-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ljxQA0D33SM0C7pPGPFuLBg2w4gTbVtLXEIQG17NgcKWmoMi8PULVR3/jSdgYjuS a+CFeWyN8/50VyZVSYOE3Q== 0000035373-94-000015.txt : 19940302 0000035373-94-000015.hdr.sgml : 19940302 ACCESSION NUMBER: 0000035373-94-000015 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19940225 19940228 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIDELITY INVESTMENT TRUST CENTRAL INDEX KEY: 0000744822 STANDARD INDUSTRIAL CLASSIFICATION: 0000 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 33 SEC FILE NUMBER: 002-90649 FILM NUMBER: 94513228 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: MAIL ZONE ZZ2 CITY: BOSTON STATE: MA ZIP: 02109 FORMER COMPANY: FORMER CONFORMED NAME: FIDELITY OVERSEAS FUND DATE OF NAME CHANGE: 19861228 485BPOS 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT (No. 2-64791) UNDER THE SECURITIES ACT OF 1933 [ ] Pre-Effective Amendment No. [ ] Post-Effective Amendment No. 53 [x] and REGISTRATION STATEMENT UNDER THE INVESTMENT [x] COMPANY ACT OF 1940 (811-4508) Amendment No. [ ] Fidelity Investment Trust (Exact Name of Registrant as Specified in Charter) 82 Devonshire Street Boston, MA 02109 (Address Of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (617) 570-7000 Arthur S. Loring, Esq. 82 Devonshire Street Boston, MA 02109 (Name and Address of Agent for Service) It is proposed that this filing become effective: [ ] Immediately upon filing pursuant to paragraph (b) of Rule 485 [x] On (February 28, 1994) pursuant to paragraph (b) of Rule 485 [ ] 60 days after filing pursuant to paragraph (a) of Rule 485 [ ] On ( ) pursuant to paragraph (a) of Rule 485 Registrant has filed a declaration pursuant to Rule 24f-2 under the Investment Company Act of 1940 and filed the notice required by such Rule before December 31, 1993. FIDELITY'S INTERNATIONAL EQUITY FUNDS FIDELITY DIVERSIFIED INTERNATIONAL FUND, FIDELITY INTERNATIONAL GROWTH & INCOME FUND, FIDELITY OVERSEAS FUND, FIDELITY WORLDWIDE FUND, FIDELITY CANADA FUND, FIDELITY EUROPE FUND, FIDELITY EUROPE CAPITAL APPRECIATION FUND, FIDELITY JAPAN FUND, FIDELITY PACIFIC BASIN FUND, FIDELITY EMERGING MARKETS FUND, FIDELITY LATIN AMERICA FUND, AND FIDELITY SOUTHEAST ASIA FUND CROSS REFERENCE SHEET FORM N-1A ITEM NUMBER PROSPECTUS SECTION
1................................... Cover Page ... 2a.................................. Expenses .. b, Contents; The Funds at a Glance; Who May Want to c................................ Invest 3a.................................. Financial Highlights .. * b................................... . Performance c.................................... 4a Charter i................................. The Funds at a Glance; Investment Principles and ii............................... Risks b................................... Investment Princliples and Risks .. Who May Want to Invest; Investment Principles and c.................................... Risks 5a.................................. Charter .. b(i)................................ Doing Business with Fidelity; Charter Charter (ii).............................. (iii)........................... Expenses; Breakdown of Expenses c, Charter; Investment Priciples and Risks; Breakdown d................................ of Expenses, Cover Page Investment Principles and Risks e.................................... Expenses f.................................... g(i)................................ Investment Principles and Risks .. (ii)................................. * .. 5A................................. Performance . 6a Charter i................................. How to Buy Shares; How to Sell Shares; Transaction ii................................ Details; Exchange Restrictions * iii............................... * b................................... . Exchange Restrictions c.................................... * d................................... . Doing Business with Fidelity; How to Buy Shares; e.................................... How to Sell Shares; Investor Services f,g................................. Dividends, Capital Gains, and Taxes .. 7a.................................. Cover Page; Charter .. How to Buy Shares; Transaction Details b................................... . Sales Charge Reductions and Waivers c.................................... How to Buy Shares d................................... . e.................................... * f ................................ * 8................................... How to Sell Shares; Investor Services; Transaction ... Details; Exchange Restrictions 9................................... * ...
