(2_FIDELITY_LOGOS)FIDELITY'S
BROADLY DIVERSIFIED INTERNATIONAL EQUITY
FUNDS
FIDELITY INTERNATIONAL GROWTH & INCOME FUND
FIDELITY DIVERSIFIED INTERNATIONAL FUND
FIDELITY INTERNATIONAL VALUE FUND
FIDELITY OVERSEAS FUND
FIDELITY WORLDWIDE FUND
SEMIANNUAL REPORT
APRIL 30, 1998
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
MARKET RECAP 3 A REVIEW OF WHAT HAPPENED IN WORLD MARKETS
DURING THE LAST SIX MONTHS.
INTERNATIONAL GROWTH & INCOME FUND 4 PERFORMANCE
5 FUND TALK: THE MANAGER'S OVERVIEW
7 INVESTMENT CHANGES
8 INVESTMENTS
13 FINANCIAL STATEMENTS
DIVERSIFIED INTERNATIONAL FUND 15 PERFORMANCE
16 FUND TALK: THE MANAGER'S OVERVIEW
18 INVESTMENT CHANGES
19 INVESTMENTS
26 FINANCIAL STATEMENTS
INTERNATIONAL VALUE FUND 28 PERFORMANCE
29 FUND TALK: THE MANAGER'S OVERVIEW
31 INVESTMENT CHANGES
32 INVESTMENTS
37 FINANCIAL STATEMENTS
OVERSEAS FUND 39 PERFORMANCE
40 FUND TALK: THE MANAGER'S OVERVIEW
42 INVESTMENT CHANGES
43 INVESTMENTS
48 FINANCIAL STATEMENTS
WORLDWIDE FUND 50 PERFORMANCE
51 FUND TALK: THE MANAGER'S OVERVIEW
53 INVESTMENT CHANGES
54 INVESTMENTS
57 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS 59 NOTES TO THE FINANCIAL STATEMENTS
</TABLE>
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MARKET RECAP
During the six-month period that ended April 30, 1998, some of the
world's financial markets enjoyed robust growth, while others
continued to unravel. Most European markets benefited from strong
economies and low interest rates, while many Asian markets continued
to writhe under the increasing pressures of currency devaluations,
economic instability, and civil and political unrest. For the period,
the Morgan Stanley Capital International (MSCI) Europe, Australasia
and Far East (EAFE) Index returned 15.56%.
EUROPE: Most economies in Europe continued to thrive amidst an
environment of relatively benign inflation and reduced interest rates,
as many countries began to prepare for the advent of the European
Monetary Union in January 1999. Many corporations followed the path to
efficiency through restructuring and robust merger and acquisition
activity. In addition, the stronger U.S. dollar made European exports
more attractive. The MSCI Europe Index returned an impressive 29.24%
during the period. Strong individual performers included Portugal,
Spain and Italy. However, the strong U.S. dollar took back some of the
gains for dollar-based investors in all European markets, except the
United Kingdom.
EMERGING MARKETS: Latin American markets struggled as the economic
turmoil in Southeast Asia prompted a massive sell-off of most
emerging-market stocks at the beginning of the period. The Brazilian
market rebounded and performed fairly well during the period after
interest rates quickly fell from a high point of more than 40% in late
fall 1997. However, Mexico and Venezuela - two major exporters of oil
- - were victims of the plummeting price of oil at the end of 1997,
which widened their trade gaps and eventually put pressure on their
currencies. The MSCI Emerging Markets Free - Latin America Index
returned 7.97% during the period. Southeast Asian markets - the origin
of most of the volatility in emerging markets - performed poorly. The
depreciation of many currencies in the region prompted central banks
to dramatically raise interest rates, which had a slowing effect on
the economies by making borrowing more expensive. The MSCI Far East
ex-Japan Free Index fell 11.87% during the period. The Southeast Asian
crisis also caused volatility in U.S. markets by introducing the
threat of cheapening Asian imports.
JAPAN AND THE FAR EAST: Japan suffered from sharply falling stock
prices and depreciating currencies relative to the U.S. dollar. In
addition, the failure of several Japanese financial firms raised
concerns about widespread corporate bankruptcies throughout the
country. The Tokyo Stock Exchange Index - a gauge of the
Japanese market - was down 12.44% over the past six months. Although
the Hong Kong market did suffer from the influence of currency
problems in Southeast Asia at the beginning of the period, the market
recovered in early 1998 and fared significantly better than other
Asian markets because of its more mature and less volatile nature. The
Hang Seng Index, which measures the performance of the Hong Kong stock
market, dropped 0.64% during the period.
U.S. AND CANADA: Despite economic difficulties in Southeast Asia and
the resulting concern that U.S. corporate earnings would slow, the
U.S. stock market continued to perform well during the period. In
fact, the Standard & Poor's 500 Index - a measure of the U.S. stock
market - returned 22.49% during this time. Some U.S. corporations with
business exposure to Asia did report disappointing earnings and their
stocks were harshly punished - sometimes sending the market tumbling
for a day or two. However, investors seemed to adopt a new attitude -
one that overlooked short-term troubles and focused on longer-term
growth - helping many of these stocks to rebound quickly. Overall, the
continued strength of the U.S. economy, combined with low interest
rates and low inflation, buoyed the stock market. Through the first
four months of 1998, cash inflows into stock mutual funds were very
strong and the Dow Jones Industrial Average closed above 9000 for the
first time in April. Canada's stock market also generated healthy
returns - to the point that share prices were often outpacing
corporate profits, causing equity valuations to hit historic highs. In
addition, Canada has improved its economy and the unemployment rate
dropped from double digits a year ago to about 8.5% during the period.
The Toronto Stock Exchange 300 was up 11.13% for the six-month period.
BONDS: Although bond markets couldn't keep pace with global equity
markets, some bonds generated relatively strong gains. U.S.-based
bonds topped most foreign bonds on the continued strength of the U.S.
dollar and a backdrop of benign inflation. Convertible bonds - issues
that are convertible into a fixed number of a company's common shares
- - outperformed most other types of bonds, particularly government
bonds, since they were more tied to the strength of regional equity
markets. And, despite the turbulence created in many markets by the
Southeast Asian crisis, the J.P. Morgan Emerging Markets Bond Index
still managed to return 14.56% for the period. The Salomon Brothers
Non-U.S. World Government Bond Index - a proxy for developed countries
- - fell 1.02% for the period.
S&P 500 EAFE
* YEAR TO DATE THROUGH APRIL 30, 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: 69.44000000000001
Row: 5, Col: 1, Value: 5.1
Row: 5, Col: 2, Value: 24.63
Row: 6, Col: 1, Value: 16.61
Row: 6, Col: 2, Value: 28.27
Row: 7, Col: 1, Value: 31.69
Row: 7, Col: 2, Value: 10.53
Row: 8, Col: 1, Value: -3.1
Row: 8, Col: 2, Value: -23.45
Row: 9, Col: 1, Value: 30.47
Row: 9, Col: 2, Value: 12.13
Row: 10, Col: 1, Value: 7.619999999999999
Row: 10, Col: 2, Value: -12.17
Row: 11, Col: 1, Value: 10.08
Row: 11, Col: 2, Value: 32.56
Row: 12, Col: 1, Value: 1.32
Row: 12, Col: 2, Value: 7.78
Row: 13, Col: 1, Value: 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: 4.819999999999999
Row: 16, Col: 1, Value: 15.1
Row: 16, Col: 2, Value: 15.7
%
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 6 PAST 1 PAST 5 PAST 10
APRIL 30, 1998 MONTHS YEAR YEARS YEARS
FIDELITY INTL GROWTH & INCOME 15.27% 22.48% 73.75% 154.03%
MSCI EAFE 15.56% 19.17% 62.18% 81.79%
JP MORGAN GLOBAL GOVT BOND 1.20% 8.82% 37.84% 118.92%
INTERNATIONAL FUNDS AVERAGE 16.25% 20.89% 80.98% 168.95%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the performance
of the Morgan Stanley Capital International (MSCI) Europe,
Australasia, Far East (EAFE) Index - a market capitalization weighted,
unmanaged index of over 1,000 foreign stocks. You can also compare the
fund's performance to the J.P. Morgan Global Government Bond Index - a
broad measure of bond performance in developed countries including the
United States. To measure how the fund's performance stacked up
against its peers, you can compare it to the international funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past six
months average represents a peer group of 503 mutual funds. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
APRIL 30, 1998 YEAR YEARS YEARS
FIDELITY INTL GROWTH & INCOME 22.48% 11.68% 9.77%
MSCI EAFE 19.17% 10.15% 6.16%
JP MORGAN GLOBAL GOVT BOND 8.82% 6.63% 8.15%
INTERNATIONAL FUNDS AVERAGE 20.89% 12.41% 10.01%
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER 10 YEARS
Int'l Growth & Income MS EAFE Index (Net)
JP Global Bond Index
00305 MS001
JP002
1988/04/30 10000.00 10000.00
10000.00
1988/05/31 9870.80 9679.44
9892.49
1988/06/30 9758.83 9424.31
9804.35
1988/07/31 9758.83 9719.98
9728.28
1988/08/31 9276.49 9088.00
9659.30
1988/09/30 9612.40 9485.10
9899.96
1988/10/31 10172.27 10296.67
10289.80
1988/11/30 10353.14 10910.00
10380.79
1988/12/31 10329.97 10970.83
10318.29
1989/01/31 10522.73 11163.85
10216.19
1989/02/28 10557.78 11221.24
10199.39
1989/03/31 10557.78 11001.01
10113.01
1989/04/30 10820.63 11103.04
10279.58
1989/05/31 10513.97 10499.00
10168.43
1989/06/30 10549.02 10322.26
10399.66
1989/07/31 11547.84 11618.46
10813.77
1989/08/31 11390.13 11095.93
10493.80
1989/09/30 11845.74 11601.37
10659.78
1989/10/31 11276.23 11135.26
10796.87
1989/11/30 11696.79 11695.02
10892.97
1989/12/31 12305.18 12126.54
11020.14
1990/01/31 12092.41 11675.33
10855.73
1990/02/28 11666.87 10860.45
10738.50
1990/03/31 11658.01 9729.05
10672.56
1990/04/30 11631.41 9651.84
10630.79
1990/05/31 12384.97 10753.13
10970.71
1990/06/30 12775.05 10658.42
11169.21
1990/07/31 13369.03 10808.55
11497.33
1990/08/31 12225.39 9758.95
11407.71
1990/09/30 11046.30 8398.90
11514.43
1990/10/31 12154.47 9707.61
11969.42
1990/11/30 11879.64 9134.97
12180.11
1990/12/31 11908.01 9282.96
12315.62
1991/01/31 12329.37 9583.21
12595.00
1991/02/28 13025.53 10610.52
12607.29
1991/03/31 12558.37 9973.55
12189.54
1991/04/30 12750.73 10071.49
12360.83
1991/05/31 12732.41 10176.58
12371.44
1991/06/30 12118.69 9428.80
12206.25
1991/07/31 12540.05 9892.05
12464.30
1991/08/31 12494.25 9691.16
12723.34
1991/09/30 12897.29 10237.35
13187.27
1991/10/31 12814.85 10382.47
13317.58
1991/11/30 12457.61 9897.77
13534.46
1991/12/31 12865.15 10408.92
14218.41
1992/01/31 12846.60 10186.59
13939.92
1992/02/29 12865.15 9821.99
13899.33
1992/03/31 12447.75 9173.58
13770.99
1992/04/30 12995.01 9217.19
13885.58
1992/05/31 13579.37 9834.14
14279.93
1992/06/30 13449.51 9367.69
14669.37
1992/07/31 13013.56 9127.94
14992.58
1992/08/31 13245.45 9700.45
15391.46
1992/09/30 13022.84 9508.89
15376.52
1992/10/31 12327.17 9010.11
14992.48
1992/11/30 12299.35 9094.90
14726.66
1992/12/31 12435.34 9141.94
14865.81
1993/01/31 12549.34 9140.81
15117.87
1993/02/28 12891.33 9416.93
15361.48
1993/03/31 13850.82 10237.76
15597.53
1993/04/30 14620.31 11209.35
15881.53
1993/05/31 14962.31 11446.09
15987.46
1993/06/30 14762.81 11267.51
15995.72
1993/07/31 15256.80 11661.92
16002.20
1993/08/31 16054.79 12291.47
16475.86
1993/09/30 15950.29 12014.80
16650.09
1993/10/31 16387.29 12385.07
16641.54
1993/11/30 15826.79 11302.48
16520.08
1993/12/31 16797.66 12118.60
16689.30
1994/01/31 17677.22 13143.17
16846.73
1994/02/28 17361.72 13106.77
16661.69
1994/03/31 16434.36 12542.24
16585.33
1994/04/30 16654.25 13074.40
16572.07
1994/05/31 16960.19 12999.34
16435.08
1994/06/30 16549.09 13183.04
16630.24
1994/07/31 16826.34 13309.82
16786.78
1994/08/31 16988.87 13624.94
16743.64
1994/09/30 16596.89 13195.81
16826.39
1994/10/31 16768.98 13635.23
17078.06
1994/11/30 16252.71 12979.92
16863.14
1994/12/31 16315.34 13061.20
16902.35
1995/01/31 15762.61 12559.44
17244.23
1995/02/28 15871.19 12523.40
17688.90
1995/03/31 16779.24 13304.50
18588.65
1995/04/30 17085.21 13804.86
18885.03
1995/05/31 16868.07 13640.30
19411.86
1995/06/30 16907.55 13401.09
19533.12
1995/07/31 17904.44 14235.39
19625.79
1995/08/31 17697.16 13692.36
19080.30
1995/09/30 17825.47 13959.78
19510.22
1995/10/31 17598.46 13584.54
19700.77
1995/11/30 17864.95 13962.51
19920.40
1995/12/31 18311.10 14525.06
20167.06
1996/01/31 18362.10 14584.69
19960.10
1996/02/29 18321.30 14634.00
19843.75
1996/03/31 18627.33 14944.77
19813.19
1996/04/30 19096.59 15379.26
19739.88
1996/05/31 19116.99 15096.25
19760.03
1996/06/30 19249.60 15181.22
19932.78
1996/07/31 18800.75 14737.51
20299.62
1996/08/31 19035.38 14769.80
20384.14
1996/09/30 19494.43 15162.17
20496.46
1996/10/31 19474.03 15007.02
20903.10
1996/11/30 20443.14 15604.12
21201.34
1996/12/31 20634.23 15403.40
21062.69
1997/01/31 20475.91 14867.36
20527.31
1997/02/28 20718.67 15114.15
20385.41
1997/03/31 20718.67 15171.59
20230.34
1997/04/30 20739.78 15255.03
20116.45
1997/05/31 21774.13 16250.73
20591.19
1997/06/30 22734.60 17149.39
20825.27
1997/07/31 23315.10 17429.28
20748.72
1997/08/31 21911.34 16129.93
20723.17
1997/09/30 23315.10 17035.95
21183.26
1997/10/31 22037.99 15730.82
21632.26
1997/11/30 21953.56 15573.51
21372.63
1997/12/31 22103.89 15712.27
21349.24
1998/01/31 22305.85 16433.78
21563.66
1998/02/28 23528.86 17491.29
21723.55
1998/03/31 24785.53 18033.17
21560.32
1998/04/30 25402.64 18178.88
21891.59
IMATRL PRASUN SHR__CHT 19980430 19980514 111512 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity International Growth & Income Fund on April 30,
1988. As the chart shows, by April 30, 1998, the value of the
investment would have grown to $25,403 - a 154.03% increase on the
initial investment. For comparison, look at how both the Morgan
Stanley Capital International EAFE Index and the J.P. Morgan Global
Government Bond Index did over the same period. With dividends and
capital gains, if any, reinvested in each, the same $10,000 would have
grown to $18,179 - a 81.79% increase and $21,892 - a 118.92% 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
NOTE TO SHAREHOLDERS: Effective May 1, 1998 - after the period covered
by this report - Bill Bower became Portfolio Manager of Fidelity
International Growth & Income Fund.
Q. BILL, HOW DID THE FUND PERFORM?
A. Fairly well. For the six-month and one-year periods that ended
April 30, 1998, the fund posted returns of 15.27% and 22.48%,
respectively. By comparison, the international funds average, as
tracked by Lipper Analytical Services, was up 16.25% and 20.89% over
the same two periods. Because the fund invests in both equities and
bonds, we also compare it to two separate indexes to evaluate its
performance. The Morgan Stanley Capital International Europe,
Australasia, Far East (EAFE) Index - which measures equity returns -
was up 15.56% over the six-month period and 19.17% over the one-year
period. For the same two time periods, the J.P. Morgan Global
Government Bond Index - which tracks the performance of government
bonds in 13 developed countries including the U.S. - returned 1.20%
and 8.82%, respectively.
Q. WHY DID THE FUND SLIGHTLY UNDERPERFORM ITS PEER GROUP OVER THE PAST
SIX MONTHS?
A. Because, unlike most of its peers, the fund was required to invest
at least 25% of its assets in debt securities. Over the past six
months, bonds dramatically underperformed equities, which did
extremely well. Considering the disparity between the performance of
stocks and bonds, the fact that the fund kept up with its peer group
to the extent that it did indicates that the stocks and bonds the fund
held performed quite well. In fact, comparing just apples to apples,
the equity portion of the fund notably outperformed the EAFE index
over the period. Likewise, the fund's bond holdings dramatically beat
the bond index.
Q. WHY DID EQUITIES SO SIGNIFICANTLY OUTPERFORM BONDS OVER THIS MOST
RECENT SIX-MONTH PERIOD?
A. There were several reasons why equities did well, and they applied
mostly to the very strong European markets, where the fund was largely
focused during this period. First, many European companies continued
to make significant structural changes. These changes - including
improving management structure and cutting costs - really paid off in
company profitability over the past six months. In addition, a number
of major European companies merged over the period. Lastly, European
central banks took steps toward finalizing European monetary union
over the period. I should emphasize that the disparity between
equities and bonds wasn't a result of bonds being poor performers, but
of equities - mostly those in Europe - being outstanding performers.
Q. HOW DID STEPS TAKEN TOWARD THE UPCOMING MONETARY UNION BOOST EQUITY
PERFORMANCE?
A. As European countries begin to convert to one currency and one
monetary policy, they are all expected to move toward the goal of one
interest rate. This is expected to result in interest rates moving
closer to those in Germany, where the Bundesbank attempts to keep
interest rates low. This is especially good news for geographically
peripheral European countries, such as Spain, Italy and Ireland, which
have historically had higher interest rates than Germany and are
already beginning to see the impact of monetary union. As Europe moves
toward monetary union, we are beginning to see lower interest rates
throughout the entire continent. Obviously, these lower rates have
been a tremendous positive for equity valuations because they lower
corporate borrowing costs.
Q. DESPITE A STRONG EUROPEAN EQUITY MARKET, YOU NOTED THE FUND'S BOND
COMPONENT DID WELL COMPARED TO THE BONDS THAT WERE PART OF THE BOND
INDEX. WHICH OF THE FUND'S BOND HOLDINGS LOOKED STRONG OVER THE
PERIOD?
A. Convertible bonds - which are convertible into a fixed number of
shares of a company's common stock - were the best performers and
definitely outperformed government bonds. In addition, the fund's
government bonds solidly beat the government bonds in the index. I
attribute this to the fund's overall bond strategy of being
underweighted versus the index in poor-performing Japan and
overweighted in the U.K. and U.S, both of which did well.
Q. COMING BACK TO EQUITIES, WHAT WERE SOME OF THE STANDOUT PERFORMERS?
A. As I've implied, most of them were European companies. Top-10
holding Telefonica de Espana, a Spanish telephone utility that the
fund has owned on and off for five years, took off over the past six
months. It was helped by a very strong Spanish stock market and
declining interest rates. French defense electronics company Alcatel
Alsthom was another top-10 holding that skyrocketed during the period.
It continued to be an excellent example of how a company can improve
its profitability by restructuring. Another factor that boosted the
performance of a number of the fund's top holdings - especially
number-one holding, Credit Suisse, as well as Dresdner Bank and
Societe Generale - was the continued success of the financial sector.
This sector - which made up more than 21% of the fund at the end of
the period - turned in a strong performance for several reasons.
Q. WHAT WERE THOSE REASONS?
A. First, there was a trend toward consolidation in the banking
industry that gave the sector a boost. The financial sector also
benefited from a decline in interest rates. That's because when
interest rates drop, financial stocks usually rise. Lastly, European
banks began to benefit from steps they had taken to set up mutual
funds and other financial services. This began to pay off as Europeans
started to realize - as Americans did several years ago - that their
governments' social security systems weren't as viable as they thought
and that they, as individuals, would need to take more action to save
adequately for retirement.
Q. DID ANY OF THE FUND'S HOLDINGS TURN IN DISAPPOINTING RESULTS OVER
THE PERIOD?
A. Yes. One of the fund's top holdings, Honda, turned in flat
performance for most of the past six months. Japan's performance in
general was very disappointing because its economy remained so weak.
Q. BILL, HOW DOES THE MARKET LOOK GOING FORWARD?
A. Overall, Europe continues to look strong even though there is some
risk of a market correction. In terms of Asia, it looks like there
will be some inexpensive buying opportunities going forward. In Japan,
the fund will continue to look for signs of change mostly at a
company-specific level. However, if the government takes action to cut
taxes and get the economy growing, Japan could look like a good
investment area. That said, I would like to emphasize that the fund
selects its equities on a stock-by-stock basis. It does not invest
based on country fundamentals.
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 ON CHANGES TO THE FUND APPROVED BY THE
FUND'S BOARD OF TRUSTEES IN MAY:
"On May 14, 1998, the fund's Board of Trustees voted to
eliminate the investment policy requiring the fund to invest
at least 25% of its total assets in debt securities under normal
conditions. This policy change will be effective July 1, 1998.
"As of July 1, Fidelity will invest a majority of the fund's
assets in equity securities, with a focus on those that pay
current dividends and show potential for capital
appreciation. The fund can continue to invest in bonds
but will not have a minimum required investment. Eliminating
the minimum debt policy makes the fund's policies more
similar to Fidelity's successful domestic growth and income
funds.
"I should make it clear that the weak performance of bonds
compared to equities over the past six months did not
precipitate this policy change.
"When the minimum debt policy was adopted in 1988, foreign
stocks had very low yields. So, the fund invested in stocks
primarily for capital appreciation and invested in bonds to
seek income. In recent years, the yields on foreign stocks
have increased relative to U.S. yields. Fidelity believes that
eliminating the minimum debt policy will allow the fund
greater flexibility in meeting its investment objectives of
capital growth and current income."
(solid bullet) Bill Bower's investment style will continue to be
"bottom-up" - or focused on finding the best individual
stocks - and heavily research-driven. He looks for
companies that are in steady, stable businesses or that have
competitive advantages in their industries. And, like the
previous fund manager, he tends to have low company
turnover and an investment horizon of one to three years.
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 April 30, 1998, more than
$1.0 billion
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 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%
JAPAN 11.8%
SWEDEN 5.1%
SPAIN 3.2%
NETHERLANDS 4.3%
OTHER 20.7%
AS OF OCTOBER 31, 1997
FRANCE 8.7%
UNITED STATES 14.4%
ROW: 1, COL: 1, VALUE: 8.699999999999999
ROW: 1, COL: 2, VALUE: 7.8
ROW: 1, COL: 3, VALUE: 4.7
ROW: 1, COL: 4, VALUE: 15.1
ROW: 1, COL: 5, VALUE: 3.7
ROW: 1, COL: 6, VALUE: 19.3
ROW: 1, COL: 7, VALUE: 3.1
ROW: 1, COL: 8, VALUE: 4.2
ROW: 1, COL: 9, VALUE: 19.0
ROW: 1, COL: 10, VALUE: 14.4
GERMANY 7.8%
UNITED
KINGDOM 19.0%
ITALY 4.7%
JAPAN 15.1%
SWEDEN 4.2%
NETHERLANDS 3.7%
SPAIN 3.1%
OTHER 19.3%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
STOCKS 71.3 66.0
BONDS 5.3 5.8
GOVERNMENT OBLIGATIONS 16.7 17.4
SHORT-TERM INVESTMENTS 6.7 10.8
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
CREDIT SUISSE GROUP (REG.) 1.4 0.5
(SWITZERLAND, BANKS)
NATIONALE ELF AQUITAINE 1.3 1.2
(FRANCE, OIL & GAS)
VODAFONE GROUP PLC 1.2 0.7
(UNITED KINGDOM, CELLULAR)
DRESDNER BANK AG ORD. 1.2 0.4
(GERMANY, BANKS)
SOCIETE GENERALE CLASS A 1.1 0.9
(FRANCE, BANKS)
ALCATEL ALSTHOM COMPAGNIE GENERALE 1.0
D'ELECTRICITE SA 1.1
(FRANCE, ELECTRICAL EQUIPMENT)
HONDA MOTOR CO. LTD. 1.1 1.0
(JAPAN, AUTOS, TIRES, & ACCESSORIES)
TELEFONICA DE ESPANA SA ORD. 1.1 0.7
(SPAIN, TELEPHONE SERVICES)
AKZO NOBEL NV 1.0 0.8
(NETHERLANDS, CHEMICALS & PLASTICS)
DAIMLER-BENZ AG ORD. 1.0 0.6
(GERMANY, AUTOS, TIRES, & ACCESSORIES)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 21.1 17.8
DURABLES 9.4 7.4
UTILITIES 7.9 7.5
BASIC INDUSTRIES 7.2 6.7
NONDURABLES 4.4 3.3
ENERGY 3.9 4.6
CONSTRUCTION & REAL ESTATE 3.6 4.6
TECHNOLOGY 3.4 4.3
INDUSTRIAL MACHINERY & EQUIPMENT 3.4 3.6
HEALTH 2.8 3.7
INTERNATIONAL GROWTH & INCOME
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 70.3%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.9%
Banco de Galicia Y Buenos Aires
SA sponsored ADR representing
Class B shares 54,758 $ 1,341,571
Bansud SA Class B (a) 140,000 1,316,165
Telecom Argentina Class B
sponsored ADR 80,000 2,880,000
YPF Sociedad Anonima sponsored ADR
representing Class D shares 91,000 3,173,625
8,711,361
AUSTRALIA - 1.7%
Australia & New Zealand Banking
Group Ltd. 257,500 1,791,277
Brambles Industries Ltd. 145,000 2,979,013
Fosters Brewing Group Ltd. 645,000 1,400,187
National Mutual Holdings Ltd. (f) 407,000 960,243
Normandy Mining Ltd. 1,850,000 2,056,117
QNI Ltd. 3,257,700 1,905,608
Sons of Gwalia NL 665,000 2,044,385
Telstra Corp. Ltd. (h) 451,000 1,055,259
Western Mining Holdings Ltd. 875,000 3,105,136
17,297,225
AUSTRIA - 0.4%
KTM-Motorradholding AG (f) 15,500 1,037,790
Mayr Melnhof Karton AG 50,000 3,467,809
4,505,599
BELGIUM - 0.2%
Credit Communal Holding/Dexia (f) 16,000 2,189,474
BRAZIL - 0.9%
Aracruz Celulose SA ADR 310,000 4,882,500
Petrobras PN (Pfd. Reg.) 15,100,000 3,829,304
8,711,804
CANADA - 2.8%
Agrium, Inc. 1,950 30,184
Barrick Gold Corp. 105,000 2,351,759
CGI Group, Inc. Class A (sub. vtg.) (a) 122,200 3,364,674 Cinar
Films, Inc. Class B (sub. vtg.) (a) 96,000 1,844,928
Common Development
International Ltd. (a)(f) 54,000 962,298
Domtar, Inc. 595,800 4,996,401
Hudson's Bay Co. Ord. 83,900 1,823,467
Hudson's Bay Co. (i) 146,000 1,326,392
JDS Fitel, Inc. (a) 213,600 3,985,548
Kinross Gold Corp. (a) 530,400 2,427,842
National Bank of Canada 255,400 5,265,243
ThermicEdge Corp. 195 127
Westaim Corp. 1,946 14,415
28,393,278
CHILE - 0.1%
Supermercados Unimarc SA
sponsored ADR 93,400 1,009,888
DENMARK - 1.3%
Novo-Nordisk AS Class B 30,000 4,861,882
Unidanmark AS Class A 100,000 8,395,141
13,257,023
FINLAND - 1.3%
Cultor OY Ord., Series 2 35,000 2,073,551
Finnair OY 500,000 5,135,730
SHARES VALUE (NOTE 1)
Rauma OY 2,784 $ 52,085
UPM-Kymmene Corp. 200,000 5,997,799
13,259,165
FRANCE - 8.7%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 62,900 11,400,625
Axa SA 60,000 7,037,129
Cap Gemini Sogeti SA 22,400 2,906,288
Christian Dior SA 15,500 2,098,596
Compagnie Generale de
Geophysique SA (a) 15,000 2,177,922
LVMH (Moet-Hennessy Louis Vuitton)
sponsored ADR 35,000 7,198,272
Michelin SA (Compagnie Generale
des Etablissements) Class B 130,000 8,182,906
Nationale Elf Aquitaine 100,000 13,107,401
Peugeot SA Ord. 50,000 8,671,817
Renault SA:
Partners Certificates 4,700 1,912,950
Ord. (a) 160,000 7,415,898
Societe Generale Class A 55,000 11,439,488
Total SA sponsored ADR 90,294 5,304,773
88,854,065
GRAND CAYMAN - 0.0%
Apex Silver Mines Ltd. 82,800 967,725
GERMANY - 5.1%
Daimler-Benz AG Ord. 100,000 9,903,113
Deutsche Lufthansa AG 200,000 4,733,003
Dresdner Bank AG Ord. 210,000 11,728,381
Hoechst AG Ord. 165,000 6,668,356
Mannesmann AG Ord. 4,500 3,723,481
Merck KGAA 55,000 2,174,397
Metallgesellschaft AG Ord. 90,000 1,931,399
Pfleiderer AG 92,000 1,885,183
Philipp Holzmann AG (a) 16,500 4,942,926
Puma AG 70,000 1,695,529
Schmalbach-Lubeca AG 8,000 2,004,566
51,390,334
HONG KONG - 1.6%
China Telecom (Hong Kong) Ltd. 1,836,000 3,545,775
Dairy Farm International Holdings Ltd. 2,767,000 3,541,760
Dah Sing Financial Holdings Ltd. 1,000,000 2,439,182
Johnson Electric Holdings Ltd. 1,336,800 4,528,748
National Mutual Asia Ltd. 3,052,000 2,442,073
Sun Hung Kai & Co. Ltd. 1,000 110
Sun Hung Kai & Co. Ltd.
warrants 2/28/00 (a) 200 5
16,497,653
INDONESIA - 0.4%
Astra International PT 9,500,000 1,870,313
PT Bank International Indonesia 3,096,285 212,870
PT Bank International Indonesia
warrants 1/17/00 (a) 453,002 9,456
PT Asuransi Lippo Life (a) 2,043,000 102,150
PT Telekom 1,351,000 531,956
Sampoerna, Hanjaya Mandala 1,800,000 1,175,625
3,902,370
IRELAND - 0.3%
Irish Life PLC 380,000 3,523,717
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ITALY - 3.1%
Assicurazioni Generali Spa 190,000 $ 5,687,031
Credito Italiano Ord. 1,500,000 7,846,546
Ericsson SPA 9,500 604,147
Istituto Bancario San Paolo 200,000 2,934,274
Telecom Italia Spa 1,122,220 8,449,099
Telecom Italia Mobile Spa 310,000 1,774,827
Toro Assicurazioni Spa Ord. 150,000 2,623,414
Unicem SPA 149,101 1,535,509
31,454,847
JAPAN - 9.8%
Acom Co. Ltd. 95,000 4,999,435
Advantest Corp. 28,600 1,916,356
Fuji Photo Film Co. Ltd. 100,000 3,546,019
Fujitsu Ltd. 277,000 3,222,021
Hitachi Maxell Ltd. 200,000 3,794,466
Honda Motor Co. Ltd. 301,000 10,877,470
Kokusai Electric Co. Ltd. 210,000 1,778,656
Long Term Credit Bank of Japan Ltd. (The) 1,439,000 2,350,935
Mabuchi Motor Co. 40,000 2,306,795
Matsushita Electric Industrial Co. Ltd. 371,000 5,921,475
Minebea Co. Ltd. 418,000 4,657,557
Mitsubishi Estate Co. Ltd. 147,000 1,416,601
Nintendo Co. Ltd. Ord. 28,600 2,613,996
Nitto Denko Corp. 200,000 3,041,596
Nomura Securities Co. Ltd. 150,000 1,823,828
Omron Corp. 100,000 1,562,206
Orix Corp. 47,900 3,299,718
Ricoh Co. Ltd. Ord. 250,000 2,580,463
Sakura Bank Ltd. 452,000 1,548,353
Sakura Finance Bermuda Trust:
sponsored ADR (f) 35 1,493,367
unit (Reg.) 22 872,050
Sankyo Co. Ltd. 191,000 4,716,582
Shin-Etsu Chemical Co. Ltd. 2,000 38,848
Shin-Etsu Chemical Co. Ltd.
warrants 8/15/00 (a) 280 437,500
Sony Corp. 100,000 8,495,348
Sumitomo Realty & Development Co. Ltd. 260,000 1,242,989
Takeda Chemical Industries Ltd. 235,000 6,687,747
Takefuji Corp. 43,000 2,249,953
THK Co. Ltd. 45,000 430,265
Tokio Marine & Fire Insurance Co.
Ltd. (The) 203,000 2,200,790
Tokyo Electron Ltd. 50,000 1,957,463
Uni Charm Corp. Ord. 121,000 4,554,865
Yasuda Trust & Banking 1,057,000 1,408,537
100,044,250
MALAYSIA - 0.2%
Arab Malaysian Corp. BHD 320,000 123,456
AMMB Holdings BHD 98,000 99,247
Berjaya Sports Toto BHD 700,000 1,659,746
Tenega Nasional BHD 1,000 1,996
1,884,445
MEXICO - 1.1%
Consorcio G Grupo Dina SA de CV
sponsored ADR (a) 432,900 2,245,669
DESC (Sociedad de Fomento
Industrial SA) Class B 209,000 1,452,073
Grupo Financiero Bancomer Class B 7,200,000 4,968,441
Grupo Financiero Inbursa SA Class B 979,000 2,985,881
11,652,064
SHARES VALUE (NOTE 1)
NETHERLANDS - 3.3%
AKZO Nobel NV 50,300 $ 10,224,690
EVC International NV 30,000 586,082
ING Groep NV 100,000 6,464,217
Koninklijke KNP BT NV 90,000 2,470,449
Royal Dutch Petroleum Co. Ord. 90,000 5,090,624
Royal Ptt Nederland NV 80,000 4,130,768
Unilever NV Ord. 58,000 4,125,031
33,091,861
NORWAY - 0.7%
Det Sondenfjelds-Norske
Dampskibselskab, Class A 120,000 2,957,209
Smedvig AS:
Series A 76,800 1,625,179
Series B 19,200 385,723
SAS Norske ASA Shares B 150,000 2,501,172
7,469,283
PERU - 0.3%
Compania de Minas Buenaventura SA
Class B sponsored ADR 175,000 2,712,500
PHILIPPINES - 0.0%
Empire East Land, Inc. (a) 1,668,500 25,701
Guoco Holdings Philippines, Inc. 645,000 16,986
42,687
PORTUGAL - 0.8%
Electricidade de Portugal SA 147,000 3,832,908
Portugal Telecom SA 85,000 4,564,208
8,397,116
RUSSIA - 0.3%
Vimpel Communications
sponsored ADR (a) 65,700 3,547,800
SINGAPORE - 0.2%
Keppel Bank 1,200,000 1,561,099
Kim Engineering Holdings Ltd. 20,000 7,326
1,568,425
SOUTH AFRICA - 0.4%
Anglo American Corp. of South
Africa Ltd. (Reg.) 50,000 2,958,346
Sasol, Ltd. 112,100 1,131,315
4,089,661
SPAIN - 3.2%
Banco Bilbao Vizcaya SA Ord. (Reg.) 105,000 5,397,856
Corporacion Mapfre Compania
Internacional de Reaseguros SA (Reg.) 120,000 4,705,419
Dragados y Construcciones SA 225,000 7,288,286
Telefonica de Espana SA Ord. 260,000 10,842,923
Vallehermoso SA 100,000 3,868,726
32,103,210
SWEDEN - 4.2%
Astra AB Class A Free shares 315,000 6,457,914
Ericsson (L.M.) Telephone Co. Class B 25,000 1,285,788
Electrolux AB 50,000 4,641,807
Mo Och Domsjoe AB Class B 200,000 6,189,076
Nordbanken Holding AB 520,000 3,821,755
Svenska Cellulosa AB (SCA)
Class B Ord. 90,000 2,587,808
Svenska Handelsbanken 150,000 6,788,643
Swedish Match Co. 890,000 3,075,455
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWEDEN - CONTINUED
Volvo AB:
Class B 199,500 $ 5,934,436
ADR Class B 50,000 1,487,500
42,270,182
SWITZERLAND - 2.5%
Credit Suisse Group (Reg.) 63,400 13,935,922
Nestle SA (Reg.) 2,400 4,651,968
SIG AG (Reg.) 5,000 4,156,398
Sulzer AG (Reg.) 3,500 2,506,161
25,250,449
UNITED KINGDOM - 14.2%
Albright & Wilson PLC 1,525,000 4,433,468
BBA Group PLC 450,000 3,695,392
Bank of Scotland 465,000 5,710,377
Berkeley Group PLC 265,000 3,404,840
Biocompatibles International
PLC Class L (a) 125,000 317,452
British Petroleum PLC Ord. 3,268 51,571
British Borneo Petroleum 275,000 1,596,658
British Telecommunications PLC Ord. 430,000 4,662,702
Cable & Wireless PLC Ord. 505,000 5,779,715
Cadbury-Schweppes PLC Ord. 175,000 2,549,641
Carlton Communications PLC 700,000 6,262,994
Commercial Union PLC 260,000 4,861,026
De la Rue PLC 300,000 1,436,053
Diageo PLC 337,816 4,018,692
Dixons Group PLC 370,000 3,529,899
English China Clay PLC 600,000 2,471,113
General Electric PLC Class L 670,000 5,541,208
Greenalls Group PLC 300,000 2,420,989
HSBC Holdings PLC Ord. 100,000 3,152,800
Iceland Group PLC 2,099,900 7,806,441
Inchcape PLC Ord. 650,600 2,432,213
Ladbroke Group PLC Ord. 998,983 5,487,169
Legal & General Group Ltd. Ord. 550,000 6,588,800
Lloyds TSB Group PLC 115,000 1,720,632
National Westminster Bank PLC Ord. 340,000 6,799,822
Pearson, PLC 236,000 3,694,673
Pilkington PLC Ord. 2,300,000 4,822,764
RMC Industries, Inc. 225,000 3,947,265
Rio Tinto PLC (Reg.) 335,000 4,805,179
Royal & Sun Alliance Insurance
Group PLC 478,209 5,337,264
Sedgwick Group PLC 850,000 2,187,077
Tarmac PLC 2,500,000 4,834,878
Tomkins PLC Ord. 700,000 4,116,851
United Biscuits Holdings PLC Class L 500,000 2,071,792
Vodafone Group PLC 1,080,000 11,819,239
144,368,649
UNITED STATES OF AMERICA - 0.3%
Getchell Gold Corp. (a) 110,000 2,708,750
TOTAL COMMON STOCKS
(Cost $528,089,673) 715,126,860
PREFERRED STOCKS - 1.0%
SHARES VALUE (NOTE 1)
CONVERTIBLE PREFERRED STOCKS - 0.2%
JAPAN - 0.1%
AJL participating trust $1.44 PEPS 117,100 $ 1,061,219
UNITED KINGDOM - 0.1%
Iceland Group PLC 5 1/2% 400,000 1,161,206
TOTAL CONVERTIBLE PREFERRED STOCKS 2,222,425
NONCONVERTIBLE PREFERRED STOCKS - 0.8%
ITALY - 0.8%
Italmobiliare Spa 90,000 1,665,292
Telecom Italia Spa 1,195,000 6,296,252
7,961,544
TOTAL PREFERRED STOCKS
(Cost $7,071,904) 10,183,969
CORPORATE BONDS - 5.3%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) (E) AMOUNT (C)
CONVERTIBLE BONDS - 4.5%
CHINA (PEOPLES REPUBLIC) - 0.1%
Qingling Motors Ltd.
3 1/2%, 1/22/02 (f) - $ 1,800,000 1,368,000
HONG KONG - 0.3%
Cosco Treasury Co. Ltd.
1%, 3/13/03 (f) - 698,000 636,053
Shanghai Investment Holdings Ltd.
1%, 6/12/02 (f) - 2,000,000 1,925,000
2,561,053
INDONESIA - 0.2%
APP Global Finance Ltd.
2%, 7/25/00 (Reg.) - 2,250,000 2,328,750
JAPAN - 1.6%
Asahi Breweries Ltd
6.40%, 10/16/98 - JPY 306,000,000 3,593,902
Hitachi Ltd. 1.70%, 3/29/02 Aa2 JPY 159,000,000 1,352,682
MBL International Finance
of Bermuda 3%, 11/30/02 Aa2 3,830,000 3,916,175
Matsushita Electric Works Co.
Ltd. 2.70%, 5/31/02 - JPY 81,000,000 795,822
STB CayMan Capital Ltd.
1/2%, 10/1/07 (f) Baa2 JPY 235,000,000 1,530,397
Sony Corp. 0.15%, 3/30/01 Aa3 JPY 100,000,000 1,277,621
Sumitomo Bank International
Finance NV:
3/4%, 5/31/01 (Reg.) A2 JPY 123,000,000 951,496
3/4%, 5/31/01 (f) A2 JPY 62,000,000 479,616
Takeda Chemical Industries Ltd.
1.90%, 9/30/98 - JPY 200,000,000 2,589,874
16,487,585
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (E) AMOUNT (C) (NOTE 1)
CONVERTIBLE BONDS - CONTINUED
MEXICO - 0.2%
Alfa SA de CV 8%, 9/15/00 (f) - $ 1,900,000 $ 2,265,750
NETHERLANDS - 1.0%
Bilbao Vizcaya Investments
3 1/2%, 7/12/06 Aa3 2,500,000 7,925,000
Volkswagen AG
3%, 1/24/02 (f) A1 1,100,000 1,732,500
9,657,500
SWITZERLAND - 0.3%
Sandoz Capital BVI Ltd.
2%, 10/6/02 - 2,200,000 3,388,000
THAILAND - 0.2%
Bangkok Bank PCL euro
3 1/4%, 3/3/04 (f) - 3,830,000 1,742,650
UNITED STATES OF AMERICA - 0.6%
Global TeleSystems Group, Inc.
8 3/4%, 6/30/00 (f) - 3,000,000 6,382,500
TOTAL CONVERTIBLE BONDS 46,181,788
NONCONVERTIBLE BONDS - 0.8%
JAPAN - 0.3%
Sony Corp. 1.40%, 3/31/05 Aa3 JPY 220,000,000 2,381,781
LUXEMBOURG - 0.5%
Daimler-Benz Capital AG
4 1/8%, 7/5/03 unit A1 DEM 5,750,000 5,402,932
TOTAL NONCONVERTIBLE BONDS 7,784,713
TOTAL CORPORATE BONDS
(Cost $47,033,332) 53,966,501
GOVERNMENT OBLIGATIONS (G) - 16.7%
DENMARK - 0.5%
Danish Kingdom Bullet
8%, 5 /15/03 Aaa DKK 29,000,000 4,795,509
FRANCE - 1.7%
French Government:
4 3/4%, 4/12/99 Aaa FRF 20,000,000 3,347,454
6 3/4%, 10/25/04 Aaa FRF 50,000,000 9,191,793
OAT 7 1/4%, 4/25/06 Aaa FRF 25,000,000 4,788,188
17,327,435
GERMANY - 4.5%
German Federal Republic:
5 3/4%, 8/22/00 Aaa DEM 17,000,000 9,767,025
6%, 1/4/07 Aaa DEM 25,000,000 14,892,255
6 1/4%, 1/4/24 Aaa DEM 5,500,000 3,373,991
Treuhandanstalt
6 5/8%, 7/9/03 Aaa DEM 30,000,000 18,161,364
46,194,635
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (E) AMOUNT (C) (NOTE 1)
ITALY - 1.5%
Italian Government
12%, 9/1/01 (d) Aa3 ITL 22,000,000 $ 15,070,462
SWEDEN - 0.9%
Swedish Government
13%, 6/15/01 Aa1 SEK 60,000,000 9,478,261
UNITED KINGDOM - 4.4%
United Kingdom, Great Britain
& Northern Ireland:
9 3/4%, 8/27/02 Aaa GBP 9,500,000 18,027,798
9%, 7/12/11 Aaa GBP 4,000,000 8,597,830
9%, 8/6/12 Aaa GBP 8,200,000 17,803,234
44,428,862
UNITED STATES OF AMERICA - 3.2%
U.S. Treasury Obligations:
7 3/4%, 12/31/99 Aaa 22,000,000 22,746,020
6 5/8% 5/15/07 Aaa 3,000,000 3,180,930
6 7/8%, 8/15/25 Aaa 6,000,000 6,668,460
32,595,410
TOTAL GOVERNMENT OBLIGATIONS
(Cost $166,602,261) 169,890,574
CASH EQUIVALENTS - 6.7%
SHARES
Taxable Central Cash Fund
(Cost $67,882,960) (b) 67,882,960 67,882,960
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $816,680,130) $1,017,050,864
SECURITY TYPE ABBREVIATIONS
PEPS - Participating Equity Preferred
Shares/Premium Exchangeable
Participating Shares
CURRENCY ABBREVIATIONS
AUD - Australian dollar
CAD - Canadian dollar
DKK - Danish krone
FRF - French franc
DEM - German deutsche mark
GBP - British pound
ITL - Italian lira
JPY - Japanese yen
SEK - Swedish krona
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.51%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Principal amount is stated in United States dollars unless
otherwise noted.
(d) Principal amount in thousands.
(e) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(f) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to
$24,705,638 or 2.4% of net assets.
(g) For foreign government obligations not individually rated by S&P
or Moody's, the ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's
ratings of the sovereign credit of the issuing government.
(h) Purchased on installment basis. Market value reflects only those
payments made through 11/17/97. The remaining installment aggregating
AUD 608,850 is due on 11/17/98.
(i) Purchased on installment basis. Market value reflects only those
payments made through 9/26/97. The remaining installment aggregating
CAD 2,737,500 is due on 10/2/98.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $326,374,168 and $441,933,552, 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 $8,392 for the
period (see Note 4 of Notes to Financial Statements).
The composition of long-term debt holdings as a percentage of total
value of investment in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 19.2% AAA, AA, A 18.3%
Baa 0.2% BBB 0.3%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings
of the sovereign credit of the issuing government. The percentage not
rated by Moody's or S&P amounted to 2.7%.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
Basic Industries 7.2%
Cash Equivalents 6.7
Construction & Real Estate 3.6
Durables 9.4
Energy 3.9
Finance 21.1
Government Obligations 16.7
Health 2.8
Holding Companies 0.3
Industrial Machinery & Equipment 3.4
Media & Leisure 2.2
Nondurables 4.4
Precious Metals 2.1
Retail & Wholesale 2.2
Services 0.8
Technology 3.4
Transportation 1.9
Utilities 7.9
100.0%
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $816,810,182. Net unrealized appreciation
aggregated $200,240,682, of which $234,347,662 related to appreciated
investment securities and $34,106,980 related to depreciated
investment securities.
INTERNATIONAL GROWTH & INCOME
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 1,017,050,864
(COST $816,680,130) - SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 471,072
RECEIVABLE FOR FUND SHARES SOLD 5,811,381
DIVIDENDS RECEIVABLE 3,799,921
INTEREST RECEIVABLE 5,514,940
OTHER RECEIVABLES 9,626
TOTAL ASSETS 1,032,657,804
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 429
PAYABLE FOR FUND SHARES REDEEMED 5,553,859
ACCRUED MANAGEMENT FEE 626,655
OTHER PAYABLES AND 521,064
ACCRUED EXPENSES
TOTAL LIABILITIES 6,702,007
NET ASSETS $ 1,025,955,797
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 790,995,447
UNDISTRIBUTED NET INVESTMENT INCOME 4,992,233
ACCUMULATED UNDISTRIBUTED 29,724,950
NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 200,243,167
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 45,318,412 $ 1,025,955,797
SHARES OUTSTANDING
NET ASSET VALUE, OFFERING PRICE $22.64
AND REDEMPTION PRICE PER SHARE ($1,025,955,797 (DIVIDED BY) 45,318,412 SHARES)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 7,621,750
DIVIDENDS
INTEREST 8,966,656
16,588,406
LESS FOREIGN TAXES WITHHELD (749,508)
TOTAL INCOME 15,838,898
EXPENSES
MANAGEMENT FEE $ 3,770,855
TRANSFER AGENT FEES 1,413,123
ACCOUNTING FEES AND EXPENSES 289,655
NON-INTERESTED TRUSTEES' COMPENSATION 1,852
CUSTODIAN FEES AND EXPENSES 317,945
REGISTRATION FEES 56,262
AUDIT 28,438
LEGAL 3,041
REPORTS TO SHAREHOLDERS 73,645
MISCELLANEOUS 19,440
TOTAL EXPENSES BEFORE REDUCTIONS 5,974,256
EXPENSE REDUCTIONS (124,841) 5,849,415
NET INVESTMENT INCOME 9,989,483
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 29,995,805
FOREIGN CURRENCY TRANSACTIONS 25,386 30,021,191
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 105,019,687
ASSETS AND LIABILITIES IN (221,431) 104,798,256
FOREIGN CURRENCIES
NET GAIN (LOSS) 134,819,447
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 144,808,930
OTHER INFORMATION $ 82,178
EXPENSE REDUCTIONS
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 663
TRANSFER AGENT CREDITS 42,000
$ 124,841
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
OPERATIONS $ 9,989,483 $ 25,418,358
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 30,021,191 73,243,116
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 104,798,256 33,690,453
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 144,808,930 132,351,927
DISTRIBUTIONS TO SHAREHOLDERS (18,064,435) (15,358,151)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (42,969,496) (19,594,396)
TOTAL DISTRIBUTIONS (61,033,931) (34,952,547)
SHARE TRANSACTIONS 601,289,282 1,459,910,318
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 59,413,586 34,047,249
COST OF SHARES REDEEMED (785,691,098) (1,531,263,569)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (124,988,230) (37,306,002)
TOTAL INCREASE (DECREASE) IN NET ASSETS (41,213,231) 60,093,378
NET ASSETS
BEGINNING OF PERIOD 1,067,169,028 1,007,075,650
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $4,992,233 AND
$22,266,921, RESPECTIVELY) $ 1,025,955,797 $ 1,067,169,028
OTHER INFORMATION
SHARES
SOLD 29,225,207 70,794,239
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 2,997,659 1,787,246
REDEEMED (38,024,665) (74,210,657)
NET INCREASE (DECREASE) (5,801,799) (1,629,172)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996 1995 1994 1993
NET ASSET VALUE, BEGINNING OF PERIOD $ 20.88 $ 19.09 $ 17.83 $ 17.54 $ 17.25 $ 13.29
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .20 D .48 D, I .54 .54 .38 D .14 D
NET REALIZED AND UNREALIZED GAIN
(LOSS) 2.81 1.97 1.32 .28 .02 4.14
TOTAL FROM INVESTMENT OPERATIONS 3.01 2.45 1.86 .82 .40 4.28
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.37) (.29) (.60) (.21) (.03) (.31)
FROM NET REALIZED GAIN (.88) (.37) - (.32) (.05) (.01) F
IN EXCESS OF NET REALIZED GAIN - - - - (.03) -
TOTAL DISTRIBUTIONS (1.25) (.66) (.60) (.53) (.11) (.32)
NET ASSET VALUE, END OF PERIOD $ 22.64 $ 20.88 $ 19.09 $ 17.83 $ 17.54 $ 17.25
TOTAL RETURN B, C 15.27% 13.17% 10.66% 4.95% 2.33% 32.94% E
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED)$ 1,025,956 $ 1,067,169 $ 1,007,076 $ 903,235 $ 1,367,938 $ 1,002,847
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.20% A 1.17% 1.16% 1.18% 1.21% 1.52%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
AFTER 1.17% A, G 1.15% G 1.14% G 1.18% 1.21% 1.52%
EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS 2.01% A 2.33% 2.76% 2.98% 2.16% .87%
PORTFOLIO TURNOVER RATE 71% A 70% 95% 141% 173% 24%
AVERAGE COMMISSION RATE H $ .0032 $ .0068 $ .0065
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS
SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET
INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E TOTAL RETURN DOES
NOT INCLUDE ONE TIME SALES CHARGE. F INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED
TRANSACTIONS TAXABLE AS ORDINARY INCOME. G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). H FOR FISCAL YEARS
BEGINNING
ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON
WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. I INVESTMENT INCOME PER
SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.05 PER SHARE.
</TABLE>
DIVERSIFIED INTERNATIONAL
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). If Fidelity had not reimbursed certain fund
expenses, the life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
APRIL 30, 1998 MONTHS YEAR YEARS FUND
FIDELITY DIVERSIFIED 17.80% 29.01% 113.89% 125.06%
INTERNATIONAL
MSCI GDP-WTD EAFE 20.46% 25.72% 78.25% 100.57%
INTERNATIONAL FUNDS AVERAGE 16.25% 20.89% 80.98% N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on December 27, 1991. For example, if
you 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) GDP-Weighted Europe, Australasia, Far East (EAFE)
Index - a gross domestic product weighted, unmanaged index of over
1,000 foreign stocks. To measure how the fund's performance stacked up
against its peers, you can compare it to the international funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past six
months average represents a peer group of 503 mutual funds. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
APRIL 30, 1998 YEAR YEARS FUND
FIDELITY DIVERSIFIED INTERNATIONAL 29.01% 16.42% 13.64%
MSCI GDP-WTD EAFE 25.72% 12.26% 11.59%
INTERNATIONAL FUNDS AVERAGE 20.89% 12.41% 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
IMATRL PRASUN SHR__CHT 19980430 19980506 114243 R00000000000080
$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 April 30, 1998,
the value of the investment would have grown to $22,506 - a 125.06%
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 $20,057 - a 100.57% 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 six-month and one-year periods that ended April 30, 1998,
the fund returned 17.80% and 29.01%, respectively. For the same time
periods, the Morgan Stanley Capital International GDP-Weighted EAFE
Index - a broad measure of stock performance in Europe, Australia and
the Far East - was up 20.46% and 25.72%, respectively, while the
international funds average was up 16.25% for the past six months and
20.89% for the past year, according to Lipper Analytical Services.
Q. WHY DID THE FUND UNDERPERFORM THE INDEX OVER THE PAST SIX MONTHS
BUT OUTPERFORM IT OVER THE 12-MONTH PERIOD?
A. Over the past six months, I think the fund was hurt somewhat versus
the index because it was underweighted in the extremely well-
performing Italian market. However, over the past 12 months, it
appears that strong stock selection in a variety of markets -
especially the very well-performing European markets - boosted the
fund's performance. In addition, certain country weightings
contributed meaningfully to the fund's performance over the 12-month
period. A notable example was the fund's weighting in the poorly
performing Japanese market. In that market, the fund benefited from a
position that was significantly underweight versus the index.
Q. WHAT WERE SOME OF THE EUROPEAN STOCKS THAT PERFORMED WELL OVER THE
PAST SIX MONTHS?
A. Over that period, many European equities benefited from several
economic trends, including lower interest rates, improving economies
and beneficial corporate restructuring moves. Some of the best
examples were companies that were added to the fund's top-10 holdings
over the period. Netherlands'-based consumer electronics company
Philips Electronics continued to benefit from corporate restructuring.
Telefonica de Espana - a Spanish telephone company that was up
dramatically over the period - was boosted by a very favorable market
environment that was sparked by decreasing interest rates in Spain. In
addition, Credit Suisse and Societe Generale, two large European
banks, benefited from an upturn in the banking sector. The financial
sector - which made up about 30% of the fund at the end of the period
- - benefited from an increase in consolidation and the overall decline
in European interest rates.
Q. IT SEEMS LIKE THERE WAS A FAIR AMOUNT OF CHANGE IN THE FUND'S
TOP-10 HOLDINGS OVER THE PAST SIX MONTHS. WHY WAS THAT?
A. There are several important things to consider when you look at the
fund's top-10 holdings. First, the computer models that help me to
manage the fund rate over 6,000 stocks continuously, so there are a
lot of good stocks to choose from in terms of top holdings. Second, as
the fund grows, new money is generally added to the most attractive
names, and this can cause the fund's weighting in those stocks to
increase dramatically. It also means that stocks can sometimes be
bumped out of the top 10 even though they remain key holdings for the
fund.
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 - 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. THE U.S. DOLLAR CONTINUED TO BE QUITE STRONG AGAINST SEVERAL MAJOR
WORLD CURRENCIES DURING MUCH OF THIS PERIOD. HOW DID THAT IMPACT THE
FUND?
A. The fund owns securities that are priced in non-dollar currencies.
Thus, a Japanese stock priced in yen will be worth fewer dollars if
the dollar rises against the yen. It's possible to sell foreign
currencies and remove some of this risk; this process is called
hedging. As long-term shareholders know, the fund generally does not
hedge currency. So, it's fair to say that, relative to international
funds that do hedge, the fund will find a strong-dollar environment
more challenging. Over the six-month period, the strong dollar
continued to hold back the fund's dollar-based performance relative to
funds that hedged, but strong local market returns resulted in
satisfactory absolute returns.
Q. WHY DOESN'T THE FUND HEDGE ITS CURRENCY EXPOSURE?
A. There can be at least a modest cost to hedging, so some returns may
be lost if a fund consistently hedges currency. Also, if the
international portion of an investor's portfolio aims to provide
diversification for a primarily U.S.-based portfolio, it may make
sense philosophically to have some non-dollar exposure as well. That's
because the dollar may do poorly when U.S. asset prices underperform.
Q. WHICH HOLDINGS WERE DISAPPOINTING FOR THE FUND OVER THE PERIOD?
A. The stocks that I considered disappointments were primarily in
Japan. Generally, smaller and non-export companies there performed
quite poorly through the end of 1997, and then rallied sharply in
January - a burst of performance that proved short-lived. However, as
I noted in the last report to shareholders, many of these companies
are extremely attractively priced, so some patience is required. One
other notable disappointment was Peregrine Investments in Hong Kong.
This company went bankrupt after making a large loan to an Indonesian
company. While I had been reducing the fund's position in this stock,
I still held some of it when Peregrine went bankrupt.
Q. GREG, WHAT'S THE OUTLOOK FOR THE FUND?
A. Many markets around the world performed impressively through the
end of the period. Because of this strong performance, the valuations
of many stocks are increasingly less attractive than they were several
years ago. As I mentioned earlier, offsetting these less attractive
valuations - at least for many European companies - are lower interest
rates, improving economies and beneficial corporate restructuring
moves. In Asia, and especially Japan, valuations have become much more
reasonable, but the restructuring activities that have contributed to
the success of American and European stocks are largely missing.
Overall, then, it's a mixed bag: Stocks that have done well tend to be
fully priced while stocks that are reasonably valued have debatable
business prospects. As in past reports, I want to remind shareholders
that investing in foreign equities entails substantial risks.
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 ADDRESSES SOME COMMONLY ASKED
SHAREHOLDER QUESTIONS:
"A shareholder who noticed during the fall of 1997 that
international markets moved mostly in sync with the U.S.
market on the big down days wrote to ask if international
diversification still had any value, since it seemed world
market movements had become highly correlated.
"It does seem to be true that markets have become more
closely correlated for short periods of time. So, on a
day-to-day basis, the benefits of international
diversification may have declined. However, over longer
periods, markets can certainly diverge.
"Witness the performance of the Japanese market, which
has largely sat out the historic bull market of the 1990s.
At some future point, though, the Japanese market may
provide positive returns for a sustained period of time, even
as other markets falter. The bottom line is that there are
probably still some diversification benefits to U.S. holders
of international assets.
"I also heard from another shareholder who questioned the
wisdom of owning securities in a country that he felt was
particularly unstable. I'd like to make a couple of points
about that statement. First, virtually every country appears
to be politically less stable than the United States. When
investing in international securities, investors need to
appreciate and accept this basic fact. Second, even when
countries' governments falter, sometimes the securities in
those countries can do quite well. Third, if the price of a
security is low enough - in relation to the value - the
expected return can be high enough to justify the risk.
"To sum up, various risks are an integral part of international
investing; however, the fund tries hard to keep risks at
acceptable levels."
FUND FACTS
GOAL: long-term growth of capital 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 April 30, 1998, more than
$2.0 billion
MANAGER: Greg Fraser, since 1991; manager,
Fidelity Select Defense and Aerospace Portfolio,
1989-1990; Fidelity Select Environmental
Services Portfolio, 1991; joined Fidelity in
1986
(checkmark)
DIVERSIFIED INTERNATIONAL
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
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%
SWITZERLAND 7.3%
GERMANY 6.6%
JAPAN 11.1%
SWEDEN 5.0%
NETHERLANDS 8.3%
OTHER 30.7%
AS OF OCTOBER 31, 1997
CANADA 8.4%
UNITED STATES 11.1%
ROW: 1, COL: 1, VALUE: 11.1
ROW: 1, COL: 2, VALUE: 10.1
ROW: 1, COL: 3, VALUE: 4.7
ROW: 1, COL: 4, VALUE: 4.3
ROW: 1, COL: 5, VALUE: 29.9
ROW: 1, COL: 6, VALUE: 4.6
ROW: 1, COL: 7, VALUE: 14.4
ROW: 1, COL: 8, VALUE: 4.5
ROW: 1, COL: 9, VALUE: 8.0
ROW: 1, COL: 10, VALUE: 8.4
FRANCE 8.0%
UNITED
KINGDOM 10.1%
GERMANY 4.5%
SWITZERLAND 4.7%
SWEDEN 4.3%
JAPAN 14.4%
OTHER 29.9%
NETHERLANDS 4.6%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
STOCKS AND CLOSED-END 94.5 90.0
INVESTMENT COMPANIES
BONDS 1.1 0.5
SHORT-TERM INVESTMENTS 4.4 9.5
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
NOVARTIS AG (REG.) 1.6 1.5
(SWITZERLAND, DRUGS & PHARMACEUTICALS)
NESTLE SA (REG.) 1.4 0.8
(SWITZERLAND, FOODS)
CREDIT SUISSE GROUP (REG.) 1.4 0.8
(SWITZERLAND, BANKS)
PHILIPS ELECTRONICS NV (BEARER) 1.3 0.3
(NETHERLANDS, ELECTRICAL EQUIPMENT)
ING GROEP NV 1.3 0.3
(NETHERLANDS, INSURANCE)
TELEFONICA DE ESPANA SA SPONSORED ADR 1.3 0.3
(SPAIN, TELEPHONE SERVICES)
SHELL TRANPORT & TRADING CO. PLC (REG.) 1.2 1.2
(UNITED KINGDOM, OIL & GAS)
AKZO NOBEL NV 1.2 0.7
(NETHERLANDS, CHEMICALS & PLASTICS)
SOCIETE GENERALE CLASS A 1.0 0.7
(FRANCE, BANKS)
UNILEVER NV ADR 1.0 0.9
(NETHERLANDS, HOUSEHOLD PRODUCTS)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 31.1 28.5
UTILITIES 9.6 7.1
BASIC INDUSTRIES 7.6 6.8
NONDURABLES 7.3 7.6
ENERGY 5.9 6.4
HEALTH 5.5 4.8
DURABLES 4.9 5.2
TECHNOLOGY 4.7 5.7
MEDIA & LEISURE 4.4 3.7
INDUSTRIAL MACHINERY & EQUIPMENT 4.3 3.5
DIVERSIFIED INTERNATIONAL
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 86.9%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.4%
Telecom Argentina Class B
sponsored ADR 100,000 $ 3,600,000
YPF Sociedad Anonima sponsored ADR
representing Class D shares 90,000 3,138,750
6,738,750
AUSTRALIA - 2.6%
AAP Telecommunications Properties Ltd. 759,123 1,628,194
Australia & New Zealand Banking
Group Ltd. 1,000,000 6,956,415
Australian Oil & Gas Corp. Ltd. 700,000 732,494
Colonial Ltd. 332,156 1,165,778
Commonwealth Bank of Australia (d) 550,000 6,581,069
Consolidated Rutile Ltd. (a) 154,282 43,119
FAI Insurance Ltd. Ord. 9,004,642 2,692,181
Fosters Brewing Group Ltd. 750,000 1,628,125
Gandel Retail Trust GAN 650,000 515,410
Henry Walker Group Ltd. 50,000 65,645
Macquarie Bank Ltd. 90,000 842,335
National Australia Bank Ltd. (a) 100,000 1,416,891
National Mutual Property Trust 1,033,333 839,518
Newcrest Mining Ltd. (a) 100,000 181,986
News Corp. Ltd. sponsored
ADR (ltd. vtg.) 275,000 6,410,938
Normandy Mining Ltd. 1,600,000 1,778,263
North Ltd. 100,000 291,828
Pacific Dunlop PLC (a) 200,000 369,172
Premier Investment Ltd. 185,000 276,554
Qantas Airways Ltd. 500,000 760,442
QNI Ltd. 5,000,000 2,924,775
St. George Bank Ltd. 100,000 592,104
Santos Ltd. 337,500 1,213,050
Savage Resources Ltd. 308,436 140,328
Savage Resources Ltd. (warrants) (a) 5,500 21
Seven Network Ltd. 100,000 358,122
Telstra Corp. Ltd. (e) 200,000 467,964
Tyndall Australia Ltd. 900,000 1,550,131
Tyndall Australia Ltd. rights 5/14/98 (a) 90,000 36,267
United Energy Ltd. 774,100 1,182,347
Western Mining Holdings Ltd. 2,010,245 7,133,811
Westfield Trust 550,000 1,158,568
51,933,845
AUSTRIA - 0.6%
Austria Tabak AG (a)(d) 60,000 3,756,084
OMV AG (d) 10,000 1,483,123
RHI AG 10,000 504,927
Vae AG 40,000 3,852,637
Voest-Alpine Stahl AG 50,000 2,049,780
11,646,551
BAHAMAS - 0.3%
Sun International Hotels Ltd. Ord. (a) 150,000 6,890,625
BELGIUM - 0.2%
Telinfo SA 35,000 3,164,642
BERMUDA - 0.5%
Lasalle Re Holdings Ltd. 20,000 731,250
PartnerRe Ltd. 20,000 1,001,250
RenaissanceRe Holdings Ltd. 20,000 955,000
Terra Nova Holdings Ltd. 218,000 6,676,250
9,363,750
SHARES VALUE (NOTE 1)
BRAZIL - 0.8%
Compania Cervejaria Brahma PN:
(Pfd. Reg.) warrants 4/30/03 (a) 188,529 $ 14,838
(Pfd. Reg.) 3,000,000 1,954,440
Compania Energertica Minas Gerais 15,000,000 727,997
Petrobras PN (Pfd. Reg.) 30,000,000 7,607,889
Telebras sponsored ADR 40,000 4,872,500
15,177,664
CANADA - 4.8%
Alliance Forest Products, Inc. (a) 100,000 2,106,992
BCE, Inc. 350,000 14,895,699
Canadian Pacific Ltd. 285,000 8,365,072
Canadian National Railway Co. 100,000 6,502,673
Canadian Natural Resources Ltd. (a) 200,000 4,297,844
Chum Ltd. Class B 100,000 3,843,600
Connor Clark Ltd., Class A (non-vtg.) 200,000 1,215,975
Dundee Bancorp, Inc. Class A
(sub. vtg.) (a)(d) 75,000 1,496,384
Edperbrascan Corp. Ltd., Class A (vtg.) 300,000 6,121,807
Greenstone Resources Ltd. (a) 50,000 303,994
Harrowston, Inc. Class A (a) 200,000 747,755
International Verifact, Inc. (a) 50,000 365,142
Investors Group Inc. 50,000 1,904,329
Marsulex, Inc. (a) 175,000 953,912
Midland Walwyn, Inc. 350,000 5,760,159
Moore Corporation Ltd. 200,000 3,123,799
National Bank of Canada 300,000 6,184,702
Newtel Enterprises Ltd. 30,000 837,555
PC Docs Group International, Inc. (a) 100,000 559,069
Power Corporation of Canada 100,000 3,993,850
Power Financial Corp. 40,000 1,601,733
QLT Phototherapeutics, Inc. (a) 100,000 1,747,091
Rio Alto Exploration Ltd. (a) 650,000 7,495,021
Russel Metals, Inc. Class A (a) 225,000 880,534
St Laurent Paperboard, Inc. (a) 300,000 4,077,711
SMED International, Inc. 50,000 929,452
Southam, Inc. 50,000 913,729
Suncor, Inc. 10,000 344,526
Telus Corp. 50,000 1,347,007
Transat AT, Inc. (a) 50,000 384,360
Trilon Financial Corp. Class A 300,000 2,714,980
UniHost Corp. (sub. vtg.) (a) 200,000 1,390,685
97,407,141
CHILE - 0.1%
Santa Isabel SA sponsored ADR 149,925 2,473,763
DENMARK - 3.4%
Alm Brand AS Class B (Reg.) (a) 25,000 846,814
Amtsspar Fyn Holding AS 25,000 1,686,328
Danisco AS 50,000 3,139,053
Den Danske Bank Group AS 50,000 6,059,102
FIH AS Class B 250,000 6,052,897
Forsikringsselskabet Codan AS 25,000 3,942,066
Jyske Bank AS (Reg.) 50,000 5,803,598
Novo-Nordisk AS Class B 30,000 4,861,882
Nordvestbank (Reg.) 400 46,838
Spar Nord Holding 25,000 1,376,073
Syd-Sonderjylland Holding 175,000 9,760,264
Telepartner AS sponsored ADR (a) 150,000 815,625
Unidanmark AS Class A 150,000 12,592,712
Vestas Wind Systems AS (d) 40,090 1,726,705
Vest-Wood AS 60,000 6,044,502
Tryg Baltica Forsikring AS (Reg.) 50,000 3,431,058
68,185,517
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ESTONIA - 0.0%
Eesti Uhispank AS sponsored
GDR (a)(d) 40,000 $ 538,000
FINLAND - 3.9%
Cultor OY Ord., Series 2 15,000 888,665
Enso OY Class R 1,400,000 14,893,617
Finnair OY 700,000 7,190,022
Huhtamaki Ord. 90,000 5,199,927
Instrumentarium OY Class B 50,000 3,099,780
Kesko OY 200,000 3,231,842
Merita Ltd., Series A 500,000 3,338,225
Metsa-Serla Ltd. Class B 600,000 6,217,902
Metsa Tissue Oyj Corp. 100,000 1,155,539
Nokia Corp. AB sponsored ADR 100,000 6,687,500
Rauma OY 75,000 1,403,155
Tamro OYJ 300,000 2,146,001
Teito Corp. Class B 42,000 7,703,595
Tulikivi OY Series A 35,000 770,360
UPM-Kymmene Corp. 400,000 11,995,598
Valmet OY 200,000 3,305,209
79,226,937
FRANCE - 8.7%
Accor SA 10,000 2,722,818
Alcatel Alsthom Compagnie Generale
d'Electricite SA sponsored ADR 450,000 16,312,500
Axa SA 75,000 8,796,412
Business Objects SA sponsored ADR (a) 25,000 471,875
Carbonne-Lorraine 5,000 2,047,512
Compagnie Generale de Geophysique
SA sponsored ADR 99,500 2,860,625
Credit Commercial de France Ord. 100,000 7,974,084
Dexia France 50,000 6,047,014
Elf Aquitaine SA sponsored ADR 300,000 19,481,250
Eurafrance (Societe) 15,000 8,422,626
Immobiliere Marseillaise, ste, Class B 1,255 2,391,370
LVMH (Moet-Hennessy Louis Vuitton)
sponsored ADR 10,000 2,056,649
Lafarge SA 50,000 4,718,000
Lagardere S.C.A. (Reg.) 100,000 3,820,915
Marine Wendel SA 30,000 5,332,669
Michelin SA (Compagnie Generale
des Etablissements) Class B 50,663 3,189,004
Pernod-Ricard 100,000 6,894,260
Paribas SA (Cie Financiere) Class A 50,000 5,316,056
Renault SA Ord. (a) 50,000 2,317,468
Remy Cointreau SA 100,000 1,960,296
Rhone Poulenc SA Class A 100,000 4,885,788
Scor SA 150,000 9,239,970
Societe Generale Class A 100,000 20,799,070
Total SA Class B 125,000 14,847,579
Union Assurances Federale SA 75,000 11,724,396
174,630,206
GERMANY - 5.2%
Adidas-Salomon AG 5,000 835,236
Allianz AG (Reg.) 35,000 11,330,809
Allianz AG (RFD) (a) 1,176 358,189
Andrea-Noris Zahn 45,000 1,678,824
BASF AG 200,000 9,065,093
Bayer AG 120,000 5,352,859
BERU AG 24,500 579,793
Berlinger Bank AG 50,000 1,187,427
Buderus AG 10,000 4,694,025
Commerzbank AG 150,000 5,846,651
SHARES VALUE (NOTE 1)
Daimler-Benz AG Ord. 50,000 $ 4,951,556
Deutsche Bank AG 150,000 11,893,758
Depfa Bank (Deut Pfandbrief) 100,000 7,795,534
Deutsche Telekom AG 200,000 5,234,144
DIS Deutscher Industrie Service AG (d) 15,000 893,702
Mannesmann AG Ord. 3,000 2,482,321
Metallgesellschaft AG Ord. 100,000 2,145,999
Phoenix AG 10,000 201,292
Rhein West Electric 50,000 2,586,447
SAP AG (Systeme Anwendungen
Produkte) 5,000 2,400,329
Siemens AG 25,000 1,480,455
Springer Axel Verlag AG (Reg.) 2,500 2,220,335
Thyssen AG Ord. 50,000 11,665,460
Veba AG Ord. 100,000 6,654,045
103,534,283
HONG KONG - 0.2%
Hutchison Whampoa Ltd. Ord. 500,000 3,090,921
Jardine Strategic Holdings Ltd. Ord. 500,000 1,300,000
Peregrine Investments Holdings Ltd. 546,000 1
4,390,922
INDONESIA - 0.0%
PT Cahaya Kalbar 292,000 44,713
PT Bank PAN Indonesia 660 52
44,765
IRELAND - 1.4%
Anglo-Irish Bank Corp. PLC 2,000,000 5,346,560
Bank of Ireland, Inc. 100,000 2,040,047
CRH PLC 100,000 1,420,180
FBD Holdings PLC 60,000 441,945
Hibernian Group PLC 303,909 3,624,267
IWP International (UK Reg.) 100,000 601,488
Independent Newspapers PLC 271,053 1,630,351
IAWS Group PLC Class A (Reg.) 70,000 298,238
Irish Life PLC 950,000 8,809,293
Jurys Hotel Group PLC (UK) 151,692 1,305,252
Ryan Hotels Ltd. 1,500,000 2,004,960
27,522,581
ISRAEL - 0.2%
RIT Technologies Ltd. 20,000 265,000
TTI Team Telecom International Ltd. (a) 20,000 160,000
Tecnomatix Technologies 125,000 3,171,875
3,596,875
ITALY - 2.8%
Assicurazioni Generali Spa 400,000 11,972,696
Bulgari Spa 100,000 611,735
Credito Italiano Ord. 2,500,000 13,077,577
Eni Spa sponsored ADR 25,000 1,653,125
Istituto Mobiliare Italiano 50,000 813,963
Istituto Nazionale Delle
Assicurazioni Spa 1,500,000 4,471,651
Manuli Rubber Industries Spa 50,000 270,804
SAES Getters SPA sponsored ADR 100,000 1,150,000
Telecom Italia Spa 2,200,000 16,563,614
Telecom Italia Mobile Spa 1,100,000 6,297,773
56,882,938
JAPAN - 11.1%
Acom Co. Ltd. 100,000 5,262,563
Aiful Corp. (d) 25,000 1,648,786
Aichi Machine Industry Co. Ltd. 100,000 207,039
Aronkasei Co. Ltd. 150,000 363,636
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Bunka Shutter Co. Ltd. 300,000 $ 801,807
Canon, Inc. 225,000 5,302,089
Chofu Seisaku Co. Ltd. 50,000 722,755
Chiyoda Fire & Marine Insurance
Co. Ltd. 550,000 2,140,787
Chiyoda Co. 50,000 327,499
Chukyo Coca Cola Bottling Co. Ltd. 25,000 201,393
Citizen Watch Co. Ltd. Ord. 500,000 3,350,273
Comany, Inc. 100,000 790,514
Credit Saison Co. Ltd. 100,000 2,160,738
Daiichi Pharmaceutical Co. Ltd. 250,000 3,574,252
Denyo Co. Ltd. 96,000 484,246
Diamond City Co. Ltd. 100,000 466,780
Fuji Coca-Cola Bottling Co. Ltd. 161,000 1,721,212
Fuji Fire & Marine Insurance Co. Ltd. 250,000 592,885
Fuji Photo Film Co. Ltd. 150,000 5,319,029
Fuji Rebio 100,000 297,384
Fujitsu Ltd. 150,000 1,744,777
Fujitsu Business Systems Ltd. 125,000 1,929,230
Fukushima Industries Corp. 100,000 639,940
Fukuda Denshi Co. Ltd. 25,000 303,030
Gakken Co. Ltd. 50,000 98,626
Gunze Ltd. 100,000 222,097
HEC Corp. 50,000 131,752
Hibiya Engineering Ltd. 80,000 379,447
Higashi Nihon House Co. Ltd. 90,000 386,222
Hitachi Koki Co. Ltd. Ord. 150,000 603,049
Hitachi Ltd. 1,000,000 7,144,739
Hokkaido Coca-Cola Bottling Co. 109,000 1,101,284
Honda Motor Co. Ltd. 100,000 3,613,777
Horiba Ltd. 25,000 284,209
Horipro Inc. 145,000 950,838
Hogy Medical Co. 25,000 756,635
Itoki Crebio Corp. 225,000 662,338
Isewan Terminal Service Co. Ltd. 200,000 504,423
Jafco Co. Ltd. 200,000 6,640,316
Japan Maintenance Co. Ltd. 70,000 474,308
Japan Wool Textile 50,000 235,272
Jichodo Co. Ltd. 204,000 1,360,768
Kameda Seika Co. Ltd. 11,000 40,663
Kao Corp. 300,000 4,392,998
Kawagishi Bridge Works Co. Ltd. 225,000 643,704
Kawasumi Laboratories, Inc. 25,000 388,669
Kentucky Fried Chicken Japan 200,000 2,047,807
Kyowa Hakko Kogyo Co. Ltd. 50,000 203,275
Kuraya Corp. 10,000 49,765
Konishi Co. Ltd. 10,000 104,950
Kuwazawa Trading Co. Ltd. 17,000 34,557
Levi Strauss Japan 263,000 2,138,453
Mabuchi Motor Co. 25,000 1,441,747
Maezawa Kasei Industries Co. Ltd. 56,900 685,413
Makita Corp. 100,000 1,084,133
Maruzen Showa Unyu Co. Ltd. 225,000 431,959
Matsushita Electric Industrial Co. Ltd. 600,000 9,576,510
Matsushita Communication Industrial
Co. Ltd. 100,000 2,943,723
Matsushita Electric Works Co. Ltd. 100,000 895,916
Meiki Co. Ltd. 50,000 213,815
Meitec Corp. 100,000 3,274,986
Minebea Co. Ltd. 1,000,000 11,142,480
Minolta Camera Co. Ltd. 550,000 3,561,077
Mitsubishi Estate Co. Ltd. 100,000 963,674
Mitsui Marine & Fire Insurance Co. 350,000 1,789,196
Mitsui Home Co. Ltd. 50,000 282,326
SHARES VALUE (NOTE 1)
Mitsui Wood Systems, Inc. 25,000 $ 86,392
Murakami Corp. 100,000 398,268
Nagase & Co. Ltd. 25,000 90,344
Nagawa Co. Ltd. 25,000 111,989
Nintendo Co. Ltd. Ord. 110,000 10,053,830
Nippon Telegraph & Telephone
Corp. Ord. 600 5,239,977
Nittetsu Mining Co. Ltd. 200,000 778,468
Nitto Denko Corp. 100,000 1,520,798
Nomura Securities Co. Ltd. 300,000 3,647,657
Noda Corp. 50,000 237,154
NTT Data Communications System 40 1,722,567
Nichicon Corp. 200,000 2,168,266
Nihon Kagaku Sangyo Co. Ltd. 200,000 594,768
Nissho Corp. 100,000 737,813
Nissei Industries Ltd. 25,000 188,218
Nishio Rent All Co. Ltd. 50,000 421,607
Omron Corp. 150,000 2,343,309
Promise Co. Ltd. 100,000 5,059,288
Ricoh Leasing Co. Ltd. 105,000 925,692
Ricoh Elemex Corp. 150,000 1,016,375
Riken Vitamin Oil Co. Ltd. 308,000 2,260,870
Royal Co. Ltd. 100,000 1,358,931
Sangetsu Company Ltd. 150,000 1,908,526
Sankyo Co. Ltd. 100,000 2,469,415
Shikoku Coca-Cola Bottling Co., Ltd. 93,400 985,156
Secom Co. Ltd. 100,000 5,872,388
Sekisui House Ltd. 300,000 2,335,404
Senshukai Co. Ltd. 100,000 493,130
Sankyo Co. Ltd. (Gunma) 50,000 798,043
Senshu Electric Co. Ltd. (a) 100,000 662,526
Shinko Shoji Co. Ltd. 50,000 300,772
Shiseido Co. Ltd. 100,000 1,313,759
Snow Brand Seed Co. Ltd. 46,000 162,771
Sony Corp. 120,000 10,194,418
Sotoh Co. Ltd. 75,000 513,834
Sonton Food Industry Co. Ltd. 150,000 1,276,115
SRL, Inc. 100,000 493,130
Sumitomo Marine and Fire Insurance
Co. Ltd. 300,000 1,782,044
TDK Corp. 20,000 1,575,005
Takeda Chemical Industries Ltd. 275,000 7,826,087
Taihei Dengyo Kaisha Ltd. 22,000 91,097
Takeda Printing Co. Ltd. 10,000 67,758
Takefuji Corp. 125,000 6,540,561
Terumo Corp. 100,000 1,459,063
THK Co. Ltd. 100,000 956,145
Tokio Marine & Fire Insurance Co.
