-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CorUs0hMdeVoB1CbqGsnHQrSAaAwWDAq+lPwA7tSSMc67Z1BioC53jXMDudaZb83 oUReY94H+c5fp5VW6ZTZYA== 0000744822-99-000027.txt : 19991224 0000744822-99-000027.hdr.sgml : 19991224 ACCESSION NUMBER: 0000744822-99-000027 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991031 FILED AS OF DATE: 19991223 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIDELITY INVESTMENT TRUST CENTRAL INDEX KEY: 0000744822 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-04008 FILM NUMBER: 99779930 BUSINESS ADDRESS: STREET 1: 82 DEVONSHIRE ST CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6174391269 MAIL ADDRESS: STREET 1: 82 DEVONSHIRE STREET STREET 2: MAILZONE ZH-1 CITY: BOSTON STATE: MA ZIP: 02109 FORMER COMPANY: FORMER CONFORMED NAME: FIDELITY OVERSEAS FUND DATE OF NAME CHANGE: 19861228 N-30D 1 (2_FIDELITY_LOGOS)FIDELITY'S BROADLY DIVERSIFIED INTERNATIONAL EQUITY FUNDS Fidelity Global Balanced Fund Fidelity International Growth & Income Fund Fidelity Diversified International Fund Fidelity International Value Fund Fidelity Overseas Fund Fidelity Worldwide Fund ANNUAL REPORT FOR THE YEAR ENDING OCTOBER 31, 1999 AND PROSPECTUS DATED DECEMBER 29, 1999 CONTENTS
MARKET RECAP A-3 A REVIEW OF WHAT HAPPENED IN WORLD MARKETS DURING THE PAST 12 MONTHS. GLOBAL BALANCED FUND A-4 A-5 A-6 A-7 A-15 PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS INTERNATIONAL GROWTH & INCOME A-17 A-18 A-20 A-21 A-26 PERFORMANCE FUND TALK: THE FUND MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS DIVERSIFIED INTERNATIONAL FUND A-28 A-29 A-31 A-32 A-40 PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS INTERNATIONAL VALUE FUND A-42 A-43 A-45 A-46 A-50 PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS OVERSEAS FUND A-52 A-53 A-55 A-56 A-62 PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS WORLDWIDE FUND A-64 A-65 A-67 A-68 A-74 PERFORMANCE FUND TALK: THE MANAGERS' OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS A-76 NOTES TO THE FINANCIAL STATEMENTS REPORT OF INDEPENDENT A-80 THE AUDITORS' OPINION ACCOUNTANTS INDEPENDENT AUDITORS' REPORT A-81 THE AUDITORS' OPINION DISTRIBUTIONS A-82 PROXY VOTING RESULTS A-84 FIDELITY'S BROADLY P-1 DIVERSIFIED INTERNATIONAL EQUITY FUNDS PROSPECTUS
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation. Third party marks appearing herein are the property of their respective owners. All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company. This report is printed on recycled paper using soy-based inks. THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. MARKET RECAP It took over 100 interest-rate cuts by central banks around the world to defuse the powder keg that characterized global equity markets 12 months ago. Those easings sparked a dramatic worldwide recovery and, in a few cases - particularly in the U.S. - were so powerful that some of the easings needed to be reversed. The bottom line, however, is that the world was a much better place to invest in at the conclusion of the 12 months ending October 31, 1999, than it was at the beginning of the period. EUROPE: European markets offered mixed results over the past 12 months. In that time, the Morgan Stanley Capital International Europe Index returned 12.79%. The U.K. posted the most impressive market returns, due in large part to the strength of the vibrant telecommunications industry. Italy and Germany, meanwhile, lagged behind, mostly due to fears of higher interest rates. The weak performance of the euro - the new single currency of 11 European nations that was introduced January 1, 1999 - didn't help matters. An additional detriment was the subpar performance of many of Europe's largest pharmaceutical companies, which suffered due to non-compelling product introductions and slow revenue growth. On a positive note, cross-border consolidation played a significant role across the European corporate landscape, as merger, acquisition and takeover bid announcements were almost daily occurrences. EMERGING MARKETS: A year ago, the emerging markets' outlook was bleak. Currency problems were the norm for several regions, and market volatility reigned supreme. In the fall of 1999, however, the markets told a different story. Over the past 12 months, the Morgan Stanley Capital International Emerging Markets Free Index returned 44.63%. Several factors contributed to this about-face, including lower interest rates and favorable export and trade data. Sentiment shifts were evident in markets such as Singapore, Thailand and especially India, where the strong performance of technology stocks helped propel that market to phenomenal returns. Latin America was also a comeback story, as Brazil rebounded nicely from it currency devaluation in January. Mexico, however, slipped over the past several months due to concerns about interest rates and fears of a potentially weaker peso. JAPAN AND THE FAR EAST: For overseas investors, Japan was the place to be for the 12-month period that ended October 31, 1999. A renewed emphasis on corporate restructuring and shareholder Standard & Poor's 500 Index(registered trademark) Morgan Stanley Capital International Europe, Australasia, Far East Index * YEAR TO DATE THROUGH OCTOBER 31, 1999. Row: 1, Col: 1, Value: nil Row: 1, Col: 2, Value: nil Row: 2, Col: 1, Value: 6.1 Row: 2, Col: 2, Value: 7.38 Row: 3, Col: 1, Value: 31.57 Row: 3, Col: 2, Value: 56.16 Row: 4, Col: 1, Value: 18.56 Row: 4, Col: 2, Value: 69.44000000000001 Row: 5, Col: 1, Value: 5.1 Row: 5, Col: 2, Value: 24.63 Row: 6, Col: 1, Value: 16.61 Row: 6, Col: 2, Value: 28.27 Row: 7, Col: 1, Value: 31.69 Row: 7, Col: 2, Value: 10.53 Row: 8, Col: 1, Value: -3.1 Row: 8, Col: 2, Value: -23.45 Row: 9, Col: 1, Value: 30.47 Row: 9, Col: 2, Value: 12.13 Row: 10, Col: 1, Value: 7.619999999999999 Row: 10, Col: 2, Value: -12.17 Row: 11, Col: 1, Value: 10.08 Row: 11, Col: 2, Value: 32.56 Row: 12, Col: 1, Value: 1.32 Row: 12, Col: 2, Value: 7.78 Row: 13, Col: 1, Value: 37.58 Row: 13, Col: 2, Value: 11.21 Row: 14, Col: 1, Value: 22.96 Row: 14, Col: 2, Value: 6.05 Row: 15, Col: 1, Value: 32.11 Row: 15, Col: 2, Value: 4.819999999999999 Row: 16, Col: 1, Value: 28.58 Row: 16, Col: 2, Value: 20.27 Row: 17, Col: 1, Value: 12.03 Row: 17, Col: 2, Value: 12.79 % value - combined with the Japanese government's willingness to create more of a free-enterprise market system - proved successful. For the period, the Morgan Stanley Capital International Japan Index returned 58.40% and Japan's TOPIX Index returned 69.97%. Other Asian markets also received a vicarious boost from Japan: Technology-driven markets such as South Korea and Taiwan performed well, as worldwide demand for personal computers translated into positive gains for semiconductor manufacturers. U.S. AND CANADA: The U.S. equity market produced solid returns for the 12 months ending October 31, 1999. The Dow Jones Industrial Average returned 26.84%, while the Standard & Poor's 500 Index - a popular gauge of U.S. stock market performance - returned 25.67%. Early on, the Federal Reserve Board tried to stabilize the impact of shaky global markets on the U.S. by lowering interest rates. In response, the Dow hit the 10,000 level for the first time in March. Late in the second quarter, however, concerns over an overheating U.S. economy and global market recoveries triggered inflation fears. In June and again in August, the Fed raised rates and the market sold off throughout the third quarter as investors anticipated additional increases. In the end, technology stocks were the clear winners as the NASDAQ Index reeled off a healthy 67.98% return. While Canadian equity markets didn't get nearly the attention of their neighbors to the south, their performance was nearly as loud, as the Toronto Stock Exchange (TSE) 300 returned 24.49%. BONDS: With few exceptions, bond performance either fell flat or dropped into negative territory for the 12-month period. Concerns about inflation, higher interest rates and the solid performance of world equity markets posed the major threats to fixed-income instruments. For the period, the Lehman Brothers Aggregate Bond Index - - a widely followed measure of taxable bond performance - posted a total return of 0.53%. U.S. Treasuries gave back all of their flight-to-quality gains - and then some - captured during the fall of 1998, as the Lehman Brothers Long-Term Government Index fell 6.10%. Meanwhile, the Lehman Brothers Corporate Bond Index returned 0.61%, and the Salomon Brothers Non-U.S. World Government Bond Index fell 2.96%. There were a few bright spots, however. The high-yield market, as measured by the Merrill Lynch High Yield Master II Index, returned 5.61% during the 12-month period, while the JP Morgan Emerging Markets Bond Index Plus returned 19.98%. GLOBAL BALANCED PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1994 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY GLOBAL BALANCED 20.13% 70.07% 115.64% MSCI World 24.91% 114.06% 183.92% SB World Govt Bond -2.46% 36.73% n/a Global Flexible Portfolio 16.51% 75.46% n/a Funds Average CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years or since the fund started on February 1, 1993. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Morgan Stanley Capital International World Index - a market capitalization-weighted index that is designed to represent the performance of developed stock markets throughout the world. As of October 31, 1999, the index included over 1300 equity securities of companies domiciled in 22 countries. You can also compare the fund's returns to the performance of the Salomon Brothers World Government Bond Index - a market value-weighted index of debt issues traded in 14 world government bond markets. To measure how the fund's performance stacked up against its peers, you can compare it to the global flexible portfolio funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 105 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1994 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY GLOBAL BALANCED 20.13% 11.21% 12.06% MSCI World 24.91% 16.44% 16.72% SB World Govt Bond -2.46% 6.46% n/a Global Flexible Portfolio 16.51% 11.69% n/a Funds Average AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND Fidelity Global Balanced MSCI World SB World Govt Bond 00334 MS004 SB006 1993/02/26 10000.00 10000.00 10000.00 1993/03/31 10639.77 10576.83 10153.51 1993/04/30 11203.78 11064.11 10368.08 1993/05/28 11423.65 11316.16 10472.05 1993/06/30 11299.46 11218.32 10449.72 1993/07/30 11501.06 11446.52 10479.38 1993/08/31 12163.48 11968.39 10794.43 1993/09/30 12102.98 11744.40 10922.48 1993/10/29 12649.13 12065.21 10903.98 1993/11/30 12502.84 11379.87 10825.83 1993/12/31 13096.97 11933.93 10917.94 1994/01/31 13743.86 12718.26 11005.86 1994/02/28 13246.25 12550.86 10933.99 1994/03/31 12368.06 12006.96 10918.29 1994/04/29 12198.22 12375.31 10930.85 1994/05/31 12398.03 12404.35 10834.90 1994/06/30 11806.56 12367.06 10991.21 1994/07/29 12027.25 12599.35 11078.78 1994/08/31 12278.02 12975.91 11040.40 1994/09/30 12247.93 12632.10 11120.30 1994/10/31 12087.43 12988.52 11298.58 1994/11/30 11746.38 12422.32 11143.33 1994/12/30 11595.91 12539.70 11174.03 1995/01/31 11284.95 12348.47 11408.49 1995/02/28 11405.32 12525.49 11700.51 1995/03/31 11726.32 13126.17 12395.51 1995/04/28 11906.88 13580.59 12625.08 1995/05/31 11916.91 13693.69 12980.25 1995/06/30 11947.00 13686.40 13056.66 1995/07/31 12438.52 14368.10 13087.36 1995/08/31 12358.27 14044.91 12637.64 1995/09/29 12538.83 14450.95 12919.89 1995/10/31 12418.46 14220.32 13016.19 1995/11/30 12649.17 14710.97 13163.42 1995/12/29 12930.36 15137.97 13301.24 1996/01/31 12940.43 15408.69 13136.91 1996/02/29 12728.95 15499.36 13069.92 1996/03/29 12799.44 15754.07 13051.78 1996/04/30 13161.98 16121.28 12999.79 1996/05/31 13182.12 16131.99 13002.58 1996/06/28 13282.82 16210.32 13104.81 1996/07/31 13000.85 15634.18 13356.01 1996/08/30 13031.06 15810.64 13408.00 1996/09/30 13330.51 16426.40 13462.42 1996/10/31 13392.46 16537.82 13714.33 1996/11/29 13991.35 17461.31 13895.05 1996/12/31 13932.06 17178.39 13782.71 1997/01/31 13900.78 17382.20 13414.28 1997/02/28 14046.77 17578.87 13314.14 1997/03/31 13994.63 17227.87 13212.62 1997/04/30 14140.63 17787.72 13098.18 1997/05/30 14901.89 18882.39 13452.66 1997/06/30 15538.01 19820.92 13613.15 (pound) 1907/ /31/97 16 111.56 207 30.57 13507.08 1997/08/29 15298.16 19340.53 13499.06 1997/09/30 16099.75 20387.98 13786.55 1997/10/31 15482.98 19311.64 14072.64 1997/11/28 15525.52 19650.09 13856.67 1997/12/31 15675.93 19886.29 13814.81 1998/01/30 16008.10 20437.18 13949.13 1998/02/27 16715.28 21816.33 14062.52 1998/03/31 17176.02 22734.20 13923.31 1998/04/30 17497.47 22952.95 14145.91 1998/05/29 17390.32 22661.87 14179.05 1998/06/30 17604.62 23196.25 14199.99 1998/07/31 17808.20 23155.59 14218.83 1998/08/31 15879.52 20064.26 14606.10 1998/09/30 16298.56 20415.67 15382.74 1998/10/30 17111.86 22257.74 15838.39 1998/11/30 17773.35 23577.90 15614.75 1998/12/31 18458.88 24726.22 15929.10 1999/01/29 18818.89 25264.05 15782.92 1999/02/26 18273.42 24588.40 15275.63 1999/03/31 18906.17 25608.58 15314.35 1999/04/30 19309.82 26614.51 15308.07 1999/05/28 18764.34 25638.40 15080.94 1999/06/30 19495.28 26830.62 14786.48 1999/07/30 19658.92 26746.51 15148.98 1999/08/31 19844.39 26695.33 15219.11 1999/09/30 19874.38 26432.85 15456.35 1999/10/29 20557.05 27803.20 15449.03 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity Global Balanced Fund on February 28, 1993, shortly after the fund started. As the chart shows, by October 31, 1999, the value of the investment would have grown to $20,557 - a 105.57% increase on the initial investment. For comparison, look at how both the Morgan Stanley Capital International World Index and Salomon Brothers World Government Bond Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 investment in the Morgan Stanley Capital International World Index would have grown to $27,803 - a 178.03% increase and the Salomon Brothers World Government Bond Index would have grown to $15,449 - a 54.49% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) GLOBAL BALANCED FUND TALK: THE MANAGER'S OVERVIEW An interview with Richard Mace, Portfolio Manager of Fidelity Global Balanced Fund Q. HOW DID THE FUND PERFORM, RICK? A. The fund recently switched its fiscal year-end from July 31 to October 31. As such, this discussion only reflects performance for a three-month period - from July 31, 1999, through October 31, 1999. During that time, the fund returned 4.57%. The fund typically compares its performance to three measures: a bond index, an equity index and a peer group of competitor funds. The fund topped its bond-related benchmark - the Salomon Brothers World Government Bond Index - which returned 1.98% during the same time period. The fund's equity-oriented benchmark - the Morgan Stanley Capital International World Index - returned 3.95%. The global flexible portfolios average - as tracked by Lipper Inc. - returned 2.16%. Q. WHAT WERE SOME OF THE KEY FACTORS BEHIND THE FUND'S PERFORMANCE? A. Much of the fund's positive performance can be traced to good representation in the rebounding Japanese market. Our research team was able to identify several worthwhile opportunities there, including telephone utilities stocks such as Hikari Tsushin and NTT Mobile Communication Network. Both of these investments were inexpensive relative to their global competitors and also appeared to be potential consolidation candidates. Investors throughout the world also were drawn to several Japanese Internet-related and business software providers. As such, the fund's positions in Softbank, Trend Micro, Fujitsu Support & Service and Hitachi Information Systems benefited. At the end of the period, Japanese stocks accounted for approximately 11% of the fund's total investments. Telecommunications stocks also performed well, as wireless demand remained high. Q. WHAT TYPES OF CHANGES DID YOU MAKE TO THE FUND'S EQUITY SUBPORTFOLIO, AND HOW DID THIS PORTION OF THE FUND PERFORM? A. The biggest adjustment I made was to reduce the fund's equity position from just under 63% three months ago to around 60% at the close of the period. This was done mainly to bring the fund's equity exposure more in line with the Morgan Stanley index. In terms of individual stock performance, the fund's best performers were the Japanese investments I mentioned. On the flip side, several U.S. technology-related stocks detracted from performance during the period, mostly due to weak earnings and revenue growth outlooks. These included computer services provider Unisys, as well as Hewlett-Packard, the second-largest computer builder in the U.S. Another significant laggard was supermarket chain Safeway, which failed to meet third-quarter profit forecasts due to rising costs and declining sales. Q. HOW DID THE FUND'S BOND INVESTMENTS PERFORM DURING THE PERIOD? A. Not as well as I would have liked. The fund had virtually no bond positions in Japan, which turned out to be the best-performing market in local currency terms. I avoided Japanese bonds for several reasons. First, in allocating fund assets, I focus on how bonds are valued relative to equities in each country by comparing the cash flow yield on equities to the yield on bonds. In Japan, bonds tend to offer very low yields, and these yields can be easily erased by a moderate weakening of the yen. The fact that Japanese bonds reversed this trend during the period hurt the fund, particularly relative to the Salomon Brothers benchmark. Globally, fears of higher interest rates sent several bond markets - including those in the U.K., France, Germany and the U.S. - downward. Q. WHAT'S YOUR OUTLOOK? A. I think we'll see more consolidation and cross-border merger activity throughout the world. In Europe, this trend has continued as the new single currency - the euro - has made it easier for companies within the same industry to join forces. I'm optimistic that the progress we've seen in Japan also will continue. Companies there have followed in the footsteps of their American counterparts in terms of eliminating unprofitable businesses and looking for ways to restructure internally. Going forward, these patterns may result in stock performance being dictated more by company earnings and fundamentals than influences of local markets. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY FIDELITY FUND. FUND FACTS GOAL: seeks income and capital growth with reasonable risk by investing in a broadly diversified portfolio of high-yielding equity and debt securities issued anywhere in the world FUND NUMBER: 334 TRADING SYMBOL: FGBLX START DATE: February 1, 1993 SIZE: as of October 31, 1999, more than $97 million MANAGER: Richard Mace, since 1996; manager, Fidelity International Value Fund, since 1994; Fidelity Overseas Fund, since 1996; Group Leader, Fidelity international funds; joined Fidelity in 1987 (checkmark) GLOBAL BALANCED INVESTMENT CHANGES AS OF OCTOBER 31, 1999 France 7.7% Row: 1, Col: 1, Value: 7.7 Row: 1, Col: 2, Value: 7.0 Row: 1, Col: 3, Value: 1.9 Row: 1, Col: 4, Value: 11.3 Row: 1, Col: 5, Value: 2.1 Row: 1, Col: 6, Value: 5.9 Row: 1, Col: 7, Value: 2.2 Row: 1, Col: 8, Value: 2.1 Row: 1, Col: 9, Value: 11.4 Row: 1, Col: 10, Value: 49.5 United States 49.5% Germany 7.0% Italy 1.9% Japan 11.3% Netherlands 2.1% Other 5.9% Spain 2.2% Switzerland 2.1% United Kingdom 11.4% GEOGRAPHIC DIVERSIFICATION (% OF NET ASSETS) AS OF JULY 31, 1999 France 6.4% Row: 1, Col: 1, Value: 6.4 Row: 1, Col: 2, Value: 6.3 Row: 1, Col: 3, Value: 2.0 Row: 1, Col: 4, Value: 12.9 Row: 1, Col: 5, Value: 1.9 Row: 1, Col: 6, Value: 6.9 Row: 1, Col: 7, Value: 2.3 Row: 1, Col: 8, Value: 2.1 Row: 1, Col: 9, Value: 9.699999999999999 Row: 1, Col: 10, Value: 40.8 United States 49.5% Germany 6.3% Italy 2.0% Japan 12.9% Netherlands 1.9% Other 6.9% Spain 2.3% Switzerland 2.1% United Kingdom 9.7%
ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS AS OF JULY 31, 1999 Stocks 60.2 62.6 Bonds 33.2 28.4 Convertible Securities 0.0 0.3 Short-Term Investments and 6.6 8.7 Net Other Assets
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TOP FIVE STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS AS OF JULY 31, 1999 MCI WorldCom, Inc. (United 1.7 1.2 States of America) Microsoft Corp. (United 1.2 1.0 States of America) General Electric Co. (United 1.2 1.0 States of America) Total Fina SA Class B (France) 0.7 0.5 Wal-Mart Stores, Inc. 0.7 0.7 (United States of America) 5.5 4.4 TOP FIVE BOND ISSUERS AS OF OCTOBER 31, 1999 (WITH MATURITIES GREATER THAN % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS AS OF ONE YEAR) JULY 31, 1999 U.S. Treasury Obligations 9.2 8.1 United Kingdom, Great Britain 5.2 3.9 & Northern Ireland Federal Home Loan Bank 5.1 4.8 French Government 4.4 3.4 German Federal Republic 3.7 2.7 27.6 22.9 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS AS OF JULY 31, 1999 FINANCE 11.2 11.5 TECHNOLOGY 10.3 10.5 UTILITIES 9.1 8.8 HEALTH 5.4 5.6 NONDURABLES 3.6 3.9 RETAIL & WHOLESALE 3.5 4.2 ENERGY 3.4 3.9 INDUSTRIAL MACHINERY & 3.4 3.2 EQUIPMENT MEDIA & LEISURE 2.5 2.3 BASIC INDUSTRIES 2.2 2.3
GLOBAL BALANCED INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 60.0% SHARES VALUE (NOTE 1) ARGENTINA - 0.1% Bansud SA Class B (a) 2,500 $ 6,153 Importadora y Exportadorade 400 3,542 de la Patagonia SA Inversiones y Representacions 100 3,019 SA sponsored GDR Nortel Inversora S A ADR 200 3,025 Perez Companc SA Class B 5,940 35,775 51,514 AUSTRALIA - 0.7% Amcor Ltd. 2,600 11,362 AMP Ltd. 3,300 33,557 Australia & New Zealand 2,438 16,090 Banking Group Ltd. Brambles Industries Ltd. 800 22,498 BRL Hardy Ltd. 2,338 10,213 Broken Hill Proprietary Co. 5,812 60,068 Ltd. (The) Cable & Wireless Optus Ltd. 9,800 22,436 (a) Coles Myer Ltd. 3,800 18,901 Colonial Ltd. 2,600 9,567 Commonwealth Bank of Australia 800 13,111 CSR Ltd. 3,500 7,856 Fosters Brewing Group Ltd. 5,600 14,884 Goodman Fielder Ltd. 7,800 7,212 Harvey Norman Holdings Ltd. 9,100 18,077 Lend Lease Corp. Ltd. 1,900 21,861 Macquarie Bank Ltd. 800 11,734 National Australia Bank Ltd. 4,700 72,532 News Corp. Ltd. 12,877 93,120 Rio Tinto Ltd. 1,000 16,075 Tabcorp Holdings Ltd. 1,500 9,508 Telstra Corp. Ltd. 19,100 97,160 Telstra Corp. Ltd. 5,800 18,604 (installment receipt) (f) Westfield Holdings Ltd. 2,700 16,013 Westpac Banking Corp. 3,300 21,175 WMC Ltd. 3,600 15,450 Woodside Petroleum Ltd. 800 4,821 Woolworths Ltd. 3,800 12,916 676,801 AUSTRIA - 0.1% VA Technologie AG 1,290 86,507 BRAZIL - 0.3% Aracruz Celulose SA ADR 1,100 22,550 Banco Bradesco SA (Reg. Pfd.) 2,400,000 11,766 Banco Itau SA 362,000 20,813 Brahma Cervejaria (Compagnie): (PN Reg.) 26,000 16,617 sponsored ADR 1,100 13,750 Centrais Electricas 1,619,000 28,839 Brasileiras SA Companhia Brasileira de 500 10,938 Distribuicao Grupo Pao de Acucar sponsored ADR SHARES VALUE (NOTE 1) Companhia de Electricidade do 27,000,000 $ 5,544 Estado do Rio de Janeiro (CERJ) (a) Companhia Paranaense de 800 5,300 Energia-Copel sponsored ADR Companhia Vale do Rio Doce: (ON) 1,100 16,093 (PN-A) 1,500 29,869 Compania Energertica Minas 889,478 12,694 Gerais Petrobras Distribuidora SA 967,000 8,776 Tele Centro Sul Participacoes 1,657,000 19,828 SA Tele Norte Leste 1,700 28,688 Participacoes SA ADR Telesp Participacoes SA (a) 570,500 9,167 Telesp Participacoes SA ADR 600 9,713 (a) Votorantim Celulose e Papel 591,000 17,293 SA (PN Reg.) 288,238 CANADA - 1.2% Abitibi-Consolidated, Inc. 1,240 15,082 Air Canada, Inc. (a) 1,340 9,970 Alberta Energy Co. Ltd. 570 17,622 Alcan Aluminium Ltd. 800 26,228 Anderson Exploration Ltd. (a) 1,080 13,906 Bank of Montreal 650 25,020 Bank of Nova Scotia 2,350 53,652 BCE, Inc. 2,540 152,914 Biovail Corp. International 150 8,291 (a) Bombardier, Inc. Class B 2,560 45,140 Bro-X Minerals Ltd. (a) 600 0 Canada Occidental Petroleum 340 6,654 Ltd. Canadian Hunter Exploration 270 4,403 Ltd. Canadian Imperial Bank of 560 12,062 Commerce Canadian National Railway Co. 720 21,844 Canadian Natural Resources 780 17,172 Ltd. (a) Canadian Pacific Ltd. 810 18,933 Canadian Tire Corp. Ltd. 370 8,824 Series A Celestica, Inc. (sub-vtg.) (a) 285 15,686 Crestar Energy, Inc. (a) 320 4,131 Dofasco, Inc. 570 10,167 Domtar, Inc. 580 6,995 Enbridge, Inc. 980 21,109 Falconbridge Ltd. 340 5,036 Franco Nevada Mining Corp. 601 11,149 Ltd. Hudson's Bay Co. 320 4,349 Imasco Ltd. 810 21,740 Imperial Oil Ltd. 440 10,195 Inco Ltd. 830 16,694 JDS Uniphase Canada Ltd. (a) 63 10,492 Laidlaw, Inc. 3,360 20,776 Newbridge Networks Corp. (a) 710 13,822 Noranda, Inc. 750 9,887 Nortel Networks Corp. 3,360 206,732 NOVA Chemicals Corp. 630 12,393 Petro-Canada 910 13,016 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) CANADA - CONTINUED Placer Dome, Inc. 1,370 $ 17,222 Potash Corp. of Saskatchewan 60 2,691 QLT PhotoTherapeutics, Inc. 250 10,549 (a) Rogers Communications, Inc. 310 6,277 Class B (non-vtg.) (a) Royal Bank of Canada 1,090 46,994 Seagram Co. Ltd. 1,130 56,012 Shaw Communications, Inc. 100 3,041 Class B Suncor Energy, Inc. 470 18,076 Talisman Energy, Inc. (a) 370 9,767 Teleglobe, Inc. 410 9,695 Toronto Dominion Bank 3,220 73,843 Transcanada Pipelines Ltd. 990 11,940 Trimark Financial Corp. 460 5,782 Westcoast Energy, Inc. 600 10,722 1,154,697 CHILE - 0.1% Compania Cervecerias Unidas 350 7,634 SA sponsored ADR Compania de 1,150 19,191 Telecomunicaciones de Chile SA sponsored ADR Cristalerias de Chile SA 300 3,825 sponsored ADR Distribucion Y Servicio D&S 900 14,681 SA ADR Embotelladora Andina 1,100 17,875 sponsored ADR Class A Enersis SA sponsored ADR 26 585 Madeco SA ADR 500 4,938 Santa Isabel SA sponsored ADR 1,300 10,400 (a) Supermercados Unimarc SA 1,400 3,063 sponsored ADR 82,192 FINLAND - 0.7% KCI (Konecranes International) 2,110 54,533 Nokia AB 5,060 584,746 Sampo Insurance Co. Ltd. 1,380 48,040 687,319 FRANCE - 3.3% AXA SA de CV 1,840 260,290 Banque Nationale de Paris 1,508 132,831 Banque Nationale de Paris 286 1,696 warrants 7/1/02 (a) Cap Gemini SA 550 83,548 Castorama Dubois 665 199,790 Investissements SA Clarins SA 1,470 145,146 Clarins SA rights 12/27/99 (a) 1,470 24,237 Compagnie Financiere de 460 48,040 Paribas Class A (Reg.) France Telecom SA 2,552 247,270 Havas Advertising SA 370 104,018 SHARES VALUE (NOTE 1) Rhodia SA 5,060 $ 97,949 Sanofi-Synthelabo SA (a) 2,630 116,386 Societe Generale, France 180 39,306 Class A Suez Lyonnaise des Eaux 1,790 289,850 Television Francaise 1 SA 985 309,645 Total Fina SA Class B 5,148 686,615 Usinor Sacilor 4,870 67,865 Vivendi SA (a) 4,180 317,703 3,172,185 GERMANY - 2.1% Allianz AG (Reg.) 895 272,005 Bayerische Hypo-und 2,850 185,890 Vereinsbank AG Beiersdorf AG 1,100 74,230 Boss (Hugo) AG 926 105,498 DaimlerChrysler AG (Reg.) 3,003 233,483 Deutsche Telekom AG 9,470 438,057 Kali Und Salz Beteiligungs AG 5,520 79,077 Mannesmann AG (Reg.) 990 156,548 Munich Reinsurance AG (Reg.) 550 125,728 Primacom AG 2,300 114,035 Siemens AG 2,850 257,203 2,041,754 HONG KONG - 0.7% Cable & Wireless HKT Ltd. 19,447 44,363 Cheung Kong Holdings Ltd. 8,000 72,606 China Telecom (Hong Kong) 2,000 6,750 Ltd. (a) CLP Holdings Ltd. 5,000 22,915 Dao Heng Bank Group Ltd. 3,000 13,787 Giordano International Ltd. 20,000 21,241 Great Eagle Holdings Ltd. 8,000 9,887 Hang Seng Bank Ltd. 2,900 31,546 Hong Kong & China Gas Co. 19,216 25,480 Ltd. Hutchison Whampoa Ltd. 13,000 130,536 JCG Holdings Ltd. 44,000 23,932 Johnson Electric Holdings 6,000 32,441 Ltd. Li & Fung Ltd. 16,000 27,291 New World Development Co. 8,000 15,139 Ltd. Pacific Century CyberWorks 16,000 12,049 Ltd. (a) Sun Hung Kai Properties Ltd. 10,000 80,780 Swire Pacific Ltd. Class A 5,000 24,781 Wharf Holdings Ltd. 7,000 20,230 Wheelock & Co. Ltd. 6,000 6,797 Wing Hang Bank Ltd. 6,000 19,580 642,131 IRELAND - 0.1% Bank of Ireland, Inc. 10,480 82,141 ITALY - 0.6% Assicurazioni Generali Spa 1,560 50,439 Banca Nazionale del Lavoro (a) 18,850 64,129 Eni Spa sponsored ADR 29,880 176,231 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) ITALY - CONTINUED San Paolo-IMI Spa 10,760 $ 142,134 Telecom Italia Spa 15,900 137,535 570,468 JAPAN - 11.3% Acom Co. Ltd. 600 65,690 Aiful Corp. 1,100 171,140 Amada Co. Ltd. 3,000 23,049 Asahi Chemical Industry Co. 6,000 36,303 Ltd. Bank of Tokyo-Mitsubishi Ltd. 14,000 232,336 Banyu Pharmaceutical Co. Ltd. 5,000 91,669 Coca-Cola West Japan Co. Ltd. 1,232 54,900 CSK Corp. 1,500 69,148 Dai Nippon Printing Co. Ltd. 2,000 36,514 Dai-Ichi Kangyo Bank Ltd. 13,000 178,535 Daiwa Securities Co. Ltd. 14,000 149,647 DDI Corp. 18 197,071 Don Quijote Co. Ltd. 300 74,910 FamilyMart Co. Ltd. 600 41,777 Fuji Bank Ltd. 12,000 164,802 Fuji Coca-Cola Bottling Co. 3,000 57,623 Ltd. Fuji Heavy Industries Ltd. 5,000 42,545 Fujitsu Ltd. 5,000 150,780 Fujitsu Support & Service, 600 168,836 Inc. Furukawa Electric Co. Ltd. 22,000 160,576 Hikari Tsushin, Inc. 200 161,152 Hirose Electric Co. Ltd. 500 87,347 Hitachi Information Systems 5,000 193,037 Hitachi Ltd. 12,000 130,500 Honda Motor Co. Ltd. 3,000 126,188 Hosiden Corp. 2,000 75,870 Hoya Corp. 2,000 144,058 Ito En Ltd. 1,000 102,761 Ito-Yokado Co. Ltd. 1,000 80,096 Jafco Co. Ltd. 1,000 112,365 Japan Medical Dynamic 1,000 54,742 Marketing, Inc. Kaneka Corp. 7,000 91,765 Kao Corp. 2,000 61,080 Kirin Beverage Corp. 2,000 27,102 Koa Denko Co. Ltd. 3,000 52,149 Kokusai Denshin Denwa 1,300 163,553 Kokusai Securities Co. Ltd. 4,000 69,109 Konami Co. Ltd. 1,700 164,898 Koyo Seiko Co. Ltd. 4,000 42,795 Kyocera Corp. 2,500 240,096 Matsushita Communication 1,000 168,259 Industrial Co. Ltd. Matsushita Electric 3,000 63,544 Industrial Co. Ltd. Mazda Motor Corp. 8,000 43,563 Mikasa Coca Cola Bottling Co. 3,800 40,144 Mitsubishi Electric Corp. 15,000 83,121 Mitsubishi Trust & Banking 4,000 53,897 Corp. SHARES VALUE (NOTE 1) Mitsumi Electric Co. Ltd. 2,000 $ 53,589 Murata Manufacturing Co. Ltd. 1,000 128,691 NEC Corp. 5,000 101,321 New Japan Securities Co. Ltd. 8,000 23,587 (a) Nichicon Corp. 8,000 173,637 Nichiei Co. Ltd. 600 31,116 Nidec Corp. 700 136,134 Nihon Unisys Ltd. 2,000 70,300 Nintendo Co. Ltd. 600 95,366 Nippon Computer Systems Corp. 3,000 58,776 Nippon Paper Industries Co. 10,000 77,791 Ltd. Nippon Sheet Glass Co. Ltd. 9,000 56,010 Nippon Steel Corp. 12,000 30,540 Nippon System Development Co. 1,500 128,211 Ltd. Nippon Telegraph & Telephone 8 122,929 Corp. Nippon Zeon Co. Ltd. 6,000 51,861 Nissin Co. Ltd. 2,300 141,148 Nitto Denko Corp. 2,000 79,136 NTT Mobile Communication 1 26,603 Network, Inc. NTT Mobile Communication 15 399,040 Network, Inc. (c) Olympus Optical Co. Ltd. 3,000 40,624 Omron Corp. 9,000 188,427 Oracle Corp. Japan 400 81,441 ORIX Corp. 600 80,672 Paris Miki, Inc. 1,000 80,672 Ricoh Co. Ltd. 6,000 98,017 Rohm Co. Ltd. 1,200 269,676 Ryohin Keikaku Co. Ltd. 400 77,061 Sakura Bank Ltd. 12,000 103,261 Sankyo Co. Ltd. (Gunma) 2,000 158,463 Sanwa Bank Ltd. 10,000 148,956 Senshukai Co. Ltd. 3,000 57,594 Sharp Corp. 5,000 79,712 Shikoku Coca-Cola Bottling 1,300 16,168 Co. Ltd. Shin-Etsu Chemical Co. Ltd. 2,000 82,593 Shohkoh Fund & Co. Ltd. 110 67,400 SMC Corp. 500 84,466 Softbank Corp. 700 291,092 Sony Corp. 1,700 271,575 Square Co. Ltd. 1,200 86,896 Sumitomo Trust & Banking Ltd. 5,000 51,188 Takeda Chemical Industries 4,000 230,108 Ltd. Terumo Corp. 3,000 91,333 THK Co. Ltd. 2,300 75,323 Toko, Inc. 33,000 163,217 Tokyo Broadcasting System, 2,000 52,917 Inc. Tokyo Seimitsu Co. Ltd. 1,500 183,097 Toyoda Gosei Co. Ltd. 5,000 215,606 Toyota Motor Corp. 4,000 138,679 Trend Micro, Inc. 1,500 298,199 Tsubaki Nakashima Co. Ltd. 7,000 100,840 World Co. Ltd. 400 40,528 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) JAPAN - CONTINUED Yakult Honsha Co. Ltd. 4,000 $ 40,951 Yamaha Motor Co. Ltd. 4,000 32,576 Yamanouchi Pharmaceutical Co. 1,000 45,426 Ltd. Yokogawa Electric Corp. 7,000 49,076 Yoshitomi Pharmaceutical 3,000 40,912 Industries Ltd. 11,001,570 LUXEMBOURG - 0.0% Quilmes Industrial SA 1,200 12,525 sponsored ADR MEXICO - 0.4% Alfa SA de CV 3,000 11,544 Apasco SA de CV 1,000 5,311 Banacci SA de CV Class O (a) 10,000 25,098 Cemex SA de CV sponsored ADR 1,600 36,000 (a) Cifra SA de CV Series C (a) 36,000 55,711 Coca Cola Femsa SA de CV ADR 1,300 18,038 Corporacion Interamericana de 2,000 5,415 Entretenimiento SA de CV (Series B) (a) El Puerto de Liverpool SA 6,000 9,110 Class C Grupo Carso SA de CV Series 5,000 21,036 A-1 (a) Grupo Elektra SA de CV Unit 11,000 5,258 Grupo Financiero Bancomer SA 86,000 22,659 de CV Series A Grupo Modelo SA de CV Class C 11,600 28,328 Grupo Televisa SA de CV 1,000 42,500 sponsored ADR (a) Telefonos de Mexico SA 1,595 136,373 sponsored ADR representing Class L shares Tubos de Acero de Mexico SA 950 10,391 sponsored ADR 432,772 NETHERLANDS - 2.1% Aegon NV 1,560 144,405 Akzo Nobel NV 3,220 139,064 Equant NV (a) 640 62,450 Fortis Amev NV 4,410 152,264 GTI Holding NV 6,890 139,914 ING Groep NV 3,136 185,522 Koninklijke Ahold NV 5,259 161,993 Koninklijke KPN NV 3,490 179,625 Numico NV 4,795 196,007 Nutreco Holding NV 2,020 69,254 Unilever NV 3,877 257,660 Vendex KBB NV 11,670 341,621 2,029,779 NETHERLANDS ANTILLES - 0.0% Schlumberger Ltd. 800 48,450 NEW ZEALAND - 0.0% Lion Nathan Ltd. 3,900 8,415 Telecom Corp. of New Zealand 7,200 29,024 Ltd. 37,439 SHARES VALUE (NOTE 1) PAPUA NEW GUINEA - 0.0% Oil Search Ltd. (a) 6,800 $ 7,936 PERU - 0.1% Cementos Lima S.A. 319 5,039 Compania de Minas 1,700 28,900 Buenaventura SA sponsored ADR Class B Telefonica del Peru SA ADR 1,300 15,031 48,970 SINGAPORE - 0.3% Chartered Semiconductor 10,000 20,188 Manufacturing Ltd. City Developments Ltd. 3,000 15,528 Datacraft Asia Ltd. 2,000 9,200 DBS Group Holdings Ltd. 2,652 30,008 DBS Land Ltd. 5,000 9,269 Natsteel Electronics Ltd. 3,000 11,736 Oversea-Chinese Banking Corp. 4,300 32,350 Ltd. Overseas Union Bank Ltd. 4,281 18,551 Singapore Airlines Ltd. 4,000 42,371 Singapore Press Holdings Ltd. 2,000 34,306 Singapore Telecommunications 16,000 30,430 Ltd. United Overseas Bank Ltd. 5,000 37,918 (For. Reg.) Venture Manufacturing 3,000 26,723 Singapore Ltd. 318,578 SPAIN - 1.1% Banco Santander Central 30,788 320,560 Hispano SA Cortefiel SA 5,880 154,016 Tabacalera SA Series A 11,220 185,233 Telefonica SA (a) 25,560 421,705 1,081,514 SWEDEN - 0.4% Ericsson (L.M.) Telefon AB: Class B 5,330 227,858 sponsored ADR Class B 1,650 70,538 Skandinaviska Enskilda Banken 9,840 101,403 Class A 399,799 SWITZERLAND - 2.1% Credit Suisse Group (Reg.) 919 177,045 Julius Baer Holding AG 47 141,689 Kuoni Reisen Holding AG Class 24 102,571 B (Reg.) Nestle SA (Reg.) 154 297,692 Novartis AG (Reg.) 189 283,332 PubliGroupe SA 263 193,329 Richemont Compagnie Financier 66 126,367 Class A Unit Roche Holding AG 32 385,035 participation certificates UBS AG 686 200,040 Zurich Allied AG (Reg.) 326 184,981 2,092,081 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) UNITED KINGDOM - 6.2% Abbey National PLC 9,560 $ 187,074 Allied Zurich PLC 3,590 43,390 Amvescap PLC 21,330 190,808 Arcadia Group PLC 24,820 62,547 AstraZeneca Group PLC: (Reg.) 3,490 159,668 (Sweden) 583 26,414 Autonomy Corp. PLC (a) 6,070 131,416 Barclays PLC 2,760 84,553 BP Amoco PLC 63,270 608,974 British Aerospace PLC 19,271 112,655 British Telecommunications PLC 17,010 306,180 British Vita PLC Ord. 23,530 94,797 Carillion PLC 284 591 Diageo PLC 11,950 120,851 Glaxo Wellcome PLC 12,230 366,136 HSBC Holdings PLC: (Reg.) 18,382 226,328 (Hong Kong) (Reg.) 3,004 36,987 Kingfisher PLC 7,006 76,555 Lloyds TSB Group PLC 16,479 228,030 MFI Furniture Group PLC 46,980 31,481 Morgan Crucible Co. PLC 29,230 116,800 Orange PLC (a) 5,090 126,973 Prudential Corp. PLC 6,300 98,884 Reuters Group PLC 15,800 146,926 Royal & Sun Alliance 10,443 71,094 Insurance Group PLC Royal Bank of Scotland Group 7,080 163,226 PLC Scottish & Newcastle PLC 18,020 168,014 Shell Transport & Trading Co. 65,090 497,667 PLC (Reg.) Smith & Nephew PLC 33,460 107,842 Smith (David S.) Holdings PLC 28,040 88,068 SmithKline Beecham PLC 18,414 235,699 Sun Life & Provincial Holding 14,250 106,443 PLC Tarmac PLC 284 2,391 Unigate PLC 22,520 104,430 Vodafone AirTouch PLC 125,225 600,298 WPP Group PLC 29,880 324,535 6,054,725 UNITED STATES OF AMERICA - 26.0% Abbott Laboratories 5,100 205,913 Abercrombie & Fitch Co. Class 3,100 84,475 A (a) ADC Telecommunications, Inc. 900 42,919 (a) AES Corp. (a) 900 50,794 Affiliated Computer Services, 1,800 68,400 Inc. Class A (a) AFLAC, Inc. 2,300 117,588 AK Steel Holding Corp. 3,000 51,938 Alcoa, Inc. 3,014 183,101 Ambac Financial Group, Inc. 2,300 137,425 Amerada Hess Corp. 900 51,638 SHARES VALUE (NOTE 1) American Express Co. 1,800 $ 277,200 American International Group, 3,725 383,442 Inc. AMFM, Inc. (a) 900 63,000 Amgen, Inc. (a) 3,700 295,075 Associates First Capital 5,548 202,502 Corp. Class A At Home Corp. Series A (a) 1,800 67,275 AT&T Corp. 11,262 526,499 AT&T Corp. (Liberty Media 1,800 71,438 Group) Class A (a) Automatic Data Processing, 1,800 86,738 Inc. AutoZone, Inc. (a) 900 23,906 Avon Products, Inc. 2,800 90,300 Baker Hughes, Inc. 4,600 128,513 Bank of America Corp. 2,000 128,750 Bank of New York Co., Inc. 12,200 510,875 Baxter International, Inc. 1,800 116,775 Becton, Dickinson & Co. 1,800 45,675 Bed Bath & Beyond, Inc. (a) 1,400 46,638 Bemis Co., Inc. 1,400 48,913 Biomet, Inc. 1,400 42,175 Boeing Co. 2,800 128,975 Bristol-Myers Squibb Co. 4,900 376,381 Burlington Northern Santa Fe 7,700 245,438 Corp. Calpine Corp. (a) 3,000 172,875 Cardinal Health, Inc. 1,400 60,375 CBS Corp. (a) 4,600 224,538 Cendant Corp. (a) 3,700 61,050 Ceridian Corp. (a) 7,000 153,563 Chase Manhattan Corp. 3,700 323,288 Chevron Corp. 1,400 127,838 Cisco Systems, Inc. (a) 6,400 473,600 Citigroup, Inc. 11,475 621,084 Clear Channel Communications, 1,800 144,675 Inc. (a) Clorox Co. 1,500 61,406 Coca-Cola Co. (The) 2,300 135,700 Colgate-Palmolive Co. 3,000 181,500 Comcast Corp. Class A 5,500 231,688 (special) Comstock Resources, Inc. (a) 9,200 36,225 Cooper Cameron Corp. (a) 2,500 96,719 Cox Communications, Inc. 1,800 81,788 Class A (a) CVS Corp. 2,500 108,594 Dell Computer Corp. (a) 5,200 208,650 DoubleClick, Inc. (a) 1,000 140,000 DST Systems, Inc. (a) 2,300 146,481 Dynegy, Inc. 4,600 105,225 Eli Lilly & Co. 2,200 151,525 EMC Corp. (a) 5,500 401,500 EOG Resources, Inc. 1,800 37,463 Exxon Corp. 6,500 481,406 Fannie Mae 4,000 283,000 Fluor Corp. 1,000 39,875 Ford Motor Co. 2,800 153,650 Freddie Mac 4,600 248,688 Gaylord Container Corp. Class 9,200 51,750 A (a) COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) UNITED STATES OF AMERICA - CONTINUED General Electric Co. 8,300 $ 1,125,169 Gillette Co. 2,100 75,994 Guidant Corp. 2,300 113,563 Halliburton Co. 3,600 135,675 Hewlett-Packard Co. 1,700 125,906 Home Depot, Inc. 6,900 520,950 Household International, Inc. 3,093 138,025 Howmet International, Inc. (a) 1,400 20,650 Illinova Corp. 2,000 63,625 IMS Health, Inc. 1,800 52,200 Ingersoll-Rand Co. 3,300 172,425 Inktomi Corp. (a) 1,500 152,156 Intel Corp. 3,700 286,519 International Business 3,000 295,125 Machines Corp. Interpublic Group of 2,800 113,750 Companies, Inc. Johnson & Johnson 3,200 335,200 Kroger Co. (a) 2,500 52,031 Leggett & Platt, Inc. 5,700 126,469 Lexmark International Group, 1,500 117,094 Inc. Class A (a) Limited, Inc. (The) 900 37,013 Lowe's Companies, Inc. 1,800 99,000 Lucent Technologies, Inc. 4,300 276,275 Lycos, Inc. (a) 1,000 53,500 M&T Bank Corp. 200 99,100 Masco Corp. 3,700 112,850 MBIA, Inc. 2,000 114,125 McDermott International, Inc. 1,800 32,625 McDonald's Corp. 2,800 115,500 MCI WorldCom, Inc. (a) 18,804 1,613,618 McLeodUSA, Inc. Class A (a) 5,500 245,438 Medimmune, Inc. (a) 1,400 156,800 Merck & Co., Inc. 6,500 517,156 Meredith Corp. 1,800 64,238 Merrill Lynch & Co., Inc. 700 54,950 Micron Technology, Inc. (a) 500 35,656 Microsoft Corp. (a) 12,500 1,157,031 Mobil Corp. 1,800 173,700 Motorola, Inc. 2,300 224,106 Nabisco Group Holdings Corp. 7,000 89,688 Nabisco Holdings Corp. Class A 2,800 104,650 Newport News Shipbuilding, 1,800 54,675 Inc. Nextel Communications, Inc. 2,100 180,994 Class A (a) Noble Drilling Corp. (a) 2,800 62,125 Omnicom Group, Inc. 2,800 246,400 Owens-Illinois, Inc. (a) 2,800 67,025 Parker-Hannifin Corp. 3,300 151,181 Phelps Dodge Corp. 2,000 112,750 Philip Morris Companies, Inc. 6,500 163,719 Praxair, Inc. 1,500 70,125 Procter & Gamble Co. 2,600 272,675 Providian Financial Corp. 600 65,400 SHARES VALUE (NOTE 1) Rowan Companies, Inc. (a) 2,800 $ 43,575 Sabre Group Holdings, Inc. 2,000 88,875 Class A (a) Safeway, Inc. (a) 1,700 60,031 SBC Communications, Inc. 12,580 640,794 Schering-Plough Corp. 7,800 386,100 Schwab (Charles) Corp. 2,000 77,875 Sealed Air Corp. (a) 900 49,838 Smurfit-Stone Container Corp. 2,800 60,550 (a) Sprint Corp. Series 1 (PCS 900 74,644 Group) Swift Energy Co. (a) 3,700 38,388 Texas Instruments, Inc. 900 80,775 Textron, Inc. 900 69,469 Time Warner, Inc. 4,901 341,538 TJX Companies, Inc. 1,400 37,975 Tricon Global Restaurants, 3,100 124,581 Inc. (a) Tyco International Ltd. 1,000 39,938 Union Pacific Resources 900 13,050 Group, Inc. Unisys Corp. (a) 6,300 152,775 United Technologies Corp. 1,800 108,900 Viacom, Inc. Class B 1,800 80,550 (non-vtg.) (a) VoiceStream Wireless Corp. (a) 1,400 138,250 Wal-Mart Stores, Inc. 12,000 680,250 Walgreen Co. 2,800 70,525 Warner-Lambert Co. 2,300 183,569 Waters Corp. (a) 1,000 53,125 Wells Fargo & Co. 2,000 95,750 WinStar Communications, Inc. 1,800 69,863 (a) 25,354,560 TOTAL COMMON STOCKS 58,456,645 (Cost $43,616,751) PREFERRED STOCKS - 0.2% CONVERTIBLE PREFERRED STOCKS - - 0.0% AUSTRALIA - 0.0% WBK STRYPES Trust (Westpac 1,100 33,000 Banking Corp.) $3.135 NONCONVERTIBLE PREFERRED STOCKS - 0.2% GERMANY - 0.2% SAP AG (Systeme Anwendungen 90 39,875 Produkte) Wella AG 4,384 122,554 162,429 TOTAL PREFERRED STOCKS 195,429 (Cost $193,696)
GOVERNMENT OBLIGATIONS (D) - 33.2% MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT (E) VALUE (NOTE 1) FRANCE - 4.4% French Government: OAT 5.5% 4/25/04 Aaa EUR 2,200,000 $ 2,405,721 4% 4/25/09 Aaa EUR 2,000,000 1,909,158 4,314,879 GERMANY - 4.7% German Federal Republic: 3.75% 8/26/03 Aaa EUR 900,000 925,390 3.75% 1/4/09 Aaa EUR 2,000,000 1,900,508 7.375% 1/3/05 Aaa EUR 625,000 733,683 Treuhandanstalt 6.625% 7/9/03 Aaa EUR 877,507 987,888 4,547,469 ITALY - 1.3% Italian Republic: 6.75% 2/1/07 Aa3 EUR 700,000 801,197 10.5% 9/1/05 Aa3 EUR 361,519 481,094 1,282,291 SPAIN - 1.1% Spanish Kingdom 4.5% 7/30/04 Aa2 EUR 1,000,000 1,039,604 SWEDEN - 0.7% Swedish Kingdom 10.25% 5/5/03 Aaa SEK 5,000,000 703,406 UNITED KINGDOM - 5.2% United Kingdom, Great Britain & Northern Ireland: 6.75% 11/26/04 Aaa GBP 600,000 1,015,055 9% 10/13/08 Aaa GBP 2,000,000 4,028,768 5,043,823 UNITED STATES OF AMERICA - 15.8% Federal Home Loan Bank: 4.875% 1/22/02 Aaa 1,500,000 1,456,875 5.125% 9/15/03 Aaa 1,495,000 1,431,702 5.19% 10/20/03 Aaa 650,000 620,952 5.28% 1/6/04 Aaa 1,515,000 1,447,295 Freddie Mac 5.75% 7/15/03 Aaa 1,480,000 1,447,588 U.S. Treasury Bond stripped Aaa 11,530,000 2,047,613 principal 0% 11/15/27 U.S. Treasury Bonds: 7.125% 2/15/23 Aaa 1,350,000 1,456,947 8.125% 8/15/19 Aaa 1,300,000 1,531,153 12.75% 11/15/10 (callable) Aaa 880,000 1,160,914 13.875% 5/15/11 (callable) Aaa 980,000 1,369,550 U.S. Treasury Notes: 5.5% 1/31/03 Aaa 640,000 632,102 MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT (E) VALUE (NOTE 1) 6.5% 10/15/06 Aaa $ 400,000 $ 407,064 7% 7/15/06 Aaa 425,000 443,993 15,453,748 TOTAL GOVERNMENT OBLIGATIONS 32,385,220 (Cost $34,575,082)
CASH EQUIVALENTS - 5.9% SHARES Central Cash Collateral Fund, 196,000 196,000 5.26% (b) Taxable Central Cash Fund, 5,565,866 5,565,866 5.21% (b) TOTAL CASH EQUIVALENTS 5,761,866 (Cost $5,761,866) TOTAL INVESTMENT PORTFOLIO - 96,799,160 99.3% (Cost $84,147,395) NET OTHER ASSETS - 0.7% 669,221 NET ASSETS - 100% $ 97,468,381 SECURITY TYPE ABBREVIATIONS STRYPES - Structured Yield Product Exchangeable for Common Stock CURRENCY ABBREVIATIONS EUR - European Monetary Unit GBP - British pound SEK - Swedish krona LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. (c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $399,040 or 0.4% of net assets. (d) For foreign government obligations not individually rated by S&P or Moody's, the ratings listed have been assigned by FMR, the fund's investment advisor, based principally on S&P and Moody's ratings of the sovereign credit of the issuing government. (e) Principal amount is stated in United States dollars unless otherwise noted. (f) Purchased on an installment basis. Market value reflects only those payments made through October 31, 1999. The remaining installments aggregating AUD 16,820 are due November 2, 2000. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $18,842,516 and $24,883,950, respectively, of which U.S. government and government agency obligations aggregated $1,664,528 and $661,950, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $474 for the period. The fund participated in the security lending program. At period end, the value of securities loaned amounted to $184,228. The fund received cash collateral of $196,000 which was invested in the Central Cash Collateral Fund. The composition of long-term debt holdings as a percentage of total value of investments in securities, is as follows (ratings are unaudited): MOODY'S RATINGS S&P RATINGS Aaa, Aa, A 33.5% AAA, AA, A 29.0% Baa 0.0% BBB 0.0% Ba 0.0% BB 0.0% B 0.0% B 0.0% Caa 0.0% CCC 0.0% Ca, C 0.0% CC, C 0.0% D 0.0% MARKET SECTOR DIVERSIFICATION (UNAUDITED) As a Percentage of Net Assets AEROSPACE & DEFENSE 0.6% BASIC INDUSTRIES 2.2 CASH EQUIVALENTS 5.9 CONSTRUCTION & REAL ESTATE 0.8 DURABLES 1.7 ENERGY 3.4 FINANCE 11.2 GOVERNMENT OBLIGATIONS 33.2 HEALTH 5.4 HOLDING COMPANIES 0.1 INDUSTRIAL MACHINERY & 3.4 EQUIPMENT MEDIA & LEISURE 2.5 NONDURABLES 3.6 PRECIOUS METALS 0.1 RETAIL & WHOLESALE 3.5 SERVICES 1.8 TECHNOLOGY 10.3 TRANSPORTATION 0.5 UTILITIES 9.1 INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $84,383,166. Net unrealized appreciation aggregated $12,415,994, of which $16,444,692 related to appreciated investment securities and $4,028,698 related to depreciated investment securities. The fund hereby designates approximately $234,000 as a capital gain dividend for the purpose of the dividend paid deduction. GLOBAL BALANCED FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 96,799,160 value (cost $84,147,395) - See accompanying schedule Foreign currency held at 89,743 value (cost $88,038) Receivable for investments 567,333 sold Receivable for fund shares 954,294 sold Dividends receivable 120,476 Interest receivable 659,256 Other receivables 247 TOTAL ASSETS 99,190,509 LIABILITIES Payable to custodian bank $ 16,736 Payable for investments 937,296 purchased Payable for fund shares 454,840 redeemed Accrued management fee 59,398 Other payables and accrued 57,858 expenses Collateral on securities 196,000 loaned, at value TOTAL LIABILITIES 1,722,128 NET ASSETS $ 97,468,381 Net Assets consist of: Paid in capital $ 83,179,073 Undistributed net investment 403,390 income Accumulated undistributed net 1,234,471 realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 12,651,447 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 5,220,714 $ 97,468,381 shares outstanding NET ASSET VALUE, offering $18.67 price and redemption price per share ($97,468,381 (divided by) 5,220,714 shares) STATEMENT OF OPERATIONS
THREE MONTHS ENDED OCTOBER YEAR ENDED JULY 31, 1999 31, 1999 INVESTMENT INCOME $ 195,779 $ 850,739 Dividends Interest 577,499 2,177,247 Security lending 265 - 773,543 3,027,986 Less foreign taxes withheld (14,061) (67,250) TOTAL INCOME 759,482 2,960,736 EXPENSES Management fee $ 185,757 $ 695,700 Transfer agent fees 65,261 244,826 Accounting and security 15,195 63,887 lending fees Non-interested trustees' 403 1,235 compensation Custodian fees and expenses 32,250 141,456 Registration fees 8,628 30,040 Audit 2,529 56,948 Legal 190 238 Reports to shareholders - 8,397 Miscellaneous 489 1,838 Total expenses before 310,702 1,244,565 reductions Expense reductions (2,783) (11,605) 307,919 1,232,960 NET INVESTMENT INCOME 451,563 1,727,776 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 3,697,991 4,224,401 Foreign currency transactions 1,772 (81,933) Futures contracts - 517,574 3,699,763 4,660,042 Change in net unrealized appreciation (depreciation) on: Investment securities 408,246 3,024,866 Assets and liabilities in (4,826) 11,584 foreign currencies Futures contracts - (56,767) 403,420 2,979,683 NET GAIN (LOSS) 4,103,183 7,639,725 NET INCREASE (DECREASE) IN $ 4,554,746 $ 9,367,501 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION $ 2,666 $ 10,520 Expense reductions Directed brokerage arrangements Transfer agent credits 117 1,085 $ 2,783 $ 11,605
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET THREE MONTHS ENDED OCTOBER YEAR ENDED JULY 31, 1999 YEAR ENDED JULY 31, 1998 ASSETS 31, 1999 Operations Net investment $ 451,563 $ 1,727,776 $ 1,467,414 income Net realized gain (loss) 3,699,763 4,660,042 6,633,711 Change in net unrealized 403,420 2,979,683 (725,159) appreciation (depreciation) NET INCREASE (DECREASE) IN 4,554,746 9,367,501 7,375,966 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (973,940) (1,574,612) (1,895,825) from net investment income Share transactions Net 12,762,394 45,697,691 66,298,210 proceeds from sales of shares Reinvestment of distributions 910,684 1,484,276 1,827,302 Cost of shares redeemed (21,541,440) (48,179,432) (53,263,687) NET INCREASE (DECREASE) IN (7,868,362) (997,465) 14,861,825 NET ASSETS RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) (4,287,556) 6,795,424 20,341,966 IN NET ASSETS NET ASSETS Beginning of period 101,755,937 94,960,513 74,618,547 End of period (including $ 97,468,381 $ 101,755,937 $ 94,960,513 undistributed net investment income of $403,390, $989,733 and $742,283, respectively) OTHER INFORMATION Shares Sold 703,403 2,735,365 4,236,702 Issued in reinvestment of 49,710 95,920 124,912 distributions Redeemed (1,180,075) (2,898,880) (3,475,772) Net increase (decrease) (426,962) (67,595) 885,842
FINANCIAL HIGHLIGHTS
THREE MONTHS ENDED OCTOBER 31, YEARS ENDED JULY 31, 1999 1999 1998 1997 1996 1995 SELECTED PER-SHARE DATA Net asset value, beginning of $ 18.02 $ 16.62 $ 15.45 $ 12.91 $ 12.40 $ 11.99 period Income from Investment Operations Net investment income .08 D .31 D .30 D .31 D .31 .28 Net realized and unrealized .74 1.37 1.27 2.68 .25 .13 gain (loss) Total from investment .82 1.68 1.57 2.99 .56 .41 operations Less Distributions From net investment income (.17) (.28) (.40) (.45) (.05) - Net asset value, end of period $ 18.67 $ 18.02 $ 16.62 $ 15.45 $ 12.91 $ 12.40 TOTAL RETURN B, C 4.57% 10.39% 10.53% 23.93% 4.52% 3.42% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 97,468 $ 101,756 $ 94,961 $ 74,619 $ 87,785 $ 148,831 (000 omitted) Ratio of expenses to average 1.20% A 1.32% 1.39% 1.51% 1.39% 1.34% net assets Ratio of expenses to average 1.19% A, E 1.30% E 1.37% E 1.49% E 1.36% E 1.33% E net assets after expense reductions Ratio of net investment 1.74% A 1.83% 1.95% 2.28% 2.94% 4.68% income to average net assets Portfolio turnover rate 80% A 100% 81% 57% 189% 242% A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
INTERNATIONAL GROWTH & INCOME PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1994 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY INTL GROWTH & INCOME 36.51% 80.39% 168.27% MSCI EAFE 23.29% 56.31% 91.41% International Funds Average 25.53% 58.85% 152.13% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years or 10 years. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Morgan Stanley Capital International Europe, Australasia, Far East (EAFE) Index - a market capitalization-weighted index that is designed to represent the performance of developed stock markets outside the United States and Canada. As of October 31, 1999, the index included over 900 equity securities of countries domiciled in 20 countries. To measure how the fund's performance stacked up against its peers, you can compare it to the international funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 589 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1994 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY INTL GROWTH & INCOME 36.51% 12.52% 10.37% MSCI EAFE 23.29% 9.35% 6.71% International Funds Average 25.53% 9.50% 9.42% AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER 10 YEARS Int'l Growth & Income MS EAFE (Net MA tax) 00305 MS001 1989/10/31 10000.00 10000.00 1989/11/30 10372.96 10502.70 1989/12/31 10912.50 10890.22 1990/01/31 10723.81 10485.01 1990/02/28 10346.43 9753.21 1990/03/31 10338.57 8737.16 1990/04/30 10314.98 8667.82 1990/05/31 10983.25 9656.83 1990/06/30 11329.18 9571.78 1990/07/31 11855.94 9706.60 1990/08/31 10841.74 8764.01 1990/09/30 9796.09 7542.62 1990/10/31 10778.84 8717.90 1990/11/30 10535.12 8203.65 1990/12/31 10560.27 8336.54 1991/01/31 10933.94 8606.19 1991/02/28 11551.31 9528.76 1991/03/31 11137.03 8956.73 1991/04/30 11307.61 9044.68 1991/05/31 11291.37 9139.06 1991/06/30 10747.11 8467.51 1991/07/31 11120.78 8883.54 1991/08/31 11080.16 8703.13 1991/09/30 11437.59 9193.63 1991/10/31 11364.48 9323.96 1991/11/30 11047.67 8888.67 1991/12/31 11409.09 9347.71 1992/01/31 11392.64 9148.05 1992/02/29 11409.09 8820.62 1992/03/31 11038.93 8238.32 1992/04/30 11524.25 8277.48 1992/05/31 12042.47 8831.54 1992/06/30 11927.31 8412.63 1992/07/31 11540.70 8197.33 1992/08/31 11746.34 8711.47 1992/09/30 11548.93 8539.45 1992/10/31 10932.00 8091.51 1992/11/30 10907.32 8167.66 1992/12/31 11027.92 8209.90 1993/01/31 11129.02 8208.89 1993/02/28 11432.31 8456.86 1993/03/31 12283.20 9194.00 1993/04/30 12965.60 10066.54 1993/05/31 13268.89 10279.14 1993/06/30 13091.97 10118.77 1993/07/31 13530.05 10472.97 1993/08/31 14237.73 11038.33 1993/09/30 14145.06 10789.87 1993/10/31 14532.59 11122.39 1993/11/30 14035.53 10150.17 1993/12/31 14896.52 10883.09 1994/01/31 15676.53 11803.20 1994/02/28 15396.74 11770.51 1994/03/31 14574.34 11263.54 1994/04/30 14769.34 11741.44 1994/05/31 15040.65 11674.03 1994/06/30 14676.08 11839.01 1994/07/31 14921.95 11952.86 1994/08/31 15066.09 12235.85 1994/09/30 14718.47 11850.48 1994/10/31 14871.08 12245.10 1994/11/30 14413.25 11656.59 1994/12/31 14468.79 11729.58 1995/01/31 13978.62 11278.99 1995/02/28 14074.90 11246.62 1995/03/31 14880.18 11948.08 1995/04/30 15151.53 12397.43 1995/05/31 14958.96 12249.65 1995/06/30 14993.97 12034.83 1995/07/31 15878.03 12784.07 1995/08/31 15694.22 12296.40 1995/09/30 15808.01 12536.56 1995/10/31 15606.69 12199.57 1995/11/30 15843.02 12539.01 1995/12/31 16238.67 13044.21 1996/01/31 16283.90 13097.76 1996/02/29 16247.71 13142.04 1996/03/31 16519.11 13421.12 1996/04/30 16935.26 13811.32 1996/05/31 16953.35 13557.16 1996/06/30 17070.95 13633.47 1996/07/31 16672.90 13235.00 1996/08/31 16880.98 13264.00 1996/09/30 17288.07 13616.36 1996/10/31 17269.98 13477.03 1996/11/30 18129.41 14013.26 1996/12/31 18298.87 13832.99 1997/01/31 18158.47 13351.61 1997/02/28 18373.75 13573.24 1997/03/31 18373.75 13624.82 1997/04/30 18392.47 13699.76 1997/05/31 19309.76 14593.94 1997/06/30 20161.52 15400.98 1997/07/31 20676.32 15652.33 1997/08/31 19431.44 14485.45 1997/09/30 20676.32 15299.10 1997/10/31 19543.76 14127.04 1997/11/30 19468.88 13985.77 1997/12/31 19602.19 14110.38 1998/01/31 19781.30 14758.33 1998/02/28 20865.89 15708.03 1998/03/31 21980.33 16194.66 1998/04/30 22527.60 16325.51 1998/05/31 22477.84 16249.27 1998/06/30 22408.19 16375.21 1998/07/31 22826.11 16544.20 1998/08/31 18666.86 14497.52 1998/09/30 18507.65 14056.21 1998/10/31 19651.94 15524.66 1998/11/30 20826.09 16323.09 1998/12/31 21558.22 16970.14 1999/01/31 21888.14 16923.13 1999/02/28 21321.09 16522.90 1999/03/31 22228.37 17215.87 1999/04/30 23084.10 17916.21 1999/05/31 22053.10 16996.58 1999/06/30 23372.78 17662.17 1999/07/31 24259.44 18190.27 1999/08/31 24919.28 18259.76 1999/09/30 25610.05 18446.74 1999/10/29 26826.63 19140.70 IMATRL PRASUN SHR__CHT 19991031 19991123 084816 R00000000000123 $10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested in Fidelity International Growth & Income Fund on October 31, 1989. As the chart shows, by October 31, 1999, the value of the investment would have grown to $26,827 - a 168.27% increase on the initial investment. For comparison, look at how both the Morgan Stanley Capital International EAFE Index did over the same period. With dividends and capital gains, if any, reinvested in each, the same $10,000 would have grown to $19,141 - a 91.41% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) INTERNATIONAL GROWTH & INCOME FUND TALK: THE MANAGER'S OVERVIEW An interview with Bill Bower, Portfolio Manager of Fidelity International Growth & Income Fund Q. HOW DID THE FUND PERFORM, BILL? A. The fund performed very well. For the 12-month period that ended October 31, 1999, the fund posted a total return of 36.51%. In comparison, the Morgan Stanley Capital International Europe, Australasia, Far East (EAFE) Index returned 23.29%. The fund also compares its performance against the international funds average, tracked by Lipper Inc., which returned 25.53% during the same period. Q. WHAT FACTORS LED TO THE FUND'S STRONG PERFORMANCE AGAINST THE INDEX AND ITS LIPPER PEER GROUP? A. Most of the fund's favorable performance can be attributed to strong stock selection within the recovering Japanese market. While the fund remained marginally underweighted in Japanese securities versus the EAFE index, the stocks we picked performed exceptionally well. Specifically, the fund's holdings in Japanese telecommunications, business services, specialty finance companies and electronic components posted strong gains as industry consolidation and improving global economies boosted sales. With the exception of Telecom Italia, European telephone companies and telecommunications equipment manufacturers also were particularly positive contributors as stock prices were lifted by continued accelerating earnings forecasts and a robust mergers-and-acquisitions environment. Q. JAPAN REPLACED THE U.K. AS THE FUND'S LARGEST GEOGRAPHIC CONCENTRATION, INCREASING FROM APPROXIMATELY 18% OF THE FUND'S NET ASSETS SIX MONTHS AGO TO ROUGHLY 26% AT THE END OF THE PERIOD. WHAT FACTORS ACCOUNTED FOR THE SIGNIFICANT INCREASE? A. My views regarding Japanese banks and the general market became increasingly positive during the period because many companies were beating earnings estimates and becoming more serious about restructuring. Following the announcement of a three-way bank merger between Dai-Ichi Kangyo Bank, Fuji Bank and the Industrial Bank of Japan, I became more enthusiastic about the prospects for growth in the Japanese market. These mergers, which were coordinated by the Japanese government, signaled a critical and necessary change in the way Japanese companies and the government were approaching corporate restructuring and reforms. Q. DID YOU MAKE ANY OTHER SIGNIFICANT CHANGES TO THE PORTFOLIO DURING THE PERIOD? WHAT TYPES OF STOCKS AND INDUSTRIES DID YOU FOCUS ON? A. I didn't make many significant changes. However, as some of the fund's Japanese holdings blew through their price targets, I started to look for alternatives within the Japanese market and other regions of the world. While Japan will probably remain the fund's largest geographical weighting in the short term, some of the areas I looked at were the European mid-cap growth stocks, which appeared to be undervalued relative to large-cap stocks. An example of mid-cap stock I purchased during the period was Dutch software company Epchos, which, in my opinions was undervalued relative to its earnings and sales growth outlook. Q. WHICH STOCKS PROVIDED THE STRONGEST RESULTS FOR THE FUND? A. Japanese and European telecommunications companies such as DDI Corp., Kokusai Denshin Denwa (KDD) and Nokia were among the fund's top holdings and provided a significant boost to fund performance. As I mentioned earlier, telecommunications companies benefited from a robust mergers-and-acquisitions environment, favorable fundamental business outlooks and strong earnings momentum. Another strong contributor to performance was Toyoda Gosei, an auto parts manufacturer that is a major supplier to Toyota Motor. Its shares rallied during the period as auto sales picked up and the company was viewed as undervalued relative to its competition. Q. WE'VE TALKED A LOT ABOUT STRATEGIES AND STOCKS THAT WORKED WELL FOR THE FUND. THERE MUST HAVE BEEN SOME HOLDINGS THAT HURT PERFORMANCE . . . A. The fund's overweighted position in Telecom Italia detracted from relative performance after it was taken over by Technost. Later in the period, Technost made an offer to buy out Telecom Italia, offering no premium to the underlying market value, resulting in further weakness in the share price. Another disappointment for the fund was Arcadia Group. The British retailer suffered from a difficult pricing environment that we thought would improve during the period, but remained weak. Shares of Rentokil also were punished after the British pest control and cleaning services firm missed earnings estimates and experienced slower sales growth. The fund's holdings in Nestle and Unilever also hurt performance due to slower-than-expected earnings growth for these companies and the food sector overall. Q. WHAT'S YOUR OUTLOOK OVER THE NEXT SIX MONTHS, BILL? A. While the short-term global market environment poses a number of risks due to Year 2000 (Y2K) concerns and uncertainty around the interest-rate outlook in the U.S. and Europe, I don't run the fund based on potential short-term events. Consequently, I don't anticipate making major changes to the portfolio at this time. In addition, due to some recent changes I made to the portfolio and the asset allocation shifts we've already discussed, I feel the fund is well-positioned to benefit from the anticipated ongoing recovery in the Japanese market, yet is still protected from potential weakness in certain sectors. For example, I recently reduced the fund's exposure to Japanese specialty-finance companies, or non-bank lenders, because I felt their valuations were getting expensive and Japanese banks were beginning to encroach upon their business. Another area I've been keeping a close eye on is Europe, especially the European banks, which have been hard hit due to interest-rate hikes by central banks. I've become less negative on European financial issues because I think the positives of low valuations, earnings improvement and industry consolidation outweigh the negatives of potentially higher interest rates. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY FIDELITY FUND. BILL BOWER COMMENTS ON HIS INVESTMENT STYLE AND HOW IT SHAPES THE STRATEGY AND HOLDINGS OF THE FUND: "The first things I ask when I look at a stock are: `Is this a good business? Is it stable? Is the company's cash flow growing?' Because of my focus on these areas, the fund's dividend yield is lower than similar overseas funds and the Morgan Stanley EAFE index. In other words, I'm a firm believer in a company's free cash-flow generation as a catalyst for growth; my focus on dividend yield is secondary. My investment style also is highly dependent upon fundamental and technical analysis of individual companies, industries and market trends. An example of this research is a recent study that my team of analysts and I completed, which investigated the correlation between stock performance and dividend yields of stocks that have made up the EAFE index over the past three years. Our results showed that if you invested solely on the basis of higher dividend yield, you would've significantly underperformed the market. Accordingly, the fund has concentrated more on companies with stable free cash flow, favorable growth outlooks and accelerating earnings versus stocks with merely high dividend yields. "Another area I tend to focus on is the track record of corporate managements and what types of incentives they receive. This approach has subsequently led me to successful companies whose managements have a high level of stock ownership. Often, these companies tend to be younger businesses that have smaller stock capitalizations and whose management teams have a large stake in the success of their company. These are the types of companies that I believe have the best prospects to outperform the broader market over the long term. While these types of investments present interesting opportunities for the fund, this is not to say that there aren't any large-cap stocks that meet my investment criteria. In fact, there are many large-cap holdings in the portfolio that exhibit strong growth prospects, healthy dividend yields, and provide the current income the fund seeks." FUND FACTS GOAL: growth of capital and current income by investing mainly in foreign stocks FUND NUMBER: 305 TRADING SYMBOL: FIGRX START DATE: December 31, 1986 SIZE: as of October 31, 1999, more than $1.0 billion MANAGER: Bill Bower, since 1998; international equity analyst, 1996-1998; manager, Fidelity Select Construction & Housing Portfolio, 1994-1996; joined Fidelity in 1994 (checkmark) INTERNATIONAL GROWTH & INCOME INVESTMENT CHANGES AS OF OCTOBER 31, 1999 Australia 2.4% United States 8.8% Row: 1, Col: 1, Value: 2.4 Row: 1, Col: 2, Value: 2.2 Row: 1, Col: 3, Value: 9.1 Row: 1, Col: 4, Value: 6.9 Row: 1, Col: 5, Value: 25.8 Row: 1, Col: 6, Value: 7.2 Row: 1, Col: 7, Value: 14.6 Row: 1, Col: 8, Value: 5.0 Row: 1, Col: 9, Value: 18.0 Row: 1, Col: 10, Value: 8.800000000000001 Finland 2.2% France 9.1% United Kingdom 18.0% Germany 6.9% Switzerland 5.0% Japan 25.8% Other 14.6% Netherlands 7.2% GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30, 1999 United States 3.8% Australia 3.3% Row: 1, Col: 1, Value: 3.3 Row: 1, Col: 2, Value: 10.4 Row: 1, Col: 3, Value: 7.3 Row: 1, Col: 4, Value: 3.8 Row: 1, Col: 5, Value: 18.5 Row: 1, Col: 6, Value: 7.1 Row: 1, Col: 7, Value: 16.2 Row: 1, Col: 8, Value: 6.3 Row: 1, Col: 9, Value: 23.3 Row: 1, Col: 10, Value: 3.8 France 10.4% United Kingdom 23.3% Germany 7.3% Italy 3.8% Switzerland 6.3% Japan 18.5% Other 16.2% Netherlands 7.1% ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks 91.9 97.3 Bonds 0.3 0.5 Short-term investments and 7.8 2.2 net other assets PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO DDI Corp. (Japan, Telephone 2.1 1.1 Services) Kokusai Denshin Denwa 2.0 0.3 (Japan, Telephone Services) Total Fina SA Class B 1.8 2.6 (France, Oil & Gas) Nokia AB sponsored ADR 1.6 1.7 (Finland, Communications Equipment) BP Amoco PLC (United 1.5 2.0 Kingdom, Oil & Gas) Kyocera Corp. (Japan, 1.3 0.3 Electronics)) Shell Transport & Trading Co. 1.3 1.3 PLC (Reg.) (United Kingdom, Oil & Gas) Takeda Chemical Industries 1.2 1.2 Ltd. (Japan, Drugs & Pharmaceuticals) Mannesmann AG (Reg.) 1.1 1.2 (Germany, Cellular) Nestle SA (Reg.) 1.0 1.1 (Switzerland, Foods) 14.9 12.8 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO FINANCE 19.6 24.0 UTILITIES 16.0 16.3 TECHNOLOGY 11.4 8.1 HEALTH 6.8 8.3 MEDIA & LEISURE 5.5 4.2 ENERGY 5.5 6.1 INDUSTRIAL MACHINERY & 4.9 3.3 EQUIPMENT SERVICES 4.6 6.7 DURABLES 4.2 5.2 RETAIL & WHOLESALE 3.8 4.8
INTERNATIONAL GROWTH & INCOME INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 91.0% SHARES VALUE (NOTE 1) AUSTRALIA - 1.8% Australia & New Zealand 425,308 $ 2,806,845 Banking Group Ltd. Brambles Industries Ltd. 100,800 2,834,755 Cable & Wireless Optus Ltd. 1,200,700 2,748,814 (a) Coles Myer Ltd. 290,300 1,443,970 Lend Lease Corp. Ltd. 152,000 1,748,915 National Australia Bank Ltd. 29,400 453,711 News Corp. Ltd. sponsored ADR 119,500 3,540,188 Perpetual Trustees Australia 17,900 230,580 Ltd. Telstra Corp. Ltd. 557,700 2,836,982 Westfield Holdings Ltd. 130,100 771,572 19,416,332 BELGIUM - 0.2% Electrabel SA 6,000 1,984,900 BRITISH VIRGIN ISLANDS - 0.4% MIH Ltd. 102,600 4,591,350 CANADA - 1.7% Barrick Gold Corp. 41,400 760,936 Celestica, Inc. (sub. vtg.) 47,400 2,608,820 (a) CGI Group, Inc. Class A (sub. 119,200 2,672,827 vtg.) (a) Cinar Films, Inc. Class B 273,300 4,748,588 (sub. vtg.) (a) Clarica Life Insurance Co. (d) 80,700 1,305,062 Placer Dome, Inc. 65,000 817,082 Toronto Dominion Bank 159,300 3,653,173 Videotron Group Ltd. (sub. 144,900 2,067,609 vtg.) 18,634,097 DENMARK - 0.5% Carlsberg AS Class B 41,800 1,618,983 Damgaard AS (a) 2,700 143,648 Falck AS 20,000 1,844,364 Unidanmark AS Class A 21,500 1,677,662 5,284,657 FINLAND - 2.2% Metso Oyj (a) 75,000 850,513 Nokia AB sponsored ADR 147,300 17,022,356 Pohjola Group Insurance Corp. 35,200 1,893,756 Class B Sampo Insurance Co. Ltd. 61,800 2,151,363 Sonera Group PLC 41,000 1,234,813 Tietoenator Oyj Abp 29,400 1,023,464 24,176,265 FRANCE - 9.1% AXA SA de CV 55,000 7,780,415 Banque Nationale de Paris 101,715 8,959,479 Banque Nationale de Paris 12,155 72,061 warrants 7/1/02 (a) Castorama Dubois 15,000 4,506,533 Investissements SA Clarins SA 19,500 1,925,403 Clarins SA rights 12/27/99 (a) 19,500 321,518 SHARES VALUE (NOTE 1) France Telecom SA 95,100 $ 9,214,483 Havas Advertising SA 7,000 1,967,916 NRJ SA 10,100 3,153,729 Rhodia SA 94,900 1,837,019 Rhone-Poulenc SA Class A 11,800 654,900 Sanofi-Synthelabo SA (a) 77,600 3,434,037 Schneider SA (a) 13,600 939,705 Societe Generale, France 12,200 2,664,044 Class A Suez Lyonnaise des Eaux 46,100 7,464,842 Television Francaise 1 SA 22,500 7,073,105 Total Fina SA: Class B 149,661 19,961,037 sponsored ADR 101,900 6,795,456 Vivendi SA (a) 129,554 9,846,822 98,572,504 GERMANY - 6.9% Allianz AG (Reg.) 27,000 8,205,751 Apcoa Parking AG 13,370 987,281 BASF AG 80,200 3,574,476 Boss (Hugo) AG 19,690 2,243,266 Celanese AG (a) 14,240 225,327 DaimlerChrysler AG (Reg.) 41,425 3,220,794 Deutsche Telekom AG 174,275 8,061,502 ELMOS Semiconductor AG (a) 72,000 1,822,867 EPCOS AG (a) 125,400 5,155,125 GFK AG (a) 40,787 1,135,892 Hannover Rueckversicherungs AG 23,000 1,732,357 Hoechst AG 142,400 6,307,644 Kali Und Salz Beteiligungs AG 10,300 147,553 Mannesmann AG (Reg.) 78,760 12,454,280 Munich Reinsurance AG (Reg.) 11,300 2,583,144 Primacom AG 100,800 4,997,694 Siemens AG 78,500 7,084,366 Veba AG 57,800 3,139,511 Viag AG 90,896 1,673,214 74,752,044 HONG KONG - 1.9% China Telecom (Hong Kong) 616,000 2,079,000 Ltd. (a) Dah Sing Financial Holdings 510,000 2,035,273 Ltd. Giordano International Ltd. 1,022,000 1,085,415 Great Eagle Holdings Ltd. 744,000 919,464 Hong Kong & China Gas Co. 696,000 922,863 Ltd. Hutchison Whampoa Ltd. 175,000 1,757,209 Johnson Electric Holdings 925,600 5,004,531 Ltd. Li & Fung Ltd. 820,000 1,398,687 South China Morning Post 1,986,000 1,444,503 Holdings Wing Hang Bank Ltd. 326,500 1,065,496 Yue Yuen Industrial Holdings 1,224,000 3,104,119 Ltd. 20,816,560 HUNGARY - 0.1% Matav RT sponsored ADR (a) 35,700 1,028,606 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) IRELAND - 0.6% Bank of Ireland, Inc. 287,400 $ 2,252,614 CRH PLC 34,800 658,954 Elan Corp. PLC sponsored ADR 113,600 2,925,200 (a) Irish Life & Permanent PLC 106,426 1,101,459 6,938,227 ISRAEL - 0.2% Bezeq Israeli 290,000 1,183,408 Telecommunication Corp. Ltd. (a) Teva Pharmaceutical 21,400 1,035,225 Industries Ltd. ADR 2,218,633 ITALY - 1.6% Assicurazioni Generali Spa 98,200 3,175,070 Banca di Roma 558,400 756,348 Eni Spa sponsored ADR 490,800 2,894,712 Olivetti & Co. Spa 1,527,316 2,953,267 San Paolo-IMI Spa 178,300 2,355,246 Telecom Italia Spa 454,240 3,929,176 Unicredito Italiano Spa 326,500 1,531,313 17,595,132 JAPAN - 25.8% Advan Co. Ltd. 42,700 1,263,059 Aiful Corp. 14,100 2,193,710 Banyu Pharmaceutical Co. Ltd. 166,000 3,043,400 CSK Corp. 47,900 2,208,115 Dai-Ichi Kangyo Bank Ltd. 361,000 4,957,791 Daiwa Securities Co. Ltd. 472,000 5,045,244 DDI Corp. 2,116 23,166,765 Digicube Co. Ltd. 22 756,399 Fancl Corp. 12,100 3,486,195 Fuji Heavy Industries Ltd. 396,000 3,369,566 Fujisawa Pharmaceutical Co. 65,000 1,629,292 Ltd. Fujitec Co. Ltd. 229,000 2,553,364 Fujitsu Ltd. 242,000 7,297,767 Fujitsu Support & Service, 4,000 1,125,570 Inc. Furukawa Electric Co. Ltd. 1,049,000 7,656,567 Hirose Electric Co. Ltd. 3,900 681,306 Hitachi Information Systems 60,000 2,316,447 Hitachi Ltd. 283,000 3,077,625 Honda Motor Co. Ltd. 124,000 5,215,750 Hoya Corp. 34,000 2,448,980 Ito-Yokado Co. Ltd. 60,000 4,805,763 Jafco Co. Ltd. 13,000 1,460,744 Japan Business Computer Co. 62,000 1,554,094 Ltd. Kaneka Corp. 73,000 956,975 Kansai Maintenance Corp. 39,000 419,870 Kao Corp. 81,000 2,473,758 Kirin Brewery Co. Ltd. 109,000 1,249,902 SHARES VALUE (NOTE 1) Kokusai Denshin Denwa 171,800 $ 21,614,215 Kyocera Corp. 147,800 14,194,478 Matsushita Electric 94,000 1,991,038 Industrial Co. Ltd. Meiji Seika Kaisha Ltd. 348,000 2,536,682 Mitsubishi Electric Corp. 250,000 1,385,354 Mitsumi Electric Co. Ltd. 57,000 1,527,299 New Japan Securities Co. Ltd. 710,000 2,093,349 (a) Nichicon Corp. 479,000 10,396,543 Nichiei Co. Ltd. 6,200 321,537 Nidec Corp. 19,000 3,695,078 Nihon Unisys Ltd. 172,000 6,045,811 Nikko Securities Co. Ltd. 260,000 2,447,059 Nintendo Co. Ltd. 15,300 2,431,837 Nippon Sheet Glass Co. Ltd. 166,000 1,033,066 Nippon System Development Co. 20,100 1,718,031 Ltd. Nippon Telegraph & Telephone 160 2,458,584 Corp. Nippon Zeon Co. Ltd. 489,000 4,226,651 Nissin Co. Ltd. 26,900 1,650,814 Nomura Securities Co. Ltd. 187,000 3,090,776 NTT Mobile Communication 364 9,683,362 Network, Inc. (d) Olympus Optical Co. Ltd. 144,000 1,949,964 Omron Corp. 364,000 7,620,841 ORIX Corp. 54,400 7,314,286 Ricoh Co. Ltd. 116,000 1,894,992 Riso Kagaku Corp. 10,000 432,173 Ryohin Keikaku Co. Ltd. 1,800 346,776 Sakura Bank Ltd. 758,000 6,522,622 Sanyo Shinpan Finance Co. 15,500 742,809 Ltd. Secom Co. Ltd. 25,000 2,684,274 Secom Co. Ltd. (RFD) 36,000 3,837,695 Senshukai Co. Ltd. 71,000 1,363,064 Shohkoh Fund & Co. Ltd. 3,020 1,850,430 Sony Corp. 47,000 7,508,250 Takasago Electric Industry 23,000 1,745,018 Co. Takeda Chemical Industries 222,000 12,770,997 Ltd. Terumo Corp. 61,000 1,857,095 Toko, Inc. 200,000 989,196 Tokyo Seimitsu Co. Ltd. 27,000 3,295,750 Tokyo Tomin Bank Ltd. (a) 201,800 6,686,291 Toyoda Gosei Co. Ltd. 154,000 6,640,673 Union Tool Co. 8,200 877,292 Yakult Honsha Co. Ltd. 97,000 993,056 Yamaha Motor Co. Ltd. 409,000 3,330,920 Yokogawa Electric Corp. 297,000 2,082,209 Yoshitomi Pharmaceutical 179,000 2,441,105 Industries Ltd. 278,733,360 KOREA (SOUTH) - 0.5% Samsung Electronics Co. Ltd. 30,857 5,144,979 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) LUXEMBOURG - 0.6% Audiofina 21,600 $ 1,089,163 Stolt Comex Seaway SA (a) 486,770 5,202,354 6,291,517 MEXICO - 0.3% Grupo Financiero Bancomer SA 6,446,000 1,698,347 de CV Series A Grupo Televisa SA de CV 29,200 1,241,000 sponsored ADR (a) 2,939,347 NETHERLANDS - 6.9% ABN AMRO Holding NV 156,500 3,795,462 Akzo Nobel NV 111,500 4,815,418 Beter Bed Holding NV 106,600 3,058,704 Exact Holdings NV (a) 168,350 6,357,808 Exact Holdings NV (d) 6,500 245,475 Fortis Amev NV 249,500 8,614,456 Fugro NV 60,300 2,035,535 Grand Hotel Krasnapolsky NV 31,500 2,051,912 Gucci Group NV (NY Shares) 40,000 3,230,000 ING Groep NV 178,822 10,578,894 Koninklijke Ahold NV 76,955 2,370,451 Koninklijke KPN NV 64,600 3,324,870 Koninklijke Philips 70,292 7,305,975 Electronics NV (NY shares) Numico NV 50,000 2,043,869 Nutreco Holding NV 94,400 3,236,433 Samas Groep NV 143,900 1,958,221 Vedior NV 78,038 1,317,157 Vendex KBB NV 153,800 4,502,260 Vnu NV 62,700 2,126,473 Wolters Kluwer NV 30,100 1,008,777 73,978,150 NEW ZEALAND - 0.1% Telecom Corp. of New Zealand 244,300 984,807 Ltd. PERU - 0.1% Compania de Minas 66,500 1,130,500 Buenaventura SA sponsored ADR Class B PORTUGAL - 0.2% Electricidade de Portugal SA 105,500 1,644,895 SINGAPORE - 0.3% Chartered Semiconductor 5,800 192,488 Manufacturing Ltd. ADR Oversea-Chinese Banking Corp. 136,500 1,026,933 Ltd. Overseas Union Bank Ltd. 244,959 1,061,514 United Overseas Bank Ltd. 128,000 970,689 (For. Reg.) 3,251,624 SOUTH AFRICA - 0.4% Anglogold Ltd. 8,100 457,359 SHARES VALUE (NOTE 1) Gold Fields Ltd. 123,000 $ 588,431 Impala Platinum Holdings Ltd. 85,500 2,960,605 4,006,395 SPAIN - 1.6% Banco Santander Central 444,760 4,630,780 Hispano SA Cortefiel SA 75,500 1,977,584 Tabacalera SA Series A 24,300 401,173 Telefonica SA (a) 608,600 10,041,070 17,050,607 SWEDEN - 2.1% A-Com AB (a) 30,000 347,572 ABB Ltd. (Sweden) (a) 39,900 3,985,256 Ericsson (L.M.) Telefon AB 251,400 10,747,350 Class B Hennes & Mauritz AB Class B 92,400 2,462,197 Nobel Biocare AB 16,700 232,178 Saab AB (B shares) 127,300 993,591 Securitas AB Class B 67,500 1,004,299 Svenska Handelsbanken AB (A 144,000 2,002,012 shares) TV 4 AB Class A 100,000 1,365,895 23,140,350 SWITZERLAND - 5.0% Ares Serono SA Class B 2,258 3,518,614 (Bearer) Bank Sarasin & Compagnie 2,281 4,244,349 Class B (Reg.) Credit Suisse Group (Reg.) 39,700 7,648,169 Julius Baer Holding AG 1,000 3,014,662 Nestle SA (Reg.) 5,981 11,561,667 Novartis AG (Reg.) 4,850 7,270,695 PubliGroupe SA 2,770 2,036,202 Roche Holding AG 612 7,363,798 participation certificates Selecta Group (Reg.) 5,870 2,080,301 UBS AG 18,750 5,467,569 54,206,026 TAIWAN - 0.7% Hon Hai Precision Industries 155,000 1,060,372 Co. Ltd. Ritek Corp. 350,000 2,295,082 Taiwan Semiconductor 953,250 4,237,334 Manufacturing Co. Ltd. 7,592,788 TURKEY - 0.2% Hurriyet Gazetecilik ve 252,511,900 1,917,070 Matbaacilik AS UNITED KINGDOM - 18.0% Abbey National PLC 207,100 4,052,607 Alliance & Leicester PLC 331,500 4,840,653 Allied Domecq PLC 149,300 839,641 Allied Zurich PLC 449,000 5,426,767 Amvescap PLC 173,900 1,555,629 Ashtead Group PLC 1,873,500 5,345,159 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) UNITED KINGDOM - CONTINUED AstraZeneca Group PLC (Reg.) 88,700 $ 4,058,025 BBA Group PLC 33,500 234,121 Bodycote International PLC 317,250 1,293,781 Boots Co. PLC 130,200 1,338,131 BP Amoco PLC 1,646,674 15,849,241 British Aerospace PLC 286,200 1,673,080 British American Tobacco PLC 232,500 1,540,762 British Telecommunications PLC 630,700 11,352,598 British Vita PLC Ord. 332,100 1,337,958 Capital Radio PLC 78,700 1,292,849 Centrica PLC 688,700 2,001,691 Computacenter PLC 553,200 5,776,481 Davis Service Group 64,800 440,880 EMAP PLC 153,300 2,004,444 Geest PLC 122,800 926,365 Glaxo Wellcome PLC 221,200 6,622,176 Granada Group PLC 409,900 3,242,130 Hays PLC 206,100 2,360,514 HSBC Holdings PLC (Reg.) 195,600 2,408,324 Iceland Group PLC 1,369,100 6,517,653 Independent Insurance PLC 417,600 1,902,163 Informa Group PLC 311,700 2,080,991 Invensys PLC 202,100 993,676 Kingfisher PLC 157,500 1,721,008 Kingston Communications PLC 55,000 403,371 (a)(d) Laporte PLC 87,000 715,314 Laporte PLC Class B (a) 783,000 6,438 Lloyds TSB Group PLC 566,800 7,843,166 Misys PLC 152,000 1,269,740 National Grid Group PLC 137,800 1,029,889 National Westminster Bank PLC 57,800 1,305,936 Pizzaexpress PLC 82,400 1,094,151 Prudential Corp. PLC 228,100 3,580,212 Rentokil Initial PLC 1,424,400 4,748,980 Reuters Group PLC 219,400 2,040,219 Royal & Sun Alliance 467,090 3,179,863 Insurance Group PLC Royal Bank of Scotland Group 140,700 3,243,766 PLC Safeway PLC 314,100 986,527 Scottish Radio Holdings PLC 65,900 975,294 Shell Transport & Trading Co. 1,826,100 13,962,060 PLC (Reg.) Smith & Nephew PLC 1,130,600 3,643,951 SmithKline Beecham PLC 542,100 6,938,876 SSL International PLC 47,200 504,890 Standard Chartered PLC 154,900 2,174,014 Taylor Nelson Sofres PLC 674,400 2,034,984 Unilever PLC 828,189 7,699,573 Vodafone AirTouch PLC 2,030,000 9,731,322 Vodafone AirTouch PLC 183,000 8,772,563 sponsored ADR WPP Group PLC 472,100 5,127,602 194,042,199 SHARES VALUE (NOTE 1) UNITED STATES OF AMERICA - 1.0% AES Corp. (a) 50,000 $ 2,821,875 AFLAC, Inc. 70,900 3,624,763 Newmont Mining Corp. 36,000 789,750 Polycom, Inc. (a) 20,000 1,000,000 Synthes-Stratec, Inc. (a) 1,600 595,437 UnitedGlobalCom, Inc. (a) 21,600 1,879,200 10,711,025 TOTAL COMMON STOCKS 982,774,946 (Cost $753,644,505) PREFERRED STOCKS - 0.9% CONVERTIBLE PREFERRED STOCKS - - 0.6% AUSTRALIA - 0.6% National Australia Bank Ltd. 76,800 2,164,800 $1.9687 EXCAPS Village Roadshow Ltd. $3.25 60,000 2,527,500 PRIDES (d) WBK STRYPES Trust (Westpac 55,000 1,650,000 Banking Corp.) $3.135 6,342,300 NONCONVERTIBLE PREFERRED STOCKS - 0.3% ITALY - 0.3% Telecom Italia Spa Risp 737,700 3,645,866 TOTAL PREFERRED STOCKS 9,988,166 (Cost $8,129,747)
CONVERTIBLE BONDS - 0.3% MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT (C) NETHERLANDS - 0.3% Koninklijke Ahold NV 3% Baa1 NLG 4,810,000 2,601,369 9/30/03 (Cost $3,045,512)
CASH EQUIVALENTS - 9.9% SHARES Central Cash Collateral Fund, 8,038,987 8,038,987 5.26% (b) Taxable Central Cash Fund, 98,978,707 98,978,707 5.21% (b) TOTAL CASH EQUIVALENTS 107,017,694 (Cost $107,017,694) TOTAL INVESTMENT PORTFOLIO - 1,102,382,175 102.1% (Cost $871,837,458) NET OTHER ASSETS - (2.1)% (22,326,839) NET ASSETS - 100% $ 1,080,055,336 SECURITY TYPE ABBREVIATIONS EXCAPS - Exchangeable Capital Units PRIDES - Preferred Redeemable Increased Dividend Equity Securities STRYPES - Structured Yield Product Exchangeable for Common Stock CURRENCY ABBREVIATIONS NLG - Dutch guilder LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. (c) Principal amount is stated in United States dollars unless otherwise noted. (d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $14,164,770 or 1.3% of net assets. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $816,194,057 and $858,011,797, respectively. The fund participated in the security lending program. At period end, the value of securities loaned amounted to $7,466,135. The fund received cash collateral of $8,038,987 which was invested in the Central Cash Collateral Fund. The fund participated in the bank borrowing program. The average daily loan balance during the period for which loans were outstanding amounted to $2,816,000. The weighted average interest rate was 5.2%. Interest expense includes $2,427 paid under the bank borrowing program. INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $874,029,546. Net unrealized appreciation aggregated $228,352,629, of which $265,296,979 related to appreciated investment securities and $36,944,350 related to depreciated investment securities. The fund hereby designates approximately $38,760,000 as a capital gain dividend for the purpose of the dividend paid deduction. MARKET SECTOR DIVERSIFICATION (UNAUDITED) As a Percentage of Net Assets AEROSPACE & DEFENSE 0.3% BASIC INDUSTRIES 3.2 CASH EQUIVALENTS 9.9 CONSTRUCTION & REAL ESTATE 1.8 DURABLES 4.2 ENERGY 5.5 FINANCE 19.6 HEALTH 6.8 HOLDING COMPANIES 0.1 INDUSTRIAL MACHINERY & 4.9 EQUIPMENT MEDIA & LEISURE 5.5 NONDURABLES 3.7 PRECIOUS METALS 0.5 RETAIL & WHOLESALE 3.8 SERVICES 4.6 TECHNOLOGY 11.4 TRANSPORTATION 0.3 UTILITIES 16.0 INTERNATIONAL GROWTH & INCOME FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 1,102,382,175 value (cost $871,837,458) - See accompanying schedule Foreign currency held at 2,326,099 value (cost $2,316,323) Receivable for investments 16,854,379 sold Receivable for fund shares 8,401,090 sold Dividends receivable 2,090,426 Interest receivable 275,620 Other receivables 10,242 TOTAL ASSETS 1,132,340,031 LIABILITIES Payable for investments $ 35,617,819 purchased Payable for fund shares 7,606,983 redeemed Accrued management fee 617,130 Other payables and accrued 403,776 expenses Collateral on securities 8,038,987 loaned, at value TOTAL LIABILITIES 52,284,695 NET ASSETS $ 1,080,055,336 Net Assets consist of: Paid in capital $ 756,385,267 Undistributed net investment 12,563,275 income Accumulated undistributed net 80,742,438 realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 230,364,356 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 41,515,452 $ 1,080,055,336 shares outstanding NET ASSET VALUE, offering $26.02 price and redemption price per share ($1,080,055,336 (divided by) 41,515,452 shares) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 16,097,662 Dividends Interest 1,673,312 Security lending 21,132 17,792,106 Less foreign taxes withheld (1,778,492) TOTAL INCOME 16,013,614 EXPENSES Management fee $ 6,581,003 Transfer agent fees 2,552,627 Accounting and security 463,219 lending fees Non-interested trustees' 3,221 compensation Custodian fees and expenses 444,258 Registration fees 47,806 Audit 59,430 Legal 3,675 Interest 2,427 Miscellaneous 776 Total expenses before 10,158,442 reductions Expense reductions (321,403) 9,837,039 NET INVESTMENT INCOME 6,176,575 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 93,653,585 Foreign currency transactions (120,709) 93,532,876 Change in net unrealized appreciation (depreciation) on: Investment securities 185,757,323 Assets and liabilities in (51,633) 185,705,690 foreign currencies NET GAIN (LOSS) 279,238,566 NET INCREASE (DECREASE) IN $ 285,415,141 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION $ 7,315 Deferred sales charges Withheld by FDC Expense reductions $ 274,497 Directed brokerage arrangements Custodian credits 1,281 Transfer agent credits 45,625 $ 321,403 STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 ASSETS Operations Net investment $ 6,176,575 $ 15,664,243 income Net realized gain (loss) 93,532,876 56,252,297 Change in net unrealized 185,705,690 (50,786,245) appreciation (depreciation) NET INCREASE (DECREASE) IN 285,415,141 21,130,295 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (3,606,738) (18,064,755) From net investment income From net realized gain (25,246,859) (42,970,040) TOTAL DISTRIBUTIONS (28,853,597) (61,034,795) Share transactions Net 1,147,448,319 1,025,290,014 proceeds from sales of shares Reinvestment of distributions 27,912,115 59,414,450 Cost of shares redeemed (1,169,631,401) (1,294,204,233) NET INCREASE (DECREASE) IN 5,729,033 (209,499,769) NET ASSETS RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) 262,290,577 (249,404,269) IN NET ASSETS NET ASSETS Beginning of period 817,764,759 1,067,169,028 End of period (including $ 1,080,055,336 $ 817,764,759 undistributed net investment income of $12,563,275 and $7,030,622, respectively) OTHER INFORMATION Shares Sold 51,495,526 49,300,775 Issued in reinvestment of 1,401,210 2,997,727 distributions Redeemed (52,786,044) (62,013,953) Net increase (decrease) 110,692 (9,715,451)
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995 SELECTED PER-SHARE DATA Net asset value, beginning of $ 19.75 $ 20.88 $ 19.09 $ 17.83 $ 17.54 period Income from Investment Operations Net investment income .15 B .34 B .48 B, D .54 .54 Net realized and unrealized 6.84 (.22) E 1.97 1.32 .28 gain (loss) Total from investment 6.99 .12 2.45 1.86 .82 operations Less Distributions From net investment income (.09) (.37) (.29) (.60) (.21) From net realized gain (.63) (.88) (.37) - (.32) Total distributions (.72) (1.25) (.66) (.60) (.53) Net asset value, end of period $ 26.02 $ 19.75 $ 20.88 $ 19.09 $ 17.83 TOTAL RETURN A 36.51% .55% 13.17% 10.66% 4.95% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 1,080,055 $ 817,765 $ 1,067,169 $ 1,007,076 $ 903,235 (000 omitted) Ratio of expenses to average 1.13% 1.17% 1.17% 1.16% 1.18% net assets Ratio of expenses to average 1.10% C 1.13% C 1.15% C 1.14% C 1.18% net assets after expense reductions Ratio of net investment .69% 1.62% 2.33% 2.76% 2.98% income to average net assets Portfolio turnover rate 94% 143% 70% 95% 141% A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. D INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.05 PER SHARE. E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET GAIN ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND.