* Not Applicable FIDELITY'S INTERNATIONAL EQUITY FUNDS FIDELITY DIVERSIFIED INTERNATIONAL FUND, FIDELITY INTERNATIONAL GROWTH & INCOME FUND, FIDELITY OVERSEAS FUND, FIDELITY WORLDWIDE FUND, FIDELITY CANADA FUND, FIDELITY EUROPE FUND, FIDELITY EUROPE CAPITAL APPRECIATION FUND, FIDELITY JAPAN FUND, FIDELITY PACIFIC BASIN FUND, FIDELITY EMERGING MARKETS FUND, FIDELITY LATIN AMERICA FUND, AND FIDELITY SOUTHEAST ASIA FUND CROSS REFERENCE SHEET (continued) FORM N-1A ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
10, 11.......................... Cover Page 12.................................. * .. 13a - Investment Policies and Limitations c............................ * d.................................. 14a - Trustees and Officers c............................ 15a, * b.............................. Trustees and Officers c.................................. 16a FMR i................................ Trustees and Officers ii.............................. Management Contracts iii............................. Management Contracts b................................. c, Contracts with Companies Affiliated with FMR d............................. e - * g........................... Description of the Trust h................................. Contracts with Companies Affiliated with FMR i................................. 17a - Portfolio Transactions c............................ * d,e.............................. 18a................................ Description of the Trust .. * b................................. 19a................................ Additional Purchase and Redemption Information .. Additional Purchase and Redemption Information; b.................................. Valuation of Portfolio Securities * c.................................. 20.................................. Distributions and Taxes .. 21a, Contracts with Companies Affiliated with FMR b.............................. * c................................. 22.................................. Performance .. 23.................................. Financial Statements ..
* Not Applicable Please read this prospectus before investing, and keep it on file for future reference. It contains important information, including how each fund invests and the services available to shareholders. A Statement of Additional Information dated February 28, 1994 has been filed with the Securities and Exchange Commission, and is incorporated herein by reference (is legally considered a part of this prospectus). The Statement of Additional Information is available free upon request by calling Fidelity at 1-800-544-8888. Mutual fund shares are not deposits or obligations of, or endorsed or guaranteed by, any bank, savings association, insured depositary institution, or government agency, nor are they federally insured or otherwise protected by the FDIC, the Federal Reserve Board, or any other agency. Investments in the funds involve investment risk, including possible loss of principal. The value of the investment and its return will fluctuate and are not guaranteed. When sold, the value of the investment may be higher or lower than the amount originally invested. LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. INT-pro-294 These international funds invest in securities around the world. Each fund is either broadly diversified, regional or country-specific, or it focuses on opportunities in emerging markets. FIDELITY'S INTERNATIONAL EQUITY FUNDS BROADLY DIVERSIFIED FUNDS Fidelity Diversified International Fund Fidelity International Growth & Income Fund Fidelity Overseas Fund Fidelity Worldwide Fund REGIONAL/SINGLE COUNTRY FUNDS Fidelity Canada Fund Fidelity Europe Fund Fidelity Europe Capital Appreciation Fund Fidelity Japan Fund Fidelity Pacific Basin Fund EMERGING MARKET FUNDS Fidelity Emerging Markets Fund Fidelity Latin America Fund Fidelity Southeast Asia Fund PROSPECTUS FEBRUARY 28, 1994(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA 02109 CONTENTS
KEY FACTS THE FUNDS AT A GLANCE WHO MAY WANT TO INVEST EXPENSES Each fund's sales charge (load) and its yearly operating expenses. FINANCIAL HIGHLIGHTS A summary of each fund's financial data. PERFORMANCE How each fund has done over time. THE FUNDS IN DETAIL CHARTER How each fund is organized. INVESTMENT PRINCIPLES AND RISKS Each fund's overall approach to investing. BREAKDOWN OF EXPENSES How operating costs are calculated and what they include. YOUR ACCOUNT DOING BUSINESS WITH FIDELITY TYPES OF ACCOUNTS Different ways to set up your account, including tax-sheltered retirement plans. HOW TO BUY SHARES Opening an account and making additional investments. HOW TO SELL SHARES Taking money out of and closing your account. INVESTOR SERVICES Services to help you manage your account. SHAREHOLDER AND ACCOUNT POLICIES DIVIDENDS, CAPITAL GAINS, AND TAXES TRANSACTION DETAILS Share price calculations and the timing of purchases and redemptions. EXCHANGE RESTRICTIONS SALES CHARGE REDUCTIONS AND WAIVERS