Ltd. (The) 650,000 7,046,866
Tokyo Style Co. Ltd. 75,000 677,583
Toyoda Automatic Loom Works Ltd. 273,000 4,809,486
Toyota Motor Corp. 125,000 3,246,753
Topcon Corp. 10,000 46,603
Toyota Corrolla Gifu Co. Ltd. 7,000 65,402
Toyo Corp. 100,000 813,853
Tsuchiya Home Co. Ltd. 50,000 199,511
Wakita & Co. Ltd. 25,000 118,577
Yurtec Corp. 50,000 265,387
Yamada Corp. 50,000 94,109
Yokogawa Electric 150,000 780,350
Yokogawa Bridge Works 100,000 271,033
223,709,781
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
KOREA (SOUTH) - 0.1%
Nam Yang Dairy Products 25,000 $ 1,683,502
SK Telecom Ltd. 1,000 609,428
Samsung Fire & Marine Insurance 1,762 520,756
2,813,686
LUXEMBOURG - 0.2%
Espirito Santo Financial Holding SA ADR 50,000 1,290,625
Quilmes Industrial SA sponsored ADR 250,000 2,765,625
4,056,250
MALAYSIA - 0.0%
Oriental Holdings BHD 360,000 752,311
MEXICO - 0.3%
Corporacion Geo SA de CV (a) 250,000 1,725,153
Elamex SA de CV (a) 154,800 1,044,900
Grupo Financiero Bancomer Class B 2,000,000 1,380,122
Grupo Financiero Inbursa SA Class B 400,000 1,219,972
5,370,147
NETHERLANDS - 8.1%
ABN-AMRO Holdings NV 300,000 7,300,064
Aegon NV Ord. 25,000 3,239,527
AKZO Nobel NV 120,000 24,392,898
Benckiser NV Class B 75,000 4,373,362
DSM NV 51,612 5,169,113
EVC International NV 100,000 1,953,608
Hagemeyer NV 100,000 4,772,739
ING Groep NV 400,000 25,856,867
KLM Royal Dutch Air Lines NV 25,000 1,014,062
Koninklijke Hoogovens NV 50,000 2,250,359
Koninklijke Pakhoed NV 50,000 1,829,962
Melia Inversiones Americanas NV (a) 8,500 423,593
Philips Electronics NV (Bearer) 300,000 27,000,000
Royal Dutch Petroleum Co. 100,000 5,656,250
Royal Ptt Nederland NV 350,000 18,072,110
Samas-Groep NV 50,000 3,098,571
Smit International NV 100,004 2,918,164
Telegraaf 100,000 2,319,600
Unilever NV ADR 275,000 20,521,875
Vedior NV 40,000 1,214,699
163,377,423
NEW ZEALAND - 0.4%
Air New Zealand Ltd. Class B 800,000 1,129,650
CDL Hotels New Zealand Ltd. 184,400 27,570
Fletcher Challenge Paper Ltd. 1,500,000 2,201,156
Independent Newspapers Ltd. 350,000 1,482,666
Lion Nathan Ltd. 700,000 1,852,848
Telecom Corp. of New Zealand (f) 195,000 521,549
Tranz Rail Holdings Ltd. sponsored ADR 75,000 787,500
8,002,939
NORWAY - 2.3%
Bergensbanken ASA 38,700 380,962
Choice Hotels Skandanavia ASA (a) 150,000 482,154
Color Lines 200,000 696,444
Det Sondenfjelds-Norske
Dampskibsselskab, Class A (a)(d) 75,000 1,848,256
Den Norske Bank AS Class A
Free shares 1,300,000 6,825,152
Merkantildata 750,000 9,442,175
Norsk Hydro AS 50,000 2,491,127
Petroleum Geo-Services AS
sponsored ADR (a) 50,000 3,287,500
SHARES VALUE (NOTE 1)
Saga Petroleum AS:
Class A 50,000 $ 991,094
Class B 50,000 890,645
Smedvig AS, Series A 100,000 2,116,119
Schibsted AS, Series B 500,000 9,509,141
Sparebanken Norway primary
shares certificates 150,000 5,183,151
Superoffice AS (a) 65,000 130,583
Tandberg Data AS (a) 25,000 246,099
Tandberg Television ASA (a) 100,000 1,319,226
45,839,828
PORTUGAL - 0.8%
Electricidade de Portugal SA 125,000 3,259,276
Portugal Telecom SA 79,000 4,242,029
Telecel Comunicacoes Pessoais SA (a) 50,000 8,963,008
16,464,313
RUSSIA - 0.1%
Luk Oil Co. sponsored ADR 35,000 2,318,750
SINGAPORE - 0.1%
Delgro Corp. Ltd. 300,000 344,806
Haw Par Brothers International Ltd. (a) 500,000 574,676
Robinson & Co. Ltd. 100,000 296,811
Times Publishing Ltd. 800,000 1,374,171
2,590,464
SOUTH AFRICA - 1.6%
Anglo American Corp. of South Africa
Ltd. (Reg.) 50,000 2,958,346
Anglogold Ltd. ADR 200,000 1,012,500
Anglogold Ltd. 125,000 6,629,069
Driefontein Consolidated Ltd. Ord. 50,000 354,705
Free State Consolidated Gold Mines
Ltd. Ord. 1,200,000 7,361,235
Gencor Ltd. (Reg.) 200,000 476,897
Ingwe Coal Corp. Ltd. 219,400 785,820
Rembrandt Group Ltd. 150,000 1,365,390
Sasol, Ltd. 50,000 504,601
South African Breweries Ltd. 150,000 5,034,135
Southvaal Holdings Ltd. 20,000 435,342
Western Deep Levels Ltd. Ord. 150,000 4,197,091
31,115,131
SPAIN - 2.4%
Argentaria Corporacion Bancaria
de Espana SA (a) 75,000 6,245,697
Banco Bilbao Vizcaya SA Ord. (Reg.) 50,000 2,570,408
Banco De Santander SA
de Credito ADR 40,000 2,095,000
Endesa SA sponsored ADR 80,000 1,940,000
Mapfre Vida SA 100,000 4,983,443
Repsol SA sponsored ADR 35,000 1,914,063
Telefonica de Espana SA :
rights 5/4/98 70,000 157,500
sponsored ADR 204,800 25,587,200
Union Electrica Fenosa SA 200,000 2,583,522
48,076,833
SWEDEN - 5.0%
ADB-Gruppen Mandator AB 75,000 2,166,177
Astra AB Class A Free shares 300,000 6,150,395
Atle AB 150,000 2,804,425
Celsius Industrier AB Class B 300,000 6,653,257
Custos AB, Class B 50,000 1,289,391
Electrolux AB 25,000 2,320,904
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWEDEN - CONTINUED
Ericsson (L.M.) Telephone Co.
Class B ADR 50,000 $ 2,571,875
Finnveden Invest AB Class B Free shares 100,000 2,204,858
Forvaltnings AB Ratos Class B Free shares 500,000 5,544,381
Hemkopskedjan AB, Series B 300,000 4,080,922
Investor AB Class B Free shares 80,000 4,507,711
Kinnevik Investment B Free shares 150,000 4,264,660
Louis Gibeck AB Class B (a) 100,000 844,551
Modern Times Group Mortgage AB,
Series B (a) 310,000 2,957,863
Mo Och Domsjoe AB Class B 200,000 6,189,076
Netcom Systems AB, Class B (a) 250,000 8,477,745
NK Cityfastigheter AB 200,000 1,882,511
Nordbanken Holding AB 350,000 2,572,335
PLM AB 50,000 899,350
Resco AB, Series B 50,000 1,224,921
SKF AB Ord. 250,000 5,028,624
Skandinaviska Enskilda Banken Class A
Free shares 100,000 1,663,314
Swedish Match Co. 4,039,000 13,957,038
Svedala Industri Free shares 25,000 594,732
Trelleborg Class B Free shares 50,000 670,483
WM Data Nordic AB, Series B 300,000 9,012,842
100,534,341
SWITZERLAND - 7.1%
Bank for International Settlements 500 3,263,838
Bucher Holding AG (Bearer) 2,000 2,304,669
Ciba Specialty Chemicals AG (a) 25,000 3,022,381
Credit Suisse Group (Reg.) 125,000 27,476,187
Compagnie Financiere Richemont AG
Class A Unit (Bearer) 2,000 2,864,184
Edipresse SA, Lausanne 25,000 7,993,073
Jelmoli, Grands Magasins SA 1,000 1,145,674
Julius Baer Holding AG 4,000 11,030,440
Nestle SA (Reg.) 15,000 29,074,802
Novartis AG (Reg.) 19,000 31,382,414
Publicitas Holding SA (Reg.) 10,000 2,597,749
Roche Holding AG 1,500 15,191,834
Sarna Kunststoff Holding AG 1,260 2,140,145
Sulzer AG (Reg.) 5,000 3,580,230
Usego Hofer Curti AG (Reg.) 500 126,557
143,194,177
THAILAND - 0.0%
ICC International PLC (For. Reg.) 4,500 6,479
UNITED KINGDOM - 10.8%
Aggregate Industries PLC 2,000,000 2,472,784
Allied Domecq PLC 400,000 4,110,168
Alpha Airports Group PLC 200,000 314,110
Anglian Water PLC Ord. 300,000 4,591,358
Arjo Wiggins Appleton PLC 50,000 177,523
Asda Group PLC 1,000,000 3,345,777
BAA PLC Ord. 200,000 2,033,364
BAT Industries PLC Ord. 700,000 6,596,318
Barclays PLC Ord. 200,000 5,764,260
BTP PLC 300,000 2,120,245
Billiton PLC 1,000,000 2,857,068
British Petroleum PLC ADR 30,124 2,846,718
British Vita Ord. 100,000 543,010
Budgens PLC 500,000 632,816
Cookson Group PLC 1,500,000 6,729,147
Crest Nicholson PLC 200,000 399,321
Diageo PLC 172,800 2,055,645
SHARES VALUE (NOTE 1)
Dorling Kindersley Holdings PLC, Class L 500,000 $ 2,146,978
English China Clay PLC 800,000 3,294,818
Glaxo PLC sponsored ADR 25,000 1,414,063
Granada Group PLC 100,000 1,720,924
Greenalls Group PLC 150,000 1,210,495
HSBC Holdings PLC 305,036 8,969,913
Hanson PLC 150,000 884,062
House of Fraser PLC Class L 1,000,000 2,656,572
Hyder PLC 355,895 5,720,335
Iceland Group PLC 200,000 743,506
International Business Communications
Holdings PLC Class L 300,000 2,556,324
Lloyds TSB Group PLC 300,000 4,488,604
London Pacific Group Ltd. 550,000 1,957,342
Man (E D & F) Group PLC 500,000 2,046,730
Mcbride PLC 800,000 2,606,448
National Grid Co. PLC 550,000 3,547,108
National Westminster Bank PLC Ord. 150,000 2,999,921
Norcros PLC Class L 116,300 132,134
Paterson Zochonis 221,900 1,523,785
Persimmon PLC Ord. 513,545 2,093,596
Powerscreen International PLC 1,000,000 3,090,980
Railtrack PLC Class L 75,000 1,369,012
Ramco Energy PLC 100,000 1,052,604
Rentokil Initial PLC 500,000 3,218,379
Rio Tinto PLC (Reg.) 200,000 2,868,764
RJB Mining PLC 150,000 308,263
Royal & Sun Alliance Insurance
Group PLC 700,000 7,812,661
Safeway PLC 308,137 1,835,388
Scottish Power PLC ADR 500,000 4,592,612
Scottish Hydro-Electric PLC Ord. 250,000 2,460,253
Shell Transport & Trading Co. PLC (Reg.) 3,300,000 24,535,698
Signet Group PLC (a) 5,000,000 3,550,450
Severn Trent PLC 500,000 7,994,778
Smiths Industries PLC Ord. 50,000 718,862
SmithKline Beecham PLC ADR 150,000 8,934,375
Stakis PLC 1,000,000 2,155,332
Thames Water PLC Ord. 250,000 4,072,575
Tomkins PLC Ord. 2,015,005 11,850,680
Unilever PLC ADR 250,000 10,562,500
Vodafone Group PLC sponsored ADR 25,000 2,748,438
WPP Group PLC (a) 800,000 5,072,549
Vaux Group PLC 200,000 908,915
Whitbread & Co. PLC Class A 150,000 2,588,905
Yorkshire Water PLC 200,000 1,603,968
216,210,231
UNITED STATES OF AMERICA - 0.4%
Brio Technology, Inc. 700 7,700
Heller Financial, Inc. Class A 6,000 162,000
Orthofix International (a) 614,100 7,983,300
8,153,000
TOTAL COMMON STOCKS
(Cost $1,389,854,543) 1,745,935,839
CLOSED-END INVESTMENT COMPANIES - 6.3%
AUSTRIA - 0.2%
Austria Fund, Inc. 350,000 4,506,250
BRAZIL - 0.2%
Brazil Fund, Inc. 150,000 3,412,500
CLOSED-END INVESTMENT COMPANIES - CONTINUED
SHARES VALUE (NOTE 1)
CANADA - 0.6%
Canadian General Investment Ltd. 134,100 $ 1,625,937
Economic Investment Trust Ltd. 64,592 5,822,962
United Corporations Ltd. 77,261 3,293,561
10,742,460
CHILE - 0.1%
Chile Fund, Inc. 100,000 1,618,750
Five Arrows Chile Investment
Trust Ltd. 500,000 1,160,000
2,778,750
EMERGING MARKETS - 1.3%
ASEAN Supreme Fund Ltd. (a) 2,800 12,488
Asia Tigers Fund, Inc. 400,000 3,025,000
Central European Equity Fund 180,000 3,555,000
Central European Value Fund, Inc. 25,000 321,875
Emerging Markets
Telecommunication Fund, Inc. 160,000 2,290,000
Emerging Markets Infrastructure
Fund, Inc. 480,000 5,610,000
Latin America Growth Fund, Inc. 100,000 943,750
Morgan Stanley Africa Investment
Fund, Inc. 80,000 1,150,000
New South Africa Fund, Inc. 25,000 400,000
Scudder New Europe Fund, Inc. 250,000 5,093,750
Southern Africa Fund, Inc. 75,000 1,284,375
Templeton Dragon Fund, Inc.. 200,000 2,200,000
25,886,238
FRANCE - 0.3%
France Growth Fund, Inc. 460,000 6,296,250
GERMANY - 0.9%
Emerging Germany Fund, Inc . 200,000 2,862,500
New Germany Fund, Inc. (The) 800,000 14,300,000
17,162,500
INDIA - 0.1%
India Fund 180,000 1,485,000
Jardine Fleming India Fund, Inc. 100,000 718,750
2,203,750
IRELAND - 0.1%
Irish Investment Fund, Inc. 100,000 2,475,000
ISRAEL - 0.0%
First Israel Fund, Inc. 52,000 708,500
ITALY - 0.2%
Italy Fund, Inc. (The) 285,000 4,150,313
MEXICO - 0.4%
Mexico Fund, Inc. (The) 400,000 $ 7,275,000
MULTI-NATIONAL - 0.7%
Americas Income Trust, Inc. 50,000 453,125
Blackrock North American
Government Income Trust, Inc. 350,000 3,696,875
Clemente Global Growth
Fund, Inc.. 3,000 34,875
Invesco Global Health
Sciences Fund 70,000 1,382,500
Morgan Stanley Asia-Pacific
Fund, Inc. 325,000 2,417,188
MFS Government Markets Income Trust 700,000 4,506,250
Royce Global Trust, Inc. 50,000 296,875
Strategic Global Income Fund, Inc. 150,000 1,818,750
14,606,438
SHARES VALUE (NOTE 1)
PHILIPPINES - 0.0%
First Phillipine Fund 10,000 $ 75,625
POTRUGAL - 0.2%
Portugal Fund, Inc. 158,900 3,565,319
SINGAPORE - 0.0%
WEBS Index Fund, Inc. 75,000 473,438
SPAIN - 0.5%
Growth Fund of Spain, Inc. 300,000 6,468,750
Spain Fund, Inc. 218,900 4,159,100
10,627,850
SWITZERLAND - 0.2%
Swiss Helvetia Fund, Inc. 150,000 4,593,750
TAIWAN - 0.3%
Taiwan Fund, Inc. 250,000 4,125,000
Taiwan Equity Fund, Inc. 90,000 1,035,000
5,160,000
TOTAL CLOSED-END INVESTMENT COMPANIES
(Cost $113,873,394) 126,699,931
PREFERRED STOCKS - 1.3%
CONVERTIBLE PREFERRED STOCKS - 0.1%
AUSTRALIA - 0.1%
Village Roadshow Ltd. PRIDES (d) 40,000 1,910,000
NONCONVERTIBLE PREFERRED STOCKS - 1.2%
AUSTRIA - 0.1%
Bank Austria AG 21,500 1,670,587
Miba Holdings AG, Class B 15,000 914,091
2,584,678
GERMANY - 0.5%
Volkswagen AG 15,100 9,484,270
ITALY - 0.2%
Telecom Italia Spa 800,000 4,215,064
PORTUGAL - 0.1%
Lusomundo (Filmes) SA (non-vtg.) 120,000 1,625,075
UNITED STATES OF AMERICA - 0.3%
Freeport McMoran Copper & Gold, Inc.:
Series B 130,000 3,266,250
Depositary shares representing
gold pfd., Series II 100,000 2,237,500
5,503,750
TOTAL NONCONVERTIBLE PREFERRED STOCKS 23,412,837
TOTAL PREFERRED STOCKS
(Cost $18,208,484) 25,322,837
CONVERTIBLE BONDS - 1.0%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (C) (NOTE 1)
FINLAND - 0.3%
Metsa Serla OY 4 3/8%,
10/15/02 (d) - $ 5,000,000 $ 5,375,000
FRANCE - 0.1%
Axa SA 4 1/2%, 1/1/99 - FRF 25,000 2,969,516
LUXEMBOURG - 0.1%
Espirito Santo Financial Holding
SA 8 3/4%, 4/10/03 - XEU 1,000,000 1,762,560
NETHERLANDS - 0.2%
Bilbao Vizcaya Investments BV
3 1/2%, 7/12/06 Aa3 1,000,000 3,170,000
SWITZERLAND - 0.2%
Swiss Life Finance Ltd. 1 1/2%,
5/20/03 (d) - 1,500,000 1,578,750
Swiss Life Finance Ltd. 2%,
5/20/05 (d) - 3,000,000 3,022,500
4,601,250
UNITED STATES OF AMERICA - 0.1%
Nestle Holdings, Inc.
3%, 6/17/02 1,600,000 2,072,000
TOTAL CONVERTIBLE BONDS
(Cost $16,216,868) 19,950,326
GOVERNMENT OBLIGATIONS - 0.1%
ITALY - 0.1%
Italian Republic 5%,
6/28/01
(Cost $995,400) Aa3 790,000 1,368,675
CASH EQUIVALENTS - 4.4%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund
(Cost $89,365,773) (b) 89,365,773 89,365,773
TOTAL INVESTMENTS IN SECURITIES - 100%
(Cost $1,628,514,462) $ 2,008,643,381
PREFERRED STOCK ABBREVIATIONS
PRIDES - Preferred redeemable increased dividend equity securities.
CURRENCY ABBREVIATIONS
AUD - Australian dollar
FRF - French franc
NZD - New Zealand dollar
XEU - European currency unit
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.51%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Principal amount is stated in United States dollars unless
otherwise noted.
(d) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to
$31,320,359 or 1.6% of net assets.
(e) Purchased on installment basis. Market value reflects only those
payments made through 11/17/97. The remaining installment aggregating
AUD 270,000 is due on 11/17/98.
(f) Purchased on installment basis. Market value reflects only those
payments made through 3/31/98. The remaining installment aggregating
NZD 809,250 is due on 3/31/99.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $843,465,706 and $550,983,293, 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 $45,231 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
Vae AG $ - $ 811,415 $ - $ -
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.3%
Basic Industries 7.6
Cash Equivalents 4.4
Construction & Real Estate 1.7
Durables 4.9
Energy 5.9
Finance 31.1
Government Obligations 0.1
Health 5.5
Holding Companies 1.7
Industrial Machinery & Equipment 4.3
Media & Leisure 4.4
Nondurables 7.3
Precious Metals 1.6
Retail & Wholesale 1.4
Services 1.5
Technology 4.7
Transportation 2.0
Utilities 9.6
100.0%
INCOME TAX INFORMATION
At April 30, 1998 the aggregate cost of investment securities for
income tax purposes was $1,629,305,916. Net unrealized appreciation
aggregated $379,337,465, of which $437,496,956 related to appreciated
investment securities and $58,159,491 related to depreciated
investment securities.
DIVERSFIED INTERNATIONAL
FINANCIAL STATEMENTS
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STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 2,008,643,381
(COST $1,628,514,462) -
SEE ACCOMPANYING SCHEDULE
CASH 58,896
RECEIVABLE FOR INVESTMENTS SOLD 29,213,973
RECEIVABLE FOR FUND SHARES SOLD 11,454,411
DIVIDENDS RECEIVABLE 6,633,325
INTEREST RECEIVABLE 645,078
OTHER RECEIVABLES 12,159
TOTAL ASSETS 2,056,661,223
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 27,763,648
PAYABLE FOR FUND SHARES REDEEMED 5,026,815
ACCRUED MANAGEMENT FEE 1,355,285
OTHER PAYABLES AND 679,317
ACCRUED EXPENSES
TOTAL LIABILITIES 34,825,065
NET ASSETS $ 2,021,836,158
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 1,588,517,138
UNDISTRIBUTED NET INVESTMENT INCOME 6,185,124
ACCUMULATED UNDISTRIBUTED 47,045,282
NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 380,088,614
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 107,431,105 SHARES OUTSTANDING $ 2,021,836,158
NET ASSET VALUE, OFFERING PRICE $18.82
AND REDEMPTION PRICE PER
SHARE ($2,021,836,158 (DIVIDED BY) 107,431,105 SHARES)
</TABLE>
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STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 21,490,229
DIVIDENDS
INTEREST 3,425,494
24,915,723
LESS FOREIGN TAXES WITHHELD (2,195,610)
TOTAL INCOME 22,720,113
EXPENSES
MANAGEMENT FEE $ 6,242,905
BASIC FEE
PERFORMANCE ADJUSTMENT 747,495
TRANSFER AGENT FEES 2,302,687
ACCOUNTING FEES AND EXPENSES 396,116
NON-INTERESTED TRUSTEES' COMPENSATION 2,282
CUSTODIAN FEES AND EXPENSES 339,047
REGISTRATION FEES 53,353
AUDIT 25,733
LEGAL 4,377
REPORTS TO SHAREHOLDERS 89,910
MISCELLANEOUS 11,766
TOTAL EXPENSES BEFORE REDUCTIONS 10,215,671
EXPENSE REDUCTIONS (176,119) 10,039,552
NET INVESTMENT INCOME 12,680,561
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (INCLUDING 50,356,326
REALIZED LOSS OF $157,742
ON SALES OF INVESTMENTS IN
AFFILIATED ISSUERS)
FOREIGN CURRENCY TRANSACTIONS (677,259) 49,679,067
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 224,995,199
ASSETS AND LIABILITIES IN (68,048) 224,927,151
FOREIGN CURRENCIES
NET GAIN (LOSS) 274,606,218
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 287,286,779
OTHER INFORMATION $ 129,059
EXPENSE REDUCTIONS
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 2,054
TRANSFER AGENT CREDITS 45,006
$ 176,119
</TABLE>
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STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
OPERATIONS $ 12,680,561 $ 16,482,301
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 49,679,067 60,480,200
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 224,927,151 84,862,601
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 287,286,779 161,825,102
DISTRIBUTIONS TO SHAREHOLDERS (17,340,492) (7,278,518)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (37,418,193) (17,468,122)
TOTAL DISTRIBUTIONS (54,758,685) (24,746,640)
SHARE TRANSACTIONS 874,527,539 1,829,687,888
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 53,306,996 24,250,333
COST OF SHARES REDEEMED (652,853,537) (1,142,181,507)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 274,980,998 711,756,714
TOTAL INCREASE (DECREASE) IN NET ASSETS 507,509,092 848,835,176
NET ASSETS
BEGINNING OF PERIOD 1,514,327,066 665,491,890
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $6,185,124 AND $14,787,511, RESPECTIVELY) $ 2,021,836,158 $ 1,514,327,066
OTHER INFORMATION
SHARES
SOLD 51,064,416 113,844,123
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 3,298,675 1,681,716
REDEEMED (38,295,342) (70,452,524)
NET INCREASE (DECREASE) 16,067,749 45,073,315
</TABLE>
FINANCIAL HIGHLIGHTS
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SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996 1995 1994 1993
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.57 $ 14.38 $ 12.73 $ 12.46 $ 11.32 $ 8.46
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .13 D .24 D, G .15 .22 .05 .07
NET REALIZED AND UNREALIZED
GAIN (LOSS) 2.72 2.46 2.13 .47 1.20 2.89
TOTAL FROM INVESTMENT OPERATIONS 2.85 2.70 2.28 .69 1.25 2.96
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.19) (.15) (.22) (.03) (.01) (.10)
FROM NET REALIZED GAIN (.41) (.36) (.41) (.39) (.10) -
TOTAL DISTRIBUTIONS (.60) (.51) (.63) (.42) (.11) (.10)
NET ASSET VALUE, END OF PERIOD $ 18.82 $ 16.57 $ 14.38 $ 12.73 $ 12.46 $ 11.32
TOTAL RETURN B, C 17.80% 19.30% 18.66% 6.02% 11.14% 35.38%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,021,836 $ 1,514,327 $ 665,492 $ 295,017 $ 351,152 $ 255,029
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.24% A 1.25% 1.29% 1.13% 1.25% 1.47%
RATIO OF EXPENSES TO AVERAGE NET
ASSETS AFTER 1.21% A, E 1.23% E 1.27% E 1.12% E 1.25% 1.47%
EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS 1.53% A 1.49% 1.53% 1.55% .96% .84%
PORTFOLIO TURNOVER RATE 71% A 81% 94% 101% 89% 56%
AVERAGE COMMISSION RATE F $ .0168 $ .0153 $ .0121
</TABLE>
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A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION
OF THE FUND'S EXPENSES (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
F FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995,
A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE
PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED.
THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS
WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
G INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND 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 6 PAST 1 LIFE OF
APRIL 30, 1998 MONTHS YEAR FUND
FIDELITY INTL VALUE 17.13% 22.95% 54.53%
MSCI EAFE 15.56% 19.17% 33.51%
INTERNATIONAL FUNDS AVERAGE 16.25% 20.89% N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year or since
the fund started on November 1, 1994. For example, if you 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 six months average represents a peer group of
503 mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
APRIL 30, 1998 YEAR FUND
FIDELITY INTL VALUE 22.95% 13.26%
MSCI EAFE 19.17% 8.62%
INTERNATIONAL FUNDS AVERAGE 20.89% 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
IMATRL PRASUN SHR__CHT 19980430 19980506 114255 R00000000000045
$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 April 30, 1998, the
value of the investment would have grown to $15,453 - a 54.53%
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 $13,351 - a 33.51% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating value
of its currency create these risks. For these
reasons an international fund's performance
may be more volatile than a fund that invests
exclusively in the United States. Past
performance is no guarantee of future results
and you may have a gain or loss when you sell
your shares.
(checkmark)
INTERNATIONAL VALUE
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Richard Mace, Portfolio Manager of
Fidelity International Value Fund
Q. RICK, HOW DID THE FUND PERFORM?
A. It did well. For the six months that ended April 30, 1998, the fund
had a total return of 17.13%. That beat the 16.25% six-month return of
the international funds average tracked by Lipper Analytical Services,
and the 15.56% return of the Morgan Stanley Capital International
Europe, Australasia and Far East (EAFE) Index. For the 12 months that
ended April 30, 1998, the fund returned 22.95%, while the Lipper
average and EAFE index returned 20.89% and 19.17%, respectively.
Q. WHAT HELPED THE FUND BEAT THE LIPPER AVERAGE AND THE INDEX?
A. Almost all of the fund's outperformance in the period was due to
stock selection. European financial positions made particularly strong
contributions to performance as low interest rates, benign inflation,
improving economies and surging securities markets provided a
favorable environment for banks and insurers. In addition, merger and
acquisition activity within these sectors continued to boost
valuations. Particular standouts included companies that were among
the fund's 25 largest holdings, such as Lloyds TSB Group in the United
Kingdom and Swiss banking companies Credit Suisse and Julius Baer, as
well as French bank Societe Generale. Insurers also aided performance
and included French companies Axa and Union Assurances Federales and
Germany's Allianz, as well as Royal & Sun Alliance Insurance Group in
the U.K. Telecommunications stocks also were among the fund's most
stellar performers. In addition to the recent merger and consolidation
activity, the cellular market in both the U.K. and Italy was
particularly strong and fund holdings of Britain's Vodafone Group and
Telecom Italia Mobile were among the fund's best performers.
Q. LET'S TAKE A CLOSER LOOK AT SOME OF THE NEW MEMBERS OF THE TOP 10 .
. .
A. I continued to increase the fund's position in Brazilian telephone
company Telebras because it appeared to be among the best values in
the telecom sector. Specifically, it appeared to be a very cheap stock
with excellent growth prospects. BHF is a German bank with an
excellent management team that was restructuring and improving the
operations of the company. Sankyo Pharmaceutical is a Japanese company
that I felt had very bright prospects. The company's share price has
declined sharply in the last six months and, as a result, I
substantially increased the fund's position there. Philips is a Dutch
electronics company that was divesting its non-core assets and
improving its return on capital employed by investing in the higher
margin, higher return-on-capital businesses. I believed that it was
another case of a company with good growth prospects that was cheaply
valued.
Q. CITE, IF YOU WILL, THE STOCKS THAT HAD THE MOST PROFOUND POSITIVE
EFFECTS ON THE FUND'S PERFORMANCE.
A. Certainly. I would point to Alcatel Alsthom as a major contributor
to performance. This French electronics equipment company has an
exceptionally fine management team that was divesting peripheral
businesses and non-core assets and focusing on its core, high-return
businesses. The company's success in this endeavor has resulted in an
enormous increase in free cash flow, enabling it to improve its
balance sheet by reducing debt. Also among the fund's top performers
for the period was the British-based business services company
Rentokil, which provides a wide range of services to businesses
worldwide, such as cleaning, maintenance and landscaping. I bought it
because it was cheap and its businesses were growing at a very rapid
rate.
Q. WHAT WERE SOME OF THE PERIOD'S DISAPPOINTMENTS?
A. Japanese financial holdings were the biggest detractors from
performance. Banks were particularly hard hit as a result of a lack of
improvement in the economy and continued concerns about the quality of
the banks' assets. Securities brokers were hurt by the equity market's
poor performance because their fortunes are highly correlated with the
level of market activity. Similarly, real estate company holdings also
suffered from the general decline in the domestic economy, despite
some signs that real estate prices might be bottoming. Among the
fund's financial holdings most hurt by these events were Long-Term
Credit Bank, Daiwa Securities and Sumitomo Realty & Development
Company.
Q. WHICH INDUSTRY SECTORS DID YOU FOCUS ON?
A. I generally favored the telecommunications sector. Companies in
this industry have been aggressively improving their returns on
capital and positioning themselves to better compete at home and
abroad through mergers and alliances with others in the field. I also
continued to favor European financials, in part because of the
on-going restructuring initiatives and improving asset quality of the
region's bank and insurance companies. The sector has also been
benefiting from improving economies and the low interest-rate
environment throughout the region.
Q. WHICH SECTORS DID YOU AVOID?
A. With the exception of Latin America and South Africa, I have
generally avoided the emerging markets, because I could find few
situations where the returns seemed to justify the economic, political
and currency risks that plagued some of these markets. However,
significant additions were made to holdings of Brazilian telephone
company Telebras because it appeared to be cheaply priced. This
company was the fund's fourth largest position at the end of April.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD, RICK?
A. I am looking for a continuing improvement in the European
economies. However, stock selection will be especially critical.
Company earnings must come through as expected in order to justify the
lofty stock valuations that the markets have placed on them. If
earnings disappoint, we run the risk of a stock correction. In Japan,
I am continuing to look for signs of an improvement in the economy and
have pinpointed a number of companies that could be early
beneficiaries of a turnaround as candidates for purchase. I will also
be keeping close watch on the emerging markets where we are beginning
to see some significant improvement in valuations. However, unlike our
approach to investing in the developed markets, country and regional
factors play as much of a role in our decision making as stock
selection. In general, emerging markets are more volatile than
developed markets. Accordingly, when I make an investment in a stock
in an emerging market I expect a higher level of return to compensate
shareholders for the higher level of risk there. Up to this point, I
have not found many stocks outside of Latin America and South Africa
that meet our requirements.
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 DEFINES HIS VALUE APPROACH TO INVESTING:
"When you refer to the fund's prospectus, it says that the fund
`focuses on securities of companies that it believes are
undervalued in the marketplace or possess valuable assets.'
Most people think of a value stock as one that has a low
price-to-earnings ratio (P/E). However, a low P/E isn't a
measure of value. It is a measure of what the market is
ascribing to a company's earnings, and it might suggest that
the company has no growth prospects. A low P/E with no
growth doesn't necessarily represent value, so a stock with
a P/E of 10 and poor growth prospects probably offers less
value than a stock with a P/E of 15 but where earnings are
growing at 15% a year. So, one must consider when looking
at value that it is not just one dimension, it's not just
price-to-earnings or just price-to-book value. That is only
one piece of the equation.
"Clearly, one pays more for a company that has a better
business, or a higher level of operating margins and, certainly,
one would generally pay more for a company with a higher
return on capital employed if it has brighter growth prospects
into the future and if it has a superior management team. All
of these functions go into considering what is the real value of
a company. So, as one considers the fund and sees that the P/E
of the fund is at a certain level, that is just a snap shot of some
old historic data. I would like to see investors consider value in
the somewhat broader context that I've described."
(solid bullet) Four of the fund's top 10 holdings remain from six
months
ago: Alcatel Alsthom, Novartis, SmithKline Beecham and
Total. Three of the companies that fell from this group are
still relatively large positions. This relative stability speaks
to the fund manager's strategy of making investments
without a specific time horizon. Rick Mace aims to purchase
undervalued equities with bright business prospects. If those
prospects develop as hoped and the valuations remain
reasonable, the fund could own the stocks for years.
FUND FACTS
GOAL: growth of capital by investing mainly in
the stocks of foreign companies that own valuable
assets or are undervalued in the marketplace
FUND NUMBER: 335
TRADING SYMBOL: FIVFX
START DATE: November 1, 1994
SIZE: as of April 30, 1998, more than
$530 million
MANAGER: Richard Mace, since 1994; manager,
Fidelity Overseas Fund, since 1996; co-manager,
Fidelity Global Balanced Fund, February 1993-
December 1993 and 1995-1996; manager,
Fidelity Global Balanced Fund, since 1996;
Fidelity International Growth & Income Fund,
1994-1996; joined Fidelity in 1987
(checkmark)
INTERNATIONAL VALUE
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1998
AUSTRALIA 3.0%
UNITED STATES 7.6%
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%
NETHERLANDS 7.0%
OTHER 20.7%
AS OF OCTOBER 31, 1997
CANADA 3.2%
UNITED STATES 15.1%
ROW: 1, COL: 1, VALUE: 3.2
ROW: 1, COL: 2, VALUE: 12.5
ROW: 1, COL: 3, VALUE: 5.0
ROW: 1, COL: 4, VALUE: 16.8
ROW: 1, COL: 5, VALUE: 6.6
ROW: 1, COL: 6, VALUE: 18.2
ROW: 1, COL: 7, VALUE: 7.6
ROW: 1, COL: 8, VALUE: 15.0
ROW: 1, COL: 9, VALUE: 15.1
FRANCE 12.5%
UNITED
KINGDOM 15.0%
GERMANY 5.0%
JAPAN 16.8%
SWEDEN 7.6%
NETHERLANDS 6.6%
OTHER 18.2%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
STOCKS, CLOSED-END INVESTMENT 93.0 86.3
COMPANIES AND EQUITY FUTURES
BONDS 0.3 0.4
SHORT-TERM INVESTMENTS 6.7 13.3
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
ALCATEL ALSTHOM COMPAGNIE GENERALE 2.0 1.9
D'ELECTRICITE SA
(FRANCE, ELECTRICAL EQUIPMENT)
PHILIPS ELECTRONICS NV (BEARER) 1.8 0.7
(NETHERLANDS, ELECTRICAL EQUIPMENT)
NOVARTIS AG (REG.) 1.8 1.5
(SWITZERLAND, DRUGS & PHARMACEUTICALS)
TELEBRAS SPONSORED ADR 1.6 0.3
(BRAZIL, TELEPHONE SERVICES)
SANKYO CO. LTD. 1.6 0.6
(JAPAN, DRUGS & PHARMACEUTICALS)
UNILEVER PLC ORD. 1.5 0.3
(UNITED KINGDOM, HOUSEHOLD PRODUCTS)
SMITHKLINE BEECHAM PLC ORD. 1.5 1.4
(UNITED KINGDOM, DRUGS &
PHARMACEUTICALS)
BHF BANK AG 1.3 0.7
(GERMANY, BANKS)
TOTAL SA CLASS B 1.2 1.4
(FRANCE, OIL & GAS)
SHELL TRANSPORT & TRADING CO. 1.1 0.8
PLC (REG.)
(UNITED KINGDOM, OIL & GAS)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 21.2 15.3
BASIC INDUSTRIES 8.4 9.5
INDUSTRIAL MACHINERY & EQUIPMENT 8.0 5.0
UTILITIES 7.1 5.4
TECHNOLOGY 7.0 5.7
HEALTH 7.0 8.4
DURABLES 6.4 9.2
ENERGY 6.4 8.1
NONDURABLES 5.8 4.5
CONSTRUCTION & REAL ESTATE 4.1 4.0
INTERNATIONAL VALUE
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 88.4%
SHARES VALUE (NOTE1)
ARGENTINA - 0.7%
Bansud SA Class B (a) 173,700 $ 1,632,984
Disco SA sponsored ADR (a) 9,400 373,650
Telecom Argentina Class B
sponsored ADR 18,400 662,400
YPF Sociedad Anonima sponsored ADR
representing Class D shares 28,600 997,425
3,666,459
AUSTRALIA - 2.8%
Australia & New Zealand Banking
Group Ltd. 311,900 2,169,706
Broken Hill Proprietary Co. Ltd. (The) 97,400 949,577
CSR Ltd. 92,100 293,316
Colonial Ltd. 118,690 416,570
Commonwealth Bank of Australia (c) 37,700 451,102
David Jones Ltd. 884,900 1,006,496
Leighton Holdings Ltd. 257,400 978,688
National Australia Bank Ltd. (a) 52,800 748,118
National Mutual Holdings Ltd. 222,000 523,769
News Corp. Ltd. 87,642 585,579
QNI Ltd. 4,108,500 2,403,288
Rio Tinto Ltd. 34,300 474,000
Tabcorp Holdings Ltd. 30,300 164,441
Western Mining Holdings Ltd. 427,074 1,515,569
Westpac Banking Corp. 24,100 161,337
Woodside Petroleum Ltd. 276,000 1,799,244
14,640,800
AUSTRIA - 0.2%
OMV AG 7,900 1,171,667
BRAZIL - 2.0%
Compania Energertica Minas Gerais 15,138,000 734,694
Petrobras PN (Pfd. Reg.) 5,463,000 1,385,397
Telebras sponsored ADR 70,500 8,587,781
10,707,872
CANADA - 2.2%
Abitibi-Consolidated, Inc. 14,500 215,329
Alcan Aluminium Ltd. 51,400 1,666,697
Alliance Forest Products, Inc. (a) 13,800 290,765
Alliance Forest Products, Inc. (a)(c) 15,000 316,049
BCE, Inc. 18,000 766,065
Canadian Natural Resources Ltd. (a) 37,500 805,846
Cominco Ltd. 52,800 865,271
CGI Group, Inc. Class A (sub. vtg.) (a) 68,900 1,897,103
Domtar, Inc. 90,700 760,614
Inco Ltd. 19,200 336,112
National Bank of Canada 69,000 1,422,482
Noranda, Inc. 63,500 1,309,095
Renaissance Energy Ltd. (a) 8,900 171,351
Rio Alto Exploration Ltd. (a) 56,200 648,031
St. Laurent Paperboard, Inc. (a)(c) 24,000 326,217
TVI Pacific, Inc. (a) 245,000 13,697
11,810,724
CHILE - 0.1%
Santa Isabel SA sponsored ADR 21,800 359,700
DENMARK - 0.7%
Den Danske Bank Group AS 8,200 993,693
International Service Systems AS, Series B 24,000 1,296,502
Jyske Bank AS (Reg.) 1,500 174,108
Unidanmark AS Class A 11,800 990,627
3,454,930
SHARES VALUE (NOTE1)
FINLAND - 2.4%
Cultor OY Ord., Series 2 26,000 $ 1,540,352
Enso OY Class R 295,900 3,147,872
Huhtamaki Ord. 9,000 519,993
Metsa-Serla Ltd. Class B 230,800 2,391,820
Nokia Corp. AB, Series A 34,000 2,282,465
UPM-Kymmene Corp. 73,100 2,192,196
Valmet OY 30,000 495,781
12,570,479
FRANCE - 12.2%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 58,700 10,640,593
Accor SA 14,100 3,839,173
Axa SA 17,100 2,005,582
Altos SA (a) 4,400 734,613
Cap Gemini Sogeti SA 19,400 2,517,053
Carbonne-Lorraine 2,600 1,064,706
Coflexip sponsored ADR 14,500 1,033,125
Compagnie de Saint Gobain 4,400 732,420
Credit Commercial de France Ord. 16,000 1,275,853
Eramet SA 14,700 737,503
Elf Sanofi SA 9,900 1,198,953
GAN (Groupe des Assurances
Nationales) (a) 59,500 1,693,222
Generale des Eaux, Cie 1,000 185,730
Groupe Danone 12,900 3,043,110
LVMH (Moet-Hennessy Louis Vuitton)
sponsored ADR 5,600 1,151,724
Lafarge SA (RFD) 375 34,388
Lagardere S.C.A. (Reg.) 25,000 955,229
Michelin SA (Compagnie Generale
des Etablissements) Class B 20,456 1,287,612
Nationale Elf Aquitaine 46,300 6,068,727
Pechiney SA Class A 43,092 1,925,699
Peugeot SA Ord. 2,700 468,278
Renault SA Ord. (a) 17,100 792,574
Rhone Poulenc SA Class A 47,484 2,319,968
Royal Canin SA (c) 8,000 482,166
Scor SA 13,500 831,597
Societe Generale Class A 23,800 4,950,179
Total SA Class B 55,582 6,602,065
Unibail (a) 3,200 457,181
Usinor Sacilor 125,700 1,879,392
Union Assurances Federale SA 17,100 2,673,162
Valeo SA 11,000 1,092,782
64,674,359
GERMANY - 4.8%
Allianz AG 9,400 3,043,132
BHF Bank AG 167,500 6,948,466
BASF AG 49,100 2,225,480
Bayer AG 29,100 1,298,068
Continental Gummi-Werke AG 14,800 422,351
Daimler-Benz AG Ord. 16,000 1,584,498
Deutsche Bank AG 7,300 578,830
Deutsche Lufthansa AG 50,000 1,183,251
Hoechst AG Ord. 31,400 1,269,008
Mannesmann AG Ord. 5,519 4,566,643
Philipp Holzmann AG (a) 3,100 928,671
Veba AG Ord. 19,000 1,264,269
25,312,667
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE1)
HONG KONG - 1.6%
Cheung Kong Holdings Ltd. 36,000 $ 239,272
China Telecom (Hong Kong) Ltd. 398,000 768,637
CLP Holdings Ltd. 70,000 336,065
Dairy Farm International Holdings Ltd. 390,000 499,200
Hutchison Whampoa Ltd. Ord. 46,000 284,365
JCG Holdings Ltd. 994,000 455,404
Johnson Electric Holdings Ltd. 264,000 894,367
Li & Fung Ltd. 618,000 1,036,846
New World Development Co. Ltd. 22,000 62,606
Peregrine Investments Holdings Ltd. 400,000 1
Sun Hung Kai Properties Ltd. 20,000 118,733
Vtech Holdings Ltd. 1,094,000 3,840,330
8,535,826
INDONESIA - 0.3%
Asia Pulp & Paper Co. Ltd.
sponsored ADR 125,000 1,820,313
IRELAND - 1.0%
Bank of Ireland, Inc. 94,485 1,927,538
CRH PLC 16,075 227,788
Elan Corp. PLC ADR (a) 9,000 559,125
Smurfit (Jefferson) Group PL
(U.K. Exchange) 280,000 1,038,569
Smurfit (Jefferson) Group PLC 439,100 1,601,749
5,354,769
ITALY - 1.0%
Assicurazioni Generali Spa 93,500 2,798,618
Credito Italiano Ord. 180,000 941,586
Telecom Italia Spa 221,665 1,668,897
5,409,101
JAPAN - 16.8%
Acom Co. Ltd. 45,800 2,410,254
Aiful Corp. (c) 12,000 791,417
Aiwa Co. Ltd. 7,800 231,959
Asahi Breweries Ltd. 69,000 900,260
Banyu Pharmaceutical Co. Ltd. 45,000 579,334
Bridgestone Corp. 39,000 886,731
Canon, Inc. 72,000 1,696,669
Circle K Japan Co. Ltd. 5,500 225,673
Citizen Watch Co. Ltd. Ord. 108,000 723,659
Daiwa House Industry Co. Ltd. 25,000 201,393
Daiwa Securities Co. Ltd. 105,000 395,257
Dainippon Ink & Chemicals, Inc. 72,000 230,378
Fuji Bank Ltd. 120,000 673,066
Fuji International Trust unit
sponsored ADR (c) 9 106,841
Fuji Photo Film Co. Ltd. 69,000 2,446,753
Fujitsu Ltd. 53,000 616,488
Fujitec Co. Ltd. 131,000 808,733
Hitachi Ltd. 273,000 1,950,514
Hitachi Maxell Ltd. 94,000 1,783,399
Honda Motor Co. Ltd. 151,000 5,456,804
Ito En Ltd. 36,000 1,048,899
Ito-Yokado Co. Ltd. 37,000 1,908,150
Jafco Co. Ltd. 18,000 597,628
Kao Corp. 67,000 981,103
Long Term Credit Bank of Japan Ltd. (The) 562,000 918,155
Mabuchi Motor Co. 30,500 1,758,931
Matsushita Electric Industrial Co. Ltd. 212,000 3,383,700
SHARES VALUE (NOTE1)
Matsushita Communication Industrial
Co. Ltd. 49,000 $ 1,442,424
Matsushita Electric Works Co. Ltd. 272,000 2,436,891
Meitec Corp. 81,300 2,662,563
Minebea Co. Ltd. 302,000 3,365,029
Minolta Camera Co. Ltd. 276,000 1,787,013
Mitsubishi Electric Co. Ord. 970,000 2,482,966
Mitsubishi Estate Co. Ltd. 134,000 1,291,323
Mitsubishi Trust & Banking Corp. 158,000 1,498,814
Mitsui Fudosan Co. Ltd. 68,000 618,438
Nintendo Co. Ltd. Ord. 12,500 1,142,481
Nomura Securities Co. Ltd. 105,000 1,276,680
Nichicon Corp. 40,000 433,653
Nichiei Co. Ltd. 12,100 938,302
Omron Corp. 110,000 1,718,426
Orix Corp. 16,000 1,102,202
Rohm Co. Ltd. 17,000 1,912,140
Sakura Bank Ltd. 388,000 1,329,117
Sankyo Co. Ltd. 346,000 8,544,174
Sekisui House Ltd. 93,000 723,975
Sharp Corp. 132,000 1,033,540
Shin-Etsu Chemical Co. Ltd. 40,000 776,962
Sony Corp. 19,000 1,614,116
Shohkoh Fund & Co. Ltd. 1,300 412,046
Sony Music Entertainment Japan, Inc. 46,600 1,817,339
Sumitomo Realty & Development Co. Ltd. 120,000 573,687
Sumitomo Special Metals Co. 9,000 201,242
TDK Corp. 20,000 1,575,005
Takeda Chemical Industries Ltd. 80,000 2,276,680
Takefuji Corp. 26,000 1,360,437
Takefuji Corp. (c) 10,000 523,245
Terumo Corp. 20,000 291,813
THK Co. Ltd. 172,600 1,650,307
Tokio Marine & Fire Insurance
Co. Ltd. (The) 59,000 639,639
Tokyo Electron Ltd. 16,000 626,388
Tokyo Seimitsu Co. Ltd. 46,000 1,347,186
Uni Charm Corp. Ord. 31,000 1,166,949
Yamanouchi Pharmaceutical Co. Ltd. 36,000 848,334
89,153,674
LUXEMBOURG - 0.7%
Stolt Comex Seaway SA (a) 120,000 3,900,000
MALAYSIA - 0.1%
Malayan Banking BHD 5,000 14,735
Oriental Holdings BHD 184,000 384,514
399,249
MEXICO - 0.9%
Grupo Elektra SA 258,400 368,795
Grupo Financiero Banamex-Accival
Class B (a) 196,000 611,634
Grupo Financiero Bancomer Class B 3,315,000 2,287,553
Grupo Financiero Inbursa SA Class B 91,000 277,544
Telefonos de Mexico SA sponsored ADR
representing Ord. Class L shares 24,500 1,387,313
4,932,839
NETHERLANDS - 7.0%
Ahold NV 66,043 2,057,821
AKZO Nobel NV 24,400 4,959,889
Beter Bed Holding NV 36,400 1,220,594
Benckiser NV Class B 17,000 991,295
Hagemeyer NV 25,000 1,193,185
ING Groep NV 57,618 3,724,552
Koninklijke Hoogovens NV 33,400 1,503,240
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE1)
NETHERLANDS - CONTINUED
Nutreco Holding NV 37,700 $ 1,344,364
Philips Electronics NV 33,500 3,015,000
Philips Electronics NV (Bearer) 103,800 9,342,000
Royal Ptt Nederland NV 14,000 722,884
Samas-Groep NV 25,000 1,549,285
Vendex International NV 38,406 2,461,753
VNU Ord. 47,400 1,533,192
Vedior NV 50,000 1,518,374
37,137,428
NEW ZEALAND - 0.1%
Air New Zealand Ltd. Class B 102,800 145,160
Sky Network Television Ltd. (a) 77,900 116,470
Telecom Corp. of New Zealand (e) 101,400 271,206
532,836
NORWAY - 0.7%
Den Norske Bank AS Class A Free shares 26,300 138,078
NCL Holdings AS (a) 638,111 3,068,129
Schibsted AS, Series B 17,100 325,213
3,531,420
PORTUGAL - 0.9%
BPI-SGPS SA (Reg.) 49,400 2,294,367
Banco Pinto & Sotto Mayor SA (Reg.) 45,000 1,131,783
Electricidade de Portugal SA 19,200 500,625
Portugal Telecom SA sponsored ADR 5,000 268,750
Portugal Telecom SA 3,000 161,090
Telecel Comunicacoes Pessoais SA (a) 1,300 233,038
4,589,653
RUSSIA - 0.3%
Vimpel Communications
sponsored ADR (a) 31,000 1,674,000
SINGAPORE - 0.0%
Singapore International Airlines Ltd. 18,000 117,082
SOUTH AFRICA - 0.3%
Sasol, Ltd. 173,100 1,746,928
SPAIN - 2.1%
Banco Bilbao Vizcaya SA Ord. (Reg.) 40,900 2,102,593
Corporacion Mapfre Compania
Internacional de Reaseguros SA (Reg.) 8,400 329,379
Iberdrola SA 29,300 470,706
Mapfre Vida SA 7,400 368,775
Repsol SA Ord. 31,100 1,702,797
Telefonica de Espana SA:
Ord. 97,800 4,078,607
sponsored ADR 16,000 1,999,000
11,051,857
SWEDEN - 4.6%
ABB AB, Series A 75,000 1,213,639
Astra AB Class A Free shares 163,233 3,346,491
Electrolux AB 15,600 1,448,244
ForeningsSparbanken AB, Series A 33,200 1,035,948
Hemkopskedjan AB, Series B 52,430 713,209
IBS (International Business Systems) AB
Class B Free shares (a) 178,800 2,754,990
Mandamus AB rights 6/15/98 (a) 33,200 51,797
Nordbanken Holding AB 147,400 1,083,320
SHARES VALUE (NOTE1)
SKF AB Ord. 21,500 $ 432,462
Skandia Foersaekrings AB 16,200 1,125,870
Svenska Handelsbanken 41,400 1,873,665
Swedish Match Co. 957,800 3,309,743
Volvo AB Class B 197,000 5,860,069
24,249,447
SWITZERLAND - 6.1%
Adecco SA (Bearer) 1,800 785,319
Credit Suisse Group (Reg.) 26,100 5,737,028
Compagnie Financiere Richemont AG
Class A Unit (Bearer) 697 998,168
Holderbank Financiere Glarus
AG (Bearer) 100 104,576
Julius Baer Holding AG 2,129 5,870,952
Nestle SA (Reg.) 2,057 3,987,124
Novartis AG (Reg.) 5,637 9,311,770
Swiss Bank Corp. (Reg.) 11,800 4,094,984
Union Bank of Switzeland Ord. (Bearer) 900 1,448,345
32,338,266
UNITED KINGDOM - 15.1%
BAT Industries PLC Ord. 149,900 1,412,554
BBA Group PLC 42,134 346,004
Bank of Scotland 163,000 2,001,702
Barclays PLC Ord. 78,000 2,248,061
British Aerospace PLC 111,562 3,724,228
British Petroleum PLC Ord. 292,835 4,621,143
Caradon PLC 696,060 2,250,361
Commercial Union PLC 56,000 1,046,990
Cookson Group PLC 368,800 1,654,473
Courtaulds Textiles PLC 249,600 1,338,672
Devro PLC 85,000 771,158
Dorling Kindersley Holdings
PLC, Class L 376,500 1,616,674
Dr Solomons Group PLC
sponsored ADR (a) 32,200 957,950
Gallaher Group PLC 188,800 984,195
HSBC Holdings PLC Ord. 121,917 3,843,799
Hazlewood Foods PLC Ord. 200,000 634,904
House of Fraser PLC Class L 273,700 727,104
Inchcape PLC Ord. 159,400 595,903
Johnson Matthey PLC 30,000 303,751
Ladbroke Group PLC Ord. 157,100 862,912
Lloyds TSB Group PLC 357,421 5,347,738
Pearson, PLC 70,000 1,095,878
Perpetual PLC 400 26,733
Pilkington PLC Ord. 780,000 1,635,546
Rentokil Initial PLC 416,200 2,678,978
Rio Tinto PLC (Reg.) 90,500 1,298,116
Royal & Sun Alliance Insurance
Group PLC 82,617 922,084
Saatchi & Saatchi PLC 90,000 237,588
Scholl PLC 144,000 902,232
Shell Transport & Trading Co. PLC:
(Reg.) 818,300 6,084,110
ADR 24,100 1,070,944
Siebe, PLC 49,700 1,109,398
SmithKline Beecham PLC Ord. 648,200 7,721,880
Somerfield PLC 556,700 3,146,924
Tarmac PLC 360,000 696,222
Tomkins PLC Ord. 19,100 112,331
Unigate PLC 75,000 909,751
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE1)
UNITED KINGDOM - CONTINUED
Unilever PLC Ord. 727,500 $ 7,742,780
Vodafone Group PLC 440,900 4,825,095
WPP Group PLC (a) 70,500 447,018
Wickes PLC 3,400 19,996
79,973,880
UNITED STATES OF AMERICA - 0.5%
Aluminum Co. of America 10,400 806,000
Brio Technology, Inc. 2,000 54,000
D.R. Horton, Inc. 45,200 836,200
Heller Financial, Inc. Class A 200 2,200
Newmont Mining Corp. 8,000 257,500
Transocean Offshore, Inc. 10,000 558,750
2,514,650
VENEZUELA - 0.2%
Compania Anonima Nacional Telefonos
de Venezuela sponsored ADR 26,800 897,800
TOTAL COMMON STOCKS
(Cost $402,997,578) 468,230,675
CLOSED-END INVESTMENT COMPANIES - 1.3%
EMERGING MARKETS - 0.6%
Asia Tigers Fund, Inc. 120,000 907,500
Scudder New Europe Fund, Inc. 25,000 509,375
Templeton Dragon Fund, Inc. 165,000 1,815,000
3,231,875
GERMANY - 0.2%
Emerging Germany Fund, Inc. 10,700 153,144
New Germany Fund, Inc. (The) 60,300 1,077,863
1,231,007
MULTI-NATIONAL - 0.5%
European Warrant Fund, Inc. 70,600 1,526,725
Morgan Stanley Asia-Pacific
Fund, Inc. 98,000 728,875
2,255,600
PORTUGAL - 0.0%
Portugal Fund, Inc. 7,000 157,063
TOTAL CLOSED-END INVESTMENT COMPANIES
(Cost $6,689,348) 6,875,545
PREFERRED STOCKS - 2.8%
CONVERTIBLE PREFERRED STOCKS - 0.2%
UNITED STATES OF AMERICA - 0.2%
WBK Trust $3.135 STRYPES 31,300 1,068,113
NONCONVERTIBLE PREFERRED STOCKS - 2.6%
AUSTRALIA - 0.2%
Sydney Harbour Casino
Holdings Ltd. (a) 1,530,101 1,083,993
GERMANY - 1.4%
Boss (Hugo) AG 124 227,852
Dyckerhoff AG 6,000 2,064,703
SHARES VALUE (NOTE1)
SAP AG (Systeme Anwendungen Produkte) 5,200 $ 2,663,845
Wella AG 2,810 2,597,361
7,553,761
ITALY - 1.0%
Telecom Italia:
Spa 159,375 839,720
Mobile Spa de Risp 1,150,800 4,142,881
4,982,601
TOTAL NONCONVERTIBLE PREFERRED STOCKS 13,620,355
TOTAL PREFERRED STOCKS
(Cost $11,671,562) 14,688,468
GOVERNMENT OBLIGATIONS - 0.3%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT
ITALY - 0.1%
Italian Republic
5%, 6/28/01 Aa3 $ 360,000 623,700
UNITED STATES OF AMERICA - 0.2%
U.S. Treasury Notes:
9 1/4%, 8/15/98 Aaa 370,000 374,103
8 7/8%, 11/15/98 Aaa 404,000 411,195
U.S. Treasury Bill yield at date
of purchase
4.97%, 7/23/98 (d) Aaa 175,000 173,019
958,317
TOTAL GOVERNMENT OBLIGATIONS
(Cost $1,599,551) 1,582,017
CASH EQUIVALENTS - 7.2%
SHARES
Taxable Central Cash Fund
(Cost $38,472,958) (b) 38,472,958 38,472,958
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $461,430,997) $ 529,849,663
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
36 Nikkei 225 Stock
Index Contracts June 98 $ 2,817,000 $ (243,210)
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 0.5%
SECURITY TYPE ABBREVIATIONS
STRYPES - Structured Yield Product
Exchangeable for Common Stock
CURRENCY ABBREVIATIONS
NZD - New Zealand dollar
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.51%. 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
$2,997,037 or 0.6% 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 $161,500.
(e) Purchased on installment basis. Market value reflects only those
payments made through 3/31/98. The remaining installment aggregating
NZD 420,810 is due on 3/31/99.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $237,261,439 and $179,877,150, respectively, of which
long-term U.S. government and government agency obligations aggregated
$1,217,641 and $1,366,659, respectively (see Note 3 of Notes to
Financial Statements).
The market value of futures contracts opened and closed during the
period amounted to $5,759,064 and $3,893,776, respectively (see Note 2
of Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $14,417 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 0.7%
Basic Industries 8.4
Cash Equivalents 7.2
Construction & Real Estate 4.1
Durables 6.4
Energy 6.4
Finance 21.2
Government Obligations 0.3
Health 7.0
Holding Companies 0.9
Industrial Machinery & Equipment 8.0
Media & Leisure 3.2
Nondurables 5.8
Precious Metals 0.3
Retail & Wholesale 3.0
Services 2.7
Technology 7.0
Transportation 0.3
Utilities 7.1
100.0%
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $461,567,016. Net unrealized appreciation
aggregated $68,282,647, of which $91,044,141 related to appreciated
investment securities and $22,761,494 related to depreciated
investment securities.
INTERNATIONAL VALUE
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 529,849,663
(COST $461,430,997) - SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 16,521,407
RECEIVABLE FOR FUND SHARES SOLD 4,469,163
DIVIDENDS RECEIVABLE 1,947,142
INTEREST RECEIVABLE 257,658
RECEIVABLE FOR DAILY VARIATION ON FUTURES CONTRACTS 31,360
OTHER RECEIVABLES 4,169
TOTAL ASSETS 553,080,562
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 18,960,573
PAYABLE FOR FUND SHARES REDEEMED 2,701,905
ACCRUED MANAGEMENT FEE 352,602
OTHER PAYABLES AND 225,193
ACCRUED EXPENSES
TOTAL LIABILITIES 22,240,273
NET ASSETS $ 530,840,289
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 454,268,527
UNDISTRIBUTED NET INVESTMENT INCOME 628,802
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 8,108,981
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 67,833,979
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS, FOR 37,385,960 $ 530,840,289
SHARES OUTSTANDING
NET ASSET VALUE, OFFERING PRICE $14.20
AND REDEMPTION PRICE PER SHARE ($530,840,289 (DIVIDED BY) 37,385,960 SHARES)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 3,652,102
DIVIDENDS
INTEREST 748,875
4,400,977
LESS FOREIGN TAXES WITHHELD (399,451)
TOTAL INCOME 4,001,526
EXPENSES
MANAGEMENT FEE $ 1,541,325
BASIC FEE
PERFORMANCE ADJUSTMENT 224,767
TRANSFER AGENT FEES 486,978
ACCOUNTING FEES AND EXPENSES 157,707
NON-INTERESTED TRUSTEES' COMPENSATION 710
CUSTODIAN FEES AND EXPENSES 142,896
REGISTRATION FEES 59,490
AUDIT 20,476
LEGAL 1,076
REPORTS TO SHAREHOLDERS 15,001
MISCELLANEOUS 10,106
TOTAL EXPENSES BEFORE REDUCTIONS 2,660,532
EXPENSE REDUCTIONS (32,738) 2,627,794
NET INVESTMENT INCOME 1,373,732
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 8,171,436
FOREIGN CURRENCY TRANSACTIONS 170,514
FUTURES CONTRACTS (107,426) 8,234,524
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 57,342,957
ASSETS AND LIABILITIES IN (350,479)
FOREIGN CURRENCIES
FUTURES CONTRACTS (89,561) 56,902,917
NET GAIN (LOSS) 65,137,441
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 66,511,173
OTHER INFORMATION $ 32,695
EXPENSE REDUCTIONS
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 43
$ 32,738
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
OPERATIONS $ 1,373,732 $ 3,148,502
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 8,234,524 18,866,932
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 56,902,917 10,598,158
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 66,511,173 32,613,592
DISTRIBUTIONS TO SHAREHOLDERS (1,833,828) (2,268,604)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (8,557,828) (4,990,927)
TOTAL DISTRIBUTIONS (10,391,656) (7,259,531)
SHARE TRANSACTIONS 425,199,902 692,644,504
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 9,766,146 7,013,302
COST OF SHARES REDEEMED (362,991,796) (593,130,534)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 71,974,252 106,527,272
TOTAL INCREASE (DECREASE) IN NET ASSETS 128,093,769 131,881,333
NET ASSETS
BEGINNING OF PERIOD 402,746,520 270,865,187
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $628,802 AND $3,062,590, RESPECTIVELY) $ 530,840,289 $ 402,746,520
OTHER INFORMATION
SHARES
SOLD 32,910,235 55,158,934
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 821,375 624,515
REDEEMED (28,637,510) (47,398,321)
NET INCREASE (DECREASE) 5,094,100 8,385,128
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996 1995 H
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.47 $ 11.33 $ 10.63 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .04 D .13 D .16 G .11 D
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.03 1.33 .85 .52
TOTAL FROM INVESTMENT OPERATIONS 2.07 1.46 1.01 .63
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.06) (.10) (.01) -
FROM NET REALIZED GAIN (.28) (.22) (.30) -
TOTAL DISTRIBUTIONS (.34) (.32) (.31) -
NET ASSET VALUE, END OF PERIOD $ 14.20 $ 12.47 $ 11.33 $ 10.63
TOTAL RETURN B, C 17.13% 13.20% 9.64% 6.30%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 530,840 $ 402,747 $ 270,865 $ 56,828
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.30% A 1.30% 1.28% 1.72%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
AFTER EXPENSE REDUCTIONS 1.29% A, E 1.28% E 1.26% E 1.72%
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS .67% A 1.03% 1.74% 1.08%
PORTFOLIO TURNOVER RATE 92% A 86% 71% 109%
AVERAGE COMMISSION RATE F $ .0061 $ .0133 $ .0264
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION
OF THE FUND'S EXPENSES (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
F FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995,
A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE
PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED.
THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS
WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
G INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.04 PER SHARE.
H FOR THE PERIOD NOVEMBER 1, 1994 (COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1995.
</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 6 PAST 1 PAST 5 PAST 10
APRIL 30, 1998 MONTHS YEAR YEARS YEARS
FIDELITY OVERSEAS 17.48% 24.99% 89.56% 139.51%
MSCI EAFE 15.56% 19.17% 62.18% 81.79%
INTERNATIONAL FUNDS AVERAGE 16.25% 20.89% 80.98% 168.95%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the performance
of the Morgan Stanley Capital International (MSCI) Europe,
Australasia, Far East (EAFE) Index - a market capitalization weighted,
unmanaged index of over 1,000 foreign stocks. To measure how the
fund's performance stacked up against its peers, you can compare it to
the international funds average, which reflects the performance of
mutual funds with similar objectives tracked by Lipper Analytical
Services, Inc. The past six months average represents a peer group of
503 mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
APRIL 30, 1998 YEAR YEARS YEARS
FIDELITY OVERSEAS 24.99% 13.64% 9.13%
MSCI EAFE 19.17% 10.15% 6.16%
INTERNATIONAL FUNDS AVERAGE 20.89% 12.41% 10.01%
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
1988/04/30 10000.00 10000.00
1988/05/31 9798.61 9679.44
1988/06/30 9519.75 9424.31
1988/07/31 9395.82 9719.98
1988/08/31 9113.09 9088.00
1988/09/30 9453.91 9485.10
1988/10/31 9798.61 10296.67
1988/11/30 10054.22 10910.00
1988/12/31 10029.07 10970.83
1989/01/31 10151.95 11163.85
1989/02/28 10417.55 11221.24
1989/03/31 10326.37 11001.01
1989/04/30 10548.36 11103.04
1989/05/31 10040.96 10499.00
1989/06/30 9747.62 10322.26
1989/07/31 10714.85 11618.46
1989/08/31 10465.11 11095.93
1989/09/30 11024.05 11601.37
1989/10/31 10425.47 11135.26
1989/11/30 11016.12 11695.02
1989/12/31 11727.34 12126.54
1990/01/31 11461.19 11675.33
1990/02/28 11224.15 10860.45
1990/03/31 11594.26 9729.05
1990/04/30 11565.15 9651.84
1990/05/31 12351.13 10753.13
1990/06/30 12571.54 10658.42
1990/07/31 13191.18 10808.55
1990/08/31 11731.50 9758.95
1990/09/30 10429.85 8398.90
1990/10/31 11423.76 9707.61
1990/11/30 11045.32 9134.97
1990/12/31 10953.05 9282.96
1991/01/31 11196.06 9583.21
1991/02/28 11602.55 10610.52
1991/03/31 11222.57 9973.55
1991/04/30 11381.63 10071.49
1991/05/31 11403.72 10176.58
1991/06/30 10687.95 9428.80
1991/07/31 11271.17 9892.05
1991/08/31 11355.12 9691.16
1991/09/30 11854.39 10237.35
1991/10/31 11894.16 10382.47
1991/11/30 11465.58 9897.77
1991/12/31 11896.48 10408.92
1992/01/31 12033.06 10186.59
1992/02/29 11783.45 9821.99
1992/03/31 11538.55 9173.58
1992/04/30 12240.29 9217.19
1992/05/31 12767.76 9834.14
1992/06/30 12466.35 9367.69
1992/07/31 11675.13 9127.94
1992/08/31 11576.23 9700.45
1992/09/30 11095.85 9508.89
1992/10/31 10342.31 9010.11
1992/11/30 10290.51 9094.90
1992/12/31 10533.65 9141.94
1993/01/31 10840.67 9140.81
1993/02/28 11062.98 9416.93
1993/03/31 11814.63 10237.76
1993/04/30 12635.09 11209.35
1993/05/31 12926.22 11446.09
1993/06/30 12619.21 11267.51
1993/07/31 13196.18 11661.92
1993/08/31 13942.54 12291.47
1993/09/30 13820.79 12014.80
1993/10/31 14376.59 12385.07
1993/11/30 13720.22 11302.48
1993/12/31 14752.82 12118.60
1994/01/31 15801.59 13143.17
1994/02/28 15505.78 13106.77
1994/03/31 15059.38 12542.24
1994/04/30 15564.95 13074.40
1994/05/31 15365.95 12999.34
1994/06/30 15161.57 13183.04
1994/07/31 15586.46 13309.82
1994/08/31 15812.35 13624.94
1994/09/30 15376.70 13195.81
1994/10/31 15688.65 13635.23
1994/11/30 15043.25 12979.92
1994/12/31 14940.30 13061.20
1995/01/31 14300.00 12559.44
1995/02/28 14310.95 12523.40
1995/03/31 14737.81 13304.50
1995/04/30 15159.20 13804.86
1995/05/31 15372.64 13640.30
1995/06/30 15487.56 13401.09
1995/07/31 16182.59 14235.39
1995/08/31 15733.83 13692.36
1995/09/30 15952.74 13959.78
1995/10/31 15635.32 13584.54
1995/11/30 15810.45 13962.51
1995/12/31 16293.18 14525.06
1996/01/31 16601.44 14584.69
1996/02/29 16635.07 14634.00
1996/03/31 16881.68 14944.77
1996/04/30 17341.28 15379.26
1996/05/31 17346.88 15096.25
1996/06/30 17475.79 15181.22
1996/07/31 16988.17 14737.51
1996/08/31 17111.48 14769.80
1996/09/30 17604.70 15162.17
1996/10/31 17419.74 15007.02
1996/11/30 18338.93 15604.12
1996/12/31 18427.30 15403.40
1997/01/31 18439.25 14867.36
1997/02/28 18851.53 15114.15
1997/03/31 19018.84 15171.59
1997/04/30 19162.24 15255.03
1997/05/31 20333.36 16250.73
1997/06/30 21390.96 17149.39
1997/07/31 22102.00 17429.28
1997/08/31 20458.84 16129.93
1997/09/30 21922.75 17035.95
1997/10/31 20387.14 15730.82
1997/11/30 20291.54 15573.51
1997/12/31 20439.54 15712.27
1998/01/31 21092.80 16433.78
1998/02/28 22279.98 17491.29
1998/03/31 23297.56 18033.17
1998/04/30 23950.82 18178.88
IMATRL PRASUN SHR__CHT 19980430 19980506 113858 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Overseas Fund on April 30, 1988. As the chart
shows, by April 30, 1998, the value of the investment would have grown
to $23,951 - a 139.51% 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 $18,179 -
a 81.79% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the
potential for significant growth over time;
however, investing in foreign markets means
assuming greater risks than investing in the
United States. Factors like changes in a
country's financial markets, its local political
and economic climate, and the fluctuating value
of its currency create these risks. For these
reasons an international fund's performance
may be more volatile than a fund that invests
exclusively in the United States. Past
performance is no guarantee of future results
and you may have a gain or loss when you sell
your shares.
