FIDELITY INVESTMENT TRUST, 485BPOS, 1998-12-28

FIDELITY INVESTMENT TRUST
485BPOS, 1998-12-28

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A

REGISTRATION STATEMENT (No. 2-90649)
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.
Post-Effective Amendment No. 76 [X]
and
REGISTRATION STATEMENT (No. 811-4008)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 76 [X]

Fidelity Investment Trust
(Exact Name of Registrant as Specified in Charter)

82 Devonshire St., Boston, Massachusetts 02109
(Address Of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number: 617-563-7000

Eric D. Roiter, Secretary
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)

It is proposed that this filing will become effective
( ) immediately upon filing pursuant to paragraph (b).
(X) on (December 30, 1998) pursuant to paragraph (b).
( ) 60 days after filing pursuant to paragraph (a)(1).
( ) on ( ) pursuant to paragraph (a)(1) of Rule
485.
( ) 75 days after filing pursuant to paragraph (a)(2).
( ) on ( ) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
( ) this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.

LIKE SECURITIES OF ALL MUTUAL
FUNDS, THESE SECURITIES HAVE
NOT BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND EXCHANGE
COMMISSION, AND THE
SECURITIES AND EXCHANGE
COMMISSION HAS NOT
DETERMINED IF THIS PROSPECTUS
IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE
CONTRARY IS A CRIMINAL
OFFENSE.

FIDELITY'S
BROADLY DIVERSIFIED
INTERNATIONAL EQUITY
FUNDS

FUND NUMBER TRADING SYMBOL

FIDELITY INTERNATIONAL GROWTH & INCOME FUND 305 FIGRX

FIDELITY DIVERSIFIED INTERNATIONAL FUND 325 FDIVX

FIDELITY INTERNATIONAL VALUE FUND 335 FIVFX

FIDELITY OVERSEAS FUND 094 FOSFX

FIDELITY WORLDWIDE FUND 318 FWWFX

PROSPECTUS
DECEMBER 30, 1998
(FIDELITY_LOGO_GRAPHIC) (registered trademark)
82 DEVONSHIRE STREET, BOSTON, MA 02109

CONTENTS

FUND SUMMARY 3 INVESTMENT SUMMARY

5 PERFORMANCE

8 FEE TABLE

FUND BASICS 10 INVESTMENT DETAILS

12 VALUING SHARES

SHAREHOLDER INFORMATION 12 BUYING AND SELLING SHARES

17 EXCHANGING SHARES

17 ACCOUNT FEATURES AND POLICIES

20 DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

21 TAX CONSEQUENCES

FUND SERVICES 21 FUND MANAGEMENT

22 FUND DISTRIBUTION

APPENDIX 22 FINANCIAL HIGHLIGHTS

FUND SUMMARY

INVESTMENT SUMMARY
INVESTMENT OBJECTIVE
INTERNATIONAL GROWTH & INCOME FUND seeks capital growth and
current income, consistent with reasonable investment risk.
PRINCIPAL INVESTMENT STRATEGIES
Fidelity Management & Research Company (FMR)'s principal investment
strategies include:
(small solid bullet) Investing at least 65% of total assets in foreign
securities.
(small solid bullet) Investing a majority of the fund's assets in
common stocks with a focus on those that pay current dividends and
show potential for capital appreciation.
(small solid bullet) Potentially investing in debt securities,
including lower-quality debt securities.
(small solid bullet) Allocating investments across countries and
regions considering the size of the market in each country and region
relative to the size of the international market as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. Lower-quality debt securities
(those of less than investment-grade quality) can be more volatile due
to increased sensitivity to adverse issuer, political, regulatory,
market or economic developments.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
DIVERSIFIED INTERNATIONAL FUND seeks capital growth.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in foreign
securities.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries and
regions considering the size of the market in each country and region
relative to the size of the international market as a whole.
(small solid bullet) Using computer-aided, quantitative analysis of
historical earnings, dividend yield, earnings per share and other
factors supported by fundamental analysis to select
investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
(small solid bullet) QUANTITATIVE INVESTING. Securities selected using
quantitative analysis can perform differently than the market as a
whole as a result of the factors used in the analysis, the weight
placed on each factor, and changes in the factors' historical trends.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
INTERNATIONAL VALUE FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in foreign
securities.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing in securities of companies that FMR
believes are undervalued in the marketplace or possess valuable assets
(stocks of these companies are often called "value" stocks).
(small solid bullet) Allocating investments across countries and
regions considering the size of the market in each country and region
relative to the size of the international market as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
(small solid bullet) "VALUE" INVESTING. "Value" stocks can perform
differently than the market as a whole and other types of stocks and
can continue to be undervalued by the market for long periods of time.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
OVERSEAS FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in foreign
securities.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries and
regions considering the size of the market in each country and region
relative to the size of the international market as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
WORLDWIDE FUND seeks growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing in securities issued anywhere in the
world.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries and
regions considering the size of the market in each country and region
relative to the size of the world market as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
PERFORMANCE
The following information illustrates the changes in the funds'
performance from year to year and compares the funds' performance to
the performance of a market index and an average of the performance
of similar funds over various periods of time. Returns are based
on past results and are not an indication of future performance.

YEAR-BY-YEAR RETURNS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTER
NATIO
NAL
GRO
WTH
&
INCO
ME

CALENDAR 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
YEARS

11.56% 19.12% -3.23% 8.04% -3.34% 35.08% -2.87% 12.23% 12.69% 7.12 %

</TABLE>

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 11.56
ROW: 2, COL: 1, VALUE: 19.12
ROW: 3, COL: 1, VALUE: -3.23
ROW: 4, COL: 1, VALUE: 8.039999999999999
ROW: 5, COL: 1, VALUE: -3.34
ROW: 6, COL: 1, VALUE: 35.08
ROW: 7, COL: 1, VALUE: -2.87
ROW: 8, COL: 1, VALUE: 12.23
ROW: 9, COL: 1, VALUE: 12.69
ROW: 10, COL: 1, VALUE: 7.12
DURING THE PERIODS SHOWN IN THE CHART FOR INTERNATIONAL GROWTH &
INCOME, THE HIGHEST RETURN FOR A QUARTER WAS 12.29 % (QUARTER
ENDING SEPTEMBER 30, 1989 ) AND THE LOWEST RETURN FOR A QUARTER
WAS -13.53 % (QUARTER ENDING SEPTEMBER 30, 1990).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1998 FOR
INTERNATIONAL GROWTH & INCOME WAS -5.58 %.

DIVER
SIFIED
INTER
NATIO
NAL

CALENDAR 1992 1993 1994 1995 1996 1997
YEARS

-13.81% 36.67% 1.09% 17.97% 20.02% 13.72 %

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: -13.81
ROW: 6, COL: 1, VALUE: 36.67
ROW: 7, COL: 1, VALUE: 1.09
ROW: 8, COL: 1, VALUE: 17.97
ROW: 9, COL: 1, VALUE: 20.02
ROW: 10, COL: 1, VALUE: 13.72
DURING THE PERIODS SHOWN IN THE CHART FOR DIVERSIFIED INTERNATIONAL,
THE HIGHEST RETURN FOR A QUARTER WAS 14.35 % (QUARTER ENDING
MARCH 31, 1993 ) AND THE LOWEST RETURN FOR A QUARTER WAS
-9.15 % (QUARTER ENDING MARCH 31, 1992 ).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1998 FOR
DIVERSIFIED INTERNATIONAL WAS -0.74 %.

INTER
NATIO
NAL
VALU
E

CALENDAR 1995 1996 1997
YEARS

13.90% 9.59% 7.85 %

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: NIL
ROW: 8, COL: 1, VALUE: 13.9
ROW: 9, COL: 1, VALUE: 9.59
ROW: 10, COL: 1, VALUE: 7.86
DURING THE PERIODS SHOWN IN THE CHART FOR INTERNATIONAL VALUE, THE
HIGHEST RETURN FOR A QUARTER WAS 12.06 % (QUARTER ENDING JUNE
30, 1997 ) AND THE LOWEST RETURN FOR A QUARTER WAS -7.11 %
(QUARTER ENDING DECEMBER 31, 1997 ).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1998 FOR
INTERNATIONAL VALUE WAS -6.44 %.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OVER
SEAS

CALENDAR 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
YEARS

8.26% 16.93% -6.60% 8.61% -11.46% 40.05% 1.27% 9.06% 13.10% 10.92 %

</TABLE>

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 8.26
ROW: 2, COL: 1, VALUE: 16.93
ROW: 3, COL: 1, VALUE: -6.6
ROW: 4, COL: 1, VALUE: 8.609999999999999
ROW: 5, COL: 1, VALUE: -11.46
ROW: 6, COL: 1, VALUE: 40.05
ROW: 7, COL: 1, VALUE: 1.27
ROW: 8, COL: 1, VALUE: 9.060000000000001
ROW: 9, COL: 1, VALUE: 13.1
ROW: 10, COL: 1, VALUE: 10.92
DURING THE PERIODS SHOWN IN THE CHART FOR OVERSEAS, THE HIGHEST RETURN
FOR A QUARTER WAS 13.09 % (QUARTER ENDING SEPTEMBER 30,
1989 ) AND THE LOWEST RETURN FOR A QUARTER WAS -17.04 %
(QUARTER ENDING SEPTEMBER 30, 1990 ).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1998 FOR OVERSEAS
WAS -4.30 %.

WORL
DWID
E

CALENDAR 1991 1992 1993 1994 1995 1996 1997
YEARS

7.88% 6.21% 36.55% 2.96% 7.19% 18.72% 12.08 %

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: 7.88
ROW: 5, COL: 1, VALUE: 6.21
ROW: 6, COL: 1, VALUE: 36.55
ROW: 7, COL: 1, VALUE: 2.96
ROW: 8, COL: 1, VALUE: 7.19
ROW: 9, COL: 1, VALUE: 18.72
ROW: 10, COL: 1, VALUE: 12.08
DURING THE PERIODS SHOWN IN THE CHART FOR WORLDWIDE, THE HIGHEST
RETURN FOR A QUARTER WAS 11.82 % (QUARTER ENDING MARCH 31,
1993 ) AND THE LOWEST RETURN FOR A QUARTER WAS -7.71 %
(QUARTER ENDING DECEMBER 31, 1997 ).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1998 FOR WORLDWIDE
WAS -8.28 %.

AVERAGE ANNUAL RETURNS
FOR THE PERIODS ENDED PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS/
DECEMBER 31, 1997 LIFE OF FUND*

INTERNATIONAL 7.12% 12.19% 9.09%
GROWTH &
INCOME FUND

MORGAN STANLEY 2.01% 11.44% 6.27%
CAPITAL
INTERNATIONAL
EAFE INDEX

LIPPER 5.44% 12.10% 9.37%
INTERNATIONAL
FUNDS AVERAGE

DIVERSIFIED 13.72% 17.34% 11.46%A
INTERNATIONAL
FUND

MORGAN STANLEY 6.06% 12.81% 8.71%A
CAPITAL
INTERNATIONAL
GDP-WEIGH T ED
EAFE INDEX

MORGAN STANLEY 2.01% 11.44% 7.10%A
CAPITAL
INTERNATIONAL
EAFE INDEX

LIPPER 5.44% 12.10% 9.41%A
INTERNATIONAL
FUNDS AVERAGE

INTERNATIONAL 7.85% N/A 10.42%B
VALUE FUND

MORGAN STANLEY 2.01% N/A 6.35%B
CAPITAL
INTERNATIONAL
EAFE INDEX

LIPPER 5.44% N/A 8.74%B
INTERNATIONAL
FUNDS AVERAGE

OVERSEAS FUND 10.92% 14.18% 8.23%

MORGAN STANLEY 2.01% 11.44% 6.27%
CAPITAL
INTERNATIONAL
EAFE INDEX

LIPPER 5.44% 12.10% 9.37%
INTERNATIONAL
FUNDS AVERAGE

WORLDWIDE FUND 12.08% 14.93% 12.62%C

MORGAN STANLEY 15.76% 15.34% 12.55%C
CAPITAL
INTERNATIONAL
WORLD INDEX

LIPPER GLOBAL 13.04% 13.76% 12.71%C
FUNDS AVERAGE

* BEGINNING JANUARY 1 OF THE FIRST CALENDAR YEAR FOLLOWING THE FUND'S
COMMENCEMENT OF OPERATIONS.
A FROM JANUARY 1, 1992.
B FROM JANUARY 1, 1995.
C FROM JANUARY 1, 1991.

If FMR had not reimbursed certain fund expenses during these periods,
International Growth & Income Fund's, Diversified International
Fund's, and Worldwide Fund's total returns would have been lower.
Morgan Stanley Capital International Europe, Australasia, Far East
(EAFE) Index is an index t hat is designed to represent the
performance of developed stock markets outside the United States and
Canada. The index may be compiled in two ways: a market
capitalization-weighted (cap-weighted) and a gross domestic
product-weighted (GDP-weighted) version. As of October 31, 1998, the
cap-weighted index included over 1,000 equity securities of
companies domiciled in 20 countries, and the GDP-weighted index
included over 1,000 equity securities of companies domiciled in
20 countries.
Morgan Stanley Capital International World Index is a market
capitalization-weighted index that is designed to represent the
performance of developed stock markets throughout the world. As of
October 31, 1998, the index included over 1,450 equity
securities of companies domiciled in 22 countries.
Each Lipper Funds Average reflects the performance (excluding sales
charges) of mutual funds with similar objectives.
FEE TABLE
The following table describes the fees and expenses that are incurred
when you buy, hold or sell shares of a fund. The annual fund
operating expenses provided below for each fund do not reflect the
effect of any reduction of certain expenses during the period.

SHAREHOLDER FEES (PAID BY THE INVESTOR DIRECTLY )
SALES CHARGE (LOAD) ON NONE
PURCHASES AND REINVESTED
DISTRIBUTIONS

DEFERRED SALES CHARGE NONE
(LOAD) ON REDEMPTIONS

ANNUAL ACCOUNT $12.00
MAINTENANCE FEE (FOR
ACCOUNTS UNDER $2,500)

ANNUA L FUND OPERATING EXPENSES (PAID FROM FUND ASSETS )
INTERNATIONAL MANAGEMENT FEE 0.74 %
GROWTH &
INCOME

DISTRIBUTION AND SERVICE (12B-1) NONE
FEE

OTHER EXPENSES 0.43 %

TOTAL ANNUAL FUND OPERATING 1.17 %
EXPENSES

DIVERSIFIED MANAGEMENT FEE 0.83 %
INTERNATIONAL

DISTRIBUTION AND SERVICE (12B-1) NONE
FEE

OTHER EXPENSES 0.39 %

TOTAL ANNUAL FUND OPERATING 1.22 %
EXPENSES

INTERNATIONAL MANAGEMENT FEE 0.82 %
VALUE

DISTRIBUTION AND SERVICE (12B-1) NONE
FEE

OTHER EXPENSES 0.41 %

TOTAL ANNUAL FUND OPERATING 1.23 %
EXPENSES

OVERSEAS MANAGEMENT FEE 0.90 %

DISTRIBUTION AND SERVICE (12B-1) NONE
FEE

OTHER EXPENSES 0.36 %

TOTAL ANNUAL FUND OPERATING 1.26 %
EXPENSES

WORLDWIDE MANAGEMENT FEE 0.74 %

DISTRIBUTION AND SERVICE (12B-1) NONE
FEE

OTHER EXPENSES 0.41 %

TOTAL ANNUAL FUND OPERATING 1.15 %
EXPENSES

A portion of the brokerage commissions that a fund pays is used to
reduce that fund's expenses. In addition, each fund has entered into
arrangements with its custodian and transfer agent whereby credits
realized as a result of uninvested cash balances are used to reduce
custodian and transfer agent expenses. Including these reductions, the
total fund operating expenses would have been 1.13% for
International Growth & Income Fund, 1.19% for Diversified
International Fund, 1.21% for International Value Fund, 1.24% for
Overseas Fund and 1.12% for Worldwide Fund.
This EXAMPLE helps you compare the cost of investing in the funds with
the cost of investing in other mutual funds.
Let's say, hypothetically, that each fund's annual return is 5% and
that your shareholder fees and each fund's annual operating expenses
are exactly as described in the fee table. This example illustrates
the effect of fees and expenses, but is not meant to suggest actual or
expected fees and expenses or returns, all of which may vary. For
every $10,000 you invested, here's how much you would pay in total
expenses if you close your account after the number of years
indicated:

INTERNATIONAL 1 YEAR $ 119
GROWTH &
INCOME

3 YEARS $ 372

5 YEARS $ 644

10 YEARS $ 1,420

DIVERSIFIED 1 YEAR $ 124
INTERNATIONAL

3 YEARS $ 387

5 YEARS $ 670

10 YEARS $ 1,477

INTERNATIONAL 1 YEAR $ 125
VALUE

3 YEARS $ 390

5 YEARS $ 676

10 YEARS $ 1,489

OVERSEAS 1 YEAR $ 128

3 YEARS $ 400

5 YEARS $ 692

10 YEARS $ 1,523

WORLDWIDE 1 YEAR $ 117

3 YEARS $ 365

5 YEARS $ 633

10 YEARS $ 1,398

FUND BASICS

INVESTMENT DETAILS
INVESTMENT OBJECTIVE
INTERNATIONAL GROWTH & INCOME FUND seeks capital growth and current
income, consistent with reasonable investment risk.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests at least 65% of the fund's total assets in
foreign securities. FMR normally invests a majority of the fund's
assets in common stocks with a focus on those that pay current
dividends and show potential for capital appreciation. However, FMR
may invest the fund's assets in debt securities, including
lower-quality debt securities, as well as equity securities that are
not currently paying dividends, but offer prospects for future income
or capital appreciation.
FMR normally diversifies the fund's investments across different
countries and regions. In allocating the fund's investments across
countries and regions, FMR will consider the size of the market in
each country and region relative to the size of the international
market as a whole.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INVESTMENT OBJECTIVE
DIVERSIFIED INTERNATIONAL FUND seeks capital growth.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests at least 65% of the fund's total assets in
foreign securities. FMR normally invests the fund's assets primarily
in common stocks.
FMR normally diversifies the fund's investments across different
countries and regions. In allocating the fund's investments across
countries and regions, FMR will consider the size of the market in
each country and region relative to the size of the international
market as a whole.
In buying and selling securities, FMR uses a disciplined approach
that involves computer-aided, quantitative analysis supported by
fundamental analysis. FMR's computer model systematically reviews
thousands of stocks, using data such as historical earnings, dividend
yield, earnings, per share, and other quantitative factors. Then, the
issuers of potential investments are analyzed further using
fundamental factors such as growth potential, earnings estimates and
financial condition.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INVESTMENT OBJECTIVE
INTERNATIONAL VALUE FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests at least 65% of the fund's total assets in
foreign securities. FMR normally invests the fund's assets primarily
in common stocks.
FMR focuses on securities of companies that it believes are
undervalued in the marketplace or possess valuable assets. The stocks
of these companies are often called "value" stocks.
FMR normally diversifies the fund's investments across different
countries and regions. In allocating the fund's investments across
countries and regions, FMR will consider the size of the market in
each country and region relative to the size of the international
market as a whole.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INVESTMENT OBJECTIVE
OVERSEAS FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests at least 65% of the fund's total assets in
foreign securities. FMR normally invests the fund's assets primarily
in common stocks.
FMR normally diversifies the fund's investments across different
countries and regions. In allocating the fund's investments across
countries and regions, FMR will consider the size of the market in
each country and region relative to the size of the international
market as a whole.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INVESTMENT OBJECTIVE
WORLDWIDE FUND seeks growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR invests the fund's assets in securities issued anywhere in the
world, including the United States. FMR normally invests the fund's
assets primarily in common stocks.
FMR normally diversifies the fund's investments across different
countries and regions. In allocating the fund's investments across
countries and regions, FMR will consider the size of the market in
each country and region relative to the size of the world market as a
whole.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve it's
objective.
DESCRIPTION OF PRINCIPAL SECURITY TYPES
EQUITY SECURITIES represent an ownership interest, or the right to
acquire an ownership interest, in an issuer. Different types of equity
securities provide different voting and dividend rights and priority
in the event of the bankruptcy of the issuer. Equity securities
include common stocks, preferred stocks, convertible securities and
warrants.
DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable or floating rate of interest, and must
repay the amount borrowed at the maturity of the security. Some debt
securities, such as zero coupon bonds, do not pay interest but are
sold at a discount from their face values. Debt securities include
corporate bonds, government securities, and mortgage and other
asset-backed securities.
PRINCIPAL INVESTMENT RISKS
Many factors affect each fund's performance. A fund's share price
changes daily based on changes in market conditions and interest rates
and in response to other economic, political or financial
developments. A fund's reaction to these developments will be affected
by the financial condition, industry and economic sector, and
geographic location of an issuer, and the fund's level of investment
in the securities of that issuer. When you sell your shares of a fund,
they could be worth more or less than what you paid for them.
The following factors may significantly affect a fund's performance:
STOCK MARKET VOLATILITY. The value of equity securities fluctuates in
response to issuer, political, market and economic developments. In
the short term, equity prices can fluctuate dramatically in response
to these developments. Different parts of the market can react
differently to these developments. For example, large cap stocks can
react differently than small cap stocks, and "growth" stocks can react
differently than "value" stocks. Issuer, political or economic
developments can affect a single issuer, issuers within an industry or
economic sector or geographic region, or the market as a whole.
INTEREST RATE CHANGES. Debt securities have varying levels of
sensitivity to changes in interest rates. In general, the price of a
debt security can fall when interest rates rise and can rise when
interest rates fall. Securities with longer maturities and mortgage
securities can be more sensitive to interest rate changes.
FOREIGN EXPOSURE. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations
can involve additional risks relating to political, economic or
regulatory conditions in foreign countries. These risks include
fluctuations in foreign currencies; withholding or other taxes;
trading, settlement, custodial and other operational risks; and the
less stringent investor protection and disclosure standards of some
foreign markets. All of these factors can make foreign investments,
especially those in emerging markets, more volatile and potentially
less liquid than U.S. investments. In addition, foreign markets can
perform differently than the U.S. market.
Investing in emerging markets involves risks in addition to and
greater than those generally associated with investing in more
developed foreign markets. The extent of foreign development;
political stability; market depth, infrastructure and capitalization
and regulatory oversight are generally less than in more developed
markets. Emerging market economies can be subject to greater social,
economic, regulatory and political uncertainties. All of these factors
can make emerging market securities more volatile and potentially less
liquid than securities issued in more developed markets.
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of issuer, and changes in general economic or
political conditions can affect the credit quality or value of
an issuer's securities. The value of securities of smaller, less
well-known issuers can be more volatile than that of larger issuers.
Lower-quality debt securities (those of less than investment-grade
quality) tend to be more sensitive to these changes than
higher-quality debt securities.
Lower-quality debt securities involve greater risk of default or price
changes due to changes in the credit quality of the issuer. The value
of lower-quality debt securities often fluctuates in response to
company, political or economic developments and can decline
significantly over short periods of time or during periods of general
or regional economic difficulty.
"QUANTITATIVE" INVESTING. The value of securities selected using
quantitative analysis can react differently to issuer, political,
market and economic developments than the market as a whole or
securities selected using only fundamental analysis. The factors used
in quantitative analysis and the weight placed on those factors may
not be predictive of a security's value. In addition, factors that
affect a security's value can change over time and these changes may
not be reflected in the quantitative model.
"VALUE" INVESTING. "Value" stocks can react differently to issuer,
political, market and economic developments than the market as a whole
and other types of stocks. "Value" stocks tend to be inexpensive
relative to their earnings or assets compared to other types of
stocks. However, "value" stocks can continue to be inexpensive for
long periods of time and may not ever realize their full value.
In response to market, economic, political or other conditions, FMR
may temporarily use a different investment strategy for defensive
purposes. If FMR does so, different factors could affect a fund's
performance and the fund may not achieve its investment
objective.
FUNDAMENTAL INVESTMENT POLICIES
The policies discussed below are fundamental, that is, subject to
change only by shareholder approval.
INTERNATIONAL GROWTH & INCOME FUND seeks capital growth and current
income, consistent with reasonable investment risk, by investing
principally in foreign securities.
DIVERSIFIED INTERNATIONAL FUND seeks capital growth by investing
primarily in equity securities of companies located anywhere outside
the U.S.
INTERNATIONAL VALUE FUND seeks long-term growth of capital.
OVERSEAS FUND seeks long-term growth of capital primarily through
investments in foreign securities.
WORLDWIDE FUND seeks growth of capital by investing in securities
issued anywhere in the world.
VALUING SHARES
Each fund is open for business each day the New York Stock
Exchange (NYSE) is open.
Each fund's net asset value per share (NAV) is the value of a single
share. Fidelity(registered trademark) normally calculates each fund's
NAV as of the close of business of the NYSE, normally 4:00 p.m.
Eastern time. However, NAV may be calculated earlier if trading on the
NYSE is restricted or as permitted by the Securities and Exchange
Commission(SEC ). Each fund's assets are valued as of this time for
the purpose of computing the fund's NAV.
To the extent that each fund's assets are traded in other markets on
days when the NYSE is closed, the value of the fund's assets may be
affected on days when the fund is not open for business. In addition,
trading in some of a fund's assets may not occur on days when the fund
is open for business.
Each fund's assets are valued primarily on the basis of market
quotations. Certain short-term securities are valued on the basis of
amortized cost. If market quotations are not readily available for a
security or if a security's value has been materially affected by
events occurring after the close of the exchange or market on which
the security is principally traded (for example, a foreign exchange or
market), that security may be valued by another method that the Board
of Trustees believes accurately reflects fair value. A security's
valuation may differ depending on the method used for determining
value.
SHAREHOLDER INFORMATION

WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
RETIREMENT
FOR TAX-ADVANTAGED RETIREMENT SAVINGS
(solid bullet) TRADITIONAL INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
(solid bullet) ROTH IRAS
(solid bullet) ROTH CONVERSION IRAS
(solid bullet) ROLLOVER IRAS
(solid bullet) 401(K) PLANS, AND CERTAIN OTHER 401(A)-QUALIFIED PLANS
(solid bullet) KEOGH PLANS
(solid bullet) SIMPLE IRAS
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS)
(solid bullet) SALARY REDUCTION SEP-IRAS (SARSEPS)
(solid bullet) 403(B) CUSTODIAL ACCOUNTS
(solid bullet) DEFERRED COMPENSATION PLANS (457 PLANS)
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
TRUST
FOR MONEY BEING INVESTED BY A TRUST
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR
OTHER GROUPS

BUYING SHARES
The price to buy one share of each fund is the fund's NAV. Each fund's
shares are sold without a sales charge.
Your shares will be bought at the next NAV calculated after your
investment is received in proper form.
Short-term or excessive trading into and out of a fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, a fund may reject any purchase
orders, including exchanges, particularly from market timers or
investors who, in FMR's opinion, have a pattern of short-term or
excessive trading or whose trading has been or may be disruptive to
that fund. For these purposes, FMR may consider an investor's trading
history in that fund or other Fidelity funds, and accounts under
common ownership or control.
Each fund may stop offering shares completely or may offer shares only
on a limited basis, for a period of time or permanently.
When you place an order to buy shares, note the following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) Fidelity reserves the right to limit the number
of checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will
be canceled and you could be liable for any losses or fees a fund or
Fidelity has incurred.
Certain financial institutions that have entered into sales agreements
with Fidelity Distributors Corporation (FDC) may enter confirmed
purchase orders on behalf of customers by phone, with payment to
follow no later than the time when a fund is priced on the following
business day. If payment is not received by that time, the order will
be canceled and the financial institution could be held liable for
resulting fees or losses.

MINIMUMS

TO OPEN AN ACCOUNT $2,500
For certain Fidelity retirement accountsA $500
TO ADD TO AN ACCOUNT $250
Through regular investment plans $100
MINIMUM BALANCE $2,000
For certain Fidelity retirement accountsA $500
A FIDELITY TRADITIONAL IRA, ROTH IRA, ROTH CONVERSION IRA, ROLLOVER
IRA, SEP-IRA, AND KEOGH ACCOUNTS.

These minimums may be lower for purchases through a Fidelity
GoalPlanner SM account in Worldwide. There is no minimum account
balance or initial or subsequent purchase minimum for purchases
through Fidelity Portfolio Advisory Services SM, a qualified state
tuition program, certain Fidelity retirement accounts funded through
salary deduction, or accounts opened with the proceeds of
distributions from such retirement accounts. In addition, each fund
may waive or lower purchase minimums in other circumstances.

KEY INFORMATION

PHONE TO OPEN AN
1-800-544-7777 ACCOUNT
(bullet)
Exchange
from another
Fidelity
fund.
TO ADD TO AN
ACCOUNT
(bullet)
Exchange
from another
Fidelity
fund.
(bullet)
Use Fidelity
Money Line(registered trademark)
to transfer
from your
bank
account.

INTERNET TO OPEN AN
WWW.FIDELITY.COM ACCOUNT
(bullet)
Complete and
sign the
application.
Make your
check
payable to
the complete
name of the
fund. Mail
to the
address
under "Mail"
below.
TO ADD TO AN
ACCOUNT
(bullet)
Exchange
from another
Fidelity
fund.
(bullet)
Use Fidelity
Money Line
to transfer
from your
bank
account.

MAIL TO OPEN AN
FIDELITY INVESTMENTS ACCOUNT
P.O. BOX 770001 (bullet)
CINCINNATI, OH Complete
45277-0002 and sign
the
application
. Make your
check
payable to
the
complete
name of the
fund. Mail
to the
address at
left.
TO ADD TO AN
ACCOUNT
(bullet)
Make your
check
payable to
the
complete
name of the
fund.
Indicate
your fund
account
number on
your check
and mail to
the address
at left.
(bullet)
Exchange
from
another
Fidelity
fund. Send
a letter of
instruction
to the
address at
left,
including
your name,
the funds'
names, the
fund
account
numbers,
and the
dollar
amount or
number of
shares to
be
exchanged.

IN PERSON TO OPEN AN
ACCOUNT
(bullet)
Bring your
application
and check
to a Fideli
ty Investor
Center.
Call
1-800-544-9
797 for the
center
nearest
you.
TO ADD TO AN
ACCOUNT
(bullet)
Bring your
check to a
Fidelity
Investor
Center.
Call
1-800-544-9
797 for the
center
nearest
you.

WIRE TO OPEN AN
ACCOUNT
(bullet)
Call
1-800-544-7
777 to set
up your
account and
to arrange
a wire
transaction
.
(bullet)
Wire within
24 hours
to: Bankers
Trust
Company,
Bank
Routing #
021001033,
Account #
00163053.
(bullet)
Specify the
complete
name of the
fund and
include
your new
fund
account
number and
your name.
TO ADD TO AN
ACCOUNT
(bullet)
Wire to:
Bankers
Trust
Company,
Bank
Routing #
021001033,
Account #
00163053.
(bullet)
Specify the
complete
name of the
fund and
include
your fund
account
number and
your name.