<r>KEY FACTS</r> THE FUNDS AT A GLANCE MANAGEMENT: Fidelity Management & Research Company (FMR) is the management arm of Fidelity Investments, which was established in 1946 and is now America's largest mutual fund manager. Foreign affiliates of FMR help choose investments for the funds. As with any mutual fund, there is no assurance that a fund will achieve its goal. BROADLY DIVERSIFIED FUNDS The broadly diversified funds do not focus on any one region or country. Instead, they span the globe looking for investments that fit their criteria. DIVERSIFIED INTERNATIONAL FUND GOAL: Long-term growth of capital. STRATEGY: Invests mainly in foreign equity securities that FMR determines, through both fundamental and technical analysis, to be undervalued compared to others in their industries and countries. SIZE: As of December 31, 1993, the fund had over $ 240 million in assets. INTERNATIONAL GROWTH & INCOME FUND GOAL: Growth of capital and current income. STRATEGY: Invests mainly in foreign securities. While the fund focuses on equity securities, it also invests a significant portion of its assets in debt securities. SIZE: As of December 31, 1993, the fund had over $ 1 b illion in assets. OVERSEAS FUND GOAL: Long-term growth of capital. STRATEGY: Invests mainly in equity securities outside the U.S. SIZE: As of December 31, 1993, the fund had over $ 1 b illion in assets. WORLDWIDE FUND GOAL: Long-term growth of capital. STRATEGY: Invests mainly in equity securities issued by companies of all sizes anywhere in the world, including the U.S. SIZE: As of December 31, 1993, the fund had over $ 342 million in assets. REGIONAL/SINGLE COUNTRY FUNDS The regional/single country funds focus on particular regions or countries. Because of their narrow focus, these funds are less diversified than the broadly diversified funds. CANADA FUND GOAL: Long-term growth of capital. STRATEGY: Invests mainly in equity securities of Canadian issuers . SIZE: As of December 31, 1993, the fund had over $ 107 million in assets. EUROPE FUND GOAL: Long-term growth of capital. STRATEGY: Invests mainly in equity securities of Western European issuers . SIZE: As of December 31, 1993, the fund had over $ 496 million in assets. EUROPE CAPITAL APPRECIATION FUND GOAL: Long-term growth of capital. STRATEGY: Invests mainly in equity securities of Eastern and Western Europe an issuers . SIZE: As of December 31, 1993, the fund had over $2 million in assets. JAPAN FUND GOAL: Long-term growth of capital. STRATEGY: Invests mainly in equity securities of Japanese issuers. SIZE: As of December 31, 1993, the fund had over $ 97 million in assets. PACIFIC BASIN FUND GOAL: Long-term growth of capital. STRATEGY: Invests mainly in equity securities of Pacific Basin issuers. SIZE: As of December 31, 1993, the fund had over $ 519 million in assets. EMERGING MARKET FUNDS The emerging market funds focus on countries with developing economies and markets fueled by political and economic changes such as the priv a tization of government-run industries. EMERGING MARKETS FUND GOAL: Long-term growth of capital. STRATEGY: Invests mainly in equity securities of emerging market issuers . These countries can be found in regions such as Southeast Asia, Latin America, and Eastern Europe. SIZE: As of December 31, 1993, the fund had over $ 1 b illion in assets. LATIN AMERICA FUND GOAL: High total investment return. STRATEGY: Invests mainly in equity and debt securities of Latin American issuers . SIZE: As of December 31, 1993, the fund had over $ 780 million in assets. SOUTHEAST ASIA FUND GOAL: Long-term growth of capital. STRATEGY: Invests mainly in equity securities of Southeast Asian issuers. The fund does not anticipate investing in Japan. SIZE: As of December 31, 1993, the fund had over $ 1 b illion in assets. WHO MAY WANT TO INVEST The funds may be appropriate for investors who want to pursue their investment goals in markets outside the United States. By including international investments in your portfolio, you can achieve an extra level of diversification and also participate in growth opportunities around the world. Like most mutual funds, these funds by themselves do not constitute a balanced investment plan. The value of the funds' investments will vary from day to day, generally reflecting changes in market conditions, interest rates, and other international political and economic news. When you sell your shares, they may be worth more or less than what you paid for them. There are additional risks involved with international investing. The performance of international funds depends upon currency values, the political and regulatory environment, and overall economic