(checkmark)
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 performed well. For the six months that ended April 30, 1998,
the fund had a total return of 17.48%, topping the 15.56% return of
the Morgan Stanley Capital International Europe, Australasia and Far
East (EAFE) Index, and the 16.25% return for the international funds
average tracked by Lipper Analytical Services. For the 12 months that
ended April 30, 1998, the fund returned 24.99%, compared to 19.17% and
20.89% for the EAFE index and Lipper peer group, respectively.
Q. WHAT FACTORS HELPED THE FUND BEAT THE INDEX AND THE LIPPER AVERAGE
OVER THE PAST SIX MONTHS?
A. Almost all of the fund's outperformance in the period was due
to stock selection. European financial positions made particularly
strong contributions to performance, as low interest rates, benign
inflation, improving economies and surging securities markets provided
a favorable environment for banks and insurers. In addition, merger
and acquisition activity within this sector continued to boost
valuations. Particular standouts included companies that were among
the fund's 35 largest holdings, including Swiss banking companies
Credit Suisse and Julius Baer, as well as French bank Societe Generale
and Germany's BHF Bank. Insurers also aided performance and included
Dutch company ING Groep and Sweden's Skandia Foersaekrings, as well as
Axa and Union Assurances Federales in France. Telecommunications
stocks also were among the fund's most stellar performers. In addition
to recent merger and consolidation activity, the cellular market in
both the United Kingdom and Italy was particularly strong, and fund
holdings of Britain's Vodafone Group and Italy's Telecom Italia and
Telecom Italia Mobile were among the fund's best performers.
Q. WHICH STOCKS PROVIDED THE BEST PERFORMANCE FOR THE FUND DURING THE
PAST SIX MONTHS?
A. Alcatel Alsthom was one of the top contributors to performance.
This French electronics equipment company has a superb management team
that has been concentrating on the divestiture of peripheral
businesses and non-core assets, instead aiming its focus on its core,
high-return businesses. An enormous increase in free cash flow has
resulted from this program, enabling the company to reduce debt and
thus improve its balance sheet. Also among the fund's top performers
for the period was the British-based business services company
Rentokil, which provides a wide range of services to businesses
worldwide, such as cleaning, maintenance and landscaping. I bought it
because it was cheap and its businesses were growing at a very rapid
rate.
Q. WHICH INVESTMENTS DIDN'T TURN OUT AS WELL AS YOU WOULD HAVE LIKED?
A. Japanese financial holdings hurt performance the most. With the
Japanese economy remaining stagnant and continued concerns about asset
quality, banks were especially hard hit. Securities brokers were hurt
by the equity market's poor performance because their fortunes are
highly correlated with the level of market activity. Similarly, real
estate company holdings also suffered from the general decline in the
domestic economy, despite some signs that real estate prices might be
bottoming. Among the fund's financial holdings most hurt by these
events were Long-Term Credit Bank, Daiwa Securities and Sumitomo
Realty & Development Company.
Q. RICK, LET'S TAKE A LOOK AT THE FUND'S COUNTRY WEIGHTINGS.
A. The fund's country and regional weightings are a result of my
stock-picking process. I don't try to pick markets that I feel will
outperform. Instead, I try to find good companies with good growth
prospects that are selling at reasonable valuations, wherever that
takes us. However, looking more closely at the question, the Japanese
component of the fund continued to decline over the past six months
and at the end of the period remained significantly underweighted in
that market relative to the Japanese component in the EAFE index. The
decline in the Japanese weighting was due mostly to the effect of
changes in the relative valuations elsewhere in the portfolio. Most
European positions experienced strong price appreciation, while
valuations in the Japanese component declined over the period.
Relative to the index, the fund was overweighted in Europe, especially
in France, the Netherlands, Ireland, Sweden, Finland and Norway, while
it was underweighted in the U.K., Germany, Switzerland, Spain and
Italy. Emerging market exposure was modestly increased over the
period, with most of the additions centered in Brazil. The fund
continued to be underweighted in the Southeast Asian markets, which
accounted for much less than 1% of total fund assets.
Q. WHAT INDUSTRY SECTORS DID YOU CONCENTRATE ON AND WHAT OTHERS WERE
AVOIDED?
A. The telecommunications sector was very attractive. Companies in
this industry have been aggressively improving their returns on
capital and positioning themselves to better compete at home and
abroad through mergers and alliances with others in the field.
European financials also continued to be favored in part because of
on-going restructuring initiatives and improving asset quality within
the region's bank and insurance companies. The sector has also been
benefiting from improving economies and the low interest-rate
environment throughout the region. With the exception of Latin America
and South Africa, I have generally avoided the emerging markets as I
could find few situations where the returns seemed to justify the
economic, political and currency risks that plagued some of these
markets. However, significant additions were made to holdings of
Brazilian telephone company Telebras, which appeared to be cheaply
priced. This company was the fund's 11th largest position at the end
of April.
Q. LOOKING OUT OVER THE NEAR FUTURE, WHAT'S YOUR OUTLOOK?
A. I think the European economies will continue to improve. However,
stock selection will be especially critical. Company earnings must
come through as expected in order to justify the lofty stock
valuations that the markets have placed on them. If earnings
disappoint, we run the risk of a stock correction. In Japan, I am
continuing to look for signs of an improvement in the economy and have
pinpointed a number of companies that could be early beneficiaries of
a turnaround as candidates for purchase. I also will be keeping close
watch on the emerging markets, where we are beginning to see some
significant improvement in valuations. However, unlike my approach to
investing in the developed markets, country and regional factors play
as much of a role in my decision making in emerging markets as stock
selection. In general, emerging markets are more volatile than
developed markets. Accordingly, when I make an investment in a stock
in an emerging market, I expect a higher level of return to compensate
shareholders for the higher level of risk there. Up to this point,I
have not found many stocks outside of Latin America and South Africa
that meet these criteria.
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 ON COUNTRY VERSUS INDUSTRY SELECTION
IN THE INVESTMENT PROCESS:
"When discussing the investment performance and portfolio
positioning of one of our diversified international funds,
we often refer to the fund's country and regional weightings
relative to an index or peer group. However, what we think
is becoming increasingly important in the investment process
is the fund's industry weightings. Studies have shown that a
stock's performance is becoming increasingly correlated
with that of its industry and decreasingly correlated with
the performance of its national market. If you look at an
auto stock such as Germany's Daimler-Benz - which may
be merging with the United States' third-largest automaker,
Chrysler - you clearly will see a global enterprise. By the
same token, when you look at Japan's Honda Motor Company,
you see a company that is more tightly correlated with the
world auto market than with the Japanese equity market.
"We believe an industry focus is most important when one
is looking at a fund's positioning and its variances relative
to an index or peer group. We manage our international
funds using a matrix that includes both country and industry
analysis. Fidelity has both country expertise and industry
expertise, but we believe that we add the most value through
stock selection that depends more on industry work.
"As an example, the fund is underweighted in Germany.
This is not indicative of my view of the German market,
but a result of the fact that I have found more attractive
stocks in other markets in Europe, such as the Netherlands.
The economies of the Netherlands and Germany are very
tightly integrated, and, with the European Monetary Union
coming on line, we think that our analytical focus on
industries makes more sense, because the environment is
rapidly changing. I firmly believe that global investors are
moving, although slowly, toward our style of industry analysis
as opposed to country selection."
(solid bullet) Seven of the fund's top 10 holdings were top 10
holdings
six months ago. This stability is typical of the manager's
strategy. He does not have a particular holding period in
mind when choosing investments for the fund. Rather, he
starts by looking for undervalued stocks of companies with
favorable fundamentals. If a company's business prospects
continue as hoped and its stock valuation doesn't rise above
a reasonable range, the manager tends to hold on to it for some
time. This is the kind of careful analytical process Rick Mace
uses when selecting stocks. He'll stay with a stock if he
thinks it's the right stock to own.
FUND FACTS
GOAL: long-term growth of capital by investing
in equity securities outside the United States
FUND NUMBER: 094
TRADING SYMBOL: FOSFX
START DATE: December 4, 1984
SIZE: as of April 30, 1998, more than $4.2 billion
MANAGER: Richard Mace, since 1996; manager,
Fidelity International Value Fund, since 1994;
co-manager, Fidelity Global Balanced Fund,
February 1993-December 1993 and
1995-1996; manager, Fidelity Global Balanced
Fund since 1996; Fidelity International Growth &
Income Fund, 1994-1996; joined Fidelity in 1987
(checkmark)
OVERSEAS
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1998
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
FRANCE 13.8%
UNITED
KINGDOM 15.1%
GERMANY 5.6%
ITALY 3.0%
SWITZERLAND
6.0%
SWEDEN 5.5%
JAPAN 17.3%
OTHER 19.1%
NETHERLANDS 8.9%
AS OF OCTOBER 31, 1997
CANADA 3.7%
UNITED STATES 9.9%
ROW: 1, COL: 1, VALUE: 3.7
ROW: 1, COL: 2, VALUE: 12.1
ROW: 1, COL: 3, VALUE: 4.1
ROW: 1, COL: 4, VALUE: 20.1
ROW: 1, COL: 5, VALUE: 8.5
ROW: 1, COL: 6, VALUE: 15.2
ROW: 1, COL: 7, VALUE: 6.1
ROW: 1, COL: 8, VALUE: 4.9
ROW: 1, COL: 9, VALUE: 15.4
ROW: 1, COL: 10, VALUE: 9.9
FRANCE 12.1%
UNITED
KINGDOM 15.4%
GERMANY 4.1%
SWITZERLAND
4.9%
JAPAN 20.1%
SWEDEN 6.1%
OTHER 15.2%
NETHERLANDS 8.5%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
STOCKS, CLOSED-END INVESTMENT 94.9 91.9
COMPANIES AND EQUITY FUTURES
BONDS 0.2 0.0
SHORT-TERM INVESTMENTS 4.9 8.1
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
ALCATEL ALSTHOM COMPAGNIE GENERALE 2.3 2.1
D'ELECTRICITE SA
(FRANCE, ELECTRICAL EQUIPMENT)
TOTAL SA CLASS B 2.0 2.3
(FRANCE, OIL & GAS)
PHILIPS ELECTRONICS NV (BEARER) 2.0 1.9
(NETHERLANDS, ELECTRICAL EQUIPMENT)
NOVARTIS AG (REG.) 1.9 2.0
(SWITZERLAND, DRUG & PHARMACEUTICALS)
CREDIT SUISSE GROUP (REG.) 1.4 1.3
(SWITZERLAND, BANKS)
SANKYO CO. LTD. 1.4 0.6
(JAPAN, DRUGS & PHARMACEUTICALS)
UNILEVER NV ORD. 1.2 1.0
(NETHERLANDS, HOUSEHOLD PRODUCTS)
AKZO NOBEL NV 1.2 1.4
(NETHERLANDS, CHEMICALS & PLASTICS)
LLOYDS TSB GROUP PLC 1.2 1.2
(UNITED KINGDOM, BANKS)
VOLVO AB CLASS B 1.1 1.6
(SWEDEN, AUTOS, TIRES, & ACCESSORIES)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 21.1 16.4
HEALTH 9.1 9.9
BASIC INDUSTRIES 8.6 9.9
UTILITIES 8.4 7.3
ENERGY 7.5 7.6
INDUSTRIAL MACHINERY & EQUIPMENT 7.1 4.9
DURABLES 6.6 9.9
TECHNOLOGY 6.5 6.5
NONDURABLES 5.7 5.0
CONSTRUCTION & REAL ESTATE 3.3 3.1
OVERSEAS
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 91.4%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.4%
Bansud SA Class B (a) 173,800 $ 1,633,924
Telecom Argentina Class B
sponsored ADR 196,200 7,063,200
YPF Sociedad Anonima sponsored ADR
representing Class D shares 185,700 6,476,288
15,173,412
AUSTRALIA - 2.5%
Australia & New Zealand Banking
Group Ltd. 2,398,800 16,687,048
Brambles Industries Ltd. 362,300 7,443,424
Broken Hill Proprietary Co. Ltd. (The) 776,800 7,573,217
CSR Ltd. 905,117 2,882,576
Coles Myer Ltd. 1,345,400 6,488,365
Colonial Ltd. 1,441,228 5,058,321
Commonwealth Bank of Australia (c) 390,700 4,674,952
Leighton Holdings Ltd. 790,000 3,003,744
National Australia Bank Ltd. (a) 571,100 8,091,865
National Mutual Holdings Ltd. 1,887,784 4,453,884
News Corp. Ltd. 900,465 6,016,444
QNI Ltd. 2,040,800 1,193,776
Rio Tinto Ltd. 249,500 3,447,900
Western Mining Holdings Ltd. 3,949,012 14,013,966
Westpac Banking Corp. 271,200 1,815,544
Woodside Petroleum Ltd. 714,200 4,655,869
Woolworths Ltd. 2,206,600 7,572,469
105,073,364
AUSTRIA - 0.2%
OMV AG 38,300 5,680,361
Voest-Alpine Stahl AG 76,100 3,119,766
8,800,127
BRAZIL - 1.8%
Compania Energertica Minas Gerais 287,818,000 13,968,700
Petrobras PN (Pfd. Reg.) 58,797,000 14,910,702
Telebras sponsored ADR 369,400 44,997,538
73,876,940
CANADA - 3.0%
Abitibi-Consolidated, Inc. 164,600 2,444,355
Alcan Aluminium Ltd. 514,500 16,683,183
Alliance Forest Products, Inc. (a) 153,000 3,223,698
Alliance Forest Products, Inc. (a)(c) 159,000 3,350,117
BCE, Inc. 480,600 20,453,922
Canadian Pacific Ltd. 53,700 1,576,156
Canadian National Railway Co. 29,600 1,924,791
Canadian Natural Resources Ltd. (a) 336,300 7,226,825
Cominco Ltd. 593,700 9,729,386
Domtar, Inc. 1,001,000 8,394,423
Greenstone Resources Ltd. (a) 268,800 1,634,271
Inco Ltd. 295,700 5,176,481
National Bank of Canada 714,800 14,736,084
Noranda, Inc. 712,800 14,694,853
Renaissance Energy Ltd. (a) 49,600 954,946
Rio Alto Exploration Ltd. (a) 641,700 7,399,315
St. Laurent Paperboard, Inc. (a)(c) 295,900 4,021,982
123,624,788
DENMARK - 0.9%
Den Danske Bank Group AS 107,800 13,063,423
International Service Systems AS, Series B 153,700 8,303,013
Jyske Bank AS (Reg.) 13,100 1,520,543
Novo-Nordisk AS Class B 48,100 7,795,217
Unidanmark AS Class A 82,800 6,951,177
37,633,373
SHARES VALUE (NOTE 1)
FINLAND - 2.5%
Cultor OY, Series 1 109,700 $ 6,478,980
Enso OY Class R 1,479,600 15,740,426
Huhtamaki Ord. 152,200 8,793,654
Metsa-Serla Ltd. Class B 2,004,600 20,774,010
Nokia Corp. AB, Series A 203,600 13,667,938
Outokumpu OY Class A 306,100 4,295,057
Pohjola Class B 148,770 8,240,745
UPM-Kymmene Corp. 607,000 18,203,320
Valmet OY 367,200 6,068,364
102,262,494
FRANCE - 13.8%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 527,700 95,643,601
Accor SA 65,932 17,952,080
Axa SA 196,665 23,065,951
Atos SA (a) 44,064 7,356,810
Cap Gemini Sogeti SA 183,300 23,782,258
Coflexip sponsored ADR 149,100 10,623,375
Compagnie de Saint Gobain 29,000 4,827,311
Credit Commercial de France Ord. 174,800 13,938,699
Eramet SA 145,938 7,321,750
Elf Sanofi SA 105,600 12,788,836
GAN (Groupe des Assururances
Nationales) (a) 622,546 17,716,111
Generale des Eaux, Cie 25,900 4,810,400
Groupe Danone 59,500 14,036,050
LVMH (Moet-Hennessy Louis Vuitton)
sponsored ADR 30,000 6,169,948
Lafarge SA 95,100 8,973,636
Lafarge SA (RFD) 7,925 726,738
Lagardere S.C.A. (Reg.) 275,100 10,511,338
Michelin SA (Compagnie Generale
des Etablissements) Class B 271,889 17,114,169
Nationale Elf Aquitaine 287,600 37,696,885
Pechiney SA Class A 476,125 21,277,120
Peugeot SA Ord. 27,700 4,804,186
Renault SA Ord. (a) 170,300 7,893,297
Rhone Poulenc SA Class A 628,925 30,727,941
Royal Canin SA (c) 83,400 5,026,584
Scor SA 137,300 8,457,653
Societe Generale Class A 177,500 36,918,349
Total SA Class B 717,490 85,223,914
Unibail (a) 26,228 3,747,168
Usinor Sacilor 864,000 12,918,017
Union Assurances Federale SA 95,500 14,929,064
Valeo SA 72,200 7,172,622
574,151,861
GERMANY - 4.6%
Allianz AG 82,900 26,837,831
BHF Bank AG 640,200 26,557,659
BASF AG 440,800 19,979,464
Bayer AG 325,700 14,528,552
Continental Gummi-Werke AG 183,500 5,236,581
Daimler-Benz AG Ord. 159,700 15,815,271
Deutsche Bank AG 67,900 5,383,908
Deutsche Lufthansa AG 525,400 12,433,599
Hoechst AG Ord. 355,700 14,375,358
Mannesmann AG Ord. 40,400 33,428,587
Philipp Holzmann AG (a) 12,600 3,774,598
Veba AG Ord. 179,600 11,950,665
190,302,073
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HONG KONG - 0.7%
China Telecom (Hong Kong) Ltd. 4,158,000 $ 8,030,137
CLP Holdings Ltd. 720,000 3,456,669
Dairy Farm International Holdings Ltd. 1,888,000 2,416,640
Hutchison Whampoa Ltd. Ord. 462,000 2,856,011
Johnson Electric Holdings Ltd. 1,353,000 4,583,629
Li & Fung Ltd. 298,000 499,968
National Mutual Asia Ltd. 2,008,000 1,606,711
Peregrine Investments Holdings Ltd. 2,084,000 3
Sun Hung Kai Properties Ltd. 214,000 1,270,439
Vtech Holdings Ltd. 1,072,000 3,763,102
28,483,309
IRELAND - 1.4%
Bank of Ireland, Inc. 1,164,449 23,755,305
CRH PLC 266,246 3,772,786
Elan Corp. PLC ADR (a) 93,900 5,833,538
Independent Newspapers PLC 1,609,950 9,683,656
Smurfit (Jefferson) Group PLC
(U.K. Exchange) 1,465,700 5,436,539
Smurfit (Jefferson) Group PLC 2,966,300 10,820,469
59,302,293
ITALY - 1.4%
Assicurazioni Generali Spa 624,800 18,701,351
Credito Italiano Ord. 2,076,600 10,862,758
Eni Spa 1,367,300 9,156,476
Telecom Italia Spa 383,330 2,886,059
Telecom Italia Mobile Spa 3,209,900 18,377,473
59,984,117
JAPAN - 16.6%
Acom Co. Ltd. 205,300 10,804,043
Aiful Corp. (c) 121,000 7,980,124
Aiwa Co. Ltd. 79,900 2,376,096
Asahi Breweries Ltd. 601,000 7,841,393
Bank of Tokyo-Mitsubishi Ltd. 200,000 2,467,909
Banyu Pharmaceutical Co. Ltd. 458,000 5,896,330
Bridgestone Corp. 394,000 8,958,253
Canon, Inc. 691,000 16,283,305
Circle K Japan Co. Ltd. 26,400 1,083,230
Citizen Watch Co. Ltd. Ord. 859,000 5,755,769
Daiwa House Industry Co. Ltd. 216,000 1,740,034
Daiwa Securities Co. Ltd. 1,418,000 5,337,850
Dainippon Ink & Chemicals, Inc. 747,000 2,390,175
Denny's Japan Co. Ltd. 144,000 3,686,053
Fuji Bank Ltd. 930,000 5,216,262
Fuji International Trust unit sponsored
ADR (c) 107 1,270,225
Fuji Photo Film Co. Ltd. 780,000 27,658,949
Fujitsu Ltd. 451,000 5,245,963
Fujitec Co. Ltd. 579,000 3,574,478
Hitachi Ltd. 1,807,000 12,910,544
Hitachi Maxell Ltd. 948,000 17,985,770
Honda Motor Co. Ltd. 938,000 33,897,232
Ito-Yokado Co. Ltd. 229,000 11,809,900
Jafco Co. Ltd. 87,000 2,888,537
Kao Corp. 574,000 8,405,270
Long Term Credit Bank of
Japan Ltd. (The) 3,928,000 6,417,286
Mabuchi Motor Co. 38,200 2,202,989
Matsushita Electric Industrial Co. Ltd. 1,451,000 23,159,194
Matsushita Communication Industrial
Co. Ltd. 175,000 5,151,515
Matsushita Electric Works Co. Ltd. 1,346,000 12,059,025
SHARES VALUE (NOTE 1)
Meitec Corp. 105,000 $ 3,438,735
Minebea Co. Ltd. 1,923,000 21,426,990
Minolta Camera Co. Ltd. 1,697,000 10,987,540
Mitsubishi Electric Co. Ord. 2,836,000 7,259,477
Mitsubishi Estate Co. Ltd. 1,257,000 12,113,382
Mitsubishi Heavy Industries Ltd. 736,000 2,715,151
Mitsubishi Trust & Banking Corp. 388,000 3,680,632
Mitsui Fudosan Co. Ltd. 561,000 5,102,112
Nintendo Co. Ltd. Ord. 198,000 18,096,894
Nippon Telegraph & Telephone
Corp. Ord. 795 6,942,970
Nomura Securities Co. Ltd. 1,455,000 17,691,134
Nichicon Corp. 208,000 2,254,997
Nichiei Co. Ltd. 65,890 5,109,482
Omron Corp. 1,043,000 16,293,807
Orix Corp. 281,400 19,384,980
Rohm Co. Ltd. 188,000 21,146,019
Sakura Bank Ltd. 3,872,000 13,263,768
Sankyo Co. Ltd. 2,364,000 58,376,961
Sekisui House Ltd. 426,000 3,316,273
Sharp Corp. 426,000 3,335,517
Shin-Etsu Chemical Co. Ltd. 356,000 6,914,963
Sony Corp. 307,200 26,097,711
Shohkoh Fund & Co. Ltd. 13,400 4,247,243
Sony Music Entertainment Japan, Inc. 242,300 9,449,381
Sumitomo Realty & Development
Co. Ltd. 1,846,000 8,825,221
Sumitomo Special Metals Co. 96,000 2,146,584
TDK Corp. 209,000 16,458,799
Takeda Chemical Industries Ltd. 1,415,000 40,268,774
Takefuji Corp. 147,500 7,717,862
Takefuji Corp. (c) 108,000 5,651,044
Terumo Corp. 159,000 2,319,910
THK Co. Ltd. 1,016,900 9,723,041
Tokio Marine & Fire Insurance Co.
Ltd. (The) 610,000 6,613,213
Toyota Motor Corp. 185,000 4,805,195
Tokyo Electron Ltd. 153,000 5,989,836
Tokyo Seimitsu Co. Ltd. 108,000 3,162,959
Uni Charm Corp. Ord. 146,000 5,495,953
Yamanouchi Pharmaceutical Co. Ltd. 368,000 8,671,861
688,950,074
LUXEMBOURG - 0.1%
Stolt Comex Seaway SA (a) 184,300 5,989,750
MALAYSIA - 0.1%
Malayan Banking BHD 52,000 153,248
Oriental Holdings BHD 1,994,800 4,168,638
4,321,886
MEXICO - 1.1%
Grupo Carso SA de CV Class A-1 295,000 1,855,040
Grupo Elektra SA 1,044,100 1,490,166
Grupo Financiero Bancomer Class B 28,730,000 19,825,458
Grupo Financiero Banamex-
Accival Class B (a) 1,949,000 6,082,018
Grupo Financiero Inbursa SA Class B 932,000 2,842,534
Telefonos de Mexico SA sponsored ADR
representing Ord. Class L shares 246,800 13,975,050
46,070,266
NETHERLANDS - 8.9%
Ahold NV 375,376 11,696,270
AKZO Nobel NV 239,900 48,765,468
Beter Bed Holding NV 167,300 5,610,040
Benckiser NV Class B 169,300 9,872,135
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NETHERLANDS - CONTINUED
Hagemeyer NV 239,300 $ 11,421,163
ING Groep NV 695,729 44,973,431
Koninklijke Hoogovens NV 281,800 12,683,021
VNU Ord. 242,400 7,840,625
Nutreco Holding NV 367,000 13,087,047
Philips Electronics NV (Bearer) 930,700 83,763,000
Royal Dutch Petroleum Co. Ord. 780,500 44,147,024
Royal Ptt Nederland NV 145,700 7,523,161
Unilever NV Ord. 709,000 50,424,947
Vendex International NV 86,000 5,512,439
Vendex International NV (c) 168,800 10,819,764
Vedior NV 138,150 4,195,267
372,334,802
NEW ZEALAND - 0.1%
Air New Zealand Ltd. Class B 1,054,400 1,488,879
Sky Network Television Ltd. (a) 731,000 1,092,936
2,581,815
NORWAY - 0.4%
Den Norske Bank AS Class A Free shares 301,200 1,581,335
NCL Holdings AS (a) 2,595,000 12,477,131
Schibsted AS, Series B 178,250 3,390,009
17,448,475
NETHERLANDS ANTILLES - 0.1%
Schlumberger Ltd. 62,400 5,171,400
PERU - 0.1%
Compania de Minas Buenaventura SA
Class B sponsored ADR 144,400 2,238,200
PORTUGAL - 0.8%
BPI-SGPS SA (Reg.) 411,300 19,102,696
Banco Pinto & Sotto Mayor SA (Reg.) 193,500 4,866,669
Electricidade de Portugal SA 223,300 5,822,370
Portugal Telecom SA 32,000 1,718,290
Telecel Comunicacoes Pessoais SA (a) 13,000 2,330,382
33,840,407
RUSSIA - 0.1%
Vimpel Communications
sponsored ADR (a) 94,300 5,092,200
SINGAPORE - 0.1%
Kim Engineering Holdings Ltd. 4,882,000 1,788,165
Singapore International Airlines Ltd. 190,000 1,235,870
3,024,035
SOUTH AFRICA - 0.3%
Amalgamated Banks of South Africa Ltd. 186,500 1,614,599
Gencor Ltd. (Reg.) 302,940 722,356
Sasol, Ltd. 1,076,500 10,864,055
13,201,010
SPAIN - 2.0%
Banco Bilbao Vizcaya SA Ord. (Reg.) 439,300 22,583,600
Corporacion Mapfre Compania
Internacional de Reaseguros SA (Reg.) 85,179 3,340,024
Iberdrola SA 291,800 4,687,781
Mapfre Vida SA 76,200 3,797,384
Repsol SA Ord. 113,100 6,192,485
Telefonica de Espana SA Ord. 1,025,800 42,779,502
83,380,776
SHARES VALUE (NOTE 1)
SWEDEN - 5.5%
ABB AB:
Series A 564,300 $ 9,131,421
Series B 270,000 4,177,626
Astra AB Class A Free shares 2,108,533 43,227,700
Ericsson (L.M.) Telephone Co. Class B 186,000 9,566,265
Electrolux AB 160,200 14,872,350
ForeningsSparbanken AB, Series A 281,600 8,786,838
Granges AB (Reg.) 32,600 592,681
IBS (International Business Systems) AB
Class B Free shares (a) 496,500 7,650,182
Investor AB Class B Free shares 150,000 8,451,957
Mandamus AB rights 6/15/98 (a) 281,600 439,342
Nordbanken Holding AB 1,246,600 9,161,922
SKF AB Ord. 225,600 4,537,831
Skandia Foersaekrings AB 188,100 13,072,606
Svenska Handelsbanken 461,600 20,890,917
Swedish Match Co. 8,140,900 28,131,430
Volvo AB Class B 1,598,300 47,543,902
230,234,970
SWITZERLAND - 6.0%
Adecco SA (Bearer) 17,300 7,547,792
Compagnie Financiere Richemont AG
Class A Unit (Bearer) 1,100 1,575,301
Credit Suisse Group (Reg.) 267,400 58,777,060
Holderbank Financiere Glarus AG (Bearer) 500 522,880
Julius Baer Holding AG 10,312 28,436,475
Nestle SA (Reg.) 19,429 37,659,622
Novartis AG (Reg.) 46,833 77,363,512
Roche Holding AG 1,026 10,391,214
Swiss Bank Corp. (Reg.) 38,500 13,360,754
Union Bank of Switzerland Ord. (Bearer) 9,850 15,851,329
251,485,939
UNITED KINGDOM - 15.1%
BAT Industries PLC Ord. 1,781,900 16,791,400
BBA Group PLC 528,442 4,339,556
Bank of Scotland 686,100 8,425,569
Barclays PLC Ord. 762,600 21,979,123
Barratt Developments PLC 1,542,300 8,258,884
Billiton PLC 1,514,700 4,327,601
Boots Co. PLC Class L (The) 293,000 4,535,629
British Aerospace PLC 764,310 25,514,643
British Petroleum PLC Ord. 2,303,335 36,348,252
British Telecommunications PLC Ord. 864,400 9,373,114
Cable & Wireless PLC Ord. 627,600 7,182,869
Caradon PLC 6,549,290 21,173,841
Commercial Union PLC 325,300 6,081,891
Cookson Group PLC 7,850,962 35,220,185
Courtaulds Textiles PLC 1,034,600 5,548,837
Devro PLC 227,800 2,066,703
Dorling Kindersley Holdings PLC,
Class L 337,200 1,447,922Dr Solomons Group PLC
sponsored ADR (a) 375,700 11,177,075
English China Clay PLC 363,800 1,498,318
Gallaher Group PLC 2,108,500 10,991,391
Glaxo Wellcome PLC 1,006,300 28,414,410
Hazlewood Foods PLC Ord. 478,400 1,526,697
HSBC Holdings:
PLC 648,000 19,055,140
PLC Ord. 376,846 11,881,199
Inchcape PLC Ord. 1,835,000 6,859,992
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Johnson Matthey PLC 316,100 $ 3,200,528
Ladbroke Group PLC Ord. 2,238,200 12,293,884
Lloyds TSB Group PLC 3,217,296 48,137,228
National Grid Co. PLC 1,007,760 6,499,334
Pearson, PLC 383,100 5,997,582
Perpetual PLC 5,200 347,526
Pilkington PLC Ord. 2,532,200 5,309,654
Rentokil Initial PLC 4,389,900 28,256,720
Rio Tinto PLC (Reg.) 900,000 12,909,436
Royal & Sun Alliance Insurance
Group PLC 445,913 4,976,810
Saatchi & Saatchi PLC 866,400 2,287,178
Scholl PLC 684,100 4,286,229
Shell Transport & Trading Co. PLC (Reg.) 4,620,700 34,355,182
Siebe, PLC 516,800 11,535,952
SmithKline Beecham PLC Ord. 3,700,344 44,081,473
Somerfield PLC 2,391,200 13,517,017
Tarmac PLC 1,998,000 3,864,034
Thames Water PLC Ord. 276,300 4,501,010
Tomkins PLC Ord. 339,700 1,997,849
Unigate PLC 605,500 7,344,720
Unilever PLC Ord. 1,960,800 20,868,787
Vodafone Group PLC 3,300,338 36,118,041
WPP Group PLC (a) 795,000 5,040,845
627,747,260
UNITED STATES OF AMERICA - 0.7%
Aluminum Co. of America 183,200 14,198,000
Brio Technology, Inc. 1,400 15,400
D.R. Horton, Inc. 286,600 5,302,100
Heller Financial, Inc. Class A 13,400 361,800
Newmont Mining Corp. 83,800 2,697,313
Transocean Offshore, Inc. 98,600 5,509,275
28,083,888
VENEZUELA - 0.1%
Compania Anonima Nacional Telefonos
de Venezuela sponsored ADR 80,500 2,696,750
TOTAL COMMON STOCKS
(Cost $2,811,706,937) 3,802,562,054
CLOSED-END INVESTMENT COMPANIES - 0.5%
EMERGING MARKETS - 0.1%
Templeton Dragon Fund, Inc. 359,000 3,949,000
GERMANY - 0.3%
Emerging Germany Fund, Inc. 134,100 1,919,306
New Germany Fund, Inc. (The) 662,700 11,845,763
13,765,069
MULTI-NATIONAL - 0.1%
Morgan Stanley Asia-Pacific
Fund, Inc. 341,400 2,539,163
TOTAL CLOSED-END INVESTMENT COMPANIES
(Cost $19,953,769) 20,253,232
PREFERRED STOCKS - 2.3%
SHARES VALUE (NOTE 1)
CONVERTIBLE PREFERRED STOCKS - 0.1%
UNITED STATES OF AMERICA - 0.1%
WBK Trust $3.135 STRYPES 167,700 $ 5,722,763
NONCONVERTIBLE PREFERRED STOCKS - 2.2%
AUSTRALIA - 0.1%
Sydney Harbour Casino Holdings Ltd. (a) 2,943,200 2,085,097
GERMANY - 0.7%
Boss (Hugo) AG 1,300 2,388,774
SAP AG (Systeme
Anwendungen Produkte) 46,800 23,974,609
Wella AG 5,000 4,621,638
30,985,021
ITALY - 1.4%
Telecom Italia:
Spa 6,286,000 33,119,867
Mobile Spa de Risp 6,799,700 24,478,925
57,598,792
TOTAL NONCONVERTIBLE PREFERRED STOCKS 90,668,910
TOTAL PREFERRED STOCKS
(Cost $43,604,177) 96,391,673
GOVERNMENT OBLIGATIONS - 0.2%
MOODY'S PRINCIPAL
RATINGS AMOUNT
ITALY - 0.2%
Italian Republic 5%,
6/28/01 Aa3 $ 3,690,000 6,392,925
UNITED STATES OF AMERICA - 0.0%
U.S. Treasury Bill, yield at date
of purchase 4.97%,
7/23/98 (d) Aaa 1,750,000 1,730,435
TOTAL GOVERNMENT OBLIGATIONS
(Cost $7,799,585) 8,123,360
CASH EQUIVALENTS - 5.6%
SHARES
Taxable Central Cash Fund
(Cost $232,869,008) (b) 232,869,008 232,869,008
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,115,933,476) $4,160,199,327
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
370 Nikkei 225 Stock
Index Contracts June 98 $ 28,952,500 $(2,499,669)
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 0.7%
PREFERRED STOCK ABBREVIATIONS
STRYPES - Structured Yield Product
Exchangeable for Common Stock
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.51%. 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
$42,794,792 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 $1,657,750.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,078,916,934 and $1,176,181,302, respectively (see Note 3
of Notes to Financial Statements).
The market value of futures contracts opened and closed during the
period amounted to $59,666,388 and $42,385,888, respectively (see Note
2 of Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $104,082 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 0.6%
Basic Industries 8.6
Cash Equivalents 5.6
Construction & Real Estate 3.3
Durables 6.6
Energy 7.5
Finance 21.1
Government Obligations 0.2
Health 9.1
Holding Companies 1.5
Industrial Machinery & Equipment 7.1
Media & Leisure 2.8
Nondurables 5.7
Precious Metals 0.5
Retail & Wholesale 2.4
Services 1.9
Technology 6.5
Transportation 0.6
Utilities 8.4
100.0%
INCOME TAX INFORMATION
At April 30, 1998 the aggregate cost of investment securities for
income tax purposes was $3,116,822,924. Net unrealized appreciation
aggregated $1,043,376,403, of which $1,213,398,411 related to
appreciated investment securities and $170,022,008 related to
depreciated investment securities.
OVERSEAS
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
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STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 4,160,199,327
(COST $3,115,933,476) -
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 55,650,471
RECEIVABLE FOR FUND SHARES SOLD 24,605,975
DIVIDENDS RECEIVABLE 19,249,812
INTEREST RECEIVABLE 989,838
RECEIVABLE FOR DAILY VARIATION ON FUTURES CONTRACTS 322,090
OTHER RECEIVABLES 52,897
TOTAL ASSETS 4,261,070,410
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 31,246,195
PAYABLE FOR FUND SHARES REDEEMED 10,865,646
ACCRUED MANAGEMENT FEE 3,087,185
OTHER PAYABLES AND 1,778,535
ACCRUED EXPENSES
TOTAL LIABILITIES 46,977,561
NET ASSETS $ 4,214,092,849
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 3,102,687,203
DISTRIBUTIONS IN EXCESS OF (6,891,403)
NET INVESTMENT INCOME
ACCUMULATED UNDISTRIBUTED 76,714,752
NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 1,041,582,297
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS, FOR 110,505,105 SHARES OUTSTANDING $ 4,214,092,849
NET ASSET VALUE, OFFERING PRICE $38.13
AND REDEMPTION PRICE PER SHARE ($4,214,092,849 (DIVIDED BY) 110,505,105 SHARES)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 34,778,607
DIVIDENDS
INTEREST 6,688,697
41,467,304
LESS FOREIGN TAXES WITHHELD (3,839,163)
TOTAL INCOME 37,628,141
EXPENSES
MANAGEMENT FEE $ 14,302,388
BASIC FEE
PERFORMANCE ADJUSTMENT 3,022,352
TRANSFER AGENT FEES 5,330,172
ACCOUNTING FEES AND EXPENSES 416,872
NON-INTERESTED TRUSTEES' COMPENSATION 3,819
CUSTODIAN FEES AND EXPENSES 1,043,782
REGISTRATION FEES 131,119
AUDIT 43,381
LEGAL 10,710
REPORTS TO SHAREHOLDERS 270,880
MISCELLANEOUS 49,970
TOTAL EXPENSES BEFORE REDUCTIONS 24,625,445
EXPENSE REDUCTIONS (316,639) 24,308,806
NET INVESTMENT INCOME 13,319,335
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 79,228,076
FOREIGN CURRENCY TRANSACTIONS (858,738)
FUTURES CONTRACTS (1,270,619) 77,098,719
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 548,678,858
ASSETS AND LIABILITIES IN (298,089)
FOREIGN CURRENCIES
FUTURES CONTRACTS (677,681) 547,703,088
NET GAIN (LOSS) 624,801,807
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 638,121,142
OTHER INFORMATION $ 172,522
EXPENSE REDUCTIONS
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 532
TRANSFER AGENT CREDITS 143,585
$ 316,639
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 13,319,335 $ 45,608,708
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 77,098,719 255,298,607
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 547,703,088 239,293,026
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 638,121,142 540,200,341
DISTRIBUTIONS TO SHAREHOLDERS (29,950,699) (36,606,761)
FROM NET INVESTMENT INCOME
IN EXCESS OF NET INVESTMENT INCOME (6,891,403) -
FROM NET REALIZED GAIN (145,109,412) (161,278,875)
TOTAL DISTRIBUTIONS (181,951,514) (197,885,636)
SHARE TRANSACTIONS 1,906,859,135 4,490,417,585
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 176,077,750 192,007,203
COST OF SHARES REDEEMED (2,102,465,903) (4,361,912,739)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS (19,529,018) 320,512,049
TOTAL INCREASE (DECREASE) IN NET ASSETS 436,640,610 662,826,754
NET ASSETS
BEGINNING OF PERIOD 3,777,452,239 3,114,625,485
END OF PERIOD (INCLUDING UNDER (OVER) DISTRIBUTION OF
NET INVESTMENT INCOME OF $(6,891,403) AND $41,157,042, $ 4,214,092,849 $ 3,777,452,239
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 55,367,465 132,727,973
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 5,371,502 6,343,151
REDEEMED (60,953,917) (128,555,588)
NET INCREASE (DECREASE) (214,950) 10,515,536
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996 1995 1994 1993
NET ASSET VALUE, BEGINNING OF PERIOD $ 34.12 $ 31.08 $ 28.57 $ 29.17 $ 27.16 $ 21.96
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .12 D .43 D .48 I .31 .18 .27
NET REALIZED AND UNREALIZED GAIN (LOSS) 5.57 4.61 2.72 (.44) 2.26 7.40
TOTAL FROM INVESTMENT OPERATIONS 5.69 5.04 3.20 (.13) 2.44 7.67
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.28) (.37) (.34) (.02) (.15) (.37)
IN EXCESS OF NET INVESTMENT INCOME (.06) - - - (.17) -
FROM NET REALIZED GAIN (1.34) (1.63) (.35) (.45) (.11) (2.10) F
TOTAL DISTRIBUTIONS (1.68) (2.00) (.69) (.47) (.43) (2.47)
NET ASSET VALUE, END OF PERIOD $ 38.13 $ 34.12 $ 31.08 $ 28.57 $ 29.17 $ 27.16
TOTAL RETURN B, C 17.48% 17.03% 11.41% (.34)% 9.13% E 39.01% E
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD
(000 OMITTED) $4,214,093 $3,777,452 $3,114,625 $2,276,306 $2,283,211 $1,490,666
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.30% A 1.23% 1.14% 1.05% 1.24% 1.27%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
AFTER 1.29% A, G 1.20% G 1.12% G 1.05% 1.24% 1.27%
EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS .70% A 1.28% 1.74% 1.78% .90% 1.00%
PORTFOLIO TURNOVER RATE 61% A 68% 82% 49% 49% 64%
AVERAGE COMMISSION RATE H $ .0077 $ .0109 $ .0134
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD
CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E TOTAL RETURNS DO NOT INCLUDE ONE TIME SALES CHARGE.
F INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS
ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS
ORDINARY INCOME.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION
OF THE FUND'S EXPENSES (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995,
A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE
PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED.
THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS
WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES
MAY DIFFER.
I INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND
WHICH AMOUNTED TO $.08 PER SHARE.
</TABLE>
WORLDWIDE
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). If Fidelity had not reimbursed certain fund
expenses, the life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
APRIL 30, 1998 MONTHS YEAR YEARS FUND
FIDELITY WORLDWIDE 19.73% 31.11% 109.75% 145.05%
MSCI WORLD 18.86% 29.04% 107.45% 134.47%
GLOBAL FUNDS AVERAGE 16.66% 27.18% 104.18% N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on May 30, 1990. For example, if you
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 1,500 stocks traded in 22 world markets. To measure how
the fund's performance stacked up against its peers, you can compare
it to the global funds average, which reflects the performance of
mutual funds with similar objectives tracked by Lipper Analytical
Services, Inc. The past six months average represents a peer group of
214 mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
APRIL 30, 1998 YEAR YEARS FUND
FIDELITY WORLDWIDE 31.11% 15.97% 11.98%
MSCI WORLD 29.04% 15.71% 11.36%
GLOBAL FUNDS AVERAGE 27.18% 15.07% 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
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
IMATRL PRASUN SHR__CHT 19980430 19980506 114241 R00000000000099
$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 April 30, 1998, the value of the
investment would have grown to $24,505 - a 145.05% 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 $23,447 - a 134.47% 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. Quite well. For the six-month and one-year periods that ended April
30, 1998, the fund returned 19.73% and 31.11%, respectively. The
global funds average tracked by Lipper Analytical Services returned
16.66% and 27.18% over the same periods, while the Morgan Stanley
Capital International World Index returned 18.86% for the past six
months and 29.04% over the past year.
Q. WHY DID THE FUND OUTPERFORM THE INDEX OVER THE PAST SIX MONTHS?
A. Probably the most important reason was the fund's overweighting
versus the index in Europe, the best-performing region in the world
during this period. On the other hand, the fund remained underweighted
in Japan - which continued to turn in a poor performance - relative to
the index over the period. Another reason the fund outperformed was
that it had a handful of extremely well-performing stocks that the
index did not hold. For example, South African bank Amalgamated Banks
of South Africa has been a stellar performer in 1998, benefiting from
interest rate declines in South Africa plus a bounce in numerous
emerging markets, including South Africa. Another fund holding,
Russian cellular company Vimpel Communications saw phenomenal growth
during the period. Its valuation compared with the world average for
cellular stocks was extremely cheap, and it benefited from very low
cellular phone penetration in Russia, which gives the company real
growth potential. In addition, Mexican bank Grupo Financiero Bancomer
outperformed as that country's economy continued to look fairly
strong. The fund also benefited from a larger weighting than the index
in some top-performing stocks, including French defense electronics
company Alcatel Alsthom and Netherlands'-based Philips Electronics.
Q. YOU ALSO BEAT YOUR PEER GROUP OVER THE SAME PERIOD . . .
A. Yes, for pretty much the same reasons. As we just discussed, the
fund was overweighted versus the index in Europe. And, while other
funds in the peer group were overweighted versus the index as well,
they were not as overweighted as I was. The fund also was
underweighted versus its competitors in the dragging Japanese market.
Q. HOW WOULD YOU DESCRIBE THE OVERALL WORLDWIDE INVESTMENT ENVIRONMENT
IN THE PAST SIX MONTHS?
A. Clearly, Europe was at the top of the heap, with only companies
involved with base metals and chemicals - what we call hard durables -
faltering. The U.S. market also performed fairly well. During the
period, Japan slowed from barely a crawl to being almost comatose.
Southeast Asia and South Korea were a roller coaster ride, looking
good in January and February, then giving it all back in March and
April. On the other side of the world, most Latin American holdings
consistently underperformed during the past six months. In terms of
overall emerging market performance, there were no real standouts
during the period except Egypt and Greece, where the fund did not have
any holdings.
Q. WHY DID EUROPE DO SO WELL?
A. There were several main factors. European companies in general -
and banks specifically - greatly benefited from a drop in interest
rates. And many companies continued to benefit from corporate
restructuring measures that they have been taking over the past few
years to improve their profitability. In addition, many exporting
companies in Europe got a boost from the strong dollar; it makes their
products cheaper. For the first time ever, European markets did not
move on the strength of inflows from outside investors, but on the
strength of domestic investors. This trend began in 1996, when many
European governments' social security systems began looking less sound
and company pensions were cut. As a result, more and more Europeans
began investing in stocks, bonds and mutual funds to build their
retirement savings.
Q. YOU MENTIONED THAT EUROPEAN BANKS GOT A BOOST FROM FALLING INTEREST
RATES. HOW DID THEY DO OVERALL?
A. Very well. They definitely benefited from lower interest rates, but
they also were helped by the rise in local mutual fund activity that
we just discussed. Banks in Europe are universal, which means that
they have asset-management and investment-banking functions as well as
lending businesses. So, if European investors want to buy mutual
funds, stocks or bonds, they go to their local bank. As a result,
banks are considered the preeminent beneficiaries of all capital
market activity on the European continent. Top-10 holding Swiss bank
Julius Baer was a good example of a bank that benefited in this
environment.
Q. WHAT WERE SOME OF THE FUND'S STRONGEST-PERFORMING STOCKS OVER THE
PERIOD?
A. As previously mentioned, the fund's top two holdings - Alcatel
Alsthom and Philips Electronics - continued to greatly benefit from
restructuring measures, and, compared to their counterparts worldwide,
they were considerably cheaper. The Italian market - probably the
strongest market in the world during the period with the exception of
Spain - boosted the performance of another top-10 holding, Telecom
Italia. By world standards for fixed-line telephone companies, Telecom
Italia was about the cheapest in world, and it beat everyone in the
market. Societe Generale D'Enterprises, a French construction company,
was helped by a greatly improving French economy. As France came out
of its doldrums, property and construction companies benefited from an
increased demand for housing.
Q. DID YOU HAVE ANY REGRETS OVER THE PERIOD?
A. Sure. For the most part, they were regrets about missed
opportunities. For example, the fund missed out on a couple of
top-performing European telecommunications companies, specifically
Vodafone and Orange in the U.K. I didn't appreciate just how much
subscriber growth would accelerate when these companies launched
prepaid phone cards. I also wish I had owned French bank Societe
Generale. I thought this bank would be hurt by its South Korean
exposure, but Korea improved somewhat and the strong financial
environment and growing French market helped the bank turn in a solid
performance.
Q. ANYTHING ELSE?
A. Yes. I was greatly disappointed by the failure of the U.S.
government and tobacco companies to put together tobacco legislation.
This negatively affected the performance of one of the fund's largest
U.S. holdings, Philip Morris. As I've mentioned in previous reports,
it is widely believed that any legislation would hardly put a dent in
the company's value because its stock is worth so much more than any
settlement. Therefore, legislation is expected to boost the stock's
performance.
Q. PENNY, WHAT'S THE OUTLOOK FOR THE FUND?
A. I expect Europe to continue to look strong and emerging markets
overall to continue to look weak, but other markets are more difficult
to forecast. The big question is will the Japanese market recover. I
don't foresee this in the short term, but the state of the Japanese
economy could change very quickly. For example, if the government
announced that it was cutting corporate and individual taxes, the
economy could easily take off. In terms of other world markets, I will
be keeping a close eye on Southeast Asia and looking for buying
opportunities there. It is still unclear whether Southeast Asia is
experiencing a short-term or long-term cycle of underperformance.
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 ROLE EMERGING MARKETS PLAY IN THE
WORLDWIDE FUND:
"Before one can talk about emerging markets, one has to
define them in the context of a global fund like this one,
which is compared to the MSCI World Index. By this
definition, emerging markets don't include Hong Kong,
Singapore or Malaysia because they are part of the index.
However, emerging markets would include most of
Southeast Asia, Latin America, Eastern Europe, the
Indian subcontinent, the Middle East and Africa.
"I don't foresee a time when the fund would have a
significant investment in all emerging markets, as many
funds did in 1993 when many emerging markets went up at
the same time. I am more likely to concentrate on one or two
markets at any given time. If this fund is going to have a
significant weighting in emerging markets - which means
about 20% of its assets - I would have to believe that there
was a huge turnaround starting to happen economically in a
particular emerging market.
"I believe you can't invest in an emerging market until you
are completely comfortable that its currency has stabilized.
That's because many companies in emerging markets have
offshore debt, usually dollar- or deutsche mark-based. And,
when an emerging market country's currency is officially
devalued or depreciated by financial markets, then companies
there have to spend a lot more of their earnings and cash flow
paying off debt. The problem for many of these companies is
that foreign financing has been much cheaper in terms of
basic interest rates than local financing. So, there has been
tremendous incentive for companies to use offshore financing.
"Another rule I tend to follow with emerging markets is to
stick with larger, more liquid companies - those you can
sell easily when the market drops. There's no point in being a
brilliant stock picker of small-capitalization companies if
you can't sell the stocks when the economy turns for the
worse. I think it will be years before small-cap and mid-cap
companies outperform large-cap ones in emerging markets.
"I also try to focus on choosing well-performing industries,
not just targeting the right countries. In the mid-90s, if you
got the right emerging market, you could choose just about
any industry. Now, I think people are much more judicious
about what industries they invest in. For instance, if
consumption trails a country's overall economic growth, that
country's retailers will probably not perform well, even in a
fairly strong economy."
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in common stocks from around the world
FUND NUMBER: 318
TRADING SYMBOL: FWWFX
START DATE: May 30, 1990
SIZE: as of April 30, 1998, more than $1.3 billion
MANAGER: Penelope Dobkin, since inception;
manager, Fidelity Europe Fund, 1986-1990;
Fidelity United Kingdom Fund, 1987-1989;
Fidelity Select Financial Services Portfolio,
1983-1986; joined Fidelity in 1980
(checkmark)
WORLDWIDE
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
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%
SWITZERLAND 5.0%
NETHERLANDS 6.9%
OTHER 21.7%
AS OF OCTOBER 31, 1997
CANADA 5.8%
ROW: 1, COL: 1, VALUE: 23.8
ROW: 1, COL: 2, VALUE: 7.2
ROW: 1, COL: 3, VALUE: 4.3
ROW: 1, COL: 4, VALUE: 3.6
ROW: 1, COL: 5, VALUE: 23.5
ROW: 1, COL: 6, VALUE: 7.6
ROW: 1, COL: 7, VALUE: 9.800000000000001
ROW: 1, COL: 8, VALUE: 8.800000000000001
ROW: 1, COL: 9, VALUE: 5.6
ROW: 1, COL: 10, VALUE: 5.8
FINLAND 5.6%
UNITED STATES 23.8%
FRANCE 8.8%
JAPAN 9.8%
UNITED
KINGDOM 7.2%
SWITZERLAND 4.3%
NETHERLANDS 7.6%
TURKEY 3.6%
OTHER 23.5%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
STOCKS 95.9 94.5
SHORT-TERM INVESTMENTS 4.1 5.5
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
ALCATEL ALSTHOM COMPAGNIE GENERALE 2.2 1.3
D'ELECTRICITE SA SPONSORED ADR
(FRANCE, ELECTRICAL EQUIPMENT)
PHILIPS ELECTRONICS NV (BEARER) 2.1 1.7
(NETHERLANDS, ELECTRICAL EQUIPMENT)
GRUPO FINANCIERO BANCOMER SA DE CV 1.6 1.2
SPONSORED ADR, SERIES C
(MEXICO, BANKS)
TELECOM ITALIA SPA 1.5 0.6
(ITALY, TELEPHONE SERVICES)
BCE, INC. 1.5 1.4
(CANADA, TELEPHONE SERVICES)
PORSCHE AG 1.5 0.0
(GERMANY, AUTOS, TIRES & ACCESSORIES)
JULIUS BAER HOLDING AG 1.3 0.8
(SWITZERLAND, BANKS)
ICELAND GROUP PLC 1.3 0.0
(UNITED KINGDOM, GROCERY STORES)
(SGE) SOCIETE GENERALE D'ENTREPRISES SA 1.2 0.6
(FRANCE, CONSTRUCTION)
CIBA SPECIALTY CHEMICALS AG 1.2 1.4
(SWITZERLAND, CHEMICALS & PLASTICS)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 17.5 14.6
BASIC INDUSTRIES 12.9 18.6
DURABLES 8.7 7.7
CONSTRUCTION & REAL ESTATE 7.6 6.0
UTILITIES 7.4 6.5
NONDURABLES 6.9 6.9
RETAIL & WHOLESALE 6.8 6.2
INDUSTRIAL MACHINERY & EQUIPMENT 6.2 8.3
MEDIA & LEISURE 5.3 5.5
ENERGY 4.6 0.7
WORLDWIDE FUND
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 89.7%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.3%
Bansud SA Class B (a) 430,000 $ 4,042,505
AUSTRIA - 0.4%
OMV AG 33,621 4,986,408
BERMUDA - 0.4%
Terra Nova (Bermuda) Holdings Ltd. 174,300 5,337,938
BRAZIL - 1.9%
Companhia Paranaense de
Energia-Copel Class B 60,000 855,000
Rossi Residencial SA 4,800,000 7,345,547
Telebras sponsored ADR 81,500 9,927,719
Telesp PN (Pfd. Reg.) 20,034,511 6,815,116
24,943,382
CANADA - 4.6%
BCE, Inc. 468,000 19,917,677
Domtar, Inc. 565,100 4,738,950
Edperbrascan Corp. Ltd., Class A (vtg.) 324,900 6,629,917
Falconbridge Ltd. 590,000 9,070,897
Imasco Ltd. 300,000 11,289,703
National Bank of Canada 464,300 9,571,858
61,219,002
FINLAND - 5.8%
Cultor OY Ord., Series 2 165,000 9,775,312
Enso OY Class R 1,000,000 10,638,298
Huhtamaki Ord. 190,000 10,977,623
Merita Ltd., Series A 800,000 5,341,159
Metsa-Serla Ltd. Class B 1,400,000 14,508,437
Raisio Group PLC 56,000 10,271,460
UPM-Kymmene Corp. 475,000 14,244,773
75,757,062
FRANCE - 10.1%
Alcatel Alsthom Compagnie Generale
d'Electricite SA sponsored ADR 813,900 29,503,866
Accor SA 30,000 8,168,453
Credit Commercial de France Ord. 118,400 9,441,316
Eramet SA 128,374 6,440,560
Galeries Lafayette SA 15,700 13,771,243
Lagardere S.C.A. (Reg.) 385,000 14,710,524
Metaleurop SA (a) 522,665 5,843,567
Pechiney SA Class A 189,959 8,488,906
Societe Fonciere Lyonnaise SA 86,000 13,158,236
(SGE) Societe Generale
d'Entreprises SA (a) 422,620 16,463,891
Total SA Class B 59,000 7,008,057
132,998,619
GERMANY - 0.6%
(BMW) Muenchen Bayerische
Motorenwerke AG 5,700 6,417,618
Kamps AG (a) 65,500 1,841,834
8,259,452
HONG KONG - 0.3%
Dairy Farm International
Holdings Ltd. 2,500,000 3,200,000
Sime Darby Hongkong Ltd. 836,000 342,557
3,542,557
IRELAND - 1.6%
Independent Newspapers PLC 1,668,800 10,037,632
Smurfit (Jefferson) Group PLC 2,800,000 10,385,693
20,423,325
SHARES VALUE (NOTE 1)
ISRAEL - 0.3%
Blue Square-Israel Ltd. sponsored ADR (a) 265,700 $ 4,251,200
ITALY - 1.4%
Credito Italiano Ord. 2,253,100 11,786,035
Saipem Spa Ord. (a) 1,090,000 6,242,980
18,029,015
JAPAN - 5.5%
Aiful Corp. (c) 91,000 6,001,581
Honda Motor Co. Ltd. 194,000 7,010,728
Minebea Co. Ltd. 865,000 9,638,246
Minolta Camera Co. Ltd. 859,000 5,561,754
Nomura Securities Co. Ltd. 581,000 7,064,295
Nichicon Corp. 360,000 3,902,880
Orix Corp. 55,000 3,788,820
Shohkoh Fund & Co. Ltd. 28,700 9,096,706
Takefuji Corp. 41,500 2,171,466
Takefuji Corp. (c) 40,000 2,092,979
THK Co. Ltd. 1,031,100 9,858,814
Tokyo Electron Ltd. 155,000 6,068,135
72,256,404
MEXICO - 3.3%
Grupo Financiero Banamex-
Accival Class B (a) 4,690,000 14,635,539
Grupo Financiero Bancomer SA de CV
sponsored ADR, Series C (a)(c) 1,579,000 21,711,250
Grupo Financiero Inbursa SA Class B 2,280,000 6,953,839
43,300,628
NETHERLANDS - 6.5%
AKZO Nobel NV 49,400 10,041,743
Benckiser NV Class B 213,120 12,427,345
Hagemeyer NV 112,000 5,345,467
New Holland NV 394,900 9,675,050
Philips Electronics NV 60,000 5,400,000
Philips Electronics NV (Bearer) 302,500 27,225,000
Samas-Groep NV (d) 243,613 15,097,042
85,211,647
NORWAY - 1.0%
Schibsted AS, Series B 715,200 13,601,875
PORTUGAL - 0.5%
BPI-SGPS SA (Reg.) 137,600 6,390,788
RUSSIA - 1.1%
Vimpel Communications sponsored ADR 266,600 14,396,400
SINGAPORE - 0.2%
Wing Tai Holdings Ltd. 2,563,000 2,087,951
SOUTH AFRICA - 1.5%
Amalgamated Banks of South Africa Ltd. 665,500 5,761,477
Orion Selections Holdings Ltd. 1,500,000 4,452,360
Sasol, Ltd. 916,400 9,248,323
19,462,160
SPAIN - 1.3%
Banco De Valencia SA (Reg.) 182,400 5,382,119
Catalana Occidente SA 88,500 6,070,030
Mapfre Vida SA 125,000 6,229,304
17,681,453
SWEDEN - 3.5%
Astra AB Class A Free shares 210,000 4,305,276
BTL AB, Series B 1,600,000 9,139,203
Castellum AB 861,400 10,218,268
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWEDEN - CONTINUED
Fastighets AB Tornet 350,000 $ 5,302,620
Hemkopskedjan AB, Series B 359,000 4,883,504
Volvo AB Class B 435,000 12,939,747
46,788,618
SWITZERLAND - 5.0%
Banque Cantonale Vaudoise (Bearer) 17,100 7,403,584
Ciba Specialty Chemicals AG (a) 135,000 16,320,855
Credit Suisse Group (Reg.) 25,000 5,495,237
Helvetia Patria Holdings (Reg.) 3,200 3,666,156
Julius Baer Holding AG 6,200 17,097,182
SIG AG (Reg.) 7,600 6,317,725
Union Bank of Switzerland Ord. (Bearer) 6,100 9,816,559
66,117,298
UNITED KINGDOM - 8.6%
Amec PLC Ord. 2,057,900 6,292,161
BTP PLC 850,000 6,007,361
Courtaulds Textiles PLC 1,400,000 7,508,575
Doncasters PLC sponsored ADR (a) 241,800 7,435,350
English China Clay PLC 1,700,000 7,001,487
Hazlewood Foods PLC Ord. 3,000,900 9,526,417
House of Fraser PLC Class L 1,733,400 4,604,902
Iceland Group PLC 4,587,550 17,054,355
Laporte PLC 750,000 10,087,455
Somerfield PLC 1,970,000 11,136,051
Shell Transport & Trading Co. PLC (Reg.) 675,000 5,018,666
Smith Holdings PLC (DS) 2,900,000 11,144,236
Thistle Hotels PLC 1,750,000 5,087,586
Unilever PLC Ord. 570,000 6,066,508
113,971,110
UNITED STATES OF AMERICA - 23.3%
AccuStaff, Inc. (a) 330,000 11,838,750
Alliant Techsystems, Inc. (a) 176,000 11,253,000
Alumax, Inc. 212,300 10,482,313
America West Holdings Corp. Class B (a) 38,100 1,152,525
Amoco Corp. 140,000 6,195,000
Breed Technologies, Inc. 338,000 6,823,375
CNF Transportation, Inc. 290,000 11,201,250
Callaway Golf Co. 265,000 7,221,250
Chesapeake Corp. 135,000 4,910,625
Coastal Corp. (The) 110,000 7,858,125
Consolidated Freightways Corp. (a) 300,000 5,381,250
Dayton Hudson Corp. 57,900 5,055,394
Dillards, Inc. Class A 125,000 4,578,125
Federated Department Stores, Inc. (a) 140,000 6,886,250
FIRSTPLUS Financial Group, Inc. (a) 250,000 12,125,000
Fruit of the Loom, Inc. Class A (a) 125,000 4,671,875
Gibson Greetings, Inc. (a) 248,900 6,510,291
International Business Machines Corp. 46,400 5,376,600
King World Productions, Inc. 520,000 13,877,500
Lone Star Industries, Inc. 43,300 3,577,663
Maxim Group, Inc. (a) 255,000 4,590,000
Mirage Resorts, Inc. (a) 250,000 5,515,625
Occidental Petroleum Corp. 125,000 3,679,688
Owens-Corning 278,500 11,575,156
Penney (J.C.) Co., Inc. 127,500 9,060,469
Pep Boys-Manny, Moe & Jack 410,000 8,917,500
Personnel Group of America, Inc. (a) 140,000 2,782,500
Philip Morris Companies, Inc. 309,000 11,529,563
Phillips Petroleum Co. 75,000 3,717,188
Phycor, Inc. (a) 300,000 6,825,000
Providian Financial Corp. 150,000 9,028,125
SHARES VALUE (NOTE 1)
Rubbermaid, Inc. 305,000 $ 8,730,625
Ryder Systems, Inc. 240,000 8,355,000
SLM Holding Corp. 246,700 10,531,006
Southdown, Inc. 90,000 6,367,500
Starwood Hotels & Resorts Trust 100,000 5,018,750
Texas Instruments, Inc. 100,000 6,406,250
USX-Marathon Group 170,000 6,088,125
Ultramar Diamond Shamrock Corp. 330,000 10,663,125
US Airways Group, Inc. (a) 70,000 4,978,750
U.S. Office Products Co. (a) 165,750 2,931,703
USFreightways Corp. 170,000 6,077,500
Valero Energy Corp. 150,000 4,856,250
Wellpoint Health Networks, Inc. (a) 33,000 2,380,125
307,581,684
VENEZUELA - 0.7%
Compania Anonima Nacional Telefonos
de Venezuela sponsored ADR 290,000 9,715,000
TOTAL COMMON STOCKS
(Cost $944,590,082) 1,182,353,481
PREFERRED STOCKS - 6.2%
CONVERTIBLE PREFERRED STOCKS - 0.7%
NETHERLANDS - 0.4%
Samas-Groep NV 79,306 4,902,938
UNITED STATES OF AMERICA- 0.3%
Unisys Corp. $3.75, Series A 84,200 4,136,325
TOTAL CONVERTIBLE PREFERRED STOCKS 9,039,263
NONCONVERTIBLE PREFERRED STOCKS - 5.5%
GERMANY - 2.8%
Dyckerhoff AG 23,000 7,914,695
Jungheinrich AG 36,800 7,397,294
Moebel Walther AG 51,700 2,187,872
Porsche AG 7,500 19,126,900
36,626,761
ITALY - 2.7%
Telecom Italia Spa 3,823,250 20,144,055
Telecom Italia Mobile Spa de Risp 4,400,000 15,840,003
35,984,058
TOTAL NONCONVERTIBLE PREFERRED STOCKS 72,610,819
TOTAL PREFERRED STOCKS
(Cost $62,545,069) 81,650,082
CASH EQUIVALENTS - 4.1%
Taxable Central Cash Fund
(Cost $54,472,747) (b) 54,472,747 54,472,747
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,061,607,898) $ 1,318,476,310
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.51%. 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
$29,805,810 or 2.2% of net assets.
(d) Affiliated company (see Note 7 of Notes to Financial Statements).
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $570,109,833 and $592,827,403, 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 $58,042 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
Beru AG $ - $ 2,813,372 $ - $ -
Haci Omer Sabanci Holdings AS - 1,818,488 - -
Samas-Groep NV 528,511 - - 15,097,042
TOTALS $ 528,511 $ 4,631,860 $ - $ 15,097,042
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 1.4%
Basic Industries 12.9
Cash Equivalents 4.1
Construction & Real Estate 7.6
Durables 8.7
Energy 4.6
Finance 17.5
Health 1.0
Holding Companies 1.1
Industrial Machinery & Equipment 6.2
Media & Leisure 5.3
Nondurables 6.9
Retail & Wholesale 6.8
Services 2.0
Technology 3.1
Transportation 3.4
Utilities 7.4
100.0%
INCOME TAX INFORMATION
At April 30, 1998 the aggregate cost of investment securities for
income tax purposes was $1,062,072,824. Net unrealized appreciation
aggregated $256,403,486 of which $287,325,249 related to appreciated
investment securities and $30,921,763 related to depreciated
investment securities.
WORLDWIDE
FINANCIAL STATEMENTS
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STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $1,061,607,898) - $ 1,318,476,310
SEE ACCOMPANYING SCHEDULE
FOREIGN CURRENCY HELD AT VALUE 1,424
(COST $1,424)
RECEIVABLE FOR INVESTMENTS SOLD 1,078,619
RECEIVABLE FOR FUND SHARES SOLD 16,290,929
DIVIDENDS RECEIVABLE 4,083,535
INTEREST RECEIVABLE 306,930
OTHER RECEIVABLES 18,824
TOTAL ASSETS 1,340,256,571
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 2,998,337
PAYABLE FOR FUND SHARES REDEEMED 5,419,192
ACCRUED MANAGEMENT FEE 792,397
OTHER PAYABLES AND 574,308
ACCRUED EXPENSES
TOTAL LIABILITIES 9,784,234
NET ASSETS $ 1,330,472,337
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 1,012,844,445
UNDISTRIBUTED NET INVESTMENT INCOME 4,638,324
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN 56,126,088
CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 256,863,480
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 69,597,672 $ 1,330,472,337
SHARES OUTSTANDING
NET ASSET VALUE, OFFERING PRICE $19.12
AND REDEMPTION PRICE PER SHARE ($1,330,472,337 (DIVIDED BY) 69,597,672 SHARES)
</TABLE>
<TABLE>
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STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 9,835,347
DIVIDENDS
INTEREST 2,711,878
12,547,225
LESS FOREIGN TAXES WITHHELD (1,123,511)
TOTAL INCOME 11,423,714
EXPENSES
MANAGEMENT FEE $ 4,298,879
TRANSFER AGENT FEES 1,633,407
ACCOUNTING FEES AND EXPENSES 316,310
NON-INTERESTED TRUSTEES' COMPENSATION 2,058
CUSTODIAN FEES AND EXPENSES 322,995
REGISTRATION FEES 48,638
AUDIT 32,514
LEGAL 3,558
REPORTS TO SHAREHOLDERS 76,566
MISCELLANEOUS 24,449
TOTAL EXPENSES BEFORE REDUCTIONS 6,759,374
EXPENSE REDUCTIONS (95,165) 6,664,209
NET INVESTMENT INCOME 4,759,505
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (INCLUDING 57,165,108
REALIZED GAIN OF $1,062,506
ON SALES OF INVESTMENTS IN
AFFILIATED ISSUERS)
FOREIGN CURRENCY TRANSACTIONS (565,909) 56,599,199
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 152,051,033
ASSETS AND LIABILITIES IN 5,256 152,056,289
FOREIGN CURRENCIES
NET GAIN (LOSS) 208,655,488
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 213,414,993
OTHER INFORMATION $ 66,646
EXPENSE REDUCTIONS
DIRECTED BROKERAGE ARRANGEMENTS
TRANSFER AGENT CREDITS 28,519
$ 95,165
</TABLE>
<TABLE>
<CAPTION>
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SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 4,759,505 $ 13,203,402
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 56,599,199 131,822,297
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 152,056,289 21,778,124
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 213,414,993 166,803,823
DISTRIBUTIONS TO SHAREHOLDERS (7,179,195) (9,779,572)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (75,708,402) (21,857,664)
TOTAL DISTRIBUTIONS (82,887,597) (31,637,236)
SHARE TRANSACTIONS 676,057,747 1,506,418,739
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 81,440,892 31,099,635
COST OF SHARES REDEEMED (718,745,079) (1,388,711,635)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS 38,753,560 148,806,739
TOTAL INCREASE (DECREASE) IN NET ASSETS 169,280,956 283,973,326
NET ASSETS
BEGINNING OF PERIOD 1,161,191,381 877,218,055
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $4,638,324 AND $12,155,595, RESPECTIVELY) $ 1,330,472,337 $ 1,161,191,381
OTHER INFORMATION
SHARES
SOLD 39,422,408 90,093,952
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 5,220,569 2,080,227
REDEEMED (42,300,009) (82,695,485)
NET INCREASE (DECREASE) 2,342,968 9,478,694
</TABLE>
<TABLE>
<CAPTION>
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SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
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FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996 1995 1994 1993
NET ASSET VALUE,
BEGINNING OF PERIOD $ 17.27 $ 15.18 $ 13.32 $ 13.96 $ 12.76 $ 9.63
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .07 D .21 D, I .22 .17 .08 .11
NET REALIZED AND UNREALIZED
GAIN (LOSS) 3.05 2.43 1.79 (.08) 1.37 3.28
TOTAL FROM INVESTMENT OPERATIONS 3.12 2.64 2.01 .09 1.45 3.39
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.11) (.17) (.15) (.16) (.10) (.24)
FROM NET REALIZED GAIN (1.16) (.38) - (.57) (.15) (.02) H
TOTAL DISTRIBUTIONS (1.27) (.55) (.15) (.73) (.25) (.26)
NET ASSET VALUE, END OF PERIOD $ 19.12 $ 17.27 $ 15.18 $ 13.32 $ 13.96 $ 12.76
TOTAL RETURN B, C 19.73% 17.95% 15.25% .95% 11.55% 36.10% E
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD
(000 OMITTED) $1,330,472 $1,161,191 $877,218 $659,045 $748,738 $287,278
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.19% A 1.18% 1.19% 1.17% 1.32% 1.40%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
AFTER 1.17% A, F 1.16% F 1.18% F 1.16% F 1.32% 1.40%
EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS .84% A 1.24% 1.71% 2.05% 1.40% 1.99%
PORTFOLIO TURNOVER RATE 108% A 85% 49% 70% 69% 57%
AVERAGE COMMISSION RATE G $ .0017 $ .0054 $ .0003
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C THE TOTAL RETURNS FOR PERIODS OF LESS THAN
ONE YEAR HAVE NOT BEEN ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD.
E TOTAL RETURNS DO NOT INCLUDE THE ONE TIME
SALES CHARGE.
F FMR OR THE FUND HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID
OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
G FOR FISCAL YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT
MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
H INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS
ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS
ORDINARY INCOME.
I INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND
WHICH AMOUNTED TO $.06 PER SHARE.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED APRIL 30, 1998 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity International Growth & Income Fund, Fidelity Diversified
International Fund, Fidelity International Value Fund, Fidelity
Overseas Fund and Fidelity Worldwide Fund (the funds) are funds of
Fidelity Investment Trust (the trust). The trust is registered under
the Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust. Each fund is authorized to issue an unlimited number
of shares. The financial statements have been prepared in conformity
with generally accepted accounting principles which permit management
to make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the funds:
SECURITY VALUATION. Securities for which quotations are readily
available are valued at the last sale price, or if no sale price, at
the closing bid price in the principal market in which such securities
are normally traded. If trading or events occurring in other markets
after the close of the principal market in which securities are traded
is 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 local share price. If the
broker-quoted premium is not readily available as a result of limited
share activity, the securities are valued at the last sale price of
the local shares in the principal market in which securities are
normally traded.
FOREIGN CURRENCY TRANSLATION. The accounting records of the funds are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. 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.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Certain foreign currency gains (losses) are taxable
as ordinary income and, therefore, increase (decrease) taxable
ordinary income available for distribution.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for futures transactions, foreign currency transactions,
passive foreign investment companies (PFIC), market discount, 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.,
(formerly FMR Texas, 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
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), and 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 the following annualized
rates expressed as a percentage of average net assets after the
performance adjustment, if applicable:
International Value .87%
Overseas .92%
Diversified International .85%
International Growth & Income, Worldwide .75%
SUB-ADVISER FEE. FMR, on behalf of the funds, entered into
sub-advisory agreements with Fidelity Management & Research (U.K.)
Inc., Fidelity Management & Research (Far East) Inc., Fidelity
International Investment Advisors (FIIA), and Fidelity Investments
Japan Limited (FIJ). In addition, FIIA entered into a sub-advisory
agreement with its subsidiary, Fidelity International Investment
Advisors (U.K.) Limited (FIIAL U.K.). Under the sub-advisory
arrangements, FMR may receive investment
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SUB-ADVISER FEE - CONTINUED
advice and research services and may grant the sub-advisers investment
management authority to buy and sell securities. FMR pays its
sub-advisers either a portion of its management fee or a fee based on
costs incurred for these services. FIIA pays FIIAL U.K. a fee based on
costs incurred for either service.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the funds' transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, each fund's transfer agent
fees were equivalent to the following annualized rates expressed as a
percentage of average net assets:
Overseas, International Growth & Income
and Diversified International .28%
Worldwide .29%
International Value .24%
ACCOUNTING FEES. FSC maintains each fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.
BROKERAGE COMMISSIONS. Certain funds placed a portion of their
portfolio transactions with brokerage firms which are affiliates of
FMR. The commissions paid to these affiliated firms are shown under
the caption "Other Information" at the end of each applicable fund's
schedule of investments.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of certain fund's expenses.
In addition, certain funds have entered into arrangements with their
custodian and transfer agent whereby credits realized as a result of
uninvested cash balances were used to reduce a portion of each
applicable fund's expenses.
For the period, the reductions under these arrangements are shown
under the caption "Other Information" on each applicable fund's
Statement of Operations.
6. BENEFICIAL INTEREST.
At the end of the period, an affiliate of FMR was record owner of
approximately 6% of the total outstanding shares of the International
Value Fund.
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.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpressprovides a single toll-free number to access
account balances, positions, quotes and trading. It's easy to navigate
the service, and on your first call, the system will help you create a
personal identification number (PIN) for security.
SM
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
0
*
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity
at 1-800-544-7272 for significant savings on Web access from
internetMCI.
SM
(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE
WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS
NO ASSURANCE THAT MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE
$1 SHARE PRICE; AN
INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE
U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN
SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP61
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
950 Northgate Drive
San Rafael, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Ave.
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
4001 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29115 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc.,
London, England
Fidelity Management & Research (Far East) Inc.,
Tokyo, Japan
Fidelity Investments Japan Ltd.
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K.) Limited
OFFICERS
Edward C. Johnson 3d, PRESIDENT
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
Pacific Basin Fund
Southeast Asia Fund
Overseas Fund
United Kingdom Fund
Worldwide Fund
CORPORATE HEADQUARTERS
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
BULK RATE
U.S. POSTAGE
P A I D
F I D E L I T Y
INVESTMENTS
(registered trademark)
P.O. Box 193
Boston, MA 02101
(2_FIDELITY_LOGOS)FIDELITY'S
TARGETED INTERNATIONAL EQUITY
FUNDS
FIDELITY CANADA FUND
FIDELITY EMERGING MARKETS FUND
FIDELITY EUROPE FUND
FIDELITY EUROPE CAPITAL APPRECIATION FUND
FIDELITY FRANCE FUND
FIDELITY GERMANY FUND
FIDELITY HONG KONG AND CHINA FUND
FIDELITY JAPAN FUND
FIDELITY JAPAN SMALL COMPANIES FUND
FIDELITY LATIN AMERICA FUND
FIDELITY NORDIC FUND
FIDELITY PACIFIC BASIN FUND
FIDELITY SOUTHEAST ASIA FUND
FIDELITY UNITED KINGDOM FUND
SEMIANNUAL REPORT
APRIL 30, 1998
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
MARKET RECAP 4 A REVIEW OF WHAT HAPPENED IN WORLD MARKETS
DURING THE PAST SIX MONTHS.