AUTOMATICALLY TO OPEN AN
ACCOUNT
(bullet)
Not
available.
TO ADD TO AN
ACCOUNT
(bullet)
Use Fidelity
Automatic
Account
Builder(registered trademark) or
Direct
Deposit.
(bullet)
Use Fidelity
Automatic
Exchange
Service to
exchange
from a
Fidelity
money market
fund.

SELLING SHARES
The price to sell one share of each fund is the fund's NAV.
Your shares will be sold at the next NAV calculated after your order
is received in proper form.
Certain requests must include a signature guarantee. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to sell more than $100,000 worth of
shares;
(small solid bullet) Your account registration has changed within the
last 30 days;
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address);
(small solid bullet) The check is being made payable to someone other
than the account owner; or
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if
authorized under state law), securities exchange or association,
clearing agency, or savings association. A notary public cannot
provide a signature guarantee.
When you place an order to sell shares, note the following:
(small solid bullet) If you are selling some but not all of your
shares, leave at least $2,000 worth of shares in the account to keep
it open ($500 for retirement accounts), except accounts not subject to
account minimums.
(small solid bullet) Normally, Fidelity will process redemptions by
the next business day, but Fidelity may take up to seven days to
process redemptions if making immediate payment would adversely affect
a fund.
(small solid bullet) Redemption proceeds (other than exchanges) may be
delayed until money from prior purchases sufficient to cover your
redemption has been received and collected. This can take up to seven
business days after a purchase.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
(small solid bullet) Redemption proceeds may be paid in securities or
other assets rather than in cash if the Board of Trustees determines
it is in the best interests of a fund.
(small solid bullet) You will not receive interest on amounts
represented by uncashed redemption checks.
(small solid bullet) Unless otherwise instructed, Fidelity will send a
check to the record address.

KEY INFORMATION

PHONE (bullet)
1-800-544-7777 Call the
phone number
at left to
initiate a
wire
transaction
or to
request a
check for
your
redemption.
(bullet)
Use Fidelity
Money Line
to transfer
to your bank
account.
(bullet)
Exchange to
another
Fidelity
fund. Call
the phone
number at
left.

INTERNET (bullet)
WWW.FIDELITY.COM Exchange to
another
Fidelity
fund.
(bullet)
Use Fidelity
Money Line
to transfer
to your bank
account.

MAIL INDIVIDUAL, JOINT
FIDELITY INVESTMENTS TENANT,
P.O. BOX 660602 SOLE PROPRIETORSHIP,
DALLAS, TX 75266-0602 UGMA, UTMA
(bullet)
Send a
letter of
instruction
to the
address at
left,
including
your name,
the fund's
name, your
fund
account
number, and
the dollar
amount or
number of
shares to
be sold.
The letter
of
instruction
must be
signed by
all persons
required to
sign for
transaction
s, exactly
as their
names
appear on
the
account.
RETIREMENT ACCOUNT
(bullet)
The account
owner
should
complete a
retirement
distributio
n form.
Call
1-800-544-6
666 to
request
one.
TRUST
(bullet)
Send a
letter of
instruction
to the
address at
left,
including
the trust's
name, the
fund's
name, the
trust's
fund
account
number, and
the dollar
amount or
number of
shares to
be sold.
The trustee
must sign
the letter
of
instruction
indicating
capacity as
trustee. If
the
trustee's
name is not
in the
account
registration
, provide a
copy of the
trust
document
certified
within the
last 60
days.
BUSINESS OR
ORGANIZATION
(bullet)
Send a
letter of
instruction
to the
address at
left,
including
the firm's
name, the
fund's
name, the
firm's fund
account
number, and
the dollar
amount or
number of
shares to
be sold. At
least one
person
authorized
by
corporate
resolution
to act on
the account
must sign
the letter
of
instruction
.
(bullet)
Include a
corporate
resolution
with
corporate
seal or a
signature
guarantee.
EXECUTOR,
ADMINISTRATOR,
CONSERVATOR,
GUARDIAN
(bullet)
Call
1-800-544-6
666 for
instruction
s.

IN PERSON INDIVIDUAL, JOINT
TENANT,
SOLE PROPRIETORSHIP,
UGMA, UTMA
(bullet)
Bring a
letter of
instruction
to a
Fidelity
Investor
Center.
Call
1-800-544-9
797 for the
center
nearest
you. The
letter of
instruction
must be
signed by
all persons
required to
sign for
transaction
s, exactly
as their
names
appear on
the
account.
RETIREMENT ACCOUNT
(bullet)
The account
owner
should
complete a
retirement
distributio
n form.
Visit a
Fidelity
Investor
Center to
request
one. Call
1-800-544-9
797 for the
center
nearest
you.
TRUST
(bullet)
Bring a
letter of
instruction
to a
Fidelity
Investor
Center.
Call
1-800-544-9
797 for the
center
nearest
you. The
trustee must
sign the
letter of
instruction
indicating
capacity as
trustee. If
the
trustee's
name is not
in the
account
registration
, provide a
copy of the
trust
document
certified
within the
last 60
days.
BUSINESS OR
ORGANIZATION
(bullet)
Bring a
letter of
instruction
to a
Fidelity
Investor
Center.
Call
1-800-544-9
797 for the
center
nearest
you. At
least one
person
authorized
by
corporate
resolution
to act on
the account
must sign
the letter
of
instruction
.
(bullet)
Include a
corporate
resolution
with
corporate
seal or a
signature
guarantee.
EXECUTOR,
ADMINISTRATOR,
CONSERVATOR,
GUARDIAN
(bullet)
Visit a
Fidelity
Investor
Center for
instruction
s. Call
1-800-544-9
797 for the
center
nearest
you.

AUTOMATICALLY (bullet)
Use Personal
Withdrawal
Service to
set up
periodic
redemptions
from your
account.

EXCHANGING SHARES
An exchange involves the redemption of all or a portion of the shares
of one fund and the purchase of shares of another fund.
As a shareholder, you have the privilege of exchanging shares of a
fund for shares of other Fidelity funds.
However, you should note the following policies and restrictions
governing exchanges:
(small solid bullet) The fund you are exchanging into must be
available for sale in your state.
(small solid bullet) You may exchange only between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund, read its
prospectus.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Each fund may temporarily or permanently
terminate the exchange privilege of any investor who makes more than
four exchanges out of the fund per calendar year.
(small solid bullet) The exchange limit may be modified for accounts
held by certain institutional retirement plans to conform to plan
exchange limits and Department of Labor regulations. See your plan
materials for further information.
(small solid bullet) Each fund may refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to
invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
The funds may terminate or modify the exchange privilege in the
future.
Other funds may have different exchange restrictions, and may impose
administrative fees of up to 1.00% and trading fees of up to 3.00% of
the amount exchanged. Check each fund's prospectus for details.
ACCOUNT FEATURES AND POLICIES
FEATURES
The following features are available to buy and sell shares of the
funds.
AUTOMATIC INVESTMENT AND WITHDRAWAL PROGRAMS. Fidelity offers
convenient services that let you automatically transfer money into
your account, betwe en accounts or out of your account. While
automatic investment programs do not guarantee a profit and will not
protect you against loss in a declining market, they can be an
excellent way to invest for retirement, a home, educational expenses,
and other long-term financial goals. Automatic withdrawal or exchange
programs can be a convenient way to provide a consistent income flow
or to move money between your investments.

<TABLE>
<CAPTION>
<S> <C> <C>
FIDELITY
AUTOMATIC
ACCOUNT
BUILDER
TO MOVE MONEY
FROM YOUR BANK
ACCOUNT TO A FIDELITY
FUND

MINIMUM FREQUENCY PROCEDURES
$100 Monthly or quarterly (bullet) To set up for a new
account, complete the appropriate
section on the fund application.
(bullet) To set up for existing
accounts, call 1-800-544-6666 or
visit Fidelity's Web site for an
application.
(bullet) To make changes, call
1-800-544-6666 at least three
business days prior to your next
scheduled investment date.

DIRECT DEPOSIT
TO SEND ALL OR A
PORTION OF YOUR
PAYCHECK OR
GOVERNMENT CHECK
TO A FIDELITY FUNDA

MINIMUM FREQUENCY PROCEDURES
$100 Every pay period (bullet) To set up for a new
account, check the appropriate box
on the fund application.
(bullet) To set up for an
existing account, call
1-800-544-6666 or visit Fidelity's
Web site for an authorization form.
(bullet) To make changes you
will need a new authorization
form. Call 1-800-544-6666 or
visit Fidelity's Web site to obtain
one.

A BECAUSE THEIR SHARE
PRICES FLUCTUATE, THESE
FUNDS MAY NOT BE
APPROPRIATE CHOICES FOR
DIRECT DEPOSIT OF YOUR
ENTIRE CHECK.

FIDELITY
AUTOMATIC
EXCHANGE
SERVICE
TO MOVE MONEY
FROM A FIDELITY
MONEY MARKET FUND
TO ANOTHER FIDELITY
FUND

MINIMUM FREQUENCY PROCEDURES
$100 Monthly, bimonthly, (bullet) To set up, call
quarterly, or annually 1-800-544-6666 after both
accounts are opened.
(bullet) To make changes, call
1-800-544-6666 at least three
business days prior to your next
scheduled exchange date.

PERSONAL
WITHDRAWAL
SERVICE
TO SET UP PERIODIC
REDEMPTIONS FROM
YOUR ACCOUNT TO YOU
OR TO YOUR BANK
ACCOUNT.

</TABLE>

OTHER FEATURES. The following other features are also available to buy
and sell shares of the funds.
WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE SYSTEM.
(bullet) You must sign up for the Wire feature before using it.
Complete the appropriate section on the application when opening your
account, or call 1-800-544-7777 to add the feature after your account
is opened. Call 1-800-544-7777 before your first use to verify that
this feature is set up on your account.
(bullet) To sell shares by wire, you must designate the U.S.
commercial bank account(s) into which you wish the redemption proceeds
deposited.
FIDELITY MONEY LINE
TO TRANSFER MONEY BY PHONE BETWEEN YOUR BANK ACCOUNT AND YOUR FUND
ACCOUNT.
(bullet) You must sign up for the Money Line feature before using it.
Complete the appropriate section on the application and then call
1-800-544-7777 or visit Fidelity's Web site before your first use to
verify that this feature is set up on your account.
(bullet) Most transfers are complete within three business days of
your call.
(bullet) Maximum purchase: $100,000
FIDELITY ON-LINE XPRESS+(registered trademark)
TO MANAGE YOUR INVESTMENTS THROUGH YOUR PC.
CALL 1-800-544-7272 OR VISIT FIDELITY'S WEB SITE FOR MORE INFORMATION.
(bullet) For account balances and holdings;
(bullet) To review recent account history;
(bullet) For mutual fund and brokerage trading; and
(bullet) For access to research and analysis tools.
FIDELITY WEB XPRESS(registered trademark)
TO ACCESS AND MANAGE YOUR ACCOUNT OVER THE INTERNET AT FIDELITY'S WEB
SITE.
(bullet) For account balances and holdings;
(bullet) To review recent account history;
(bullet) To obtain quotes;
(bullet) For mutual fund and bro kerage tr ading; and
(bullet) To access third-party research on companies, stocks, mutual
funds and the market.
TOUCHTONE XPRESS
TO ACCESS AND MANAGE YOUR ACCOUNT AUTOMATICALLY BY PHONE.
CALL 1-800-544-5555.
(bullet) For account balances and holdings;
(bullet) For mutual fund and brokerage trading;
(bullet) To obtain quotes;
(bullet) To review orders and mutual fund activity; and
(bullet) To change your personal identification number (PIN).
POLICIES
The following policies apply to you as a shareholder.
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after transactions
affecting your account balance except reinvestment of distributions in
the fund or another fund and certain transactions through automatic
investment or withdrawal programs).
(small solid bullet) Monthly or quarterly account statements
(detailing account balances and all transactions completed during the
prior month or quarter).
(small solid bullet) Financial reports (every six months).
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed to your household, even if you have more
than one account in a fund. Call Fidelity at 1-800-544-8544 if
you need additional copies of financial reports, prospectuses or
historical account information.
Electronic copies of most financial reports and prospectuses are
available at Fidelity's Web site. To participate in Fidelity's
electronic delivery program, call Fidelity or visit Fidelity's Web
site for more information.
You may initiate many TRANSACTIONS BY TELEPHONE OR ELECTRONICALLY.
Fidelity will not be responsible for any losses resulting from
unauthorized transactions if it follows reasonable security procedures
designed to verify the identity of the investor. Fidelity will request
personalized security codes or other information, and may also record
calls. For transactions conducted through the Internet, Fidelity
recommends the use of an Internet browser with 128-bit encryption. You
should verify the accuracy of your confirmation statements immediately
after you receive them. If you do not want the ability to sell and
exchange by telephone, call Fidelity for instructions.
When you sign your ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require a fund to withhold 31% of your taxable distributions and
redemptions.
Fidelity may deduct an ANNUAL MAINTENANCE FEE of $12.00 from accounts
with a value of less than $2,500, subject to an annual maximum charge
of $24.00 per shareholder. It is expected that accounts will be valued
on the second Friday in November of each year. Accounts opened after
September 30 will not be subject to the fee for that year. The fee,
which is payable to Fidelity, is designed to offset in part the
relatively higher costs of servicing smaller accounts. This fee will
not be deducted from Fidelity brokerage accounts, retirement accounts
(except non-prototype retirement accounts), accounts using regular
investment plans, or if total assets with Fidelity exceed $30,000.
Eligibility for the $30,000 waiver is determined by aggregating
accounts with Fidelity maintained by Fidelity Service Company, Inc. or
FBSI which are registered under the same social security number or
which list the same social security number for the custodian of a
Uniform Gifts/Transfers to Minors Act account.
If your ACCOUNT BALANCE falls below $2,000 (except accounts not
subject to account minimums), you will be given 30 days' notice to
reestablish the minimum balance. If you do not increase your balance,
Fidelity may close your account and send the proceeds to you. Your
shares will be sold at the NAV on the day your account is closed.
Fidelity may charge a FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
Each fund earns dividends, interest and other income from its
investments, and distributes this income (less expenses) to
shareholders as dividends. Each fund also realizes capital gains from
its investments, and distributes these gains (less any losses) to
shareholders as capital gains distributions.
Each fund normally pays dividends and capital gains distributions in
December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. The following options may be available for
each fund's distributions:
1. REINVESTMENT OPTION. Your dividends and capital gains distributions
will be automatically reinvested in additional shares of the fund. If
you do not indicate a choice on your application, you will be assigned
this option.
2. INCOME-EARNED OPTION. Your capital gains distributions will be
automatically reinvested in additional shares of the fund. Your
dividends will be paid in cash.
3. CASH OPTION. Your dividends and capital gains distributions will be
paid in cash.
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividends
will be automatically invested in shares of another identically
registered Fidelity fund. Your capital gains distributions will be
automatically invested in shares of another identically registered
Fidelity fund, automatically reinvested in additional shares of the
fund or paid in cash.
Not all distribution options are available for every account. If the
option you prefer is not listed on your account application, or if you
want to change your current option, call Fidelity.
If you elect to receive distributions paid in cash by check and the
U.S. Postal Service does not deliver your checks, your distribution
option may be converted to the Reinvestment Option. You will not
receive interest on amounts represented by uncashed distribution
checks.
TAX CONSEQUENCES
As with any investment, your investment in a fund could have tax
consequences for you. If you are not investing through a
tax-advantaged retirement account, you should consider these tax
consequences.
TAXES ON DISTRIBUTIONS. Distributions you receive from each fund are
subject to federal income tax, and may also be subject to state or
local taxes.
For federal tax purposes, each fund's dividends and distributions of
short-term capital gains are taxable to you as ordinary income. Each
fund's distributions of long-term capital gains are taxable to you
generally as capital gains .
If you buy shares when a fund has realized but not yet distributed
income or capital gains, you will be "buying a dividend" by paying the
full price for the shares and then receiving a portion of the price
back in the form of a taxable distribution.
Any taxable distributions you receive from a fund will normally be
taxable to you when you receive them, regardless of your distribution
option.
TAXES ON TRANSACTIONS. Your redemptions, including exchanges, may
result in a capital gain or loss for federal tax purposes. A capital
gain or loss on your investment in a fund is the difference between
the cost of your shares and the price you receive when you sell them.
FUND SERVICES

MANAGEMENT = BASIC +/- PERFORMANCE
FEE FEE ADJUSTMENT

The basic fee is calculated by adding a group fee rate to an
individual fund fee rate, dividing by twelve, and multiplying the
result by a fund's average net assets throughout the month.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52%, and it
drops as total assets under management increase.
For October 1998, the group fee rate was . 2910 %. The individual
fund fee rate is 0.45% for I nternational Growth & Income Fund,
Diversified International Fund, International Value Fund, Overseas
Fund, and Worldwide Fund.
The basic fee for Diversified International Fund, International Value
Fund, and Overseas Fund for the fiscal year ended October 31, 1998 was
0.74%, 0.74% and 0.74% , respectively, of the fund's average net
assets.
The performance adjustment rate is calculated monthly by comparing
over the performance period Diversified International Fund's
performance to that of the Morgan Stanley Capital International
GDP-Weighted EAFE Index and International Value Fund's and Overseas
Fund's performance to that of the Morgan Stanley Capital
Intern ational EAFE Index.
The performance adjustment rate is divided by twelve and multiplied by
the fund's average net assets throughout the month, and the resulting
dollar amount is then added to or subtracted from the basic fee. The
maximum annualized performance adjustment rate is (plus/minus)0.20% of
the fund's average net assets over the performance period.
For Diversified International Fund, International Value Fund, and
Overseas Fund, the performance period is the most recent 36-month
period.
On or about May 19, 1999, a meeting of the shareholders of Fidelity
Diversified International Fund will be held to prospectively change
the comparative securities index used to calculate the fund's
performance adjustment from the Morgan Stanley Capital International
GDP-Weighted EAFE Index to the Morgan Stanley Capital International
EAFE Index.
The total management fee for the fiscal year ended October 31, 1998
was 0.74 % of the fund's average net assets for International
Growth & Income Fund, 0.83 % of the fund's average net assets
for Diversified International Fund, 0.82 % of the fund's average
net assets for International Value Fund , 0.90 % of the fund's
average net assets for Overseas Fund, and 0.74 % of the fund's
average net assets for Worldwide Fund.
FMR pays FMR U.K., FMR Far East, FIJ and FIIA for providing assistance
with investment advisory services, and FIIA in turn pays FIIA(U.K.)L.
FMR may, from time to time, agree to reimburse the funds for
management fees and other expenses above a specified limit. FMR
retains the ability to be repaid by a fund if expenses fall below the
specified limit prior to the end of the fiscal year. Reimbursement
arrangements, which may be terminated by FMR at any time, can decrease
a fund's expenses and boost its performance.
FUND DISTRIBUTION
FDC distributes each fund's shares.
Each fund has adopted a Distribution and Service Plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 that recognizes
that FMR may use its management fee revenues, as well as its past
profits or its resources from any other source, to pay FDC for
expenses incurred in connection with providing services intended to
result in the sale of fund shares and/or shareholder support services.
FMR, directly or through FDC, may pay intermediaries, such as banks,
broker-dealers and other service providers, that provide those
services. Currently, the Board of Trustees of each fund has authorized
such payments.
To receive payments made pursuant to a Distribution and Service Plan,
intermediaries must sign the appropriate agreement with FDC in
advance.
FMR may allocate brokerage transactions in a manner that takes into
account the sale of shares of a fund, provided that the fund receives
brokerage services and commission rates comparable to those of other
broker-dealers.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this Prospectus and in the related
Statement of Additional Information (SAI), in connection with the
offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the funds or FDC. This Prospectus and the related SAI do
not constitute an offer by the funds or by FDC to sell or to buy
shares of the funds to any person to whom it is unlawful to make such
offer.
APPENDIX

FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
fund's financial history for the past 5 years , and for
International Value Fund, the past 4 years . Certain information
reflects financial results for a single fund share. Total returns for
each period include the reinvestment of all dividends and
distributions. The annual information has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose
report, along with the funds' financial highlights and financial
statements, are included in the funds' Annual Report. A free copy of
the Annual Report is available upon request.

INTERNATIONAL GROWTH & INCOME

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

YEARS ENDED 1998 1997 1996 1995 1994
OCTOBER 31

NET ASSET $ 20.88 $ 19.09 $ 17.83 $ 17.54 $ 17.25
VALUE,
BEGINNING OF
PERIOD

INCOME FROM
INVESTMENT
OPERATIONS

NET .34B .48B,C .54 .54 .38B
INVESTMENT
INCOME

NET (.22)E 1.97 1.32 .28 .02
REALIZED AND
UNREALIZED
GAIN (LOSS)

TOTAL FROM .12 2.45 1.86 .82 .40
INVESTMENT
OPERATIONS

LESS
DISTRIBUTIONS

FROM NET (.37) (.29) (.60) (.21) (.03)
INVESTMENT
INCOME

FROM NET (.88) (.37) -- (.32) (.05)
REALIZED GAIN

IN EXCESS -- -- -- -- (.03)
OF NET
REALIZED GAIN

TOTAL (1.25) (.66) (.60) (.53) (.11)
DISTRIBUTIONS

NET ASSET $ 19.75 $ 20.88 $ 19.09 $ 17.83 $ 17.54
VALUE, END OF
PERIOD

TOTAL .55% 13.17% 10.66% 4.95% 2.33%
RETURNA

NET ASSETS, $ 817,765 $ 1,067,169 $ 1,007,076 $ 903,235 $ 1,367,938
END OF PERIOD
(000
OMITTED)

RATIO OF 1.17% 1.17% 1.16% 1.18% 1.21%
EXPENSES TO
AVERAGE NET
ASSETS

RATIO OF 1.13%D 1.15%D 1.14%D 1.18% 1.21%
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS

RATIO OF NET 1.62% 2.33% 2.76% 2.98% 2.16%
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS

PORTFOLIO 143% 70% 95% 141% 173%
TURNOVER
RATE

</TABLE>

A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
C INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.05 PER SHARE.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
E THE AMOUNT SHOWN FOR SHARES OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET GAIN ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING
OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.

DIVERSIFIED INTERNATIONAL

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

YEARS ENDED 1998 1997 1996 1995 1994
OCTOBER 31

NET ASSET $ 16.57 $ 14.38 $ 12.73 $ 12.46 $ 11.32
VALUE,
BEGINNING OF
PERIOD

INCOME FROM
INVESTMENT
OPERATIONS

NET .26B .24B,C .15 .22 .05
INVESTMENT
INCOME

NET .98 2.46 2.13 .47 1.20
REALIZED AND
UNREALIZED
GAIN (LOSS)

TOTAL FROM 1.24 2.70 2.28 .69 1.25
INVESTMENT
OPERATIONS

LESS
DISTRIBUTIONS

FROM NET (.19) (.15) (.22) (.03) (.01)
INVESTMENT
INCOME

FROM NET (.41) (.36) (.41) (.39) (.10)
REALIZED GAIN

TOTAL (.60) (.51) (.63) (.42) (.11)
DISTRIBUTIONS

NET ASSET $ 17.21 $ 16.57 $ 14.38 $ 12.73 $ 12.46
VALUE, END OF
PERIOD

TOTAL 7.72% 19.30% 18.66% 6.02% 11.14%
RETURNA

NET ASSETS, $ 1,944,815 $ 1,514,327 $ 665,492 $ 295,017 $ 351,152
END OF PERIOD
(000
OMITTED)

RATIO OF 1.22% 1.25% 1.29% 1.13% 1.25%
EXPENSES TO
AVERAGE NET
ASSETS

RATIO OF 1.19%D 1.23%D 1.27%D 1.12%D 1.25%
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS

RATIO OF NET 1.46% 1.49% 1.53% 1.55% .96%
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS

PORTFOLIO 95% 81% 94% 101% 89%
TURNOVER
RATE

</TABLE>

INTERNATIONAL VALUE

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

YEARS ENDED 1998 1997 1996 1995B
OCTOBER 31

NET ASSET $ 12.47 $ 11.33 $ 10.63 $ 10.00
VALUE,
BEGINNING OF
PERIOD

INCOME FROM
INVESTMENT
OPERATIONS

NET .09C .13C .16D .11C
INVESTMENT
INCOME

NET .14F 1.33 .85 .52
REALIZED AND
UNREALIZED
GAIN (LOSS)

TOTAL FROM .23 1.46 1.01 .63
INVESTMENT
OPERATIONS

LESS
DISTRIBUTIONS

FROM NET (.06) (.10) (.01) --
INVESTMENT
INCOME

FROM NET (.28) (.22) (.30) --
REALIZED GAIN

TOTAL (.34) (.32) (.31) --
DISTRIBUTIONS

NET ASSET $ 12.36 $ 12.47 $ 11.33 $ 10.63
VALUE, END OF
PERIOD

TOTAL 1.95% 13.20% 9.64% 6.30%
RETURNA

NET ASSETS, $ 408,755 $ 402,747 $ 270,865 $ 56,828
END OF PERIOD
(000
OMITTED)

RATIO OF 1.23% 1.30% 1.28% 1.72%
EXPENSES TO
AVERAGE NET
ASSETS

RATIO OF 1.21%E 1.28%E 1.26%E 1.72%
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS

RATIO OF NET .71% 1.03% 1.74% 1.08%
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS

PORTFOLIO 137% 86% 71% 109%
TURNOVER
RATE

</TABLE>

A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B FOR THE PERIOD NOVEMBER 1, 1994 (COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1995.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.04 PER SHARE.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
F THE AMOUNT SHOWN FOR SHARES OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING
OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.

OVERSEAS

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

YEARS ENDED 1998 1997 1996 1995 1994
OCTOBER 31

NET ASSET $ 34.12 $ 31.08 $ 28.57 $ 29.17 $ 27.16
VALUE,
BEGINNING OF
PERIOD

INCOME FROM
INVESTMENT
OPERATIONS

NET .29C .43C .48D .31 .18
INVESTMENT
INCOME

NET 1.22 4.61 2.72 (.44) 2.26
REALIZED AND
UNREALIZED
GAIN (LOSS)

TOTAL FROM 1.51 5.04 3.20 (.13) 2.44
INVESTMENT
OPERATIONS

LESS
DISTRIBUTIONS

FROM NET (.34) (.37) (.34) (.02) (.15)
INVESTMENT
INCOME

IN EXCESS -- -- -- -- (.17)
OF NET
INVESTMENT
INCOME

FROM NET (1.34) (1.63) (.35) (.45) (.11)
REALIZED GAIN

TOTAL (1.68) (2.00) (.69) (.47) (.43)
DISTRIBUTIONS

NET ASSET $ 33.95 $ 34.12 $ 31.08 $ 28.57 $ 29.17
VALUE, END OF
PERIOD

TOTAL 4.60% 17.03% 11.41% (.34)% 9.13%B
RETURNA

NET ASSETS, $ 3,603,342 $ 3,777,452 $ 3,114,625 $ 2,276,306 $ 2,283,211
END OF PERIOD
(000
OMITTED)

RATIO OF 1.26% 1.23% 1.14% 1.05% 1.24%
EXPENSES TO
AVERAGE NET
ASSETS

RATIO OF 1.24%E 1.20%E 1.12%E 1.05% 1.24%
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS

RATIO OF NET .82% 1.28% 1.74% 1.78% .90%
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS

PORTFOLIO 69% 68% 82% 49% 49%
TURNOVER
RATE

</TABLE>

WORLDWIDE

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

YEARS ENDED 1998 1997 1996 1995 1994
OCTOBER 31

NET ASSET $ 17.27 $ 15.18 $ 13.32 $ 13.96 $ 12.76
VALUE,
BEGINNING OF
PERIOD

INCOME FROM
INVESTMENT
OPERATIONS

NET .16B .21B,C .22 .17 .08
INVESTMENT
INCOME

NET (.57) 2.43 1.79 (.08) 1.37
REALIZED AND
UNREALIZED
GAIN (LOSS)

TOTAL FROM (.41) 2.64 2.01 .09 1.45
INVESTMENT
OPERATIONS

LESS
DISTRIBUTIONS

FROM NET (.11) (.17) (.15) (.16) (.10)
INVESTMENT
INCOME

FROM NET (1.16) (.38) -- (.57) (.15)
REALIZED GAIN

TOTAL (1.27) (.55) (.15) (.73) (.25)
DISTRIBUTIONS

NET ASSET $ 15.59 $ 17.27 $ 15.18 $ 13.32 $ 13.96
VALUE, END OF
PERIOD

TOTAL (2.38)% 17.95% 15.25% .95% 11.55%
RETURNA

NET ASSETS, $ 972,105 $ 1,161,191 $ 877,218 $ 659,045 $ 748,738
END OF PERIOD
(000
OMITTED)

RATIO OF 1.15% 1.18% 1.19% 1.17% 1.32%
EXPENSES TO
AVERAGE NET
ASSETS

RATIO OF 1.12%D 1.16%D 1.18%D 1.16%D 1.32%
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS

RATIO OF NET .91% 1.24% 1.71% 2.05% 1.40%
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS

PORTFOLIO 100% 85% 49% 70% 69%
TURNOVER
RATE

</TABLE>

You can obtain additional information about the funds. The funds '
SAI includes more detailed information about each fund and its
investments. The SAI is incorporated herein by reference (legally
forms a part of the prospectus). Each fund's annual and semi-annual
reports include a discussion of the fund's holdings and recent
market conditions and the fund's investment strategie s that
affected performance.
For a free copy of any of these documents or to request other
information or ask questions about a fund, call Fidelity at
1-800-544-8544 or visit Fidelity's Web site at www.fidelity.com.
The SAI, the funds' annual and semi-annual reports and other related
materials are available on the SEC's Internet Web site
(http://www.sec.gov). You can obtain copies of this information upon
paying a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-6009. You can also review and copy
information about the funds, including the funds' SAI, at the SEC's
Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the SEC's Public Reference Room.
INVESTMENT COMPANY ACT OF 1940, FILE NUMBER, 811-4008
Fidelity Investments & (Pyramid) Design, Fidelity, Fidelity
Investments, TouchTone Xpress, Fidelity Money Line, Fidelity Automatic
Account Builder, Fidelity On-Line Xpress+, Fidelity Web Xpress, and
Directed Dividends are registered trademarks of FMR Corp.
Fidelity GoalPlanner and Fidelity Portfolio Advisory Services are
service marks of FMR Corp.
The third party marks appearing above are the marks of their
respective owners.

1.702898.101 IBD-pro-1298

FIDELITY'S BROADLY DIVERSIFIED INTERNATIONAL EQUITY FUNDS
FIDELITY INTERNATIONAL GROWTH & INCOME FUND, FIDELITY DIVERSIFIED
INTERNATIONAL FUND,
FIDELITY INTERNATIONAL VALUE FUND, FIDELITY OVERSEAS FUND, AND
FIDELITY WORLDWIDE FUND
FUNDS OF FIDELITY INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 30, 1998

This Statement of Additional Information (SAI) is not a prospectus.
Portions of the funds' Annual Report are incorporated herein. The
Annual Report is supplied with this SAI.
To obtain a free additional copy of the Prospectus, dated December 30,
1998, or an Annual Report, please call Fidelity(registered trademark)
at 1-800-544-8 544 or visit Fidelity's Web site at
www.fidelity.com.

