990/10/31 11781.14 10377.48
13108.41
1990/11/30 11514.75 9765.34
13339.14
1990/12/31 11542.25 9923.53
13487.55
1991/01/31 11950.66 10244.51
13793.52
1991/02/28 12625.44 11342.71
13806.97
1991/03/31 12172.63 10661.78
13349.48
1991/04/30 12359.08 10766.48
13537.06
1991/05/31 12341.33 10878.82
13548.68
1991/06/30 11746.46 10079.43
13367.77
1991/07/31 12154.87 10574.66
13650.38
1991/08/31 12110.48 10359.91
13934.07
1991/09/30 12501.14 10943.78
14442.15
1991/10/31 12421.23 11098.92
14584.85
1991/11/30 12074.97 10580.77
14822.37
1991/12/31 12469.99 11127.19
15571.41
1992/01/31 12452.01 10889.52
15266.41
1992/02/29 12469.99 10499.76
15221.97
1992/03/31 12065.42 9806.60
15081.41
1992/04/30 12595.86 9853.22
15206.90
1992/05/31 13162.27 10512.75
15638.78
1992/06/30 13036.40 10014.11
16065.28
1992/07/31 12613.84 9757.82
16419.25
1992/08/31 12838.61 10369.83
16856.08
1992/09/30 12622.83 10165.06
16839.72
1992/10/31 11948.54 9631.85
16419.14
1992/11/30 11921.57 9722.49
16128.03
1992/12/31 12053.38 9772.78
16280.42
1993/01/31 12163.88 9771.58
16556.46
1993/02/28 12495.37 10066.75
16823.25
1993/03/31 13425.38 10944.22
17081.76
1993/04/30 14171.24 11982.86
17392.78
1993/05/31 14502.73 12235.93
17508.80
1993/06/30 14309.36 12045.03
17517.84
1993/07/31 14788.18 12466.66
17524.94
1993/08/31 15561.66 13139.65
18043.67
1993/09/30 15460.37 12843.88
18234.48
1993/10/31 15883.94 13239.70
18225.12
1993/11/30 15340.67 12082.41
18092.10
1993/12/31 16281.71 12954.85
18277.42
1994/01/31 17134.25 14050.12
18449.83
1994/02/28 16828.45 14011.21
18247.18
1994/03/31 15929.57 13407.73
18163.56
1994/04/30 16142.71 13976.60
18149.03
1994/05/31 16439.24 13896.36
17999.01
1994/06/30 16040.77 14092.74
18212.74
1994/07/31 16309.51 14228.27
18384.18
1994/08/31 16467.04 14565.13
18336.94
1994/09/30 16087.11 14106.39
18427.56
1994/10/31 16253.91 14576.13
18703.17
1994/11/30 15753.50 13875.60
18467.81
1994/12/31 15814.21 13962.49
18510.75
1995/01/31 15278.46 13426.11
18885.16
1995/02/28 15383.69 13387.58
19372.14
1995/03/31 16263.86 14222.58
20357.52
1995/04/30 16560.43 14757.47
20682.10
1995/05/31 16349.96 14581.55
21259.05
1995/06/30 16388.23 14325.84
21391.86
1995/07/31 17354.49 15217.71
21493.34
1995/08/31 17153.58 14637.21
20895.94
1995/09/30 17277.95 14923.08
21366.78
1995/10/31 17057.91 14521.94
21575.46
1995/11/30 17316.22 14926.00
21815.99
1995/12/31 17748.66 15527.37
22086.12
1996/01/31 17798.10 15591.12
21859.47
1996/02/29 17758.55 15643.83
21732.05
1996/03/31 18055.18 15976.04
21698.58
1996/04/30 18510.02 16440.51
21618.29
1996/05/31 18529.80 16137.98
21640.35
1996/06/30 18658.34 16228.81
21829.55
1996/07/31 18223.28 15754.48
22231.30
1996/08/31 18450.70 15789.00
22323.85
1996/09/30 18895.65 16208.45
22446.86
1996/10/31 18875.87 16042.59
22892.20
1996/11/30 19815.22 16680.89
23218.82
1996/12/31 20000.44 16466.31
23066.97
1997/01/31 19846.98 15890.03
22480.66
1997/02/28 20082.28 16149.93
22325.25
1997/03/31 20082.28 16208.41
22155.43
1997/04/30 20102.74 16294.42
22030.69
Let's say hypothetically that $10,000 was invested in Fidelity
International Growth & Income Fund on April 30, 1987. As the chart shows,
by April 30, 1997, the value of the investment would have grown to $20,103
- - a 101.03% increase on the initial investment. For comparison, look at how
both the Morgan Stanley Capital International EAFE Index and the J.P.
Morgan Global Government Bond Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment in the EAFE index would have grown to $16,294 - a 62.94%
increase. If $10,000 was put in the bond index, it would have grown to
$22,031 - a 120.31% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
INTERNATIONAL GROWTH & INCOME
FUND TALK: THE MANAGER'S OVERVIEW
An interview with John Hickling, Portfolio Manager of Fidelity
International Growth & Income Fund
Q. JOHN, HOW DID THE FUND PERFORM?
A. Quite well. For the six-month and one-year periods ending April 30,
1997, the fund returned 6.50% and 8.60%, respectively. Because the fund
invests in both equities and bonds, we compare it to two separate indexes
to evaluate its performance. The Morgan Stanley Capital International
Europe, Australasia, Far East (EAFE) Index - which measures international
equity returns - returned 1.57% over the past six months and -0.89% over
the past year. For the same periods, the JP Morgan Global Government Bond
Index - which tracks the performance of government bonds in 13 developed
countries including the U.S. - returned -3.76% and 1.91%, respectively. The
international funds average was up 6.17% over the past six months and 5.43%
for the past year, according to Lipper Analytical Services. Given that this
fund competes against two very different indexes and that it beat them
both, I am quite pleased with this period's results.
Q. WHY DID THE FUND OUTPERFORM THE EAFE INDEX OVER THE PERIOD?
A. Largely because the fund - like almost all actively managed funds - was
underweighted in Japan, which was a very weak performer. Japanese holdings
made up about 18% of the fund, compared to over 40% for the index. In
addition, Japanese banks and financial companies, probably the market's
worst performers, made up about one quarter of the index. That said, the
fund did own some Japanese blue chip stocks, such as exporters Honda, Canon
and Fuji, which turned in strong performances. These particular stocks -
all top 10 holdings of the fund - benefited from the strong dollar and weak
yen scenario, which made their goods less expensive and in higher demand in
the United States and other major international markets.
Q. THE FUND ALSO BEAT THE BOND INDEX. WHY?
A. The outperformance of the fund's bonds was related to the Japanese
market as well. The bond index that the fund is compared to had an
extremely large Japanese bond component, while the fund held very few
Japanese bonds. Over the period, the Japanese bond market suffered due to
overall poor country performance and because the strong dollar hurt
non-dollar-denominated bonds, such as those denominated in yen. Another
reason the bond portion of the fund did well over the period was that I
bought convertible bonds - which, like convertible preferred stocks, are
convertible into a fixed number of a company's common stock. Basically,
when you buy convertible bonds, you are investing in a company, instead of
a country. This was a useful strategy when so many countries' bond markets
were volatile because of the strong dollar. Lastly, the fund's bond
performance was boosted by a large position in United Kingdom bonds over
the period. The British pound was one of the few currencies that actually
appreciated against the dollar.
Q. HOW DID THE EUROPEAN BOND MARKET LOOK IN GENERAL?
A. As I mentioned, non-dollar-denominated bonds, including European bonds,
suffered because of the strong dollar. This was especially true in Germany,
where the fund had a relatively large position in government bonds. Bonds
underperformed equities throughout Europe - as they did in the U.S. - and
did even more poorly in dollar terms. Despite this tough environment, the
fund invested in Swedish and Italian government bonds. That's because as
Europe moves toward monetary union under the Maastricht Treaty, some
countries, such as Sweden and Italy, are pursuing stringent fiscal policies
so they can qualify to participate in the union.
Q. OBVIOUSLY EUROPE WAS STRONG FOR EQUITIES. WHY?
A. Over the period, one of the most exciting places to be was in European
restructuring stories, such as Volkswagen and Michelin. European companies
and management are starting to understand for the first time what American
companies have known for years - that they need to deliver shareholder
value. The example I like to use is Royal Dutch Petroleum, which is about
150 years old. In January of 1996, for the first time, this established
company started giving financial incentives to its executives based on the
company's performance.
Q. WERE THERE SOME ESPECIALLY STRONG SECTORS IN EUROPE?
A. Yes. The European financial sector did well. Over the period, the fund
was particularly overweighted in Swedish and Spanish banks. In Sweden,
where banks recently cut costs and increased profits, Svenska Handelsbanken
was a top performer. One Spanish bank in particular, BBV, looked good
because it has been quietly establishing profitable long-term growth
positions in Latin America.
Q. WHAT WERE SOME OTHER STANDOUT EUROPEAN COMPANIES?
A. One was top 10 fund holding National Elf Aquitaine, a French company I
bought about six months ago. The largest oil company in the world, Elf
benefited from restructuring and, since oil is denominated in dollar terms,
from the strong dollar over the period. Overall, it was a phenomenal stock
and our timing was perfect. In addition, Alcatel Alsthom, a French defense
electronics company that was one of the fund's top holdings, also turned in
a solid performance during the period due to management changes.
Q. IN LIGHT OF EUROPE'S STRONG PERFORMANCE, IT'S IRONIC THAT YOUR TOP
EQUITY HOLDING DURING THE PERIOD - HONDA - WAS A JAPANESE COMPANY . . .
A. Perhaps so, but Honda looked especially strong because of two great new
products - the Odyssey mini van and the CRV sports utility vehicle, which
are both phenomenal hits with consumers. In retrospect, however, while
Honda was a great stock, I wish that I had held almost no Japanese equities
during the period. Some of my competitors had virtually nothing invested in
Japanese stocks, which served them well. While I expected an upturn in
Japan, my timing was probably a couple of months too early.
Q. HOW DID EMERGING MARKETS PERFORM OVER THE PERIOD?
A. The overall market was a mixed bag, but the fund was well-positioned. It
invested in emerging markets, such as Brazil, Mexico, Argentina and
Indonesia that performed fairly well, while avoiding poor-performing
markets such as Thailand and Korea.
Q. HOW DOES THE FUND LOOK GOING FORWARD?
A. I think the outlook with respect to Japan is very good because it looks
like it's finally coming out of its banking crisis and because the weak yen
is boosting some economic and corporate profits. In terms of Europe, while
I expect there to be a short-term correction, I think it will continue to
do well over the long run. That's because I believe the structural changes
that many companies made will have a lasting effect. Also, European
exporters - like those in Japan - have benefited from the strong dollar.
Going forward, I will continue to keep my eye on emerging market
investments around the world. From Shanghai to Sao Paolo, there are many
exceedingly attractive opportunities.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: growth of capital and current income by
investing mainly in foreign stocks and bonds
FUND NUMBER: 305
TRADING SYMBOL: FIGRX
START DATE: December 31, 1986
SIZE: as of April 30, 1997, more than $1.0 billion
MANAGER: John Hickling, since 1996; manager,
Fidelity Overseas Fund, Fidelity Advisor
Overseas Fund and Fidelity VIP: Overseas,
1993- 1996; Fidelity Advisor Annuity Overseas
Fund, 1995-1996; joined Fidelity in 1982
(checkmark)
JOHN HICKLING ON INVESTING IN COMPANIES
VERSUS COUNTRIES:
"When it comes to international stock markets, I tend
to take a bottom-up approach and buy well-performing
individual stocks, regardless of their country, although
I'm certainly influenced by overall country
performance. In most cases, this is a very effective
approach. However, as we've seen with Japanese
stocks over this period, sometimes even a great
stock in a bad market doesn't do as well as an
average stock in a great market.
"When it comes to purchasing bonds, I take a different
approach. I need to pay attention to the macro
fundamentals of a country I plan on investing in.
Looking at the past six-month period, the U.K.
provides a good example of the importance of
focusing on a country's macro performance. The
U.K.'s bond market was very attractive because the
markets had already anticipated an upcoming interest
rate increase. In addition, the British pound was
considered the beneficiary of the European monetary
union turmoil - as sort of a safe haven against the
dollar and Deutsche mark. And, in fact, when many
European bond markets had a tough time, the British
market was by far the top performer.
"On the other hand, Japan was an example of a
country that exhibited overall poor macro
performance, and this made its bond market
extremely unattractive. That's one big reason why I
was dramatically underweighted in the Japanese
bond market, which looked awful.
"To compensate for the effect of specific countries'
macro performance on the bond market, I bought
convertible bonds, which are an investment in
specific companies, instead of countries. That's
because, as most people would say, it's easier to get
one company right than it is to get a whole country
right."
INTERNATIONAL GROWTH & INCOME
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997
France 7.3%
United States 9.5%
Row: 1, Col: 1, Value: 7.3
Row: 1, Col: 2, Value: 9.199999999999999
Row: 1, Col: 3, Value: 3.6
Row: 1, Col: 4, Value: 18.1
Row: 1, Col: 5, Value: 3.9
Row: 1, Col: 6, Value: 27.2
Row: 1, Col: 7, Value: 4.0
Row: 1, Col: 8, Value: 17.1
Row: 1, Col: 9, Value: 9.6
Germany 9.2%
United
Kingdom 17.1%
Italy 3.6%
Sweden 4.0%
Japan 18.0%
Netherlands 4.1%
Other 27.2%
AS OF OCTOBER 31, 1996
France 7.2%
United States 12.1%
Row: 1, Col: 1, Value: 7.2
Row: 1, Col: 2, Value: 10.0
Row: 1, Col: 3, Value: 15.2
Row: 1, Col: 4, Value: 3.6
Row: 1, Col: 5, Value: 29.5
Row: 1, Col: 6, Value: 4.5
Row: 1, Col: 7, Value: 17.9
Row: 1, Col: 8, Value: 12.1
Germany 10.0%
United Kingdom 17.9%
Japan 15.2%
Sweden 4.5%
Netherlands 3.6%
Other 29.5%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 69.9 68.0
Bonds 6.4 4.3
Government obligations 17.4 20.4
Short-term investments 6.3 7.3
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
STOCKS
6 MONTHS AGO
Honda Motor Co. Ltd. 1.3 1.2
(Japan, Autos, Tires, & Accessories)
National Elf Aquitaine 1.2 0.0
(France, Oil & Gas)
Canon, Inc. 1.2 1.3
(Japan, Computers & Office Equipment)
Fuji Photo Film Co. Ltd. 1.1 0.8
(Japan, Photographic Equipment)
Alcatel Alsthom Compagnie Generale 1.1 0.9
d'Electricite SA
(France, Electrical Equipment)
Sony Corp. 1.1 1.0
(Japan, Consumer Electronics)
Volvo AB Class B 0.9 1.0
(Sweden, Autos, Tires, & Accessories)
Huhtamaki Ord. 0.8 1.1
(Finland, Foods)
Credit Suisse Group (Reg.) 0.8 0.0
(Switzerland, Banks)
Volkswagen AG 0.8 0.5
(Germany, Autos, Tires, & Accessories)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET
SECTORS
6 MONTHS AGO
Finance 15.3 11.1
Durables 10.2 8.5
Utilities 8.6 7.3
Technology 7.2 5.5
Nondurables 5.3 4.3
Energy 4.4 4.8
Industrial Machinery & Equipment 4.2 5.2
Basic Industries 4.0 8.4
Retail & Wholesale 3.7 4.5
Health 3.6 2.5
INTERNATIONAL GROWTH & INCOME
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 67.7%
SHARES VALUE (NOTE 1)
ARGENTINA - 1.2%
Telefonica de Argentina SA
sponsored ADR 155,000 $ 5,153,751
YPF Sociedad Anonima sponsored
ADR representing Class D shares 241,000 6,657,625
11,811,376
AUSTRALIA - 1.6%
Broken Hill Proprietary Co. Ltd. (The) 221,300 3,125,062
Brambles Industries Ltd. 145,000 2,627,452
FAI Insurance Ltd. Ord. 3,600,000 1,771,421
Fosters Brewing Group Ltd. 1,295,000 2,670,254
MIM Holdings 2,156,500 2,812,838
National Mutual Holdings Ltd. (f) 407,000 603,986
News Corp. Ltd. ADR 66,000 1,221,000
Western Mining Holdings Ltd. 333,000 1,976,681
16,808,694
AUSTRIA - 0.6%
Austria Mikro Systeme International 32,150 2,427,112
KTM-Motorradholding AG (f) 15,500 928,486
Mayr Melnhof Karton AG (a) 50,000 2,367,374
5,722,972
BELGIUM - 0.4%
Credit Communal Holding/Dexia (f) 16,000 1,590,635
Delhaize Freres & Cie Le Lion SA 25,000 1,256,686
Petrofina SA 2,700 968,858
3,816,179
BERMUDA - 0.2%
Sakura Finance Bermuda Trust:
sponsored ADR (f) 35 1,477,340
unit (Reg.) 22 948,089
2,425,429
BRAZIL - 1.4%
Aracruz Celulose SA PN B ADR 112,500 2,123,438
Compania Cervejaria Brahma PN
(Pfd. Reg.) 3,350,000 2,279,115
Multicanal Participacoes SA
sponsored ADR 57,000 826,500
Telebras ON 58,900,000 6,341,669
Telesp:
ON (a) 479,988 132,923
PN (Pfd. Reg.) 11,200,000 3,180,592
14,884,237
CANADA - 0.5%
Agrium, Inc. 1,950 25,047
Canadian Imperial Bank of Commerce 45,400 1,042,857
Common Development International
Ltd. (a) (f) 54,000 743,855
JDS Fitel, Inc. (a) 125,100 2,663,226
OSF, Inc. (a)(f) 91,000 879,101
Westaim Corp. 1,946 7,937
5,362,023
CHILE - 0.1%
Vina Concha Stet y Toro SA
sponsored ADR 20,300 662,288
SHARES VALUE (NOTE 1)
CHINA (PEOPLES REPUBLIC) - 0.4%
Huaneng Power International, Inc.
Class N sponsored ADR (a) 43,000 $ 1,042,750
Maanshan Iron & Steel Co. Ltd.
Class H 13,000,000 2,852,901
3,895,651
DENMARK - 0.5%
Novo-Nordisk AS Class B 50,000 4,946,964
FINLAND - 2.5%
America Group Ltd. Class A (a) 70,000 1,198,342
Cultor OY Ord., Series 2 35,000 1,938,890
Huhtamaki Ord. 200,000 8,674,995
Nokia Corp. AB, Series A 126,000 7,862,200
Rauma OY 2,784 57,299
UPM-Kymmene Corp. 100,000 2,288,968
Valmet OY 212,100 3,586,099
25,606,793
FRANCE - 5.6%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 102,900 11,446,561
Assurance Generales De France
Vie SA (a)(f) 25,000 813,729
Axa SA 80,000 4,924,026
Cap Gemini Sogeti SA 16,500 999,743
Credit Lyonnais (a) 75,000 2,513,177
Credit Local de France SA 14,700 1,360,586
Elf Sanofi SA 22,000 2,055,106
GAN (Groupe Des Assur Natl.) 18,500 437,588
Groupe AB SA sponsored ADR 90,000 652,500
Lagardere S.C.A. (Reg.) 65,000 2,012,084
Michelin SA (Compagnie Generale
des Etablissements) Class B 100,000 5,589,407
Nationale Elf Aquitaine 125,000 12,126,666
Pechiney SA Class A 50,000 1,868,278
Rhone Poulenc SA Class A 90,000 3,028,153
Total SA sponsored ADR 175,394 7,300,775
57,128,379
GERMANY - 3.7%
BASF AG 100,000 3,916,698
Daimler-Benz AG:
Ord. 100,000 7,405,910
(rights) (a) 100,000 8,665
Dresdner Bank AG Ord. 110,000 3,504,520
Hornbach Baumarket AG (Bearer) 25,000 794,316
Lufthansa 150,000 2,088,328
Puma AG (Rudolf Dassler Sport) (f) 17,300 584,646
Schering AG 25,000 2,390,168
Schmalbach-Lubeca AG 8,000 1,756,160
Siemens AG 60,000 3,251,553
Veba AG Ord. 157,000 8,115,514
Volkswagen AG 6,500 4,115,797
37,932,275
HONG KONG - 2.2%
Cafe De Coral Holdings Ltd. 2,026,000 496,921
Dairy Farm International Holdings Ltd. 2,767,000 2,047,580
HSBC Holdings PLC 107,543 2,713,223
Hong Kong & China Gas Co. Ltd.
(warrants) (a) 263,800 132,811
Hong Kong Electric Holdings Ord. 1,830,000 6,472,859
Johnson Electric Holdings Ltd. 1,614,000 4,375,395
Pacific Ports Co. Ltd. 1,344,000 503,143
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HONG KONG - CONTINUED
South China Morning Post Holdings 3,762,000 $ 3,229,497
Shanghai Industrial Holdings Ltd.
Class H (a)(f) 443,000 2,493,358
Sun Hung Kai & Co. Ltd. 1,000 250
Sun Hung Kai Co. Ltd. (warrants) (a) 200 11
22,465,048
INDIA - 0.2%
Videsh Sanchar Nigam GDR (f) 93,600 1,801,800
INDONESIA - 1.7%
Astra International PT (For. Reg.) 1,007,000 3,688,193
Bank International Indonesia PT
(For. Reg.) 5,096,285 3,670,168
Inti Indorayon Utama PT (For. Reg.) (a) 2,068,000 1,489,302
Indah Kiat Pulp & Paper (For. Reg.) (a) 1,300,000 1,056,585
Matahari Putra Prima PT (For. Reg.) 2,195,000 3,071,196
PT Bank International Indonesia
(warrants) (For. Reg.) (a) 453,002 144,476
PT Indosat Class B (For.Reg.) 683,000 1,883,170
PT Telkom (For. Reg.) 1,351,000 1,959,786
16,962,876
ITALY - 1.5%
Credito Italiano Ord. 1,800,000 2,525,815
Italcementi Fabbriche Ruinite Cemento
Spa, Bergamo 50,000 279,127
Italgas Spa 462,700 1,590,872
Montedison Spa Ord. (a) 2,800,000 1,840,973
Rinascente per l'Esercizio di Grandi
Magazzini Spa 350,000 1,867,361
Stet (Societa Finanziaria Telefonica)
Spa Ord. 600,000 2,849,476
Telecom Italia:
Spa 1,300,000 3,444,023
Mobile Spa 310,000 973,092
15,370,739
JAPAN - 17.1%
Acom Co. Ltd. 145,000 5,912,079
Advantest Corp. 115,500 6,409,343
Amway Japan Ltd. 58,400 1,778,960
Canon, Inc. 500,000 11,846,197
Daiichi Pharmaceutical Co. Ltd. 121,000 1,942,934
Daiwa House Industry Co. Ltd. 100,000 1,117,714
Daiwa Securities Co. Ltd. 374,000 2,487,544
Daito Trust Construction Co. 162,200 1,634,193
Fuji Photo Film Co. Ltd. 300,000 11,452,635
Fuji Electric Co. Ltd. 504,000 1,999,418
Hitachi Maxell Ltd. 200,000 4,203,235
Honda Motor Co. Ltd. 441,000 13,676,572
Hoya Corp. 52,000 2,382,148
Ishikawajima-Harima Heavy
Industries Co. Ltd. 610,000 2,271,085
JGC Corp. 266,000 1,371,404
Jusco Co. Ltd. 149,000 4,573,970
Komatsu Ltd. Ord. 744,000 5,434,547
Konica Corp. 147,000 850,447
Kokusai Electric Co. Ltd. 102,000 1,493,906
Kyocera Corp. (warrants) (a) 315 246,094
Mabuchi Motor Co. 40,000 2,024,480
Matsushita Electric Industrial Co. Ltd. 300,000 4,793,577
SHARES VALUE (NOTE 1)
Mitsubishi Electric Co. Ord. 245,000 $ 1,340,273
Namco Ltd. 98,000 2,869,535
Nintendo Co. Ltd. Ord. 28,600 2,089,087
Nippon Telegraph & Telephone
Corp. Ord. 84 591,759
Nitto Denko Corp. 200,000 2,896,612
Nomura Securities Co. Ltd. 510,000 5,700,343
Omron Corp. 100,000 1,889,094
Orix Corp. 77,900 3,930,411
Ricoh Co. Ltd. Ord. 250,000 2,971,388
Sakura Bank Ltd. 324,000 1,711,236
Sankyo Co. Ltd. 160,000 4,281,947
Sekisui House Ltd. 150,000 1,334,173
Shin-Etsu Chemical Co. Ltd. 2,000 40,301
Shin-Etsu Chemical Co. Ltd. (warrants) (a) 280 411,250
Sony Corp. 155,000 11,273,171
Suzuki Motor Corp. 420,000 4,462,986
TDK Corp. 32,000 2,304,695
Takeda Chemical Industries Ltd. 335,000 7,726,003
Takefuji Corp. 43,000 2,068,007
THK Co. Ltd. 45,000 520,682
Tokio Marine & Fire Insurance Co.
Ltd. (The) 303,000 2,957,377
Toyota Motor Corp. 200,000 5,793,223
Tokyo Electron Ltd. 118,800 4,581,999
Uni Charm Corp. Ord. 121,000 3,704,908
Uny Co. Ltd. 300,000 5,265,851
Yamanouchi Pharmaceutical Co. Ltd. 50,000 1,066,551
Yamaichi Securities Co. Ltd. 677,000 1,769,168
175,454,512
MALAYSIA - 0.5%
Arab Malaysian Corp. BHD 320,000 1,325,632
Hong Leong Credit BHD 562,000 2,910,177
Tenega Nasional BHD 1,000 4,621
TA Enterprise BHD 1,142,000 1,332,826
5,573,256
MEXICO - 1.7%
BANACCI SA de CV Class B (a) 1,100,000 2,354,969
Cifra SA Series C 1,325,000 2,033,333
Cifra SA de CV, Series A 162,057 244,614
Gruma SA Class B sponsored
ADR (a) (f) 157,500 2,992,500
Grupo Financiero Bancomer Class B (a) 12,200,000 4,266,163
Grupo Financiero Inbursa SA Class B 479,000 1,638,843
Telefonos de Mexico SA sponsored ADR
representing Ord. Class L shares 90,000 3,712,500
17,242,922
NETHERLANDS - 3.5%
AKZO Nobel NV 50,300 6,482,991
Docdata NV 150,00 1,955,545
ING Groep NV 100,000 3,928,214
KBB NV Ord. 45,000 2,969,268
KLM Royal Dutch Air Lines NV 30,000 887,314
Philips Electronics NV (Bearer) 100,000 5,222,214
Royal Dutch Petroleum Co. Ord. 40,000 7,151,917
Unilever NV Ord. 17,100 3,327,012
Vendex International NV 80,243 3,811,383
35,735,858
NEW ZEALAND - 0.3%
Lion Nathan Ltd. 1,250,000 3,006,104
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NORWAY - 0.4%
Orkla AS Class B (non-vtg.) 30,000 $ 2,321,173
Smedvig AS 76,800 1,833,347
Smedvig AS, Series B 19,200 451,597
4,606,117
PERU - 0.1%
Compania de Minas Buenaventura SA
Class B sponsored ADR 52,000 1,131,000
PHILIPPINES - 0.4%
Belle Resources Corp. (a) 6,256,000 1,494,608
Empire East Land, Inc. (a) 887,500 164,913
Equitable Banking Corp. (f) 62,000 242,169
Guoco Holdings Philippines, Inc. 645,000 94,169
Megaworld Properties & Holdings, Inc. (a) 8,922,250 1,996,256
3,992,115
PORTUGAL - 0.4%
Portugal Telecom SA 85,000 3,133,381
Telecel Comunicacoes Pessoais SA (a) 12,000 1,033,899
4,167,280
SINGAPORE - 0.0%
Kim Engineering Holdings Ltd. 20,000 16,446
SPAIN - 2.9%
Banco Bilbao Vizcaya SA Ord. (Reg.) 70,000 4,718,616
Banco Popular Espanol 25,000 5,309,128
Corporacion Mapfre Compania
Internacional de Reaseguros SA (Reg.) 54,017 2,830,827
Dragados y Construcciones SA 225,000 3,637,609
FOCSA (Fomento Construcciones y
Contratas SA) 10,000 975,509
Iberdrola SA 250,000 2,825,826
Telefonica de Espana SA Ord. (a) 260,000 6,670,320
Vallehermoso SA 100,000 2,466,176
29,434,011
SWEDEN - 3.1%
Ericsson (L.M.) Telephone Co.:
Class B 90,000 2,844,472
Class B ADR 56,900 1,913,263
Esselte AB Class B Free shares 139,000 3,170,847
Forcenergy AB Class B Free shares 100,000 1,102,360
Nordbanken AB 75,000 2,303,487
Scania AB Class B 80,000 2,064,536
Skandia Foersaekrings AB 60,000 1,735,739
Svenska Handelsbanken 200,000 5,505,429
Swedish Match Co. ADR 10,000 323,750
Volvo AB:
Class B 375,000 9,438,561
ADR Class B 50,000 1,262,500
31,664,944
SWITZERLAND - 2.1%
Credit Suisse Group (Reg.) 77,000 8,671,642
Julius Baer Holding AG 2,000 2,503,392
SIG AG (Reg.) 2,500 3,375,170
Sulzer AG (Reg.) 3,500 2,410,109
Surveillance, Societe Generale (Bearer) 2,400 4,966,079
21,926,392
SHARES VALUE (NOTE 1)
THAILAND - 0.3%
Thai Military Bank Ltd. (For. Reg.) 2,191,700 $ 3,188,538
UNITED KINGDOM - 10.6%
Albright & Wilson PLC 750,000 1,917,759
BAT Industries PLC Ord. 540,000 4,550,021
BBA Group PLC 650,000 3,535,171
British Aerospace PLC 201,197 4,282,294
British Petroleum PLC Ord. 429,440 4,936,147
British Steel PLC Ord. 850,000 1,918,165
British Telecommunications PLC Ord. 630,000 4,623,079
Cable & Wireless PLC Ord. 380,000 2,931,188
Caradon PLC 1,618,724 6,491,156
Cookson Group PLC 1,247,544 4,395,091
Cordiant PLC (a) 1,109,300 2,323,224
Dalgety PLC 500,000 2,532,660
English China Clay PLC 662,500 2,215,672
Grand Metropolitan PLC 558,800 4,672,141
Great Universal Stores PLC Ord
Class A 200,000 2,078,080
Inchcape PLC Ord. 1,000,000 4,448,390
Ladbroke Group PLC Ord. 1,719,834 6,421,946
Legal & General Group Ltd. Ord. 600,000 4,027,904
Lloyds TSB Group PLC 350,000 3,199,107
LucasVarity PLC 2,015,000 6,117,429
Monument Oil and Gas PLC Class L (a) 1,676,200 2,394,753
National Grid Co. PLC 1,153,700 4,158,131
Rolls Royce PLC Ord. 1,057,921 4,173,609
Royal & Sun Alliance Insurance
Group PLC 528,209 4,167,680
Shanks & McEwan Group PLC 500,000 1,103,980
Tomkins PLC Ord. 1,233,333 5,326,161
Vodafone Group PLC 1,350,000 6,049,161
Willis Coroon PLC Ord. 1,280,000 3,013,216
108,003,315
TOTAL COMMON STOCKS
(Cost $600,288,409) 692,746,533
PREFERRED STOCKS - 2.2%
CONVERTIBLE PREFERRED STOCKS - 0.8%
AUSTRALIA - 0.2%
National Australia Bank Ltd. 80,000 2,120,000
HONG KONG - 0.2%
Jardine Strategic Holdings Ltd.
7 1/2% (a) 18,000 2,124,000
JAPAN - 0.2%
AJL participating trust (a) 117,100 1,888,238
UNITED STATES OF AMERICA - 0.2%
SBC Communications, Inc. $3.07 (a) 50,000 2,062,500
TOTAL CONVERTIBLE PREFERRED STOCKS 8,194,738
NONCONVERTIBLE PREFERRED STOCKS - 1.4%
GERMANY - 0.8%
Volkswagen AG 17,000 8,367,176
PREFERRED STOCKS - CONTINUED
SHARES VALUE
(NOTE 1)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
ITALY - 0.6%
Banco Ambro Veneto 620,000 $ 1,068,571
Italmobiliare Spa 90,000 672,955
Stet (Societa Finanziaria Telefonica) Spa 1,195,000 4,427,164
6,168,690
TOTAL NONCONVERTIBLE PREFERRED STOCKS 14,535,866
TOTAL PREFERRED STOCKS
(Cost $17,986,435) 22,730,604
CORPORATE BONDS - 6.4%
MOODY'S PRINCIPAL
RATINGS (E) AMOUNT (C)
CONVERTIBLE BONDS - 5.8%
ARGENTINA - 0.1%
Banco De Galicia Y Buenos Aires
SA 7%, 8/1/02 B1 $ 1,000,000 1,152,500
BERMUDA - 0.8%
MBL International Finance of
Bermuda 3%, 11/30/02 Aa2 7,830,000 7,947,450
BRITISH VIRGIN ISLANDS - 0.5%
Sandoz Capital BVI Ltd.
2%, 10/6/02 - 4,390,000 5,443,600
CHINA (PEOPLES REPUBLIC) - 0.2%
Qingling Motors Ltd. 3 1/2%,
1/22/02 (f) - 1,800,000 1,836,000
FRANCE - 0.2%
Sanofi SA 4%, 1/1/00 - FRF 19,000 1,927,926
GERMANY - 0.3%
Bayerische Hypotheken und
Wechs Bank
9 1/4%, 12/31/01 - DEM 2,900,000 2,864,735
HONG KONG - 0.1%
Hong Kong Land Holdings Ltd.
euro 4%, 2/23/01 (f) - 1,100,000 965,250
JAPAN - 0.5%
Hitachi Ltd. 1.70%, 3/29/02 Aa2 JPY 159,000,000 1,476,800
Matsushita Electric Works Co.
Ltd. 2.70%, 5/31/02 - JPY 81,000,000 873,470
Sony Corp. 0.15%, 3/30/01 Aa3 JPY 100,000,000 1,113,779
Takeda Chemical Industries Ltd.
1.90%, 9/30/98 - JPY 200,000,000 2,121,296
5,585,345
KOREA (SOUTH) - 0.2%
Samsung Electronics Co. Ltd.
1/4%, 12/31/06 (Reg.) Baa1 1,775,000 1,988,000
MOODY'S PRINCIPAL VALUE
RATINGS (E) AMOUNT (C) (NOTE 1)
MEXICO - 0.7%
Alfa SA de CV
8%, 9/15/00 (f) - $1,900,000 $ 2,356,000
Empresas Ica Sociedad
Controladora SA de CV
5%, 3/15/04 B3 6,000,000 4,440,000
6,796,000
NETHERLANDS - 0.6%
Bilbao Vizcaya Investments BV
3 1/2%, 7/12/06 Aa3 2,500,000 3,537,500
Volkswagen AG 3%,
1/24/02 (f) A1 2,270,000 2,814,800
6,352,300
NETHERLANDS ANTILLES - 0.2%
Sumitomo Bank International
Finance NV 3/4%,
5/31/01 (Reg.) A2 JPY 123,000,000 1,031,091
Sumitomo Bank International
Finance NV 3/4%,
5/31/01 (f) A2 JPY 62,000,000 519,737
1,550,828
THAILAND - 0.5%
Bangkok Bank PCL euro
3 1/4%, 3/3/04 (f) - 3,830,000 3,533,175
SCB (Siam Commercial Bank)
PCL 3 1/4%, 1/24/04 - 2,000,000 1,380,000
4,913,175
UNITED KINGDOM - 0.9%
Glaxo Wellcome PLC
4.30%, 9/28/98 Aa3 JPY 195,000,000 2,469,253
Grand Metropolitan PLC euro
6 1/2%, 1/31/00 A2 2,500,000 3,068,750
Land Securities PLC
7%, 9/30/08 A1 GBP 2,000,000 4,058,750
9,596,753
TOTAL CONVERTIBLE BONDS 58,919,862
NONCONVERTIBLE BONDS - 0.6%
JAPAN - 0.2%
Sony Corp. 1.40%, 3/31/05 Aa3 JPY 220,000,000 2,069,346
LUXEMBOURG - 0.4%
Daimler-Benz Capital AG
4 1/8%, 7/5/03 A1 DEM 5,750,000 4,500,881
TOTAL NONCONVERTIBLE BONDS 6,570,227
TOTAL CORPORATE BONDS
(Cost $63,196,474) 65,490,089
GOVERNMENT OBLIGATIONS (G) - 17.4%
MOODY'S PRINCIPAL VALUE
RATINGS (E) AMOUNT (C) (NOTE 1)
DENMARK - 0.5%
Danish Kingdom Bullet 8%,
5/15/03 Aaa DKK 29,000,000 $ 4,883,868
FRANCE - 1.5%
French Government:
8 1/2%, 12/26/12 Aaa FRF 17,000,000 3,610,233
OAT:
7 1/4%, 4/25/06 Aaa FRF 20,000,000 3,825,342
6%, 10/25/25 Aaa FRF 35,000,000 5,532,331
Principal Strips 0%,
10/25/25 Aaa FRF 110,000,000 2,611,417
15,579,323
GERMANY - 4.4%
German Federal Republic:
8%, 7/22/02 Aaa DEM 9,300,000 6,132,128
6%, 6/20/16 Aaa DEM 32,600,000 17,994,454
Treuhandanstalt:
6 5/8%, 7/9/03 Aaa DEM 12,200,000 7,572,098
7 1/2%, 9/9/04 Aaa DEM 20,000,000 12,942,434
44,641,114
ITALY - 1.5%
Italian Republic (d):
8 1/2%, 4/1/99 Aa3 ITL 15,600,000 9,389,806
10 1/2%, 9/1/05 Aa3 ITL 8,000,000 5,508,656
14,898,462
SWEDEN - 0.9%
Swedish Government
13%, 6/15/01 Aa1 SEK 60,000,000 9,558,801
UNITED KINGDOM - 5.6%
United Kingdom, Great Britain
& Northern Ireland:
9 1/2%, 1/15/99 Aaa GBP 4,500,000 7,618,527
9 3/4%, 8/27/02 Aaa GBP 13,100,000 23,567,436
6 3/4%, 11/26/04 Aaa GBP 5,500,000 8,633,469
7 3/4%, 9/8/06 Aaa GBP 5,100,000 8,432,510
9%, 10/13/08 Aaa GBP 2,200,000 3,970,302
8 3/4%, 8/25/17 Aaa GBP 3,000,000 5,422,815
57,645,059
UNITED STATES OF AMERICA - 3.0%
U.S. Treasury Obligations:
9 1/4%, 8/15/98 Aaa $7,385,000 7,668,879
9 1/8%, 5/15/99 Aaa 7,400,000 7,794,272
7 3/4%, 12/31/99 Aaa 7,550,000 7,795,375
7 1/4%, 2/15/23 Aaa 750,000 756,683
6 1/4%, 8/15/23 Aaa 830,000 751,797
7 1/2%, 11/15/24 Aaa 1,570,000 1,658,564
7 5/8%, 2/15/25 Aaa 2,750,000 2,949,375
6 7/8%, 8/15/25 Aaa 1,860,000 1,827,152
31,202,097
TOTAL GOVERNMENT OBLIGATIONS
(Cost $181,962,701) 178,408,724
CASH EQUIVALENTS - 6.3%
SHARES VALUE
(NOTE 1)
Taxable Central Cash Fund (b)
(Cost $64,179,810) 64,179,810 $ 64,179,810
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $927,613,829) $ 1,023,555,760
CURRENCY ABBREVIATIONS
GBP - British pound
FRF - French franc
DEM - German deutsche mark
DKK - Danish krone
ITL - Italian lira
JPY - Japanese yen
SEK - Swedish krona
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash Fund was
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
(c) Principal amount is stated in United States dollars unless otherwise
noted.
(d) Principal amount in thousands.
(e) Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
(f) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $27,176,567 or 2.6% of net
assets.
(g) For foreign government obligations not individually rated by S&P or
Moody's, the ratings listed are assigned to securities by FMR, the fund's
investment adviser, based principally on S&P and Moody's ratings of the
sovereign credit of the issuing government.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 20.8% AAA, AA, A 19.9%
Baa 0.2% BBB 0.0%
Ba 0.0% BB 0.6%
B 0.6% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings of
the sovereign credit of the issuing government. The percentage not rated by
both S&P and Moody's amounted to 2.3%.
Purchases and sales of securities, other than short-term securities,
aggregated $314,158,749 and $348,985,603, respectively, of which U.S.
government and government agency obligations aggregated $0 and $15,481,962,
respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $66,868 for the period (see Note 4 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $927,793,642. Net unrealized appreciation aggregated
$95,762,118, of which $135,267,886 related to appreciated investment
securities and $39,505,768 related to depreciated investment securities.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.8%
Basic Industries 4.0
Cash Equivalents 6.3
Construction & Real Estate 3.1
Durables 10.2
Energy 4.4
Finance 15.3
Government Obligations .17.4
Health 3.6
Holding Companies 1.6
Industrial Machinery & Equipment 4.2
Media & Leisure 2.0
Nondurables 5.3
Precious Metals 0.3
Retail & Wholesale 3.7
Services 1.1
Technology 7.2
Transportation 0.9
Utilities 8.6
100.0%
INTERNATIONAL GROWTH & INCOME
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $927,613,829) - See accompanying schedule $ 1,023,555,760
Cash 1,275,513
Receivable for investments sold 13,503,722
Receivable for fund shares sold 15,818,243
Dividends receivable 3,450,229
Interest receivable 6,379,889
TOTAL ASSETS 1,063,983,356
LIABILITIES
Payable for investments purchased $ 21,954,996
Payable for fund shares redeemed 4,077,932
Accrued management fee 626,348
Other payables and accrued expenses 341,847
TOTAL LIABILITIES 27,001,123
NET ASSETS $ 1,036,982,233
Net Assets consist of:
Paid in capital $ 913,582,815
Undistributed net investment income 9,603,756
Accumulated undistributed net realized gain (loss) on investments and foreign 18,164,898
currency transactions
Net unrealized appreciation (depreciation) on investments 95,630,764
and assets and liabilities in foreign currencies
NET ASSETS, for 52,765,313 $ 1,036,982,233
shares outstanding
NET ASSET VALUE, offering price $19.65
and redemption price per
share ($1,036,982,233 (divided by) 52,765,313 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 7,116,611
Dividends
Special Dividend from British Gas 2,427,323
PLC Ord.
Interest 9,861,149
19,405,083
Less foreign taxes withheld (754,656
)
TOTAL INCOME 18,650,427
EXPENSES
Management fee $ 3,877,031
Transfer agent fees 1,350,206
Accounting fees and expenses 288,235
Non-interested trustees' compensation 3,927
Custodian fees and expenses 297,197
Registration fees 28,701
Audit 28,021
Legal 8,880
Miscellaneous 5,878
Total expenses before reductions 5,888,076
Expense reductions (83,515 5,804,561
)
NET INVESTMENT INCOME 12,845,866
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 19,169,811
Foreign currency transactions (103,530 19,066,281
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 34,275,454
Assets and liabilities in (399,148 33,876,306
foreign currencies )
NET GAIN (LOSS) 52,942,587
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 65,788,453
OTHER INFORMATION $ 41,868
Expense reductions
Directed brokerage arrangements
Custodian interest credits 9,318
Transfer agent interest credits 32,329
$ 83,515
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31,
(UNAUDITED) 1996
Operations $ 12,845,866 $ 27,101,159
Net investment income
Net realized gain (loss) 19,066,281 58,081,824
Change in net unrealized appreciation (depreciation) 33,876,306 13,275,048
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 65,788,453 98,458,031
Distributions to shareholders (15,357,887) (30,254,272)
From net investment income
From net realized gain (19,594,353) -
TOTAL DISTRIBUTIONS (34,952,240) (30,254,272)
Share transactions 579,628,979 756,874,122
Net proceeds from sales of shares
Reinvestment of distributions 34,046,643 29,614,909
Cost of shares redeemed (614,605,252) (750,852,349)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (929,630) 35,636,682
TOTAL INCREASE (DECREASE) IN NET ASSETS 29,906,583 103,840,441
NET ASSETS
Beginning of period 1,007,075,650 903,235,209
End of period (including undistributed net investment income of $9,603,756 and
$21,693,374, respectively) $ 1,036,982,233 $ 1,007,075,650
OTHER INFORMATION
Shares
Sold 29,679,670 41,219,618
Issued in reinvestment of distributions 1,787,230 1,655,407
Redeemed (31,450,970) (40,792,385)
Net increase (decrease) 15,930 2,082,640
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED
APRIL 30, 1997
SELECTED PER-SHARE DATA (UNAUDITED) 1996 1995 1994 G 1993 1992
Net asset value, beginning of period $ 19.09 $ 17.83 $ 17.54 $ 17.25 $ 13.29 $ 13.99
Income from Investment Operations
Net investment income .24 F, J .54 .54 .38 F .14 F .31
Net realized and unrealized gain (loss) .98 1.32 .28 .02 4.14 (.84)
Total from investment operations 1.22 1.86 .82 .40 4.28 (.53)
Less Distributions
From net investment income (.29) (.60) (.21) (.03) (.31) (.16)
From net realized gain (.37) - (.32) (.05) (.01) D (.01) D
In excess of net realized gain - - - (.03) - -
Total distributions (.66) (.60) (.53) (.11) (.32) (.17)
Net asset value, end of period $ 19.65 $ 19.09 $ 17.83 $ 17.54 $ 17.25 $ 13.29
TOTAL RETURN B, C 6.50% 10.66% 4.95% 2.33% 32.94% (3.81)%
E E
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,036,982 $ 1,007,076 $ 903,235 $ 1,367,938 $ 1,002,847 $ 60,007
Ratio of expenses to average net assets 1.16% A 1.16% 1.18% 1.21% 1.52% 1.62%
Ratio of expenses to average net assets after
expense 1.15% A, 1.14% 1.18% 1.21% 1.52% 1.62%
reductions H H
Ratio of net investment income to average net assets 2.54% A 2.76% 2.98% 2.16% .87% 2.78%
Portfolio turnover rate 65% A 95% 141% 173% 24% 76%
Average commission rate I $ .0083 $ .0065
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF
NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED . D INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED
GAINS ON FOREIGN CURRENCY
RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. E TOTAL RETURNS DO
NOT INCLUDE THE ONE TIME SALES CHARGE. F NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. 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 (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS). 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 INVESTMENT INCOME
PER SHARE REFLECTS A SPECIAL DIVIDEND FROM BRITISH GAS PLC ORD.
WHICH AMOUNTED TO $.05 PER SHARE.
</TABLE>
DIVERSIFIED INTERNATIONAL
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). If Fidelity had not
reimbursed certain fund expenses, the life of fund total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
APRIL 30, 1997 MONTHS YEAR YEARS FUND
DIVERSIFIED INTERNATIONAL 8.94% 13.35% 88.81% 74.46%
Morgan Stanley Capital 3.98% 1.86% 66.65% 60.62%
International GDP-Weighted
EAFE Index
International Funds Average 6.17% 5.43% 66.38% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years or since
the fund started on December 27, 1991. For example, if you invested $1,000
in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Morgan Stanley Capital International (MSCI) GDP-Weighted
Europe, Australasia, Far East (EAFE) Index - a gross domestic product
weighted, unmanaged index of over 1,000 foreign stocks. To measure how the
fund's performance stacked up against its peers, you can compare it to the
international funds average, which reflects the performance of mutual funds
with similar objectives tracked by Lipper Analytical Services, Inc. The
past six months average represents a peer group of 396 mutual funds. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
APRIL 30, 1997 YEAR YEARS FUND
DIVERSIFIED INTERNATIONAL 13.35% 13.55% 10.97%
Morgan Stanley Capital 1.86% 10.75% 9.27%
International GDP-Weighted
EAFE Index
International Funds Average 5.43% 10.58% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER LIFE OF FUND
Diversified International MS GDP-Wtd. EAFE (Net)
00325 MS005
1991/12/27 10000.00 10000.00
1991/12/31 10060.00 10275.57
1992/01/31 9860.00 10188.63
1992/02/29 9680.00 10050.14
1992/03/31 9140.00 9554.95
1992/04/30 9240.00 9638.28
1992/05/31 9750.00 10205.78
1992/06/30 9540.00 9873.69
1992/07/31 9190.00 9524.06
1992/08/31 9350.00 9997.89
1992/09/30 9140.00 9631.08
1992/10/31 8460.00 9240.11
1992/11/30 8460.00 9285.20
1992/12/31 8671.06 9283.63
1993/01/31 8873.42 9391.13
1993/02/28 9176.96 9719.67
1993/03/31 9915.57 10383.39
1993/04/30 10522.64 11339.71
1993/05/31 10785.71 11516.97
1993/06/30 10482.17 11317.62
1993/07/31 10805.94 11658.22
1993/08/31 11362.43 12512.58
1993/09/30 11210.66 12250.09
1993/10/31 11453.49 12586.98
1993/11/30 11028.54 11584.19
1993/12/31 11850.64 12399.01
1994/01/31 12739.44 13347.09
1994/02/28 12484.04 13273.82
1994/03/31 12085.61 13083.23
1994/04/30 12320.58 13744.12
1994/05/31 12300.15 13428.70
1994/06/30 12136.69 13422.75
1994/07/31 12555.55 13734.43
1994/08/31 12872.25 13967.08
1994/09/30 12504.47 13476.08
1994/10/31 12729.22 13885.61
1994/11/30 12044.75 13266.77
1994/12/31 11979.79 13367.39
1995/01/31 11428.51 13024.96
1995/02/28 11566.33 13010.19
1995/03/31 12128.21 13599.39
1995/04/30 12509.87 14207.31
1995/05/31 12615.88 14069.97
1995/06/30 12806.71 13912.97
1995/07/31 13633.63 14822.36
1995/08/31 13421.60 14203.34
1995/09/30 13676.04 14371.87
1995/10/31 13495.81 13955.28
1995/11/30 13633.63 14249.36
1995/12/31 14132.55 14859.11
1996/01/31 14555.74 15047.94
1996/02/29 14566.88 15092.84
1996/03/31 14856.44 15292.91
1996/04/30 15391.00 15769.16
1996/05/31 15546.91 15536.30
1996/06/30 15691.69 15658.22
1996/07/31 15190.54 15208.75
1996/08/31 15446.68 15200.26
1996/09/30 15914.43 15618.28
1996/10/31 16014.66 15447.32
1996/11/30 16905.60 16107.34
1996/12/31 16961.57 15992.68
1997/01/31 17076.88 15691.33
1997/02/28 17365.14 15800.68
1997/03/31 17388.20 16101.69
1997/04/30 17445.86 16062.16
Let's say hypothetically that $10,000 was invested in Fidelity Diversified
International Fund on December 27, 1991, when the fund started. As the
chart shows, by April 30, 1997, the value of the investment would have
grown to $17,446 - a 74.46% increase on the initial investment. For
comparison, look at how the Morgan Stanley Capital International
GDP-weighted EAFE Index did over the same period. With dividends and
capital gains, if any, reinvested, the same $10,000 investment would have
grown to $16,062 - a 60.62% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
DIVERSIFIED INTERNATIONAL
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Greg Fraser, Portfolio Manager of Fidelity Diversified
International Fund
Q. HOW DID THE FUND DO, GREG?
A. For the six-month and one-year periods ending April 30, 1997, the fund
returned 8.94% and 13.35%, respectively. For the same time periods, the
Morgan Stanley Capital International GDP-Weighted EAFE Index, a broad
measure of stock performance in Europe, Australia and the Far East, was up
3.98% and 1.86%, respectively, while the international funds average was up
6.17% for the past six months and 5.43% for the past year, according to
Lipper Analytical Services.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S OUTPERFORMANCE?
A. While no one stock or country was that important, being underweighted
compared to the index in Japan in general and the Japanese bank sector in
particular continued to help the fund. Many Japanese banks performed quite
poorly because investors believed that these banks had not adequately taken
care of problem loans, which meant that asset values and future earnings
growth were both questionable. Still, despite the overall underperformance
of the Japanese market, world class exporters such as Fuji Photo Film,
Canon and Sony did quite well over the period. These top 10 fund holdings
benefited from the strong U.S. dollar and the weak Japanese yen, which made
Japanese products cheaper and increased demand for them in many overseas
markets.
Q. WERE THERE OTHER REASONS THE FUND DID WELL DURING THE PERIOD?
A. Yes. The fund also benefited from its holdings in Spain. As Spanish
interest rates declined, Spanish utilities - including the electric
utilities Union Electrica Fenosa and Iberdrola, as well as the Spanish
telephone company, Telefonica - performed well. In addition, French
companies undergoing restructuring, such as top 10 fund holding Alcatel
Alsthom, were positive contributors to the fund. Unilever, one of the
world's largest consumer product companies and another top fund holding,
also profited from management changes. Finally, some specific fund holdings
in emerging markets, such as the Brazilian telephone company Telebras and
Gencor, the South African multi-industry company, were solid performers.
Q. HOW HAS THE STRENGTH OF THE DOLLAR AFFECTED THE FUND?
A. The dollar was generally quite strong against many currencies, including
the yen, the German mark and the British pound. A change in the value of
the dollar affects the fund in several ways. First, when the fund's
holdings are calculated in dollars, there is an immediate translation
impact. So a share that is priced in yen and is worth a certain number of
dollars will be worth fewer dollars if the dollar is strong, assuming that
the share price in yen remains the same. On the other hand, many analysts
feel that a relatively weak currency can increase export competitiveness.
So big exporting companies can often experience stronger earnings from a
weaker currency. Thus, the longer-term business impact of a weak currency
can sometimes offset the translation impact, at least for companies heavily
involved in exports.
Q. SO, OVERALL, DID THE CURRENCY SITUATION HELP OR HURT THE FUND?
A. The strength of the dollar has probably modestly held back the
performance of the fund in the past year - especially for Japanese and
German holdings. However, good price performance in most markets in local
currency terms resulted in satisfactory dollar-based returns for
shareholders.
Q. WHICH OF THE FUND'S INVESTMENTS WERE DISAPPOINTMENTS?
A. For most of the six-month period, the biggest disappointment by far was
the performance of smaller and non-export-oriented Japanese companies. The
share prices of these companies often performed poorly in yen terms and,
when translated back into dollars, returns for dollar-based investors were
extremely disappointing. The valuations of many of these companies look
quite interesting now.
Q. HAVE THERE BEEN ANY IMPORTANT CHANGES OVER THE PERIOD TO THE COMPUTER
MODELS THAT THE FUND USES?
A. Yes there have. As many shareholders know, the fund uses two general
types of computer models to make investment decisions. The first set of
models, which I call the top-down models, uses data to choose countries
whose markets could outperform the average market. The second set, which I
call the bottom-up models, focuses on individual companies. A recent
addition to the bottom-up models is one that looks at how much cash flow
companies have generated over different time frames. In the event of a bear
market, it seems logical that companies that generate a lot of free cash
may do better than those that do not. Now the fund can quickly be
positioned in this way, if the situation warrants.
Q. THERE WERE A NUMBER OF NOTABLE CHANGES IN THE FUND'S TOP 10 STOCKS OVER
THE PAST SIX MONTHS. COULD YOU TALK ABOUT THE FUND'S TURNOVER RATE?
A. Sure. The computer models we use continuously evaluate over 6,000
companies. And it seems that business events, if anything, are speeding up
around the world. So it's not surprising that the companies that the models
favor will change over time. I do try to keep turnover to reasonable levels
because dealing in foreign stocks tends to be more expensive than dealing
in U.S. stocks.
Q. GIVEN THE PERFORMANCE OF LARGE MULTINATIONAL U.S. COMPANIES, SHOULD
INVESTORS STILL INVEST INTERNATIONALLY?
A. As an international investor, it's been quite frustrating to see the
U.S. market go from strength to strength and outdistance many foreign
markets. And, quite honestly, it's hard to find foreign companies that have
the global dominance of U.S. companies such as Microsoft, Intel and
Coca-Cola. But for long-term investors, some of the great companies in the
future are bound to be outside of the U.S. So, for investors with patience
and foresight, international holdings could be an important part of a
broadly diversified portfolio.
Q. GREG, WHAT'S THE OUTLOOK FOR THE FUND?
A. The valuations of many international companies continue to look quite
reasonable when compared to their U.S. peers. Yet, many foreign indexes and
companies have been hitting new highs. That said, many international
companies are more expensive and, therefore, look less compelling now than
they did a year or two ago. So - as I was six months ago - I continue to be
just a bit cautious. Finally, I reiterate two cautions I've made in
previous reports. First, because the fund rarely hedges currency exposure,
a large sustained increase in the value of the dollar could hurt the
returns for the fund's shareholders. Second, if the U.S. were to suffer a
bear market, as some analysts have predicted, many foreign markets would
probably follow suit.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in foreign equity securities that are
determined, mainly through both technical and
fundamental analysis, to be undervalued
compared to others in their industries and
countries
FUND NUMBER: 325
TRADING SYMBOL: FDIVX
START DATE: December 27, 1991
SIZE: as of April 30, 1997, more than $1.0 billion
MANAGER: Greg Fraser, since 1991; manager,
Fidelity Select Defense and Aerospace
Portfolio, 1989-1990; Fidelity Select
Environmental Services Portfolio, 1991; joined
Fidelity in 1986
(checkmark)
GREG FRASER ON LESSONS LEARNED OVER THE FUND'S FIRST FIVE
YEARS:
"Recently, the fund had its five year anniversary, so I
thought it would be useful to review some of the
events that have influenced it and how some of
these events helped our current strategy evolve.
"Looking back to 1992, the big news was the
unraveling of the exchange rate system in Europe
and, most notably, the devaluation of the British
pound. Since that time, the fund's country and
company computer models have monitored stock
and currency price movements in an effort to
minimize future adverse effects from devaluations.
"The next year, emerging markets took off and, even
though the fund had a reasonably good year, some
competitive funds that had greater emerging
markets exposure performed better than the fund.
We learned from this experience that there would be
greater growth from emerging markets over time
than from developed markets. So the fund often has
had a greater exposure to emerging markets than it
did prior to 1993. One attractive instrument I have
used since then for participating in emerging
markets are deeply discounted closed-end funds.
"Toward the end of 1994, the Mexican peso was
devalued, which caused extreme pressure
throughout the emerging markets. In retrospect, this
was actually an excellent time to buy - not sell -
emerging market stocks. In that emotional market, I
learned that it was useful to increase the reliance on
valuation models and decrease the reliance on
analyst earnings expectations.
"This helped early in 1995 when Japan experienced
a terrible earthquake and Barings, a venerable
British merchant bank, had to be rescued after a
rogue trader had lost about one billion dollars. In
that volatile environment, I applied the knowledge
gained the previous year in Mexico and used the
fund's computer models to dispassionately assess
various stocks, while some other investors got
carried away with their emotions. It was one of many
lessons learned since the fund started that really
paid off."
DIVERSIFIED INTERNATIONAL
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997
Australia 3.4%
United States 12.7%
Row: 1, Col: 1, Value: 12.7
Row: 1, Col: 2, Value: 8.4
Row: 1, Col: 3, Value: 5.1
Row: 1, Col: 4, Value: 4.8
Row: 1, Col: 5, Value: 24.7
Row: 1, Col: 6, Value: 5.8
Row: 1, Col: 7, Value: 17.1
Row: 1, Col: 8, Value: 5.4
Row: 1, Col: 9, Value: 4.9
Row: 1, Col: 10, Value: 7.7
Row: 1, Col: 11, Value: 3.4
Canada 7.7%
France 4.9%
United
Kingdom 8.4%
Germany 5.4%
Switzerland 5.1%
Japan 17.1%
Sweden 4.8%
Netherlands 5.8%
Other 24.7%
AS OF OCTOBER 31, 1996
Australia 3.6%
United States 9.0%
Canada 9.7%
Row: 1, Col: 1, Value: 9.0
Row: 1, Col: 2, Value: 6.0
Row: 1, Col: 3, Value: 3.4
Row: 1, Col: 4, Value: 7.5
Row: 1, Col: 5, Value: 27.6
Row: 1, Col: 6, Value: 5.4
Row: 1, Col: 7, Value: 16.3
Row: 1, Col: 8, Value: 7.3
Row: 1, Col: 9, Value: 4.2
Row: 1, Col: 10, Value: 9.699999999999999
Row: 1, Col: 11, Value: 3.6
United
Kingdom 6.0%
France 4.2%
Switzerland 3.4%
Germany 7.3%
Sweden 7.5%
Japan 16.3%
Other 27.6%
Netherlands 5.4%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks and closed-end 88.4 90.5
investment companies
Bonds 0.3 0.8
Short-term investments 11.3 8.7
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
STOCKS
6 MONTHS AGO
Novartis AG (Reg.) 1.9 1.6
(Switzerland, Drugs & Pharmaceuticals)
Fuji Photo Film Co. Ltd. 1.6 0.9
(Japan, Photographic Equipment)
National Bank of Canada 1.4 0.3
(Canada, Banks)
Sony Corp. 1.4 0.5
(Japan, Consumer Electronics)
Alcatel Alstom Compagnie Generale 1.3 0.2
d'Electricite SA sponsored ADR
(France, Electrical Equipment)
Unilever NV ADR 1.3 0.9
(Netherlands, Household Products)
Canon, Inc. 1.2 0.7
(Japan, Computers & Office Equipment)
Shell Transport & Trading Co. PLC (Reg.) 1.2 0.9
(United Kingdom, Oil & Gas)
Credit Suisse Group (Reg.) 0.9 0.0
(Switzerland, Banks)
Nestle SA (Reg.) 0.9 0.6
(Switzerland, Foods)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET
SECTORS
6 MONTHS AGO
Finance 28.6 26.3
Technology 7.2 5.5
Nondurables 7.0 5.0
Durables 6.1 5.5
Basic Industries 5.9 7.6
Energy 5.9 8.8
Health 5.4 5.7
Utilities 5.2 6.1
Media & Leisure 4.3 4.1
Industrial Machinery & Equipment 3.8 2.3
DIVERSIFIED INTERNATIONAL
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 77.8%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.5%
Banco de Galicia Y Buenos Aires SA
sponsored ADR representing
Class B shares 100,000 $ 2,432,813
Telefonica de Argentina SA
sponsored ADR 35,000 1,163,750
YPF Sociedad Anonima sponsored
ADR representing Class D shares 50,000 1,381,250
4,977,813
AUSTRALIA - 2.8%
Australia & New Zealand
Banking Group Ltd. 700,000 4,477,760
Austereo Ltd. 500,000 972,407
Australian Oil & Gas Corp. Ltd. 800,000 1,262,177
Burns Philip & Co. 51,041 84,914
CRA Ltd. Ord. 100,000 1,493,368
Consolidated Rutile Ltd. 154,282 119,297
Foodland Associated Ltd. 700,000 4,270,000
Fosters Brewing Group Ltd. 1,250,000 2,577,465
Gandel Retail Trust GAN 500,000 363,188
Macquarie Bank Ltd. 100,000 722,471
Memtec Ltd. sponsored ADR 100,000 2,312,500
National Australia Bank Ltd. 175,000 2,398,800
National Mutual Property Trust 800,000 662,330
News Corp. Ltd. sponsored ADR
(ltd. vtg.) 125,000 1,890,625
Petsec Energy Ltd. sponsored ADR 100,000 2,150,000
Santos Ltd. 300,000 1,171,575
Santos Ltd. (rights) (a) 37,500 30,168
Savage Resources Ltd. 305,731 298,489
Savage Resources Ltd. (warrants) (a) 5,500 1,203
Seven Network Ltd. 100,000 377,091
Siddons Ramset Ltd. 106,475 590,452
Tyndall Australia Ltd. 400,000 618,592
Tyndall Australia Ltd. (rights) (a) 40,000 14,996
Western Mining Holdings Ltd. 102,280 607,132
Westfield Trust 200,000 373,342
29,840,342
AUSTRIA - 0.2%
OMV AG (d) 10,000 1,091,372
VA Technologie AG 4,000 621,376
1,712,748
BAHAMAS (NASSAU) - 0.1%
Sun International Hotels Ltd. Ord. (a) 40,000 1,215,000
BELGIUM - 0.0%
Delhaize Freres & Cie Le Lion SA 1,500 75,401
BERMUDA - 0.8%
Benor Tankers (a) 200,000 1,319,965
Lasalle Re Holdings Ltd. 50,000 1,387,500
Mid Ocean Ltd. 40,000 1,835,000
Partner Re Ltd. 100,000 3,362,500
Renaissance Re Holdings Ltd. 29,400 1,087,800
8,992,765
BRAZIL - 0.3%
Compania Cervejaria Brahma PN:
(Pfd. Reg.) (warrants) (a) 188,529 13,331
(Pfd. Reg.) 3,000,000 2,040,999
Telebras sponsored ADR 15,000 1,721,250
3,775,580
SHARES VALUE (NOTE 1)
CANADA - 7.7%
Air Canada, Inc. (a) 200,000 $ 1,073,384
Alberta Energy Co. Ltd. 35,000 752,621
Alliance Forest Products, Inc. 150,000 3,434,828
Astral Bellevue Pathe, Inc. Class A 100,000 1,073,384
BCE, Inc. 60,000 2,807,972
Baton Broadcasting (a) 200,000 1,574,296
Beau Canada Exploration Ltd. (a) 550,000 1,220,079
Boralex, Inc. Class A (a) 175,000 688,755
Brascan Ltd. Class A 100,000 2,425,847
CHC Helicopter Corp. Class A 250,000 1,288,060
Canadian General Investment Ltd. 170,000 1,666,607
Canadian Pacific Ltd. 50,000 1,225,446
Canadian Imperial Bank of Commerce 80,000 1,837,633
Canadian National Railway Co. 50,000 1,914,201
Canadian Natural Resources Ltd. (a) 150,000 3,574,368
Club Monaco, Inc. (a) 125,000 939,211
Computalog Ltd. (a) 65,000 674,443
Dundee Bancorp, Inc. Class A
(sub. vtg.) (a)(d) 100,000 2,125,300
Edper Group Ltd. (The) Class A (ltd. vtg.) 100,000 1,649,433
FCA International Ltd. (a) 130,000 172,099
Fletchers Fine Foods Ltd. 135,000 1,294,501
Harrowston, Inc. Class A (a) 200,000 679,810
International Murex Technologies Corp. (a) 175,000 1,050,000
Jannock Ltd. 50,000 701,277
Laurentian Bank 90,000 1,352,463
London Insurance Group, Inc. 100,000 1,359,619
Marsulex, Inc. (a) 250,000 894,486
Midland Walwyn, Inc. 100,000 901,642
National Bank of Canada 1,250,000 14,580,128
National Trustco, Inc. 135,000 2,328,169
Noranda, Inc. 150,000 3,166,482
North West Co. Fund Trust unit 100,000 805,038
Penn West Petroleum Ltd. (a) 65,000 732,584
Petro-Canada 40,000 652,617
Power Corporation of Canada 100,000 2,082,364
Power Financial Corp. 40,000 755,662
Renaissance Energy Ltd. (a) 133,700 3,702,594
Rio Alto Exploration Ltd. (a) 400,000 2,790,798
Royal Group Technology Ltd. (sub. vtg.) (a) 90,000 2,025,475
Royal Bank of Canada 50,000 1,998,283
Telus Corp. 150,000 2,157,501
Trilon Financial Corp. Class A 500,000 2,755,018
Trizec Hahn Corp. (sub-vtg.) 90,000 1,964,292
82,848,770
CHILE - 0.1%
Banco de Santiago D sponsored ADR 50,000 1,381,250
DENMARK - 2.6%
Amtsspar Fyn Holding AS 5,000 303,495
BG Bank AS (Reg.) 20,000 877,100
Den Danske Bank Group AS 30,000 2,594,880
FIH AS Class B 150,000 3,596,413
Jyske Bank AS (Reg.) 75,000 5,940,910
Novo-Nordisk AS Class B 20,000 1,978,786
Syd-Sonderjylland Holding 96,700 4,519,583
Tele Danmark AS Class B 30,000 1,443,117
Unidanmark AS Class A 70,000 3,462,875
Vest-Wood AS 40,000 3,095,646
27,812,805
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINLAND - 1.3%
Cultor OY Ord., Series 2 20,000 $ 1,107,937
Enso OY Class R 200,000 1,654,212
Huhtamaki Ord. 40,000 1,734,999
Instrumentarium OY Class B 50,000 1,961,972
Metsa-Serla Ltd. Class B 100,000 750,166
Nokia Corp. AB sponsored ADR 50,000 3,231,250
Silja OY AB Series A (a) 100,000 923,281
TT Teito OY 40,000 3,039,134
14,402,951
FRANCE - 4.6%
Alcatel Alsthom Compagnie Generale
d'Electricite SA sponsored ADR 625,000 13,906,250
Assurances Generales (Reg.) 100,000 3,254,917
Carbonne-Lorraine (LE) 5,000 1,186,956
Club Mediterranee SA Ord. 40,000 3,098,942
Credit National 15,000 845,867
Elf Aquitaine SA sponsored ADR 80,000 3,890,000
Eramet SA 19,900 1,006,213
Eurafrance (Societe) 10,000 4,322,749
Group Axime (a) 3,000 360,972
Lagardere S.C.A. (Reg.) 25,000 773,878
Marine Wendel SA 30,000 3,110,940
Michelin SA (Compagnie Generale
des Etablissements) Class B 50,663 2,831,761
Nord Est 20,000 455,928
Pernod-Ricard 10,000 514,034
Paribas SA (Cie Financiere) Class A 30,000 1,892,788
Compagnie Financiere Paribas SA
Class A (d) 10,000 630,929
Rhone Poulenc SA Class A 35,000 1,177,615
Securidev SA 1,700 34,237
Societe Generale Class A 15,000 1,681,450
Total SA Class B 35,674 2,959,458
Worms et Compagnie SA (Reg.) 20,000 1,213,524
49,149,408
GRAND CAYMAN - 0.0%
Anangel-American Shipholdings
Ltd. ADR 3,000 28,875
GERMANY - 3.7%
Adidas AG (a) 15,000 1,551,082
Andrea-Noris Zahn 4,500 1,598,741
BASF AG 100,000 3,916,698
Bayer AG 100,000 3,884,348
Bayerische Vereinsbank AG Ord. 10,000 395,425
BHW Holding AG (d) 29,000 485,832
Buderus AG 10,000 4,690,795
Deutsche Bank AG (a) 70,000 3,691,574
Depfa Bank (Deut Pfandbrief) (a) 125,000 6,773,346
K & M Mobel AG (d) 57,000 625,632
Metallgesellschaft A G Ord. (a) 100,000 2,066,376
Pfeiffer Vacuum Technology AG
sponsored ADR 60,000 1,395,000
Springer Axel Verlag AG (Reg.) 2,500 2,079,663
Thyssen AG Ord. 10,000 2,172,092
Veba AG Ord. 75,000 3,876,838
39,203,442
SHARES VALUE (NOTE 1)
HONG KONG - 1.2%
HSBC Holdings PLC 250,000 $ 6,307,298
Jardine Matheson Holdings Ltd. Ord. 100,000 550,000
Jardine Strategic Holdings Ltd. Ord. 300,000 1,020,000
Jardine Strategic Holdings Ltd. Ord.
Put Warrants $3.80 Strike Price, 7/7/97 15,000 5,100
Peregrine Investments Holdings Ltd. 2,000,000 3,072,355
Vtech Holdings Ltd. 389,000 652,811
Yue Yuen Industrial Holdings Ltd. 400,000 882,979
12,490,543
INDIA - 0.0%
Tata Engineering & Locomotive GDR (d) 45,000 540,000
INDONESIA - 0.2%
Asia Pulp & Paper Co. Ltd.
sponsored ADR (a) 50,000 668,750
Bank Tiara Asia, PT 400,000 485,597
Panin Bank PT (For. Reg.) 416,000 607,737
Putra Surya Multidana PT (For. Reg.) 517,000 585,083
Ramayana Lestari Sentosa PT
(For. Reg.) (a) 100,000 242,799
2,589,966
IRELAND - 0.4%
Bank of Ireland, Inc. 100,000 1,040,664
Elan Corp. PLC ADR (a) 20,000 680,000
FBD Holdings PLC 50,000 183,383
Independent Newspapers PLC 271,053 1,386,172
IAWS Group PLC Class A (Reg.) 150,000 523,579
Jurys Hotel Group PLC (UK) 150,000 803,633
4,617,431
ISRAEL - 0.2%
Koor Industries Ltd. sponsored ADR 39,500 686,313
OSHAP Technologies Ltd. (a) 10,000 57,500
Teva Pharmaceutical Industries
Ltd. ADR 8,000 406,000
Tower Semiconductor Ltd. (a) 100,000 1,250,000
2,399,813
ITALY - 1.1%
Credito Italiano Ord. 900,000 1,262,908
Eni Spa sponsored ADR 20,000 1,020,000
Instrumentation Laboratory
sponsored ADR 40,000 150,000
Mondadori Arnoldo Editore Spa 250,000 1,457,145
SAES Getters SPA sponsored ADR (a) 65,000 585,000
Stet (Societa Finanziaria Telefonica)
Spa Ord. 800,000 3,799,302
Telecom Italia:
Spa 600,000 1,589,549
Mobile Spa 600,000 1,883,403
11,747,307
JAPAN - 16.9%
Acom Co. Ltd. 75,000 3,057,972
Aoyama Trading Co. Ord. 80,000 2,254,319
Bank of the Ryukyus 5,300 87,607
Bunka Shutter Co. Ltd. 250,000 1,283,010
Canon, Inc. 550,000 13,030,816
Chiyoda Fire & Marine Insurance
Co. Ltd. 525,000 1,880,239
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Chubu Steel Plate Co. Ltd. 118,000 $ 557,283
Citizen Watch Co. Ltd. Ord. 350,000 2,515,251
Dai-Tokyo Fire & Marine
Insurance Ord. 900,000 4,215,042
Daiichi Pharmaceutical Co. Ltd. 250,000 4,014,326
Daito Trust Construction Co. 81,100 817,096
Dowa Fire & Marine
Insurance Co. Ltd. 400,000 1,589,988
Fuji Photo Film Co. Ltd. 450,000 17,178,953
Fujitsu Ltd. 300,000 3,117,006
Fuji Fire & Marine Insurance Co. Ltd. 400,000 1,322,366
Fujitsu Business Systems Ltd. 50,000 1,007,517
Hitachi Ltd. 700,000 6,336,338
Honda Motor Co. Ltd. 100,000 3,101,263
Izumiya Co. Ltd. 100,000 1,401,078
Jamco Corp. 50,000 566,728
Japan Associated Finance Co. 100,000 6,485,891
Kao Corp. 225,000 2,621,119
Kawagishi Bridge Works Co. Ltd. (a) 100,000 456,531
Konica Corp. 250,000 1,446,338
Konami Industry Co. Ltd. 75,000 2,278,720
Makita Corp. 100,000 1,369,594
Maruzen Showa Unyu Co. Ltd. 200,000 716,282
Matsushita Electric Industrial Co. Ltd. 550,000 8,788,225
Matsushita Electric Works Co. Ltd. 100,000 1,015,388
Minolta Camera Co. Ltd. 300,000 1,870,204
Mitsubishi Heavy Industries Ltd. 500,000 3,298,044
Mitsui Home Co. Ltd. 27,000 257,153
Namco Ltd. 100,000 2,928,096
Nippon Fire and Marine
Insurance Co. Ltd. 400,000 1,574,245
Nintendo Co. Ltd. Ord. 100,000 7,304,499
Nittetsu Mining Co. Ltd. 200,000 1,287,733
Nitto Denko Corp. 100,000 1,448,306
Nomura Securities Co. Ltd. 80,000 894,171
NTT Data Communications System 50 1,460,113
Okinawa Bank Ltd. 5,000 125,940
Omron Corp. 150,000 2,833,642
Promise Co. Ltd. 20,000 826,479
Ricoh Co. Ltd. Ord. 250,000 2,971,388
Royal Co. Ltd. 100,000 1,786,769
Sangetsu Company Ltd. 100,000 1,692,314
Sankyo Co. Ltd. 100,000 2,676,217
Sankyo Co. Ltd. (Gunma) 70,000 1,614,389
Sekisui House Ltd. 250,000 2,223,622
Shiseido Co. Ltd. 100,000 1,432,563
Shinko Kogyo Co. Ltd. 50,000 220,394
Sony Corp. 200,000 14,546,028
Sotoh Co. Ltd. 50,000 472,274
Square Co. Ltd. 1,500 64,347
Sumitomo Marine and Fire
Insurance Co. Ltd. 300,000 1,844,228
TDK Corp. 20,000 1,440,435
Takeda Chemical Industries Ltd. 330,000 7,610,689
Takefuji Corp. 26,000 1,250,423
Terumo Corp. 100,000 1,519,147
THK Co. Ltd. 44,600 516,053
Tokio Marine & Fire Insurance Co.
Ltd. (The) 600,000 5,856,193
Toyota Motor Corp. 125,000 3,620,764
U Store Co. Ltd. 87,000 992,955
Xebio Co. Ltd. 50,000 1,172,813
SHARES VALUE (NOTE 1)
Yamaichi Securities Co. Ltd. 50,000 $ 130,662
Yasuda Fire & Marine Insurance Co. 600,000 2,776,969
Yokogawa Electric 150,000 1,049,628
180,102,175
KOREA (SOUTH) - 0.6%
Dongwon Securities Co. Ltd. 80,000 780,269
Daewoo Securities Co. Ltd. 80,000 771,300
Kookmin Bank 41,147 781,424
Korea Electric Power Corp. 60,000 1,789,237
LG Securities Co. Ltd. (a) 80,000 645,740
Nam Yang Dairy Products 10,000 1,143,498
Samsung Electronics Co. Ltd. (vtg.) 9,460 777,650
6,689,118
LUXEMBOURG - 0.2%
Espirito Santo Financial Holding
SA ADR 100,000 1,700,000
MALAYSIA - 0.2%
Arab Malaysian Finance BHD
(For. Reg.) 200,000 438,160
Oriental Holdings BHD 225,000 1,702,848
Tan Chong Motor Holdings BHD 50,000 92,810
2,233,818
MEXICO - 0.5%
Corporacion Geo SA de CV (a) 500,000 2,327,044
Grupo Financiero Inbursa SA Class B 600,000 2,052,830
Telefonos de Mexico SA sponsored ADR
representing Ord. Class L shares 25,000 1,031,250
5,411,124
NETHERLANDS - 5.7%
ABN-AMRO Holdings NV 45,000 3,094,046
AKZO Nobel NV 50,000 6,444,325
ASM Lithography Holding NV (a)(d) 15,000 1,120,696
DSM NV 90,000 8,965,570
IHC Caland NV 15,000 740,969
ING Groep NV 120,000 4,713,857
KLM Royal Dutch Air Lines NV 40,000 1,183,086
Koninklijke Pakhoed NV 75,000 2,445,506
New Holland NV (a) 350,000 7,743,750
Philips Electronics NV (Bearer) 50,000 2,611,107
Royal Dutch Petroleum Co. ADR 25,000 4,506,250
SGS Thomson Microelectronics NV (a) 20,000 1,567,500
Telegraaf 50,000 1,026,984
Unilever NV ADR 70,000 13,737,500
Van Ommeren Ceteco NV 25,000 974,351
60,875,497
NETHERLANDS ANTILLES - 0.3%
Intrum Justitia NV (Reg.) 1,000,000 1,980,670
Orthofix International (a) 101,400 811,200
2,791,870
NEW ZEALAND - 1.8%
Air New Zealand Ltd. Class B 2,055,890 5,941,560
Brierley Investments Ltd. 1,000,000 880,174
Corporate Investments Ltd. (a) 921,000 453,192
Fletcher Challenge Ltd. 2,250,000 6,533,729
Fletcher Challenge Ltd.