CANADA FUND 5 PERFORMANCE
6 FUND TALK: THE MANAGER'S OVERVIEW
8 INVESTMENT CHANGES
9 INVESTMENTS
11 FINANCIAL STATEMENTS
EMERGING MARKETS FUND 13 PERFORMANCE
14 FUND TALK: THE MANAGER'S OVERVIEW
16 INVESTMENT CHANGES
17 INVESTMENTS
20 FINANCIAL STATEMENTS
EUROPE FUND 22 PERFORMANCE
23 FUND TALK: THE MANAGER'S OVERVIEW
25 INVESTMENT CHANGES
26 INVESTMENTS
28 FINANCIAL STATEMENTS
EUROPE CAPITAL APPRECIATION FUND 30 PERFORMANCE
31 FUND TALK: THE MANAGER'S OVERVIEW
33 INVESTMENT CHANGES
34 INVESTMENTS
36 FINANCIAL STATEMENTS
FRANCE FUND 38 PERFORMANCE
39 FUND TALK: THE MANAGER'S OVERVIEW
41 INVESTMENT CHANGES
42 INVESTMENTS
44 FINANCIAL STATEMENTS
GERMANY FUND 46 PERFORMANCE
47 FUND TALK: THE MANAGER'S OVERVIEW
49 INVESTMENT CHANGES
50 INVESTMENTS
52 FINANCIAL STATEMENTS
HONG KONG AND CHINA FUND 54 PERFORMANCE
55 FUND TALK: THE MANAGER'S OVERVIEW
57 INVESTMENT CHANGES
58 INVESTMENTS
60 FINANCIAL STATEMENTS
JAPAN FUND 62 PERFORMANCE
63 FUND TALK: THE MANAGER'S OVERVIEW
65 INVESTMENT CHANGES
66 INVESTMENTS
68 FINANCIAL STATEMENTS
JAPAN SMALL COMPANIES FUND 70 PERFORMANCE
71 FUND TALK: THE MANAGER'S OVERVIEW
73 INVESTMENT CHANGES
74 INVESTMENTS
76 FINANCIAL STATEMENTS
LATIN AMERICA FUND 78 PERFORMANCE
79 FUND TALK: THE MANAGER'S OVERVIEW
81 INVESTMENT CHANGES
82 INVESTMENTS
84 FINANCIAL STATEMENTS
NORDIC FUND 86 PERFORMANCE
87 FUND TALK: THE MANAGERS' OVERVIEW
89 INVESTMENT CHANGES
90 INVESTMENTS
92 FINANCIAL STATEMENTS
PACIFIC BASIN FUND 94 PERFORMANCE
95 FUND TALK: THE MANAGER'S OVERVIEW
97 INVESTMENT CHANGES
98 INVESTMENTS
101 FINANCIAL STATEMENTS
SOUTHEAST ASIA FUND 103 PERFORMANCE
104 FUND TALK: THE MANAGER'S OVERVIEW
106 INVESTMENT CHANGES
107 INVESTMENTS
110 FINANCIAL STATEMENTS
UNITED KINGDOM FUND 112 PERFORMANCE
113 FUND TALK: THE MANAGER'S OVERVIEW
115 INVESTMENT CHANGES
116 INVESTMENTS
119 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS 121 NOTES TO THE FINANCIAL STATEMENTS
</TABLE>
To reduce expenses and demonstrate respect for our environment, we
have initiated a project through which we will begin eliminating
duplicate copies of most financial reports and prospectuses to most
households, even if they have more than one account in the fund.
If additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE
FUNDS. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR
MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE
YOU INVEST OR SEND MONEY.
MARKET RECAP
During the six-month period that ended April 30, 1998, some of the
world's financial markets enjoyed robust growth, while others
continued to unravel. Most European markets benefited from strong
economies and low interest rates, while many Asian markets continued
to writhe under the increasing pressures of currency devaluations,
economic instability, and civil and political unrest. For the period,
the Morgan Stanley Capital International (MSCI) Europe, Australasia
and Far East (EAFE) Index returned 15.56%.
EUROPE: Most economies in Europe continued to thrive amidst an
environment of relatively benign inflation and reduced interest rates,
as many countries began to prepare for the advent of the European
Monetary Union in January 1999. Many corporations followed the path to
efficiency through restructuring and robust merger and acquisition
activity. In addition, the stronger U.S. dollar made European exports
more attractive. The MSCI Europe Index returned an impressive 29.24%
during the period. Strong individual performers included Portugal,
Spain and Italy. However, the strong U.S. dollar took back some of the
gains for dollar-based investors in all European markets, except the
United Kingdom.
EMERGING MARKETS: Latin American markets struggled as the economic
turmoil in Southeast Asia prompted a massive sell-off of most
emerging-market stocks at the beginning of the period. The Brazilian
market rebounded and performed fairly well during the period after
interest rates quickly fell from a high point of more than 40% in late
fall 1997. However, Mexico and Venezuela - two major exporters of oil
- - were victims of the plummeting price of oil at the end of 1997,
which widened their trade gaps and eventually put pressure on their
currencies. The MSCI Emerging Markets Free - Latin America Index
returned 7.97% during the period. Southeast Asian markets - the origin
of most of the volatility in emerging markets - performed poorly. The
depreciation of many currencies in the region prompted central banks
to dramatically raise interest rates, which had a slowing effect on
the economies by making borrowing more expensive. The MSCI Far East
ex-Japan Free Index fell 11.87% during the period. The Southeast Asian
crisis also caused volatility in U.S. markets by introducing the
threat of cheapening Asian imports.
JAPAN AND THE FAR EAST: Japan suffered from sharply falling stock
prices and depreciating currencies relative to the U.S. dollar. In
addition, the failure of several Japanese financial firms raised
concerns about widespread corporate bankruptcies throughout the
country. The Tokyo Stock Exchange Index - a gauge of the
Japanese market - was down 12.44% over the past six months. Although
the Hong Kong market did suffer from the influence of currency
problems in Southeast Asia at the beginning of the period, the market
recovered in early 1998 and fared significantly better than other
Asian markets because of its more mature and less volatile nature. The
Hang Seng Index, which measures the performance of the Hong Kong stock
market, dropped 0.64% during the period.
U.S. AND CANADA: Despite economic difficulties in Southeast Asia and
the resulting concern that U.S. corporate earnings would slow, the
U.S. stock market continued to perform well during the period. In
fact, the Standard & Poor's 500 Index - a measure of the U.S. stock
market - returned 22.49% during this time. Some U.S. corporations with
business exposure to Asia did report disappointing earnings and their
stocks were harshly punished - sometimes sending the market tumbling
for a day or two. However, investors seemed to adopt a new attitude -
one that overlooked short-term troubles and focused on longer-term
growth - helping many of these stocks to rebound quickly. Overall, the
continued strength of the U.S. economy, combined with low interest
rates and low inflation, buoyed the stock market. Through the first
four months of 1998, cash inflows into stock mutual funds were very
strong and the Dow Jones Industrial Average closed above 9000 for the
first time in April. Canada's stock market also generated healthy
returns - to the point that share prices were often outpacing
corporate profits, causing equity valuations to hit historic highs. In
addition, Canada has improved its economy and the unemployment rate
dropped from double digits a year ago to about 8.5% during the period.
The Toronto Stock Exchange 300 was up 11.13% for the six-month period.
BONDS: Although bond markets couldn't keep pace with global equity
markets, some bonds generated relatively strong gains. U.S.-based
bonds topped most foreign bonds on the continued strength of the U.S.
dollar and a backdrop of benign inflation. Convertible bonds - issues
that are convertible into a fixed number of a company's common shares
- - outperformed most other types of bonds, particularly government
bonds, since they were more tied to the strength of regional equity
markets. And, despite the turbulence created in many markets by the
Southeast Asian crisis, the J.P. Morgan Emerging Markets Bond Index
still managed to return 14.56% for the period. The Salomon Brothers
Non-U.S. World Government Bond Index - a proxy for developed countries
- - fell 1.02% for the period.
S&P 500 EAFE
* YEAR TO DATE THROUGH APRIL 30, 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: 15.1
Row: 16, Col: 2, Value: 15.7
%
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 6 PAST 1 PAST 5 PAST 10
APRIL 30, 1998 MONTHS YEAR YEARS YEARS
FIDELITY CANADA 9.40% 18.71% 56.78% 155.53%
FIDELITY CANADA 6.12% 15.15% 52.08% 147.86%
(INCL. 3.00% SALES CHARGE)
TORONTO STOCK EXCHANGE 300 11.13% 27.30% 100.35% 162.56%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the performance
of the 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
APRIL 30, 1998 YEAR YEARS YEARS
FIDELITY CANADA 18.71% 9.41% 9.84%
FIDELITY CANADA 15.15% 8.75% 9.50%
(INCL. 3.00% SALES CHARGE)
TORONTO STOCK EXCHANGE 300 27.30% 14.91% 10.13%
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
1988/04/30 9700.00 10000.00
1988/05/31 9237.72 9725.49
1988/06/30 9950.73 10504.99
1988/07/31 9809.69 10401.09
1988/08/31 9339.58 9882.47
1988/09/30 9535.46 10101.71
1988/10/31 9982.07 10415.89
1988/11/30 9864.54 10431.90
1988/12/31 10081.43 10739.39
1989/01/31 10842.14 11570.15
1989/02/28 10537.86 11289.75
1989/03/31 10714.02 11420.28
1989/04/30 10930.22 11673.63
1989/05/31 11298.57 11723.18
1989/06/30 11843.08 12089.08
1989/07/31 12563.75 12939.46
1989/08/31 12627.81 13174.79
1989/09/30 12547.74 12962.96
1989/10/31 12371.57 12980.56
1989/11/30 12443.64 13187.24
1989/12/31 12802.18 13402.30
1990/01/31 11763.94 12233.76
1990/02/28 11830.92 12149.14
1990/03/31 12031.87 12273.78
1990/04/30 11454.14 11342.00
1990/05/31 12207.71 12114.77
1990/06/30 12492.38 12135.75
1990/07/31 12592.86 12343.74
1990/08/31 11864.42 11596.95
1990/09/30 11671.84 11004.08
1990/10/31 11362.04 10644.42
1990/11/30 11730.45 10941.55
1990/12/31 12099.03 11416.56
1991/01/31 12152.68 11461.26
1991/02/28 13270.48 12302.91
1991/03/31 13851.73 12384.99
1991/04/30 13959.04 12371.87
1991/05/31 14576.06 12791.62
1991/06/30 14593.95 12598.59
1991/07/31 14549.24 12783.07
1991/08/31 14424.04 12841.19
1991/09/30 13941.16 12526.77
1991/10/31 14558.18 13117.50
1991/11/30 14012.69 12773.13
1991/12/31 14238.63 12834.76
1992/01/31 14495.26 12947.26
1992/02/29 14580.81 12844.22
1992/03/31 14172.09 12216.12
1992/04/30 14001.00 11999.08
1992/05/31 14124.57 12032.76
1992/06/30 14048.52 12135.66
1992/07/31 14409.72 12496.60
1992/08/31 14191.10 12273.19
1992/09/30 13582.78 11451.77
1992/10/31 13525.74 11670.23
1992/11/30 13487.72 11084.88
1992/12/31 13829.95 11501.22
1993/01/31 13753.80 11389.99
1993/02/28 14610.44 12081.49
1993/03/31 15409.97 12575.57
1993/04/30 15809.73 13105.20
1993/05/31 16028.65 13482.29
1993/06/30 16847.22 13695.56
1993/07/31 16238.05 13682.66
1993/08/31 16647.33 13932.44
1993/09/30 15828.77 13333.93
1993/10/31 16961.44 14375.31
1993/11/30 16571.19 13987.19
1993/12/31 17352.56 14659.84
1994/01/31 18115.73 15377.63
1994/02/28 17343.02 14737.65
1994/03/31 16703.87 14111.08
1994/04/30 16579.85 13928.69
1994/05/31 16656.17 14156.49
1994/06/30 15740.36 13203.89
1994/07/31 16045.63 13690.06
1994/08/31 16646.63 14441.69
1994/09/30 16732.48 14784.43
1994/10/31 16389.06 14478.81
1994/11/30 15196.61 13611.29
1994/12/31 15272.98 13797.32
1995/01/31 14203.87 13118.05
1995/02/28 14786.16 13661.22
1995/03/31 15712.08 14236.85
1995/04/30 16189.36 14586.95
1995/05/31 16695.28 15039.42
1995/06/30 16924.37 15325.88
1995/07/31 17506.66 15732.58
1995/08/31 17287.11 15657.06
1995/09/30 17535.29 15774.45
1995/10/31 16752.55 15508.54
1995/11/30 17439.84 16050.65
1995/12/31 18234.70 16236.89
1996/01/31 18541.48 17015.57
1996/02/29 18704.47 16963.22
1996/03/31 18992.08 17278.28
1996/04/30 19356.39 17866.72
1996/05/31 19816.57 18158.57
1996/06/30 19174.23 17576.11
1996/07/31 18618.18 17049.14
1996/08/31 19413.91 17902.69
1996/09/30 19941.20 18547.40
1996/10/31 20938.26 19989.96
1996/11/30 21542.25 21339.37
1996/12/31 21144.49 20740.64
1997/01/31 22812.52 21775.86
1997/02/28 22248.51 21639.92
1997/03/31 20736.48 20363.89
1997/04/30 20880.48 20624.94
1997/05/31 22764.52 22367.45
1997/06/30 22368.51 22591.64
1997/07/31 23412.54 24173.41
1997/08/31 22524.52 23109.31
1997/09/30 24036.55 24772.01
1997/10/31 22656.52 23625.12
1997/11/30 21636.50 22271.20
1997/12/31 22438.16 22867.88
1998/01/31 21963.06 22480.47
1998/02/28 23116.87 24356.50
1998/03/31 24148.51 26076.97
1998/04/30 24786.50 26255.75
IMATRL PRASUN SHR__CHT 19980430 19980506 113654 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Canada Fund on April 30, 1988, and the current
3.00% sales charge was paid. As the chart shows, by April 30, 1998,
the value of the investment would have grown to $24,786 - a 147.86%
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 $26,256 - a 162.56% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the potential
for significant growth over time; however, investing
in foreign markets means assuming greater risks than
investing in the United States. Factors like changes in
a country's financial markets, its local political and
economic climate, and the fluctuating value of its
currency create these risks. For these reasons an
international fund's performance may be more
volatile than a fund that invests exclusively in the
United States. Past performance is no guarantee
of future results and you may have a gain or loss
when you sell your shares.
(checkmark)
CANADA
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Tom Sweeney, Portfolio Manager of Fidelity Canada
Fund
Q. TOM, HOW DID THE FUND PERFORM?
A. For the six- and 12-month periods that ended April 30, 1998, the
fund returned 9.40% and 18.71%, respectively, compared to the Toronto
Stock Exchange (TSE) 300 returns of 11.13% and 27.30%.
Q. HOW WOULD YOU CHARACTERIZE THE CANADIAN STOCK MARKET'S PERFORMANCE
DURING THE PAST SIX MONTHS?
A. The Canadian market has been strengthening over the past six
months. I would characterize the stock market as "frothy," with share
prices going up much faster than the profits of its listed companies.
Price-to-earnings ratios increased, valuations hit historic highs and
stocks became very expensive. Within this environment, certain
industries performed very strongly - financial services and
telecommunications in particular. Although the market improved,
Canada's heavy dependence on natural resources, which have
underperformed the market, has limited the frothy performance of the
Canadian stock market.
Q. WHAT WAS BEHIND THIS MARKET ENVIRONMENT?
A. One of the underlying factors included an improving Canadian
economy, with the unemployment rate - which had been in double digits
a year ago - dropping fairly dramatically to about 8.5%. However, one
of the reasons that the Canadian economy lagged the U.S. is that there
are more unions and labor regulations in Canada, so employers don't
react quickly by increasing or reducing the number of employees when
economic conditions shift. Provincial governments in Ontario and
Alberta did a good job implementing economic reforms, but other
provinces still have a number of workforce regulations that have
proved cumbersome to employers.
Q. WHY DID THE FUND UNDERPERFORM ITS BENCHMARK DURING THE PERIOD?
A. First, the fund's average market capitalization - or the average
size of the companies in the fund - was much smaller than that of the
TSE 300. During the period, large-cap stocks performed better than
small-cap stocks. Second, the fund's weighting in natural resource
stocks was heavier than the TSE 300's. These stocks generally
underperformed, due primarily to events in Asia, that resulted in a
drop in Asian consumption of these products. Finally, the fund's
underweighting in banks, which performed very strongly, hurt fund
performance.
Q. WHAT HAS YOUR STRATEGY BEEN WITHIN THIS ENVIRONMENT?
A. I've cut back on natural resource stocks. Within this group,
performance varied. Some paper and forest product companies did very
well, even though the underlying paper pricing showed no improvement
during the period. However, after these stocks sold off last year due
to fears about Asia's economic troubles, they became very cheap and
prices rebounded. As they improved, I pared back the fund's weighting
because I saw continued weak fundamentals. I also reduced holdings in
precious metals producers after we saw a correction in the price of
silver; the resulting performance of silver producers, including Pan
American Silver and Silver Standard, was weak. Energy was another area
that generally performed poorly. The warm winter weakened prices and
inventories grew, factors that typically foreshadow weaker commodity
prices. In fact, the price of oil came down very sharply in the past
few months. The fund had been moderately overweighted relative to the
TSE 300 in oil and gas stocks, so I sold some holdings during the
period. I sold shares of Newport Petroleum and, to some extent,
Renaissance Energy and Beau Canada because they did not make their
production targets. However, in the long term I'm optimistic about
energy, and will explain why later in our discussion.
Q. WHICH STOCKS PERFORMED WELL?
A. Some of the best opportunities in the past six months were in
telecommunications companies. The fund benefited from the strong
performance of BCE/Bell Canada, BC Telecom, Maritime Telegraph and
Telephone, and Newtel Enterprises. However, these stocks became so
expensive that I pared them back at the end of the period to be
slightly underweighted relative to the TSE 300. Paper and forest
product producers Donohue and MacMillan Bloedel did well. Avenor, a
paper and forest product company, and Norcen, an energy company, were
bought out by other companies during the period, and I took the
opportunity to sell them at a profit. Some other energy holdings in
the fund did very well. Examples include Genlyte, FirstEnergy - two of
the fund's largest investments - and Niagara Mohawk. Banks, including
National Bank of Canada, also performed very well.
Q. WHAT'S BEHIND THE STRONG PERFORMANCE OF BANK STOCKS?
A. In Canada, the valuations of bank stocks are currently at an
historic high, but the performance of these stocks has been somewhat
tempered because mergers and acquisitions are not allowed in Canada.
However, a major event has recently occurred in the banking industry,
with two of the big banks - Royal Bank of Canada and the Bank of
Montreal - announcing that they want to merge. A governmental task
force has formed to investigate the possibility of changing the law to
allow mergers, with the decision expected in the fall. Interest rates
are also a factor in the performance of bank stocks. The fundamentals
for banks haven't been as good as for banks in the U.S., because
interest rates have moved up slightly in Canada, and banks' earnings
momentum has slowed. Still, the Canadian banks have generally had
terrific performance. In spite of this slight rise in interest rates,
investors are optimistic since the rate climb has propped up the
Canadian dollar, which had been weakening.
Q. WHICH STOCKS PERFORMED POORLY?
A. In addition to the other natural resource stocks I mentioned
before, base metal producers generally performed poorly. These
included two zinc producers, Breakwater Resources and Cominco, as well
as two nickel producers, Falconbridge and Inco. Their poor performance
can be attributed primarily to the shakeup in Asian markets and the
weak prices of underlying metals.
Q. WHERE ARE YOU FINDING NEW OPPORTUNITIES?
A. From a variety of industries. Seagram, one of the fund's top 10
holdings, had reported lower profits resulting from declining demand
for its premium spirits in Asia, one of its prime markets, and its
stock price declined. However, Seagram's asset value was significantly
higher than the share price, so I added it to the fund, and it
performed well. Noranda and Edperbrascan have been selling off some of
their holdings; again, the companies' asset values were higher than
their share prices and presented good investment opportunities.
Westburne - a distributor of plumbing fixtures and supplies - showed
promise based on excellent management and its earnings potential. The
banking sector could benefit from the potential future allowance of
bank mergers, so I added the Bank of Nova Scotia to the fund's
holdings. Canadian Airlines, the second-largest airline in Canada
after Air Canada, had been losing money for a long time, but recently
posted a profit and showed promise for a turnaround.
Q. TOM, WHAT IS YOUR OUTLOOK?
A. Since Canada has a much higher proportion of its stock market in
natural resources, it has lagged the U.S. market. However, I believe
natural resources will make a recovery. It had begun a year ago, but
was stalled by the Asia Pacific troubles and by two very warm winters
and a cool summer. But, with low commodities prices limiting
production, supply has tightened up. At some point, the tighter
supply/demand balance could create a good scenario for price
increases. Further, if the government continues to support the
Canadian dollar and attract non-Canadian investors by increasing
interest rates, foreign investment in Canada should have a positive
impact on the Canadian stock market.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
TOM SWEENEY ON THE ENERGY SECTOR:
"I'm optimistic on energy in the long term, although it has
disappointed in the short term. In the next few years, the
industry is poised for a recovery in energy prices, simply
because there is very low spare capacity for the production of
crude oil in the world. If you compare 1998 to 1985 - when
the price of energy collapsed - there was a lot more spare
capacity in 1985, because Saudi Arabia could have produced
10 million barrels a day; but, it had cut back to producing
2 million barrels a day to try to support the price. Now, Saudi
Arabia is back up to 8 million barrels, with very little spare
production capacity in the rest of the world.
"If you look at capacity utilization historically, the last two
times that it has been this high were in 1973 and 1979, when
the price went up dramatically, in fact tripling in 1973. The
world is now in a very tight supply/demand scenario for energy.
Short-term, though, with one of the warmest winters just
over, there has been lower demand and growing inventories.
"The U.S. has experienced declining energy production
because we are a high-cost producer, with sources of energy
discovered long ago drying up. Since Canadian oil fields are
younger, Canadian production has been growing. Canada is
now a net exporter of energy - because it uses less than it
produces - so it has the potential to benefit from a future
recovery in energy prices. Many Canadian energy companies
are trading at low valuations relative to current energy prices.
If energy prices recover, I believe the shares of these
companies have significant upside potential.
"The low valuations of Canadian energy companies have caught
the eye of corporate buyers recently. Norcen Energy, a holding
of the fund, was bought out by Union Pacific Resources, a large
U.S. energy company. This was announced in January, and
helped boost the fund's performance during the period."
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Canadian issuers
FUND NUMBER: 309
TRADING SYMBOL: FICDX
START DATE: November 17, 1987
SIZE: as of April 30, 1998, more than $78 million
MANAGER: Tom Sweeney, since 1996; manager,
Fidelity Capital Appreciation Fund, 1986-1996;
Fidelity Select Paper and Forest Products Portfolio,
1986; joined Fidelity in 1985
(checkmark)
CANADA
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1998
ROW: 1, COL: 1, VALUE: 25.3
ROW: 1, COL: 2, VALUE: 74.7
UNITED STATES 25.3%
CANADA 74.7%
AS OF OCTOBER 31, 1997
ROW: 1, COL: 1, VALUE: 26.4
ROW: 1, COL: 2, VALUE: 73.59999999999999
UNITED STATES 26.4%
CANADA 73.6%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
STOCKS 95.7 94.3
SHORT-TERM INVESTMENTS 4.3 5.7
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
GENLYTE GROUP, INC. 6.7 7.4
(ELECTRICAL EQUIPMENT)
PAN AMERICAN SILVER CORP. 6.5 6.2
(PRECIOUS METALS)
NATIONAL BANK OF CANADA 4.9 2.9
(BANKS)
FIRSTENERGY CORP. 4.0 0.0
(ELECTRIC UTILITY)
SEAGRAM CO. LTD. 3.9 0.0
(BEVERAGES)
HANCOCK FABRICS, INC. 3.9 4.2
(RETAIL & WHOLESALE, MISCELLANEOUS)
ALCAN ALUMINIUM LTD. 3.4 2.0
(METALS AND MINING)
DENBURY RESOURCES, INC. 3.3 0.8
(OIL & GAS)
BCE, INC. 2.8 4.6
(TELEPHONE SERVICES)
FPI LTD. 2.7 5.2
(FOODS)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
BASIC INDUSTRIES 14.1 19.2
UTILITIES 14.1 11.3
ENERGY 13.9 23.5
FINANCE 10.2 5.3
NONDURABLES 9.2 8.9
PRECIOUS METALS 7.5 8.9
INDUSTRIAL MACHINERY & EQUIPMENT 6.7 7.4
TRANSPORTATION 5.9 1.8
RETAIL & WHOLESALE 5.6 4.2
CONSTRUCTION & REAL ESTATE 3.1 0.0
CANADA
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 95.7%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.8%
Magellan Aerospace Corp. (a) 100,000 $ 646,481
BASIC INDUSTRIES - 14.1%
CHEMICALS & PLASTICS - 1.2%
Potash Corp. of Saskatchewan 10,000 890,318
IRON & STEEL - 0.3%
Linamar Corp. 4,000 262,763
METALS & MINING - 8.2%
Alcan Aluminium Ltd. 80,000 2,594,081
Breakwater Resources Ltd. (a) 200,000 363,395
Cominco Ltd. 80,000 1,311,017
Falconbridge Ltd. 10,000 153,744
Inco Ltd. 10,000 175,059
Noranda, Inc. 80,000 1,649,254
6,246,550
PAPER & FOREST PRODUCTS - 4.4%
Alliance Forest Products, Inc. (a) 5,000 105,350
Cascades, Inc. 100,000 782,697
Domtar, Inc. 5,000 41,930
Donohue, Inc. (vtg.) 25,000 567,805
Groupe Forex, Inc. 2,200 8,730
MacMillan Bloedel Ltd. 50,000 711,066
Noranda Forest, Inc. 10,000 67,088
Paperboard Industries
International, Inc. (a) 275,000 960,900
St. Laurent Paperboard, Inc. (a) 5,000 67,962
Tembec, Inc. Class A (a) 10,000 66,389
3,379,917
TOTAL BASIC INDUSTRIES 10,779,548
CONSTRUCTION & REAL ESTATE - 3.1%
BUILDING MATERIALS - 3.1%
Emco Ltd. 5,000 51,364
Hussmann International, Inc. 40,000 695,000
Richelieu Hardware Ltd. (a) 5,000 64,118
St. Lawrence Cement, Inc. Class A 10,000 136,972
Westburne, Inc. (a) 105,000 1,394,179
2,341,633
DURABLES - 0.3%
AUTOS, TIRES, & ACCESSORIES - 0.3%
Canadian Tire Corp. Ltd. Series A (a) 10,000 250,882
ENERGY - 13.9%
ENERGY SERVICES - 0.8%
Bonus Resource Services Corp. (a) 40,000 138,370
Peak Energy Services Ltd. (a) 86,200 225,899
Precision Drilling Class A (a) 10,000 237,604
601,873
OIL & GAS - 13.1%
Amber Energy, Inc. (a) 10,000 109,717
Anderson Exploration Ltd. (a) 10,000 121,598
Beau Canada Exploration Ltd. (a) 400,000 679,269
Canadian Natural Resources Ltd. (a) 25,000 537,231
Canadian Occidental Petroleum Ltd. 80,000 1,624,096
Denbury Resources, Inc. (a) 150,000 2,531,535
Encal Energy Ltd. (a) 90,000 364,793
Gulf Canada Resources Ltd. (a) 50,000 260,317
Northrock Resources Ltd. (a) 20,000 314,476
SHARES VALUE (NOTE 1)
Penn West Petroleum Ltd. (a) 40,000 $ 521,332
Petro-Canada 50,000 842,098
Pinnacle Resources Ltd. (a) 50,000 489,186
Renaissance Energy Ltd. (a) 15,200 292,645
Rio Alto Exploration Ltd. (a) 25,000 288,270
Ulster Petroleums Ltd. (a) 30,000 236,906
Vermilion Resources Ltd. (a) 125,000 764,352
9,977,821
TOTAL ENERGY 10,579,694
FINANCE - 10.2%
BANKS - 8.1%
Bank of Montreal 20,000 1,090,185
Bank of Nova Scotia 50,000 1,371,467
National Bank of Canada 180,000 3,710,821
6,172,473
INSURANCE - 2.1%
Acceptance Insurance Co., Inc. (a) 5,000 114,063
Edperbrascan Corp. Ltd., Class A (vtg.) 75,000 1,530,452
1,644,515
TOTAL FINANCE 7,816,988
INDUSTRIAL MACHINERY & EQUIPMENT - 6.7%
ELECTRICAL EQUIPMENT - 6.7%
Genlyte Group, Inc. (a) 200,000 5,087,500
POLLUTION CONTROL - 0.0%
Laidlaw Environmental Services, Inc. (a) 10,000 39,375
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 5,126,875
MEDIA & LEISURE - 2.3%
ENTERTAINMENT - 1.3%
Cinar Films, Inc. Class B (sub. vtg.) (a) 50,000 960,900
PUBLISHING - 1.0%
Thomson Corp. 25,000 752,123
TOTAL MEDIA & LEISURE 1,713,023
NONDURABLES - 9.2%
BEVERAGES - 3.9%
Seagram Co. Ltd. 70,000 2,984,032
FOODS - 5.3%
FPI Ltd. (a) 400,000 2,026,626
National Sea Products Ltd. (a) 300,000 1,897,341
Saputo Group, Inc. 5,000 131,556
4,055,523
TOTAL NONDURABLES 7,039,555
PRECIOUS METALS - 7.5%
Greenstone Resources Ltd. (a) 10,000 60,799
Greenstone Resources Ltd.
warrants 2/28/02 (a) 11,040 24,688
Pan American Silver Corp. (a) 500,000 4,944,268
Silver Standard Resources, Inc. (a) 210,800 707,111
5,736,866
RETAIL & WHOLESALE - 5.6%
GENERAL MERCHANDISE STORES - 1.3%
Hudson's Bay Co. Ord. 10,000 217,338
Sears Canada, Inc. 40,000 747,755
965,093
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - 0.4%
Alementation Couch-Tard, Inc.
Class B (sub. vtg.) (a) 15,000 $ 205,982
Metro, Inc. Class A 10,000 132,779
338,761
RETAIL & WHOLESALE, MISCELLANEOUS - 3.9%
Hancock Fabrics, Inc. 200,000 2,975,000
TOTAL RETAIL & WHOLESALE 4,278,854
SERVICES - 2.0%
PRINTING - 0.2%
Moore Corporation Ltd. 10,000 156,190
SERVICES - 1.8%
CGI Group, Inc. Class A (sub. vtg.) (a) 50,000 1,376,708
TOTAL SERVICES 1,532,898
TRANSPORTATION - 5.9%
AIR TRANSPORTATION - 3.9%
Canadian Airlines Corp. (a) 300,000 1,111,150
Transat AT, Inc. (a) 240,000 1,844,928
2,956,078
RAILROADS - 0.7%
Bombardier, Inc. Class B 20,000 539,502
TRUCKING & FREIGHT - 1.3%
Laidlaw, Inc. 75,000 1,043,013
TOTAL TRANSPORTATION 4,538,593
UTILITIES - 14.1%
CELLULAR - 0.3%
Teleglobe, Inc. 5,000 218,386
ELECTRIC UTILITY - 9.8%
Boralex, Inc. Class A (a) 100,000 314,476
Eastern Utilities Associates 10,000 262,500
FirstEnergy Corp. 100,000 3,025,000
Niagara Mohawk Power Corp. (a) 150,000 1,837,500
Unisource Energy Corp. (a) 113,000 1,998,688
7,438,164
TELEPHONE SERVICES - 4.0%
BCE, Inc. 50,000 2,127,957
BC Telecom, Inc. 5,000 182,571
Island Telephone Co. Ltd. 10,000 356,407
Maritime Telegraph & Telephone
Co. Ltd. 5,000 134,526
Newtel Enterprises Ltd. 10,000 279,185
3,080,646
TOTAL UTILITIES 10,737,196
TOTAL COMMON STOCKS
(Cost $58,710,380) 73,119,086
CASH EQUIVALENTS - 4.3%
Taxable Central Cash Fund (b)
(Cost $3,258,583) 3,258,583 3,258,583
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $61,968,963) $ 76,377,669
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.51%. 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 $72,525,867 and $97,675,016, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these
affiliated firms were $3,232 for the period.
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 April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $62,056,924. Net unrealized appreciation
aggregated $14,320,745, of which $15,184,643 related to appreciated
investment securities and $863,898 related to depreciated investment
securities.
CANADA
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 76,377,669
(COST $61,968,963) -
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 3,705,889
RECEIVABLE FOR FUND SHARES SOLD 25,130
DIVIDENDS RECEIVABLE 44,948
INTEREST RECEIVABLE 7,920
TOTAL ASSETS 80,161,556
LIABILITIES
PAYABLE TO CUSTODIAN BANK $ 52,048
PAYABLE FOR INVESTMENTS PURCHASED 1,128,661
PAYABLE FOR FUND SHARES REDEEMED 198,622
ACCRUED MANAGEMENT FEE 20,971
OTHER PAYABLES AND 57,691
ACCRUED EXPENSES
TOTAL LIABILITIES 1,457,993
NET ASSETS $ 78,703,563
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 65,124,656
UNDISTRIBUTED NET INVESTMENT INCOME 168,552
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (1,001,798)
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 14,412,153
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS, FOR 4,310,473 $ 78,703,563
SHARES OUTSTANDING
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE ($78,703,563 (DIVIDED BY) 4,310,473 SHARES) $18.26
MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $18.26) $18.82
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 541,848
DIVIDENDS
INTEREST 54,635
596,483
LESS FOREIGN TAXES WITHHELD (58,950)
TOTAL INCOME 537,533
EXPENSES
MANAGEMENT FEE $ 311,791
BASIC FEE
PERFORMANCE ADJUSTMENT (184,604)
TRANSFER AGENT FEES 145,319
ACCOUNTING FEES AND EXPENSES 32,213
NON-INTERESTED TRUSTEES' COMPENSATION 158
CUSTODIAN FEES AND EXPENSES 28,553
REGISTRATION FEES 9,281
AUDIT 17,148
LEGAL 279
REPORTS TO SHAREHOLDERS 10,126
MISCELLANEOUS 153
TOTAL EXPENSES BEFORE REDUCTIONS 370,417
EXPENSE REDUCTIONS (23,200) 347,217
NET INVESTMENT INCOME 190,316
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (INCLUDING (76,656)
REALIZED LOSS OF $189,266
ON SALES OF INVESTMENTS IN
AFFILIATED ISSUERS)
FOREIGN CURRENCY TRANSACTIONS (23,197) (99,853)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 6,628,037
ASSETS AND LIABILITIES IN 6,341 6,634,378
FOREIGN CURRENCIES
NET GAIN (LOSS) 6,534,525
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 6,724,841
OTHER INFORMATION $ 7,426
SALES CHARGES PAID TO FDC
DEFERRED SALES CHARGES WITHHELD $ 2,681
BY FDC
EXPENSE REDUCTIONS $ 22,680
DIRECTED BROKERAGE ARRANGEMENTS
TRANSFER AGENT CREDITS 520
$ 23,200
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 190,316 $ 228,412
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) (99,853) 13,785,439
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 6,634,378 (5,363,765)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 6,724,841 8,650,086
DISTRIBUTIONS TO SHAREHOLDERS (246,908) (783,295)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (10,106,122) (26,588,671)
TOTAL DISTRIBUTIONS (10,353,030) (27,371,966)
SHARE TRANSACTIONS 4,249,384 53,914,016
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 10,182,688 27,052,083
COST OF SHARES REDEEMED (28,570,522) (95,712,095)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS (14,138,450) (14,745,996)
REDEMPTION FEES 12,699 254,182
TOTAL INCREASE (DECREASE) IN NET ASSETS (17,753,940) (33,213,694)
NET ASSETS
BEGINNING OF PERIOD 96,457,503 129,671,197
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $168,552 AND $322,747, RESPECTIVELY) $ 78,703,563 $ 96,457,503
OTHER INFORMATION
SHARES
SOLD 250,121 2,741,798
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 627,013 1,540,551
REDEEMED (1,676,961) (5,109,443)
NET INCREASE (DECREASE) (799,827) (827,094)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996 1995 1994 1993
NET ASSET VALUE, BEGINNING OF PERIOD $ 18.88 $ 21.84 $ 17.55 $ 17.18 $ 17.82 $ 14.23
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) .04 D .03 D .08 D .05 - (.15)
NET REALIZED AND UNREALIZED GAIN (LOSS) 1.47 1.39 4.27 .33 (.60) 3.76
TOTAL FROM INVESTMENT OPERATIONS 1.51 1.42 4.35 .38 (.60) 3.61
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.05) (.13) (.08) (.01) - (.02)
FROM NET REALIZED GAIN (2.08) (4.29) - - - -
IN EXCESS OF NET REALIZED GAIN - - - - (.04) -
TOTAL DISTRIBUTIONS (2.13) (4.42) (.08) (.01) (.04) (.02)
REDEMPTION FEES ADDED TO PAID IN CAPITAL - .04 .02 - - -
NET ASSET VALUE, END OF PERIOD $ 18.26 $ 18.88 $ 21.84 $ 17.55 $ 17.18 $ 17.82
TOTAL RETURN B, C 9.40% 8.21% 24.99% 2.22% (3.37)% 25.40%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $78,704 $96,458 $129,671 $326,763 $368,330 $95,977
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% A .93% 1.01% 1.09% E 1.57% 2.00%E
RATIO OF EXPENSES TO AVERAGE NET ASSETS
AFTER EXPENSE REDUCTIONS .84% A, F .92% F .98% F 1.08% F 1.57% 2.00%
RATIO OF NET INVESTMENT INCOME (LOSS) TO
AVERAGE NET ASSETS .46% A .18% .40% .26% (.14)% (.66)%
PORTFOLIO TURNOVER RATE 181% A 139% 139% 75% 59% 131%
AVERAGE COMMISSION RATE G $ .0205 $ .0242 $ .0276
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE NOTE 6
OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME
SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS
BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE
FUND'S EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 6
OF NOTES TO FINANCIAL STATEMENTS).
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995,
A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION
RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
</TABLE>
EMERGING MARKETS
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). If Fidelity had not reimbursed certain fund
expenses, the life of fund total returns would have been lower. 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 6 PAST 1 PAST 5 LIFE OF
APRIL 30, 1998 MONTHS YEAR YEARS FUND
FIDELITY EMERGING MARKETS 2.04% -35.52% -10.64% 14.98%
FIDELITY EMERGING MARKETS -1.02% -37.46% -13.33% 11.53%
(INCL. 3.00% SALES CHARGE)
MSCI EMERGING 3.64% -14.53% 38.81% 167.07%
MARKETS FREE
EMERGING MARKETS 3.49% -6.18% 27.66% N/A
FUNDS AVERAGE
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on November 1, 1990. For example, if
you 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 of over 850 stocks traded in 22 world
markets. Mexico, Malaysia, Brazil, and Thailand are most heavily
weighted, and together account for over 60% of the index. However, to
measure how the fund's performance stacked up against its peers, you
can compare it to the emerging markets funds average, which reflects
the performance of mutual funds with similar objectives tracked by
Lipper Analytical Services, Inc. The past six months average
represents a peer group of 150 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
APRIL 30, 1998 YEAR YEARS FUND
FIDELITY EMERGING MARKETS -35.52% -2.23% 1.88%
FIDELITY EMERGING MARKETS -37.46% -2.82% 1.47%
(INCL. 3.00% SALES CHARGE)
MSCI EMERGING -14.53% 6.78% 14.00%
MARKETS FREE
EMERGING MARKETS -6.18% 4.79% 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
IMATRL PRASUN SHR__CHT 19980430 19980506 115541 R00000000000093
$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 April 30, 1998, the value of the investment would have
grown to $11,153 - an 11.53% increase on the initial investment. For
comparison, look at how the Morgan Stanley Capital International
Emerging Markets Free Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 would have
grown to $26,707 - a 167.07% 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. DAVID, HOW DID THE FUND PERFORM?
A. For the six months that ended April 30, 1998, the fund's return was
2.04%. During the same period, the Morgan Stanley Capital
International Emerging Markets Free Index had a return of 3.64%, while
the emerging markets funds average tracked by Lipper Analytical
Services returned 3.49%. For the 12 months that ended April 30, 1998,
the fund's return was -35.52%. Over that same period, the index and
the average had returns of -14.53% and -6.18%, respectively.
Q. YOU MADE SUBSTANTIAL CHANGES IN BOTH THE STRATEGY AND THE HOLDINGS
OF THE FUND. CAN YOU ELABORATE ON THOSE CHANGES?
A. I completely restructured the fund's portfolio during November and
December 1997. The number of holdings was reduced from approximately
220 to about 150. In the first quarter of 1998, I took advantage of
sharp rallies in Southeast Asian markets to reduce the fund's holdings
in that region. Of particular note, I underweighted Malaysia, whereas
in the previous period the fund owned a considerably higher percentage
of Malaysian stocks than the Morgan Stanley index did. Indonesia was
another country where I cut back sharply on the fund's holdings. With
the cash raised by the sale of Asian securities, I increased the
fund's holdings in European emerging markets, including those of
Turkey, Poland and Greece. South Africa and Israel are two other
countries where I increased the fund's investments. In addition, I
built up significant positions in China and restructured the fund's
holdings in India. Although the fund still underperformed the index
and the average during the period, performance was hampered somewhat
by the restructuring process, which is now complete.
Q. YOU CUT BACK ON ASIAN HOLDINGS OVERALL BUT BUILT UP POSITIONS IN
CHINA. CAN YOU EXPLAIN YOUR REASONING THERE?
A. China has a massive domestic economy that is not overly dependent
on exports. In general, I believe that companies operating in
countries with large domestic economies are less vulnerable to
disruptions in sales and revenues because they are less dependent on
foreign trade. This may be an increasingly important consideration
going forward, as many firms in Asia seek to capitalize on their
countries' sharply depreciated currencies by increasing exports. A
flood of inexpensive exports could lead to friction with those
countries' trading partners. China might be somewhat insulated from
these frictions by its sizable domestic economy. India was another
country that fit this general description. In addition, the Indian
economy was beginning to show signs of growth after a period of
stagnation, so there was lots of room for positive surprises.
Q. WHAT ABOUT LATIN AMERICA? WHAT WAS YOUR STRATEGY WITH RESPECT TO
THE FUND'S HOLDINGS THERE?
A. I maintained a lighter exposure to Latin American equities relative
to the index. I saw some deterioration in the region's trade accounts,
indicating less competitive performance. In addition, the outlook for
corporate earnings was dimmer in view of higher interest rates
prompted by the "Asian contagion" - the spread of volatility from the
markets in Asia. However, there were still many attractive
opportunities in Latin America for selective investors.
Q. WHAT WAS IT ABOUT THE EMERGING MARKETS IN EUROPE THAT ATTRACTED
YOU?
A. For one thing, the imminent convergence of the European Economic
Community (EEC) countries into a massive single-currency organization
raised investors' expectations, especially for relatively new entries
like Greece. Also, economic growth remained strong in those countries,
interest rates were low and there were minimal spillover effects from
Southeast Asia.
Q. THE FUND'S HOLDINGS OF UTILITIES WENT FROM 16.2% TO 23.4% DURING
THE PERIOD. WAS THAT A CONSCIOUS DECISION ON YOUR PART?
A. Yes, it was part of my restructuring plan. In Asia, I reduced the
fund's holdings of property and financial companies because they are
extremely vulnerable in a high-interest-rate environment of the sort
we saw in many Asian countries during the period. The fund's remaining
investments in Asia were concentrated mostly in defensive,
consumer-oriented industries such as gaming and tobacco. Utilities
also are widely regarded as defensive stocks that tend to benefit from
any "flight to quality" triggered by general market volatility. That's
why I increased the percentage of the fund's utility holdings.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE?
A. One stock that helped was Industrial Credit and Investment Trust.
This Indian-based finance company recently acquired a bank and
received a full banking license, enabling it to increase its lending
margins and decrease its borrowing costs. Investors responded
positively to the prospects for higher earnings based on these
developments. Real Africa Holdings - a South African holding company
with interests in financial services, telecommunications and health
care - also did well. The company benefited from injections of assets
with significant upside potential as part of the black empowerment
movement in that country. YTL Corporation is a Malaysian electric
utility and conglomerate. Its stock price recovered nicely from
extremely depressed levels, and I took advantage of this opportunity
to take profits and reduce the fund's holdings of it by about
two-thirds. Finally, Haci Omer Sabanci Holding is a Turkish holding
company involved in banking, chemicals and telecommunications. The
stock of this well-managed company rose, in part, because it was an
undervalued issue in a market that was itself undervalued.
Q. WHAT STOCKS WERE DISAPPOINTING?
A. Indochina Goldfields severely hurt the fund's performance. The
story there, of course, was the sharp decline in the price of gold
over the period. I have since reduced the fund's position in this
stock somewhat. Centrais Electricas Brasileiras is a Brazilian
electric utility that was hurt by several factors. For one thing,
investors had less confidence in the company's ability to raise rates
because it was an election year in Brazil. In addition, the
privatization process for electric utilities ran into unexpected
delays.
Q. WHAT'S YOUR OUTLOOK, DAVID?
A. In the short term, I'm cautious because Asian contagion appears to
be taking hold of many emerging markets again. To prepare for this
eventuality, I raised the fund's cash position to about 7% by the end
of the period, which should enable me to take advantage of some of the
bargains that I expect to see in the coming months. I continue to be
interested in Latin America on a stock-selective basis, as further
Asian weakness may spill over into those markets. I'm very cautious on
Russia because the economy there is sensitive to commodity prices,
which have been weak lately. Until the Asian problems sort themselves
out a bit more, most of my interest will be in the emerging markets of
Europe, as well as South Africa, Israel, China and India - for the
reasons I mentioned earlier. The markets in Europe are especially well
insulated from the events in Asia, economic growth is good and the EEC
convergence is a catalyst that will likely maintain investors'
interest in the region. Looking out beyond the next six months or so,
I believe that the worst will be over in Asia, and the stage will be
set for those markets to make meaningful recoveries.
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.
DAVID STEWART ON INVESTING IN EXPORT-DRIVEN
COMPANIES IN THE PACIFIC BASIN:
"I think it's important to look past the obvious effects of the
widespread currency devaluations in the Pacific Basin. At
first glance, one might be attracted to certain companies
and countries simply on the basis of their export potential.
A cheaper local currency means that they can sell their goods
and services less expensively in countries with more expensive
currencies. Their ability to compete has therefore been
enhanced, and both their sales and earnings - as
denominated in the currency of the country in which they are
based - are likely to rise.
"In practice, it's not quite that straightforward. For one
thing, in order to enhance their exporting capacity in a
meaningful way, many Asian companies require large
infusions of capital - a commodity not readily available in
much of Asia right now. Moreover, even if we assume a
substantial increase in exporting capacity, a rapid,
widespread growth of exports could trigger the enactment of
trade barriers to protect competing firms in countries where
those exports are being sold. If that should happen, a
company that depends primarily on exports for its revenues
might suddenly find itself cut off from its main source of
business.
"This is why I prefer to invest in companies located in
countries with strong internal economies. Firms in those
countries typically derive more of their revenue from
domestic sales instead of relying so much on exports. This
offers more protection against the possibility of trade
restrictions. Indonesia and the Philippines are examples of
countries that currently depend more heavily on exports,
while China and India are examples of countries with strong
domestic economies.
"Another way I try to protect the fund's holdings from trade
sanctions and other risks is by buying the stocks of large,
well-diversified companies. With a number of profitable
business lines, a company is in a much better position to
weather negative developments to any one of them. The
precaution of buying well-established companies is
especially important when investing in emerging markets,
which by definition are more risky than established markets
such as those in the United States and Western Europe."
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of emerging market
issuers, which can be found in regions such as
Southeast Asia, Latin America, and Eastern Europe
FUND NUMBER: 322
TRADING SYMBOL: FEMKX
START DATE: November 1, 1990
SIZE: as of April 30, 1998, more than $472 million
MANAGER: David Stewart, since November 1997;
manager, Fidelity Emerging Markets Pilot Fund,
since 1995; analyst covering emerging markets,
since 1995; joined Fidelity in 1994
EMERGING MARKETS
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1998
ARGENTINA 3.7%
UNITED STATES 7.1%
ROW: 1, COL: 1, VALUE: 7.1
ROW: 1, COL: 2, VALUE: 4.4
ROW: 1, COL: 3, VALUE: 10.8
ROW: 1, COL: 4, VALUE: 4.1
ROW: 1, COL: 5, VALUE: 29.5
ROW: 1, COL: 6, VALUE: 13.0
ROW: 1, COL: 7, VALUE: 4.4
ROW: 1, COL: 8, VALUE: 7.2
ROW: 1, COL: 9, VALUE: 15.8
ROW: 1, COL: 10, VALUE: 3.7
TAIWAN 4.4%
BRAZIL 15.8%
SOUTH AFRICA 10.8%
INDIA 7.2%
TURKEY 4.1%
MALAYSIA 4.4%
MEXICO 13.0%
OTHER 29.5%
AS OF OCTOBER 31, 1997
UNITED STATES 8.0%
ARGENTINA 4.1%
ROW: 1, COL: 1, VALUE: 8.0
ROW: 1, COL: 2, VALUE: 4.9
ROW: 1, COL: 3, VALUE: 10.4
ROW: 1, COL: 4, VALUE: 3.6
ROW: 1, COL: 5, VALUE: 23.7
ROW: 1, COL: 6, VALUE: 12.7
ROW: 1, COL: 7, VALUE: 11.1
ROW: 1, COL: 8, VALUE: 7.2
ROW: 1, COL: 9, VALUE: 14.1
ROW: 1, COL: 10, VALUE: 4.1
THAILAND 4.9%
BRAZIL 14.1%
SOUTH AFRICA 10.4%
PHILIPPINES 3.6%
INDIA 7.2%
MALAYSIA 11.1%
OTHER 23.9%
MEXICO 12.7%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
STOCKS 92.9% 90.5%
BONDS 0.0% 1.5%
SHORT-TERM INVESTMENTS 7.1% 8.0%
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
TELEBRAS SPONSORED ADR 4.9 3.3
(BRAZIL, TELEPHONE SERVICES)
GRUPO FINANCIERO BANCOMER CLASS B 2.6 1.7
(MEXICO, BANKS)
PETROBRAS PN (PFD. REG.) 2.6 1.8
(BRAZIL, OIL & GAS)
INDUSTRIAL CREDIT & INVESTMENT TRUST 2.6 2.3
(INDIA, CREDIT & OTHER FINANCE)
TELEFONOS DE MEXICO SA SPONSORED 2.5 1.7
ADR REPRESENTING ORD. CLASS L SHARES
(MEXICO, TELEPHONE SERVICES)
CENTRAIS ELECTRICAS BRASILEIRAS SA 2.4 2.4
(BRAZIL, ELECTRIC UTILITIES)
TELESP PN (PFD. REG.) 2.0 0.8
(BRAZIL, TELEPHONE SERVICES)
YPF SOCIEDAD ANONIMA SPONSORED ADR 1.9 1.4
REPRESENTING CLASS D SHARES
(ARGENTINA, OIL & GAS)
CATHAY LIFE INSURANCE CO. LTD. 1.8 1.4
(TAIWAN, INSURANCE)
YAPI VE KREDI BANKASI AS 1.7 0.3
(TURKEY, BANKS)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 25.4 31.1
UTILITIES 23.4 16.2
HOLDING COMPANIES 7.0 4.8
ENERGY 6.6 6.3
NONDURABLES 6.3 8.5
BASIC INDUSTRIES 5.2 5.9
CONSTRUCTION & REAL ESTATE 5.0 8.3
TECHNOLOGY 4.5 1.6
PRECIOUS METALS 3.1 4.1
MEDIA & LEISURE 2.1 1.8
EMERGING MARKETS
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 92.8%
SHARES VALUE (NOTE 1)
ARGENTINA - 3.7%
Bansud SA Class B (a) 110,587 $ 1,039,652
Telecom Argentina Class B
sponsored ADR 195,700 7,045,200
YPF Sociedad Anonima sponsored ADR
representing Class D shares 261,100 9,105,863
17,190,715
BANGLADESH - 0.1%
Beximco Pharmaceuticals Ltd. (c) 21,585 25,347
BERMUDA - 0.5%
Central European Media Class C (a) 92,100 2,573,044
BRAZIL - 15.8%
Centrais Electricas Brasileiras SA 252,851,000 11,278,849
Compania Cervejaria Brahma PN
(Pfd. Reg.) 5,540,648 3,609,621
Compania Energertica Minas Gerais 105,855,000 5,137,471
Eletropaulo Metropolitana - Electricidade
de Sao Paulo SA (a) 4,741,000 558,448
Empresa Bandeirante Energia (a) 6,120,000 208,718
Itaubanco PN (Pfd. Reg.) 4,600,000 3,097,372
Klabin Industria de Papel e Celulose PN 1,413,887 890,209
Petrobras PN (Pfd. Reg.) 47,760,000 12,111,759
Souza Cruz Industria Comerico 464,600 3,798,706
Telebras sponsored ADR 187,500 22,839,844
Telesp PN (Pfd. Reg.) 27,622,635 9,396,359
Votorantim Celulose e Papel SA
(Pfd. Reg.) 47,768,505 918,985
73,846,341
CANADA - 0.9%
First Dynasty Mines Ltd. (a) 846,800 260,381
Indochina Goldfields Ltd. (a) 2,918,800 3,977,540
Indochina Goldfields Ltd. (a)(c) 39,000 53,147
4,291,068
CHILE - 1.8%
Compania Cervecerias Unidas SA
sponsored ADR 116,500 3,218,313
Enersis SA sponsored ADR (a) 50,000 1,471,875
Sociedad Quimica y Minera de Chile
sponsored ADR 68,000 2,953,750
Vina Concha Stet y Toro SA
sponsored ADR 28,400 923,000
8,566,938
CHINA (PEOPLES REPUBLIC) - 1.1%
Guangshen Railway Co. Class H 7,686,000 1,438,304
Qingling Motors Co. Ltd. Class H 4,600,000 1,988,772
Zhenhai Refining & Chemical Co.,
Class H 6,948,000 1,905,465
5,332,541
COLOMBIA - 1.1%
Suramericana de Inversiones SA 340,700 5,243,071
CZECH REPUBLIC - 0.9%
CEZ AS (a) 106,000 3,183,561
Komercni Banka AS sponsored ADR (a) 70,300 808,450
3,992,011
ESTONIA - 0.3%
Eesti Uhispank AS sponsored GDR (a)(c) 93,105 1,252,262
SHARES VALUE (NOTE 1)
GREECE - 1.2%
Alpha Credit Bank (a) 18,630 $ 1,965,621
Commercial Bank of Greece 59,040 3,715,246
5,680,867
HONG KONG - 1.7%
China Telecom Ltd. 1,125,000 2,172,656
China Resources Beijing Land Ltd. 6,764,000 3,579,067
Glorious Sun Enterprises 6,402,000 1,561,564
Shanghai Industrial Holdings Ltd.
Class H 257,000 880,603
8,193,890
HUNGARY - 1.0%
Magyar Tavkozlesi RT sponsored ADR 76,600 2,259,700
Magyar Olaj-es Gazipari RT (a) 77,700 2,360,627
4,620,327
INDIA - 7.2%
Bharat Petroleum Corp. Ltd. 144,600 1,456,377
Bajaj Auto Ltd. 28,150 422,268
Chemplast Sanmar Ltd. 210,000 137,480
Chemplast Sanmar Ltd. (c) 315,000 206,219
Colgate-Palmolive 1,299 8,579
Dr Reddy's Laboratories Ltd. 103,600 1,089,932
Hindalco Industries Ltd. 3,560 65,320
Hindustan Petroleum Corp. Ltd. 400 3,659
ITC Ltd. 90,000 1,782,239
Industrial Credit & Investment Trust (a) 4,655,860 12,109,976
Mahanagar Telephone Nigam Ltd.
GDR (a)(c) 108,800 1,713,600
Mahanagar Telephone Nigam Ltd. 647,700 4,109,792
Mahindra & Mahindra Ltd. 70 459
Oriental Bank of Commerce 450,000 717,235
Ranbaxy Laboratories Ltd. 20,250 338,307
Reliance Industries Ltd. 1,102 5,194
State Bank of India 1,089,900 7,903,521
Tata Engineering & Locomotive Ltd. 7,125 45,183
Tata Power Co. 567,700 1,416,427
33,531,767
INDONESIA - 0.9%
Gulf Indonesia Resources Ltd. 181,600 2,792,100
PT Astra Argo Niaga Lestari Tbk (a) 3,591,000 1,559,841
4,351,941
ISRAEL - 4.0%
Bank Hapoalim BM 2,423,300 6,492,208
ECI Telecom Ltd. 174,300 5,316,150
Elron Electronics Industries Ltd. 96,100 1,681,750
Koor Industries Ltd. sponsored ADR 208,000 5,278,000
18,768,108
KOREA (SOUTH) - 2.3%
Lg Electronics, Inc. 45,000 535,354
Samsung Electronics Co. Ltd.:
(vtg.) 100,529 5,566,140
rights 6/1/98 (a) 7,998 154,395
Samsung Fire & Marine Insurance 15,469 4,571,833
10,827,722
LUXEMBOURG - 1.3%
Minorco SA (For. Reg.) 307,500 6,024,043
MEXICO - 13.0%
Cifra SA de CV, Series C (a) 2,448,300 4,157,382
Corporacion Geo SA de CV (a) 666,440 4,598,844
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEXICO - CONTINUED
Gruma SA Class B sponsored
ADR (a)(c) 112,850 $ 1,015,650
Grupo Carso SA de CV Class A-1 1,130,000 7,105,747
Grupo Financiero:
Bancomer Class B 17,606,900 12,149,839
Inbursa SA Class B 1,147,208 3,498,903
Bannamex-Accival Class B (a) 762,000 2,377,885
Grupo Televisa SA de CV
sponsored ADR (a) 75,300 3,087,300
Grupo Elektra SA 3,520,000 5,023,834
Kimberly Clark de Mexico SA Class A 1,238,000 6,071,915
Telefonos de Mexico SA sponsored ADR
representing Ord. Class L shares 207,900 11,772,338
60,859,637
MALAYSIA - 4.4%
Arab Malaysian Corp. BHD 2,795,428 1,078,477
Amway Holding BHD 660,000 1,299,665
Carlsberg Brewery BHD 724,000 2,502,237
Hume Industries BHD 1,281,000 1,050,197
Hong Leong Credit BHD 1,927,300 1,559,396
Malaysian Plantations BHD 6,068,000 1,641,977
RJ Reynolds BHD 42,000 66,952
Rothmans of Pall Mall BHD 280,000 2,306,765
Sungei Bagen Rubber Co. BHD 10,000 219,692
YTL Corp. BHD 2,792,200 4,338,851
YTL Power International BHD (a) 3,625,680 3,283,268
YTL Cement BHD 2,620,800 1,123,451
20,470,928
PAKISTAN - 0.6%
Dandot Cement Co. Ltd. (a) 93,750 3,638
Hub Power Co. Ltd. GDR 91,300 2,305,325
Pakistan State Oil Co. Ltd. 98,813 484,025
2,792,988
PERU - 0.2%
Compania de Minas Buenaventura SA
Class B sponsored ADR 50,000 775,000
PHILIPPINES - 1.5%
First Philippines Holdings Corp. 852,500 624,814
Lepanto Consolidated Mining Co. 165,952,000 2,226,429
Manila Electric Co. Class B 860,000 2,435,776
QueenBee Resources Corp.
warrants 3/25/03 (a) 3,785,000 1,716,180
7,003,199
POLAND - 1.0%
Bank Handlowy W Warszawie SA GDR
Unit (Reg.S) (a) 160,500 3,025,425
Polifarb Cieszyn-Wroclaw SA (a) 505,300 1,874,512
4,899,937
RUSSIA - 3.2%
Tatneft AO sponsored ADR (Reg.) (a) 155,500 3,012,813
Mosenergo AO sponsored ADR (a) 75,700 2,706,275
Unified Energy Systems
sponsored ADR (a) 147,500 4,793,750
Vimpel Communications
sponsored ADR (a) 80,200 4,330,800
14,843,638
SHARES VALUE (NOTE 1)
SOUTH AFRICA - 10.8%
Barlow Rand Ltd. Ord. 273,700 $ 2,645,740
Coronation Holdings Ltd.,
Class N (1/100th vtg.) 126,430 2,601,904
Elandsrand Gold Mines Ltd. Ord. 483,200 2,151,380
JCI Ltd. 160,100 963,103
Johnnies Industrial Corp. Ltd. (Reg.) 501,700 7,247,274
Liberty Life Association of Africa Ltd. 134,395 4,547,649
Orion Selections:
Ltd. 1,579,000 3,593,252
Holdings Ltd. 1,058,500 3,141,882
Persetel Q Data Holdings Ltd. 307,300 3,344,514
Plessey Corp. Ltd. 1,882,000 2,960,700
Real Africa Holdings Ltd. (a) 1,689,884 6,487,335
Real Africa Holdings Ltd.
rights 5/20/98 (a) 580,067 487,837
Rembrandt Group Ltd. 767,700 6,988,068
Sasol, Ltd. 357,400 3,606,886
50,767,524
SRI LANKA - 0.5%
Aitken Spence & Co. Ltd. 95,000 292,631
Development Finance Corp. of Ceylon 200,288 964,977
John Keells Holdings Ltd. 141,223 747,330
National Development Bank 150,000 556,828
2,561,766
TAIWAN - 4.4%
Asustek Computer, Inc. (a) 178,100 3,629,568
Bank Sinopac (a) 3,035,000 2,208,980
Cathay Life Insurance Co. Ltd. 2,078,000 8,318,428
Cathay Construction Co. Ltd. 3,407,400 3,162,032
China Trust Co. Ltd. (a) 2,887,000 3,388,282
20,707,290
THAILAND - 2.7%
Bangkok Bank Public Co. Ltd.
(For. Reg.) 1,403,000 3,457,458
BEC World PCL (For. Reg.) 290,200 1,535,689
Bangkok Expressway PCL (For. Reg.) (a) 2,497,200 1,975,735
Industrial Finance Corp. of Thailand
(For. Reg.) 6,556,766 2,721,357
Nithipat Capital:
PCL (a) 2,395,900 -
PCL (warrants) (For. Reg.) (a) 49,800 -
Siam Makro PCL (For. Reg.) 335,600 552,804
Thai Military Bank Ltd. (For. Reg.) 9,687,820 2,487,922
12,730,965
TURKEY - 4.1%
Egs Gayrimenkul Yatirim Orta Class B (a) 64,717,400 1,941,522
Guney Biraciliu (a) 17,862,100 1,929,107
Haci Omer Sabanci Holding AS 85,584,100 6,247,639
Koytas Tekstil Sanayi ve Ticaret
Anonim Sirketi 26,770,000 1,231,420
Yapi Ve Kredi Bankasi AS 165,044,800 8,087,195
19,436,883
UNITED KINGDOM - 0.0%
Bakyrchik Gold PLC (a) 515,773 60,323
VENEZUELA - 0.6%
Compania Anonima Nacional Telefonos
de Venezuela sponsored ADR 85,000 2,847,500
TOTAL COMMON STOCKS
(Cost $473,405,947) 435,069,581
CONVERTIBLE PREFERRED STOCKS - 0.1%
SHARES VALUE (NOTE 1)
PHILIPPINES - 0.1%
PDCP Development Bank
(Cost $859,496) 2,252,138 $ 386,081
CASH EQUIVALENTS - 7.1%
Taxable Central Cash Fund (b)
(Cost $33,408,594) 33,408,594 33,408,594
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $507,674,037) $ 468,864,256
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.51%. 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
$4,266,225 or 0.9% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $201,524,641 and $225,619,870, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these
affiliated firms were $701 for the period.
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
As a Percentage of Total Value of Investment in Securities
Basic Industries 5.2%
Cash Equivalents 7.1
Construction & Real Estate 5.0
Durables 1.4
Energy 6.6
Finance 25.4
Health 0.3
Holding Companies 7.0
Media & Leisure 2.1
Nondurables 6.3
Precious Metals 3.1
Retail & Wholesale 2.1
Services 0.2
Transportation 0.3
Technology 4.5
Utilities 23.4
100.0%
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $509,092,517. Net unrealized depreciation
aggregated $40,228,261, of which $83,123,557 related to appreciated
investment securities and $123,351,818 related to depreciated
investment securities.
At October 31, 1997, the fund had a capital loss carryforward of
approximately $97,011,000, all of which will expire on September 30,
2004.
EMERGING MARKETS
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 468,864,256
(COST $507,674,037) -
SEE ACCOMPANYING SCHEDULE
FOREIGN CURRENCY HELD AT VALUE 4,181,852
(COST $4,193,279)
RECEIVABLE FOR INVESTMENTS SOLD 2,187,298
RECEIVABLE FOR FUND SHARES SOLD 500,351
DIVIDENDS RECEIVABLE 1,741,625
INTEREST RECEIVABLE 138,810
REDEMPTION FEES RECEIVABLE 61
TOTAL ASSETS 477,614,253
LIABILITIES
PAYABLE TO CUSTODIAN BANK $ 81,175
PAYABLE FOR INVESTMENTS PURCHASED 3,430,362
PAYABLE FOR FUND SHARES REDEEMED 1,198,748
ACCRUED MANAGEMENT FEE 293,169
OTHER PAYABLES AND 478,271
ACCRUED EXPENSES
TOTAL LIABILITIES 5,481,725
NET ASSETS $ 472,132,528
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 871,413,868
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME (19,074,549)
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (341,137,692)
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS (39,069,099)
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS, FOR 45,832,014 $ 472,132,528
SHARES OUTSTANDING
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE ($472,132,528 (DIVIDED BY) 45,832,014 SHARES) $10.30
MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $10.30) $10.62
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 4,689,638
DIVIDENDS
INTEREST 1,137,281
5,826,919
LESS FOREIGN TAXES WITHHELD (443,600)
TOTAL INCOME 5,383,319
EXPENSES
MANAGEMENT FEE $ 1,688,385
TRANSFER AGENT FEES 1,110,473
ACCOUNTING FEES AND EXPENSES 173,328
NON-INTERESTED TRUSTEES' COMPENSATION 852
CUSTODIAN FEES AND EXPENSES 390,158
REGISTRATION FEES 23,990
AUDIT 45,825
LEGAL 1,439
REPORTS TO SHAREHOLDERS 87,175
MISCELLANEOUS 32,835
TOTAL EXPENSES BEFORE REDUCTIONS 3,554,460
EXPENSE REDUCTIONS (64,390) 3,490,070
NET INVESTMENT INCOME 1,893,249
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (INCLUDING (215,328,541)
REALIZED LOSS OF $1,636,897
ON SALES OF INVESTMENTS IN
AFFILIATED ISSUERS)
FOREIGN CURRENCY TRANSACTIONS (1,740,530) (217,069,071)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 221,450,087
ASSETS AND LIABILITIES IN 1,161,014 222,611,101
FOREIGN CURRENCIES
NET GAIN (LOSS) 5,542,030
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 7,435,279
OTHER INFORMATION $ 252,296
SALES CHARGES PAID TO FDC
SALES CHARGES - DEALERS' PORTION $ 1,470
EXPENSE REDUCTIONS $ 58,597
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 3,599
TRANSFER AGENT CREDITS 2,194
$ 64,390
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
OPERATIONS $ 1,893,249 $ 9,380,546
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) (217,069,071) 26,296,015
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 222,611,101 (357,058,651)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 7,435,279 (321,382,090)
DISTRIBUTIONS TO SHAREHOLDERS (1,893,249) (9,380,546)
FROM NET INVESTMENT INCOME
IN EXCESS OF NET INVESTMENT INCOME (8,926,799) (8,604,392)
TOTAL DISTRIBUTIONS (10,820,048) (17,984,938)
SHARE TRANSACTIONS 70,463,222 345,209,422
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 10,654,699 17,580,514
COST OF SHARES REDEEMED (104,880,164) (788,069,622)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (23,762,243) (425,279,686)
REDEMPTION FEES 111,477 650,998
TOTAL INCREASE (DECREASE) IN NET ASSETS (27,035,535) (763,995,716)
NET ASSETS
BEGINNING OF PERIOD 499,168,063 1,263,163,779
END OF PERIOD (INCLUDING DISTRIBUTIONS IN EXCESS OF NET
INVESTMENT INCOME OF $19,074,549 AND $10,147,750, $ 472,132,528 $ 499,168,063
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 7,295,597 20,888,778
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 1,174,708 1,073,294
REDEEMED (10,856,150) (49,788,241)
NET INCREASE (DECREASE) (2,385,845) (27,826,169)
</TABLE>
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<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
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FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996 1995 1994 1993
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.35 $ 16.61 $ 15.14 $ 19.25 $ 16.18 $ 11.05
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .04 D .15 D .12 D .05 .06 .06 D
NET REALIZED AND UNREALIZED
GAIN (LOSS) .14 (6.17) 1.60 (4.13) 2.97 5.28
TOTAL FROM INVESTMENT OPERATIONS .18 (6.02) 1.72 (4.08) 3.03 5.34
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.04) (.13) (.18) (.04) (.04) (.08)
IN EXCESS OF NET INVESTMENT INCOME (.19) (.12) (.09) - (.01) -
FROM NET REALIZED GAIN - - - - - (.15)
TOTAL DISTRIBUTIONS (.23) (.25) (.27) (.04) (.05) (.23)
REDEMPTION FEES ADDED TO PAID
IN CAPITAL - .01 .02 .01 .09 .02
NET ASSET VALUE, END OF PERIOD $ 10.30 $ 10.35 $ 16.61 $ 15.14 $ 19.25 $ 16.18
TOTAL RETURN B, C 2.04% (36.74)% 11.69% (21.17)% 19.32% 49.58%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD
(000 OMITTED) $ 472,133 $ 499,168 $ 1,263,164 $ 1,095,583 $ 1,976,371 $ 757,737
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.59% A 1.36% 1.30% 1.28% 1.52% 1.91%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
AFTER EXPENSE REDUCTIONS 1.56% A, E 1.35% E 1.29% E 1.28% 1.52% 1.91%
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS .85% A .89% .74% .46% .39% .44%
PORTFOLIO TURNOVER RATE 96% A 69% 77% 78% 107% 57%
AVERAGE COMMISSION RATE F $ .0007 $ .0020 $ .0017
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE NOTE 6 OF
NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME
SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE
6 OF NOTES TO FINANCIAL STATEMENTS).
F FOR FISCAL YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT
MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
</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 6 PAST 1 PAST 5 PAST 10
APRIL 30, 1998 MONTHS YEAR YEARS YEARS
FIDELITY EUROPE 28.39% 45.07% 174.40% 298.14%
FIDELITY EUROPE 24.54% 40.72% 166.17% 286.20%
(INCL. 3.00% SALES CHARGE)
MSCI EUROPE 29.24% 45.89% 172.61% 330.76%
EUROPEAN REGION 26.03% 39.23% 154.57% 207.83%
FUNDS AVERAGE
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the performance
of the 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
April 30, 1998, the index included over 550 equity securities of
companies domiciled in 14 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 six months average represents a peer group of
93 mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
APRIL 30, 1998 YEAR YEARS YEARS
FIDELITY EUROPE 45.07% 22.37% 14.82%
FIDELITY EUROPE 40.72% 21.63% 14.47%
(INCL. 3.00% SALES CHARGE)
MSCI EUROPE 45.89% 22.21% 15.72%
EUROPEAN REGION 39.23% 20.39% 11.64%
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
1988/04/30 9700.00 10000.00
1988/05/31 9593.74 9812.92
1988/06/30 9381.22 9713.94
1988/07/31 9282.55 9735.71
1988/08/31 8796.79 9293.77
1988/09/30 9206.65 9799.56
1988/10/31 9836.62 10707.15
1988/11/30 9958.06 10839.18
1988/12/31 9969.01 10897.40
1989/01/31 10442.25 11292.02
1989/02/28 10465.52 11163.80
1989/03/31 10643.95 11244.71
1989/04/30 11101.68 11556.81
1989/05/31 10799.11 10964.63
1989/06/30 11093.92 11417.01
1989/07/31 12086.94 12760.89
1989/08/31 11993.84 12601.49
1989/09/30 12536.90 12817.89
1989/10/31 11668.01 11977.49
1989/11/30 12350.71 12642.50
1989/12/31 13192.26 14003.29
1990/01/31 13357.06 13965.77
1990/02/28 13011.76 13631.12
1990/03/31 13404.15 13823.44
1990/04/30 13137.32 13456.59
1990/05/31 13945.65 14551.77
1990/06/30 14526.39 15062.85
1990/07/31 15405.36 15697.16
1990/08/31 13568.96 14140.81
1990/09/30 12226.97 12475.43
1990/10/31 12776.32 13526.75
1990/11/30 12760.63 13662.67
1990/12/31 12586.60 13465.36
1991/01/31 12835.60 13918.44
1991/02/28 13614.73 15135.93
1991/03/31 12883.79 14120.14
1991/04/30 12851.66 13972.52
1991/05/31 12907.89 14384.68
1991/06/30 11775.34 13177.43
1991/07/31 12369.73 14089.45
1991/08/31 12618.73 14346.68
1991/09/30 13076.57 14777.84
1991/10/31 12795.44 14466.53
1991/11/30 12409.89 14125.99
1991/12/31 13110.22 15230.93
1992/01/31 13168.34 15226.54
1992/02/29 13326.09 15285.00
1992/03/31 12869.44 14750.07
1992/04/30 13716.33 15564.16
1992/05/31 14388.86 16449.87
1992/06/30 14256.02 16143.53
1992/07/31 13741.24 15566.76
1992/08/31 13782.75 15516.00
1992/09/30 13566.88 15259.38
1992/10/31 12553.93 14194.68
1992/11/30 12545.63 14187.75
1992/12/31 12779.39 14513.23
1993/01/31 12711.68 14537.61
1993/02/28 12787.85 14703.93
1993/03/31 13625.71 15460.35
1993/04/30 14074.25 15801.33
1993/05/31 14243.52 15971.32
1993/06/30 13845.75 15738.00
1993/07/31 13854.21 15792.02
1993/08/31 14979.81 17177.78
1993/09/30 14962.89 17124.42
1993/10/31 15597.62 17837.83
1993/11/30 15292.95 17452.78
1993/12/31 16250.88 18763.10
1994/01/31 17423.80 19718.62
1994/02/28 17015.83 19020.30
1994/03/31 16539.86 18481.96
1994/04/30 17015.83 19247.28
1994/05/31 16361.38 18429.11
1994/06/30 16165.89 18235.62
1994/07/31 16905.34 19191.35
1994/08/31 17440.80 19800.04
1994/09/30 17202.82 19014.91
1994/10/31 18001.76 19843.26
1994/11/30 17330.31 19083.18
1994/12/31 17267.55 19191.65
1995/01/31 16896.30 19041.41
1995/02/28 17198.48 19472.83
1995/03/31 17612.90 20376.47
1995/04/30 18208.64 21028.11
1995/05/31 18571.25 21458.65
1995/06/30 19097.91 21660.95
1995/07/31 19952.66 22790.00
1995/08/31 19572.77 21908.99
1995/09/30 20436.15 22570.83
1995/10/31 20298.01 22464.22
1995/11/30 20168.50 22623.95
1995/12/31 20519.91 23340.91
1996/01/31 20582.85 23493.50
1996/02/29 21338.19 23921.48
1996/03/31 21859.73 24207.53
1996/04/30 22192.44 24382.68
1996/05/31 22830.87 24571.09
1996/06/30 23073.66 24841.64
1996/07/31 22633.05 24530.47
1996/08/31 23397.37 25258.40
1996/09/30 23793.02 25789.87
1996/10/31 24386.50 26388.60
1996/11/30 25321.68 27725.83
1996/12/31 25778.63 28262.89
1997/01/31 25672.07 28346.83
1997/02/28 26224.26 28729.51
1997/03/31 26718.33 29666.09
1997/04/30 26621.45 29526.07
1997/05/31 27861.46 30794.81
1997/06/30 29217.72 32343.17
1997/07/31 30138.04 33864.60
1997/08/31 28733.34 31935.68
1997/09/30 31397.42 35038.86
1997/10/31 30079.91 33328.62
1997/11/30 30670.86 33848.87
1997/12/31 31678.64 35093.83
1998/01/31 32895.42 36562.86
1998/02/28 35149.11 39429.76
1998/03/31 37688.48 42246.62
1998/04/30 38619.58 43075.50
IMATRL PRASUN SHR__CHT 19980430 19980506 113855 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Europe Fund on April 30, 1988, and the current
3.00% sales charge was paid. As the chart shows, by April 30, 1998,
the value of the investment would have grown to $38,620 - a 286.20%
increase on the initial investment. For comparison, look at how the
Morgan Stanley Capital International Europe Index did over the same
period. With dividends and capital gains, if any, reinvested, the same
$10,000 would have grown to $43,076 - a 330.76% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the potential
for significant growth over time; however, investing
in foreign markets means assuming greater risks than
investing in the United States. Factors like changes in
a country's financial markets, its local political and
economic climate, and the fluctuating value of its
currency create these risks. For these reasons an
international fund's performance may be more
volatile than a fund that invests exclusively in the
United States. Past performance is no guarantee
of future results and you may have a gain or loss
when you sell your shares.