TABLE OF CONTENTS PAGE

INVESTMENT POLICIES AND 30
LIMITATIONS

SPECIAL CONSIDERATIONS REGARDING 38
AFRICA

SPECIAL CONSIDERATIONS REGARDING 38
CANADA

SPECIAL CONSIDERATIONS REGARDING 39
EUROPE

SPECIAL CONSIDERATIONS REGARDING 41
ASIA

SPECIAL CONSIDERATIONS REGARDING 47
LATIN AMERICA

SPECIAL CONSIDERATIONS REGARDING 49
THE RUSSIAN FEDERATION

PORTFOLIO TRANSACTIONS 50

VALUATION 54

PERFORMANCE 55

ADDITIONAL PURCHASE, EXCHANGE 63
AND REDEMPTION INFORMATION

DISTRIBUTIONS AND TAXES 63

TRUSTEES AND OFFICERS 63

CONTROL OF INVESTMENT ADVISERS 68

MANAGEMENT CONTRACTS 68

DISTRIBUTION SERVICES 72

TRANSFER AND SERVICE AGENT 73
AGREEMENTS

DESCRIPTION OF THE TRUST 73

FINANCIAL STATEMENTS 74

APPENDIX 74

IBD-ptb-1298
1.538871.101

(fidelity_logo_graphic)(registered trademark)
82 Devonshire Street, Boston, MA 02109

Also of concern are Japan's trade and current-account surpluses. If
they continue to grow, they could lead to an increase in trade
friction between Japan and the United States. Additionally, with
inflationary pressures largely absent and wholesale prices falling,
Japan may be entering a period of deflation. A deflationary
environment would both hit corporate profits and increase the debt
burden of Japan's most highly leveraged companies.
CHINA AND HONG KONG. China is one of the world's last
remaining communist systems, and the only one that appears poised to
endure due to its measured embrace of capitalist institutions. It is
the world's most populous nation, with 1.22 billion people creating a
workforce of 699 million people. Today's Chinese economy, roughly
separated between the largely agricultural interior provinces and the
more industrialized coastal and southern provinces, has its roots in
the reforms of the recently deceased communist leader Deng Xiaoping.
Originally an orthodox communist system, China undertook economic
reforms in 1978 by providing broad autonomy to certain industries and
establishing special economic zones (SEZs) to attract foreign
investment (FDI). Attracted to low labor costs and favorable
government policies, investment flowed from many sources, with Hong
Kong, Taiwan, and the United States leading the way. Most of this
investment, has been concentrated in the southern provinces,
establishing manufacturing facilities to process goods for re-export.

The result has been a steadily high level of real GDP growth,
averaging 11.35% per year so far this decade. With this growth has
come a doubling of total consumption, a tripling of real incomes for
many workers, and a reduction in the number of people living in
absolute poverty from 270 to 100 million people. Today there is a
market of more than 80 million people who are now able to afford
middle class western goods.
Such success has not come without negatives. As a communist system
in transition, there still exist high levels of subsidies to
state-owned enterprises (SOE) which are not productive. At the end of
1997, it was reported that close to half of the SOEs ran losses. In
addition, the inefficiencies endemic to communist systems, with their
parallel (thus redundant) political, economic and governmental policy
bodies, contribute to high levels of inflation. Fighting inflation and
attempting to cool runaway growth has forced the government to
repeatedly implement periods of fiscal and monetary austerity.
Periodic intervention seems to be their chosen method of guarding
against overheating.
Performance in 1997 reflects this dynamic between growth,
inflation, and the government's attempts to control them. Growth
slowed to 9.1%, largely as a result of a tightening of credits to
SOEs. Policy was a mix between a loose monetary stance and some
relatively austere fiscal positions. While growth was a priority, it
came at the cost of double-digit inflation.
China has two stock exchanges that are set up to accommodate
foreign investment, in Shenzhen and in Shanghai. In both cases,
foreign trading is limited to a special class of shares (Class B)
which was created for that purpose. Only foreign investors may own
Class B shares, but the government must approve sales of Class B
shares among foreign investors. As of December 1997, there were 51
companies with Class B shares on the two exchanges, for a total Class
B market capitalization of $2.1 billion U.S. dollars. In 1997, all of
China's stock market indices finished the year below the level at
which they began it. These markets were buoyed by strong speculative
buying in the year's second quarter. Market valuations peaked in
September and were subsequently hit by a heavy sell off from October
onwards.
In Shanghai, all "B" shares are denominated in Chinese renminbi but
all transactions in "B" shares must be settled in U.S. dollars. All
distributions made on "B" shares are also payable in U.S. dollars, the
exchange rate being the weighted average exchange rate for the U.S.
dollar as published by the Shanghai Foreign Exchange Adjustment
Center. In Shenzhen, the purchase and sale prices for "B" shares are
quoted in Hong Kong dollars. Dividends and other lawful revenue
derived from "B" shares are calculated in renminbi but payable in Hong
Kong dollars, the rate of exchange being the average rate published by
the Shenzhen Foreign Exchange Adjustment Center. There are no foreign
exchange restrictions on the repatriation of gains made on or income
derived from "B" shares, subject to the repayment of taxes imposed by
China thereon.
China's proven ability to nurture domestic consumption and expand
export markets leads many to believe that the bulk of its growth has
yet to be seen. Most sources, notably the World Bank, predict future
growth levels through the year 2000 of over 7%. This auspicious
indicator notwithstanding, there are a few special considerations
regarding China's future. While this list is not all-inclusive, it
does highlight some internal and external forces that have a strong
influence on the country's future.
To begin with the internal issues, one matter is that
infrastructure bottlenecks could prove to be a problem, as most FDI
has been concentrated in manufacturing and industry at the expense of
badly needed transportation and power improvements. Secondly, as with
all transition economies, the ability to develop and sustain a
credible legal, regulatory, and tax system could influence the course
of investments. Third, environmentalists warn of the current and
looming problems regarding pollution and resource destruction, a
common result of such industrial growth in developing economies which
can't afford effective environmental protection. This is a
particularly noteworthy issue, given the size of the country's
agricultural sector. Lastly, given China's unique method of transition
there exists the possibility that further economic liberalization
could give rise to new social issues which have heretofore been
effectively mitigated. One such issue is the possible dismantling of
inefficient state-owned enterprises, something which is potentially
socially explosive given the communist policy of providing social
welfare through the firm. Exposing what many economists feel is a high
level of open unemployment and widening the gap between the newly
empowered business class and the disenfranchised could pressure the
government to retreat on the road to reform and continue with massive
state spending.
Regarding external issues, China's position in the world economy
and its relationship with the United States also have a strong
influence on it's economic performance. The country has recently
enjoyed an almost uninterrupted positive trade balance. As the largest
country amidst the fastest growing region in the world, China and its
multi-million person ethnic diaspora have a significant role to play
in Asian growth. Should China ascend to become a member of the World
Trade Organization (WTO), as it desires, such movements of capital and
goods will become easier.
Export growth in China has recently been subject to fluctuations
caused by external political events, such as the U.S. elections and
debates over human rights issues. U.S. policy (specifically most
favored nation status) is frequently reconsidered by various elements
of the U.S. government in reaction to a variety of issues, from
nuclear proliferation to Tibetan rights. Significant changes in U.S.
policy could impact China's growth, as close to 9% of their GDP is
trade with the U.S. and the U.S. represents the third biggest investor
in China.
Perhaps the strongest influence on the Chinese economy is the
policy that is set by the political leaders in Beijing and this is
somewhat of an open question as the death of Deng has created a slight
vacuum in Chinese political society. A large part of Deng's strength
derived from a newly empowered business class endeared to him and it
is unclear if any of his successors can harness this loyalty as
effectively as he did. Sustained growth is one possible way to win
over this constituency, leading many to believe that the future
Chinese leadership will respect market forces at least as much as Deng
did. Choosing between double digit growth and reduced inflation could
continue to be a central economic question, with 1997 (Deng
influenced) decisions pointing to an acceptance of lower, albeit still
high, GDP growth.
Another key political player is the Chinese army. With provocative
situations occurring in Taiwan and the Korean peninsula, and with ever
present pressure from internal democrats, the military is in a
position of leverage regarding the shaping of the future political
scene. Finally, there is the communist party, long seen as a loser
amongst the beneficiaries of Deng's reforms. Many view the battle
between the party and the middle class as a zero sum game and as the
leadership settles, respective alliances and constituencies could
determine how much the government pursues its growth strategy.
As with almost all foreign investments, U.S. investors face the
significant risk of currency devaluation by the Chinese government.
Despite assurances from officials reemphasizing China's policy
commitment to maintain the current exchange rate of the renminbi
against the U.S. dollar, many observers believe that this policy will
be soon tested as China monitors the effect of regional devaluations
on exports. Government authorities feel that China has boosted its
international reputation by refraining from devaluing the renminbi at
a time when such a move could further destabilize the currencies of
its neighbors. Nevertheless, Chinese authorities have recently hinted
that a continued slide in the Japanese yen would make it very
difficult for them to maintain their promise not to devalue. If
efforts to prevent the slide in the yen fail, then China may be pushed
into devaluing their currency. For U.S. investors, a devaluation would
erode the investment returns on their investments.
The last significant force in the Chinese economy is the
acquisition on July 1, 1997 of Hong Kong as a Special Autonomous
Region (SAR). For the past 99 years as a British Colony, Hong Kong has
established itself as the world's freest market and more recently as
an economic gateway between China and the west.
A tiny, 814 square mile area adjacent to the coast of southern
China with a population of 6.3 million, Hong Kong has a long
established history as a global trading center. Originally a
manufacturing-based economy; most of these businesses have migrated to
southern China. In their place has emerged a developed, mature service
economy which currently accounts for approximately 80% of ITS GROSS
DOMESTIC PRODUCT. Hong Kong trades over $400 billion in goods and
services each year with countries throughout the world, notably China,
Japan, and the U.S. Its leading exports are textiles and electronics
while imports tend to revolve around foodstuffs and raw materials.
Hong Kong's currency, the HK dollar, was pegged to the US dollar at
HK7.7=$1 in 1983 and investors consider it to be a stable mechanism in
enduring confidence lapses and speculator attacks. The operation of a
currency board and accumulation of U.S. dollars in its monetary fund
is partly responsible for this stability.
The stock market (SEHK) listed 658 publicly traded companies by the
end of 1997, with total capitalization at $413 billion U.S. dollars. A
significant portion of SEHK firms are in real estate, and are
sensitive to fluctuations in the property markets. 1997 was a
tumultuous year for the Hong Kong stock market as a speculative attack
on the Hong Kong dollar in October provoked a global sell-off in
equities. Investors were shocked as the Hong Kong market, long
regarded as a safe-haven, plunged 40% in October. The stock market's
decline and the attack on the local currency sent interest rates
soaring, precipitating an erosion in local property values. This in
turn put additional pressure on the banking sector which is heavily
geared to real estate. The Hong Kong market's dramatic downturn
illustrates how vulnerable it is to the Asian region's economic
problems. The structural problems besetting Hong Kong's neighbors in
Southeast and Northeast Asia may not be quickly resolved. Exports to
the Asian region may remain depressed as the process of economic
reform in countries such as Thailand, Malaysia, Indonesia, Japan and
South Korea will likely hold back economic growth in the area.
Accordingly, Hong Kong and China will likely be more dependent upon
demand from the U.S. and Europe for some time to come.
As a trade center, Hong Kong's economy is very closely tied to that
of its trading partners, particularly China and the United States. In
the wake of Deng's reforms, Hong Kong and China have become
increasingly interdependent economically. Currently, China is Hong
Kong's largest trading partner. After Taiwan, Hong Kong is the largest
foreign investor in China, accounting for about 60 percent of overall
foreign direct investment. Hong Kong plays a particularly significant
role as an intermediary in U.S.-China trade. In 1996, it handled 56%
of China's exports to the U.S. and 49% of Chinese imports from the
U.S.
The critical question regarding the future of Hong Kong is how the
Chinese leadership will exert its influence now that it has become a
Special Autonomous Region (SAR). This new status is in accordance with
pledges made at the Joint Declaration on the Question of Hong Kong
made by the Chinese and British governments in 1984. Leading up to the
hand over of the colony, the Chinese government has pledged to uphold
the Basic Law of 1990 which states that Hong Kong's status as an
unfettered financial center will remain intact for at least 50 years
after 1997. Part of this status includes retaining the legal,
financial and monetary systems (specifically the HK$/US$ peg) which
guarantee economic freedom and foster market expansion.
Many investors and citizens are closely monitoring Chinese actions
in order to assess their actual commitment to these principles.
Already there is evidence of a clear, if slow, current of political
change coming from Beijing. Certain actions, such as the curbing of
media freedoms, indicate that there is the possibility of significant
interference from communist authorities. More significant was the
clash between the U.K. and Chinese governments over China's abolition
of the elected legislature and subsequent installation of governmental
leaders in both the executive and the legislature who are directly
appointed by Beijing. Mr. Tung Chee-hwa, appointed as the first Chief
Executive of the SAR, has surrounded himself with like-minded
Machiavellian figures who have strong ties to both market successes
and Beijing leaders. They are portrayed as believing in the powers of
capitalism and central authority, if not democracy, leading some to
speculate that the SAR could develop into a South Korean style of
corporatism which preserves the economic status quo without
incorporating further political freedoms.
In assessing the prospects for Hong Kong's future, it must be noted
that China has a very strong interest in a prosperous SAR.
Particularly if Beijing pursues a growth strategy as it has in the
past, Hong Kong can be a key agent in China's economic policy. Desire
for investment and new technologies necessary for modernization is a
strong incentive to send positive signals through the treatment of
Hong Kong. This is reinforced by the respect Hong Kong is due given
its role in China's recent dynamic performance.
To be sure, there are more adamant concerns over the effect of the
acquisition. Many are skeptical of Beijing's ability to leave the
currency alone. Some note the continuous drop in GDP as evidence that
Hong Kong has yet to mature as a service economy and that the
workforce hasn't fully adjusted to the switch out of manufacturing.
Additionally, by tying Hong Kong so closely with China, it now must
weather the ups and downs of Beijing's relationship with the U.S. Most
Favored Nation Status now means just as much, if not more, to the SAR
than it does to Beijing, with some asserting that revoking MFN could
result in substantial losses in trade, income, and jobs.
Hong Kong's competitive advantage has traditionally been a mix of
geography, market freedoms and entrepreneurial spirit. The
preservation of these advantages is now a function of the island's
independence from Beijing. Today's investors will be vigilant in
measuring how much of that independence is retained after July 1,
1997.
AUSTRALIA. Australia is a 3 million square mile continent
(about the size of the 48 continental United States) with a
predominantly European ethnic population of 18.2 million people. A
member of the British Commonwealth, its government is a democratic,
federal-state system.
The country has a western style capitalist economy with a workforce
of 9.2 million people that is concentrated in services, mining, and
agriculture. Australia's large agricultural sector specializes in
wheat and sheep rearing and together, these two activities account for
more than half of the country's export revenues. Australia also
possesses abundant natural resources such as bauxite, coal, iron ore,
copper, tin, silver, uranium, nickel, tungsten, mineral sands, lead,
zinc, diamonds, natural gas, and oil. The health of the country's
domestic economy is particularly sensitive to movements in the world
prices of these commodities. Primary trading partners are the United
States, Japan, South Korea, New Zealand, the United Kingdom and
Germany. Imports revolve around machinery and high technology
equipment.
Historically, Australia's strong points were its agricultural and
mining sectors. While this is still true to a large extent, the
government managed to boost its manufacturing sector by undertaking
protective measures in the 1970's and early 1980's. These have
subsequently been liberalized in an effort to spur growth in the
industrial sector. Today's economy is more diverse, as manufactures'
share of total exports is increasing. Part of the government's effort
to make manufacturing more competitive was a floating of the
Australian dollar in 1984, precipitating an initial depreciation, and
a campaign to reduce taxes. Such reforms have attracted foreign
investment, particularly in the transport and manufacturing sectors.
Restrictions do exist on investment in certain areas as media, mining
and some real estate.
With inflation well under control but unemployment stubbornly high
and signs of cyclical slack in the economy, Australia's monetary
policy is focused on preserving the low inflation environment while
keeping monetary conditions conducive to stronger economic growth. The
government has set a goal of achieving a government budget surplus in
fiscal year 1998/1999.
Australia is fully integrated into the world economy, participating
in GATT and also more regional trade associations such as the Asia and
the Pacific Economic Cooperation (APEC) forum. Future growth could
result from their movement towards regional economic liberalization,
but a countervailing force is the reality that some export markets in
Europe could be lost to continued European economic integration.
After suffering a significant recession in 1990-91, the Australian
economy has enjoyed six years of expansion. The medium-term outlook
appears favorable, with domestic spending supported by low interest
rates, improving consumer confidence and a strengthening labor market.
GDP growth has increased steadily throughout 1997. However, weakness
in commodity prices, particularly metal prices, coupled with an
increase in the nation's current account deficit have placed
significant pressure on the Australian dollar.
Investors should be aware that, while Australia's prospects for
strong economic growth appear favorable over the long-term, many
sectors currently face significant risks arising from the recent
turbulence in Asian countries, which account altogether for almost 60
percent of Australia's exports. While projections already embody a
more subdued outlook for growth in these countries, there is a risk of
this outlook deteriorating further, especially in Japan and Korea.
Due to the large position that the agriculture and natural resource
sectors have in the nation's export driven economy, any weakness in
commodity prices may negatively impact both the economy and stock
prices. In addition, United States investors face the risk that their
investment returns from investments in Australia could be eroded if
the Australian currency declines relative to the United States
dollar.
INDONESIA. Indonesia is a country that encompasses over
17,000 islands on which live 195 million people. It is a mixed economy
that balances free enterprise with significant government
intervention. Deregulation policies, diversification of strong
domestic sectors, and investment in infrastructure projects have all
contributed to high levels of growth since the late 1980's.
Indonesia's economy grew at 7.1% in 1996, the exact average of its
performance for the current decade. Growth in the 1990's had been
fairly steady, hovering between 6.5-7.5% for the most part, peaking at
8.1% in 1995. Moderate growth in investment, including public
investment, and also in import growth, helped to slowdown GDP growth.
Growth has been accompanied by moderately high levels of
inflation.
In recent years, Indonesia had been undergoing a diversification of
the core of its economy. No longer strictly revolving around oil and
textiles, it is now gaining strength in high technology manufactures,
such as electronics. Indonesia consistently runs a positive trade
balance. Strong export performers are oil, gas, and textiles and
apparel. Oil, once responsible for 80% of export revenues, now
accounts for only 25%, an indication of how far other (mostly
manufacturing and apparel) sectors have developed. Main imports are
raw materials and capital goods.
However, as with many of its Asian neighbors, Indonesia's bright
prospects came to a sudden halt in August of 1997 when the plunging
Thai baht began to destabilize the rupiah. By mid-year 1998 the local
currency had fallen more than 80% against the dollar, and hugely
increased the cost of servicing foreign debts; a collapse of the real
economy, and a growing number of bad loans. Various central bank
initiatives, including a doubling of interest rates, failed to halt
the currency's depreciation. The nation's banks, unable to service
their extensive short term borrowings, were suddenly in danger of
collapse. Of more than 200 local banks, a mere handful were estimated
to be solvent at mid-year 1998.
The social effects of this decline have been devastating. By the
end of 1998 the government expects 47% of the population to be living
below the poverty line and unemployment is expected to surpass 20% of
the workforce. This has led to an increase in social tensions and food
riots and large-scale strikes have broken out sporadically. Rioting
and attacks upon the countries business oriented ethnic Chinese
population have prompted as many as 80,000 to flee the country. Rising
popular opposition forced President Suharto to resign less than three
months after being appointed to his seventh consecutive five-year term
and was replaced by his vice-president, B. J. Habibie. The political
upheaval and resulting uncertainty has resulted in the further erosion
in public confidence at home and abroad.
The breakdown in public confidence in the Indonesian economy will
likely be difficult to reverse, and will prolong the period of
recovery. Resumption of lending by multilateral institutions under a
rescue package drawn up by the International Monetary Fund (IMF) may
speed up the process of restoring the faith in the government's
efforts to shore up the banking system. Nevertheless, even if the two
critical outstanding issues of restructuring the corporate sector's
external debt and shoring up the banking sector can be resolved this
year, the economy will remain weak in 1999 and recover only slowly in
the following years.
The Indonesian stock market plunged to record lows in 1997 under
the combined impact of the country's economic implosion, political
uncertainty and social unrest. The market's retreat continued into
mid-1998 as domestic and foreign investors fled the market for safer
havens overseas. While many investors believe that the market's steep
decline has brought valuations of a number of Indonesian companies to
very attractive levels, there remains considerable risk particularly
for foreign investors. As with most foreign investments, United States
investors could see their investment returns eroded if the Indonesian
currency declines in value relative to the U.S. dollar. Secondly, any
escalation of rioting and other forms of social unrest could be a
major obstacle in the path of economic recovery. Thirdly, many
question the will of the Indonesian government and its people to
accept the conditions of economic reform as mandated by the IMF.
Fourth, the Indonesian economy, currency and securities markets are
extremely sensitive to events that take place within the Asian region
and their fortunes are somewhat dependent upon how well other Asian
nations resolve their own economic and currency problems.
MALAYSIA. 1997 saw Malaysia's GDP growth slow to 7.4%, down
from over 8.2% in 1996 and 9.5% in 1995. Inflation has been kept
relatively low at 3.8%. Performance in 1996 avoided the economy's
potential overheating as export growth, investment, and consumption
all slowed. A large part of Malaysia's recent growth is due to its
manufacturing industries, particularly electronics and semiconductors.
This has led to an increased reliance on imports; thus the economy is
sensitive to shifts in foreign production and demand. This is
particularly true regarding its main trading partners: the United
States, Japan, and Singapore. Such shifts were partly responsible for
the slowdown in 1997. In addition, monetary policies to stem the
threat of overheating were evident, but the country still needs
massive public and private investment to finance several large
infrastructure projects. Government industrial policy seeks investment
to create more value added high technology manufacturing and service
sectors in order to decrease the emphasis on low skilled
manufacturing. Already U.S. investors have invested over $9 billion,
and most of this is in electronics and energy projects.
However, like its Asian neighbors, Malaysia has stumbled in its
dash to become a developed nation by 2020. The grandiose ambitions of
Malaysian Prime Minister Mahathir Mohamad have been set back by its
worst-ever currency crisis, which also brought a sharp fall in the
country's stock market. An overheated property market, a growing
current-account deficit and a highly leveraged economy, precipitated
much of the country's problems. Following the sharp decline of
Thailand's currency, the Malaysian ringgit came under severe pressure.
The Malaysian central bank attempted to defend the currency and the
resulting spikes in interbank rates marked the start of a period of
escalating interest rates. Once the central bank ceased using foreign
exchange reserves to slow the ringgit's depreciation in the
region-wide currency slide, the Malaysian currency quickly weakened
versus the United States dollar and by year end had declined by 35%.