(Forestry Division) 508,145 700,818
Independent Newspapers Ltd. 292,000 1,416,594
Lion Nathan Ltd. 1,200,000 2,885,860
Progressive Enterprises Ltd. 100,000 107,423
18,919,350
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NORWAY - 2.1%
Aker ASA Class B 70,000 $ 1,572,724
Color Lines 300,000 1,326,986
Den Norske Bank AS Class A
Free shares 1,300,000 4,709,748
Fokus Bank AS 6,500 63,436
Ganger Rolf 30,000 1,225,883
Helikopter Services AS 100,000 1,319,965
I.M. Skaugen ASA 21,212 229,354
Merkantildata 50,000 912,742
Norsk Hydro AS ADR 10,000 490,000
P4 Radio Hele Norge SA 53,100 466,025
Saga Petroleum AS Class B 130,000 2,090,179
Saevik Supply AS (a) 200,000 2,331,002
Schibsted AS:
Series B 150,000 2,590,783
Class B (d) 50,000 863,594
Storli Skibs Series `A' AS 10,000 187,516
Superoffice AS (a) 150,000 526,582
UNI Storebrand AS 300,000 1,832,505
22,739,024
PERU - 0.2%
Banco Wiese Ltd. sponsored ADR 135,000 877,500
Telefonica Del Peru SA Class B
sponsored ADR 35,000 840,000
1,717,500
PORTUGAL - 0.2%
Portugal Telecom SA sponsored ADR 20,000 740,000
Portugal Telecom SA 30,000 1,105,899
Sonae Investmentos-Sociedade Gestora
de Particpacoes Sociais SA 10,000 328,921
2,174,820
RUSSIA - 0.2%
Luk Oil Co. sponsored ADR 35,000 1,960,000
SINGAPORE - 0.3%
Creative Technology Corp. Ltd. (a) 100,000 1,375,000
DBS Land Ltd. 150,000 485,075
Singapore Bus Service 1978 Ltd.
(For. Reg.) 50,000 241,846
Wing Tai Holdings Ltd. 300,000 775,290
2,877,211
SOUTH AFRICA - 0.4%
Anglo American Corp. of
South Africa Ltd. (Reg.) 25,000 1,596,223
Free State Consolidated Gold Mines
Ltd. Ord. 50,000 337,230
Gencor Ltd. (Reg.) 300,000 1,261,241
South African Breweries Ltd. (a) 35,000 1,030,800
4,225,494
SPAIN - 1.7%
Argentaria Corporacion Bancaria
de Espana SA 75,000 3,349,889
Asturiana del Zinc SA (a) 50,000 770,680
Banco Bilbao Vizcaya SA Ord. (Reg.) 10,000 674,088
Banco De Santander SA
de Credito ADR 20,000 1,485,000
Empresa Nacional De Electricidad SA
sponsored ADR 20,000 1,397,500
Hidroelectrica de Cantabrico SA 25,000 873,437
SHARES VALUE (NOTE 1)
Iberdrola SA 75,000 $ 847,748
Repsol SA sponsored ADR 20,000 837,500
Telefonica de Espana SA
sponsored ADR 70,000 5,390,000
Union Electrica Fenosa SA 250,000 2,089,399
17,715,241
SWEDEN - 4.8%
ASG AB Class B Free shares Ord. 100,000 1,784,167
Astra AB Class A Free shares 50,000 2,045,420
Atle AB 150,000 2,074,094
Bilspedition 'B' Free (a) 200,000 660,142
Bure Investment AB 300,000 3,784,982
Enator AB (a) 120,000 2,416,272
Ericsson (L.M.) Telephone Co.
Class B ADR 60,000 2,017,500
Forvaltnings AB Ratos Class B
Free shares 560,000 4,959,984
Investor AB Class B Free shares 80,000 3,496,967
Industrivarden AB, Series A 30,000 1,452,822
Linjebuss AB Class A 100,000 917,571
Marieberg Tidnings Class A
Free shares 50,000 1,166,080
Nordbanken AB 50,000 1,535,658
SKF AB Ord. 175,000 3,791,354
Skandinaviska Enskilda Banken Class A
Free shares 100,000 1,019,524
Skandia Foersaekrings AB 150,000 4,339,349
Scala International SA 25,000 1,051,384
Swedish Match Co. 1,900,000 6,198,705
Trelleborg Class B Free shares 50,000 781,086
Volvo AB Class B 150,000 3,775,424
WM Data Nordic AB, Series B 25,000 1,816,027
51,084,512
SWITZERLAND - 5.1%
Bank for International Settlements 500 3,358,209
Bucher Holding AG (Bearer) 2,000 1,852,103
Ciba Specialty Chemicals AG (a) 10,000 861,601
Credit Suisse Group (Reg.) 86,300 9,718,986
Edipresse SA, Lausanne 5,000 1,139,756
Jelmoli, Grands Magasins SA (a) 2,000 1,156,038
Julius Baer Holding AG 2,000 2,503,392
Nestle SA (Reg.) 8,000 9,715,061
Novartis AG (Reg.) 15,000 19,762,551
Publicitas Holding SA (Reg.) 10,000 1,777,476
Surveillance, Societe
Generale (Bearer) 500 1,034,600
Tag-Heuer International SA 10,000 1,404,342
54,284,115
THAILAND - 0.1%
PTT Exploration & Production
(For. Reg.) 40,000 511,485
Sri Thai Superware Co. Ltd. (For.) 30,000 128,637
640,122
UNITED KINGDOM - 8.4%
Anglian Water PLC Ord. 200,000 2,217,701
Appleyard Group 100,000 86,556
Avis Europe PLC (d) 500,000 1,095,863
BAT Industries PLC Ord. 700,000 5,898,176
Biocompatibles International
PLC Class L 10,000 229,725
British Petroleum PLC ADR 7,000 963,375
British Energy PLC 50,000 105,528
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Capital Radio PLC 200,000 $ 1,759,874
Carlton Communications PLC 250,000 2,053,728
Doncasters PLC sponsored ADR 170,900 3,845,250
EMI Group PLC 25,000 497,197
Energy Group PLC sponsored ADR (a) 150,000 4,706,250
English China Clay PLC 600,000 2,006,646
Ferguson Industrial Holdings PLC 200,000 649,400
Fleming Natural Resources Investment
Trust PLC 20,000 33,444
Granada Group PLC 100,000 1,446,539
Grand Metropolitan PLC 350,000 2,926,359
Guinness PLC Ord. 800,000 6,623,880
Hanson PLC sponsored ADR 25,037 607,147
Hays PLC 100,000 884,808
Huntingdon International Holdings
PLC Ord. 200,000 301,971
International Business Communications
Holdings PLC Class L 160,200 951,910
London Pacific Group Ltd. 50,000 174,526
LucasVarity PLC 600,000 1,821,567
Medeva PLC 200,000 977,347
Mcbride PLC 600,000 1,217,625
Mirror Group Newspaper PLC 100,000 342,559
National Power PLC (d) 75,000 647,777
Paterson Zochonis 106,100 723,464
Planning Sciences International
PLC sponsored ADR 75,000 328,125
Professional Staff PLC sponsored ADR 10,000 92,500
RTZ Corp. PLC Ord. 100,000 1,591,030
Railtrack Group PLC (d) 75,000 564,978
Rentokil Group PLC 150,000 983,841
Safeway PLC 300,000 1,665,711
Scottish Television PLC 100,000 1,111,692
Shell Transport & Trading Co.
PLC (Reg.) 700,000 12,398,670
Sema Group PLC 25,000 487,557
Severn Trent PLC Ord. 150,000 1,838,614
SmithKline Beecham PLC ADR 75,000 6,046,875
Stakis PLC 650,000 1,002,511
Thames Water PLC Ord. 200,000 2,191,725
Tomkins PLC Ord. 605,555 2,615,095
Unilever PLC ADR 40,000 4,290,000
Vodafone Group PLC sponsored ADR 40,000 1,770,000
WPP Group PLC 800,000 3,259,988
Waste Management International
PLC sponsored ADR (a) 180,000 1,417,500
89,452,604
UNITED STATES OF AMERICA - 0.3%
MCI Communications Corp. 50,000 1,906,250
Pharmacia & Upjohn, Inc. 50,000 1,481,250
3,387,500
TOTAL COMMON STOCKS
(Cost $736,807,902) 830,783,305
CLOSED-END INVESTMENT COMPANIES - 8.2%
AUSTRIA- 0.2%
Austria Fund, Inc. 300,000 2,662,500
BRAZIL- 0.4%
Brazil Fund, Inc. 150,000 3,825,000
SHARES VALUE (NOTE 1)
CHILE- 0.2%
Five Arrows Chile Investment
Trust Ltd. 500,000 $ 1,617,500
EMERGING MARKETS - 2.7%
Central European Equity Fund 225,000 5,034,375
Emerging Markets Infrastructure
Fund, Inc. 200,000 2,400,000
GT Global Developing Markets Fund 620,400 7,367,250
Morgan Stanley Africa Investment
Fund, Inc. 70,000 1,190,000
TCW/DW Emerging Markets Opportunities
Trust (SBI) 625,000 8,281,250
Templeton Dragon Fund, Inc. 250,000 3,687,500
Southern Africa Fund, Inc. 50,000 837,500
28,797,875
FRANCE - 0.3%
France Growth Fund, Inc. 300,000 3,150,000
GERMANY - 1.2%
Emerging Germany Fund, Inc. 420,000 3,727,500
New Germany Fund, Inc. 650,000 9,343,750
13,071,250
INDIA - 0.2%
India Fund (The) 130,000 1,137,500
Jardine Fleming India Fund, Inc. (a) 160,000 1,420,000
2,557,500
ITALY - 0.1%
Italy Fund, Inc. (The) 100,000 887,500
MALAYSIA - 0.0%
Malaysia Fund, Inc. 30,000 453,750
MEXICO - 0.3%
Mexico Fund, Inc. (The) 200,000 3,175,000
MULTI-NATIONAL - 1.4%
Alliance Global Environment Fund 200,000 2,925,000
Americas Income Trust, Inc. 189,000 1,441,125
Blackrock North American Government
Income Trust, Inc. 400,000 3,950,000
European Warrant Fund, Inc. 55,000 790,625
Global Health Sciences Fund 70,000 1,050,000
Morgan Stanley Asia-Pacific Fund, Inc. 150,000 1,462,500
Strategic Global Income Fund, Inc. 150,000 1,837,500
Templeton Global Income Fund, Inc. 225,000 1,631,250
15,088,000
PHILIPPINES- 0.2%
First Philippine Fund 140,000 1,907,500
PORTUGAL- 0.1%
Portugal Fund, Inc. 75,000 1,162,500
SPAIN - 0.6%
Growth Fund of Spain, Inc. 450,000 5,850,000
Spain Fund, Inc. 25,000 309,375
6,159,375
TAIWAN (FREE CHINA) - 0.2%
Taiwan Fund, Inc. 100,000 2,512,500
THAILAND - 0.1%
Thai Prime Fund 61,000 603,900
TOTAL CLOSED-END INVESTMENT COMPANIES
(Cost $80,661,188) 87,631,650
PREFERRED STOCKS - 2.4%
SHARES VALUE (NOTE 1)
CONVERTIBLE PREFERRED STOCKS - 0.5%
AUSTRALIA - 0.5%
National Australia Bank Ltd. 240,000 $ 6,360,000
NONCONVERTIBLE PREFERRED STOCKS - 1.9%
GERMANY - 0.5%
Volkswagen AG 10,000 4,921,868
ITALY - 0.3%
Stet (Societa Finanziaria
Telefonica) Spa 800,000 2,963,792
UNITED STATES OF AMERICA - 1.1%
Freeport McMoran Copper & Gold, Inc.,
Series B 106,900 3,353,988
depositary shares representing $0.025
shares silver denomination 300,500 5,521,688
depositary shares representing
gold, Series II 108,700 3,233,825
12,109,501
TOTAL NONCONVERTIBLE PREFERRED STOCKS 19,995,161
TOTAL PREFERRED STOCKS
(Cost $21,984,951) 26,355,161
CONVERTIBLE BONDS - 0.3%
MOODY'S PRINCIPAL
RATINGS AMOUNT (C)
JAPAN - 0.2%
Yamanouchi Pharmaceutical Co.
Ltd. euro 1 1/4%,
3/31/14 Aa3 JPY 150,000,000 1,611,634
NETHERLANDS - 0.1%
Bilbao Vizcaya Investments BV
3 1/2%, 7/12/06 Aa3 1,000,000 1,415,000
TOTAL CONVERTIBLE BONDS
(Cost $2,853,144) 3,026,634
CASH EQUIVALENTS - 11.3%
SHARES
Taxable Central Cash Fund (b)
(Cost $120,419,312) 120,419,312 120,419,312
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $962,726,497) $1,068,216,062
CURRENCY ABBREVIATIONS
JPY - Japanese yen
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash Fund was
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
(c) Principal amount is stated in United States dollars unless otherwise
noted.
(d) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $9,791,973 or 0.9% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $601,183,674 and $317,231,606, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $84,358 for the period (see Note 4 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $962,946,504. Net unrealized appreciation aggregated
$105,269,558, of which $134,521,718 related to appreciated investment
securities and $29,252,160 related to depreciated investment securities.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.4%
Basic Industries 5.9
Cash Equivalents 11.3
Construction & Real Estate 1.4
Durables 6.1
Energy 5.9
Finance 28.6
Health 5.4
Holding Companies 2.1
Industrial Machinery & Equipment 3.8
Media & Leisure 4.3
Nondurables 7.0
Precious Metals 0.2
Retail & Wholesale 1.6
Services 1.0
Technology 7.2
Transportation 2.6
Utilities 5.2
100.0%
DIVERSIFIED INTERNATIONAL
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $962,726,497) - See accompanying schedule $ 1,068,216,062
Cash 324,698
Receivable for investments sold 4,805,996
Receivable for fund shares sold 13,750,170
Dividends receivable 3,370,118
Interest receivable 585,157
TOTAL ASSETS 1,091,052,201
LIABILITIES
Payable for investments purchased $ 22,021,252
Payable for fund shares redeemed 3,557,269
Accrued management fee 695,689
Other payables and 300,563
accrued expenses
TOTAL LIABILITIES 26,574,773
NET ASSETS $ 1,064,477,428
Net Assets consist of:
Paid in capital $ 931,589,161
Undistributed net investment income 2,954,181
Accumulated undistributed net realized gain (loss) on investments and foreign 24,518,384
currency transactions
Net unrealized appreciation (depreciation) on investments 105,415,702
and assets and liabilities in foreign currencies
NET ASSETS, for 70,346,928 $ 1,064,477,428
shares outstanding
NET ASSET VALUE, offering price $15.13
and redemption price per
share ($1,064,477,428 (divided by) 70,346,928 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 9,936,256
Dividends
Interest 2,200,055
12,136,311
Less foreign taxes withheld (982,120
)
TOTAL INCOME 11,154,191
EXPENSES
Management fee $ 3,120,984
Basic fee
Performance adjustment 413,176
Transfer agent fees 1,129,851
Accounting fees and expenses 250,311
Non-interested trustees' compensation 2,175
Custodian fees and expenses 218,587
Registration fees 55,417
Audit 28,185
Legal 3,896
Miscellaneous 2,852
Total expenses before reductions 5,225,434
Expense reductions (85,356 5,140,078
)
NET INVESTMENT INCOME 6,014,113
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 25,325,288
Foreign currency transactions (48,865 25,276,423
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 35,187,908
Assets and liabilities in (71,068 35,116,840
foreign currencies )
NET GAIN (LOSS) 60,393,263
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 66,407,376
OTHER INFORMATION $ 67,527
Expense reductions
Directed brokerage arrangements
Custodian interest credits 6
Transfer agent interest credits 17,823
$ 85,356
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31,
(UNAUDITED) 1996
Operations $ 6,014,113 $ 7,321,339
Net investment income
Net realized gain (loss) 25,276,423 27,040,980
Change in net unrealized appreciation (depreciation) 35,116,840 39,551,272
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 66,407,376 73,913,591
Distributions to shareholders (7,278,525) (5,256,708)
From net investment income
From net realized gain (17,468,122) (9,796,447)
TOTAL DISTRIBUTIONS (24,746,647) (15,053,155)
Share transactions 672,834,382 791,836,282
Net proceeds from sales of shares
Reinvestment of distributions 24,250,340 14,593,828
Cost of shares redeemed (339,759,913) (494,815,255)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 357,324,809 311,614,855
TOTAL INCREASE (DECREASE) IN NET ASSETS 398,985,538 370,475,291
NET ASSETS
Beginning of period 665,491,890 295,016,599
End of period (including undistributed net investment income of $2,954,181 and $6,896,785,
respectively) $ 1,064,477,428 $ 665,491,890
OTHER INFORMATION
Shares
Sold 45,260,842 58,603,680
Issued in reinvestment of distributions 1,681,717 1,169,376
Redeemed (22,885,672) (36,651,694)
Net increase (decrease) 24,056,887 23,121,362
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31, DECEMBER 27,
ENDED 1991
APRIL 30, 1997 (COMMENCEMENT
OF
OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA (UNAUDITED) 1996 1995 1994 E 1993 1992
Net asset value, beginning of period $ 14.38 $ 12.73 $ 12.46 $ 11.32 $ 8.46 $ 10.00
Income from Investment Operations
Net investment income .11 D .15 .22 .05 .07 .07
Net realized and unrealized gain (loss) 1.15 2.13 .47 1.20 2.89 (1.61)
Total from investment operations 1.26 2.28 .69 1.25 2.96 (1.54)
Less Distributions
From net investment income (.15) (.22) (.03) (.01) (.10) -
From net realized gain (.36) (.41) (.39) (.10) - -
Total distributions (.51) (.63) (.42) (.11) (.10) -
Net asset value, end of period $ 15.13 $ 14.38 $ 12.73 $ 12.46 $ 11.32 $ 8.46
TOTAL RETURN B, C 8.94% 18.66% 6.02% 11.14% 35.38% (15.40)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,064,477 $ 665,492 $ 295,017 $ 351,152 $ 255,029 $ 36,439
Ratio of expenses to average net assets 1.28% A 1.29% 1.13% 1.25% 1.47% 2.00% A,
F
Ratio of expenses to average net assets after 1.26% A, 1.27% 1.12% 1.25% 1.47% 2.00% A
expense reductions G G G
Ratio of net investment income to average net assets 1.48% A 1.53% 1.55% .96% .84% 1.38% A
Portfolio turnover rate 84% A 94% 101% 89% 56% 56% A
Average commission rate H $ .0130 $ .0121
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF
NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED . D NET INVESTMENT INCOME PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E EFFECTIVE NOVEMBER 1, 1993,
THE FUND ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION,
DISCLOSURE, AND FINANCIAL
STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF
CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET
INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES. F FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES DURING THE PERIOD. WITHOUT
THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN
HIGHER. G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER PAID
OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 5 OF NOTES
TO FINANCIAL STATEMENTS). H FOR FISCAL YEARS BEGINNING ON OR
AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT
MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
</TABLE>
INTERNATIONAL VALUE
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 LIFE OF
APRIL 30, 1997 MONTH YEAR FUND
S
INTERNATIONAL VALUE 7.84% 5.51% 25.69%
Morgan Stanley Capital 1.57% -0.89% 11.79%
International EAFE Index
International Funds Average 6.17% 5.43% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year or since the fund
started on November 1, 1994. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Morgan Stanley Capital International (MSCI) Europe, Australasia, Far East
(EAFE) Index - a market capitalization weighted, unmanaged index of over
1,000 foreign stocks. To measure how the fund's performance stacked up
against its peers, you can compare it to the international funds average,
which reflects the performance of mutual funds with similar objectives
tracked by Lipper Analytical Services, Inc. The past six months average
represents a peer group of 396 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect of
sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
APRIL 30, 1997 YEAR FUND
INTERNATIONAL VALUE 5.51% 9.58%
Morgan Stanley Capital -0.89% 4.56%
International EAFE Index
International Funds Average 5.43% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER LIFE OF FUND
International Value Fund MS EAFE Index (Net)
00335 MS001
1994/11/01 10000.00 10000.00
1994/11/30 9700.00 9519.40
1994/12/31 9790.00 9579.01
1995/01/31 9440.00 9211.02
1995/02/28 9530.00 9184.59
1995/03/31 10000.00 9757.44
1995/04/30 10170.00 10124.41
1995/05/31 10030.00 10003.72
1995/06/30 10040.00 9828.29
1995/07/31 10830.00 10440.16
1995/08/31 10800.00 10041.90
1995/09/30 10860.00 10238.02
1995/10/31 10630.00 9962.82
1995/11/30 10820.00 10240.03
1995/12/31 11150.86 10652.60
1996/01/31 11253.73 10696.33
1996/02/29 11294.88 10732.49
1996/03/31 11521.18 10960.41
1996/04/30 11912.08 11279.06
1996/05/31 11840.07 11071.51
1996/06/30 11973.80 11133.82
1996/07/31 11562.33 10808.41
1996/08/31 11562.33 10832.09
1996/09/30 11870.93 11119.85
1996/10/31 11654.91 11006.06
1996/11/30 12251.54 11443.98
1996/12/31 12219.78 11296.76
1997/01/31 12198.62 10901.40
1997/02/28 12452.54 11079.71
1997/03/31 12547.75 11119.83
1997/04/30 12568.91 11178.83
Let's say hypothetically that $10,000 was invested in Fidelity
International Value Fund on November 1, 1994, when the fund started. As the
chart shows, by April 30, 1997, the value of the investment would have
grown to $12,569 - a 25.69% increase on the initial investment. For
comparison, look at how the Morgan Stanley Capital International EAFE Index
did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $11,179 - a
11.79% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
INTERNATIONAL VALUE
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Richard Mace, Portfolio Manager of Fidelity International
Value Fund
Q. HOW DID THE FUND PERFORM, RICK?
A. For the six months that ended April 30, 1997, the fund produced a return
of 7.84%. For the same period, the Morgan Stanley Capital International
Europe, Australasia, Far East Index (EAFE) returned 1.57%. The
international funds average, according to Lipper Analytical Services, had a
six-month return of 6.17%. For the 12 months that ended April 30, 1997, the
fund returned 5.51%, compared to the -0.89% return of the EAFE index and
the 5.43% return of the Lipper peer group.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG SHOWING?
A. Individual stock selection will typically have the biggest influence on
the fund's return, and this period was no different. Several of the fund's
larger positions contributed positively to performance. Market selection
also played a key role, specifically the fund's underweighting in Japan
relative to the EAFE index. While the EAFE index had an approximate
Japanese weighting of 30%, I kept the fund at around 25%. As Japan's
well-documented economic woes continued to hamper the overall performance
of Japanese securities, my strategy of underweighting Japanese securities
worked in the fund's favor.
Q. CAN YOU PROVIDE AN UPDATE ON JAPAN'S TROUBLES AND HOW THE FUND HAS BEEN
AFFECTED?
A. Like a lot of other managers, I wish I knew more about what was going on
over there. For a perspective on Japan's problems, the entire Japanese
stock market was up 20% from mid-1995 through January 1997, an average gain
at best. If you look at the 15 best-performing stocks in the Japanese
market, however, they were up an average of 80% over that same span. So,
despite the overall underperformance of the Japanese market, some
individual stocks have done quite well. Another factor in Japan's situation
has been the weakening yen. The yen's poor performance relative to the U.S.
dollar has hurt those Japanese businesses that do not realize significant
export-related revenue. In terms of how I positioned the fund in Japan,
export companies comprised nearly half of my entire Japanese holdings.
Examples included Honda, Toyota, Sony, Hitachi and Fuji. Two years ago,
when the yen was strong, the managements of these companies took decisive
action to cut costs and make their companies more competitive. This
strategy helped offset the strong yen back then and, as the yen gradually
showed signs of strength toward the end of the period, these companies were
able to grow their earnings. My feeling is that export stocks will
eventually hit some sort of fair value and, since this fund is
value-oriented, I'll probably sell some of these stocks before they reach
their peak value. I think there's an end in sight for Japan; it's just
going to take some time.
Q. ONE OF YOUR STRATEGIES SEEMS TO BE THAT YOU'RE MORE HEAVILY CONCENTRATED
IN SOME OF THE FUND'S LARGER POSITIONS. WHAT'S BEHIND THIS THINKING?
A. I've made a conscious effort to stick to this strategy and I believe it
has benefited the fund. One reason for this concentration is that we've
seen such a favorable stock picking environment. Another is that by
increasing the fund's exposure to these larger positions, I'm able to
leverage the best ideas churned out by our research staff. By following
this strategy, I'm placing confidence in our research and can also
streamline my ongoing analysis of the fund's top holdings.
Q. YOU MENTIONED MARKET SELECTION AS BEING A KEY CONTRIBUTOR TO
PERFORMANCE. DO YOU BASE YOUR INVESTMENT DECISIONS ON WHERE THE STOCK IS
ISSUED?
A. No. Stock selection is my primary consideration. I look at the pluses
and minuses of an individual stock before I consider the country where the
stock is issued. A good example of this is the fund's positions in French
stocks. My increased weighting in France has very little to do with
following economic or political developments there. Instead, my
overweighting relative to the EAFE index simply reflects my bottom-up stock
picking strategy. As I found attractive buying opportunities, it just so
happened that a number of them were French stocks.
Q. HOW DID THE FUND'S EUROPEAN HOLDINGS PERFORM?
A. The overall decline in European interest rates had favorable
implications for Europe's stock markets. This rate environment, which may
have been related to continuing optimism on proposed economic unity
throughout Europe, led to strong performances in countries such as Spain,
Italy and Sweden. In Europe, I basically continued my strategy of looking
for companies based on three themes: those that would benefit from a rising
dollar, those that would gain from the overall improvement of world
economies and those companies engaged in restructurings designed to improve
their return on capital.
Q. FOLLOWING THE LEAD OF AMERICAN CORPORATIONS, INTERNATIONAL COMPANIES
HAVE BEEN IMPLEMENTING VARIOUS COST-CUTTING AND RESTRUCTURING STRATEGIES.
CAN YOU EXPLAIN WHY THIS IS A POSITIVE DEVELOPMENT? HOW HAS THIS TREND
AFFECTED THE FUND?
A. Worldwide, company managements have gotten smarter about how they run
their businesses. In order to earn returns above their costs of capital,
companies have had to reduce expenses, either by cutting personnel,
restructuring their balance sheets or upgrading their technology. As they
strive to become more shareholder-friendly, international companies also
are coming up with new ways to utilize their existing assets. In terms of
the fund, several individual holdings are good illustrations of this trend.
For example, Volvo, one of the fund's more significant stakes and a strong
performer during the period, divested many of its non-core businesses and
has announced plans to implement a share redemption program in which the
company will buy back one of every 20 outstanding shares. As companies
strive to push their share prices up, they can do one of two things. They
can wait for investors to bid the price up, or they can take a proactive
approach and try to increase the value themselves. In the case of Volvo,
management has taken a proactive stance and set forth a list of goals for
doing this; for the most part, the company has seen its plan through. This
emphasis on managing core businesses to be more efficient can enhance a
company's value and put smiles on the faces of money managers throughout
the world.
Q. WHICH INDIVIDUAL STOCK POSITIONS BENEFITED THE FUND DURING THE PERIOD?
WERE THERE ANY DISAPPOINTMENTS?
A. As I mentioned earlier, individual stock selection was a real key to the
fund's performance. Aside from the strong performances of Volvo and
Telebras, a privatized telecommunications company based in Brazil, the
fund's positions in Total, a French-based oil company, and Alcatel, which
specializes in telecommunications and electrical equipment, turned in good
results. Disappointments included the poor performance of several Japanese
brokerage companies, including Nomura Securities and Nikko Securities.
Q. WHAT'S YOUR OUTLOOK?
A. More and more, individual stock selection is outdistancing country
selection in terms of performance influence. In my opinion, this trend will
most likely continue and will place even more emphasis on thorough research
and analysis of individual stocks. With this in mind, I'll continue to use
my three-pronged approach of looking for stocks that can benefit from a
rising dollar, stronger economies and increased corporate efficiencies.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: growth of capital by investing mainly
in the stocks of foreign companies that own
valuable assets or are undervalued in the
marketplace
FUND NUMBER: 335
TRADING SYMBOL: FIVFX
START DATE: November 1, 1994
SIZE: as of April 30, 1997, more than
$290 million
MANAGER: Richard Mace, since 1994;
co-manager, Fidelity Global Balanced Fund,
February 1993-December 1993 and January
1995-March 1996; manager, Fidelity Global
Balanced Fund, since 1996; manager, Fidelity
International Growth & Income Fund, 1994-
1996; joined Fidelity in 1987
(checkmark)
RICK MACE ON FIDELITY'S INTERNATIONAL STOCK PICKING
PROCESS AND THE INFLUENCE OF COUNTRY SELECTION VS.
INDUSTRY SELECTION ON PERFORMANCE:
"Over the past few years, Fidelity has been gradually
increasing its presence on the international investing
stage. The process of searching the globe for
attractive investment opportunities isn't all that
different from choosing domestic stocks. Like U.S.
stock fund managers, we target stocks, conduct our
analysis, pick up the phone and visit companies on a
regular basis. The best way to find opportunities is
to take a hands-on approach; if you turn over enough
rocks and kick enough tires, you'll find some
winners. Fidelity's international stock picking
machine involves hundreds of analysts and fund
managers, located in several countries
throughout the world. We consider our international
team to be among the best and brightest in the
industry, and we function as a complete team. The
fact that we have aggressively grown our
international staff, I think, is a reflection of Fidelity's
commitment to being successful internationally.
And we've started to see the benefits. Fidelity
recently won several distinguished awards for its
international research and fund management.
Perhaps most significantly, those awards singled out
Fidelity's impressive devotion to teamwork. One
award, in fact, identified "Team Fidelity" as its
recipient.
"While it's obviously important to monitor events in the
country in which I'm investing, the bottom line is that I
pick stocks. Even in a case such as Japan, which as
I mentioned has certainly had its share of problems,
investors could still gain positive returns if they chose
the right stocks in the right industries. If you go back to
1986-90, studies show that country selection - that
is, picking a stock based on various macroeconomic
or political conditions within a country - accounted
for 84% of a stock's price movement. Industry
selection, on the other hand, accounted for 16%. From
1991-96, country influence had shrunk to 70% and
industry selection had climbed to 30%. I think this
upward trend in favor of industry selection will
continue."
INTERNATIONAL VALUE
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997
Canada 3.2%
United States 14.8%
Row: 1, Col: 1, Value: 3.2
Row: 1, Col: 2, Value: 10.0
Row: 1, Col: 3, Value: 4.2
Row: 1, Col: 4, Value: 25.3
Row: 1, Col: 5, Value: 6.0
Row: 1, Col: 6, Value: 13.5
Row: 1, Col: 7, Value: 5.7
Row: 1, Col: 8, Value: 4.2
Row: 1, Col: 9, Value: 13.1
Row: 1, Col: 10, Value: 14.8
France 10.0%
United
Kingdom 13.1%
Germany 4.2%
Switzerland 4.2%
Japan 25.3%
Sweden 5.7%
Other 13.5%
Netherlands 6.0%
AS OF OCTOBER 31, 1996
Canada 5.6%
United States 6.4%
Row: 1, Col: 1, Value: 5.6
Row: 1, Col: 2, Value: 9.4
Row: 1, Col: 3, Value: 6.4
Row: 1, Col: 4, Value: 31.4
Row: 1, Col: 5, Value: 4.6
Row: 1, Col: 6, Value: 17.5
Row: 1, Col: 7, Value: 8.699999999999999
Row: 1, Col: 8, Value: 10.0
Row: 1, Col: 9, Value: 6.4
United
Kingdom 10.0%
France 9.4%
Sweden 8.7%
Germany 6.4%
Other 17.5%
Japan 31.4%
Netherlands 4.6%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks, closed-end investment 87.9 96.2
companies and equity futures
Bonds 1.1 1.5
Short-term investments 11.0 2.3
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
STOCKS
6 MONTHS AGO
Alcatel Alsthom Compagnie Generale 2.1 1.6
d'Electricite SA
(France, Electrical Equipment)
Takeda Chemical Industries Ltd. 1.7 1.3
(Japan, Drugs & Pharmaceuticals)
Hitachi Ltd. 1.6 1.1
(Japan, Electronics)
Novartis AG (Reg.) 1.4 0.0
(Switzerland, Drugs & Pharmaceuticals)
Canon, Inc. 1.4 1.1
(Japan, Computers & Office Equipment)
Fuji Photo Film Co. Ltd. 1.3 1.1
(Japan, Photographic Equipment)
Volvo AB Class B 1.3 3.4
(Sweden, Autos, Tires, & Accessories)
Credit Suisse Group (Reg.) 1.2 0.0
(Switzerland, Banks)
Total SA Class B 1.0 1.2
(France, Oil & Gas)
Shell Transport & Trading Co. 1.0 1.1
PLC (Reg.)
(United Kingdom, Oil & Gas)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET
SECTORS
6 MONTHS AGO
Finance 13.5 12.2
Basic Industries 11.5 14.0
Technology 9.6 7.2
Durables 8.1 14.1
Health 7.5 3.5
Energy 7.0 11.1
Nondurables 5.8 4.9
Industrial Machinery & Equipment 5.2 5.9
Utilities 5.1 6.7
Construction & Real Estate 4.3 5.1
INTERNATIONAL VALUE
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.9%
SHARES VALUE (NOTE 1)
AUSTRALIA - 1.3%
Aberfoyle Ltd. 144,700 $ 412,166
Australia & New Zealand Banking
Group Ltd. 22,100 141,369
CSR Ltd. 400,000 1,480,871
National Australia Bank Ltd. 21,100 289,227
Pasminco Ltd. 77,700 148,078
QNI Ltd. 156,000 289,989
Tabcorp Holdings Ltd. 10,300 51,422
Western Mining Holdings Ltd. 160,843 954,761
Westpac Banking Corp. 24,100 130,069
3,897,952
AUSTRIA - 0.4%
Leykam-Muerstaler Papier und Zelstoff
AG Ord. 40,000 958,438
Voest-Alpine Stahl AG 3,400 134,198
1,092,636
BELGIUM - 0.1%
BBL (Banque Bruxelles Lambert) 100 24,927
Credit Communal Holding/Dexia (d) 3,600 357,893
382,820
BERMUDA - 0.1%
Fuji International Trust unit sponsored
ADR (d) 9 196,685
BRAZIL - 0.7%
Multicanal Participacoes SA
sponsored ADR 15,000 217,500
Telebras sponsored ADR 16,000 1,836,000
2,053,500
CANADA - 3.2%
Alcan Aluminium Ltd. 51,400 1,743,433
Alliance Forest Products (a)(d) 15,000 343,483
BCE, Inc. 15,800 739,433
Bro-X Minerals Ltd. 6,220 3,383
Canadian Natural Resources Ltd. (a) 37,500 893,592
Cominco Ltd. (a) 40,200 1,035,601
Domtar, Inc. 12,700 108,147
Greenstone Resources Ltd. (a) 60,000 566,747
Inco Ltd. 38,500 1,232,871
Noranda, Inc. 50,500 1,066,049
Renaissance Energy Ltd. (a) 38,000 1,052,345
TVI Pacific, Inc. (a) 593,000 347,962
9,133,046
DENMARK - 1.0%
Den Danske Bank Group AS 8,000 691,968
International Service Systems AS,
Series B 35,600 1,053,430
Novo-Nordisk AS Class B 4,300 425,439
Unidanmark AS Class A 12,500 618,371
2,789,208
FINLAND - 1.9%
Cultor OY Ord., Series 2 15,000 830,953
Huhtamaki Ord. 30,000 1,301,249
Metsa-Serla Ltd. Class B 89,800 673,649
Nokia Corp. AB, Series A 22,200 1,385,245
Rauma OY 361 7,429
UPM-Kymmene Corp. 13,000 297,566
Valmet OY 67,300 1,137,880
5,633,971
SHARES VALUE (NOTE 1)
FRANCE - 10.0%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 55,000 $ 6,118,181
Axa SA 9,600 590,883
Axime SA Ex Segin (a)(d) 7,000 842,268
BQE National Paris Ord. 9,400 401,183
Canal Plus SA 1,600 289,052
Cap Gemini Sogeti SA 4,500 272,657
Compagnie de Saint Gobain 4,400 589,759
Credit Commercial de France Ord. 10,000 443,930
Credit Local de France SA 6,600 610,875
Elf Aquitaine SA sponsored ADR 35,000 1,701,875
Eramet SA 29,000 1,466,341
Generale des Eaux, Cie 2,078 289,568
Group Axime (a) 300 36,097
Groupe Danone 6,900 1,005,271
Lafarge Coppee SA 2,500 164,031
Lagardere S.C.A. (Reg.) 13,000 402,417
Michelin SA (Compagnie Generale
des Etablissements) Class B 27,200 1,520,319
Nationale Elf Aquitaine 6,300 611,184
Pechiney SA Class A 71,938 2,688,003
Paribas SA (Cie Financiere) Class A 7,500 473,197
Rhone Poulenc SA Class A 55,900 1,880,819
Societe Generale Class A 11,500 1,289,112
Total SA:
Class B 34,882 2,893,755
sponsored ADR 50,000 2,081,250
Unibail 1,300 125,895
Usinor Sacilor 9,500 143,617
Valeo SA 2,600 160,432
29,091,971
GERMANY - 4.0%
Allianz Versich Holdings Ord. (Reg.) (a) 2,100 407,614
Altana AG 104 80,506
BASF AG 33,000 1,292,510
Bayer AG 45,600 1,771,263
Buderus AG 2,000 938,159
Continental Gummi-Werke AG 21,500 472,589
Daimler-Benz AG:
Ord. 14,600 1,081,263
(rights) (a) 14,600 1,265
Degussa AG 12,000 529,621
Dresdner Bank AG Ord. 5,000 159,296
Hornbach Baumarket AG (Bearer) 5,000 158,863
Karstadt AG 300 89,772
Lufthansa 20,000 278,444
Metallgesellschaft A G Ord. (a) 42,400 876,144
Mannesmann AG Ord. 1,500 589,758
Marseille-Kliniken AG 27,000 522,515
Thyssen AG Ord. 600 130,326
Veba AG Ord. 21,300 1,101,022
Viag AG 100 44,481
Volkswagen AG 955 604,706
Wella AG 720 436,729
11,566,846
HONG KONG - 0.8%
Cheung Kong Holdings Ltd. 36,000 316,014
HSBC Holdings PLC 29,800 751,830
Hutchison Whampoa Ltd. Ord. 46,000 341,445
New World Development Co. Ltd. 22,000 126,948
Peregrine Investments HoldingsLtd. 400,000 614,471
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HONG KONG - CONTINUED
Peregrine Investments Holdings Ltd.
(warrants) (a) 40,000 $ 5,990
Wharf Holdings Ltd. 37,000 139,947
2,296,645
INDONESIA - 0.3%
Matahari Putra Prima PT (For. Reg.) 344,000 481,317
Multipolar PT (For. Reg.) 401,000 231,029
Putra Surya Multidana PT (For. Reg.) 135,500 153,344
865,690
IRELAND - 0.1%
CRH PLC 15,300 148,877
ITALY - 1.8%
Credito Italiano Ord. 675,000 947,181
Eni Spa 379,700 1,934,171
Stet (Societa Finanziaria Telefonica)
Spa Ord. 180,000 854,843
Telecom Italia:
Spa 152,700 404,540
Mobile Spa 300,100 942,016
5,082,751
JAPAN - 24.9%
Acom Co. Ltd. 42,900 1,749,160
Amway Japan Ltd. sponsored ADR 10,000 151,250
Amway Japan Ltd. 10,000 304,616
Asahi Chemical Industry Co. Ltd. 76,000 442,678
Asahi Breweries Ltd. 60,000 661,183
Bank of Tokyo-Mitsubishi Ltd. 111,000 1,756,149
Canon, Inc. 166,000 3,932,937
Citizen Watch Co. Ltd. Ord. 108,000 776,134
DDI Corp. Ord. 173 1,147,932
Dai-Tokyo Fire & Marine Insurance Ord. 170,000 796,175
Daiichi Pharmaceutical Co. Ltd. 22,000 353,261
Daiwa House Industry Co. Ltd. 75,000 838,286
Daiwa Securities Co. Ltd. 105,000 698,375
Denso Corp. 36,000 818,922
Daito Trust Construction Co. 149,300 1,504,223
Fuji Bank Ltd. 120,000 1,350,703
Fuji Photo Film Co. Ltd. 100,000 3,817,545
Fujitsu Ltd. 221,000 2,296,194
Hitachi Ltd. 502,000 4,544,059
Hitachi Maxell Ltd. 93,000 1,954,504
Honda Motor Co. Ltd. 42,000 1,302,531
Hoya Corp. 7,000 320,674
Ibiden Co. Ltd. 61,000 801,842
Ito-Yokado Co. Ltd. 29,000 1,390,137
Jusco Co. Ltd. 35,000 1,074,422
Kobe Steel Ltd. Ord. (a) 250,000 454,563
Komatsu Ltd. Ord. 150,000 1,095,675
Konica Corp. 27,000 156,204
Kyocera Corp. 10,000 598,213
Matsushita Communication Industrial
Co. Ltd. 6,000 154,906
Matsushita Electric Industrial Co. Ltd. 105,000 1,677,752
Matsushita Electric Works Co. Ltd. 52,000 528,002
Minebea Co. Ltd. 10,000 83,435
Minolta Camera Co. Ltd. 228,000 1,421,355
Mitsubishi Heavy Industries Ltd. 160,000 1,055,374
Murata Manufacturing Co. Ltd. 4,000 147,349
NEC Corp. 43,000 524,617
NKK Corp. 200,000 431,343
Nichiei Co. Ltd. 10,000 802,865
SHARES VALUE (NOTE 1)
Nintendo Co. Ltd. Ord. 27,100 $ 1,979,519
Nippon Telegraph & Telephone
Corp. Ord. 92 648,116
Nichicon Corp. 20,000 218,820
Nomura Securities Co. Ltd. 105,000 1,173,600
Omron Corp. 40,000 755,638
Ricoh Co. Ltd. Ord. 100,000 1,188,555
Rohm Co. Ltd. 10,000 774,529
Sakura Bank Ltd. 419,000 2,212,988
Sankyo Co. Ltd. 27,000 722,579
Sekisui House Ltd. 50,000 444,724
Shimamura Corp. 10,000 293,597
Shimachu Co. Ltd. 25,000 600,181
Shin-Etsu Chemical Co. Ltd. 15,000 300,959
Shinko Electric Industries Co. Ltd. 1,000 34,277
Sony Corp. 34,400 2,501,917
Shohkoh Fund & Co. Ltd. 700 162,939
TDK Corp. 18,000 1,296,391
Takeda Chemical Industries Ltd. 209,000 4,820,103
Terumo Corp. 27,000 410,170
THK Co. Ltd. 18,100 209,430
Toyota Motor Corp. 97,000 2,809,713
Tokyo Electron Ltd. 23,100 890,944
Uni Charm Corp. Ord. 31,000 949,191
Uny Co. Ltd. 105,000 1,843,048
Xebio Co. Ltd. 22,000 516,038
Yamanouchi Pharmaceutical Co. Ltd. 15,000 319,965
Yoshinoya D&C Co. Ltd. Ord. 20 193,632
72,187,108
KOREA (SOUTH) - 0.1%
Korea Electric Power Corp. 10,000 298,206
MALAYSIA - 0.3%
Arab Malaysian Corp. BHD 109,000 451,544
Magnum Corp. BHD 65,000 103,047
Oriental Holdings BHD 30,000 227,046
781,637
MEXICO - 0.3%
Gruma SA Class B sponsored
ADR (a)(d) 14,250 270,750
Telefonos de Mexico SA sponsored ADR
representing Ord. Class L shares 1,000 41,250
Tubos De Acero De Mexico ADR (a) 37,500 614,063
926,063
NETHERLANDS - 6.0%
Ahold NV 2,600 177,566
AKZO Nobel NV 19,700 2,539,064
Chicago Bridge & Iron Co. NV 20,000 340,000
DSM NV 7,400 737,169
EVC International NV 9,000 257,876
ING Groep NV 62,792 2,466,604
KBB NV Ord. 6,000 395,902
Koninklijke Hoogovens NV 19,400 886,595
Koninklijke Pakhoed NV 800 26,090
Koninklijke KNP BT NV 46,900 924,779
New Holland NV (a) 39,500 873,938
Philips Electronics NV (Bearer) 46,800 2,443,996
Royal Dutch Petroleum Co. Ord. 12,600 2,252,854
Unilever NV Ord. 11,300 2,198,552
Vendex International NV 19,906 945,495
17,466,480
NETHERLANDS ANTILLES - 0.1%
Schlumberger Ltd. 3,000 332,250
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NEW ZEALAND - 0.0%
Air New Zealand Ltd. Class B 20,600 $ 59,523
NORWAY - 1.0%
Den Norske Bank AS Class A Free shares 77,000 278,962
Elkem ASA 70,500 1,351,314
NCL Holdings AS 18,000 45,497
Nydalens Compagnie ASA (a) 50,000 282,248
Olav Thon Eiendomsselskp Ord. 10,500 281,616
Saga Petroleum AS Class B 22,500 361,762
Steen & Stroem Invest AS 21,000 286,039
2,887,438
PERU - 0.1%
Compania de Minas Buenaventura SA
Class B sponsored ADR 14,000 304,500
SOUTH AFRICA - 0.3%
Gencor Ltd. (Reg.) 122,200 513,746
JCI Ltd. 38,500 372,190
885,936
SPAIN - 1.9%
Acerinox SA (Reg.) 4,600 673,102
Asturiana del Zinc SA (a)(d) 56,000 863,161
Banco Bilbao Vizcaya SA Ord. (Reg.) 12,500 842,610
Banco de Santander SA Ord. (Reg.) 7,900 595,307
Tabacalera SA, Series A 23,900 1,201,754
Telefonica de Espana SA Ord. (a) 54,700 1,403,333
5,579,267
SWEDEN - 5.7%
ABB AB, Series B 25,000 302,671
Astra AB Class A Free shares 65,500 2,679,500
Assi Doman AB Free shares 10,000 250,421
Electrolux AB 17,300 992,124
Ericsson (L.M.) Telephone Co.:
Class B 24,700 780,649
Class B ADR 7,700 258,913
Esselte AB Class B Free shares 38,700 882,818
Forcenergy AB Class B Free shares 50,000 551,180
Nordbanken AB 32,600 1,001,249
SKF AB Ord. 6,000 129,989
Scania AB Class B 32,100 828,395
Skandia Foersaekrings AB 36,800 1,064,587
Scala International SA 2,300 96,727
Svenska Cellulosa AB (SCA) Class B
Ord. 16,000 342,560
Svenska Handelsbanken 25,000 688,179
Swedish Match Co. 450,100 1,468,441
Svedala Industri Free shares 25,000 458,786
Volvo AB Class B 147,800 3,720,051
16,497,240
SWITZERLAND - 4.2%
ABB AG (Bearer) 100 121,099
Credit Suisse Group (Reg.) 30,200 3,401,085
Julius Baer Holding AG 1,718 2,150,414
Nestle SA (Reg.) 1,156 1,403,826
Novartis AG (Reg.) 3,043 4,009,163
Roche Holding AG participation
certificates 90 760,176
SHARES VALUE (NOTE 1)
SWITZERLAND - CONTINUED
Sulzer AG (Reg.) 400 $ 275,441
Surveillance, Societe Generale (Bearer) 65 134,498
12,255,702
UNITED KINGDOM - 13.1%
Asda Group PLC 426,000 795,353
BAT Industries PLC Ord. 249,200 2,099,751
BOC Group PLC 7,700 118,103
Barclays PLC Ord. 36,900 687,135
Bass PLC Ord. 40,000 516,922
Blue Circle Industries PLC 102,500 698,917
British Aerospace PLC 34,200 727,916
British Petroleum PLC:
Ord. 201,657 2,317,922
ADR 4,000 550,500
British Land Co. PLC, (The) Ord. 7,800 72,498
British Steel PLC Ord. 125,000 282,083
British Telecommunications PLC Ord. 18,000 132,088
Caradon PLC 522,400 2,094,847
Cookson Group PLC 709,100 2,498,156
English China Clay PLC 24,100 80,600
Glaxo Holdings PLC 87,500 1,723,142
Granada Group PLC 138,700 2,006,349
Grand Metropolitan PLC 96,100 803,495
Guinness PLC Ord. 35,000 289,795
HSBC Holdings PLC Ord. 5,000 131,422
Hays PLC 15,000 132,721
ICI (Imperial Chemical Industries)
PLC Class L 40,000 455,229
Inchcape PLC Ord. 61,600 274,021
JJB Sports PLC Class L 89,800 653,141
Ladbroke Group PLC Ord. 149,100 556,747
Lloyds TSB Group PLC 250,700 2,291,474
LucasVarity PLC 350,500 1,064,099
Mercury Asset Management Group PLC 12,400 269,056
National Grid Co. PLC 216,500 780,303
Perpetual PLC 3,100 132,465
Prudential Corp. PLC 5,000 48,624
RTZ Corp. PLC Ord. 10,000 159,103
Redland PLC Ord. 125,000 710,281
Rentokil Group PLC 393,300 2,579,631
Rugby Group PLC 116,900 212,562
Shell Transport & Trading Co. PLC (Reg.) 160,300 2,839,295
SmithKline Beecham PLC Ord. 163,195 2,617,677
Somerfield PLC 192,000 564,199
Thames Water PLC Ord. 23,300 255,336
Unigate PLC 75,000 566,196
Unilever PLC Ord. 49,000 1,289,530
Vodafone Group PLC 187,000 837,921
WPP Group PLC 40,500 165,037
38,081,642
UNITED STATES OF AMERICA - 2.2%
Alumax, Inc. (a) 42,600 1,554,900
Aluminum Co. of America 17,900 1,250,763
D.R. Horton, Inc. 40,000 390,000
Durco International, Inc. 10,000 248,750
Freeport McMoRan Copper & Gold, Inc.:
Class A 10,000 280,000
Class B 10,000 291,250
Hertz Corp. Class A 1,000 29,000
Jefferson Smurfit Corp. (a) 45,700 594,100
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - CONTINUED
Kaiser Aluminum Corp. (a) 10,400 $ 111,800
Limited, Inc. (The) 9 163
MCI Communications Corp. 35,800 1,364,875
Newmont Mining Corp. 8,000 277,000
Silgan Holdings, Inc. 1,000 26,500
6,419,101
TOTAL COMMON STOCKS
(Cost $237,527,407) 249,194,691
CLOSED-END INVESTMENT COMPANIES - 0.4%
EMERGING MARKETS - 0.2%
GT Global Developing Markets Fund 29,000 344,375
TCW/DW Emerging Markets Opportunities
Trust (SBI) 11,100 147,075
Templeton Dragon Fund, Inc. 8,400 123,900
615,350
GERMANY - 0.2%
Emerging Germany Fund, Inc. 5,600 49,700
New Germany Fund, Inc. 31,300 449,938
499,638
MULTI-NATIONAL - 0.0%
Morgan Stanley Asia-Pacific Fund, Inc. 13,800 134,550
TOTAL CLOSED-END INVESTMENT COMPANIES
(Cost $1,246,372) 1,249,538
PREFERRED STOCKS - 0.8%
CONVERTIBLE PREFERRED STOCKS - 0.3%
JAPAN - 0.3%
AJL participating trust (a) 43,500 701,438
NONCONVERTIBLE PREFERRED STOCKS - 0.5%
ITALY- 0.5%
Stet (Societa Finanziaria Telefonica) Spa 168,700 624,990
Telecom Italia Mobile Spa de Risp 478,200 883,707
TOTAL NONCONVERTIBLE PREFERRED STOCKS 1,508,697
TOTAL PREFERRED STOCKS
(Cost $1,855,431) 2,210,135
CONVERTIBLE BONDS - 0.3%
MOODY'S PRINCIPAL
RATINGS AMOUNT (C)
BERMUDA - 0.2%
MBL International Finance of
Bermuda 3%, 11/30/02 Aa2 $ 600,000 609,000
JAPAN - 0.1%
Matsushita Electric Works Co.
Ltd. 2.70%, 5/31/02 - JPY 15,000,000 161,754
TOTAL CONVERTIBLE BONDS
(Cost $887,938) 770,754
GOVERNMENT OBLIGATIONS - 0.8%
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (C) (NOTE 1)
UNITED STATES OF AMERICA - 0.8%
U.S. Treasury Bills, yield at date of purchase
5.27% to 5.30%, 6/26/97 (e) $ 100,000 $ 99,164
U.S. Treasury Notes
6 1/2%, 5/15/97 Aaa 390,000 390,121
8 3/4%, 10/15/97 Aaa 370,000 374,973
9 1/4%, 8/15/98 Aaa 370,000 384,223
8 7/8%, 11/15/98 Aaa 404,000 419,780
8 7/8%, 2/15/99 Aaa 370,000 386,302
9 1/8%, 5/15/99 Aaa 360,000 379,181
2,334,580
TOTAL GOVERNMENT OBLIGATIONS
(Cost $2,509,185) 2,433,744
CASH EQUIVALENTS - 11.8%
SHARES
Taxable Central Cash Fund (b)
(Cost $34,279,133) 34,279,133 34,279,133
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $278,305,466) $ 290,137,995
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
25 Nikkei 225 Stock
Index Contracts Jun 97 $2,430,000 $85,612
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.8%
CURRENCY ABBREVIATIONS
JPY - Japanese yen
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash Fund was
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
(c) Principal amount is stated in United States dollars unless otherwise
noted.
(d) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $2,874,240 or 1.0% of net
assets.
(e) Security was pledged to cover margin requirements for futures
contracts. At the period end, the value of securities pledged amounted to
$89,248.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $109,086,405 and $134,600,305, respectively.
The market value of futures contracts opened and closed during the period
amounted to $6,993,248 and $8,662,705, respectively (see Note 2 of Notes to
Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $33,339 for the period (see Note 4 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $278,369,579. Net unrealized appreciation aggregated
$11,768,416, of which $26,691,614 related to appreciated investment
securities and $14,923,198 related to depreciated investment securities.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.3%
Basic Industries 11.5
Cash Equivalents 11.8
Construction & Real Estate 4.3
Durables 8.1
Energy 7.0
Finance 13.5
Government Obligations 0.8
Health 7.5
Holding Companies 1.3
Industrial Machinery & Equipment 5.2
Media & Leisure 1.9
Nondurables 5.8
Precious Metals 1.0
Retail & Wholesale 3.8
Services 1.4
Technology 9.6
Transportation 0.1
Utilities 5.1
100.0%
INTERNATIONAL VALUE
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $278,305,466) - See accompanying schedule $ 290,137,995
Cash 330,589
Receivable for investments sold 2,559,009
Receivable for fund shares sold 10,106,088
Dividends receivable 1,145,647
Interest receivable 153,390
Receivable for daily variation on futures contracts 46,048
TOTAL ASSETS 304,478,766
LIABILITIES
Payable for investments purchased $ 9,054,906
Payable for fund shares redeemed 4,784,599
Accrued management fee 193,470
Other payables and 108,820
accrued expenses
TOTAL LIABILITIES 14,141,795
NET ASSETS $ 290,336,971
Net Assets consist of:
Paid in capital $ 269,616,314
Undistributed net investment income 537,567
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 8,291,394
Net unrealized appreciation (depreciation) on investments 11,891,696
and assets and liabilities in
foreign currencies
NET ASSETS, for 24,444,338 $ 290,336,971
shares outstanding
NET ASSET VALUE, offering price $11.88
and redemption price per
share ($290,336,971 (divided by) 24,444,338 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 2,243,341
Dividends
Interest 410,421
2,653,762
Less foreign taxes withheld (257,907
)
TOTAL INCOME 2,395,855
EXPENSES
Management fee $ 997,406
Basic fee
Performance adjustment 136,487
Transfer agent fees 335,260
Accounting fees and expenses 99,953
Non-interested trustees' compensation 854
Custodian fees and expenses 127,507
Registration fees 20,436
Audit 15,016
Legal 1,119
Miscellaneous 1,021
Total expenses before reductions 1,735,059
Expense reductions (20,907 1,714,152
)
NET INVESTMENT INCOME 681,703
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 9,030,095
Foreign currency transactions (4,928
)
Futures contracts (615,890 8,409,277
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 11,498,702
Assets and liabilities in (27,007
foreign currencies )
Futures contracts 87,097 11,558,792
NET GAIN (LOSS) 19,968,069
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 20,649,772
OTHER INFORMATION $ 18,774
Expense reductions
Directed brokerage arrangements
Custodian interest credits 82
Transfer agent interest credits 2,051
$ 20,907
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED OCTOBER 31,
APRIL 30, 1997 1996
(UNAUDITED)
Operations $ 681,703 $ 3,786,783
Net investment income
Net realized gain (loss) 8,409,277 8,945,621
Change in net unrealized appreciation (depreciation) 11,558,792 (1,251,635)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 20,649,772 11,480,769
Distributions to shareholders (2,268,604) (56,772)
From net investment income
From net realized gain (4,990,927) (1,703,168)
TOTAL DISTRIBUTIONS (7,259,531) (1,759,940)
Share transactions 204,234,122 592,069,913
Net proceeds from sales of shares
Reinvestment of distributions 7,013,302 1,730,074
Cost of shares redeemed (205,165,881) (389,483,829)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 6,081,543 204,316,158
TOTAL INCREASE (DECREASE) IN NET ASSETS 19,471,784 214,036,987
NET ASSETS
Beginning of period 270,865,187 56,828,200
End of period (including undistributed net investment income of $537,567 and $3,774,842,
respectively) $ 290,336,971 $ 270,865,187
OTHER INFORMATION
Shares
Sold 17,516,618 53,175,152
Issued in reinvestment of distributions 624,515 160,044
Redeemed (17,603,527) (34,777,000)
Net increase (decrease) 537,606 18,558,196
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SIX MONTHS YEARS ENDED NOVEMBER 1, 1994
ENDED OCTOBER 31, (COMMENCEMENT
APRIL 30, 1997 OF
OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA (UNAUDITED) 1996 1995
Net asset value, beginning of period $ 11.33 $ 10.63 $ 10.00
Income from Investment Operations
Net investment income .03 D .16 G .11 D
Net realized and unrealized gain (loss) .84 .85 .52
Total from investment operations .87 1.01 .63
Less Distributions
From net investment income (.10) (.01) -
From net realized gain (.22) (.30) -
Total distributions (.32) (.31) -
Net asset value, end of period $ 11.88 $ 11.33 $ 10.63
TOTAL RETURN B, C 7.84% 9.64% 6.30%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 290,337 $ 270,865 $ 56,828
Ratio of expenses to average net assets 1.33% A 1.28% 1.72%
Ratio of expenses to average net assets after expense reductions 1.32% A, E 1.26% E 1.72%
Ratio of net investment income to average net assets .52% A 1.74% 1.08%
Portfolio turnover rate 87% A 71% 109%
Average commission rate F $ .0219 $ .0264
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF
NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE FUND'S
EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F FOR FISCAL
YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO
DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO
FUND DEPENDING ON THE
MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER. G INVESTMENT INCOME PER SHARE
REFLECTS A SPECIAL
DIVIDEND FROM VOLVO AB WHICH AMOUNTED TO $.04 PER SHARE.
</TABLE>
OVERSEAS
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). Prior to July 1, 1995, the
fund imposed a 3% sales charge. If this sales charge were taken into
account, total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 PAST 10
APRIL 30, 1997 MONTHS YEAR YEARS YEARS
OVERSEAS 10.00% 10.50% 56.55% 71.85%
Morgan Stanley Capital 1.57% -0.89% 65.37% 62.94%
International EAFE Index
International Funds Average 6.17% 5.43% 66.38% 120.34%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five or 10 years. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, the value of your investment would be $1,050. You can compare
the fund's returns to the performance of the Morgan Stanley Capital
International (MSCI) Europe, Australasia, Far East (EAFE) Index - a market
capitalization weighted, unmanaged index of over 1,000 foreign stocks. To
measure how the fund's performance stacked up against its peers, you can
compare it to the international funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a peer
group of 396 mutual funds. These benchmarks include reinvested dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
APRIL 30, 1997 YEAR YEARS YEARS
OVERSEAS 10.50% 9.38% 5.56%
Morgan Stanley Capital -0.89% 10.58% 5.00%
International EAFE Index
International Funds Average 5.43% 10.58% 7.91%
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER 10 YEARS
Overseas MS EAFE Index (Net)
00094 MS001
1987/04/30 10000.00 10000.00
1987/05/31 9961.78 9999.96
1987/06/30 9261.15 9681.37
1987/07/31 9398.73 9664.46
1987/08/31 10180.89 10389.12
1987/09/30 10056.05 10225.55
1987/10/31 7872.61 8792.78
1987/11/30 7808.92 8879.36
1987/12/31 8308.41 9143.02
1988/01/31 7985.38 9306.26
1988/02/29 8238.94 9926.59
1988/03/31 8739.11 10536.93
1988/04/30 8968.36 10690.05
1988/05/31 8787.74 10347.37
1988/06/30 8537.66 10074.63
1988/07/31 8426.51 10390.71
1988/08/31 8172.95 9715.13
1988/09/30 8478.61 10139.62
1988/10/31 8787.74 11007.19
1988/11/30 9016.99 11662.85
1988/12/31 8994.43 11727.88
1989/01/31 9104.64 11934.22
1989/02/28 9342.83 11995.57
1989/03/31 9261.06 11760.14
1989/04/30 9460.15 11869.21
1989/05/31 9005.09 11223.49
1989/06/30 8742.02 11034.55
1989/07/31 9609.46 12420.20
1989/08/31 9385.49 11861.61
1989/09/30 9886.76 12401.93
1989/10/31 9349.94 11903.65
1989/11/30 9879.65 12502.04
1989/12/31 10517.50 12963.33
1990/01/31 10278.81 12480.99
1990/02/28 10066.22 11609.88
1990/03/31 10398.15 10400.41
1990/04/30 10372.05 10317.87
1990/05/31 11076.94 11495.16
1990/06/30 11274.61 11393.91
1990/07/31 11830.32 11554.40
1990/08/31 10521.23 10432.37
1990/09/30 9353.86 8978.47
1990/10/31 10245.24 10377.48
1990/11/30 9905.84 9765.34
1990/12/31 9823.09 9923.53
1991/01/31 10041.03 10244.51
1991/02/28 10405.58 11342.71
1991/03/31 10064.80 10661.78
1991/04/30 10207.46 10766.48
1991/05/31 10227.27 10878.82
1991/06/30 9585.34 10079.43
1991/07/31 10108.39 10574.66
1991/08/31 10183.68 10359.91
1991/09/30 10631.45 10943.78
1991/10/31 10667.11 11098.92
1991/11/30 10282.74 10580.77
1991/12/31 10669.19 11127.19
1992/01/31 10791.68 10889.52
1992/02/29 10567.82 10499.76
1992/03/31 10348.19 9806.60
1992/04/30 10977.53 9853.22
1992/05/31 11450.59 10512.75
1992/06/30 11180.27 10014.11
1992/07/31 10470.68 9757.82
1992/08/31 10381.98 10369.83
1992/09/30 9951.16 10165.06
1992/10/31 9275.36 9631.85
1992/11/30 9228.90 9722.49
1992/12/31 9446.96 9772.78
1993/01/31 9722.30 9771.58
1993/02/28 9921.68 10066.75
1993/03/31 10595.79 10944.22
1993/04/30 11331.61 11982.86
1993/05/31 11592.70 12235.93
1993/06/30 11317.36 12045.03
1993/07/31 11834.81 12466.66
1993/08/31 12504.17 13139.65
1993/09/30 12394.98 12843.88
1993/10/31 12893.44 13239.70
1993/11/30 12304.78 12082.41
1993/12/31 13230.86 12954.85
1994/01/31 14171.44 14050.12
1994/02/28 13906.14 14011.21
1994/03/31 13505.79 13407.73
1994/04/30 13959.20 13976.60
1994/05/31 13780.73 13896.36
1994/06/30 13597.44 14092.74
1994/07/31 13978.50 14228.27
1994/08/31 14181.08 14565.13
1994/09/30 13790.38 14106.39
1994/10/31 14070.14 14576.13
1994/11/30 13491.32 13875.60
1994/12/31 13399.00 13962.49
1995/01/31 12824.75 13426.11
1995/02/28 12834.57 13387.58
1995/03/31 13217.40 14222.58
1995/04/30 13595.32 14757.47
1995/05/31 13786.73 14581.55
1995/06/30 13889.80 14325.84
1995/07/31 14513.13 15217.71
1995/08/31 14110.67 14637.21
1995/09/30 14306.99 14923.08
1995/10/31 14022.32 14521.94
1995/11/30 14179.38 14926.00
1995/12/31 14612.31 15527.37
1996/01/31 14888.77 15591.12
1996/02/29 14918.93 15643.83
1996/03/31 15140.10 15976.04
1996/04/30 15552.28 16440.51
1996/05/31 15557.31 16137.98
1996/06/30 15672.92 16228.81
1996/07/31 15235.60 15754.48
1996/08/31 15346.19 15789.00
1996/09/30 15788.53 16208.45
1996/10/31 15622.65 16042.59
1996/11/30 16447.01 16680.89
1996/12/31 16526.26 16466.31
1997/01/31 16536.98 15890.03
1997/02/28 16906.73 16149.93
1997/03/31 17056.78 16208.41
1997/04/30 17185.38 16294.42
Let's say hypothetically that $10,000 was invested in Fidelity Overseas
Fund on April 30, 1987. As the chart shows, by April 30, 1997, the value of
the investment would have grown to $17,185 - a 71.85% increase on the
initial investment. For comparison, look at how the Morgan Stanley Capital
International EAFE Index did over the period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have grown to
$16,294 - a 62.94% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
OVERSEAS
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Richard Mace, Portfolio Manager of Fidelity Overseas Fund
Q. HOW DID THE FUND PERFORM, RICK?
A. For the six months that ended April 30, 1997, the fund produced a return
of 10.00%. For the same period, the Morgan Stanley Capital International
Europe, Australasia, Far East Index (EAFE) returned 1.57%. The
international funds average, according to Lipper Analytical Services, had a
six-month return of 6.17%. For the 12 months that ended April 30, 1997, the
fund returned 10.50%, while the EAFE index and Lipper peer group returned
- -0.89% and 5.43%, respectively.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG SHOWING?
A. Individual stock selection had the biggest influence on the fund's
return, as several of the fund's larger positions performed well. Market
selection also played a key role during this time, specifically the fund's
underweighting in Japan relative to the EAFE index. While the EAFE index
had an approximate Japanese weighting of 30%, I kept the fund at around
22%. As Japan's well-documented economic woes continued to hamper the
overall performance of Japanese securities, my strategy of underweighting
Japanese securities worked in the fund's favor. I would add, however, that
while market selection is important, I place more emphasis on analyzing the
specific pluses and minuses of a stock than I do on the country from where
a stock is issued.
Q. HOW DID THE FUND'S EUROPEAN HOLDINGS PERFORM?
A. The overall decline in European interest rates had favorable
implications for Europe's stock markets. This rate environment, which may
have been related to continuing optimism on proposed economic unity
throughout Europe, led to strong performances in countries such as Spain,
Italy and Sweden. In Europe, I basically continued my strategy of looking
for companies based on three themes: those that would benefit from a rising
dollar, those that would gain from the overall improvement of world
economies, and those companies that were engaging in restructurings
designed to improve the return of capital employed in their businesses.
Q. DID YOUR STRATEGIES LEAD YOU TO ANY OTHER REGIONS OF THE WORLD?
A. The fund's Latin American positions - with the exception of Telebras, a
privatized telecommunications company based in Brazil that performed well
during the period - have been relatively uneventful. I'll invest in
emerging market stocks, but only when valuations are attractive. If an
emerging market stock is undervalued and has a potentially attractive
risk/reward tradeoff, I'll consider adding it to the portfolio. The other
area that came into play was Canada. I've previously mentioned my strategy
of looking for stocks that can benefit from improving economies, and
Canada's many natural resource-related stocks fit that bill. Stocks such as
Inco, a nickel producer, aluminum-producer Alcan, and Noranda, a paper and
forest products company, reflected this strategy.
Q. FOLLOWING THE LEAD OF AMERICAN CORPORATIONS, INTERNATIONAL COMPANIES
HAVE BEEN IMPLEMENTING VARIOUS COST-CUTTING AND RESTRUCTURING STRATEGIES.
CAN YOU EXPLAIN WHY THIS IS A POSITIVE DEVELOPMENT? HOW HAS THIS TREND
AFFECTED THE FUND?
A. Worldwide, company managements have gotten smarter about how they run
their businesses. In order to earn returns above their costs of capital,
companies have had to reduce expenses, either by cutting personnel,
restructuring their balance sheets or upgrading their technology. As they
strive to become more shareholder-friendly, international companies also
are coming up with new ways to utilize their existing assets. In terms of
the fund, several individual holdings are good illustrations of this trend.
For example, Volvo, one of the fund's more significant stakes and a strong
performer during the period, divested many of its non-core businesses and
has announced plans to implement a share redemption program in which the
company will buy back one of every 20 outstanding shares. As companies
strive to push their share prices up, they can do one of two things. They
can wait for investors to bid the price up or they can take a proactive
approach and try to increase the value themselves. In the case of Volvo,
management has taken a proactive stance and set forth a list of goals for
doing this; for the most part, the company has seen its plan through. This
emphasis on managing core businesses to be more efficient can enhance a
company's value and put smiles on the faces of money managers throughout
the world.
Q. ONE OF YOUR STRATEGIES SEEMS TO BE THAT YOU'RE MORE HEAVILY CONCENTRATED
IN SOME OF THE FUND'S LARGER POSITIONS. WHAT'S BEHIND THIS THINKING?
A. I've made a conscious effort to stick to this strategy and I believe it
has benefited the fund. One reason for this concentration is that we've
seen such a favorable environment for stock picking. Another is that by
increasing the fund's exposure to these larger positions, I'm able to
leverage the best ideas churned out by our research group. By following
this strategy, I'm placing confidence in that research and can also
streamline my ongoing analysis of the fund's top stocks.
Q. WHICH INDIVIDUAL STOCK POSITIONS BENEFITED THE FUND DURING THE PERIOD?
WERE THERE ANY DISAPPOINTMENTS?
A. As I mentioned earlier, individual stock selection was a real key to the
fund's performance. Aside from the strong performances of Volvo and
Telebras, the fund's positions in Total, a French-based oil company, and
Alcatel, which specializes in telecommunications and electrical equipment,
turned in good results. Disappointments included the poor performance of
several Japanese brokerage companies, including Nomura Securities and Nikko
Securities.
Q. WHAT'S YOUR OUTLOOK?
A. More and more, individual stock selection is outdistancing country
selection in terms of performance influence. In my opinion, this trend will
most likely continue and will place even more emphasis on thorough research
and analysis of individual stocks. With this in mind, I'll continue to use
my three-pronged approach of looking for stocks that can benefit from a
rising dollar, stronger economies and increased corporate efficiencies.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
in equity securities outside the United States
FUND NUMBER: 094
TRADING SYMBOL: FOSFX
START DATE: December 4, 1984
SIZE: as of April 30, 1997, more than
$3.4 billion
MANAGER: Richard Mace, since 1996;
manager, International Value Fund, since
1994; co-manager, Fidelity Global Balanced
Fund, February 1993-December 1993 and
January 1995-March 1996; manager, Fidelity
Global Balanced Fund, since 1996; manager,
Fidelity International Growth & Income Fund,
1994-
1996; joined Fidelity in 1987
(checkmark)
RICK MACE ON FIDELITY'S INTERNATIONAL STOCK PICKING
PROCESS:
"Over the past few years, Fidelity has been
increasing its presence on the international investing
stage. The process of searching the globe for
attractive investment opportunities isn't all that
different from choosing domestic stocks. Like U.S.
stock fund managers, we target stocks, conduct our
analysis, pick up the phone and visit companies on a
regular basis. The best way to find opportunities is to
take a hands-on approach; if you turn over enough
rocks and kick enough tires, you'll find some
winners. Fidelity's international stock picking
machine involves hundreds of analysts and fund
managers, located in several countries around the
world. We consider our international team to be
among the best and brightest in the industry, and we
function as a complete team. The fact that we have
aggressively grown our international staff, I think, is
a reflection of Fidelity's commitment to being
successful internationally. And we've started to see
the benefits. Fidelity recently won several
distinguished awards for its international research
and fund management. Perhaps most significantly,
those awards singled out Fidelity's impressive
devotion to teamwork. One award, in fact, identified
"Team Fidelity" as its honoree."