DIVERSIFIED INTERNATIONAL PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). If Fidelity had not reimbursed certain fund expenses, the life of fund total returns would have been lower. CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1994 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY DIVERSIFIED 29.12% 108.76% 165.73% INTERNATIONAL MSCI EAFE 23.29% 56.31% 109.68% MSCI GDP-Wtd EAFE 26.40% 79.18% 146.89% International Funds Average 25.53% 58.85% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years or since the fund started on December 27, 1991. For example, if you invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Morgan Stanley Capital International Europe, Australasia, Far East (EAFE) Index - a market capitalization-weighted index that is designed to represent the performance of developed stock markets outside the United States and Canada. As of October 31, 1999, the index included over 900 equity securities of companies domiciled in 20 countries. You can also compare the fund's returns to the performance of the Morgan Stanley Capital International GDP-Weighted Europe, Australasia, Far East (EAFE) Index - a gross domestic product weighted, unmanaged index of over 900 foreign stocks. To measure how the fund's performance stacked up against its peers, you can compare it to the international funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 589 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1994 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY DIVERSIFIED 29.12% 15.86% 13.26% INTERNATIONAL MSCI EAFE 23.29% 9.35% 9.89% MSCI GDP-Wtd EAFE 26.40% 12.37% 12.20% International Funds Average 25.53% 9.50% n/a AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND Diversified International MS EAFE (Net MA tax) 00325 MS001 1991/12/27 10000.00 10000.00 1991/12/31 10060.00 10240.13 1992/01/31 9860.00 10021.41 1992/02/29 9680.00 9662.72 1992/03/31 9140.00 9024.82 1992/04/30 9240.00 9067.72 1992/05/31 9750.00 9674.68 1992/06/30 9540.00 9215.78 1992/07/31 9190.00 8979.92 1992/08/31 9350.00 9543.15 1992/09/30 9140.00 9354.70 1992/10/31 8460.00 8864.00 1992/11/30 8460.00 8947.42 1992/12/31 8671.06 8993.69 1993/01/31 8873.42 8992.59 1993/02/28 9176.96 9264.23 1993/03/31 9915.57 10071.75 1993/04/30 10522.64 11027.58 1993/05/31 10785.71 11260.48 1993/06/30 10482.17 11084.80 1993/07/31 10805.94 11472.82 1993/08/31 11362.43 12092.16 1993/09/30 11210.66 11819.97 1993/10/31 11453.49 12184.23 1993/11/30 11028.54 11119.20 1993/12/31 11850.64 11922.09 1994/01/31 12739.44 12930.05 1994/02/28 12484.04 12894.23 1994/03/31 12085.61 12338.86 1994/04/30 12320.58 12862.39 1994/05/31 12300.15 12788.54 1994/06/30 12136.69 12969.27 1994/07/31 12555.55 13093.99 1994/08/31 12872.25 13404.00 1994/09/30 12504.47 12981.83 1994/10/31 12729.22 13414.13 1994/11/30 12044.75 12769.44 1994/12/31 11979.79 12849.40 1995/01/31 11428.51 12355.78 1995/02/28 11566.33 12320.32 1995/03/31 12128.21 13088.75 1995/04/30 12509.87 13581.01 1995/05/31 12615.88 13419.11 1995/06/30 12806.71 13183.79 1995/07/31 13633.63 14004.56 1995/08/31 13421.60 13470.33 1995/09/30 13676.04 13733.41 1995/10/31 13495.81 13364.25 1995/11/30 13633.63 13736.10 1995/12/31 14132.55 14289.53 1996/01/31 14555.74 14348.19 1996/02/29 14566.88 14396.70 1996/03/31 14856.44 14702.43 1996/04/30 15391.00 15129.88 1996/05/31 15546.91 14851.46 1996/06/30 15691.69 14935.05 1996/07/31 15190.54 14498.53 1996/08/31 15446.68 14530.30 1996/09/30 15914.43 14916.31 1996/10/31 16014.66 14763.67 1996/11/30 16905.60 15351.09 1996/12/31 16961.57 15153.62 1997/01/31 17076.88 14626.27 1997/02/28 17365.14 14869.07 1997/03/31 17388.20 14925.57 1997/04/30 17445.86 15007.66 1997/05/31 18541.27 15987.21 1997/06/30 19486.78 16871.30 1997/07/31 20040.25 17146.65 1997/08/31 18852.59 15868.37 1997/09/30 20155.56 16759.69 1997/10/31 19106.27 15475.73 1997/11/30 18944.84 15320.98 1997/12/31 19289.47 15457.49 1998/01/31 19851.53 16167.29 1998/02/28 20891.95 17207.66 1998/03/31 21860.61 17740.75 1998/04/30 22506.38 17884.10 1998/05/31 22530.30 17800.58 1998/06/30 22386.79 17938.53 1998/07/31 22637.92 18123.66 1998/08/31 19325.35 15881.58 1998/09/30 19145.97 15398.14 1998/10/31 20581.02 17006.79 1998/11/30 21442.05 17881.45 1998/12/31 22065.54 18590.27 1999/01/31 22339.49 18538.77 1999/02/28 21691.97 18100.33 1999/03/31 22663.25 18859.46 1999/04/30 23746.61 19626.66 1999/05/31 22899.85 18619.24 1999/06/30 24194.89 19348.37 1999/07/31 24730.34 19926.89 1999/08/31 25103.91 20003.00 1999/09/30 25489.93 20207.83 1999/10/29 26573.29 20968.05 IMATRL PRASUN SHR__CHT 19991031 19991207 094455 R00000000000098 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity Diversified International Fund on December 27, 1991, when the fund started. As the chart shows, by October 31, 1999, the value of the investment would have grown to $26,573 - a 165.73% increase on the initial investment. For comparison, look at how the Morgan Stanley Capital International EAFE Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 in the EAFE index would have grown to $20,968 - a 109.68% increase. Beginning with this report, the fund will only compare its performance to that of the Morgan Stanley Capital International EAFE Index. The change in benchmark will align the fund's benchmark with that of other broadly diversified international funds in its comparative universe. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) DIVERSIFIED INTERNATIONAL FUND TALK: THE MANAGER'S OVERVIEW An interview with Greg Fraser, Portfolio Manager of Fidelity Diversified International Fund Q. HOW DID THE FUND PERFORM, GREG? A. For the 12-month period that ended October 31, 1999, the fund returned 29.12%. During the same period, the capitalization-weighted Morgan Stanley Capital International EAFE Index and the Morgan Stanley Capital International GDP-Weighted EAFE Index - two broad measures of stock performance in Europe, Australasia and the Far East - were up 23.29% and 26.40%, respectively. The fund also compares its performance against the international funds average, tracked by Lipper Inc., which was up 25.53%, during the same period. Q. WHAT FACTORS HELPED THE FUND OUTPERFORM THE EAFE INDEXES AND ITS LIPPER PEER GROUP DURING THE PERIOD? A. There were a variety of factors that contributed to the fund's strong performance. The two primary contributors, however, appeared to be strong stock selection across a wide range of global markets and the fund's overweighting in the technology and telecommunications sectors. Although the fund was underweighted relative to the index in the recovering Japanese market, superior stock selection in this country aided the fund's total return. Japanese telecommunications and non-bank financial services holdings staged impressive gains on strong earnings growth, as did electronic components manufacturers in both Japan and Europe. Other factors that helped push the fund's performance ahead of its benchmarks were underweighted positions in the weak German and Swiss markets. Q. WHY DOES THE FUND COMPARE ITS PERFORMANCE AGAINST TWO INDEXES? A. Most international funds use the capitalization-weighted version of the index. In this version, companies are weighted by their market values. When the fund was launched in 1991, Japan accounted for more than 50% of the capitalization-weighted index. In order to reduce the pressure to invest in what appeared to be an expensive market, we chose the GDP-weighted index, in which the weights are adjusted to take the size of the different economies into account. In general, it was beneficial for shareholders over the past seven years or so not to be heavily invested in Japan. Over time, however, the differences between the two indexes have lessened. In order to be consistent with other funds, and to make comparisons simpler, the fund's board of trustees recommended that we switch our primary benchmark to the capitalization-weighted EAFE index. On July 14, 1999, shareholders approved the benchmark change. However, because the GDP-weighted index was used during part of the reporting period, we're required to provide performance results for both indexes. In the next report, only the Morgan-Stanley Capital International EAFE Index will be used. Q. COULD YOU TELL US ABOUT THE PARTICULAR STOCKS THAT HELPED THE FUND'S PERFORMANCE? A. Sure. On the telecommunications side, DDI, a leading Japanese cellular provider, and Nippon Telegraph and Telephone, the dominant telephone services provider in Japan and one of the most highly valued companies in the world, provided a major boost to the fund's performance. In other parts of the world, stocks such as BCE Inc. - the leading telecommunications provider in Canada and owner of a major portion of Nortel Networks, a leading telecommunications equipment supplier - turned in solid results. Mannesmann AG, a German cellular provider with a variety of manufacturing businesses, also aided the fund's performance. Other telecommunications equipment companies that contributed to total return were Nokia, Ericsson and Kyocera, as they benefited from strong sales and positive earnings momentum. Another sector that produced favorable gains for the fund was technology. Some of the important contributors here were Omron, Sharp, Hitachi and Rohm, all Japanese electronics companies with bright business prospects. In other regions, Philips, the Dutch electronics giant, and Celestica, a fast growing Canadian contract manufacturer, also were important contributors. Q. WHICH HOLDINGS AND INDUSTRIES HURT THE FUND'S PERFORMANCE? A. Some of the consumer products companies and pharmaceutical firms were generally under pressure during the period. Names in this group included Unilever, the Anglo-Dutch giant, and Pharmacia & Upjohn, the Swedish-American drug company. Another noticeable restraint on fund performance was its underweighting in Japanese banks, such as Industrial Bank of Japan, Fuji Bank and Asahi Bank. These banks did very well as a group because of the moves by the Japanese government to restructure and support the banking system. The fund owned modest positions in several of these stocks, but in hindsight, I could have been more aggressive in buying them as the restructuring story unfolded. Q. DID CURRENCY MOVEMENTS HAVE ANY EFFECT ON THE FUND'S PERFORMANCE DURING THE PERIOD? A. As many shareholders are probably aware, this fund generally does not hedge foreign currency exposure. As a result, currency movements may be reflected in the fund's share price. That said, currency movements were relatively moderate during the period, although the strong Japanese yen marginally helped performance in dollar terms. Q. GREG, WHAT'S YOUR OUTLOOK FOR THE FUND? A. Market leadership around the world seems to have returned to large-capitalization growth stocks, especially those related to telecommunications products and services. The fund has built sizable holdings in these areas and should benefit if their present momentum continues. However, there has been an incredible proliferation of new public companies in these areas, so I'll be watching closely for signs of excess capacity. Other technology companies also appear promising and remain important holdings for the fund. Finally, as company restructurings, in the form of consolidation and cost-cutting measures appear to gain momentum in Japan, the fund's holdings there may continue to increase. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY FIDELITY FUND. GREG FRASER DISCUSSES THE POTENTIAL EFFECT OF INTERNATIONAL INTERNET COMPANIES ON THE FUND'S INVESTMENT STRATEGY: "Due to the fund's disciplined approach to international investing, the fund's exposure to Internet companies has been limited. However, because the Internet has quickly become a worldwide phenomenon, I have spent an increasing amount of my time researching these companies, speaking with different companies' management teams, and trying to gain a full understanding of this industry. While many Internet stock valuations are difficult to justify using traditional techniques, a fund manager who disregards these stocks can be at a significant competitive disadvantage because of their favorable business prospects and potential to outperform the broader market. "As a result, some of the companies I've been keeping a close eye on are Internet service providers, such as Internet Initative and InterQ in Japan, Freeserve in the United Kingdom, and Pacific Internet in Singapore. Internet portals and search engine companies such as Yahoo! Japan and China.Com also appear worth investigating. Softbank, the dominant Internet venture capital business in Japan, produced amazing performance during the period due to positive investor sentiment and the impressive growth in demand for Internet services. Internet software providers such as Intershop and Brokat Infosystems in Germany and Jacada in Israel are potential leaders in this group. Swedish Internet consulting firms, such as Framtidsfabriken, Icon Medialab and A-Com, also seem to be benefiting from the huge demand in Internet business. "Many of these companies exhibit growth prospects and business characteristics similar to their U.S. counterparts. In some cases, however, their valuations are not as pricey given the relatively early stage of Internet usage and development overseas. While these companies are likely to remain a modest portion of the overall portfolio due to their volatile and uncertain long-term outlooks, they should help differentiate the fund's performance from time to time." FUND FACTS GOAL: long-term growth by investing mainly in foreign equity securities that are determined, mainly through both quantitative and fundamental analysis, to be undervalued compared to others in their industries and countries FUND NUMBER: 325 TRADING SYMBOL: FDIVX START DATE: December, 27, 1991 SIZE: as of October 31, 1999, more than $3.5 billion MANAGER: Greg Fraser, since 1991; manager, Fidelity Select Environmental Services Portfolio, 1991; Fidelity Select Defense and Aerospace Portfolio, 1989-1990; joined Fidelity in 1986 DIVERSIFIED INTERNATIONAL INVESTMENT CHANGES AS OF OCTOBER 31, 1999 Canada 3.9% Finland 3.6% United States 9.2% Row: 1, Col: 1, Value: 3.9 Row: 1, Col: 2, Value: 3.6 Row: 1, Col: 3, Value: 7.6 Row: 1, Col: 4, Value: 6.4 Row: 1, Col: 5, Value: 26.1 Row: 1, Col: 6, Value: 6.3 Row: 1, Col: 7, Value: 19.1 Row: 1, Col: 8, Value: 6.3 Row: 1, Col: 9, Value: 11.5 Row: 1, Col: 10, Value: 9.199999999999999 France 7.6% United Kingdom 11.5% Germany 6.4% Switzerland 6.3% Japan 26.1% Other 19.1% Netherlands 6.3% GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30, 1999 United States 5.5% Canada 4.4% Row: 1, Col: 1, Value: 4.4 Row: 1, Col: 2, Value: 11.7 Row: 1, Col: 3, Value: 7.3 Row: 1, Col: 4, Value: 6.1 Row: 1, Col: 5, Value: 16.8 Row: 1, Col: 6, Value: 6.5 Row: 1, Col: 7, Value: 22.8 Row: 1, Col: 8, Value: 5.5 Row: 1, Col: 9, Value: 13.4 Row: 1, Col: 10, Value: 5.5 France 11.7% United Kingdom 13.4% Switzerland 5.5% Germany 7.3% Italy 6.1% Other 22.8% Japan 16.8% Netherlands 6.5%
ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks and investment companies 91.9 95.4 Bonds 0.3 0.7 Short-term investments and 7.8 3.9 net other assets
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Nokia AB sponsored ADR 1.9 0.9 (Finland, Communications Equipment) BCE, Inc. (Canada, Telephone 1.5 1.5 Services) Kyocera Corp. (Japan, 1.3 0.2 Electronics) Mannesmann AG (Reg.) 1.3 1.3 (Germany, Cellular) ING Groep NV (Netherlands, 1.2 1.0 Insurance) Eni Spa sponsored ADR 1.2 1.0 (Italy, Oil & Gas) DDI Corp. (Japan, Telephone 1.2 0.1 Services) Vodafone AirTouch PLC 1.2 0.6 sponsored ADR (United Kingdom, Cellular) BP Amoco PLC sponsored ADR 1.2 1.8 (United Kingdom, Oil & Gas) Rhone-Poulenc SA Class A 1.1 0.4 (France, Drugs & Pharmaceuticals) 13.1 7.5 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO FINANCE 16.0 21.2 TECHNOLOGY 13.4 8.7 UTILITIES 13.0 13.9 HEALTH 6.9 5.5 ENERGY 6.3 7.7 NONDURABLES 6.0 8.4 BASIC INDUSTRIES 5.7 5.1 DURABLES 5.4 4.2 INDUSTRIAL MACHINERY & 4.7 2.5 EQUIPMENT MEDIA & LEISURE 3.9 4.3
DIVERSIFIED INTERNATIONAL INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 88.3% SHARES VALUE (NOTE 1) AUSTRALIA - 2.2% AAPT Ltd. (a) 2,500,000 $ 8,082,848 Australia & New Zealand 500,000 3,299,779 Banking Group Ltd. Broken Hill Proprietary Co. 250,000 2,583,801 Ltd. (The) Cable & Wireless Optus Ltd. 2,500,000 5,723,358 (a) Commonwealth Bank of Australia 900,000 14,750,001 CSR Ltd. 2,000,000 4,489,408 Goodman Fielder Ltd. 1,000,000 924,665 Keycorp Ltd. 500,000 2,671,963 Macquarie Bank Ltd. 250,000 3,666,775 National Australia Bank Ltd. 200,000 3,086,468 News Corp. Ltd. sponsored ADR 550,000 15,159,375 (preferred ltd. vtg.) Orbital Engine Co. Ltd. 50,000 200,000 sponsored ADR (a) Pacific Dunlop Ltd. 500,000 704,659 Reinsurance Australia Corp. 419,766 230,209 Ltd. Solution 6 Holdings Ltd. (a) 150,000 658,106 WMC Ltd. 3,000,000 12,875,163 79,106,578 AUSTRIA - 0.4% Austria Tabak AG 100,000 4,509,698 RHI AG 203,000 5,717,663 RHI AG New 87,000 2,427,483 12,654,844 BELGIUM - 0.0% Telinfo SA (strip VVPR) 11,111 117 BERMUDA - 0.4% ESG Re Ltd. 200,000 1,550,000 Lasalle Re Holdings Ltd. 218,000 2,820,375 RenaissanceRe Holdings Ltd. 100,000 3,643,750 Sea Containers Ltd. Class A 150,000 4,387,500 Terra Nova (Bermuda) Holdings 100,000 3,156,250 Ltd. Class A 15,557,875 BRAZIL - 0.2% Brahma Cervejaria (Compagnie): warrants 4/30/03 (a) 188,529 19,356 (PN Reg.) 3,000,000 1,917,351 Telebras sponsored: ADR 50,000 2,344 ADR (PFD) 50,000 3,893,750 5,832,801 CANADA - 3.7% Alberta Energy Co. Ltd. 300,000 9,274,988 BCE, Inc. 900,000 54,182,238 Canadian Imperial Bank of 75,000 1,615,479 Commerce Canadian Natural Resources 300,000 6,604,607 Ltd. (a) Canadian Pacific Ltd. 200,000 4,674,866 SHARES VALUE (NOTE 1) Celestica, Inc. (sub-vtg.) (a) 300,000 $ 16,511,517 Co-Steel, Inc 25,000 263,301 Falconbridge Ltd. 100,000 1,481,280 Gulf Canada Resources Ltd. (a) 2,500,000 10,022,423 Harrowston, Inc. Class A (a) 400,000 1,345,383 Marsulex, Inc. (a) 65,000 136,916 Newbridge Networks Corp. (a) 100,000 1,946,728 Noranda, Inc. 125,000 1,647,754 OCI Communications, Inc. 106,500 868,384 Class B (non-vtg.) (a) Petro-Canada 200,000 2,860,637 Suncor Energy, Inc. 100,000 3,845,893 Thomson Corp. 150,000 4,382,687 TLC The Laser Center, Inc. (a) 100,000 1,742,882 Toronto Dominion Bank 450,000 10,319,698 133,727,661 CHINA - 0.0% Huaneng Power International, 125,000 1,515,625 Inc. Series N sponsored ADR Shandong Huaneng Power 25,000 103,125 Development Co. Ltd. sponsored ADR 1,618,750 DENMARK - 1.0% Falck AS 35,000 3,227,637 Novo-Nordisk AS Class B 150,000 18,046,393 Ratin AS Class B 34,395 3,586,625 Sydbank AS 100,000 4,469,036 Unidanmark AS Class A 100,000 7,803,079 37,132,770 FINLAND - 3.6% JOT Automation Group Oyj 500,000 2,584,505 KCI (Konecranes International) 56,200 1,452,492 Kesko OY (a) 100,000 1,141,402 Merita Ltd. Series A 300,000 1,743,750 Metsa Tissue PLC 626,100 8,057,769 Metsa-Serla Oyj Class B Free 200,000 1,816,538 Shares Metso Oyj (a) 300,000 3,402,053 Nokia AB sponsored ADR 600,000 69,337,482 Nokian Tyres Ltd. 100,000 3,375,680 Perlos Oyj (a) 50,000 822,822 Sampo Insurance Co. Ltd. 500,000 17,405,850 Stora Enso Oyj 300,000 3,955,875 Talentum OY Class B 60,000 784,846 UPM-Kymmene Corp. 400,000 12,658,800 128,539,864 FRANCE - 7.4% Atos SA (a) 30,000 3,854,605 AXA SA de CV 100,000 14,146,209 Banque Nationale de Paris 72,500 6,386,101 Banque Nationale de Paris 32,500 192,677 warrants 7/1/02 (a) COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) FRANCE - CONTINUED Cap Gemini SA 40,000 $ 6,076,224 Christian Dior SA 115,577 20,751,155 CNP Assurances 250,000 7,384,300 Compagnie Generale de 100,000 1,075,000 Geophysique SA sponsored ADR (a) Credit Commercial de France 75,000 8,663,366 Dexia France 40,000 5,654,264 Eramet SA 100,000 5,105,716 Eurafrance (Societe) 28,000 16,954,353 Fi SYSTEM (a) 10,000 1,002,155 France Telecom SA 100,000 9,689,257 GrandVision SA 150,000 4,652,109 Groupe Danone 30,000 7,674,398 Havas Advertising SA 612 172,052 Isis SA 100,000 6,719,713 Lafarge SA 50,000 4,826,168 LVMH (Louis Vuitton Moet 36,000 10,899,227 Hennessy) Natexis Banques Populaires 1,900 146,359 Pechiney SA Class A 65,000 3,647,844 Pernod-Ricard 100,000 6,772,458 Rhone-Poulenc SA Class A 700,000 38,849,999 Scor SA 175,000 8,768,856 Seita SA 50,000 2,795,485 Seita SA New 35,500 2,067,182 SR Teleperformance SA 5,000 690,960 Total Fina SA: Class B 150,000 20,006,251 sponsored ADR 292,307 19,493,223 Unilog SA 4,515 312,271 Union Assurances Federales SA 70,000 9,038,383 Vivendi SA (a) 140,000 10,640,776 265,109,096 GERMANY - 6.2% Aixtron AG 15,000 1,677,291 Allianz AG (Reg.) 30,000 9,117,501 BASF AG 400,000 17,827,810 Bayer AG 400,000 16,338,291 Buderus AG 275,000 4,656,065 Celanese AG (a) 30,000 474,705 Commerzbank AG 100,000 3,833,507 DaimlerChrysler AG (Reg.) 50,000 3,887,500 Deutsche Bank AG 100,010 7,171,927 Deutsche Telekom AG 250,000 11,564,341 DIS Deutscher Industrie 100,000 6,329,400 Service AG EPCOS AG (a) 84,200 3,461,416 Fresenius Medical Care AG 400,000 9,325,000 sponsored ADR GFK AG (a) 3,800 105,828 Heidelberger Druckmaschinen AG 150,000 8,861,160 Hoechst AG 300,000 13,288,575 Mannesmann AG (Reg.) 300,000 47,438,853 Metallgesellschaft AG 500,000 10,417,138 SHARES VALUE (NOTE 1) MobilCom AG 85,000 $ 4,487,808 Primacom AG 75,000 3,718,523 RWE AG 175,000 7,033,546 Siemens AG 100,000 9,024,670 Stinnes AG (a) 45,340 870,491 Veba AG 300,000 16,295,040 Viag AG 78,000 1,435,824 Zapf Creation AG (a) 80,000 2,806,034 221,448,244 HONG KONG - 0.4% Amway Asia Pacific Ltd. (a) 50,000 643,750 China Telecom (Hong Kong) 2,000,000 6,750,000 Ltd. (a) Hutchison Whampoa Ltd. 300,000 3,012,358 Johnson Electric Holdings 800,000 4,325,438 Ltd. 14,731,546 IRELAND - 0.7% Anglo-Irish Bank Corp. PLC 2,000,000 4,661,874 Bank of Ireland, Inc. 200,000 1,567,581 Elan Corp. PLC sponsored ADR 200,000 5,150,000 (a) Hibernian Group PLC 225,300 1,461,664 Independent Newspapers PLC 400,000 2,122,459 (Ireland) Irish Life & Permanent PLC 600,000 6,209,715 Ryanair Holdings PLC 125,000 5,156,250 sponsored ADR (a) 26,329,543 ISRAEL - 0.9% AudioCodes Ltd. 50,000 3,025,000 Bezeq Israeli 600,000 2,448,431 Telecommunication Corp. Ltd. (a) ECI Telecom Ltd. 100,000 2,912,500 Internet Gold 150,000 1,125,000 Koor Industries Ltd. 175,000 2,953,125 sponsored ADR Partner Communication Co. 216,400 3,408,300 Ltd. ADR Teva Pharmaceutical 350,000 16,931,250 Industries Ltd. ADR 32,803,606 ITALY - 1.7% Assicurazioni Generali Spa 100,000 3,233,269 Eni Spa sponsored ADR 750,000 44,062,500 Istituto Nazionale Delle 400,000 1,218,199 Assicurazioni Spa SAES Getters Spa sponsored ADR 175,000 831,250 Seat Pagine Gialle Spa 1,000,000 1,428,335 Telecom Italia Mobile Spa 400,000 2,512,772 Telecom Italia Spa 400,000 3,460,000 Tiscali Spa (a)(e) 5,200 358,805 Unione Immobiliare Spa 6,000,000 3,091,912 60,197,042 JAPAN - 26.1% Advantest Corp. 100,000 15,078,032 Amway Japan Ltd. sponsored ADR 400,000 1,950,000 Asahi Bank Ltd. 500,000 4,446,579 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) JAPAN - CONTINUED Bank of Tokyo-Mitsubishi Ltd. 525,000 $ 8,662,500 ADR Bank of Yokohama Ltd. 300,000 1,685,474 BellSystem24, Inc. 10,000 9,603,842 Canon, Inc. 250,000 7,082,833 Chiba Bank 150,000 821,128 Chiyoda Fire & Marine 350,000 1,327,731 Insurance Co. Ltd. Chukyo Coca-Cola Bottling Co. 200,000 2,379,832 Ltd. Coca-Cola West Japan Co. Ltd. 50,000 2,228,091 CSK Corp. 182,000 8,389,916 Dai Nippon Printing Co. Ltd. 200,000 3,651,381 Dai-Ichi Kangyo Bank Ltd. 300,000 4,120,048 Daiwa Securities Co. Ltd. 300,000 3,206,723 DDI Corp. 4,000 43,793,520 Diamond Computer Service Co. 80,000 2,097,479 Ltd. FamilyMart Co. Ltd. 25,000 1,740,696 Fanuc Ltd. 100,000 7,779,112 Fuji Bank Ltd. 700,000 9,613,446 Fuji Coca-Cola Bottling Co. 300,000 5,762,305 Ltd. Fuji Heavy Industries Ltd. 1,500,000 12,763,506 Fuji Photo Film Co. Ltd. 100,000 3,217,287 Fuji Soft ABC, Inc. 80,000 7,337,335 Fuji Television Network, Inc. 200 1,728,692 Fujisawa Pharmaceutical Co. 200,000 5,013,206 Ltd. Fujitec Co. Ltd. 150,000 1,672,509 Fujitsu Business Systems Ltd. 80,000 3,841,537 Fujitsu Ltd. 500,000 15,078,032 Furukawa Electric Co. Ltd. 2,323,000 16,955,391 Hirose Electric Co. Ltd. 30,000 5,240,817 Hitachi Information Systems 150,000 5,791,117 Hitachi Ltd. 2,000,000 21,750,001 Hitachi Software Engineerng 50,000 4,605,042 Co. Ltd. Hokkaido Coca-Cola Bottling 300,000 4,065,306 Co. Ltd. Honda Motor Co. Ltd. 350,000 14,721,876 Hosiden Corp. 50,000 1,896,759 Hoya Corp. 100,000 7,202,881 Industrial Bank of Japan Ltd. 250,000 3,385,354 (The) Ines Corp. 100,000 1,612,485 Internet Initiative Japan, 30,000 1,612,500 Inc. sponsored ADR Isewan Terminal Service Co. 200,000 566,627 Ltd. Ito-Yokado Co. Ltd. 200,000 16,019,208 Itoki Crebio Corp. 80,000 199,760 Jafco Co. Ltd. 150,000 16,854,743 Japan Telecom Co. Ltd. 200 6,876,351 Japan Tobacco, Inc. 500 5,522,209 Jichodo Co. Ltd. 88,000 612,725 Joyo Bank Ltd. 100,000 489,796 Kaneka Corp. 150,000 1,966,387 Kao Corp. 350,000 10,689,076 Kawagishi Bridge Works Co. 200,000 729,892 Ltd. Keiiyu Co. Ltd. 44,100 385,412 Kinki Coca-Cola Bottling Co. 300,000 5,186,075 Ltd. SHARES VALUE (NOTE 1) Koa Denko Co. Ltd. 300,000 $ 5,214,886 Kojima Co. Ltd. 50,000 2,429,772 Kokusai Denshin Denwa 225,000 28,307,324 Kokusai Securities Co. Ltd. 300,000 5,183,194 Kubota Corp. 500,000 1,992,797 Kyocera Corp. 500,000 48,019,210 Levi Strauss Japan 525,000 5,344,538 Mabuchi Motor Co. Ltd. 100,000 14,789,917 Matsushita Communication 125,000 21,032,414 Industrial Co. Ltd. Matsushita Electric 700,000 14,826,876 Industrial Co. Ltd. Mikasa Coca Cola Bottling Co. 150,000 1,584,634 Minebea Co. Ltd. 200,000 2,698,680 Mitsubishi Electric Corp. 1,000,000 5,541,417 Mitsui Chemicals, Inc. 200,000 1,997,599 Mitsui Marine & Fire 300,000 1,990,876 Insurance Co. Ltd. Morinaga & Co. Ltd. (a) 500,000 1,176,471 Murata Manufacturing Co. Ltd. 50,000 6,434,574 NEC Corp. 300,000 6,079,232 Nichicon Corp. 400,000 8,681,873 Nihon Unisys Ltd. 150,000 5,272,509 Nikko Securities Co. Ltd. 300,000 2,823,530 Nikon Corp. 250,000 5,954,382 Nintendo Co. Ltd. 130,000 20,662,666 Nippon Computer Systems Corp. 200,000 3,918,368 Nippon System Development Co. 100,000 8,547,419 Ltd. Nippon Telegraph & Telephone 1,300 19,975,991 Corp. Nippon Television Network 15,000 13,541,417 Corp. Nitto Denko Corp. 250,000 9,891,957 Nomura Securities Co. Ltd. 1,000,000 16,528,212 NTT Mobile Communication 250 6,650,661 Network, Inc. NTT Mobile Communication 500 13,301,321 Network, Inc. (e) Oki Electric Industry Co. 200,000 1,286,915 Ltd. (a) Omron Corp. 1,300,000 27,217,288 Oracle Corp. Japan 50,000 10,180,073 ORIX Corp. 100,000 13,445,379 Ricoh Co. Ltd. 350,000 5,717,647 Ricoh Elemex Corp. 60,000 554,334 Riken Vitamin Oil Co. Ltd. 150,000 2,016,807 Rohm Co. Ltd. 100,000 22,472,990 Sakura Bank Ltd. 500,000 4,302,521 Sanwa Bank Ltd. 400,000 5,958,224 Secom Co. Ltd. 70,000 7,515,967 Secom Co. Ltd. (RFD) 70,000 7,462,185 Senshukai Co. Ltd. 300,000 5,759,424 Sharp Corp. 1,100,000 17,536,615 Shikoku Coca-Cola Bottling 306,400 3,810,689 Co. Ltd. Softbank Corp. 40,000 16,633,854 Sony Corp. 50,000 7,987,500 Star Micronics Co. Ltd. 200,000 2,833,133 Taisho Pharmaceutical Co. 50,000 2,084,034 Ltd. Taito Corp. 4,070 4,143,290 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) JAPAN - CONTINUED Takeda Chemical Industries 300,000 $ 17,258,104 Ltd. TDK Corp. 35,000 3,431,933 Terumo Corp. 80,000 2,435,534 The Suruga Bank Ltd. 100,000 1,469,388 THK Co. Ltd. 150,000 4,912,365 Tokai Bank Ltd. 350,000 3,058,824 Tokio Marine & Fire Insurance 500,000 6,554,622 Co. Ltd. (The) Tokyo Electron Ltd. 90,000 7,485,234 Tokyo Seimitsu Co. Ltd. 100,000 12,206,483 Toshiba Corp. 1,000,000 6,300,120 Tosoh Corp. 100,000 447,539 Toyo Communication Equipment 50,000 627,945 Co. Ltd. Toyo Information System Co. 75,000 3,795,919 Ltd. Toyoda Automatic Loom Works 500,000 9,747,900 Ltd. Toyota Motor Corp. 400,000 13,867,948 Trans Cosmos, Inc. 25,000 3,181,273 Trend Micro, Inc. sponsored 25,000 493,750 ADR (a) Yamaha Motor Co. Ltd. 500,000 4,072,029 Yaskawa Electric Corp. (a) 50,000 337,575 Yokogawa Electric Corp. 200,000 1,402,161 933,410,794 LUXEMBOURG - 0.6% Espirito Santo Financial 300,000 4,800,000 Holding SA ADR Millicom International 175,000 5,906,250 Cellular SA (a) Quilmes Industrial SA 400,000 4,175,000 sponsored ADR Societe Europeene de Communication SA sponsored ADR: Class A (a) 40,000 610,000 Class B (a) 400,000 6,600,000 22,091,250 MEXICO - 0.3% Elamex SA de CV (a)(d) 367,000 1,330,375 Grupo Radio Centro SA de CV 328,300 1,538,906 sponsored ADR Industrias Penoles SA 1,000,000 3,155,428 Telefonos de Mexico SA 50,000 4,275,000 sponsored ADR representing Class L shares 10,299,709 NETHERLANDS - 6.3% ABN AMRO Holding NV 750,000 18,189,113 Aegon NV 50,000 4,628,374 Akzo Nobel NV 350,000 15,115,662 Core Laboratories NV (a) 100,000 1,837,500 De Telegraaf Holding NV 70,000 1,292,253 (Certificaten Van Aandelen) Fortis Amev NV 100,000 3,452,688 Heineken Holding NV 300,000 10,918,215 ING Groep NV 750,000 44,369,094 Koninklijke Ahold NV 200,000 6,160,616 Koninklijke KPN NV 100,000 5,146,857 SHARES VALUE (NOTE 1) Koninklijke Philips 200,000 $ 20,570,550 Electronics NV Laurus NV 50,000 1,115,557 Norit NV 225,000 1,661,468 Pakhoed NV, Koninklijke 50,000 1,400,380 Samas Groep NV 30,250 411,648 Scala Business Solutions NV 200,000 717,332 (a) Smit International NV 200,000 4,662,658 (Certificaten Van Aandelen) STMicroelectronics NV 135,000 12,268,125 TNT Post Group NV 250,000 6,382,145 Unilever NV (NY shares) 400,000 26,675,000 United Pan-Europe 75,000 5,783,489 Communications NV Van Melle NV 60,000 3,259,641 Vedior NV 400,000 6,751,360 Vendex KBB NV 550,000 16,100,411 Wolters Kluwer NV 250,000 8,378,543 227,248,679 NEW ZEALAND - 0.6% CDL Hotels New Zealand Ltd. 2,000,000 345,236 Contact Energy Ltd. 1,000,000 1,741,411 Fletcher Challenge Ltd.: Forestry Division (a) 10,000,000 4,112,370 Paper Division 5,000,000 3,274,665 Building Division 1,000,000 1,238,788 Sky City Ltd. 1,200,000 2,400,406 Telecom Corp. of New Zealand 1,500,000 6,046,707 Ltd. Tranz Rail Holdings Ltd. 247,000 1,296,750 sponsored ADR 20,456,333 NORWAY - 0.5% Bergensbanken ASA 38,700 583,610 Den Norske Bank ASA Class A 500,000 1,942,554 Free shares Merkantildata (e) 150,000 1,274,801 NetCom ASA (a) 50,000 1,757,245 Norsk Hydro AS 100,000 4,000,128 Smedvig AS 26,000 259,178 Sparebanken NOR primary 300,000 6,632,800 shares certificates 16,450,316 PANAMA - 0.3% Banco Latinamericano de 450,000 10,771,875 Exporaciones SA Class E PAPUA NEW GUINEA - 0.1% Oil Search Ltd. (a) 2,500,000 2,917,478 PORTUGAL - 0.1% Electricidade de Portugal SA 100,000 1,559,142 Portugal Telecom SA 40,000 1,789,110 3,348,252 SINGAPORE - 0.4% Chartered Semiconductor 19,200 637,200 Manufacturing Ltd. ADR COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SINGAPORE - CONTINUED Datacraft Asia Ltd. 250,000 $ 1,150,000 Delgro Corp. Ltd. 700,000 2,422,510 Fraser & Neave Ltd. 1,500,000 6,409,871 Haw Par Corp. Ltd. 1,000,000 1,709,299 Times Publishing Ltd. 1,500,000 2,762,564 15,091,444 SOUTH AFRICA - 0.6% Anglo American Platinum Corp. 200,000 5,760,312 Ltd. Anglogold Ltd. 100,000 5,646,408 Gold Fields Ltd. 100,000 478,399 Gold Fields of South Africa 500,000 1,163,453 Ltd. Impala Platinum Holdings Ltd. 200,000 6,925,393 Standard Bank Investment 500,000 1,708,567 Corp. Ltd. 21,682,532 SPAIN - 1.7% Amadeus Global Travel 430,700 2,585,226 Distribution SA (a) Banco Santander Central 1,700,000 17,318,750 Hispano SA ADR Repsol SA sponsored ADR 450,000 9,225,000 Telefonica SA sponsored ADR 600,000 29,962,500 (a) 59,091,476 SWEDEN - 3.1% A-Com AB (a) 99,400 1,151,620 Atlas Copco AB Series B 57,142 1,491,312 Atle AB 50,000 771,365 Avesta Sheffield AB (a) 500,000 2,372,024 Bure Investment AB 100,000 542,699 Electrolux AB 400,000 8,000,244 Ericsson (L.M.) Telefon AB 700,000 29,925,000 sponsored ADR Class B ForeningsSparbanken AB Series 250,000 3,994,024 A Information Highway AB (a) 150,000 4,957,468 Investor AB Class B Free 1,200,000 15,439,495 shares Kinnevik Investment AB Series 500,000 9,939,327 B Kungsleden AB (a) 100,000 774,414 Linne Group AB (a) 20,000 357,328 Mo Och Domsjoe AB Series B 100,000 2,951,309 Modern Times Group AB Series 200,000 6,488,003 B (a) Net Insight AB (B shares) (a) 4,166 134,637 Netcom AB Series B (a) 125,000 5,205,951 Rottneros AB 100,000 109,150 SKF AB 150,000 3,054,971 Svedala Industri AB (Free 300,000 5,305,040 shares) Swedish Match Co. 2,500,000 9,177,109 TV 4 AB Class A 25,220 344,479 112,486,969 SWITZERLAND - 6.1% ABB Ltd. (Reg) (Switzerland) 100,000 10,092,708 (a) Bank for International 712 4,531,633 Settlements SHARES VALUE (NOTE 1) Credit Suisse Group (Reg.) 80,000 $ 15,411,927 Disetronic Holding AG 1,805 6,883,424 Edipresse SA (Bearer) 35,000 14,428,957 Gretag Imaging Holding AG 118,000 14,974,029 (Reg.) Julius Baer Holding AG 1,000 3,014,662 Mikron Holding AG 10,000 3,110,001 Mikron Holding AG warrants 7,425 39,495 12/15/99 (a) Nestle SA (Reg.) 18,000 34,795,187 Novartis AG (Reg.) 14,000 20,987,573 Phonak Holding AG 1,000 1,545,138 PubliGroupe SA 25,000 18,377,277 Richemont Compagnie Financier 6,000 11,487,935 Class A Unit Roche Holding AG 2,000 24,064,699 participation certificates Swatch Group AG (The) (Reg.) 100,000 16,437,636 Swiss Reinsurance Co. (Reg.) 4,000 8,310,869 UBS AG 30,000 8,748,110 ZZ Holding AG 1,000 1,052,009 218,293,269 UNITED KINGDOM - 11.5% Aggreko PLC 1,000,000 5,023,642 Allied Domecq PLC 1,500,000 8,435,772 Allied Zurich PLC 1,000,000 12,086,340 Antofagasta Holdings PLC 800,000 5,498,874 Barclays PLC 350,000 10,722,310 BICC PLC 1,500,000 2,688,594 Billiton PLC 700,000 3,027,340 Biocompatibles International 244,444 976,772 PLC (a) Bodycote International PLC 300,000 1,223,434 BP Amoco PLC sponsored ADR 720,000 41,580,000 British American Tobacco PLC 600,000 3,976,159 British Telecommunications PLC 1,000,000 17,999,997 British Vita PLC Ord. 600,000 2,417,268 Capital Radio PLC 50,000 821,378 CGU PLC 750,000 10,933,205 CMG PLC 50,000 1,945,325 Diageo PLC 1,000,000 10,113,060 Dialog Semiconductor PLC 225,000 5,810,389 Ellis & Everard PLC 1,000,000 3,568,348 Energis PLC (a) 100,000 3,191,780 F.I. Group PLC 166,300 1,403,741 Future Networks Ltd. 400,000 4,676,674 Glaxo Wellcome PLC sponsored 200,000 11,975,000 ADR Guinness Peat Group PLC 102,500 82,590 Hanson PLC 1,000,000 7,737,494 House of Fraser PLC 2,000,000 2,203,496 HSBC Holdings PLC (Reg.) 1,200,000 14,774,993 Invensys PLC 600,000 2,950,054 ITNET PLC 13,800 129,311 Johnson Matthey PLC 300,000 2,779,858 Kewill Systems PLC 200,000 2,234,569 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) UNITED KINGDOM - CONTINUED Kingston Communications 196,800 $ 1,465,747 (HULL) PLC (a) Lloyds TSB Group PLC 650,000 8,994,457 Logica PLC 250,000 3,825,286 Lonmin PLC 300,000 3,019,118 Man (E D & F) Group PLC 500,000 2,910,588 MG PLC (a) 800,000 2,302,160 National Westminster Bank PLC 600,000 13,556,434 Norwich Union PLC 500,000 3,837,619 Nycomed Amersham PLC 1,200,000 7,311,002 Paterson Zochonis PLC Class A 300,000 1,331,964 (non-vtg.) Professional Staff PLC 804,000 4,070,250 sponsored ADR (a)(d) Prudential Corp. PLC 200,000 3,139,160 Reckitt & Colman PLC 400,000 4,857,558 Reed International PLC 500,000 2,918,810 Rio Tinto PLC (Reg.) 500,000 8,559,102 Royal & Sun Alliance 800,000 5,446,253 Insurance Group PLC Severn Trent PLC 400,000 5,745,534 Shell Transport & Trading Co. 5,000,000 38,229,176 PLC (Reg.) Smith & Nephew PLC 1,000,000 3,223,024 SmithKline Beecham PLC 250,000 16,000,000 sponsored ADR South African Breweries PLC 600,000 5,252,624 Tomkins PLC 850,000 2,882,839 Unilever PLC ADR 300,000 11,156,250 United Biscuits Holdings PLC 150,000 529,086 Vodafone AirTouch PLC 900,000 43,143,750 sponsored ADR Wetherspoon (JD) PLC 350,000 1,968,347 WPP Group PLC 300,000 3,258,379 411,922,284 UNITED STATES OF AMERICA - 1.2% Akamai Technologies, Inc. 1,300 188,744 Autoliv, Inc. 175,000 5,589,063 Hollinger International, Inc. 408,800 4,241,300 Class A JDS Uniphase Corp. (a) 25,426 4,242,964 Orthofix International NV (a) 635,000 8,890,000 Pharmacia & Upjohn, Inc. 200,000 10,787,500 Plug Power, Inc. 1,900 30,400 UnitedGlobalCom, Inc. (a) 85,000 7,395,000 41,364,971 TOTAL COMMON STOCKS 3,161,717,968 (Cost $2,530,777,139) NONCONVERTIBLE PREFERRED STOCKS - 0.1% GERMANY - 0.1% Marschollek Lautenschlaeger 18,000 3,807,134 und Partner AG (Cost $3,038,675) INVESTMENT COMPANIES - 3.5% SHARES VALUE (NOTE 1) ARGENTINA - 0.0% Argentina Fund, Inc. 175,000 $ 1,870,313 BRAZIL - 0.1% Brazil Fund, Inc. 150,000 2,006,250 CANADA - 0.2% Economic Investment Trust 61,673 3,708,677 Ltd. United Corporations Ltd. 86,921 2,569,181 6,277,858 CHILE - 0.2% Chile Fund, Inc. 420,000 4,226,250 Five Arrows Chile Investment 750,000 1,530,000 Trust Ltd. Genesis Chile Fund 35,000 923,125 6,679,375 CHINA - 0.0% China Fund, Inc. 100,000 993,750 EMERGING MARKETS - 0.6% Asia Tigers Fund, Inc. 525,000 4,528,125 Central European Equity Fund, 175,000 2,187,500 Inc. Emerging Markets 354,568 3,058,149 Infrastructure Fund, Inc. Emerging Markets 250,000 2,687,500 Telecommunication Fund, Inc. Southern Africa Fund, Inc. 17,076 199,576 Templeton Dragon Fund, Inc. 1,000,000 8,437,500 21,098,350 FRANCE - 0.2% France Growth Fund, Inc. 440,000 6,132,500 GERMANY - 0.1% New Germany Fund, Inc. (The) 252,800 3,049,400 HONG KONG - 0.1% Asia Pacific Fund, Inc. 400,000 3,750,000 Greater China Fund, Inc. 90,000 686,250 4,436,250 INDIA - 0.3% India Fund 450,000 5,568,750 India Growth Fund (a) 200,000 2,337,500 Jardine Fleming India Fund, 250,000 2,234,375 Inc. (a) 10,140,625 ISRAEL - 0.0% First Israel Fund, Inc. 125,000 1,781,250 ITALY - 0.1% Italy Fund, Inc. (The) 285,000 3,990,000 KOREA (SOUTH) - 0.2% Korea Equity Fund (a) 200,000 862,500 Korea Fund, Inc. (The) (a) 375,000 4,781,250 Korean Investment Fund, Inc. 200,000 1,312,500 (a) 6,956,250 INVESTMENT COMPANIES - CONTINUED SHARES VALUE (NOTE 1) MEXICO - 0.4% Mexico Fund, Inc. (The) 1,000,000 $ 14,312,500 MULTI-NATIONAL - 0.5% Blackrock North American 450,000 4,359,375 Government Income Trust, Inc. MFS Government Markets Income 1,000,000 5,937,500 Trust Morgan Stanley Asia-Pacific 600,000 5,812,500 Fund, Inc. RCM Strategic Global 100,000 900,000 Government Fund, Inc. Strategic Global Income Fund, 250,000 2,593,750 Inc. 19,603,125 PHILIPPINES - 0.0% First Philippine Fund, Inc. 250,000 1,546,875 (a) PORTUGAL - 0.1% Portugal Fund, Inc. 158,900 1,956,456 SINGAPORE - 0.1% Singapore Fund, Inc. 275,000 2,457,813 WEBS Index Fund, Inc. 99,000 804,375 3,262,188 SPAIN - 0.1% Kemper Global Growth Fund of 145,747 3,027,173 Spain Class A SWITZERLAND - 0.2% Swiss Helvetia Fund, Inc. 400,000 5,725,000 THAILAND - 0.0% Thai Euro Fund Ltd. 50,000 300,000 Thai Prime Fund (a) 200,000 860,000 1,160,000 TOTAL INVESTMENT COMPANIES 126,005,488 (Cost $121,136,018)
CONVERTIBLE BONDS - 0.3% MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT ISRAEL - 0.1% Tecnomatix Tech Ltd. 5.25% - $ 5,857,000 4,400,071 8/15/04 UNITED STATES OF AMERICA - 0.2% Nestle Holdings, Inc. 3% AAA 4,000,000 4,900,000 6/17/02 TOTAL CONVERTIBLE BONDS 9,300,071 (Cost $9,467,285)
CASH EQUIVALENTS - 9.5% SHARES VALUE (NOTE 1) Central Cash Collateral Fund, 31,979,519 $ 31,979,519 5.26% (c) Taxable Central Cash Fund, 306,268,706 306,268,706 5.21% (c) TOTAL CASH EQUIVALENTS 338,248,225 (Cost $338,248,225) TOTAL INVESTMENT PORTFOLIO - 3,639,078,886 101.7% (Cost $3,002,667,342) NET OTHER ASSETS - (1.7)% (59,492,869) NET ASSETS - 100% $ 3,579,586,017 LEGEND (a) Non-income producing (b) Standard & Poor's credit ratings are used in the absence of a rating by Moody's Investors Service, Inc. (c) The rate quoted is the annualized seven-day yield of the fund at period end. (d) Affiliated company (e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $14,934,927 or 0.4% of net assets. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $2,666,429,196 and $1,786,144,404, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $37,383 for the period. The fund participated in the security lending program. At period end, the value of securities loaned amounted to $30,743,368. The fund received cash collateral of $31,979,519 which was invested in the Central Cash Collateral Fund. Transactions during the period with companies which are or were affiliates are as follows: PURCHASES SALES DIVIDEND VALUE AFFILIATE COST COST INCOME Elamex SA de CV $ - $ - $ - $ 1,330,375 Professional Staff PLC Sponsored ADR 1,830,231 - - 4,070,250 Professional Staff PLC Sponsored ADR - 218,291 - - TOTALS $ 1,830,231 $ 218,291 $ - $ 5,400,625 INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $3,009,602,809. Net unrealized appreciation aggregated $629,476,077, of which $728,473,696 related to appreciated investment securities and $98,997,619 related to depreciated investment securities. The fund hereby designates approximately $67,262,000 as a capital gain dividend for the purpose of the dividend paid deduction. MARKET SECTOR DIVERSIFICATION (UNAUDITED) As a Percentage of Net Assets BASIC INDUSTRIES 5.7% CASH EQUIVALENTS 9.5 CONSTRUCTION & REAL ESTATE 1.0 DURABLES 5.4 ENERGY 6.3 FINANCE 16.0 HEALTH 6.9 HOLDING COMPANIES 0.7 INDUSTRIAL MACHINERY & 4.7 EQUIPMENT INVESTMENT COMPANIES 3.5 MEDIA & LEISURE 3.9 NONDURABLES 6.0 PRECIOUS METALS 0.8 RETAIL & WHOLESALE 1.5 SERVICES 2.6 TECHNOLOGY 13.4 TRANSPORTATION 0.8 UTILITIES 13.0 DIVERSIFIED INTERNATIONAL FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 3,639,078,886 value (cost $3,002,667,342) - - See accompanying schedule Foreign currency held at 327,377 value (cost $324,651) Receivable for investments 38,694,568 sold Receivable for fund shares 16,160,806 sold Dividends receivable 6,311,688 Interest receivable 1,417,476 Other receivables 123,273 TOTAL ASSETS 3,702,114,074 LIABILITIES Payable to custodian bank $ 282,056 Payable for investments 72,604,520 purchased Payable for fund shares 14,036,197 redeemed Accrued management fee 2,249,379 Other payables and accrued 1,376,386 expenses Collateral on securities 31,979,519 loaned, at value TOTAL LIABILITIES 122,528,057 NET ASSETS $ 3,579,586,017 Net Assets consist of: Paid in capital $ 2,774,332,529 Undistributed net investment 28,734,752 income Accumulated undistributed net 140,088,611 realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 636,430,125 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 167,755,792 $ 3,579,586,017 shares outstanding NET ASSET VALUE, offering $21.34 price and redemption price per share ($3,579,586,017 (divided by) 167,755,792 shares) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 52,736,749 Dividends Interest 8,049,893 Security lending 174,418 60,961,060 Less foreign taxes withheld (5,642,700) TOTAL INCOME 55,318,360 EXPENSES Management fee Basic fee $ 19,062,217 Performance adjustment 2,531,329 Transfer agent fees 7,147,989 Accounting and security 1,134,709 lending fees Non-interested trustees' 8,242 compensation Custodian fees and expenses 946,516 Registration fees 415,942 Audit 47,476 Legal 21,044 Reports to shareholders 187,637 Miscellaneous 5,433 Total expenses before 31,508,534 reductions Expense reductions (719,086) 30,789,448 NET INVESTMENT INCOME 24,528,912 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 168,151,747 (including realized gain (loss) of $102,901 on sales of investments in affiliated issuers) Foreign currency transactions (315,228) 167,836,519 Change in net unrealized appreciation (depreciation) on: Investment securities 481,662,284 Assets and liabilities in (43,558) 481,618,726 foreign currencies NET GAIN (LOSS) 649,455,245 NET INCREASE (DECREASE) IN $ 673,984,157 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION $ 554,377 Expense reductions Directed brokerage arrangements Custodian credits 13,034 Transfer agent credits 151,675 $ 719,086 STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 ASSETS Operations Net investment $ 24,528,912 $ 27,052,311 income Net realized gain (loss) 167,836,519 74,228,503 Change in net unrealized 481,618,726 (350,064) appreciation (depreciation) NET INCREASE (DECREASE) IN 673,984,157 100,930,750 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (26,414,796) (17,340,499) From net investment income From net realized gain (53,970,908) (37,418,194) TOTAL DISTRIBUTIONS (80,385,704) (54,758,693) Share transactions Net 2,707,434,686 1,769,510,488 proceeds from sales of shares Reinvestment of distributions 75,587,611 53,307,005 Cost of shares redeemed (1,741,849,904) (1,438,501,445) NET INCREASE (DECREASE) IN 1,041,172,393 384,316,048 NET ASSETS RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) 1,634,770,846 430,488,105 IN NET ASSETS NET ASSETS Beginning of period 1,944,815,171 1,514,327,066 End of period (including $ 3,579,586,017 $ 1,944,815,171 undistributed net investment income of $28,734,752 and $23,593,280, respectively) OTHER INFORMATION Shares Sold 142,411,837 100,969,939 Issued in reinvestment of 4,456,615 3,298,675 distributions Redeemed (92,138,799) (82,605,831) Net increase (decrease) 54,729,653 21,662,783
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995 SELECTED PER-SHARE DATA Net asset value, beginning of $ 17.21 $ 16.57 $ 14.38 $ 12.73 $ 12.46 period Income from Investment Operations Net investment income .18 B .26 B .24 B, C .15 .22 Net realized and unrealized 4.65 .98 2.46 2.13 .47 gain (loss) Total from investment 4.83 1.24 2.70 2.28 .69 operations Less Distributions From net investment income (.23) (.19) (.15) (.22) (.03) From net realized gain (.47) (.41) (.36) (.41) (.39) Total distributions (.70) (.60) (.51) (.63) (.42) Net asset value, end of period $ 21.34 $ 17.21 $ 16.57 $ 14.38 $ 12.73 TOTAL RETURN A 29.12% 7.72% 19.30% 18.66% 6.02% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 3,579,586 $ 1,944,815 $ 1,514,327 $ 665,492 $ 295,017 (000 omitted) Ratio of expenses to average 1.21% 1.22% 1.25% 1.29% 1.13% net assets Ratio of expenses to average 1.18% D 1.19% D 1.23% D 1.27% D 1.12% D net assets after expense reductions Ratio of net investment .94% 1.46% 1.49% 1.53% 1.55% income to average net assets Portfolio turnover rate 73% 95% 81% 94% 101% 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.
INTERNATIONAL VALUE PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1994 PAST 1 YEAR LIFE OF FUND FIDELITY INTL VALUE 35.47% 82.22% MSCI EAFE 23.29% 56.54% International Funds Average 25.53% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year or since the fund started on November 1, 1994. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Morgan Stanley Capital International Europe, Australasia, Far East (EAFE) Index - a market capitalization-weighted index that is designed to represent the performance of developed stock markets outside the United States and Canada. As of October 31, 1999, the index included over 900 equity securities of countries domiciled in 20 countries. To measure how the fund's performance stacked up against its peers, you can compare it to the international funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 589 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1994 PAST 1 YEAR LIFE OF FUND FIDELITY INTL VALUE 35.47% 12.75% MSCI EAFE 23.29% 9.38% International Funds Average 25.53% n/a AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND International Value MS EAFE (Net MA tax) 00335 MS001 1994/11/01 10000.00 10000.00 1994/11/30 9700.00 9533.02 1994/12/31 9790.00 9592.71 1995/01/31 9440.00 9224.21 1995/02/28 9530.00 9197.73 1995/03/31 10000.00 9771.40 1995/04/30 10170.00 10138.89 1995/05/31 10030.00 10018.03 1995/06/30 10040.00 9842.35 1995/07/31 10830.00 10455.10 1995/08/31 10800.00 10056.27 1995/09/30 10860.00 10252.67 1995/10/31 10630.00 9977.08 1995/11/30 10820.00 10254.68 1995/12/31 11150.86 10667.84 1996/01/31 11253.73 10711.64 1996/02/29 11294.88 10747.85 1996/03/31 11521.18 10976.09 1996/04/30 11912.08 11295.20 1996/05/31 11840.07 11087.35 1996/06/30 11973.80 11149.75 1996/07/31 11562.33 10823.87 1996/08/31 11562.33 10847.59 1996/09/30 11870.93 11135.76 1996/10/31 11654.91 11021.81 1996/11/30 12251.54 11460.35 1996/12/31 12219.78 11312.93 1997/01/31 12198.62 10919.24 1997/02/28 12452.54 11100.50 1997/03/31 12547.75 11142.68 1997/04/30 12568.91 11203.96 1997/05/31 13394.15 11935.25 1997/06/30 14060.68 12595.26 1997/07/31 14409.82 12800.82 1997/08/31 13351.83 11846.52 1997/09/30 14187.64 12511.94 1997/10/31 13193.13 11553.40 1997/11/30 13087.33 11437.87 1997/12/31 13178.62 11539.78 1998/01/31 13581.27 12069.69 1998/02/28 14364.81 12846.37 1998/03/31 15039.52 13244.35 1998/04/30 15453.05 13351.37 1998/05/31 15431.29 13289.02 1998/06/30 15289.82 13392.01 1998/07/31 15518.35 13530.21 1998/08/31 12395.09 11856.39 1998/09/30 12329.79 11495.48 1998/10/31 13450.68 12696.41 1998/11/30 14353.93 13349.39 1998/12/31 14726.16 13878.56 1999/01/31 15075.74 13840.11 1999/02/28 14507.67 13512.79 1999/03/31 15359.77 14079.52 1999/04/30 16058.94 14652.27 1999/05/31 15283.30 13900.18 1999/06/30 16299.28 14444.52 1999/07/31 16845.50 14876.41 1999/08/31 17020.29 14933.23 1999/09/30 17348.02 15086.15 1999/10/29 18221.98 15653.69 IMATRL PRASUN SHR__CHT 19991031 19991111 112218 R00000000000063 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity International Value Fund on November 1, 1994, when the fund started. As the chart shows, by October 31, 1999, the value of the investment would have grown to $18,222 - an 82.22% increase on the initial investment. For comparison, look at how the Morgan Stanley Capital International EAFE Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $15,654 - a 56.54% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) INTERNATIONAL VALUE FUND TALK: THE MANAGER'S OVERVIEW An interview with Richard Mace, Portfolio Manager of Fidelity International Value Fund Q. HOW DID THE FUND PERFORM, RICK? A. Very well. For the 12 months that ended October 31, 1999, the fund returned 35.47%. The Morgan Stanley Capital International Europe, Australasia, Far East (EAFE) Index returned 23.29% during the same period, while the international funds average - as tracked by Lipper Inc. - returned 25.53%. Q. CAN YOU HIGHLIGHT SOME OF THE FACTORS THAT HELPED THE FUND PERFORM SO WELL? A. Good stock picking in Japan and strong performance from several of the fund's energy services positions helped. After enduring years of sputtering capital markets and economic doldrums, the Japanese market experienced a nice rebound during the period and the fund was able to take advantage. While the fund was underweighted in Japan relative to the Morgan Stanley index, good stock selection in that market helped. In particular, positions in software and network servicing companies produced great results. Chief among these were Softbank, a large Internet venture capital firm, as well as Hitachi Information Systems and Nippon Systems Development. The fund's positions in Japanese telecommunications stocks also performed well, including DDI Corp. and Kokusai Denshin Denwa. At the end of the period, just over 25% of the fund's total assets were in Japan, compared to 17% six months ago. Q. WHAT ABOUT THE FUND'S ENERGY SERVICES AND OIL-RELATED HOLDINGS? A. The fund realized strong returns from several of its larger stakes in this area, most notably Elf Aquitaine, Total, BP Amoco and Shell Transport & Trading. Each of these stocks benefited from rebounding oil prices during the period, as well as reduced production and increased demand. That being said, it's important to note that my strategy with oil stocks involves looking for sustainable earnings growth rather than trying to forecast the direction of oil prices. I added to the fund's position in Elf Aquitaine mainly because I was drawn to the company's projected production growth rates. Total, meanwhile, attracted my interest for its current production growth rates. Interestingly, these large French oil companies merged with one another during the period, a move that I feel will prove advantageous to both down the road. Q. IT SEEMS EVERYWHERE YOU GO TODAY, PEOPLE HAVE CELLULAR PHONES IN THEIR HANDS. HAS THE SAME BEEN TRUE OVERSEAS AND HAS THE FUND BEEN ABLE TO TAKE ADVANTAGE? A. The power of wireless communications is indeed becoming more global. One of the fund's strongest performers in this area was U.K. telecommunications stock Vodafone AirTouch. Vodafone benefited from a strong presence in its home market, and also was boosted after the company announced it was merging its mobile business with Bell Atlantic in the U.S. Another wireless-related position that fared well was Finland's Nokia. This has been a longstanding stock within the portfolio, and it continued to reflect many of the things I look for in a promising investment: strong management execution, accelerating market share and solid returns. Not all telecom stocks did well, however. Telecom Italia was one of the fund's biggest disappointments, as several company decisions seemed to go against the best interests of shareholders. Q. CAN YOU HIGHLIGHT SOME OTHER INVESTMENTS THAT DIDN'T PERFORM AS WELL AS YOU WOULD HAVE LIKED? A. Ah, there's always a few of those. One disappointment was Olivetti, the Italian office equipment/telecommunications company. Over the years, Olivetti has gradually moved more into the telecom industry. During this particular period, the company made several questionable investment decisions and the market seemed to punish them for it. Switzerland-based Nestle, the world's largest foodmaker, was another detractor. Depressed economies around the world diminished the company's earnings power, particularly in the emerging markets, where Nestle realizes close to 33% of its total sales. Nestle's earnings also were hindered by the strengthening of the Swiss franc relative to the dollar. The company generates around 50% of its sales in dollar or dollar-related currencies. Q. HOW DID THE FUND'S FINANCE-RELATED POSITIONS PERFORM? A. Bank stocks contributed positively. Specifically, the fund's investments in French banking giants Societe Generale and Banque Nationale de Paris posted strong gains as the country's largest banks sought to combine their operations and further strengthen their global competitiveness. British banks Standard Chartered and HSBC Holdings also fared well, as investors viewed Asian economic recoveries as favorable for banks with high exposure to that region. Britain's Lloyds TSB continued to produce healthy gains as well, as did the fund's positions in Mexican banks such as Banacci. Q. WHAT'S YOUR OUTLOOK FOR THE NEXT FEW MONTHS? A. Consolidation and cross-border mergers have become the norm throughout the world. With 11 countries in Europe operating under a single currency - the euro - it has become much simpler to complete such deals. Going forward, I think we'll see this trend continue, if not accelerate. As big companies become bigger, many smaller firms may continue to acquire assets just to keep up. Japanese companies have followed in the footsteps of their U.S. counterparts in terms of restructuring from within, and this bodes well for that market. As a result, stock valuations may be influenced more by competitive trends within various industries rather than by local market fluctuations. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY FIDELITY FUND. RICK MACE TALKS ABOUT THE GROWING WORLDWIDE EMPHASIS ON SHAREHOLDER VALUE: "Traditionally, European and Japanese companies have focused on the needs of customers and employees, and in doing so have paid scant attention to the needs of shareholders. In recent years, however, company managers have begun to look for ways to reward the people who buy the firm's shares. "The trend may be strongest in Europe, where companies have been working to boost their share values by shedding unprofitable product lines, becoming more efficient and finding more profitable uses for their cash. This new emphasis on shareholder value reflects a number of factors. Increasingly, corporate managers at European firms have accepted pay packages with stock options that tie their compensation to the performance of their firm's shares. Even in Japan, companies such as Sony and Matsushita Electric have been making similar use of options to motivate managers. In fact, we're seeing a revolution of sorts in the executive suites of many of the world's major businesses. Managers of companies like these are now beginning to care about their firm's share price. "At the same time, a wave of mergers, acquisitions and other restructuring moves in Europe has served as a warning to managers. The message is that weak or inefficient companies with lagging stock prices could be absorbed by stronger competitors. Changing government regulations also have helped fuel the financial markets' transformation. For example, until recently Japan and most European countries prohibited firms from repurchasing shares directly from stockholders. That deprived them of a tool that U.S. companies have long used to return excess earnings and cash to their investors. Now, however, such buybacks are legal in Japan and in European markets such as the United Kingdom, France and Sweden. While this practice is still relatively unusual in Japan, some leading firms such as Toyota have conducted large stock-buyback programs to make more efficient use of their cash and enhance shareholder value. "These changes come as a welcome development to U.S. investors who are accustomed to more shareholder friendly corporate managements at home. Such trends can only serve to advance the relative attractiveness of investing overseas." FUND FACTS GOAL: seeks growth of capital primarily through investments in foreign securities FUND NUMBER: 335 TRADING SYMBOL: FIVFX START DATE: November 1, 1994 SIZE: as of October 31, 1999, more than $535 million MANAGER: Richard Mace, since inception; manager, Fidelity Overseas Fund, since 1996; Fidelity Global Balanced Fund, since 1996; joined Fidelity in 1987 INTERNATIONAL VALUE INVESTMENT CHANGES AS OF OCTOBER 31, 1999 United States 7.7% Row: 1, Col: 1, Value: 12.2 Row: 1, Col: 2, Value: 7.5 Row: 1, Col: 3, Value: 25.5 Row: 1, Col: 4, Value: 2.7 Row: 1, Col: 5, Value: 5.7 Row: 1, Col: 6, Value: 15.4 Row: 1, Col: 7, Value: 3.1 Row: 1, Col: 8, Value: 4.4 Row: 1, Col: 9, Value: 15.8 Row: 1, Col: 10, Value: 7.7 France 12.2% United Kingdom 15.8% Germany 7.5% Switzerland 4.4% Spain 3.1% Japan 25.5% Other 15.4% Netherlands 5.7% Mexico 2.7% PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF APPLICABLE. GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30, 1999 United States 10.1% France 16.0% Row: 1, Col: 1, Value: 16.0 Row: 1, Col: 2, Value: 8.0 Row: 1, Col: 3, Value: 8.5 Row: 1, Col: 4, Value: 17.0 Row: 1, Col: 5, Value: 7.7 Row: 1, Col: 6, Value: 12.2 Row: 1, Col: 7, Value: 4.3 Row: 1, Col: 8, Value: 4.2 Row: 1, Col: 9, Value: 12.0 Row: 1, Col: 10, Value: 10.1 United Kingdom 12.0% Germany 8.0% Switzerland 4.2% Italy 8.5% Spain 4.3% Other 12.2% Japan 17.0% Netherlands 7.7% PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF APPLICABLE.
ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks, investment companies 90.5 93.9 and equity futures Bonds 2.5 0.0 Short-term investments and 7.0 6.1 net other assets
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS. TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Total Fina SA Class B 4.0 6.2 (France, Oil & Gas) Vodafone AirTouch PLC 3.4 0.0 sponsored ADR (United Kingdom, Cellular) DDI Corp. (Japan, Telephone 3.0 2.3 Services) Telefonica SA (Spain, 2.5 3.5 Telephone Services) Nokia AB (Finland, 2.5 3.1 Communications Equipment) Kyocera Corp. (Japan, 2.5 1.3 Electronics) Kokusai Denshin Denwa 2.4 0.0 (Japan, Telephone Services) Mannesmann AG (Reg.) 2.4 4.4 (Germany, Cellular) Nestle SA (Reg.) 2.4 2.9 (Switzerland, Foods) British Telecommunications 2.0 0.0 PLC (United Kingdom, Telephone Services) 27.1 13.1 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO FINANCE 20.4 21.4 UTILITIES 20.3 22.5 TECHNOLOGY 8.8 7.4 ENERGY 6.4 8.2 NONDURABLES 5.1 5.2 HEALTH 4.6 6.1 BASIC INDUSTRIES 4.5 4.1 RETAIL & WHOLESALE 3.5 1.9 INDUSTRIAL MACHINERY & 2.9 1.4 EQUIPMENT SERVICES 2.7 2.0 INTERNATIONAL VALUE INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 84.2% SHARES VALUE (NOTE 1) AUSTRALIA - 0.9% Australia & New Zealand 406,000 $ 2,679,420 Banking Group Ltd. News Corp. Ltd. sponsored ADR 69,600 2,061,900 4,741,320 CANADA - 0.9% Alcan Aluminium Ltd. 60,400 1,980,227 Inco Ltd. 93,600 1,882,558 Toronto Dominion Bank 46,000 1,054,902 4,917,687 FINLAND - 2.5% Nokia AB 116,800 13,497,700 FRANCE - 11.5% AXA SA de CV 44,600 6,309,209 Banque Nationale de Paris 54,800 4,827,011 Cap Gemini SA 5,800 881,052 Compagnie Generale de 200,000 2,150,000 Geophysique SA sponsored ADR (a) France Telecom SA 90,000 8,720,331 Groupe Danone 11,200 2,865,108 Rhodia SA 65,900 1,275,654 Sanofi-Synthelabo SA (a) 124,800 5,522,781 Societe Generale, France 10,000 2,183,643 Class A Suez Lyonnaise des Eaux 11,100 1,797,391 Total Fina SA Class B 158,892 21,192,220 Vivendi SA (a) 51,130 3,886,164 61,610,564 GERMANY - 6.4% Allianz AG (Reg.) 13,800 4,194,050 BASF AG 60,800 2,709,827 Bayer AG 47,700 1,948,341 Deutsche Bank AG 74,100 5,313,867 Deutsche Telekom AG 22,400 1,036,165 EPCOS AG (a) 12,500 513,868 Kali Und Salz Beteiligungs AG 197,000 2,822,132 Mannesmann AG (Reg.) 82,100 12,982,433 Munich Reinsurance AG (Reg.) 5,200 1,188,704 Veba AG 30,300 1,645,799 34,355,186 HONG KONG - 1.9% China Telecom (Hong Kong) 616,000 2,079,000 Ltd. (a) Dah Sing Financial Holdings 802,000 3,200,566 Ltd. Dao Heng Bank Group Ltd. 464,000 2,132,441 Wing Hang Bank Ltd. 801,000 2,613,974 10,025,981 SHARES VALUE (NOTE 1) IRELAND - 1.2% Bank of Ireland, Inc. 786,170 $ 6,161,927 Esat Telecom Group PLC 5,900 264,025 sponsored ADR (a) 6,425,952 ITALY - 2.1% Assicurazioni Generali Spa 66,700 2,156,590 Banca Commerciale Italiana Spa 316,200 1,915,632 Eni Spa sponsored ADR 338,100 1,994,096 Olivetti & Co. Spa 520,700 1,006,842 San Paolo-IMI Spa 65,300 862,578 Telecom Italia Spa 372,000 3,217,800 11,153,538 JAPAN - 22.8% Aiful Corp. 11,000 1,711,405 CSK Corp. 26,900 1,240,048 Dai Nippon Printing Co. Ltd. 60,000 1,095,414 Daiwa Securities Co. Ltd. 418,000 4,468,034 DDI Corp. 1,467 16,061,273 Furukawa Electric Co. Ltd. 536,000 3,912,221 Heiwa Corp. 33,000 906,411 Hitachi Information Systems 12,000 463,289 Honda Motor Co. Ltd. 59,000 2,481,688 Hoya Corp. 29,000 2,088,836 Ito-Yokado Co. Ltd. 120,000 9,611,525 Jafco Co. Ltd. 13,000 1,460,744 Kirin Brewery Co. Ltd. 196,000 2,247,530 Kokusai Denshin Denwa 103,600 13,033,950 Kyocera Corp. 139,000 13,349,340 Matsushita Electric 144,000 3,050,100 Industrial Co. Ltd. Mitsumi Electric Co. Ltd. 34,000 911,020 Nichicon Corp. 239,000 5,187,419 Nikko Securities Co. Ltd. 116,000 1,091,765 Nintendo Co. Ltd. 17,000 2,702,041 Nippon System Development Co. 6,600 564,130 Ltd. Nomura Securities Co. Ltd. 415,000 6,859,208 Omron Corp. 326,000 6,825,258 Sakura Bank Ltd. 628,000 5,403,967 Sankyo Co. Ltd. (Gunma) 13,700 1,085,474 Softbank Corp. 13,500 5,613,926 Takeda Chemical Industries 80,000 4,602,161 Ltd. Yokogawa Electric Corp. 480,000 3,365,186 Yoshitomi Pharmaceutical 71,000 968,259 Industries Ltd. 122,361,622 KOREA (SOUTH) - 0.4% Samsung Electronics Co. Ltd. 13,200 2,200,918 LUXEMBOURG - 0.2% Stolt Comex Seaway SA (a) 120,000 1,282,500 MEXICO - 2.7% Banacci SA de CV Class O (a) 2,919,000 7,325,998 Cifra SA de CV Series V (a) 650,000 1,022,130 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) MEXICO - CONTINUED Empresas ICA Sociedad 10,600 $ 27,163 Controladora SA de CV sponsored ADR Grupo Financiero Bancomer SA 4,400,000 1,159,281 de CV Series A Telefonos de Mexico SA 23,600 2,017,800 sponsored ADR representing Class L shares Tubos de Acero de Mexico SA 244,700 2,676,406 sponsored ADR 14,228,778 NETHERLANDS - 5.7% Akzo Nobel NV 114,800 4,957,937 Beter Bed Holding NV 51,100 1,466,227 Fortis Amev NV 126,400 4,364,197 ING Groep NV 104,269 6,168,428 Koninklijke Philips 30,232 3,109,444 Electronics NV Numico NV 25,300 1,034,198 Samas Groep NV 92,500 1,258,759 Vedior NV 88,400 1,492,051 Vendex KBB NV 203,200 5,948,370 Vnu NV 18,500 627,428 30,427,039 NORWAY - 0.3% Bergesen d.y. AS: (B shares) 43,400 671,127 Class A 66,700 1,078,316 1,749,443 SINGAPORE - 0.7% Chartered Semiconductor 32,900 1,091,869 Manufacturing Ltd. ADR DBS Group Holdings Ltd. 236,089 2,671,365 3,763,234 SPAIN - 3.1% Banco Santander Central 303,800 3,163,124 Hispano SA Telefonica SA (a) 830,100 13,695,518 16,858,642 SWITZERLAND - 4.4% ABB Ltd. (Reg) (Switzerland) 20,800 2,099,283 (a) Credit Suisse Group (Reg.) 18,300 3,525,478 Nestle SA (Reg.) 6,700 12,951,542 Roche Holding AG 184 2,213,952 participation certificates UBS AG 8,700 2,536,952 23,327,207 SHARES VALUE (NOTE 1) TAIWAN - 1.1% Ritek Corp. 812,000 $ 5,324,590 Taiwan Semiconductor 173,420 770,877 Manufacturing Co. Ltd. 6,095,467 UNITED KINGDOM - 15.1% Allied Zurich PLC 148,350 1,793,009 Arcadia Group PLC 756,500 1,906,413 BP Amoco PLC 214,800 2,067,450 British Telecommunications PLC 607,700 10,938,598 Caradon PLC 1,653,200 3,856,495 Computacenter PLC 74,400 776,880 Glaxo Wellcome PLC 77,800 2,329,138 Lloyds TSB Group PLC 296,500 4,102,856 MFI Furniture Group PLC 2,644,200 1,771,860 Morgan Crucible Co. PLC 24,100 96,301 Rentokil Initial PLC 2,696,400 8,989,854 Reuters Group PLC 75,200 699,291 Royal & Sun Alliance 195,181 1,328,756 Insurance Group PLC Shell Transport & Trading Co. 834,600 6,381,214 PLC (Reg.) SmithKline Beecham PLC 569,100 7,284,476 Standard Chartered PLC 151,300 2,123,489 Thorntons PLC 147,118 472,955 Unigate PLC 384,800 1,784,398 Unilever PLC 462,321 4,298,142 Vodafone AirTouch PLC 377,000 18,072,438 sponsored ADR 81,074,013 UNITED STATES OF AMERICA - 0.3% OMI Corp. (a) 210,500 394,688 Overseas Shipholding Group, 76,900 990,088 Inc. 1,384,776 TOTAL COMMON STOCKS 451,481,567 (Cost $364,382,930) NONCONVERTIBLE PREFERRED STOCKS - 0.8% GERMANY - 0.4% Wella AG 75,400 2,107,796 ITALY - 0.4% Telecom Italia Spa Risp 390,800 1,931,414 TOTAL NONCONVERTIBLE 4,039,210 PREFERRED STOCKS (Cost $4,037,959) INVESTMENT COMPANIES - 2.8% EMERGING MARKETS - 1.6% Asia Tigers Fund, Inc. 434,700 3,749,288 Templeton Dragon Fund, Inc. 554,100 4,675,219 8,424,507 INVESTMENT COMPANIES - CONTINUED SHARES VALUE (NOTE 1) HONG KONG - 0.3% Asia Pacific Fund, Inc. 203,500 $ 1,907,813 INDIA - 0.3% India Fund 113,800 1,408,275 MULTI-NATIONAL - 0.6% European Warrant Fund, Inc. 56,500 872,219 Morgan Stanley Asia-Pacific 218,100 2,112,844 Fund, Inc. 2,985,063 TOTAL INVESTMENT COMPANIES 14,725,658 (Cost $15,259,691)
GOVERNMENT OBLIGATIONS (E) - 2.9% MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT (C) FRANCE - 0.7% French Government OAT 5.5% Aaa EUR 3,500,000 3,827,283 4/25/04 GERMANY - 0.7% German Federal Republic 3.75% Aaa EUR 3,800,000 3,907,202 8/26/03 UNITED KINGDOM - 0.7% United Kingdom, Great Britain Aaa GBP 2,300,000 3,891,045 & Northern Ireland 6.75% 11/26/04 UNITED STATES OF AMERICA - 0.8% U.S. Treasury Bills, yield at - 2,000,000 1,984,791 date of purchase 4.71% 12/30/99 (d) U.S. Treasury Bond stripped Aaa 11,900,000 2,113,321 principal 0% 11/15/27 4,098,112 TOTAL GOVERNMENT OBLIGATIONS 15,723,642 (Cost $15,790,870)
CASH EQUIVALENTS - 15.9% SHARES Central Cash Collateral Fund, 8,086,061 8,086,061 5.26% (b) Taxable Central Cash Fund, 77,295,377 77,295,377 5.21% (b) TOTAL CASH EQUIVALENTS 85,381,438 (Cost $85,381,438) TOTAL INVESTMENT PORTFOLIO - 571,351,515 106.6% (Cost $484,852,888) NET OTHER ASSETS - (6.6)% (35,411,011) NET ASSETS - 100% $ 535,940,504
FUTURES CONTRACTS EXPIRATION DATE UNDERLYING FACE AMOUNT AT VALUE UNREALIZED GAIN/LOSS PURCHASED 97 Nikkei 225 Index Contracts Dec. 1999 $ 8,734,850 $ 175,618 (Japan) 38 Topix Index Contracts Dec. 1999 5,429,903 279,731 (Japan) $ 14,164,753 $ 455,349
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF NET ASSETS - 2.7%. CURRENCY ABBREVIATIONS EUR - European Monetary Unit GBP - British pound LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. (c) Principal amount is stated in United States dollars unless otherwise noted. (d) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $1,885,560. (e) For foreign government obligations not individually rated by S&P or Moody's, the ratings listed have been assigned by FMR, the fund's investment adviser, based principally on S&P and Moody's ratings of the sovereign credit of the issuing government. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $697,935,029 and $736,046,476, respectively, of which U.S. government and government agency obligations aggregated $1,999,054 and $0, respectively. The market value of futures contracts opened and closed during the period amounted to $75,919,383 and $64,892,380, respectively. The fund participated in the security lending program. At period end, the value of securities loaned amounted to $7,649,743. The fund received cash collateral of $8,086,061 which was invested in the Central Cash Collateral Fund. The fund participated in the bank borrowing program. The average daily loan balance during the period for which loans were outstanding amounted to $3,694,000. The weighted average interest rate was 5.2%. INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $485,923,226. Net unrealized appreciation aggregated $85,428,289, of which $104,890,562 related to appreciated investment securities and $19,462,273 related to depreciated investment securities. The fund hereby designates approximately $14,258,000 as a capital gain dividend for the purpose of the dividend paid deduction. MARKET SECTOR DIVERSIFICATION (UNAUDITED) As a Percentage of Net Assets BASIC INDUSTRIES 4.5% CASH EQUIVALENTS 15.9 CONSTRUCTION & REAL ESTATE 0.9 DURABLES 2.3 ENERGY 6.4 FINANCE 20.4 GOVERNMENT OBLIGATIONS 2.9 HEALTH 4.6 INDUSTRIAL MACHINERY & 2.9 EQUIPMENT INVESTMENT COMPANIES 2.8 MEDIA & LEISURE 2.0 NONDURABLES 5.1 RETAIL & WHOLESALE 3.5 SERVICES 2.7 TECHNOLOGY 8.8 TRANSPORTATION 0.6 UTILITIES 20.3 INTERNATIONAL VALUE FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 571,351,515 value (cost $484,852,888) - See accompanying schedule Cash 1,428,817 Foreign currency held at 4,066,026 value (cost $4,031,295) Receivable for investments 3,746,022 sold Receivable for fund shares 2,775,515 sold Dividends receivable 1,048,191 Interest receivable 564,864 Receivable for daily 306,044 variation on futures contracts Other receivables 14,305 TOTAL ASSETS 585,301,299 LIABILITIES Payable for investments $ 35,235,688 purchased Payable for fund shares 5,463,984 redeemed Accrued management fee 373,649 Other payables and accrued 201,413 expenses Collateral on securities 8,086,061 loaned, at value TOTAL LIABILITIES 49,360,795 NET ASSETS $ 535,940,504 Net Assets consist of: Paid in capital $ 402,795,412 Undistributed net investment 3,735,473 income Accumulated undistributed net 42,421,775 realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 86,987,844 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 32,123,131 $ 535,940,504 shares outstanding NET ASSET VALUE, offering $16.68 price and redemption price per share ($535,940,504 (divided by) 32,123,131 shares) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 7,128,600 Dividends Interest 1,988,063 Security lending 5,888 9,122,551 Less foreign taxes withheld (771,185) TOTAL INCOME 8,351,366 EXPENSES Management fee Basic fee $ 3,238,254 Performance adjustment 443,140 Transfer agent fees 1,061,162 Accounting and security 259,436 lending fees Non-interested trustees' 1,329 compensation Custodian fees and expenses 240,642 Registration fees 46,301 Audit 41,825 Legal 1,758 Interest 1,067 Miscellaneous 3,024 Total expenses before 5,337,938 reductions Expense reductions (300,513) 5,037,425 NET INVESTMENT INCOME 3,313,941 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 63,247,838 Foreign currency transactions (106,444) Futures contracts 2,334,563 65,475,957 Change in net unrealized appreciation (depreciation) on: Investment securities 67,750,260 Assets and liabilities in (7,996) foreign currencies Futures contracts 455,349 68,197,613 NET GAIN (LOSS) 133,673,570 NET INCREASE (DECREASE) IN $ 136,987,511 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION $ 299,070 Expense Reductions Directed brokerage arrangements Transfer agent credits 1,443 $ 300,513 STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 INCREASE (DECREASE) IN NET ASSETS Operations Net investment $ 3,313,941 $ 3,233,365 income Net realized gain (loss) 65,475,957 (19,725,721) Change in net unrealized 68,197,613 7,859,169 appreciation (depreciation) NET INCREASE (DECREASE) IN 136,987,511 (8,633,187) NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (1,595,857) (1,833,828) From net investment income From net realized gain - (8,557,828) TOTAL DISTRIBUTIONS (1,595,857) (10,391,656) Share transactions Net 690,679,399 689,788,871 proceeds from sales of shares Reinvestment of distributions 1,458,882 9,766,146 Cost of shares redeemed (700,344,477) (674,521,648) NET INCREASE (DECREASE) IN (8,206,196) 25,033,369 NET ASSETS RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) 127,185,458 6,008,526 IN NET ASSETS NET ASSETS Beginning of period 408,755,046 402,746,520 End of period (including $ 535,940,504 $ 408,755,046 undistributed net investment income of $3,735,473 and $3,827,529, respectively) OTHER INFORMATION Shares Sold 47,825,870 53,050,043 Issued in reinvestment of 112,655 821,375 distributions Redeemed (48,889,094) (53,089,578) Net increase (decrease) (950,569) 781,840
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995 E SELECTED PER-SHARE DATA Net asset value, beginning of $ 12.36 $ 12.47 $ 11.33 $ 10.63 $ 10.00 period Income from Investment Operations Net investment income .11 B .09 B .13 B .16 C .11 B Net realized and unrealized 4.26 .14 D 1.33 .85 .52 gain (loss) Total from investment 4.37 .23 1.46 1.01 .63 operations Less Distributions From net investment income (.05) (.06) (.10) (.01) - From net realized gain - (.28) (.22) (.30) - Total distributions (.05) (.34) (.32) (.31) - Net asset value, end of period $ 16.68 $ 12.36 $ 12.47 $ 11.33 $ 10.63 TOTAL RETURN A 35.47% 1.95% 13.20% 9.64% 6.30% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 535,941 $ 408,755 $ 402,747 $ 270,865 $ 56,828 (000 omitted) Ratio of expenses to average 1.21% 1.23% 1.30% 1.28% 1.72% net assets Ratio of expenses to average 1.14% F 1.21% F 1.28% F 1.26% F 1.72% net assets after expense reductions Ratio of net investment .75% .71% 1.03% 1.74% 1.08% income to average net assets Portfolio turnover rate 173% 137% 86% 71% 109% 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 $.04 PER SHARE. D THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND. E FOR THE PERIOD NOVEMBER 1, 1994 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1995. F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
OVERSEAS PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1994 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY OVERSEAS 28.77% 75.04% 163.40% MSCI EAFE 23.29% 56.31% 91.41% International Funds Average 25.53% 58.85% 152.13% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years or 10 years. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Morgan Stanley Capital International Europe, Australasia, Far East (EAFE) Index - a market capitalization-weighted index that is designed to represent the performance of developed stock markets outside the United States and Canada. As of October 31, 1999 the index included over 900 equity securities of companies domiciled in 20 countries. To measure how the fund's performance stacked up against its peers, you can compare it to the international funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 589 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1994 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY OVERSEAS 28.77% 11.85% 10.17% MSCI EAFE 23.29% 9.35% 6.71% International Funds Average 25.53% 9.50% 9.42% AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER 10 YEARS Overseas MS EAFE (Net MA tax) 00094 MS001 1989/10/31 10000.00 10000.00 1989/11/30 10566.54 10502.70 1989/12/31 11248.74 10890.22 1990/01/31 10993.45 10485.01 1990/02/28 10766.08 9753.21 1990/03/31 11121.09 8737.16 1990/04/30 11093.17 8667.82 1990/05/31 11847.07 9656.83 1990/06/30 12058.49 9571.78 1990/07/31 12652.83 9706.60 1990/08/31 11252.72 8764.01 1990/09/30 10004.20 7542.62 1990/10/31 10957.55 8717.90 1990/11/30 10594.55 8203.65 1990/12/31 10506.05 8336.54 1991/01/31 10739.14 8606.19 1991/02/28 11129.04 9528.76 1991/03/31 10764.57 8956.73 1991/04/30 10917.14 9044.68 1991/05/31 10938.33 9139.06 1991/06/30 10251.77 8467.51 1991/07/31 10811.18 8883.54 1991/08/31 10891.71 8703.13 1991/09/30 11370.60 9193.63 1991/10/31 11408.75 9323.96 1991/11/30 10997.66 8888.67 1991/12/31 11410.98 9347.71 1992/01/31 11541.98 9148.05 1992/02/29 11302.56 8820.62 1992/03/31 11067.65 8238.32 1992/04/30 11740.75 8277.48 1992/05/31 12246.70 8831.54 1992/06/30 11957.58 8412.63 1992/07/31 11198.66 8197.33 1992/08/31 11103.79 8711.47 1992/09/30 10643.02 8539.45 1992/10/31 9920.23 8091.51 1992/11/30 9870.54 8167.66 1992/12/31 10103.77 8209.90 1993/01/31 10398.25 8208.89 1993/02/28 10611.49 8456.86 1993/03/31 11332.47 9194.00 1993/04/30 12119.44 10066.54 1993/05/31 12398.69 10279.14 1993/06/30 12104.21 10118.77 1993/07/31 12657.63 10472.97 1993/08/31 13373.53 11038.33 1993/09/30 13256.75 10789.87 1993/10/31 13789.86 11122.39 1993/11/30 13160.28 10150.17 1993/12/31 14150.74 10883.09 1994/01/31 15156.72 11803.20 1994/02/28 14872.98 11770.51 1994/03/31 14444.79 11263.54 1994/04/30 14929.73 11741.44 1994/05/31 14738.85 11674.03 1994/06/30 14542.81 11839.01 1994/07/31 14950.36 11952.86 1994/08/31 15167.03 12235.85 1994/09/30 14749.17 11850.48 1994/10/31 15048.38 12245.10 1994/11/30 14429.32 11656.59 1994/12/31 14330.57 11729.58 1995/01/31 13716.40 11278.99 1995/02/28 13726.90 11246.62 1995/03/31 14136.35 11948.08 1995/04/30 14540.54 12397.43 1995/05/31 14745.27 12249.65 1995/06/30 14855.50 12034.83 1995/07/31 15522.16 12784.07 1995/08/31 15091.72 12296.40 1995/09/30 15301.69 12536.56 1995/10/31 14997.23 12199.57 1995/11/30 15165.21 12539.01 1995/12/31 15628.24 13044.21 1996/01/31 15923.92 13097.76 1996/02/29 15956.18 13142.04 1996/03/31 16192.72 13421.12 1996/04/30 16633.56 13811.32 1996/05/31 16638.94 13557.16 1996/06/30 16762.59 13633.47 1996/07/31 16294.87 13235.00 1996/08/31 16413.14 13264.00 1996/09/30 16886.24 13616.36 1996/10/31 16708.83 13477.03 1996/11/30 17590.50 14013.26 1996/12/31 17675.26 13832.99 1997/01/31 17686.72 13351.61 1997/02/28 18082.18 13573.24 1997/03/31 18242.66 13624.82 1997/04/30 18380.21 13699.76 1997/05/31 19503.54 14593.94 1997/06/30 20517.98 15400.98 1997/07/31 21200.00 15652.33 1997/08/31 19623.90 14485.45 1997/09/30 21028.06 15299.10 1997/10/31 19555.12 14127.04 1997/11/30 19463.42 13985.77 1997/12/31 19605.38 14110.38 1998/01/31 20231.99 14758.33 1998/02/28 21370.71 15708.03 1998/03/31 22346.76 16194.66 1998/04/30 22973.37 16325.51 1998/05/31 22937.22 16249.27 1998/06/30 22714.29 16375.21 1998/07/31 22907.09 16544.20 1998/08/31 18773.93 14497.52 1998/09/30 18761.88 14056.21 1998/10/31 20454.91 15524.66 1998/11/30 21653.89 16323.09 1998/12/31 22122.31 16970.14 1999/01/31 22435.89 16923.13 1999/02/28 21827.18 16522.90 1999/03/31 22743.31 17215.87 1999/04/30 23745.52 17916.21 1999/05/31 22669.53 16996.58 1999/06/30 23905.38 17662.17 1999/07/31 24600.16 18190.27 1999/08/31 24944.47 18259.76 1999/09/30 25276.49 18446.74 1999/10/29 26340.18 19140.70 IMATRL PRASUN SHR__CHT 19991031 19991111 150552 R00000000000123 $10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested in Fidelity Overseas Fund on October 31, 1989. As the chart shows, by October 31, 1999, the value of the investment would have grown to $26,340 - a 163.40% increase on the initial investment. For comparison, look at how the Morgan Stanley Capital International EAFE Index did over the period. With dividends and capital gains, if any, reinvested, the same $10,000 investment would have grown to $19,141 - a 91.41% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) OVERSEAS FUND TALK: THE MANAGER'S OVERVIEW An interview with Richard Mace, Portfolio Manager of Fidelity Overseas Fund Q. HOW DID THE FUND PERFORM, RICK? A. Pretty well. For the 12 months that ended October 31, 1999, the fund returned 28.77%. The Morgan Stanley Capital International Europe, Australasia, Far East (EAFE) Index returned 23.29% during the same period, while the international funds average - as tracked by Lipper Inc. - returned 25.53%. Q. WHAT KEY FACTORS HELPED THE FUND BEAT BOTH ITS INDEX AND PEER GROUP DURING THE PERIOD? A. Most of the fund's outperformance can be traced to a relatively strong commitment to the high-performing Japanese market, as well as good individual stock picking in that market. Though the fund was moderately underweighted in Japanese investments relative to the index, its weighting was larger than that of the average of the Lipper peer group. The fund also received a healthy performance boost from its energy services positions. Q. WHAT TRIGGERED THE JAPANESE MARKET'S REBOUND DURING THE PERIOD AND HOW DID THE FUND TAKE ADVANTAGE? A. The Japanese market became somewhat more "Americanized" over the past year. The government has allowed some barriers to come down to create more of a free-enterprise market system, and Japanese corporations - following in the footsteps of their U.S. counterparts - have begun to implement share buyback programs, cut unprofitable businesses and consider effective restructuring programs. Japanese investors, in fact, can now buy mutual funds. All of this has translated into a more confident market and economy, and the fund took advantage. Several of the fund's Japanese telephone utilities positions fared well, particularly DDI Corp., which was among the fund's top-10 holdings through much of the period. Japanese non-bank financial positions also performed well, including brokerage-related holdings such as Nomura Securities and Nikko Securities. Q. CAN YOU ELABORATE ON THE ENERGY SERVICES POSITIONS YOU MENTIONED? A. The fund's best performers here were the two large French companies, Elf Aquitaine and Total. Both suited my philosophy that it's better to look for energy stocks with good long-term characteristics rather than to focus on trying to guess the direction of oil prices. In particular, I was attracted to Elf Aquitaine's growing oil reserve base, which should kick into production growth in the year 2001. Total - the fund's largest holding at the end of the period - intrigued me because of its rapid 10% production growth rate. I looked at both stocks as a package: One had current production growth, while the other had future production growth. In addition, both companies were engaged in a fierce takeover battle during the period, when each company made takeover bids for the other. Eventually, the issue was resolved and a merger was approved. Overall, I think the merger - which makes Total the fourth-largest oil company in the world - will be beneficial for both companies. Elf Aquitane is no longer a publicly traded stock. Q. THE FUND ALSO GOT GOOD RESULTS FROM SEVERAL OF ITS TELECOMMUNICATIONS-RELATED STOCKS, MOST NOTABLY FINLAND'S NOKIA AND THE U.K.'S VODAFONE AIRTOUCH . . . A. Both companies were beneficiaries of the worldwide wireless communications boom. Nokia - a longstanding position in the fund - displayed many of the characteristics I look for in a good stock. The company showed strong management execution during the period and generated strong financial returns in the process. Nokia was a classic example of the maxim "share price follows earnings." Vodafone Airtouch, meanwhile, benefited from its strong presence in the burgeoning U.K. market as well as its announcement that it will be merging its mobile communications business with U.S.-based Bell Atlantic. The Vodafone-Bell Atlantic partnership is but another example of the cross-border alliances that have fueled telecom business around the globe. Q. WHERE DID THE FUND'S DISAPPOINTMENTS LIE? A. Rentokil - which provides a variety of industrial-related services for corporations - detracted significantly from performance due to a strong British pound. A slump in sales growth, particularly in Asia, also hurt. Nippon Telegraph & Telephone was another disappointment, as cellular phone providers eroded the company's local phone service revenues. The company was also under considerable cost pressures within its industry. The fund's Italian positions also proved to be a weak link. Telecom Italia turned in negative results, as several corporate actions were detrimental to the interests of the company's shareholders. The fund's positions in several Italian banks - including Banca di Roma and San Paolo-IMI - tumbled due to concerns over the possibility of higher interest rates. Q. WHAT'S YOUR OUTLOOK? A. I expect to see more of the same in terms of increased consolidation and cross-border mergers. The euro - the new single currency in Europe - has made it much easier to complete such transactions. As big companies have become bigger, many smaller firms have jumped into the consolidation fray just to keep pace. We may also see continued restructuring efforts in Europe and Japan. As a result, there should be greater differentiation of stocks away from the influences of their local markets and more towards the earnings and underlying fundamentals of the company itself. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY FIDELITY FUND. RICK MACE DISCUSSES THE INCREASED GLOBALIZATION OF INDUSTRIES: "It used to be enough for investors in international markets to rely on `top-down' analysis to find countries that would deliver the best return potential. Twenty years ago, for instance - when foreign stock markets were less developed and the world's information network was still in the dark ages - investors could capture most of the strong returns by being in the right country at the right time. But speeding globalization has changed all that. "Over the past decade, the borders between countries, companies and currencies have been coming down. The result: Most companies are now much less constrained by international borders than they were in the past. Leading firms in an industry must now compete worldwide for the same customer. Today, the relationship between a stock's performance and the performance of its respective market has weakened, while the links between a company and its industry group have become stronger. Over time, companies with good business prospects and reasonable stock prices can have superior growth potential, no matter what country they are in. "This shift can have important implications for investors. In the past, a company's stock price typically moved along with the overall stock market in its home country. Now, however, the stock's price might move with the stock prices of its foreign competitors. Pharmaceutical companies, the majority of which are headquartered in Europe and the U.S., have in recent years provided some of the best examples of how stocks are more closely related to their industry's performance than to home markets. A case in point is British pharmaceutical company Glaxo Wellcome, which competes worldwide with U.S.-based Merck. Over the past 10 years, the performance of both companies' stocks almost have moved in tandem. "The stock market performance of Japanese automaker Honda offers another excellent example of this trend. During the past decade, Honda's stock price has had relatively little to do with the fluctuations of Japan's stock market. Instead, Honda shares have closely tracked shares of its U.S. competitor, Ford. That fact is all the more striking when you consider that the overall performance of the Japanese and U.S. stock markets have been almost diametrically opposed during that period. By looking at the stock performance of several of Japan's large companies in 1998, one can measure the importance of selecting stocks on the company's merits first and its home country's merits second. Companies such as Sony, Fuji Photo Film and Ito Yokodo, for example, all performed well in 1998, while Japan's TOPIX Index declined." FUND FACTS GOAL: seeks growth of capital primarily through investments in foreign securities FUND NUMBER: 094 TRADING SYMBOL: FOSFX START DATE: December 4, 1984 SIZE: as of October 31, 1999, more than $4.4 billion MANAGER: Richard Mace, since 1996; manager, Fidelity International Value Fund, since 1996; Fidelity Global Balanced Fund, since 1996; joined Fidelity in 1987 (checkmark) OVERSEAS INVESTMENT CHANGES AS OF OCTOBER 31, 1999 United States 9.2% Finland 2.5% Row: 1, Col: 1, Value: 2.5 Row: 1, Col: 2, Value: 12.0 Row: 1, Col: 3, Value: 7.5 Row: 1, Col: 4, Value: 3.1 Row: 1, Col: 5, Value: 24.9 Row: 1, Col: 6, Value: 6.1 Row: 1, Col: 7, Value: 11.7 Row: 1, Col: 8, Value: 5.1 Row: 1, Col: 9, Value: 17.9 Row: 1, Col: 10, Value: 9.199999999999999 France 12.0% United Kingdom 17.9% Germany 7.5% Italy 3.1% Switzerland 5.1% Other 11.7% Japan 24.9% Netherlands 6.1% PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF APPLICABLE. GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30, 1999 United States 6.3% Australia 3.2% Row: 1, Col: 1, Value: 3.2 Row: 1, Col: 2, Value: 12.9 Row: 1, Col: 3, Value: 8.199999999999999 Row: 1, Col: 4, Value: 4.6 Row: 1, Col: 5, Value: 17.3 Row: 1, Col: 6, Value: 7.4 Row: 1, Col: 7, Value: 12.8 Row: 1, Col: 8, Value: 6.2 Row: 1, Col: 9, Value: 21.1 Row: 1, Col: 10, Value: 6.3 France 12.9% United Kingdom 21.1% Germany 8.2% Italy 4.6% Switzerland 6.2% Japan 17.3% Other 12.8% Netherlands 7.4% PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF APPLICABLE. ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks, investment companies 90.2 93.9 and equity futures Bonds 1.7 1.0 Short-term investments and 8.1 5.1 net other assets PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS. TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Total Fina SA Class B 2.9 3.2 (France, Oil & Gas) Vodafone AirTouch PLC 1.7 1.1 (United Kingdom, Cellular) Nokia AB (Finland, 1.6 1.4 Communcations Equipment) DDI Corp. (Japan, Telephone 1.6 0.8 Services) Ito-Yokado Co. Ltd. (Japan, 1.5 0.5 General Merchandise Stores) Kyocera Corp. (Japan, 1.3 0.2 Electronics) BP Amoco PLC (United 1.3 1.8 Kingdom, Oil & Gas) Shell Transport & Trading 1.3 1.7 Co. PLC (Reg.) (United Kingdom, Oil & Gas) SmithKline Beecham PLC 1.2 1.4 (United Kingdom, Drugs & Pharmaceuticals) Omron Corp. (Japan, 1.2 0.6 Electrical Equipment) 15.6 12.7 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO FINANCE 20.6 23.8 UTILITIES 16.3 15.5 TECHNOLOGY 8.7 5.7 HEALTH 7.9 8.0 ENERGY 6.8 7.9 NONDURABLES 5.1 5.6 INDUSTRIAL MACHINERY & 4.9 3.7 EQUIPMENT BASIC INDUSTRIES 4.5 3.8 RETAIL & WHOLESALE 3.6 3.2 DURABLES 3.1 4.9 OVERSEAS INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 88.3% SHARES VALUE (NOTE 1) AUSTRALIA - 1.9% AMP Ltd. 404,000 $ 4,108,181 Australia & New Zealand 1,940,297 12,805,101 Banking Group Ltd. Brambles Industries Ltd. 90,600 2,547,905 Broken Hill Proprietary Co. 910,658 9,411,836 Ltd. (The) Cable & Wireless Optus Ltd. 3,757,100 8,601,291 (a) Coles Myer Ltd. 785,526 3,907,253 CSR Ltd. 452,517 1,015,767 Fosters Brewing Group Ltd. 993,700 2,641,189 National Australia Bank Ltd. 892,400 13,771,820 News Corp. Ltd. 1,192,617 8,624,431 News Corp. Ltd. sponsored: ADR 70,500 2,088,563 ADR (preferred ltd. vtg.) 82,300 2,268,394 Rio Tinto Ltd. 408,000 6,558,398 Westpac Banking Corp. 325,200 2,086,658 Woolworths Ltd. 1,067,800 3,629,389 84,066,176 BELGIUM - 0.4% Electrabel SA 23,500 7,774,191 Fortis B 235,800 7,984,728 15,758,919 CANADA - 0.6% Alcan Aluminium Ltd. 151,200 4,957,124 Barrick Gold Corp. 84,000 1,543,929 Celestica, Inc. (sub-vtg.) (a) 92,500 5,091,051 Cinar Films, Inc. Class B 251,800 4,375,025 (sub. vtg.) (a) Inco Ltd. 465,100 9,354,461 Placer Dome, Inc. 65,900 828,396 26,149,986 DENMARK - 0.4% Carlsberg AS Class B 109,300 4,233,369 Novo-Nordisk AS Class B 25,300 3,043,825 Ratin AS Class B 28,700 2,992,764 Unidanmark AS Class A 70,100 5,469,958 15,739,916 FINLAND - 2.5% Asko OY Class A 61,100 999,043 Helsinki Telephone Corp. 99,200 4,724,771 Class E KCI (Konecranes International) 39,100 1,010,541 Metsa-Serla Oyj Class B Free 103,800 942,783 Shares Metso Oyj (a) 252,600 2,864,528 Nokia AB 623,200 72,018,551 Sampo Insurance Co. Ltd. 177,300 6,172,114 Sonera Group PLC (c) 134,800 4,059,825 UPM-Kymmene Corp. 533,000 16,867,851 109,660,007 SHARES VALUE (NOTE 1) FRANCE - 11.5% Alcatel Alsthom Compagnie 72,100 $ 11,062,844 Generale d'Electricite SA (RFD) AXA SA de CV 250,765 35,473,741 Banque Nationale de Paris 334,005 29,420,547 Banque Nationale de Paris 30,485 180,731 warrants 7/1/02 (a) Canal Plus SA 64,400 4,483,747 Cap Gemini SA 63,222 9,603,776 Castorama Dubois 42,200 12,678,379 Investissements SA Club Mediterranee SA (a) 40,000 4,017,059 Coflexip SA sponsored ADR 149,100 5,908,088 Compagnie de St. Gobain 43,600 7,588,951 Compagnie Financiere de 46,900 4,898,006 Paribas Class A (Reg.) France Telecom SA 425,000 41,179,340 Groupe Danone 69,500 17,779,021 L'Oreal SA 9,030 6,044,086 Lafarge SA 75,900 7,326,122 Lagardere S.C.A. (Reg.) 72,000 2,924,183 Michelin SA (Compagnie 124,689 5,445,525 Generale des Etablissements) Class B (a) Pinault Printemps SA 30,900 5,909,729 Rhodia SA 505,000 9,775,495 Rhone-Poulenc SA Class A 274,625 15,241,687 Sanofi-Synthelabo SA (a) 480,400 21,259,168 Schneider SA (a) 65,200 4,505,056 Scor SA 89,900 4,504,687 Seita SA 87,320 4,882,035 Societe Generale, France 99,300 21,683,575 Class A Suez Lyonnaise des Eaux 133,800 21,665,853 Television Francaise 1 SA 66,300 20,842,081 Total Fina SA Class B 969,874 129,356,942 Union Assurances Federales SA 46,700 6,029,893 Valeo SA 26,000 1,873,291 Vivendi SA (a) 542,100 41,202,606 514,746,244 GERMANY - 6.7% Allianz AG (Reg.) 109,900 33,400,444 BASF AG 367,200 16,365,930 Bayer AG 378,100 15,443,770 Bayerische Hypo-und 101,500 6,620,283 Vereinsbank AG Celanese AG (a) 13,790 218,206 Deutsche Bank AG 182,000 13,051,603 Deutsche Lufthansa AG (Reg.) 203,900 4,301,882 Deutsche Telekom AG 1,064,300 49,231,714 Dresdner Bank AG 21,100 1,089,548 EPCOS AG (a) 106,100 4,361,713 FAG Kugelfischer Georg 244,758 2,078,471 Schaefer AG Fresenius Medical Care AG 57,800 4,115,692 Hoechst AG 137,900 6,108,315 Kali Und Salz Beteiligungs AG 925,100 13,252,559 Mannesmann AG (Reg.) 331,900 52,483,184 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) GERMANY - CONTINUED Metro AG 85,700 $ 4,565,449 Munich Reinsurance AG (Reg.) 92,400 21,122,347 RWE AG 184,400 7,411,348 Siemens AG 232,700 21,000,406 Veba AG 307,450 16,699,700 Viag AG 370,500 6,820,166 299,742,730 HONG KONG - 0.5% Cheung Kong Holdings Ltd. 502,000 4,555,999 China Telecom (Hong Kong) 2,326,000 7,850,250 Ltd. (a) Dah Sing Financial Holdings 1,026,800 4,097,683 Ltd. Wing Hang Bank Ltd. 1,546,000 5,045,198 21,549,130 IRELAND - 0.5% Bank of Ireland, Inc. 2,088,298 16,367,886 CRH PLC 223,361 4,229,442 Esat Telecom Group PLC 49,700 2,224,075 sponsored ADR (a) 22,821,403 ITALY - 2.8% Assicurazioni Generali Spa 541,400 17,504,916 Banca Commerciale Italiana Spa 1,393,900 8,444,651 Banca di Roma 2,788,400 3,776,864 Eni Spa sponsored ADR 5,576,000 32,886,946 Italgas Spa 620,800 2,582,854 Olivetti & Co. Spa 3,512,700 6,792,268 San Paolo-IMI Spa 876,700 11,580,732 Telecom Italia Mobile Spa 2,465,100 15,485,584 Telecom Italia Spa 2,186,470 18,912,967 Unicredito Italiano Spa 1,950,200 9,146,605 127,114,387 JAPAN - 24.3% Aiful Corp. (c) 59,200 9,210,469 Aiwa Co. Ltd. 79,500 1,939,304 Asahi Chemical Industry Co. 610,000 3,690,756 Ltd. Bank of Tokyo-Mitsubishi Ltd. 183,000 3,036,965 Banyu Pharmaceutical Co. Ltd. 395,000 7,241,825 Canon, Inc. 292,000 8,272,750 CSK Corp. 181,200 8,353,038 Dai Nippon Printing Co. Ltd. 388,000 7,083,679 Dai-Ichi Kangyo Bank Ltd. 1,711,000 23,498,008 Daiwa Securities Co. Ltd. 2,132,000 22,789,110 DDI Corp. 6,369 69,730,231 Fuji Bank Ltd. 1,719,000 23,607,876 Fuji Photo Film Co. Ltd. 260,000 8,364,946 Fujisawa Pharmaceutical Co. 349,000 8,748,044 Ltd. Fujitsu Ltd. 574,000 17,309,581 SHARES VALUE (NOTE 1) Furukawa Electric Co. Ltd. 5,002,000 $ 36,509,197 Heiwa Corp. 66,000 1,812,821 Hirose Electric Co. Ltd. 23,700 4,140,245 Hitachi Chemical Co. Ltd. 197,000 3,651,477 Hitachi Information Systems 37,000 1,428,475 Hitachi Ltd. 2,867,000 31,178,627 Honda Motor Co. Ltd. 504,000 21,199,501 Hoya Corp. 125,000 9,003,602 Ito-Yokado Co. Ltd. 849,000 68,001,540 Jafco Co. Ltd. 54,000 6,067,707 Kaneka Corp. 237,000 3,106,891 Kao Corp. 305,000 9,314,766 Kirin Brewery Co. Ltd. 814,000 9,334,128 Koa Denko Co. Ltd. 412,000 7,161,777 Kokusai Denshin Denwa 268,100 33,729,750 Kyocera Corp. 625,500 60,072,032 Matsushita Electric 645,000 13,661,907 Industrial Co. Ltd. Minolta Co. Ltd. 714,000 2,928,000 Mitsubishi Electric Corp. 3,087,000 17,106,354 Mitsubishi Estate Co. Ltd. 1,153,000 11,571,525 Mitsubishi Trust & Banking 813,000 10,954,517 Corp. Mitsui Fudosan Co. Ltd. 515,000 3,852,917 Mitsumi Electric Co. Ltd. 68,000 1,822,041 NEC Corp. 550,000 11,145,259 Nichicon Corp. 1,177,000 25,546,412 Nikko Securities Co. Ltd. 3,445,000 32,423,531 Nintendo Co. Ltd. 74,700 11,873,086 Nippon Computer Systems Corp. 147,000 2,880,000 Nippon Steel Corp. 1,328,000 3,379,784 Nippon System Development Co. 18,100 1,547,083 Ltd. Nippon Telegraph & Telephone 1,745 26,813,927 Corp. Nippon Zeon Co. Ltd. 852,000 7,364,226 Nomura Securities Co. Ltd. 1,649,000 27,255,022 NTT Data Corp. 208 3,296,039 NTT Mobile Communication 1,051 27,959,377 Network, Inc. Omron Corp. 2,605,000 54,539,258 ORIX Corp. 101,000 13,579,833 Ricoh Co. Ltd. 575,000 9,393,278 Rohm Co. Ltd. 24,000 5,393,518 Sakura Bank Ltd. 2,021,000 17,390,791 Sankyo Co. Ltd. 197,000 5,619,112 Sankyo Co. Ltd. (Gunma) 27,700 2,194,718 Secom Co. Ltd. (RFD) 80,000 8,528,212 Sharp Corp. 711,000 11,335,031 Shin-Etsu Chemical Co. Ltd. 254,000 10,489,316 Shohkoh Fund & Co. Ltd. 9,450 5,790,252 Softbank Corp. 72,800 30,273,615 Sony Corp. 204,500 32,668,877 Sumitomo Realty & Development 847,000 2,928,404 Co. Ltd. Takeda Chemical Industries 874,000 50,278,610 Ltd. Takefuji Corp. 38,400 4,978,632 Tokyo Seimitsu Co. Ltd. 37,000 4,516,399 Toyota Motor Corp. 506,000 17,542,954 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) JAPAN - CONTINUED Yamaha Motor Co. Ltd. 671,000 $ 5,464,663 Yamanouchi Pharmaceutical Co. 259,000 11,765,379 Ltd. Yokogawa Electric Corp. 906,000 6,351,789 Yoshitomi Pharmaceutical 461,000 6,286,867 Industries Ltd. 1,089,279,633 KOREA (SOUTH) - 0.2% Samsung Electronics Co. Ltd. 53,000 8,837,019 LUXEMBOURG - 0.0% Stolt Comex Seaway SA (a) 184,300 1,969,706 MEXICO - 0.5% Banacci SA de CV Class O (a) 2,258,000 5,667,045 Cifra SA de CV Series V (a) 3,529,000 5,549,378 Empresas ICA Sociedad 16,600 42,538 Controladora SA de CV sponsored ADR Grupo Financiero Bancomer SA 20,228,000 5,329,533 de CV Series A Telefonos de Mexico SA 87,000 7,438,500 sponsored ADR representing Class L shares 24,026,994 NETHERLANDS - 6.0% ABN AMRO Holding NV 601,800 14,594,944 Aegon NV 172,700 15,986,403 Ahrend (KON) NV 168,996 2,326,474 Akzo Nobel NV 459,200 19,831,749 Beter Bed Holding NV 34,000 975,572 DSM NV 26,100 991,184 Fortis Amev NV 748,600 25,846,820 Getronics NV 19,500 975,044 Heineken NV 176,200 9,013,000 IHC Caland NV 57,600 2,506,442 ING Groep NV 693,382 41,019,641 Koninklijke Ahold NV 416,049 12,815,591 Koninklijke KPN NV 368,800 18,981,609 Koninklijke Philips 257,964 26,532,307 Electronics NV NBM-Amstelland NV 184,800 2,378,335 Numico NV 90,154 3,685,259 Nutreco Holding NV 171,022 5,863,361 Samas Groep NV 142,200 1,935,087 TNT Post Group NV 145,700 3,719,514 Unilever NV 321,475 21,364,811 Vedior NV 472,014 7,966,841 Vendex KBB NV 652,900 19,112,652 Vnu NV 153,700 5,212,741 Volker Wessels Stevin NV 111,100 1,898,630 Wolters Kluwer NV 145,800 4,886,366 270,420,377 NEW ZEALAND - 0.1% Lion Nathan Ltd. 919,700 1,984,460 SHARES VALUE (NOTE 1) NORWAY - 0.7% Bergesen d.y. AS: (B shares) 410,500 $ 6,347,871 Class A 831,400 13,440,953 Den Norske Bank ASA Class A 1,568,400 6,093,404 Free shares Frontline Ltd. (a) 183,700 795,863 Norsk Hydro AS 120,400 4,816,154 31,494,245 PORTUGAL - 0.1% Electricidade de Portugal SA 271,800 4,237,749 SINGAPORE - 0.2% Chartered Semiconductor 81,300 2,698,144 Manufacturing Ltd. ADR Overseas Union Bank Ltd. 837,771 3,630,425 United Overseas Bank Ltd. 578,000 4,383,268 (For. Reg.) 10,711,837 SOUTH AFRICA - 0.1% Anglogold Ltd. 32,800 1,852,022 Gold Fields Ltd. 498,900 2,386,732 4,238,754 SPAIN - 2.3% Argentaria Caja Postal y 226,300 5,037,074 Banco Hipotecario de Espana SA Banco Bilbao Vizcaya SA (Reg.) 459,700 6,197,502 Banco Santander Central 2,097,416 21,838,008 Hispano SA Endesa SA 488,200 9,800,491 Iberdrola SA 702,273 10,267,873 Tabacalera SA Series A 184,500 3,045,945 Telefonica SA (a) 2,792,700 46,075,741 Union Electrica Fenosa SA 127,400 1,869,424 104,132,058 SWEDEN - 1.9% ABB Ltd. (Sweden) (a) 68,178 6,809,693 Atlas Copco AB Series B 74,800 1,952,157 Electrolux AB 428,700 8,574,261 Ericsson (L.M.) Telefon AB 862,900 36,888,975 Class B N&T Argonaut AB (B shares) (a) 1,369,300 943,510 Nordbanken Holding AB 962,400 5,633,733 Sandvik AB Series B 73,200 1,901,473 Skandinaviska Enskilda Banken 339,600 3,499,643 Class A Svenska Handelsbanken AB (A 450,800 6,267,411 shares) Swedish Match Co. 2,160,300 7,930,124 Volvo AB Class B 187,000 4,846,184 85,247,164 SWITZERLAND - 5.1% ABB Ltd. (Reg) (Switzerland) 104,518 10,548,697 (a) Ares Serono SA Class B 4,000 6,233,151 (Bearer) Credit Suisse Group (Reg.) 145,000 27,934,118 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SWITZERLAND - CONTINUED Holderbank Financiere Glarus 3,472 $ 4,284,926 AG (Bearer) Julius Baer Holding AG 2,712 8,175,764 Nestle SA (Reg.) 23,100 44,653,823 Novartis AG (Reg.) 28,289 42,408,390 Roche Holding AG 3,059 36,806,956 participation certificates Swatch Group AG (The) (Reg.) 33,400 5,490,170 Swiss Reinsurance Co. (Reg.) 4,843 10,062,384 Swisscom AG 21,200 6,474,719 UBS AG 93,511 27,268,149 230,341,247 TAIWAN - 0.8% Hon Hai Precision Industries 1,758,000 12,026,671 Co. Ltd. Ritek Corp. 1,532,000 10,045,902 Taiwan Semiconductor 3,070,400 13,648,373 Manufacturing Co. Ltd. 35,720,946 UNITED KINGDOM - 17.6% Abbey National PLC 595,500 11,652,958 Alliance & Leicester PLC 256,900 3,751,324 Allied Domecq PLC 595,500 3,349,001 Allied Zurich PLC 2,318,050 28,016,740 Amvescap PLC 852,700 7,627,859 Ashtead Group PLC 1,852,900 5,286,387 AstraZeneca Group PLC (Reg.) 321,400 14,704,051 Bass PLC 44,067 484,420 BG PLC 801,500 4,451,500 Booker PLC 2,379,067 4,890,172 Boots Co. PLC 425,900 4,377,187 BP Amoco PLC 6,180,464 59,486,979 British Aerospace PLC 1,954,603 11,426,300 British American Tobacco PLC 975,150 6,462,253 British Telecommunications PLC 2,715,800 48,884,392 British Vita PLC Ord. 453,800 1,828,260 BTP PLC 266,600 1,534,390 Cadbury Schweppes PLC 1,234,800 8,096,639 Caradon PLC 8,989,650 20,970,569 Centrica PLC 1,450,100 4,214,682 CGU PLC 754,500 10,998,804 Cookson Group PLC 1,379,062 4,286,009 Courtaulds Textiles PLC 987,400 1,964,653 Diageo PLC 1,395,400 14,111,764 General Electric Co. PLC 1,007,500 10,959,289 Glaxo Wellcome PLC 1,750,600 52,408,592 Granada Group PLC 266,700 2,109,481 Hanson PLC 1,139,200 8,814,553 Hays PLC 288,100 3,299,680 SHARES VALUE (NOTE 1) HSBC Holdings PLC: (Reg.) 566,000 $ 6,968,872 (Hong Kong) (Reg.) 274,869 3,384,325 Imperial Chemical Industries 204,400 2,053,581 PLC Invensys PLC 817,400 4,018,956 Johnson Matthey PLC 134,600 1,247,230 Kingfisher PLC 1,341,543 14,659,091 Lloyds TSB Group PLC 2,779,100 38,456,146 Marks & Spencer PLC 170,500 785,037 Morgan Crucible Co. PLC 556,000 2,221,716 National Grid Group PLC 1,011,460 7,559,448 National Westminster Bank PLC 269,100 6,080,060 Orange PLC (a) 298,800 7,453,730 Pearson PLC 489,200 10,996,701 Peninsular & Oriental Steam 228,300 3,236,090 Navigation Co. Prudential Corp. PLC 846,300 13,283,354 Rentokil Initial PLC 5,986,889 19,960,414 Reuters Group PLC 1,091,400 10,149,018 Rio Tinto PLC (Reg.) 368,400 6,306,346 Royal & Sun Alliance 770,920 5,248,282 Insurance Group PLC Royal Bank of Scotland Group 562,900 12,977,371 PLC Safeway PLC 1,211,700 3,805,712 Scottish & Newcastle PLC 599,200 5,586,790 Scottish & Southern Energy PLC 646,100 6,135,631 Shell Transport & Trading Co. 7,622,500 58,280,378 PLC (Reg.) SmithKline Beecham PLC 4,293,744 54,959,894 Standard Chartered PLC 1,022,619 14,352,411 Tomkins PLC 709,500 2,406,322 Unigate PLC 390,500 1,810,830 Unilever PLC 2,756,963 25,631,150 Vodafone AirTouch PLC 15,400,640 73,826,893 WPP Group PLC 580,300 6,302,790 790,593,457 UNITED STATES OF AMERICA - 0.6% ASA Ltd. 52,700 1,057,294 Baker Hughes, Inc. 129,400 3,615,113 Halliburton Co. 120,700 4,548,881 McDermott International, Inc. 37,800 685,125 Newmont Mining Corp. 335,600 7,362,225 Noble Drilling Corp. (a) 79,400 1,761,688 OMI Corp. (a) 854,000 1,601,250 Overseas Shipholding Group, 156,000 2,008,500 Inc. Smith International, Inc. (a) 24,400 843,325 Weatherford International, 72,000 2,439,000 Inc. (a) 25,922,401 TOTAL COMMON STOCKS 3,956,506,945 (Cost $2,847,046,218) PREFERRED STOCKS - 0.9% SHARES VALUE (NOTE 1) CONVERTIBLE PREFERRED STOCKS - - 0.2% AUSTRALIA - 0.2% WBK STRYPES Trust (Westpac 315,800 $ 9,474,000 Banking Corp.) $3.135 NONCONVERTIBLE PREFERRED STOCKS - 0.7% GERMANY - 0.4% SAP AG (Systeme Anwendungen 28,600 12,671,459 Produkte) Wella AG 219,700 6,141,681 18,813,140 ITALY - 0.3% Telecom Italia Spa Risp 2,402,500 11,873,651 TOTAL NONCONVERTIBLE 30,686,791 PREFERRED STOCKS TOTAL PREFERRED STOCKS 40,160,791 (Cost $29,456,348) INVESTMENT COMPANIES - 0.4% EMERGING MARKETS - 0.2% Asia Tigers Fund, Inc. 258,200 2,226,975 Templeton Dragon Fund, Inc. 840,400 7,090,875 9,317,850 GERMANY - 0.1% New Germany Fund, Inc. (The) 254,200 3,066,288 MULTI-NATIONAL - 0.1% European Warrant Fund, Inc. 215,200 3,322,150 TOTAL INVESTMENT COMPANIES 15,706,288 (Cost $18,242,074)
CONVERTIBLE BONDS - 0.6% MOODY'S RATINGS (UNAUDITED) (E) PRINCIPAL AMOUNT (D) FRANCE - 0.2% Groupe Danone 3% 1/1/02 A1 EUR 18,000 4,633,121 Suez Lyonnaise des Eaux 4% A EUR 25,000 4,058,728 1/1/06 8,691,849 NETHERLANDS - 0.1% Koninklijke Ahold NV 3% Baa1 NLG 8,640,000 4,672,729 9/30/03 MOODY'S RATINGS (UNAUDITED) (E) PRINCIPAL AMOUNT (D) VALUE (NOTE 1) UNITED STATES OF AMERICA - 0.3% Nestle Holdings, Inc. 3% AAA $ 9,860,000 $ 12,078,500 6/17/02 Roche Holdings, Inc. liquid - 5,780,000 3,496,900 yield option note 0% 4/20/10 (c) 15,575,400 TOTAL CONVERTIBLE BONDS 28,939,978 (Cost $32,955,001) GOVERNMENT OBLIGATIONS (G) - 1.4% FRANCE - 0.3% French Government OAT 5.5% Aaa EUR 13,400,000 14,653,025 4/25/04 GERMANY - 0.3% German Federal Republic 3.75% Aaa EUR 14,200,000 14,600,597 8/26/03 UNITED KINGDOM - 0.3% United Kingdom, Great Britain Aaa GBP 8,600,000 14,549,125 & Northern Ireland 6.75% 11/26/04 UNITED STATES OF AMERICA - 0.5% U.S. Treasury Bills, yield at - 11,000,000 10,916,351 date of purchase 4.71% 12/30/99 (f) U.S. Treasury Bond stripped Aaa 47,775,000 8,484,362 principal 0% 11/15/27 19,400,713 TOTAL GOVERNMENT OBLIGATIONS 63,203,460 (Cost $63,430,680)
CASH EQUIVALENTS - 9.4% SHARES Central Cash Collateral Fund, 32,598,689 32,598,689 5.26% (b) Taxable Central Cash Fund, 389,395,366 389,395,366 5.21% (b) TOTAL CASH EQUIVALENTS 421,994,055 (Cost $421,994,055) TOTAL INVESTMENT PORTFOLIO - 4,526,511,517 101.0% (Cost $3,413,124,376) NET OTHER ASSETS - (1.0)% (44,467,382) NET ASSETS - 100% $ 4,482,044,135
FUTURES CONTRACTS EXPIRATION DATE UNDERLYING FACE AMOUNT AT VALUE UNREALIZED GAIN/LOSS PURCHASED 157 Nikkei 225 Index Dec. 1999 $ 14,137,850 $ 309,133 Contracts (Japan) 90 Topix Index Contracts Dec. 1999 12,860,751 671,165 (Japan) $ 26,998,601 $ 980,298
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF NET ASSETS - 0.6% SECURITY TYPE ABBREVIATIONS STRYPES - Structured Yield Product Exchangeable for Common Stock CURRENCY ABBREVIATIONS EUR - European Monetary Unit GBP - British pound NLG - Dutch guilder LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. (c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $16,767,194 or 0.4% of net assets. (d) Principal amount is stated in United States dollars unless otherwise noted. (e) Standard & Poor's credit ratings are used in the absence of a rating by Moody's Investors Service, Inc. (f) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $9,427,758. (g) For foreign government obligations not individually rated by S&P or Moody's, the ratings listed have been assigned by FMR, the fund's investment advisor, based prinicpally on S&P and Moody's ratings of the sovereign credit of the issuing government. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $3,084,723,183 and $3,143,607,290, respectively, of which U.S. government and government agency obligations aggregated $8,025,767 and $0, respectively. The market value of futures contracts opened and closed during the period amounted to $463,626,369 and $657,369,890, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $5,276 for the period. The fund participated in the security lending program. At period end, the value of securities loaned amounted to $30,729,255. The fund received cash collateral of $32,598,689 which was invested in the Central Cash Collateral Fund. INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $3,426,808,884. Net unrealized appreciation aggregated $1,099,702,633, of which $1,230,719,249 related to appreciated investment securities and $131,016,616 related to depreciated investment securities. The fund hereby designates approximately $143,107,000 as a capital gain dividend for the purpose of the dividend paid deduction. MARKET SECTOR DIVERSIFICATION (UNAUDITED) As a Percentage of Net Assets AEROSPACE & DEFENSE 0.3% BASIC INDUSTRIES 4.5 CASH EQUIVALENTS 9.4 CONSTRUCTION & REAL ESTATE 2.2 DURABLES 3.1 ENERGY 6.8 FINANCE 20.6 GOVERNMENT OBLIGATIONS 1.4 HEALTH 7.9 HOLDING COMPANIES 0.2 INDUSTRIAL MACHINERY & 4.9 EQUIPMENT Investment Companies 0.4 MEDIA & LEISURE 2.1 NONDURABLES 5.1 PRECIOUS METALS 0.4 RETAIL & WHOLESALE 3.6 SERVICES 2.1 TECHNOLOGY 8.7 TRANSPORTATION 1.0 UTILITIES 16.3 OVERSEAS FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 4,526,511,517 value (cost $3,413,124,376) - - See accompanying schedule Cash 74,397 Foreign currency held at 16,260,100 value (cost $16,123,771) Receivable for investments 25,030,337 sold Receivable for fund shares 16,780,590 sold Dividends receivable 9,811,265 Interest receivable 2,663,024 Receivable for daily 612,304 variation on futures contracts Other receivables 125,078 TOTAL ASSETS 4,597,868,612 LIABILITIES Payable for investments $ 47,291,480 purchased Payable for fund shares 31,232,250 redeemed Accrued management fee 3,245,409 Other payables and accrued 1,456,649 expenses Collateral on securities 32,598,689 loaned, at value TOTAL LIABILITIES 115,824,477 NET ASSETS $ 4,482,044,135 Net Assets consist of: Paid in capital $ 2,939,066,439 Undistributed net investment 45,498,123 income Accumulated undistributed net 382,957,485 realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 1,114,522,088 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 104,613,848 $ 4,482,044,135 shares outstanding NET ASSET VALUE, offering $42.84 price and redemption price per share ($4,482,044,135 (divided by) 104,613,848 shares) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 75,443,850 Dividends Interest 15,671,889 Security lending 27,938 91,143,677 Less foreign taxes withheld (8,619,843) TOTAL INCOME 82,523,834 EXPENSES Management fee Basic fee $ 29,034,894 Performance adjustment 7,248,162 Transfer agent fees 10,812,235 Accounting and security 1,274,894 lending fees Non-interested trustees' 15,535 compensation Custodian fees and expenses 1,633,137 Registration fees 230,186 Audit 80,248 Legal 8,460 Miscellaneous 16,571 Total expenses before 50,354,322 reductions Expense reductions (1,672,307) 48,682,015 NET INVESTMENT INCOME 33,841,819 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 410,211,905 Foreign currency transactions 95,193 Futures contracts 24,336,040 434,643,138 Change in net unrealized appreciation (depreciation) on: Investment securities 553,008,511 Assets and liabilities in (385,905) foreign currencies Futures contracts (1,531,372) 551,091,234 NET GAIN (LOSS) 985,734,372 NET INCREASE (DECREASE) IN $ 1,019,576,191 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION $ 1,435,973 Expense reductions Directed brokerage arrangements Transfer agent credits 236,334 $ 1,672,307 STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 INCREASE (DECREASE) IN NET ASSETS Operations Net investment $ 33,841,819 $ 31,812,695 income Net realized gain (loss) 434,643,138 85,208,677 Change in net unrealized 551,091,234 69,551,645 appreciation (depreciation) NET INCREASE (DECREASE) IN 1,019,576,191 186,573,017 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (20,938,368) (36,842,102) From net investment income From net realized gain (53,392,648) (145,109,412) TOTAL DISTRIBUTIONS (74,331,016) (181,951,514) Share transactions Net 4,000,168,797 3,450,931,991 proceeds from sales of shares Reinvestment of distributions 71,180,520 176,077,752 Cost of shares redeemed (4,137,892,605) (3,805,741,237) NET INCREASE (DECREASE) IN (66,543,288) (178,731,494) NET ASSETS RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) 878,701,887 (174,109,991) IN NET ASSETS NET ASSETS Beginning of period 3,603,342,248 3,777,452,239 End of period (including $ 4,482,044,135 $ 3,603,342,248 undistributed net investment income of $45,498,123 and $17,037,956, respectively) OTHER INFORMATION Shares Sold 105,210,288 98,986,406 Issued in reinvestment of 2,054,834 5,371,501 distributions Redeemed (108,778,783) (108,950,453) Net increase (decrease) (1,513,661) (4,592,546)
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995 SELECTED PER-SHARE DATA Net asset value, beginning of $ 33.95 $ 34.12 $ 31.08 $ 28.57 $ 29.17 period Income from Investment Operations Net investment income .32 B .29 B .43 B .48 C .31 Net realized and unrealized 9.28 1.22 4.61 2.72 (.44) gain (loss) Total from investment 9.60 1.51 5.04 3.20 (.13) operations Less Distributions From net investment income (.20) (.34) (.37) (.34) (.02) From net realized gain (.51) (1.34) (1.63) (.35) (.45) Total distributions (.71) (1.68) (2.00) (.69) (.47) Net asset value, end of period $ 42.84 $ 33.95 $ 34.12 $ 31.08 $ 28.57 TOTAL RETURN A 28.77% 4.60% 17.03% 11.41% (.34)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 4,482,044 $ 3,603,342 $ 3,777,452 $ 3,114,625 $ 2,276,306 (000 omitted) Ratio of expenses to average 1.27% 1.26% 1.23% 1.14% 1.05% net assets Ratio of expenses to average 1.23% D 1.24% D 1.20% D 1.12% D 1.05% net assets after expense reductions Ratio of net investment .85% .82% 1.28% 1.74% 1.78% income to average net assets Portfolio turnover rate 85% 69% 68% 82% 49% 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 $.08 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.
WORLDWIDE PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). If Fidelity had not reimbursed certain fund expenses, the life of fund total returns would have been lower. CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1994 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY WORLDWIDE 25.18% 67.70% 150.12% MSCI World 24.91% 114.06% 184.02% Global Funds Average 28.07% 96.23% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case one year, five years or since the fund started on May 30, 1990. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Morgan Stanley Capital International World Index - a market capitalization-weighted index that is designed to represent the performance of developed stock markets throughout the world. As of October 31, 1999, the index included over 1300 equity securities of companies domiciled in 22 countries. To measure how the fund's performance stacked up against its peers, you can compare it to the global funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 238 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1994 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY WORLDWIDE 25.18% 10.89% 10.21% MSCI World 24.91% 16.44% 11.71% Global Funds Average 28.07% 14.06% n/a AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND Worldwide MS World Index (Net) 00318 MS004 1990/05/30 10000.00 10000.00 1990/05/31 10030.00 9976.64 1990/06/30 10290.00 9902.62 1990/07/31 10570.00 9989.88 1990/08/31 9380.00 9051.77 1990/09/30 8450.00 8094.23 1990/10/31 8950.00 8846.73 1990/11/30 8950.00 8698.31 1990/12/31 8898.23 8877.31 1991/01/31 9150.44 9198.82 1991/02/28 9654.88 10047.22 1991/03/31 9321.95 9748.02 1991/04/30 9412.75 9821.21 1991/05/31 9483.37 10040.73 1991/06/30 8807.43 9417.84 1991/07/31 9352.22 9859.59 1991/08/31 9493.46 9825.22 1991/09/30 9654.88 10079.83 1991/10/31 9695.23 10240.21 1991/11/30 9180.71 9790.88 1991/12/31 9599.06 10500.46 1992/01/31 9701.07 10302.97 1992/02/29 9996.89 10122.11 1992/03/31 9762.27 9642.19 1992/04/30 10190.71 9773.45 1992/05/31 10619.15 10159.10 1992/06/30 10251.92 9815.63 1992/07/31 10149.91 9837.48 1992/08/31 10007.10 10073.46 1992/09/30 10007.10 9977.88 1992/10/31 9823.48 9704.42 1992/11/30 9976.49 9874.98 1992/12/31 10194.86 9951.68 1993/01/31 10530.15 9981.98 1993/02/28 10781.62 10215.46 1993/03/31 11399.81 10804.71 1993/04/30 11682.71 11302.49 1993/05/31 12049.43 11559.98 1993/06/30 11923.70 11460.02 1993/07/31 12185.64 11693.15 1993/08/31 12950.52 12226.26 1993/09/30 12814.31 11997.44 1993/10/31 13369.63 12325.16 1993/11/30 13128.64 11625.06 1993/12/31 13920.64 12191.05 1994/01/31 14914.21 12992.28 1994/02/28 14689.86 12821.27 1994/03/31 14134.32 12265.65 1994/04/30 14625.76 12641.94 1994/05/31 14604.39 12671.61 1994/06/30 14305.25 12633.52 1994/07/31 14743.28 12870.80 1994/08/31 14989.00 13255.48 1994/09/30 14700.54 12904.26 1994/10/31 14914.21 13268.36 1994/11/30 14401.40 12689.97 1994/12/31 14332.82 12809.88 1995/01/31 14253.69 12614.52 1995/02/28 14423.25 12795.36 1995/03/31 14502.37 13408.98 1995/04/30 14864.08 13873.19 1995/05/31 15011.03 13988.72 1995/06/30 15214.49 13981.28 1995/07/31 15836.18 14677.67 1995/08/31 15440.56 14347.51 1995/09/30 15587.50 14762.30 1995/10/31 15056.24 14526.70 1995/11/30 15101.46 15027.93 1995/12/31 15363.09 15464.12 1996/01/31 15786.03 15740.67 1996/02/29 15991.79 15833.30 1996/03/31 16266.13 16093.49 1996/04/30 16746.23 16468.62 1996/05/31 17043.43 16479.56 1996/06/30 17032.00 16559.58 1996/07/31 16414.73 15971.03 1996/08/31 16849.10 16151.29 1996/09/30 17169.17 16780.32 1996/10/31 17352.06 16894.13 1996/11/30 18152.22 17837.53 1996/12/31 18239.31 17548.51 1997/01/31 18464.49 17756.70 1997/02/28 18974.10 17957.61 1997/03/31 18725.22 17599.05 1997/04/30 18689.67 18170.96 1997/05/31 19791.85 19289.22 1997/06/30 20834.77 20247.97 1997/07/31 21699.92 21177.22 1997/08/31 20538.49 19757.23 1997/09/30 22150.28 20827.25 1997/10/31 20467.38 19727.72 1997/11/30 20064.43 20073.46 1997/12/31 20441.89 20314.75 1998/01/31 20762.29 20877.50 1998/02/28 22223.34 22286.37 1998/03/31 23633.13 23224.02 1998/04/30 24504.63 23447.48 1998/05/31 24402.10 23150.13 1998/06/30 23799.74 23696.03 1998/07/31 23389.62 23654.49 1998/08/31 19109.00 20496.55 1998/09/30 18750.15 20855.53 1998/10/31 19980.50 22737.29 1998/11/30 20992.99 24085.90 1998/12/31 21910.20 25258.95 1999/01/31 22360.86 25808.38 1999/02/28 21512.56 25118.17 1999/03/31 22162.04 26160.33 1999/04/30 23116.39 27187.93 1999/05/31 22572.94 26190.79 1999/06/30 23739.36 27408.70 1999/07/31 23924.93 27322.78 1999/08/31 23977.95 27270.49 1999/09/30 23805.64 27002.36 1999/10/29 25011.83 28402.23 IMATRL PRASUN SHR__CHT 19991031 19991123 151939 R00000000000117 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity Worldwide Fund on May 30, 1990, when the fund started. As the chart shows, by October 31, 1999, the value of the investment would have grown to $25,012 - a 150.12% increase on the initial investment. For comparison, look at how the Morgan Stanley Capital International World Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $28,402 - a 184.02% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) WORLDWIDE FUND TALK: THE MANAGERS' OVERVIEW An interview with Penny Dobkin (right), Lead Portfolio Manager of Fidelity Worldwide Fund, and Doug Chase, who began managing U.S. equities for the fund on September 1, 1999. Q. HOW DID THE FUND PERFORM, PENNY? A. The fund kept pace with its benchmark in a strong market environment. For the 12 months that ended October 31, 1999, the fund returned 25.18%. By comparison, the Morgan Stanley Capital International World Index returned 24.91%, while the global funds average monitored by Lipper Inc. returned 28.07%. Q. WHAT ENABLED THE FUND TO SLIGHTLY OUTPERFORM THE INDEX? A. One positive influence was an overweighting in Japanese equities, which were extremely strong during the period, especially the past six months. The fund's stock selection, particularly in Japan and the United Kingdom, also helped. Q. WHAT CAUSED JAPANESE STOCKS TO CATCH FIRE? A. The investment environment in Japan improved dramatically during the past year for several reasons. First, there was evidence of growth in the economy, as the Japanese gross domestic product - a measure of all goods and services produced domestically - actually rose modestly for two consecutive quarters instead of falling, as had been the case for quite a while. A second positive influence was the government bailout of the banking industry, which resulted in recapitalized banks that were capable of supporting an expanding economy once again. In addition, across all sectors of the economy, the restructuring efforts undertaken by many Japanese companies were beginning to be taken more seriously by an increasing number of investors. Japanese managements were not simply saying the right things about cost cutting, concentrating on core businesses and so on. They were actually "walking the talk" with concrete initiatives. Finally, the Japanese telecommunications sector was particularly strong, buoyed by consumers' warm reception of a number of cellular telecommunications products and services, including an exciting cellular phone with Internet capabilities. Q. ON THE OTHER HAND, THE FUND TRAILED THE LIPPER AVERAGE . . . A. During the first half of the period, the fund had a higher concentration of defensive stocks - that is, stocks of companies perceived to be capable of generating consistent earnings and share price growth in a variety of economic environments - than its peers. Defensive stocks tend to underperform when prospects for economic growth are improving, as they were following 1998's credit crunch. Another negative was the fund's stock selection in Italy, where government intervention hurt two of the fund's holdings. Q. HOW WAS THE FUND POSITIONED WITH RESPECT TO EUROPEAN STOCKS? A. I modestly underweighted European stocks. Growth in the region slowed, and I didn't expect it to pick up until some of the key players in Europe made a concerted effort to lower interest rates. Furthermore, the euro continued to depreciate against the dollar during the period, which resulted in substantially lower returns from European stocks in U.S. dollar terms than the returns measured in local currencies. One sector where I increased holdings in Europe, however, was insurance, which offered some compelling values, in my view. Q. WHAT ABOUT THE REST OF ASIA AND LATIN AMERICA? A. On balance, the fund's weightings were roughly commensurate with those of the index with respect to the rest of Asia. Stock markets in Hong Kong, Singapore, South Korea and Taiwan all enjoyed strong advances. However, in view of the favorable environment for Japanese equities and Fidelity's strong research presence there, I concentrated my efforts in Asia on Japan. I continued to avoid investments in Latin America, which I felt offered insufficient potential rewards to compensate for the risks involved. Q. TURNING TO YOU, DOUG, WHAT DEVELOPMENTS IN THE FUND'S U.S. SUBPORTFOLIO MERIT MENTION? D.C. Since I am able to devote all of my efforts to managing the fund's U.S. holdings, I felt comfortable increasing them from about 90 when I began to roughly 250 at the end of the period. I believe that owning a greater number of issues allows me to more effectively leverage Fidelity's stock-picking strengths. I tried to balance aggressive growth positions with value plays. I don't try to predict what the economy is going to do, so the subportfolio will generally be structured using a "bottom-up" approach. That is, I tend not to stray far from my benchmark in terms of sector weightings, and investment decisions are made mostly on the basis of a company's basic business prospects and stock valuation. Q. PENNY, WHAT STOCKS DID WELL FOR THE FUND? A. DDI is the largest provider of cellular phone service in Japan and perhaps the most reasonably valued major provider in the world. The company benefited from ongoing consolidation in the industry as well as an extremely strong market for cellular products and services in Japan. Another cellular play, Orange PLC, occupies a similar position in the U.K. cellular communications market. Orange benefited from strong demand, increasing market share and a management initiative to acquire the company from shareholders. In the case of Oracle, a provider of enterprise software, I purchased the stock near its fall 1998 lows, and it participated nicely in the rebound in U.S. stocks that followed. Q. WHAT STOCKS DETRACTED FROM PERFORMANCE? A. U.S.-based Philip Morris hurt performance, as the company encountered further difficulties due to smoking-related lawsuits. Although the rulings against the company did not detract from earnings - - and could possibly be overturned - investors were cautious about the stock's prospects. Raisio Group also hurt performance. The Finnish biotechnology stock, which I sold near the end of 1998, suffered from an unfavorable U.S. Food and Drug Administration ruling on one of its products as well as competitive pressures. Finally, Telecom Italia and Olivetti, two of the fund's Italian holdings, put a dent in performance when the Italian government threw its support behind a merger of the two companies at a price that was disadvantageous to shareholders. I was skeptical that the merger would go through on those terms and held on to both stocks, which hurt the funds returns. Q. WHAT'S YOUR OUTLOOK, PENNY? A. Not knowing how strong the various world economies that affect the fund are going to be in the year ahead makes sector allocation difficult right now. If those economies see modest growth, it would be good to emphasize defensive stocks. On the other hand, stronger economic growth would dictate owning more cyclical stocks - those that are most sensitive to economic changes. Until we get a clearer picture of where economic growth is headed, our plan is to take a cautious approach and maintain sector weightings close to our benchmarks. At the end of the period, the fund was essentially fully invested, which reflects our overall optimism for worldwide equity markets right now. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY FIDELITY FUND. PENNY DOBKIN ON FACTORS LIKELY TO AFFECT WORLDWIDE ECONOMIC GROWTH OVER THE SHORT TERM: "The two most important factors that will affect our decision- making over the next six to 12 months are Y2K and interest rates. In our view, Y2K is important, not because we're anticipating technological glitches, but because many companies are stockpiling extra inventory in the fourth quarter of 1999 as a precaution against disruptions in their supply lines. If business continues pretty much as usual, therefore, those companies will be left holding extra inventory. That means that orders for new products may suffer temporarily while the existing inventory is being depleted. In most cases, however, the overstocking amounts to only a few weeks' worth, so any inventory-related slowdown should be strictly short term in nature. "The other important variable is interest rates. The question is, will the interest-rate increases that have occurred in the U.S. and abroad have a dampening effect on economic growth? The ideal scenario, of course, would be a `soft landing'-a modest slowdown that allows the economy to maintain a reasonable growth rate while reassuring the Federal Reserve Board and other monetary authorities that inflation will remain under control. If, on the other hand, economic growth continues at its recent vigorous pace, we will likely see more increases in interest rates, which would not be conducive to strong share price appreciation. Another possibility would be a more pronounced slowdown than anticipated, which would not be favorable for stocks either. At the moment, though, a recession seems a remote possibility. "Although we do not know which of these scenarios will come to pass, we are generally optimistic about the prospects for stocks in the year 2000 and are comfortable for now with sector weightings that closely parallel those of our benchmarks. Given the high volatility that currently characterizes world equity markets, patience is a virtue, and it often pays to simply wait for an appropriate catalyst to take a previously ignored sector higher. Pharmaceuticals were a good example of this recently. Shunned by many investors for the first eight months of 1999, they suddenly took off in September and October on several announced merger proposals. The fund, although neutral on pharmaceutical stocks with respect to its benchmark, owned more than most of its peers and was able to capitalize on that opportunity." FUND FACTS GOAL: long-term growth of capital by investing mainly in common stocks from around the world FUND NUMBER: 318 TRADING SYMBOL: FWWFX START DATE: May 30, 1990 SIZE: as of October 31, 1999, more than $980 million MANAGERS: Penelope Dobkin, since inception; manager, Fidelity Europe Fund, 1986-1990; Fidelity United Kingdom Fund, 1987-1989; Fidelity Select Financial Services Portfolio, 1983-1986; joined Fidelity in 1980; Doug Chase, U.S. equity investments, since August 1999; manager, several Fidelity Select Portfolios; joined Fidelity in 1992. (checkmark) WORLDWIDE INVESTMENT CHANGES AS OF OCTOBER 31, 1999 Canada 1.6% Row: 1, Col: 1, Value: 1.6 Row: 1, Col: 2, Value: 5.4 Row: 1, Col: 3, Value: 3.3 Row: 1, Col: 4, Value: 15.1 Row: 1, Col: 5, Value: 3.5 Row: 1, Col: 6, Value: 8.699999999999999 Row: 1, Col: 7, Value: 1.6 Row: 1, Col: 8, Value: 2.7 Row: 1, Col: 9, Value: 9.4 Row: 1, Col: 10, Value: 48.7 France 5.4% Germany 3.3% Japan 15.1% United States 48.7% Netherlands 3.5% Other 8.7% Sweden 1.6% Switzerland 2.7% United Kingdom 9.4% GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30, 1999 Australia 1.8% France 5.1% Row: 1, Col: 1, Value: 1.8 Row: 1, Col: 2, Value: 5.1 Row: 1, Col: 3, Value: 2.5 Row: 1, Col: 4, Value: 2.0 Row: 1, Col: 5, Value: 11.1 Row: 1, Col: 6, Value: 3.3 Row: 1, Col: 7, Value: 8.9 Row: 1, Col: 8, Value: 3.6 Row: 1, Col: 9, Value: 11.0 Row: 1, Col: 10, Value: 50.7 Germany 2.5% Italy 2.0% Japan 11.1% United States 50.7% Netherlands 3.3% Other 8.9% Switzerland 3.6% United Kingdom 11.0%
ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks and Investment Companies 95.9 96.2 Bonds 0.0 0.3 Short-term investments and 4.1 3.5 net other assets
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Microsoft Corp. (United 2.8 1.7 States of America, Computer Services & Software) General Electric Co. (United 1.7 1.7 States of America, Electrical Equipment) DDI Corp. (Japan, Telephone 1.3 1.2 Services) Total Fina SA Class B 1.2 0.5 (France, Oil & Gas) Vodafone AirTouch PLC 1.0 0.6 sponsored ADR (United Kingdom, Cellular) Orange PLC (United Kingdom, 1.0 0.7 Cellular) Avon Products, Inc. (United 0.9 0.3 States of America, Household Products) Cisco Systems, Inc. (United 0.9 0.0 States of America, Communications Equipment) Citigroup, Inc. (United 0.9 1.7 States of America, Credit & Other Finance) Kokusai Denshin Denwa 0.9 0.0 (Japan, Telephone Services) 12.6 8.4 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO FINANCE 19.1 21.0 TECHNOLOGY 14.0 10.3 UTILITIES 12.6 11.7 HEALTH 9.3 11.7 NONDURABLES 6.5 6.7 INDUSTRIAL MACHINERY & 6.3 3.9 EQUIPMENT RETAIL & WHOLESALE 5.4 4.6 ENERGY 5.3 7.7 MEDIA & LEISURE 4.6 5.3 BASIC INDUSTRIES 3.7 1.8
WORLDWIDE INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 95.6% SHARES VALUE (NOTE 1) AUSTRALIA - 1.0% Australia & New Zealand 400,000 $ 2,639,823 Banking Group Ltd. Cable & Wireless Optus Ltd. 892,300 2,042,781 (a) HIH Insurance Ltd. 1,033,237 981,754 (installment receipt) National Australia Bank Ltd. 141,600 2,185,219 Telstra Corp. Ltd. 325,000 1,042,480 (installment receipt) (d) Westpac Banking Corp. 95,900 615,346 Woodside Petroleum Ltd. 91,400 550,801 10,058,204 BELGIUM - 0.3% Fortis B 50,000 1,693,114 GIB Holdings Ltd. 27,000 1,111,095 2,804,209 CANADA - 1.6% BCE, Inc. 128,000 7,705,918 Canadian National Railway Co. 101,600 3,082,449 Clarica Life Insurance Co. (c) 85,300 1,379,452 Imasco Ltd. 120,000 3,220,765 15,388,584 DENMARK - 0.2% Coloplast AS Class B 4,900 483,152 Ratin AS Class B 13,300 1,386,891 1,870,043 FINLAND - 1.1% Metsa-Serla Oyj Class B Free 66,900 607,632 Shares Nokia AB sponsored ADR 41,000 4,738,063 Pohjola Group Insurance Corp. 36,600 1,969,076 Class B Sampo Insurance Co. Ltd. 106,800 3,717,890 11,032,661 FRANCE - 5.4% AXA SA de CV 40,500 5,729,215 Banque Nationale de Paris 84,478 7,441,173 Banque Nationale de Paris 3,666 21,734 warrants 7/1/02 (a) Christian Dior SA 4,100 736,130 Compagnie Financiere de 5,660 591,103 Paribas Class A (Reg.) Euro Disney SCA (a) 1,031,400 1,425,311 Groupe Danone 2,300 588,370 Havas Advertising SA 8,300 2,333,386 Rhodia SA 89,800 1,738,296 Sanofi-Synthelabo SA (a) 44,280 1,959,525 Schneider SA (a) 30,900 2,135,065 Societe Generale, France 30,200 6,594,602 Class A Television Francaise 1 SA 18,200 5,721,356 Total Fina SA Class B 90,038 12,008,819 Transiciel SA 13,200 764,465 SHARES VALUE (NOTE 1) Usinor Sacilor 32,600 $ 454,288 Vivendi SA (a) 29,900 2,272,566 52,515,404 GERMANY - 3.0% Bilfinger & Berger Bau AG 38,800 787,905 Celanese AG (a) 8,100 128,170 DaimlerChrysler AG (Reg.) 35,000 2,721,250 EPCOS AG (a) 23,000 945,517 FAG Kugelfischer Georg 52,400 444,978 Schaefer AG Fresenius Medical Care AG 36,200 2,577,648 GFK AG (a) 1,100 30,634 Hoechst AG 81,000 3,587,915 Holzmann (Phillip) AG (a) 2,000 293,262 Kali Und Salz Beteiligungs AG 106,000 1,518,507 Mannesmann AG (Reg.) 35,900 5,676,849 Munich Reinsurance AG (Reg.) 18,600 4,251,901 Primacom AG 44,000 2,181,533 Siemens AG 27,800 2,508,858 Veba AG 28,500 1,548,029 29,202,956 HONG KONG - 0.7% Amoy Properties Ltd. 718,000 619,284 China Telecom (Hong Kong) 462,000 1,559,250 Ltd. (a) Great Eagle Holdings Ltd. 822,000 1,015,860 Henderson Land Development 257,000 1,171,190 Co. Ltd. Hong Kong Electric Holdings 372,000 1,137,358 Ltd. Kerry Properties Ltd. 282,500 280,027 Sun Hung Kai Properties Ltd. 198,000 1,599,446 7,382,415 IRELAND - 0.7% Bank of Ireland, Inc. 287,400 2,252,614 Independent Newspapers PLC 789,900 4,195,484 (United Kingdom) 6,448,098 ISRAEL - 0.1% Partner Communication Co. 59,000 929,250 Ltd. ADR ITALY - 0.8% Olivetti & Co. Spa 1,000,000 1,933,632 Telecom Italia Spa 703,500 6,085,275 8,018,907 JAPAN - 15.1% Advan Co. Ltd. 25,900 766,118 Alps Electric Co. Ltd. 19,000 368,595 Amada Co. Ltd. 205,000 1,575,030 Bank of Tokyo-Mitsubishi Ltd. 143,000 2,373,148 Banyu Pharmaceutical Co. Ltd. 183,000 3,355,073 Canon Sales Co., Inc. 103,000 1,631,184 Chukyo Coca-Cola Bottling Co. 44,000 523,563 Ltd. Citizen Watch Co. Ltd. 132,000 934,300 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) JAPAN - CONTINUED Dai-Ichi Kangyo Bank Ltd. 2,000 $ 27,467 Daiwa Securities Co. Ltd. 129,000 1,378,891 DDI Corp. 1,141 12,492,101 Fancl Corp. 1,000 288,115 Fuji Bank Ltd. 195,000 2,678,031 Fuji Coca-Cola Bottling Co. 63,000 1,210,084 Ltd. Fuji Heavy Industries Ltd. 202,000 1,718,819 Fujikura Ltd. 403,000 2,496,375 Funai Electric Co. Ltd. 1,100 498,631 Furukawa Electric Co. Ltd. 620,000 4,525,330 Heiwa Corp. 24,000 659,208 Hirose Electric Co. Ltd. 5,500 960,816 Hokkaido Coca-Cola Bottling 57,000 772,408 Co. Ltd. Honda Motor Co. Ltd. 129,000 5,426,063 Ito-Yokado Co. Ltd. 60,000 4,805,763 Kaneka Corp. 163,000 2,136,807 Kirin Brewery Co. Ltd. 431,000 4,942,272 Koa Denko Co. Ltd. 148,000 2,572,677 Kokusai Denshin Denwa 70,900 8,919,952 Kyocera Corp. 70,000 6,722,689 Mikasa Coca Cola Bottling Co. 74,000 781,753 Minolta Co. Ltd. 412,000 1,689,546 Mitsubishi Electric Corp. 570,000 3,158,608 Mitsubishi Estate Co. Ltd. 86,000 863,097 Mitsumi Electric Co. Ltd. 109,000 2,920,624 New Japan Securities Co. Ltd. 397,000 1,170,507 (a) Nichicon Corp. 135,000 2,930,132 Nihon Unisys Ltd. 32,000 1,124,802 Nikko Securities Co. Ltd. 140,000 1,317,647 Nippon Computer Systems Corp. 150,000 2,938,776 Nomura Securities Co. Ltd. 80,000 1,322,257 NTT Mobile Communication 40 1,064,106 Network, Inc. (c) Omron Corp. 320,000 6,699,640 ORIX Corp. 29,500 3,966,387 Ricoh Co. Ltd. 121,000 1,976,672 Sanwa Bank Ltd. 139,000 2,070,483 Sanyo Shinpan Finance Co. 16,800 805,109 Ltd. Senshukai Co. Ltd. 86,000 1,651,035 Shikoku Coca-Cola Bottling 50,000 621,849 Co. Ltd. Shionogi & Co. Ltd. 175,000 1,611,765 Sony Corp. 35,500 5,671,125 Square Co. Ltd. 10,500 760,336 Sumitomo Electric Industries 87,000 1,170,583 Ltd. Takeda Chemical Industries 100,000 5,752,701 Ltd. Tokyo Seimitsu Co. Ltd. 14,000 1,708,908 Toyota Motor Corp. 73,000 2,530,900 Tsubaki Nakashima Co. Ltd. 57,000 821,128 Yamaha Motor Co. Ltd. 182,000 1,482,219 Yamanouchi Pharmaceutical Co. 170,000 7,722,449 Ltd. Yokogawa Electric Corp. 408,000 2,860,408 147,925,062 SHARES VALUE (NOTE 1) KOREA (SOUTH) - 0.2% Samsung Electronics Co. Ltd. 13,300 $ 2,217,591 LUXEMBOURG - 0.0% Audiofina 9,700 489,115 MEXICO - 0.3% Cifra SA de CV Series C (a) 877,000 1,357,169 Empresas ICA Sociedad 2,200 5,638 Controladora SA de CV sponsored ADR Grupo Elektra SA de CV Unit 900,000 430,200 Grupo Financiero Bancomer SA 4,000,000 1,053,892 de CV Series A 2,846,899 NETHERLANDS - 3.5% ABN AMRO Holding NV 137,000 3,322,545 Fortis Amev NV 94,000 3,245,526 IHC Caland NV 61,400 2,671,798 ING Groep NV 67,900 4,016,882 Koninklijke KPN NV 37,300 1,919,778 Koninklijke Philips 34,100 3,507,279 Electronics NV Laurus NV 52,900 1,180,259 NBM-Amstelland NV 64,200 826,240 Numico NV 33,300 1,361,217 Samas Groep NV 280,000 3,810,299 United Pan-Europe 21,000 1,619,377 Communications NV Vendex KBB NV 203,800 5,965,934 Volker Wessels Stevin NV 57,300 979,221 34,426,355 NEW ZEALAND - 0.3% Lion Nathan Ltd. 730,000 1,575,139 Telecom Corp. of New Zealand 410,000 1,652,767 Ltd. 3,227,906 NORWAY - 0.5% Bergesen d.y. AS Class A 49,800 805,099 Christiania Bank Og 325,000 1,586,632 Kreditkasse Den Norske Bank ASA Class A 596,900 2,319,021 Free shares 4,710,752 PORTUGAL - 0.3% Banco Pinto & Sotto Mayor SA 150,000 3,133,053 SINGAPORE - 0.6% Chartered Semiconductor 5,200 172,575 Manufacturing Ltd. ADR Oversea-Chinese Banking Corp. 175,350 1,319,215 Ltd. Overseas Union Bank Ltd. 456,800 1,979,512 United Overseas Bank Ltd. 323,000 2,449,473 (For. Reg.) 5,920,775 SPAIN - 1.5% Aguas de Barcelon SA 45,100 722,204 Aguas de Barcelon SA rights 45,100 0 11/16/99 (a) Banco Santander Central 187,400 1,951,183 Hispano SA COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SPAIN - CONTINUED Cortefiel SA 90,600 $ 2,373,101 Endesa SA 58,200 1,168,350 Iberdrola SA 83,100 1,214,998 Sogecable SA (a)(c) 13,200 364,270 Telefonica SA (a) 272,084 4,489,015 Union Electrica Fenosa SA 150,000 2,201,049 14,484,170 SWEDEN - 1.6% A-Com AB (a) 27,400 317,449 ABB Ltd. (Sweden) (a) 23,966 2,393,750 Atlas Copco AB Series B 15,300 399,305 Avesta Sheffield AB (a) 142,700 676,976 Electrolux AB 65,200 1,304,040 Ericsson (L.M.) Telefon AB: Class B 30,000 1,282,500 sponsored ADR Class B 155,000 6,626,250 Investor AB Class B Free 156,400 2,012,281 shares Sandvik AB Series B 37,200 966,322 15,978,873 SWITZERLAND - 2.7% Credit Suisse Group (Reg.) 28,500 5,490,499 Julius Baer Holding AG 200 602,932 Nestle SA (Reg.) 3,327 6,431,310 Novartis AG (Reg.) 2,900 4,347,426 PubliGroupe SA 3,152 2,317,007 Roche Holding AG 322 3,874,416 participation certificates Sika Finanz AG 1,300 388,060 UBS AG 10,500 3,061,838 26,513,488 TAIWAN - 0.1% Taishin International Bank 1,471,680 839,767 UNITED KINGDOM - 9.4% Abbey National PLC 107,300 2,099,685 Alliance & Leicester PLC 68,800 1,004,636 Allied Domecq PLC 278,200 1,564,555 Allied Zurich PLC 417,700 5,048,464 Amvescap PLC 200,000 1,789,107 Arcadia Group PLC 202,500 510,309 Barclays PLC 71,800 2,199,605 Bass PLC 20,586 226,298 BICC PLC 447,600 802,276 Booker PLC 299,000 614,595 BP Amoco PLC sponsored ADR 142,032 8,202,348 British Aerospace PLC 279,200 1,632,159 British Vita PLC Ord. 148,200 597,065 Cordiant PLC 450,700 1,319,213 SHARES VALUE (NOTE 1) Glaxo Wellcome PLC 209,800 $ 6,280,888 Iceland Group PLC 487,550 2,321,000 Independent Insurance PLC 533,400 2,429,631 Informa Group PLC 235,700 1,573,595 Morgan Crucible Co. PLC 192,700 770,008 National Westminster Bank PLC 111,300 2,514,718 Nycomed Amersham PLC 113,800 693,327 Orange PLC (a) 377,300 9,411,955 Royal & Sun Alliance 431,727 2,939,118 Insurance Group PLC Royal Bank of Scotland Group 114,500 2,639,739 PLC Rugby Group PLC 200,500 375,861 Safeway PLC 310,100 973,963 Scottish & Newcastle PLC 206,900 1,929,083 Shell Transport & Trading Co. PLC: ADR 35,000 1,605,625 (Reg.) 763,400 5,836,831 Smith & Nephew PLC 756,100 2,436,928 Smith (David S.) Holdings PLC 179,800 564,717 SmithKline Beecham PLC 70,000 4,480,000 sponsored ADR Sun Life & Provincial Holding 94,200 703,645 PLC Tesco PLC 664,000 1,976,306 Unilever PLC 178,571 1,660,153 Vodafone AirTouch PLC 213,000 10,210,688 sponsored ADR 91,938,094 UNITED STATES OF AMERICA - 44.6% Abbott Laboratories 73,000 2,947,375 Abercrombie & Fitch Co. Class 24,000 654,000 A (a) ACNielsen Corp. (a) 29,200 642,400 Adaptec, Inc. (a) 25,900 1,165,500 AES Corp. (a) 16,800 948,150 Affiliated Computer Services, 10,000 380,000 Inc. Class A (a) AFLAC, Inc. 29,000 1,482,625 AHL Services, Inc. (a) 25,800 490,200 Alliant Techsystems, Inc. (a) 10,900 670,350 AlliedSignal, Inc. 38,000 2,163,625 ALLTEL Corp. 34,300 2,855,475 Altera Corp. (a) 24,300 1,181,588 Ambac Financial Group, Inc. 62,800 3,752,300 America Online, Inc. (a) 18,700 2,425,156 American Home Products Corp. 70,196 3,667,741 American Italian Pasta Co. 30,000 753,750 Class A (a) Ames Department Stores, Inc. 39,500 1,251,656 (a) Amgen, Inc. (a) 19,100 1,523,225 Apple Computer, Inc. (a) 12,800 1,025,600 Associates First Capital 75,000 2,737,500 Corp. Class A At Home Corp. Series A (a) 18,000 672,750 AT&T Corp. 32,400 1,514,700 AT&T Corp. (Liberty Media 67,000 2,659,063 Group) Class A (a) Atlantic Coast Airlines 30,000 697,500 Holdings (a) Automatic Data Processing, 43,500 2,096,156 Inc. COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) UNITED STATES OF AMERICA - CONTINUED Avery Dennison Corp. 29,000 $ 1,812,500 Avon Products, Inc. 288,206 9,294,644 Ball Corp. 9,000 362,813 Bank of America Corp. 81,000 5,214,375 Bank of New York Co., Inc. 46,000 1,926,250 Barrett Resources Corp. (a) 23,000 771,938 BE Aerospace, Inc. (a) 82,000 825,125 BellSouth Corp. 71,200 3,204,000 Bestfoods 19,000 1,116,250 Biomet, Inc. 60,231 1,814,459 BJ Services Co. (a) 33,000 1,132,313 BJ's Wholesale Club, Inc. (a) 27,100 835,019 Block (H&R), Inc. 15,000 638,438 Boeing Co. 37,000 1,704,313 Boise Cascade Corp. 13,000 463,125 Bowater, Inc. 20,000 1,050,000 Bristol-Myers Squibb Co. 114,800 8,818,075 Burlington Northern Santa Fe 115,400 3,678,375 Corp. Burlington Resources, Inc. 34,800 1,213,650 Calpine Corp. (a) 41,000 2,362,625 Canandaigua Brands, Inc. 15,100 913,550 Class A (a) Cardinal Health, Inc. 30,800 1,328,250 Case Corp. 26,400 1,399,200 Caterpillar, Inc. 41,100 2,270,775 CBS Corp. (a) 24,000 1,171,500 CDW Computer Centers, Inc. (a) 9,000 555,750 CEC Entertainment, Inc. (a) 26,600 852,863 Centex Corp. 14,400 386,100 CenturyTel, Inc. 35,500 1,435,531 Ceridian Corp. (a) 65,000 1,425,938 Champion International Corp. 30,000 1,734,375 Chase Manhattan Corp. 77,000 6,727,875 CIGNA Corp. 8,900 665,275 Circuit City Stores, Inc. - 38,000 1,622,125 Circuit City Group Cisco Systems, Inc. (a) 124,668 9,225,432 Citigroup, Inc. 166,808 9,028,483 Citrix Systems, Inc. (a) 15,000 961,875 Clorox Co. 89,138 3,649,087 CMGI, Inc. (a) 8,200 897,388 CNF Transportation, Inc. 20,745 685,882 Computer Sciences Corp. (a) 26,600 1,827,088 Compuware Corp. (a) 40,400 1,123,625 Concord EFS, Inc. (a) 25,500 690,094 Consolidated Papers, Inc. 45,000 1,409,063 Consolidated Stores Corp. (a) 130,500 2,389,781 Convergys Corp. (a) 20,200 395,163 Cordant Technologies, Inc. 34,300 1,069,731 Corn Products International, 13,000 423,313 Inc. Corning, Inc. 9,100 715,488 CVS Corp. 21,000 912,188 Dayton Hudson Corp. 52,700 3,405,738 SHARES VALUE (NOTE 1) Dean Foods Co. 12,000 $ 555,000 Dell Computer Corp. (a) 81,000 3,250,125 Dial Corp. 74,100 1,732,088 Donnelley (R.R.) & Sons Co. 42,700 1,035,475 DST Systems, Inc. (a) 13,000 827,938 Dynegy, Inc. 131,000 2,996,625 eBay, Inc. 9,000 1,216,125 Eli Lilly & Co. 81,500 5,613,313 EMC Corp. (a) 40,000 2,920,000 Entergy Corp. 38,000 1,137,625 Express Scripts, Inc. Class A 13,000 638,625 (a) Exxon Corp. 81,100 6,006,469 Fannie Mae 68,000 4,811,000 Ferro Corp. 34,000 692,750 Financial Security Assurance 9,000 507,375 Holdings Ltd. Fluor Corp. 18,000 717,750 Fortune Brands, Inc. 37,000 1,311,188 Fox Entertainment Group, Inc. 31,000 670,375 Class A Freddie Mac 44,500 2,405,781 Fuller (H.B.) Co. 6,700 366,825 Gateway, Inc. (a) 56,000 3,699,500 Gaylord Container Corp. Class 101,000 568,125 A (a) General Dynamics Corp. 23,000 1,275,063 General Electric Co. 125,000 16,945,313 General Instrument Corp. (a) 35,000 1,883,438 General Mills, Inc. 15,000 1,307,813 Golden West Financial Corp. 6,000 670,500 H.J. Heinz Co. 14,000 668,500 Halliburton Co. 34,000 1,281,375 Harte Hanks Communications, 19,000 376,438 Inc. Hartford Financial Services 44,600 2,310,838 Group, Inc. Home Depot, Inc. 74,600 5,632,300 Household International, Inc. 33,000 1,472,625 Illinova Corp. 100 3,181 Ingersoll-Rand Co. 34,700 1,813,075 Intel Corp. 72,200 5,590,988 Interpublic Group of 17,200 698,750 Companies, Inc. Jabil Circuit, Inc. (a) 16,100 841,225 JDS Uniphase Corp. (a) 6,900 1,151,438 Johnson & Johnson 50,000 5,237,500 Keebler Foods Co. (a) 45,000 1,437,188 Knight/Trimark Group, Inc. 12,000 312,750 Class A (a) Kroger Co. (a) 80,000 1,665,000 Legato Systems, Inc. (a) 22,300 1,198,625 Lehman Brothers Holdings, 55,700 4,104,394 Inc. Lexmark International Group, 17,500 1,366,094 Inc. Class A (a) Limited, Inc. (The) 21,000 863,625 Litton Industries, Inc. (a) 13,700 643,044 Liz Claiborne, Inc. 18,300 732,000 Lowe's Companies, Inc. 17,600 968,000 LSI Logic Corp. (a) 19,200 1,021,200 Lucent Technologies, Inc. 33,900 2,178,075 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) UNITED STATES OF AMERICA - CONTINUED Lycos, Inc. (a) 15,900 $ 850,650 MapInfo Corp. (a) 32,900 610,706 Marshall & Ilsley Corp. 27,000 1,812,375 MBIA, Inc. 47,900 2,733,294 McDonald's Corp. 52,000 2,145,000 McGraw-Hill Companies, Inc. 32,000 1,908,000 MCI WorldCom, Inc. (a) 101,300 8,692,806 McLeodUSA, Inc. Class A (a) 38,000 1,695,750 Mead Corp. 29,000 1,044,000 MediaOne Group, Inc. 80,406 5,713,851 Merck & Co., Inc. 51,000 4,057,688 Meredith Corp. 39,000 1,391,813 Michaels Stores, Inc. (a) 19,500 654,469 Microchip Technology, Inc. (a) 14,100 939,413 Microsoft Corp. (a) 292,709 27,093,856 Millipore Corp. 30,000 956,250 Mobil Corp. 57,000 5,500,500 Mohawk Industries, Inc. (a) 19,000 435,813 MotivePower Industries, Inc. 141,000 1,683,188 (a) Motorola, Inc. 11,000 1,071,813 Nabisco Group Holdings Corp. 68,200 873,813 National Instrument Corp. (a) 21,000 631,313 Navistar International Corp. 23,700 987,994 (a) NCO Group, Inc. (a) 4,600 194,925 NCR Corp. (a) 22,500 745,313 Network Appliance, Inc. (a) 3,500 259,000 Newport News Shipbuilding, 67,000 2,035,125 Inc. Nextel Communications, Inc. 22,000 1,896,125 Class A (a) Noble Drilling Corp. (a) 20,000 443,750 Ogden Corp. 35,000 317,188 Olin Corp. 191,000 2,638,188 Omnicom Group, Inc. 11,000 968,000 Parker-Hannifin Corp. 20,800 952,900 Payless ShoeSource, Inc. (a) 13,000 595,563 PG&E Corp. 39,400 903,738 Philip Morris Companies, Inc. 172,800 4,352,400 Pittway Corp. Class A 21,300 702,900 Polymer Group, Inc. (a) 42,900 839,231 Praxair, Inc. 18,000 841,500 Procter & Gamble Co. 30,700 3,219,663 Profit Recovery Group 15,200 626,050 International, Inc. (a) Providian Financial Corp. 22,015 2,399,635 Quaker Oats Co. 25,400 1,778,000 QUALCOMM, Inc. (a) 8,000 1,782,000 Quixote Corp. 44,300 658,963 Reader's Digest Association, 84,000 2,709,000 Inc. Class A (non-vtg.) Republic Services, Inc. Class 25,000 306,250 A (a) RJ Reynolds Tobacco Holdings, 50,700 1,099,556 Inc. Rohm & Haas Co. 27,800 1,063,350 SHARES VALUE (NOTE 1) Ryder System, Inc. 30,000 $ 641,250 Sabre Group Holdings, Inc. 7,000 311,063 Class A (a) Safeway, Inc. (a) 52,000 1,836,250 SBC Communications, Inc. 124,064 6,319,510 Schering-Plough Corp. 20,000 990,000 Seagate Technology, Inc. (a) 26,200 771,263 Siebel Systems, Inc. (a) 16,000 1,757,000 Solutia, Inc. 47,000 807,813 SPX Corp. (a) 12,800 1,084,800 Starwood Hotels & Resorts 40,000 917,500 Worldwide, Inc. unit Steel Dynamics, Inc. (a) 47,000 643,313 Sunoco, Inc. 92,000 2,219,500 Syncor International Corp. (a) 27,300 999,863 Tanning Technology Corp. 16,200 569,025 TCF Financial Corp. 18,000 531,000 Texas Instruments, Inc. 29,200 2,620,700 Textron, Inc. 17,000 1,312,188 Time Warner, Inc. 50,100 3,491,344 Tosco Corp. 30,000 759,375 Trex Co., Inc. (a) 29,200 691,675 Tricon Global Restaurants, 60,340 2,424,914 Inc. (a) True North Communications 32,000 1,290,000 TSI International Software 26,100 626,400 Ltd. (a) U.S. Bancorp 96,000 3,558,000 U.S. Foodservice (a) 33,000 633,188 Ultramar Diamond Shamrock 50,000 1,225,000 Corp. Union Pacific Corp. 22,000 1,226,500 Unisys Corp. (a) 100,022 2,425,534 UnitedGlobalCom, Inc. (a) 13,000 1,131,000 USA Networks, Inc. (a) 15,000 675,938 USFreightways Corp. 8,700 394,219 USX-Marathon Group 41,000 1,194,125 Vastar Resources, Inc. 10,100 596,531 VERITAS Software Corp. (a) 11,000 1,186,625 Viacom, Inc. Class B 49,000 2,192,750 (non-vtg.) (a) Visual Networks, Inc. (a) 15,000 624,375 VoiceStream Wireless Corp. (a) 14,000 1,382,500 Walgreen Co. 119,600 3,012,425 Warner-Lambert Co. 70,255 5,607,227 Washington Mutual, Inc. 28,800 1,035,000 Weatherford International, 28,000 948,500 Inc. (a) Wells Fargo & Co. 90,000 4,308,750 Westvaco Corp. 30,000 890,625 WinStar Communications, Inc. 11,000 426,938 (a) Yahoo!, Inc. (a) 11,000 1,969,688 437,299,482 TOTAL COMMON STOCKS 937,602,113 (Cost $808,666,633) NONCONVERTIBLE PREFERRED STOCKS - 0.3% SHARES VALUE (NOTE 1) GERMANY - 0.3% Wella AG (Cost $3,672,093) 101,842 $ 2,846,978 CASH EQUIVALENTS - 6.0% Central Cash Collateral Fund, 17,016,747 17,016,747 5.26% (b) Taxable Central Cash Fund, 42,224,898 42,224,898 5.21% (b) TOTAL CASH EQUIVALENTS 59,241,645 (Cost $59,241,645) TOTAL INVESTMENT PORTFOLIO - 999,690,736 101.9% (Cost $871,580,371) NET OTHER ASSETS - (1.9)% (18,855,744) NET ASSETS - 100% $ 980,834,992 LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. (c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $2,807,828 or 0.3% of net assets. (d) Purchased on an installment basis. Market value reflects only those payments made through October 31, 1999. The remaining installments aggregating AUD 942,500 are due November 2, 2000. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $1,499,033,371 and $1,625,576,706, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $131,555 for the period. The fund participated in the security lending program. At period end, the value of securities loaned amounted to $16,155,465. The fund received cash collateral of $17,016,747 which was invested in the Central Cash Collateral Fund. INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $874,571,662. Net unrealized appreciation aggregated $125,119,074, of which $158,910,238 related to appreciated investment securities and $33,791,164 related to depreciated investment securities. The fund hereby designates approximately $41,255,000 as a capital gain dividend for the purpose of the dividend paid deduction. MARKET SECTOR DIVERSIFICATION (UNAUDITED) As a Percentage of Net Assets AEROSPACE & DEFENSE 1.4% BASIC INDUSTRIES 3.7 CASH EQUIVALENTS 6.0 CONSTRUCTION & REAL ESTATE 1.7 DURABLES 3.3 ENERGY 5.3 FINANCE 19.1 HEALTH 9.3 INDUSTRIAL MACHINERY & 6.3 EQUIPMENT MEDIA & LEISURE 4.6 NONDURABLES 6.5 RETAIL & WHOLESALE 5.4 SERVICES 1.4 TECHNOLOGY 14.0 TRANSPORTATION 1.3 UTILITIES 12.6 WORLDWIDE FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 999,690,736 value (cost $871,580,371) - See accompanying schedule Cash 1,380,764 Foreign currency held at 1,170,635 value (cost $1,169,855) Receivable for investments 8,330,179 sold Receivable for fund shares 2,830,963 sold Dividends receivable 1,701,984 Interest receivable 172,196 Other receivables 42,056 TOTAL ASSETS 1,015,319,513 LIABILITIES Payable for investments $ 14,226,533 purchased Payable for fund shares 2,380,013 redeemed Accrued management fee 569,776 Other payables and accrued 291,452 expenses Collateral on securities 17,016,747 loaned, at value TOTAL LIABILITIES 34,484,521 NET ASSETS $ 980,834,992 Net Assets consist of: Paid in capital $ 756,709,095 Undistributed net investment 4,445,154 income Accumulated undistributed net 91,570,426 realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 128,110,317 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 51,978,114 $ 980,834,992 shares outstanding NET ASSET VALUE, offering $18.87 price and redemption price per share ($980,834,992 (divided by) 51,978,114 shares) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 13,904,527 Dividends Interest 1,917,546 Security lending 16,230 15,838,303 Less foreign taxes withheld (1,037,118) TOTAL INCOME 14,801,185 EXPENSES Management fee $ 7,059,622 Transfer agent fees 2,907,774 Accounting and security 489,303 lending fees Non-interested trustees' 3,612 compensation Custodian fees and expenses 281,285 Registration fees 27,596 Audit 38,834 Legal 4,317 Miscellaneous 2,455 Total expenses before 10,814,798 reductions Expense reductions (543,236) 10,271,562 NET INVESTMENT INCOME 4,529,623 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 93,756,980 Foreign currency transactions (72,226) 93,684,754 Change in net unrealized appreciation (depreciation) on: Investment securities 120,653,228 Assets and liabilities in (87,296) 120,565,932 foreign currencies NET GAIN (LOSS) 214,250,686 NET INCREASE (DECREASE) IN $ 218,780,309 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION $ 496,961 Expense reductions Directed brokerage arrangements Custodian credits 1,360 Transfer agent credits 44,915 $ 543,236 STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 INCREASE (DECREASE) IN NET ASSETS Operations Net investment $ 4,529,623 $ 10,606,399 income Net realized gain (loss) 93,684,754 54,276,462 Change in net unrealized 120,565,932 (97,262,806) appreciation (depreciation) NET INCREASE (DECREASE) IN 218,780,309 (32,379,945) NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (6,008,790) (7,179,216) From net investment income From net realized gain (26,442,347) (75,708,622) TOTAL DISTRIBUTIONS (32,451,137) (82,887,838) Share transactions Net 565,425,727 1,176,690,836 proceeds from sales of shares Reinvestment of distributions 31,563,831 81,441,133 Cost of shares redeemed (774,588,535) (1,331,950,770) NET INCREASE (DECREASE) IN (177,598,977) (73,818,801) NET ASSETS RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) 8,730,195 (189,086,584) IN NET ASSETS NET ASSETS Beginning of period 972,104,797 1,161,191,381 End of period (including $ 980,834,992 $ 972,104,797 undistributed net investment income of $4,445,154 and $12,289,760, respectively) OTHER INFORMATION Shares Sold 32,894,318 67,640,582 Issued in reinvestment of 2,000,226 5,220,585 distributions Redeemed (45,257,975) (77,774,326) Net increase (decrease) (10,363,431) (4,913,159)
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995 SELECTED PER-SHARE DATA Net asset value, beginning of $ 15.59 $ 17.27 $ 15.18 $ 13.32 $ 13.96 period Income from Investment Operations Net investment income .08 B .16 B .21 B, D .22 .17 Net realized and unrealized 3.74 (.57) 2.43 1.79 (.08) gain (loss) Total from investment 3.82 (.41) 2.64 2.01 .09 operations Less Distributions From net investment income (.10) (.11) (.17) (.15) (.16) From net realized gain (.44) (1.16) (.38) - (.57) Total distributions (.54) (1.27) (.55) (.15) (.73) Net asset value, end of period $ 18.87 $ 15.59 $ 17.27 $ 15.18 $ 13.32 TOTAL RETURN A 25.18% (2.38)% 17.95% 15.25% .95% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 980,835 $ 972,105 $ 1,161,191 $ 877,218 $ 659,045 (000 omitted) Ratio of expenses to average 1.12% 1.15% 1.18% 1.19% 1.17% net assets Ratio of expenses to average 1.07% C 1.12% C 1.16% C 1.18% C 1.16% C net assets after expense reductions Ratio of net investment .47% .91% 1.24% 1.71% 2.05% income to average net assets Portfolio turnover rate 164% 100% 85% 49% 70% A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. D INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.06 PER SHARE.