(checkmark)
EUROPE
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Sally Walden, Portfolio Manager of Fidelity Europe
Fund
Q. HOW DID THE FUND PERFORM, SALLY?
A. For the six months that ended on April 30, 1998, the fund produced
a return of 28.39%. The Morgan Stanley Capital International (MSCI)
Europe Index returned 29.24% in that period, while the European region
funds average tracked by Lipper Analytical Services returned 26.03%.
For the 12 months that ended April 30, 1998, the fund returned 45.07%,
while the MSCI Europe Index and European funds average returned 45.89%
and 39.23%, respectively.
Q. ALTHOUGH THE FUND BEAT ITS LIPPER PEER GROUP, CAN YOU EXPLAIN WHY
IT SLIGHTLY UNDERPERFORMED THE MSCI EUROPE INDEX OVER THE PAST SIX
MONTHS?
A. The main reason for the underperformance compared with the
benchmark index was the portfolio's bias toward medium-sized
companies. For much of the review period, these stocks continued to
trail the market leaders as they had done in the previous six months.
Since March, however, medium-sized companies in many European markets
have begun to rebound, and this has helped the portfolio. In the
United Kingdom, the advance of medium-sized companies was particularly
strong after investors became more certain that interest rates had
probably peaked, allowing smaller companies to improve their profits
because they tend to be more sensitive to interest rates.
Q. WHICH HOLDINGS PERFORMED PARTICULARLY WELL?
A. Many of the fund's holdings in the finance sector helped
performance significantly, including Banco Bilbao Vizcaya, Spain's
second-largest bank. This company is continuing to build a presence in
Latin America, where lending profit margins are higher. In addition,
Credito Italiano, Italy's sixth-largest bank, reported that fee income
from its asset management business was supplementing moderate loan
growth. France's Societe Generale reported strong gains in equity
trading and commissions that more than offset provisions for Asian
loans. And HSBC Holdings returned to favor after the Asian crisis
appeared to subside. Other strong performers were in the
telecommunications sector. Vodafone, the UK's largest mobile phone
operator, rose on better-than-expected subscriber numbers. Telecom
Italia Mobile, Europe's largest cellular telephone company, reported
higher profits as it signed up large numbers of new clients. And
Telefonica de Espana, Spain's largest telecommunications company,
announced a joint venture with Portugal Telecom that will help its
operations outside of its traditional markets. Telecel, Portugal's
largest mobile phone company, became a new entrant to the portfolio's
top 10 holdings during the review period. Its share price benefited
from increased demand.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. In such a strong market, most of the fund's disappointments were
stocks that didn't keep pace with the overall market, as opposed to
those that fell in price. During much of the period, falling oil
prices hurt the relative performance of oil companies such as Shell,
British Petroleum, Total and Nationale Elf Acquitaine. Roche,
Switzerland's second-largest drug company, surprised investors by
taking a larger-than-expected charge to integrate last year's
acquisition of Corange, and its share price lagged as a result. In the
U.K., the third-largest fashion retailer, Next, underperformed after
it warned that its first-half profits will decline because it had
insufficient inventories of its best-selling lines.
Q. HAVE THERE BEEN ANY MAJOR CHANGES TO THE FUND'S COUNTRY WEIGHTINGS
OVER THE SIX-MONTH PERIOD?
A. There were some minor changes in country allocations, but only as a
result of share-price appreciation and where I found attractive
companies. Overall, the portfolio remained overweighted in Nordic
markets relative to the index because of its many holdings in Sweden
and Finland. The main underweighted positions remained in Germany and
the Netherlands. In the case of Germany, this position reflected the
difficulty of finding companies with shareholder-friendly management
that were attractively valued.
Q. IS THE FUND STILL BIASED TOWARDS MEDIUM-SIZED COMPANIES?
A. Yes, medium-sized companies are presently more strongly represented
in the fund than they are in the index. About 66% of the portfolio is
invested in stocks with market capitalizations of more than $5
billion, while the index has 86% of its value in this tier of the
market. More than 25% of the fund is invested in companies with market
capitalizations of between $1 billion and $5 billion, a segment that
represents only 12% of the index.
Q. DID YOU FAVOR ANY PARTICULAR INDUSTRY SECTORS?
A. The allocation to different sectors has not changed greatly over
the past six months. The fund's exposure to durables declined three
percentage points mainly because a position in German car manufacturer
Volkswagen was sold. The weighting of the finance sector rose by
about two percentage points largely as a result of the appreciation of
stocks in this sector. Merger speculation within the financial
industry has been a prominent feature of the markets in different
countries. The merger of UBS and Swiss Bank Corp., for example,
created the world's second-largest bank. The deal sparked off share
price increases in related companies. Also, the forthcoming start of
the single European currency will intensify competition among
companies across borders, because it eliminates exchange rate risks
and makes it easier for companies to sell products and services
throughout the region. In Italy, France, Germany and Scandinavia,
banks are expected to have to consolidate quickly if they want to be
up to such increased competition.
Q. WHAT IS THE OUTLOOK FOR EUROPEAN MARKETS AND THE FUND?
A. I believe the backdrop for European stock markets is fairly
positive, with long-term promise for a number of reasons. One of those
is that profit growth is accelerating because economic growth has
become stronger at the same time that inflation has remained subdued.
Economic recovery in continental Europe is clearly under way, although
the pace has differed across the continent. Over the short term,
however, some backlash cannot be ruled out after the extraordinary
advances seen in the first quarter of 1998. Nevertheless, the demand
for equities is expected to remain strong, with large amounts of money
flowing into equity mutual funds. Over the medium to longer term, I
believe fundamentals in Europe will stay positive. There remains
considerable scope for companies to improve their profitability: Many
companies will continue to restructure to prepare themselves for the
more competitive environment of a single currency. I feel this will
provide a number of attractive investment opportunities.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
SALLY WALDEN DISCUSSES EUROPE'S MOVE TOWARD A
UNIFIED CURRENCY, THE EURO:
"Starting next year, 11 countries - Germany, France, the
Netherlands, Austria, Luxembourg, Belgium, Ireland,
Finland, Italy, Spain and Portugal - will begin a process
that will result in their giving up their national currencies
to create a single currency, the Euro. In January 1999, the
exchange rates of the individual currencies against the Euro
will be fixed, and the Euro will be introduced. In January
2002, Euro notes and coins will be issued to replace the
national currencies.
"The 11 countries that comprise `Euroland' have a larger
population than the U.S. by about 10%, but an economy that
will be about 95% the size of that of the U.S. In terms of stock
market capitalization, though, Euroland will comprise only
about 16% of the world's stock market.
"The introduction of the Euro marks yet another move
toward integration in Europe, and it appears to be acting as
a catalyst for change on the corporate front. Companies have
realized that they will need to increase their competitiveness
to survive in such a single currency market. Competition will
increase because national trade barriers will be reduced;
product standards are being unified, and goods and services
will be priced in one currency. New market entrants should
find it easier to establish themselves across borders, and
companies in traditional `soft-currency countries' can no
longer benefit from competitive devaluations.
"Companies are reacting by cutting costs, restructuring
their businesses to shed unprofitable parts, concentrating
on core areas and looking at possible mergers or acquisitions
in order to gain economies of scale or more synergy - and,
hence, greater efficiency.
"For the investor, this is good news, because those companies
that are successful should be rewarded by rising share prices.
Identifying such companies should therefore be a very
important part of an investment strategy.
"There are other important changes indirectly linked to the
Euro. Not surprisingly, privatization of companies across the
continent is booming during a time of fiscal austerity in the
run-up to the European Monetary Union. That's because
governments have been under pressure to lower their public
debt levels in order to `join the club.' Successful
privatizations can create a wide range of investment
opportunities, because, in many cases, the result is the
opening up of an industry to competition, an environment in
which many companies can prosper. In addition,
privatization helps to broaden equity markets, making them
more representative of underlying economies and raising
the profile of equities among investors.
"I believe that these trends will continue. In fact, corporate
restructuring and the creation of shareholder value have
been powerful forces behind the strong performance of
European stock markets over the past two years. At Fidelity,
we have always paid special attention to companies that are
managed in the interests of shareholders and will continue
to do so in the future."
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 April 30, 1998, more than
$1.5 billion
MANAGER: Sally Walden, since 1992; also
manages various funds for non-U.S. investors;
joined Fidelity in 1984
(checkmark)
EUROPE
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1998
FINLAND 3.9%
UNITED STATES 8.2%
ROW: 1, COL: 1, VALUE: 8.199999999999999
ROW: 1, COL: 2, VALUE: 28.5
ROW: 1, COL: 3, VALUE: 10.0
ROW: 1, COL: 4, VALUE: 8.9
ROW: 1, COL: 5, VALUE: 11.1
ROW: 1, COL: 6, VALUE: 4.6
ROW: 1, COL: 7, VALUE: 5.3
ROW: 1, COL: 8, VALUE: 7.9
ROW: 1, COL: 9, VALUE: 11.6
ROW: 1, COL: 10, VALUE: 3.9
FRANCE 11.6%
UNITED KINGDOM
28.5%
GERMANY 7.9%
ITALY 5.3%
NETHERLANDS 4.6%
OTHER 11.1%
SWITZERLAND 10.0%
SWEDEN 8.9%
AS OF OCTOBER 31, 1997
UNITED STATES 2.6%
FRANCE 10.2%
ROW: 1, COL: 1, VALUE: 2.6
ROW: 1, COL: 2, VALUE: 34.5
ROW: 1, COL: 3, VALUE: 9.4
ROW: 1, COL: 4, VALUE: 9.699999999999999
ROW: 1, COL: 5, VALUE: 10.9
ROW: 1, COL: 6, VALUE: 5.5
ROW: 1, COL: 7, VALUE: 3.9
ROW: 1, COL: 8, VALUE: 3.4
ROW: 1, COL: 9, VALUE: 9.9
ROW: 1, COL: 10, VALUE: 10.2
GERMANY 9.9%
UNITED KINGDOM
34.5%
IRELAND 3.4%
ITALY 3.9%
NETHERLANDS 5.5%
OTHER 10.9%
SWITZERLAND 9.4%
SWEDEN 9.7%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
STOCKS 91.8 97.4
SHORT-TERM INVESTMENTS 8.2 2.6
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
SHELL TRANSPORT & TRADING CO. PLC (REG.) 2.7 3.1
(UNITED KINGDOM, OIL & GAS)
NOVARTIS AG (REG.) 2.2 2.7
(SWITZERLAND, DRUGS & PHARMACEUTICALS)
TELECOM ITALIA MOBILE SPA 2.2 2.0
(ITALY, TELEPHONE SERVICES)
LLOYDS TSB GROUP PLC 2.0 2.1
(UNITED KINGDOM, BANKS)
BRITISH PETROLEUM PLC ORD. 1.7 2.1
(UNITED KINGDOM, OIL & GAS)
GLAXO WELLCOME PLC 1.6 1.8
(UNITED KINGDOM, DRUGS & PHARMACEUTICALS)
HSBC HOLDINGS PLC ORD. 1.6 1.8
(UNITED KINGDOM, BANKS)
TOTAL SA CLASS B 1.6 2.1
(FRANCE, OIL & GAS)
TELECEL COMUNICACOES PESSOAIS SA 1.6 0.7
(PORTUGAL, CELLULAR)
CREDIT SUISSE GROUP (REG.) 1.4 1.3
(SWITZERLAND, BANKS)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 29.7 27.8
HEALTH 10.8 12.8
UTILITIES 9.6 8.6
ENERGY 7.3 8.9
MEDIA & LEISURE 6.6 5.9
DURABLES 4.2 7.2
RETAIL & WHOLESALE 4.1 5.5
INDUSTRIAL MACHINERY & EQUIPMENT 3.9 2.5
TECHNOLOGY 3.5 1.4
SERVICES 3.4 4.3
EUROPE
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 89.8%
SHARES VALUE (NOTE 1)
AUSTRIA - 0.5%
OMV AG 54,100 $ 8,023,693
DENMARK - 0.5%
International Service Systems AS,
Series B 159,300 8,605,531
FINLAND - 3.9%
Cultor OY Ord., Series 2 82,600 4,893,580
KCI (Konecranes International) 145,900 7,830,521
Nokia Corp. AB, Series A 173,400 11,640,572
Nokian Tyres Ltd. 114,580 6,620,084
Sampo Insurance Co. Ltd. 324,200 14,628,247
Tamro OYJ 554,900 3,969,387
Tieto Corp Class B 28,700 5,264,123
UPM-Kymmene Corp. 191,800 5,751,889
60,598,403
FRANCE - 11.6%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 87,400 15,841,250
Accor SA 23,912 6,510,801
BIC 73,240 5,034,756
Carbonne-Lorraine 18,300 7,493,895
Club Mediterranee SA Ord. (a) 73,600 6,737,038
Credit Commercial de France Ord. 146,900 11,713,930
Castorama Dubois Investissements SA 45,700 7,546,441
Elf Sanofi SA 89,800 10,875,355
France Telecom SA 7,600 413,237
Genset SA (a) 82,500 7,592,823
Groupe Photo Services GPS 163,800 6,585,198
Hachette Filipacchi Medias SA 27,771 7,469,266
Nationale Elf Aquitaine 103,000 13,500,623
Peugeot SA Ord. 23,200 4,023,723
Renault SA Ord. (a) 91,300 4,231,697
Seita 164,900 7,396,462
Societe Generale Class A 103,050 21,433,441
Total SA Class B 207,778 24,680,002
Union Assurances Federale SA 77,794 12,161,169
181,241,107
GERMANY - 6.5%
Adidas-Salomon AG 59,700 9,972,716
Allianz AG:
(Reg.) 44,700 14,471,062
(RFD) (a) 1,161 353,620
BHF Bank AG 187,800 7,790,579
(BMW) Muenchen Bayerische
Motorenwerke AG 9,224 10,385,282
Dresdner Bank AG Ord. 137,800 7,696,052
Gehe AG 154,910 8,086,649
Hannover Rueckversicherungs-AG 10,500 1,344,730
Hoechst AG Ord. 254,400 10,281,392
Mannesmann AG Ord. 26,340 21,794,777
Veba AG Ord. 138,310 9,203,210
101,380,069
IRELAND - 3.3%
Bank of Ireland, Inc. 954,900 19,480,407
CRH PLC 706,060 10,027,323
IWP International (UK Reg.) 605,060 3,639,363
Independent Newspapers PLC 948,066 5,702,503
Irish Life PLC 763,100 7,012,622
Smurfit (Jefferson) Group PLC 1,577,400 5,754,040
51,616,258
SHARES VALUE (NOTE 1)
ITALY - 4.7%
Aeroporti di Roma Spa 36,000 $ 505,178
Banca Commerciale Italiana Spa 1,324,600 6,696,611
Credito Italiano Ord. 2,968,400 15,527,791
Istituto Nazionale Delle
Assicurazioni Spa 5,537,000 16,506,355
Telecom Italia Mobile Spa 5,990,040 34,294,464
73,530,399
LUXEMBOURG - 0.0%
Scandinavian Broadcasting Corp. (a) 23,600 749,300
NETHERLANDS - 4.6%
AKZO Nobel NV 41,400 8,415,550
Ahold NV 180,500 5,624,165
ING Groep NV 225,650 14,586,505
Philips Electronics NV (Bearer) 94,800 8,532,000
Vendex International NV 139,300 8,928,869
VNU Ord. 594,100 19,216,648
Volmac Software Groep NV 107,600 7,077,897
72,381,634
NORWAY - 0.4%
Schibsted AS, Series B 367,800 6,994,924
PORTUGAL - 3.0%
BPI-SGPS SA (Reg.) 476,500 22,130,889
Telecel Comunicacoes Pessoais SA (a) 136,500 24,469,012
46,599,901
SPAIN - 3.4%
Banco Bilbao Vizcaya SA Ord. (Reg.) 422,300 21,709,662
Corp Financiera Reunida-Cofir (a) 322,415 3,636,299
Mapfre Vida SA 162,300 8,088,128
Telefonica de Espana SA:
Ord. 482,200 20,109,452
rights 5/7/98 (a) 482,200 379,424
53,922,965
SWEDEN - 8.9%
Assa Abloy AB Class B 216,665 7,542,879
Astra AB Class A Free shares 769,366 15,773,015
Ericsson (L.M.) Telephone Co. Class B 145,100 7,462,715
ForeningsSparbanken AB, Series A 454,500 14,181,881
Hennes & Mauritz AB Class B 118,000 6,131,569
Incentive AB Class B 71,400 6,877,069
Mandamus AB rights 6/15/98 (a) 454,500 709,094
Nordbanken Holding AB 2,027,400 14,900,433
Securitas AB Class B 288,800 10,612,719
Skandia Foersaekrings AB 312,563 21,722,556
Scandic Hotels AB 238,600 9,075,636
Svenska Handelsbanken 318,400 14,410,026
Swedish Match Co. 3,001,700 10,372,577
139,772,169
SWITZERLAND - 10.0%
Adecco SA (Bearer) 16,700 7,286,019
ABB AG (Bearer) 9,830 16,107,240
Credit Suisse Group (Reg.) 102,660 22,565,643
Julius Baer Holding AG 2,736 7,544,821
Kuoni Reisen Holding AG Class B (Reg.) 2,538 13,608,806
Novartis AG (Reg.) 21,340 35,251,582
Roche Holding AG 1,854 18,777,107
Swiss Bank Corp. (Reg.) 62,300 21,620,129
Swiss Reinsurance Corp. (Reg.) (a) 6,213 13,698,148
156,459,495
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - 28.5%
Alliance & Leicester PLC 442,800 $ 6,184,981
Asda Group PLC 1,920,100 6,424,226
Barclays PLC Ord. 634,470 18,286,250
British Aerospace PLC 252,000 8,412,411
Barratt Developments PLC 1,331,775 7,131,541
Boots Co. PLC Class L (The) 658,830 10,198,663
British Petroleum PLC Ord. 1,660,014 26,196,193
British Telecommunications PLC Ord. 1,005,750 10,905,842
Capital Shopping Centres PLC 929,521 6,926,575
Cable & Wireless PLC Ord. 643,500 7,364,845
Carpetright PLC 210,600 1,217,472
Daily Mail & General Trust PLC Class A 178,900 7,577,270
Electrocomponents PLC 754,020 7,325,834
Flextech PLC (a) 598,880 4,953,013
Glaxo Wellcome PLC 896,400 25,311,217
Great Universal Stores PLC Ord Class A 527,800 8,033,637
HSBC Holdings PLC Ord. 789,500 24,891,353
Gallaher Group PLC 1,293,100 6,740,796
Granada Group PLC 454,300 7,818,158
Ladbroke Group PLC Ord. 1,115,300 6,126,070
Lloyds TSB Group PLC 2,122,100 31,750,890
London Insurance Market Investment
Trust PLC 3,838,070 11,158,006
National Grid Co. PLC 695,745 4,487,060
Next PLC 666,400 5,511,435
Nycomed Amersham PLC 220,200 7,299,338
Orange PLC (a) 1,062,500 7,620,153
Prudential Corp. PLC 584,870 8,276,891
Peninsular & Oriental Steam
Navigation Co. 586,300 8,644,882
Royal & Sun Alliance Insurance
Group PLC 649,093 7,244,491
Rentokil Initial PLC 1,124,200 7,236,202
Scottish & Newcastle Brewers PLC 488,000 7,378,921
Scottish Media Group PLC 462,530 5,525,485
Shell Transport & Trading Co. PLC (Reg.) 5,602,300 41,653,437
Smiths Industries PLC Ord. 432,770 6,222,036
SmithKline Beecham PLC Ord. 1,582,420 18,851,059
Tesco PLC Ord. 743,720 6,958,601
Unilever PLC Ord. 1,655,100 17,615,223
Vodafone Group PLC 2,005,525 21,947,944
Wolseley PLC Ord. 507,450 3,556,720
Zeneca Group PLC Ord. 250,180 10,767,699
447,732,820
TOTAL COMMON STOCKS
(Cost $944,901,644) 1,409,608,668
NONCONVERTIBLE PREFERRED STOCKS - 2.0%
GERMANY - 1.4%
Boss (Hugo) AG 5,280 9,702,099
Porsche AG 1,778 4,534,350
Wella AG 8,018 7,411,259
21,647,708
ITALY - 0.6%
Telecom Italia Spa 1,723,900 9,082,937
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $17,684,741) 30,730,645
CASH EQUIVALENTS - 8.2%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $128,720,237) 128,720,237 $128,720,237
TOTAL INVESTMENTS IN SECURITIES - 100%
(Cost $1,091,306,622) $ 1,569,059,550
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.51%. 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 $445,391,077 and $146,272,288, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these
affiliated firms were $2,644 for the period.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.9%
Basic Industries 2.4
Cash Equivalents 8.2
Construction & Real Estate 1.8
Durables 4.2
Energy 7.3
Finance 29.7
Health 10.8
Industrial Machinery & Equipment 3.9
Media & Leisure 6.6
Nondurables 3.0
Retail & Wholesale 4.1
Services 3.4
Technology 3.5
Transportation 0.6
Utilities 9.6
100.0%
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $1,091,640,804. Net unrealized appreciation
aggregated $477,418,746, of which $490,617,572 related to appreciated
investment securities and $13,198,826 related to depreciated
investment securities.
EUROPE
FINANCIAL STATEMENTS
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STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $1,091,306,622) - $ 1,569,059,550
SEE ACCOMPANYING SCHEDULE
CASH 2,013
RECEIVABLE FOR INVESTMENTS SOLD 1,124,762
RECEIVABLE FOR FUND SHARES SOLD 14,395,595
DIVIDENDS RECEIVABLE 6,821,827
INTEREST RECEIVABLE 515,914
REDEMPTION FEES RECEIVABLE 973
TOTAL ASSETS 1,591,920,634
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 57,879,126
PAYABLE FOR FUND SHARES REDEEMED 8,174,786
ACCRUED MANAGEMENT FEE 973,556
OTHER PAYABLES AND 623,590
ACCRUED EXPENSES
TOTAL LIABILITIES 67,651,058
NET ASSETS $ 1,524,269,576
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 1,006,041,057
UNDISTRIBUTED NET INVESTMENT INCOME 5,744,094
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 34,761,824
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 477,722,601
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS, FOR 41,762,056 $ 1,524,269,576
SHARES OUTSTANDING
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($1,524,269,576 (DIVIDED BY) 41,762,056 SHARES) $36.50
MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $36.50) $37.63
</TABLE>
<TABLE>
<CAPTION>
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STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 12,094,999
DIVIDENDS
INTEREST 1,731,076
13,826,075
LESS FOREIGN TAXES WITHHELD (1,501,464)
TOTAL INCOME 12,324,611
EXPENSES
MANAGEMENT FEE $ 4,056,026
BASIC FEE
PERFORMANCE ADJUSTMENT 228,875
TRANSFER AGENT FEES 1,330,861
ACCOUNTING FEES AND EXPENSES 303,095
NON-INTERESTED TRUSTEES' COMPENSATION 1,813
CUSTODIAN FEES AND EXPENSES 255,034
REGISTRATION FEES 175,639
AUDIT 24,777
LEGAL 2,717
REPORTS TO SHAREHOLDERS 59,183
MISCELLANEOUS 980
TOTAL EXPENSES BEFORE REDUCTIONS 6,439,000
EXPENSE REDUCTIONS (32,449) 6,406,551
NET INVESTMENT INCOME 5,918,060
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 36,142,447
FOREIGN CURRENCY TRANSACTIONS (616,747) 35,525,700
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 233,216,750
ASSETS AND LIABILITIES IN (97,262) 233,119,488
FOREIGN CURRENCIES
NET GAIN (LOSS) 268,645,188
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 274,563,248
OTHER INFORMATION $ 671,160
SALES CHARGES PAID TO FDC
SALES CHARGES - DEALERS' PORTION $ 1,250
DEFERRED SALES CHARGES WITHHELD $ 19,270
BY FDC
EXPENSE REDUCTIONS $ 18,480
DIRECTED BROKERAGE ARRANGEMENTS
TRANSFER AGENT CREDITS 13,969
$ 32,449
</TABLE>
<TABLE>
<CAPTION>
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STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
OPERATIONS $ 5,918,060 $ 13,404,635
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 35,525,700 79,961,346
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 233,119,488 86,807,048
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 274,563,248 180,173,029
DISTRIBUTIONS TO SHAREHOLDERS (11,392,134) (6,427,940)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (68,664,194) (46,294,939)
TOTAL DISTRIBUTIONS (80,056,328) (52,722,879)
SHARE TRANSACTIONS 456,667,695 355,908,188
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 78,862,444 51,814,504
COST OF SHARES REDEEMED (122,017,471) (311,301,709)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS 413,512,668 96,420,983
REDEMPTION FEES 141,938 475,113
TOTAL INCREASE (DECREASE) IN NET ASSETS 608,161,526 224,346,246
NET ASSETS
BEGINNING OF PERIOD 916,108,050 691,761,804
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $5,744,094 AND $12,950,679, RESPECTIVELY) $ 1,524,269,576 $ 916,108,050
OTHER INFORMATION
SHARES
SOLD 13,332,939 12,685,159
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 2,653,514 2,034,335
REDEEMED (3,724,970) (10,729,871)
NET INCREASE (DECREASE) 12,261,483 3,989,623
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
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FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996 1995 1994 1993
NET ASSET VALUE, BEGINNING OF PERIOD $ 31.05 $ 27.12 $ 23.51 $ 21.18 $ 18.43 $ 15.12
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .17 D .44 D .30 D .27 .18 .25
NET REALIZED AND UNREALIZED
GAIN (LOSS) 8.02 5.44 4.23 2.37 2.65 3.35
TOTAL FROM INVESTMENT OPERATIONS 8.19 5.88 4.53 2.64 2.83 3.60
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.39) (.24) (.12) (.20) (.08) (.29)
FROM NET REALIZED GAIN (2.35) (1.73) (.81) (.11) - -
TOTAL DISTRIBUTIONS (2.74) (1.97) (.93) (.31) (.08) (.29)
REDEMPTION FEES ADDED TO
PAID IN CAPITAL - .02 .01 - - -
NET ASSET VALUE, END OF PERIOD $ 36.50 $ 31.05 $ 27.12 $ 23.51 $ 21.18 $ 18.43
TOTAL RETURN B, C 28.39% 23.35% 20.14% 12.76% 15.41% 24.24%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD
(000 OMITTED) $ 1,524,270 $ 916,108 $ 691,762 $ 492,867 $ 507,460 $ 528,929
RATIO OF EXPENSES TO AVERAGE
NET ASSETS 1.20% A 1.19% 1.27% 1.18% E 1.35% 1.25%
RATIO OF EXPENSES TO AVERAGE
NET ASSETS AFTER EXPENSE REDUCTIONS 1.19% A, F 1.18% F 1.27% 1.18% 1.35% 1.25%
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS 1.10% A 1.53% 1.20% 1.12% .85% 1.44%
PORTFOLIO TURNOVER RATE 28% A 57% 45% 38% 49% 76%
AVERAGE COMMISSION RATE G $ .0429 $ .0344 $ .0299
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE NOTE 6 OF
NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE
TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E 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 6 OF NOTES TO FINANCIAL STATEMENTS).
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995,
A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION
RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
</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).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 LIFE OF
APRIL 30, 1998 MONTHS YEAR FUND
FIDELITY EUROPE CAPITAL APP 29.15% 48.51% 143.74%
FIDELITY EUROPE CAPITAL APP 25.28% 44.06% 136.43%
(INCL. 3.00% SALES CHARGE)
MSCI EUROPE 29.24% 45.89% 131.58%
EUROPEAN REGION FUNDS AVERAGE 26.03% 39.23% N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year or since
the fund started on December 21, 1993. For example, if you 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 April 30, 1998, the index included over 550
equity securities of companies domiciled in 14 European companies. To
measure how the fund's performance stacked up against its peers, you
can compare it to the European region funds average, which reflects
the performance of mutual funds with similar objectives tracked by
Lipper Analytical Services, Inc. The past six months average
represents a peer group of 93 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
APRIL 30, 1998 YEAR FUND
FIDELITY EUROPE CAPITAL APP 48.51% 22.68%
FIDELITY EUROPE CAPITAL APP 44.06% 21.82%
(INCL. 3.00% SALES CHARGE)
MSCI EUROPE 45.89% 21.25%
EUROPEAN REGION FUNDS AVERAGE 39.23% 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
IMATRL PRASUN SHR__CHT 19980430 19980506 115111 R00000000000056
$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 April 30, 1998, the value of the
investment would have grown to $23,643 - a 136.43% 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 $23,158 - a 131.58% 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. The fund did pretty well. For the six months that ended April 30,
1998, the fund returned 29.15%. This topped the 26.03% return of the
European region funds average for the same period, according to Lipper
Analytical Services. The Morgan Stanley Capital International Europe
Index returned 29.24%. For the 12 months that ended April 30, 1998,
the fund returned 48.51%. The Lipper average and Morgan Stanley index
had 12 -month returns of 39.23% and 45.89%, respectively, as of April
30.
Q. CAN YOU OUTLINE THE FACTORS THAT CONTRIBUTED TO THE FUND'S
PERFORMANCE?
A. The positive aspects that I've talked about in the past continued
to have a strong influence on the performance of most European
markets. Compared to six months ago, the drive towards a uniform
currency is closer to becoming reality. As countries have met more and
more of the requirements for joining the Europe Monetary Union (EMU),
the resulting convergence of monetary and fiscal policies has
benefited the overall investing climate. In addition, we continued to
see a large number of company restructurings - either through mergers
or acquisitions - and this was a positive development. Low interest
rates and renewed consumer confidence also provided a nice investing
backdrop. Of course, there were some obstacles along the way, with the
biggest being the market crisis that enveloped Southeast Asian markets
at the beginning of the period. This dilemma threw a few curveballs at
me, as a lack of demand from Southeast Asia equated to falling
commodity prices. In particular, the fund's oil-related positions hurt
performance as the price of oil tumbled dramatically in late 1997.
Another factor that detracted from the fund's return was my
underweighting - relative to the index - in insurance-related stocks.
This group performed very well during the period.
Q. EUROPEAN ECONOMIES CONTINUED TO BE ON THE UPSWING DURING THE
PERIOD. HOW DID THIS PLAY INTO YOUR STRATEGY?
A. Compared to six months ago, I was more comfortable looking at
stocks of companies that were sensitive to the ups and downs of the
various European economies. I was attracted to certain commodity
cyclicals - including paper and pulp companies - but also to
non-commodity, cyclical areas such as advertising, hotel and leisure
and media-related companies. Advertising has been a big worldwide
trend, mostly because companies have more money to spend to highlight
their products and services. One notable example within the portfolio
is the global ad agency, Saatchi & Saatchi. With its strong reputation
and foothold in many world regions, this position performed well for
the fund.
Q. DID THE ECONOMIC CRISES IN SOUTHEAST ASIA HAVE A DIRECT IMPACT ON
EUROPEAN MARKETS?
A. The problems in Southeast Asia affected most global markets, but
I'd argue that the overall impact in Europe was more indirect. While
Southeast Asia is a popular end market for many European products -
and that end market has now become somewhat softer due to less demand
- - we did experience surprising growth stories from Eastern Europe,
Russia and Latin America. In terms of the fund itself, the most
negative performance factor - that of falling oil prices - can be
traced back to the problems in Southeast Asia.
Q. WERE THERE ANY PARTICULAR INVESTMENT AREAS THAT OFFERED GOOD
EARNINGS GROWTH?
A. Telecommunications stocks had a strong period, particularly with
the increased popularity of cellular phones. Cellular phone usage has
risen rapidly as more and more people consider cell phones to be a
necessity. Cellular phones now have longer battery lives and are
lighter in weight. Also, with more cellular competition sprouting up
throughout Europe, costs have been generally coming down. Features
such as better voicemail capability and caller ID have also been well
accepted. The fund held a number of stocks that reflected this trend,
including Vodafone, Mannesman and Telecom Italia Mobile. Another big
event that helped telecom stocks was that a number of markets opened
to new competition in early 1998. Mannesman, which was one of the
fund's 10 largest positions at the end of the period, was a play on
this. Mannesman also has controlling interest in one of the major
cellular companies in Germany. The company also has a history of
creating strong businesses with sound marketing strategies.
Q. THE FUND'S HEALTH CARE-RELATED POSITIONS DECLINED FROM AROUND 13%
TO JUST OVER 5% DURING THE PERIOD. WHAT HAPPENED THERE?
A. A lot of the reduction took place in the pharmaceuticals arena.
Over the past couple years, many drug-stock companies have enjoyed
great stock performance. As with most any other industry in Europe,
this group has also seen a considerable amount of merger and
acquisition activity and some companies got very big in size almost
overnight. In the early part of the year, I felt that earnings
expectations for many of these companies had gotten slightly ahead of
reality. At the same time, there was much talk of several large-scale
mergers and this drove share prices up. With my skepticism over
earnings expectations in mind, I took advantage of this upward price
movement and reduced many of the fund's pharmaceutical-related
positions.
Q. WHICH INDIVIDUAL STOCKS PERFORMED WELL? WHICH DIDN'T?
A. Accor, a global hotel company that made a number of internal
improvements, benefited performance. NCL Holdings, which owns the
third-largest cruise ship company in the world, also generated
positive results. On the flip side, the fund's oil stocks Royal Dutch
Petroleum and Shell Transport & Trading suffered, mainly due to the
problems in Southeast Asia. Also, the fund's underweighting in
insurance stocks relative to the index detracted from performance.
Q. WHAT'S YOUR OUTLOOK?
A. I expect the main drivers of European stock performance to
continue. I don't think the restructuring theme has played itself out
yet, as many companies still could use a bit of streamlining. Low
unemployment and higher levels of consumer confidence could also be
positives. At the same time, though, European markets have been on
quite a roll for some time so I wouldn't be surprised to see some
stock price consolidation.
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.
KEVIN MCCAREY EXPLORES THE ONGOING
RESTRUCTURING TREND THROUGHOUT EUROPE:
"Corporate restructurings continued to be a dominant
theme throughout Europe and I think there's more to
come. In general, companies have pursued three phases of
restructuring. First, they've concentrated on improving
the profitability of their existing businesses. Second, many
are disposing of businesses that may not fit into their plans
as well as they originally thought. Third, companies are
also trying to make logical acquisitions, with the emphasis
on logical. Companies don't want to commit time and
resources to operate in a business which they may not
understand fully.
"One stock the fund held during the period - Vendex - is
a good example of a company taking a proactive
restructuring approach. Vendex is a Dutch company that
operates retailing and temporary employment businesses.
The company made a sizable acquisition in the services
area, and is spinning that whole business off to shareholders.
Then, the company recently made a food-retail acquisition
and will spin off that business to shareholders, leaving the
core, general retailing business intact.
"European companies have been quick to study
consolidation activity in other world markets and have
taken note of what has worked and what hasn't worked.
Companies are realizing that it's important to increase the
market share in their main businesses and there's no shortage
of U.S.-based examples. Coca-Cola, McDonald's and Philip
Morris have all worked hard to gain market share and it
shows in their profit margins.
"One other interesting consolidation note concerns the
number of high-profile cross-border deals we've seen
lately. As more and more countries have met the
requirements for EMU - and their fiscal and economic
policies have converged - companies in different
countries have felt more comfortable conducting business
with one another. While this activity hasn't been confined to
one industry, we have seen a good deal of activity in the
finance, insurance and pharmaceutical areas."
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of eastern and
western European issuers
FUND NUMBER: 341
TRADING SYMBOL: FECAX
START DATE: December 21, 1993
SIZE: as of April 30, 1998, more than
$637 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 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%
AS OF OCTOBER 31, 1997
UNITED STATES 5.8%
FRANCE 20.1%
ROW: 1, COL: 1, VALUE: 20.1
ROW: 1, COL: 2, VALUE: 5.3
ROW: 1, COL: 3, VALUE: 3.1
ROW: 1, COL: 4, VALUE: 5.9
ROW: 1, COL: 5, VALUE: 8.5
ROW: 1, COL: 6, VALUE: 10.6
ROW: 1, COL: 7, VALUE: 4.5
ROW: 1, COL: 8, VALUE: 6.5
ROW: 1, COL: 9, VALUE: 29.7
ROW: 1, COL: 10, VALUE: 5.8
UNITED KINGDOM 29.7%
GERMANY 5.3%
IRELAND 3.1%
ITALY 5.9%
SWITZERLAND 6.5%
NETHERLANDS 8.5%
SWEDEN 4.5%
OTHER 10.6%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
STOCKS 96.0 94.1
BONDS 0.0 0.1
SHORT-TERM INVESTMENTS 4.0 5.8
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
ALCATEL ALSHTOM COMPAGNIE GENERALE 2.4 1.9
D'ELECTRICITE SA
(FRANCE, ELECTRICAL EQUIPMENT)
BRITISH AEROSPACE PLC 2.1 1.8
(UNITED KINGDOM, AEROSPACE & DEFENSE)
NCL HOLDINGS AS 1.9 0.7
(NORWAY, ENTERTAINMENT)
PHILIPS ELECTRONICS NV (BEARER) 1.9 0.7
(NETHERLANDS, ELECTRICAL EQUIPMENT)
CREDIT SUISSE GROUP (REG.) 1.9 0.4
(SWITZERLAND, BANKS)
UNILEVER PLC ORD. 1.8 1.2
(UNITED KINGDOM, HOUSEHOLD PRODUCTS)
SHELL TRANSPORT & TRADING CO. PLC (REG.) 1.7 4.0
(UNITED KINGDOM, OIL & GAS)
ACCOR SA 1.7 0.6
(FRANCE, LODGING & GAMING)
MANNESMANN AG ORD. 1.7 0.2
(GERMANY, INDUSTRIAL MACHINERY &
EQUIPMENT)
PHILIPS ELECTRONICS NV WARRANTS 1.6 0.0
6/30/98
(NETHERLANDS, ELECTRICAL EQUIPMENT)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 23.6 19.6
UTILITIES 8.8 5.2
INDUSTRIAL MACHINERY & EQUIPMENT 8.5 4.6
NONDURABLES 7.7 4.0
MEDIA & LEISURE 6.4 5.2
ENERGY 6.1 12.5
HEALTH 5.4 13.3
DURABLES 5.3 5.4
BASIC INDUSTRIES 5.0 5.7
CONSTRUCTION & REAL ESTATE 4.8 5.5
EUROPE CAPITAL APPRECIATION
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 90.5%
SHARES VALUE (NOTE 1)
CANADA - 0.1%
Canadian Fracmaster Ltd. (a) 47,900 $ 620,948
FINLAND - 3.0%
Merita Ltd., Series A 658,000 4,393,103
Metsa-Serla Ltd. Class B 798,200 8,271,882
Nokia Corp. AB sponsored ADR 86,400 5,778,000
18,442,985
FRANCE - 19.0%
Accor SA 39,700 10,809,586
Alcatel Alsthom Compagnie Generale
d'Electricite SA 84,000 15,225,000
Axa SA 42,500 4,984,633
Atos SA (a) 7,500 1,252,180
BQE National Paris Ord. 26,600 2,240,419
Bongrain SA 6,000 3,087,964
Cap Gemini Sogeti SA 49,000 6,357,505
Christian Dior SA 21,500 2,910,956
Coflexip sponsored ADR 75,400 5,372,250
Compagnie Generale de
Geophysique SA sponsored ADR (a) 12,000 1,742,337
Credit Commercial de France Ord. 40,000 3,189,634
Generale des Eaux, Cie 27,000 5,014,702
Groupe Danone 23,000 5,425,700
Michelin SA (Compagnie Generale
des Etablissements) Class B 69,200 4,355,824
Nationale Elf Aquitaine 70,500 9,240,718
NRJ SA 27,960 4,761,027
Pathe SA 6,064 1,317,670
Pechiney SA Class A 32,202 1,439,046
Renault SA Ord. (a) 120,000 5,561,924
Rhone Poulenc SA Class A 38,400 1,876,143
Societe Generale Class A 37,500 7,799,651
Total SA Class B 82,000 9,740,012
Unibail (a) 18,000 2,571,642
Union Assurances Federale SA 16,800 2,626,265
118,902,788
GERMANY - 7.0%
Allianz AG (Reg.) 21,000 6,798,485
BHF Bank AG 232,200 9,632,441
BASF AG 45,000 2,039,646
Daimler-Benz AG Ord. 20,000 1,980,623
Deutsche Lufthansa AG 256,000 6,058,244
Fresenius Medical Care AG
sponsored ADR (a) 100 2,306
Hoechst AG Ord. 55,000 2,222,785
Hornbach Baumarket AG (Bearer) 18,500 844,702
Mannesmann AG Ord. 12,500 10,343,004
Philipp Holzmann AG (a) 13,200 3,954,340
43,876,576
IRELAND, - 1.6%
Bank of Ireland, Inc. 190,000 3,876,089
Elan Corp. PLC ADR (a) 60,000 3,727,500
Smurfit (Jefferson) Group PLC 675,000 2,462,265
10,065,854
ITALY - 2.5%
Assicurazioni Generali Spa 75,000 2,244,881
Banca Commerciale Italiana Spa 475,000 2,401,397
Credito Italiano Ord. 880,000 4,603,307
Finmeccanica Spa (a) 1,530,000 2,250,330
Istituto Nazionale Delle
Assicurazioni Spa 720,000 2,146,393
Toro Assicurazioni Spa Ord. 96,500 1,687,730
15,334,038
SHARES VALUE (NOTE 1)
LUXEMBOURG - 0.6%
Stolt Comex Seaway SA (a) 122,000 $ 3,965,000
NETHERLANDS - 10.4%
ASM Lithography Holding NV (a) 1,000 91,625
AKZO Nobel NV 28,000 5,691,676
Benckiser NV Class B 30,000 1,749,345
Fortis Amev NV 134,000 7,833,622
ING Groep NV 116,300 7,517,884
Koninklijke KNP BT NV 95,000 2,607,696
Melia Inversiones Americanas NV (a) 2,400 119,603
Philips Electronics NV:
warrants 6/30/98 (a) 144,000 10,255,700
(Bearer) 132,000 11,880,000
PolyGram NV Ord. 48,500 2,000,544
Samas-Groep NV 93,000 5,763,341
Vendex International NV 34,000 2,179,336
Vedior NV 145,000 4,403,284
VNU Ord. 96,000 3,105,198
65,198,854
NORWAY - 1.9%
NCL Holdings AS (a) 2,501,000 12,025,166
PORTUGAL - 1.5%
BPI-SGPS SA (Reg.) 125,000 5,805,585
Portugal Telecom SA 33,400 1,793,465
Telecel Comunicacoes Pessoais SA (a) 10,000 1,792,602
9,391,652
RUSSIA - 0.5%
Vimpel Communications
sponsored ADR (a) 60,000 3,240,000
SPAIN - 3.6%
Actividades de Construccion y Servicios
(ACS) SA 103,000 3,376,938
Corporacion Mapfre Compania
Internacional de Reaseguros SA (Reg.) 80,000 3,136,946
Iberdrola SA 185,000 2,972,034
Portland Valderrivas SA Ord. 16,900 2,072,260
Repsol SA Ord. 37,000 2,025,835
Telefonica de Espana SA Ord. 210,000 8,757,746
22,341,759
SWEDEN - 4.3%
Astra AB Class A Free shares 425,000 8,713,059
Hemkopskedjan AB, Series B 225,000 3,060,692
Incentive AB Class A 46,000 4,448,399
Industrial-Matematik International
Corp. (a) 150,000 3,337,500
Svenska Handelsbanken 76,000 3,439,579
Volvo AB Class B 130,000 3,867,051
26,866,280
SWITZERLAND - 8.4%
Credit Suisse Group (Reg.) 53,500 11,759,808
Forbo Holding AG (Reg.) (a) 5,300 2,718,311
Julius Baer Holding AG 3,050 8,410,711
Moevenpick Holding AG (a) 6,400 3,687,471
Nestle SA (Reg.) 5,005 9,701,292
Novartis AG (Reg.) 4,150 6,855,392
Swiss Bank Corp. (Reg.) 22,400 7,773,530
Von Roll Holding AG (a) 55,000 1,813,428
52,719,943
UNITED KINGDOM - 26.1%
Alpha Airports Group PLC 587,100 922,071
ARM Holdings PLC sponsored ADR 2,400 96,900
BAT Industries PLC Ord. 480,000 4,523,190
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Britax International PLC 745,000 $ 2,016,489
Bank of Scotland 360,000 4,420,937
Barclays PLC Ord. 108,000 3,112,700
British Aerospace PLC 400,000 13,353,034
British Petroleum PLC Ord. 182,369 2,877,912
British Telecommunications PLC Ord. 337,500 3,659,679
Commercial Union PLC 440,000 8,226,351
Cordiant PLC 650,000 1,270,643
Corporate Services Group PLC 400,000 1,610,651
Courtaulds Textiles PLC 340,000 1,823,511
Devro PLC 877,000 7,956,533
Dr Solomons Group PLC
sponsored ADR (a) 88,000 2,618,000
Glaxo Wellcome PLC 47,500 1,341,235
HSBC Holdings PLC Ord. 245,000 7,724,359
Hazlewood Foods PLC Ord. 1,125,000 3,571,335
Iceland Group PLC 24,700 91,823
Johnson Matthey PLC 160,000 1,620,008
KBC Advanced Technologies PLC 225,000 1,296,959
Kingfisher PLC 150,000 2,721,733
Lloyds TSB Group PLC 570,000 8,528,348
Mayflower Corp. 535,000 2,163,185
Minerva PLC 520,300 2,042,896
Misys PLC Ord. 48,167 2,313,726
National Westminster Bank PLC Ord. 70,000 1,399,963
Next PLC 202,500 1,674,768
Pearson, PLC 160,000 2,504,863
Rentokil Initial PLC 190,000 1,222,984
Saatchi & Saatchi PLC 3,524,200 9,303,409
Scholl PLC 247,900 1,553,217
Shell Transport & Trading Co. PLC (Reg.) 1,470,000 10,929,538
Siebe PLC 135,000 3,013,455
SmithKline Beecham PLC Ord. 607,438 7,236,290
Somerfield PLC 748,700 4,232,265
Ultra Electronics Holdings PLC 310,000 2,097,689
Unilever PLC Ord. 1,053,000 11,207,075
Vodafone Group PLC 602,120 6,589,434
Wickes PLC 800,000 4,704,973
Williams Holdings PLC Class L 185,000 1,418,760
Yorkshire Water PLC 340,000 2,726,746
163,719,637
UNITED STATES OF AMERICA - 0.0%
Global Telesystems Group, Inc. (a) 3,500 164,500
TOTAL COMMON STOCKS
(Cost $457,691,755) 566,875,980
NONCONVERTIBLE PREFERRED STOCKS - 5.5%
GERMANY - 2.6%
Dyckerhoff AG (non-vtg.) 8,500 2,924,996
Porsche AG 1,100 2,805,279
SAP AG (Systeme Anwendungen
Produkte) 15,000 7,684,170
Wella AG 3,079 2,846,005
16,260,450
ITALY - 2.9%
Telecom Italia Spa 1,941,800 10,231,015
Telecom Italia Mobile Spa de Risp 2,175,000 7,830,002
18,061,017
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $28,014,183) 34,321,467
CASH EQUIVALENTS - 4.0%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $25,351,590) 25,351,590 $25,351,590
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $511,057,528) $ 626,549,037
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.51%. 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 $477,197,771 and $351,400,561, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these
affiliated firms were $10,741 for the period.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 2.1%
Basic Industries 5.0
Cash Equivalents 4.0
Construction & Real Estate 4.8
Durables 5.3
Energy 6.1
Finance 23.6
Health 5.4
Holding Companies 0.4
Industrial Machinery & Equipment 8.5
Media & Leisure 6.4
Nondurables 7.7
Retail & Wholesale 3.2
Services 2.9
Technology 4.7
Transportation 1.1
Utilities 8.8
100.0%
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $511,139,201. Net unrealized appreciation
aggregated $115,409,836, of which $121,847,020 related to appreciated
investment securities and $6,437,184 related to depreciated investment
securities.
EUROPE CAPITAL APPRECIATION
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 626,549,037
(COST $511,057,528) -
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 42,956,143
RECEIVABLE FOR FUND SHARES SOLD 3,853,487
DIVIDENDS RECEIVABLE 2,305,439
INTEREST RECEIVABLE 183,941
REDEMPTION FEES RECEIVABLE 20,985
TOTAL ASSETS 675,869,032
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 34,311,080
PAYABLE FOR FUND SHARES REDEEMED 3,254,595
ACCRUED MANAGEMENT FEE 386,580
OTHER PAYABLES AND ACCRUED EXPENSES 152,379
TOTAL LIABILITIES 38,104,634
NET ASSETS $ 637,764,398
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 496,604,595
UNDISTRIBUTED NET INVESTMENT INCOME 1,383,717
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN
(LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 24,338,924
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 115,437,162
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS, FOR 34,474,997 SHARES OUTSTANDING $ 637,764,398
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($637,764,398 (DIVIDED BY) 34,474,997 SHARES) $18.50
MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $18.50) $19.07
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 3,659,944
DIVIDENDS
INTEREST 478,189
4,138,133
LESS FOREIGN TAXES WITHHELD (408,893)
TOTAL INCOME 3,729,240
EXPENSES
MANAGEMENT FEE $ 1,606,433
BASIC FEE
PERFORMANCE ADJUSTMENT 4,939
TRANSFER AGENT FEES 515,176
ACCOUNTING FEES AND EXPENSES 161,385
NON-INTERESTED TRUSTEES' COMPENSATION 714
CUSTODIAN FEES AND EXPENSES 51,100
REGISTRATION FEES 52,355
AUDIT 25,475
LEGAL 1,094
REPORTS TO SHAREHOLDERS 24,292
MISCELLANEOUS 331
TOTAL EXPENSES BEFORE REDUCTIONS 2,419,002
EXPENSE REDUCTIONS (73,480) 2,345,522
NET INVESTMENT INCOME 1,383,718
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 25,071,292
FOREIGN CURRENCY TRANSACTIONS (278,965) 24,792,327
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 85,420,976
ASSETS AND LIABILITIES IN (77,728) 85,343,248
FOREIGN CURRENCIES
NET GAIN (LOSS) 110,135,575
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 111,519,293
OTHER INFORMATION $ 530,183
SALES CHARGES PAID TO FDC
SALES CHARGES - DEALERS' PORTION $ 410
EXPENSE REDUCTIONS $ 73,008
DIRECTED BROKERAGE ARRANGEMENTS
TRANSFER AGENT CREDITS 472
$ 73,480
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
OPERATIONS $ 1,383,718 $ 4,455,207
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 24,792,327 62,599,749
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 85,343,248 15,678,969
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 111,519,293 82,733,925
DISTRIBUTIONS TO SHAREHOLDERS (3,530,573) (2,855,514)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (46,118,471) (16,015,689)
TOTAL DISTRIBUTIONS (49,649,044) (18,871,203)
SHARE TRANSACTIONS 232,598,200 297,299,863
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 48,775,275 18,146,164
COST OF SHARES REDEEMED (77,677,144) (177,761,244)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM SHARE TRANSACTIONS 203,696,331 137,684,783
REDEMPTION FEES 148,443 310,115
TOTAL INCREASE (DECREASE) IN NET ASSETS 265,715,023 201,857,620
NET ASSETS
BEGINNING OF PERIOD 372,049,375 170,191,755
END OF PERIOD (INCLUDING UNDISTRIBUTED NET
INVESTMENT INCOME OF $1,383,717 AND $4,579,952, RESPECTIVELY) $ 637,764,398 $ 372,049,375
OTHER INFORMATION
SHARES
SOLD 13,318,878 20,196,556
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 3,398,974 1,399,089
REDEEMED (4,700,765) (11,229,699)
NET INCREASE (DECREASE) 12,017,087 10,365,946
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEARS ENDED OCTOBER 31, DECEMBER 21, 1993
APRIL 30, 1998 (COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996 1995 1994
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.57 $ 14.07 $ 12.08 $ 11.35 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .05 D .20 D .22 G .23 .08 D
NET REALIZED AND UNREALIZED GAIN (LOSS) 4.12 3.81 2.00 .50 1.27
TOTAL FROM INVESTMENT OPERATIONS 4.17 4.01 2.22 .73 1.35
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.16) (.23) (.23) - -
FROM NET REALIZED GAIN (2.09) (1.29) - - -
TOTAL DISTRIBUTIONS (2.25) (1.52) (.23) - -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .01 - - -
NET ASSET VALUE, END OF PERIOD $ 18.50 $ 16.57 $ 14.07 $ 12.08 $ 11.35
TOTAL RETURN B, C 29.15% 31.57% 18.74% 6.43% 13.50%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 637,764 $ 372,049 $ 170,192 $ 194,433 $ 352,855
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.14% A 1.10% 1.33% 1.36% 1.54% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS
AFTER EXPENSE REDUCTIONS 1.10% A, E 1.07% E 1.30% E 1.36% 1.54% A
RATIO OF NET INVESTMENT INCOME TO AVERAGE
NET ASSETS .65% A 1.33% 1.66% 1.45% .79% A
PORTFOLIO TURNOVER RATE 171% A 189% 155% 176% 317% A
AVERAGE COMMISSION RATE F $ .0281 $ .0254 $ .0245
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE NOTE 6 OF
NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME
SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID
OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS).
F FOR FISCAL YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT
MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
G INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL
DIVIDEND WHICH AMOUNTED TO $.04 PER SHARE.
</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 6 PAST 1 LIFE OF
APRIL 30, 1998 MONTHS YEAR FUND
FIDELITY FRANCE 31.02% 38.10% 86.18%
FIDELITY FRANCE 27.09% 33.96% 80.59%
(INCL. 3.00% SALES CHARGE)
SBF 250 34.93% 41.21% 80.99%
EUROPEAN REGION FUNDS AVERAGE 26.03% 39.23% N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year or since
the fund started on November 1, 1995. For example, if you 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 Societe des Bourses Francaises 250 Index (SBF
250 Index) - a market capitalization weighted index of the stocks of
the 250 largest companies in the French market. To measure how the
fund's performance stacked up against its peers, you can compare the
fund's performance to the European region funds average, which
reflects the performance of mutual funds with similar objectives
tracked by Lipper Analyticale Services, Inc. The past six months
average represents a peer group of 93 mutual funds. These benchmarks
include reinvested dividends and capital gains, if any, and exclude
the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
APRIL 30, 1998 YEAR FUND
FIDELITY FRANCE 38.10% 28.28%
FIDELITY FRANCE 33.96% 26.72%
(INCL. 3.00% SALES CHARGE)
SBF 250 41.21% 26.83%
EUROPEAN REGION FUNDS AVERAGE 39.23% 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
IMATRL PRASUN SHR__CHT 19980430 19980506 114239 R00000000000033
$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 April 30, 1998, the value of the investment would have grown
to $18,059 - an 80.59% increase on the initial investment. For
comparison, look at how the Societe des Bourses Francaises 250 Index
did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 would have grown to $18,099 - an 80.99%
increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the potential
for significant growth over time; however, investing
in foreign markets means assuming greater risks than
investing in the United States. Factors like changes in
a country's financial markets, its local political and
economic climate, and the fluctuating value of its
currency create these risks. For these reasons an
international fund's performance may be more
volatile than a fund that invests exclusively in the
United States. Past performance is no guarantee
of future results and you may have a gain or loss
when you sell your shares.
(checkmark)
FRANCE
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Effective on May 19, 1998 - after the period
covered by this report - Alexandra Edzard became Portfolio Manager of
Fidelity France Fund.
Q. HOW DID THE FUND PERFORM, ALEXANDRA?
A. For the six months that ended April 30, 1998, the fund returned
31.02%, compared to the 34.93% return of the Societe des Bourses
Francaises (SBF) 250 Index and the European region funds average
return of 26.03%, as monitored by Lipper Analytical Services. For the
one-year period, the fund returned 38.10%, compared to the SBF 250's
return of 41.21% and the Lipper European region funds average return
of 39.23%.
Q. HOW WOULD YOU DESCRIBE THE INVESTMENT ENVIRONMENT DURING THE
PERIOD?
A. France's economic recovery became clearer to investors in early
1998 and the stock market rallied, outperforming most other European
markets. The favorable factors included a pick-up in construction and
real estate activity and increased consumer spending. In addition, low
interest rates and the French government's decision to give more
favorable tax treatment to returns from stock investments compared to
bond investments helped the market.
Q. WHAT WERE THE KEY FACTORS INFLUENCING PERFORMANCE?
A. The fund's healthy returns were helped by good exposure to domestic
cyclical companies, which tend to do well during a period of economic
recovery. The emphasis on heavy industries supported the performance.
The fund was hurt however, by major investments in oil company stocks.
In addition, shares of France Telecom staged a very large rally during
the six months. This single stock accounts for 8% of the SBF 250
Index, but the fund was underweighted with just 3% at the start of the
rally. The fund slightly underperformed the SBF 250 Index because it
owned some smaller-company stocks during a time when larger-company
stocks tended to do better, although some of the fund's small-company
stocks did very well.
Q. WHAT WERE THE PRINCIPAL STRATEGIES DURING THE SIX-MONTH PERIOD?
A. We focused on cyclical companies and finance companies - both very
strong performing areas because of the recovering economy. Within
cyclical industries, for example, construction and real estate
accounted for 8.5% of portfolio investments at the end of the period,
while consumer goods accounted for 7.8%, industrial machinery 7.0% and
technology 7.0%. We found particularly good opportunities in building
materials and construction, as well as electrical equipment and
technology companies such as Alcatel Alsthom and Schneider. Several
technology stocks did very well, including Cap Gemini, Atos and Cegid.
These three software companies are all involved in providing solutions
to companies that need to adapt their computer dating systems for
calendar changes beginning in the year 2000.
Q. THE FINANCE INDUSTRY HAD THE LARGEST EMPHASIS AT THE END OF THE
PERIOD, WITH 10.7% OF PORTFOLIO INVESTMENTS. WHAT WAS THE STRATEGY
HERE?
A. In general, the finance sector was helped by the economic recovery
and relatively low interest rates. We focused on both banks and
insurance companies. Most of the banks in the finance sector did very
well, with Societe Generale, the fund's third-largest holding at the
end of the period, having particularly strong performance. Axa, the
global insurance company based in France, also helped the fund's
returns significantly.
Q. WHAT OTHER COMPANIES WERE STRONG CONTRIBUTORS?
A. The investment in Sodexho, a major French catering company, was
very successful. This company acquired Marriott Catering Services in
the United States, making it the world's largest catering company.
Genset, a biotechnology company involved in genetic research, was
another good-performing stock. Bouygues, a construction company, also
helped the fund's returns significantly. This company benefited both
from the health of its underlying businesses - including construction,
road building and media - and from market expectations during the
period that it was an acquisition candidate. The company's assets were
worth significantly more than the stock value of the company.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. The major disappointment was in oil stocks, where we had a
considerable weighting because energy stocks tend to do well in
economic recoveries. At the end of the period, energy stocks accounted
for 8.3% of portfolio investments. The slump in world oil prices hurt
this industry. The fund's two largest holdings at the end of the
period, Elf Aquitaine and Total, are oil companies that were affected
by the problems in the energy industry.
Q. WHAT IS YOUR OUTLOOK?
A. There are signs that economic growth in France is broadening from
the export sector to include the consumer sector, which is a positive
development. At the same time, inflation remains subdued. This implies
that there should not be much upward pressure on interest rates or
bond yields. The general market expectation is that interest rates
could end the year at around 4% to 4.5%. Overall, this background has
tended to be benign for equities. On the corporate front, the outlook
for profit growth remains favorable. A key item in the market
continues to be corporate restructuring, which is taking the form of
cost-cutting in general, and of mergers and acquisitions in
particular. The broadening in economic growth may also improve the
outlook for small- or medium-sized companies.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
ALEXANDRA EDZARD ON HER INVESTMENT STYLE:
"In managing the fund, I emphasize strong company
research. I look for positive changes that can improve a
corporation's profitability, trying to determine the quality,
strategic direction and motivation of corporate management.
"I take time to understand the businesses in which I invest,
trying to be patient in order to give my investment ideas time
to work. I focus on what I'm familiar with, avoiding
speculation about the unknown. I look for changes that are
taking place and how they may affect an industry or
company, either positively or negatively.
"In selecting stocks, I invest only in companies managed by
people who clearly understand their business. I look for
those companies whose positions will improve from
consolidation within their industries, trying to identify
companies that will benefit from corporate restructuring or
from improving fundamentals and earnings potential. I like
to invest in companies with strong balance sheets and
positive cash flow, as they have the financial flexibility to
initiate positive changes. In this analysis, I rely on Fidelity's
strong research team to give me insight and information.
"In today's era of consolidation, I want to emphasize
companies that are focusing on what they understand and
what they are good at. This means avoiding companies that
are using their positive cash flow to make unproductive
acquisitions in non-core businesses.
"I also emphasize companies that recognize the importance
of shareholders, especially in terms of communication. I
have found that companies adapting to a broader range of
shareholders seek better returns on capital, and demonstrate
the courage to make major adjustments in their business
portfolio, rather than just small-scale cost reductions.
"I look to invest in companies with pro-active managements
who believe that change is important in improving corporate
earnings. I also try to talk with a company's line managers
to assess their competitive position and to determine
long-term corporate strategy. In judging a company's
managers, I look at their past records, their attitude toward
the business, their motivation and their appreciation of
their company's competitive position."
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 April 30, 1998, more than
$8 million
MANAGER: Alexandra Edzard since May 1998;
manager Fidelity Germany Fund 1996; joined
Fidelity in 1994
(checkmark)
FRANCE
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
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%
AS OF OCTOBER 31, 1997
UNITED STATES 5.7%
ROW: 1, COL: 1, VALUE: 94.3
ROW: 1, COL: 2, VALUE: 5.7
FRANCE 94.3%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
STOCKS 79.6 76.1
BONDS 3.4 18.2
SHORT-TERM INVESTMENTS 17.0 5.7
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
NATIONALE ELF AQUITAINE 4.4 6.2
(OIL & GAS)
TOTAL SA CLASS B 3.9 3.7
(OIL & GAS)
SOCIETE GENERALE DE PARIS (RFD) 3.8 0.0
(BANKS)
LVMH (MOET-HENNESSY LOUIS VUITTON) 3.6 1.2
SPONSORED ADR
(BEVERAGES)
FRANCE TELECOM SA 3.6 3.9
(TELEPHONE SERVICES)
ALCATEL ALSTHOM COMPAGNIE GENERALE 3.2 0.0
D'ELECTRICITE SA
(ELECTRICAL EQUIPMENT)
GROUPE DANONE 2.6 0.0
(FOODS)
CREDIT COMMERCIAL DE FRANCE ORD. 2.1 3.4
(BANKS)
AXA SA 2.0 0.0
(INSURANCE)
GENERALE DES EAUX, CIE 2.0 0.0
(WATER)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 10.7 11.3
CONSTRUCTION & REAL ESTATE 8.5 13.1
ENERGY 8.3 9.9
NONDURABLES 7.8 5.3
INDUSTRIAL MACHINERY & EQUIPMENT 7.0 6.2
TECHNOLOGY 7.0 5.3
HEALTH 6.2 10.0
UTILITIES 5.6 3.9
MEDIA & LEISURE 5.5 6.7
DURABLES 4.6 8.4
FRANCE
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 78.9%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.9%
Industrielle d'Aviation Latecoere SA 600 $ 84,226
BASIC INDUSTRIES - 1.3%
CHEMICALS & PLASTICS - 1.3%
L'Air Liquide 700 129,080
CONSTRUCTION & REAL ESTATE - 8.5%
BUILDING MATERIALS - 1.9%
IMETAL SA Ord. 400 51,898
Lafarge SA 600 56,616
Lafarge SA (RFD) 31 2,843
Lapeyre SA 1,000 75,920
187,277
CONSTRUCTION - 4.4%
Bouygues Offshore SA 1,500 65,537
Compagnie de Saint Gobain 1,050 174,782
Groupe GTM 1,200 94,493
(SGE) Societe Generale
d'Entreprises SA (a) 1,000 38,957
Technip SA 360 45,692
419,461
ENGINEERING - 1.0%
Bouygues 600 94,593
REAL ESTATE - 1.2%
Societe Fonciere Lyonnaise SA 300 45,901
Unibail (a) 500 71,435
117,336
TOTAL CONSTRUCTION & REAL ESTATE 818,667
DURABLES - 4.6%
AUTOS, TIRES, & ACCESSORIES - 2.6%
Peugeot SA Ord. 600 104,062
Valeo SA 1,500 149,016
253,078
CONSUMER DURABLES - 0.7%
l'Europeenne d'Extincteurs 800 66,849
CONSUMER ELECTRONICS - 0.5%
BIC 700 48,120
HOME FURNISHINGS - 0.4%
Strafor Facom SA 380 34,720
TEXTILES & APPAREL - 0.4%
Alain Manoukian SA 1,000 37,877
TOTAL DURABLES 440,644
ENERGY - 8.3%
OIL & GAS - 8.3%
Nationale Elf Aquitaine 3,255 426,646
Total SA Class B 3,150 374,159
800,805
FINANCE - 10.7%
BANKS - 7.0%
Credit Commercial de France Ord. 2,520 200,947
Paribas SA (Cie Financiere) Class A 1,000 106,321
Societe Generale de Paris (RFD)(a) 1,770 364,615
671,883
SHARES VALUE (NOTE 1)
INSURANCE - 3.7%
Assurances Generales (Reg.) 2,600 $ 164,133
Axa SA 1,680 197,040
361,173
TOTAL FINANCE 1,033,056
HEALTH - 4.8%
DRUGS & PHARMACEUTICALS - 4.0%
Genset SA (a) 1,200 110,441
Rhone Poulenc SA Class A 3,150 153,902
Synthelabo 800 120,276
384,619
MEDICAL EQUIPMENT & SUPPLIES - 0.8%
Essilor International SA 200 80,738
TOTAL HEALTH 465,357
HOLDING COMPANIES - 1.7%
Lagardere S.C.A. (Reg.) 3,000 114,627
Marine Wendel SA 300 53,327
167,954
INDUSTRIAL MACHINERY & EQUIPMENT - 7.0%
ELECTRICAL EQUIPMENT - 4.1%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 1,680 304,500
Equipements et Composants pour
l'Industrie Automobile (ECIA) 300 94,294
398,794
INDUSTRIAL MACHINERY & EQUIPMENT - 2.9%
Carbone-Lorraine (Le) (RFD) (a) 400 164,665
Entrelec SA (a) 800 43,592
Euraltech SA (a) 200 26,614
Sidel SA 600 45,851
280,722
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 679,516
MEDIA & LEISURE - 3.5%
BROADCASTING - 0.4%
NRJ SA 240 40,867
PUBLISHING - 1.4%
Hachette Filipacchi Medias SA 504 135,555
RESTAURANTS - 1.7%
Sodexho Alliance SA 887 162,237
TOTAL MEDIA & LEISURE 338,659
NONDURABLES - 7.8%
BEVERAGES - 3.6%
LVMH (Moet-Hennessy Louis Vuitton)
sponsored ADR 1,680 345,517
FOODS - 2.6%
Groupe Danone 1,050 247,695
HOUSEHOLD PRODUCTS - 1.6%
L'Oreal Co. Ord. 324 154,478
TOTAL NONDURABLES 747,690
RETAIL & WHOLESALE - 4.4%
GENERAL MERCHANDISE STORES - 2.5%
Bricorama SA 1,000 54,822
Galeries Lafayette SA 210 184,201
239,023
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - 1.9%
Pinault Printemps SA 160 $ 119,026
Castorama Dubois Investissements SA 400 66,052
185,078
TOTAL RETAIL & WHOLESALE 424,101
SERVICES - 3.5%
ADVERTISING - 2.0%
Expand SA (a) 600 140,045
Havas Advertising SA 300 53,576
193,621
SERVICES - 1.5%
Publicis SA 200 23,989
Sidergie SA 180 43,329
Suez Lyonnaise des Eaux 450 76,252
143,570
TOTAL SERVICES 337,191
TECHNOLOGY - 6.3%
COMPUTER SERVICES & SOFTWARE - 4.7%
Atos SA (a) 840 140,244
Cegid SA 1,050 180,538
Cap Gemini Sogeti SA 666 86,410
Sopra SA 130 43,625
450,817
ELECTRONICS - 1.6%
Schneider SA 2,100 156,990
TOTAL TECHNOLOGY 607,807
UTILITIES - 5.6%
TELEPHONE SERVICES - 3.6%
France Telecom SA 6,300 342,552
WATER - 2.0%
Generale des Eaux, Cie 1,050 195,016
TOTAL UTILITIES 537,568
TOTAL COMMON STOCKS
(Cost $5,734,702) 7,612,321
NONCONVERTIBLE PREFERRED STOCKS - 0.7%
TECHNOLOGY - 0.7%
COMMUNICATIONS EQUIPMENT - 0.7%
Sagem SA (non-vtg.)
(Cost $67,320) 200 63,460
CONVERTIBLE BONDS - 3.4%
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (NOTE 1)
HEALTH - 1.4%
DRUGS & PHARMACEUTICALS - 1.4%
Sanofi SA 4%, 1/1/00 - FRF 310,000 $ 130,742
MEDIA & LEISURE - 2.0%
LODGING & GAMING - 2.0%
Accor SA 6 3/4%, 1/1/00 - FRF 604,800 196,236
TOTAL CONVERTIBLE BONDS
(Cost $229,929) 326,978
CASH EQUIVALENTS - 17.0%
SHARES
Taxable Central Cash Fund (b) 1,604,679 1,604,679
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.50%, dated
4/30/98 due 5/1/98 $ 39,006 39,000
TOTAL CASH EQUIVALENTS
(Cost $1,643,679) 1,643,679
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $7,675,630) $ 9,646,438
CURRENCY ABBREVIATIONS
FRF - French franc
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.51%. 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 $4,004,178 and $2,756,343, respectively.
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $7,678,678. Net unrealized appreciation
aggregated $1,967,760, of which $2,008,699 related to appreciated
investment securities and $40,939 related to depreciated investment
securities.
FRANCE
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE
AGREEMENTS OF $39,000) (COST $7,675,630) - SEE $ 9,646,438
ACCOMPANYING SCHEDULE
CASH 577
FOREIGN CURRENCY HELD AT VALUE 11
(COST $11)
RECEIVABLE FOR INVESTMENTS SOLD 113,932
RECEIVABLE FOR FUND SHARES SOLD 22,796
DIVIDENDS RECEIVABLE 42,552
INTEREST RECEIVABLE 3,566
OTHER RECEIVABLES 2,171
RECEIVABLE FROM INVESTMENT ADVISER FOR EXPENSE REDUCTIONS 3,944
TOTAL ASSETS 9,835,987
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 1,356,720
PAYABLE FOR FUND SHARES REDEEMED 400
OTHER PAYABLES AND 31,514
ACCRUED EXPENSES
TOTAL LIABILITIES 1,388,634
NET ASSETS $ 8,447,353
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 6,398,235
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME (42,065)
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 121,252
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 1,969,931
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS, FOR 532,626 $ 8,447,353
SHARES OUTSTANDING
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE ($8,447,353 (DIVIDED BY) 532,626 SHARES) $15.86
MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $15.86) $16.35
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 5,026
DIVIDENDS
INTEREST 12,844
TOTAL INCOME 17,870
EXPENSES
MANAGEMENT FEE $ 21,999
TRANSFER AGENT FEES 10,342
ACCOUNTING FEES AND EXPENSES 30,018
NON-INTERESTED TRUSTEES' COMPENSATION 10
CUSTODIAN FEES AND EXPENSES 17,641
REGISTRATION FEES 7,867
AUDIT 15,601
LEGAL 16
REPORTS TO SHAREHOLDERS 2,198
MISCELLANEOUS 8
TOTAL EXPENSES BEFORE REDUCTIONS 105,700
EXPENSE REDUCTIONS (47,479) 58,221
NET INVESTMENT INCOME (LOSS) (40,351)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 132,460
FOREIGN CURRENCY TRANSACTIONS (5,049) 127,411
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 1,517,635
ASSETS AND LIABILITIES IN 8,824 1,526,459
FOREIGN CURRENCIES
NET GAIN (LOSS) 1,653,870
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,613,519
OTHER INFORMATION $ 5,163
SALES CHARGES PAID TO FDC
EXPENSE REDUCTIONS
FMR REIMBURSEMENT $ 47,479
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
OPERATIONS $ (40,351) $ 49,036
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 127,411 752,856
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 1,526,459 20,706
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,613,519 822,598
DISTRIBUTIONS TO SHAREHOLDERS (16,501) (69,894)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (474,417) (266,472)
TOTAL DISTRIBUTIONS (490,918) (336,366)
SHARE TRANSACTIONS 2,646,779 5,243,968
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 487,606 334,785
COST OF SHARES REDEEMED (1,392,150) (6,049,684)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 1,742,235 (470,931)
REDEMPTION FEES 4,142 21,293
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,868,978 36,594
NET ASSETS
BEGINNING OF PERIOD 5,578,375 5,541,781
END OF PERIOD (INCLUDING UNDER (OVER) DISTRIBUTION OF NET
INVESTMENT INCOME OF $(42,065) AND $23,384, RESPECTIVELY) $ 8,447,353 $ 5,578,375
OTHER INFORMATION
SHARES
SOLD 179,323 411,477
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 39,450 28,936
REDEEMED (106,595) (472,584)
NET INCREASE (DECREASE) 112,178 (32,171)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEAR ENDED NOVEMBER 1, 1995
APRIL 30, 1998 OCTOBER 31, (COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.27 $ 12.24 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.09) D .10 D .23
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.86 1.66 1.98
TOTAL FROM INVESTMENT OPERATIONS 3.77 1.76 2.21
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.04) (.16) (.04)
FROM NET REALIZED GAIN (1.15) (.61) -
TOTAL DISTRIBUTIONS (1.19) (.77) (.04)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .04 .07
NET ASSET VALUE, END OF PERIOD $ 15.86 $ 13.27 $ 12.24
TOTAL RETURN B, C 31.02% 15.63% 22.89%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 8,447 $ 5,578 $ 5,542
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.00% A, E 2.00% E 2.00% E
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.38)% A .78% 1.74%
PORTFOLIO TURNOVER RATE 96% A 150% 129%
AVERAGE COMMISSION RATE F $ .1889 $ .1749 $ .1932
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN (SEE NOTE 6 OF
NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME
SALES CHARGE AND FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS
BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS).
F A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE
PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
</TABLE>
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 total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 LIFE OF
APRIL 30, 1998 MONTHS YEAR FUND
FIDELITY GERMANY 33.60% 43.46% 82.52%
FIDELITY GERMANY 29.59% 39.16% 77.05%
(INCL. 3.00% SALES CHARGE)
DAX 100 28.95% 39.35% 77.61%
EUROPEAN REGION FUNDS AVERAGE 26.03% 39.23% N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year or since
the fund started on November 1, 1995. For example, if you 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 six months average represents a peer group of
93 mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
APRIL 30, 1998 YEAR FUND
FIDELITY GERMANY 43.46% 27.26%
FIDELITY GERMANY 39.16% 25.72%
(INCL. 3.00% SALES CHARGE)
DAX 100 39.35% 25.88%
EUROPEAN REGION FUNDS AVERAGE 39.23% 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
IMATRL PRASUN SHR__CHT 19980430 19980513 162221 R00000000000033
$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 April 30, 1998, the value of the investment would have grown
to $17,705 - a 77.05% 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 $17,761 - a 77.61% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the potential
for significant growth over time; however, investing
in foreign markets means assuming greater risks than
investing in the United States. Factors like changes in
a country's financial markets, its local political and
economic climate, and the fluctuating value of its
currency create these risks. For these reasons an
international fund's performance may be more
volatile than a fund that invests exclusively in the
United States. Past performance is no guarantee
of future results and you may have a gain or loss
when you sell your shares.
(checkmark)
GERMANY
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Alexandra Edzard, Portfolio Manager of Fidelity
Germany Fund
Q. HOW DID THE FUND PERFORM, ALEXANDRA?
A. For the six-month period that ended April 30, 1998, the fund
returned 33.60%, compared with 28.95% for the Deutscher Aktienindex
100 (DAX 100), the fund's benchmark. According to Lipper Analytical
Services, the European region funds average returned 26.03% for the
same period. For the 12-month period through April 30, 1998, the fund
returned 43.46%, versus 39.35% for the DAX index and 39.23% for the
European region funds average.
Q. WHAT WAS THE MARKET LIKE DURING THE PERIOD?
A. The market was very strong, driven by German investment in the
stock market. This pro-investment sentiment reflected a sea change in
German attitudes. In the past, large parts of many companies were
owned by banks, and there was little pressure for companies to be
managed for the benefit of shareholders. As a consequence - and
because Germany's equity culture was less developed - German investors
were basically savers and invested in bonds rather than equities. The
stock market was viewed with suspicion. In 1996, Deutsche Telekom,
Europe's largest telecommunications company and a household name in
Germany, listed shares on the Frankfurt exchange. Since then, Germans
have begun to embrace a new equity culture, facilitated by financial
market reforms. Insurance companies have started thinking about life
insurance policies wrapped around mutual fund investments. Banks are
making an effort to lure depositors away from relatively low-yielding
savings vehicles and into stock mutual funds. Altogether, Germans
invested $8.22 billion in German equity funds in 1997. During the
six-month period, small-capitalization stocks outperformed large-cap
stocks, something that has not happened for many years. Many blue-chip
companies were trading at historically high valuations, so investors
turned to the stocks of smaller companies. Mini-caps - companies with
market capitalizations of $200 million or less - were particularly
strong during the period, often with two or more initial public
offerings coming to market each week.
