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Previous: NEW YORK DAILY TAX FREE INCOME FUND INC, NSAR-A, 1998-12-22 |
Next: PC QUOTE INC, S-3/A, 1998-12-22 |
(2_FIDELITY_LOGOS)FIDELITY'S
TARGETED INTERNATIONAL EQUITY
FUNDS
Fidelity Canada Fund
Fidelity Emerging Markets Fund
Fidelity Europe Fund
Fidelity Europe Capital Appreciation Fund
Fidelity France Fund
Fidelity Germany Fund
Fidelity Hong Kong and China Fund
Fidelity Japan Fund
Fidelity Japan Small Companies Fund
Fidelity Latin America Fund
Fidelity Nordic Fund
Fidelity Pacific Basin Fund
Fidelity Southeast Asia Fund
Fidelity United Kingdom Fund
ANNUAL REPORT
FOR THE YEAR ENDING
OCTOBER 31, 1998
AND
PROSPECTUS
DATED DECEMBER 30, 1998
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
MARKET RECAP A-4 A REVIEW OF WHAT HAPPENED IN WORLD MARKETS
DURING THE PAST 12 MONTHS.
CANADA FUND A-5 PERFORMANCE
A-6 FUND TALK: THE MANAGER'S OVERVIEW
A-7 INVESTMENT CHANGES
A-8 INVESTMENTS
A-12 FINANCIAL STATEMENTS
EMERGING MARKETS FUND A-14 PERFORMANCE
A-15 FUND TALK: THE MANAGER'S OVERVIEW
A-16 INVESTMENT CHANGES
A-17 INVESTMENTS
A-20 FINANCIAL STATEMENTS
EUROPE FUND A-22 PERFORMANCE
A-23 FUND TALK: THE MANAGER'S OVERVIEW
A-25 INVESTMENT CHANGES
A-26 INVESTMENTS
A-29 FINANCIAL STATEMENTS
EUROPE CAPITAL APPRECIATION FUND A-31 PERFORMANCE
A-32 FUND TALK: THE MANAGER'S OVERVIEW
A-33 INVESTMENT CHANGES
A-34 INVESTMENTS
A-37 FINANCIAL STATEMENTS
FRANCE FUND A-39 PERFORMANCE
A-40 FUND TALK: THE MANAGER'S OVERVIEW
A-41 INVESTMENT CHANGES
A-42 INVESTMENTS
A-44 FINANCIAL STATEMENTS
GERMANY FUND A-46 PERFORMANCE
A-47 FUND TALK: THE MANAGER'S OVERVIEW
A-48 INVESTMENT CHANGES
A-49 INVESTMENTS
A-51 FINANCIAL STATEMENTS
HONG KONG AND CHINA FUND A-53 PERFORMANCE
A-54 FUND TALK: THE MANAGER'S OVERVIEW
A-55 INVESTMENT CHANGES
A-56 INVESTMENTS
A-58 FINANCIAL STATEMENTS
JAPAN FUND A-60 PERFORMANCE
A-61 FUND TALK: THE MANAGER'S OVERVIEW
A-62 INVESTMENT CHANGES
A-63 INVESTMENTS
A-66 FINANCIAL STATEMENTS
JAPAN SMALL COMPANIES FUND A-68 PERFORMANCE
A-69 FUND TALK: THE MANAGER'S OVERVIEW
A-70 INVESTMENT CHANGES
A-71 INVESTMENTS
A-74 FINANCIAL STATEMENTS
LATIN AMERICA FUND A-76 PERFORMANCE
A-77 FUND TALK: THE MANAGER'S OVERVIEW
A-78 INVESTMENT CHANGES
A-79 INVESTMENTS
A-81 FINANCIAL STATEMENTS
NORDIC FUND A-83 PERFORMANCE
A-84 FUND TALK: THE MANAGERS' OVERVIEW
A-85 INVESTMENT CHANGES
A-86 INVESTMENTS
A-88 FINANCIAL STATEMENTS
PACIFIC BASIN FUND A-90 PERFORMANCE
A-91 FUND TALK: THE MANAGER'S OVERVIEW
A-92 INVESTMENT CHANGES
A-93 INVESTMENTS
A-96 FINANCIAL STATEMENTS
SOUTHEAST ASIA FUND A-98 PERFORMANCE
A-99 FUND TALK: THE MANAGER'S OVERVIEW
A-100 INVESTMENT CHANGES
A-101 INVESTMENTS
A-104 FINANCIAL STATEMENTS
UNITED KINGDOM FUND A-106 PERFORMANCE
A-107 FUND TALK: THE MANAGER'S OVERVIEW
A-108 INVESTMENT CHANGES
A-109 INVESTMENTS
A-111 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS A-113 NOTES TO THE FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS A-117 THE AUDITORS' OPINION
DISTRIBUTIONS A-118
FIDELITY'S TARGETED INTERNATIONAL EQUITY P-1
FUNDS PROSPECTUS
</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
The specter of a slowing world economy cast dark shadows across many
global markets during the 12-month period ending October 31, 1998.
With Asia continuing its tailspin, emerging markets in crisis, and
even the U.S. and Europe approaching bear-market levels, the economic
forecast by summer's end was anything but bright. Fortunately, thanks
in part to the intervention of international economic organizations,
most global markets weathered the storm and were on their way to
recovery by period's end.
EUROPE: Until late July, European stock markets benefited from
expectations of strong corporate profit growth, improved economic
prospects and strong inflows into mutual funds. Between late July and
early October, however, investors' earlier optimism was scuttled by
concerns that profits would not be as strong as expected due to
recession in Japan and elsewhere in Asia. Another huge shove toward a
pessimistic outlook occurred when Russia devalued the ruble in August
and defaulted on loans. This set off a crisis of confidence in
emerging markets, leading investors to seek safer havens in
conservative and liquid investments over equities. The European
markets suffered a steep decline, but, along with the U.S. market,
began to recover in October when the U.S. Federal Reserve Board cut
interest rates for a second time. For the 12-month period, the Morgan
Stanley Europe Index returned 23.39%. On January 1, 1999, 11 countries
of the European Monetary Union will officially adopt the euro as their
currency.
EMERGING MARKETS: The world's emerging markets suffered considerably
throughout the 12-month period ending October 31, 1998. Russia's
political, economic and currency woes had worldwide implications.
Latin American markets were rocked by developments such as credit
rating downgrades in Brazil and Venezuela. For the period, the MSCI
Emerging Markets Latin American Free Index returned -28.00%.
Malaysia's corporate loan defaults, along with bank closings and
economic woes in Indonesia, contributed to the Asian emerging-markets
decline. The MSCI Far East ex-Japan Free Index fell -23.05% during the
12-month period.
JAPAN AND THE FAR EAST: The Japanese economy continued to sink lower,
amid unfulfilled promises by the government to help the ailing banking
sector. The banking system's problems, specifically bad debt and an
increasing credit crunch, were particularly hard on the small-cap
market, spurring investors' flight to
large, globally competitive companies. Even the formerly strong export
companies found it harder to operate profitably toward the end of the
period, as the yen, which had fallen for the first 10 months of the
period, suddenly surged upward against the U.S. dollar in September
and October. The Tokyo Stock Exchange Index, a gauge of the Japanese
market, was down -15.42% for the 12 months. In Hong Kong, the
government purchased $15 billion in securities in an attempt to temper
market volatility. Late in the period, the Hong Kong market rebounded
on speculation of a decline in interest rates. For the period, the
Hang Seng Index returned -1.56%.
U.S. AND CANADA: The U.S. equity markets fluctuated wildly against a
backdrop of worldwide economic and financial unrest. After closing
above 9000 for the first time in April and reaching a record high in
July, the Dow Jones Industrial Average saw all its returns for the
year erased on the last day of August as the U.S. equity market
suffered one of its worst one-day performances ever. Despite the
equity market's tumultuous behavior, the U.S. economy remained strong
and steady thanks to low inflation, strong employment and low interest
rates. In fact, toward the end of the period, the Federal Reserve
Board cut key interest rates twice, resulting in a sharp rebound in
the stock market during October. For the 12-month period, the Standard
& Poor's 500 Index returned 21.99%. The Canadian stock market was not
as fortunate. Natural resource companies that make up a significant
proportion of the Canadian economy were hard hit by the global
economic slowdown triggered by the Asian financial crisis that started
in 1997. When the problems in Russia were added to the situation, the
Canadian market and the Canadian dollar fell sharply. For the 12
months that ended October 31, 1998, the Toronto Stock Exchange (TSE)
300 returned -15.82%.
BONDS: In a see-saw battle that saw bonds rise as world equity markets
struggled to get off the ground, then head back to earth as stocks
began to regain their lofty levels, bonds and stocks ultimately ended
up with nearly level performance in some instances. For the period,
the Lehman Brothers Long Term Government Index return of 16.04% nearly
rivaled the 17.45% gain of the equity benchmark Dow Jones Industrials
Average. U.S. Treasuries were by far the best-performing bonds, and
the safe haven of choice by investors around the world. In contrast,
the JP Morgan Emerging Markets Bond Index returned -6.20%. The Salomon
Brothers Non-U.S. World Government Bond Index returned 12.80%.
Standard & Poor's 500 Index(registered trademark) Morgan Stanley
Capital International Europe, Australasia, Far East Index
* YEAR TO DATE THROUGH OCTOBER 31, 1998.
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: 69.44
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: 7.62
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: 37.58
Row: 13, Col: 2, Value: 11.21
Row: 14, Col: 1, Value: 22.96
Row: 14, Col: 2, Value: 6.05
Row: 15, Col: 1, Value: 32.11
Row: 15, Col: 2, Value: 4.82
Row: 16, Col: 1, Value: 14.63
Row: 16, Col: 2, Value: 10.02
%
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). If Fidelity had not reimbursed certain fund
expenses, the past five year and past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
OCTOBER 31, 1994 YEAR YEARS YEARS
FIDELITY CANADA -21.27% 5.16% 78.69%
FIDELITY CANADA -23.64% 2.00% 73.32%
(INCL. 3.00% SALES CHARGE)
Toronto Stock Exchange 300 -15.82% 38.35% 90.94%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare the fund's returns to the performance of the
Toronto Stock Exchange 300 Index - a market capitalization-weighted
index of 300 stocks traded in the Canadian market. This benchmark
includes reinvested dividends and capital gains if any, and excludes
the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
OCTOBER 31, 1994 YEAR YEARS YEARS
FIDELITY CANADA -21.27% 1.01% 5.98%
FIDELITY CANADA -23.64% 0.40% 5.65%
(INCL. 3.00% SALES CHARGE)
Toronto Stock Exchange 300 -15.82% 6.71% 6.68%
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
Canada Toronto Stck Exchange 300
00309 DR001
1988/10/31 9700.00 10000.00
1988/11/30 9585.79 10015.37
1988/12/31 9796.56 10310.59
1989/01/31 10535.77 11108.18
1989/02/28 10240.08 10838.97
1989/03/31 10411.27 10964.29
1989/04/30 10621.36 11207.52
1989/05/31 10979.30 11255.10
1989/06/30 11508.42 11606.39
1989/07/31 12208.73 12422.82
1989/08/31 12270.98 12648.75
1989/09/30 12193.17 12445.38
1989/10/31 12021.98 12462.27
1989/11/30 12092.02 12660.70
1989/12/31 12440.43 12867.17
1990/01/31 11431.52 11745.29
1990/02/28 11496.61 11664.05
1990/03/31 11691.88 11783.71
1990/04/30 11130.48 10889.14
1990/05/31 11862.75 11631.05
1990/06/30 12139.38 11651.20
1990/07/31 12237.02 11850.88
1990/08/31 11529.16 11133.91
1990/09/30 11342.02 10564.71
1990/10/31 11040.98 10219.41
1990/11/30 11398.98 10504.68
1990/12/31 11757.14 10960.72
1991/01/31 11809.28 11003.63
1991/02/28 12895.49 11811.68
1991/03/31 13460.32 11890.48
1991/04/30 13564.59 11877.89
1991/05/31 14164.18 12280.87
1991/06/30 14181.56 12095.56
1991/07/31 14138.11 12272.67
1991/08/31 14016.46 12328.46
1991/09/30 13547.21 12026.60
1991/10/31 14146.80 12593.75
1991/11/30 13616.73 12263.13
1991/12/31 13836.28 12322.29
1992/01/31 14085.66 12430.30
1992/02/29 14168.79 12331.37
1992/03/31 13771.62 11728.35
1992/04/30 13605.37 11519.98
1992/05/31 13725.44 11552.32
1992/06/30 13651.55 11651.10
1992/07/31 14002.54 11997.63
1992/08/31 13790.10 11783.14
1992/09/30 13198.96 10994.52
1992/10/31 13143.54 11204.26
1992/11/30 13106.60 10642.28
1992/12/31 13439.15 11042.00
1993/01/31 13365.15 10935.21
1993/02/28 14197.59 11599.10
1993/03/31 14974.52 12073.46
1993/04/30 15362.99 12581.94
1993/05/31 15575.72 12943.97
1993/06/30 16371.16 13148.73
1993/07/31 15779.21 13136.34
1993/08/31 16176.92 13376.15
1993/09/30 15381.49 12801.53
1993/10/31 16482.15 13801.34
1993/11/30 16102.93 13428.71
1993/12/31 16862.22 14074.50
1994/01/31 17603.82 14763.63
1994/02/28 16852.95 14149.21
1994/03/31 16231.86 13547.65
1994/04/30 16111.35 13372.55
1994/05/31 16185.51 13591.25
1994/06/30 15295.58 12676.69
1994/07/31 15592.22 13143.44
1994/08/31 16176.24 13865.06
1994/09/30 16259.67 14194.12
1994/10/31 15925.95 13900.70
1994/11/30 14767.19 13067.81
1994/12/31 14841.41 13246.42
1995/01/31 13802.51 12594.27
1995/02/28 14368.34 13115.75
1995/03/31 15268.10 13668.40
1995/04/30 15731.89 14004.52
1995/05/31 16223.51 14438.93
1995/06/30 16446.13 14713.95
1995/07/31 17011.96 15104.41
1995/08/31 16798.62 15031.90
1995/09/30 17039.79 15144.61
1995/10/31 16279.17 14889.31
1995/11/30 16947.03 15409.78
1995/12/31 17719.43 15588.58
1996/01/31 18017.55 16336.17
1996/02/29 18175.93 16285.91
1996/03/31 18455.41 16588.40
1996/04/30 18809.43 17153.34
1996/05/31 19256.61 17433.53
1996/06/30 18632.42 16874.33
1996/07/31 18092.08 16368.40
1996/08/31 18865.32 17187.87
1996/09/30 19377.72 17806.84
1996/10/31 20346.60 19191.80
1996/11/30 20933.52 20487.33
1996/12/31 20547.00 19912.51
1997/01/31 22167.90 20906.40
1997/02/28 21619.82 20775.88
1997/03/31 20150.52 19550.80
1997/04/30 20290.45 19801.43
1997/05/31 22121.26 21474.37
1997/06/30 21736.44 21689.60
1997/07/31 22750.96 23208.21
1997/08/31 21888.03 22186.60
1997/09/30 23357.34 23782.91
1997/10/31 22016.30 22681.82
1997/11/30 21025.10 21381.96
1997/12/31 21804.11 21954.81
1998/01/31 21342.44 21582.87
1998/02/28 22463.64 23383.99
1998/03/31 23466.13 25035.77
1998/04/30 24086.09 25207.41
1998/05/31 23241.89 24543.24
1998/06/30 22661.50 23694.25
1998/07/31 20392.72 21658.98
1998/08/31 15789.19 16679.32
1998/09/30 16290.43 17384.29
1998/10/30 17332.49 19094.22
IMATRL PRASUN SHR__CHT 19981031 19981109 150602 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Canada Fund on October 31, 1988, and the current
3.00% sales charge was paid. As the chart shows, by October 31, 1998,
the value of the investment would have grown to $17,332 - a 73.32%
increase on the initial investment. For comparison, look at how the
Toronto Stock Exchange 300 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
would have grown to $19,094 - a 90.94% 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)
CANADA
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Robert Haber became Portfolio Manager of
Fidelity Canada Fund on July 15, 1998.
Q. BOB, HOW DID THE FUND PERFORM?
A. For the 12 months that ended October 31, 1998, the fund had a total
return of -21.27%. To compare, the Toronto Stock Exchange (TSE) 300
returned -15.82% during the same period.
Q. WHY DID THE FUND'S PERFORMANCE TRAIL THAT OF THE TSE 300?
A. It was a difficult year for the Canadian stock market. Natural
resource companies comprise a substantial portion of the Canadian
economy, and they were hurt by the global economic slowdown sparked by
the Asian financial crisis that started in 1997. As their economies
slowed, demand for natural resources such as zinc, aluminum, precious
metals, paper and oil also declined. When the problems in Russia were
added to the situation, the Canadian market and the Canadian dollar
fell sharply. The fund underperformed the index because over the year
it carried more natural resource stocks than the index. Because of
that, it also had less invested in some of the better-performing
sectors of the market. In addition, some large positions - including
Pan American Silver, FPI and Cominco, all of which have been reduced -
experienced sharp share-price declines.
Q. WHAT CHANGES HAVE YOU MADE SINCE TAKING OVER THE FUND?
A. I've focused on four areas. First, I reduced the fund's U.S.
investments from about 25% six months ago to about 18% at the end of
the period. By doing so, I strove to make the fund more representative
of the Canadian market, aiming to beat the index through stock picking
and limited sector bets. Second, I reduced the fund's investments in
natural resource stocks, and sought to bring the fund's sector
weightings more into line with the four major investment areas that
comprise the TSE 300 - natural resources, interest-rate sensitive
stocks, industrials and consumer companies. Third, I increased the
average market capitalization of the fund - previously it had had a
mid- and small-cap bias - and looked to invest more of the fund in
Canadian blue chips. Finally, as part of that increase in
capitalization, I've tried to sell off some of the less liquid,
small-cap stocks that were in the fund when I took it over. As of the
end of the period, I was about 75% done with this last task, so that
these investments represented only about 5% of the fund.
Q. EVEN IN A DOWN MARKET, THERE MUST HAVE BEEN SOME WINNING STOCKS FOR
THE FUND . . .
A. That's right. BCE - the largest company in Canada, the fund's top
holding and top contributor to its performance - has been one of the
big winners in a telecommunications environment characterized by
faster deregulation than in the U.S. Among the fund's other winners
were Genlyte, a lighting manufacturer, and National Sea Products, a
seafood processing company. In general, the fund's top performers
posted stronger earnings growth than the overall market, an important
characteristic amid this year's uncertainty.
Q. HOW WOULD YOU DESCRIBE YOUR INVESTMENT APPROACH?
A. I look for stocks selling at an attractive valuation, where the
company has some sort of catalyst for improvement in earnings, such as
a change in management, an increase in orders or a restructuring
program. Ideally, the portfolio should comprise stocks that, on
average, have higher earnings growth than the market as a whole,
selling at reduced valuations.
Q. WHAT'S YOUR OUTLOOK?
A. At the end of the period, most Canadian stocks were cheaper than
their U.S. counterparts, presenting attractive opportunities. In
addition, the Canadian dollar was stabilizing after declining in
value. A cheaper currency will help stimulate exports to the U.S. and
has sparked an increase in tourism. There's very low inflation and the
government has solved a budget deficit problem. Hopefully, this
positive backdrop will attract back the investment capital that fled
when the Canadian dollar was weakening. The big question is the
strength of the Canadian economy, which has been weaker than that of
the U.S. Because such a large part of the stock market is natural
resource-based, the strength of the global economy will be a crucial
factor. Additional uncertainty lies in the effects of the upcoming
election in Quebec will have on the political situation.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Canadian issuers
FUND NUMBER: 309
TRADING SYMBOL: FICDX
START DATE: November 17, 1987
SIZE: as of October 31, 1998,
more than $47 million
MANAGER: Robert Haber, since July 1998; chief
investment officer, Fidelity Investments Canada;
manager, Fidelity Advisor Income & Growth Fund,
1987-1996; Fidelity Balanced Fund, 1988-1996;
Fidelity Global Balanced Fund, 1993-1996;
Fidelity Advisor Annuity Income & Growth Fund,
1995-1996; director of equity research,
1996-1997; joined Fidelity in 1985
(checkmark)
CANADA
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
UNITED STATES 18.0%
ROW: 1, COL: 1, VALUE: 82.0
ROW: 1, COL: 2, VALUE: 18.0
CANADA 82.0%
AS OF APRIL 30, 1998
ROW: 1, COL: 1, VALUE: 74.7
ROW: 1, COL: 2, VALUE: 25.3
UNITED STATES 25.3%
CANADA 74.7%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 92.9 95.7
Short-term investments 7.1 4.3
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
BCE, Inc. 5.0 2.8
(Telephone Services)
National Sea Products Ltd. 3.4 2.5
(Foods)
Bank of Nova Scotia 2.9 1.8
(Banks)
Enbridge, Inc. 2.4 0.0
(Oil & Gas)
National Bank of Canada 2.4 4.9
(Banks)
Northern Telecom Ltd. (Communications Equipment) 2.3 0.0
Laidlaw, Inc. 2.1 1.4
(Trucking & Freight)
Teleglobe, Inc. 2.0 0.3
(Cellular)
Potash Corp. of Saskatchewan (Chemicals & Plastics) 2.0 1.2
CGI Group, Inc. Class A (sub. vtg.) (Services) 2.0 1.8
</TABLE>
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 16.4 10.2
ENERGY 13.9 13.9
UTILITIES 12.7 14.1
NONDURABLES 7.5 9.2
BASIC INDUSTRIES 6.8 14.1
TECHNOLOGY 6.1 0.0
TRANSPORTATION 5.0 5.9
RETAIL & WHOLESALE 4.5 5.6
DURABLES 3.4 0.3
PRECIOUS METALS 3.4 7.5
CANADA
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 92.9%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.2%
Cordant Technologies, Inc. 980 $ 39,874
Orbital Sciences Corp. (a) 1,350 44,550
84,424
BASIC INDUSTRIES - 6.8%
CHEMICALS & PLASTICS - 2.9%
Intertape Polymer Group, Inc. 14,000 274,483
Maax, Inc. (a) 12,000 124,052
Potash Corp. of Saskatchewan 14,000 966,362
1,364,897
IRON & STEEL - 0.7%
Dofasco, Inc. 24,800 319,865
METALS & MINING - 1.4%
Alcan Aluminium Ltd. 9,900 248,639
Breakwater Resources Ltd. (a) 17,500 9,981
Cameco Corp. 1,900 36,020
Cominco Ltd. 800 8,192
Southernera Resources Ltd. (a) 67,300 372,944
675,776
PAPER & FOREST PRODUCTS - 1.8%
Abitibi-Consolidated, Inc. 4,400 41,208
Cascades, Inc. 26,300 132,105
Domtar, Inc. 12,600 69,006
Donohue, Inc. Class A (sub. vtg.) 9,300 192,883
Macmillan Bloedel Ltd. 11,900 113,377
Paperboard Industries 181,100 246,490
International, Inc. (a)
Tembec, Inc. Class A (a) 17,000 88,146
883,215
TOTAL BASIC INDUSTRIES 3,243,753
CONSTRUCTION & REAL ESTATE - 2.7%
BUILDING MATERIALS - 0.9%
Owens-Corning 470 17,067
Richelieu Hardware Ltd. (a) 6,400 61,183
St. Lawrence Cement, Inc. Class A 32,500 338,081
416,331
REAL ESTATE - 1.8%
Boardwalk Equities, Inc. (a) 55,100 582,105
Cadillac Fairvew Corp. 13,100 246,225
Oxford Properties Group, Inc. (a) 4,400 46,341
874,671
TOTAL CONSTRUCTION & REAL ESTATE 1,291,002
DURABLES - 3.4%
AUTOS, TIRES, & ACCESSORIES - 2.4%
Airboss of America Corp. (a) 41,500 76,927
Breed Technologies, Inc. 2,030 17,128
SHARES VALUE (NOTE 1)
Canadian Tire Corp. Ltd. Series A 11,100 $ 261,151
Federal-Mogul Corp. 2,180 118,129
Gentex Corp. (a) 780 11,456
Magna International, Inc. Class A 9,200 570,342
TRW, Inc. 1,450 82,559
1,137,692
CONSUMER ELECTRONICS - 0.2%
Black & Decker Corp. 630 32,563
Maytag Corp. 1,890 93,437
126,000
HOME FURNISHINGS - 0.6%
Dorel Industries, Inc. Class B (a) 21,800 291,769
TEXTILES & APPAREL - 0.2%
Shaw Industries, Inc. 5,280 91,740
TOTAL DURABLES 1,647,201
ENERGY - 13.9%
ENERGY SERVICES - 0.2%
Baker Hughes, Inc. 3,550 78,322
Halliburton Co. 510 18,328
96,650
OIL & GAS - 13.7%
Alberta Energy Co. Ltd. 32,700 762,979
Amoco Corp. 40 2,245
Anderson Exploration Ltd. (a) 22,900 233,022
Beau Canada Exploration Ltd. 14,600 17,979
Enbridge, Inc. 26,600 1,156,822
Ensign Resource Service Group, Inc. 10,100 122,740
Imperial Oil Ltd. 9,500 150,852
Oryx Energy Co. (a) 2,070 28,980
Paramount Resources Ltd. 12,000 126,385
Penn West Petroleum Ltd. (a) 58,800 758,390
Poco Petroleums Ltd. (a) 12,200 116,631
Post Energy Corp. (a) 61,000 187,796
Rio Alto Exploration Ltd. (a) 79,900 869,998
Shell Canada Ltd. Class A 36,000 570,484
Suncor Energy, Inc. 26,500 841,597
Thunder Energy, Inc. (a) 10,000 10,370
Tosco Corp. 1,630 45,742
Ulster Petroleums Ltd. (a) 51,700 469,117
Union Pacific Resources Group, Inc. 3,980 51,740
USX-Marathon Group 400 13,075
6,536,944
TOTAL ENERGY 6,633,594
FINANCE - 16.4%
BANKS - 9.9%
Bank of Montreal, Canada 14,500 593,007
Bank of Nova Scotia 66,800 1,394,102
Canadian Imperial Bank of Commerce 44,800 889,960
National Bank of Canada 76,400 1,143,846
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
BANKS - CONTINUED
Peoples Heritage Financial Group, Inc. 1,800 $ 32,400
Royal Bank of Canada 11,600 534,552
Wells Fargo & Co. 405 149,850
4,737,717
CREDIT & OTHER FINANCE - 2.1%
Chapters, Inc. (a) 11,000 148,292
Doral Financial Corp. 3,250 56,875
Equitable Companies (The), Inc. 3,770 184,730
Power Corp. of Canada 29,000 610,863
1,000,760
FEDERAL SPONSORED CREDIT - 0.3%
SLM Holding Corp. 3,810 152,638
INSURANCE - 1.7%
American Bankers Insurance Group, Inc. 1,740 77,756
Great-West Lifeco, Inc. 44,500 728,255
806,011
SAVINGS & LOANS - 0.1%
Charter One Financial, Inc. 787 21,593
Washington Mutual, Inc. 520 19,468
41,061
SECURITIES INDUSTRY - 2.3%
Lehman Brothers Holdings, Inc. 2,100 79,669
Mackenzie Financial Corp. 16,800 188,373
Power Financial Corp. 39,400 849,083
1,117,125
TOTAL FINANCE 7,855,312
HEALTH - 2.1%
DRUGS & PHARMACEUTICALS - 1.4%
Amgen, Inc. (a) 1,040 81,705
Biochem Pharma, Inc. 22,100 479,843
Sepracor, Inc. (a) 510 34,999
Warner-Lambert Co. 730 57,214
653,761
MEDICAL EQUIPMENT & SUPPLIES - 0.4%
Arterial Vascular Engineering, Inc. (a) 2,510 77,183
Becton, Dickinson & Co. 1,600 67,400
Cardinal Health, Inc. 210 19,858
McKesson Corp. 300 23,100
187,541
MEDICAL FACILITIES MANAGEMENT - 0.3%
Health Management Associates, Inc. Class A (a) 5,310 94,584
Lincare Holdings, Inc. (a) 1,240 49,523
144,107
TOTAL HEALTH 985,409
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 2.3%
ELECTRICAL EQUIPMENT - 1.2%
Genlyte Group, Inc. (a) 18,900 $ 374,456
Teklogix International, Inc. (a) 23,400 181,995
556,451
INDUSTRIAL MACHINERY & EQUIPMENT - 1.1%
Badger Daylighting, Inc. (a) 12,700 66,262
Enerflex Systems Ltd. 3,400 71,618
Skyjack, Inc. (a) 18,000 253,743
Tyco International Ltd. 2,100 130,069
521,692
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,078,143
MEDIA & LEISURE - 2.6%
BROADCASTING - 1.2%
AlphaNet Telecom, Inc. (a) 15,000 66,595
Chum Ltd. Class B 2,700 57,748
Cogeco Cable, Inc. 12,900 142,135
Cogeco, Inc. 3,800 41,869
NTL, Inc. (a) 1,470 70,468
Radiomutuel, Inc. Class A (a) 900 7,729
Time Warner, Inc. 970 90,028
Videotron Group Ltd. (sub. vtg.) 7,700 98,564
575,136
ENTERTAINMENT - 0.1%
IMAX Corp. (a) 2,100 53,558
PUBLISHING - 1.1%
Quebecor, Inc. Class B (sub. vtg.) 12,500 253,581
Thomson Corp. 11,400 281,139
534,720
RESTAURANTS - 0.2%
Sportscene Restaurants, Inc. Class A (a) 20,000 88,794
TOTAL MEDIA & LEISURE 1,252,208
NONDURABLES - 7.5%
AGRICULTURE - 0.5%
Edperbrascan Corp. Class A (ltd. vtg.) 16,800 246,082
BEVERAGES - 0.2%
Seagram Co. Ltd. 3,400 111,725
FOODS - 5.2%
FPI Ltd. (a) 231,600 750,535
National Sea Products Ltd. (a) 270,600 1,622,302
Sara Lee Corp. 1,560 93,113
Weston George Ltd. 900 25,666
2,491,616
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - CONTINUED
TOBACCO - 1.6%
Imasco Ltd. 38,000 $ 714,239
Rothmans, Inc. 400 50,554
764,793
TOTAL NONDURABLES 3,614,216
PRECIOUS METALS - 3.4%
Barrick Gold Corp. 21,400 454,936
Newmont Mining Corp. 2,290 48,663
Pan American Silver Corp. (a) 111,500 682,919
Placer Dome, Inc. 25,100 397,754
Stillwater Mining Co. (a) 1,890 61,189
1,645,461
RETAIL & WHOLESALE - 4.5%
APPAREL STORES - 0.5%
Gap, Inc. 3,110 186,989
San Francisco Boutiques, Inc. Class A (a) 3,000 19,541
Suzy Shier Ltd. (sub-vtg.) 5,000 25,925
232,455
DRUG STORES - 1.2%
Jean Coutu Group, Inc. Class A 26,200 466,129
Walgreen Co. 1,940 94,454
560,583
GENERAL MERCHANDISE STORES - 0.8%
Dayton Hudson Corp. 1,290 54,664
Dollar Tree Stores, Inc. (a) 300 11,569
Sears Canada, Inc. 13,400 191,503
Wal-Mart Stores, Inc. 1,800 124,200
381,936
GROCERY STORES - 1.6%
Alimentation Couche Tard, Inc. Class B (sub. vtg.) (a) 2,500 24,224
Empire Co. Ltd. Class A (non-vtg.) 20,700 415,234
Loblaw Companies Ltd. 5,400 100,622
Metro Richelieu, Inc. Class A 700 8,439
Onex Corp. 2,500 53,471
Safeway, Inc. (a) 1,940 92,756
Silcorp Ltd. (a) 8,100 80,848
775,594
RETAIL & WHOLESALE, MISCELLANEOUS - 0.4%
Best Buy Co., Inc. (a) 3,190 153,120
Forzani Group Ltd. (a) 15,900 30,916
184,036
TOTAL RETAIL & WHOLESALE 2,134,604
SHARES VALUE (NOTE 1)
SERVICES - 3.3%
PRINTING - 1.3%
G.T.C. Transcontinental Group Ltd. 2,500 $ 20,254
Quebecor Printing, Inc. (sub. vtg.) 31,600 620,572
640,826
SERVICES - 2.0%
CGI Group, Inc. Class A (sub. vtg.) (a) 67,900 932,970
TOTAL SERVICES 1,573,796
TECHNOLOGY - 6.1%
COMMUNICATIONS EQUIPMENT - 2.6%
Cisco Systems, Inc. (a) 370 23,310
Intermedia Communications, Inc. (a) 2,080 38,480
Mitel Corp. (a) 12,700 102,479
Northern Telecom Ltd. 25,100 1,076,946
1,241,215
COMPUTER SERVICES & SOFTWARE - 1.2%
America Online, Inc. 610 77,508
ATI Technologies, Inc. (a) 3,400 27,546
Compuware Corp. (a) 1,440 78,030
GEAC Computer Ltd. (a) 9,600 214,038
Microsoft Corp. (a) 159 16,834
Wang Laboratories Inc. (a) 1,560 33,345
Yahoo, Inc. (a) 905 118,414
565,715
COMPUTERS & OFFICE EQUIPMENT - 0.6%
Apple Computer, Inc. (a) 700 25,988
Dell Computer Corp. (a) 2,280 149,340
EMC Corp. (a) 730 46,994
SCI Systems, Inc. (a) 1,240 48,980
271,302
ELECTRONIC INSTRUMENTS - 0.9%
JDS Fitel, Inc. (a) 30,600 455,162
ELECTRONICS - 0.8%
Celestica, Inc. (sub-vtg.) (a) 3,800 69,454
Gennum Corp. 1,500 33,298
Solectron Corp. (a) 700 40,075
Vitesse Semiconductor Corp. (a) 7,640 246,390
389,217
TOTAL TECHNOLOGY 2,922,611
TRANSPORTATION - 5.0%
AIR TRANSPORTATION - 0.3%
Atlantic Coast Airlines Holdings, Inc. (a) 1,700 40,800
Transat AT, Inc. (a) 37,600 116,975
157,775
RAILROADS - 2.6%
Bombardier, Inc. Class B 26,800 317,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TRANSPORTATION - CONTINUED
RAILROADS - CONTINUED
Canadian National Railway Co. 8,800 $ 439,458
Canadian Pacific Ltd. 22,900 514,282
1,270,740
TRUCKING & FREIGHT - 2.1%
Laidlaw, Inc. 106,200 987,731
TOTAL TRANSPORTATION 2,416,246
UTILITIES - 12.7%
CELLULAR - 2.2%
SkyTel Communications, Inc. (a) 4,130 68,403
Teleglobe, Inc. 35,600 973,699
Telesystem International Wireless, Inc. (sub. vtg.) (a) 1,000 10,500
1,052,602
ELECTRIC UTILITY - 0.7%
Entergy Corp. 1,040 29,900
Transalta Corp. 20,100 302,887
Washington Water & Power Co. 10 188
332,975
GAS - 1.8%
BC Gas, Inc. 4,200 86,428
Canadian Utilities Ltd. 2,500 73,158
Transcanada Pipelines Ltd. 38,000 573,854
Westcoast Energy, Inc. 5,600 109,793
843,233
TELEPHONE SERVICES - 8.0%
BCE, Inc. 71,200 2,413,478
e.spire Communications, Inc. (a) 2,340 28,080
Island Telecom, Inc. 15,000 208,536
Manitoba Telecom Services, Inc. (a) 46,600 585,936
Maritime Telegraph & Telephone Co. Ltd. 4,800 103,286
MCI WorldCom, Inc. (a) 1,820 100,555
NewTel Enterprises Ltd. 9,100 222,354
Qwest Communications International, Inc. (a) 2,080 81,380
WinStar Communications, Inc. (a) 3,920 105,840
3,849,445
TOTAL UTILITIES 6,078,255
TOTAL COMMON STOCKS 44,456,235
(Cost $43,801,901)
</TABLE>
CASH EQUIVALENTS - 7.1%
Taxable Central Cash Fund (b) 3,420,426 3,420,426
(Cost $3,420,426)
TOTAL INVESTMENT IN SECURITIES - 100% $ 47,876,661
(Cost $47,222,327)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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 $146,853,818 and $179,850,830, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $4,611 for the
period (see Note 4 of Notes to Financial Statements).
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
FPI Ltd. $ - $ 1,747,895 $ - $ -
National Sea Products Ltd. - 1,581,240 - -
South Crofty Holdings Ltd. - 998,384 - -
TOTALS $ - $ 4,327,519 $ - $ -
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $48,829,740. Net unrealized depreciation
aggregated $953,079, of which $2,310,885 related to appreciated
investment securities and $3,263,964 related to depreciated investment
securities.
The fund hereby designates approximately $5,249,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
At October 31, 1998, the fund had a capital loss carryforward of
approximately $6,389,000 all of which will expire on October 31, 2006.
CANADA
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 47,876,661
SECURITIES, AT
VALUE
(COST
$47,222,327
) -
SEE
ACCOMPANYIN
G SCHEDULE
FOREIGN 5
CURRENCY HELD
AT VALUE
(COST $5)
RECEIVABLE FOR 647,345
INVESTMENTS
SOLD
RECEIVABLE FOR 51,750
FUND SHARES
SOLD
DIVIDENDS 52,894
RECEIVABLE
INTEREST 19,094
RECEIVABLE
OTHER 333
RECEIVABLES
TOTAL ASSETS 48,648,082
LIABILITIES
PAYABLE TO $ 43,255
CUSTODIAN
BANK
PAYABLE FOR 1,022,504
INVESTMENTS
PURCHASED
PAYABLE FOR 85,324
FUND SHARES
REDEEMED
ACCRUED 8,276
MANAGEMENT
FEE
OTHER PAYABLES 66,938
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 1,226,297
NET ASSETS $ 47,421,785
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 54,410,352
UNDISTRIBUTED 352,447
NET INVESTMENT
INCOME
ACCUMULATED (7,996,112)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 655,098
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 47,421,785
3,608,263
SHARES
OUTSTANDING
NET ASSET $13.14
VALUE AND
REDEMPTION
PRICE PER
SHARE
($47,421,78
5 (DIVIDED BY)
3,608,263
SHARES)
MAXIMUM $13.55
OFFERING PRICE
PER SHARE
(100/97.00
OF $13.14)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 902,107
DIVIDENDS
INTEREST 191,262
1,093,369
LESS FOREIGN TAXES WITHHELD (103,360)
TOTAL INCOME 990,009
EXPENSES
MANAGEMENT FEE $ 534,905
BASIC FEE
PERFORMANCE ADJUSTMENT (322,133)
TRANSFER AGENT FEES 260,120
ACCOUNTING FEES AND EXPENSES 62,402
NON-INTERESTED TRUSTEES' COMPENSATION 379
CUSTODIAN FEES AND EXPENSES 71,579
REGISTRATION FEES 16,067
AUDIT 41,452
LEGAL 365
REPORTS TO SHAREHOLDERS 10,269
MISCELLANEOUS 266
TOTAL EXPENSES BEFORE REDUCTIONS 675,671
EXPENSE REDUCTIONS (98,091) 577,580
NET INVESTMENT INCOME 412,429
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (INCLUDING (7,137,272)
REALIZED LOSS OF $189,266
ON SALES OF INVESTMENTS IN
AFFILIATED ISSUERS)
FOREIGN CURRENCY TRANSACTIONS (24,577) (7,161,849)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (7,126,335)
ASSETS AND LIABILITIES IN 3,658 (7,122,677)
FOREIGN CURRENCIES
NET GAIN (LOSS) (14,284,526)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (13,872,097)
OTHER INFORMATION $ 18,905
SALES CHARGES PAID TO FDC
SALES CHARGES - RETAINED BY FDC $ 18,905
DEFERRED SALES CHARGES WITHHELD $ 4,018
BY FDC
EXPENSE REDUCTIONS $ 97,188
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 358
TRANSFER AGENT CREDITS 545
$ 98,091
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ 412,429 $ 228,412
NET INVESTMENT
INCOME
NET REALIZED GAIN (7,161,849) 13,785,439
(LOSS)
CHANGE IN NET (7,122,677) (5,363,765)
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (13,872,097) 8,650,086
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO (246,908) (783,295)
SHAREHOLDERS
FROM NET INVESTMENT
INCOME
FROM NET REALIZED (10,106,122) (26,588,671)
GAIN
TOTAL DISTRIBUTIONS (10,353,030) (27,371,966)
SHARE TRANSACTIONS 7,142,290 53,914,016
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 10,182,688 27,052,083
DISTRIBUTIONS
COST OF SHARES (42,155,827) (95,712,095)
REDEEMED
NET INCREASE (24,830,849) (14,745,996)
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION FEES 20,258 254,182
TOTAL INCREASE (49,035,718) (33,213,694)
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 96,457,503 129,671,197
END OF PERIOD $ 47,421,785 $ 96,457,503
(INCLUDING
UNDISTRIBUTED NET
INVESTMENT INCOME
OF $352,447 AND
$322,747,
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 449,694 2,741,798
ISSUED IN 627,013 1,540,551
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (2,578,744) (5,109,443)
NET INCREASE (1,502,037) (827,094)
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED
OCTOBER 31,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
NET ASSET VALUE, BEGINNING OF PERIOD $ 18.88 $ 21.84 $ 17.55 $ 17.18 $ 17.82
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .09 C .03 C .08 C .05 -
NET REALIZED AND UNREALIZED GAIN (LOSS) (3.70) 1.39 4.27 .33 (.60)
TOTAL FROM INVESTMENT OPERATIONS (3.61) 1.42 4.35 .38 (.60)
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.05) (.13) (.08) (.01) -
FROM NET REALIZED GAIN (2.08) (4.29) - - -
IN EXCESS OF NET REALIZED GAIN - - - - (.04)
TOTAL DISTRIBUTIONS (2.13) (4.42) (.08) (.01) (.04)
REDEMPTION FEES ADDED TO PAID IN CAPITAL - .04 .02 - -
NET ASSET VALUE, END OF PERIOD $ 13.14 $ 18.88 $ 21.84 $ 17.55 $ 17.18
TOTAL RETURN A, B (21.27)% 8.21% 24.99% 2.22% (3.37)%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 47,422 $ 96,458 $ 129,671 $ 326,763 $ 368,330
RATIO OF EXPENSES TO AVERAGE NET ASSETS .94% .93% 1.01% 1.09% D 1.57%
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS .80% E .92% E .98% E 1.08% E 1.57%
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS .57% .18% .40% .26% (.14)%
PORTFOLIO TURNOVER RATE 215% 139% 139% 75% 59%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
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). Prior to February 19, 1993, Emerging Markets
operated under certain different investment policies. Accordingly, the
fund's historical performance may not represent its current investment
policies.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1998 YEAR YEARS FUND
FIDELITY EMERGING MARKETS -33.23% -55.62% -24.76%
FIDELITY EMERGING MARKETS -35.23% -56.95% -27.02%
(INCL. 3.00% SALES CHARGE)
MSCI Emerging -30.99% -29.90% 77.84%
Markets Free
Emerging Markets -31.83% -33.47% n/a
Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on November 1, 1990. For example, if you had invested
$1,000 in a fund that had a 5% return over the past year, the value of
your investment would be $1,050. You can compare the fund's returns to
the performance of the Morgan Stanley Capital International (MSCI)
Emerging Markets Free Index - a market capitalization-weighted index
that is designed to represent the performance of emerging stock
markets throughout the world. As of October 31, 1998, the index
included over 960 common stocks of companies domiciled in 26
countries. 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 one
year average represents a peer group of 151 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
OCTOBER 31, 1998 YEAR YEARS FUND
FIDELITY EMERGING MARKETS -33.23% -15.00% -3.49%
FIDELITY EMERGING MARKETS -35.23% -15.51% -3.86%
(INCL. 3.00% SALES CHARGE)
MSCI Emerging -30.99% -6.86% 7.46%
Markets Free
Emerging Markets -31.83% -8.06% 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 9571.06
1990/12/31 9777.33 9975.54
1991/01/31 9709.16 10782.17
1991/02/28 10118.17 12378.30
1991/03/31 10108.44 12889.03
1991/04/30 10332.42 13027.70
1991/05/31 10332.42 14052.74
1991/06/30 9972.10 13551.10
1991/07/31 10186.34 14255.08
1991/08/31 10108.44 14557.58
1991/09/30 10225.30 14002.85
1991/10/31 10127.91 14578.49
1991/11/30 9991.58 14362.80
1991/12/31 10438.08 15976.83
1992/01/31 10517.68 17826.43
1992/02/29 10826.15 18620.48
1992/03/31 10806.24 19252.13
1992/04/30 11064.96 19122.79
1992/05/31 11542.58 19054.82
1992/06/30 11522.68 17165.89
1992/07/31 11144.56 17354.93
1992/08/31 10865.95 16548.35
1992/09/30 10796.29 16609.34
1992/10/31 10995.30 17499.53
1992/11/30 10905.75 17309.63
1992/12/31 11048.91 17823.04
1993/01/31 11201.38 17909.23
1993/02/28 11770.60 18207.62
1993/03/31 12095.86 18807.85
1993/04/30 12482.12 19240.41
1993/05/31 12756.56 19769.94
1993/06/30 12919.19 20356.62
1993/07/31 13142.82 20904.76
1993/08/31 14057.63 22673.81
1993/09/30 14372.73 23280.87
1993/10/31 16446.31 25369.70
1993/11/30 17096.84 26492.37
1993/12/31 20082.32 30871.45
1994/01/31 19501.26 31433.12
1994/02/28 18950.78 30873.94
1994/03/31 17115.84 28080.18
1994/04/30 16952.74 27518.51
1994/05/31 17391.08 28460.32
1994/06/30 16167.79 27675.84
1994/07/31 17401.28 29396.67
1994/08/31 19613.39 33045.18
1994/09/30 20112.90 33420.73
1994/10/31 19623.58 32817.87
1994/11/30 18267.77 31111.53
1994/12/31 16480.81 28612.77
1995/01/31 14212.53 25568.64
1995/02/28 14376.01 24912.84
1995/03/31 14089.92 25071.12
1995/04/30 14386.23 26195.85
1995/05/31 15837.11 27589.45
1995/06/30 16021.03 27671.05
1995/07/31 16828.21 28292.18
1995/08/31 16317.33 27625.75
1995/09/30 16245.81 27494.64
1995/10/31 15469.28 26442.14
1995/11/30 14968.62 25970.59
1995/12/31 15956.70 27122.44
1996/01/31 17548.21 29050.35
1996/02/29 17340.17 28588.47
1996/03/31 17464.99 28811.13
1996/04/30 18359.57 29963.08
1996/05/31 18349.17 29829.29
1996/06/30 18276.35 30015.55
1996/07/31 16840.87 27964.18
1996/08/31 17517.00 28679.97
1996/09/30 17901.88 28928.42
1996/10/31 17277.76 28156.91
1996/11/30 18182.73 28628.69
1996/12/31 17552.02 28758.18
1997/01/31 18565.85 30719.77
1997/02/28 19558.57 32035.35
1997/03/31 18470.81 31193.85
1997/04/30 17298.56 31248.96
1997/05/31 17023.98 32143.32
1997/06/30 17150.71 33863.53
1997/07/31 16855.01 34369.04
1997/08/31 13010.88 29995.61
1997/09/30 13422.75 30826.73
1997/10/31 10930.41 25768.45
1997/11/30 10275.64 24828.22
1997/12/31 10395.44 25426.53
1998/01/31 9691.58 23432.32
1998/02/28 10633.67 25878.08
1998/03/31 11055.99 27001.09
1998/04/30 11153.44 26706.95
1998/05/31 9691.58 23047.01
1998/06/30 8727.84 20629.47
1998/07/31 8998.55 21283.56
1998/08/31 6118.15 15129.63
1998/09/30 6594.61 16089.38
1998/10/30 7298.47 17783.62
IMATRL PRASUN SHR__CHT 19981031 19981203 105800 R00000000000099
$10,000 OVER LIFE OF FUND: 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 3.00% sales charge was paid. As the
chart shows, by October 31, 1998, the value of the investment would
have been $7,298 - a 27.02% decrease 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 would have
grown to $17,784 - a 77.84% 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)
EMERGING MARKETS
FUND TALK: THE MANAGER'S OVERVIEW
An interview with David Stewart, Portfolio Manager of Fidelity
Emerging Markets Fund
Q. HOW DID THE FUND PERFORM, DAVID?
A. For the 12 months that ended October 31, 1998, the fund's return
was -33.23%. Over the same period of time, the Morgan Stanley Capital
International Emerging Markets Free Index had a return of -30.99%,
while the emerging markets funds average monitored by Lipper
Analytical Services returned -31.83%.
Q. THE FUND'S RETURN SLIGHTLY TRAILED THOSE OF THE INDEX AND THE
AVERAGE. WHY WAS THAT?
A. As I mentioned in the previous report, the first two months of the
period were devoted to an extensive restructuring of the fund. For one
thing, I reduced the number of the fund's holdings by about one-third.
In addition, during the rally in Pacific Basin markets early in 1998,
I cut back on the fund's Asian exposure, which had been significantly
higher than the index's. These maneuvers, although necessary, resulted
in a somewhat higher-than-normal turnover rate for the fund and held
back returns. One factor that hurt the fund's performance relative to
the Lipper average was a heavier position in Latin America in the
third quarter. The volatility experienced by stock markets worldwide
from July through October caused an upward spike in interest rates and
drove down stock prices in most emerging markets, particularly Latin
America. Finally, the fund had lighter holdings in Greece than both
the index and the Lipper average, which hurt relative performance
because Greece was one of the stronger emerging markets during the
period.
Q. WHAT WAS YOUR STRATEGY DURING THE PERIOD?
A. I cut back on the fund's Latin American holdings late in the
period. On the other hand, after trimming Asian holdings early in the
period, I began to increase them again in the third quarter, but with
a different emphasis. I reduced the fund's positions in Asian
financial services and real-estate stocks and substituted defensive
stocks in industries such as tobacco and food. These changes benefited
the fund during the rally in Asian stocks that occurred at the end of
September.
Q. WHAT STOCKS DID WELL FOR THE FUND?
A. Real Africa Holdings was the most positive contributor to the
fund's performance. The company is a conglomerate that is benefiting
from black empowerment initiatives in South Africa. During the period
the company converted its merchant banking division to a separately
listed holding and started a joint venture in networking software,
both of which were well received by investors. Another helpful stock
was Telefonos de Mexico. In spite of some analysts' concerns about
regulatory issues, the company continued its rapid growth and
generated healthy cash flows.
Q. ON THE OTHER SIDE OF THE LEDGER, WHAT ABOUT DISAPPOINTING STOCKS?
A. Indochina Goldfields - a Canadian company with exploration projects
scattered throughout Asia - was the holding most detrimental to
performance. While the stock was hurt by further deterioration in the
price of gold, it also suffered because investors favored proven
producers over pure exploration companies, which are considered to be
more speculative. I cut back further on this position and substituted
more mainstream gold stocks in its place. Brazil-based Telebras - one
of the fund's largest holdings over much of the period - also hurt
performance. The stock reacted negatively to the spike in interest
rates affecting stock markets in Brazil and the rest of Latin America.
The process of privatizing Telebras has gone well, and the company is
slated to be split into 12 separate companies in November 1998.
Consequently, I judged that the stock's problems were temporary and
maintained the position.
Q. WHAT'S YOUR OUTLOOK, DAVID?
A. Although the region's recovering markets may have gotten a little
ahead of themselves in the short term, I feel that Asian stocks merit
more consideration now than at any time since the devaluation of the
Thai currency in July 1997. In many countries in the region, we are
starting to see current account surpluses. A current account measures
a country's balance of trade with its global trading partners, and
against the backdrop of weak currencies and economies we have seen in
Asia, a surplus indicates an improving balance of imports and exports.
However, because there could be further shocks to the region, I favor
the sort of defensive holdings I mentioned earlier. On the other hand,
many Latin American countries have sizable current account and budget
deficits, signaling further downward pressure on the currencies of
those countries. Until I see this change, I would be inclined to
underweight Latin America in the portfolio. Other countries where I
see good opportunities currently are South Africa, Turkey and Israel.
Shareholders should remember, as always, that investing
internationally carries more risk than U.S. investments.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of emerging market
issuers, which can be found in regions such as
Southeast Asia, Latin America and Eastern Europe
FUND NUMBER: 322
TRADING SYMBOL: FEMKX
START DATE: November 1, 1990
SIZE: as of October 31, 1998, more than
$270 million
MANAGER: David Stewart, since 1997; manager,
Fidelity Emerging Markets Pilot Fund, since 1995;
analyst covering emerging markets, since
1995; joined Fidelity in 1994
(checkmark)
EMERGING MARKETS
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
BRAZIL 11.0%
UNITED STATES 8.9%
ROW: 1, COL: 1, VALUE: 11.0
ROW: 1, COL: 2, VALUE: 5.3
ROW: 1, COL: 3, VALUE: 3.9
ROW: 1, COL: 4, VALUE: 6.8
ROW: 1, COL: 5, VALUE: 12.4
ROW: 1, COL: 6, VALUE: 30.4
ROW: 1, COL: 7, VALUE: 11.6
ROW: 1, COL: 8, VALUE: 4.9
ROW: 1, COL: 9, VALUE: 4.8
ROW: 1, COL: 10, VALUE: 8.9
THAILAND 4.8%
INDIA 5.3%
TAIWAN 4.9%
ISRAEL 3.9%
SOUTH AFRICA 11.6%
KOREA (SOUTH) 6.8%
MEXICO 12.4%
OTHER 30.4%
AS OF APRIL 30, 1998
ARGENTINA 3.7%
UNITED STATES 7.1%
ROW: 1, COL: 1, VALUE: 3.7
ROW: 1, COL: 2, VALUE: 15.8
ROW: 1, COL: 3, VALUE: 7.2
ROW: 1, COL: 4, VALUE: 4.4
ROW: 1, COL: 5, VALUE: 13.0
ROW: 1, COL: 6, VALUE: 29.5
ROW: 1, COL: 7, VALUE: 4.1
ROW: 1, COL: 8, VALUE: 10.8
ROW: 1, COL: 9, VALUE: 4.4
ROW: 1, COL: 10, VALUE: 7.1
BRAZIL 15.8%
TAIWAN 4.4%
SOUTH AFRICA 10.8%
INDIA 7.2%
TURKEY 4.1%
MALAYSIA 4.4%
MEXICO 13.0%
OTHER 29.5%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Common Stocks 91.0 92.9
Preferred Stocks 0.1 0.0
Short-term investments 8.9 7.1
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Telebras sponsored ADR 4.0 4.9
(Brazil, Telephone Services)
Telefonos de Mexico SA de CV 3.8 2.5
sponsored ADR representing
Class L shares
(Mexico, Telephone Services)
Cathay Life Insurance Co. Ltd. (Taiwan, Insurance) 3.0 1.8
Fomento Economico Mexicano 2.2 0.0
SA de CV sponsored ADR (Mexico, Beverages)
Samsung Electronics Co. Ltd. (Korea (South), Electronics) 2.2 1.2
Korea Electric Power Corp. 2.1 0.0
(Korea (South), Electric Utility)
Samsung Fire & Marine Insurance (Korea (South), Insurance) 2.0 1.0
Centrais Electricas Brasileiras SA (Brazil, Electric Utility) 1.9 2.4
YPF Sociedad Anonima sponsored 1.8 1.9
ADR representing Class D shares (Argentina, Oil & Gas)
Real Africa Holdings Ltd. 1.7 1.4
(South Africa, Credit & Other
Finance)
</TABLE>
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
UTILITIES 23.5 23.4
FINANCE 21.1 25.4
NONDURABLES 12.1 6.3
TECHNOLOGY 5.7 4.5
ENERGY 4.8 6.6
HOLDING COMPANIES 4.6 7.0
BASIC INDUSTRIES 3.4 5.2
PRECIOUS METALS 3.2 3.1
CONSTRUCTION & REAL ESTATE 2.5 5.0
MEDIA & LEISURE 2.2 2.1
EMERGING MARKETS
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 91.0%
SHARES VALUE (NOTE 1)
ARGENTINA - 2.9%
Bansud SA Class B (a) 13,687 $ 45,866
Telecom Argentina Stet-France Telecom SA sponsored ADR Class B 87,900 2,834,775
YPF Sociedad Anonima sponsored ADR representing Class D shares 167,200 4,838,350
7,718,991
BERMUDA - 0.2%
Central European Media Enterprises Ltd. Class A (a) 92,100 587,138
BRAZIL - 11.0%
Centrais Electricas Brasileiras SA 221,096,000 5,115,260
Compania Cervejaria Brahma PN 7,940,648 3,727,535
(Pfd. Reg.)
Compania Energertica Minas Gerais 121,093,173 2,354,970
Petrobras PN (Pfd. Reg.) 22,040,000 2,771,281
Souza Cruz Industria Comerico 464,600 3,154,583
Telebras sponsored ADR 139,600 10,600,871
Telesp (Pfd. Reg.) 9,307,837 1,560,474
29,284,974
CANADA - 0.4%
Indochina Goldfields Ltd. (a) 1,886,100 916,829
CHILE - 1.9%
Compania Cervecerias Unidas SA sponsored ADR 151,200 2,721,600
Embotelladora Andina sponsored ADR Class A 80,000 1,065,000
Enersis SA sponsored ADR 50,000 1,043,750
Santa Isabel SA sponsored ADR 51,600 299,925
5,130,275
CHINA - 1.5%
Guangshen Railway Co. Ltd. Class H 11,562,000 1,791,517
Qingling Motors Co. Ltd. Class H 4,600,000 849,377
Zhenhai Refining & Chemical Co. 6,948,000 1,417,501
Class H
4,058,395
COLOMBIA - 0.5%
Suramericana de Inversiones SA 1,362,800 1,388,416
CROATIA - 1.0%
Pliva D.D.:
GDR (a)(c) 133,700 1,931,965
GDR (Reg.S) Unit 57,200 826,540
2,758,505
CZECH REPUBLIC - 1.0%
CEZ AS (a) 106,000 2,412,696
Komercni Banka AS sponsored ADR (a) 70,300 300,533
2,713,229
SHARES VALUE (NOTE 1)
EGYPT - 1.2%
Commercial International Bank Ltd. 407,880 $ 3,270,175
ESTONIA - 0.2%
Eesti Uhispank AS sponsored GDR (a)(c) 93,105 535,354
GREECE - 2.2%
Alpha Credit Bank 18,630 1,490,705
Hellenic Telecommunication Organization SA (OTE) 193,100 4,395,973
5,886,678
HONG KONG - 1.1%
China Resources Beijing Land Ltd. 6,764,000 1,812,293
Glorious Sun Enterprises 6,402,000 1,124,246
2,936,539
HUNGARY - 1.6%
Matav RT sponsored ADR 120,500 3,238,438
MOL Magyar Olay-es Gazipari RT 48,800 1,094,221
Series A (For. Reg.)
4,332,659
INDIA - 5.3%
Dr. Reddy's Laboratories Ltd. (a) 187,000 1,961,569
Hindalco Industries Ltd. 410 4,949
Hindustan Petroleum Corp. Ltd. (a) 221,500 1,391,464
Industrial Credit & Investment Corp. of India Ltd. 172,460 164,422
ITC Ltd. (a) 90,000 1,486,195
Mahanagar Telephone Nigam Ltd. (a) 647,700 2,797,147
Mahanagar Telephone Nigam Ltd. sponsored GDR (a)(c) 110,500 1,171,300
Mahindra & Mahindra Ltd. 70 243
Ranbaxy Laboratories Ltd. 96,750 1,139,881
Reliance Industries Ltd. (a) 594 1,538
State Bank of India (a) 743,700 2,730,849
Tata Engineering & Locomotive Co. Ltd. 7,125 18,983
Tata Power Co. Ltd. 567,700 1,105,257
13,973,797
ISRAEL - 3.9%
Bank Hapoalim BM (Reg.) 1,590,100 2,872,395
Bezeq Israeli Telecommunication 637,700 1,831,776
Corp. Ltd.
ECI Telecom Ltd. 100,500 3,329,063
Koor Industries Ltd. sponsored ADR 149,400 2,418,413
10,451,647
KOREA (SOUTH) - 6.8%
Korea Electric Power Corp. 306,000 5,449,793
Samsung Electronics Co. Ltd. 142,278 5,822,671
Samsung Fire & Marine Insurance 21,429 5,359,281
SK Telecom Ltd. 2,016 1,380,185
18,011,930
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
LUXEMBOURG - 1.5%
Minorco SA (For. Reg.) 233,800 $ 4,022,185
MALAYSIA - 2.9%
Amway Holding BHD 660,000 840,632
Carlsberg Brewery BHD 724,000 1,219,368
Rothmans of Pall Mall Malaysia BHD 730,000 2,781,684
YTL Cement BHD 2,620,800 899,348
YTL Power International BHD (a) 3,625,680 1,923,519
7,664,551
MALTA - 0.2%
Maltacom PLC GDR (a)(c) 57,000 627,000
MEXICO - 12.4%
BANACCI SA de CV Class B (a) 762,000 796,912
Cifra SA de CV Series C (a) 2,055,300 2,681,716
Corporacion Geo SA de CV (a) 406,440 708,436
Elektra SA de CV unit 3,344,000 1,492,143
Fomento Economico Mexicano SA de CV sponsored ADR 226,600 5,905,763
Gruma SA de CV sponsored ADR 114,731 1,104,286
Class B (a)(c)
Grupo Carso SA de CV Class A-1 281,000 979,582
Grupo Financiero Bancomer SA de CV Class B 13,758,900 2,823,041
Grupo Financiero Inbursa SA Class B 1,076,208 1,899,443
Grupo Televisa SA de CV sponsored GDR (a) 45,400 1,231,475
Kimberly-Clark de Mexico SA de CV Class A 1,014,000 2,989,482
Telefonos de Mexico SA de CV sponsored ADR representing 194,100 10,250,906
Class L shares
32,863,185
PAKISTAN - 0.2%
Dandot Cement Co. Ltd. (a) 93,750 1,684
Hub Power Co. Ltd. GDR Unit 91,300 410,850
Pakistan State Oil Co. Ltd. 98,813 97,438
509,972
PANAMA - 0.4%
Panamerican Beverages, Inc. Class A 57,700 1,168,425
PERU - 0.2%
Compania de Minas Buenaventura SA sponsored ADR Class B 50,000 612,500
PHILIPPINES - 3.1%
Benpres Holdings Corp. (a) 7,598,000 819,115
First Phillipines Holdings Corp. Class B 852,500 443,680
Lepanto Consolidated Mining Co. 48,931,000 497,192
Manila Electric Co. Class B 860,000 2,536,307
QueenBee Resources Corp. warrants 3/25/03 (a) 3,785,000 1,688,476
San Miguel Corp. Class B 1,474,800 2,174,736
8,159,506
SHARES VALUE (NOTE 1)
POLAND - 1.0%
Bank Handlowy w Warszawie SA GDR (Reg. S) Unit 182,200 $ 2,031,530
Polifarb Cieszyn Wroclaw SA 505,300 671,176
2,702,706
RUSSIA - 1.0%
AO Tatneft sponsored ADR (Reg.) Unit (a) 155,500 301,281
Mosenergo AO sponsored ADR 327,300 654,600
Unified Energy Systems sponsored ADR (a) 295,100 922,188
Vimpel Communications sponsored ADR (a) 69,400 815,450
2,693,519
SOUTH AFRICA - 11.6%
Anglogold Ltd. 47,890 2,445,885
Barlow Ltd. 273,700 1,299,772
Dimension Data Holdings Ltd. (a) 308,411 1,420,396
Gold Fields Ltd. (a) 186,007 1,316,657
Gold Fields of South Africa Ltd. 119,800 232,934
Johnnies Industrial Corp. Ltd. (Reg.) 451,800 2,858,033
Liberty Life Association of Africa Ltd. 231,295 3,979,091
Persetel Q Data Holdings Ltd. 153,400 1,525,684
Real Africa Holdings Ltd. (a) 1,414,951 4,513,441
Rembrandt Group Ltd. 614,600 4,108,164
Sasol Ltd. 254,200 1,250,444
South African Brewers Ltd. 198,300 3,866,321
Tiger Oats Ltd. 195,200 2,018,376
30,835,198
SRI LANKA - 0.4%
Aitken Spence & Co. Ltd. 82,666 103,525
Development Finance Corp. of Ceylon 233,669 334,435
John Keells Holdings Ltd. 141,223 400,035
National Development Bank 150,000 173,313
1,011,308
TAIWAN - 4.9%
Bank Sinopac (a) 3,648,070 1,558,235
Cathay Life Insurance Co. Ltd. 2,238,600 7,905,002
China Trust Co. Ltd. (a) 374,420 260,968
Phoenixtec Power Co. Ltd. (a) 633,000 1,337,255
Siliconware Precision Industries Co. Ltd. (a) 1,259,000 2,019,059
13,080,519
THAILAND - 4.8%
Bangkok Bank Ltd. PCL (For. Reg.) (a) 1,737,100 2,643,413
Bangkok Expressway PCL (For. Reg.) (a) 2,497,200 1,967,902
BEC World PCL (For. Reg.) 290,200 1,782,208
Nithipat Finance PCL:
(For. Reg.) warrants 12/15/99 (a) 49,800 -
(For. Reg.) (a) 2,395,900 -
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
THAILAND - CONTINUED
PTT Exploration & Production 246,200 $ 2,368,337
Public Co. Ltd. (For. Reg.) (a)
Thai Farmers Bank PCL (For. Reg.) (a) 3,093,400 3,908,780
12,670,640
TURKEY - 3.7%
EGS Gayrimenkul Yatirim Ortakligi AS Class B (a) 64,717,400 662,671
Finansbank AS 133,282,000 705,498
Guney Biraciliu 17,862,100 805,992
Haci Omer Sabanci Holding AS 145,492,970 2,196,777
Koytas Tekstil Sanayi ve Ticaret AS (a) 26,770,000 343,799
Sabah Yayincilik AS (a) 101,245,900 658,921
Turkiye Is Bankasi AS Series C Unit 74,317,500 2,037,853
Yapi Ve Kredi Bankasi AS 218,700,492 2,467,106
9,878,617
TOTAL COMMON STOCKS 242,455,362
(Cost $346,582,130)
</TABLE>
CONVERTIBLE PREFERRED STOCKS - 0.1%
PHILIPPINES - 0.1%
PDCP Development Bank (non-vtg.) (a) 2,252,138 189,771
(Cost $859,496)
CASH EQUIVALENTS - 8.9%
Taxable Central Cash Fund (b) 23,698,131 23,698,131
(Cost $23,698,131)
TOTAL INVESTMENT IN SECURITIES - 100% $ 266,343,264
(Cost $371,139,757)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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
$5,369,905 or 2.0% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $316,567,403 and $372,715,911, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $701 for the
period (see Note 4 of Notes to Financial Statements).
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Charan Insurance PCL (For. Reg.) $ - $ 76,484 $ - $ -
PT Perdanacipta Multi Finance - 1,405,411 - -
Tong Hua Daily News Co. Ltd.
(For. Reg.) - 316,290 - -
TOTALS $ - $ 1,798,185 $ - $ -
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
BASIC INDUSTRIES 3.4%
CASH EQUIVALENTS 8.9
CONSTRUCTION & REAL ESTATE 2.5
DURABLES 1.1
ENERGY 4.8
FINANCE 21.1
HEALTH 2.1
HOLDING COMPANIES 4.6
INDUSTRIAL MACHINERY & EQUIPMENT 1.6
MEDIA & LEISURE 2.2
NONDURABLES 12.1
PRECIOUS METALS 3.2
RETAIL & WHOLESALE 1.6
SERVICES 0.1
TECHNOLOGY 5.7
TRANSPORTATION 1.5
UTILITIES 23.5
100.0%
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $372,027,806. Net unrealized depreciation
aggregated $105,684,542, of which $21,224,741 related to appreciated
investment securities and $126,909,283 related to depreciated
investment securities.
At October 31, 1998, the fund had a capital loss carryforward of
approximately $116,340,000 of which $97,014,000 and $19,326,000 will
expire on September 30, 2004 and 2006, respectively.
The fund intends to elect to defer to its fiscal year ending September
30, 1999 approximately $262,816,000 of losses recognized during the
period November 1, 1997 to September 30, 1998.
The fund intends to elect to defer to its fiscal year ending September
30, 1999 approximately $5,752,000 of currency losses recognized during
the period November 1, 1997 to September 30, 1998.
EMERGING MARKETS
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 266,343,264
SECURITIES, AT
VALUE
(COST
$371,139,75
7) -
SEE
ACCOMPANYIN
G SCHEDULE
FOREIGN 593,051
CURRENCY HELD
AT VALUE
(COST
$591,028)
RECEIVABLE FOR 4,591,702
INVESTMENTS
SOLD
RECEIVABLE FOR 570,315
FUND SHARES
SOLD
DIVIDENDS 884,264
RECEIVABLE
INTEREST 77,426
RECEIVABLE
OTHER 81,242
RECEIVABLES
TOTAL ASSETS 273,141,264
LIABILITIES
PAYABLE TO $ 22,397
CUSTODIAN
BANK
PAYABLE FOR 1,351,947
INVESTMENTS
PURCHASED
PAYABLE FOR 463,797
FUND SHARES
REDEEMED
ACCRUED 154,521
MANAGEMENT
FEE
OTHER PAYABLES 439,552
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 2,432,214
NET ASSETS $ 270,709,050
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 829,018,449
DISTRIBUTIONS IN (19,246,778)
EXCESS OF
NET INVESTMENT
INCOME
ACCUMULATED (434,228,382)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (104,834,239)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN FOREIGN
CURRENCIES
NET ASSETS, FOR $ 270,709,050
40,194,329
SHARES
OUTSTANDING
NET ASSET $6.74
VALUE AND
REDEMPTION
PRICE PER
SHARE
($270,709,0
50 (DIVIDED BY)
40,194,329
SHARES)
MAXIMUM $6.95
OFFERING PRICE
PER SHARE
(100/97.00
OF $6.74)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 9,542,895
DIVIDENDS
INTEREST 1,242,162
10,785,057
LESS FOREIGN TAXES WITHHELD (767,395)
TOTAL INCOME 10,017,662
EXPENSES
MANAGEMENT FEE $ 2,908,156
TRANSFER AGENT FEES 2,019,856
ACCOUNTING FEES AND EXPENSES 297,918
NON-INTERESTED TRUSTEES' COMPENSATION 1,545
CUSTODIAN FEES AND EXPENSES 716,949
REGISTRATION FEES 35,251
AUDIT 82,618
LEGAL 1,869
REPORTS TO SHAREHOLDERS 89,053
MISCELLANEOUS 60,170
TOTAL EXPENSES BEFORE REDUCTIONS 6,213,385
EXPENSE REDUCTIONS (125,101) 6,088,284
NET INVESTMENT INCOME 3,929,378
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (INCLUDING (310,099,079)
REALIZED LOSS OF $1,636,897
ON SALES OF INVESTMENTS IN
AFFILIATED ISSUERS)
FOREIGN CURRENCY TRANSACTIONS (2,387,312) (312,486,391)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 155,463,375
ASSETS AND LIABILITIES IN 1,382,586 156,845,961
FOREIGN CURRENCIES
NET GAIN (LOSS) (155,640,430)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (151,711,052)
OTHER INFORMATION $ 361,040
SALES CHARGES PAID TO FDC
SALES CHARGES - RETAINED BY FDC $ 359,570
EXPENSE REDUCTIONS $ 109,984
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 11,964
TRANSFER AGENT CREDITS 3,153
$ 125,101
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ 3,929,378 $ 9,380,546
NET INVESTMENT
INCOME
NET REALIZED GAIN (312,486,391) 26,296,015
(LOSS)
CHANGE IN NET 156,845,961 (357,058,651)
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (151,711,052) (321,382,090)
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO (3,929,378) (9,380,546)
SHAREHOLDERS
FROM NET INVESTMENT
INCOME
IN EXCESS OF NET (6,890,670) (8,604,392)
INVESTMENT INCOME
TOTAL DISTRIBUTIONS (10,820,048) (17,984,938)
SHARE TRANSACTIONS 99,292,935 345,209,422
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 10,654,699 17,580,514
DISTRIBUTIONS
COST OF SHARES (176,082,060) (788,069,622)
REDEEMED
NET INCREASE (66,134,426) (425,279,686)
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION FEES 206,513 650,998
TOTAL INCREASE (228,459,013) (763,995,716)
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 499,168,063 1,263,163,779
END OF PERIOD $ 270,709,050 $ 499,168,063
(INCLUDING
DISTRIBUTIONS IN
EXCESS OF NET
INVESTMENT INCOME
OF $19,246,778
AND $10,147,750,
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 11,211,119 20,888,778
ISSUED IN 1,174,708 1,073,294
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (20,409,357) (49,788,241)
NET INCREASE (8,023,530) (27,826,169)
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED
OCTOBER 31,
SELECTED 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET VALUE, $ 10.35 $ 16.61 $ 15.14 $ 19.25 $ 16.18
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
NET .09 C .15 C .12 C .05 .06
INVESTMENT
INCOME
NET REALIZED (3.47) (6.17) 1.60 (4.13) 2.97
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (3.38) (6.02) 1.72 (4.08) 3.03
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET (.08) (.13) (.18) (.04) (.04)
INVESTMENT
INCOME
IN EXCESS OF (.15) (.12) (.09) - (.01)
NET INVESTMENT
INCOME
TOTAL (.23) (.25) (.27) (.04) (.05)
DISTRIBUTIONS
REDEMPTION FEES - .01 .02 .01 .09
ADDED TO PAID
IN CAPITAL
NET ASSET VALUE, $ 6.74 $ 10.35 $ 16.61 $ 15.14 $ 19.25
END OF PERIOD
TOTAL RETURN A, B (33.23)% (36.74)% 11.69% (21.17)% 19.32%
RATIOS AND
SUPPLEMENTAL
DATA
NET ASSETS, END $ 270,709 $ 499,168 $ 1,263,164 $ 1,095,583 $ 1,976,371
OF PERIOD
(000 OMITTED)
RATIO OF 1.59% 1.36% 1.30% 1.28% 1.52%
EXPENSES TO
AVERAGE NET
ASSETS
RATIO OF 1.56% D 1.35% D 1.29% D 1.28% 1.52%
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET 1.01% .89% .74% .46% .39%
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
PORTFOLIO 87% 69% 77% 78% 107%
TURNOVER RATE
A THE TOTAL RETURNS
WOULD HAVE BEEN
LOWER HAD CERTAIN
EXPENSES NOT BEEN
REDUCED DURING THE
PERIODS SHOWN (SEE
NOTE 7 OF NOTES TO
FINANCIAL
STATEMENTS).
B TOTAL RETURNS DO NOT
INCLUDE THE ONE
TIME SALES CHARGE.
C NET INVESTMENT
INCOME PER SHARE
HAS BEEN CALCULATED
BASED ON AVERAGE
SHARES OUTSTANDING
DURING THE PERIOD.