OVERSEAS
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997
Canada 2.6%
United States 13.8%
France 10.0%
Row: 1, Col: 1, Value: 13.8
Row: 1, Col: 2, Value: 13.9
Row: 1, Col: 3, Value: 4.7
Row: 1, Col: 4, Value: 5.2
Row: 1, Col: 5, Value: 15.0
Row: 1, Col: 6, Value: 7.7
Row: 1, Col: 7, Value: 22.8
Row: 1, Col: 8, Value: 4.3
Row: 1, Col: 9, Value: 10.0
Row: 1, Col: 10, Value: 2.6
Germany 4.3%
United
Kingdom 13.9%
Sweden 5.2%
Japan 22.8%
Switzerland 4.7%
Other 15.0%
Netherlands 7.7%
AS OF OCTOBER 31, 1996
Canada 3.1%
United States 12.7%
France 9.4%
Row: 1, Col: 1, Value: 12.7
Row: 1, Col: 2, Value: 12.1
Row: 1, Col: 3, Value: 6.6
Row: 1, Col: 4, Value: 3.5
Row: 1, Col: 5, Value: 17.0
Row: 1, Col: 6, Value: 5.4
Row: 1, Col: 7, Value: 23.7
Row: 1, Col: 8, Value: 6.5
Row: 1, Col: 9, Value: 9.4
Row: 1, Col: 10, Value: 3.1
Germany 6.5%
United
Kingdom 12.1%
Sweden 6.6%
Japan 23.7%
Spain 3.5%
Other 17.0%
Netherlands 5.4%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks, closed-end investment 88.5 88.8
companies and equity futures
Bonds 0.2 0.3
Short-term investments 11.3 10.9
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
STOCKS
6 MONTHS AGO
Alcatel Alsthom Compagnie Generale 2.3 1.6
d'Electricite SA
(France, Electrical Equipment)
Total SA Class B 1.9 2.2
(France, Oil & Gas)
Novartis AG (Reg.) 1.8 1.1
(Switzerland, Drugs & Pharmaceuticals)
Fuji Photo Film Co. Ltd. 1.7 1.4
(Japan, Photographic Equipment)
Takeda Chemical Industries Ltd. 1.6 1.3
(Japan, Drugs & Pharmaceuticals)
Volvo AB Class B 1.5 2.8
(Sweden, Autos, Tires, & Accessories)
Toyota Motor Corp. 1.5 1.6
(Japan, Autos, Tires, & Accessories)
Philips Electronics NV (Bearer) 1.4 0.5
(Netherlands, Consumer Electronics)
Canon, Inc. 1.3 1.1
(Japan, Computers & Office Equipment)
Credit Suisse Group (Reg.) 1.3 0.0
(Switzerland, Banks)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET
SECTORS
6 MONTHS AGO
Finance 13.7 14.4
Basic Industries 10.3 10.1
Durables 10.3 14.1
Technology 8.2 5.4
Health 7.7 4.4
Energy 6.6 8.9
Utilities 6.4 8.5
Nondurables 6.3 5.3
Industrial Machinery & Equipment 4.9 4.4
Construction & Real Estate 3.4 3.7
OVERSEAS
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 86.3%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.2%
Perez Companc Class B 785,387 $ 6,370,412
AUSTRALIA - 1.6%
Aberfoyle Ltd. 41,821 119,225
Australia & New Zealand Banking
Group Ltd. 249,300 1,594,722
Brambles Industries Ltd. 362,300 6,565,006
CSR Ltd. 3,931,500 14,555,109
Coles Myer Ltd. 1,308,700 6,368,058
National Australia Bank Ltd. 237,500 3,255,514
Pasminco Ltd. 866,500 1,651,343
QNI Ltd. 1,587,800 2,951,560 Tabcorp Holdings Ltd. 129,300 639,770
Western Mining Holdings Ltd. 1,843,962 10,945,722
Westpac Banking Corp. 271,200 1,463,681
Woolworths Ltd. 2,206,600 6,514,697
56,624,407
AUSTRIA - 0.0%
Voest-Alpine Stahl AG 40,100 1,582,743
BELGIUM - 0.1%
BBL (Banque Bruxelles Lambert) 1,300 325,100
Credit Communal Holding/Dexia (c) 44,900 4,463,721
Delhaize Freres & Cie Le Lion SA 4,100 206,097
4,994,918
BERMUDA - 0.1%
Fuji International Trust unit sponsored
ADR (c) 107 2,338,369
BRAZIL - 0.7%
Multicanal Participacoes SA
sponsored ADR 177,400 2,572,300
Telebras sponsored ADR 175,600 20,150,100
22,722,400
CANADA - 2.6%
Alcan Aluminium Ltd. 514,500 17,451,286
Alliance Forest Products (a)(c) 159,000 3,640,917
BCE, Inc. 211,200 9,884,060
Bro-X Minerals Ltd. 81,770 44,470
Canadian Natural Resources Ltd. (a) 336,300 8,013,732
Cominco Ltd. (a) 449,400 11,577,087
Domtar, Inc. 159,700 1,359,927
Greenstone Resources Ltd. (a) 268,800 2,539,025
Inco Ltd. 591,500 18,941,375
Noranda, Inc. 566,700 11,962,968
Renaissance Energy Ltd. (a) 121,900 3,375,813
88,790,660
DENMARK - 0.7%
Den Danske Bank Group AS 101,800 8,805,293
International Service Systems AS,
Series B 244,200 7,226,058
Novo-Nordisk AS Class B 44,800 4,432,480
Unidanmark AS Class A 91,500 4,526,472
24,990,303
FINLAND - 1.9%
Cultor OY, Series 1 109,700 5,950,431
Huhtamaki Ord. 345,100 14,968,705
Metsa-Serla Ltd. Class B 1,052,400 7,894,746
Nokia Corp. AB, Series A 247,900 15,468,567
Pohjola Class B 228,470 6,504,046
SHARES VALUE (NOTE 1)
Rauma OY 4,204 $ 86,525
UPM-Kymmene Corp. 151,000 3,456,341
Valmet OY 623,360 10,539,512
64,868,873
FRANCE - 10.0%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 716,400 79,692,094
Axa SA 208,565 12,837,244
BQE National Paris Ord. 111,800 4,771,513
Canal Plus SA 19,400 3,504,752
Cap Gemini Sogeti SA 54,700 3,314,299
Compagnie de Saint Gobain 29,000 3,887,046
Credit Commercial de France Ord. 102,600 4,554,724
Credit Local de France SA 72,315 6,693,251
Eramet SA 247,115 12,494,995
Generale des Eaux, Cie 36,100 5,030,518
Group Axime (a) 3,700 445,199
Groupe Danone 82,200 11,975,832
Lafarge Coppee SA 116,200 7,624,178
Lagardere S.C.A. (Reg.) 148,100 4,584,456
Michelin SA (Compagnie Generale
des Etablissements) Class B 358,900 20,060,383
Nationale Elf Aquitaine 240,800 23,360,809
Pechiney SA Class A 776,269 29,005,723
Paribas SA (Cie Financiere) Class A 84,100 5,306,116
Rhone Poulenc SA Class A 651,000 21,903,638
Societe Generale Class A 124,700 13,978,455
Total SA Class B 783,990 65,038,550
Unibail 15,300 1,481,681
Usinor Sacilor 365,000 5,517,933
Valeo SA 29,800 1,838,797
348,902,186
GERMANY - 4.1%
Allianz Versich Holdings Ord. (Reg.) (a) 25,000 4,852,546
Altana AG 1,200 928,916
BASF AG 246,800 9,666,411
Bayer AG 497,000 19,305,208
Buderus AG 15,500 7,270,732
Continental Gummi-Werke AG 247,800 5,446,862
Daimler-Benz AG:
Ord. 137,800 10,205,344
(rights) (a) 137,800 11,941
Degussa AG 143,700 6,342,208
Dresdner Bank AG Ord. 54,500 1,736,331
Hoechst AG Ord. 161,200 6,332,342
Karstadt AG 3,300 987,493
Lufthansa 213,200 2,968,210
Mannesmann AG Ord. 20,400 8,020,704
Metallgesellschaft AG Ord. (a) 479,900 9,916,537
Thyssen AG Ord. 7,800 1,694,232
Veba AG Ord. 355,000 18,350,365
Viag AG 1,500 667,226
Volkswagen AG 45,800 29,000,537
143,704,145
HONG KONG - 1.4%
Great Eagle Holdings Ltd. 960,000 2,868,909
HSBC Holdings PLC 1,348,000 34,008,948
Hong Kong & China Gas Co. Ltd. 3,157,920 5,014,189
Hutchison Whampoa Ltd. Ord. 462,000 3,429,291
Peregrine Investments Holdings Ltd. 2,084,000 3,201,394
Wharf Holdings Ltd. 375,000 1,418,382
49,941,113
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDONESIA - 0.3%
Matahari Putra Prima PT (For. Reg.) 4,199,000 $ 5,875,149
Multipolar PT (For. Reg.) 4,553,000 2,623,130
Putra Surya Multidana PT (For. Reg.) 1,680,500 1,901,802
10,400,081
IRELAND - 0.8%
Bank of Ireland, Inc. 1,771,600 18,436,395
CRH PLC 191,000 1,858,526
Independent Newspapers PLC 1,609,950 8,233,325
28,528,246
ITALY - 1.3%
Credito Italiano Ord. 7,400,000 10,383,908
Eni Spa 3,976,500 20,256,069
Telecom Italia:
Spa 1,380,500 3,657,287
Mobile Spa 3,629,300 11,392,394
45,689,658
JAPAN - 22.7%
Acom Co. Ltd. 162,500 6,625,605
Amway Japan Ltd. 310,200 9,449,203
Asahi Chemical Industry Co. Ltd. 494,000 2,877,406
Asahi Breweries Ltd. 629,000 6,931,402
Bank of Tokyo-Mitsubishi Ltd. 611,000 9,666,733
Canon, Inc. 1,958,000 46,389,706
Citizen Watch Co. Ltd. Ord. 859,000 6,173,144
DDI Corp. Ord. 1,733 11,499,225
Dai-Tokyo Fire & Marine Insurance Ord. 663,000 3,105,081
Daiichi Pharmaceutical Co. Ltd. 186,000 2,986,658
Daiwa House Industry Co. Ltd. 553,000 6,180,960
Daiwa Securities Co. Ltd. 1,418,000 9,431,383
Denso Corp. 404,000 9,190,130
Denny's Japan Co. Ltd. 144,100 3,754,347
Daito Trust Construction Co. 1,125,800 11,342,627
Fuji Bank Ltd. 930,000 10,467,945
Fuji Photo Film Co. Ltd. 1,511,000 57,683,106
Fujitsu Ltd. 2,065,000 21,455,390
Hitachi Ltd. 4,427,000 40,072,810
Hitachi Maxell Ltd. 696,000 14,627,259
Honda Motor Co. Ltd. 837,000 25,957,575
Hoya Corp. 62,000 2,840,254
Ibiden Co. Ltd. 570,000 7,492,621
Ito-Yokado Co. Ltd. 312,000 14,955,961
Jusco Co. Ltd. 202,000 6,200,953
Kao Corp. 236,000 2,749,262
Kobe Steel Ltd. Ord. (a) 1,541,000 2,801,928
Komatsu Ltd. Ord. 2,257,000 16,486,254
Konica Corp. 117,000 681,120
Kyocera Corp. 47,000 2,811,602
Matsushita Electric Industrial Co. Ltd. 1,536,000 24,543,115
Matsushita Communication Industrial
Co. Ltd. 61,000 1,574,875
Matsushita Electric Works Co. Ltd. 547,000 5,554,174
Minebea Co. Ltd. 80,000 667,480
Minolta Camera Co. Ltd. 1,193,000 7,437,176
Mitsubishi Estate Co. Ltd. 511,000 6,435,515
Mitsubishi Heavy Industries Ltd. 2,137,000 14,095,840
Murata Manufacturing Co. Ltd. 45,000 1,657,680
NEC Corp. 393,000 4,794,758
NKK Corp. 1,412,000 3,045,283
Nichiei Co. Ltd. 53,600 4,303,357
Nikko Securities Co. Ltd. 1,031,000 5,745,586
Nintendo Co. Ltd. Ord. 399,000 29,144,950
SHARES VALUE (NOTE 1)
Nippon Telegraph & Telephone
Corp. Ord. 915 $ 6,445,944
Nitto Denko Corp. 46,000 666,221
Nomura Securities Co. Ltd. 1,455,000 16,262,742
Omron Corp. 301,000 5,686,174
Onward Kashiyama & Co. Ltd. 590,000 7,569,759
Orix Corp. 467,000 23,562,282
Ricoh Co. Ltd. Ord. 1,143,000 13,585,187
Rohm Co. Ltd. 156,000 12,082,648
Sakura Bank Ltd. 4,152,000 21,929,175
Sankyo Co. Ltd. 422,000 11,293,636
Shin-Etsu Chemical Co. Ltd. 157,000 3,150,038
Shinko Electric Industries Co. Ltd. 12,900 442,169
Sony Corp. 462,300 33,623,143
Shohkoh Fund & Co. Ltd. 6,800 1,582,832
TDK Corp. 186,000 13,396,041
Takeda Chemical Industries Ltd. 2,369,000 54,635,525
Terumo Corp. 228,000 3,463,655
THK Co. Ltd. 182,000 2,105,868
Toyota Motor Corp. 1,749,000 50,661,736
Tokyo Electron Ltd. 200,200 7,721,516
Uni Charm Corp. Ord. 146,000 4,470,385
Uny Co. Ltd. 510,000 8,951,946
Xebio Co. Ltd. 21,800 499,514
Yamanouchi Pharmaceutical Co. Ltd. 151,000 3,220,985
788,896,560
KOREA (SOUTH) - 0.3%
Korea Electric Power Corp. 354,760 10,579,164
MALAYSIA - 0.3%
Arab Malaysian Corp. BHD 1,258,000 5,211,392
Magnum Corp. BHD 722,000 1,144,617
Oriental Holdings BHD 339,000 2,565,624
8,921,633
MEXICO - 0.3%
Cifra SA Series C 3,236,100 4,966,091
Cifra SA de CV, Series A 395,799 597,432
Gruma SA Class B sponsored
ADR (a)(c) 163,000 3,097,000
Tubos De Acero De Mexico ADR (a) 142,700 2,336,713
10,997,236
NETHERLANDS - 7.7%
Ahold NV 30,000 2,048,833
AKZO Nobel NV 306,500 39,503,710
Chicago Bridge & Iron Co. NV 254,200 4,321,400
DSM NV 146,700 14,613,880
ING Groep NV 742,067 29,149,978
KBB NV Ord. 67,500 4,453,901
KLM Royal Dutch Air Lines NV 75,200 2,224,201
Koninklijke Hoogovens NV 223,100 10,195,846
Koninklijke KNP BT NV 554,100 10,925,795
Koninklijke Pakhoed NV 9,600 313,074
New Holland NV (a) 454,700 10,060,238
Philips Electronics NV (Bearer) 951,900 49,710,252
Royal Dutch Petroleum Co. Ord. 225,000 40,229,531
Unilever NV Ord. 193,800 37,706,139
Vendex International NV (c) 270,200 12,833,962
268,290,740
NETHERLANDS ANTILLES - 0.2%
Schlumberger Ltd. 62,400 6,910,800
NEW ZEALAND - 0.0%
Air New Zealand Ltd. Class B 257,900 745,193
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NORWAY - 0.6%
Den Norske Bank AS Class A Free
shares 906,400 $ 3,283,781
Elkem ASA 660,600 12,662,103
Orkla AS Class B (non-vtg.) 29,700 2,297,961
NCL Holdings AS 202,500 511,838
Saga Petroleum AS Class B 230,000 3,698,009
22,453,692
PERU - 0.1%
Compania de Minas Buenaventura SA
Class B sponsored ADR 144,400 3,140,700
SINGAPORE - 0.1%
Kim Engineering Holdings Ltd. 4,882,000 4,014,359
SOUTH AFRICA - 0.3%
Gencor Ltd. (Reg.) 1,469,100 6,176,297
JCI Ltd. 370,400 3,580,755
9,757,052
SPAIN - 2.3%
Acerinox SA (Reg.) 54,441 7,966,157
Asturiana del Zinc SA (a)(c) 679,600 10,475,081
Banco Bilbao Vizcaya SA Ord. (Reg.) 135,700 9,147,374
Banco de Santander SA Ord. (Reg.) 77,600 5,847,577
Banco Intercontinental Espanol 19,100 2,852,406
Tabacalera SA, Series A 364,600 18,333,029
Telefonica de Espana SA Ord. (a) 935,600 24,002,891
78,624,515
SWEDEN - 5.2%
ABB AB, Series B 270,000 3,268,848
Astra AB Class A Free shares 750,900 30,718,114
Assi Doman AB Free shares 115,500 2,892,357
Electrolux AB 178,000 10,207,983
Ericsson (L.M.) Telephone Co.:
Class B 293,700 9,282,459
Class B ADR 90,500 3,043,063
Esselte AB Class B Free shares 165,700 3,779,923
Investor AB Class B Free shares 150,000 6,556,813
Nordbanken AB 290,700 8,928,315
SKF AB Ord. 64,900 1,406,051
Scania AB Class B 390,700 10,082,677
Skandia Foersaekrings AB 470,000 13,596,625
Svenska Cellulosa AB (SCA)
Class B Ord. 185,100 3,962,991
Svenska Handelsbanken 291,500 8,024,163
Swedish Match Co. 3,957,000 12,909,619
Volvo AB Class B 2,034,400 51,244,885
179,904,886
SWITZERLAND - 4.7%
ABB AG (Bearer) 1,300 1,574,288
Credit Suisse Group (Reg.) 388,950 43,803,053
Julius Baer Holding AG 10,212 12,782,320
Nestle SA (Reg.) 17,145 20,820,590
Novartis AG (Reg.) 47,108 62,064,950
Roche Holding AG participation
certificates 2,300 19,426,730
Sulzer AG (Reg.) 4,400 3,029,851
Surveillance, Societe Generale (Bearer) 700 1,448,440
164,950,222
SHARES VALUE (NOTE 1)
UNITED KINGDOM - 13.9%
Asda Group PLC 5,189,700 $ 9,689,300
BAT Industries PLC Ord. 2,906,000 24,485,853
BOC Group PLC 93,900 1,440,240
Barclays PLC Ord. 432,600 8,055,680
Barratt Developments PLC 1,542,300 6,485,163
Bass PLC Ord. 461,700 5,966,577
Blue Circle Industries PLC 784,100 5,346,543
Boots Co. PLC (The) Class L 586,100 6,584,611
British Aerospace PLC 485,300 10,329,166
British Petroleum PLC:
Ord. 1,812,146 20,829,495
ADR 45,800 6,303,225
British Land Co. PLC, (The) Ord. 97,100 902,507
British Steel PLC Ord. 2,400,000 5,415,996
British Telecommunications PLC Ord. 1,612,500 11,832,880
Cable & Wireless PLC Ord. 627,600 4,841,089
Caradon PLC 5,112,100 20,499,750
Cookson Group PLC 7,331,500 25,828,838
Dixons Group PLC 607,017 4,981,663
English China Clay PLC 299,100 1,000,313
Glaxo Holdings PLC 1,016,400 20,016,021
Granada Group PLC 1,736,700 25,122,034
Grand Metropolitan PLC 3,203,511 26,784,636
Guinness PLC Ord. 408,000 3,378,179
HSBC Holdings PLC Ord. 59,900 1,574,439
Hays PLC 180,700 1,598,847
ICI (Imperial Chemical Industries)
PLC Class L 243,600 2,772,347
Inchcape PLC Ord. 721,300 3,208,624
Ladbroke Group PLC Ord. 2,143,400 8,003,563
Lloyds TSB Group PLC 3,473,159 31,745,733
LucasVarity PLC 4,133,300 12,548,471
Mercury Asset Management Group PLC 147,200 3,193,957
National Grid Co. PLC 2,978,200 10,733,939
Perpetual PLC 36,900 1,576,756
Prudential Corp. PLC 821,605 7,989,916
RTZ Corp. PLC Ord. 98,400 1,565,574
Redland PLC Ord. 835,100 4,745,247
Rentokil Group PLC 5,222,000 34,250,785
Rolls Royce PLC Ord. 1,443,347 5,694,155
Rugby Group PLC 1,880,200 3,418,805
Shell Transport & Trading Co.
PLC (Reg.) 1,438,800 25,484,580
SmithKline Beecham PLC Ord. 1,786,055 28,648,644
Thames Water PLC Ord. 276,300 3,027,868
Unigate PLC 605,500 4,571,086
Unilever PLC Ord. 490,200 12,900,562
Vodafone Group PLC 3,382,550 15,156,733
WPP Group PLC 480,900 1,959,660
482,490,050
UNITED STATES OF AMERICA - 1.8%
Alumax, Inc. (a) 461,200 16,833,800
Aluminum Co. of America 262,500 18,342,188
D.R. Horton, Inc. 309,500 3,017,625
Hertz Corp. Class A 13,500 391,500
Jefferson Smurfit Corp. (a) 109,900 1,428,700
Kaiser Aluminum Corp. (a) 239,700 2,576,775
MCI Communications Corp. 399,700 15,238,563
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - CONTINUED
Newmont Mining Corp. 83,800 $ 2,901,575
Silgan Holdings, Inc. 4,800 127,200
60,857,926
TOTAL COMMON STOCKS
(Cost $2,592,267,531) 3,001,983,242
CLOSED-END INVESTMENT COMPANIES - 0.4%
EMERGING MARKETS - 0.2%
GT Global Developing Markets Fund 350,000 4,156,250
TCW/DW Emerging Markets Opportunities
Trust (SBI) 136,400 1,807,300
Templeton Dragon Fund, Inc. 94,900 1,399,778
7,363,328
GERMANY - 0.2%
Emerging Germany Fund, Inc. 70,400 624,800
New Germany Fund, Inc. 355,200 5,106,000
5,730,800
MULTI-NATIONAL - 0.0%
Morgan Stanley Asia-Pacific Fund, Inc. 157,000 1,530,750
TOTAL CLOSED-END INVESTMENT COMPANIES
(Cost $14,601,033) 14,624,878
PREFERRED STOCKS - 1.1%
CONVERTIBLE PREFERRED STOCKS - 0.1%
JAPAN - 0.1%
AJL participating trust (a) 131,300 2,117,213
NONCONVERTIBLE PREFERRED STOCKS - 1.0%
ITALY - 1.1%
Stet (Societa Finanziaria
Telefonica) Spa 6,512,600 24,127,488
Telecom Italia Mobile Spa de Risp 6,809,500 12,583,865
TOTAL NONCONVERTIBLE PREFERRED STOCKS 36,711,353
TOTAL PREFERRED STOCKS
(Cost $20,462,502) 38,828,566
CONVERTIBLE BONDS - 0.2%
MOODY'S PRINCIPAL
RATINGS AMOUNT
BERMUDA - 0.2%
MBL International Finance
of Bermuda
3%, 11/30/02
(Cost $9,095,888) Aa2 $ 8,031,000 8,151,465
GOVERNMENT OBLIGATIONS - 0.0%
UNITED STATES OF AMERICA - 0.0%
U.S. Treasury Bill, yield at date of
purchase 5.27% to 5.30%,
6/26/97 (Cost $743,615) (d) 750,000 744,210
CASH EQUIVALENTS - 12.0%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $415,476,561) 415,476,561 $ 415,476,561
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,052,647,130) $ 3,479,808,922
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
266 Nikkei 225 Stock
Index Contracts Jun 97 $ 25,855,201 $ 868,275
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.7%
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash Fund was
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $36,849,050 or 1.1% of net
assets.
(d) Security was pledged to cover margin requirements for futures
contracts. At the period end, the value of securities pledged amounted to
$744,210.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,186,271,026 and $1,148,351,522, respectively.
The market value of futures contracts opened and closed during the period
amounted to $52,452,607 and $37,606,801, respectively (see Note 2 of Notes
to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan and
average daily balance during the period for which the loan was outstanding
amounted to $2,020,000. The weighted average interest rate was 5.9%.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $359,487 for the period (see Note 4 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $3,053,282,418. Net unrealized appreciation aggregated
$426,526,504, of which $554,894,310 related to appreciated investment
securities and $128,367,806 related to depreciated investment securities.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.5%
Basic Industries 10.3
Cash Equivalents 12.0
Construction & Real Estate 3.4
Durables 10.3
Energy 6.6
Finance 13.7
Health 7.7
Holding Companies 1.1
Industrial Machinery & Equipment 4.9
Media & Leisure 2.3
Nondurables 6.3
Precious Metals 0.5
Retail & Wholesale 3.3
Services 2.1
Technology 8.2
Transportation 0.4
Utilities 6.4
100.0%
OVERSEAS
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $3,052,647,130) - See accompanying schedule $ 3,479,808,922
Cash 4,071,952
Receivable for investments sold 38,910,789
Receivable for fund shares sold 53,922,315
Dividends receivable 14,261,462
Interest receivable 1,885,637
Receivable for daily variation on futures contracts 467,452
Other receivables 2,734
TOTAL ASSETS 3,593,331,263
LIABILITIES
Payable for investments purchased $ 87,973,159
Payable for fund shares redeemed 18,908,763
Accrued management fee 2,320,483
Other payables and 964,057
accrued expenses
TOTAL LIABILITIES 110,166,462
NET ASSETS $ 3,483,164,801
Net Assets consist of:
Paid in capital $ 2,934,054,152
Undistributed net investment income 5,129,327
Accumulated undistributed 116,357,430
net realized gain (loss) on investments and foreign
currency transactions
Net unrealized appreciation (depreciation) on investments 427,623,892
and assets and liabilities in foreign currencies
NET ASSETS, for 108,626,924 shares outstanding $ 3,483,164,801
NET ASSET VALUE, offering price $32.07
and redemption price per
share ($3,483,164,801 (divided by) 108,626,924 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 28,200,783
Dividends
Interest 9,513,109
37,713,892
Less foreign taxes withheld (3,162,599
)
TOTAL INCOME 34,551,293
EXPENSES
Management fee $ 12,049,755
Basic fee
Performance adjustment 682,992
Transfer agent fees 4,282,453
Accounting fees and expenses 402,668
Non-interested trustees' compensation 14,551
Custodian fees and expenses 786,281
Registration fees 65,348
Audit 51,958
Legal 20,371
Interest 999
Miscellaneous 14,247
Total expenses before reductions 18,371,623
Expense reductions (331,750 18,039,873
)
NET INVESTMENT INCOME 16,511,420
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 121,896,157
Foreign currency transactions (84,403
)
Futures contracts (3,403,879 118,407,875
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 172,107,248
Assets and liabilities in (420,863
foreign currencies )
Futures contracts 1,351,324 173,037,709
NET GAIN (LOSS) 291,445,584
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 307,957,004
OTHER INFORMATION $ 184,387
Expense reductions
Directed brokerage arrangements
Transfer agent interest credits 147,363
$ 331,750
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31,
(UNAUDITED) 1996
Operations $ 16,511,420 $ 48,199,048
Net investment income
Net realized gain (loss) 118,407,875 208,828,408
Change in net unrealized appreciation (depreciation) 173,037,709 20,311,637
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 307,957,004 277,339,093
Distributions to shareholders (36,606,423) (27,336,910)
From net investment income
From net realized gain (161,277,731) (28,141,138)
TOTAL DISTRIBUTIONS (197,884,154) (55,478,048)
Share transactions 1,629,513,793 2,267,210,371
Net proceeds from sales of shares
Reinvestment of distributions 192,005,721 53,404,640
Cost of shares redeemed (1,563,053,048) (1,704,156,879)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 258,466,466 616,458,132
TOTAL INCREASE (DECREASE) IN NET ASSETS 368,539,316 838,319,177
NET ASSETS
Beginning of period 3,114,625,485 2,276,306,308
End of period (including undistributed net investment income of $5,129,327 and $35,462,219, $ 3,483,164,801 $ 3,114,625,485
respectively)
OTHER INFORMATION
Shares
Sold 52,015,368 75,173,719
Issued in reinvestment of distributions 6,343,102 1,869,255
Redeemed (49,936,065) (56,502,435)
Net increase (decrease) 8,422,405 20,540,539
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED
APRIL 30, 1997
SELECTED PER-SHARE DATA (UNAUDITED) 1996 1995 1994 H 1993 1992
Net asset value, beginning of period $ 31.08 $ 28.57 $ 29.17 $ 27.16 $ 21.96 $ 26.92
Income from Investment Operations
Net investment income .16 F .48 J .31 .18 .27 .46
Net realized and unrealized gain (loss) 2.83 2.72 (.44) 2.26 7.40 (3.82)
Total from investment operations 2.99 3.20 (.13) 2.44 7.67 (3.36)
Less Distributions
From net investment income (.37) (.34) (.02) (.15) (.37) (.44)
In excess of net investment income - - - (.17) - -
From net realized gain (1.63) (.35) (.45) (.11) (2.10) E (1.16)
Total distributions (2.00) (.69) (.47) (.43) (2.47) (1.60)
Net asset value, end of period $ 32.07 $ 31.08 $ 28.57 $ 29.17 $ 27.16 $ 21.96
TOTAL RETURN B, C 10.00% 11.41% (.34) 9.13% 39.01% (13.05)%
% D D D
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 3,483,165 $ 3,114,625 $ 2,276,306 $ 2,283,211 $ 1,490,666 $ 801,845
Ratio of expenses to average net assets 1.17% A 1.14% 1.05% 1.24% 1.27% 1.52%
Ratio of expenses to average net assets after
expense 1.15% A, 1.12% 1.05% 1.24% 1.27% 1.52%
reductions G G
Ratio of net investment income to average net
assets 1.05% A 1.74% 1.78% .90% 1.00% 1.78%
Portfolio turnover rate 81% A 82% 49% 49% 64% 122%
Average commission rate I $ .0208 $ .0134
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF
NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED. D TOTAL
RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. E INCLUDES
AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY
RELATED TRANSACTIONS TAXABLE AS ORDINARY
INCOME. F NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. G FMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION
OF THE FUND'S EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
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 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 INVESTMENT INCOME PER
SHARE REFLECTS A SPECIAL DIVIDEND FROM VOLVO AB WHICH AMOUNTED
TO $.08 PER SHARE.
</TABLE>
WORLDWIDE
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). If Fidelity had not
reimbursed certain fund expenses, the life of fund total returns would have
been lower. Prior to July 1, 1995, the fund imposed a 3% sales charge. If
this sales charge were taken into account, total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
APRIL 30, 1997 MONTHS YEAR YEARS FUND
WORLDWIDE 7.71% 11.61% 83.40% 86.90%
Morgan Stanley Capital 7.56% 10.34% 85.92% 82.84%
International World Index
Global Funds Average 6.83% 8.81% 75.21% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years or since
the fund started on May 30, 1990. For example, if you invested $1,000 in a
fund that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the performance of
the Morgan Stanley Capital International World Index - a market
capitalization weighted equity index of over 1,500 stocks traded in 22
world markets. To measure how the fund's performance stacked up against its
peers, you can compare it to the global funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a peer
group of 181 mutual funds. These benchmarks include reinvested dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
APRIL 30, 1997 YEAR YEARS FUND
WORLDWIDE 11.61% 12.90% 9.45%
Morgan Stanley Capital 10.34% 13.21% 9.10%
International World Index
Global Funds Average 8.81% 11.71% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER LIFE OF FUND
Worldwide Fund MS World Index (Net)
00318 MS004
1990/05/30 10000.00 10000.00
1990/05/31 10030.00 10038.61
1990/06/30 10290.00 9964.14
1990/07/31 10570.00 10051.93
1990/08/31 9380.00 9108.00
1990/09/30 8450.00 8144.51
1990/10/31 8950.00 8901.68
1990/11/30 8950.00 8752.34
1990/12/31 8898.23 8932.45
1991/01/31 9150.44 9255.96
1991/02/28 9654.88 10109.62
1991/03/31 9321.95 9808.57
1991/04/30 9412.75 9882.21
1991/05/31 9483.37 10103.10
1991/06/30 8807.43 9476.34
1991/07/31 9352.22 9920.84
1991/08/31 9493.46 9886.25
1991/09/30 9654.88 10142.44
1991/10/31 9695.23 10303.82
1991/11/30 9180.71 9851.69
1991/12/31 9599.06 10565.69
1992/01/31 9701.07 10366.97
1992/02/29 9996.89 10184.99
1992/03/31 9762.27 9702.08
1992/04/30 10190.71 9834.16
1992/05/31 10619.15 10222.20
1992/06/30 10251.92 9876.60
1992/07/31 10149.91 9898.58
1992/08/31 10007.10 10136.03
1992/09/30 10007.10 10039.86
1992/10/31 9823.48 9764.70
1992/11/30 9976.49 9936.32
1992/12/31 10194.86 10013.50
1993/01/31 10530.15 10043.98
1993/02/28 10781.62 10278.91
1993/03/31 11399.81 10871.83
1993/04/30 11682.71 11372.70
1993/05/31 12049.43 11631.78
1993/06/30 11923.70 11531.21
1993/07/31 12185.64 11765.78
1993/08/31 12950.52 12302.20
1993/09/30 12814.31 12071.96
1993/10/31 13369.63 12401.72
1993/11/30 13128.64 11697.27
1993/12/31 13920.64 12266.78
1994/01/31 14914.21 13072.98
1994/02/28 14689.86 12900.91
1994/03/31 14134.32 12341.84
1994/04/30 14625.76 12720.47
1994/05/31 14604.39 12750.32
1994/06/30 14305.25 12711.99
1994/07/31 14743.28 12950.75
1994/08/31 14989.00 13337.82
1994/09/30 14700.54 12984.42
1994/10/31 14914.21 13350.78
1994/11/30 14401.40 12768.79
1994/12/31 14332.82 12889.44
1995/01/31 14253.69 12692.88
1995/02/28 14423.25 12874.84
1995/03/31 14502.37 13492.27
1995/04/30 14864.08 13959.36
1995/05/31 15011.03 14075.61
1995/06/30 15214.49 14068.12
1995/07/31 15836.18 14768.84
1995/08/31 15440.56 14436.63
1995/09/30 15587.50 14854.00
1995/10/31 15056.24 14616.93
1995/11/30 15101.46 15121.27
1995/12/31 15363.09 15560.18
1996/01/31 15786.03 15838.45
1996/02/29 15991.79 15931.65
1996/03/31 16266.13 16193.46
1996/04/30 16746.23 16570.92
1996/05/31 17043.43 16581.92
1996/06/30 17032.00 16662.44
1996/07/31 16414.73 16070.23
1996/08/31 16849.10 16251.61
1996/09/30 17169.17 16884.55
1996/10/31 17352.06 16999.07
1996/11/30 18152.22 17948.32
1996/12/31 18239.31 17657.51
1997/01/31 18464.49 17867.00
1997/02/28 18974.10 18069.15
1997/03/31 18725.22 17708.37
1997/04/30 18689.67 18283.83
Let's say hypothetically that $10,000 was invested in Fidelity Worldwide
Fund on May 30, 1990, when the fund started. As the chart shows, by April
30, 1997, the value of the investment would have grown to $18,690 - an
86.90% increase on the initial investment. For comparison, look at how the
Morgan Stanley Capital International World Index did over the same period.
With dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $18,284 - an 82.84% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
WORLDWIDE
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Penny Dobkin, Portfolio Manager of Fidelity Worldwide
Fund
Q. PENNY, HOW DID THE FUND PERFORM?
A. Quite well. For the six-month and one-year periods ending April 30,
1997, the fund returned 7.71% and 11.61%, respectively. The global funds
average tracked by Lipper Analytical Services returned 6.83% and 8.81% over
the same periods, while the Morgan Stanley Capital International World
Index returned 7.56% for the past six months and 10.34% over the past year.
Q. WHY DID THE FUND BEAT THE INDEX OVER THE PAST SIX MONTHS?
A. There were a number of reasons. Compared to the index, the fund was
overweighted in selected European countries - which did very well - while
it was underweighted in the poorly performing Japanese market. The fund
also avoided most Southeast Asian markets, where many countries' economies
were overheated. In addition, the fund benefited from investing in a number
of European initial public offerings (IPOs) and from solid individual stock
selection.
Q. LET'S DISCUSS THE FUND'S POSITION IN EUROPE. WHAT COUNTRIES WERE YOU
OVERWEIGHTED IN DURING THE PERIOD?
A. Over the period, the fund invested heavily in Finland, Spain, the
Netherlands and Switzerland. All of these countries outperformed the world
index, and I chose individual stocks that outperformed others in their
respective countries. Some companies that turned in excellent results over
the past six months were the Spanish Bank BBV and Finnish paper and forest
products company UPM-Kymmene. Elsewhere in Europe, many companies continued
to restructure to improve profitability and focus on shareholder concerns.
Good examples are two of the fund's top 10 stocks, Swiss bank Julius Baer
and United Kingdom-based Unilever, one of the world's largest consumer
products companies. Both of these companies benefited from management
actions to improve profitability. Julius Baer also benefited from a strong
European banking sector during the past six months.
Q. CLEARLY EUROPE LOOKED MUCH BETTER THAN JAPAN AND SOUTHEAST ASIA. HOW
WOULD YOU DESCRIBE THE FUND'S POSITION IN THE FAR EAST?
A. First, as I noted, the fund was underweighted compared to the index in
Japan - Japanese investments made up about 10% of the fund, compared to
about 17% of the world index. The fund held what is called a "Blue Chip
Export Package" of companies, which included Honda - the fund's top holding
- - Canon and Nintendo. All of these companies had good fundamentals and
benefited from the strong dollar and weak yen, which resulted in their
products being less expensive and in higher demand in the United States and
other major international markets. While holding these particular companies
helped the fund, I do wish that I had been even more underweighted in
Japan, especially in smaller and non-export companies. I underestimated how
long the Japanese economy would stagnate, and the fund was somewhat hurt by
the size of my position there.
Q. AND SOUTHEAST ASIA?
A. In terms of Southeast Asia, especially Thailand, Singapore and Malaysia,
these countries have been suffering for some time from overheated business
conditions. So I chose to avoid most of the region over the six-month
period. The one market in the region that I was comfortable with was Hong
Kong because I was not concerned about how its upcoming transfer from the
U.K. to China would affect the Hong Kong economy. However, while some
investors are worried that property prices could drop, I still think Hong
Kong looks good, mostly because I expect the demand for residential
property to outstrip supply until at least 1999.
Q. WHAT ROLE DID IPOS PLAY IN THE FUND'S RETURNS OVER THE PERIOD?
A. As I mentioned in the last report to shareholders, IPOs of private
sector companies are a relatively new vehicle in overseas markets, and many
of them are attractively priced when you compare them to North American
IPOs. During the six-month period, I focused largely on European IPOs. Some
that turned out to be strong performers were Railtrack, a U.K railway
company; Pliva, a Croatian pharmaceutical company with significant
international sales; and the Danish apparel company Carli Gry
International. During the period, I also looked for IPOs in Latin America,
but almost none were completed. This is the one region in the world that
desperately needs more equity offerings because there are few public
companies outside the financial and utilities sectors.
Q. WE'VE ALREADY TALKED ABOUT SEVERAL OF THE FUND'S TOP 10 HOLDINGS, SUCH
AS HONDA. LET'S DISCUSS SOME OF YOUR OTHER LARGE HOLDINGS . . .
A. Sure. Philip Morris remained a very solidly performing holding and
benefited from restructuring over the period. As of the end of the period,
I believe it could continue to be a strong performer going forward even if
tobacco companies are required to pay generous settlements in ongoing U.S.
tobacco litigation. That's because its stock is undervalued versus other
companies with global brand names so that a settlement would probably not
affect the share price beyond the very short term. Another winner was
Sulzer AG. At the end of the period, its stock was worth 30% to 40% more
than the share price using comparable valuations for its medical device
business to be spun off this year.
Q. DID YOU HAVE ANY REGRETS OVER THE PERIOD?
A. Yes. I already mentioned that I regretted having 10% of the fund
invested in Japan over the past six months. In retrospect, I also wish that
I had fully appreciated how the privatization of Brazilian electric
utilities would affect those stocks, which turned out to be surprisingly
strong performers.
Q. PENNY, WHAT'S YOUR OUTLOOK GOING FORWARD?
A. What happens in world equity markets in the near future is dependent on
where medium- and long-term interest rates go. Overall, I don't think we'll
see much in terms of broad market movement, and I suspect it will very much
be a stock selector's market over the next six months or so. In terms of
specific markets, I think Hong Kong will rebound and provide some very
interesting investment opportunities going forward. However, it's likely
that I will continue to avoid most other Southeast Asian countries. Japan's
domestic economy should strengthen within the next several months, and
domestic stocks could outperform the exporters if the yen/dollar
relationship stabilizes. Europe still looks solid, but I am concerned that
the new Labor government in the U.K. may raise corporate taxes to fund
social programs and am therefore less interested in the U.K. market.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in common stocks from around the
world
FUND NUMBER: 318
TRADING SYMBOL: FWWFX
START DATE: May 30, 1990
SIZE: as of April 30, 1997, more than
$1.0 billion
MANAGER: Penelope Dobkin, since inception;
manager, Fidelity Europe Fund, 1986-1990;
Fidelity United Kingdom Fund, 1987-1989;
Fidelity Select Financial Services Portfolio,
1983-1986; joined Fidelity in 1980
(checkmark)
PENNY DOBKIN ON THE FUND'S HOLDINGS IN THE UNITED
STATES:
"When investors look at the Geographic
Diversification pie chart on the following page, they
are sometimes struck by the fairly large portion of
the pie that the fund has invested in the United
States although this truly is a worldwide fund.
"In reality, however, the fund actually is
underweighted compared to the Morgan Stanley
Capital International World Index in terms of U.S.
equities. Over the period, investments in the
United States made up about 20% of the fund's
holdings (the number on the pie chart appears larger
because the fund's cash holdings also fall under the
U.S. category). This compares to about 45% of the
index in U.S. holdings.
"I always have believed that there are better
investment opportunities outside than inside the
United States, especially through careful stock
picking. That's because it's easier to anticipate
movements in many international markets because
they follow the United States' lead. The U.S.
economy is often the first to grow and the first to
increase short-term interest rates, while many
other economies are in the later phases of the same
pattern. Still, my focus on overseas companies
doesn't always work, especially when the U.S.
market is extremely strong, as it was in 1995. But it
has looked good so far in 1997."
WORLDWIDE
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997
Canada 6.0%
Row: 1, Col: 1, Value: 34.0
Row: 1, Col: 2, Value: 4.1
Row: 1, Col: 3, Value: 4.2
Row: 1, Col: 4, Value: 4.4
Row: 1, Col: 5, Value: 19.5
Row: 1, Col: 6, Value: 5.8
Row: 1, Col: 7, Value: 10.0
Row: 1, Col: 8, Value: 3.1
Row: 1, Col: 9, Value: 8.9
Row: 1, Col: 10, Value: 6.0
United States 34.0%
France 8.9%
Hong Kong 3.1%
Japan 10.0%
Netherlands 5.8%
United
Kingdom 4.1%
Switzerland 4.2%
Spain 4.4%
Other 19.5%
AS OF OCTOBER 31, 1996
Canada 7.1%
Row: 1, Col: 1, Value: 27.0
Row: 1, Col: 2, Value: 4.7
Row: 1, Col: 3, Value: 3.6
Row: 1, Col: 4, Value: 5.1
Row: 1, Col: 5, Value: 25.0
Row: 1, Col: 6, Value: 6.0
Row: 1, Col: 7, Value: 12.4
Row: 1, Col: 8, Value: 4.6
Row: 1, Col: 9, Value: 4.5
Row: 1, Col: 10, Value: 7.1
Finland 4.5%
United States 27.0%
France 4.6%
Japan 12.4%
United
Kingdom 4.7%
Netherlands 6.0%
Switzerland 3.6%
Spain 5.1%
Other 25.0%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 85.3 92.6
Bonds 0.0 0.7
Short-term investments 14.7 6.7
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
STOCKS
6 MONTHS AGO
Honda Motor Co. Ltd 1.4 1.5
(Japan, Autos, Tires, & Accessories)
BCE, Inc 1.3 1.6
(Canada, Telephone Services)
Sulzer AG (Reg.) 1.3 0.0
(Switzerland, Industrial Machinery &
Equipment)
Falconbridge Ltd. 1.3 0.6
(Canada, Metals & Mining)
Philips Electronics NV (Bearer) 1.2 0.0
(Netherlands, Consumer Electronics)
Unilever PLC Ord. 1.2 1.2
(United Kindom, Household Products)
Julius Baer Holding AG 1.1 1.3
(Switzerland, Banks)
Philip Morris Companies, Inc. 1.1 1.2
(United States of America, Tobacco)
Alcatel Alsthom Compagnie Generale 1.0 0.0
d'Electricite SA sponsored ADR
(France, Electrical Equipment)
Koninklijke KNP BT NV 1.0 0.0
(Netherlands, Paper & Forest Products)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET
SECTORS
6 MONTHS AGO
Finance 13.6 14.7
Basic Industries 12.9 10.2
Construction & Real Estate 8.0 10.0
Retail & Wholesale 7.9 9.6
Industrial Machinery & Equipment 7.4 4.9
Durables 7.3 13.4
Technology 5.9 5.3
Nondurables 5.4 7.5
Utilities 4.9 5.2
Media & Leisure 3.3 2.4
WORLDWIDE
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 82.7%
SHARES VALUE (NOTE 1)
AUSTRALIA - 2.4%
Aristocrat Leisure Ltd. 912,300 $ 1,909,639
Boral Ltd. Ord. 1,150,000 3,395,224
CSR Ltd. 2,063,735 7,640,312
Capral Aluminum Ltd. 727,000 2,657,413
Comalco Ltd. 930,000 4,721,447
Reinsurance Australia Corp. Ltd. 1,326,392 4,102,475
24,426,510
AUSTRIA - 0.7%
Voest-Alpine Stahl AG 172,000 6,788,824
BELGIUM - 0.1%
Credit Communal
Holding/Dexia (c) 14,000 1,391,806
BERMUDA - 0.3%
Terra Nova Holdings Ltd. 174,300 3,268,125
BRAZIL - 0.4%
Telesp PN (Pfd. Reg.) 16,000,000 4,543,702
CANADA - 6.0%
Alcan Aluminium Ltd. 65,000 2,204,730
BCE, Inc. 284,000 13,291,066
Brascan Ltd. Class A 216,600 5,254,385
Canadian Imperial Bank of Commerce 349,600 8,030,455
Canwest Global Communications
Corp. (non-vtg.) 441,000 5,995,921
Falconbridge Ltd. 620,000 12,866,292
Imasco Ltd. 300,000 8,168,450
Inco Ltd. 175,000 5,603,957
61,415,256
CHINA (PEOPLES REPUBLIC) - 0.1%
Beijing Datang Power Class H (c) 1,962,000 1,019,435
CROATIA - 0.4%
Pliva D.D. GDR (a)(c) 278,360 4,425,924
DENMARK - 1.2%
Carli Gry International AS (Reg.) 30,000 1,506,851
East Asiatic Co. Ltd. (The) (a) 175,000 4,647,263
Syd-Sonderjylland Holding 130,000 6,075,965
12,230,079
FINLAND - 1.8%
Enso OY Class R 450,000 3,721,977
Huhtamaki Ord. 85,000 3,686,873
KCI (Konecranes International) (c) 140,550 5,406,965
Merita Ltd. Class A 500,000 1,625,359
Rauma OY 4,455 91,690
UPM-Kymmene Corp. 160,000 3,662,348
18,195,212
FRANCE - 8.9%
Alcatel Alsthom Compagnie
Generale d'Electricite SA 64,500 7,174,958
Alcatel Alsthom Compagnie
Generale d'Electricite SA
sponsored ADR 468,900 10,433,025
Bail Investissement SA 31,300 4,383,100
Bouygues Offshore SA sponsored ADR 219,500 2,743,750
Carbonne-Lorraine (LE) 23,200 5,507,477
Compagnie des Machines Bull SA 200,000 1,712,302
Credit Local de France SA 92,000 8,515,233
Eramet SA 128,374 6,491,037
SHARES VALUE (NOTE 1)
Galeries Lafayette SA (a) 13,000 $ 5,214,038
Klepierre SA 45,838 6,371,790
Lyonnaise des Eaux Dumez SA 52,000 4,706,003
Metaleurop SA (a) 522,669 6,271,043
Metaleurop SA (warrants) (a) 149,334 243,163
Pechiney SA Class A 187,076 6,990,199
Rhone Poulenc SA Class A 265,000 8,916,227
Unibail 57,000 5,519,990
91,193,335
GERMANY - 0.1%
BHW Holding AG (c) 28,000 469,079
HONG KONG - 3.1%
Amoy Properties Ltd. 3,206,000 3,166,062
Great Eagle Holdings Ltd. 1,149,014 3,433,767
Hong Kong Land Holdings Ltd. 1,279,000 2,660,320
Jardine Matheson Holdings Ltd. Ord. 607,800 3,342,900
Jardine Strategic Holdings Ltd. Ord. 1,493,000 5,076,200
Jardine Strategic Holdings Ltd. Ord.
Put Warrants $3.80 Strike Price, 7/7/97 74,650 25,381
Kumagai Gumi 5,002,000 5,423,972
Liu Chong Hing Bank Ltd. 1,140,000 2,097,076
Sime Darby Hongkong Ltd. 5,108,000 5,505,945
Wing Hang Bank Ltd. 264,000 964,461
31,696,084
INDONESIA - 0.9%
PT Alumindo Light Metal TBK Class L (a) 950,000 439,815
PT Tambang Timah GDR unit 85,000 1,307,300
PT Indosat Class B (For. Reg.) 900,000 2,481,484
Putra Surya Multidana PT (For. Reg.) 4,521,500 5,116,929
9,345,528
IRELAND - 0.6%
Anglo-Irish Bank Corp. PLC 2,400,000 3,000,228
IONA Technologies PLC sponsored ADR 55,500 804,750
Woodchester Investments PLC Unit 538,440 2,360,225
6,165,203
ITALY - 1.1%
Credito Italiano Ord. 4,003,100 5,617,273
Telecom Italia Spa 2,106,200 5,579,847
11,197,120
JAPAN - 10.0%
Amway Japan Ltd. 94,500 2,878,626
Canon, Inc. 284,000 6,728,640
Daiwa Securities Co. Ltd. 625,000 4,156,992
Deo Deo Corp. 66,100 1,061,388
Daito Trust Construction Co. 551,000 5,551,419
Fuji Photo Film Co. Ltd. 80,000 3,054,036
Fujitsu Ltd. 309,000 3,210,516
Fuji Machine Manufacturing Co.
Ltd. Ord. 183,000 5,156,756
Hanshin Department Store Ltd. 666,000 3,024,771
Honda Motor Co. Ltd. 474,000 14,699,989
Meiden Engineering Co. Ltd. 81,000 575,088
Matsuya Co. Ltd. 251,000 1,165,650
Minolta Camera Co. Ltd. 859,000 5,355,016
Nikko Securities Co. Ltd. 740,000 4,123,893
Nikku Sangyo Co. Ltd. 81,000 599,315
Nintendo Co. Ltd. Ord. 81,300 5,938,557
Nomura Securities Co. Ltd. 581,000 6,493,920
Nippon Thompson Co. Ltd. 262,000 1,763,234
Nippon Zeon Co. Ltd. 373,000 1,702,861
Obayashi Corp. 459,000 2,326,703
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Omron Corp. 185,000 $ 3,494,825
Sakura Bank Ltd. 415,000 2,191,861
Sakai Chemical Industry Co. Ltd. 459,000 1,651,092
Sumitomo Realty & Development
Co. Ltd. 480,000 3,404,148
THK Co. Ltd. 636,100 7,360,125
Tokyo Nissan Auto Sales Co. Ltd. (a) 85,000 267,622
Yamaichi Securities Co. Ltd. 1,589,000 4,152,450
102,089,493
MEXICO - 2.7%
Acer Computec Latino America sponsored
ADR (a)(c) 325,000 5,240,625
BANACCI SA de CV Class B (a) 2,190,000 4,688,528
Cemex SA Class B sponsored ADR 600,000 4,350,000
Controladora Comercial Mexicana SA
de CV GDR 217,000 3,309,250
Grupo Financiero Bancomer SA de CV
sponsored ADR, Series C (a)(c) 1,429,000 9,645,750
27,234,153
NETHERLANDS - 5.6%
AKZO Nobel NV 69,400 8,944,723
BAM Groep NV (a) 25,745 1,610,178
KBB NV Ord. 71,625 4,726,084
Koninklijke KNP BT NV 525,000 10,351,999
New Holland NV (a) 420,000 9,292,500
Philips Electronics NV 60,000 3,210,000
Philips Electronics NV (Bearer) 242,500 12,663,868
Samas-Groep NV 93,613 3,624,442
Volker Stevin NV 30,000 3,412,154
57,835,948
NORWAY - 0.8%
Elkem ASA 431,200 8,265,060
PANAMA - 0.5%
McDermott (J. Ray) SA 316,000 5,411,500
PHILIPPINES - 0.3%
Benpress Holdings Corp. GDR (a) 469,800 3,429,540
RUSSIA - 0.3%
Tatneft AO sponsored ADR (a)(c) 35,500 2,627,000
Vimpel Communications
sponsored ADR (a) 17,600 532,400
3,159,400
SOUTH AFRICA - 0.4%
Gencor Ltd. (Reg.) 1,000,000 4,204,137
SPAIN - 4.4%
Banco Bilbao Vizcaya SA Ord. (Reg.) 64,600 4,354,609
Banco de Santander SA Ord. (Reg.) 94,587 7,127,638
Banco De Valencia SA (Reg.) 257,400 4,760,952
Catalana Occidente SA 88,500 4,656,140
Cristaleria Espanola SA 100,400 7,703,237
Cubiertas y MZOV SA 54,300 5,468,128
Compania Espanola de Petroleos SA 50,000 1,591,026
FOCSA (Fomento Construcciones y
Contratas SA) 91,900 8,964,932
44,626,662
SWEDEN - 1.7%
Assi Doman AB Free shares 105,800 2,649,449
Catena AB Class A Free shares 275,000 3,329,383
SHARES VALUE (NOTE 1)
Forcenergy AB Class B Free shares 619,500 $ 6,829,121
Rottneros Bruk AB Free shares 1,850,000 2,051,155
Svenska Cellulosa AB (SCA)
Class B Ord. 140,000 2,997,400
17,856,508
SWITZERLAND - 4.2%
Credit Suisse Group (Reg.) 26,650 3,001,289
Julius Baer Holding AG 9,100 11,390,434
Schindler Holding AG (Reg.) 2,800 3,324,288
SIG AG (Reg.) 3,800 5,130,258
Sulzer AG (Reg.) 18,800 12,945,726
Swisslog Holding AG (Reg.) (a) 10,150 3,739,111
Valora Holding AG 16,900 3,691,859
Von Moos Holdings AG (Reg.) (a) 18,050 175,112
43,398,077
TURKEY - 0.6%
Dogan Sirketler Grubu Holdings AS 138,000,000 3,359,030
Eregli Demir Celik 28,000,000 2,736,496
6,095,526
UNITED KINGDOM - 4.1%
Doncasters PLC sponsored ADR 181,700 4,088,250
Grand Metropolitan PLC 960,000 8,026,584
House of Fraser PLC Class L 1,300,000 3,587,935
Monument Oil and Gas PLC Class L (a) 1,562,900 2,232,884
Somerfield PLC 1,970,000 5,756,931
Unilever PLC Ord. 480,000 12,632,129
Unichem PLC 1,373,600 5,842,704
42,167,417
UNITED STATES OF AMERICA - 19.0%
AccuStaff, Inc. (a) 260,000 4,745,000
Alaska Air Group, Inc. (a) 150,000 3,731,250
Alliant Techsystems, Inc. (a) 80,000 3,350,000
Alumax, Inc. (a) 182,300 6,653,950
Aluminum Co. of America 30,000 2,096,250
America West Holding Corp. Class B (a) 300,000 4,612,500
ASA Holdings, Inc. 120,000 2,550,000
BJ Services Co. (a) 30,239 1,425,013
Boise Cascade Corp. 90,000 2,992,500
Carson Pirie Scott & Co. (a) 64,300 1,912,925
Chesapeake Corp. 135,000 4,606,875
Circus Circus Enterprises, Inc. (a) 155,000 3,739,375
Consolidated Stores Corp. (a) 137,500 5,500,000
Cummins Engine Co., Inc. 38,500 2,160,813
Data General Corp. (a) 380,300 7,130,625
Dayton Hudson Corp. 122,700 5,521,500
Dillard Department Stores, Inc.
Class A 125,000 3,859,375
Donnkenny, Inc. (a) 319,000 1,136,438
Federated Department Stores,
Inc. (a) 140,000 4,760,000
Forcenergy Gas Exploration, Inc. (a) 102,500 3,177,500
Furniture Brands International, Inc. (a) 350,000 5,162,500
Gibson Greetings, Inc. (a) 248,900 5,102,450
Hertz Corp. Class A 4,000 116,000
ITT Corp. (a) 120,000 7,110,000
Integrated Device Technology, Inc. (a) 300,000 3,525,000
International Business Machines Corp. 35,700 5,738,775
Kaiser Aluminum Corp. (a) 109,400 1,176,050
Louisiana-Pacific Corp. 120,000 2,235,000
MCI Communications Corp. 130,000 4,956,250
Maxim Group, Inc. (a) 255,000 2,518,125
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - CONTINUED
Meyer (Fred), Inc. (a) 150,000 $ 6,168,750
Mirage Resorts, Inc. 250,000 5,031,250
Modine Manufacturing Co. 139,200 3,723,600
Payless ShoeSource, Inc. (a) 125,000 5,312,500
Philip Morris Companies, Inc. 279,000 10,985,625
Premark International, Inc. 100,000 2,450,000
President Riverboat Casinos, Inc. (a) 89,000 55,625
Providian Corp. 70,000 4,042,500
Quantum Corp. (a) 150,000 6,253,125
RJR Nabisco Holdings Corp. 193,840 5,766,740
Reebok International Ltd. 60,000 2,295,000
Sears, Roebuck & Co. 65,500 3,144,000
Sodak Gaming, Inc. (a) 120,000 1,410,000
Talbots, Inc. 190,000 5,130,000
Telespectrum Worldwide, Inc. (a) 27,800 288,425
Texas Instruments, Inc. 50,000 4,462,500
Thomas & Betts Corp. 82,628 3,749,246
Toys "R" Us, Inc. (a) 238,600 6,800,100
UNUM Corp. 29,800 2,294,600
U.S. Office Products Co. (a) 110,500 2,817,750
195,483,375
TOTAL COMMON STOCKS
(Cost $768,418,493) 849,028,018
PREFERRED STOCKS - 2.6%
CONVERTIBLE PREFERRED STOCKS - 0.5%
NETHERLANDS - 0.2%
Samas-Groep NV 59,306 2,497,159
UNITED STATES OF AMERICA - 0.3%
Unisys Corp. $3.75, Series A 84,200 3,010,150
TOTAL CONVERTIBLE PREFERRED STOCKS 5,507,309
NONCONVERTIBLE PREFERRED STOCKS - 2.1%
GERMANY - 0.9%
Berentzen-Gruppe AG 128,800 3,645,880
Escada AG (non-vtg.) 34,690 5,591,121
9,237,001
ITALY - 1.2%
Telecom Italia:
Ord. 3,200,000 6,930,943
Mobile Spa de Risp 2,800,000 5,174,362
12,105,305
TOTAL NONCONVERTIBLE PREFERRED STOCKS 21,342,306
TOTAL PREFERRED STOCKS
(Cost $23,434,021) 26,849,615
CASH EQUIVALENTS - 14.7%
Taxable Central Cash Fund (b)
(Cost $150,717,794) 150,717,794 150,717,794
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $942,570,308) $ 1,026,595,427
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash Fund was
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $30,226,584 or 3.0% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $407,875,232 and $404,834,965, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $140,782 for the period (see Note 4 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $942,810,486. Net unrealized appreciation aggregated
$83,784,941, of which $133,712,312 related to appreciated investment
securities and $49,927,371 related to depreciated investment securities.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.7%
Basic Industries 12.9
Cash Equivalents 14.7
Construction & Real Estate 8.0
Durables 7.3
Energy 1.7
Finance 13.6
Health 1.9
Holding Companies 2.3
Industrial Machinery & Equipment 7.4
Media & Leisure 3.3
Nondurables 5.4
Retail & Wholesale 7.9
Services 0.5
Technology 5.9
Transportation 1.6
Utilities 4.9
100.0%
WORLDWIDE
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $942,570,308) - See accompanying schedule $ 1,026,595,427
Receivable for investments sold 267,883
Receivable for fund shares sold 6,373,319
Dividends receivable 2,832,058
Interest receivable 586,823
Other receivables 69,433
TOTAL ASSETS 1,036,724,943
LIABILITIES
Payable for investments purchased $ 13,469,890
Payable for fund shares redeemed 2,928,657
Accrued management fee 615,272
Other payables and accrued expenses 367,284
TOTAL LIABILITIES 17,381,103
NET ASSETS $ 1,019,343,840
Net Assets consist of:
Paid in capital $ 869,805,748
Undistributed net investment income 3,084,443
Accumulated undistributed net realized gain (loss) on investments and foreign 62,518,397
currency transactions
Net unrealized appreciation (depreciation) on investments 83,935,252
and assets and liabilities in foreign currencies
NET ASSETS, for 64,625,737 $ 1,019,343,840
shares outstanding
NET ASSET VALUE, offering price $15.77
and redemption price per
share ($1,019,343,840 (divided by) 64,625,737 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 9,183,247
Dividends
Interest 2,009,831
11,193,078
Less foreign taxes withheld (923,715
)
TOTAL INCOME 10,269,363
EXPENSES
Management fee $ 3,571,495
Transfer agent fees 1,426,408
Accounting fees and expenses 272,915
Non-interested trustees' compensation 5,862
Custodian fees and expenses 242,666
Registration fees 54,105
Audit 37,014
Legal 6,328
Miscellaneous 18,941
Total expenses before reductions 5,635,734
Expense reductions (95,434 5,540,300
)
NET INVESTMENT INCOME 4,729,063
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 62,927,257
Foreign currency transactions 4,296 62,931,553
Change in net unrealized appreciation (depreciation) on:
Investment securities 990,806
Assets and liabilities in (84,621 906,185
foreign currencies )
NET GAIN (LOSS) 63,837,738
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 68,566,801
OTHER INFORMATION $ 61,136
Expense reductions
Directed brokerage arrangements
Custodian interest credits 5,631
Transfer agent interest credits 28,667
$ 95,434
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31,
(UNAUDITED) 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 4,729,063 $ 13,034,296
Net investment income
Net realized gain (loss) 62,931,553 28,773,100
Change in net unrealized appreciation (depreciation) 906,185 64,176,063
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 68,566,801 105,983,459
Distributions to shareholders (9,778,435) (7,253,442)
From net investment income
From net realized gain (21,857,649) -
TOTAL DISTRIBUTIONS (31,636,084) (7,253,442)
Share transactions 655,124,032 826,965,537
Net proceeds from sales of shares
Reinvestment of distributions 31,098,484 7,084,969
Cost of shares redeemed (581,027,448) (714,607,691)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 105,195,068 119,442,815
TOTAL INCREASE (DECREASE) IN NET ASSETS 142,125,785 218,172,832
NET ASSETS
Beginning of period 877,218,055 659,045,223
End of period (including undistributed net investment income of $3,084,443 and $10,438,333, $ 1,019,343,840 $ 877,218,055
respectively)
OTHER INFORMATION
Shares
Sold 41,826,496 57,492,786
Issued in reinvestment of distributions 2,080,166 532,304
Redeemed (37,056,935) (49,735,743)
Net increase (decrease) 6,849,727 8,289,347
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED
APRIL 30, 1997
SELECTED PER-SHARE DATA (UNAUDITED) 1996 1995 1994 E 1993 1992
Net asset value, beginning of period $ 15.18 $ 13.32 $ 13.96 $ 12.76 $ 9.63 $ 9.61
Income from Investment Operations
Net investment income .08 D .22 .17 .08 .11 .20
Net realized and unrealized gain (loss) 1.06 1.79 (.08) 1.37 3.28 (.08)
Total from investment operations 1.14 2.01 .09 1.45 3.39 .12
Less Distributions
From net investment income (.17) (.15) (.16) (.10) (.24) (.10)
From net realized gain (.38) - (.57) (.15) (.02) H -
Total distributions (.55) (.15) (.73) (.25) (.26) (.10)
Net asset value, end of period $ 15.77 $ 15.18 $ 13.32 $ 13.96 $ 12.76 $ 9.63
TOTAL RETURN B, C 7.71% 15.25% .95% 11.55% 36.10% 1.32%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,019,344 $ 877,218 $ 659,045 $ 748,738 $ 287,278 $ 103,627
Ratio of expenses to average net assets 1.21% A 1.19% 1.17% 1.32% 1.40% 1.51%
Ratio of expenses to average net assets after expense 1.19% A, 1.18% F 1.16% F 1.32% 1.40% 1.51%
reductions F
Ratio of net investment income to average net assets 1.02% A 1.71% 2.05% 1.40% 1.99% 2.02%
Portfolio turnover rate 94% A 49% 70% 69% 57% 130%
Average commission rate G $ .0058 $ .0003
A ANNUALIZED B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL
RETURNS WOULD HAVE
BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS
SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). D NET INVESTMENT
INCOME PER SHARE
HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE
PERIOD. E EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF
POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF
INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A
RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES. F FMR OR THE
FUND HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION
OF THE FUND'S EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
G FOR FISCAL YEARS
BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO
DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON
WHICH COMMISSIONS ARE
CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER. H INCLUDES AMOUNTS DISTRIBUTED
FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS
TAXABLE AS ORDINARY INCOME.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1997 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity International Growth & Income Fund, Fidelity Diversified
International Fund, Fidelity International Value Fund, Fidelity Overseas
Fund and Fidelity Worldwide Fund (the funds) are funds of Fidelity
Investment Trust (the trust). The trust is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust. Each fund
is authorized to issue an unlimited number of shares. The financial
statements have been prepared in conformity with generally accepted
accounting principles which permit management to make certain estimates and
assumptions at the date of the financial statements. The following
summarizes the significant accounting policies of the funds:
SECURITY VALUATION. Securities for which quotations are readily available
are valued at the last sale price, or if no sale price, at the closing bid
price in the principal market in which such securities are normally traded.
Securities (including restricted securities) for which quotations are not
readily available are valued primarily using dealer-supplied valuations or
at their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less for
which quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value. Equity securities that have reached the limit for aggregate foreign
ownership may trade at a premium to the local share price. If the
broker-quoted premium is not readily available as a result of limited share
activity, the securities are valued at the last sale price of the local
shares in the principal market in which securities are normally traded.
FOREIGN CURRENCY TRANSLATION. The accounting records of the funds are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. The effects of changes in foreign currency exchange
rates on investments in securities are included with the net realized and
unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to U.S. federal
income taxes to the extent that it distributes substantially all of its
taxable income for its fiscal year. Each fund may be subject to foreign
taxes on income and gains on investments which are accrued based upon each
funds' understanding of the tax rules and regulations that exist in the
markets in which it invests. The schedules of investments include
information regarding income taxes under the caption "Income Tax
Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the funds are informed of the
ex-dividend date. Non-cash dividends included in dividend income, if any,
are recorded at the fair market value of the securities received. Interest
income, which includes accretion of original issue discount, is accrued as
earned. Investment income is recorded net of foreign taxes withheld where
recovery of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Certain foreign currency gains (losses) are taxable as
ordinary income and, therefore, increase (decrease) taxable ordinary income
available for distribution.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
transactions, foreign currency transactions, passive foreign investment
companies (PFIC), market discount, capital loss carryforwards and losses
deferred due to wash sales. Certain funds also utilized earnings and
profits distributed to shareholders on redemption of shares as a part of
the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions may
include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. Certain funds use foreign currency contracts to
facilitate transactions in foreign-denominated securities. Losses may arise
from changes in the value of the foreign currency or if the counterparties
do not perform under the contracts' terms. The U.S. dollar value of foreign
currency contracts is determined using contractual currency exchange
2. OPERATING POLICIES - CONTINUED
FOREIGN CURRENCY CONTRACTS - CONTINUED
rates established at the time of each trade. The cost of the foreign
currency contracts is included in the cost basis of the associated
investment.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (SEC), the funds may invest in the
Taxable Central Cash Fund (the Cash Fund) managed by FMR Texas, an
affiliate of Fidelity Management & Research Company (FMR). The Cash Fund is
an open-end money market fund available only to investment companies and
other accounts managed by FMR and its affiliates. The Cash Fund seeks
preservation of capital, liquidity, and current income by investing in U.S.
Treasury securities and repurchase agreements for these securities.
Dividends from the Cash Fund are declared daily and paid monthly from net
interest income. Income distributions received by the funds are recorded as
interest income in the accompanying financial statements.
FUTURES CONTRACTS AND OPTIONS. Certain funds may use futures contracts and
options to manage their exposure to the stock and bond markets and to
fluctuations in interest rates and currency values. Buying futures, writing
puts, and buying calls tend to increase a fund's exposure to the underlying
instrument. Selling futures, buying puts, and writing calls tend to
decrease a fund's exposure to the underlying instrument, or hedge other
fund investments. Futures contracts involve, to varying degrees, risk of
loss in excess of each applicable fund's futures variation margin or the
option value reflected in each applicable fund's Statement of Assets and
Liabilities. The underlying face amount at value of any open futures
contracts and options at period end, is shown in each applicable fund's
schedule of investments under the captions "Purchased Options" and "Futures
Contracts." This amount reflects each contract's exposure to the underlying
instrument at period end. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparties do not perform under the contracts'
terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange traded
options are valued using the last sale price or, in the absence of a sale,
the last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations.
RESTRICTED SECURITIES. Certain funds are permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period, the
funds had no investments in restricted securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Information regarding purchases and sales of securities (other than
short-term securities), the market value of future contracts opened and
closed, is included under the caption "Other Information" at the end of
each applicable fund's schedule of investments.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of each fund.
The group fee rate is the weighted average of a series of rates and is
based on the monthly average net assets of all the mutual funds advised by
FMR. The rates ranged from .2500% to .5200% for the period. In the event
that these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted in
the same or a lower management fee. The annual individual fund fee rate is
.45%. The basic fee for Diversified International, International Value and
Overseas is subject to a performance adjustment (up to a maximum of ".20%
of the fund's average net assets over the performance period) based on each
fund's investment performance as compared to the appropriate index over a
specified period of time. For the period, each fund's management fee was
equivalent to the following annualized rates expressed as a percentage of
average net assets after the performance adjustment, if applicable:
Diversified International, International
Value 87%
Overseas .81%
International Growth & Income, Worldwide .75%
SUB-ADVISER FEE. FMR, on behalf of the funds, entered into sub-advisory
agreements with Fidelity Management & Research (U.K.) Inc., Fidelity
Management & Research Far East Inc., Fidelity International Investment
Advisors (FIIA), and Fidelity Investment Japan Ltd.(International Value
Fund only). In addition, FIIA entered into a sub-advisory agreement with
its subsidiary, Fidelity International Investment Advisors (U.K.) Limited
(FIIAL U.K.). Under the sub-advisory arrangements, FMR may receive
investment advice and research services and may grant the sub-advisers
investment management authority to buy and sell securities. FMR pays its
sub-advisers either a portion of its management fee or a fee based on costs
incurred for these services. FIIA pays FIIAL U.K. a fee based on costs
incurred for either service.
SALES LOAD. Fidelity Distributors Corporation (FDC), an affiliate of FMR,
is the general distributor of the funds. Shares of International Growth &
Income purchased before October 12, 1990 are subject to a 1% deferred sales
charge upon redemption. For the period, FDC received no deferred sales
charges for redemption of shares of International Growth & Income.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, is the funds' transfer, dividend disbursing and shareholder servicing
agent. FSC receives account fees and asset-based fees that vary according
to account size and type of account. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements. For the
period, each fund's transfer agent fees were equivalent to the following
annualized rates expressed as a percentage of average net assets:
International Value .26%
International Growth & Income, Overseas .27%
Diversified International .28%
Worldwide .31%
ACCOUNTING FEES. FSC maintains each fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. Certain funds placed a portion of their portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms are shown under the caption
"Other Information" at the end of each applicable fund's schedule of
investments.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
certain fund's expenses.
In addition, certain funds have entered into arrangements with their
custodian and transfer agent whereby credits realized as a result of
uninvested cash balances were used to reduce a portion of each applicable
fund's expenses.
Information regarding expense reductions are shown under the caption "Other
Information" on each applicable fund's Statement of Operations.
6. BANK BORROWINGS.
Each fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. Each fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, each fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time.
Information regarding a fund's participation in the program is included
under the caption "Other Information" at the end of each applicable fund's
schedule of investments.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc.,
London, England
Fidelity Management & Research (Far East) Inc.,
Tokyo, Japan
Fidelity Investments Japan Ltd.
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K.) Limited
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
Penelope A. Dobkin, VICE PRESIDENT, WORLDWIDE FUND
Gregory Fraser, VICE PRESIDENT, DIVERSIFIED INTERNATIONAL FUND
Richard Mace, Jr., VICE PRESIDENT, INTERNATIONAL VALUE FUND,
OVERSEAS FUND
John R. Hickling, VICE PRESIDENT, INTERNATIONAL GROWTH &
INCOME FUND
William J. Hayes, VICE PRESIDENT
Arthur S. Loring, SECRETARY
Kenneth A. Rathgeber, TREASURER
Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Chase Manhattan Bank, N.A.
New York, NY
FIDELITY'S INTERNATIONAL EQUITY FUNDS
Canada Fund
Diversified International Fund
Emerging Markets Fund
Europe Fund
Europe Capital Appreciation Fund
France Fund
Germany Fund
Global Balanced Fund
Hong Kong and China Fund
International Growth & Income Fund
International Value Fund
Japan Fund
Japan Small Companies Fund
Latin America Fund
Nordic Fund
Pacific Basin Fund
Southeast Asia Fund
Overseas Fund
United Kingdom Fund
Worldwide Fund
CORPORATE HEADQUARTERS
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
BULK RATE
U.S. POSTAGE
P A I D
F I D E L I T Y
INVESTMENTS
(registered trademark)
P.O. Box 193
Boston, MA 02101
(2_FIDELITY_LOGOS)FIDELITY'S
TARGETED INTERNATIONAL EQUITY
FUNDS
FIDELITY CANADA FUND
FIDELITY EMERGING MARKETS FUND
FIDELITY EUROPE FUND
FIDELITY EUROPE CAPITAL APPRECIATION FUND
FIDELITY FRANCE FUND
FIDELITY GERMANY FUND
FIDELITY HONG KONG AND CHINA FUND
FIDELITY JAPAN FUND
FIDELITY JAPAN SMALL COMPANIES FUND
FIDELITY LATIN AMERICA FUND
FIDELITY NORDIC FUND
FIDELITY PACIFIC BASIN FUND
FIDELITY SOUTHEAST ASIA FUND
FIDELITY UNITED KINGDOM FUND
SEMIANNUAL REPORT
APRIL 30, 1997
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
MARKET RECAP 4 A REVIEW OF WHAT HAPPENED IN WORLD MARKETS
DURING THE LAST SIX MONTHS.
CANADA FUND 5 PERFORMANCE
6 FUND TALK: THE MANAGER'S OVERVIEW
8 INVESTMENT CHANGES
9 INVESTMENTS
11 FINANCIAL STATEMENTS
EMERGING MARKETS FUND 13 PERFORMANCE
14 FUND TALK: THE MANAGER'S OVERVIEW
16 INVESTMENT CHANGES
17 INVESTMENTS
22 FINANCIAL STATEMENTS
EUROPE FUND 24 PERFORMANCE
25 FUND TALK: THE MANAGER'S OVERVIEW
27 INVESTMENT CHANGES
28 INVESTMENTS
30 FINANCIAL STATEMENTS
EUROPE CAPITAL APPRECIATION FUND 32 PERFORMANCE
33 FUND TALK: THE MANAGER'S OVERVIEW
35 INVESTMENT CHANGES
36 INVESTMENTS
39 FINANCIAL STATEMENTS
FRANCE FUND 41 PERFORMANCE
42 FUND TALK: THE MANAGER'S OVERVIEW
44 INVESTMENT CHANGES
45 INVESTMENTS
47 FINANCIAL STATEMENTS
GERMANY FUND 49 PERFORMANCE
50 FUND TALK: THE MANAGER'S OVERVIEW
52 INVESTMENT CHANGES
53 INVESTMENTS
55 FINANCIAL STATEMENTS
HONG KONG AND CHINA FUND 57 PERFORMANCE
58 FUND TALK: THE MANAGER'S OVERVIEW
60 INVESTMENT CHANGES
61 INVESTMENTS
63 FINANCIAL STATEMENTS
JAPAN FUND 65 PERFORMANCE
66 FUND TALK: THE MANAGER'S OVERVIEW
68 INVESTMENT CHANGES
69 INVESTMENTS
72 FINANCIAL STATEMENTS
JAPAN SMALL COMPANIES FUND 74 PERFORMANCE
75 FUND TALK: THE MANAGER'S OVERVIEW
77 INVESTMENT CHANGES
78 INVESTMENTS
81 FINANCIAL STATEMENTS
LATIN AMERICA FUND 83 PERFORMANCE
84 FUND TALK: THE MANAGER'S OVERVIEW
86 INVESTMENT CHANGES
87 INVESTMENTS
89 FINANCIAL STATEMENTS
NORDIC FUND 91 PERFORMANCE
92 FUND TALK: THE MANAGER'S OVERVIEW
94 INVESTMENT CHANGES
95 INVESTMENTS
97 FINANCIAL STATEMENTS
PACIFIC BASIN FUND 99 PERFORMANCE
100 FUND TALK: THE MANAGER'S OVERVIEW
102 INVESTMENT CHANGES
103 INVESTMENTS
105 FINANCIAL STATEMENTS
SOUTHEAST ASIA FUND 107 PERFORMANCE
108 FUND TALK: THE MANAGER'S OVERVIEW
110 INVESTMENT CHANGES
111 INVESTMENTS
114 FINANCIAL STATEMENTS
UNITED KINGDOM FUND 116 PERFORMANCE
117 FUND TALK: THE MANAGER'S OVERVIEW
119 INVESTMENT CHANGES
120 INVESTMENTS
122 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS 124 NOTES TO THE FINANCIAL STATEMENTS
</TABLE>
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will begin eliminating duplicate
copies of most financial reports and prospectuses to most households, even
if they have more than one account in the fund.
If additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS
NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUNDS
UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE
INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
MARKET RECAP
Low interest rates, controlled inflation and steady growth helped many
international markets post healthy gains during the six months ended April
30, 1997. The exceptions proved to be some markets in the Far East. In
addition, a strong U.S. dollar ate into the returns for U.S.-based
investors. For the six months, the Morgan Stanley Capital International
(MSCI) EAFE Index (capital weighted) - which measures stock market
performance in Europe, Australia and the Far East - returned 1.57%.
EUROPE: The combination of a strong U.S. dollar, low interest rates,
increased corporate restructurings and scant inflationary concern
translated into a healthy period for much of Europe. For the six months
ended April 30, 1997, the MSCI Europe Index was up 11.77%. The United
Kingdom - Europe's largest stock market - displayed hints of an improving
economy, but the market itself trailed many of its European counterparts.
Germany, on the other hand, performed exceptionally well, as did Italy,
Spain and the Scandinavian countries.
JAPAN AND THE FAR EAST: While the Japanese stock market showed some
glimpses of strength over the past six months, it continued to struggle.
Even though exporters benefiting from a weak yen and corporations that
focused on increasing shareholder value saw some share price gains, the
overall market dropped sharply for dollar-based investors. The Tokyo Stock
Exchange Index (TOPIX), a measure of the Japanese market, was down 16.36%.
Many other markets in the region also experienced troubles. The MSCI
Combined Far East ex-Japan Free Index returned -1.45%. Export growth was
sluggish and fears of interest rate hikes in the U.S. stalled the markets,
as many of the countries in the region link their currencies and interest
rates to the U.S.
EMERGING MARKETS: While the MSCI Emerging Markets Free Index posted a
strong 10.98% return for the six months ended April 30, 1997, most of that
performance came as a result of healthy returns in Latin America. As
mentioned previously, emerging markets in Asia encountered difficulties.
Stock markets in Thailand and Malaysia, in particular, experienced sharp
drops, while Taiwan posted strong returns. In Latin America, a combination
of stable economic growth, low interest rates, government reforms and
positive investor sentiment helped to bolster stock markets. Markets in
Eastern Europe and the Middle East tended to post fairly strong gains over
the six months.
U.S. AND CANADA: Concerns in March and April over higher interest rates and
the possibility of weaker corporate earnings provided the only significant
pause in the U.S. stock market's upward climb during the six-month period.
The Standard & Poor's 500 Index returned 14.72% over that time. In
February, Federal Reserve Board Chairman Alan Greenspan indicated the Fed's
inclination to raise short-term interest rates to head off inflation.
Because higher interest rates tend to slow economic growth and increase
borrowing costs, the stock market faltered as the Fed's March 25 Open
Market Committee approached. At that meeting, the Fed raised a key
short-term interest rate. The stock market, already at historically high
valuations, reacted coolly. It sold off sharply through mid-April, when
positive news on inflation emerged. The market recovered, almost to the
peak it had reached in March, when the Dow Jones Industrial Average closed
above 7000 for the first time. While the Canadian stock market tends to
move closely with the U.S. market, the Toronto Stock Exchange 300 was
hampered by its large natural resources component. For the six month
period, this index posted a return of 3.15%.
BONDS: Emerging market debt, particularly Brady bonds - bonds issued by
governments of developing countries that are denominated in U.S. dollars -
continued to dominate the world's fixed-income markets. The JP Morgan
Emerging Markets Bond Index returned 11.90% during the six-month period,
beating its developed-market counterpart, the Salomon Brothers Non-U.S.
World Government Bond Index, which fell 7.29%. Emerging market debt
instruments were helped by strong domestic product growth, declining
inflation and positive steps by governments to streamline debt management
policies. Non-dollar-denominated bonds in the developed world were hurt by
the relative strength of the U.S. dollar. Bond markets in such countries as
Sweden and Italy that imposed strict fiscal policies in order to meet the
requirements for membership in the European monetary union tended to post
positive results. In the U.S., a relatively favorable inflation backdrop
steadied fears of higher interest rates, helping to spark an April rally
that bolstered the performance of the U.S. taxable bond market.
S&P 500 EAFE
* YEAR TO DATE THROUGH APRIL 30, 1997.