Q. WHAT CONTRIBUTED TO THE FUND'S OUTPERFORMANCE RELATIVE TO THE DAX
INDEX?
A. The fund's overweight position in select financial companies helped
boost returns. In the banking sector, consolidation trends have
enabled companies to save costs and enhance returns through economies
of scale. Insurance holdings also performed well. The insurance
industry is likely to benefit from increased demand for private
pension products, because the state-related pension schemes will not
offer sufficient income to future generations. While these sector
overweights helped, I do not attempt to outperform the DAX index by
making sector bets. I prefer to add value through individual stock
picking. During the period, the fund also benefited from several
stocks outside the financial sector, including Mannesmann, BMW,
Deutscher Industrie Service (DIS), SAP and Wella. In many cases, these
companies performed well because they were undervalued or
under-researched at the start of the period, or because they benefited
from the easing of regulatory restrictions.
Q. WHAT SORT OF REGULATORY CHANGES ARE TAKING PLACE IN GERMANY?
A. Many of the economic reforms now taking place involve liberalizing
the financial markets. For example, companies are now allowed to buy
back up to 10% of their outstanding shares of stock - and many are
planning to do so. This will create additional demand for stocks and
help use up surplus capital. Companies now can also issue stock
options to management similar to U.S. companies. Further, financial
institutions are now allowed to engage in securitization, which should
lead to the creation of markets for mortgage-backed and asset-backed
securities. DIS, offering temporary employment services, is an example
of a company that benefited from a recent change in the liberalization
of employment regulations. DIS has been moving aggressively to
establish a niche in such fast-growing areas as finance and
information technology.
Q. WHAT CHANGES WERE MADE TO THE PORTFOLIO DURING THE PERIOD?
A. In the insurance sector, I increased the fund's weighting in
Hannover Re and took some profits on Allianz, the fund's largest
holding. Also, I reduced the fund's holdings in health care and
utilities. In the utilities sector, companies are diversifying by
investing their surplus cash in the telecommunications market. I
limited fund holdings to those utilities I believed had made good
investments. Gehe, the only health-related company in the portfolio at
the start of the period, suffered from a lack of acquisition
opportunities and, hence, revenue and profit growth. Further
investments were made in specialty retailers Hugo Boss and Adidas.
Q. WHAT WERE SOME OF THE DISAPPOINTMENTS?
A. In general, banks with exposure to Asia suffered during the period.
BHF Bank, which is a fascinating restructuring story, underperformed
in the period and stormed ahead only recently when discovered by other
market participants. Electronics giant Siemens underperformed as a
result of strong competition in semiconductors. Other laggards
included Viag and RWE, which were subsequently sold.
Q. WHAT'S YOUR OUTLOOK?
A. The German economy continues to benefit from strong export demand
that is helped by a weak deutschemark relative to the U.S. dollar.
Manufacturing capacity utilization is high at 84.7%, but unemployment
remains above 10% as companies continue to restructure and downsize
their businesses. As a result, consumer spending is still sluggish.
Only car sales are improving. I intend to remain focused on companies
benefiting from corporate restructuring and the regulatory changes
taking place in Germany. As always, I will look for opportunities to
invest in inexpensive companies with decent growth prospects and
companies that are well managed and focus on improving shareholder
value.
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.
ALEXANDRA EDZARD ON INVESTING IN GERMANY:
"The outlook for the German market remains positive.
Strong investment inflows should continue to drive the
market on the one hand, while fundamentals support it on
the other. More and more companies are realizing that they
compete internationally. As a result, they are restructuring
their businesses and trying to adjust their cost bases. German
management teams are learning to focus on core businesses,
where they can achieve strong growth and good return on
capital due to strong market positions. At present,
return-on-capital improvement in German companies is
achieved despite very little domestic demand, but there are
signs of economic recovery which, when in full swing, will
give additional support to earnings growth.
"The good companies can only be found by picking stocks
carefully, turning them over stone by stone. With our
European research team of 45 analysts, we achieve a
significant breadth of company coverage and discover
stocks early. Also, the extremely close teamwork among
Fidelity analysts worldwide should help us pick the right
stocks in an exciting market."
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of German issuers
FUND NUMBER: 346
TRADING SYMBOL: FGERF
START DATE: November 1, 1995
SIZE: as of April 30, 1998, more than
$17 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 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%
AS OF OCTOBER 31, 1997
UNITED STATES 9.5%
ROW: 1, COL: 1, VALUE: 85.40000000000001
ROW: 1, COL: 2, VALUE: 1.0
ROW: 1, COL: 3, VALUE: 3.5
ROW: 1, COL: 4, VALUE: 9.5
SWITZERLAND 3.5%
OTHER 0.6%
GERMANY 86.4%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
COMMON STOCKS 81.9 74.2
PREFERRED STOCKS 14.0 16.4
SHORT-TERM INVESTMENTS 4.1 9.4
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
ALLIANZ AG (REG.) 8.0 8.5
(INSURANCE)
MANNESMANN AG ORD. 6.6 2.8
(INDUSTRIAL MACHINERY & EQUIPMENT)
SAP AG (SYSTEME ANWENDUNGEN 5.8 3.9
PRODUKTE)
(COMPUTER SERVICES & SOFTWARE)
VEBA AG ORD. 5.8 3.2
(ELECTRIC UTILITY)
MUNICH REINSURANCE AG (REG.) 4.7 4.1
(INSURANCE)
DEUTSCHE BANK AG 4.3 4.7
(BANKS)
BASF AG 4.2 1.6
(CHEMICALS & PLASTICS)
DRESDNER BANK AG ORD. 4.1 3.3
(BANKS)
(BMW) MUENCHEN BAYERISCHE 3.8 3.2
MOTOREWERKE AG
(AUTOS, TIRES, & ACCESSORIES)
BAYER AG 3.4 2.3
(CHEMICALS & PLASTICS)
TOP MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 39.1 28.9
BASIC INDUSTRIES 16.1 13.4
DURABLES 15.2 16.0
INDUSTRIAL MACHINERY & EQUIPMENT 8.9 9.6
TECHNOLOGY 7.8 7.2
UTILITIES 5.8 8.3
SERVICES 1.6 1.1
TRANSPORTATION 1.0 2.2
CONSTRUCTION & REAL ESTATE 0.4 0.4
GERMANY
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 81.9%
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 11.9%
CHEMICALS & PLASTICS - 11.9%
BASF AG 16,320 $ 739,709
Bayer AG 13,266 591,759
Beiersdorf AG 1,709 94,685
Degussa AG 2,137 119,588
Hoechst AG Ord. 13,415 542,158
2,087,899
CONSTRUCTION & REAL ESTATE - 0.4%
CONSTRUCTION - 0.4%
Bien-Haus AG 203 62,169
DURABLES - 7.6%
AUTOS, TIRES, & ACCESSORIES - 3.1%
Daimler-Benz AG Ord. 5,334 528,232
Volkswagen AG 15 12,420
540,652
TEXTILES & APPAREL - 4.5%
Adidas-Salomon AG 2,851 476,251
Boss (Hugo) AG 188 314,049
790,300
TOTAL DURABLES 1,330,952
FINANCE - 38.3%
BANKS - 21.6%
BHF Bank AG 14,100 584,916
Bayerische Hypotheken-und
Wechselbank AG 5,441 319,480
Bayerische Vereinsbank AG Ord. 4,936 386,437
Commerzbank AG 4,487 174,893
Credit Suisse Group (Reg.) 1,595 350,596
Deutsche Bank AG 9,432 747,880
Dresdner Bank AG Ord. 12,816 715,766
Julius Baer Holding AG 187 515,673
3,795,641
INSURANCE - 16.7%
Allianz AG. (Reg.) 4,331 1,402,107
Allianz AG (RFD)(a) 122 37,159
CKAG Colonia Konzern AG (Bearer)(a) 534 70,173
ERGO Versicherungsgruppe AG (a) 800 151,456
Hannover Rueckversicherungs-AG 1,407 180,194
ING Groep NV 4,073 263,288
Munich Reinsurance AG (Reg.) 1,714 822,689
2,927,066
TOTAL FINANCE 6,722,707
INDUSTRIAL MACHINERY & EQUIPMENT - 8.2%
ELECTRICAL EQUIPMENT - 0.9%
Siemens AG 2,716 160,837
INDUSTRIAL MACHINERY & EQUIPMENT - 7.3%
Linde AG 180 125,686
Mannesmann AG Ord. 1,402 1,160,071
1,285,757
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,446,594
SERVICES - 1.6%
DIS Deutscher Industrie Service AG 4,200 250,237
DIS Deutscher Industrie Service AG (c) 600 35,748
285,985
SHARES VALUE (NOTE 1)
TECHNOLOGY - 7.1%
COMPUTER SERVICES & SOFTWARE - 5.8%
SAP AG (Systeme Anwendungen
Produkte) 2,126 $ 1,020,620
ELECTRONICS - 1.3%
ABB AG (Bearer) 141 231,040
TOTAL TECHNOLOGY 1,251,660
TRANSPORTATION - 1.0%
AIR TRANSPORTATION - 1.0%
Deutsche Lufthansa AG 7,009 165,868
UTILITIES - 5.8%
ELECTRIC UTILITY - 5.8%
Veba AG Ord. 15,277 1,016,539
TOTAL COMMON STOCKS
(Cost $10,690,769) 14,370,373
NONCONVERTIBLE PREFERRED STOCKS - 14.0%
BASIC INDUSTRIES - 4.2%
CHEMICALS & PLASTICS - 4.2%
Henkel KGAA 5,250 418,328
Wella AG 343 317,044
735,372
DURABLES - 7.6%
AUTOS, TIRES, & ACCESSORIES - 7.6%
(BMW) Muenchen Bayerische
Motorenwerke AG 926 665,148
Porsche AG 50 127,513
Volkswagen AG 856 537,651
1,330,312
FINANCE - 0.8%
INSURANCE - 0.8%
Marschollek Lautenschlaeger und
Partner AG 383 149,178
INDUSTRIAL MACHINERY & EQUIPMENT - 0.7%
Koenig & Bauer-Albert AG (non-vtg.) 500 119,717
TECHNOLOGY - 0.7%
ELECTRONICS - 0.7%
Sartorius AG 278 129,256
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $1,935,002) 2,463,835
CASH EQUIVALENTS - 4.1%
Taxable Central Cash Fund (b)
(Cost $718,662) 718,662 718,662
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $13,344,433) $ 17,552,870
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.51%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
3. 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 $35,748 or 0.2%
of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $9,548,043 and $9,022,357, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these
affiliated firms were $8,519 for the period.
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $13,360,915. Net unrealized appreciation
aggregated $4,191,955, of which $4,232,106 related to appreciated
investment securities and $40,151 related to depreciated investment
securities.
GERMANY
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 17,552,870
(COST $13,344,433) -
SEE ACCOMPANYING SCHEDULE
FOREIGN CURRENCY HELD AT VALUE (COST $179) 179
RECEIVABLE FOR INVESTMENTS SOLD 88,377
RECEIVABLE FOR FUND SHARES SOLD 13,595
DIVIDENDS RECEIVABLE 703
INTEREST RECEIVABLE 4,882
TOTAL ASSETS 17,660,606
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED $ 8,963
ACCRUED MANAGEMENT FEE 8,704
OTHER PAYABLES AND 36,573
ACCRUED EXPENSES
TOTAL LIABILITIES 54,240
NET ASSETS $ 17,606,366
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 12,993,646
ACCUMULATED NET INVESTMENT LOSS (99,091)
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 503,423
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 4,208,388
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS, FOR 1,094,054 $ 17,606,366
SHARES OUTSTANDING
NET ASSET VALUE, OFFERING PRICE $16.09
AND REDEMPTION PRICE PER SHARE ($17,606,366 (DIVIDED BY) 1,094,054 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $16.09) $16.59
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 20,196
DIVIDENDS
INTEREST 19,964
40,160
LESS FOREIGN TAXES WITHHELD (2,208)
TOTAL INCOME 37,952
EXPENSES
MANAGEMENT FEE $ 51,783
TRANSFER AGENT FEES 21,855
ACCOUNTING FEES AND EXPENSES 30,253
NON-INTERESTED TRUSTEES' COMPENSATION 24
CUSTODIAN FEES AND EXPENSES 28,293
REGISTRATION FEES 9,204
AUDIT 15,969
LEGAL 37
REPORTS TO SHAREHOLDERS 2,588
MISCELLANEOUS 262
TOTAL EXPENSES BEFORE REDUCTIONS 160,268
EXPENSE REDUCTIONS (23,225) 137,043
NET INVESTMENT INCOME (LOSS) (99,091)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 560,639
FOREIGN CURRENCY TRANSACTIONS (709) 559,930
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 3,590,490
ASSETS AND LIABILITIES IN (146) 3,590,344
FOREIGN CURRENCIES
NET GAIN (LOSS) 4,150,274
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 4,051,183
OTHER INFORMATION $ 26,747
SALES CHARGES PAID TO FDC
EXPENSE REDUCTIONS $ 23,174
FMR REIMBURSEMENT
TRANSFER AGENT CREDITS 51
$ 23,225
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
OPERATIONS $ (99,091) $ (21,289)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 559,930 1,713,253
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 3,590,344 288,600
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 4,051,183 1,980,564
DISTRIBUTIONS TO SHAREHOLDERS - (5,297)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (1,175,759) (248,285)
TOTAL DISTRIBUTIONS (1,175,759) (253,582)
SHARE TRANSACTIONS 4,461,748 14,817,379
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 1,171,719 252,687
COST OF SHARES REDEEMED (3,636,235) (11,309,518)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 1,997,232 3,760,548
REDEMPTION FEES 1,477 66,433
TOTAL INCREASE (DECREASE) IN NET ASSETS 4,874,133 5,553,963
NET ASSETS
BEGINNING OF PERIOD 12,732,233 7,178,270
END OF PERIOD (INCLUDING ACCUMULATED NET INVESTMENT
LOSS OF $99,091 AND 0, RESPECTIVELY) $ 17,606,366 $ 12,732,233
OTHER INFORMATION
SHARES
SOLD 301,803 1,166,667
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 93,141 22,362
REDEEMED (262,395) (860,345)
NET INCREASE (DECREASE) 132,549 328,684
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEAR ENDED NOVEMBER 1, 1995
APRIL 30, 1998 OCTOBER 31, (COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.24 $ 11.34 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.10) D (.02) D .01
NET REALIZED AND UNREALIZED GAIN (LOSS) 4.20 2.21 1.31
TOTAL FROM INVESTMENT OPERATIONS 4.10 2.19 1.32
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME - (.01) -
FROM NET REALIZED GAIN (1.25) (.35) -
TOTAL DISTRIBUTIONS (1.25) (.36) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL - .07 .02
NET ASSET VALUE, END OF PERIOD $ 16.09 $ 13.24 $ 11.34
TOTAL RETURN B, C 33.60% 20.47% 13.40%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 17,606 $ 12,732 $ 7,178
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.00% A, E 2.00% E 2.00% E
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.45)% A (.18)% .12%
PORTFOLIO TURNOVER RATE 136% A 120% 133%
AVERAGE COMMISSION RATE F $ .1682 $ .1517 $ .1714
A ANNUALIZED.
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD
CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES
CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER
(SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS)
F A FUND IS REQUIRED TO DISCLOSE IT'S AVERAGE COMMISSION
RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
</TABLE>
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 6 PAST 1 LIFE OF
APRIL 30, 1998 MONTHS YEAR FUND
FIDELITY HONG KONG AND CHINA 0.51% -17.54% 13.05%
FIDELITY HONG KONG AND CHINA -2.51% -20.01% 9.66%
(INCL. 3.00% SALES CHARGE)
HANG SENG -0.64% -16.93% 14.32%
CHINA REGION FUNDS AVERAGE -11.89% -28.09% N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year or since
the fund started on November 1, 1995. For example, if you 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 six months 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
APRIL 30, 1998 YEAR FUND
FIDELITY HONG KONG AND CHINA -17.54% 5.04%
FIDELITY HONG KONG AND CHINA -20.01% 3.76%
(INCL. 3.00% SALES CHARGE)
HANG SENG -16.93% 5.51%
CHINA REGION FUNDS AVERAGE -28.09% 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
IMATRL PRASUN SHR__CHT 19980430 19980513 151815 R00000000000033
$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 April 30, 1998, the value of the investment would
have grown to $10,966 - a 9.66% 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 $11,432 - a 14.32% 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)
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 six months that ended April 30, 1998, the fund returned
0.51%, compared to the -0.64% return of the Hang Seng Index and the
China region funds average of -11.89%, as monitored by Lipper
Analytical Services. For the one-year period, the fund returned
- -17.54%, compared to the Hang Seng Index return of -16.93% and the
China region funds average return of -28.09%.
Q. WHAT WAS THE INVESTMENT ENVIRONMENT LIKE DURING THE PERIOD?
A. It was a very volatile period. Even after the major market and
currency problems of last October, the Asian markets continued to
suffer in late 1997 and into January 1998. In late January, in what I
believe was a reaction against extreme losses in the market, the Asian
markets and currencies did rally for a period. Some Asian markets went
up as much as 25% in local market value in just a few days, and some
about 50% when taking currency appreciation into account. This
benefited the Hong Kong market, where the Hang Seng Index went from a
low of 8,000 in January to 12,000 by the end of March before slipping
again. Over the full period, the Hong Kong market did significantly
better than other Asian markets, in part because it is more mature and
less volatile.
Q. WHAT WERE YOUR PRINCIPAL INVESTMENT STRATEGIES?
A. I tried to reposition the fund according to changing market
conditions, taking advantage of a rally in the January-March period to
move into less volatile industries. I started out the period with a
greater emphasis on property companies than most other institutional
investors. I had less emphasis on defensive industries such as
utilities and far less cash than other investors had. That changed as
the market rebounded from January to March, when I took advantage of
strength in the property companies to reduce my position in that
volatile sector. I also reduced the number of holdings in
interest-rate-sensitive industries such as banking. I built up
investments in the more defensive industries, including utilities,
telecommunications, globally competitive exporters and companies
benefiting from infrastructure spending in China. I believe the
decision to move away from property-related companies while the market
was rallying helped my performance, relative to other China-related
funds.
Q. WHAT AREAS OF THE MARKET PERFORMED THE BEST DURING THE SIX MONTHS?
A. Just a few very large companies had very strong performance
relative to the market. These included the fund's four largest
investments: HSBC Holdings, the major banking company that makes up
more than 25% of the Hang Seng Index; China Telecom, which provides
cellular phone service in China; Hutchison, the conglomerate involved
in properties, telecommunications, ports and retailing; and Cheung
Kong Holdings, a property company. Another major holding that did well
was Hong Kong Telecom.
Q. APART FROM THESE BIG COMPANIES, DID ANY OTHER INVESTMENTS HELP THE
FUND'S PERFORMANCE?
A. Several helped the fund, including Johnson Electric Holdings, the
fund's largest investment outside the Hang Seng Index. This company
sells small motors throughout the world, especially in developed
nations. It is one of the very few globally competitive manufacturers
based in Hong Kong. Two other successful investments were so-called
"red chip" companies - firms based in Hong Kong but actually
controlled from China. As a general rule, I prefer not to invest in
"red chip" companies because I believe they have poorer management,
with less experience than Hong Kong-controlled companies in either
competing or making financial disclosures. However, I am open to
opportunities. The "red chip" companies that helped the fund were
Legend Holdings, which assembles and markets computers in China; and
Tianjin Development, a conglomerate that owns several businesses,
including a red wine distribution business and an Otis Elevator
franchise in Tianjin Province.
Q. WERE THERE ANY DISAPPOINTMENTS, APART FROM THE CONTINUED
VOLATILITY?
A. Yes. The leading disappointment was a company I had over-weighted
versus the Hang Seng Index, Hong Kong and China Gas Co. This company -
which has a near monopoly in gas distribution in Hong Kong -
traditionally has been able to increase its earnings by well over 15%
a year. However, economic problems led to lower gas consumption in
Hong Kong, particularly among large users such as restaurants and
hotels. Moreover, the stock price was hurt by rumors that the company
might face new competition. Another disappointing performer was
Glorious Sun Enterprises, a retail clothing company operating in
Mainland China. This well-managed company was one of the few companies
in which I could invest that has demonstrated an ability to make a
profit in China. However, consumer buying has fallen off dramatically
in China.
Q. WHAT HAS BEEN THE EFFECT OF THE DECISION NOT TO DEVALUE THE
CURRENCY IN HONG KONG?
A. Hong Kong, backed by China, has told the world it will not devalue
the Hong Kong dollar. I believe exports from Hong Kong will decline
because they will be less competitive against products produced in
countries with weaker currencies. Unemployment could go higher. Longer
term, deflation - or price decreases - could probably lead to a
strengthening of export industries as the relative price of
Chinese-produced goods becomes more competitive, but it would have
been easier to adjust the currency. However, I believe China will not
devalue the Hong Kong currency. This is being decided as a political
issue rather than an economic issue. In China, politics comes before
economics.
Q. WHAT IS YOUR OUTLOOK FOR THE NEXT SIX MONTHS TO A YEAR?
A. I am pessimistic about the immediate future. The current economic
downturn in Hong Kong is the most serious in 10 years. I believe it
will be a U-shaped correction, with a sharp descent and a sharp ascent
and a long period - perhaps two years - at the bottom. In addition,
Hong Kong remains an asset-price-driven market, with almost 75% of
corporate profits generated either directly or indirectly from real
estate. I don't see real estate prices going up in the next six to 12
months. For the foreseeable future, I will continue to add investments
in companies that can deliver earnings growth. I will be considering
investing some of the portfolio outside of Hong Kong and China,
searching for companies that can benefit from developments in Hong
Kong and China. These may be companies based in Singapore or Taiwan
that are able to generate earnings growth, perhaps by taking advantage
of lower labor costs in China. I am trying to find pockets of
opportunity, using more creative ideas, because I think there are
companies that can produce good relative performance for the fund.
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.
JOSEPH TSE ON THE LONG-TERM OUTLOOK IN
HONG KONG AND CHINA:
"The opportunities in Hong Kong and China will depend,
to a large extent, on how much the markets can move away
from their historically heavy emphasis on property
companies. When Britain ruled Hong Kong, there was a high
land-price policy for real estate: The government controlled
the supply of land, so prices continued to go up. However,
the new Hong Kong Special Administrative Region -
controlled by China - has a different agenda, which is to
keep an adequate supply of housing with stable prices. This
is better for the people, but not for property companies. As a
result, the earnings power of most key property companies
in Hong Kong has been weakened.
"Longer term, investment opportunities will have to depend
on China and whether Hong Kong can continue to benefit
from servicing China. The Chinese economy is growing
rapidly, at a compounded rate of more than 8% a year.
Unfortunately, publicly listed Chinese-based companies
generally are not worthwhile investments because they
generally are not well managed. Investments in them can be
extremely volatile, and I don't see prospects of much
long-term capital growth. I had minimal investments in
them at the close of the period.
"Nevertheless, looking more closely at China, there are
sectors that will continue to grow. Telecommunications
investment continues, despite a recession. The market
penetration of technologies such as computers still is low in
China. Even if penetration increases a little, the growth will
be unmatched by any other economy in the world. Moreover,
the government will continue to invest in infrastructure
development and some companies will benefit."
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Hong Kong and
Chinese issuers
FUND NUMBER: 352
TRADING SYMBOL: FHKCX
START DATE: November 1, 1995
SIZE: as of April 30, 1998, more than
$173 million
MANAGER: Joseph Tse, since inception; director
of research, Fidelity Investments Management
(Hong Kong), since 1994; manager Asian
portion of various global equity funds, since
1993; analyst covering Hong Kong and
Chinese equities, 1990-1993; joined Fidelity
in 1990
(checkmark)
HONG KONG AND CHINA
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1998
CHINA (PEOPLES REPUBLIC) 4.1%
UNITED KINGDOM 23.6%
ROW: 1, COL: 1, VALUE: 23.6
ROW: 1, COL: 2, VALUE: 6.0
ROW: 1, COL: 3, VALUE: 66.3
ROW: 1, COL: 4, VALUE: 4.1
HONG KONG 66.3%
OTHER 6.0%
AS OF OCTOBER 31, 1997
UNITED STATES 8.6%
ROW: 1, COL: 1, VALUE: 8.6
ROW: 1, COL: 2, VALUE: 18.4
ROW: 1, COL: 3, VALUE: 1.0
ROW: 1, COL: 4, VALUE: 72.0
HONG KONG 72.0%
UNITED KINGDOM 18.4%
OTHER 1.0%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
STOCKS 96.2 91.4
SHORT-TERM INVESTMENTS 3.8 8.6
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
HSBC HOLDINGS PLC 23.6 18.4
(BANKS)
CHINA TELECOM (HONG KONG) LTD. 8.1 3.4
(CELLULAR)
HUTCHISON WHAMPOA LTD. ORD. 7.7 10.3
(ELECTRICAL EQUIPMENT)
CHEUNG KONG HOLDINGS LTD. 5.3 8.7
(REAL ESTATE)
CLP HOLDINGS LTD. 4.6 2.2
(ELECTRIC UTILITY)
HONG KONG & CHINA GAS CO. LTD. 4.4 2.1
(GAS)
SUN HUNG KAI PROPERTIES LTD. 4.3 7.9
(REAL ESTATE)
HONG KONG TELECOMMUNICATIONS LTD. 4.0 3.2
(TELEPHONE SERVICES)
HANG SENG BANK LTD. 3.2 1.7
(BANKS)
JOHNSON ELECTRIC HOLDINGS LTD. 2.4 1.2
(ELECTRICAL EQUIPMENT)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 31.2 27.0
UTILITIES 23.1 14.4
CONSTRUCTION & REAL ESTATE 18.1 25.5
INDUSTRIAL MACHINERY & EQUIPMENT 11.6 12.1
TECHNOLOGY 3.2 1.0
TRANSPORTATION 3.2 1.5
HOLDING COMPANIES 1.8 3.6
DURABLES 1.4 1.6
MEDIA & LEASURE 1.0 1.2
HEALTH 0.9 1.6
HONG KONG AND CHINA
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 96.2%
SHARES VALUE (NOTE 1)
CONSTRUCTION & REAL ESTATE - 18.1%
BUILDING MATERIALS - 0.4%
Anhui Conch Cement Co. Ltd. Class H 3,504,000 $ 719,024
CONSTRUCTION - 1.9%
Cheung Kong Infrastructure Holdings Ltd. 1,284,000 3,256,192
Pacific Ports Co. Ltd. 612,000 156,386
3,412,578
REAL ESTATE - 15.8%
Cheung Kong Holdings Ltd. 1,397,000 9,285,087
Guangzhou Investment Co. Ltd. 13,314,000 2,405,575
HKR International Ltd. 1,712,400 1,027,639
Henderson Investment Ltd. 654,000 422,017
Henderson Land Development Co. Ltd. 772,000 3,447,274
New World Development Co. Ltd. 1,213,188 3,452,384
Sun Hung Kai Properties Ltd. 1,273,000 7,557,334
27,597,310
TOTAL CONSTRUCTION & REAL ESTATE 31,728,912
DURABLES - 1.4%
TEXTILES & APPAREL - 1.4%
Glorious Sun Enterprises 9,900,000 2,414,790
ENERGY - 0.5%
OIL & GAS - 0.5%
Zhenhai Refining & Chemical Co.,
Class H 2,984,000 818,352
FINANCE - 31.2%
BANKS - 29.4%
HSBC Holdings PLC 1,406,676 41,364,827
Hang Seng Bank Ltd. 658,000 5,541,008
Liu Chong Hing Bank Ltd. 2,609,000 3,653,307
Wing Lung Bank 208,000 783,842
51,342,984
CREDIT & OTHER FINANCE - 0.2%
JCG Holdings Ltd. 940,000 430,664
INSURANCE - 1.6%
National Mutual Asia Ltd. 3,562,000 2,850,152
TOTAL FINANCE 54,623,800
HEALTH - 0.9%
MEDICAL EQUIPMENT & SUPPLIES - 0.9%
Sa Sa International Holdings Ltd. 8,842,000 1,654,630
HOLDING COMPANIES - 1.8%
Citic Pacific Ltd. Ord. 442,000 1,357,630
Ocean-Land Group Ltd. 298,000 93,263
Tianjin Development Holdings Ltd. 1,464,000 1,672,117
3,123,010
INDUSTRIAL MACHINERY & EQUIPMENT - 11.6%
ELECTRICAL EQUIPMENT - 10.2%
Harbin Power Equipment Co. Ltd.
Class H 786,000 107,525
Hutchison Whampoa Ltd. Ord. 2,188,000 13,525,870
Johnson Electric Holdings Ltd. 1,249,040 4,231,438
17,864,833
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 1.4%
Dongfang Electrical Machinery Co. Ltd.
Class H 126,000 $ 17,887
First Tractor Co. Ltd. Class H 882,000 492,308
Mabuchi Motor Co. 34,500 1,989,610
2,499,805
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 20,364,638
MEDIA & LEISURE - 1.0%
BROADCASTING - 0.7%
Television Broadcast Ltd. Ord. 522,000 1,333,884
PUBLISHING - 0.3%
South China Morning Post Holdings 790,000 474,092
TOTAL MEDIA & LEISURE 1,807,976
NONDURABLES - 0.1%
FOODS - 0.1%
Tingyi (Cayman Islands) Holding Corp. 1,422,000 139,475
RETAIL & WHOLESALE - 0.1%
TRADING COMPANIES - 0.1%
Li & Fung Ltd. 98,000 164,419
TECHNOLOGY - 3.2%
COMMUNICATIONS EQUIPMENT - 1.1%
Datacraft Asia Ltd. 567,000 1,905,120
COMPUTERS & OFFICE EQUIPMENT - 0.8%
Legend Holdings Ltd. (a) 3,066,000 1,315,668
ELECTRONICS - 1.3%
Elec & Eltek International Holdings Ltd. 1,340,000 380,461
Vtech Holdings Ltd. 556,000 1,951,758
2,332,219
TOTAL TECHNOLOGY 5,553,007
TRANSPORTATION - 3.2%
AIR TRANSPORTATION - 0.4%
Swire Pacific Ltd. Class A 118,000 589,353
TRUCKING & FREIGHT - 2.8%
Jiangsu Expressway Co. Ltd. Class H 1,836,000 527,212
Shenzhen Expressway Co. Ltd. Class H 4,304,000 1,180,357
Sichuan Expressway Co. Ltd. Class H 6,254,000 1,073,475
Zhejiang Expressway Co. Class H 8,908,000 2,149,830
4,930,874
TOTAL TRANSPORTATION 5,520,227
UTILITIES - 23.1%
CELLULAR - 8.1%
China Telecom (Hong Kong) Ltd. 7,320,000 14,136,749
ELECTRIC UTILITY - 6.6%
CLP Holdings Ltd. 1,680,000 8,065,563
Hong Kong Electric Holdings Ord. 1,087,000 3,338,788
Shandong Huaneng Power Development
Ltd. Class N sponsored ADR 9,100 65,975
11,470,326
GAS - 4.4%
Hong Kong & China Gas Co. Ltd. 5,700,000 7,760,857
Hong Kong & China Gas Co. Ltd.
warrants 9/30/99 (a) 250,000 -
7,760,857
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - CONTINUED
TELEPHONE SERVICES - 4.0%
Hong Kong Telecommunications Ltd. 3,665,332 $ 7,078,672
TOTAL UTILITIES 40,446,604
TOTAL COMMON STOCKS
(Cost $173,046,236) 168,359,840
CASH EQUIVALENTS - 3.8%
Taxable Central Cash Fund (b)
(Cost $6,596,925) 6,596,925 6,596,925
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $179,643,161) $ 174,956,765
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.51%. 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 $79,560,754 and $72,449,618, respectively.
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $180,167,437. Net unrealized depreciation
aggregated $5,210,672, of which $20,798,461 related to appreciated
investment securities and $26,009,133 related to depreciated
investment securities.
HONG KONG AND CHINA
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 174,956,765
(COST $179,643,161) -
SEE ACCOMPANYING SCHEDULE
FOREIGN CURRENCY HELD AT VALUE 399,253
(COST $399,253)
RECEIVABLE FOR INVESTMENTS SOLD 337,092
RECEIVABLE FOR FUND SHARES SOLD 482,576
DIVIDENDS RECEIVABLE 1,280,216
INTEREST RECEIVABLE 40,282
REDEMPTION FEES RECEIVABLE 303
TOTAL ASSETS 177,496,487
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 2,739,197
PAYABLE FOR FUND SHARES REDEEMED 775,020
ACCRUED MANAGEMENT FEE 115,660
OTHER PAYABLES AND 136,509
ACCRUED EXPENSES
TOTAL LIABILITIES 3,766,386
NET ASSETS $ 173,730,101
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 209,861,102
UNDISTRIBUTED NET INVESTMENT INCOME 1,417,573
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (32,861,409)
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS (4,687,165)
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS, FOR 15,715,002 $ 173,730,101
SHARES OUTSTANDING
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($173,730,101 (DIVIDED BY) 15,715,002 SHARES) $11.06
MAXIMUM OFFERING PRICE PER $11.40
SHARE (100/97.00 OF $11.06)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 3,471,200
DIVIDENDS
INTEREST 273,049
3,744,249
LESS FOREIGN TAXES WITHHELD (129,382)
TOTAL INCOME 3,614,867
EXPENSES
MANAGEMENT FEE $ 665,618
TRANSFER AGENT FEES 344,721
ACCOUNTING FEES AND EXPENSES 68,242
NON-INTERESTED TRUSTEES' COMPENSATION 330
CUSTODIAN FEES AND EXPENSES 81,769
REGISTRATION FEES 32,444
AUDIT 16,645
LEGAL 568
REPORTS TO SHAREHOLDERS 17,998
MISCELLANEOUS 216
TOTAL EXPENSES BEFORE REDUCTIONS 1,228,551
EXPENSE REDUCTIONS (233) 1,228,318
NET INVESTMENT INCOME 2,386,549
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (31,478,500)
FOREIGN CURRENCY TRANSACTIONS (69) (31,478,569)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 29,382,993
ASSETS AND LIABILITIES IN (877) 29,382,116
FOREIGN CURRENCIES
NET GAIN (LOSS) (2,096,453)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 290,096
OTHER INFORMATION $ 306,615
SALES CHARGES PAID TO FDC
SALES CHARGES - DEALERS' PORTION $ 183
EXPENSE REDUCTIONS $ 33
CUSTODIAN CREDITS
TRANSFER AGENT CREDITS 200
$ 233
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
OPERATIONS $ 2,386,549 $ 2,557,197
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) (31,478,569) 3,355,483
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 29,382,116 (45,265,803)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 290,096 (39,353,123)
DISTRIBUTIONS TO SHAREHOLDERS (968,977) (1,741,904)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN - (995,341)
TOTAL DISTRIBUTIONS (968,977) (2,737,245)
SHARE TRANSACTIONS 71,046,986 371,658,055
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 960,768 2,718,651
COST OF SHARES REDEEMED (75,404,903) (266,116,227)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS (3,397,149) 108,260,479
REDEMPTION FEES 390,120 1,365,678
TOTAL INCREASE (DECREASE) IN NET ASSETS (3,685,910) 67,535,789
NET ASSETS
BEGINNING OF PERIOD 177,416,011 109,880,222
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $1,417,573 AND $2,038,914, RESPECTIVELY) $ 173,730,101 $ 177,416,011
OTHER INFORMATION
SHARES
SOLD 6,497,245 26,276,084
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 81,433 197,576
REDEEMED (6,904,108) (18,903,843)
NET INCREASE (DECREASE) (325,430) 7,569,817
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEAR ENDED NOVEMBER 1, 1995
APRIL 30, 1998 OCTOBER 31, (COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.06 $ 12.97 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME C .14 .17 .29
NET REALIZED AND UNREALIZED GAIN (LOSS) (.10) (1.95) 2.64
TOTAL FROM INVESTMENT OPERATIONS .04 (1.78) 2.93
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.06) (.14) (.01)
FROM NET REALIZED GAIN - (.08) -
TOTAL DISTRIBUTIONS (.06) (.22) (.01)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .02 .09 .05
NET ASSET VALUE, END OF PERIOD $ 11.06 $ 11.06 $ 12.97
TOTAL RETURN B 0.51% (13.36)% 29.83%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 173,730 $ 177,416 $ 109,880
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.39% A 1.31% 1.62%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 2.71% A 1.18% 2.53%
PORTFOLIO TURNOVER RATE 87% A 174% 118%
AVERAGE COMMISSION RATE D $ .0023 $ .0034 $ .0049
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME
SALES CHARGE AND FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT ANNUALIZED.
C NET INVESTMENT INCOME PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD.
D A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE FOR SECURITY TRADES
ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT
MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
</TABLE>
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 6 PAST 1 PAST 5 LIFE OF
APRIL 30, 1998 MONTHS YEAR YEARS FUND
FIDELITY JAPAN -5.87% -6.63% -17.33% 11.11%
FIDELITY JAPAN -8.69% -9.43% -19.81% 7.77%
(INCL. 3.00% SALES CHARGE)
TOPIX -12.44% -17.80% -33.93% -12.99%
JAPANESE FUNDS AVERAGE -7.32% -10.98% -24.82% N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on 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 1,100
stocks traded in the Japanese market. To measure how the fund's
performance stacked up against its peers, you can compare it to the
Japanese funds average, which reflects the performance of mutual funds
with similar objectives tracked by Lipper Analytical Services, Inc.
The past six months average represents a peer group of 34 mutual
funds. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
APRIL 30, 1998 YEAR YEARS FUND
FIDELITY JAPAN -6.63% -3.74% 1.89%
FIDELITY JAPAN -9.43% -4.32% 1.34%
(INCL. 3.00% SALES CHARGE)
TOPIX -17.80% -7.96% -2.44%
JAPANESE FUNDS AVERAGE -10.98% -5.98% 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
IMATRL PRASUN SHR__CHT 19980430 19980506 114739 R00000000000071
$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 April 30, 1998, the value of the investment would have grown
to $10,777 - a 7.77% 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 $8,701 - a 12.99% 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 six months that ended April 30, 1998, the fund had a total
return of -5.87%. During the same period, the Tokyo Stock Exchange
Index (TOPIX) had a return of -12.44%, while the Japanese funds
average tracked by Lipper Analytical Services returned -7.32%. For the
12 months that ended April 30, 1998, the fund had a total return of
- -6.63%. Over that same period, TOPIX and the Lipper Japanese funds
average had returns of -17.80% and -10.98%, respectively.
Q. THE FUND HAD A NEGATIVE RETURN, BUT IT PERFORMED BETTER THAN THE
INDEX AND THE AVERAGE. CAN YOU EXPLAIN WHY?
A. Negative returns - denominated in U.S. dollars - were the norm for
most funds investing in Japan over the period. The Japanese yen
depreciated further against the dollar and thereby lessened the value
of Japanese stocks in U.S. dollar terms. Thus, although many of the
fund's stocks gained in value as measured in yen, these gains were
largely offset by the yen's decline in value against the dollar.
Unlike many of its competitors, the fund does not use hedging
procedures to offset the effects of currency fluctuations. However,
the relatively strong performance of many of the fund's holdings
helped it outperform both the index and the average.
Q. WHAT WAS THE INVESTMENT ENVIRONMENT LIKE IN JAPAN DURING THE PAST
SIX MONTHS?
A. The markets went from one extreme to another. Following last
October's plunge in the Hong Kong and U.S. equity markets, November
and December 1997 saw sharply falling stock prices all over the
Pacific Basin and rapidly depreciating currencies relative to the U.S.
dollar. In Japan, the failure of Yamaichi Securities and several other
prominent financial services firms raised the possibility in
investors' minds of widespread bankruptcies. The share prices of many
Japanese companies fell as they began to reflect that possibility.
Early in 1998, the markets entered a radically different phase. The
Japanese government, fearing a "domino effect" of failing companies
against the backdrop of an already stagnant economy, steadied the
markets with promises to pass legislation to help stimulate the
economy, and with assurances that banks would not be allowed to fail.
From mid-January through mid-March, the Japanese stock market rallied
strongly, regaining much of the ground it had lost near the end of
1997. However, the government failed to follow through on its promises
with any meaningful reform measures. The markets responded by plunging
again in April, reflecting investors' loss of confidence.
Q. WHAT STRATEGY DID YOU USE IN THIS DIFFICULT ENVIRONMENT?
A. Investing in Japan during the period presented a number of
challenges. For one thing, the economy was extremely sluggish and
showed few signs of recovering any time soon, so it was important to
be selective about investments there. In addition, many questions
remained about how vigorously the government intended to pursue the
deregulation of various industries - especially financial services. In
this environment, I looked for companies with strong business
franchises, shareholder-friendly managements, healthy cash flows and
high returns on capital. Many of the companies that fit this
description derived much of their revenue from exports. These
companies can still do well when the yen declines relative to the U.S.
dollar, as it did over the period. Depreciation of the yen has the
effect of increasing yen-denominated sales even when U.S.
dollar-denominated sales remain flat.
Q. THE FUND HAD A FUTURES POSITION THAT COMPRISED ROUGHLY 2% OF ITS
PORTFOLIO AT THE END OF THE PERIOD. CAN YOU ELABORATE ON THAT?
A. The fund had a sudden inflow of cash early in 1998, reflecting
renewed investor interest in Japan following the Japanese government's
reassuring announcements. Instead of investing all of the cash in
equities right away, I preferred to employ it gradually, as attractive
opportunities presented themselves. In the meantime, I bought some
Nikkei Index futures contracts, which trade on the Chicago Mercantile
Exchange. This position provided a way for the fund to participate
more fully in the strength that the Japanese stock market was
displaying at that time. In March, I began to liquidate the position.
Q. WHAT STOCKS PERFORMED WELL FOR THE FUND?
A. TDK performed well, and I used a dip in the stock's price to
increase the fund's position in this stock. The company makes video
and audio tapes, as well as a variety of electronic components.
Investors responded positively to the earnings potential of TDK's line
of magneto resistant (MR) heads for computer hard disk drives, which
disk drive manufacturers now use instead of the old thermal heads.
Aiwa also helped the fund's performance. The company, which is
extremely competitive in the mini-component stereo market, benefited
from having production facilities in Malaysia and Indonesia - two
countries whose currencies depreciated sharply in the past year
against both the Japanese yen and the U.S. dollar. When the Malaysian
ringgit and the Indonesian rupiah declined against the yen, Aiwa
experienced lower costs for Malaysian and Indonesian labor and other
expenses. On the other hand, much of the company's revenue came from
the U.S. and Europe. Therefore, the currency markets handed Aiwa a
double-barreled advantage. The company's revenue stream benefited not
only from the company's increased market share but also from the yen's
lower value in U.S. dollar terms, while its costs fell substantially
because of the decline of the ringgit and rupiah against the yen. And
because Aiwa shares had been selling at a very reasonable valuation,
the stock's price rose sharply as the implications of this scenario
became clear to investors.
Q. WHAT STOCKS HURT THE FUND'S PERFORMANCE?
A. The banking sector in general was weak due to widespread problems
with non-performing loans, further erosion in the prices of banks'
equity holdings, Asian exposure and increased competition. And,
although I underweighted this sector relative to the TOPIX, there were
some banking stocks, such as Sakura Bank and Fuji Bank, that hurt the
fund's performance. Another disappointing stock was THK Corp. This
stock suffered from a downturn in the semiconductor industry and
generally poor performance in the Japanese over-the-counter stock
market. However, the company hired a new president who made improved
profitability and shareholder returns a high priority. Moreover, the
fund acquired the stock at what I felt was a very reasonable price,
and it is still one of the fund's holdings.
Q. WHAT'S YOUR OUTLOOK, SHIGEKI?
A. Japan is still mired in a bad recession. Production, private
consumption, capital spending and other economic indicators are all
very weak. Moreover, the Japanese government appears to be
backpedaling on some aspects of deregulation - to the detriment of the
overall economy. However, there are some positive signs. Increasingly,
Japanese companies are adopting more rational ways of allocating their
capital. For example, many companies have announced stock buybacks, a
tactic that helps existing shareholders by increasing earnings per
share. I am also seeing more firms divesting themselves of
unprofitable lines of business. When making investment decisions for
the fund, I look at these and many other indicators to determine
management's commitment to "doing the right thing" for shareholders.
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.
SHIGEKI MAKINO ON THE CURRENT STATE OF DEREGULATION IN
THE JAPANESE ECONOMY:
"A cloud of uncertainty currently hangs over the Japanese
government's deregulation plans. At issue is whether the
government has the resolve to proceed with deregulation
even if it means inflicting some short-term pain. In the
fall of 1997 that resolve seemed to be present, as Yamaichi
Securities, Hokkaido Takushoku Bank and other ailing
companies were allowed to fail. Although difficult for
investors, customers and employees in the short run,
these failures had the beneficial effect of helping to
cleanse the economy of companies that were unable
to compete, making it stronger in the long run.
"However, with the failure of a number of prominent firms,
the Japanese stock market plunging and the economy mired
in recession, the government appeared to lose its resolve.
Early in 1998 the government announced a series of
measures designed to shore up the markets and reassure
investors. However, the market's judgment of these
measures has been basically, `Too little, too late.' For
example, the government has said that it will pass
legislation designed to stimulate the economy, but fiscal
policy to date - which has included a damaging sales tax
hike - has been ineffective, if not downright
counterproductive. Other measures fail to address the
economy's underlying structural problems. For instance,
firms with securities portfolios can now - for accounting
purposes - value those securities at cost or market value,
whichever is higher. Similarly, real estate can now be
`marked to market' instead of valued at cost - an advantage
for firms that acquired real estate at a cost below its current
value. These measures are essentially accounting tricks
that cover up the real problems and postpone the need to
confront them.
"The Japanese economy - and especially the financial
services sector - is still riddled with many companies that
can be competitive only with infusions of cash and other
help from the government. The convoy system - a method
of transferring resources from healthy companies to
struggling ones - is another mechanism for bailing out
weak firms. The trouble with these transfers is that they
subsidize bad business decisions and allow companies to
continue their unprofitable ways without penalty. At the
same time, there is a tremendous opportunity cost because
resources are siphoned away from more profitable
endeavors.
"Until Japanese companies, as a group, become much more
competitive and responsive to shareholders' concerns, they
will be unable to provide the return on capital demanded by
global investors. These firms need to avail themselves of the
techniques employed so effectively by companies that serve
as models of competition around the globe. Examples of these
techniques include cutting costs, shrinking debt, buying back
stock, raising dividends and using mergers and acquisitions to
bolster core competencies. Ultimately, I expect that the
current uncertainty will pass, and Japan will wholeheartedly
embrace deregulation and competition as the most viable
options for its economy."
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 April 30, 1998, more than
$249 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 APRIL 30, 1998
UNITED STATES 10.2%
ROW: 1, COL: 1, VALUE: 10.2
ROW: 1, COL: 2, VALUE: 89.8
JAPAN 89.8%
AS OF OCTOBER 31, 1997
UNITED STATES 5.2%
OTHER 0.1%
ROW: 1, COL: 1, VALUE: 5.2
ROW: 1, COL: 2, VALUE: 1.1
ROW: 1, COL: 3, VALUE: 93.7
JAPAN 94.7%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
STOCKS & EQUITY FUTURES 89.8 94.8
BONDS 1.6 0.0
SHORT-TERM INVESTMENTS 8.6 5.2
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
TOYOTA MOTOR CORP. 2.9 2.9
(AUTOS, TIRES, & ACCESSORIES)
HONDA MOTOR CO. LTD. 2.8 2.5
(AUTOS, TIRES, & ACCESSORIES)
CANON, INC. 2.7 2.5
(COMPUTERS & OFFICE EQUIPMENT)
ROHM CO. LTD. 2.3 2.3
(ELECTRONICS)
MINEBEA CO. LTD. 2.2 2.1
(ELECTRONICS)
TDK CORP. 2.2 1.5
(ELECTRONICS)
AIWA CO. LTD. 2.0 0.4
(ELECTRONICS)
MATSUSHITA ELECTRIC INDUSTRIAL CO. LTD. 1.9 3.3
(CONSUMER ELECTRONICS)
HOYA CORP. 1.9 1.5
(MEDICAL EQUIPMENT & SUPPLIES)
TAKEDA CHEMICAL INDUSTRIES LTD. 1.9 2.2
(DRUGS & PHARMACEUTICALS)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
TECHNOLOGY 26.6 25.3
DURABLES 14.4 13.9
FINANCE 12.3 15.8
INDUSTRIAL MACHINERY & EQUIPMENT 9.8 10.3
HEALTH 7.5 9.1
SERVICES 4.9 4.5
BASIC INDUSTRIES 4.5 2.9
MEDIA & LEISURE 3.8 4.9
RETAIL & WHOLESALE 2.4 2.4
CONSTRUCTION & REAL ESTATE 1.3 1.3
JAPAN
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 87.8%
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 4.5%
CHEMICALS & PLASTICS - 3.5%
Asahi Chemical Industry Co. Ltd. 250,000 $ 873,330
Canon Chemicals, Inc. 50,000 557,124
Sekisui Chemical Co. Ltd. 250,000 1,368,342
Shin-Etsu Chemical Co. Ltd. 160,000 3,107,849
Sumitomo Bakelite Co. Ltd. 299,000 2,066,493
Tenma Corp. 70,000 811,594
8,784,732
IRON & STEEL - 1.0%
Sumitomo Special Metals Co. 40,000 894,410
Sumitomo Metal Industries Ltd. 900,000 1,483,907
2,378,317
TOTAL BASIC INDUSTRIES 11,163,049
CONSTRUCTION & REAL ESTATE - 1.3%
CONSTRUCTION - 1.3%
Daiwa House Industry Co. Ltd. 200,000 1,611,142
Okumura Gumi 190,000 700,922
Sumitomo Forestry Co. Ltd. 150,000 848,108
3,160,172
DURABLES - 14.4%
AUTOS, TIRES, & ACCESSORIES - 8.2%
Bridgestone Corp. 176,000 4,001,656
Denso Corp. 130,000 2,226,614
Honda Motor Co. Ltd. 190,000 6,866,177
Toyota Motor Corp. 280,000 7,272,727
20,367,174
CONSUMER DURABLES - 1.6%
Aderans Co. Ltd. 90,000 2,120,836
Heiwa Corp. 90,000 945,229
Sankyo Co. Ltd. (Gunma) 55,000 877,847
3,943,912
CONSUMER ELECTRONICS - 4.6%
Citizen Watch Co. Ltd. Ord. 250,000 1,675,136
Matsushita Electric Industrial Co. Ltd. 300,000 4,788,255
Sharp Corp. 150,000 1,174,478
Sony Corp. 44,700 3,797,421
11,435,290
TOTAL DURABLES 35,746,376
ENERGY - 0.7%
OIL & GAS - 0.7%
Nippon Oil Co. Ltd. 500,000 1,682,665
FINANCE - 10.8%
BANKS - 2.9%
Akita Bank Ltd. 300,000 1,312,253
Bank of Tokyo-Mitsubishi Ltd. 225,000 2,776,397
Fuji Bank Ltd. 230,000 1,290,043
Sakura Bank Ltd. 500,000 1,712,780
7,091,473
CREDIT & OTHER FINANCE - 6.6%
Acom Co. Ltd. 75,000 3,946,923
Aiful Corp. (c) 9,000 593,563
Credit Saison Co. Ltd. 80,000 1,728,590
Nichiei Co. Ltd. 38,500 2,985,507
Shohkoh Fund & Co. Ltd. 8,000 2,535,667
Takefuji Corp. 60,000 3,139,469
Takefuji Corp. (c) 30,000 1,569,735
16,499,454
SHARES VALUE (NOTE 1)
SECURITIES INDUSTRY - 1.3%
Nomura Securities Co. Ltd. 270,000 $ 3,282,891
Osaka Securities Finance Co. Ltd. Ord. 22,000 37,433
3,320,324
TOTAL FINANCE 26,911,251
HEALTH - 7.5%
DRUGS & PHARMACEUTICALS - 4.7%
Banyu Pharmaceutical Co. Ltd. 170,000 2,188,595
Sankyo Co. Ltd. 190,000 4,691,888
Takeda Chemical Industries Ltd. 165,000 4,695,652
11,576,135
MEDICAL EQUIPMENT & SUPPLIES - 2.8%
Hoya Corp. 145,000 4,781,479
Terumo Corp. 150,000 2,188,594
6,970,073
TOTAL HEALTH 18,546,208
INDUSTRIAL MACHINERY & EQUIPMENT - 9.8%
ELECTRICAL EQUIPMENT - 4.7%
Fuji Heavy Industries Ltd. 200,000 892,904
Mirai Industry Co. Ltd. 80,000 810,088
Mitsubishi Electric Co. Ord. 700,000 1,791,831
NGK Insulators Ltd. 400,000 3,514,399
Omron Corp. 300,000 4,686,618
11,695,840
INDUSTRIAL MACHINERY & EQUIPMENT - 5.1%
Disco Corp. 22,000 629,400
Fuji Machine Manufacturing Co.
Ltd. Ord. 130,000 3,699,605
Glory Ltd. 50,000 835,686
Komatsu Ltd. Ord. 600,000 2,710,333
Mabuchi Motor Co. 40,000 2,306,795
Misumi Corp. 40,000 704,687
THK Co. Ltd. 200,000 1,912,291
12,798,797
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 24,494,637
MEDIA & LEISURE - 3.8%
ENTERTAINMENT - 0.9%
Sony Music Entertainment Japan, Inc. 60,000 2,339,921
LEISURE DURABLES & TOYS - 2.9%
Nintendo Co. Ltd. Ord. 30,000 2,741,954
Shimano, Inc. 200,000 4,411,820
7,153,774
TOTAL MEDIA & LEISURE 9,493,695
NONDURABLES - 1.1%
HOUSEHOLD PRODUCTS - 1.1%
Uni Charm Corp. Ord. 75,000 2,823,264
RETAIL & WHOLESALE - 2.4%
APPAREL STORES - 0.2%
Charle Co. Ltd. 70,000 584,980
GENERAL MERCHANDISE STORES - 1.3%
Ito-Yokado Co. Ltd. 51,000 2,630,152
Matsumotokiyoshi Co. Ltd. 20,000 688,123
3,318,275
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - 0.9%
Amway Japan Ltd. 50,000 $ 692,641
Paris Miki, Inc. 54,900 880,384
Senshukai Co. Ltd. 110,000 542,443
2,115,468
TOTAL RETAIL & WHOLESALE 6,018,723
SERVICES - 4.9%
LEASING & RENTAL - 1.7%
Orix Corp. 60,000 4,133,258
PRINTING - 1.4%
Riso Kagaku Corp. 45,000 2,341,050
Toppan Forms Co. Ltd. 90,000 1,077,357
3,418,407
SERVICES - 1.8%
Benesse Corp. 66,000 2,126,708
Meitec Corp. 50,000 1,637,493
Nippon System Development Co. 34,000 844,720
4,608,921
TOTAL SERVICES 12,160,586
TECHNOLOGY - 26.6%
COMPUTER SERVICES & SOFTWARE - 1.1%
Daitec Co. Ltd. 60,000 971,203
Konami Industry Co. Ltd. 81,500 1,797,817
2,769,020
COMPUTERS & OFFICE EQUIPMENT - 6.8%
Canon, Inc. 283,000 6,668,850
Fujitsu Ltd. 310,000 3,605,872
Hitachi Ltd. 540,000 3,858,159
Nidec Corp. 50,000 2,672,690
16,805,571
ELECTRONIC INSTRUMENTS - 0.6%
Tokyo Seimitsu Co. Ltd. 50,000 1,464,333
ELECTRONICS - 15.7%
Aiwa Co. Ltd. 170,000 5,055,524
Futaba Corp. 30,000 1,197,064
Hirose Electric Co. Ltd. 80,000 4,029,362
Hitachi Maxell Ltd. 160,000 3,035,573
Japan Aviation Electronics Industries 150,000 553,360
KOA 100,000 986,260
Minebea Co. Ltd. 495,000 5,515,528
Nitto Denko Corp. 200,000 3,041,596
Nichicon Corp. 150,000 1,626,200
Rohm Co. Ltd. 50,000 5,623,941
TDK Corp. 70,000 5,512,516
Tokyo Electron Ltd. 60,000 2,348,955
Wako Electric Co. Ltd. 60,000 632,411
39,158,290
PHOTOGRAPHIC EQUIPMENT - 2.4%
Fuji Photo Film Co. Ltd. 80,000 2,836,815
Minolta Camera Co. Ltd. 480,000 3,107,849
5,944,664
TOTAL TECHNOLOGY 66,141,878
TOTAL COMMON STOCKS
(Cost $227,146,952) 218,342,504
NONCONVERTIBLE BONDS - 1.5%
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
FINANCE - 1.5%
CREDIT & OTHER FINANCE - 1.5%
IBJ Preferred Capital Co. LLC (c)
(Cost $4,002,000) A3 $ 4,000,000 $ 3,780,000
U.S. TREASURY OBLIGATIONS - 0.1%
U.S. Treasury Bill, yield at date of
purchase 4.9669%, 7/23/98 (d)
(Cost $345,990) Aaa 350,000 346,085
CASH EQUIVALENTS - 10.6%
SHARES
Taxable Central Cash Fund (b)
(Cost $26,364,205) 26,364,205 26,364,205
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $257,859,147) $ 248,832,794
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
65 Nikkei 225 Stock
Index Futures Contracts June 1998 $ 5,086,250 $ (439,140)
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 2.0%
LEGEND
(a) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.51%. 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
$5,943,298 or 2.4% 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 $346,085.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $67,971,799 and $73,506,772, respectively.
The market value of futures contracts opened and closed during the
period amounted to $16,479,212 and $10,799,995, respectively.
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $257,911,996. Net unrealized depreciation
aggregated $9,079,202, of which $22,824,586 related to appreciated
investment securities and $31,903,788 related to depreciated
investment securities.
At October 31, 1997, the fund had a capital loss carryforward of
approximately $52,268,000 of which $31,995,000 and $20,273,000 will
expire on October 31, 2003 and 2005, respectively.
JAPAN
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 248,832,794
(COST $257,859,147) -
SEE ACCOMPANYING SCHEDULE
CASH 350,000
RECEIVABLE FOR INVESTMENTS SOLD 109,298
RECEIVABLE FOR FUND SHARES SOLD 579,149
DIVIDENDS RECEIVABLE 718,843
INTEREST RECEIVABLE 187,118
RECEIVABLE FOR DAILY VARIATION ON FUTURES CONTRACTS 56,875
TOTAL ASSETS 250,834,077
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 1,168,324
PAYABLE FOR FUND SHARES REDEEMED 322,097
ACCRUED MANAGEMENT FEE 205,312
OTHER PAYABLES AND 129,096
ACCRUED EXPENSES
TOTAL LIABILITIES 1,824,829
NET ASSETS $ 249,009,248
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 334,321,492
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME (5,374,898)
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (70,447,053)
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS (9,490,293)
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS, FOR 24,248,567 $ 249,009,248
SHARES OUTSTANDING
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE ($249,009,248 (DIVIDED BY) 24,248,567 SHARES) $10.27
MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $10.27) $10.59
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 947,786
DIVIDENDS
INTEREST 658,120
1,605,906
LESS FOREIGN TAXES WITHHELD (140,137)
TOTAL INCOME 1,465,769
EXPENSES
MANAGEMENT FEE $ 883,825
BASIC FEE
PERFORMANCE ADJUSTMENT 322,615
TRANSFER AGENT FEES 387,846
ACCOUNTING FEES AND EXPENSES 90,738
NON-INTERESTED TRUSTEES' COMPENSATION 437
CUSTODIAN FEES AND EXPENSES 52,987
REGISTRATION FEES 16,446
AUDIT 18,181
LEGAL 708
REPORTS TO SHAREHOLDERS 23,130
MISCELLANEOUS 368
TOTAL EXPENSES BEFORE REDUCTIONS 1,797,281
EXPENSE REDUCTIONS (6,209) 1,791,072
NET INVESTMENT INCOME (LOSS) (325,303)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (17,931,677)
FOREIGN CURRENCY TRANSACTIONS (34,284)
FUTURES CONTRACTS (153,827) (18,119,788)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 2,676,454
ASSETS AND LIABILITIES IN (23,317)
FOREIGN CURRENCIES
FUTURES CONTRACTS (439,140) 2,213,997
NET GAIN (LOSS) (15,905,791)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (16,231,094)
OTHER INFORMATION $ 197,265
SALES CHARGES PAID TO FDC
SALES CHARGES - DEALERS' PORTION $ 1,565
EXPENSE REDUCTIONS $ 6,209
DIRECTED BROKERAGE ARRANGEMENTS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
OPERATIONS $ (325,303) $ (1,581,245)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) (18,119,788) (19,143,235)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 2,213,997 9,840,199
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (16,231,094) (10,884,281)
DISTRIBUTIONS TO SHAREHOLDERS
IN EXCESS OF NET INVESTMENT INCOME (3,904,278) (234,962)
SHARE TRANSACTIONS 82,381,197 233,528,383
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 3,837,897 230,693
COST OF SHARES REDEEMED (72,819,984) (258,476,937)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 13,399,110 (24,717,861)
REDEMPTION FEES 190,703 897,125
TOTAL INCREASE (DECREASE) IN NET ASSETS (6,545,559) (34,939,979)
NET ASSETS
BEGINNING OF PERIOD 255,554,807 290,494,786
END OF PERIOD (INCLUDING DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME OF $5,374,898 AND
$1,145,317, $ 249,009,248 $ 255,554,807
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 7,896,652 19,572,662
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 370,453 19,451
REDEEMED (7,036,426) (21,440,377)
NET INCREASE (DECREASE) 1,230,679 (1,848,264)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996 1995 1994 1993
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.10 $ 11.68 $ 12.08 $ 14.27 $ 13.35 $ 9.84
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.01) D (.06) D (.02) D (.02) (.04) D (.09)
NET REALIZED AND UNREALIZED GAIN (LOSS) (.65) (.55) (.40) (1.89) 1.31 3.60
TOTAL FROM INVESTMENT OPERATIONS (.66) (.61) (.42) (1.91) 1.27 3.51
LESS DISTRIBUTIONS
IN EXCESS OF NET INVESTMENT INCOME (.18) (.01) - - - -
FROM NET REALIZED GAIN - - - (.36) (.39) -
TOTAL DISTRIBUTIONS (.18) (.01) - (.36) (.39) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .04 .02 .08 .04 -
NET ASSET VALUE, END OF PERIOD $ 10.27 $ 11.10 $ 11.68 $ 12.08 $ 14.27 $ 13.35
TOTAL RETURN B, C (5.87)% (4.89)% (3.31)% (12.96)% 10.45% 35.67%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 249,009 $ 255,555 $ 290,495 $ 343,981 $ 469,639 $ 118,195
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.54% A 1.42% 1.15% 1.15% 1.42% 1.71%
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE
REDUCTIONS 1.54% A 1.40% E 1.14% E 1.15% 1.42% 1.71%
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET
ASSETS (.28)% A (.54)% (.12)% (.06)% (.32)% (.77)%
PORTFOLIO TURNOVER RATE 63% A 70% 83% 86% 153% 257%
AVERAGE COMMISSION RATE F $ .0228 $ .0269 $ .0364
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS). C
TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND
HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A
PORTION OF THE FUND'S EXPENSES. F FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1,
1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO
PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS
WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</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 6 PAST 1 LIFE OF
APRIL 30, 1998 MONTHS YEAR FUND
FIDELITY JAPAN SMALL COMPANIES -6.63% -11.68% -39.30%
FIDELITY JAPAN SMALL COMPANIES -9.44% -14.33% -41.12%
(INCL. 3.00% SALES CHARGE)
TOKYO STOCK EXCHANGE -14.79% -24.15% -44.71%
SECOND SECTION
TOPIX -12.44% -17.80% -30.83%
JAPANESE FUNDS AVERAGE -7.32% -10.98% N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year or since
the fund started on November 1, 1995. For example, if you 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 and the Tokyo Stock Exchange Index (TOPIX), a market
capitalization weighted index of over 1,100 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 six months average represents a peer group of 34 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
APRIL 30, 1998 YEAR FUND
FIDELITY JAPAN SMALL COMPANIES -11.68% -18.13%
FIDELITY JAPAN SMALL COMPANIES -14.33% -19.12%
(INCL. 3.00% SALES CHARGE)
TOKYO STOCK EXCHANGE -24.15% -21.13%
SECOND SECTION
TOPIX -17.80% -13.73%
JAPANESE FUNDS AVERAGE -10.98% 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
00360 TK001
1995/11/01 9700.00 10000.00
1995/11/30 9661.20 10703.96
1995/12/31 10262.60 11183.17
1996/01/31 10107.40 11075.87
1996/02/29 9894.00 10898.23
1996/03/31 10272.30 11264.01
1996/04/30 11028.90 12021.09
1996/05/31 10602.10 11438.95
1996/06/30 10679.70 11493.87
1996/07/31 10185.00 10936.10
1996/08/31 9709.70 10475.85
1996/09/30 9632.10 10777.60
1996/10/31 8856.10 10060.55
1996/11/30 8477.80 10140.85
1996/12/31 7738.69 9364.33
1997/01/31 7036.95 8360.12
1997/02/28 7027.20 8525.70
1997/03/31 6637.34 8212.91
1997/04/30 6666.58 8414.61
1997/05/31 7748.44 9460.89
1997/06/30 8099.31 10074.24
1997/07/31 7797.17 9681.63
1997/08/31 6773.79 8818.81
1997/09/30 6471.65 8548.44
1997/10/31 6305.96 7899.69
1997/11/30 5643.20 7304.53
1997/12/31 5389.64 6733.86
1998/01/31 5946.18 7453.91
1998/02/28 5985.23 7515.90
1998/03/31 5467.75 7009.39
1998/04/30 5887.60 6917.14
IMATRL PRASUN SHR__CHT 19980430 19980506 115039 R00000000000033
$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 April 30, 1998, the value of the investment would
have been $5,888 - a 41.12% 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 $5,529 - a
44.71% decrease. Beginning with this report, 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 (TOPIX). 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. KENICHI, HOW DID THE FUND PERFORM?
A. For the six months that ended April 30, 1998, the fund had a total
return of -6.63%. During the same period, the Japanese funds average -
which comprises mainly large-cap-oriented funds - fell 7.32%,
according to Lipper Analytical Services, and the Second Section Stock
Price Index was down 14.79%. For the 12 months that ended April 30,
1998, the fund returned -11.68%, compared to the Second Section Price
Index's return of -24.15%, and the Lipper Japanese funds average
return of -10.98%.
Q. HOW WOULD YOU CHARACTERIZE THE SIX-MONTH PERIOD THAT ENDED APRIL
30, 1998?
A. Fears of a credit crunch, accelerated by the failure of large
financial institutions to reassure investors, caused the market to
continue its negative performance. "Small-caps" were less attractive
than "large-caps" in an environment of eroding confidence in the
Japanese economy. As a result, small-cap stocks underperformed
large-cap stocks. However, the stock market has been gradually
improving since the beginning of this calendar year, recovering from
the effects of oversold stocks last year.
Q. WHAT FACTORS HELPED THE FUND OUTPERFORM THE INDEX OVER THE PAST SIX
MONTHS?
A. Events in the market - including bankruptcies and erosion of
confidence due to less-than-full disclosure by some of the large-cap
companies - forced investors to avoid weaker companies with unhealthy
balance sheets. The fund focused on companies with strong market
shares. With most of these companies leaders in their niche markets,
their profits have been increasing. The fund's focus on these stronger
companies was the biggest factor in explaining why it outperformed the
market. However, the factors mentioned above that negatively affected
larger companies also hit smaller companies to a greater extent,
because their shares are not traded as frequently as shares of large
companies, and are relatively riskier investments. Although money has
come into the Japanese small stock market, the credit crunch and
infrequent trading of many stocks have accelerated disinterest in
smaller companies.
Q. WHICH STOCKS PERFORMED WELL DURING THE PERIOD?
A. Union Tool and Meitec, the fund's number one and number three
holdings, respectively, both did well. Union Tool, a long-term
holding, is a manufacturer of drills for printed circuit boards.
Demand has been increasing strongly from electronics industry
customers in Japan, Southeast Asia and the U.S. As a result, Union
Tool's business has been strong and steady, with predictable demand
and earnings. Meitec provides temporary engineering staff to Japanese
companies who are unwilling to add to their permanent engineering
staff in this uncertain economic environment. Meitec's business has
remained very strong. Sony Music, another top holding, has been
underweighted in the fund's portfolio relative to the Second Section
Index. Sony Music's relative performance was good during the period,
but its absolute performance has not been very impressive.
Q. YOU'VE ADDED SOME NEW NAMES TO THE FUND'S PORTFOLIO. WHAT WAS THEIR
APPEAL?
A. Uyemura, one of the fund's new top 10 holdings, has been a good
choice. This company manufactures chemicals used in coating computers'
hard disk drives. Uyemura commands a 65% market share and its business
has been very profitable due to a diverse international customer base.
In addition to its core business, the company has also started to
supply chemicals for Intel's circuit board packaging, which presented
a great opportunity for Uyemura to increase profits. Japan Lifeline is
a wholesaler and importer of medical supplies, primarily pacemakers.
The company's new product, Stent - used to help open up clogged
arteries - shows promise. This stock has performed well. Trans Cosmos,
a business software development company, has expanded its business
into telemarketing software for the Internet, and has developed
customized software for networking, an area of good potential growth
in Japan. Demand for these products and Trans Cosmos' profits have
been increasing at a relatively healthy rate. Glory is Japan's largest
money handling machine manufacturer, with an 80% market share in
Japan. Deregulation will require Japanese banks and other financial
institutions to become more efficient, and Glory could be one of the
primary suppliers of efficient money processing machinery.
Q. ALTHOUGH THE FUND'S PERFORMANCE WAS STRONGER THAN ITS BENCHMARK, IT
WAS STILL OPERATING IN A NEGATIVE MARKET ENVIRONMENT . . .
A. Unfortunately, the Japanese market and economy have not yet seen a
turnaround. The same factors that have been driving the stock market's
fall are still in place. Consumption has dropped dramatically in
Japan, and many companies have revised their earnings projections
downward. Reflecting this, many of the fund's holdings performed
poorly.
Q. WITH A BLEAK STOCK MARKET ENVIRONMENT, THERE MUST HAVE BEEN A
NUMBER OF STOCKS WHOSE PERFORMANCE WAS DISAPPOINTING DURING THE PERIOD
. . .
A. Yes. Examples included Konami, a video game manufacturer;
Shindengen Electric, Honma Golf, Nitto Kohki, and Fuji Denki. I'm
still holding some shares of Nitto Kohki, but all the others were sold
from the portfolio. Reflecting continued low consumer activity,
retailers such as Fast Retailing Company were disappointments. Fast
Retailing, a clothing retailer in Japan, has been expanding the number
of its clothing outlets by about 40 outlets per year. Significantly
weak consumption in Japan, particularly in the clothing area, caused
Fast to miss its earnings targets, so its stock dropped when the
company revised its earnings projection downward. On the manufacturing
side, the performance of Keihin also was poor. Keihin is one of the
largest parts makers for Honda. Although Honda's performance was
boosted by sales overseas, Keihin's performance over the past six
months lagged because car sales in Japan declined. I believe that the
stock market was looking for a further slowing of demand, and as a
result, auto-parts manufacturers were out of favor. However, Keihin is
a very competitive company, based on its market share. Jafco, a
venture capital company, is one of the larger companies listed in the
over-the-counter market in Japan. The performance of this market has
been extremely disappointing, affecting the number of initial public
offerings brought to market. As a result, investors have lost
interest. If Japan continues to deregulate its markets and welcome new
companies to the stock market, the long-term opportunities for venture
capital companies could be positive.
Q. WHAT IS YOUR OUTLOOK, KENICHI?
A. At this time, there is not much good news. There has been a real
loss of faith in the Japanese economy, resulting from bankruptcies and
the lack of true disclosure in companies' financial statements. The
economy is not very strong, so a solid turnaround is not likely at
this point in time. There are still many problems in the Japanese
market due to increasing inventories and weak consumption. There are
some positive signs, though. The Japanese government announced its
economic reform package on April 24, aiming to provide traditional
public works funding, investment in Japan's telecommunications
infrastructure and planned income tax cuts. These are much-needed
steps designed to spur consumption and increase consumer demand in
Japan. Further, small-cap stock valuations are very attractive right
now. If, in the near future, the gross domestic product in Japan shows
a positive growth rate, this would be very good news for smaller
companies, which tend to be more sensitive to changes in the 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.
KENICHI MIZUSHITA ON THE "SHAREHOLDER-FRIENDLY"
MOVEMENT IN JAPAN:
"The shareholder-friendly movement, where companies pay
greater attention to the interests of investors, has started to
take hold in Japan. Japanese companies are beginning to
focus more on shareholder value and to become more
cognizant of the real cost of capital. Reflecting this change
in management practice, the number of share buybacks has
grown from 186 in 1997 to nearly 800 so far in 1998. As more
companies have announced their intentions to change their
articles of incorporation - which would allow for more
share buybacks - this has set the stage for a shift in the
stock market's supply/demand scenario, potentially
resulting in a decline in the supply of available equity
shares in the Japanese stock market. Japanese banks, which
have historically tended to own a good portion of the stocks
of companies with whom they had business relationships,
have been unloading these stocks. As a result, more shares
are being purchased by the investing public, who are
demanding greater disclosure from the companies whose
shares they hold.
"The substantial increase in share buyback activity has
occurred at the same time that Japanese companies are
becoming more aware of returns on capital, placing greater
emphasis on increasing their asset values. It is also notable
that the growth in this area has been more pronounced in
small- and mid-cap companies than in the large-cap arena.
"The primary reason for greater share buyback activity and
for its characterization as "shareholder-friendly", is that its
goal is to increase the value of outstanding shares, thereby
increasing returns for investors."