By mid-year 1998, the outlook for the Malaysian economy remained
bleak as economists predicted that the economy would shrink by at
least 5 percent this year, the first contraction in 13 years. The
likelihood that Malaysia will be forced to seek IMF assistance is
increasing. Although Malaysia does not have the high level of foreign
debt that has overwhelmed its Asian neighbors, domestic lending, at
170 percent of GDP, was the highest in Southeast Asia when the
currency crisis struck. The nation's banks are now faced with a
growing number of unpaid loans as more businesses are struggling to
stay afloat in the sagging economic environment.
Adding to the bleak outlook is the government's seemingly confused
and erratic response to the nation's serious economic and currency
crisis. The Prime Minister is increasingly at odds with the finance
minister on what policies the country has to institute to remedy the
country's serious problems. Prime Minister Mahathir has abandoned the
tight money, financially conservative recovery policy endorsed by the
IMF and has placed the blame for the nation's troubles on foreign
currency and stock market speculators. The move risks triggering
another round of currency devaluations, inflation and, in the long
run, economic collapse.
Investors should be aware that investing in Malaysia currently
entails a number of potential risks, not the least of which is the
increasingly erratic economic policies of the Malaysian government
that are counter to the advice of the IMF and many of the developed
nations. In addition, the government appears to be escalating its
hostile attitude toward foreign investors. In September of 1998
Malaysian authorities imposed new restrictions on the foreign exchange
and securities markets. Included were limitations in repatriating the
investment proceeds of foreign investors.
While the Malaysian population has been relatively passive during
the first year of the economic meltdown, there could be mounting
social unrest if the crisis is prolonged. Should the country finally
adopt IMF remedies the Malaysian people may be reluctant to accept the
additional sacrifices that they will be called upon to endure. This
could seriously undermine the recovery of Malaysia's economy as well
as its currency and stock market. An increasingly hostile government
towards foreign investors could also lead to additional curbs on the
free access to their funds. As with other Asian markets, currency risk
remains substantial.
SINGAPORE. Since achieving independence from the British in
1965, Singapore has repeatedly elected the People's Action Party (PAP)
as their government. It is a party that is so consistent it has only
offered up two prime ministers in this 32-year period. Elections in
January 1997 returned the PAP to power, signaling satisfaction with
their policy of close coordination with the private sector to
stimulate investment. Typical policies include selective tax
incentives, subsidies for R&D, and joint ventures with private firms.
While the combination of consistent leadership and interventionist
policies is sometimes seen as impeding civil liberties and
laissez-faire economics, it has produced an attractive investment
environment.
The Singapore economy is almost devoid of agriculture and natural
resources, not surprising given the island nation's geographic size.
Its strongest sector is manufacturing, particularly of electronics,
machinery and petroleum and chemical products. They produce 45% of the
world's computer disk drives. Major trading partners are Japan,
Malaysia and the United States.
The economic situation in Singapore registered a passable year in
1996 but weakened in early 1997, dragged down by the downturn in the
global electronics industry. However, it ended the year on a firmer
footing as real GDP growth rose from 4.1% in the first quarter to 7%
by the fourth quarter. Inflation remained low and the current account
balance maintained its large surplus. Property values have declined
recently, impacted by continuing oversupply.
Although Singapore boasts one of the strongest economies in Asia,
investors in that market face a number of possible risks. Chief among
these is that the country is not immune to the region's economic
troubles, as Singapore's neighbors account for nearly one-quarter of
its trade. Any prolonged regional economic downturn could slow its
growth. In addition, Analysts believe that there is considerable
downside risk in the current Singapore dollar exchange rate and any
decline in the Singapore currency versus the U.S. dollar could erode
the investment return of United States investors in that market.
Lastly, manufacturing, a major pillar of Singapore's economy, is
unlikely to sustain growth into 1998 as recent indications point to
continued excess capacity in the computer electronics industry.
SOUTH KOREA. South Korea has been one of the more
spectacular economic stories of the post-war period. Coming out of a
civil war in the mid-1950's, the country found itself with a destroyed
economy and boundaries that excluded most of the peninsula's mineral
and industrial resources. It proceeded over the next 40 years to
create a society that includes a highly skilled and educated labor
force and an economy that exploited the large amounts of foreign aid
given to it by the United States and other countries. Exports of labor
intensive products such as textiles initially drove the economy and
were eventually replaced by heavy industries such as automobiles.
Hostile relations with North Korea dictate large expenditures on
the military and political uncertainty and potential famine in the
north has put the south on high alert. Any kind of significant
military effort could have multiple effects, both positive and
negative, on the economy. South Korea's lack of natural resources put
a premium on imported energy products, making the economy very
sensitive to oil prices.
Since 1991, GDP growth has fluctuated widely between 5% and 9%,
settling down at 5.6% last year. Currently the labor market is in need
of restructuring, and its rigidity has hurt performance. Relations
between labor and the large conglomerates, or Chaebols, could prove to
be a significant influence on future growth. Inflation in the same
period has been consistently dropping, save a brief rise in 1994 and
finished the year at 4.5%. The country consistently runs trade
deficits, and the current account deficit widened sharply in 1996,
more than doubling to $19.3 billion. South Korea's strong domestic
sectors are electronics, textiles and industrial machinery. Exports
revolve around electronics, textiles, automobiles, steel and footwear,
while imports focus on oil, food, chemicals and metals.
The stock market (Korea Stock Exchange) is currently undergoing
liberalization to include more foreign participation, which was only
first allowed in 1992, but the bond market remains off limits until
1999. Foreign ownership has since been increased to 55% for all listed
stocks except three. The foreign ownership liberalization is in
response to the KSE 1996 performance, which was down 18%. The number
of listed companies totaled 726 in 1997, a decline of 34 from the
previous year, while the market's capitalization plummeted 70 percent
from its 1996 level.
Over the calendar year 1997, the Korean stock market extended its
two-year decline plunging by 42% to its lowest year-end level since
1986. The collapse came as a direct result of the Asian region's
currency crisis and the failure of several Korean conglomerates. In
the summer of 1997 the South Korean won hit record lows against the
U.S. dollar as a series of nationwide labor strikes aggravated the
already escalating trade deficit. Despite aggressive official
intervention to support the local currency, the won had fallen from
860 to 914 to the U.S. dollar by year-end.
The Korean market poses risks for current and prospective
investors. The Korean government will need to maintain public support
to implement the radical and difficult restructuring of the economy
demanded by the IMF under a $58 million loan package. This opposition
could come from the country's major conglomerates that have yet to
institute necessary restructuring initiatives, and from workers
protesting against rising unemployment.
In addition, relations with its long-standing enemy, North Korea
have been worsening as widespread famine could prompt another attack
on its southern neighbor to divert the attention of its people from
their suffering. More importantly, South Korea's heavy reliance on
exporting to the Asian region holds its economy hostage to the
economic fortunes of its neighbors.
THAILAND. The Thai economy has witnessed a fundamental
transition in recent years. Traditionally it was a strong producer of
textiles, minerals and agricultural products, but more recently it has
tried to build high technology export industries. This proved
particularly fortuitous in the mid 1990s when flooding wiped out much
of their traditional exports, but the newer industries remained
strong, keeping the growth rate above 8%. (This level had been
achieved through the 1990s, giving the economy a name as one of the
fastest growing in the region.) Successive governments have also taken
steps toward reducing the influence of central planning, opening its
market to foreigners and abandoning five-year plans. This
restructuring is still underway, and the change can cause difficulty
at times.
The political situation in Thailand is tenuous. Democracy has a
short history in the country, and power is alternatively obtained by
the military, a non-elected bureaucratic elite, and democratically
elected officials. The frequent transfers of power have generally gone
without divisive, bloody conflicts, but there are bitter differences
between the military and the political parties. Free elections in 1992
and again in 1995 have produced non-military democratic leaders from
different parties, a healthy sign of party competition. More recently,
the dramatic downturn in the economy generated demands from all
sectors of society for the resignation of Prime Minister Chavalit. The
worsening economic situation threatened social stability of the nation
and the Prime Minister resigned after barely one year in power.
In 1997 GDP contracted by approximately 0.3%, compared with 7.2%
growth in 1996 and 8.6% in 1995. The 1997 current account deficit was
1.9% of GDP as against 7.9% in 1996. Inflation was 5.6%, however, the
government has projected a 16.2% rate for 1998. One cause for
Thailand's economic downturn was a decline in export growth as its
manufacturing industry faces stiff competition from low priced
competitors and its agriculture has suffered a severe drop in
production. In 1996, Thailand's currency, the baht, was linked to a
U.S. dollar dominated basket, and monetary policy had remained tight
to keep that link strong and avoid inflationary pressures.
The situation changed in early 1997, however, with the revelation
of many bad bank loans and a bubbling of property prices due to
over-investment. Many companies, faced with slowing exports, stopped
servicing their debts. Many other firms have stayed alive only with
infusions of public cash, and the government has been slow to let many
property laden financial firms fail. The stock market has reacted
strongly, dropping to new lows for the decade. Reluctant to float the
baht, indeed promising that it wouldn't, the government relented in
early July hoping to revive export and stock market growth. The
subsequent devaluation (approximately 20% against the dollar in the
first month) led to the need for a $16 billion loan coordinated by the
IMF to shore up foreign reserves. Most of the loan came from
neighboring countries led by Japan, indicating their desire to both
protect their own investments in Thailand, and also mitigate the
effect of the devaluation on their home currencies.
The total impact of the entire situation is negative, particularly
on inflation, unemployment and foreign debt. Significant turnover and
a major gamble on the currency has put the government in a precarious
position, especially given the fact that it is a six party coalition.
Dissatisfaction amongst the military, always a political factor, is
high.
The new Thai government has produced mixed results in their efforts
to remedy the country's serious economic woes. Crucial to Thailand's
recovery are both the outcome of newly instituted economic and banking
reforms and the outlook for both China's and Malaysia's economies.
Looking forward, currency risk remains high and the baht will likely
be highly vulnerable to regional contagion.
INDIA. India is the second most populous and seventh largest
country in the world. Although the country occupies only 2.4% of the
world's land area, it supports over 15% of the world's population.
Only China has a larger population. The Indian government is
classified as a federation, or union, and is, under its constitution a
"sovereign, socialist, secular, democratic republic" composed of 25
states and 7 union territories. Like the United States, it has a
federal form of government. However, the central government in India
has greater power in relation to its states, and is patterned after
the British parliamentary system.
India's population was estimated at 952 million in 1997 and has
been projected to double by the year 2028. Religion, caste, and
language are major determinants of social and political organization.
Although 83% of the people are Hindu, India also is the home of more
than 120 million Muslims - one of the world's largest Muslim
populations. Despite economic modernization and laws countering
discrimination against the lower end of the class structure, the caste
system remains an important factor in Indian society.
India has the world's fifth largest economy in terms of purchasing
power parity. About 62% of the population depends directly on
agriculture. Industry and services sectors are growing in importance
and account for 29% and 42% of GDP, respectively, while agriculture
contributes about 29%. More than 35% of the population lives below the
poverty line, but a large and growing middle class of 150-200 million
has disposable income for consumer goods. In the industrial sector,
India now manufactures a variety of finished products for domestic use
and export.
India gained independence in 1947 after two centuries of British
colonial rule. Economic policies in the first four decades of
independence were driven by its leaders' deep distrust of foreign
economic interests and admiration for the Soviet model of centrally
planned industrialization. Accordingly, the country has followed a
policy regime that has been characterized by extreme protectionism and
public sector dominance in strategic sectors. Nevertheless, India has
developed a large and diversified private sector, and agriculture has
remained almost entirely in private hands.
India's treatment of foreign investment has been alternatively
encouraging, ambivalent or difficult, depending on the industry sector
involved. Most industries are open to limited investment by
multinational companies while others are closed to foreign investors.
Sectors closed to foreign investment currently number five: mineral
oils; railway transport; war ships and the military-related areas of
aircraft; atomic energy; and associated minerals. Although recent
measures have liberalized the investment limits on a number of major
industries, several political parties, deeply hostile to foreign
investment, have made these issues the subject of pre-election
rhetoric.
India has a large and active stock market which ranks twentieth
globally in market value. There are 23 recognized stock exchanges in
India. The BSE is the premier exchange; accounting for more than
one-third of trading volume, over 70% of listed capital and over 90%
of market capitalization. As of the end of 1997 there were 5,842
listed companies on the BSE with a total market value of US$128.27
billion.
Relations between India and its neighbors have been fraught with
difficulties. India disputes Pakistan's claims to part of Kashmir, and
repeated attempts at mediation have not resolved this conflict. The
dispute has triggered wars between the two countries in 1947, 1965 and
1971. More recently, India's nuclear tests prompted Pakistan to reply
in kind, despite Western efforts to dissuade it. Economic sanctions
imposed by the U.S. and other industrialized countries following the
nuclear tests in May of 1998 have not been without consequences. While
their short-term, direct effect on the economy has been relatively
modest, the indirect and medium-term consequences of sanctions could
become more serious. Relations with Nepal, with Bhutan and with China
are marred by China's two territorial claims in the nation's east and
north. Historical suspicions remain following the 1962 border war
between India and China and the two countries have continued to work
towards expanding their political and economic influence in the South
Asian region.
While India presents many attractions for U.S. investors, there are
a number of factors that could pose considerable risk to those
investing in this market: Contemporary politics have become
increasingly unpredictable since the resounding defeat of Congress in
1996 after decades at the helm. The alignment of political forces has
become increasingly erratic among factions, parties and interest
groups. Some factions within the current administration have been
hostile to foreign investment and could impose measures that would be
detrimental to the interests and rights of these investors.
India's foreign relations in the region remain fragile and the
possibility of increased tensions or open warfare is an ever-present
danger to the stability of the market. In addition, the monetary cost
of economic sanctions resulting from recent nuclear tests could
substantially impact economic growth and corporate profits. Sanctions
affect India in several ways. Crucially, there will be a deferment or
loss of direct aid and concessional loans, from multilateral agencies
(notably the World Bank) and bilateral donors (the U.S., Japan and
Canada, among others). The loss of export credit and guarantees,
notably from the US Export-Import Bank could delay and increase the
cost of large infrastructure and foreign investment projects. This, in
turn, could have a negative impact upon creditor and investor
confidence in the Indian market.
Relative to the more mature markets of the world, the level of
corporate disclosure in India is very low and companies are generally
less disposed to act in the best interests of their shareholders.
Accordingly, investors face a much more difficult task in ascertaining
the true investment worth of a particular stock.
As with most other emerging markets, the Indian market has been
negatively impacted by recent economic and currency turmoil in the
world's less developed regions and is likely to be similarly impacted
in any future weakness. Currency fluctuation is an additional risk to
U.S. investors as any weakening in the value of the Indian rupee
versus the U.S. dollar could erode the value of their investments upon
currency translation.
TAIWAN. Taiwan is one of the most densely populated
countries in the world, with a population of over 20 million, or 1,504
persons per square mile. Most Taiwanese are descendants of immigrants
who came from China's Fukien and Kwantung provinces over 100 years
ago. Mandarin is the official language while English is taught to all
students as their first foreign language, beginning in the seventh
grade.
Although settled by Chinese in the seventeenth century, Taiwan
(also called Formosa) was ruled by Japan from 1895-1945 and
subsequently reverted to Chinese administration at the end of World
War II. In 1949, nationalist leader Chiang Kai-shek took control of
the island after fleeing mainland China with two million supporters,
following his defeat at the hands of the communists. Since that time,
Taiwan has been governed by the right-wing Kuomintang (KMT) which was
founded by Chiang Kai-shek. In 1996 the island held its first popular
presidential elections in which the KMT retained its control.
Both the Taipei and Beijing governments consider Taiwan an integral
part of China. The KMT has vowed to reconquer the mainland while The
People's Republic of China has urged Taiwan to accept a peaceful
reunification with the mainland. China has proposed that they regain
sovereignty over Taiwan on the basis of a "one country-two systems"
arrangement similar to that of the recent reunification of Hong Kong.
Nevertheless, China has periodically threatened to annex Taiwan
through military action.
Under the KMT government, Taiwan achieved a remarkable record of
economic growth with the assistance of massive U.S. aid in the early
years of the post war period. Today, Taiwan has one of the world's
strongest economies and is among the ten leading capital exporters.
Between 1980 and 1990 real GDP expanded at an average annual rate of
7.9%. During 1990-95 an annual GDP growth rate of 6.6% was recorded.
In 1996, compared with the previous year, GDP increased by 5.7% in
real terms, while it was anticipated that growth would exceed 6.0% in
1997 and 1998. Between 1960 and 1973 the island's exports rose 20 fold
and real GDP increased 3.3 times. Even more remarkable, as the shift
of millions of people from villages to cities took place, was the high
level of employment. Between 1964 and 1995 the unemployment rate
rarely exceeded 2% of the work force in any year.
Prior to 1967 foreign sources played a large role in financing
capital formation expansion, but thereafter domestic savings financed
the entire growth of net capital formation. By 1986 the ratio of
national gross savings to GDP had reached 38.5%. Thereafter the ratio
declined, standing at 26.0% in 1996. The expansion of foreign trade
was the major reason for Taiwan's rapid capital growth. Much of the
growth in exports could be attributed to the competitiveness of its
exports in price and quality in world markets.
Since the mid-1990s the island's traditional reliance upon light
industry has gradually given way to high technology activities, as
emphasis shifted from labor-intensive to capital-intensive production.
The electrical and electronic machinery sector continued to show
particularly strong growth in the 1990s as did the chemical sector.
Taiwan also has eleven vehicle manufacturers, all of which have
contracted joint ventures with foreign companies. By the mid-1990s
Taiwan had become one of the world's largest producers of personal
computers and semiconductors.
Taiwan has a large and active stock market ranking twelfth by
market value among the world's markets. The TSE in Taipei is the only
official stock exchange in Taiwan, although there is also a small OTC
market. At the end of 1997 there were 404 companies listed on the TSE
with a market capitalization of US$288.1 billion. The market is
dominated by individual investors, who account for 90.7% of total
turnover in listed shares. Many local institutions, such as banks,
insurance companies or pension funds, are prohibited or restricted
from investing in listed shares. Foreign individuals and institutional
investors meeting certain criteria have been able to invest in the
market directly since 1990 but are subject to certain limits. Foreign
involvement in the market through qualified foreign institutional
investors and mutual funds is small but growing.
Investing in Taiwan entails special risks as well as those risks
that are common to other emerging markets. Taiwan's relations with The
People's Republic of China remain fragile. The conflict between the
entrenched nationalization of China and the nascent nationalism of
Taiwan persists and armed conflict between the two nations remains a
possibility. Beijing continues its policy of attempting to isolate
Taiwan and could use its growing economic power and political
influence to interfere with the nation's trade with the rest of the
world's economies.
In addition, the Taiwan market has been one of the most volatile in
Asia over the past decade. The country did not escape the effects of
the Asian economic and currency crises in 1997 and 1998 and could
continue to be negatively impacted by an extension of the current
regional turmoil. The nation's heavy dependence upon trade and
manufacturing partnerships with foreign companies also leaves it
particularly vulnerable to downturns in the global economies. Currency
fluctuation is an additional risk to U. S. investors as any weakening
in the value of the local currency versus the U.S. dollar could erode
the value of their investments upon currency conversion.
THE PHILIPPINES. The Philippines is a developing democratic
republic. After 300 years of Spanish rule, the United States acquired
the Philippines from Spain in 1898 and ruled for 48 years. The country
subsequently gained its independence from the United States in 1946.
The nation, as provided by the 1987 Constitution, is a democratic
republican state with a presidential form of government. However,
since its independence, the government has been periodically roiled by
military coups, martial law and political assassinations.
The Filipino population consists of approximately 70 million
people, primarily of Indo-Malay, Chinese and Spanish descent. Thirteen
percent of the population lives within the Metro Manila area. Most
Filipinos are bilingual, with English as the basic language in
business, government, schools, and everyday communication. While there
are 87 languages spoken throughout the Philippines, the official
language is Pilipino, which is spoken mainly in the Metro Manila area
and widely used in the mass media.
The Philippine economy is basically agricultural if food-processing
manufacture is included. Agriculture (including forestry and fishing)
contributed 21.5% of GDP in 1996, and engaged 39.8% of the employed
labor force, while industry (including mining, manufacturing,
construction and power) contributed 31.9% of GDP and engaged 16.5% of
the employed labor force.
Manufacturing accounted for 22.6% of GDP in 1996 and engaged 9.8%
of the labor force. The principal branches of manufacturing are food
products, petroleum refineries, electrical machinery, chemical
products, beverages, metals and textiles.
The services sector contributed 46.6% of GDP in 1996, and engaged
43.7% of the employed labor force. Remittances from Filipino workers
abroad constituted the Government's principal source of foreign
exchange, while tourism remains a significant sector of the
economy.
In 1995 the Philippines recorded a trade deficit and a deficit on
the current account of the balance of payments. The principal source
of imports was Japan, which accounted for 22.1% of the total. Other
significant suppliers were the United States, Saudi Arabia, Singapore,
the Republic of Korea and Taiwan. The United States was the principal
market for exports (35.8%), while other purchasers were Japan,
Singapore and the United Kingdom.
Under the regime of General Fidel Ramos, installed in 1992, the
economic performance of the Philippines improved dramatically, owing
to extensive structural reforms, including the dismantling of
protectionist legislation and the liberalization of trade, foreign
investment and foreign exchange controls. However, economic growth was
adversely affected by the regional financial crisis in 1997. The
effective devaluation of the peso in July caused a collapse of the
stock market and led to rising inflation and the depletion of foreign
exchange reserves. The absence of large foreign investment inflows,
which had previously contributed to an overall surplus on the balance
of payments despite a recurrent account deficit, resulted in an
overall deficit in 1997.
The Philippine stock exchange (PSE) is the country's only exchange
and ranks thirty-sixth in total market capitalization among the
world's markets. The total number of companies listed on the exchange
was 221 in 1997. Individual domestic investors are the majority
participants while foreign investment is dominated by the Taiwanese,
who are closely followed by the Japanese and Hong Kong Chinese.
Foreign investors are generally allowed to acquire 100% of the equity
of a Philippine listed company, although there are businesses where
foreign ownership is restricted by law.
Foreign investors face special risks when investing in the
Philippines. The country's economy and stock market have historically
been highly sensitive to changes in the Asian region's economies and
this has been amply demonstrated in recent years. After posting
dramatic gains in the four years preceding Asia's financial crisis in
mid-1997, the Philippine stock market plummeted in response to the
spreading economic, political turmoil in Southeast Asia and Japan. The
market's weakness was further exacerbated as foreign investors pulled
out of the market in large numbers.
Weakening conditions in neighboring countries has also negatively
impacted the Philippine peso. Plummeting currencies in Thailand,
Indonesia, Singapore and Malaysia sent the Philippine peso into a
steady decline. Over the 1997 calendar year, the value of the peso
fell by 52 percent versus the U.S. dollar.
For U.S. investors, currency fluctuation presents an additional
risk to investing in the Philippines as a weakening peso can erode the
investment returns on their investments in that country.
Because the Philippines is highly dependent upon the United States,
Japan and the Southeast Asian countries as the primary purchasers of
their exports, their economy is particularly sensitive to changes in
the economic fortunes of these nations.
Although the Philippine political climate appears to have improved
over the past few years, investors should be aware that the country
has periodically been subjected to military coups, martial law, and
wide spread political corruption since it gained independence. Several
past administrations have instituted policies that have also been
detrimental to the domestic economy and the rights of its citizens.
Cronyism and corruption have also been rampant in both government and
the business community to the detriment of the interests of corporate
shareholders.
PAKISTAN. The Islamic Republic of Pakistan was founded in
1947, when the British partitioned the South Asian subcontinent into
two states: India and Pakistan. (East Pakistan broke away to become
Bangladesh in 1971). The Pakistan constitution of 1973, amended
substantially in 1985, provides for a President (Chief of State) who
is elected by an electoral college consisting of both houses of the
federal parliament and members of the four provincial legislatures.
The National Assembly in a special session elects a Prime Minister.
Following the election, the President invites the Prime Minister to
create a government. The constitution permits a vote of "no
confidence" against the Prime Minister by a majority of the National
Assembly. In practice, the army has a strong voice in the
decision-making process and few Presidents have been able to oppose
its interests for long.
Relations between Pakistan and India have been fraught with
difficulties. India disputes Pakistan's claims to part of Kashmir, and
repeated attempts at mediation have not resolved this conflict. The
dispute has triggered wars between the two countries in 1947, 1965 and
1971. India has accused Pakistan of fomenting religious and political
unrest and in 1994 there were frequent disturbances in the region. The
two sides frequently exchange fire. More recently, India's nuclear
tests prompted Pakistan to reply in kind, despite Western efforts to
dissuade it. Economic sanctions imposed by the U.S. and other
industrialized countries following the nuclear tests have not been
without consequences. While their short-term, direct effect on the
economy has been relatively modest, the indirect and medium-term
consequences of sanctions could become more serious as the resumption
of IMF funding is currently in jeopardy.
With a per capita GDP of about $470, Pakistan is considered a
low-income country by the World Bank. No more than 39% of adults are
literate and life expectancy at birth is about 62 years. Relatively
few resources have been devoted to socio-economic development or
infrastructure projects. Inadequate provision of social services and
high population growth have contributed to a persistence of poverty
and unequal income distribution.
The country's principal natural resource is arable land ( 25% of
the total land area is under cultivation). Agriculture accounts for
24% of GDP and employs about 50% of the labor force. Wheat, cotton,
and rice together account for almost 70% of the value of total crop
output and are among the countries major exports. Pakistan's
manufacturing sector accounts for about 20% of GDP. Cotton textile
production and apparel manufacturing are Pakistan's largest
industries, accounting for about 50% of total exports. Other major
industries include cement, fertilizer, sugar, steel, tobacco,
chemicals, machinery and food processing.
Weak world demand for its exports and domestic political
uncertainty have contributed to the nation's widening trade deficit.
The nation continues to rely heavily on imports of such materials as
petroleum products, capital goods, industrial raw materials and
consumer products and the resulting external imbalance has left
Pakistan with a growing foreign debt burden. Annual debt service now
exceeds 27% of export earnings.
Pakistan has three stock exchanges located in Karachi, Lahore and
Islamabad. The Karachi Stock Exchange (KSE) is dominant, accounting
for approximately 80% of equity transactions in Pakistan. The KSE
ranks forty-eighth among the world's markets and had a market
capitalization of US$11billion in 1997. At the end of that year there
were 781 companies listed on the KSE. The combined market
capitalization of the 20 largest companies represented 71.7% of the
market total.
U.S. investors should be aware that there are a number of factors
that could pose special risks to investing in Pakistan securities.
Among these is the country's long history of government instability
marked by military coups, political assassinations and frequent
outbreaks of violent rioting, strikes and ethnic unrest. While recent
governments have made some progress on addressing some of the
country's social and economic ills, the current administration is
faced with a number of serious crises. The country appears to be close
to defaulting on its international commitments. With no debt
repayments made since August of 1998, Pakistan faces the possibility
of outright default unless it can secure a bailout package and debt
rescheduling. Recent talks with the IMF on a debt rescue package broke
down and a default could precipitate declines in the nation's trade
and currency. By November of 1998, foreign investment has slowed
dramatically in response to a rise in investment risk and new
restrictions imposed by the central bank designed to limit the outflow
of foreign exchange.
Corruption within the government and business community remains a
problem and corporate managements are generally not focused on
improving shareholder interests.
The threat of war with India over the disputed province of Kashmir
remains a threat to peace in the region and any outbreak of
hostilities would likely plunge the nation's economy into deep
depression and further erode the relative value of its currency versus
the world's major currencies.
SPECIAL CONSIDERATIONS REGARDING LATIN AMERICA
Latin America represents one of the world's more advanced emerging
markets. With a total population of 427 million people and its
abundant natural resources, the area is a prime trading partner for
the United States and Canada. Latin American exports represent, on
average, 16.6% of GDP. Strong export sectors are petroleum,
manufactured goods, agricultural commodities such as coffee and beef,
and metals and mining products. GDP growth in Latin America as a
region was 3.4% in 1996, up from 0.1% in 1995. Recognizing the
important role of international trade as a component of GDP, the
countries of Latin America have formed strong regional trade
organizations, notably Mercado Comun del Sur (MERCOSUR). Talk of
extending the North American Free Trade Agreement (NAFTA) down through
Latin America indicates some desire to tie the economies even closer
to those of the north.
Politically, Latin American countries generally have strong
presidential systems closely modeled after the United States. The
transition to democracy is largely complete in most countries. All
countries enjoy good relations with the United States, with whom they
cooperate on a range of non-economic matters, such as preservation of
the environment and drug control. Monetarist minded governments were
responsible for the successful staving off of contagion from the 1995
currency crisis in Mexico, increasing their stature in the eyes of
most capital market participants.
ARGENTINA. Prior to 1989, Argentine politics were characterized by
populist leaders, sometimes democratically elected and sometimes not,
who ruled with the overt support of the military. Coups and outright
military rule were not uncommon. Economic polices were highly
protectionist, with significant barriers and restrictions on foreign
trade and investment. Markets were highly regulated and the state was
heavily involved in many industries. Inflation was routinely high and
growth stagnant.
President Carlos Menem was first elected to office in 1989 and
undertook a program of deregulation, liberalization and macroeconomic
reform. The results have been positive. GDP growth in 1997 was 8.0%,
up from 4.4% in 1996 and -4.4% in 1995. Argentina's growth, averaging
over 6% from 1991 to 1997, had been driven primarily by domestic
consumption. Immediately after the Mexican crisis, bank liquidity was
restrained. However, deposits have since returned to the system
surpassing the levels that existed prior to the crisis and liquidity
is very much improved. Lending also increased and consumer spending
rebounded although it has slowed somewhat due to the most recent
Brazilian crisis. The positive effect is that inflation, well over
150% at the beginning of the decade, was 0.4% in 1996. Still
troublesome for Argentina is unemployment, quite high at 15%. Menem's
economic liberalization policies have succeeded in attracting foreign
investment. From the U.S. alone, approximately $10 billion was
invested by 1996. Investors have been most attracted to the
telecommunications, finance, and energy sectors.
Argentina enjoys a positive trade balance. The export economy is
heavily weighted toward agriculture, which represents 60% of the total
value of all Argentine exports. Primary products are livestock,
oilseeds, and grain. Argentina's single biggest trading partner is
Brazil, and the United States is the second. Primary imports are
machinery, vehicles and chemicals.
The resignation of Economy Minister Domingo Cavallo in July 1996
was initially greeted with skepticism from the markets. Cavallo was
widely recognized as the man responsible for ensuring the
convertibility of the peso by pegging it to the dollar, a move which
saved Argentina from the hyperinflation and continuous drops in output
which could have followed from the Mexican crisis in 1994. Confidence
was quickly restored, however, with the appointment of Roque
Fernandez, who promptly reaffirmed commitment to Cavallo's plan and
introduced further measures for fiscal stability.
The next presidential election is due in 1999. In accordance with
the constitution, Menem, a member of the Peronist party, can not seek
a third consecutive term. The next election is likely to present a
third candidate to the voters beyond the traditional contestants from
the Peronist and Radical parties. Frepaso, a center-left alliance,
first emerged in the 1995 elections and by 1999 could build itself up
enough to promote a viable alternative to the older parties. It is
uncertain how policies would be effected by the systemic change from a
predominantly two party system to a three party one.
The Argentine stock market reached an all-time high in October of
1997 in response to rising corporate earnings and strong economic
growth. However, the market underwent a significant correction due
largely to the "contagion effect"of the Asian economic and currency
crisis and the Mervel index ended the year only 5.9% ahead. While
there was little direct impact from the Asian crisis on Argentina's
economy, foreign investors fled the market, as they feared that Asia's
currency problems would spread to Latin America.
The Argentine market may pose special risks for investors. As an
emerging nation, Argentina's stock market may be particularly
vulnerable to widespread economic, currency and market turmoil such as
we have seen recently in Asia. These crises may prompt investors to
become increasingly averse to emerging market exposure on concern that
the impact of these events will spread to other countries. In
addition, mutual funds that invest in emerging markets may be forced
to sell holdings in countries that have little similarity with the
markets in trouble, merely to raise cash to meet redemptions.
Similarly, the Asian crisis has accelerated a growing imbalance
between supply and demand for basic commodities such as oil, metals,
pulp, grains and others. This could impact the Argentinean stock
market where energy stocks (oil, gas and electricity) comprise
approximately 40% of the market's total value. A currency devaluation
by one or more of its Latin American neighbors could precipitate a
recession and political pressure for competitive devaluation to
protect the country's trade competitiveness.
While Argentina's political situation is relatively stable; there
is a high degree of dissatisfaction with the government's inability to
lower the country's high unemployment rate. This could eventually lead
to social unrest and a turnover of the government to the control of
parties less favorable to investors.
BRAZIL. Brazil is the largest country in South America and is home
to vast amounts of natural resources. Its 155 million people are
descendants from indigenous tribes and European immigrants. They live
in diverse socio-economic conditions, from the urban cities of Sao
Paolo to the undeveloped trading posts of the distant regions.
Industrial development has been concentrated in specific areas. The
disenfranchised population is quite large and is a source of many of
Brazil's social problems.
The Brazilian economy is currently undergoing extensive reforms,
stemming from a 1994 effort to stabilize the currency called the Real
Plan. With the aim of curbing inflation, a new currency, the Real, was
introduced and supported via a floating exchange band. The plan has
stabilized the exchange rate and controlled inflation which was at
2,700% in 1994. Inflation in 1995 dropped to 81%, and fell even
further in 1996, settling at 18.7%. Perhaps the most remarkable
achievement for the Brazilian economy in 1997 was the lowest rate of
inflation in the past 40 years, as the National Consumer Price Index
increased just 7.48%. At the same time, however, the Real Plan has
sent the trade and current account balances into a deficit. The
current account deficit is expected to reach $30 billion in 1998,
equivalent to 3.6% of GDP.
Other objectives of the administration of the current President,
Fernando Henrique Cardoso, are trade liberalization and privatization,
but these efforts are sporadic and often stalled by special interests
in the legislature. Some privatization efforts are performing well,
particularly in the utilities sector. Utilities and telecommunications
have been key draws for foreign investment, and foreign direct
investment (FDI) is coming in at record levels. In 1998 the country
received over $20 billion from privatizations. Still, there are
restrictions against investments in certain industries, such as metals
and mining.
Traditionally a primarily agricultural economy, a strong industrial
sector has developed which produces metals, chemical, and manufactured
consumer goods. Agriculture still plays a significant role, however,
representing 11% of the GDP, 40% of exports and employing over 35% of
the workforce. Primary agricultural products are grains, coffee, and
cattle. Regarding energy and utilities, the country is a leading
producer of hydroelectric power, but they are dependent on imports for
oil.
Presidential elections were held in October of 1998 and President
Cardoso won with 53% of the vote. This should insure continuity in
policy, which will be much needed given the difficulties caused by the
recent instability in the global markets and its impact on Brazil.