D FMR OR THE FUND
HAS ENTERED INTO
VARYING
ARRANGEMENTS WITH
THIRD PARTIES WHO
EITHER PAID OR
REDUCED A PORTION OF
THE FUND'S EXPENSES
(SEE NOTE 7 OF
NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
EUROPE
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. 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 five year and past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
OCTOBER 31, 1998 YEAR YEARS YEARS
FIDELITY EUROPE 15.45% 122.64% 253.03%
FIDELITY EUROPE 11.98% 115.96% 242.44%
(INCL. 3.00% SALES CHARGE)
MSCI Europe 23.39% 130.55% 284.09%
European Region 15.45% 102.97% 174.85%
Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare the fund's returns to the performance of the
Morgan Stanley Capital International (MSCI) Europe Index - an
unmanaged market capitalization-weighted index that is designed to
represent the performance of developed stock markets in Europe. As of
October 31, 1998, the index included over 590 equity securities of
companies domiciled in 15 European countries. 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 one year average represents a peer group of 91
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
OCTOBER 31, 1998 YEAR YEARS YEARS
FIDELITY EUROPE 15.45% 17.36% 13.44%
FIDELITY EUROPE 11.98% 16.65% 13.10%
(INCL. 3.00% SALES CHARGE)
MSCI Europe 23.39% 18.18% 14.40%
European Region 15.45% 15.02% 10.26%
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
1988/10/31 9700.00 10000.00
1988/11/30 9819.75 10123.32
1988/12/31 9830.55 10177.69
1989/01/31 10297.22 10546.25
1989/02/28 10320.17 10426.49
1989/03/31 10496.12 10502.06
1989/04/30 10947.49 10793.55
1989/05/31 10649.13 10240.48
1989/06/30 10939.83 10662.98
1989/07/31 11919.06 11918.10
1989/08/31 11827.26 11769.23
1989/09/30 12362.78 11971.34
1989/10/31 11505.95 11186.45
1989/11/30 12179.17 11807.54
1989/12/31 13009.03 13078.45
1990/01/31 13171.55 13043.41
1990/02/28 12831.04 12730.86
1990/03/31 13217.98 12910.48
1990/04/30 12954.86 12567.86
1990/05/31 13751.96 13590.71
1990/06/30 14324.64 14068.03
1990/07/31 15191.39 14660.45
1990/08/31 13380.50 13206.89
1990/09/30 12057.15 11651.50
1990/10/31 12598.87 12633.38
1990/11/30 12583.39 12760.33
1990/12/31 12411.79 12576.05
1991/01/31 12657.33 12999.21
1991/02/28 13425.64 14136.28
1991/03/31 12704.85 13187.58
1991/04/30 12673.17 13049.72
1991/05/31 12728.61 13434.66
1991/06/30 11611.79 12307.14
1991/07/31 12197.93 13158.92
1991/08/31 12443.47 13399.16
1991/09/30 12894.95 13801.85
1991/10/31 12617.72 13511.10
1991/11/30 12237.53 13193.04
1991/12/31 12928.13 14225.01
1992/01/31 12985.45 14220.91
1992/02/29 13141.01 14275.52
1992/03/31 12690.70 13775.91
1992/04/30 13525.82 14536.24
1992/05/31 14189.02 15363.45
1992/06/30 14058.02 15077.34
1992/07/31 13550.39 14538.67
1992/08/31 13591.33 14491.26
1992/09/30 13378.45 14251.59
1992/10/31 12379.57 13257.20
1992/11/30 12371.38 13250.73
1992/12/31 12601.90 13554.71
1993/01/31 12535.13 13577.48
1993/02/28 12610.24 13732.82
1993/03/31 13436.46 14439.28
1993/04/30 13878.78 14757.74
1993/05/31 14045.69 14916.51
1993/06/30 13653.45 14698.59
1993/07/31 13661.79 14749.05
1993/08/31 14771.76 16043.29
1993/09/30 14755.07 15993.45
1993/10/31 15380.99 16659.74
1993/11/30 15080.55 16300.12
1993/12/31 16025.18 17523.90
1994/01/31 17181.81 18416.32
1994/02/28 16779.50 17764.12
1994/03/31 16310.14 17261.33
1994/04/30 16779.50 17976.11
1994/05/31 16134.13 17211.97
1994/06/30 15941.36 17031.26
1994/07/31 16670.54 17923.87
1994/08/31 17198.57 18492.36
1994/09/30 16963.89 17759.08
1994/10/31 17751.74 18532.73
1994/11/30 17089.61 17822.84
1994/12/31 17027.73 17924.15
1995/01/31 16661.63 17783.83
1995/02/28 16959.62 18186.76
1995/03/31 17368.28 19030.72
1995/04/30 17955.74 19639.32
1995/05/31 18313.32 20041.43
1995/06/30 18832.67 20230.36
1995/07/31 19675.54 21284.85
1995/08/31 19300.93 20462.02
1995/09/30 20152.31 21080.15
1995/10/31 20016.09 20980.59
1995/11/30 19888.38 21129.77
1995/12/31 20234.91 21799.37
1996/01/31 20296.98 21941.88
1996/02/29 21041.83 22341.60
1996/03/31 21556.12 22608.76
1996/04/30 21884.21 22772.34
1996/05/31 22513.78 22948.31
1996/06/30 22753.19 23200.99
1996/07/31 22318.70 22910.37
1996/08/31 23072.41 23590.23
1996/09/30 23462.57 24086.59
1996/10/31 24047.80 24645.78
1996/11/30 24969.99 25894.69
1996/12/31 25420.59 26396.29
1997/01/31 25315.51 26474.68
1997/02/28 25860.03 26832.09
1997/03/31 26347.24 27706.81
1997/04/30 26251.71 27576.04
1997/05/31 27474.49 28760.99
1997/06/30 28811.92 30207.09
1997/07/31 29719.46 31628.03
1997/08/31 28334.27 29826.50
1997/09/30 30961.35 32724.74
1997/10/31 29662.14 31127.45
1997/11/30 30244.87 31613.35
1997/12/31 31238.66 32776.08
1998/01/31 32438.54 34148.09
1998/02/28 34660.93 36825.64
1998/03/31 37165.03 39456.47
1998/04/30 38083.20 40230.61
1998/05/31 38427.51 41054.13
1998/06/30 38823.99 41512.70
1998/07/31 39898.67 42341.71
1998/08/31 32636.78 37024.87
1998/09/30 32083.79 35553.87
1998/10/30 34243.58 38409.20
IMATRL PRASUN SHR__CHT 19981031 19981203 115137 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Europe Fund on October 31, 1988, and the current
3.00% sales charge was paid. As the chart shows, by October 31, 1998,
the value of the investment would have grown to $34,244 - a 242.44%
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 would have grown to $38,409 - a 284.09% 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
NOTE TO SHAREHOLDERS: Thierry Serero became Portfolio Manager of
Fidelity Europe Fund on October 1, 1998.
Q. HOW DID THE FUND PERFORM, THIERRY?
A. For the 12 months that ended on October 31, 1998, the fund produced
a return of 15.45%. The Morgan Stanley Capital International Europe
Index returned 23.39% in that period, while the European region funds
average, as tracked by Lipper Analytical Services, returned 15.45%.
Q. WHAT FACTORS INFLUENCED THE PERFORMANCE OF EUROPEAN STOCK MARKETS
DURING THE PERIOD?
A. Until late July, European stock markets rose rapidly, even
outperforming a strong U.S. market. European markets benefited from
expectations of strong corporate profits growth due to an improvement
in economic growth prospects, corporate restructuring - in particular
mergers and acquisitions - and strong inflows into mutual funds.
Between late July and early October, investors' earlier optimism
vanished entirely. Investors began to worry that profits might not be
as strong as expected because of the recession in Japan and elsewhere
in Asia. On top of that, Russia devalued the ruble in August and
defaulted on loans. This set off a crisis of confidence in emerging
markets, leading investors to become much more risk averse and
favoring safe and very liquid investments over equities. European
markets declined steeply, but again, along with the U.S. market,
started to recover in October after the U.S. Federal Reserve Board cut
interest rates for a second time.
Q. ALTHOUGH THE FUND PERFORMED IN LINE WITH ITS PEERS, WHY DID IT
UNDERPERFORM THE BENCHMARK INDEX?
A. There are two main reasons that explain the underperformance
compared with the benchmark index. The first is the portfolio's bias
toward medium-sized companies. The share price of these companies
continued to trail that of larger companies both in the United Kingdom
and in continental Europe. The second reason for the fund's
underperformance was that it was more exposed to sectors that suffered
badly in the summer decline, and less exposed to some of those that
benefited. For example, the portfolio contained fewer holdings in
utilities and other defensive stocks than the benchmark. It also had a
relatively large exposure to finance and service companies, sectors
that were particularly hurt by the emerging-market crisis and fears of
a global economic slowdown.
Q. DID THE DEPRECIATION OF THE U.S. DOLLAR AFFECT PERFORMANCE?
A. For U.S. investors, the relative currency movements improved
returns. Over the 12-month period, the U.S. dollar depreciated 4%
against the German mark and the ecu - a basket of all European
currencies useful to gauge how much they had moved against the U.S.
dollar or the yen. Investments in the U.K. market did not benefit
investors in the same way because the pound sterling remained
unchanged against the U.S. dollar. The sharp appreciation of European
currencies against the dollar during the summer of 1998 played a part
in the downward revisions to profits' growth forecasts for exporters
and the consequent decline in their share price, because it reduced
their competitiveness compared with U.S. companies.
Q. WHICH FUND HOLDINGS PERFORMED PARTICULARLY WELL?
A. In much of the period, many of the holdings in the finance sector
helped performance significantly. However, during the summer decline,
financial companies' shares were among the main losers, thereby giving
up much of the earlier gain. Overall, holdings in pharmaceutical
companies such as Switzerland's Novartis and Glaxo Wellcome in the
U.K. contributed significantly to performance. Other strong performers
were in the telecommunications sector. Holdings in mobile phone
companies such as Italian group Telecom Italia Mobile and German
manufacturer Mannesmann also helped.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Swiss bank UBS was one of the major disappointments. Its share
price was hurt by the Russian loan default and also by its involvement
in the near-failure of the U.S. hedge fund, Long-Term Capital
Management.
Q. HAVE THERE BEEN ANY MAJOR CHANGES TO COUNTRY WEIGHTINGS OVER THE
PAST 12 MONTHS?
A. Yes, there have been. A major change was to increase the exposure
to the French market. This was one of the better-performing markets in
the period. The proportion of the fund invested in the U.K. was
reduced during the first half of the review period, but ended almost
unchanged from a year ago. Investment in German companies has remained
below neutral level, reflecting the difficulty in finding attractively
valued companies that are also run by shareholder-friendly management.
Q. IS THE FUND STILL BIASED TOWARDS MEDIUM-SIZED COMPANIES?
A. Yes, medium-sized companies are more strongly represented in the
fund than they are in the benchmark index. However, this bias has
become considerably smaller than it has been in the past. While there
is a bias, it is worth keeping in mind that holdings in large
companies dominate the portfolio.
Q. DID YOU FAVOR ANY PARTICULAR INDUSTRY SECTORS?
A. The allocation to different sectors has changed over the past 12
months, partly because of the relative performance of stocks in
different sectors. During the summer's stock market declines, the
share price of banks and other financial institutions suffered
particularly badly because investors feared that exposure to
emerging-market debt would result in lower bank profits. On the other
hand, the share prices of more defensive stocks such as utilities and
drug companies performed relatively well. Within the fund, the main
changes were in these two sectors. At the end of the period, exposure
to the finance sector was some four percentage points lower than at
the beginning. However, finance remains the largest sector within the
fund, representing around 23% of the portfolio, because we believe
that the industry will continue to undergo structural change. Many
European countries remain `overbanked' - meaning too many banks per
number of customers - and this is leading to greater competitive
pressures within the industry. The fund's exposure to utilities
increased by over five percentage points to 14% at the end of the
12-month period.
Q. TALK TO US A BIT ABOUT YOUR INVESTMENT STYLE . . .
A. I take a relatively conservative approach to managing the
portfolio. Two principles dominate the investment process - risk
control and stock picking. I will only take risks that I am
comfortable with, while reducing those with which I am not. Therefore,
no country, economy or liquidity bets are taken; risk is only taken at
the level of a company, management or sector. In practice, this means
country weightings do not diverge significantly from the index. The
fund is truly diversified amongst all European markets with weightings
similar to the benchmark index.
Q. WHAT FACTORS DO YOU CONSIDER IN TERMS OF YOUR STOCKPICKING
STRATEGY?
A. I consider a number of factors in selecting stocks. Is the company
good at what it does and how does it fit within its industry? What is
the structure of its industry and its long-term fundamental trends? In
what direction are sales, margins and cash flow moving? Based on the
principle that stock markets are fairly efficient at valuing
companies, my stock-picking style is characterized by identifying
`factors of change' that will affect company valuations in the future.
I reach a decision on the direction of the valuation; buying stocks
for which I believe valuation is likely to rise and selling those for
which I believe it will fall.
Q. HAS THE COMING OF THE EURO HAD AN IMPACT ON YOUR INVESTMENT STYLE?
A. Some of the trends I've mentioned - restructuring, consolidation,
creation of shareholder value - have been under way for years, and of
course, we have tried to take advantage of them in choosing securities
for our funds. Now, what will change is that the inter-European
currency risk will no longer exist. Beyond that, our style still seeks
to find the best companies with the best prospects. The euro, in a
sense, can make some things easier and open up opportunities. I
believe it is a once-in-a-lifetime event. It is fantastic to be in the
middle of it. There are skeptics, but I sense a strong commitment
throughout.
Q. WHAT IS YOUR OUTLOOK FOR THE EUROPEAN MARKETS, THIERRY?
A. While some slowdown in economic growth seems inevitable, the
outlook for Europe remains reasonable compared with other regions.
Growth rates are still expected to be in excess of 2% this year and in
1999. Inflation in most economies is virtually absent and this,
together with the recent cuts in U.S. interest rates, has given rise
to optimism among economists that European interest rates could be cut
early in the new year. There also has been renewed activity and
speculation of further mergers and acquisitions, seen as being
positive for stock markets. Although equity valuations are not cheap
in absolute terms, equities do offer value relative to bonds.
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 European issuers
FUND NUMBER: 301
TRADING SYMBOL: FIEUX
START DATE: October 1, 1986
SIZE: as of October 31, 1998, more than
$1.5 billion
MANAGER: Thierry Serero, since October, 1998;
manager, several funds for Fidelity International
Limited, since 1994; research analyst, Fidelity
International Services Limited, 1991-1994;
joined Fidelity in 1991
(checkmark)
EUROPE
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
FINLAND 2.8%
ROW: 1, COL: 1, VALUE: 2.8
ROW: 1, COL: 2, VALUE: 12.8
ROW: 1, COL: 3, VALUE: 10.1
ROW: 1, COL: 4, VALUE: 6.0
ROW: 1, COL: 5, VALUE: 6.3
ROW: 1, COL: 6, VALUE: 11.4
ROW: 1, COL: 7, VALUE: 3.8
ROW: 1, COL: 8, VALUE: 3.0
ROW: 1, COL: 9, VALUE: 10.5
ROW: 1, COL: 10, VALUE: 33.3
FRANCE 12.8%
UNITED KINGDOM 33.3%
GERMANY 10.1%
ITALY 6.0%
SWITZERLAND 10.5%
NETHERLANDS 6.3%
SWEDEN 3.0%
OTHER 11.4%
SPAIN 3.8%
AS OF APRIL 30, 1998
FINLAND 3.9%
UNITED STATES 8.2%
ROW: 1, COL: 1, VALUE: 3.9
ROW: 1, COL: 2, VALUE: 11.6
ROW: 1, COL: 3, VALUE: 7.9
ROW: 1, COL: 4, VALUE: 5.3
ROW: 1, COL: 5, VALUE: 4.6
ROW: 1, COL: 6, VALUE: 11.1
ROW: 1, COL: 7, VALUE: 8.9
ROW: 1, COL: 8, VALUE: 10.0
ROW: 1, COL: 9, VALUE: 28.5
ROW: 1, COL: 10, VALUE: 8.199999999999999
FRANCE 11.6%
UNITED KINGDOM 28.5%
GERMANY 7.9%
ITALY 5.3%
NETHERLANDS 4.6%
SWITZERLAND 10.0%
OTHER 11.1%
SWEDEN 8.9%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 94.7 91.8
Bonds 3.2 0.0
Short-term investments 2.1 8.2
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Novartis AG (Reg.) 3.3 2.2
(Switzerland, Drugs &
Pharmaceuticals)
Glaxo Wellcome PLC 3.0 1.6
(United Kingdom, Drugs &
Pharmaceuticals)
British Petroleum Co. PLC 2.4 1.7
(United Kingdom, Oil & Gas)
Shell Transport & Trading Co. PLC 2.3 2.7
(Reg.) (United Kingdom,
Oil & Gas)
UBS AG (Switzerland, Banks) 2.1 0.0
Nestle SA (Reg.) 2.0 0.0
(Switzerland, Foods)
OY Nokia AB Series A 1.8 0.7
(Finland, Communications
Equipment)
Allied Zurich PLC 1.6 0.0
(United Kingdom, Insurance)
Roche Holding AG 1.6 1.2
participation certificates
(Switzerland, Drugs &
Pharmaceuticals)
Mannesmann AG 1.6 1.4
(Germany, Industrial
Machinery & Equipment)
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 23.4 29.7
UTILITIES 14.0 9.6
HEALTH 12.7 10.8
INDUSTRIAL MACHINERY & EQUIPMENT 8.2 3.9
ENERGY 7.0 7.3
TECHNOLOGY 6.9 3.5
NONDURABLES 6.4 3.0
RETAIL & WHOLESALE 3.7 4.1
SERVICES 3.2 3.4
CONSTRUCTION & REAL ESTATE 3.0 1.8
EUROPE
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 91.6%
SHARES VALUE (NOTE 1)
BELGIUM - 1.1%
Electrabel SA 20,300 $ 7,476,761
Mobistar SA (a) 162,550 7,117,799
Mobistar SA (a)(c) 68,100 2,981,988
17,576,548
DENMARK - 1.9%
Ratin AS Class B 88,600 15,221,459
Tele Danmark AS Class B 134,400 14,661,196
29,882,655
FINLAND - 2.8%
Hartwall OY AB Class A 214,100 2,638,219
KCI (Konecranes International) 173,300 7,543,019
OY Nokia AB Series A 304,200 28,309,614
Sampo Insurance Co. Ltd. 171,100 5,338,905
43,829,757
FRANCE - 12.8%
Accor SA 48,200 10,139,229
Atos SA (a) 41,885 7,912,374
Castorama Dubois Investissements SA 49,200 8,788,723
Dassault Systemes SA 162,633 6,214,863
Elf Aquitaine 132,000 15,312,000
France Telecom SA 8,600 600,699
Galeries Lafayette SA 7,815 8,677,542
Genset SA (a) 71,700 6,565,532
GrandVision SA 183,800 4,754,277
Groupe Danone 43,600 11,545,037
Groupe GTM 55,825 6,057,763
Lagardere S.C.A. (Reg.) 250,000 10,076,248
Legrand SA 36,150 9,226,959
Pinault Printemps SA 88,300 14,802,350
Sanofi SA 95,600 14,992,159
Scor SA 110,800 6,363,156
Societe Generale d'Enterprises SA (SGE) 179,100 8,619,734
Societe Generale, France Class A 108,750 14,407,998
Total SA Class B 114,378 13,382,226
TRANSGENE SA sponsored ADR (a) 58,500 855,563
Vivendi SA 102,400 23,423,329
202,717,761
GERMANY - 8.7%
Aachener & Muenchener 8,800 1,215,719
Beteiligungs AG
Aachener & Muenchener 31,159 4,803,836
Beteiligungs AG (Reg.)
BASF AG 392,200 16,691,027
Bayerische Hypo-und Vereinsbank AG 200,550 15,890,011
Berliner Kraft-und Licht AG 85,000 4,984,885
Deutsche Telekom AG 223,800 6,064,520
Hoechst AG 233,600 9,848,203
Linde AG 14,600 7,917,896
Mannesmann AG 250,700 24,751,699
SHARES VALUE (NOTE 1)
Munich Reinsurance AG (Reg.) 30,600 $ 14,152,963
Siemens AG 280,700 17,310,399
Veba AG 241,310 13,407,732
137,038,890
IRELAND - 2.1%
Bank of Ireland, Inc. 721,300 13,195,399
Irish Life PLC 1,514,200 13,445,339
IWP International PLC 605,060 1,773,053
Saville Systems PLC sponsored ADR (a) 338,500 5,712,188
34,125,979
ITALY - 4.0%
Banca Commerciale Italiana Spa 1,300,000 8,051,609
Finmeccanica Spa (a) 9,195,800 7,259,913
Istituto Bancario San Paolo 773,000 11,502,461
Istituto Nazionale Delle 4,576,200 12,677,068
Assicurazioni Spa
Olivetti & Co. Spa 3,977,400 9,731,582
Unicredito Italiano Spa 2,562,500 13,824,409
63,047,042
LUXEMBOURG - 0.0%
Scandinavian Broadcasting Corp. (a) 23,600 542,800
NETHERLANDS - 4.7%
Aegon NV 93,200 8,093,277
Akzo Nobel NV 303,600 11,807,661
DSM NV 88,000 8,339,423
Equant NV (a) 299,655 13,006,638
ING Groep NV 271,850 13,165,072
Philips Electronics NV (Bearer) 258,200 14,168,730
STMicroelectronics NV (a) 97,000 5,944,806
74,525,607
NORWAY - 0.3%
NCL Holdings AS (a) 1,574,600 4,115,221
PORTUGAL - 2.1%
Banco Espirito Santo e Comercial de Lisboa SA 192,200 5,687,262
Banco Pinto & Sotto Mayor SA (a) 294,600 5,654,098
BPI-SGPS SA (Reg.) 169,807 5,214,822
Electricidade de Portugal SA 333,200 8,388,431
Telecel Comunicacoes Pessoais SA 49,500 9,132,627
34,077,240
SPAIN - 3.8%
Argentaria Corporacion Bancaria de Espana SA (a) 404,200 8,805,068
Banco Bilbao Vizcaya SA (Reg.) 1,239,600 16,739,447
Banco Central Hispanoamericano SA 787,500 8,703,359
Campofrio Alimentacion SA 194,600 3,305,572
Grupo Acciona SA 34,700 8,977,115
Mapfre Vida SA 196,900 7,822,822
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SPAIN - CONTINUED
Viscofan Envolturas Celulosicas SA 170,000 $ 5,056,504
Viscofan Envolturas Celulosicas SA 8,500 251,798
(new) (a)
59,661,685
SWEDEN - 3.0%
Astra AB Class A 522,066 8,572,424
Ericsson (L.M.) Telefon AB Class B 722,200 16,322,572
Industri-Matematik International Corp. (a) 680,000 3,145,000
Mandamus AB (a) 22,725 125,501
Securitas AB Class B 759,200 9,360,561
Skandia Foersaekrings AB 753,715 9,631,739
47,157,797
SWITZERLAND - 10.5%
Lindt & Spruengli AG 3,232 7,759,287
Nestle SA (Reg.) 15,070 32,110,088
Novartis AG (Reg.) 28,677 51,767,745
Richemont Compagnie Financier 7,000 9,321,940
Class A unit
Roche Holding AG participation certificates 2,222 25,973,884
Swisscom AG (a) 19,190 6,516,635
UBS AG (a) 118,016 32,436,610
165,886,189
UNITED KINGDOM - 33.2%
Allied Zurich PLC (a) 2,188,235 26,015,817
Anite Group PLC 4,489,700 3,984,541
Association British Ports Holdings PLC 1,734,000 8,086,479
Babcock International Group PLC 4,399,700 4,383,542
Barclays PLC 762,300 16,428,186
Boots Co. PLC 821,730 12,342,602
British American Tobacco PLC 1,118,135 10,101,151
British Energy PLC 994,200 9,722,361
British Land Co. PLC 1,066,100 8,568,885
British Petroleum Co. PLC 2,557,314 37,683,556
British Telecommunications PLC 1,190,750 15,490,494
British-Borneo Oil & Gas PLC 2,150,000 8,082,393
Cadbury-Schweppes PLC 700,500 10,732,833
Capita Group PLC 920,400 9,262,671
CGU PLC 395,700 6,271,506
Cobham PLC 480,000 6,044,275
Electrocomponents PLC 859,020 5,667,410
Gallaher Group PLC 692,500 4,754,324
General Electric Co. PLC 1,985,900 15,878,735
Glaxo Wellcome PLC 1,514,100 47,113,589
Go-Ahead Group PLC 314,400 3,448,331
Kingfisher PLC 1,381,400 12,132,494
Lloyds TSB Group PLC 1,129,700 13,951,160
London Insurance Market Investment 1,884,370 5,206,373
Trust PLC
Misys PLC 444,000 3,115,173
National Grid Group PLC 1,718,945 11,772,547
SHARES VALUE (NOTE 1)
Nycomed Amersham PLC 1,288,434 $ 9,050,640
Orange PLC (a) 829,700 7,717,743
Prudential Corp. PLC 1,197,270 15,577,518
RMC Industries, Inc. 582,300 8,288,021
Rolls-Royce PLC 2,600,000 9,599,909
Royal Bank of Scotland Group PLC 736,300 9,764,840
Scottish & Newcastle PLC 488,000 5,948,896
Sema Group PLC 878,800 7,122,305
Serco Group PLC 447,500 7,793,123
Shell Transport & Trading Co. PLC (Reg.) 5,973,700 36,578,827
Shield Diagnostics Group PLC (a) 600,900 4,628,552
Siebe PLC 2,596,400 10,651,796
SmithKline Beecham PLC 1,794,620 22,875,355
Stagecoach Holdings PLC 2,462,500 9,566,419
Triad Group PLC 9,100 59,733
Unilever PLC 1,519,000 15,261,393
Vodafone Group PLC 1,032,325 13,894,022
Wimpey George PLC 3,951,800 7,477,537
Zeneca Group PLC 180,180 6,921,260
525,019,317
UNITED STATES OF AMERICA - 0.6%
Cellular Communications 162,500 10,100,391
International, Inc. (a)
</TABLE>
TOTAL COMMON STOCKS 1,449,304,879
(Cost $1,281,551,932)
PREFERRED STOCKS - 3.1%
CONVERTIBLE PREFERRED STOCKS - 0.1%
UNITED KINGDOM - 0.1%
Peninsular & Oriental Steam 966,669 1,893,864
Navigation Co. 6.75%
NONCONVERTIBLE PREFERRED STOCKS - 3.0%
GERMANY - 1.4%
Boss (Hugo) AG 4,080 6,364,208
Marschollek Lautenschlaeger und 14,800 7,516,324
Partner AG
SAP AG (Systeme Anwendungen Produkte) 17,356 8,567,295
22,447,827
ITALY - 1.6%
Telecom Italia Mobile Spa 2,083,400 7,403,536
Telecom Italia Spa Risp 3,485,450 17,684,614
25,088,150
TOTAL NONCONVERTIBLE PREFERRED STOCKS 47,535,977
TOTAL PREFERRED STOCKS 49,429,841
(Cost $46,581,018)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS - 3.2%
MOODY'S RATINGS (UNAUDITED) PRINCIPAL VALUE
AMOUNT (D) (NOTE 1)
CONVERTIBLE BONDS - 2.0%
ITALY - 0.4%
Mediobanca International Ltd. 3.5% 1/2/01 (e) - ITL 6,600,000 $ 7,019,144
NETHERLANDS - 1.6%
Telefonica Europe BV 2% 7/15/02 A2 16,300,000 24,531,500
TOTAL CONVERTIBLE BONDS 31,550,644
NONCONVERTIBLE BONDS - 1.2%
LUXEMBOURG - 1.2%
Daimler-Benz Capital AG 4.125% 7/5/03 unit A1 DEM 21,341,000 18,837,884
TOTAL CORPORATE BONDS 50,388,528
(Cost $50,822,037)
</TABLE>
CASH EQUIVALENTS - 2.1%
SHARES
Taxable Central Cash Fund (b) 33,505,482 33,505,482
(Cost $33,505,482)
TOTAL INVESTMENT IN SECURITIES - 100% $ 1,582,628,730
(Cost $1,412,460,469)
CURRENCY ABBREVIATIONS
DEM - German deutsche mark
ITL - Italian lira
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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 $2,981,988 or 0.2% of net assets.
(d) Principal amount is stated in United States dollars unless
otherwise noted.
(e) Principal amount in thousands.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $2,120,088,586 and $1,497,715,074, respectively (see Note
3 of Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $2,644 for the
period (see Note 4 of Notes to Financial Statements).
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
AEROSPACE & DEFENSE 1.0%
BASIC INDUSTRIES 3.0
CASH EQUIVALENTS 2.1
CONSTRUCTION & REAL ESTATE 3.0
DURABLES 1.6
ENERGY 7.0
FINANCE 23.4
HEALTH 12.7
HOLDING COMPANIES 1.7
INDUSTRIAL MACHINERY & EQUIPMENT 8.2
MEDIA & LEISURE 0.9
NONDURABLES 6.4
RETAIL & WHOLESALE 3.7
SERVICES 3.2
TECHNOLOGY 6.9
TRANSPORTATION 1.2
UTILITIES 14.0
100.0%
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $1,420,511,039. Net unrealized appreciation
aggregated $162,117,691, of which $252,680,499 related to appreciated
investment securities and $90,562,808 related to depreciated
investment securities.
The fund hereby designates approximately $86,212,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
EUROPE
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 1,582,628,730
SECURITIES, AT
VALUE
(COST
$1,412,460,
469) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 22,152,943
INVESTMENTS
SOLD
RECEIVABLE FOR 2,870,024
FUND SHARES
SOLD
DIVIDENDS 3,942,445
RECEIVABLE
INTEREST 604,745
RECEIVABLE
REDEMPTION FEES 1,796
RECEIVABLE
TOTAL ASSETS 1,612,200,683
LIABILITIES
PAYABLE FOR $ 22,227,226
INVESTMENTS
PURCHASED
PAYABLE FOR 2,052,728
FUND SHARES
REDEEMED
ACCRUED 763,223
MANAGEMENT
FEE
OTHER PAYABLES 799,808
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 25,842,985
NET ASSETS $ 1,586,357,698
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 1,271,947,847
UNDISTRIBUTED 15,517,755
NET INVESTMENT
INCOME
ACCUMULATED 128,565,892
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 170,326,204
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 1,586,357,698
48,333,724
SHARES
OUTSTANDING
NET ASSET $32.82
VALUE AND
REDEMPTION
PRICE PER
SHARE
($1,586,357,
698 (DIVIDED BY)
48,333,724
SHARES)
MAXIMUM $33.84
OFFERING PRICE
PER SHARE
(100/97.00
OF $32.82)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 30,729,763
DIVIDENDS
INTEREST 4,421,968
35,151,731
LESS FOREIGN TAXES WITHHELD (3,782,329)
TOTAL INCOME 31,369,402
EXPENSES
MANAGEMENT FEE $ 10,299,384
BASIC FEE
PERFORMANCE ADJUSTMENT (88,133)
TRANSFER AGENT FEES 3,287,862
ACCOUNTING FEES AND EXPENSES 700,120
NON-INTERESTED TRUSTEES' COMPENSATION 7,104
CUSTODIAN FEES AND EXPENSES 813,580
REGISTRATION FEES 290,853
AUDIT 56,391
LEGAL 3,975
REPORTS TO SHAREHOLDERS 61,151
MISCELLANEOUS 4,253
TOTAL EXPENSES BEFORE REDUCTIONS 15,436,540
EXPENSE REDUCTIONS (116,005) 15,320,535
NET INVESTMENT INCOME 16,048,867
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 129,742,635
FOREIGN CURRENCY TRANSACTIONS (770,014) 128,972,621
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (74,367,917)
ASSETS AND LIABILITIES IN 91,008 (74,276,909)
FOREIGN CURRENCIES
NET GAIN (LOSS) 54,695,712
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 70,744,579
OTHER INFORMATION $ 1,670,671
SALES CHARGES PAID TO FDC
SALES CHARGES - RETAINED BY FDC $ 1,668,232
DEFERRED SALES CHARGES WITHHELD $ 44,535
BY FDC
EXPENSE REDUCTIONS $ 79,560
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 240
TRANSFER AGENT CREDITS 36,205
$ 116,005
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ 16,048,867 $ 13,404,635
NET INVESTMENT
INCOME
NET REALIZED GAIN 128,972,621 79,961,346
(LOSS)
CHANGE IN NET (74,276,909) 86,807,048
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE 70,744,579 180,173,029
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO (11,392,134) (6,427,940)
SHAREHOLDERS
FROM NET INVESTMENT
INCOME
FROM NET REALIZED (68,664,194) (46,294,939)
GAIN
TOTAL DISTRIBUTIONS (80,056,328) (52,722,879)
SHARE TRANSACTIONS 1,112,727,257 355,908,188
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 78,862,444 51,814,504
DISTRIBUTIONS
COST OF SHARES (512,978,219) (311,301,709)
REDEEMED
NET INCREASE 678,611,482 96,420,983
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION FEES 949,915 475,113
TOTAL INCREASE 670,249,648 224,346,246
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 916,108,050 691,761,804
END OF PERIOD $ 1,586,357,698 $ 916,108,050
(INCLUDING
UNDISTRIBUTED NET
INVESTMENT INCOME
OF $15,517,755
AND $12,950,679,
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 31,701,697 12,685,159
ISSUED IN 2,653,514 2,034,335
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (15,522,060) (10,729,871)
NET INCREASE 18,833,151 3,989,623
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS
ENDED
OCTOBER
31,
SELECTED PER-SHARE 1998 1997 1996 1995 1994
DATA
NET ASSET VALUE, $ 31.05 $ 27.12 $ 23.51 $ 21.18 $ 18.43
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT .39 C .44 C .30 C .27 .18
INCOME
NET REALIZED AND 4.10 5.44 4.23 2.37 2.65
UNREALIZED GAIN
(LOSS)
TOTAL FROM INVESTMENT 4.49 5.88 4.53 2.64 2.83
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT (.39) (.24) (.12) (.20) (.08)
INCOME
FROM NET REALIZED (2.35) (1.73) (.81) (.11) -
GAIN
TOTAL DISTRIBUTIONS (2.74) (1.97) (.93) (.31) (.08)
REDEMPTION FEES .02 .02 .01 - -
ADDED TO PAID IN
CAPITAL
NET ASSET VALUE, END OF $ 32.82 $ 31.05 $ 27.12 $ 23.51 $ 21.18
PERIOD
TOTAL RETURN A, B 15.45% 23.35% 20.14% 12.76% 15.41%
RATIOS AND
SUPPLEMENTAL DATA
NET ASSETS, END OF $ 1,586,358 $ 916,108 $ 691,762 $ 492,867 $ 507,460
PERIOD (000 OMITTED)
RATIO OF EXPENSES TO 1.10% 1.19% 1.27% 1.18% D 1.35%
AVERAGE NET ASSETS
RATIO OF EXPENSES TO 1.09% E 1.18% E 1.27% 1.18% 1.35%
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT 1.15% 1.53% 1.20% 1.12% .85%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 114% 57% 45% 38% 49%
A THE TOTAL RETURNS WOULD HAVE
BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE
NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
D FMR AGREED TO REIMBURSE A
PORTION OF THE FUND'S EXPENSES
DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE BEEN
HIGHER.
E FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE FUND'S
EXPENSES (SEE NOTE 7 OF NOTES
TO FINANCIAL STATEMENTS).
</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). Fidelity Europe Capital Appreciation has a 3%
sales charge, which was waived beginning July 1, 1998 through December
31, 1998.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1998 YEAR FUND
FIDELITY EUROPE CAPITAL APP 13.65% 114.49%
FIDELITY EUROPE CAPITAL APP 10.25% 108.06%
(INCL. 3.00% SALES CHARGE)
MSCI Europe 23.39% 121.09%
European Region Funds Average 15.45% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on December 21, 1993. For example, if you had invested $1,000
in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Morgan Stanley Capital International (MSCI) Europe
Index - an unmanaged market capitalization weighted index that is
designed to represent the performance of developed stock markets in
Europe. As of October 31, 1998, the index included over 590 equity
securities of companies domiciled in 15 European countries. 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 one year average represents a peer
group of 91 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
OCTOBER 31, 1998 YEAR FUND
FIDELITY EUROPE CAPITAL APP 13.65% 16.99%
FIDELITY EUROPE CAPITAL APP 10.25% 16.26%
(INCL. 3.00% SALES CHARGE)
MSCI Europe 23.39% 17.72%
European Region Funds Average 15.45% 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 10087.27
1994/01/31 11145.30 10600.97
1994/02/28 10670.00 10225.54
1994/03/31 10786.40 9936.13
1994/04/30 11242.30 10347.57
1994/05/31 10825.20 9907.72
1994/06/30 10602.10 9803.69
1994/07/31 11145.30 10317.50
1994/08/31 11339.30 10644.74
1994/09/30 10941.60 10222.65
1994/10/31 11009.50 10667.98
1994/11/30 10534.20 10259.35
1994/12/31 10398.40 10317.67
1995/01/31 10272.30 10236.89
1995/02/28 10563.30 10468.83
1995/03/31 10786.40 10954.64
1995/04/30 11300.50 11304.96
1995/05/31 11475.10 11536.43
1995/06/30 11640.00 11645.19
1995/07/31 12241.40 12252.18
1995/08/31 11737.00 11778.54
1995/09/30 12086.20 12134.35
1995/10/31 11717.60 12077.04
1995/11/30 11649.70 12162.91
1995/12/31 11926.02 12548.36
1996/01/31 12005.13 12630.39
1996/02/29 12311.69 12860.48
1996/03/31 12509.47 13014.26
1996/04/30 12865.47 13108.42
1996/05/31 13152.25 13209.72
1996/06/30 13221.47 13355.17
1996/07/31 12954.47 13187.88
1996/08/31 13439.03 13579.22
1996/09/30 13735.69 13864.95
1996/10/31 13913.69 14186.83
1996/11/30 14793.81 14905.74
1996/12/31 15013.99 15194.47
1997/01/31 15389.62 15239.60
1997/02/28 15566.38 15445.33
1997/03/31 15842.58 15948.85
1997/04/30 15919.91 15873.58
1997/05/31 16638.02 16555.66
1997/06/30 17654.42 17388.08
1997/07/31 18460.91 18206.02
1997/08/31 17367.18 17169.01
1997/09/30 19201.12 18837.32
1997/10/31 18306.24 17917.87
1997/11/30 18328.34 18197.57
1997/12/31 18761.13 18866.87
1998/01/31 19553.49 19656.64
1998/02/28 21125.44 21197.92
1998/03/31 23016.89 22712.30
1998/04/30 23643.11 23157.91
1998/05/31 24243.78 23631.96
1998/06/30 24103.19 23895.92
1998/07/31 24448.26 24373.13
1998/08/31 19834.65 21312.60
1998/09/30 19310.67 20465.85
1998/10/30 20805.94 22109.46
IMATRL PRASUN SHR__CHT 19981031 19981113 090127 R00000000000062
$10,000 OVER LIFE OF FUND: 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 3.00% sales charge was
paid. As the chart shows, by October 31, 1998, the value of the
investment would have grown to $20,806 - a 108.06% 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
would have grown to $22,109 - a 121.09% 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 12 months that ended October 31, 1998, the fund returned
13.65%. This trailed the the Morgan Stanley Capital International
Europe Index, which returned 23.39% during the same time period. The
fund's return was more in line with that of the European region funds
average, which returned 15.45% during this time according to Lipper
Analytical Services.
Q. WHAT FACTORS PLAYED KEY ROLES IN THE FUND'S PERFORMANCE?
A. Much of the fund's underperformance can be traced to the difficult
environment we witnessed during the second half of the period. The
economic problems that began a year ago in Asia eventually spread to
other emerging markets, including Russia and Latin America. Some of
the larger, multinational European companies depend on these markets
as a source of growth, and this volatility was a significant detriment
to overall stock performance. One area that was negatively affected
was finance stocks, which represented just over 26% of the fund's
investments at the close of the period. Banks with investment banking
exposure and outstanding provisions - i.e., loans or letters of credit
- - to emerging-market countries were especially stung. Two of the
fund's Swiss banking stocks - Credit Suisse and UBS - fell into this
category and both performed weakly.
Q. BASED ON THIS VOLATILITY, DID YOU MAKE ANY CHANGES TO YOUR
INVESTING STRATEGY?
A. I made a couple. First, as growth investments fell out of favor, I
began to look at industries that tend to have more stable earnings
profiles. Two sectors that I turned to were utilities - which
accounted for about 18% of the fund's investments at the end of the
period - and pharmaceuticals, which represented around 13% of
investments. The fund's positions in utility stocks Deutsche Telekom,
Spain's Telefonica and Telecom Italia - all significant positions at
the close of the period - performed well. Meanwhile, Switzerland-based
Novartis - the fund's largest single investment at the end of the
period - reflected my attraction to pharmaceutical stocks. One other
strategy was to look at companies engaged in "self-help" initiatives.
When things are bad on the outside, companies with room to grow within
can become appealing. Some of the fund's positions - such as British
Petroleum, which joined forces with Amoco, and Daimler-Benz, which
teamed up with Chrysler - were examples of this approach.
Q. ON JANUARY 1, 1999, 11 EUROPEAN COUNTRIES WILL ADOPT THE EURO AS
THEIR OFFICIAL CURRENCY. ANY THOUGHTS?
A. It won't have much of an impact on my investing process, but the
euro could result in several positive developments. First, short- and
long-term interest rates in Europe should be lower. As the euro date
has approached, rates have gone down and the general feeling is that
overall inflation should be kept at bay. Second, a lot of companies
may begin to look beyond their normal regions of operation for
opportunities in other countries. This could create an acceleration in
cross-border merger and acquisition activity. Lastly, the shareholder
bases for companies will automatically become more regionally diverse
and companies may become more accountable to their shareholders.
Q. WHICH INDIVIDUAL STOCKS PERFORMED WELL? WHICH PROVED DISAPPOINTING?
A. The fund's position in pharmaceutical company Glaxo Wellcome did
well, as the company benefited from a more favorable sales
environment. Germany-based manufacturing company Mannesmann and the
U.K.'s Vodafone also performed well due to positive trends within the
telecommunications industry. Disappointments included French hotel
operator Accor, which slid due to slower anticipated growth for the
company.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I've mentioned in past reports how the trend towards corporate
restructuring has been positive, and I think the drivers behind this
will both continue and deepen in the months ahead. European companies
have instituted management pay programs based on bonuses and
incentives, and companies are increasingly focusing on improving the
value of their stock. These two factors could lead to more
consolidation activity. In terms of the fund itself, opportunities
could present themselves if companies that were reluctant to
restructure in past years decide that now is the time.
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 European issuers
FUND NUMBER: 341
TRADING SYMBOL: FECAX
START DATE: December 21, 1993
SIZE: as of October 31, 1998, more than
$650 million
MANAGER: Kevin McCarey, since inception;
manager, Fidelity Select Financial Services
Portfolio, Fidelity Select Automotive Portfolio,
1988-1990; Fidelity Select Regional Banks
Portfolio, 1986-1989; joined Fidelity in 1985
(checkmark)
EUROPE CAPITAL APPRECIATION
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
UNITED STATES 3.2%
ROW: 1, COL: 1, VALUE: 17.3
ROW: 1, COL: 2, VALUE: 13.1
ROW: 1, COL: 3, VALUE: 7.3
ROW: 1, COL: 4, VALUE: 5.5
ROW: 1, COL: 5, VALUE: 5.9
ROW: 1, COL: 6, VALUE: 4.5
ROW: 1, COL: 7, VALUE: 2.1
ROW: 1, COL: 8, VALUE: 11.4
ROW: 1, COL: 9, VALUE: 29.7
ROW: 1, COL: 10, VALUE: 3.2
FRANCE 17.3%
UNITED KINGDOM 29.7%
GERMANY 13.1%
ITALY 7.3%
SWITZERLAND 11.4%
NETHERLANDS 5.5%
SWEDEN 2.1%
OTHER 5.9%
SPAIN 4.5%
AS OF APRIL 30, 1998
UNITED STATES 4.0%
ROW: 1, COL: 1, VALUE: 19.0
ROW: 1, COL: 2, VALUE: 9.6
ROW: 1, COL: 3, VALUE: 5.4
ROW: 1, COL: 4, VALUE: 10.4
ROW: 1, COL: 5, VALUE: 9.199999999999999
ROW: 1, COL: 6, VALUE: 3.6
ROW: 1, COL: 7, VALUE: 4.3
ROW: 1, COL: 8, VALUE: 8.4
ROW: 1, COL: 9, VALUE: 26.1
ROW: 1, COL: 10, VALUE: 4.0
FRANCE 19.0%
UNITED KINGDOM 26.1%
GERMANY 9.6%
ITALY 5.4%
SWITZERLAND 8.4%
SWEDEN 4.3%
NETHERLANDS 10.4%
SPAIN 3.6%
OTHER 9.2%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 96.8 96.0
Short-term investments 3.2 4.0
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Novartis AG (Reg.) 3.3 1.1
(Switzerland, Drugs &
Pharmaceuticals)
Glaxo Wellcome PLC 2.6 0.2
(United Kingdom, Drugs &
Pharmaceuticals)
Nestle SA (Reg.) 2.4 1.5
(Switzerland, Foods)
Lloyds TSB Group PLC 2.2 1.4
(United Kingdom, Banks)
British Petroleum Co. PLC 2.2 0.5
(United Kingdom, Oil & Gas)
Deutsche Telekom AG 1.9 0.0
(Germany, Telephone Services)
Telefonica de Espana SA 1.9 1.4
(Spain, Telephone Services)
Alcatel Alsthom Compagnie 1.9 2.4
Generale d'Electricite SA
(France, Electrical Equipment)
SmithKline Beecham PLC 1.8 1.2
(United Kingdom, Drugs &
Pharmaceuticals)
Roche Holding AG participation 1.8 0.0
certificates
(Switzerland, Drugs & Pharmaceuticals)
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 26.4 23.6
UTILITIES 17.8 8.8
HEALTH 12.8 5.4
ENERGY 7.1 6.1
NONDURABLES 6.9 7.7
INDUSTRIAL MACHINERY & EQUIPMENT 4.9 8.5
RETAIL & WHOLESALE 4.2 3.2
TECHNOLOGY 3.6 4.7
DURABLES 2.7 5.3
SERVICES 2.7 2.9
EUROPE CAPITAL APPRECIATION
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 92.2%
SHARES VALUE (NOTE 1)
BELGIUM - 0.8%
Electrabel SA 13,600 $ 5,009,062
FINLAND - 2.0%
Merita Ltd. Series A 293,900 1,577,124
OY Nokia AB sponsored ADR 103,500 9,631,969
Sampo Insurance Co. Ltd. 54,000 1,684,985
12,894,078
FRANCE - 17.3%
Accor SA 16,375 3,444,603
Alcatel Alsthom Compagnie Generale d'Electricite SA 109,900 12,089,000
Axa SA 74,900 8,478,685
Banque Nationale de Paris 124,400 7,890,903
Cap Gemini SA 31,000 4,665,898
Castorama Dubois Investissements SA 28,800 5,144,618
Compagnie de St. Gobain 15,700 2,326,261
Elf Aquitaine 67,700 7,853,200
France Telecom SA 17,700 1,236,323
Groupe Danone 21,400 5,666,601
L'Oreal SA 7,000 4,006,165
Lagardere S.C.A. (Reg.) 65,000 2,619,824
Pinault Printemps SA 24,000 4,023,289
Renault SA 30,000 1,284,316
Rhone-Poulenc SA Class A 69,300 3,235,443
Sanofi SA 24,600 3,857,815
Societe Generale, France Class A 61,400 8,134,722
Suez Lyonnaise des Eaux 28,220 5,061,359
Synthelabo 16,400 3,133,551
Total SA Class B 65,600 7,675,200
Unibail 13,500 1,856,715
Vivendi SA 39,825 9,109,708
112,794,199
GERMANY - 11.2%
Allianz AG (Reg.) 32,600 11,205,018
BASF AG 112,500 4,787,712
Bayerische Hypo-Und Vereinsbank 70,400 5,577,944
BHF Bank AG 40,300 1,565,463
Daimler-Benz AG (a) 147,700 11,643,073
Deutsche Lufthansa AG (Reg.) 134,300 2,931,215
Deutsche Telekom AG 460,700 12,484,023
Dresdner Bank AG 38,400 1,497,461
Hoechst AG 75,000 3,161,880
Mannesmann AG 96,000 9,478,114
RWE AG 86,700 4,720,799
Viag AG 5,800 3,923,942
72,976,644
IRELAND - 1.2%
Bank of Ireland, Inc. 212,200 3,881,968
SHARES VALUE (NOTE 1)
CRH PLC 48,200 $ 692,767
Elan Corp. PLC ADR (a) 46,000 3,222,875
7,797,610
ITALY - 4.6%
Assicurazioni Generali Spa 243,100 8,685,441
Banca Commerciale Italiana Spa 800,000 4,954,836
Banca di Roma (a) 981,500 1,714,811
Eni Spa sponsored ADR 1,209,800 7,227,354
Istituto Bancario San Paolo 512,000 7,618,707
30,201,149
LUXEMBOURG - 0.5%
Stolt Comex Seaway SA 233,800 2,980,950
NETHERLANDS - 5.5%
Aegon NV 34,600 3,004,586
Ahold NV 114,100 3,795,795
Akzo Nobel NV 131,700 5,122,098
Fortis Amev NV 96,900 6,296,657
Heineken NV 42,300 2,254,701
ING Groep NV 141,951 6,874,361
Philips Electronics NV (Bearer) 28,500 1,563,938
Samas Groep NV 81,500 1,357,824
Vedior NV 149,359 3,808,586
VNU 59,000 2,041,785
36,120,331
PORTUGAL - 1.4%
Banco Pinto & Sotto Mayor SA 81,900 1,571,862
Electricidade de Portugal SA 141,200 3,554,761
Telecel Comunicacoes Pessoais SA 20,000 3,689,950
8,816,573
SPAIN - 4.5%
Banco Bilbao Vizcaya SA (Reg.) 221,900 2,996,518
Banco Central Hispanoamericano SA 291,000 3,216,098
Banco Santander SA 124,200 2,277,442
Corporacion Mapfre Compania Internacional de Reaseguros SA (Reg.) 45,200 1,195,053
Endesa SA 200,000 5,046,198
Iberdrola SA 140,000 2,263,682
Telefonica de Espana SA 273,000 12,340,299
29,335,290
SWEDEN - 2.1%
Astra AB Class A 112,000 1,839,062
Ericsson (L.M.) Telefon AB Class B 323,500 7,311,481
Svenska Handelsbanken 114,000 4,809,663
13,960,206
SWITZERLAND - 11.4%
Credit Suisse Group (Reg.) 38,800 5,977,953
Julius Baer Holding AG 1,225 3,761,144
Nestle SA (Reg.) 7,300 15,554,323
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWITZERLAND - CONTINUED
Novartis AG (Reg.) 11,860 $ 21,409,681
Roche Holding AG participation certificates 1,000 11,689,417
Swisscom AG (a) 13,100 4,448,563
UBS AG (a) 40,807 11,215,774
74,056,855
UNITED KINGDOM - 29.7%
Allied Zurich PLC (a) 573,800 6,821,880
Bank of Scotland 290,588 3,157,967
Barclays PLC 108,000 2,327,488
BG PLC 445,200 2,918,583
BOC Group PLC 161,100 2,365,812
Boots Co. PLC 178,900 2,687,125
British Aerospace PLC 480,684 3,493,289
British American Tobacco PLC 154,900 1,399,355
British Petroleum Co. PLC 960,000 14,146,176
British Telecommunications PLC 859,900 11,186,459
Cable & Wireless Communications PLC (a) 540,000 4,069,035
Cadbury-Schweppes PLC 245,800 3,766,068
CGU PLC 422,400 6,694,678
Diageo PLC 332,300 3,589,014
GKN PLC Class L 171,700 2,087,335
Glaxo Wellcome PLC 550,000 17,114,110
Kingfisher PLC 538,026 4,725,349
Lloyds TSB Group PLC 1,147,130 14,166,410
Misys PLC 212,000 1,487,425
National Westminster Bank PLC 148,400 2,507,323
Pearson PLC 255,600 4,459,783
Prudential Corp. PLC 345,700 4,497,856
Reed International PLC 250,000 2,116,149
Rentokil Initial PLC 720,000 4,509,094
RMC Industries, Inc. 202,300 2,879,386
Saatchi & Saatchi PLC 1,980,000 3,845,992
Schroders PLC 165,000 3,135,920
Scottish Hydro-Electric PLC 271,900 2,793,244
Seton Scholl Healthcare Group PLC 205,858 2,602,555
Shell Transport & Trading Co. PLC (Reg.) 1,466,300 8,978,612
Siebe PLC 269,200 1,104,400
SmithKline Beecham PLC 938,089 11,957,472
Somerfield PLC 449,200 2,899,675
Unilever PLC 953,000 9,574,791
Vodafone Group PLC 657,520 8,849,536
Wickes PLC 1,648,800 4,707,361
Wimpey George PLC 134,800 255,067
Zeneca Group PLC 81,500 3,130,662
193,008,436
TOTAL COMMON STOCKS 599,951,383
(Cost $561,952,092)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NONCONVERTIBLE PREFERRED STOCKS - 4.6%
SHARES VALUE (NOTE 1)
GERMANY - 1.9%
Dyckerhoff AG 9,400 $ 2,887,062
Porsche AG (non-vtg.) 850 1,464,631
SAP AG (Systeme Anwendungen Produkte) 16,000 7,897,944
12,249,637
ITALY - 2.7%
Telecom Italia Mobile Spa 1,740,000 6,183,235
Telecom Italia Spa Risp 2,236,800 11,349,164
17,532,399
TOTAL NONCONVERTIBLE PREFERRED STOCKS 29,782,036
(Cost $26,223,687)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CASH EQUIVALENTS - 3.2%
Taxable Central Cash Fund (b) 20,556,408 20,556,408
(Cost $20,556,408)
TOTAL INVESTMENT IN SECURITIES - 100% $ 650,289,827
(Cost $608,732,187)
</TABLE>
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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 $1,284,695,180 and $994,099,997, respectively (see Note 3
of Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $10,741 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $4,284,000 and $4,026,800, respectively. The
weighted average interest rate was 5.4% (see Note 6 of Notes to
Financial Statements).
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
AEROSPACE & DEFENSE 0.5%
BASIC INDUSTRIES 2.4
CASH EQUIVALENTS 3.2
CONSTRUCTION & REAL ESTATE 2.1
DURABLES 2.7
ENERGY 7.1
FINANCE 26.4
HEALTH 12.8
HOLDING COMPANIES 0.4
INDUSTRIAL MACHINERY & EQUIPMENT 4.9
MEDIA & LEISURE 1.8
NONDURABLES 6.9
RETAIL & WHOLESALE 4.2
SERVICES 2.7
TECHNOLOGY 3.6
TRANSPORTATION 0.5
UTILITIES 17.8
100.0%
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $615,538,326. Net unrealized appreciation
aggregated $34,751,501, of which $71,738,722 related to appreciated
investment securities and $36,987,221 related to depreciated
investment securities.
The fund hereby designates approximately $12,011,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
At October 31, 1998, the fund had a capital loss carryforward of
approximately $17,004,000, all of which will expire on October 31,
2006.
EUROPE CAPITAL APPRECIATION
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 650,289,827
SECURITIES, AT
VALUE
(COST
$608,732,18
7) -
SEE
ACCOMPANYIN
G SCHEDULE
FOREIGN 2,815
CURRENCY HELD
AT VALUE
(COST $2,739)
RECEIVABLE FOR 34,588,133
INVESTMENTS
SOLD
RECEIVABLE FOR 1,421,393
FUND SHARES
SOLD
DIVIDENDS 1,570,826
RECEIVABLE
INTEREST 36,720
RECEIVABLE
REDEMPTION FEES 553
RECEIVABLE
TOTAL ASSETS 687,910,267
LIABILITIES
PAYABLE FOR $ 34,322,863
INVESTMENTS
PURCHASED
PAYABLE FOR 2,062,436
FUND SHARES
REDEEMED
ACCRUED 350,565
MANAGEMENT
FEE
OTHER PAYABLES 367,302
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 37,103,166
NET ASSETS $ 650,807,101
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 627,865,700
UNDISTRIBUTED 5,124,361
NET INVESTMENT
INCOME
ACCUMULATED (23,810,019)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 41,627,059
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 650,807,101
39,969,117
SHARES
OUTSTANDING
NET ASSET $16.28
VALUE AND
REDEMPTION
PRICE PER
SHARE
($650,807,1
01 (DIVIDED BY)
39,969,117
SHARES)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 11,609,227
DIVIDENDS
INTEREST 1,379,606
12,988,833
LESS FOREIGN TAXES WITHHELD (1,285,184)
TOTAL INCOME 11,703,649
EXPENSES
MANAGEMENT FEE $ 4,368,067
BASIC FEE
PERFORMANCE ADJUSTMENT (91,978)
TRANSFER AGENT FEES 1,378,298
ACCOUNTING FEES AND EXPENSES 396,823
NON-INTERESTED TRUSTEES' COMPENSATION 2,437
CUSTODIAN FEES AND EXPENSES 356,877
REGISTRATION FEES 160,803
AUDIT 49,841
LEGAL 3,058
INTEREST 3,022
REPORTS TO SHAREHOLDERS 24,777
MISCELLANEOUS 1,825
TOTAL EXPENSES BEFORE REDUCTIONS 6,653,850
EXPENSE REDUCTIONS (262,108) 6,391,742
NET INVESTMENT INCOME 5,311,907
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (22,980,226)
FOREIGN CURRENCY TRANSACTIONS (563,936) (23,544,162)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 11,487,107
ASSETS AND LIABILITIES IN 46,038 11,533,145
FOREIGN CURRENCIES
NET GAIN (LOSS) (12,011,017)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (6,699,110)
OTHER INFORMATION $ 1,074,774
SALES CHARGES PAID TO FDC
SALES CHARGES - RETAINED BY FDC $ 1,068,074
EXPENSE REDUCTIONS $ 256,641
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 2,041
TRANSFER AGENT CREDITS 3,426
$ 262,108
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ 5,311,907 $ 4,455,207
NET INVESTMENT
INCOME
NET REALIZED GAIN (23,544,162) 62,599,749
(LOSS)
CHANGE IN NET 11,533,145 15,678,969
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (6,699,110) 82,733,925
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO (3,656,037) (2,855,514)
SHAREHOLDERS
FROM NET INVESTMENT
INCOME
FROM NET REALIZED (45,993,007) (16,015,689)
GAIN
TOTAL DISTRIBUTIONS (49,649,044) (18,871,203)
SHARE TRANSACTIONS 619,171,673 297,299,863
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 48,775,275 18,146,164
DISTRIBUTIONS
COST OF SHARES (333,641,119) (177,761,244)
REDEEMED
NET INCREASE 334,305,829 137,684,783
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION FEES 800,051 310,115
TOTAL INCREASE 278,757,726 201,857,620
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 372,049,375 170,191,755
END OF PERIOD $ 650,807,101 $ 372,049,375
(INCLUDING
UNDISTRIBUTED NET
INVESTMENT INCOME
OF $5,124,361
AND $4,579,952,
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 34,085,254 20,196,556
ISSUED IN 3,398,974 1,399,089
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (19,973,021) (11,229,699)
NET INCREASE 17,511,207 10,365,946
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED
OCTOBER 31,
SELECTED PER-SHARE 1998 1997 1996 1995 1994 G
DATA
NET ASSET VALUE, $ 16.57 $ 14.07 $ 12.08 $ 11.35 $ 10.00
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT .15 D .20 D .22 E .23 .08 D
INCOME
NET REALIZED AND 1.79 H 3.81 2.00 .50 1.27
UNREALIZED GAIN
(LOSS)
TOTAL FROM INVESTMENT 1.94 4.01 2.22 .73 1.35
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT (.17) I (.23) (.23) - -
INCOME
FROM NET REALIZED (2.08) I (1.29) - - -
GAIN
TOTAL DISTRIBUTIONS (2.25) (1.52) (.23) - -
REDEMPTION FEES .02 .01 - - -
ADDED TO PAID IN
CAPITAL
NET ASSET VALUE, END OF $ 16.28 $ 16.57 $ 14.07 $ 12.08 $ 11.35
PERIOD
TOTAL RETURN B, C 13.65% 31.57% 18.74% 6.43% 13.50%
RATIOS AND
SUPPLEMENTAL DATA
NET ASSETS, END OF $ 650,807 $ 372,049 $ 170,192 $ 194,433 $ 352,855
PERIOD (000 OMITTED)
RATIO OF EXPENSES TO 1.12% 1.10% 1.33% 1.36% 1.54% A
AVERAGE NET ASSETS
RATIO OF EXPENSES TO 1.08% F 1.07% F 1.30% F 1.36% 1.54% A
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT .89% 1.33% 1.66% 1.45% .79% A
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 179% 189% 155% 176% 317% A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE
BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS
SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND FOR PERIODS
OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
D NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE
PERIOD.
E INVESTMENT INCOME PER SHARE
REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.04 PER SHARE.
F FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A
PORTION OF THE FUND'S EXPENSES (SEE
NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
G FOR THE PERIOD DECEMBER 21,
1993 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31, 1994.
H THE AMOUNT SHOWN FOR A SHARE
OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET LOSS ON INVESTMENTS
FOR THE PERIOD DUE TO THE TIMING OF
SALES AND REPURCHASES OF FUND SHARES
IN RELATION TO FLUCTUATING MARKET
VALUES OF THE INVESTMENTS
OF THE FUND.
I THE AMOUNTS SHOWN REFLECT
CERTAIN RECLASSIFICATIONS RELATED TO
BOOK TO TAX DIFFERENCES (SEE NOTE 1
OF NOTES TO FINANCIAL STATEMENTS).
</TABLE>
FRANCE
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. 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 total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1998 YEAR FUND
FIDELITY FRANCE 21.85% 73.15%
FIDELITY FRANCE 18.20% 67.95%
(INCL. 3.00% SALES CHARGE)
SBF 250 34.42% 80.31%
European Region Funds Average 15.45% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on November 1, 1995. For example, if you had invested $1,000
in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Society des Bourses Francaises 250 Index (SBF 250)
- - 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 one year average represents a peer
group of 91 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
OCTOBER 31, 1998 YEAR FUND
FIDELITY FRANCE 21.85% 20.08%
FIDELITY FRANCE 18.20% 18.87%
(INCL. 3.00% SALES CHARGE)
SBF 250 34.42% 21.71%
European Region Funds Average 15.45% 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 SBF 250
00345 EX001
1995/11/01 9700.00 10000.00
1995/11/30 9515.70 9996.87
1995/12/31 9952.70 10331.57
1996/01/31 10381.19 10618.07
1996/02/29 10799.95 11028.30
1996/03/31 11150.53 11258.88
1996/04/30 11403.73 11466.65
1996/05/31 11647.19 11517.59
1996/06/30 11803.01 11777.11
1996/07/31 11559.54 11522.35
1996/08/31 11393.99 11290.00
1996/09/30 11617.98 11688.17
1996/10/31 11919.87 11888.32
1996/11/30 12299.67 12521.77
1996/12/31 12484.65 12692.23
1997/01/31 13045.52 12947.26
1997/02/28 13180.55 13046.89
1997/03/31 13585.62 13392.49
1997/04/30 13076.68 12816.85
1997/05/31 12889.72 12695.77
1997/06/30 13855.67 13730.74
1997/07/31 14125.72 14007.70
1997/08/31 13388.28 13106.00
1997/09/30 14707.37 14283.43
1997/10/31 13782.97 13413.94
1997/11/30 13814.13 13600.74
1997/12/31 14290.14 14013.96
1998/01/31 14665.89 14539.07
1998/02/28 15724.84 15771.19
1998/03/31 17410.05 17395.62
1998/04/30 18059.09 18099.22
1998/05/31 19357.16 19161.02
1998/06/30 19527.95 19713.51
1998/07/31 19619.05 19896.29
1998/08/31 16487.74 17660.05
1998/09/30 15485.73 16376.52
1998/10/30 16795.18 18030.99
IMATRL PRASUN SHR__CHT 19981031 19981110 154050 R00000000000039
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity France Fund on November 1, 1995, when the fund
started, and the current 3.00% sales charge was paid. As the chart
shows, by October 31, 1998, the value of the investment would have
grown to $16,795 - a 67.95% increase on the initial investment. For
comparison, look at how the Society des Bourses Francaises 250 Index
did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 would have grown to $18,031 - an 80.31%
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)
FRANCE
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Alexandra Edzard, Portfolio Manager of Fidelity
France Fund
Q. HOW DID THE FUND PERFORM, ALEXANDRA?
A. For the 12-month period that ended October 31, 1998, the fund
returned 21.85%, compared to the 34.42% return of the fund's
benchmark, the Society des Bourses Francaises (SBF) 250 Index. During
the same 12 months, the European region funds average returned 15.45%,
according to Lipper Analytical Services.
Q. HOW DID THE CHANGE IN THE ECONOMIC ENVIRONMENT AFFECT THE FUND'S
STRATEGY AND PERFORMANCE DURING THE PAST YEAR?
A. The French stock market continued to rally during the first eight
months of the reporting period. Things were fine until July, when
economic concerns that began with the Russian crisis led to renewed
worries about Asia and Latin America. The financial services sector
was especially hard hit as investors worried about exposure to
emerging markets and the adequacy of banks' loan-loss provisions.
Investors then began to focus on Western Europe, where they downgraded
corporate earnings and economic growth estimates. The French market
was hit harder than the markets of countries like Germany because of
the higher proportion of small company stocks in France. As investors
started selling, the liquidity - or ease of buying and selling - of
small company stocks dried up in France, adversely affecting all stock
prices. The market corrected sharply, with the most major effects on
banking stocks and companies tied closely to the rate of economic
growth, such as manufacturing and engineering.
Q. WHAT FACTORS HELPED THE FUND'S PERFORMANCE?
A. The emphasis on information technology, utilities and most
defensive stocks helped performance. One excellent performer in the
information technology (IT) industry was Cap Gemini, which specializes
in software systems consulting and implementation. Two other strong
performers were Groupe Danone, a food company, and Vivendi, which owns
and operates water utilities. All three companies were among the
fund's largest holdings.
Q. WHAT HOLDINGS HURT PERFORMANCE?
A. One disappointment was Accor, a hotel company, which in my opinion
was unduly hurt by concerns about its hotel business in the United
States. Alcatel, a telecommunications equipment company, fell sharply.
Management was itself surprised about first half results due to a lack
of internal reporting systems. The fund has sold its position in
Alcatel. Another disappointing investment was Societe Generale, the
major banking company, which, while benefiting from domestic
re-structuring and growth in its loan portfolio, was hurt by its
emerging market exposure.
Q. WHAT IMPACT DO YOU ANTICIPATE FROM THE INTRODUCTION OF THE EURO,
THE SINGLE EUROPEAN CURRENCY, ON JANUARY 1, 1999?
A. I don't think there will be a very big impact overall. However,
some types of companies could be helped, including the advertising and
information technology industries, as well as larger, well-positioned
companies making acquisitions. I expect the advertising industry will
benefit as more financial products are advertised across Europe. The
euro also should be positive for the information technology industry
as companies invest in data processing and networking systems for its
introduction. The euro could be negative for many smaller companies
that are unprepared in information technology.
Q. WHAT IS YOUR OUTLOOK?
A. European domestic growth is slowing and we need to watch retailers
and banks carefully. U.S. investors should keep in mind that investing
internationally carries more risk than investing in the U.S. I believe
information technology companies will have strong demand going
forward, particularly as their corporate customers continue their IT
developments after having dealt with a "quick fix" for the "Year 2000"
computer problem and concentrate on long-term business issues. I will
be looking for companies that can increase their revenues and earnings
without being too reliant on the European economy.
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: FRANX
START DATE: November 1, 1995
SIZE: as of October 31, 1998, more than
$16 million
MANAGER: Alexandra Edzard since May 1998;
manager, Fidelity Germany Fund, since 1996;
joined Fidelity in 1994
(checkmark)
FRANCE
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
UNITED STATES 3.6%
BELGIUM 2.5%
OTHER 0.8%
ROW: 1, COL: 1, VALUE: 2.5
ROW: 1, COL: 2, VALUE: 91.7
ROW: 1, COL: 3, VALUE: 1.4
ROW: 1, COL: 4, VALUE: 1.0
ROW: 1, COL: 5, VALUE: 3.4
NETHERLANDS 1.4%
FRANCE 91.7%
AS OF APRIL 30, 1998
UNITED STATES 17.0%
ROW: 1, COL: 1, VALUE: 83.0
ROW: 1, COL: 2, VALUE: 17.0
FRANCE 83.0%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 96.4 79.6
Bonds 0.0 3.4
Short-term investments 3.6 17.0
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
France Telecom SA (Telephone Services) 7.4 3.6
Vivendi SA (Water) 7.2 0.0
Suez Lyonnaise des Eaux (Services) 5.4 0.8
L'Oreal SA (Household Products) 5.4 1.6
Axa SA (Insurance) 5.2 2.0
Groupe Danone (Foods) 3.9 2.6
Elf Aquitaine (Oil & Gas) 3.9 4.4
Total SA Class B (Oil & Gas) 3.6 3.9
Cap Gemini SA (Computer Services & Software) 2.9 0.9
Sanofi SA (Drugs & Pharmaceuticals) 2.7 0.0
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
UTILITIES 17.1 5.6
FINANCE 13.4 10.7
NONDURABLES 12.0 7.8
SERVICES 10.9 3.5
TECHNOLOGY 8.6 7.0
HEALTH 7.9 6.2
ENERGY 7.5 8.3
RETAIL & WHOLESALE 5.7 4.4
MEDIA & LEISURE 5.4 5.5
CONSTRUCTION & REAL ESTATE 2.9 8.5
FRANCE
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 96.4%
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 0.6%
CHEMICALS & PLASTICS - 0.6%
Compagnie Generale d' Industrie et de Participations (CGIP) 2,150 $ 106,963
CONSTRUCTION & REAL ESTATE - 2.9%
BUILDING MATERIALS - 0.8%
Lapeyre SA 1,527 134,872
CONSTRUCTION - 1.1%
Eiffage SA 894 73,967
Societe Generale d'Enterprises SA (SGE) 2,188 105,304
179,271
ENGINEERING - 1.0%
Bouygues 777 157,005
TOTAL CONSTRUCTION & REAL ESTATE 471,148
DURABLES - 0.5%
CONSUMER ELECTRONICS - 0.5%
BIC Ste 1,214 74,840
ENERGY - 7.5%
OIL & GAS - 7.5%
Elf Aquitaine 5,406 627,096
Total SA Class B 5,000 585,000
1,212,096
FINANCE - 13.4%
BANKS - 5.6%
Banque Nationale de Paris 4,182 265,271
Compagnie Financiere de Paribas 3,069 225,928
Class A (Reg.)
Credit Commercial de France 1,420 99,876
Dexia France 1,605 236,944
Societe Generale, France Class A 623 82,540
910,559
INSURANCE - 7.8%
April SA 643 53,895
Assurances Generales (Bearer) 4,366 244,755
Axa SA 7,386 836,096
CNP Assurances (a) 1,505 51,245
Scor SA 205 11,773
Union Assurancesfederales SA 490 61,386
1,259,150
TOTAL FINANCE 2,169,709
HEALTH - 7.9%
DRUGS & PHARMACEUTICALS - 7.0%
Genset SA (a) 1,080 98,895
Rhone-Poulenc SA Class A 7,400 345,487
SHARES VALUE (NOTE 1)
Sanofi SA 2,819 $ 442,081
Synthelabo 1,274 243,423
1,129,886
MEDICAL EQUIPMENT & SUPPLIES - 0.9%
Essilor International SA 351 142,356
TOTAL HEALTH 1,272,242
HOLDING COMPANIES - 1.5%
Lagardere S.C.A. (Reg.) 3,164 127,525
Marine Wendel SA 719 117,550
245,075
INDUSTRIAL MACHINERY & EQUIPMENT - 2.4%
Compagnie de Fives-Lille 1,000 79,312
Entrelec SA 1,282 72,561
Euraltec SA (a) 1,697 12,236
Legrand SA 455 116,135
Sidel SA 1,434 105,979
386,223
MEDIA & LEISURE - 5.4%
BROADCASTING - 0.8%
NRJ SA 606 124,527
LODGING & GAMING - 3.1%
Accor SA 1,160 244,015
Club Mediterranee SA (a) 1,604 124,470
Societe du Louvre 1,850 133,055
501,540
RESTAURANTS - 1.5%
Sodexho Alliance SA 1,276 248,176
TOTAL MEDIA & LEISURE 874,243
NONDURABLES - 12.0%
BEVERAGES - 1.1%
LVMH Moet Hennessy Louis Vuitton 1,000 185,663
FOODS - 3.9%
Groupe Danone 2,396 634,447
HOUSEHOLD PRODUCTS - 5.4%
L'Oreal SA 1,516 867,621
TOBACCO - 1.6%
Seita 4,400 261,730
TOTAL NONDURABLES 1,949,461
RETAIL & WHOLESALE - 5.7%
GENERAL MERCHANDISE STORES - 2.4%
Bricorama SA 2,166 113,225
Galeries Lafayette SA 253 280,924
394,149
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - 1.1%
Casino Guichard Perrachon et Compagnie 1,700 $ 169,458
RETAIL & WHOLESALE, MISCELLANEOUS - 2.2%
Castorama Dubois Investissements SA 1,283 229,186
Pinault Printemps SA 746 125,057
354,243
TOTAL RETAIL & WHOLESALE 917,850
SERVICES - 10.9%
ADVERTISING - 2.5%
Expand SA 4,751 213,670
Havas Advertising SA 1,132 192,622
406,292
SERVICES - 8.4%
Adecco SA (Bearer) 300 119,854
Cegedim SA 3,035 128,617
GrandVision SA 1,798 46,508
Publicis SA 645 102,313
Suez Lyonnaise des Eaux 4,884 875,963
Vedior NV 3,163 80,655
1,353,910
TOTAL SERVICES 1,760,202
TECHNOLOGY - 8.6%
COMPUTER SERVICES & SOFTWARE - 8.6%
Atos SA (a) 1,275 240,857
Cap Gemini SA 3,093 465,536
Cegid SA 524 100,121
Dassault Systemes SA 4,556 174,103
Equant NV (a) 3,555 154,306
Ilog SA sponsored ADR (a) 8,407 80,917
Sopra SA 560 181,697
1,397,537
UTILITIES - 17.1%
CELLULAR - 2.5%
Mobistar SA (a) 8,540 373,953
Mobistar SA (a)(c) 700 30,652
404,605
TELEPHONE SERVICES - 7.4%
France Telecom SA 17,203 1,201,606
WATER - 7.2%
Vivendi SA 5,061 1,157,671
TOTAL UTILITIES 2,763,882
TOTAL COMMON STOCKS 15,601,471
(Cost $14,183,899)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CASH EQUIVALENTS - 3.6%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b) 580,926 $ 580,926
(Cost $580,926)
TOTAL INVESTMENT IN SECURITIES - 100% $ 16,182,397
(Cost $14,764,825)
</TABLE>
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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 $30,652 or 0.2% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $32,683,530 and $20,850,946, respectively (see Note 3 of
Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $2,814,000 and $1,584,161, respectively. The
weighted average interest rate was 5.86% (see Note 6 of Notes to
Financial Statements).