NOTES TO FINANCIAL STATEMENTS For the period ended October 31, 1999 1. SIGNIFICANT ACCOUNTING POLICIES. Fidelity Global Balanced Fund is a fund of Fidelity Puritan Trust. Fidelity International Growth & Income Fund, Fidelity Diversified International Fund, Fidelity International Value Fund, Fidelity Overseas Fund and Fidelity Worldwide Fund are funds of Fidelity Investment Trust. Each trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. At a special meeting of the shareholders of Fidelity Global Balanced Fund, held on July 14, 1999, shareholders approved an agreement and Plan of Reorganization of the fund into Fidelity Investment Trust, effective on or about December 29, 1999. Each fund is authorized to issue an unlimited number of shares. The financial statements have been prepared in conformity with generally accepted accounting principles which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the funds: SECURITY VALUATION. Equity securities for which quotations are readily available are valued at the last sale price, or if no sale price, at the closing bid price in the principal market in which such securities are normally traded. If trading or events occurring in other markets after the close of the principal market in which securities are traded are expected to materially affect the value of those securities, then they are valued at their fair value taking this trading or these events into account. Fair value is determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. Debt securities for which quotations are readily available are valued by a pricing service at their market values as determined by their most recent bid prices in the principal market (sales prices if the principal market is an exchange) in which such securities are normally traded. Securities (including restricted securities) for which quotations are not readily available are valued primarily using dealer-supplied valuations or at their fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost or original cost plus accrued interest, both of which approximate current value. FOREIGN CURRENCY TRANSLATION. The accounting records of the funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the prevailing rates of exchange at period end. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of foreign currency contracts, disposition of foreign currencies, the difference between the amount of net investment income accrued and the U.S. dollar amount actually received, and gains and losses between trade and settlement date on purchases and sales of securities. The effects of changes in foreign currency exchange rates on investments in securities are included with the net realized and unrealized gain or loss on investment securities. INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, each fund is not subject to U.S. federal income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. Each fund may be subject to foreign taxes on income and gains on investments which are accrued based upon each fund's understanding of the tax rules and regulations that exist in the markets in which they invest. Foreign governments may also impose taxes on other payments or transactions with respect to foreign securities. Each fund accrues such taxes as applicable. The schedules of investments include information regarding income taxes under the caption "Income Tax Information." INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, are recorded as soon as the funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. EXPENSES. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust. DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the Plan) non-interested Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the fund or are invested in a cross-section of other Fidelity funds. Deferred amounts remain in the fund until distributed in accordance with the Plan. DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences, which may result in distribution reclassifications, are primarily due to differing treatments for futures transactions, foreign currency transactions, passive foreign investment companies (PFIC), market discount, non-taxable dividends and losses deferred due to wash sales. Certain funds also utilized earnings and profits distributed to shareholders on redemption of shares as a part of the dividends paid deduction for income tax purposes. 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital. Undistributed net investment income and accumulated undistributed net realized gain (loss) on investments and foreign currency transactions may include temporary book and tax basis differences which will reverse in a subsequent period. Any taxable income or gain remaining at fiscal year end is distributed in the following year. SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 2. OPERATING POLICIES. FOREIGN CURRENCY CONTRACTS. Certain funds use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms. The U.S. dollar value of foreign currency contracts is determined using contractual currency exchange rates established at the time of each trade. JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the funds, along with other affiliated entities of Fidelity Management & Research Company (FMR), may transfer uninvested cash balances into one or more joint trading accounts. These balances are invested in one or more repurchase agreements for U.S. Treasury or Federal Agency obligations. REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency securities are transferred to an account of the funds, or to the Joint Trading Account, at a bank custodian. The securities are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). FMR, the funds' investment adviser, is responsible for determining that the value of the underlying securities remains in accordance with the market value requirements stated above. CENTRAL CASH FUNDS. Pursuant to an Exemptive Order issued by the SEC, the funds may invest in the Taxable Central Cash Fund and the Central Cash Collateral Fund(the Cash Funds) managed by Fidelity Investments Money Management, Inc., an affiliate of FMR. The Cash Funds are open-end money market funds available only to investment companies and other accounts managed by FMR and its affiliates. The Cash Funds seek preservation of capital, liquidity, and current income. Income distributions from the Cash Funds are declared daily and paid monthly from net interest income. Income distributions earned by the funds are recorded as either interest income or security lending income in the accompanying financial statements. FUTURES CONTRACTS. Certain funds may use futures contracts to manage their exposure to the stock market and to fluctuations in currency values. Buying futures tends to increase a fund's exposure to the underlying instrument, while selling futures tends to decrease a fund's exposure to the underlying instrument or hedge other fund investments. Futures contracts involve, to varying degrees, risk of loss in excess of the futures variation margin reflected in each applicable fund's Statement of Assets and Liabilities. The underlying face amount at value of any open futures contracts at period end is shown in each applicable fund's schedule of investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contracts' terms. Gains (losses) are realized upon the expiration or closing of the futures contracts. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. RESTRICTED SECURITIES. Certain funds are permitted to invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included under the caption "Other Information" at the end of each applicable fund's schedule of investments. At the end of the period, no funds had investments in restricted securities (excluding 144A issues). 3. PURCHASES AND SALES OF INVESTMENTS. Information regarding purchases and sales of securities (other than short-term securities), and the market value of future contracts opened and closed, is included under the caption "Other Information" at the end of each applicable fund's schedule of investments. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As each fund's investment adviser, FMR receives a monthly basic fee that is calculated on the basis of a group fee rate plus a fixed individual fund fee rate applied to the average net assets of each fund. The group fee rate is the weighted average of a series of rates and is based on the monthly average net assets of all the mutual funds advised by FMR. The rates ranged from .2167% to .5200% for the period. The annual individual fund fee rate is .45%. In the event that these rates were lower than the contractual rates in effect during the period, FMR voluntarily implemented the above rates, as they resulted in the same or a 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED MANAGEMENT FEE - CONTINUED lower management fee. The basic fee for Diversified International, International Value and Overseas is subject to a performance adjustment (up to a maximum of (plus/minus).20% of the fund's average net assets over the performance period) based on each fund's investment performance as compared to the appropriate index over a specified period of time. For the period, each fund's management fees was equivalent to the following annual rates expressed as a percentage of average net assets after the performance adjustment, if applicable: Global Balanced* .73%** International Growth & Income .73% Diversified International .83% International Value .83% Overseas .92% Worldwide .73% * FOR THE PERIOD AUGUST 1, 1999 TO OCTOBER 31, 1999. THE MANAGEMENT FEE RATE FOR THE FISCAL YEAR ENDED JULY 31, 1999 WAS .74%. ** ANNUALIZED SUB-ADVISER FEE. FMR, on behalf of the funds, entered into sub-advisory agreements with Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research Far East Inc., Fidelity International Investment Advisors (FIIA), and Fidelity Investments Japan Limited (FIJ). In addition, FIIA entered into a sub-advisory agreement with its subsidiary, Fidelity International Investment Advisors (U.K.) Limited (FIIA(U.K.)L). Under the sub-advisory arrangements, FMR may receive investment advice and research services and may grant the sub-advisers investment management authority to buy and sell securities. FMR pays its sub-advisers either a portion of its management fee or a fee based on costs incurred for these services. FIIA pays FIIA(U.K.)L a fee based on costs incurred for either service. SALES LOAD. Fidelity Distributors Corporation (FDC), an affiliate of FMR, is the general distributor of the fund. Shares of International Growth & Income purchased prior to October 12, 1990, are subject to a 1% deferred sales charge upon redemption. The amounts received by FDC for deferred sales charges are shown under the caption "Other Information" on the fund's Statement of Operations. TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the funds' transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of all shareholder reports, except proxy statements. For the period, each fund's transfer agent fees was equivalent to an annual rate expressed as a percentage of average net assets: Global Balanced* .25%** International Growth & Income .28% Diversified International .27% International Value .24% Overseas .27% Worldwide .30% * FOR THE PERIOD AUGUST 1, 1999 TO OCTOBER 31, 1999. THE TRANSFER AGENT FEE RATE FOR THE FISCAL YEAR ENDED JULY 31, 1999 WAS .26%. ** ANNUALIZED ACCOUNTING AND SECURITY LENDING FEES. FSC maintains each fund's accounting records and administers the security lending program. The security lending fee is based on the number and duration of lending transactions. The accounting fee is based on the level of average net assets for the month plus out-of-pocket expenses. BROKERAGE COMMISSIONS. Certain funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of FMR. The commissions paid to these affiliated firms are shown under the caption "Other Information" at the end of each applicable fund's schedule of investments 5. SECURITY LENDING. Certain funds lend portfolio securities from time to time in order to earn additional income. Each applicable fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the funds and any additional required collateral is delivered to the funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Information regarding the value of securities loaned and the value of collateral at period end is included under the caption "Other Information" at the end of each applicable fund's schedule of investments. 6. BANK BORROWINGS. Each fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. Each fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. Information regarding a fund's participation in the program is included under the caption "Other Information" at the end of each applicable fund's schedule of investments. 7. EXPENSE REDUCTIONS. FMR has directed certain portfolio trades to brokers who paid a portion of certain funds' expenses. In addition, certain funds have entered into arrangements with their custodian and transfer agent whereby credits realized on uninvested cash balances were used to offset a portion of certain funds' expenses. For the period, the reductions under these arrangements are shown under the caption "Other Information" on each applicable fund's Statement of Operations. 8. TRANSACTIONS WITH AFFILIATED COMPANIES. An affiliated company is a company which the fund has ownership of at least 5% of the voting securities. Information regarding transactions with affiliated companies is included in "Other Information" at the end of each applicable fund's schedule of investments. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Puritan Trust and Fidelity Investment Trust and the Shareholders of Fidelity Global Balanced Fund, Fidelity International Growth & Income Fund, Fidelity International Value Fund and Fidelity Overseas Fund: In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Global Balanced Fund (a fund of Fidelity Puritan Trust), Fidelity International Growth & Income Fund, Fidelity International Value Fund and Fidelity Overseas Fund (funds of Fidelity Investment Trust) at October 31, 1999, and the results of their operations, the changes in their net assets and the financial highlights for the periods indicated, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Puritan Trust's and the Fidelity Investment Trust's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 1999 by correspondence with the custodian and brokers, provide a reasonable basis for the opinion expressed above. /s/PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Boston, Massachusetts December 15, 1999 INDEPENDENT AUDITORS' REPORT To the Trustees of Fidelity Investment Trust and Shareholders of Fidelity Diversified International Fund and Fidelity Worldwide Fund: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Fidelity Investment Trust: Fidelity Diversified International Fund and Fidelity Worldwide Fund as of October 31, 1999, and the related statements of operations, changes in net assets and financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The statement of changes in net assets for the year ended October 31, 1998, and the financial highlights for each of the years in the four-year period ended October 31, 1998, were audited by other auditors whose report, dated December 14, 1998, expressed an unqualified opinion on those statements and financial highlights. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of the securities owned at October 31, 1999, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of Fidelity Investment Trust: Fidelity Diversified International Fund and Fidelity Worldwide Fund at October 31, 1999, the results of its operations, the changes in its net assets, and its financial highlights for the year then ended in conformity with generally accepted accounting principles. /s/DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP Boston, Massachusetts December 3, 1999 DISTRIBUTIONS The Board of Trustees of Fidelity Investment Trust voted to pay to shareholders of record at the opening of business on record date, the following distributions derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income: Fidelity Global Balanced Fund Pay Date 12/06/99 Record Date 12/03/99 Dividends .15 Capital Gains .25 Fidelity International Growth & Income Fund Pay Date 12/06/99 Record Date 12/03/99 Dividends .33 Capital Gains 1.50 Fidelity Diversified International Fund Pay Date 12/06/99 Record Date 12/03/99 Dividends .25 Capital Gains .70 Fidelity International Value Fund Pay Date 12/13/99 Record Date 12/10/99 Dividends Capital Gains Fidelity Overseas Fund Pay Date 12/06/99 Record Date 12/03/99 Dividends .44 Capital Gains 2.64 Fidelity Worldwide Fund Pay Date 12/13/99 Record Date 12/10/99 Dividends Capital Gains Each fund hereby designates 100% of the long-term capital gain dividends distributed during the fiscal year as 20%-rate capital gain dividends. A percentage of the dividends distributed during the fiscal year for the following funds was derived from interest on U.S. Government securities which is generally exempt from state income tax: Global Balanced 0% International Growth & Income 0% Diversified International 0% International Value 0% Overseas 0% Worldwide 0% A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders: Global Balanced 13% International Growth & Income 3% Diversified International 4% International Value 3% Overseas 5% Worldwide 39% The amounts per share which represent income derived from sources within, and taxes paid to, foreign countries or possessions of the United States are as follows: FUND PAY DATE INCOME TAXES International Growth & Income 12/07/98 $.128 $.038 Diversified International 12/07/98 $.271 $.041 International Value 12/14/98 $.077 $.027 Overseas 12/07/98 $.277 $.077 Worldwide 12/14/98 $.137 $.037 The funds will notify shareholders in January 2000 of amounts for use in preparing 1999 income tax returns. PROXY VOTING RESULTS A special meeting of the fund's shareholders was held on July 14, 1999. The results of votes taken among shareholders on proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting. PROPOSAL 1 To approve an amended management contract for the fund. # OF % OF SHARES VOTED SHARES VOTED Affirmative 983,747,960.03 77.767 Against 68,186,327.88 5.390 Abstain 213,060,851.88 16.843 TOTAL 1,264,995,139.79 100.000 INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research (U.K.) Inc., London, England Fidelity Management & Research (Far East) Inc., Tokyo, Japan Fidelity International Investment Advisors, Pemboke, Bermuda Fidelity International Investment Advisors (U.K.) Limited, London England Fidelity Investments Japan Limited, Tokyo, Japan OFFICERS Edward C. Johnson 3d, PRESIDENT Robert C. Pozen, SENIOR VICE PRESIDENT Robert Lawrence, VICE PRESIDENT, DIVERSIFIED INTERNATIONAL FUND Richard Spillane Jr., VICE PRESIDENT, INTERNATIONAL GROWTH & INCOME FUND, INTERNATIONAL VALUE FUND, OVERSEAS FUND, WORLDWIDE FUND Penelope A. Dobkin, VICE PRESIDENT, WORLDWIDE FUND Gregory Fraser, VICE PRESIDENT, DIVERSIFIED INTERNATIONAL FUND Richard Mace Jr., VICE PRESIDENT, INTERNATIONAL VALUE FUND, OVERSEAS FUND Eric D. Roiter, SECRETARY Richard A. Silver, TREASURER Matthew N. Karstetter, DEPUTY TREASURER John H. Costello, ASSISTANT TREASURER BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Robert M. Gates * Edward C. Johnson 3d E. Bradley Jones * Donald J. Kirk * Peter S. Lynch Marvin L. Mann * William O. McCoy * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Gary Burkhead Abigail P. Johnson Ned C. Lautenbach GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA * INDEPENDENT TRUSTEES TRANSFER AND SHAREHOLDER SERVICING AGENT Fidelity Service Company, Inc. Boston, MA CUSTODIAN Chase Manhattan Bank, N.A. New York, NY FIDELITY'S INTERNATIONAL EQUITY FUNDS Canada Fund Diversified International Fund Emerging Markets Fund Europe Fund Europe Capital Appreciation Fund France Fund Germany Fund Global Balanced Fund Hong Kong and China Fund International Growth & Income Fund International Value Fund Japan Fund Japan Small Companies Fund Latin America Fund Nordic Fund Overseas Fund Pacific Basin Fund Southeast Asia Fund United Kingdom Fund Worldwide Fund CORPORATE HEADQUARTERS 82 Devonshire Street Boston, MA 02109 1-800-544-8888 THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Exchanges/Redemptions 1-800-544-6666 Account Assistance 1-800-544-6666 Product Information 1-800-544-6666 Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.) TDD Service 1-800-544-0118 for the deaf and hearing impaired (9 a.m. - 9 p.m. Eastern time) Fidelity Automated Service Telephone (FAST SM) 1-800-544-5555 AUTOMATED LINE FOR QUICKEST SERVICE (registered trademark) BULK RATE U.S. Postage PAID Fidelity Investments P.O. Box 193 Boston, MA 02101 (2_FIDELITY_LOGOS)FIDELITY'S(REGISTERED TRADEMARK) TARGETED INTERNATIONAL EQUITY FUNDS Fidelity France Fund Fidelity Germany Fund Fidelity United Kingdom Fund ANNUAL REPORT FOR THE YEAR ENDING OCTOBER 31, 1999 AND PROSPECTUS DATED DECEMBER 29, 1999 CONTENTS
MARKET RECAP A-3 A REVIEW OF WHAT HAPPENED IN WORLD MARKETS DURING THE PAST 12 MONTHS. FRANCE FUND A-4 A-5 A-6 A-7 A-9 PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS GERMANY FUND A-11 A-12 A-13 A-14 A-16 PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS UNITED KINGDOM FUND A-18 A-19 A-20 A-21 A-23 PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS A-25 NOTES TO THE FINANCIAL STATEMENTS REPORT OF INDEPENDENT A-28 THE AUDITORS' OPINION. ACCOUNTANTS DISTRIBUTIONS A-29 PROSPECTUS P-1
Third party marks appearing herein are the property of their respective owners. All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company. This report is printed on recycled paper using soy-based inks. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF EACH FUND'S PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY FIDELITY FUND. THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. MARKET RECAP It took over 100 interest-rate cuts by central banks around the world to defuse the powder keg that characterized global equity markets 12 months ago. Those easings sparked a dramatic worldwide recovery and, in a few cases - particularly in the U.S. - were so powerful that some of the easings needed to be reversed. The bottom line, however, is that the world was a much better place to invest in at the conclusion of the 12 months ending October 31, 1999, than it was at the beginning of the period. EUROPE: European markets offered mixed results over the past 12 months. In that time, the Morgan Stanley Capital International Europe Index returned 12.79%. The U.K. posted the most impressive market returns, due in large part to the strength of the vibrant telecommunications industry. Italy and Germany, meanwhile, lagged behind, mostly due to fears of higher interest rates. The weak performance of the euro - the new single currency of 11 European nations that was introduced January 1, 1999 - didn't help matters. An additional detriment was the subpar performance of many of Europe's largest pharmaceutical companies, which suffered due to non-compelling product introductions and slow revenue growth. On a positive note, cross-border consolidation played a significant role across the European corporate landscape, as merger, acquisition and takeover bid announcements were almost daily occurrences. EMERGING MARKETS: A year ago, the emerging markets' outlook was bleak. Currency problems were the norm for several regions, and market volatility reigned supreme. In the fall of 1999, however, the markets told a different story. Over the past 12 months, the Morgan Stanley Capital International Emerging Markets Free Index returned 44.63%. Several factors contributed to this about-face, including lower interest rates and favorable export and trade data. Sentiment shifts were evident in markets such as Singapore, Thailand and especially India, where the strong performance of technology stocks helped propel that market to phenomenal returns. Latin America was also a comeback story, as Brazil rebounded nicely from it currency devaluation in January. Mexico, however, slipped over the past several months due to concerns about interest rates and fears of a potentially weaker peso. JAPAN AND THE FAR EAST: For overseas investors, Japan was the place to be for the 12-month period that ended October 31, 1999. A renewed emphasis on corporate restructuring and shareholder Standard & Poor's 500 Index(registered trademark) Morgan Stanley Capital International Europe, Australasia, Far East Index * YEAR TO DATE THROUGH OCTOBER 31, 1999. Row: 1, Col: 1, Value: nil Row: 1, Col: 2, Value: nil Row: 2, Col: 1, Value: 6.1 Row: 2, Col: 2, Value: 7.38 Row: 3, Col: 1, Value: 31.57 Row: 3, Col: 2, Value: 56.16 Row: 4, Col: 1, Value: 18.56 Row: 4, Col: 2, Value: 69.44000000000001 Row: 5, Col: 1, Value: 5.1 Row: 5, Col: 2, Value: 24.63 Row: 6, Col: 1, Value: 16.61 Row: 6, Col: 2, Value: 28.27 Row: 7, Col: 1, Value: 31.69 Row: 7, Col: 2, Value: 10.53 Row: 8, Col: 1, Value: -3.1 Row: 8, Col: 2, Value: -23.45 Row: 9, Col: 1, Value: 30.47 Row: 9, Col: 2, Value: 12.13 Row: 10, Col: 1, Value: 7.619999999999999 Row: 10, Col: 2, Value: -12.17 Row: 11, Col: 1, Value: 10.08 Row: 11, Col: 2, Value: 32.56 Row: 12, Col: 1, Value: 1.32 Row: 12, Col: 2, Value: 7.78 Row: 13, Col: 1, Value: 37.58 Row: 13, Col: 2, Value: 11.21 Row: 14, Col: 1, Value: 22.96 Row: 14, Col: 2, Value: 6.05 Row: 15, Col: 1, Value: 32.11 Row: 15, Col: 2, Value: 4.819999999999999 Row: 16, Col: 1, Value: 28.58 Row: 16, Col: 2, Value: 20.27 Row: 17, Col: 1, Value: 12.03 Row: 17, Col: 2, Value: 12.79 % value - combined with the Japanese government's willingness to create more of a free-enterprise market system - proved successful. For the period, the Morgan Stanley Capital International Japan Index returned 58.40% and Japan's TOPIX Index returned 69.97%. Other Asian markets also received a vicarious boost from Japan: Technology-driven markets such as South Korea and Taiwan performed well, as worldwide demand for personal computers translated into positive gains for semiconductor manufacturers. U.S. AND CANADA: The U.S. equity market produced solid returns for the 12 months ending October 31, 1999. The Dow Jones Industrial Average returned 26.84%, while the Standard & Poor's 500 Index - a popular gauge of U.S. stock market performance - returned 25.67%. Early on, the Federal Reserve Board tried to stabilize the impact of shaky global markets on the U.S. by lowering interest rates. In response, the Dow hit the 10,000 level for the first time in March. Late in the second quarter, however, concerns over an overheating U.S. economy and global market recoveries triggered inflation fears. In June and again in August, the Fed raised rates and the market sold off throughout the third quarter as investors anticipated additional increases. In the end, technology stocks were the clear winners as the NASDAQ Index reeled off a healthy 67.98% return. While Canadian equity markets didn't get nearly the attention of their neighbors to the south, their performance was nearly as loud, as the Toronto Stock Exchange (TSE) 300 returned 24.49%. BONDS: With few exceptions, bond performance either fell flat or dropped into negative territory for the 12-month period. Concerns about inflation, higher interest rates and the solid performance of world equity markets posed the major threats to fixed-income instruments. For the period, the Lehman Brothers Aggregate Bond Index - - a widely followed measure of taxable bond performance - posted a total return of 0.53%. U.S. Treasuries gave back all of their flight-to-quality gains - and then some - captured during the fall of 1998, as the Lehman Brothers Long-Term Government Index fell 6.10%. Meanwhile, the Lehman Brothers Corporate Bond Index returned 0.61%, and the Salomon Brothers Non-U.S. World Government Bond Index fell 2.96%. There were a few bright spots, however. The high-yield market, as measured by the Merrill Lynch High Yield Master II Index, returned 5.61% during the 12-month period, while the JP Morgan Emerging Markets Bond Index Plus returned 19.98%. FRANCE PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). If Fidelity had not reimbursed certain fund expenses, the total returns would have been lower. CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1994 PAST 1 YEAR LIFE OF FUND FIDELITY FRANCE 21.69% 110.71% FIDELITY FRANCE (INCL. 18.04% 104.39% 3.00% SALES CHARGE) SBF 250 25.37% 126.06% European Region Funds Average 10.72% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year or since the fund started on November 1, 1995. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Socirty des Bourses Francaises 250 Index (SBF 250) - - a market capitalization-weighted index of the 250 largest companies in the French market. To measure how the fund's performance stacked up against its peers, you can compare the fund's performance to the European region funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 138 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1994 PAST 1 YEAR LIFE OF FUND FIDELITY FRANCE 21.69% 20.48% FIDELITY FRANCE (INCL. 18.04% 19.57% 3.00% SALES CHARGE) SBF 250 25.37% 22.62% European Region Funds Average 10.72% n/a AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND France SBF 250 00345 EX001 1995/11/01 9700.00 10000.00 1995/11/30 9515.70 9996.87 1995/12/31 9952.70 10331.57 1996/01/31 10381.19 10618.07 1996/02/29 10799.95 11028.30 1996/03/31 11150.53 11258.88 1996/04/30 11403.73 11466.65 1996/05/31 11647.19 11517.59 1996/06/30 11803.01 11777.11 1996/07/31 11559.54 11522.35 1996/08/31 11393.99 11290.00 1996/09/30 11617.98 11688.17 1996/10/31 11919.87 11888.32 1996/11/30 12299.67 12521.77 1996/12/31 12484.65 12692.23 1997/01/31 13045.52 12947.26 1997/02/28 13180.55 13046.89 1997/03/31 13585.62 13392.49 1997/04/30 13076.68 12816.85 1997/05/31 12889.72 12695.77 1997/06/30 13855.67 13730.74 1997/07/31 14125.72 14007.70 1997/08/31 13388.28 13106.00 1997/09/30 14707.37 14283.43 1997/10/31 13782.97 13413.94 1997/11/30 13814.13 13600.74 1997/12/31 14290.14 14013.96 1998/01/31 14665.89 14539.07 1998/02/28 15724.84 15771.19 1998/03/31 17410.05 17395.62 1998/04/30 18059.09 18099.22 1998/05/31 19357.16 19161.02 1998/06/30 19527.95 19713.51 1998/07/31 19619.05 19896.29 1998/08/31 16487.74 17660.05 1998/09/30 15485.73 16376.52 1998/10/31 16795.18 18030.99 1998/11/30 17706.10 19077.94 1998/12/31 18423.46 19816.20 1999/01/31 19231.90 20468.32 1999/02/28 17968.00 19175.46 1999/03/31 17865.52 19389.56 1999/04/30 18218.50 20014.23 1999/05/31 17763.04 19663.45 1999/06/30 18662.58 20588.65 1999/07/31 18639.80 20857.23 1999/08/31 19083.88 21553.07 1999/09/30 19562.11 21781.13 1999/10/29 20438.88 22606.15 IMATRL PRASUN SHR__CHT 19991031 19991109 144248 R00000000000051 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity France Fund on November 1, 1995, when the fund started, and the current 3.00% sales charge was paid. As the chart shows, by October 31, 1999, the value of the investment would have grown to $20,439 - a 104.39% increase on the initial investment. For comparison, look at how the Society des Bourses Francaises 250 Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $22,606 - a 126.06% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) FRANCE FUND TALK: THE MANAGER'S OVERVIEW An interview with Alexandra Hartmann, Portfolio Manager of Fidelity France Fund Q. HOW DID THE FUND PERFORM, ALEXANDRA? A. For the 12-month period that ended October 31, 1999, the fund returned 21.69%, compared to the 25.37% return of the Societe des Bourses Francaises (SBF) 250 Index and the 10.72% European region funds average return, as measured by Lipper Inc. Q. WHILE THE FUND SOUNDLY OUTPERFORMED ITS PEER GROUP, IT TRAILED ITS BENCHMARK INDEX. WHAT FACTORS ACCOUNTED FOR THIS PERFORMANCE OVER THE PAST YEAR? A. Supported by high consumer confidence and growing household income, the French equity market showed strong gains during the fiscal year, particularly in the final three months of the period. While this scenario helped the fund outperform the European funds average, problems in several of the fund's larger holdings held back performance relative to the SBF 250 index. I'll discuss these in more detail later in the report. Q. WHAT WERE YOUR PRINCIPAL STRATEGIES WITHIN THIS ENVIRONMENT OF FAVORABLE CONSUMER SENTIMENT? A. During most of the year, I took advantage of strong consumer spending by emphasizing the companies in the retailing, personal care and media industries, as well as growth companies in the telecommunications and business services industries. In general, I sought out companies with clear business strategies and proactive managements, and I was alert to opportunities presented in industries where I anticipated merger-and-acquisition activity. I tended to de-emphasize cyclical industries such as chemicals, automobiles and general industries. Q. WHAT WERE SOME OF THE INVESTMENTS THAT HELPED THE FUND'S PERFORMANCE? A. Among the best performing sectors were retailers and media companies. TF-1, a media company, benefited from strong increases in advertising rates and effective cost controls. NRJ, which owns radio stations, proved to be an excellent performer. Retailers Castorama and Carrefour also helped, driven by strong consumer demand. Within the telecommunications sector, France Telecom, the fund's largest holding, outperformed the broad market. Other contributors included Equant, a global data service provider, and STMicroelectronics. Q. WHAT WERE SOME OF THE DISAPPOINTMENTS? A. Large holdings in Vivendi and Suez Lyonnaise des Eaux performed poorly as utilities and other defensive stocks fell into disfavor with investors. Toward the end of the period, stock selection in the energy sector hurt performance. The fund had a relatively large investment in oil giant Total Fina, whose share price fell during the third quarter of 1999. An underweighted position in Elf Aquitaine another oil company, hurt as its share price rose after Total Fina announced its intention to acquire Elf Aquitaine. Fund performance also was held back by not holding some of the strong-performing cyclical companies in industries such as construction, electronics, metals and materials. Q. WHAT IS YOUR OUTLOOK FOR THE FUND DURING THE NEXT SEVERAL MONTHS? A. The earnings outlook for French companies appears favorable, particularly relative to expectations for European companies in general. Consumer confidence remains very high, and economic growth is expected to continue to be higher than Europe as a whole. Unemployment, while high, is declining. Despite these favorable factors, I am somewhat concerned about the relatively high valuations of many French stocks. However, high valuation levels are partly justified by strong volume growth in sectors such as telecommunications and information technology, which I continued to emphasize at the end of the period. The pace of global economic growth will be an important factor influencing French stock performance, as many of the largest companies in France are focused on international markets. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-2. FUND FACTS GOAL: long-term growth of capital by investing mainly in equity securities of French issuers FUND NUMBER: 345 TRADING SYMBOL: FRANX START DATE: November 1, 1995 SIZE: as of October 31, 1999, more than $11 million MANAGER: Alexandra Hartmann, since 1998; manager, Fidelity Germany Fund, since 1996; joined Fidelity in 1994 (checkmark) FRANCE INVESTMENT CHANGES AS OF OCTOBER 31, 1999 Austria 0.8% United States 4.9% Netherlands 5.8% Row: 1, Col: 1, Value: 0.8 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 3, Value: 87.40000000000001 Row: 1, Col: 4, Value: 1.1 Row: 1, Col: 5, Value: 5.8 Row: 1, Col: 6, Value: 4.9 Luxembourg 1.1% France 87.4% GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30, 1999 Austria 0.6% United States 0.5% Belgium 0.9% Netherlands 5.8% Row: 1, Col: 1, Value: 0.6000000000000001 Row: 1, Col: 2, Value: 0.9 Row: 1, Col: 3, Value: 92.2 Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 5, Value: 5.8 Row: 1, Col: 6, Value: 0.5 France 92.2% PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF APPLICABLE. ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks 95.1 99.5 Short-Term Investments and 4.9 0.5 Net Other Assets PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO France Telecom SA (Telephone 9.2 9.0 Services) Total Fina SA Class B (Oil & 8.8 8.6 Gas) Carrefour SA (SUPERMARCHE) 4.9 3.9 (General Merchandise Stores) AXA SA de CV (Insurance) 4.4 4.9 L'Oreal SA (Household Products) 3.9 5.7 Banque Nationale de Paris 3.6 2.3 (Banks) Rhone-Poulenc SA Class A 3.6 2.0 (Drugs & Pharmaceuticals) Suez Lyonnaise des Eaux 3.1 4.3 (Services) STMicroelectronics NV 3.0 1.8 (Electronics) Television Francaise 1 SA 2.7 1.3 (Broadcasting) 47.2 43.8 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO TECHNOLOGY 11.5 11.4 RETAIL & WHOLESALE 11.0 9.7 UTILITIES 10.9 15.6 FINANCE 10.2 14.2 ENERGY 8.8 8.6 SERVICES 8.0 6.4 MEDIA & LEISURE 7.5 3.3 CONSTRUCTION & REAL ESTATE 7.1 3.2 NONDURABLES 6.9 11.7 DURABLES 5.1 6.4
FRANCE INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 95.1% SHARES VALUE (NOTE 1) BASIC INDUSTRIES - 2.7% CHEMICALS & PLASTICS - 2.7% Rhodia SA 16,410 $ 317,655 CONSTRUCTION & REAL ESTATE - 7.1% BUILDING MATERIALS - 3.1% Ciments Francais SA 1,783 114,358 Lafarge SA 2,590 249,995 364,353 CONSTRUCTION - 1.4% Alstom SA 5,412 164,423 ENGINEERING - 2.6% Bouygues 601 209,852 VA Technologie AG 1,390 93,213 303,065 TOTAL CONSTRUCTION & REAL 831,841 ESTATE DURABLES - 5.1% AUTOS, TIRES, & ACCESSORIES - 1.7% Peugeot SA 1,047 201,568 TEXTILES & APPAREL - 3.4% Christian Dior SA 1,363 244,718 Hermes International SA 1,348 147,889 392,607 TOTAL DURABLES 594,175 ENERGY - 8.8% OIL & GAS - 8.8% Total Fina SA Class B 7,723 1,030,055 FINANCE - 10.2% BANKS - 5.8% Banque Nationale de Paris 4,844 426,680 Banque Nationale de Paris 1,079 6,397 warrants 7/1/02 (a) Societe Generale, France 1,135 247,843 Class A 680,920 INSURANCE - 4.4% AXA SA de CV 3,609 510,537 TOTAL FINANCE 1,191,457 HEALTH - 3.6% DRUGS & PHARMACEUTICALS - 3.6% Rhone-Poulenc SA Class A 7,673 425,851 INDUSTRIAL MACHINERY & EQUIPMENT - 1.8% INDUSTRIAL MACHINERY & EQUIPMENT - 1.6% Compagnie de Fives-Lille 186 17,070 Sidel SA 1,734 173,774 190,844 SHARES VALUE (NOTE 1) POLLUTION CONTROL - 0.2% Serp Recyclage (a) 212 $ 24,332 TOTAL INDUSTRIAL MACHINERY & 215,176 EQUIPMENT MEDIA & LEISURE - 7.5% BROADCASTING - 5.6% Audiofina 2,654 133,826 NRJ SA 662 206,710 Television Francaise 1 SA 1,023 321,590 662,126 ENTERTAINMENT - 0.9% Europeene de Casinos SA 802 101,524 LODGING & GAMING - 1.0% Club Mediterranee SA (a) 1,159 116,394 TOTAL MEDIA & LEISURE 880,044 NONDURABLES - 6.9% BEVERAGES - 1.5% LVMH (Louis Vuitton Moet 585 177,112 Hennessy) HOUSEHOLD PRODUCTS - 5.1% Clarins SA 1,164 114,932 Clarins SA rights 12/27/99 (a) 1,164 19,192 L'Oreal SA 692 463,179 597,303 TOBACCO - 0.3% Seita SA 544 30,415 TOTAL NONDURABLES 804,830 RETAIL & WHOLESALE - 11.0% APPAREL STORES - 1.5% Brice SA 1,970 129,261 DU Pareil AU Meme AS 567 45,458 174,719 GENERAL MERCHANDISE STORES - 4.9% Carrefour SA (SUPERMARCHE) 3,074 570,726 GROCERY STORES - 1.2% Casino Guichard Perrachon et 780 88,865 Compagnie Guyenne Et Gascogne SA 111 57,142 146,007 RETAIL & WHOLESALE, MISCELLANEOUS - 3.4% Castorama Dubois 345 103,650 Investissements SA Pinault Printemps SA 1,555 297,399 401,049 TOTAL RETAIL & WHOLESALE 1,292,501 SERVICES - 8.0% ADVERTISING - 2.3% Havas Advertising SA 985 276,914 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SERVICES - CONTINUED SERVICES - 5.7% ALTEN (a) 945 $ 103,576 Cegedim SA 1,075 61,237 Ipsos SA 2,692 137,304 Suez Lyonnaise des Eaux 2,236 362,069 664,186 TOTAL SERVICES 941,100 TECHNOLOGY - 11.5% COMPUTER SERVICES & SOFTWARE - - 5.3% Cap Gemini SA 1,259 191,249 Equant NV (a) 3,290 321,032 Transiciel SA 1,874 108,531 620,812 COMPUTERS & OFFICE EQUIPMENT - - 0.6% Neopost SA (a) 1,782 61,846 ELECTRONICS - 5.6% Schneider SA (a) 4,403 304,229 STMicroelectronics NV 4,030 354,979 659,208 TOTAL TECHNOLOGY 1,341,866 UTILITIES - 10.9% TELEPHONE SERVICES - 9.2% France Telecom SA 11,124 1,077,836 WATER - 1.7% Vivendi SA (a) 2,698 205,063 TOTAL UTILITIES 1,282,899 TOTAL COMMON STOCKS 11,149,450 (Cost $8,715,841) CASH EQUIVALENTS - 6.8% Central Cash Collateral Fund, 272,600 272,600 5.26% (b) Taxable Central Cash Fund, 521,437 521,437 5.21% (b) TOTAL CASH EQUIVALENTS 794,037 (Cost $794,037) TOTAL INVESTMENT PORTFOLIO - 11,943,487 101.9% (Cost $9,509,878) NET OTHER ASSETS - (1.9)% (217,969) NET ASSETS - 100% $ 11,725,518 LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $14,797,886 and $21,823,472, respectively. The fund participated in the security lending program. The fund received cash collateral of $272,600 which was invested in the Central Cash Collateral Fund. Cash collateral includes $272,600 received for unsettled security loans. INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $9,619,732. Net unrealized appreciation aggregated $2,323,755, of which $2,460,744 related to appreciated investment securities and $136,989 related to depreciated investment securities. At October 31, 1999, the fund had a capital loss carryforward of approximately $694,000, all of which will expire on October 31, 2006. FRANCE FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 11,943,487 value (cost $9,509,878) - See accompanying schedule Foreign currency held at 173,105 value (cost $173,356) Receivable for investments 96,538 sold Receivable for fund shares 46,230 sold Dividends receivable 46,835 Interest receivable 2,733 Other receivables 461 TOTAL ASSETS 12,309,389 LIABILITIES Payable for investments $ 254,410 purchased Payable for fund shares 10,922 redeemed Accrued management fee 8,491 Other payables and accrued 37,448 expenses Collateral on securities 272,600 loaned, at value TOTAL LIABILITIES 583,871 NET ASSETS $ 11,725,518 Net Assets consist of: Paid in capital $ 10,037,048 Accumulated undistributed net (753,205) realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 2,441,675 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 653,378 $ 11,725,518 shares outstanding NET ASSET VALUE and $17.95 redemption price per share ($11,725,518 (divided by) 653,378 shares) Maximum offering price per $18.51 share (100/97.00 of $17.95) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 191,509 Dividends Interest 14,233 Security lending 5 205,747 Less foreign taxes withheld (33,199) TOTAL INCOME 172,548 EXPENSES Management fee $ 94,267 Transfer agent fees 47,037 Accounting and security 60,354 lending fees Non-interested trustees' 42 compensation Custodian fees and expenses 111,694 Registration fees 18,568 Audit 33,278 Legal 23 Miscellaneous 24 Total expenses before 365,287 reductions Expense reductions (112,226) 253,061 NET INVESTMENT INCOME (LOSS) (80,513) REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 1,557,528 Foreign currency transactions (11,725) 1,545,803 Change in net unrealized appreciation (depreciation) on: Investment securities 1,016,037 Assets and liabilities in 4,601 1,020,638 foreign currencies NET GAIN (LOSS) 2,566,441 NET INCREASE (DECREASE) IN $ 2,485,928 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION Sales $ 18,605 charges paid to FDC Sales charges - Retained by $ 18,605 FDC Expense reductions Directed brokerage $ 2,693 arrangements FMR reimbursement 109,533 $ 112,226 STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 INCREASE (DECREASE) IN NET ASSETS Operations Net investment $ (80,513) $ 49,705 income (loss) Net realized gain (loss) 1,545,803 (2,314,802) Change in net unrealized 1,020,638 977,565 appreciation (depreciation) NET INCREASE (DECREASE) IN 2,485,928 (1,287,532) NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders - (16,501) From net investment income From net realized gain - (474,417) TOTAL DISTRIBUTIONS - (490,918) Share transactions Net 6,925,778 27,069,838 proceeds from sales of shares Reinvestment of distributions - 487,606 Cost of shares redeemed (14,139,720) (15,052,615) NET INCREASE (DECREASE) IN (7,213,942) 12,504,829 NET ASSETS RESULTING FROM SHARE TRANSACTIONS Redemption fees 23,371 125,407 TOTAL INCREASE (DECREASE) (4,704,643) 10,851,786 IN NET ASSETS NET ASSETS Beginning of period 16,430,161 5,578,375 End of period (including $ 11,725,518 $ 16,430,161 undistributed net investment income of $0 and $37,763, respectively) OTHER INFORMATION Shares Sold 418,188 1,626,364 Issued in reinvestment of - 39,450 distributions Redeemed (878,342) (972,730) Net increase (decrease) (460,154) 693,084
FINANCIAL HIGHLIGHTS YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 F SELECTED PER-SHARE DATA Net asset value, beginning of $ 14.75 $ 13.27 $ 12.24 $ 10.00 period Income from Investment Operations Net investment income (loss) (.10) C .06 C .10 C .23 Net realized and unrealized 3.27 2.46 G 1.66 1.98 gain (loss) Total from investment 3.17 2.52 1.76 2.21 operations Less Distributions From net investment income - (.04) (.16) (.04) From net realized gain - (1.15) (.61) - Total distributions - (1.19) (.77) (.04) Redemption fees added to paid .03 .15 .04 .07 in capital Net asset value, end of period $ 17.95 $ 14.75 $ 13.27 $ 12.24 TOTAL RETURN A, B 21.69% 21.85% 15.63% 22.89% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 11,726 $ 16,430 $ 5,578 $ 5,542 (000 omitted) Ratio of expenses to average 2.00% D 2.12% D 2.00% D 2.00% D net assets Ratio of expenses to average 1.98% E 2.12% 2.00% 2.00% net assets after expense reductions Ratio of net investment (.63)% .40% .78% 1.74% income (loss) to average net assets Portfolio turnover rate 118% 182% 150% 129% A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F FOR THE PERIOD NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1996. G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND. GERMANY PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). If Fidelity had not reimbursed certain fund expenses, the life of fund total returns would have been lower. CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, PAST 1 YEAR LIFE OF FUND 1994 FIDELITY GERMANY 1.28% 69.93% FIDELITY GERMANY (INCL. -1.75% 64.83% 3.00% SALES CHARGE) DAX 100 3.58% 80.60% European Region Funds Average 10.72% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year or since the fund started on November 1, 1995. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Deutscher Aktienindex 100 (DAX 100) Index - a market capitalization-weighted index of the 100 most heavily traded stocks in the German market. To measure how the fund's performance stacked up against its peers, you can compare the fund's performance to the European region funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 138 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, PAST 1 YEAR LIFE OF FUND 1994 FIDELITY GERMANY 1.28% 14.17% FIDELITY GERMANY (INCL. -1.75% 13.31% 3.00% SALES CHARGE) DAX 100 3.58% 15.93% European Region Funds Average 10.72% n/a AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND Germany DAX 100 00346 EX002 1995/11/01 9700.00 10000.00 1995/11/30 9622.40 10045.93 1995/12/31 9835.80 10293.16 1996/01/31 10320.80 10746.76 1996/02/29 10369.30 10830.07 1996/03/31 10495.40 10812.65 1996/04/30 10194.70 10413.05 1996/05/31 10573.00 10679.84 1996/06/30 10650.60 10956.77 1996/07/31 10524.50 10921.61 1996/08/31 10660.30 11180.88 1996/09/30 10747.60 11282.48 1996/10/31 10999.80 11378.77 1996/11/30 11523.60 11820.89 1996/12/31 11650.51 12007.46 1997/01/31 11570.43 11917.66 1997/02/28 12000.82 12383.06 1997/03/31 12631.39 13186.91 1997/04/30 12341.13 12745.27 1997/05/31 12951.68 13390.51 1997/06/30 13352.04 13933.20 1997/07/31 14473.05 15226.21 1997/08/31 13221.92 13796.83 1997/09/30 14242.84 14883.23 1997/10/31 13251.95 13772.76 1997/11/30 13642.30 14115.89 1997/12/31 14018.54 14726.44 1998/01/31 14634.74 15145.43 1998/02/28 15349.97 16176.40 1998/03/31 16560.36 17180.21 1998/04/30 17704.73 17760.59 1998/05/31 18750.07 19367.83 1998/06/30 19256.24 20055.83 1998/07/31 19960.47 20301.79 1998/08/31 15944.16 16938.45 1998/09/30 15669.08 16560.16 1998/10/31 16274.27 17435.20 1998/11/30 17132.55 18261.47 1998/12/31 17286.60 18447.96 1999/01/31 17341.62 18214.98 1999/02/28 16032.19 16900.12 1999/03/31 15261.94 16522.94 1999/04/30 16021.19 17697.48 1999/05/31 15118.90 16576.94 1999/06/30 15900.15 17283.48 1999/07/31 15900.15 17016.61 1999/08/31 15955.17 17451.52 1999/09/30 15889.15 17232.00 1999/10/29 16483.34 18059.77 IMATRL PRASUN SHR__CHT 19991031 19991111 111347 R00000000000051 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity Germany Fund on November 1, 1995, when the fund started, and the current 3.00% sales charge was paid. As the chart shows, by October 31, 1999, the value of the investment would have grown to $16,483 - a 64.83% increase on the initial investment. For comparison, look at how the Deutscher Aktienindex 100 Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $18,060 - a 80.60% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) GERMANY FUND TALK: THE MANAGER'S OVERVIEW An interview with Alexandra Hartmann, Portfolio Manager of Fidelity Germany Fund Q. HOW DID THE FUND PERFORM, ALEXANDRA? A. For the 12-month period that ended October 31, 1999, the fund returned 1.28%, compared to the 3.58% return of the Deutscher Aktienindex 100 (DAX 100) and the 10.72% European region funds average return, as tracked by Lipper Inc. Q. WHY DID THE FUND'S PERFORMANCE TRAIL ITS BENCHMARK INDEX AND ITS PEER GROUP? A. The German stock market was one of the weaker performers in Europe during the 12-month period, as economic growth in Germany trailed that of most other countries on the Continent. This was the primary reason for the fund's underperformance relative to the broader peer group average. Performance relative to the DAX 100 was hurt by the fund's underemphasis during most of the year on banking and cyclical stocks, both of which performed relatively well. However, performance was helped by investments in telecommunications and insurance, as well as by a de-emphasis on automobile stocks, which performed poorly. Q. WHAT WERE YOUR PRINCIPAL STRATEGIES DURING THE YEAR? A. I focused on companies that I felt had the ability to grow independently of the German economy, including many internationally focused companies in the telecommunications, business services and chemicals industries. Despite this emphasis on companies with international operations, I underweighted automobile companies relative to the DAX 100 index because I was concerned about their lack of pricing power - or ability to raise prices. I also tended to de-emphasize banking and pharmaceutical stocks. After de-emphasizing cyclical companies, I increased the fund's exposure to the sector at the end of the period because I believed a global recovery had increased the pricing power of companies in industries such as chemicals. Q. WHAT WERE SOME OF THE INVESTMENTS THAT HELPED PERFORMANCE? A. Mannesmann, the wireless phone giant and the fund's second-largest holding, continued to do well, helped by cheap acquisitions and industry consolidation. Several small-cap investments added to performance, including: Kamps, a bakery chain; DIS, a temporary employment agency; and Intershop, a software developer for e-commerce. A large holding in chemical company BASF helped, as did holdings in Linde, a high-quality fork-lift, truck and industrial gas company, and Preussag, which changed from a shipbuilding and steel-rolling company to become a travel agency. Another contributor was Siemens, the electronics and technology company. Q. WHAT WERE SOME OF THE DISAPPOINTMENTS? A. Several specific investments hurt, including an overweighted position in Hannover Re, a specialty insurance company. Underweighting banks such as Deutsche Bank held back performance as banks tended to do well, partly because of industry consolidation. Performance also was hurt because I was not aggressive enough in cyclicals such as steel companies and engineering firms, which performed well over the period. Q. WHAT IS YOUR OUTLOOK? A. Economic growth in Germany has tended to lag that of growth elsewhere in Europe, and I expect this trend to continue during the next year. However, I do see some signs of economic improvement. German business confidence has risen, and the 10% decline in the euro currency, relative to the dollar, early in 1999 should help exporting industries. Moreover, German stocks appear attractively valued relative to other European stocks. At the end of the fiscal year, German stocks were selling at about 5% below their 10-year average, based on price-to-earnings ratios, while European stocks were selling above their 10-year averages. I tend to emphasize companies that can grow independently of the German economy, so performance is likely to be affected by the pace of global growth as well as by conditions within Germany. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-2. FUND FACTS GOAL: long-term growth of capital by investing mainly in equity securities of German issuers FUND NUMBER: 346 TRADING SYMBOL: FGERF START DATE: November 1, 1995 SIZE: as of October 31, 1999, more than $22 million MANAGER: Alexandra Hartmann, since 1996; manager, Fidelity France Fund, since 1998; joined Fidelity in 1994 (checkmark) GERMANY INVESTMENT CHANGES AS OF OCTOBER 31,1999 United States 2.6% United Kingdom 1.5% France 3.2% Row: 1, Col: 1, Value: 3.2 Row: 1, Col: 2, Value: 87.7 Row: 1, Col: 3, Value: 1.0 Row: 1, Col: 4, Value: 1.5 Row: 1, Col: 5, Value: 2.5 Row: 1, Col: 6, Value: 1.5 Row: 1, Col: 7, Value: 2.6 Switzerland 2.5% Netherlands 1.5% Luxembourg 1.0% Germany 87.7% GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30, 1999 United States 0.9% France 2.8% Switzerland 3.4% Netherlands 1.2% Row: 1, Col: 1, Value: 2.8 Row: 1, Col: 2, Value: 91.7 Row: 1, Col: 3, Value: 1.2 Row: 1, Col: 4, Value: 3.4 Row: 1, Col: 5, Value: 0.9 Germany 91.7% PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF APPLICABLE. ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks 97.4 99.1 Short-Term Investments and 2.6 0.9 Net Other Assets PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Deutsche Telekom AG 9.8 4.5 (Telephone Services) Mannesmann AG (Reg.) (Cellular) 9.6 9.6 Allianz AG (Reg.) (Insurance) 7.8 8.6 Siemens AG (Electrical 6.8 4.7 Equipment) BASF AG (Chemicals & Plastics) 5.3 6.6 Munich Reinsurance AG (Reg.) 5.1 2.7 (Insurance) DaimlerChrysler AG (Reg.) 4.9 9.8 (Autos, Tires, & Accessories) Veba AG (Electric Utility) 3.7 4.8 Dresdner Bank AG (Banks) 3.0 0.0 Marschollek Lautenschlaeger 2.8 2.8 und Partner AG (Insurance) 58.8 54.1 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO UTILITIES 25.7 20.2 FINANCE 22.9 27.6 BASIC INDUSTRIES 11.7 8.7 INDUSTRIAL MACHINERY & 10.7 7.0 EQUIPMENT DURABLES 9.8 18.0 TECHNOLOGY 6.2 6.2 MEDIA & LEISURE 2.6 0.3 SERVICES 2.3 1.6 HEALTH 1.8 2.7 RETAIL & WHOLESALE 1.7 3.9
GERMANY INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 89.7% SHARES VALUE (NOTE 1) BASIC INDUSTRIES - 11.7% CHEMICALS & PLASTICS - 8.2% BASF AG 27,273 $ 1,215,545 Bayer AG 8,227 336,038 Kali und Salz Beteiligungs AG 14,160 202,850 Rhodia SA 6,034 116,803 1,871,236 METALS & MINING - 3.5% Metallgesellschaft AG 9,866 205,551 Preussag AG 9,660 524,802 Vossloh AG 4,068 84,539 814,892 TOTAL BASIC INDUSTRIES 2,686,128 CONSTRUCTION & REAL ESTATE - 0.5% BUILDING MATERIALS - 0.5% Ciments Francais SA 1,647 105,635 DURABLES - 6.1% AUTOS, TIRES, & ACCESSORIES - 4.9% DaimlerChrysler AG (Reg.) 14,524 1,129,241 TEXTILES & APPAREL - 1.2% Boss (Hugo) AG 2,463 280,608 TOTAL DURABLES 1,409,849 FINANCE - 20.1% BANKS - 6.6% Deutsche Bank AG 8,188 587,179 Dresdner Bank AG 13,164 679,754 Julius Baer Holding AG 81 244,188 1,511,121 INSURANCE - 13.5% Allianz AG (Reg.) 5,932 1,802,834 Hannover Rueckversicherungs AG 1,847 139,116 Munich Reinsurance AG (Reg.) 5,086 1,162,643 3,104,593 TOTAL FINANCE 4,615,714 HEALTH - 1.8% MEDICAL FACILITIES MANAGEMENT - - 1.8% Fresenius Medical Care AG 5,691 405,232 INDUSTRIAL MACHINERY & EQUIPMENT - 10.7% ELECTRICAL EQUIPMENT - 8.2% ABB Ltd. (Reg) (Switzerland) 3,259 328,921 (a) Siemens AG 17,295 1,560,817 1,889,738 SHARES VALUE (NOTE 1) INDUSTRIAL MACHINERY & EQUIPMENT - 2.5% Heidelberger Druckmaschinen AG 6,026 $ 355,982 Linde AG 4,050 215,540 571,522 TOTAL INDUSTRIAL MACHINERY & 2,461,260 EQUIPMENT MEDIA & LEISURE - 2.6% BROADCASTING - 2.6% Audiofina 4,650 234,473 Primacom AG 2,345 116,266 Television Francaise 1 SA 757 237,971 588,710 RETAIL & WHOLESALE - 1.7% APPAREL STORES - 0.2% Ludwig Beck Am Rathausec AG 3,500 49,844 GENERAL MERCHANDISE STORES - 1.5% Vendex KBB NV 11,504 336,762 TOTAL RETAIL & WHOLESALE 386,606 SERVICES - 2.3% LEASING & RENTAL - 0.9% Apcoa Parking AG 2,857 210,969 SERVICES - 1.4% GFK AG (a) 2,800 77,978 Suez Lyonnaise des Eaux 1,491 241,433 319,411 TOTAL SERVICES 530,380 TECHNOLOGY - 6.2% COMPUTER SERVICES & SOFTWARE - - 4.8% Intershop Communication AG (a) 2,523 318,051 SAP AG (Systeme Anwendungen 1,488 554,258 Produkte) Utimaco Safeware AG (a) 1,980 223,909 1,096,218 ELECTRONICS - 1.4% ELMOS Semiconductor AG (a) 2,300 58,230 EPCOS AG (a) 6,340 260,634 318,864 TOTAL TECHNOLOGY 1,415,082 TRANSPORTATION - 0.3% TRUCKING & FREIGHT - 0.3% Stinnes AG (a) 3,821 73,360 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) UTILITIES - 25.7% CELLULAR - 11.1% Mannesmann AG (Reg.) 13,958 $ 2,207,172 Orange PLC (a) 14,140 352,730 2,559,902 ELECTRIC UTILITY - 4.8% Veba AG 15,410 837,022 Viag AG 14,257 262,443 1,099,465 TELEPHONE SERVICES - 9.8% Deutsche Telekom AG 48,714 2,253,379 TOTAL UTILITIES 5,912,746 TOTAL COMMON STOCKS 20,590,702 (Cost $17,001,726) NONCONVERTIBLE PREFERRED STOCKS - 7.7% DURABLES - 3.7% AUTOS, TIRES, & ACCESSORIES - 3.7% Bayerische Motoren Werke 36,890 564,271 (BMW) AG (non-vtg.) Porsche AG (non-vtg.) 101 277,017 841,288 FINANCE - 2.8% INSURANCE - 2.8% Marschollek Lautenschlaeger 3,053 645,732 und Partner AG NONDURABLES - 1.2% HOUSEHOLD PRODUCTS - 1.2% Wella AG 10,154 283,854 TOTAL NONCONVERTIBLE 1,770,874 PREFERRED STOCKS (Cost $1,515,514) CASH EQUIVALENTS - 2.0% Central Cash Collateral Fund, 129,250 129,250 5.26% (b) Taxable Central Cash Fund, 321,019 321,019 5.21% (b) TOTAL CASH EQUIVALENTS 450,269 (Cost $450,269) TOTAL INVESTMENT PORTFOLIO - 22,811,845 99.4% (Cost $18,967,509) NET OTHER ASSETS - 0.6% 147,292 NET ASSETS - 100% $ 22,959,137 LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $32,155,232 and $43,678,320, respectively. The fund participated in the security lending program. At period end, the value of securities loaned amounted to $106,077. The fund received cash collateral of $129,250 which was invested in the Central Cash Collateral Fund. INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $19,172,650. Net unrealized appreciation aggregated $3,639,195, of which $4,083,109 related to appreciated investment securities and $443,914 related to depreciated investment securities. At October 31, 1999, the fund had a capital loss carryforward of approximately $5,231,000 of which $2,136,000 and $3,095,000 will expire on October 31, 2006 and 2007, respectively. GERMANY FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 22,811,845 value (cost $18,967,509) - See accompanying schedule Foreign currency held at 6,409 value (cost $6,409) Receivable for investments 1,661,820 sold Receivable for fund shares 11,881 sold Dividends receivable 34,058 Interest receivable 4,721 Redemption fees receivable 36 Other receivables 28 TOTAL ASSETS 24,530,798 LIABILITIES Payable to custodian bank $ 3,650 Payable for investments 1,328,064 purchased Payable for fund shares 52,356 redeemed Accrued management fee 13,715 Other payables and accrued 44,626 expenses Collateral on securities 129,250 loaned, at value TOTAL LIABILITIES 1,571,661 NET ASSETS $ 22,959,137 Net Assets consist of: Paid in capital $ 24,553,230 Accumulated undistributed net (5,437,961) realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 3,843,868 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 1,532,381 $ 22,959,137 shares outstanding NET ASSET VALUE and $14.98 redemption price per share ($22,959,137 (divided by) 1,532,381 shares) Maximum offering price per $15.44 share (100/97.00 of $14.98) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 359,259 Dividends Interest 32,431 Security lending 28 391,718 Less foreign taxes withheld (35,765) TOTAL INCOME 355,953 EXPENSES Management fee $ 181,310 Transfer agent fees 98,318 Accounting and security 60,413 lending fees Non-interested trustees' 81 compensation Custodian fees and expenses 73,856 Registration fees 20,774 Audit 33,370 Legal 109 Miscellaneous 76 Total expenses before 468,307 reductions Expense reductions (27,723) 440,584 NET INVESTMENT INCOME (LOSS) (84,631) REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities (2,179,459) Foreign currency transactions (5,912) (2,185,371) Change in net unrealized appreciation (depreciation) on: Investment securities 2,402,057 Assets and liabilities in (4,105) 2,397,952 foreign currencies NET GAIN (LOSS) 212,581 NET INCREASE (DECREASE) IN $ 127,950 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION $ 52,463 Sales charges paid to FDC Sales charges - Retained by $ 52,463 FDC Expense Reductions $ 27,723 Directed brokerage arrangements STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 ASSETS Operations Net investment $ (84,631) $ 48,103 income (loss) Net realized gain (loss) (2,185,371) (3,233,307) Change in net unrealized 2,397,952 827,872 appreciation (depreciation) NET INCREASE (DECREASE) IN 127,950 (2,357,332) NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders - (6,803) From net investment income From net realized gain - (1,168,956) TOTAL DISTRIBUTIONS - (1,175,759) Share transactions Net 17,443,225 46,714,688 proceeds from sales of shares Reinvestment of distributions - 1,171,719 Cost of shares redeemed (29,483,918) (22,470,888) NET INCREASE (DECREASE) IN (12,040,693) 25,415,519 NET ASSETS RESULTING FROM SHARE TRANSACTIONS Redemption fees 76,837 180,382 TOTAL INCREASE (DECREASE) (11,835,906) 22,062,810 IN NET ASSETS NET ASSETS Beginning of period 34,795,043 12,732,233 End of period (including $ 22,959,137 $ 34,795,043 undistributed net investment income of $0 and $16,792, respectively) OTHER INFORMATION Shares Sold 1,168,030 2,771,374 Issued in reinvestment of - 93,141 distributions Redeemed (1,987,640) (1,474,029) Net increase (decrease) (819,610) 1,390,486
FINANCIAL HIGHLIGHTS YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 E SELECTED PER-SHARE DATA Net asset value, beginning of $ 14.79 $ 13.24 $ 11.34 $ 10.00 period Income from Investment Operations Net investment income (loss) (.05) C .03 C, I (.02) C .01 Net realized and unrealized .19 2.65 D 2.21 1.31 gain (loss) Total from investment .14 2.68 2.19 1.32 operations Less Distributions From net investment income - (.01) F (.01) - From net realized gain - (1.24) F (.35) - Total distributions - (1.25) (.36) - Redemption fees added to paid .05 .12 .07 .02 in capital Net asset value, end of period $ 14.98 $ 14.79 $ 13.24 $ 11.34 TOTAL RETURN A, B 1.28% 22.81% 20.47% 13.40% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 22,959 $ 34,795 $ 12,732 $ 7,178 (000 omitted) Ratio of expenses to average 1.90% 1.76% 2.00% G 2.00% G net assets Ratio of expenses to average 1.79% H 1.74% H 2.00% 2.00% net assets after expense reductions Ratio of net investment (.34)% .20% (.18)% .12% income (loss) to average net assets Portfolio turnover rate 132% 139% 120% 133% A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND. E FOR THE PERIOD NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1996. F THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES. G FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER. H FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. I INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.08 PER SHARE. UNITED KINGDOM PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). If Fidelity had not reimbursed certain fund expenses, the total returns would have been lower. CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1994 PAST 1 YEAR LIFE OF FUND FIDELITY UNITED KINGDOM 12.49% 73.79% FIDELITY UNITED KINGDOM 9.11% 68.58% (INCL. 3.00% SALES CHARGE) FT-All-Shares 16.52% 98.87% European Region Funds Average 10.72% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year or since the fund started on November 1, 1995. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the FT-All-Shares Index - a market capitalization-weighted index of over 840 stocks traded in the U.K. market. To measure how the fund's performance stacked up against its peers, you can compare the fund's performance to the European region funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 138 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1994 PAST 1 YEAR LIFE OF FUND FIDELITY UNITED KINGDOM 12.49% 14.82% FIDELITY UNITED KINGDOM 9.11% 13.95% (INCL. 3.00% SALES CHARGE) FT-All-Shares 16.52% 18.75% European Region Funds Average 10.72% n/a AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND United Kingdom FTSE Actuaries All Shares 00344 FT001 1995/11/01 9700.00 10000.00 1995/11/30 9573.90 10045.63 1995/12/31 9778.19 10332.30 1996/01/31 9729.49 10310.34 1996/02/29 9963.23 10460.66 1996/03/31 10099.58 10580.27 1996/04/30 10411.24 10783.02 1996/05/31 10722.89 10999.14 1996/06/30 10596.28 10897.13 1996/07/31 10430.72 10838.63 1996/08/31 10927.42 11423.97 1996/09/30 11005.33 11641.61 1996/10/31 11579.95 12221.95 1996/11/30 12183.78 12823.08 1996/12/31 12575.73 13285.32 1997/01/31 12205.27 12911.20 1997/02/28 12555.71 13299.67 1997/03/31 12565.72 13420.62 1997/04/30 12665.85 13546.04 1997/05/31 13016.28 14119.45 1997/06/30 13216.53 14307.89 1997/07/31 13526.92 14788.25 1997/08/31 13366.72 14587.42 1997/09/30 14408.03 15706.71 1997/10/31 14227.80 15250.76 1997/11/30 14347.95 15309.01 1997/12/31 14686.21 15781.29 1998/01/31 15115.63 16509.20 1998/02/28 16103.30 17613.50 1998/03/31 17037.29 18678.26 1998/04/30 17048.02 18737.66 1998/05/31 16919.20 18390.36 1998/06/30 16790.37 18462.12 1998/07/31 16146.24 18059.16 1998/08/31 13902.51 16565.85 1998/09/30 14428.55 16189.75 1998/10/31 14986.80 17067.41 1998/11/30 15684.61 17671.51 1998/12/31 16201.58 18175.13 1999/01/31 16109.46 18101.10 1999/02/28 16512.48 18527.57 1999/03/31 17088.23 19246.07 1999/04/30 17779.13 20125.69 1999/05/31 16903.99 19140.07 1999/06/30 16834.90 19232.10 1999/07/31 17111.26 19639.91 1999/08/31 17088.23 19666.90 1999/09/30 16719.75 19405.59 1999/10/29 16857.93 19887.49 IMATRL PRASUN SHR__CHT 19991031 19991111 124750 R00000000000051 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity United Kingdom Fund on November 1, 1995, when the fund started, and the current 3.00% sales charge was paid. As the chart shows, by October 31, 1999, the value of the investment would have grown to $16,858 - a 68.58% increase on the initial investment. For comparison, look at how the FT-All-Shares Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $19,887 - a 98.87% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) UNITED KINGDOM FUND TALK: THE MANAGER'S OVERVIEW An interview with Frederic Gautier, Portfolio Manager of Fidelity United Kingdom Fund Q. HOW DID THE FUND PERFORM, FREDERIC? A. For the 12-month period that ended October 31, 1999, the fund posted a total return of 12.49%, compared to 16.52% for the FT-All-Shares Index and 10.72% for the European region funds average tracked by Lipper Inc. Q. WHY DID THE FUND LAG ITS BENCHMARK DURING THE PERIOD? A. The fund's limited exposure to cyclicals - or, companies whose prospects rise and fall with the economy - and value-oriented companies detracted from relative performance as both groups rose during the period. The fund's slight overweighting in banks relative to the benchmark hurt as well, as concerns over higher interest rates overshadowed many strong earnings stories. All in all, strong stock picking, as well as some good exposure to the recovery in oil and the rally in telecommunications, limited the fund's downside. Q. WHAT OTHER FACTORS INFLUENCED PERFORMANCE? A. Our positioning within the building and construction industry, which benefited from historically low interest-rate levels, paid off for the fund. I propped up the fund's position in telecommunications by adding appreciably to its stake in Vodafone AirTouch - the fund's top holding at the close of the period. I gained exposure to the Internet by way of advertising firms such as Saatchi & Saatchi, beneficiaries of the emerging Net culture. Riding a generally strong period for technology stocks, the fund's position in accounting and business-software solutions provider Sage Group, as well the inclusion of Sema Group - a company that provides information technology systems solutions - contributed to fund returns. Additionally, the fund benefited relative to the benchmark from not owning key components Sainsbury and Marks & Spencer, which did poorly during the period. Conversely, the exposure we did have to clothing retailers - although limited - hurt performance, as local players recoiled in response to Wal-Mart's impending arrival in the U.K. Some of the fund's holdings among food manufacturers also dragged on performance. Q. WHICH STOCKS LIFTED PERFORMANCE? A. Vodafone AirTouch emerged as one of the most influential wireless players in the global arena. Its stock rose steadily during the period on the back of increased subscriber growth and the company's optimal positioning with respect to rising data traffic. British Telecommunications also added meaningfully to performance. Royal Bank of Scotland benefited from strong earnings growth and some new ventures that looked to add significant value to the firm. Shares of BP Amoco rose along side the price of oil. Q. WHICH STOCKS DETRACTED? A. Brewer and pub retailer Scottish & Newcastle suffered from depressed earnings levels amid a negative pricing environment. Scottish & Southern Energy, an electric utility provider, fell in line with a weak utility sector in response to rising interest rates, despite gaining cost efficiencies from the merger of Scottish Hydro-Electric and Southern Electric, which occurred during the period. Although fundamentally sound, shares of Bank of Ireland were beaten down, as were many large-cap Irish stocks during this time frame. The stock responded to intense selling pressures from investors looking to further reallocate their portfolios away from domestic players to comparable firms among the euro member states. Q. WHAT'S YOUR OUTLOOK? A. It remains positive. If you look at the makeup of the fund at the close of the period, you would see approximately the same level of earnings growth as the market looking forward, as well as from a historical standpoint. Yet, the aggregate price-to-earnings ratio of the fund was about 10% lower overall. So, shareholders have a fund with similar earnings dynamics to the market, but it's around 10% cheaper in a sense. On top of that, I don't plan to emphasize any particular sector over another, and instead will aim to add value through individual security selection. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-2. FUND FACTS GOAL: long-term growth of capital by investing mainly in equity securities of British issuers FUND NUMBER: 344 TRADING SYMBOL: FUTYF START DATE: November 1, 1995 SIZE: as of October 31, 1999, more than $6 million MANAGER: Frederic Gautier, since 1998; manager, various Fidelity funds through Fidelity International Limited, since 1995; joined Fidelity in 1994 (checkmark) UNITED KINGDOM INVESTMENT CHANGES AS OF OCTOBER 31, 1999 Ireland 5.7% United States 0.7% Row: 1, Col: 1, Value: 5.7 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 3, Value: 93.59999999999999 Row: 1, Col: 4, Value: 0.7000000000000001 United Kingdom 93.6% GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30, 1999 Ireland 5.0% United States 1.7% South Africa 0.2% Row: 1, Col: 1, Value: 5.0 Row: 1, Col: 2, Value: 0.2 Row: 1, Col: 3, Value: 93.09999999999999 Row: 1, Col: 4, Value: 1.7 United Kingdom 93.1% PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF APPLICABLE. ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks 99.3 98.3 Short-Term Investments and 0.7 1.7 Net Other Assets PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Vodafone AirTouch PLC 8.0 4.9 (Cellular) BP Amoco PLC (Oil & Gas) 6.1 7.0 British Telecommunications 5.0 5.0 PLC (Telephone Services) Glaxo Wellcome PLC (Drugs & 4.5 4.0 Pharmaceuticals) Shell Transport & Trading Co. 3.8 3.4 PLC (Reg.) (Oil & Gas) SmithKline Beecham PLC 3.7 4.2 (Drugs & Pharmaceuticals) Lloyds TSB Group PLC (Banks) 3.5 4.0 National Westminster Bank PLC 2.5 3.3 (Banks) Royal Bank of Scotland Group 2.5 2.3 PLC (Banks) General Electric Co. PLC 2.3 1.7 (Electrical Equipment) 41.9 39.8 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO FINANCE 26.4 27.6 UTILITIES 17.1 14.2 HEALTH 11.6 10.1 ENERGY 9.9 10.4 NONDURABLES 6.2 8.9 RETAIL & WHOLESALE 5.3 6.9 MEDIA & LEISURE 4.2 2.7 SERVICES 3.5 4.0 CONSTRUCTION & REAL ESTATE 3.4 5.5 INDUSTRIAL MACHINERY & 3.2 2.3 EQUIPMENT