In 1997 the Brazilian stock market rose to an all-time high in the
first quarter. Over the summer, the speculative attack on the Thai
currency triggered a sharp reversal in the Brazilian market, as
investors feared a raid on the Brazilian real. However, the market
ended the year with a gain of 4.34%. By mid-year 1998 the Brazilian
market plummeted amid growing concern that Brazil, Latin America's
largest economy, might suffer the confidence crisis that had caused
large currency devaluations in Russia and Asia.
Investing in Brazil could entail special risks: High unemployment
is the chief challenge facing Brazil's president Cardoso following his
reelection in October of 1998. Joblessness is at a record high and
social unrest could hinder his progress in subduing inflation and
denationalizing government ownership of many of its businesses. Brazil
could be a likely target for a renewed attack on its currency. The
economy is in a more precarious state: interest rates remain high and,
despite austerity measures, little progress has been made in reducing
the current account deficit. This poses particular risk for U.S.
investors who would see their investment returns eroded if the
Brazilian real were to be devalued.
Overall, Brazil remains vulnerable to both external shocks and
changing sentiment due to worsening domestic indicators or political
risk.
CHILE. Chile is a transition economy which has recently made great
strides toward putting its authoritarian, statist, past behind itself.
In all of Latin America, it is the country with the highest rates of
growth. Averaging 7.3% so far this decade, GDP grew at 6.0% in 1996,
down from 6.6% the previous year. Inflation has been steadily
declining and is down over 15% in the last five years. Inflation in
1997 was 6.0%, a 0.6% drop over 1996. Unemployment in 1996 was 6.2%,
particularly low for the Latin American region. Chile is still
considered to have one of the best performing stock markets in the
region.
Performance of the Chilean stock market was lackluster in 1997 as
weak copper prices and rising interest rates led to a contraction in
the domestic economy. Also contributing to the market's weakness was
the contagion effect of the Asian economic and currency crises, a
decline in pulp and steel prices, and uncertainty about the growth
prospects of its Latin American neighbors. These factors combined to
produce a 15% decline in the stock market for the 1997 calendar year.
The market weakness carried through into the first half of the next
year.
Eduardo Frei is President and is due for reelection in 1999.
President Frei has been trying to decentralize the government but
encounters stiff opposition from the powerful trade unions. Also high
on Frei's agenda is tax reform.
There is a considerable military component to political life in
Chile. In the legislature there is strong representation by parties
with authoritarian views. As part of the negotiated settlement with
coup leader General Augusto Pinochet in 1990, the army chain of
command ends with General Pinochet, not an elected official.
Furthermore, certain seats are reserved in the Senate for appointed
officials from the military. Pinochet must resign in 1998, and shortly
thereafter the reserved Senate seats will fall open to election. There
are constitutional reforms currently in progress further diminishing
the role and influence of the military, and thus the political
transition is still underway. A successful outcome requires that the
military acquiesce as it is stripped of its political powers.
Investors in the Chilean market face special risks: The Chilean
market is particularly sensitive to the fluctuation in the
international price of copper and pulp on the international markets
and they have a significant impact on the nation's economy and stock
market.
As is typical of most emerging markets, much of the Chilean market
equity is firmly held by controlling families and their associates.
Accordingly, these owners may not always act in the interests of
outside shareholders. In addition, any weakness in the Chilean
currency versus the dollar could erode the investment returns to U.S.
investors upon currency conversion.
MEXICO. The Mexican economy has recovered fairly well since the
currency crisis of December 1994 thanks in large part to growth in
exports, peso stabilization, and massive financial assistance from the
United States. GDP growth rose to 7.3%, with consumer spending and
investment leading the way. A major positive factor supporting growth
during 1997 was the strength of the peso, which closed the year little
changed from its 1996 year-end level. In addition, the nation's
inflation rate declined to 15.7% from the 27.7% rate of 1996. This
marked the second straight year of improvement. Inflation is the chief
concern of the central bank, which takes active measures such as the
setting of wage ceilings and the adjustment of interest rates to
control it. Domestic consumption, while improved, has yet to return to
pre-1994 levels, and has also contributed to the containment of
inflation.
The Mexican economy is very strong in manufacturing and natural
resources, specifically oil. Manufacturing alone counts for 22% of the
Mexican GDP and 21% of all urban employment. The economy is also very
closely tied to the United States, which is responsible for 60% of all
foreign investment and with whom it conducts over 75% of all trade.
Trade pacts such as NAFTA further integrate the economies, giving the
United States strong incentives to provide assistance in times of
crisis. NAFTA also enabled the recent recovery, given the ease with
which it allows increases in exports and investment. The Mexican stock
market listed 194 companies with total capitalization of $156 billion
in 1997.
Internally, the various people of the Mexican states have recently
experienced a great deal of dissatisfaction with their relationship to
the federal government. Most notably, in Chiapas there have been armed
uprisings by indigenous groups demanding further autonomy. While the
rebellions have not strongly shaken financial markets, they serve as a
reminder of the diversity of Mexico, of the vast socio-economic gaps
between various peoples, and of the potential for such groups to
demand the attention of both their government and the world.
Politically, the landscape changed fundamentally in July 1997. The
defeat of candidates from the Institutional Revolutionary Party (PRI)
in legislative elections signaled the end of decades of one party
rule. Citizens now have the confidence that their votes count and that
the PRI is no longer invincible. Winning every presidential election
since its founding in 1929, the PRI was the country's monolithic
political machine, maintaining power through rigged elections and
ruling in an environment rife with intrigue and corruption. Internal
pressures including armed rebellion from domestic interest groups,
extensive crises and scandals caused by intra-party rivalries and
corruption, and deteriorating relationships with foreign countries
over financial mismanagement and mutual social problems all
contributed to the establishment of fully free and unfettered
elections. Numerous electoral reforms implemented since 1989 have
aided in the further opening of the Mexican political system and
opposition parties have made historic gains in elections at all
levels. Much of the impetus for establishing a real two party system
in Mexico can be credited to President Zedillo and the PRI majority in
Congress. During 1995-96 the political parties negotiated
constitutional amendments to address electoral campaign fairness
issues, which passed unanimously. The response from the Mexican people
was clear as a record number of registered voters cast ballots. Though
they took the most votes (39%) for the 500-member Lower House of
Congress, the PRI has lost their majority. Mid-term elections held in
July of 1997, also saw large gains for opposition parties and marked a
significant step in Mexico's political transformation. Market reaction
to the new Mexican political world was positive. The IPC index,
consisting of 35 of the most representative stocks on the Mexican
Stock Exchange, rose 3.25% the day after the election. Further
financial implications of the new landscape are as yet uncertain.
Relevant considerations are the effect of the new configurations on
government consensus and policy making, the demands of newly empowered
groups on economic and other resources, the balance of power between
the executive and the legislature, and the ability of the government
to maintain law and order.
Mexico's stock market fell sharply in late 1997 and continued its
decent through mid-1998 as the worsening Asian economic and currency
crises threatened to cause problems for Mexico's trade balance and
raised questions concerning the sustainability of its economic growth.
Foreign investors fled the Mexican market, as they feared that Asia's
currency problems would spread to Latin America.
Investors in Mexico face a number of potential risks. As an
emerging nation, Mexico's stock market may be particularly vulnerable
to widespread economic, currency and stock market turmoil such as that
recently experienced in Asia and Russia. These crises may prompt
investors to become increasingly averse to emerging market exposure on
concern that the impact of these events will spread to other
countries. In addition, mutual funds that invest in emerging markets
may be forced to sell holdings in countries that have little
similarity with the troubled markets, merely to raise cash to meet
redemptions. Similarly, because the United States is Mexico's largest
trading partner, any economic downturn in the U.S. economy can have a
strongly adverse impact upon Mexico's economy and stock market.
While Mexico's political situation is relatively stable, there is a
high degree of dissatisfaction with the government's inability to
effectively address the nation's growing social problems, particularly
in the country's less developed regions. Occasional flair-ups of
strikes and armed rebellion could pose a threat to Mexico's political
and economic stability.
SPECIAL CONSIDERATIONS REGARDING THE RUSSIAN FEDERATION
The Russian Federation is the largest republic of the Commonwealth of
Independent States with a 1995 population of 147,500,000. It is about
one and four fifths of the land area of the United States and occupies
most of Eastern Europe and north Asia.
Russia has had a long history of political and economic turbulence.
The USSR lasted 69 years and for more than half that time it ranked as
a nuclear superpower. In the 1930's tens of millions of its citizens
were collectivized under state agricultural and industrial enterprises
and millions died in political purges and the vast penal and labor
system or in state-created famines. During World War II, as many as 20
million Soviet citizens died. After decades of communist rule, the
Soviet Union was dissolved on December 8, 1991 following a failed coup
attempt against the government of Mikhail Gorbachev. On the day that
the leaders declared that the Soviet Union ceased to exist, the Soviet
republics were invited to join with Russia in the Commonwealth of
Independent states (CIS). At one time or another those that have
agreed to join have included the Ukraine, Belarus, Moldova, Georgia,
Armenia, Azerbaijan, Uzbekistan, Turkmenistan, Tajikistan, Kazakhstan
and Kyrgyzstan, but a number have dropped out since or have only
observer status. Each of the republics is a sovereign state that
controls its own economy and natural resources and collects its own
taxes, providing only minimal support to the CIS.
Boris Yeltsin, President of Russia, inherited the mantle of economic
and political chaos. With the freeing of most prices he staked his
political life on the rapid creation of a free market economy. Since
1991 Yeltsin and his Russian reformers have been faced with the
daunting task of stabilizing the Russian economy while transforming it
into a modern and efficient structure able to compete in international
markets and respond to the needs of the Russian people. To date, their
efforts have yielded widely mixed results. On the one hand, they have
made some impressive progress. Since 1992, they have abolished central
planning, decontrolled prices, unified the foreign exchange market,
made the ruble convertible, and privatized two thirds of the economy.
They have accomplished this in spite of the crushing burdens inherited
from the communist system: huge industrial enterprises that are
unprofitable; an obsolete capital stock; a crumbling energy sector,
huge external debt; and armies that had to be repatriated and
resettled at home.
Russia remains a paradox among the major economies of the world in
that it is a country marked by stagnation in production levels, but
has few constraints on growth. Labor supply is adequate and savings
are high. In addition, there is almost unlimited scope for increasing
productivity through the introduction of improved technologies,
production process and market-oriented managerial development. There
are 147 million consumers who are slowly increasing their buying power
and education standards are high. Russia is also rich in natural
resources. It has 40% of the world's natural gas reserves, 6% of its
oil, 25% of coal, diamonds, gold and nickel, and 30% of timber and
bauxite. Approximately ten million people are engaged in agriculture
and they produce half of the region's grain, meat, milk, and other
dairy products.
The main reason for the continued poor performance of the Russian
economy is the country's failure to mobilize the resources that are
available. While the official unemployment rate was at 10.6% in 1996,
up to half of the working population is, in effect, unemployed or, to
a significant degree, underemployed in inefficient and unproductive
industries. Much of the country's savings have been siphoned off
through capital flight. Russia's technological potential for
assimilating both domestic and foreign technologies is not being
exploited. Industry privatization and restructuring initiatives have
generally failed to mobilize the available factors of production as
the country's privatization program virtually ensures the predominance
of the old management teams that are largely non market-oriented in
their management approach. Approximately 80% of Russian privatized
companies continue to be majority-owned by insiders and only 10% are
owned by investors with large enough stakes to influence the running
of the company.
In July 1996, Boris Yeltsin was re-elected for a second term and it
was hoped that the election would mark the start of a more stable
period of economic growth. However, macroeconomic indicators in 1996
proved contradictory. On the one hand, the Russian government
continued its strict credit policies, and the annual inflation rate
for 1997 dropped to 11%, down from 22% in 1996. Inflation has since
remained below 3% a month through the first half of 1997. In addition,
expenditure cuts trimmed the budget deficit to 7% of GDP for the first
nine months of 1996.
By the end of 1997, GDP was up 0.4% following 1996's 6% fall, and
industrial production was up by 1.9%. Non-payment continues to
represent a serious problem for the economy, particularly in the
energy sector.
While Russia is widely believed to be one of the most risky markets in
Eastern Europe, it is also recognized for its potential for positive
returns. However, the market has been essentially liquidity driven and
concentrated in very few of the country's largest companies. At just
$129 billion, the total capitalization of the stock market accounts
for just 28.7 percent of GDP. The majority of investors in Russian
equities are small and medium-sized United States hedge funds. In
addition, several country specific funds have been established to make
direct and portfolio investments in Russian companies. To facilitate
foreign investment, a number of the larger Russian companies have
issued equity in the form of American depository receipts while six
big firms have issued securities in the form of Russian depository
certificates. These certificates are issued and marketed by the Bank
of New York. Any investment in Russia is risky and deciding which
companies will perform well at this stage of the country's
transformation is far from easy. A combination of poor accounting
standards, inept management, limited shareholder rights and the
criminalization of large sectors of the economy pose a significant
risk, particularly to foreign investors.
In 1996 the Russian market delivered the world's best stock market
performance and was among the top performing markets in the first half
of 1997. However, the markets strength masked a rapidly deteriorating
political and economic picture. Many of the country's economic reform
initiatives have floundered as the proceeds of IMF and other
assistance have been squandered or stolen. Taxes were not being
collected and Russian banks, suffering from a collapsed ruble, could
not meet the demands of either domestic depositors or foreign
creditors. In July of 1998 the Yeltsin government effectively devalued
the Russian ruble by approximately 34% to strengthen the ailing
banking system and stimulate demand for Russian exports. In addition
the government announced a restructuring of their foreign debt that
would allow a 90-day moratorium on banks' foreign loans and a
rescheduling of $40 billion in domestic debt. These actions were
viewed by investors as being tantamount to default and they fled the
Russian stock market. President Yeltsin's relations with the communist
dominated Duma worsened and there was talk among the body of beginning
impeachment proceedings against the president. By August of 1998 the
ruble had fallen by 70 percent and food prices soared, heightening
fears of social unrest. By early September the Russian economy
appeared to be slipping out of control and the government in a state
of paralysis as the President and the Duma feuded over remedial
initiatives. Many observers fear that country's communist party could
regain control of the government and end free market reforms, which
could further negatively impact stock prices.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of each fund by FMR pursuant to authority contained in the
management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and investment
accounts for which it or its affiliates act as investment adviser. In
selecting broker-dealers, subject to applicable limitations of the
federal securities laws, FMR considers various relevant factors,
including, but not limited to: the size and type of the transaction;
the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability,
and financial condition of the broker-dealer firm; the broker-dealer's
execution services rendered on a continuing basis; the reasonableness
of any commissions; and, if applicable, arrangements for payment of
fund expenses.
If FMR grants investment management authority to a sub-adviser (see
the section entitled "Management Contracts"), that sub-adviser is
authorized to place orders for the purchase and sale of portfolio
securities, and will do so in accordance with the policies described
above.
Generally, commissions for investments traded on foreign exchanges
will be higher than for investments traded on U.S. exchanges and may
not be subject to negotiation.
Each fund may execute portfolio transactions with broker-dealers who
provide research and execution services to the fund or other
investment accounts over which FMR or its affiliates exercise
investment discretion. Such services may include advice concerning the
value of securities; the advisability of investing in, purchasing, or
selling securities; and the availability of securities or the
purchasers or sellers of securities. In addition, such broker-dealers
may furnish analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy, and
performance of investment accounts; and effect securities transactions
and perform functions incidental thereto (such as clearance and
settlement).
The selection of such broker-dealers for transactions in equity
securities is generally made by FMR (to the extent possible consistent
with execution considerations) in accordance with a ranking of
broker-dealers determined periodically by FMR's investment staff based
upon the quality of research and execution services provided.
For transactions in fixed-income securities, FMR's selection of
broker-dealers is generally based on the availability of a security
and its price and, to a lesser extent, on the overall quality of
execution and other services, including research, provided by the
broker-dealer.
The receipt of research from broker-dealers that execute transactions
on behalf of a fund may be useful to FMR in rendering investment
management services to that fund or its other clients, and conversely,
such research provided by broker-dealers who have executed transaction
orders on behalf of other FMR clients may be useful to FMR in carrying
out its obligations to a fund. The receipt of such research has not
reduced FMR's normal independent research activities; however, it
enables FMR to avoid the additional expenses that could be incurred if
FMR tried to develop comparable information through its own efforts.
Fixed-income securities are generally purchased from an issuer or
underwriter acting as principal for the securities, on a net basis
with no brokerage commission paid. However, the dealer is compensated
by a difference between the security's original purchase price and the
selling price, the so-called "bid-asked spread." Securities may also
be purchased from underwriters at prices that include underwriting
fees.
Subject to applicable limitations of the federal securities laws, a
fund may pay a broker-dealer commissions for agency transactions that
are in excess of the amount of commissions charged by other
broker-dealers in recognition of their research and execution
services. In order to cause a fund to pay such higher commissions, FMR
must determine in good faith that such commissions are reasonable in
relation to the value of the brokerage and research services provided
by such executing broker-dealers, viewed in terms of a particular
transaction or FMR's overall responsibilities to that fund or its
other clients. In reaching this determination, FMR will not attempt to
place a specific dollar value on the brokerage and research services
provided, or to determine what portion of the compensation should be
related to those services.
To the extent permitted by applicable law, FMR is authorized to
allocate portfolio transactions in a manner that takes into account
assistance received in the distribution of shares of the funds or
other Fidelity funds and to use the research services of brokerage and
other firms that have provided such assistance. FMR may use research
services provided by and place agency transactions with National
Financial Services Corporation (NFSC) and Fidelity Brokerage Services
Japan LLC (FBSJ), indirect subsidiaries of FMR Corp., if the
commissions are fair, reasonable, and comparable to commissions
charged by non-affiliated, qualified brokerage firms for similar
services. Prior to December 9, 1997, FMR used research services
provided by and placed agency transactions with Fidelity Brokerage
Services (FBS), an indirect subsidiary of FMR Corp.
FMR may allocate brokerage transactions to broker-dealers (including
affiliates of FMR) who have entered into arrangements with FMR under
which the broker-dealer allocates a portion of the commissions paid by
a fund toward the reduction of that fund's expenses. The transaction
quality must, however, be comparable to those of other qualified
broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions
for investment accounts which they or their affiliates manage, unless
certain requirements are satisfied. Pursuant to such requirements, the
Board of Trustees has authorized NFSC to execute portfolio
transactions on national securities exchanges in accordance with
approved procedures and applicable SEC rules.
The Trustees of each fund periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio
transactions on behalf of the fund and review the commissions paid by
the fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the fund.
Each fund's turnover rates for the fiscal periods ended October 31,
1998 and 1997 are indicated in the table below. Variations in turnover
rates may be due to fluctuating volume of shareholder purchase and
redemption orders, market conditions, or changes in FMR's investment
outlook.

TUR 1998 1997
NO
VER
RAT
ES

INTERN 143 % 70%
ATIONAL
GROWT
H &
INCOM
E

DIVERS 95 % 81%
IFIED
INTERN
ATIONAL

INTERN 137 % 86%
ATIONAL
VALUE

OVERS 69 % 68%
EAS

WORLD 100 % 85%
WIDE

The following tables show the brokerage commissions paid by the funds.
Significant changes in brokerage commissions paid by a fund from year
to year may result from changing asset levels throughout the year. A
fund may pay both commissions and spreads in connection with the
placement of portfolio transactions.
The following table shows the total amount of brokerage commissions
paid by each fund.

FISCAL YEAR TOTAL
ENDED OCTOBER 31 AMOUNT PAID

INTERNATIONAL GROWTH & INCOME

1998 $ 4,067,823

1997 $ 2,995,171

1996 $ 3,004,001

DIVERSIFIED INTERNATIONAL

1998 $ 6,427,253

1997 $ 4,502,575

1996 $ 2,192,851

INTERNATIONAL VALUE

1998 $ 2,169,075

1997 $ 1,076,317

1996 $ 927,266

OVERSEAS

1998 $ 9,346,601

1997 $ 8,282,544

1996 $ 8,266,411

WORLDWIDE

1998 $ 4,061,335

1997 $ 3,341,959

1996 $ 1,736,992

Of the following tables, the first shows the total amount of brokerage
commissions paid by each fund to NFSC, FBS and FBSJ, as applicable,
for the past three fiscal years. The second table shows the
approximate percentage of aggregate brokerage commissions paid by a
fund to NFSC, FBS and FBSJ for transactions involving the approximate
percentage of the aggregate dollar amount of transactions for which
the fund paid brokerage commissions for the fiscal year ended 1998.
NFSC, FBS and FBSJ are paid on a commission basis.

TOTAL AMOUNT PAID

FISCAL TO NFSC TO FBS TO FBSJ
YEAR
ENDED
OCTOB
ER 31

INTERN
ATIONAL
GROWT
H &
INCOM
E

19 $ 10,723 $ 1,832 $ 0
98

19 $ 0 $ 140,274 N/A
97

19 $ 5,530 $ 124,031 N/A
96

DIVERS
IFIED
INTERN
ATIONAL

19 $ 82,815 $ 27,870 $ 0
98

19 $ 70,400 $ 178,643 N/A
97

19 $ 75,564 $ 80,532 N/A
96

INTERN
ATIONAL
VALUE

19 $ 8,518 $ 12,615 $ 0
98

19 $ 2,896 $ 71,388 N/A
97

19 $ 7,878 $ 45,758 N/A
96

OVERS
EAS

19 $ 23,747 $ 89,506 $ 0
98

19 $ 14,838 $ 611,587 N/A
97

19 $ 45,887 $ 500,320 N/A
96

WORLD
WIDE (DAGGER)

19 $ 86,795 $ 16,579 $ 0
98

19 $ 61,353 $ 152,700 N/A
97

19 $ 36,270 $ 69,922 N/A
96

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FISCAL % OF % OF % OF % OF % OF % OF
YEAR AGGREGATE AGGREGATE AGGREGATE AGGREGATE AGGREGATE AGGREGATE
ENDED COMMISSIO DOLLAR COMMISSIONS DOLLAR COMMISSIONS DOLLAR
OCTOB NS PAID TO AMOUNT OF PAID TO AMOUNT OF PAID TO AMOUNT OF
ER 31, NFSC TRANSACTIO FBS TRANSACTIO FBSJ TRANSACTIO
1998 NS NS NS
EFFECTED EFFECTED EFFECTED
THROUGH THROUGH THROUGH
NFSC FBS FBSJ

INTERN 0.26 % 0.49 % 0.05 % 0.19 % 0 % 0 %
ATIONAL
GROWT
H &
INCOM
E

DIVERS 1.29 % 1.12 % 0.43 % 0.42 % 0 % 0 %
IFIED
INTERN
ATIONAL

INTERN 0.39 % 1.14 % 0.58 % 0.64 % 0 % 0 %
ATIONAL
VALUE

OVERS 0.25 % 0.48 % 0.96 % 0.89 % 0 % 0 %
EAS

WORLD 2.13 % 5.52 % 0.41 % 0.42 % 0 % 0 %
WIDE (DAGGER)

</TABLE>

(dagger) The difference between the percentage of aggregate
brokerage commissions paid to, and the percentage of the aggregate
dollar amount of transactions effected through, NFSC is a result of
the low commission rates charged by NFSC.

NFSC has used a portion of the commissions paid by a fund to
reduce that fund's custodian or transfer agent fees.
The following table shows the dollar amount of brokerage commissions
paid to firms that provided research services and the approximate
dollar amount of the transactions involved for the fiscal year ended
October 1998.

$ AMOUNT OF $ AMOUNT OF
COMMISSIONS PAID TO BROKERAGE
FIRMS THAT PROVIDED TRANSACTIONS
RESEARCH SERVICES* INVOLVED*

INTERNATIONAL GROWTH & INCOME $ 3,616,944 $ 1,698,543,126

DIVERSIFIED INTERNATIONAL $ 5,808,236 $ 2,697,216,894

INTERNATIONAL VALUE $ 1,973,911 $ 966,084,772

OVERSEAS $ 8,545,051 $ 4,235,951,878

WORLDWIDE $ 3,675,388 $ 1,768,870,793

* The provision of research services was not necessarily a factor in
the placement of all this business with such firms.

The Trustees of each fund have approved procedures in conformity with
Rule 10f-3 under the 1940 Act whereby a fund may purchase securities
that are offered in underwritings in which an affiliate of FMR
participates. These procedures prohibit the funds from directly or
indirectly benefiting an FMR affiliate in connection with such
underwritings. In addition, for underwritings where an FMR affiliate
participates as a principal underwriter, certain restrictions may
apply that could, among other things, limit the amount of securities
that the funds could purchase in the underwriting.
From time to time the Trustees will review whether the recapture for
the benefit of the funds of some portion of the brokerage commissions
or similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at
present no other recapture arrangements are in effect. The Trustees
intend to continue to review whether recapture opportunities are
available and are legally permissible and, if so, to determine in the
exercise of their business judgment whether it would be advisable for
each fund to seek such recapture.
Although the Trustees and officers of each fund are substantially the
same as those of other funds managed by FMR or its affiliates,
investment decisions for each fund are made independently from those
of other funds managed by FMR or investment accounts managed by FMR
affiliates. It sometimes happens that the same security is held in the
portfolio of more than one of these funds or investment accounts.
Simultaneous transactions are inevitable when several funds and
investment accounts are managed by the same investment adviser,
particularly when the same security is suitable for the investment
objective of more than one fund or investment account.
When two or more funds are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in
accordance with procedures believed to be appropriate and equitable
for each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as each fund is
concerned. In other cases, however, the ability of the funds to
participate in volume transactions will produce better executions and
prices for the funds. It is the current opinion of the Trustees that
the desirability of retaining FMR as investment adviser to each fund
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
VALUATION
Each fund's net asset value per share ( NAV) is the value of a
single share. The NAV of each fund is computed by adding the value of
the fund's investments, cash, and other assets, subtracting its
liabilities, and dividing the result by the number of shares
outstanding.
Portfolio securities are valued by various methods depending on the
primary market or exchange on which they trade. Most equity securities
for which the primary market is the United States are valued at last
sale price or, if no sale has occurred, at the closing bid price. Most
equity securities for which the primary market is outside the United
States are valued using the official closing price or the last sale
price in the principal market in which they are traded. If the last
sale price (on the local exchange) is unavailable, the last evaluated
quote or closing bid price normally is used. Securities of other
open-end investment companies are valued at their respective NAVs.
Fixed-income securities and other assets for which market quotations
are readily available may be valued at market values determined by
such securities' most recent bid prices (sales prices if the principal
market is an exchange) in the principal market in which they normally
are traded, as furnished by recognized dealers in such securities or
assets. Or, fixed-income securities and convertible securities may be
valued on the basis of information furnished by a pricing service that
uses a valuation matrix which incorporates both dealer-supplied
valuations and electronic data processing techniques. Use of pricing
services has been approved by the Board of Trustees. A number of
pricing services are available, and the funds may use various pricing
services or discontinue the use of any pricing service.
Futures contracts and options are valued on the basis of market
quotations, if available.
Independent brokers or quotation services provide prices of foreign
securities in their local currency. Fidelity Service Company, Inc.
(FSC) gathers all exchange rates daily at the close of the NYSE using
the last quoted price on the local currency and then translates the
value of foreign securities from their local currencies into U.S.
dollars. Any changes in the value of forward contracts due to exchange
rate fluctuations and days to maturity are included in the calculation
of NAV. If an event that is expected to materially affect the value of
a portfolio security occurs after the close of an exchange or market
on which that security is traded, then that security will be valued in
good faith by a committee appointed by the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which market quotations and information furnished by a pricing
service are not readily available are valued either at amortized cost
or at original cost plus accrued interest, both of which approximate
current value.
The procedures set forth above need not be used to determine the value
of the securities owned by a fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method would more
accurately reflect the fair value of such securities. For example,
securities and other assets for which there is no readily available
market value may be valued in good faith by a committee appointed by
the Board of Trustees. In making a good faith determination of the
value of a security, the committee may review price movements in
futures contracts and ADRs market and trading trends, the bid/ask
quotes of brokers and off-exchange institutional trading.
PERFORMANCE
A fund may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is
not intended to indicate future returns. Each fund's share price,
yield, if available, and return fluctuate in response to market
conditions and other factors, and the value of fund shares when
redeemed may be more or less than their original cost.
YIELD CALCULATIONS. Yields for a fund are computed by dividing a
fund's interest and dividend income for a given 30-day or one-month
period, net of expenses, by the average number of shares entitled to
receive distributions during the period, dividing this figure by the
f und's NAV at the end of the period, and annualizing the result
(assuming compounding of income) in order to arrive at an annual
percentage rate. Income is calculated for purposes of yield quotations
in accordance with standardized methods applicable to all stock and
bond funds. Dividends from equity investments are treated as if they
were accrued on a daily basis, solely for the purposes of yield
calculations. In general, interest income is reduced with respect to
bonds trading at a premium over their par value by subtracting a
portion of the premium from income on a daily basis, and is increased
with respect to bonds trading at a discount by adding a portion of the
discount to daily income. For a fund's investments denominated in
foreign currencies, income and expenses are calculated first in their
respective currencies, and then are converted to U.S. dollars, either
when they are actually converted or at the end of the 30-day or one
month period, whichever is earlier. Capital gains and losses generally
are excluded from the calculation as are gains and losses from
currency exchange rate fluctuations.
Income calculated for the purposes of calculating a fund's yield
differs from income as determined for other accounting purposes.
Because of the different accounting methods used, and because of the
compounding of income assumed in yield calculations, a fund's yield
may not equal its distribution rate, the income paid to your account,
or the income reported in the fund's financial statements.
In calculating a fund's yield, a fund may from time to time use a
portfolio security's coupon rate instead of its yield to maturity in
order to reflect the risk premium on that security. This practice will
have the effect of reducing a fund's yield.
Yield information may be useful in reviewing a fund's performance and
in providing a basis for comparison with other investment
alternatives. However, a fund's yield fluctuates, unlike investments
that pay a fixed interest rate over a stated period of time. When
comparing investment alternatives, investors should also note the
quality and maturity of the portfolio securities of respective
investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest rates
a fund's yield will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates a fund's yield will
tend to be somewhat lower. Also, when interest rates are falling, the
inflow of net new money to a fund from the continuous sale of its
shares will likely be invested in instruments producing lower yields
than the balance of the fund's holdings, thereby reducing a fund's
current yield. In periods of rising interest rates, the opposite can
be expected to occur.
RETURN CALCULATIONS. Returns quoted in advertising reflect all aspects
of a fund's return, including the effect of reinvesting dividends and
capital gain distributions, and any change in a fund's NAV over a
stated period. A cumulative return reflects actual performance over a
stated period of time. Average annual returns are calculated by
determining the growth or decline in value of a hypothetical
historical investment in a fund over a stated period, and then
calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had
been constant over the period. For example, a cumulative return of
100% over ten years would produce an average annual return of 7.18%,
which is the steady annual rate of return that would equal 100% growth
on a compounded basis in ten years. While average annual returns are a
convenient means of comparing investment alternatives, investors
should realize that a fund's performance is not constant over time,
but changes from year to year, and that average annual returns
represent averaged figures as opposed to the actual year-to-year
performance of a fund.
In addition to average annual returns, a fund may quote unaveraged or
cumulative returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative returns
may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a
series of redemptions, over any time period. Returns may be broken
down into their components of income and capital (including capital
gains and changes in share price) in order to illustrate the
relationship of these factors and their contributions to return.
Returns may be quoted on a before-tax or after-tax basis. Returns may
or may not include the effect of a fund's small account fee. Excluding
a fund's small account fee from a return calculation produces a higher
return figure. Returns, yields, if applicable, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
NET ASSET VALUE. Charts and graphs using a fund's NAVs ,
adjusted NAVs, and benchmark indexes may be used to exhibit
performance. An adjusted NAV includes any distributions paid by a fund
and reflects all elements of its return. Unless otherwise indicated, a
fund's adjusted NAVs are not adjusted for sales charges, if any.
MOVING AVERAGES. A fund may illustrate performance using moving
averages. A long-term moving average is the average of each week's
adjusted closing NAV for a specified period. A short-term moving
average is the average of each day's adjusted closing NAV for a
specified period. Moving Average Activity Indicators combine adjusted
closing NAVs from the last business day of each week with moving
averages for a specified period to produce indicators showing when an
NAV has crossed, stayed above, or stayed below its moving average. On
October 30, 1998, the 13-week and 39-week long-term moving averages
are shown below.

FUND NAME 13 WEEK LONG-TERM 39 WEEK LONG-TERM
MOVING AVERAGE MOVING AVERAGE

INTERNATIONAL GROWTH & INCOME $ 19. 48 $ 21.32

DIVERSIFIED INTERNATIONAL $ 16. 72 $ 17. 91

INTERNATIONAL VALUE $ 12. 00 $ 13.29

OVERSEAS $ 3 2.78 $ 35. 86

WORLDWIDE $ 15. 45 $ 17.4 7

CALCULATING HISTORICAL FUND RESULTS. The following table shows
performance for each fund.
HISTORICAL FUND RESULTS. The following table shows each fund's return
for the fiscal periods ended October 31, 1998.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
AVERAGE CUMULATIVE
ANNUAL RETURNS
RETURNS

ONE FIVE TEN ONE FIVE TEN
YEAR YEARS YEARS YEAR YEARS YEARS

INTERNATIONAL GROWTH & 0.5 5 % 6.2 2 % 8. 10 % 0.5 5 % 35. 23 % 117. 85 %
INCOME

</TABLE>

Note: If FMR had not reimbursed certain fund expenses during these
periods, the fund's returns would have been lower.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
AVERAGE CUMULATIVE
ANNUAL RETURNS
RETURNS

ONE FIVE LIFE OF ONE FIVE LIFE OF
YEAR YEARS FUND* YEAR YEARS FUND*

DIVERSIFIED INTERNATIONAL 7. 72 % 12.4 4 % 11.1 1 % 7. 72 % 79. 6 9% 105. 81 %

</TABLE>

* From December 27, 1991 (commencement of operations).
Note: If FMR had not reimbursed certain fund expenses during these
periods, the fund's returns would have been lower.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
AVERAGE CUMULATIVE
ANNUAL RETURNS
RETURNS

ONE FIVE LIFE OF ONE FIVE LIFE OF
YEAR YEARS FUND* YEAR YEARS FUND*

INTERNATIONAL VALUE 1.95% N/A 7.69% 1.95% N/A 34.51%

</TABLE>

* From November 1, 1994 (commencement of operations).

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
AVERAGE CUMULATIVE
ANNUAL RETURNS
RETURNS

ONE FIVE TEN ONE FIVE TEN
YEAR YEARS YEARS YEAR YEARS YEARS

OVERSEAS 4.6 0 % 8.21% 8.09% 4.6 0 % 48.3 3 % 117. 64 %

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
AVERAGE CUMULATIVE
ANNUAL RETURNS
RETURNS

ONE FIVE LIFE OF ONE FIVE LIFE OF
YEAR YEARS FUND* YEAR YEARS FUND*

WORLDWIDE -2.38% 8.37% 8.56% -2.38% 49.45% 99.81%

</TABLE>

* From May 30, 1990 (commencement of operations).