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $15,106,494. Net unrealized appreciation
aggregated $1,075,903, of which $1,715,036 related to appreciated
investment securities and $639,133 related to depreciated investment
securities.
The fund hereby designates approximately $243,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
At October 31, 1998, the fund had a capital loss carryforward of
approximately $1,969,000, all of which will expire on October 31,
2006.
FRANCE
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 16,182,397
SECURITIES, AT
VALUE
(COST
$14,764,825
) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 290,733
INVESTMENTS
SOLD
RECEIVABLE FOR 26,780
FUND SHARES
SOLD
DIVIDENDS 58,407
RECEIVABLE
INTEREST 1,088
RECEIVABLE
REDEMPTION FEES 77
RECEIVABLE
OTHER 630
RECEIVABLES
TOTAL ASSETS 16,560,112
LIABILITIES
PAYABLE TO $ 32,160
CUSTODIAN
BANK
PAYABLE FOR 7,201
INVESTMENTS
PURCHASED
PAYABLE FOR 18,170
FUND SHARES
REDEEMED
ACCRUED 7,558
MANAGEMENT
FEE
OTHER PAYABLES 64,862
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 129,951
NET ASSETS $ 16,430,161
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 17,282,094
UNDISTRIBUTED 37,763
NET INVESTMENT
INCOME
ACCUMULATED (2,310,733)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 1,421,037
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 16,430,161
1,113,532
SHARES
OUTSTANDING
NET ASSET $14.75
VALUE AND
REDEMPTION
PRICE PER
SHARE
($16,430,16
1 (DIVIDED BY)
1,113,532
SHARES)
MAXIMUM $15.21
OFFERING PRICE
PER SHARE
(100/97.00
OF $14.75)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 252,848
DIVIDENDS
INTEREST 88,105
340,953
LESS FOREIGN TAXES WITHHELD (27,147)
TOTAL INCOME 313,806
EXPENSES
MANAGEMENT FEE $ 91,019
TRANSFER AGENT FEES 36,742
ACCOUNTING FEES AND EXPENSES 60,217
NON-INTERESTED TRUSTEES' COMPENSATION 41
CUSTODIAN FEES AND EXPENSES 84,774
REGISTRATION FEES 20,388
AUDIT 31,407
LEGAL 62
INTEREST 14,450
REPORTS TO SHAREHOLDERS 2,206
MISCELLANEOUS 301
TOTAL EXPENSES BEFORE REDUCTIONS 341,607
EXPENSE REDUCTIONS (77,506) 264,101
NET INVESTMENT INCOME 49,705
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (2,300,341)
FOREIGN CURRENCY TRANSACTIONS (14,461) (2,314,802)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 964,399
ASSETS AND LIABILITIES IN 13,166 977,565
FOREIGN CURRENCIES
NET GAIN (LOSS) (1,337,237)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (1,287,532)
OTHER INFORMATION $ 40,597
SALES CHARGES PAID TO FDC
SALES CHARGES - RETAINED BY FDC $ 40,597
EXPENSE REDUCTIONS $ 33
CUSTODIAN CREDITS
FMR REIMBURSEMENT 77,473
$ 77,506
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ 49,705 $ 49,036
NET INVESTMENT
INCOME
NET REALIZED GAIN (2,314,802) 752,856
(LOSS)
CHANGE IN NET 977,565 20,706
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (1,287,532) 822,598
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO (16,501) (69,894)
SHAREHOLDERS
FROM NET INVESTMENT
INCOME
FROM NET REALIZED (474,417) (266,472)
GAIN
TOTAL DISTRIBUTIONS (490,918) (336,366)
SHARE TRANSACTIONS 27,069,838 5,243,968
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 487,606 334,785
DISTRIBUTIONS
COST OF SHARES (15,052,615) (6,049,684)
REDEEMED
NET INCREASE 12,504,829 470,931
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION FEES 125,407 21,293
TOTAL INCREASE 10,851,786 36,594
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 5,578,375 5,541,781
END OF PERIOD $ 16,430,161 $ 5,578,375
(INCLUDING
UNDISTRIBUTED NET
INVESTMENT INCOME
OF $37,763 AND
$23,384,
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 1,626,364 411,477
ISSUED IN 39,450 28,936
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (972,730) (472,584)
NET INCREASE 693,084 (32,171)
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED
OCTOBER 31,
SELECTED PER-SHARE 1998 1997 1996 D
DATA
NET ASSET VALUE, $ 13.27 $ 12.24 $ 10.00
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT .06 C .10 C .23
INCOME
NET REALIZED AND 2.46 F 1.66 1.98
UNREALIZED GAIN
(LOSS)
TOTAL FROM INVESTMENT 2.52 1.76 2.21
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT (.04) (.16) (.04)
INCOME
FROM NET REALIZED (1.15) (.61) -
GAIN
TOTAL DISTRIBUTIONS (1.19) (.77) (.04)
REDEMPTION FEES .15 .04 .07
ADDED TO PAID IN
CAPITAL
NET ASSET VALUE, END OF $ 14.75 $ 13.27 $ 12.24
PERIOD
TOTAL RETURN A, B 21.85% 15.63% 22.89%
RATIOS AND
SUPPLEMENTAL DATA
NET ASSETS, END OF $ 16,430 $ 5,578 $ 5,542
PERIOD (000 OMITTED)
RATIO OF EXPENSES TO 2.12% E 2.00% E 2.00% E
AVERAGE NET ASSETS
RATIO OF NET INVESTMENT .40% .78% 1.74%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 182% 150% 129%
A THE TOTAL RETURNS WOULD HAVE
BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE
NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
D FOR THE PERIOD NOVEMBER 1,
1995 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31,
1996.
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 7 OF NOTES TO
FINANCIAL STATEMENTS).
F 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.
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). If Fidelity had not reimbursed certain fund
expenses, the life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1998 YEAR FUND
FIDELITY GERMANY 22.81% 67.78%
FIDELITY GERMANY 19.12% 62.74%
(INCL. 3.00% SALES CHARGE)
DAX 100 26.59% 74.35%
European Region Funds Average 15.45% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on November 1, 1995. For example, if you had invested $1,000
in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Deutscher Aktienindex 100 (DAX 100) Index - 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 one year average represents a peer group of 91
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
OCTOBER 31, 1998 YEAR FUND
FIDELITY GERMANY 22.81% 18.83%
FIDELITY GERMANY 19.12% 17.63%
(INCL. 3.00% SALES CHARGE)
DAX 100 26.59% 20.36%
European Region Funds Average 15.45% 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 DAX 100
00346 EX002
1995/11/01 9700.00 10000.00
1995/11/30 9622.40 10045.93
1995/12/31 9835.80 10293.16
1996/01/31 10320.80 10746.76
1996/02/29 10369.30 10830.07
1996/03/31 10495.40 10812.65
1996/04/30 10194.70 10413.05
1996/05/31 10573.00 10679.84
1996/06/30 10650.60 10956.77
1996/07/31 10524.50 10921.61
1996/08/31 10660.30 11180.88
1996/09/30 10747.60 11282.48
1996/10/31 10999.80 11378.77
1996/11/30 11523.60 11820.89
1996/12/31 11650.51 12007.46
1997/01/31 11570.43 11917.66
1997/02/28 12000.82 12383.06
1997/03/31 12631.39 13186.91
1997/04/30 12341.13 12745.27
1997/05/31 12951.68 13390.51
1997/06/30 13352.04 13933.20
1997/07/31 14473.05 15226.21
1997/08/31 13221.92 13796.83
1997/09/30 14242.84 14883.23
1997/10/31 13251.95 13772.76
1997/11/30 13642.30 14115.89
1997/12/31 14018.54 14726.44
1998/01/31 14634.74 15145.43
1998/02/28 15349.97 16176.40
1998/03/31 16560.36 17180.21
1998/04/30 17704.73 17760.59
1998/05/31 18750.07 19367.83
1998/06/30 19256.24 20055.83
1998/07/31 19960.47 20301.79
1998/08/31 15944.16 16938.45
1998/09/30 15669.08 16560.16
1998/10/30 16274.27 17435.20
IMATRL PRASUN SHR__CHT 19981031 19981203 105329 R00000000000039
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Germany Fund on November 1, 1995, when the fund
started, and the current 3.00% sales charge was paid. As the chart
shows, by October 31, 1998, the value of the investment would have
grown to $16,274 - a 62.74% increase on the initial investment. For
comparison, look at how the Deutscher Aktienindex 100 Index did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 would have grown to $17,435 - a 74.35% 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 12-month period that ended October 31, 1998, the fund
returned 22.81%. During the same 12-month period, the fund's
benchmark, the Deutscher Aktienindex 100 (DAX 100), returned 26.59%,
while the European regions funds average, as monitored by Lipper
Analytical Services, returned 15.45%.
Q. HOW DID EXPANDING CONCERNS ABOUT AN ECONOMIC SLOWDOWN AFFECT YOUR
STRATEGY AND THE FUND'S PERFORMANCE DURING THE FISCAL YEAR?
A. At the end of 1997 and the first few months of 1998, the German
stock market performed very well. The problems began in July with the
economic crisis and bond default in Russia, which caused investors to
start worrying about financial instability in Asia and Latin America
again. As concerns grew, I increased my emphasis on defensive stocks,
including utilities, telecommunications and pharmaceuticals. I also
emphasized finance stocks, but concentrated on insurance companies
rather than banks. I de-emphasized chemical, construction, engineering
and retailing stocks, as these tend to do poorly when economic growth
slows. The heavier weighting on insurance stocks helped the
performance of the fund, while I probably did not move into utility
stocks early enough. My de-emphasis of retail stocks also may have
held back performance, as they held up better than I anticipated.
Q. WHAT INVESTMENT DECISIONS HELPED SUPPORT THE FUND'S PERFORMANCE?
A. Two that stand out were to overweight, relative to the index,
Mannesmann AG and SAP, a software industry leader. Mannesmann
successfully acquired mobile phone companies, substantially increasing
its market share at a time when mobile phone penetration was still
growing strongly. SAP increased its business both from new and
existing corporate customers. It also was successful in recruiting
qualified employees, which has been a challenge in its industry.
Another successful decision was to avoid owning very much of Deutsche
Bank, Germany's largest bank. Deutsche Bank, suffered from poor cost
controls and too much diversification in its business operations,
resulting in a lack of corporate focus.
Q. WHAT WERE THE DISAPPOINTMENTS?
A. The most disappointing investments were in Wella, a hair care
products company hurt by fears of its emerging markets exposure;
Siemens, a telecommunications equipment company that has had
management problems; and Suedzucker, a sugar company whose stock value
suffered because of lower-than-expected earnings.
Q. WHAT IMPACT DO YOU ANTICIPATE FROM THE INTRODUCTION OF THE EURO,
THE SINGLE EUROPEAN CURRENCY, ON JANUARY 1, 1999?
A. I don't think there will be a very big impact overall. However,
some companies could be helped, including firms in the advertising and
information technology industries, as well as companies making
strategic acquisitions. I expect the advertising industry will benefit
as more financial products are advertised across Europe. The euro also
should be positive for the information technology industry as
companies adapt their data processing and networking systems to the
expanded market.
Q. WHAT IS YOUR OUTLOOK?
A. Overall, I expect it will be a difficult year for the equity
market, although there will be opportunities for the stock-picking
approach I favor. Some factors will be helpful. The lowering of German
social security taxes, for example, will result in more money
available for consumption. In addition, government approval of public
companies to buy back up to 10% of their outstanding shares should be
favorable for the market. Overall, the German economic outlook is very
difficult to predict. I expect to emphasize companies that are
improving through restructurings and companies in growth segments.
There are many multi-national German companies that can improve their
core businesses without being dependent on the German economy. U.S.
investors should keep in mind that investing internationally carries
more risk than investing domestically.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of German issuers
FUND NUMBER: 346
TRADING SYMBOL: FGERF
START DATE: November 1, 1995
SIZE: as of October 31, 1998, more than
$34 million
MANAGER: Alexandra Edzard, since 1996;
manager, Fidelity France Fund, since May
1998; joined Fidelity in 1994
(checkmark)
GERMANY
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
UNITED STATES 3.4%
SWITZERLAND 2.6%
ROW: 1, COL: 1, VALUE: 94.0
ROW: 1, COL: 2, VALUE: 2.6
ROW: 1, COL: 3, VALUE: 3.4
GERMANY 94.0%
AS OF APRIL 30, 1998
UNITED STATES 4.1%
SWITZERLAND 6.3%
ROW: 1, COL: 1, VALUE: 88.09999999999999
ROW: 1, COL: 2, VALUE: 1.5
ROW: 1, COL: 3, VALUE: 6.3
ROW: 1, COL: 4, VALUE: 4.1
OTHER 1.5%
GERMANY 88.1%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Common Stocks 79.6 81.9
Preferred Stocks 17.0 14.0
Short-term investments 3.4 4.1
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Mannesmann AG 8.5 6.6
(Industrial Machinery &
Equipment)
Allianz AG (Reg.) (Insurance) 8.2 8.0
SAP AG (Systeme Anwendungen 7.8 5.8
Produkte)
(Computer Services & Software)
Daimler-Benz AG 6.4 3.0
(Autos, Tires, & Accessories)
Munich Reinsurance AG (Reg.) (Insurance) 5.6 4.7
Bayerische Hypo-Und Vereinsbank (Banks) 4.6 1.8
RWE AG (non-vtg.) 4.5 0.0
(Electric Utility)
Viag AG 4.4 0.0
(Electric Utility)
Bayerische Motoren Werke (BMW) 3.5 3.8
AG (non-vtg.)
(Autos, Tires, & Accessories)
Veba AG 3.3 5.8
(Electric Utility)
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 33.0 39.1
UTILITIES 15.4 5.8
DURABLES 13.3 15.2
INDUSTRIAL MACHINERY & EQUIPMENT 12.2 8.9
TECHNOLOGY 9.3 7.8
BASIC INDUSTRIES 7.5 16.1
NONDURABLES 2.7 0.0
HEALTH 2.3 0.0
SERVICES 0.9 1.6
GERMANY
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 79.6%
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 5.5%
CHEMICALS & PLASTICS - 5.5%
BASF AG 9,508 $ 404,636
Bayer AG 9,664 397,194
Hoechst AG 26,010 1,096,540
1,898,370
DURABLES - 8.1%
AUTOS, TIRES, & ACCESSORIES - 6.4%
Daimler-Benz AG (a) 28,116 2,216,362
TEXTILES & APPAREL - 1.7%
Boss (Hugo) AG 442 607,950
TOTAL DURABLES 2,824,312
FINANCE - 30.9%
BANKS - 11.2%
Bayerische Hypo-Und Vereinsbank 20,403 1,616,574
BHF Bank AG 22,051 856,576
Deutsche Bank AG 8,613 541,567
Julius Baer Holding AG 296 908,815
3,923,532
INSURANCE - 19.7%
Aachener & Muenchener Beteiligungs AG (Reg.) 4,538 699,631
Allianz AG (Reg.) 8,281 2,846,281
CKAG Colonia Konzern AG (Bearer) 2,405 275,543
ERGO Versicherungs Gruppe AG 1,683 277,787
Hannover Rueckversicherungs AG 6,906 799,576
Munich Reinsurance AG (Reg.) 4,238 1,960,139
6,858,957
TOTAL FINANCE 10,782,489
HEALTH - 2.3%
DRUGS & PHARMACEUTICALS - 2.3%
Schering AG 6,901 807,342
INDUSTRIAL MACHINERY & EQUIPMENT - 12.2%
ELECTRICAL EQUIPMENT - 2.1%
Siemens AG 11,732 723,497
INDUSTRIAL MACHINERY & EQUIPMENT - 10.1%
Linde AG 1,002 543,406
Mannesmann AG 30,083 2,970,107
3,513,513
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 4,237,010
SERVICES - 0.9%
DIS Deutscher Industrie Service AG 6,482 315,478
SHARES VALUE (NOTE 1)
TECHNOLOGY - 8.8%
COMPUTER SERVICES & SOFTWARE - 8.8%
IXOS Software AG (a) 3,300 $ 359,129
SAP AG (Systeme Anwendungen Produkte) 6,388 2,703,507
3,062,636
UTILITIES - 10.9%
ELECTRIC UTILITY - 9.0%
Berliner Kraft-und Licht AG 7,500 439,843
Veba AG 20,757 1,153,306
Viag AG 2,275 1,539,132
3,132,281
TELEPHONE SERVICES - 1.9%
Deutsche Telekom AG 24,356 659,998
TOTAL UTILITIES 3,792,279
TOTAL COMMON STOCKS 27,719,916
(Cost $26,058,329)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NONCONVERTIBLE PREFERRED STOCKS - 17.0%
BASIC INDUSTRIES - 2.0%
CHEMICALS & PLASTICS - 2.0%
Henkel KGaA 8,112 701,585
DURABLES - 5.2%
AUTOS, TIRES, & ACCESSORIES - 5.2%
Bayerische Motoren Werke (BMW) AG:
(non-vtg.) 2,869 1,222,881
(RFD) (a) 298 115,308
Volkswagen AG 10,224 479,057
1,817,246
FINANCE - 2.1%
INSURANCE - 2.1%
Marschollek Lautenschlaeger und 1,473 748,077
Partner AG
NONDURABLES - 2.7%
FOODS - 1.4%
Suedzucker AG 1,002 506,452
HOUSEHOLD PRODUCTS - 1.3%
Wella AG 634 440,810
TOTAL NONDURABLES 947,262
TECHNOLOGY - 0.5%
ELECTRONICS - 0.5%
Sartorius AG (non-vtg.) 595 163,319
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - 4.5%
ELECTRIC UTILITY - 4.5%
RWE AG (non-vtg.) 42,600 $ 1,564,661
TOTAL NONCONVERTIBLE PREFERRED STOCKS 5,942,150
(Cost $6,161,458)
</TABLE>
CASH EQUIVALENTS - 3.4%
Taxable Central Cash Fund (b) 1,178,875 1,178,875
(Cost $1,178,875)
TOTAL INVESTMENT IN SECURITIES - 100% $ 34,840,941
(Cost $33,398,662)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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 $54,810,939 and $30,921,797, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $8,519 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $2,967,000 and $2,967,000, respectively. The
weighted average interest rate was 5.38% (see Note 6 of Notes to
Financial Statements).
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $34,624,854. Net unrealized appreciation
aggregated $216,087, of which $3,017,835 related to appreciated
investment securities and $2,801,748 related to depreciated investment
securities.
The fund hereby designates approximately $578,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
At October 31, 1998, the fund had a capital loss carryforward of
approximately $2,136,000, all of which will expire on October 31,
2006.
GERMANY
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 34,840,941
SECURITIES, AT
VALUE
(COST
$33,398,662
) -
SEE
ACCOMPANYIN
G SCHEDULE
FOREIGN 17,881
CURRENCY HELD
AT VALUE
(COST
$17,881)
RECEIVABLE FOR 50,165
FUND SHARES
SOLD
DIVIDENDS 50,415
RECEIVABLE
INTEREST 3,677
RECEIVABLE
TOTAL ASSETS 34,963,079
LIABILITIES
PAYABLE FOR $ 29,732
INVESTMENTS
PURCHASED
PAYABLE FOR 65,416
FUND SHARES
REDEEMED
ACCRUED 20,301
MANAGEMENT
FEE
OTHER PAYABLES 52,587
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 168,036
NET ASSETS $ 34,795,043
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 36,590,843
UNDISTRIBUTED 16,792
NET INVESTMENT
INCOME
ACCUMULATED (3,258,508)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 1,445,916
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 34,795,043
2,351,991
SHARES
OUTSTANDING
NET ASSET $14.79
VALUE,
OFFERING PRICE
AND
REDEMPTION
PRICE PER
SHARE
($34,795,04
3 (DIVIDED BY)
2,351,991
SHARES)
MAXIMUM $15.25
OFFERING PRICE
PER SHARE
(100/97.00
OF $14.79)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 291,729
DIVIDENDS
SPECIAL DIVIDEND FROM 126,345
DAIMLER-BENZ AG
INTEREST 86,552
504,626
LESS FOREIGN TAXES WITHHELD (42,346)
TOTAL INCOME 462,280
EXPENSES
MANAGEMENT FEE $ 173,896
TRANSFER AGENT FEES 71,727
ACCOUNTING FEES AND EXPENSES 60,342
NON-INTERESTED TRUSTEES' COMPENSATION 80
CUSTODIAN FEES AND EXPENSES 46,093
REGISTRATION FEES 28,842
AUDIT 32,107
LEGAL 55
INTEREST 1,772
REPORTS TO SHAREHOLDERS 2,610
MISCELLANEOUS 325
TOTAL EXPENSES BEFORE REDUCTIONS 417,849
EXPENSE REDUCTIONS (3,672) 414,177
NET INVESTMENT INCOME 48,103
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (3,208,801)
FOREIGN CURRENCY TRANSACTIONS (24,506) (3,233,307)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 824,332
ASSETS AND LIABILITIES IN 3,540 827,872
FOREIGN CURRENCIES
NET GAIN (LOSS) (2,405,435)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (2,357,332)
OTHER INFORMATION $ 148,281
SALES CHARGES PAID TO FDC
SALES CHARGES - RETAINED BY FDC $ 148,137
EXPENSE REDUCTIONS $ 3,644
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 28
$ 3,672
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ 48,103 $ (21,289)
NET INVESTMENT
INCOME (LOSS)
NET REALIZED GAIN (3,233,307) 1,713,253
(LOSS)
CHANGE IN NET 827,872 288,600
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (2,357,332) 1,980,564
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO (6,803) (5,297)
SHAREHOLDERS
FROM NET INVESTMENT
INCOME
FROM NET REALIZED (1,168,956) (248,285)
GAIN
TOTAL DISTRIBUTIONS (1,175,759) (253,582)
SHARE TRANSACTIONS 46,714,688 14,817,379
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 1,171,719 252,687
DISTRIBUTIONS
COST OF SHARES (22,470,888) (11,309,518)
REDEEMED
NET INCREASE 25,415,519 3,760,548
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION FEES 180,382 66,433
TOTAL INCREASE 22,062,810 5,553,963
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 12,732,233 7,178,270
END OF PERIOD $ 34,795,043 $ 12,732,233
(INCLUDING
UNDISTRIBUTED NET
INVESTMENT INCOME
OF $16,792 AND
$0, RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 2,771,374 1,166,667
ISSUED IN 93,141 22,362
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (1,474,029) (860,345)
NET INCREASE 1,390,486 328,684
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED
OCTOBER 31,
SELECTED PER-SHARE 1998 1997 1996 D
DATA
NET ASSET VALUE, $ 13.24 $ 11.34 $ 10.00
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT .03 C, I (.02) C .01
INCOME (LOSS)
NET REALIZED AND 2.65 G 2.21 1.31
UNREALIZED GAIN
(LOSS)
TOTAL FROM INVESTMENT 2.68 2.19 1.32
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT (.01) H (.01) -
INCOME
FROM NET REALIZED (1.24) H (.35) -
GAIN
TOTAL DISTRIBUTIONS (1.25) (.36) -
REDEMPTION FEES .12 .07 .02
ADDED TO PAID IN
CAPITAL
NET ASSET VALUE, END OF $ 14.79 $ 13.24 $ 11.34
PERIOD
TOTAL RETURN A, B 22.81% 20.47% 13.40%
RATIOS AND
SUPPLEMENTAL DATA
NET ASSETS, END OF $ 34,795 $ 12,732 $ 7,178
PERIOD (000 OMITTED)
RATIO OF EXPENSES TO 1.76% 2.00% E 2.00% E
AVERAGE NET ASSETS
RATIO OF EXPENSES TO 1.74% F 2.00% 2.00%
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT .20% (.18)% .12%
INCOME (LOSS) TO
AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 139% 120% 133%
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D FOR THE PERIOD NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1996.
E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
G 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.
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
I INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM
DAIMLER-BENZ WHICH AMOUNTED TO $.08 PER SHARE.
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).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1998 YEAR FUND
FIDELITY HONG KONG AND CHINA -6.85% 4.77%
FIDELITY HONG KONG AND CHINA -9.65% 1.63%
(INCL. 3.00% SALES CHARGE)
Hang Seng -1.56% 13.26%
China Region Funds Average -22.99% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on November 1, 1995. For example, if you had invested $1,000
in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the 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 China
region funds average, which reflects the performance of mutual funds
with similar objectives tracked by Lipper Analytical Services, Inc.
The past one year average represents a peer group of 20 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
OCTOBER 31, 1998 YEAR FUND
FIDELITY HONG KONG AND CHINA -6.85% 1.57%
FIDELITY HONG KONG AND CHINA -9.65% 0.54%
(INCL. 3.00% SALES CHARGE)
Hang Seng -1.56% 4.24%
China Region Funds Average -22.99% 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 Hang Seng
00352 EX004
1995/11/01 9700.00 10000.00
1995/11/30 9729.10 10055.31
1995/12/31 9942.65 10355.18
1996/01/31 11136.94 11707.43
1996/02/29 11001.00 11493.79
1996/03/31 10787.39 11344.61
1996/04/30 10816.52 11377.80
1996/05/31 11156.36 11717.22
1996/06/30 11010.71 11485.79
1996/07/31 10738.84 11172.35
1996/08/31 11272.87 11703.04
1996/09/30 12010.80 12513.71
1996/10/31 12593.38 13153.37
1996/11/30 13962.44 14151.17
1996/12/31 14017.97 14238.54
1997/01/31 13741.76 14107.81
1997/02/28 13899.59 14226.29
1997/03/31 13021.62 13329.79
1997/04/30 13297.84 13761.33
1997/05/31 15320.13 15770.49
1997/06/30 15438.51 16275.44
1997/07/31 16888.65 17575.67
1997/08/31 15300.40 15196.09
1997/09/30 15921.89 16236.25
1997/10/31 10910.54 11505.49
1997/11/30 10999.32 11431.72
1997/12/31 10926.40 11656.10
1998/01/31 9716.76 10104.22
1998/02/28 11630.37 12566.68
1998/03/31 11858.41 12638.18
1998/04/30 10966.06 11431.68
1998/05/31 9617.61 9866.13
1998/06/30 9131.77 9474.51
1998/07/31 8655.85 8841.87
1998/08/31 7604.85 8110.53
1998/09/30 8507.12 8789.59
1998/10/30 10162.94 11326.10
IMATRL PRASUN SHR__CHT 19981031 19981109 151901 R00000000000039
$10,000 OVER LIFE OF FUND: 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 3.00% sales charge was paid. As
the charts shows, by October 31, 1998, the value of the investment
would have grown to $10,163 - a 1.63% 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 would have grown to $11,326 - a 13.26% 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. For the 12-month period that ended on October 31, 1998, the fund
returned -6.85%, compared to a -1.56% return for the Hang Seng Index
and -22.99% for the China region funds average, as measured by Lipper
Analytical Services.
Q. WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE?
A. Generally, the economic and currency crisis throughout the
Southeast Asian region had the most significant impact on the fund's
investment results.
Q. WHY DID THE FUND UNDERPERFORM THE HANG SENG INDEX?
A. The fund underperformed the index because of its higher-than-normal
defensive position prior to a sharp upturn in stock prices late in the
period. The rally was triggered by the government's decision to spend
$15 billion on equities to help prop up the market. This action shrunk
market supply by approximately 10%. Similar interventions by other
governments in the region have failed within the past year.
Q. WHY DID THE FUND OUTPERFORM THE LIPPER INDEX?
A. The fund outperformed the China Region Funds average because of our
emphasis on high-quality securities. The types of companies in which
we invest - well-managed corporations with strong finances and solid
earnings prospects - fared better than the market during the fiscal
year, and some were even beneficiaries of the economic and currency
crisis within the region.
Q. WHAT WERE SOME OF THE FUND'S BETTER-PERFORMING STOCKS?
A. The fund enjoyed good performance from Johnson Electric, one of the
few world-class manufacturing concerns born and bred in Hong Kong.
Johnson Electric makes micro-motors for household appliances,
printers, cars, audio-visual products and many other products. The
company benefited from lower copper and steel prices, a continuing
outsourcing trend and rising demand for its products. Today, for
example, automobiles have 10 times more motors than they did a decade
ago. Cafe de Coral, a fast food chain, also contributed favorably. The
company benefited from the growing number of people looking for better
food values as a result of the recession. Cafe de Coral offers an
attractively priced menu, which appeals to an increasing number of
consumers when economic conditions weaken. Additionally, the company
was a major beneficiary of the sharp downturn in retail rental rates.
Finally, our exposure to HSBC also helped performance. We did,
however, take profits in the stock late in the period.
Q. WHAT DETRACTED FROM PERFORMANCE?
A. Our overweighting in defensive stocks during the market's rally had
the most significant impact on performance. Additionally, we took
profits in certain stocks represented in the index that continued to
perform well after we sold them. Hang Seng Bank was one such holding.
We felt that the price of the stock had become overvalued, given its
current level of nonperforming assets. Our underweighting in China
Telecom also hindered investment results. This stock makes up roughly
10% of the index, a much greater percentage than we usually allocate
to any one security. During the period, China Telecom, our only
holding in mainland China, made up about 3.5% of the fund's total
investments.
Q. WHY DO YOU REMAIN UNDERWEIGHTED IN MAINLAND CHINA?
A. Simply put, we are not finding many companies in mainland China
that, in our judgment, meet our high-quality criteria for investment.
China is a volatile emerging market where identifying good companies
with long-term capital appreciation potential is difficult.
Q. WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS?
A. Our forecast remains mixed. The lingering economic and currency
crisis throughout Southeast Asia still poses a risk to equity prices.
However, we are encouraged by several factors: interest rates are
trending lower, currency devaluation worries have subsided and
residential property prices appear to be firming. Additionally,
investment funds around the world are beginning to increase their
investment in the region after having taken a substantially
underweighted stance for the past year or two. In our opinion, this
development should benefit the region's most liquid market, Hong Kong.
In light of this outlook, we have gradually increased our exposure to
the types of stocks likely to fare well in the current environment,
most notably property companies and banks.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Hong Kong and
Chinese issuers
FUND NUMBER: 352
TRADING SYMBOL: FHKCX
START DATE: November 1, 1995
SIZE: as of October 31, 1998, more than
$140 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; joined Fidelity in 1990
(checkmark)
HONG KONG AND CHINA
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
UNITED STATES 13.2%
ROW: 1, COL: 1, VALUE: 75.0
ROW: 1, COL: 2, VALUE: 1.1
ROW: 1, COL: 3, VALUE: 2.6
ROW: 1, COL: 4, VALUE: 3.2
ROW: 1, COL: 5, VALUE: 4.9
ROW: 1, COL: 6, VALUE: 13.2
UNITED KINGDOM 4.9%
TAIWAN 3.2%
SINGAPORE 2.6%
HONG KONG 75.8%
OTHER 0.3%
AS OF APRIL 30, 1998
CHINA (PEOPLES REPUBLIC) 4.1%
ROW: 1, COL: 1, VALUE: 4.1
ROW: 1, COL: 2, VALUE: 66.3
ROW: 1, COL: 3, VALUE: 6.0
ROW: 1, COL: 4, VALUE: 23.6
UNITED KINGDOM 23.6%
HONG KONG 66.3%
OTHER 6.0%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 86.8 96.2
Short-term investments 13.2 3.8
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Hutchison Whampoa Ltd. 10.2 7.7
(Electrical Equipment)
Johnson Electric Holdings Ltd. (Electrical Equipment) 7.8 2.4
CLP Holdings Ltd. 6.5 4.6
(Electric Utility)
Cheung Kong Holdings Ltd. 6.3 5.3
(Real Estate)
Sun Hung Kai Properties Ltd. 5.5 4.3
(Real Estate)
Hong Kong & China Gas Co. Ltd. (Gas) 4.9 4.4
HSBC Holdings PLC 4.9 23.6
(Banks)
Hong Kong Telecommunications Ltd. (Telephone Services) 4.6 4.0
Henderson Land Development Co. Ltd. (Real Estate) 3.9 2.0
China Telecom (Hong Kong) Ltd. (Cellular) 3.5 8.1
</TABLE>
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
UTILITIES 23.4 23.1
CONSTRUCTION & 19.0 18.1
REAL ESTATE
INDUSTRIAL MACHINERY 18.0 11.6
& EQUIPMENT
FINANCE 7.9 31.2
TECHNOLOGY 6.9 3.2
MEDIA & LEISURE 3.2 1.0
RETAIL & WHOLESALE 2.7 0.1
DURABLES 1.8 1.4
TRANSPORTATION 1.8 3.2
NONDURABLES 1.1 0.1
HONG KONG AND CHINA
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 86.8%
SHARES VALUE (NOTE 1)
CONSTRUCTION & REAL ESTATE - 19.0%
CONSTRUCTION - 0.2%
Cheung Kong Infrastructure Holdings Ltd. 110,000 $ 279,811
REAL ESTATE - 18.8%
Cheung Kong Holdings Ltd. 1,323,000 9,054,038
Henderson Investment Ltd. 566,000 380,037
Henderson Land Development Co. Ltd. 1,120,000 5,509,975
HKR International Ltd. 1,828,000 1,032,668
Hopson Development Holdings Ltd. (a) 842,000 81,542
Hysan Development Ltd. 352,000 429,518
Kerry Properties Ltd. 166,000 102,350
Lai Sun Development Co. Ltd. 2,696,000 417,742
New World Development Co. Ltd. 519,188 1,206,712
Sino Land Co. Ltd. 2,194,000 814,481
Sun Hung Kai Properties Ltd. 1,115,000 7,774,550
26,803,613
TOTAL CONSTRUCTION & REAL ESTATE 27,083,424
DURABLES - 1.8%
TEXTILES & APPAREL - 1.8%
Glorious Sun Enterprises 10,848,000 1,905,001
Yue Yuen Industrial Holdings Ltd. 356,000 634,360
2,539,361
FINANCE - 7.9%
BANKS - 6.9%
Hang Seng Bank Ltd. 6,000 51,908
HSBC Holdings PLC 304,676 6,938,448
Liu Chong Hing Bank Ltd. 2,877,000 2,879,043
9,869,399
INSURANCE - 1.0%
National Mutual Asia Ltd. 2,086,000 1,427,568
TOTAL FINANCE 11,296,967
HEALTH - 0.8%
MEDICAL EQUIPMENT & SUPPLIES - 0.8%
Medison Co. Ltd. 45,621 504,787
Quality Healthcare Asia Ltd. (a) 1,462,000 118,931
Sa Sa International Holdings Ltd. 6,898,000 534,418
1,158,136
HOLDING COMPANIES - 0.2%
First Pacific Co. Ltd. 534,000 253,399
INDUSTRIAL MACHINERY & EQUIPMENT - 18.0%
ELECTRICAL EQUIPMENT - 18.0%
Hutchison Whampoa Ltd. 2,022,000 14,490,414
Johnson Electric Holdings Ltd. 4,810,080 11,179,733
25,670,147
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - 3.2%
BROADCASTING - 0.4%
Television Broadcasts Ltd. 222,000 $ 590,509
PUBLISHING - 1.4%
Singapore Press Holdings 171,000 1,485,125
South China Morning Post Holdings 757,000 405,649
1,890,774
RESTAURANTS - 1.4%
Cafe de Coral Holdings Ltd. 5,882,000 2,012,693
TOTAL MEDIA & LEISURE 4,493,976
NONDURABLES - 1.1%
BEVERAGES - 1.1%
Vitasoy International Holdings Ltd. 4,035,000 1,589,095
RETAIL & WHOLESALE - 2.7%
APPAREL STORES - 0.2%
Goldlion Holdings Ltd. 2,331,000 240,790
GROCERY STORES - 0.8%
Dairy Farm International Holdings Ltd. 914,000 1,124,220
Four Seas Mercantile Holdings Ltd. 268,000 78,727
1,202,947
TRADING COMPANIES - 1.7%
Li & Fung Ltd. 1,506,000 2,352,973
TOTAL RETAIL & WHOLESALE 3,796,710
TECHNOLOGY - 6.9%
COMMUNICATIONS EQUIPMENT - 1.3%
Datacraft Asia Ltd. 409,000 1,316,980
Singapore Telecommunications Ltd. 310,000 536,557
1,853,537
COMPUTERS & OFFICE EQUIPMENT - 0.9%
Compal Electronics, Inc. (a) 180,000 560,678
Computer & Technologies Holdings Ltd. (a) 1,075,000 56,911
Hon Hai Precision Industry Co. (a) 123,000 591,766
1,209,355
ELECTRONICS - 4.7%
Elec & Eltek International Co. Ltd. 70,000 350,000
Elec & Eltek International Holdings Ltd. 876,000 168,538
Phoenixtec Power Co. Ltd. (a) 942,000 1,990,039
Taiwan Semiconductor Manufacturing Co. Ltd. (a) 689,000 1,391,812
Varitronix International Ltd. 1,476,000 2,801,627
6,702,016
TOTAL TECHNOLOGY 9,764,908
TRANSPORTATION - 1.8%
AIR TRANSPORTATION - 1.6%
Cathay Pacific Airways Ltd. 292,000 311,059
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TRANSPORTATION - CONTINUED
AIR TRANSPORTATION - CONTINUED
Swire Pacific Ltd.:
Class A 212,000 $ 1,125,082
Class B 998,000 824,740
2,260,881
SHIPPING - 0.2%
Shun Tak Holdings Ltd. 2,446,000 268,461
TOTAL TRANSPORTATION 2,529,342
UTILITIES - 23.4%
CELLULAR - 4.8%
China Telecom (Hong Kong) Ltd. 2,644,000 5,040,141
Smartone Telecommunications 636,000 1,806,702
Holdings Ltd.
6,846,843
ELECTRIC UTILITY - 9.1%
CLP Holdings Ltd. 1,644,000 9,234,166
Hong Kong Electric Holdings Ltd. 992,000 3,637,782
12,871,948
GAS - 4.9%
Hong Kong & China Gas Co. Ltd. 4,902,000 6,962,619
TELEPHONE SERVICES - 4.6%
Hong Kong Telecommunications Ltd. 3,261,708 6,543,800
TOTAL UTILITIES 33,225,210
TOTAL COMMON STOCKS 123,400,675
(Cost $115,620,330)
</TABLE>
CASH EQUIVALENTS - 13.2%
Taxable Central Cash Fund (b) 18,805,502 18,805,502
(Cost $18,805,502)
TOTAL INVESTMENT IN SECURITIES - 100% $ 142,206,177
(Cost $134,425,832)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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 $155,819,895 and $175,807,801, respectively (see Note 3 of
Notes to Financial Statements).
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $33,499,819; collateral
consisted of U.S. Treasury obligations valued at $35,252,309 (see Note
5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $141,738,877. Net unrealized appreciation
aggregated $467,300, of which $13,315,202 related to appreciated
investment securities and $12,847,902 related to depreciated
investment securities.
At October 31, 1998, the fund had a capital loss carryforward of
approximately $55,966,000 all of which will expire on October 31,
2006.
HONG KONG AND CHINA
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 142,206,177
SECURITIES, AT
VALUE
(COST
$134,425,83
2) -
SEE
ACCOMPANYIN
G SCHEDULE
CASH 3,132
FOREIGN 105,086
CURRENCY HELD
AT VALUE
(COST
$102,165)
RECEIVABLE FOR 253,754
INVESTMENTS
SOLD
RECEIVABLE FOR 679,061
FUND SHARES
SOLD
DIVIDENDS 237,470
RECEIVABLE
INTEREST 255,964
RECEIVABLE
TOTAL ASSETS 143,740,644
LIABILITIES
PAYABLE FOR $ 2,506,162
INVESTMENTS
PURCHASED
PAYABLE FOR 210,853
FUND SHARES
REDEEMED
ACCRUED 77,126
MANAGEMENT
FEE
OTHER PAYABLES 122,684
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 2,916,825
NET ASSETS $ 140,823,819
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 192,430,338
UNDISTRIBUTED 3,798,587
NET INVESTMENT
INCOME
ACCUMULATED (63,188,201)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 7,783,095
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 140,823,819
13,743,373
SHARES
OUTSTANDING
NET ASSET $10.25
VALUE AND
REDEMPTION
PRICE PER
SHARE
($140,823,8
19 (DIVIDED BY)
13,743,373
SHARES)
MAXIMUM $10.57
OFFERING PRICE
PER SHARE
(100/97.00
OF $10.25)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 6,325,805
DIVIDENDS
INTEREST (INCLUDING INCOME ON SECURITIES LOANED OF $199,768) 801,176
7,126,981
LESS FOREIGN TAXES WITHHELD (219,794)
TOTAL INCOME 6,907,187
EXPENSES
MANAGEMENT FEE $ 1,146,603
TRANSFER AGENT FEES 640,524
ACCOUNTING FEES 117,732
NON-INTERESTED TRUSTEES' COMPENSATION 598
CUSTODIAN FEES AND EXPENSES 173,127
REGISTRATION FEES 41,504
AUDIT 29,940
LEGAL 743
REPORT TO SHAREHOLDERS 18,431
MISCELLANEOUS 447
TOTAL EXPENSES BEFORE REDUCTIONS 2,169,649
EXPENSE REDUCTIONS (3,674) 2,165,975
NET INVESTMENT INCOME 4,741,212
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (61,805,361)
FOREIGN CURRENCY TRANSACTIONS 26,352 (61,779,009)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 41,849,734
ASSETS AND LIABILITIES IN 2,642 41,852,376
FOREIGN CURRENCIES
NET GAIN (LOSS) (19,926,633)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (15,185,421)
OTHER INFORMATION $ 420,670
SALES CHARGES PAID TO FDC
SALES CHARGES - RETAINED BY FDC $ 420,487
EXPENSE REDUCTIONS $ 3,566
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 35
TRANSFER AGENT CREDITS 73
$ 3,674
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ 4,741,212 $ 2,557,197
NET INVESTMENT
INCOME
NET REALIZED GAIN (61,779,009) 3,355,483
(LOSS)
CHANGE IN NET 41,852,376 (45,265,803)
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (15,185,421) (39,353,123)
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO (968,977) (1,741,904)
SHAREHOLDERS
FROM NET INVESTMENT
INCOME
FROM NET REALIZED - (995,341)
GAIN
TOTAL DISTRIBUTIONS (968,977) (2,737,245)
SHARE TRANSACTIONS 103,918,242 371,658,055
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 960,768 2,718,651
DISTRIBUTIONS
COST OF SHARES (125,865,511) (266,116,227)
REDEEMED
NET INCREASE (20,986,501) 108,260,479
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION FEES 548,707 1,365,678
TOTAL INCREASE (36,592,192) 67,535,789
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 177,416,011 109,880,222
END OF PERIOD $ 140,823,819 $ 177,416,011
(INCLUDING
UNDISTRIBUTED NET
INVESTMENT INCOME
OF $3,798,587
AND $2,038,914,
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 10,103,475 26,276,084
ISSUED IN 81,433 197,576
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (12,481,967) (18,903,843)
NET INCREASE (2,297,059) 7,569,817
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED
OCTOBER 31,
SELECTED PER-SHARE 1998 1997 1996 E
DATA
NET ASSET VALUE, $ 11.06 $ 12.97 $ 10.00
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT .31 .17 .29
INCOME C
NET REALIZED AND (1.10) (1.95) 2.64
UNREALIZED GAIN
(LOSS)
TOTAL FROM INVESTMENT (.79) (1.78) 2.93
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT (.06) (.14) (.01)
INCOME
FROM NET REALIZED - (.08) -
GAIN
TOTAL DISTRIBUTIONS (.06) (.22) (.01)
REDEMPTION FEES .04 .09 .05
ADDED TO PAID IN
CAPITAL
NET ASSET VALUE, END OF $ 10.25 $ 11.06 $ 12.97
PERIOD
TOTAL RETURN A, B (6.85)% (13.36)% 29.83%
RATIOS AND
SUPPLEMENTAL DATA
NET ASSETS, END OF $ 140,824 $ 177,416 $ 109,880
PERIOD (000 OMITTED)
RATIO OF EXPENSES TO 1.41% 1.31% 1.62%
AVERAGE NET ASSETS
RATIO OF EXPENSES TO 1.40% D 1.31% 1.62%
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT 3.07% 1.18% 2.53%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 109% 174% 118%
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
E FOR THE PERIOD NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1996.
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). If Fidelity had not reimbursed certain fund
expenses, the life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1998 YEAR YEARS FUND
FIDELITY JAPAN -7.52% -18.23% 9.16%
FIDELITY JAPAN -10.29% -20.69% 5.88%
(INCL. 3.00% SALES CHARGE)
TOPIX -15.42% -38.37% -15.95%
Japanese Funds Average -13.24% -30.51% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on September 15, 1992. For example, if you had
invested $1,000 in a fund that had a 5% return over the past year, the
value of your investment would be $1,050. You can compare the fund's
returns to the performance of the Tokyo Stock Exchange Index (TOPIX) -
a market capitalization weighted index of over 1,300 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
tracked by Lipper Analytical Services, Inc. The past one year average
represents a peer group of 33 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
OCTOBER 31, 1998 YEAR YEARS FUND
FIDELITY JAPAN -7.52% -3.95% 1.44%
FIDELITY JAPAN -10.29% -4.53% 0.94%
(INCL. 3.00% SALES CHARGE)
TOPIX -15.42% -9.23% -2.80%
Japanese Funds Average -13.24% -7.37% 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
00350 TK001
1992/09/15 9700.00 10000.00
1992/09/30 9641.80 9815.42
1992/10/31 9544.80 9336.12
1992/11/30 9641.80 9576.86
1992/12/31 9661.20 9437.20
1993/01/31 9748.50 9388.21
1993/02/28 10301.40 9815.57
1993/03/31 11484.80 11253.41
1993/04/30 13036.80 13170.39
1993/05/31 13405.40 13966.69
1993/06/30 12610.00 13389.70
1993/07/31 13453.90 14330.57
1993/08/31 13686.70 14650.81
1993/09/30 13318.10 13889.46
1993/10/31 12949.50 13636.41
1993/11/30 11252.00 11429.98
1993/12/31 11637.09 11715.04
1994/01/31 13010.29 13586.06
1994/02/28 13621.71 14249.19
1994/03/31 13391.17 13845.83
1994/04/30 13701.90 14386.73
1994/05/31 14082.78 14648.69
1994/06/30 14934.77 15465.45
1994/07/31 14443.62 14910.88
1994/08/31 14393.51 14947.34
1994/09/30 14042.69 14552.59
1994/10/31 14303.30 14937.45
1994/11/30 13331.03 14052.07
1994/12/31 13552.55 14299.84
1995/01/31 12387.96 13546.80
1995/02/28 11810.82 12780.10
1995/03/31 12758.98 13884.10
1995/04/30 12913.57 14548.67
1995/05/31 12181.84 13609.31
1995/06/30 12016.94 12960.37
1995/07/31 12820.82 13960.65
1995/08/31 12769.29 13417.71
1995/09/30 12738.37 13428.96
1995/10/31 12449.80 12721.44
1995/11/30 12594.08 13464.74
1995/12/31 13263.98 14067.55
1996/01/31 13171.23 13932.57
1996/02/29 12810.51 13709.11
1996/03/31 13171.23 14169.24
1996/04/30 14016.33 15121.58
1996/05/31 13511.33 14389.30
1996/06/30 13748.37 14458.38
1996/07/31 13068.16 13756.75
1996/08/31 12573.47 13177.79
1996/09/30 12862.04 13557.37
1996/10/31 12037.55 12655.38
1996/11/30 12336.43 12756.39
1996/12/31 11779.52 11779.59
1997/01/31 10892.44 10516.37
1997/02/28 11181.26 10724.66
1997/03/31 10995.59 10331.19
1997/04/30 11542.28 10584.92
1997/05/31 12872.89 11901.06
1997/06/30 13574.29 12672.60
1997/07/31 13935.31 12178.72
1997/08/31 12295.26 11093.36
1997/09/30 12439.66 10753.27
1997/10/31 11449.44 9937.19
1997/11/30 11036.85 9188.53
1997/12/31 10515.02 8470.67
1998/01/31 11186.63 9376.43
1998/02/28 11008.24 9454.41
1998/03/31 10305.14 8817.25
1998/04/30 10777.37 8701.22
1998/05/31 10441.56 8293.03
1998/06/30 10462.55 8346.71
1998/07/31 10724.90 8236.34
1998/08/31 9633.52 7389.77
1998/09/30 9738.46 7235.42
1998/10/30 10588.47 8404.64
IMATRL PRASUN SHR__CHT 19981031 19981203 110125 R00000000000077
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Japan Fund on September 15, 1992, when the fund
started, and the current 3.00% sales charge was paid. As the chart
shows, by October 31, 1998, the value of the investment would have
grown to $10,588 - a 5.88% 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 would have been $8,405 - a 15.95% 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
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 12 months that ended October 31, 1998, the fund returned
- -7.52%. During the same period, the Tokyo Stock Exchange Index (TOPIX)
returned -15.42%, while the Japanese funds average monitored by Lipper
Analytical Services returned -13.24%.
Q. WHILE THE FUND HAD A NEGATIVE RETURN, IT PERFORMED BETTER THAN THE
INDEX AND THE AVERAGE. WHY WAS THAT?
A. Strong stock selection helped the fund to perform better than the
index. My emphasis was on buying stocks that were reasonably valued,
where the underlying companies had healthy balance sheets, progressive
managements, strong business franchises, strong cash flows and high
returns on capital. Fortunately, those criteria led me to underweight
some deeply troubled sectors, such as banking, and overweight export
companies, some of which did relatively well. Stock selection also
helped the fund do better than its peers, as did the fact that the yen
actually strengthened slightly against the U.S. dollar over the
period. Unlike many of its competitors, the fund does not use hedging
procedures to offset the effects of currency fluctuations, and a
strong yen helps the fund's relative performance. However, the fund's
performance was hurt by not owning more defensive issues in the
utilities and food sectors.
Q. CAN YOU DESCRIBE THE INVESTMENT CLIMATE DURING THE PERIOD?
A. The Japanese economy continued to sink lower, amid unfulfilled
promises by the government to help the ailing banking sector and get
the economy growing again. Even the formerly strong export companies
found it harder to operate profitably toward the end of the period, as
the yen, which had fallen for the first 10 months of the period,
suddenly surged upward against the U.S. dollar in September and
October. A weakening yen increases yen-denominated profits for
Japanese export companies, while a strengthening yen results in weaker
profits from export operations. Currency fluctuation is one reason
that foreign investments tend to be riskier than U.S. investments.
Q. WHAT STOCKS PERFORMED WELL FOR THE FUND?
A. Nidec was the fund's most positive contributor to performance. The
company makes spindle motors for computer hard disk drives. Although
operating in a difficult business environment, the company's sales and
earnings held up well because of its favorable competitive position
and its established relationships with customers. Benesse, another
helpful holding, is a correspondence company serving approximately 20%
of all Japanese children, helping to prepare them for their college
entrance exams. The company grew its number of members, cut costs,
eliminated unprofitable business lines and continued to generate
excellent cash flow and earnings growth.
Q. WHAT STOCKS WERE DISAPPOINTING?
A. Long-Term Credit Bank of Japan (LTCBJ), which I sold in December
1997, did poorly, as did the entire banking sector. In October 1998,
the Japanese government announced that it would nationalize LTCBJ, a
sign of the dire condition of the bank. Omron also hurt performance.
The company, which makes control sensing devices for robots and other
industrial applications, had many customers in Asia that were forced
by the generally poor economic conditions to cut their capital
spending budgets. Omron's business dropped off as a result. Toyota and
Canon, Inc. were examples of export companies that were hurt by the
sharp and sudden yen appreciation.
Q. WHAT'S YOUR OUTLOOK, SHIGEKI?
A. Japan has many serious problems to overcome. As I've mentioned in
previous reports, I believe the government must allow unprofitable
companies to fail so that capital can be reallocated more efficiently.
Beyond that, in order to be competitive with companies in the West,
Japanese firms have to be willing to use the various tools available
for enhancing shareholder value: buying back stock, using mergers and
acquisitions to enhance core competencies, cutting unnecessary costs
and dropping unprofitable lines of business. Though we are seeing some
of these initiatives in isolated cases, overall progress has been
agonizingly slow. However, I believe that the stagnant economy will
force the Japanese government and business sectors to act more
decisively in the months and years ahead.
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.
NOTE TO SHAREHOLDERS: Effective December 31, 1998, Brenda Reed will
become portfolio manager of Fidelity Japan Fund.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Japanese issuers
FUND NUMBER: 350
TRADING SYMBOL: FJPNX
START DATE: September 15, 1992
SIZE: as of October 31, 1998, more than
$265 million
MANAGER: Shigeki Makino, since 1994; manager,
Fidelity Pacific Basin Fund, since 1996; joined
Fidelity in 1990
(checkmark)
JAPAN
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
UNITED STATES 9.6%
ROW: 1, COL: 1, VALUE: 90.40000000000001
ROW: 1, COL: 2, VALUE: 9.6
JAPAN 90.4%
AS OF APRIL 30, 1998
UNITED STATES 10.2%
ROW: 1, COL: 1, VALUE: 89.90000000000001
ROW: 1, COL: 2, VALUE: 10.2
JAPAN 89.8%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks & equity futures 90.4 89.8
Bonds 1.1 1.6
Short-term investments 8.5 8.6
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Fuji Photo Film Co. Ltd. (Photographic Equipment) 3.5 1.1
Toyota Motor Corp. (Autos, Tires, & Accessories) 3.2 2.9
Takeda Chemical Industries Ltd. (Drugs & Pharmaceuticals) 2.5 1.9
Hoya Corp. (Medical Equipment & Supplies) 2.4 1.9
Ito-Yokado Co. Ltd. (General Merchandise Stores) 2.2 1.1
Orix Corp. (Leasing & Rental) 2.2 1.7
Acom Co. Ltd. (Credit & Other Finance) 2.0 1.6
Hirose Electric Co. Ltd. (Electronics) 2.0 1.6
Minebea Co. Ltd. (Electronics) 2.0 2.2
Sony Corp. (Consumer Electronics) 1.9 1.5
</TABLE>
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
TECHNOLOGY 25.5 26.6
DURABLES 15.8 14.4
FINANCE 11.0 12.3
HEALTH 8.6 7.5
INDUSTRIAL MACHINERY & EQUIPMENT 7.9 9.8
SERVICES 5.9 4.9
MEDIA & LEISURE 4.4 3.8
UTILITIES 3.8 0.0
RETAIL & WHOLESALE 3.7 2.4
BASIC INDUSTRIES 2.0 4.5
JAPAN
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 90.4%
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 2.0%
CHEMICALS & PLASTICS - 1.8%
Canon Chemicals, Inc. 60,000 $ 465,433
Shin-Etsu Chemical Co. Ltd. 210,000 4,194,576
4,660,009
IRON & STEEL - 0.2%
Sumitomo Special Metals Co. 40,000 575,463
TOTAL BASIC INDUSTRIES 5,235,472
CONSTRUCTION & REAL ESTATE - 1.1%
CONSTRUCTION - 0.7%
Okumura Corp. 190,000 826,087
Sumitomo Forestry Co. Ltd. 150,000 1,024,107
1,850,194
ENGINEERING - 0.4%
Hikari Tsushin, Inc. 25,000 947,051
TOTAL CONSTRUCTION & REAL ESTATE 2,797,245
DURABLES - 15.8%
AUTOS, TIRES, & ACCESSORIES - 9.2%
Bridgestone Corp. 215,000 4,747,955
Denso Corp. 150,000 2,834,697
Fuji Heavy Industries Ltd. 750,000 3,745,157
Honda Motor Co. Ltd. 150,000 4,520,017
Toyota Motor Corp. 350,000 8,437,366
24,285,192
CONSUMER DURABLES - 1.0%
Aderans Co. Ltd. 90,000 2,557,038
Heiwa Corp. 2,700 24,292
2,581,330
CONSUMER ELECTRONICS - 5.6%
Mabuchi Motors Co. Ltd. 51,400 3,363,237
Matsushita Electric Industrial Co. Ltd. 300,000 4,422,524
Sharp Corp. 250,000 1,894,103
Sony Corp. 75,700 4,983,947
14,663,811
TOTAL DURABLES 41,530,333
FINANCE - 9.9%
BANKS - 1.0%
Akita Bank Ltd. 300,000 1,275,936
Bank of Tokyo-Mitsubishi Ltd. 161,000 1,498,416
2,774,352
CREDIT & OTHER FINANCE - 8.1%
Acom Co. Ltd. 95,000 5,324,581
Credit Saison Co. Ltd. 95,000 2,245,157
Nichiei Co. Ltd. 50,000 4,055,101
SHARES VALUE (NOTE 1)
Shohkoh Fund & Co. Ltd. 14,000 $ 4,272,923
Takefuji Corp. 80,000 4,277,228
Takefuji Corp. (c) 20,000 1,069,307
21,244,297
SECURITIES INDUSTRY - 0.8%
Nomura Securities Co. Ltd. 270,000 2,045,631
TOTAL FINANCE 26,064,280
HEALTH - 8.6%
DRUGS & PHARMACEUTICALS - 4.3%
Banyu Pharmaceutical Co. Ltd. 200,000 3,407,663
Sankyo Co. Ltd. 64,000 1,449,161
Takeda Chemical Industries Ltd. 200,000 6,526,044
11,382,868
MEDICAL EQUIPMENT & SUPPLIES - 4.3%
Hoya Corp. 145,000 6,229,445
Kawasumi Laboratories, Inc. 45,000 755,489
Terumo Corp. 200,000 4,218,683
11,203,617
TOTAL HEALTH 22,586,485
INDUSTRIAL MACHINERY & EQUIPMENT - 7.9%
ELECTRICAL EQUIPMENT - 3.1%
Mirai Industry Co. Ltd. 80,000 550,323
Mitsubishi Electric Corp. 600,000 1,224,279
NGK Insulators Ltd. 300,000 3,344,813
Omron Corp. 310,000 3,042,617
8,162,032
INDUSTRIAL MACHINERY & EQUIPMENT - 4.8%
Daifuku Co. Ltd. 286,000 1,211,468
Disco Corp. 22,000 625,054
Fuji Machine Manufacturing Co. Ltd. 130,000 3,839,001
Komatsu Ltd. 600,000 3,254,413
Misumi Corp. 40,000 647,439
THK Co. Ltd. 250,000 2,582,867
Tsubaki Nakashima Co. Ltd. 100,000 522,600
12,682,842
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 20,844,874
MEDIA & LEISURE - 4.4%
ENTERTAINMENT - 1.8%
Aruze Corp. (a) 33,000 514,249
Avex, Inc. (a) 4,000 151,528
Sony Music Entertainment Ltd. 117,800 4,117,676
4,783,453
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - CONTINUED
LEISURE DURABLES & TOYS - 2.6%
Nintendo Co. Ltd. 35,000 $ 2,971,158
Shimano, Inc. 170,000 3,776,152
6,747,310
TOTAL MEDIA & LEISURE 11,530,763
NONDURABLES - 1.8%
FOODS - 0.1%
Q'Sai Co. Ltd. 20,000 313,388
HOUSEHOLD PRODUCTS - 1.7%
Kao Corp. 50,000 1,015,928
Unified-Charm Corp. 75,000 3,422,299
4,438,227
TOTAL NONDURABLES 4,751,615
RETAIL & WHOLESALE - 3.7%
APPAREL STORES - 0.5%
Charle Co. Ltd. (a) 70,000 512,269
World Co. Ltd. 25,000 798,536
1,310,805
GENERAL MERCHANDISE STORES - 2.5%
Ito-Yokado Co. Ltd. 100,000 5,854,499
Matsumotokiyoshi Co. Ltd. 20,000 757,641
6,612,140
RETAIL & WHOLESALE, MISCELLANEOUS - 0.7%
Paris Miki, Inc. 65,900 1,110,343
Senshukai Co. Ltd. 110,000 683,771
1,794,114
TOTAL RETAIL & WHOLESALE 9,717,059
SERVICES - 5.9%
LEASING & RENTAL - 2.2%
Orix Corp. (a) 80,000 5,751,184
PRINTING - 1.9%
Riso Kagaku Corp. 65,200 3,676,797
Toppan Forms Co. Ltd. 90,000 1,385,450
5,062,247
SERVICES - 1.8%
Benesse Corp. 80,000 3,684,890
Nippon System Development Co. 40,000 1,022,815
4,707,705
TOTAL SERVICES 15,521,136
SHARES VALUE (NOTE 1)
TECHNOLOGY - 25.5%
COMMUNICATIONS EQUIPMENT - 0.7%
Matsushita Communication 40,000 $ 1,856,220
Industrial Co. Ltd.
COMPUTER SERVICES & SOFTWARE - 2.3%
Daitec Co. Ltd. 60,000 1,069,307
Konami Co. Ltd. 150,000 4,377,960
Square Co. Ltd. 30,000 568,231
6,015,498
COMPUTERS & OFFICE EQUIPMENT - 2.6%
Canon, Inc. 240,000 4,556,178
Nidec Corp. 26,000 2,375,032
6,931,210
ELECTRONIC INSTRUMENTS - 0.9%
Tokyo Seimitsu Co. Ltd. 75,000 2,356,866
ELECTRONICS - 15.1%
Aiwa Co. Ltd. 200,000 4,959,105
Futaba Corp. 40,000 1,246,664
Hirose Electric Co. Ltd. 91,000 5,288,420
Hitachi Maxell Ltd. 131,000 1,872,234
Hosiden Corp. (a) 100,000 1,647,008
Koa Denko Co. Ltd. 100,000 774,860
Minebea Co. Ltd. 550,000 5,185,106
Nichicon Corp. 290,000 3,158,416
Nitto Denko Corp. 145,000 1,760,224
Rohm Co. Ltd. 45,000 3,990,530
Shinko Electric Industries Co.Ltd. 30,000 1,058,976
TDK Corp. 75,000 4,959,105
Tokyo Electron Ltd. 100,000 3,263,022
Wako Electric Co. Ltd. 60,000 367,284
39,530,954
PHOTOGRAPHIC EQUIPMENT - 3.9%
Fuji Photo Film Co. Ltd. 250,000 9,190,700
Noritsu Koki Co. Ltd. 45,000 949,204
10,139,904
TOTAL TECHNOLOGY 66,830,652
UTILITIES - 3.8%
CELLULAR - 2.9%
Ntt Mobile Communication 90 3,262,161
Network, Inc. (a)
Ntt Mobile Communication 118 4,277,056
Network, Inc. (a)(c)
7,539,217
ELECTRIC UTILITY - 0.4%
Kyushu Electric Power Co., Inc. 58,300 1,121,830
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - CONTINUED
TELEPHONE SERVICES - 0.5%
DDI Corp. 400 $ 1,170,900
TOTAL UTILITIES 9,831,947
TOTAL COMMON STOCKS 237,241,861
(Cost $234,052,665)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
NONCONVERTIBLE BONDS - 1.1%
MOODY'S RATINGS (UNAUDITED) PRINCIPAL
AMOUNT
FINANCE - 1.1%
CREDIT & OTHER FINANCE - 1.1%
SB Treasury Co. LLC 9.4% 12/29/49 (c)(d) Baa1 $ 3,314,000 2,982,600
(Cost $2,811,746)
</TABLE>
CASH EQUIVALENTS - 8.5%
SHARES
Taxable Central Cash Fund (b) 22,382,238 22,382,238
(Cost $22,382,238)
TOTAL INVESTMENT IN SECURITIES - 100% $ 262,606,699
(Cost $259,246,649)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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
$8,328,963 or 3.1% of net assets.
(d) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $151,170,884 and $135,958,305, respectively (see Note 3 of
Notes to Financial Statements).
The market value of futures contracts opened and closed during the
period amounted to $16,479,212 and $15,909,555, respectively (see Note
3 of Notes to Financial Statements).
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $260,276,000. Net unrealized appreciation
aggregated $2,330,699, of which $28,858,925 related to appreciated
investment securities and $26,528,226 related to depreciated
investment securities.
At October 31, 1998, the fund had a capital loss carryforward of
approximately $86,198,000 of which $31,995,000, $20,273,000 and
$33,930,000 will expire on October 31, 2003, 2005 and 2006,
respectively.
JAPAN
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 262,606,699
SECURITIES, AT
VALUE
(COST
$259,246,64
9) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 4,115,093
INVESTMENTS
SOLD
RECEIVABLE FOR 365,964
FUND SHARES
SOLD
DIVIDENDS 578,694
RECEIVABLE
INTEREST 209,993
RECEIVABLE
REDEMPTION FEES 1,757
RECEIVABLE
TOTAL ASSETS 267,878,200
LIABILITIES
PAYABLE FOR $ 1,749,153
INVESTMENTS
PURCHASED
PAYABLE FOR 384,610
FUND SHARES
REDEEMED
ACCRUED 207,942
MANAGEMENT
FEE
OTHER PAYABLES 141,980
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 2,483,685
NET ASSETS $ 265,394,515
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 353,907,990
DISTRIBUTIONS IN (4,689,993)
EXCESS OF
NET INVESTMENT
INCOME
ACCUMULATED (87,259,946)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 3,436,464
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 265,394,515
26,312,845
SHARES
OUTSTANDING
NET ASSET $10.09
VALUE AND
REDEMPTION
PRICE PER
SHARE
($265,394,5
15 (DIVIDED BY)
26,312,845
SHARES)
MAXIMUM $10.40
OFFERING PRICE
PER SHARE
(100/97.00
OF $10.09)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 1,587,426
DIVIDENDS
INTEREST 1,288,945
2,876,371
LESS FOREIGN TAXES WITHHELD (236,425)
TOTAL INCOME 2,639,946
EXPENSES
MANAGEMENT FEE $ 1,766,681
BASIC FEE
PERFORMANCE ADJUSTMENT 632,472
TRANSFER AGENT FEES 773,076
ACCOUNTING FEES AND EXPENSES 180,786
NON-INTERESTED TRUSTEES' COMPENSATION 887
CUSTODIAN FEES AND EXPENSES 91,396
REGISTRATION FEES 32,915
AUDIT 52,576
LEGAL 942
REPORTS TO SHAREHOLDERS 23,591
MISCELLANEOUS 771
TOTAL EXPENSES BEFORE REDUCTIONS 3,556,093
EXPENSE REDUCTIONS (30,124) 3,525,969
NET INVESTMENT INCOME (LOSS) (886,023)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (32,963,771)
FOREIGN CURRENCY TRANSACTIONS (153,627)
FUTURES CONTRACTS (569,657) (33,687,055)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 15,062,857
ASSETS AND LIABILITIES IN 77,897 15,140,754
FOREIGN CURRENCIES
NET GAIN (LOSS) (18,546,301)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (19,432,324)
OTHER INFORMATION $ 397,863
SALES CHARGES PAID TO FDC
SALES CHARGES - RETAINED BY FDC $ 396,298
EXPENSE REDUCTIONS $ 28,135
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 1,702
TRANSFER AGENT CREDITS 287
$ 30,124
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ (886,023) $ (1,581,245)
NET INVESTMENT
INCOME (LOSS)
NET REALIZED GAIN (33,687,055) (19,143,235)
(LOSS)
CHANGE IN NET 15,140,754 9,840,199
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (19,432,324) (10,884,281)
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO (3,904,278) (234,962)
SHAREHOLDERS IN
EXCESS OF NET
INVESTMENT INCOME
SHARE TRANSACTIONS 166,701,599 233,528,383
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 3,837,897 230,693
DISTRIBUTIONS
COST OF SHARES (137,739,104) (258,476,937)
REDEEMED
NET INCREASE 32,800,392 (24,717,861)
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION FEES 375,918 897,125
TOTAL INCREASE 9,839,708 (34,939,979)
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 255,554,807 290,494,786
END OF PERIOD $ 265,394,515 $ 255,554,807
(INCLUDING
DISTRIBUTIONS IN
EXCESS OF NET
INVESTMENT INCOME
OF $4,689,993
AND $1,145,317,
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 16,601,342 19,572,662
ISSUED IN 370,453 19,451
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (13,676,838) (21,440,377)
NET INCREASE 3,294,957 (1,848,264)
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED
OCTOBER 31,
SELECTED PER-SHARE 1998 1997 1996 1995 1994
DATA
NET ASSET VALUE, $ 11.10 $ 11.68 $ 12.08 $ 14.27 $ 13.35
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT (.04) C (.06) C (.02) C (.02) (.04) C
INCOME (LOSS)
NET REALIZED AND (.81) (.55) (.40) (1.89) 1.31
UNREALIZED GAIN
(LOSS)
TOTAL FROM INVESTMENT (.85) (.61) (.42) (1.91) 1.27
OPERATIONS
LESS DISTRIBUTIONS
IN EXCESS OF NET (.18) (.01) - - -
INVESTMENT INCOME
FROM NET REALIZED - - - (.36) (.39)
GAIN
TOTAL DISTRIBUTIONS (.18) (.01) - (.36) (.39)
REDEMPTION FEES .02 .04 .02 .08 .04
ADDED TO PAID IN
CAPITAL
NET ASSET VALUE, END OF $ 10.09 $ 11.10 $ 11.68 $ 12.08 $ 14.27
PERIOD
TOTAL RETURN A, B (7.52)% (4.89)% (3.31)% (12.96)% 10.45%
RATIOS AND
SUPPLEMENTAL DATA
NET ASSETS, END OF $ 265,395 $ 255,555 $ 290,495 $ 343,981 $ 469,639
PERIOD (000 OMITTED)
RATIO OF EXPENSES TO 1.49% 1.42% 1.15% 1.15% 1.42%
AVERAGE NET ASSETS
RATIO OF EXPENSES TO 1.48% D 1.40% D 1.14% D 1.15% 1.42%
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT (.37)% (.54)% (.12)% (.06)% (.32)%
INCOME (LOSS) TO
AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 62% 70% 83% 86% 153%
A THE TOTAL RETURNS WOULD HAVE
BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE
NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE FUND'S
EXPENSES (SEE NOTE 7 OF NOTES
TO FINANCIAL STATEMENTS).
</TABLE>
JAPAN SMALL COMPANIES
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. 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 1 LIFE OF
OCTOBER 31, 1998 YEAR FUND
FIDELITY JAPAN SMALL COMPANIES -6.94% -39.50%
FIDELITY JAPAN SMALL COMPANIES -9.74% -41.32%
(INCL. 3.00% SALES CHARGE)
TOPIX Second Section -20.61% -48.48%
TOPIX -15.42% -33.19%
Japanese Funds Average -13.24% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on November 1, 1995. For example, if you had invested $1,000
in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Tokyo Stock Exchange Second Section Stock Price
Index (TOPIX Second Section) and the Tokyo Stock Exchange Index
(TOPIX), a market capitalization weighted index of over 1,300 stocks
traded in the Japanese market. The Second Section Index reflects the
performance of the smaller, less established and newly listed
companies which comprise the second section of the Tokyo Stock
Exchange, while the TOPIX reflects the performance of the larger
company stocks listed in the first section. 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 tracked by Lipper
Analytical Services, Inc. the past one year average represents a peer
group of 33 mutual funds. These benchmarks include reinvested
dividends and capital gains, if any, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1998 YEAR FUND
FIDELITY JAPAN SMALL COMPANIES -6.94% -15.43%
FIDELITY JAPAN SMALL COMPANIES -9.74% -16.28%
(INCL. 3.00% SALES CHARGE)
TOPIX Second Section -20.61% -19.84%
TOPIX -15.42% -12.58%
Japanese Funds Average -13.24% 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 2nd Section Index
00360 EX005
1995/11/01 9700.00 10000.00
1995/11/30 9661.20 10335.33
1995/12/31 10262.60 10975.96
1996/01/31 10107.40 10804.92
1996/02/29 9894.00 10597.01
1996/03/31 10272.30 10646.28
1996/04/30 11028.90 11708.81
1996/05/31 10602.10 11395.42
1996/06/30 10679.70 11315.66
1996/07/31 10185.00 10994.68
1996/08/31 9709.70 10749.69
1996/09/30 9632.10 10480.50
1996/10/31 8856.10 9863.12
1996/11/30 8477.80 9534.70
1996/12/31 7738.69 8704.07
1997/01/31 7036.95 7918.69
1997/02/28 7027.20 7943.57
1997/03/31 6637.34 7373.48
1997/04/30 6666.58 7289.86
1997/05/31 7748.44 8537.79
1997/06/30 8099.31 8954.32
1997/07/31 7797.17 8282.33
1997/08/31 6773.79 7335.82
1997/09/30 6471.65 6623.67
1997/10/31 6305.96 6488.83
1997/11/30 5643.20 5546.61
1997/12/31 5389.64 5109.59
1998/01/31 5946.18 5889.51
1998/02/28 5985.23 6039.62
1998/03/31 5467.75 5636.64
1998/04/30 5887.60 5528.93
1998/05/31 5770.43 5257.19
1998/06/30 5721.61 5270.87
1998/07/31 5926.65 5282.13
1998/08/31 5311.53 4839.95
1998/09/30 5243.18 4632.10
1998/10/30 5868.07 5151.68
IMATRL PRASUN SHR__CHT 19981031 19981112 164804 R00000000000039
$10,000 OVER LIFE OF FUND: 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 3.00% sales charge was paid. As
the chart shows, by October 31, 1998, the value of the investment
would have been $5,868 - a 41.32% decrease on the initial investment.
For comparison, look at how the Tokyo Stock Exchange Second Section
Stock Price Index did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 would have been $5,152 - a
48.48% decrease. Going forward, the fund will compare its performance
to that of the Tokyo Stock Exchange Second Section Stock Price Index
rather than the Tokyo Stock Exchange Index. The Second Section Index
provides a better indication of the performance of Japanese
small-capitalization stocks than the TOPIX, which generally includes
larger companies.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the potential
for significant growth over time; however, investing
in foreign markets means assuming greater risks than
investing in the United States. Factors like changes in
a country's financial markets, its local political and
economic climate, and the fluctuating value of its
currency create these risks. For these reasons an
international fund's performance may be more
volatile than a fund that invests exclusively in the
United States. Past performance is no guarantee
of future results and you may have a gain or loss
when you sell your shares.