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: 6.1
Row: 2, Col: 2, Value: 7.38
Row: 3, Col: 1, Value: 31.57
Row: 3, Col: 2, Value: 56.16
Row: 4, Col: 1, Value: 18.56
Row: 4, Col: 2, Value: 69.44000000000001
Row: 5, Col: 1, Value: 5.1
Row: 5, Col: 2, Value: 24.63
Row: 6, Col: 1, Value: 16.61
Row: 6, Col: 2, Value: 28.27
Row: 7, Col: 1, Value: 31.69
Row: 7, Col: 2, Value: 10.53
Row: 8, Col: 1, Value: -3.1
Row: 8, Col: 2, Value: -23.45
Row: 9, Col: 1, Value: 30.47
Row: 9, Col: 2, Value: 12.13
Row: 10, Col: 1, Value: 7.619999999999999
Row: 10, Col: 2, Value: -12.17
Row: 11, Col: 1, Value: 10.08
Row: 11, Col: 2, Value: 32.56
Row: 12, Col: 1, Value: 1.32
Row: 12, Col: 2, Value: 7.78
Row: 13, Col: 1, Value: 29.3
Row: 13, Col: 2, Value: 11.21
Row: 14, Col: 1, Value: 15.72
Row: 14, Col: 2, Value: 3.26
Row: 15, Col: 1, Value: 8.81
Row: 15, Col: 2, Value: -1.04
%
CANADA
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). The fund has a 3% sales
charge. If Fidelity had not reimbursed certain fund expenses, the past five
years and life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
APRIL 30, 1997 MONTHS YEAR YEARS FUND
CANADA -0.28% 7.87% 49.14% 166.50%
CANADA (INCL. 3% SALES CHARGE) -3.27% 4.64% 44.66% 158.50%
Toronto Stock Exchange 300 3.15% 15.42% 71.72% 153.44%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years or since
the fund started on November 17, 1987. For example, if you invested $1,000
in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Toronto Stock Exchange 300 - a market capitalization
weighted index of 300 stocks traded in the Canadian market. This index
includes reinvested dividends and capital gains.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
APRIL 30, 1997 YEAR YEARS FUND
CANADA 7.87% 8.32% 10.92%
CANADA (INCL. 3% SALES CHARGE) 4.64% 7.66% 10.56%
Toronto Stock Exchange 300 15.42% 11.42% 10.33%
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER LIFE OF FUND
Canada DR Toronto Stock Exchange
00309 DR001
1987/11/17 9700.00 10000.00
1987/11/30 9767.90 10159.91
1987/12/31 10446.90 10902.20
1988/01/31 10340.20 10766.12
1988/02/29 11048.30 11455.09
1988/03/31 11737.00 12118.74
1988/04/30 12008.60 12276.06
1988/05/31 11436.30 11954.61
1988/06/30 12319.00 12914.95
1988/07/31 12144.40 12770.34
1988/08/31 11562.40 12147.56
1988/09/30 11804.90 12408.94
1988/10/31 12357.80 12761.49
1988/11/30 12212.30 12838.17
1988/12/31 12480.81 13196.56
1989/01/31 13422.57 14222.20
1989/02/28 13045.87 13890.22
1989/03/31 13263.96 14036.78
1989/04/30 13531.62 14355.44
1989/05/31 13987.63 14392.34
1989/06/30 14661.73 14855.07
1989/07/31 15553.93 15900.00
1989/08/31 15633.23 16157.57
1989/09/30 15534.10 15932.92
1989/10/31 15316.01 15960.00
1989/11/30 15405.23 16207.21
1989/12/31 15849.10 16485.03
1990/01/31 14563.76 15032.84
1990/02/28 14646.68 14930.11
1990/03/31 14895.46 15093.60
1990/04/30 14180.23 13939.41
1990/05/31 15113.14 14894.22
1990/06/30 15465.57 14917.50
1990/07/31 15589.96 15170.55
1990/08/31 14688.15 14244.12
1990/09/30 14449.74 13522.93
1990/10/31 14066.21 13082.07
1990/11/30 14522.30 13448.40
1990/12/31 14978.60 14028.62
1991/01/31 15045.02 14085.97
1991/02/28 16428.85 15109.86
1991/03/31 17148.44 15222.57
1991/04/30 17281.29 15203.81
1991/05/31 18045.17 15723.75
1991/06/30 18067.31 15483.78
1991/07/31 18011.95 15706.41
1991/08/31 17856.97 15784.70
1991/09/30 17259.15 15390.08
1991/10/31 18023.03 16127.28
1991/11/30 17347.72 15701.06
1991/12/31 17627.42 15774.02
1992/01/31 17945.14 15913.63
1992/02/29 18051.04 15788.30
1992/03/31 17545.05 15012.42
1992/04/30 17333.24 14759.32
1992/05/31 17486.21 14790.80
1992/06/30 17392.07 14908.57
1992/07/31 17839.23 15363.59
1992/08/31 17568.58 15082.56
1992/09/30 16815.48 14074.27
1992/10/31 16744.87 14340.45
1992/11/30 16697.80 13619.11
1992/12/31 17121.47 14136.15
1993/01/31 17027.21 13995.03
1993/02/28 18087.72 14854.14
1993/03/31 19077.54 15456.65
1993/04/30 19572.45 16116.48
1993/05/31 19843.47 16569.77
1993/06/30 20856.85 16833.20
1993/07/31 20102.71 16817.33
1993/08/31 20609.40 17117.80
1993/09/30 19596.02 16383.72
1993/10/31 20998.26 17665.94
1993/11/30 20515.13 17192.85
1993/12/31 21482.47 18016.96
1994/01/31 22427.27 18892.01
1994/02/28 21470.66 18105.20
1994/03/31 20679.39 17343.76
1994/04/30 20525.86 17117.74
1994/05/31 20620.34 17394.54
1994/06/30 19486.57 16229.92
1994/07/31 19864.49 16821.43
1994/08/31 20608.53 17748.84
1994/09/30 20714.82 18170.07
1994/10/31 20289.65 17794.46
1994/11/30 18813.40 16727.05
1994/12/31 18907.95 16957.49
1995/01/31 17584.40 16119.77
1995/02/28 18305.26 16786.00
1995/03/31 19451.56 17497.07
1995/04/30 20042.43 17923.40
1995/05/31 20668.76 18482.09
1995/06/30 20952.38 18834.82
1995/07/31 21673.24 19342.43
1995/08/31 21401.44 19243.97
1995/09/30 21708.69 19383.92
1995/10/31 20739.66 19052.21
1995/11/30 21590.52 19726.25
1995/12/31 22574.56 19959.52
1996/01/31 22954.36 20910.61
1996/02/29 23156.13 20846.27
1996/03/31 23512.19 21236.57
1996/04/30 23963.21 21958.20
1996/05/31 24532.92 22313.61
1996/06/30 23737.70 21597.87
1996/07/31 23049.31 20954.91
1996/08/31 24034.42 22000.79
1996/09/30 24687.21 22794.76
1996/10/31 25921.57 24569.51
1996/11/30 26669.31 26239.71
1996/12/31 26176.87 25493.96
1997/01/31 28241.90 26762.55
1997/02/28 27543.66 26599.35
1997/03/31 25671.76 25029.01
1997/04/30 25850.03 25344.40
Let's say hypothetically that $10,000 was invested in Fidelity Canada Fund
on November 17, 1987, when the fund started, and the current maximum 3%
sales charge was paid. As the chart shows, by April 30, 1997, the value of
the investment would have grown to $25,850 - a 158.50% increase on the
initial investment. For comparison, look at how the Toronto Stock Exchange
300 did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $25,344 - a
153.44% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
CANADA
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Tom Sweeney, Portfolio Manager of Fidelity Canada Fund
Q. HOW DID THE FUND PERFORM, TOM?
A. For the six months that ended on April 30, 1997, the fund had a total
return of -0.28%, compared to the Toronto Stock Exchange 300 (TSE 300)
return of 3.15%. For the one-year period ending April 30, 1997, the fund
returned 7.87%, compared to the TSE 300 return of 15.42%.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING THE SIX-MONTH
PERIOD?
A. The Canadian market tends to track the U.S. market, but has lagged by
about 8% per year over the past 10 years. The makeup of the Canadian market
is different, because natural resources companies, which have performed
relatively poorly, make up about 40-50% of the Canadian market, a much
bigger percentage than in the U.S. Precious metals, base metals, oil and
gas, and paper and forest product companies have performed just as poorly
in the U.S., but they account for a much smaller percentage of the overall
market than in Canada. Last year, the two best industries in Canada were
banks, which benefited from declining interest rates, and oil and gas. Over
the last six months, financial and utility stocks, in which the fund is
underweighted, did better than natural resource stocks, in which it is
overweighted.
Q. THE FUND'S LARGEST WEIGHTING CONTINUED TO BE IN THE ENERGY SECTOR. WHAT
WERE SOME DEVELOPMENTS OF NOTE DURING THE PERIOD?
A. Energy exploration and production companies, such as Rio Alto
Exploration, Norcen Energy Resources and Beau Canada Exploration, were
valued very inexpensively and were growing, and I remained optimistic on
energy in the long-run. Rio Alto is mainly a producer of natural gas in
Alberta and is a very disciplined company that meets its production goals
consistently. Some of the other energy commodities in the past six months
have weakened because of the very warm winter in the U.S.; Alberta's
winter, in contrast, was very cold. Natural gas inventories went down, and
pricing in Alberta was up fairly dramatically. On the other hand, companies
that sell natural gas or oil to the U.S., such as Beau Canada and Norcen,
have experienced some weakening oil and gas prices. Beau Canada is similar
in size to Rio Alto, but is primarily in oil; it is doing fairly well, and
is expected to report good earnings in 1997. Norcen is a bigger company,
with operations in Canada, the Gulf of Mexico and South America. During the
period, its stock price was down because the price of crude oil was
weakening. However, the company has been making improvements in its
management over the past two years, and I believed that its outlook was
good. Canada Occidental Petroleum was up significantly during the period.
Like Beau Canada, it was valued very cheaply, and it recently made a very
good acquisition, Wascana, at a fairly attractive price.
Q. WHAT CHANGES DID YOU MAKE TO THE FUND'S PRECIOUS METALS HOLDINGS, ITS
THIRD LARGEST SECTOR WEIGHTING?
A. During the period, I reduced the fund's holdings in gold because I
became less optimistic about its price, which usually increases at the end
of the calendar year when demand is high. When the price of gold actually
dropped at the end of 1996, I found that central banks, which held about 15
years' worth of world mine production, were selling gold at a faster rate
than in recent years. I felt that this sell-off could continue for some
time. At the same time, I saw better opportunities in other sectors. I
reduced our gold holdings to about 5% of the fund, making it dramatically
underweighted versus our index as of the end of the period. One of the
fund's holdings in this sector, Greenstone Resources, is a gold mining
company with operations in Nicaragua, Honduras and Panama, and with two new
mines that have started up. The company has some excellent assets and is
finding a lot of gold, but the stock price was down during the period. I
maintained my Greenstone holdings because I felt it could outperform other
gold mining companies due to finding gold at very low cost.
Q. DID THE FUND HAVE POSITIONS IN OTHER PRECIOUS METALS BESIDES GOLD?
A. Yes, it did. The fund had 5% of its holdings in silver mining companies.
Silver has had much steadier demand and, with production staying the same
year after year, inventories have been dropping. I believe that the price
of silver could go up and, in that case, silver companies could do better
than gold companies. One of my top-10 holdings, Pan American Silver Corp.,
owns a mine in Peru that is profitable at the current price of silver.
Q. WAS THE FUND AFFECTED BY BRE-X'S RECENT TROUBLES?
A. Clearly one of the biggest events during the period was the Bre-X
scandal. Bre-X, a gold exploration company known as a "junior" gold
company, conducts exploration, but doesn't own any mines. A junior gold
company will stake a claim and, if it discovers gold, will partner with a
"senior" gold company to mine it. Bre-X claimed to discover gold and called
in Freeport, a senior company, which drilled its own holes next to Bre-X's
and found insignificant amounts of gold. The fund didn't own Bre-X
directly, but held shares in another company, Bresea Resources, that held
its shares. As a result, the fund's performance was negatively affected,
although the fund had sold a large portion of Bresea before the fraud was
discovered.
Q. YOU'VE BUILT UP POSITIONS IN BASIC INDUSTRIES, INCLUDING BASE METAL
PRODUCERS, AS WELL AS PAPER AND FOREST PRODUCTS COMPANIES. WHY?
A. Two base metal producers, Cominco and Alcan Aluminium, looked attractive
as of the end of the period. In the last few years, zinc and aluminum
pricing was low, no capacity was being added and there had been a surplus
of the metals. Recently, these industries have been moving from a surplus
to a shortage of metal inventories. As shortage conditions approach, the
price goes up; the incremental cost to produce more zinc is minimal, so
profits increase. Capacity can be added at this point, but overall I don't
think there will be much capacity added in the next two years, so the
outlook is good. The same holds true for aluminum. There's not much new
capacity, so as demand increases, prices could increase. As long as the
economy is reasonable and avoids a recession that would push demand down,
the outlook is positive.
Q. AND PAPER AND FOREST PRODUCTS?
A. Pricing was very good for paper until early 1996, when prices collapsed.
I have been adding to my position in the last six months, and inventories
are starting to come down, particularly in newsprint and pulp. Recently,
newsprint saw its first price increase since the collapse. I see an upward
trend in pricing over time, and I wanted to buy these stocks early.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT FEW MONTHS, TOM?
A. I believe that the Canadian market could do better than the U.S. market
in the future because the performance of natural resources, with the
possible exception of gold, should improve. As demand has grown for natural
resources, most of this industry is moving from surplus to shortage, and
pricing has improved. I also believe that actions being taken by the
federal and some provincial governments will help bolster the financial
markets. The Canadian government is doing a good job addressing the
nation's economic problems, specifically by reducing the deficit. Some
provinces, such as Alberta and Ontario, are doing an even better job, and
are generating surpluses and reducing taxes.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Canadian issuers
FUND NUMBER: 309
TRADING SYMBOL: FICDX
START DATE: November 17, 1987
SIZE: as of April 30, 1997, more than $125 million
MANAGER: Tom Sweeney, since 1996;
manager, Fidelity Capital Appreciation Fund,
1986-1996; Fidelity Select Paper and Forest
Products Portfolio, 1986; joined Fidelity in
1985
(checkmark)
TOM SWEENEY ON DEVELOPMENTS IN THE
FISHING INDUSTRY:
"The industry has suffered dramatically since the
Canadian government placed a virtual moratorium
on groundfish quotas in 1992, reducing them by up to
90% because of overfishing. Companies in this
sector had to downsize dramatically, but they
reduced their costs, went from losses to break-even
and are now seeing profits. FPI, the fund's largest
holding, was flat during the period, but is in a
recovery phase and its profits are increasing as
quotas are now being increased. National Sea
Products, another large holding, was up substantially
during the six months; unlike such other fishing
companies as FPI that only distribute groundfish,
National Sea has 60% of the market for frozen fish in
Canadian retail markets. I think that as the quotas
increase, these companies could be in a position to
become more profitable, having repositioned
themselves to be more efficient. I am optimistic on
this market, and have purchased the stocks to
participate in the projected recovery."
CANADA
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997
United States 22.9%
Row: 1, Col: 1, Value: 22.9
Row: 1, Col: 2, Value: 77.09999999999999
Canada 77.1%
AS OF OCTOBER 31, 1996
United States 15.7%
Row: 1, Col: 1, Value: 15.7
Row: 1, Col: 2, Value: 84.3
Canada 84.3%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 90.6 95.3
Short-term investments 9.4 4.7
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
STOCKS
6 MONTHS AGO
FPI Ltd. 5.7 4.0
(Foods)
Alcan Aluminium Ltd. 5.4 1.9
(Metals & Mining)
Cominco Ltd. 5.1 0.5
(Metals & Mining)
Genlyte Group, Inc. 4.2 3.1
(Electrical Equipment)
Rio Alto Exploration Ltd. 4.2 3.1
(Oil & Gas)
Pan American Silver Corp. 4.1 4.2
(Precious Metals)
Greenstone Resources Ltd. 3.7 2.9
(Precious Metals)
Noranda, Inc. 3.4 0.2
(Metals & Mining)
Norcen Energy Resources Ltd. 3.2 0.8
(Oil & Gas)
Beau Canada Exploration Ltd. 2.9 1.8
(Oil & Gas)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET
SECTORS
6 MONTHS AGO
Energy 27.9 31.0
Basic Industries 24.7 7.6
Precious Metals 10.4 18.6
Nondurables 9.6 7.4
Industrial Machinery & Equipment 4.2 3.1
Utilities 4.2 7.6
Retail & Wholesale 2.9 2.0
Media & Leisure 2.6 6.2
Finance 1.5 9.8
Technology 1.2 1.0
CANADA
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.6%
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 24.7%
METALS & MINING - 15.8%
Alcan Aluminium Ltd. 200,000 $ 6,783,785
Anvil Range Mining Corp. 510,000 894,129
Cominco Ltd. (a) 250,000 6,440,302
Noranda, Inc. 200,000 4,221,976
South Crofty Holdings Ltd. (a)(d) 2,115,000 1,437,798
19,777,990
PAPER & FOREST PRODUCTS - 8.9%
Alliance Forest Products (c) 10,000 228,989
Avenor, Inc. 100,000 1,806,863
Cascades, Inc. 50,000 314,859
Crestbrook Forest Industries Ltd. 110,000 850,120
Domtar, Inc. 75,000 638,663
Harmac Pacific, Inc. (a) 80,000 795,735
MacMillan Bloedel Ltd. 25,000 341,694
Noranda Forest, Inc. 100,000 683,388
Paperboard Industries International, Inc. (a) 300,000 912,376
St. Laurent Paperboard, Inc. (a) 40,000 523,811
Scott Paper Ltd. 200,000 2,819,421
Tembec, Inc. Class A (a) 167,900 1,285,577
11,201,496
TOTAL BASIC INDUSTRIES 30,979,486
CONSTRUCTION & REAL ESTATE - 0.5%
ENGINEERING - 0.5%
ADS, Inc. Class A (multi-vtg.) (a) 75,000 603,778
DURABLES - 0.2%
HOME FURNISHINGS - 0.2%
Shermag, Inc. (a) 10,000 90,164
SMED International, Inc. (a) 10,000 135,962
226,126
ENERGY - 27.9%
OIL & GAS - 27.9%
Anderson Exploration Ltd. (a) 200,000 2,311,353
Barrington Petroleum Ltd. (a) 300,000 1,105,585
Beau Canada Exploration Ltd. (a) 1,650,000 3,660,238
Canadian Natural Resources Ltd. (a) 100,000 2,382,912
Canada Occidental Petroleum Ltd. 150,000 2,957,172
Denbury Resources, Inc. (a) 125,000 1,699,524
Norcen Energy Resources Ltd. 200,000 4,007,299
Penn West Petroleum Ltd. (a) 300,000 3,381,159
Petro-Canada 200,000 3,263,086
Renaissance Energy Ltd. (a) 120,000 3,323,196
Rio Alto Exploration Ltd. (a) 750,000 5,232,745
Ulster Petroleums Ltd. (a) 200,000 1,667,323
34,991,592
FINANCE - 1.5%
INSURANCE - 1.5%
Acceptance Insurance Co., Inc. (a) 100,000 1,925,000
HEALTH - 0.1%
DRUGS & PHARMACEUTICALS - 0.1%
Technilab Pharma, Inc. 16,000 84,726
INDUSTRIAL MACHINERY & EQUIPMENT - 4.2%
ELECTRICAL EQUIPMENT - 4.2%
Genlyte Group, Inc. (a) 420,000 5,276,250
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - 2.6%
BROADCASTING - 0.1%
Radiomutuel, Inc. Class A 20,000 $ 157,430
ENTERTAINMENT - 0.2%
Coscient Group, Inc.:
Class A (multi-vtg.) (a) 32,600 93,313
Class B (sub. vtg.) (a) 60,500 140,703
234,016
PUBLISHING - 2.3%
Torstar Corp. Class B 100,000 2,851,623
TOTAL MEDIA & LEISURE 3,243,069
NONDURABLES - 9.6%
AGRICULTURE - 1.0%
Saskatchewan Wheat Pool Class B
(non-vtg.) (a) 100,000 1,173,566
FOODS - 8.6%
FPI Ltd. (a)(d) 1,600,000 7,155,891
National Sea Products Ltd. (a)(d) 680,000 3,649,504
10,805,395
TOTAL NONDURABLES 11,978,961
PRECIOUS METALS - 10.4%
Breakwater Resources Ltd. (a) 450,000 1,181,792
Consolidated Nevada Goldfields
Corp. (a) 1,000,000 665,502
Consolidated Nevada Goldfields
Corp. (warrants) (a) 500,000 -
Greenstone Resources Ltd. (a) 485,000 4,581,201
Greenstone Resources Ltd. (warrants) (a) 11,040 39,501
Pan American Silver Corp. (a) 820,000 5,105,013
Silver Standard Resources, Inc. (a) 275,000 1,082,329
United Keno Hill Mines Ltd. (a) 200,000 64,403
War Eagle Mining, Inc. (a) 300,000 330,602
13,050,343
RETAIL & WHOLESALE - 2.9%
RETAIL & WHOLESALE, MISCELLANEOUS - 2.9%
Hancock Fabrics, Inc. 300,000 3,600,000
TECHNOLOGY - 1.2%
ELECTRONIC INSTRUMENTS - 1.2%
Medar, Inc. (a) 265,000 1,457,500
TRANSPORTATION - 0.6%
AIR TRANSPORTATION - 0.6%
Transat AT, Inc. 125,000 751,369
UTILITIES - 4.2%
ELECTRIC UTILITY - 4.2%
Boralex, Inc. Class A (a) 160,000 629,718
Centerior Energy Corp. 160,000 1,600,000
Ohio Edison Co. 80,000 1,600,000
Tucson Electric Power Co. 100,000 1,425,000
5,254,718
TOTAL COMMON STOCKS
(Cost $105,378,745) 113,422,918
CASH EQUIVALENTS - 9.4%
SHARES
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.37%, dated
4/30/97 due 5/1/97 $ 5,461,815 $ 5,461,000
SHARES
Taxable Central Cash Fund (b) 6,320,414 6,320,414
TOTAL CASH EQUIVALENTS
(Cost $11,781,414) 11,781,414
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $117,160,159) $ 125,204,332
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash Fund was
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $228,989 or 0.2% of net
assets.
(d) An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions during the period with
companies which are or were affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
FPI Ltd. $ 2,014,808 $ - $ - $ 7,155,891
National Sea Products Ltd. 2,448 - - 3,649,504
South Crofty Holdings Ltd. - 43,475 - 1,437,798
TOTALS $ 2,017,256 $ 43,475 $ - $ 12,243,193
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $100,902,002 and $110,154,509, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $1,120 for the period.
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $117,468,952. Net unrealized appreciation aggregated
$7,735,380, of which $15,461,774 related to appreciated investment
securities and $7,726,394 related to depreciated investment securities.
CANADA
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at $ 125,204,332
value (including repurchase agreements of $5,461,000)
(cost $117,160,159) - See accompanying schedule
Cash 863
Receivable for investments sold 3,695,381
Receivable for fund shares sold 31,068
Dividends receivable 38,083
Interest receivable 43,955
TOTAL ASSETS 129,013,682
LIABILITIES
Payable for investments purchased $ 1,874,199
Payable for fund shares redeemed 1,221,066
Accrued management fee 40,991
Other payables and accrued expenses 69,193
TOTAL LIABILITIES 3,205,449
NET ASSETS $ 125,808,233
Net Assets consist of:
Paid in capital $ 115,750,853
Distributions in excess of net investment income (51,638
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 2,067,610
Net unrealized appreciation (depreciation) on investments 8,041,408
and assets and liabilities in
foreign currencies
NET ASSETS, for 7,229,185 $ 125,808,233
shares outstanding
NET ASSET VALUE and redemption price per share ($125,808,233 (divided by) 7,229,185 shares) $17.40
Maximum offering price per share (100/97.00 of $17.40) $17.94
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 644,196
Dividends
Interest 251,692
895,888
Less foreign taxes withheld (70,829
)
TOTAL INCOME 825,059
EXPENSES
Management fee $ 527,884
Basic fee
Performance adjustment (237,713
)
Transfer agent fees 232,533
Accounting fees and expenses 53,046
Non-interested trustees' compensation 1,343
Custodian fees and expenses 39,473
Registration fees 11,091
Audit 21,959
Legal 2,236
Miscellaneous 815
Total expenses before reductions 652,667
Expense reductions (2,393 650,274
)
NET INVESTMENT INCOME 174,785
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized loss of $17,228 on sales of investments in affiliated issuers) 2,772,285
Foreign currency transactions (3,650 2,768,635
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (5,096,647
)
Assets and liabilities in (3,485 (5,100,132
foreign currencies ) )
NET GAIN (LOSS) (2,331,497
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (2,156,712
)
OTHER INFORMATION $ 34,538
Sales charges paid to FDC
Deferred sales charges withheld $ 3,646
by FDC
Expense reductions $ 1,853
Directed brokerage arrangements
Custodian interest credits 158
Transfer agent interest credits 382
$ 2,393
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED OCTOBER 31,
APRIL 30, 1997 1996
(UNAUDITED)
Operations $ 174,785 $ 588,385
Net investment income
Net realized gain 2,768,635 44,553,089
Change in net unrealized appreciation (depreciation) (5,100,132 (9,158,534
) )
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (2,156,712 35,982,940
)
Distributions to shareholders (805,058 (772,736
From net investment income ) )
From net realized gain (26,566,908 -
)
TOTAL DISTRIBUTIONS (27,371,966 (772,736
) )
Share transactions 47,699,547 38,234,017
Net proceeds from sales of shares
Reinvestment of distributions 27,052,083 759,773
Cost of shares redeemed (49,305,550 (271,428,450
) )
Redemption fees 219,634 132,635
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 25,665,714 (232,302,025
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (3,862,964 (197,091,821
) )
NET ASSETS
Beginning of period 129,671,197 326,763,018
End of period (including under (over) distribution of net investment income of $(51,638) and
$783,201, $ 125,808,233 $ 129,671,197
respectively)
OTHER INFORMATION
Shares
Sold 2,415,622 1,931,430
Issued in reinvestment of distributions 1,540,552 41,292
Redeemed (2,664,383 (14,656,999
) )
Net increase (decrease) 1,291,791 (12,684,277
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED
APRIL 30, 1997
SELECTED PER-SHARE DATA (UNAUDITED) 1996 1995 1994 E 1993 1992
Net asset value, beginning of period $ 21.84 $ 17.55 $ 17.18 $ 17.82 $ 14.23 $ 16.28
Income from Investment Operations
Net investment income (loss) .02 D .08 D .05 - (.15) (.02) D
Net realized and unrealized gain (loss) (.07) 4.27 .33 (.60) 3.76 (1.11)
Total from investment operations (.05) 4.35 .38 (.60) 3.61 (1.13)
Less Distributions
From net investment income (.13) (.08) (.01) - (.02) -
From net realized gain (4.29) - - - - (.92)
In excess of net realized gain - - - (.04) - -
Total distributions (4.42) (.08) (.01) (.04) (.02) (.92)
Redemption fees added to paid in capital .03 .02 - - - -
Net asset value, end of period $ 17.40 $ 21.84 $ 17.55 $ 17.18 $ 17.82 $ 14.23
TOTAL RETURN B, C (.28)% 24.99% 2.22% (3.37)% 25.40% (7.09)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 125,808 $ 129,671 $ 326,763 $ 368,330 $ 95,977 $ 21,701
Ratio of expenses to average net assets .95% A 1.01% 1.09% F 1.57% 2.00% F 2.00% F
Ratio of expenses to average net assets after expense .95% A .98% 1.08% 1.57% 2.00% 2.00%
reductions G G
Ratio of net investment income (loss) to average net assets .25% A .40% .26% (.14)% (.66)% (.11)%
Portfolio turnover rate 160% A 139% 75% 59% 131% 55%
Average commission rate H $ .0232 $ .0276
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. C TOTAL RETURNS
DO NOT INCLUDE THE ONE TIME
SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED
STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL
STATEMENT PRESENTATION OF
INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS
RELATED TO BOOK TO TAX DIFFERENCES. F FMR AGREED TO REIMBURSE
A PORTION OF THE FUND'S EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER. G FMR OR THE FUND HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION
OF THE FUND'S EXPENSES. H FOR
FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE
CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO
FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS
WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
</TABLE>
EMERGING MARKETS
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). The fund has a 3% sales
charge.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
APRIL 30, 1997 MONTHS YEAR YEARS FUND
EMERGING MARKETS 0.12% -5.78% 56.34% 78.34%
EMERGING MARKETS -2.88% -8.61% 51.65% 72.99%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital 10.98% 4.29% 63.41% 209.51%
International Emerging
Markets Free Index
Emerging Markets 14.60% 9.25% 65.98% n/a
Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years or since
the fund started on November 1, 1990. For example, if you invested $1,000
in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Morgan Stanley Capital International (MSCI) Emerging
Markets Free Index - a market capitalization weighted index of over 850
stocks traded in 22 world markets. Mexico, Malaysia, Brazil, and Thailand
are most heavily weighted, and together account for over 60% of the index.
Keep in mind that before February 1992, the fund's objective was more
broadly defined, and did not focus specifically on emerging markets.
However, to measure how the fund's performance stacked up against its
peers, you can compare it to the emerging markets funds average, which
reflects the performance of mutual funds with similar objectives tracked by
Lipper Analytical Services, Inc. The past six months average represents a
peer group of 114 mutual funds. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
APRIL 30, 1997 YEAR YEARS FUND
EMERGING MARKETS -5.78% 9.35% 9.31%
EMERGING MARKETS -8.61% 8.68% 8.80%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital 4.29% 10.32% 18.98%
International Emerging
Markets Free Index
Emerging Markets 9.25% 10.61% n/a
Funds Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER LIFE OF FUND
Emerging Markets MS EMF Index (Gross)
00322 MS006
1990/11/01 9700.00 10000.00
1990/11/30 9564.20 9479.74
1990/12/31 9777.33 9880.37
1991/01/31 9709.16 10679.30
1991/02/28 10118.17 12260.21
1991/03/31 10108.44 12766.06
1991/04/30 10332.42 12903.41
1991/05/31 10332.42 13918.67
1991/06/30 9972.10 13421.82
1991/07/31 10186.34 14119.08
1991/08/31 10108.44 14418.70
1991/09/30 10225.30 13869.26
1991/10/31 10127.91 14439.40
1991/11/30 9991.58 14225.77
1991/12/31 10438.08 15824.40
1992/01/31 10517.68 17656.36
1992/02/29 10826.15 18442.83
1992/03/31 10806.24 19068.46
1992/04/30 11064.96 18940.35
1992/05/31 11542.58 18873.02
1992/06/30 11522.68 17002.12
1992/07/31 11144.56 17189.36
1992/08/31 10865.95 16390.47
1992/09/30 10796.29 16450.88
1992/10/31 10995.30 17332.58
1992/11/30 10905.75 17144.49
1992/12/31 11048.91 17652.99
1993/01/31 11201.38 17738.37
1993/02/28 11770.60 18033.91
1993/03/31 12095.86 18628.41
1993/04/30 12482.12 19056.85
1993/05/31 12756.56 19581.32
1993/06/30 12919.19 20162.41
1993/07/31 13142.82 20705.31
1993/08/31 14057.63 22457.49
1993/09/30 14372.73 23058.76
1993/10/31 16446.31 25127.66
1993/11/30 17096.84 26239.62
1993/12/31 20082.32 30576.92
1994/01/31 19501.26 31133.23
1994/02/28 18950.78 30579.38
1994/03/31 17115.84 27812.28
1994/04/30 16952.74 27255.97
1994/05/31 17391.08 28188.79
1994/06/30 16167.79 27411.79
1994/07/31 17401.28 29116.21
1994/08/31 19613.39 32729.91
1994/09/30 20112.90 33101.88
1994/10/31 19623.58 32504.77
1994/11/30 18267.77 30814.71
1994/12/31 16480.81 28339.78
1995/01/31 14212.53 25324.70
1995/02/28 14376.01 24675.15
1995/03/31 14089.92 24831.93
1995/04/30 14386.23 25945.92
1995/05/31 15837.11 27326.23
1995/06/30 16021.03 27407.06
1995/07/31 16828.21 28022.26
1995/08/31 16317.33 27362.19
1995/09/30 16245.81 27232.33
1995/10/31 15469.28 26189.87
1995/11/30 14968.62 25722.82
1995/12/31 15956.70 26863.68
1996/01/31 17548.21 28773.20
1996/02/29 17340.17 28315.72
1996/03/31 17464.99 28536.26
1996/04/30 18359.57 29677.21
1996/05/31 18349.17 29544.70
1996/06/30 18276.35 29729.19
1996/07/31 16840.87 27697.39
1996/08/31 17517.00 28406.35
1996/09/30 17901.88 28652.43
1996/10/31 17277.76 27888.27
1996/11/30 18182.73 28355.56
1996/12/31 17552.02 28483.81
1997/01/31 18565.85 30426.69
1997/02/28 19558.57 31729.72
1997/03/31 18470.81 30896.25
1997/04/30 17298.56 30950.83
Let's say hypothetically that $10,000 was invested in Fidelity Emerging
Markets Fund on November 1, 1990, when the fund started, and the current
maximum 3% sales charge was paid. As the chart shows, by April 30, 1997,
the value of the investment would have grown to $17,299 - a 72.99% increase
on the initial investment. For comparison, look at how the Morgan Stanley
Capital International Emerging Markets Free Index did over the same period.
With dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $30,951 - a 209.51% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
EMERGING MARKETS
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Richard Hazlewood, Portfolio Manager of Fidelity Emerging
Markets Fund
Q. RICHARD, HOW DID THE FUND PERFORM?
A. It had a rough period. For the six-month and one-year periods ending
April 30, 1997, the fund returned 0.12% and -5.78%, respectively. For the
same periods, the Morgan Stanley Capital International Emerging Markets
Free Index returned 10.98% and 4.29%. The emerging markets funds average,
as tracked by Lipper Analytical Services, was 14.60% for the past six
months and 9.25% for the past year.
Q. WHAT WAS BEHIND THE FUND'S UNDERPERFORMANCE COMPARED TO THE INDEX DURING
THE PERIOD?
A. In general, the fund was underweighted compared to the index in several
top-performing markets and overweighted compared to the index in some
markets that did poorly. Specifically, however, it was the fund's strategy
in Southeast Asia that hurt it the most. The fund was overweighted compared
to the index in two of the world's weakest markets during the period,
Thailand and Malaysia. In addition, the fund didn't participate fully in
the Taiwanese market, one of the few Southeast Asian markets that turned in
a strong performance and where the index had a heavy weighting. Most of the
fund's negative performance occurred over the past two months. Before that
time, the fund was basically in line with or beating the index. I should
note that in the volatile emerging markets sector, it is not uncommon for
funds to perform extremely well or poorly over a short-term period.
Investors are encouraged to take a long-term view with such investments.
Q. HOW DID YOUR INVESTMENT DECISIONS DIFFER FROM THOSE OF THE AVERAGE
EMERGING MARKETS FUND?
A. Most of my competitors did three things over the period that helped them
outperform the fund. They were overweighted compared to the index in Latin
America; held big positions in Hong Kong, one of the few markets in
Southeast Asia that performed well; and avoided Thailand.
Q. WHAT HAPPENED IN THAILAND AND MALAYSIA?
A. Thailand experienced a large current account deficit similar to that of
Mexico several years ago, which led to fears that the Thai currency would
be devalued. As a result, the Thai market was down 46% over the period. In
Thailand, the fund invested mostly in the banking sector, which also
suffered from rumors of devaluation, but outperformed the overall index. I
found some attractive opportunities in this sector, such as one of my top
10 holdings, Industrial Finance Corp., which had solid fundamentals and
growth prospects. During the period, I cut my holdings in Thailand. In
terms of the fund's holdings in Malaysia, they were hurt by rumors and
concerns that Thailand's poor performance could bring down Malaysia. These
concerns were similar to those that injured countries like Brazil - which
was fairly stable - when Mexico experienced its monetary crisis. In fact,
most of the fund's Malaysian holdings performed well until about two months
ago. Soon after the U.S. Federal Reserve Board raised interest rates, the
Malaysian government announced that it would put restrictions on lending to
the property sector to avoid problems similar to those Thailand
experienced. On that announcement, many big Malaysian holdings dropped
30%-40% over a period of one month and negatively affected the fund's
performance. I should point out that over the past four years Malaysia has
turned in very strong returns and generally outperformed the index, and
when it has stumbled in the past, it's always come back.
Q. AND TAIWAN . . .
A. In September 1996, the emerging market index added Taiwan. It made up
about 9% at the end of this period - a move that really helped the index
since Taiwan was up 34% since it was included. The fund, along with many
other funds, missed the opportunity because it did not receive approval
from the Taiwanese government to invest in the country until November 1996.
By that time, the market was quite overvalued, and there were fewer
attractive opportunities.
Q. YOU MENTIONED THAT THE FUND'S WEIGHTING IN A NUMBER OF EMERGING MARKETS
DIDN'T PAY OFF. WHERE WERE THE PROBLEMS BESIDES SOUTHEAST ASIA?
A. The fund was slightly underweighted in Latin America, which was up 26%
over the period. I should note, however, that the fund's largest holding
was the Brazilian telephone company, Telebras. This company was an
exceptional performer over the period. The fund also was significantly
underweighted compared to the index in the emerging markets of Eastern
Europe and the Middle East, an area that was up 22% over the period.
Q. WE'VE TALKED ABOUT SEVERAL OF THE FUND'S TOP 10 STOCKS. HOW DID YOUR
OTHER LARGE HOLDINGS PERFORM OVER THE PERIOD?
A. The best stocks I found in terms of fundamentals and prices were in
Southeast Asia. Probably my favorite stock was top 10 holding Arab
Malaysian Corp., a rapidly growing Malaysian bank. It is owned by the most
experienced banker in Malaysia, who I believe will position the bank for
excellent future performance. Another top stock was YTL Corp., a Malaysian
construction and power company. This company won a contract to build an
independent power facility in Malaysia, which was hugely profitable. Now
it's taking the same formula to Singapore, China and Thailand. That said,
both stocks were hurt by the sell-off in the Malaysian market over the
period.
Q. HOW DOES THE FUND LOOK GOING FORWARD?
A. As I have stressed in this report, I feel that the fund owns extremely
good stocks, and that it's just a matter of time before the market
recognizes the solid fundamentals of these companies. In fact, I have never
seen such solid companies with good fundamentals at cheaper prices. Since
many of these companies are in Southeast Asia, I still have some concerns
about how these markets are perceived and about how rumors and fears may
affect them. That said, share prices follow earnings, and it's just a
question of time before increased earnings are reflected in higher share
prices.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by
investing mainly in equity securities of
emerging market issuers which can be found
in regions such as Southeast Asia, Latin
America and Eastern Europe
FUND NUMBER: 322
TRADING SYMBOL: FEMKX
START DATE: November 1, 1990
SIZE: as of April 30, 1997, more than $1.1
billion
MANAGER: Richard Hazlewood, since 1993;
assistant, Fidelity Low-Priced Stock Fund and
Fidelity Contrafund, 1992-93; analyst,
Japanese stocks, 1991-92; joined Fidelity in
1991
(checkmark)
RICHARD HAZLEWOOD ON HOW RUMORS AFFECT THE
PERFORMANCE OF EMERGING MARKETS:
"When it comes to emerging markets, especially in
Southeast Asia, rumors and fears play a key role in
how certain countries and companies perform. For
instance, as we've discussed in this report, many
companies throughout Malaysia suffered over the
past several months, not because they had bad
fundamentals or performed poorly, but because there
were rumors and concerns that Malaysia would
become the next Thailand.
"A good example of how wild the rumors have become
is one that recently hit a Philippine property company.
Empire East saw its stock fall dramatically on a rumor
that its management had absconded with company
money and that the company was about to declare
bankruptcy. In one day, based on this untrue
information, the stock fell 30%. I should note that this
was in the context of a larger market fear that the
Philippines' property market could become as
oversupplied as Thailand's. In this context, everyone
was overly concerned that they should sell all their
real estate holdings, even though the country's
property market was very different from Thailand's.
"I have been in this industry for 15 years, and normally
there are meaningful reasons why markets go up and
down. I've never seen the rumor mill have such an
impact on one part of the world before."
(solid bullet) An issue to keep in mind about the Morgan
Stanley Capital International Emerging Markets Free
Index is that it's constantly redefining itself. We talked
about the addition of Taiwan in 1996. The latest news
is that Portugal will soon be removed from the index,
and Russia may be added in its place. With the index
making changes every few months, it puts added
pressure on the fund. To keep up would require
shifting amounts as large as $130 million out of one
market and into another.
EMERGING MARKETS
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997
United States 3.3%
Brazil 12.5%
Thailand 7.3%
Row: 1, Col: 1, Value: 3.3
Row: 1, Col: 2, Value: 7.3
Row: 1, Col: 3, Value: 9.1
Row: 1, Col: 4, Value: 5.7
Row: 1, Col: 5, Value: 19.8
Row: 1, Col: 6, Value: 6.3
Row: 1, Col: 7, Value: 28.0
Row: 1, Col: 8, Value: 5.1
Row: 1, Col: 9, Value: 2.9
Row: 1, Col: 10, Value: 12.5
South Africa 9.1%
India 2.9%
Indonesia 5.1%
Philippines 5.7%
Other 19.8%
Malaysia 28.0%
Mexico 6.3%
AS OF OCTOBER 31, 1996
Argentina 2.4%
Thailand 9.2%
Row: 1, Col: 1, Value: 9.199999999999999
Row: 1, Col: 2, Value: 5.9
Row: 1, Col: 3, Value: 4.7
Row: 1, Col: 4, Value: 16.5
Row: 1, Col: 5, Value: 5.8
Row: 1, Col: 6, Value: 32.6
Row: 1, Col: 7, Value: 2.6
Row: 1, Col: 8, Value: 5.2
Row: 1, Col: 9, Value: 15.1
Row: 1, Col: 10, Value: 2.4
Brazil 15.1%
South Africa 5.9%
Philippines 4.7%
Indonesia 5.2%
Korea (South)
2.6%
Other 16.5%
Malaysia
32.6%
Mexico 5.8%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 94.6% 96.6
Bonds 2.1% 0.6
Short-term investments 3.3% 2.8
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
STOCKS
6 MONTHS AGO
Telebras sponsored ADR 6.1 7.7
(Brazil, Telephone Services)
YTL Corp. BHD 3.5 3.7
(Malaysia, Construction)
Hong Leong Bank BHD 3.4 3.8
(Malaysia, Banks)
Industrial Finance Corp. 3.4 3.1
of Thailand (For. Reg.)
(Thailand, Credit & Other Finance)
Hong Leong Credit BHD 2.7 2.7
(Malaysia, Credit & Other Finance)
Grupo Carso SA de CV Class A-1 2.7 2.0
(Mexico, Tobacco)
Arab Malaysian Corp. BHD 2.5 2.5
(Malaysia, Credit & Other Finance)
Indochina Goldfields Ltd. 2.3 0.1
(Canada, Precious Metals)
Thai Military Bank Ltd. (For. Reg.) 2.3 2.2
(Thailand, Banks)
Centrais Electricas Brasileiras SA 1.8 1.2
(Brazil, Electric Utilities)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET
SECTORS
6 MONTHS AGO
Finance 38.4 40.1
Utilities 12.6 14.4
Construction & Real Estate 11.7 14.4
Nondurables 7.9 7.0
Holding Companies 6.0 5.0
Precious Metals 4.9 0.8
Basic Industries 4.8 7.1
Energy 4.0 1.9
Media & Leisure 3.3 1.8
Technology 1.2 0.1
EMERGING MARKETS
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.5%
SHARES VALUE (NOTE 1)
ARGENTINA - 2.8%
Banco de Galicia Y Buenos Aires SA
sponsored ADR representing
Class B shares 142,806 $ 3,474,181
Central Costanera SA ADR (b) 36,200 1,272,430
Ciadea SA 181,500 726,105
IRSA (Inversiones Y Representa) SA GDR 22,700 794,500
Perez Companc Class B 2,642,710 21,435,486
YPF Sociedad Anonima sponsored
ADR representing Class D shares 178,600 4,933,825
32,636,527
AUSTRALIA - 0.0%
Overseas & General Ltd. (a) 280,750 42,760
BANGLADESCH - 0.0%
Advanced Chemical Industries 15,650 39,335
Beximco Pharmaceuticals Ltd. 98,170 239,071
278,406
BERMUDA - 0.6%
AES China Generating Co. Class A (a) 10,000 185,000
Central European Media Class C (a) 1,000 28,375
Credicorp Ltd. 245,385 5,153,085
FPB Bank Holding Co. Ltd. 2,250,000 914,929
GZI Transport Ltd. 1,632,000 979,642
GZI Transport Ltd. (warrants) (a) 326,400 52,248
7,313,279
BRAZIL - 12.5%
Bradesco PN 747,486,354 6,185,450
Centrais Electricas Brasileiras SA 46,640,800 21,753,572
Compania Cervejaria Brahma:
PN (Pfd. Reg.) 17,450,648 11,872,250
PN (Pfd. Reg.) (warrants) (a) 1,297,021 91,717
ON (Reg.) (a) 130,097 89,304
Compania Energertica Minas Gerais 58,400,000 2,662,859
Itaubanco PN (Pfd. Reg.) 9,231,000 4,991,137
Itausa Investimentos Itau SA 2,136,900 1,808,463
Karsten PN 1,451,638 16,353
Klabin Industria de Papel e
Celulose PN 1,413,887 1,462,481
Multicanal Participacoes SA
sponsored ADR 72,000 1,044,000
Perdigao SA Comercio e Industria PDG
(Pfd. shares) 9,292,745 19,224
Perdigao SA Comercio e Industria PDG 427,455 824
Petrobras PN (Pfd. Reg.) 51,500,000 10,823,498
Souza Cruz Industria Comerico 464,600 3,757,168
Telebras sponsored ADR 632,000 72,522,000
Telebras ON 60,000,000 6,460,104
Telesp ON (a) 1,896,269 525,132
Votorantim Celulose e Papel SA
(Pfd. Reg.) 47,768,505 1,347,554
147,433,090
CANADA - 2.6%
First Dynasty Mines Ltd. (a) 1,178,900 2,362,102
Indochina Goldfields Ltd. (a) 2,918,800 26,839,300
Indochina Goldfields Ltd. (a)(b) 139,000 1,278,149
30,479,551
CHILE - 1.9%
Banco Santander Chile SA, Series A
sponsored ADR 175,300 2,804,800
Empresa Nacional de Electricidad SA
sponsored ADR 155,200 2,987,600
SHARES VALUE (NOTE 1)
Enersis SA sponsored ADR 304,400 $ 9,588,600
Madeco SA ADR 39,400 1,078,575
Soc Quimica y Minera de Chile ADR 98,000 5,806,500
Vina Concha Stet y Toro SA
sponsored ADR 20,200 659,025
22,925,100
CHINA (PEOPLES REPUBLIC) - 0.4%
Beijing Datang Power Class H (b) 58,000 30,136
China Southern Glass Co. Ltd. Class B 30,000 21,765
Guangdong Electric Power Development
Co. Ltd. Class B 1,169,835 1,315,338
Heilongjiang Electric Power Co. Ltd.
Class B 2,754,400 2,451,416
Inner Mongolia Erdos Cashmere
Products Co. Ltd. Class B (a) 1,203,689 1,141,097
4,959,752
COLOMBIA - 1.0%
Banc Industrial Colombiano
sponsored ADR 113,000 2,048,125
Banco de Bogota 58,622 356,115
Compania Nacional de Chocolates 130,000 1,154,205
Noel (Industria Alimenticias) 79,337 382,598
Suramericana de Seguros SA 340,700 8,450,630
12,391,673
CROATIA - 0.0%
Pliva DD GDR unit (Reg.) (a) 3,700 58,830
CZECH REPUBLIC - 0.0%
Komercni Banka AS 1,400 98,943
GREECE - 1.4%
Alpha Credit Bank 142,500 10,128,232
Alpha Credit Bank (rights) 122,000 898,396
Ergo Bank SA (Reg.) 88,750 5,851,258
16,877,886
HONG KONG - 2.2%
Cheung Kong Holdings Ltd. 1,000 8,778
Citic Pacific Ltd. Ord. 20,000 108,178
Dao Heng Bank Group Ltd. 5,000 23,753
Dah Sing Financial Holdings Ltd. 200,000 831,343
Guoco Group Ltd. 700,000 3,325,373
HSBC Holdings PLC 10,000 252,292
International Bank of Asia Ltd. 2,210,000 1,255,277
JCG Holdings Ltd. 100,000 80,036
Kumagai Gumi 100,000 108,436
Lai Sun Hotels International Ltd. 16,852,000 4,459,639
Lai Sun Hotels International Ltd.
(warrants) (a) 146,184 13,965
Lai Sun Development Co. Ltd. 728,000 888,091
Liu Chong Hing Bank Ltd. 1,600,000 2,943,265
Liu Chong Hing Investment Ltd. 5,770,000 6,591,945
Magnum International Holdings Ltd. (a) 3,750,000 169,431
Magnum International Holdings Ltd.
(warrants) (a) 250,000 -
Pacific Ports Co. Ltd. 4,656,000 1,743,032
Peregrine Investments Holdings Ltd. 1,700,000 2,611,502
Sun Hung Kai Properties Ltd. 1,000 10,844
25,425,180
HUNGARY - 0.0%
OTP Bank GDR unit 2,000 47,000
Pannonplast Plastic Industries PLC 2,000 99,740
146,740
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDIA - 2.9%
Bharti Telecom Ltd. 14,000 $ 39,281
Bharat Petroleum Corp. Ltd. 56,000 572,166
Bajaj Auto Ltd. 126,300 3,169,249
Chemplast Sanmar Ltd. 210,000 217,464
Chemplast Sanmar Ltd. (b) 315,000 326,196
Crompton Greaves Ltd. (a) 300,000 619,228
HDFC Bank Ltd. (a) 500 805
Industrial Development Bank of India 215,000 541,562
Industrial Credit & Investments Corp.
Ltd. (a) 5,785,250 9,118,622
Larsen and Toubro Ltd. 1,400 8,647
Mahindra & Mahindra Ltd. 150,000 1,446,823
Mahindra & Mahindra Ltd. GDR 83,333 999,996
Mahanagar Telephone Nigam Ltd. 531,100 4,362,167
Maral Overseas Ltd. 54,400 41,870
Oriental Bank of Commerce (a) 522,000 1,049,659
Prime Securities (a) 300,000 196,054
Ranbaxy Laboratories Ltd. 10,250 185,856
Reliance Industries Ltd. 5,997 50,950
SCICI Ltd. (a) 926,650 570,528
Shriram Industrial Enterprises Ltd.
GDR (a)(b) 105,600 105,600
State Bank of India (a) 1,090,000 9,705,341
Tata Engineering & Locomotive Ltd. 11,130 125,536
TVS Suzuki 5,000 56,365
Zee Telefilms Ltd. 88,300 229,806
33,739,771
INDONESIA - 5.1%
Apac Centertex Corp. (For. Reg.)
(warrants) (a) 5,838,375 360,394
Astra International PT (For. Reg.) 2,405,500 8,810,275
Bank Bali PT:
(For. Reg.) 175,000 421,297
(For. Reg.) (warrants) (a) 100,000 84,362
Bank Dagang Nasional Indonesia PT 10,325,000 10,303,765
Bank Dagang Nasional Indonesia PT
(For. Reg.) (warrants) (a) 1,550,000 542,182
Bank International Indonesia PT
(For. Reg.) 2,349,606 1,692,105
Bank Niaga PT 1,537,200 4,301,633
Barito Pacific Timber PT (For. Reg.) 1,000,000 946,503
Bhuwanatala Indah Permai (For. Reg.)
(warrants) (a) 1,260,000 137,408
Bimantara Citra (For. Reg.) 100,500 136,482
Gudang Garam PT Perusahaan
(For. Reg.) 115,000 482,716
Panin Bank PT (For. Reg.) 4,604,750 6,727,110
PT Bank International Indonesia
(warrants) (For. Reg.) (a) 483,668 154,256
PT Perdanacipta Multi Finance
(For. Reg.) (e) 13,600,000 7,135,808
Putra Surya Multidana PT (For. Reg.) 643,500 728,241
Sampoerna Hanjaya Mandala
(For. Reg.) 4,231,051 17,019,984
Van Der Horst Indonesia (For. Reg.) 417,514 227,657
60,212,178
ISRAEL - 0.4%
Bank Hapoalim BM (a) 600,000 1,276,971
Elbit Computer Ltd. 7,500 15,703
Elbit Medical Imaging Ltd. 7,500 49,688
Elbit Systems Ltd. 7,500 64,688
SHARES VALUE (NOTE 1)
First International Bank of Israel (a) 3,580 $ 2,900,152
Gilat Satellite Networks Ltd. (a) 5,000 157,500
Teva Pharmaceutical Industries Ltd. ADR 4,000 203,000
4,667,702
KOREA (SOUTH) - 1.9%
Hana Bank GDR (b) 91,572 1,167,543
Hana Bank GDR (Reg.) 20,087 256,109
Hyundai Electronic Industries Co. Ltd. 70,400 2,809,686
Hyundai Fire & Marine Insurance Co. 7,100 244,361
Housing & Commercial Bank 126,300 2,463,982
Kookmin Bank 142,701 2,710,039
LG Insurance Co. Ltd. 26,700 1,676,233
LG Semicon Co. Ltd. 133,700 4,151,894
Oriental Fire & Marine Insurance 17,030 389,475
SK Telecom Ltd. 868 665,596
Samsung Electronics Co. Ltd. (vtg.) 8,000 657,632
Shinhan Bank 97,450 1,407,125
Samsung Fire & Marine Insurance 8,195 2,826,448
Yukong Ltd. NV GDR (b) 185,932 697,245
Yukong Ltd. GDR (b) 11,657 103,894
22,227,262
MALAYSIA - 26.4%
Arab Malaysian Corp. BHD 7,206,000 29,851,584
Arab Malaysian Finance BHD (rights) (a) 9,503,292 38
Arab Malaysian Finance BHD (For. Reg.) 9,635,332 21,109,072
Advance Synergy BHD 1,300,000 1,698,466
Affin Holdings BHD 100,000 240,988
AMMB Holdings BHD 110,000 731,727
AMMB Holdings BHD (warrants) (a) 1,000 -
Bandar Raya Development BHD 50,000 73,691
Boustead Holdings BHD 3,475,000 7,613,025
HLG Capital BHD 4,060,333 11,240,515
Hong Leong Properties BHD 133,000 181,183
Hong Leong Bank BHD 13,934,000 40,239,593
Hong Leong Bank BHD (warrants) (a) 3,931,200 4,431,506
Hong Leong Credit BHD 6,261,000 32,421,031
Hume Industries BHD 3,465,000 18,494,722
Hume Industries BHD (warrants) (a) 2,251 2,700,480
Inchcape Timuran BHD 1,150,000 1,988,050
Industrial Oxygen, Inc. BHD 5,103,000 6,341,908
Kamunting Corp. BHD 15,817,000 11,340,609
Leisure Management BHD 694,333 3,014,630
Malaysian Plantations BHD 12,672,000 18,978,976
Malaysian Resources Corp. BHD 3,703,000 10,620,036
Multi-Purpose Holdings BHD 9,409,000 15,366,222
Omega Holdings BHD 1,450,000 5,429,197
Phileo Allied BHD 600,000 1,194,981
Sungei Bagen Rubber Co. BHD 10,000 549,691
TA Enterprise BHD 100,000 116,714
Tan Chong Motor Holdings BHD 2,186,000 4,057,662
YTL Cement BHD 2,620,800 7,777,319
YTL Corp. BHD 10,316,800 41,916,495
YTL Corp. BHD (rights) (a) 1,021,680 -
YTL Power International BHD 1,021,680 1,627,851
YTL Power International BHD (f) 6,948,000 11,070,305
312,418,267
MEXICO - 6.3%
BANACCI SA de CV Class B (a) 2,541,000 5,439,977
Cifra SA de CV, Series A 393,255 593,592
Cifra SA Series C 3,215,300 4,934,171
Corporacion Geo SA de CV Class B
sponsored ADR (a)(b) 12,700 231,775
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEXICO - CONTINUED
Corporacion Geo SA de CV (a) 610,960 $ 2,843,462
Gruma SA Class B sponsored
ADR (a)(b) 157,500 2,992,500
Grupo Carso SA de CV Class A-1 5,520,000 31,870,189
Grupo Financiero Bancomer Class B (a) 7,127,900 2,492,523
Grupo Elektra SA 425,000 3,982,704
Grupo Modelo SA de CV Class C Ord. 1,109,300 6,725,567
Grupo Financiero Inbursa SA Class B 2,021,208 6,915,328
Kimberly Clark de Mexico SA Class A 475,000 1,762,579
Tubos De Acero De Mexico ADR (a) 195,000 3,193,125
73,977,492
PAKISTAN - 0.2%
Askari Commercial Bank (a) 113 76
Askari Leasing Ltd. 17,200 10,435
Dandot Cement Co. Ltd. (a) 93,750 12,803
DG Kahn Cement Ltd. (a) 212,865 72,797
First Grindlays Modarba 490 133
Hub Power Co. Ltd. GDR (a) 26,300 598,325
Maple Leaf Cement Factory Ltd. (a) 270,000 67,165
Pakistan State Oil Co. Ltd. 256,011 1,885,109
Pakland Cement Ltd. (a) 30,000 8,732
Sunflo Cit-Russ Ltd. (a) 100 22
Sui Southern Gas Pipelines Ltd. (a) 110,167 67,844
Trust Leasing Corp. Ltd. (a) 20,666 4,230
Union Bank Ltd. (a) 2,743 676
2,728,347
PERU - 0.8%
Compania de Minas Buenaventura SA:
Class A 83,863 788,133
Class B 20,966 227,318
Class B sponsored ADR 363,700 7,910,475
Class T 58,331 498,948
9,424,874
PHILIPPINES - 5.6%
Aboitiz Equity Ventures, Inc. (a) 2,000,080 174,448
Belle Resources Corp. (a) 1,000,000 238,908
Centennial City, Inc. 85,051,200 6,579,612
Empire East Land, Inc. (a) 28,950,000 5,379,408
Equitable Banking Corp. (b) 79,500 310,523
Guoco Holdings Philippines, Inc. 104,616,000 15,273,853
JG Summit Holdings, Inc. Class B 100,000 23,891
Lepanto Consolidated Mining Co. (a) 245,268,000 8,463,929
Liberty Telecoms Holdings, Inc. (a) 64,130,000 1,799,629
Liberty Telecoms Holdings, Inc. (a)(b) 20,919,000 587,033
Megaworld Properties & Holdings,
Inc. (a) 64,399,500 14,408,686
Metro Pacific, Inc. Class B 4,897,366 1,132,876
Mondragon International
Philippines, Inc. (a) 392,200 141,293
PICOP Resources (a)(e) 31,423,900 4,587,864
Robinson's Land Corp. (a) 51,999,000 7,493,217
SM Prime Holdings, Inc. (a) 286,000 74,835
United Paragon Mining Corp. (a) 4,500,000 2,219
66,672,224
POLAND - 0.1%
Bank Slaski SA 11,000 933,765
BRE (Bank Rozwoju Eksportu) 30,000 716,092
Wedel SA 1,000 59,279
1,709,136
SHARES VALUE (NOTE 1)
PORTUGAL - 0.1%
CIN 8,750 $ 488,489
Mague (Constru Metalom) 1,586 42,080
Unicer (Uniao Cervejeira) SA 10,000 170,935
701,504
RUSSIA - 0.1%
Tatneft AO sponsored ADR (a)(b) 5,000 370,000
Vimpel Communications
sponsored ADR (a) 10,000 302,500
672,500
SINGAPORE - 0.7%
ABR Holdings Ltd. 1,523,000 1,231,281
Amcol Holdings Ltd. 50,000 58,458
Asiamatrix Ltd. (a)(e) 1,510,000 954,706
Focal Finance Ltd. 263,200 487,407
Focal Finance Ltd. (warrants) (a) 78,960 38,738
Hong Leong Finance Ltd. (warrants) (a) 424,600 231,781
Keppel Finance Ltd. (warrants) (a) 212,000 116,459
Kim Engineering Holdings Ltd. 3,000,000 2,466,833
L&M Group Investments Ltd. 100,000 100,884
Overseas Union Trust Ltd. (For. Reg.) 847,200 1,363,997
Overseas Union Trust (For. Reg.)
(rights) (a) 119,000 88,806
Singapore Finance Ltd. 104,480 155,940
Tat Lee Finance Ltd. 642,000 754,146
Tat Lee Finance Ltd. (warrants) (a) 494,023 157,028
Transmarco Ltd. 40,000 328,911
United Pulp & Paper Co. Ltd. 100,000 88,447
8,623,822
SOUTH AFRICA - 9.1%
Amalgamated Banks of South Africa Ltd. 720,756 4,747,786
Anglo American Corp. of South Africa
Ltd. (Reg.) 20,000 1,276,978
Anglo American Coal Corp. Ltd. 307 20,637
Barlow Rand Ltd. Ord. 100,000 1,101,619
Cashbuild Ltd. (a) 10,000 8,768
Centenary Depositary AG unit 75,000 2,697,842
De Beers Consolidated Mines Ltd. ADR 375,000 13,494,141
Energy Africa Ltd. (a) 687,418 2,897,727
First National Bank Holdings Ltd. 1,110,000 7,960,656
Fedsure Holdings Ltd. 416,700 3,513,096
Gencor Ltd. (Reg.) 820,000 3,447,392
ISCOR Ltd. 100,000 69,245
Liberty Life Association of Africa Ltd. 431,406 12,050,853
Metropolitan Life Ltd. 2,481,000 4,886,142
Nedcor Ltd. 564,604 11,487,559
Nedcor Ltd. (warrants) (a)(b) 85,000 701,250
Nedcor Ltd. GDR (b) 102,601 2,052,020
Polifin Ltd. 45,702 82,198
Rembrandt Group Ltd. 898,600 9,454,694
Sage Group Ltd. 30,778 163,301
Sappi Ltd. 100,000 870,054
Sasol Ltd. 1,320,900 16,927,001
Smith (CG) Ltd. 20,000 115,558
South African Breweries Ltd.
sponsored ADR 5,105 149,959
South African Breweries Ltd. (a) 100,000 2,945,144
Southern Life Association Ltd., (The) 481,515 4,709,061
Standard Bank Investment Corp. 5,000 229,879
108,060,560
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SRI LANKA - 0.3%
Aitken Spence & Co. Ltd. 95,000 $ 249,134
Asia Capital Ltd. (a) 90,310 13,348
Development Finance Corp. of Ceylon 289,288 1,343,821
John Keells Holdings Ltd. 112,979 433,213
John Keells Holdings Ltd. GDR 101,224 759,180
National Development Bank 196,600 797,027
Sampath Bank Ltd. 90,000 100,338
3,696,061
SWITZERLAND - 0.2%
Financiere Richemont AG unit 165,000 2,411,196
TAIWAN (FREE CHINA) - 0.5%
Acer, Inc. (a) 500,000 1,274,403
Taiwan Semiconduct
Manufacturing Co. Ltd. 640,000 2,174,982
United Micro Electronics Corp. 818,000 1,981,417
5,430,802
THAILAND - 7.3%
Ayudhya Life Assurance Co. (For. Reg.) 7,500 17,228
Ayudhya Insurance Co. 231,800 1,916,876
Bangkok Bank Ltd. (For. Reg.) 165,700 1,535,199
Bumrungrad Hospital PCL (For. Reg.) 75,000 66,041
Bangkok Union Insurance Co. Ltd.
(For. Reg.) 50,000 58,384
Bangkok Expressway PCL (For. Reg.) (a) 100,000 107,198
Berli Jucker PCL 55,000 202,144
Charan Insurance PCL (For. Reg.) 317,300 577,020
Deves Insurance Co. Ltd. 60,000 163,093
Industrial Finance Corp. of Thailand
(For. Reg.) 14,919,466 39,983,254
Krung Thai Bank Ltd. (For. Reg.) 1,888,610 2,367,993Kiatnakin Finance &
Securities
PCL (warrants) (a) 24,516 8,729
Nithipat Capital PCL 1,895,900 1,560,561
Nithipat Capital PCL (For. Reg.)
(warrants) (a) 49,800 7,245
Pacific Insurance PCL 66 66
Phatra Insurance PCL (For. Reg.) 26,000 177,182
Property Perfect PCL (For. Reg.)
(warrants) (a) 4,444 1,259
Safety Insurance PCL (For. Reg.) 363,200 232,910
Siam City Bank PCL (For. Reg.) 8,070,550 6,565,819
Siam Commercial Life Assurance
(For. Reg.) 215,100 69,998
S Khon Kaen Food Industry PCL
(For. Reg.) 30,700 76,397
Thai Farmers Bank PCL 353,100 2,135,904
Thai Farmers Bank PCL (For. Reg.)
(warrants) (a) 123,987 90,190
Thai Military Bank Ltd. (For. Reg.) 18,406,880 26,778,769
Thai Reinsurance Co. Ltd. (For. Reg.) 340,000 1,028,331
Tong Hua Daily News Co. Ltd.
(For. Reg.) 657,500 203,895
85,931,685
TURKEY - 0.4%
Akbank 57,359,505 3,680,828
Aksigorta (b) 1,385,250 65,393
Altinyildiz Mensucat Ve Konfeksiyon
Fabrikalari AS 1,080,000 145,381
Anadolu Anonim Turk Sigoria SK 10,294,000 463,164
Bossa Ticaret Ve Sanayi
Isletmeleri (b) 1,500,000 107,321
Turkiye Garanti Bankasi AS 8,034,312 444,458
4,906,545
SHARES VALUE (NOTE 1)
UNITED KINGDOM - 0.2%
Bakyrchik Gold PLC (a) 1,155,673 $ 2,720,541
VENEZUELA - 0.5%
Electricidad de Caracas 3,130,927 3,396,039
Mavesa SA sponsored ADR 408,975 2,811,703
6,207,742
TOTAL COMMON STOCKS
(Cost $1,065,540,493) 1,118,207,928
CONVERTIBLE PREFERRED STOCKS - 0.1%
PHILIPPINES - 0.1%
PDCP Development Bank (a) 1,126,069 512,432
PDCP Development Bank (a)(f) 1,126,069 512,432
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $859,496) 1,024,864
CORPORATE BONDS - 2.1%
MOODY'S PRINCIPAL
RATINGS AMOUNT (C)
CONVERTIBLE BONDS - 2.1%
MALAYSIA - 1.6%
AMMB Holdings BHD
7 1/2%, 5/8/02 - MYR 10,000 3,983
Arab Malaysia Corp. BHD
5%, 5/2/02 - MYR 500,000 310,695
Arab Malaysian Finance BHD
7 1/2%, 11/20/99 - MYR 3,242,666 2,208,707
Hospital Pantai BHD
5%, 9/22/01 - MYR 87,000 280,701
Malaysian Plantations BHD
5%, 3/31/02 - MYR 16,268,000 9,395,977
Multi-Purpose Holdings BHD
3%, 1/13/02 - MYR 18,409,000 6,856,170
19,056,233
NETHERLANDS - 0.5%
Liblife International NV euro
6 1/2%, 9/30/04 - $ 4,500,000 5,490,000
TOTAL CONVERTIBLE BONDS 24,546,233
NONCONVERTIBLE BONDS - 0.0%
MALAYSIA - 0.0%
AMMB Holdings
5%, 5/13/02 - MYR 10,000 4,043
TOTAL CORPORATE BONDS
(Cost $23,587,807) 24,550,276
CASH EQUIVALENTS - 3.3%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (d)
(Cost $39,016,350) 39,016,350 $39,016,350
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,129,004,146) $ 1,182,799,418
CURRENCY ABBREVIATION
MYR - Malaysian ringgit
LEGEND
(a) Non-income producing
(b) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $12,399,008 or 1.1% of net
assets.
(c) Principal amount is stated in United States dollars unless otherwise
noted.
(d) At period end, the seven-day yield on the Taxable Central Cash Fund was
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
(e) An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions during the period with
companies which are or were affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
APAC Centertex Corp. PT (For. Reg.) $ - $ 6,485,466 $ - $ -
Asiamatrix Ltd. - 299,768 - 954,706
Heilongjiang Electric Power Co. Ltd. Class B - 1,069,187 - -
Liberty Telecoms Holdings, Inc. - 2,219,482 - -
PICOP Resources - - - 4,587,864
PT Bhuwanatala Indah Permai (For. Reg.) - - - -
PT Perdanacipta Multi Finance (For. Reg.) - 850,141 - 7,135,808
TOTALS $ - $ 10,924,044 $ - $ 12,678,378
(f) Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $487,191,089 and $576,602,370, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $2,592 for the period.
The fund participated in the bank borrowing program. The maximum loan and
the average daily balances during the period for which loans were
outstanding amounted to $2,821,000 and $1,738,000, respectively. The
weighted average interest rate was 5.6% (see Note 5 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $1,132,675,927. Net unrealized appreciation aggregated
$50,123,491, of which $207,052,027 related to appreciated investment
securities and $156,928,536 related to depreciated investment securities.
At October 31, 1996, the fund had a capital loss carryforward of
approximately $116,433,000, of which $11,421,000 and $105,012,000 will
expire on September 30, 2002 and 2004, respectively.
The fund intends to elect to defer to its taxable year ending September 30,
1997 approximately $22,403,000 of losses recognized during the period
October 1, 1995 to September 30, 1996.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Basic Industries 4.8%
Cash Equivalents 3.3
Construction & Real Estate 11.7
Durables 0.6
Energy 4.0
Finance 38.4
Health 0.1
Holding Companies 6.0
Media & Leisure 3.3
Nondurables 7.9
Precious Metals 4.9
Retail & Wholesale 0.8
Services 0.3
Technology 1.2
Transportation 0.1
Utilities 12.6
100.0%
EMERGING MARKETS
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $1,129,004,146) - $ 1,182,799,418
See accompanying schedule
Foreign currency held at value New Taiwan dollars (cost $679,847) 676,895
Receivable for investments sold 9,191,614
Receivable for fund shares sold 1,112,859
Dividends receivable 5,744,974
Interest receivable 155,176
Redemption fees receivable 3,198
TOTAL ASSETS 1,199,684,134
LIABILITIES
Payable for investments purchased $ 16,502,610
Regular delivery
Delayed delivery 11,687,121
Payable for fund shares redeemed 4,981,992
Accrued management fee 753,177
Other payables and accrued expenses 565,833
TOTAL LIABILITIES 34,490,733
NET ASSETS $ 1,165,193,401
Net Assets consist of:
Paid in capital $ 1,243,125,493
Distributions in excess of net investment income (14,774,405)
Accumulated undistributed (117,084,279)
net realized gain (loss) on investments and foreign
currency transactions
Net unrealized appreciation (depreciation) on investments 53,926,592
and assets and liabilities in foreign currencies
NET ASSETS, for 71,138,282 $ 1,165,193,401
shares outstanding
NET ASSET VALUE and redemption price per share ($1,165,193,401 (divided by) 71,138,282 shares) $16.38
Maximum offering price per share (100/97.00 of $16.38) $16.89
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 13,396,641
Dividends
Interest 855,844
14,252,485
Less foreign taxes withheld (1,137,703
)
TOTAL INCOME 13,114,782
EXPENSES
Management fee $ 4,659,838
Transfer agent fees 1,867,610
Accounting fees and expenses 327,537
Non-interested trustees' compensation 5,207
Custodian fees and expenses 936,400
Registration fees 40,260
Audit 49,981
Legal 10,272
Interest 541
Miscellaneous 47,830
Total expenses before reductions 7,945,476
Expense reductions (11,967 7,933,509
)
NET INVESTMENT INCOME 5,181,273
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including 33,193,208
realized loss of $2,902,341
on sales of investments in
affiliated issuers)
Foreign currency transactions (340,104 32,853,104
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (41,661,638
)
Assets and liabilities in 209,779 (41,451,859
foreign currencies )
NET GAIN (LOSS) (8,598,755
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (3,417,482
)
OTHER INFORMATION $ 430,673
Sales charges paid to FDC
Expense reductions $ 10,267
Directed brokerage arrangements
Custodian interest credits 1,700
$ 11,967
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31,
(UNAUDITED) 1996
Operations $ 5,181,273 $ 9,827,956
Net investment income
Net realized gain (loss) 32,853,104 (12,982,670)
Change in net unrealized appreciation (depreciation) (41,451,859) 124,808,332
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (3,417,482) 121,653,618
Distributions to shareholders (5,181,273) (12,640,733)
From net investment income
In excess of net investment income (12,804,082) (6,384,938)
TOTAL DISTRIBUTIONS (17,985,355) (19,025,671)
Share transactions 246,439,986 640,979,260
Net proceeds from sales of shares
Reinvestment of distributions 17,580,932 18,581,507
Cost of shares redeemed (340,911,157) (595,850,851)
Redemption fees 322,698 1,242,758
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (76,567,541) 64,952,674
TOTAL INCREASE (DECREASE) IN NET ASSETS (97,970,378) 167,580,621
NET ASSETS
Beginning of period 1,263,163,779 1,095,583,158
End of period (including distributions in excess of net investment income of $14,774,405
and $1,970,323, $ 1,165,193,401 $ 1,263,163,779
respectively)
OTHER INFORMATION
Shares 13,908,697 38,644,131
Sold
Issued in reinvestment of distributions 1,073,319 1,242,911
Redeemed (19,887,762) (36,185,962)
Net increase (decrease) (4,905,746) 3,701,080
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED
APRIL 30, 1997
SELECTED PER-SHARE DATA (UNAUDITED) 1996 1995 1994 F 1993 1992
Net asset value, beginning of period $ 16.61 $ 15.14 $ 19.25 $ 16.18 $ 11.05 $ 10.40
Income from Investment Operations
Net investment income .07 E .12 E .05 .06 .06 E .08
Net realized and unrealized gain (loss) (.05) I 1.60 (4.13) 2.97 5.28 .76
Total from investment operations .02 1.72 (4.08) 3.03 5.34 .84
Less Distributions
From net investment income (.07) (.18) (.04) (.04) (.08) (.08)
In excess of net investment income (.18) (.09) - (.01) - -
From net realized gain - - - - (.15) (.14)
Total distributions (.25) (.27) (.04) (.05) (.23) (.22)
Redemption fees added to paid in capital - .02 .01 .09 .02 .03
Net asset value, end of period $ 16.38 $ 16.61 $ 15.14 $ 19.25 $ 16.18 $ 11.05
TOTAL RETURN B, C .12% 11.69% (21.17)% 19.32% 49.58% 8.56%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,165,193 $ 1,263,164 $ 1,095,583 $ 1,976,371 $ 757,737 $ 13,732
Ratio of expenses to average net assets 1.31% A 1.30% 1.28% 1.52% 1.91% 2.60%
D
Ratio of expenses to average net assets after
expense 1.31% A 1.29% 1.28% 1.52% 1.91% 2.60%
reductions G
Ratio of net investment income to average net assets .85% A .74% .46% .39% .44% .90%
Portfolio turnover rate 82% A 77% 78% 107% 57% 159%
Average commission rate H $ .0019 $ .0017
</TABLE>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED. D LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. E NET
INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. 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 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.
EUROPE
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). The fund has a 3% sales
charge. If Fidelity had not reimbursed certain fund expenses, the past five
years and past 10 years total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 PAST 10
APRIL 30, 1997 MONTHS YEAR YEARS YEARS
EUROPE 9.16% 19.96% 94.09% 153.06%
EUROPE (INCL. 3% SALES CHARGE) 5.89% 16.36% 88.26% 145.47%
Morgan Stanley Capital 11.77% 20.96% 89.50% 175.53%
International Europe Index
European Region 9.62% 17.13% 82.43% 112.66%
Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five or 10 years. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, the value of your investment would be $1,050. You can compare
the fund's returns to the performance of the Morgan Stanley Capital
International (MSCI) Europe Index - a market capitalization weighted index
of over 550 stocks traded in 14 European markets. To measure how the fund's
performance stacked up against its peers, you can compare it to the
European region funds average, which reflects the performance of mutual
funds with similar objectives tracked by Lipper Analytical Services, Inc.
The past six months average represents a peer group of 67 mutual funds.
These benchmarks include reinvested dividends and capital gains, if any,
and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
APRIL 30, 1997 YEAR YEARS YEARS
EUROPE 19.96% 14.18% 9.73%
EUROPE (INCL. 3% SALES CHARGE) 16.36% 13.49% 9.40%
Morgan Stanley Capital 20.96% 13.64% 10.67%
International Europe Index
European Region 17.13% 12.64% 7.76%
Funds Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER 10 YEARS
Europe MS Europe Index (Net)
00301 MS002
1987/04/30 9700.00 10000.00
1987/05/31 9860.97 9944.36
1987/06/30 10259.88 10227.83
1987/07/31 10994.73 10572.25
1987/08/31 11225.69 10659.80
1987/09/30 11631.60 10729.27
1987/10/31 8461.26 8689.37
1987/11/30 8083.33 8306.92
1987/12/31 8685.21 8790.14
1988/01/31 8272.29 8429.54
1988/02/29 8314.29 8925.58
1988/03/31 8699.21 9171.14
1988/04/30 8944.16 9342.03
1988/05/31 8846.18 9167.26
1988/06/30 8650.22 9074.79
1988/07/31 8559.24 9095.13
1988/08/31 8111.33 8682.27
1988/09/30 8489.25 9154.78
1988/10/31 9070.13 10002.65
1988/11/30 9182.11 10126.00
1988/12/31 9192.20 10180.38
1989/01/31 9628.56 10549.04
1989/02/28 9650.03 10429.25
1989/03/31 9814.56 10504.84
1989/04/30 10236.61 10796.41
1989/05/31 9957.62 10243.19
1989/06/30 10229.46 10665.81
1989/07/31 11145.10 11921.26
1989/08/31 11059.26 11772.35
1989/09/30 11560.00 11974.51
1989/10/31 10758.81 11189.41
1989/11/30 11388.32 11810.66
1989/12/31 12164.29 13081.91
1990/01/31 12316.25 13046.86
1990/02/28 11997.85 12734.23
1990/03/31 12359.67 12913.90
1990/04/30 12113.64 12571.19
1990/05/31 12858.98 13594.31
1990/06/30 13394.47 14071.76
1990/07/31 14204.94 14664.34
1990/08/31 12511.63 13210.38
1990/09/30 11274.22 11654.59
1990/10/31 11780.76 12636.73
1990/11/30 11766.29 12763.71
1990/12/31 11605.82 12579.38
1991/01/31 11835.42 13002.65
1991/02/28 12553.84 14140.03
1991/03/31 11879.86 13191.08
1991/04/30 11850.24 13053.17
1991/05/31 11902.08 13438.21
1991/06/30 10857.78 12310.40
1991/07/31 11405.85 13162.40
1991/08/31 11635.45 13402.71
1991/09/30 12057.62 13805.50
1991/10/31 11798.39 13514.68
1991/11/30 11442.88 13196.54
1991/12/31 12088.64 14228.78
1992/01/31 12142.24 14224.68
1992/02/29 12287.70 14279.30
1992/03/31 11866.62 13779.56
1992/04/30 12647.52 14540.09
1992/05/31 13267.65 15367.52
1992/06/30 13145.16 15081.33
1992/07/31 12670.49 14542.52
1992/08/31 12708.77 14495.10
1992/09/30 12509.72 14255.36
1992/10/31 11575.70 13260.71
1992/11/30 11568.04 13254.24
1992/12/31 11783.59 13558.30
1993/01/31 11721.16 13581.08
1993/02/28 11791.40 13736.46
1993/03/31 12563.96 14443.10
1993/04/30 12977.56 14761.65
1993/05/31 13133.63 14920.46
1993/06/30 12766.86 14702.49
1993/07/31 12774.66 14752.95
1993/08/31 13812.55 16047.54
1993/09/30 13796.95 15997.69
1993/10/31 14382.23 16664.15
1993/11/30 14101.29 16304.44
1993/12/31 14984.58 17528.54
1994/01/31 16066.10 18421.19
1994/02/28 15689.92 17768.82
1994/03/31 15251.04 17265.91
1994/04/30 15689.92 17980.87
1994/05/31 15086.46 17216.53
1994/06/30 14906.21 17035.77
1994/07/31 15588.04 17928.61
1994/08/31 16081.78 18497.26
1994/09/30 15862.34 17763.78
1994/10/31 16599.03 18537.64
1994/11/30 15979.90 17827.56
1994/12/31 15922.03 17928.90
1995/01/31 15579.71 17788.54
1995/02/28 15858.34 18191.58
1995/03/31 16240.47 19035.76
1995/04/30 16789.78 19644.52
1995/05/31 17124.14 20046.74
1995/06/30 17609.77 20235.72
1995/07/31 18397.91 21290.49
1995/08/31 18047.62 20467.44
1995/09/30 18843.72 21085.73
1995/10/31 18716.35 20986.14
1995/11/30 18596.93 21135.37
1995/12/31 18920.96 21805.15
1996/01/31 18979.00 21947.69
1996/02/29 19675.47 22347.52
1996/03/31 20156.37 22614.74
1996/04/30 20463.16 22778.37
1996/05/31 21051.84 22954.39
1996/06/30 21275.71 23207.13
1996/07/31 20869.43 22916.44
1996/08/31 21574.20 23596.48
1996/09/30 21939.02 24092.98
1996/10/31 22486.25 24652.31
1996/11/30 23348.56 25901.55
1996/12/31 23769.91 26403.28
1997/01/31 23671.65 26474.91
1997/02/28 24180.81 26824.75
1997/03/31 24636.38 27691.09
1997/04/30 24547.05 27553.36
Let's say hypothetically that $10,000 was invested in Fidelity Europe Fund
on April 30, 1987 and the current maximum 3% sales charge was paid. As the
chart shows, by April 30, 1997, the value of the investment would have
grown to $24,547 - a 145.47% increase on the initial investment. For
comparison, look at how the the Morgan Stanley Capital International Europe
Index did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $27,553 - a
175.53% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
EUROPE
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Sally Walden, Portfolio Manager of Fidelity Europe Fund
Q. SALLY, HOW DID THE FUND PERFORM?
A. For the six-month period that ended April 30, 1997, the fund provided a
return of 9.16%. The Morgan Stanley Capital International Europe Index
returned 11.77% over the same period. The European region funds average, as
tracked by Lipper Analytical Services, had a six-month return of 9.62% as
of April 30, 1997. For a 12-month perspective, the fund returned 19.96% as
of April 30, 1997, while the index and Lipper peer group returned 20.96%
and 17.13%, respectively.