Note: If FMR had not reimbursed certain fund expenses during these
periods, the fund's returns would have been lower.
The following tables show the income and capital elements of each
fund's cumulative return. The tables compare each fund's return to the
record of the Standard & Poor's 500 Index (S&P 500) the Dow Jones
Industrial Average (DJIA), and the cost of living, as measured by the
Consumer Price Index (CPI), over the same period. The CPI information
is as of the month-end closest to the initial investment date for each
fund. The S&P 500 and DJIA comparisons are provided to show how each
fund's return compared to the record of a broad unmanaged index of
common stocks and a narrower set of stocks of major industrial
companies, respectively, over the same period. Each fund has the
ability to invest in securities not included in either index, and its
investment portfolio may or may not be similar in composition to the
indexes. The S&P 500 and DJIA returns are based on the prices of
unmanaged groups of stocks and, unlike each fund's returns, do not
include the effect of brokerage commissions or other costs of
investing.
The following tables show the growth in value of a hypothetical
$10,000 investment in each fund during the 10 - year period ended
October 31, 1998 or life of each fund, as applicable, assuming all
distributions were reinvested. Returns are based on past results and
are not an indication of future performance. Tax consequences of
different investments (with the exception of foreign tax withholdings)
have not been factored into the figures below.
During the 10-year period ended October 31, 1998, a hypothetical
$10,000 investment in Fidelity International Growth & Income Fund
would have grown to $21,7 85 .

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY INTERNATIONAL GROWTH & INCOME FUND INDEXES

FISCAL YEAR VALUE OF VALUE OF VALUE OF TOTAL S&P 500 DJIA COST OF
ENDED INITIAL REINVESTED REINVESTED VALUE LIVING*
OCTOBER 31 $10,000 DIVIDEND CAPITAL GAIN
INVESTMENT DISTRIBUTIONS DISTRIBUTIONS

1998 $ 16,7 23 $ 3,11 3 $ 1,94 9 $ 21,7 85 $ 51,835 $ 52,795 $ 13,644

1997 $ 17,680 $ 2,886 $ 1,099 $ 21,665 $ 42,491 $ 44,953 $ 13,444

1996 $ 16,164 $ 2,347 $ 633 $ 19,144 $ 32,162 $ 35,753 $ 13,170

1995 $ 15,097 $ 1,612 $ 591 $ 17,300 $ 25,918 $ 27,599 $ 12,787

1994 $ 14,852 $ 1,586 $ 47 $ 16,485 $ 20,498 $ 22,121 $ 12,438

1993 $ 14,606 $ 1,504 $ 0 $ 16,110 $ 19,735 $ 20,275 $ 12,121

1992 $ 11,253 $ 865 $ 0 $ 12,118 $ 17,169 $ 17,263 $ 11,797

1991 $ 11,846 $ 752 $ 0 $ 12,598 $ 15,611 $ 15,947 $ 11,431

1990 $ 11,60 9 $ 340 $ 0 $ 11,949 $ 11,693 $ 12,260 $ 11,106

1989 $ 10,898 $ 187 $ 0 $ 11,085 $ 12,640 $ 12,774 $ 10,449

</TABLE>

* From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Fidelity
International Growth & Income Fund on November 1, 1988, the net amount
invested in fund shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $14,269. If
distributions had not been reinvested, the amount of distributions
earned from the fund over time would have been smaller, and cash
payments for the period would have amounted to $2,202 for dividends
and $1,550 for capital gain distributions. The figures in the table do
not include the effect of the fund's 2% sales charge (which was in
effect during the period January 1, 1991 through June 1, 1994), its 1%
deferred sales charge on shares purchased prior to October 12, 1990,
or its $25 exchange fee in effect from December 1, 1987 through
October 1, 1989. Prior to April 1991, the fund imposed a 2% sales
charge which is no longer in effect and is not reflected in the
figures above.
During the period from December 27, 1991 (commencement of operations)
to October 31, 1998, a hypothetical $10,000 investment in Fidelity
Diversified International Fund would have grown to $20,5 81 .

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY DIVERSIFIED INTERNATIONAL FUND INDEXES

FISCAL YEAR VALUE OF VALUE OF VALUE OF TOTAL S&P 500 DJIA COST OF
ENDED INITIAL REINVESTED REINVESTED VALUE LIVING**
OCTOBER 31 $10,000 DIVIDEND CAPITAL GAIN
INVESTMENT DISTRIBUTIONS DISTRIBUTIONS

1998 $ 17,2 10 $ 1,0 20 $ 2,35 1 $ 20,5 81 $ 31,868 $ 32,610 $ 11,893

1997 $ 16,570 $ 757 $ 1,779 $ 19,106 $ 26,124 $ 27,766 $ 11,719

1996 $ 14,380 $ 491 $ 1,144 $ 16,015 $ 19,774 $ 22,084 $ 11,479

1995 $ 12,730 $ 197 $ 569 $ 13,496 $ 15,934 $ 17,047 $ 11,146

1994 $ 12,460 $ 158 $ 111 $ 12,729 $ 12,602 $ 13,663 $ 10,841

1993 $ 11,320 $ 133 $ 0 $ 11,453 $ 12,133 $ 12,523 $ 10,566

1992* $ 8,460 $ 0 $ 0 $ 8,460 $ 10,555 $ 10,663 $ 10,283

</TABLE>

* From December 27, 1991 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Fidelity
Diversified International Fund on December 27, 1991, the net amount
invested in fund shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $12,568. If
distributions had not been reinvested, the amount of distributions
earned from the fund over time would have been smaller, and cash
payments for the period would have amounted to $700 for dividends and
$1,670 for capital gain distributions.
During the period from November 1, 1994 (commencement of operations)
to October 31, 1998, a hypothetical $10,000 investment in Fidelity
International Value Fund would have grown to $13,451.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY INTERNATIONAL VALUE FUND INDEXES

FISCAL YEAR VALUE OF VALUE OF VALUE OF TOTAL S&P 500 DJIA COST OF
ENDED INITIAL REINVESTED REINVESTED VALUE LIVING**
OCTOBER 31 $10,000 DIVIDEND CAPITAL GAIN
INVESTMENT DISTRIBUTIONS DISTRIBUTIONS

1998 $ 12,360 $ 191 $ 900 $ 13,451 $ 25,497 $ 24,142 $ 10,970

1997 $ 12,470 $ 126 $ 597 $ 13,193 $ 20,901 $ 20,555 $ 10,809

1996 $ 11,330 $ 11 $ 314 $ 11,655 $ 15,820 $ 16,349 $ 10,589

1995* $ 10,630 $ 0 $ 0 $ 10,630 $ 12,749 $ 12,620 $ 10,281

</TABLE>

* From November 1, 1994 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Fidelity
International Value Fund on November 1, 1994, the net amount invested
in fund shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $10,999. If distributions
had not been reinvested, the amount of distributions earned from the
fund over time would have been smaller, and cash payments for the
period would have amounted to $170 for dividends and $800 for capital
gain distributions.
During the 10-year period ended October 31, 1998, a hypothetical
$10,000 investment in Fidelity Overseas Fund would have grown to
$21,7 64 .

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY OVERSEAS FUND INDEXES

FISCAL YEAR VALUE OF VALUE OF VALUE OF TOTAL S&P 500 DJIA COST OF
ENDED INITIAL REINVESTED REINVESTED VALUE LIVING*
OCTOBER 31 $10,000 DIVIDEND CAPITAL GAIN
INVESTMENT DISTRIBUTIONS DISTRIBUTIONS

1998 $ 13,4 19 $ 2,407 $ 5,9 38 $ 21,7 64 $ 51,835 $ 52,795 $ 13,644

1997 $ 13,486 $ 2,203 $ 5,117 $ 20,806 $ 42,491 $ 44,953 $ 13,444

1996 $ 12,285 $ 1,789 $ 3,704 $ 17,778 $ 32,162 $ 35,753 $ 13,170

1995 $ 11,292 $ 1,456 $ 3,209 $ 15,957 $ 25,918 $ 27,599 $ 12,787

1994 $ 11,530 $ 1,485 $ 2,996 $ 16,011 $ 20,498 $ 22,121 $ 12,438

1993 $ 10,735 $ 1,148 $ 2,789 $ 14,672 $ 19,735 $ 20,275 $ 12,121

1992 $ 8,680 $ 732 $ 1,143 $ 10,555 $ 17,169 $ 17,263 $ 11,797

1991 $ 10,640 $ 678 $ 821 $ 12,139 $ 15,611 $ 15,947 $ 11,431

1990 $ 10,858 $ 370 $ 431 $ 11,659 $ 11,693 $ 12,260 $ 11,106

1989 $ 10,395 $ 245 $ 0 $ 10,640 $ 12,640 $ 12,774 $ 10,449

</TABLE>

* From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Fidelity
Overseas Fund on November 1, 1988, the net amount invested in fund
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $16,378. If distributions had
not been reinvested, the amount of distributions earned from the fund
over time would have been smaller, and cash payments for the period
would have amounted to $1,514 for dividends and $3,545 for capital
gain distributions. The figures in the table do not include the effect
of the fund's 3% sales charge which was waived through June 30, 1995
and eliminated as of July 1, 1995 and the fund's $25 exchange fee,
which was in effect from December 1, 1987 through October 1, 1989.
Prior to May 1994, the fund imposed a 3% sales charge which is no
longer in effect and is not included in the figures above.
During the period from May 30, 1990 (commencement of operations) to
October 31, 1998, a hypothetical $10,000 investment in Fidelity
Worldwide Fund would have grown to $19,981.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY WORLDWIDE FUND INDEXES

FISCAL YEAR VALUE OF VALUE OF VALUE OF TOTAL S&P 500 DJIA COST OF
ENDED INITIAL REINVESTED REINVESTED VALUE LIVING**
OCTOBER 31 $10,000 DIVIDEND CAPITAL GAIN
INVESTMENT DISTRIBUTIONS DISTRIBUTIONS

1998 $ 15,590 $ 1,498 $ 2,893 $ 19,981 $ 37,857 $ 37,153 $ 12,694

1997 $ 17,270 $ 1,514 $ 1,683 $ 20,467 $ 31,033 $ 31,634 $ 12,508

1996 $ 15,180 $ 1,134 $ 1,038 $ 17,352 $ 23,490 $ 25,160 $ 12,252

1995 $ 13,320 $ 825 $ 911 $ 15,056 $ 18,929 $ 19,422 $ 11,896

1994 $ 13,960 $ 782 $ 172 $ 14,914 $ 14,971 $ 15,566 $ 11,571

1993 $ 12,760 $ 610 $ 0 $ 13,370 $ 14,413 $ 14,267 $ 11,277

1992 $ 9,630 $ 193 $ 0 $ 9,823 $ 12,539 $ 12,148 $ 10,975

1991 $ 9,610 $ 85 $ 0 $ 9,695 $ 11,402 $ 11,222 $ 10,635

1990* $ 8,950 $ 0 $ 0 $ 8,950 $ 8,540 $ 8,627 $ 10,333

</TABLE>

* From May 30, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Fidelity
Worldwide Fund on May 30, 1990, the net amount invested in fund shares
was $10,000. The cost of the initial investment ($10,000) together
with the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $13,791. If distributions had not
been reinvested, the amount of distributions earned from the fund over
time would have been smaller, and cash payments for the period would
have amounted to $1,040 for dividends and $2,350 for capital gain
distributions.
INTERNATIONAL INDEXES, MARKET CAPITALIZATION, AND NATIONAL
STOCK MARKET RETURN
The following tables show the total market capitalization of certain
countries according to the Morgan Stanley Capital International
indexes database, the total market capitalization of Latin American
countries according to the International Finance Corporation Emerging
Markets database, and the performance of national stock markets as
measured in U.S. dollars by the Morgan Stanley Capital International
stock market indexes for the twelve months ended October 31, 1998. Of
course, these results are not indicative of future stock market
performance or the funds' performance. Market conditions during the
periods measured fluctuated widely. Brokerage commissions and other
fees are not factored into the values of the indexes.
MARKET CAPITALIZATION. Companies outside the United States now make up
nearly two-thirds of the world's stock market capitalization.
According to Morgan Stanley Capital International, the size of the
markets as measured in U.S. dollars grew from $ 6,981.7 billion
in 1997 to $ 6,207.8 billion in 1998.
The following table measures the total market capitalization of
certain countries according to the Morgan Stanley Capital
International indexes database. The value of the markets are measured
in billions of U.S. dollars as of October 31, 1998.

TOTAL MARKET CAPITALIZATION
AUSTRALIA $ 181.7 JAPAN $ 1,444.0

AUSTRIA $ 23.8 NETHERLANDS $ 362.7

BELGIUM $ 125.5 NORWAY $ 32.3

CANADA $ 273.4 SINGAPORE $ 45.5

DENMARK $ 63.3 SPAIN $ 227.0

FRANCE $ 634.3 SWEDEN $ 185.3

GERMANY $ 701.2 SWITZERLAND $ 555.0

HONG KONG $ 158.1 UNITED KINGDOM $ 1,474.6

ITALY $ 322.3 UNITED STATES $ 7,182.1

The following table measures the total market capitalization of Latin
American countries according to the International Finance Corporation
Emerging Markets database. The value of the markets is measured in
billions of U.S. dollars as of October 31, 1998.

TOTAL MARKET CAPITALIZATION - LATIN AMERICA
ARGENTINA $ 26.8

BRAZIL $ 59.2

CHILE $ 30.3

COLOMBIA $ 5.1

MEXICO $ 64.3

VENEZUELA $ 3.4

TOTAL LATIN AMERICA $ 189.1

NATIONAL STOCK MARKET PERFORMANCE. Certain national stock markets have
outperformed the U.S. stock market. The first table below represents
the performance of national stock markets as measured in U.S. dollars
by the Morgan Stanley Capital International stock market indexes for
the twelve months ended October 31, 1998. The second table shows the
same performance as measured in local currency. Each table measures
return based on the period's change in price, dividends paid on stocks
in the index, and the effect of reinvesting dividends net of any
applicable foreign taxes. These are unmanaged indexes composed of a
sampling of selected companies representing an approximation of the
market structure of the designated country.

STOCK MARKET PERFORMANCE
MEASURED IN U.S. DOLLARS
AUSTRALIA 1.4 % JAPAN -14.4 %

AUSTRIA 3.9% NETHERLANDS 9.6%

BELGIUM 50.8% NORWAY -27.5%

CANADA -11.0% SINGAPORE -22.4%

DENMARK 14.2% SPAIN 47.5%

FRANCE 35.2% SWEDEN 4.5%

GERMANY 29.4% SWITZERLAND 24.2%

HONG KONG -0.9% UNITED KINGDOM 14.0%

ITALY 40.5% UNITED STATES 22.4%

STOCK MARKET PERFORMANCE
MEASURED IN LOCAL CURRENCY
AUSTRALIA 14.8 % JAPAN -17.1 %

AUSTRIA -0.1 % NETHERLANDS 5.5 %

BELGIUM 45.1 % NORWAY -23.7 %

CANADA -2.3 % SINGAPORE -19.6 %

DENMARK 9.7 % SPAIN 43.2 %

FRANCE 30.5 % SWEDEN 9.1 %

GERMANY 24.5 % SWITZERLAND 20.4 %

HONG KONG -0.7 % UNITED KINGDOM 14.1 %

ITALY 36.2 % UNITED STATES 22.4 %

The following table shows the average annualized stock market returns
measured in U.S. dollars as of October 31, 1998.

STOCK MARKET PERFORMANCE
FIVE YEARS ENDED TEN YEARS ENDED
OCTOBER 31, 1998 OCTOBER 31, 1998

GERMANY 16.4 % 14.0 %

HONG KONG 2.1 % 16.7 %

JAPAN -8.1 % -5.3 %

SPAIN 23.6 % 12.4 %

UNITED KINGDOM 17.1 % 14.2 %

UNITED STATES 21.4 % 17.4 %

PERFORMANCE COMPARISONS. A fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed
as mutual fund rankings prepared by Lipper Analytical Services, Inc.
(Lipper), an independent service located in Summit, New Jersey that
monitors the performance of mutual funds. Generally, Lipper rankings
are based on return, assume reinvestment of distributions, do not take
sales charges or trading fees into consideration, and are prepared
without regard to tax consequences. In addition to the mutual fund
rankings, a fund's performance may be compared to stock, bond, and
money market mutual fund performance indexes prepared by Lipper or
other organizations. When comparing these indexes, it is important to
remember the risk and return characteristics of each type of
investment. For example, while stock mutual funds may offer higher
potential returns, they also carry the highest degree of share price
volatility. Likewise, money market funds may offer greater stability
of principal, but generally do not offer the higher potential returns
available from stock mutual funds.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and
periodicals. For example, a fund may quote Morningstar, Inc. in its
advertising materials. Morningstar, Inc. is a mutual fund rating
service that rates mutual funds on the basis of risk-adjusted
performance. Rankings that compare the performance of Fidelity funds
to one another in appropriate categories over specific periods of time
may also be quoted in advertising.
A fund's performance may also be compared to that of each benchmark
index representing the universe of securities in which the fund may
invest. The return of each index reflects reinvestment of all
dividends and capital gains paid by securities included in each index.
Unlike a fund's returns, however, the index 's returns do not
reflect brokerage commissions, transaction fees, or other costs of
investing directly in the securities includ ed in the index.
Diversified International may compare its performance to that of the
Morgan Stanley Capital International GDP-Weighted Europe, Australasia,
Far East Index, a market capitalization-weighted gross domestic
product weighted index that is designed to represent the performance
of developed stock markets outside of the United States and Canada.
The index returns for periods after January 1, 1997 are adjusted for
tax withholding rates applicable to U.S.-based mutual funds organized
as Massachusetts business trusts. Effective October 1, 1998, the
country of Malaysia was removed from this index. The index returns
reflect the inclusion of Malaysia prior to October 1, 1998.
Each of International Value, Overseas, Internat ional Gro wth &
Income, and Diversified International may compare its performance to
that of the Morgan Stanley Capital International Europe, Australasia,
Far East (EAFE) Index, a market capitalization-weighted index that is
designed to represent the performance of developed stock markets
outside of the United States and Canada. The index returns for periods
after January 1, 1997 are adjusted for tax withholding rates
applicable to U.S.-based mutual funds organized as Massachusetts
business trusts. Effective October 1, 1998, the country of Malaysia
was removed from this index. The index returns reflect the inclusion
of Malaysia prior to October 1, 1998.
Worldwide may compare its performance to that of the Morgan Stanley
Capital International World Index, a market capitalization-weighted
index that is designed to represent the performance of developed stock
markets throughout the world. Effective October 1, 1998, the
country of Malaysia was removed from this index. The index returns
reflect the inclusion of Malaysia prior to October 1, 1998.
Stocks are selected for the Morgan Stanley Capital International
(MSCI) indexes on the basis of industry representation, liquidity,
sufficient float, and avoidance of cross-ownership.
A fund may be compared in advertising to Certificates of Deposit (CDs)
or other investments issued by banks or other depository institutions.
Mutual funds differ from bank investments in several respects. For
example, a fund may offer greater liquidity or higher potential
returns than CDs, a fund does not guarantee your principal or your
return, and fund shares are not FDIC insured.
Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial
strategies. Such information may include information about current
economic, market, and political conditions; materials that describe
general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; questionnaires
designed to help create a personal financial profile; worksheets used
to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and action plans offering investment
alternatives. Materials may also include discussions of Fidelity's
asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides
historical returns of the capital markets in the United States,
including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term
government bonds, Treasury bills, the U.S. rate of inflation (based on
the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indexes.
Fidelity funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with
the security types in any capital market may or may not correspond
directly to those of the funds. Ibbotson calculates returns in the
same method as the funds. The funds may also compare performance to
that of other compilations or indexes that may be developed and made
available in the future.
In advertising materials, Fidelity may reference or discuss its
products and services, which may include other Fidelity funds;
retirement investing; brokerage products and services; model
portfolios or allocations; saving for college or other goals; and
charitable giving. In addition, Fidelity may quote or reprint
financial or business publications and periodicals as they relate to
current economic and political conditions, fund management, portfolio
composition, investment philosophy, investment techniques, the
desirability of owning a particular mutual fund, and Fidelity services
and products. Fidelity may also reprint, and use as advertising and
sales literature, articles from Fidelity Focus(Registered trademark),
a quarterly magazine provided free of charge to Fidelity fund
shareholders.
A fund may present its fund number, Quotron(trademark) number, and
CUSIP number, and discuss or quote its current portfolio manager.
VOLATILITY. A fund may quote various measures of volatility and
benchmark correlation in advertising. In addition, the fund may
compare these measures to those of other funds. Measures of volatility
seek to compare a fund's historical share price fluctuations or
returns to those of a benchmark. Measures of benchmark correlation
indicate how valid a comparative benchmark may be. All measures of
volatility and correlation are calculated using averages of historical
data. In advertising, a fund may also discuss or illustrate examples
of interest rate sensitivity.
MOMENTUM INDICATORS indicate a fund's price movements over specific
periods of time. Each point on the momentum indicator represents a
fund's percentage change in price movements over that period.
A fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a
program, an investor invests a fixed dollar amount in a fund at
periodic intervals, thereby purchasing fewer shares when prices are
high and more shares when prices are low. While such a strategy does
not assure a profit or guard against loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers
of shares are purchased at the same intervals. In evaluating such a
plan, investors should consider their ability to continue purchasing
shares during periods of low price levels.
A fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which
may produce superior after-tax returns over time. For example, a
$1,000 investment earning a taxable return of 10% annually would have
an after-tax value of $1,949 after ten years, assuming tax was
deducted from the return each year at a 31% rate. An equivalent
tax-deferred investment would have an after-tax value of $2,100 after
ten years, assuming tax was deducted at a 31% rate from the
tax-deferred earnings at the end of the ten-year period.
As of October 31 , 1998, FMR advised over $ 32 billion in
municipal fund assets, $115 billion in taxable fixed-income assets,
$ 118 billion in money market fund assets, $ 436
billion in equity fund assets, $ 13 billion in international
fund assets, and $ 28 billion in Spartan fund assets. The funds
may reference the growth and variety of money market mutual funds and
the adviser's innovation and participation in the industry. The equity
funds under management figure represents the largest amount of equity
fund assets under management by a mutual fund investment adviser in
the United States, making FMR America's leading equity (stock) fund
manager. FMR, its subsidiaries, and affiliates maintain a worldwide
information and communications network for the purpose of researching
and managing investments abroad.
ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION
On October 12, 1990, International Growth & Income changed its sales
charge policy from a 1% sales charge upon purchase and a 1% deferred
sales charge upon redemption, to a 2% sales charge upon purchase. On
June 1, 1994, the 2% sales charge was eliminated. If you purchased
shares prior to October 12, 1990, when you redeem those shares a
deferred sales charge of 1% of the redemption amount will be deducted.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are
valued in computing each fund's NAV. Shareholders receiving securities
or other property on redemption may realize a gain or loss for tax
purposes, and will incur any costs of sale, as well as the associated
inconveniences.
DISTRIBUTIONS AND TAXES
DIVIDENDS. Because each fund invests significantly in foreign
securities, corporate shareholders should not expect fund dividends to
qualify for the dividends-received deduction. Short-term capital gains
are taxable as dividends, but do not qualify for the
dividends-received deduction.
CAPITAL GAINS DISTRIBUTIONS. Each fund's long-term capital
gains distributions are federally taxable to shareholders generally
as capital gains.
As of October 31, 1998, International Value had a capital loss
carryforward aggregating approximately $ 18,475,000 . This loss
carryforward, of which $ 18,475,000 will expire on October 31,
2006 , is available to offset future capital gains.
RETURNS OF CAPITAL. If a fund's distributions exceed its taxable
income and capital gains realized during a taxable year, all or a
portion of the distributions made in the same taxable year may be
recharacterized as a return of capital to shareholders. A return of
capital distribution will generally not be taxable, but will reduce
each shareholder's cost basis in the fund and result in a higher
reported capital gain or lower reported capital loss when those shares
on which the distribution was received are sold.
FOREIGN TAX CREDIT OR DEDUCTION. Foreign governments may withhold
taxes on dividends and interest earned by a fund with respect to
foreign securities. Foreign governments may also impose taxes on other
payments or gains with respect to foreign securities. If, at the close
of its fiscal year, more than 50% of a fund's total assets is invested
in securities of foreign issuers, the fund may elect to pass through
eligible foreign taxes paid and thereby allow shareholders to take a
deduction or, if they meet certain holding period requirements with
respect to fund shares, a credit on their individual tax returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal
Revenue Code so that it will not be liable for federal tax on income
and capital gains distributed to shareholders. In order to qualify as
a regulated investment company, and avoid being subject to federal
income or excise taxes at the fund level, each fund intends to
distribute substantially all of its net investment income and net
realized capital gains within each calendar year as well as on a
fiscal year basis, and intends to comply with other tax rules
applicable to regulated investment companies.
OTHER TAX INFORMATION. The information above is only a summary of some
of the tax consequences generally affecting each fund and its
shareholders, and no attempt has been made to discuss individual tax
consequences. It is up to you or your tax preparer to determine
whether the sale of shares of a fund resulted in a capital gain or
loss or other tax consequence to you. In addition to federal income
taxes, shareholders may be subject to state and local taxes on fund
distributions, and shares may be subject to state and local personal
property taxes. Investors should consult their tax advisers to
determine whether a fund is suitable to their particular tax
situation.
TRUSTEES AND OFFICERS
The Trustees, Members of the Advisory Board, and executive officers of
the trust are listed below. The Board of Trustees governs each fund
and is responsible for protecting the interests of shareholders. The
Trustees are experienced executives who meet periodically throughout
the year to oversee each fund's activities, review contractual
arrangements with companies that provide services to each fund, and
review each fund's performance. Except as indicated, each individual
has held the office shown or other offices in the same company for the
last five years. All persons named as Trustees and Members of the
Advisory Board also serve in similar capacities for other funds
advised by FMR or its affiliates The business address of each Trustee,
Member of the Advisory Board, and officer who is an "interested
person" (as defined in the 1940 Act) is 82 Devonshire Street, Boston,
Massachusetts 02109, which is also the address of FMR. The business
address of all the other Trustees is Fidelity
Investments (registered trademark) , P.O. Box 9235, Boston,
Massachusetts 02205-9235. Those Trustees who are "interested persons"
by virtue of their affiliation with either the trust or FMR are
indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (68), Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman
of the Board and of the Executive Committee of FMR; Chairman and a
Director of Fidelity Investments Money Management, Inc. (1998),
Fidelity Management & Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc.
J. GARY BURKHEAD (57), Member of the Advisory Board (1997), is Vice
Chairman and a Member of the Board of Directors of FMR Corp. (1997)
and President of Fidelity Personal Investments and Brokerage Group
(1997). Previously, Mr. Burkhead served as President of Fidelity
Management & Research Company.
RALPH F. COX (66), Trustee, is President of RABAR Enterprises
(management consulting-engineering industry, 1994). Prior to February
1994, he was President of Greenhill Petroleum Corporation (petroleum
exploration and production). Until March 1990, Mr. Cox was President
and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of USA Waste Services,
Inc. (non-hazardous waste, 1993), CH2M Hill Companies (engineering),
Rio Grande, Inc. (oil and gas production), and Daniel Industries
(petroleum measurement equipment manufacturer). In addition, he is a
member of advisory boards of Texas A&M University and the University
of Texas at Austin.
PHYLLIS BURKE DAVIS (66), Trustee. Prior to her retirement in
September 1991, Mrs. Davis was the Senior Vice President of Corporate
Affairs of Avon Products, Inc. She is currently a Director of
BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores),
and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she is a member of
the President's Advisory Council of The University of Vermont School
of Business Administration.
ROBERT M. GATES (55), Trustee (1997), is a consultant, author, and
lecturer (1993). Mr. Gates was Director of the Central Intelligence
Agency (CIA) from 1991-1993. From 1989 to 1991, Mr. Gates served as
Assistant to the President of the United States and Deputy National
Security Advisor. Mr. Gates is a Director of LucasVarity PLC
(automotive components and diesel engines), Charles Stark Draper
Laboratory (non-profit), NACCO Industries, Inc. (mining and
manufacturing), and TRW Inc. (original equipment and replacement
products). Mr. Gates also is a Trustee of the Forum for International
Policy and of the Endowment Association of the College of William and
Mary. In addition, he is a member of the National Executive Board of
the Boy Scouts of America.
E. BRADLEY JONES (70), Trustee. Prior to his retirement in 1984, Mr.
Jones was Chairman and Chief Executive Officer of LTV Steel Company.
He is a Director of TRW Inc. (original equipment and replacement
products), Consolidated Rail Corporation, Birmingham Steel
Corporation, and RPM, Inc. (manufacturer of chemical products), and he
previously served as a Director of NACCO Industries, Inc. (mining and
manufacturing, 1985-1995), Hyster-Yale Materials Handling, Inc.
(1985-1995), and Cleveland-Cliffs Inc (mining), and as a Trustee of
First Union Real Estate Investments. In addition, he serves as a
Trustee of the Cleveland Clinic Foundation, where he has also been a
member of the Executive Committee as well as Chairman of the Board and
President, a Trustee and member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
DONALD J. KIRK (65), Trustee, is Executive-in-Residence (1995) at
Columbia University Graduate School of Business and a financial
consultant. From 1987 to January 1995, Mr. Kirk was a Professor at
Columbia University Graduate School of Business. Prior to 1987, he was
Chairman of the Financial Accounting Standards Board. Mr. Kirk is a
Director of General Re Corporation (reinsurance), and he previously
served as a Director of Valuation Research Corp. (appraisals and
valuations, 1993-1995). In addition, he serves as Chairman of the
Board of Directors of National Arts Stabilization Inc., Chairman of
the Board of Trustees of the Greenwich Hospital Association, Director
of the Yale-New Haven Health Services Corp. (1998), a Member of the
Public Oversight Board of the American Institute of Certified Public
Accountants' SEC Practice Section (1995), and as a Public Governor of
the National Association of Securities Dealers, Inc. (1996).
*PETER S. LYNCH (55), Trustee, is Vice Chairman and Director of FMR.
Prior to May 31, 1990, he was a Director of FMR and Executive Vice
President of FMR (a position he held until March 31, 1991); Vice
President of Fidelity Magellan Fund (registered trademark) and
FMR Growth Group Leader; and Managing Director of FMR Corp. Mr. Lynch
was also Vice President of Fidelity Investments Corporate Services
(1991-1992). In addition, he serves as a Trustee of Boston College,
Massachusetts Eye & Ear Infirmary, Historic Deerfield (1989) and
Society for the Preservation of New England Antiquities, and as an
Overseer of the Museum of Fine Arts of Boston.
WILLIAM O. McCOY (65), Trustee (1997), is the Vice President of
Finance for the University of North Carolina (16-school system, 1995).
Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman
of the Board of BellSouth Corporation (telecommunications, 1984) and
President of BellSouth Enterprises (1986). He is currently a Director
of Liberty Corporation (holding company, 1984), Weeks Corporation of
Atlanta (real estate, 1994), Carolina Power and Light Company
(electric utility, 1996), and the Kenan Transport Co. (1996).
Previously, he was a Director of First American Corporation (bank
holding company, 1979-1996). In addition, Mr. McCoy serves as a member
of the Board of Visitors for the University of North Carolina at
Chapel Hill (1994) and for the Kenan-Flager Business School
(University of North Carolina at Chapel Hill, 1988).
GERALD C. McDONOUGH (70), Trustee and Chairman of the non-interested
Trustees, is Chairman of G.M. Management Group (strategic advisory
services). Mr. McDonough is a Director of York International Corp.
(air conditioning and refrigeration), Commercial Intertech Corp.
(hydraulic systems, building systems, and metal products, 1992), CUNO,
Inc. (liquid and gas filtration products, 1996), and Associated
Estates Realty Corporation (a real estate investment trust, 1993). Mr.
McDonough served as a Director of ACME-Cleveland Corp. (metal working,
telecommunications, and electronic products) from 1987-1996 and
Brush-Wellman Inc. (metal refining) from 1983-1997.
MARVIN L. MANN (65), Trustee (1993), is Chairman of the Board, of
Lexmark International, Inc. (office machines, 1991). Prior to 1991, he
held the positions of Vice President of International Business
Machines Corporation ("IBM") and President and General Manager of
various IBM divisions and subsidiaries. Mr. Mann is a Director of M.A.
Hanna Company (chemicals, 1993), Imation Corp. (imaging and
information storage, 1997).
*ROBERT C. POZEN (52), Trustee (1997) and Senior Vice President, is
also President and a Director of FMR (1997); and President and a
Director of Fidelity Investments Money Management, Inc. (1998),
Fidelity Management & Research (U.K.) Inc. (1997), and Fidelity
Management & Research (Far East) Inc. (1997). Previously, Mr. Pozen
served as General Counsel, Managing Director, and Senior Vice
President of FMR Corp.
THOMAS R. WILLIAMS (70), Trustee, is President of The Wales Group,
Inc. (management and financial advisory services). Prior to retiring
in 1987, Mr. Williams served as Chairman of the Board of First
Wachovia Corporation (bank holding company), and Chairman and Chief
Executive Officer of The First National Bank of Atlanta and First
Atlanta Corporation (bank holding company). He is currently a Director
of ConAgra, Inc. (agricultural products), Georgia Power Company
(electric utility), National Life Insurance Company of Vermont,
American Software, Inc., and AppleSouth, Inc. (restaurants, 1992).
ROBERT A. LAWRENCE (46), is Vice President of certain Equity Funds
(1997), Vice President of Fidelity Real Estate High Income Fund (1995)
and Fidelity Real Estate High Income Fund II (1996), and Senior Vice
President of FMR (1993).
RICHARD A. SPILLANE, JR. (47), is Vice President of certain Equity
Funds and Senior Vice President of FMR (1997). Since joining Fidelity,
Mr. Spillane is Chief Investment Officer for Fidelity International,
Limited. Prior to that position, Mr. Spillane served as Director of
Research.
ERIC D. ROITER ( 49 ) , Secretary (1998), is Vice President
(1998) and General Counsel of FMR (1998). Mr. Roiter was an Adjunct
Member, Faculty of Law, at Columbia University Law School (1996-1997).
Prior to joining Fidelity, Mr. Roiter was a partner at Debevoise &
Plimpton (1981-1997) and served as an Assistant General Counsel of the
U.S. Securities and Exchange Commission (1979-1981).
RICHARD MACE, JR. (36), is Vice President of Fidelity International
Value Fund (1995), Fidelity Overseas Fund (1996) and other funds
advised by FMR. Prior to his current responsibilities, Mr. Mace has
managed a variety of Fidelity funds.
GREGORY FRASER (38) is Vice President of Fidelity Diversified
International Fund (1994). Prior to his current responsibilities, Mr.
Fraser has managed a variety of Fidelity funds.
PENELOPE A. DOBKIN (44) is Vice President of Fidelity Worldwide Fund.
Prior to her current responsibilities, Ms. Dobkin has managed a
variety of Fidelity funds.
RICHARD A. SILVER (51), Treasurer (1997), is Treasurer of the Fidelity
funds and is an employee of FMR (1997). Before joining FMR, Mr. Silver
served as Executive Vice President, Fund Accounting & Administration
at First Data Investor Services Group, Inc. (1996-1997). Prior to
1996, Mr. Silver was Senior Vice President and Chief Financial Officer
at The Colonial Group, Inc. Mr. Silver also served as Chairman of the
Accounting/Treasurer's Committee of the Investment Company Institute
(1987-1993).
MATTHEW N. KARSTETTER (37), Deputy Treasurer (1998), is Deputy
Treasurer of the Fidelity funds and is an employee of FMR (1998).
Before joining FMR, Mr. Karstetter served as Vice President of
Investment Accounting and Treasurer of IDS Mutual Funds at American
Express Financial Advisors (1996-1998). Prior to 1996, Mr. Karstetter
was Vice President, Mutual Fund Services at State Street Bank & Trust
(1991-1996).
JOHN H. COSTELLO (52), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (52), Assistant Treasurer (1994), is an employee of
FMR (1994). Prior to becoming Assistant Treasurer of the Fidelity
funds, Mr. Rush was Chief Compliance Officer of FMR Corp. (1993-1994)
and Chief Financial Officer of Fidelity Brokerage Services, Inc.
(1990-1993).
The following table sets forth information describing the compensation
of each Trustee and Member of the Advisory Board of each fund for his
or her services for the fiscal year ended October 31, 1998 or calendar
year ended December 31, 1997, as applicable.