UNITED KINGDOM INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 99.3% SHARES VALUE (NOTE 1) AEROSPACE & DEFENSE - 0.8% British Aerospace PLC 8,700 $ 50,859 BASIC INDUSTRIES - 2.4% CHEMICALS & PLASTICS - 0.1% Wardle Storeys PLC 1,900 9,842 METALS & MINING - 1.1% Johnson Matthey PLC 7,500 69,496 PAPER & FOREST PRODUCTS - 1.2% Jefferson Smurfit Group PLC 29,300 76,429 TOTAL BASIC INDUSTRIES 155,767 CONSTRUCTION & REAL ESTATE - 3.4% BUILDING MATERIALS - 1.8% CRH PLC 5,050 95,624 Meyer International PLC 4,400 24,709 120,333 CONSTRUCTION - 0.8% George Wimpey PLC 12,000 23,482 Persimmon PLC 7,990 27,066 50,548 REAL ESTATE - 0.8% Minerva PLC 13,750 50,195 TOTAL CONSTRUCTION & REAL 221,076 ESTATE DURABLES - 0.6% HOME FURNISHINGS - 0.6% Carpetright PLC 4,600 34,644 ENERGY - 9.9% OIL & GAS - 9.9% BP Amoco PLC 40,286 387,753 Shell Transport & Trading Co. 32,150 245,814 PLC (Reg.) 633,567 FINANCE - 26.4% BANKS - 14.6% Bank of Ireland, Inc. 18,500 145,001 HSBC Holdings PLC (Reg.) 11,900 146,519 Lloyds TSB Group PLC 16,191 224,045 National Westminster Bank PLC 7,150 161,548 Royal Bank of Scotland Group 7,000 161,381 PLC Standard Chartered PLC 7,150 100,350 938,844 CREDIT & OTHER FINANCE - 1.6% Alliance & Leicester PLC 7,200 105,136 INSURANCE - 6.3% Domestic & General Group PLC 5,250 47,482 Hogg Robinson PLC 12,700 58,005 Independent Insurance PLC 13,500 61,492 SHARES VALUE (NOTE 1) Irish Life & Permanent PLC 5,000 $ 51,748 Norwich Union PLC 11,100 85,195 Royal & Sun Alliance 7,909 53,843 Insurance Group PLC Sun Life & Provincial Holding 6,600 49,300 PLC 407,065 INVESTMENT COMPANIES - 1.2% 3I Group PLC 6,100 76,134 SECURITIES INDUSTRY - 2.7% Amvescap PLC 11,600 103,768 Man (E D & F) Group PLC 11,650 67,817 171,585 TOTAL FINANCE 1,698,764 HEALTH - 11.6% DRUGS & PHARMACEUTICALS - 10.9% AstraZeneca Group PLC (Reg.) 1,800 82,350 Glaxo Wellcome PLC 9,772 292,549 Nycomed Amersham PLC 5,400 32,900 SmithKline Beecham PLC 18,839 241,139 SSL International PLC 5,213 55,763 704,701 MEDICAL EQUIPMENT & SUPPLIES - - 0.7% Smith & Nephew PLC 13,300 42,866 TOTAL HEALTH 747,567 INDUSTRIAL MACHINERY & EQUIPMENT - 3.2% ELECTRICAL EQUIPMENT - 2.3% General Electric Co. PLC 13,700 149,025 INDUSTRIAL MACHINERY & EQUIPMENT - 0.9% FKI PLC 20,250 53,112 TOTAL INDUSTRIAL MACHINERY & 202,137 EQUIPMENT MEDIA & LEISURE - 4.2% BROADCASTING - 1.2% Capital Radio PLC 4,500 73,924 ENTERTAINMENT - 1.1% Granada Group PLC 8,600 68,022 PUBLISHING - 0.9% Daily Mail & General Trust 1,150 59,190 PLC Class A RESTAURANTS - 1.0% Enterprise Inns PLC 9,600 66,302 TOTAL MEDIA & LEISURE 267,438 NONDURABLES - 6.2% BEVERAGES - 2.5% Allied Domecq PLC 10,000 56,238 Scottish & Newcastle PLC 11,500 107,223 163,461 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) NONDURABLES - CONTINUED FOODS - 1.5% Hazlewood Foods PLC 23,850 $ 37,258 Matthews (Bernard) PLC 11,150 21,269 Tomkins PLC 11,609 39,373 97,900 HOUSEHOLD PRODUCTS - 1.1% Unilever PLC 7,600 70,656 TOBACCO - 1.1% British American Tobacco PLC 10,326 68,430 TOTAL NONDURABLES 400,447 RETAIL & WHOLESALE - 5.3% APPAREL STORES - 0.6% Arcadia Group PLC 6,600 16,632 New Look Group PLC 6,700 18,840 35,472 GENERAL MERCHANDISE STORES - 1.5% Kingfisher PLC 9,100 99,436 GROCERY STORES - 2.1% Safeway PLC 2,900 9,108 Tesco PLC 43,000 127,984 137,092 RETAIL & WHOLESALE, MISCELLANEOUS - 1.1% Dixons Group PLC 2,150 38,112 Great Universal Stores PLC 4,300 32,668 Class A 70,780 TOTAL RETAIL & WHOLESALE 342,780 SERVICES - 3.5% ADVERTISING - 1.7% Saatchi & Saatchi PLC 28,650 110,713 SERVICES - 1.8% Reuters Group PLC 6,900 64,164 Taylor Nelson Sofres PLC 3,800 11,466 Thomson Travel Group PLC 25,200 39,160 114,790 TOTAL SERVICES 225,503 TECHNOLOGY - 2.4% COMPUTER SERVICES & SOFTWARE - - 2.4% Informa Group PLC 5,300 35,384 Sage Group PLC 1,600 82,115 Sema Group PLC 2,900 37,912 155,411 TRANSPORTATION - 2.3% AIR TRANSPORTATION - 0.8% BAA PLC 6,750 49,560 SHARES VALUE (NOTE 1) TRUCKING & FREIGHT - 1.5% NFC PLC 14,200 $ 45,767 Stagecoach Holdings PLC 17,800 50,638 96,405 TOTAL TRANSPORTATION 145,965 UTILITIES - 17.1% CELLULAR - 8.0% Vodafone AirTouch PLC 106,675 511,374 ELECTRIC UTILITY - 3.3% Independent Energy Holdings 1,100 29,394 PLC (a) National Grid Group PLC 10,283 76,853 Scottish & Southern Energy PLC 11,400 108,259 214,506 TELEPHONE SERVICES - 5.0% British Telecommunications PLC 17,900 322,200 WATER - 0.8% Severn Trent PLC 3,700 53,146 TOTAL UTILITIES 1,101,226 TOTAL COMMON STOCKS 6,383,151 (Cost $5,639,485) CASH EQUIVALENTS - 0.5% Taxable Central Cash Fund, 33,945 33,945 5.21% (b) (Cost $33,945) TOTAL INVESTMENT PORTFOLIO - 6,417,096 99.8% (Cost $5,673,430) NET OTHER ASSETS - 0.2% 12,412 NET ASSETS - 100% $ 6,429,508 LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $5,183,473 and $6,266,946, respectively. INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $5,696,664. Net unrealized appreciation aggregated $720,432, of which $1,083,067 related to appreciated investment securities and $362,635 related to depreciated investment securities. The fund hereby designates approximately $239,000 as a capital gain dividend for the purpose of the dividend paid deduction. At October 31, 1999, the fund had a capital loss carryforward of approximately $2,000, all of which will expire on October 31, 2007. UNITED KINGDOM FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 6,417,096 value (cost $5,673,430) - See accompanying schedule Cash 20,249 Receivable for investments 171,541 sold Receivable for fund shares 1,862 sold Dividends receivable 12,047 Interest receivable 322 Receivable from investment 13,896 adviser for expense reductions TOTAL ASSETS 6,637,013 LIABILITIES Payable for investments $ 161,079 purchased Payable for fund shares 4,651 redeemed Other payables and accrued 41,775 expenses TOTAL LIABILITIES 207,505 NET ASSETS $ 6,429,508 Net Assets consist of: Paid in capital $ 5,677,367 Undistributed net investment 33,638 income Accumulated undistributed net (25,058) realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 743,561 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 439,189 $ 6,429,508 shares outstanding NET ASSET VALUE and $14.64 redemption price per share ($6,429,508 (divided by) 439,189 shares) Maximum offering price per $15.09 share (100/97.00 of $14.64) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 184,475 Dividends Interest 5,041 189,516 Less foreign taxes withheld (18,713) TOTAL INCOME 170,803 EXPENSES Management fee $ 49,300 Transfer agent fees 21,017 Accounting fees and expenses 60,031 Non-interested trustees' 25 compensation Custodian fees and expenses 56,962 Registration fees 18,555 Audit 33,694 Legal 29 Miscellaneous 16 Total expenses before 239,629 reductions Expense reductions (106,168) 133,461 NET INVESTMENT INCOME 37,342 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 61,258 Foreign currency transactions (212) 61,046 Change in net unrealized appreciation (depreciation) on: Investment securities 703,694 Assets and liabilities in (61) 703,633 foreign currencies NET GAIN (LOSS) 764,679 NET INCREASE (DECREASE) IN $ 802,021 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION $ 5,957 Sales charges paid to FDC Sales charges - Retained by $ 5,957 FDC Expense Reductions $ 105,032 FMR reimbursement Directed brokerage 1,136 arrangements $ 106,168 STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 ASSETS Operations Net investment $ 37,342 $ 94,463 income Net realized gain (loss) 61,046 574,852 Change in net unrealized 703,633 (519,997) appreciation (depreciation) NET INCREASE (DECREASE) IN 802,021 149,318 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (69,464) (115,006) From net investment income From net realized gain (411,822) (484,235) TOTAL DISTRIBUTIONS (481,286) (599,241) Share transactions Net 1,697,930 6,741,898 proceeds from sales of shares Reinvestment of distributions 460,462 598,563 Cost of shares redeemed (2,968,242) (5,731,991) NET INCREASE (DECREASE) IN (809,850) 1,608,470 NET ASSETS RESULTING FROM SHARE TRANSACTIONS Redemption fees 3,189 48,025 TOTAL INCREASE (DECREASE) (485,926) 1,206,572 IN NET ASSETS NET ASSETS Beginning of period 6,915,434 5,708,862 End of period (including $ 6,429,508 $ 6,915,434 undistributed net investment income of $33,638 and $99,432, respectively) OTHER INFORMATION Shares Sold 114,788 455,368 Issued in reinvestment of 34,466 43,658 distributions Redeemed (205,450) (405,257) Net increase (decrease) (56,196) 93,769
FINANCIAL HIGHLIGHTS YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 D SELECTED PER-SHARE DATA Net asset value, beginning of $ 13.96 $ 14.21 $ 11.89 $ 10.00 period Income from Investment Operations Net investment income .08 C .19 C .31 C .16 Net realized and unrealized 1.56 .46 2.31 1.75 gain (loss) Total from investment 1.64 .65 2.62 1.91 operations Less Distributions From net investment income (.14) (.19) (.13) (.04) From net realized gain (.83) (.80) (.20) - Total distributions (.97) (.99) (.33) (.04) Redemption fees added to paid .01 .09 .03 .02 in capital Net asset value, end of period $ 14.64 $ 13.96 $ 14.21 $ 11.89 TOTAL RETURN A, B 12.49% 5.33% 22.87% 19.38% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 6,430 $ 6,915 $ 5,709 $ 2,656 (000 omitted) Ratio of expenses to average 2.00% E 2.02% E 2.00% E 2.00% E net assets Ratio of expenses to average 1.98% F 2.01% F 1.99% F 1.97% F net assets after expense reductions Ratio of net investment .55% 1.26% 2.36% 1.62% income to average net assets Portfolio turnover rate 78% 191% 96% 50% A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D FOR THE PERIOD NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1996. E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER. F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. NOTES TO FINANCIAL STATEMENTS For the period ended October 31, 1999 1. SIGNIFICANT ACCOUNTING POLICIES. Fidelity France Fund, Fidelity Germany Fund, and Fidelity United Kingdom Fund (the funds) are funds of Fidelity Investment Trust (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Each fund is authorized to issue an unlimited number of shares. The financial statements have been prepared in conformity with generally accepted accounting principles which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the funds: SECURITY VALUATION. Securities for which quotations are readily available are valued at the last sale price, or if no sale price, at the closing bid price in the principal market in which such securities are normally traded. If trading or events occurring in other markets after the close of the principal market in which securities are traded are expected to materially affect the value of those securities, then they are valued at their fair value taking this trading or these events into account. Fair value is determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. Securities (including restricted securities) for which quotations are not readily available are valued primarily using dealer-supplied valuations or at their fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost or original cost plus accrued interest, both of which approximate current value. FOREIGN CURRENCY TRANSLATION. The accounting records of the funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the prevailing rates of exchange at period end. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of foreign currency contracts, disposition of foreign currencies, the difference between the amount of net investment income accrued and the U.S. dollar amount actually received, and gains and losses between trade and settlement date on purchases and sales of securities. The effects of changes in foreign currency exchange rates on investments in securities are included with the net realized and unrealized gain or loss on investment securities. INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, each fund is not subject to U.S. federal income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. Each fund may be subject to foreign taxes on income and gains on investments which are accrued based upon each fund's understanding of the tax rules and regulations that exist in the markets in which they invest. Foreign governments may also impose taxes on other payments or transactions with respect to foreign securities. Each fund accrues such taxes as applicable. The schedules of investments include information regarding income taxes under the caption "Income Tax Information." INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, are recorded as soon as the funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. EXPENSES. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust. DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences, which may result in distribution reclassifications, are primarily due to differing treatments for foreign currency transactions/passive foreign investment companies (PFIC), net operating losses, capital loss carryforwards, and losses deferred due to wash sales. Certain funds also utilized earnings and profits distributed to shareholders on redemption of shares as a part of the dividends paid deduction for income tax purposes. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital. Undistributed net investment income and accumulated undistributed net realized gain (loss) on investments and foreign currency transactions may include temporary book and tax basis differences which will reverse in a subsequent period. Any taxable income or gain remaining at fiscal year end is distributed in the following year. SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in France, Germany, and United Kingdom less than 90 days are subject to a short-term trading fee equal to 1.50% of the proceeds of the redeemed shares. These fees, which are retained by the funds, are accounted for as an addition to paid in capital. SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 2. OPERATING POLICIES. FOREIGN CURRENCY CONTRACTS. Certain funds use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms. The U.S. dollar value of foreign currency contracts is determined using contractual currency exchange rates established at the time of each trade. JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the funds, along with other affiliated entities of Fidelity Management & Research Company (FMR), may transfer uninvested cash balances into one or more joint trading accounts. These balances are invested in one or more repurchase agreements for U.S. Treasury or Federal Agency obligations. REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency securities are transferred to an account of the funds, or to the Joint Trading Account, at a bank custodian. The securities are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). FMR, the funds' investment adviser, is responsible for determining that the value of the underlying securities remains in accordance with the market value requirements stated above. CENTRAL CASH FUNDS. Pursuant to an Exemptive Order issued by the SEC, the funds may invest in the Taxable Central Cash Fund and the Central Cash Collateral Fund (the Cash Funds) managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Cash Funds are open-end money market funds available only to investment companies and other accounts managed by FMR and its affiliates. The Cash Funds seek preservation of capital, liquidity, and current income. Income distributions from the Cash Funds are declared daily and paid monthly from net interest income. Income distributions earned by the funds are recorded as either interest income or security lending income in the accompanying financial statements. RESTRICTED SECURITIES. Certain funds are permitted to invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. At the end of the period, no funds had investments in restricted securities. 3. PURCHASES AND SALES OF INVESTMENTS. Information regarding purchases and sales of securities (other than short-term securities), is included under the caption "Other Information" at the end of each applicable fund's schedule of investments. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As each fund's investment adviser, FMR receives a monthly fee that is calculated on the basis of a group fee rate plus a fixed individual fund fee rate applied to the average net assets of each fund. The group fee rate is the weighted average of a series of rates and is based on the monthly average net assets of all the mutual funds advised by FMR. The rates ranged from .2167% to .5200% for the period. The annual individual fund fee rate is .45% for each fund. In the event that these rates were lower than the contractual rates in effect during the period, FMR voluntarily implemented the above rates, as they resulted in the same or a lower management fee. For the period, each fund's management fee was equivalent to the following annual rates expressed as a percentage of average net assets: France .74% Germany .74% United Kingdom .73% SUB-ADVISER FEE. FMR, on behalf of the funds, entered into sub-advisory agreements with Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research Far East Inc. and Fidelity International Investment Advisors (FIIA). In addition, FIIA entered into a sub-advisory agreement with its subsidiary, Fidelity International Investment Advisors (U.K.) Limited (FIIA(U.K.)L). Under the sub-advisory arrangements, FMR may receive investment advice and research services and may grant the sub-advisers investment management authority to buy and sell securities. FMR pays its sub-advisers either a portion of its management fee or a fee based on costs incurred for these services. FIIA pays FIIA(U.K.)L a fee based on costs incurred for either service. SALES LOAD. Fidelity Distributors Corporation (FDC), an affiliate of FMR, is the general distributor of the funds. FDC receives a sales charge of up to 3% for selling shares of each fund. The amounts received and retained by FDC for sales charges are shown under the caption "Other Information" on each fund's Statement of Operations. TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the funds' transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of all shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to the following annual rates as a percentage of the average net assets: France .37% Germany .40% United Kingdom .31% ACCOUNTING AND SECURITY LENDING FEES. FSC maintains each fund's accounting records and administers the security lending program. The security lending fee is based on the number and duration of lending transactions. The accounting fee is based on the level of average net assets for the month plus out-of-pocket expenses. 5. SECURITY LENDING. Certain funds lend portfolio securities from time to time in order to earn additional income. Each applicable fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the funds and any additional required collateral is delivered to the funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Information regarding the value of securities loaned and the value of collateral at period end is included under the caption "Other Information" at the end of each applicable fund's schedule of investments. 6. EXPENSE REDUCTIONS. FMR voluntarily agreed to reimburse each fund's operating expenses (excluding interest, taxes, certain securities lending fees, brokerage commissions and extraordinary expenses, if any) above an annual rate of 2.00% of average net assets of each of the applicable funds. FMR has directed certain portfolio trades to brokers who paid a portion of certain funds' expenses. In addition, through arrangements with certain funds custodian and transfer agent, credits realized on uninvested cash balances were used to reduce a portion of certain funds' expenses. For the period, the reductions under these arrangements are shown under the caption "Other Information" on each applicable fund's Statement of Operations. 7. BENEFICIAL INTEREST. At the end of the period, FMR and its affiliates were record owners of more than 5% of the outstanding shares of the following funds: FUND % OWNERSHIP France 18% United Kingdom 27% REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Investment Trust and the Shareholders of: Fidelity France Fund, Fidelity Germany Fund, Fidelity United Kingdom Fund: In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity France Fund, Fidelity Germany Fund and Fidelity United Kingdom Fund (funds of Fidelity Investment Trust) at October 31, 1999, and the results of their operations, the changes in their net assets and the financial highlights for the periods indicated, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Trust's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 1999 by correspondence with the custodian and brokers, provide a reasonable basis for the opinion expressed above. /s/PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Boston, Massachusetts December 15, 1999 DISTRIBUTIONS Each fund hereby designates 100% of the long-term capital gain dividends distributed during the fiscal year as 20%-rate capital gain dividends. The amounts per share which represent income derived from sources within, and taxes paid to, foreign countries or possessions of the United States are as follows: FUND PAY DATE INCOME TAXES United Kingdom 12/07/98 $.463 $.055 The funds will notify shareholders in January 2000 of amounts for use in preparing 1999 income tax returns. [This page left intentionally blank.] INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research (U.K.) Inc., London, England Fidelity Management & Research (Far East) Inc., Tokyo, Japan Fidelity International Investment Advisors Fidelity International Investment Advisors (U.K.) Limited OFFICERS Edward C. Johnson 3d, PRESIDENT Robert C. Pozen, SENIOR VICE PRESIDENT Richard A. Spillane, Jr., VICE PRESIDENT Eric D. Roiter, SECRETARY Richard A. Silver, TREASURER Matthew N. Karstetter, DEPUTY TREASURER John H. Costello, ASSISTANT TREASURER BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Robert M. Gates * Edward C. Johnson 3d E. Bradley Jones * Donald J. Kirk * Peter S. Lynch Marvin L. Mann * William O. McCoy * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Gary Burkhead Abigail P. Johnson Ned C. Lautenbach GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENT Fidelity Service Company, Inc. Boston, MA * INDEPENDENT TRUSTEES CUSTODIANS Brown Brothers Harriman & Co. Boston, MA FIDELITY'S INTERNATIONAL EQUITY FUNDS Canada Fund Diversified International Fund Emerging Markets Fund Europe Fund Europe Capital Appreciation Fund France Fund Germany Fund Global Balanced Fund Hong Kong and China Fund International Growth & Income Fund International Value Fund Japan Fund Japan Smaller Companies Fund Latin America Fund Nordic Fund Overseas Fund Pacific Basin Fund Southeast Asia Fund United Kingdom Fund Worldwide Fund CORPORATE HEADQUARTERS 82 Devonshire Street Boston, MA 02109 www.fidelity.com THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Exchanges/Redemptions 1-800-544-6666 Account Assistance 1-800-544-6666 Product Information 1-800-544-6666 Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.) TDD Service 1-800-544-0118 for the deaf and hearing impaired (9 a.m. - 9 p.m. Eastern time) Fidelity Automated Service Telephone (FAST SM) 1-800-544-5555 AUTOMATED LINE FOR QUICKEST SERVICE (registered trademark) BULK RATE U.S. Postage PAID Fidelity Investments P.O. Box 193 Boston, MA 02101 (2_FIDELITY_LOGOS)FIDELITY'S(REGISTERED TRADEMARK) TARGETED INTERNATIONAL EQUITY FUNDS Fidelity Canada Fund Fidelity Emerging Markets Fund Fidelity Europe Fund Fidelity Europe Capital Appreciation Fund Fidelity Hong Kong and China Fund Fidelity Japan Fund Fidelity Japan Smaller Companies Fund Fidelity Latin America Fund Fidelity Nordic Fund Fidelity Pacific Basin Fund Fidelity Southeast Asia Fund ANNUAL REPORT FOR THE YEAR ENDING OCTOBER 31, 1999 AND PROSPECTUS DATED DECEMBER 29, 1999 CONTENTS
MARKET RECAP A-4 A REVIEW OF WHAT HAPPENED IN WORLD MARKETS DURING THE PAST 12 MONTHS. CANADA FUND A-5 A-6 A-7 A-8 A-12 PERFORMANCE FUND TALK: THE MANAGERS' OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS EMERGING MARKETS FUND A-14 A-15 A-16 A-17 A-20 PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS EUROPE FUND A-22 A-23 A-24 A-25 A-28 PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS EUROPE CAPITAL APPRECIATION A-30 A-31 A-32 A-33 A-36 PERFORMANCE FUND TALK: THE FUND MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS HONG KONG AND CHINA FUND A-38 A-39 A-40 A-41 A-44 PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS JAPAN FUND A-46 A-47 A-48 A-49 A-52 PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS JAPAN SMALLER COMPANIES FUND A-54 A-55 A-56 A-57 A-60 PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS LATIN AMERICA FUND A-62 A-63 A-64 A-65 A-67 PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS NORDIC FUND A-69 A-70 A-71 A-72 A-74 PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS PACIFIC BASIN FUND A-76 A-77 A-78 A-79 A-83 PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS SOUTHEAST ASIA FUND A-85 A-86 A-87 A-88 A-91 PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS A-93 NOTES TO THE FINANCIAL STATEMENTS REPORT OF INDEPENDENT A-97 THE AUDITORS' OPINION ACCOUNTANTS INDEPENDENT AUDITORS' REPORT A-98 THE AUDITORS' OPINION DISTRIBUTIONS A-99 PROSPECTUS P-1
Third party marks appearing herein are the property of their respective owners. All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company. This report is printed on recycled paper using soy-based inks. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF EACH FUND'S PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY FIDELITY FUND. THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. MARKET RECAP It took over 100 interest-rate cuts by central banks around the world to defuse the powder keg that characterized global equity markets 12 months ago. Those easings sparked a dramatic worldwide recovery and, in a few cases - particularly in the U.S. - were so powerful that some of the easings needed to be reversed. The bottom line, however, is that the world was a much better place to invest in at the conclusion of the 12 months ending October 31, 1999, than it was at the beginning of the period. EUROPE: European markets offered mixed results over the past 12 months. In that time, the Morgan Stanley Capital International Europe Index returned 12.79%. The U.K. posted the most impressive market returns, due in large part to the strength of the vibrant telecommunications industry. Italy and Germany, meanwhile, lagged behind, mostly due to fears of higher interest rates. The weak performance of the euro - the new single currency of 11 European nations that was introduced January 1, 1999 - didn't help matters. An additional detriment was the subpar performance of many of Europe's largest pharmaceutical companies, which suffered due to non-compelling product introductions and slow revenue growth. On a positive note, cross-border consolidation played a significant role across the European corporate landscape, as merger, acquisition and takeover bid announcements were almost daily occurrences. EMERGING MARKETS: A year ago, the emerging markets' outlook was bleak. Currency problems were the norm for several regions, and market volatility reigned supreme. In the fall of 1999, however, the markets tell a different story. Over the past 12 months, the Morgan Stanley Capital International Emerging Markets Free Index returned 44.63%. Several factors contributed to this about-face, including lower interest rates and favorable export and trade data. Sentiment shifts were evident in markets such as Singapore, Thailand and especially India, where the strong performance of technology stocks helped propel that market to phenomenal returns. Latin America was also a comeback story, as Brazil rebounded nicely from it currency devaluation in January. Mexico, however, slipped over the past several months due to concerns about interest rates and fears of a potentially weaker peso. JAPAN AND THE FAR EAST: For overseas investors, Japan was the place to be for the 12-month period that ended October 31, 1999. A renewed emphasis on corporate restructuring and shareholder Standard & Poor's 500 Index(registered trademark) Morgan Stanley Capital International Europe, Australasia, Far East Index * YEAR TO DATE THROUGH OCTOBER 31, 1999. Row: 1, Col: 1, Value: nil Row: 1, Col: 2, Value: nil Row: 2, Col: 1, Value: 6.1 Row: 2, Col: 2, Value: 7.38 Row: 3, Col: 1, Value: 31.57 Row: 3, Col: 2, Value: 56.16 Row: 4, Col: 1, Value: 18.56 Row: 4, Col: 2, Value: 69.44000000000001 Row: 5, Col: 1, Value: 5.1 Row: 5, Col: 2, Value: 24.63 Row: 6, Col: 1, Value: 16.61 Row: 6, Col: 2, Value: 28.27 Row: 7, Col: 1, Value: 31.69 Row: 7, Col: 2, Value: 10.53 Row: 8, Col: 1, Value: -3.1 Row: 8, Col: 2, Value: -23.45 Row: 9, Col: 1, Value: 30.47 Row: 9, Col: 2, Value: 12.13 Row: 10, Col: 1, Value: 7.619999999999999 Row: 10, Col: 2, Value: -12.17 Row: 11, Col: 1, Value: 10.08 Row: 11, Col: 2, Value: 32.56 Row: 12, Col: 1, Value: 1.32 Row: 12, Col: 2, Value: 7.78 Row: 13, Col: 1, Value: 37.58 Row: 13, Col: 2, Value: 11.21 Row: 14, Col: 1, Value: 22.96 Row: 14, Col: 2, Value: 6.05 Row: 15, Col: 1, Value: 32.11 Row: 15, Col: 2, Value: 4.819999999999999 Row: 16, Col: 1, Value: 21.99 Row: 16, Col: 2, Value: -30.99 Row: 17, Col: 1, Value: 25.67 Row: 17, Col: 2, Value: 44.63 % value - combined with the Japanese government's willingness to create more of a free-enterprise market system - proved successful. For the period, the Morgan Stanley Capital International Japan Index returned 58.40% and Japan's TOPIX Index returned 69.97%. Other Asian markets also received a vicarious boost from Japan: Technology-driven markets such as South Korea and Taiwan performed well, as worldwide demand for personal computers translated into positive gains for semiconductor manufacturers. U.S. AND CANADA: The U.S. equity market produced solid returns for the 12 months ending October 31, 1999. The Dow Jones Industrial Average returned 26.84%, while the Standard & Poor's 500 Index - a popular gauge of U.S. stock market performance - returned 25.67%. Early on, the Federal Reserve Board tried to stabilize the impact of shaky global markets on the U.S. by lowering interest rates. In response, the Dow hit the 10,000 level for the first time in March. Late in the second quarter, however, concerns over an overheating U.S. economy and global market recoveries triggered inflation fears. In June and again in August, the Fed raised rates and the market sold off throughout the third quarter as investors anticipated additional increases. In the end, technology stocks were the clear winners as the NASDAQ Index reeled off a healthy 67.98% return. While Canadian equity markets didn't get nearly the attention of their neighbors to the south, their performance was nearly as loud, as the Toronto Stock Exchange (TSE) 300 returned 24.49%. BONDS: With few exceptions, bond performance either fell flat or dropped into negative territory for the 12-month period. Concerns about inflation, higher interest rates and the solid performance of world equity markets posed the major threats to fixed-income instruments. For the period, the Lehman Brothers Aggregate Bond Index - - a widely followed measure of taxable bond performance - posted a total return of 0.53%. U.S. Treasuries gave back all of their flight-to-quality gains - and then some - captured during the fall of 1998, as the Lehman Brothers Long-Term Government Index returned - -6.10%. Meanwhile, the Lehman Brothers Corporate Bond Index returned 0.61%, and the Salomon Brothers Non-U.S. World Government Bond Index fell 2.96%. There were a few bright spots, however. The high-yield market, as measured by the Merrill Lynch High Yield Master II Index, returned 5.61% during the 12-month period, while the JP Morgan Emerging Markets Bond Index Plus returned 19.98%. CANADA PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). If Fidelity had not reimbursed certain fund expenses, the past five year and past 10 year total returns would have been lower. CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1994 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY CANADA 21.71% 32.46% 75.48% FIDELITY CANADA (INCL. 18.06% 28.49% 70.21% 3.00% SALES CHARGE) Toronto Stock Exchange 300 24.49% 71.01% 90.74% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years or 10 years. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Toronto Stock Exchange 300 Index - a market capitalization-weighted index of 300 stocks traded in the Canadian market. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1994 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY CANADA 21.71% 5.78% 5.78% FIDELITY CANADA (INCL. 3.00% 18.06% 5.14% 5.46% SALES CHARGE) Toronto Stock Exchange 300 24.49% 11.33% 6.67% AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER 10 YEARS Canada Toronto Stck Exchange 300 00309 DR001 1989/10/31 9700.00 10000.00 1989/11/30 9756.50 10159.22 1989/12/31 10037.62 10324.90 1990/01/31 9223.58 9424.68 1990/02/28 9276.10 9359.48 1990/03/31 9433.66 9455.51 1990/04/30 8980.68 8737.68 1990/05/31 9571.52 9333.01 1990/06/30 9794.72 9349.17 1990/07/31 9873.50 9509.40 1990/08/31 9302.36 8934.09 1990/09/30 9151.37 8477.35 1990/10/31 8908.47 8200.27 1990/11/30 9197.32 8429.18 1990/12/31 9486.31 8795.12 1991/01/31 9528.38 8829.55 1991/02/28 10404.79 9477.95 1991/03/31 10860.53 9541.18 1991/04/30 10944.66 9531.07 1991/05/31 11428.44 9854.44 1991/06/30 11442.47 9705.74 1991/07/31 11407.41 9847.86 1991/08/31 11309.25 9892.63 1991/09/30 10930.64 9650.41 1991/10/31 11414.42 10105.50 1991/11/30 10986.73 9840.20 1991/12/31 11163.87 9887.67 1992/01/31 11365.09 9974.34 1992/02/29 11432.16 9894.96 1992/03/31 11111.71 9411.08 1992/04/30 10977.56 9243.88 1992/05/31 11074.44 9269.83 1992/06/30 11014.82 9349.10 1992/07/31 11298.02 9627.16 1992/08/31 11126.61 9455.05 1992/09/30 10649.65 8822.25 1992/10/31 10604.93 8990.55 1992/11/30 10575.12 8539.60 1992/12/31 10843.45 8860.34 1993/01/31 10783.74 8774.65 1993/02/28 11455.40 9307.37 1993/03/31 12082.27 9688.00 1993/04/30 12395.71 10096.02 1993/05/31 12567.35 10386.52 1993/06/30 13209.15 10550.83 1993/07/31 12731.53 10540.89 1993/08/31 13052.43 10733.31 1993/09/30 12410.63 10272.23 1993/10/31 13298.71 11074.49 1993/11/30 12992.73 10775.49 1993/12/31 13605.37 11293.69 1994/01/31 14203.74 11846.66 1994/02/28 13597.89 11353.63 1994/03/31 13096.76 10870.93 1994/04/30 12999.52 10730.42 1994/05/31 13059.36 10905.92 1994/06/30 12341.32 10172.05 1994/07/31 12580.67 10546.58 1994/08/31 13051.88 11125.63 1994/09/30 13119.20 11389.67 1994/10/31 12849.93 11154.22 1994/11/30 11914.98 10485.90 1994/12/31 11974.87 10629.22 1995/01/31 11136.63 10105.92 1995/02/28 11593.17 10524.37 1995/03/31 12319.14 10967.82 1995/04/30 12693.36 11237.54 1995/05/31 13090.03 11586.11 1995/06/30 13269.65 11806.79 1995/07/31 13726.19 12120.11 1995/08/31 13554.05 12061.93 1995/09/30 13748.64 12152.36 1995/10/31 13134.93 11947.51 1995/11/30 13673.80 12365.14 1995/12/31 14297.01 12508.62 1996/01/31 14537.55 13108.50 1996/02/29 14665.34 13068.17 1996/03/31 14890.84 13310.89 1996/04/30 15176.48 13764.21 1996/05/31 15537.29 13989.05 1996/06/30 15033.66 13540.33 1996/07/31 14597.69 13134.36 1996/08/31 15221.58 13791.92 1996/09/30 15635.01 14288.60 1996/10/31 16416.76 15399.92 1996/11/30 16890.32 16439.48 1996/12/31 16578.45 15978.23 1997/01/31 17886.28 16775.75 1997/02/28 17444.07 16671.02 1997/03/31 16258.55 15687.99 1997/04/30 16371.45 15889.10 1997/05/31 17848.65 17231.50 1997/06/30 17538.16 17404.21 1997/07/31 18356.73 18622.78 1997/08/31 17660.47 17803.01 1997/09/30 18845.99 19083.93 1997/10/31 17763.97 18200.38 1997/11/30 16964.21 17157.35 1997/12/31 17592.76 17617.02 1998/01/31 17220.26 17318.57 1998/02/28 18124.91 18763.82 1998/03/31 18933.77 20089.25 1998/04/30 19433.99 20226.97 1998/05/31 18752.84 19694.03 1998/06/30 18284.55 19012.78 1998/07/31 16453.97 17379.64 1998/08/31 12739.59 13383.85 1998/09/30 13144.02 13949.53 1998/10/31 13984.81 15321.62 1998/11/30 14282.81 15776.71 1998/12/31 14967.35 16194.35 1999/01/31 15876.74 17026.62 1999/02/28 14913.86 16025.29 1999/03/31 15363.20 16776.29 1999/04/30 16112.11 18481.96 1999/05/31 15759.05 17851.21 1999/06/30 16358.17 18454.60 1999/07/31 16154.90 18118.01 1999/08/31 15812.54 18020.73 1999/09/30 15983.72 18320.90 1999/10/29 17021.49 19074.48 IMATRL PRASUN SHR__CHT 19991031 19991129 085908 R00000000000123 $10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested in Fidelity Canada Fund on October 31, 1989, and the current 3.00% sales charge was paid. As the chart shows, by October 31, 1999, the value of the investment would have grown to $17,021 - a 70.21% increase on the initial investment. For comparison, look at how the Toronto Stock Exchange 300 Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $19,074 - a 90.74% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) CANADA FUND TALK: THE MANAGERS' OVERVIEW NOTE TO SHAREHOLDERS: On October 1, 1999, Stephen Binder (right) became Portfolio Manager of Fidelity Canada Fund. The following is an interview with Robert Haber, who managed the fund during most of the period covered by this report, with comments from Stephen Binder on his outlook. Q. HOW DID THE FUND PERFORM, ROBERT? R.H. For the 12 months that ended October 31, 1999, the fund had a total return of 21.71%. In comparison, the Toronto Stock Exchange (TSE) 300 returned 24.49% during the same period. Q. WHY DID THE FUND TRAIL ITS BENCHMARK DURING THE PAST 12 MONTHS? R.H. The real story behind why the fund fell short of its benchmark over the past 12 months had a lot to do with our relative underweighting of Nortel Networks. Nortel, a global communications equipment concern, soared during the period, nearly tripling in price. My strategy for much of the period was to gain exposure to Nortel through the fund's market weighting in BCE - a diversified telecommunications company, and incidentally, the largest company in Canada - which owns about 41% of Nortel, and was selling at a more attractive valuation. Regrettably, this strategy failed me during the sharp rise in Nortel's share price as the period progressed. At the same time, the broader market, as reflected in the TSE 300, saw Nortel and BCE ascend to 13% and 9%, respectively, of the index. On the other side of the Nortel equation, BCE was trading at a wider discount to the aggregate value of its underlying businesses than it had previously. Simply put, BCE could not keep up with Nortel in terms of share price, and the fund was inadequately compensated because of it. We added to the fund's position in Nortel during the period, but we simply didn't add it fast enough to make up for the fund's lost performance versus the benchmark. Q. BESIDES THE NORTEL STORY, WHAT ELSE INFLUENCED PERFORMANCE? R.H. Overall, the fund's gains from strong stock picking within oil, gas, industrial products and merchandising were tempered by disappointing performance from several holdings in the financial services and precious metals sectors. On the other hand, it's important to note that while we were losing by underweighting Nortel, we were winning elsewhere with technology names such as JDS Uniphase and Celestica. The fund also benefited from its modest underweighting in finance during the period on the back of rising interest rates. The fund was rewarded, however, for holding on to some of the better banking names such as Toronto Dominion, which had a strong period. Amid a sharp recovery in cyclicals - or, economically sensitive stocks such as paper and base metals - during the first two-thirds of the period, the fund's underweighting in many of the natural resource sectors relative to the benchmark detracted from performance. Q. WHICH STOCKS CONTRIBUTED TO THE FUND'S RETURNS? R.H. BCE continued to benefit from its rich collection of telecommunications, media and technology assets. Investors rallied around Nortel and its contributions to further developing the Internet's infrastructure. JDS Fitel, a maker of fiber-optic communications products, also benefited from the race for higher bandwidth - or, speed of data transfer - rising even further after merging into JDS Uniphase in the summer. Toronto Dominion Bank performed well relative to other banks, riding the success of its online discount brokerage division. Information technology systems solutions provider CGI Group also added meaningfully to performance during the 12-month period. The fund no longer held CGI Group at the close of the period. Q. WHICH STOCKS WERE A DRAG ON PERFORMANCE? R.H. Barrick Gold suffered during a generally poor period for gold. Bank of Nova Scotia fell, as most banks did during the period, on concerns over rising interest rates. Insurance carrier Great West Life's shares traded lower in response to weakened fundamentals and the overall downtrend in the financial services sector. I sold off the fund's position in Great West Life during the period. Q. TURNING TO YOU, STEPHEN, WHAT'S YOUR OUTLOOK? S.B. I'm optimistic in general about the Canadian equity market. The Toronto market has rebounded quite nicely from the sharp decline of last autumn, and, in my opinion, has yet to reach its high. The overall economy is doing well, and interest rates, although higher, aren't at hostile levels. I feel that as world economies continue to improve and demand picks up steam, Canada, as a natural resource-based economy, should reap the rewards. I will continue to pursue only the best stocks within each industry, adding value from the bottom up, in lieu of making massive top-down sector bets. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3. FUND FACTS GOAL: long-term growth by investing mainly in equity securities of Canadian issuers FUND NUMBER: 309 TRADING SYMBOL: FICDX START DATE: November 17, 1987 SIZE: as of October 31, 1999, more than $43 million MANAGER: Stephen Binder, since October 1999; associate portfolio manager, Fidelity Canada Fund, 1998-1999; manager, various Fidelity Select Portfolios, 1990-1997; research analyst, 1989-present; joined Fidelity in 1989 (checkmark) CANADA INVESTMENT CHANGES AS OF OCTOBER 31, 1999 United States 8.1% Row: 1, Col: 1, Value: 91.90000000000001 Row: 1, Col: 2, Value: 8.1 Canada 91.9% GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30, 1999 United States 15.5% Row: 1, Col: 1, Value: 84.5 Row: 1, Col: 2, Value: 15.5 Canada 84.5% PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF APPLICABLE. ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks 97.3 92.4 Short-Term Investments and 2.7 7.6 Net Other Assets PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO BCE, Inc. (Telephone Services) 13.9 11.5 Nortel Networks Corp. 8.0 1.8 (Communications Equipment) Toronto Dominion Bank (Banks) 4.4 5.1 Seagram Co. Ltd. (Beverages) 3.6 2.0 Bank of Nova Scotia (Banks) 2.7 4.0 JDS Uniphase Canada Ltd. 2.3 2.0 (Electronic Instruments) Rogers Communications, Inc. 2.2 0.0 Class B (non-vtg.) (Cellular) Canadian Pacific Ltd. 2.0 0.5 (Railroads) Bombardier, Inc. Class B 1.9 2.7 (Aerospace & Defense) Barrick Gold Corp. 1.9 1.1 (Precious Metals) 42.9 30.7 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO UTILITIES 19.5 19.7 TECHNOLOGY 14.6 7.4 FINANCE 12.8 16.7 BASIC INDUSTRIES 11.0 5.5 ENERGY 9.4 10.2 NONDURABLES 6.0 6.2 TRANSPORTATION 4.4 4.3 MEDIA & LEISURE 4.2 6.5 PRECIOUS METALS 3.8 3.2 RETAIL & WHOLESALE 3.6 1.0
CANADA INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 97.3% SHARES VALUE (NOTE 1) AEROSPACE & DEFENSE - 2.0% Bombardier, Inc. Class B 46,600 $ 821,682 Textron, Inc. 770 59,434 881,116 BASIC INDUSTRIES - 11.0% CHEMICALS & PLASTICS - 2.8% Intertape Polymer Group, Inc. 14,600 394,340 NOVA Chemicals Corp. 41,300 812,418 1,206,758 IRON & STEEL - 0.8% Dofasco, Inc. 10,000 178,365 Stelco, Inc. Series A 26,600 171,706 350,071 METALS & MINING - 4.5% Alcan Aluminium Ltd. 6,050 198,351 Breakwater Resources Ltd. (a) 140,000 299,653 Falconbridge Ltd. 44,440 658,281 Inco Ltd. 40,200 808,534 Phelps Dodge Corp. 370 20,859 1,985,678 PACKAGING & CONTAINERS - 0.0% Gaylord Container Corp. Class 1,960 11,025 A (a) PAPER & FOREST PRODUCTS - 2.9% Abitibi-Consolidated, Inc. 16,800 204,335 Boise Cascade Corp. 840 29,925 Canfor Corp. (a) 12,600 109,588 Domtar, Inc. 59,200 714,004 Smurfit-Stone Container Corp. 2,485 53,738 (a) Tembec, Inc. Class A (a) 13,800 138,309 1,249,899 TOTAL BASIC INDUSTRIES 4,803,431 CONSTRUCTION & REAL ESTATE - 0.7% BUILDING MATERIALS - 0.6% Richelieu Hardware Ltd. (a) 27,000 194,469 United Dominion Industries 3,400 73,928 Ltd. 268,397 CONSTRUCTION - 0.1% Lennar Corp. 1,990 32,711 ENGINEERING - 0.0% PerkinElmer, Inc. 130 5,306 TOTAL CONSTRUCTION & REAL 306,414 ESTATE DURABLES - 1.3% AUTOS, TIRES, & ACCESSORIES - 0.8% Airboss of America Corp. (a) 69,100 206,591 SHARES VALUE (NOTE 1) Canadian Tire Corp. Ltd. 3,900 $ 93,015 Series A Navistar International Corp. 800 33,350 (a) 332,956 CONSUMER ELECTRONICS - 0.0% Maytag Corp. 300 12,019 TEXTILES & APPAREL - 0.5% Gildan Activewear, Inc. Class 11,800 224,938 A (a) TOTAL DURABLES 569,913 ENERGY - 9.4% ENERGY SERVICES - 1.4% Bonus Resource Services Corp. 43,200 70,449 (a) Ensign Resource Service 19,700 412,954 Group, Inc. Halliburton Co. 173 6,520 Peak Energy Services Ltd. (a) 36,000 51,369 Plains Energy Services Ltd. 11,400 69,715 (a) Weatherford International, 100 3,388 Inc. (a) 614,395 OIL & GAS - 8.0% Alberta Energy Co. Ltd. 5,800 179,316 Bellator Exploration, Inc. (a) 134,200 162,313 Bonavista Petroleum Ltd. (a) 16,200 183,828 Canadian Hunter Exploration 12,500 203,846 Ltd. Canadian Natural Resources 12,400 272,990 Ltd. (a) Crestar Energy, Inc. (a) 44,200 570,633 Merit Energy Ltd. (a) 35,400 38,486 Ocean Energy, Inc. (a) 1,000 9,188 Poco Petroleums Ltd. (a) 10,600 94,353 Post Energy Corp. (a) 18,800 89,420 Rio Alto Exploration Ltd. (a) 42,500 626,656 Santa Fe Snyder Corp. (a) 2,421 20,881 Storm Energy, Inc. (a) 20,500 31,341 Suncor Energy, Inc. 20,800 799,946 Swift Energy Co. (a) 693 7,190 Talisman Energy, Inc. (a) 6,800 179,507 Triton Energy Ltd. (a) 2,500 41,406 3,511,300 TOTAL ENERGY 4,125,695 FINANCE - 12.8% BANKS - 9.8% Bank of Montreal 10,500 404,175 Bank of Nova Scotia 50,500 1,152,952 Royal Bank of Canada 18,400 793,287 Toronto Dominion Bank 84,600 1,940,103 4,290,517 CREDIT & OTHER FINANCE - 0.2% Home Capital Group Class B 10,000 27,044 (sub-vtg.) Providian Financial Corp. 697 75,973 103,017 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) FINANCE - CONTINUED FEDERAL SPONSORED CREDIT - 0.2% Freddie Mac 1,550 $ 83,797 INSURANCE - 1.1% Canada Life Financial Corp. 15,200 199,851 (a) Clarica Life Insurance Co. 12,700 205,382 MGIC Investment Corp. 1,450 86,638 491,871 SECURITIES INDUSTRY - 1.5% AGF Management Ltd. Class B 4,000 58,436 Lehman Brothers Holdings, 940 69,266 Inc. Mackenzie Financial Corp. 19,200 226,350 Schwab (Charles) Corp. 2,020 78,654 Trimark Financial Corp. 16,000 201,128 633,834 TOTAL FINANCE 5,603,036 HEALTH - 2.4% DRUGS & PHARMACEUTICALS - 2.3% Amgen, Inc. (a) 360 28,710 Biovail Corp. International 10,400 574,873 (a) Medimmune, Inc. (a) 350 39,200 Millennium Pharmaceuticals, 600 42,075 Inc. (a) QLT PhotoTherapeutics, Inc. 7,400 312,251 (a) 997,109 MEDICAL EQUIPMENT & SUPPLIES - - 0.1% VISX, Inc. (a) 710 44,419 MEDICAL FACILITIES MANAGEMENT - - 0.0% Syncor International Corp. (a) 380 13,918 TOTAL HEALTH 1,055,446 INDUSTRIAL MACHINERY & EQUIPMENT - 1.5% ELECTRICAL EQUIPMENT - 1.4% Research in Motion Ltd. (a) 3,200 99,259 Teklogix International, Inc. 30,500 507,746 (a) 607,005 POLLUTION CONTROL - 0.1% Bennett Environmental, Inc. 7,100 48,244 (a) Tetra Tech, Inc. (a) 1,000 15,875 64,119 TOTAL INDUSTRIAL MACHINERY & 671,124 EQUIPMENT MEDIA & LEISURE - 4.2% BROADCASTING - 1.6% AMFM, Inc. (a) 2,433 170,310 Cogeco Cable, Inc. 13,000 192,125 Cogeco, Inc. (sub. vtg.) 11,600 169,464 Comcast Corp. Class A 2,270 95,624 (special) SHARES VALUE (NOTE 1) CTC Communications Group, 400 $ 7,050 Inc. (a) Time Warner, Inc. 420 29,269 USA Networks, Inc. (a) 40 1,803 665,645 ENTERTAINMENT - 0.5% Cinar Films, Inc. Class B 12,400 215,450 (sub. vtg.) (a) LODGING & GAMING - 0.0% WMS Industries, Inc. (a) 1,000 13,563 PUBLISHING - 1.8% Thomson Corp. 27,400 800,571 RESTAURANTS - 0.3% Sportscene Restaurants, Inc. 20,000 110,077 Class A TOTAL MEDIA & LEISURE 1,805,306 NONDURABLES - 6.0% BEVERAGES - 4.1% Molson, Inc. Class A 11,500 214,888 Seagram Co. Ltd. 32,000 1,586,193 1,801,081 FOODS - 0.5% Maple Leaf Foods, Inc. 20,600 195,964 TOBACCO - 1.4% Imasco Ltd. 22,900 614,629 TOTAL NONDURABLES 2,611,674 PRECIOUS METALS - 3.8% Barrick Gold Corp. 44,500 817,915 Franco Nevada Mining Corp. 19,256 357,198 Ltd. Meridian Gold, Inc. (a) 5,000 36,183 Placer Dome, Inc. 27,500 345,689 Stillwater Mining Co. (a) 430 8,654 Teck Corp. Class B (sub-vtg.) 10,040 92,780 1,658,419 RETAIL & WHOLESALE - 3.6% APPAREL STORES - 0.0% Suzy Shier Ltd. (sub-vtg.) 300 897 DRUG STORES - 0.3% Jean Coutu Group, Inc. Class A 6,200 133,125 GROCERY STORES - 3.0% Empire Co. Ltd. Class A 10,000 198,410 (non-vtg.) Loblaw Companies Ltd. 13,900 323,959 Onex Corp. 42,500 801,369 1,323,738 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) RETAIL & WHOLESALE - CONTINUED RETAIL & WHOLESALE, MISCELLANEOUS - 0.3% Forzani Group Ltd. (a) 24,900 $ 70,215 Home Depot, Inc. 400 30,200 100,415 TOTAL RETAIL & WHOLESALE 1,558,175 SERVICES - 0.1% Ecolab, Inc. 1,600 54,100 TECHNOLOGY - 14.6% COMMUNICATIONS EQUIPMENT - 8.3% Jabil Circuit, Inc. (a) 2,190 114,428 Nortel Networks Corp. 57,300 3,525,525 3,639,953 COMPUTER SERVICES & SOFTWARE - - 0.5% Affymetrix, Inc. (a) 500 44,063 Commerce One, Inc. 380 65,075 Electronics for Imaging, Inc. 1,900 76,594 (a) 185,732 COMPUTERS & OFFICE EQUIPMENT - - 0.4% Adaptec, Inc. (a) 1,500 67,500 Comverse Technology, Inc. (a) 970 110,095 ScanSource, Inc. (a) 210 7,114 184,709 ELECTRONIC INSTRUMENTS - 2.3% JDS Uniphase Canada Ltd. (a) 6,090 1,014,241 ELECTRONICS - 3.1% Altera Corp. (a) 800 38,900 C-Mac Industries, Inc. (a) 20,400 647,333 Celestica, Inc. (sub-vtg.) (a) 11,500 632,941 Micron Technology, Inc. (a) 470 33,517 1,352,691 TOTAL TECHNOLOGY 6,377,326 TRANSPORTATION - 4.4% AIR TRANSPORTATION - 0.3% Air Canada, Inc. (a) 13,200 98,213 Preview Travel, Inc. (a) 200 6,100 SkyWest, Inc. 1,210 30,023 134,336 RAILROADS - 3.3% Canadian National Railway Co. 18,300 555,205 Canadian Pacific Ltd. 38,000 888,225 1,443,430 SHARES VALUE (NOTE 1) TRUCKING & FREIGHT - 0.8% Laidlaw, Inc. 55,800 $ 345,030 Vitran Corp., Inc. Class A 4,600 25,005 370,035 TOTAL TRANSPORTATION 1,947,801 UTILITIES - 19.5% CELLULAR - 2.5% ALLTEL Corp. 450 37,463 Nextel Communications, Inc. 1,080 93,083 Class A (a) Rogers Communications, Inc. 47,200 955,738 Class B (non-vtg.) (a) 1,086,284 ELECTRIC UTILITY - 0.1% PG&E Corp. 1,524 34,957 GAS - 1.8% ATCO Ltd. Class I (non-vtg.) 16,000 413,128 Enbridge, Inc. 18,050 388,792 801,920 TELEPHONE SERVICES - 15.1% Aliant, Inc. 12,500 188,133 AT&T Corp. 920 43,010 BCE, Inc. 100,900 6,074,422 GST Telecommunications, Inc. 22,000 148,500 (a) MCI WorldCom, Inc. (a) 544 46,682 McLeodUSA, Inc. Class A (a) 900 40,163 OCI Communications, Inc. 2,600 21,200 Class B (non-vtg.) (a) Time Warner Telecom, Inc. 350 8,816 WinStar Communications, Inc. 1,586 61,557 (a) 6,632,483 TOTAL UTILITIES 8,555,644 TOTAL COMMON STOCKS 42,584,620 (Cost $36,461,570) CASH EQUIVALENTS - 13.5% Central Cash Collateral Fund, 4,739,858 4,739,858 5.26% (b) Taxable Central Cash Fund, 1,182,892 1,182,892 5.21% (b) TOTAL CASH EQUIVALENTS 5,922,750 (Cost $5,922,750) TOTAL INVESTMENT PORTFOLIO - 48,507,370 110.8% (Cost $42,384,320) NET OTHER ASSETS - (10.8)% (4,737,107) NET ASSETS - 100% $ 43,770,263 LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $119,501,071 and $130,940,783, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $1,962 for the period. The fund participated in the security lending program. At period end, the value of securities loaned amounted to $4,652,401. The fund received cash collateral of $4,739,858 which was invested in investments. INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $42,633,180. Net unrealized appreciation aggregated $5,874,190, of which $7,598,874 related to appreciated investment securities and $1,724,684 related to depreciated investment securities. At October 31, 1999, the fund had a capital loss carryforward of approximately $4,511,000, all of which will expire on October 31, 2006. CANADA FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 48,507,370 value (cost $42,384,320) - See accompanying schedule Foreign currency held at 24,884 value (cost $24,884) Receivable for investments 966,378 sold Receivable for fund shares 138,884 sold Dividends receivable 30,824 Interest receivable 3,865 Redemption fees receivable 4 Other receivables 24,514 TOTAL ASSETS 49,696,723 LIABILITIES Payable to custodian bank $ 722 Payable for investments 1,033,844 purchased Payable for fund shares 83,181 redeemed Accrued management fee 11,563 Other payables and accrued 57,292 expenses Collateral on securities 4,739,858 loaned, at value TOTAL LIABILITIES 5,926,460 NET ASSETS $ 43,770,263 Net Assets consist of: Paid in capital $ 42,289,681 Undistributed net investment 66,029 income Accumulated undistributed net (4,707,628) realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 6,122,181 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 2,751,390 $ 43,770,263 shares outstanding NET ASSET VALUE and $15.91 redemption price per share ($43,770,263 (divided by) 2,751,390 shares) Maximum offering price per $16.40 share (100/97.00 of $15.91) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 482,519 Dividends Interest 179,970 Security lending 4,469 666,958 Less foreign taxes withheld (69,946) TOTAL INCOME 597,012 EXPENSES Management fee Basic fee $ 332,751 Performance adjustment (189,641) Transfer agent fees 175,967 Accounting and security 60,507 lending fees Custodian fees and expenses 114,267 Registration fees 17,666 Audit 39,678 Legal 285 Total expenses before 551,480 reductions Expense reductions (71,154) 480,326 NET INVESTMENT INCOME 116,686 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 3,288,483 Foreign currency transactions 32,769 3,321,252 Change in net unrealized appreciation (depreciation) on: Investment securities 5,468,716 Assets and liabilities in (1,633) 5,467,083 foreign currencies NET GAIN (LOSS) 8,788,335 NET INCREASE (DECREASE) IN $ 8,905,021 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION Sales $ 15,360 charges paid to FDC Sales charges - Retained by $ 15,360 FDC Deferred sales charges $ 3,145 withheld by FDC Expense Reductions $ 71,154 Directed brokerage arrangements STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 ASSETS Operations Net investment $ 116,686 $ 412,429 income Net realized gain (loss) 3,321,252 (7,161,849) Change in net unrealized 5,467,083 (7,122,677) appreciation (depreciation) NET INCREASE (DECREASE) IN 8,905,021 (13,872,097) NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (248,416) (246,908) From net investment income From net realized gain - (10,106,122) TOTAL DISTRIBUTIONS (248,416) (10,353,030) Share transactions Net 10,888,952 7,142,290 proceeds from sales of shares Reinvestment of distributions 237,716 10,182,688 Cost of shares redeemed (23,488,113) (42,155,827) NET INCREASE (DECREASE) IN (12,361,445) (24,830,849) NET ASSETS RESULTING FROM SHARE TRANSACTIONS Redemption fees 53,318 20,258 TOTAL INCREASE (DECREASE) (3,651,522) (49,035,718) IN NET ASSETS NET ASSETS Beginning of period 47,421,785 96,457,503 End of period (including $ 43,770,263 $ 47,421,785 undistributed net investment income of $66,029 and $352,447, respectively) OTHER INFORMATION Shares Sold 743,930 449,694 Issued in reinvestment of 17,767 627,013 distributions Redeemed (1,618,570) (2,578,744) Net increase (decrease) (856,873) (1,502,037)
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995 SELECTED PER-SHARE DATA Net asset value, beginning of $ 13.14 $ 18.88 $ 21.84 $ 17.55 $ 17.18 period Income from Investment Operations Net investment income .04 C .09 C .03 C .08 C .05 Net realized and unrealized 2.78 (3.70) 1.39 4.27 .33 gain (loss) Total from investment 2.82 (3.61) 1.42 4.35 .38 operations Less Distributions From net investment income (.07) (.05) (.13) (.08) (.01) From net realized gain - (2.08) (4.29) - - Total distributions (.07) (2.13) (4.42) (.08) (.01) Redemption fees added to paid .02 - .04 .02 - in capital Net asset value, end of period $ 15.91 $ 13.14 $ 18.88 $ 21.84 $ 17.55 TOTAL RETURN A, B 21.71% (21.27)% 8.21% 24.99% 2.22% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 43,770 $ 47,422 $ 96,458 $ 129,671 $ 326,763 (000 omitted) Ratio of expenses to average 1.22% .94% .93% 1.01% 1.09% D net assets Ratio of expenses to average 1.06% E .80% E .92% E .98% E 1.08% E net assets after expense reductions Ratio of net investment .26% .57% .18% .40% .26% income to average net assets Portfolio turnover rate 286% 215% 139% 139% 75% A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
EMERGING MARKETS PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). Prior to February 19, 1993, Emerging Markets operated under certain different investment policies. Accordingly, the fund's historical performance may not represent its current investment policies. CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY EMERGING MARKETS 38.72% -48.41% 4.38% FIDELITY EMERGING MARKETS 34.56% -49.95% 1.25% (INCL. 3.00% SALES CHARGE) MSCI Emerging Markets Free 44.63% -21.63% 157.20% Emerging Markets Funds 35.76% -18.36% n/a Average CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years or since the fund started on November 1, 1990. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Morgan Stanley Capital International (MSCI) Emerging Markets Free Index - a market capitalization-weighted index that is designed to represent the performance of emerging stock markets throughout the world. As of October 31, 1999, the index included over 800 equity securities of companies domiciled in 25 countries. However, to measure how the fund's performance stacked up against its peers, you can compare it to the emerging markets funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 179 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY EMERGING MARKETS 38.72% -12.40% 0.48% FIDELITY EMERGING MARKETS 34.56% -12.93% 0.14% (INCL. 3.00% SALES CHARGE) MSCI Emerging Markets Free 44.63% -4.76% 11.06% Emerging Markets Funds 35.76% -4.20% n/a Average AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND Emerging Markets MS EMF Index (Gross) 00322 MS006 1990/11/01 9700.00 10000.00 1990/11/30 9564.20 9571.06 1990/12/31 9777.33 9975.54 1991/01/31 9709.16 10782.17 1991/02/28 10118.17 12378.30 1991/03/31 10108.44 12889.03 1991/04/30 10332.42 13027.70 1991/05/31 10332.42 14052.74 1991/06/30 9972.10 13551.10 1991/07/31 10186.34 14255.08 1991/08/31 10108.44 14557.58 1991/09/30 10225.30 14002.85 1991/10/31 10127.91 14578.49 1991/11/30 9991.58 14362.80 1991/12/31 10438.08 15976.83 1992/01/31 10517.68 17826.43 1992/02/29 10826.15 18620.48 1992/03/31 10806.24 19252.13 1992/04/30 11064.96 19122.79 1992/05/31 11542.58 19054.82 1992/06/30 11522.68 17165.89 1992/07/31 11144.56 17354.93 1992/08/31 10865.95 16548.35 1992/09/30 10796.29 16609.34 1992/10/31 10995.30 17499.53 1992/11/30 10905.75 17309.63 1992/12/31 11048.91 17823.04 1993/01/31 11201.38 17909.23 1993/02/28 11770.60 18207.62 1993/03/31 12095.86 18807.85 1993/04/30 12482.12 19240.41 1993/05/31 12756.56 19769.94 1993/06/30 12919.19 20356.62 1993/07/31 13142.82 20904.76 1993/08/31 14057.63 22673.81 1993/09/30 14372.73 23280.87 1993/10/31 16446.31 25369.70 1993/11/30 17096.84 26492.37 1993/12/31 20082.32 30871.45 1994/01/31 19501.26 31433.12 1994/02/28 18950.78 30873.94 1994/03/31 17115.84 28080.18 1994/04/30 16952.74 27518.51 1994/05/31 17391.08 28460.32 1994/06/30 16167.79 27675.84 1994/07/31 17401.28 29396.67 1994/08/31 19613.39 33045.18 1994/09/30 20112.90 33420.73 1994/10/31 19623.58 32817.87 1994/11/30 18267.77 31111.53 1994/12/31 16480.81 28612.77 1995/01/31 14212.53 25568.64 1995/02/28 14376.01 24912.84 1995/03/31 14089.92 25071.12 1995/04/30 14386.23 26195.85 1995/05/31 15837.11 27589.45 1995/06/30 16021.03 27671.05 1995/07/31 16828.21 28292.18 1995/08/31 16317.33 27625.75 1995/09/30 16245.81 27494.64 1995/10/31 15469.28 26442.14 1995/11/30 14968.62 25970.59 1995/12/31 15956.70 27122.44 1996/01/31 17548.21 29050.35 1996/02/29 17340.17 28588.47 1996/03/31 17464.99 28811.13 1996/04/30 18359.57 29963.08 1996/05/31 18349.17 29829.29 1996/06/30 18276.35 30015.55 1996/07/31 16840.87 27964.18 1996/08/31 17517.00 28679.97 1996/09/30 17901.88 28928.42 1996/10/31 17277.76 28156.91 1996/11/30 18182.73 28628.69 1996/12/31 17552.02 28758.18 1997/01/31 18565.85 30719.77 1997/02/28 19558.57 32035.35 1997/03/31 18470.81 31193.85 1997/04/30 17298.56 31248.96 1997/05/31 17023.98 32143.32 1997/06/30 17150.71 33863.53 1997/07/31 16855.01 34369.04 1997/08/31 13010.88 29995.61 1997/09/30 13422.75 30826.73 1997/10/31 10930.41 25768.45 1997/11/30 10275.64 24828.22 1997/12/31 10395.44 25426.53 1998/01/31 9691.58 23432.32 1998/02/28 10633.67 25878.08 1998/03/31 11055.99 27001.09 1998/04/30 11153.44 26706.95 1998/05/31 9691.58 23047.01 1998/06/30 8727.84 20629.47 1998/07/31 8998.55 21283.56 1998/08/31 6118.15 15129.63 1998/09/30 6594.61 16089.38 1998/10/31 7298.47 17783.62 1998/11/30 7720.78 19262.66 1998/12/31 7634.15 18983.49 1999/01/31 7428.41 18677.21 1999/02/28 7450.07 18858.89 1999/03/31 8348.84 21344.31 1999/04/30 9366.73 23985.04 1999/05/31 9323.41 23845.51 1999/06/30 10590.36 26551.78 1999/07/31 10103.07 25830.49 1999/08/31 10092.24 26065.50 1999/09/30 9756.56 25183.39 1999/10/29 10124.73 25719.61 IMATRL PRASUN SHR__CHT 19991031 19991111 111256 R00000000000111 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity Emerging Markets Fund on November 1, 1990, when the fund started, and the current 3.00% sales charge was paid. As the chart shows, by October 31, 1999, the value of the investment would have been $10,125 - a 1.25% increase on the initial investment. For comparison, look at how the Morgan Stanley Capital International Emerging Markets Free Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $25,720 - a 157.20% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) EMERGING MARKETS FUND TALK: THE MANAGER'S OVERVIEW An interview with David Stewart, Portfolio Manager of Fidelity Emerging Markets Fund Q. HOW DID THE FUND PERFORM, DAVID? A. The fund performed well on an absolute basis but trailed its benchmark. For the 12 months that ended October 31, 1999, the fund returned 38.72%. By comparison, the Morgan Stanley Capital International Emerging Markets Free Index returned 44.63%, while the emerging markets funds average tracked by Lipper Inc. returned 35.76%. Q. WHY DID THE FUND UNDERPERFORM THE INDEX? A. Early in the period, I positioned the fund defensively, focusing on companies with solid management and a reliable cash flow. Following the extreme volatility in world markets during 1998, there was widespread fear that further negative surprises were ahead, with Brazil being the most frequently mentioned possibility. In fact, Brazil massively devalued its currency in January 1999, but instead of triggering further weakness, the Brazilian devaluation marked a significant turning point for emerging-market equities. Interest rates began to drop, and investors aggressively bought the stocks of companies poised to benefit from an economic upswing-despite the fact that many of the highest flyers were mediocre businesses with excessive levels of debt. I adjusted the portfolio to allow the fund to participate more fully in the rally, but it was too late to catch up with the index. Apparently, many of my peers suffered a similar fate, though to a greater degree, as evidenced by the fact that the fund outperformed the Lipper average. Q. WHAT OTHER FACTORS INFLUENCED THE FUND'S PERFORMANCE? A. Overweighting Asia and underweighting Latin America were good decisions. On the other hand, an underweighting in Greece hurt relative performance. Stocks in Greece surged in anticipation of that country's entry into the European Monetary System next year. Valuations of Greek securities became extreme, and the market appeared to be at unsustainable levels. Q. THE FUND OWNED HOLDINGS IN MALAYSIA AND HONG KONG, DESPITE THE FACT THAT NEITHER COUNTRY WAS REPRESENTED IN THE INDEX. WHAT DID YOU SEE IN THESE COUNTRIES? A. After a difficult period that included capital controls - or, limits on investment capital leaving the country - Malaysia will again be represented in the index next year, and I felt that there were some good opportunities there. The country's exports continued to be strong, and there was an upcoming election, which historically has been a favorable influence on Malaysian stocks. As for Hong Kong, the fund's holdings were actually Chinese stocks that were listed in Hong Kong. These represented not only the best Chinese stocks, in my opinion, but also offered greater liquidity for executing orders. Q. WHAT STOCKS DID WELL FOR THE FUND? A. Samsung Electronics, the fund's second-largest holding at the end of the period, did extremely well. This South Korean company is the world's most efficient producer of computer DRAM (dynamic random access memory) and was profitable even when DRAM prices were near their lows. Larsen & Toubro Ltd., an Indian construction company, benefited from a new CEO who began restructuring the company to increase the focus on profitable areas of business and to sell non-performing assets. Q. WHAT STOCKS DETRACTED FROM PERFORMANCE? A. The biggest detractor was Real Africa Holdings, a company with sound underlying assets that was unfortunately damaged by negative publicity surrounding a competitor. China Resources Beijing Land, a construction and real estate stock, was the victim of a weak market for Chinese stocks. In addition, the delay of deregulation in the property sector hurt the stock. Q. WHAT'S YOUR OUTLOOK, DAVID? A. I am looking for improving world economic growth to provide a reasonably favorable backdrop for emerging-market stocks. As I've indicated in previous reports, the easy, interest-rate-driven gains have been realized. Going forward, the companies that continue to see meaningful share-price growth will probably be limited to those that deliver on the earnings front. Restructuring should play a big part in many of the most successful stories. Furthermore, because many emerging-market economies are experiencing strong growth concurrently, we may see rising commodity prices - and strong performance from commodity-sensitive stocks. In addition, I will focus more on companies positioned to benefit from increasing demand from Europe and Asia, as opposed to those with strong ties to the U.S. economy. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3. FUND FACTS GOAL: long-term growth of capital by investing mainly in equity securities of emerging market issuers, which can be found in regions such as Southeast Asia, Latin America and Eastern Europe START DATE: November 1, 1990 FUND NUMBER: 322 TRADING SYMBOL: FEMKX SIZE: as of October 31, 1999, more than $402 million MANAGER: David Stewart, since 1997; manager, Fidelity Emerging Markets Pilot Fund, since 1995; analyst covering emerging markets, since 1995; joined Fidelity in 1994 (checkmark) EMERGING MARKETS INVESTMENT CHANGES AS OF OCTOBER 31, 1999 United States 5.7% Brazil 8.2% Turkey 4.2% Row: 1, Col: 1, Value: 8.199999999999999 Row: 1, Col: 2, Value: 8.199999999999999 Row: 1, Col: 3, Value: 9.699999999999999 Row: 1, Col: 4, Value: 5.0 Row: 1, Col: 5, Value: 9.6 Row: 1, Col: 6, Value: 26.0 Row: 1, Col: 7, Value: 11.6 Row: 1, Col: 8, Value: 11.8 Row: 1, Col: 9, Value: 4.2 Row: 1, Col: 10, Value: 5.7 India 8.2% Taiwan 11.8% Korea (South) 9.7% South Africa 11.6% Malaysia 5.0% Mexico 9.6% Other 26.0% GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30, 1999 United States 6.7% Brazil 8.5% Row: 1, Col: 1, Value: 8.5 Row: 1, Col: 2, Value: 5.8 Row: 1, Col: 3, Value: 10.8 Row: 1, Col: 4, Value: 4.2 Row: 1, Col: 5, Value: 11.4 Row: 1, Col: 6, Value: 31.3 Row: 1, Col: 7, Value: 8.199999999999999 Row: 1, Col: 8, Value: 10.0 Row: 1, Col: 9, Value: 3.1 Row: 1, Col: 10, Value: 6.7 Turkey 3.1% India 5.8% Taiwan 10.0% Korea (South) 10.8% South Africa 8.2% Malaysia 4.2% Mexico 11.4% Other 31.3% PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF APPLICABLE.
ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks 94.3 93.3 Short-Term Investments and 5.7 6.7 Net Other Assets
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Telefonos de Mexico SA 3.5 3.4 sponsored ADR representing Class L shares (Mexico, Telephone Services) Samsung Electronics Co. Ltd. 2.9 2.3 (Korea (South), Electronics) Reliance Industries Ltd. 2.0 1.6 (India, Chemicals & Plastics) Johnnies Industrial Corp. 1.8 1.7 Ltd. (Reg.) (South Africa, Precious Metals) Far Eastern Textile Ltd. 1.8 1.7 (Taiwan, Textiles & Apparel) Taiwan Semiconductor 1.8 1.3 Manufacturing Co. Ltd. (Taiwan, Electronics) China Trust Co. Ltd. 1.7 1.8 (Taiwan, Banks) Malayan Banking BHD 1.7 1.0 (Malaysia, Banks) Hon Hai Precision Industries 1.7 0.8 Co. Ltd. (Taiwan, Electronics) Haci Omer Sabanci Holding AS 1.7 1.0 (Turkey, Holding Companies) 20.6 16.6 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO FINANCE 18.1 20.9 UTILITIES 17.5 22.0 BASIC INDUSTRIES 13.5 7.8 TECHNOLOGY 9.3 6.3 NONDURABLES 5.7 10.9 PRECIOUS METALS 4.2 3.9 ENERGY 3.4 3.1 DURABLES 3.3 2.4 CONSTRUCTION & REAL ESTATE 3.2 2.0 HOLDING COMPANIES 3.1 2.2
EMERGING MARKETS INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 93.0% SHARES VALUE (NOTE 1) ARGENTINA - 0.6% Perez Companc SA Class B 427,800 $ 2,576,541 BRAZIL - 8.2% Aracruz Celulose SA ADR 117,700 2,412,850 Banco Bradesco SA (Reg. Pfd.) 504,058,000 2,471,126 Brahma Cervejaria(Compagnie) 8,118,648 5,188,766 (PN Reg.) Centrais Electricas 133,101,000 2,370,947 Brasileiras SA Companhia Vale do Rio Doce 258,000 5,137,485 (PN-A) Compania Energertica Minas 63,874,173 911,551 Gerais Souza Cruz Industria Comerico 473,500 2,795,303 Tele Centro Sul Participacoes 25,820 1,542,745 SA sponsored ADR Tele Norte Leste 257,500 4,345,313 Participacoes SA ADR Telesp Participacoes SA ADR 199,600 3,231,025 (a) Votorantim Celulose e Papel 93,761,000 2,743,520 SA (PN Reg.) 33,150,631 CHILE - 2.1% Compania Cervecerias Unidas 52,400 1,142,975 SA sponsored ADR Compania de 155,400 2,593,238 Telecomunicaciones de Chile SA sponsored ADR Distribucion Y Servicio D&S 141,900 2,314,744 SA ADR Embotelladora Andina 145,000 2,356,250 sponsored ADR Class A 8,407,207 CHINA - 0.8% Shanghai Petrochemical Co. 14,698,000 3,008,473 Ltd. Class H COLOMBIA - 0.2% Suramericana de Inversiones SA 723,400 745,338 CROATIA - 0.9% Pliva D.D.: GDR (c) 133,700 1,423,905 GDR (Reg.S) unit 216,100 2,301,465 3,725,370 CZECH REPUBLIC - 0.6% Ceske Energeticke Zavody AS 967,800 2,505,931 (a) EGYPT - 2.1% Commercial International Bank 550,380 6,594,932 Ltd. Lakah Group Sae (a) 741,903 1,687,126 8,282,058 GREECE - 3.0% Alpha Credit Bank 10,980 843,048 Hellenic Telecommunication 256,600 5,459,050 Organization SA (OTE) Heracles General Cement Co. 33,060 1,077,745 SHARES VALUE (NOTE 1) Minoan Lines SA 60,700 $ 1,883,646 STET Hellas 120,800 2,597,200 Telecommunications SA ADR (a) 11,860,689 HONG KONG - 3.2% Beijing Enterprises Holdings 1,524,000 2,481,797 Ltd. China Resources Beijing Land 16,866,000 2,496,898 Ltd. China Telecom (Hong Kong) 992,000 3,348,000 Ltd. (a) Glorious Sun Enterprises 5,304,000 1,928,914 New World Infrastructure Ltd. 2,093,800 2,398,921 (a) 12,654,530 HUNGARY - 0.9% Matav RT sponsored ADR (a) 97,000 2,794,813 OTP Bank Rt. 19,800 901,280 3,696,093 INDIA - 8.2% Dr. Reddy's Laboratories Ltd. 56,300 1,380,919 Gujarat Ambuja Cement Ltd. 246,800 3,069,653 Industrial Credit & 1,589,800 2,892,543 Investment Corp. of India Ltd. ITC Ltd. 500 8,015 Larsen & Toubro Ltd. 720,300 6,604,132 Mahanagar Telephone Nigam 3,900 15,395 Ltd. Pentafour Software & Exports 110,000 1,527,637 Ltd. (a) Pentafour Software & Exports 110,000 1,527,637 Ltd. New (a) Ranbaxy Laboratories Ltd. 89,100 1,785,181 Reliance Industries Ltd. 1,473,494 7,925,714 State Bank of India 252,000 1,439,337 Tata Engineering & Locomotive 7,125 39,317 Co. Ltd. Tata Iron & Steel Co. Ltd. (a) 704,000 2,391,525 Wipro Ltd. 91,880 2,295,730 32,902,735 INDONESIA - 2.3% PT Bank International 13,570,000 298,241 Indonesia PT Indah Kiat Pulp & Paper 4,469,000 1,931,654 Corp. (a) PT Indosat 833,500 1,355,581 PT Telkomunikasi Indonesia 8,179,000 3,894,758 Sampoerna, Hanjaya Mandala (a) 731,000 1,702,987 9,183,221 ISRAEL - 1.2% Bank Hapoalim BM (Reg.) 569,500 1,355,984 Bezeq Israeli 894,000 3,648,162 Telecommunication Corp. Ltd. (a) 5,004,146 KOREA (SOUTH) - 9.7% Cheil Jedang Corp. 30,700 1,765,986 Kookmin Bank 237,600 3,704,145 Kookmin Bank rights 11/4/99 23,865 145,239 (a) COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) KOREA (SOUTH) - CONTINUED Korea Electric Power Corp. 192,400 $ 5,630,048 Korea Telecom 83,000 5,584,079 Lg Chemical Ltd. 94,700 2,865,870 Medison Co. Ltd. 413,670 4,138,426 Pohang Iron & Steel Co. Ltd. 13,600 1,632,681 Samsung Electronics Co. Ltd. 68,845 11,478,954 Shinsegae Department Store 38,200 2,098,692 Shinsegae Department Store 6,677 118,010 rights 12/1/99 (a) 39,162,130 MALAYSIA - 5.0% AMMB Holdings BHD 1,066,000 2,300,316 Amway Holding BHD 660,000 1,710,789 Genting BHD 1,003,000 3,589,684 Malayan Banking BHD 2,025,000 6,874,342 Rothmans of Pall Mall 352,000 2,454,737 Malaysia BHD Tenaga Nasional BHD 572,000 1,317,105 YTL Cement BHD 2,584,800 1,782,152 20,029,125 MEXICO - 9.6% Alfa SA de CV 1,113,000 4,282,775 Cemex SA de CV sponsored ADR 128,200 2,884,500 (a) Cifra SA de CV Series C (a) 2,306,300 3,569,031 Grupo Financiero Bancomer SA 12,318,900 3,245,698 de CV Series A Grupo Modelo SA de CV Class C 1,733,000 4,232,111 Grupo Televisa SA de CV 113,400 4,819,500 sponsored ADR (a) Telefonos de Mexico SA 162,800 13,919,399 sponsored ADR representing Class L shares Tubos de Acero de Mexico SA 163,300 1,786,094 sponsored ADR 38,739,108 PAKISTAN - 0.0% Dandot Cement Co. Ltd. (a) 93,750 1,807 PERU - 1.4% Cementos Lima S.A. 3,194 50,451 Compania de Minas 240,300 4,085,100 Buenaventura SA sponsored ADR Class B Telefonica del Peru SA ADR 122,100 1,411,781 5,547,332 PHILIPPINES - 1.5% Benpres Holdings Corp. (a) 12,881,000 2,248,554 Manila Electric Co. Class B 1,301,000 3,568,828 QueenBee Resources Corp. 520,000 197,756 warrants 3/24/03 (a) 6,015,138 SHARES VALUE (NOTE 1) POLAND - 0.6% KGHM Polska Miedz SA sonsored 177,600 $ 2,193,360 GDR (Reg. S) RUSSIA - 1.9% Lukoil Oil Co. sponsored ADR 127,000 4,032,250 Unified Energy Systems 657,700 3,699,563 sponsored ADR 7,731,813 SOUTH AFRICA - 11.6% Anglo American Platinum Corp. 130,200 3,749,963 Ltd. Anglogold Ltd. 47,890 2,704,065 De Beers Consolidated Mines 115,700 3,159,134 Ltd./ De Beers Centenary AG unit Dimension Data Holdings Ltd. 287,200 1,392,655 Gold Fields Ltd. 606,990 2,903,833 Imperial Holdings Ltd. 239,500 2,221,382 Iscor Ltd. 6,849,700 2,652,719 Johnnies Industrial Corp. 1,069,147 7,306,838 Ltd. (Reg.) Liberty Life Association of 353,903 3,282,478 Africa Ltd. Nampak Ltd. 1,871,500 5,024,774 Real Africa Holdings Ltd. (a) 1,821,851 2,193,751 Standard Bank Investment 1,917,695 6,553,022 Corp. Ltd. Super Group Ltd. 1,848,900 2,707,689 Theta Group Ltd. (a) 460,700 760,899 46,613,202 TAIWAN - 11.8% Bank Sinopac 3,728,900 2,104,266 Cathay Life Insurance Co. 684,890 1,770,523 Ltd. China Development Corp. (a) 1,205,000 1,789,265 China Petrochemical 3,964,400 2,187,169 Development Corp. (a) China Trust Co. Ltd. (a) 7,537,720 6,915,121 Far Eastern Textile Ltd. 5,202,340 7,117,956 Hon Hai Precision Industries 1,001,400 6,850,687 Co. Ltd. Kindom Construction Co. Ltd. 910,000 547,951 Nan Ya Plastics Corp. 2,305,000 4,033,023 Phoenixtec Power Co. Ltd. 2,462,006 5,006,286 Pou Chen Corp. 1,075,200 2,288,020 Taiwan Semiconductor 1,584,240 7,042,177 Manufacturing Co. Ltd. 47,652,444 THAILAND - 1.4% Bangkok Bank Ltd. PCL (For. 583,200 1,358,913 Reg.) (a) Ministry of Finance of the 4,653,200 1,626,361 Kingdom of Thailand (Siam Commercial Bank PLC) warrants 5/31/02 (a) Nithipat Finance PCL: (For. Reg.) warrants 12/15/99 49,800 0 (a) (For. Reg.) (a) 2,395,900 1 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) THAILAND - CONTINUED PTT Exploration & Production 246,200 $ 1,797,499 Public Co.Ltd. (For.Reg.) (a) Siam Cement PCL (For.Reg.) (a) 37,000 957,929 5,740,703 TURKEY - 4.2% Dogan Sirketler Grubu Holding 219,242,560 2,462,532 AS Erciyas Biracilik Ve Malt 5,013,200 104,275 Guney Biraciliu 31,258,675 1,089,052 Haci Omer Sabanci Holding AS 227,448,970 6,741,587 Hurriyet Gazetecilik ve 172,658,890 1,310,826 Matbaacilik AS Koytas Tekstil Sanayi ve 26,770,000 0 Ticaret AS (a) Sabah Yayincilik AS (a) 303,737,700 773,924 Yapi ve Kredi Bankasi AS 314,585,118 4,580,359 17,062,555 TOTAL COMMON STOCKS 374,191,680 (Cost $338,880,530) CONVERTIBLE PREFERRED STOCKS - - 1.3% PHILIPPINES - 0.1% PDCP Development Bank 2,252,138 155,010 (non-vtg.) (a) THAILAND - 1.2% Siam Commercial Bank PLC 4,386,700 4,968,754 5.25% (a) TOTAL CONVERTIBLE PREFERRED 5,123,764 STOCKS (Cost $3,959,085) CASH EQUIVALENTS - 6.9% Central Cash Collateral Fund, 5,809,428 5,809,428 5.26% (b) Taxable Central Cash Fund, 22,022,810 22,022,810 5.21% (b) TOTAL CASH EQUIVALENTS 27,832,238 (Cost $27,832,238) TOTAL INVESTMENT PORTFOLIO - 407,147,682 101.2% (Cost $370,671,853) NET OTHER ASSETS - (1.2)% (4,755,572) NET ASSETS - 100% $ 402,392,110 LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. (c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $1,423,905 or 0.4% of net assets. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $339,577,219 and $297,292,260, respectively. The fund participated in the security lending program. At period end, the value of securities loaned amounted to $5,872,606. The fund received cash collateral of $5,809,428 which was invested in the Central Cash Collateral Fund. INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $372,003,315. Net unrealized appreciation aggregated $35,144,367, of which $81,968,879 related to appreciated investment securities and $46,824,512 related to depreciated investment securities. At October 31, 1999, the fund had a capital loss carryforward of approximately $425,756,000 of which $97,014,000, $19,326,000 and $309,416,000 will expire on September 30, 2004, 2006 and 2007, respectively. The fund intends to elect to defer to its fiscal year ending September 30, 2000 approximately $41,648,000 of losses recognized during the period November 1, 1998 to September 30, 1999. MARKET SECTOR DIVERSIFICATION (UNAUDITED) As a Percentage of Net Assets BASIC INDUSTRIES 13.5% CASH EQUIVALENTS 6.9 CONSTRUCTION & REAL ESTATE 3.2 DURABLES 3.3 ENERGY 3.4 FINANCE 18.1 HEALTH 3.0 HOLDING COMPANIES 3.1 INDUSTRIAL MACHINERY & 3.0 EQUIPMENT MEDIA & LEISURE 2.3 NONDURABLES 5.7 PRECIOUS METALS 4.2 RETAIL & WHOLESALE 2.0 SERVICES 0.3 TECHNOLOGY 9.3 TRANSPORTATION 2.4 UTILITIES 17.5 EMERGING MARKETS FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 407,147,682 value (cost $370,671,853) - See accompanying schedule Foreign currency held at 469,080 value (cost $471,970) Receivable for investments 3,689,463 sold Receivable for fund shares 765,368 sold Dividends receivable 425,171 Interest receivable 90,174 Redemption fees receivable 2,370 Other receivables 3,431 TOTAL ASSETS 412,592,739 LIABILITIES Payable for investments $ 2,290,414 purchased Payable for fund shares 1,482,637 redeemed Accrued management fee 240,285 Other payables and accrued 377,865 expenses Collateral on securities 5,809,428 loaned, at value TOTAL LIABILITIES 10,200,629 NET ASSETS $ 402,392,110 Net Assets consist of: Paid in capital $ 840,246,031 Accumulated net investment (864,668) loss Accumulated undistributed net (473,444,142) realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 36,454,889 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 43,035,100 $ 402,392,110 shares outstanding NET ASSET VALUE and $9.35 redemption price per share ($402,392,110 (divided by) 43,035,100 shares) Maximum offering price per $9.64 share (100/97.00 of $9.35) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 7,660,949 Dividends Interest 809,261 Security lending 3,330 8,473,540 Less foreign taxes withheld (527,561) TOTAL INCOME 7,945,979 EXPENSES Management fee $ 2,504,496 Transfer agent fees 1,629,934 Accounting and security 199,079 lending fees Custodian fees and expenses 526,160 Registration fees 31,792 Audit 59,804 Legal 1,238 Miscellaneous 21,111 Total expenses before 4,973,614 reductions Expense reductions (107,662) 4,865,952 NET INVESTMENT INCOME 3,080,027 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities (46,886,970) Foreign currency transactions (74,467) (46,961,437) Change in net unrealized appreciation (depreciation) on: Investment securities 141,272,322 Assets and liabilities in 16,806 141,289,128 foreign currencies NET GAIN (LOSS) 94,327,691 NET INCREASE (DECREASE) IN $ 97,407,718 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION Sales $ 377,395 charges paid to FDC Sales charges - Retained by $ 377,019 FDC Expense Reductions $ 101,912 Directed brokerage arrangements Custodian credits 1,956 Transfer agent credits 3,794 $ 107,662 STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 ASSETS Operations Net investment $ 3,080,027 $ 3,929,378 income Net realized gain (loss) (46,961,437) (312,486,391) Change in net unrealized 141,289,128 156,845,961 appreciation (depreciation) NET INCREASE (DECREASE) IN 97,407,718 (151,711,052) NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders - (3,929,378) From net investment income In excess of net investment - (6,890,670) income TOTAL DISTRIBUTIONS - (10,820,048) Share transactions Net 186,390,654 99,292,935 proceeds from sales of shares Reinvestment of distributions - 10,654,699 Cost of shares redeemed (152,695,597) (176,082,060) NET INCREASE (DECREASE) IN 33,695,057 (66,134,426) NET ASSETS RESULTING FROM SHARE TRANSACTIONS Redemption fees 580,285 206,513 TOTAL INCREASE (DECREASE) 131,683,060 (228,459,013) IN NET ASSETS NET ASSETS Beginning of period 270,709,050 499,168,063 End of period (including $ 402,392,110 $ 270,709,050 accumulated net investment loss and distributions in excess of net investment income of $864,668 and $19,246,778, respectively) OTHER INFORMATION Shares Sold 21,355,004 11,211,119 Issued in reinvestment of - 1,174,708 distributions Redeemed (18,514,233) (20,409,357) Net increase (decrease) 2,840,771 (8,023,530)
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995 SELECTED PER-SHARE DATA Net asset value, beginning of $ 6.74 $ 10.35 $ 16.61 $ 15.14 $ 19.25 period Income from Investment Operations Net investment income .07 C .09 C .15 C .12 C .05 Net realized and unrealized 2.53 (3.47) (6.17) 1.60 (4.13) gain (loss) Total from investment 2.60 (3.38) (6.02) 1.72 (4.08) operations Less Distributions From net investment income - (.08) (.13) (.18) (.04) In excess of net investment - (.15) (.12) (.09) - income Total distributions - (.23) (.25) (.27) (.04) Redemption fees added to paid .01 - .01 .02 .01 in capital Net asset value, end of period $ 9.35 $ 6.74 $ 10.35 $ 16.61 $ 15.14 TOTAL RETURN A, B 38.72% (33.23)% (36.74)% 11.69% (21.17)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 402,392 $ 270,709 $ 499,168 $ 1,263,164 $ 1,095,583 (000 omitted) Ratio of expenses to average 1.45% 1.59% 1.36% 1.30% 1.28% net assets Ratio of expenses to average 1.42% D 1.56% D 1.35% D 1.29% D 1.28% net assets after expense reductions Ratio of net investment .90% 1.01% .89% .74% .46% income to average net assets Portfolio turnover rate 94% 87% 69% 77% 78% A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
EUROPE PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). If Fidelity had not reimbursed certain fund expenses, the past five year and past 10 year total returns would have been lower. CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY EUROPE 12.18% 116.40% 233.87% FIDELITY EUROPE (INCL. 8.82% 109.91% 223.85% 3.00% SALES CHARGE) MSCI Europe 12.79% 133.76% 287.28% European Region Funds Average 10.72% 109.13% 185.68%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years or 10 years. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Morgan Stanley Capital International (MSCI) Europe Index - a market capitalization-weighted index that is designed to represent the performance of developed stock markets in Europe. As of October 31, 1999, the index included over 560 equity securities of companies domiciled in 15 European countries. To measure how the fund's performance stacked up against its peers, you can compare it to the European region funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 138 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY EUROPE 12.18% 16.69% 12.81% FIDELITY EUROPE (INCL. 8.82% 15.99% 12.47% 3.00% SALES CHARGE) MSCI Europe 12.79% 18.51% 14.50% European Region Funds Average 10.72% 15.72% 10.65% AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER 10 YEARS Europe MS Europe (Net MA tax) 00301 MS002 1989/10/31 9700.00 10000.00 1989/11/30 10267.55 10555.22 1989/12/31 10967.16 11691.34 1990/01/31 11104.17 11660.01 1990/02/28 10817.10 11380.61 1990/03/31 11143.31 11541.18 1990/04/30 10921.49 11234.90 1990/05/31 11593.48 12149.26 1990/06/30 12076.27 12575.96 1990/07/31 12806.98 13105.55 1990/08/31 11280.32 11806.15 1990/09/30 10164.68 10415.73 1990/10/31 10621.38 11293.47 1990/11/30 10608.33 11406.96 1990/12/31 10463.65 11242.22 1991/01/31 10670.66 11620.50 1991/02/28 11318.38 12636.97 1991/03/31 10710.72 11788.90 1991/04/30 10684.01 11665.65 1991/05/31 10730.76 12009.76 1991/06/30 9789.23 11001.83 1991/07/31 10283.36 11763.27 1991/08/31 10490.37 11978.04 1991/09/30 10870.98 12338.01 1991/10/31 10637.27 12078.10 1991/11/30 10316.75 11793.78 1991/12/31 10898.96 12716.29 1992/01/31 10947.28 12712.63 1992/02/29 11078.42 12761.44 1992/03/31 10698.79 12314.83 1992/04/30 11402.84 12994.51 1992/05/31 11961.94 13733.98 1992/06/30 11851.50 13478.22 1992/07/31 11423.54 12996.68 1992/08/31 11458.06 12954.30 1992/09/30 11278.59 12740.05 1992/10/31 10436.50 11851.13 1992/11/30 10429.59 11845.34 1992/12/31 10623.93 12117.08 1993/01/31 10567.64 12137.44 1993/02/28 10630.96 12276.30 1993/03/31 11327.50 12907.83 1993/04/30 11700.39 13192.52 1993/05/31 11841.11 13334.45 1993/06/30 11510.43 13139.65 1993/07/31 11517.46 13184.75 1993/08/31 12453.21 14341.72 1993/09/30 12439.14 14297.17 1993/10/31 12966.82 14892.79 1993/11/30 12713.53 14571.31 1993/12/31 13509.90 15665.30 1994/01/31 14484.98 16463.06 1994/02/28 14145.82 15880.04 1994/03/31 13750.13 15430.58 1994/04/30 14145.82 16069.54 1994/05/31 13601.75 15386.46 1994/06/30 13439.24 15224.91 1994/07/31 14053.97 16022.84 1994/08/31 14499.11 16531.04 1994/09/30 14301.27 15875.53 1994/10/31 14965.46 16567.13 1994/11/30 14407.26 15932.53 1994/12/31 14355.09 16023.10 1995/01/31 14046.45 15897.66 1995/02/28 14297.67 16257.85 1995/03/31 14642.19 17012.30 1995/04/30 15137.44 17556.35 1995/05/31 15438.90 17915.81 1995/06/30 15876.73 18084.71 1995/07/31 16587.30 19027.36 1995/08/31 16271.49 18291.80 1995/09/30 16989.25 18844.37 1995/10/31 16874.41 18755.36 1995/11/30 16766.74 18888.72 1995/12/31 17058.88 19487.31 1996/01/31 17111.21 19614.70 1996/02/29 17739.14 19972.03 1996/03/31 18172.71 20210.85 1996/04/30 18449.30 20357.08 1996/05/31 18980.06 20514.39 1996/06/30 19181.89 20740.27 1996/07/31 18815.60 20480.48 1996/08/31 19451.01 21088.22 1996/09/30 19779.93 21531.95 1996/10/31 20273.30 22031.82 1996/11/30 21050.75 23148.27 1996/12/31 21430.63 23596.67 1997/01/31 21342.04 23666.75 1997/02/28 21801.09 23986.25 1997/03/31 22211.83 24768.20 1997/04/30 22131.29 24651.30 1997/05/31 23162.15 25710.57 1997/06/30 24289.65 27003.29 1997/07/31 25054.75 28273.53 1997/08/31 23886.97 26663.08 1997/09/30 26101.71 29253.92 1997/10/31 25006.42 27826.04 1997/11/30 25497.69 28260.40 1997/12/31 26335.50 29299.82 1998/01/31 27347.05 30526.31 1998/02/28 29220.61 32919.88 1998/03/31 31331.68 35271.68 1998/04/30 32105.73 35963.71 1998/05/31 32396.00 36699.89 1998/06/30 32730.25 37109.82 1998/07/31 33636.25 37850.91 1998/08/31 27514.17 33097.97 1998/09/30 27047.98 31782.99 1998/10/31 28868.77 34335.49 1998/11/30 30522.44 36170.37 1998/12/31 31805.63 37760.06 1999/01/31 32242.62 37524.82 1999/02/28 30979.14 36580.32 1999/03/31 31017.14 36987.82 1999/04/30 31207.14 38096.72 1999/05/31 29696.65 36273.79 1999/06/30 30846.14 36892.98 1999/07/31 30855.64 37242.73 1999/08/31 31026.64 37628.57 1999/09/30 31017.14 37345.98 1999/10/29 32385.12 38727.79 IMATRL PRASUN SHR__CHT 19991031 19991109 144544 R00000000000123 $10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested in Fidelity Europe Fund on October 31, 1989, and the current 3.00% sales charge was paid. As the chart shows, by October 31, 1999, the value of the investment would have grown to $32,385 - a 223.85% increase on the initial investment. For comparison, look at how the Morgan Stanley Capital International Europe Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $38,728 - a 287.28% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) EUROPE FUND TALK: THE MANAGER'S OVERVIEW An interview with Thierry Serero, Portfolio Manager of Fidelity Europe Fund Q. HOW DID THE FUND PERFORM, THIERRY? A. For the 12 months ending October 31, 1999, the fund returned 12.18%, while the Morgan Stanley Capital International Europe Index returned 12.79%. Meanwhile, the European region funds average, as tracked by Lipper Inc., returned 10.72%. Q. WHAT FACTORS INFLUENCED THE PERFORMANCE OF EUROPEAN STOCK MARKETS DURING THE PAST 12 MONTHS? A. European stock markets rose during much of the period after interest-rate cuts in the U.S. and most other major countries helped restore investor confidence. The successful introduction of the European single currency - the euro - and strengthening economic growth in Europe provided a positive backdrop for equity investors. Increased merger and acquisition activity and upward revisions of corporate profit growth also helped the investment environment. Against this backdrop, the emergence of fears in the summer of 1999 that interest rates in Europe and the U.K. could rise had a relatively limited impact on stock markets. Q. THE FUND OUTPERFORMED ITS PEER GROUP AVERAGE, BUT SLIGHTLY TRAILED ITS BENCHMARK RETURN. WHY? A. During certain times within the 12-month period, the fund suffered from its heavy bias toward growth stocks and performed significantly worse than the index, particularly in the early spring of 1999 and again in July and August when many investors favored value stocks over growth. My investment style favors growth rather than value. This proved beneficial when interest rate-sensitive growth stocks reversed some of their earlier relative losses against the market, particularly in early summer and early autumn when the fund performed significantly better than the market. Q. WHICH FUND HOLDINGS PERFORMED PARTICULARLY WELL? A. Shares in manufacturers of mobile phone equipment, such as Nokia; operators of mobile phone networks, such as Vodafone AirTouch and Mannesmann; and operators of data networks, such as Equant, were strong contributors to performance. These companies benefited from the rapid expansion of mobile and data traffic. This is expected to continue for some time and should lead to increased growth in corporate profits. Another factor driving share prices was the ongoing merger and acquisition activity among telecommunications companies. Q. WERE THERE ANY DISAPPOINTMENTS? A. The fund's two largest pharmaceutical holdings proved disappointing. Swiss company Novartis and U.K.-based Glaxo Wellcome suffered when these companies - the world's third- and fourth-largest pharmaceutical manufacturers, respectively - warned that 1999's profits would be lower than anticipated. Furthermore, they were affected, along with other pharmaceutical shares, by the preference investors had for cyclical stocks. Q. DID YOU MAKE MAJOR CHANGES TO THE PORTFOLIO? A. The main change I carried out this year was to increase those holdings where I had the strongest conviction. This resulted in a reduction of holdings in the fund and sharpened the focus on the most attractive companies within each sector. Overall, the emphasis continues to be on growth stocks, but the type of growth stocks held has changed. A year ago the majority of the holdings were restructuring stories, but now the fund contains many long-term growth stories that are not dependent on a strong economy to grow their business. Examples are Equant and Synthes-Stratec. A second group includes companies that have implemented their restructuring programs and are poised to benefit in terms of long-term growth in revenues and profits. Examples of this are Mannesmann or Preussag. Q. WHAT IS YOUR OUTLOOK FOR THE EUROPEAN MARKET? A. Improving economic growth prospects have resulted in increased inflationary expectations as shown by the rise in bond yields earlier this year. While smaller and cyclical companies performed better than growth companies in this environment, I believe these conditions will not continue. In my opinion, the low-inflation environment, in place through much of the 1990s, will re-emerge as the dominant influence on the stock market over the longer term. Such an environment restricts the ability of companies to increase prices and, consequently, forces them to continue to improve profitability by controlling costs, increasing market share and becoming more competitive. The portfolio is positioned to benefit from companies' long-term growth in revenues and profits against a background of low inflation, and I believe that we have identified those companies that should perform relatively well in this environment. FUND FACTS GOAL: long-term growth of capital by investing mainly in equity securities of European issuers FUND NUMBER: 301 TRADING SYMBOL: FIEUX START DATE: October 1, 1986 SIZE: as of October 31, 1999, more than $1.3 billion MANAGER: Thierry Serero, since 1998; manager, several funds for Fidelity International Limited, since 1994; research analyst, Fidelity International Services Limited, 1991-1994; joined Fidelity in 1991 (checkmark) THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3. EUROPE INVESTMENT CHANGES AS OF OCTOBER 31, 1999 United States 2.4% Finland 4.7% Row: 1, Col: 1, Value: 4.7 Row: 1, Col: 2, Value: 19.7 Row: 1, Col: 3, Value: 15.9 Row: 1, Col: 4, Value: 5.9 Row: 1, Col: 5, Value: 5.6 Row: 1, Col: 6, Value: 3.7 Row: 1, Col: 7, Value: 2.9 Row: 1, Col: 8, Value: 6.9 Row: 1, Col: 9, Value: 32.3 Row: 1, Col: 10, Value: 2.4 United Kingdom 32.3% France 19.7% Germany 15.9% Switzerland 6.9% Netherlands 5.9% Sweden 2.9% Other 5.6% Spain 3.7% GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30, 1999 Finland 2.7% United States 3.2% Row: 1, Col: 1, Value: 2.7 Row: 1, Col: 2, Value: 13.3 Row: 1, Col: 3, Value: 14.7 Row: 1, Col: 4, Value: 2.0 Row: 1, Col: 5, Value: 5.2 Row: 1, Col: 6, Value: 9.9 Row: 1, Col: 7, Value: 3.9 Row: 1, Col: 8, Value: 3.7 Row: 1, Col: 9, Value: 10.5 Row: 1, Col: 10, Value: 30.9 Row: 1, Col: 11, Value: 3.2 France 13.3% United Kingdom 30.9% Germany 14.7% Ireland 2.0% Switzerland 10.5% Italy 5.2% Netherlands 9.9% Spain 3.7% Other 3.9% PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF APPLICABLE.
ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks 97.5 93.1 Bonds 2.5 5.2 Short-Term Investments and 0.0 1.7 Net Other Assets
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Nokia AB (Finland, 3.5 2.1 Communications Equipment) Vodafone AirTouch PLC 3.4 2.8 (United Kingdom, Cellular) Novartis AG (Reg.) 3.1 3.3 (Switzerland, Drugs & Pharmaceuticals) BP Amoco PLC (United 2.9 2.8 Kingdom, Oil & Gas) Glaxo Wellcome PLC (United 2.9 4.1 Kingdom, Drugs & Pharmaceuticals) France Telecom SA (France, 2.8 0.0 Telephone Services) Ericsson (L.M.) Telefon AB 2.0 0.0 Class B (Sweden, Electrical Equipment) Lloyds TSB Group PLC (United 2.0 2.3 Kingdom, Banks) Munich Reinsurance AG (Reg.) 1.9 1.5 (Germany, Insurance) Siemens AG (Germany, 1.9 1.8 Electrical Equipment) 26.4 20.7 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO FINANCE 21.2 30.1 UTILITIES 15.8 19.4 HEALTH 12.1 10.6 TECHNOLOGY 11.6 8.6 RETAIL & WHOLESALE 7.7 4.3 INDUSTRIAL MACHINERY & 6.6 6.3 EQUIPMENT SERVICES 6.5 4.2 ENERGY 4.6 5.1 BASIC INDUSTRIES 4.2 1.0 CONSTRUCTION & REAL ESTATE 4.0 3.4
EUROPE INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 95.8% SHARES VALUE (NOTE 1) BELGIUM - 1.0% GIB Holdings Ltd. 45,100 $ 1,855,939 Mobistar SA (a) 203,338 8,365,549 Telinfo SA 35,150 3,337,176 Telinfo SA (strip VVPR) 28,500 301 13,558,965 FINLAND - 4.7% Nokia AB 397,705 45,959,783 Sampo Insurance Co. Ltd. 230,202 8,013,723 Sonera Group PLC 241,070 7,260,400 61,233,906 FRANCE - 19.1% Banque Nationale de Paris 228,629 20,138,591 Bouygues 54,813 19,139,159 Castorama Dubois 36,550 10,980,918 Investissements SA Club Mediterranee SA (a) 110,900 11,137,297 Dassault Systemes SA 319,650 13,295,748 France Telecom SA 375,147 36,348,955 Galeries Lafayette SA 64,480 9,522,793 Genset SA (a) 58,000 1,523,487 L'Air Liquide 76,463 11,816,810 Legrand SA 44,939 10,784,899 Neopost SA (a) 628,334 21,807,092 Pinault Printemps SA 85,300 16,313,912 Rhodia SA 677,889 13,122,179 Rhone-Poulenc SA Class A 182,000 10,101,000 Suez Lyonnaise des Eaux 124,497 20,159,444 Total Fina SA Class B 169,324 22,583,589 TRANSGENE SA sponsored ADR 409,380 3,326,213 (a)(e) 252,102,086 GERMANY - 14.2% Aachener & Muenchener 58,964 4,946,233 Beteiligungs AG Bewag 265,350 3,652,926 Celanese AG (a) 16,960 268,367 Deutsche Bank AG 215,286 15,438,612 Deutsche Telekom AG 526,567 24,357,602 EPCOS AG (a) 21,090 866,998 Hoechst AG 309,100 13,691,662 Kali Und Salz Beteiligungs AG 194,500 2,786,318 Karstadt AG 356,820 16,185,605 Mannesmann AG (Reg.) 146,783 23,210,724 Munich Reinsurance AG (Reg.) 111,805 25,558,269 NSE Software AG 178,790 2,847,944 Preussag AG 263,803 14,331,718 Siemens AG 278,642 25,146,520 Veba AG 257,450 13,983,860 187,273,358 SHARES VALUE (NOTE 1) IRELAND - 0.6% Irish Life & Permanent PLC 709,737 $ 7,262,405 IWP International PLC (United 568,270 1,121,356 Kingdom Reg.) 8,383,761 ITALY - 1.8% Bulgari Spa 866,330 6,150,490 Interbanca Spa (a) 202,030 2,737,119 Luxottica Group Spa sponsored 399,900 7,673,081 ADR Rolo Banca 1473 Spa 318,660 6,632,327 23,193,017 LUXEMBOURG - 0.5% Audiofina 124,090 6,257,141 NETHERLANDS - 4.5% Equant NV (a) 195,278 19,054,886 Fortis Amev NV 323,200 11,159,087 Heineken Holding NV 246,790 8,981,688 ING Groep NV 315,391 18,658,151 Vnu NV 44,700 1,516,002 59,369,814 NORWAY - 1.2% Den Norske Bank ASA Class A 1,694,940 6,585,025 Free shares Kvaerner ASA (a) 370,780 7,013,060 Kvaerner ASA (B shares) (a) 133,070 2,023,749 15,621,834 SPAIN - 3.7% Argentaria Caja Postal y 428,483 9,537,342 Banco Hipotecario de Espana SA Centros Comerciales 252,720 6,073,019 Continente SA Centros Comerciales Pryca SA 343,630 6,477,791 Grupo Acciona SA 302,137 14,597,574 Prosegur Comp Securidad SA 865,859 7,124,478 Tabacalera SA Series A 313,109 5,169,174 48,979,378 SWEDEN - 2.9% Ericsson (L.M.) Telefon AB 634,400 27,120,600 Class B Industri-Matematik 671,270 1,426,449 International Corp. (a) Mandamus AB 21,355 113,289 Securitas AB Class B 683,321 10,166,793 38,827,131 SWITZERLAND - 6.9% Kudelski SA (a) 3,667 15,286,199 Lindt & Spruengli AG 2,905 6,857,091 Novartis AG (Reg.) 27,118 40,652,929 Richemont Compagnie Financier 6,389 12,232,736 Class A Unit COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SWITZERLAND - CONTINUED Swatch Group AG (The) (Bearer) 4,855 $ 3,875,317 UBS AG 39,200 11,430,863 90,335,135 UNITED KINGDOM - 32.3% Allied Zurich PLC 1,659,916 20,062,309 AstraZeneca Group PLC (Reg.) 546,680 25,010,612 Axis Shield PLC (a) 438,283 3,124,289 Babcock International Group 2,932,777 4,533,299 PLC BP Amoco PLC 3,986,052 38,365,759 British Land Co. PLC 1,244,751 8,955,050 Capita Group PLC 1,213,095 16,058,248 Financial Objects PLC 628,030 3,459,654 General Electric Co. PLC 1,832,638 19,934,897 Glaxo Wellcome PLC 1,264,726 37,862,738 Go-Ahead Group (The) PLC 391,774 3,994,246 Informa Group PLC 606,710 4,050,556 Kingfisher PLC 867,677 9,481,140 Lloyds TSB Group PLC 1,906,791 26,385,461 Misys PLC 1,669,266 13,944,300 Nycomed Amersham PLC 1,364,310 8,312,061 Orange PLC (a) 613,160 15,295,612 Prudential Corp. PLC 1,539,993 24,171,419 Royal & Sun Alliance 872,686 5,941,086 Insurance Group PLC Royal Bank of Scotland Group 795,183 18,332,537 PLC Safeway PLC 2,370,550 7,445,433 Scottish & Southern Energy PLC 717,070 6,809,591 Sema Group PLC 527,918 6,901,461 Serco Group PLC 511,017 14,705,536 Stagecoach Holdings PLC 3,894,491 11,079,095 Tesco PLC 4,164,990 12,396,526 Thomson Travel Group PLC 3,000,940 4,663,335 Vodafone AirTouch PLC 9,464,665 45,371,284 WPP Group PLC 800,780 8,697,481 425,345,015 UNITED STATES OF AMERICA - 2.4% LHS Group, Inc. (a) 103,600 2,952,600 Pharmacia & Upjohn, Inc. unit 226,955 12,302,997 Synthes-Stratec, Inc. (a) 44,681 16,627,948 31,883,545 TOTAL COMMON STOCKS 1,262,364,086 (Cost $1,034,099,850) NONCONVERTIBLE PREFERRED STOCKS - 1.7% GERMANY - 1.7% Marschollek Lautenschlaeger 105,882 22,394,832 und Partner AG (Cost $20,457,715)
CORPORATE BONDS - 2.5% MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT (C) VALUE (NOTE 1) CONVERTIBLE BONDS - 1.9% ITALY - 0.5% Mediobanca International Ltd. - ITL 8,000,000 $ 6,509,467 3.5% 1/2/01 (d) NETHERLANDS - 1.4% Telefonica Europe BV 2% A2 11,535,000 19,061,588 7/15/02 TOTAL CONVERTIBLE BONDS 25,571,055 NONCONVERTIBLE BONDS - 0.6% FRANCE - 0.6% Eurotunnel Finance Ltd. euro: 0% 4/30/40 (f) - EUR 1,355 1,972,558 0% 4/30/40 (f) - EUR 3,885 5,655,635 7,628,193 TOTAL CORPORATE BONDS 33,199,248 (Cost $33,766,198)
CASH EQUIVALENTS - 3.2% SHARES Central Cash Collateral Fund, 26,174,468 26,174,468 5.26% (b) Taxable Central Cash Fund, 15,625,613 15,625,613 5.21% (b) TOTAL CASH EQUIVALENTS 41,800,081 (Cost $41,800,081) TOTAL INVESTMENT PORTFOLIO - 1,359,758,247 103.2% (Cost $1,130,123,844) NET OTHER ASSETS - (3.2)% (42,356,113) NET ASSETS - 100% $ 1,317,402,134 CURRENCY ABBREVIATIONS EUR - European Monetary Unit ITL - Italian lira LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. (c) Principal amount is stated in United States dollars unless otherwise noted. (d) Principal amount in thousands. (e) Affiliated company (f) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $1,531,668,182 and $1,927,056,256, respectively. The fund participated in the security lending program. At period end, the value of securities loaned amounted to $25,310,758. The fund received cash collateral of $26,174,468 which was invested in the Central Cash Collateral Fund. The fund participated in the interfund lending program as a borrower. The average daily loan balance during the period for which loans were outstanding amounted to $17,053,444. The weighted average interest rate was 5.09%. Interest expense includes $43,402 paid under the interfund lending program. The fund participated in the bank borrowing program. The average daily loan balance during the period for which loans were outstanding amounted to $7,535,869. The weighted average interest rate was 5.11%. Interest expense includes $65,272 paid under the bank borrowing program. Transactions during the period with companies which are or were affiliates are as follows: PURCHASES SALES DIVIDEND VALUE AFFILIATE COST COST INCOME TRANSGENE SA sponsored ADR $ 1,503,613 $ 79,800 $ - $ 3,326,213 INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $1,133,071,253. Net unrealized appreciation aggregated $226,686,994, of which $284,849,175 related to appreciated investment securities and $58,162,181 related to depreciated investment securities. The fund hereby designates approximately $133,877,000 as a capital gain dividend for the purpose of the dividend paid deduction. MARKET SECTOR DIVERSIFICATION (UNAUDITED) As a Percentage of Net Assets BASIC INDUSTRIES 4.2% CASH EQUIVALENTS 3.2 CONSTRUCTION & REAL ESTATE 4.0 DURABLES 0.3 ENERGY 4.6 FINANCE 21.2 HEALTH 12.1 HOLDING COMPANIES 0.9 INDUSTRIAL MACHINERY & 6.6 EQUIPMENT MEDIA & LEISURE 1.4 NONDURABLES 2.3 RETAIL & WHOLESALE 7.7 SERVICES 6.5 TECHNOLOGY 11.6 TRANSPORTATION 0.8 UTILITIES 15.8 EUROPE FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 1,359,758,247 value (cost $1,130,123,844) - - See accompanying schedule Cash 1,636,533 Receivable for investments 12,559,474 sold Receivable for fund shares 1,213,032 sold Dividends receivable 2,308,952 Interest receivable 54,559 Redemption fees receivable 925 Other receivables 104,208 TOTAL ASSETS 1,377,635,930 LIABILITIES Payable for investments $ 31,289,859 purchased Payable for fund shares 1,782,051 redeemed Accrued management fee 577,666 Other payables and accrued 409,752 expenses Collateral on securities 26,174,468 loaned, at value TOTAL LIABILITIES 60,233,796 NET ASSETS $ 1,317,402,134 Net Assets consist of: Paid in capital $ 981,316,365 Undistributed net investment 9,182,220 income Accumulated undistributed net 97,292,769 realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 229,610,780 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 38,641,105 $ 1,317,402,134 shares outstanding NET ASSET VALUE and $34.09 redemption price per share ($1,317,402,134 (divided by) 38,641,105 shares) Maximum offering price per $35.14 share (100/97.00 of $34.09) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 24,845,617 Dividends Interest 2,055,131 Security lending 29,071 26,929,819 Less foreign taxes withheld (2,629,293) TOTAL INCOME 24,300,526 EXPENSES Management fee Basic fee $ 10,777,278 Performance adjustment (2,043,853) Transfer agent fees 3,683,342 Accounting and security 700,824 lending fees Non-interested trustees' 4,298 compensation Custodian fees and expenses 708,560 Registration fees 35,853 Audit 55,558 Legal 6,208 Interest 108,674 Miscellaneous 301 Total expenses before 14,037,043 reductions Expense reductions (910,620) 13,126,423 NET INVESTMENT INCOME 11,174,103 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 104,209,184 (including realized loss of $29,262 on sales of investments in affiliated issuers) Foreign currency transactions (584,632) 103,624,552 Change in net unrealized appreciation (depreciation) on: Investment securities 59,466,142 Assets and liabilities in (181,566) 59,284,576 foreign currencies NET GAIN (LOSS) 162,909,128 NET INCREASE (DECREASE) IN $ 174,083,231 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION Sales $ 513,062 charges paid to FDC Sales charges - Retained by $ 512,932 FDC Deferred sales charges $ 52,904 withheld by FDC Expense Reductions $ 853,284 Directed brokerage arrangements Transfer agent credits 57,336 $ 910,620 STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 ASSETS Operations Net investment $ 11,174,103 $ 16,048,867 income Net realized gain (loss) 103,624,552 128,972,621 Change in net unrealized 59,284,576 (74,276,909) appreciation (depreciation) NET INCREASE (DECREASE) IN 174,083,231 70,744,579 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (13,415,761) (11,392,134) From net investment income From net realized gain (107,821,453) (68,664,194) TOTAL DISTRIBUTIONS (121,237,214) (80,056,328) Share transactions Net 350,466,714 1,112,727,257 proceeds from sales of shares Reinvestment of distributions 118,737,898 78,862,444 Cost of shares redeemed (791,339,602) (512,978,219) NET INCREASE (DECREASE) IN (322,134,990) 678,611,482 NET ASSETS RESULTING FROM SHARE TRANSACTIONS Redemption fees 333,409 949,915 TOTAL INCREASE (DECREASE) (268,955,564) 670,249,648 IN NET ASSETS NET ASSETS Beginning of period 1,586,357,698 916,108,050 End of period (including $ 1,317,402,134 $ 1,586,357,698 undistributed net investment income of $9,182,220 and $15,517,755, respectively) OTHER INFORMATION Shares Sold 10,550,858 31,701,697 Issued in reinvestment of 3,755,163 2,653,514 distributions Redeemed (23,998,640) (15,522,060) Net increase (decrease) (9,692,619) 18,833,151
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995 SELECTED PER-SHARE DATA Net asset value, beginning of $ 32.82 $ 31.05 $ 27.12 $ 23.51 $ 21.18 period Income from Investment Operations Net investment income .25 C .39 C .44 C .30 C .27 Net realized and unrealized 3.54 4.10 5.44 4.23 2.37 gain (loss) Total from investment 3.79 4.49 5.88 4.53 2.64 operations Less Distributions From net investment income (.28) (.39) (.24) (.12) (.20) From net realized gain (2.25) (2.35) (1.73) (.81) (.11) Total distributions (2.53) (2.74) (1.97) (.93) (.31) Redemption fees added to paid .01 .02 .02 .01 - in capital Net asset value, end of period $ 34.09 $ 32.82 $ 31.05 $ 27.12 $ 23.51 TOTAL RETURN A, B 12.18% 15.45% 23.35% 20.14% 12.76% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 1,317,402 $ 1,586,358 $ 916,108 $ 691,762 $ 492,867 (000 omitted) Ratio of expenses to average .96% 1.10% 1.19% 1.27% 1.18% D net assets Ratio of expenses to average .89% E 1.09% E 1.18% E 1.27% 1.18% net assets after expense reductions Ratio of net investment .76% 1.15% 1.53% 1.20% 1.12% income to average net assets Portfolio turnover rate 106% 114% 57% 45% 38% A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
EUROPE CAPITAL APPRECIATION PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). Fidelity Europe Capital Appreciation has a 3% sales charge, which was waived beginning July 1, 1998 through December 31, 1998. CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY EUROPE CAPITAL APP 14.50% 116.38% 145.59% FIDELITY EUROPE CAPITAL APP 11.06% 109.89% 138.22% (INCL. 3.00% SALES CHARGE) MSCI Europe 12.79% 133.76% 149.38% European Region Funds Average 10.72% 109.13% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years or since the fund started on December 21, 1993. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Morgan Stanley Capital International (MSCI) Europe Index - a market capitalization-weighted index that is designed to represent the performance of developed stock markets in Europe. As of October 31, 1999, the index included over 560 equity securities of companies domiciled in 15 European countries. To measure how the fund's performance stacked up against its peers, you can compare it to the European region funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 138 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY EUROPE CAPITAL APP 14.50% 16.69% 16.56% FIDELITY EUROPE CAPITAL APP 11.06% 15.98% 15.96% (INCL. 3.00% SALES CHARGE) MSCI Europe 12.79% 18.51% 16.87% European Region Funds Average 10.72% 15.72% n/a AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND Europe Cap. Appreciation MS Europe (Net MA tax) 00341 MS002 1993/12/21 9700.00 10000.00 1993/12/31 9729.10 10087.27 1994/01/31 11145.30 10600.97 1994/02/28 10670.00 10225.54 1994/03/31 10786.40 9936.13 1994/04/30 11242.30 10347.57 1994/05/31 10825.20 9907.72 1994/06/30 10602.10 9803.69 1994/07/31 11145.30 10317.50 1994/08/31 11339.30 10644.74 1994/09/30 10941.60 10222.65 1994/10/31 11009.50 10667.98 1994/11/30 10534.20 10259.35 1994/12/31 10398.40 10317.67 1995/01/31 10272.30 10236.89 1995/02/28 10563.30 10468.83 1995/03/31 10786.40 10954.64 1995/04/30 11300.50 11304.96 1995/05/31 11475.10 11536.43 1995/06/30 11640.00 11645.19 1995/07/31 12241.40 12252.18 1995/08/31 11737.00 11778.54 1995/09/30 12086.20 12134.35 1995/10/31 11717.60 12077.04 1995/11/30 11649.70 12162.91 1995/12/31 11926.02 12548.36 1996/01/31 12005.13 12630.39 1996/02/29 12311.69 12860.48 1996/03/31 12509.47 13014.26 1996/04/30 12865.47 13108.42 1996/05/31 13152.25 13209.72 1996/06/30 13221.47 13355.17 1996/07/31 12954.47 13187.88 1996/08/31 13439.03 13579.22 1996/09/30 13735.69 13864.95 1996/10/31 13913.69 14186.83 1996/11/30 14793.81 14905.74 1996/12/31 15013.99 15194.47 1997/01/31 15389.62 15239.60 1997/02/28 15566.38 15445.33 1997/03/31 15842.58 15948.85 1997/04/30 15919.91 15873.58 1997/05/31 16638.02 16555.66 1997/06/30 17654.42 17388.08 1997/07/31 18460.91 18206.02 1997/08/31 17367.18 17169.01 1997/09/30 19201.12 18837.32 1997/10/31 18306.24 17917.87 1997/11/30 18328.34 18197.57 1997/12/31 18761.13 18866.87 1998/01/31 19553.49 19656.64 1998/02/28 21125.44 21197.92 1998/03/31 23016.89 22712.30 1998/04/30 23643.11 23157.91 1998/05/31 24243.78 23631.96 1998/06/30 24103.19 23895.92 1998/07/31 24448.26 24373.13 1998/08/31 19834.65 21312.60 1998/09/30 19310.67 20465.85 1998/10/31 20805.94 22109.46 1998/11/30 21968.92 23290.99 1998/12/31 22825.19 24314.63 1999/01/31 23106.35 24163.15 1999/02/28 22224.53 23554.96 1999/03/31 22301.21 23817.36 1999/04/30 23016.89 24531.41 1999/05/31 22045.60 23357.58 1999/06/30 22633.49 23756.30 1999/07/31 23042.45 23981.51 1999/08/31 23195.81 24229.96 1999/09/30 22952.99 24047.99 1999/10/29 23822.03 24937.77 IMATRL PRASUN SHR__CHT 19991031 19991111 111326 R00000000000074 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity Europe Capital Appreciation Fund on December 21, 1993, when the fund started, and the current 3.00% sales charge was paid. As the chart shows, by October 31, 1999, the value of the investment would have grown to $23,822 - a 138.22% increase on the initial investment. For comparison, look at how the Morgan Stanley Capital International Europe Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $24,938 - a 149.38% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) EUROPE CAPITAL APPRECIATION FUND TALK: THE MANAGER'S OVERVIEW An interview with Kevin McCarey, Portfolio Manager of Fidelity Europe Capital Appreciation Fund Q. HOW DID THE FUND PERFORM, KEVIN? A. For the 12 months that ended October 31, 1999, the fund returned 14.50%. This topped the Morgan Stanley Capital International Europe Index, which returned 12.79% during the same period. The European region funds average, as tracked by Lipper Inc., returned 10.72%. Q. WHAT FACTORS INFLUENCED THE PERFORMANCE OF EUROPEAN MARKETS DURING THE PERIOD? A. Economic developments in both Europe and Russia served as catalysts for positive market performance. When the period began, most European economies were struggling. Several interest-rate cuts followed shortly thereafter, though, and we began to see an economic revival - particularly in the United Kingdom - in April and May. This improved climate led to a higher level of corporate restructuring, as well as a rash of merger and acquisition activity. Russia, meanwhile, recovered from its currency problems of last year. Since many European companies rely on Russia as a market for their goods and services, this righting of the ship proved beneficial. On another front, market performance - as measured in U.S. dollar returns - was suppressed somewhat during the initial stages of the period due to the slow start of the euro, the new single currency of 11 European nations. Q. WITH THESE ECONOMIC SHIFTS IN MIND, DID YOU FOLLOW ANY SPECIFIC INVESTMENT STRATEGIES? A. My decision to add to several of the fund's positions in smaller-sized U.K. stocks worked out well. Small-cap stocks typically perform well at the beginning of an economic rebound, and the fund's stakes in building materials retailer Wickes, and de la Rue - a company that makes cash-handling equipment for banks - performed well. Several holdings in France also contributed positively, as favorable economic conditions resulted in more consolidation activity during the period, especially among larger firms. One example was the merger between France's two largest oil companies, Total and Elf Aquitaine. Q. SEVEN OF THE FUND'S TOP-20 INVESTMENTS AT THE END OF THE PERIOD WERE TELECOMMUNICATIONS-RELATED. WHAT WAS THE ATTRACTION? A. These companies continued to reap the benefits from both fixed-line and wireless demand. On the fixed side, more phone lines were installed for Internet usage. Unlike their U.S. counterparts, European phone companies charge per-minute fees for local calls. While consumer pressure may change this fee structure in the future, increased Internet usage has helped to propel revenues. Wireless demand, on the other hand, was extremely strong. Consolidation activity was popular within this group as well, as companies such as Vodafone AirTouch, Deutsche Telekom and Mannesmann looked to join forces with other business partners. The fund's positions in Nokia, British Telecommunications and Ericsson also fared nicely. Q. FINANCE STOCKS ACCOUNTED FOR MORE THAN A QUARTER OF THE FUND'S NET ASSETS AT THE END OF THE PERIOD. HOW DID THIS GROUP PERFORM? A. Finance stocks performed fairly well early, but declined through most of the period as long-term interest rates rose. These higher rates in the U.S. and Europe put pressure on stocks, and the fund's positions in Italian bank San Paolo-IMI and insurance stocks Allied Zurich suffered accordingly. While the fund's finance exposure was considerable, its weighting was still lower than that of the Morgan Stanley index through much of the period. Q. WERE THERE ANY OTHER POSITIONS THAT DIDN'T PERFORM AS WELL AS YOU WOULD HAVE LIKED? A. The fund's investment in Telecom Italia was a source of frustration. Telecom Italia was bought at a premium during the period by Olivetti, a fellow Italian telecom firm. Olivetti paid a premium for Telecom Italia, but the fund owned "savings class" shares and the takeover bid recognized only ordinary shares. In Italy, there is less protection for minority shareholders of stock. In the U.S., a bid would most likely have included both classes of shares. The fund also was hurt by not owning enough economically sensitive stocks, particularly those in the non-consumer commodity areas such as metals. Q. WHAT'S YOUR OUTLOOK? A. I'm reasonably optimistic. For the most part, European companies have been paying attention to shareholder interests. While valuations aren't as low as they have been in recent years, I think better economies, calmer currency situations and increased merger activity can be positive drivers of European market performance over the next year or so. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3. FUND FACTS GOAL: long-term growth of capital by investing mainly in equity securities of European issuers FUND NUMBER: 341 TRADING SYMBOL: FECAX START DATE: December 21, 1993 SIZE: as of October 31, 1999, more than $474 million MANAGER: Kevin McCarey, since inception; manager, Fidelity Select Financial Services Portfolio and Fidelity Select Automotive Portfolio, 1989-1990; Fidelity Select Regional Banks Portfolio, 1986-1990; joined Fidelity in 1986 (checkmark) EUROPE CAPITAL APPRECIATION INVESTMENT CHANGES AS OF OCTOBER 31, 1999 United States 2.5% Finland 4.3% Row: 1, Col: 1, Value: 4.3 Row: 1, Col: 2, Value: 18.6 Row: 1, Col: 3, Value: 11.5 Row: 1, Col: 4, Value: 8.800000000000001 Row: 1, Col: 5, Value: 3.9 Row: 1, Col: 6, Value: 3.2 Row: 1, Col: 7, Value: 3.2 Row: 1, Col: 8, Value: 11.5 Row: 1, Col: 9, Value: 32.5 Row: 1, Col: 10, Value: 2.5 France 18.6% United Kingdom 32.5% Germany 11.5% Switzerland 11.5% Netherlands 8.8% Sweden 3.2% Other 3.9% Spain 3.2% GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30, 1999 United States 3.2% Finland 3.7% Row: 1, Col: 1, Value: 3.7 Row: 1, Col: 2, Value: 18.4 Row: 1, Col: 3, Value: 12.6 Row: 1, Col: 4, Value: 5.3 Row: 1, Col: 5, Value: 7.6 Row: 1, Col: 6, Value: 2.6 Row: 1, Col: 7, Value: 2.8 Row: 1, Col: 8, Value: 2.2 Row: 1, Col: 9, Value: 7.2 Row: 1, Col: 10, Value: 32.4 Row: 1, Col: 11, Value: 3.2 United Kingdom 32.4% France 18.4% Germany 12.6% Switzerland 7.2% Italy 5.3% Sweden 2.2% Netherlands 7.6% Spain 4.8% Other 2.6% PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF APPLICABLE.
ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks and investment companies 97.5 97.7 Short-Term Investments and 2.5 2.3 Net Other Assets
PRIOR TO THIS REPORT CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Total Fina SA Class B 3.7 2.8 (France, Oil & Gas) Nokia AB sponsored ADR 3.7 2.8 (Finland, Communications Equipment) Vodafone AirTouch PLC 2.6 0.8 (United Kingdom, Cellular) ING Groep NV (Netherlands, 2.2 1.3 Insurance) Nestle SA (Reg.) 2.2 0.7 (Switzerland, Foods) BP Amoco PLC (United 2.2 2.4 Kingdom, Oil & Gas) British Telecommunications 2.0 2.4 PLC (United Kingdom, Telephone Services) Shell Transport & Trading Co. 2.0 1.8 PLC (Reg.) (United Kingdom, Oil & Gas) Deutsche Telekom AG 1.9 1.8 (Germany, Telephone Services) Roche Holding AG 1.7 2.1 participation certificates (Switzerland, Drugs & Pharmaceuticals) 24.2 18.9 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO FINANCE 28.6 25.1 UTILITIES 14.9 20.1 ENERGY 8.8 7.1 HEALTH 7.4 8.0 TECHNOLOGY 7.3 6.1 NONDURABLES 5.4 4.8 SERVICES 5.3 3.8 RETAIL & WHOLESALE 4.3 9.5 DURABLES 4.1 5.1 INDUSTRIAL MACHINERY & 4.0 2.2 EQUIPMENT
EUROPE CAPITAL APPRECIATION INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 97.1% SHARES VALUE (NOTE 1) AUSTRIA - 0.4% Bank Austria AG 40,000 $ 1,994,605 BELGIUM - 0.3% Electrabel SA 4,400 1,455,593 DENMARK - 0.0% Damgaard A/S (a) 1,200 63,843 FINLAND - 4.3% Nokia AB sponsored ADR 150,500 17,392,156 Sonera Group PLC 50,000 1,505,870 UPM-Kymmene Corp. 50,000 1,582,350 20,480,376 FRANCE - 18.6% AXA SA de CV 40,800 5,771,653 Banque Nationale de Paris 14,000 1,233,178 Bouygues 6,000 2,095,031 Cap Gemini SA 10,000 1,519,056 Carrefour SA (SUPERMARCHE) 10,400 1,930,889 Castorama Dubois 13,500 4,055,880 Investissements SA Compagnie de St. Gobain 10,000 1,740,585 Dassault Systemes SA 17,100 711,269 France Telecom SA 79,900 7,741,716 Groupe Danone 5,000 1,279,066 Havas Advertising SA 15,000 4,216,963 Hermes International SA 23,100 2,534,292 Lafarge SA 13,500 1,303,065 Rhodia SA 115,500 2,235,781 Sanofi-Synthelabo SA (a) 60,000 2,655,183 Schneider SA (a) 13,200 912,067 Societe Generale, France 30,000 6,550,929 Class A Suez Lyonnaise des Eaux 40,000 6,477,086 Television Francaise 1 SA 20,500 6,444,384 Total Fina SA Class B 131,538 17,543,882 Transiciel SA 23,400 1,355,188 Vivendi SA (a) 103,000 7,828,571 88,135,714 GERMANY - 11.2% Allianz AG (Reg.) 18,000 5,470,500 Celanese AG (a) 3,870 61,237 DaimlerChrysler AG (Reg.) 45,000 3,498,750 Deutsche Bank AG 53,000 3,800,741 Deutsche Telekom AG 197,200 9,121,952 Dresdner Bank AG 68,000 3,511,340 Fresenius Medical Care AG 95,000 2,214,688 sponsored ADR Hoechst AG 38,700 1,714,226 Kali Und Salz Beteiligungs AG 55,200 790,770 Mannesmann AG (Reg.) 42,000 6,641,439 Munich Reinsurance AG (Reg.) 13,000 2,971,759 Primacom AG 57,000 2,826,077 Siemens AG 20,000 1,804,934 SHARES VALUE (NOTE 1) Veba AG 74,600 $ 4,052,033 Wella AG 190,000 4,649,999 53,130,445 IRELAND - 0.2% CRH PLC 45,000 852,095 ITALY - 2.5% Assicurazioni Generali Spa 50,000 1,616,634 Eni Spa sponsored ADR 430,000 2,536,117 Mondadori (Arnoldo) Editore 88,100 1,657,154 Spa San Paolo-IMI Spa 110,000 1,453,040 TECNOST Spa (a) 1,500,000 2,914,689 Unicredito Italiano Spa 314,800 1,476,439 11,654,073 LUXEMBOURG - 0.0% Audiofina 3,066 154,601 NETHERLANDS - 8.8% ABN AMRO Holding NV 120,000 2,910,258 Aegon NV 45,000 4,165,536 Equant NV (a) 25,100 2,449,214 Fortis Amev NV 130,000 4,488,494 Getronics NV 17,500 875,040 Gucci Group NV (NY Shares) 15,000 1,211,250 ING Groep NV 180,000 10,648,583 Koninklijke Ahold NV 139,077 4,284,000 Koninklijke KPN NV 45,000 2,316,086 Libertel NV (a) 55,000 1,044,351 Numico NV 38,349 1,567,606 STMicroelectronics NV 100 9,088 Vendex KBB NV 160,000 4,683,756 Vnu NV 38,500 1,305,729 41,958,991 NORWAY - 0.4% Norsk Hydro AS 50,000 2,000,064 SPAIN - 3.2% Argentaria Caja Postal y 168,500 3,750,539 Banco Hipotecario de Espana SA Banco Santander Central 520,000 5,414,169 Hispano SA Telefonica SA (a) 360,000 5,939,509 15,104,217 SWEDEN - 3.2% A-Com AB (a) 13,400 155,249 Electrolux AB 180,000 3,600,110 Ericsson (L.M.) Telefon AB 175,000 7,481,250 Class B Swedish Match Co. 750,000 2,753,133 Volvo AB Class B 46,000 1,192,110 15,181,852 SWITZERLAND - 11.5% ABB Ltd. (Reg) (a) 45,000 4,541,719 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SWITZERLAND - CONTINUED Ares Serono SA Class B 1,725 $ 2,688,047 (Bearer) Credit Suisse Group (Reg.) 38,000 7,320,665 Holderbank Financiere Glarus 1,700 2,098,034 AG (Bearer) Julius Baer Holding AG 500 1,507,331 Kuoni Reisen Holding AG Class 345 1,474,456 B (Reg.) Nestle SA (Reg.) 5,500 10,631,863 Novartis AG (Reg.) 2,100 3,148,136 PubliGroupe SA 2,600 1,911,237 Roche Holding AG 680 8,181,998 participation certificates Swatch Group AG (The) (Bearer) 4,800 3,831,416 UBS AG 25,000 7,290,091 54,624,993 UNITED KINGDOM - 32.5% Abbey National PLC 188,700 3,692,550 Alliance & Leicester PLC 181,000 2,643,011 Allied Zurich PLC 400,000 4,834,536 Amvescap PLC 425,000 3,801,853 Arcadia Group PLC 850,000 2,142,037 AstraZeneca Group PLC (Sweden) 69,700 3,157,846 Bank of Scotland 300,000 3,744,299 BG PLC 300,000 1,666,188 BP Amoco PLC 1,090,000 10,491,252 British Telecommunications PLC 540,000 9,719,998 CGU PLC 250,000 3,644,402 Computacenter PLC 199,800 2,086,300 de la Rue PLC 520,000 2,631,533 Diageo PLC 200,000 2,022,612 General Electric Co. PLC 436,700 4,750,294 GKN PLC 65,000 1,041,070 Glaxo Wellcome PLC 160,000 4,790,000 HSBC Holdings PLC (Reg.) 380,000 4,678,748 Kingfisher PLC 170,000 1,857,596 Lloyds TSB Group PLC 550,000 7,610,694 MERANT PLC (a) 540,000 2,175,541 Misys PLC 270,000 2,255,459 Pearson PLC 129,900 2,920,015 Prudential Corp. PLC 258,200 4,052,655 Rentokil Initial PLC 1,400,000 4,667,629 Reuters Group PLC 500,000 4,649,541 Royal Bank of Scotland Group 310,000 7,146,891 PLC Safeway PLC 100 314 Shell Transport & Trading Co. 1,265,000 9,671,981 PLC (Reg.) Smith (David S.) Holdings PLC 416,100 1,306,889 SmithKline Beecham PLC 600,000 7,679,996 Standard Chartered PLC 475,000 6,666,603 Unilever PLC 630,000 5,857,033 SHARES VALUE (NOTE 1) Vodafone AirTouch PLC 2,600,000 $ 12,463,763 Wickes PLC 300,000 1,568,758 154,089,887 TOTAL COMMON STOCKS 460,881,349 (Cost $383,534,002) NONCONVERTIBLE PREFERRED STOCKS - 0.3% GERMANY - 0.3% Dyckerhoff AG (Cost 45,684 1,363,835 $1,458,505) INVESTMENT COMPANIES - 0.1% MULTI-NATIONAL - 0.1% European Warrant Fund, Inc. 20,000 308,750 (Cost $326,000) CASH EQUIVALENTS - 4.2% Central Cash Collateral Fund, 3,585,000 3,585,000 5.26% (b) Taxable Central Cash Fund, 16,561,038 16,561,038 5.21% (b) TOTAL CASH EQUIVALENTS 20,146,038 (Cost $20,146,038) TOTAL INVESTMENT PORTFOLIO - 482,699,972 101.7% (Cost $405,464,545) NET OTHER ASSETS - (1.7)% (7,945,429) NET ASSETS - 100% $ 474,754,543 LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $830,459,776 and $1,071,624,077, respectively. The fund participated in the security lending program. At period end, the value of securities loaned amounted to $3,410,867. The fund received cash collateral of $3,585,000 which was invested in the Central Cash Collateral Fund. The fund participated in the bank borrowing program. The average daily loan balance during the period for which loans were outstanding amounted to $9,152,370. The weighted average interest rate was 5.69%. INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $407,248,206. Net unrealized appreciation aggregated $75,451,766, of which $83,700,738 related to appreciated investment securities and $8,248,972 related to depreciated investment securities. The fund hereby designates approximately $1,528,000 as a capital gain dividend for the purpose of the dividend paid deduction. MARKET SECTOR DIVERSIFICATION (UNAUDITED) As a Percentage of Net Assets BASIC INDUSTRIES 1.7% CASH EQUIVALENTS 4.2 CONSTRUCTION & REAL ESTATE 2.0 DURABLES 4.1 ENERGY 8.8 FINANCE 28.6 HEALTH 7.4 INDUSTRIAL MACHINERY & 4.0 EQUIPMENT INVESTMENT COMPANIES 0.1 MEDIA & LEISURE 3.6 NONDURABLES 5.4 RETAIL & WHOLESALE 4.3 SERVICES 5.3 TECHNOLOGY 7.3 UTILITIES 14.9 EUROPE CAPITAL APPRECIATION FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 482,699,972 value (cost $405,464,545) - See accompanying schedule Receivable for investments 29,935,525 sold Receivable for fund shares 376,763 sold Dividends receivable 1,353,737 Interest receivable 37,636 Redemption fees receivable 52 Other receivables 23,573 TOTAL ASSETS 514,427,258 LIABILITIES Payable for investments $ 34,866,889 purchased Payable for fund shares 773,246 redeemed Accrued management fee 242,595 Other payables and accrued 204,985 expenses Collateral on securities 3,585,000 loaned, at value TOTAL LIABILITIES 39,672,715 NET ASSETS $ 474,754,543 Net Assets consist of: Paid in capital $ 378,696,752 Undistributed net investment 4,567,063 income Accumulated undistributed net 14,267,585 realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 77,223,143 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 25,476,199 $ 474,754,543 shares outstanding NET ASSET VALUE and $18.64 redemption price per share ($474,754,543 (divided by) 25,476,199 shares) Maximum offering price per $19.22 share (100/97.00 of $18.64) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 11,183,391 Dividends Interest 550,771 Security lending 6,881 11,741,043 Less foreign taxes withheld (1,331,449) TOTAL INCOME 10,409,594 EXPENSES Management fee Basic fee $ 4,186,170 Performance adjustment (428,477) Transfer agent fees 1,478,053 Accounting and security 322,595 lending fees Non-interested trustees' 1,775 compensation Custodian fees and expenses 391,266 Registration fees 30,041 Audit 43,109 Legal 1,104 Interest 66,521 Miscellaneous 635 Total expenses before 6,092,792 reductions Expense reductions (557,665) 5,535,127 NET INVESTMENT INCOME 4,874,467 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 38,307,029 Foreign currency transactions (157,088) 38,149,941 Change in net unrealized appreciation (depreciation) on: Investment securities 35,677,787 Assets and liabilities in (81,703) 35,596,084 foreign currencies NET GAIN (LOSS) 73,746,025 NET INCREASE (DECREASE) IN $ 78,620,492 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION Sales $ 299,716 charges paid to FDC Sales charges - Retained by $ 299,687 FDC Expense Reductions $ 551,470 Directed brokerage arrangements Transfer agent credits 6,195 $ 557,665 STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 ASSETS Operations Net investment $ 4,874,467 $ 5,311,907 income Net realized gain (loss) 38,149,941 (23,544,162) Change in net unrealized 35,596,084 11,533,145 appreciation (depreciation) NET INCREASE (DECREASE) IN 78,620,492 (6,699,110) NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders - (3,656,037) From net investment income From net realized gain - (45,993,007) TOTAL DISTRIBUTIONS - (49,649,044) Share transactions Net 134,939,446 619,171,673 proceeds from sales of shares Reinvestment of distributions - 48,775,275 Cost of shares redeemed (389,794,618) (333,641,119) NET INCREASE (DECREASE) IN (254,855,172) 334,305,829 NET ASSETS RESULTING FROM SHARE TRANSACTIONS Redemption fees 182,122 800,051 TOTAL INCREASE (DECREASE) (176,052,558) 278,757,726 IN NET ASSETS NET ASSETS Beginning of period 650,807,101 372,049,375 End of period (including $ 474,754,543 $ 650,807,101 undistributed net investment income of $4,567,063 and $5,124,361, respectively) OTHER INFORMATION Shares Sold 7,566,679 34,085,254 Issued in reinvestment of - 3,398,974 distributions Redeemed (22,059,597) (19,973,021) Net increase (decrease) (14,492,918) 17,511,207
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995 SELECTED PER-SHARE DATA Net asset value, beginning of $ 16.28 $ 16.57 $ 14.07 $ 12.08 $ 11.35 period Income from Investment Operations Net investment income .15 C .15 C .20 C .22 D .23 Net realized and unrealized 2.20 1.79 E 3.81 2.00 .50 gain (loss) Total from investment 2.35 1.94 4.01 2.22 .73 operations Less Distributions From net investment income - (.17) F (.23) (.23) - From net realized gain - (2.08) F (1.29) - - Total distributions - (2.25) (1.52) (.23) - Redemption fees added to paid .01 .02 .01 - - in capital Net asset value, end of period $ 18.64 $ 16.28 $ 16.57 $ 14.07 $ 12.08 TOTAL RETURN A, B 14.50% 13.65% 31.57% 18.74% 6.43% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 474,755 $ 650,807 $ 372,049 $ 170,192 $ 194,433 (000 omitted) Ratio of expenses to average 1.07% 1.12% 1.10% 1.33% 1.36% net assets Ratio of expenses to average .97% G 1.08% G 1.07% G 1.30% G 1.36% net assets after expense reductions Ratio of net investment .86% .89% 1.33% 1.66% 1.45% income to average net assets Portfolio turnover rate 150% 179% 189% 155% 176% A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.04 PER SHARE. E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND. F THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES. G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
HONG KONG AND CHINA PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR LIFE OF FUND FIDELITY HONG KONG AND CHINA 42.44% 49.24% FIDELITY HONG KONG AND CHINA 38.17% 44.76% (INCL. 3.00% SALES CHARGE) Hang Seng 30.15% 47.41% China Region Funds Average 23.25% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year or since the fund started on November 1, 1995. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Hang Seng Index - a market capitalization-weighted index of the stocks of the 33 largest companies in the Hong Kong market. You can also compare the fund's performance to the China region funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 28 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR LIFE OF FUND FIDELITY HONG KONG AND CHINA 42.44% 10.53% FIDELITY HONG KONG AND CHINA 38.17% 9.69% (INCL. 3.00% SALES CHARGE) Hang Seng 30.15% 10.19% China Region Funds Average 23.25% n/a AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND Hong Kong and China Hang Seng 00352 EX004 1995/11/01 9700.00 10000.00 1995/11/30 9729.10 10055.31 1995/12/31 9942.65 10355.18 1996/01/31 11136.94 11707.43 1996/02/29 11001.00 11493.79 1996/03/31 10787.39 11344.61 1996/04/30 10816.52 11377.80 1996/05/31 11156.36 11717.22 1996/06/30 11010.71 11485.79 1996/07/31 10738.84 11172.35 1996/08/31 11272.87 11703.04 1996/09/30 12010.80 12513.71 1996/10/31 12593.38 13153.37 1996/11/30 13962.44 14151.17 1996/12/31 14017.97 14238.54 1997/01/31 13741.76 14107.81 1997/02/28 13899.59 14226.29 1997/03/31 13021.62 13329.79 1997/04/30 13297.84 13761.33 1997/05/31 15320.13 15770.49 1997/06/30 15438.51 16275.44 1997/07/31 16888.65 17575.67 1997/08/31 15300.40 15196.09 1997/09/30 15921.89 16236.25 1997/10/31 10910.54 11505.49 1997/11/30 10999.32 11431.72 1997/12/31 10926.40 11656.10 1998/01/31 9716.76 10104.22 1998/02/28 11630.37 12566.68 1998/03/31 11858.41 12638.18 1998/04/30 10966.06 11431.68 1998/05/31 9617.61 9866.13 1998/06/30 9131.77 9474.51 1998/07/31 8655.85 8841.87 1998/08/31 7604.85 8110.53 1998/09/30 8507.12 8789.59 1998/10/31 10162.94 11326.10 1998/11/30 10470.30 11606.20 1998/12/31 10342.98 11205.69 1999/01/31 9729.16 10599.24 1999/02/28 9841.69 10992.69 1999/03/31 10864.74 12198.25 1999/04/30 13135.90 14862.47 1999/05/31 12409.54 13434.96 1999/06/30 14118.02 15067.86 1999/07/31 14015.72 14677.98 1999/08/31 14210.09 15000.69 1999/09/30 13841.80 14161.97 1999/10/29 14476.09 14740.74 IMATRL PRASUN SHR__CHT 19991031 19991109 144717 R00000000000051 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity Hong Kong and China Fund on November 1, 1995, when the fund started, and the current 3.00% sales charge was paid. As the charts shows, by October 31, 1999, the value of the investment would have grown to $14,476 - a 44.76% increase on the initial investment. For comparison, look at how the Hang Seng Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $14,741 - a 47.41% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) HONG KONG AND CHINA FUND TALK: THE MANAGER'S OVERVIEW An interview with Joseph Tse, Portfolio Manager of Fidelity Hong Kong and China Fund Q. HOW DID THE FUND PERFORM, JOSEPH? A. For the 12 months ending October 31, 1999, the fund returned 42.44%, compared to 30.15% for the Hang Seng Index and 23.25% for the China region funds average tracked by Lipper Inc. Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG SHOWING OVER THE PAST 12 MONTHS? A. Simply put, we had some good stock picks and overweighted these positions relative to the index. We added further to the fund's return by investing in some strong, smaller companies not included in the Hang Seng Index. Also, I substantially underweighted Hang Seng Bank and Cable & Wireless HKT Ltd. - which made up about 6% and 7% of the index, respectively - which was a good choice, as these stocks lagged during the period. A similar stance with regard to poorly performing electric utilities, Hong Kong Electric and CLP Holdings Ltd. helped as well. Further, the fund's very limited exposure to China-based companies boosted relative performance, as these firms failed to meet our quality criteria and performed poorly. Some timely trading into and out of conglomerate Wharf Holdings - a strong performer during the period - also added to returns. Some smaller stocks that lifted performance included telecommunications concerns City Telecom and Asia Satellite. Q. WHICH OF YOUR STRATEGIES WORKED OUT WELL FOR THE FUND? A. To begin with, I maintained a bottom-up approach and an industry focus in contrast to many of my competitors, whose scope was restricted to more of a top-down country focus. I felt it increasingly important to apply globalization to investing - that is, search for companies that add value on a global scale - for the world is, theoretically speaking, getting smaller by the minute. Looking at industry allocation during the period, I broadened the fund's exposure to retail stocks with well-recognized brands - namely, Giordano, Esprit and Glorious Sun - accumulating shares at attractive levels to benefit from the recovery in retail consumption. Elsewhere, I positioned the fund to capitalize on the recovering industrial sector, adding to names like ASM Pacific Technology - a leading provider of semiconductor assembly equipment - a stock that doubled in price over the course of the period. In terms of limiting the fund's downside, I pulled back on property stocks, a group that fell sharply out of favor during this time frame. Hong Kong investors moved from heavy speculation in real estate to more of an emphasis on companies from the world of telecommunications. Q. WHICH STOCKS HELPED PERFORMANCE? A. A property firm that benefited from its diversified investments, Cheung Kong Holdings, took advantage of its exposure to telecommunications through its stake in Hutchison Whampoa, itself a strong contributor to the fund during the period. Johnson Electric - one of the fund's sizable holdings not included in the benchmark, and one of the world's largest micro-motor manufacturers - rose sharply, riding stronger sales and earnings growth. China Telecom benefited from worldwide enthusiasm surrounding cellular stocks in general. Q. WHICH STOCKS HURT? A. CLP Holdings Ltd. suffered in response to deregulation in Hong Kong. Real-estate firms Henderson Land Development and New World Development were simply in the wrong sector over the past 12 months as property prices, along with sales, plummeted. Hong Kong Electric further detracted from performance, as utilities in general underperformed the market during the period. Q. WHAT'S YOUR OUTLOOK? A. I feel there's still some upside left, as many of Hong Kong's largest stocks remain reasonably priced. I expect the theme of globalization to continue, and the market to be further driven by developments specifically related to the individual sectors. I'll continue to take positions in the strongest market names, all the while searching for the best investment opportunities outside of the index. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3. NOTE TO SHAREHOLDERS: On December 15, 1999, shareholders of Fidelity Hong Kong & China Fund voted to amend the fund's investment policies to permit the fund to invest up to 35% of its total assets in any industry that represents more than 20% of the Hong Kong and Chinese market. As of October 31, 1999, banks accounted for approximately 35% of the Hong Kong and Chinese market as represented by the Hang Seng Index. FUND FACTS GOAL: long-term growth of capital by investing mainly in equity securities of Hong Kong and Chinese issuers FUND NUMBER: 352 TRADING SYMBOL: FHKCX START DATE: November 1, 1995 SIZE: as of October 31, 1999, more than $161 million MANAGER: Joseph Tse, since inception; director of research, Fidelity Investments Management (Hong Kong), since 1994; manager, Asian portion of various global equity funds, since 1993; joined Fidelity in 1990 (checkmark) HONG KONG AND CHINA INVESTMENT CHANGES AS OF OCTOBER 31, 1999 United States 1.3% China 0.7% Row: 1, Col: 1, Value: 0.7000000000000001 Row: 1, Col: 2, Value: 81.40000000000001 Row: 1, Col: 3, Value: 0.4 Row: 1, Col: 4, Value: 3.9 Row: 1, Col: 5, Value: 12.3 Row: 1, Col: 6, Value: 1.3 United Kingdom 12.3% Taiwan 3.9% Singapore 0.4% Hong Kong 81.4% GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30, 1999 United States 5.2% United Kingdom 13.2% Row: 1, Col: 1, Value: 5.2 Row: 1, Col: 2, Value: 75.8 Row: 1, Col: 3, Value: 1.5 Row: 1, Col: 4, Value: 2.6 Row: 1, Col: 5, Value: 1.7 Row: 1, Col: 6, Value: 13.2 Taiwan 1.7% Singapore 2.6% Other 1.5% Hong Kong 75.8% PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF APPLICABLE. ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks 98.9 94.8 Short-Term Investments and 1.1 5.2 Net Other Assets PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO HSBC Holdings PLC (Hong Kong) 10.7 10.9 (Reg.) (Banks) Hutchison Whampoa Ltd. 9.7 9.3 (Electrical Equipment) China Telecom (Hong Kong) 8.5 4.4 Ltd. (Cellular) Sun Hung Kai Properties Ltd. 6.8 7.5 (Real Estate) Cheung Kong Holdings Ltd. 6.1 6.7 (Real Estate) Johnson Electric Holdings 4.1 3.2 Ltd. (Electrical Equipment) Television Broadcasts Ltd. 3.7 1.1 (Broadcasting) Henderson Land Development 3.4 4.4 Co. Ltd. (Real Estate) Smartone Telecommunications 3.1 2.1 Holdings Ltd. (Cellular) Hong Kong & China Gas Co. 2.6 3.4 Ltd. (Gas) 58.7 53.0 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO CONSTRUCTION & REAL ESTATE 21.4 25.6 FINANCE 19.6 23.3 UTILITIES 18.1 15.9 INDUSTRIAL MACHINERY & 14.3 12.7 EQUIPMENT TECHNOLOGY 7.8 5.2 MEDIA & LEISURE 7.5 4.5 TRANSPORTATION 3.4 2.7 RETAIL & WHOLESALE 2.6 0.5 DURABLES 2.1 1.5 HOLDING COMPANIES 1.5 2.2