Q. CAN YOU DESCRIBE THE INVESTMENT BACKGROUND IN EUROPE?
A. The economic outlook has improved over the last six months, due in large
part to the strength of the U.S. dollar. As a result of the dollar's strong
performance, European export-oriented businesses were more competitive.
Inflationary pressures also have been absent, which has resulted in low
interest rates. In some cases, in fact, interest rates were cut. There were
fewer downward revisions to profit growth forecasts during the period when
compared to the first half of 1996, and this also helped the market move
ahead. Further progress was made on corporate restructurings, which was a
positive influence on certain large-cap stocks. Finally, the strong U.S.
equity market had a positive effect on most European markets.
Q. WHAT WERE THE MAJOR INFLUENCES BEHIND THE FUND'S PERFORMANCE?
A. There were several. The fund's underweighted position in the German
equity market, relative to the Morgan Stanley index, hurt performance.
Germany, which is the second largest equity market in Europe behind that of
the United Kingdom, turned in a surprisingly strong showing. The U.K.
market did not perform as well as other markets and the fund was marginally
overweighted in the U.K. On the other hand, the fund's relatively large
exposures to the Nordic and Spanish markets proved rewarding as they
performed very well. In terms of individual stocks, a number of the banks
held in the
portfolio performed well. In Germany, Volkswagen performed strongly, as did
the Swiss-based pharmaceutical company Ares Serono. Both holdings
contributed positively to the fund's return. Disappointments included the
fund's positions in Lloyd's of London investment trusts, as well as some of
the food retailer stocks in the U.K. In France, the fund's positions in
Television Francaise 1 and Canal Plus, both media companies, held back
performance.
Q. HAVE THERE BEEN ANY CHANGES TO THE GEOGRAPHICAL ALLOCATION IN THE FUND?
A. There have been some changes. The proportion of the fund invested in the
U.K. has increased marginally and that market remains overweighted in the
portfolio. Similarly, there has been a slight increase in the overweighted
position in Scandinavia, though within the region the exposure to Sweden
has been slightly reduced. The largest underweighted positions remained in
Germany, the Netherlands and Switzerland. The weightings are more
attributable to individual stock selection rather than a macroeconomic, or
"top down," view of the markets.
Q. HAVE THERE BEEN ANY CHANGES TO THE MAJOR THEMES IN THE PORTFOLIO?
A. The portfolio is still biased toward medium-sized companies. However,
the proportion invested in blue chip companies was increased marginally. In
terms of sectors, banks and finance companies were generally favored
throughout the period. There were good growth and restructuring prospects
for many banks - particularly in Scandinavia where the industry has
continued its consolidation progress. The proportion of the fund invested
in media companies was reduced. Competition is increasing and there is some
evidence that advertising revenue is slowing down for certain TV companies.
Q. COULD YOU DESCRIBE SOME OF THE FUND'S MAJOR PURCHASES DURING THE PERIOD?
A. Shares were purchased in British Telecommunications. The proposed merger
between BT and MCI should present more opportunities for growth, while
simultaneously creating the first and only true global company in the
telecommunications industry. Another purchase was Elf Aquitaine, a leading
oil company. The French government sold most of its remaining stake in the
company, and this should allow the management of Elf Aquitaine to be more
focused and to improve profitability and shareholder value, which has been
helped by a recent share buyback. I also increased the fund's stake in
Swedish Match, a Swedish tobacco company, due mostly to its favorable
growth potential.
Q. WHAT IS YOUR OUTLOOK?
A. The economic environment should remain benign. The U.K. economy is at a
more advanced stage in the economic cycle than the rest of Europe. Consumer
spending is expected to be the main driver behind growth and interest rates
may rise further. However, inflationary pressures are expected to remain
under control. In continental Europe, growth is being fueled by exports and
any rise in consumer spending is expected to be modest. The exception is
Scandinavia, where consumer spending is on the rise. Governments are
expected to maintain tight fiscal policies, which may dampen consumer
spending. On the whole, there continues to be a lack of inflationary
pressures in most economies. Given this background, interest rates should
remain relatively low. The outlook for profits growth has improved and
corporate restructuring continues to be a major theme throughout Europe.
However, the strong performance of markets over the past year probably
means some of this good news is already discounted in share prices.
Therefore, investors should probably have more modest return expectations
for the coming year.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by
investing mainly in equity securities of
Western European issuers
FUND NUMBER: 301
TRADING SYMBOL: FIEUX
START DATE: October 1, 1986
SIZE: as of April 30, 1997, more than $875 million
MANAGER: Sally Walden, since 1992; also
manages various funds for non-U.S. investors;
joined Fidelity in 1984
(checkmark)
SALLY WALDEN ON THE FLOW OF FUNDS INTO EQUITY MARKETS
BY DOMESTIC INVESTORS:
"Compared to U.S. investors, Europeans have
historically shied away from the equity market. In the
U.K., interest in the equity market has grown as a
result of privatizations, private pensions and tax
incentives. Nevertheless, the percentage of
households investing in equities has remained at
about 4%. In the rest of Europe, investors have
traditionally favored cash and bonds. However, there
are reasons to believe Europeans are becoming
more interested in equities.
"During the first quarter of this year, domestic flows
into equity mutual funds were strong, with many
markets setting a record. In the U.K., the beginning of
the year tends to be seasonally strong, but flows
totalled (pound)2.7 billion. This was equivalent to flows
during four months between September and
December. In Germany, it is estimated that net flows
into international equity funds during January and
February was equivalent to the flow for the whole of
1996. In Sweden, the total for the first quarter was
$3.2 billion, equivalent to 12% of equity funds.
While first quarter figures are not available for the
Netherlands, in 1996 net flows into equity mutual
funds were double those of 1995.
"So why the increasing interest in equities? The fact
that cash returns are relatively low - for example,
three-month interest rates in Germany are about 3.5%
- - has encouraged investors to seek other investment
alternatives to improve their returns. In addition,
nominal bond yields are low, which act as another
incentive for retail investors to move a portion of their
assets into equities. Of course, the relatively high
returns achieved in the past year by equity markets
also have prompted a shift of assets into equities.
"In recent months, the performance of some of the
privatization shares has improved, which is
stimulating interest in the equity market. There are a
number of privatizations scheduled to come to the
market this year, and this should raise the profile of
equities. Governments will be keen to ensure there is
sufficient demand to meet supply.
"There are also long-term structural changes
occurring, which should attract people to the equity
market. Because governments and people alike are
realizing that the state pension program will not be
able to meet their needs in retirement, there is a
growing need for private pensions. In the U.K., there
have long been incentives for individuals to take out a
private pension, and one of the fastest-growing
businesses for fund management firms is defined
benefit programs. A proportion of funds invested in
such programs is being directed toward equities, and
there seems every likelihood that this will increase
in the future. In continental Europe, private pensions
are very much in their infancy, but we believe that
they will become a growing factor and have a
beneficial long-term influence on Europe's stock
markets."
EUROPE
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997
France 11.2%
United States 5.9%
Row: 1, Col: 1, Value: 5.9
Row: 1, Col: 2, Value: 35.1
Row: 1, Col: 3, Value: 8.6
Row: 1, Col: 4, Value: 8.9
Row: 1, Col: 5, Value: 3.6
Row: 1, Col: 6, Value: 10.9
Row: 1, Col: 7, Value: 4.2
Row: 1, Col: 8, Value: 4.9
Row: 1, Col: 9, Value: 6.7
Row: 1, Col: 10, Value: 11.2
Germany 6.7%
Italy 4.9%
United Kingdom
35.1%
Netherlands 4.2%
Other 10.9%
Spain 3.6%
Switzerland 8.6%
Sweden 8.9%
AS OF OCTOBER 31, 1996
France 11.2%
United States 7.2%
Row: 1, Col: 1, Value: 7.2
Row: 1, Col: 2, Value: 33.4
Row: 1, Col: 3, Value: 9.5
Row: 1, Col: 4, Value: 9.9
Row: 1, Col: 5, Value: 3.0
Row: 1, Col: 6, Value: 10.7
Row: 1, Col: 7, Value: 4.7
Row: 1, Col: 8, Value: 3.0
Row: 1, Col: 9, Value: 6.5
Row: 1, Col: 10, Value: 11.2
Germany
6.5%
United Kingdom
33.4%
Italy 3.0%
Netherlands 4.7%
Other 10.7%
Spain 3.9%
Switzerland 9.5%
Sweden 9.9%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 94.1 93.0
Bonds 0.0 0.1
Short-term investments 5.9 6.9
TOP TEN STOCKS
% OF % OF FUND'S
FUND'S INVESTMENTS
INVESTMENT IN THESE
S STOCKS
6 MONTHS AGO
Novartis AG (Reg.) 2.6 0.0
(Switzerland, Drugs & Pharmaceuticals)
British Petroleum PLC Ord. 2.3 2.5
(United Kingdom, Oil & Gas)
Telecom Italia Mobile Spa 2.3 0.9
(Italy, Telephone Services)
Shell Transport & Trading Co. PLC 2.0 2.1
(Reg.)
(United Kingdom, Oil & Gas)
Lloyds TSB Group PLC 2.0 1.5
(United Kingdom, Banks)
Glaxo Holdings PLC 1.9 1.6
(United Kingdom, Drugs &
Pharmaceuticals)
Total SA Class B 1.6 1.7
(France, Oil & Gas)
British Telecommunications PLC Ord. 1.6 0.0
(United Kingdom, Telephone Services)
Volkswagen AG 1.5 1.0
(Germany, Auto, Tires & Accessories)
Kuoni Reisen Holding AG Class B 1.5 1.5
(Reg.)
(Switzerland, Entertainment)
TOP TEN MARKET SECTORS
% OF % OF FUND'S
FUND'S INVESTMENTS
INVESTMENT IN THESE
S MARKET
SECTORS
6 MONTHS AGO
Finance 27.3 23.1
Health 12.6 12.5
Utilities 8.5 5.2
Media & Leisure 8.2 13.1
Energy 7.7 7.2
Retail & Wholesale 6.0 6.6
Services 5.0 4.7
Nondurables 4.9 3.9
Durables 4.9 4.6
Construction & Real Estate 3.5 4.3
EUROPE
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.9%
SHARES VALUE (NOTE 1)
BELGIUM - 0.8%
BBL (Banque Bruxelles Lambert) 3,200 $ 800,246
Generale de Banque SA 13,862 5,754,968
Quick Restaurants SA 2,629 130,313
6,685,527
BERMUDA - 0.0%
Bona Shipholdings Ltd. (a) 41,770 398,848
DENMARK - 2.5%
Den Danske Bank Group AS 99,800 8,632,301
International Service Systems AS,
Series B 159,300 4,713,804
Novo-Nordisk AS Class B 52,000 5,144,843
Unidanmark AS Class A 73,010 3,611,779
22,102,727
FINLAND - 2.4%
Cultor OY Ord., Series 2 105,200 5,827,750
KCI (Konecranes International) 145,900 5,612,780
Sampo Insurance Co. Ltd. 70,900 6,409,687
Spontel OY Class A 554,900 3,415,525
21,265,742
FRANCE - 11.2%
Axa SA 125,457 7,721,919
BIC 22,020 3,491,194
Canal Plus SA 32,800 5,925,560
Castorama Dubois Investissements SA 47,500 7,026,182
Christian Dior SA 52,000 7,709,646
Credit Commercial de France Ord. 182,100 8,083,970
Elf Sanofi SA 80,500 7,519,818
Groupe Photo Services GPS 32,200 4,796,126
Nationale Elf Aquitaine 79,100 7,673,754
Rhone Poulenc SA Class A 198,600 6,682,124
Salomon SA 47,940 3,382,115
Societe Generale Class A 73,500 8,239,105
Total SA Class B 174,328 14,461,970
Union Assurancesfederale SA 57,230 6,817,474
99,530,957
GERMANY - 4.2%
Bayer AG 336,860 13,084,814
Gehe AG 112,110 7,447,878
IVG Holding AG (RFD) 18,900 614,696
IVG Holding AG 109,700 3,612,201
Mannesmann AG Ord. 9,840 3,868,810
Tarkett AG 23,000 391,959
Tarkett AG (c) 38,000 647,584
Veba AG Ord. 150,610 7,785,207
37,453,149
IRELAND - 3.0%
Bank of Ireland, Inc. 916,200 9,534,559
CRH PLC 589,560 5,771,618
IWP International (UK Reg.) 735,060 3,043,093
Independent Newspapers PLC 1,557,200 7,963,560
26,312,830
ITALY - 4.2%
Credito Italiano Ord. 6,443,900 9,042,279
De Rigo Spa sponsored ADR (a) 44,528 294,998
Eni Spa 1,507,400 7,678,611
Telecom Italia Mobile Spa 6,569,040 20,620,255
37,636,143
SHARES VALUE (NOTE 1)
NETHERLANDS - 4.2%
ABN-AMRO Holdings NV 125,100 $ 8,601,448
Ahold NV 64,500 4,404,991
Gucci Group NV 31,200 2,174,043
ING Groep NV 222,050 8,722,599
VNU Ord. 405,000 8,380,960
Vendex International NV 101,700 4,830,548
37,114,589
NORWAY - 2.1%
Den Norske Bank AS Class A Free shares 1,151,800 4,172,837
Fokus Bank AS 471,250 4,599,078
Schibsted AS, Series B 91,200 1,575,196
UNI Storebrand AS (a) 1,396,900 8,532,753
18,879,864
PORTUGAL - 0.1%
Telecel Comunicacoes Pessoais SA (a) 8,600 740,961
SPAIN - 3.6%
Banco Bilbao Vizcaya SA Ord. (Reg.) 139,000 9,369,823
Banco Intercontinental Espanol 31,700 4,734,098
Empresa Nacional De Electricidad SA Ord. 48,660 3,406,783
Tabacalera SA, Series A 159,600 8,025,100
Telefonica de Espana SA Ord. 258,200 6,624,141
32,159,945
SWEDEN - 8.9%
Assa Abloy AB Class B 163,150 3,191,559
Astra AB Class A Free shares 171,025 6,996,358
Hennes & Mauritz AB Class B Free shares 28,000 4,050,059
Incentive Fund, Inc. 94,400 6,195,647
Naeckebro AB 19,900 239,658
Nordbanken AB 219,000 6,726,181
Nordbanken AB (c) 29,500 906,038
Securitas AB Class B 275,100 6,626,128
Skandia Foersaekrings AB 382,513 11,065,715
Svenska Handelsbanken 323,100 8,894,020
Swedish Match Co. 2,453,200 8,003,507
Trygg Hansa AB Class B 399,300 6,920,630
TV 4 AB Class A 128,930 2,218,172
Volvo AB Class B 266,520 6,708,174
78,741,846
SWITZERLAND - 8.6%
Adecco SA 14,028 4,686,219
Ares Serono Class B (Bearer) 8,210 11,017,218
Baloise-Holding (Reg.) 2,475 5,222,015
Credit Suisse Group (Reg.) 80,500 9,065,807
Kuoni Reisen Holding AG Class B (Reg.) 4,676 13,450,638
Novartis AG (Reg.) 17,500 23,057,022
Surveillance, Societe Generale (Bearer) 1,500 3,103,087
Swiss Reinsurance Corp. (Reg.) 5,853 6,774,232
76,376,238
UNITED KINGDOM - 35.1%
Amersham International PLC Class L 193,200 3,967,802
Asda Group PLC 2,366,000 4,417,381
Barclays PLC Ord. 507,070 9,442,427
Barratt Developments PLC 1,176,575 4,947,339
Bass PLC Ord. 294,500 3,805,841
Boots Co. PLC (The) Class L 769,330 8,643,130
British Petroleum PLC Ord. 1,798,016 20,667,079
British Telecommunications PLC Ord. 1,944,900 14,272,104
Cable & Wireless PLC Ord. 518,500 3,999,529
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Capital Radio PLC 391,600 $ 3,445,833
Capital Shopping Centres PLC 769,521 4,722,420
Carpetright PLC 431,000 3,309,716
Compass Group PLC Ord. 365,577 4,012,156
Cookson Group PLC 813,800 2,867,013
Daily Mail & General Trust PLC Class A 135,900 3,397,758
EMAP PLC 287,500 3,556,683
Electrocomponents PLC 996,720 6,391,791
Flextech PLC (a) 832,080 8,375,468
Glaxo Holdings PLC 846,400 16,668,202
Granada Group PLC 544,600 7,877,849
Grand Metropolitan PLC 676,000 5,652,053
Great Universal Stores PLC Ord. Class A 603,800 6,273,724
HSBC Holdings PLC Ord. 358,300 9,417,724
Ladbroke Group PLC Ord. 344,900 1,287,874
Lloyds TSB Group PLC 1,941,500 17,745,902
London Insurance Market Investment
Trust PLC 3,189,770 6,783,955
Mercury Asset Management
Group PLC 204,100 4,428,578
National Grid Co. PLC 1,279,700 4,612,256
Next PLC 541,400 5,726,443
Prudential Corp. PLC 511,870 4,977,815
Rentokil Group PLC 810,700 5,317,333
Reuters Holdings PLC Ord. 306,180 3,151,508
Royal & Sun Alliance Insurance
Group PLC 519,093 4,095,753
Scottish Television PLC 409,130 4,548,264
Shell Transport & Trading Co. PLC (Reg.) 1,009,000 17,871,796
Smiths Industries PLC Ord. 344,370 4,215,499
SmithKline Beecham PLC Ord. 622,460 9,984,370
Standard Chartered Bank PLC 776,760 11,772,087
Tesco PLC Ord. 1,332,420 7,744,198
3I Group PLC 187,500 1,544,862
Unilever PLC Ord. 344,200 9,058,289
Vendome Luxury Group PLC SA 464,200 3,851,043
Vodafone Group PLC 1,581,125 7,084,800
Westminster Health Care Holdings PLC 448,870 1,829,139
Wolseley PLC Ord. 507,450 4,069,795
Yorkshire TV Holdings PLC 97,000 1,724,401
Zeneca Group PLC Ord. 250,180 7,570,957
311,127,939
TOTAL COMMON STOCKS
(Cost $617,869,344) 806,527,305
NONCONVERTIBLE PREFERRED STOCKS - 3.2%
GERMANY - 2.5%
Boss (Hugo) AG 4,850 6,191,907
Volkswagen AG 27,800 13,682,794
Wella AG 3,850 2,335,288
22,209,989
ITALY - 0.7%
Stet (Societa Finanziaria Telefonica) Spa 1,625,500 6,022,055
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $17,338,799) 28,232,044
CASH EQUIVALENTS - 5.9%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $52,666,198) 52,666,198 $ 52,666,198
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $687,874,341) $ 887,425,547
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash Fund was
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $1,553,622 or 0.2% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $254,039,537 and $122,338,196, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $43,493 for the period.
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $688,036,974. Net unrealized appreciation aggregated
$199,388,573, of which $209,960,821 related to appreciated investment
securities and $10,572,248 related to depreciated investment securities.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.5%
Basic Industries 1.8
Cash Equivalents 5.9
Construction & Real Estate 3.5
Durables 4.9
Energy 7.7
Finance 27.3
Health 12.6
Holding Companies 1.5
Industrial Machinery & Equipment 1.0
Media & Leisure 8.2
Nondurables 4.9
Retail & Wholesale 6.0
Services 5.0
Technology 0.7
Utilities 8.5
100.0%
EUROPE
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value $ 887,425,547
(cost $687,874,341) - See accompanying schedule
Cash 309,979
Receivable for investments sold 3,261,067
Receivable for fund shares sold 2,511,024
Dividends receivable 4,636,949
Interest receivable 148,961
Redemption fees receivable 479
TOTAL ASSETS 898,294,006
LIABILITIES
Payable for investments purchased $ 21,285,747
Payable for fund shares redeemed 993,752
Accrued management fee 553,901
Other payables and accrued expenses 291,382
TOTAL LIABILITIES 23,124,782
NET ASSETS $ 875,169,224
Net Assets consist of:
Paid in capital $ 651,453,966
Undistributed net investment income 3,653,734
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 20,638,760
Net unrealized appreciation (depreciation) on investments 199,422,764
and assets and liabilities in
foreign currencies
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
NET ASSETS, for 31,852,728 $ 875,169,224
shares outstanding
NET ASSET VALUE and redemption price per share ($875,169,224 (divided by) 31,852,728 shares) $27.48
Maximum offering price per share (100/97.00 of $27.48) $28.33
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 9,007,658
Dividends
Interest 1,386,614
10,394,272
Less foreign taxes withheld (1,205,727
)
TOTAL INCOME 9,188,545
EXPENSES
Management fee $ 2,974,529
Basic fee
Performance adjustment 219,554
Transfer agent fees 1,086,687
Accounting fees and expenses 242,984
Non-interested trustees' compensation 1,326
Custodian fees and expenses 205,245
Registration fees 40,840
Audit 26,310
Legal 4,763
Miscellaneous 5,222
Total expenses before reductions 4,807,460
Expense reductions (14,822 4,792,638
)
NET INVESTMENT INCOME 4,395,907
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 21,358,445
Foreign currency transactions (56,575 21,301,870
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 41,792,158
Assets and liabilities in (165,459 41,626,699
foreign currencies )
NET GAIN (LOSS) 62,928,569
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 67,324,476
OTHER INFORMATION $ 548,002
Sales charges paid to FDC
Deferred sales charges withheld $ 20,431
by FDC
Expense reductions $ 5,704
Directed brokerage arrangements
Custodian interest credits 64
Transfer agent interest credits 9,054
$ 14,822
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED OCTOBER 31,
APRIL 30, 1997 1996
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 4,395,907 $ 6,716,135
Net investment income
Net realized gain (loss) 21,301,870 51,588,573
Change in net unrealized appreciation (depreciation) 41,626,699 45,251,666
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 67,324,476 103,556,374
Distributions to shareholders (6,427,940) (2,532,705
From net investment income )
From net realized gain (46,294,939) (17,095,667
)
TOTAL DISTRIBUTIONS (52,722,879) (19,628,372
)
Share transactions 235,012,893 240,208,198
Net proceeds from sales of shares
Reinvestment of distributions 51,814,504 19,284,800
Cost of shares redeemed (118,166,769) (144,811,084
)
Redemption fees 145,195 284,527
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 168,805,823 114,966,441
TOTAL INCREASE (DECREASE) IN NET ASSETS 183,407,420 198,894,443
NET ASSETS
Beginning of period 691,761,804 492,867,361
End of period (including undistributed net investment income of $3,653,734 and $6,366,458,
respectively) $ 875,169,224 $ 691,761,804
OTHER INFORMATION
Shares
Sold 8,706,123 9,582,175
Issued in reinvestment of distributions 2,034,335 860,545
Redeemed (4,398,680) (5,896,676
)
Net increase (decrease) 6,341,778 4,546,044
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED
APRIL 30, 1997
SELECTED PER-SHARE DATA (UNAUDITED) 1996 1995 1994 F 1993 1992
Net asset value, beginning of period $ 27.12 $ 23.51 $ 21.18 $ 18.43 $ 15.12 $ 15.93
Income from Investment Operations
Net investment income .15 D .30 D .27 .18 .25 .27
Net realized and unrealized gain (loss) 2.18 4.23 2.37 2.65 3.35 (.57)
Total from investment operations 2.33 4.53 2.64 2.83 3.60 (.30)
Less Distributions
From net investment income (.24) (.12) (.20) (.08) (.29) (.48)
From net realized gain (1.73) (.81) (.11) - - (.03) E
Total distributions (1.97) (.93) (.31) (.08) (.29) (.51)
Redemption fees added to paid in capital - .01 - - - -
Net asset value, end of period $ 27.48 $ 27.12 $ 23.51 $ 21.18 $ 18.43 $ 15.12
TOTAL RETURN B, C 9.16% 20.14% 12.76% 15.41% 24.24% (1.89)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 875,169 $ 691,762 $ 492,867 $ 507,460 $ 528,929 $ 431,223
Ratio of expenses to average net assets 1.24% A 1.27% 1.18% 1.35% 1.25% 1.22%
G
Ratio of expenses to average net assets after expense 1.23% A, 1.27% 1.18% 1.35% 1.25% 1.22%
reductions H
Ratio of net investment income to average net assets 1.13% A 1.20% 1.12% .85% 1.44% 2.38%
Portfolio turnover rate 33% A 45% 38% 49% 76% 95%
Average commission rate I $ .0261 $ .0299
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6
OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES
CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS
BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE
PERIOD. E INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS
ON FOREIGN CURRENCY RELATED TRANSACTIONS
TAXABLE AS ORDINARY INCOME. 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 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. 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 (SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS). 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.
</TABLE>
EUROPE CAPITAL APPRECIATION
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). The fund has a 3% sales
charge.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 LIFE OF
APRIL 30, 1997 MONTHS YEAR FUND
EUROPE CAPITAL APPRECIATION 14.42% 23.74% 64.12%
EUROPE CAPITAL APPRECIATION 10.99% 20.03% 59.20%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital 11.77% 20.96% 59.27%
International Europe Index
European Region Funds Average 9.62% 17.13% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year or since the fund
started on December 21, 1993. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Morgan Stanley Capital International (MSCI) Europe Index - a market
capitalization weighted index of over 550 stocks traded in 14 European
markets. To measure how the fund's performance stacked up against its
peers, you can compare it to the European region funds average, which
reflects the performance of mutual funds with similar objectives tracked by
Lipper Analytical Services, Inc. The past six months average represents a
peer group of 67 mutual funds. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
APRIL 30, 1997 YEAR FUND
EUROPE CAPITAL APPRECIATION 23.74% 15.88%
EUROPE CAPITAL APPRECIATION 20.03% 14.83%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital 20.96% 14.85%
International Europe Index
European Region Funds Average 17.13% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER LIFE OF FUND
Europe Cap. Appreciation MS Europe Index (Net)
00341 MS002
1993/12/21 9700.00 10000.00
1993/12/31 9729.10 10132.25
1994/01/31 11145.30 10648.25
1994/02/28 10670.00 10271.15
1994/03/31 10786.40 9980.44
1994/04/30 11242.30 10393.72
1994/05/31 10825.20 9951.90
1994/06/30 10602.10 9847.41
1994/07/31 11145.30 10363.51
1994/08/31 11339.30 10692.22
1994/09/30 10941.60 10268.23
1994/10/31 11009.50 10715.55
1994/11/30 10534.20 10305.10
1994/12/31 10398.40 10363.68
1995/01/31 10272.30 10282.54
1995/02/28 10563.30 10515.52
1995/03/31 10786.40 11003.49
1995/04/30 11300.50 11355.38
1995/05/31 11475.10 11587.88
1995/06/30 11640.00 11697.12
1995/07/31 12241.40 12306.82
1995/08/31 11737.00 11831.07
1995/09/30 12086.20 12188.47
1995/10/31 11717.60 12130.90
1995/11/30 11649.70 12217.16
1995/12/31 11926.02 12604.32
1996/01/31 12005.13 12686.72
1996/02/29 12311.69 12917.83
1996/03/31 12509.47 13072.30
1996/04/30 12865.47 13166.88
1996/05/31 13152.25 13268.63
1996/06/30 13221.47 13414.73
1996/07/31 12954.47 13246.69
1996/08/31 13439.03 13639.78
1996/09/30 13735.69 13926.78
1996/10/31 13913.69 14250.10
1996/11/30 14793.81 14972.21
1996/12/31 15013.99 15262.24
1997/01/31 15389.62 15303.64
1997/02/28 15566.38 15505.86
1997/03/31 15842.58 16006.65
1997/04/30 15919.91 15927.03
Let's say hypothetically that $10,000 was invested in Fidelity Europe
Capital Appreciation Fund on December 21, 1993, when the fund started and
the current maximum 3% sales charge was paid. As the chart shows, by April
30, 1997, the value of the investment would have grown to $15,920 - a
59.20% increase on the initial investment. For comparison, look at how the
Morgan Stanley Capital International Europe Index did over the same period.
With dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $15,927 - a 59.27% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
EUROPE CAPITAL APPRECIATION
FUND TALK: THE MANAGER'S OVERVIEW
+
An interview with Kevin McCarey, Portfolio Manager of Fidelity Europe
Capital Appreciation Fund
Q. HOW DID THE FUND PERFORM, KEVIN?
A. For the six months that ended April 30, 1997, the fund produced a return
of 14.42%. For comparison, the Morgan Stanley Capital International Europe
Index returned 11.77% during the same period. The European region funds
average, as tracked by Lipper Analytical Services, had a 9.62% return for
the past six months. For the 12 months that ended April 30, 1997, the fund
returned 23.74%, while the index and peer group had returns of 20.96% and
17.13%, respectively.
Q. HOW WOULD YOU CHARACTERIZE THE OVERALL ECONOMIC STATE OF EUROPE DURING
THE PERIOD?
A. European economies were improving, but this improvement was steady
rather than dramatic. Unemployment was still very high throughout Europe,
but the general feeling is that unemployment levels may be peaking. The
reason for this high unemployment may have something to do with a lack of
entrepreneurship. While the U.S. encourages new business start-ups and
consequently has a flourishing venture capital/initial public offering
climate, Europe's strong regulatory guidelines tend to discourage new
business. In terms of specific regions, the economies of both the United
Kingdom and Scandinavia have stood out above the rest. In the U.K. - where
the economy is the closest model to that of the U.S. - companies generally
are better managed and able to react to market developments quickly.
Scandinavia's economies are largely dependent upon the success of exporting
businesses and accordingly go through hot and cold economic spells.
Q. CAN YOU DISCUSS THE FACTORS THAT INFLUENCED THE FUND'S RETURNS?
A. Good stock picking generally has the most influence on a fund's
performance, and over the past six months we've seen a good stock selecting
environment throughout Europe. This hadn't been the case until recently.
Looking back to 1995, Europe wasn't a good environment for picking stocks,
as large-cap growth stocks ruled the roost. Back then, if you owned the big
caps, your fund did okay. If you didn't,
performance suffered. Similar to American corporations, however, European
companies have gradually come to realize that streamlining their businesses
can help drive their stock prices up. While American corporations have been
doing this for quite some time, Europe has just begun. Companies are
focusing more on their stock's share price and shareholder friendliness,
all of which adds up to a positive stock picking environment.
Q. DID ANYTHING ELSE PLAY A BIG ROLE IN TERMS OF PERFORMANCE?
A. On a more specific note, the fund benefited from its positions in
technology stocks. While there aren't nearly as many cutting-edge
technology stocks in Europe as there are in the U.S., I was able to find
several good opportunities in the semiconductor area. Two of the fund's
larger positions during the period, both headquartered in the Netherlands,
were Philips Electronics and ASM Lithography. A portion of Philips'
business involves semiconductors, and as the technology situation around
the world showed signs of improvement, the stock performed well. ASM
Lithography, an equipment supplier for semiconductor manufacturers, also
benefited from this worldwide technology turnaround. Another direct play on
semiconductor production that worked out well was SGS Thomson
Microelectronics.
Q. IN THE PAST YOU'VE STATED YOUR RELUCTANCE TO BUY CYCLICAL STOCKS -
STOCKS WHOSE VALUE HINGES MOSTLY ON ECONOMIC CONDITIONS. AS EUROPEAN
ECONOMIES BEGAN TO SHOW SIGNS OF LIFE, DID YOU LOOK MORE CLOSELY AT
CYCLICALS?
A. Cyclicals can play an important role in a fund, but over long periods of
time they've generally underperformed other market segments. This explains
my wariness. Cyclical stocks can be logical investments when economies -
such as we've seen in Europe - are beginning their initial ascent from the
bottom. The fund did own some economically sensitive stocks, such as
positions in the steel industry, but that doesn't imply that I think the
steel industry is showing considerable structural improvement. Time, and
the condition of the economies, will determine the performance of European
cyclical stocks.
Q. FROM A REGIONAL STANDPOINT, DID YOU ADD TO ANY OF THE FUND'S POSITIONS
DURING THE PERIOD?
A. Not materially, but two areas I would single out would be the fund's
Dutch and U.S. exposures. The fund's Dutch weighting was higher than that
of its index, due mostly to the aforementioned stakes in Philips and ASM
Lithography. In terms of U.S.-based holdings, two of my larger positions
were MCI and Manpower. MCI agreed to be bought out by British
Telecommunications and will be merged into a new company named Concert.
Manpower, a temporary employment agency with over half its business in
Europe, proved to be a good play on the improving European economic
situation. I would add that country selection doesn't play as significant a
role in stock picking as does the fundamental analysis of each stock.
Q. WERE THERE ANY PARTICULAR INDUSTRIES THAT CAUGHT YOUR ATTENTION?
A. The fund held positions in two tobacco-related stocks, British-based BAT
Industries and Spanish-based Tabacalera. Both companies would stand to
benefit from a U.S. tobacco litigation settlement, which at the close of
the period seemed possible in the intermediate term. Exclusive of a
settlement, the valuations of the two companies are still attractive.
Telecommunications equipment stocks also performed relatively well,
supported by continued global cellular growth and increased demand for
telephone service providers. The fund held positions in Nokia, Ericsson and
Alcatel at varying times during the period.
Q. WHICH INDIVIDUAL STOCKS CONTRIBUTED TO PERFORMANCE? WHICH HURT?
A. Many of the stocks I've mentioned - including Philips and ASM
Lithography - all added positively to performance. Volkswagen was another
stock that helped, as the company cut costs and continued to gain market
share throughout Europe. In terms of disappointments, Astra was one stock
that didn't pan out. The pharmaceutical company suffered from a combination
of the weak Swedish krona and less-than-expected earnings growth. Rentokil
was another stock that hurt performance despite good earnings reports.
Q. WHAT'S YOUR OUTLOOK?
A. With the corporate restructuring trend continuing, I'm very positive on
the prospects for European markets. My biggest concern will be the impact
of U.S. capital markets on Europe; if we can have a relatively friendly
U.S. market environment, I think the European stock market will perform
well. European economies should also continue to improve, slowly but
surely.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Eastern and
Western European issuers
FUND NUMBER: 341
TRADING SYMBOL: FECAX
START DATE: December 21, 1993
SIZE: as of April 30, 1997, more than
$348 million
MANAGER: Kevin McCarey, since inception;
manager, Fidelity Select Financial
Services Portfolio, Fidelity Select
Automotive Portfolio, 1988-90; Fidelity
Select Regional Banks Portfolio, 1986-89;
joined Fidelity in 1985
(checkmark)
KEVIN MCCAREY ON THE CHANGING MINDSET OF EUROPEAN
COMPANIES:
"Many European companies are beginning to
emphasize the interests of their shareholders by
focusing on new ways to improve their stock price.
For a variety of reasons, company restructurings
have become a huge trend throughout Europe and
this has benefited overall performance. American
companies have been at it for awhile, and that's a big
reason why we've seen all-time records in the U.S.
stock market over the past year or so. Now,
European companies are catching on.
"Among other methods, European companies are
trying to cut costs across the board. This can include
eliminating any non-profitable ancillary businesses
and/or simply redeploying resources into their main
lines of business to make them stronger. And this is
just the beginning of this trend. As companies see
stock price improvement, implementing
restructuring strategies becomes even more
addictive. Over the past few years, American
companies have gravitated more toward having just
one or two lines of business under their roof. In the
case of Europe, though, you still have a lot of
companies operating illogical side businesses that
aren't generating much profit.
"This restructuring movement is part of a concept
focusing on return on invested capital. Not only does
a company have to think about the numerator, which
would be improving profit growth or cash flow, it also
has to focus on the existing capital being employed
in the business. If a company has a fast-growing
division, it makes sense to put more capital into that
area. This line of thinking, as I mentioned, has
contributed to the strong market performance we've
seen in the U.S. As it continues to take hold in
Europe, and companies manage their capital more
efficiently, stocks are going to become much more
attractive."
EUROPE CAPITAL APPRECIATION
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997
France 13.8%
United States 12.3%
Row: 1, Col: 1, Value: 12.3
Row: 1, Col: 2, Value: 28.3
Row: 1, Col: 3, Value: 7.0
Row: 1, Col: 4, Value: 5.0
Row: 1, Col: 5, Value: 4.1
Row: 1, Col: 6, Value: 7.6
Row: 1, Col: 7, Value: 12.3
Row: 1, Col: 8, Value: 3.6
Row: 1, Col: 9, Value: 6.0
Row: 1, Col: 10, Value: 13.8
United
Kingdom 28.3%
Germany 6.0%
Italy 3.6%
Netherlands 12.3%
Other 7.6%
Switzerland 7.0%
Sweden 5.0%
Spain 4.1%
AS OF OCTOBER 31, 1996
Finland 4.0%
United States 5.1%
Row: 1, Col: 1, Value: 5.1
Row: 1, Col: 2, Value: 27.5
Row: 1, Col: 3, Value: 5.5
Row: 1, Col: 4, Value: 9.699999999999999
Row: 1, Col: 5, Value: 4.2
Row: 1, Col: 6, Value: 8.6
Row: 1, Col: 7, Value: 13.6
Row: 1, Col: 8, Value: 6.4
Row: 1, Col: 9, Value: 15.4
Row: 1, Col: 10, Value: 4.0
France 15.4%
United
Kingdom 27.5%
Germany 6.4%
Switzerland 5.5%
Netherlands 13.6%
Sweden 9.7%
Spain 4.2%
Other 8.6%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 89.9 95.3
Short-term investments 10.1 4.7
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENT INVESTMENTS
S IN THESE
STOCKS
6 MONTHS AGO
Philips Electronics NV (Bearer) 3.4 0.0
(Netherlands, Consumer Electronics)
Novartis AG (Reg.) 2.6 0.0
(Switzerland, Drugs & Pharmaceuticals)
Nationale Elf Aquitaine 1.9 1.2
(France, Oil & Gas)
Unilever PLC Ord. 1.9 1.3
(United Kingdom, Household Products)
Nokia Corp. AB, Series A 1.8 0.0
(Finland, Communications Equipment)
MCI Communications Corp. 1.8 0.0
(United States of America,
Telephone Services)
BAT Industries PLC Ord. 1.8 0.0
(United Kingdom, Tobacco)
Rhone Poulenc SA Class A 1.8 0.0
(France, Drugs & Pharmaceuticals)
National Grid Co. PLC 1.7 0.3
(United Kingdom, Electric Utility)
SGS Thomson Microelectronics NV 1.7 2.9
(Netherlands, Electronics)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENT INVESTMENTS
S IN THESE
MARKET
SECTORS
6 MONTHS AGO
Finance 18.5 17.4
Health 10.2 6.8
Utilities 10.0 5.8
Durables 7.3 7.5
Basic Industries 6.5 8.7
Nondurables 6.4 6.5
Technology 6.3 4.9
Media & Leisure 4.4 5.3
Services 4.2 3.3
Energy 4.1 8.4
EUROPE CAPITAL APPRECIATION
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.6%
SHARES VALUE (NOTE 1)
AUSTRIA - 0.6%
Leykam-Muerstaler Papier und Zelstoff
AG Ord. 30,000 $ 718,829
Voest-Alpine Stahl AG 35,000 1,381,447
2,100,276
BELGIUM - 1.7%
BBL (Banque Bruxelles Lambert) 19,000 4,751,463
Fortis AG 9,000 1,607,998
6,359,461
CANADA - 0.2%
Canadian Fracmaster Ltd. 84,200 692,905
DENMARK - 0.9%
Novo-Nordisk AS Class B 34,000 3,363,936
FINLAND - 2.2%
Fiskars OY, Series A 7,100 566,760
Huhtamaki Ord. 18,000 780,750
Nokia Corp. AB, Series A 108,900 6,793,836
8,141,346
FRANCE - 13.8%
Accor SA 3,500 506,746
Alcatel Alsthom Compagnie
Generale d'Electricite SA 53,000 5,895,702
Axa SA 31,000 1,908,060
BQE National Paris Ord. 87,500 3,734,413
Canal Plus SA 100 18,066
Cap Gemini Sogeti SA 50,000 3,029,524
Cardif SA 13,500 1,689,163
Credit Commercial de France Ord. 15,000 665,895
Credit Local de France SA 18,000 1,666,024
Group Axime (a) 7,500 902,430
Groupe Danone 6,600 961,563
Havas Advertising 3,200 364,743
Lafarge Coppee SA 14,000 918,576
Michelin SA (Compagnie Generale des
Etablissements) Class B 29,000 1,620,928
NRJ SA 12,000 1,877,876
Nationale Elf Aquitaine 72,000 6,984,960
Pathe SA (a) 7,000 1,635,343
Pechiney SA Class A 91,000 3,400,266
Rhone Poulenc SA Class A 200,000 6,729,228
Societe Generale Class A 30,000 3,362,900
Total SA Class B 39,000 3,235,377
Unibail 5,000 484,210
51,591,993
GERMANY - 5.5%
Allianz Versich Holdings Ord. (Reg.) (a) 16,000 3,105,630
Altana AG 4,800 3,715,664
BASF AG 64,000 2,506,687
Bayerische Motoren Werke (BMW) AG 1,250 1,032,249
Daimler-Benz AG Ord. 27,000 1,999,596
Dresdner Bank AG Ord. 21,500 684,974
Lufthansa 75,000 1,044,164
Mannesmann AG Ord. 1,000 393,172
Metallgesellschaft AG Ord. (a) 245,000 5,062,621
Veba AG Ord. 20,600 1,064,838
20,609,595
SHARES VALUE (NOTE 1)
IRELAND - 1.8%
Anglo-Irish Bank Corp. PLC 985,000 $ 1,231,344
Bank of Ireland, Inc. 185,000 1,925,227
Dana Petroleum PLC 2,500,000 923,366
Jurys Hotel Group PLC 215,000 1,151,873
Woodchester Investments PLC unit 325,500 1,426,813
6,658,623
ITALY - 2.8%
Banca Fideuram Spa 400,000 1,010,607
Credito Italiano Ord. 2,015,000 2,827,510
Eni Spa 315,000 1,604,592
Finanziaria Autogrill Spa 150,700 211,379
Istituto Bancario San Paolo 20,000 132,398
Mediaset Spa 62,500 263,654
Rinascente per l'Esercizio di Grandi
Magazzini Spa 125,000 666,914
Telecom Italia Spa 1,460,000 3,867,903
10,584,957
NETHERLANDS - 12.3%
AKZO Nobel NV 28,000 3,608,822
ASM Lithography Holding NV (a) 1,000 79,500
Baan Co. NV (a) 5,000 262,138
ING Groep NV 154,000 6,049,449
Koninklijke Hoogovens NV 40,000 1,828,032
Koninklijke KNP BT NV 50,000 985,905
Philips Electronics NV 81,000 4,333,500
Philips Electronics NV (Bearer) 241,000 12,585,535
SGS Thomson Microelectronics NV (a) 80,000 6,270,000
VNU Ord. 285,000 5,897,712
Vendex International NV 84,000 3,989,833
45,890,426
NORWAY - 0.2%
Tomra Systems AS 30,000 581,346
SPAIN - 4.1%
Asturiana del Zinc SA (a) 155,000 2,389,108
Banco Central SA (Reg.) 9,000 274,362
Banco de Santander SA Ord. (Reg.) 7,000 527,488
Corporacion Financiera Alba SA 5,000 513,787
Cortefiel SA 22,175 717,013
Prosegur, CIA de Seguridad SA (Reg.) 64,000 694,914
Tabacalera SA, Series A 96,000 4,827,128
Telefonica de Espana SA sponsored ADR 70,000 5,390,000
15,333,800
SWEDEN - 5.0%
Astra AB Class A Free shares 130,000 5,318,091
Ericsson (L.M.) Telephone Co.
Class B ADR 116,000 3,900,500
Esselte AB Class B Free shares 80,000 1,824,948
Forcenergy AB Class B Free shares 33,000 363,779
Incentive Fund, Inc. 19,400 1,273,258
Scancem AB, Series A 8,000 295,662
Svenska Handelsbanken 67,000 1,844,319
Trygg Hansa AB Class B 22,500 389,968
Volvo AB ADR Class B 143,000 3,610,750
18,821,275
SWITZERLAND - 7.0%
Credit Suisse Group (Reg.) 43,800 4,932,700
Intershop Holding AG (Bearer) 1,470 807,802
Julius Baer Holding AG 1,700 2,127,883
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWITZERLAND - CONTINUED
Nestle SA (Reg.) 1,800 $ 2,185,889
Novartis AG (Reg.) 7,400 9,749,525
Oerlikon-Buhrle Holding Ltd. (Reg.) (a) 25,000 2,476,255
Roche Holding AG participation
certificates 110 929,104
SMH (Bearer) 1,250 708,107
Sulzer AG (Reg.) 2,000 1,377,205
Surveillance, Societe Generale (Bearer) 400 827,680
26,122,150
UNITED KINGDOM - 28.3%
Aegis Group PLC 750,000 748,839
BAT Industries PLC Ord. 800,000 6,740,772
Bank of Scotland 480,000 2,875,543
Barclays PLC Ord. 210,000 3,910,524
Benson's Crisps PLC 500,000 284,113
British Aerospace PLC 180,000 3,831,135
British Petroleum PLC Ord. 35,000 402,303
British Land Co. PLC, (The) Ord. 209,800 1,965,321
British Steel PLC Ord. 600,000 1,353,999
Caradon PLC 910,000 3,649,141
Commercial Union PLC 144,000 1,589,731
Cookson Group PLC 410,000 1,444,428
Cordiant PLC (a) 2,300,000 4,816,925
Dixons Group PLC 187,500 1,538,774
Glaxo PLC sponsored ADR 54,000 2,126,250
Granada Group PLC 160,000 2,314,462
HSBC Holdings PLC Ord. 230,000 6,045,427
Inchcape PLC Ord. 580,000 2,580,066
KBC Advanced Technologies PLC 200,000 808,503
Kingfisher PLC 150,000 1,626,747
Ladbroke Group PLC Ord. 439,800 1,642,235
Lloyds TSB Group PLC 340,000 3,107,704
LucasVarity PLC 1,000 3,036
Medeva PLC 360,000 1,759,225
Mercury Asset Management Group PLC 135,000 2,929,240
Misys PLC Ord. 40,000 798,762
National Grid Co. PLC 1,770,000 6,379,381
Next PLC 75,000 793,283
Persimmon PLC Ord. 400,000 1,584,536
Regent Inns PLC 160,000 836,427
Rentokil Group PLC 472,500 3,099,099
Reuters Holdings PLC Ord. 350,000 3,602,547
Rolls Royce PLC Ord. 705,000 2,781,299
Scholl PLC 200,000 974,100
Shell Transport & Trading Co. PLC (Reg.) 60,000 1,062,743
SmithKline Beecham PLC Ord. 281,346 4,512,840
Somerfield PLC 350,000 1,022,805
Thames Water PLC Ord. 475,000 5,205,347
Unilever PLC Ord. 265,000 6,973,988
Vodafone Group PLC 302,813 1,356,863
Yorkshire Water PLC 780,000 4,558,788
105,637,251
UNITED STATES OF AMERICA - 2.2%
MCI Communications Corp. 177,000 6,748,126
Manpower, Inc. 35,000 1,404,375
8,152,501
TOTAL COMMON STOCKS
(Cost $304,209,376) 330,641,841
NONCONVERTIBLE PREFERRED STOCKS - 1.3%
SHARES VALUE (NOTE 1)
GERMANY - 0.5%
Friedrich Grohe AG 1,600 $ 479,247
Volkswagen AG 3,000 1,476,560
1,955,807
ITALY - 0.8%
Telecom Italia Mobile Spa de Risp 1,500,000 2,771,980
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $3,769,620) 4,727,787
CASH EQUIVALENTS - 10.1%
SHARES
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.37%, dated
4/30/97 due 5/1/97
(Cost $37,802,000) $ 37,807,639 37,802,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $345,780,996) $ 373,171,628
LEGEND
(a) Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $338,750,463 and $189,220,522, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $87,539 for the period.
The fund participated in the bank borrowing program. The maximum loan and
the average daily balances during the period for which loans were
outstanding amounted to $3,058,000 and $2,289,643, respectively. The
weighted average interest rate was 5.7% (see Note 5 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $345,822,864. Net unrealized appreciation aggregated
$27,348,764, of which $33,269,631 related to appreciated investment
securities and $5,920,867 related to depreciated investment securities.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 2.4%
Basic Industries 6.5
Cash Equivalents 10.1
Construction & Real Estate 3.2
Durables 7.3
Energy 4.1
Finance 18.5
Health 10.2
Holding Companies 0.5
Industrial Machinery & Equipment 2.1
Media & Leisure 4.4
Nondurables 6.4
Retail & Wholesale 3.5
Services 4.2
Technology 6.3
Transportation 0.3
Utilities 10.0
100.0%
EUROPE CAPITAL APPRECIATION
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at $ 373,171,628
value (including repurchase agreements of $37,802,000)
(cost $345,780,996) - See accompanying schedule
Cash 146
Receivable for investments sold 3,189,300
Receivable for fund shares sold 2,181,883
Dividends receivable 1,338,963
Redemption fees receivable 855
TOTAL ASSETS 379,882,775
LIABILITIES
Payable for investments purchased $ 30,911,381
Payable for fund shares redeemed 436,414
Accrued management fee 167,281
Other payables and 123,653
accrued expenses
TOTAL LIABILITIES 31,638,729
NET ASSETS $ 348,244,046
Net Assets consist of:
Paid in capital $ 304,613,746
Undistributed net investment income 764,906
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 15,503,013
Net unrealized appreciation (depreciation) on investments 27,362,381
and assets and liabilities in
foreign currencies
NET ASSETS, for 24,171,019 shares outstanding $ 348,244,046
NET ASSET VALUE and redemption price per share ($348,244,046 (divided by) 24,171,019 shares) $14.41
Maximum offering price per share (100/97.00 of $14.41) $14.86
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 2,534,666
Dividends
Interest 567,720
3,102,386
Less foreign taxes withheld (326,076
)
TOTAL INCOME 2,776,310
EXPENSES
Management fee $ 968,545
Basic fee
Performance adjustment (98,698
)
Transfer agent fees 365,817
Accounting fees and expenses 97,110
Non-interested trustees' compensation 868
Custodian fees and expenses 80,606
Registration fees 37,453
Audit 21,659
Legal 554
Interest 5,037
Miscellaneous 1,418
Total expenses before reductions 1,480,369
Expense reductions (40,993 1,439,376
)
NET INVESTMENT INCOME 1,336,934
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 15,680,310
Foreign currency transactions (14,728 15,665,582
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 12,986,863
Assets and liabilities in (39,427 12,947,436
foreign currencies )
NET GAIN (LOSS) 28,613,018
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 29,949,952
OTHER INFORMATION $ 397,324
Sales charges paid to FDC
Expense reductions $ 40,993
Directed brokerage arrangements
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED OCTOBER 31,
APRIL 30, 1997 1996
(UNAUDITED)
Operations $ 1,336,934 $ 2,784,527
Net investment income
Net realized gain (loss) 15,665,582 20,477,130
Change in net unrealized appreciation (depreciation) 12,947,436 5,045,707
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 29,949,952 28,307,364
Distributions to shareholders (2,855,514) (3,490,608)
From net investment income
From net realized gain (16,015,689) -
TOTAL DISTRIBUTIONS (18,871,203) (3,490,608)
Share transactions 178,472,706 31,758,801
Net proceeds from sales of shares
Reinvestment of distributions 18,146,164 3,381,925
Cost of shares redeemed (29,708,984) (84,225,438)
Redemption fees 63,656 26,923
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 166,973,542 (49,057,789)
TOTAL INCREASE (DECREASE) IN NET ASSETS 178,052,291 (24,241,033)
NET ASSETS
Beginning of period 170,191,755 194,432,788
End of period (including undistributed net investment income of $764,906 and $2,652,862,
respectively) $ 348,244,046 $ 170,191,755
OTHER INFORMATION
Shares
Sold 12,792,929 2,457,375
Issued in reinvestment of distributions 1,399,088 286,361
Redeemed (2,112,962) (6,752,442)
Net increase (decrease) 12,079,055 (4,008,706)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31, DECEMBER 21,
ENDED 1993
APRIL 30, 1997 (COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA (UNAUDITED) 1996 1995 1994
Net asset value, beginning of period $ 14.07 $ 12.08 $ 11.35 $ 10.00
Income from Investment Operations
Net investment income .07 D .22 G .23 .08 D
Net realized and unrealized gain (loss) 1.79 2.00 .50 1.27
Total from investment operations 1.86 2.22 .73 1.35
Less Distributions
From net investment income (.23) (.23) - -
From net realized gain (1.29) - - -
Total distributions (1.52) (.23) - -
Net asset value, end of period $ 14.41 $ 14.07 $ 12.08 $ 11.35
TOTAL RETURN B, C 14.42% 18.74% 6.43% 13.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 348,244 $ 170,192 $ 194,433 $ 352,855
Ratio of expenses to average net assets 1.17% A 1.33% 1.36% 1.54% A
Ratio of expenses to average net assets after expense reductions 1.14% A, 1.30% E 1.36% 1.54% A
E
Ratio of net investment income to average net assets 1.06% A 1.66% 1.45% .79% A
Portfolio turnover rate 159% A 155% 176% 317% A
Average commission rate F $ .0223 $ .0245
</TABLE>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT
INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES (SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS). F FOR FISCAL YEARS
BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS
AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. G INVESTMENT INCOME
PER SHARE REFLECTS A SPECIAL DIVIDEND FROM VOLVO AB WHICH AMOUNTED TO $.04
PER SHARE
FRANCE
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). The fund has a 3% sales
charge. If Fidelity had not reimbursed certain fund expenses, the total
returns would have been lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 LIFE OF
APRIL 30, 1997 MONTHS YEAR FUND
FRANCE 9.70% 14.67% 34.81%
FRANCE (INCL. 3% SALES CHARGE) 6.41% 11.23% 30.77%
Societe des Bourses Francaises 7.81% 11.78% 27.60%
250 Index
European Region Funds Average 9.62% 17.13% n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year or since the fund
started on November 1, 1995. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Societe des Bourses Francaises 250 Index (SBF 250 Index) - a market
capitalization weighted index of the stocks of the 250 largest companies in
the French market. To measure how the fund's performance stacked up against
its peers, you can compare the fund's performance to the European region
funds average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past six months
average represents a peer group of 67 mutual funds. These benchmarks
include reinvested dividends and capital gains, if any, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
APRIL 30, 1997 YEAR FUND
FRANCE 14.67% 22.05%
FRANCE (INCL. 3% SALES CHARGE) 11.23% 19.60%
Societe des Bourses Francaises 11.78% 17.66%
250 Index
European Region Funds Average 17.13% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER LIFE OF FUND
France EX SBF 250
00345 EX001
1995/11/01 9700.00 10000.00
1995/11/30 9515.70 9952.81
1995/12/31 9952.70 10286.04
1996/01/31 10381.19 10571.27
1996/02/29 10799.95 10979.69
1996/03/31 11150.53 11209.26
1996/04/30 11403.73 11416.12
1996/05/31 11647.19 11466.83
1996/06/30 11803.01 11725.21
1996/07/31 11559.54 11471.58
1996/08/31 11393.99 11240.25
1996/09/30 11617.98 11636.67
1996/10/31 11919.87 11835.93
1996/11/30 12299.67 12466.59
1996/12/31 12484.65 12636.29
1997/01/31 13045.52 12890.20
1997/02/28 13180.55 12989.39
1997/03/31 13585.62 13333.47
1997/04/30 13055.91 12760.36
Let's say hypothetically that $10,000 was invested in Fidelity France Fund
on November 1, 1995, when the fund started and the current maximum 3% sales
charge was paid. As the chart shows, by April 30, 1997, the value of the
investment would have grown to $13,077 - a 30.77% increase on the initial
investment. For comparison, look at how the Societe des Bourses Francaises
250 Index did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 investment would have grown to $12,760 -
a 27.60% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
FRANCE
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Renaud Saleur, Portfolio Manager of Fidelity France Fund
Q. RENAUD, HOW DID THE FUND PERFORM?
A. For the six months that ended on April 30, 1997, the fund returned
9.70%, compared to the 7.81% return of the Societe des Bourses Francaises
(SBF) 250 Index and the European region funds average return of 9.62%, as
monitored by Lipper Analytical Services. For the one-year period, the fund
returned 14.67%, compared to the SBF 250's return of 11.78% and the Lipper
European region funds average return of 17.13%.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. After a very slow economic period, there have been some signs of
recovery in France. In general, companies' financial conditions are
improving, consumer demand is increasing and interest rates continue to
remain low. While consumer confidence is still low, the French economy
appears to show signs of recovery.
Q. GIVEN THIS ENVIRONMENT, WHAT WAS YOUR INVESTMENT STRATEGY?
A. As I saw signs of economic improvement, I shifted the fund's focus from
defensive stocks, such as retailers and cosmetics companies, to cyclical
stocks, such as construction, industrial machinery and equipment companies.
These stocks have reacted positively to the slight pick-up in the economy
and generally have done well since the beginning of the year.
Q. CAN YOU TELL US WHAT'S GOING ON IN CONSTRUCTION AND REAL ESTATE?
A. Interest rates have been very low, real estate values have been
depressed and I believe this is clearly a sector that will benefit from a
turnaround if the economy improves. Companies that have benefited from the
beginnings of a recovery include Lafarge Coppee, a building materials
company. Lafarge is one of the world's leading cement makers, with 40% of
its sales in emerging markets. In addition to its business in Canada and
the U.S., France is now a small, though important, part of Lafarge's
business. Many construction projects in France have been road construction
and improvements undertaken by companies such as Colas, a roadworks
company, and GTM-Entrepose, a construction company with three-quarters of
its business in services and collections for parking garages and highways.
In France, travelers pay to use the highways, which are privately owned.
There is some cyclicality to these companies' business because of the
construction portion, but the recurring part of their business keeps them
relatively insulated from economic cycles.
Q. FINANCE REMAINS THE FUND'S LARGEST SECTOR . . .
A. Yes it does. The finance industry is relatively healthy, but has been
stalled by the lack of a real economic recovery. The lending side has been
very slow, but the deposit side is getting better and the risk side is
improving. Although I have reduced the number of banks I hold in the fund,
I still maintained the fund's weighting relative to the index by buying
fewer, but stronger banks. For example, a top holding in the fund, Societe
Generale, is one of France's best-run and largest commercial banks. I
believe that this sector could be the first and biggest beneficiary of an
economic recovery. So far, the recovery has not been very strong and
lending activity is still very slow. This sector needs a significant
improvement in the economy to shake it up a bit and get it going.
Q. WHAT ABOUT YOUR ENERGY HOLDINGS?
A. The fund's two largest holdings at the end of the period were Elf
Aquitaine and Total. These two large oil companies have been undergoing
cost-cutting and restructuring measures, activities that are sending
signals that business should improve. They have also announced that they
are planning to buy back shares of their stock to boost their return on
equity. With the supply/demand scenario for oil still looking favorable, I
was very optimistic about the prospects for these two companies as of the
end of the period.
Q. WHAT ABOUT SOME OF THE FUND'S OTHER TOP HOLDINGS?
A. Carrefour Supermarche, the world's largest retailer after Wal-Mart, was
in the top 10; it's a defensive stock and has been out of favor for most of
1997. It is now showing signs of improving. Lagardere is an electronics and
defense company that has experienced some volatility in its stock price
resulting from a great deal of speculation regarding a stake it has in the
privatization of Thomson CSF. However, its core business, after years of a
very poor economic environment for the defense business, has been
improving. Alcatel Alsthom Compagnie Generale d'Electricite, a similar
company to Lagardere, has improved based on a recovery in the
telecommunications industry.
Q. WHICH STOCKS PERFORMED WELL DURING THE SIX-MONTH PERIOD?
A. Accor is one of the largest hotel companies in the world and owns, among
others, Motel 6 in the U.S. Its stock performed well during the six-month
period due to several factors. Revenues per room have been increasing,
financial charges have been decreasing and a new chairman was brought in
two months ago. Investors have started to recognize that the company has
become more efficient, interest in the company has increased and the stock
has performed well. Schneider, an electrical equipment company, has
benefited from the slight pick-up in the economy, which had a big effect on
the company's orders. At the end of the period, I felt that Schneider was
one of the best-positioned companies in the fund, and is geared toward an
economic recovery in France. Compagnie des Machines Bull, a data processing
company, has just been privatized and, at the end of the period, its price
appeared very cheap, with its prospects in "smart cards" and in software.
Its stock has performed very well and, as of the end of the period, I
believe it continued to have the opportunity to do so.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Credit Commercial de France's performance was disappointing. The stock
price stayed flat, performing pretty much in line with the rest of the
banking industry. L'Air Liquide was also a disappointment. The company was
established by French investors for operation in the U.S. as a "dollar
play," where the company would do well if the dollar strengthened. So far,
it hasn't delivered, and its stock stayed pretty flat during the period.
Clarins was a disappointing stock during the period, although I believe its
performance can improve over time.
Q. WHAT IS YOUR OUTLOOK FOR THE NEXT SEVERAL MONTHS?
A. To some extent it depends on the French election results this year.
Overall, I am confident that with some good liquidity flows in the market,
very low inflation and low interest rates, the outlook could be a positive
one. One important change that signals improvement to me is that French
companies are getting more shareholder-friendly. French companies appear to
be listening more to shareholders than they used to, and the investment
environment is changing noticeably and for the better.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of French issuers
FUND NUMBER: 345
TRADING SYMBOL: FFRAF
START DATE: November 1, 1995
SIZE: as of April 30, 1997, more than
$7 million
MANAGER: Renaud Saleur, since inception;
portfolio manager and senior equity analyst,
Fidelity International, Limited, since 1986; joined
Fidelity in 1986
(checkmark)
RENAUD SALEUR ON RECENT DEVELOPMENTS
IN FRANCE:
"The elections in France are coming at a moment
when French companies are undergoing a major
revolution in their attitude toward shareholders. This
movement is beginning to create a different investing
environment and, although it may be slowed
somewhat by the election results, its trend should be
preserved by the new government.
"Companies are now starting to buy back their
shares or are at least paying dividends with new
shares, recognizing for the first time that their cost of
equity is greater than French money market rates.
They are also appointing independent directors and
are beginning to compensate their managers based
on performance.
"The French Market is clearly behind most of its peers
in terms of performance. The recognition by
international investors of the "new deal" proposed by
French companies should help the French Market.
"On the political side, the new government will have
very limited ability to make major mistakes if it wants
to preserve the European cohesion."
FRANCE
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997
United States 3.4%
Row: 1, Col: 1, Value: 96.59999999999999
Row: 1, Col: 2, Value: 3.4
France 96.6%
AS OF OCTOBER 31, 1996
United States 5.9%
Row: 1, Col: 1, Value: 94.09999999999999
Row: 1, Col: 2, Value: 5.9
France 94.1%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 89.1 87.8
Bonds 7.5 6.3
Short-term investments 3.4 5.9
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Nationale Elf Aquitaine 4.9 3.5
(Oil & Gas)
Total SA Class B 4.3 4.0
(Oil & Gas)
Lafarge Coppee SA 3.8 1.9
(Building Materials)
Clarins SA 3.6 1.9
(Household Products)
Societe Generale Class A 3.2 2.9
(Banks)
Lagardere S.C.A. (Reg.) 3.0 1.4
(Holding Companies)
Alcatel Alsthom Compagnie 2.9 2.0
Generale d'Electricite SA
(Electrical Equipment)
Carrefour Supermarche SA 2.7 3.5
(General Merchandise Stores)
L'Air Liquide 2.6 1.2
(Chemicals & Plastics)
Groupe Danone 2.5 3.3
(Foods)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
Finance 14.3 20.2
Construction & Real Estate 11.0 4.6
Energy 9.2 8.7
Nondurables 8.8 5.4
Durables 8.6 9.2
Media & Leisure 7.4 7.1
Retail & Wholesale 7.2 7.1
Health 6.6 7.9
Technology 6.5 7.6
Industrial Machinery & Equipment 5.6 5.2
FRANCE
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.1%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 2.6%
AEROSPACE & DEFENSE - 1.3%
Industrielle d'Aviation Latecoere SA 600 $ 91,321
DEFENSE ELECTRONICS - 1.3%
Intertechnique SA 360 85,152
TOTAL AEROSPACE & DEFENSE 176,473
BASIC INDUSTRIES - 2.6%
CHEMICALS & PLASTICS - 2.6%
L'Air Liquide 1,200 180,794
CONSTRUCTION & REAL ESTATE - 11.0%
BUILDING MATERIALS - 4.7%
Lafarge Coppee SA 4,000 262,450
Lapeyre SA 1,000 60,333
322,783
CONSTRUCTION - 3.6%
Bouygues Offshore SA 2,400 61,293
Compagnie de Saint Gobain 905 121,303
GTM-Entrepose 600 36,149
Technip SA 300 31,726
250,471
ENGINEERING - 0.8%
Colas SA 400 55,123
REAL ESTATE - 1.9%
Klepierre SA 500 69,503
SILIC SA 400 61,979
131,482
TOTAL CONSTRUCTION & REAL ESTATE 759,859
DURABLES - 8.6%
AUTOS, TIRES, & ACCESSORIES - 2.5%
Sylea SA 1,200 102,635
Valeo SA 1,200 74,046
176,681
CONSUMER DURABLES - 1.4%
l'Europeenne d'Extincteurs 900 59,391
l'Europeenne d'Extincteur (rights) 900 11,138
Securidev SA 1,200 24,168
94,697
CONSUMER ELECTRONICS - 0.7%
BIC 300 47,564
HOME FURNISHINGS - 0.9%
Strafor Facom SA 800 60,470
TEXTILES & APPAREL - 3.1%
Alain Manoukian SA 3,200 82,272
Christian Dior (warrants) (a) 4,000 134,722
216,994
TOTAL DURABLES 596,406
ENERGY - 9.2%
OIL & GAS - 9.2%
Nationale Elf Aquitaine 3,500 339,547
Total SA Class B 3,600 298,650
638,197
SHARES VALUE (NOTE 1)
FINANCE - 10.5%
BANKS - 8.3%
Credit Commercial de France Ord. 3,800 $ 168,693
Credit Lyonnais (a) 1,140 38,200
Credit Local de France SA 400 37,023
Paribas SA (Cie Financiere) Class A 1,730 109,151
Societe Generale Class A 2,000 224,193
577,260
CREDIT & OTHER FINANCE - 2.2%
Compagnie Financiere de Credit Industriel
et Commercial SA 800 46,621
Group Axime (a) 855 102,877
149,498
TOTAL FINANCE 726,758
HEALTH - 4.6%
DRUGS & PHARMACEUTICALS - 4.6%
Genset SA (a) 1,000 49,364
Rhone Poulenc SA Class A 4,560 153,426
Synthelabo 950 113,168
315,958
HOLDING COMPANIES - 3.0%
Lagardere S.C.A. (Reg.) 6,600 204,304
INDUSTRIAL MACHINERY & EQUIPMENT - 3.9%
ELECTRICAL EQUIPMENT - 2.9%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 1,810 201,344
INDUSTRIAL MACHINERY & EQUIPMENT - 1.0%
Sidel SA 1,000 71,852
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 273,196
MEDIA & LEISURE - 7.4%
BROADCASTING - 2.7%
Canal Plus SA 300 54,198
NRJ SA 600 93,894
Television Francaise 1 SA 400 38,600
186,692
ENTERTAINMENT - 1.3%
Pathe SA (a) 380 88,776
LODGING & GAMING - 2.3%
Accor SA 1,100 157,809
PUBLISHING - 1.1%
Filipacchi Medias 350 79,488
TOTAL MEDIA & LEISURE 512,765
NONDURABLES - 8.8%
AGRICULTURE - 0.6%
GUYOMARC'H Nutrition Animale SA (a) 600 37,948
BEVERAGES - 2.1%
LVMH (Moet-Hennessy Louis Vuitton)
sponsored ADR 600 146,548
FOODS - 2.5%
Groupe Danone 1,200 174,830
HOUSEHOLD PRODUCTS - 3.6%
Clarins SA 2,007 250,090
TOTAL NONDURABLES 609,416
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - 7.2%
GENERAL MERCHANDISE STORES - 5.0%
Carrefour Supermarche SA 300 $ 187,376
Galeries Lafayette SA (a) 400 160,432
347,808
GROCERY STORES - 0.9%
Guyenne et Gascogne SA 200 62,493
RETAIL & WHOLESALE, MISCELLANEOUS - 1.3%
Castorama Dubois Investissements SA 600 88,752
TOTAL RETAIL & WHOLESALE 499,053
SERVICES - 1.5%
ADVERTISING - 0.8%
Expand 600 56,563
SERVICES - 0.7%
Compagnie Europenne de
Telesecurite (C.E.T.) 520 44,564
TOTAL SERVICES 101,127
TECHNOLOGY - 6.5%
COMMUNICATIONS EQUIPMENT - 0.5%
Com 1 SA 600 36,149
COMPUTER SERVICES & SOFTWARE - 3.1%
Cegid SA 600 72,092
Cap Gemini Sogeti SA 1,000 60,590
Ingenico 1,800 39,152
Jet Multimedia SA 300 38,565
210,399
COMPUTERS & OFFICE EQUIPMENT - 1.8%
Compagnie des Machines Bull SA 14,610 125,084
ELECTRONICS - 1.1%
Cofidur SA (a) 1,000 36,852
Schneider SA (warrants) (a) 2,000 40,794
77,646
TOTAL TECHNOLOGY 449,278
UTILITIES - 1.7%
WATER - 1.7%
Generale des Eaux, Cie 860 119,841
TOTAL COMMON STOCKS
(Cost $5,659,617) 6,163,425
CONVERTIBLE BONDS - 7.5%
MOODY'S PRINCIPAL
RATING AMOUNT (C)
FINANCE - 3.8%
INSURANCE - 3.8%
Axa SA 4 1/2%, 1/1/99 - FRF 594,000 143,292
Scor SA 3%, 1/1/01 - FRF 540,000 120,530
TOTAL FINANCE 263,822
HEALTH - 2.0%
DRUGS & PHARMACEUTICALS - 2.0%
Sanofi SA 4%, 1/1/00 - FRF 421,600 137,999
MOODY'S PRINCIPAL
RATINGS AMOUNT
INDUSTRIAL MACHINERY & EQUIPMENT - 1.7%
Carbone Lorrane, Le
3 1/4%, 1/1/01 - FRF 250,000 $ 116,553
TOTAL CONVERTIBLE BONDS
(Cost $461,352) 518,374
CASH EQUIVALENTS - 3.4%
SHARES
Taxable Central Cash Fund (b)
(Cost $237,518) 237,518 237,518
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $6,358,487) $ 6,919,317
CURRENCY ABBREVIATION
FRF - French franc
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash Fund was
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
(c) Principal amount is stated in United States dollars unless otherwise
noted.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $4,157,530 and $3,738,644, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $167 for the period.
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $6,365,483. Net unrealized appreciation aggregated
$553,834, of which $716,885 related to appreciated investment securities
and $163,051 related to depreciated investment securities.
FRANCE
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at $ 6,919,317
value (cost $6,358,487) -
See accompanying schedule
Receivable for investments sold 187,411
Receivable for fund shares sold 12,556
Dividends receivable 53,684
Interest receivable 2,938
TOTAL ASSETS 7,175,906
LIABILITIES
Payable for investments purchased $ 101,187
Payable for fund shares redeemed 626
Accrued management fee 331
Other payables and accrued expenses 25,384
TOTAL LIABILITIES 127,528
NET ASSETS $ 7,048,378
Net Assets consist of:
Paid in capital $ 6,173,547
Distributions in excess of net investment income (46,650
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 370,106
Net unrealized appreciation (depreciation) on investments 551,375
and assets and liabilities in
foreign currencies
NET ASSETS, for 559,793 shares outstanding $ 7,048,378
NET ASSET VALUE and redemption price per share ($7,048,378 (divided by) 559,793 shares) $12.59
Maximum offering price per share (100/97.00 of $12.59) $12.98
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 20,436
Dividends
Interest 20,641
41,077
Less foreign taxes withheld (2,660
)
TOTAL INCOME 38,417
EXPENSES
Management fee $ 23,080
Transfer agent fees 10,467
Accounting fees and expenses 30,004
Non-interested trustees' compensation 21
Custodian fees and expenses 21,531
Registration fees 7,349
Audit 16,044
Legal 21
Miscellaneous 42
Total expenses before reductions 108,559
Expense reductions (48,396 60,163
)
NET INVESTMENT INCOME (LOSS) (21,746
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 383,151
Foreign currency transactions 29 383,180
Change in net unrealized appreciation (depreciation) on:
Investment securities 135,295
Assets and liabilities in (6,686 128,609
foreign currencies )
NET GAIN (LOSS) 511,789
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 490,043
OTHER INFORMATION $ 8,131
Sales charges paid to FDC
Expense reduction $ 22
Custodian interest credits
FMR reimbursement 48,374
$ 48,396
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS NOVEMBER 1, 1995
ENDED (COMMENCEMENT
APRIL 30, 1997 OF OPERATIONS) TO
(UNAUDITED) OCTOBER 31, 1996
Operations $ (21,746) $ 94,919
Net investment income (loss)
Net realized gain (loss) 383,180 418,467
Change in net unrealized appreciation (depreciation) 128,609 422,766
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 490,043 936,152
Distributions to shareholders (44,990) (10,687)
From net investment income
In excess of net investment income (24,904) -
From net realized gain (266,472) -
TOTAL DISTRIBUTIONS (336,366) (10,687)
Share transactions 3,495,023 11,366,476
Net proceeds from sales of shares
Reinvestment of distributions 334,785 10,618
Cost of shares redeemed (2,489,988) (6,790,666)
Redemption fees 13,100 29,888
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 1,352,920 4,616,316
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,506,597 5,541,781
NET ASSETS
Beginning of period 5,541,781 -
End of period (including under (over) distribution of net investment income of $(46,650) and $87,666, $ 7,048,378 $ 5,541,781
respectively)
OTHER INFORMATION
Shares
Sold 279,315 1,041,015
Issued in reinvestment of distributions 28,935 1,052
Redeemed (201,076) (589,448)
Net increase (decrease) 107,174 452,619
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS NOVEMBER 1, 1995
ENDED (COMMENCEMENT
APRIL 30, 1997 OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA (UNAUDITED) 1996
Net asset value, beginning of period $ 12.24 $ 10.00
Income from Investment Operations
Net investment income (loss) (.04) D .23
Net realized and unrealized gain (loss) 1.13 1.98
Total from investment operations 1.09 2.21
Less Distributions (.10) (.04)
From net investment income
In excess of net investment income (.06) -
From net realized gain (.61) -
Total distributions (.77) (.04)
Redemption fees added to paid in capital .03 .07
Net asset value, end of period $ 12.59 $ 12.24
TOTAL RETURN B, C 9.70% 22.89%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 7,048 $ 5,542
Ratio of expenses to average net assets 2.00% A, E 2.00%
E
Ratio of net investment income (loss) to average net assets (.72)% A 1.74%
Portfolio turnover rate 133% A 129%
Average commission rate F $ .1647 $ .1932
</TABLE>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT
INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE
FUND'S EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS). F 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.
GERMANY
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). The fund has a 3% sales
charge. If Fidelity had not reimbursed certain fund expenses, the total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 LIFE OF
APRIL 30, 1997 MONTHS YEAR FUND
GERMANY 12.19% 21.05% 27.23%
GERMANY (INCL. 3% SALES CHARGE) 8.83% 17.42% 23.41%
Deutscher Aktienindex 100 12.01% 22.40% 26.43%
European Region Funds Average 9.62% 17.13% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year or since the fund
started on November 1, 1995. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Deutscher Aktienindex (DAX) 100 - a market capitalization weighted index of
the 100 most heavily traded stocks in the German market. To measure how the
fund's performance stacked up against its peers, you can compare the fund's
performance to the European region funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a peer
group of 67 mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
APRIL 30, 1997 YEAR FUND
GERMANY 21.05% 17.43%
GERMANY (INCL. 3% SALES CHARGE) 17.42% 15.07%
Deutscher Aktienindex 100 22.40% 16.94%
European Region Funds Average 17.13% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER LIFE OF FUND
Germany EX DAX 100
00346 EX002
1995/11/01 9700.00 10000.00
1995/11/30 9622.40 9965.44
1995/12/31 9835.80 10210.69
1996/01/31 10320.80 10660.65
1996/02/29 10369.30 10743.29
1996/03/31 10495.40 10726.01
1996/04/30 10194.70 10329.62
1996/05/31 10573.00 10594.27
1996/06/30 10650.60 10868.98
1996/07/31 10524.50 10834.10
1996/08/31 10660.30 11091.29
1996/09/30 10747.60 11192.08
1996/10/31 10999.80 11287.60
1996/11/30 11523.60 11726.17
1996/12/31 11650.51 11911.25
1997/01/31 11570.43 11822.17
1997/02/28 12000.82 12283.84
1997/03/31 12631.39 13081.25
1997/04/30 12341.13 12643.15
Let's say hypothetically that $10,000 was invested in Fidelity Germany Fund
on November 1, 1995, when the fund started and the current maximum 3% sales
charge was paid. As the chart shows, by April 30, 1997, the value of the
investment would have grown to $12,341 - a 23.41% increase on the initial
investment. For comparison, look at how the Deutscher Aktienindex 100 did
over the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $12,643 - a 26.43%
increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
GERMANY
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Alexandra Edzard, Portfolio Manager of Fidelity Germany
Fund
Q. HOW DID THE FUND PERFORM, ALEXANDRA?
A. For the six- and 12-month periods ended April 30, 1997, the fund
returned 12.19% and 21.05%, respectively. For comparison purposes, the
fund's benchmark - the Deutscher Aktienindex (DAX) 100 - returned 12.01%
for the same six-month period and 22.40% for the same 12-month period. The
total returns for the European region funds average were 9.62% for the
six-month period and 17.13% for the 12-month period that ended April 30,
1997, as tracked by Lipper Analytical Services.
Q. HOW WOULD YOU CHARACTERIZE THE GERMAN STOCK MARKET'S PERFORMANCE DURING
THE PAST SIX MONTHS?
A. Over the past six months, the German market has been strong, fueled
primarily by three factors. First, the period saw a number of German
companies following through on the restructuring and return-on-investment
goals announced over the past several years. In short, many German
companies made significant strides toward improving shareholder value.
Second, the Deutsche mark was weak relative to other European currencies
and the U.S. dollar. That was a positive for German companies with large
export businesses, as well as German companies that sell products and
services domestically in competition with more expensive European and U.S.
producers. Finally, the net supply of stocks available fell somewhat due to
a lack of new issuance during the period while demand for stocks was
strong. Even though foreign demand for German stocks was lackluster, we saw
improvement in domestic demand, particularly from German banks and pension
funds.
Q. AGAINST THIS BACKDROP, WHAT WERE THE KEYS TO THE FUND'S PERFORMANCE?
A. During the period, automakers Daimler-Benz, Germany's largest car
manufacturer by total sales, Volkswagen, and BMW, Europe's number one auto
exporter, were some of the best performers. These three made up about 10%
of the fund's investments at the end of the period. For the most part, they
benefited from rising sales in Europe and abroad, thanks in part to the
weak Deutsche mark and the success of revamped product lines. Another
strong performer was construction company Dyckerhoff. Even though the
German economy remained weak, this company was able to benefit from its
diversification into other areas of Europe where the economy was stronger.
Q. WITH THE ECONOMY WEAK AND CONSUMER SPENDING IN THE DOLDRUMS, HOW DID THE
FUND'S RETAIL HOLDINGS PERFORM?