COMPENSATION TABLE

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
AGGREGATE J. GARY RALPH PHYLLIS ROBERT EDWARD C.
COMPENSATION BURKHEAD F. BURKE M. JOHNSON
FROM A FUND ** COX DAVIS GATES*** 3D**

INTERNATIONAL $ 0 $ 363 $ 360 $ 365 $ 0
GROWTH & INCOMEB

DIVERSIFIED $ 0 $ 432 $ 429 $ 435 $ 0
INTERNATIONALB

INTERNATIONAL $ 0 $ 658 $ 654 $ 664 $ 0
VALUEB

OVERSEASB ,C,D $ 0 $ 1,417 $ 1,408 $ 1,428 $ 0

WORLDWIDEB $ 0 $ 164 $ 162 $ 165 $ 0

TOTAL $ 0 $ 214,500 $ 210,000 $ 176,000 $ 0
COMPENSATION
FROM THE FUND
COMPLEX*,A

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AGGREGATE E. DONALD PETER WILLIAM O.
COMPENSATION BRADLEY J. S. MCCOY
FROM A FUND JONES KIRK LYNCH** ****

INTERNATIONAL $ 363 $ 369 $ 0 $ 365
GROWTH & INCOMEB

DIVERSIFIED $ 432 $ 440 $ 0 $ 435
INTERNATIONALB

INTERNATIONAL $ 658 $ 673 $ 0 $ 664
VALUEB

OVERSEASB,C,D $ 1,418 $ 1,445 $ 0 $ 1,428

WORLDWIDEB $ 164 $ 167 $ 0 $ 165

TOTAL $ 211,500 $ 211,500 $ 0 $ 214,500
COMPENSATION
FROM THE FUND
COMPLEX*,A

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AGGREGATE GERALD MARVIN ROBERT THOMAS
COMPENSATION C. MC L. C. R.
FROM A FUND DONOUGH MANN POZEN** WILLIAMS

INTERNATIONAL $ 450 $ 360 $ 0 $ 365
GROWTH & INCOMEB

DIVERSIFIED $ 535 $ 429 $ 0 $ 435
INTERNATIONALB

INTERNATIONAL $ 816 $ 655 $ 0 $ 663
VALUEB

OVERSEASB,C,D $ 1,757 $ 1,408 $ 0 $ 1,427

WORLDWIDEB $ 203 $ 163 $ 0 $ 165

TOTAL $ 264,500 $ 214,500 $ 0 $ 214,500
COMPENSATION
FROM THE FUND
COMPLEX*,A

</TABLE>

* Information is for the calendar year ended December 31, 1997 for 230
funds in the complex.
** Interested Trustees of the funds and Mr. Burkhead are compensated
by FMR.
*** Mr. Gates was appointed to the Board of Trustees of Fidelity
Investment Trust effective March 1, 1997.
**** Mr. McCoy was appointed to the Board of Trustees Fidelity
Investment Trust effective January 1, 1997.
A Compensation figures include cash, amounts required to be deferred,
and may include amounts deferred at the election of Trustees. For the
calendar year ended December 31, 1997, the Trustees accrued required
deferred compensation from the funds as follows: Ralph F. Cox,
$75,000; Phyllis Burke Davis, $75,000; Robert M. Gates, $62,500; E.
Bradley Jones, $75,000; Donald J. Kirk, $75,000; William O. McCoy,
$75,000; Gerald C. McDonough, $87,500; Marvin L. Mann, $75,000; and
Thomas R. Williams, $75,000. Certain of the non-interested Trustees
elected voluntarily to defer a portion of their compensation as
follows: Ralph F. Cox, $53,699; Marvin L. Mann, $53,699; and Thomas R.
Williams, $62,462.
B Compensation figures include cash, and may include amounts required
to be deferred and amounts deferred at the election of Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $ 643 ; Phyllis Burke
Davis, $ 643 ; Robert M. Gates, $ 643 ; E. Bradley Jones,
$ 643 ; Donald J. Kirk, $ 643; William O. McCoy,
$ 643 ; Gerald C. McDonough, $ 751 ; Marvin L. Mann,
$ 643 ; and Thomas R. Williams, $ 643 .
D Certain of the non-interested Trustees' aggregate
compensation from a fund includes accrued voluntary deferred
compensation as follows: Ralph F. Cox, $546, Overseas Fund; Marvin
L. Mann, $546, Overseas Fund; William O. McCoy, $449, Overseas Fund;
and Thomas R. Williams, $546, Overseas Fund.

Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (the Plan), non-interested Trustees must
defer receipt of a portion of, and may elect to defer receipt of an
additional portion of, their annual fees. Amounts deferred under the
Plan are subject to vesting and are treated as though equivalent
dollar amounts had been invested in shares of a cross-section of
Fidelity funds including funds in each major investment discipline and
representing a majority of Fidelity's assets under management (the
Reference Funds). The amounts ultimately received by the Trustees
under the Plan will be directly linked to the investment performance
of the Reference Funds. Deferral of fees in accordance with the Plan
will have a negligible effect on a fund's assets, liabilities, and net
income per share, and will not obligate a fund to retain the services
of any Trustee or to pay any particular level of compensation to the
Trustee. A fund may invest in the Reference Funds under the Plan
without shareholder approval.
As of October 31, 1998, the Trustees, Members of the Advisory Board,
and officers of each fund owned, in the aggregate, less than 1%
of each fund's total outstanding shares.
CONTROL OF INVESTMENT ADVISERS
FMR Corp., organized in 1972, is the ultimate parent company of FMR,
FMR U.K. and FMR Far East. The voting common stock of FMR Corp. is
divided into two classes. Class B is held predominantly by members of
the Edward C. Johnson 3d family and is entitled to 49% of the vote on
any matter acted upon by the voting common stock. Class A is held
predominantly by non-Johnson family member employees of FMR Corp. and
its affiliates and is entitled to 51% of the vote on any such matter.
The Johnson family group and all other Class B shareholders have
entered into a shareholders' voting agreement under which all Class B
shares will be voted in accordance with the majority vote of Class B
shares. Under the 1940 Act, control of a company is presumed where one
individual or group of individuals owns more than 25% of the voting
stock of that company. Therefore, through their ownership of voting
common stock and the execution of the shareholders' voting agreement,
members of the Johnson family may be deemed, under the 1940 Act, to
form a controlling group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by its division, Fidelity Investments Retail Marketing
Company, which provides marketing services to various companies within
the Fidelity organization.
Fidelity International Limited (FIL), a Bermuda company formed in
1968, is the ultimate parent company of FIIA, FIJ and FIIA(U.K.)L.
Edward C. Johnson 3d, Johnson family members, and various trusts for
the benefit of the Johnson family own, directly or indirectly, more
than 25% of the voting common stock of FIL. FIL provides investment
advisory services to non-U.S. investment companies and institutional
investors investing in securities throughout the world.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that sets forth all
employees' fiduciary responsibilities regarding the funds, establishes
procedures for personal investing and restricts certain transactions.
For example, all personal trades in most securities require
pre-clearance, and participation in initial public offerings is
prohibited. In addition, restrictions on the timing of personal
investing in relation to trades by Fidelity funds and on short-term
trading have been adopted.
MANAGEMENT CONTRACTS
Each fund has entered into a management contract with FMR, pursuant to
which FMR furnishes investment advisory and other services.
MANAGEMENT SERVICES. Under the terms of its management contract with
each fund, FMR acts as investment adviser and, subject to the
supervision of the Board of Trustees, directs the investments of the
fund in accordance with its investment objective, policies and
limitations. FMR also provides each fund with all necessary office
facilities and personnel for servicing the fund's investments,
compensates all officers of each fund and all Trustees who are
"interested persons" of the trust or of FMR, and all personnel of each
fund or FMR performing services relating to research, statistical and
investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of each fund. These services include
providing facilities for maintaining each fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters and other persons dealing with each fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining each fund's records and the
registration of each fund's shares under federal securities laws and
making necessary filings under state securities laws; developing
management and shareholder services for each fund; and furnishing
reports, evaluations and analyses on a variety of subjects to the
Trustees.
MANAGEMENT-RELATED EXPENSES. In addition to the management fee payable
to FMR and the fees payable to the transfer, dividend disbursing, and
shareholder servicing agent, pricing and bookkeeping agent, and
securities lending agent, each fund pays all of its expenses that are
not assumed by those parties. Each fund pays for the typesetting,
printing, and mailing of its proxy materials to shareholders, legal
expenses, and the fees of the custodian, auditor and non-interested
Trustees. Each fund's management contract further provides that the
fund will pay for typesetting, printing, and mailing prospectuses,
statements of additional information, notices, and reports to
shareholders; however, under the terms of each fund's transfer agent
agreement, the transfer agent bears the costs of providing these
services to existing shareholders. Other expenses paid by each fund
include interest, taxes, brokerage commissions, the fund's
proportionate share of insurance premiums and Investment Company
Institute dues, and the costs of registering shares under federal
securities laws and making necessary filings under state securities
laws. Each fund is also liable for such non-recurring expenses as may
arise, including costs of any litigation to which the fund may be a
party, and any obligation it may have to indemnify its officers and
Trustees with respect to litigation.
MANAGEMENT FEES. For the services of FMR under the management
contract, International Growth & Income and Worldwide pays FMR a
monthly management fee which has two components: a group fee rate and
an individual fund fee rate.
For the services of FMR under the management contract, Diversified
International, International V alue and Overseas each pays FMR a
monthly management fee which has two components: a basic fee, which is
the sum of a group fee rate and an individual fund fee rate, and a
performance adjustment based on a comparison of t he fund's
p erformance to that of the Morgan Stanley Capital International
Europe, Australasia, Far East Index for International Value and
Overseas and the Morgan Stanley Capital International GDP-Weighted
Europe, Australasia, Far East Index for Diversified Intern ational.
On or about May 19, 1999, a meeting of the shareholders of Fidelity
Diversified International Fund will be held to prospectively change
the comparative securities index used to calculate the fund's
performance adjustment from the Morgan Stanley Capital International
GDP-Weighted EAFE Index to the Morgan Stanley Capital International
EAFE Index.
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts.

GROUP FEE RATE EFFECTIVE ANNUAL
SCHEDULE FEE RATES

AVERAGE GROUP ANNUALIZED GROUP NET EFFECTIVE ANNUAL FEE
ASSETS RATE ASSETS RATE

0 - $3 BILLION .5200% $ 0.5 BILLION .5200%

3 - 6 .4900 25 .4238

6 - 9 .4600 50 .3823

9 - 12 .4300 75 .3626

12 - 15 .4000 100 .3512

15 - 18 .3850 125 .3430

18 - 21 .3700 150 .3371

21 - 24 .3600 175 .3325

24 - 30 .3500 200 .3284

30 - 36 .3450 225 .3249

36 - 42 .3400 250 .3219

42 - 48 .3350 275 .3190

48 - 66 .3250 300 .3163

66 - 84 .3200 325 .3137

84 - 102 .3150 350 .3113

102 - 138 .3100 375 .3090

138 - 174 .3050 400 .3067

174 - 210 .3000 425 .3046

210 - 246 .2950 450 .3024

246 - 282 .2900 475 .3003

282 - 318 .2850 500 .2982

318 - 354 .2800 525 .2962

354 - 390 .2750 550 .2942

390 - 426 .2700

426 - 462 .2650

462 - 498 .2600

498 - 534 .2550

OVER 534 .2500

</TABLE>

The group fee rate is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown above on the left. The schedule
above on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $ 591 billion of group net assets - the approximate
level for October 1998 - was .2910 %, which is the weighted
average of the respective fee rates for each level of group net assets
up to $ 591 billion.
The individual fund fee rate for International Growth & Income and
Worldwide is 0.45%. Based on the average group net assets of the funds
advised by FMR for October 1998, each fund's annual management fee
rate would be calculated as follows:

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
GROUP FEE RATE INDIVIDUAL FUND FEE RATE MANAGEMENT FEE RATE

INTERNATIONAL GROWTH 0. 2910 % + 0.45% = 0. 7410 %
& INCOME

WORLDWIDE 0. 2910 % 0.45% 0. 7410 %

</TABLE>

The individual fund fee rate for Diversified International,
International Value and Overseas is 0.45% . Based on the average group
net assets of the funds advised by FMR for October 1998, each fund's
annual basic fee rate would be calculated as follows:

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
GROUP FEE RATE INDIVIDUAL FUND FEE RATE BASIC FEE RATE

DIVERSIFIED 0. 2910 % + 0.45% = 0. 7410 %
INTERNATIONAL

INTERNATIONAL VALUE 0. 2910 % 0.45% 0. 7410 %

OVERSEAS 0. 2910 % 0.45% 0. 7410 %

</TABLE>

One-twelfth of the basic fee rate or management fee rate, as
applicable, is applied to each fund's average net assets for the
month, giving a dollar amount which is the fee for that month.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee for Diversified
International, International Value and Overseas is subject to upward
or downward adjustment, depending upon whether, and to what extent,
the fund's investment performance for the performance period exceeds,
or is exceeded by, the record of the Morgan Stanley Capital
International Europe, Australasia, Far East Index for International
Value and Overseas and the Morgan Stanley Capital International
GDP-Weighted Europe, Australasia, Far East Index for Diversified
International over the same period. Starting with the twelfth
month, the performance adjustment takes effect. Each month subsequent
to the twelfth month, a new month is added to the performance period
until the performance period includes 36 months. Thereafter, the
performance period consists of the most recent month plus the previous
35 months.
Each percentage point of difference, calculated to the nearest 0.01%
(up to a maximum difference of (plus/minus)10.00) is multiplied by a
performance adjustment rate of 0.02%.
The performance comparison is made at the end of each month. One
twelfth (1/12) of this rate is then applied to each fund's average net
assets throughout the month, giving a dollar amount which will be
added to (or subtracted from) the basic fee.
The maximum annualized adjustment rate is (plus/minus)0.20% of a
fund's average net assets over the performance period.
A fund's performance is calculated based on change in NAV. For
purposes of calculating the performance adjustment, any dividends or
capital gain distributions paid by the fund are treated as if
reinvested in that fund's shares at the NAV as of the record date for
payment. The record of the Index is based on change in value and is
adjusted for any cash distributions from the companies whose
securities compose the Index.
Because the adjustment to the basic fee is based on a fund's
performance compared to the investment record of the Index, the
controlling factor is not whether the fund's performance is up or down
per se, but whether it is up or down more or less than the record of
the Index. Moreover, the comparative investment performance of each
fund is based solely on the relevant performance period without regard
to the cumulative performance over a longer or shorter period of time.
For each of Morgan Stanley Capital International Europe, Australasia,
Far East Index and the Morgan Stanley Capital International
GDP-Weighted Europe, Australasia, Far East Index, the index returns
for periods prior to January 1, 1997 are adjusted for tax withholding
at non-treaty rates. The index returns for periods after January 1,
1997 are adjusted for tax withholding at treaty rates applicable to
U.S.-based mutual funds organized as Massachusetts business trusts.
The following table shows the amount of management fees paid by each
fund to FMR for the past three fiscal years, and the amount of
negative or positive performance adjustments to the management fees
paid by Diversified International, International Value and Overseas.

<TABLE>
<CAPTION>
<S> <C> <C> <C>
FUND FISCAL YEARS ENDED PERFORMANCE MANAGEMENT FEES
OCTOBER 31 ADJUSTMENT PAID TO FMR

INTERNATIONAL GROWTH & 1998 N/A $ 7,165,449
INCOME

1997 N/A $ 8,152,782

1996 N/A $ 7,427,387

DIVERSIFIED INTERNATIONAL 1998 $ 1,780,998 $ 15,442,573 *

1997 $ 954,599 $ 9,176,455*

1996 $ 445,161 $ 4,050,659*

INTERNATIONAL VALUE 1998 $ 353,461 $ 3,712,674 *

1997 $ 318,389 $ 2,596,428*

1996 $ 86,631 $ 1,722,862*

OVERSEAS 1998 $ 6,125,472 $ 34,730,569 *

1997 $ 3,286,953 $ 29,984,950*

1996 $ 123,101 $ 21,073,542*

WORLDWIDE 1998 N/A $ 8,657,475

1997 N/A $ 7,971,278

1996 N/A $ 5,758,962

</TABLE>

* Including the amount of the performance adjustment.

During the reporting period, FMR voluntarily modified the breakpoints
in the group fee rate schedules on January 1, 1996 to provide for
lower management fee rates as FMR's assets under management increase.
FMR may, from time to time, voluntarily reimburse all or a portion of
a fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses) which is subject to revision
or termination. FMR retains the ability to be repaid for these expense
reimbursements in the amount that expenses fall below the limit prior
to the end of the fiscal year.
Expense reimbursements by FMR will increase a fund's total returns and
yield, and repayment of the reimbursement by a fund will lower its
total returns and yield.
SUB-ADVISERS. On behalf of each fund, FMR has entered into
sub-advisory agreements with FMR U.K., FMR Far East, FIJ, and FIIA.
FIIA, in turn, has entered into a sub-advisory agreement with
FIIA(U.K.)L. Pursuant to the sub-advisory agreements, FMR may receive
investment advice and research services outside the United States from
the sub-advisers.
On behalf of each fund, FMR may also grant FMR U.K., FMR Far East,
FIJ, FIIA, and FIIA(U.K.)L investment management authority as well as
the authority to buy and sell securities if FMR believes it would be
beneficial to the funds.
Under the sub-advisory agreements FMR pays the fees of FMR U.K., FMR
Far East, FIJ, and FIIA. FIIA, in turn, pays the fees of FIIA(U.K.)L.
For providing non-discretionary investment advice and research
services the sub-advisers are compensated as follows:
(small solid bullet) FMR pays FMR U.K. and FMR Far East fees equal to
110% and 105%, respectively, of FMR U.K.'s and FMR Far East's costs
incurred in connection with providing investment advice and research
services.
(small solid bullet) FMR pays FIIA and FIJ fees equal to 30% of FMR's
monthly management fee with respect to the average net assets held by
the fund for which the sub-adviser has provided FMR with investment
advice and research services.
(small solid bullet) FIIA pays FIIA(U.K.)L a fee equal to 110% of
FIIA(U.K.)L's costs incurred in connection with providing investment
advice and research services.
For providing discretionary investment management and executing
portfolio transactions, the sub-advisers are compensated as follows:
(small solid bullet) FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a
fee equal to 50% of its monthly management fee (including any
performance adjustment) with respect to the fund's average net assets
managed by the sub-adviser on a discretionary basis.
(small solid bullet) FIIA pays FIIA(U.K.)L a fee equal to 110% of
FIIA(U.K.)L's costs incurred in connection with providing
discretionary investment management services.
For providing investment advice and research services, fees paid to
FMR U.K., FMR Far East, FIIA, FIIA(U.K.)L, and FIJ for the past
three fiscal years are shown in the table below.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FISCAL YEAR ENDED FMR U.K. FMR FAR EAST FIIA FIIA(U.K.)L FIJ
OCTOBER 31

INTERNATIONAL
GROWTH & INCOME

1998 $ 594,158 $ 542,605 $ 0 $ 0 $ 0

1997 $ 583,525 $ 548,949 $ 0 $ 0 N/A

1996 $ 568,043 $ 581,491 $ 0 $ 0 N/A

DIVERSIFIED
INTERNATIONAL

1998 $ 1,130,912 $ 1,028,149 $ 0 $ 0 $ 0

1997 $ 529,480 $ 509,732 $ 0 $ 0 N/A

1996 $ 261,591 $ 263,574 $ 0 $ 0 N/A

INTERNATIONAL VALUE

1998 $ 295,092 $ 270,035 $ 0 $ 0 $ 0

1997 $ 165,017 $ 157,421 $ 0 $ 0 N/A

1996 $ 132,491 $ 130,310 $ 0 $ 0 N/A

OVERSEAS

1998 $ 2,501,109 $ 2,280,719 $ 0 $ 0 $ 0

1997 $ 1,884,543 $ 1,789,326 $ 0 $ 0 N/A

1996 $ 1,624,527 $ 1,648,516 $ 0 $ 0 N/A

WORLDWIDE

1998 $ 481,583 $ 445,866 $ 0 $ 0 $ 0

1997 $ 416,867 $ 395,729 $ 0 $ 0 N/A

1996 $ 321,179 $ 324,985 $ 0 $ 0 N/A

</TABLE>

For discretionary investment management and execution of portfolio
transactions, no fees were paid to FMR U.K., FMR Far East, FIIA,
FIIA(U.K.)L, and FIJ by FMR on behalf of the funds for the
past three fiscal years.
DISTRIBUTION SERVICES
Each fund has entered into a distribution agreement with FDC, an
affiliate of FMR. FDC is a broker-dealer registered under the
Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc. The distribution agreements
call for FDC to use all reasonable efforts, consistent with its other
business, to secure purchasers for shares of the fund, which are
continuously offered at NAV. Promotional and administrative expenses
in connection with the offer and sale of shares are paid by FMR.
The Trustees have approved Distribution and Service Plans on behalf of
each fund (the Plans) pursuant to Rule 12b-1 under the 1940 Act (the
Rule). The Rule provides in substance that a mutual fund may not
engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of the fund except
pursuant to a plan approved on behalf of the fund under the Rule. The
Plans, as approved by the Trustees, allow the funds and FMR to incur
certain expenses that might be considered to constitute indirect
payment by the funds of distribution expenses.
Under each Plan, if the payment of management fees by the fund to FMR
is deemed to be indirect financing by the fund of the distribution of
its shares, such payment is authorized by the Plan. Each Plan
specifically recognizes that FMR may use its management fee revenue,
as well as its past profits or its other resources, to pay FDC for
expenses incurred in connection with providing services intended to
result in the sale of fund shares and/or shareholder support services.
In addition, each Plan provides that FMR, directly or through FDC, may
pay intermediaries, such as banks, broker-dealers and other service
providers, that provide those services. Currently, the Board of
Trustees has authorized such payments for each fund's shares.
Payments made by FMR either directly or through FDC to
intermediaries for the fiscal year ended 1998 amounted to $3,666 for
International Growth & Income, $935 for Diversified International,
$11,689 for Overseas, and $5,764 for Worldwide.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and
determined that there is a reasonable likelihood that the Plan will
benefit the fund and its shareholders. In particular, the Trustees
noted that each Plan does not authorize payments by the fund other
than those made to FMR under its management contract with the fund. To
the extent that each Plan gives FMR and FDC greater flexibility in
connection with the distribution of fund shares, additional sales of
fund shares or stabilization of cash flows may result. Furthermore,
certain shareholder support services may be provided more effectively
under the Plans by local entities with whom shareholders have other
relationships.
The Glass-Steagall Act generally prohibits federally and state
chartered or supervised banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope
of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, FDC believes
that the Glass-Steagall Act should not preclude a bank from performing
shareholder support services, or servicing and recordkeeping
functions. FDC intends to engage banks only to perform such functions.
However, changes in federal or state statutes and regulations
pertaining to the permissible activities of banks and their affiliates
or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions,
if any, would be necessary to continue to provide efficient and
effective shareholder services. In such event, changes in the
operation of the funds might occur, including possible termination of
any automatic investment or redemption or other services then provided
by the bank. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these
occurrences. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein, and
banks and other financial institutions may be required to register as
dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase
securities issued by, depository institutions that receive payments
under the Plans. No preference for the instruments of such depository
institutions will be shown in the selection of investments.
TRANSFER AND SERVICE AGENT AGREEMENTS
Each fund has entered into a transfer agent agreement with FSC, an
affiliate of FMR. Under the terms of the agreements, FSC performs
transfer agency, dividend disbursing, and shareholder services for
each fund.
For providing transfer agency services, FSC receives an account fee
and an asset-based fee each paid monthly with respect to each account
in a fund. For retail accounts and certain institutional accounts,
these fees are based on account size and fund type. For certain
institutional retirement accounts, these fees are based on fund type.
For certain other institutional retirement accounts, these fees are
based on account type (i.e., omnibus or non-omnibus) and, for
non-omnibus accounts, fund type. The account fees are subject to
increase based on postage rate changes.
The asset-based fees are subject to adjustment if the year-to-date
total return of the S&P 500 exceeds a positive or negative 15%.
FSC also collects small account fees from certain accounts with
balances of less than $2,500.
In addition, FSC receives the pro rata portion of the transfer agency
fees applicable to shareholder accounts in a qualified state tuition
program (QSTP), as defined under the Small Business Job Protection Act
of 1996, managed by FMR or an affiliate and each Fidelity Freedom
Fund, a fund of funds managed by an FMR affiliate, according to the
percentage of the QSTP's or Freedom Fund's assets that is invested in
a fund.
FSC pays out-of-pocket expenses associated with providing transfer
agent services. In addition, FSC bears the expense of typesetting,
printing, and mailing prospectuses, statements of additional
information, and all other reports, notices, and statements to
existing shareholders, with the exception of proxy statements.
Each fund has also entered into a service agent agreement with FSC.
Under the terms of the agreements, FSC calculates the NAV and
dividends for each fund, maintains each fund's portfolio and general
accounting records, and administers fund's securities lending program.
For providing pricing and bookkeeping services, FSC receives a monthly
fee based on each fund's average daily net assets throughout the
month. The annual fee rates for pricing and bookkeeping services are
.0750% of the first $500 million of average net assets and .0375% of
average net assets in excess of $500 million. The fee, not including
reimbursement for out-of-pocket expenses, is limited to a minimum of
$60,000 and a maximum of $800,000 per year.
Pricing and bookkeeping fees, including reimbursement for
out-of-pocket expenses, paid by the funds to FSC for the past three
fiscal years are shown in the table below.