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Japanese issuers
with small market capitalizations
FUND NUMBER: 360
TRADING SYMBOL: FJSCX
START DATE: November 1, 1995
SIZE: as of April 30, 1998, more than
$105 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 APRIL 30, 1998
UNITED STATES 7.7%
ROW: 1, COL: 1, VALUE: 92.3
ROW: 1, COL: 2, VALUE: 7.7
JAPAN 92.3%
AS OF OCTOBER 31, 1997
UNITED STATES 0.4%
ROW: 1, COL: 1, VALUE: 98.59999999999999
ROW: 1, COL: 2, VALUE: 1.4
JAPAN 99.6%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
STOCKS 92.3 99.6
SHORT-TERM INVESTMENTS 7.7 0.4
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
UNION TOOL CO. 4.1 2.9
(INDUSTRIAL MACHINERY & EQUIPMENT)
SONY MUSIC ENTERTAINMENT JAPAN, INC. 4.1 4.1
(ENTERTAINMENT)
MEITEC CORP. 4.0 4.6
(SERVICES)
C. UYEMURA & CO. LTD. 3.7 0.0
(CHEMICALS & PLASTIC)
SHOHKOH FUND & CO. LTD. 3.5 1.4
(CREDIT & OTHER FINANCE)
NIPPON SYSTEM DEVELOPMENT CO. 2.9 2.3
(SERVICES)
ADERANS CO. LTD. 2.2 3.1
(CONSUMER DURABLES)
MISUMI CORP. 2.2 2.0
(INDUSTRIAL MACHINERY & EQUIPMENT)
JAPAN LIFELINE CO. LTD. 2.1 0.0
(MEDICAL EQUIPMENT & SUPPLIES)
FUJI SOFT, INC. 2.1 2.5
(COMPUTER SERVICES & SOFTWARE)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
TECHNOLOGY 21.5 33.7
INDUSTRIAL MACHINERY & EQUIPMENT 13.3 11.6
SERVICES 9.6 9.9
MEDIA & LEISURE 8.2 8.6
FINANCE 8.2 5.7
RETAIL & WHOLESALE 7.4 8.0
BASIC INDUSTRIES 6.3 3.0
NONDURABLES 5.0 3.9
DURABLES 4.6 8.5
CONSTRUCTION & REAL ESTATE 4.5 5.8
JAPAN SMALL COMPANIES
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 92.3%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.7%
Jamco Corp. 75,000 $ 773,574
BASIC INDUSTRIES - 6.3%
CHEMICALS & PLASTICS - 5.7%
C. Uyemura & Co. Ltd. 149,000 3,926,215
Canon Chemicals, Inc. 100,000 1,114,248
Nippon Pillar Packing Co. Ltd. 160,000 831,169
Toshiba Chemical Corp. 40,000 88,839
5,960,471
METALS & MINING - 0.2%
Oiles Corp. 9,300 230,356
PAPER & FOREST PRODUCTS - 0.4%
Ube-Nitto Kasei Co. Ltd. 120,000 417,391
TOTAL BASIC INDUSTRIES 6,608,218
CONSTRUCTION & REAL ESTATE - 4.5%
BUILDING MATERIALS - 1.2%
Arc Land Sakamoto Co. Ltd. 136,000 747,450
Kondotec, Inc. 100,000 504,423
1,251,873
ENGINEERING - 1.3%
Ataka Construction & Engineering
Co. Ltd. 150,000 525,127
Sawako Corp. 102,500 841,144
1,366,271
REAL ESTATE - 2.0%
Meiwa Estate Co. Ltd. 75,000 671,937
Sekiwa Real Estate Ltd. 99,000 298,137
Toc Company Ltd. 123,600 1,144,574
2,114,648
TOTAL CONSTRUCTION & REAL ESTATE 4,732,792
DURABLES - 4.6%
AUTOS, TIRES, & ACCESSORIES - 2.4%
FCC Co. Ltd. 42,000 388,933
Keihin Seiki Manufacturing Co. Ltd. 40,000 522,492
Piolax, Inc. 50,000 481,837
Sanyo Denki Co. Ltd. 140,000 664,032
Yachiyo Industry Co. Ltd. 80,000 442,688
2,499,982
CONSUMER DURABLES - 2.2%
Aderans Co. Ltd. 100,000 2,356,484
TOTAL DURABLES 4,856,466
FINANCE - 8.2%
CREDIT & OTHER FINANCE - 8.2%
Aeon Credit Service Ltd. 20,000 933,559
Acom Co. Ltd. 20,000 1,052,513
Jafco Co. Ltd. 33,000 1,095,652
Shohkoh Fund & Co. Ltd. 11,500 3,645,022
Takefuji Corp. 36,000 1,883,681
8,610,427
HEALTH - 3.0%
MEDICAL EQUIPMENT & SUPPLIES - 3.0%
Hogy Medical Co. 31,500 953,360
Japan Lifeline Co. Ltd. (a) 100,000 2,198,381
3,151,741
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 13.3%
ELECTRICAL EQUIPMENT - 1.4%
Hakuto Co. Ltd. 50,000 $ 715,227
SUNX Ltd. 86,000 725,165
1,440,392
INDUSTRIAL MACHINERY & EQUIPMENT - 11.9%
Glory Ltd. 80,000 1,337,098
Misumi Corp. 130,100 2,291,993
Nitto Kohki Co. Ltd. 80,120 925,912
Shinkawa Ltd. 20,000 346,320
THK Co. Ltd. 120,000 1,147,374
Tsudakoma Corp. 100,000 221,344
Union Tool Co. 116,000 4,366,648
Yushin Precision Equipment Co. Ltd. 138,000 1,984,416
12,621,105
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 14,061,497
MEDIA & LEISURE - 8.2%
ENTERTAINMENT - 4.1%
Sony Music Entertainment Japan, Inc. 110,000 4,289,855
LEISURE DURABLES & TOYS - 1.9%
Ryohin Keikaku Co. Ltd. 23,300 1,982,232
PUBLISHING - 0.8%
Asia Securities Printing Co. Ltd. 84,000 872,727
RESTAURANTS - 1.4%
Saizeriya Co. Ltd. 40,000 755,882
Yoshinoya D&C Co. Ltd. Ord. 88 728,778
1,484,660
TOTAL MEDIA & LEISURE 8,629,474
NONDURABLES - 5.0%
FOODS - 4.1%
Ariake Japan 15,000 409,938
Q'Sai Co. Ltd. 40,000 484,848
Rock Field Co. Ltd. 147,000 2,019,763
Yonekyu Corp. 105,000 1,379,447
4,293,996
HOUSEHOLD PRODUCTS - 0.9%
Comany, Inc. 124,000 980,237
TOTAL NONDURABLES 5,274,233
RETAIL & WHOLESALE - 7.4%
APPAREL STORES - 1.4%
Fast Retailing Co. Ltd. 60,000 591,756
Naigai Clothes Co. Ltd. 155,000 863,542
1,455,298
GENERAL MERCHANDISE STORES - 4.1%
Circle K Japan Co. Ltd. 34,100 1,399,172
Himaraya Co. Ltd. 64,500 582,722
Homac Corp. 70,000 595,520
Matsumotokiyoshi Co. Ltd. 52,500 1,806,324
4,383,738
RETAIL & WHOLESALE, MISCELLANEOUS - 1.9%
Don Quijote Co. Ltd. 13,800 529,870
Paris Miki, Inc. 40,000 641,445
Yamada Denki Co. Ltd. 80,000 837,192
2,008,507
TOTAL RETAIL & WHOLESALE 7,847,543
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 9.6%
Aucnet, Inc. (a) 49,000 $ 741,502
BellSystem24, Inc. 14,700 2,031,937
Meitec Corp. 130,000 4,257,482
Nippon System Development Co. 125,000 3,105,590
10,136,511
TECHNOLOGY - 21.5%
COMPUTER SERVICES & SOFTWARE - 6.5%
Diamond Computer Service Co. Ltd. 53,000 798,043
Fuji Soft, Inc. 61,400 2,177,256
Ines Corp. Ord. 80,000 584,227
Sumisho Computer Service Corp. 90,000 1,856,578
Trans Cosmos, Inc. 50,000 1,445,511
6,861,615
COMPUTERS & OFFICE EQUIPMENT - 2.7%
Argotechnos 21Corp. (a) 63,000 1,233,202
IO Data Device, Inc. 20,000 225,861
Toyo Information System Co. Ltd. 100,000 1,347,638
2,806,701
ELECTRONIC INSTRUMENTS - 4.2%
Cosel Co. Ltd. 100,000 978,731
Micronics Japan Co. Ltd. 10,000 240,918
Sony Chemicals Corp. 76,000 1,430,454
Tokyo Seimitsu Co. Ltd. 63,000 1,845,059
4,495,162
ELECTRONICS - 6.3%
Fujitsu Business Systems Ltd. 20,000 308,677
Kyoden Co. Ltd. 93,800 2,118,577
Mimasu Semiconductor Industries
Co. Ltd. 147,000 2,158,103
Nippon Ceramic Co. Ltd. 94,000 969,546
Shinko Electric Industries Co. Ltd. 11,000 477,847
Towa Corp. 22,000 619,462
6,652,212
PHOTOGRAPHIC EQUIPMENT - 1.8%
Noritsu Koki Co. Ltd. 34,000 1,011,105
Ricoh Elemex Corp. 130,000 880,858
1,891,963
TOTAL TECHNOLOGY 22,707,653
TOTAL COMMON STOCKS
(Cost $108,286,169) 97,390,129
CASH EQUIVALENTS - 7.7%
Taxable Central Cash Fund (b)
(Cost $8,124,655) 8,124,655 8,124,655
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $116,410,824) $ 105,514,784
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.51%. 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 $32,953,409 and $12,198,878, respectively.
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $116,457,295. Net unrealized depreciation
aggregated $10,942,511, of which $9,555,852 related to appreciated
investment securities and $20,498,363 related to depreciated
investment securities.
At October 31, 1997, the fund had a capital loss carryforward of
approximately $38,186,000 all of which will expire on October 31,
2005.
JAPAN SMALL COMPANIES
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 105,514,784
(COST $116,410,824) -
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 4,251
RECEIVABLE FOR FUND SHARES SOLD 322,722
DIVIDENDS RECEIVABLE 285,312
INTEREST RECEIVABLE 41,448
REDEMPTION FEES RECEIVABLE 21
TOTAL ASSETS 106,168,538
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 292,655
PAYABLE FOR FUND SHARES REDEEMED 92,450
ACCRUED MANAGEMENT FEE 62,751
OTHER PAYABLES AND 60,583
ACCRUED EXPENSES
TOTAL LIABILITIES 508,439
NET ASSETS $ 105,660,099
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 161,786,723
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME (602,010)
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (44,621,875)
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS (10,902,739)
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS, FOR 17,528,394 $ 105,660,099
SHARES OUTSTANDING
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE ($105,660,099 (DIVIDED BY) 17,528,394 SHARES) $6.03
MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $6.03) $6.22
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 412,943
DIVIDENDS
INTEREST 247,459
660,402
LESS FOREIGN TAXES WITHHELD (61,316)
TOTAL INCOME 599,086
EXPENSES
MANAGEMENT FEE $ 334,764
TRANSFER AGENT FEES 136,984
ACCOUNTING FEES AND EXPENSES 34,472
NON-INTERESTED TRUSTEES' COMPENSATION 157
CUSTODIAN FEES AND EXPENSES 22,913
REGISTRATION FEES 12,856
AUDIT 16,974
LEGAL 243
REPORTS TO SHAREHOLDERS 7,504
MISCELLANEOUS 124
TOTAL EXPENSES BEFORE REDUCTIONS 566,991
EXPENSE REDUCTIONS (55) 566,936
NET INVESTMENT INCOME 32,150
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (6,263,235)
FOREIGN CURRENCY TRANSACTIONS (35,686) (6,298,921)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 264,473
ASSETS AND LIABILITIES IN (6,256) 258,217
FOREIGN CURRENCIES
NET GAIN (LOSS) (6,040,704)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (6,008,554)
OTHER INFORMATION $ 84,929
SALES CHARGES PAID TO FDC
EXPENSE REDUCTIONS $ 55
CUSTODIAN CREDITS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
OPERATIONS $ 32,150 $ (431,691)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) (6,298,921) (38,200,071)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 258,217 7,160,981
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (6,008,554) (31,470,781)
DISTRIBUTIONS TO SHAREHOLDERS
IN EXCESS OF NET INVESTMENT INCOME (141,696) (53,184)
FROM NET REALIZED GAIN - (359,714)
TOTAL DISTRIBUTIONS (141,696) (412,898)
SHARE TRANSACTIONS 51,876,265 128,561,609
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 141,028 410,794
COST OF SHARES REDEEMED (24,607,920) (118,965,973)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 27,409,373 10,006,430
REDEMPTION FEES 127,027 486,767
TOTAL INCREASE (DECREASE) IN NET ASSETS 21,386,150 (21,390,482)
NET ASSETS
BEGINNING OF PERIOD 84,273,949 105,664,431
END OF PERIOD (INCLUDING DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME OF $602,010 AND
$492,464, RESPECTIVELY) $ 105,660,099 $ 84,273,949
OTHER INFORMATION
SHARES
SOLD 8,723,851 16,940,710
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 25,139 49,197
REDEEMED (4,236,042) (15,551,026)
NET INCREASE (DECREASE) 4,512,948 1,438,881
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEAR ENDED NOVEMBER 1, 1995
APRIL 30, 1998 OCTOBER 31, (COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996
NET ASSET VALUE, BEGINNING OF PERIOD $ 6.47 $ 9.13 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D - (.03) (.03)
NET REALIZED AND UNREALIZED GAIN (LOSS) (.44) (2.63) (.87)
TOTAL FROM INVESTMENT OPERATIONS (.44) (2.66) (.90)
LESS DISTRIBUTIONS
IN EXCESS OF NET INVESTMENT INCOME (.01) (.01) -
FROM NET REALIZED GAIN - (.03) -
TOTAL DISTRIBUTIONS (.01) (.04) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .04 .03
NET ASSET VALUE, END OF PERIOD $ 6.03 $ 6.47 $ 9.13
TOTAL RETURN B, C (6.63)% (28.80)% (8.70)%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 105,660 $ 84,274 $ 105,664
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.28% A 1.35% 1.34%
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.28% A 1.34% E 1.34%
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS .07% A (.46)% (.32)%
PORTFOLIO TURNOVER RATE 30% A 101% 66%
AVERAGE COMMISSION RATE F $ .0603 $ .0511 $ .0578
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES
CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT
INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING
THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
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 6 PAST 1 PAST 5 LIFE OF
APRIL 30, 1998 MONTHS YEAR YEARS FUND
FIDELITY LATIN AMERICA 12.65% 11.50% 82.33% 81.24%
FIDELITY LATIN AMERICA 9.27% 8.16% 76.86% 75.80%
(INCL. 3.00% SALES CHARGE)
MSCI EMF - LATIN AMERICA 7.97% 6.42% 113.48% 105.57%
LATIN AMERICAN REGION 10.14% 7.69% 64.57% N/A
FUNDS AVERAGE
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on 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 170 stocks
traded in seven Latin American markets. To measure how the fund's
performance stacked up against its peers, you can compare it to the
Latin American funds average, which reflects the performance of mutual
funds with similar objectives tracked by Lipper Analytical Services,
Inc. The past six months average represents a peer group of 42 mutual
funds. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
APRIL 30, 1998 YEAR YEARS FUND
FIDELITY LATIN AMERICA 11.50% 12.76% 12.54%
FIDELITY LATIN AMERICA 8.16% 12.08% 11.86%
(INCL. 3.00% SALES CHARGE)
MSCI EMF - LATIN AMERICA 6.42% 16.38% 15.39%
LATIN AMERICAN FUNDS AVERAGE 7.69% 10.26% 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
IMATRL PRASUN SHR__CHT 19980430 19980506 115542 R00000000000064
$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 April 30, 1998, the value of the investment would have
grown to $17,580 - a 75.80% 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 $20,557 - a 105.57% 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. The fund outperformed both its peer group and index over the
six-month period that ended April 30, 1998. During that period, the
fund provided a return of 12.65%. To compare the fund's performance
with that of its peers, the Latin American funds average returned
10.14% for the same six-month period, according to Lipper Analytical
Services. To gauge how the fund did relative to Latin American
markets, the Morgan Stanley Capital International Emerging Markets
Free-Latin America Index returned 7.97%. For the 12-month period that
ended April 30, 1998, the fund returned 11.50%, while the peer group
and index had returns of 7.69% and 6.42%, respectively.
Q. AS A GROUP, THE LATIN AMERICAN MARKETS STRUGGLED OVER THE PAST SIX
MONTHS. WHAT WAS TROUBLING THEM?
A. The primary trouble resulted from financial and economic turmoil in
Southeast Asia. Attacks on the Hong Kong dollar just prior to the
beginning of the period prompted a massive sell-off of all
emerging-market stocks, including Latin American stocks. October saw
Latin stocks' largest price declines since the 1994-1995 Mexican peso
crisis. Volatility continued to plague Latin stocks into November, as
nervous investors sold them to lock in the near-record-breaking
profits they earned through mid-1997. Brazil, which had posted the
region's best first-half 1997 gains, suffered the biggest losses,
although the region's other large market, Mexico, weathered the storm
in pretty good shape. In a fairly quick turnabout later in November,
Latin American markets rallied. Brazil came back particularly strong
in December and pulled up many of the smaller markets in the region
along with it.
Q. HOW HAVE THE LATIN MARKETS FARED SO FAR IN 1998?
A. Brazilian stocks have continued to do fairly well, with the
remaining major markets posting flat or negative returns for the first
four months of this year. The declining price of oil was the catalyst
for the divergence in this year's performance across the various
markets. After shrugging off the Asian crisis, Mexico suffered from an
oil crisis of sorts as the price of its oil has plummeted by roughly
one-third since the end of 1997. Investors feared that lower oil
prices would mean less revenue for the government and a widening trade
gap that ultimately would put pressure on the peso. Stocks from
Venezuela, the region's other large oil exporter, also suffered. In
contrast, Brazil benefited from lower oil prices because it is a major
importer, rather than an exporter, of oil.
Q. WHAT FACTORS HELPED THE FUND OUTPACE ITS PEERS AND ITS INDEX?
A. I'd point to three factors: security selection in Brazil, security
selection in Mexico and a relatively light weighting in Chilean
stocks, which severely lagged the other Latin markets during the past
six months. In Brazil, the fund's performance got a boost from its
holdings in integrated oil company Petrobras, which profited from the
declining price in oil. The other big Brazilian winner was telephone
company Telebras. Its success was due to the growing demand for
telephones and data transmission, as well as investors' increased
appetite for defensive-type companies that are expected to do well
even when the economy slows.
Q. THE FUND'S HOLDINGS IN VARIOUS SHARES OF TELEBRAS AND ITS
SUBSIDIARIES HAVE CHANGED DURING THE PAST SIX MONTHS. WHAT EXPLAINS
THE SHIFT?
A. Toward the beginning of the period, I had switched some of the
fund's investments out of Telebras ON - which is the voting class of
shares issued by the company - into the company's Telesp subsidiary.
Here's why: Prior to December, Telebras ON stock had historically
traded at a 20% to 25% discount to Telebras American Depository
Receipts (ADRs) - meaning the voting shares were 20% to 25% cheaper
than the ADRs. As a reminder, an ADR is a receipt for the shares of a
foreign-based corporation that are traded on stock exchanges in the
U.S. But that discount closed to about 5% in December, with the shares
of Telebras ON posting strong gains. I locked in that strength by
selling the fund's stake in Telebras ON shares and buying Telesp,
which was selling rather cheaply at the time because its shares were
in abundant supply. Telesp, in turn, performed extremely well and
helped the fund's performance.
Q. TURNING TO MEXICO, WHICH STOCKS PERFORMED WELL?
A. Telefonos De Mexico, or "Telmex," was one of the Mexican market's
best performers during the period as well as one of the fund's largest
holdings. Although increased competition pushed Mexican phone rates
lower, it helped spur telephone usage. The fund's relatively large
stake in Mexican banks - including Group Financiero Bancomer - also
helped the fund's performance. Thanks to Mexico's relatively healthy
economy, many of the banks enjoyed improved asset quality, healthy
loan growth and better profitability.
Q. WHAT WERE THE DISAPPOINTMENTS DURING THE PERIOD?
A. I'd say the biggest disappointment resulted not from something the
fund owned, but rather, from something it didn't own. The fund had no
investments in Brazilian banks, which performed extremely well over
the past six months. I avoided them because I was concerned about high
interest rates. In late fall 1997, the Brazilian government raised
interest rates to above 40% in order to stave off speculative attacks
on its currency. I worried that at those interest rate levels, banks
would suffer deteriorating assets and loan losses. But interest rates
came down very quickly and bank stock prices rose in concert. Another
disappointment had to do with money going out of the fund. As
redemptions occurred, I was forced to sell some stocks into a rather
weak market, which was a slight negative for performance.
Q. WERE THERE ANY PARTICULAR STOCKS OUTSIDE OF BRAZIL AND MEXICO THAT
RECENTLY CAUGHT YOUR ATTENTION?
A. I continued to like Telecom Argentina. Although increased
competition will eventually be a factor in Argentina, it appears to be
a couple of years off. What's more, Argentina is a great market for
cellular phone service, providing the company greater profits than
regular line service.
Q. WHAT'S YOUR OUTLOOK?
A. Over the short term, I think the Latin American markets will remain
volatile and continued uncertainty over Southeast Asia will likely
cast a shadow over Latin American stocks. But over the longer term,
I'm more optimistic. Earnings for many companies across the region
continue to grow at quite a healthy pace. In Mexico, for instance, the
average company's operating income is growing at about 20% annually in
U.S. dollar terms. Given that growth rate, I believe that many Latin
American stocks are priced cheaply relative to comparable stocks in
other parts of the world. Furthermore, the regional economy should
continue to post decent growth, although at a slightly slower pace
than in 1997. But as long as the market is clouded by perception
problems, I'll focus on finding solid companies that have proven they
can withstand volatility and generally avoid smaller, riskier
companies.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
PATTI SATTERTHWAITE ON THE BREAKUP OF TELEBRAS:
"Telebras, the government-controlled Brazilian phone
monopoly, is set to start privatizing by dividing into 12 new
companies - dubbed `Baby Bras' - in the next six months
or so. The new companies will include three regional wireline
companies without cellular operations, eight cellular entities
and one long distance company. The wireline companies are
slated to be Telesp, which will serve the populous city and
state of Sao Paulo; Tele-Centro/Sul will handle the central
and southern states and Brasilia; Tele-Norte/Nordest gets
the north and northeast, including Rio de Janeiro; and
Embratel will provide domestic and international service
nationwide. The cellular units will range from Telesp Cellular
to Amazonia Cellular, which will handle wireless service in
the rainforests. After the transaction occurs, shareholders of
Telebras will receive one share of each of the 12 companies
for each share they hold of Telebras.
"I view the privatization of Telebras as a positive move,
although it will likely cause confusion as investors decide
how to play the breakup. Current pent-up demand for
phones - where a long wait is common - has made
Telebras one of the fastest-growing phone companies in
Latin America. I think there is some unrecognized value in
Telebras' current stock price which I believe will be released
after the company's breakup. But I'll choose carefully among
the 12 entities, since all may not emerge as winners."
FUND FACTS
GOAL: high total investment return by investing
mainly in equity and debt securities of Latin
American issuers
FUND NUMBER: 349
TRADING SYMBOL: FLATX
START DATE: April 19, 1993
SIZE: as of April 30, 1998, more than
$668 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 APRIL 30, 1998
ARGENTINA 8.8%
ROW: 1, COL: 1, VALUE: 9.4
ROW: 1, COL: 2, VALUE: 36.3
ROW: 1, COL: 3, VALUE: 3.5
ROW: 1, COL: 4, VALUE: 42.0
ROW: 1, COL: 5, VALUE: 8.800000000000001
OTHER 9.4%
MEXICO 36.3%
BRAZIL 42.0%
CHILE 3.5%
AS OF OCTOBER 31, 1997
UNITED STATES 7.1%
ARGENTINA 10.8%
ROW: 1, COL: 1, VALUE: 7.1
ROW: 1, COL: 2, VALUE: 6.8
ROW: 1, COL: 3, VALUE: 32.9
ROW: 1, COL: 4, VALUE: 4.6
ROW: 1, COL: 5, VALUE: 37.8
ROW: 1, COL: 6, VALUE: 10.8
OTHER 6.8%
MEXICO 32.9%
BRAZIL 37.8%
CHILE 4.6%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
STOCKS 98.0 92.9
SHORT-TERM INVESTMENTS 2.0 7.1
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
TELEBRAS SPONSORED ADR 12.4 6.3
(BRAZIL, TELEPHONE SERVICES)
TELEFONOS DE MEXICO SA SPONSORED ADR 6.6 6.9
REPRESENTING ORD. CLASS L SHARES
(MEXICO, TELEPHONE SERVICES)
TELESP PN (PFD. REG.) 6.5 2.3
(BRAZIL, TELEPHONE SERVICES)
PETROBRAS PN (PFD. REG.) 5.6 3.6
(BRAZIL, OIL & GAS)
CENTRAIS ELECTRICAS BRASILEIRAS SA 5.4 6.4
(BRAZIL, ELECTRIC UTILITY)
YPF SOCIEDAD ANONIMA SPONSORED ADR 4.8 4.8
REPRESENTING CLASS D SHARES
(ARGENTINA, OIL & GAS)
GRUPO FINANCIERO BANCOMER CLASS B 4.7 2.9
(MEXICO, BANKS)
GRUPO CARSO SA DE CV CLASS A-1 4.0 3.9
(MEXICO, TOBACCO)
COMPANIA ENERGERTICA MINAS GERAIS 3.3 3.4
(BRAZIL, ELECTRIC UTILITY)
PANAMERICAN BEVERAGES, INC. CLASS A 2.9 1.7
(PANAMA, BEVERAGES)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
UTILITIES 40.7 38.1
NONDURABLES 16.0 15.4
ENERGY 11.3 10.8
FINANCE 9.8 8.9
BASIC INDUSTRIES 6.3 8.2
RETAIL & WHOLESALE 5.6 4.4
CONSTRUCTION & REAL ESTATE 3.2 3.8
MEDIA & LEISURE 1.9 1.0
HOLDING COMPANIES 1.6 0.4
PRECIOUS METALS 1.0 1.1
LATIN AMERICA
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 98.0%
SHARES VALUE (NOTE 1)
ARGENTINA - 8.8%
Bansud SA Class B (a) 229,590 $ 2,158,416
Cresud Sacifya sponsored ADR (a) 104,500 2,076,938
Disco SA sponsored ADR (a) 73,300 2,913,675
IRSA (Inversiones Y Representa)
SA GDR 43,800 1,702,725
Perez Companc Class B 290,236 1,744,536
Telecom Argentina Class B
sponsored ADR 450,100 16,203,600
YPF Sociedad Anonima sponsored
ADR representing Class D shares 910,700 31,760,663
58,560,553
BRAZIL - 42.0%
Aracruz Celulose SA ADR 227,750 3,587,063
Bradesco PN 65,324,483 599,803
Caemi Mineracao e Metalurgia 2,546,000 182,565
Centrais Electricas Brasileiras SA 810,330,100 36,146,152
Cimento Itau PN Ord. 6,044,000 1,374,177
Companhia Brasileira de Distribuicao
Grupo Pao de Acucar
sponsored GDR 87,600 2,332,350
Companhia Brasileira de Petroleo
Ipiranga SA Class B 321,249,000 4,185,746
Companhia de Electricidade do Estado
do Rio de Janeiro 2,008,714,550 1,457,925
Companhia Paranaense
de Energia-Copel Class B 23,000 327,750
Compania Cervejaria Brahma
ON (Reg.) 117,827 70,065
Compania Cervejaria Brahma PN:
(Pfd. Reg.) 25,013,523 16,295,810
(Pfd. Reg.) warrants 4/30/03 (a) 1,895,770 149,201
Compania Energertica Minas Gerais 452,618,000 21,966,955
Compania Paulista de Forca Luz Ord. 18,570,597 2,565,829
Coteminas PN 10,053,310 2,461,569
Dixie Toga SA 1,904,400 1,082,471
Eletropaulo Metropolitana-Electricidade
de Sao Paulo SA (a) 17,599,000 2,073,006
Empresa Bandeirante Energia (a) 22,717,000 774,747
Encorpar Redito e Participa SA (a) 11,465,310 31,181
Itausa Investimentos Itau SA 4,623,000 3,921,394
Klabin Industria de Papel e
Celulose PN 4,640,165 2,921,533
Light Servicos de Electricidade
SA Ord. 5,100,000 2,051,506
Paulista De Forca Luz rights
4/13/98 (a) 80,306 9,417
Perdigao SA PN 1,461,114,630 2,427,642
Perdigao SA ON 23,222,143 36,552
Petrobras PN (Pfd. Reg.) 146,980,000 37,273,584
Souza Cruz Industria Comerico 537,500 4,394,758
Telebras sponsored ADR 675,040 82,228,310
Telesp PN (Pfd. Reg.) 127,579,899 43,398,701
Votorantim Celulose e Papel SA
(Pfd. Reg.) 145,251,499 2,794,392
279,122,154
CANADA - 0.2%
Bell Canada International, Inc. 61,400 1,373,074
SHARES VALUE (NOTE 1)
CHILE - 3.5%
Chilectra SA sponsored ADR 37,500 $ 1,045,313
Cristalerias de Chile SA
sponsored ADR 124,700 1,691,244
Enersis SA sponsored ADR (a) 164,700 4,848,356
Santa Isabel SA sponsored ADR 114,500 1,889,250
Sociedad Quimica y Minera de Chile
sponsord ADR 256,100 11,124,344
Supermercados Unimarc SA
sponsored ADR 86,200 932,038
Vina Concha Stet y Toro SA
sponsored ADR 61,000 1,982,500
23,513,045
COLOMBIA - 1.4%
Banco Ganadero Class C
sponsored ADR 79,800 1,476,300
Compania Nacional de Chocolates 136,000 697,640
Noel (Industria Alimenticias) 97,207 183,429
Suramericana de Inversiones SA 440,350 6,776,597
9,133,966
LUXEMBOURG - 0.3%
Quilmes Industrial SA
sponsored ADR 201,300 2,226,881
MEXICO - 36.3%
Apasco SA de CV 1,283,000 8,702,402
Cemex SA, Series B (a) 659,000 3,957,725
Cifra SA de CV:
Series C 9,942,200 16,882,540
Series V (a) 1,556,572 2,731,150
Corporacion Geo SA de CV (a) 808,873 5,581,719
Fomento Economico Mexicano SA
de CV Class B 1,500,600 11,097,230
Gruma SA Class B (a) 1,396,864 3,204,299
Grupo Carso SA de CV Class A-1 4,280,100 26,914,430
Grupo Financiero Banamex-Accival
Class B (a) 5,580,000 17,412,859
Grupo Financiero Bancomer Class B 45,618,700 31,479,695
Grupo Televisa SA de CV
sponsored ADR (a) 311,000 12,751,000
Grupo Elektra SA 8,512,700 12,149,543
Grupo Modelo SA de CV Class C Ord. 1,626,800 15,363,797
Grupo Financiero Inbursa SA Class B 3,831,900 11,687,024
Kimberly Clark de Mexico SA Class A 3,556,000 17,440,815
Telefonos de Mexico SA sponsored ADR
representing Ord. Class L shares 781,000 44,224,125
241,580,353
PANAMA - 2.9%
Panamerican Beverages, Inc. Class A 484,500 19,319,438
PERU - 1.0%
Compania de Minas Buenaventura SA:
Class B 134,077 1,042,850
Class B sponsored ADR 339,000 5,254,500
Class T 98,541 581,805
6,879,155
VENEZUELA - 1.6%
Compania Anonima Nacional Telefonos
de Venezuela sponsored ADR 315,400 10,565,900
TOTAL COMMON STOCKS
(Cost $452,868,298) 652,274,519
NONCONVERTIBLE BONDS - 0.0%
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (NOTE 1)
BRAZIL - 0.0%
Cia Vale Do Rio Doce
0%, 11/19/00 (Cost $0) - BRL 290,000 $ -
CASH EQUIVALENTS - 2.0%
SHARES
Taxable Central Cash Fund (b)
(Cost $13,114,817) 13,114,817 13,114,817
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $465,983,115) $ 665,389,336
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 5.51%. 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 $107,751,368 and $293,264,026, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these
affiliated firms were $3,776 for the period.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Basic Industries 6.3%
Cash Equivalents 2.0
Construction & Real Estate 3.2
Durables 0.4
Energy 11.3
Finance 9.8
Holding Companies 1.6
Media & Leisure 1.9
Nondurables 16.0
Precious Metals 1.0
Retail & Wholesale 5.6
Services 0.2
Utilities 40.7
100.0%
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $467,006,964. Net unrealized appreciation
aggregated $198,382,372, of which $226,563,811 related to appreciated
investment securities and $28,181,439 related to depreciated
investment securities.
At October 31, 1997, the fund had a capital loss carryforward of
approximately $117,765,000 of which $80,150,000, and $37,615,000 will
expire on October 31, 2003, and 2004, respectively.
LATIN AMERICA
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 665,389,336
(COST $465,983,115) -
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 2,179,477
RECEIVABLE FOR FUND SHARES SOLD 300,166
DIVIDENDS RECEIVABLE 5,778,759
INTEREST RECEIVABLE 52,171
REDEMPTION FEES RECEIVABLE 298
OTHER RECEIVABLES 9,757
TOTAL ASSETS 673,709,964
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 1,649,532
PAYABLE FOR FUND SHARES REDEEMED 2,672,027
ACCRUED MANAGEMENT FEE 424,060
OTHER PAYABLES AND 720,617
ACCRUED EXPENSES
TOTAL LIABILITIES 5,466,236
NET ASSETS $ 668,243,728
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 566,578,451
UNDISTRIBUTED NET INVESTMENT INCOME 4,715,092
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (102,749,275)
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 199,699,460
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS, FOR 38,697,364 $ 668,243,728
SHARES OUTSTANDING
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE ($668,243,728 (DIVIDED BY) 38,697,364 SHARES) $17.27
MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $17.27) $17.80
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 9,048,400
DIVIDENDS
SPECIAL DIVIDEND FROM CENTRAIS ELECTRICAS BRASILEIRAS SA 2,290,547
INTEREST 852,094
12,191,041
LESS FOREIGN TAXES WITHHELD (909,522)
TOTAL INCOME 11,281,519
EXPENSES
MANAGEMENT FEE $ 2,823,782
TRANSFER AGENT FEES 1,068,411
ACCOUNTING FEES AND EXPENSES 242,934
NON-INTERESTED TRUSTEES' COMPENSATION 1,961
CUSTODIAN FEES AND EXPENSES 721,650
REGISTRATION FEES 20,237
AUDIT 31,778
LEGAL 2,943
REPORTS TO SHAREHOLDERS 60,952
MISCELLANEOUS 76,116
TOTAL EXPENSES BEFORE REDUCTIONS 5,050,764
EXPENSE REDUCTIONS (30,002) 5,020,762
NET INVESTMENT INCOME 6,260,757
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 19,146,317
FOREIGN CURRENCY TRANSACTIONS (375,211) 18,771,106
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 59,032,452
ASSETS AND LIABILITIES IN 326,067 59,358,519
FOREIGN CURRENCIES
NET GAIN (LOSS) 78,129,625
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 84,390,382
OTHER INFORMATION $ 212,550
SALES CHARGES PAID TO FDC
SALES CHARGES - DEALERS' PORTION $ 79
EXPENSE REDUCTIONS $ 24,975
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 2,088
TRANSFER AGENT CREDITS 2,939
$ 30,002
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
OPERATIONS $ 6,260,757 $ 10,354,029
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 18,771,106 65,034,745
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 59,358,519 64,919,843
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 84,390,382 140,308,617
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME (10,041,235) (9,458,525)
SHARE TRANSACTIONS 76,796,582 704,350,162
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 9,873,399 9,235,878
COST OF SHARES REDEEMED (301,656,492) (595,524,911)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (214,986,511) 118,061,129
REDEMPTION FEES 338,954 1,741,603
TOTAL INCREASE (DECREASE) IN NET ASSETS (140,298,410) 250,652,824
NET ASSETS
BEGINNING OF PERIOD 808,542,138 557,889,314
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $4,715,092 AND $8,495,570,
RESPECTIVELY) $ 668,243,728 $ 808,542,138
OTHER INFORMATION
SHARES
SOLD 4,655,425 43,052,799
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 578,067 724,384
REDEEMED (18,651,799) (35,962,567)
NET INCREASE (DECREASE) (13,418,307) 7,814,616
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED YEARS ENDED OCTOBER 31, APRIL 19, 1993
APRIL 30, 1998 (COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996 1995 1994 1993
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.51 $ 12.59 $ 9.75 $ 16.21 $ 13.28 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .14 D, E .20 D .22 .04 .07 .03
NET REALIZED AND UNREALIZED GAIN (LOSS) 1.81 2.92 2.72 (6.52) 2.82 3.23
TOTAL FROM INVESTMENT OPERATIONS 1.95 3.12 2.94 (6.48) 2.89 3.26
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.20) (.23) (.12) - (.05) -
FROM NET REALIZED GAIN - - - - (.05) -
TOTAL DISTRIBUTIONS (.20) (.23) (.12) - (.10) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .03 .02 .02 .14 .02
NET ASSET VALUE, END OF PERIOD $ 17.27 $ 15.51 $ 12.59 $ 9.75 $ 16.21 $ 13.28
TOTAL RETURN B, C 12.65% 25.42% 30.69% (39.85)% 22.89% 32.80%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 668,244 $ 808,542 $ 557,889 $ 466,289 $ 888,530 $ 342,934
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.36% A 1.30% 1.32% 1.41% 1.48% 1.94% A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER 1.35% A, F 1.29% F 1.32% 1.41% 1.48% 1.94% A
EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET
ASSETS 1.68% A 1.19% 1.48% .97% .47% 1.21% A
PORTFOLIO TURNOVER RATE 30% A 64% 70% 57% 77% 72% A
AVERAGE COMMISSION RATE G $ .0004 $ .0005 $ .0004
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS). C
TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E INVESTMENT INCOME
PER SHARE REFLECTS A SPECIAL DIVIDEND FROM CENTRAIS ELECTRICAS BRASILEIRAS
WHICH AMOUNTED TO $.05 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 6 OF NOTES TO FINANCIAL STATEMENTS). G FOR FISCAL YEARS
BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
</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 6 PAST 1 LIFE OF
APRIL 30, 1998 MONTHS YEAR FUND
FIDELITY NORDIC 26.07% 46.69% 103.23%
FIDELITY NORDIC 22.29% 42.28% 97.14%
(INCL. 3.00% SALES CHARGE)
FT - ACTUARIES WORLD NORDIC 23.14% 43.96% 91.41%
EUROPEAN REGION FUNDS AVERAGE 26.03% 39.23% N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year or since
the fund started on November 1, 1995. For example, if you 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 over 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 six months average represents a peer group of
93 mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
APRIL 30, 1998 YEAR FUND
FIDELITY NORDIC 46.69% 32.86%
FIDELITY NORDIC 42.28% 31.25%
(INCL. 3.00% SALES CHARGE)
FT - ACTUARIES WORLD NORDIC 43.96% 29.71%
EUROPEAN REGION FUNDS AVERAGE 39.23% 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
IMATRL PRASUN SHR__CHT 19980430 19980513 152248 R00000000000033
$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 April 30, 1998, the value of the investment would have grown
to $19,714 - a 97.14% 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 $19,141 -
a 91.41% 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 MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: On June 1, 1998, after the period covered by
this report, Trygve Toraasen (right) became portfolio manager of
Fidelity Nordic Fund. The following is an interview with Colin Stone,
who managed the fund during the period covered by this report, with
comments by Trygve Toraasen on his outlook and investment approach.
Q. HOW DID THE FUND PERFORM, COLIN?
C.S. For the six months that ended April 30, 1998, the fund returned
26.07%, compared to the 23.14% return of the FT-Actuaries World Nordic
Index and the European region funds average of 26.03%, as monitored by
Lipper Analytical Services. For the one-year period, the fund returned
46.69%, compared to the FT-Actuaries Index return of 43.96% and the
Lipper European regions funds average return of 39.23%.
Q. HOW WOULD YOU DESCRIBE THE MARKET ENVIRONMENT FOR THE SIX MONTHS?
C.S. We had a strong market, with good liquidity - or cash flow - into
the market. As interest rates declined and bond markets rallied, the
equity markets attracted more investors. Corporate earnings throughout
the Nordic region grew and were expected to continue growing
throughout 1998. Consensus corporate earnings growth estimates for
1998 ranged from a low of 10% in Norway to almost 20% in Sweden and
Finland. Moreover, a strong economic recovery seemed to be developing
throughout Europe, with very favorable reports from large countries
like Germany and France. Growth in the Nordic region was expected to
be robust as a result of this broad recovery. Estimates of 1998 growth
in gross domestic product in the Nordic countries were very strong:
2.8% in Denmark, 3% in Sweden and 4% in Finland. The one potential
area of worry was in Norway, where the economic cycle extended the
furthest. There was concern about the economy overheating and setting
off inflationary pressures.
Q. WHAT WERE YOUR PRINCIPAL AREAS OF EMPHASIS?
C.S. I continued to focus the fund on technology - particularly in
telecommunications - as well as the finance and health care sectors.
At the end of the period, telecommunications equipment companies
accounted for 18.8% of portfolio assets, financial companies 19.4%,
and health care 13.0%. The fund's two largest holdings continued to be
the two giant telecommunications equipment companies, Ericsson of
Sweden and Nokia of Finland. The fundamentals for telecommunications
remained extremely favorable. Analysts are revising upward the
estimates of global subscriber growth in wireless systems, despite the
Asian economic crisis. In Finland, for example, mobile phone ownership
was expected this year to exceed 50% of the population. To illustrate,
it is quite common for school children in Finland to have mobile
phones now.
Q. WHY HAVE YOU ALSO EMPHASIZED THE FINANCE AND HEALTH CARE SECTORS?
C.S. I anticipated further restructuring in the finance sector, and
have overweighted banks, particularly Swedish banks. In addition,
stock valuations for the Nordic banks were low compared to their
competitors in Continental Europe and the United Kingdom. In health
care, I had a sizeable holding in Astra of Sweden, a major global
pharmaceutical company that accounted for about 8% of portfolio
assets. Other health care-related companies included Novo-Nordisk, a
pharmaceutical company based in Denmark, and two Swedish dental
product companies, Biora and Nobel Biocare. Each of these health care
companies has a global business, and all were benefiting from the
increase in demand for new products worldwide.
Q. WHAT OTHER COMPANIES CONTRIBUTED TO PERFORMANCE?
C.S. One strong contributor has been the Finnish brewer, Hartwall.
This firm has bought and modernized a number of old breweries in the
former Soviet Union, greatly increasing the breweries' volume and
enabling the plants to improve the quality of their beers, which in
turn has helped increase demand. The stock rose by 97% in the first
four months of 1998. Another contributor was Tieto, the largest
information technology service company in Finland, whose stock rose
67% during the same period. A third company was Raisio of Finland.
This company has produced a cholesterol-reducing agent and has entered
into a global distribution agreement with a subsidiary of Johnson &
Johnson. Other strong stocks included Europolitan Holdings, a Swedish
cellular network company, and Scandic Hotels, a hotel chain based in
Sweden.
Q. WERE THERE ANY DISAPPOINTMENTS?
C.S. The Danish banks in general did badly during the period because
of fears about the potential impact of proposed changes in Denmark's
tax laws. While I had reduced the fund's emphasis in these companies,
their performance still hurt the fund. Norwegian stocks, especially
banking stocks, underperformed the other Nordic markets. Investors
have been concerned about the possibility that growth in Norway may
overheat, stimulating inflation and causing interest rates to rise.
Q. DO YOU EXPECT THE ADVENT OF A SINGLE CURRENCY, THE EURO, IN MUCH OF
EUROPE TO HAVE A MAJOR IMPACT ON STOCKS OF THE NORDIC REGION?
C.S. Of the four Nordic countries, only Finland will adopt the single
European currency at the outset, although Sweden and Denmark may
later. Norway is not a member of the European Monetary Union. However,
the single currency is not as important an issue as may first appear.
Most of the largest companies will be bought and sold using the Euro
currency regardless of where they are based. This will be true, for
example, in Sweden, where companies account for more than one half the
Nordic index and more than one half the fund's portfolio. Most Swedish
companies do a small amount of their business in Sweden. They
effectively are global companies domiciled in Sweden. So the movement
to the single European currency will not be a cause for concern to the
Swedish stock market. The larger issue of the emergence of a single
market across Europe - a Pan-European market - is having a more
profound impact. Companies are restructuring themselves to be European
in orientation.
Q. TURNING TO YOU TRYGVE, WHAT IS YOUR OUTLOOK?
A. The stock-picking environment remains good in the Nordic region,
despite relatively high stock prices. In general, the European
economies have been recovering enough to offset the effects of the
Asian economic crisis. One of the effects of the European Economic
Union will be the convergence of interest rates in different countries
to be closer to each other, which could lead to further rate
reductions in Denmark. Norway, on the other hand, will probably see
increasing rates due to rising inflationary pressures. Because of a
tight labor market, recent collective bargaining contracts in Norway
have been worse than business observers expected, with average wage
increases over the next two years in the 4.5% to 5.5% range. For
labor-intensive industries, these contracts will have a big impact on
their cost bases. For these reasons, I expect the portfolio will
continue to de-emphasize Norway and instead be overweighted in
Finland, where the prospects are more favorable.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGERS ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
TRYGVE TORAASEN ON HIS INVESTMENT APPROACH:
"I emphasize a bottom-up, stock-picking approach similar
to that of the previous manager, Colin Stone, with whom
I have worked closely. This is important, given the universe
of stocks in the Nordic region which has a large base of
cyclical, commodity companies, with a fair representation
of high technology companies as well.
"I use Fidelity's significant research resources to find stocks
that are undervalued on any investment parameter. I am not
strictly a value manager or a growth manager. I will look for
attractive opportunities based on corporate turnarounds,
restructurings and gaps in valuations when compared to
stock prices of similar companies in other countries. These
types of companies have dominated the fund's portfolio. I
will be attracted to the stock of a company when Fidelity's
research staff and I believe its prospects are more favorable
than its current stock price implies."
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of issuers in Denmark,
Finland, Norway and Sweden
FUND NUMBER: 342
TRADING SYMBOL: FNORX
START DATE: November 1, 1995
SIZE: as of April 30, 1998, more than
$123 million
MANAGER: Trygve Toraasen, since June 1, 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 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%
AS OF OCTOBER 31, 1997
UNITED STATES 6.5%
ROW: 1, COL: 1, VALUE: 11.7
ROW: 1, COL: 2, VALUE: 24.2
ROW: 1, COL: 3, VALUE: 4.5
ROW: 1, COL: 4, VALUE: 1.1
ROW: 1, COL: 5, VALUE: 52.0
ROW: 1, COL: 6, VALUE: 6.5
DENMARK 11.7%
FINLAND 24.2%
SWEDEN 53.0%
NORWAY 4.5%
NETHERLANDS 0.1%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
STOCKS 94.1 94.5
SHORT-TERM INVESTMENTS 5.9 5.5
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
ERICSSON (L.M.) TELEPHONE CO. CLASS B 9.5 9.3
(SWEDEN, COMMUNICATIONS EQUIPMENT)
NOKIA CORP. AB, SERIES A 9.3 8.1
(FINLAND, COMMUNICATIONS EQUIPMENT)
ASTRA AB CLASS A FREE SHARES 8.0 6.9
(SWEDEN, DRUGS & PHARMACEUTICALS)
ABB AB, SERIES A 5.0 3.2
(SWEDEN, HOLDING COMPANIES)
FORENINGSSPARBANKEN AB, SERIES A 3.0 0.0
(SWEDEN, BANKS)
UPM-KYMMENE CORP. 2.8 2.5
(FINLAND, PAPER & FOREST PRODUCTS)
SVENSKA HANDELSBANKEN 2.7 2.5
(SWEDEN, BANKS)
SKANDIA FOERSAEKRINGS AB 2.2 2.0
(SWEDEN, INSURANCE)
NORDBANKEN HOLDING AB 2.1 1.7
(SWEDEN, BANKS)
VOLVO AB CLASS B 2.1 3.1
(SWEDEN, AUTOS, TIRES & ACCESSORIES)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
TECHNOLOGY 21.1 23.4
FINANCE 19.4 17.6
HEALTH 13.0 10.8
BASIC INDUSTRIES 7.8 10.0
DURABLES 5.6 7.5
NONDURABLES 5.4 2.8
MEDIA & LEISURE 5.2 5.4
HOLDING COMPANIES 5.0 4.3
INDUSTRIAL MACHINERY & EQUIPMENT 3.7 2.5
CONSTRUCTION & REAL ESTATE 3.3 5.3
NORDIC
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 94.1%
SHARES VALUE (NOTE 1)
DENMARK - 11.3%
Broendby IF Class B (a) 4,900 $ 436,430
Carlsberg AS Class B 15,600 970,274
Danisco AS 16,200 1,017,049
Den Danske Bank Group AS 11,279 1,366,812
GN Store Nordic Ltd. 20,600 516,805
Incentive AS 10,278 577,736
Jyske Bank AS (Reg.) 3,800 441,073
NKT Holding AS 9,710 765,549
Novo-Nordisk AS Class B 12,900 2,090,609
Radiometer AS Class B 10,500 456,842
Ratin AS Class B 4,920 944,607
Sondagsavisen AS (Reg.) 19,900 929,744
Scanbox Danmark AS Class B (a) 9,170 291,868
Sophus Berendsen AS Class B 4,380 177,139
Syd-Sonderjylland Holding 24,250 1,352,494
Unidanmark AS Class A 17,867 1,499,960
Vestas Wind Systems AS 4,900 211,047
14,046,038
FINLAND - 26.4%
Asko Class A 50,590 1,053,185
Cultor OY, Series 1 15,842 935,643
Elcoteq Network Corp. Class A 7,300 98,413
Elcoteq Network Corp. Class A (a)(c) 26,000 350,514
Enso OY Class R 111,250 1,183,511
Hartwall OY AB Class A 56,815 1,761,140
Huhtamaki Ord. 7,569 437,314
KCI (Konecranes International) 23,850 1,137,381
Martela OY Class A 19,500 608,034
Merita Ltd., Series A 214,700 1,433,434
Metsa-Serla Ltd. Class B 114,950 1,191,246
Nokia Corp. AB, Series A 172,680 11,592,238
Nokian Tyres Ltd. 9,000 519,993
Okobank Class A 23,700 428,182
Pohjola Class B 33,601 1,861,244
Rauma OY 41,197 770,744
Raisio Group PLC 5,270 966,618
Sampo Insurance Co. Ltd. 13,000 586,574
Talentum OY Class B 45,750 755,227
Tieto Corp Class B 5,149 944,424
UPM-Kymmene Corp. 114,350 3,429,242
Yit-Yhtymae OY 52,300 767,425
32,811,726
NORWAY - 4.2%
A-Pressen AS, Series A 11,500 254,135
Ekornes AS (Reg.) 75,150 754,872
Fokus Bank AS 64,550 544,653
Orkla AS Class A Free shares 5,150 609,737
NCL Holdings AS (a) 370,177 1,779,864
P4 Radio Hele Norge SA 17,000 198,085
Schibsted AS, Series B 59,800 1,137,293
5,278,639
SWEDEN - 52.2%
ABB AB, Series A 381,600 6,174,996
Astra AB Class A Free shares 483,133 9,904,862
Assi Doman AB Free shares 27,100 726,804
Biora AB sponsored ADR (a) 39,200 1,229,900
Dahl International AB 29,700 539,958
Electrolux AB 15,830 1,469,596
Ericsson (L.M.) Telephone Co. Class B 228,286 11,741,099
Europolitan Holdings AB 26,650 1,649,389
SHARES VALUE (NOTE 1)
Fastighets AB Tornet 47,700 $ 722,671
ForeningsSparbanken AB, Series A 119,650 3,733,470
Granges AB (Reg.) 50,700 921,747
Hemkopskedjan AB, Series B 72,900 991,664
Hennes & Mauritz AB Class B 37,850 1,966,779
Incentive AB Class B 18,450 1,777,058
IBS (International Business Systems) AB
Class B Free shares (a) 45,500 701,074
Mandamus AB rights 6/15/98 (a) 109,150 170,292
Mo Och Domsjoe AB Class B 23,150 716,386
Munters AB 105,700 1,192,525
Munters AB (c) 8,300 93,642
NCC AB Class B Free shares 48,300 610,320
Nobel Biocare AB 57,700 751,418
Nordbanken Holding AB 354,550 2,605,775
Skandinaviska Enskilda Banken Class A
Free shares 130,400 2,168,962
Skandia Foersaekrings AB 39,950 2,776,452
Scandic Hotels AB 24,000 912,889
Spectra Physics AB, Series A 7,100 136,405
Stora Kopparbergs Bergslags AB Class A
Free shares 88,200 1,506,847
Svenska Handelsbanken 73,050 3,306,069
Svedala Industri Free shares 37,990 903,754
TV 4 AB Class A 5,725 110,726
Volvo AB Class B 85,978 2,557,548
64,771,077
TOTAL COMMON STOCKS
(Cost $94,541,295) 116,907,480
CASH EQUIVALENTS - 5.9%
Taxable Central Cash Fund (b)
(Cost $7,293,371) 7,293,371 7,293,371
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $101,834,666) $ 124,200,851
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.51%. 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 $444,156
or 0.4% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $53,266,069 and $22,516,705, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of FMR. The commissions paid to these
affiliated firms were $2,554 for the period.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Basic Industries 7.8%
Cash Equivalents 5.9
Construction & Real Estate 3.3
Durables 5.6
Finance 19.4
Health 13.0
Holding Companies 5.0
Industrial Machinery & Equipment 3.7
Media & Leisure 5.2
Nondurables 5.4
Retail & Wholesale 2.4
Services 0.9
Technology 21.1
Utilities 1.3
100.0%
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $101,860,317. Net unrealized appreciation
aggregated $22,340,534, of which $24,345,699 related to appreciated
investment securities and $2,005,165 related to depreciated investment
securities.
NORDIC
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 124,200,851
(COST $101,834,666) -
SEE ACCOMPANYING SCHEDULE
FOREIGN CURRENCY HELD AT VALUE 514,364
(COST $513,378)
RECEIVABLE FOR INVESTMENTS SOLD 1,088,776
RECEIVABLE FOR FUND SHARES SOLD 1,101,635
DIVIDENDS RECEIVABLE 571,338
INTEREST RECEIVABLE 46,700
REDEMPTION FEES RECEIVABLE 88
TOTAL ASSETS 127,523,752
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 3,281,701
PAYABLE FOR FUND SHARES REDEEMED 183,482
ACCRUED MANAGEMENT FEE 64,280
OTHER PAYABLES AND 99,800
ACCRUED EXPENSES
TOTAL LIABILITIES 3,629,263
NET ASSETS $ 123,894,489
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 98,885,430
UNDISTRIBUTED NET INVESTMENT INCOME 770,405
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 1,871,513
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 22,367,141
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS, FOR 6,708,941 $ 123,894,489
SHARES OUTSTANDING
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE ($123,894,489 (DIVIDED BY) 6,708,941 SHARES) $18.47
MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $18.47) $19.04
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 1,405,008
DIVIDENDS
INTEREST 115,615
1,520,623
LESS FOREIGN TAXES WITHHELD (210,207)
TOTAL INCOME 1,310,416
EXPENSES
MANAGEMENT FEE $ 275,768
TRANSFER AGENT FEES 139,870
ACCOUNTING FEES AND EXPENSES 32,039
NON-INTERESTED TRUSTEES' COMPENSATION 125
CUSTODIAN FEES AND EXPENSES 48,338
REGISTRATION FEES 22,424
AUDIT 15,442
LEGAL 195
REPORTS TO SHAREHOLDERS 6,466
MISCELLANEOUS 67
TOTAL EXPENSES 540,734
NET INVESTMENT INCOME 769,682
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 1,928,074
FOREIGN CURRENCY TRANSACTIONS (7,474) 1,920,600
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 14,321,487
ASSETS AND LIABILITIES IN 836 14,322,323
FOREIGN CURRENCIES
NET GAIN (LOSS) 16,242,923
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 17,012,605
OTHER INFORMATION $ 83,546
SALES CHARGES PAID TO FDC
SALES CHARGES - DEALERS' PORTION $ 1,007
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
OPERATIONS $ 769,682 $ 460,352
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 1,920,600 6,922,189
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 14,322,323 5,718,128
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 17,012,605 13,100,669
DISTRIBUTIONS TO SHAREHOLDERS (302,313) (148,633)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (5,108,510) (297,267)
TOTAL DISTRIBUTIONS (5,410,823) (445,900)
SHARE TRANSACTIONS 57,579,205 91,413,026
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 5,325,815 444,929
COST OF SHARES REDEEMED (23,928,667) (62,246,049)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 38,976,353 29,611,906
REDEMPTION FEES 38,614 140,469
TOTAL INCREASE (DECREASE) IN NET ASSETS 50,616,749 42,407,144
NET ASSETS
BEGINNING OF PERIOD 73,277,740 30,870,596
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $770,405 AND $436,258,
RESPECTIVELY) $ 123,894,489 $ 73,277,740
OTHER INFORMATION
SHARES
SOLD 3,281,100 6,327,627
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 375,060 33,555
REDEEMED (1,543,471) (4,182,354)
NET INCREASE (DECREASE) 2,112,689 2,178,828
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SIX MONTHS ENDED YEAR ENDED NOVEMBER 1, 1995
APRIL 30, 1998 OCTOBER 31, (COMMENCEMENT
OF OPERATIONS)
TO
OCTOBER 31,
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.94 $ 12.77 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME E .16 .10 .17 D
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.61 3.19 2.57
TOTAL FROM INVESTMENT OPERATIONS 3.77 3.29 2.74
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.07) (.05) -
FROM NET REALIZED GAIN (1.18) (.10) -
TOTAL DISTRIBUTIONS (1.25) (.15) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .03 .03
NET ASSET VALUE, END OF PERIOD 18.47 $ 15.94 $ 12.77
TOTAL RETURN B, C 26.07% 26.24% 27.70%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 123,894 $ 73,278 $ 30,871
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.48% A 1.42% 2.00% F
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 2.11% A .67% 1.52%
PORTFOLIO TURNOVER RATE 61% A 74% 35%
AVERAGE COMMISSION RATE G $ .0628 $ .0485 $ .0523
A ANNUALIZED B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURN WOULD HAVE
BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN
D INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.16
PER SHARE. E NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. F FMR AGREED TO REIMBURSE A PORTION OF
THE FUND'S EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE BEEN HIGHER G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE
STRUCTURES MAY DIFFER.
</TABLE>
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 6 PAST 1 PAST 5 PAST 10
APRIL 30, 1998 MONTHS YEAR YEARS YEARS
FIDELITY PACIFIC BASIN -5.11% -10.00% 0.13% 2.88%
FIDELITY PACIFIC BASIN -7.95% -12.70% -2.87% -0.21%
(INCL. 3.00% SALES CHARGE)
MSCI PACIFIC -8.58% -17.95% -20.17% -27.04%
PACIFIC REGION FUNDS AVERAGE -9.11% -23.41% -4.08% 32.59%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the performance
of the Morgan Stanley Capital International (MSCI) Pacific Index - a
market capitalization weighted index of over 400 stocks traded in six
Pacific-region markets. To measure how the fund's performance stacked
up against its peers, you can compare it to the Pacific region funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past six
months average represents a peer group of 53 mutual funds. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
APRIL 30, 1998 YEAR YEARS YEARS
FIDELITY PACIFIC BASIN -10.00% 0.03% 0.28%
FIDELITY PACIFIC BASIN -12.70% -0.58% -0.02%
(INCL. 3.00% SALES CHARGE)
MSCI PACIFIC -17.95% -4.41% -3.10%
PACIFIC REGION FUNDS AVERAGE -23.41% -0.99% 2.45%
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
1988/04/30 9700.00 10000.00
1988/05/31 9353.80 9618.36
1988/06/30 8818.75 9291.44
1988/07/31 8648.80 9713.52
1988/08/31 8617.33 8994.52
1988/09/30 8743.22 9341.80
1988/10/31 8806.16 10109.66
1988/11/30 9372.68 10943.99
1988/12/31 9399.24 11006.02
1989/01/31 9576.82 11107.22
1989/02/28 9786.12 11249.15
1989/03/31 9557.80 10891.87
1989/04/30 9805.15 10898.31
1989/05/31 9424.61 10289.35
1989/06/30 8986.99 9830.61
1989/07/31 10058.84 11106.41
1989/08/31 9519.74 10419.28
1989/09/30 10306.18 11056.08
1989/10/31 10008.10 10760.18
1989/11/30 10331.55 11272.42
1989/12/31 10474.70 11284.68
1990/01/31 10118.28 10646.19
1990/02/28 9484.65 9612.98
1990/03/31 8897.22 7881.88
1990/04/30 8798.22 7934.92
1990/05/31 9649.66 9037.14
1990/06/30 9794.86 8673.04
1990/07/31 10124.88 8607.19
1990/08/31 8778.42 7786.11
1990/09/30 7346.15 6565.40
1990/10/31 8507.80 7983.79
1990/11/30 7728.97 7098.46
1990/12/31 7624.18 7400.62
1991/01/31 7771.32 7631.27
1991/02/28 8473.54 8572.02
1991/03/31 8366.54 8105.07
1991/04/30 8727.68 8313.37
1991/05/31 8667.49 8281.18
1991/06/30 8520.36 7740.03
1991/07/31 8627.36 8001.07
1991/08/31 8045.52 7595.21
1991/09/30 8547.11 8192.68
1991/10/31 8794.56 8541.33
1991/11/30 8379.91 7991.84
1991/12/31 8580.55 8237.08
1992/01/31 8359.85 7917.93
1992/02/29 8279.59 7363.37
1992/03/31 7757.94 6663.09
1992/04/30 7677.69 6357.65
1992/05/31 8292.97 6853.51
1992/06/30 8119.09 6314.58
1992/07/31 7757.94 6226.80
1992/08/31 7985.33 7079.84
1992/09/30 7931.82 6917.62
1992/10/31 8025.45 6673.37
1992/11/30 7992.02 6799.23
1992/12/31 7926.87 6721.40
1993/01/31 8007.89 6708.89
1993/02/28 8473.78 7034.17
1993/03/31 9047.70 7883.92
1993/04/30 9965.98 9140.00
1993/05/31 10452.12 9405.90
1993/06/30 9911.96 9251.70
1993/07/31 10438.62 9798.68
1993/08/31 10918.01 10088.50
1993/09/30 10945.02 9711.19
1993/10/31 11802.53 9926.78
1993/11/30 11221.85 8526.18
1993/12/31 12992.82 9120.54
1994/01/31 13345.29 10176.29
1994/02/28 13476.60 10438.63
1994/03/31 12467.58 9862.41
1994/04/30 12813.13 10288.86
1994/05/31 13193.24 10533.62
1994/06/30 13137.95 10878.20
1994/07/31 13110.31 10644.81
1994/08/31 13732.31 10829.82
1994/09/30 13552.62 10558.76
1994/10/31 13794.51 10825.84
1994/11/30 12661.09 10221.73
1994/12/31 12627.32 10290.51
1995/01/31 11457.40 9640.63
1995/02/28 11270.21 9401.87
1995/03/31 11628.99 10123.70
1995/04/30 11761.58 10554.27
1995/05/31 11691.38 10132.11
1995/06/30 11582.19 9702.72
1995/07/31 12338.74 10402.27
1995/08/31 12206.15 10010.44
1995/09/30 12065.76 10103.16
1995/10/31 11605.59 9611.90
1995/11/30 11504.20 10084.49
1995/12/31 11855.17 10576.70
1996/01/31 12034.56 10594.64
1996/02/29 11777.18 10475.09
1996/03/31 12089.16 10796.36
1996/04/30 12728.71 11346.12
1996/05/31 12369.94 10853.76
1996/06/30 12533.73 10856.01
1996/07/31 11894.17 10357.17
1996/08/31 11660.19 10084.50
1996/09/30 12003.36 10413.61
1996/10/31 11426.20 9930.21
1996/11/30 11862.97 10199.84
1996/12/31 11527.47 9669.68
1997/01/31 10813.86 8856.45
1997/02/28 11041.28 9041.55
1997/03/31 10743.29 8710.64
1997/04/30 11088.33 8892.43
1997/05/31 12225.39 9763.08
1997/06/30 12797.84 10368.39
1997/07/31 13127.20 10121.21
1997/08/31 11535.31 9118.00
1997/09/30 11817.62 9083.62
1997/10/31 10515.87 7981.32
1997/11/30 10155.15 7542.59
1997/12/31 9786.91 7211.77
1998/01/31 10251.04 7603.30
1998/02/28 10275.05 7876.72
1998/03/31 9786.91 7443.18
1998/04/30 9978.96 7296.33
IMATRL PRASUN SHR__CHT 19980430 19980506 115138 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Pacific Basin Fund on April 30, 1988, and the
current 3.00% sales charge was paid. As the chart shows, by April 30,
1998, the value of the investment would have been $9,979 - a 0.21%
decrease 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 $7,296 - a 27.04% 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 six months that ended April 30, 1998, the fund had a total
return of -5.11%. During the same period, the Morgan Stanley Capital
International Pacific Index had a return of -8.58%, while the Pacific
region funds average tracked by Lipper Analytical Services returned
- -9.11%. For the 12 months that ended April 30, 1998, the fund had a
total return of -10.00%. Over that same period, the index and the
average had returns of -17.95% and -23.41%, respectively.
Q. ALTHOUGH THE FUND'S RETURNS WERE NEGATIVE, IT PERFORMED BETTER THAN
THE INDEX AND THE AVERAGE. WHY WAS THAT?
A. Negative returns - in U.S. dollar terms - were the norm for most
Pacific Basin funds over the period, as the region struggled to come
to grips with slowing economies, sharply depreciated currencies,
excess production capacity, the shaky balance sheets of many firms and
the diminished flow of investment capital from other parts of the
world. However, relative to the index, the fund was helped by
investing more heavily in Australia, and by having a lighter position
in Japanese stocks - even though Japan remained the fund's largest
country weighting at 70.9% at the end of the period. A greater
emphasis on Australia also helped the fund's performance relative to
the Lipper average, as did having a lower exposure to non-Japanese
Asian stocks. In addition to its geographical allocations, the fund
also was helped by strong stock selection.
Q. CAN YOU DESCRIBE THE INVESTMENT ENVIRONMENT IN THE PACIFIC BASIN
DURING THE PAST SIX MONTHS?
A. Schizophrenic is a good word to describe it. The last two months of
1997 were characterized by rapidly falling stock prices and the
depreciation of many Pacific Basin currencies relative to the U.S.
dollar. In Japan, which has one of the key economies in the region,
the failure of Yamaichi Securities and several other prominent
financial services firms raised the possibility in investors' minds of
widespread bankruptcies. The share prices of many Japanese companies
fell as they began to reflect that possibility. Early in 1998, the
markets entered a radically different phase. The Japanese government,
fearing a "domino effect" of failing companies against the backdrop of
an already stagnant economy, steadied the markets with promises to
pass legislation to help stimulate the economy, and with assurances
that banks would not be allowed to fail. From mid-January through
mid-March, most Pacific Basin stock markets rallied strongly,
regaining much of the ground they'd lost near the end of 1997.
However, the Japanese government failed to follow through on its
promises with any meaningful reform measures. The markets responded by
plunging again in April, reflecting investors' loss of confidence.
Q. CAN YOU EXPLAIN YOUR STRATEGY IN MORE DETAIL?
A. Australia was one of the few Pacific Basin countries offering a
healthy economy and well-managed companies with stocks selling at
reasonable price-to-earnings ratios. Japan was also important to my
overall strategy over the period. The economy in Japan was extremely
sluggish and showed no signs of recovering any time soon, so it was
important to be selective about investments there. In this
environment, I looked for companies with strong business franchises,
shareholder-friendly managements, healthy cash flows and high returns
on capital. Many of the companies that fit this description derived
much of their revenues from exports. These companies can still do well
when the yen declines relative to the U.S. dollar, as it did over the
period. Depreciation of the yen has the effect of increasing
yen-denominated sales even when U.S. dollar-denominated sales remain
flat.
Q. WHAT STOCKS PERFORMED WELL FOR THE FUND?
A. Aiwa is a Japanese stock that helped the fund's performance. The
company, which is extremely competitive in the mini-component stereo
market, benefited from having production facilities in Malaysia and
Indonesia - two countries whose currencies depreciated sharply in the
past year against both the Japanese yen and the U.S. dollar. When the
Malaysian ringgit and the Indonesian rupiah declined against the yen,
Aiwa experienced lower costs for Malaysian and Indonesian labor and
other expenses. On the other hand, much of the company's revenue came
from the U.S. and Europe. Therefore, the currency markets handed Aiwa
a double-barreled advantage. The company's revenue stream benefited
not only from the company's increased market share but also from the
yen's lower value in U.S. dollar terms, while its costs fell
substantially because of the decline of the ringgit and rupiah against
the yen. And because Aiwa shares had been selling at a very reasonable
valuation, the stock's price rose sharply as the implications of this
scenario became clear to investors.
Q. WHAT OTHER STOCKS HELPED THE FUND'S PERFORMANCE?
A. National Australia Bank is representative of the fund's increased
emphasis on Australian equities. The stock performed well because it
was inexpensively valued relative to its global peers and saw
reasonable growth in assets and earnings. There was also some
favorable spillover effect from the consolidation taking place within
the Australian banking industry. Johnson Electric - another helpful
holding - is one of two major Pacific Basin players in the micromotor
market, which mainly serves the toy, home appliance and auto
industries. The company enjoyed higher profits resulting from more
carefully planned capacity expansion and pricing. Investors also
responded favorably to evidence that the company's management is
trying to increase shareholder returns. Johnson recently bought back
one of its convertible bonds, which is positive for shareholders
because it lowers the company's debt and reduces the potential number
of outstanding shares, thereby making less likely a dilution of
earnings per share.
Q. WHAT STOCKS HURT PERFORMANCE?
A. Komatsu was one of the first Japanese companies to consistently
make business decisions based on the goal of maximizing shareholder
returns. Unfortunately, the niche markets that the company serves -
construction equipment, silicon wafers and electronic equipment - have
all been sluggish lately, and Komatsu stock struggled as a result.
Another stock that hurt the fund's performance was Sydney Harbour
Casino Holdings, an Australian stock. The company built a new casino
to take advantage of existing demand for gambling and in anticipation
of the Olympic games scheduled to be held in Sydney in the year 2000.
However, early operations were not as profitable as anticipated, a tax
break expected to benefit high-net-worth gamblers did not materialize
and the stock experienced weakness in sympathy with the shares of a
casino in Melbourne that suffered from management problems.
Q. WHAT'S YOUR OUTLOOK, SHIGEKI?
A. The stability of the Pacific Basin depends to a great extent on the
economies of Japan and China. The Chinese economy is growing, albeit
more slowly than it was a year or two ago. Fortunately, China has a
large domestic economy that makes it more resistant to the stagnation
affecting many other Pacific Basin economies. Japan is still mired in
a bad recession. Production, private consumption, capital spending and
other economic indicators are all very weak. There are some positive
signs, however. Increasingly, Japanese companies are adopting more
rational ways of allocating their capital. For example, many companies
have announced stock buybacks, a tactic that helps existing
shareholders by increasing earnings per share. I am also seeing more
firms divesting themselves of unprofitable business lines. When making
investment decisions for the fund, I look at these and many other
indicators to determine management's commitment to making
fundamentally sound business decisions.
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.
SHIGEKI MAKINO ON THE CHALLENGES FACING THE PACIFIC
BASIN ECONOMIES:
"Many Pacific Basin economies, including those of Malaysia,
South Korea, Indonesia, Thailand, the Philippines and,
most importantly, Japan, have inefficiencies and structural
problems that need immediate attention. These problems
include production overcapacity in many industries, bad
debt in the banking sector, trade barriers that encourage
inefficiency and weak balance sheets on the part of many
firms. These problems are, in part, a byproduct of the desire
in many of these cultures to protect individuals, organizations
and even entire industries from failure - apparently, even
at the expense of those industries' long-term economic
well-being.
"In Japan, for example, many industries - particularly the
financial services sector - are still riddled with many
companies that can be competitive only with infusions of cash
and other help from the government. The convoy system - a
method of transferring resources from healthy companies to
struggling ones - is another mechanism for bailing out weak
firms. The trouble with these transfers is that they subsidize
bad business decisions and allow companies to continue their
unprofitable ways without penalty. At the same time, the
opportunity cost is tremendous because resources are
siphoned away from more profitable endeavors.
"There are signs of progress, however. The International
Monetary Fund (IMF) is working closely with the South
Korean and Thai governments to remedy some of these
problems. The IMF is encouraging these countries to pass
bankruptcy and foreclosure laws that will make it easier to
put marginal companies out of business. Ultimately, this will
lead to a more rational allocation of capital.
"In Japan, the government had pledged to let struggling
companies fail rather than continue to prop them up with
subsidies. However, the events of the last quarter of 1997
- - which included the failure of several prominent finance
companies, plunging equity markets and a further weakening
of the yen against the U.S. dollar - seem to have weakened
the Japanese government's resolve. A reversal of policy has
taken place, and ailing firms are once again being bailed out.
"When the governments of these countries step back and
allow companies to succeed or fail on their own merits, those
companies will out of necessity become more competitive and
responsive to shareholders' concerns, and they will be able to
provide the return on capital demanded by global investors.
These firms need to avail themselves of the techniques
employed so effectively by companies that serve as models of
competition around the globe. Examples of these techniques
include cutting costs, shrinking debt, buying back stock,
raising dividends and using mergers and acquisitions to
bolster core competencies. Certainly, many companies whose
stocks are owned by the fund are models of competition, and I
will try to position the fund to benefit from other opportunities
that arise as the region hones its competitive edge."
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Pacific Basin issuers
FUND NUMBER: 302
TRADING SYMBOL: FPBFX
START DATE: October 1, 1986
SIZE: as of April 30, 1998, more than $214 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 APRIL 30, 1998
UNITED STATES 4.6%
UNITED KINGDOM 1.1%
SINGAPORE 1.8%
ROW: 1, COL: 1, VALUE: 4.6
ROW: 1, COL: 2, VALUE: 2.1
ROW: 1, COL: 3, VALUE: 2.8
ROW: 1, COL: 4, VALUE: 1.0
ROW: 1, COL: 5, VALUE: 3.7
ROW: 1, COL: 6, VALUE: 67.40000000000001
ROW: 1, COL: 7, VALUE: 5.9
ROW: 1, COL: 8, VALUE: 12.5
AUSTRALIA 12.5%
OTHER 0.5%
MALAYSIA 2.7%
HONG KONG 5.9%
JAPAN 70.9%
AS OF OCTOBER 31, 1997
UNITED STATES 6.6%
SINGAPORE 1.9%
AUSTRALIA 9.9%
ROW: 1, COL: 1, VALUE: 6.6
ROW: 1, COL: 2, VALUE: 1.9
ROW: 1, COL: 3, VALUE: 2.2
ROW: 1, COL: 4, VALUE: 2.2
ROW: 1, COL: 5, VALUE: 71.40000000000001
ROW: 1, COL: 6, VALUE: 5.8
ROW: 1, COL: 7, VALUE: 9.9
OTHER 2.2%
HONG KONG 5.8%
MALAYSIA 2.2%
JAPAN 71.4%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
STOCKS AND EQUITY FUTURES 94.9 92.9
BONDS 0.5 0.5
SHORT-TERM INVESTMENTS 4.6 6.6
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
TOYOTA MOTOR CORP. 2.5 2.7
(JAPAN, AUTOS, TIRES, & ACCESSORIES)
CANON, INC. 2.2 1.8
(JAPAN, COMPUTERS & OTHER EQUIPMENT)
HONDA MOTOR CO. LTD. 2.0 1.9
(JAPAN, AUTOS, TIRES, & ACCESSORIES)
NATIONAL AUSTRALIA BANK LTD. 2.0 2.0
(AUSTRALIA, BANKS)
MATUSHITA ELECTRIC INDUSTRIAL CO. LTD. 1.7 2.4
(JAPAN, CONSUMER ELECTRONICS)
MINEBEA CO. LTD. 1.7 1.4
(JAPAN, ELECTRONICS)
ORIX CORP. 1.6 1.7
(JAPAN, LEASING & RENTAL)
SANKYO CO. LTD. 1.6 1.4
(JAPAN, CONSUMER DURABLES)
ROHM CO. LTD. 1.6 1.8
(JAPAN, ELECTRONICS)
SONY CORP. 1.6 1.4
(JAPAN, CONSUMER ELECTRONICS)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
TECHNOLOGY 21.9 19.8
FINANCE 15.6 17.1
DURABLES 12.7 12.3
INDUSTRIAL MACHINERY & EQUIPMENT 8.9 8.8
MEDIA & LEISURE 7.0 6.6
HEALTH 5.9 6.9
BASIC INDUSTRIES 4.7 2.6
SERVICES 4.3 3.6
RETAIL & WHOLESALE 3.5 2.3
CONSTRUCTION & REAL ESTATE 3.3 3.7
PACIFIC BASIN
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 94.5%
SHARES VALUE (NOTE 1)
AUSTRALIA - 12.1%
Australia & New Zealand Banking
Group Ltd. 287,327 $ 1,998,760
Australian Gas Light Co. 61,000 452,451
Brambles Industries Ltd. 79,647 1,636,341
Broken Hill Proprietary Co. Ltd. (The) 111,200 1,084,117
David Jones Ltd. 530,590 603,500
Goodman Fielder Ltd. Ord. 681,037 1,053,483
Harvey Norman Holdings Ltd. 206,394 1,047,679
Howard Smith 134,000 947,749
Leighton Holdings Ltd. 283,000 1,076,025
Macquarie Bank Ltd. 118,300 1,107,203
National Australia Bank Ltd. (a) 303,615 4,301,894
Normandy Mining Ltd. 743,035 825,820
Pioneer International Ltd. 346,200 985,556
Publishing & Broadcasting Ltd. 255,600 1,217,713
QNI Ltd. 1,584,200 926,686
Rio Tinto Ltd. 76,600 1,058,554
Tabcorp Holdings Ltd. 208,000 1,128,833
Westfield Holdings Ltd. 225,000 1,126,038
Westpac Banking Corp. 156,300 1,046,348
Woodside Petroleum Ltd. 280,161 1,826,369
Woolworths Ltd. 183,000 628,008
26,079,127
HONG KONG - 5.9%
Cheung Kong Holdings Ltd. 118,000 784,281
Four Seas Mercantile Holdings Ltd. 1,702,000 757,811
Hong Kong & China Gas Co. Ltd. 1,486,496 2,023,944
Hong Kong & China Gas Co. Ltd.
warrants 9/30/99 (a) 67,568 -
Hutchison Whampoa Ltd. Ord. 102,000 630,548
JCG Holdings Ltd. 1,812,000 830,174
Johnson Electric Holdings Ltd. 600,000 2,032,652
Li & Fung Ltd. 400,000 671,098
National Mutual Asia Ltd. 830,000 664,129
South China Morning Post Holdings 2,368,000 1,421,075
Sun Hung Kai Properties Ltd. 140,000 831,129
Television Broadcast Ltd. Ord. 407,000 1,040,021
Vtech Holdings Ltd. 214,000 751,216
Yue Yuen Industrial Holdings Ltd. 135,000 260,470
12,698,548
JAPAN - 70.4%
Acom Co. Ltd. 55,400 2,915,460
Aderans Co. Ltd. 50,000 1,178,242
Aiful Corp. (a) 6,000 395,709
Aiwa Co. Ltd. 110,000 3,271,221
Akita Bank Ltd. 216,000 944,822
Amway Japan Ltd. 40,000 554,113
Asahi Chemical Industry Co. Ltd. 170,000 593,864
Bank of Tokyo-Mitsubishi Ltd. 100,000 1,233,954
Banyu Pharmaceutical Co. Ltd. 130,000 1,673,631
Benesse Corp. 43,000 1,385,582
Bridgestone Corp. 125,000 2,842,085
Canon Chemicals, Inc. 30,000 334,274
Canon, Inc. 200,000 4,712,968
Charle Co. Ltd. 39,000 325,918
Citizen Watch Co. Ltd. Ord. 180,000 1,206,098
Credit Saison Co. Ltd. 60,000 1,296,443
Daiwa House Industry Co. Ltd. 160,000 1,288,914
Daitec Co. Ltd. 42,700 691,173
Denso Corp. 100,000 1,712,780
Fuji Bank Ltd. 150,000 841,333
SHARES VALUE (NOTE 1)
Fuji Heavy Industries Ltd. 100,000 $ 446,452
Fuji Photo Film Co. Ltd. 70,000 2,482,213
Fujitsu Ltd. 240,000 2,791,643
Fuji Machine Manufacturing Co.