(checkmark)
JAPAN SMALL COMPANIES
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Kenichi Mizushita, Portfolio Manager of Fidelity
Japan Small Companies Fund
Q. HOW DID THE FUND PERFORM, KENICHI?
A. For the 12 months that ended October 31, 1998, the fund had a total
return of -6.94%. During the same period, the Japanese funds average -
which comprises mainly large-cap-oriented funds - had a total return
of -13.24%, according to Lipper Analytical Services, and the Tokyo
Stock Exchange Second Section Stock Price Index's total return was
- -20.61%.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE DURING THE PAST YEAR?
A. It was a challenging one. Japan's weak economy, whose Gross
Domestic Product (GDP) growth rate was negative over the last several
quarters, was a primary factor in the stock market's continuing
decline, with small-cap stocks faring worse than large-cap stocks. The
banking system's problems in Japan, namely bad debt associated with
the troubled economy and an increasing credit crunch, also hurt the
small-cap market, spurring investors' flight to large, globally
competitive companies. Liquidity was also an issue, with trading
volumes declining throughout the period for large-caps, and to a
greater degree, for small-cap stocks. In this environment, small-cap
stocks significantly underperformed large-cap stocks over the past
year.
Q. IT'S INTERESTING THAT THE FUND, WHICH INVESTS IN SMALL-CAP STOCKS,
OUTPERFORMED ITS PEER GROUP - ALL LARGE-CAP FUNDS - AND THE INDEX OVER
THE PAST YEAR . . .
A. It all boiled down to stock picking. I continued to visit many
companies over the last year, meeting with management to discuss their
progress and competitive strategies. Using Fidelity's strong research
capabilities to round out my own knowledge, I successfully identified
companies that had strong potential for earnings growth at attractive
valuations, and I was able to discover companies with a competitive
edge and growing businesses.
Q. WHICH STOCKS PERFORMED WELL?
A. Retailing companies generally helped the fund's performance. Don
Quijote, a discount-store operator, is a well-managed company with a
unique store operation. Two other retailer holdings, Ryohin Keikaku
and Yamada Denki, also contributed to the fund's performance. Ryohin
Keikaku is a full-line retailer that has established a strong brand
identity, promoting its high-quality product line at reasonable
prices. Yamada Denki is one of Japan's leading retailers for consumer
electronics and appliances. This company has developed large-scale
stores that have been generating good economies of scale. Even within
the current environment of low consumer consumption, these retailers
have all been doing well.
Q. WHAT ABOUT DISAPPOINTMENTS?
A. The technology sector performed very poorly during the period.
Semiconductor-related companies, such as Mimasu Semiconductor and
Towa, were disappointments and I've sold Towa from the fund's
portfolio. After showing some signs of recovery late last year,
pricing declined significantly again this year, hurting the entire
industry and lowering the earnings outlook for both companies.
Recently, however, semiconductor prices have stabilized, Japanese
manufacturers have been attempting to raise prices and capital
expenditures for 1999 are expected to increase - all good signs for
this industry.
Q. HAVE YOU FOUND ANY INTERESTING OPPORTUNITIES IN NEWLY LISTED
STOCKS?
A. With the decline in the stock market, the number of newly listed
companies has declined as well. However, the depressed equity markets
have enhanced opportunities to purchase their stocks at more
reasonable prices. Access Company is one example. This company is a
custom software development firm, specializing in large-scale systems
integration software for financial services. It's currently the only
company of its kind doing this kind of work for the financial industry
in Japan, and it has a strong competitive advantage in meeting
increased demand. Another example is Koha, a company that makes
switches for vending machines.
Q. WHAT'S YOUR OUTLOOK?
A. The negative dynamics, including declining industrial production,
lower household income and expenditures and an overdue turnaround of
the economy have all taken a toll on the Japanese stock market.
However, there are signs that things may be changing in Japan. The
government has changed its tight fiscal policy to an expanding fiscal
policy and is taking steps to try to stimulate the economy. Problems
in the banking system have led to the creation of stricter banking
standards. Although Japan's problems will take some time to resolve, I
think that the outlook for small-cap stocks is more positive now. With
fundamental valuations currently attractive, I believe small-cap
stocks can provide an excellent opportunity to add value over the long
term.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Japanese issuers
with small market capitalizations
FUND NUMBER: 360
TRADING SYMBOL: FJSCX
START DATE: November 1, 1995
SIZE: as of October 31, 1998, more than $99 million
MANAGER: Kenichi Mizushita, since 1996;
manager, several Fidelity Investments Japan, Ltd.,
and institutional funds; joined Fidelity in 1985
(checkmark)
JAPAN SMALL COMPANIES
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
UNITED STATES 3.7%
ROW: 1, COL: 1, VALUE: 96.3
ROW: 1, COL: 2, VALUE: 3.7
JAPAN 96.3%
AS OF APRIL 30, 1998
UNITED STATES 7.7%
ROW: 1, COL: 1, VALUE: 92.3
ROW: 1, COL: 2, VALUE: 7.7
JAPAN 92.3%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 96.3 92.3
Short-term investments 3.7 7.7
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Shohkoh Fund & Co. Ltd. 4.6 3.5
(Credit & Other Finance)
Union Tool Co. 3.9 4.1
(Industrial Machinery
& Equipment)
Sony Music Entertainment Ltd. (Entertainment) 3.9 4.1
Access Co. Ltd. 3.8 0.0
(Computer Services & Software)
Nippon System Development Co. (Services) 3.2 2.9
Rock Field Co. Ltd. 3.0 1.9
(Foods)
C. Uyemura & Co. Ltd. 3.0 3.7
(Chemicals & Plastics)
BellSystem24, Inc. 2.8 1.9
(Services)
Don Quijote Co. Ltd. 2.7 0.5
(Retail & Wholesale,
Miscellaneous)
Ryohin Keikaku Co. Ltd. 2.6 1.9
(General Merchandise Stores)
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
TECHNOLOGY 21.6 21.5
RETAIL & WHOLESALE 14.2 7.4
INDUSTRIAL MACHINERY & EQUIPMENT 9.8 13.3
FINANCE 7.7 8.2
SERVICES 7.6 9.6
CONSTRUCTION & 6.8 4.5
REAL ESTATE
MEDIA & LEISURE 6.8 8.2
NONDURABLES 6.6 5.0
DURABLES 6.3 4.6
BASIC INDUSTRIES 4.0 6.3
JAPAN SMALL COMPANIES
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 96.3%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.4%
Jamco Corp. 50,000 $ 396,040
BASIC INDUSTRIES - 4.0%
CHEMICALS & PLASTICS - 3.7%
C. Uyemura & Co. Ltd. 122,000 2,951,528
Canon Chemicals, Inc. 97,000 752,449
3,703,977
METALS & MINING - 0.3%
Toami Corp. 68,000 298,579
TOTAL BASIC INDUSTRIES 4,002,556
CONSTRUCTION & REAL ESTATE - 6.8%
BUILDING MATERIALS - 1.9%
Arc Land Sakamoto Co. Ltd. 131,000 812,053
Kondotec, Inc. 100,000 467,499
Mitani Sekisan Co. Ltd. 5,000 14,206
Nichiha Corp. 80,000 564,787
1,858,545
CONSTRUCTION - 0.8%
Geotop Corp. 70,000 294,705
Maeda Road Construction Co. Ltd. 30,000 193,198
Mitsui Home Co. Ltd. 60,000 290,314
778,217
ENGINEERING - 3.4%
Ataka Construction & 150,000 413,259
Engineering Co. Ltd.
Hikari Tsushin, Inc. 46,000 1,742,574
NEC System Integration 20,000 352,992
& Constuction Ltd.
Nippon Kokan Koji Corp. 130,000 339,130
Sawako Corp. 102,500 573,612
3,421,567
REAL ESTATE - 0.7%
Meiwa Estate Co. Ltd. 75,000 710,288
TOTAL CONSTRUCTION & REAL ESTATE 6,768,617
DURABLES - 6.3%
AUTOS, TIRES, & ACCESSORIES - 3.4%
FCC Co. Ltd. 40,000 344,382
Keihin Corp. 40,000 547,568
Koha Co. Ltd. (a) 100,000 1,868,274
Piolax, Inc. 50,000 335,773
Yachiyo Industry Co. Ltd. 80,000 334,051
3,430,048
CONSUMER DURABLES - 2.3%
Aderans Co. Ltd. 80,000 2,272,923
SHARES VALUE (NOTE 1)
HOME FURNISHINGS - 0.6%
Nitori Co. Ltd. 73,000 $ 634,783
TOTAL DURABLES 6,337,754
FINANCE - 7.7%
CREDIT & OTHER FINANCE - 7.7%
Acom Co. Ltd. 20,000 1,120,964
Aeon Credit Service Ltd. 20,000 1,205,338
Aiful Corp. 1,000 46,750
Jafco Co. Ltd. 35,000 747,310
Shohkoh Fund & Co. Ltd. 15,000 4,578,134
7,698,496
HEALTH - 3.1%
DRUGS & PHARMACEUTICALS - 0.2%
Jcr Pharmaceuticals Co. Ltd. 19,000 145,588
MEDICAL EQUIPMENT & SUPPLIES - 2.9%
Hogy Medical Co. 31,500 739,023
Japan Lifeline Co. Ltd. 120,000 2,190,271
2,929,294
TOTAL HEALTH 3,074,882
INDUSTRIAL MACHINERY & EQUIPMENT - 9.8%
ELECTRICAL EQUIPMENT - 0.7%
Hakuto Co. Ltd. 48,000 690,142
INDUSTRIAL MACHINERY & EQUIPMENT - 9.1%
Glory Ltd. 70,000 849,763
Iuchi Seieido Co. Ltd. 30,000 511,408
Misumi Corp. 48,000 776,926
THK Co. Ltd. 120,000 1,239,776
Union Tool Co. 105,000 3,878,175
Yushin Precision Equipment Co. Ltd. 117,600 1,822,471
9,078,519
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 9,768,661
MEDIA & LEISURE - 6.8%
ENTERTAINMENT - 4.9%
Aruze Corp. (a) 65,000 1,012,914
Sony Music Entertainment Ltd. 110,000 3,845,028
4,857,942
PUBLISHING - 0.8%
Asia Securities Printing Co. Ltd. 84,000 846,147
RESTAURANTS - 1.1%
Anrakutei Co. Ltd. 3,000 22,988
Saizeriya Co. Ltd. (a) 52,000 1,029,703
1,052,691
TOTAL MEDIA & LEISURE 6,756,780
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - 6.6%
FOODS - 6.2%
Ariake Japan 25,000 $ 746,879
Q'Sai Co. Ltd. 67,000 1,049,849
Rock Field Co. Ltd. 157,000 2,973,741
Yonekyu Corp. 90,000 1,396,298
6,166,767
HOUSEHOLD PRODUCTS - 0.4%
Comany, Inc. 76,000 425,312
TOTAL NONDURABLES 6,592,079
RETAIL & WHOLESALE - 14.2%
APPAREL STORES - 1.4%
Fast Retailing Co. Ltd. 40,000 464,916
Naigai Clothes Co. Ltd. 145,000 961,257
1,426,173
GENERAL MERCHANDISE STORES - 6.1%
Circle K Japan Co. Ltd. 28,000 1,106,500
Himaraya Co. Ltd. 61,000 367,628
Matsumotokiyoshi Co. Ltd. 52,500 1,988,808
Ryohin Keikaku Co. Ltd. 24,500 2,657,770
6,120,706
GROCERY STORES - 1.4%
C Two-Network Co. Ltd. (a) 70,000 1,368,059
RETAIL & WHOLESALE, MISCELLANEOUS - 5.3%
Don Quijote Co. Ltd. 37,500 2,744,296
Paris Miki, Inc. 40,000 673,956
Yamada Denki Co. Ltd. 105,000 1,898,407
5,316,659
TOTAL RETAIL & WHOLESALE 14,231,597
SERVICES - 7.6%
Aucnet, Inc. 37,300 738,614
BellSystem24, Inc. 14,700 2,834,955
Meitec Corp. 40,000 774,860
Nippon System Development Co. 125,000 3,196,298
7,544,727
TECHNOLOGY - 21.6%
COMPUTER SERVICES & SOFTWARE - 10.0%
Access Co. Ltd. (a) 112 3,751,012
Computer Engineering & Consulting Ltd. 80,000 1,226,001
Diamond Computer Service Co. Ltd. 51,000 748,644
Fuji Soft ABC, Inc. 61,400 2,325,958
Ines Corp. 80,000 571,675
Trans Cosmos, Inc. 50,000 1,061,128
Trend Micro, Inc. (a) 8,000 303,056
9,987,474
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT - 3.0%
Argotechnos 21Corp. 63,000 $ 781,059
Digicube Co. Ltd. (a) 75 519,802
Fujitsu Support & Service, Inc. (a) 1,000 50,366
Japan Business Computer Co. Ltd. 10,000 64,572
Toyo Information System Co. Ltd. 100,000 1,549,720
2,965,519
ELECTRONIC INSTRUMENTS - 4.9%
Cosel Co. Ltd. 100,000 688,765
Sony Chemicals Corp. 76,000 2,211,623
Tokyo Seimitsu Co. Ltd. 63,000 1,979,768
4,880,156
ELECTRONICS - 3.1%
Kyoden Co. Ltd. 38,000 719,759
Megachips Corp. (a) 1,000 28,412
Mimasu Semiconductor 147,000 1,645,286
Industries Co. Ltd.
Paltek Corp. (a) 48,000 706,672
3,100,129
PHOTOGRAPHIC EQUIPMENT - 0.6%
Noritsu Koki Co. Ltd. 31,000 653,896
TOTAL TECHNOLOGY 21,587,174
UTILITIES - 1.4%
CELLULAR - 1.4%
Ntt Mobile Communication Network, Inc. (a)(c) 40 1,449,849
TOTAL COMMON STOCKS 96,209,212
(Cost $98,735,378)
</TABLE>
CASH EQUIVALENTS - 3.7%
Taxable Central Cash Fund (b) 3,689,460 3,689,460
(Cost $3,689,460)
TOTAL INVESTMENT IN SECURITIES - 100% $ 99,898,672
(Cost $102,424,838)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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 $1,449,849 or 1.4% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $54,967,005 and $34,569,386, respectively (see Note 3 of
Notes to Financial Statements).
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $102,463,426. Net unrealized depreciation
aggregated $2,564,754, of which $14,804,890 related to appreciated
investment securities and $17,369,644 related to depreciated
investment securities.
At October 31, 1998, the fund had a capital loss carryforward of
approximately $53,802,000 of which $38,185,000 and $15,617,000 will
expire on October 31, 2005 and 2006, respectively.
JAPAN SMALL COMPANIES
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 99,898,672
SECURITIES, AT
VALUE
(COST
$102,424,83
8) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 119,444
INVESTMENTS
SOLD
RECEIVABLE FOR 54,290
FUND SHARES
SOLD
DIVIDENDS 201,249
RECEIVABLE
INTEREST 17,512
RECEIVABLE
REDEMPTION FEES 107
RECEIVABLE
TOTAL ASSETS 100,291,274
LIABILITIES
PAYABLE FOR $ 111,964
INVESTMENTS
PURCHASED
PAYABLE FOR 62,004
FUND SHARES
REDEEMED
ACCRUED 58,288
MANAGEMENT
FEE
OTHER PAYABLES 71,879
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 304,135
NET ASSETS $ 99,987,139
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 157,076,536
DISTRIBUTIONS IN (753,057)
EXCESS OF NET
INVESTMENT
INCOME
ACCUMULATED (53,840,851)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (2,495,489)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 99,987,139
16,637,346
SHARES
OUTSTANDING
NET ASSET $6.01
VALUE AND
REDEMPTION
PRICE PER
SHARE
($99,987,13
9 (DIVIDED BY)
16,637,346
SHARES)
MAXIMUM $6.20
OFFERING PRICE
PER SHARE
(100/97.00
OF $6.01)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 695,214
DIVIDENDS
INTEREST 389,929
1,085,143
LESS FOREIGN TAXES WITHHELD (103,657)
TOTAL INCOME 981,486
EXPENSES
MANAGEMENT FEE $ 703,099
TRANSFER AGENT FEES 272,094
ACCOUNTING FEES AND EXPENSES 72,061
NON-INTERESTED TRUSTEES' COMPENSATION 348
CUSTODIAN FEES AND EXPENSES 53,182
REGISTRATION FEES 27,451
AUDIT 32,819
LEGAL 340
REPORTS TO SHAREHOLDERS 7,570
MISCELLANEOUS 304
TOTAL EXPENSES BEFORE REDUCTIONS 1,169,268
EXPENSE REDUCTIONS (714) 1,168,554
NET INVESTMENT INCOME (LOSS) (187,068)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (15,457,114)
FOREIGN CURRENCY TRANSACTIONS (80,257) (15,537,371)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 8,634,347
ASSETS AND LIABILITIES IN 31,120 8,665,467
FOREIGN CURRENCIES
NET GAIN (LOSS) (6,871,904)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (7,058,972)
OTHER INFORMATION $ 128,795
SALES CHARGES PAID TO FDC
SALES CHARGES - RETAINED BY FDC $ 128,795
EXPENSE REDUCTIONS $ 637
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 77
$ 714
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ (187,068) $ (431,691)
NET INVESTMENT
INCOME (LOSS)
NET REALIZED GAIN (15,537,371) (38,200,071)
(LOSS)
CHANGE IN NET 8,665,467 7,160,981
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (7,058,972) (31,470,781)
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO
SHAREHOLDERS
IN EXCESS OF NET (141,696) (53,184)
INVESTMENT INCOME
FROM NET REALIZED - (359,714)
GAIN
TOTAL DISTRIBUTIONS (141,696) (412,898)
SHARE TRANSACTIONS 68,052,610 128,561,609
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 141,028 410,794
DISTRIBUTIONS
COST OF SHARES (45,513,438) (118,965,973)
REDEEMED
NET INCREASE 22,680,200 10,006,430
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION FEES 233,658 486,767
TOTAL INCREASE 15,713,190 (21,390,482)
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 84,273,949 105,664,431
END OF PERIOD $ 99,987,139 $ 84,273,949
(INCLUDING
DISTRIBUTIONS IN
EXCESS OF NET
INVESTMENT INCOME
OF $753,057 AND
$492,464,
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 11,458,260 16,940,710
ISSUED IN 25,139 49,197
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (7,861,499) (15,551,026)
NET INCREASE 3,621,900 1,438,881
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED
OCTOBER 31,
SELECTED PER-SHARE 1998 1997 1996 E
DATA
NET ASSET VALUE, $ 6.47 $ 9.13 $ 10.00
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT (.01) (.03) (.03)
INCOME (LOSS) C
NET REALIZED AND (.45) (2.63) (.87)
UNREALIZED GAIN
(LOSS)
TOTAL FROM INVESTMENT (.46) (2.66) (.90)
OPERATIONS
LESS DISTRIBUTIONS
IN EXCESS OF NET (.01) (.01) -
INVESTMENT INCOME
FROM NET REALIZED - (.03) -
GAIN
TOTAL DISTRIBUTIONS (.01) (.04) -
REDEMPTION FEES .01 .04 .03
ADDED TO PAID IN
CAPITAL
NET ASSET VALUE, END OF $ 6.01 $ 6.47 $ 9.13
PERIOD
TOTAL RETURN A, B (6.94)% (28.80)% (8.70)%
RATIOS AND
SUPPLEMENTAL DATA
NET ASSETS, END OF $ 99,987 $ 84,274 $ 105,664
PERIOD (000 OMITTED)
RATIO OF EXPENSES TO 1.23% 1.35% 1.34%
AVERAGE NET ASSETS
RATIO OF EXPENSES TO 1.23% 1.34% D 1.34%
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT (.20)% (.46)% (.32)%
INCOME (LOSS) TO
AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 39% 101% 66%
A THE TOTAL RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE ONE
TIME SALES CHARGE.
C NET INVESTMENT INCOME (LOSS) PER
SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING
THE PERIOD.
D FMR OR THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A
PORTION OF THE FUND'S EXPENSES.
E FOR THE PERIOD NOVEMBER 1, 1995
(COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1996.
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).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1998 YEAR YEARS FUND
FIDELITY LATIN AMERICA -30.01% -15.21% 12.60%
FIDELITY LATIN AMERICA -32.11% -17.75% 9.23%
(INCL. 3.00% SALES CHARGE)
MSCI EMF - Latin America -28.00% 10.62% 37.09%
Latin American Funds Average -32.34% -19.52% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on April 19, 1993. For example, if you had invested
$1,000 in a fund that had a 5% return over the past year, the value of
your investment would be $1,050. You can compare the fund's returns to
the performance of the Morgan Stanley Capital International (MSCI)
Emerging-Markets Free - Latin America Index - a market
capitalization-weighted index of approximately 190 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
funds average, which reflects the performance of mutual funds with
similar objectives tracked by Lipper Analytical Services, Inc. The
past one year average represents a peer group of 40 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
OCTOBER 31, 1998 YEAR YEARS FUND
FIDELITY LATIN AMERICA -30.01% -3.25% 2.17%
FIDELITY LATIN AMERICA -32.11% -3.83% 1.61%
(INCL. 3.00% SALES CHARGE)
MSCI EMF - Latin America -28.00% 2.04% 5.86%
Latin American Funds Average -32.34% -4.49% 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
Latin America MS Latin Amer. Fr (Gross)
00349 MS007
1993/04/19 9700.00 10000.00
1993/04/30 9641.80 9629.27
1993/05/31 9874.60 9880.87
1993/06/30 10379.00 10503.42
1993/07/31 10737.90 10785.19
1993/08/31 11746.70 11714.82
1993/09/30 11960.10 11920.39
1993/10/31 12881.60 12392.75
1993/11/30 13861.30 13204.75
1993/12/31 15722.24 14878.84
1994/01/31 16981.97 17327.50
1994/02/28 16093.32 16826.00
1994/03/31 14462.50 15684.24
1994/04/30 13437.14 14487.31
1994/05/31 14169.54 15343.10
1994/06/30 12851.22 14360.38
1994/07/31 14042.59 15721.44
1994/08/31 16132.38 18278.52
1994/09/30 16679.24 19062.61
1994/10/31 15829.65 18120.86
1994/11/30 15360.92 17604.02
1994/12/31 12079.76 14974.08
1995/01/31 10331.75 13338.86
1995/02/28 8710.70 11406.56
1995/03/31 8564.22 11013.06
1995/04/30 9618.88 12602.53
1995/05/31 9667.71 12888.85
1995/06/30 9804.43 13089.71
1995/07/31 10331.75 13494.70
1995/08/31 10527.06 13648.86
1995/09/30 10361.05 13532.50
1995/10/31 9521.23 12443.72
1995/11/30 9863.02 12667.34
1995/12/31 10090.87 13052.35
1996/01/31 11504.18 14390.58
1996/02/29 10901.30 13561.89
1996/03/31 11316.40 13731.96
1996/04/30 11800.68 14492.29
1996/05/31 12373.92 14958.43
1996/06/30 12709.95 15342.23
1996/07/31 12186.13 14737.59
1996/08/31 12561.70 15152.37
1996/09/30 12759.37 15498.77
1996/10/31 12443.10 15347.63
1996/11/30 12601.23 15494.03
1996/12/31 13190.77 15951.46
1997/01/31 14347.85 17521.55
1997/02/28 15122.60 18680.87
1997/03/31 15032.04 18395.98
1997/04/30 15766.54 19316.04
1997/05/31 16903.50 20684.98
1997/06/30 18352.37 22458.18
1997/07/31 19569.83 23720.20
1997/08/31 17436.77 21447.02
1997/09/30 19217.67 23503.38
1997/10/31 15605.55 19038.69
1997/11/30 16662.02 19689.74
1997/12/31 17528.97 20998.04
1998/01/31 15788.29 18665.66
1998/02/28 16541.56 19646.12
1998/03/31 17579.87 21039.04
1998/04/30 17579.87 20557.00
1998/05/31 15045.19 17898.10
1998/06/30 14261.37 16840.37
1998/07/31 14882.32 17673.60
1998/08/31 9120.76 11542.94
1998/09/30 9874.04 12724.85
1998/10/30 10922.52 13708.79
IMATRL PRASUN SHR__CHT 19981031 19981113 094640 R00000000000070
$10,000 OVER LIFE OF FUND: 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 3.00% sales charge was paid. As the
chart shows, by October 31, 1998, the value of the investment would
have grown to $10,923 - a 9.23% 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
would have grown to $13,709 - a 37.09% 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 DID THE FUND PERFORM, PATTI?
A. It was an extremely difficult year for the Latin American markets
and the fund's performance reflects that. For the 12-month period that
ended October 31, 1998, the fund provided a total return of -30.01%.
To get a sense of how the fund did relative to its competitors, the
Latin American funds average returned -32.34%, according to Lipper
Analytical Services. To gauge how the fund did relative to the Latin
American markets, the Morgan Stanley Capital International Emerging
Markets Free-Latin America Index returned -28.00%.
Q. AFTER POSTING VERY STRONG GAINS IN THE PREVIOUS YEAR, LATIN
AMERICAN STOCKS CAME UNDER SEVERE PRESSURE DURING THE PAST 12 MONTHS.
WHAT CAUSED THE ABOUT-FACE?
A. Protracted problems in Southeast Asian emerging markets cast a
continued pall over Latin American stocks during most of the year. As
the Asian turmoil grew, Latin American stocks languished as investors
became increasingly worried about the prospects and stability of all
emerging markets. The most severe Latin American market decline,
however, took place in August 1998 when Russia defaulted on its debt.
In response, investors hurriedly sold off emerging-market bonds and
equities. Venezuela, which suffered ongoing economic and political
challenges, took the biggest blow, followed by Brazil, which was
plagued by concerns about fiscal and current account deficits and
uncertainty over the upcoming presidential election. Argentina and
Mexico weathered the storm in better shape. Latin American markets
rebounded later in the period, thanks to a variety of factors
including interest-rate cuts in the United States, the resolution of
the Brazilian presidential election and talk of a potential bailout of
that country by the International Monetary Fund.
Q. HOW DID YOU ALTER YOUR STRATEGY IN RESPONSE TO THESE CHALLENGES?
A. Because I was concerned that Brazilian stock prices weren't yet
reflecting the possibility of worse things to come, and because I was
concerned that the country had drawn down its reserves in order to
defend its currency, I cut the fund's stake in Brazilian holdings in
mid-August. For example, I locked in some profits by selling some of
the fund's holdings in the country's telephone company, Telebras, well
before the stock had reached a September bottom.
Q. WHICH HOLDINGS WERE THE BIGGEST DETRACTORS FROM THE FUND'S
PERFORMANCE OVER THE PAST YEAR?
A. Among the stocks that suffered the most damage were three of the
biggest stocks in the Brazilian market: Telebras, electric company
Centrais Electricas Brasileiras and integrated oil company Petrobras.
Because they are perhaps the market's most liquid stocks and they had
posted better-than-average multi-year gains, they were the first and
hardest hit during the summer sell-off. The fund's holdings in Mexican
banks, such as Grupo Financiero Bancomer, stumbled on concerns about
the prospects for financial services companies in a slowing, global
economic environment.
Q. WHICH OF THE FUND'S HOLDINGS HELD UP RELATIVELY WELL AGAINST THE
DIFFICULT ENVIRONMENT?
A. The most notable came mainly out of Mexico, where the economy
remained relatively strong. One of the fund's best performers as well
as one of its largest holdings was phone company Telefonos de Mexico.
Lower phone rates have helped spur telephone usage, which was a plus
for "Telmex." Thanks to good consumer spending, retailers such as
Cifra also performed well. Grupo Modelo also performed well, thanks in
large part to increased international sales of Corona beer.
Q. WHAT'S YOUR OUTLOOK FOR THE LATIN AMERICAN MARKETS, PATTI?
A. The fortunes of Latin American markets depend mainly on how things
unfold for Brazil, since it's Latin America's largest and most
influential economy. The biggest near-term concerns are how well
Brazil's government handles the fiscal challenges it faces and what
role the International Monetary Fund plays in any bailout. I think
Mexico will continue to differentiate itself from the rest of the
region by posting decent economic growth. Given that outlook, I plan
to continue to emphasize Brazilian utilities. In Mexico, where the
economy has remained strong, I'll likely split between companies that
can benefit from continued economic strength, such as retailers, and
those that can withstand economic downturns, such as utilities.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
GOAL: high total investment return by investing
mainly in equity and debt securities of Latin
American issuers
FUND NUMBER: 349
TRADING SYMBOL: FLATX
START DATE: April 19, 1993
SIZE: as of October 31, 1998, more than
$332 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)
LATIN AMERICA
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
ARGENTINA 7.6%
UNITED STATES 9.7%
ROW: 1, COL: 1, VALUE: 7.6
ROW: 1, COL: 2, VALUE: 34.6
ROW: 1, COL: 3, VALUE: 3.1
ROW: 1, COL: 4, VALUE: 40.4
ROW: 1, COL: 5, VALUE: 1.5
ROW: 1, COL: 6, VALUE: 1.4
ROW: 1, COL: 7, VALUE: 1.7
ROW: 1, COL: 8, VALUE: 9.699999999999999
PERU 1.7%
PANAMA 1.4%
OTHER 1.5%
BRAZIL 34.6%
MEXICO 40.4%
CHILE 3.1%
AS OF APRIL 30, 1998
OTHER 9.4%
ARGENTINA 8.8%
ROW: 1, COL: 1, VALUE: 8.800000000000001
ROW: 1, COL: 2, VALUE: 42.0
ROW: 1, COL: 3, VALUE: 3.5
ROW: 1, COL: 4, VALUE: 36.3
ROW: 1, COL: 5, VALUE: 9.4
MEXICO 36.3%
BRAZIL 42.0%
CHILE 3.5%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 90.3 98.0
Short-term investments 9.7 2.0
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Telebras sponsored ADR 13.2 12.4
(Brazil, Telephone Services)
Telefonos de Mexico SA de CV 12.2 6.6
sponsored ADR representing
Class L shares
(Mexico, Telephone Services)
Centrais Electricas Brasileiras SA (Brazil, Electric Utility) 4.8 5.4
Telesp (Pfd. Reg.) 4.3 6.5
(Brazil, Telephone Services)
Cifra SA de CV Series C 4.0 2.5
(Mexico, General Merchandise
Stores)
Grupo Modelo SA de CV 3.7 2.3
Class C
(Mexico, Beverages)
Grupo Carso SA de CV 3.6 4.0
Class A-1
(Mexico, Tobacco)
YPF Sociedad Anonima 3.5 4.8
sponsored ADR representing
Class D shares
(Argentina, Oil & Gas)
Compania Cervejaria 3.2 2.4
Brahma PN (Pfd. Reg.)
(Brazil, Beverages)
Grupo Financiero Bancomer 3.1 4.7
SA de CV Class B
(Mexico, Banks)
</TABLE>
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
UTILITIES 40.1 40.7
NONDURABLES 19.1 16.0
FINANCE 7.0 9.8
ENERGY 6.7 11.3
RETAIL & WHOLESALE 6.1 5.6
BASIC INDUSTRIES 4.2 6.3
CONSTRUCTION & REAL ESTATE 2.2 3.2
PRECIOUS METALS 1.7 1.0
HOLDING COMPANIES 1.3 1.6
MEDIA & LEISURE 1.3 1.9
LATIN AMERICA
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C>
COMMON STOCKS - 90.3%
SHARES VALUE (NOTE 1)
ARGENTINA - 7.6%
Bansud SA Class B (a) 229,590 $ 769,365
Cresud S.A.C.I.F.y A. 104,500 1,449,938
sponsored ADR (a)
Disco SA sponsored ADR (a) 23,400 343,688
Inversiones y Representacions SA ADR 43,800 1,133,325
Perez Companc SA Class B 290,236 1,434,210
Telecom Argentina Stet-France Telecom SA sponsored ADR Class B 259,200 8,359,200
YPF Sociedad Anonima sponsored ADR representing Class D shares 401,300 11,612,619
25,102,345
BRAZIL - 34.6%
Aracruz Celulose SA ADR 187,750 1,572,406
Banco Bradesco SA (Reg. Pfd.) 65,324,483 372,360
Centrais Electricas Brasileiras SA 676,860,100 15,659,784
Companhia Brasileira de Distribuicao Grupo Pao de Acucar sponsored ADR 87,600 1,412,550
Companhia Brasileira de Petroleo Ipiranga SA Class B 321,249,000 1,723,453
Companhia de Electricidade do Estado do Rio de Janeiro (CERJ) (a) 2,008,714,550 656,690
Companhia de Tecidos Norte 10,053,310 1,162,963
de Minas
Companhia Paulista de Forca 80,306 4,712
e Luz (a)
Companhia Paulista de Forca e 196 0
Luz rights 1/22/99 (a)
Compania Cervejaria Brahma PN:
(Pfd. Reg.) 22,076,523 10,363,262
(Reg.) 117,827 44,446
warrants 4/30/03 (a) 1,895,770 79,457
Compania Cimento Portland Itau 6,044,000 810,629
Compania Energertica Minas Gerais 273,241,329 5,313,885
Dixie Toga SA 1,904,400 494,877
Encorpar Redito e Participa SA 11,465,310 15,377
Itausa Investimentos Itau SA 4,623,000 2,441,418
Klabin Industria de Papel e Celulose PN 4,047,165 746,365
Perdigao SA PN (a) 1,202,539,630 1,461,656
Petrobras PN (Pfd. Reg.) 59,246,000 7,449,516
Souza Cruz Industria Comerico 537,500 3,649,566
Telebras sponsored ADR 569,340 43,234,253
Telesp (Pfd. Reg.) 83,193,899 13,947,592
Votorantim Celulose e Papel SA 126,688,499 1,115,075
(Pfd. Reg.)
113,732,292
CHILE - 3.1%
Chilectra SA sponsored ADR 37,500 712,500
Cristalerias de Chile SA 124,700 1,434,050
sponsored ADR
SHARES VALUE (NOTE 1)
Embotelladora Andina sponsored ADR Class A 166,200 $ 2,212,538
Enersis SA sponsored ADR 163,200 3,406,800
Santa Isabel SA sponsored ADR 114,500 665,531
Supermercados Unimarc SA sponsored ADR 86,200 296,313
Vina Concha Stet y Toro SA 61,000 1,566,938
sponsored ADR
10,294,670
COLOMBIA - 0.9%
Banco Ganadero SA sponsored ADR Class C 79,800 573,563
Compania Nacional de Chocolates 136,000 294,616
Noel (Industria Alimenticias) 97,207 117,677
Suramericana de Inversiones SA 1,761,400 1,794,508
2,780,364
LUXEMBOURG - 0.6%
Quilmes Industrial SA sponsored ADR 201,300 1,849,444
MEXICO - 40.4%
Apasco SA de CV 1,283,000 4,728,187
BANACCI SA de CV Class B (a) 5,580,000 5,835,657
Cifra SA de CV:
Series C (a) 9,942,200 12,972,393
Series V (a) 821,572 1,121,069
Corporacion Geo SA de CV (a) 394,873 688,275
Elektra SA de CV unit 8,087,300 3,608,676
Fomento Economico Mexicano SA de CV sponsored ADR 300,120 7,821,878
Gruma SA de CV Class B (a) 1,420,145 3,394,769
Grupo Carso SA de CV Class A-1 3,398,100 11,845,966
Grupo Financiero Bancomer SA de CV Class B 49,437,700 10,143,592
Grupo Financiero Inbursa SA Class B 3,045,900 5,375,832
Grupo Modelo SA de CV Class C 5,735,200 12,167,307
Grupo Televisa SA de CV sponsored GDR (a) 152,400 4,133,850
Kimberly-Clark de Mexico SA de CV Class A 2,927,000 8,629,402
Telefonos de Mexico SA de CV sponsored ADR representing 759,400 40,105,813
Class L shares
132,572,666
PANAMA - 1.4%
Panamerican Beverages, Inc. Class A 227,000 4,596,750
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PERU - 1.7%
Compania de Minas Buenaventura SA:
Class B 134,077 $ 804,899
sponsored ADR Class B 339,000 4,152,750
sponsored ADR Class T 98,541 562,037
5,519,686
TOTAL COMMON STOCKS 296,448,2
(Cost $356,105,148) 17
</TABLE>
NONCONVERTIBLE BONDS - 0.0%
MOODY'S RATINGS (UNAUDITED) PRINCIPAL
AMOUNT
BRAZIL - 0.0%
Compania Vale Do Rio Doce 0% 11/19/00 (Cost $0) BRL 290,000 -
CASH EQUIVALENTS - 9.7%
MATURITY
AMOUNT
Investments in repurchase $ 40,018 40,000
agreements (U.S.
Treasury obligations), in
a joint trading account
at 5.39%, dated
10/30/98 due
11/2/98
SHARES
Taxable Central Cash 31,861,812 31,861,812
Fund (b)
TOTAL CASH EQUIVALENTS 31,901,81
(Cost $31,901,812) 2
TOTAL INVESTMENT IN SECURITIES - 100% $ 328,350,029
(Cost $388,006,960)
CURRENCY ABBREVIATIONS
BRL - Brazilian real
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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 $177,057,106 and $486,089,740, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $3,776 for the
period (see Note 4 of Notes to Financial Statements).
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
BASIC INDUSTRIES 4.2%
CASH EQUIVALENTS 9.7
CONSTRUCTION & REAL ESTATE 2.2
DURABLES 0.4
ENERGY 6.7
FINANCE 7.0
HOLDING COMPANIES 1.3
MEDIA & LEISURE 1.3
NONDURABLES 19.1
PRECIOUS METALS 1.7
RETAIL & WHOLESALE 6.1
SERVICES 0.2
UTILITIES 40.1
100.0%
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $389,066,256. Net unrealized depreciation
aggregated $60,716,227, of which $43,816,382 related to appreciated
investment securities and $104,532,609 related to depreciated
investment securities.
At October 31, 1998, the fund had a capital loss carryforward of
approximately $74,514,000 of which $36,899,000 and $37,615,000 will
expire on October 31, 2003 and 2004, respectively.
LATIN AMERICA
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 328,350,029
SECURITIES, AT
VALUE
(INCLUDING
REPURCHASE
AGREEMENTS OF
$40,000)
(COST
$388,006,96
0) - SEE
ACCOMPANYIN
G SCHEDULE
CASH 358
RECEIVABLE FOR 2,240,108
INVESTMENTS
SOLD
RECEIVABLE FOR 563,418
FUND SHARES
SOLD
DIVIDENDS 2,267,099
RECEIVABLE
INTEREST 114,305
RECEIVABLE
REDEMPTION FEES 3,040
RECEIVABLE
OTHER 9,750
RECEIVABLES
TOTAL ASSETS 333,548,107
LIABILITIES
PAYABLE FOR $ 750,483
FUND SHARES
REDEEMED
ACCRUED 189,614
MANAGEMENT
FEE
OTHER PAYABLES 368,466
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 1,308,563
NET ASSETS $ 332,239,544
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 460,744,470
UNDISTRIBUTED 6,696,796
NET INVESTMENT
INCOME
ACCUMULATED (75,451,982)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (59,749,740)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 332,239,544
30,966,969
SHARES
OUTSTANDING
NET ASSET $10.73
VALUE AND
REDEMPTION
PRICE PER
SHARE
($332,239,5
44 (DIVIDED BY)
30,966,969
SHARES)
MAXIMUM $11.06
OFFERING PRICE
PER SHARE
(100/97.00
OF $10.73)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 14,473,638
DIVIDENDS
SPECIAL DIVIDEND FROM CENTRAIS ELECTRICAS BRASILEIRAS SA 2,290,547
INTEREST 1,274,609
18,038,794
LESS FOREIGN TAXES WITHHELD (1,273,722)
TOTAL INCOME 16,765,072
EXPENSES
MANAGEMENT FEE $ 4,433,227
TRANSFER AGENT FEES 1,894,165
ACCOUNTING FEES AND EXPENSES 401,285
NON-INTERESTED TRUSTEES' COMPENSATION 2,921
CUSTODIAN FEES AND EXPENSES 910,406
REGISTRATION FEES 24,722
AUDIT 67,119
LEGAL 3,597
REPORTS TO SHAREHOLDERS 62,762
FOREIGN TAX EXPENSE 179,654
MISCELLANEOUS 1,891
TOTAL EXPENSES BEFORE REDUCTIONS 7,981,749
EXPENSE REDUCTIONS (74,173) 7,907,576
NET INVESTMENT INCOME 8,857,496
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 45,905,210
FOREIGN CURRENCY TRANSACTIONS (615,031) 45,290,179
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (200,030,700)
ASSETS AND LIABILITIES IN (59,981) (200,090,681)
FOREIGN CURRENCIES
NET GAIN (LOSS) (154,800,502)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (145,943,006)
OTHER INFORMATION $ 323,761
SALES CHARGES PAID TO FDC
SALES CHARGES - RETAINED BY FDC $ 323,203
EXPENSE REDUCTIONS $ 64,035
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 4,789
TRANSFER AGENT CREDITS 5,349
$ 74,173
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ 8,857,496 $ 10,354,029
NET INVESTMENT
INCOME
NET REALIZED GAIN 45,290,179 65,034,745
(LOSS)
CHANGE IN NET (200,090,681) 64,919,843
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (145,943,006) 140,308,617
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO (10,041,240) (9,458,525)
SHAREHOLDERS FROM
NET INVESTMENT
INCOME
SHARE TRANSACTIONS 115,794,938 704,350,162
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 9,873,405 9,235,878
DISTRIBUTIONS
COST OF SHARES (446,516,807) (595,524,911)
REDEEMED
NET INCREASE (320,848,464) 118,061,129
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION FEES 530,116 1,741,603
TOTAL INCREASE (476,302,594) 250,652,824
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 808,542,138 557,889,314
END OF PERIOD $ 332,239,544 $ 808,542,138
(INCLUDING
UNDISTRIBUTED NET
INVESTMENT INCOME
OF $6,696,796
AND $8,495,570,
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 8,079,774 43,052,799
ISSUED IN 578,067 724,384
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (29,806,543) (35,962,567)
NET INCREASE (21,148,702) 7,814,616
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED
OCTOBER 31,
SELECTED PER-SHARE 1998 1997 1996 1995 1994
DATA
NET ASSET VALUE, $ 15.51 $ 12.59 $ 9.75 $ 16.21 $ 13.28
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT .22 C, E .20 C .22 .04 .07
INCOME
NET REALIZED AND (4.81) 2.92 2.72 (6.52) 2.82
UNREALIZED GAIN
(LOSS)
TOTAL FROM INVESTMENT (4.59) 3.12 2.94 (6.48) 2.89
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT (.20) (.23) (.12) - (.05)
INCOME
FROM NET REALIZED - - - - (.05)
GAIN
TOTAL DISTRIBUTIONS (.20) (.23) (.12) - (.10)
REDEMPTION FEES .01 .03 .02 .02 .14
ADDED TO PAID IN
CAPITAL
NET ASSET VALUE, END OF $ 10.73 $ 15.51 $ 12.59 $ 9.75 $ 16.21
PERIOD
TOTAL RETURN A, B (30.01)% 25.42% 30.69% (39.85)% 22.89%
RATIOS AND
SUPPLEMENTAL DATA
NET ASSETS, END OF $ 332,240 $ 808,542 $ 557,889 $ 466,289 $ 888,530
PERIOD (000 OMITTED)
RATIO OF EXPENSES TO 1.34% 1.30% 1.32% 1.41% 1.48%
AVERAGE NET ASSETS
RATIO OF EXPENSES TO 1.33% D 1.29% D 1.32% 1.41% 1.48%
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT 1.49% 1.19% 1.48% .97% .47%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 31% 64% 70% 57% 77%
A THE TOTAL RETURNS WOULD HAVE
BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE
NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE FUND'S
EXPENSES (SEE NOTE 7 OF NOTES
TO FINANCIAL STATEMENTS).
E INVESTMENT INCOME PER SHARE
REFLECTS A SPECIAL DIVIDEND FROM
CENTRAL ELECTRICAS BRASILEIRAS
WHICH AMOUNTED TO $.06 PER
SHARE.
</TABLE>
NORDIC
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. 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 1 LIFE OF
OCTOBER 31, 1998 YEAR FUND
FIDELITY NORDIC 10.99% 78.91%
FIDELITY NORDIC 7.66% 73.55%
(INCL. 3.00% SALES CHARGE)
FT-Actuaries World Nordic 7.70% 67.41%
European Region Funds Average 15.45% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on November 1, 1995. For example, if you had invested $1,000
in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the FT/S&P-Actuaries World Nordic Index - a market
capitalization weighted index of approximately 90 stocks traded in
four Scandinavian markets. 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 one year average represents a peer group of 91
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
OCTOBER 31, 1998 YEAR FUND
FIDELITY NORDIC 10.99% 21.40%
FIDELITY NORDIC 7.66% 20.17%
(INCL. 3.00% SALES CHARGE)
FT-Actuaries World Nordic 7.70% 18.74%
European Region Funds Average 15.45% 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 10178.00
1995/12/31 9554.50 9911.00
1996/01/31 9612.70 9809.37
1996/02/29 10204.40 10456.70
1996/03/31 10340.20 10564.18
1996/04/30 10476.00 10606.06
1996/05/31 10990.10 10977.77
1996/06/30 11106.50 11058.76
1996/07/31 10980.40 10822.25
1996/08/31 11630.30 11437.85
1996/09/30 12018.30 11769.52
1996/10/31 12386.90 12210.52
1996/11/30 13269.60 12915.13
1996/12/31 13537.43 13283.75
1997/01/31 13880.77 13676.71
1997/02/28 13969.05 13661.62
1997/03/31 14332.01 14093.06
1997/04/30 13439.33 13296.07
1997/05/31 14302.58 14246.43
1997/06/30 15136.41 15111.48
1997/07/31 15617.09 15775.44
1997/08/31 14999.07 15074.22
1997/09/30 16843.30 16846.82
1997/10/31 15636.71 15544.47
1997/11/30 15705.38 15583.27
1997/12/31 15177.38 15331.98
1998/01/31 15593.63 15587.89
1998/02/28 17077.22 16969.39
1998/03/31 18219.26 18157.18
1998/04/30 19713.51 19141.41
1998/05/31 19830.92 19281.53
1998/06/30 20119.10 19279.69
1998/07/31 20791.51 19608.59
1998/08/31 16575.57 16383.65
1998/09/30 16212.68 15544.47
1998/10/30 17354.72 16741.19
IMATRL PRASUN SHR__CHT 19981031 19981113 170859 R00000000000039
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Nordic Fund on November 1, 1995, when the fund
started, and the current 3.00% sales charge was paid. As the chart
shows, by October 31, 1998, the value of the investment would have
grown to $17,355 - a 73.55% increase on the initial investment. For
comparison, look at how the FT/S&P-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 $16,741 -
a 67.41% 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 Trygve Toraasen, Portfolio Manager of Fidelity
Nordic Fund
Q. HOW DID THE FUND PERFORM, TRYGVE?
A. For the 12 months that ended October 31, 1998, the fund posted a
total return of 10.99%, compared to 7.70% for the FT/S&P-Actuaries
World Nordic Index and 15.45% for the European region funds average
tracked by Lipper Analytical Services.
Q. WHY DID THE FUND PERFORM BETTER THAN THE NORDIC INDEX, BUT LAG THE
LIPPER AVERAGE?
A. It beat the index because of the solid performance of the fund's
biggest positions, especially the top position, Finnish
telecommunications equipment company Nokia. Maintaining a heavier
weighting in Nokia than the one found in the index helped, as this
stock was the single largest contributor to the fund's performance
over the past year, spurred by very strong earnings buoyed by the
introduction of a new line of cellular handsets. The fund also
benefited from a significant underweighting, relative to the index, in
oil, shipping and engineering stocks. These sectors fared poorly due
to, among other factors, fears of a global economic slowdown. The fund
trailed the European funds average because the Nordic market trailed
Europe as a whole. Cyclicals - companies whose prospects rise and fall
with the economy - make up a large proportion of the Nordic index,
including paper, forest products, oil, shipping and engineering.
Again, these stocks underperformed because of uncertainty over global
economic strength.
Q. WHAT STRATEGIES DID YOU PURSUE GIVEN THE RECENT VOLATILITY OF THE
GLOBAL MARKETS?
A. The Nordic markets reacted much the same way other markets did -
there was a flight to quality. While larger-capitalization blue-chip
stocks fared well, smaller company stocks did not. In addition,
investors looked to invest in companies that offered steadily
recurring revenues and predictable earnings streams. Following that
approach, I increased the fund's investments in pharmaceutical stocks
such as one of the fund's top holdings, Astra, and also added to the
fund's utilities investments.
Q. WHICH STOCKS DID WELL? WHICH WERE DISAPPOINTMENTS?
A. Like Nokia, its Finnish competitor, Sweden's Ericsson thrived by
demonstrating significant growth potential, as did Europolitan, a
cellular service provider. Nokia and Ericsson accounted for 24% of the
Nordic index and about 28% of the fund at the end of the period.
Hennes & Mauritz, a Swedish retailer, performed well as it expanded
its store concept throughout Europe. Svenska Handelsbanken benefited
from positive developments in its lending business, good growth in its
asset management business and reduced operating costs. And Skandia
Foersaekrings, an insurance company, profited from growth in the
variable annuity market in the U.S. On the other hand, Volvo posted
disappointing earnings because the company encountered
higher-than-expected costs in bringing a new model to market.
Hartwall, a Finnish beverage company that the fund no longer owns,
held a big stake in a Russian brewery and was hit hard by turmoil in
that country. In addition, NCL Holdings, the Norwegian cruise ship
company, delayed expansion plans after it had to cancel an initial
public offering of its stock in the U.S. when the market turbulence
hit Wall Street in August.
Q. HOW WILL THE JANUARY 1, 1999, INTRODUCTION OF THE EURO AFFECT THE
NORDIC MARKET?
A. Finland is the only Scandinavian country among the first 11 member
states of the European Monetary Union (EMU) that will adopt the euro
as a common currency, although both Sweden and Denmark are proceeding
with preparations to join the euro bloc. Norway presently is not a
member of the EMU. The impact of the implementation of the euro can be
seen at several levels. First, interest rates will converge in all 11
countries. Second, many large companies are preparing to deal with the
euro. Several will have their share prices listed in both the euro and
their own currency. Smaller companies may lag if they are behind in
readying their business processes for the euro conversion. In
addition, capital flows may affect individual stock markets. Markets
outside of the euro bloc such as Sweden and Denmark may appear less
attractive and thus could see a net outflow of funds that might hurt
them, but only in the short run.
Q. WHAT'S YOUR OUTLOOK?
A. Before I look at each of the four countries in the Nordic region,
let me remind shareholders that the country weightings in the fund are
strictly a secondary result of the stock picking I do on a
company-by-company basis. That being said, there is a mixed outlook. I
think that Norway will struggle because weak oil prices will hurt its
gross domestic product (GDP). In addition, interest rates are high -
supporting the currency but curbing domestic consumption - and
upcoming contract negotiations could increase labor costs. On the
other hand, the outlook for Sweden is very good. Although that market
was held back by weakness in engineering stocks, its domestic economy
is doing well and further interest-rate reductions are expected. The
same could be said for Denmark. The real star in terms of growth in
GDP at this point is Finland. That market appears to offer the best
opportunity in the near future.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of issuers in Denmark,
Finland, Norway and Sweden
FUND NUMBER: 342
TRADING SYMBOL: FNORX
START DATE: November 1, 1995
SIZE: as of October 31, 1998, more than
$101 million
MANAGER: Trygve Toraasen, since June 1998;
research analyst, since 1994, associate portfolio
manager, Fidelity Nordic Fund, 1997-June 1998;
joined Fidelity in 1994
(checkmark)
NORDIC
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
NORWAY 2.8%
UNITED STATES 2.3%
ROW: 1, COL: 1, VALUE: 15.5
ROW: 1, COL: 2, VALUE: 31.0
ROW: 1, COL: 3, VALUE: 48.4
ROW: 1, COL: 4, VALUE: 2.3
ROW: 1, COL: 5, VALUE: 2.8
DENMARK 15.5%
FINLAND 31.0%
SWEDEN 48.4%
AS OF APRIL 30, 1998
UNITED STATES 5.9%
ROW: 1, COL: 1, VALUE: 11.3
ROW: 1, COL: 2, VALUE: 26.4
ROW: 1, COL: 3, VALUE: 4.2
ROW: 1, COL: 4, VALUE: 52.2
ROW: 1, COL: 5, VALUE: 5.9
DENMARK 11.3%
SWEDEN 52.2%
FINLAND 26.4%
NORWAY 4.2%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 97.7 94.1
Short-term investments 2.3 5.9
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
OY Nokia AB Series A 17.3 9.3
(Finland, Communications
Equipment)
Ericsson (L.M.) Telefon AB 11.4 9.5
Class B
(Sweden, Electrical Equipment)
Astra AB Class A 7.1 8.0
(Sweden, Drugs &
Pharmaceuticals)
Hennes & Mauritz AB Class B (Sweden, Apparel Stores) 3.3 1.6
ForeningsSparbanken AB 3.1 3.0
Series A
(Sweden, Banks)
Svenska Handelsbanken 3.0 2.7
(Sweden, Banks)
Europolitan Holdings AB 2.6 1.3
(Sweden, Cellular)
Tele Danmark AS Class B 2.6 0.0
(Denmark, Telephone Services)
Volvo AB Class B 2.2 2.1
(Sweden, Autos, Tires, &
Accessories)
Skandia Foersaekrings AB 2.1 2.2
(Sweden, Insurance)
</TABLE>
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
TECHNOLOGY 19.0 21.1
FINANCE 17.7 19.4
INDUSTRIAL MACHINERY & EQUIPMENT 15.0 3.7
HEALTH 9.8 13.0
UTILITIES 7.6 1.3
MEDIA & LEISURE 5.4 5.2
DURABLES 4.2 5.6
RETAIL & WHOLESALE 4.2 2.4
SERVICES 3.8 0.9
BASIC INDUSTRIES 3.4 7.8
NORDIC
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 97.7%
SHARES VALUE (NOTE 1)
DENMARK - 15.5%
Broendby IF Class B 21,125 $ 460,218
Carlsberg AS Class B 19,120 1,188,805
Danisco AS 19,520 1,080,202
Den Danske Bank Group AS 10,799 1,468,235
Falck AS 5,200 405,178
GN Store Nordic AS 31,180 1,031,301
Incentive AS 12,118 387,072
International Service Systems AS Class B 10,800 729,892
Novo-Nordisk AS Class B 14,589 1,705,135
Ratin AS Class B 5,870 1,008,465
Sondagsavisen AS (Reg.) 23,570 1,161,896
Sydbank AS 17,030 766,385
Tele Danmark AS Class B 23,750 2,590,799
Unidanmark AS Class A 18,977 1,448,488
Vestas Wind Systems AS (a) 4,900 237,652
15,669,723
FINLAND - 31.0%
Asko OY Class A 61,230 1,016,139
Elcoteq Network Corp. Class A (c) 26,000 170,526
Enso OY Class R 34,370 266,408
Hackman OY AB Class A 13,100 442,612
Helsinki Telephone Corp. Class E 6,000 329,127
Jaakko Poyry Group Oyj 54,350 432,078
KCI (Konecranes International) 34,390 1,496,852
Merita Ltd. Series A 251,000 1,346,914
Metsa-Serla Ltd. Class B Free Shares 139,220 1,054,215
Okobank Class A 28,990 570,408
OY Nokia AB Series A 188,226 17,516,781
Pohjola Group Insurance Corp. Class B 23,581 965,455
Raisio Group PLC 62,800 848,733
Rauma OY 24,907 294,538
Sampo Insurance Co. Ltd. 15,710 490,206
Sponda Oyj (a) 35,600 237,027
Talentum OY Class B 55,340 857,899
Teito Corp. Class B 36,414 1,057,356
UPM-Kymmene Corp. 61,510 1,473,110
YIT-Yhtyma OY 62,680 523,216
31,389,600
NORWAY - 2.8%
A-Pressen ASA Series A 11,500 165,225
Agresso Group ASA 33,700 124,504
Electric Farm ASA 1,700 3,722
Hafslund ASA Series B 112,700 416,368
Kvaerner ASA 13,300 254,782
NCL Holdings AS (a) 494,617 1,292,683
P4 Radio Hele Norge ASA 34,000 139,569
Storebrand ASA (a) 39,300 309,207
Unitor AS 17,200 174,161
2,880,221
SHARES VALUE (NOTE 1)
SWEDEN - 48.4%
ABB AB Series A 169,877 $ 1,799,961
Assa Abloy AB Class B 29,050 1,160,329
Astra AB Class A 439,983 7,224,605
Biora AB sponsored ADR (a) 37,200 646,350
Drott AB Series B (a) 30,400 234,261
Electrolux AB 37,000 558,360
Ericsson (L.M.) Telefon AB Class B 511,800 11,567,283
Europolitan Holdings AB 30,280 2,625,029
ForeningsSparbanken AB Series A 117,350 3,187,630
Hemkopskedjan AB Series B 88,310 907,349
Hennes & Mauritz AB Class B 47,000 3,319,976
IBS (International Business Systems) AB Class B Free shares (a) 41,106 622,962
Mandamus AB (a) 5,457 30,137
Munters AB 128,750 892,926
Munters AB (c) 8,300 57,563
NCC AB Series B 58,460 563,112
NetCom Systems AB Series B (a) 14,600 549,408
Nobel Biocare AB 34,920 426,062
Nordbanken Holding AB 246,613 1,482,301
Scandic Hotels AB 35,960 1,177,699
Skandia Foersaekrings AB 163,200 2,085,536
Skandinaviska Enskilda Banken Class A 74,716 758,080
Stora Kopparbergs Bergslags AB Class A 53,800 594,231
Svenska Handelsbanken 71,892 3,033,126
Sydkraft AB 56,200 1,190,953
TV 4 AB Class A 5,725 82,351
Volvo AB Class B 104,118 2,253,202
49,030,782
TOTAL COMMON STOCKS 98,970,326
(Cost $86,867,480)
</TABLE>
CASH EQUIVALENTS - 2.3%
Taxable Central Cash Fund (b) 2,288,647 2,288,647
(Cost $2,288,647)
TOTAL INVESTMENT IN SECURITIES - 100% $ 101,258,973
(Cost $89,156,127)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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 $228,089 or 0.2% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $101,511,921 and $67,494,155, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $2,554 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $5,991,000 and $2,706,000, respectively. The
weighted average interest rate was 6.02% (see Note 6 of Notes to
Financial Statements).
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
BASIC INDUSTRIES 3.4%
CASH EQUIVALENTS 2.3
CONSTRUCTION & REAL ESTATE 2.7
DURABLES 4.2
FINANCE 17.7
HEALTH 9.8
HOLDING COMPANIES 1.8
INDUSTRIAL MACHINERY & EQUIPMENT 15.0
MEDIA & LEISURE 5.4
NONDURABLES 3.1
RETAIL & WHOLESALE 4.2
SERVICES 3.8
TECHNOLOGY 19.0
UTILITIES 7.6
100.0%
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $89,897,673. Net unrealized appreciation
aggregated $11,361,300, of which $20,363,458 related to appreciated
investment securities and $9,002,158 related to depreciated investment
securities.
The fund hereby designates approximately $2,419,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
At October 31, 1998, the fund had a capital loss carryforward of
approximately $8,285,000, all of which will expire on October 31,
2006.
NORDIC
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 101,258,973
SECURITIES, AT
VALUE
(COST
$89,156,127
) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 1,200,760
INVESTMENTS
SOLD
RECEIVABLE FOR 126,905
FUND SHARES
SOLD
DIVIDENDS 1,862
RECEIVABLE
INTEREST 13,628
RECEIVABLE
REDEMPTION FEES 285
RECEIVABLE
TOTAL ASSETS 102,602,413
LIABILITIES
PAYABLE TO $ 278
CUSTODIAN
BANK
PAYABLE FOR 364,372
INVESTMENTS
PURCHASED
PAYABLE FOR 196,721
FUND SHARES
REDEEMED
ACCRUED 59,577
MANAGEMENT
FEE
OTHER PAYABLES 123,108
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 744,056
NET ASSETS $ 101,858,357
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 98,631,486
UNDISTRIBUTED 178,966
NET INVESTMENT
INCOME
ACCUMULATED (9,052,307)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 12,100,212
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 101,858,357
6,265,670
SHARES
OUTSTANDING
NET ASSET $16.26
VALUE AND
REDEMPTION
PRICE PER
SHARE
($101,858,3
57 (DIVIDED BY)
6,265,670
SHARES)
MAXIMUM $16.76
OFFERING PRICE
PER SHARE
(100/97.00
OF $16.26)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 1,571,040
DIVIDENDS
INTEREST 273,990
1,845,030
LESS FOREIGN TAXES WITHHELD (234,904)
TOTAL INCOME 1,610,126
EXPENSES
MANAGEMENT FEE $ 766,651
TRANSFER AGENT FEES 316,947
ACCOUNTING FEES AND EXPENSES 82,144
NON-INTERESTED TRUSTEES' COMPENSATION 367
CUSTODIAN FEES AND EXPENSES 158,252
REGISTRATION FEES 41,486
AUDIT 34,577
LEGAL 278
INTEREST 4,974
REPORTS TO SHAREHOLDERS 6,575
MISCELLANEOUS 338
TOTAL EXPENSES BEFORE REDUCTIONS 1,412,589
EXPENSE REDUCTIONS (6,505) 1,406,084
NET INVESTMENT INCOME 204,042
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (9,014,143)
FOREIGN CURRENCY TRANSACTIONS (15,013) (9,029,156)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 4,058,148
ASSETS AND LIABILITIES IN (2,754) 4,055,394
FOREIGN CURRENCIES
NET GAIN (LOSS) (4,973,762)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (4,769,720)
OTHER INFORMATION $ 258,454
SALES CHARGES PAID TO FDC
SALES CHARGES - RETAINED BY FDC $ 257,334
EXPENSE REDUCTIONS $ 6,426
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 65
TRANSFER AGENT CREDITS 14
$ 6,505
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ 204,042 $ 460,352
NET INVESTMENT
INCOME
NET REALIZED GAIN (9,029,156) 6,922,189
(LOSS)
CHANGE IN NET 4,055,394 5,718,128
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (4,769,720) 13,100,669
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO (302,313) (148,633)
SHAREHOLDERS
FROM NET INVESTMENT
INCOME
FROM NET REALIZED (5,108,510) (297,267)
GAIN
TOTAL DISTRIBUTIONS (5,410,823) (445,900)
SHARE TRANSACTIONS 137,620,320 91,413,026
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 5,325,815 444,929
DISTRIBUTIONS
COST OF SHARES (104,656,126) (62,246,049)
REDEEMED
NET INCREASE 38,290,009 29,611,906
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION FEES 471,151 140,469
TOTAL INCREASE 28,580,617 42,407,144
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 73,277,740 30,870,596
END OF PERIOD $ 101,858,357 $ 73,277,740
(INCLUDING
UNDISTRIBUTED NET
INVESTMENT INCOME
OF $178,966 AND
$436,258,
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 7,537,796 6,327,627
ISSUED IN 375,060 33,555
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (6,243,438) (4,182,354)
NET INCREASE 1,669,418 2,178,828
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED
OCTOBER 31,
SELECTED PER-SHARE 1998 1997 1996 E
DATA
NET ASSET VALUE, $ 15.94 $ 12.77 $ 10.00
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT .03 .10 .17 D
INCOME C
NET REALIZED AND 1.46 G 3.19 2.57
UNREALIZED GAIN
(LOSS)
TOTAL FROM INVESTMENT 1.49 3.29 2.74
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT (.07) (.05) -
INCOME
FROM NET REALIZED (1.18) (.10) -
GAIN
TOTAL DISTRIBUTIONS (1.25) (.15) -
REDEMPTION FEES .08 .03 .03
ADDED TO PAID IN
CAPITAL
NET ASSET VALUE, END OF $ 16.26 $ 15.94 $ 12.77
PERIOD
TOTAL RETURN A, B 10.99% 26.24% 27.70%
RATIOS AND
SUPPLEMENTAL DATA
NET ASSETS, END OF $ 101,858 $ 73,278 $ 30,871
PERIOD (000 OMITTED)
RATIO OF EXPENSES TO 1.35% 1.42% 2.00% F
AVERAGE NET ASSETS
RATIO OF NET INVESTMENT .20% .67% 1.52%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 69% 74% 35%
A THE TOTAL RETURNS WOULD HAVE
BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
D INVESTMENT INCOME PER SHARE
REFLECTS A SPECIAL DIVIDEND
WHICH AMOUNTED TO $.16 PER
SHARE.
E FOR THE PERIOD NOVEMBER
1,1995 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31,
1996.
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 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.
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). If Fidelity had not reimbursed certain fund
expenses, the past five year and past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
OCTOBER 31, 1998 YEAR YEARS YEARS
FIDELITY PACIFIC BASIN -9.52% -19.38% 8.05%
FIDELITY PACIFIC BASIN -12.23% -21.80% 4.81%
(INCL. 3.00% SALES CHARGE)
MSCI Pacific -13.80% -30.69% -31.95%
Pacific Region Funds Average -21.64% -26.69% 30.88%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare the fund's returns to the performance of the
Morgan Stanley Capital International (MSCI) Pacific Index - a market
capitalization-weighted index of approximately 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 one year average represents a peer group of 48 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
OCTOBER 31, 1998 YEAR YEARS YEARS
FIDELITY PACIFIC BASIN -9.52% -4.22% 0.78%
FIDELITY PACIFIC BASIN -12.23% -4.80% 0.47%
(INCL. 3.00% SALES CHARGE)
MSCI Pacific -13.80% -7.07% -3.78%
Pacific Region Funds Average -21.64% -6.34% 2.33%
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 10 YEARS
Pacific Basin MS Pacific Index (Net)
00302 MS003
1988/10/31 9700.00 10000.00
1988/11/30 10324.02 10825.28
1988/12/31 10353.27 10886.63
1989/01/31 10548.88 10986.73
1989/02/28 10779.42 11127.12
1989/03/31 10527.92 10773.72
1989/04/30 10800.38 10780.09
1989/05/31 10381.22 10177.74
1989/06/30 9899.18 9723.97
1989/07/31 11079.82 10985.94
1989/08/31 10486.01 10306.26
1989/09/30 11352.27 10936.15
1989/10/31 11023.93 10643.46
1989/11/30 11380.22 11150.15
1989/12/31 11537.89 11162.27
1990/01/31 11145.30 10530.70
1990/02/28 10447.35 9508.71
1990/03/31 9800.30 7796.38
1990/04/30 9691.25 7848.85
1990/05/31 10629.11 8939.11
1990/06/30 10789.05 8578.96
1990/07/31 11152.57 8513.82
1990/08/31 9669.43 7701.65
1990/09/30 8091.79 6494.18
1990/10/31 9371.35 7897.19
1990/11/30 8513.46 7021.46
1990/12/31 8398.04 7320.34
1991/01/31 8560.11 7548.49
1991/02/28 9333.62 8479.04
1991/03/31 9215.75 8017.15
1991/04/30 9613.55 8223.19
1991/05/31 9547.25 8191.36
1991/06/30 9385.18 7656.07
1991/07/31 9503.05 7914.28
1991/08/31 8862.15 7512.82
1991/09/30 9414.65 8103.81
1991/10/31 9687.22 8448.68
1991/11/30 9230.48 7905.14
1991/12/31 9451.48 8147.73
1992/01/31 9208.38 7832.04
1992/02/29 9119.98 7283.50
1992/03/31 8545.38 6590.81
1992/04/30 8456.98 6288.69
1992/05/31 9134.72 6779.16
1992/06/30 8943.18 6246.08
1992/07/31 8545.38 6159.26
1992/08/31 8795.85 7003.04
1992/09/30 8736.91 6842.58
1992/10/31 8840.05 6600.99
1992/11/30 8803.21 6725.47
1992/12/31 8731.45 6648.49
1993/01/31 8820.70 6636.12
1993/02/28 9333.88 6957.87
1993/03/31 9966.05 7798.40
1993/04/30 10977.54 9040.86
1993/05/31 11513.02 9303.87
1993/06/30 10918.04 9151.34
1993/07/31 11498.15 9692.39
1993/08/31 12026.20 9979.06
1993/09/30 12055.95 9605.85
1993/10/31 13000.50 9819.10
1993/11/30 12360.88 8433.70
1993/12/31 14311.61 9021.60
1994/01/31 14699.85 10065.90
1994/02/28 14844.49 10325.40
1994/03/31 13733.05 9755.42
1994/04/30 14113.68 10177.25
1994/05/31 14532.37 10419.36
1994/06/30 14471.47 10760.20
1994/07/31 14441.02 10529.35
1994/08/31 15126.15 10712.34
1994/09/30 14928.22 10444.22
1994/10/31 15194.66 10708.40
1994/11/30 13946.20 10110.85
1994/12/31 13909.01 10178.88
1995/01/31 12620.34 9536.06
1995/02/28 12414.15 9299.88
1995/03/31 12809.34 10013.88
1995/04/30 12955.39 10439.78
1995/05/31 12878.07 10022.21
1995/06/30 12757.80 9597.47
1995/07/31 13591.13 10289.43
1995/08/31 13445.09 9901.85
1995/09/30 13290.45 9993.57
1995/10/31 12783.57 9507.63
1995/11/30 12671.89 9975.10
1995/12/31 13058.49 10461.97
1996/01/31 13256.08 10479.71
1996/02/29 12972.57 10361.46
1996/03/31 13316.22 10679.25
1996/04/30 14020.69 11223.05
1996/05/31 13625.50 10736.03
1996/06/30 13805.91 10738.25
1996/07/31 13101.44 10244.82
1996/08/31 12843.71 9975.11
1996/09/30 13221.72 10300.65
1996/10/31 12585.97 9822.49
1996/11/30 13067.08 10089.20
1996/12/31 12697.52 9564.79
1997/01/31 11911.48 8760.38
1997/02/28 12161.98 8943.48
1997/03/31 11833.74 8616.15
1997/04/30 12213.80 8795.97
1997/05/31 13466.28 9657.18
1997/06/30 14096.84 10255.92
1997/07/31 14459.62 10011.42
1997/08/31 12706.16 9019.09
1997/09/30 13017.12 8985.09
1997/10/31 11583.25 7894.75
1997/11/30 11185.91 7460.77
1997/12/31 10780.29 7133.54
1998/01/31 11291.54 7520.83
1998/02/28 11317.98 7791.28
1998/03/31 10780.29 7362.44
1998/04/30 10991.84 7217.18
1998/05/31 10524.66 6727.57
1998/06/30 10348.37 6714.85
1998/07/31 10533.48 6598.35
1998/08/31 9299.43 5818.75
1998/09/30 9599.13 5800.19
1998/10/30 10480.59 6805.14
IMATRL PRASUN SHR__CHT 19981031 19981113 092012 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Pacific Basin Fund on October 31, 1988, and the
current 3.00% sales charge was paid. As the chart shows, by October
31, 1998, the value of the investment would have grown to $10,481 - a
4.81% 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 would have been $6,805 - a 31.95% 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)
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 12 months that ended October 31, 1998, the fund returned
- -9.52%. During the same period, the Morgan Stanley Capital
International Pacific Index had a return of -13.80%, while the Pacific
region funds average monitored by Lipper Analytical Services returned
- -21.64%.
Q. ALTHOUGH THE FUND HAD A NEGATIVE RETURN, IT PERFORMED WELL COMPARED
TO THE INDEX AND THE AVERAGE. CAN YOU EXPLAIN WHY?
A. The fund was helped primarily by strong stock selection, especially
in Japan. In terms of country allocations, the fund underweighted
Japan slightly relative to the index, overweighted Australia
marginally and underweighted most of Southeast Asia to some degree.
All of these decisions helped the fund, with the exception of the
lighter weighting in Hong Kong stocks, which skyrocketed in October in
response to a surging Japanese yen. Compared to the Lipper average, on
the other hand, the fund had a substantially higher percentage of
Japanese stocks and a much lighter allocation of Southeast Asian
holdings, which helped relative performance.
Q. HOW DID YOU RESPOND TO THE RECENT STRENGTH IN HONG KONG AND OTHER
SOUTHEAST ASIAN STOCK MARKETS?
A. The rally did not trigger any significant changes in the fund's
composition. My view is that investors who bet on strong, long-term
growth resuming any time soon in Southeast Asian stock markets will be
disappointed. Therefore, I was not at all tempted to "chase" stocks in
those rapidly rising markets. All foreign investments tend to be
riskier than U.S. investments, but at this time, I feel that Japan
offers less risk and more opportunity than the markets of Southeast
Asia.
Q. WHAT STOCKS HELPED THE FUND?
A. Johnson Electric and Mabuchi Motors were the two primary players in
the global micro-motor market. Both are healthy companies that reduced
costs and grew their earnings, as more and more companies chose to
outsource their micro-motor needs. Harvey Norman is an Australian
retailer that helped performance. The company successfully operates
franchises in a number of different consumer-market items, such as
home furnishings and computer-related electronics. Also making a
positive contribution was Hoya Corp., a manufacturer of glass plates
for hard disk drives in laptop computers. Investors responded
positively to the company's plans for a new product line for desktop
computers, a potentially much bigger market.
Q. WHAT STOCKS HURT THE FUND'S PERFORMANCE?
A. Although the fund had a lighter weighting in Japanese banks than
its benchmark index, performance was still hurt by holdings such as
Fuji Bank, Long-Term Credit Bank of Japan and Sakura Bank. In fact,
Long-Term Credit Bank of Japan's problems were so intractable that the
Japanese government announced in October that the company would be
nationalized. Berjaya Sports Toto also hurt performance. Although
profitable, this company, which operates one of the state-regulated
Lotto operations in Malaysia, had the misfortune of being a subsidiary
of cash-strapped parent company, Berjaya Group. The stock suffered due
to fears surrounding potentially improper transfers of funds between
the two companies and general weakness in the Malaysian stock market.
Q. WHAT'S YOUR OUTLOOK, SHIGEKI?
A. The main economic problem plaguing the entire Pacific Basin is
overcapacity. Due to years of rapid growth and lax business practices,
many industries have more participants than are justified by demand
for their goods and services. Although Pacific Basin economies have
slowed dramatically, the overcapacity problem remains to a large
degree. This is due to the way in which these countries have dealt
with economic hard times, which is to say that they have blindly tried
to continue with "business as usual." Thailand, for example, still has
no business foreclosure laws. Many of Japan's problems stem from a
similar unwillingness to let unprofitable businesses fail. In
addition, now that Southeast Asian stock markets have risen so
dramatically from their lows of the past year or so, many of the
region's stocks are no longer attractively valued relative to their
competitors elsewhere in the world. I believe that investors who,
because of their experience with steadily rising markets in the United
States and Europe, are accustomed to buying on dips in stock prices
will find that this tactic will not work well in the Pacific Basin, at
least until some of the region's deep-seated problems are addressed
with more conviction than we've seen so far.
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.