A. They were mixed. Some specialty retailers, such as sportswear and
equipment manufacturer Adidas and bike maker Eurobike, did well on the
strength of their foreign sales. Others, such as department store Metro,
suffered along with the weak level of consumer spending in Germany.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Yes, as I mentioned, the fund's department store holdings generally
lagged the overall market. Fortunately, I maintained a lighter weighting
than the DAX 100 in department store stocks throughout the period. Some
chemical companies - including BASF - also lagged the market. Increased
global competition caused investors to worry that companies involved in
producing basic chemicals or those involved in cyclical areas of the
chemical business would suffer declining profits.
Q. DID YOU PURSUE ANY BROAD INVESTMENT STRATEGIES?
A. I continued to invest primarily in large, blue chip companies with
proactive management teams, clear strategies and restructuring programs
with realistic and achievable return goals. However, I also found some
smaller companies that offered attractive growth at attractive valuations.
One example was software maker SAP, which has a good growth strategy and a
product that has been well-received among corporate users.
Q. LOOKING AT BROAD SECTOR THEMES, HAVE YOU MADE ANY SUBSTANTIAL CHANGES?
A. There weren't any major changes, but there were some minor adjustments I
would like to discuss. First, I reduced the fund's exposure to chemical
companies. Second, I reduced the fund's weighting in electric utilities. In
my view, upcoming deregulation could put pressure on electricity prices and
hurt electric providers. On the other hand, I increased the fund's stake in
engineering companies, which I believe are poised to benefit from a wave of
consolidation within the industry. For example, my view is that the merger
of Thyssen and Hoesch-Krupp could result in cost savings for the combined
entity.
Q. THE FINANCE SECTOR IS THE LARGEST SECTOR IN THE FUND. WHAT'S BEEN
HAPPENING THERE?
A. While it's true that financial stocks were the largest sector in the
fund at the end of the period, the fund is not overweighted in these stocks
versus its index. In general, the performance of financial stocks was mixed
during the period. However, I bought banks including Deutsche Bank, one of
the fund's largest holdings at the end of the period, because I believed
banks could benefit from consolidation in the banking industry.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS OR SO?
A. I'm optimistic about the future, although the market has had a pretty
decent run over the past year. I wouldn't call the market cheap at the
moment. To stay healthy, I'd say the market needs evidence that the German
economy is on the mend. While some German companies have enjoyed good
profits driven by the strength of their exports, other more domestically
oriented companies have languished. That said, we haven't yet seen many
foreign investors pouring money into this market. If only a moderate amount
of foreign money comes into the German market, it could help boost returns.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of German issuers
FUND NUMBER: 346
TRADING SYMBOL: FGERF
START DATE: November 1, 1995
SIZE: as of April 30, 1997, more than
$13 million
MANAGER: Alexandra Edzard, since 1996;
joined Fidelity in 1994
(checkmark)
ALEXANDRA EDZARD ON SHAREHOLDER VALUE:
"Over the past several years, German companies
have more readily accepted the reality that there is
international competition for capital. They now
understand that they need to deliver adequate
returns to shareholders in order for people to invest
in them. To make themselves more attractive to
investors, many German companies are in the
process of identifying what's wrong with their
businesses and setting out on a path to fix it. Over
the next several years, I think we will see the benefits
of the fixes that are being put into place now.
"When selecting stocks for inclusion in the fund, I
look carefully at a company's management team. I
try to identify companies with proactive teams who
are: focused on generating cash; setting adequate
and realistic return targets; committed to
restructuring; and willing to change in order to create
shareholder value."
GERMANY
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997
Other 14.2%
Row: 1, Col: 1, Value: 85.8
Row: 1, Col: 2, Value: 14.2
Germany 85.8%
AS OF OCTOBER 31, 1996
Other 5.6%
Row: 1, Col: 1, Value: 94.40000000000001
Row: 1, Col: 2, Value: 5.6
Germany 94.4%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Common Stocks 75.6 82.2
Preferred Stocks 15.2 14.2
Short-term investments 9.2 3.6
TOP TEN STOCKS
<TABLE>
<CAPTION>
<S> <C> <C>
% of fund's % OF FUND'S
investments INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Allianz Versich Holdings Ord. (Reg.) (Insurance) 8.5 8.6
Munich Reinsurance AG (Reg.) 6.5 2.3
(Insurance)
Daimler-Benz AG Ord. 4.5 5.2
(Autos, Tires, & Accessories)
Deutsche Bank AG 4.1 3.4
(Banks)
Bayer AG 3.9 5.9
(Chemicals & Plastics)
Siemens AG 3.8 5.4
(Electrical Equipment)
Hoechst AG Ord. 3.8 4.1
(Chemicals & Plastics)
Veba AG Ord. 3.7 7.3
(Electric Utility)
Volkswagen AG 3.4 4.5
(Autos, Tires, & Accessories)
BASF AG 3.3 4.7
(Chemicals & Plastics)
</TABLE>
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
Finance 31.7 27.3
Basic Industries 17.0 19.5
Durables 12.1 19.8
Utilities 10.4 11.8
Industrial Machinery & Equipment 5.8 5.4
Technology 4.6 1.9
Health 4.2 6.2
Retail & Wholesale 1.8 1.0
Nondurables 1.2 0.9
Construction & Real Estate 0.9 0.5
GERMANY
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 75.6%
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 14.1%
CHEMICALS & PLASTICS - 12.0%
BASF AG 11,131 $ 435,968
Bayer AG 13,272 515,531
Degussa AG 2,910 128,433
Hoechst AG Ord. 12,528 492,131
1,572,063
IRON & STEEL - 0.9%
Kloeckner Werke Actiengesellschaft Ord. 200 13,287
Thyssen AG Ord. 470 102,088
115,375
METALS & MINING - 1.2%
Metallgesellschaft AG Ord. (a) 6,380 131,835
Vossloh AG (Reg.) 600 25,125
156,960
TOTAL BASIC INDUSTRIES 1,844,398
CONSTRUCTION & REAL ESTATE - 0.5%
REAL ESTATE - 0.5%
IVG Holding AG 1,875 61,740
DURABLES - 6.3%
AUTOS, TIRES, & ACCESSORIES - 5.0%
Continental Gummi-Werke AG 1,703 37,433
Daimler-Benz AG Ord. 7,914 586,104
Daimler-Benz AG (rights) 7,914 686
Kolbenschmidt AG (a) 1,896 33,844
658,067
TEXTILES & APPAREL - 1.3%
Adidas AG 1,479 152,937
PUMA AG 892 16,627
169,564
TOTAL DURABLES 827,631
FINANCE - 31.7%
BANKS - 14.7%
Bayerische Hypotheken-und
Wechselbank AG 5,221 162,145
Bayerische Vereinsbank AG Ord. 4,988 197,238
Commerzbank AG 6,691 180,316
Credit Suisse Group (Reg.) 1,690 190,326
Deutsche Bank AG (a) 10,230 539,497
Dresdner Bank AG Ord. 10,236 326,112
Julius Baer Holding AG 263 329,196
1,924,830
CREDIT & OTHER FINANCE - 0.5%
ING Groep NV 1,700 66,780
INSURANCE - 16.5%
Allianz Versich Holdings Ord. (Reg.) (a) 5,700 1,106,381
Hannover Rueckversicherungs-AG 320 15,750
Koelnische Ruckesich (Reg.) 145 106,381
Marschollek Lautenschlaeger und
Partner AG 370 74,810
Munich Reinsurance AG (Reg.) 352 848,965
2,152,287
TOTAL FINANCE 4,143,897
SHARES VALUE (NOTE 1)
HEALTH - 3.2%
DRUGS & PHARMACEUTICALS - 1.4%
Altana AG 66 $ 51,090
Fresenius AG (rights) 500 1,935
Schering AG 1,350 129,069
182,094
MEDICAL EQUIPMENT & SUPPLIES - 1.8%
Gehe AG 3,483 231,388
TOTAL HEALTH 413,482
HOLDING COMPANIES - 0.6%
Man AG Ord. 282 81,291
INDUSTRIAL MACHINERY & EQUIPMENT - 5.8%
ELECTRICAL EQUIPMENT - 4.3%
Rofin Sinar Technologies, Inc. 1,600 23,800
Rofin Sinar Technologies, Inc. (Ger.) 2,500 38,994
Siemens AG 9,155 496,133
558,927
INDUSTRIAL MACHINERY & EQUIPMENT - 1.5%
Fried. Krupp AG, Hoesch-Krupp (a) 550 101,037
Mannesmann AG Ord. 244 95,934
196,971
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 755,898
RETAIL & WHOLESALE - 1.8%
GENERAL MERCHANDISE STORES - 1.7%
Metro AG 2,322 225,218
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
Eurobike AG 624 16,582
TOTAL RETAIL & WHOLESALE 241,800
TECHNOLOGY - 2.8%
COMPUTER SERVICES & SOFTWARE - 2.8%
SAP (Systeme Anwendungen Produkte) AG 1,981 361,628
TRANSPORTATION - 0.5%
AIR TRANSPORTATION - 0.5%
Lufthansa 4,950 68,915
UTILITIES - 8.3%
ELECTRIC UTILITY - 5.6%
Veba AG Ord. 9,411 486,466
Viag AG 544 241,980
728,446
TELEPHONE SERVICES - 2.7%
Deutsche Telekom AG 16,723 361,693
TOTAL UTILITIES 1,090,139
TOTAL COMMON STOCKS
(Cost $9,399,010) 9,890,819
NONCONVERTIBLE PREFERRED STOCKS - 15.2%
BASIC INDUSTRIES - 2.9%
CHEMICALS & PLASTICS - 2.9%
Henkel KGAA Pfd. 4,240 232,691
Wella AG 250 151,642
384,333
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONSTRUCTION & REAL ESTATE - 0.4%
BUILDING MATERIALS - 0.4%
Dyckerhoff AG (non-vtg.) 138 $ 49,427
DURABLES - 5.8%
AUTOS, TIRES, & ACCESSORIES - 5.8%
(BMW) Muenchen Beyerische
Motorenwerke AG 570 315,450
Volkswagen AG 913 449,367
764,817
HEALTH - 1.0%
DRUGS & PHARMACEUTICALS - 1.0%
Biotest AG 600 23,206
Fresenius AG 500 112,504
135,710
NONDURABLES - 1.2%
BEVERAGES - 0.5%
Berentzen-Gruppe AG 1,980 56,047
FOODS - 0.7%
Suedzucker AG 195 94,399
TOTAL NONDURABLES 150,446
TECHNOLOGY - 1.8%
COMPUTER SERVICES & SOFTWARE - 1.8%
SAP AG 1,297 237,964
UTILITIES - 2.1%
ELECTRIC UTILITY - 2.1%
RWE AG 8,020 269,179
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $1,717,838) 1,991,876
CASH EQUIVALENTS - 9.2%
SHARES
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.37%, dated
4/30/97 due 5/1/97 $ 31,005 31,000
SHARES
Taxable Central Cash Fund (b) 1,172,772 1,172,772
TOTAL CASH EQUIVALENTS
(Cost $1,203,772) 1,203,772
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $12,320,620) $ 13,086,467
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash Fund was
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $8,361,632 and $4,419,247, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $2,737 for the period.
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $12,320,700. Net unrealized appreciation aggregated
$765,767, of which $893,464 related to appreciated investment securities
and $127,697 related to depreciated investment securities.
GERMANY
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements $ 13,086,467
of $31,000) (cost $12,320,620) - See accompanying schedule
Cash 812
Receivable for investments sold 13,573
Receivable for fund shares sold 65,078
Dividends receivable 3,008
Interest receivable 5,772
TOTAL ASSETS 13,174,710
LIABILITIES
Payable for investments purchased $ 39,090
Payable for fund shares redeemed 5,137
Accrued management fee 5,468
Other payables and accrued expenses 25,610
TOTAL LIABILITIES 75,305
NET ASSETS $ 13,099,405
Net Assets consist of:
Paid in capital $ 11,789,673
Distributions in excess of net investment income (52,723
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 596,617
Net unrealized appreciation (depreciation) on investments 765,838
and assets and liabilities in
foreign currencies
NET ASSETS, for 1,062,143 shares outstanding $ 13,099,405
NET ASSET VALUE and redemption price per share ($13,099,405 (divided by) 1,062,143 shares) $12.33
Maximum offering price per share (100/97.00 of $12.33) $12.71
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 21,025
Dividends
Interest 22,853
43,878
Less foreign taxes withheld (2,092
)
TOTAL INCOME 41,786
EXPENSES
Management fee $ 35,598
Transfer agent fees 16,008
Accounting fees and expenses 30,006
Non-interested trustees' compensation 26
Custodian fees and expenses 10,894
Registration fees 9,366
Audit 16,368
Legal 25
Miscellaneous 48
Total expenses before reductions 118,339
Expense reductions (25,579 92,760
)
NET INVESTMENT INCOME (LOSS) (50,974
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 600,329
Foreign currency transactions (335 599,994
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 436,354
Assets and liabilities in 40 436,394
foreign currencies
NET GAIN (LOSS) 1,036,388
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 985,414
OTHER INFORMATION $ 18,540
Sales charges paid to FDC
Expense reductions 375
Custodian interest credits
FMR reimbursement 25,204
$ 25,579
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS NOVEMBER 1, 1995
ENDED (COMMENCEMENT
APRIL 30, 1997 OF OPERATIONS) TO
(UNAUDITED) OCTOBER 31,
1996
Operations $ (50,974) $ 6,560
Net investment income (loss)
Net realized gain (loss) 599,994 284,909
Change in net unrealized appreciation (depreciation) 436,394 329,444
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 985,414 620,913
Distributions to shareholders (7,044) -
From net investment income
From net realized gain (246,538) -
TOTAL DISTRIBUTIONS (253,582) -
Share transactions 7,800,876 9,994,580
Net proceeds from sales of shares
Reinvestment of distributions 252,687 -
Cost of shares redeemed (2,879,486) (3,453,139)
Redemption fees 15,226 15,916
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 5,189,303 6,557,357
TOTAL INCREASE (DECREASE) IN NET ASSETS 5,921,135 7,178,270
NET ASSETS
Beginning of period 7,178,270 -
End of period (including under (over) distribution of net investment income of $(52,723) and
$6,207, $ 13,099,405 $ 7,178,270
respectively)
OTHER INFORMATION 648,841 951,953
Shares
Sold
Issued in reinvestment of distributions 22,362 -
Redeemed (241,881) (319,132)
Net increase (decrease) 429,322 632,821
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS NOVEMBER 1, 1995
ENDED (COMMENCEMENT
APRIL 30, 1997 OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA (UNAUDITED) 1996
Net asset value, beginning of period $ 11.34 $ 10.00
Income from Investment Operations (.06) D .01
Net investment income (loss)
Net realized and unrealized gain (loss) 1.39 1.31
Total from investment operations 1.33 1.32
Less Distributions
From net investment income (.01) -
From net realized gain (.35) -
Total distributions (.36) -
Redemption fees added to paid in capital .02 .02
Net asset value, end of period $ 12.33 $ 11.34
TOTAL RETURN B, C 12.19% 13.40%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 13,099 $ 7,178
Ratio of expenses to average net assets 2.00% A, E 2.00% E
Ratio of expenses to average net assets after expense reductions 1.99% A, F 2.00%
Ratio of net investment income (loss) to average net assets (1.09)% A .12%
Portfolio turnover rate 102% A 133%
Average commission rate G $ .1681 $ .1714
</TABLE>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT
INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE
FUND'S EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS). F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS). G 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.
HONG KONG AND CHINA
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). The fund has a 3% sales
charge.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 LIFE OF
APRIL 30, 1997 MONTHS YEAR FUND
HONG KONG AND CHINA 5.59% 22.94% 37.09%
HONG KONG AND CHINA 2.43% 19.25% 32.98%
(INCL. 3% SALES CHARGE)
Hang Seng Index 4.62% 20.95% 37.63%
Pacific ex-Japan Funds Average 2.35% -3.38% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year or since the fund
started on November 1, 1995. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Hang Seng Index - a market capitalization weighted index of the stocks of
the 33 largest companies in the Hong Kong market. You can also compare the
fund's performance to the Pacific ex-Japan funds average, which reflects
the performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a peer
group of 86 mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
APRIL 30, 1997 YEAR FUND
HONG KONG AND CHINA 22.94% 23.42%
HONG KONG AND CHINA 19.25% 20.94%
(INCL. 3% SALES CHARGE)
Hang Seng Index 20.95% 23.75%
Pacific ex-Japan Funds Average -3.38% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER LIFE OF FUND
Hong Kong and China EX Hang Seng
00352 EX004
1995/11/01 9700.00 10000.00
1995/11/30 9729.10 10056.30
1995/12/31 9942.65 10356.20
1996/01/31 11136.94 11708.58
1996/02/29 11001.00 11494.93
1996/03/31 10787.39 11345.73
1996/04/30 10816.52 11378.92
1996/05/31 11156.36 11718.38
1996/06/30 11010.71 11486.92
1996/07/31 10738.84 11173.46
1996/08/31 11272.87 11704.20
1996/09/30 12010.80 12514.94
1996/10/31 12593.38 13154.67
1996/11/30 13962.44 14152.56
1996/12/31 14017.97 14239.94
1997/01/31 13741.76 14109.20
1997/02/28 13899.59 14227.69
1997/03/31 13021.62 13331.10
1997/04/30 13297.84 13762.69
Let's say hypothetically that $10,000 was invested in Fidelity Hong Kong
and China Fund on November 1, 1995, when the fund started and the current
maximum 3% sales charge was paid. As the charts shows, by April 30, 1997,
the value of the investment would have grown to $13,298 - a 32.98% increase
on the initial investment. For comparison, look at how the Hang Seng Index
did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $13,763 - a
37.63% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
HONG KONG AND CHINA
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Joseph Tse, Portfolio Manager of Fidelity Hong Kong and
China Fund
Q. HOW DID THE FUND PERFORM, JOSEPH?
A. The fund outperformed both its peer group and index over the six-month
period that ended April 30, 1997. During this period, the fund had a return
of 5.59%, compared to 2.35% for the Pacific ex-Japan funds average,
according to Lipper Analytical Services, and 4.62% for the Hang Seng Index.
For the 12-month period that ended April 30, 1997, the fund had a return of
22.94%, the Lipper peer group was -3.38% and the Hang Seng Index was up
20.95%.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE OVER THE PAST SIX MONTHS?
A. The market basically moved sideways during the period. The property
sector - by far the most important part of the Hong Kong stock market - did
very well through December of last year, and then started to retreat quite
significantly due to excessive speculation in the residential property
market. In January and February, in fact, while apartment prices were up
10%-15%, the stock market began discounting these prices and selling the
stocks of many property companies. This correction continued through the
end of the period.
Q. THE SO-CALLED "RED CHIP" STOCKS ALSO PLAYED A KEY ROLE IN THE MARKET,
DIDN'T THEY?
A. That's quite true. The red chips - or Hong Kong-based companies
controlled by mainland China - have been the focus of the market over the
past year or so. Many of these stocks have tripled and quadrupled after
receiving "cheap" assets from their parent companies in China. Shanghai
Industrial Holdings, for example, was first listed on the market about a
year ago at below $10, and now is selling at over $40. The red chips have
drawn so much attention and speculative "hot money" that they've frequently
accounted for about 50% of market activity, even though they make up only
about 10% of the market's capitalization. People are paying a hefty price
for these concepts and their lack of apparent earnings. Since this
fund focuses primarily on companies' fundamentals - meaning their business
prospects as seen in the growth of their business by reasons other than
acquisitions, for instance - I've tended to downplay the red chips.
Q. WHAT WERE THE KEY FACTORS IN THE FUND'S STRONG ABSOLUTE PERFORMANCE
SINCE LAST FALL?
A. There were a couple of factors. First, the fund benefited from the
run-up in property companies before the turn of the year, and I managed to
avoid part of the correction in these stocks recently by selling some of my
holdings in such companies as Henderson Land Development, New World
Development, Wharf Holdings and Great Eagle Holdings in January. Second,
the fund's position in HSBC - Hong Kong's leading bank and our largest
holding - helped, as its stock appreciated close to 25%.
Q. YOU ALSO INCREASED THE FUND'S WEIGHTING IN THE UTILITIES SECTOR FROM
5.6% SIX MONTHS AGO TO ALMOST 15% AT THE END OF THE PERIOD. WHAT DID YOU
SEE IN THIS SECTOR AND HOW DID IT DO?
A. I almost tripled my weighting in this sector for two reasons, and I'm
glad I did because the utilities sector outperformed during the period,
helping the fund's performance. The first factor in my thinking was that I
needed to find stocks to buy as I sold some of my holdings in the property
companies, and I wanted to stay fully invested in the market. The second
factor was that I was looking for more defensive positions, and I found
them in such companies as Hong Kong Telecommunications, China Light & Power
and Hong Kong Electric, all top-10 holdings at the end of the period. With
the stocks of the property companies - which make up about 40% of the stock
market in Hong Kong - dropping since the beginning of the year, the
utilities turned out to be a good way to further diversify the fund.
There's also a good likelihood that the way in which utilities are
regulated could be changed in the near future, which I believe can benefit
these holdings. Finally, China Light & Power and Hong Kong Electric have
both become much more aggressive in looking at business opportunities in
China and elsewhere overseas.
Q. WHAT OTHER INDIVIDUAL HOLDINGS INFLUENCED PERFORMANCE?
A. Both Cheung Kong Holdings - the fund's third-largest position - and
Cheung Kong Infrastructure helped. Although it has significant property
holdings, Cheung Kong Holdings - which also owns about 50% of Hutchison
Whampoa, another large position in the fund - outperformed the broader
market because it is viewed more as a well-managed conglomerate than a
property company, and conglomerates were viewed as better investments than
property companies during most of the period. Cheung Kong Infrastructure
was part of an investment theme I played to invest in the infrastructure in
China, including roads and power plants on the mainland. I
thought it had one of the best management teams among the companies
investing in China's infrastructure. Investors should note that Cheung Kong
is a household name in the region, the flagship of one of Asia's wealthiest
men. As far as holdings that hurt performance, I'd point to not being able
to reduce my positions in such property companies as Great Eagle Holdings
as fast as I would have liked when this sector began to correct earlier
this year. Mandarin Oriental, a hotel company, was also a disappointment.
Q. WHAT'S YOUR OUTLOOK FOR THE FUTURE?
A. I'm a bull, barring any significant increase in U.S. interest rates. I
don't think the property market is headed for a cyclical correction, as
many people might have thought at the start of the year. Instead, I think
the correction will be short-lived. And as we know, the broader Hong Kong
stock market generally takes its cues from the property market, because
it's such a large component. I also think that volume in the market will
improve, with more funds flowing in from China. Further, Hong Kong is seen
a safe haven throughout the region. With other regional markets, such as
Thailand, Malaysia and the Philippines, in the doldrums, Hong Kong can be
an indirect beneficiary of weaknesses elsewhere in the Pacific Rim.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Hong Kong and
Chinese issuers
FUND NUMBER: 352
TRADING SYMBOL: FHKCX
START DATE: November 1, 1995
SIZE: as of April 30, 1997, more than
$184 million
MANAGER: Joseph Tse, since inception;
director of research, Fidelity Investments
Management (Hong Kong), since 1994;
manager, Asian portion of various global
equity funds, since 1993; analyst covering
Hong Kong and Chinese equities, 1990-1993;
joined Fidelity in 1990
(checkmark)
JOSEPH TSE ON OPPORTUNITIES IN CHINA:
"On a macro-economic - or top-down - basis,
China has been coming out with very favorable
economic numbers. Inflation has dropped to single
digits, export growth has been strong and credit has
been loosening. So all the macro signs have been
telling us that things have been going very well
there, which had been expected. The implications for
the fund are that with these positive macro-economic
numbers investors might begin to feel more
comfortable about committing money to the Hong
Kong market, the best way to `play China,' in my
view.
"There is another factor. There is going to be a lot of
money coming from China and going into the Hong
Kong market. We've seen signs of this already with
the red chip companies and the speculation over the
past year in their stocks and in the property market.
"I will play China through the red chips very selectively
because most of them do not meet my fundamental
investment criteria. I prefer to invest in companies
with a good track record and good management.
Also, organic growth is much preferred over growth
through acquisitions."
HONG KONG AND CHINA
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997
Other
1.1%
Bermuda 4.9%
Row: 1, Col: 1, Value: 2.0
Row: 1, Col: 2, Value: 94.0
Row: 1, Col: 3, Value: 4.0
Hong Kong 94.0%
AS OF OCTOBER 31, 1996
Other 7.4%
Row: 1, Col: 1, Value: 7.4
Row: 1, Col: 2, Value: 92.59999999999999
Hong
Kong 92.6%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 100.0 95.8
Short-term investments 0.0 4.2
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
STOCKS 6
MONTHS AGO
HSBC Holdings PLC 20.8 14.8
(Banks)
Sun Hung Kai Properties Ltd. 10.2 9.8
(Real Estate)
Cheung Kong Holdings Ltd. 7.7 4.8
(Real Estate)
Hong Kong Telecommunications Ltd. 5.5 3.8
(Telephone Services)
New World Development Co. Ltd. 5.4 4.8
(Real Estate)
Citic Pacific Ltd. Ord. 4.8 0.6
(Holding Companies)
Henderson Land Development Co. Ltd. 4.7 9.6
(Real Estate)
Hutchison Whampoa Ltd. Ord. 4.3 9.7
(Electrical Equipment)
China Light & Power Co. Ltd. 4.0 0.0
(Electric Utility)
(Hong Kong Electric Holdings Ord. 2.8 0.0
(Electric Utility)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET
SECTORS 6
MONTHS AGO
Construction & Real Estate 36.9 43.9
Finance 24.9 22.5
Utilities 14.9 5.6
Holding Companies 6.8 2.3
Industrial Machinery & Equipment 4.8 10.6
Media & Leisure 3.8 1.3
Transportation 3.8 4.3
Retail & Wholesale 1.4 3.1
Nondurables 1.2 0.6
Durables 0.6 1.6
HONG KONG AND CHINA
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 100.0%
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 0.5%
METALS & MINING - 0.5%
China Resources Enterprise Ltd. 304,000 $ 839,812
CONSTRUCTION & REAL ESTATE - 36.9%
BUILDING MATERIALS - 0.2%
China Mdrchants Hai Hong Holdings
Co. Ltd. 396,000 424,295
CONSTRUCTION - 2.4%
Cheung Kong Infrastructure Holdings Ltd. 1,528,000 4,329,646
REAL ESTATE - 34.3%
Cheung Kong Holdings Ltd. 1,606,000 14,097,722
Great Eagle Holdings Ltd. 1,733,532 5,180,567
Henderson Land Development Co. Ltd. 1,032,700 8,698,596
Henderson Investment Ltd. 2,598,000 2,699,787
Hysan Development Co. Ltd.
(warrants) (a) 49,600 17,128
New World Development Co. Ltd. 1,723,661 9,946,124
Soundwill Holdings Ltd. 5,184,000 1,539,173
Sun Hung Kai Properties Ltd. 1,728,000 18,737,753
Wharf Holdings Ltd. 579,000 2,189,983
63,106,833
TOTAL CONSTRUCTION & REAL ESTATE 67,860,774
DURABLES - 0.6%
AUTOS, TIRES, & ACCESSORIES - 0.6%
Sime Darby Hongkong Ltd. 1,042,000 1,123,178
FINANCE - 24.9%
BANKS - 24.5%
HSBC Holdings PLC 1,514,852 38,218,489
Hang Seng Bank Ltd. 134,900 1,519,399
Ka Wah Bank Ltd. 7,200,000 3,136,900
Liu Chong Hing Bank Ltd. 1,235,000 2,271,832
Wing Hang Bank Ltd. 4,300 15,709
45,162,329
INSURANCE - 0.4%
National Mutual Asia Ltd. 692,000 714,645
TOTAL FINANCE 45,876,974
HEALTH - 0.4%
MEDICAL EQUIPMENT & SUPPLIES - 0.4%
Arts Optical International Holdings Ltd. 282,000 52,421
Moulin International Holding Ltd. 800,000 609,307
661,728
HOLDING COMPANIES - 6.8%
Citic Pacific Ltd. Ord. 1,634,000 8,838,133
Guangdong Investments Co. Ltd. Ord. 3,022,000 2,828,309
Shanghai Industrial Holdings Ltd.
Class H 156,000 878,022
12,544,464
INDUSTRIAL MACHINERY & EQUIPMENT - 4.8%
ELECTRICAL EQUIPMENT - 4.8%
Harbin Power Equipment Co. Ltd.
Class H 786,000 162,344
Hutchison Whampoa Ltd. Ord. 1,069,000 7,934,874
Johnson Electric Holdings Ltd. 244,200 662,002
8,759,220
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
Dongfang Electrical Machinery Co. Ltd.
Class H 126,000 $ 41,477
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 8,800,697
MEDIA & LEISURE - 3.8%
BROADCASTING - 1.1%
Television Broadcast Ltd. Ord. 481,000 1,974,543
ENTERTAINMENT - 0.3%
China Star Entertainment Ltd. (a) 16,844,000 597,960
LODGING & GAMING - 1.3%
Harbour Centre Development Ltd. 312,000 416,859
Mandarin Oriental International Ltd. 1,785,866 2,071,605
2,488,464
PUBLISHING - 1.1%
Oriental Press Group Ltd. 5,334,000 1,996,850
TOTAL MEDIA & LEISURE 7,057,817
NONDURABLES - 1.2%
FOODS - 0.9%
Tingyi Cayman Islands Holding
Corp. (a) 6,752,000 1,647,361
HOUSEHOLD PRODUCTS - 0.3%
Magician Industries Holdings Ltd. (a) 2,058,000 571,187
TOTAL NONDURABLES 2,218,548
RETAIL & WHOLESALE - 1.4%
APPAREL STORES - 1.1%
Esprit Asia Holdings Ltd. 684,000 313,458
Giordano Holdings Ltd. Ord. 2,717,000 1,473,104
Goldlion Holdings Ltd. 386,000 227,967
2,014,529
GROCERY STORES - 0.3%
Dairy Farm International Holdings
Ltd. (SG) 645,000 477,300
TOTAL RETAIL & WHOLESALE 2,491,829
TECHNOLOGY - 0.0%
COMMUNICATIONS EQUIPMENT - 0.0%
Nanjing Posts Telecommunications
Equipment Class B 200,000 67,175
TRANSPORTATION - 3.8%
AIR TRANSPORTATION - 1.0%
Swire Pacific Ltd. Class A 232,000 1,789,453
TRUCKING & FREIGHT - 2.8%
GZI Transport Ltd. 2,396,000 1,438,250
GZI Transport Ltd. (warrants) (a) 62,800 10,053
New World Infrastructure Ltd. (a) 1,339,400 3,786,595
5,234,898
TOTAL TRANSPORTATION 7,024,351
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - 14.9%
CELLULAR - 1.9%
Smartone Telecommunications Holdings Ltd. 1,874,000 $ 3,580,352
ELECTRIC UTILITY - 6.9%
China Light & Power Co. Ltd. 1,646,000 7,415,659
Hong Kong Electric Holdings Ord. 1,476,000 5,220,732
Shandong Huaneng Power Development
Ltd. Class N sponsored ADR 9,100 105,788
12,742,179
GAS - 0.6%
Hong Kong & China Gas Co. Ltd. 672,064 1,067,113
TELEPHONE SERVICES - 5.5%
Hong Kong Telecommunications Ltd. 5,882,000 10,072,924
TOTAL UTILITIES 27,462,568
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $176,142,853) $ 184,029,915
LEGEND
(a) Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $208,875,103 and $131,799,519, respectively.
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $176,241,781. Net unrealized appreciation aggregated
$7,788,134, of which $14,772,131 related to appreciated investment
securities and $6,983,997 related to depreciated investment securities.
HONG KONG AND CHINA
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at $ 184,029,915
value (cost $176,142,853) -
See accompanying schedule
Receivable for investments sold 3,238,388
Receivable for fund shares sold 379,589
Dividends receivable 518,317
Interest receivable 18,620
Redemption fees receivable 179
TOTAL ASSETS 188,185,008
LIABILITIES
Payable to custodian bank $ 1,805,367
Payable for investments purchased 476,161
Payable for fund shares redeemed 852,488
Accrued management fee 112,452
Other payables and 105,690
accrued expenses
TOTAL LIABILITIES 3,352,158
NET ASSETS $ 184,832,850
Net Assets consist of:
Paid in capital $ 172,236,004
Undistributed net investment income 643,466
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 4,066,200
Net unrealized appreciation (depreciation) on investments 7,887,180
and assets and liabilities in
foreign currencies
NET ASSETS, for 13,710,033 shares outstanding $ 184,832,850
NET ASSET VALUE and redemption price per share ($184,832,850 (divided by) 13,710,033 shares) $13.48
Maximum offering price per share (100/97.00 of $13.48) $13.90
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 2,139,091
Dividends
Interest 224,278
TOTAL INCOME 2,363,369
EXPENSES
Management fee $ 710,155
Transfer agent fees 290,119
Accounting fees and expenses 72,405
Non-interested trustees' compensation 409
Custodian fees and expenses 91,389
Registration fees 20,136
Audit 16,698
Legal 403
Miscellaneous 793
Total expenses before reductions 1,202,507
Expense reductions (213 1,202,294
)
NET INVESTMENT INCOME 1,161,075
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 4,285,356
Foreign currency transactions (459 4,284,897
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (3,309,466
)
Assets and liabilities in 124 (3,309,342
foreign currencies )
NET GAIN (LOSS) 975,555
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 2,136,630
OTHER INFORMATION $ 597,343
Sales charges paid to FDC
Expense reductions $ 103
Custodian interest credits
Transfer agent interest credits 110
$ 213
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS NOVEMBER 1, 1995
ENDED (COMMENCEMENT
APRIL 30, 1997 OF OPERATIONS) TO
(UNAUDITED) OCTOBER 31, 1996
Operations $ 1,161,075 $ 1,483,683
Net investment income
Net realized gain (loss) 4,284,897 976,500
Change in net unrealized appreciation (depreciation) (3,309,342) 11,196,522
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,136,630 13,656,705
Distributions to shareholders (1,741,903) (11,297)
From net investment income
From net realized gain (995,341) -
TOTAL DISTRIBUTIONS (2,737,244) (11,297)
Share transactions 186,962,633 148,300,504
Net proceeds from sales of shares
Reinvestment of distributions 2,718,650 11,187
Cost of shares redeemed (114,639,356) (52,326,724)
Redemption fees 511,315 249,847
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 75,553,242 96,234,814
TOTAL INCREASE (DECREASE) IN NET ASSETS 74,952,628 109,880,222
NET ASSETS
Beginning of period 109,880,222 -
End of period (including undistributed net investment income of $643,466 and $1,471,740,
respectively) $ 184,832,850 $ 109,880,222
OTHER INFORMATION
Shares
Sold 13,382,927 13,096,572
Issued in reinvestment of distributions 197,576 1,110
Redeemed (8,341,085) (4,627,067)
Net increase (decrease) 5,239,418 8,470,615
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED NOVEMBER 1, 1995
APRIL 30, 1997 (COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA C (UNAUDITED) 1996
Net asset value, beginning of period $ 12.97 $ 10.00
Income from Investment Operations
Net investment income .08 .29
Net realized and unrealized gain (loss) .61 E 2.64
Total from investment operations .69 2.93
Less Distributions
From net investment income (.14) (.01)
From net realized gain (.08) -
Total distributions (.22) (.01)
Redemption fees added to paid in capital .04 .05
Net asset value, end of period $ 13.48 $ 12.97
TOTAL RETURN B 5.59% 29.83%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 184,833 $ 109,880
Ratio of expenses to average net assets 1.30% A 1.62%
Ratio of net investment income to average net assets 1.25% A 2.53%
Portfolio turnover rate 152% A 118%
Average commission rate D $ .0042 $ .0049
ANNUALIZED
TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
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.
THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET GAIN 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.
JAPAN
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). The fund has a 3% sales
charge. If Fidelity had not reimbursed certain fund expenses, the life of
fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 LIFE OF
APRIL 30, 1997 MONTHS YEAR FUND
JAPAN -4.11% -17.65% 18.99%
JAPAN (INCL. 3% SALES CHARGE) -6.99% -20.12% 15.42%
Tokyo Stock Exchange Index -16.36% -30.00% 5.80%
Japanese Funds Average -7.44% -20.74% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year or since the fund
started on September 15, 1992. For example, if you invested $1,000 in a
fund that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the performance of
the Tokyo Stock Exchange Index (TOPIX) - a market capitalization weighted
index of over 1,100 stocks traded in the Japanese market. To measure how
the fund's performance stacked up against its peers, you can compare it to
the Japanese funds average, which reflects the performance of mutual funds
with similar objectives - in this case, a very small peer group - tracked
by Lipper Analytical Services, Inc. The past six months average represents
a peer group of 29 mutual funds. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
APRIL 30, 1997 YEAR FUND
JAPAN -17.65% 3.83%
JAPAN (INCL. 3% SALES CHARGE) -20.12% 3.15%
Tokyo Stock Exchange Index -30.00% 1.23%
Japanese Funds Average -20.74% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER LIFE OF FUND
Japan Fund TOPIX Total Return Index
00350 TK001
1992/09/15 9700.00 10000.00
1992/09/30 9641.80 9811.27
1992/10/31 9544.80 9332.17
1992/11/30 9641.80 9572.82
1992/12/31 9661.20 9433.21
1993/01/31 9748.50 9384.24
1993/02/28 10301.40 9811.42
1993/03/31 11484.80 11248.65
1993/04/30 13036.80 13164.83
1993/05/31 13405.40 13960.79
1993/06/30 12610.00 13384.04
1993/07/31 13453.90 14324.51
1993/08/31 13686.70 14644.62
1993/09/30 13318.10 13883.59
1993/10/31 12949.50 13630.65
1993/11/30 11252.00 11425.15
1993/12/31 11637.09 11710.09
1994/01/31 13010.29 13580.32
1994/02/28 13621.71 14243.17
1994/03/31 13391.17 13839.98
1994/04/30 13701.90 14380.65
1994/05/31 14082.78 14642.50
1994/06/30 14934.77 15458.92
1994/07/31 14443.62 14904.58
1994/08/31 14393.51 14941.03
1994/09/30 14042.69 14546.44
1994/10/31 14303.30 14931.14
1994/11/30 13331.03 14046.14
1994/12/31 13552.55 14293.80
1995/01/31 12387.96 13541.08
1995/02/28 11810.82 12774.70
1995/03/31 12758.98 13878.24
1995/04/30 12913.57 14542.52
1995/05/31 12181.84 13603.56
1995/06/30 12016.94 12954.90
1995/07/31 12820.82 13954.75
1995/08/31 12769.29 13412.04
1995/09/30 12738.37 13423.28
1995/10/31 12449.80 12716.06
1995/11/30 12594.08 13459.05
1995/12/31 13263.98 14061.61
1996/01/31 13171.23 13926.68
1996/02/29 12810.51 13703.32
1996/03/31 13171.23 14163.25
1996/04/30 14016.33 15115.19
1996/05/31 13511.33 14383.22
1996/06/30 13748.37 14452.27
1996/07/31 13068.16 13750.93
1996/08/31 12573.47 13172.22
1996/09/30 12862.04 13551.64
1996/10/31 12037.55 12650.04
1996/11/30 12336.43 12751.00
1996/12/31 11779.52 11774.61
1997/01/31 10892.44 10511.93
1997/02/28 11181.26 10720.12
1997/03/31 10995.59 10326.82
1997/04/30 11531.96 10580.45
Let's say hypothetically that $10,000 was invested in Fidelity Japan Fund
on September 15, 1992, when the fund started and the current maximum 3%
sales charge was paid. As the chart shows, by April 30, 1997, the value of
the investment would have grown to $11,542 - a 15.42% increase on the
initial investment. For comparison, look at how the Tokyo Stock Exchange
Index did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $10,580 - a
5.80% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
JAPAN
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Shigeki Makino, Portfolio Manager of Fidelity Japan Fund
Q. HOW DID THE FUND PERFORM, SHIGEKI?
A. For the six months that ended April 30, 1997, the fund had a total
return of -4.11%. That handily beat the Tokyo Stock Exchange Index (TOPIX)
- - a measure of the overall performance of the Japanese stock market - which
returned -16.36% over the same time period. In addition, the fund beat the
Japanese funds average, which returned -7.44% over the six-month period,
according to Lipper Analytical Services. For the 12 months that ended April
30, 1997, the fund was down 17.65%, the TOPIX lost 30.00% and the Japanese
funds average dropped 20.74%.
Q. WHAT FACTORS HELPED THE FUND BEAT THE INDEX AND THE AVERAGE OVER THE
PAST SIX MONTHS?
A. The market favored the kinds of stocks I chose for the fund.
Specifically, these were companies with shareholder-friendly management
that are internationally competitive or have some sort of competitive
advantage, and whose stocks were selling at attractive valuations. In
addition, many of the companies in the fund that posted strong performance
were exporters helped by the weakness of the yen. This weakness helped make
Japanese products less expensive to customers outside of Japan.
Furthermore, the domestic Japanese investor base has become more interested
in stocks of companies with shareholder-friendly management.
Q. AT THE SAME TIME, THE FUND WAS DOWN ABOUT 4%. WHY WAS THAT?
A. The main reason was currency depreciation. The yen weakened from about
114 to the dollar in October to around 126 to the dollar at the end of the
period. So even though the stocks in the fund did well, those gains did not
translate when converted back into dollars. Fidelity Japan Fund does not
use currency hedging to offset the influence of currency fluctuations.
Q. WHAT LED TO THE POOR PERFORMANCE OF THE JAPANESE MARKET?
A. One of the main reasons the TOPIX struggled was an increasing lack of
confidence in the finance sector, which makes up about 18% of the index.
The bad loan situation that has been going on for some time seemed to
worsen, there were scandals in the brokerage community, rumors abounded of
bank failures and a life insurance company was forced to close. Another
problem was a very slow economy that didn't help the more domestic-oriented
and less competitive industries such as steel and chemicals. But the
overriding problem in the Japanese market was ongoing deregulation. The
non-competitive industries that were either fully or partially regulated
saw share price collapses beyond the beaten-down levels they had already
reached. A large rift was created between the performance of these
companies and that of the shareholder-friendly, competitive stocks I
mentioned earlier.
Q. EVEN THOUGH THERE HAVE BEEN PROBLEMS IN THE FINANCE SECTOR, THE FUND
MAINTAINED A STAKE OF ABOUT 13% IN FINANCE STOCKS AT THE END OF THE PERIOD.
WHY?
A. Deregulation in the finance sector - often called the "Big Bang" reforms
- - will incorporate several steps, some of which haven't been disclosed.
What we do know is that there will be foreign currency deregulation, so
that Japanese investors can start to hold accounts denominated in foreign
currency. Commissions in the brokerage industry should be changed from
fixed rates in the not-too-distant future. At the same time, banks probably
will be able to engage in brokerage activities, bond issuance and
underwriting of initial public offerings. All of this activity points to a
great deal of opportunity, although the sector's continuing problems have
led me to invest less in finance than is included in the index. To win,
companies will need effective distribution channels, investment management
expertise and aggressive personnel. Currently, most companies fail on all
of these accounts, or at least one. I've sought to concentrate the fund's
finance investments on those companies that I feel can succeed in this
newly competitive market.
Q. LET'S TAKE A LOOK AT THOSE STOCKS THAT PERFORMED WELL FOR THE FUND . . .
A. I'd mention three that have at least one common thread: They are
exporters that benefited from yen weakness. Toyota is the first. This
company is in the middle of a tremendous product cycle, introducing new
models and increasing market share. The company is focused on reducing
costs by a staggering $1 billion a year, something it succeeded in doing
over the past year. It is using its free cash flow to buy back shares and
is reinforcing its shareholder-friendly reputation by meeting with
shareholders. Fuji Photo Film is a significant position I built in the fund
in 1995. It had been a beaten-down stock because investors perceived the
company's earnings growth to be at a standstill. However, that situation
has changed, spurred on by the weak yen. The company has been better in
terms of disclosure and contact with executives, and has used its excess
free cash flow in constructive ways. For example, it recently purchased the
Wal-Mart photo distribution chain. Finally, Canon remained globally
competitive in a number of areas - copiers and printers, for example. It
has benefited because more people are using personal computers and from the
move away from analog to digital copiers. Its copier business has been
strong both in terms of volume and profit margin.
Q. THE PERCENTAGE OF THE FUND'S ASSETS INVESTED IN CONSTRUCTION AND REAL
ESTATE DROPPED FROM ABOUT 10% TO ABOUT 2% OVER THE PERIOD. WHAT WAS BEHIND
THAT MOVE?
A. This is a sector that underperformed due to two factors. First, demand
in the public works sector dropped materially, as the government didn't
produce a supplemental budget authorizing additional spending. Second,
newly implemented open bidding for contracts has worsened the pricing
problems the industry faces. The net effect is that profit margins and
revenues are under tremendous pressure. Furthermore, while demand for
housing was strong in 1996, orders have fallen off dramatically and appear
to be weak going forward. I sold off a lot of the fund's positions in
stocks from this sector as prospects started to look less inviting.
Q. WHAT'S YOUR OUTLOOK?
A. We can look at the Japanese market on a number of levels. First, there
are the economic fundamentals. As I mentioned, the economy was very slow
over the period, and many investors are expecting that to continue. In my
opinion, the economy is not that bad, just a bit static. The depreciation
of the yen has helped the competitiveness of the economy, especially the
exporters. Second, there is earnings growth, which is relatively robust
when compared to global averages. Third are valuations. While the stocks
that were favored during the period performed well, overall valuations in
the market remain relatively reasonable and attractive, with those in the
less competitive, recently deregulated areas at very cheap levels. Finally,
sentiment is very negative. It's important to note that most money managers
that invest worldwide have underweighted Japan. In combination, I believe
these factors present a good, but not great environment for the Japanese
market. I expect some of the stocks that recently went up to give some of
those gains back. The big question mark is the yen. At this point, the
economy and the market would benefit most from stability in the yen rather
than any upward or downward move.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Japanese issuers
FUND NUMBER: 350
TRADING SYMBOL: FJAPX
START DATE: September 15, 1992
SIZE: as of April 30, 1997, more than $265 million
MANAGER: Shigeki Makino, since 1994;
manager, Fidelity Pacific Basin Fund, since
1996; joined Fidelity in 1990
(checkmark)
SHIGEKI MAKINO ON THE JAPANESE STOCK MARKET AND
DEREGULATION:
"The Japanese market showed some renewed
strength over the past few months. The question is
whether or not that will continue. Historically, Japan
has had a strong reversion to the mean. That is,
strong performers have had a tendency to start to
underperform. One might expect that sort of behavior
in a regulated environment, especially in a society
like Japan's where standing out for an extended
period is frowned upon.
"I believe this tendency may be coming to an end,
with the strong push for deregulation occurring now
in Japan. But there have been and will continue to be
many problems. For example, in the banking industry
there are tremendous problems with nonperforming
assets that can't be quantified. In addition, there are
other areas that need to be cleaned up, including life
insurance companies. With deregulation, there
probably will be only a few companies that succeed.
The rest will either go out of business or be acquired.
On top of that, when the economy finally gets going,
interest rates will go up, with companies finding
difficulties maintaining the core profitability of their
businesses.
"Other industries face deregulation pressures,
including gas and power utilities. In Japan, these
companies enjoy some of the highest rates in the
world. The government is determined to rein rates in.
Higher oil prices and interest rates will make it difficult
for electric companies. They can't raise their asset
base because demand for electricity is not growing.
Under this pressure, these companies will be hard
pressed to meet their 50 yen dividend payment. If they
can't, their stocks could collapse.
"What are the benefits of deregulation? Efficiency and
competition are among the positive factors. For
example, there has been a huge increase in the
number of construction firms since new processes for
open bidding were introduced. For now, however,
many different industries are encountering difficulties.
In this type of environment, I'll continue to look for the
qualities that characterize the fund's top holdings,
shareholder-oriented management interested in
providing a solid return on investment being one of the
most important. Hopefully, as these issues regarding
deregulation play out, we'll be able to see positive
performance in the market broaden beyond the few
stocks that posted strong gains over the past six
months."
JAPAN
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997
United States 6.8%
Other 1.9%
Row: 1, Col: 1, Value: 6.8
Row: 1, Col: 2, Value: 1.9
Row: 1, Col: 3, Value: 91.3
Japan 91.3%
AS OF OCTOBER 31, 1996
United States 2.0%
Other 1.7%
Row: 1, Col: 1, Value: 3.0
Row: 1, Col: 2, Value: 2.0
Row: 1, Col: 3, Value: 95.0
Japan 96.3%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 91.6 97.2
Bonds 1.6 0.8
Short-term investments 6.8 2.0
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
STOCKS 6
MONTHS AGO
Toyota Motor Corp. 5.4 3.1
(Autos, Tires, & Accessories)
Canon, Inc. 3.3 2.2
(Computers & Office Equipment)
Matsushita Electric Industrial Co. Ltd. 2.8 3.2
(Consumer Electronics)
DDI Corp. Ord. 2.5 2.8
(Telephone Services)
Nintendo Co. Ltd. Ord. 2.3 0.8
(Leisure Durables & Toys)
Sony Corp. 2.2 1.8
(Consumer Electronics)
Sumitomo Metal Industries Ltd. 2.1 1.6
(Iron & Steel)
Fuji Photo Film Co. Ltd. 2.0 3.4
(Photographic Equipment)
Bank of Tokyo-Mitsubishi Ltd. 2.0 1.7
(Banks)
Takeda Chemical Industries Ltd. 2.0 1.6
(Drugs & Pharmaceuticals)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET
SECTORS 6
MONTHS AGO
Technology 19.0 14.7
Durables 15.8 16.9
Finance 14.9 15.2
Industrial Machinery & Equipment 10.0 9.1
Basic Industries 7.2 6.2
Health 6.5 6.2
Media & Leisure 4.7 3.0
Retail & Wholesale 4.7 6.5
Services 3.5 2.7
Utilities 3.2 2.8
JAPAN
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.6%
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 7.2%
CHEMICALS & PLASTICS - 2.3%
Nippon Soda Co. Ltd. 200,000 $ 1,637,215
Sakai Chemical Industry Co. Ltd. 200,000 719,430
Shin-Etsu Chemical Co. Ltd. 120,000 2,418,041
Tenma Corp. 75,000 1,180,684
5,955,370
IRON & STEEL - 3.8%
Godo Steel Ltd. 150,000 472,274
Kobe Steel Ltd. Ord. (a) 1,700,000 3,091,031
Sumitomo Metal Industries Ltd. 2,200,000 5,472,077
Tokyo Steel Manufacturing Co. Ltd. 100,000 1,070,487
10,105,869
METALS & MINING - 1.1%
Fujikura Ltd. 150,000 1,119,288
Sumitomo Sitix Corp. 100,000 1,881,223
3,000,511
TOTAL BASIC INDUSTRIES 19,061,750
CONSTRUCTION & REAL ESTATE - 1.5%
BUILDING MATERIALS - 0.3%
C.I. Holdings BHD 85,000 335,192
Toshiba Ceramics Co., Ltd. 10,000 72,966
Toyo Shutter Co. Ltd. 100,000 427,408
835,566
CONSTRUCTION - 1.0%
Daiwa House Industry Co. Ltd. 210,000 2,347,200
Mitsui Wood Systems, Inc. 36,000 240,860
2,588,060
ENGINEERING - 0.2%
Okumura Gumi 130,000 695,816
TOTAL CONSTRUCTION & REAL ESTATE 4,119,442
DURABLES - 15.8%
AUTOS, TIRES, & ACCESSORIES - 7.7%
Denso Corp. 85,000 1,933,567
Honda Motor Co. Ltd. 130,000 4,031,642
Toyota Motor Corp. 500,000 14,483,058
20,448,267
CONSUMER DURABLES - 0.8%
Aderans Co. Ltd. 40,000 900,468
Sankyo Co. Ltd. (Gunma) 55,000 1,268,448
2,168,916
CONSUMER ELECTRONICS - 6.1%
Citizen Watch Co. Ltd. Ord. 220,000 1,581,015
Matsushita Electric Industrial Co. Ltd. 470,000 7,509,938
Rinnai Corp. Ord. 80,000 1,448,306
Sony Corp. 79,400 5,774,773
16,314,032
HOME FURNISHINGS - 0.5%
Shimachu Co. Ltd. 53,000 1,272,384
TEXTILES & APPAREL - 0.7%
Roda Vivatex PT (For. Reg.) 2,115,200 565,795
Tokyo Style Co. Ltd. 100,000 1,204,298
1,770,093
TOTAL DURABLES 41,973,692
SHARES VALUE (NOTE 1)
FINANCE - 13.3%
BANKS - 5.8%
Akita Bank Ltd. 300,000 $ 1,636,428
Bank of Tokyo-Mitsubishi Ltd. 336,000 5,315,912
Fuji Bank Ltd. 300,000 3,376,756
Hyakugo Bank 150,000 826,479
Sakura Bank Ltd. 800,000 4,225,275
15,380,850
CREDIT & OTHER FINANCE - 4.4%
Acom Co. Ltd. 80,000 3,261,836
Credit Saison Co. Ltd. 115,000 2,208,666
Nichiei Co. Ltd. 35,000 2,810,028
Shohkoh Fund & Co. Ltd. 10,000 2,345,626
Takefuji Corp. 24,500 1,178,283
11,804,439
SECURITIES INDUSTRY - 3.1%
Ace Koeki Co. Ltd. 47,000 221,969
Daiwa Securities Co. Ltd. 590,000 3,924,200
Nomura Securities Co. Ltd. 320,000 3,576,686
Osaka Securities Finance Co. Ltd. Ord. 165,000 538,982
8,261,837
TOTAL FINANCE 35,447,126
HEALTH - 6.5%
DRUGS & PHARMACEUTICALS - 4.0%
Banyu Pharmaceutical Co. Ltd. 100,000 1,534,889
Daiichi Pharmaceutical Co. Ltd. 130,000 2,087,449
Sankyo Co. Ltd. 70,000 1,873,352
Takeda Chemical Industries Ltd. 230,000 5,304,420
10,800,110
MEDICAL EQUIPMENT & SUPPLIES - 2.5%
Hoya Corp. 60,000 2,748,632
Terumo Corp. 256,000 3,889,016
6,637,648
TOTAL HEALTH 17,437,758
INDUSTRIAL MACHINERY & EQUIPMENT - 10.0%
ELECTRICAL EQUIPMENT - 5.0%
Hitachi Koki Co. Ltd. Ord. 148,000 937,778
Ibiden Co. Ltd. 140,000 1,840,293
Matsushita Electric Works Co. Ltd. 150,000 1,523,082
Mirai Industry Co. Ltd. 67,500 1,338,896
Omron Corp. 242,000 4,571,609
Sumitomo Electric Industries Ltd. 70,000 947,696
Shinko Electric Industries Co. Ltd. 60,000 2,054,390
13,213,744
INDUSTRIAL MACHINERY & EQUIPMENT - 5.0%
Aida Engineering Ltd. Ord. 110,000 675,351
Amadasonoike Co. Ltd. 146,000 563,108
Fuji Machine Manufacturing Co. Ltd. Ord. 80,000 2,254,319
Heiwa Corp. 85,000 1,124,011
Hitachi Construction Machinery Co. Ltd. 120,000 991,775
Komatsu Ltd. Ord. 660,000 4,820,969
SMC Corp. 15,000 1,100,966
Shintokogio Ltd. 169,000 1,078,823
Tsudakoma Corp. 178,000 652,903
13,262,225
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 26,475,969
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - 4.7%
ENTERTAINMENT - 0.3%
Sony Music Entertainment Japan, Inc. 24,000 $ 823,645
LEISURE DURABLES & TOYS - 4.2%
Namco Ltd. 55,000 1,610,453
Nintendo Co. Ltd. Ord. 82,000 5,989,689
Shimano, Inc. 220,000 3,705,774
11,305,916
RESTAURANTS - 0.2%
Yoshinoya D&C Co. Ltd. Ord. 52 503,444
TOTAL MEDIA & LEISURE 12,633,005
NONDURABLES - 2.2%
BEVERAGES - 1.2%
Asahi Breweries Ltd. 300,000 3,305,915
FOODS - 0.0%
Ezaki Glicko Co. Ltd. 10,000 78,712
HOUSEHOLD PRODUCTS - 1.0%
Uni Charm Corp. Ord. 85,000 2,602,621
TOTAL NONDURABLES 5,987,248
RETAIL & WHOLESALE - 4.7%
APPAREL STORES - 0.2%
Charle Co. Ltd. 50,000 531,308
GENERAL MERCHANDISE STORES - 2.4%
Hanshin Department Store Ltd. 50,000 227,085
Ito-Yokado Co. Ltd. 70,000 3,355,504
Izumiya Co. Ltd. 200,000 2,802,157
6,384,746
RETAIL & WHOLESALE, MISCELLANEOUS - 2.1%
Amway Japan Ltd. 86,300 2,628,840
Senshukai Co. Ltd. 70,000 589,555
Uny Co. Ltd. 136,000 2,387,186
5,605,581
TOTAL RETAIL & WHOLESALE 12,521,635
SERVICES - 3.5%
LEASING & RENTAL - 1.7%
Orix Corp. 90,000 4,540,911
PRINTING - 0.7%
Riso Kagaku Corp. 30,000 1,771,026
SERVICES - 1.1%
Benesse Corp. 21,000 935,574
Meitec Corp. 100,000 1,999,292
2,934,866
TOTAL SERVICES 9,246,803
TECHNOLOGY - 19.0%
COMMUNICATIONS EQUIPMENT - 0.5%
Matsushita Communication Industrial
Co. Ltd. 50,000 1,290,881
COMPUTER SERVICES & SOFTWARE - 0.2%
Daitec Co. Ltd. 20,000 645,441
ISR Group Ltd. (a) 70,000 17,496
662,937
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT - 6.4%
Canon, Inc. 370,000 $ 8,766,186
Fujitsu Ltd. 360,000 3,740,407
NEC Corp. 280,000 3,416,113
OKI Electric Industry Co. Ltd. 200,000 980,755
16,903,461
ELECTRONICS - 8.4%
Hirose Electric Co. Ltd. 40,000 2,185,053
Hitachi Ltd. 500,000 4,525,956
Hitachi Maxell Ltd. 155,000 3,257,507
Minebea Co. Ltd. 200,000 1,668,700
Mitsumi Electric Co. Ltd. 120,000 2,521,941
Nichicon Corp. 100,000 1,094,101
Ryoyo Electro Corp. Ord. 70,000 1,118,501
Rohm Co. Ltd. 35,000 2,710,851
Tokyo Electron Ltd. 66,000 2,545,555
Wako Electric Co. Ltd. 60,000 661,183
22,289,348
PHOTOGRAPHIC EQUIPMENT - 3.5%
Fuji Photo Film Co. Ltd. 140,000 5,344,563
Konica Corp. 175,000 1,012,437
Minolta Camera Co. Ltd. 332,000 2,069,692
Noritsu Koki Co. Ltd. 20,000 851,667
9,278,359
TOTAL TECHNOLOGY 50,424,986
UTILITIES - 3.2%
TELEPHONE SERVICES - 3.2%
DDI Corp. Ord. 1,000 6,635,444
Nippon Telegraph & Telephone Corp.
Ord. 250 1,761,187
8,396,631
TOTAL COMMON STOCKS
(Cost $258,463,283) 243,726,045
CONVERTIBLE BONDS - 1.6%
MOODY'S PRINCIPAL
RATINGS AMOUNT
FINANCE - 1.6%
CREDIT & OTHER FINANCE - 1.6%
MBL International Finance of
Bermuda 3%, 11/30/02
(Cost $4,399,050) Aa2 $ 4,050,000 4,110,750
CASH EQUIVALENTS - 6.8%
SHARES
Taxable Central Cash Fund (b)
(Cost $18,191,630) 18,191,630 18,191,630
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $281,053,963) $ 266,028,425
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash Fund was
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $75,184,030 and $103,724,158, respectively.
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $281,121,006. Net unrealized depreciation aggregated
$15,092,581, of which $20,656,186 related to appreciated investment
securities and $35,748,767 related to depreciated investment securities.
At October 31, 1996, the fund had a capital loss carryforward of
approximately $31,995,000 all of which will expire on October 31, 2003.
JAPAN
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at $ 266,028,425
value (cost $281,053,963) -
See accompanying schedule
Receivable for investments sold 242,263
Receivable for fund shares sold 4,369,823
Dividends receivable 728,220
Interest receivable 106,997
Redemption fees receivable 561
TOTAL ASSETS 271,476,289
LIABILITIES
Payable for investments purchased $ 4,901,050
Payable for fund shares redeemed 780,419
Accrued management fee 214,334
Other payables and accrued expenses 104,003
TOTAL LIABILITIES 5,999,806
NET ASSETS $ 265,476,483
Net Assets consist of:
Paid in capital $ 329,877,160
Accumulated net investment (1,165,070
income (loss) )
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (48,189,881
)
Net unrealized appreciation (depreciation) on investments (15,045,726
and assets and liabilities in )
foreign currencies
NET ASSETS, for 23,734,090 shares outstanding $ 265,476,483
NET ASSET VALUE and redemption price per share ($265,476,483 (divided by) 23,734,090 shares) $11.19
Maximum offering price per share (100/97.00 of $11.19) $11.54
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 991,872
Dividends
Interest 321,072
1,312,944
Less foreign taxes withheld (145,648
)
TOTAL INCOME 1,167,296
EXPENSES
Management fee $ 941,066
Basic fee
Performance adjustment 180,519
Transfer agent fees 408,953
Accounting fees and expenses 94,398
Non-interested trustees' compensation 1,310
Custodian fees and expenses 93,246
Registration fees 13,724
Audit 22,185
Legal 3,094
Miscellaneous 3,433
Total expenses before reductions 1,761,928
Expense reductions (9,719 1,752,209
)
NET INVESTMENT INCOME (LOSS) (584,913
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (15,978,682
)
Foreign currency transactions (43,356 (16,022,038
) )
Change in net unrealized appreciation (depreciation) on:
Investment securities 6,485,185
Assets and liabilities in 13,578 6,498,763
foreign currencies
NET GAIN (LOSS) (9,523,275
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (10,108,188
)
OTHER INFORMATION $ 370,619
Sales charges paid to FDC
Expense reductions $ 8,084
Directed brokerage arrangements
Transfer agent interest credits 1,635
$ 9,719
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED OCTOBER 31,
APRIL 30, 1997 1996
(UNAUDITED)
Operations $ (584,913 $ (453,534
Net investment income (loss) ) )
Net realized gain (loss) (16,022,038 3,136,936
)
Change in net unrealized appreciation (depreciation) 6,498,763 (13,924,049
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (10,108,188 (11,240,647
) )
Distributions to shareholders in excess of net investment income (234,861 -
)
Share transactions 75,308,962 208,233,225
Net proceeds from sales of shares
Reinvestment of distributions 230,593 -
Cost of shares redeemed (90,309,752 (251,007,290
) )
Redemption fees 94,943 528,384
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (14,675,254 (42,245,681
) )
TOTAL INCREASE (DECREASE) IN NET ASSETS (25,018,303 (53,486,328
) )
NET ASSETS
Beginning of period 290,494,786 343,981,114
End of period (including accumulated of net investment loss of $1,165,070 and $345,296,
respectively) $ 265,476,483 $ 290,494,786
OTHER INFORMATION
Shares 6,902,409 16,223,064
Sold
Issued in reinvestment of distributions 19,443 -
Redeemed (8,053,914 (19,823,608
) )
Net increase (decrease) (1,132,062 (3,600,544
) )
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31, SEPTEMBER 15, 1992
ENDED (COMMENCEMENT
APRIL 30, 1997 OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA (UNAUDITED) 1996 1995 1994 E 1993 1992
Net asset value, beginning of period $ 11.68 $ 12.08 $ 14.27 $ 13.35 $ 9.84 $ 10.00
Income from Investment Operations
Net investment income (loss) (.03) D (.02) D (.02) (.04) D (.09) -
Net realized and unrealized gain (loss) (.45) (.40) (1.89) 1.31 3.60 (.16)
Total from investment operations (.48) (.42) (1.91) 1.27 3.51 (.16)
Less Distributions
In excess of net investment income (.01) - - - - -
From net realized gain - - (.36) (.39) - -
Total distributions (.01) - (.36) (.39) - -
Redemption fees added to paid in capital - .02 .08 .04 - -
Net asset value, end of period $ 11.19 $ 11.68 $ 12.08 $ 14.27 $ 13.35 $ 9.84
TOTAL RETURN B, C (4.11)% (3.31)% (12.96)% 10.45% 35.67% (1.60)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 265,476 $ 290,495 $ 343,981 $ 469,639 $ 118,195 $ 2,953
Ratio of expenses to average net assets 1.44% A 1.15% 1.15% 1.42% 1.71% 2.00% A, F
Ratio of expenses to average net assets after expense 1.43% A, 1.14% 1.15% 1.42% 1.71% 2.00% A
reductions G G
Ratio of net investment income (loss) to average net
assets (.48)% A (.12)% (.06)% (.32)% (.77)% .03% A
Portfolio turnover rate 63% A 83% 86% 153% 257% -
Average commission rate H $ .0263 $ .0364
</TABLE>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT
INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E EFFECTIVE NOVEMBER 1, 1993, THE FUND
ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE, AND
FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF
CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES. F FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER. G FMR OR THE FUND HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE
FUND'S EXPENSES (SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS). H FOR FISCAL
YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO
DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS
WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
JAPAN SMALL COMPANIES
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). The fund has a 3% sales
charge.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 LIFE OF
APRIL 30, 1997 MONTHS YEAR FUND
JAPAN SMALL COMPANIES -24.72% -39.55% -31.27%
JAPAN SMALL COMPANIES -26.98% -41.37% -33.33%
(INCL. 3% SALES CHARGE)
Tokyo Stock Exchange Index -16.36% -30.00% -16.79%
Japanese Funds Average -7.44% -20.74% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year or since the fund
started on November 1, 1995. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Tokyo Stock Exchange Index (TOPIX) - a market capitalization weighted index
of over 1,100 stocks traded in the Japanese market. To measure how the
fund's performance stacked up against its peers, you can compare the fund's
performance to the Japanese funds average, which reflects the performance
of mutual funds with similar objectives - in this case, a very small peer
group - tracked by Lipper Analytical Services, Inc. The past six months
average represents a peer group of 29 mutual funds. These benchmarks
include reinvested dividends and capital gains, if any, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
APRIL 30, 1997 YEAR FUND
JAPAN SMALL COMPANIES -39.55% -22.13%
JAPAN SMALL COMPANIES -41.37% -23.70%
(INCL. 3% SALES CHARGE)
Tokyo Stock Exchange Index -30.00% -11.54%
Japanese Funds Average -20.74% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER LIFE OF FUND
Japan Small Companies TOPIX Total Return Index
00360 TK001
1995/11/01 9700.00 10000.00
1995/11/30 9661.20 10584.29
1995/12/31 10262.60 11058.14
1996/01/31 10107.40 10952.04
1996/02/29 9894.00 10776.38
1996/03/31 10272.30 11138.08
1996/04/30 11028.90 11886.69
1996/05/31 10602.10 11311.06
1996/06/30 10679.70 11365.36
1996/07/31 10185.00 10813.83
1996/08/31 9709.70 10358.73
1996/09/30 9632.10 10657.10
1996/10/31 8856.10 9948.07
1996/11/30 8477.80 10027.48
1996/12/31 7738.69 9259.64
1997/01/31 7036.95 8266.65
1997/02/28 7027.20 8430.38
1997/03/31 6637.34 8121.08
1997/04/30 6666.58 8320.54
Let's say hypothetically that $10,000 was invested in Fidelity Japan Small
Companies Fund on November 1, 1995, when the fund started and the current
maximum 3% sales charge was paid. As the chart shows, by April 30, 1997,
the value of the investment would have been $6,667 - a 33.33% decrease on
the initial investment. For comparison, look at how the Tokyo Stock
Exchange Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have been $8,321 - a
16.79% decrease.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
JAPAN SMALL COMPANIES
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Kenichi Mizushita became Portfolio Manager of
Fidelity Japan Small Companies Fund on December 19, 1996.
Q. KENICHI, HOW DID THE FUND PERFORM?
A. For the six-month period ending April 30, 1997, the fund's total return
was -24.72%. Over the same period, the Tokyo Stock Exchange Index (TOPIX)
returned -16.36%, and the Japanese funds average returned -7.44%, according
to Lipper Analytical Services. For the 12-month period ending April 30,
1997, the fund returned -39.55%, compared to the TOPIX return of -30.00%
and the Lipper Japanese funds average return of -20.74%. While these are
the best comparisons available, no existing index currently measures
performance of the kinds of stocks this fund owns, and small-company stocks
in Japan have been significantly underperforming.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE FOR THE PAST SIX MONTHS?
A. There were five factors. First, there continued to be concerns about the
Japanese economy. The gross domestic product (GDP) growth rate has been
negative, signifying that the economic recovery is taking longer than
expected to get going. Small-cap stocks have fallen because their share
prices are more sensitive to an economic recovery. Second, there has been
an over-issuance of Japanese small-cap stocks, reflecting an increase in
the number of newly listed companies. Third, in Japan there is now a
two-tier stock market, giving investors the choice of buying large-cap,
blue chip stocks or small-cap stocks. Clearly, small-cap stocks were out of
favor. Fourth, the Japanese small-caps are heavily weighted in domestic
industries, such as construction, and have little exposure to export
industries, which have been benefitting from a weak yen. Fifth, the poor
performance was exaggerated by the weak yen.
Q. HOW HAVE SMALL COMPANIES BEEN AFFECTED IN PARTICULAR?
A. With lingering skepticism in the outlook for an economic recovery, there
has been less interest in small-caps and, as a result, these stocks have
underperformed. In this kind of environment, small-cap stocks tend to be
much more volatile than large-cap stocks. The factors affecting the market
as a whole have had an even greater effect on small companies.
Q. TELL US ABOUT SOME OF THE FUND'S TOP MARKET SECTORS . . .
A. Technology is the largest sector in the fund. The fund owned companies
that are industry leaders in their main product markets, and demand has
been very strong for personal computer-related products. Mitsumi Electric,
for example, manufactures computer-related products such as CD-ROM drives.
Demand has been very strong for its products, which are sold in Japan and
internationally. Mitsumi enjoys a high market share and is showing strong
earnings growth. I have reduced holdings in the construction and real
estate sector because of severe competition among construction companies
and because the Japanese government has cut the budget for public spending.
Since the government is one of the biggest customers of the construction
industry, less spending by the government no doubt will have an impact on
this sector's profitability.
Q. THE FUND HAS A NUMBER OF NEW TOP HOLDINGS. WHAT WERE SOME OF THE MORE
SIGNIFICANT ONES AND HOW DID THEY PERFORM?
A. Circle K Japan is the fifth-largest convenience store operator in the
country. The convenience store industry is the fastest-growing segment of
the retail sector, and Circle K in particular is increasing the number of
outlets and developing what I consider a superior merchandising strategy.
Much of Circle K's business is based outside Tokyo, and competition is less
intense in these more regional markets. It also has been quite successful
in introducing new products such as sweet candies and games. Meitec is the
largest outsourcing company for engineering services in Japan and has been
a key beneficiary of the increasing demand for outsourced services of this
kind. Japanese manufacturing companies have been struggling to reduce their
costs and have moved toward bringing in outside consultants for design and
manufacturing. As a consequence, the demand for Meitec's services has been
very strong and continues to grow. Shindengen Electric is Japan's largest
manufacturer of power sources. It has shown a spectacular recovery in
earnings, due to the growth of the mobile phone market in Japan, which
expanded significantly in 1996. Shindengen is a well-established company,
and I expect that it will continue to do well as the telecommunications
market grows.
Q. GIVEN THE INVESTMENT ENVIRONMENT FOR SMALL-CAP COMPANIES, THERE MUST
HAVE BEEN A NUMBER OF DISAPPOINTMENTS DURING THE PERIOD . . .
A. Oi Electric Company performed quite poorly. The company manufactures
pagers and telecommunications transmission equipment. The domestic pager
market has peaked, and growing competition among foreign competitors has
led to declining margins. The company's earnings were lower than expected
and its share price has dropped dramatically. While Oi Electric is a small
company and has limited product lines, its competitors have a greater
variety of product lines and can shift among them. This competitive
disadvantage has hurt Oi Electric's prospects for profitability. Another
holding, Chofu Seisaku Co. Ltd., manufactures heating equipment, air
conditioners, and kitchen and bath fixtures. With the slump in the
construction industry and resulting increased competition and decreased
profitability, Chofu Seisaku suffered. Its poor performance during the
period mirrored the performance of most construction-related companies in
Japan.
Q. WHICH MARKET SECTOR DO YOU THINK PRESENTS THE BEST OPPORTUNITIES FOR
GROWTH IN THE NEXT FEW YEARS?
A. I like the telecommunications, multimedia and information service
industries. There's strong demand for these kinds of products and new
innovations are occurring daily. In the current Japanese scenario, they may
also prove to be less sensitive to economic factors.
Q. WHAT IS YOUR OUTLOOK FOR THE NEXT FEW MONTHS?
A. There are many unique and growing small companies in Japan, and I
believe it is a very good time to buy them. Relative valuations of the
Second Section of the Tokyo Stock Exchange - meaning the smaller-cap
companies - compared to the First Section are attractive. Many small-cap
stocks have been oversold and their valuations look very attractive in
general. Interest rates are historically low. The underlying economic
recovery trend should continue. All of these factors are signals that it
could be a good time to buy these stocks.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Japanese issuers
with small market capitalizations
FUND NUMBER: 360
TRADING SYMBOL: FJSCX
START DATE: November 1, 1995
SIZE: as of April 30, 1997, more than $68
million
MANAGER: Kenichi Mizushita, since December
1996; manager, several Fidelity Investments
Japan Limited and institutional funds; joined
Fidelity in 1985
(checkmark)
KENICHI MIZUSHITA ON HIS INVESTMENT PHILOSOPHY AND THE
FUND:
"I look at individual companies first, then at industry
and economic trends. I'm constantly visiting
companies and talking with their management, a key
factor in my investment style. I visit over 150
companies each year, and call many more to speak
with management. Together, my team of small-cap
analysts and other fund managers investing in the
small-cap arena communicate and exchange ideas
constantly.
"There are many types of Japan-related funds to
choose from, but this fund offers something different
from a generic Japan fund. Fidelity Japan Small
Companies Fund focuses on those growing, small
companies listed mainly in the Second Section of the
Tokyo Stock Exchange, the OTC and regional stock
markets in Japan. In general, small companies offer
a higher level of dynamic growth and innovation than
large-cap stocks. From a medium- to long-term
perspective, the current market correction presents a
good opportunity to add attractive small companies
to the fund's portfolio.
"The Japanese economy, which has historically
focused on manufacturing sectors, is gradually
shifting toward service sectors. Deregulation is finally
occurring in Japan, in such industries as
telecommunications and retail. Structural change in
the Japanese economy, with support from the
deregulation process, generates plenty of
opportunities for entrepreneurs to grow their
businesses."