Ltd. Ord. 80,000 2,276,680
Futaba Corp. 22,000 877,847
Glory Ltd. 40,000 668,549
Heiwa Corp. 60,000 630,152
Hirose Electric Co. Ltd. 50,000 2,518,351
Hitachi Ltd. 415,000 2,965,067
Hitachi Maxell Ltd. 100,000 1,897,233
Honda Motor Co. Ltd. 120,000 4,336,533
Hoya Corp. 90,000 2,967,815
Ito-Yokado Co. Ltd. 40,000 2,062,865
Japan Aviation Electronics Industries 100,000 368,906
KOA 80,000 789,008
Komatsu Ltd. Ord. 400,000 1,806,889
Konami Industry Co. Ltd. 63,100 1,391,929
Mabuchi Motor Co. 30,000 1,730,096
Matsushita Electric Industrial Co. Ltd. 230,000 3,670,996
Matsumotokiyoshi Co. Ltd. 15,000 516,093
Meitec Corp. 40,000 1,309,994
Minebea Co. Ltd. 327,000 3,643,591
Minolta Camera Co. Ltd. 220,000 1,424,431
Mirai Industry Co. Ltd. 63,000 637,945
Mitsubishi Electric Co. Ord. 500,000 1,279,880
Misumi Corp. 30,000 528,515
NGK Insulators Ltd. 250,000 2,196,499
Nintendo Co. Ltd. Ord. 18,000 1,645,172
Nippon Oil Co. Ltd. 350,000 1,177,866
Nippon Telegraph & Telephone
Corp. Ord. 165 1,440,994
Nitto Denko Corp. 110,000 1,672,878
Nidec Corp. 30,000 1,603,614
Nomura Securities Co. Ltd. 205,000 2,492,565
Nichicon Corp. 121,000 1,311,801
Okumura Gumi 150,000 553,360
Omron Corp. 200,000 3,124,412
Orix Corp. 50,200 3,458,159
Nippon System Development Co. 15,000 372,671
Nichiei Co. Ltd. 29,700 2,303,106
Paris Miki, Inc. 35,200 564,472
Riso Kagaku Corp. 40,000 2,080,934
Rohm Co. Ltd. 30,000 3,374,365
Sakura Bank Ltd. 350,000 1,198,946
Sankyo Co. Ltd. 140,000 3,457,180
Sekisui Chemical Co. Ltd. 150,000 821,005
Senshukai Co. Ltd. 80,000 394,504
Sharp Corp. 100,000 782,985
Sankyo Co. Ltd. (Gunma) 55,000 877,847
Shimano, Inc. 130,000 2,867,683
Shin-Etsu Chemical Co. Ltd. 120,000 2,330,886
Sony Corp. 39,500 3,355,663
Shohkoh Fund & Co. Ltd. 6,000 1,901,750
Sony Music Entertainment Japan, Inc. 43,500 1,696,443
Sumitomo Bakelite Co. Ltd. 200,000 1,382,270
Sumitomo Special Metals Co. 25,000 559,006
Sumitomo Metal Industries Ltd. 625,000 1,030,491
TDK Corp. 36,000 2,835,008
Takeda Chemical Industries Ltd. 115,000 3,272,727
Takefuji Corp. 50,000 2,616,224
Takefuji Corp. (c) 20,000 1,046,490
Terumo Corp. 100,000 1,459,063
THK Co. Ltd. 151,000 1,443,779
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Toppan Forms Co. Ltd. 60,000 $ 718,238
Toyota Motor Corp. 210,000 5,454,545
Tokyo Electron Ltd. 40,000 1,565,970
Tokyo Seimitsu Co. Ltd. 40,000 1,171,466
Uni Charm Corp. Ord. 60,000 2,258,611
Wako Electric Co. Ltd. 60,000 632,411
151,922,316
MALAYSIA - 2.7%
Amway Holding BHD 518,000 1,020,040
Berjaya Sports Toto BHD 247,000 585,653
C.I. Holdings BHD 85,000 61,715
Malaysia International Shipping BHD
(For. Reg.) 570,000 992,632
Oriental Holdings BHD 182,720 381,840
RJ Reynolds BHD 31,000 49,417
Resorts World BHD 500,000 964,501
Rothmans of Pall Mall Malaysia BHD 72,000 593,168
Petronas Gas BHD 200,000 482,251
Tanjong PLC 310,000 705,961
5,837,178
NEW ZEALAND - 0.2%
Telecom Corp. of New Zealand
(installment receipts) (d) 193,800 518,340
PHILIPPINES - 0.2%
Oriental Petroleum & Mineral Corp.
Class B (a) 7,771,657 1,255
QueenBee Resources Corp.
warrants 3/25/03 (a) 976,000 442,534
443,789
SINGAPORE - 1.8%
City Developments Ltd. 120,000 519,103
Clipsal Industries Ltd. 128,000 184,320
Datacraft Asia Ltd. 386,000 1,296,960
Elec & Eltek International Co. Ltd. 160,700 932,060
GP Batteries International Ltd. 112,000 309,795
Singapore Press Holdings 44,660 493,559
Want Want Holdings Ltd. 109,400 131,280
3,867,077
TAIWAN - 0.1%
Taiwan Semiconductor Manufacturing
Co. sponsored ADR 10,800 265,275
UNITED KINGDOM - 1.1%
HSBC Holdings PLC 84,013 2,470,493
TOTAL COMMON STOCKS
(Cost $201,360,355) 204,102,143
NONCONVERTIBLE PREFERRED STOCKS - 0.4%
AUSTRALIA - 0.4%
Sydney Harbour Casino Holdings Ltd. (a)
(Cost $1,862,607) 1,219,400 863,878
CONVERTIBLE BONDS - 0.5%
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (NOTE 1)
JAPAN - 0.5%
MBL International Finance of
Bermuda 3%, 11/30/02
(Cost $1,126,575) Aa2 $ 1,080,000 $ 1,104,300
CASH EQUIVALENTS - 4.6%
SHARES
Taxable Central Cash Fund (b)
(Cost $9,828,217) 9,828,217 9,828,217
TOTAL INVESTMENTS IN SECURITIES - 100%
(Cost $214,177,754) $ 215,898,538
CURRENCY ABBREVIATIONS
NZD - New Zealand dollar
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.51%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
3. 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 $1,046,490 or
0.5% of net assets.
4. Purchased on an installment basis. Market value reflects only those
payments made through 3/31/98. The remaining installment aggregating
NZD 804,270 is due 3/31/99
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $66,507,445 and $70,676,935 respectively. The market value
of futures contracts opened and closed during the period amounted to
$2,259,519 and $4,441,389, respectively.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Basic Industries 4.7%
Cash Equivalents 4.6
Construction & Real Estate 3.3
Durables 12.7
Energy 1.6
Finance 15.6
Health 5.9
Industrial Machinery & Equipment 8.9
Media & Leisure 7.0
Nondurables 1.9
Precious Metals 0.4
Retail & Wholesale 3.5
Services 4.3
Technology 21.9
Transportation 1.7
Utilities 2.0
100.0%
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $214,207,461. Net unrealized appreciation
aggregated $1,691,077, of which $30,204,390 related to appreciated
investment securities and $28,513,313 related to depreciated
investment securities.
At October 31, 1997, the fund had a capital loss carryforward of
approximately $62,709,000 of which $10,408,000, $17,259,000, and
$35,042,000 will expire on October 31, 2003, 2004 and 2005
respectively.
PACIFIC BASIN
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 215,898,538
(COST $214,177,754) -
SEE ACCOMPANYING SCHEDULE
CASH 1,009
RECEIVABLE FOR INVESTMENTS SOLD 23,732
RECEIVABLE FOR FUND SHARES SOLD 397,605
DIVIDENDS RECEIVABLE 601,796
INTEREST RECEIVABLE 62,245
REDEMPTION FEES RECEIVABLE 47
TOTAL ASSETS 216,984,972
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 1,542,529
PAYABLE FOR FUND SHARES REDEEMED 625,720
ACCRUED MANAGEMENT FEE 203,564
OTHER PAYABLES AND 161,045
ACCRUED EXPENSES
TOTAL LIABILITIES 2,532,858
NET ASSETS $ 214,452,114
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 296,853,724
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME (4,851,201)
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (79,256,395)
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 1,705,986
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS, FOR 17,196,297 $ 214,452,114
SHARES OUTSTANDING
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE ($214,452,114 (DIVIDED BY) 17,196,297 SHARES) $12.47
MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $12.47) $12.86
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 1,468,870
DIVIDENDS
INTEREST 377,252
1,846,122
LESS FOREIGN TAXES WITHHELD (130,389)
TOTAL INCOME 1,715,733
EXPENSES
MANAGEMENT FEE $ 814,991
BASIC FEE
PERFORMANCE ADJUSTMENT 366,203
TRANSFER AGENT FEES 512,435
ACCOUNTING FEES AND EXPENSES 84,505
CUSTODIAN FEES AND EXPENSES 82,654
AUDIT 21,141
LEGAL 681
MISCELLANEOUS 1,594
TOTAL EXPENSES BEFORE REDUCTIONS 1,884,204
EXPENSE REDUCTIONS (3,701) 1,880,503
NET INVESTMENT INCOME (LOSS) (164,770)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (15,999,373)
FOREIGN CURRENCY TRANSACTIONS (190,183)
FUTURES CONTRACTS (329,823) (16,519,379)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 3,814,362
ASSETS AND LIABILITIES IN (11,116)
FOREIGN CURRENCIES
FUTURES CONTRACTS 296,343 4,099,589
NET GAIN (LOSS) (12,419,790)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (12,584,560)
OTHER INFORMATION $ 89,806
SALES CHARGES PAID TO FDC
SALES CHARGES - DEALERS' PORTION $ 30
DEFERRED SALES CHARGES $ 9,997
WITHHELD BY FDC
EXPENSE REDUCTIONS $ 793
DIRECTED BROKERAGE ARRANGEMENTS
TRANSFER AGENT CREDITS 2,908
$ 3,701
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
OPERATIONS $ (164,770) $ (123,748)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) (16,519,379) (32,319,686)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 4,099,589 9,562,140
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (12,584,560) (22,881,294)
DISTRIBUTIONS TO SHAREHOLDERS - (363,575)
FROM NET INVESTMENT INCOME
IN EXCESS OF NET INVESTMENT INCOME (4,350,839) (2,160,117)
TOTAL DISTRIBUTIONS (4,350,839) (2,523,692)
SHARE TRANSACTIONS 38,905,012 95,487,816
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 4,301,574 2,485,317
COST OF SHARES REDEEMED (51,509,933) (405,452,612)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (8,303,347) (307,479,479)
REDEMPTION FEES 173,434 252,002
TOTAL INCREASE (DECREASE) IN NET ASSETS (25,065,312) (332,632,463)
NET ASSETS
BEGINNING OF PERIOD 239,517,426 572,149,889
END OF PERIOD (INCLUDING DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME OF
$4,851,201 AND $335,592, $ 214,452,114 $ 239,517,426
RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 3,086,573 6,377,029
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 352,299 168,725
REDEEMED (4,109,824) (27,740,166)
NET INCREASE (DECREASE) (670,952) (21,194,412)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996 1995 1994 1993
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.41 $ 14.65 $ 14.88 $ 19.96 $ 17.48 $ 12.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.01) D (.01) D .05 D .07 D .10 .20
NET REALIZED AND UNREALIZED GAIN (LOSS) (.69) (1.16) (.29) (3.12) 2.78 5.39
TOTAL FROM INVESTMENT OPERATIONS (.70) (1.17) (.24) (3.05) 2.88 5.59
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME - (.01) - - (.01) (.11)
IN EXCESS OF NET INVESTMENT INCOME (.25) (.07) - (.02) (.11) -
FROM NET REALIZED GAIN - - - (2.02) (.28) -
TOTAL DISTRIBUTIONS (.25) (.08) - (2.04) (.40) (.11)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .01 .01 .01 - -
NET ASSET VALUE, END OF PERIOD $ 12.47 $ 13.41 $ 14.65 $ 14.88 $ 19.96 $ 17.48
TOTAL RETURN B, C (5.11)% (7.97)% (1.55)% (15.87)% 16.88% 47.06%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 214,452 $ 239,517 $ 572,150 $ 317,635 $ 553,532 $ 493,533
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.74% A 1.32% 1.26% 1.32% F 1.54% 1.59%
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER
EXPENSE REDUCTIONS 1.73% A, G 1.31% G 1.24% G 1.32% 1.54% 1.59%
RATIO OF NET INVESTMENT INCOME (LOSS) TO
AVERAGE NET ASSETS (.15)% A (.04)% .30% .44% .04% .15%
PORTFOLIO TURNOVER RATE 64% A 42% 85% 65% 88% 77%
AVERAGE COMMISSION RATE E $ .0137 $ .0204 $ .0151
A ANNUALIZED. B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS). C
TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FOR FISCAL YEARS
BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISSION
RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
F FMR
AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER. G FMR OR THE FUND
HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED
A
PORTION OF THE FUND'S EXPENSES (SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS).
</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 five year and life of fund total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
APRIL 30, 1998 MONTHS YEAR YEARS FUND
FIDELITY SOUTHEAST ASIA -5.39% -35.00% -3.68% -4.16%
FIDELITY SOUTHEAST ASIA -8.23% -36.95% -6.57% -7.04%
(INCL. 3.00% SALES CHARGE)
MSCI FAR EAST EX-JAPAN FREE -11.87% -41.50% -7.21% -4.10%
PACIFIC EX-JAPAN -10.92% -34.79% -13.65% N/A
FUNDS AVERAGE
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on 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 ex-Japan Free Index - a market
capitalization weighted index of over 450 stocks traded in eight Asian
markets, excluding Japan. To measure how the fund's performance
stacked up against its peers, you can compare it to the Pacific
ex-Japan funds average, which reflects the performance of mutual funds
with similar objectives tracked by Lipper Analytical Services, Inc.
The past six months average represents a peer group of 82 mutual
funds. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
APRIL 30, 1998 YEAR YEARS FUND
FIDELITY SOUTHEAST ASIA -35.00% -0.75% -0.84%
FIDELITY SOUTHEAST ASIA -36.95% -1.35% -1.44%
(INCL. 3.00% SALES CHARGE)
MSCI FAR EAST EX-JAPAN FREE -41.50% -1.49% -0.83%
PACIFIC EX-JAPAN -34.79% -3.00% 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
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
IMATRL PRASUN SHR__CHT 19980430 19980506 115545 R00000000000064
$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 April 30, 1998, the value of the investment would have
been $9,296 - a 7.04% decrease on the initial investment. For
comparison, look at how the Morgan Stanley Capital International AC
Far East ex-Japan Free Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 would have
been $9,590 - a 4.10% 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 six months that ended April 30, 1998, the fund's return was
- -5.39%. During the same period, the Morgan Stanley Capital
International (MSCI) Combined Far East Ex-Japan Free Index had a
return of -11.87%, while the Pacific ex-Japan funds average tracked by
Lipper Analytical Services returned -10.92%. For the 12 months that
ended April 30, 1998, the fund's return was -35.00%. Over that same
period, the index and the average had returns of -41.50% and -34.79%,
respectively.
Q. CAN YOU SUMMARIZE THE INVESTMENT CLIMATE OVER THE PERIOD?
A. Both the equity markets in Southeast Asia and the region's
currencies were extremely volatile over the period. For example, the
Indonesian rupiah lost over 50% of its value against the U.S. dollar
since the end of October 1997, while the South Korean won gave up
almost 30%. Depreciating currencies in many of the countries prompted
their central banks to raise interest rates substantially in an
attempt to stem the declines and attract investment capital. Higher
interest rates make borrowing more expensive and therefore tend to
slow an economy - which is problematic because the pendulum has swung
rapidly in most of these countries from strong growth to negligible
growth or in some cases a contracting economy. Moreover, rising
interest rates generally are not good for equity markets because they
encourage some investors to transfer funds out of equities. A cheaper
currency also raises the costs and lowers the earnings of companies
that rely on importing goods and services from countries with stronger
currencies. Hong Kong, an exception, continued to maintain a pegged or
stable exchange rate for its currency against the U.S. dollar in spite
of continuing pressure on this arrangement. All in all, it was a very
challenging time for investors in the region's markets.
Q. THE FUND'S RETURN - ALTHOUGH NEGATIVE - BESTED THOSE OF THE INDEX
AND THE AVERAGE BY A FAIRLY WIDE MARGIN OVER THE PAST SIX MONTHS. CAN
YOU EXPLAIN WHY?
A. Negative returns were the norm for most Southeast Asian funds over
the period - especially in U.S. dollar terms. However, some countries
offered better investment opportunities than others. I tried to
emphasize countries that had relatively stable currencies such as Hong
Kong, Taiwan and Singapore. For example, I increased the fund's
holdings in Taiwan from 11.9% to 15.1% over the period, mainly by
purchasing technology stocks. I also increased the fund's holdings of
Korean stocks from 2.2% to 7.2% because it seemed to me that after the
Korean won depreciated so much earlier in the period, there were
bargains to be found in that country. Within the countries I've
mentioned, I looked for companies with good cash flows, low
debt-to-equity ratios, strong managements and healthy export
businesses. Weaker currencies help exporters to sell their goods and
services abroad more competitively. With respect to the index and the
average, the favorable performance of individual issues in the
countries I mentioned enabled the fund to post a better return.
Q. DO YOU CONSIDER INDUSTRY WEIGHTINGS IN YOUR STRATEGY?
A. Not really. I use a bottom-up investment approach, which emphasizes
careful analysis of the basic business prospects of individual
companies. To some extent, I look at country weightings, too. But I
don't give much thought to industry weightings.
Q. WHAT HOLDINGS PERFORMED WELL FOR THE FUND?
A. Hong Kong Telecommunications did well. Utility stocks in general
tend to perform well during periods of market volatility because they
are considered to be safer than stocks in other industries and are
therefore purchased by investors as defensive investments. In
addition, the stock benefited from speculation that the company might
attempt to establish a stronger presence in mainland China. China, of
course, represents a huge potential market for the company's services.
HSBC Holdings also did well. This banking group has a highly respected
management team and a huge presence in Hong Kong and other Southeast
Asian countries, as well as good growth in developed markets such as
the United States and the United Kingdom. This international exposure
was attractive to investors because it was perceived to buffer the
company's earnings from the recent volatility in the Pacific Basin.
Finally, Taiwan Semiconductor helped the fund's performance. This
extremely competitive company manufactures the advanced integrated
circuits used in personal computers and other products. The stock
responded well to healthy earnings reported by the company during the
period.
Q. WHAT HOLDINGS WERE DISAPPOINTING?
A. Gulf Indonesia Resources was a drag on the fund's performance. The
twin negatives of falling oil prices and volatility in the Indonesian
market hurt this oil exploration company's share price. However, this
is a well-managed company with potentially substantial oil reserves.
It has been operating in Indonesia for more than 30 years and has
weathered other rough periods, so the fund still holds this stock.
Another holding that hurt the fund's performance was Sun Hung Kai
Properties, which was a victim of the collapse in Hong Kong property
values. This company, too, is very well managed and has a strong
balance sheet. It is also a large and well-capitalized firm, with the
stock comprising about 3.5% of the MSCI Combined Far East Ex-Japan
Free Index. The stock remains one of the fund's top 10 holdings.
Q. WHAT'S YOUR OUTLOOK, ALLAN?
A. It will take some time for the countries in Southeast Asia to work
themselves out of their current problems. It is important to realize
that these problems are structural in nature and have developed over a
number of years. They will not disappear overnight. Many marginal
businesses have been protected by import tariffs and other
protectionist policies that have made it unprofitable for competitors
from other countries to sell their goods and services in the region.
Moreover, formerly stable exchange rates encouraged excessive
borrowing of U.S. dollars and overinvestment in marginally profitable
ventures. The International Monetary Fund (IMF) is taking steps to
improve the situation. For example, the IMF is working with the Thai
government to pass new bankruptcy laws. While many unprofitable
companies will go out of business, the new laws will ultimately lead
to a more rational allocation of capital. In addition to the economic
problems I've mentioned, some countries like Indonesia also have
political instability that is an ongoing disincentive to investment.
Until these problems are addressed, the fund's defensive strategy -
emphasizing investment in the region's more stable countries and in
the stocks of companies with strong managements, healthy cash flows,
low debt and export-driven revenues - seems a prudent way to approach
these markets.
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.
ALLAN LIU ON THE FACTORS CURRENTLY AFFECTING THE
HONG KONG DOLLAR-U.S. DOLLAR EXCHANGE RATE:
"In the short run, I think that the Hong Kong monetary
authorities will probably be able to maintain the pegged -
that is, stable - exchange rate between the Hong Kong
dollar and the U.S. dollar. Stable exchange rates enable
institutions and individuals to invest capital in Hong
Kong without worrying about the adverse effects of
currency depreciation.
"Heightened investor cautiousness about Hong Kong is
being reflected in sharply higher interest rates and
significantly lower asset prices. Hong Kong stock prices, for
example, have declined 38% from the peak registered in
August 1997. Real estate prices have fallen by over 30%. The
travel and tourism industry - a vital part of the Hong Kong
economy - has seen tourist arrivals drop over 20% from
what it was previously.
"While these developments are painful in the short term,
they have the effect of wringing the excesses out of the
system. Once this process is completed and asset prices are
down at sufficiently attractive levels, the flow of investment
capital into Hong Kong will pick up again, and interest rates
will be able to ease back down. Lower interest rates will help
both the equity and real estate markets get back on track.
"However, further shocks to the system could put more
short-term downward pressure on the value of the Hong
Kong dollar. One unknown variable is the Chinese economy.
While the economy in China is still growing, it is slowing
down, and some observers expect the Chinese to devalue
their currency - the yuan, sometimes called the renminbi.
Yet another devaluation in the Pacific Basin would add to
the atmosphere of uncertainty in the region and put further
pressure on the Hong Kong dollar-U.S. dollar link. However,
a yuan devaluation also would have some beneficial
consequences for Hong Kong. Many Hong Kong companies
have manufacturing facilities in China, and these companies
would see the costs of operating those facilities drop
overnight. In addition, Hong Kong provides banking,
shipping and other services to Chinese companies. Demand
for those services would rise if there were an increase in
Chinese exports due to a devaluation of the yuan.
"The situation is quite complex and fluid. What we do know
is that the Hong Kong government appears to be strongly
committed to maintaining the current exchange rate for
the Hong Kong and United States currencies. Aside from
the big-picture economic considerations I've mentioned,
there are many well-managed companies in Hong Kong that
are generating healthy profits even in the current uncertain
environment. Because of these factors, there is no doubt in
my mind that Hong Kong merits the heaviest weighting of
all the countries in which the fund has investments."
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of Southeast Asian
issuers; the fund does not anticipate investing in
Japan
FUND NUMBER: 351
TRADING SYMBOL: FSEAX
START DATE: April 19, 1993
SIZE: as of April 30, 1998, more than
$255 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 APRIL 30, 1998
UNITED STATES 3.2%
CHINA 3.3%
UNITED KINGDOM 5.9%
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
THAILAND 3.8%
HONG KONG 36.6%
TAIWAN 15.1%
SINGAPORE 12.9%
OTHER 3.2%
KOREA 7.2%
MALAYSIA 8.8%
AS OF OCTOBER 31, 1997
UNITED STATES 9.2%
ROW: 1, COL: 1, VALUE: 7.0
ROW: 1, COL: 2, VALUE: 39.3
ROW: 1, COL: 3, VALUE: 4.4
ROW: 1, COL: 4, VALUE: 6.0
ROW: 1, COL: 5, VALUE: 4.8
ROW: 1, COL: 6, VALUE: 13.8
ROW: 1, COL: 7, VALUE: 11.9
ROW: 1, COL: 8, VALUE: 3.6
ROW: 1, COL: 9, VALUE: 9.199999999999999
CHINA 7.0%
UNITED KINGDOM 3.6%
TAIWAN 11.9%
HONG KONG 39.3%
SINGAPORE 13.8%
OTHER 4.8%
MALAYSIA 6.0%
INDONESIA 4.4%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
STOCKS 96.8 90.7
BONDS 0.0 0.1
SHORT-TERM INVESTMENTS 3.2 9.2
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
HUTCHISON WHAMPOA LTD. ORD. 7.5 7.9
(HONG KONG, ELECTRICAL EQUIPMENT)
HONG KONG TELECOMMUNICATIONS LTD. 6.8 6.2
(HONG KONG, TELEPHONE SERVICES)
HSBC HOLDINGS PLC 5.9 3.6
(UNITED KINGDOM, BANKS)
CHEUNG KONG HOLDINGS LTD. 4.3 4.2
(HONG KONG, REAL ESTATE)
SUN HUNG KAI PROPERTIES LTD. 3.9 5.0
(HONG KONG, REAL ESTATE)
HANG SENG BANK LTD. 2.9 3.4
(HONG KONG, BANKS)
TAIWAN SEMICONDUCTOR 2.3 0.9
MANUFACTURING CO. LTD.
(TAIWAN, ELECTRONICS)
CLP HOLDINGS LTD. 1.9 0.0
(HONG KONG, ELECTRIC UTILITY)
HONG KONG & CHINA GAS CO. LTD. 1.8 2.0
(HONG KONG, GAS)
COMPAL ELECTRONICS, INC. 1.7 0.7
(TAIWAN, COMPUTERS & OFFICE
EQUIPMENT)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
TECHNOLOGY 19.0 15.0
UTILITIES 16.4 14.8
FINANCE 16.3 10.9
CONSTRUCTION & REAL ESTATE 12.1 12.6
INDUSTRIAL MACHINERY & EQUIPMENT 10.3 10.9
MEDIA & LEISURE 4.9 4.4
TRANSPORTATION 3.4 4.0
ENERGY 3.3 4.9
BASIC INDUSTRIES 2.6 3.4
DURABLES 2.6 0.8
SOUTHEAST ASIA
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 96.8%
SHARES VALUE (NOTE 1)
CHINA (PEOPLES REPUBLIC) - 3.3%
First Tractor Co. Ltd. Class H 3,798,000 $ 2,119,940
Guangdong Kelon Electric Holding
Class H 1,032,000 1,058,837
Harbin Power Equipment Co. Ltd.
Class H 6,970,000 953,501
Huaneng Power International, Inc.
Class H (a) 542,000 304,278
Qingling Motors Co. Ltd. Class H 2,808,000 1,214,015
Zhenhai Refining & Chemical Co.
Class H 5,740,000 1,574,175
Zhejiang Expressway Co. Class H 4,886,000 1,179,173
8,403,919
HONG KONG - 36.6%
Chu Kong Shipping Development
Co. Ltd. (a) 1,472,000 227,967
Cheung Kong Holdings Ltd. 1,665,000 11,066,335
China Aerospace International
Holdings Ltd. 2,140,000 469,510
China Telecom (Hong Kong) Ltd. 1,794,000 3,464,662
China Resources Beijing Land Ltd. 684,000 361,928
China Overseas Land &
Investment Ltd. (a) 2,048,000 470,470
China Resources Enterprise Ltd. 384,000 659,121
China Everbright-IHD Pacific Ltd. (a) 668,000 452,604
CLP Holdings Ltd. 1,010,000 4,848,938
Cosco Pacific Ltd. 964,000 653,159
First Pacific Co. Ltd. (a) 1,110,000 533,619
Guangnan Holdings 714,000 460,734
Guangdong Brewery Holdings Ltd. 1,720,000 244,176
Hang Seng Bank Ltd. 892,000 7,511,518
Hong Kong & China Gas Co. Ltd. 3,330,360 4,534,465
Hong Kong & China Gas Co. Ltd.
warrants 9/30/99 (a) 151,380 -
Hong Kong Telecommunications Ltd. 9,022,000 17,423,737
Hong Kong Electric Holdings Ord. 640,000 1,965,800
Hutchison Whampoa Ltd. Ord. 3,094,000 19,126,618
Johnson Electric Holdings Ltd. 40,000 135,510
Ng Fung Hong Ltd. 730,000 659,483
New World Development Co. Ltd. 1,267,100 3,605,802
Shanghai Industrial Holdings Ltd.
Class H 571,000 1,956,514
Sun Hung Kai Properties Ltd. 1,696,000 10,068,529
Swire Pacific Ltd. Class A 130,000 649,287
Television Broadcast Ltd. Ord. 572,000 1,461,651
Tianjin Development Holdings Ltd. 482,000 550,519
93,562,656
INDONESIA - 2.0%
PT Astra Argo Niaga Lestari Tbk (a) 1,661,000 721,497
PT Telekomunikasi Indonesia Persero,
Series B, sponsored ADR 78,000 624,000
Gulf Indonesia Resources Ltd. 247,500 3,805,313
5,150,810
KOREA (SOUTH) - 7.2%
Hyundai Engineering & Construction
Co. Ltd. (a) 8 40
Hyundai Engineering & Construction Co.
rights 5/6/98 (a) 1 -
Hyundai Mipo Dockyard Co. Ltd. 41,200 554,883
Korea Electric Power Corp. 51,800 705,395
Korea Fine Chemical Co. Ltd. 29,200 699,140
SHARES VALUE (NOTE 1)
Lg Electronics, Inc. 84,900 $ 1,010,034
Medison Co. Ltd. 56,800 463,240
Mirae Corp. 230,000 671,156
Mirae Corp rights 5/20/98 (a) 47,214 28,261
Samsung Electronics Co. Ltd. (vtg.) 73,700 4,080,659
Samsung Electronics Co. Ltd.
rights 6/1/98 (a) 5,863 113,180
Samsung Co. Ltd. sponsored GDR (a) 21 16
Seondo Electric Co. Ltd. 176,000 2,870,782
Seong An Co. Ltd. 166,580 1,371,029
S1 Corp. 14,175 2,015,152
Sewoo Polymer Co. Ltd. 57,300 793,154
Samsung Display Devices Ltd.
rights 5/11/98 (a) 680 11,804
Suheung Capsule Co. Ltd. 54,000 729,293
Sindo Ricoh Co. 8,000 281,332
Samsung Fire & Marine Insurance 5,624 1,662,162
Youngone Corp. 13,600 310,363
18,371,075
MALAYSIA - 8.8%
Berjaya Sports Toto BHD 1,130,833 2,681,279
Commerce Asset Holding BHD 700,000 525,117
Gamuda BHD 103,000 116,453
Genting BHD 428,000 1,421,889
Konsortium Perkapalan BHD 538,000 435,301
Magnum Corp. BHD 200,000 133,958
Malaysia International Shipping BHD
(For. Reg.) 1,390,000 2,420,630
Malakoff BHD 315,000 827,060
Malaysian Resources Corp. BHD 387,000 164,857
Perusahaan Otomobil Nasional BHD 338,000 418,368
Resorts World BHD 935,000 1,803,617
Rothmans of Pall Mall Malaysia BHD 287,000 2,364,434
Petronas Gas BHD 515,000 1,241,795
Selangor Properties BHD 565,000 242,197
Sungei Way Holdings BHD 705,000 203,992
Tanjong PLC 493,000 1,122,706
Technology Resources Industries BHD 762,000 783,946
Tenega Nasional BHD 1,073,000 2,141,688
Time Engineering BHD 330,000 114,052
Telekom Malaysia BHD 620,000 1,860,415
United Engineers BHD 1,361,000 1,090,259
YTL Corp. BHD 274,000 425,774
22,539,787
PHILIPPINES - 1.2%
Manila Electric Co. Class B 202,851 574,535
Music Corp. (a) 4,176,400 1,245,138
Petron Corp. 1,848,000 270,887
Philippine Long Distance Telephone 38,000 1,014,907
3,105,467
SINGAPORE - 12.9%
City Developments Ltd. 165,000 713,767
Creative Technology Ltd. (a) 48,200 988,100
Creative Technology Ltd. (SGD) (a) 88,000 1,828,355
Datacraft Asia Ltd. 847,000 2,845,920
DBS Land Ltd. 215,000 324,503
Development Bank of Singapore Ltd.
(For. Reg.) 297,000 1,969,372
Development Bank of Singapore Class A
(For. Reg.)(a) 100,800 655,662
Elec & Eltek International Co. Ltd. 23,400 135,720
Flextech Holdings Ltd. 947,000 771,475
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SINGAPORE - CONTINUED
Flextech Holdings Ltd.
warrants 10/22/02 (a) 284,100 $ 61,000
FHTK Holdings Ltd. 5,616,000 1,170,369
JIT Holdings Ltd. (a) 2,999,000 2,443,139
Natsteel Ltd. 1,177,000 1,546,044
Overseas Union Bank Ltd. (For. Reg.) 85,000 322,071
Overseas Chinese Banking Corp. 477,000 2,515,283
Rothmans Industries Ltd. 132,000 658,541
St. Computer Systems & Services Ltd. 956,000 1,310,085
Sembawang Shipyard Ltd. 26,000 51,885
Singapore International Airlines Ltd. 198,000 1,287,907
Singapore Press Holdings 251,196 2,776,085
Singapore Telecommunications Ltd. 812,000 1,394,784
Singapore Technologies
Engineering Ltd. (a) 1,906,175 1,637,132
United Overseas Bank Ltd. (For. Reg.) 659,500 3,123,619
Venture Manufacturing Singapore Ltd. 684,000 2,483,739
33,014,557
TAIWAN - 15.1%
Asustek Computer, Inc. (a) 209,000 4,259,287
Aurora Corp. (a) 351,000 681,254
Bank Sinopac (a) 1,060,000 771,505
CTCI Corp. 844,000 1,202,990
Compal Electronics, Inc. (a) 1,026,600 4,467,607
Cathay Life Insurance Co. Ltd. 647,000 2,590,001
Chuntex Electronic Co. Ltd. (a) 320,000 587,120
China Development Corp. (a) 718,500 1,950,166
D-Link Corp. 1,036,000 2,654,839
Everest Textile Co. Ltd. (a) 1,708,000 2,149,600
Far Eastern Silo & Shipping Corp. 2,634,000 2,492,253
Orient Semiconductor Electronics Ltd. (a) 232,000 506,573
Phoenixtec Power Company (a) 705,000 2,298,367
Siliconware Precision Industries (a) 919,000 2,229,602
Taiwan Mask Corp. (a) 891,000 3,458,673
Taiwan Semiconductor Manufacturing
Co. Ltd. (a) 1,354,500 5,853,500
Tatung Co. 544,000 503,177
38,656,514
THAILAND - 3.8%
Advanced Information Services
(For. Reg.) 179,400 1,256,498
Bangkok Bank Public Co. Ltd.
(For. Reg.) 416,100 1,025,409
BEC World PCL (For. Reg.) 38,100 201,619
Cogeneration Public Company
Limited (For. Reg.) 306,200 182,687
Eastern Water Resources Development &
Management PCL (For. Reg.) 262,100 305,953
International Broadcasting Corp.
(For. Reg.) (a) 670,300 834,615
Malee Sampran Factory PCL (For. Reg.) (a) 743,900 501,722
National Finance & Securities PCL
(For. Reg.) 1,566,200 700,829
National Petrochemical Co. (a) 556,900 469,501
Nava Finance & SEC PCL (For. Reg.) 960,600 137,051
PTT Exploration & Production (For. Reg.) 109,000 1,153,619
Siam Cement PCL (For. Reg.) 38,800 549,541
Shinawatra Computer & Communication
PCL (For. Reg.) 168,800 1,059,652
SHARES VALUE (NOTE 1)
Thai Farmers Bank PCL 494,000 $ 1,134,086
Thai Union Frozen Products PCL
(For. Reg.) 70,900 275,875
9,788,657
UNITED KINGDOM - 5.9%
HSBC Holdings PLC 509,465 14,981,368
TOTAL COMMON STOCKS
(Cost $278,770,224) 247,574,810
NONCONVERTIBLE BONDS - 0.0%
MOODY'S PRINCIPAL
RATINGS AMOUNT
SINGAPORE - 0.0%
Flextech Holdings Ltd. 2 1/4%,
1/1/02 (Cost $151,850) - SGD 236,750 79,988
CASH EQUIVALENTS - 3.2%
SHARES
Taxable Central Cash Fund (b)
(Cost $8,115,178) 8,115,178 8,115,178
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $287,037,252) $ 255,769,976
CURRENCY ABBREVIATIONS
SGD - Singapore dollar
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.51%. 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 $142,029,301 and $119,563,255, respectively.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.2%
Basic Industries 2.6
Cash Equivalents 3.2
Construction & Real Estate 12.1
Durables 2.6
Energy 3.3
Finance 16.3
Health 0.5
Holding Companies 1.2
Industrial Machinery & Equipment 10.3
Media & Leisure 4.9
Nondurables 2.1
Retail & Wholesale 1.1
Services 0.8
Technology 19.0
Transportation 3.4
Utilities 16.4
100.0%
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $287,336,714. Net unrealized depreciation
aggregated $31,566,738, of which $16,425,859 related to appreciated
investment securities and $47,992,597 related to depreciated
investment securities.
At October 31, 1997, the fund had a capital loss carryforward of
approximately $32,652,000 all of which will expire on October 31,
2005.
SOUTHEAST ASIA
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 255,769,976
(COST $287,037,252) -
SEE ACCOMPANYING SCHEDULE
FOREIGN CURRENCY HELD AT VALUE 1,250,745
(COST $1,248,312)
RECEIVABLE FOR INVESTMENTS SOLD 1,176,114
RECEIVABLE FOR FUND SHARES SOLD 378,826
DIVIDENDS RECEIVABLE 399,329
INTEREST RECEIVABLE 46,877
REDEMPTION FEES RECEIVABLE 216
TOTAL ASSETS 259,022,083
LIABILITIES
PAYABLE TO CUSTODIAN BANK $ 108,233
PAYABLE FOR INVESTMENTS PURCHASED 1,924,314
PAYABLE FOR FUND SHARES REDEEMED 697,322
ACCRUED MANAGEMENT FEE 249,443
OTHER PAYABLES AND 463,065
ACCRUED EXPENSES
TOTAL LIABILITIES 3,442,377
NET ASSETS $ 255,579,706
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 377,562,472
DISTRIBUTIONS IN EXCESS OF (332,186)
NET INVESTMENT INCOME
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN (90,375,028)
CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS (31,275,552)
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS, FOR 28,426,421 SHARES OUTSTANDING $ 255,579,706
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE ($255,579,706 (DIVIDED BY) 28,426,421 SHARES) $8.99
MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $8.99) $9.27
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 2,439,732
DIVIDENDS
INTEREST 658,055
TOTAL INCOME 3,097,787
EXPENSES
MANAGEMENT FEE $ 1,018,260
BASIC FEE
PERFORMANCE ADJUSTMENT 527,609
TRANSFER AGENT FEES 570,673
ACCOUNTING FEES AND EXPENSES 104,649
NON-INTERESTED TRUSTEES' COMPENSATION 508
CUSTODIAN FEES AND EXPENSES 377,268
REGISTRATION FEES 20,656
AUDIT 37,537
LEGAL 859
REPORTS TO SHAREHOLDERS 37,377
MISCELLANEOUS 790
TOTAL EXPENSES BEFORE REDUCTIONS 2,696,186
EXPENSE REDUCTIONS (70,029) 2,626,157
NET INVESTMENT INCOME 471,630
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (55,279,069)
FOREIGN CURRENCY TRANSACTIONS (1,106,836) (56,385,905)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 42,794,086
ASSETS AND LIABILITIES IN 598,947 43,393,033
FOREIGN CURRENCIES
NET GAIN (LOSS) (12,992,872)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (12,521,242)
OTHER INFORMATION
SALES CHARGES PAID TO FDC $ 372,627
SALES CHARGES - DEALERS' PORTION $ 679
EXPENSE REDUCTIONS $ 67,786
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 1,828
TRANSFER AGENT CREDITS 415
$ 70,029
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
OPERATIONS $ 471,630 $ 1,305,926
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) (56,385,905) (28,617,300)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 43,393,033 (92,383,800)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (12,521,242) (119,695,174)
DISTRIBUTIONS TO SHAREHOLDERS (1,127,260) (4,930,534)
FROM NET INVESTMENT INCOME
IN EXCESS OF NET INVESTMENT INCOME (332,186) (3,526,327)
FROM NET REALIZED GAIN - (19,898,492)
TOTAL DISTRIBUTIONS (1,459,446) (28,355,353)
SHARE TRANSACTIONS 90,671,536 157,877,019
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 1,428,081 27,853,163
COST OF SHARES REDEEMED (101,788,474) (514,623,033)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (9,688,857) (328,892,851)
REDEMPTION FEES 402,286 444,381
TOTAL INCREASE (DECREASE) IN NET ASSETS (23,267,259) (476,498,997)
NET ASSETS
BEGINNING OF PERIOD 278,846,965 755,345,962
END OF PERIOD (INCLUDING UNDER (OVER) DISTRIBUTION OF NET INVESTMENT INCOME OF
$(332,186) AND $752,671, RESPECTIVELY) $ 255,579,706 $ 278,846,965
OTHER INFORMATION
SHARES
SOLD 10,040,169 11,474,774
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 142,524 1,884,517
REDEEMED (10,954,980) (35,591,294)
NET INCREASE (DECREASE) (772,287) (22,232,003)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
<C>
SIX MONTHS ENDED YEARS ENDED OCTOBER 31, APRIL 19, 1993
APRIL 30, 1998 (COMMENCEMENT
OF OPERATIONS) TO
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996 1995 1994 OCTOBER 31, 1993
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.55 $ 14.69 $ 13.88 $ 14.61 $ 13.24 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .02 D .04 D, E .14 D .15 .04 .01
NET REALIZED AND UNREALIZED GAIN (LOSS) (.54) (4.62) .87 (.91) 1.23 3.22
TOTAL FROM INVESTMENT OPERATIONS (.52) (4.58) 1.01 (.76) 1.27 3.23
LESS DISTRIBUTIONS (.04) (.10) (.23) - (.04) -
FROM NET INVESTMENT INCOME
IN EXCESS OF NET INVESTMENT INCOME (.01) (.07) - - (.03) -
FROM NET REALIZED GAIN - (.40) - - - -
TOTAL DISTRIBUTIONS (.05) (.57) (.23) - (.07) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL .01 .01 .03 .03 .17 .01
NET ASSET VALUE, END OF PERIOD $ 8.99 $ 9.55 $ 14.69 $ 13.88 $ 14.61 $ 13.24
TOTAL RETURN B, C (5.39)% (32.48)% 7.59% (5.00)% 10.87% 32.40%
RATIOS AND SUPPLEMENTAL DATA $ 255,580 $ 278,847 $ 755,346 $ 649,868 $ 825,734 $ 499,669
NET ASSETS, END OF PERIOD (000 OMITTED)
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.00% A 1.32% 1.13% 1.10% 1.47% 2.00% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER
EXPENSE REDUCTIONS 1.95% A, G 1.32% 1.12% G 1.10% 1.47% 2.00% A,
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .35% A .22% .95% .90% .22% .45% A
PORTFOLIO TURNOVER RATE 97% A 141% 102% 94% 157% 14% A
AVERAGE COMMISSION RATE H $ .0044 $ .0063 $ .0129
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME
SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET
INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.02 PER SHARE. F FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE
6 OF NOTES TO FINANCIAL STATEMENTS). H FOR FISCAL YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE
PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</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 6 PAST 1 LIFE OF
APRIL 30, 1998 MONTHS YEAR FUND
FIDELITY UNITED KINGDOM 19.82% 34.60% 75.75%
FIDELITY UNITED KINGDOM 16.23% 30.56% 70.48%
(INCL. 3.00% SALES CHARGE)
FT-SE ALL-SHARES 22.86% 38.33% 87.38%
EUROPEAN REGION FUNDS AVERAGE 26.03% 39.23% N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year or since
the fund started on November 1, 1995. For example, if you 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 750 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 six
months average represents a peer group of 93 mutual funds. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
APRIL 30, 1998 YEAR FUND
FIDELITY UNITED KINGDOM 34.60% 25.35%
FIDELITY UNITED KINGDOM 30.56% 23.83%
(INCL. 3.00% SALES CHARGE)
FT-SE ALL-SHARES 38.33% 28.61%
EUROPEAN REGION FUNDS AVERAGE 39.23% 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
IMATRL PRASUN SHR__CHT 19980430 19980506 115337 R00000000000033
$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 April 30, 1998, the value of the investment would have
grown to $17,048 - a 70.48% 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 $18,738 - an 87.38% increase.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the potential
for significant growth over time; however, investing
in foreign markets means assuming greater risks than
investing in the United States. Factors like changes in
a country's financial markets, its local political and
economic climate, and the fluctuating value of its
currency create these risks. For these reasons an
international fund's performance may be more
volatile than a fund that invests exclusively in the
United States. Past performance is no guarantee
of future results and you may have a gain or loss
when you sell your shares.
(checkmark)
UNITED KINGDOM
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Simon Roberts, Portfolio Manager of Fidelity United
Kingdom Fund
Q. HOW DID THE FUND PERFORM, SIMON?
A. For the six months that ended April 30, 1998, the fund returned
19.82%, compared to the 22.86% return of the FT-All-Shares Index, and
the European region funds average of 26.03%, as tracked by Lipper
Analytical Services. For the one-year period, the fund returned
34.60%, compared to the FT-All-Shares Index return of 38.33% and the
Lipper European region funds average return of 39.23%.
Q. WHAT WERE THE FACTORS THAT CONTRIBUTED TO PERFORMANCE?
A. The British economy is still growing nicely, with the stock market
turning in a good performance led by the financial sector, which tends
to dominate. The fund did not do quite as well as the FT-All-Shares
Index during the six months because the index is dominated by
larger-company stocks, while the fund tends to look for additional
opportunities in small- and medium-sized companies. Through most of
the six-month period, large-capitalization stocks continued to lead
the market. Since the end of February, however, small- and mid-cap
companies appeared to have turned the corner and started outperforming
large-cap stocks. At the end of the period, I was reducing the fund's
large-cap holdings and buying smaller caps. The fund's underweighting
in finance was a factor in trailing the market index.
Q. HOW WOULD YOU DESCRIBE THE INVESTMENT ENVIRONMENT DURING THE
PERIOD?
A. Favorable interest rates, controlled inflation and economic growth
have supported the market, while the value of the pound Sterling has
been a problem affecting industrial companies principally. While the
Bank of England has raised interest rates five times in a year, the
market expects that rates may have reached a plateau, with no further
increases likely. The inflationary outlook is good, with the most
recent Bank of England report anticipating that inflation will be down
to the government's target of about 2.5% this year. General growth has
been strong, particularly in major sectors such as finance, services
and consumer goods. The only concern has been the Sterling's strength
against other European currencies. This hurt the manufacturing and
general industrial sector, which had difficulty competing with cheaper
goods imported from Europe or the Far East. More recently, however,
there was evidence that the Sterling may have peaked, which would be
positive for the manufacturing sector. While manufacturing-company
stocks in general have been lagging companies in other industries, it
is important to keep in mind that the general industrial sector is not
large in the United Kingdom, accounting for just 12% of the
capitalization of the FT-All-Shares Index. The market is dominated by
finance, services, consumer and utility companies, which tended to do
well.
Q. WHAT WERE YOUR PRINCIPAL STRATEGIES DURING THE SIX MONTHS?
A. My principal strategy was, as usual, to look for stocks whose
fundamentals I believed would surprise the market, and whose company
outlook was not reflected in the share price. I continued to build the
portfolio from the bottom up, on a stock-by-stock basis, using
Fidelity's own stock research. As a general rule, I believe our
ability to add value from research is greatest in small- and
medium-sized companies. In the long run, I believe this approach
should lead to strong relative performance, although it may have hurt
the fund in the past six months. I have moved toward manufacturing and
industrial companies, where I believed market expectations were too
negative.
Q. WHAT WERE SOME EXAMPLES OF FUND INVESTMENTS IN MEDIUM- AND
SMALL-SIZED COMPANIES?
A. I found some good opportunities among specialty chemical companies.
One outstanding example was BTP, which the fund has owned for less
than one year. This company manufactures the active ingredient in the
anti-impotence drug Viagra, which very recently attracted attention
throughout the world. Another good holding was British Vita, a
manufacturer of industrial foams.
Q. ALTHOUGH THE FINANCE INDUSTRY WAS THE FUND'S LARGEST EMPHASIS AT
16.8% OF PORTFOLIO ASSETS ON APRIL 30, IT WAS UNDERWEIGHTED VERSUS THE
FT-ALL-SHARES INDEX, WHERE IT MADE UP 24% OF THE MARKET. WHAT WAS YOUR
STRATEGY HERE?
A. I believed the share prices of finance companies fully reflected
their prospects. They've been through a very good period. Going
forward, I believe there will be pressures on certain areas of
finance, especially mortgages. Within the finance sector, Bank of
Scotland, the fastest-growing bank in the U.K., was the fund's
second-best performer during the period. This bank has been innovative
in product development, introducing new mortgage and savings products.
Q. ANOTHER MAJOR EMPHASIS WAS IN PHARMACEUTICALS. HOW HAVE THEY DONE?
A. The investments in the pharmaceutical industry have done very well.
I concentrated on three large companies: Glaxo Wellcome, SmithKline
Beecham and Zeneca Group. All three closely followed developments in
the United States, where they have high sales. All three stocks did
well because of strong sales volume and speculation about mergers and
consolidation.
Q. WHAT OTHER AREAS CONTRIBUTED TO PERFORMANCE?
A. Media and leisure companies did very well, particularly hotel
companies benefiting from very high occupancy rates. One very good
performer was Ladbroke Group, which, in addition to operating hotels
in the United Kingdom, owns the Hilton Hotels that are located outside
the United States. I also owned a number of telecommunications
companies that did extremely well. The best-performing stock in the
fund was Vodafone, which operates cellular phone systems in the U.K.
Its subscriber growth has been very strong. Another telecommunications
stock that helped performance was Cable & Wireless Communications, a
cable television and telephone system operator in the U.K.
Q. HAVE THERE BEEN ANY DISAPPOINTMENTS?
A. Yes. The first disappointment was in a major stock that did well
but that the fund did not own. This was British Telecom. I preferred
other telecommunications companies such as Vodafone because of the
superior long-term growth opportunities of cellular companies over
fixed-line companies. Among the disappointing stocks I did own were
Monument Oil & Gas, and Albert Fisher Group, a food processing
company. Monument Oil & Gas was hurt by a slump in world oil prices
and by disappointments in some of its exploration sites. Albert Fisher
had problems in its seafood division.
Q. WHAT IS YOUR OUTLOOK?
A. After the most recent interest rate increase, I think there are
signs that interest rates and the pound Sterling could have peaked. As
a result, U.K. manufacturers should start to improve performance. I
have overweighted areas such as chemicals, packaging, engineering,
automotive components and paper, which should become more competitive
in the absence of currency problems. I see the best opportunities more
in the medium-sized and small-sized companies. I think the overall
market index may not repeat the extraordinary returns of the past year
because many major industries, such as finance, are fully priced.
However, careful investments in selected medium- and small-cap
companies should provide an opportunity to produce good returns.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
SIMON ROBERTS ON THE EUROPEAN ECONOMIC
UNION AND THE EUROPEAN MONETARY UNION:
"The United Kingdom is part of the European Economic
Union, but not of the European Monetary Union, which is
establishing the single-currency Euro in stages, beginning
at the end of 1998. The recent performance of European
economies has been split. The larger countries such as
Germany and France have had weaker economies, although
they have shown signs of strength more recently. Other
nations, including Spain, Italy and Ireland, have shown
strong growth. The U.K. was somewhere in the middle.
"The European Monetary Union will be occurring at a time
when the European economies are not in sync with each
other. This is the reason that the U.K. has decided not to
enter it. Because of this lack of synchronization, European
currencies have been weak relative to the dollar and the
pound Sterling. However, once the Euro is established as a
single currency, there seems to be no reason why it should
not be a strong currency because of the tight monetary and
fiscal policies being implemented by the member countries
as they prepare for the single currency's introduction. U.K.
companies will see their competitiveness improve because
their goods and products will appear cheaper against the
products of other European countries. Recently, goods
made by British companies have had difficulty competing
either in Europe or in the U.K. itself because of the strong
pound Sterling.
"On balance, the European Monetary Union is positive
for U.K. companies even if the U.K. doesn't enter the system
immediately. That's because both the EEU and the EMU will
create a single, seamless market, rather than the many
markets with which they deal now."
FUND FACTS
GOAL: long-term growth of capital by investing
mainly in equity securities of British issuers:
FUND NUMBER: 344
TRADING SYMBOL: FUTYF
START DATE: November 1, 1995
SIZE: as of April 30, 1998, more than $7 million
MANAGER: Simon Roberts, since July 1997
manager, Fidelity Germany Fund, 1995-1996;
director of United Kingdom and European
Research, Fidelity International, Limited,
since 1994; joined Fidelity in 1992
(checkmark)
UNITED KINGDOM
INVESTMENT CHANGES
GEOGRAPHIC DIVERSIFICATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1998
OTHER 0.5%
UNITED STATES 2.2%
ROW: 1, COL: 1, VALUE: 3.2
ROW: 1, COL: 2, VALUE: 95.3
ROW: 1, COL: 3, VALUE: 1.5
UNITED KINGDOM 97.3%
AS OF OCTOBER 31, 1997
OTHER 0.3%
UNITED STATES 4.1%
ROW: 1, COL: 1, VALUE: 4.1
ROW: 1, COL: 2, VALUE: 95.3
ROW: 1, COL: 3, VALUE: 1.0
UNITED KINGDOM 95.6%
ASSET ALLOCATION
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
STOCKS 97.8 95.9
SHORT-TERM INVESTMENTS 2.2 4.1
TOP TEN STOCKS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
LLOYDS TSB GROUP PLC 4.1 3.7
(BANKS)
GLAXO WELLCOME PLC 3.5 3.7
(DRUGS & PHARMACEUTICALS)
SHELL TRANSPORT & TRADING CO. PLC (REG.) 3.4 5.0
(OIL & GAS)
BRITISH PETROLEUM PLC ORD. 3.1 4.5
(OIL & GAS)
VODAFONE GROUP PLC 2.9 1.6
(CELLULAR)
SMITHKLINE BEECHAM PLC ORD. 2.6 1.9
(DRUGS & PHARMACEUTICALS)
BANK OF SCOTLAND 2.4 1.5
(BANKS)
HSBC HOLDINGS PLC (REG.) 2.4 4.0
(BANKS)
ZENECA GROUP PLC ORD. 2.3 1.7
(DRUGS & PHARMACEUTICALS)
SCOTTISH & NEWCASTLE BREWERS PLC 2.1 0.8
(BEVERAGES)
TOP TEN MARKET SECTORS
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE
MARKET SECTORS
6 MONTHS AGO
FINANCE 16.8 13.4
NONDURABLES 12.1 12.1
HEALTH 9.0 8.6
UTILITIES 8.5 9.1
ENERGY 7.8 10.8
MEDIA & LEISURE 7.3 6.7
RETAIL & WHOLESALE 7.0 9.1
BASIC INDUSTRIES 6.6 4.8
CONSTRUCTION & REAL ESTATE 6.5 5.3
TRANSPORTATION 3.8 1.7
UNITED KINGDOM
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 97.8%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.2%
Smiths Industries PLC Ord. 6,300 $ 90,577
BASIC INDUSTRIES - 6.6%
CHEMICALS & PLASTICS - 2.7%
Albright & Wilson PLC 1,960 5,698
BTP PLC 5,830 41,203
British Polythene Industries PLC 7,290 60,535
British Vita Ord. 6,430 34,916
Inspec Group PLC 4,700 22,969
McKechnie PLC 4,630 38,524
203,845
IRON & STEEL - 0.5%
Richardsons Westgarth PLC Class L 28,600 37,989
METALS & MINING - 2.4%
English China Clay PLC 13,340 54,941
Johnson Matthey PLC 3,600 36,450
Rio Tinto PLC (Reg.) 5,900 84,629
176,020
PAPER & FOREST PRODUCTS - 1.0%
Graham Group PLC 3,100 9,789
Rexam PLC 4,950 22,578
Smith Holdings PLC 10,570 40,619
72,986
TOTAL BASIC INDUSTRIES 490,840
CONSTRUCTION & REAL ESTATE - 6.5%
BUILDING MATERIALS - 1.5%
Aggregate Industries PLC 33,749 41,727
Ibstock Johnsen PLC 32,050 28,381
Norcros PLC Class L 18,950 21,530
Polypipe PLC 5,710 17,745
109,383
CONSTRUCTION - 2.6%
Amec PLC Ord. 12,000 36,691
Barratt Developments PLC 5,100 27,310
Beazer Group PLC 12,110 39,860
Bovis Homes Group PLC (a) 5,100 22,070
Countryside Properties PLC 6,700 12,650
Persimmon PLC Ord. 12,490 50,919
189,500
ENGINEERING - 0.4%
Weir Group PLC (The) 6,060 27,844
REAL ESTATE - 1.7%
CLS Holdings PLC 3,200 7,539
Daejan Holdings PLC 600 16,691
Development Securities PLC 1,600 9,236
Great Portland Estates 5,000 23,266
Mucklow (A & J) Group PLC 9,710 25,471
Wates City of London Property PLC (a) 27,940 44,581
126,784
REAL ESTATE INVESTMENT TRUSTS - 0.3%
Minerva PLC 4,800 18,847
Prestbury Group PLC 52,500 5,263
24,110
TOTAL CONSTRUCTION & REAL ESTATE 477,621
DURABLES - 3.7%
AUTOS, TIRES, & ACCESSORIES - 2.3%
Britax International PLC 12,500 33,834
Dennis Group PLC 6,430 33,949
SHARES VALUE (NOTE 1)
Laird Group 4,990 $ 36,893
Mayflower Corp. 10,900 44,072
Partco Group PLC 4,700 23,401
172,149
TEXTILES & APPAREL - 1.4%
Berisford (S.W.) PLC 7,510 28,107
Black (Peter) Holdings PLC 3,790 25,203
Courtaulds Textiles PLC 5,140 27,567
House of Fraser PLC Class L 8,010 21,279
102,156
TOTAL DURABLES 274,305
ENERGY - 7.8%
COAL - 0.5%
RJB Mining PLC 18,700 38,430
ENERGY SERVICES - 0.3%
Sidlaw Group PLC 11,500 20,943
OIL & GAS - 7.0%
British Petroleum PLC Ord. 14,541 229,467
Monument Oil and Gas PLC (a):
Class L 34,230 36,174
rights 5/13/98 6,157 874
Shell Transport & Trading Co. PLC (Reg.) 34,200 254,279
520,794
TOTAL ENERGY 580,167
FINANCE - 16.8%
BANKS - 10.8%
Barclays PLC Ord. 5,002 144,164
Bank of Scotland 14,400 176,837
HSBC Holdings PLC (Reg.) 5,969 175,525
Lloyds TSB Group PLC 20,491 306,587
803,113
CLOSED END INVESTMENT COMPANY - 1.9%
3I Group PLC 12,300 121,147
Benfield & Realty Investment Trust PLC 9,600 21,894
143,041
CREDIT & OTHER FINANCE - 0.4%
Alliance & Leicester PLC 1,900 26,539
INSURANCE - 3.7%
Britannic Assurance Ord. (a) 60 1,238
Commercial Union PLC 3,700 69,176
General Accident Fire & Life 2,500 58,854
London Insurance Market Investment
Trust PLC 12,070 35,090
New London Capital PLC 12,200 16,307
Norwich Union PLC (a) 12,080 90,169
270,834
TOTAL FINANCE 1,243,527
HEALTH - 9.0%
DRUGS & PHARMACEUTICALS - 8.9%
AEA Technology PLC 3,120 37,429
Glaxo Wellcome PLC 9,172 258,985
SmithKline Beecham PLC Ord. 16,239 193,452
Zeneca Group PLC Ord. 3,930 169,146
659,012
MEDICAL EQUIPMENT & SUPPLIES - 0.1%
Alliance Unichem PLC 1,190 8,152
TOTAL HEALTH 667,164
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HOLDING COMPANIES - 0.9%
Cookson Group PLC 8,876 $ 39,819
Hunting Group PLC 7,460 30,039
69,858
INDUSTRIAL MACHINERY & EQUIPMENT - 1.5%
ELECTRICAL EQUIPMENT - 0.5%
Choride Group PLC 44,440 30,814
Staveley Industries PLC 3,650 7,623
38,437
INDUSTRIAL MACHINERY & EQUIPMENT - 0.9%
Babcock International Group PLC (a) 21,710 24,303
Senior Engineering Group PLC 10,630 39,073
63,376
POLLUTION CONTROL - 0.1%
Waste Recycling Group PLC 800 5,771
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 107,584
MEDIA & LEISURE - 7.3%
BROADCASTING - 0.4%
Scottish Media Group PLC 2,370 28,313
ENTERTAINMENT - 2.2%
Clubhaus PLC (a) 23,700 34,450
Granada Group PLC 5,366 92,345
Wembley PLC 5,570 35,643
162,438
LODGING & GAMING - 1.5%
Jarvis Hotels PLC 9,020 23,962
Ladbroke Group PLC Ord. 11,239 61,733
Millennium & Copthorne Hotels PLC 2,650 25,857
111,552
PUBLISHING - 2.5%
Daily Mail & General Trust PLC Class A 800 33,884
EMAP PLC 2,300 46,767
Mirror Group Newspaper PLC 8,600 26,295
Pearson PLC 5,020 78,590
185,536
RESTAURANTS - 0.7%
Allied Domecq PLC 4,800 49,322
TOTAL MEDIA & LEISURE 537,161
NONDURABLES - 12.1%
BEVERAGES - 3.4%
Greenalls Group PLC 4,160 33,571
Scottish & Newcastle Brewers PLC 10,450 158,012
Vaux Group PLC 13,000 59,079
250,662
FOODS - 3.6%
Bernard Matthews 10,600 17,710
Hazlewood Foods PLC Ord. 11,450 36,348
Tomkins PLC Ord. 26,409 155,317
Unigate PLC 4,860 58,952
268,327
HOUSEHOLD PRODUCTS - 2.0%
Mcbride PLC 10,070 32,809
Oriflame International SA 4,300 36,281
Scholl PLC 5,970 37,405
Yule Catto Ord. 6,800 43,514
150,009
SHARES VALUE (NOTE 1)
TOBACCO - 3.1%
BAT Industries PLC Ord. 15,153 $ 142,791
Gallaher Group PLC 16,410 85,544
228,335
TOTAL NONDURABLES 897,333
RETAIL & WHOLESALE - 7.0%
APPAREL STORES - 0.9%
Arcadia Group PLC 6,300 49,486
Headlam Sims and Coggins PLC Class L 3,290 20,682
70,168
GROCERY STORES - 3.7%
Albert Fisher Group PLC Ord. 62,400 29,192
Asda Group PLC 31,430 105,158
Geest PLC 3,150 26,762
Iceland Group PLC 8,400 31,227
Safeway PLC 8,700 51,821
Somerfield PLC 5,190 29,338
273,498
RETAIL & WHOLESALE, MISCELLANEOUS - 2.0%
Great Universal Stores PLC Ord. Class A 7,660 116,593
Wickes PLC 5,070 29,818
146,411
TRADING COMPANIES - 0.4%
Inchcape PLC Ord. 7,860 29,384
TOTAL RETAIL & WHOLESALE 519,461
SERVICES - 3.8%
ADVERTISING - 0.2%
Abbott Mead Vickers PLC 2,250 13,985
PRINTING - 0.7%
Jarvis Porter Group PLC 6,170 22,370
Waddington PLC 7,220 32,209
54,579
SERVICES - 2.9%
Davis Service Group 2,740 18,861
Go-Ahead Group (The) PLC 3,000 32,781
Halma PLC Ord. 19,600 42,736
Hays PLC 4,430 75,090
Securicor Group PLC 6,300 41,683
211,151
TOTAL SERVICES 279,715
TECHNOLOGY - 1.3%
COMPUTER SERVICES & SOFTWARE - 0.4%
Micro Focus Group (a) 3,250 29,594
COMPUTERS & OFFICE EQUIPMENT - 0.7%
Skillgroup PLC 6,600 30,104
Psion PLC 4,320 19,921
50,025
ELECTRONICS - 0.2%
Roxboro Group PLC 4,000 18,579
TOTAL TECHNOLOGY 98,198
TRANSPORTATION - 3.8%
AIR TRANSPORTATION - 1.1%
BAA PLC Ord. 8,100 82,351
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TRANSPORTATION - CONTINUED
SHIPPING - 2.7%
Peninsular & Oriental Steam
Navigation Co. 9,679 $ 142,715
Powell Duffryn PLC 6,100 55,546
198,261
TOTAL TRANSPORTATION 280,612
UTILITIES - 8.5%
CELLULAR - 2.9%
Vodafone Group PLC 19,785 216,522
ELECTRIC UTILITY - 2.0%
British Energy PLC 4,960 45,166
National Grid Co. PLC 16,133 104,046
149,212
GAS - 0.5%
BG PLC 6,100 32,563
TELEPHONE SERVICES - 2.0%
Cable & Wireless Communications PLC (a) 5,980 43,413
Cable & Wireless Communications PLC Ord. 9,360 107,125
150,538
WATER - 1.1%
Hyder PLC 5,130 82,455
TOTAL UTILITIES 631,290
TOTAL COMMON STOCKS
(Cost $6,157,599) 7,245,413
CASH EQUIVALENTS - 2.2%
Taxable Central Cash Fund (b)
(Cost $164,138) 164,138 164,138
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $6,321,737) $ 7,409,551
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.51%. 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 $6,062,576 and $5,389,298, respectively.
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 5 of Notes to
Financial Statements).
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $6,322,254. Net unrealized appreciation
aggregated $1,087,297, of which $1,223,584 related to appreciated
investment securities and $136,287 related to depreciated investment
securities.
UNITED KINGDOM
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE $ 7,409,551
(COST $6,321,737) -
SEE ACCOMPANYING SCHEDULE
FOREIGN CURRENCY HELD AT VALUE 55,432
(COST $55,424)
RECEIVABLE FOR INVESTMENTS SOLD 88,269
RECEIVABLE FOR FUND SHARES SOLD 17,820
DIVIDENDS RECEIVABLE 65,221
INTEREST RECEIVABLE 1,245
RECEIVABLE FROM INVESTMENT ADVISER FOR EXPENSE REDUCTIONS 4,847
TOTAL ASSETS 7,642,385
LIABILITIES
PAYABLE TO CUSTODIAN BANK $ 4,101
PAYABLE FOR INVESTMENTS PURCHASED 157,046
OTHER PAYABLES AND 44,129
ACCRUED EXPENSES
TOTAL LIABILITIES 205,276
NET ASSETS $ 7,437,109
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 5,675,522
UNDISTRIBUTED NET INVESTMENT INCOME 36,840
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 636,290
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 1,088,457
AND ASSETS AND LIABILITIES IN
FOREIGN CURRENCIES
NET ASSETS, FOR 468,305 $ 7,437,109
SHARES OUTSTANDING
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE ($7,437,109 (DIVIDED BY) 468,305 SHARES) $15.88
MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $15.88) $16.37
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 127,674
DIVIDENDS
INTEREST 11,731
139,405
LESS FOREIGN TAXES WITHHELD (12,911)
TOTAL INCOME 126,494
EXPENSES
MANAGEMENT FEE $ 26,509
TRANSFER AGENT FEES 10,965
ACCOUNTING FEES AND EXPENSES 30,020
NON-INTERESTED TRUSTEES' COMPENSATION 13
CUSTODIAN FEES AND EXPENSES 40,234
REGISTRATION FEES 6,830
AUDIT 13,481
LEGAL 18
INTEREST 1,231
REPORTS TO SHAREHOLDERS 2,228
TOTAL EXPENSES BEFORE REDUCTIONS 131,529
EXPENSE REDUCTIONS (60,349) 71,180
NET INVESTMENT INCOME 55,314
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 643,752
FOREIGN CURRENCY TRANSACTIONS (946) 642,806
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 529,140
ASSETS AND LIABILITIES IN (608) 528,532
FOREIGN CURRENCIES
NET GAIN (LOSS) 1,171,338
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,226,652
OTHER INFORMATION $ 6,371
SALES CHARGES PAID TO FDC
SALES CHARGES - DEALERS' PORTION $ 750
EXPENSE REDUCTIONS $ 60,349
FMR REIMBURSEMENTS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
OPERATIONS $ 55,314 $ 120,593
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 642,806 580,520
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 528,532 249,896
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,226,652 951,009
DISTRIBUTIONS TO SHAREHOLDERS (115,006) (35,705)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (484,235) (54,931)
TOTAL DISTRIBUTIONS (599,241) (90,636)
SHARE TRANSACTIONS 4,305,224 5,571,480
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 598,563 90,558
COST OF SHARES REDEEMED (3,845,730) (3,481,394)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 1,058,057 2,180,644
REDEMPTION FEES 42,779 12,334
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,728,247 3,053,351
NET ASSETS
BEGINNING OF PERIOD 5,708,862 2,655,511
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $36,840 AND
$115,342, RESPECTIVELY) $ 7,437,109 $ 5,708,862
OTHER INFORMATION
SHARES
SOLD 297,979 437,185
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 43,658 7,700
REDEEMED (274,948) (266,573)
NET INCREASE (DECREASE) 66,689 178,312
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SIX MONTHS ENDED YEAR ENDED NOVEMBER 1, 1995
APRIL 30, 1998 OCTOBER 31, (COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
SELECTED PER-SHARE DATA (UNAUDITED) 1997 1996
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.21 $ 11.89 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .11 D .31 D .16
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.46 2.31 1.75
TOTAL FROM INVESTMENT OPERATIONS 2.57 2.62 1.91
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.19) (.13) (.04)
FROM NET REALIZED GAIN (.80) (.20) -
TOTAL DISTRIBUTIONS (.99) (.33) (.04)
REDEMPTION FEES ADDED TO PAID IN CAPITAL .09 .03 .02
NET ASSET VALUE, END OF PERIOD $ 15.88 $ 14.21 $ 11.89
TOTAL RETURN B, C 19.82% 22.87% 19.38%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 7,437 $ 5,709 $ 2,656
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.04% A, E 2.00% E 2.00% E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.04% A 1.99% F 1.97% F
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.58% A 2.36% 1.62%
PORTFOLIO TURNOVER RATE 160% A 96% 50%
AVERAGE COMMISSION RATE G $ .0094 $ .0105 $ .0086
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL
RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO
REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 6 OF
NOTES TO FINANCIAL STATEMENTS). F FMR OR THE FUND HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE
FUND'S EXPENSES. G A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES
ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS
WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED APRIL 30, 1998 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Canada Fund, Fidelity Emerging Markets Fund, Fidelity Europe
Fund, Fidelity Europe Capital Appreciation Fund, Fidelity France Fund,
Fidelity Germany Fund, Fidelity Hong Kong and China Fund, Fidelity
Japan Fund, Fidelity Japan Small Companies Fund, Fidelity Latin
America Fund, Fidelity Nordic Fund, Fidelity Pacific Basin Fund,
Fidelity Southeast Asia Fund and Fidelity United Kingdom Fund (the
funds) are funds of Fidelity Investment Trust (the trust). The trust
is registered under the Investment Company Act of 1940, as amended
(the 1940 Act), as an open-end management investment company organized
as a Massachusetts business trust. Each fund is authorized to issue an
unlimited number of shares. The financial statements have been
prepared in conformity with generally accepted accounting principles
which permit management to make certain estimates and assumptions at
the date of the financial statements. The following summarizes the
significant accounting policies of the funds:
SECURITY VALUATION. Securities for which quotations are readily
available are valued at the last sale price, or if no sale price, at
the closing bid price in the principal market in which such securities
are normally traded. If trading or events occurring in other markets
after the close of the principal market in which securities are traded
is 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 exchange quotations are not readily available (and in certain
cases debt securities which trade on an exchange) 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 shares in the principal market in which securities
are normally traded.
FOREIGN CURRENCY TRANSLATION. The accounting records of the funds are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. 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 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. Certain foreign currency gains (losses), if
applicable, are taxable as ordinary income and, therefore, increase
(decrease) taxable ordinary income available for distribution.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, futures and options transactions,
foreign currency transactions, passive foreign investment companies
(PFIC), non-taxable dividends, net operating losses, capital loss
carryforwards and losses deferred due to wash sales, futures and
options and excise tax regulations. Certain funds also utilized
earnings and profits distributed to shareholders on redemption of
shares as a part of the dividends paid deduction for income tax
purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income, accumulated net investment loss,
distributions in excess of net investment income and accumulated
undistributed net realized gain (loss) on investments and foreign
currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the
following year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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. 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.,
(formerly FMR Texas, 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
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.
3. PURCHASES AND SALES OF INVESTMENTS.
Information regarding purchases and sales of securities (other than
short-term securities), and 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 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
For the period, each fund's management fee was equivalent to the
following annualized rates expressed as a percentage of average net
assets after the performance adjustment, if applicable:
Canada .31%
Emerging Markets .76%
Europe .80%
Europe Capital Appreciation .76%
France .75%
Germany .76%
Hong Kong and China .76%
Japan 1.03%
Japan Small Companies .76%
Latin America .76%
Nordic .75%
Pacific Basin 1.09%
Southeast Asia 1.15%
United Kingdom .76%
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) (Hong Kong and China, Japan, Emerging Markets,
Pacific Basin, Japan Small Companies and Southeast Asia funds only.).
In addition, FIIA entered into a sub-advisory agreement with its
subsidiary, Fidelity International Investment Advisors (U.K.) Limited
(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 3.00% for selling shares of each 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 by FDC for sales charges, a portion of which was paid to
securities dealers, banks and other financial institutions ("Dealers'
Portion"), 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, each fund's transfer agent fees were equivalent to the
following annualized rates expressed as a percentage of average net
assets:
Canada .35%
Emerging Markets .50%
Europe .25%
Europe Capital Appreciation .24%
France .35%
Germany .32%
Hong Kong and China .39%
Japan .33%
Japan Small Companies .31%
Latin America .29%
Nordic .38%
Pacific Basin .47%
Southeast Asia .42%
United Kingdom .31%
ACCOUNTING FEES. FSC maintains each fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.
BROKERAGE COMMISSIONS. Certain funds placed a portion of their
portfolio transactions with brokerage firms which are affiliates of
FMR. The commissions paid to these affiliated firms are shown under
the caption "Other Information" at the end of each applicable fund's
schedule of investments
5. BANK BORROWINGS.
Each fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. Each fund has
established borrowing arrangements with certain banks. Under the most
restrictive arrangement, each fund must pledge to the bank securities
having a market value in excess of 220% of the total bank borrowings.
The interest rate on the borrowings is the bank's base rate, as
revised from time to time. Information regarding a fund's
participation in the program is included under the caption "Other
Information" at the end of each applicable fund's schedule of
investments.
6. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse certain fund's operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above an annual rate of 2.00% of average net assets.
FMR has directed certain portfolio trades to brokers who paid a
portion of certain fund's expenses.
In addition, certain funds have entered into arrangements with their
custodian and transfer agent whereby credits realized as a result of
uninvested cash balances were used to reduce a portion of each
applicable fund's expenses.
6. EXPENSE REDUCTIONS - CONTINUED
For the period, the reductions under these arrangements are shown
under the caption "Other Information" on each applicable fund's
Statement of Operations.
7. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of
approximately 5% of the total outstanding shares of the fund.
FMR
FUND % OF OWNERSHIP
France 22
Germany 10
Japan Small Companies 40
United Kingdom 24
8. 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.
9. 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.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpressprovides a single toll-free number to access
account balances, positions, quotes and trading. It's easy to navigate
the service, and on your first call, the system will help you create a
personal identification number (PIN) for security.
SM
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
0
*
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity
at 1-800-544-7272 for significant savings on Web access from
internetMCI.
SM
(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE
WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS
NO ASSURANCE THAT MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE
$1 SHARE PRICE; AN
INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE
U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN
SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP61
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
950 Northgate Drive
San Rafael, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Ave.
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
4001 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29115 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc.,
London, England
Fidelity Management & Research (Far East) Inc.,
Tokyo, Japan
Fidelity Investments Japan Ltd.
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K.) Limited
OFFICERS
Edward C. Johnson 3d, PRESIDENT
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
Thomas Sweeney, VICE PRESIDENT, CANADA FUND
Sally Walden, VICE PRESIDENT, EUROPE 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 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
BULK RATE
U.S. POSTAGE
P A I D
F I D E L I T Y
INVESTMENTS
(registered trademark)
P.O. Box 193
Boston, MA 02101