NOTE TO SHAREHOLDERS: Effective December 31, 1998, William Kennedy
will become portfolio manager of Fidelity Pacific Basin Fund.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Pacific Basin issuers
FUND NUMBER: 302
TRADING SYMBOL: FPBFX
START DATE: October 1, 1986
SIZE: as of October 31, 1998, more than
$195 million
MANAGER: Shigeki Makino, since 1996; manager,
Fidelity Japan Fund, since 1994; joined Fidelity
in 1990
(checkmark)
PACIFIC BASIN
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
UNITED STATES 5.6%
SINGAPORE 1.5%
OTHER 2.0%
AUSTRALIA 11.0%
ROW: 1, COL: 1, VALUE: 11.0
ROW: 1, COL: 2, VALUE: 5.0
ROW: 1, COL: 3, VALUE: 74.90000000000001
ROW: 1, COL: 4, VALUE: 0.9
ROW: 1, COL: 5, VALUE: 1.1
ROW: 1, COL: 6, VALUE: 1.5
HONG KONG 5.0%
JAPAN 74.9%
AS OF APRIL 30, 1998
UNITED STATES
4.6%
UNITED KINGDOM 1.1%
SINGAPORE 1.8%
ROW: 1, COL: 1, VALUE: 12.5
ROW: 1, COL: 2, VALUE: 5.9
ROW: 1, COL: 3, VALUE: 70.90000000000001
ROW: 1, COL: 4, VALUE: 2.7
ROW: 1, COL: 5, VALUE: 0.5
ROW: 1, COL: 6, VALUE: 1.8
ROW: 1, COL: 7, VALUE: 1.1
ROW: 1, COL: 8, VALUE: 4.6
AUSTRALIA 12.5%
OTHER 0.5%
MALAYSIA 2.7%
HONG KONG 5.9%
JAPAN 70.9%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 94.4 94.9
Bonds 0.5 0.5
Short-term investments 5.1 4.6
<TABLE>
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TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Toyota Motor Corp. 3.1 2.5
(Japan, Autos, Tires, &
Accessories)
Fuji Photo Film Co. Ltd. 2.9 1.1
(Japan, Photographic Equipment)
Takeda Chemical Industries Ltd. (Japan, Drugs & Pharmaceuticals) 1.9 1.5
Ito-Yokado Co. Ltd. 1.8 1.0
(Japan, General Merchandise
Stores)
Hirose Electric Co. Ltd. 1.8 1.2
(Japan, Electronics)
Hoya Corp. 1.8 1.4
(Japan, Medical Equipment
& Supplies)
Matsushita Electric Industrial 1.8 1.7
Co. Ltd.
(Japan, Consumer Electronics)
Sony Corp. 1.7 1.6
(Japan, Consumer Electronics)
Acom Co. Ltd. 1.7 1.4
(Japan, Credit & Other Finance)
Orix Corp. 1.6 1.6
(Japan, Leasing & Rental)
</TABLE>
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
TECHNOLOGY 22.0 21.9
DURABLES 14.5 12.7
FINANCE 12.0 15.6
INDUSTRIAL MACHINERY 9.0 8.9
& EQUIPMENT
HEALTH 7.2 5.9
MEDIA & LEISURE 6.8 7.0
RETAIL & WHOLESALE 5.0 3.5
UTILITIES 4.6 2.0
SERVICES 4.5 4.3
NONDURABLES 3.2 1.9
PACIFIC BASIN
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 94.4%
SHARES VALUE (NOTE 1)
AUSTRALIA - 11.0%
AMP Ltd. 80,400 $ 954,342
Australia & New Zealand Banking 93,808 535,306
Group Ltd.
Australian Gas Light Co. 123,215 884,310
Brambles Industries Ltd. 79,647 1,742,985
Broken Hill Proprietary Co. Ltd. (The) 61,200 519,076
Cochlear Ltd. 120,000 606,637
David Jones Ltd. 480,590 488,244
Fosters Brewing Group Ltd. 327,400 802,439
Goodman Fielder Ltd. 681,037 897,452
Harvey Norman Holdings Ltd. 146,394 991,503
Lend Lease Corp. Ltd. 29,200 642,779
National Australia Bank Ltd. 122,761 1,623,070
News Corp. Ltd. 98,000 668,016
Publishing & Broadcasting Ltd. 255,600 1,012,221
Rio Tinto Ltd. 76,600 956,244
Smith (Howard) Ltd. 141,000 844,173
Tabcorp Holdings Ltd. 208,000 1,380,731
Telstra Corp. Ltd. (installment receipts) (d) 393,700 1,215,378
Westfield Holdings Ltd. 225,000 993,474
Westpac Banking Corp. 229,694 1,393,810
Woodside Petroleum Ltd. 140,061 738,536
Woolworths Ltd. 366,347 1,286,299
21,177,025
HONG KONG - 5.0%
China Telecom (Hong Kong) Ltd. 378,000 720,565
Four Seas Mercantile Holdings Ltd. 1,702,000 499,974
Hutchison Whampoa Ltd. 102,000 730,970
Johnson Electric Holdings Ltd. 1,311,000 3,047,066
Li & Fung Ltd. 400,000 624,960
National Mutual Asia Ltd. 830,000 568,016
South China Morning Post Holdings 1,184,000 634,463
Television Broadcasts Ltd. 509,000 1,353,916
Varitronix International Ltd. 300,000 569,436
Vtech Holdings Ltd. 246,000 922,758
9,672,124
JAPAN - 74.9%
Acom Co. Ltd. 57,400 3,217,168
Aderans Co. Ltd. 60,000 1,704,692
Aiwa Co. Ltd. 115,000 2,851,485
Akita Bank Ltd. 216,000 918,674
Aruze Corp. (a) 20,000 311,666
Avex, Inc. (a) 1,900 71,976
Bank of Tokyo-Mitsubishi Ltd. 72,000 670,099
Banyu Pharmaceutical Co. Ltd. 130,000 2,214,981
Benesse Corp. 47,000 2,164,873
Bridgestone Corp. 125,000 2,760,439
Canon Chemicals, Inc. 42,000 325,803
Canon, Inc. 140,000 2,657,770
Charle Co. Ltd. (a) 39,000 285,407
Credit Saison Co. Ltd. 60,000 1,417,994
SHARES VALUE (NOTE 1)
Daifuku Co. Ltd. 197,000 $ 834,473
Daitec Co. Ltd. 39,700 707,525
DDI Corp. 280 819,630
Denso Corp. 100,000 1,889,798
Fuji Heavy Industries Ltd. 390,000 1,947,482
Fuji Machine Manufacturing Co. Ltd. 80,000 2,362,462
Fuji Photo Film Co. Ltd. 154,000 5,661,472
Futaba Corp. 22,000 685,665
Heiwa Corp. 1,600 14,395
Hikari Tsushin, Inc. 15,000 568,231
Hirose Electric Co. Ltd. 60,000 3,486,871
Hitachi Maxell Ltd. 82,000 1,171,933
Honda Motor Co. Ltd. 100,000 3,013,345
Hosiden Corp. (a) 60,000 988,205
Hoya Corp. 80,000 3,436,935
Ito-Yokado Co. Ltd. 60,000 3,512,699
Kao Corp. 30,000 609,557
Kawasumi Laboratories, Inc. 30,000 503,659
Koa Denko Co. Ltd. 80,000 619,888
Komatsu Ltd. 400,000 2,169,608
Konami Co. Ltd. 82,000 2,393,285
Kyushu Electric Power Co., Inc. 21,400 411,787
Mabuchi Motors Co. Ltd. 31,600 2,067,671
Matsumotokiyoshi Co. Ltd. 15,000 568,231
Matsushita Communication 20,000 928,110
Industrial Co. Ltd.
Matsushita Electric Industrial Co. Ltd. 230,000 3,390,602
Minebea Co. Ltd. 290,000 2,733,965
Mirai Industry Co. Ltd. 63,000 433,379
Misumi Corp. 30,000 485,579
Mitsubishi Electric Corp. 400,000 816,186
NGK Insulators Ltd. 200,000 2,229,875
Nichicon Corp. 161,000 1,753,465
Nichiei Co. Ltd. 30,000 2,433,061
Nidec Corp. 16,000 1,461,558
Nintendo Co. Ltd. 20,000 1,697,805
Nippon System Development Co. 25,000 639,260
Nippon Telegraph & Telephone Corp. 165 1,295,566
Nitto Denko Corp. 100,000 1,213,948
Nomura Securities Co. Ltd. 155,000 1,174,344
Noritsu Koki Co. Ltd. 30,000 632,802
Ntt Mobile Communication 40 1,449,849
Network, Inc. (a)
Ntt Mobile Communication 43 1,558,588
Network, Inc. (a)(c)
Okumura Corp. 150,000 652,174
Omron Corp. 200,000 1,962,979
Orix Corp. (a) 43,200 3,105,639
Paris Miki, Inc. 42,200 711,024
Q'Sai Co. Ltd. 20,000 313,388
Riso Kagaku Corp. 36,900 2,080,887
Rohm Co. Ltd. 26,000 2,305,639
Sankyo Co. Ltd. 41,000 928,369
Senshukai Co. Ltd. 80,000 497,288
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Sharp Corp. 170,000 $ 1,287,990
Shimano, Inc. 100,000 2,221,266
Shin-Etsu Chemical Co. Ltd. 120,000 2,396,901
Shinko Electric Industries Co.Ltd. 18,000 635,385
Shohkoh Fund & Co. Ltd. 9,000 2,746,879
Sony Corp. 49,500 3,258,988
Sony Music Entertainment Ltd. 61,000 2,132,243
Square Co. Ltd. 20,000 378,821
Sumitomo Forestry Co. Ltd. 100,000 682,738
Sumitomo Special Metals Co. 25,000 359,664
Takeda Chemical Industries Ltd. 115,000 3,752,475
Takefuji Corp. 35,000 1,871,287
Takefuji Corp. (c) 20,000 1,069,307
TDK Corp. 46,000 3,041,584
Terumo Corp. 120,000 2,531,210
THK Co. Ltd. 151,000 1,560,052
Tokyo Electron Ltd. 50,000 1,631,511
Tokyo Seimitsu Co. Ltd. 45,000 1,414,120
Toppan Forms Co. Ltd. 45,000 692,725
Toyota Motor Corp. 250,000 6,026,688
Tsubaki Nakashima Co. Ltd. 60,000 313,560
Unified-Charm Corp. 60,000 2,737,839
Wako Electric Co. Ltd. 60,000 367,284
World Co. Ltd. 15,000 479,122
144,492,802
MALAYSIA - 0.9%
Amway Holding BHD 313,000 398,663
Berjaya Sports Toto BHD 352,000 226,762
Malaysian International Shipping BHD (For. Reg.) 529,000 463,293
Resorts World BHD 500,000 341,053
Rothmans of Pall Mall Malaysia BHD 72,000 274,358
1,704,129
NEW ZEALAND - 0.2%
Telecom Corp. of New Zealand Ltd. (installment receipts) (e) 193,800 377,524
PHILIPPINES - 0.2%
Oriental Petroleum & Mineral Corp. Class B (a) 7,771,657 732
QueenBee Resources Corp. warrants 3/25/03 (a) 976,000 435,390
436,122
SINGAPORE - 1.5%
Datacraft Asia Ltd. 386,000 1,242,920
GP Batteries International Ltd. 190,000 418,971
Singapore Press Holdings 80,694 700,823
Want Want Holdings Ltd. 393,280 468,003
2,830,717
SHARES VALUE (NOTE 1)
TAIWAN - 0.4%
President Chain Store Corp. 220,000 $ 702,236
UNITED KINGDOM - 0.3%
HSBC Holdings PLC 28,013 637,946
TOTAL COMMON STOCKS 182,030,625
(Cost $175,199,970)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
NONCONVERTIBLE BONDS - 0.5%
MOODY'S RATINGS (UNAUDITED) PRINCIPAL
AMOUNT
UNITED STATES OF AMERICA - 0.5%
SB Treasury Co. LLC 9.4% 12/29/49 (c)(f) Baa1 $ 1,127,000 1,014,300
(Cost $1,000,798)
</TABLE>
CASH EQUIVALENTS - 5.1%
SHARES
Taxable Central Cash Fund (b) 9,897,471 9,897,471
(Cost $9,897,471)
TOTAL INVESTMENT IN SECURITIES - 100% $ 192,942,396
(Cost $186,098,239)
CURRENCY ABBREVIATIONS
AUD - Australian dollar
NZD - New Zealand dollar
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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 $3,642,195 or 1.9% of net assets.
(d) Purchased on an installment basis. Market value reflects only
those payments made through October 31, 1998. The remaining
installments aggregating AUD 551,180 are due November 17, 1998.
(e) Purchased on an installment basis. Market value reflects only
those payments through October 31, 1998. The remaining installments
aggregating NZD 804,270 are due March 31, 1999.
(f) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $113,544,848 and $130,100,194, respectively (see Note 3 of
Notes to Financial Statements).
The market value of Futures Contracts opened and closed during the
period amounted to $2,259,519 and $4,441,389, respectively (see Note 3
of Notes to Financial Statements).
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
BASIC INDUSTRIES 2.4%
CASH EQUIVALENTS 5.1
CONSTRUCTION & REAL ESTATE 1.8
DURABLES 14.5
ENERGY 0.4
FINANCE 12.0
HEALTH 7.2
INDUSTRIAL MACHINERY & EQUIPMENT 9.0
MEDIA & LEISURE 6.8
NONDURABLES 3.2
RETAIL & WHOLESALE 5.0
SERVICES 4.5
TECHNOLOGY 22.0
TRANSPORTATION 1.5
UTILITIES 4.6
100.0%
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $186,217,866. Net unrealized appreciation
aggregated $6,724,530, of which $29,048,166 related to appreciated
investment securities and $22,323,636 related to depreciated
investment securities.
At October 31, 1998, the fund had a capital loss carryforward of
approximately $95,690,000 of which $10,408,000, $17,259,000,
$35,042,000 and $32,981,000 will expire on October 31, 2003, 2004,
2005 and 2006, respectively.
PACIFIC BASIN
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 192,942,396
SECURITIES, AT
VALUE
(COST
$186,098,23
9) -
SEE
ACCOMPANYIN
G SCHEDULE
FOREIGN 689,328
CURRENCY HELD
AT VALUE
(COST
$748,221)
RECEIVABLE FOR 2,443,541
INVESTMENTS
SOLD
RECEIVABLE FOR 300,037
FUND SHARES
SOLD
DIVIDENDS 545,969
RECEIVABLE
INTEREST 78,838
RECEIVABLE
REDEMPTION FEES 211
RECEIVABLE
TOTAL ASSETS 197,000,320
LIABILITIES
PAYABLE FOR $ 1,045,574
INVESTMENTS
PURCHASED
PAYABLE FOR 170,624
FUND SHARES
REDEEMED
ACCRUED 179,288
MANAGEMENT
FEE
OTHER PAYABLES 140,857
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 1,536,343
NET ASSETS $ 195,463,977
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 288,302,237
DISTRIBUTIONS IN (3,862,332)
EXCESS OF
NET INVESTMENT
INCOME
ACCUMULATED (95,809,445)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 6,833,517
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 195,463,977
16,436,158
SHARES
OUTSTANDING
NET ASSET $11.89
VALUE AND
REDEMPTION
PRICE PER
SHARE
($195,463,9
77 (DIVIDED BY)
16,436,158
SHARES)
MAXIMUM $12.26
OFFERING PRICE
PER SHARE
(100/97.00
OF $11.89)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 2,802,222
DIVIDENDS
INTEREST 668,023
3,470,245
LESS FOREIGN TAXES WITHHELD (234,717)
TOTAL INCOME 3,235,528
EXPENSES
MANAGEMENT FEE $ 1,527,937
BASIC FEE
PERFORMANCE ADJUSTMENT 765,898
TRANSFER AGENT FEES 953,544
ACCOUNTING FEES AND EXPENSES 157,269
NON-INTERESTED TRUSTEES' COMPENSATION 247
CUSTODIAN FEES AND EXPENSES 123,603
REGISTRATION FEES 6,964
AUDIT 49,205
LEGAL 890
MISCELLANEOUS 2,427
TOTAL EXPENSES BEFORE REDUCTIONS 3,587,984
EXPENSE REDUCTIONS (31,188) 3,556,796
NET INVESTMENT INCOME (LOSS) (321,268)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (31,169,900)
FOREIGN CURRENCY TRANSACTIONS (336,827)
FUTURES CONTRACTS (329,823) (31,836,550)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 8,937,735
ASSETS AND LIABILITIES IN (6,958)
FOREIGN CURRENCIES
FUTURES CONTRACTS 296,343 9,227,120
NET GAIN (LOSS) (22,609,430)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (22,930,698)
OTHER INFORMATION $ 144,033
SALES CHARGES PAID TO FDC
SALES CHARGES - RETAINED BY FDC $ 142,818
DEFERRED SALES CHARGE WITHHELD $ 16,130
BY FDC
EXPENSE REDUCTIONS $ 23,446
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 731
TRANSFER AGENT CREDITS 7,011
$ 31,188
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ (321,268) $ (123,748)
NET INVESTMENT
INCOME (LOSS)
NET REALIZED GAIN (31,836,550) (32,319,686)
(LOSS)
CHANGE IN NET 9,227,120 9,562,140
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (22,930,698) (22,881,294)
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO - (363,575)
SHAREHOLDERS
FROM NET INVESTMENT
INCOME
IN EXCESS OF NET (4,350,839) (2,160,117)
INVESTMENT INCOME
TOTAL DISTRIBUTIONS (4,350,839) (2,523,692)
SHARE TRANSACTIONS 63,798,234 95,487,816
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 4,301,574 2,485,317
DISTRIBUTIONS
COST OF SHARES (84,998,801) (405,452,612)
REDEEMED
NET INCREASE (16,898,993) (307,479,479)
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION FEES 127,081 252,002
TOTAL INCREASE (44,053,449) (332,632,463)
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 239,517,426 572,149,889
END OF PERIOD $ 195,463,977 $ 239,517,426
(INCLUDING
DISTRIBUTIONS IN
EXCESS OF NET
INVESTMENT INCOME
OF $3,862,332
AND
$335,592,
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 5,220,379 6,377,029
ISSUED IN 352,299 168,725
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (7,003,769) (27,740,166)
NET INCREASE (1,431,091) (21,194,412)
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED
OCTOBER 31,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
NET ASSET VALUE, BEGINNING $ 13.41 $ 14.65 $ 14.88 $ 19.96 $ 17.48
OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME (.02) C (.01) C .05 C .07 C .10
(LOSS)
NET REALIZED AND (1.26) (1.16) (.29) (3.12) 2.78
UNREALIZED GAIN (LOSS)
TOTAL FROM INVESTMENT (1.28) (1.17) (.24) (3.05) 2.88
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT - (.01) - - (.01)
INCOME
IN EXCESS OF NET (.25) (.07) - (.02) (.11)
INVESTMENT INCOME
FROM NET REALIZED GAIN - - - (2.02) (.28)
TOTAL DISTRIBUTIONS (.25) (.08) - (2.04) (.40)
REDEMPTION FEES ADDED TO .01 .01 .01 .01 -
PAID IN CAPITAL
NET ASSET VALUE, END OF $ 11.89 $ 13.41 $ 14.65 $ 14.88 $ 19.96
PERIOD
TOTAL RETURN A, B (9.52)% (7.97)% (1.55)% (15.87)% 16.88%
RATIOS AND SUPPLEMENTAL
DATA
NET ASSETS, END OF PERIOD $ 195,464 $ 239,517 $ 572,150 $ 317,635 $ 553,532
(000 OMITTED)
RATIO OF EXPENSES TO 1.73% 1.32% 1.26% 1.32% D 1.54%
AVERAGE NET ASSETS
RATIO OF EXPENSES TO 1.72% E 1.31% E 1.24% E 1.32% 1.54%
AVERAGE NET ASSETS AFTER
EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT (.16)% (.04)% .30% .44% .04%
INCOME (LOSS) TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 57% 42% 85% 65% 88%
A THE TOTAL RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN
(SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE
TIME SALES CHARGE.
C NET INVESTMENT INCOME (LOSS) PER
SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING
THE PERIOD.
D FMR AGREED TO REIMBURSE A PORTION
OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A
PORTION OF THE FUND'S EXPENSES (SEE
NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
</TABLE>
SOUTHEAST ASIA
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. 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 1 PAST 5 LIFE OF
OCTOBER 31, 1998 YEAR YEARS FUND
FIDELITY SOUTHEAST ASIA -14.44% -34.54% -13.33%
FIDELITY SOUTHEAST ASIA -17.01% -36.50% -15.93%
(INCL. 3.00% SALES CHARGE)
MSCI Far East Free ex Japan -23.05% -40.96% -16.28%
Pacific Region ex-Japan Funds Average -24.41% -41.26% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on April 19, 1993. For example, if you had invested
$1,000 in a fund that had a 5% return over the past year, the value of
your investment would be $1,050. You can compare the fund's returns to
the performance of the Morgan Stanley Capital International AC Far
East Free ex Japan Index - a market capitalization weighted index of
over 450 stocks traded in nine Asian markets, excluding Japan. To
measure how the fund's performance stacked up against its peers, you
can compare it to the Pacific region ex-Japan funds average, which
reflects the performance of mutual funds with similar objectives
tracked by Lipper Analytical Services, Inc. The past one year average
represents a peer group of 84 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
OCTOBER 31, 1998 YEAR YEARS FUND
FIDELITY SOUTHEAST ASIA -14.44% -8.13% -2.55%
FIDELITY SOUTHEAST ASIA -17.01% -8.68% -3.09%
(INCL. 3.00% SALES CHARGE)
MSCI Far East Free ex Japan -23.05% -10.00% -3.16%
Pacific Region ex-Japan Funds Average -24.41% -10.25% 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 10334.89
1993/05/31 10078.30 10929.98
1993/06/30 9835.80 10642.82
1993/07/31 9826.10 10715.96
1993/08/31 10543.90 11612.63
1993/09/30 10873.70 11974.11
1993/10/31 12842.80 14179.62
1993/11/30 13240.50 14084.20
1993/12/31 15992.99 17508.06
1994/01/31 14696.78 16312.13
1994/02/28 14004.83 15375.29
1994/03/31 12221.33 13702.83
1994/04/30 12533.20 14348.37
1994/05/31 13069.22 14960.14
1994/06/30 12299.30 14295.10
1994/07/31 12952.27 15093.47
1994/08/31 14141.27 16322.75
1994/09/30 14131.52 16059.95
1994/10/31 14238.73 16372.12
1994/11/30 12845.07 14812.82
1994/12/31 12513.71 14446.91
1995/01/31 11198.01 12897.43
1995/02/28 12162.86 14200.92
1995/03/31 12318.79 14269.05
1995/04/30 12309.04 14134.01
1995/05/31 13712.45 15856.11
1995/06/30 13702.71 15617.68
1995/07/31 14053.56 15864.27
1995/08/31 13507.79 15109.47
1995/09/30 13683.21 15371.66
1995/10/31 13527.28 15138.13
1995/11/30 13293.38 14979.13
1995/12/31 14038.25 15724.49
1996/01/31 15771.98 17165.65
1996/02/29 15425.24 17106.70
1996/03/31 15296.45 17244.40
1996/04/30 15623.38 17726.96
1996/05/31 15682.82 17554.45
1996/06/30 15237.00 17200.74
1996/07/31 14038.25 15961.51
1996/08/31 14672.30 16537.82
1996/09/30 15147.84 16955.48
1996/10/31 14553.42 16635.18
1996/11/30 15603.56 17587.62
1996/12/31 15464.51 17475.63
1997/01/31 15454.22 17729.59
1997/02/28 15690.87 17795.50
1997/03/31 14620.81 16822.86
1997/04/30 14301.84 16393.53
1997/05/31 15124.97 17225.98
1997/06/30 15618.85 17686.50
1997/07/31 16123.01 17772.64
1997/08/31 14013.75 14500.35
1997/09/30 13231.78 14391.39
1997/10/31 9826.09 10880.61
1997/11/30 9754.06 10188.55
1997/12/31 9451.16 9732.57
1998/01/31 8882.44 8912.96
1998/02/28 10226.69 10957.88
1998/03/31 10195.67 10690.41
1998/04/30 9296.05 9589.59
1998/05/31 8044.86 8104.40
1998/06/30 7383.07 7222.25
1998/07/31 7269.33 7021.87
1998/08/31 6349.03 5936.84
1998/09/30 7093.54 6576.50
1998/10/30 8406.78 8372.34
IMATRL PRASUN SHR__CHT 19981031 19981203 113445 R00000000000070
$10,000 OVER LIFE OF FUND: 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 3.00% sales charge was paid. As the
chart shows, by October 31, 1998, the value of the investment would
have been $8,407 - a 15.93% decrease on the initial investment. For
comparison, look at how the Morgan Stanley Capital International AC
Far East Free ex Japan Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 would have
been $8,372 - a 16.28% 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)
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 12 months that ended October 31, 1998, the fund returned
- -14.44%. During the same period, the Morgan Stanley Capital
International AC Far East Free ex Japan Index had a return of -23.05%,
while the Pacific region ex-Japan funds average tracked by Lipper
Analytical Services returned -24.41%.
Q. THE FUND HANDILY BEAT THE INDEX AND THE AVERAGE DURING THE PERIOD.
WHY WAS THAT?
A. Strong stock selection was the main factor driving performance, as
was a heavier weighting in Hong Kong stocks relative to the index
toward the end of the period, when the Hong Kong market enjoyed an
exceptionally strong rally. I looked for companies with predictable
earnings, healthy cash flows, strong balance sheets and progressive
managements. In many cases, the companies that fit that description
were export companies. In Taiwan and Singapore, for example, I
emphasized the stocks of electronics and technology companies. Because
these companies export to the United States - and therefore benefit
from U.S. dollar-denominated revenues - they offered the prospect of
good earnings growth even in a slowing economy. In Hong Kong, I
overweighted utilities relative to the index, and lightened up on the
fund's bank and real-estate company holdings. Utilities are less
sensitive to interest rates, which were abnormally high during most of
the period.
Q. AND YET, THE FUND'S RETURN WAS NEGATIVE . . .
A. Southeast Asian stock markets were very volatile. After plunging in
November and December 1997, the markets rebounded strongly in the
first quarter of 1998 because investors hoped that the worst was over.
When this optimism turned out to be premature, stocks plunged again in
April and May, and remained under pressure throughout the summer. One
universal problem in the region was extremely high interest rates,
which, following the collapse of many of the region's currencies, were
necessary to attract investment capital but also drove down stock
prices and slowed economic growth.
Q. WHAT STOCKS DID WELL FOR THE FUND?
A. Hong Kong Telecommunications, the fund's second-largest holding,
was a positive contributor to performance, exemplifying the benefits
of the fund's greater emphasis on Hong Kong utility shares.
Predictable earnings growth was the key to this stock's success during
the period. Another helpful holding was Hutchison Whampoa, a Hong Kong
conglomerate with significant business interests both in and out of
Asia, and the fund's largest holding for much of the period. Finally,
Compal Electronics and Asustek also helped the fund's performance.
Both are Taiwanese companies that manufacture various computer-related
hardware, and both had strong balance sheets and healthy earnings
growth.
Q. WHAT STOCKS WERE DISAPPOINTING?
A. Sun Hung Kai Properties was the biggest detractor from performance.
High interest rates and plunging real-estate prices hurt this stock.
Although underweighted relative to the index, the stock remains one of
the fund's top-10 holdings because the company is financially sound
and well managed, and positioned to benefit once the Hong Kong
property market begins to recover. Another disappointing stock was
that of Tenaga Nasional, a Malaysian electricity-generating company.
Although the basic business prospects of this company were good, the
weakness of Malaysia's economy and currency caused investors to dump
Malaysian stocks regardless of their quality. This holding illustrates
why we like investors to keep in mind that foreign investments are
riskier than U.S. investments.
Q. WHAT'S YOUR OUTLOOK, ALLAN?
A. It's useful to think of Southeast Asia as a three-tiered market.
First, you have the stronger economies that include Hong Kong, Taiwan
and Singapore. On the next level is China, which has a large domestic
economy but shares many of the structural problems of the weakest
economies in the region. Finally, there are the countries that have
suffered from massive currency devaluations, sharply contracting
economies and exceptionally weak stock markets. Countries in this last
category include Indonesia, Thailand, Malaysia and South Korea. There
are grounds for optimism about the first group, with interest rates
there easing back down and economic activity beginning to pick up. The
other two groups are more problematic. Although those countries also
are benefiting from lower interest rates, they will continue to
encounter many obstacles to fully recover from what has happened to
them over the past year or so.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Southeast Asian
issuers; the fund does not anticipate investing
in Japan
FUND NUMBER: 351
TRADING SYMBOL: FSEAX
START DATE: April 19, 1993
SIZE: as of October 31, 1998, more than
$223 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)
SOUTHEAST ASIA
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
CHINA 2.0%
UNITED STATES 6.9%
UNITED KINGDOM 1.5%
ROW: 1, COL: 1, VALUE: 2.0
ROW: 1, COL: 2, VALUE: 51.1
ROW: 1, COL: 3, VALUE: 3.1
ROW: 1, COL: 4, VALUE: 2.0
ROW: 1, COL: 5, VALUE: 3.1
ROW: 1, COL: 6, VALUE: 11.8
ROW: 1, COL: 7, VALUE: 17.2
ROW: 1, COL: 8, VALUE: 1.3
ROW: 1, COL: 9, VALUE: 1.5
ROW: 1, COL: 10, VALUE: 6.9
THAILAND 1.3%
HONG KONG 51.1%
TAIWAN 17.2%
SINGAPORE 11.8%
OTHER 3.1%
MALAYSIA 2.0%
KOREA (SOUTH) 3.1%
AS OF APRIL 30, 1998
CHINA 3.3%
UNITED STATES 3.2%
ROW: 1, COL: 1, VALUE: 3.3
ROW: 1, COL: 2, VALUE: 36.6
ROW: 1, COL: 3, VALUE: 7.2
ROW: 1, COL: 4, VALUE: 8.800000000000001
ROW: 1, COL: 5, VALUE: 3.2
ROW: 1, COL: 6, VALUE: 12.9
ROW: 1, COL: 7, VALUE: 15.1
ROW: 1, COL: 8, VALUE: 3.8
ROW: 1, COL: 9, VALUE: 5.9
ROW: 1, COL: 10, VALUE: 3.2
UNITED KINGDOM 5.9%
THAILAND 3.8%
HONG KONG 36.6%
TAIWAN 15.1%
SINGAPORE 12.9%
OTHER 3.2%
KOREA (SOUTH) 7.2%
MALAYSIA 8.8%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 92.9 96.8
Bonds 0.2 0.0
Short-term investments 6.9 3.2
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Hutchison Whampoa Ltd. 10.1 7.5
(Hong Kong, Electrical Equipment)
Hong Kong Telecommunications Ltd. 7.7 6.8
(Hong Kong, Telephone Services)
Cheung Kong Holdings Ltd. 5.3 4.3
(Hong Kong, Real Estate)
CLP Holdings Ltd. 3.4 1.9
(Hong Kong, Electric Utility)
China Telecom (Hong Kong) Ltd. (Hong Kong, Cellular) 3.1 1.4
Hang Seng Bank Ltd. 2.7 2.9
(Hong Kong, Banks)
Sun Hung Kai Properties Ltd. (Hong Kong, Real Estate) 2.3 3.9
Swire Pacific Ltd. Class A 2.2 0.3
(Hong Kong, Air Transportation)
Compal Electronics, Inc. 2.1 1.7
(Taiwan, Computers &
Office Equipment)
Taiwan Semiconductor 2.0 2.3
Manufacturing Co. Ltd.
(Taiwan, Electronics)
</TABLE>
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
UTILITIES 20.1 16.4
TECHNOLOGY 19.4 19.0
CONSTRUCTION & REAL ESTATE 13.6 12.1
INDUSTRIAL MACHINERY & 11.8 10.3
EQUIPMENT
FINANCE 9.8 16.3
TRANSPORTATION 4.6 3.4
NONDURABLES 2.7 2.1
RETAIL & WHOLESALE 2.2 1.1
BASIC INDUSTRIES 2.2 2.6
MEDIA & LEISURE 1.6 4.9
SOUTHEAST ASIA
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 92.9%
SHARES VALUE (NOTE 1)
AUSTRALIA - 0.6%
David Jones Ltd. 505,500 $ 513,551
Goodman Fielder Ltd. 600,379 791,163
1,304,714
CHINA - 2.0%
Beijing Datang Power Generation Co. Ltd. 2,000,000 619,795
China Eastern Airlines Corp. Ltd. (a) 600,000 44,160
China Southern Airlines Ltd. (a) 800,000 99,167
Harbin Power Equipment Co. Ltd. 2,970,000 245,439
Series H
Huaneng Power International, Inc. 1,200,000 418,361
Class H (a)
Qingling Motors Co. Ltd. Class H 3,558,000 656,975
Shenzhen Expressway Co. Ltd. Class H 4,000,000 903,867
Zhejiang Express Co. Ltd. Class H 4,946,000 970,743
Zhenhai Refining & Chemical Co. Class H 2,250,000 459,035
4,417,542
HONG KONG - 51.1%
Cheung Kong Holdings Ltd. 1,725,000 11,805,152
China Aerospace International 2,140,000 279,088
Holdings Ltd. (a)
China Aerospace International 214,000 4,200
Holdings Ltd. warrants 12/31/99 (a)
China Everbright Ltd. (a) 668,000 256,608
China Everbright Ltd. warrants 1/5/00 (a) 66,800 6,900
China Resources Beijing Land Ltd. 1,174,000 314,552
China Telecom (Hong Kong) Ltd. 3,558,000 6,782,459
CLP Holdings Ltd. 1,346,000 7,560,333
Cosco Pacific Ltd. 2,360,000 1,157,983
Dah Sing Financial Holdings Ltd. 760,000 1,334,625
Dao Heng Bank Group Ltd. 320,000 667,312
Guangnan Holdings Ltd. 3,616,000 1,108,916
GZI Transport Ltd. 1,094,000 235,907
Hang Seng Bank Ltd. 692,000 5,986,700
Henderson Land Development Co. Ltd. 737,000 3,625,760
HKR International Ltd. 1,200,000 677,900
Hong Kong & China Gas Co. Ltd. 3,070,360 4,361,025
Hong Kong Electric Holdings Ltd. 1,140,000 4,180,515
Hong Kong Telecommunications Ltd. 8,480,000 17,012,997
Hutchison Whampoa Ltd. 3,109,000 22,280,265
Johnson Electric Holdings Ltd. 1,284,000 2,984,311
Liu Chong Hing Bank Ltd. 400,000 400,284
New World Development Co. Ltd. 520,000 1,208,600
New World Infrastructure Ltd. (a) 1,136,800 1,622,008
Ng Fung Hong Ltd. 1,020,000 902,189
Shanghai Industrial Holdings Ltd. Class H 300,000 693,395
Shui On Construction & Materials Ltd. 362,000 224,366
Shum Yip Investment Ltd. 3,500,000 858,674
Silver Grant International Industries Ltd. 4,000,000 418,361
Sun Hung Kai Properties Ltd. 726,478 5,065,506
Swire Pacific Ltd. Class A 900,000 4,776,293
SHARES VALUE (NOTE 1)
Television Broadcasts Ltd. 274,000 $ 728,827
Tianjin Development Holdings Ltd. 2,420,000 1,609,271
Varitronix International Ltd. 259,000 491,613
Wing Hang Bank Ltd. 804,000 1,531,280
113,154,175
INDONESIA - 1.2%
Gudang Garam PT Perusahaan (a) 700,000 616,719
Gulf Indonesia Resources Ltd. (a) 71,400 705,075
PT Indah Kiat Pulp & Paper Corp. (a) 2,000,000 443,729
PT Indosat 400,000 421,864
PT Semen Gresik TBK 500,000 398,713
2,586,100
KOREA (SOUTH) - 3.1%
Dae Duck Electronics Co. Ltd. 4,440 315,292
Hyundai Engineering & 8 35
Construction Co. Ltd. (a)
Korea Fine Chemical Co. Ltd. (a) 19,200 525,290
Medison Co. Ltd. 64,049 708,689
Mirae Corp. 277,215 471,654
Pohang Iron & Steel Co. Ltd. 9,200 513,583
S1 Corp. 5,909 792,644
Samsung Co. Ltd. sponsored GDR unit (a) 21 5
Samsung Display Devices Ltd. 680 25,510
Samsung Electronics Co. Ltd. 25,055 1,025,366
Samsung Fire & Marine Insurance 850 212,581
Seong An Co. Ltd. 91,180 608,788
Sindoricoh Co. Ltd. 5,000 151,194
Suheung Capsule Co. Ltd. 67,000 1,046,003
Youngone Corp. 20,600 518,318
6,914,952
MALAYSIA - 2.0%
Berjaya Sports Toto BHD 713,833 459,859
Malaysian International Shipping BHD (For. Reg.) 1,766,000 1,546,644
Petronas Gas BHD 515,000 742,684
Resorts World BHD 134,000 91,402
Rothmans of Pall Mall Malaysia BHD 287,000 1,093,621
Telekom Malaysia BHD 215,000 305,526
Tenaga Nasional BHD 225,000 203,684
4,443,420
PHILIPPINES - 1.3%
Manila Electric Co. Class B 302,851 893,167
Philippine Long Distance Telephone 68,000 1,626,270
SM Prime Holdings, Inc. 2,500,000 421,314
2,940,751
SINGAPORE - 11.8%
City Developments Ltd. 372,000 1,351,894
Creative Technology Ltd. (a) 88,000 1,284,632
Creative Technology Ltd. (NASDAQ) (a) 48,200 677,813
Datacraft Asia Ltd. 770,000 2,479,400
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SINGAPORE - CONTINUED
Flextech Holdings Ltd. 1,136,400 $ 500,478
JIT Holdings Ltd. 2,199,000 1,517,019
Jurong Shipyard Ltd. 179,000 771,789
Keppel Corp. Ltd. 1,000,000 2,008,007
Keppel Land Ltd. 500,000 489,683
Natsteel Electronics Ltd. 814,000 1,674,629
Natsteel Ltd. 1,777,000 1,685,605
Oversea-Chinese Banking Corp. 140,000 612,257
(For. Reg.) (a)
Parkway Holdings Ltd. 230,000 417,924
Rothmans Industries Ltd. 368,000 1,870,034
Sembcorp Industries Ltd. (a) 300,000 297,505
Singapore Press Holdings 199,077 1,728,972
Singapore Technologies Engineering Ltd. 1,026,175 1,011,321
Singapore Telecommunications Ltd. 1,036,000 1,793,138
St. Computer Systems & Services Ltd. 831,500 660,693
United Overseas Bank Ltd. (For. Reg.) 220,500 1,039,005
Venture Manufacturing Singapore Ltd. 700,000 2,328,303
26,200,101
TAIWAN - 17.2%
Asustek Computer, Inc. (a) 122,741 908,492
Bank Sinopac (a) 1,274,120 544,227
Cathay Life Insurance Co. Ltd. 776,400 2,741,644
China Development Corp. (a) 969,975 1,914,523
Chuntex Electronic Co. Ltd. (a) 566,400 655,050
Compal Electronics, Inc. (a) 1,517,240 4,726,021
Compeq Manufacturing Co. Ltd. (a) 18,000 114,356
CTCI Corp. 1,038,120 1,744,874
D-Link Corp. (a) 1,935,700 4,268,390
Fortune Electric Co. Ltd. (a) 317,200 476,411
Hon Hai Precision Industry Co. (a) 721,200 3,469,767
Orient Semiconductor Electronics Ltd. (a) 319,000 301,045
Phoenixtec Power Co. Ltd. (a) 1,674,000 3,536,438
President Chain Store Corp. 960,000 3,064,302
Siliconware Precision 1,720,160 2,758,622
Industries Co. Ltd. (a)
Sunplus Technology Co. Ltd. (a) 385,000 1,169,545
Taiwan Semiconductor 2,173,925 4,391,429
Manufacturing Co. Ltd. (a)
Winbond Electronics Corp. (a) 700,000 563,454
Yung Shin Pharmaceutical 260,000 637,471
Industries Co. Ltd.
37,986,061
THAILAND - 1.3%
Bangkok Bank Ltd. PCL (For. Reg.) (a) 400,000 608,696
Delta Electronics PCL (For. Reg.) 50,000 285,326
Malee Sampran Factory PCL 743,900 298,166
(For. Reg.) (a)
Shinawatra Computer & Communications PCL (For. Reg.) (a) 60,800 290,783
Thai Farmers Bank PCL (For. Reg.) (a) 600,000 758,152
SHARES VALUE (NOTE 1)
Thai Union Frozen Products PCL 94,000 $ 385,707
(For. Reg.)
United Broadcasting Corp. PCL 523,686 330,861
(For. Reg.) (a)
2,957,691
UNITED KINGDOM - 1.3%
HSBC Holdings PLC 127,465 2,902,786
TOTAL COMMON STOCKS 205,808,293
(Cost $209,254,270)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS - 0.2%
MOODY'S RATINGS (UNAUDITED) PRINCIPAL
AMOUNT (C)
CONVERTIBLE BONDS - 0.2%
UNITED KINGDOM - 0.2%
Shum Yip Capital Ltd. euro 1.2% 8/8/02 - $ 500,000 310,000
NONCONVERTIBLE BONDS - 0.0%
SINGAPORE - 0.0%
Flextech Holdings Ltd. 2.25% 10/23/02 - SGD 236,750 85,309
TOTAL CORPORATE BONDS 395,309
(Cost $420,600)
</TABLE>
CASH EQUIVALENTS - 6.9%
SHARES
Taxable Central Cash Fund (b) 15,197,316 15,197,316
(Cost $15,197,316)
TOTAL INVESTMENT IN SECURITIES - 100% $ 221,400,918
(Cost $224,872,186)
CURRENCY ABBREVIATIONS
SGD - Singapore dollar
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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 $213,157,627 and $204,119,665, respectively (see Note 3 of
Notes to Financial Statements).
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
AEROSPACE & DEFENSE 1.2%
BASIC INDUSTRIES 2.2
CASH EQUIVALENTS 6.9
CONSTRUCTION & REAL ESTATE 13.6
DURABLES 0.5
ENERGY 0.8
FINANCE 9.8
HEALTH 1.1
HOLDING COMPANIES 1.1
INDUSTRIAL MACHINERY & EQUIPMENT 11.8
MEDIA & LEISURE 1.6
NONDURABLES 2.7
RETAIL & WHOLESALE 2.2
SERVICES 0.4
TECHNOLOGY 19.4
TRANSPORTATION 4.6
UTILITIES 20.1
100.0%
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $226,910,997. Net unrealized depreciation
aggregated $5,510,079, of which $21,241,292 related to appreciated
investment securities and $26,751,371 related to depreciated
investment securities.
At October 31, 1998, the fund had a capital loss carryforward of
approximately $143,224,000 of which $32,651,000 and $110,573,000 will
expire on October 31, 2005 and 2006, respectively.
SOUTHEAST ASIA
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 221,400,918
SECURITIES, AT
VALUE
(COST
$224,872,18
6) -
SEE
ACCOMPANYIN
G SCHEDULE
FOREIGN 1,151,196
CURRENCY HELD
AT VALUE
(COST
$1,109,121)
RECEIVABLE FOR 438,694
INVESTMENTS
SOLD
RECEIVABLE FOR 633,560
FUND SHARES
SOLD
DIVIDENDS 286,256
RECEIVABLE
INTEREST 94,652
RECEIVABLE
OTHER 94,840
RECEIVABLES
TOTAL ASSETS 224,100,116
LIABILITIES
PAYABLE FOR $ 137,933
INVESTMENTS
PURCHASED
PAYABLE FOR 269,269
FUND SHARES
REDEEMED
ACCRUED 184,469
MANAGEMENT
FEE
OTHER PAYABLES 169,106
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 760,777
NET ASSETS $ 223,339,339
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 371,512,237
UNDISTRIBUTED 347,773
NET INVESTMENT
INCOME
ACCUMULATED (145,090,351)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (3,430,320)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 223,339,339
27,479,138
SHARES
OUTSTANDING
NET ASSET $8.13
VALUE AND
REDEMPTION
PRICE PER
SHARE
($223,339,3
39 (DIVIDED BY)
27,479,138
SHARES)
MAXIMUM $8.38
OFFERING PRICE
PER SHARE
(100/97.00
OF $8.13)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 5,983,148
DIVIDENDS
INTEREST 1,201,137
7,184,285
LESS FOREIGN TAXES WITHHELD (461,461)
TOTAL INCOME 6,722,824
EXPENSES
MANAGEMENT FEE $ 1,752,393
BASIC FEE
PERFORMANCE ADJUSTMENT 983,526
TRANSFER AGENT FEES 1,029,562
ACCOUNTING FEES AND EXPENSES 179,603
CUSTODIAN FEES AND EXPENSES 230,324
REGISTRATION FEES 25,461
AUDIT 70,818
LEGAL 1,125
REPORTS TO SHAREHOLDERS 38,217
MISCELLANEOUS 945
TOTAL EXPENSES BEFORE REDUCTIONS 4,311,974
EXPENSE REDUCTIONS (104,487) 4,207,487
NET INVESTMENT INCOME 2,515,337
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (111,098,189)
FOREIGN CURRENCY TRANSACTIONS (1,367,305) (112,465,494)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 70,590,094
ASSETS AND LIABILITIES IN 648,171 71,238,265
FOREIGN CURRENCIES
NET GAIN (LOSS) (41,227,229)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (38,711,892)
OTHER INFORMATION $ 507,395
SALES CHARGES PAID TO FDC
SALES CHARGE - RETAINED BY FDC $ 506,629
EXPENSE REDUCTIONS $ 102,543
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 1,944
$ 104,487
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ 2,515,337 $ 1,305,926
NET INVESTMENT
INCOME
NET REALIZED GAIN (112,465,494) (28,617,300)
(LOSS)
CHANGE IN NET 71,238,265 (92,383,800)
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (38,711,892) (119,695,174)
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO (1,459,446) (4,930,534)
SHAREHOLDERS
FROM NET INVESTMENT
INCOME
IN EXCESS OF NET - (3,526,327)
INVESTMENT INCOME
FROM NET REALIZED - (19,898,492)
GAIN
TOTAL DISTRIBUTIONS (1,459,446) (28,355,353)
SHARE TRANSACTIONS 131,309,522 157,877,019
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 1,428,081 27,853,163
DISTRIBUTIONS
COST OF SHARES (148,622,010) (514,623,033)
REDEEMED
NET INCREASE (15,884,407) (328,892,851)
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION FEES 548,119 444,381
TOTAL INCREASE (55,507,626) (476,498,997)
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 278,846,965 755,345,962
END OF PERIOD $ 223,339,339 $ 278,846,965
(INCLUDING
UNDISTRIBUTED NET
INVESTMENT INCOME
OF $347,773 AND
$752,671,
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 15,599,765 11,474,774
ISSUED IN 142,524 1,884,517
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (17,461,859) (35,591,294)
NET INCREASE (1,719,570) (22,232,003)
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED
OCTOBER 31,
SELECTED PER-SHARE 1998 1997 1996 1995 1994
DATA
NET ASSET VALUE, $ 9.55 $ 14.69 $ 13.88 $ 14.61 $ 13.24
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT .09 C .04 C, D .14 C .15 .04
INCOME
NET REALIZED AND (1.48) (4.62) .87 (.91) 1.23
UNREALIZED GAIN
(LOSS)
TOTAL FROM INVESTMENT (1.39) (4.58) 1.01 (.76) 1.27
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT (.05) (.10) (.23) - (.04)
INCOME
IN EXCESS OF NET - (.07) - - (.03)
INVESTMENT INCOME
FROM NET REALIZED - (.40) - - -
GAIN
TOTAL DISTRIBUTIONS (.05) (.57) (.23) - (.07)
REDEMPTION FEES .02 .01 .03 .03 .17
ADDED TO PAID IN
CAPITAL
NET ASSET VALUE, END OF $ 8.13 $ 9.55 $ 14.69 $ 13.88 $ 14.61
PERIOD
TOTAL RETURN A, B (14.44)% (32.48)% 7.59% (5.00)% 10.87%
RATIOS AND
SUPPLEMENTAL DATA
NET ASSETS, END OF $ 223,339 $ 278,847 $ 755,346 $ 649,868 $ 825,734
PERIOD (000 OMITTED)
RATIO OF EXPENSES TO 1.83% 1.32% 1.13% 1.10% 1.47%
AVERAGE NET ASSETS
RATIO OF EXPENSES TO 1.79% E 1.32% 1.12% E 1.10% 1.47%
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT 1.07% .22% .95% .90% .22%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 95% 141% 102% 94% 157%
A THE TOTAL RETURNS WOULD HAVE
BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE
NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
D INVESTMENT INCOME PER SHARE
REFLECTS A SPECIAL DIVIDEND
WHICH AMOUNTED TO $.02 PER
SHARE.
E FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE FUND'S
EXPENSES (SEE NOTE 7 OF NOTES
TO FINANCIAL STATEMENTS).
</TABLE>
UNITED KINGDOM
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. 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 total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
OCTOBER 31, 1998 YEAR FUND
FIDELITY UNITED KINGDOM 5.33% 54.50%
FIDELITY UNITED KINGDOM 2.17% 49.87%
(INCL. 3.00% SALES CHARGE)
FT-All-Shares 11.91% 70.67%
European Region Funds Average 15.45% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on November 1, 1995. For example, if you had invested $1,000
in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the FT-All-Shares Index - a market
capitalization-weighted index of over 840 stocks traded in 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 one year average represents a peer group of 91 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
OCTOBER 31, 1998 YEAR FUND
FIDELITY UNITED KINGDOM 5.33% 15.61%
FIDELITY UNITED KINGDOM 2.17% 14.44%
(INCL. 3.00% SALES CHARGE)
FT-All-Shares 11.91% 19.51%
European Region Funds Average 15.45% 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 10045.63
1995/12/31 9778.19 10332.30
1996/01/31 9729.49 10310.34
1996/02/29 9963.23 10460.66
1996/03/31 10099.58 10580.27
1996/04/30 10411.24 10783.02
1996/05/31 10722.89 10999.14
1996/06/30 10596.28 10897.13
1996/07/31 10430.72 10838.63
1996/08/31 10927.42 11423.97
1996/09/30 11005.33 11641.61
1996/10/31 11579.95 12221.95
1996/11/30 12183.78 12823.08
1996/12/31 12575.73 13285.32
1997/01/31 12205.27 12911.20
1997/02/28 12555.71 13299.67
1997/03/31 12565.72 13420.62
1997/04/30 12665.85 13546.04
1997/05/31 13016.28 14119.45
1997/06/30 13216.53 14307.89
1997/07/31 13526.92 14788.25
1997/08/31 13366.72 14587.42
1997/09/30 14408.03 15706.71
1997/10/31 14227.80 15250.76
1997/11/30 14347.95 15309.01
1997/12/31 14686.21 15781.29
1998/01/31 15115.63 16509.20
1998/02/28 16103.30 17613.50
1998/03/31 17037.29 18678.26
1998/04/30 17048.02 18737.66
1998/05/31 16919.20 18390.36
1998/06/30 16790.37 18462.12
1998/07/31 16146.24 18059.16
1998/08/31 13902.51 16565.85
1998/09/30 14428.55 16189.75
1998/10/30 14986.80 17067.41
IMATRL PRASUN SHR__CHT 19981031 19981113 094112 R00000000000039
$10,000 OVER LIFE OF FUND: 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 3.00% sales charge was paid. As the
chart shows, by October 31, 1998, the value of the investment would
have grown to $14,987 - a 49.87% 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 would have grown to $17,067 - a 70.67% 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
NOTE TO SHAREHOLDERS: Frederic Gautier became Portfolio Manager of
Fidelity United Kingdom Fund on August 1, 1998.
Q. HOW DID THE FUND PERFORM, FREDERIC?
A. For the 12-month period ended October 31, 1998, the Fidelity United
Kingdom Fund returned 5.33%. In comparison, the Financial Times
(FT)-All-Shares Index returned 11.91%, and the European region funds
average was up 15.45%, according to Lipper Analytical Services.
Q. WHAT CAUSED THE FUND TO PRODUCE RETURNS LOWER THAN THE INDEX?
A. As the fund invests in the U.K. only, the most relevant performance
comparison is the FT-All-Shares Index. During the period, the Bank of
England boosted short-term interest rates in the U.K. several times in
an effort to slow down the economy and curtail inflation. Rising
interest rates generally translate into a stronger currency. Relative
to the index, the fund was heavily weighted in industrial companies
that rely on exports for a large percentage of their profits. A strong
currency tends to hurt exporters because their goods become expensive
relative to other countries.
Q. HOW WOULD YOU DESCRIBE THE U.K. INVESTMENT ENVIRONMENT?
A. Ten years ago, the U.K. was primarily a manufacturing country.
Today, the service sector comprises about two-thirds of the economy,
with the two biggest sectors being banking and telecommunications. The
stock market is relatively inexpensive compared to Continental Europe,
where investors are eagerly anticipating the start of the euro,
Europe's single currency. Even though the U.K. is not adopting the new
currency, most companies here will still have to update their
accounting systems to reflect the euro because their customers on the
Continent will be using it. We suspect that U.K. companies could price
their products in both the pound Sterling and the euro, and customers
will become much more aware of pricing differences between the U.K.
and the rest of the Continent. Some retailers in our portfolio will
most likely be negatively impacted, but our manufacturers will
probably benefit from the increased competition.
Q. WHICH STOCKS HELPED THE FUND'S PERFORMANCE?
A. One of my largest positions is Vodafone, a leading mobile telephone
operator in the U.K. The company's market position is very strong in
Continental Europe, where the market for cellular phones is much more
developed than the U.S. Another favorite is CRH PLC, an Irish
building-materials company that is very profitable. The company should
benefit from a major road construction program about to begin in the
United States. British Aerospace is benefiting from the consolidation
of the defense industry in Europe. Similarly, Glaxo Wellcome and
SmithKline Beecham are very strong pharmaceutical companies that have
benefited from potential industry consolidation.
Q. WHICH STOCKS DID NOT PERFORM AS WELL AS YOU HAD HOPED?
A. Persimmon, a homebuilder, performed poorly on recession fears.
However, we believe that falling interest rates should buoy the stock,
which is only selling at seven times earnings. Another poor performer
was Shell Transport, which was adversely impacted by plunging oil
prices and a large exposure to Asia's economic crisis. Finally, being
underweighted in British Telecom for much of the period hurt our
relative performance, since that stock performed well.
Q. YOU TOOK OVER THE PORTFOLIO ON AUGUST 1, 1998. HOW IS YOUR STYLE
DIFFERENT THAN THE PREVIOUS MANAGER?
A. The previous manager was implementing more of a top-down approach,
using his views on the economy to invest in sectors. In contrast, I
keep the portfolio's industry weightings quite similar to the
benchmark, but try to pick the best stocks within each sector. That's
why it's great that our analytical team in London is organized along
industry sectors on a pan-European basis. They can compare U.K.
companies with Continental companies operating in the same industry.
I'm also more likely to emphasize larger companies because they have
consistently outperformed small and mid-sized companies as a group. In
addition, large company stocks are more liquid and less expensive to
trade than smaller companies.
Q. WHAT IS YOUR OUTLOOK?
A. The U.K. stock market is very attractively priced compared to
Continental Europe and the United States. Now that interest rates have
stopped rising in the U.K., the pound Sterling has probably peaked,
and that should help exporters in the portfolio. I expect the economy
to slow down and inflation to remain low. Although corporate profits
are projected to remain flat in 1999, I believe that U.K. stock prices
already reflect modest expectations for corporate performance. I'm
confident that many of the companies in the portfolio may indeed beat
those expectations.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of British issuers
FUND NUMBER: 344
TRADING SYMBOL: FUTYF
START DATE: November 1, 1995
SIZE: as of October 31, 1998, more than
$6 million
MANAGER: Frederic Gautier, since August 1998;
manager, various Fidelity funds through Fidelity
International Limited, since 1995; joined Fidelity
in 1994
(checkmark)
UNITED KINGDOM
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
UNITED STATES 3.1%
IRELAND 3.9%
ROW: 1, COL: 1, VALUE: 3.9
ROW: 1, COL: 2, VALUE: 93.0
ROW: 1, COL: 3, VALUE: 3.1
UNITED KINGDOM 93.0%
AS OF APRIL 30, 1998
UNITED STATES 2.2%
OTHER 0.5%
ROW: 1, COL: 1, VALUE: 1.0
ROW: 1, COL: 2, VALUE: 97.0
ROW: 1, COL: 3, VALUE: 2.0
UNITED KINGDOM 97.3%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 96.9 97.8
Short-term investments 3.1 2.2
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Glaxo Wellcome PLC 5.4 3.5
(Drugs & Pharmaceuticals)
British Petroleum Co. PLC 4.5 3.1
(Oil & Gas)
SmithKline Beecham PLC (Drugs & 4.4 2.6
Pharmaceuticals)
Vodafone Group PLC (Cellular) 4.2 2.9
Lloyds TSB Group PLC (Banks) 4.1 4.1
HSBC Holdings PLC 3.8 2.4
(UK Reg.) (Banks)
British Telecommunications PLC (Telephone Services) 3.3 0.0
Shell Transport & Trading Co. PLC (Reg.) (Oil & Gas) 2.9 3.4
National Westminster Bank PLC (Banks) 2.8 0.0
Southern Electric PLC 2.5 0.0
(Electric Utility)
</TABLE>
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 24.7 16.8
UTILITIES 14.2 8.5
HEALTH 11.7 9.0
NONDURABLES 10.9 12.1
RETAIL & WHOLESALE 8.0 7.0
ENERGY 7.4 7.8
MEDIA & LEISURE 5.9 7.3
CONSTRUCTION & REAL ESTATE 4.1 6.5
INDUSTRIAL MACHINERY & 2.1 1.5
EQUIPMENT
SERVICES 1.9 3.8
UNITED KINGDOM
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 96.9%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.9%
British Aerospace PLC 18,100 $ 131,539
BASIC INDUSTRIES - 0.8%
CHEMICALS & PLASTICS - 0.4%
Wardle Storeys PLC 5,400 28,755
PAPER & FOREST PRODUCTS - 0.4%
Smurfit (Jefferson) Group PLC 16,000 26,479
TOTAL BASIC INDUSTRIES 55,234
CONSTRUCTION & REAL ESTATE - 4.1%
BUILDING MATERIALS - 1.8%
CRH PLC 8,700 126,743
CONSTRUCTION - 1.6%
Persimmon PLC 16,690 48,349
Wimpey George PLC 34,800 65,848
114,197
REAL ESTATE - 0.7%
Minerva PLC 15,700 46,007
TOTAL CONSTRUCTION & REAL ESTATE 286,947
ENERGY - 7.4%
OIL & GAS - 7.4%
British Petroleum Co. PLC 21,285 313,647
Shell Transport & Trading Co. PLC (Reg.) 32,700 200,232
513,879
FINANCE - 24.7%
BANKS - 15.0%
Bank of Ireland, Inc. 6,300 115,252
Bank of Scotland 7,400 80,420
HSBC Holdings PLC (Reg.) 11,669 265,740
Lloyds TSB Group PLC 23,091 285,161
National Westminster Bank PLC 11,500 194,301
Royal Bank of Scotland Group PLC 7,200 95,487
1,036,361
CREDIT & OTHER FINANCE - 0.9%
Cattles Holdings PLC 6,400 64,944
INSURANCE - 7.8%
Allied Zurich PLC (a) 5,726 68,076
CGU PLC 4,282 67,866
Domestic & General Group PLC 7,900 61,513
Hogg Robinson PLC 17,200 63,795
Norwich Union PLC 14,800 105,574
Prudential Corp. PLC 5,100 66,355
United Assurance Group PLC 10,600 103,215
536,394
SECURITIES INDUSTRY - 1.0%
Man (E D & F) Group PLC 13,000 71,945
TOTAL FINANCE 1,709,644
SHARES VALUE (NOTE 1)
HEALTH - 11.7%
DRUGS & PHARMACEUTICALS - 11.0%
Glaxo Wellcome PLC 11,852 $ 368,788
Seton Scholl Healthcare Group PLC 6,713 84,869
SmithKline Beecham PLC 23,939 305,142
758,799
MEDICAL FACILITIES MANAGEMENT - 0.7%
Westminster Health Care Holdings PLC 11,200 48,574
TOTAL HEALTH 807,373
INDUSTRIAL MACHINERY & EQUIPMENT - 2.1%
ELECTRICAL EQUIPMENT - 1.4%
Siebe PLC 23,300 95,589
INDUSTRIAL MACHINERY & EQUIPMENT - 0.7%
FKI PLC 22,500 47,472
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 143,061
MEDIA & LEISURE - 5.9%
BROADCASTING - 1.3%
Capital Radio PLC 5,600 47,167
Scottish Media Group PLC 3,770 41,160
88,327
LODGING & GAMING - 2.3%
Ladbroke Group PLC 28,500 104,395
Millennium & Copthorne Hotels PLC 8,450 51,858
156,253
PUBLISHING - 2.3%
Daily Mail & General Trust PLC Class A 2,000 73,578
Pearson PLC 5,020 87,590
161,168
TOTAL MEDIA & LEISURE 405,748
NONDURABLES - 10.9%
BEVERAGES - 5.9%
Cadbury-Schweppes PLC 8,100 124,106
Diageo PLC 14,500 156,608
Scottish & Newcastle PLC 10,050 122,513
403,227
FOODS - 3.7%
Hazlewood Foods PLC 22,250 57,936
Matthews (Bernard) PLC 13,100 22,813
Tomkins PLC 24,709 114,402
United Biscuits Holdings PLC 15,200 59,813
254,964
TOBACCO - 1.3%
British American Tobacco PLC 10,126 91,478
TOTAL NONDURABLES 749,669
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - 8.0%
APPAREL STORES - 0.4%
JJB Sports PLC Class L 6,500 $ 24,490
GENERAL MERCHANDISE STORES - 2.6%
Kingfisher PLC 14,900 130,863
New Look Group PLC (a) 19,800 47,412
178,275
GROCERY STORES - 2.9%
Asda Group PLC 38,030 102,527
Somerfield PLC 15,500 100,056
202,583
RETAIL & WHOLESALE, MISCELLANEOUS - 2.1%
Boots Co. PLC 9,900 148,701
TOTAL RETAIL & WHOLESALE 554,049
SERVICES - 1.9%
ADVERTISING - 0.8%
Saatchi & Saatchi PLC 29,500 57,301
SERVICES - 1.1%
Rentokil Initial PLC 12,100 75,778
TOTAL SERVICES 133,079
TECHNOLOGY - 1.7%
COMPUTER SERVICES & SOFTWARE - 0.7%
Sage Group PLC 2,300 49,394
COMPUTERS & OFFICE EQUIPMENT - 0.2%
Eurodis Electron PLC 11,200 13,128
ELECTRONICS - 0.8%
Vitec Group PLC 6,600 54,374
TOTAL TECHNOLOGY 116,896
TRANSPORTATION - 1.6%
TRUCKING & FREIGHT - 1.6%
Stagecoach Holdings PLC 29,000 112,660
UTILITIES - 14.2%
CELLULAR - 4.2%
Vodafone Group PLC 21,685 291,858
ELECTRIC UTILITY - 4.4%
National Grid Group PLC 19,033 130,351
Southern Electric PLC 16,900 173,756
304,107
GAS - 0.4%
BG PLC 4,100 26,878
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - 4.2%
British Telecommunications PLC 17,700 $ 230,260
Securicor PLC 8,000 59,210
289,470
WATER - 1.0%
Yorkshire Water PLC 8,100 69,581
TOTAL UTILITIES 981,894
TOTAL COMMON STOCKS 6,701,672
(Cost $6,661,700)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CASH EQUIVALENTS - 3.1%
MATURITY
AMOUNT
Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading
account at 5.39%, dated 10/30/98 $ 41,018 41,000
due 11/2/98
SHARES
Taxable Central Cash Fund (b) 175,643 175,643
TOTAL CASH EQUIVALENTS 216,643
(Cost $216,643)
TOTAL INVESTMENT IN SECURITIES - 100% $ 6,918,315
(Cost $6,878,343)
</TABLE>
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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 $14,569,754 and $13,324,274, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $61 for the period
(see Note 4 of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $2,444,000 and $961,875, respectively. The
weighted average interest rate was 5.8% (see Note 6 of Notes to
Financial Statements).
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $6,946,395. Net unrealized depreciation
aggregated $28,080, of which $506,233 related to appreciated
investment securities and $534,313 related to depreciated investment
securities.
The fund hereby designates approximately $563,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
UNITED KINGDOM
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 6,918,315
SECURITIES, AT
VALUE
(INCLUDING
REPURCHASE
AGREEMENTS OF
$41,000)
(COST
$6,878,343)
- - SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 237,498
INVESTMENTS
SOLD
RECEIVABLE FOR 2,640
FUND SHARES
SOLD
DIVIDENDS 35,829
RECEIVABLE
INTEREST 961
RECEIVABLE
TOTAL ASSETS 7,195,243
LIABILITIES
PAYABLE TO $ 2,983
CUSTODIAN
BANK
PAYABLE FOR 226,540
INVESTMENTS
PURCHASED
PAYABLE FOR 2,970
FUND SHARES
REDEEMED
ACCRUED 2,229
MANAGEMENT
FEE
OTHER PAYABLES 45,087
AND ACCRUED
EXPENSES
TOTAL LIABILITIES 279,809
NET ASSETS $ 6,915,434
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 6,231,179
UNDISTRIBUTED 99,432
NET INVESTMENT
INCOME
ACCUMULATED 544,895
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 39,928
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 6,915,434
495,385
SHARES
OUTSTANDING
NET ASSET $13.96
VALUE AND
REDEMPTION
PRICE PER
SHARE
($6,915,434
(DIVIDED BY) 495,385
SHARES)
MAXIMUM $14.39
OFFERING PRICE
PER SHARE
(100/97.00
OF $13.96)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 248,955
DIVIDENDS
INTEREST 23,711
272,666
LESS FOREIGN TAXES WITHHELD (27,460)
TOTAL INCOME 245,206
EXPENSES
MANAGEMENT FEE $ 55,409
TRANSFER AGENT FEES 22,574
ACCOUNTING FEES AND EXPENSES 60,078
NON-INTERESTED TRUSTEES' COMPENSATION 27
CUSTODIAN FEES AND EXPENSES 69,134
REGISTRATION FEES 14,054
AUDIT 29,365
LEGAL 25
INTEREST 1,231
REPORTS TO SHAREHOLDERS 2,228
MISCELLANEOUS 20
TOTAL EXPENSES BEFORE REDUCTIONS 254,145
EXPENSE REDUCTIONS (103,402) 150,743
NET INVESTMENT INCOME 94,463
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 575,652
FOREIGN CURRENCY TRANSACTIONS (800) 574,852
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (518,702)
ASSETS AND LIABILITIES IN (1,295) (519,997)
FOREIGN CURRENCIES
NET GAIN (LOSS) 54,855
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 149,318
OTHER INFORMATION $ 18,402
SALES CHARGES PAID TO FDC
SALES CHARGES - RETAINED BY FDC $ 17,652
EXPENSE REDUCTIONS $ 103,194
FMR REIMBURSEMENT
DIRECTED BROKERAGE ARRANGEMENTS 188
CUSTODIAN CREDITS 20
$ 103,402
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ 94,463 $ 120,593
NET INVESTMENT
INCOME
NET REALIZED GAIN 574,852 580,520
(LOSS)
CHANGE IN NET (519,997) 249,896
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE 149,318 951,009
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO (115,006) (35,705)
SHAREHOLDERS
FROM NET INVESTMENT
INCOME
FROM NET REALIZED (484,235) (54,931)
GAIN
TOTAL DISTRIBUTIONS (599,241) (90,636)
SHARE TRANSACTIONS 6,741,898 5,571,480
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 598,563 90,558
DISTRIBUTIONS
COST OF SHARES (5,731,991) (3,481,394)
REDEEMED
NET INCREASE 1,608,470 2,180,644
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION FEES 48,025 12,334
TOTAL INCREASE 1,206,572 3,053,351
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 5,708,862 2,655,511
END OF PERIOD $ 6,915,434 $ 5,708,862
(INCLUDING
UNDISTRIBUTED NET
INVESTMENT INCOME
OF $99,432 AND
$115,342,
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 455,368 437,185
ISSUED IN 43,658 7,700
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (405,257) (266,573)
NET INCREASE 93,769 178,312
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED
OCTOBER 31,
SELECTED PER-SHARE 1998 1997 1996 D
DATA
NET ASSET VALUE, $ 14.21 $ 11.89 $ 10.00
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT .19 C .31 C .16
INCOME
NET REALIZED AND .46 2.31 1.75
UNREALIZED GAIN
(LOSS)
TOTAL FROM INVESTMENT .65 2.62 1.91
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT (.19) (.13) (.04)
INCOME
FROM NET REALIZED (.80) (.20) -
GAIN
TOTAL DISTRIBUTIONS (.99) (.33) (.04)
REDEMPTION FEES .09 .03 .02
ADDED TO PAID IN
CAPITAL
NET ASSET VALUE, END OF $ 13.96 $ 14.21 $ 11.89
PERIOD
TOTAL RETURN A, B 5.33% 22.87% 19.38%
RATIOS AND
SUPPLEMENTAL DATA
NET ASSETS, END OF $ 6,915 $ 5,709 $ 2,656
PERIOD (000 OMITTED)
RATIO OF EXPENSES TO 2.02% E 2.00% E 2.00% E
AVERAGE NET ASSETS
RATIO OF EXPENSES TO 2.01% F 1.99% F 1.97% F
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT 1.26% 2.36% 1.62%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 191% 96% 50%
A THE TOTAL RETURNS WOULD HAVE
BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE
NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
D FOR THE PERIOD NOVEMBER 1,
1995 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31,
1996.
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 7 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 7 OF NOTES
TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED OCTOBER 31, 1998
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 require 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. If trading or events occurring in other markets
after the close of the principal market in which securities are traded
are expected to materially affect the value of those securities, then
they are valued at their fair value taking this trading or these
events into account. Fair value is determined in good faith under
consistently applied procedures under the general supervision of the
Board of Trustees. Securities (including restricted securities) for
which quotations are not readily available are valued primarily using
dealer-supplied valuations or at their fair value. Short-term
securities with remaining maturities of sixty days or less for which
quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the funds are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. 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 they invest.
Each fund accrues such taxes as applicable. The schedules of
investments include information regarding income taxes under the
caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the funds
are informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income 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
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for futures transactions, foreign currency transactions,
passive foreign investment companies (PFIC), net operating losses,
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, 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.
SHORT-TERM TRADING (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 short-term trading fee equal to
1.50% of the proceeds of the redeemed shares.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
SHORT-TERM TRADING (REDEMPTION) FEES - CONTINUED
Shares held in Europe, Europe Capital Appreciation, and Pacific Basin
less than 90 days are subject to a short-term trading 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.
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 Fidelity Investments Money Management, Inc., 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. Income distributions
from the Cash Fund are declared daily and paid monthly from net
interest income. Income distributions earned by the funds are recorded
as interest income in the accompanying financial statements.
FUTURES CONTRACTS. Certain funds may use futures contracts to manage
its exposure to the stock market and to fluctuations in currency
values. Buying futures tends to increase the fund's exposure to the
underlying instrument, while selling futures tends to decrease the
fund's exposure to the underlying instrument or hedge other fund
investments. Losses may arise from changes in the value of the
underlying instruments or if the counterparties do not perform under
the contracts' terms. Gains (losses) are realized upon the expiration
or closing of the futures contracts. Futures contracts are valued at
the settlement price established each day by the board of trade or
exchange on which they are traded.
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 "Other Information" at the end of each applicable
fund's schedule of investments.
3. PURCHASES AND SALES OF INVESTMENTS.
Information regarding purchases and sales of securities (other than
short-term securities), the market value of futures 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 for the funds. The annual individual fund fee
rate is .45% for each fund. 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 basic fee for Canada, Europe, Europe
Capital Appreciation, Japan, Pacific Basin, and Southeast Asia is
subject to a performance adjustment (up to a maximum of
(plus/minus).20% of 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.
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
For the period, each fund's management fee was equivalent to the
following annual rates expressed as a percentage of average net assets
after the performance adjustment, if applicable:
Canada .30%
Emerging Markets .74%
Europe .73%
Europe Capital Appreciation .72%
France .73%
Germany .73%
Hong Kong and China .74%
Japan 1.01%
Japan Small Companies .74%
Latin America .75%
Nordic .74%
Pacific Basin 1.11%
Southeast Asia 1.16%
United Kingdom .74%
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 Investments
Japan Limited (FIJ) (Japan and Japan Small Companies funds only). In
addition, FIIA entered into a sub-advisory agreement with its
subsidiary, Fidelity International Investment Advisors (U.K.) Limited
(FIIA(U.K.)L). 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 FIIA(U.K.)L 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 fund. FDC receives a sales
charge of up to 3% for selling shares of each fund. For the period
July 1, 1998 to December 31, 1998, FDC voluntarily waived the sales
charge on the sale of shares of the Europe Capital Appreciation Fund.
Shares of Canada, Europe, and Pacific Basin purchased prior to October
12, 1990, are subject to a 1% deferred sales charge upon redemption.
The amounts received and retained by FDC for sales charges and
deferred sales charges are shown under the caption "Other Information"
on each 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, the transfer agent fees were equivalent to the
following annual rates expressed as a percentage of the average net
assets:
Canada .36%
Emerging Markets .52%
Europe .23%
Europe Capital Appreciation .23%
France .29%
Germany .30%
Hong Kong and China .41%
Japan .32%
Japan Small Companies .29%
Latin America .32%
Nordic .30%
Pacific Basin .46%
Southeast Asia .44%
United Kingdom .30%
ACCOUNTING FEES. FSC maintains each fund's accounting records. The
accounting 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. SECURITY LENDING.
Certain funds loaned securities to brokers who paid the funds
negotiated lenders' fees. These fees are included in interest income.
Each applicable fund receives U.S. Treasury obligations and/or cash as
collateral against the loaned securities, in an amount at least equal
to 102% of the market value of the loaned securities at the inception
of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of the
loan. Information regarding the value of securities loaned and the
value of collateral at period end is included under the caption "Other
Information" at the end of each applicable fund's schedule of
investments.
6. BANK BORROWINGS.
Each fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. Each fund has
established borrowing arrangements with certain banks. Under the most
restrictive arrangement, each fund must pledge to the bank securities
having a market value in excess of 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.
7. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse certain funds' operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above an annual rate of 2.00% of average net assets of each
of the applicable funds.
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 expenses.
For the period, the reductions under these arrangements are shown
under the caption "Other Information" on each applicable fund's
Statement of Operations.
8. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of
more than 5% of the outstanding shares of the following funds:
FMR
FUND % OF OWNERSHIP
France 18
Japan Small Companies 42
United Kingdom 22
At the end of the period, one shareholder was record owner of
approximately 13% of the total outstanding shares of the United
Kingdom Fund.
9. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company which the fund has ownership of at
least 5% of the voting securities. Information regarding transactions
with affiliated companies is included in "Other Information" at the
end of each applicable fund's schedule of investments.
10. LITIGATION.
The Latin America Fund is engaged in litigation against the obligor on
the inflation adjusted debt of Siderurgica Brasileiras SA, contesting
the calculation of the principal adjustment. The probability of
success of this litigation cannot be predicted and the amount of
recovery cannot be estimated. Any recovery from this litigation would
inure to the benefit of the fund. As of period end, the Latin America
Fund no longer holds Siderurgica Brasileiras SA debt securities.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Investment Trust and the Shareholders of:
Fidelity 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:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Canada Fund, Fidelity Emerging Markets Fund, Fidelity Europe
Fund, Fidelity Europe Capital Appreciation Fund, Fidelity France Fund,
Fidelity Germany Fund, Fidelity Hong Kong and China Fund, Fidelity
Japan Fund, Fidelity Japan Small Companies Fund, Fidelity Latin
America Fund, Fidelity Nordic Fund, Fidelity Pacific Basin Fund,
Fidelity Southeast Asia Fund and Fidelity United Kingdom Fund (funds
of Fidelity Investment Trust) at October 31, 1998, and the results of
their operations, the changes in their net assets and the financial
highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements")
are the responsibility of the Fidelity Investment Trust's management;
our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities at October 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 14, 1998
DISTRIBUTIONS
The Board of Trustees of the following funds voted to pay to
shareholders of record at the opening of business on record date, the
following distributions derived from capital gains realized from sales
of portfolio securities, and dividends derived from net investment
income:
LONG TERM
SHORT TERM LONG TERM CAPITAL GAIN PERCENTAGES
PAY DATE RECORD DATE DIVIDENDS CAPITAL GAINS CAPITAL GAINS 28% RATE
20% RATE
Canada 12/8/97 12/5/97 $.05 $1.00 $1.08 31.16% 68.84%
12/7/98 12/4/98 $.07 - - - -
Europe 12/8/97 12/5/97 $.39 $.35 $2.00 41.89% 58.11%
12/7/98 12/4/98 $.28 - $2.25 - 100.00%
Europe Capital Appreciation 12/15/97 12/12/97 $.16 $1.54 $.55 50.02%
49.98%
France 12/8/97 12/5/97 $.04 $.56 $.59 60.37% 39.63%
Germany 12/15/97 12/12/97 - $.63 $.62 52.54% 47.46%
Hong Kong and China 12/7/98 12/4/98 $.32 - - - -
Japan 12/7/98 12/4/98 $.03 - - - -
Latin America 12/7/98 12/4/98 $.23 - - - -
Nordic 12/15/97 12/12/97 $.07 $.62 $.56 45.08% 54.92%
Pacific Basin 12/14/98 12/11/98 $.02 - - - -
Southeast Asia 12/7/98 12/4/98 $.02 - - - -
United Kingdom 12/8/97 12/5/97 $.19 $.08 $.72 32.34% 67.66%
12/7/98 12/4/98 $.14 $.35 $.48 - 100.00%
A percentage of the dividends distributed during the fiscal year for
the following funds qualifies for the dividends-received deduction for
corporate shareholders.
CANADA 7%
HONG KONG AND CHINA 2%
SOUTHEAST ASIA 1%
A percentage of the dividends distributed during the fiscal year for
the following funds were derived from interest on U.S. Government
securities which is generally exempt from state income tax.
CANADA .24%
EUROPE 1.02%
EUROPE CAPITAL APPRECIATION .05%
FRANCE .34%
HONG KONG AND CHINA 1.78%
JAPAN 7.74%
JAPAN SMALL COMPANIES 8.84%
LATIN AMERICA 2.80%
NORDIC .36%
PACIFIC BASIN 3.03%
SOUTHEAST ASIA 3.74%
UNITED KINGDOM 1.15%
The amounts per share which represent income derived from sources
within, and taxes paid to, foreign countries or possessions of the
United States are as follows:
PAY DATE INCOME TAXES
Canada 12/8/97 $.113 $.018
Emerging Markets 12/15/97 $.270 $.040
Europe 12/8/97 $.679 $.098
Europe Capital Appreciation 12/15/97 $.248 $.033
France 12/8/97 $.251 $.035
Germany 12/15/97 $.123 $.014
Hong Kong and China 12/8/97 $.050 -
Hong Kong and China 12/31/97 $.010 -
Japan 12/8/97 $.081 $.013
Japan Small Companies 12/15/97 $.016 $.006
Latin America 12/8/97 $.216 $.016
Nordic 12/15/97 $.225 $.034
Pacific Basin 12/15/97 $.224 $.021
Southeast Asia 12/8/97 $.077 $.027
United Kingdom 12/8/97 $.291 $.032
The funds will notify shareholders in January 1999 of amounts for use
in preparing 1998 income tax returns.
[This page left intentionally blank.]
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
Robert C. Pozen, SENIOR VICE PRESIDENT
Richard A. Spillane, Jr., VICE PRESIDENT
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
David Stewart, VICE PRESIDENT, EMERGING MARKETS FUND
Eric D. Roiter, SECRETARY
Richard A. Silver, TREASURER
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
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 (registered trademark) 1-800-544-5555
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
BROADLY DIVERSIFIED INTERNATIONAL EQUITY
FUNDS
Fidelity International Growth & Income Fund
Fidelity Diversified International Fund
Fidelity International Value Fund
Fidelity Overseas Fund
Fidelity Worldwide Fund
ANNUAL REPORT
FOR THE YEAR ENDING
OCTOBER 31, 1998
AND
PROSPECTUS
DATED DECEMBER 30, 1998
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
MARKET RECAP A-3 A REVIEW OF WHAT HAPPENED IN WORLD MARKETS
DURING THE LAST 12 MONTHS.
INTERNATIONAL GROWTH & INCOME FUND A-4 PERFORMANCE
A-5 FUND TALK: THE MANAGER'S OVERVIEW
A-7 INVESTMENT CHANGES
A-8 INVESTMENTS
A-12 FINANCIAL STATEMENTS
DIVERSIFIED INTERNATIONAL FUND A-14 PERFORMANCE
A-15 FUND TALK: THE MANAGER'S OVERVIEW
A-17 INVESTMENT CHANGES
A-18 INVESTMENTS
A-25 FINANCIAL STATEMENTS
INTERNATIONAL VALUE FUND A-27 PERFORMANCE
A-28 FUND TALK: THE MANAGER'S OVERVIEW
A-30 INVESTMENT CHANGES
A-31 INVESTMENTS
A-34 FINANCIAL STATEMENTS
OVERSEAS FUND A-36 PERFORMANCE
A-37 FUND TALK: THE MANAGER'S OVERVIEW
A-39 INVESTMENT CHANGES
A-40 INVESTMENTS
A-45 FINANCIAL STATEMENTS
WORLDWIDE FUND A-47 PERFORMANCE
A-48 FUND TALK: THE MANAGER'S OVERVIEW
A-50 INVESTMENT CHANGES
A-51 INVESTMENTS
A-54 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS A-56 NOTES TO THE FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS A-59 THE AUDITORS' OPINION
DISTRIBUTIONS A-60
FIDELITY'S BROADLY DIVERSIFIED P-1
INTERNATIONAL EQUITY
FUNDS PROSPECTUS
</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
The specter of a slowing world economy cast dark shadows across many
global markets during the 12-month period ending October 31, 1998.
With Asia continuing its tailspin, emerging markets in crisis, and
even the U.S. and Europe approaching bear-market levels, the economic
forecast by summer's end was anything but bright. Fortunately, thanks
in part to the intervention of international economic organizations,
most global markets weathered the storm and were on their way to
recovery by period's end.
EUROPE: Until late July, European stock markets benefited from
expectations of strong corporate profit growth, improved economic
prospects and strong inflows into mutual funds. Between late July and
early October, however, investors' earlier optimism was scuttled by
concerns that profits would not be as strong as expected due to
recession in Japan and elsewhere in Asia. Another huge shove toward a
pessimistic outlook occurred when Russia devalued the ruble in August
and defaulted on loans. This set off a crisis of confidence in
emerging markets, leading investors to seek safer havens in
conservative and liquid investments over equities. The European
markets suffered a steep decline, but, along with the U.S. market,
began to recover in October when the U.S. Federal Reserve Board cut
interest rates for a second time. For the 12-month period, the Morgan
Stanley Europe Index returned 23.39%. On January 1, 1999, 11 countries
of the European Monetary Union will officially adopt the euro as their
currency.
EMERGING MARKETS: The world's emerging markets suffered considerably
throughout the 12-month period ending October 31, 1998. Russia's
political, economic and currency woes had worldwide implications.
Latin American markets were rocked by developments such as credit
rating downgrades in Brazil and Venezuela. For the period, the MSCI
Emerging Markets Latin American Free Index returned -28.00%.
Malaysia's corporate loan defaults, along with bank closings and
economic woes in Indonesia, contributed to the Asian emerging-markets
decline. The MSCI Far East ex-Japan Free Index fell -23.05% during the
12-month period.
JAPAN AND THE FAR EAST: The Japanese economy continued to sink lower,
amid unfulfilled promises by the government to help the ailing banking
sector. The banking system's problems, specifically bad debt and an
increasing credit crunch, were particularly hard on the small-cap
market, spurring investors' flight to
large, globally competitive companies. Even the formerly strong export
companies found it harder to operate profitably toward the end of the
period, as the yen, which had fallen for the first 10 months of the
period, suddenly surged upward against the U.S. dollar in September
and October. The Tokyo Stock Exchange Index, a gauge of the Japanese
market, was down -15.42% for the 12 months. In Hong Kong, the
government purchased $15 billion in securities in an attempt to temper
market volatility. Late in the period, the Hong Kong market rebounded
on speculation of a decline in interest rates. For the period, the
Hang Seng Index returned -1.56%.
U.S. AND CANADA: The U.S. equity markets fluctuated wildly against a
backdrop of worldwide economic and financial unrest. After closing
above 9000 for the first time in April and reaching a record high in
July, the Dow Jones Industrial Average saw all its returns for the
year erased on the last day of August as the U.S. equity market
suffered one of its worst one-day performances ever. Despite the
equity market's tumultuous behavior, the U.S. economy remained strong
and steady thanks to low inflation, strong employment and low interest
rates. In fact, toward the end of the period, the Federal Reserve
Board cut key interest rates twice, resulting in a sharp rebound in
the stock market during October. For the 12-month period, the Standard
& Poor's 500 Index returned 21.99%. The Canadian stock market was not
as fortunate. Natural resource companies that make up a significant
proportion of the Canadian economy were hard hit by the global
economic slowdown triggered by the Asian financial crisis that started
in 1997. When the problems in Russia were added to the situation, the
Canadian market and the Canadian dollar fell sharply. For the 12
months that ended October 31, 1998, the Toronto Stock Exchange (TSE)
300 returned -15.82%.
BONDS: In a see-saw battle that saw bonds rise as world equity markets
struggled to get off the ground, then head back to earth as stocks
began to regain their lofty levels, bonds and stocks ultimately ended
up with nearly level performance in some instances. For the period,
the Lehman Brothers Long Term Government Index return of 16.04% nearly
rivaled the 17.45% gain of the equity benchmark Dow Jones Industrials
Average. U.S. Treasuries were by far the best-performing bonds, and
the safe haven of choice by investors around the world. In contrast,
the JP Morgan Emerging Markets Bond Index returned -6.20%. The Salomon
Brothers Non-U.S. World Government Bond Index returned 12.80%.
Standard & Poor's 500 Index(registered trademark) Morgan Stanley
Capital International Europe, Australasia, Far East Index
* YEAR TO DATE THROUGH OCTOBER 31, 1998.
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: 69.44
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: 7.62
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: 37.58
Row: 13, Col: 2, Value: 11.21
Row: 14, Col: 1, Value: 22.96
Row: 14, Col: 2, Value: 6.05
Row: 15, Col: 1, Value: 32.11
Row: 15, Col: 2, Value: 4.82
Row: 16, Col: 1, Value: 14.63
Row: 16, Col: 2, Value: 10.02
%
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.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
OCTOBER 31, 1994 YEAR YEARS YEARS
FIDELITY INTL GROWTH & INCOME 0.55% 35.23% 117.85%
MSCI EAFE 9.89% 39.58% 67.89%
JP Morgan Global Govt Bond 12.70% 46.86% 137.51%
International Funds Average 4.07% 41.60% 133.99%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare the fund's returns to the performance of the
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 one
year average represents a peer group of 489 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
OCTOBER 31, 1994 YEAR YEARS YEARS
FIDELITY INTL GROWTH & INCOME 0.55% 6.22% 8.10%
MSCI EAFE 9.89% 6.90% 5.32%
JP Morgan Global Govt Bond 12.70% 7.99% 9.04%
International Funds Average 4.07% 7.02% 8.53%
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 Govt Bond Index
00305 MS001
JP002
1988/10/31 10000.00 10000.00
10000.00
1988/11/30 10177.82 10595.66
10088.43
1988/12/31 10155.04 10654.74
10027.70
1989/01/31 10344.53 10842.20
9928.47
1989/02/28 10378.98 10897.93
9912.14
1989/03/31 10378.98 10684.05
9828.19
1989/04/30 10637.38 10783.14
9990.07
1989/05/31 10335.92 10196.50
9882.06
1989/06/30 10370.37 10024.86
10106.77
1989/07/31 11352.28 11283.71
10509.22
1989/08/31 11197.24 10776.24
10198.26
1989/09/30 11645.13 11267.11
10359.56
1989/10/31 11085.27 10814.43
10492.79
1989/11/30 11498.71 11358.07
10586.19
1989/12/31 12096.80 11777.15
10709.77
1990/01/31 11887.63 11338.94
10550.00
1990/02/28 11469.30 10547.54
10436.06
1990/03/31 11460.58 9448.74
10371.98
1990/04/30 11434.44 9373.75
10331.39
1990/05/31 12175.23 10443.31
10661.73
1990/06/30 12558.71 10351.33
10854.65
1990/07/31 13142.63 10497.13
11173.53
1990/08/31 12018.36 9477.77
11086.43
1990/09/30 10859.23 8156.91
11190.14
1990/10/31 11948.64 9427.91
11632.32
1990/11/30 11678.46 8871.78
11837.07
1990/12/31 11706.35 9015.50
11968.77
1991/01/31 12120.57 9307.10
12240.28
1991/02/28 12804.94 10304.81
12252.22
1991/03/31 12345.69 9686.19
11846.24
1991/04/30 12534.80 9781.31
12012.70
1991/05/31 12516.79 9883.37
12023.02
1991/06/30 11913.46 9157.13
11862.48
1991/07/31 12327.68 9607.04
12113.27
1991/08/31 12282.66 9411.94
12365.01
1991/09/30 12678.88 9942.39
12815.87
1991/10/31 12597.83 10083.33
12942.51
1991/11/30 12246.64 9612.59
13153.28
1991/12/31 12647.28 10109.02
13817.97
1992/01/31 12629.05 9893.09
13547.32
1992/02/29 12647.28 9539.00
13507.88
1992/03/31 12236.95 8909.27
13383.15
1992/04/30 12774.94 8951.62
13494.51
1992/05/31 13349.41 9550.80
13877.76
1992/06/30 13221.75 9097.78
14256.23
1992/07/31 12793.18 8864.94
14570.34
1992/08/31 13021.14 9420.96
14957.98
1992/09/30 12802.30 9234.92
14943.46
1992/10/31 12118.41 8750.51
14570.24
1992/11/30 12091.06 8832.85
14311.91
1992/12/31 12224.75 8878.54
14447.14
1993/01/31 12336.82 8877.45
14692.10
1993/02/28 12673.02 9145.61
14928.85
1993/03/31 13616.26 9942.79
15158.25
1993/04/30 14372.72 10886.39
15434.25
1993/05/31 14708.92 11116.30
15537.20
1993/06/30 14512.80 10942.87
15545.22
1993/07/31 14998.43 11325.92
15551.52
1993/08/31 15782.91 11937.33
16011.84
1993/09/30 15680.18 11668.63
16181.17
1993/10/31 16109.77 12028.23
16172.86
1993/11/30 15558.77 10976.83
16054.82
1993/12/31 16513.19 11769.44
16219.27
1994/01/31 17377.86 12764.49
16372.27
1994/02/28 17067.71 12729.14
16192.44
1994/03/31 16156.05 12180.88
16118.23
1994/04/30 16372.22 12697.70
16105.34
1994/05/31 16672.97 12624.80
15972.21
1994/06/30 16268.83 12803.21
16161.88
1994/07/31 16541.39 12926.34
16314.01
1994/08/31 16701.16 13232.37
16272.08
1994/09/30 16315.82 12815.61
16352.50
1994/10/31 16485.00 13242.37
16597.08
1994/11/30 15977.48 12605.94
16388.22
1994/12/31 16039.05 12684.87
16426.32
1995/01/31 15495.68 12197.58
16758.57
1995/02/28 15602.41 12162.57
17190.72
1995/03/31 16495.09 12921.17
18065.13
1995/04/30 16795.88 13407.11
18353.17
1995/05/31 16582.41 13247.29
18865.15
1995/06/30 16621.22 13014.98
18983.00
1995/07/31 17601.23 13825.24
19073.06
1995/08/31 17397.46 13297.86
18542.93
1995/09/30 17523.60 13557.57
18960.75
1995/10/31 17300.43 13193.14
19145.93
1995/11/30 17562.42 13560.22
19359.37
1995/12/31 18001.00 14106.57
19599.08
1996/01/31 18051.14 14164.48
19397.96
1996/02/29 18011.03 14212.36
19284.88
1996/03/31 18311.88 14514.18
19255.18
1996/04/30 18773.19 14936.15
19183.94
1996/05/31 18793.25 14661.30
19203.51
1996/06/30 18923.62 14743.82
19371.41
1996/07/31 18482.37 14312.89
19727.92
1996/08/31 18713.02 14344.25
19810.05
1996/09/30 19164.30 14725.32
19919.21
1996/10/31 19144.24 14574.64
20314.39
1996/11/30 20096.94 15154.54
20604.24
1996/12/31 20284.80 14959.59
20469.49
1997/01/31 20129.16 14439.00
19949.19
1997/02/28 20367.80 14678.68
19811.29
1997/03/31 20367.80 14734.46
19660.59
1997/04/30 20388.55 14815.50
19549.90
1997/05/31 21405.39 15782.51
20011.27
1997/06/30 22349.59 16655.28
20238.75
1997/07/31 22920.26 16927.10
20164.36
1997/08/31 21540.27 15665.19
20139.53
1997/09/30 22920.26 16545.10
20586.67
1997/10/31 21664.78 15277.58
21023.02
1997/11/30 21581.78 15124.81
20770.70
1997/12/31 21729.56 15259.57
20747.97
1998/01/31 21928.11 15960.29
20956.36
1998/02/28 23130.40 16987.33
21111.74
1998/03/31 24365.79 17513.60
20953.11
1998/04/30 24972.45 17655.11
21275.05
1998/05/31 24917.30 17572.66
21366.92
1998/06/30 24840.09 17708.85
21425.94
1998/07/31 25303.36 17891.60
21484.48
1998/08/31 20692.72 15678.23
22078.03
1998/09/30 20516.24 15200.99
23230.83
1998/10/30 21784.71 16789.03
23751.22
IMATRL PRASUN SHR__CHT 19981031 19981123 163931 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity International Growth & Income Fund on October 31,
1988. As the chart shows, by October 31, 1998, the value of the
investment would have grown to $21,785 - a 117.85% 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 in each, the same $10,000 would have
grown to $16,789 - a 67.89% increase and $23,751 - a 137.51% increase,
respectively.
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 Bill Bower, Portfolio Manager of
Fidelity International Growth & Income Fund
Q. BILL, HOW DID THE FUND PERFORM?
A. For the 12 months that ended October 31, 1998, the fund posted a
total return of 0.55%. In comparison, the international funds average,
as tracked by Lipper Analytical Services, was up 4.07% over the same
period. The fund also compares its performance against the Morgan
Stanley Capital International Europe, Australasia, Far East (EAFE)
Index, which was up 9.89% over the 12-month period.
Q. WHY DID THE FUND UNDERPERFORM ITS PEER GROUP?
A. In the last report, I discussed the changes the fund's Board of
Trustees made to the fund's investment strategy, which states that as
of July 1, 1998, the fund can invest a majority of its assets in
equity securities, with a focus on stocks that pay current dividends
and show the potential for capital appreciation. Prior to July 1, the
fund was required to invest at least 25% of its assets in debt
securities. This previous investment requirement hurt performance
because bonds significantly underperformed equities prior to that
date. Relative to the Lipper funds average, the fund's performance
would have more closely matched the return of the peer group had the
fund been more heavily invested in equities during the entire period.
Q. WHAT ABOUT THE FUND'S PERFORMANCE RELATIVE TO THE INDEX?
A. My answer will focus on the last four months when International
Growth & Income Fund changed its investment objectives.
Underperformance by the fund was driven by stock and industry
selection in Europe and emerging markets. In Europe, the fund's
moderate overweighted position in financials proved to be untimely as
credit quality and currency volatility weakened the near-term earnings
outlook. Also in Europe, stock selection in the telecommunications
industry - more specifically, being underweighted in the defensive
incumbents and overweighted in the faster-growing but more volatile
start-ups, hurt relative performance. Overall, stock selection in
Europe detracted approximately 2.00% from total return.
Emerging-market performance was largely the result of Brazil and,
specifically, telecommunications company Telebras. Emerging-market
stock performance detracted close to 1.00% from the fund's return. On
a brighter note, positive relative performance was generated in Japan
due to both positive stock and industry selection.
Q. SINCE TAKING OVER THE FUND IN MAY, YOU MADE SOME SIGNIFICANT
CHANGES TO THE PORTFOLIO'S HOLDINGS. WHAT WAS YOUR RATIONALE FOR THESE
CHANGES?
A. The major themes were to diversify industry allocations to get the
fund closer to the index weightings, spread out the concentration of
certain sectors and re-focus the fund more in line with our research
expertise. Another major influence driving the shift of holdings was
the change to the fund's investment objectives. After selling the
fund's bond holdings, it was necessary to put this money to work in a
number of new stocks. Many of these purchases are now top holdings for
the fund.
Q. YOU'VE TALKED ABOUT A NUMBER OF AREAS THAT HURT THE FUND. WERE
THERE ANY BRIGHT SPOTS?
A. The Dutch publishing company VNU was the top performer for the
fund. VNU publishes a wide range of professional journals, magazines
and consumer marketing information. VNU stock performed well due to
its solid and stable earnings outlook. Another holding that did well
in the third quarter was French pharmaceutical company Sanofi.
Investors started to appreciate Sanofi's strong pipeline, sales and
earnings prospects. British Telecom was a top holding for the fund
that turned in stable performance during this volatile period. While
each of these stocks generally outperformed their respective industry
group, the common theme was that they were in defensive sectors.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
A. Alcatel was the worst laggard for the fund as its stock price fell
almost 45% in one day when it released its second-quarter earnings.
Several weeks prior to the earnings report, the company released sales
numbers that were in line with expectations. However, it later
released segment profits that turned unexpectedly negative, and the
company missed its earnings estimates for the second quarter. In
response to Alcatel's unpleasant surprise, the market punished the
stock. Telebras was the second-biggest detractor to fund performance;
it was caught up in the widespread decline of Brazilian stocks due in
part to concerns about the country's currency. Despite the stock's
severe decline during the period, from about $135 to $76 at the
market's close on October 30, I still believed the company's
fundamental business outlook to be solid.
Q. WHAT ROLE DOES THE EAFE INDEX PLAY WHEN MANAGING THE FUND?
A. The EAFE is one of the equity benchmarks that the fund is compared
against. While the EAFE is a very important guideline for the fund,
the fund is constructed on a stock-by-stock basis. Stocks are chosen
on individual merit and relative industry fundamentals; Fidelity's
global research team generates virtually all of the fund's stock
picks. Industry selection relative to EAFE is a function of medium and
long term business fundamentals of those companies. Given the more
conservative nature of the fund, aggressive industry bets are
unlikely. For example, let's say health care stocks are 10% of the
index; it would be highly unlikely for the fund to have more than15%
or less than 5% of total assets in health care stocks. Country
selection relative to EAFE is generally a function of stock and
industry selection.
Q. WHAT DO YOU SEE HAPPENING IN THE MARKETS OVER THE NEXT FEW MONTHS,
BILL?
A. In the long run, the equity markets will be driven by earnings and
real interest rates. I cannot predict the latter so I continue to
focus on company earnings and industry fundamentals. In the mid- to
long-term, I continue to believe that European stocks will benefit
from restructuring, deregulation and industry consolidation. The
situation is similar in Japan, however, I expect the rate of change to
be slower and the gap between the winners and losers to remain large.
While slower earnings growth and the continuation of market volatility
is a concern near term, my objective is not to predict the short-term
direction of the overall markets. The fund will continue to be fully
invested in stocks and industries with solid long-term prospects.
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.
BILL BOWER COMPARES FIDELITY INTERNATIONAL
GROWTH & INCOME FUND'S INVESTMENT STRATEGY
TO OTHER FIDELITY INTERNATIONAL FUNDS:
"Since taking over the fund in May, Fidelity's investment
management team and I have focused on a strategy to more
clearly distinguish and position Fidelity's range of
international funds, namely Fidelity International Growth &
Income Fund, Fidelity Overseas Fund, Fidelity
International Value Fund and Fidelity Europe Capital
Appreciation Fund. Normally, there is some overlap of these
funds; therefore, we want to clearly pinpoint our investment
objectives and styles for shareholders of these funds.
International Growth & Income has steered toward a more
conservative road in its approach to international investing in
comparison to the other three funds. We've accomplished this
more conservative approach by making the following
adjustments: We have limited the fund's emerging-market
exposure to 5% of total assets - it is currently about 3% -
and I will strive to match the dividend yield of the EAFE
index. Additionally, the fund will tend to own more blue-chip
stocks, such as British Petroleum, Nestle and SmithKline
Beecham, for example. I also will follow a more diversified
strategy with less industry concentration compared with
the other three funds. If we were to place each of these funds
on a chart, International Growth & Income would be
considered the least aggressive of the four funds, followed by
Overseas Fund, which will take a more middle-of-the-road
investment approach, and finally, International Value and
Europe Capital Appreciation, which will pursue more
aggressive growth strategies."
FUND FACTS
GOAL: growth of capital and current income
by investing mainly in foreign stocks
FUND NUMBER: 305
TRADING SYMBOL: FIGRX
START DATE: December 31, 1986
SIZE: as of October 31, 1998,
more than $817 million
MANAGER: Bill Bower, since May 1998; manager,
Fidelity Select Construction & Housing Portfolio,
1994-1996; international equity analyst,
1996-1998; joined Fidelity in 1994
(checkmark)
INTERNATIONAL GROWTH & INCOME
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
FINLAND 2.9%
UNITED STATES 10.2%
ROW: 1, COL: 1, VALUE: 2.9
ROW: 1, COL: 2, VALUE: 13.7
ROW: 1, COL: 3, VALUE: 8.4
ROW: 1, COL: 4, VALUE: 13.2
ROW: 1, COL: 5, VALUE: 7.7
ROW: 1, COL: 6, VALUE: 17.1
ROW: 1, COL: 7, VALUE: 3.0
ROW: 1, COL: 8, VALUE: 6.5
ROW: 1, COL: 9, VALUE: 17.3
ROW: 1, COL: 10, VALUE: 10.2
FRANCE 13.7%
UNITED KINGDOM 17.3%
GERMANY 8.4%
SWITZERLAND 6.5%
JAPAN 13.2%
SPAIN 3.0%
NETHERLANDS 7.7%
OTHER 17.1%
AS OF APRIL 30, 1998
UNITED STATES 10.8%
FRANCE 10.4%
ROW: 1, COL: 1, VALUE: 10.4
ROW: 1, COL: 2, VALUE: 9.6
ROW: 1, COL: 3, VALUE: 5.4
ROW: 1, COL: 4, VALUE: 11.8
ROW: 1, COL: 5, VALUE: 4.3
ROW: 1, COL: 6, VALUE: 20.7
ROW: 1, COL: 7, VALUE: 3.2
ROW: 1, COL: 8, VALUE: 5.1
ROW: 1, COL: 9, VALUE: 18.7
ROW: 1, COL: 10, VALUE: 10.8
GERMANY 9.6%
UNITED KINGDOM 18.7%
ITALY 5.4%
SWEDEN 5.1%
JAPAN 11.8%
SPAIN 3.2%
NETHERLANDS 4.3%
OTHER 20.7%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks and closed-end 91.9 71.3
investment companies
Bonds 0.8 5.3
Government obligations 0.0 16.7
Short-term investments 7.3 6.7
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
British Petroleum Co. PLC 1.9 0.0
(United Kingdom, Oil & Gas)
Telefonica de Espana SA 1.7 1.1
(Spain, Telephone Services)
Nestle SA (Reg.) 1.7 0.5
(Switzerland, Foods)
Novartis AG (Reg.) 1.7 0.0
(Switzerland, Drugs &
Pharmaceuticals)
Elf Aquitaine 1.4 1.3
(France, Oil & Gas)
Glaxo Wellcome PLC 1.4 0.0
(United Kingdom, Drugs &
Pharmaceuticals)
OY Nokia AB sponsored ADR (Finland, Communications 1.4 0.0
Equipment)
Telebras sponsored ADR 1.4 0.0
(Brazil, Telephone Services)
Total SA sponsored ADR 1.2 0.5
(France, Oil & Gas)
SmithKline Beecham PLC 1.2 0.0
(United Kingdom, Drugs &
Pharmaceuticals)
</TABLE>
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 20.9 21.1
UTILITIES 14.8 7.9
HEALTH 8.6 2.8
TECHNOLOGY 7.2 3.4
SERVICES 6.7 0.8
DURABLES 6.1 9.4
NONDURABLES 5.6 4.4
ENERGY 5.4 3.9
INDUSTRIAL MACHINERY & EQUIPMENT 4.2 3.4
MEDIA & LEISURE 4.0 2.2
INTERNATIONAL GROWTH & INCOME
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 89.6%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.1%
Bansud SA Class B (a) 140,000 $ 469,145
AUSTRALIA - 2.2%
Australia & New Zealand Banking 425,308 2,426,977
Group Ltd.
Brambles Industries Ltd. 145,000 3,173,162
Commonwealth Bank of Australia (c) 120,100 1,489,768
David Jones Ltd. 1,102,085 1,119,637
News Corp. Ltd. ADR 136,500 3,728,156
Smith (Howard) Ltd. 350,900 2,100,852
Telstra Corp. Ltd. (d) 557,700 1,721,658
Woolworths Ltd. 560,000 1,966,244
17,726,454
BELGIUM - 0.3%
Electrabel SA 7,200 2,651,856
BRAZIL - 1.5%
Compania Energertica Minas Gerais 55,000,000 1,069,617
Telebras sponsored ADR 150,000 11,390,625
12,460,242
CANADA - 1.6%
CGI Group, Inc. Class A (sub. vtg.) (a) 399,400 5,487,899
Cinar Films, Inc. Class B (sub. vtg.) (a) 96,000 2,099,942
JDS Fitel, Inc. (a) 183,600 2,730,974
Rio Alto Exploration Ltd. (a) 67,400 733,891
Videotron Group Ltd. (sub. vtg.) 144,900 1,854,803
12,907,509
DENMARK - 0.5%
Falck AS 20,000 1,558,375
International Service Systems AS Class B 31,200 2,108,577
3,666,952
FINLAND - 2.9%
Merita Ltd. Series A 150,000 804,929
Metsa-Serla Ltd. Class B Free Shares 119,600 905,646
OY Nokia AB sponsored ADR 122,800 11,428,075
Pohjola Group Insurance Corp. Class B 30,000 1,228,262
Raisio Group PLC 208,500 2,817,848
Sampo Insurance Co. Ltd. 88,000 2,745,901
Teito Corp. Class B 96,000 2,787,558
UPM-Kymmene Corp. 30,000 718,474
23,436,693
FRANCE - 13.7%
Accor SA 14,800 3,113,290
Alcatel Alsthom Compagnie Generale d'Electricite SA 68,500 7,535,000
Atos SA (a) 2,000 377,814
Axa SA 59,400 6,724,084
Banque Nationale de Paris 72,000 4,567,082
BIC Ste 38,700 2,385,745
SHARES VALUE (NOTE 1)
Cap Gemini SA 5,000 $ 752,564
Castorama Dubois Investissements SA 15,000 2,679,489
Coflexip SA sponsored ADR 27,000 1,299,375
Compagnie de St. Gobain 10,000 1,481,695
Compagnie Financiere de Paribas Class A (Reg.) 28,500 2,098,059
Eiffage SA 27,604 2,283,872
Elf Aquitaine 102,400 11,878,400
Groupe Danone 17,800 4,713,341
Hachette Filipacchi Medias SA 10,000 1,919,714
Havas Advertising SA 9,400 1,599,510
Ilog SA sponsored ADR (a) 75,000 721,875
Lagardere S.C.A. (Reg.) 132,500 5,340,411
NRJ SA 10,100 2,075,455
Renault SA 61,400 2,628,567
Renault SA participation certificates 3,800 1,780,918
Rhone-Poulenc SA Class A 55,000 2,567,812
Sanofi SA 42,800 6,711,971
Scor SA 4,300 246,946
Societe Generale, France Class A 33,700 4,464,823
Suez Lyonnaise des Eaux 48,300 8,662,779
Total SA sponsored ADR 170,600 9,980,100
Union Assurancesfederales SA 20,800 2,605,765
Vivendi SA 38,000 8,692,251
111,888,707
GERMANY - 7.2%
Aachener & Muenchener Beteiligungs AG 21,000 2,901,149
Adidas-Salomon AG 9,200 1,084,643
Apcoa Parking AG 13,370 986,179
BASF AG 116,700 4,966,453
Bayerische Hypo-und Vereinsbank AG 42,400 3,359,444
BHF Bank AG 138,500 5,380,063
Boss (Hugo) AG 2,200 3,025,998
Daimler-Benz AG (a) 52,600 4,146,416
Deutsche Lufthansa AG (Reg.) 71,700 1,564,915
Deutsche Telekom AG 145,000 3,929,202
DIS Deutscher Industrie Service AG 19,000 924,728
Hannover Rueckversicherungs AG 15,000 1,736,699
Hoechst AG 51,400 2,166,942
Mannesmann AG 87,060 8,595,464
Munich Reinsurance AG (Reg.) 9,100 4,208,888
Siemens AG 81,300 5,013,664
Veba AG 48,000 2,666,989
Viag AG 3,496 2,365,190
59,023,026
GREECE - 0.1%
STET Hellas Telecommunications SA ADR (a) 25,000 656,250
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HONG KONG - 0.8%
Johnson Electric Holdings Ltd. 2,449,600 $ 5,693,434
Vtech Holdings Ltd. 180,000 675,189
6,368,623
IRELAND - 2.0%
Bank of Ireland, Inc. 272,400 5,001,536
Elan Corp. PLC ADR (a) 101,000 7,076,313
Irish Life PLC 483,200 4,288,328
16,366,177
ITALY - 1.5%
Alitalia Linee Aeree Italiane Class A (a) 7,400 21,092
Banca di Roma (a) 2,861,500 4,999,420
Finmeccanica Spa (a) 2,000,000 1,578,963
Istituto Bancario San Paolo 368,600 5,484,874
12,084,349
JAPAN - 13.2%
Advantest Corp. 16,900 1,069,436
Aeon Credit Service Ltd. 47,000 2,832,544
Aiwa Co. Ltd. 108,900 2,700,233
Amway Japan Ltd. 32,100 354,219
Banyu Pharmaceutical Co. Ltd. 45,000 766,724
BellSystem24, Inc. 800 154,283
Canon, Inc. 33,000 626,474
DDI Corp. 1,042 3,050,194
Fuji Heavy Industries Ltd. 1,469,000 7,335,515
Fuji Photo Film Co. Ltd. 236,000 8,676,023
Fujitsu Support & Service, Inc. (a) 4,000 201,464
Hirose Electric Co. Ltd. 126,800 7,368,920
Hitachi Maxell Ltd. 160,000 2,286,698
Honda Motor Co. Ltd. 216,000 6,508,825
Kao Corp. 184,000 3,738,614
Konami Co. Ltd. 80,300 2,343,668
Mabuchi Motors Co. Ltd. 43,500 2,846,320
Minolta Co. Ltd. 270,000 1,364,529
Nichicon Corp. 15,000 163,366
Nidec Corp. 38,000 3,471,201
Nippon Telegraph & Telephone Corp. 207 1,625,347
Nomura Securities Co. Ltd. 234,000 1,772,880
Ntt Mobile Communication Network, Inc. (a)(c) 117 4,240,809
Omron Corp. 75,000 736,117
Orix Corp. (a) 72,900 5,240,766
Rohm Co. Ltd. 15,000 1,330,177
Sankyo Co. Ltd. 16,000 362,290
Secom Ltd. 36,000 2,681,016
Shimano, Inc. 43,000 955,144
Shohkoh Fund & Co. Ltd. 5,400 1,648,128
Sony Corp. 86,900 5,721,334
Takeda Chemical Industries Ltd. 259,000 8,451,227
Takefuji Corp. 80,000 4,277,228
SHARES VALUE (NOTE 1)
Terumo Corp. 190,000 $ 4,007,749
THK Co. Ltd. 150,000 1,549,720
Tokyo Seimitsu Co. Ltd. 30,000 942,747
Unified-Charm Corp. 106,000 4,836,849
108,238,778
LUXEMBOURG - 0.6%
Minorco SA (For. Reg.) 80,000 1,376,282
Stolt Comex Seaway SA 301,770 3,847,568
5,223,850
MEXICO - 0.6%
Grupo Financiero Bancomer SA de CV Class B 8,541,000 1,752,436
Telefonos de Mexico SA de CV sponsored ADR representing Class L shares 66,000 3,485,625
5,238,061
NETHERLANDS - 7.7%
ABN AMRO Holding NV 64,700 1,213,103
Ahold NV 150,000 4,990,089
Ahrend NV 73,400 1,490,256
Akzo Nobel NV 155,900 6,063,288
ASM Lithography Holding (a) 10,000 255,000
Equant NV (a) 60,000 2,604,323
Fortis Amev NV 13,700 890,239
Grand Hotel Krasnapolsky NV 60,000 4,532,062
ING Groep NV 175,190 8,484,050
Koninklijke KPN NV 90,000 3,500,295
Nutreco Holding NV 90,000 3,061,552
Philips Electronics NV (NY shares) 24,300 1,333,463
Samas Groep NV 112,500 1,874,297
Unilever NV 105,000 7,796,111
Vedior NV 250,938 6,398,805
VNU 233,700 8,087,545
62,574,478
NEW ZEALAND - 0.1%
Telecom Corp. of New Zealand Ltd. 244,300 1,002,232
NORWAY - 0.2%
Storebrand ASA (a) 185,000 1,455,557
PORTUGAL - 1.4%
Banco Espirito Santo e Comercial de Lisboa SA 48,000 1,420,336
Banco Pinto & Sotto Mayor SA 291,648 5,597,441
Companhia de Seguros Tranquilidade 75,000 2,453,581
Electricidade de Portugal SA 58,800 1,480,311
Telecel Comunicacoes Pessoais SA 1,700 313,646
11,265,315
SPAIN - 3.0%
Banco Bilbao Vizcaya SA (Reg.) 378,700 5,113,931
Corporacion Financiera Reunida SA (a) 210,300 2,525,992
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SPAIN - CONTINUED
Corporacion Mapfre Compania Internacional de Reaseguros SA (Reg.) 75,000 $ 1,982,943
Iberdrola SA 87,400 1,413,184
Telefonica de Espana SA 306,400 13,850,065
24,886,115
SWEDEN - 2.5%
Astra AB Class A 133,200 2,187,170
Ericsson (L.M.) Telefon AB Class B 177,100 4,002,669
Nordbanken Holding AB 546,100 3,282,407
Scandic Hotels AB 85,100 2,787,046
Skandia Foersaekrings AB 200,800 2,566,027
Svenska Handelsbanken 63,800 2,691,724
Swedish Match Co. 890,000 3,143,382
20,660,425
SWITZERLAND - 6.5%
Bank Sarasin & Compagnie Class B (Reg.) 3,692 5,845,359
Credit Suisse Group (Reg.) 11,500 1,771,816
Julius Baer Holding AG 1,904 5,845,892
Nestle SA (Reg.) 6,455 13,753,856
Novartis AG (Reg.) 7,451 13,450,553
Selecta Group (Reg.) 4,800 1,058,262
Swisscom AG (a) 13,300 4,516,480
UBS AG (a) 24,750 6,802,519
53,044,737
TAIWAN - 0.0%
Taiwan Semiconductor Manufacturing Co. Ltd. ADR 25,000 373,438
UNITED KINGDOM - 17.3%
Allied Zurich PLC (a) 349,000 4,149,244
Ashtead Group PLC 650,000 2,122,429
Bank of Scotland 290,719 3,159,390
Barclays PLC 51,200 1,103,402
BBA Group PLC 341,100 2,110,480
Bg PLC 220,000 1,442,247
Boots Co. PLC 198,320 2,978,819
British Aerospace PLC 421,400 3,062,453
British American Tobacco PLC 245,000 2,213,312
British Petroleum Co. PLC 1,036,220 15,269,316
British Telecommunications PLC 748,400 9,735,953
CGU PLC 220,000 3,486,811
Esprit Telecom Group PLC sponsored ADR (a) 30,000 540,000
Glaxo Wellcome PLC 372,100 11,578,473
Hays PLC 153,000 2,254,547
Holmes Place PLC 493,500 1,256,076
Iceland Group PLC 1,899,900 6,251,417
Kingfisher PLC 144,800 1,271,743
Lloyds TSB Group PLC 633,200 7,819,664
SHARES VALUE (NOTE 1)
Misys PLC 100,000 $ 701,616
National Grid Group PLC 225,700 1,545,753
National Westminster Bank PLC 234,400 3,960,353
Pilkington PLC 1,491,300 1,648,140
Prudential Corp. PLC 150,000 1,951,630
Rentokil Initial PLC 815,500 5,107,175
Saatchi & Saatchi PLC 2,505,200 4,866,151
Sainsbury (J.) PLC 273,600 2,418,996
Scottish & Newcastle PLC 117,700 1,434,805
Shell Transport & Trading Co. PLC (Reg.) 863,000 5,284,418
Shire Pharmaceuticals Group PLC (a) 338,100 2,411,792
SmithKline Beecham PLC 767,100 9,777,939
Somerfield PLC 308,900 1,994,011
Tarmac PLC 435,000 750,260
Taylor Nelson Sofres PLC 577,900 846,732
Taylor Nelson Sofres PLC (a)(c) 422,100 618,456
Thistle Hotels PLC 80,830 163,097
Triad Group PLC 186,200 1,222,224
Vodafone Group PLC 584,200 7,862,725
Wimpey George PLC 1,080,100 2,043,749
WPP Group PLC 376,800 1,873,926
Zeneca Group PLC 30,000 1,152,391
141,442,115
UNITED STATES OF AMERICA - 2.1%
AFLAC, Inc. 80,000 3,050,000
Cellular Communications International, Inc. (a) 92,300 5,737,022
Global TeleSystems Group, Inc. (a) 120,000 4,807,500
Manpower, Inc. 130,100 3,138,663
Primus Telecommunications Group, Inc. (a) 20,000 221,250
16,954,435
TOTAL COMMON STOCKS 732,065,519
(Cost $690,571,658)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PREFERRED STOCKS - 2.1%
CONVERTIBLE PREFERRED STOCKS - 0.1%
AUSTRALIA - 0.1%
WBK STRYPES Trust $3.135 27,100 777,431
JAPAN - 0.0%
AJL PEPS Trust $1.44 25,000 160,938
TOTAL CONVERTIBLE PREFERRED STOCKS 938,369
NONCONVERTIBLE PREFERRED STOCKS - 2.0%
GERMANY - 1.2%
Boss (Hugo) AG 1,329 2,073,047
Moebel Walther AG (a) 35,000 1,142,684
RWE AG (non-vtg.) 40,000 1,469,166
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
GERMANY - CONTINUED
SAP AG (Systeme Anwendungen Produkte) 6,400 $ 3,159,178
Wella AG 2,509 1,744,468
9,588,543
ITALY - 0.8%
Telecom Italia Mobile Spa 267,600 950,939
Telecom Italia Spa Risp 1,195,000 6,063,238
7,014,177
TOTAL NONCONVERTIBLE PREFERRED STOCKS 16,602,720
TOTAL PREFERRED STOCKS 17,541,089
(Cost $16,721,107)
</TABLE>
CLOSED-END INVESTMENT COMPANIES - 0.2%
GERMANY - 0.0%
New Germany Fund, Inc. (The) 25,000 407,813
MULTI-NATIONAL - 0.2%
European Warrant Fund, Inc. 100,000 1,675,000
TOTAL CLOSED-END INVESTMENT COMPANIES 2,082,813
(Cost $1,878,012)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CONVERTIBLE BONDS - 0.8%
MOODY'S RATINGS (UNAUDITED) PRINCIPAL
AMOUNT
UNITED STATES OF AMERICA - 0.8%
Global TeleSystems Group, Inc. 8.75% 6/30/00 (c) - $ 3,000,000 6,168,750
(Cost $3,900,000)
</TABLE>
CASH EQUIVALENTS - 7.3%
SHARES
Taxable Central Cash Fund (b) 59,642,191 $ 59,642,191
(Cost $59,642,191)
TOTAL INVESTMENT IN SECURITIES - 100% $817,500,362
(Cost $772,712,968)
CURRENCY ABBREVIATION
AUD - Australian Dollar
SECURITY TYPE
PEPS - Participating Equity Preferred Shares/Premium Exchangeable
Participating Shares
STRYPES - Structured Yield Product Exchangeable for Common Stock
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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
$12,517,783 or 1.5% of net assets.
(d) Purchased on an installment basis. Market value reflects only
those payments made through 10/31/98. The remaining installments
aggregating AUD 780,780 are due 11/17/98.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,274,439,776 and $1,450,800,340, respectively (see Note 3
of Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $12,555 for the
period (see Note 4 of Notes to Financial Statements).
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
AEROSPACE & DEFENSE 0.4%
BASIC INDUSTRIES 1.9
CASH EQUIVALENTS 7.3
CLOSED-END INVESTMENT COMPANIES 0.2
CONSTRUCTION & REAL ESTATE 1.8
DURABLES 6.1
ENERGY 5.4
FINANCE 20.9
HEALTH 8.6
HOLDING COMPANIES 0.9
INDUSTRIAL MACHINERY & EQUIPMENT 4.2
MEDIA & LEISURE 4.0
NONDURABLES 5.6
RETAIL & WHOLESALE 3.1
SERVICES 6.7
TECHNOLOGY 7.2
TRANSPORTATION 0.9
UTILITIES 14.8
100.0%
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $775,574,862. Net unrealized appreciation
aggregated $41,925,500, of which $100,325,936 related to appreciated
investment securities and $58,400,436 related to depreciated
investment securities.
The fund hereby designates approximately $73,942,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
INTERNATIONAL GROWTH & INCOME
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 817,500,362
SECURITIES, AT
VALUE
(COST
$772,712,96
8) -
SEE
ACCOMPANYIN
G SCHEDULE
FOREIGN 985
CURRENCY HELD
AT VALUE
(COST $959)
RECEIVABLE FOR 9,694,486
INVESTMENTS
SOLD
RECEIVABLE FOR 3,266,366
FUND SHARES
SOLD
DIVIDENDS 1,696,208
RECEIVABLE
INTEREST 360,977
RECEIVABLE
OTHER 12,034
RECEIVABLES
TOTAL ASSETS 832,531,418
LIABILITIES
PAYABLE TO $ 148
CUSTODIAN
BANK
PAYABLE FOR 11,558,943
INVESTMENTS
PURCHASED
PAYABLE FOR 2,377,202
FUND SHARES
REDEEMED
ACCRUED 466,410
MANAGEMENT
FEE
OTHER PAYABLES 363,956
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 14,766,659
NET ASSETS $ 817,764,759
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 706,411,432
UNDISTRIBUTED 7,030,622
NET INVESTMENT
INCOME
ACCUMULATED 59,664,039
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 44,658,666
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 817,764,759
41,404,760
SHARES
OUTSTANDING
NET ASSET $19.75
VALUE,
OFFERING PRICE
AND
REDEMPTION
PRICE PER
SHARE
($817,764,7
59 (DIVIDED BY)
41,404,760
SHARES)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 14,821,283
DIVIDENDS
INTEREST 13,334,157
28,155,440
LESS FOREIGN TAXES WITHHELD (1,541,511)
TOTAL INCOME 26,613,929
EXPENSES
MANAGEMENT FEE $ 7,165,449
TRANSFER AGENT FEES 2,748,705
ACCOUNTING FEES AND EXPENSES 558,890
NON-INTERESTED TRUSTEES' COMPENSATION 4,402
CUSTODIAN FEES AND EXPENSES 552,397
REGISTRATION FEES 73,498
AUDIT 61,038
LEGAL 4,178
REPORTS TO SHAREHOLDERS 74,171
MISCELLANEOUS 24,154
TOTAL EXPENSES BEFORE REDUCTIONS 11,266,882
EXPENSE REDUCTIONS (317,196) 10,949,686
NET INVESTMENT INCOME 15,664,243
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 55,971,569
FOREIGN CURRENCY TRANSACTIONS 280,728 56,252,297
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (50,563,653)
ASSETS AND LIABILITIES IN (222,592) (50,786,245)
FOREIGN CURRENCIES
NET GAIN (LOSS) 5,466,052
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 21,130,295
OTHER INFORMATION $ 243,480
EXPENSE REDUCTIONS
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 3,264
TRANSFER AGENT CREDITS 70,452
$ 317,196
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ 15,664,243 $ 25,418,358
NET INVESTMENT
INCOME
NET REALIZED GAIN 56,252,297 73,243,116
(LOSS)
CHANGE IN NET (50,786,245) 33,690,453
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE 21,130,295 132,351,927
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO (18,064,755) (15,358,151)
SHAREHOLDERS
FROM NET INVESTMENT
INCOME
FROM NET REALIZED (42,970,040) (19,594,396)
GAIN
TOTAL DISTRIBUTIONS (61,034,795) (34,952,547)
SHARE TRANSACTIONS 1,025,290,014 1,459,910,318
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 59,414,450 34,047,249
DISTRIBUTIONS
COST OF SHARES (1,294,204,233) (1,531,263,569)
REDEEMED
NET INCREASE (209,499,769) (37,306,002)
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
TOTAL INCREASE (249,404,269) 60,093,378
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 1,067,169,028 1,007,075,650
END OF PERIOD $ 817,764,759 $ 1,067,169,028
(INCLUDING
UNDISTRIBUTED NET
INVESTMENT INCOME
OF $7,030,622
AND $22,266,921,
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 49,300,775 70,794,239
ISSUED IN 2,997,727 1,787,246
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (62,013,953) (74,210,657)
NET INCREASE (9,715,451) (1,629,172)
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED
OCTOBER 31,
SELECTED PER-SHARE 1998 1997 1996 1995 1994
DATA
NET ASSET VALUE, $ 20.88 $ 19.09 $ 17.83 $ 17.54 $ 17.25
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT .34 B .48 B, C .54 .54 .38 B
INCOME
NET REALIZED AND (.22)E 1.97 1.32 .28 .02
UNREALIZED GAIN
(LOSS)
TOTAL FROM INVESTMENT .12 2.45 1.86 .82 .40
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT (.37) (.29) (.60) (.21) (.03)
INCOME
FROM NET REALIZED (.88) (.37) - (.32) (.05)
GAIN
IN EXCESS OF NET - - - - (.03)
REALIZED GAIN
TOTAL DISTRIBUTIONS (1.25) (.66) (.60) (.53) (.11)
NET ASSET VALUE, END OF $ 19.75 $ 20.88 $ 19.09 $ 17.83 $ 17.54
PERIOD
TOTAL RETURN A .55% 13.17% 10.66% 4.95% 2.33%
RATIOS AND
SUPPLEMENTAL DATA
NET ASSETS, END OF $ 817,765 $ 1,067,169 $ 1,007,076 $ 903,235 $ 1,367,938
PERIOD (000 OMITTED)
RATIO OF EXPENSES TO 1.17% 1.17% 1.16% 1.18% 1.21%
AVERAGE NET ASSETS
RATIO OF EXPENSES TO 1.13% D 1.15% D 1.14% D 1.18% 1.21%
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT 1.62% 2.33% 2.76% 2.98% 2.16%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 143% 70% 95% 141% 173%
A 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).
B NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
C INVESTMENT INCOME PER SHARE
REFLECTS A SPECIAL DIVIDEND
WHICH AMOUNTED TO $.05 PER
SHARE.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE FUND'S
EXPENSES (SEE NOTE 6 OF NOTES
TO FINANCIAL STATEMENTS).
E 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.
</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 1 PAST 5 LIFE OF
OCTOBER 31, 1998 YEAR YEARS FUND
FIDELITY DIVERSIFIED INTERNATIONAL 7.72% 79.69% 105.81%
MSCI EAFE 9.89% 39.58% 70.07%
MSCI GDP-Wtd EAFE 17.30% 56.39% 95.32%
International Funds Average 4.07% 41.60% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on December 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)
Europe, Australasia, Far East (EAFE) Index - a market capitalization
weighted, unmanaged index of over 1,000 foreign stocks and 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 one year average represents a peer group of 489 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
OCTOBER 31, 1998 YEAR YEARS FUND
FIDELITY DIVERSIFIED INTERNATIONAL 7.72% 12.44% 11.11%
MSCI EAFE 9.89% 6.90% 8.06%
MSCI GDP-Wtd EAFE 17.30% 9.36% 10.27%
International Funds Average 4.07% 7.02% 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 10196.19
1992/01/31 9860.00 10109.92
1992/02/29 9680.00 9972.49
1992/03/31 9140.00 9481.13
1992/04/30 9240.00 9563.81
1992/05/31 9750.00 10126.93
1992/06/30 9540.00 9797.41
1992/07/31 9190.00 9450.48
1992/08/31 9350.00 9920.65
1992/09/30 9140.00 9556.68
1992/10/31 8460.00 9168.72
1992/11/30 8460.00 9213.47
1992/12/31 8671.06 9211.91
1993/01/31 8873.42 9318.58
1993/02/28 9176.96 9644.58
1993/03/31 9915.57 10303.18
1993/04/30 10522.64 11252.11
1993/05/31 10785.71 11427.99
1993/06/30 10482.17 11230.18
1993/07/31 10805.94 11568.15
1993/08/31 11362.43 12415.92
1993/09/30 11210.66 12155.45
1993/10/31 11453.49 12489.74
1993/11/30 11028.54 11494.70
1993/12/31 11850.64 12303.22
1994/01/31 12739.44 13243.97
1994/02/28 12484.04 13171.27
1994/03/31 12085.61 12982.15
1994/04/30 12320.58 13637.94
1994/05/31 12300.15 13324.95
1994/06/30 12136.69 13319.05
1994/07/31 12555.55 13628.32
1994/08/31 12872.25 13859.17
1994/09/30 12504.47 13371.97
1994/10/31 12729.22 13778.34
1994/11/30 12044.75 13164.27
1994/12/31 11979.79 13264.12
1995/01/31 11428.51 12924.34
1995/02/28 11566.33 12909.67
1995/03/31 12128.21 13494.32
1995/04/30 12509.87 14097.55
1995/05/31 12615.88 13961.27
1995/06/30 12806.71 13805.48
1995/07/31 13633.63 14707.85
1995/08/31 13421.60 14093.61
1995/09/30 13676.04 14260.84
1995/10/31 13495.81 13847.46
1995/11/30 13633.63 14139.27
1995/12/31 14132.55 14744.32
1996/01/31 14555.74 14931.68
1996/02/29 14566.88 14976.23
1996/03/31 14856.44 15174.76
1996/04/30 15391.00 15647.33
1996/05/31 15546.91 15416.27
1996/06/30 15691.69 15537.25
1996/07/31 15190.54 15091.25
1996/08/31 15446.68 15082.83
1996/09/30 15914.43 15497.62
1996/10/31 16014.66 15327.98
1996/11/30 16905.60 15982.90
1996/12/31 16961.57 15869.12
1997/01/31 17076.88 15573.96
1997/02/28 17365.14 15686.25
1997/03/31 17388.20 15988.99
1997/04/30 17445.86 15953.65
1997/05/31 18541.27 16789.15
1997/06/30 19486.78 17792.30
1997/07/31 20040.25 18188.00
1997/08/31 18852.59 16886.29
1997/09/30 20155.56 17974.61
1997/10/31 19106.27 16651.14
1997/11/30 18944.84 16586.70
1997/12/31 19289.47 16831.02
1998/01/31 19851.53 17709.76
1998/02/28 20891.95 18731.79
1998/03/31 21860.61 19756.23
1998/04/30 22506.38 20057.32
1998/05/31 22530.30 20345.74
1998/06/30 22386.79 20540.65
1998/07/31 22637.92 20812.20
1998/08/31 19325.35 18073.52
1998/09/30 19145.97 17572.88
1998/10/30 20581.02 19532.26
IMATRL PRASUN SHR__CHT 19981031 19981209 150005 R00000000000086
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Diversified International Fund on December 27,
1991, when the fund started. As the chart shows, by October 31, 1998,
the value of the investment would have grown to $20,581 - a 105.81%
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 would have grown to $19,532 - a 95.32% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating value
of its currency create these risks. For these
reasons an international fund's performance
may be more volatile than a fund that invests
exclusively in the United States. 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 PERFORM, GREG?
A. For the one-year period that ended October 31, 1998, the fund
returned 7.72%. Over the same period, the Morgan Stanley Capital
International GDP-Weighted Europe, Australasia, Far East (EAFE) Index
was up 17.30%, while the international funds average tracked by Lipper
Analytical Services was up 4.07%.
Q. WHAT FACTORS CAUSED THE FUND TO UNDERPERFORM THE INDEX YET
OUTPERFORM THE LIPPER AVERAGE?
A. Relative to the index, the fund was mostly hurt because it was
underweighted in several strong-performing European markets, including
Italy, Spain and Belgium. Poor stock selection in Denmark, Norway and
Finland also contributed to underperformance relative to the index.
Relative to its competitors, it appears that strong stock selection in
a variety of markets helped the fund to outperform.
Q. INTERNATIONAL MARKETS WERE QUITE VOLATILE DURING THE PERIOD. HOW
DID THAT VOLATILITY AFFECT THE FUND?
A. The market volatility certainly presented challenges. After Russia
defaulted on its debt in the summer, many foreign markets became very
weak. Because the fund uses quantitative analysis, it employs some
proprietary risk control procedures that cause poorly performing
stocks to be examined very closely. As these stocks were sold, the
fund's short-term investments rose to much higher than normal levels.
Q. SO THE LEVEL OF ABOUT 10% IN SHORT-TERM INVESTMENTS AT THE END OF
THE PERIOD WAS UNUSUAL?
A. Well, this stake had been as high as about 18% earlier in the
period, and that was very unusual. Generally speaking, short-term
investments have tended to be between 0% to 10% of the fund's
investments, so, at the end of the period, the level of short-term
investments was on the high side. Although not a formal target, this
part of the fund tends to gravitate towards the 5% level over time.
The overweighted short-term-investment position significantly helped
the fund's performance in August and September as markets fell.
However, it hurt the fund in October when the markets rebounded
sharply. Overall, the effect on the fund's performance was relatively
neutral.
Q. IT ALSO LOOKS AS IF THE NUMBER OF STOCKS IN THE FUND WAS REDUCED
FROM THE PREVIOUS PERIOD . . .
A. That's right. During the period, the number of names fell from
about 560 to a low of about 350, before rising again near the end of
the period. But let's keep things in perspective. Combined, the 200 or
so names that were eliminated were less than 5% of total fund assets.
The risk control procedures I mentioned earlier caused me to examine
all fund holdings and either buy more to make them more important
factors in the fund's performance or eliminate them. In sum, the fund
became more focused on its better ideas over the period. Shareholders
should keep in mind that quantitative funds like this one often have a
greater number of securities than non-quantitative funds.
Q. THE DOLLAR CONTINUED TO BE QUITE STRONG AGAINST SEVERAL MAJOR
CURRENCIES DURING MUCH OF THIS PERIOD, ALTHOUGH THE YEN HAD A BURST OF
STRENGTH NEAR THE END OF THE PERIOD. HOW WAS THE FUND AFFECTED?
A. As long-term shareholders know, the fund generally does not hedge -
or try to control - currency risk by investing in forward foreign
currency contracts or other vehicles. Thus, relative to international
funds that do hedge, the fund will find a strong-dollar environment
challenging, because returns diminish when they are translated back
into dollars. At various points in the past, though, the fund's
returns have been bolstered by a weak dollar.
Q. THERE HAS BEEN A LOT OF PRESS COVERAGE ABOUT MONETARY UNION IN
EUROPE. HOW WILL MONETARY UNION AFFECT THE FUND'S EUROPEAN HOLDINGS?
A. As shareholders may be aware, many countries in Europe are
attempting to adopt a common regional currency - the euro, scheduled
to be introduced in January 1999 - in place of national currencies.
This is a rather complicated topic, and the full ramifications of it
are difficult to predict. If the monetary union works as planned,
transaction costs for European companies will probably decline, and
some European companies will become even more globally competitive.
However, there very well could be some unforeseen glitches that - at
least temporarily - could cause sharp drops in some stock prices.
Q. WHICH HOLDINGS WERE DISAPPOINTING FOR THE FUND?
A. There were a fair number of disappointments. Important among them
were financial institutions in Europe such as UBS, Credit Suisse Group
and Netherlands-based ING Groep NV. These companies had more business
in emerging markets than people expected. After Russia defaulted on
its debt, these companies began to suffer losses due to their
investments in various emerging-market businesses. Several of them
also had large losses from certain hedge fund investments. All in all,
these stocks lost roughly half their value in just a few months. And,
as we've noted in previous reports, some companies in Japan continued
to prove disappointing. Generally, smaller Japanese companies and
those that don't export performed quite poorly for much of 1998.
However, as I've also noted in the past couple of reports to
shareholders, many of these companies seemed attractively priced, so
some patience is required.
Q. WHICH STOCKS HELPED THE FUND?
A. The large consumer companies in Europe stand out as especially
helpful over the period. They tended to go up when the market was
rising, and not drop as far when it was falling. Two of the most
important winners were Nestle, the Switzerland-based global consumer
foods giant, and Unilever, the Anglo-Dutch consumer products company.
During the period, many investors became concerned that these firms'
financial results would suffer from their emerging-markets business,
but - at least for now - their businesses have held up well.
Q. GREG, WHAT'S THE OUTLOOK FOR THE FUND?
A. With the rebound of the markets in October, we are pretty much
where we were six months ago. In Europe, broadly speaking, valuations
are not as attractive as they were several years ago, but some
individual stocks look interesting because of beneficial corporate
restructuring moves. In Asia, and especially Japan, while valuations
have become more reasonable, the restructuring activities that have
contributed to the success of American and European stocks are still
largely ignored. So it's a mixed bag: Stocks with good prospects tend
to be fully priced while stocks that are reasonably valued have
debatable business prospects.
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.
GREG FRASER DISCUSSES RISKS THAT BUFFETED THE
FUND AFTER THE RUSSIAN DEBT DEFAULT:
"As in many past reports, I want to remind shareholders
that foreign equity investments entail very substantial risks.
The past 12 months presented some graphic illustrations of
a multitude of risks shareholders in foreign investments face:
(solid bullet) COUNTRY RISK: When Russia defaulted on its debt in
August, Russian equity and debt markets tumbled.
(solid bullet) CONTAGION RISK: At about the same time, the credit
markets became very sensitive to all risk presented by
investments outside of the U.S. Many foreign companies -
not just those in Russia - faced difficulty in funding their
operations. In fact, some observers have said that the
Russian default is just a link in the chain of `Asian flu' that
began with the Thai baht devaluation in July 1997. One
other fascinating example of contagion risk was the near
collapse of Long-Term Capital Management. In this case,
unusual behavior in world markets caused financial
problems for a very highly leveraged hedge fund, which in
turn caused more unusual behavior in world markets. So,
watching this contagion was a bit like watching a mad dog
chase its own tail.
(solid bullet) CURRENCY RISK: Not only did Russian debt and equity
markets collapse, so too did their currency markets. Some
countries, seeing the consequences of various devaluations,
have tried different tactics than devaluations. An example
is Malaysia's decision to reduce the free convertibility of its
currency. Specifically, the government started to require
sellers of Malaysian shares to hold the proceeds of the sale in
Malaysian ringgit for one year. The lack of easy convertibility
certainly causes concerns for holders of Malaysian equities,
and makes it more difficult to buy or sell stocks in that market.
If other countries adopt non-convertibility policies like this
one, it would make it extremely difficult and risky for the fund
to invest in those places.
"While these risks are by no means the only risks facing
international investors, they are a good sample of the types
of risks that should be considered by shareholders, relative
to U.S. investments."
FUND FACTS
GOAL: long-term growth by investing mainly in
foreign equity securities that are determined,
mainly through both quantitative and
fundamental analysis, to be undervalued
compared to others in their industries and
countries
FUND NUMBER: 325
TRADING SYMBOL: FDIVX
START DATE: December 27, 1991
SIZE: as of October 31, 1998, more than
$1.9 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)
DIVERSIFIED INTERNATIONAL
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
UNITED STATES 11.1%
FRANCE 12.6%
ROW: 1, COL: 1, VALUE: 12.6
ROW: 1, COL: 2, VALUE: 7.4
ROW: 1, COL: 3, VALUE: 5.2
ROW: 1, COL: 4, VALUE: 13.4
ROW: 1, COL: 5, VALUE: 6.3
ROW: 1, COL: 6, VALUE: 24.0
ROW: 1, COL: 7, VALUE: 3.7
ROW: 1, COL: 8, VALUE: 6.9
ROW: 1, COL: 9, VALUE: 9.4
ROW: 1, COL: 10, VALUE: 11.1
GERMANY 7.4%
UNITED KINGDOM 9.4%
SWITZERLAND 6.9%
ITALY 5.2%
JAPAN 13.4%
SWEDEN 3.7%
OTHER 24.0%
NETHERLANDS 6.3%
AS OF APRIL 30, 1998
CANADA 5.4%
UNITED STATES 5.7%
ROW: 1, COL: 1, VALUE: 5.4
ROW: 1, COL: 2, VALUE: 9.1
ROW: 1, COL: 3, VALUE: 6.6
ROW: 1, COL: 4, VALUE: 11.1
ROW: 1, COL: 5, VALUE: 8.300000000000001
ROW: 1, COL: 6, VALUE: 30.7
ROW: 1, COL: 7, VALUE: 5.0
ROW: 1, COL: 8, VALUE: 7.3
ROW: 1, COL: 9, VALUE: 10.8
ROW: 1, COL: 10, VALUE: 5.7
UNITED KINGDOM 10.8%
FRANCE 9.1%
GERMANY 6.6%
SWITZERLAND 7.3%
SWEDEN 5.0%
JAPAN 11.1%
NETHERLANDS 8.3%
OTHER 30.7%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks and closed-end 89.5 94.5
investment companies
Bonds 1.0 1.1
Short-term investments 9.5 4.4
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Novartis AG (Reg.) 1.7 1.6
(Switzerland, Drugs & Pharmaceuticals)
Nestle SA (Reg.) 1.6 1.4
(Switzerland, Foods)
Unilever NV (NY shares) 1.6 1.0
(Netherlands, Household Products)
Assicurazioni Generali Spa 1.4 0.6
(Italy, Insurance)
Telefonica de Espana SA 1.3 1.3
sponsored ADR
(Spain, Telephone Services)
Axa SA 1.2 0.4
(France, Insurance)
Total SA Class B 1.2 0.7
(France, Oil & Gas)
Shell Transport & Trading Co. PLC (Reg.) 1.2 1.2
(United Kingdom, Oil & Gas)
Elf Aquitaine sponsored ADR 1.2 1.0
(France, Oil & Gas)
Vivendi SA 1.2 0.0
(France, Water)
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 20.6 24.8
UTILITIES 11.4 9.6
NONDURABLES 8.5 7.3
HEALTH 7.0 5.5
ENERGY 6.8 5.9
TECHNOLOGY 5.8 4.7
DURABLES 4.7 4.9
BASIC INDUSTRIES 4.3 7.6
MEDIA & LEISURE 3.9 4.4
INDUSTRIAL MACHINERY & EQUIPMENT 3.2 4.3
DIVERSIFIED INTERNATIONAL
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 81.5%
SHARES VALUE (NOTE 1)
AUSTRALIA - 1.8%
AAPT Ltd. (a) 759,123 $ 1,514,967
Australia & New Zealand Banking 500,000 2,853,199
Group Ltd.
Australian Oil & Gas Corp. Ltd. 300,000 224,514
Commonwealth Bank of Australia (e) 500,000 6,202,199
FAI Insurances Ltd. 8,491,340 3,812,849
Fosters Brewing Group Ltd. 500,000 1,225,472
National Mutual Property Trust 1,033,333 863,547
News Corp. Ltd. sponsored ADR 150,000 3,628,125
(ltd. vtg.)
North Ltd. 200,000 386,164
OzEmail Ltd. ADR 50,000 493,750
Resolute Ltd. 1,000,000 860,637
Savage Resources Ltd. 500,000 286,879
Savage Resources Ltd. warrants 11/30/98 (a) 5,500 3
TAB Ltd. 800,000 1,521,706
Tyndall Australia Ltd. 1,600,000 1,935,810
Westfield Trust 1,000,000 2,076,755
WMC Ltd. 2,010,245 6,806,279
34,692,855
AUSTRIA - 0.3%
Austria Tabak AG (e) 60,000 4,227,349
RHI AG 50,000 1,568,071
5,795,420
BAHAMAS (NASSAU) - 0.2%
Sun International Hotels Ltd. (a) 75,000 3,000,000
BELGIUM - 0.6%
Mobistar SA (a) 12,142 531,678
Mobistar SA (a)(e) 25,000 1,094,709
Telinfo SA 100,000 10,640,164
12,266,551
BERMUDA - 0.6%
RenaissanceRe Holdings Ltd. 100,000 3,775,000
Terra Nova Bermuda Holdings Ltd. 300,000 8,325,000
Class A
12,100,000
BRAZIL - 0.7%
Compania Cervejaria Brahma PN:
(Pfd. Reg.) 3,000,000 1,408,274
warrants 4/30/03 (a) 188,529 7,902
Telebras sponsored ADR PFD-Holdr (a) 175,000 13,289,063
14,705,239
CANADA - 2.9%
Alberta Energy Co. Ltd. 300,000 6,999,806
Barrick Gold Corp. 100,000 2,125,867
BCE, Inc. 575,000 19,490,894
Cambior, Inc. 200,000 991,639
Canadian Natural Resources Ltd. (a) 225,000 3,937,391
SHARES VALUE (NOTE 1)
Chum Ltd. Class B 40,000 $ 855,532
COM DEV International Ltd. (a) 35,000 133,839
Connor Clark Ltd. Class A (non-vtg.) 100,000 324,065
Corel Corp. (a) 100,000 196,383
Harrowston, Inc. Class A (a) 250,000 842,569
Kinross Gold Corp. (a) 200,000 512,023
Marsulex, Inc. (a) 75,000 243,049
Newcourt Credit Group, Inc. 10,000 328,926
Penn West Petroleum Ltd. (a) 100,000 1,289,779
Potash Corp. of Saskatchewan 150,000 10,353,879
Prudential Steel Ltd. 150,000 758,312
Russel Metals, Inc. 30,000 58,332
Suncor Energy, Inc. 175,000 5,557,716
Teleglobe, Inc. 50,000 1,367,555
Wescam, Inc. (a) 23,300 63,426
56,430,982
CHILE - 0.1%
Santa Isabel SA sponsored ADR 250,000 1,453,125
DENMARK - 1.8%
Danisco AS 100,000 5,533,823
Den Danske Bank Group AS 25,000 3,399,008
F. Junckers Industrier AS (a)(d) 100,000 3,975,448
FIH AS Class B 75,000 1,729,320
Novo-Nordisk AS Class B 40,000 4,675,126
Sydbank AS 100,000 4,500,207
Tryg Baltica Forsikring AS (Reg.) 100,000 2,703,304
Unidanmark AS Class A 100,000 7,632,859
Vest-Wood AS 15,000 1,097,224
35,246,319
FINLAND - 2.3%
Enso OY Class R 300,000 2,325,350
Helsinki Telephone Corp. Class E 125,000 6,856,802
Kesko OY 200,000 2,981,218
Merita Ltd. Series A 500,000 2,683,096
Metsa Tissue PLC 582,900 4,981,556
Metsa-Serla Ltd. Class B Free Shares 300,000 2,271,688
OY Nokia AB sponsored ADR 160,000 14,890,000
Rauma OY 100,000 1,182,550
UPM-Kymmene Corp. 250,000 5,987,280
Valmet OY 100,000 1,071,251
45,230,791
FRANCE - 12.2%
Accor SA 40,000 8,414,298
Alcatel Alsthom Compagnie Generale d'Electricite SA sponsored ADR 250,000 5,500,000
Atos SA (a) 15,000 2,833,607
Axa SA 210,000 23,772,014
Cap Gemini SA 100,000 15,051,282
CNP Assurances (a) 89,800 3,057,703
Compagnie Financiere de Paribas 50,000 3,680,805
Class A (Reg.)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FRANCE - CONTINUED
Credit Commercial de France 50,000 $ 3,516,773
Dexia France 25,000 3,690,719
Elf Aquitaine sponsored ADR 400,000 23,200,000
Eurafrance (Societe) 15,000 7,627,485
Groupe Danone 75,000 19,859,581
Immobiliere Marseillaise Ste Class B 1,000 1,948,555
Isis SA 63,955 5,003,239
Lafarge SA 50,000 5,119,239
Lagardere S.C.A. (Reg.) 100,000 4,030,499
Marine Wendel SA 40,000 6,539,647
Pernod-Ricard 100,000 6,669,431
Rhone-Poulenc SA Class A 200,000 9,337,498
Scor SA 225,000 12,921,571
Societe Generale, France Class A 100,000 13,248,734
Total SA Class B 200,000 23,400,000
Union Assurancesfederales SA 75,000 9,395,786
Vivendi SA 100,000 22,874,344
240,692,810
GERMANY - 6.1%
Aachener & Muenchener Beteiligungs AG 10,000 1,381,499
Adidas-Salomon AG 15,000 1,768,440
Aixtron AG 6,000 1,017,533
Allianz AG (Reg.) 30,000 10,311,366
BASF AG 300,000 12,767,231
Bayer AG 187,300 7,698,098
Buderus AG 10,000 4,195,889
Commerzbank AG 100,000 3,029,021
Daimler-Benz AG (a) 150,000 11,824,380
Depfa Bank AG 100,000 8,041,112
Deutsche Bank AG 150,000 9,431,681
Deutsche Telekom AG 325,000 8,806,832
Hoechst AG 50,000 2,107,920
Mannesmann AG 210,000 20,733,374
SAP AG (Systeme Anwendungen Produkte) 20,000 8,464,329
Siemens AG 100,000 6,166,868
Teles AG (a) 10,000 1,133,615
Veba AG 30,000 1,666,868
120,546,056
HONG KONG - 0.1%
Jardine Strategic Holdings Ltd. 400,000 640,000
Johnson Electric Holdings Ltd. 800,000 1,859,384
2,499,384
INDONESIA - 0.0%
PT Bank PAN Indonesia (For. Reg.) 660 19
IRELAND - 1.5%
Anglo-Irish Bank Corp. PLC 2,000,000 4,856,050
Bank of Ireland, Inc. 100,000 1,829,391
CBT Group PLC sponsored ADR (a) 150,000 1,790,625
SHARES VALUE (NOTE 1)
Elan Corp. PLC ADR (a) 110,000 $ 7,706,875
Hibernian Group PLC 250,000 2,445,625
Independent Newspapers PLC 99,053 389,781
Irish Life PLC 1,100,000 9,762,335
Ryan Hotels PLC 1,000,000 920,975
Saville Systems PLC sponsored ADR (a) 18,100 305,438
30,007,095
ISRAEL - 0.3%
ECI Telecom Ltd. 50,000 1,656,250
ESC Medical Systems Ltd. (a) 200,000 1,625,000
Forsoft Ltd. (a) 120,000 1,290,000
Galileo Technology Ltd. (a) 100,000 1,575,000
Nice Systems Ltd. sponsored ADR (a) 25,000 475,000
6,621,250
ITALY - 4.4%
Aem Spa (a) 1,500,000 2,038,219
Alitalia Linee Aeree Italiane Class A (a) 2,000,000 5,700,655
Assicurazioni Generali Spa 750,000 26,795,890
Banca Commerciale Italiana Spa 750,000 4,645,159
Banca di Roma (a) 1,250,000 2,183,916
Eni Spa sponsored ADR 125,000 7,593,750
Istituto Nazionale Delle Assicurazioni Spa 2,000,000 5,540,435
SAES Getters Spa sponsored ADR 122,400 612,000
Telecom Italia Mobile Spa 1,500,000 8,731,688
Telecom Italia Spa 2,500,000 18,110,372
Unicredito Italiano Spa 1,000,000 5,394,891
87,346,975
JAPAN - 13.4%
Acom Co. Ltd. 175,000 9,808,438
Amway Japan Ltd. sponsored ADR 150,000 815,625
Bank of Tokyo-Mitsubishi Ltd. ADR 100,000 975,000
BellSystem24, Inc. 50,000 9,642,704
Canon, Inc. 225,000 4,271,416
Chugoku Electric Power Co. 25,000 471,373
Chukyo Coca-Cola Bottling Co. 200,000 1,721,911
Computer Engineering & Consulting Ltd. 50,000 766,251
Daiichi Pharmaceutical Co. Ltd. 250,000 4,186,397
Daiwa House Industry Co. Ltd. 100,000 1,132,157
Fuji Coca-Cola Bottling Co. Ltd. 300,000 2,737,839
Fuji Heavy Industries Ltd. 400,000 1,997,417
Fuji Photo Film Co. Ltd. 500,000 18,381,404
Fuji Soft ABC, Inc. 25,000 947,051
Fujirebio, Inc. 75,000 229,875
Fujitsu Business Systems Ltd. 100,000 1,046,922
Fujitsu Ltd. 150,000 1,601,378
Hokkaido Coco-Cola Bottling Co. Ltd. 250,000 2,305,209
Honda Motor Co. Ltd. 150,000 4,520,017
Horipro, Inc. 50,000 288,420
Isewan Terminal Service Co. Ltd. 250,000 497,202
Itoki Crebio Corp. 200,000 359,879
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Jichodo Co. Ltd. 150,000 $ 1,046,061
Jusco Co. Ltd. 50,000 809,298
Kansai Electric Power Co., Inc. 25,000 537,021
Kao Corp. 1,050,000 21,334,482
Kawagishi Bridge Works Co. Ltd. 200,000 532,071
Keiiyu Co. Ltd. 150,000 710,288
Kinki Coca-Cola Bottling Co. Ltd. 250,000 3,271,632
Kirin Brewery Co. Ltd. 25,000 273,353
Kuraray Co. Ltd. 250,000 2,675,420
Kyushu Electric Power Co., Inc. 75,000 1,443,177
Levi Strauss Japan 500,000 5,596,212
Mabuchi Motors Co. Ltd. 100,000 6,543,263
Maezawa Kasei Industries Co. Ltd. 8,200 74,128
Matsushita Communication Industrial 100,000 4,640,551
Co. Ltd.