JAPAN SMALL COMPANIES
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997
United
States 7.3%
Japan 92.7%
Row: 1, Col: 1, Value: 0.0
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 7.3
Row: 1, Col: 5, Value: 92.7
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 0.0
AS OF OCTOBER 31, 1996
Other 0.1%
Japan 99.9%
Row: 1, Col: 1, Value: 0.0
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 2.0
Row: 1, Col: 6, Value: 98.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 0.0
Row: 1, Col: 9, Value: 0.0
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 92.7 99.5
Bonds 0.0 0.5
Short-term investments 7.3 0.0
TOP TEN STOCKS
<TABLE>
<CAPTION>
<S> <C> <C>
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
STOCKS 6
MONTHS AGO
Sony Music Entertainment Japan, Inc. 4.0 3.2
(Entertainment)
Circle K Japan Co. Ltd. 2.4 0.0
(General Merchandise Stores)
Meitec Corp. 2.3 1.2
(Services)
Mitsumi Electric Co. Ltd. 2.1 0.0
(Electronics)
Matsumotokiyoshi Co. Ltd. 2.0 1.7
(General Merchandise Stores)
Mimasu Semiconductor Industries Co. Ltd. (Electronics) 2.0 1.3
Shindengen Electric Co. Ltd. 1.8 0.0
(Electronics)
Union Tool Co. 1.8 0.4
(Industrial Machinery & Equipment)
Roland Corp. 1.7 1.4
(Leisure Durables & Toys)
Shinko Electric Industries Co. Ltd. 1.7 0.5
(Electrical Equipment)
</TABLE>
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET
SECTORS 6
MONTHS AGO
Technology 18.8 10.9
Retail & Wholesale 14.5 12.7
Industrial Machinery & Equipment 11.5 6.1
Construction & Real Estate 10.7 23.2
Media & Leisure 9.5 8.4
Durables 9.3 9.5
Basic Industries 6.1 9.7
Finance 5.2 8.4
Health 2.9 2.4
Services 2.7 3.0
JAPAN SMALL COMPANIES
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.7%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.1%
Jamco Corp. 65,000 $ 736,747
BASIC INDUSTRIES - 6.1%
CHEMICALS & PLASTICS - 2.2%
Canon Chemicals, Inc. 32,000 629,698
FP Corp. 10,000 243,221
Nippon Soda Co. Ltd. 55,000 450,234
Toshiba Chemical Corp. 40,000 173,482
1,496,635
IRON & STEEL - 2.1%
Bunka Shutter Co. Ltd. 150,000 769,806
Chubu Steel Plate Co. Ltd. 143,000 675,351
1,445,157
METALS & MINING - 0.7%
Oiles Corp. 20,000 491,165
PAPER & FOREST PRODUCTS - 1.1%
Ube-Nitto Kasei Co. Ltd. 90,000 757,999
TOTAL BASIC INDUSTRIES 4,190,956
CONSTRUCTION & REAL ESTATE - 10.7%
BUILDING MATERIALS - 4.6%
Almetax Manufacturing Co. Ltd. 7,805 47,305
Chofu Seisaku Co. Ltd. 30,000 472,274
Furusato Industries Ltd. 60,000 524,224
Kawagishi Bridge Works Co. Ltd. (a) 43,000 196,308
Kikusui Chemical Industries Co. Ltd. 23,000 153,882
Kondotec, Inc. 85,100 797,111
Sanden Corp. 120,000 972,884
3,163,988
CONSTRUCTION - 2.0%
Mitsui Wood Systems, Inc. 60,000 401,433
Nissei Build Kogyo Co. Ltd. 166,000 849,305
Ohmoto Gumi Co. Ltd. 14,000 112,401
1,363,139
ENGINEERING - 1.2%
Ataka Construction & Engineering
Co. Ltd. 86,000 453,540
Kawasaki Setsubi Kogyo Co. Ltd. 38,000 173,781
Japan Industrial Land Development
Co. Ltd. 20,000 196,781
824,102
REAL ESTATE - 2.9%
Daibiru Corp. 40,000 440,789
Meiwa Estate Co. Ltd. (a) 30,300 500,846
Sekiwa Real Estate Ltd. 42,000 261,167
Toc Company Ltd. 84,000 786,808
1,989,610
TOTAL CONSTRUCTION & REAL ESTATE 7,340,839
DURABLES - 9.3%
AUTOS, TIRES, & ACCESSORIES - 6.5%
Diamond Electric Mfg. Co. Ltd. 55,000 627,730
FCC Co. Ltd. 42,900 1,175,111
Keihin Seiki Manufacturing Co. Ltd. 50,000 523,437
Murakami Corp. 25,000 238,105
Piolax, Inc. 50,000 739,895
Sanyo Denki Co. 80,000 743,044
Yachiyo Industry Co. Ltd. 50,000 425,046
4,472,368
SHARES VALUE (NOTE 1)
CONSUMER DURABLES - 2.3%
Aderans Co. Ltd. 40,000 $ 900,468
Kuramoto Seisakusho Co. Ltd. 27,000 272,030
Sankyo Co. Ltd. (Gunma) 17,900 412,822
1,585,320
TEXTILES & APPAREL - 0.5%
Jeans Mate Corp. 1,860 35,137
Impact 21 Co. Ltd. 29,000 342,398
377,535
TOTAL DURABLES 6,435,223
FINANCE - 5.2%
CREDIT & OTHER FINANCE - 3.5%
Acom Co. Ltd. 25,000 1,019,324
Credia Co. Ltd. 15,000 268,015
Japan Associated Finance Co. 10,000 648,589
Shohkoh Fund & Co. Ltd. 2,000 469,125
2,405,053
SECURITIES INDUSTRY - 1.7%
Ichiyoshi Securities 69,000 209,099
Kankaku Securities (a) 125,000 208,588
New Japan Securities 200,000 483,293
Wako Securities 58,000 271,636
1,172,616
TOTAL FINANCE 3,577,669
HEALTH - 2.9%
DRUGS & PHARMACEUTICALS - 1.6%
JCR Pharmaceuticals Co. Ltd. 24,000 290,921
Teikoku Hormone Manufacturing Co. Ltd. 80,000 837,499
1,128,420
MEDICAL EQUIPMENT & SUPPLIES - 1.3%
Fukuda Denshi Co. Ltd. 42,000 800,032
Seed Co. Ltd. 10,000 81,866
881,898
TOTAL HEALTH 2,010,318
INDUSTRIAL MACHINERY & EQUIPMENT - 11.5%
ELECTRICAL EQUIPMENT - 2.2%
Inaba Denkisangyo Co. Ltd. 20,000 310,126
Shinko Electric Industries Co. Ltd. 35,000 1,198,394
1,508,520
INDUSTRIAL MACHINERY & EQUIPMENT - 9.3%
Fuji Denki Reiki Co. Ltd. 50,500 308,060
Fujitec Co. Ltd. 60,000 609,233
Kito Corp. 38,000 260,223
Misumi Corp. 30,000 514,778
Nitto Kohki Co. Ltd. 30,690 867,229
Shinkawa Ltd. 30,000 597,426
Tsubaki Nakashima Co. Ltd. 81,000 637,569
Tsubakimoto Chain Co. 60,000 315,951
THK Co. Ltd. 60,000 694,242
Union Tool Co. 52,000 1,219,725
Yushin Precision Equipment Co. Ltd. 30,000 387,264
6,411,700
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 7,920,220
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - 9.5%
BROADCASTING - 0.9%
Nippon Broadcasting System, Inc. (a) 8,000 $ 598,213
ENTERTAINMENT - 4.0%
Sony Music Entertainment Japan, Inc. 80,000 2,745,484
LEISURE DURABLES & TOYS - 2.0%
Roland Corp. 67,000 1,202,409
Takasago Electric Industries Co. Ltd. 15,000 216,065
1,418,474
PUBLISHING - 0.8%
Asia Securities Printing Co. Ltd. 22,000 329,017
Takara Printing Co. Ltd. 33,000 196,112
525,129
RESTAURANTS - 1.8%
Kentucky Fried Chicken Japan 46,000 553,977
Yoshinoya D&C Co. Ltd. Ord. 70 677,713
1,231,690
TOTAL MEDIA & LEISURE 6,518,990
NONDURABLES - 0.4%
FOODS - 0.4%
Yonekyu Corp. 26,000 272,187
RETAIL & WHOLESALE - 14.5%
APPAREL STORES - 1.6%
Fast Retailing Co. Ltd. 20,000 516,352
Naigai Clothes Co. 100,000 613,169
1,129,521
GENERAL MERCHANDISE STORES - 5.8%
Circle K Japan Co. Ltd. 36,000 1,652,013
Hanshin Department Store Ltd. 9,000 40,875
Matsumotokiyoshi Co. Ltd. 45,000 1,399,111
Ministop Co. Ltd. 35,600 899,492
3,991,491
GROCERY STORES - 1.0%
Echo Trading Co. Ltd. 12,000 160,573
U Store Co. Ltd. 44,000 502,184
662,757
RETAIL & WHOLESALE, MISCELLANEOUS - 6.1%
Amway Japan Ltd. 35,000 1,066,158
Art Vivant Co. Ltd. 24,000 566,728
Daimon Co. Ltd. 38,000 273,683
Juel Verite Ohkubo Co. Ltd. 34,000 194,026
Maruzen Co. Ltd. 37,000 214,349
Paris Miki, Inc. 25,400 749,734
Salomon & Taylor Made Co. Ltd. 54,000 182,770
Yamada Denki Co. Ltd. 60,000 949,270
4,196,718
TOTAL RETAIL & WHOLESALE 9,980,487
SERVICES - 2.7%
Bellsystem 24, Inc. 2,000 245,582
Meitec Corp. 80,000 1,599,433
1,845,015
SHARES VALUE (NOTE 1)
TECHNOLOGY - 18.8%
COMMUNICATIONS EQUIPMENT - 3.3%
Forval Corp. 15,000 $ 393,168
Fujitsu Denso 35,000 1,057,893
Oi Electric Co. Ltd. 90,000 699,910
Tohoku Telecommunications Construction
Co. Ltd. 39,000 141,210
2,292,181
COMPUTER SERVICES & SOFTWARE - 0.8%
Ines Corp. Ord. 40,000 516,352
OA System Plaza Co. Ltd. 2,000 11,649
528,001
COMPUTERS & OFFICE EQUIPMENT - 3.0%
IO Data Device, Inc. 25,000 639,537
Melco, Inc. 10,000 281,790
Nidec Corp. 10,000 426,621
Nissho Electronics Corp. 60,000 675,351
2,023,299
ELECTRONIC INSTRUMENTS - 1.0%
Nitto Electric Works Ltd. 47,000 677,004
ELECTRONICS - 10.1%
Hirose Electric Co. Ltd. 10,000 546,263
Mimasu Semiconductor Industries
Co. Ltd. 90,000 1,374,316
Meiden Engineering Co. Ltd. 69,400 492,729
Mitsumi Electric Co. Ltd. 70,000 1,471,132
Nippon Ceramic Co. Ltd. 40,000 642,292
Shindengen Electric Co. Ltd. 144,000 1,269,471
Tokyo Denpa Co. Ltd. 15,000 259,750
Towa Corp. 28,000 912,433
6,968,386
PHOTOGRAPHIC EQUIPMENT - 0.6%
Ricoh Elemex Corp. 40,000 412,452
TOTAL TECHNOLOGY 12,901,323
TOTAL COMMON STOCKS
(Cost $82,640,471) 63,729,974
CASH EQUIVALENTS - 7.3%
Taxable Central Cash Fund (b)
(Cost $5,044,086) 5,044,086 5,044,086
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $87,684,557) $ 68,774,060
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash Fund was
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $28,754,128 and $45,318,538, respectively.
The fund participated in the bank borrowing program. The maximum loan and
the average daily balances during the period for which loans were
outstanding amounted to $2,070,000. The weighted average interest rate was
6.4% (see Note 5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $87,698,400. Net unrealized depreciation aggregated
$18,924,340, of which $2,113,661 related to appreciated investment
securities and $21,038,001 related to depreciated investment securities.
JAPAN SMALL COMPANIES
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at $ 68,774,060
value (cost $87,684,557) -
See accompanying schedule
Receivable for investments sold 397,078
Receivable for fund shares sold 727,637
Dividends receivable 229,478
Interest receivable 19,991
TOTAL ASSETS 70,148,244
LIABILITIES
Payable for investments purchased $ 942,239
Payable for fund shares redeemed 165,839
Accrued management fee 39,635
Other payables and 51,640
accrued expenses
TOTAL LIABILITIES 1,199,353
NET ASSETS $ 68,948,891
Net Assets consist of:
Paid in capital $ 109,947,293
Accumulated net investment (loss) (270,884
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (21,810,520
)
Net unrealized appreciation (depreciation) on investments (18,916,998
and assets and liabilities in )
foreign currencies
NET ASSETS, for 10,079,524 shares outstanding $ 68,948,891
NET ASSET VALUE and redemption price per share ($68,948,891 (divided by) 10,079,524 shares) $6.84
Maximum offering price per share (100/97.00 of $6.84) $7.05
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 321,679
Dividends
Interest 90,879
412,558
Less foreign taxes withheld (48,252
)
TOTAL INCOME 364,306
EXPENSES
Management fee $ 284,393
Transfer agent fees 140,095
Accounting fees and expenses 32,291
Non-interested trustees' compensation 323
Custodian fees and expenses 40,067
Registration fees 15,457
Audit 15,170
Legal 374
Interest 1,110
Miscellaneous 818
Total expenses before reductions 530,098
Expense reductions (11 530,087
)
NET INVESTMENT INCOME (LOSS) (165,781
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (21,719,609
)
Foreign currency transactions (12,358 (21,731,967
) )
Change in net unrealized appreciation (depreciation) on:
Investment securities (599,757
)
Assets and liabilities in 4,696 (595,061
foreign currencies )
NET GAIN (LOSS) (22,327,028
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (22,492,809
)
OTHER INFORMATION $ 298,037
Sales charges paid to FDC
Expense reductions $ 11
Custodian interest credits
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS NOVEMBER 1, 1995
ENDED (COMMENCEMENT
APRIL 30, 1997 OF OPERATIONS) TO
(UNAUDITED) OCTOBER 31, 1996
Operations $ (165,781) $ (333,376)
Net investment income (loss)
Net realized gain (loss) (21,731,967) 698,907
Change in net unrealized appreciation (depreciation) (595,061) (18,321,937)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (22,492,809) (17,956,406)
Distributions to shareholders (334,345) -
From net realized gains
In excess of net realized gains (78,553) -
Total distributions (412,898) -
Share transactions 41,193,408 207,082,528
Net proceeds from sales of shares
Reinvestment of distributions 410,794 -
Cost of shares redeemed (55,497,258) (83,815,966)
Redemption fees 83,223 354,275
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (13,809,833) 123,620,837
TOTAL INCREASE (DECREASE) IN NET ASSETS (36,715,540) 105,664,431
NET ASSETS
Beginning of period 105,664,431 -
End of period (including accumulated net investment loss of $270,884 and $105,103,
respectively) $ 68,948,891 $ 105,664,431
OTHER INFORMATION
Shares
Sold 5,545,633 19,679,280
Issued in reinvestment of distributions 49,197 -
Redeemed (7,091,871) (8,102,715)
Net increase (decrease) (1,497,041) 11,576,565
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS NOVEMBER 1, 1995
ENDED (COMMENCEMENT
APRIL 30, 1997 OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA C (UNAUDITED) 1996
Net asset value, beginning of period $ 9.13 $ 10.00
Income from Investment Operations (.02) (.03)
Net investment income (loss)
Net realized and unrealized gain (loss) (2.24) (.87)
Total from investment operations (2.26) (.90)
Less Distributions
From net realized gain (.03) -
In excess of net realized gain (.01) -
Total distribution (.04) -
Redemption fees added to paid in capital .01 .03
Net asset value, end of period $ 6.84 $ 9.13
TOTAL RETURN B (24.72)% (8.70)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 68,949 $ 105,664
Ratio of expenses to average net assets 1.43% A 1.34%
Ratio of net investment income (loss) to average net assets (.45)% A (.32)%
Portfolio turnover rate 80% A 66%
Average commission rate D $ .0422 $ .0578
</TABLE>
ANNUALIZED
TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
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.
LATIN AMERICA
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). The fund has a 3% sales
charge.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 LIFE OF
APRIL 30, 1997 MONTHS YEAR FUND
LATIN AMERICA 26.71% 33.61% 62.54%
LATIN AMERICA 22.91% 29.60% 57.67%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital 25.86% 33.28% 91.93%
International Emerging Markets
Free - Latin America Index
Latin American Region 23.61% 30.38% n/a
Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year or since the fund
started on April 19, 1993. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Morgan Stanley Capital International (MSCI) Emerging Markets Free - Latin
America Index - a market capitalization weighted index of approximately 170
stocks traded in seven Latin American markets. To measure how the fund's
performance stacked up against its peers, you can compare it to the Latin
American region funds average, which reflects the performance of mutual
funds with similar objectives - in this case, a very small peer group -
tracked by Lipper Analytical Services, Inc. The past six months average
represents a peer group of 31 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect of
sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
APRIL 30, 1997 YEAR FUND
LATIN AMERICA 33.61% 12.79%
LATIN AMERICA 29.60% 11.94%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital International 33.28% 17.53%
Emerging Markets Free -
Latin America Index
Latin American Region 30.38% n/a
Funds Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER LIFE OF FUND
Latin America MS Latin Amer. Fr (Gross)
00349 MS007
1993/04/19 9700.00 10000.00
1993/04/30 9641.80 9568.13
1993/05/31 9874.60 9818.14
1993/06/30 10379.00 10436.73
1993/07/31 10737.90 10716.71
1993/08/31 11746.70 11640.43
1993/09/30 11960.10 11844.71
1993/10/31 12881.60 12314.07
1993/11/30 13861.30 13120.91
1993/12/31 15722.24 14784.37
1994/01/31 16981.97 17217.49
1994/02/28 16093.32 16719.16
1994/03/31 14462.50 15584.66
1994/04/30 13437.14 14395.32
1994/05/31 14169.54 15245.68
1994/06/30 12851.22 14269.20
1994/07/31 14042.59 15621.61
1994/08/31 16132.38 18162.47
1994/09/30 16679.24 18941.58
1994/10/31 15829.65 18005.81
1994/11/30 15360.92 17492.25
1994/12/31 12079.76 14879.00
1995/01/31 10331.75 13254.17
1995/02/28 8710.70 11334.14
1995/03/31 8564.22 10943.14
1995/04/30 9618.88 12522.51
1995/05/31 9667.71 12807.01
1995/06/30 9804.43 13006.60
1995/07/31 10331.75 13409.01
1995/08/31 10527.06 13562.20
1995/09/30 10361.05 13446.57
1995/10/31 9521.23 12364.71
1995/11/30 9863.02 12586.91
1995/12/31 10090.87 12969.47
1996/01/31 11504.18 14299.20
1996/02/29 10901.30 13475.78
1996/03/31 11316.40 13644.77
1996/04/30 11800.68 14400.27
1996/05/31 12373.92 14863.45
1996/06/30 12709.95 15244.82
1996/07/31 12186.13 14644.02
1996/08/31 12561.70 15056.16
1996/09/30 12759.37 15400.36
1996/10/31 12443.10 15250.18
1996/11/30 12601.23 15395.65
1996/12/31 13190.77 15850.18
1997/01/31 14347.85 17410.30
1997/02/28 15122.60 18562.26
1997/03/31 15032.04 18279.18
1997/04/30 15766.54 19193.40
Let's say hypothetically that $10,000 was invested in Fidelity Latin
America Fund on April 19, 1993, when the fund started, and the current
maximum 3% sales charge was paid. As the chart shows, by April 30, 1997,
the value of the investment would have grown to $15,767 - a 57.67% increase
on the initial investment. For comparison, look at how the Morgan Stanley
Capital International Emerging Markets Free - Latin America Index did over
the same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would have grown to $19,193 - a 91.93% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
LATIN AMERICA
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Patti Satterthwaite, Portfolio Manager of Fidelity Latin
America Fund
Q. HOW HAS THE FUND PERFORMED, PATTI?
A. The fund's performance was good on both an absolute and relative basis.
For the six months that ended April 30, 1997, the fund had a total return
of 26.71%. That was better than the Latin American region funds average's
total return of 23.61%, as tracked by Lipper Analytical Services. The fund
also beat the Morgan Stanley Capital International Emerging Markets Free -
Latin America Index, which returned 25.86%. For the 12 months ended April
30, 1997, the fund returned 33.61%, while the Lipper average and the index
returned 30.38% and 33.28%, respectively.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE IN THE REGION OVER THE PAST SIX
MONTHS?
A. In earlier periods, the Latin American market's performance generally
was dominated by a particular news event, such as the devaluation of the
Mexican peso in late 1995. But absent any bad news and a confluence of
positive economic, political and market factors, the Latin American market
posted impressive gains over the past six months. Across the region,
economic growth was positive and stable. What's more, interest rates
remained low although they did begin to creep up slightly toward the end of
the period. From a political standpoint, the region's governments continued
on the reform track, generally improving budgetary and trade surpluses.
Finally, market forces also were positive. Stronger investment inflows, a
reflection of diminished market volatility, were also a positive.
Q. AGAINST THIS BACKDROP, WHAT WERE THE KEYS TO THE FUND'S PERFORMANCE?
A. There were three main factors influencing the fund's performance. The
first was stock selection, with its holdings in Brazilian stocks performing
particularly well. Second, in terms of country weightings, the fund had a
lighter weighting than the index in Chilean and Venezuelan stocks, which
generally lagged the performance of
the region as a whole. That was an additional positive for the fund's
performance. Finally, several individual large holdings from other
countries in the region performed well.
Q. THE FUND'S LARGEST HOLDING, TELEBRAS, IS A GOOD EXAMPLE OF A BRAZILIAN
STOCK THAT PERFORMED WELL DURING THE PERIOD . . .
A. That's true, and the stock price of the Brazilian phone giant Telebras
has more than doubled over the past 12 months, rising about 50% in the
first four months of 1997 alone. Telebras is a state holding company that
controls 28 telephone operating subsidiaries and a monopoly position in
supplying local and long distance services in the country. Part of the
reason for its strong performance was investors' enthusiasm for Telebras'
potential growth. Phone penetration in Brazil is very low, about 10 lines
per 100 people. With Brazil, one of the world's 10 largest economies,
growing at a decent pace, the number of new telephone customers is expected
to grow at a impressive rate. The telecommunications industry is preparing
for privatization, and Telebras continues to improve its financial status
in order to make itself more attractive to investors at the point of
privatization. Telebras, and its subsidiaries - including Telesp, Telepar
and Telemig - accounted for roughly 18% of the fund's investments at the
end of the period.
Q. OUTSIDE THE TELECOMMUNICATIONS SECTOR, WERE THERE OTHER BRAZILIAN STOCKS
THAT PERFORMED WELL?
A. Yes, Petrobras, the large oil production company was another winner
during the period. Despite the fact that oil prices have dropped recently,
regulatory changes and an increase in Petrobras' oil production helped this
company offset declining oil prices and post improved financial results.
Q. A NEW ADDITION TO THE FUND'S TOP 10 HOLDINGS WAS THE MEXICAN TELEPHONE
COMPANY TELEFONOS DE MEXICO (TELMEX). WHAT MADE THIS COMPANY SO ATTRACTIVE?
A. Although Telmex represents about 6% of the Morgan Stanley Capital
International Emerging Markets Free - Latin American Index, I've generally
avoided building up a large stake in it over the past four years or so.
That turned out to be the correct thing to do, since it tended to lag the
overall Mexican market. But in my view, recent developments have made this
stock more attractive. Many investors have worried that deregulation and
competition from U.S. carriers AT&T and MCI will threaten Telmex's
dominance in the long distance market. Those fears forced Telmex's stock
price down to what I felt were attractive levels. And while it's quite
likely that Telmex will lose some market share to American competitors
operating in Mexico, the company is in strong financial shape, with a
strong balance sheet, a low level of debt and with healthy amounts of free
cash flow. In addition, over the past several years the company has bought
more than 15% of its own shares.
Q. WHICH COMPANIES IN ARGENTINA DID YOU FIND ATTRACTIVE?
A. The fund's biggest Argentine holding is YPF, the large oil concern.
During the period it was helped by increased oil production and a new
management team. Another favorite was Perez Companc, a large energy-related
conglomerate.
Q. DESPITE THE FUND'S STRONG PERFORMANCE, THERE MUST HAVE BEEN SOME
DISAPPOINTMENTS . . .
A. That's true, and I'd say the fund's Mexican bank stocks were the biggest
disappointment during the period as they continued to struggle with
non-performing loans. While they generally posted gains, the stocks
generally lagged the overall market.
Q. WHAT'S YOUR OUTLOOK?
A. I'm optimistic. Earnings growth for Latin American companies has been
strong, even though the region's economies have posted only slow economic
growth. And despite its recent rise, U.S. investors - both professional and
individual - have tended to stay away from Latin American stocks. In my
view, many stocks are priced reasonably relative to U.S. stocks. If
investors take notice of Latin American stocks' potential, we could see an
increase in investor inflows into the market. That would most likely bode
well for the stocks in this region.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: high total investment return by investing
mainly in equity and debt securities of Latin
American issuers
FUND NUMBER: 349
TRADING SYMBOL: FLATX
START DATE: April 19, 1993
SIZE: as of April 30, 1997, more than $866
million
MANAGER: Patti Satterthwaite, since 1993;
assistant manager, Latin American portion of
Fidelity Emerging Markets Fund, since 1990;
securities and Latin American analyst,
1986-1990; joined Fidelity in 1986
(checkmark)
PATTI SATTERWAITE ON THE OPPORTUNITY IN LATIN AMERICAN
TELECOMMUNICATIONS STOCKS:
"At the end of April 1997, roughly one-quarter of the
fund's investments were in telecommunications
stocks, including Brazilian phone giant Telebras and
three of its regional domestic operator subsidiaries
- - Telesp, Telemig and Telepar - as well as
Mexican phone company Telmex. In my view, these
and other Latin American telecom companies have
the opportunity for exciting growth. In Brazil and
Mexico, for example, only about one in 10 people
have phones. Recently, Telebras has enjoyed line
growth - a measure of how many new phones are
installed - in excess of 10% annually. That
line-growth rate compares quite favorably to the U.S.,
where telecom providers typically enjoy line growth
of about one to two percent per year. The use of
cellular phones is also growing quite quickly across
the region, especially given the fact that cellular
phones have only been available in most of Latin
America for the past couple of years."
LATIN AMERICA
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AA OF APRIL 30, 1997
Argentina 9.7%
United States 10.5%
Row: 1, Col: 1, Value: 10.5
Row: 1, Col: 2, Value: 6.5
Row: 1, Col: 3, Value: 25.8
Row: 1, Col: 4, Value: 6.0
Row: 1, Col: 5, Value: 41.5
Row: 1, Col: 6, Value: 9.699999999999999
Other 6.5%
Mexico 25.8%
Brazil 41.5%
Chile 6.0%
AS OF OCTOBER 31, 1996
United States 5.7%
Row: 1, Col: 1, Value: 5.7
Row: 1, Col: 2, Value: 6.0
Row: 1, Col: 3, Value: 22.3
Row: 1, Col: 4, Value: 7.2
Row: 1, Col: 5, Value: 48.6
Row: 1, Col: 6, Value: 10.2
Argentina 10.2%
Other 6.0%
Mexico 22.3%
Brazil 48.6%
Chile 7.2%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 89.5 94.3
Short-term investments 10.5 5.7
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
STOCKS
6 MONTHS AGO
Telebras sponsored ADR 6.8 6.7
(Brazil, Telephone Services)
Telefonos de Mexico SA sponsored ADR 5.3 0.0
representing Ord. Class L shares
(Mexico, Telephone Services)
Centrais Electricas Brasileiras SA 5.2 5.6
(Brazil, Electric Utility)
Petrobras PN (Pfd. Reg.) 3.9 2.7
(Brazil, Oil & Gas)
Telesp PN (Pfd. Reg.) 3.4 4.4
(Brazil, Telephone Services)
YPF Sociedad Anonima sponsored ADR 3.4 3.5
representing Class D shares
(Argentina, Oil & Gas)
Telebras ON 3.3 3.7
(Brazil, Telephone Services)
Telebras PN (Pfd. Reg.) 3.1 3.7
(Brazil, Telephone Services)
Perez Companc Class B 3.1 2.8
(Argentina, Oil & Gas)
Grupo Carso SA de CV Class A-1 3.1 3.9
(Mexico, Tobacco)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET
SECTORS 6
MONTHS AGO
Utilities 36.4 34.3
Nondurables 13.5 15.4
Finance 11.1 15.4
Energy 11.0 8.9
Basic Industries 6.9 8.0
Construction & Real Estate 3.1 3.1
Retail & Wholesale 2.9 3.7
Precious Metals 1.3 1.2
Media & Leisure 1.2 0.9
Durables 1.1 1.0
LATIN AMERICA
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.5%
SHARES VALUE (NOTE 1)
ARGENTINA - 9.7%
Banco de Galicia Y Buenos Aires
SA sponsored ADR representing
Class B shares 368,888 $ 8,974,062
Central Costanera SA ADR (c) 19,500 685,425
Ciadea SA 179,062 716,352
Commercial del Plata (a) 423,700 1,283,997
Cresud Sacifya sponsored ADR 171,000 3,142,125
IRSA (Inversiones Y Representa) SA GDR 29,200 1,022,000
Perez Companc Class B 3,280,580 26,609,362
S.A. Importadora y Exportadora de la
Patagonia Class B 153,000 1,744,453
Telecom Argentina Class B
sponsored ADR 168,600 8,430,000
Telecom Argentina Stet France
Telecom SA 360,200 1,783,249
YPF Sociedad Anonima sponsored
ADR representing Class D shares 1,043,800 28,834,975
83,226,000
BERMUDA - 1.3%
Credicorp Ltd. 509,238 10,693,998
BRAZIL - 41.5%
Aracruz Celulose SA ADR 271,550 5,125,506
Banco Real SA (Reg.) (a) 84,000 67,142
Bradesco PN 1,357,622,377 11,234,325
Cimento Itau PN Ord. 6,044,000 2,131,271
Centrais Electricas Brasileiras SA 94,941,110 44,281,151
Compania Cervejaria Brahma:
On (Reg.) (a) 117,827 80,882
PN (Pfd. Reg.) (warrants) (a) 1,895,770 134,056
PN (Pfd. Reg.) 33,686,523 22,918,050
Compania Energertica Minas Gerais 488,328,000 22,266,243
Companhia Brasileira de Petroleo
Ipiranga SA Class B 321,249,000 4,999,470
Companhia Paranaense de
Energia-Copel Class B 81,001,000 1,260,586
Compania Vale do Rio Doce PN Ord. 290,000 7,390,098
Compania Paulista de Forca Luz Ord. 30,050,597 4,663,077
Coteminas PN 11,465,310 4,808,433
Dixie Toga SA 1,904,400 1,432,620
Klabin Industria de Papel e Celulose PN 4,775,165 4,939,284
Itaubanco PN (Pfd. Reg.) 9,327,100 5,043,098
Itausa Investimentos Itau SA 4,623,000 3,912,455
Light Servicos de Electricidade SA Ord. 16,847,000 7,002,092
Multicanal Participacoes SA
sponsored ADR 390,500 5,662,250
Perdigao SA Comercio e Industria
PDG (Pfd. shares) 1,461,114,630 3,022,608
Perdigao SA Comercio e Industria PDG 23,222,143 44,765
Petrobras PN (Pfd. Reg.) 157,164,000 33,030,372
Souza Cruz Industria Comerico 720,600 5,827,411
Telebras:
ON 261,974,800 28,206,408
PN (Pfd. Reg.) 233,540,597 26,789,816
sponsored ADR 506,100 58,074,975
Telemig (Telecomunicacoes de
Minas Gerais) SA Class B 20,600,000 3,281,434
Telepar PN 6,551,764 4,497,427
Telesp PN (Pfd. Reg.) 103,558,857 29,408,789
Vale Do Rio (Pnb) (Non Tradable) 290,000 2,727
Votorantim Celulose e Papel SA
(Pfd. Reg.) 145,251,499 4,097,559
355,636,380
SHARES VALUE (NOTE 1)
CHILE - 6.0%
Banco de Santiago D sponsored ADR 35,700 $ 986,213
Banco Santander Chile SA, Series A
sponsored ADR 379,000 6,064,000
Chilectra SA sponsored ADR 30,000 1,845,000
Cristalerias de Chile SA
sponsored ADR 124,700 2,899,275
Empresa Nacional de Electricidad
SA sponsored ADR 372,100 7,162,925
Enersis SA sponsored ADR 470,100 14,808,150
Madeco SA ADR 94,900 2,597,888
Soc Quimica y Minera de Chile ADR 214,500 12,709,125
Vina Concha Stet y Toro SA
sponsored ADR 61,000 1,990,125
51,062,701
COLOMBIA - 1.5%
Banco Ganadero Class C
sponsored ADR 79,800 2,204,475
Banc Industrial Colombiano
sponsored ADR 159,300 2,887,313
Banco de Bogota 25,737 156,346
Compania Nacional de Chocolates 136,000 1,207,476
Noel (Industria Alimenticias) 94,613 456,265
Suramericana de Seguros SA 245,494 6,089,166
13,001,041
MEXICO - 25.8%
BANACCI SA de CV Class B (a) 2,766,000 5,921,675
Cemex SA, Series B 2,762,000 10,109,962
Cifra SA de CV Class C 7,778,200 11,936,357
Cifra SA de CV, Series A 951,332 1,435,973
Coca-Cola Femsa SA de CV
sponsored ADR 32,000 1,116,000
Corporacion Geo SA de CV (a) 898,873 4,183,434
Corporacion Geo SA de CV Class B
sponsored ADR (a) (c) 40,800 744,600
Empresas Ica Sociedad Controladora SA
de CV sponsored ADR representing
Ord. Participation Certificate 328,600 4,887,925
Fomento Economico Mexicano SA
de CV Class B 3,501,600 16,516,981
Gruma SA Class B (a) 1,788,494 8,616,267
Grupo Carso SA de CV Class A-1 4,529,100 26,149,143
Grupo Cementos Chihuahua Class B 1,356,300 1,306,825
Grupo Elektra SA 992,600 9,301,723
Grupo Financiero Bancomer Class B (a) 43,033,700 15,048,261
Grupo Financiero Inbursa SA Class B 5,696,900 19,491,281
Grupo Imsa SA sponsored ADR 168,400 3,620,600
Grupo Modelo SA de CV Class C Ord. 1,857,500 11,261,824
Grupo Televisa SA de CV
sponsored ADR (a) 185,600 4,292,000
Industrias Penoles SA 178,000 832,906
Kimberly Clark de Mexico SA Class A 1,550,000 5,751,572
Telefonos de Mexico SA sponsored ADR
representing Ord. Class L shares 1,090,600 44,987,250
Tubos de Acero de Mexico ADR (a) 821,100 13,445,513
220,958,072
PANAMA - 1.5%
Panamerican Beverages, Inc. Class A 438,000 12,702,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PERU - 1.5%
Compania de Cementos Lima
SA Class C 145,558 $ 2,648,495
Compania de Minas Buenaventura SA:
Class A 100,526 944,729
Class B 33,551 363,768
Class B sponsored ADR 385,700 8,388,975
Class T 98,541 842,894
13,188,861
VENEZUELA - 0.7%
Electricidad de Caracas 1,902,966 2,064,100
Mavesa SA sponsored ADR 513,933 3,533,289
5,597,389
TOTAL COMMON STOCKS
(Cost $554,643,694) 766,066,442
NONCONVERTIBLE PREFERRED STOCKS - 0.0%
BRAZIL - 0.0%
Suzano de Papel e Cellulose
(Cost $139,680) 52,000 117,354
CASH EQUIVALENTS - 10.5%
SHARES
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.37%, dated
4/30/97 due 5/1/97 $ 46,926,999 46,920,000
SHARES
Taxable Central Cash Fund (b) 42,908,110 42,908,110
TOTAL CASH EQUIVALENTS
(Cost $89,828,110) 89,828,110
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $644,611,484) $ 856,011,906
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash Fund was
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $1,430,025 or 0.2% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $239,887,995 and $142,000,776, respectively.
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $645,917,836. Net unrealized appreciation aggregated
$210,094,070, of which $226,765,160 related to appreciated investment
securities and $16,671,090 related to depreciated investment securities.
At October 31, 1996, the fund had a capital loss carryforward of
approximately $185,031,000 of which $147,415,000, and $37,616,000 will
expire on October 31, 2003, and 2004, respectively.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Basic Industries 6.9%
Cash Equivalents 10.5
Construction & Real Estate 3.1
Durables 1.1
Energy 11.0
Finance 11.1
Holding Companies 0.8
Media & Leisure 1.2
Nondurables 13.5
Precious Metals 1.3
Retail & Wholesale 2.9
Services 0.2
Utilities 36.4
100.0%
LATIN AMERICA
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at $ 856,011,906
value (including repurchase agreements of $46,920,000)
(cost $644,611,484) -
See accompanying schedule
Cash 1,507,089
Receivable for investments sold 1,173,325
Receivable for fund shares sold 7,404,061
Dividends receivable 6,904,754
Interest receivable 210,876
Redemption fees receivable 1,489
TOTAL ASSETS 873,213,500
LIABILITIES
Payable for investments purchased $ 4,164,105
Payable for fund shares redeemed 1,576,813
Accrued management fee 515,554
Other payables and accrued expenses 407,319
TOTAL LIABILITIES 6,663,791
NET ASSETS $ 866,549,709
Net Assets consist of:
Paid in capital $ 831,237,432
Undistributed net investment income 7,373,640
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (183,459,752
)
Net unrealized appreciation (depreciation) on investments 211,398,389
and assets and liabilities in
foreign currencies
NET ASSETS, for 55,293,861 shares outstanding $ 866,549,709
NET ASSET VALUE and redemption price per share ($866,549,709 (divided by) 55,293,861 shares) $15.67
Maximum offering price per share (100/97.00 of $15.67) $16.15
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 11,915,592
Dividends
Interest 1,322,268
13,237,860
Less foreign taxes withheld (575,806
)
TOTAL INCOME 12,662,054
EXPENSES
Management fee $ 2,506,648
Transfer agent fees 979,106
Accounting fees and expenses 219,576
Non-interested trustees' compensation 2,270
Custodian fees and expenses 486,965
Registration fees 52,156
Audit 33,148
Legal 2,024
Miscellaneous 126,598
Total expenses before reductions 4,408,491
Expense reductions (5,735 4,402,756
)
NET INVESTMENT INCOME 8,259,298
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 4,442,550
Foreign currency transactions (374,376 4,068,174
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 135,954,563
Assets and liabilities in 22,728 135,977,291
foreign currencies
NET GAIN (LOSS) 140,045,465
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 148,304,763
OTHER INFORMATION $ 579,820
Sales charges paid to FDC
Expense reductions $ 4,110
Directed brokerage arrangements .
Custodian interest credits 1,263
Transfer agent interest credits 362
$ 5,735
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED OCTOBER 31,
APRIL 30, 1997 1996
(UNAUDITED)
Operations $ 8,259,298 $ 8,995,030
Net investment income
Net realized gain (loss) 4,068,174 (33,471,294)
Change in net unrealized appreciation (depreciation) 135,977,291 168,576,025
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 148,304,763 144,099,761
Distributions to shareholders from net investment income (9,458,525) (5,626,729)
Share transactions 315,717,252 348,744,157
Net proceeds from sales of shares
Reinvestment of distributions 9,235,878 5,493,619
Cost of shares redeemed (155,503,759) (401,997,197)
Redemption fees 364,786 886,945
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 169,814,157 (46,872,476)
TOTAL INCREASE (DECREASE) IN NET ASSETS 308,660,395 91,600,556
NET ASSETS
Beginning of period 557,889,314 466,288,758
End of period (including undistributed net investment income of $7,373,640 and $8,572,867,
respectively) $ 866,549,709 $ 557,889,314
OTHER INFORMATION
Shares
Sold 21,485,168 29,713,125
Issued in reinvestment of distributions 724,384 552,485
Redeemed (11,216,746) (33,772,507)
Net increase (decrease) 10,992,806 (3,506,897)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31, APRIL 19, 1993
ENDED (COMMENCEME
APRIL 30, 1997 NT OF
OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA (UNAUDITED) 1996 1995 1994 D 1993
Net asset value, beginning of period $ 12.59 $ 9.75 $ 16.21 $ 13.28 $ 10.00
Income from Investment Operations
Net investment income .18 C .22 .04 .07 .03
Net realized and unrealized gain (loss) 3.12 2.72 (6.52) 2.82 3.23
Total from investment operations 3.30 2.94 (6.48) 2.89 3.26
Less Distributions
From net investment income (.23) (.12) - (.05) -
From net realized gain - - - (.05) -
Total distributions (.23) (.12) - (.10) -
Redemption fees added to paid in capital .01 .02 .02 .14 .02
Net asset value, end of period $ 15.67 $ 12.59 $ 9.75 $ 16.21 $ 13.28
TOTAL RETURN B 26.71% 30.69% (39.85)% 22.89% 32.80%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 866,550 $ 557,889 $ 466,289 $ 888,530 $ 342,934
Ratio of expenses to average net assets 1.35% A 1.32% 1.41% 1.48% 1.94% A
Ratio of net investment income to average net assets 2.53% A 1.48% .97% .47% 1.21% A
Portfolio turnover rate 47% A 70% 57% 77% 72% A
Average commission rate E $ .0005 $ .0004
</TABLE>
ANNUALIZED
TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
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.
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.
NORDIC
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). The fund has a 3% sales
charge. If Fidelity had not reimbursed certain fund expenses, the past one
year and life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 LIFE OF
APRIL 30, 1997 MONTHS YEAR FUND
NORDIC 8.50% 28.29% 38.55%
NORDIC (INCL. 3% SALES CHARGE) 5.24% 24.44% 34.39%
FT - Actuaries World Nordic Index 8.89% 25.36% 31.98%
European Region Funds Average 9.62% 17.13% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year or since the fund
started on November 1, 1995. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the FT
- - Actuaries World Nordic Index - a market capitalization weighted index of
over 90 stocks traded in four Scandinavian markets. The index is designed
to provide coverage of approximately 85% of investable equity available in
each market. To measure how the fund's performance stacked up against its
peers, you can compare the fund's performance to the European region funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past six months
average represents a peer group of 67 mutual funds. These benchmarks
include reinvested dividends and capital gains, if any, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
APRIL 30, 1997 YEAR FUND
NORDIC 28.29% 24.30%
NORDIC (INCL. 3% SALES CHARGE) 24.44% 21.80%
FT - Actuaries World Nordic Index 25.36% 20.33%
European Region Funds Average 17.13% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER LIFE OF FUND
Nordic FT Nordic
00342 FT002
1995/11/01 9700.00 10000.00
1995/11/30 9845.50 10102.71
1995/12/31 9554.50 9837.68
1996/01/31 9612.70 9736.81
1996/02/29 10204.40 10379.35
1996/03/31 10340.20 10486.03
1996/04/30 10476.00 10527.60
1996/05/31 10990.10 10896.56
1996/06/30 11106.50 10976.95
1996/07/31 10980.40 10742.19
1996/08/31 11630.30 11353.24
1996/09/30 12018.30 11682.46
1996/10/31 12386.90 12120.19
1996/11/30 13269.60 12819.59
1996/12/31 13537.43 13185.49
1997/01/31 13880.77 13575.53
1997/02/28 13969.05 13560.56
1997/03/31 14332.01 13988.81
1997/04/30 13439.33 13197.71
Let's say hypothetically that $10,000 was invested in Fidelity Nordic Fund
on November 1, 1995, when the fund started, and the current maximum 3%
sales charge was paid. As the chart shows, by April 30, 1997, the value of
the investment would have grown to $13,439 - a 34.39% increase on the
initial investment. For comparison, look at how the FT - Actuaries World
Nordic Index did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 investment would have grown to $13,198 -
a 31.98% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
NORDIC
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Colin Stone, Portfolio Manager of Fidelity Nordic Fund
Q. HOW DID THE FUND PERFORM, COLIN?
A. During the six-month period from November 1, 1996 through April 30,
1997, the fund had a return of 8.50%. For the same period, the FT-Actuaries
World Nordic Index was up 8.89% and the European region funds average was
up 9.62%, according to Lipper Analytical Services. For the past 12 months,
the fund's return was 28.29%, the FT Nordic Index was up 25.36% and the
Lipper peer group was up 17.13%.
Q. WHAT WAS THE INVESTMENT ENVIRONMENT LIKE OVER THE PAST SIX MONTHS AND
HOW DID THE ENVIRONMENT AFFECT THE FUND'S PERFORMANCE?
A. The markets in Scandinavia were relatively strong during the period.
Liquidity - meaning the volume of trading - has been good, the interest
rate environment has been reasonably favorable and the outlook for global
growth seems to have improved. The strong U.S. dollar also has been a big
positive for the region. Many of the companies in Sweden, Norway, Finland
and Denmark are commodity-based, export to the U.S. or compete against U.S.
companies, and a strong dollar tends to make Nordic companies' products
more competitive based on price. Many of the fund's technology and forest
products companies compete in dollar-based markets - the U.S. being the
most prominent, of course - and a strong dollar has made their products
more competitive as well. However, many of these companies hedge their
currency risks, and so it may be several months before the real benefits of
their overseas sales are realized. Another factor favoring the fund is that
the domestic economies within the countries generally were supportive of
good performance. The economies of Norway and Denmark were rather robust,
Finland's seemed to be recovering from a down period and Sweden's economy,
while weaker than the other countries, saw some improvement taking place.
Q. THE FUND'S 10 LARGEST HOLDINGS ACCOUNT FOR ABOUT HALF OF THE FUND'S
INVESTMENTS. HOW DID THEY PERFORM?
A. Ericsson, one of the world's leading telecommunications concerns and the
fund's largest holding, outperformed during the period. The stock of this
Swedish company represented 9.5% of the fund's investments at the end of
the period, while it represented more than 10% of my index. Ericsson's
strong performance can be attributed to the global growth in cellular
communications, particularly in the Far East and Europe. Nokia was the
third-largest holding in the fund at the end of the period. Headquartered
in Finland, it also benefited from the growth in the cellular market, and I
more than tripled the fund's position in its stock over the past six
months. Like Ericsson, Nokia continued to gain market share in the cellular
handset market, and its stock price appreciated considerably. The fund's
second-largest position was Astra, a leading pharmaceuticals company. Its
stock was up strongly for a good part of the period before retreating
significantly after reporting disappointing first quarter financial results
based on slowing sales for one of its core products, an ulcer drug.
Q. SOME OF THE FUND'S OTHER LONG-TIME HOLDINGS - ACROSS DIFFERENT
INDUSTRIES - SEEMED TO HAVE A POSITIVE EFFECT ON PERFORMANCE . . .
A. That's quite true. ABB, a major engineering concern, Volvo, the car and
truck manufacturer, and Den Danske Bank, all made contributions to the
fund's performance. ABB's main markets are electrical power generation and
electricity distribution, but it's a fairly diversified company along the
lines of General Electric. It's an extremely high-quality name and a
company where business seems to be improving. Volvo, whose performance in
the previous couple of periods hurt the fund, had a wonderful six months
with its stock going up significantly. The fourth quarter of 1996 and first
quarter of 1997 showed a strong improvement in the profitability of its car
business, with margins up considerably due to a complete overhaul of its
product family. Volume is up and the company appears to be regaining market
share. Den Danske Bank has benefited from the merger and acquisition
activity in the financial services industry across the region, acquiring
one of its smaller Swedish competitors. Its stock also appreciated nicely
during the period.
Q. AT THE SAME TIME, YOU'VE MADE SOME SIGNIFICANT CHANGES TO KEY HOLDINGS
FROM SIX MONTHS AGO . . .
A. That's right. A few examples would be Foreningsbanken, Autoliv and
Falck. Foreningsbanken was acquired during the period by Sparbanken
Sverige, one of the fund's large holdings, and I sold off my holdings after
the takeover bid. Autoliv's stock performed quite well after its merger
with Morton, but I became concerned about dependence on certain car
companies to which it sells products. I eliminated the fund's holdings in
this stock during the period. Falck, the Danish security and ambulance
services company, performed quite well during the period. It reached a
level that I felt was full valuation, and I identified some potential risks
to its stock price. Consequently, I sold the fund's holdings to lock in the
gains we had seen.
Q. THERE ARE ALSO A FEW NEWCOMERS TO THE FUND'S 10 LARGEST HOLDINGS. WHAT
WAS THE STORY THERE?
A. I switched my holdings in Foreningsbanken partly into Svenska
Handelsbanken, a bank I felt was a good value among Nordic financials. It's
very conservatively and professionally managed, and I considered the stock
to be undervalued considering the return on equity it produces.
UPM-Kymmene, a Finnish forest products company, represents my optimism that
the prospects for this industry are starting to improve after a couple of
years of dreadful underperformance. I'm now slightly overweighted in forest
products companies relative to my index, and have invested in the most
liquid companies to give me the flexibility to sell them when necessary.
Stora Kopparbergs, another top-10 holding, is another forest products
company with excellent liquidity.
Q. WHAT'S YOUR OUTLOOK FOR THE FUTURE?
A. It's harder finding good value today in the market than it was 12 or 18
months ago. Growth is improving, and there's still enough spare capacity in
the Nordic economies, so I don't think we have to worry about interest rate
increases for quite a while, except possibly in Norway. The more cyclical
companies - such as those in the engineering and metals industries - are
moderately attractive, but fundamentals - or business prospects - have not
shown that much improvement. I do believe, however, that there is a
cyclical recovery underway, and I've been increasing my holdings in some of
the cyclical companies.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of issuers in
Denmark, Finland, Norway and Sweden
FUND NUMBER: 342
TRADING SYMBOL: FNORX
START DATE: November 1, 1995
SIZE: as of April 30, 1997, more than
$74 million
MANAGER: manager, Colin Stone, since
inception; manager, Fidelity International,
Limited's Fidelity Nordic Fund, since 1990,
Fidelity Iberia Fund, since 1993, Fidelity New
Europe Fund, since 1995; analyst covering oil,
oil service, leisure and engineering industries,
1987-1993; joined Fidelity in 1987
(checkmark)
COLIN STONE ON THE MOVE TOWARD SHAREHOLDER VALUE IN
THE REGION:
"If I look across the entirety of Europe at the moment,
I believe it's the Nordic companies' management
teams that are the most shareholder-friendly
anywhere, with the possible exception of the United
Kingdom. We have excellent financial reporting, pretty
full quarterly disclosure of earnings, cash flow and
balance sheets, and good access to company
management. This is particularly true in Sweden and
Norway, and to a lesser degree in Finland, with
Denmark probably having the furthest to go, although
it's clearly improving as well.
"There's a strong equity culture in the Nordic region. In
Sweden, investing in the stock market is like a
national hobby, and there's a higher level of
individual stockholders in the Swedish population
than there is in the U.S. population. At long last, share
buy-backs are in the process of being legalized in the
Nordic regions, and several companies have
indicated their intent to do so. Volvo, for instance, said
it will be repurchasing shares amounting to what I
believe will be 5% of its total capital.
"For some time now, corporate management across
Europe has talked about the need to create more
shareholder value. While in the rest of Europe it gets
talked about, in the Nordic region it gets done. For
example, in the financial sector, there's been a
tremendous amount of merger and acquisition activity,
including Foreningsbanken in Sweden, the
second-biggest Norwegian bank and the country's
largest insurance company, and two of the three
largest Swedish construction companies. The object
of these mergers and acquisitions is to reduce cost
levels; the result is that they enhance shareholder
value quite a bit.
"Another trend is that conglomerates are refocusing
their businesses and selling off their non-core
holdings to increase shareholder value. Volvo, for
instance, is selling off its non-
core assets to focus on its global car, truck and
construction businesses. Asko, which the fund holds a
position in, is a Finnish conglomerate that is focusing
more on its core building materials business and
selling off its non-core assets. We're also expecting to
see a pickup in merger and acquisition activity in the
forest products sector, although it hasn't happened
as of yet."
NORDIC
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997
United States 6.3%
Denmark 10.9%
Row: 1, Col: 1, Value: 6.3
Row: 1, Col: 2, Value: 55.1
Row: 1, Col: 3, Value: 5.7
Row: 1, Col: 4, Value: 22.0
Row: 1, Col: 5, Value: 10.9
Finland 22.0%
Norway 5.7%
Sweden 55.1%
AS OF OCTOBER 31, 1996
Denmark 9.9%
Row: 1, Col: 1, Value: 15.4
Row: 1, Col: 2, Value: 49.5
Row: 1, Col: 3, Value: 8.800000000000001
Row: 1, Col: 4, Value: 16.4
Row: 1, Col: 5, Value: 9.9
United States 15.4%
Finland 16.4
%
Norway 8.8%
Sweden 49.5%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 94.8 85.7
Short-term investments 5.2 14.3
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
STOCKS
6 MONTHS AGO
Ericsson (L.M.) Telephone Co. Class B 9.5 8.5
(Sweden, Communications Equipment)
Astra AB Class A Free shares 8.9 5.4
(Sweden, Drugs & Pharmaceuticals)
Nokia Corp. AB, Series A 6.5 3.1
(Finland, Communications Equipment)
ABB AB, Series A 5.0 4.2
(Sweden, Holding Companies)
Volvo AB Class B 4.5 3.9
(Sweden, Autos, Tires & Accessories)
Svenska Handelsbanken 3.9 0.4
(Sweden, Banks)
Den Danske Bank Group AS 3.6 2.6
(Denmark, Banks)
UPM-Kymmene Corp. 3.0 1.9
(Finland, Paper & Forest Products)
Nordbanken AB 2.6 0.0
(Sweden, Banks)
Stora Kopparbergs Bergslags AB 2.1 1.9
Class A Free shares
(Sweden Paper & Forest Products)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET
SECTORS
6 MONTHS AGO
Technology 23.1 20.3
Finance 19.2 15.2
Health 12.0 7.0
Durables 7.3 9.9
Basic Industries 7.2 4.8
Construction & Real Estate 5.5 4.4
Holding Companies 5.3 4.8
Nondurables 4.6 4.4
Media & Leisure 3.5 3.0
Industrial Machinery & Equipment 3.4 2.3
NORDIC
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.8%
SHARES VALUE (NOTE 1)
DENMARK - 10.9%
Bang & Olufsen Class B 5,400 $ 311,386
Den Danske Bank Group AS 31,329 2,709,833
Fredgaard Radio AS 2,300 160,549
Incentive AS 7,778 389,499
International Service Systems AS,
Series B 8,350 247,083
InWear Group AS (a)(c) 1,000 43,400
NKT Holding AS 11,500 724,214
Scanbox Danmark AS Class B (a) 10,000 455,242
Sondagsavisen AS (Reg.) 548 119,747
Sophus Berendsen AS, Series B 9,340 1,133,856
Spar Nord Holding 20,600 853,397
Syd-Sonderjylland Holding 11,500 537,489
Unidanmark AS Class A 9,717 480,697
8,166,392
FINLAND - 22.0%
Asko Class A 43,000 781,615
Cultor OY, Series 1 20,692 1,122,391
Efore OY Class A 18,964 525,273
Enso OY Class R 60,000 496,264
Fiskars OY, Series A 2,800 223,511
Hartwall OY AB Class A 5,013 226,599
Huhtamaki Ord. 16,169 701,330
Lemminkaeinen OY 54,300 541,031
Martela OY Class A 1,200 31,853
Metsa-Serla Ltd. Class B 65,000 487,608
Nokia Corp. AB, Series A 77,690 4,847,733
Okobank Class A 31,000 414,419
Pohjola Class B 46,151 1,313,819
Raision Tehtaat Class V 3,400 281,870
Rauma OY 2,497 51,392
Spontel OY Class A 26,500 163,113
Talentum OY Class B 3,400 41,528
TT Teito OY 11,549 877,474
UPM-Kymmene Corp. 98,500 2,254,633
Vaisala OY Class A 6,300 392,625
Yit-Yhtymae OY 62,500 759,783
16,535,864
NORWAY - 5.7%
A-Pressen AS, Series A 12,200 278,386
Ekornes AS (Reg.) 50,000 368,607
Fokus Bank AS 23,000 224,464
NCL Holdings AS (a) 407,000 1,028,730
Nera AS 142,800 902,351
SE (System Etikettering) AS 4,269 56,349
Saga Petroleum AS Class B 3,380 54,345
Schibsted AS, Series B 48,300 834,232
Sparebanken Midt-Norge 5,900 146,643
Sparebanken Norway primary
shares certificates 8,617 248,053
Steen & Stroem Invest AS 13,635 185,721
4,327,881
SWEDEN - 55.1%
ABB AB, Series A 307,500 3,742,449
Allgon AB Class B Free shares 43,300 1,186,407
ASG AB Class B Free shares Ord. 43,145 769,779
Assi Doman AB Free shares 26,500 663,614
Astra AB Class A Free shares 164,000 6,708,977
SHARES VALUE (NOTE 1)
Beijer AG (G&L), Series B 2,900 $ 36,588
Bergman & Beving AB Class B
Free shares 1,344 41,107
Biacore International AB
sponsored ADR (a) 25,600 432,000
Biora AB sponsored ADR 32,500 593,125
Dahl International AB 37,500 778,980
Electrolux AB 8,780 503,517
Ericsson (L.M.) Telephone Co. Class B 226,286 7,151,823
Frontec AB, Series B 75,000 573,482
IBS (International Business Systems) AB
Class B Free shares 19,000 150,125
Incentive Fund, Inc. 16,000 1,050,110
NCC AB Class B Free shares 64,200 719,988
NK Cityfastigheter AB (a)(c) 13,000 91,120
Nobel Biocare AB 50,300 737,179
Nordbanken AB 63,500 1,950,285
Nordictel Holding AB (a) 31,800 607,891
Scandic Hotels AB (a)(c) 2,000 33,389
SKF AB Ord. 8,874 192,254
Skandia Foersaekrings AB 51,400 1,486,950
Stora Kopparbergs Bergslags AB
Class A Free shares 111,750 1,545,200
Svenska Handelsbanken 105,500 2,904,114
Swedbank Class A 66,000 1,177,550
Swedish Match Co. 347,000 1,132,079
Svedala Industri Free shares 54,240 995,382
TV 4 AB Class A 6,025 103,657
Volvo AB Class B 133,878 3,369,642
41,428,763
UNITED STATES OF AMERICA - 1.1%
Pharmacia & Upjohn, Inc. 846 25,063
Pharmacia & Upjohn, Inc. unit 27,190 783,114
808,177
TOTAL COMMON STOCKS
(Cost $69,286,152) 71,267,077
CASH EQUIVALENTS - 5.2%
Taxable Central Cash Fund (b)
(Cost $3,873,154) 3,873,154 3,873,154
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $73,159,306) $ 75,140,231
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash Fund was
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $167,909 or 0.2% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $52,429,450 and $9,851,606, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these affiliated
firms were $11,764 for the period.
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $73,170,502. Net unrealized appreciation aggregated
$1,969,729, of which $5,433,161 related to appreciated investment
securities and $3,463,432 related to depreciated investment securities.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Basic Industries 7.2%
Cash Equivalents 5.2
Construction & Real Estate 5.5
Durables 7.3
Energy 0.1
Finance 19.2
Health 12.0
Holding Companies 5.3
Industrial Machinery & Equipment 3.4
Media & Leisure 3.5
Nondurables 4.6
Services 1.8
Technology 23.1
Transportation 1.0
Utilities 0.8
100.0%
NORDIC
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at $ 75,140,231
value (cost $73,159,306) -
See accompanying schedule
Receivable for investments sold 2,510
Receivable for fund shares sold 438,447
Dividends receivable 484,161
Interest receivable 16,463
Redemption fees receivable 255
TOTAL ASSETS 76,082,067
LIABILITIES
Payable for investments purchased $ 1,208,069
Payable for fund shares redeemed 667,700
Accrued management fee 47,247
Other payables and accrued expenses 56,995
TOTAL LIABILITIES 1,980,011
NET ASSETS $ 74,102,056
Net Assets consist of:
Paid in capital $ 70,205,464
Undistributed net investment income 737,106
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 1,188,042
Net unrealized appreciation (depreciation) on investments 1,971,444
and assets and liabilities in
foreign currencies
NET ASSETS, for 5,409,972 shares outstanding $ 74,102,056
NET ASSET VALUE and redemption price per share ($74,102,056 (divided by) 5,409,972 shares) $13.70
Maximum offering price per share (100/97.00 of $13.70) $14.12
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 1,211,812
Dividends
Interest 135,713
1,347,525
Less foreign taxes withheld (180,639
)
TOTAL INCOME 1,166,886
EXPENSES
Management fee $ 218,785
Transfer agent fees 86,280
Accounting fees and expenses 30,317
Non-interested trustees' compensation 111
Custodian fees and expenses 41,506
Registration fees 19,730
Audit 18,616
Legal 94
Miscellaneous 348
Total expenses before reductions 415,787
Expense reductions (458 415,329
)
NET INVESTMENT INCOME 751,557
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 1,212,109
Foreign currency transactions (1,843 1,210,266
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (345,769
)
Assets and liabilities in (9,477 (355,246
foreign currencies ) )
NET GAIN (LOSS) 855,020
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,606,577
OTHER INFORMATION $ 337,070
Sales charges paid to FDC
Expense reduction $ 458
Custodian interest credits
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS NOVEMBER 1, 1995
ENDED (COMMENCEMENT
APRIL 30, 1997 OF OPERATIONS) TO
(UNAUDITED) OCTOBER 31, 1996
Operations $ 751,557 $ 145,269
Net investment income
Net realized gain (loss) 1,210,266 294,221
Change in net unrealized appreciation (depreciation) (355,246) 2,326,690
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,606,577 2,766,180
Distributions to shareholders (148,633) -
From net investment income
From net realized gain (297,267) -
TOTAL DISTRIBUTIONS (445,900) -
Share transactions 66,187,482 32,616,632
Net proceeds from sales of shares
Reinvestment of distributions 444,939 -
Cost of shares redeemed (24,650,889) (4,541,434)
Redemption fees 89,251 29,218
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 42,070,783 28,104,416
TOTAL INCREASE (DECREASE) IN NET ASSETS 43,231,460 30,870,596
NET ASSETS
Beginning of period 30,870,596 -
End of period (including undistributed net investment income of $737,106 and $143,841, respectively) $74,102,056 $ 30,870,596
OTHER INFORMATION
Shares 4,723,445 2,814,140
Sold
Issued in reinvestment of distributions 33,555 -
Redeemed (1,764,452) (396,716)
Net increase (decrease) 2,992,548 2,417,424
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED NOVEMBER 1, 1995
APRIL 30, 1997 (COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA D (UNAUDITED) 1996
Net asset value, beginning of period $ 12.77 $ 10.00
Income from Investment Operations
Net investment income .18 .17 E
Net realized and unrealized gain (loss) .88 2.57
Total from investment operations 1.06 2.74
Less Distributions
From net investment income (.05) -
From net realized gain (.10) -
Total distributions (.15) -
Redemption fees added to paid in capital .02 .03
Net asset value, end of period $ 13.70 $ 12.77
TOTAL RETURN B, C 8.50% 27.70%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 74,102 $ 30,871
Ratio of expenses to average net assets 1.46% A 2.00% F
Ratio of net investment income to average net assets 2.63% A 1.52%
Portfolio turnover rate 37% A 35%
Average commission rate G $ .0484 $ .0523
</TABLE>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E INVESTMENT INCOME PER SHARE
REFLECTS SPECIAL DIVIDENDS FROM VOLVO AB AND STEEN & STROEM INVEST AS,
WHICH AMOUNTED TO $.06 AND $.10 PER SHARE, RESPECTIVELY. F FMR AGREED TO
REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER. G 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.
PACIFIC BASIN
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). The fund has a 3% sales
charge. If Fidelity had not reimbursed certain fund expenses, the past five
years and past 10 years total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 PAST 10
APRIL 30, 1997 MONTH YEAR YEARS YEARS
S
PACIFIC BASIN -2.96% -12.89% 44.42% 12.59%
PACIFIC BASIN -5.87% -15.50% 40.09% 9.21%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital -10.47% -21.65% 39.83% 1.99%
International Pacific Index
Pacific Region Funds Average -0.29% -7.58% 54.40% 55.00%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years or 10
years. For example, if you invested $1,000 in a fund that had a 5% return
over the past year, the value of your investment would be $1,050. You can
compare the fund's returns to the performance of the Morgan Stanley Capital
International (MSCI) Pacific Index - a market capitalization weighted index
of over 400 stocks traded in six Pacific-region markets. To measure how the
fund's performance stacked up against its peers, you can compare it to the
Pacific region funds average, which reflects the performance of mutual
funds with similar objectives tracked by Lipper Analytical Services, Inc.
The past six months average represents a peer group of 45 mutual funds.
These benchmarks include reinvested dividends and capital gains, if any,
and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST
APRIL 30, 1997 YEAR YEARS 10
YEARS
PACIFIC BASIN -12.89% 7.63% 1.19%
PACIFIC BASIN -15.50% 6.97% 0.89%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital -21.65% 6.94% 0.20%
International Pacific Index
Pacific Region Funds Average -7.58% 8.96% 4.22%
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER 10 YEARS
Pacific Basin MS Pacific Index (Net)
00302 MS003
1987/04/30 9700.00 10000.00
1987/05/31 9730.68 10000.00
1987/06/30 9055.79 9371.75
1987/07/31 9104.87 9150.46
1987/08/31 9607.97 10237.70
1987/09/30 9479.13 9941.40
1987/10/31 7620.11 8860.21
1987/11/30 7798.04 9211.99
1987/12/31 8382.19 9353.53
1988/01/31 8382.19 9821.44
1988/02/29 8729.38 10510.41
1988/03/31 9212.97 11329.15
1988/04/30 9553.96 11472.43
1988/05/31 9212.97 11034.60
1988/06/30 8685.98 10659.54
1988/07/31 8518.58 11143.77
1988/08/31 8487.59 10318.90
1988/09/30 8611.58 10717.32
1988/10/31 8673.58 11598.24
1988/11/30 9231.57 12555.41
1988/12/31 9257.73 12626.58
1989/01/31 9432.64 12742.68
1989/02/28 9638.78 12905.50
1989/03/31 9413.90 12495.62
1989/04/30 9657.52 12503.01
1989/05/31 9282.71 11804.38
1989/06/30 8851.69 11278.10
1989/07/31 9907.39 12741.75
1989/08/31 9376.42 11953.44
1989/09/30 10151.02 12684.01
1989/10/31 9857.42 12344.54
1989/11/30 10176.00 12932.21
1989/12/31 10316.99 12946.27
1990/01/31 9965.94 12213.76
1990/02/28 9341.85 11028.43
1990/03/31 8763.27 9042.43
1990/04/30 8665.75 9103.28
1990/05/31 9504.37 10367.79
1990/06/30 9647.39 9950.09
1990/07/31 9972.44 9874.53
1990/08/31 8646.25 8932.56
1990/09/30 7235.55 7532.11
1990/10/31 8379.71 9159.34
1990/11/30 7612.60 8143.65
1990/12/31 7509.39 8490.31
1991/01/31 7654.31 8754.91
1991/02/28 8345.97 9834.19
1991/03/31 8240.57 9298.49
1991/04/30 8596.28 9537.45
1991/05/31 8536.99 9500.53
1991/06/30 8392.08 8879.70
1991/07/31 8497.47 9179.17
1991/08/31 7924.39 8713.55
1991/09/30 8418.43 9398.99
1991/10/31 8662.15 9798.98
1991/11/30 8253.75 9168.58
1991/12/31 8451.36 9449.93
1992/01/31 8233.98 9083.79
1992/02/29 8154.94 8447.57
1992/03/31 7641.14 7644.18
1992/04/30 7562.09 7293.77
1992/05/31 8168.11 7862.64
1992/06/30 7996.85 7244.36
1992/07/31 7641.14 7143.65
1992/08/31 7865.10 8122.29
1992/09/30 7812.40 7936.19
1992/10/31 7904.62 7655.98
1992/11/30 7871.69 7800.37
1992/12/31 7807.52 7711.08
1993/01/31 7887.33 7696.73
1993/02/28 8346.20 8069.90
1993/03/31 8911.48 9044.77
1993/04/30 9815.93 10485.80
1993/05/31 10294.76 10790.86
1993/06/30 9762.73 10613.94
1993/07/31 10281.46 11241.46
1993/08/31 10753.63 11573.96
1993/09/30 10780.23 11141.09
1993/10/31 11624.83 11388.42
1993/11/30 11052.90 9781.60
1993/12/31 12797.20 10463.47
1994/01/31 13144.36 11674.67
1994/02/28 13273.70 11975.64
1994/03/31 12279.87 11314.57
1994/04/30 12620.22 11803.82
1994/05/31 12994.61 12084.62
1994/06/30 12940.15 12479.94
1994/07/31 12912.92 12212.19
1994/08/31 13525.56 12424.43
1994/09/30 13348.57 12113.46
1994/10/31 13586.82 12419.86
1994/11/30 12470.47 11726.81
1994/12/31 12437.20 11805.71
1995/01/31 11284.90 11060.15
1995/02/28 11100.53 10786.22
1995/03/31 11453.90 11614.34
1995/04/30 11584.50 12108.31
1995/05/31 11515.36 11624.00
1995/06/30 11407.81 11131.37
1995/07/31 12152.97 11933.93
1995/08/31 12022.37 11484.40
1995/09/30 11884.10 11590.78
1995/10/31 11430.86 11027.18
1995/11/30 11330.99 11569.36
1995/12/31 11676.68 12134.04
1996/01/31 11853.37 12154.62
1996/02/29 11599.86 12017.47
1996/03/31 11907.14 12386.04
1996/04/30 12537.07 13016.76
1996/05/31 12183.70 12451.90
1996/06/30 12345.02 12454.48
1996/07/31 11715.09 11882.19
1996/08/31 11484.63 11569.37
1996/09/30 11822.64 11946.94
1996/10/31 11254.17 11392.36
1996/11/30 11684.37 11701.69
1996/12/31 11353.91 11093.47
1997/01/31 10651.05 10160.02
1997/02/28 10875.04 10371.52
1997/03/31 10581.54 9991.44
1997/04/30 10921.38 10199.04
Let's say hypothetically that $10,000 was invested in Fidelity Pacific
Basin Fund on April 30, 1987, and the current maximum 3% sales charge was
paid. As the chart shows, by April 30, 1997, the value of the investment
would have grown to $10,921 - a 9.21% increase on the initial investment.
For comparison, look at how the Morgan Stanley Capital International
Pacific Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to $10,199
- - a 1.99% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
PACIFIC BASIN
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Shigeki Makino, Portfolio Manager of Fidelity Pacific
Basin Fund
Q. HOW DID THE FUND PERFORM, SHIGEKI?
A. For the six months that ended April 30, 1997, the fund had a total
return of -2.96%. For the same period, the Morgan Stanley Capital
International Pacific Index returned -10.47%, while the Pacific region
funds average tracked by Lipper Analytical Services posted a return of
- -0.29%. For the 12 months that ended April 30, 1997, the fund had a total
return of -12.89%, the Morgan Stanley Capital International Pacific Index
returned -21.65% and the Pacific region funds average returned -7.58%.
Q. WHY DID THE FUND BEAT THE INDEX OVER THE PAST SIX MONTHS?
A. Primarily because of stock picking. The stocks I chose for the fund
performed better than those that make up the index. In addition, the index
had a heavier weighting in Japan than the fund did. The Japanese market
didn't perform as well as other markets in the region.
Q. AND WHY DID THE FUND TRAIL THE AVERAGE DURING THE PERIOD?
A. There were two reasons. First, while the fund had less invested in Japan
than the index, it had more invested there than other funds. The fund's
peers benefited more from the better performance of the non-Japanese stock
markets. Second, many of the funds in the Lipper average use currency
hedging to offset currency fluctuations, but Fidelity Pacific Basin Fund
does not. Funds that hedged performed better because of the relative
strength of the dollar over the period.
Q. JAPAN REMAINS THE FUND'S LARGEST COUNTRY WEIGHTING, 64% AT THE END OF
THE PERIOD. HOW HAS THAT MARKET PERFORMED?
A. First off, let me mention the reason behind my weighting in Japan. The
fund continued to have less invested in Japan than the Morgan Stanley
Capital International Pacific Index. That being said, I kept Japan as the
fund's largest country weighting because I found more value there.
Alternatives in Asia were, in my opinion, overvalued. Looking closely at
the Japanese market, we can see that it struggled. One of the main reasons
was an increasing lack of confidence in the finance sector, which makes up
about 18% of the Tokyo Stock Exchange Index (TOPIX). Banks have suffered
from bad loans for some time, and that situation worsened during the
period. In addition, the brokerage community was hit by scandals, rumors
regarding bank failures increased and a life insurance company was forced
to close. Furthermore, the economy grew very slowly, hurting domestically
oriented and less competitive industries such as steel and chemicals. Most
of all, the Japanese market was plagued by problems related to
deregulation. Non-competitive industries that were either fully or
partially regulated experienced share price collapses, creating a sharp
dichotomy between the performance of these companies and others that were
more shareholder-friendly and competitive.
Q. DID YOU FOCUS THE FUND'S JAPANESE INVESTMENTS ON THESE MORE COMPETITIVE
COMPANIES?
A. Yes, I did. In fact, the market favored the Japanese stocks I chose for
the fund. I targeted companies with shareholder-friendly management that
are competitive in international markets or have other competitive
advantages, and whose stocks were selling at attractive valuations.
Moreover, many of the fund's best-performing stocks were exporters helped
by the weakness of the yen. The yen's relative weakness made Japanese
products less expensive outside of the country. Furthermore, the domestic
Japanese investor base has become more interested in stocks of companies
with shareholder-friendly management.
Q. WHAT WERE SOME OF THE JAPANESE STOCKS THAT POSTED STRONG PERFORMANCE FOR
THE FUND?
A. Three exporters that benefited from yen weakness bear mentioning:
Toyota, Fuji Photo Film and Canon. Toyota is enjoying a strong new product
cycle that is helping it to increase market share. Cost reduction also is a
clear priority for Toyota, as it is aiming to continue to pare $1 billion
per year from its costs as it has done over the past year. The company is
employing its free cash flow to buy back shares and is meeting with
shareholders - helping to reinforce its shareholder-friendly reputation.
Another strong performer, Fuji Photo Film, was helped by improved
disclosure and access to company executives. Further, the company has used
its excess free cash flow for constructive endeavors such as purchasing
Wal-Mart's photo distribution chain. Canon maintained its global
competitiveness in such areas as copiers and printers, and benefited
because more people are using personal computers and from the move away
from analog to digital copiers. Its copier business has been strong both in
terms of volume and profit margin.
Q. WHAT WERE SOME OF THE AREAS YOU FAVORED IN THE REST OF THE REGION?
A. The fund's country weightings haven't changed significantly from six
months ago. I've tended to invest more in Australia and Hong Kong than is
represented in the index. Australia was appealing because company
managements there tend to be shareholder friendly, stock valuations aren't
as excessive as elsewhere in the region and the country's economy appears
to be growing. Hong Kong was appealing because companies tended to provide
good returns on capital. Both of these markets posted relatively positive
returns, although Hong Kong faltered a bit earlier in 1997 due to falling
real estate prices and the effects of interest rate increases in the U.S.
Hong Kong sets its currency and interest rates based on what is going on in
the U.S. Higher interest rates also hurt markets in the rest of the Asia
region because those countries set their rates according to levels in the
U.S. Higher interest rates tend to increase borrowing costs for
corporations and also can slow economic growth and, hence, company
earnings.
Q. WHY DIDN'T YOU LIKE THE OTHER MARKETS IN THE ASIAN REGION?
A. I found that the valuations for stocks in other markets were too high.
Nevertheless, I've started to turn my attention to some of the companies in
Asia that are more shareholder-friendly, have a competitive advantage,
target a niche that enables them to remain competitive on an international
level, and are selling at reasonable valuations.
Q. WHAT'S YOUR OUTLOOK?
A. I'll probably continue to overweight Australia and Hong Kong because of
the reasons I just cited, and underweight elsewhere in Southeast Asia
because of high valuations there. As I said, I'll also seek to do in Asia
what I did in Japan: look for companies with sustainable earnings growth,
sales, and returns on capital, with some sort of competitive advantage that
are selling at reasonable valuations. For now, though, I remain somewhat
skeptical about prospects in Southeast Asia; hence, I could maintain the
fund's relative weighting in Japan.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Pacific Basin
issuers
FUND NUMBER: 302
TRADING SYMBOL: FPBFX
START DATE: October 1, 1986
SIZE: as of April 30, 1997, more than
$284 million
MANAGER: Shigeki Makino, since 1996;
manager, Fidelity Japan Fund, since 1994;
joined Fidelity in 1990
(checkmark)
SHIGEKI MAKINO ON HONG KONG'S CHANGEOVER FROM
BRITISH TO CHINESE RULE:
"Being based in Hong Kong, I have an excellent
perspective on the history that will be made this
summer when Great Britain cedes control to China.
On the cusp of such a monumental change, I'd
comment on two levels.
"First, economically, we've seen some changes
over the past five years. At the beginning of that
period, investors were able to purchase shares
of Hong Kong companies at a discount to the rest of
Southeast Asia because of the uncertainty
surrounding the changeover. As the actual date
approaches, that discount is dwindling, meaning that
investors are growing more comfortable with the
idea of Chinese rule in Hong Kong. Not only that, but
many people are becoming more optimistic about
the prospects for Hong Kong's economic future, and
there is a fair amount of people and business flowing
into the area. Hong Kong represents more of an
opportunity to do business with mainland China,
and that prospect has created a more positive
backdrop. Further, fears that the financial center
located in Hong Kong might move elsewhere -
such as to Shanghai - have been allayed.
"On the social side, there is a bit more uncertainty.
Hong Kong is somewhat of a paradox, because
while it is a fairly chaotic place, at the same time
there is a strong sense of law and order that helps
make it livable. Many people are suspect of the
ability of the Chinese government to maintain the
balance that keeps Hong Kong moving. Crime and
pollution are expected to increase, and perhaps Hong
Kong will become a less attractive place to live. Any
modest breakdown in order in such a fast-paced
environment will probably cause major social
problems.
"All in all, though, people are much less
apprehensive about the change than a few years
ago. There is a great deal of optimism and, by all
appearances, Hong Kong's pre-eminence as a major
financial center will remain intact."
PACIFIC BASIN
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997
United States 4.1%
Singapore 3.6%
Australia 10.4%
Other 1.1%
Row: 1, Col: 1, Value: 4.1
Row: 1, Col: 2, Value: 3.6
Row: 1, Col: 3, Value: 1.1
Row: 1, Col: 4, Value: 5.5
Row: 1, Col: 5, Value: 64.2
Row: 1, Col: 6, Value: 11.1
Row: 1, Col: 7, Value: 10.4
Malaysia 5.5%
Hong Kong 11.1%
Japan 64.2%
AS OF OCTOBER 31, 1996
Other 7.3%
Australia 7.8%
Row: 1, Col: 1, Value: 7.3
Row: 1, Col: 2, Value: 4.1
Row: 1, Col: 3, Value: 72.2
Row: 1, Col: 4, Value: 8.6
Row: 1, Col: 5, Value: 7.8
Malaysia 4.1%
Hong Kong 8.6%
Japan 72.2%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 94.9 97.0
Bonds 1.0 1.4
Short-term investments 4.1 1.6
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
STOCKS
6 MONTHS AGO
Toyota Motor Corp. 5.6 2.3
(Japan, Autos, Tires, & Accessories)
Canon, Inc. 2.7 1.5
(Japan, Computer Services & Software)
Matsushita Electric Industrial Co. Ltd. 2.4 2.4
(Japan, Consumer Electronics)
Takeda Chemical Industries Ltd. 1.9 1.2
(Japan, Drugs & Pharmaceuticals)
DDI Corp. Ord. 1.8 2.1
(Japan, Telephone Services)
Nintendo Co. Ltd. Ord. 1.8 0.6
(Japan, Leisure Durables & Toys)
Sony Corp. 1.8 1.3
(Japan, Consumer Electronics)
Sumitomo Metal Industries Ltd. 1.7 1.2
(Japan, Iron & Steel)
Honda Motor Co. Ltd. 1.7 2.1
(Japan, Autos, Tires, & Accessories)
National Australia Bank Ltd. 1.6 0.7
(Australia, Banks)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET
SECTORS 6
MONTHS AGO
Finance 19.7 19.2
Durables 13.8 12.9
Technology 13.6 11.2
Construction & Real Estate 8.2 13.4
Industrial Machinery & Equipment 8.0 8.2
Media & Leisure 6.8 4.8
Health 5.5 4.6
Basic Industries 5.1 6.0
Utilities 4.7 4.0
Services 2.9 2.1
PACIFIC BASIN
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.6%
SHARES VALUE (NOTE 1)
AUSTRALIA - 10.1%
Australia & New Zealand Banking
Group Ltd. 281,000 $ 1,797,501
Brambles Industries Ltd. 79,647 1,443,232
Broken Hill Proprietary Co. Ltd. (The) 237,139 3,348,731
CSR Ltd. 408,000 1,510,488
Harvey Norman Holdings Ltd. 153,197 814,249
James Hardie Industries Ltd. Ord. 560,619 1,663,912
Leighton Holdings Ltd. 283,000 1,273,174
Memtec Ltd. Ord. 333 7,283
Mirvac Ltd. 227,062 457,555
National Australia Bank Ltd. 337,000 4,619,403
National Mutual Holdings Ltd. 652,900 968,900
Publishing & Broadcasting Ltd. 150,000 793,160
QNI Ltd. 758,500 1,409,975
Tabcorp Holdings Ltd. 516,000 2,553,143
Western Mining Holdings Ltd. 393,345 2,334,888
Westpac Banking Corp. 326,000 1,759,440
Woodside Petroleum Ltd. 280,161 2,231,961
28,986,995
HONG KONG - 11.1%
Cheung Kong Holdings Ltd. 498,000 4,371,523
Dao Heng Bank Group Ltd. 150,000 712,580
HSBC Holdings PLC 81,852 2,065,060
Hang Seng Bank Ltd. 367,600 4,140,334
Hong Kong & China Gas Co. Ltd. 2,151,360 3,415,959
Hong Kong Telecommunications Ltd. (a) 288,800 494,570
Hutchison Whampoa Ltd. Ord. 612,000 4,542,697
JCG Holdings Ltd. 912,000 729,930
Johnson Electric Holdings Ltd. 200,000 542,180
Manhattan Card Co. Ltd. 1,500,000 464,726
National Mutual Asia Ltd. 412,000 425,482
New World Development Co. Ltd. 418,616 2,415,560
Sime Darby Hongkong Ltd. 242,000 260,853
Sun Hung Kai Properties Ltd. 415,000 4,500,097
Television Broadcast Ltd. Ord. 207,000 849,751
Varitronix International Ltd. 148,000 206,338
Wharf Holdings Ltd. 309,000 1,168,747
Wing Hang Bank Ltd. 182,400 666,355
31,972,742
INDONESIA - 0.1%
Putra Surya Multidana PT (For. Reg.) 143,500 162,397
JAPAN - 64.2%
Acom Co. Ltd. 80,400 3,278,146
Ace Koeki Co. Ltd. 79,000 373,096
Aderans Co. Ltd. 21,000 472,746
Aida Engineering Ltd. Ord. 120,000 736,747
Akita Bank Ltd. 216,000 1,178,228
Amway Japan Ltd. 75,000 2,284,624
Asahi Breweries Ltd. 250,000 2,754,929
Bank of Tokyo-Mitsubishi Ltd. 275,000 4,350,821
Banyu Pharmaceutical Co. Ltd. 100,000 1,534,889
Benesse Corp. 20,400 908,843
Canon, Inc. 330,000 7,818,490
Citizen Watch Co. Ltd. Ord. 130,000 934,236
DDI Corp. Ord. 800 5,308,355
Daiichi Pharmaceutical Co. Ltd. 50,000 802,865
Daiwa House Industry Co. Ltd. 160,000 1,788,343
Daiwa Securities Co. Ltd. 530,000 3,525,129
Daitec Co. Ltd. 20,100 648,668
Denso Corp. 70,000 1,592,349
Fuji Bank Ltd. 230,000 2,588,847
Fuji Photo Film Co. Ltd. 120,000 4,581,054
SHARES VALUE (NOTE 1)
Fujitsu Ltd. 240,000 $ 2,493,605
Fuji Machine Manufacturing Co.