FUND 1998 1997 1996

INTERNATIONAL GROWTH & INCOME $ 558,890 $ 600,005 $ 541,422

DIVERSIFIED INTERNATIONAL $ 800,666 $ 603,478 $ 339,831

INTERNATIONAL VALUE $ 339,547 $ 229,548 $ 163,645

OVERSEAS $ 825,676 $ 813,270 $ 800,990

WORLDWIDE $ 633,924 $ 590,839 $ 461,271

FIDELITY'S
TARGETED INTERNATIONAL
EQUITY
FUNDS

FUND NUMBER TRADING SYMBOL

FIDELITY CANADA FUND 309 FICDX

FIDELITY EMERGING MARKETS FUND 322 FEMKX

FIDELITY EUROPE FUND 301 FIEUX

FIDELITY EUROPE CAPITAL APPRECIATION FUND 341 FECAX

FIDELITY FRANCE FUND 345 FRAN X

FIDELITY GERMANY FUND 346 FGER X

FIDELITY HONG KONG AND CHINA FUND 352 FHKCX

FIDELITY JAPAN FUND 350 FJPNX

FIDELITY JAPAN SMALL COMPANIES FUND 360 FJSCX

FIDELITY LATIN AMERICA FUND 349 FLATX

FIDELITY NORDIC FUND 342 FNORX

FIDELITY PACIFIC BASIN FUND 302 FPBFX

FIDELITY SOUTHEAST ASIA FUND 351 FSEAX

FIDELITY UNITED KINGDOM FUND 344 FUTYF

PROSPECTUS
DECEMBER 30, 1998
(FIDELITY_LOGO_GRAPHIC)(registered trademark)
82 DEVONSHIRE STREET, BOSTON, MA 02109

CONTENTS

FUND SUMMARY 2 INVESTMENT SUMMARY

9 PERFORMANCE

17 FEE TABLE

FUND BASICS 21 INVESTMENT DETAILS

26 VALUING SHARES

SHAREHOLDER INFORMATION 26 BUYING AND SELLING SHARES

34 EXCHANGING SHARES

34 ACCOUNT FEATURES AND POLICIES

37 DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

37 TAX CONSEQUENCES

FUND SERVICES 37 FUND MANAGEMENT

39 FUND DISTRIBUTION

APPENDIX 41 FINANCIAL HIGHLIGHTS

FUND SUMMARY

INVESTMENT SUMMARY
INVESTMENT OBJECTIVE
CANADA FUND seeks growth of capital over the long term.
PRINCIPAL INVESTMENT STRATEGIES
Fidelity Management & Research Company (FMR)'s principal investment
strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of issuers that have their principal activities in Canada
or are registered in Canadian markets.
(small solid bullet) Potentially, investing in securities of U.S.
issuers.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN CANADA. The Canadian
economy is significantly affected by the U.S. economy and the price of
natural resources.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
EMERGING MARKETS FUND seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of issuers in emerging markets (countries that
have an emerging stock market as defined by the International Finance
Corporation, countries with low-to-middle-income economics according
to the World Bank, and countries that are listed in World Bank
publications as "developing").
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries
considering the size of the market in each country relative to the
size of the markets in countries considered emerging markets as a
whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market. Emerging markets can be subject to greater social, economic,
regulatory and political uncertainties and can be extremely volatile.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole .
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
EUROPE FUND seeks growth of capital over the long-term.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of issuers that have their principal activities in Europe.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries
considering the size of the market in each country relative to the
size of the markets in Europe as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market. Emerging markets can be subject to greater social, economic,
regulatory and political uncertainties and can be extremely volatile.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN EUROPE. Both
developed and emerging market countries in Europe will be
significantly affected by the tight fiscal and monetary controls
required to join the European Economic and Monetary Union
(EMU) .
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
EUROPE CAPITAL APPRECIATION FUND seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of issuers that have their principal activities in Europe.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries
considering the size of the market in each country relative to the
size of the markets in Europe as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market. Emerging markets can be subject to greater social, economic,
regulatory and political uncertainties and can be extremely volatile.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN EUROPE. Both
developed and emerging market countries in Europe will be
significantly affected by the tight fiscal and monetary controls
required to join the EMU .
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
FRANCE FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of French issuers.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN FRANCE. The French
economy is significantly affected by government policies and
investments in the private sector and the restrictions required to
join the EMU .
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
In addition, the fund is considered non-diversified and can invest a
greater portion of assets in securities of individual issuers than a
diversified fund. As a result, changes in the market value of a single
issuer could cause greater fluctuations in the fund's share price than
would occur in a more diversified fund.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
GERMANY FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of German issuers.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN GERMANY. The German
economy is significantly affected by the reunification of eastern and
western Germany and the restrictions required to join the EMU .
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
In addition, the fund is considered non-diversified and can invest a
greater portion of assets in securities of individual issuers than a
diversified fund. As a result, changes in the market value of a single
issuer could cause greater fluctuations in the fund's share price than
would occur in a more diversified fund.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
HONG KONG AND CHINA FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of Hong Kong and Chinese issuers.
(small solid bullet) Investing mostly in securities of Hong Kong
issuers.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market. Emerging markets can be subject to greater social, economic,
regulatory and political uncertainties and can be extremely volatile.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN HONG KONG AND CHINA.
The Hong Kong and Chinese economies are generally considered emerging
markets and are significantly affected by general economic and
political conditions in other Asian countries and changes in Chinese
government policy.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
In addition, the fund is considered non-diversified and can invest a
greater portion of assets in securities of individual issuers than a
diversified fund. As a result, changes in the market value of a single
issuer could cause greater fluctuations in the fund's share price than
would occur in a more diversified fund.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
JAPAN FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of Japanese issuers.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN JAPAN. The Japanese
economy is currently in a recession. International trade and
government policy significantly affect economic growth.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
JAPAN SMALL COMPANIES FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of Japanese issuers with small market capitalizations
(those with market capitalizations of 100 billion Yen or less).
(small solid bullet) Potentially investing in securities of Japanese
issuers with larger market capitalizations and non-Japanese
issuers .
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN JAPAN. The Japanese
economy is currently in a recession. International trade and
government policy significantly affect economic growth.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
(small solid bullet) SMALL CAP INVESTING. The value of securities of
smaller, less well-known issuers can perform differently than
the market as a whole and other types of stocks and can be more
volatile than that of larger issuers .
In addition, the fund is considered non-diversified and can invest a
greater portion of assets in securities of individual issuers than a
diversified fund. As a result, changes in the market value of a single
issuer could cause greater fluctuations in the fund's share price than
would occur in a more diversified fund.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
LATIN AMERICA FUND seeks high total investment return.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of Latin American issuers.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries
considering the size of the market in each country relative to the
size of the markets in Latin America as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market. Emerging markets can be subject to greater social, economic,
regulatory and political uncertainties and can be extremely volatile.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN LATIN AMERICA. The
Latin American economies are generally considered emerging markets and
are significantly affected by currency devaluations. The markets in
Latin America can be extremely volatile.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
NORDIC FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of Danish, Finnish, Norwegian, and Swedish issuers.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries
considering the size of the market in each country relative to the
size of the markets in the Nordic region as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN NORDIC REGION. The
Nordic economies are significantly affected by the price of natural
resources and their governments' efforts to comply with the
restrictions required to join the EMU.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
In addition, the fund is considered non-diversified and can invest a
greater portion of assets in securities of individual issuers than a
diversified fund. As a result, changes in the market value of a single
issuer could cause greater fluctuations in the fund's share price than
would occur in a more diversified fund.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
PACIFIC BASIN FUND seeks growth of capital over the long-term.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of issuers that have their principal activities in the
Pacific Basin.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries
considering the size of the market in each country relative to the
size of the markets in the Pacific Basin as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market. Emerging markets can be subject to greater social, economic,
regulatory and political uncertainties and can be extremely volatile.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN PACIFIC BASIN. Many
Pacific Basin economies are generally considered emerging markets and
most are currently in recessions. International trade, government
policy, and political and social stability significantly affect
economic growth. The markets in the Pacific Basin can be extremely
volatile.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
SOUTHEAST ASIA FUND seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of Southeast Asian issuers.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries
considering the size of the market in each country relative to the
size of the markets in Southeast Asia as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market. Emerging markets can be subject to to greater social,
economic, regulatory and political uncertainties and can be extremely
volatile.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN SOUTHEAST ASIA. Most
Southeast Asian economies are generally considered emerging markets
and are currently in recessions. International trade, government
policy and political and social stability significantly affect
economic growth. The markets in Southeast Asia can be extremely
volatile.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
UNITED KINGDOM FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of British issuers.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN UNITED KINGDOM. The
United Kingdom economies are significantly affected by the
restrictions required to join the EMU .
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
In addition, the fund is considered non-diversified and can invest a
greater portion of assets in securities of individual issuers than a
diversified fund. As a result, changes in the market value of a single
issuer could cause greater fluctuations in the fund's share price than
would occur in a more diversified fund.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
PERFORMANCE
The following information illustrates the changes in the funds'
performance from year to year and compares the funds' performance to
the performance of a market index and an average of the performance
of similar funds over various periods of time. Prior to February
19, 1993, Emerging Markets Fund operated under certain different
investment policies. Accordingly, Emerging Market Fund's historical
performance may not represent its current investment policies. Returns
are based on past results and are not an indication of future
performance.
YEAR-BY-YEAR RETURNS
The returns in the charts do not include the effect of the funds'
front-end sales charge. If the effect of the sales charge was
reflected, returns would be lower than those shown.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CANADA FUND

CALENDAR 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
YEARS

19.47% 26.99% -5.49% 17.68% -2.87% 25.47% -11.98% 19.39% 15.96% 6.12%

</TABLE>

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 19.47
ROW: 2, COL: 1, VALUE: 26.99
ROW: 3, COL: 1, VALUE: -5.49
ROW: 4, COL: 1, VALUE: 17.68
ROW: 5, COL: 1, VALUE: -2.87
ROW: 6, COL: 1, VALUE: 25.47
ROW: 7, COL: 1, VALUE: -11.98
ROW: 8, COL: 1, VALUE: 19.39
ROW: 9, COL: 1, VALUE: 15.96
ROW: 10, COL: 1, VALUE: 6.12
DURING THE PERIODS SHOWN IN THE CHART FOR CANADA FUND, THE HIGHEST
RETURN FOR A QUARTER WAS 14.49 % (QUARTER ENDING MARCH
31 , 19 91 ) AND THE LOWEST RETURN FOR A QUARTER WAS
-8.72 % (QUARTER ENDING DECEMBER 31 , 19 94 ). THE
YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1998 FOR CANADA FUND WAS
-25.29 %.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
EMER
GING
MARK
ETS
FUND

CALENDAR 1991 1992 1993 1994 1995 1996 1997
YEARS

6.76% 5.85% 81.76% -17.93% -3.18% 10.00% -40.77%

</TABLE>

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: 6.76
ROW: 5, COL: 1, VALUE: 5.85
ROW: 6, COL: 1, VALUE: 81.76000000000001
ROW: 7, COL: 1, VALUE: -17.93
ROW: 8, COL: 1, VALUE: -3.18
ROW: 9, COL: 1, VALUE: 10.0
ROW: 10, COL: 1, VALUE: -40.77
DURING THE PERIODS SHOWN IN THE CHART FOR EMERGING MARKETS FUND, THE
HIGHEST RETURN FOR A QUARTER WAS 39.73 % (QUARTER ENDING
DECEMBER 31 , 19 93 ) AND THE LOWEST RETURN FOR A QUARTER
WAS -22.55 % (QUARTER ENDING DECEMBER 31 , 19 97 ).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1998 FOR EMERGING MARKETS
FUND WAS -36.56 %.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EURO
PE
FUND

CALENDAR 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
YEARS

5.84% 32.33% -4.59% 4.16% -2.52% 27.16% 6.26% 18.84% 25.63% 22.89%

</TABLE>

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 5.84
ROW: 2, COL: 1, VALUE: 32.33
ROW: 3, COL: 1, VALUE: -4.59
ROW: 4, COL: 1, VALUE: 4.16
ROW: 5, COL: 1, VALUE: -2.52
ROW: 6, COL: 1, VALUE: 27.16
ROW: 7, COL: 1, VALUE: 6.26
ROW: 8, COL: 1, VALUE: 18.84
ROW: 9, COL: 1, VALUE: 25.63
ROW: 10, COL: 1, VALUE: 22.89
DURING THE PERIODS SHOWN IN THE CHART FOR EUROPE FUND, THE HIGHEST
RETURN FOR A QUARTER WAS 13.01 % (QUARTER ENDING SEPTEMBER
31 , 19 89 ) AND THE LOWEST RETURN FOR A QUARTER WAS
-15.83 % (QUARTER ENDING SEPTEMBER 31 , 19 90 ). THE
YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1998 FOR EUROPE FUND WAS
2.71 %.
EURO
PE
CAPIT
AL
APPR
ECIATI
ON
FUND

CALENDAR 1994 1995 1996 1997
YEARS

6.88% 14.69% 25.89% 24.96%

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: 6.88
ROW: 8, COL: 1, VALUE: 14.69
ROW: 9, COL: 1, VALUE: 25.89
ROW: 10, COL: 1, VALUE: 24.96
DURING THE PERIODS SHOWN IN THE CHART FOR EUROPE CAPITAL APPRECIATION
FUND, THE HIGHEST RETURN FOR A QUARTER WAS 11.44 % (QUARTER
ENDING JUNE 30 , 19 97 ) AND THE LOWEST RETURN FOR A
QUARTER WAS -4.96 % (QUARTER ENDING DECEMBER 31 ,
19 94 ). THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1998 FOR
EUROPE CAPITAL APPRECIATION FUND WAS 2.93 %.
FRANCE FUND

CALENDAR 1996 1997
YEARS

25.44% 14.46 %

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: NIL
ROW: 8, COL: 1, VALUE: NIL
ROW: 9, COL: 1, VALUE: 25.44
ROW: 10, COL: 1, VALUE: 14.46
DURING THE PERIODS SHOWN IN THE CHART FOR FRANCE FUND, THE HIGHEST
RETURN FOR A QUARTER WAS 12.04 % (QUARTER ENDING MARCH
31 , 19 96 ) AND THE LOWEST RETURN FOR A QUARTER WAS
-2.84 % (QUARTER ENDING DECEMBER 31 , 19 97 ). THE
YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1998 FOR FRANCE FUND WAS
8.37 %.
GERMANY FUND

CALENDAR 1996 1997
YEARS

18.45% 20.33 %

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: NIL
ROW: 8, COL: 1, VALUE: NIL
ROW: 9, COL: 1, VALUE: 18.45
ROW: 10, COL: 1, VALUE: 20.33
DURING THE PERIODS SHOWN IN THE CHART FOR GERMANY FUND, THE HIGHEST
RETURN FOR A QUARTER WAS 8.42 % (QUARTER ENDING MARCH 31 ,
19 97 ) AND THE LOWEST RETURN FOR A QUARTER WAS -1.57 %
(QUARTER ENDING DECEMBER 31 , 19 97 ). THE YEAR-TO-DATE
RETURN AS OF SEPTEMBER 30, 1998 FOR GERMANY FUND WAS 11.77 %.
HONG
KONG
AND
CHIN
A
FUND

CALENDAR 1996 1997
YEARS

40.99% -22.05 %

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: NIL
ROW: 8, COL: 1, VALUE: NIL
ROW: 9, COL: 1, VALUE: 40.99
ROW: 10, COL: 1, VALUE: 22.05
DURING THE PERIODS SHOWN IN THE CHART FOR HONG KONG AND CHINA FUND,
THE HIGHEST RETURN FOR A QUARTER WAS 18.56 % (QUARTER ENDING
JUNE 30 , 19 97 ) AND THE LOWEST RETURN FOR A QUARTER WAS
-31.38 % (QUARTER ENDING DECEMBER 31 , 19 97 ). THE
YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1998 FOR HONG KONG AND CHINA
FUND WAS -22.14 %.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
JAPA
N
FUND

CALENDAR 1993 1994 1995 1996 1997
YEARS

20.45% 16.46% -2.13% -11.19% -10.73%

</TABLE>

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: 20.45
ROW: 7, COL: 1, VALUE: 16.46
ROW: 8, COL: 1, VALUE: -2.13
ROW: 9, COL: 1, VALUE: -11.19
ROW: 10, COL: 1, VALUE: -10.73
DURING THE PERIODS SHOWN IN THE CHART FOR JAPAN FUND, THE HIGHEST
RETURN FOR A QUARTER WAS 23.45 % (QUARTER ENDING JUNE 30 ,
19 97 ) AND THE LOWEST RETURN FOR A QUARTER WAS -15.47 %
(QUARTER ENDING DECEMBER 31 , 19 97 ). THE YEAR-TO-DATE
RETURN AS OF SEPTEMBER 30, 1998 FOR JAPAN FUND WAS -7.39 %.
JAPA
N
SMAL
L
COM
PANI
ES
FUND

CALENDAR 1996 1997
YEARS

-24.59% -30.35%

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: NIL
ROW: 8, COL: 1, VALUE: NIL
ROW: 9, COL: 1, VALUE: -24.59
ROW: 10, COL: 1, VALUE: -30.35
DURING THE PERIODS SHOWN IN THE CHART FOR JAPAN SMALL COMPANIES FUND,
THE HIGHEST RETURN FOR A QUARTER WAS 22.03 % (QUARTER ENDING
JUNE 30 , 19 97 ) AND THE LOWEST RETURN FOR A QUARTER WAS
-20.10 % (QUARTER ENDING SEPTEMBER 30 , 19 97 ). THE
YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1998 FOR JAPAN SMALL COMPANIES
FUND WAS -2.72 %.
LATIN
AMER
ICA
FUND

CALENDAR 1994 1995 1996 1997
YEARS

-23.17% -16.46% 30.72% 32.89%

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: -23.17
ROW: 8, COL: 1, VALUE: -16.46
ROW: 9, COL: 1, VALUE: 30.72
ROW: 10, COL: 1, VALUE: 32.89
DURING THE PERIODS SHOWN IN THE CHART FOR LATIN AMERICA FUND, THE
HIGHEST RETURN FOR A QUARTER WAS 29.79 % (QUARTER ENDING
SEPTEMBER 30 , 19 94 ) AND THE LOWEST RETURN FOR A QUARTER
WAS -29.10 % (QUARTER ENDING MARCH 31 , 19 95 ). THE
YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1998 FOR LATIN AMERICA FUND
WAS -43.67 %.
NORDIC FUND

CALENDAR YEARS 1996 1997

41.69% 12.11%

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: NIL
ROW: 8, COL: 1, VALUE: NIL
ROW: 9, COL: 1, VALUE: 41.69
ROW: 10, COL: 1, VALUE: 12.11
DURING THE PERIODS SHOWN IN THE CHART FOR NORDIC FUND, THE HIGHEST
RETURN FOR A QUARTER WAS 12.64 % (QUARTER ENDING DECEMBER
31 , 19 96 ) AND THE LOWEST RETURN FOR A QUARTER WAS
-9.89 % (QUARTER ENDING DECEMBER 31 , 19 97 ). THE
YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1998 FOR NORDIC FUND WAS
6.82 %.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PACIFI
C
BASIN
FUND

CALENDAR 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
YEARS

10.45% 11.44% -27.21% 12.54% -7.62% 63.91% -2.81% -6.11% -2.76% -15.10%

</TABLE>

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 10.45
ROW: 2, COL: 1, VALUE: 11.44
ROW: 3, COL: 1, VALUE: -27.21
ROW: 4, COL: 1, VALUE: 12.54
ROW: 5, COL: 1, VALUE: -7.62
ROW: 6, COL: 1, VALUE: 63.91
ROW: 7, COL: 1, VALUE: -2.81
ROW: 8, COL: 1, VALUE: -6.11
ROW: 9, COL: 1, VALUE: -2.76
ROW: 10, COL: 1, VALUE: -15.1
DURING THE PERIODS SHOWN IN THE CHART FOR PACIFIC BASIN FUND, THE
HIGHEST RETURN FOR A QUARTER WAS 19.12 % (QUARTER ENDING JUNE
30 , 19 97 ) AND THE LOWEST RETURN FOR A QUARTER WAS
-25.00 % (QUARTER ENDING SEPTEMBER 30 , 19 90 ). THE
YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1998 FOR PACIFIC BASIN FUND
WAS -10.96 %.
SOUT
HEAST
ASIA
FUND

CALENDAR 1994 1995 1996 1997
YEARS

-21.76% 12.18% 10.16% -38.88%

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: -21.76
ROW: 8, COL: 1, VALUE: 12.18
ROW: 9, COL: 1, VALUE: 10.16
ROW: 10, COL: 1, VALUE: -38.88
DURING THE PERIODS SHOWN IN THE CHART FOR SOUTHEAST ASIA FUND, THE
HIGHEST RETURN FOR A QUARTER WAS 14.90 % (QUARTER ENDING
SEPTEMBER 30 , 19 94 ) AND THE LOWEST RETURN FOR A QUARTER
WAS -28.57 % (QUARTER ENDING DECEMBER 31 , 1 997 ).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1998 FOR SOUTHEAST ASIA
FUND WAS -24.95 %.
UNITED KINGDOM FUND

CALENDAR YEARS 1996 1997

28.61% 16.78%

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: NIL
ROW: 8, COL: 1, VALUE: NIL
ROW: 9, COL: 1, VALUE: 28.61
ROW: 10, COL: 1, VALUE: 16.78
DURING THE PERIODS SHOWN IN THE CHART FOR UNITED KINGDOM FUND, THE
HIGHEST RETURN FOR A QUARTER WAS 14.27 % (QUARTER ENDING
DECEMBER 31 , 19 96 ) AND THE LOWEST RETURN FOR A QUARTER
WAS -0.08 % (QUARTER ENDING MARCH 31 , 19 97 ). THE
YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1998 FOR UNITED KINGDOM FUND
WAS -1.75 %.
AVERAGE ANNUAL RETURNS
The returns in the following table include the effect of each
fund's 3.00% maximum applicable front-end sales charge.

<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR THE PERIODS ENDED PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS/
DECEMBER 31, 1997. LIFE OF FUND *

CANADA FUND 2.93% 9.49% 9.94%

TORONTO STOCK 10.26% 14.74% 9.93%
EXCHANGE INDEX

EMERGING - 42.55% - 1.81% 0. 4 4% A
MARKETS FUND

MSCI EMERGING - 11.59% 7.36% 1 4 . 3 0% A
MARKETS FREE
INDEX

LIPPER EMERGING -2.38% 6.76% 5.28%A
MARKETS FUNDS
AVERAGE

EUROPE FUND 19.20% 19.18% 12.55%

MSCI EUROPE 24.17% 19.31% 14.07%
INDEX

LIPPER EUROPEAN 15.78% 17.64% 10.08%
REGION FUNDS
AVERAGE

EUROPE CAPITAL 21.21% N/A 16.9 5 % B
APPRECIATION
FUND

MSCI EUROPE 24.17% N/A 1 6.94 % B
INDEX

LIPPER EUROPEAN 15.78% N/A 18.87%B
REGION FUNDS
AVERAGE

FRANCE FUND 11.03% N/A 1 8.01 % C

SBF 250 INDEX 10.41% N/A 16. 47 % C

LIPPER EUROPEAN 15.78% N/A 9.33%C
REGION FUNDS
AVERAGE

GERMANY FUND 16.72% N/A 1 7.58 % C

DAX 100 INDEX 2 2.64 % N/A 19.61 % C

LIPPER EUROPEAN 15.78% N/A 9.33%C
REGION FUNDS
AVERAGE

HONG KONG - 24.39% N/A 3.25 % C
AND CHINA
FUND

HANG SENG - 18.14% N/A 6.10 % C
INDEX

LIPPER CHINA -23.58% N/A -12.42% C
REGION FUNDS
AVERAGE

JAPAN FUND - 13.41% 1.09% 1.09 % D

TOPIX INDEX - 28.09% - 2.14% -2.14 % D

LIPPER JAPANESE -14.07% -0.17% -1.78%D
FUNDS AVERAGE

JAPAN SMALL -32.44 % N/A -28.63 % C
COMPANIES
FUND

TOKYO STOCK -41.30 % N/A -23.33 % C
EXCHANGE
SECOND SECTION
STOCK PRICE
INDEX

TOPIX INDEX -28.09 % N/A -22.40 % C

LIPPER JAPANESE -14.07% N/A 7.07%C
FUNDS AVERAGE

LATIN AMERICA 28.90% N/A 1.98 % B
FUND

MSCI LATIN 31.64% N/A 8.99 % B
AMERICA FREE
INDEX

LIPPER LATIN 25.27% N/A 9.46%B
AMERICAN
REGION FUNDS
AVERAGE

NORDIC FUND 8.75% N/A 24.13 % C

FT-A-NORDIC 1 5.42 % N/A 24.38 % C
INDEX

LIPPER 15.78% N/A 9.33%C
EUROPEAN
REGION FUNDS
AVERAGE

PACIFIC BASIN - 17.65% 3.67% 1.10%
FUND

MSCI PACIFIC - 25.42% 1.42% - 1.22%
INDEX

LIPPER PACIFIC -27.63% 3.28% 4.31%
REGION FUNDS
AVERAGE

SOUTHEAST ASIA - 40.72% N/A - 1 2 . 9 9% B
FUND

MSCI FAR EAST - 44.31% N/A -13.65 % B
EX-JAPAN FREE
INDEX

LIPPER PACIFIC -35.52% N/A -10.87%B
EX-JAPAN FUNDS
AVERAGE

UNITED 13.28% N/A 20.70 % C
KINGDOM FUND

FT-ALL SHARES 18.79% N/A 23.59 % C
INDEX

LIPPER 15.78% N/A 9.33%C
EUROPEAN
REGION FUNDS
AVERAGE

</TABLE>

* BEGINNING JANUARY 1 OF THE FIRST CALENDAR YEAR FOLLOWING THE
FUND'S COMMENCEMENT OF OPERATIONS.
A FROM JANUARY 1, 1991.
B FROM JANUARY 1, 1994.
C FROM JANUARY 1, 1996.
D FROM JANUARY 1, 1993.

If FMR had not reimbursed certain fund expenses during these periods,
Canada Fund's, Europe Fund's, France Fund's, Germany Fund's, Japan
Fund's, Nordic Fund's, Pacific Basin Fund's, Southeast Asia Fund's,
and United Kingdom Fund's total returns would have been lower.
Going forward, Japan Small Companies Fund's performance will be
compared to the Tokyo Stock Exchange Second Section Stock
Price Index rather than Tokyo Stock Exchange Index (TOPIX)
because the Tokyo Stock Exchange Second Section Stock Price
Index provides a better indication of the performance of Japanese
small-capitalization stocks than the TOPIX, which generally includes
larger companies.
Morgan Stanley Capital International Far East Free ex Japan
Index is a market capitalization-weighted index of over 450 stocks
traded in nine Asian markets, excluding Japan.
Morgan Stanley Capital International Emerging Markets Free Index is a
market capitalization-weighted index that is designed to represent the
performance of emerging stock markets throughout the world. As of
October 31,1998, the index included over 960 common stocks of
companies domiciled in 26 countries.
Morgan Stanley Capital International Emerging Markets Free - Latin
America Index is a market capitalization-weighted index of
approximately 190 stocks traded in seven Latin American
markets.
Morgan Stanley Capital International Europe Index is a market
capitalization-weighted index that is designed to represent the
performance of developed stock markets in Europe. As of October 31,
1998, the index included over 590 common stocks of companies
domiciled in 15 European countries.
Morgan Stanley Capital International Pacific Index is a market
capitalization-weighted index of approximately 400 stocks traded in
six Pacific-region markets.
Toronto Stock Exchange (TSE) 300 is a market capitalization-weighted
index of 300 stocks traded in the Canadian market.
Societe des Bourses Francaises (SBF) 250 is a market
capitalization-weighted index of the stocks of the 250 largest
companies in the French market.
Deutscher Akteinindex (DAX) 100 is a market capitalization-weighted
index of the 100 most heavily traded stocks in the German market.
Hang Seng Index is a market capitalization-weighted index of the
stocks of the 33 largest companies in the Hong Kong market.
Tokyo Stock Exchange Index ( TOPIX ) is a market
capitalization-weighted index of over 1 3 00 stocks traded in the
Japanese market.
Tokyo Stock Exchange Second Section Stock Price Index is
a market capitalization-weighted index that reflects the performance
of the smaller, less established and newly listed companies of the
Tokyo Stock Exchange.
FT - Actuaries World Nordic Index is a market capitalization-weighted
index of approximately 90 stocks traded in four Scandinavian
markets.
FT - All Shares Index is a market capitalization-weighted index of
over 840 stocks traded in the U.K. market.
Each Lipper Funds Average reflects the performance (excluding sales
charges) of mutual funds with similar objectives.
FEE TABLE
The following table describes the fees and expenses that are
incurred when you buy, hold or sell shares of a fund. The annual fund
operating expenses provided below for Canada Fund, Emerging Markets
Fund, Europe Fund, Europe Capital Appreciation Fund, Germany Fund,
Hong Kong & China Fund, Japan Fund, Latin America Fund, Pacific Basin
Fund and Southeast Asia Fund do not reflect the effect of any
reduction of certain expenses during the period. The annual fund
operating expenses provided below for France Fund do not reflect the
effect of any expense reimbursements during the period. The annual
fund operating expenses provided below for United Kingdom Fund do not
reflect the effect of any expense reimbursements or reduction of
certain expenses during the period. The annual fund operating expenses
provided below for Japan Small Companies Fund and Nordic Fund are
based on historical expenses during the period.

SHAREHOLDER FEES (PAID BY THE INVESTOR DIRECTLY )
MAXIMUM SALES CHARGE 3.00%X
(LOAD) ON PURCHASES (AS A
% OF OFFERING PRICE)

SALES CHARGE (LOAD) ON NONE
REINVESTED DISTRIBUTIONS

DEFERRED SALES CHARGE NONE
(LOAD) ON REDEMPTIONS

REDEMPTION FEE 1.50%
ON SHARES HELD LESS THAN
90 DAYS (AS A % OF
AMOUNT REDEEMED)
FOR CANADA FUND, EMERGING
MARKETS FUND, FRANCE
FUND, GERMANY FUND,
HONG KONG AND CHINA
FUND, JAPAN FUND, JAPAN
SMALL COMPANIES FUND,
LATIN AMERICA FUND, NORDIC
FUND, SOUTHEAST ASIA
FUND, AND UNITED KINGDOM
FUND ONLY.

REDEMPTION FEE 1.00%
ON SHARES HELD LESS THAN
90 DAYS (AS A % OF
AMOUNT REDEEMED)
FOR EUROPE FUND, EUROPE
CAPITAL APPRECIATION FUND
AND PACIFIC BASIN FUND ONLY

ANNUAL ACCOUNT $ 12.00
MAINTENANCE FEE (FOR
ACCOUNTS UNDER $2,500)

X LOWER SALES CHARGES MAY BE AVAILABLE FOR ACCOUNTS OVER $250,000.

ANNUAL F UND OPERATING EXPENSES (PAID FROM FUND
ASSETS )
CANADA FUND MANAGEMENT FEE 0.30%