Matsushita Electric Industrial Co. Ltd. 300,000 4,422,524
Minebea Co. Ltd. 600,000 5,656,479
Minolta Co. Ltd. 400,000 2,021,524
Mitsui Marine & Fire Insurance Co. Ltd. (a) 600,000 2,990,960
Murakami Corp. 30,000 96,858
Nagase & Co. Ltd. 50,000 193,715
NGK Insulators Ltd. 350,000 3,902,282
Nichicon Corp. 300,000 3,267,327
Nintendo Co. Ltd. 100,000 8,489,023
Nippon Telegraph & Telephone Corp. 500 3,925,958
Nishio Rent All Co. Ltd. 50,000 327,163
Nomura Securities Co. Ltd. 1,100,000 8,334,051
NTT Data Corp. 300 1,273,353
Ntt Mobile Communication Network, Inc. (a)(e) 100 3,624,624
Omron Corp. 125,000 1,226,862
Orix Corp. (a) 225,000 16,175,205
Promise Co. Ltd. 75,000 3,402,927
Ricoh Elemex Corp. 150,000 1,022,815
Riken Vitamin Oil Co. Ltd. 400,000 3,168,317
Rohm Co. Ltd. 50,000 4,433,922
Sangetsu Co. Ltd. 100,000 1,239,776
Sankyo Co. Ltd. 27,000 611,365
Sanyo Coca-Cola Bottling Co. Ltd. 100,200 1,164,615
Secom Ltd. 100,000 7,447,267
Sekisui House Ltd. 300,000 2,998,709
Senshu Electric Co. Ltd. 57,000 245,372
Shikoku Coca-Cola Bottling Co. Ltd. 300,000 3,357,727
Shohkoh Fund & Co. Ltd. 5,000 1,526,044
Snow Brand Milk Products Co. Ltd. 100,000 370,211
Sonton Food Industry Co. Ltd. 36,000 308,704
Sony Corp. 100,000 6,583,814
Takeda Chemical Industries Ltd. 300,000 9,789,066
Takefuji Corp. 100,000 5,346,535
Terumo Corp. 150,000 3,164,012
THK Co. Ltd. 125,000 1,291,434
Tohoku Electric Power Co., Inc. 75,000 1,314,034
SHARES VALUE (NOTE 1)
Tokio Marine & Fire Insurance Co. Ltd. (The) 500,000 $ 5,703,832
Tokyo Electric Power Co. 125,000 3,174,774
Tokyo Style Co. Ltd. 50,000 501,076
Toyo Information System Co. Ltd. 50,000 774,860
Toyoda Automatic Loom Works Ltd. 500,000 8,179,079
Toyota Corolla Gifu Co. Ltd. 16,000 172,191
Toyota Motor Corp. 125,000 3,013,345
264,424,573
KOREA (SOUTH) - 0.1%
Nam Yang Dairy Products 25,000 1,705,192
LUXEMBOURG - 0.2%
Espirito Santo Financial Holding SA ADR 125,000 2,109,375
Quilmes Industrial SA sponsored ADR 150,000 1,378,125
3,487,500
MEXICO - 0.0%
Grupo Radio Centro SA de CV sponsored ADR 100,000 456,250
NETHERLANDS - 6.2%
ABN AMRO Holding NV 250,000 4,687,416
Aegon NV 50,000 4,341,887
Akzo Nobel NV 200,000 7,778,433
Elsevier NV 100,000 1,408,903
Fortis Amev NV 15,000 974,715
Fugro NV 34,925 946,700
ING Groep NV 310,000 15,012,589
Koninklijke Boskalis Westminster NV 50,000 674,988
Koninklijke KPN NV 100,000 3,889,216
Koninklijke Pakhoed NV 60,000 1,478,545
Philips Electronics NV (Bearer) 225,000 12,346,880
Samas Groep NV 125,000 2,082,552
Smit International NV 100,004 2,255,407
STMicroelectronics NV (a) 50,000 3,040,625
Telegraaf Holdings CVA 150,000 3,792,789
TNT Post Group NV 400,000 10,714,094
Unilever NV (NY shares) 420,000 31,605,000
Vedior NV 250,000 6,374,886
VNU 50,000 1,730,326
Wolters Kluwer NV 30,000 5,817,753
120,953,704
NEW ZEALAND - 0.3%
Auckland International Airport Ltd. (a)(e) 200,000 264,675
Brierley Investments Ltd. 4,000,000 910,482
Fletcher Challenge Ltd.:
Forestry Division 3,000,000 1,016,352
Paper Division 600,000 381,132
Energy Division sponsored ADR 75,000 1,387,500
Tranz Rail Holdings Ltd. sponsored ADR 250,000 1,328,125
5,288,266
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NORWAY - 0.5%
Bergensbanken ASA 38,700 $ 259,476
Choice Hotels Skandanavia ASA (a) 150,000 197,039
Merkantildata 150,000 1,518,842
Petroleum Geo-Services ASA sponsored ADR (a) 50,000 1,068,750
Saga Petroleum AS Class A 150,000 1,919,077
Schibsted AS Series B 500,000 5,268,055
10,231,239
PANAMA - 0.2%
Banco Latinamericano de Exporaciones SA Class E 135,000 2,927,813
PORTUGAL - 0.7%
Electricidade de Portugal SA 100,000 2,517,536
Portugal Telecom SA 60,000 2,847,038
Telecel Comunicacoes Pessoais SA 40,000 7,379,900
12,744,474
RUSSIA - 0.0%
Vimpel Communications sponsored ADR (a) 75,000 881,250
SINGAPORE - 0.3%
Datacraft Asia Ltd. 300,000 966,000
Delgro Corp. Ltd. 500,000 569,757
Flextronics International (a) 30,000 1,558,125
Haw Par Brothers International Ltd. 1,228,000 1,096,766
Times Publishing Ltd. 1,200,000 1,803,511
5,994,159
SOUTH AFRICA - 0.7%
Anglogold Ltd. 200,000 10,214,596
Samancor Ltd. 100,000 772,367
South African Brewers Ltd. 100,000 1,949,733
12,936,696
SPAIN - 2.0%
Banco Santander SA sponsored ADR 79,900 1,473,156
Mapfre Vida SA 70,000 2,781,095
Repsol SA sponsored ADR 150,000 7,500,000
Telefonica de Espana SA sponsored ADR 180,000 24,648,750
Union Electrica Fenosa SA 150,000 2,436,034
38,839,035
SWEDEN - 3.7%
Asticus AB (a) 350,000 2,989,263
Astra AB Class A 300,000 4,926,058
Celsius Industrier AB Class B 350,000 5,618,916
Electrolux AB 225,000 3,395,430
Finnveden Invest AB Series B 100,000 1,714,572
Hemkopskedjan AB Series B 250,000 2,568,647
Investor AB Class B Free shares 80,000 3,123,475
Kinnevik Investment AB Series B 425,000 11,025,918
Louis Gibeck AB Series B 41,000 179,035
SHARES VALUE (NOTE 1)
Mandator AB 50,000 $ 1,605,404
Mo Och Domsjoe AB Series B 150,000 3,506,203
Modern Times Group AB Series B (a) 300,000 3,275,025
NetCom Systems AB Series B (a) 80,000 3,010,454
Nordbanken Holding AB 350,000 2,103,722
Ortivus AB Series B (a) 100,000 680,691
Semcon AB 100,000 866,918
Skandinaviska Enskilda Banken Class A 100,000 1,014,616
Societe Europeene de Communication SA sponsored ADR:
Class A 8,000 251,449
Class B 72,000 2,263,037
Svedala Industri AB Free shares 100,000 1,579,718
Svenska Handelsbanken 100,000 4,219,003
Swedish Match Co. 3,500,000 12,361,614
72,279,168
SWITZERLAND - 6.6%
Bank for International Settlements 500 3,227,537
Bucher Holding AG (Bearer) 1,500 1,391,632
Credit Suisse Group (Reg.) 100,000 15,407,095
Edipresse SA (Bearer) 25,000 6,843,488
Julius Baer Holding AG 860 2,640,476
Nestle SA (Reg.) 15,000 31,960,937
Novartis AG (Reg.) 18,000 32,493,620
PubliGroupe SA 10,000 2,663,411
Richemont Compagnie Financier 2,000 2,663,411
Class A unit
Roche Holding AG participation certificates 1,000 11,689,417
Swiss Reinsurance Co. (Reg.) 2,500 5,578,367
UBS AG (a) 50,000 13,742,463
130,301,854
UNITED KINGDOM - 9.4%
Allied Domecq PLC 600,000 5,525,850
Allied Zurich PLC (a) 1,000,000 11,888,950
Amvescap PLC 100,000 766,921
Antofagasta Holdings PLC 900,000 2,938,748
Asda Group PLC 1,000,000 2,695,945
Barclays PLC 100,000 2,155,082
Billiton PLC 2,000,000 4,906,285
Biocompatibles International PLC (a) 100,000 123,913
British American Tobacco PLC 600,000 5,420,357
British Petroleum Co. PLC ADR 200,000 17,687,500
Corporate Services Group PLC 200,000 499,001
Diageo PLC 350,000 3,780,184
Dialog Corp. PLC (a) 150,000 394,345
Dorling Kindersley Holdings PLC 500,000 2,034,518
Ecsoft Group PLC sponsored ADR (a) 25,000 550,000
Ellis & Everard PLC 800,000 2,786,368
Energis PLC (a) 250,000 3,369,931
Glaxo Wellcome PLC sponsored ADR 105,000 6,536,250
Hanson PLC 600,000 4,236,318
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
House of Fraser PLC 350,000 $ 380,949
Hyder PLC 300,000 4,119,270
IBC Group PLC 150,000 846,460
Lloyds TSB Group PLC 200,000 2,469,888
Logica PLC 65,000 2,195,897
Man (E D & F) Group PLC 500,000 2,767,111
Misys PLC 250,000 1,754,039
National Grid Group PLC 600,000 4,109,223
Paterson Zochonis PLC Class A (non-vtg.) 256,700 1,354,009
Rio Tinto PLC (Reg.) 200,000 2,428,025
Royal & Sun Alliance Insurance 500,000 4,579,758
Group PLC
Scottish Hydro-Electric PLC 250,000 2,568,264
Severn Trent PLC 500,000 8,699,028
Shell Transport & Trading Co. PLC (Reg.) 3,800,000 23,268,584
Signet Group PLC (a) 2,400,000 1,283,605
SmithKline Beecham PLC ADR 235,000 14,981,250
Stakis PLC 700,000 1,148,707
Tomkins PLC 1,250,000 5,787,491
Unilever PLC ADR 300,000 12,243,750
Vodafone Group PLC sponsored ADR 60,000 8,077,500
Wetherspoon (JD) PLC 200,000 663,102
WPP Group PLC 300,000 1,491,980
185,514,356
UNITED STATES OF AMERICA - 1.3%
Cellular Communications International, Inc. (a) 80,000 4,972,500
Orthofix International NV (a) 642,900 8,196,975
Pharmacia & Upjohn, Inc. 250,000 13,234,375
26,403,850
</TABLE>
TOTAL COMMON STOCKS 1,604,004,250
(Cost $1,449,278,621)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PREFERRED STOCKS - 1.5%
CONVERTIBLE PREFERRED STOCKS - 0.5%
AUSTRALIA - 0.5%
National Australia Bank Ltd. $1.97 EXCAPS 75,000 1,982,813
St. George Bank Ltd. Primary $4.50 STRYPES (a)(e) 100,000 4,987,500
Village Roadshow Ltd. $3.25 PRIDES (a)(e) 75,000 3,075,000
10,045,313
SHARES VALUE (NOTE 1)
NONCONVERTIBLE PREFERRED STOCKS - 1.0%
GERMANY - 0.6%
Marschollek Lautenschlaeger und 6,000 $ 3,047,158
Partner AG
Volkswagen AG 200,000 9,371,221
12,418,379
ITALY - 0.3%
Telecom Italia Spa Risp 1,000,000 5,073,840
PORTUGAL - 0.1%
Lusomundo-SGPS, SA (non-vtg.) 100,000 1,177,129
TOTAL NONCONVERTIBLE PREFERRED STOCKS 18,669,348
TOTAL PREFERRED STOCKS 28,714,661
(Cost $26,768,746)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CLOSED-END INVESTMENT COMPANIES - 6.5%
ARGENTINA - 0.0%
Argentina Fund, Inc. 30,000 290,625
AUSTRALIA - 0.0%
First Australia Fund, Inc. 100,000 656,250
AUSTRIA - 0.2%
Austria Fund, Inc. 350,000 3,478,125
BRAZIL - 0.2%
Brazil Fund, Inc. 260,000 3,575,000
CANADA - 0.3%
Economic Investment Trust Ltd. 63,592 3,915,510
United Corporations Ltd. 82,966 2,339,115
6,254,625
CHILE - 0.2%
Chile Fund, Inc. 150,000 1,406,250
Five Arrows Chile Investment Trust Ltd. 1,250,000 1,875,000
Genesis Chile Fund 35,000 717,500
3,998,750
CHINA - 0.1%
China Fund, Inc. 175,000 1,531,250
EMERGING MARKETS - 0.9%
Asia Tigers Fund, Inc. 500,000 3,062,500
Central European Equity Fund, Inc. 150,000 1,959,375
Emerging Markets Infrastructure 480,000 3,330,000
Fund, Inc.
Emerging Markets Telecommunications Fund, Inc. 250,000 2,437,500
Scudder New Europe Fund, Inc. 250,000 4,687,500
Southern Africa Fund, Inc. 75,000 768,750
Templeton Dragon Fund, Inc. 280,000 2,362,500
18,608,125
CLOSED-END INVESTMENT COMPANIES - CONTINUED
SHARES VALUE (NOTE 1)
FRANCE - 0.3%
France Growth Fund, Inc. 450,000 $ 6,075,000
GERMANY - 0.7%
Emerging Germany Fund, Inc. 150,000 2,015,625
New Germany Fund, Inc. (The) 750,000 12,234,375
14,250,000
HONG KONG - 0.1%
Asia Pacific Fund, Inc. 100,000 631,250
Greater China Fund, Inc. 125,000 851,563
1,482,813
INDIA - 0.1%
India Fund 275,000 1,701,563
India Growth Fund 75,000 562,500
Jardine Fleming India Fund, Inc. 120,000 667,500
2,931,563
ISRAEL - 0.1%
First Israel Fund, Inc. 125,000 1,421,875
ITALY - 0.2%
Italy Fund, Inc. (The) 285,000 3,847,500
KOREA (SOUTH) - 0.0%
Korea Fund, Inc. (The) (a) 50,000 415,625
MEXICO - 0.3%
Mexico Fund, Inc. (The) 600,000 6,750,000
MULTI-NATIONAL - 1.4%
Blackrock North American Government Income Trust, Inc. 650,000 6,418,750
MFS Government Markets Income Trust 1,600,000 10,800,000
Morgan Stanley Asia-Pacific Fund, Inc. 250,000 1,750,000
RCM Strategic Global Government 300,000 3,056,250
Fund, Inc.
Strategic Global Income Fund, Inc. 400,000 4,800,000
26,825,000
PORTUGAL - 0.2%
Portugal Fund, Inc. 158,900 3,029,031
SINGAPORE - 0.1%
Singapore Fund, Inc. 125,000 796,875
WEBS Index Fund, Inc. 99,000 519,750
1,316,625
SPAIN - 0.4%
Growth Fund of Spain, Inc. 190,000 4,191,875
Spain Fund, Inc. 200,000 3,400,000
7,591,875
SWITZERLAND - 0.3%
Swiss Helvetia Fund, Inc. 400,000 5,975,000
SHARES VALUE (NOTE 1)
TAIWAN - 0.4%
Taiwan Equity Fund, Inc. 120,000 $ 1,072,500
Taiwan Fund, Inc. 490,000 6,829,375
7,901,875
THAILAND - 0.0%
Thai Euro Fund Ltd. 50,000 325,000
TOTAL CLOSED-END INVESTMENT COMPANIES 128,531,532
(Cost $133,671,390)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS - 1.0%
MOODY'S RATINGS (UNAUDITED) (F) PRINCIPAL
AMOUNT (C)
CONVERTIBLE BONDS - 0.9%
FRANCE - 0.1%
Axa SA 4.5% 1/1/99 - FRF 25,000 2,969,699
ISRAEL - 0.1%
Tecnomatix Tech Ltd. 5.25% 8/15/04 - 2,725,000 1,853,000
ITALY - 0.3%
Banca Popolare di Milano 2.5% 4/15/08 (e) A- ITL 50,000,000 5,448,372
NETHERLANDS - 0.1%
Bilbao Vizcaya Investments BV 3.5% 7/12/06 Aa3 1,000,000 2,580,000
UNITED STATES OF AMERICA - 0.3%
Nestle Holdings, Inc. 3% 6/17/02 - 4,000,000 5,600,000
TOTAL CONVERTIBLE BONDS 18,451,071
NONCONVERTIBLE BONDS - 0.1%
INDONESIA - 0.1%
Indah Kiat International Finance Co. BV 11.375% 6/15/99 Caa1 1,000,000 820,000
TOTAL CORPORATE BONDS 19,271,071
(Cost $16,053,497)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CASH EQUIVALENTS - 9.5%
SHARES
Taxable Central Cash Fund (b) 186,572,367 186,572,367
(Cost $186,572,367)
TOTAL INVESTMENT IN SECURITIES - 100% $ 1,967,093,881
(Cost $1,812,344,621)
</TABLE>
CURRENCY ABBREVIATIONS
FRF - French franc
ITL - Italian lira
SECURITY TYPE ABBREVIATIONS
EXCAPS - Exchangeable Capital Units
PRIDES - Preferred Redeemable Increased Dividend Equity Securities
STRYPES - Structured Yield Product Exchangeable for Common Stock
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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) Affiliated company (see Note 7 of Notes to Financial Statements).
(e) 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 $28,924,428 or 1.5% of net assets.
(f) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investor Services, Inc.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,941,049,106 and $1,586,428,121, respectively (see Note
3 of Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $110,685 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the interfund lending program as a lender.
The maximum loan and average daily balances during the period for
which loans were outstanding amounted to $59,261,000 and $49,119,000,
respectively. The weighted average interest rate was 5.74%. Interest
earned from the interfund lending program amounted to $23,496 and is
included in interest income on the Statement of Operations (see Note 2
of Notes to Financial Statements).
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Vae AG $ - $ 811,415 $ - $ -
F. Junckers Industrier AS 1,496,056 - - 3,975,448
TOTALS $ 1,496,056 $ 811,415 $ - $ 3,975,448
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $1,822,841,509. Net unrealized appreciation
aggregated $144,252,372, of which $261,544,402 related to appreciated
investment securities and $117,292,030 related to depreciated
investment securities.
The fund hereby designates approximately $41,259,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
AEROSPACE & DEFENSE 0.3%
BASIC INDUSTRIES 4.3
CASH EQUIVALENTS 9.5
CLOSED-END INVESTMENT COMPANIES 6.5
CONSTRUCTION & REAL ESTATE 1.5
DURABLES 4.7
ENERGY 6.8
FINANCE 20.6
HEALTH 7.0
HOLDING COMPANIES 1.2
INDUSTRIAL MACHINERY & EQUIPMENT 3.2
MEDIA & LEISURE 3.9
NONDURABLES 8.5
PRECIOUS METALS 1.1
RETAIL & WHOLESALE 0.4
SERVICES 2.3
TECHNOLOGY 5.8
TRANSPORTATION 1.0
UTILITIES 11.4
100.0%
DIVERSIFIED INTERNATIONAL
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 1,967,093,881
SECURITIES, AT
VALUE (COST
$1,812,344,
621) -
SEE
ACCOMPANYIN
G SCHEDULE
CASH 313,102
RECEIVABLE FOR 12,768,729
INVESTMENTS
SOLD
RECEIVABLE FOR 4,795,496
FUND SHARES
SOLD
DIVIDENDS 4,195,880
RECEIVABLE
INTEREST 1,087,721
RECEIVABLE
OTHER 23,787
RECEIVABLES
TOTAL ASSETS 1,990,278,596
LIABILITIES
PAYABLE FOR $ 1,017,450
CUSTODIAN
BANK
PAYABLE FOR 35,624,940
INVESTMENTS
PURCHASED
PAYABLE FOR 6,389,856
FUND SHARES
REDEEMED
ACCRUED 1,316,658
MANAGEMENT
FEE
OTHER PAYABLES 1,114,521
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 45,463,425
NET ASSETS $ 1,944,815,171
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 1,697,852,186
UNDISTRIBUTED 23,593,280
NET INVESTMENT
INCOME
ACCUMULATED 68,558,306
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 154,811,399
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN FOREIGN
CURRENCIES
NET ASSETS, FOR $ 1,944,815,171
113,026,139
SHARES
OUTSTANDING
NET ASSET $17.21
VALUE,
OFFERING PRICE
AND
REDEMPTION
PRICE PER
SHARE
($1,944,815,
171 (DIVIDED BY)
113,026,139
SHARES)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 51,607,037
DIVIDENDS
INTEREST 2,214,168
53,821,205
LESS FOREIGN TAXES WITHHELD (4,691,845)
TOTAL INCOME 49,129,360
EXPENSES
MANAGEMENT FEE $ 13,661,575
BASIC FEE
PERFORMANCE ADJUSTMENT 1,780,998
TRANSFER AGENT FEES 5,007,185
ACCOUNTING FEES AND EXPENSES 800,666
NON-INTERESTED TRUSTEES' COMPENSATION 6,391
CUSTODIAN FEES AND EXPENSES 953,987
REGISTRATION FEES 189,747
AUDIT 55,245
LEGAL 6,198
REPORTS TO SHAREHOLDERS 91,283
MISCELLANEOUS 34,644
TOTAL EXPENSES BEFORE REDUCTIONS 22,587,919
EXPENSE REDUCTIONS (510,870) 22,077,049
NET INVESTMENT INCOME 27,052,311
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (INCLUDING 75,461,119
REALIZED LOSS OF $157,742 ON
SALES OF INVESTMENTS IN
AFFILIATED ISSUERS)
FOREIGN CURRENCY TRANSACTIONS (1,232,616) 74,228,503
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (384,460)
ASSETS AND LIABILITIES IN 34,396 (350,064)
FOREIGN CURRENCIES
NET GAIN (LOSS) 73,878,439
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 100,930,750
OTHER INFORMATION $ 401,245
EXPENSE REDUCTIONS
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 4,793
TRANSFER AGENT CREDITS 104,832
$ 510,870
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ 27,052,311 $ 16,482,301
NET INVESTMENT
INCOME
NET REALIZED GAIN 74,228,503 60,480,200
(LOSS)
CHANGE IN NET (350,064) 84,862,601
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE 100,930,750 161,825,102
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO (17,340,499) (7,278,518)
SHAREHOLDERS
FROM NET INVESTMENT
INCOME
FROM NET REALIZED (37,418,194) (17,468,122)
GAIN
TOTAL DISTRIBUTIONS (54,758,693) (24,746,640)
SHARE TRANSACTIONS 1,769,510,488 1,829,687,888
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 53,307,005 24,250,333
DISTRIBUTIONS
COST OF SHARES (1,438,501,445) (1,142,181,507)
REDEEMED
NET INCREASE 384,316,048 711,756,714
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
TOTAL INCREASE 430,488,105 848,835,176
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 1,514,327,066 665,491,890
END OF PERIOD $ 1,944,815,171 $ 1,514,327,066
(INCLUDING
UNDISTRIBUTED NET
INVESTMENT INCOME
OF $23,593,280
AND $14,787,511,
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 100,969,939 113,844,123
ISSUED IN 3,298,675 1,681,716
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (82,605,831) (70,452,524)
NET INCREASE 21,662,783 45,073,315
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED
OCTOBER 31,
SELECTED PER-SHARE 1998 1997 1996 1995 1994
DATA
NET ASSET VALUE, $ 16.57 $ 14.38 $ 12.73 $ 12.46 $ 11.32
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT .26 B .24 B, D .15 .22 .05
INCOME
NET REALIZED AND .98 2.46 2.13 .47 1.20
UNREALIZED GAIN
(LOSS)
TOTAL FROM INVESTMENT 1.24 2.70 2.28 .69 1.25
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT (.19) (.15) (.22) (.03) (.01)
INCOME
FROM NET REALIZED (.41) (.36) (.41) (.39) (.10)
GAIN
TOTAL DISTRIBUTIONS (.60) (.51) (.63) (.42) (.11)
NET ASSET VALUE, END OF $ 17.21 $ 16.57 $ 14.38 $ 12.73 $ 12.46
PERIOD
TOTAL RETURN A 7.72% 19.30% 18.66% 6.02% 11.14%
RATIOS AND
SUPPLEMENTAL DATA
NET ASSETS, END OF $ 1,944,815 $ 1,514,327 $ 665,492 $ 295,017 $ 351,152
PERIOD (000 OMITTED)
RATIO OF EXPENSES TO 1.22% 1.25% 1.29% 1.13% 1.25%
AVERAGE NET ASSETS
RATIO OF EXPENSES TO 1.19% C 1.23% C 1.27% C 1.12% C 1.25%
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT 1.46% 1.49% 1.53% 1.55% .96%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 95% 81% 94% 101% 89%
A 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).
B NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
C FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE FUND'S
EXPENSES (SEE NOTE 6 OF NOTES
TO FINANCIAL STATEMENTS).
D INVESTMENT INCOME PER SHARE
REFLECTS A SPECIAL DIVIDEND
WHICH AMOUNTED TO $.05 PER
SHARE.
</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 1 LIFE OF
OCTOBER 31, 1998 YEAR FUND
FIDELITY INTL VALUE 1.95% 34.51%
MSCI EAFE 9.89% 26.96%
International Funds Average 4.07% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on November 1, 1994. For example, if you had invested $1,000
in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the 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 one year average represents a peer group of
489 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
OCTOBER 31, 1998 YEAR FUND
FIDELITY INTL VALUE 1.95% 7.69%
MSCI EAFE 9.89% 6.15%
International Funds Average 4.07% 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 MS EAFE Index (Net)
00335 MS001
1994/11/01 10000.00 10000.00
1994/11/30 9700.00 9533.02
1994/12/31 9790.00 9592.71
1995/01/31 9440.00 9224.21
1995/02/28 9530.00 9197.73
1995/03/31 10000.00 9771.40
1995/04/30 10170.00 10138.89
1995/05/31 10030.00 10018.03
1995/06/30 10040.00 9842.35
1995/07/31 10830.00 10455.10
1995/08/31 10800.00 10056.27
1995/09/30 10860.00 10252.67
1995/10/31 10630.00 9977.08
1995/11/30 10820.00 10254.68
1995/12/31 11150.86 10667.84
1996/01/31 11253.73 10711.64
1996/02/29 11294.88 10747.85
1996/03/31 11521.18 10976.09
1996/04/30 11912.08 11295.20
1996/05/31 11840.07 11087.35
1996/06/30 11973.80 11149.75
1996/07/31 11562.33 10823.87
1996/08/31 11562.33 10847.59
1996/09/30 11870.93 11135.76
1996/10/31 11654.91 11021.81
1996/11/30 12251.54 11460.35
1996/12/31 12219.78 11312.93
1997/01/31 12198.62 10919.24
1997/02/28 12452.54 11100.50
1997/03/31 12547.75 11142.68
1997/04/30 12568.91 11203.96
1997/05/31 13394.15 11935.25
1997/06/30 14060.68 12595.26
1997/07/31 14409.82 12800.82
1997/08/31 13351.83 11846.52
1997/09/30 14187.64 12511.94
1997/10/31 13193.13 11553.40
1997/11/30 13087.33 11437.87
1997/12/31 13178.62 11539.78
1998/01/31 13581.27 12069.69
1998/02/28 14364.81 12846.37
1998/03/31 15039.52 13244.35
1998/04/30 15453.05 13351.37
1998/05/31 15431.29 13289.02
1998/06/30 15289.82 13392.01
1998/07/31 15518.35 13530.21
1998/08/31 12395.09 11856.39
1998/09/30 12329.79 11495.48
1998/10/30 13450.68 12696.41
IMATRL PRASUN SHR__CHT 19981031 19981110 154333 R00000000000051
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity International Value Fund on November 1, 1994,
when the fund started. As the chart shows, by October 31, 1998, the
value of the investment would have grown to $13,451 - a 34.51%
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 would have grown to $12,696 - a 26.96% 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 12 months that ended October 31, 1998, the fund returned
1.95%. This lagged the Morgan Stanley Capital International Europe,
Australasia, Far East (EAFE) Index, which returned 9.89% over the same
time period. The international funds average, as tracked by Lipper
Analytical Services, had a 12-month return of 4.07% as of October 31,
1998.
Q. WHY DID THE FUND UNDERPERFORM BOTH THE EAFE INDEX AND THE LIPPER
PEER GROUP?
A. The fund's exposure to both emerging markets and companies whose
businesses were negatively affected by emerging-market turmoil was a
significant detractor to performance. Though the fund's total exposure
to emerging-market securities was somewhat minimal, several of the
fund's positions in sectors such as banking and commodities were weak
as investors expected problems in emerging markets to lead to slower
overall economic growth. Banks, for example, reported an increase in
problematic loans as a result of slower economic growth and
emerging-market turbulence. Bank-related investments that hurt
included Mexican holdings Grupo Financiero Bancomer and BANACCI.
Several commodities-related companies, meanwhile, experienced earnings
shortfalls as a result of lower commodity prices due to slackened
demand. Commodity holdings that declined during the period included
energy-related Petrobras, based in Brazil, and Canadian Natural
Resources.
Q. YOU BUMPED UP THE FUND'S EXPOSURE TO UTILITIES STOCKS COMPARED TO
SIX MONTHS AGO, FROM AROUND 7% OF THE FUND'S INVESTMENTS TO
APPROXIMATELY 17%. WHY?
A. The utilities sector - especially the telephone utility area -
offered good opportunities over the past year as companies had to
adapt to a rapidly changing competitive environment. The privatization
of state-owned businesses continued during the period, and industry
deregulation opened up new opportunities for expansion into new
markets. As a result, this created a rash of consolidation activity as
companies sought to gain a foothold in these markets and protect their
competitive positions closer to home. Our research team was able to
uncover a number of telecommunications companies in Europe and Japan
that we felt were attractively valued, particularly among cellular
providers. These included United Kingdom-based Vodafone, Germany's
Mannesmann and Spain's Telefonica, all of which contributed positively
to the fund's performance.
Q. THE FUND'S COMBINED INVESTMENTS IN THE U.K., FRANCE AND JAPAN WAS
OVER 42% AT THE END OF THE PERIOD. HOW DID YOU POSITION THE FUND
WITHIN THESE MARKETS AND HOW DID EACH MARKET PERFORM?
A. The fund was considerably underweighted - at 11.5% and 13.8%,
respectively - in both the U.K. and Japan relative to the EAFE index
during the period, and, at 17.1%, was overweighted in France. The
underweighting in the U.K. hurt, as that market beat the EAFE's
average return over the past 12 months. On the other hand, my decision
to underweight Japan - which continued to struggle economically -
helped relative performance. Shareholders should be aware, though,
that the fund's country weightings are accumulated strictly as a
result of my individual stock selection process. If our research team
uncovers more stocks that meet my investing criteria in a particular
country, the fund may be overweighted in that market. The opposite
will be true for those markets where we find fewer attractive
opportunities. During this past 12-month period, for example, Spain,
Italy and Belgium were three of the top-performing national markets.
The fund, however, was underweighted in each county because I didn't
find enough appealing ideas in their respective markets. This turned
out to be a contributing factor to the fund's underperformance
relative to the EAFE index.
Q. WHICH OTHER INDIVIDUAL STOCKS PERFORMED WELL? WHICH PROVED
DISAPPOINTING?
A. The fund's positions in France-based computer systems and software
providers Cap Gemini and Atos and Denmark's International Service
Systems performed well as overall business conditions grew favorable.
The fund's investment in telecommunications equipment manufacturer
Nokia also worked out favorably, as the Finnish company was able to
take advantage of a worldwide cellular communications boom. In terms
of disappointments, paper stocks were another commodities area that
felt the brunt of falling demand and weak prices. The fund's
investments in Canadian paper companies Domtar and St. Laurent
Paperboard, for instance, were notable detractors.
Q. RICK, THE FUND HAD SOME EXPOSURE TO FUTURES CONTRACTS DURING THE
PERIOD. CAN YOU EXPLAIN HOW YOU USE THESE TYPES OF INVESTMENTS?
A. While there are many different uses for futures contracts, I use
them in the fund to be as fully invested in equities as possible.
During periods of inconsistent cash flows, volatile financial markets
or if the fund experiences a temporary cash buildup due to my selling
a few stocks, the use of futures can provide a low-cost way for the
fund to remain fully invested in a diversified group of stocks.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I'll continue to monitor the situation in Japan closely, looking
for signs of economic improvement as well as for indications that
businesses are adopting a more shareholder-friendly approach. I'm
optimistic that European economies can continue to improve. As the
last few months of the period displayed, though, corporate earnings
must be watched carefully lest earnings fail to justify current
valuations. If earnings disappoint, we may be in for more significant
stock corrections. Lastly, the emerging markets still appear to be in
turmoil as continuing economic and currency concerns, together with
rising social unrest, provide a bleak outlook for a speedy recovery.
Regardless, I'll keep an eye on a number of companies that have shown
valuation improvements over the past few months.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
RICK MACE DISCUSSES A RECENT STRATEGIC CHANGE
AS WELL AS THE UPCOMING INTRODUCTION OF THE EURO:
PORTFOLIO CONCENTRATION
"I reduced the fund's total holdings from around 300 at the
end of April 1998 to just over 100 at the end of October for
two important reasons. First, I responded to the substantial
and wide-ranging stock price declines in various markets
by bolstering the fund's positions in stocks that I felt were
attractively valued and had bright prospects. In order to
fund these purchases, I sold off some of the fund's smaller,
less compelling investments and increased the concentration
in other, larger holdings. Six months ago, the fund's top 50
positions accounted for around 44% of the fund's investments.
At the end of October, that figure had grown to approximately
72%. The second reason for this concentration involves the
nature of value investing. When valuations are extremely
disparate, as they were during much of this period, the fund
will tend to have more concentrated and larger positions.
When valuation gaps are closer, the fund may have a greater
number of holdings and a lower overall concentration. In sum,
I feel I took advantage of some excellent buying opportunities
over the second half of the period.
THE EURO
"On January 1, 1999, 11 of the `in' countries of the European
Union will officially adopt the euro as their currency. The
in countries include Germany, France, Italy, Spain, the
Netherlands, Belgium, Austria, Finland, Portugal, Ireland
and Luxembourg. The four other member countries - the
U.K., Sweden, Denmark and Greece - will not be converting
their currencies on that date for various reasons. On New
Year's weekend, the participating countries will establish fixed
conversion rates between their existing currencies and the
euro. For example, the French franc will be interchangeable
with the euro at the fixed exchange rate, much like U.S.
dimes and quarters are interchangeable with the U.S. dollar.
"In terms of the impact the euro will have on the way I
manage the fund, it will be extremely minimal. My stock
selection consists mostly of individual stock analysis. I will,
however, have to get used to the fact that a security that was
valued at 10 Deutsche marks the week before may be worth
only five euros on January 4. We may also see more investment
opportunities throughout Europe, as companies could forego
the traditional bank route and go to the capital markets to
raise money for expenditures.
"The introduction of the euro also could have the effect
of reducing the costs of doing business throughout Europe.
This could make Europe a more attractive place to do business
and, in turn, could heighten interest among multinational
corporations around the world in both owning more European
businesses and expanding their operations in the region. The
launch of the euro should also serve to improve the efficiency
of those businesses operating in Europe."
FUND FACTS
GOAL: growth of capital by investing mainly
in the stocks of foreign companies that own
valuable assets or are undervalued in the
marketplace
FUND NUMBER: 335
TRADING SYMBOL: FIVFX
START DATE: November 1, 1994
SIZE: as of October 31, 1998, more than
$408 million
MANAGER: Richard Mace, since 1994; manager,
Fidelity Overseas Fund, since 1996; Fidelity Advisor
Overseas Fund, since 1996; various other Fidelity
funds, 1993-1996; joined Fidelity in 1987
(checkmark)
INTERNATIONAL VALUE
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
UNITED STATES 4.7%
ROW: 1, COL: 1, VALUE: 17.1
ROW: 1, COL: 2, VALUE: 9.1
ROW: 1, COL: 3, VALUE: 3.7
ROW: 1, COL: 4, VALUE: 13.8
ROW: 1, COL: 5, VALUE: 9.0
ROW: 1, COL: 6, VALUE: 18.5
ROW: 1, COL: 7, VALUE: 4.4
ROW: 1, COL: 8, VALUE: 8.199999999999999
ROW: 1, COL: 9, VALUE: 11.5
ROW: 1, COL: 10, VALUE: 4.7
FRANCE 17.1%
UNITED KINGDOM 11.5%
SWITZERLAND 8.2%
GERMANY 9.1%
SPAIN 4.4%
ITALY 3.7%
JAPAN 13.8%
OTHER 18.5%
NETHERLANDS 9.0%
AS OF APRIL 30, 1998
UNITED STATES 7.6%
AUSTRALIA 3.0%
ROW: 1, COL: 1, VALUE: 3.0
ROW: 1, COL: 2, VALUE: 12.2
ROW: 1, COL: 3, VALUE: 6.4
ROW: 1, COL: 4, VALUE: 17.3
ROW: 1, COL: 5, VALUE: 7.0
ROW: 1, COL: 6, VALUE: 20.7
ROW: 1, COL: 7, VALUE: 4.6
ROW: 1, COL: 8, VALUE: 6.1
ROW: 1, COL: 9, VALUE: 15.1
ROW: 1, COL: 10, VALUE: 7.6
FRANCE 12.2%
UNITED KINGDOM 15.1%
GERMANY 6.4%
SWITZERLAND
6.1%
SWEDEN 4.6%
JAPAN 17.3%
OTHER 20.7%
NETHERLANDS 7.0%
<TABLE>
<CAPTION>
<S> <C> <C>
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks, closed-end investment companies and equity futures 95.8 93.0
Bonds 0.0 0.3
Short-term investments 4.2 6.7
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Telefonica de Espana SA 3.8 0.8
(Spain, Telephone Services)
OY Nokia AB Series A 3.5 0.4
(Finland, Communications
Equipment)
Telebras sponsored ADR 3.0 1.6
(Brazil, Telephone Services)
Fuji Photo Film Co. Ltd. 2.8 0.5
(Japan, Photographic Equipment)
ING Groep NV 2.5 0.7
(Netherlands, Insurance)
Julius Baer Holding AG (Switzerland, Banks) 2.5 1.1
Philips Electronics NV (Bearer) (Netherlands, Electrical 2.4 1.8
Equipment)
Mannesmann AG 2.3 0.9
(Germany, Industrial Machinery
& Equipment)
Telefonos de Mexico SA de CV 1.9 0.3
sponsored ADR representing
Class L shares
(Mexico, Telephone Services)
Fuji Heavy Industries Ltd. 1.9 0.0
(Japan, Autos, Tires, &
Accessories)
</TABLE>
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 26.8 19.9
UTILITIES 16.9 7.1
TECHNOLOGY 11.0 7.0
INDUSTRIAL MACHINERY & EQUIPMENT 7.7 8.0
HEALTH 5.3 7.0
DURABLES 5.0 6.4
ENERGY 4.8 6.4
SERVICES 4.7 2.7
NONDURABLES 2.8 5.8
BASIC INDUSTRIES 2.3 8.4
INTERNATIONAL VALUE
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 91.0%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.1%
Bansud SA Class B (a) 161,500 $ 541,193
AUSTRALIA - 1.5%
Commonwealth Bank of Australia (c) 173,500 2,152,163
David Jones Ltd. 1,067,200 1,084,196
News Corp. Ltd. 162,683 1,108,928
Smith (Howard) Ltd. 76,700 459,206
WMC Ltd. 427,074 1,445,985
6,250,478
BRAZIL - 3.2%
Centrais Electricas Brasileiras SA 7,209,000 166,787
Compania Energertica Minas Gerais 22,412,430 435,868
Telebras sponsored ADR 160,200 12,165,188
12,767,843
CANADA - 0.6%
CGI Group, Inc. Class A (sub. vtg.) (a) 117,800 1,618,614
Noranda, Inc. 63,500 938,363
2,556,977
FINLAND - 3.5%
OY Nokia AB Series A 150,900 14,043,132
FRANCE - 17.1%
Accor SA 15,691 3,300,719
Alcatel Alsthom Compagnie Generale d'Electricite SA 67,000 7,370,000
Axa SA 61,000 6,905,204
Banque Nationale de Paris 90,800 5,759,598
Cap Gemini SA 33,100 4,981,974
Elf Aquitaine 58,700 6,809,200
Groupe Danone 6,100 1,615,246
Lagardere S.C.A. (Reg.) 47,400 1,910,457
Michelin SA (Compagnie Generale des Etablissements) Class B 18,056 745,322
Renault SA 64,900 2,778,404
Rhone-Poulenc SA Class A 25,184 1,175,778
Sanofi SA 9,000 1,411,396
Scor SA 46,700 2,681,944
Societe Generale, France Class A 57,700 7,644,519
Suez Lyonnaise des Eaux 11,900 2,134,308
Total SA Class B 49,082 5,742,594
Union Assurancesfederales SA 17,100 2,142,239
Vivendi SA 18,400 4,208,879
69,317,781
GERMANY - 7.4%
Allianz AG (Reg.) 10,200 3,505,865
BASF AG 78,100 3,323,736
Bayerische Hypo-und Vereinsbank AG 61,000 4,833,162
BHF Bank AG 123,300 4,789,616
Daimler-Benz AG (a) 17,500 1,379,511
SHARES VALUE (NOTE 1)
Mannesmann AG 94,100 $ 9,290,526
Viag AG 4,400 2,976,784
30,099,200
HONG KONG - 1.7%
Johnson Electric Holdings Ltd. 1,124,000 2,612,435
Li & Fung Ltd. 618,000 965,563
Vtech Holdings Ltd. 932,000 3,495,978
7,073,976
IRELAND - 1.3%
Bank of Ireland, Inc. 72,885 1,333,352
Elan Corp. PLC ADR (a) 21,100 1,478,319
Irish Life PLC 165,000 1,464,350
Smurfit (Jefferson) Group PLC 719,100 1,168,825
5,444,846
ITALY - 2.6%
Assicurazioni Generali Spa 66,700 2,383,048
Banca di Roma (a) 2,099,500 3,668,105
Telecom Italia Spa 593,965 4,302,771
10,353,924
JAPAN - 13.8%
Acom Co. Ltd. 45,800 2,567,008
Aiwa Co. Ltd. 32,200 798,416
Canon, Inc. 102,000 1,936,375
DDI Corp. 989 2,895,050
Fuji Heavy Industries Ltd. 1,573,000 7,854,843
Fuji Photo Film Co. Ltd. 303,000 11,139,131
Honda Motor Co. Ltd. 211,000 6,358,158
Ito-Yokado Co. Ltd. 40,000 2,341,800
Nippon Telegraph & Telephone Corp. 225 1,766,681
Nomura Securities Co. Ltd. 318,000 2,409,298
Ntt Mobile Communication Network, Inc. (a)(c) 87 3,153,422
Orix Corp. (a) 57,900 4,162,419
Rohm Co. Ltd. 27,000 2,394,318
Takeda Chemical Industries Ltd. 80,000 2,610,418
Takefuji Corp. 29,000 1,550,495
Terumo Corp. 54,000 1,139,044
THK Co. Ltd. 87,500 904,003
55,980,879
LUXEMBOURG - 0.4%
Stolt Comex Seaway SA 120,000 1,530,000
MEXICO - 2.6%
BANACCI SA de CV Class B (a) 2,510,000 2,625,000
Telefonos de Mexico SA de CV sponsored ADR representing Class L shares 149,200 7,879,625
10,504,625
NETHERLANDS - 9.0%
Ahold NV 52,500 1,746,531
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NETHERLANDS - CONTINUED
Akzo Nobel NV 107,400 $ 4,177,018
ING Groep NV 211,148 10,225,413
Philips Electronics NV (Bearer) 174,100 9,553,741
Samas Groep NV 62,500 1,041,276
Unilever NV 56,000 4,157,926
Vedior NV 88,400 2,254,160
VNU 100,000 3,460,652
36,616,717
NORWAY - 0.3%
NCL Holdings AS (a) 440,000 1,149,941
PORTUGAL - 0.7%
Banco Pinto & Sotto Mayor SA 140,500 2,696,540
RUSSIA - 0.2%
Vimpel Communications sponsored ADR (a) 77,700 912,975
SPAIN - 4.4%
Banco Bilbao Vizcaya SA (Reg.) 177,000 2,390,192
Telefonica de Espana SA 338,800 15,314,623
17,704,815
SWEDEN - 0.4%
Nordbanken Holding AB 147,400 885,967
Svenska Handelsbanken 18,200 767,859
1,653,826
SWITZERLAND - 8.2%
Julius Baer Holding AG 3,300 10,132,061
Nestle SA (Reg.) 2,800 5,966,042
Novartis AG (Reg.) 4,237 7,648,637
Swiss Reinsurance Co. (Reg.) 900 2,008,212
UBS AG (a) 27,707 7,615,248
33,370,200
UNITED KINGDOM - 11.5%
Allied Zurich PLC (a) 148,350 1,763,726
British Aerospace PLC 260,048 1,889,855
British Petroleum Co. PLC 205,213 3,023,937
CGU PLC 127,500 2,020,766
HSBC Holdings PLC Ord. 110,500 2,590,452
Lloyds TSB Group PLC 570,900 7,050,294
Pilkington PLC 780,000 862,033
Rentokil Initial PLC 848,600 5,314,468
Saatchi & Saatchi PLC 1,781,500 3,460,421
Shell Transport & Trading Co. PLC (Reg.) 594,300 3,639,084
Siebe PLC 432,000 1,772,291
SmithKline Beecham PLC 429,000 5,468,304
SHARES VALUE (NOTE 1)
Somerfield PLC 278,000 $ 1,794,545
Vodafone Group PLC 440,900 5,934,056
46,584,232
UNITED STATES OF AMERICA - 0.5%
Global TeleSystems Group, Inc. (a) 46,000 1,842,875
TOTAL COMMON STOCKS 368,996,975
(Cost $350,175,398)
</TABLE>
PREFERRED STOCKS - 2.8%
CONVERTIBLE PREFERRED STOCKS - 0.0%
AUSTRALIA - 0.0%
WBK STRYPES Trust $3.135 3,800 109,013
NONCONVERTIBLE PREFERRED STOCKS - 2.8%
GERMANY - 1.7%
Dyckerhoff AG 5,100 1,566,385
SAP AG (Systeme Anwendungen Produkte) 10,900 5,380,475
6,946,860
ITALY - 1.1%
Telecom Italia Mobile Spa 1,166,600 4,145,610
TOTAL NONCONVERTIBLE PREFERRED STOCKS 11,092,470
TOTAL PREFERRED STOCKS 11,201,483
(Cost $10,118,622)
CLOSED-END INVESTMENT COMPANIES - 2.0%
EMERGING MARKETS - 0.5%
Asia Tigers Fund, Inc. 120,000 735,000
Templeton Dragon Fund, Inc. 165,000 1,392,188
2,127,188
MULTI-NATIONAL - 1.5%
European Warrant Fund, Inc. 310,000 5,192,500
Morgan Stanley Asia-Pacific Fund, Inc. 98,000 686,000
5,878,500
TOTAL CLOSED-END INVESTMENT COMPANIES 8,005,688
(Cost $9,161,849)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
GOVERNMENT OBLIGATIONS - 0.1%
MOODY'S RATINGS (UNAUDITED) PRINCIPAL
AMOUNT
UNITED STATES OF AMERICA - 0.1%
U.S. Treasury Bills, yields at dates of purchase 3.66% to 4.32% 12/17/98 to 1/7/99 - $ 600,000 596,534
(Cost $596,444)
</TABLE>
CASH EQUIVALENTS - 4.1%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b) 16,402,729 $ 16,402,729
(Cost $16,402,729)
TOTAL INVESTMENT IN SECURITIES - 100% $405,203,409
(Cost $386,455,042)
SECURITY TYPE ABBREVIATIONS
STRYPES - Structured Yield Product Exchangeable for Common Stock
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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 $5,305,585 or 1.3% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $607,545,734 and $575,428,214, respectively (see Note 3 of
Notes to Financial Statements).
The market value of futures contracts opened and closed during the
period amounted to $13,552,985 and $13,858,240, respectively (see Note
3 of Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $21,133 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $2,926,000 and $1,580,333, respectively. The
weighted average interest rate was 5.48% (see Note 5 of Notes to
Financial Statements).
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $388,822,254. Net unrealized appreciation
aggregated $16,381,155, of which $54,616,774 related to appreciated
investment securities and $38,235,619 related to depreciated
investment securities.
The fund hereby designates approximately $3,851,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
At October 31, 1998, the fund had a capital loss carryforward of
approximately $18,475,000 all of which will expire on October 31,
2006.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
AEROSPACE & DEFENSE 0.5%
BASIC INDUSTRIES 2.3
CASH EQUIVALENTS 4.1
CLOSED-END INVESTMENT COMPANIES 2.0
CONSTRUCTION & REAL ESTATE 1.0
DURABLES 5.0
ENERGY 4.8
FINANCE 26.8
GOVERNMENT OBLIGATIONS 0.1
HEALTH 5.3
HOLDING COMPANIES 0.5
INDUSTRIAL MACHINERY & EQUIPMENT 7.7
MEDIA & LEISURE 2.2
NONDURABLES 2.8
PRECIOUS METALS 0.3
RETAIL & WHOLESALE 1.9
SERVICES 4.7
TECHNOLOGY 11.0
TRANSPORTATION 0.1
UTILITIES 16.9
100.0%
INTERNATIONAL VALUE
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 405,203,409
SECURITIES, AT
VALUE
(COST
$386,455,04
2) -
SEE
ACCOMPANYIN
G SCHEDULE
FOREIGN 22,924
CURRENCY HELD
AT VALUE
(COST
$22,874)
RECEIVABLE FOR 7,236,482
INVESTMENTS
SOLD
RECEIVABLE FOR 1,322,443
FUND SHARES
SOLD
DIVIDENDS 1,126,388
RECEIVABLE
OTHER 30,542
RECEIVABLES
TOTAL ASSETS 414,942,188
LIABILITIES
PAYABLE FOR $ 3,517,259
INVESTMENTS
PURCHASED
PAYABLE FOR 2,233,034
FUND SHARES
REDEEMED
ACCRUED 234,164
MANAGEMENT
FEE
OTHER PAYABLES 202,685
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 6,187,142
NET ASSETS $ 408,755,046
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 407,328,092
UNDISTRIBUTED 3,827,529
NET INVESTMENT
INCOME
ACCUMULATED (21,190,806)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 18,790,231
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 408,755,046
33,073,700
SHARES
OUTSTANDING
NET ASSET $12.36
VALUE,
OFFERING PRICE
AND
REDEMPTION
PRICE PER
SHARE
($408,755,0
46 (DIVIDED BY)
33,073,700
SHARES)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 7,844,671
DIVIDENDS
INTEREST 1,735,207
9,579,878
LESS FOREIGN TAXES WITHHELD (846,515)
TOTAL INCOME 8,733,363
EXPENSES
MANAGEMENT FEE $ 3,359,213
BASIC FEE
PERFORMANCE ADJUSTMENT 353,461
TRANSFER AGENT FEES 1,050,241
ACCOUNTING FEES AND EXPENSES 339,547
NON-INTERESTED TRUSTEES' COMPENSATION 1,644
CUSTODIAN FEES AND EXPENSES 350,201
REGISTRATION FEES 69,626
AUDIT 40,520
LEGAL 1,504
INTEREST 1,444
REPORTS TO SHAREHOLDERS 15,110
MISCELLANEOUS 23,541
TOTAL EXPENSES BEFORE REDUCTIONS 5,606,052
EXPENSE REDUCTIONS (106,054) 5,499,998
NET INVESTMENT INCOME 3,233,365
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (18,958,636)
FOREIGN CURRENCY TRANSACTIONS 230,009
FUTURES CONTRACTS (997,094) (19,725,721)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 7,672,658
ASSETS AND LIABILITIES IN 32,862
FOREIGN CURRENCIES
FUTURES CONTRACTS 153,649 7,859,169
NET GAIN (LOSS) (11,866,552)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (8,633,187)
OTHER INFORMATION $ 104,931
EXPENSE REDUCTIONS
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 1,123
$ 106,054
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ 3,233,365 $ 3,148,502
NET INVESTMENT
INCOME
NET REALIZED GAIN (19,725,721) 18,866,932
(LOSS)
CHANGE IN NET 7,859,169 10,598,158
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (8,633,187) 32,613,592
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO (1,833,828) (2,268,604)
SHAREHOLDERS
FROM NET INVESTMENT
INCOME
FROM NET REALIZED (8,557,828) (4,990,927)
GAIN
TOTAL DISTRIBUTIONS (10,391,656) (7,259,531)
SHARE TRANSACTIONS 689,788,871 692,644,504
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 9,766,146 7,013,302
DISTRIBUTIONS
COST OF SHARES (674,521,648) (593,130,534)
REDEEMED
NET INCREASE 25,033,369 106,527,272
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
TOTAL INCREASE 6,008,526 131,881,333
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 402,746,520 270,865,187
END OF PERIOD $ 408,755,046 $ 402,746,520
(INCLUDING
UNDISTRIBUTED NET
INVESTMENT INCOME
OF $3,827,529
AND $3,062,590,
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 53,050,043 55,158,934
ISSUED IN 821,375 624,515
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (53,089,578) (47,398,321)
NET INCREASE 781,840 8,385,128
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEARS ENDED
OCTOBER 31,
SELECTED PER-SHARE 1998 1997 1996 1995 B
DATA
NET ASSET VALUE, $ 12.47 $ 11.33 $ 10.63 $ 10.00
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT .09 C .13 C .16 D .11 C
INCOME
NET REALIZED AND .14 F 1.33 .85 .52
UNREALIZED GAIN
(LOSS)
TOTAL FROM INVESTMENT .23 1.46 1.01 .63
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT (.06) (.10) (.01) -
INCOME
FROM NET REALIZED (.28) (.22) (.30) -
GAIN
TOTAL DISTRIBUTIONS (.34) (.32) (.31) -
NET ASSET VALUE, END OF $ 12.36 $ 12.47 $ 11.33 $ 10.63
PERIOD
TOTAL RETURN A 1.95% 13.20% 9.64% 6.30%
RATIOS AND
SUPPLEMENTAL DATA
NET ASSETS, END OF $ 408,755 $ 402,747 $ 270,865 $ 56,828
PERIOD (000 OMITTED)
RATIO OF EXPENSES TO 1.23% 1.30% 1.28% 1.72%
AVERAGE NET ASSETS
RATIO OF EXPENSES TO 1.21% E 1.28% E 1.26% E 1.72%
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT .71% 1.03% 1.74% 1.08%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 137% 86% 71% 109%
A 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).
B FOR THE PERIOD NOVEMBER 1,
1994 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31,
1995.
C NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
D INVESTMENT INCOME PER SHARE
REFLECTS A SPECIAL DIVIDEND
WHICH AMOUNTED TO $.04 PER
SHARE.
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 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.
</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).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
OCTOBER 31, 1998 YEAR YEARS YEARS
FIDELITY OVERSEAS 4.60% 48.33% 117.64%
MSCI EAFE 9.89% 39.58% 67.89%
International Funds Average 4.07% 41.60% 133.99%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare the fund's returns to the performance of the
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 one year average represents a peer group of 489 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
OCTOBER 31, 1998 YEAR YEARS YEARS
FIDELITY OVERSEAS 4.60% 8.21% 8.09%
MSCI EAFE 9.89% 6.90% 5.32%
International Funds Average 4.07% 7.02% 8.53%
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
1988/10/31 10000.00 10000.00
1988/11/30 10260.87 10595.66
1988/12/31 10235.20 10654.74
1989/01/31 10360.61 10842.20
1989/02/28 10631.66 10897.93
1989/03/31 10538.61 10684.05
1989/04/30 10765.16 10783.14
1989/05/31 10247.34 10196.50
1989/06/30 9947.97 10024.86
1989/07/31 10935.08 11283.71
1989/08/31 10680.21 10776.24
1989/09/30 11250.63 11267.11
1989/10/31 10639.75 10814.43
1989/11/30 11242.54 11358.07
1989/12/31 11968.38 11777.15
1990/01/31 11696.75 11338.94
1990/02/28 11454.84 10547.54
1990/03/31 11832.56 9448.74
1990/04/30 11802.86 9373.75
1990/05/31 12604.99 10443.31
1990/06/30 12829.93 10351.33
1990/07/31 13462.30 10497.13
1990/08/31 11972.62 9477.77
1990/09/30 10644.22 8156.91
1990/10/31 11658.56 9427.91
1990/11/30 11272.34 8871.78
1990/12/31 11178.17 9015.50
1991/01/31 11426.18 9307.10
1991/02/28 11841.02 10304.81
1991/03/31 11453.23 9686.19
1991/04/30 11615.56 9781.31
1991/05/31 11638.11 9883.37
1991/06/30 10907.63 9157.13
1991/07/31 11502.83 9607.04
1991/08/31 11588.51 9411.94
1991/09/30 12098.04 9942.39
1991/10/31 12138.62 10083.33
1991/11/30 11701.24 9612.59
1991/12/31 12141.00 10109.02
1992/01/31 12280.38 9893.09
1992/02/29 12025.64 9539.00
1992/03/31 11775.71 8909.27
1992/04/30 12491.86 8951.62
1992/05/31 13030.18 9550.80
1992/06/30 12722.57 9097.78
1992/07/31 11915.10 8864.94
1992/08/31 11814.16 9420.96
1992/09/30 11323.91 9234.92
1992/10/31 10554.88 8750.51
1992/11/30 10502.01 8832.85
1992/12/31 10750.16 8878.54
1993/01/31 11063.48 8877.45
1993/02/28 11290.37 9145.61
1993/03/31 12057.46 9942.79
1993/04/30 12894.79 10886.39
1993/05/31 13191.90 11116.30
1993/06/30 12878.58 10942.87
1993/07/31 13467.41 11325.92
1993/08/31 14229.10 11937.33
1993/09/30 14104.85 11668.63
1993/10/31 14672.07 12028.23
1993/11/30 14002.21 10976.83
1993/12/31 15056.04 11769.44
1994/01/31 16126.37 12764.49
1994/02/28 15824.48 12729.14
1994/03/31 15368.90 12180.88
1994/04/30 15884.86 12697.70
1994/05/31 15681.77 12624.80
1994/06/30 15473.19 12803.21
1994/07/31 15906.81 12926.34
1994/08/31 16137.35 13232.37
1994/09/30 15692.75 12815.61
1994/10/31 16011.10 13242.37
1994/11/30 15352.44 12605.94
1994/12/31 15247.37 12684.87
1995/01/31 14593.91 12197.58
1995/02/28 14605.08 12162.57
1995/03/31 15040.72 12921.17
1995/04/30 15470.78 13407.11
1995/05/31 15688.60 13247.29
1995/06/30 15805.88 13014.98
1995/07/31 16515.19 13825.24
1995/08/31 16057.21 13297.86
1995/09/30 16280.62 13557.57
1995/10/31 15956.68 13193.14
1995/11/30 16135.41 13560.22
1995/12/31 16628.06 14106.57
1996/01/31 16942.66 14164.48
1996/02/29 16976.98 14212.36
1996/03/31 17228.66 14514.18
1996/04/30 17697.70 14936.15
1996/05/31 17703.42 14661.30
1996/06/30 17834.98 14743.82
1996/07/31 17337.34 14312.89
1996/08/31 17463.18 14344.25
1996/09/30 17966.54 14725.32
1996/10/31 17777.78 14574.64
1996/11/30 18715.86 15154.54
1996/12/31 18806.04 14959.59
1997/01/31 18818.24 14439.00
1997/02/28 19238.99 14678.68
1997/03/31 19409.74 14734.46
1997/04/30 19556.09 14815.50
1997/05/31 20751.28 15782.51
1997/06/30 21830.62 16655.28
1997/07/31 22556.27 16927.10
1997/08/31 20879.34 15665.19
1997/09/30 22373.33 16545.10
1997/10/31 20806.16 15277.58
1997/11/30 20708.60 15124.81
1997/12/31 20859.64 15259.57
1998/01/31 21526.33 15960.29
1998/02/28 22737.91 16987.33
1998/03/31 23776.40 17513.60
1998/04/30 24443.09 17655.11
1998/05/31 24404.63 17572.66
1998/06/30 24167.44 17708.85
1998/07/31 24372.58 17891.60
1998/08/31 19975.00 15678.23
1998/09/30 19962.18 15200.99
1998/10/30 21769.93 16789.03
IMATRL PRASUN SHR__CHT 19981031 19981109 152214 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Overseas Fund on October 31, 1988. As the chart
shows, by October 31, 1998, the value of the investment would have
grown to $21,764 - a 117.64% 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 $16,789 -
a 67.89% 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. It was mixed. For the 12 months that ended October 31, 1998, the
fund returned 4.60%. This lagged the Morgan Stanley Capital
International Europe, Australasia, Far East (EAFE) Index, which
returned 9.89% over the same time period. The fund outperformed the
international funds average, which had a 12-month return of 4.07% as
of October 31, 1998 according to Lipper Analytical Services.
Q. WHAT FACTORS CAUSED THE FUND TO UNDERPERFORM THE EAFE INDEX?
A. One of the primary detractors to the fund's performance was its
exposure both to investments in emerging markets and to companies
whose businesses were negatively affected by emerging-market turmoil.
The fund's overall exposure to emerging-market securities was fairly
minimal. Nonetheless, several of the fund's holdings in sectors such
as banking and commodities were weak as investors expected problems in
emerging markets to lead to sluggish economic growth. Several
commodities-related companies experienced earnings shortfalls as a
result of lower commodity prices due to declining demand. Banks,
meanwhile, reported an increase in problematic loans stemming from
slower economic growth and the emerging-market volatility. Commodity
holdings that were hurt during the period included energy-related
stocks Elf Aquitaine and Total, both headquartered in France. Banking
positions that were negatively affected included Mexican holdings
Grupo Financiero Bancomer and BANACCI.
Q. WITH ALL THE VOLATILITY WE WITNESSED DURING THE PERIOD, DID YOU
MAKE ANY ADJUSTMENTS TO YOUR STRATEGIC THINKING?
A. As the market went through its correction, I decided to reduce the
number of holdings in the portfolio. This move was based on two
factors. First, our analysis showed that the top holdings in the fund
are typically among the best performers. Thus, I chose to place more
emphasis on certain top holdings. Second, the magnitude of share price
declines during the correction in world markets varied widely. Our
research staff felt that some positions had declined by more than our
analysis justified, and I increased the fund's exposure to several of
those positions. I felt that the correction and volatility provided me
with an opportunity to purchase certain stocks at more attractive
valuations.
Q. TOGETHER, THE FUND'S INVESTMENTS IN THE UNITED KINGDOM, FRANCE AND
JAPAN TOTALED AROUND 47% AT THE END OF THE PERIOD. HOW DID YOU
POSITION THE FUND WITHIN THESE MARKETS AND HOW DID EACH MARKET
PERFORM?
A. Compared to the EAFE index, the fund was significantly
underweighted in both the U.K. and Japan during the period, and was
overweighted in France. My underweighting in the U.K. hurt, as that
market topped the EAFE's average return over the past 12 months. On
the flip side, my decision to underweight Japan - which continued to
struggle economically - helped relative performance. That being said,
I'd like to stress to shareholders that the fund's country weightings
are mostly a function of my individual stock selection process. If I
find more stocks that meet my selection criteria in a particular
country, the fund may be overweighted in that market. The reverse will
be true for those markets where I uncover fewer attractive
opportunities. Here's an example. During this past 12-month period,
Spain, Italy and Belgium were three of the best-performing markets in
the world. The fund, however, was underweighted in each country
because I didn't find enough solid investments in those markets. This
turned out to be a contributing factor to the fund's underperformance
relative to the EAFE index.
Q. YOU INCREASED THE FUND'S EXPOSURE TO UTILITIES STOCKS FROM AROUND
8% OF THE FUND'S INVESTMENTS TO APPROXIMATELY 14%. WHAT WAS YOUR
ATTRACTION?
A. The utilities sector - particularly the telephone utility segment -
proved to be a fertile area for good opportunities over the past year.
Companies worldwide have had to cope with a rapidly changing
competitive environment, the privatization of state-owned businesses
continued uninterrupted during the period and industry deregulation
opened up new opportunities for expansion into new markets. As a
result, a rash of consolidation activity ensued as companies jockeyed
for position in these markets while protecting their competitive bases
closer to home. Our research team was able to find a number of
telecommunications companies in Europe and Japan that we felt were
attractively valued, particularly among cellular providers. These
included U.K.-based Vodafone, Germany's Mannesmann and Spain's
Telefonica, all of which contributed positively to the fund's
performance.
Q. WHICH OTHER INDIVIDUAL STOCKS PERFORMED WELL? WHICH PROVED
DISAPPOINTING?
A. The fund's positions in European business services providers such
as Britain's Rentokil and Securicor got a boost from improved business
conditions. In terms of disappointments, paper stocks were another
commodities area that was hit hard by falling demand and prices. The
fund's investments in Canadian paper companies Abitibi-Consolidated
and Alliance Forest Products, for instance, were notable detractors.
Holdings in Canadian and Australian metals producers also hurt
performance.
Q. SHAREHOLDERS MAY NOTICE THAT THE FUND HOLDS SEVERAL POSITIONS IN
FUTURES CONTRACTS. WHAT ROLE DO THESE INVESTMENTS PLAY IN THE
PORTFOLIO?
A. While there are many different uses for futures contracts, I use
them in the fund to be as fully invested in equities as possible.
During periods of inconsistent cash flows, volatile financial markets
or if the fund experiences a temporary cash buildup due to my selling
a few stocks, the use of futures can provide a low-cost way for the
fund to remain fully invested in a diversified group of stocks.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I remain optimistic that Europe's economies will continue to
improve. As the closing months of the period showed, however,
corporate earnings must be watched carefully and a determination must
be made as to whether those earnings support prevailing valuations. If
earnings disappoint, more stock market corrections could become
reality. It's becoming an old story, but as far as the situation in
Japan goes, I'll continue to look for glimmers of economic
improvement. Towards the end of the period, we began to see Japanese
companies adopt a more shareholder-friendly focus. Lastly, the
emerging markets still appear to be in turmoil at this point.
Continuing economic and currency concerns combined with social unrest
provide a less-than-promising outlook for a fast recuperation.
Regardless, I'll keep an eye on a number of companies that have shown
valuation improvements over the past few months.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
RICK MACE DISCUSSES THE IMPACT OF THE UPCOMING
INTRODUCTION OF THE EURO:
"On January 1, 1999, 11 of the `in' countries of the European
Union will officially adopt the euro as their currency. The
in countries include Germany, France, Italy, Spain, the
Netherlands, Belgium, Austria, Finland, Portugal, Ireland
and Luxembourg. The four other member countries - the
United Kingdom, Sweden, Denmark and Greece - will not
be converting their currencies on that date for various
reasons. On New Year's weekend, the participating countries
will establish fixed conversion rates between their existing
currencies and the euro. For example, the French franc will
be interchangeable with the euro at the fixed exchange rate,
much like U.S. dimes and quarters are interchangeable with
the U.S. dollar.
"The introduction of the euro also could have the effect of
reducing the costs of doing business throughout Europe. This
could make Europe a more attractive place to do business
and, in turn, could heighten interest among multinational
corporations around the world in both owning more European
businesses and expanding their operations in the region. In
addition, the launch of the euro should serve to improve the
efficiency of those businesses operating in Europe.
"In terms of the impact the euro will have on the way I manage
the fund, it will be extremely minimal. My stock selection
process is built on the foundation of individual stock analysis
and that has never wavered. Rather, I'll have to get used to the
fact that a security that was valued at 10 Deutsche marks the
week before may be worth only five euro on January 4. We may
also see more investment opportunities throughout Europe, as
companies could forego the traditional bank route and go to
the capital markets to raise money for expenditures."
FUND FACTS
GOAL: long-term growth of capital by investing
in equity securities outside the United States
FUND NUMBER: 094
TRADING SYMBOL: FOSFX
START DATE: December 4, 1984
SIZE: as of October 31, 1998, more than
$3.6 billion
MANAGER: Richard Mace, since 1996; manager,
Fidelity International Value Fund, since 1994;
Fidelity Advisor Overseas Fund, since 1996;
various other Fidelity funds, 1993-1996;
joined Fidelity in 1987
(checkmark)
OVERSEAS
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
UNITED STATES 11.6%
FRANCE 15.2%
ROW: 1, COL: 1, VALUE: 15.2
ROW: 1, COL: 2, VALUE: 9.199999999999999
ROW: 1, COL: 3, VALUE: 4.3
ROW: 1, COL: 4, VALUE: 15.3
ROW: 1, COL: 5, VALUE: 7.8
ROW: 1, COL: 6, VALUE: 9.4
ROW: 1, COL: 7, VALUE: 3.1
ROW: 1, COL: 8, VALUE: 6.8
ROW: 1, COL: 9, VALUE: 17.3
ROW: 1, COL: 10, VALUE: 11.6
UNITED KINGDOM 17.3%
GERMANY 9.2%
ITALY 4.3%
SWITZERLAND 6.8%
JAPAN 15.3%
SWEDEN 3.1%
NETHERLANDS 7.8%
OTHER 9.4%
PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF
APPLICABLE.
AS OF APRIL 30, 1998
FRANCE 13.8%
UNITED STATES 5.7%
ROW: 1, COL: 1, VALUE: 13.8
ROW: 1, COL: 2, VALUE: 5.6
ROW: 1, COL: 3, VALUE: 3.0
ROW: 1, COL: 4, VALUE: 17.3
ROW: 1, COL: 5, VALUE: 8.9
ROW: 1, COL: 6, VALUE: 19.1
ROW: 1, COL: 7, VALUE: 5.5
ROW: 1, COL: 8, VALUE: 6.0
ROW: 1, COL: 9, VALUE: 15.1
ROW: 1, COL: 10, VALUE: 5.7
UNITED KINGDOM 15.1%
GERMANY 5.6%
ITALY 3.0%
SWITZERLAND 6.0%
JAPAN 17.3%
SWEDEN 5.5%
NETHERLANDS 8.9%
OTHER 19.1%
PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF
APPLICABLE.