HONG KONG AND CHINA INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 98.9% SHARES VALUE (NOTE 1) CONSTRUCTION & REAL ESTATE - 21.4% BUILDING MATERIALS - 0.4% Companion Building Material 6,242,000 $ 118,926 (Holdings) Ltd. (a) Companion Marble (Holdings) 2,690,000 533,290 Ltd. (a) 652,216 CONSTRUCTION - 0.4% Cheung Kong Infrastructure 342,000 647,194 Holdings Ltd. REAL ESTATE - 20.6% Amoy Properties Ltd. 2,204,000 1,900,978 Cheung Kong Holdings Ltd. 1,081,000 9,810,827 Great Eagle Holdings Ltd. 992,000 1,225,953 Henderson Land Development 1,210,000 5,514,161 Co. Ltd. HKR International Ltd. 287,200 218,136 Hongkong Land Holdings Ltd. 341,000 439,890 Kerry Properties Ltd. 414,000 410,376 New World Development Co. 300,738 569,110 Ltd. Pacific Century Region 110,000 635,570 Developments Ltd. (a) Paliburg Holdings Ltd. (a) 1,248,000 94,789 Sun Hung Kai Properties Ltd. 1,359,021 10,978,188 Wharf Holdings Ltd. 506,485 1,463,773 33,261,751 TOTAL CONSTRUCTION & REAL 34,561,161 ESTATE DURABLES - 2.1% AUTOS, TIRES, & ACCESSORIES - 0.1% Denway Investment Ltd. (a) 1,036,000 113,363 TEXTILES & APPAREL - 2.0% Far Eastern Textile Ltd. 665,540 910,606 Glorious Sun Enterprises 6,446,000 2,344,226 3,254,832 TOTAL DURABLES 3,368,195 FINANCE - 19.6% BANKS - 18.8% Dah Sing Financial Holdings 263,744 1,052,531 Ltd. Dao Heng Bank Group Ltd. 400,000 1,838,311 Hang Seng Bank Ltd. 270,000 2,937,049 HSBC Holdings PLC (Hong Kong) 1,408,325 17,340,000 (Reg.) Liu Chong Hing Bank Ltd. 2,149,000 2,227,015 Standard Chartered PLC 182,092 2,555,653 Wing Hang Bank Ltd. 576,000 1,879,712 Wing Lung Bank Ltd. 122,000 471,164 30,301,435 CREDIT & OTHER FINANCE - 0.4% Aeon Credit Service (ASIA) 1,476,000 608,033 Co. Ltd. SHARES VALUE (NOTE 1) INSURANCE - 0.0% Pacific Century Insurance 26,000 $ 13,974 Holdings Ltd. SECURITIES INDUSTRY - 0.4% Guoco Group Ltd. 272,000 728,321 TOTAL FINANCE 31,651,763 HEALTH - 0.2% DRUGS & PHARMACEUTICALS - 0.2% China Pharmaceutical 1,666,000 304,547 Enterprise and Investment Corp. Ltd. China Pharmaceutical 166,600 7,292 Enterprise and Investment Corp. Ltd. warrants 10/20/01 (a) 311,839 HOLDING COMPANIES - 1.5% First Pacific Co. Ltd. 1,000 579 Jardine Matheson Holdings 159,000 683,700 Ltd. Jardine Strategic Holdings 474,000 1,047,540 Ltd. Wheelock & Co. Ltd. 650,000 736,354 2,468,173 INDUSTRIAL MACHINERY & EQUIPMENT - 14.3% ELECTRICAL EQUIPMENT - 14.3% Chen Hsong Holdings Ltd. 3,870,000 757,261 Hutchison Whampoa Ltd. 1,569,000 15,754,634 Johnson Electric Holdings 1,217,080 6,580,505 Ltd. 23,092,400 MEDIA & LEISURE - 7.5% BROADCASTING - 5.0% Asia Satellite 894,000 2,106,102 Telecommunications Holdings Ltd. Television Broadcasts Ltd. 1,119,000 5,978,180 8,084,282 ENTERTAINMENT - 0.2% e-New Media Co. Ltd. (a) 1,602,000 391,838 PUBLISHING - 0.4% Culturecom Holdings Ltd. (a) 8,106,000 448,710 Oriental Press Group Ltd. (a) 786,000 105,232 553,942 RESTAURANTS - 1.9% Cafe de Coral Holdings Ltd. 7,070,000 2,980,722 TOTAL MEDIA & LEISURE 12,010,784 NONDURABLES - 0.4% BEVERAGES - 0.4% Vitasoy International 2,091,000 612,387 Holdings Ltd. COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) RETAIL & WHOLESALE - 2.6% APPAREL STORES - 2.3% Esprit Asia Holdings Ltd. 1,524,000 $ 1,441,993 Giordano International Ltd. 2,144,000 2,277,034 3,719,027 GENERAL MERCHANDISE STORES - 0.3% China Everbright Ltd. 746,000 532,994 TOTAL RETAIL & WHOLESALE 4,252,021 TECHNOLOGY - 7.8% COMMUNICATIONS EQUIPMENT - 2.6% CCT Telecom Holdings Ltd. (a) 7,732,000 2,488,414 Champion Technology Holdings 5,168,000 302,709 Ltd. Pacific Century CyberWorks 1,832,000 1,379,660 Ltd. (a) 4,170,783 COMPUTER SERVICES & SOFTWARE - - 0.4% MyWeb Inc.com (a) 14,500 288,188 New World CyberBase Ltd. (a) 1,200,000 312,822 601,010 COMPUTERS & OFFICE EQUIPMENT - - 0.7% Asustek Computer, Inc. 38,000 398,928 Compal Electronics, Inc. 30,926 103,834 D-Link Corp. 393,600 657,654 1,160,416 ELECTRONICS - 4.1% ASM Pacific Technology Ltd. 1,098,000 1,293,344 Chartered Semiconduct 1,000 33,188 Manufacturing Ltd. ADR Hon Hai Precision Industries 84,000 574,653 Co. Ltd. Phoenixtec Power Co. Ltd. 311,970 634,365 Siliconware Precision 129,150 232,079 Industries Co. Ltd. Taiwan Semiconductor 248,460 1,104,441 Manufacturing Co. Ltd. United Microelectronics Corp. 254,000 660,624 Varitronix International Ltd. 492,000 1,060,891 Winbond Electronics Corp. (a) 321,000 586,948 Winbond Electronics Corp. 29,300 523,005 sponsored GDR (a)(c) 6,703,538 TOTAL TECHNOLOGY 12,635,747 TRANSPORTATION - 3.4% AIR TRANSPORTATION - 2.1% Cathay Pacific Airways Ltd. 924,000 1,879,403 Swire Pacific Ltd.: Class A 206,000 1,020,984 Class B 730,500 540,728 3,441,115 SHARES VALUE (NOTE 1) SHIPPING - 0.8% IMC Holdings Ltd. (a) 4,096,000 $ 369,104 Shun Tak Holdings Ltd. 5,280,000 917,611 1,286,715 TRUCKING & FREIGHT - 0.5% New World Infrastructure Ltd. 146,000 167,276 (a) Shenzhen Expressway Co. Ltd. 4,288,000 640,330 Class H 807,606 TOTAL TRANSPORTATION 5,535,436 UTILITIES - 18.1% CELLULAR - 11.6% China Telecom (Hong Kong) 4,080,000 13,770,000 Ltd. (a) Smartone Telecommunications 1,416,000 4,994,645 Holdings Ltd. 18,764,645 ELECTRIC UTILITY - 1.2% Beijing Datang Power 1,320,000 275,283 Generation Co. Ltd. CLP Holdings Ltd. 285,000 1,306,128 Hong Kong Electric Holdings 22,871 69,926 Ltd. Huaneng Power International, 612,000 183,175 Inc. Class H 1,834,512 GAS - 2.6% Hong Kong & China Gas Co. 3,189,800 4,229,524 Ltd. TELEPHONE SERVICES - 2.7% Cable & Wireless HKT Ltd. 604,708 1,379,490 City Telecom (HK) Ltd. 4,208,000 2,952,317 4,331,807 TOTAL UTILITIES 29,160,488 TOTAL COMMON STOCKS 159,660,394 (Cost $116,065,051) CASH EQUIVALENTS - 0.7% Taxable Central Cash Fund, 1,194,990 1,194,990 5.21% (b) (Cost $1,194,990) TOTAL INVESTMENT PORTFOLIO - 160,855,384 99.6% (Cost $117,260,041) NET OTHER ASSETS - 0.4% 662,220 NET ASSETS - 100% $ 161,517,604 LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. (c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $523,005 or 0.3% of net assets. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $120,385,352 and $129,771,899, respectively. The fund participated in the security lending program. At period end there were no loans outstanding. The fund participated in the bank borrowing program. The average daily loan balance during the period for which loans were outstanding amounted to $2,386,286. The weighted average interest rate was 5.36%. INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $119,816,817. Net unrealized appreciation aggregated $41,038,567, of which $45,230,391 related to appreciated investment securities and $4,191,824 related to depreciated investment securities. At October 31, 1999, the fund had a capital loss carryforward of approximately $50,478,000, all of which will expire on October 31, 2006. HONG KONG AND CHINA FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 160,855,384 value (cost $117,260,041) - See accompanying schedule Cash 33,906 Foreign currency held at 445,143 value (cost $444,909) Receivable for investments 594,754 sold Receivable for fund shares 113,416 sold Dividends receivable 225,281 Interest receivable 1,516 Redemption fees receivable 1,874 TOTAL ASSETS 162,271,274 LIABILITIES Payable for investments $ 169,469 purchased Payable for fund shares 369,862 redeemed Accrued management fee 95,641 Other payables and accrued 118,698 expenses TOTAL LIABILITIES 753,670 NET ASSETS $ 161,517,604 Net Assets consist of: Paid in capital $ 169,429,983 Undistributed net investment 1,848,938 income Accumulated undistributed net (53,356,934) realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 43,595,617 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 11,414,483 $ 161,517,604 shares outstanding NET ASSET VALUE and $14.15 redemption price per share ($161,517,604 (divided by) 11,414,483 shares) Maximum offering price per $14.59 share (100/97.00 of $14.15) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 3,837,969 Dividends Interest 213,992 Security lending 324,121 4,376,082 Less foreign taxes withheld (48,122) TOTAL INCOME 4,327,960 EXPENSES Management fee $ 1,088,415 Transfer agent fees 542,873 Accounting and security 91,586 lending fees Non-interested trustees' 453 compensation Custodian fees and expenses 181,428 Registration fees 25,502 Audit 46,372 Legal 534 Interest 2,489 Miscellaneous 13,136 Total expenses before 1,992,788 reductions Expense reductions (27,324) 1,965,464 NET INVESTMENT INCOME 2,362,496 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 9,831,268 Foreign currency transactions 284 9,831,552 Change in net unrealized appreciation (depreciation) on: Investment securities 35,814,998 Assets and liabilities in (2,476) 35,812,522 foreign currencies NET GAIN (LOSS) 45,644,074 NET INCREASE (DECREASE) IN $ 48,006,570 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION Sales $ 216,345 charges paid to FDC Sales charges - Retained by $ 216,270 FDC Expense Reductions $ 27,063 Directed brokerage arrangements Transfer agent credits 261 $ 27,324 STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 ASSETS Operations Net investment $ 2,362,496 $ 4,741,212 income Net realized gain (loss) 9,831,552 (61,779,009) Change in net unrealized 35,812,522 41,852,376 appreciation (depreciation) NET INCREASE (DECREASE) IN 48,006,570 (15,185,421) NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (4,312,427) (968,977) from net investment income Share transactions Net 89,140,338 103,918,242 proceeds from sales of shares Reinvestment of distributions 4,182,802 960,768 Cost of shares redeemed (116,955,228) (125,865,511) NET INCREASE (DECREASE) IN (23,632,088) (20,986,501) NET ASSETS RESULTING FROM SHARE TRANSACTIONS Redemption fees 631,730 548,707 TOTAL INCREASE (DECREASE) 20,693,785 (36,592,192) IN NET ASSETS NET ASSETS Beginning of period 140,823,819 177,416,011 End of period (including $ 161,517,604 $ 140,823,819 undistributed net investment income of $1,848,938 and $3,798,587, respectively) OTHER INFORMATION Shares Sold 7,169,572 10,103,475 Issued in reinvestment of 415,738 81,433 distributions Redeemed (9,914,200) (12,481,967) Net increase (decrease) (2,328,890) (2,297,059)
FINANCIAL HIGHLIGHTS YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 E SELECTED PER-SHARE DATA Net asset value, beginning of $ 10.25 $ 11.06 $ 12.97 $ 10.00 period Income from Investment Operations Net investment income C .19 .31 .17 .29 Net realized and unrealized 3.98 (1.10) (1.95) 2.64 gain (loss) Total from investment 4.17 (.79) (1.78) 2.93 operations Less Distributions From net investment income (.32) (.06) (.14) (.01) From net realized gain - - (.08) - Total distributions (.32) (.06) (.22) (.01) Redemption fees added to paid .05 .04 .09 .05 in capital Net asset value, end of period $ 14.15 $ 10.25 $ 11.06 $ 12.97 TOTAL RETURN A, B 42.44% (6.85)% (13.36)% 29.83% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 161,518 $ 140,824 $ 177,416 $ 109,880 (000 omitted) Ratio of expenses to average 1.34% 1.41% 1.31% 1.62% net assets Ratio of expenses to average 1.32% D 1.40% D 1.31% 1.62% net assets after expense reductions Ratio of net investment 1.59% 3.07% 1.18% 2.53% income to average net assets Portfolio turnover rate 84% 109% 174% 118% A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. E FOR THE PERIOD NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1996. JAPAN PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). If Fidelity had not reimbursed certain fund expenses, the life of fund total returns would have been lower. CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY JAPAN 116.35% 60.16% 136.17% FIDELITY JAPAN (INCL. 3.00% 109.86% 55.36% 129.08% SALES CHARGE) TOPIX 69.97% -4.37% 42.85% Japanese Funds Average 95.57% 31.32% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years or since the fund started on September 15, 1992. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Tokyo Stock Exchange Index (TOPIX) - a market capitalization-weighted index of over 1,100 stocks traded in the Japanese market. To measure how the fund's performance stacked up against its peers, you can compare it to the Japanese funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 44 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY JAPAN 116.35% 9.88% 12.81% FIDELITY JAPAN (INCL. 3.00% 109.86% 9.21% 12.33% SALES CHARGE) TOPIX 69.97% -0.89% 5.13% Japanese Funds Average 95.57% 4.61% n/a AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND Japan Fund TOPIX 00350 TK001 1992/09/15 9700.00 10000.00 1992/09/30 9641.80 9815.42 1992/10/31 9544.80 9336.12 1992/11/30 9641.80 9576.86 1992/12/31 9661.20 9437.20 1993/01/31 9748.50 9388.21 1993/02/28 10301.40 9815.57 1993/03/31 11484.80 11253.41 1993/04/30 13036.80 13170.39 1993/05/31 13405.40 13966.69 1993/06/30 12610.00 13389.70 1993/07/31 13453.90 14330.57 1993/08/31 13686.70 14650.81 1993/09/30 13318.10 13889.46 1993/10/31 12949.50 13636.41 1993/11/30 11252.00 11429.98 1993/12/31 11637.09 11715.04 1994/01/31 13010.29 13586.06 1994/02/28 13621.71 14249.19 1994/03/31 13391.17 13845.83 1994/04/30 13701.90 14386.73 1994/05/31 14082.78 14648.69 1994/06/30 14934.77 15465.45 1994/07/31 14443.62 14910.88 1994/08/31 14393.51 14947.34 1994/09/30 14042.69 14552.59 1994/10/31 14303.30 14937.45 1994/11/30 13331.03 14052.07 1994/12/31 13552.55 14299.84 1995/01/31 12387.96 13546.80 1995/02/28 11810.82 12780.10 1995/03/31 12758.98 13884.10 1995/04/30 12913.57 14548.67 1995/05/31 12181.84 13609.31 1995/06/30 12016.94 12960.37 1995/07/31 12820.82 13960.65 1995/08/31 12769.29 13417.71 1995/09/30 12738.37 13428.96 1995/10/31 12449.80 12721.44 1995/11/30 12594.08 13464.74 1995/12/31 13263.98 14067.55 1996/01/31 13171.23 13932.57 1996/02/29 12810.51 13709.11 1996/03/31 13171.23 14169.24 1996/04/30 14016.33 15121.58 1996/05/31 13511.33 14389.30 1996/06/30 13748.37 14458.38 1996/07/31 13068.16 13756.75 1996/08/31 12573.47 13177.79 1996/09/30 12862.04 13557.37 1996/10/31 12037.55 12655.38 1996/11/30 12336.43 12756.39 1996/12/31 11779.52 11779.59 1997/01/31 10892.44 10516.37 1997/02/28 11181.26 10724.66 1997/03/31 10995.59 10331.19 1997/04/30 11542.28 10584.92 1997/05/31 12872.89 11901.06 1997/06/30 13574.29 12672.60 1997/07/31 13935.31 12178.72 1997/08/31 12295.26 11093.36 1997/09/30 12439.66 10753.27 1997/10/31 11449.44 9937.19 1997/11/30 11036.85 9188.53 1997/12/31 10515.02 8470.67 1998/01/31 11186.63 9376.43 1998/02/28 11008.24 9454.41 1998/03/31 10305.14 8817.25 1998/04/30 10777.37 8701.22 1998/05/31 10441.56 8293.03 1998/06/30 10462.55 8346.71 1998/07/31 10724.90 8236.34 1998/08/31 9633.52 7389.77 1998/09/30 9738.46 7235.42 1998/10/31 10588.47 8404.64 1998/11/30 11312.56 8804.35 1998/12/31 11890.92 9128.11 1999/01/31 11796.21 9173.65 1999/02/28 11722.55 8955.23 1999/03/31 13469.36 10158.76 1999/04/30 14374.33 10642.34 1999/05/31 13795.57 10165.67 1999/06/30 16100.09 11129.49 1999/07/31 18141.54 12264.80 1999/08/31 19793.64 12654.46 1999/09/30 21287.90 13484.72 1999/10/29 22908.43 14285.26 IMATRL PRASUN SHR__CHT 19991031 19991111 112208 R00000000000089 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity Japan Fund on September 15, 1992, when the fund started, and the current 3.00% sales charge was paid. As the chart shows, by October 31, 1999, the value of the investment would have grown to $22,908 - a 129.08% increase on the initial investment. For comparison, look at how the Tokyo Stock Exchange Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have been $14,285 - a 42.85% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) JAPAN FUND TALK: THE MANAGER'S OVERVIEW An interview with Brenda Reed, Portfolio Manager of Fidelity Japan Fund Q. HOW DID THE FUND PERFORM, BRENDA? A. Both absolute and relative performance were quite good - the fund soundly beat its benchmark against the backdrop of a very strong overall market. For the 12 months that ended October 31, 1999, the fund returned 116.35%, compared to 69.97% for the Tokyo Stock Exchange Index (TOPIX) and 95.57% for the Japanese funds average monitored by Lipper Inc. Q. WHAT ACCOUNTED FOR THE FUND'S EXTRAORDINARILY STRONG PERFORMANCE? A. The fund benefited from great stock selection virtually across the board. Overweightings in telecommunications and technology also helped, as these sectors were buoyed by the restructuring trends unfolding in Japan. The wireless telecommunications industry was particularly vibrant during the period. In contrast to the situation in the United States, wireless - or cellular - phones are much more common in Japan than personal computers. Consequently, a lot of investors concentrated their buying on companies offering products and services for the wireless telecommunications market, and the fund benefited substantially from its numerous investments in that industry. Finally, the yen continued to appreciate against the dollar during the period, which increased the value of Japanese stocks in U.S. dollar terms. Q. THE BIGGEST SECTOR CHANGES IN THE PAST SIX MONTHS WERE AN INCREASE IN UTILITIES FROM 7.9% TO 13.5% AS A PERCENTAGE OF NET ASSETS AND A DECREASE IN FINANCE STOCKS FROM 17.6% TO 12.8% OF NET ASSETS. CAN YOU COMMENT ON THOSE CHANGES? A. Utilities showed a big increase because of my decision to increase the fund's investments in growth-oriented telecommunications stocks, which are classified as utilities. In the finance area, I cut back on non-bank finance companies, which were subject to increased competitive pressures from banks and, after a vigorous third-quarter advance, were no longer attractively valued. Q. WHAT STOCKS DID WELL FOR THE FUND? A. Hikari Tsushin was a standout performer. With its dynamic business model, which involves both one-time payments and ongoing compensation for each wireless phone the company sells, Hikari Tsushin positioned itself as a key player in the wireless communications industry. Furthermore, the company revealed plans to use a similar business model for the Internet market. NTT Mobile Communication is Japan's largest provider of wireless phone service. The stock benefited from investors' enthusiasm about the introduction of a new wireless phone with Internet capabilities. Another strong holding, Softbank Corp., appeared to have successfully remade itself. A few years ago, it was known for owning computer magazines and selling software in the retail market. Now Softbank is essentially a venture capital firm, with stakes in a number of well-known Internet companies such as Yahoo! Japan and eBay Japan. Q. WHAT STOCKS DETRACTED FROM THE FUND'S PERFORMANCE? A. The worst offender was Nichiei Co., one of the non-bank finance companies I sold for reasons mentioned earlier. Riso Kagaku - the industrial-printer manufacturer mentioned in the semiannual report six month ago - again detracted from performance. The stock suffered from earnings downgrades as business from Southeast Asia and Latin America fell off. However, the company had a great cash flow, its new products were selling well and the stock price was extremely cheap as the period came to an end. As a result, I held on to the stock. Q. WHAT'S YOUR OUTLOOK, BRENDA? A. Overall, my outlook is very positive. One short-term bump in the road, though, could be Y2K. Many companies have built up excess inventory as insurance against supply disruptions. If business continues as usual, new orders could suffer while that excess inventory is being depleted. In most cases, however, the excess amounts to only a few weeks' worth, so I don't see this as anything more than a very short-term potential problem. Going forward, I will be looking carefully for continuing evidence of the commitment to restructuring that many companies have expressed. One possibility, now that the economy is recovering and the stock market is rising again, is that some managements will slack off and fail to follow through on their restructuring plans. With Fidelity's strong research presence in Japan, I anticipate staying on the cutting edge of these developments, and I am confident that we can continue to identify promising investment opportunities for our shareholders. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3. FUND FACTS GOAL: long-term growth of capital by investing mainly in equity securities of Japanese issuers FUND NUMBER: 350 TRADING SYMBOL: FJPNX START DATE: September 15, 1992 SIZE: as of October 31, 1999, more than $891 million MANAGER: Brenda Reed, since 1998; associate manager, Fidelity Japan Fund, October-December 1998; manager, Fidelity Select Automotive Portfolio, 1994-1996; Fidelity Select Air Transportation Portfolio, 1993-1994; joined Fidelity in 1992 (checkmark) JAPAN INVESTMENT CHANGES AS OF OCTOBER 31,1999 United States 4.5% Row: 1, Col: 1, Value: 95.5 Row: 1, Col: 2, Value: 4.5 Japan 95.5% GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30, 1999 United States 3.1% Row: 1, Col: 1, Value: 96.90000000000001 Row: 1, Col: 2, Value: 3.1 Japan 96.9% PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF APPLICABLE. ASSET ALLOCATION % OF FUND' NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks 95.5 96.2 Bonds 0.0 1.6 Short-Term Investments and 4.5 2.2 Net Other Assets PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO NTT Mobile Communication 4.1 2.9 Network, Inc. (Cellular) Kokusai Denshin Denwa 2.5 0.7 (Telephone Services) Takeda Chemical Industries 2.3 2.5 Ltd. (Drugs & Pharmaceuticals) Toyota Motor Corp. (Autos, 2.2 2.9 Tires, & Accessories) Softbank Corp. (Computers & 2.2 1.2 Office Equipment) Hikari Tsushin, Inc. 2.1 1.4 (Cellular) Bank of Tokyo-Mitsubishi Ltd. 2.0 2.8 (Banks) Toyoda Gosei Co. Ltd. 1.9 0.0 (Autos, Tires, & Accessories) Kyocera Corp. (Electronics) 1.9 0.7 Omron Corp. (Electrical 1.8 1.5 Equipment) 23.0 16.6 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO TECHNOLOGY 23.9 23.4 UTILITIES 13.5 7.9 FINANCE 12.8 17.6 DURABLES 12.6 13.6 HEALTH 6.9 7.4 BASIC INDUSTRIES 6.7 4.9 INDUSTRIAL MACHINERY & 6.3 6.8 EQUIPMENT RETAIL & WHOLESALE 4.5 4.6 NONDURABLES 2.9 5.3 MEDIA & LEISURE 2.5 1.6
JAPAN INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 95.5% SHARES VALUE (NOTE 1) BASIC INDUSTRIES - 6.7% CHEMICALS & PLASTICS - 4.4% Asahi Chemical Industry Co. 600,000 $ 3,630,252 Ltd. Hitachi Chemical Co. Ltd. 223,000 4,133,398 Kaneka Corp. 590,000 7,734,454 Mitsubishi Chemical Corp. 1,400,000 6,359,664 Nippon Zeon Co. Ltd. 560,000 4,840,336 Nissan Chemical Industries 470,000 3,042,305 Co. Ltd. Shin-Etsu Chemical Co. Ltd. 224,000 9,250,421 38,990,830 IRON & STEEL - 0.5% Nippon Steel Corp. 1,740,000 4,428,332 METALS & MINING - 1.1% Furukawa Electric Co. Ltd. 1,414,000 10,320,673 PAPER & FOREST PRODUCTS - 0.7% Hokuetsu Paper Mills Ltd. 390,000 3,153,710 Nippon Paper Industries Co. 370,000 2,878,271 Ltd. 6,031,981 TOTAL BASIC INDUSTRIES 59,771,816 CONSTRUCTION & REAL ESTATE - 1.1% BUILDING MATERIALS - 0.5% Nippon Sheet Glass Co. Ltd. 760,000 4,729,700 ENGINEERING - 0.6% Nippon Computer Systems Corp. 255,000 4,995,919 TOTAL CONSTRUCTION & REAL 9,725,619 ESTATE DURABLES - 12.6% AUTOS, TIRES, & ACCESSORIES - 7.8% Bridgestone Corp. 160,000 4,410,084 Denso Corp. 180,000 3,854,982 Fuji Heavy Industries Ltd. 250,000 2,127,251 Hino Motors Ltd. (a) 830,000 3,021,081 Honda Motor Co. Ltd. 108,000 4,542,750 Koyo Seiko Co. Ltd. 355,000 3,798,031 Mazda Motor Corp. 600,000 3,267,227 Toyoda Automatic Loom Works 220,000 4,289,076 Ltd. Toyoda Gosei Co. Ltd. 391,000 16,860,409 Toyota Motor Corp. 572,000 19,831,165 Yamaha Motor Co. Ltd. 380,000 3,094,742 69,096,798 CONSUMER DURABLES - 1.1% Sankyo Co. Ltd. (Gunma) 128,500 10,181,273 CONSUMER ELECTRONICS - 3.3% Citizen Watch Co. Ltd. 343,000 2,427,765 Matsushita Electric 296,000 6,269,650 Industrial Co. Ltd. Sharp Corp. 440,000 7,014,646 Sony Corp. 84,700 13,530,826 29,242,887 SHARES VALUE (NOTE 1) HOME FURNISHINGS - 0.4% Otsuka Kagu Ltd. 12,000 $ 3,572,629 TOTAL DURABLES 112,093,587 FINANCE - 12.8% BANKS - 7.6% Bank of Tokyo-Mitsubishi Ltd. 1,061,000 17,607,761 Dai-Ichi Kangyo Bank Ltd. 680,000 9,338,776 Fuji Bank Ltd. 600,000 8,240,096 Sakura Bank Ltd. 1,534,000 13,200,135 Sanwa Bank Ltd. 938,000 13,972,034 The Suruga Bank Ltd. 35,000 514,286 Toyo Trust & Banking Co. Ltd. 740,000 4,690,516 67,563,604 CREDIT & OTHER FINANCE - 2.6% Aeon Credit Service Ltd. 90 13,138 Aiful Corp. 59,600 9,272,702 Jafco Co. Ltd. 45,000 5,056,423 Shohkoh Fund & Co. Ltd. 7,800 4,779,256 Takefuji Corp. 36,300 4,706,363 23,827,882 SECURITIES INDUSTRY - 2.6% Daiwa Securities Co. Ltd. 1,237,000 13,222,387 New Japan Securities Co. Ltd. 597,000 1,760,183 (a) Nikko Securities Co. Ltd. 855,000 8,047,059 23,029,629 TOTAL FINANCE 114,421,115 HEALTH - 6.9% DRUGS & PHARMACEUTICALS - 5.3% Banyu Pharmaceutical Co. Ltd. 180,000 3,300,072 Fujisawa Pharmaceutical Co. 423,000 10,602,930 Ltd. Takeda Chemical Industries 350,000 20,134,455 Ltd. Yamanouchi Pharmaceutical Co. 148,000 6,723,074 Ltd. Yoshitomi Pharmaceutical 480,000 6,545,979 Industries Ltd. 47,306,510 MEDICAL EQUIPMENT & SUPPLIES - - 1.6% Hoya Corp. 167,000 12,028,812 Japan Medical Dynamic 26,500 1,450,660 Marketing, Inc. Terumo Corp. 39,000 1,187,323 14,666,795 TOTAL HEALTH 61,973,305 INDUSTRIAL MACHINERY & EQUIPMENT - 6.3% ELECTRICAL EQUIPMENT - 2.9% Mitsubishi Electric Corp. 1,140,000 6,317,215 Omron Corp. 772,000 16,162,882 Yokogawa Electric Corp. 515,000 3,610,564 26,090,661 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED INDUSTRIAL MACHINERY & EQUIPMENT - 3.4% Amada Co. Ltd. 1,200,000 $ 9,219,688 Daifuku Co. Ltd. 179,000 1,167,261 Fuji Machine Manufacturing 41,000 1,909,724 Co. Ltd. Hitachi Metals Ltd. 440,000 2,167,779 SMC Corp. 44,000 7,432,990 THK Co. Ltd. 259,000 8,482,017 30,379,459 TOTAL INDUSTRIAL MACHINERY & 56,470,120 EQUIPMENT MEDIA & LEISURE - 2.5% BROADCASTING - 0.5% Tokyo Broadcasting System, 160,000 4,233,374 Inc. ENTERTAINMENT - 0.8% Sony Music Entertainment Ltd. 50,800 6,630,224 LEISURE DURABLES & TOYS - 0.9% Namco Ltd. 95,000 4,488,836 Nintendo Co. Ltd. 22,300 3,544,442 8,033,278 PUBLISHING - 0.3% Kadokawa Shoten Publish Co. 12,000 2,997,551 Ltd. TOTAL MEDIA & LEISURE 21,894,427 NONDURABLES - 2.9% BEVERAGES - 1.9% Coca-Cola West Japan Co. Ltd. 60,000 2,673,710 Fuji Coca-Cola Bottling Co. 200,000 3,841,537 Ltd. Ito En Ltd. 51,000 5,240,817 Kinki Coca-Cola Bottling Co. 104,000 1,797,839 Ltd. Kirin Brewery Co. Ltd. 276,000 3,164,888 16,718,791 FOODS - 0.6% Yakult Honsha Co. Ltd. 310,000 3,173,686 Yonekyu Corp. 170,000 2,610,612 5,784,298 HOUSEHOLD PRODUCTS - 0.4% Kao Corp. 114,000 3,481,585 TOTAL NONDURABLES 25,984,674 RETAIL & WHOLESALE - 4.5% APPAREL STORES - 0.4% World Co. Ltd. 32,000 3,242,257 GENERAL MERCHANDISE STORES - 3.2% FamilyMart Co. Ltd. 70,000 4,873,950 Ito-Yokado Co. Ltd. 183,000 14,657,576 Seven Eleven Japan Co. Ltd. 94,000 8,621,369 28,152,895 SHARES VALUE (NOTE 1) RETAIL & WHOLESALE, MISCELLANEOUS - 0.9% Paris Miki, Inc. 50,400 $ 4,065,883 Senshukai Co. Ltd. 233,000 4,473,153 8,539,036 TOTAL RETAIL & WHOLESALE 39,934,188 SERVICES - 1.8% PRINTING - 0.9% Dai Nippon Printing Co. Ltd. 150,000 2,738,536 Riso Kagaku Corp. 72,600 3,137,575 Toppan Forms Co. Ltd. 90,000 2,381,273 8,257,384 SERVICES - 0.9% Nippon System Development Co. 91,000 7,778,152 Ltd. TOTAL SERVICES 16,035,536 TECHNOLOGY - 23.9% COMMUNICATIONS EQUIPMENT - 1.3% Matsushita Communication 40,000 6,730,372 Industrial Co. Ltd. NEC Corp. 227,000 4,599,952 11,330,324 COMPUTER SERVICES & SOFTWARE - - 3.8% CSK Corp. 60,000 2,765,907 Hitachi Information Systems 215,000 8,300,601 Konami Co. Ltd. 95,000 9,214,886 Oracle Corp. Japan 15,500 3,155,822 Square Co. Ltd. 34,000 2,462,041 Trend Micro, Inc. 39,000 7,753,182 33,652,439 COMPUTERS & OFFICE EQUIPMENT - - 7.2% Canon, Inc. 77,000 2,181,513 Fujitsu Ltd. 403,000 12,152,894 Fujitsu Support & Service, 21,000 5,909,244 Inc. Hitachi Ltd. 906,000 9,852,751 Nihon Unisys Ltd. 160,000 5,624,010 Ricoh Co. Ltd. 572,000 9,344,269 Softbank Corp. 46,900 19,503,194 64,567,875 ELECTRONIC INSTRUMENTS - 2.0% Advantest Corp. 36,000 5,428,092 Tokyo Seimitsu Co. Ltd. 100,000 12,206,483 17,634,575 ELECTRONICS - 9.1% Hirose Electric Co. Ltd. 55,600 9,712,980 Hosiden Corp. 115,000 4,362,545 Koa Denko Co. Ltd. 135,000 2,346,699 Kyocera Corp. 173,000 16,614,647 Mitsumi Electric Co. Ltd. 120,000 3,215,366 Nichicon Corp. 527,000 11,438,368 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) TECHNOLOGY - CONTINUED ELECTRONICS - CONTINUED Nidec Corp. 28,000 $ 5,445,378 Nitto Denko Corp. 195,000 7,715,727 Rohm Co. Ltd. 58,000 13,034,334 TDK Corp. 78,000 7,648,308 81,534,352 PHOTOGRAPHIC EQUIPMENT - 0.5% Olympus Optical Co. Ltd. 305,000 4,130,132 TOTAL TECHNOLOGY 212,849,697 UTILITIES - 13.5% CELLULAR - 7.6% Hikari Tsushin, Inc. 23,700 19,096,568 NTT Mobile Communication 1,356 36,073,179 Network, Inc. NTT Mobile Communication 472 12,556,447 Network, Inc. (c) 67,726,194 TELEPHONE SERVICES - 5.9% DDI Corp. 1,420 15,546,699 Kokusai Denshin Denwa 180,000 22,645,859 Nippon Telegraph & Telephone 915 14,060,025 Corp. 52,252,583 TOTAL UTILITIES 119,978,777 TOTAL COMMON STOCKS 851,132,861 (Cost $538,701,887) CASH EQUIVALENTS - 11.1% Central Cash Collateral Fund, 53,557,619 53,557,619 5.26% (b) Taxable Central Cash Fund, 45,335,264 45,335,264 5.21% (b) TOTAL CASH EQUIVALENTS 98,892,883 (Cost $98,892,883) TOTAL INVESTMENT PORTFOLIO - 950,025,744 106.6% (Cost $637,594,770) NET OTHER ASSETS - (6.6)% (58,784,697) NET ASSETS - 100% $ 891,241,047 LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. (c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $12,556,447 or 1.4% of net assets. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $587,695,928 and $349,308,848, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $3,655 for the period. The fund participated in the security lending program. At period end, the value of securities loaned amounted to $50,853,059. The fund received cash collateral of $53,557,619 which was invested in the Central Cash Collateral Fund. Cash collateral includes $282,600 received for unsettled security loans. The fund participated in the bank borrowing program. The average daily loan balance during the period for which loans were outstanding amounted to $3,662,200. The weighted average interest rate was 5.07%. INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $637,806,232. Net unrealized appreciation aggregated $312,219,512, of which $317,439,843 related to appreciated investment securities and $5,220,331 related to depreciated investment securities. At October 31, 1999, the fund had a capital loss carryforward of approximately $44,939,000 of which $11,008,000 and $33,931,000 will expire on October 31, 2005 and 2006, respectively. JAPAN FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 950,025,744 value (cost $637,594,770) - See accompanying schedule Receivable for investments 18,863,016 sold Receivable for fund shares 5,040,935 sold Dividends receivable 1,271,230 Interest receivable 128,696 Redemption fees receivable 15,504 Other receivables 27,027 TOTAL ASSETS 975,372,152 LIABILITIES Payable for investments $ 28,074,797 purchased Payable for fund shares 1,679,830 redeemed Accrued management fee 555,237 Other payables and accrued 263,622 expenses Collateral on securities 53,557,619 loaned, at value TOTAL LIABILITIES 84,131,105 NET ASSETS $ 891,241,047 Net Assets consist of: Paid in capital $ 610,734,718 Undistributed net investment 13,253,040 income Accumulated undistributed net (45,150,065) realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 312,403,354 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 40,946,589 $ 891,241,047 shares outstanding NET ASSET VALUE and $21.77 redemption price per share ($891,241,047 (divided by) 40,946,589 shares) Maximum offering price per $22.44 share (100/97.00 of $21.77) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 2,523,306 Dividends Interest 1,206,842 Security lending 56,746 3,786,894 Less foreign taxes withheld (378,496) TOTAL INCOME 3,408,398 EXPENSES Management fee Basic fee $ 3,283,457 Performance adjustment 595,599 Transfer agent fees 1,166,036 Accounting and security 250,625 lending fees Non-interested trustees' 1,941 compensation Custodian fees and expenses 163,437 Registration fees 87,482 Audit 32,733 Legal 1,192 Interest 5,154 Total expenses before 5,587,656 reductions Expense reductions (59,100) 5,528,556 NET INVESTMENT INCOME (LOSS) (2,120,158) REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 63,450,396 Foreign currency transactions (443,642) 63,006,754 Change in net unrealized appreciation (depreciation) on: Investment securities 309,070,924 Assets and liabilities in (104,034) 308,966,890 foreign currencies NET GAIN (LOSS) 371,973,644 NET INCREASE (DECREASE) IN $ 369,853,486 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION Sales $ 1,800,232 charges paid to FDC Sales charges - Retained by $ 1,799,715 FDC Expense Reductions $ 54,682 Directed brokerage arrangements Custodian credits 1,969 Transfer agent credits 2,449 $ 59,100 STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 ASSETS Operations Net investment $ (2,120,158) $ (886,023) income (loss) Net realized gain (loss) 63,006,754 (33,687,055) Change in net unrealized 308,966,890 15,140,754 appreciation (depreciation) NET INCREASE (DECREASE) IN 369,853,486 (19,432,324) NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (833,682) (3,904,278) in excess of net investment income Share transactions Net 547,523,917 166,701,599 proceeds from sales of shares Reinvestment of distributions 804,286 3,837,897 Cost of shares redeemed (292,716,488) (137,739,104) NET INCREASE (DECREASE) IN 255,611,715 32,800,392 NET ASSETS RESULTING FROM SHARE TRANSACTIONS Redemption fees 1,215,013 375,918 TOTAL INCREASE (DECREASE) 625,846,532 9,839,708 IN NET ASSETS NET ASSETS Beginning of period 265,394,515 255,554,807 End of period (including $ 891,241,047 $ 265,394,515 under (over) distribution of net investment income of $13,253,040 and $(4,689,993), respectively) OTHER INFORMATION Shares Sold 34,652,174 16,601,342 Issued in reinvestment of 73,856 370,453 distributions Redeemed (20,092,286) (13,676,838) Net increase (decrease) 14,633,744 3,294,957
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995 SELECTED PER-SHARE DATA Net asset value, beginning of $ 10.09 $ 11.10 $ 11.68 $ 12.08 $ 14.27 period Income from Investment Operations Net investment income (loss) (.07) C (.04) C (.06) C (.02) C (.02) Net realized and unrealized 11.74 (.81) (.55) (.40) (1.89) gain (loss) Total from investment 11.67 (.85) (.61) (.42) (1.91) operations Less Distributions In excess of net investment (.03) (.18) (.01) - - income From net realized gain - - - - (.36) Total distributions (.03) (.18) (.01) - (.36) Redemption fees added to paid .04 .02 .04 .02 .08 in capital Net asset value, end of period $ 21.77 $ 10.09 $ 11.10 $ 11.68 $ 12.08 TOTAL RETURN A, B 116.35% (7.52)% (4.89)% (3.31)% (12.96)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 891,241 $ 265,395 $ 255,555 $ 290,495 $ 343,981 (000 omitted) Ratio of expenses to average 1.24% 1.49% 1.42% 1.15% 1.15% net assets Ratio of expenses to average 1.23% D 1.48% D 1.40% D 1.14% D 1.15% net assets after expense reductions Ratio of net investment (.47)% (.37)% (.54)% (.12)% (.06)% income (loss) to average net assets Portfolio turnover rate 79% 62% 70% 83% 86% A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
JAPAN SMALLER COMPANIES PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR LIFE OF FUND FIDELITY JAPAN SMALLER 242.10% 106.95% COMPANIES FIDELITY JAPAN SMALLER 231.83% 100.74% COMPANIES (INCL. 3.00% SALES CHARGE) TOPIX Second Section 164.91% 37.66% Japanese Funds Average 95.57% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year or since the fund started on November 1, 1995. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Tokyo Stock Exchange Second Section Stock Index (TOPIX Second Section) - a market capitalization-weighted index that reflects the performance of the smaller, less established and newly listed companies of the Tokyo Stock Exchange. To measure how the fund's performance stacked up against its peers, you can compare the fund's performance to the Japanese funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 44 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR LIFE OF FUND FIDELITY JAPAN SMALLER 242.10% 19.94% COMPANIES FIDELITY JAPAN SMALLER 231.83% 19.03% COMPANIES (INCL. 3.00% SALES CHARGE) TOPIX Second Section 164.91% 8.32% Japanese Funds Average 95.57% n/a AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND Japan Small Companies TOPIX 2nd Section Index 00360 EX005 1995/11/01 9700.00 10000.00 1995/11/30 9661.20 10335.33 1995/12/31 10262.60 10975.96 1996/01/31 10107.40 10804.92 1996/02/29 9894.00 10597.01 1996/03/31 10272.30 10646.28 1996/04/30 11028.90 11708.81 1996/05/31 10602.10 11395.42 1996/06/30 10679.70 11315.66 1996/07/31 10185.00 10994.68 1996/08/31 9709.70 10749.69 1996/09/30 9632.10 10480.50 1996/10/31 8856.10 9863.12 1996/11/30 8477.80 9534.70 1996/12/31 7738.69 8704.07 1997/01/31 7036.95 7918.69 1997/02/28 7027.20 7943.57 1997/03/31 6637.34 7373.48 1997/04/30 6666.58 7289.86 1997/05/31 7748.44 8537.79 1997/06/30 8099.31 8954.32 1997/07/31 7797.17 8282.33 1997/08/31 6773.79 7335.82 1997/09/30 6471.65 6623.67 1997/10/31 6305.96 6488.83 1997/11/30 5643.20 5546.61 1997/12/31 5389.64 5109.59 1998/01/31 5946.18 5889.51 1998/02/28 5985.23 6039.62 1998/03/31 5467.75 5636.64 1998/04/30 5887.60 5528.93 1998/05/31 5770.43 5257.19 1998/06/30 5721.61 5270.87 1998/07/31 5926.65 5282.13 1998/08/31 5311.53 4839.95 1998/09/30 5243.18 4632.10 1998/10/31 5868.07 5151.68 1998/11/30 6356.26 5552.29 1998/12/31 7069.02 5866.27 1999/01/31 7537.68 5940.63 1999/02/28 8221.15 6193.52 1999/03/31 10027.46 7536.45 1999/04/30 11042.90 8351.16 1999/05/31 10554.71 8063.28 1999/06/30 13923.24 10038.60 1999/07/31 15504.98 11213.77 1999/08/31 17623.73 12577.28 1999/09/30 19371.46 13567.61 1999/10/29 20074.46 13766.00 IMATRL PRASUN SHR__CHT 19991031 19991129 100922 R00000000000051 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity Japan Smaller Companies Fund on November 1, 1995, when the fund started, and the current 3.00% sales charge was paid. As the chart shows, by October 31, 1999, the value of the investment would have been $20,074 - a 100.74% increase on the initial investment. For comparison, look at how the Tokyo Stock Exchange Second Section Stock Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have been $13,766 - a 37.66% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) JAPAN SMALLER COMPANIES FUND TALK: THE MANAGER'S OVERVIEW An interview with Kenichi Mizushita, Portfolio Manager of Fidelity Japan Smaller Companies Fund Q. HOW DID THE FUND PERFORM, KENICHI? A. The fund had an exceptional year, turning in a total return of 242.10% for the 12 months that ended October 31, 1999. By comparison, the Japanese funds average returned 95.57%, according to Lipper Inc., and the Tokyo Stock Exchange Second Section Stock Index returned 164.91% during the same time period. Q. WHAT FACTORS HELPED YOU DELIVER SUCH GOOD PERFORMANCE? A. Several factors helped. First, through careful stock selection among small-cap names, I was able to add some very strong performers to the fund's portfolio. Second, the fund's investment parameters were changed earlier this year, giving me a broader range of stocks from which to choose. Third, a significant improvement in investor sentiment in Japan - spurred by the government's fiscal and monetary policies - created a more favorable environment for small stocks, and helped boost the fund's return. Q. RECENTLY, THE FUND CHANGED ITS NAME FROM JAPAN SMALL COMPANIES TO JAPAN SMALLER COMPANIES. WHY? A. The rapid appreciation of Japanese small-capitalization stocks caused their market caps to grow beyond levels commonly thought of as "small cap" by investors in the United States. Between June 1 and October 29, 1999, the average weighted market cap of the TSE Second Section Index - the fund's benchmark - increased approximately 71% from $2.0 billion to $3.4 billion. Changing the fund's name to Japan Smaller Companies gives it a name that's descriptive of the fund's investment universe, and differentiates the fund from those that have the ability to invest in larger capitalization stocks found in the Nikkei, TOPIX and other Japanese indexes. Q. WHAT KINDS OF STOCKS ARE YOU ALLOWED TO PURCHASE FOR THE FUND NOW? A. Earlier in the year, we changed the fund's investment parameters to allow the fund to purchase stocks of companies with market capitalizations above $1 billion. These companies are among the largest of the small-cap stocks, and they did extremely well during the past year, given their strong positions in their respective industries. By Japanese standards, though, they're still considered small-cap stocks. Adding these companies, with a focus on such technology names as Oracle Japan and Trend Micro, beefed up the fund's investments in industry leaders. Q. WHICH STOCKS TURNED OUT TO BE THE STARS DURING THE PAST YEAR? A. Hikari Tsushin, the fund's largest holding and Japan's largest wholesaler of mobile telephones, successfully increased its market share and its stock performed very well. Fund holding Don Quijote's chain of discount stores, featuring late-night operation, continued to deliver strong earnings. Funai Electric is Japan's largest maker of TV/VCRs, supplying the worldwide market, and has a very innovative and sophisticated production system in China. Funai began to diversify its product line, branching into laser printers and DVD players, which helped improve its competitiveness and profitability. Obic Co., an information technology software development company, focuses on small-to-medium companies. Since other IT software firms focus only on the largest companies, Obic's unique positioning and strong growth helped it perform well. Q. WHAT ABOUT DISAPPOINTMENTS? A. There were very few stocks that disappointed. Riso Kagaku, a manufacturer of printers, experienced lower demand from its South American markets as they encountered economic troubles as well as lower demand in Japan for its products. The company's earnings growth slowed as a result. Idec Izumi makes switches for machines used in factories. With the manufacturing sector in Japan still sluggish, demand for the company's products was weak. Q. WHAT'S YOUR OUTLOOK, KENICHI? A. The good news is that the Japanese economy has been showing signs of recovery, and demonstrated positive Gross Domestic Product growth during the first and second quarters of 1999, backed by an increase in public spending and housing starts. Although consumption and capital expenditure activity are still weak, I believe that the economy is gradually improving. As for small-cap stocks, with a new NASDAQ Japan exchange opening next year and another exchange, MOTHERS - an offshoot of the Tokyo Stock Exchange - opening this year, I anticipate that more investors will join in the growing interest in small-cap stocks. This positive sentiment should continue to build, assuming no major interference with the economic recovery in Japan. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3. FUND FACTS GOAL: long-term growth of capital by investing mainly in equity securities of Japanese issuers with smaller market capitalizations FUND NUMBER: 360 TRADING SYMBOL: FJSCX START DATE: November 1, 1995 SIZE: as of October 31, 1999, more than $1.7 billion MANAGER: Kenichi Mizushita, since 1996; manager, several Fidelity Investments Japan, Ltd., and institutional funds; joined Fidelity in 1985 (checkmark) JAPAN SMALLER COMPANIES INVESTMENT CHANGES AS OF OCTOBER 31,1999 United States 5.9% Row: 1, Col: 1, Value: 94.09999999999999 Row: 1, Col: 2, Value: 5.9 Japan 94.1% GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30, 1999 United States 6.7% Row: 1, Col: 1, Value: 93.3 Row: 1, Col: 2, Value: 6.7 Japan 93.3% PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF APPLICABLE. ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks 94.1 93.3 Short-Term Investments and 5.9 6.7 Net Other Assets PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Hikari Tsushin, Inc. 3.4 2.5 (Cellular) Funai Electric Co. Ltd. 3.0 0.8 (Consumer Electronics) Tokyo Seimitsu Co. Ltd. 2.7 0.8 (Electronic Instruments) Fancl Corp. (Household 2.4 2.1 Products) Obic Co. Ltd. (Computer 2.4 1.1 Services & Software) Aiful Corp. (Credit & Other 2.2 0.6 Finance) Trend Micro, Inc. (Computer 2.0 0.7 Services & Software) Takasago Electric Industry 2.0 1.7 Co. (Leisure Durables & Toys) Oracle Corp. Japan 1.9 0.0 (Computer Services & Software) Sony Music Entertainment Ltd. 1.9 2.2 (Entertainment) 23.9 12.5 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO TECHNOLOGY 23.0 18.6 RETAIL & WHOLESALE 11.0 12.4 MEDIA & LEISURE 10.7 8.1 NONDURABLES 7.8 9.3 DURABLES 7.6 4.8 SERVICES 7.2 6.2 INDUSTRIAL MACHINERY & 7.0 7.6 EQUIPMENT UTILITIES 5.9 3.0 CONSTRUCTION & REAL ESTATE 5.3 10.2 FINANCE 5.2 6.4
COMMON STOCKS - 94.1% SHARES VALUE (NOTE 1) BASIC INDUSTRIES - 0.6% CHEMICALS & PLASTICS - 0.2% Canon Chemicals, Inc. 77,000 $ 701,782 Ferrotec Corp. 179,000 4,091,429 4,793,211 METALS & MINING - 0.1% Toami Corp. 182,000 1,328,403 PAPER & FOREST PRODUCTS - 0.3% Rengo Co. Ltd. 910,000 4,806,723 TOTAL BASIC INDUSTRIES 10,928,337 CONSTRUCTION & REAL ESTATE - 5.3% BUILDING MATERIALS - 3.1% Advan Co. Ltd. 179,400 5,306,622 Arc Land Sakamoto Co. Ltd. 662,000 11,126,051 Fujimi, Inc. 323,900 14,931,285 Hitachi Metals Techno Ltd. 485,000 2,654,982 Kondotec, Inc. 456,500 2,630,492 Nichiha Corp. 507,000 5,112,605 Nippon Sheet Glass Co. Ltd. 700,000 4,356,303 Noritz Corp. 538,000 8,499,496 54,617,836 ENGINEERING - 0.2% Daimei Telecom Engineering 348,000 4,130,881 Corp. REAL ESTATE - 2.0% Able, Inc. 123,000 11,340,217 Meiwa Estate Co. Ltd. 135,000 4,472,989 Nagawa Co. Ltd. 138,000 1,457,863 Sumitomo Real Estate Sales 397,000 18,529,845 Co. Ltd. 35,800,914 TOTAL CONSTRUCTION & REAL 94,549,631 ESTATE DURABLES - 7.6% AUTOS, TIRES, & ACCESSORIES - 1.8% FCC Co. Ltd. 261,000 4,938,007 Toyoda Gosei Co. Ltd. 591,000 25,484,659 Toyoda Machine Works Ltd. 250,000 1,810,324 32,232,990 CONSUMER DURABLES - 2.8% Aderans Co. Ltd. 262,000 13,134,598 Heiwa Corp. 261,000 7,168,884 Sankyo Co. Ltd. (Gunma) 378,000 29,949,581 50,253,063 CONSUMER ELECTRONICS - 3.0% Funai Electric Co. Ltd. 116,000 52,582,956 TOTAL DURABLES 135,069,009 SHARES VALUE (NOTE 1) FINANCE - 5.2% BANKS - 0.3% The Suruga Bank Ltd. 165,000 $ 2,424,490 Tokyo Tomin Bank Ltd. (a) 103,400 3,425,979 5,850,469 CREDIT & OTHER FINANCE - 4.9% Aiful Corp. 255,000 39,673,471 Jafco Co. Ltd. 164,000 18,427,852 Mycal Card, Inc. 223,000 9,851,621 Shohkoh Fund & Co. Ltd. 29,600 18,136,664 86,089,608 TOTAL FINANCE 91,940,077 HEALTH - 2.8% DRUGS & PHARMACEUTICALS - 0.7% JCR Pharmaceuticals Co. Ltd. 535,000 5,651,861 Sysmex Corp. 202,000 6,207,923 11,859,784 MEDICAL EQUIPMENT & SUPPLIES - - 2.1% Hogy Medical Co. 294,000 19,764,707 Japan Medical Dynamic 336,000 18,393,278 Marketing, Inc. 38,157,985 TOTAL HEALTH 50,017,769 INDUSTRIAL MACHINERY & EQUIPMENT - 7.0% ELECTRICAL EQUIPMENT - 1.5% Hakuto Co. Ltd. 532,000 12,568,740 Icom, Inc. 323,000 5,118,368 Idec Izumi Corp. 357,000 3,946,286 Mirai Industry Co. Ltd. 322,000 5,195,294 26,828,688 INDUSTRIAL MACHINERY & EQUIPMENT - 5.5% Iuchi Seieido Co. Ltd. 118,000 3,411,093 Misumi Corp. 290,000 21,027,612 Nitto Kohki Co. Ltd. 527,000 11,742,041 Star Micronics Co. Ltd. 814,000 11,530,853 THK Co. Ltd. 455,000 14,900,841 Tsubaki Nakashima Co. Ltd. 702,500 10,120,048 Union Tool Co. 237,000 25,355,872 98,088,360 TOTAL INDUSTRIAL MACHINERY & 124,917,048 EQUIPMENT MEDIA & LEISURE - 10.7% ENTERTAINMENT - 3.1% Avex, Inc. 98,000 20,705,883 Sony Music Entertainment Ltd. 261,000 34,064,732 54,770,615 LEISURE DURABLES & TOYS - 2.0% Takasago Electric Industry 465,000 35,279,714 Co. COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) MEDIA & LEISURE - CONTINUED PUBLISHING - 1.7% Asia Securities Printing Co. 390,000 $ 6,554,622 Ltd. Asia Securities Printing Co. 374,000 6,142,041 Ltd. (a) Shobunsha Publications, Inc. 176,000 8,197,840 Takara Printing Co. Ltd. 362,000 9,039,136 29,933,639 RESTAURANTS - 3.9% Anrakutei Co. Ltd. 293,000 5,205,763 Kappa Create Co. Ltd. 350,000 11,092,438 Maysuya Foods Co. 273,000 18,824,875 Resorttrust, Inc. 271,000 7,807,924 Saizeriya Co. Ltd. 245,700 19,585,211 Zensho Co. Ltd. 130,000 7,865,547 70,381,758 TOTAL MEDIA & LEISURE 190,365,726 NONDURABLES - 7.8% AGRICULTURE - 0.9% Hokuto Corp. 291,000 17,187,516 BEVERAGES - 0.8% Chukyo Coca-Cola Bottling Co. 250,000 2,974,790 Ltd. Fuji Coca-Cola Bottling Co. 200,000 3,841,537 Ltd. Kinki Coca-Cola Bottling Co. 136,000 2,351,021 Ltd. Mikasa Coca Cola Bottling Co. 254,000 2,683,313 Shikoku Coca-Cola Bottling 152,300 1,894,151 Co. Ltd. 13,744,812 FOODS - 3.0% Ariake Japan 154,000 9,909,244 Bourbon Corp. 48,000 433,325 Q'Sai Co. Ltd. 378,000 26,101,514 Rock Field Co. Ltd. 333,000 16,502,090 52,946,173 HOUSEHOLD PRODUCTS - 3.1% Fancl Corp. 150,000 43,217,289 Mandom Corp. 408,000 12,342,858 55,560,147 TOTAL NONDURABLES 139,438,648 RETAIL & WHOLESALE - 11.0% APPAREL STORES - 1.7% Fast Retailing Co. Ltd. 36,000 8,643,458 Kyoto Kimono Yuzen Co. Ltd. 300 2,463,385 (a) United Arrows Ltd. 77,000 9,835,295 World Co. Ltd. 100,000 10,132,053 31,074,191 GENERAL MERCHANDISE STORES - 1.5% Ryohin Keikaku Co. Ltd. 135,000 26,008,165 SHARES VALUE (NOTE 1) GROCERY STORES - 1.0% C Two-Network Co. Ltd. 70,800 $ 18,018,728 RETAIL & WHOLESALE, MISCELLANEOUS - 6.8% Daiichikosho Co. Ltd. 90,000 3,370,949 Don Quijote Co. Ltd. 115,800 28,915,248 Jac Co. Ltd. 53,000 18,578,632 Paris Miki, Inc. 246,000 19,845,379 Shaddy Co. Ltd. 640,000 19,545,739 Yamada Denki Co. Ltd. 426,000 30,397,889 120,653,836 TOTAL RETAIL & WHOLESALE 195,754,920 SERVICES - 7.2% PRINTING - 0.5% Riso Kagaku Corp. 203,000 8,773,110 SERVICES - 6.7% Aucnet, Inc. 228,000 19,510,013 BellSystem24, Inc. 20,000 19,207,684 Kansai Maintenance Corp. 281,000 3,025,220 NIC Corp. 232,000 11,474,670 Nichii Gakkan Co. 161,000 26,285,716 Nippon System Development Co. 194,000 16,581,994 Ltd. Pasona Softbank, Inc. 300,000 19,591,838 Universal Home, Inc. (a) 97 3,633,133 119,310,268 TOTAL SERVICES 128,083,378 TECHNOLOGY - 23.0% COMPUTER SERVICES & SOFTWARE - - 9.0% Fuji Soft ABC, Inc. 76,000 6,970,469 InterQ, Inc. (a) 60,000 18,439,377 KOEI Co. Ltd. 184,000 7,121,441 Obic Co. Ltd. 91,300 42,964,708 Oracle Corp. Japan 170,000 34,612,247 Square Co. Ltd. 87,000 6,299,928 Tomy Co. Ltd. 125,000 8,295,319 Trend Micro, Inc. 180,000 35,783,915 160,487,404 COMPUTERS & OFFICE EQUIPMENT - - 1.3% Argotechnos 21Corp. 103,200 5,163,717 Japan Business Computer Co. 174,000 4,361,489 Ltd. Melco Inc. 166,800 4,485,378 Softbank Corp. 10,000 4,158,464 Toyo Information System Co. 108,000 5,466,123 Ltd. 23,635,171 ELECTRONIC INSTRUMENTS - 5.2% Cosel Co. Ltd. 750,000 21,032,414 Nagano Keiki Co. Ltd. 200,200 5,095,126 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) TECHNOLOGY - CONTINUED ELECTRONIC INSTRUMENTS - CONTINUED Sony Chemicals Corp. 203,000 $ 18,033,614 Tokyo Seimitsu Co. Ltd. 390,000 47,605,284 91,766,438 ELECTRONICS - 7.4% Citizen Electronics Co. Ltd. 208,400 20,014,407 Doshisha Co. Ltd. 232,000 6,684,274 Hirose Electric Co. Ltd. 38,000 6,638,368 Koa Denko Co. Ltd. 714,000 12,411,429 Kuroda Electric Co. Ltd. 350,000 20,100,841 Kyocera Corp. 116,000 11,140,457 Nidec Corp. 92,000 17,891,958 Satori Electric Co. Ltd. 160,000 1,859,304 Sumida Electric Co. Ltd. 412,000 19,150,829 Toko, Inc. 677,000 3,348,428 Tokyo Denpa Co. Ltd. (c) 340,000 11,787,756 131,028,051 PHOTOGRAPHIC EQUIPMENT - 0.1% Daito Chemix Corp. 215,000 2,374,550 TOTAL TECHNOLOGY 409,291,614 TRANSPORTATION - 0.0% TRUCKING & FREIGHT - 0.0% Miroku Jyoho Service Co., 21,500 388,394 Ltd. UTILITIES - 5.9% CELLULAR - 3.7% Hikari Tsushin, Inc. 75,000 60,432,172 NTT Mobile Communication 200 5,320,528 Network, Inc. (d) 65,752,700 TELEPHONE SERVICES - 2.2% DDI Corp. 1,630 17,845,859 Kokusai Denshin Denwa 164,000 20,632,894 38,478,753 TOTAL UTILITIES 104,231,453 TOTAL COMMON STOCKS 1,674,976,004 (Cost $977,502,800) CASH EQUIVALENTS - 12.1% SHARES VALUE (NOTE 1) Central Cash Collateral Fund, 106,876,253 $ 106,876,253 5.26% (b) Taxable Central Cash Fund, 108,487,630 108,487,630 5.21% (b) TOTAL CASH EQUIVALENTS 215,363,883 (Cost $215,363,883) TOTAL INVESTMENT PORTFOLIO - 1,890,339,887 106.2% (Cost $1,192,866,683) NET OTHER ASSETS - (6.2)% (110,327,569) NET ASSETS - 100% $ 1,780,012,318
LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. (c) Affiliated company (d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $5,320,528 or 0.3% of net assets. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $1,094,772,051 and $244,943,603, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $3,523 for the period. The fund participated in the security lending program. At period end, the value of securities loaned amounted to $98,220,575. The fund received cash collateral of $106,876,253 which was invested in the Central Cash Collateral Fund. Cash collateral includes $3,485,750 received for unsettled securities loans. The fund participated in the interfund lending program as a lender. The average daily loan balance during the period for which loans were outstanding amounted to $9,915,000. The weighted average interest rate was 4.81%. Interest earned from the interfund lending program amounted to $1,324 and is included in interest income on the Statement of Operations. Transactions during the period with companies which are or were affiliates are as follows: PURCHASES SALES DIVIDEND VALUE AFFILIATE COST COST INCOME Tokyo Denpa Co. Ltd. $ 353,977 $ 826,984 $ - $ 11,787,756 INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $1,196,068,348. Net unrealized appreciation aggregated $694,271,539, of which $712,752,240 related to appreciated investment securities and $18,480,701 related to depreciated investment securities. At October 31, 1999, the fund had a capital loss carryforward of approximately $21,197,000 of which $5,580,000 and $15,617,000 will expire on October 31, 2005 and 2006, respectively. JAPAN SMALLER COMPANIES FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 1,890,339,887 value (cost $1,192,866,683) - - See accompanying schedule Foreign currency held at 1,182,865 value (cost $1,182,865) Receivable for investments 7,610,209 sold Receivable for fund shares 8,465,949 sold Dividends receivable 1,556,331 Interest receivable 471,121 Redemption fees receivable 14,160 Other receivables 65,158 TOTAL ASSETS 1,909,705,680 LIABILITIES Payable for investments $ 17,957,490 purchased Payable for fund shares 3,156,921 redeemed Accrued management fee 1,043,047 Other payables and accrued 659,651 expenses Collateral on securities 106,876,253 loaned, at value TOTAL LIABILITIES 129,693,362 NET ASSETS $ 1,780,012,318 Net Assets consist of: Paid in capital $ 1,109,862,199 Accumulated net investment (1,879,427) loss Accumulated undistributed net (25,468,603) realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 697,498,149 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 86,557,508 $ 1,780,012,318 shares outstanding NET ASSET VALUE and $20.56 redemption price per share ($1,780,012,318 (divided by) 86,557,508 shares) Maximum offering price per $21.20 share (100/97.00 of $20.56) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 2,963,373 Dividends Interest 3,096,784 Security lending 78,711 6,138,868 Less foreign taxes withheld (447,133) TOTAL INCOME 5,691,735 EXPENSES Management fee $ 4,833,493 Transfer agent fees 1,270,185 Accounting and security 299,027 lending fees Non-interested trustees' 1,508 compensation Custodian fees and expenses 261,486 Registration fees 466,407 Audit 33,680 Legal 981 Miscellaneous 1,796 Total expenses before 7,168,563 reductions Expense reductions (37,014) 7,131,549 NET INVESTMENT INCOME (LOSS) (1,439,814) REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 28,938,974 (including realized loss of $94,722 on sales of investments in affiliated issuers) Foreign currency transactions (253,283) 28,685,691 Change in net unrealized appreciation (depreciation) on: Investment securities 699,999,370 Assets and liabilities in (5,732) 699,993,638 foreign currencies NET GAIN (LOSS) 728,679,329 NET INCREASE (DECREASE) IN $ 727,239,515 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION Sales $ 6,014,883 charges paid to FDC Sales charges - Retained by $ 6,010,566 FDC Expense Reductions $ 32,417 Directed brokerage arrangements Custodian credits 847 Transfer agent credits 3,750 $ 37,014 STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 ASSETS Operations Net investment $ (1,439,814) $ (187,068) income (loss) Net realized gain (loss) 28,685,691 (15,537,371) Change in net unrealized 699,993,638 8,665,467 appreciation (depreciation) NET INCREASE (DECREASE) IN 727,239,515 (7,058,972) NET ASSETS RESULTING FROM OPERATIONS Distributions in excess of - (141,696) net investment income Share transactions Net 1,641,046,368 68,052,610 proceeds from sales of shares Reinvestment of distributions - 141,028 Cost of shares redeemed (694,218,114) (45,513,438) NET INCREASE (DECREASE) IN 946,828,254 22,680,200 NET ASSETS RESULTING FROM SHARE TRANSACTIONS Redemption fees 5,957,410 233,658 TOTAL INCREASE (DECREASE) 1,680,025,179 15,713,190 IN NET ASSETS NET ASSETS Beginning of period 99,987,139 84,273,949 End of period (including $ 1,780,012,318 $ 99,987,139 accumulated net investment loss and distributions in excess of net investment income of $1,879,427 and $753,057, respectively) OTHER INFORMATION Shares Sold 112,923,444 11,458,260 Issued in reinvestment of - 25,139 distributions Redeemed (43,003,282) (7,861,499) Net increase (decrease) 69,920,162 3,621,900
FINANCIAL HIGHLIGHTS YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 D SELECTED PER-SHARE DATA Net asset value, beginning of $ 6.01 $ 6.47 $ 9.13 $ 10.00 period Income from Investment Operations Net investment income (loss) C (.03) (.01) (.03) (.03) Net realized and unrealized 14.45 (.45) (2.63) (.87) gain (loss) Total from investment 14.42 (.46) (2.66) (.90) operations Less Distributions In excess of net investment - (.01) (.01) - income From net realized gain - - (.03) - Total distributions - (.01) (.04) - Redemption fees added to paid .13 .01 .04 .03 in capital Net asset value, end of period $ 20.56 $ 6.01 $ 6.47 $ 9.13 TOTAL RETURN A, B 242.10% (6.94)% (28.80)% (8.70)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 1,780,012 $ 99,987 $ 84,274 $ 105,664 (000 omitted) Ratio of expenses to average 1.07% 1.23% 1.35% 1.34% net assets Ratio of expenses to average 1.07% 1.23% 1.34% E 1.34% net assets after expense reductions Ratio of net investment (.22)% (.20)% (.46)% (.32)% income (loss) to average net assets Portfolio turnover rate 39% 39% 101% 66% A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D FOR THE PERIOD NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1996. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. LATIN AMERICA PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY LATIN AMERICA 17.46% -18.95% 32.26% FIDELITY LATIN AMERICA 13.93% -21.38% 28.29% (INCL. 3.00% SALES CHARGE) MSCI EMF - Latin America 21.17% -8.33% 66.11% Latin American Funds Average 16.19% -19.48% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years or since the fund started on April 19, 1993. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Morgan Stanley Capital International (MSCI) Emerging Markets Free-Latin America Index - a market capitalization-weighted index of over 160 stocks traded in seven Latin American markets. To measure how the fund's performance stacked up against its peers, you can compare it to the Latin American funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 49 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY LATIN AMERICA 17.46% -4.12% 4.37% FIDELITY LATIN AMERICA 13.93% -4.70% 3.89% (INCL. 3.00% SALES CHARGE) MSCI EMF - Latin America 21.17% -1.72% 8.07% Latin American Funds Average 16.19% -4.58% n/a AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND Latin America MS EMF Latin America 00349 MS007 1993/04/19 9700.00 10000.00 1993/04/30 9641.80 9629.27 1993/05/31 9874.60 9880.87 1993/06/30 10379.00 10503.42 1993/07/31 10737.90 10785.19 1993/08/31 11746.70 11714.82 1993/09/30 11960.10 11920.39 1993/10/31 12881.60 12392.75 1993/11/30 13861.30 13204.75 1993/12/31 15722.24 14878.84 1994/01/31 16981.97 17327.50 1994/02/28 16093.32 16826.00 1994/03/31 14462.50 15684.24 1994/04/30 13437.14 14487.31 1994/05/31 14169.54 15343.10 1994/06/30 12851.22 14360.38 1994/07/31 14042.59 15721.44 1994/08/31 16132.38 18278.52 1994/09/30 16679.24 19062.61 1994/10/31 15829.65 18120.86 1994/11/30 15360.92 17604.02 1994/12/31 12079.76 14974.08 1995/01/31 10331.75 13338.86 1995/02/28 8710.70 11406.56 1995/03/31 8564.22 11013.06 1995/04/30 9618.88 12602.53 1995/05/31 9667.71 12888.85 1995/06/30 9804.43 13089.71 1995/07/31 10331.75 13494.70 1995/08/31 10527.06 13648.86 1995/09/30 10361.05 13532.50 1995/10/31 9521.23 12443.72 1995/11/30 9863.02 12667.34 1995/12/31 10090.87 13052.35 1996/01/31 11504.18 14390.58 1996/02/29 10901.30 13561.89 1996/03/31 11316.40 13731.96 1996/04/30 11800.68 14492.29 1996/05/31 12373.92 14958.43 1996/06/30 12709.95 15342.23 1996/07/31 12186.13 14737.59 1996/08/31 12561.70 15152.37 1996/09/30 12759.37 15498.77 1996/10/31 12443.10 15347.63 1996/11/30 12601.23 15494.03 1996/12/31 13190.77 15951.46 1997/01/31 14347.85 17521.55 1997/02/28 15122.60 18680.87 1997/03/31 15032.04 18395.98 1997/04/30 15766.54 19316.04 1997/05/31 16903.50 20684.98 1997/06/30 18352.37 22458.18 1997/07/31 19569.83 23720.20 1997/08/31 17436.77 21447.02 1997/09/30 19217.67 23503.38 1997/10/31 15605.55 19038.69 1997/11/30 16662.02 19689.74 1997/12/31 17528.97 20998.04 1998/01/31 15788.29 18665.66 1998/02/28 16541.56 19646.12 1998/03/31 17579.87 21039.04 1998/04/30 17579.87 20557.00 1998/05/31 15045.19 17898.10 1998/06/30 14261.37 16840.37 1998/07/31 14882.32 17673.60 1998/08/31 9120.76 11542.94 1998/09/30 9874.04 12724.85 1998/10/31 10922.52 13708.79 1998/11/30 11502.75 14767.44 1998/12/31 10807.56 13626.18 1999/01/31 9421.44 12012.79 1999/02/28 10182.24 12779.37 1999/03/31 12099.88 15377.27 1999/04/30 13725.70 17592.42 1999/05/31 13204.60 17042.55 1999/06/30 14069.63 17854.23 1999/07/31 12600.13 16480.24 1999/08/31 12235.36 15983.64 1999/09/30 12339.58 16244.78 1999/10/29 12829.41 16611.05 IMATRL PRASUN SHR__CHT 19991031 19991111 112252 R00000000000082 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity Latin America Fund on April 19, 1993, when the fund started, and the current 3.00% sales charge was paid. As the chart shows, by October 31, 1999, the value of the investment would have grown to $12,829 - a 28.29% increase on the initial investment. For comparison, look at how the Morgan Stanley Capital International Emerging Markets Free-Latin America Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $16,611 - a 66.11% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) LATIN AMERICA FUND TALK: THE MANAGER'S OVERVIEW An interview with Patti Satterthwaite, Portfolio Manager of Fidelity Latin America Fund Q. HOW DID THE FUND PERFORM, PATTI? A. Despite a sell-off during the last four months of the period, it was a good year for the Latin American equity markets. During the 12-month period that ended October 31, 1999, the fund returned 17.46%. In comparison, the Morgan Stanley Capital International Emerging Markets Free-Latin America Index returned 21.17%. To get a sense of how the fund performed relative to its peers, the Latin American funds average, tracked by Lipper Inc., returned 16.19% during the same period. Q. WHAT FACTORS CAUSED THE FUND TO UNDERPERFORM THE INDEX, YET OUTPACE THE LIPPER PEER GROUP DURING THE PERIOD? A. The fund's cash position was the primary detractor from relative performance. Since most Latin American markets posted strong gains during the period, the cash the fund held - which it normally does to meet redemption requirements and to take advantage of buying opportunities - hurt performance versus the index, which, by construction, does not hold cash. While it's impossible to say with certainty how much cash my competitors held during the period, cash levels are generally similar or higher among these funds; consequently the fund was able to slightly outperform its peer group. Another detractor relative to the index was the fund's overweighted position in Mexico. While Mexico was among the region's strongest performers during the first half of the period, it led the decline in Latin America over the past four months, due to concerns about interest rates, fears of a potentially weaker peso and increased volatility in the U.S. market. Q. WERE THERE ANY OTHER FACTORS THAT CAUSED THE MARKET'S DECLINE DURING THE PAST SIX MONTHS? A. Not really. The sell-off didn't seem to be driven by any fundamental changes or problems with the economies or markets. In addition to investors' perceived problems regarding the peso and interest rates, the real factors seemed to be nervousness about stock valuations and profit-taking after a stunning recovery in Latin America from the fourth quarter of 1998 through the second quarter of 1999. Q. MEXICO AND BRAZIL COMBINED REPRESENTED ROUGHLY 80% OF THE FUND'S NET ASSETS AT THE END OF THE PERIOD. HOW DID THE FUND'S HOLDINGS IN THESE COUNTRIES PERFORM? A. While I recently reduced the fund's exposure to Mexican banks because I felt their valuations were getting a bit extended, in general these holdings produced strong results for the fund. During the first half of the period, the improved economic environment in Mexico - characterized by declining interest rates, lower inflation and a strong peso - helped bank stocks such as Grupo Financiero Bancomer and Banacci. Other Mexican holdings that provided an important contribution were Telefonos de Mexico (Telmex) and Grupo Televisa. Telmex, the fund's largest holding, continued to be one of our best performers. Its shares rallied strongly on the impressive growth in demand for wireless, voice and Internet services, which drove its earnings higher. With the exception of Votorantim Celulose, a Brazilian pulp producer, and Companhia Vale do Rio Doce, a metals and mining company - both of which benefited from lower production costs - the fund's holdings in Brazil and other regions outside Mexico produced mixed results. Q. WHICH STOCKS WERE THE PRIMARY DETRACTORS? A. I can't think of any individual holdings that stand out as significant detractors. Underperformance relative to the index was more a matter of being underweighted or overweighted relative to the index in certain countries and, as I mentioned earlier, the fund's cash position. Early in the period, the fund's exposure to Brazilian stocks detracted from absolute returns following the country's currency crisis in September of 1998. However, the fund's underweighting in Brazilian stocks versus the index helped relative performance. A similar example was the fund's underweighted exposure to Argentina, which hurt performance during the past six months, but was a contributor during the overall 12-month period. Q. WHAT'S YOUR OUTLOOK, PATTI? A. Latin American markets could continue to be volatile over the short term. Macroeconomic factors - such as fears of higher interest rates in the U.S. and, despite no indication of higher inflation in Mexico, fears of a weaker peso - may have an impact on the short-term direction of the market. Once we get past these short-term hurdles, I remain optimistic about the outlook for many Latin American markets. We are seeing improvements in the business fundamentals at many companies, and my research team and I are finding a lot of interesting investment opportunities despite the run-up in stock prices over the past year or so. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3. NOTE TO SHAREHOLDERS: On December 15, 1999, shareholders of Fidelity Latin America Fund voted to amend the fund's investment policies to permit the fund to invest up to 35% of its total assets in any industry that represents more than 20% of the Latin American market. As of October 31, 1999, telephone companies accounted for approximately 27% of the Latin American market as represented by the Morgan Stanley Capital International (MSCI) Emerging Markets Free-Latin America Index. FUND FACTS GOAL: high total investment return by investing mainly in equity and debt securities of Latin American issuers FUND NUMBER: 349 TRADING SYMBOL: FLATX START DATE: April 19, 1993 SIZE: as of October 31, 1999, more than $307 million MANAGER: Patti Satterthwaite, since 1993; assistant manager, Latin American portion of Fidelity Emerging Markets Fund, since 1990; securities and Latin American analyst, 1986-1990; joined Fidelity in 1986 (checkmark) LATIN AMERICA INVESTMENT CHANGES AS OF OCTOBER 31, 1999 United States 4.0% Argentina 5.0% Row: 1, Col: 1, Value: 5.0 Row: 1, Col: 2, Value: 30.9 Row: 1, Col: 3, Value: 3.7 Row: 1, Col: 4, Value: 1.3 Row: 1, Col: 5, Value: 49.4 Row: 1, Col: 6, Value: 1.7 Row: 1, Col: 7, Value: 4.0 Row: 1, Col: 8, Value: 4.0 Row: 1, Col: 9, Value: 0.0 Peru 4.0% Other 1.7% Brazil 30.9% Mexico 49.4% Chile 3.7% Luxembourg 1.3% GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30,1999 United States 9.6% Argentina 11.6% Row: 1, Col: 1, Value: 11.6 Row: 1, Col: 2, Value: 24.3 Row: 1, Col: 3, Value: 2.7 Row: 1, Col: 4, Value: 45.9 Row: 1, Col: 5, Value: 2.4 Row: 1, Col: 6, Value: 1.5 Row: 1, Col: 7, Value: 2.0 Row: 1, Col: 8, Value: 9.6 Row: 1, Col: 9, Value: 0.0 Peru 2.0% Panama 1.5% Other 2.4% Brazil 24.3% Mexico 45.9% Chile 2.7% PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF APPLICABLE. ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks 96.0 90.4 Short-Term Investments and 4.0 9.6 Net Other Assets PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Telefonos de Mexico SA 14.9 12.4 sponsored ADR representing Class L shares (Mexico, Telephone Services) Cifra SA de CV Series C 4.8 4.8 (Mexico, General Merchandise Stores) Tele Norte Leste 4.6 2.9 Participacoes SA ADR (Brazil, Telephone Services) Brahma Cervejaria (Compagnie) 4.2 0.0 sponsored ADR (Brazil, Beverages) Grupo Televisa SA de CV 4.0 4.9 sponsored ADR (Mexico, Broadcasting) Grupo Modelo SA de CV Class C 4.0 4.0 (Mexico, Beverages) Banacci SA de CV Class O 3.7 3.4 (Mexico, Banks) Cemex SA de CV sponsored ADR 3.3 0.0 (Mexico, Building Materials) Companhia Vale do Rio Doce 3.2 1.0 (PN-A) (Brazil, Metals & Mining) Grupo Carso SA de CV Series 2.9 2.8 A1 (Mexico, Tobacco) 49.6 36.2 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO UTILITIES 31.7 31.7 NONDURABLES 19.8 19.7 BASIC INDUSTRIES 10.9 5.2 FINANCE 8.7 8.6 RETAIL & WHOLESALE 7.8 6.2 CONSTRUCTION & REAL ESTATE 5.5 2.2 MEDIA & LEISURE 4.3 4.9 ENERGY 3.7 8.3 PRECIOUS METALS 2.7 2.0 HOLDING COMPANIES 0.6 1.3
LATIN AMERICA INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 96.0% SHARES VALUE (NOTE 1) ARGENTINA - 5.0% Banco de Galicia y Buenos 38,695 $ 817,432 Aires SA ADR Class B Bansud SA Class B (a) 617,519 1,519,796 Cresud S.A.C.I.F.y A. 111,582 1,143,716 sponsored ADR Inversiones y Representacions 44,580 1,345,759 SA sponsored GDR Perez Companc SA Class B 1,412,336 8,506,176 Telefonica de Argentina SA 83,300 2,134,563 sponsored ADR 15,467,442 BRAZIL - 30.9% Aracruz Celulose SA ADR 173,900 3,564,950 Banco Bradesco SA (Reg. Pfd.) 421,424,000 2,066,016 Banco Itau SA 70,610,000 4,059,713 Brahma Cervejaria(Compagnie): warrants 4/30/03 (a) 1,895,770 194,638 (Reg.) 117,827 50,808 sponsored ADR 1,041,326 13,016,575 Centrais Electricas 320,445,100 5,708,134 Brasileiras SA Companhia Brasileira de 113,700 2,487,188 Distribuicao Grupo Pao de Acucar sponsored ADR Companhia Brasileira de 321,249,000 2,613,859 Petroleo Ipiranga SA Class B Companhia de Electricidade do 2,008,714,550 412,467 Estado do Rio de Janeiro (CERJ) (a) Companhia de Tecidos Norte de 10,053,310 712,195 Minas Companhia Vale do Rio Doce 496,000 9,876,715 (PN-A) Compania Cimento Portland Itau 6,044,000 597,264 Compania Energertica Minas 213,729,329 3,050,141 Gerais Dixie Toga SA 1,904,400 342,166 Embratel Participacoes SA ADR 436,165 5,615,624 Encorpar Redito e Participa 11,465,310 8,887 SA (a) Perdigao SA 1,202,539,630 1,666,764 Souza Cruz Industria Comerico 530,500 3,131,802 Tele Centro Sul Participacoes 135,868 8,118,113 SA sponsored ADR Tele Norte Leste 838,065 14,142,347 Participacoes SA ADR Telesp Participacoes SA ADR 428,140 6,930,516 (a) Votorantim Celulose e Papel 225,286,499 6,592,059 SA (PN Reg.) 94,958,941 CHILE - 3.7% Chilectra SA sponsored ADR 37,500 651,563 Compania Cervecerias Unidas 4,000 87,250 SA sponsored ADR Cristalerias de Chile SA 124,700 1,589,925 sponsored ADR Distribucion Y Servicio D&S 204,600 3,337,538 SA ADR Embotelladora Andina 243,900 3,963,375 sponsored ADR Class A SHARES VALUE (NOTE 1) Enersis SA sponsored ADR 42,278 $ 951,255 Vina Concha Stet y Toro SA 27,600 952,200 sponsored ADR 11,533,106 COLOMBIA - 0.9% Banco Ganadero SA sponsored 79,800 513,713 ADR Class C Compania Nacional de 136,000 408,708 Chocolates Noel (Industria Alimenticias) 97,207 157,041 Suramericana de Inversiones SA 1,761,400 1,814,817 2,894,279 LUXEMBOURG - 1.3% Quilmes Industrial SA 371,600 3,878,575 sponsored ADR MEXICO - 49.4% Alfa SA de CV 1,241,000 4,775,314 Apasco SA de CV 925,000 4,912,783 Banacci SA de CV Class O (a) 4,577,000 11,487,186 Cemex SA de CV sponsored ADR 444,400 9,999,000 (a) Cifra SA de CV Series C (a) 9,553,200 14,783,708 Coca Cola Femsa SA de CV ADR 277,300 3,847,538 Corporacion Interamericana de 323,000 874,564 Entretenimiento SA de CV (Series A1) (a) Gruma SA de CV Class B 360,953 1,849,884 sponsored ADR (a) Grupo Bimbo SA de CV Series A 1,702,070 3,123,194 Grupo Carso SA de CV Series 2,153,100 9,058,603 A1 (a) Grupo Elektra SA de CV Unit 6,957,300 3,325,593 Grupo Financiero Bancomer SA 24,136,700 6,359,370 de CV Series A Grupo Modelo SA de CV Class C 5,007,200 12,227,945 Grupo Televisa SA de CV 290,600 12,350,500 sponsored ADR (a) Kimberly-Clark de Mexico SA 1,739,000 5,577,839 de CV Series A Telefonos de Mexico SA 537,100 45,922,045 sponsored ADR representing Class L shares Tubos de Acero de Mexico SA 110,300 1,206,406 sponsored ADR 151,681,472 PANAMA - 0.8% Panamerican Beverages, Inc. 153,800 2,470,413 Class A PERU - 4.0% Compania de Minas Buenaventura SA: Class B 232,618 1,910,648 sponsored ADR Class B 367,200 6,242,400 Telefonica del Peru SA ADR 352,300 4,073,469 12,226,517 TOTAL COMMON STOCKS 295,110,745 (Cost $295,141,676)
NONCONVERTIBLE BONDS - 0.0% MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1) BRAZIL - 0.0% Companhia Vale do Rio Doce 0% - BRL 290,000 $ 0 11/19/00 (Cost $0)
CASH EQUIVALENTS - 16.1% SHARES Central Cash Collateral Fund, 38,376,500 38,376,500 5.26% (b) Taxable Central Cash Fund, 11,154,035 11,154,035 5.21% (b) TOTAL CASH EQUIVALENTS 49,530,535 (Cost $49,530,535) TOTAL INVESTMENT PORTFOLIO - 344,641,280 112.1% (Cost $344,672,211) NET OTHER ASSETS - (12.1)% (37,304,845) NET ASSETS - 100% $ 307,336,435 CURRENCY ABBREVIATIONS BRL - Brazilian real LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $147,581,971 and $185,968,417, respectively. The fund participated in the security lending program. At period end, the value of securities loaned amounted to $37,714,181. The fund received cash collateral of $38,376,500 which was invested in the Central Cash Collateral Fund. INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $345,357,892. Net unrealized depreciation aggregated $716,612, of which $61,441,807 related to appreciated investment securities and $62,158,419 related to depreciated investment securities. At October 31, 1999, the fund had a capital loss carryforward of approximately $97,171,000 of which $36,899,000, $37,615,000 and $22,657,000 will expire on October 31, 2003 and 2004 and 2007 respectively. MARKET SECTOR DIVERSIFICATION (UNAUDITED) As a Percentage of Net Assets BASIC INDUSTRIES 10.9% CASH EQUIVALENTS 16.1 CONSTRUCTION & REAL ESTATE 5.5 DURABLES 0.2 ENERGY 3.7 FINANCE 8.7 HOLDING COMPANIES 0.6 MEDIA & LEISURE 4.3 NONDURABLES 19.8 PRECIOUS METALS 2.7 RETAIL & WHOLESALE 7.8 SERVICES 0.1 UTILITIES 31.7 LATIN AMERICA FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 344,641,280 value (cost $344,672,211) - See accompanying schedule Foreign currency held at 8,410 value (cost $8,410) Receivable for investments 1,756,120 sold Receivable for fund shares 523,130 sold Dividends receivable 1,171,174 Interest receivable 34,398 Redemption fees receivable 44 Other receivables 15,370 TOTAL ASSETS 348,149,926 LIABILITIES Payable to custodian bank $ 784,848 Payable for investments 553,929 purchased Payable for fund shares 752,450 redeemed Accrued management fee 178,256 Other payables and accrued 167,508 expenses Collateral on securities 38,376,500 loaned, at value TOTAL LIABILITIES 40,813,491 NET ASSETS $ 307,336,435 Net Assets consist of: Paid in capital $ 402,767,540 Undistributed net investment 2,896,477 income Accumulated undistributed net (98,029,008) realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation (298,574) (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 24,971,152 $ 307,336,435 shares outstanding NET ASSET VALUE and $12.31 redemption price per share ($307,336,435 (divided by) 24,971,152 shares) Maximum offering price per $12.69 share (100/97.00 of $12.31) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 9,079,945 Dividends Interest 1,032,235 Security lending 16,595 10,128,775 Less foreign taxes withheld (736,622) TOTAL INCOME 9,392,153 EXPENSES Management fee $ 2,413,253 Transfer agent fees 1,256,813 Accounting and security 194,144 lending fees Custodian fees and expenses 269,982 Registration fees 37,851 Audit 68,859 Legal 1,433 Foreign tax expense 68,346 Miscellaneous 26,151 Total expenses before 4,336,832 reductions Expense reductions (43,962) 4,292,870 NET INVESTMENT INCOME 5,099,283 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities (22,577,026) Foreign currency transactions (1,232,873) (23,809,899) Change in net unrealized appreciation (depreciation) on: Investment securities 59,626,000 Assets and liabilities in (174,834) 59,451,166 foreign currencies NET GAIN (LOSS) 35,641,267 NET INCREASE (DECREASE) IN $ 40,740,550 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION $ 343,731 Sales charges paid to FDC Sales charges - Retained by $ 343,725 FDC Expense reductions Directed $ 42,134 brokerage arrangements Transfer agent credits 1,828 $ 43,962 STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 ASSETS Operations Net investment $ 5,099,283 $ 8,857,496 income Net realized gain (loss) (23,809,899) 45,290,179 Change in net unrealized 59,451,166 (200,090,681) appreciation (depreciation) NET INCREASE (DECREASE) IN 40,740,550 (145,943,006) NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (7,666,729) (10,041,240) from net investment income Share transactions Net 152,034,795 115,794,938 proceeds from sales of shares Reinvestment of distributions 7,377,095 9,873,405 Cost of shares redeemed (218,494,512) (446,516,807) NET INCREASE (DECREASE) IN (59,082,622) (320,848,464) NET ASSETS RESULTING FROM SHARE TRANSACTIONS Redemption fees 1,105,692 530,116 TOTAL INCREASE (DECREASE) (24,903,109) (476,302,594) IN NET ASSETS NET ASSETS Beginning of period 332,239,544 808,542,138 End of period (including $ 307,336,435 $ 332,239,544 undistributed net investment income of $2,896,477 and $6,696,796, respectively) OTHER INFORMATION Shares Sold 12,312,091 8,079,774 Issued in reinvestment of 701,738 578,067 distributions Redeemed (19,009,646) (29,806,543) Net increase (decrease) (5,995,817) (21,148,702)
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995 SELECTED PER-SHARE DATA Net asset value, beginning of $ 10.73 $ 15.51 $ 12.59 $ 9.75 $ 16.21 period Income from Investment Operations Net investment income .18 C .22 C, D .20 C .22 .04 Net realized and unrealized 1.61 (4.81) 2.92 2.72 (6.52) gain (loss) Total from investment 1.79 (4.59) 3.12 2.94 (6.48) operations Less distributions from net (.25) (.20) (.23) (.12) - investment income Redemption fees added to paid .04 .01 .03 .02 .02 in capital Net asset value, end of period $ 12.31 $ 10.73 $ 15.51 $ 12.59 $ 9.75 TOTAL RETURN A, B 17.46% (30.01)% 25.42% 30.69% (39.85)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 307,336 $ 332,240 $ 808,542 $ 557,889 $ 466,289 (000 omitted) Ratio of expenses to average 1.32% 1.34% 1.30% 1.32% 1.41% net assets Ratio of expenses to average 1.30% E 1.33% E 1.29% E 1.32% 1.41% net assets after expense reductions Ratio of net investment 1.55% 1.49% 1.19% 1.48% .97% income to average net assets Portfolio turnover rate 49% 31% 64% 70% 57% A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.06 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.