Ltd. Ord. 70,000 1,972,529
Heiwa Corp. 80,000 1,057,893
Hirose Electric Co. Ltd. 30,000 1,638,789
Hitachi Ltd. 425,000 3,847,062
Hitachi Maxell Ltd. 105,000 2,206,698
Honda Motor Co. Ltd. 160,000 4,962,022
Hoya Corp. 50,000 2,290,527
Ibiden Co. Ltd. 100,000 1,314,495
Izumiya Co. Ltd. 140,000 1,961,510
Kobe Steel Ltd. Ord. (a) 1,000,000 1,818,253
Komatsu Ltd. Ord. 600,000 4,382,699
Konica Corp. 102,000 590,106
Matsushita Electric Industrial Co. Ltd. 440,000 7,030,580
Matsushita Communication
Industrial Co. Ltd. 40,000 1,032,705
Meitec Corp. 100,000 1,999,292
Minebea Co. Ltd. 90,000 750,915
Minolta Camera Co. Ltd. 300,000 1,870,204
Mirai Industry Co. Ltd. 63,250 1,254,595
Mitsumi Electric Co. Ltd. 100,000 2,101,618
Mitsui Wood Systems, Inc. 36,000 240,860
NEC Corp. 240,000 2,928,096
Namco Ltd. 60,000 1,756,858
Nintendo Co. Ltd. Ord. 72,000 5,259,239
Nippon Telegraph & Telephone
Corp. Ord. 250 1,761,187
Nomura Securities Co. Ltd. 245,000 2,738,400
Nichicon Corp. 70,000 765,870
Nichiei Co. Ltd. 27,000 2,167,736
OKI Electric Industry Co. Ltd. 100,000 490,377
Okumura Gumi 120,000 642,292
Omron Corp. 240,000 4,533,827
Orix Corp. 75,200 3,794,183
Riso Kagaku Corp. 27,000 1,593,923
Rohm Co. Ltd. 40,000 3,098,115
Sakura Bank Ltd. 750,000 3,961,195
Sakai Chemical Industry Co. Ltd. 170,000 611,516
Sankyo Co. Ltd. 70,000 1,873,352
Sankyo Co. Ltd. (Gunma) 55,000 1,268,448
Shimano, Inc. 150,000 2,526,664
Shin-Etsu Chemical Co. Ltd. 50,000 1,007,517
Shinko Electric Industries Co. Ltd. 25,000 855,996
Shohkoh Fund & Co. Ltd. 6,000 1,407,375
Sony Corp. 70,500 5,127,475
Sony Music Entertainment Japan, Inc. 22,500 772,167
Sumitomo Electric Industries Ltd. 50,000 676,926
Sumitomo Metal Industries Ltd. 2,000,000 4,974,615
Sumitomo Sitix Corp. 80,000 1,504,979
Takeda Chemical Industries Ltd 240,000 5,535,047
Terumo Corp. 240,000 3,645,952
Tsudakoma Corp. 100,000 366,799
Toshiba Ceramics Co. Ltd. 10,000 72,966
Toyota Motor Corp. 550,000 15,931,363
Uni Charm Corp. Ord. 80,000 2,449,526
Uny Co. Ltd. 140,000 2,457,397
Wako Electric Co. Ltd. 75,000 826,479
Yoshinoya D&C Co. Ltd. Ord. 45 435,672
184,097,891
KOREA (SOUTH) - 0.0%
Sam Yang Co. Ltd. (warrants) (a) 300 -
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MALAYSIA - 5.5%
Affin Holdings BHD 250,000 $ 602,470
Amway Holding BHD (a) 150,000 961,960
Berjaya Sports Toto BHD 365,000 1,744,672
Carlsberg Brewery BHD 80,000 697,869
EON (Edaran Otomobil Nasional) BHD 50,000 472,018
Magnum Corp. BHD 504,500 799,805
Malayan Banking BHD 190,000 1,892,053
Oriental Holdings BHD 64,200 485,879
Petronas Dagangan BHD 209,000 466,202
Public Bank BHD (For. Reg.) 548,000 908,058
Resorts World BHD 277,000 1,020,613
Rothmans of Pall Mall Malaysia BHD 184,000 1,700,378
Tanjong PLC (MLAY Reg.) 68,000 246,485
Tenega Nasional BHD 422,000 1,949,890
United Engineers BHD 100,000 709,022
YTL Corp. BHD (rights) (a) 16,600 -
YTL Corp. BHD 166,000 674,447
YTL Power International BHD (c) 273,600 435,929
15,767,750
PAKISTAN - 0.0%
Bank of Punjab (a) 14,800 9,259
PHILIPPINES - 0.0%
Oriental Petroleum & Mineral Corp.
Class B (a) 7,771,657 2,800
SINGAPORE - 3.6%
City Developments Ltd. 180,000 1,455,224
Datacraft Asia Ltd. 514,000 1,130,800
DBS Land Ltd. 189,000 611,194
Development Bank of Singapore Ltd.
(For. Reg.) 102,000 1,212,272
Hong Leong Finance Ltd. (For. Reg.) 228,000 705,804
Overseas Union Bank Ltd. (For . Reg.) 85,000 557,974
Overseas Chinese Banking Corp. 113,000 1,319,583
Parkway Holdings Ltd. 179,000 729,754
Singapore International Airlines Ltd. 120,000 1,061,360
United Overseas Bank Ltd. (For. Reg.) 161,000 1,512,991
10,296,956
TOTAL COMMON STOCKS
(Cost $263,011,835) 271,296,790
NONCONVERTIBLE PREFERRED STOCKS - 0.3%
AUSTRALIA - 0.3%
Sydney Harbour Casino Holdings Ltd. (a)
(Cost $979,067) 579,700 977,993
CONVERTIBLE BONDS - 1.0%
MOODY'S PRINCIPAL
RATINGS AMOUNT
BERMUDA - 1.0%
MBL International Finance of
Bermuda 3%, 11/30/02
(Cost $3,226,075) Aa2 $ 2,860,000 2,902,900
CASH EQUIVALENTS - 4.1%
SHARES
Taxable Central Cash Fund (b)
(Cost $11,813,810) 11,813,810 $ 11,813,810
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $279,030,787) $ 286,991,493
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash Fund was
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
(c) A portion of the security purchased on a delayed delivery basis (see
Note 2 of Notes to Financial Statements).
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $55,460,875 and $322,809,236, respectively.
The fund participated in the bank borrowing program. The maximum loan and
the average daily balances during the period for which loans were
outstanding amounted to $10,161,000 and $3,611,520, respectively. The
weighted average interest rate was 5.6% (see Note 5 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $279,166,638. Net unrealized appreciation aggregated
$7,824,855, of which $37,682,017 related to appreciated investment
securities and $29,857,162 related to depreciated investment securities.
At October 31, 1996, the fund had a capital loss carryforward of
approximately $27,666,000 of which $10,407,000 and $17,259,000 will expire
on October 31, 2003 and 2004, respectively.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Basic Industries 5.1%
Cash Equivalents 4.1
Construction & Real Estate 8.2
Durables 13.8
Energy 0.8
Finance 19.7
Health 5.5
Industrial Machinery & Equipment 8.0
Media & Leisure 6.8
Nondurables 2.6
Precious Metals 0.8
Retail & Wholesale 2.5
Services 2.9
Technology 13.6
Transportation 0.9
Utilities 4.7
100.0%
PACIFIC BASIN
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at $ 286,991,493
value (cost $279,030,787) -
See accompanying schedule
Receivable for investments sold 222,974
Receivable for fund shares sold 314,516
Dividends receivable 878,430
Interest receivable 75,704
Redemption fees receivable 68
TOTAL ASSETS 288,483,185
LIABILITIES
Payable for investments purchased $ 2,551,409
Regular delivery
Delayed delivery 411,243
Payable for fund shares redeemed 755,109
Accrued management fee 174,963
Other payables and 218,021
accrued expenses
TOTAL LIABILITIES 4,110,745
NET ASSETS $ 284,372,440
Net Assets consist of:
Paid in capital $ 338,994,761
Distributions in excess of net investment income (2,287,233
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (60,280,503
)
Net unrealized appreciation (depreciation) on investments 7,945,415
and assets and liabilities in
foreign currencies
NET ASSETS, for 20,115,706 shares outstanding $ 284,372,440
NET ASSET VALUE and redemption price per share ($284,372,440 (divided by) 20,115,706 shares) $14.14
Maximum offering price per share (100/97.00 of $14.14) $14.58
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 2,168,167
Dividends
Interest 240,292
2,408,459
Less foreign taxes withheld (181,936
)
TOTAL INCOME 2,226,523
EXPENSES
Management fee $ 1,456,958
Basic fee
Performance adjustment (277,888
)
Transfer agent fees 766,758
Accounting fees and expenses 144,854
Non-interested trustees' compensation 1,456
Custodian fees and expenses 150,472
Registration fees 71,733
Audit 25,761
Legal 4,238
Interest 13,507
Miscellaneous 14,824
Total expenses before reductions 2,372,673
Expense reductions (18,965 2,353,708
)
NET INVESTMENT INCOME (LOSS) (127,185
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (31,735,311
)
Foreign currency transactions (76,134 (31,811,445
) )
Change in net unrealized appreciation (depreciation) on:
Investment securities 19,867,897
Assets and liabilities in 33,261 19,901,158
foreign currencies
NET GAIN (LOSS) (11,910,287
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (12,037,472
)
OTHER INFORMATION $ 210,778
Sales charges paid to FDC
Deferred sales charges withheld $ 15,796
by FDC
Expense reductions $ 18,187
Directed brokerage arrangements
Transfer agent interest credits 778
$ 18,965
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED OCTOBER 31,
APRIL 30, 1997 1996
(UNAUDITED)
Operations $ (127,185 $ 1,804,391
Net investment income (loss) )
Net realized gain (loss) (31,811,445 (16,260,540
) )
Change in net unrealized appreciation (depreciation) 19,901,158 (1,144,219
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (12,037,472 (15,600,368
) )
Distributions to shareholders (363,575 -
From net investment income )
In excess of net investment income (2,160,048 -
)
TOTAL DISTRIBUTIONS (2,523,623 -
)
Share transactions 43,259,853 529,218,224
Net proceeds from sales of shares
Reinvestment of distributions 2,485,249 -
Cost of shares redeemed (319,059,089 (259,448,198
) )
Redemption fees 97,633 345,316
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (273,216,354 270,115,342
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (287,777,449 254,514,974
)
NET ASSETS
Beginning of period 572,149,889 317,634,915
End of period (including under (over) distribution of net investment income of $(2,287,233) and
$363,575, $ 284,372,440 $ 572,149,889
respectively)
OTHER INFORMATION
Shares
Sold 2,996,816 34,672,919
Issued in reinvestment of distributions 168,722 -
Redeemed (22,111,493 (16,960,967
) )
Net increase (decrease) (18,945,955 17,711,952
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED
APRIL 30, 1997
SELECTED PER-SHARE DATA (UNAUDITED) 1996 1995 1994 E 1993 1992 I
Net asset value, beginning of period $ 14.65 $ 14.88 $ 19.96 $ 17.48 $ 12.00 $ 13.15
Income from Investment Operations
Net investment income (loss) - D .05 D .07 D .10 .20 .08 D
Net realized and unrealized gain (loss) (.43) (.29) (3.12) 2.78 5.39 (1.23)
Total from investment operations (.43) (.24) (3.05) 2.88 5.59 (1.15)
Less Distributions
From net investment income (.01) - - (.01) (.11) -
In excess of net investment income (.07) - (.02) (.11) - -
From net realized gain - - (2.02) (.28) - -
Total distributions (.08) - (2.04) (.40) (.11) -
Redemption fees added to paid in capital - .01 .01 - - -
Net asset value, end of period $ 14.14 $ 14.65 $ 14.88 $ 19.96 $ 17.48 $ 12.00
TOTAL RETURN B, C (2.96)% (1.55)% (15.87)% 16.88% 47.06% (8.75)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 284,372 $ 572,150 $ 317,635 $ 553,532 $ 493,533 $ 116,277
Ratio of expenses to average net assets 1.25% A 1.26% 1.32% 1.54% 1.59% 1.84%
F
Ratio of expenses to average net assets after expense 1.24% A, 1.24% 1.32% 1.54% 1.59% 1.84%
reductions G G
Ratio of net investment income (loss) to average net assets (.07)% A .30% .44% .04% .15% .65%
Portfolio turnover rate 29% A 85% 65% 88% 77% 105%
Average commission rate H $ .0238 $ .0151
</TABLE>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT
INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT
OF POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS
BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY
REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES. F FMR
AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN
HIGHER. G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE
NOTE 6 OF NOTES TO FINANCIAL STATEMENTS). H FOR FISCAL YEARS BEGINNING ON
OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE
CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. I AS OF NOVEMBER 1,
1991 THE FUND DISCONTINUED THE USE OF EQUALIZATION ACCOUNTING.
SOUTHEAST ASIA
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). The fund has a 3% sales
charge. If Fidelity had not reimbursed certain fund expenses, the life of
fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 LIFE OF
APRIL 30, 1997 MONTHS YEAR FUND
SOUTHEAST ASIA -1.73% -8.46% 47.44%
SOUTHEAST ASIA -4.68% -11.20% 43.02%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital -1.45% -7.52% 64.62%
International Combined Far
East ex-Japan Free Index
Pacific ex-Japan Funds Average 2.35% -3.38% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year or since the fund
started on April 19, 1993. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Morgan Stanley Capital International Combined Far East ex-Japan Free Index
- - a market capitalization weighted index of over 450 stocks traded in eight
Asian markets, excluding Japan. The index is weighted by each country's
market capitalization (or the total value of its outstanding shares). To
measure how the fund's performance stacked up against its peers, you can
compare it to the Pacific ex-Japan funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a peer
group of 86 mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
APRIL 30, 1997 YEAR FUND
SOUTHEAST ASIA -8.46% 10.10%
SOUTHEAST ASIA -11.20% 9.27%
(INCL. 3% SALES CHARGE)
Morgan Stanley Capital -7.52% 13.15%
International Combined Far
East ex-Japan Free Index
Pacific ex-Japan Funds Average -3.38% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER LIFE OF FUND
Southeast Asia MS FarEast x-JPN Fr Gross
00351 MS008
1993/04/19 9700.00 10000.00
1993/04/30 9651.50 10378.31
1993/05/31 10078.30 10975.91
1993/06/30 9835.80 10687.54
1993/07/31 9826.10 10760.98
1993/08/31 10543.90 11661.43
1993/09/30 10873.70 12024.42
1993/10/31 12842.80 14239.20
1993/11/30 13240.50 14143.38
1993/12/31 15992.99 17581.63
1994/01/31 14696.78 16380.67
1994/02/28 14004.83 15439.89
1994/03/31 12221.33 13760.40
1994/04/30 12533.20 14408.66
1994/05/31 13069.22 15023.00
1994/06/30 12299.30 14355.17
1994/07/31 12952.27 15156.89
1994/08/31 14141.27 16391.33
1994/09/30 14131.52 16127.43
1994/10/31 14238.73 16440.91
1994/11/30 12845.07 14875.07
1994/12/31 12513.71 14507.62
1995/01/31 11198.01 12951.63
1995/02/28 12162.86 14260.59
1995/03/31 12318.79 14329.01
1995/04/30 12309.04 14193.40
1995/05/31 13712.45 15922.73
1995/06/30 13702.71 15683.30
1995/07/31 14053.56 15930.93
1995/08/31 13507.79 15172.95
1995/09/30 13683.21 15436.24
1995/10/31 13527.28 15201.74
1995/11/30 13293.38 15042.07
1995/12/31 14038.25 15790.56
1996/01/31 15771.98 17237.77
1996/02/29 15425.24 17178.58
1996/03/31 15296.45 17316.85
1996/04/30 15623.38 17801.45
1996/05/31 15682.82 17628.21
1996/06/30 15237.00 17273.01
1996/07/31 14038.25 16028.58
1996/08/31 14672.30 16607.31
1996/09/30 15147.84 17026.73
1996/10/31 14553.42 16705.08
1996/11/30 15603.56 17661.52
1996/12/31 15464.51 17549.06
1997/01/31 15454.22 17804.08
1997/02/28 15690.87 17870.27
1997/03/31 14620.81 16893.55
1997/04/30 14301.84 16462.41
Let's say hypothetically that $10,000 was invested in Fidelity Southeast
Asia Fund on April 19, 1993, when the fund started, and the current maximum
3% sales charge was paid. As the chart shows, by April 30, 1997, the value
of the investment would have grown to $14,302 - a 43.02% increase on the
initial investment. For comparison, look at how the Morgan Stanley Capital
International Combined Far East ex-Japan Free Index did over the same
period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $16,462 - a 64.62% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
SOUTHEAST ASIA
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Allan Liu, Portfolio Manager of Fidelity Southeast Asia
Fund
Q. HOW DID THE FUND PERFORM, ALLAN?
A. For the six months that ended April 30, 1997, the fund had a total
return of -1.73%. To compare, the Pacific ex-Japan funds average tracked by
Lipper Analytical Services returned 2.35%, and the Morgan Stanley Capital
International Combined Far East ex-Japan Free Index returned -1.45% during
the same six-month period. For the 12 months that ended April 30, 1997, the
fund returned -8.46%, while the Lipper average returned -3.38% and the
Morgan Stanley index returned -7.52%.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE OVER THE PAST SIX MONTHS?
A. It was not particularly favorable. The recovery in export growth that
many were expecting the region to experience hasn't materialized yet. To
some extent, this was due to the weakness of the Japanese yen, which made
Japanese goods cheaper and reduced the competitiveness of the goods
produced by many Southeast Asian countries. Export growth in Southeast Asia
also suffered from rising competition from other developing countries in
Eastern Europe and Latin America. In addition, hikes in interest rates in
the United States negatively affected stock markets across the region.
However, it's important to add that fears of a protracted period of
interest rate hikes by the U.S. have subsided somewhat more recently,
aiding these markets.
Q. WHY DO INTEREST RATE INCREASES IN THE U.S. AFFECT MARKETS IN SOUTHEAST
ASIA?
A. The U.S. is the major trading partner of many Asian countries. As such,
most of the central banks in the region try to link their currencies with
the U.S. dollar. When interest rates change in the U.S., rates in Southeast
Asia tend to move in concert with them. Interest rate increases make it
harder for companies because their borrowing costs go up. Higher rates also
tend to slow economic growth, which in turn negatively affects corporate
earnings and has a cooling effect on equity markets. When this kind of
scenario
takes place in Southeast Asia, foreign investors tend to pull money out of
the region to invest in alternatives elsewhere, and local investors tend to
hold cash instead. This reduced investor interest dampens the performance
of the region's stock markets.
Q. WHY DID THE FUND'S PERFORMANCE LAG THAT OF THE AVERAGE OVER THE PAST SIX
MONTHS?
A. There were a few reasons. First, the fund saw a fair amount of
redemption activity at a time when the markets were falling. As a result, I
had to sell stocks at a bad time. Second, compared to the index the fund
was overweighted in Thailand at the beginning of the period. That market
was one of the poorer performers over the past six months. Finally, the
fund was underweighted in Taiwan, one of the better performing markets over
the period. I chose to underweight Taiwan because I had difficulty finding
stocks that were attractive based on their business prospects and found the
market to be comparatively expensive.
Q. LET'S TALK ABOUT THAILAND FOR A MOMENT. WHAT WAS THE NATURE OF THAT
COUNTRY'S PROBLEMS?
A. The Thai economy suffered from slow economic, export and profit growth.
In addition, the country's central bank kept interest rates high to protect
its currency and maintain inflows of foreign capital. As I said, high
interest rates are a negative influence because they tend to damage
corporate profitability. Going forward, the country may have to devalue its
currency to alleviate some of this pressure, as the Thai baht currently is
pegged to a basket of foreign currencies with a heavy bias toward the U.S.
dollar. For the moment, Thailand is caught in a dilemma. If interest rates
are kept high, it will be hard to pull the country's economy out of
recession. On the other hand, devaluing the currency would have negative
effects as well.
Q. DO YOU BASE YOUR INVESTMENT DECISIONS ON YOUR OUTLOOKS FOR PARTICULAR
COUNTRIES?
A. No. The fund's country allocations are a result of how the fund looks
after I pick individual stocks based on the attractiveness of individual
companies. My strategy has been to focus on those companies that can
sustain consistent earnings growth, with strong cash flow and steady
management.
Q. WHAT WERE SOME OF THE STOCKS THAT PERFORMED WELL FOR THE FUND?
A. Malaysian lottery companies such as Berjaya Sports Toto provided solid
performance for the fund. They had very strong cash flow and unit growth,
sparked by that country's buoyant economy. Malaysia hasn't experienced the
same kind of economic slowdown that many of the countries in the region
have encountered. Gross domestic product of the country is growing at over
7% per year and consumer spending is very strong. While the Hong Kong stock
market has gone up and down like a roller coaster over the past
year, it still posted about a 14% gain over that time. The market has come
off its peak over the past three or four months due to concerns over U.S.
interest rates and because of drops in residential property prices from
very high levels. Still, the fund benefited from investments in such
property companies as Cheung Kong Holdings and Sun Hung Kai Properties.
While the fund still holds investments in these companies, I've reduced its
weighting there because property prices have retreated from earlier peaks.
Q. WHAT'S YOUR OUTLOOK?
A. I'm very cautious because of the potential for rising interest rates and
the slow recovery in export growth in many of the markets in Southeast
Asia. I'm also concerned that as Asian economies and earnings growth slow,
foreign money will be pulled out to invest in other emerging markets that
offer better growth. Valuations may drop further even though they are
reaching quite attractive levels by historical standards. In addition, the
problems that Thailand is facing mean that a higher risk premium probably
will be applied to equities throughout the rest of Asia.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Southeast Asian
issuers; the fund does not anticipate
investing in Japan
FUND NUMBER: 351
TRADING SYMBOL: FSEAX
START DATE: April 19, 1993
SIZE: as of April 30, 1997, more than
$539 million
MANAGER: Allan Liu, since inception; manager,
various funds for non-U.S. investors; analyst,
Southeast Asian markets, 1987-1990; joined
Fidelity in 1987
(checkmark)
ALLAN LIU ON THE UPCOMING CHINESE TAKEOVER
OF HONG KONG:
"If we look to the economy first, I don't believe we'll
see any drastic changes in policy as control of Hong
Kong shifts from the British to the Chinese. Presently,
residents of Hong Kong enjoy full economic
freedom. I believe that will continue. Even in China at
the moment, most people are able to participate in a
more open business climate and seek to maximize
profits. I think the main difference going forward will be
a higher degree of participation by the Chinese
government in companies located in Hong Kong. I see
the government having a more important role, much
like the British government did about 20 years ago.
At the same time, I think that life for most companies
will be business as usual. As it stands, for example,
nearly all major property development companies
are owned by local Chinese.
"As far as the political life is concerned, I think that is
more uncertain. I believe there will be a lower degree
of political freedom under Chinese rule, as the new
government probably will adopt a more conservative
approach. It's important to remember, however, that
political freedom in Hong Kong is a relatively new
concept, only coming about over the past five to 10
years. Before that, Britain did not allow democratic
institutions to flourish.
"Socially, it's also difficult to say what will happen.
Hong Kong may lose some of its international flavor as
the Chinese influence becomes stronger.
"All in all, in the short term, the changeover should be
a net positive in terms of more funds flowing into Hong
Kong from China. For investors to remain
comfortable over the long term, a lot depends on
whether the Chinese government can maintain a level
of confidence and law and order. The key to Hong
Kong maintaining its role as a leading financial center
will be how Hong Kong can succeed at playing the
important role of developing a strong bridge between
China and the outside world. And for that, only time
will tell."
SOUTHEAST ASIA
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997
United States 3.5%
Taiwan (Free
China) 6.9%
Row: 1, Col: 1, Value: 3.5
Row: 1, Col: 2, Value: 6.9
Row: 1, Col: 3, Value: 14.8
Row: 1, Col: 4, Value: 3.3
Row: 1, Col: 5, Value: 5.2
Row: 1, Col: 6, Value: 20.4
Row: 1, Col: 7, Value: 3.6
Row: 1, Col: 8, Value: 8.4
Row: 1, Col: 9, Value: 33.9
Singapore 14.8%
Hong Kong 33.9%
Philippines 3.3%
Other 5.2%
Indonesia 8.4%
Malaysia 20.4%
Korea (South)
3.6%
AS OF OCTOBER 31, 1996
United States 4.8%
Row: 1, Col: 1, Value: 4.8
Row: 1, Col: 2, Value: 11.6
Row: 1, Col: 3, Value: 9.1
Row: 1, Col: 4, Value: 3.8
Row: 1, Col: 5, Value: 4.4
Row: 1, Col: 6, Value: 22.3
Row: 1, Col: 7, Value: 4.9
Row: 1, Col: 8, Value: 39.1
Thailand 11.6%
Singapore 9.1%
Hong Kong 39.1%
Philippines
3.8%
Other 4.4%
Indonesia
4.9%
Malaysia 22.3%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 96.5 95.2
Short-term investments 3.5 4.8
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
STOCKS
6 MONTHS AGO
Hutchison Whampoa Ltd. Ord. 4.7 6.0
(Hong Kong, Electrical Equipment)
Berjaya Sports Toto BHD 4.2 2.7
(Malaysia, Entertainment)
Sun Hung Kai Properties Ltd. 3.9 7.9
(Hong Kong, Real Estate)
Hang Seng Bank Ltd. 3.8 5.1
(Hong Kong, Banks)
Cheung Kong Holdings Ltd. 3.0 4.2
(Hong Kong, Real Estate)
Magnum Corp. BHD 2.5 1.9
(Malaysia, Lodging & Gaming)
HSBC Holding PLC 2.2 1.3
(Hong Kong, Banks)
Overseas Chinese Banking Corp. 2.0 2.1
(Singapore, Banks)
Development Bank of Singapore Ltd. 2.0 1.0
(For. Reg.)
(Singapore, Banks)
PWE Industries BHD 2.0 1.5
(Malaysia, Electronic Instruments)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET
SECTORS
6 MONTHS AGO
Finance 22.2 25.4
Construction & Real Estate 18.2 26.5
Media & Leisure 9.8 7.2
Utilities 6.4 11.3
Basic Indusries 5.9 0.8
Industrial Machinery & Equipment 5.7 8.2
Technology 5.4 1.7
Holding Companies 4.8 1.7
Nondurables 4.5 1.7
Durables 4.3 3.3
SOUTHEAST ASIA
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.5%
SHARES VALUE (NOTE 1)
BERMUDA - 1.2%
Cosco Pacific Ltd. 3,828,000 $ 5,361,618
GZI Transport Ltd. 1,050,000 630,285
GZI Transport Ltd. (warrants) (a) 210,000 33,615
6,025,518
CHINA (PEOPLES REPUBLIC) - 0.7%
Guangshen Railway Co. Class H 1,786,000 853,056
Guangdong Kelon Electric Holding
Class H 2,466,000 2,387,530
Qingling Motors Co. Ltd. Class H 500,000 274,317
3,514,903
GRAND CAYMAN (U.K. OVERSEAS TERRITORY) - 0.8%
China Resources Beijing Land Ltd. 6,452,000 4,247,750
HONG KONG - 33.9%
Cheung Kong Holdings Ltd. 1,783,000 15,651,456
Cheung Kong Infrastructure Holdings Ltd. 949,000 2,689,027
China Aerospace International Holdings
Ltd. (a) 1,225,000 502,082
China Merchants Hai Hong Holdings
Co. Ltd. 598,000 640,728
China Overseas Land & Investment Ltd. 6,704,000 3,786,226
China Resources Enterprise Ltd. 3,144,000 8,685,419
China Everbright-IHD Pacific Ltd. 1,868,000 1,868,844
China Travel International Investment
Hong Kong Ltd. 6,354,000 3,342,484
Continental Mariner Investment Co. Ltd. (a) 7,812,000 4,638,895
Guangdong Investments Co. Ltd. Ord. 4,578,000 4,284,580
Guangzhou Investment Co. Ltd. 9,156,000 4,343,678
Guangnan Holdings 3,432,000 4,939,882
Guangnan Holdings Ltd. (warrants) (a) 465,714 258,513
HSBC Holdings PLC 452,544 11,417,318
Hang Seng Bank Ltd. 1,776,000 20,003,356
Harbour Ring International Holdings Ltd.
(warrants) (a) 333 -
Hong Kong & China Gas Co. Ltd. 1,245,600 1,977,781
Hong Kong Telecommunications Ltd. 988,000 1,691,950
Hutchison Whampoa Ltd. Ord. 3,358,000 24,925,450
Kumagai Gumi 3,508,000 3,803,937
Ng Fung Hong Ltd. 5,346,000 7,177,228
New World Development Co. Ltd. 1,127,100 6,503,759
New World Infrastructure Ltd. (a) (c) 197,000 553,121
Shanghai Industrial Holdings Ltd. Class H 1,651,000 9,292,403
Silver Grant International Industries Ltd. 2,776,000 1,496,134
Soundwill Holdings Ltd. 9,496,000 2,819,441
South China Morning Post Holdings 3,552,000 3,049,222
Sun Hung Kai Properties Ltd. 1,874,000 20,320,919
Swire Pacific Ltd. Class A 368,000 2,838,443
Television Broadcast Ltd. Ord. 574,000 2,356,316
Wheelock & Co. Ltd. (a) 1,068,000 2,219,686
178,078,278
INDONESIA - 8.4%
Astra International PT (For. Reg.) 814,500 2,983,151
Bank International Indonesia PT
(For. Reg.) 6,966,779 5,017,232
Bimantara Citra (For. Reg.) 2,887,000 3,920,621
Citra Marga Nusadhala Persada PT
(For. Reg.) 3,655,500 3,196,685
Gudang Garam PT Perusahaan (For. Reg.) 1,545,000 6,485,191
Heromini Supermarket PT (For. Reg.) (a) 752,000 649,877
Kalbe Farma (For. Reg.) 638,500 630,619
Lippo Securities PT (For. Reg.) 3,823,000 2,202,553
SHARES VALUE (NOTE 1)
Multipolar PT (For. Reg.) 1,135,000 $ 653,910
PT Bank International Indonesia
(warrants) (For. Reg.) (a) 863,002 275,237
PT Bank Negara Indonesia (For. Reg.) 40,000 22,222
PT Lippo Land Development (For. Reg.) 1,167,000 1,308,674
PT Telkom (For. Reg.) 3,848,500 5,582,706
Putra Surya Multidana PT (For. Reg.) 5,067,500 5,734,830
Telekomunikasiindo (Persero) PT, Series B
sponsored ADR 173,800 4,953,300
Wicaksana Overseas International
(For. Reg.) 595,500 686,173
44,302,981
KOREA (SOUTH) - 3.6%
Dae Duck Electronics Co. Ltd. 46,000 2,604,260
Hyundai Engineering & Construction
Co. Ltd. (a) 8 161
Hyundai Securities Co. Ltd. 92,000 1,082,959
Hyundai Motor Co. Ltd.:
sponsored GDR 92,600 787,100
sponsored GDR (c) 34,000 289,000
Korea Electric Power Corp. 176,710 5,269,602
LG Chemical Ltd. 191,900 2,215,885
Lg Cable & Machinery Ltd. 80,940 1,143,323
S1 Corp. 15,100 4,141,496
SK Telecom Ltd. 566 434,018
Samsung Co. Ltd. sponsored GDR (a) 21 53
Seoul City Gas Co. Ltd. 20,000 1,053,811
19,021,668
MALAYSIA - 20.4%
Amway Holding BHD (a) 382,000 2,449,791
Berjaya Group BHD 2,705,000 3,189,325
Berjaya Sports Toto BHD 4,597,833 21,977,294
Carlsberg Brewery BHD 267,000 2,329,138
Ekran BHD Ord. 1,716,000 3,759,410
Ekovest BHD 275,000 1,347,341
EON (Edaran Otomobil Nasional) BHD 974,000 9,194,901
Kwong Yik Bank BHD 685,000 2,401,115
Lingui Development BHD 525,000 907,588
Magnum Corp. BHD 8,308,000 13,171,018
Malakoff BHD 312,000 1,242,780
Malayan Banking BHD 1,002,000 9,978,092
Malaysian National Reinsurance BHD 505,000 1,327,624
PWE Industries BHD 652,400 10,264,808
Perusahaan Otomobil Nasional BHD 527,000 3,148,775
Rothmans of Pall Mall Malaysia BHD 165,000 1,524,796
SP Setia BHD 111,000 380,243
Tanjong PLC (MLAY Reg.) 389,000 1,410,038
Tenega Nasional BHD 1,528,000 7,060,267
United Engineers BHD 700,000 4,963,155
YTL Corp. BHD (rights) (a) 176,050 -
YTL Corp. BHD 1,130,500 4,593,150
YTL Power International BHD 176,050 280,502
106,901,151
PHILIPPINES - 3.3%
Alaska Milk Corp. (a) 7,490,000 676,003
Ayala Land, Inc. Class B 1,313,250 946,217
Belle Resources Corp. (a) 2,999,000 716,485
Benpress Holdings Corp. GDR (a) (c) 79,200 578,160
La Tondena Distillers, Inc. 278,200 638,267
Manila Electric Co. Class B 404,501 2,515,668
Metropolitan Bank & Trust Co. 102,077 2,090,314
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PHILIPPINES - CONTINUED
Petron Corp. 6,542,131 $ 2,406,472
Philippine Commercial International Bank 10,500 129,408
San Miguel Corp. Class B 1,025,000 2,954,115
Security Bank Corp. (a) 406,000 723,625
SM Prime Holdings, Inc. (a) 11,296,040 2,955,733
17,330,467
SINGAPORE - 14.8%
Cerebos Pacific Ltd. 146,000 897,872
City Developments Ltd. 152,000 1,228,856
Cycle & Carriage Ltd. 249,000 2,546,435
Datacraft Asia Ltd. 314,000 690,800
DBS Land Ltd. 613,000 1,982,338
Delifrance Asia Ltd. (a) 35,000 36,277
Development Bank of Singapore Ltd.
(For. Reg.) 867,000 10,304,312
First Capital Corp. Ltd. 931,000 2,328,787
Flextech Holdings Ltd. 847,000 749,143
FHTK Holdings Ltd. (a) 5,233,000 2,422,685
Keppel Telecom & Transport 648,000 523,881
Keppel Telecom & Transport (rights) (a) 324,000 38,060
Marco Polo Developments Ltd. 769,000 1,519,721
Natsteel Ltd. 2,556,000 6,923,383
Omni Industries Ltd. (a) 1,257,000 603,659
Overseas Union Bank Ltd. (For. Reg.) 1,029,000 6,754,768
Overseas Chinese Banking Corp. 887,200 10,360,475
Parkway Holdings Ltd. 1,530,000 6,237,562
Rothmans Industries Ltd. 166,000 785,724
Sembawang Shipyard Ltd. 319,000 1,377,660
Singapore International Airlines Ltd. 134,000 1,185,185
Singapore Press Holdings Ltd. (For. Reg.) 289,800 5,366,667
Singapore Technologies Automotive Ltd.
SAE (For. Reg.) 341,000 881,247
Singapore Aerospace (For. Reg.) 636,000 1,010,779
Super Coffeemix Manufacturing Ltd. 337,000 295,737
United Overseas Bank Ltd.:
(For. Reg.) 1,027,000 9,651,189
(warrants) (a) 127,000 437,023
Venture Manufacturing Singapore Ltd. 229,000 648,770
77,788,995
TAIWAN (FREE CHINA) - 6.9%
Acer, Inc. (a) 311,000 792,679
Asustek Computer, Inc. (a) 84,000 2,475,054
Asia Cement Corp. 273,000 498,427
Bank Sinopac (a) 446,000 443,420
Compal Electronics, Inc. 320,000 1,261,027
Cathay Life Insurance Co. Ltd. 392,000 2,338,395
Cathay Construction Co. Ltd. 297,000 520,770
Chief Construction Corp. 283,000 665,040
China Development Corp. 951,000 3,953,905
China Trust Co. Ltd. 1,571,000 2,953,435
First Bank 355,000 1,520,879
Formosa Chemical & Fibre 1,082,000 1,564,714
Formosa Plastic 1,027,000 2,561,931
Kindom Construction Co. Ltd. (a) 695,000 2,010,123
Nan Ya Plastics Corp. 1,198,000 3,183,406
Siliconware Precision Industries 360,000 1,301,518
Taiwan Mask Corp. (a) 757,000 3,763,106
Taiwan Secom Co. (a) 409,000 1,537,816
United World Chinese Commercial
Bank (a) 554,300 1,422,824
Yageo Corp. (a) 417,000 1,469,902
36,238,371
SHARES VALUE (NOTE 1)
THAILAND - 2.5%
Bangkok Bank Ltd. (For. Reg.) 261,400 $ 2,421,853
BEC World PCL:
(For. Reg.) 132,600 1,218,377
(Loc. Reg.) 52,000 477,795
Cogeneration Public Company Ltd.
(For. Reg.) 47,100 161,388
Electricity Generating PCL (For. Reg.) 471,460 1,263,484
Industrial Finance Corp. of Thailand
(For. Reg.) 196,100 525,536
Nation Publishing Group (For. Reg.) 402,500 1,094,085
PTT Exploration & Production (For. Reg.) 321,400 4,109,786
Seamico Securities PCL (For. Reg.) (a) 364,500 160,480
Total Access Communication PCL 244,000 1,256,600
Thai Farmers Bank PCL 84,800 512,956
13,202,340
TOTAL COMMON STOCKS
(Cost $482,555,822) 506,652,422
CASH EQUIVALENTS - 3.5%
Taxable Central Cash Fund (b)
(Cost $18,485,574) 18,485,574 18,485,574
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $501,041,396) $ 525,137,996
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash Fund was
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $1,420,281 or 0.3% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $381,154,031 and $583,285,886, respectively.
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $501,060,194. Net unrealized appreciation aggregated
$24,077,802, of which $49,965,502 related to appreciated investment
securities and $25,887,700 related to depreciated investment securities.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.3%
Basic Industries 5.9
Cash Equivalents 3.5
Construction & Real Estate 18.2
Durables 4.3
Energy 1.2
Finance 22.2
Health 0.1
Holding Companies 4.8
Industrial Machinery & Equipment 5.7
Media & Leisure 9.8
Nondurables 4.5
Retail & Wholesale 2.8
Services 1.9
Technology 5.4
Transportation 3.0
Utilities 6.4
100.0%
SOUTHEAST ASIA
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value $ 525,137,996
(cost $501,041,396) - See accompanying schedule
Foreign currency held at value 12,501,159
New Taiwan dollars
(cost $12,519,628)
Receivable for investments sold 11,721,656
Receivable for fund shares sold 853,260
Dividends receivable 421,452
Interest receivable 128,994
Redemption fees receivable 44,219
TOTAL ASSETS 550,808,736
LIABILITIES
Payable for investments purchased $ 7,500,277
Payable for fund shares redeemed 2,892,246
Accrued management fee 354,882
Other payables and accrued expenses 326,876
TOTAL LIABILITIES 11,074,281
NET ASSETS $ 539,734,455
Net Assets consist of:
Paid in capital $ 530,105,469
Distributions in excess of net investment income (4,167,892
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (10,286,938
)
Net unrealized appreciation (depreciation) on investments 24,083,816
and assets and liabilities in
foreign currencies
NET ASSETS, for 38,826,928 shares outstanding $ 539,734,455
NET ASSET VALUE and redemption price per share ($539,734,455 (divided by) 38,826,928 shares) $13.90
Maximum offering price per share (100/97.00 of $13.90) $14.33
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 4,388,971
Dividends
Interest 811,227
5,200,198
Less foreign taxes withheld (366,087
)
TOTAL INCOME 4,834,111
EXPENSES
Management fee $ 2,658,402
Basic fee
Performance adjustment (268,212
)
Transfer agent fees 1,015,047
Accounting fees and expenses 227,220
Non-interested trustees' compensation 2,876
Custodian fees and expenses 429,093
Registration fees 34,060
Audit 36,064
Legal 5,254
Miscellaneous 8,134
Total expenses before reductions 4,147,938
Expense reductions (12,951 4,134,987
)
NET INVESTMENT INCOME 699,124
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (9,132,800
)
Foreign currency transactions (94,078 (9,226,878
) )
Change in net unrealized appreciation (depreciation) on:
Investment securities 6,373,656
Assets and liabilities in (5,055 6,368,601
foreign currencies )
NET GAIN (LOSS) (2,858,277
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (2,159,153
)
OTHER INFORMATION $ 208,563
Sales charges paid to FDC
Expense reductions $ 11,123
Directed brokerage arrangements
Custodian interest credits 430
Transfer agent interest credits 1,398
$ 12,951
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED OCTOBER 31,
APRIL 30, 1997 1996
(UNAUDITED)
Operations $ 699,124 $ 8,026,537
Net investment income
Net realized gain (loss) (9,226,878 55,694,252
)
Change in net unrealized appreciation (depreciation) 6,368,601 (24,937,563
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (2,159,153 38,783,226
)
Distributions to shareholders (4,288,968 (10,551,466
From net investment income ) )
In excess of net investment income (4,167,892 -
)
From net realized gain (19,898,491 -
)
TOTAL DISTRIBUTIONS (28,355,351 (10,551,466
) )
Share transactions 77,493,691 546,524,731
Net proceeds from sales of shares
Reinvestment of distributions 27,853,162 10,313,913
Cost of shares redeemed (290,610,147 (481,254,069
) )
Redemption fees 166,291 1,661,583
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (185,097,003 77,246,158
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (215,611,507 105,477,918
)
NET ASSETS
Beginning of period 755,345,962 649,868,044
End of period (including under (over) distribution of net investment income of $(4,167,892)
and $4,729,540, $ 539,734,455 $ 755,345,962
respectively)
OTHER INFORMATION 5,157,541 35,716,913
Shares
Sold
Issued in reinvestment of distributions 1,884,517 741,474
Redeemed (19,645,841 (31,850,201
) )
Net increase (decrease) (12,603,783 4,608,186
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31, APRIL 19, 1993
ENDED (COMMENCEME
APRIL 30, 1997 NT OF
OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA (UNAUDITED) 1996 1995 1994 E 1993
Net asset value, beginning of period $ 14.69 $ 13.88 $ 14.61 $ 13.24 $ 10.00
Income from Investment Operations .01 D .14 D .15 .04 .01
Net investment income
Net realized and unrealized gain (loss) (.23) .87 (.91) 1.23 3.22
Total from investment operations (.22) 1.01 (.76) 1.27 3.23
Less Distributions
From net investment income (.09) (.23) - (.04) -
In excess of net investment income (.08) - - (.03) -
From net realized gain (.40) - - - -
Total distributions (.57) (.23) - (.07) -
Redemption fees added to paid in capital - .03 .03 .17 .01
Net asset value, end of period $ 13.90 $ 14.69 $ 13.88 $ 14.61 $ 13.24
TOTAL RETURN B, C (1.73)% 7.59% (5.00)% 10.87% 32.40%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 539,734 $ 755,346 $ 649,868 $ 825,734 $ 499,669
Ratio of expenses to average net assets 1.20% A 1.13% 1.10% 1.47% 2.00% A,
F
Ratio of expenses to average net assets after expense reductions 1.19% A, 1.12% G 1.10% 1.47% 2.00% A
G
Ratio of net investment income to average net assets .20% A .95% .90% .22% .45% A
Portfolio turnover rate 117% A 102% 94% 157% 14% A
Average commission rate H $ .0088 $ .0129
</TABLE>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT
INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT
OF POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS
BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY
REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES. F FMR
AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN
HIGHER. G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE
NOTE 6 OF NOTES TO FINANCIAL STATEMENTS). H FOR FISCAL YEARS BEGINNING ON
OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE
CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
UNITED KINGDOM
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). The fund has a 3% sales
charge. If Fidelity had not reimbursed certain fund expenses, the total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 LIFE OF
APRIL 30, 1997 MONTHS YEAR FUND
UNITED KINGDOM 9.38% 21.66% 30.58%
UNITED KINGDOM 6.10% 18.01% 26.66%
(INCL. 3% SALES CHARGE)
FT-All-Shares Index 10.83% 25.62% 35.15%
European Region Funds Average 9.62% 17.13% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year or since the fund
started on November 1, 1995. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
FT-All-Shares Index - a market capitalization weighted index of over 750
stocks traded in the U.K. market. The index covers more than 90% of the
total capitalization of the U.K. market. To measure how the fund's
performance stacked up against its peers, you can compare the fund's
performance to the European region funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a peer
group of 67 mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
APRIL 30, 1997 YEAR FUND
UNITED KINGDOM 21.66% 19.48%
UNITED KINGDOM 18.01% 17.08%
(INCL. 3% SALES CHARGE)
FT-All-Shares Index 25.62% 22.26%
European Region Funds Average 17.13% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
$10,000 OVER LIFE OF FUND
United Kingdom FT SE A All Shares
00344 FT001
1995/11/01 9700.00 10000.00
1995/11/30 9573.90 10022.83
1995/12/31 9778.19 10308.85
1996/01/31 9729.49 10286.94
1996/02/29 9963.23 10436.92
1996/03/31 10099.58 10556.26
1996/04/30 10411.24 10758.55
1996/05/31 10722.89 10974.18
1996/06/30 10596.28 10872.40
1996/07/31 10430.72 10814.03
1996/08/31 10927.42 11398.04
1996/09/30 11005.33 11615.18
1996/10/31 11579.95 12194.21
1996/11/30 12183.78 12793.97
1996/12/31 12575.73 13255.17
1997/01/31 12205.27 12881.90
1997/02/28 12555.71 13269.48
1997/03/31 12565.72 13390.16
1997/04/30 12665.85 13515.29
Let's say hypothetically that $10,000 was invested in Fidelity United
Kingdom Fund on November 1, 1995, when the fund started, and the current
maximum 3% sales charge was paid. As the chart shows, by April 30, 1997,
the value of the investment would have grown to $12,666 - a 26.66% increase
on the initial investment. For comparison, look at how the FT-All-Shares
Index did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $13,515 - a
35.15% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating
value of its currency create these risks. For
these reasons an international fund's
performance may be more volatile than a fund
that invests exclusively in the United States.
Past performance is no guarantee of future
results and you may have a gain or loss when
you sell your shares.
(checkmark)
UNITED KINGDOM
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Samuel Morse, Portfolio Manager of Fidelity United
Kingdom Fund
Q. HOW DID THE FUND PERFORM, SAM?
A. For the six months that ended April 30, 1997, the fund produced a return
of 9.38%. The FT-All-Shares Index returned 10.83% during the same period,
while the European region funds average, as tracked by Lipper Analytical
Services, returned 9.62%. For the 12 months that ended April 30, 1997, the
fund returned 21.66%, while the index and peer group had returns of 25.62%
and 17.13%, respectively.
Q. HOW WOULD YOU CHARACTERIZE THE INVESTING ENVIRONMENT IN THE UNITED
KINGDOM OVER THE PAST SIX MONTHS?
A. The combination of a favorable interest rate climate and
stronger-than-anticipated corporate earnings growth translated into a
robust U.K. stock market and renewed consumer confidence. Inflation
remained at bay - thanks partly to the strength of the pound sterling - and
interest rate levels stayed low. In terms of the stock market itself, the
U.K. mirrored that of the U.S. market as large-cap companies - those with
market capitalizations of $5 billion or more - flourished. A final point
I'd make concerns what appeared to be the impending election of a new prime
minister. As the period came to a close, it seemed quite certain that the
Labor party would win. The overall feeling within the U.K. investing
community is that the "new" Labor party will not make any drastic changes
to fiscal or economic policy and that the election will eliminate much of
the political uncertainty that existed previously.
Q. CAN YOU DISCUSS THE FACTORS THAT INFLUENCED THE FUND'S RETURNS?
A. Relative to the fund's index, my underweightings in bank and
pharmaceutical stocks had a negative effect on performance. Bank stocks did
well due to a favorable interest rate backdrop and investor demand for
"building society" stocks. Building societies - which are quite similar to
savings and loan institutions - have begun to raise capital by issuing
stock. Investor demand for these stocks has spiraled upward, resulting in
increased valuations. Pharmaceuticals also had a very strong period,
benefiting in part from the large-cap rally I spoke of. Three companies
comprise 95% of the U.K.'s
pharmaceutical market and each performed well. The fund, however, owned
only one of these companies - SmithKline Beecham. I didn't feel the
earnings growth prospects were encouraging for the other two companies. On
a positive note, many of the fund's larger positions appreciated in value
during the period.
Q. HOW WOULD YOU DESCRIBE YOUR STOCK PICKING STRATEGY?
A. I take a bottom-up approach when considering a potential investment.
Bottom-up investing involves a thorough examination of a company's
fundamental characteristics - which can include earnings growth or
management philosophy - and its stock's technical aspects, such as the
industry in which that company operates and the supply/demand situations
within those industries. One common denominator in my stock selection
process is that I look for companies poised to grow their dividends within
the next three to five years. Also, if I find that I'm significantly
overweighted or underweighted in a particular sector, I may look further
into that. Otherwise, individual stock analysis takes precedence over
making any sector plays.
Q. WHILE WE'RE ON THE SUBJECT, WHICH SECTORS PERFORMED WELL? WHICH DIDN'T?
A. As I mentioned, pharmaceuticals enjoyed a good ride during the period.
There hasn't been a lot of positive news concerning fundamentals in this
sector, but developments in the U.S. - including increased prescriptions
and pressure from managed care companies to discount prices - may have
helped overseas drug stocks. Financial stocks made up the biggest portion
of the fund and they also performed well. My strategy in the financial
sector was to find companies that operated in their own little "niche"
environment. For instance, rather than looking at retail banks, I
concentrated somewhat on money management-oriented companies. As the U.K.'s
population ages and the government provides less and less for employee
pension plans, these money management companies should prosper. Examples of
these types of stocks owned by the fund included Mercury Asset Management
and Perpetual PLC. The fund's positions in media and leisure stocks
declined during the period. Media-related stocks in general were poor
performers during the period and Reuters, one of the fund's larger
holdings, felt the ramifications.
Q. WHICH INDIVIDUAL STOCKS CONTRIBUTED POSITIVELY TO PERFORMANCE? WERE
THERE ANY DISAPPOINTMENTS?
A. One of the better-performing stocks was British Telecommunications. BT's
announcement of its merger with MCI was met with widespread approval. In
addition, BT implemented a capital restructuring program and also benefited
from rising phone call volumes. Another stock that has done well is
Prudential Corp. Prudential sells long-term savings products, including
life insurance plans, and sales expanded as
consumer confidence bounced back. Disappointments included the
aforementioned Reuters, which encountered regulatory problems concerning a
proposed share buyback, and Westminster Health Care, a nursing home
company.
Q. CAN YOU GIVE AN UPDATE ON THE MOVEMENT TO CREATE A UNIFORM CURRENCY
WITHIN EUROPE?
A. The countries that indicated their desire to be involved in the European
Monetary Unit are still trying to meet the many economic parameters
required by the Maastricht Treaty. The U.K. does not wish to be part of the
EMU, and there's been considerable debate over whether or not the U.K. will
ever express its desire to join. If the uniform currency becomes reality -
and the U.K. is not included - I don't think it makes a big difference in
terms of stock picking. From the U.K.'s standpoint, one question may be
whether those countries that do adopt the uniform monetary unit continue to
trade as frequently with the U.K. Some countries may decide that the cost
of doing business is cheaper using the same currency.
Q. WHAT'S YOUR OUTLOOK?
A. My main concern will be whether the "narrowing" of the market continues
to revolve around relatively few large-cap companies. We may be nearing the
end of an economic cycle, which is typically when investors are putting
money into these larger, more defensive companies. The government's fiscal
policy may come into play as well. If the government feels the economy is
purring along a little too quickly, it may react by raising short-term
interest rates. Overall, I'm optimistic about the long-term outlook for the
U.K. economy and its stock market.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of British issuers
FUND NUMBER: 344
TRADING SYMBOL: FUTYF
START DATE: November 1, 1995
SIZE: as of April 30, 1997, more than $5
million
MANAGER: Samuel Morse, since inception;
manager, several United Kingdom equity
income funds for Fidelity International,
Limited, since 1993; joined Fidelity in 1990
(checkmark)
SAM MORSE ON THE CORRELATION BETWEEN THE U.K. AND U.S.
ECONOMIES:
"Of the various European economies, the U.K's most
closely resembles that of the U.S. U.K. companies are
managed in much the same way as U.S. firms, the
U.K. stock market is among the most efficient in
Europe, and the U.S. and U.K. economic cycles follow
similar patterns. Why? The historical linkage
between the two countries may have resulted in a sort
of progressive synergy. In addition, the two countries
began following similar fiscal policies back in the
1980s. Many believe President Reagan's economic
philosophies - widely dubbed `Reaganomics' -
were variations of policies set forth by Margaret
Thatcher, the U.K.'s Prime Minister at the time. In
terms of corporate activity, much of what has fueled
the success of the U.S. stock market recently has
been the proactive steps taken by companies to
improve their share prices. Beginning approximately
five years ago, U.S. companies began to implement
a variety of cost-cutting strategies. These included
reducing personnel, improving upon existing
technology, paying off debt and eliminating
low-profit, non-core businesses. American
corporations also began to pay more attention to
their shareholders, offering share buyback programs
or special dividend payments. While this trend
came somewhat late to Europe - countries are just
beginning to realize the potential benefits of taking
proactive, cost-reduction steps - the U.K. was out
in the forefront. U.K. companies have been in a
restructuring mode for a few years and this has
undoubtedly aided the strong market performance
we've seen. The stock markets are correlated as
well. Market followers in the U.K. closely monitor
economic and market developments within the U.S.
For instance, when the Federal Reserve Board
raised short-term interest rates in the U.S. in late
March, the U.K. market reacted similarly: There was
an initial correction and then the market settled
down."
UNITED KINGDOM
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997
United
States 5.2%
Other 2.3%
Row: 1, Col: 1, Value: 5.2
Row: 1, Col: 2, Value: 92.5
Row: 1, Col: 3, Value: 2.3
United Kingdom 92.5%
AS OF OCTOBER 31, 1996
Other 2.3%
United
States 2.3%
Row: 1, Col: 1, Value: 2.3
Row: 1, Col: 2, Value: 95.40000000000001
Row: 1, Col: 3, Value: 2.3
United Kindom 95.4%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 94.8 97.7
Short-term investments 5.2 2.3
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
STOCKS
6 MONTHS AGO
British Petroleum PLC Ord. 4.7 4.7
(Oil & Gas)
British Telecommunications PLC Ord. 4.7 4.3
(Telephone Services)
Shell Transport & Trading Co. PLC (Reg.) 4.6 4.7
(Oil & Gas)
Lloyds TSB Group PLC 4.3 3.3
(Banks)
SmithKline Beecham PLC Ord. 3.3 3.2
(Drugs & Pharmaceuticals)
Barclays PLC Ord. 3.2 2.3
(Banks)
Boots Co. PLC (The) Class L 3.0 3.1
(Retail & Wholesale, Miscellaneous)
Reuters Holdings PLC Ord. 3.0 3.2
(Services)
Grand Metropolitan PLC 2.5 2.0
(Foods)
BAT Industries PLC Ord. 2.4 1.3
(Tobacco)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET
SECTORS
6 MONTHS AGO
Finance 20.2 19.1
Nondurables 15.0 11.9
Utilities 11.9 11.1
Energy 9.3 9.5
Retail & Wholesale 7.6 8.3
Services 6.9 3.5
Construction & Real Estate 6.1 5.9
Media & Leisure 4.6 7.4
Health 4.1 4.6
Durables 2.3 3.0
UNITED KINGDOM
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.8%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.6%
British Aerospace PLC 3,923 $ 83,497
BASIC INDUSTRIES - 1.5%
CHEMICALS & PLASTICS - 1.5%
Albright & Wilson PLC 16,700 42,702
Wardle Stroeys PLC Class L 5,400 37,785
80,487
CONSTRUCTION & REAL ESTATE - 6.1%
BUILDING MATERIALS - 3.8%
Baynes (Charles) PLC 22,000 38,932
Blue Circle Industries PLC 6,204 42,303
CRH PLC 8,484 83,056
Polypipe PLC 10,000 38,477
202,768
CONSTRUCTION - 2.3%
Barratt Developments PLC 9,500 39,946
Persimmon PLC Ord. 10,900 43,179
Taylor Woodrow PLC 13,045 40,557
123,682
TOTAL CONSTRUCTION & REAL ESTATE 326,450
DURABLES - 2.3%
AUTOS, TIRES, & ACCESSORIES - 1.5%
BBA Group PLC 15,191 82,620
TEXTILES & APPAREL - 0.8%
Tie Rack PLC 13,200 41,360
TOTAL DURABLES 123,980
ENERGY - 9.3%
OIL & GAS - 9.3%
British Petroleum PLC Ord. 22,048 253,428
Shell Transport & Trading Co. PLC (Reg.) 13,900 246,202
499,630
FINANCE - 20.2%
BANKS - 9.9%
Anglo-Irish Bank Corp. PLC 30,306 37,885
Barclays PLC Ord. 9,237 172,007
Lloyds TSB Group PLC 25,357 231,771
Standard Chartered Bank PLC 5,900 89,417
531,080
CREDIT & OTHER FINANCE - 4.0%
Cattles Holdings 8,814 46,220
London Forfaiting Co. 7,200 47,049
Perpetual PLC 1,900 81,188
Provident Financial Group 4,704 43,836
218,293
INSURANCE - 5.5%
Hogg Robinson Group 12,600 42,753
London Insurance Market Investment
Trust PLC 19,600 41,685
Prudential Corp. PLC 12,861 125,070
Royal & Sun Alliance Insurance
Group PLC 10,774 85,009
294,517
SECURITIES INDUSTRY - 0.8%
Mercury Asset Management Group PLC 1,950 42,311
TOTAL FINANCE 1,086,201
SHARES VALUE (NOTE 1)
HEALTH - 4.1%
DRUGS & PHARMACEUTICALS - 3.3%
SmithKline Beecham PLC Ord. 11,047 $ 177,196
MEDICAL FACILITIES MANAGEMENT - 0.8%
Westminster Health Care Holdings PLC 10,300 41,972
TOTAL HEALTH 219,168
HOLDING COMPANIES - 0.7%
Cookson Group PLC 10,603 37,354
INDUSTRIAL MACHINERY & EQUIPMENT - 0.7%
ELECTRICAL EQUIPMENT - 0.7%
Premier Farnell PLC 4,900 37,071
MEDIA & LEISURE - 4.6%
BROADCASTING - 0.9%
Yorkshire TV Holdings PLC 2,530 44,977
ENTERTAINMENT - 1.5%
EMI Group PLC 2,100 41,765
London Clubs International PLC 6,200 38,954
80,719
PUBLISHING - 1.5%
Bemrose 5,970 41,677
EMAP PLC 3,250 40,206
81,883
RESTAURANTS - 0.7%
Compass Group PLC Ord. 3,600 39,509
TOTAL MEDIA & LEISURE 247,088
NONDURABLES - 15.0%
BEVERAGES - 3.4%
Bass PLC Ord. 6,050 78,185
Bulmer (HP) Holdings PLC 3,725 32,354
Cadbury-Schweppes PLC Ord. 8,917 74,121
184,660
FOODS - 5.4%
Grand Metropolitan PLC 15,988 133,676
Man (E D & F) Group PLC 13,500 39,122
Tomkins PLC Ord. 17,639 76,174
United Biscuits Holdings PLC Class L 11,100 39,466
288,438
HOUSEHOLD PRODUCTS - 3.8%
London International Group PLC 14,175 41,769
Scholl PLC 8,400 40,912
Unilever PLC Ord. 4,600 121,058
203,739
TOBACCO - 2.4%
BAT Industries PLC Ord. 15,400 129,760
TOTAL NONDURABLES 806,597
RETAIL & WHOLESALE - 7.6%
GENERAL MERCHANDISE STORES - 1.5%
Kingfisher PLC 7,326 79,450
GROCERY STORES - 2.4%
Somerfield PLC 14,200 41,497
Tesco PLC Ord. 15,353 89,234
130,731
RETAIL & WHOLESALE, MISCELLANEOUS - 3.7%
Boots Co. PLC (The) Class L 14,300 160,655
Goldsmiths Group PLC 6,600 37,181
197,836
TOTAL RETAIL & WHOLESALE 408,017
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 6.9%
LEASING & RENTAL - 0.8%
National Parking Corp. Ltd. 4,700 $ 40,441
PRINTING - 0.8%
Waddington PLC, John Class L 9,000 44,711
SERVICES - 5.3%
Business Post Group PLC 5,100 38,046
Davis Service Group 1,200 5,027
Hays PLC 4,600 40,701
Reuters Holdings PLC Ord. 15,500 159,541
Securicor Group PLC 8,600 39,652
282,967
TOTAL SERVICES 368,119
TECHNOLOGY - 1.5%
ELECTRONIC INSTRUMENTS - 0.8%
Sanderson Electronics PLC 20,600 42,140
ELECTRONICS - 0.7%
Electrocomponents PLC 6,200 39,760
TOTAL TECHNOLOGY 81,900
TRANSPORTATION - 0.8%
TRUCKING & FREIGHT - 0.8%
Ocean Group PLC 5,100 43,304
UTILITIES - 11.9%
CELLULAR - 2.3%
Vodafone Group PLC 27,476 123,116
ELECTRIC UTILITY - 3.2%
National Grid Co. PLC 35,480 127,876
Southern Electric PLC 6,461 45,734
173,610
TELEPHONE SERVICES - 4.7%
British Telecommunications PLC Ord. 34,500 253,169
WATER - 1.7%
Severn Trent PLC Ord. 3,900 47,804
Yorkshire Water PLC 7,169 41,900
89,704
TOTAL UTILITIES 639,599
TOTAL COMMON STOCKS
(Cost $4,532,523) 5,088,462
CASH EQUIVALENTS - 5.2%
Taxable Central Cash Fund (b)
(Cost $279,580) 279,580 279,580
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $4,812,103) $ 5,368,042
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash Fund was
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $2,987,059 and $745,124, respectively.
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $4,813,914. Net unrealized appreciation aggregated
$554,128, of which $668,755 related to appreciated investment securities
and $114,627 related to depreciated investment securities.
UNITED KINGDOM
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at $ 5,368,042
value (cost $4,812,103) -
See accompanying schedule
Cash 18,953
Receivable for investments sold 89,801
Receivable for fund shares sold 5,112
Dividends receivable 43,769
Interest receivable 1,290
Receivable from investment adviser for expense reductions 5,714
TOTAL ASSETS 5,532,681
LIABILITIES
Payable for investments purchased $ 5,017
Payable for fund shares redeemed 18,404
Other payables and accrued expenses 25,256
TOTAL LIABILITIES 48,677
NET ASSETS $ 5,484,004
Net Assets consist of:
Paid in capital $ 4,877,615
Undistributed net investment income 27,036
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 23,326
Net unrealized appreciation (depreciation) on investments 556,027
and assets and liabilities in
foreign currencies
NET ASSETS, for 433,354 shares outstanding $ 5,484,004
NET ASSET VALUE and redemption price per share ($5,484,004 (divided by) 433,354 shares) $12.65
Maximum offering price per share (100/97.00 of $12.65) $13.04
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 83,335
Dividends
Interest 8,948
92,283
Less foreign taxes withheld (9,024
)
TOTAL INCOME 83,259
EXPENSES
Management fee $ 16,716
Transfer agent fees 7,171
Accounting fees and expenses 30,002
Non-interested trustees' compensation 11
Custodian fees and expenses 20,564
Registration fees 7,345
Audit 16,363
Legal 10
Miscellaneous 15
Total expenses before reductions 98,197
Expense reductions (55,514 42,683
)
NET INVESTMENT INCOME 40,576
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 28,362
Foreign currency transactions (32 28,330
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 246,362
Assets and liabilities in (364 245,998
foreign currencies )
NET GAIN (LOSS) 274,328
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 314,904
OTHER INFORMATION $ 61,940
Sales charges paid to FDC
Expense reductions $ 945
Custodian interest credits
FMR reimbursement 54,569
$ 55,514
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS NOVEMBER 1, 1995
ENDED (COMENCEMENT
APRIL 30, 1997 OF OPERATIONS) TO
(UNAUDITED) OCTOBER 31,
1996
Operations $ 40,576 $ 33,364
Net investment income
Net realized gain (loss) 28,330 60,786
Change in net unrealized appreciation (depreciation) 245,998 310,029
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 314,904 404,179
Distributions to shareholders (35,705) (6,442)
From net investment income
From net realized gain (54,931) -
TOTAL DISTRIBUTIONS (90,636) (6,442)
Share transactions 3,823,016 3,047,222
Net proceeds from sales of shares
Reinvestment of distributions 90,558 6,442
Cost of shares redeemed (1,317,627) (799,432)
Redemption fees 8,278 3,542
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 2,604,225 2,257,774
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,828,493 2,655,511
NET ASSETS
Beginning of period 2,655,511 -
End of period (including undistributed net investment income of $27,036 and $26,710,
respectively) $ 5,484,004 $ 2,655,511
OTHER INFORMATION 308,912 295,808
Shares
Sold
Issued in reinvestment of distributions 7,701 651
Redeemed (106,563) (73,155)
Net increase (decrease) 210,050 223,304
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS NOVEMBER 1, 1995
ENDED (COMENCEMENT
APRIL 30, 1997 OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA (UNAUDITED) 1996
Net asset value, beginning of period $ 11.89 $ 10.00
Income from Investment Operations .11 D .16
Net investment income
Net realized and unrealized gain (loss) .96 1.75
Total from investment operations 1.07 1.91
Less Distributions
From net investment income (.13) (.04)
From net realized gain (.20) -
Total distributions (.33) (.04)
Redemption fees added to paid in capital .02 .02
Net asset value, end of period $ 12.65 $ 11.89
TOTAL RETURN B, C 9.38% 19.38%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 5,484 $ 2,656
Ratio of expenses to average net assets 2.00% A, E 2.00% E
Ratio of expenses to average net assets after expense reductions 1.96% A, F 1.97% F
Ratio of net investment income to average net assets 1.86% A 1.62%
Portfolio turnover rate 37% A 50%
Average commission rate G $ .0103 $ .0086
</TABLE>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT
INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE
RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS).
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 6 OF
NOTES TO FINANCIAL STATEMENTS). G 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.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1997 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Canada Fund, Fidelity Emerging Markets Fund, Fidelity Europe Fund,
Fidelity Europe Capital Appreciation Fund, Fidelity France Fund, Fidelity
Germany Fund, Fidelity Hong Kong and China Fund, Fidelity Japan Fund,
Fidelity Japan Small Companies Fund, Fidelity Latin America Fund, Fidelity
Nordic Fund, Fidelity Pacific Basin Fund, Fidelity Southeast Asia Fund and
Fidelity United Kingdom Fund (the funds) are funds of Fidelity Investment
Trust (the trust). The trust is registered under the Investment Company Act
of 1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. Each fund is
authorized to issue an unlimited number of shares. The financial statements
have been prepared in conformity with generally accepted accounting
principles which permit management to make certain estimates and
assumptions at the date of the financial statements. The following
summarizes the significant accounting policies of the funds:
SECURITY VALUATION. Securities for which quotations are readily available
are valued at the last sale price, or if no sale price, at the closing bid
price in the principal market in which such securities are normally traded.
Securities (including restricted securities) for which quotations are not
readily available are valued primarily using dealer-supplied valuations or
at their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less for
which quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value. Equity securities that have reached the limit for aggregate foreign
ownership may trade at a premium to the local share price. If the
broker-quoted premium is not readily available as a result of limited share
activity, the securities are valued at the last sale price of the local
shares in the principal market in which securities are normally traded.
FOREIGN CURRENCY TRANSLATION. The accounting records of the funds are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. The effects
of changes in foreign currency exchange rates on investments in securities
are included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to U.S. federal
income taxes to the extent that it distributes substantially all of its
taxable income for its fiscal year. Each fund may be subject to foreign
taxes on income and gains on investments which are accrued based upon each
fund's understanding of the tax rules and regulations that exist in the
markets in which it invests. The schedules of investments include
information regarding income taxes under the caption "Income Tax
Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the funds are informed of the
ex-dividend date. Non-cash dividends included in dividend income, if any,
are recorded at the fair market value of the securities received. Interest
income is accrued as earned. Investment income is recorded net of foreign
taxes withheld where recovery of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Certain foreign currency gains (losses) are taxable as
ordinary income and, therefore, increase (decrease) taxable ordinary income
available for distribution.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for foreign
currency transactions, passive foreign investment companies (PFIC), capital
loss carryforwards, net operating losses and losses deferred due to wash
sales and excise tax regulations. Certain funds also utilized earnings and
profits distributed to shareholders on redemption of shares as a part of
the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income, accumulated net investment loss,
distributions in excess of net investment income, and accumulated
undistributed net realized gain (loss) on investments and foreign currency
transactions may include temporary book and tax basis differences which
will reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
REDEMPTION FEES. Shares held in Canada, Emerging Markets, France, Germany,
Hong Kong and China, Japan, Japan Small Companies, Latin America, Nordic,
Southeast Asia and United Kingdom less than 90 days are subject to a
redemption fee equal to 1.50% of the proceeds of the redeemed shares (1.00%
for shares purchased prior to February 1, 1996 for Canada and Japan).
Shares held in Europe, Europe Capital Appreciation, and Pacific Basin less
than 90 days are subject to a redemption fee equal to 1.00% of the proceeds
of the redeemed shares. These fees, which are retained by the funds, are
accounted for as an addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. Certain funds use foreign currency contracts to
facilitate transactions in foreign-denominated securities. Losses may arise
from changes in the value of the foreign currency or if the counterparties
do not perform under the contracts' terms. The U.S. dollar value of foreign
currency contracts is determined using contractual currency exchange rates
established at the time of each trade. The cost of the foreign currency
contracts is included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the funds, along with other
affiliated entities of Fidelity Management & Research Company (FMR), may
transfer uninvested cash balances into one or more joint trading accounts.
These balances are invested in one or more repurchase agreements for U.S.
Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the funds, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the funds'
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
SEC, the funds may invest in the Taxable Central Cash Fund (the Cash Fund)
managed by FMR Texas, an affiliate of FMR. The Cash Fund is an open-end
money market fund available only to investment companies and other accounts
managed by FMR and its affiliates. The Cash Fund seeks preservation of
capital, liquidity, and current income by investing in U.S. Treasury
securities and repurchase agreements for these securities.
Dividends from the Cash Fund are declared daily and paid monthly from net
interest income. Income distributions received by the funds are recorded as
interest income in the accompanying financial statements.
WHEN-ISSUED SECURITIES. Each fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or more
after the date of the transaction. The price of the underlying securities
is fixed at the time the transaction is negotiated. The market values of
the securities purchased on a when-issued or forward commitment basis are
identified as such in each applicable fund's schedule of investments. Each
fund may receive compensation for interest forgone in the purchase of a
when-issued security. With respect to purchase commitments, each fund
identifies securities as segregated in its custodial records with a value
at least equal to the amount of the commitment. The payables and
receivables associated with the purchases and sales of when-issued
securities having the same settlement date and broker are offset.
When-issued securities that have been purchased from and sold to different
brokers are reflected as both payables and receivables in the applicable
statements of assets and liabilities under the caption "Delayed delivery."
Losses may arise due to changes in the market value of the underlying
securities, if the counterparty does not perform under the contract, or if
the issuer does not issue the securities due to political, economic, or
other factors.
RESTRICTED SECURITIES. Certain funds are permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. Information regarding
restricted securities is included under the caption "Legend" at the end of
each applicable fund's schedule of investments.
3. PURCHASES AND SALES OF INVESTMENTS.
Information regarding purchases and sales of securities (other than
short-term securities), is included under the caption "Other Information"
at the end of each applicable fund's schedule of investments.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of each fund.
The group fee rate is the weighted average of a series of rates and is
based on the monthly average net assets of all the mutual funds advised by
FMR. The rates ranged from .2500% to .5200% for the period. In the event
that these rates were lower than the contractual rates in effect
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
MANAGEMENT FEE - CONTINUED
during the period, FMR voluntarily implemented the above rates, as they
resulted in the same or a lower management fee. The annual individual fund
fee rate is .45% for each fund. The basic fee for Canada, Europe, Europe
Capital Appreciation, Japan, Pacific Basin, and Southeast Asia is subject
to a performance adjustment (up to a maximum of ".20% of the fund's average
net assets over the performance period) based on each fund's investment
performance as compared to the appropriate index over a specified period of
time.
For the period, each fund's management fee was equivalent to the following
annualized rates expressed as a percentage of average net assets after the
performance adjustment, if applicable:
Canada .42%
Emerging Markets .75%
Europe .82%
Europe Capital Appreciation .69%
France .75%
Germany .75%
Hong Kong and China .75%
Japan .91%
Japan Small Companies .75%
Latin America .75%
Nordic .75%
Pacific Basin .62%
Southeast Asia .69%
United Kingdom .75%
SUB-ADVISER FEE. FMR, on behalf of the funds, entered into sub-advisory
agreements with Fidelity Management & Research (U.K.) Inc., Fidelity
Management & Research Far East Inc., Fidelity International Investment
Advisors (FIIA), and Fidelity Investment Japan Ltd. (Hong Kong and China,
Japan, Japan Small Companies and Southeast Asia funds only.). In addition,
FIIA entered into a sub-advisory agreement with its subsidiary, Fidelity
International Investment Advisors (U.K.) Limited (FIIAL U.K.). Under the
sub-advisory arrangements, FMR may receive investment advice and research
services and may grant the sub-advisers investment management authority to
buy and sell securities. FMR pays its sub-advisers either a portion of its
management fee or a fee based on costs incurred for these services. FIIA
pays FIIAL U.K. a fee based on costs incurred for either service.
SALES LOAD. For the period, Fidelity Distributors Corporation (FDC), an
affiliate of FMR and the general distributor of the funds, is paid a 3%
sales charge on sales of shares of each fund.
Shares of Canada, Europe, and Pacific Basin purchased before October 12,
1990 are subject to a 1% deferred sales charge upon redemption.
The amount received by FDC for sales charges and deferred sales charges is
shown under the caption "Other Information" on each applicable fund's
Statement of Operations.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, is the funds' transfer, dividend disbursing and shareholder servicing
agent. FSC receives account fees and asset-based fees that vary according
to account size and type of account. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
For the period, each fund's transfer agent fees were equivalent to the
following annualized rates expressed as a percentage of average net assets:
Canada .34%
Emerging Markets .31%
Europe .28%
Europe Capital Appreciation .29%
France .35%
Germany .34%
Hong Kong and China .31%
Japan .33%
Japan Small Companies .38%
Latin America .30%
Nordic .30%
Pacific Basin .40%
Southeast Asia .29%
United Kingdom .33%
ACCOUNTING FEES. FSC maintains each fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. Certain funds placed a portion of their portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms are shown under the caption
"Other Information" at the end of each applicable fund's schedule of
investments.
5. BANK BORROWINGS.
Each fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. Each fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, each fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time.
Information regarding a fund's participation in the program is included
under the caption "Other Information" at the end of each applicable fund's
schedule of investments.
6. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse certain funds' operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above an annual rate of 2.00% of average net assets.
6. EXPENSE REDUCTIONS - CONTINUED
FMR has directed certain portfolio trades to brokers who paid a portion of
certain funds' expenses. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby credits
realized as a result of uninvested cash balances were used to reduce a
portion of each applicable fund's expenses.
For the period, the reductions under these arrangements are shown under the
caption "Other Information" on each applicable fund's Statement of
Operations.
7. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates, were the record owners of
more than 5% of the outstanding shares of the following funds:
FMR FUND % OF OWNERSHIP
France 19
Germany 10
Japan 11
United Kingdom 24
8. TRANSACTIONS WITH AFFILIATED COMPANIES.
Information regarding transactions with affiliated companies is included in
the "Legend" at the end of each applicable fund's schedule of investments.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a day.
BY PHONE
Fidelity TouchTone Xpressprovides a single toll-free number to access
account balances, positions, quotes and trading. It's easy to navigate the
service, and on your first call, the system will help you create a personal
identification number (PIN) for security.
SM
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
1
For quotes.*
2
For account balances and holdings.
3
To review orders and mutual
fund activity.
4
To change your PIN.
5
To speak to a Fidelity representative.
*
0
BY PC
Fidelity's Web site on the Internet provides a wide range of information,
including daily financial news, fund performance, interactive planning
tools and news about Fidelity products and services.
(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity
at 1-800-544-7272 for significant savings on Web access from internetMCI.
SM
(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity at
1-800-544-7272 or visit our Web site for more information on how to manage
your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL
ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR
SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL BE ABLE
TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND
IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS
ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP61
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
950 Northgate Drive
San Rafael, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Ave.
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29115 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the
Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
1903 East Ninth Street
Cleveland, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc.,
London, England
Fidelity Management & Research (Far East) Inc.,
Tokyo, Japan
Fidelity Investments Japan Ltd.
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K.) Limited
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
Richard Hazlewood, VICE PRESIDENT, EMERGING MARKETS FUND
Allan Liu, VICE PRESIDENT, SOUTHEAST ASIA FUND
Shigeki Makino, VICE PRESIDENT, JAPAN FUND, PACIFIC BASIN FUND
Kevin McCarey, VICE PRESIDENT, EUROPE CAPITAL APPRECIATION FUND
Patricia Satterthwaite, VICE PRESIDENT, LATIN AMERICA FUND
Thomas Sweeney, VICE PRESIDENT, CANADA FUND
Sally Walden, VICE PRESIDENT, EUROPE FUND
Arthur S. Loring, SECRETARY
Kenneth A. Rathgeber, TREASURER
Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
* INDEPENDENT TRUSTEES
CUSTODIANS
The Chase Manhattan Bank
New York, NY
EMERGING MARKETS FUND, EUROPE FUND, EUROPE CAPITAL APPRECIATION FUND, JAPAN
FUND, PACIFIC BASIN FUND, SOUTHEAST ASIA FUND
Brown Brothers Harriman & Co.
Boston, MA
CANADA FUND, FRANCE FUND, GERMANY FUND, HONG KONG AND CHINA FUND, JAPAN
SMALL COMPANIES FUND, LATIN AMERICA FUND, NORDIC FUND, UNITED KINGDOM FUND
FIDELITY'S INTERNATIONAL EQUITY FUNDS
Canada Fund
Diversified International Fund
Emerging Markets Fund
Europe Fund
Europe Capital Appreciation Fund
France Fund
Germany Fund
Hong Kong and China Fund
International Growth and Income Fund
International Value Fund
Japan Fund
Japan Small Companies Fund
Latin America Fund
Nordic Fund
Overseas Fund
Pacific Basin Fund
Southeast Asia Fund
United Kingdom Fund
Worldwide Fund
CORPORATE HEADQUARTERS
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
BULK RATE
U.S. POSTAGE
P A I D
F I D E L I T Y
INVESTMENTS
(registered trademark)
P.O. Box 193
Boston, MA 02101