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks, closed-end investment 94.8 94.9
companies and equity futures
Bonds 0.2 0.2
Short-term investments 5.0 4.9
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Novartis AG (Reg.) 1.8 1.9
(Switzerland, Drugs &
Pharmaceuticals)
Elf Aquitaine 1.8 0.9
(France, Oil & Gas)
Telefonica de Espana SA 1.7 1.0
(Spain, Telephone Services)
Total SA Class B 1.6 2.0
(France, Oil & Gas)
SmithKline Beecham PLC 1.4 1.1
(United Kingdom, Drugs &
Pharmaceuticals)
Nestle SA (Reg.) 1.3 0.9
(Switzerland, Foods)
Telebras sponsored ADR 1.3 1.1
(Brazil, Telephone Services)
Glaxo Wellcome PLC 1.2 0.7
(United Kingdom, Drugs &
Pharmaceuticals)
Vodafone Group PLC 1.2 0.9
(United Kingdom, Cellular)
OY Nokia AB Series A 1.2 0.3
(Finland, Communications
Equipment)
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 21.1 20.6
UTILITIES 14.3 8.4
HEALTH 8.5 9.1
ENERGY 7.2 7.5
DURABLES 5.9 6.6
INDUSTRIAL MACHINERY & EQUIPMENT 5.5 7.1
TECHNOLOGY 5.4 6.5
NONDURABLES 4.6 5.7
BASIC INDUSTRIES 4.3 8.6
SERVICES 3.2 1.9
OVERSEAS
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 86.2%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.0%
Bansud SA Class B (a) 343,000 $ 1,149,406
AUSTRALIA - 2.4%
Australia & New Zealand Banking Group Ltd. 2,169,197 12,378,300
Brambles Industries Ltd. 90,600 1,982,679
Broken Hill Proprietary Co. Ltd. (The) 791,340 6,711,861
Coles Myer Ltd. 1,345,400 5,755,943
Commonwealth Bank of Australia (c) 664,600 8,243,963
CSR Ltd. 452,517 1,032,897
David Jones Ltd. 1,298,600 1,319,281
Fosters Brewing Group Ltd. 1,663,600 4,077,391
National Australia Bank Ltd. 285,500 3,774,704
News Corp. Ltd. 901,917 6,147,912
News Corp. Ltd.:
ADR 265,900 7,262,394
sponsored ADR (ltd. vtg.) 82,300 1,990,631
Rio Tinto Ltd. 249,500 3,114,659
Smith (Howard) Ltd. 82,200 492,135
WMC Ltd. 3,949,012 13,370,548
Woodside Petroleum Ltd. 714,200 3,765,949
Woolworths Ltd. 1,455,147 5,109,239
86,530,486
AUSTRIA - 0.1%
Bank Austria AG 42,300 2,304,266
BELGIUM - 0.0%
Fortis AG 2,000 574,101
BRAZIL - 1.6%
Centrais Electricas Brasileiras SA 141,360,000 3,270,494
Compania Energertica Minas Gerais 330,921,033 6,435,616
Telebras sponsored ADR 617,700 46,906,594
56,612,704
CANADA - 1.2%
Alcan Aluminium Ltd. 74,100 1,861,025
BCE, Inc. 480,600 16,290,997
Canadian Natural Resources Ltd. (a) 336,300 5,885,087
Inco Ltd. 295,700 3,171,842
Noranda, Inc. 712,800 10,533,307
Rio Alto Exploration Ltd. (a) 415,400 4,523,119
42,265,377
DENMARK - 0.5%
Den Danske Bank Group AS 39,200 5,329,644
International Service Systems AS 62,900 4,250,946
Class B
Unidanmark AS Class A 104,100 7,945,807
17,526,397
FINLAND - 1.7%
Enso OY Class R 509,800 3,951,545
Merita Ltd. Series A 257,800 1,383,405
SHARES VALUE (NOTE 1)
OY Nokia AB:
Series A 451,200 $ 41,989,803
sponsored ADR 2,000 186,125
Raisio Group PLC 140,400 1,897,486
Sampo Insurance Co. Ltd. 97,300 3,036,093
UPM-Kymmene Corp. 346,700 8,303,160
60,747,617
FRANCE - 14.1%
Accor SA 90,100 18,953,206
Alcatel Alsthom Compagnie Generale d'Electricite SA 368,700 40,557,000
Alcatel Alsthom Compagnie Generale d'Electricite SA sponsored ADR 3,000 66,000
Atos SA (a) 44,000 8,311,913
Axa SA 270,165 30,582,695
Banque Nationale de Paris 240,500 15,255,322
Cap Gemini SA 95,400 14,358,923
Castorama Dubois Investissements SA 37,300 6,662,995
Coflexip SA sponsored ADR 149,100 7,175,438
Compagnie de St. Gobain 54,100 8,015,971
Compagnie Financiere de Paribas Class A (Reg.) 89,600 6,596,002
Credit Commercial de France 88,600 6,231,721
Elf Aquitaine 541,000 62,756,000
Elf Aquitaine sponsored ADR 2,000 116,000
Groupe Danone 73,100 19,356,472
Lafarge SA 69,862 7,152,805
Lagardere S.C.A. (Reg.) 212,500 8,564,811
Michelin SA (Compagnie Generale des Etablissements) Class B 135,989 5,613,404
Pechiney SA Class A (a) 148,150 5,097,939
Peugeot SA 35,100 5,865,079
Renault SA 304,700 13,044,370
Rhone-Poulenc SA:
Class A 313,125 14,619,021
sponsored ADR Class A 2,500 116,719
Royal Canin SA (c) 15,486 837,428
Sanofi SA 137,600 21,578,672
Scor SA 209,000 12,002,704
Societe Generale, France Class A 252,400 33,439,804
Suez Lyonnaise des Eaux 68,800 12,339,528
Total SA:
Class B 484,990 56,743,830
sponsored ADR 2,000 117,000
Unibail 26,228 3,607,254
Union Assurancesfederales SA 95,500 11,963,967
Valeo SA 72,200 6,259,928
Vivendi SA 168,900 38,634,767
502,594,688
GERMANY - 6.9%
Adidas-Salomon AG 64,200 7,568,924
Allianz AG (Reg.) 95,600 32,858,888
BASF AG 440,800 18,759,318
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
GERMANY - CONTINUED
Bayer AG 325,700 $ 13,386,388
Bayerische Hypo-und Vereinsbank AG 240,900 19,087,028
Bayerische Motoren Werke (BMW) AG 10,600 7,466,143
BHF Bank AG 552,950 21,479,466
Continental Gummi-Werke AG 67,000 1,782,346
Daimler-Benz AG (a) 247,700 19,525,993
Deutsche Lufthansa AG (Reg.) 318,200 6,944,994
Deutsche Telekom AG 580,900 15,741,196
Dresdner Bank AG 112,000 4,367,594
Hoechst AG 140,700 5,931,687
Holzmann (Phillip) AG (a) 3,676 373,378
Mannesmann AG 361,300 35,671,276
Schering AG 21,000 2,456,771
Siemens AG 180,400 11,125,030
Veba AG 129,450 7,192,536
Viag AG 21,700 14,680,955
246,399,911
HONG KONG - 0.6%
CLP Holdings Ltd. 720,000 4,044,160
Dairy Farm International Holdings Ltd. 2,553,000 3,140,190
Hong Kong & China Gas Co. Ltd. 523,000 742,850
Johnson Electric Holdings Ltd. 3,863,000 8,978,501
Li & Fung Ltd. 298,000 465,595
Sun Hung Kai Properties Ltd. 252,000 1,757,118
Vtech Holdings Ltd. 913,000 3,424,708
22,553,122
IRELAND - 1.3%
Bank of Ireland, Inc. 1,164,449 21,302,328
CRH PLC 296,900 4,267,269
Elan Corp. PLC ADR (a) 137,600 9,640,600
Irish Life PLC 790,000 7,011,132
Smurfit (Jefferson) Group PLC 2,966,300 4,821,424
47,042,753
ITALY - 2.7%
Assicurazioni Generali Spa 956,500 34,173,692
Banca Commerciale Italiana Spa 501,400 3,105,444
Banca di Roma (a) 9,381,800 16,391,249
Eni Spa sponsored ADR 683,600 4,083,831
Finmeccanica Spa (a) 3,320,100 2,621,157
Istituto Bancario San Paolo 525,500 7,819,591
Istituto Nazionale Delle Assicurazioni Spa 1,740,200 4,820,732
Telecom Italia Mobile Spa 1,770,400 10,305,721
Telecom Italia Spa 383,330 2,776,900
Unicredito Italiano Spa 2,043,800 11,026,079
97,124,396
JAPAN - 13.3%
Acom Co. Ltd. 190,900 10,699,604
SHARES VALUE (NOTE 1)
Aiful Corp. (a)(c) 109,600 $ 5,123,788
Aiwa Co. Ltd. 165,600 4,106,139
Bank of Tokyo-Mitsubishi Ltd. 183,000 1,703,168
Banyu Pharmaceutical Co. Ltd. 420,000 7,156,092
Bridgestone Corp. 166,000 3,665,863
Canon, Inc. 826,000 15,680,844
Daiwa House Industry Co. Ltd. 339,000 3,838,011
DDI Corp. 3,616 10,584,934
Fuji Bank Ltd. 1,045,000 4,012,656
Fuji Heavy Industries Ltd. 3,520,000 17,577,272
Fuji Photo Film Co. Ltd. 863,000 31,726,304
Hitachi Maxell Ltd. 747,000 10,676,023
Honda Motor Co. Ltd. 909,000 27,391,306
Hoya Corp. 93,000 3,995,437
Ito-Yokado Co. Ltd. 290,000 16,978,046
Kao Corp. 446,000 9,062,075
Matsumotokiyoshi Co. Ltd. 7,100 268,963
Matsushita Electric Industrial Co. Ltd. 820,000 12,088,232
Minebea Co. Ltd. 828,000 7,805,941
Minolta Co. Ltd. 1,956,000 9,885,252
Mitsubishi Electric Corp. 2,602,000 5,309,290
Mitsubishi Estate Co. Ltd. 1,153,000 10,492,648
Mitsubishi Trust & Banking Corp. 600,000 4,065,433
Mitsui Fudosan Co. Ltd. 515,000 3,431,856
NGK Insulators Ltd. 284,000 3,166,423
Nichicon Corp. 156,000 1,699,010
Nippon Telegraph & Telephone Corp. 2,107 16,543,987
Nomura Securities Co. Ltd. 1,828,000 13,849,678
Ntt Mobile Communication Network, Inc. (a)(c) 478 17,325,700
Omron Corp. 587,000 5,761,343
Orix Corp. (a) 296,100 21,286,570
Osaka Gas Co. Ltd. 637,000 2,051,124
Paris Miki, Inc. 16,400 276,322
Rohm Co. Ltd. 169,000 14,986,656
Sankyo Co. Ltd. 240,000 5,434,352
Secom Ltd. 32,000 2,383,125
Sekisui House Ltd. 501,000 5,007,844
Sharp Corp. 1,149,000 8,705,295
Shin-Etsu Chemical Co. Ltd. 164,000 3,275,764
Shohkoh Fund & Co. Ltd. 12,200 3,723,547
Sony Corp. 210,800 13,878,680
Sumitomo Realty & Development Co. Ltd. (a) 1,694,000 5,090,022
Takeda Chemical Industries Ltd. 1,233,000 40,233,063
Takefuji Corp. 133,800 7,153,664
Takefuji Corp. (c) 96,900 5,180,792
Terumo Corp. 245,000 5,167,887
THK Co. Ltd. 674,100 6,964,443
Tokio Marine & Fire Insurance Co. Ltd. (The) 279,000 3,182,738
Tokyo Electron Ltd. 140,000 4,568,231
Tokyo Gas Co. Ltd. 672,000 1,729,901
Toyota Motor Corp. 169,000 4,074,042
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Unified-Charm Corp. 135,700 $ 6,192,079
Yamanouchi Pharmaceutical Co. Ltd. 259,000 7,447,783
473,665,242
LUXEMBOURG - 0.1%
Stolt Comex Seaway SA 184,300 2,349,825
MALAYSIA - 0.0%
Malayan Banking BHD 104,000 100,716
Oriental Holdings BHD 1,994,800 1,663,033
1,763,749
MEXICO - 1.1%
BANACCI SA de CV Class B (a) 2,258,000 2,361,454
Elektra SA de CV unit 1,044,100 465,893
Grupo Financiero Bancomer SA de CV Class B 49,452,000 10,146,526
Telefonos de Mexico SA de CV sponsored ADR representing Class L shares 494,400 26,110,500
39,084,373
NETHERLANDS - 7.8%
ABN AMRO Holding NV 397,400 7,451,117
Ahold NV 713,653 23,741,282
Akzo Nobel NV 810,300 31,514,319
Akzo Nobel NV ADR 2,000 79,000
Elsevier NV 233,800 3,294,016
Fortis Amev NV 69,500 4,516,178
ING Groep NV 838,534 40,608,279
Koninklijke KPN NV 252,900 9,835,828
Laurus NV 60,200 1,515,723
Nutreco Holding NV 184,122 6,263,324
Philips Electronics NV (Bearer) 746,800 40,980,665
Royal Dutch Petroleum Co.:
(Hague Registry) 780,500 38,439,635
(NY Registry Gilder 1.25) 2,500 123,125
TNT Post Group NV 145,700 3,902,609
Unilever NV 476,000 35,342,369
Unilever NV (NY shares) 1,500 112,875
Vedior NV 570,914 14,558,047
Vendex NV CVA 86,000 2,188,354
VNU 384,400 13,302,748
277,769,493
NETHERLANDS ANTILLES - 0.1%
Schlumberger Ltd. 62,400 3,276,000
NORWAY - 0.2%
NCL Holdings AS (a) 3,092,900 8,083,302
PORTUGAL - 0.5%
Banco Pinto & Sotto Mayor SA 347,100 6,661,702
Electricidade de Portugal SA 223,300 5,621,658
SHARES VALUE (NOTE 1)
Portugal Telecom SA 32,000 $ 1,518,420
Telecel Comunicacoes Pessoais SA 13,000 2,398,468
16,200,248
RUSSIA - 0.1%
Vimpel Communications sponsored ADR (a) 199,600 2,345,300
SOUTH AFRICA - 0.0%
ABSA Group Ltd. 186,500 1,019,354
SPAIN - 2.7%
Banco Bilbao Vizcaya SA (Reg.) 1,317,900 17,796,803
Banco Santander SA 302,788 5,552,190
Corporacion Mapfre Compania Internacional de Reaseguros SA (Reg.) 85,179 2,252,068
Iberdrola SA 291,800 4,718,160
Mapfre Vida SA 76,200 3,027,420
Repsol SA 45,000 2,261,194
Telefonica de Espana SA 1,357,100 61,344,396
Telefonica de Espana SA sponsored ADR 1,000 136,938
97,089,169
SWEDEN - 3.1%
ABB AB:
Series A 141,000 1,493,989
Series B 135,000 1,430,415
Assa Abloy AB Class B 13,200 527,241
Astra AB Class A 1,085,333 17,821,376
Electrolux AB 359,100 5,419,107
Ericsson (L.M.) Telefon AB:
ADR Class B 4,500 101,813
Class B 857,600 19,382,771
Nordbanken Holding AB 1,246,600 7,492,857
Skandia Foersaekrings AB 940,500 12,018,668
Svenska Handelsbanken 343,100 14,475,399
Swedish Match Co. 7,736,300 27,323,759
Volvo AB Class B 157,600 3,410,598
110,897,993
SWITZERLAND - 6.8%
Adecco SA (Bearer) 17,824 7,120,897
Credit Suisse Group (Reg.) 153,000 23,572,855
Julius Baer Holding AG 11,712 35,959,605
Nestle SA (Reg.) 22,229 47,363,977
Novartis AG (Reg.) 36,389 65,689,456
Roche Holding AG participation certificates 820 9,585,322
Swiss Reinsurance Co. (Reg.) 1,900 4,239,559
Swisscom AG (a) 42,500 14,432,360
UBS AG (a) 125,911 34,606,545
Zurich Allied AG (Reg.) (a) 3,000 1,826,656
244,397,232
UNITED KINGDOM - 16.1%
Allied Zurich PLC (a) 1,199,550 14,261,390
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Amec PLC 500 $ 1,490
Bank of Scotland 838,200 9,109,143
Barclays PLC 381,300 8,217,326
Barratt Developments PLC 54,700 210,211
Bass PLC 271,000 3,294,512
BBA Group PLC 528,442 3,269,617
BOC Group PLC 160,900 2,362,875
Boots Co. PLC 425,900 6,397,131
British Aerospace PLC 2,680,140 19,477,462
British American Tobacco PLC 777,450 7,023,427
British Petroleum Co. PLC 2,117,817 31,207,304
British Petroleum Co. PLC ADR 1,500 132,656
British Telecommunications PLC 2,406,400 31,304,913
BTP PLC 104,100 686,803
Cable & Wireless PLC 921,600 10,339,569
Cadbury-Schweppes PLC 432,900 6,632,753
Caradon PLC 6,549,290 13,575,785
CGU PLC 1,011,500 16,031,408
Cookson Group PLC 3,954,762 8,277,811
Courtaulds Textiles PLC 987,400 2,380,898
Diageo PLC 348,000 3,758,583
Glaxo Wellcome PLC 1,362,400 42,393,206
Glaxo Wellcome PLC sponsored ADR 2,500 155,625
Hays PLC 322,500 4,752,231
HSBC Holdings PLC 324,000 7,378,517
HSBC Holdings PLC Ord. 253,900 5,952,178
Kingfisher PLC 901,200 7,915,017
Lloyds TSB Group PLC 3,335,700 41,194,019
Misys PLC 373,300 2,619,131
National Grid Group PLC 1,007,760 6,901,851
National Westminster Bank PLC 419,700 7,091,127
Pearson PLC 489,200 8,535,703
Pilkington PLC 2,532,200 2,798,511
Prudential Corp. PLC 130,000 1,691,412
Reed International PLC 735,800 6,228,251
Rentokil Initial PLC 4,916,300 30,788,968
Rio Tinto PLC (Reg.) 900,000 10,926,113
Royal & Sun Alliance Insurance 445,913 4,084,347
Group PLC
Saatchi & Saatchi PLC 3,729,400 7,244,061
Scottish & Newcastle PLC 334,400 4,076,456
Shell Transport & Trading Co. PLC:
(Reg.) 4,620,700 28,293,986
ADR 3,000 110,250
Siebe PLC 3,642,800 14,944,678
SmithKline Beecham PLC 4,007,744 51,085,225
SmithKline Beecham PLC ADR 2,500 159,375
Somerfield PLC 1,195,600 7,717,834
Tarmac PLC 1,628,500 2,808,731
Tomkins PLC 709,500 3,284,980
Unilever PLC 1,165,100 11,705,760
Unilever PLC ADR 3,000 122,438
SHARES VALUE (NOTE 1)
Vodafone Group PLC 3,123,838 $ 42,043,614
Wimpey George PLC 984,300 1,862,478
WPP Group PLC 1,686,100 8,385,422
573,204,562
UNITED STATES OF AMERICA - 1.2%
Aluminum Co. of America 237,300 18,806,025
Global TeleSystems Group, Inc. (a) 433,900 17,383,119
Newmont Mining Corp. 83,800 1,780,750
Transocean Offshore, Inc. 98,600 3,642,038
41,611,932
</TABLE>
TOTAL COMMON STOCKS 3,076,182,998
(Cost $2,555,585,987)
PREFERRED STOCKS - 2.6%
CONVERTIBLE PREFERRED STOCKS - 0.2%
AUSTRALIA - 0.2%
WBK STRYPES Trust $3.135 315,800 9,059,513
NONCONVERTIBLE PREFERRED STOCKS - 2.4%
AUSTRALIA - 0.1%
Star City Holdings Ltd. (a) 2,943,200 2,000,724
GERMANY - 0.9%
Dyckerhoff AG 12,700 3,900,605
Porsche AG (non-vtg.) 534 920,133
SAP AG (Systeme Anwendungen Produkte) 52,300 25,816,406
30,637,144
ITALY - 1.4%
Telecom Italia Mobile Spa 5,879,300 20,892,583
Telecom Italia Spa Risp 6,117,400 31,038,706
51,931,289
TOTAL NONCONVERTIBLE PREFERRED STOCKS 84,569,157
TOTAL PREFERRED STOCKS 93,628,670
(Cost $52,460,688)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CLOSED-END INVESTMENT COMPANIES - 0.6%
EMERGING MARKETS - 0.1%
Templeton Dragon Fund, Inc. 359,000 3,029,063
GERMANY - 0.3%
Emerging Germany Fund, Inc. 134,100 1,801,969
New Germany Fund, Inc. (The) 662,700 10,810,294
12,612,263
CLOSED-END INVESTMENT COMPANIES - CONTINUED
SHARES VALUE (NOTE 1)
MULTI-NATIONAL - 0.2%
European Warrant Fund, Inc. 123,300 $ 2,065,275
Morgan Stanley Asia-Pacific Fund, Inc. 341,400 2,389,800
4,455,075
TOTAL CLOSED-END INVESTMENT COMPANIES 20,096,401
(Cost $21,522,003)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
GOVERNMENT OBLIGATIONS - 0.6%
MOODY'S RATINGS (UNAUDITED) PRINCIPAL
AMOUNT
ITALY - 0.2%
Italian Republic 5% 6/28/01 Aa3 $ 3,690,000 6,111,378
UNITED STATES OF AMERICA - 0.4%
U.S. Treasury Bills, yields at dates of purchase 3.66% to 4.70%
12/17/98 to 1/7/99 (d) - 15,600,000 15,494,831
TOTAL GOVERNMENT OBLIGATIONS 21,606,209
(Cost $21,566,970)
</TABLE>
CASH EQUIVALENTS - 10.0%
SHARES
Taxable Central Cash Fund (b) 356,371,081 356,371,081
(Cost $356,371,081)
TOTAL INVESTMENT IN SECURITIES - 100% $ 3,567,885,359
(Cost $3,007,506,729)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FUTURES CONTRACTS
EXPIRATION UNDERLYING UNREALIZED
DATE FACE AMOUNT GAIN/(LOSS)
AT VALUE
PURCHASED
1,286 CAC 40 Index Contracts (France) Dec. 1998 $ 40,646,203 $ 1,703,129
145 DAX 30 Index Contracts (Germany) Dec. 1998 40,218,051 (721)
460 FTSE 100 Index Contracts (United Kingdom) Dec. 1998 42,295,845 2,139,815
1,029 Nikkei 225 Index Contracts (Japan) Dec. 1998 70,460,775 (1,330,553)
$193,620,874 $ 2,511,670
</TABLE>
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 5.4%
PREFERRED STOCK ABBREVIATIONS
STRYPES - Structured Yield Product Exchangeable for Common Stock
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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 $36,711,671 or 1.0% of net assets.
(d) Security or a portion of the security was pledged to cover margin
requirements for futures contracts. At the period end, the value of
securities pledged amounted to $13,110,000.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $2,450,913,996 and $2,804,608,133, respectively (see Note
3 of Notes to Financial Statements).
The market value of futures contracts opened and closed during the
period amounted to $306,771,748 and $124,660,994, respectively (see
Note 3 of Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $113,253 for the
period (see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $3,019,925,607. Net unrealized appreciation
aggregated $547,959,752, of which $790,188,836 related to appreciated
investment securities and $242,229,084 related to depreciated
investment securities.
The fund hereby designates approximately $141,329,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
AEROSPACE & DEFENSE 0.5%
BASIC INDUSTRIES 4.3
CASH EQUIVALENTS 10.0
CLOSED-END INVESTMENT COMPANIES 0.6
CONSTRUCTION & REAL ESTATE 2.2
DURABLES 5.9
ENERGY 7.2
FINANCE 21.1
GOVERNMENT OBLIGATIONS 0.6
HEALTH 8.5
HOLDING COMPANIES 0.5
INDUSTRIAL MACHINERY & EQUIPMENT 5.5
MEDIA & LEISURE 2.2
NONDURABLES 4.6
PRECIOUS METALS 0.5
RETAIL & WHOLESALE 2.5
SERVICES 3.2
TECHNOLOGY 5.4
TRANSPORTATION 0.4
UTILITIES 14.3
100.0%
OVERSEAS
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 3,567,885,359
SECURITIES, AT
VALUE
(COST
$3,007,506,
729) -
SEE
ACCOMPANYIN
G SCHEDULE
FOREIGN 1,055
CURRENCY HELD
AT VALUE
(COST $593)
RECEIVABLE FOR 54,882,273
INVESTMENTS
SOLD
RECEIVABLE FOR 13,327,219
FUND SHARES
SOLD
DIVIDENDS 10,309,257
RECEIVABLE
INTEREST 1,605,158
RECEIVABLE
RECEIVABLE FOR 1,734,470
DAILY VARIATION
ON FUTURES
CONTRACTS
OTHER 79,518
RECEIVABLES
TOTAL ASSETS 3,649,824,309
LIABILITIES
PAYABLE TO $ 60
CUSTODIAN
BANK
PAYABLE FOR 22,732,725
INVESTMENTS
PURCHASED
PAYABLE FOR 19,814,906
FUND SHARES
REDEEMED
ACCRUED 2,590,115
MANAGEMENT
FEE
OTHER PAYABLES 1,344,255
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 46,482,061
NET ASSETS $ 3,603,342,248
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 2,944,844,146
UNDISTRIBUTED 17,037,956
NET INVESTMENT
INCOME
ACCUMULATED 78,029,292
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 563,430,854
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN FOREIGN
CURRENCIES
NET ASSETS, FOR $ 3,603,342,248
106,127,509
SHARES
OUTSTANDING
NET ASSET $33.95
VALUE,
OFFERING PRICE
AND
REDEMPTION
PRICE PER
SHARE
($3,603,342,
248 (DIVIDED BY)
106,127,509
SHARES)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 72,366,745
DIVIDENDS
INTEREST 15,275,707
87,642,452
LESS FOREIGN TAXES WITHHELD (8,062,278)
TOTAL INCOME 79,580,174
EXPENSES
MANAGEMENT FEE $ 28,605,097
BASIC FEE
PERFORMANCE ADJUSTMENT 6,125,472
TRANSFER AGENT FEES 10,591,874
ACCOUNTING FEES AND EXPENSES 825,676
NON-INTERESTED TRUSTEES' COMPENSATION 19,234
CUSTODIAN FEES AND EXPENSES 1,898,816
REGISTRATION FEES 153,515
AUDIT 92,537
LEGAL 21,308
REPORTS TO SHAREHOLDERS 272,716
MISCELLANEOUS 100,160
TOTAL EXPENSES BEFORE REDUCTIONS 48,706,405
EXPENSE REDUCTIONS (938,926) 47,767,479
NET INVESTMENT INCOME 31,812,695
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 94,401,117
FOREIGN CURRENCY TRANSACTIONS (2,748,602)
FUTURES CONTRACTS (6,443,838) 85,208,677
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 64,791,856
ASSETS AND LIABILITIES IN 426,131
FOREIGN CURRENCIES
FUTURES CONTRACTS 4,333,658 69,551,645
NET GAIN (LOSS) 154,760,322
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 186,573,017
OTHER INFORMATION $ 642,757
EXPENSE REDUCTIONS
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 1,135
TRANSFER AGENT CREDITS 295,034
$ 938,926
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ 31,812,695 $ 45,608,708
NET INVESTMENT
INCOME
NET REALIZED GAIN 85,208,677 255,298,607
(LOSS)
CHANGE IN NET 69,551,645 239,293,026
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE 186,573,017 540,200,341
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO (36,842,102) (36,606,761)
SHAREHOLDERS
FROM NET INVESTMENT
INCOME
FROM NET REALIZED (145,109,412) (161,278,875)
GAIN
TOTAL DISTRIBUTIONS (181,951,514) (197,885,636)
SHARE TRANSACTIONS 3,450,931,991 4,490,417,585
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 176,077,752 192,007,203
DISTRIBUTIONS
COST OF SHARES (3,805,741,237) (4,361,912,739)
REDEEMED
NET INCREASE (178,731,494) 320,512,049
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
TOTAL INCREASE (174,109,991) 662,826,754
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 3,777,452,239 3,114,625,485
END OF PERIOD $ 3,603,342,248 $ 3,777,452,239
(INCLUDING
UNDISTRIBUTED NET
INVESTMENT INCOME
OF $17,037,956
AND $41,157,042,
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 98,986,406 132,727,973
ISSUED IN 5,371,501 6,343,151
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (108,950,453) (128,555,588)
NET INCREASE (4,592,546) 10,515,536
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED
OCTOBER 31,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
NET ASSET VALUE, BEGINNING $ 34.12 $ 31.08 $ 28.57 $ 29.17 $ 27.16
OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .29 C .43 C .48 D .31 .18
NET REALIZED AND 1.22 4.61 2.72 (.44) 2.26
UNREALIZED GAIN (LOSS)
TOTAL FROM INVESTMENT 1.51 5.04 3.20 (.13) 2.44
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT (.34) (.37) (.34) (.02) (.15)
INCOME
IN EXCESS OF NET - - - - (.17)
INVESTMENT INCOME
FROM NET REALIZED GAIN (1.34) (1.63) (.35) (.45) (.11)
TOTAL DISTRIBUTIONS (1.68) (2.00) (.69) (.47) (.43)
NET ASSET VALUE, END OF $ 33.95 $ 34.12 $ 31.08 $ 28.57 $ 29.17
PERIOD
TOTAL RETURN A 4.60% 17.03% 11.41% (.34)% 9.13% B
RATIOS AND SUPPLEMENTAL
DATA
NET ASSETS, END OF PERIOD $ 3,603,342 $ 3,777,452 $ 3,114,625 $ 2,276,306 $ 2,283,211
(000 OMITTED)
RATIO OF EXPENSES TO 1.26% 1.23% 1.14% 1.05% 1.24%
AVERAGE NET ASSETS
RATIO OF EXPENSES TO 1.24% E 1.20% E 1.12% E 1.05% 1.24%
AVERAGE NET ASSETS AFTER
EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT .82% 1.28% 1.74% 1.78% .90%
INCOME TO AVERAGE NET
ASSETS
PORTFOLIO TURNOVER RATE 69% 68% 82% 49% 49%
A 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).
B TOTAL RETURNS DO NOT INCLUDE THE ONE
TIME SALES CHARGE.
C NET INVESTMENT INCOME PER SHARE
HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING
THE PERIOD.
D INVESTMENT INCOME PER SHARE REFLECTS
A SPECIAL DIVIDEND WHICH AMOUNTED
TO $.08 PER SHARE.
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).
</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.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
OCTOBER 31, 1998 YEAR YEARS FUND
FIDELITY WORLDWIDE -2.38% 49.45% 99.81%
MSCI World 15.26% 84.48% 127.37%
Global Funds Average 5.31% 67.78% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on May 30, 1990. For example, if you had invested
$1,000 in a fund that had a 5% return over the past year, the value of
your investment would be $1,050. You can compare the fund's returns to
the performance of the Morgan Stanley Capital International World
Index - a market capitalization weighted equity index of over 1,450
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 one year average represents a peer group of 211 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
OCTOBER 31, 1998 YEAR YEARS FUND
FIDELITY WORLDWIDE -2.38% 8.37% 8.56%
MSCI World 15.26% 13.03% 10.24%
Global Funds Average 5.31% 10.70% 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 MS World Index (Net)
00318 MS004
1990/05/30 10000.00 10000.00
1990/05/31 10030.00 9976.64
1990/06/30 10290.00 9902.62
1990/07/31 10570.00 9989.88
1990/08/31 9380.00 9051.77
1990/09/30 8450.00 8094.23
1990/10/31 8950.00 8846.73
1990/11/30 8950.00 8698.31
1990/12/31 8898.23 8877.31
1991/01/31 9150.44 9198.82
1991/02/28 9654.88 10047.22
1991/03/31 9321.95 9748.02
1991/04/30 9412.75 9821.21
1991/05/31 9483.37 10040.73
1991/06/30 8807.43 9417.84
1991/07/31 9352.22 9859.59
1991/08/31 9493.46 9825.22
1991/09/30 9654.88 10079.83
1991/10/31 9695.23 10240.21
1991/11/30 9180.71 9790.88
1991/12/31 9599.06 10500.46
1992/01/31 9701.07 10302.97
1992/02/29 9996.89 10122.11
1992/03/31 9762.27 9642.19
1992/04/30 10190.71 9773.45
1992/05/31 10619.15 10159.10
1992/06/30 10251.92 9815.63
1992/07/31 10149.91 9837.48
1992/08/31 10007.10 10073.46
1992/09/30 10007.10 9977.88
1992/10/31 9823.48 9704.42
1992/11/30 9976.49 9874.98
1992/12/31 10194.86 9951.68
1993/01/31 10530.15 9981.98
1993/02/28 10781.62 10215.46
1993/03/31 11399.81 10804.71
1993/04/30 11682.71 11302.49
1993/05/31 12049.43 11559.98
1993/06/30 11923.70 11460.02
1993/07/31 12185.64 11693.15
1993/08/31 12950.52 12226.26
1993/09/30 12814.31 11997.44
1993/10/31 13369.63 12325.16
1993/11/30 13128.64 11625.06
1993/12/31 13920.64 12191.05
1994/01/31 14914.21 12992.28
1994/02/28 14689.86 12821.27
1994/03/31 14134.32 12265.65
1994/04/30 14625.76 12641.94
1994/05/31 14604.39 12671.61
1994/06/30 14305.25 12633.52
1994/07/31 14743.28 12870.80
1994/08/31 14989.00 13255.48
1994/09/30 14700.54 12904.26
1994/10/31 14914.21 13268.36
1994/11/30 14401.40 12689.97
1994/12/31 14332.82 12809.88
1995/01/31 14253.69 12614.52
1995/02/28 14423.25 12795.36
1995/03/31 14502.37 13408.98
1995/04/30 14864.08 13873.19
1995/05/31 15011.03 13988.72
1995/06/30 15214.49 13981.28
1995/07/31 15836.18 14677.67
1995/08/31 15440.56 14347.51
1995/09/30 15587.50 14762.30
1995/10/31 15056.24 14526.70
1995/11/30 15101.46 15027.93
1995/12/31 15363.09 15464.12
1996/01/31 15786.03 15740.67
1996/02/29 15991.79 15833.30
1996/03/31 16266.13 16093.49
1996/04/30 16746.23 16468.62
1996/05/31 17043.43 16479.56
1996/06/30 17032.00 16559.58
1996/07/31 16414.73 15971.03
1996/08/31 16849.10 16151.29
1996/09/30 17169.17 16780.32
1996/10/31 17352.06 16894.13
1996/11/30 18152.22 17837.53
1996/12/31 18239.31 17548.51
1997/01/31 18464.49 17756.70
1997/02/28 18974.10 17957.61
1997/03/31 18725.22 17599.05
1997/04/30 18689.67 18170.96
1997/05/31 19791.85 19289.22
1997/06/30 20834.77 20247.97
1997/07/31 21699.92 21177.22
1997/08/31 20538.49 19757.23
1997/09/30 22150.28 20827.25
1997/10/31 20467.38 19727.72
1997/11/30 20064.43 20073.46
1997/12/31 20441.89 20314.75
1998/01/31 20762.29 20877.50
1998/02/28 22223.34 22286.37
1998/03/31 23633.13 23224.02
1998/04/30 24504.63 23447.48
1998/05/31 24402.10 23150.13
1998/06/30 23799.74 23696.03
1998/07/31 23389.62 23654.49
1998/08/31 19109.00 20496.55
1998/09/30 18750.15 20855.53
1998/10/30 19980.50 22737.29
IMATRL PRASUN SHR__CHT 19981031 19981109 152503 R00000000000105
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Worldwide Fund on May 30, 1990, when the fund
started. As the chart shows, by October 31, 1998, the value of the
investment would have grown to $19,981 - a 99.81% 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
would have grown to $22,737 - a 127.37% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating value
of its currency create these risks. For these
reasons an international fund's performance
may be more volatile than a fund that invests
exclusively in the United States. Past
performance is no guarantee of future results
and you may have a gain or loss when you sell
your shares.
(checkmark)
WORLDWIDE
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Penny Dobkin, Portfolio Manager of Fidelity
Worldwide Fund
Q. HOW DID THE FUND PERFORM, PENNY?
A. Not well. For the 12 months that ended October 31, 1998, the fund
returned -2.38%. In contrast, the Morgan Stanley Capital International
World Index returned 15.26% over the same period, while the global
funds average monitored by Lipper Analytical Services had a return of
5.31%.
Q. WHY DID THE FUND'S PERFORMANCE TRAIL THAT OF THE INDEX AND THE
AVERAGE BY SUCH A WIDE MARGIN?
A. The basic ideas I used to manage the fund successfully in previous
periods suddenly weren't applicable in the third quarter of 1998. For
example, I overweighted European equities and underweighted United
States stocks relative to the index. Those allocations were based on
the premise - which seemed very reasonable until Russia devalued its
currency and defaulted on its debt - that European economic growth
would accelerate and exceed growth in the United States by the end of
1998. However, the Russian financial crisis led investors to question
growth forecasts for Europe and to avoid stocks there to an even
greater extent than occurred in the U.S. Moreover, U.S. stocks
recovered much more strongly in late October than European shares did.
Q. WERE THERE OTHER REASONS FOR THE FUND'S POOR PERFORMANCE?
A. Yes, there were. Because I was expecting economic growth to pick up
in Europe, I overweighted the fund with cyclical stocks, which tend to
perform well in that kind of environment. However, the sectors that
did best during the period were mainly defensive ones like utilities
and health care. Furthermore, during the second half of the period, 6%
of the fund's assets were invested in Latin America. The Russian
situation caused interest rates in all emerging markets - including
Latin America - to rise sharply while driving down stock prices in
those markets. Finally, some of the fund's individual holdings - even
in the relatively resilient U.S. market - were hit particularly hard
during the recent pullback in stock prices.
Q. THE FUND'S HOLDINGS OF STOCKS IN THE BASIC INDUSTRIES SECTOR
DECLINED FROM 12.9% SIX MONTHS AGO TO 4.2% AT THE END OF THE PERIOD.
ON THE OTHER HAND, TECHNOLOGY HOLDINGS INCREASED FROM 3.1% TO 9.9%.
CAN YOU COMMENT ON THOSE CHANGES?
A. Many of the fund's holdings in the paper and forest products and
specialty chemicals industries did well in the first half of the
period, and I took profits on a number of those positions in May and
June, resulting in a drop in the fund's basic industries holdings. In
technology, I saw opportunities in two main areas - software and
semiconductor capital equipment companies. The software investments
were primarily company-specific stories, based on research about the
prospects for certain software products. On the semiconductor capital
equipment side, there was evidence that the prices of DRAM (Dynamic
Random Access Memory) computer chips had stabilized, which would
enable producers of those chips to raise their expenditures on new
manufacturing facilities and equipment over the next year. In
addition, the stocks of semiconductor equipment manufacturers had been
shunned by investors for about a year and were due for a comeback.
Q. DID THE IMMINENT INTRODUCTION OF THE EURO - WHICH AS OF JANUARY 1,
1999, WILL BE USED AS THE NEW COMMON CURRENCY FOR MUCH OF EUROPE -
INFLUENCE HOW YOU MANAGED THE FUND?
A. Not really. For investment purposes, I have regarded Europe as one
unified region for many years. While the euro will no doubt bring
changes, it's important to remember that the old currencies of the 11
participating European Union countries will be phased out gradually
over a three-year period. So there will probably not be dramatic
changes directly attributable to the euro, at least initially.
However, currency risk is a factor to consider seriously when
investing abroad, and it's one reason for periodically reminding
Fidelity shareholders that foreign investments carry greater risk than
domestic ones.
Q. WHAT STOCKS PERFORMED WELL FOR THE FUND?
A. Galeries Lafayette performed extremely well. The company, a
department store chain in France, saw its restructuring effort pay off
in lower costs, as well as higher sales and earnings. Moreover, the
French economy just pulled out of recession in 1997, so the overall
pickup in economic activity also helped. Another strong holding was
Julius Baer, a Swiss-based universal bank and one of the fund's top-10
holdings. Unlike banks in the United States, universal banks can
engage in asset management and security underwriting in addition to
lending activities. As equity mutual funds became more popular in
Switzerland, Julius Baer's assets under management experienced strong
growth, and consequently so did the company's earnings. A third
positive contributor to performance was Benckiser, a Dutch company
that makes a variety of household products. The company's stock, which
became available to investors through an IPO (initial public offering)
in November 1997, attracted attention because of its modest
price-to-earnings ratio compared to such industry heavyweights as
Unilever and Procter & Gamble.
Q. WHAT STOCKS WERE DISAPPOINTING?
A. FIRSTPLUS Financial Group hurt the fund's performance. The company
is a U.S.-based sub-prime equity lender - that is, it specializes in
providing loans to people with less than "prime" credit records. When
yields of mortgage securities climbed sharply in September and October
1998, the company was unable to obtain sufficient funds to fuel its
lending activities, and its earnings forecasts were severely
downgraded as a result. Grupo Financiero Bancomer, one of the fund's
largest holdings, and BANACCI are both Mexican banks whose prospects
suffered because of the upward spike in that country's interest rates.
Finally, Foundation Health Systems, an HMO headquartered in
California, also negatively affected performance. The company
experienced a squeeze, as costs escalated faster than revenues did. In
addition, there were unanticipated difficulties in assimilating some
recent acquisitions.
Q. WHAT'S YOUR OUTLOOK, PENNY?
A. The big question at this point is whether we can avoid a recession
in the U.S. and Europe. If so, I think there's the potential for a
very favorable environment for stocks. For example, interest rates
could fall much further in Europe without sparking inflation, if the
political leaders there would let them. Furthermore, European stock
markets are much further from their highs than the U.S. market is. The
combination of lower interest rates and generally better stock values
in Europe could be a potent one. The way to participate in Europe, I
believe, will be to invest in large-cap stocks, at least for the time
being. Following the introduction of the euro, there will likely be
one or two indexes representing all of Europe, and most investors will
focus on the stocks in those indexes to the detriment of small- and
mid-cap issues. Asia still looks weak, as Japan - the key economy in
the region - struggles to pull out of its deep depression. If the yen
stops falling in value against the U.S. dollar, as its recent sharp
rally might portend, that could spark more interest in Japanese
stocks. For now, because of the reasons I mentioned earlier and due to
the additional attention that the euro will bring to them, I am
comfortable with the fund's relatively heavy weighting in European
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.
PENNY DOBKIN ON THE EFFECT OF THE RUSSIAN
FINANCIAL DIFFICULTIES ON EUROPEAN STOCKS:
"Russia's 70% devaluation of its currency - the ruble - and
its default on much of the debt owed to foreign governments
and corporations took virtually everyone by complete
surprise. In the fourth quarter of 1997, after the Asian
situation had hit full force, investors as yet had no reason to
classify Russia as a financial basket case.
"Unfortunately, Russia misrepresented its financial
condition to its creditors, including the World Bank and the
IMF (International Monetary Fund). So when the Russian
crisis hit on August 17, 1998, it took even the most
experienced investors by surprise, including the managers
of many hedge funds. At that point, many investors resolved
to avoid emerging markets generally, and investment
capital flew out of not only Russia but also the other former
Soviet-bloc countries. This series of events was perceived to
have a negative effect on many western European
companies for several reasons. First, western Europe sells
goods and services to eastern Europe, and the latter was
now seen to be much less capable of purchasing those goods
and services than it was before. Second, many European
banks had investments in Russia, and suddenly many of
these loans were either written off as uncollectible or were
considered by investors to be in serious jeopardy. As a result,
many European financial services stocks suffered huge
declines in their share prices, as a wave of panic and
pessimism swept over the region.
"At the same time, the Federal Reserve Board began to lower
United States interest rates more rapidly than European
countries were lowering theirs. Since currency exchange
rates are a direct function of short-term interest rates, the
U.S. dollar began to weaken relative to most European
currencies. Exporting - selling goods and services abroad
- - is crucial to most European economies, and a weaker
dollar meant higher U.S. dollar-denominated prices and
therefore lower U.S. demand for European goods and
services. As a result of these events, European stocks had a
lot of negatives hitting them all at once, and the growth
prospects for the region's economies suddenly looked a lot
less rosy than they had only a month or two earlier.
"It would be a very positive development if Europe
aggressively lowered short-term interest rates. Lower
interest rates in Europe tend to decrease the value of the
region's currencies relative to the U.S. dollar, which helps to
boost European exports. However, some countries in the
region, particularly Germany, are reluctant to lower interest
rates because of the possible inflationary effects. Since
economic growth is a much greater concern than inflation
virtually worldwide, I hope that countries in the European
Union will see the wisdom of making a concerted effort to
lower rates."
FUND FACTS
GOAL: to provide long-term growth of capital by
investing mainly in common stocks from around
the world
FUND NUMBER: 318
TRADING SYMBOL: FWWFX
START DATE: May 30, 1990
SIZE: as of October 31, 1998, more than
$972 million
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)
WORLDWIDE
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998
CANADA 3.1%
ROW: 1, COL: 1, VALUE: 3.1
ROW: 1, COL: 2, VALUE: 10.1
ROW: 1, COL: 3, VALUE: 3.8
ROW: 1, COL: 4, VALUE: 3.8
ROW: 1, COL: 5, VALUE: 4.4
ROW: 1, COL: 6, VALUE: 4.0
ROW: 1, COL: 7, VALUE: 12.4
ROW: 1, COL: 8, VALUE: 6.1
ROW: 1, COL: 9, VALUE: 7.5
ROW: 1, COL: 10, VALUE: 44.8
FRANCE 10.1%
UNITED STATES 44.8%
GERMANY 3.8%
ITALY 3.8%
JAPAN 4.4%
NETHERLANDS 4.0%
OTHER 12.4%
UNITED KINGDOM 7.5%
SWITZERLAND 6.1%
AS OF APRIL 30, 1998
CANADA 4.6%
ROW: 1, COL: 1, VALUE: 4.6
ROW: 1, COL: 2, VALUE: 5.8
ROW: 1, COL: 3, VALUE: 10.1
ROW: 1, COL: 4, VALUE: 4.1
ROW: 1, COL: 5, VALUE: 5.5
ROW: 1, COL: 6, VALUE: 6.9
ROW: 1, COL: 7, VALUE: 21.7
ROW: 1, COL: 8, VALUE: 5.0
ROW: 1, COL: 9, VALUE: 8.6
ROW: 1, COL: 10, VALUE: 27.7
FINLAND 5.8%
UNITED STATES 27.7%
FRANCE 10.1%
ITALY 4.1%
UNITED
KINGDOM 8.6%
JAPAN 5.5%
NETHERLANDS 6.9%
SWITZERLAND 5.0%
OTHER 21.7%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Stocks 89.8 95.9
Short-term investments 10.2 4.1
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Telecom Italia Spa 2.0 1.5
(Italy, Telephone Services)
MCI Worldcom, Inc. 1.8 0.0
(United States of America,
Telephone Services)
Julius Baer Holding AG (Switzerland, Banks) 1.7 1.3
Philip Morris Companies, Inc. (United States of America, 1.7 0.9
Tobacco)
Alcatel Alsthom Compagnie 1.5 2.2
Generale d'Electricite SA
sponsored ADR
(France, Electrical Equipment)
Oracle Corp. 1.5 0.0
(United States of America,
Computer Services & Software)
Lagardere S.C.A. (Reg.) 1.4 1.1
(France, Holding Companies)
King World Productions, Inc. 1.4 1.1
(United States of America,
Entertainment)
Galeries Lafayette SA 1.4 1.0
(France, General Merchandise
Stores)
Banco Pinto & Sotto Mayor SA 1.4 0.0
(Portugal, Banks)
</TABLE>
TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 12.6 17.5
UTILITIES 10.2 7.4
TECHNOLOGY 9.9 3.1
NONDURABLES 8.9 6.9
DURABLES 8.8 8.7
ENERGY 7.7 4.6
RETAIL & WHOLESALE 6.8 6.8
CONSTRUCTION & REAL ESTATE 5.5 7.6
BASIC INDUSTRIES 4.2 12.9
MEDIA & LEISURE 4.1 5.3
WORLDWIDE
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 83.5%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.2%
Bansud SA Class B (a) 430,000 $ 1,440,947
AUSTRALIA - 1.4%
AMP Ltd. 369,100 4,381,191
Colonial Ltd. 1,025,000 3,350,903
David Jones Ltd. 549,455 558,206
HIH Winterthur International Holdings Ltd. 4,943,829 4,162,346
St. George Bank Ltd. 150,000 998,339
13,450,985
BRAZIL - 0.9%
Telebras sponsored ADR 96,500 7,327,969
Telesp (Pfd. Reg.) 10,034,511 1,682,302
9,010,271
CANADA - 3.1%
BCE, Inc. 378,000 12,813,144
Imasco Ltd. 600,000 11,277,465
National Bank of Canada 214,300 3,208,458
Potash Corp. of Saskatchewan 25,000 1,725,647
29,024,714
FINLAND - 2.7%
Merita Ltd. Series A 900,000 4,829,574
OY Nokia AB sponsored ADR 61,500 5,723,344
Raisio Group PLC 700,000 9,460,399
UPM-Kymmene Corp. 240,000 5,747,789
25,761,106
FRANCE - 10.1%
Accor SA 36,000 7,572,868
Alcatel Alsthom Compagnie Generale d'Electricite SA sponsored ADR 653,900 14,385,800
Credit Commercial de France 88,400 6,217,654
Elf Aquitaine 51,500 5,974,000
Eramet SA 128,374 3,794,967
Fonciere Lyonnaise SA 24,272 4,033,885
Fonciere Lyonnaise SA warrants 7/30/02 (a) 49,272 51,513
Galeries Lafayette SA 11,700 12,991,330
Lagardere S.C.A. (Reg.) 342,500 13,804,459
Metaleurop SA (a) 175,734 837,854
Societe Generale d'Enterprises SA (SGE) 100,400 4,832,057
Total SA:
Class B 69,400 8,119,800
sponsored ADR 109,000 6,376,500
Vivendi SA 29,300 6,702,183
95,694,870
GERMANY - 0.8%
BHF Bank AG 111,500 4,331,242
Kamps AG (a) 81,900 3,723,628
8,054,870
SHARES VALUE (NOTE 1)
IRELAND - 1.0%
Independent Newspapers PLC 1,219,900 $ 4,800,398
Smurfit (Jefferson) Group PLC 2,800,000 4,633,743
9,434,141
ISRAEL - 0.3%
Blue Square Israel Ltd. sponsored ADR 226,100 2,911,038
ITALY - 1.3%
Banca di Roma (a) 4,800,000 8,386,237
Istituto Bancario San Paolo 296,300 4,409,029
12,795,266
JAPAN - 4.4%
Advantest Corp. 101,100 6,397,633
Fuji Heavy Industries Ltd. 1,102,000 5,502,884
Honda Motor Co. Ltd. 129,000 3,887,215
Minolta Co. Ltd. 859,000 4,341,223
Nintendo Co. Ltd. 62,400 5,297,150
Ntt Mobile Communication Network, Inc. (a)(c) 220 7,974,172
Sankyo Co. Ltd. 60,000 1,358,588
Sony Corp. 55,500 3,654,017
Sony Corp. sponsored ADR 14,000 922,250
Yamanouchi Pharmaceutical Co. Ltd. 70,000 2,012,914
41,348,046
MEXICO - 1.3%
BANACCI SA de CV Class B (a) 6,390,000 6,682,769
Grupo Financiero Bancomer SA de CV sponsored ADR Series C (c) 1,579,000 5,921,250
12,604,019
NETHERLANDS - 3.7%
Ahrend NV 272,600 5,534,655
Akzo Nobel NV 57,600 2,240,189
Nutreco Holding NV 230,100 7,827,369
Philips Electronics NV (Bearer) 177,500 9,740,316
Samas Groep NV 609,032 10,146,727
35,489,256
NORWAY - 0.5%
Schibsted AS Series B 447,600 4,715,963
PORTUGAL - 1.4%
Banco Pinto & Sotto Mayor SA 670,000 12,858,946
SPAIN - 0.5%
Catalana Occidente SA 88,000 2,339,161
Mapfre Vida SA 55,000 2,185,146
4,524,307
SWEDEN - 2.2%
Castellum AB 561,400 4,975,033
Hemkopskedjan AB Series B 398,400 4,093,396
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWEDEN - CONTINUED
Semcon AB 324,200 $ 2,810,549
Volvo AB Class B 435,000 9,413,771
21,292,749
SWITZERLAND - 6.1%
Banque Cantonale Vaudoise (Bearer) 5,530 1,730,618
Gretag Imaging Holding AG (Reg.) (a) 118,000 10,737,987
Helvetia Patria Holdings (Reg.) 3,200 2,900,159
Julius Baer Holding AG 5,200 15,965,672
Nestle SA (Reg.) 5,827 12,415,759
Novartis AG (Reg.) 4,400 7,942,885
UBS AG (a) 21,500 5,909,259
57,602,339
UNITED KINGDOM - 7.5%
BTP PLC 850,000 5,607,901
Doncasters PLC sponsored ADR (a) 45,100 631,400
Hazlewood Foods PLC 2,000,900 5,210,038
Iceland Group PLC 2,587,550 8,514,055
Laporte PLC 750,000 7,083,135
Nycomed Amersham PLC 1,292,500 9,079,202
Peninsular & Oriental Steam Navigation Co. 475,000 5,026,849
Shell Transport & Trading Co. PLC:
(Reg.) 1,063,400 6,511,530
ADR 55,000 2,021,250
Smith (David S.) Holdings PLC 1,900,000 4,008,753
Somerfield PLC 1,570,000 10,134,660
Unilever PLC 600,000 6,028,200
United Biscuits Holdings PLC 219,744 864,709
70,721,682
UNITED STATES OF AMERICA - 34.1%
Alliant Techsystems, Inc. (a) 176,000 12,320,000
American Standard Companies, Inc. (a) 245,300 7,834,269
Amoco Corp. 170,000 9,541,250
Applied Materials, Inc. (a) 100,000 3,468,750
AT&T Corp. 177,500 11,049,375
Autodesk, Inc. 350,000 10,915,625
Breed Technologies, Inc. 438,000 3,695,625
Cellular Communications International, Inc. (a) 142,600 8,863,481
Chesapeake Corp. 135,000 4,725,000
CNF Transportation, Inc. 255,000 7,713,750
Coastal Corp. (The) 220,000 7,755,000
Consolidated Freightways Corp. (a) 360,000 3,892,500
Dayton Hudson Corp. 115,800 4,907,025
Dillards, Inc. Class A 125,000 3,882,813
Dollar Tree Stores, Inc. (a) 90,000 3,470,625
Federated Department Stores, Inc. (a) 140,000 5,381,250
FIRSTPLUS Financial Group, Inc. (a) 310,000 1,375,625
SHARES VALUE (NOTE 1)
Fruit of the Loom, Inc. Class A (a) 285,000 $ 4,346,250
Household International, Inc. 100,000 3,656,250
International Business Machines Corp. 46,400 6,887,500
King World Productions, Inc. (a) 520,000 13,650,000
KLA-Tencor Corp. (a) 250,000 9,218,750
Lone Star Industries, Inc. 63,300 4,458,694
Maxim Group, Inc. (a) 255,000 4,494,375
MCI WorldCom, Inc. (a) 305,000 16,851,250
Microsoft Corp. (a) 110,000 11,646,250
Modis Professional Services, Inc. (a) 395,000 6,961,875
Navigant International, Inc. (a) 323 1,857
Occidental Petroleum Corp. 290,000 5,763,750
Oracle Corp. (a) 475,000 14,042,188
Owens-Corning 278,500 10,113,031
Pep Boys-Manny, Moe & Jack 410,000 6,406,250
PepsiCo, Inc. 150,000 5,062,500
Personnel Group of America, Inc. (a) 320,000 4,960,000
Philip Morris Companies, Inc. 309,000 15,797,625
Phillips Petroleum Co. 75,000 3,243,750
Providian Financial Corp. 50,000 3,968,750
Rubbermaid, Inc. 305,000 10,122,188
Sabre Group Holdings, Inc. Class A (a) 18,600 700,988
Saks Holdings, Inc. (a) 119,000 2,707,250
SLM Holding Corp. 246,700 9,883,419
Southdown, Inc. 90,000 4,899,375
Starwood Hotels & Resorts Trust 130,000 3,680,625
Tele-Communications, Inc. (TCI Group) Series A (a) 65,800 2,771,825
Ultramar Diamond Shamrock Corp. 230,000 6,195,625
US Airways Group, Inc. (a) 50,000 2,828,125
USFreightways Corp. 220,000 5,513,750
USX-Marathon Group 260,000 8,498,750
Valero Energy Co. 150,000 3,750,000
323,874,778
TOTAL COMMON STOCKS 792,610,293
(Cost $783,791,126)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PREFERRED STOCKS - 6.3%
CONVERTIBLE PREFERRED STOCKS - 0.8%
NETHERLANDS - 0.3%
Samas Groep NV 198,265 3,345,662
UNITED STATES OF AMERICA - 0.5%
Unisys Corp. Series A, $3.75 85,200 4,318,575
TOTAL CONVERTIBLE PREFERRED STOCKS 7,664,237
NONCONVERTIBLE PREFERRED STOCKS - 5.5%
GERMANY - 3.0%
Dyckerhoff AG 26,000 7,985,490
Jungheinrich AG 638,000 8,486,094
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
GERMANY - CONTINUED
Moebel Walther AG (a) 71,700 $ 2,340,871
Porsche AG (non-vtg.) 5,500 9,477,025
28,289,480
ITALY - 2.5%
Telecom Italia Mobile Spa 1,300,000 4,619,658
Telecom Italia Spa Risp 3,823,250 19,398,550
24,018,208
TOTAL NONCONVERTIBLE PREFERRED STOCKS 52,307,688
TOTAL PREFERRED STOCKS 59,971,925
(Cost $61,333,955)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CASH EQUIVALENTS - 10.2%
Taxable Central Cash Fund (b) 96,544,764 96,544,764
(Cost $96,544,764)
TOTAL INVESTMENT IN SECURITIES - 100% $ 949,126,982
(Cost $941,669,845)
</TABLE>
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. 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 $13,895,422 or 1.4% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,052,785,509 and $1,234,950,835, respectively (see Note
3 of Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $103,374 for the
period (see Note 4 of Notes to Financial Statements).
Transactions during the period with companies which are or were
affiliates are as follow:
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Beru AG $ - $ 2,813,372 $ - $ -
Haci Omer Sabanci
Holdings AS - 1,818,488 - -
Samas-Groep NV 528,511 - - -
TOTALS $ 528,511 $ 4,631,860 $ - $ -
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $944,570,723. Net unrealized appreciation
aggregated $4,556,259, of which $122,261,800 related to appreciated
investment securities and $117,705,541 related to depreciated
investment securities.
The fund hereby designates approximately $78,565,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
AEROSPACE & DEFENSE 1.4%
BASIC INDUSTRIES 4.2
CASH EQUIVALENTS 10.2
CONSTRUCTION & REAL ESTATE 5.5
DURABLES 8.8
ENERGY 7.7
FINANCE 12.6
HEALTH 2.2
HOLDING COMPANIES 1.4
INDUSTRIAL MACHINERY & EQUIPMENT 2.5
MEDIA & LEISURE 4.1
NONDURABLES 8.9
RETAIL & WHOLESALE 6.8
SERVICES 1.0
TECHNOLOGY 9.9
TRANSPORTATION 2.6
UTILITIES 10.2
100.0%
WORLDWIDE
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN $ 949,126,982
SECURITIES, AT
VALUE
(COST
$941,669,84
5) -
SEE
ACCOMPANYIN
G SCHEDULE
FOREIGN 847,822
CURRENCY HELD
AT VALUE
(COST
$849,281)
RECEIVABLE FOR 29,283,650
INVESTMENTS
SOLD
RECEIVABLE FOR 4,698,175
FUND SHARES
SOLD
DIVIDENDS 2,079,573
RECEIVABLE
INTEREST 560,000
RECEIVABLE
OTHER 53,449
RECEIVABLES
TOTAL ASSETS 986,649,651
LIABILITIES
PAYABLE FOR $ 9,252,222
INVESTMENTS
PURCHASED
PAYABLE FOR 4,284,350
FUND SHARES
REDEEMED
ACCRUED 565,744
MANAGEMENT
FEE
OTHER PAYABLES 442,538
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 14,544,854
NET ASSETS $ 972,104,797
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 900,272,103
UNDISTRIBUTED 12,289,760
NET INVESTMENT
INCOME
ACCUMULATED 51,998,549
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 7,544,385
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 972,104,797
62,341,545
SHARES
OUTSTANDING
NET ASSET $15.59
VALUE,
OFFERING PRICE
AND
REDEMPTION
PRICE PER
SHARE
($972,104,7
97 (DIVIDED BY)
62,341,545
SHARES)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 20,593,289
DIVIDENDS
INTEREST 5,387,925
25,981,214
LESS FOREIGN TAXES WITHHELD (2,239,593)
TOTAL INCOME 23,741,621
EXPENSES
MANAGEMENT FEE $ 8,657,475
TRANSFER AGENT FEES 3,325,611
ACCOUNTING FEES AND EXPENSES 633,924
NON-INTERESTED TRUSTEES' COMPENSATION 4,348
CUSTODIAN FEES AND EXPENSES 545,977
REGISTRATION FEES 65,317
AUDIT 70,906
LEGAL 4,735
REPORTS TO SHAREHOLDERS 77,577
MISCELLANEOUS 28,518
TOTAL EXPENSES BEFORE REDUCTIONS 13,414,388
EXPENSE REDUCTIONS (279,166) 13,135,222
NET INVESTMENT INCOME 10,606,399
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (INCLUDING REALIZED GAIN OF $1,062,506 ON SALES OF INVESTMENTS
IN AFFILIATED ISSUERS) 54,602,793
FOREIGN CURRENCY TRANSACTIONS (326,331) 54,276,462
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (97,360,242)
ASSETS AND LIABILITIES IN 97,436 (97,262,806)
FOREIGN CURRENCIES
NET GAIN (LOSS) (42,986,344)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (32,379,945)
OTHER INFORMATION $ 213,799
EXPENSE REDUCTIONS
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 2,167
TRANSFER AGENT CREDITS 63,200
$ 279,166
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS OCTOBER 31, OCTOBER 31,
1998 1997
OPERATIONS $ 10,606,399 $ 13,203,402
NET INVESTMENT
INCOME
NET REALIZED GAIN 54,276,462 131,822,297
(LOSS)
CHANGE IN NET (97,262,806) 21,778,124
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (32,379,945) 166,803,823
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
DISTRIBUTIONS TO (7,179,216) (9,779,572)
SHAREHOLDERS
FROM NET INVESTMENT
INCOME
FROM NET REALIZED (75,708,622) (21,857,664)
GAIN
TOTAL DISTRIBUTIONS (82,887,838) (31,637,236)
SHARE TRANSACTIONS 1,176,690,836 1,506,418,739
NET PROCEEDS FROM
SALES OF SHARES
REINVESTMENT OF 81,441,133 31,099,635
DISTRIBUTIONS
COST OF SHARES (1,331,950,770) (1,388,711,635)
REDEEMED
NET INCREASE (73,818,801) 148,806,739
(DECREASE) IN NET
ASSETS RESULTING
FROM SHARE
TRANSACTIONS
TOTAL INCREASE (189,086,584) 283,973,326
(DECREASE) IN NET
ASSETS
NET ASSETS
BEGINNING OF PERIOD 1,161,191,381 877,218,055
END OF PERIOD $ 972,104,797 $ 1,161,191,381
(INCLUDING
UNDISTRIBUTED NET
INVESTMENT INCOME
OF $12,289,760
AND $12,155,595,
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 67,640,582 90,093,952
ISSUED IN 5,220,585 2,080,227
REINVESTMENT OF
DISTRIBUTIONS
REDEEMED (77,774,326) (82,695,485)
NET INCREASE (4,913,159) 9,478,694
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED
OCTOBER 31,
SELECTED PER-SHARE DATA 1998 1997 1996 1995 1994
NET ASSET VALUE, BEGINNING $ 17.27 $ 15.18 $ 13.32 $ 13.96 $ 12.76
OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .16 B .21 B, D .22 .17 .08
NET REALIZED AND (.57) 2.43 1.79 (.08) 1.37
UNREALIZED GAIN (LOSS)
TOTAL FROM INVESTMENT (.41) 2.64 2.01 .09 1.45
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT (.11) (.17) (.15) (.16) (.10)
INCOME
FROM NET REALIZED GAIN (1.16) (.38) - (.57) (.15)
TOTAL DISTRIBUTIONS (1.27) (.55) (.15) (.73) (.25)
NET ASSET VALUE, END OF $ 15.59 $ 17.27 $ 15.18 $ 13.32 $ 13.96
PERIOD
TOTAL RETURN A (2.38)% 17.95% 15.25% .95% 11.55%
RATIOS AND SUPPLEMENTAL
DATA
NET ASSETS, END OF PERIOD $ 972,105 $ 1,161,191 $ 877,218 $ 659,045 $ 748,738
(000 OMITTED)
RATIO OF EXPENSES TO 1.15% 1.18% 1.19% 1.17% 1.32%
AVERAGE NET ASSETS
RATIO OF EXPENSES TO 1.12% C 1.16% C 1.18% C 1.16% C 1.32%
AVERAGE NET ASSETS AFTER
EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT .91% 1.24% 1.71% 2.05% 1.40%
INCOME TO AVERAGE NET
ASSETS
PORTFOLIO TURNOVER RATE 100% 85% 49% 70% 69%
A 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).
B NET INVESTMENT INCOME PER SHARE HAS
BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE
PERIOD.
C FMR OR THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A
PORTION OF THE FUND'S EXPENSES (SEE
NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS).
D INVESTMENT INCOME PER SHARE REFLECTS
A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.06 PER SHARE.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED OCTOBER 31, 1998
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 require 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. If trading or events occurring in other markets
after the close of the principal market in which securities are traded
are expected to materially affect the value of those securities, then
they are valued at their fair value taking this trading or these
events into account. Fair value is determined in good faith under
consistently applied procedures under the general supervision of the
Board of Trustees. Securities (including restricted securities) for
which quotations are not readily available are valued primarily using
dealer-supplied valuations or at their fair value. 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 share in the principal market in which such
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. Purchase
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. 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 they invest.
Each fund accrues such taxes as applicable. The schedules of
investments include information regarding income taxes under the
caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the funds
are informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income, which includes accretion of
original issue discount, is accrued as earned. Investment income is
recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the
Plan) non-interested Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of, their annual
compensation. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the fund or are invested in a
cross-section of other Fidelity funds. Deferred amounts remain in the
fund until distributed in accordance with the Plan.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for futures transactions, foreign currency transactions,
passive foreign investment companies (PFIC), market discount 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 rates established at
the time of each trade.
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 Fidelity Investments Money Management, Inc., 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. Income distributions
from the Cash Fund are declared daily and paid monthly from net
interest income. Income distributions earned by the funds are recorded
as interest income in the accompanying financial statements.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by
the SEC, the funds, along with other registered investment companies
having management contracts with FMR, may participate in an interfund
lending program. This program provides an alternative credit facility
allowing the funds to borrow from, or lend money to, other
participating funds. Information regarding each fund's participation
in the program is included under the caption "Other Information" at
the end of each applicable fund's schedule of investments.
FUTURES CONTRACTS. Certain funds may use futures contracts to manage
their exposure to the stock market and to fluctuations in currency
values. Buying futures tends to increase a fund's exposure to the
underlying instrument, while selling futures tends 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 the futures variation margin reflected in each
applicable fund's Statement of Assets and Liabilities. The underlying
face amount at value of any open futures contracts at period end is
shown in each applicable fund's schedule of investments under the
caption "Futures Contracts." This amount reflects each contract's
exposure to the underlying instrument at period end. Losses may arise
from changes in the value of the underlying instruments or if the
counterparties do not perform under the contracts' terms. Gains
(losses) are realized upon the expiration or closing of the futures
contracts. Futures contracts are valued at the settlement price
established each day by the board of trade or exchange on which they
are traded.
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 "Other Information" at the end of each applicable
fund's schedule of investments. 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. The annual individual fund fee rate is .45%. 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 basic fee
for Diversified International, International Value and Overseas is
subject to a performance adjustment (up to a maximum of
(plus/minus).20% of the 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 annual rate expressed as
a percentage of average net assets after the performance adjustment,
if applicable:
International Value .82%
Overseas .90%
Diversified International .83%
International Growth & Income, Worldwide .74%
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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 Investments
Japan Limited (FIJ). In addition, FIIA entered into a sub-advisory
agreement with its subsidiary, Fidelity International Investment
Advisors (U.K.) Limited (FIIA(U.K.)L). 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 FIIA(U.K.)L 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 fund. Shares of International
Growth & Income purchased prior to October 12, 1990, are subject to a
1% deferred sales charge upon redemption. For the period, FDC received
no deferred sales charges for redemption of shares of International
Growth & Income.
TRANSFER AGENT FEES. Fidelity Service 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
fee was equivalent to an annual rate expressed as a percentage of
average net assets:
International Value .23%
Overseas .27%
Diversified International .27%
International Growth & Income, Worldwide .28%
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.
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 has directed certain portfolio trades to brokers who paid a
portion of the 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.
For the period, the reductions under these arrangements are shown
under the caption "Other Information" on each applicable fund's
Statement of Operations.
7. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company which the fund has ownership of at
least 5% of the voting securities. Information regarding transactions
with affiliated companies is included in "Other Information" at the
end of each applicable fund's schedule of investments.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Investment Trust and the Shareholders of:
Fidelity International Growth & Income Fund,
Fidelity Diversified International Fund,
Fidelity International Value Fund,
Fidelity Overseas Fund,
and Fidelity Worldwide Fund:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Investment Trust: Fidelity International Growth & Income
Fund, Fidelity Diversified International Fund, Fidelity International
Value Fund, Fidelity Overseas Fund, and Fidelity Worldwide Fund at
October 31, 1998, and the results of their operations, the changes in
their net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of the Fidelity Investment Trust's management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation
of securities at October 31, 1998 by correspondence with the custodian
and brokers, provide a reasonable basis for the opinion expressed
above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 14, 1998
DISTRIBUTIONS
The Board of Trustees of Fidelity Investment Trust voted to pay to
shareholders of record at the opening of business on record date, the
following distributions derived from capital gains realized from sales
of portfolio securities, and dividends derived from net investment
income:
FIDELITY INTERNATIONAL GROWTH & INCOME FUND
PAY DATE 12/8/97 12/7/98
RECORD DATE 12/5/97 12/4/98
DIVIDENDS $.37 $.09
SHORT-TERM
CAPITAL GAINS $.16 $ -
LONG-TERM
CAPITAL GAINS $.72 $.63
LONG-TERM
CAPITAL GAIN BREAKDOWN:
28% rate 50.46% -
20% rate 49.54% 100%
FIDELITY DIVERSIFIED INTERNATIONAL FUND
PAY DATE 12/8/97 12/7/98
RECORD DATE 12/5/97 12/4/98
DIVIDENDS $.19 $.23
SHORT-TERM
CAPITAL GAINS $.24 $ -
LONG-TERM
CAPITAL GAINS $.17 $.47
LONG-TERM
CAPITAL GAIN BREAKDOWN:
28% rate 65.38% -
20% rate 34.62% 100%
FIDELITY INTERNATIONAL VALUE FUND
PAY DATE 12/15/97 12/14/98
RECORD DATE 12/12/97 12/11/98
DIVIDENDS $.06 $.05
SHORT-TERM
CAPITAL GAINS $.15 $ -
LONG-TERM
CAPITAL GAINS $.13 $ -
LONG-TERM
CAPITAL GAIN BREAKDOWN:
28% rate 57.54% -
20% rate 42.46% 100%
FIDELITY OVERSEAS FUND
PAY DATE 12/8/97 12/7/98
RECORD DATE 12/5/97 12/4/98
DIVIDENDS $.34 $.20
SHORT-TERM
CAPITAL GAINS $.45 $ -
LONG-TERM
CAPITAL GAINS $.89 $.51
LONG-TERM
CAPITAL GAIN BREAKDOWN:
28% rate 58.52% -
20% rate 41.48% 100%
FIDELITY WORLDWIDE FUND
PAY DATE 12/15/97 12/14/98
RECORD DATE 12/12/97 12/11/98
DIVIDENDS $.11 $.10
SHORT-TERM
CAPITAL GAINS $.38 $-
LONG-TERM
CAPITAL GAINS $.78 $.44
LONG-TERM
CAPITAL GAIN BREAKDOWN:
28% rate 64.34% -
20% rate 35.66% 100%
A percentage of the dividends distributed during the fiscal year for
the following funds was derived from interest on U.S. Government
securities which is generally exempt from state income tax:
International Growth & Income 6.65%
Diversified International 1.75%
International Value 2.75%
Overseas 2.48%
Worldwide 1.70%
A percentage of the dividends distributed during the fiscal year for
the following funds qualifies for the dividends-received deduction for
corporate shareholders:
International Growth & Income .42%
Diversified International 13.14%
International Value 19.82%
Overseas .95%
Worldwide 6.3%
The amounts per share which represent income derived from sources
within, and taxes paid to, foreign countries or possessions of the
United States are as follows:
PAY DATE INCOME TAXES
International Growth &
Income 12/8/97 $.397 $.025
Diversified International 12/8/97 $.160 $.018
International Value 12/15/97 $.082 $.010
Overseas 12/8/97 $.368 $.044
Worldwide 12/15/97 $.169 $.016
The funds will notify shareholders in January 1999 of amounts for use
in preparing 1998 income tax returns.
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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
Robert C. Pozen, SENIOR VICE PRESIDENT
Robert Lawrence, VICE PRESIDENT, DIVERSIFIED INTERNATIONAL FUND
Richard Spillane Jr., VICE PRESIDENT, INTERNATIONAL GROWTH &
INCOME FUND, INTERNATIONAL VALUE FUND, OVERSEAS FUND,
WORLDWIDE FUND
Penelope A. Dobkin, VICE PRESIDENT, WORLDWIDE FUND
Gregory Fraser, VICE PRESIDENT, DIVERSIFIED INTERNATIONAL FUND
Richard Mace Jr., VICE PRESIDENT, INTERNATIONAL VALUE FUND,
OVERSEAS FUND
Eric D. Roiter, SECRETARY
Richard A. Silver, TREASURER
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
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
Overseas Fund
Southeast Asia Fund
Pacific Basin 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 (registered trademark) 1-800-544-5555
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
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