NORDIC PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). If Fidelity had not reimbursed certain fund expenses, the life of fund total returns would have been lower. CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR LIFE OF FUND FIDELITY NORDIC 38.31% 147.47% FIDELITY NORDIC (INCL. 34.17% 140.04% 3.00% SALES CHARGE) FT-Actuaries World Nordic 48.91% 149.29% European Region Funds Average 10.72% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year or since the fund started on November 1, 1995. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the FT/S&P-Actuaries World Nordic Index - a market capitalization-weighted index of over 90 stocks traded in four Scandinavian markets. To measure how the fund's performance stacked up against its peers, you can compare the fund's performance to the European region funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 138 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR LIFE OF FUND FIDELITY NORDIC 38.31% 25.42% FIDELITY NORDIC (INCL. 34.17% 24.47% 3.00% SALES CHARGE) FT-Actuaries World Nordic 48.91% 25.65% European Region Funds Average 10.72% n/a AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND Nordic FT Nordic 00342 FT002 1995/11/01 9700.00 10000.00 1995/11/30 9845.50 10178.00 1995/12/31 9554.50 9911.00 1996/01/31 9612.70 9809.37 1996/02/29 10204.40 10456.70 1996/03/31 10340.20 10564.18 1996/04/30 10476.00 10606.06 1996/05/31 10990.10 10977.77 1996/06/30 11106.50 11058.76 1996/07/31 10980.40 10822.25 1996/08/31 11630.30 11437.85 1996/09/30 12018.30 11769.52 1996/10/31 12386.90 12210.52 1996/11/30 13269.60 12915.13 1996/12/31 13537.43 13283.75 1997/01/31 13880.77 13676.71 1997/02/28 13969.05 13661.62 1997/03/31 14332.01 14093.06 1997/04/30 13439.33 13296.07 1997/05/31 14302.58 14246.43 1997/06/30 15136.41 15111.48 1997/07/31 15617.09 15775.44 1997/08/31 14999.07 15074.22 1997/09/30 16843.30 16846.82 1997/10/31 15636.71 15544.47 1997/11/30 15705.38 15583.27 1997/12/31 15177.38 15331.98 1998/01/31 15593.63 15587.89 1998/02/28 17077.22 16969.39 1998/03/31 18219.26 18157.18 1998/04/30 19713.51 19141.41 1998/05/31 19830.92 19281.53 1998/06/30 20119.10 19279.69 1998/07/31 20791.51 19608.59 1998/08/31 16575.57 16383.65 1998/09/30 16212.68 15544.47 1998/10/31 17354.72 16741.19 1998/11/30 18358.01 17652.13 1998/12/31 19660.15 18400.78 1999/01/31 21015.65 19564.24 1999/02/28 19574.76 18618.50 1999/03/31 20119.10 19577.79 1999/04/30 20738.15 20356.31 1999/05/31 20044.38 19512.81 1999/06/30 22115.00 21352.86 1999/07/31 22296.44 22089.18 1999/08/31 22360.48 22024.51 1999/09/30 22552.60 22346.33 1999/10/29 24004.16 24928.86 IMATRL PRASUN SHR__CHT 19991031 19991111 112315 R00000000000051 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity Nordic Fund on November 1, 1995, when the fund started, and the current 3.00% sales charge was paid. As the chart shows, by October 31, 1999, the value of the investment would have grown to $24,004 - a 140.04% increase on the initial investment. For comparison, look at how the FT/S&P-Actuaries World Nordic Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 investment would have grown to $24,929 - a 149.29% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) NORDIC FUND TALK: THE MANAGER'S OVERVIEW An interview with Trygve Toraasen, Portfolio Manager of Fidelity Nordic Fund Q. HOW DID THE FUND PERFORM, TRYGVE? A. For the 12 months that ended October 31, 1999, the fund posted a total return of 38.31%, compared to 48.91% for the FT/S&P-Actuaries World Nordic Index and 10.72% for the European region funds average tracked by Lipper Inc. Q. WHAT FACTORS SHAPED PERFORMANCE DURING THE PERIOD? A. Nordic markets led the charge in Europe during the period, strongly outpacing the returns found in much of the rest of the Continent. Most of the fund's superior returns relative to its Lipper peers came by way of some strong stock picks in its region. Although representing about one-quarter combined of the portfolio throughout the period, the fund's positions in leading wireless names Nokia and Ericsson were still underweighted relative to the telecommunications-heavy Nordic index, which impeded performance to a degree. In addition, the fund was underweighted in cyclicals - or, economically sensitive stocks - which make up a sizable proportion of the index. This sector rallied in the first-half of the period, and our underweighting of them hampered returns. Q. WHAT WAS THE INVESTMENT CLIMATE LIKE DURING THE PERIOD? A. The story over the past 12 months was one of recovery, as Nordic economies - major exporters to the world - ignited, rallying on a markedly improved global economic picture. Norway, for instance, reaped the rewards provided by rebounding oil prices, falling interest rates and stronger growth in key trading partner Germany. The story in Sweden was strong, thanks in part to the success of homegrown Ericsson. In Finland, front-runner Nokia set the pace, pushing the local market higher. Finally, Denmark rebounded from a mild recession earlier in the period, benefiting from strengthening exports to Swedish and German markets. Q. COULD YOU DISCUSS SOME OF THE STRATEGIES YOU EMPLOYED OVER THE PAST 12 MONTHS? A. Sure. I reduced the fund's exposure to the finance sector - keeping only those stocks with the strongest internal fundamentals - in response to rising interest rates in all markets except Norway. In a rising rate environment, I felt it unlikely that I could find strong performance among banks. Also, I added to some of the machinery and engineering names, such as Danish windmill manufacturer Vestas Wind Systems, which was a big win for the fund. Overall, I pursued the best companies with the strongest long-term growth prospects regardless of the industry in which they resided. Also notable given the fund's growth orientation, I chose not to chase cyclicals amid their rise in the first half of the period. With the exception of paper stocks, which benefited from improved capacity discipline among the producers and a more favorable demand situation, I simply didn't believe in the overall sustainability of the cyclical wave. Q. WHICH STOCKS CONTRIBUTED TO PERFORMANCE? A. Not surprisingly, Nokia, arguably the strongest-performing stock in Europe over the past two years or so, soared during the period, nearly tripling in price. The company benefited from robust earnings related to worldwide handset sales. By successfully reducing the product life cycle, Nokia made it even more difficult for competitors to play on the same field. Ericsson, another high-altitude performer, got its lift from rising expectations for a recovery in margin growth on the handset side following recent problems, as well as from a strong cellular infrastructure business. Another positive contributor was Swedish insurance provider, Skandia Foersaekrings, which enjoyed a successful period in its life insurance and variable annuity businesses in the U.S. Hennes & Mauritz, a Swedish apparel retailer, also added appreciably to fund performance. Q. WHICH STOCKS DETRACTED? A. Danish brewer Carlsberg suffered from lost volume in its home market, as higher taxes in Denmark sent consumers in search of a substitute, that being German beer. The stock fell further in response to management's failed cost-cutting initiatives. Swedish banking giant ForeningsSparbanken fell on unrealized cost efficiencies related to merger activities. Danish financial conglomerate Den Danske Bank Group also was a drag on fund performance and was sold off during the period. Q. WHAT'S YOUR OUTLOOK? A. Things look pretty positive overall for the Nordic markets for the next six to 12 months. On the whole, the outlook for inflation across the region is benign. Short-term, I intend to stay the course, maintaining my strong bias toward growth and positive earnings stories. This strategy should bode well for the fund, as I expect stronger profit growth from Scandinavian firms that are likely to respond effectively to economic expansion in Germany and elsewhere in the world. NOTE TO SHAREHOLDERS: On December 15, 1999, shareholders of Fidelity Nordic Fund voted to amend the fund's investment policies to permit the fund to invest up to 35% of its total assets in any industry that represents more than 20% of the Nordic market. As of October 31, 1999, communications companies accounted for approximately 43% of the Nordic market as represented by the FT/S&P-Actuaries World Nordic Index. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3. FUND FACTS GOAL: long-term growth of capital by investing mainly in equity securities of issuers in Denmark, Finland, Norway and Sweden FUND NUMBER: 342 TRADING SYMBOL: FNORX START DATE: November 1, 1995 SIZE: as of October 31, 1999, more than $111 million MANAGER: Trygve Toraasen, since 1998; associate portfolio manager, Fidelity Nordic Fund, 1997-1998; research analyst, 1994-1998; joined Fidelity in 1994 (checkmark) NORDIC INVESTMENT CHANGES AS OF OCTOBER 31, 1999 Denmark 10.5% United States 11.7% Row: 1, Col: 1, Value: 10.5 Row: 1, Col: 2, Value: 22.4 Row: 1, Col: 3, Value: 7.9 Row: 1, Col: 4, Value: 47.5 Row: 1, Col: 5, Value: 11.7 Finland 22.4% Sweden 47.5% Norway 7.9% GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30, 1999 Denmark 11.2% United States 8.1% Row: 1, Col: 1, Value: 11.2 Row: 1, Col: 2, Value: 24.0 Row: 1, Col: 3, Value: 8.300000000000001 Row: 1, Col: 4, Value: 48.4 Row: 1, Col: 5, Value: 8.1 Finland 24.0% Sweden 48.4% Norway 8.3% PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF APPLICABLE. ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks 89.6 93.5 Short-Term Investments and 10.4 6.5 Net Other Assets PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Nokia AB (Finland, 13.1 12.4 Communications Equipment) Ericsson (L.M.) Telefon AB 12.7 11.6 Class B (Sweden, Electrical Equipment) Skandia Foersaekrings AB 4.9 3.9 (Sweden, Insurance) Hennes & Mauritz AB Class B 4.3 3.8 (Sweden, Apparel Stores) ABB Ltd. (Sweden, Electrical 3.6 0.0 Equipment) Norsk Hydro AS (Norway, Oil 2.7 2.2 & Gas) Svenska Handelsbanken AB (A 2.6 2.6 shares) (Sweden, Banks) Investor AB Class B Free 2.5 2.3 shares (Sweden, Credit & Other Finance) Tele Danmark AS Class B 2.4 2.5 (Denmark, Telephone Services) Volvo AB Class B (Sweden, 2.2 2.6 Autos, Tires, & Accessories) 51.0 43.9 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO INDUSTRIAL MACHINERY & 20.0 13.4 EQUIPMENT FINANCE 16.3 19.7 TECHNOLOGY 14.6 15.0 BASIC INDUSTRIES 6.3 6.8 UTILITIES 5.8 5.1 RETAIL & WHOLESALE 4.3 4.1 MEDIA & LEISURE 4.0 4.0 SERVICES 3.9 5.5 DURABLES 3.8 5.8 HEALTH 3.6 3.1
NORDIC INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 89.6% SHARES VALUE (NOTE 1) DENMARK - 10.5% Carlsberg AS Class B 14,620 $ 566,257 Coloplast AS Class B 5,000 493,013 Falck AS 16,360 1,508,690 GN Store Nordic AS 37,680 1,288,342 International Service Systems 9,200 494,687 AS Class B (a) Novo-Nordisk AS Class B 9,989 1,201,769 Sondagsavisen AS (Reg.) 8,870 490,785 Sydbank AS 21,730 971,122 Tele Danmark AS Class B 43,800 2,665,844 Vestas Wind Systems AS (a) 15,300 2,007,874 11,688,383 FINLAND - 22.4% America Group Ltd. Class A 56,800 1,084,522 Eimo Oyj (a) 23,600 479,241 Hackman OY AB Class A 1,000 15,032 Helsinki Telephone Corp. 9,800 466,762 Class E KCI (Konecranes International) 6,390 165,150 Merita Ltd. Series A 91,900 534,169 Metra OY Series B 8,600 163,299 Nokia AB 126,200 14,583,985 Okobank Class A 23,180 216,405 Pohjola Group Insurance Corp. 18,781 1,010,416 Class B Sampo Insurance Co. Ltd. 11,210 390,239 Sonera Group PLC 62,300 1,876,314 Stora Enso Oyj 147,170 1,940,620 UPM-Kymmene Corp. 64,110 2,028,889 24,955,043 NORWAY - 7.9% Bergesen d.y. AS Class A 7,600 122,867 Den Norske Bank ASA Class A 400,300 1,555,209 Free shares Kvaerner ASA (a) 42,700 807,642 Kvaerner ASA (B shares) (a) 35,300 536,848 NCL Holdings AS (a) 875,517 2,226,626 NetCom ASA (a) 9,100 319,819 Norsk Hydro AS 73,200 2,928,094 Norske Skogindustrier AS 6,300 245,567 Class A 8,742,672 SWEDEN - 47.5% ABB Ltd. (a) 40,219 4,017,118 Assa Abloy AB Class B 51,400 573,566 Atlas Copco AB Series B 31,400 819,488 Avesta Sheffield AB (a) 58,000 275,155 Connecta AB (a) 14,600 213,665 Electrolux AB 90,200 1,804,055 Ericsson (L.M.) Telefon AB 331,100 14,154,525 Class B Europolitan Holdings AB 96,800 1,115,595 SHARES VALUE (NOTE 1) Forenings Sparbanken AB 115,575 $ 1,846,437 Series A Gambro AB Series B 42,100 438,983 Hennes & Mauritz AB Class B 180,900 4,820,470 Investor AB Class B Free 217,200 2,794,549 shares Modern Times Group AB Series 32,000 1,038,080 B (a) Munksjo AB 29,000 224,580 Munters AB 50,850 601,537 Munters AB (c) 8,300 98,186 NCC AB Series B 25,500 261,227 Nobel Biocare AB 34,920 485,488 OM Gruppen AB 23,600 305,082 Readsoft AB (B shares) (a) 31,100 326,181 Sandvik AB Series B 10,300 267,557 Scandic Hotels AB 76,980 722,883 Securitas AB Class B 107,400 1,597,951 Skandia Foersaekrings AB 242,200 5,405,360 Skanska AB Class B 17,800 653,410 SKF AB 40,000 814,659 SSAB Swedish Steel Series A 44,100 543,200 Svenska Cellulosa AB (SCA) 48,900 1,323,918 Class B Svenska Handelsbanken AB (A 209,196 2,908,423 shares) Volvo AB Class B 95,418 2,472,798 52,924,126 UNITED STATES OF AMERICA - 1.3% Pharmacia & Upjohn, Inc. unit 27,400 1,485,326 TOTAL COMMON STOCKS 99,795,550 (Cost $66,184,188) CASH EQUIVALENTS - 9.7% Central Cash Collateral Fund, 1,813,105 1,813,105 5.26% (b) Taxable Central Cash Fund, 8,998,362 8,998,362 5.21% (b) TOTAL CASH EQUIVALENTS 10,811,467 (Cost $10,811,467) TOTAL INVESTMENT PORTFOLIO - 110,607,017 99.3% (Cost $76,995,655) NET OTHER ASSETS - 0.7% 780,598 NET ASSETS - 100% $ 111,387,615 LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. (c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $98,186 or 0.1% of net assets. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $70,697,418 and $102,294,354, respectively. The fund participated in the security lending program. At period end, the value of securities loaned amounted to $1,673,005. The fund received cash collateral of $1,813,105 which was invested in the Central Cash Collateral Fund. The fund participated in the bank borrowing program. The average daily loan balance during the period for which loans were outstanding amounted to $1,469,818. The weighted average interest rate was 5.16%. INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $77,698,085. Net unrealized appreciation aggregated $32,908,932, of which $35,145,669 related to appreciated investment securities and $2,236,737 related to depreciated investment securities. The fund hereby designates approximately $234,000 as a capital gain dividend for the purpose of the dividend paid deduction. MARKET SECTOR DIVERSIFICATION (UNAUDITED) As a Percentage of Net Assets AEROSPACE & DEFENSE 0.1% BASIC INDUSTRIES 6.3 CASH EQUIVALENTS 9.7 CONSTRUCTION & REAL ESTATE 2.6 DURABLES 3.8 ENERGY 2.7 FINANCE 16.3 HEALTH 3.6 HOLDING COMPANIES 1.0 INDUSTRIAL MACHINERY & 20.0 EQUIPMENT MEDIA & LEISURE 4.0 NONDURABLES 0.5 RETAIL & WHOLESALE 4.3 SERVICES 3.9 TECHNOLOGY 14.6 TRANSPORTATION 0.1 UTILITIES 5.8 NORDIC FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 110,607,017 value (cost $76,995,655) - See accompanying schedule Foreign currency held at 22,241 value (cost $22,258) Receivable for investments 893,507 sold Receivable for fund shares 1,874,232 sold Dividends receivable 8,908 Interest receivable 40,628 Redemption fees receivable 69 Other receivables 1,923 TOTAL ASSETS 113,448,525 LIABILITIES Payable for investments $ 60,422 purchased Payable for fund shares 49,374 redeemed Accrued management fee 62,582 Other payables and accrued 75,427 expenses Collateral on securities 1,813,105 loaned, at value TOTAL LIABILITIES 2,060,910 NET ASSETS $ 111,387,615 Net Assets consist of: Paid in capital $ 75,440,141 Undistributed net investment 367,863 income Accumulated undistributed net 1,972,264 realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 33,607,347 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 4,952,374 $ 111,387,615 shares outstanding NET ASSET VALUE and $22.49 redemption price per share ($111,387,615 (divided by) 4,952,374 shares) Maximum offering price per $23.19 share (100/97.00 of $22.49) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 1,759,359 Dividends Interest 164,031 Security lending 3,854 1,927,244 Less foreign taxes withheld (255,621) TOTAL INCOME 1,671,623 EXPENSES Management fee $ 769,457 Transfer agent fees 329,410 Accounting and security 64,666 lending fees Non-interested trustees' 323 compensation Custodian fees and expenses 95,683 Registration fees 28,691 Audit 33,509 Legal 450 Interest 6,969 Miscellaneous 6,586 Total expenses before 1,335,744 reductions Expense reductions (50,484) 1,285,260 NET INVESTMENT INCOME 386,363 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 11,024,662 Foreign currency transactions (18,591) 11,006,071 Change in net unrealized appreciation (depreciation) on: Investment securities 21,508,516 Assets and liabilities in (1,381) 21,507,135 foreign currencies NET GAIN (LOSS) 32,513,206 NET INCREASE (DECREASE) IN $ 32,899,569 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION Sales $ 123,563 charges paid to FDC Sales charges - Retained by $ 123,293 FDC Expense Reductions $ 49,810 Directed brokerage arrangements Transfer agent credits 674 $ 50,484 STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 ASSETS Operations Net investment $ 386,363 $ 204,042 income Net realized gain (loss) 11,006,071 (9,029,156) Change in net unrealized 21,507,135 4,055,394 appreciation (depreciation) NET INCREASE (DECREASE) IN 32,899,569 (4,769,720) NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders - (302,313) From net investment income From net realized gain - (5,108,510) TOTAL DISTRIBUTIONS - (5,410,823) Share transactions Net 41,593,918 137,620,320 proceeds from sales of shares Reinvestment of distributions - 5,325,815 Cost of shares redeemed (65,061,644) (104,656,126) NET INCREASE (DECREASE) IN (23,467,726) 38,290,009 NET ASSETS RESULTING FROM SHARE TRANSACTIONS Redemption fees 97,415 471,151 TOTAL INCREASE (DECREASE) 9,529,258 28,580,617 IN NET ASSETS NET ASSETS Beginning of period 101,858,357 73,277,740 End of period (including $ 111,387,615 $ 101,858,357 undistributed net investment income of $367,863 and $178,966, respectively) OTHER INFORMATION Shares Sold 2,122,892 7,537,796 Issued in reinvestment of - 375,060 distributions Redeemed (3,436,188) (6,243,438) Net increase (decrease) (1,313,296) 1,669,418
FINANCIAL HIGHLIGHTS YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 E SELECTED PER-SHARE DATA Net asset value, beginning of $ 16.26 $ 15.94 $ 12.77 $ 10.00 period Income from Investment Operations Net investment income C .07 .03 .10 .17 D Net realized and unrealized 6.14 1.46 H 3.19 2.57 gain (loss) Total from investment 6.21 1.49 3.29 2.74 operations Less Distributions From net investment income - (.07) (.05) - From net realized gain - (1.18) (.10) - Total distributions - (1.25) (.15) - Redemption fees added to paid .02 .08 .03 .03 in capital Net asset value, end of period $ 22.49 $ 16.26 $ 15.94 $ 12.77 TOTAL RETURN A, B 38.31% 10.99% 26.24% 27.70% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 111,388 $ 101,858 $ 73,278 $ 30,871 (000 omitted) Ratio of expenses to average 1.27% 1.35% 1.42% 2.00% F net assets Ratio of expenses to average 1.23% G 1.35% 1.42% 2.00% net assets after expense reductions Ratio of net investment .37% .20% .67% 1.52% income to average net assets Portfolio turnover rate 70% 69% 74% 35% A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.16 PER SHARE. E FOR THE PERIOD NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1996. F FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER. G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. H THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND. PACIFIC BASIN PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). If Fidelity had not reimbursed certain fund expenses, the past five year and past 10 year total returns would have been lower. CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY PACIFIC BASIN 89.36% 30.61% 80.03% FIDELITY PACIFIC BASIN 83.68% 26.69% 74.63% (INCL. 3.00% SALES CHARGE) MSCI Pacific 51.73% -3.58% -2.99% Pacific Region Funds Average 67.12% 2.20% 71.52% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years or 10 years. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Morgan Stanley Capital International (MSCI) Pacific Index - a market capitalization-weighted index of over 400 stocks traded in Pacific-region markets. To measure how the fund's performance stacked up against its peers, you can compare it to the Pacific region funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 55 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY PACIFIC BASIN 89.36% 5.49% 6.06% FIDELITY PACIFIC BASIN 83.68% 4.85% 5.73% (INCL. 3.00% SALES CHARGE) MSCI Pacific 51.73% -0.73% -0.30% Pacific Region Funds Average 67.12% -0.13% 5.21% AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER 10 YEARS Pacific Basin MS Pacific (Net MA tax) 00302 MS003 1989/10/31 9700.00 10000.00 1989/11/30 10013.50 10476.06 1989/12/31 10152.23 10487.45 1990/01/31 9806.79 9894.06 1990/02/28 9192.67 8933.85 1990/03/31 8623.32 7325.04 1990/04/30 8527.36 7374.34 1990/05/31 9352.59 8398.69 1990/06/30 9493.33 8060.32 1990/07/31 9813.19 7999.11 1990/08/31 8508.17 7236.05 1990/09/30 7120.00 6101.57 1990/10/31 8245.89 7419.76 1990/11/30 7491.03 6596.97 1990/12/31 7389.47 6877.79 1991/01/31 7532.08 7092.14 1991/02/28 8212.69 7966.43 1991/03/31 8108.97 7532.47 1991/04/30 8459.00 7726.05 1991/05/31 8400.66 7696.14 1991/06/30 8258.06 7193.22 1991/07/31 8361.77 7435.82 1991/08/31 7797.84 7058.63 1991/09/30 8283.99 7613.89 1991/10/31 8523.82 7937.91 1991/11/30 8121.94 7427.23 1991/12/31 8316.40 7655.16 1992/01/31 8102.49 7358.55 1992/02/29 8024.71 6843.17 1992/03/31 7519.11 6192.36 1992/04/30 7441.33 5908.50 1992/05/31 8037.67 6369.33 1992/06/30 7869.14 5868.47 1992/07/31 7519.11 5786.90 1992/08/31 7739.50 6579.67 1992/09/30 7687.64 6428.91 1992/10/31 7778.39 6201.92 1992/11/30 7745.98 6318.88 1992/12/31 7682.84 6246.56 1993/01/31 7761.37 6234.93 1993/02/28 8212.92 6537.22 1993/03/31 8769.17 7326.95 1993/04/30 9659.18 8494.29 1993/05/31 10130.36 8741.40 1993/06/30 9606.82 8598.09 1993/07/31 10117.27 9106.43 1993/08/31 10581.90 9375.77 1993/09/30 10608.08 9025.12 1993/10/31 11439.19 9225.48 1993/11/30 10876.39 7923.83 1993/12/31 12592.84 8476.20 1994/01/31 12934.45 9457.36 1994/02/28 13061.72 9701.17 1994/03/31 12083.77 9165.65 1994/04/30 12418.68 9561.98 1994/05/31 12787.09 9789.45 1994/06/30 12733.50 10109.69 1994/07/31 12706.71 9892.79 1994/08/31 13309.56 10064.72 1994/09/30 13135.40 9812.81 1994/10/31 13369.84 10061.02 1994/11/30 12271.32 9499.59 1994/12/31 12238.59 9563.51 1995/01/31 11104.69 8959.55 1995/02/28 10923.26 8737.65 1995/03/31 11270.99 9408.49 1995/04/30 11399.50 9808.64 1995/05/31 11331.47 9416.31 1995/06/30 11225.64 9017.25 1995/07/31 11958.89 9667.38 1995/08/31 11830.38 9303.23 1995/09/30 11694.32 9389.40 1995/10/31 11248.31 8932.84 1995/11/30 11150.04 9372.05 1995/12/31 11490.21 9829.49 1996/01/31 11664.08 9846.16 1996/02/29 11414.62 9735.05 1996/03/31 11716.99 10033.63 1996/04/30 12336.86 10544.55 1996/05/31 11989.13 10086.98 1996/06/30 12147.88 10089.06 1996/07/31 11528.01 9625.47 1996/08/31 11301.23 9372.06 1996/09/30 11633.84 9677.91 1996/10/31 11074.45 9228.67 1996/11/30 11497.77 9479.25 1996/12/31 11172.60 8986.54 1997/01/31 10480.96 8230.77 1997/02/28 10701.37 8402.79 1997/03/31 10412.56 8095.25 1997/04/30 10746.97 8264.20 1997/05/31 11849.03 9073.35 1997/06/30 12403.86 9635.89 1997/07/31 12723.08 9406.18 1997/08/31 11180.20 8473.83 1997/09/30 11453.81 8441.89 1997/10/31 10192.14 7417.47 1997/11/30 9842.53 7009.73 1997/12/31 9485.62 6702.28 1998/01/31 9935.47 7066.15 1998/02/28 9958.74 7320.25 1998/03/31 9485.62 6917.34 1998/04/30 9671.76 6780.86 1998/05/31 9260.69 6320.85 1998/06/30 9105.57 6308.90 1998/07/31 9268.45 6199.44 1998/08/31 8182.61 5466.98 1998/09/30 8446.31 5449.54 1998/10/31 9221.91 6393.73 1998/11/30 9857.91 6687.84 1998/12/31 10269.34 6874.70 1999/01/31 10284.87 6924.74 1999/02/28 10160.58 6789.99 1999/03/31 11543.29 7646.34 1999/04/30 12506.53 8158.11 1999/05/31 11861.78 7672.54 1999/06/30 13617.36 8379.03 1999/07/31 14922.39 9017.60 1999/08/31 15528.29 8926.52 1999/09/30 16398.31 9338.92 1999/10/29 17462.53 9700.99 IMATRL PRASUN SHR__CHT 19991031 19991129 103500 R00000000000123 $10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested in Fidelity Pacific Basin Fund on October 31, 1989, and the current 3.00% sales charge was paid. As the chart shows, by October 31, 1999, the value of the investment would have grown to $17,463 - a 74.63% increase on the initial investment. For comparison, look at how the Morgan Stanley Capital International Pacific Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have been $9,701 - a 2.99% decrease. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) PACIFIC BASIN FUND TALK: THE MANAGER'S OVERVIEW An interview with William Kennedy, Portfolio Manager of Fidelity Pacific Basin Fund Q. HOW DID THE FUND PERFORM, BILL? A. The fund did extremely well in a surging market. For the 12 months that ended October 31, 1999, the fund returned 89.36%, compared to 51.73% for the Morgan Stanley Capital International Pacific Index and 67.12% for the Pacific region funds average monitored by Lipper Inc. Q. WHY WAS THE FUND ABLE TO OUTPERFORM THE INDEX BY SUCH A WIDE MARGIN? A. Stock selection in Japan, the fund's largest country allocation, was the most important factor. Fidelity has a strong research presence in Japan, enabling the fund to identify many promising opportunities before other investors got wind of them. An overweighting in the technology sector also helped - mainly existing technology holdings in Japan as well as new holdings in Taiwan and South Korea. As part of the region's general restructuring trend, more Japanese companies are outsourcing the production of various products and components, benefiting technology companies in Taiwan and South Korea. Q. WHAT WAS THE FUND'S SECOND-LARGEST SECTOR WEIGHTING, AFTER TECHNOLOGY? A. Finance was next, at 19.6% of net assets. I added to the fund's finance holdings, mainly through the purchase of Japanese bank stocks. During the period, three prominent Japanese banks merged to form the world's largest bank. This merger is likely to trigger more consolidation, both within the banking industry and outside of it. Consolidation should result in further cost-cutting, revenue growth and share price appreciation. The other positive factor is that when Japanese banks were recapitalized earlier in the year, the government made itself a shareholder, but provided a buyout option through which the banks, if profitable enough, could buy back the government's shares. Since banks do not want the government as a long-term business associate, there is a strong incentive for them to earn enough money to buy the government out. Q. YOU REDUCED THE FUND'S HOLDINGS IN AUSTRALIA FROM 9.6% OF NET ASSETS SIX MONTHS AGO TO 5.3% AT THE END OF THE PERIOD, AND IN HONG KONG FROM 7.8% TO 5.4% OF NET ASSETS. CAN YOU COMMENT ON THOSE CHANGES? A. Australia's growth prospects are still good, but I reduced holdings there to make room for what seemed to be better opportunities in Taiwan and South Korea. In Hong Kong, I did not see the aggressive restructuring that was occurring elsewhere. In addition, the fixed-rate currency link with the U.S. dollar was limiting the attractiveness of Hong Kong investments compared with those of other countries in the region. Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE? A. DDI Corp. was a key contributor. A large Japanese telecommunications company, DDI was fairly cheap relative to its global peers and also was a potential merger target. In addition, the company recently launched CDMA, a wireless, or cellular, technology superior to that of DDI's competitors. Hikari Tsushin - which I sold for valuation reasons - was another strong holding. The company sells wireless handsets and continued to benefit from a favorable business model, as well as the prospect of healthy sales from a new generation of handsets with advanced Internet capabilities. Softbank Corp., an Internet conglomerate, mirrored the strength of Internet stocks generally and was priced relatively cheaply in view of its holdings. Q. WHAT STOCKS WERE DISAPPOINTING? A. South Korea-based Hanvit Bank underperformed. The company was a victim of the failure of Daewoo, a large South Korean conglomerate that had extensive dealings with Hanvit. Another underperformer was Matsushita Kotobuki, a Japanese manufacturer of hard-disk drives. The stock encountered difficulties because prices for hard drives continued to plummet. I sold both stocks by the end of the period. Q. WHAT'S YOUR OUTLOOK, BILL? A. The resumption of economic growth in Japan and a strong yen would dictate sticking with the fund's current strategy of investing in stocks positioned to benefit from an improving domestic economy there. On the other hand, a strong yen hurts companies, like Honda and Toyota, that derive most of their revenues from exports. As Japan recovers, other economies in the region, such as those in Taiwan and South Korea, are experiencing increased demand for their products and services, and I will continue to look for other ways to play the unfolding revival of the Pacific Basin. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3. FUND FACTS GOAL: long-term growth of capital by investing mainly in equity securities of Pacific Basin issuers FUND NUMBER: 302 TRADING SYMBOL: FPBFX START DATE: October 1, 1986 SIZE: as of October 31, 1999, more than $659 million MANAGER: William Kennedy, since 1998; Hong Kong research director, 1996-1998; analyst, regional power sector and Indian companies, 1994-1996; joined Fidelity in 1994 (checkmark) PACIFIC BASIN INVESTMENT CHANGES AS OF OCTOBER 31, 1999 United States 4.9% Australia 5.3% Thailand 0.7% Row: 1, Col: 1, Value: 5.3 Row: 1, Col: 2, Value: 5.4 Row: 1, Col: 3, Value: 0.7000000000000001 Row: 1, Col: 4, Value: 72.59999999999999 Row: 1, Col: 5, Value: 3.5 Row: 1, Col: 6, Value: 1.4 Row: 1, Col: 7, Value: 2.5 Row: 1, Col: 8, Value: 3.0 Row: 1, Col: 9, Value: 0.7000000000000001 Row: 1, Col: 10, Value: 4.9 Hong Kong 5.4% Taiwan 3.0% Singapore 2.5% India 0.7% Other 1.4% Korea (South) 3.5% Japan 72.6% GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30, 1999 United States 4.9% Australia 9.6% Singapore 2.8% Row: 1, Col: 1, Value: 9.6 Row: 1, Col: 2, Value: 7.8 Row: 1, Col: 3, Value: 72.59999999999999 Row: 1, Col: 4, Value: 2.3 Row: 1, Col: 5, Value: 2.8 Row: 1, Col: 6, Value: 4.9 Other 2.3% Hong Kong 7.8% Japan 72.6% PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF APPLICABLE. ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks 95.1 95.1 Short-Term Investments and 4.9 4.9 Net Other Assets PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Nippon Telegraph & Telephone 2.5 3.7 Corp. (Japan, Telephone Services) DDI Corp. (Japan, Telephone 2.0 0.9 Services) Fujitsu Ltd. (Japan, 1.9 1.3 Computers & Office Equipment) Sony Corp. (Japan, Consumer 1.9 0.9 Electronics) Kokusai Denshin Denwa 1.8 1.1 (Japan, Telephone Services) Toyota Motor Corp. (Japan, 1.8 2.5 Autos, Tires, & Accessories) Softbank Corp. (Japan, 1.7 0.5 Computers & Office Equipment) Takeda Chemical Industries 1.6 1.9 Ltd. (Japan, Drugs & Pharmaceuticals) Murata Manufacturing Co. Ltd. 1.5 0.0 (Japan, Electrical Equipment) Fuji Bank Ltd. (Japan, Banks) 1.4 1.2 18.1 14.0 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO TECHNOLOGY 22.7 17.3 FINANCE 19.6 17.8 UTILITIES 10.1 12.1 DURABLES 8.9 11.1 INDUSTRIAL MACHINERY & 8.3 6.0 EQUIPMENT BASIC INDUSTRIES 5.8 5.8 HEALTH 3.7 3.9 CONSTRUCTION & REAL ESTATE 3.4 4.1 RETAIL & WHOLESALE 3.4 4.5 NONDURABLES 3.1 4.3
PACIFIC BASIN INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 95.0% SHARES VALUE (NOTE 1) AUSTRALIA - 5.3% Amcor Ltd. 121,500 $ 530,974 Austar United Communications 31,400 102,121 Ltd. (a) Australia & New Zealand 177,808 1,173,454 Banking Group Ltd. Brambles Industries Ltd. 26,553 746,739 Broken Hill Proprietary Co. 463,432 4,789,664 Ltd. (The) Cable & Wireless Optus Ltd. 682,800 1,563,163 (a) Cochlear Ltd. 106,500 1,161,347 Coles Myer Ltd. 126,900 631,208 F.H. Faulding & Co. Ltd. 116,044 709,672 Lend Lease Corp. Ltd. 103,700 1,193,174 Macquarie Bank Ltd. 88,500 1,298,038 National Australia Bank Ltd. 231,858 3,578,111 News Corp. Ltd. 588,279 4,254,150 Perpetual Trustees Australia 146,300 1,884,569 Ltd. Rio Tinto Ltd. 60,200 967,685 Smith (Howard) Ltd. 55,888 400,734 Tabcorp Holdings Ltd. 135,000 855,730 Telstra Corp. Ltd. 852,400 4,336,102 Westfield Holdings Ltd. 98,000 581,200 Westpac Banking Corp. 322,694 2,070,578 WMC Ltd. 317,000 1,360,476 Woolworths Ltd. 145,000 492,846 34,681,735 HONG KONG - 5.4% Cable & Wireless HKT Ltd. 670,000 1,528,438 Cheung Kong Holdings Ltd. 389,000 3,530,445 China Telecom (Hong Kong) 500,000 1,687,500 Ltd. (a) Dao Heng Bank Group Ltd. 200,000 919,156 Giordano International Ltd. 2,326,000 2,470,327 Great Eagle Holdings Ltd. 552,000 682,183 Hang Seng Bank Ltd. 126,200 1,372,799 Hong Kong & China Gas Co. 945,000 1,253,025 Ltd. Hongkong Land Holdings Ltd. 373,000 481,170 Hutchison Whampoa Ltd. 919,000 9,227,858 Johnson Electric Holdings 717,000 3,876,674 Ltd. Li & Fung Ltd. 1,072,000 1,828,527 New World Development Co. 334,000 632,055 Ltd. South China Morning Post 1,512,000 1,099,743 Holdings Sun Hung Kai Properties Ltd. 360,000 2,908,084 Swire Pacific Ltd. Class A 314,000 1,556,256 Wing Hang Bank Ltd. 158,500 517,247 35,571,487 INDIA - 0.7% Infosys Technologies Ltd. 17,110 2,737,915 Pentafour Software & Exports 72,900 1,012,407 Ltd. (new) (a) Pentafour Software & Exports 72,900 1,012,407 Ltd. (a) 4,762,729 INDONESIA - 0.4% Gudang Garam PT Perusahaan 164,500 424,205 SHARES VALUE (NOTE 1) PT Bank PAN Indonesia Tbk (a) 1,382,500 $ 162,051 PT Indofood Sukses Makmur (a) 383,000 454,549 PT Matahari Putra Prima Tbk 3,561,000 443,494 (a) PT Telkomunikasi Indonesia 1,029,000 490,000 Sampoerna, Hanjaya Mandala (a) 343,000 799,076 2,773,375 JAPAN - 72.6% Acom Co. Ltd. 15,200 1,664,154 Aderans Co. Ltd. 19,000 952,509 Advan Co. Ltd. 29,500 872,605 Advantest Corp. 22,000 3,317,167 Aiful Corp. 25,800 4,014,022 Aiwa Co. Ltd. 72,000 1,756,351 Asahi Bank Ltd. 540,000 4,802,305 Asahi Chemical Industry Co. 195,000 1,179,832 Ltd. Asahi Glass Co. Ltd. 237,000 1,886,896 Bank of Tokyo-Mitsubishi Ltd. 471,000 7,816,452 Bank of Yokohama Ltd. 361,000 2,028,187 BellSystem24, Inc. 1,200 1,152,461 Canon, Inc. 73,000 2,068,187 Chiba Bank 377,000 2,063,770 CSK Corp. 33,300 1,535,078 Dai Nippon Printing Co. Ltd. 118,000 2,154,315 Dai-Ichi Kangyo Bank Ltd. 197,000 2,705,498 Daiwa Securities Co. Ltd. 685,000 7,322,017 DDI Corp. 1,223 13,389,869 Diamond Computer Service Co. 119,000 3,120,000 Ltd. Fanuc Ltd. 46,000 3,578,392 Fuji Bank Ltd. 691,000 9,489,844 Fuji Coca-Cola Bottling Co. 120,000 2,304,922 Ltd. Fuji Heavy Industries Ltd. 449,000 3,820,543 Fuji Machine Manufacturing 16,900 787,179 Co. Ltd. Fujitsu Ltd. 422,000 12,725,859 Furukawa Electric Co. Ltd. 1,041,000 7,598,176 Heiwa Corp. 23,000 631,741 Hino Motors Ltd. (a) 290,000 1,055,558 Hirose Electric Co. Ltd. 11,000 1,921,633 Hitachi Information Systems 118,000 4,555,678 Hitachi Ltd. 844,000 9,178,500 Honda Motor Co. Ltd. 193,000 8,118,063 Hoya Corp. 90,000 6,482,593 Industrial Bank of Japan Ltd. 513,000 6,946,747 (The) Ito En Ltd. 40,000 4,110,444 Ito-Yokado Co. Ltd. 95,000 7,609,124 Jafco Co. Ltd. 58,000 6,517,167 Japan Business Computer Co. 39,400 987,601 Ltd. Japan Medical Dynamic 6,000 328,451 Marketing, Inc. Japan Tobacco, Inc. 217 2,396,639 Kadokawa Shoten Publish Co. 6,300 1,573,714 Ltd. Kaneka Corp. 227,000 2,975,798 Kao Corp. 134,000 4,092,389 Kawasaki Steel Corp. 375,000 849,940 Kirin Brewery Co. Ltd. 109,000 1,249,902 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) JAPAN - CONTINUED Koa Denko Co. Ltd. 219,000 $ 3,806,867 Kokusai Denshin Denwa 94,100 11,838,752 Konami Co. Ltd. 24,000 2,327,971 Kyocera Corp. 73,000 7,010,805 Matsushita Communication 30,000 5,047,779 Industrial Co. Ltd. Matsushita Electric 98,000 2,075,763 Industrial Co. Ltd. Mikasa Coca Cola Bottling Co. 114,000 1,204,322 Mikuni Coca Cola Bottling Co. 46,000 971,909 Mirai Industry Co. Ltd. 41,000 661,513 Misumi Corp. 20,000 1,450,180 Mitsubishi Electric Corp. 1,394,000 7,724,735 Mitsubishi Estate Co. Ltd. 260,000 2,609,364 Mitsui Trust & Banking Co. 947,000 2,946,728 Ltd. Mitsumi Electric Co. Ltd. 85,000 2,277,551 Murata Manufacturing Co. Ltd. 78,000 10,037,936 Namco Ltd. 60,100 2,839,779 NEC Corp. 368,000 7,457,191 NIC Corp. 19,000 939,736 Nichicon Corp. 199,000 4,319,232 Nidec Corp. 11,000 2,139,256 Nikko Securities Co. Ltd. 397,000 3,736,471 Nintendo Co. Ltd. 26,400 4,196,111 Nippon Computer Systems Corp. 207,000 4,055,510 Nippon Paper Industries Co. 260,000 2,022,569 Ltd. Nippon Steel Corp. 1,401,000 3,565,570 Nippon Telegraph & Telephone 1,068 16,411,044 Corp. Nippon Zeon Co. Ltd. 404,000 3,491,957 Nissin Co. Ltd. 19,000 1,166,002 Nitto Denko Corp. 115,000 4,550,300 Nomura Securities Co. Ltd. 161,000 2,661,042 NTT Mobile Communication 246 6,544,250 Network, Inc. Oki Electric Industry Co. 521,000 3,352,413 Ltd. (a) Omron Corp. 278,000 5,820,312 Oracle Corp. Japan 9,000 1,832,413 ORIX Corp. 37,800 5,082,353 Otsuka Kagu Ltd. 5,200 1,548,139 Q'Sai Co. Ltd. 17,000 1,173,878 Ricoh Co. Ltd. 213,000 3,479,597 Rohm Co. Ltd. 29,000 6,517,167 Sakura Bank Ltd. 815,000 7,013,110 Sankyo Co. Ltd. (Gunma) 17,500 1,386,555 Secom Co. Ltd. 35,000 3,757,983 Secom Co. Ltd. (RFD) 35,000 3,731,093 Senshukai Co. Ltd. 235,000 4,511,549 Sharp Corp. 246,000 3,921,825 Shin-Etsu Chemical Co. Ltd. 124,000 5,120,769 Shohkoh Fund & Co. Ltd. 7,450 4,564,802 Skylark Co. Ltd. 65,000 1,822,809 SMC Corp. 15,000 2,533,974 Softbank Corp. 27,700 11,518,944 SHARES VALUE (NOTE 1) Sony Corp. 77,500 $ 12,380,626 Sumitomo Bank Ltd. Japan 578,000 9,314,613 Sumitomo Metal Industries 557,000 545,633 Ltd. (a) Sumitomo Trust & Banking Ltd. 285,000 2,917,743 Takasago Electric Industry 4,000 303,481 Co. Takeda Chemical Industries 183,000 10,527,443 Ltd. Takefuji Corp. 8,500 1,102,041 Takefuji Corp. (c) 20,000 2,593,037 THK Co. Ltd. 133,600 4,375,280 Tokai Bank Ltd. 432,000 3,775,462 Toko, Inc. 561,000 2,774,694 Tokyo Electron Ltd. 14,000 1,164,370 Tokyo Seimitsu Co. Ltd. 60,000 7,323,890 Toyoda Gosei Co. Ltd. 141,000 6,080,096 Toyota Motor Corp. 336,000 11,649,076 Tsubaki Nakashima Co. Ltd. 82,000 1,181,273 Union Tool Co. 11,300 1,208,951 World Co. Ltd. 22,200 2,249,316 Yamaha Motor Co. Ltd. 241,000 1,962,718 Yamanouchi Pharmaceutical Co. 69,000 3,134,406 Ltd. Yamato Transport Co. Ltd. 81,000 2,333,734 Yoshitomi Pharmaceutical 146,000 1,991,069 Industries Ltd. 479,355,104 KOREA (SOUTH) - 3.5% Housing & Commercial Bank (a) 42,400 1,120,534 Korea Electric Power Corp. 114,400 3,347,596 Korea Telecom Sponsored ADR 42,000 1,480,500 Korea Tobacco & Ginseng Co. 37,600 1,025,027 Ltd. Lg Chemical Ltd. 24,850 752,026 Lg Electronics, Inc. 22,000 720,801 Medison Co. Ltd. 25,800 258,108 Pohang Iron & Steel Co. Ltd. 10,500 1,260,526 Samsung Corp. 34,400 544,894 Samsung Electro-Mechanics Co. 36,900 1,784,244 Samsung Electronics Co. Ltd. 48,100 8,020,011 Samsung Securities Co. Ltd. 20,800 728,304 Shinhan Bank 82,500 873,489 Shinsegae Department Store 9,950 546,649 Shinsegae Department Store 1,739 30,735 rights 12/1/99 (a) SK Telecom Co. Ltd. 720 831,347 23,324,791 MALAYSIA - 0.1% Amway Holding BHD 144,000 373,263 NEW ZEALAND - 0.3% Fletcher Challenge Ltd. 129,700 160,671 Building Division Lion Nathan Ltd. 216,100 466,284 Telecom Corp. of New Zealand 212,000 854,601 Ltd. Warehouse Group Ltd. (The) 90,100 349,940 1,831,496 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) PHILIPPINES - 0.0% Oriental Petroleum & Mineral 7,771,657 $ 775 Corp. Class B (a) SINGAPORE - 2.5% Chartered Semiconduct 3,500 116,156 Manufacturing Ltd. ADR City Developments Ltd. 104,000 538,309 Datacraft Asia Ltd. 403,000 1,853,800 DBS Group Holdings Ltd. 147,239 1,666,021 DBS Land Ltd. 237,000 439,338 Natsteel Electronics Ltd. 243,000 950,647 Overseas Union Bank Ltd. 386,452 1,674,664 Singapore Airlines Ltd. 274,000 2,902,438 Singapore Press Holdings Ltd. 86,694 1,487,077 Singapore Technologies 529,000 767,313 Engineering Ltd. Singapore Telecommunications 772,000 1,468,264 Ltd. United Overseas Bank Ltd. 217,000 1,645,621 (For. Reg.) Venture Manufacturing 145,000 1,291,604 Singapore Ltd. 16,801,252 TAIWAN - 3.0% Advanced Semiconductor 492,000 1,512,295 Engineering, Inc. (a) Asustek Computer, Inc. 184,000 1,931,652 China Steel Corp. 1,027,000 790,000 Far Eastern Textile Ltd. 963,000 1,317,598 Formosa Plastic 428,000 856,810 Hon Hai Precision Industries 317,000 2,168,632 Co. Ltd. Nan Ya Plastics Corp. 522,000 913,335 Ritek Corp. 75,000 491,803 Siliconware Precision 407,000 731,368 Industries Co. Ltd. Taishin International Bank 2,464,000 1,406,003 Taiwan Semiconductor 1,080,130 4,801,334 Manufacturing Co. Ltd. United Microelectronics Corp. 1,103,000 2,868,774 19,789,604 THAILAND - 0.6% Advanced Info Service PCL 85,700 998,447 (For. Reg.) (a) BEC World PCL (For.Reg.) (a) 111,600 693,437 PTT Exploration & Production 83,900 612,551 Public Co.Ltd. (For.Reg.) (a) Siam Cement PCL (For.Reg.) (a) 45,500 1,177,994 Siam Makro PCL (For.Reg.) 200,100 334,148 3,816,577 UNITED KINGDOM - 0.6% HSBC Holdings PLC (Hong Kong) 293,184 3,609,828 (Reg.) TOTAL COMMON STOCKS 626,692,016 (Cost $442,859,620) PREFERRED STOCKS - 0.1% SHARES VALUE (NOTE 1) CONVERTIBLE PREFERRED STOCKS - - 0.1% THAILAND - 0.1% Siam Commercial Bank PLC 631,100 $ 714,838 5.25% (a) NONCONVERTIBLE PREFERRED STOCKS - 0.0% TAIWAN - 0.0% Taishin International Bank (a) 363,000 114,439 TOTAL PREFERRED STOCKS 829,277 (Cost $684,817) CASH EQUIVALENTS - 6.5% Central Cash Collateral Fund, 12,996,138 12,996,138 5.26% (b) Taxable Central Cash Fund, 29,603,427 29,603,427 5.21% (b) TOTAL CASH EQUIVALENTS 42,599,565 (Cost $42,599,565) TOTAL INVESTMENT PORTFOLIO - 670,120,858 101.6% (Cost $486,144,002) NET OTHER ASSETS - (1.6)% (10,240,012) NET ASSETS - 100% $ 659,880,846 LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. (c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $2,593,037 or 0.4% of net assets. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $557,505,583 and $344,592,705, respectively. The fund participated in the security lending program. At period end, the value of securities loaned amounted to $12,355,928. The fund received cash collateral of $12,996,138 which was invested in the Central Cash Collateral Fund. INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $487,010,408. Net unrealized appreciation aggregated $183,110,450, of which $191,597,264 related to appreciated investment securities and $8,486,814 related to depreciated investment securities. At October 31, 1999, the fund had a capital loss carryforward of approximately $45,130,000 of which $12,149,000 and $32,981,000 will expire on October 31, 2005 and 2006, respectively. MARKET SECTOR DIVERSIFICATION (UNAUDITED) As a Percentage of Net Assets BASIC INDUSTRIES 5.8% CASH EQUIVALENTS 6.5 CONSTRUCTION & REAL ESTATE 3.4 DURABLES 8.9 ENERGY 0.1 FINANCE 19.6 HEALTH 3.7 INDUSTRIAL MACHINERY & 8.3 EQUIPMENT MEDIA & LEISURE 2.8 NONDURABLES 3.1 PRECIOUS METALS 0.2 RETAIL & WHOLESALE 3.4 SERVICES 1.8 TECHNOLOGY 22.7 TRANSPORTATION 1.2 UTILITIES 10.1 PACIFIC BASIN FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 670,120,858 value (cost $486,144,002) - See accompanying schedule Foreign currency held at 4,631,618 value (cost $4,631,618) Receivable for investments 4,043,421 sold Receivable for fund shares 5,564,156 sold Dividends receivable 1,036,745 Interest receivable 106,512 Redemption fees receivable 1,036 Other receivables 10,146 TOTAL ASSETS 685,514,492 LIABILITIES Payable for investments $ 10,826,822 purchased Payable for fund shares 1,131,647 redeemed Accrued management fee 423,496 Other payables and accrued 255,543 expenses Collateral on securities 12,996,138 loaned, at value TOTAL LIABILITIES 25,633,646 NET ASSETS $ 659,880,846 Net Assets consist of: Paid in capital $ 521,918,337 Distributions in excess of (43,795) net investment income Accumulated undistributed net (45,996,431) realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 184,002,735 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 29,359,366 $ 659,880,846 shares outstanding NET ASSET VALUE and $22.48 redemption price per share ($659,880,846 (divided by) 29,359,366 shares) Maximum offering price per $23.18 share (100/97.00 of $22.48) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 3,527,645 Dividends Interest 723,262 Security lending 28,870 4,279,777 Less foreign taxes withheld (340,415) TOTAL INCOME 3,939,362 EXPENSES Management fee Basic fee $ 2,565,004 Performance adjustment 670,293 Transfer agent fees 1,133,920 Accounting and security 199,333 lending fees Non-interested trustees' 2,271 compensation Custodian fees and expenses 163,157 Registration fees 49,219 Audit 44,178 Legal 958 Miscellaneous 118 Total expenses before 4,828,451 reductions Expense reductions (56,246) 4,772,205 NET INVESTMENT INCOME (LOSS) (832,843) REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 54,887,737 Foreign currency transactions (77,941) 54,809,796 Change in net unrealized appreciation (depreciation) on: Investment securities 177,132,699 Assets and liabilities in 36,519 177,169,218 foreign currencies NET GAIN (LOSS) 231,979,014 NET INCREASE (DECREASE) IN $ 231,146,171 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION Sales $ 534,718 charges paid to FDC Sales charges - Retained by $ 533,043 FDC Deferred sales charge $ 9,916 witheld by FDC Expense Reductions $ 45,152 Directed brokerage arrangements Custodian credits 1,230 Transfer agent credits 9,864 $ 56,246 STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 ASSETS Operations Net investment $ (832,843) $ (321,268) income (loss) Net realized gain (loss) 54,809,796 (31,836,550) Change in net unrealized 177,169,218 9,227,120 appreciation (depreciation) NET INCREASE (DECREASE) IN 231,146,171 (22,930,698) NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (345,403) (4,350,839) in excess of net investment income Share transactions Net 388,881,157 63,798,234 proceeds from sales of shares Reinvestment of distributions 338,512 4,301,574 Cost of shares redeemed (156,304,703) (84,998,801) NET INCREASE (DECREASE) IN 232,914,966 (16,898,993) NET ASSETS RESULTING FROM SHARE TRANSACTIONS Redemption fees 701,135 127,081 TOTAL INCREASE (DECREASE) 464,416,869 (44,053,449) IN NET ASSETS NET ASSETS Beginning of period 195,463,977 239,517,426 End of period (including $ 659,880,846 $ 195,463,977 distributions in excess of net investment income of $43,795 and $3,862,332, respectively) OTHER INFORMATION Shares Sold 21,838,288 5,220,379 Issued in reinvestment of 26,201 352,299 distributions Redeemed (8,941,281) (7,003,769) Net increase (decrease) 12,923,208 (1,431,091)
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995 SELECTED PER-SHARE DATA Net asset value, beginning of $ 11.89 $ 13.41 $ 14.65 $ 14.88 $ 19.96 period Income from Investment Operations Net investment income (loss) C (.04) (.02) (.01) .05 .07 Net realized and unrealized 10.62 (1.26) (1.16) (.29) (3.12) gain (loss) Total from investment 10.58 (1.28) (1.17) (.24) (3.05) operations Less Distributions From net investment income - - (.01) - - In excess of net investment (.02) (.25) (.07) - (.02) income From net realized gain - - - - (2.02) Total distributions (.02) (.25) (.08) - (2.04) Redemption fees added to paid .03 .01 .01 .01 .01 in capital Net asset value, end of period $ 22.48 $ 11.89 $ 13.41 $ 14.65 $ 14.88 TOTAL RETURN A, B 89.36% (9.52)% (7.97)% (1.55)% (15.87)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 659,881 $ 195,464 $ 239,517 $ 572,150 $ 317,635 (000 omitted) Ratio of expenses to average 1.37% 1.73% 1.32% 1.26% 1.32% D net assets Ratio of expenses to average 1.36% E 1.72% E 1.31% E 1.24% E 1.32% net assets after expense reductions Ratio of net investment (.24)% (.16)% (.04)% .30% .44% income (loss) to average net assets Portfolio turnover rate 101% 57% 42% 85% 65% A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
SOUTHEAST ASIA PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). If Fidelity had not reimbursed certain fund expenses, the life of fund total returns would have been lower. CUMULATIVE TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY SOUTHEAST ASIA 49.80% -11.56% 29.83% FIDELITY SOUTHEAST ASIA 45.31% -14.21% 25.93% (INCL. 3.00% SALES CHARGE) MSCI Far East Free ex-Japan 52.06% -22.24% 27.31% Pacific Region ex-Japan 48.33% -17.64% n/a Funds Average CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years or since the fund started on April 19, 1993. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Morgan Stanley Capital International AC Far East Free ex-Japan Index - a market capitalization-weighted index of stocks traded in Asian markets, excluding Japan. To measure how the fund's performance stacked up against its peers, you can compare it to the Pacific region ex-Japan funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 86 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY SOUTHEAST ASIA 49.80% -2.43% 4.07% FIDELITY SOUTHEAST ASIA 45.31% -3.02% 3.59% (INCL. 3.00% SALES CHARGE) MSCI Far East Free ex-Japan 52.06% -4.91% 3.76% Pacific Region ex-Japan 48.33% -4.14% n/a Funds Average AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND Southeast Asia MS FarEast x-JPN Fr Gross 00351 MS008 1993/04/19 9700.00 10000.00 1993/04/30 9651.50 10334.89 1993/05/31 10078.30 10929.98 1993/06/30 9835.80 10642.82 1993/07/31 9826.10 10715.96 1993/08/31 10543.90 11612.63 1993/09/30 10873.70 11974.11 1993/10/31 12842.80 14179.62 1993/11/30 13240.50 14084.20 1993/12/31 15992.99 17508.06 1994/01/31 14696.78 16312.13 1994/02/28 14004.83 15375.29 1994/03/31 12221.33 13702.83 1994/04/30 12533.20 14348.37 1994/05/31 13069.22 14960.14 1994/06/30 12299.30 14295.10 1994/07/31 12952.27 15093.47 1994/08/31 14141.27 16322.75 1994/09/30 14131.52 16059.95 1994/10/31 14238.73 16372.12 1994/11/30 12845.07 14812.82 1994/12/31 12513.71 14446.91 1995/01/31 11198.01 12897.43 1995/02/28 12162.86 14200.92 1995/03/31 12318.79 14269.05 1995/04/30 12309.04 14134.01 1995/05/31 13712.45 15856.11 1995/06/30 13702.71 15617.68 1995/07/31 14053.56 15864.27 1995/08/31 13507.79 15109.47 1995/09/30 13683.21 15371.66 1995/10/31 13527.28 15138.13 1995/11/30 13293.38 14979.13 1995/12/31 14038.25 15724.49 1996/01/31 15771.98 17165.65 1996/02/29 15425.24 17106.70 1996/03/31 15296.45 17244.40 1996/04/30 15623.38 17726.96 1996/05/31 15682.82 17554.45 1996/06/30 15237.00 17200.74 1996/07/31 14038.25 15961.51 1996/08/31 14672.30 16537.82 1996/09/30 15147.84 16955.48 1996/10/31 14553.42 16635.18 1996/11/30 15603.56 17587.62 1996/12/31 15464.51 17475.63 1997/01/31 15454.22 17729.59 1997/02/28 15690.87 17795.50 1997/03/31 14620.81 16822.86 1997/04/30 14301.84 16393.53 1997/05/31 15124.97 17225.98 1997/06/30 15618.85 17686.50 1997/07/31 16123.01 17772.64 1997/08/31 14013.75 14500.35 1997/09/30 13231.78 14391.39 1997/10/31 9826.09 10880.61 1997/11/30 9754.06 10188.55 1997/12/31 9451.16 9732.57 1998/01/31 8882.44 8912.96 1998/02/28 10226.69 10957.88 1998/03/31 10195.67 10690.41 1998/04/30 9296.05 9589.59 1998/05/31 8044.86 8104.40 1998/06/30 7383.07 7222.25 1998/07/31 7269.33 7021.87 1998/08/31 6349.03 5936.84 1998/09/30 7093.54 6576.50 1998/10/31 8406.78 8372.34 1998/11/30 8944.48 9134.88 1998/12/31 8903.49 9263.54 1999/01/31 8582.17 8960.88 1999/02/28 8447.43 8802.18 1999/03/31 9204.07 9791.62 1999/04/30 11111.22 12052.48 1999/05/31 10738.08 11510.53 1999/06/30 12790.34 13507.32 1999/07/31 12634.86 12989.96 1999/08/31 12925.08 13202.48 1999/09/30 11909.32 12145.78 1999/10/29 12593.40 12730.66 IMATRL PRASUN SHR__CHT 19991031 19991111 124720 R00000000000082 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity Southeast Asia Fund on April 19, 1993, when the fund started, and the current 3.00% sales charge was paid. As the chart shows, by October 31, 1999, the value of the investment would have been $12,593 - a 25.93% increase on the initial investment. For comparison, look at how the Morgan Stanley Capital International AC Far East Free-ex Japan Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have been $12,731 - a 27.31% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. Past performance is no guarantee of future results and you may have a gain or loss when you sell your shares. (checkmark) SOUTHEAST ASIA FUND TALK: THE MANAGER'S OVERVIEW An interview with Allan Liu, Portfolio Manager of Fidelity Southeast Asia Fund Q. HOW DID THE FUND PERFORM, ALLAN? A. The fund did very well on an absolute basis but slightly trailed its benchmark during the period. For the 12 months that ended October 31, 1999, the fund returned 49.80%, compared to 52.06% for the Morgan Stanley Capital International AC Far East Free ex-Japan Index and 48.33% for the Pacific region ex-Japan funds average tracked by Lipper Inc. Q. WHY DID THE FUND UNDERPERFORM ITS BENCHMARK? A. The underperformance occurred during the first six months of the period, when I positioned the fund defensively due to the instability and increased risk I perceived in Southeast Asian equity markets. At that time, in addition to an emphasis on earnings and share-price growth, I also focused on companies with the best survival capability. When Southeast Asian stocks rallied strongly late in 1998 and early in 1999 - particularly in South Korea - the fund fell behind the index. However, the fund soundly beat the index during the last six months of the period, narrowing the performance gap from 11.79% as of April 30, 1999, to 2.26% at the end of the period. Q. WHAT DID YOU DO DIFFERENTLY IN THE SECOND HALF OF THE PERIOD? A. I invested more in companies that were positioned to benefit from the domestic recoveries occurring in many Southeast Asian countries and in manufacturers with strong export businesses. These included the stocks of domestic consumer, technology and electronics companies in Hong Kong, Korea, Taiwan and Singapore. I particularly favored companies that I felt could compete successfully on a global level. Q. THE FINANCE COMPONENT OF THE FUND DECREASED FROM 28.6% OF NET ASSETS AT THE END OF APRIL TO 20.1% AT THE END OF THE PERIOD. WHY WAS THAT? A. Early in the year, the fund had a heavier weighting of finance stocks because interest rates were dropping sharply, which tends to benefit companies in this sector. Once most of the drop in interest rates had occurred, however, I lightened up on the fund's finance holdings. As a result of the precarious financial condition of the region, many banks had badly damaged balance sheets requiring massive recapitalization - that is, issuing more shares of stock. When more shares of a stock are issued, there is dilution of earnings per share, which I felt did not bode well for those companies' stock prices. Q. AFTER OVERWEIGHTING HONG KONG RELATIVE TO THE INDEX 12 MONTHS AGO, YOU SUBSEQUENTLY UNDERWEIGHTED THAT COUNTRY. CAN YOU EXPLAIN YOUR RATIONALE? A. When the region began to recover, I felt that Hong Kong's fixed-rate currency system would inhibit its recovery. Currency depreciation - painful though it is in many respects - is one way a country can make itself more competitive, with cheaper asset prices that will attract foreign investors. Since Hong Kong has chosen to maintain a fixed-rate link to the U.S. dollar, currency depreciation is not a possible avenue of recovery. Instead, investors must wait for domestic asset prices in Hong Kong to fall to levels that seem attractive. Q. WHAT STOCKS DID WELL FOR THE FUND? A. Samsung Electronics, the fund's largest holding at the end of the period, did extremely well. The company is the world's most efficient producer of computer DRAM (dynamic random access memory) and was able to survive comfortably even when DRAM prices were at their lowest point. Another helpful holding was Taiwan Semiconductor, one of the most efficient manufacturers of semiconductors. The stock benefited from improved demand in the semiconductor market. Q. WHAT STOCKS DISAPPOINTED YOU? A. Swire Pacific weighed down the fund's return, based on the disappointing performance of its investments in office property. CLP Holdings, a Hong Kong utility, suffered when investors began to allocate more capital to non-defensive stocks. I sold both stocks. Q. WHAT'S YOUR OUTLOOK, ALLAN? A. Now that interest rates have fallen so dramatically, further gains in Southeast Asian share prices will be primarily earnings-driven. I will be watching to see which companies continue to put a high priority on decreasing debt and increasing operating efficiency and overall shareholder value. With better times may come a certain complacency on the part of some managements about implementing needed restructuring. I intend to emphasize the companies that are serious about continuing to improve. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3. FUND FACTS GOAL: long-term growth of capital by investing mainly in equity securities of Southeast Asian issuers; the fund does not anticipate investing in Japan START DATE: April 19, 1993 FUND NUMBER: 351 TRADING SYMBOL: FSEAX SIZE: as of October 31, 1999, more than $360 million MANAGER: Allan Liu, since inception; manager, various funds for non-U.S. investors; analyst, Southeast Asian markets, 1987-1990; joined Fidelity in 1987 (checkmark) SOUTHEAST ASIA INVESTMENT CHANGES AS OF OCTOBER 31, 1999 United States 2.8% United Kingdom 5.2% Row: 1, Col: 1, Value: 28.1 Row: 1, Col: 2, Value: 1.6 Row: 1, Col: 3, Value: 19.7 Row: 1, Col: 4, Value: 8.5 Row: 1, Col: 5, Value: 1.9 Row: 1, Col: 6, Value: 12.8 Row: 1, Col: 7, Value: 17.0 Row: 1, Col: 8, Value: 2.4 Row: 1, Col: 9, Value: 5.2 Row: 1, Col: 10, Value: 2.8 Thailand 2.4% Hong Kong 28.1% Taiwan 17.0% Indonesia 1.6% Singapore 12.8% Other 1.9% Korea (South) 19.7% Malaysia 8.5% GEOGRAPHIC DIVERSIFICATION (% OF FUND'S NET ASSETS) AS OF APRIL 30, 1999 United States 5.8% Row: 1, Col: 1, Value: 35.7 Row: 1, Col: 2, Value: 1.5 Row: 1, Col: 3, Value: 15.2 Row: 1, Col: 4, Value: 2.9 Row: 1, Col: 5, Value: 1.2 Row: 1, Col: 6, Value: 13.0 Row: 1, Col: 7, Value: 13.3 Row: 1, Col: 8, Value: 3.8 Row: 1, Col: 9, Value: 7.6 Row: 1, Col: 10, Value: 5.8 United Kingdom 7.6% Thailand 3.8% Hong Kong 35.7% Taiwan 13.3% Singapore 13.0% Indonesia 1.5% Other 1.2% Malaysia 2.9% Korea (South) 15.2% PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF APPLICABLE. ASSET ALLOCATION % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Stocks 97.2 94.2 Short-Term Investments and 2.8 5.8 Net Other Assets PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TOP TEN STOCKS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Samsung Electronics Co. Ltd. 8.4 3.4 (Korea (South), Electronics) Hutchison Whampoa Ltd. (Hong 6.6 7.2 Kong, Electrical Equipment) HSBC Holdings PLC (Hong Kong) 5.2 7.6 (Reg.) (United Kingdom, Banks) Taiwan Semiconductor 4.7 3.0 Manufacturing Co. Ltd. (Taiwan, Electronics) Cheung Kong Holdings Ltd. 4.2 5.4 (Hong Kong, Real Estate) China Telecom (Hong Kong) 3.8 2.9 Ltd. (Hong Kong, Cellular) Sun Hung Kai Properties Ltd. 3.2 4.1 (Hong Kong, Real Estate) Korea Electric Power Corp. 2.4 3.1 (Korea (South), Electric Utility) Cable & Wireless HKT Ltd. 2.2 3.3 (Hong Kong, Telephone Services) Hang Seng Bank Ltd. (Hong 2.1 2.7 Kong, Banks) 42.8 42.7 TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO TECHNOLOGY 31.1 16.7 FINANCE 20.1 28.6 UTILITIES 12.0 15.0 CONSTRUCTION & REAL ESTATE 9.8 15.0 INDUSTRIAL MACHINERY & 8.3 8.1 EQUIPMENT MEDIA & LEISURE 4.1 2.4 BASIC INDUSTRIES 3.0 2.2 NONDURABLES 2.6 2.5 DURABLES 2.5 1.5 TRANSPORTATION 2.0 1.2
SOUTHEAST ASIA INVESTMENTS OCTOBER 31, 1999 Showing Percentage of Net Assets COMMON STOCKS - 96.8% SHARES VALUE (NOTE 1) AUSTRALIA - 0.6% LibertyOne Ltd. 1,800,000 $ 2,226,848 CHINA - 0.7% China Southern Airlines Ltd. 1,600,000 319,259 (a) Great Wall Technology Co. (H 2,460,000 1,504,248 Shares) Shanghai Petrochemical Co. 2,400,000 491,246 Ltd. Class H Shenzhen Expressway Co. Ltd. 1,000,000 149,331 Class H 2,464,084 HONG KONG - 28.1% Cable & Wireless HKT Ltd. 3,448,000 7,865,750 Cheung Kong Holdings Ltd. 1,685,000 15,292,546 China Telecom (Hong Kong) 4,068,000 13,729,500 Ltd. (a) Dah Sing Financial Holdings 760,000 3,032,956 Ltd. Dao Heng Bank Group Ltd. 850,000 3,906,411 Denway Investment Ltd. (a) 8,370,000 915,873 Giordano International Ltd. 1,000,000 1,062,049 Hang Seng Bank Ltd. 706,000 7,679,840 Hutchison Whampoa Ltd. 2,367,000 23,767,508 Johnson Electric Holdings 874,000 4,725,541 Ltd. Smartone Telecommunications 10,000 35,273 Holdings Ltd. Sun Hung Kai Properties Ltd. 1,410,310 11,392,502 Television Broadcasts Ltd. 620,000 3,312,307 Wharf Holdings Ltd. 325,942 941,993 Wing Hang Bank Ltd. 1,079,000 3,521,196 101,181,245 INDIA - 0.5% Infosys Technologies Ltd. 5,850 936,108 Pentafour Software & Exports 73,000 1,013,795 Ltd. (a) 1,949,903 INDONESIA - 1.6% Gudang Garam PT Perusahaan 780,000 2,011,427 PT Lippo Bank Tbk (a) 46,000,000 1,516,482 PT Lippo Bank Tbk: rights 12/31/99 (a) 36,000,000 0 warrants 5/1/02 (a) 36,000,000 0 PT Telkomunikasi Indonesia 1,076,060 512,409 Sampoerna, Hanjaya Mandala (a) 700,000 1,630,768 5,671,086 KOREA (SOUTH) - 19.7% Cheil Jedang Corp. 45,000 2,588,580 Daelim Industrial Co. 99,945 1,258,166 Dongwon Securities Co. Ltd. 20,000 600,250 Hanwha Chemical Corp. 140,000 1,266,361 Honam Petrochemical Corp. 16,000 309,462 Housing & Commercial Bank (a) 95,300 2,518,559 Hyundai Electronics 120,000 1,995,832 Industries Co. Ltd. (a) Hyundai Engineering & 8 47 Construction Co. Ltd. (a) SHARES VALUE (NOTE 1) Kookmin Bank 58,000 $ 904,210 Kookmin Bank rights 11/04/99 8,839 53,793 (a) Korea Chemical Co. Ltd. 8,500 566,903 Korea Electric Power Corp. 300,000 8,778,661 Korea Telecom 80,100 5,388,972 Korea Tobacco & Ginseng Co. 27,000 736,057 Ltd. Lg Chemical Ltd. 52,000 1,573,656 Lg Electronics, Inc. 90,000 2,948,730 Pohang Iron & Steel Co. Ltd. 27,000 3,241,352 Samsung Corp. sponsored GDR 21 123 Unit (a) Samsung Electronics Co. Ltd. 180,834 30,151,573 Samsung Fire & Marine 26,220 1,158,533 Insurance Shinsegae Department Store 57,000 3,131,556 Shinsegae Department Store 9,964 176,104 rights 12/1/99 (a) SK Telecom Co. Ltd. 1,526 1,761,993 71,109,473 MALAYSIA - 8.5% AMMB Holdings BHD 200,000 431,579 Berjaya Sports Toto BHD 708,833 1,538,914 Commerce Asset Holding BHD 760,000 1,680,000 Genting BHD 500,000 1,789,474 Hong Leong Industries BHD 100,000 119,474 Jaya Tiasa Holdings BHD 715,000 1,307,697 Lingui Development BHD 329,000 337,658 Magnum Corp. BHD 1,000,000 789,474 Malayan Banking BHD 1,067,000 3,622,184 Malaysian Pacific Industries 275,000 1,194,079 New Straits Times Press BHD 300,000 667,105 (a) PhileoAllied BHD (a) 1,200,000 862,105 Public Bank BHD (For. Reg.) 1,354,000 1,432,389 Resorts World BHD 880,000 2,524,211 Rothmans of Pall Mall 227,000 1,583,026 Malaysia BHD Sungei Way Holdings BHD (a) 949,000 609,358 Telekom Malaysia BHD 806,000 2,481,632 Tenaga Nasional BHD 744,000 1,713,158 UMW Holdings BHD 100,000 177,632 Unisem (M) BHD 895,000 3,650,658 United Engineers BHD (a) 850,000 1,442,763 United Engineers BHD warrants 170,000 44,737 10/28/02 (a) WTK Holdings BHD 283,000 796,868 30,796,175 PHILIPPINES - 0.1% Philippine Long Distance 24,000 499,751 Telephone SINGAPORE - 12.8% Chartered Semiconduct 1,900 63,056 Manufacturing Ltd. ADR City Developments Ltd. 238,000 1,231,899 Datacraft Asia Ltd. 1,430,000 6,578,000 DBS Group Holdings Ltd. 389,605 4,408,410 Delgro Corp. Ltd. 200,000 692,146 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SINGAPORE - CONTINUED Gul Technologies Singapore 1,400,000 $ 1,280,770 Ltd. JIT Holdings Ltd. 1,230,000 2,028,408 Natsteel Electronics Ltd. 697,000 2,726,753 Oversea-Chinese Banking Corp. 529,200 3,981,342 Ltd. Pacific Century Region 160,000 924,466 Developments Ltd. (a) Pacific Internet Ltd. 100 3,125 Singapore Airlines Ltd. 547,000 5,794,282 Singapore Press Holdings Ltd. 230,076 3,946,534 Singapore Technologies 1,106,175 1,604,503 Engineering Ltd. United Overseas Bank Ltd. 485,500 3,681,794 (For. Reg.) Venture Manufacturing 803,000 7,152,814 Singapore Ltd. 46,098,302 TAIWAN - 17.0% Advanced Semiconductor 410,000 1,260,246 Engineering, Inc. (a) Asustek Computer, Inc. 452,759 4,753,113 Bank Sinopac 4,324,113 2,440,152 China Trust Co. Ltd. (a) 2,982,280 2,735,950 Compal Electronics, Inc. 989,599 3,322,582 Compeq Manufacturing Co. Ltd. 23,400 119,508 (a) CTCI Corp. 460,000 390,101 Eten Information System Co. 424,000 1,022,573 Ltd. Far Eastern Textile Ltd. 3,511,430 4,804,416 Hon Hai Precision Industries 999,880 6,840,289 Co. Ltd. Kindom Construction Co. Ltd. 610,000 367,308 Nan Ya Plastics Corp. 500,000 874,842 Phoenixtec Power Co. Ltd. 494,480 1,005,484 Siliconware Precision 1,464,000 2,630,769 Industries Co. Ltd. Systex Corp. 899,000 2,848,345 Taishin International Bank 600,000 342,371 Taiwan Semiconductor 3,832,677 17,036,805 Manufacturing Co. Ltd. Ulead Systems, Inc. 506,000 1,611,160 United Microelectronics Corp. 2,727,950 7,095,078 61,501,092 THAILAND - 2.0% Advanced Info Service PCL 58,000 675,728 (For. Reg.) (a) Kiatnakin Finance & 600,000 722,330 Securities PCL (a) Ministry of Finance of the 2,866,600 1,001,918 Kingdom of Thailand (Siam Commercial Bank PLC) warrants 5/31/02 (a) Shin Satellite PCL (a) 875,000 475,728 Siam Cement PCL (For. Reg.) 90,000 2,330,097 (a) Siam Makro PCL (a) 39,800 66,462 Siam Makro PCL (For. Reg.) 610,200 1,018,975 Thai Farmers Bank PCL (For. 650,000 917,152 Reg.) (a) 7,208,390 SHARES VALUE (NOTE 1) UNITED KINGDOM - 5.2% HSBC Holdings PLC (Hong Kong) 1,513,550 $ 18,635,584 (Reg.) TOTAL COMMON STOCKS 349,341,933 (Cost $249,503,647) CONVERTIBLE PREFERRED STOCKS - - 0.4% THAILAND - 0.4% Siam Commercial Bank PLC 1,166,600 1,321,392 5.25% (a) (Cost $824,305) CASH EQUIVALENTS - 2.4% Central Cash Collateral Fund, 2,784,950 2,784,950 5.26% (b) Taxable Central Cash Fund, 5,753,920 5,753,920 5.21% (b) TOTAL CASH EQUIVALENTS 8,538,870 (Cost $8,538,870) TOTAL INVESTMENT PORTFOLIO - 359,202,195 99.6% (Cost $258,866,822) NET OTHER ASSETS - 0.4% 1,479,689 NET ASSETS - 100% $ 360,681,884 LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $309,135,892 and $269,182,012, respectively. The fund participated in the security lending program. At period end, the value of securities loaned amounted to $2,688,354. The fund received cash collateral of $2,784,950 which was invested in the Central Cash Collateral Fund. The fund participated in the bank borrowing program. The average daily loan balance during the period for which loans were outstanding amounted to $2,017,000. The weighted average interest rate was 5.48%. INCOME TAX INFORMATION At October 31, 1999, the aggregate cost of investment securities for income tax purposes was $259,789,342. Net unrealized appreciation aggregated $99,412,853, of which $106,628,237 related to appreciated investment securities and $7,215,384 related to depreciated investment securities. At October 31, 1999, the fund had a capital loss carryforward of approximately $143,548,000 of which $32,651,000, $110,573,000 and $324,000 will expire on October 31, 2005, 2006 and 2007, respectively. MARKET SECTOR DIVERSIFICATION (UNAUDITED) As a Percentage of Net Assets BASIC INDUSTRIES 3.0% CASH EQUIVALENTS 2.4 CONSTRUCTION & REAL ESTATE 9.8 DURABLES 2.5 ENERGY 0.1 FINANCE 20.1 HOLDING COMPANIES 0.1 INDUSTRIAL MACHINERY & 8.3 EQUIPMENT MEDIA & LEISURE 4.1 NONDURABLES 2.6 RETAIL & WHOLESALE 1.5 TECHNOLOGY 31.1 TRANSPORTATION 2.0 UTILITIES 12.0 SOUTHEAST ASIA FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999 ASSETS Investment in securities, at $ 359,202,195 value (cost $258,866,822) - See accompanying schedule Foreign currency held at 4,877,351 value (cost $4,843,050) Receivable for investments 2,414,091 sold Receivable for fund shares 359,542 sold Dividends receivable 502,004 Interest receivable 18,827 Redemption fees receivable 902 Other receivables 5,871 TOTAL ASSETS 367,380,783 LIABILITIES Payable for investments $ 1,915,282 purchased Payable for fund shares 1,475,627 redeemed Accrued management fee 277,128 Other payables and accrued 245,912 expenses Collateral on securities 2,784,950 loaned, at value TOTAL LIABILITIES 6,698,899 NET ASSETS $ 360,681,884 Net Assets consist of: Paid in capital $ 404,233,757 Undistributed net investment 566,245 income Accumulated undistributed net (144,491,480) realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 100,373,362 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 29,687,778 $ 360,681,884 shares outstanding NET ASSET VALUE and $12.15 redemption price per share ($360,681,884 (divided by) 29,687,778 shares) Maximum offering price per $12.53 share (100/97.00 of $12.15) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME $ 5,012,805 Dividends Interest 344,027 Security lending 31,593 5,388,425 Less foreign taxes withheld (240,264) TOTAL INCOME 5,148,161 EXPENSES Management fee Basic fee $ 2,190,265 Performance adjustment 474,579 Transfer agent fees 1,001,891 Accounting and security 173,892 lending fees Non-interested trustees' 1,054 compensation Custodian fees and expenses 407,562 Registration fees 47,786 Audit 70,090 Legal 944 Interest 307 Miscellaneous 924 Total expenses before 4,369,294 reductions Expense reductions (64,296) 4,304,998 NET INVESTMENT INCOME 843,163 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 699,202 Foreign currency transactions (164,872) 534,330 Change in net unrealized appreciation (depreciation) on: Investment securities 103,806,641 Assets and liabilities in (2,959) 103,803,682 foreign currencies NET GAIN (LOSS) 104,338,012 NET INCREASE (DECREASE) IN $ 105,181,175 NET ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION $ 537,360 Sales charges paid to FDC Sales charges - Retained by $ 536,707 FDC Expense reductions Directed $ 62,950 brokerage arrangements Custodian credits 1,064 Transfer agent credits 282 $ 64,296 STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998 ASSETS Operations Net investment $ 843,163 $ 2,515,337 income Net realized gain (loss) 534,330 (112,465,494) Change in net unrealized 103,803,682 71,238,265 appreciation (depreciation) NET INCREASE (DECREASE) IN 105,181,175 (38,711,892) NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (562,063) (1,459,446) from net investment income Share transactions Net 212,535,353 131,309,522 proceeds from sales of shares Reinvestment of distributions 540,135 1,428,081 Cost of shares redeemed (181,366,771) (148,622,010) NET INCREASE (DECREASE) IN 31,708,717 (15,884,407) NET ASSETS RESULTING FROM SHARE TRANSACTIONS Redemption fees 1,014,716 548,119 TOTAL INCREASE (DECREASE) 137,342,545 (55,507,626) IN NET ASSETS NET ASSETS Beginning of period 223,339,339 278,846,965 End of period (including $ 360,681,884 $ 223,339,339 undistributed net investment income of $566,245 and $347,773, respectively) OTHER INFORMATION Shares Sold 19,445,097 15,599,765 Issued in reinvestment of 63,997 142,524 distributions Redeemed (17,300,454) (17,461,859) Net increase (decrease) 2,208,640 (1,719,570)
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995 SELECTED PER-SHARE DATA Net asset value, beginning of $ 8.13 $ 9.55 $ 14.69 $ 13.88 $ 14.61 period Income from Investment Operations Net investment income .03 C .09 C .04 C, E .14 C .15 Net realized and unrealized 3.97 (1.48) (4.62) .87 (.91) gain (loss) Total from investment 4.00 (1.39) (4.58) 1.01 (.76) operations Less Distributions From net investment income (.02) (.05) (.10) (.23) - In excess of net investment - - (.07) - - income From net realized gain - - (.40) - - Total distributions (.02) (.05) (.57) (.23) - Redemption fees added to paid .04 .02 .01 .03 .03 in capital Net asset value, end of period $ 12.15 $ 8.13 $ 9.55 $ 14.69 $ 13.88 TOTAL RETURN A, B 49.80% (14.44)% (32.48)% 7.59% (5.00)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 360,682 $ 223,339 $ 278,847 $ 755,346 $ 649,868 (000 omitted) Ratio of expenses to average 1.46% 1.83% 1.32% 1.13% 1.10% net assets Ratio of expenses to average 1.43% D 1.79% D 1.32% 1.12% D 1.10% net assets after expense reductions Ratio of net investment .28% 1.07% .22% .95% .90% income to average net assets Portfolio turnover rate 93% 95% 141% 102% 94% A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D 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 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.02 PER SHARE.
NOTES TO FINANCIAL STATEMENTS For the period ended October 31, 1999 1. SIGNIFICANT ACCOUNTING POLICIES. Fidelity Canada Fund, Fidelity Emerging Markets Fund, Fidelity Europe Fund, Fidelity Europe Capital Appreciation Fund, Fidelity Hong Kong and China Fund, Fidelity Japan Fund, Fidelity Japan Small Companies Fund, Fidelity Latin America Fund, Fidelity Nordic Fund, Fidelity Pacific Basin Fund, and Fidelity Southeast Asia Fund (the funds) are funds of Fidelity Investment Trust (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. On November 18, 1999, the Board of Trustees approved a change in the fund's name from Japan Small Companies to Japan Smaller Companies. Each fund is authorized to issue an unlimited number of shares. The financial statements have been prepared in conformity with generally accepted accounting principles which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the funds: SECURITY VALUATION. Securities for which quotations are readily available are valued at the last sale price, or if no sale price, at the closing bid price in the principal market in which such securities are normally traded. If trading or events occurring in other markets after the close of the principal market in which securities are traded are expected to materially affect the value of those securities, then they are valued at their fair value taking this trading or these events into account. Fair value is determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. Securities (including restricted securities) for which quotations are not readily available are valued primarily using dealer-supplied valuations or at their fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost or original cost plus accrued interest, both of which approximate current value. FOREIGN CURRENCY TRANSLATION. The accounting records of the funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the prevailing rates of exchange at period end. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of foreign currency contracts, disposition of foreign currencies, the difference between the amount of net investment income accrued and the U.S. dollar amount actually received, and gains and losses between trade and settlement date on purchases and sales of securities. The effects of changes in foreign currency exchange rates on investments in securities are included with the net realized and unrealized gain or loss on investment securities. INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, each fund is not subject to U.S. federal income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. Each fund may be subject to foreign taxes on income and gains on investments which are accrued based upon each fund's understanding of the tax rules and regulations that exist in the markets in which they invest. Foreign governments may also impose taxes on other payments or transactions with respect to foreign securities. Each fund accrues such taxes as applicable. The schedules of investments include information regarding income taxes under the caption "Income Tax Information." INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, are recorded as soon as the funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. EXPENSES. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust. DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences, which may result in distribution reclassifications, are primarily due to differing treatments for futures transactions, foreign currency transactions/passive foreign investment companies (PFIC), market discount, net operating losses, capital loss carryforwards, and losses deferred due to wash sales. Certain funds also utilized earnings and profits distributed to shareholders on redemption of shares as a part of the dividends paid deduction for income tax purposes. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital. Undistributed net investment income, distributions in excess of net investment income, accumulated net investment loss and accumulated undistributed net realized gain (loss) on investments and foreign currency transactions may include temporary book and tax basis differences which will reverse in a subsequent period. Any taxable income or gain remaining at fiscal year end is distributed in the following year. SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in Canada, Emerging Markets, Hong Kong and China, Japan, Japan Smaller Companies, Latin America, Nordic, and Southeast Asia less than 90 days are subject to a short-term trading fee equal to 1.50% of the proceeds of the redeemed shares (1.00% for shares purchased prior to February 1, 1996 for Canada and Japan). Shares held in Europe, 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED SHORT-TERM TRADING (REDEMPTION) FEES - CONTINUED Europe Capital Appreciation, and Pacific Basin less than 90 days are subject to a short-term trading fee equal to 1.00% of the proceeds of the redeemed shares. These fees, which are retained by the funds, are accounted for as an addition to paid in capital. SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 2. OPERATING POLICIES. FOREIGN CURRENCY CONTRACTS. Certain funds use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms. The U.S. dollar value of foreign currency contracts is determined using contractual currency exchange rates established at the time of each trade. JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the funds, along with other affiliated entities of Fidelity Management & Research Company (FMR), may transfer uninvested cash balances into one or more joint trading accounts. These balances are invested in one or more repurchase agreements for U.S. Treasury or Federal Agency obligations. REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency securities are transferred to an account of the funds, or to the Joint Trading Account, at a bank custodian. The securities are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). FMR, the funds' investment adviser, is responsible for determining that the value of the underlying securities remains in accordance with the market value requirements stated above. CENTRAL CASH FUNDS. Pursuant to an Exemptive Order issued by the SEC, the funds may invest in the Taxable Central Cash Fund and the Central Cash Collateral Fund (the Cash Funds) managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Cash Funds are open-end money market funds available only to investment companies and other accounts managed by FMR and its affiliates. The Cash Funds seek preservation of capital, liquidity, and current income. Income distributions from the Cash Funds are declared daily and paid monthly from net interest income. Income distributions earned by the funds are recorded as either interest income or security lending income in the accompanying financial statements. INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the SEC, the funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating funds. Information regarding each fund's participation in the program is included under the caption "Other Information" at the end of each applicable fund's schedule of investments. RESTRICTED SECURITIES. Certain funds are permitted to invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. At the end of the period, no funds had investments in restricted securities (excluding 144A issues). 3. PURCHASES AND SALES OF INVESTMENTS. Information regarding purchases and sales of securities (other than short-term securities), is included under the caption "Other Information" at the end of each applicable fund's schedule of investments. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As each fund's investment adviser, FMR receives a monthly basic fee that is calculated on the basis of a group fee rate plus a fixed individual fund fee rate applied to the average net assets of each fund. The group fee rate is the weighted average of a series of rates and is based on the monthly average net assets of all the mutual funds advised by FMR. The rates ranged from .2167% to .5200% for the period. The annual individual fund fee rate is .45% for each fund. In the event that these rates were lower than the contractual rates in effect during the period, FMR voluntarily implemented the above rates, as they resulted in the same or a lower management fee. The basic fee for Canada, Europe, Europe Capital Appreciation, Japan, Pacific Basin, and Southeast Asia is subject to a performance adjustment (up to a maximum of (plus/minus).20% of the fund's average net assets over the performance period) based on each fund's investment performance as compared to the appropriate index over a specified period of time. For the period, each fund's management fee was equivalent to the following annual rates expressed as a percentage of average net assets after the performance adjustment, if applicable: Canada .32% Emerging Markets .73% Europe .60% Europe Capital Appreciation .66% Hong Kong and China .73% Japan .86% Japan Smaller Companies .72% Latin America .73% Nordic .73% Pacific Basin .92% Southeast Asia .89% 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED SUB-ADVISER FEE. FMR, on behalf of the funds, entered into sub-advisory agreements with Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research Far East Inc., Fidelity International Investment Advisors (FIIA), and Fidelity Investments Japan Limited (FIJ) (Emerging Markets, Hong Kong and China, Japan, Japan Smaller Companies, Pacific Basin, and Southeast Asia funds only.). In addition, FIIA entered into a sub-advisory agreement with its subsidiary, Fidelity International Investment Advisors (U.K.) Limited (FIIA(U.K.)L). Under the sub-advisory arrangements, FMR may receive investment advice and research services and may grant the sub-advisers investment management authority to buy and sell securities. FMR pays its sub-advisers either a portion of its management fee or a fee based on costs incurred for these services. FIIA pays FIIA(U.K.)L a fee based on costs incurred for either service. SALES LOAD. Fidelity Distributors Corporation (FDC), an affiliate of FMR, is the general distributor of the fund. FDC receives a sales charge of up to 3% for selling shares of each fund. For the period July 1, 1998 to December 31, 1998, FDC voluntarily waived the sales charge on the sale of shares of the Europe Capital Appreciation Fund. Shares of Canada, Europe, and Pacific Basin purchased prior to October 12, 1990, are subject to a 1% deferred sales charge upon redemption. The amounts received and retained by FDC for sales charges and deferred sales charges are shown under the caption "Other Information" on each fund's Statement of Operations. TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the funds' transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of all shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to the following annual rates as a percentage of the average net assets: Canada .39% Emerging Markets .48% Europe .25% Europe Capital Appreciation .26% Hong Kong and China .36% Japan .26% Japan Smaller Companies .19% Latin America .38% Nordic .31% Pacific Basin .32% Southeast Asia .33% ACCOUNTING AND SECURITY LENDING FEES. FSC maintains each fund's accounting records and administers the security lending program. The security lending fee is based on the number and duration of lending transactions. The accounting fee is based on the level of average net assets for the month plus out-of-pocket expenses. BROKERAGE COMMISSIONS. Certain funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of FMR. The commissions paid to these affiliated firms are shown under the caption "Other Information" at the end of each applicable fund's schedule of investments. 5. SECURITY LENDING. Certain funds lend portfolio securities from time to time in order to earn additional income. Each applicable fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the funds and any additional required collateral is delivered to the funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Information regarding the value of securities loaned and the value of collateral at period end is included under the caption "Other Information" at the end of each applicable fund's schedule of investments. 6. BANK BORROWINGS. Each fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. Each fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. Information regarding a fund's participation in the program is included under the caption "Other Information" at the end of each applicable fund's schedule of investments. 7. EXPENSE REDUCTIONS. FMR voluntarily agreed to reimburse certain fund's operating expenses (excluding interest, taxes, certain securities lending fees, brokerage commissions and extraordinary expenses, if any) above an annual rate of 2.00% of average net assets of each of the applicable funds. FMR has directed certain portfolio trades to brokers who paid a portion of certain funds' expenses. In addition, through arrangements with certain funds' custodian and transfer agent, credits realized on uninvested cash balances were used to reduce a portion of certain funds' expenses. For the period, the reductions under these arrangements are shown under the caption "Other Information" on each applicable fund's Statement of Operations. 8. BENEFICIAL INTEREST. At the end of the period, FMR and its affiliates were record owners of more than 5% of the outstanding shares of the following funds: % FUND OWNERSHIP Japan Smaller Companies 7% 9. TRANSACTIONS WITH AFFILIATED COMPANIES. An affiliated company is a company which the fund has ownership of at least 5% of the voting securities. Information regarding transactions with affiliated companies is included in "Other Information" at the end of each applicable fund's schedule of investments. 10. LITIGATION. The Latin America Fund is engaged in litigation against the obligor on the inflation adjusted debt of Siderurgica Brasileiras SA, contesting the calculation of the principal adjustment. The probability of success of this litigation cannot be predicted and the amount of recovery cannot be estimated. Any recovery from this litigation would inure to the benefit of the fund. As of period end, the Latin America Fund no longer holds Siderurgica Brasileiras SA debt securities. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Investment Trust and the Shareholders of: Fidelity Canada Fund, Fidelity Emerging Markets Fund, Fidelity Europe Fund, Fidelity Hong Kong and China Fund, Fidelity Japan Fund, Fidelity Japan Smaller Companies Fund, Fidelity Latin America Fund, Fidelity Nordic Fund, Fidelity Pacific Basin Fund, Fidelity Southeast Asia Fund, In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Canada Fund, Fidelity Emerging Markets Fund, Fidelity Europe Fund, Fidelity Hong Kong and China Fund, Fidelity Japan Fund, Fidelity Japan Smaller Companies Fund, Fidelity Latin America Fund, Fidelity Nordic Fund, Fidelity Pacific Basin Fund and Fidelity Southeast Asia Fund (funds of Fidelity Investment Trust) at October 31, 1999, and the results of their operations, the changes in their net assets and the financial highlights for the periods indicated, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Investment Trust's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 1999 by correspondence with the custodian and brokers, provide a reasonable basis for the opinion expressed above. /s/PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Boston, Massachusetts December 15, 1999 INDEPENDENT AUDITORS' REPORT To the Trustees of Fidelity Investment Trust and Shareholders of Fidelity Europe Capital Appreciation Fund: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments of Fidelity Europe Capital Appreciation Fund as of October 31, 1999, and the related statements of operations, changes in net assets and financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The statement of changes in net assets for the year ended October 31, 1998, and the financial highlights for each of the years in the four-year period ended October 31, 1998 were audited by other auditors whose report, dated December 14, 1998, expressed an unqualified opinion on those statements and financial highlights. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of the securities owned at October 31, 1999, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of Fidelity Europe Capital Appreciation Fund at October 31, 1999, the results of its operations, the changes in its net assets, and its financial highlights for the year then ended in conformity with generally accepted accounting principles. /s/DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP Boston, Massachusetts December 3, 1999 DISTRIBUTIONS The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income: FUND PAY DATE RECORD DATE DIVIDENDS CAPITAL GAINS Canada 12/06/99 12/03/99 $.03 - Europe 12/06/99 12/03/99 $.18 $1.94 Europe Capital Appreciation 12/13/99 12/10/99 $.13 $ .47 Hong Kong and China 12/06/99 12/03/99 $.17 - Japan 12/06/99 12/03/99 $.39 - Japan Smaller Companies 12/13/99 12/10/99 $.15 - Latin America 12/06/99 12/03/99 $.14 - Nordic 12/13/99 12/10/99 $.06 $ .45 Pacific Basin 12/13/99 12/10/99 $.26 - Southeast Asia 12/06/99 12/03/99 $.02 - Each fund hereby designates 100% of the long-term capital gains dividends distributed during the fiscal year as 20%-rate capital gains dividend. A percentage of the dividends distributed during the fiscal year for the following fund qualifies for the dividends-received deduction for corporate shareholders: Canada 39% The amounts per share which represent income derived from sources within, and taxes paid to, foreign countries or possessions of the United States are as follows: PAY DATE INCOME TAXES Canada 12/7/98 $.099 $.029 Europe 12/7/98 $.359 $.079 Hong Kong and China 12/7/98 $.336 $.016 Japan 12/7/98 $.039 $.009 Latin America 12/7/98 $.268 $.038 Latin America 1/2/99 $.023 $.003 Pacific Basin 12/14/98 $.034 $.014 Southeast Asia 12/7/98 $.036 $.016 The funds will notify shareholders in January 2000 of amounts for use in preparing 1999 income tax returns. INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research (U.K.) Inc., London, England Fidelity Management & Research (Far East) Inc., Tokyo, Japan Fidelity Investments Japan Ltd. Fidelity International Investment Advisors Fidelity International Investment Advisors (U.K.) Limited OFFICERS Edward C. Johnson 3d, PRESIDENT Robert C. Pozen, SENIOR VICE PRESIDENT Richard A. Spillane, Jr., VICE PRESIDENT Allan Liu, VICE PRESIDENT, SOUTHEAST ASIA FUND Kevin McCarey, VICE PRESIDENT, EUROPE CAPITAL APPRECIATION FUND Brenda A. Reed, VICE PRESIDENT, JAPAN FUND Patricia Satterthwaite, VICE PRESIDENT, LATIN AMERICA FUND David Stewart, VICE PRESIDENT, EMERGING MARKETS FUND Eric D. Roiter, SECRETARY Richard A. Silver, TREASURER Matthew N. Karstetter, DEPUTY TREASURER John H. Costello, ASSISTANT TREASURER BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Robert M. Gates * Edward C. Johnson 3d E. Bradley Jones * Donald J. Kirk * Peter S. Lynch Marvin L. Mann * William O. McCoy * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Gary Burkhead Abigail P. Johnson Ned C. Lautenbach GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENT Fidelity Service Company, Inc. Boston, MA * INDEPENDENT TRUSTEES CUSTODIANS The Chase Manhattan Bank New York, NY EMERGING MARKETS FUND, EUROPE FUND, EUROPE CAPITAL APPRECIATION FUND, JAPAN FUND, PACIFIC BASIN FUND, SOUTHEAST ASIA FUND Brown Brothers Harriman & Co. Boston, MA CANADA FUND, HONG KONG AND CHINA FUND, JAPAN SMALLER COMPANIES FUND, LATIN AMERICA FUND, NORDIC FUND FIDELITY'S INTERNATIONAL EQUITY FUNDS Canada Fund Diversified International Fund Emerging Markets Fund Europe Fund Europe Capital Appreciation Fund France Fund Germany Fund Global Balanced Fund Hong Kong and China Fund International Growth & Income Fund International Value Fund Japan Fund Japan Smaller Companies Fund Latin America Fund Nordic Fund Overseas Fund Pacific Basin Fund Southeast Asia Fund United Kingdom Fund Worldwide Fund CORPORATE HEADQUARTERS 82 Devonshire Street Boston, MA 02109 www.fidelity.com THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Exchanges/Redemptions 1-800-544-6666 Account Assistance 1-800-544-6666 Product Information 1-800-544-6666 Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.) TDD Service 1-800-544-0118 for the deaf and hearing impaired (9 a.m. - 9 p.m. Eastern time) Fidelity Automated Service Telephone (FAST SM) 1-800-544-5555 AUTOMATED LINE FOR QUICKEST SERVICE (registered trademark) BULK RATE U.S. Postage PAID Fidelity Investments P.O. Box 193 Boston, MA 02101 -----END PRIVACY-ENHANCED MESSAGE-----