factors in the countries in which a fund invests. These risks are particularly significant for funds that focus on a single country or region, or on emerging markets. See "INVESTMENT PRINCIPLES AND RISKS" on page . BROADLY DIVERSIFIED funds could be appropriate for investors first entering the international markets or those who are interested in broad participation in multiple markets around the world. The REGIONAL/SINGLE COUNTRY funds are designed for investors looking to target their investments in particular regions or countries. The EMERGING MARKET funds may be better suited for more aggressive investors who hope to take advantage of opportunities available in developing countries. EXPENSES SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell shares of a fund. See pages - and - for an explanation of how and when these charges apply. None of the funds impose sales charges on reinvested dividends or exchange fees. ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each fund pays a management fee that , in certain cases, var ies based on its performance. Each fund also incurs other expenses for services such as maintaining shareholder records and furnishing shareholder statements and fund reports. A fund's e xpenses are factored into its share price or dividends and are not charged directly to shareholder accounts (see page ). The following are projections based on historical expenses after reimbursement , and are calculated as a percentage of average net assets. For Europe Capital Appreciation, Latin America, and Southeast Asia, annual fund operating expenses are based on a fund's estimated expenses for its first year of operation after reimbursement. FMR has voluntarily agreed to temporarily limit the total operating expenses of each fund to 2.00% of average net assets. EXAMPLES. Let's say, hypothetically, that each fund's annual return is 5% and that its operating expenses are exactly as described. For every $1,000 you invested, the examples show how much you would have to pa y in total expenses if you close your account after the number of years indicated. The se examples illustrate the effect of expenses, but are not meant to suggest actual or expected costs or returns, all of which may vary. BROADLY DIVERSIFIED FUNDS Transaction expenses Operating expenses Examples
DIVERSIFIED Maximum sales charge Management fee 0 .73 After 1 year $ 15 INTERNATIONAL FUND on purchases 3.00 % (as a % of offering price) %A 12b-1 fee None After 3 years $ 46 Deferred sales charge None Other expenses 0. 74 After 5 years $ 80 on redemptions % Redemption fee None Total fund operating 1.47 After 10 $ 176 expenses % years INTERNATIONAL Maximum sales charge Management fee 0. 77 After 1 year $ 15 GROWTH & INCOME on purchases 2.00 % FUND (as a % of offering price) %A 12b-1 fee None After 3 years $ 48 Deferred sales charge None Other expenses 0. 75 After 5 years $ 83 on redemptions % Redemption fee None Total fund operating 1.52 After 10 $ 181 expenses % years OVERSEAS FUND Maximum sales charge Management fee 0. 77 After 1 year $ 43 on purchases 3.00 % (as a % of offering price) % 12b-1 fee None After 3 years $ 69 Deferred sales charge None Other expenses 0. 50 After 5 years $ 98 on redemptions % Redemption fee None Total fund operating 1.27 After 10 $ 179 expenses % years WORLDWIDE FUND Maximum sales charge Management fee 0. 78 After 1 year $ 14 on purchases 3.00 % (as a % of offering price) %A 12b-1 fee None After 3 years $ 44 Deferred sales charge None Other expenses 0. 62 After 5 years $ 77 on redemptions % Redemption fee None Total fund operating 1.40 After 10 $ 168 expenses % years
REGIONAL/SINGLE COUNTRY FUNDS Transaction expenses Operating expenses Examples
CANADA FUND Maximum sales charge Management fee 0. 86 After 1 year $ 20 on purchases 3.00 % (as a % of offering price) %A 12b-1 fee None After 3 years $ 63 Deferred sales charge None Other expenses 1.14 After 5 years $ 108 on redemptions % Redemption fee None Total fund operating 2.00 After 10 $ 233 expenses % years EUROPE FUND Maximum sales charge Management fee 0.64 After 1 year $ 42 on purchases 3.00 % (as a % of offering price) % 12b-1 fee None After 3 years $ 68 Deferred sales charge None Other expenses 0. 61 After 5 years $ 97 on redemptions % Redemption fee None Total fund operating 1.25 After 10 $ 177 expenses % years EUROPE CAPITAL Maximum sales charge Management Fee 0.78 APPRECIATION FUND on purchases 3.00 12b-1 fee % After 1 year $ 16 (as a % of offering price) %A None Deferred sales charge None Other expenses 0. 75 After 3 years $ 48 on redemptions % Redemption fee None Total fund operating 1.53 expenses % JAPAN FUND Maximum sales charge Management fee 0. 77 After 1 year $17 on purchases 3.00 % (as a % of offering price) %A 12b-1 fee None After 3 years $54 Deferred sales charge None Other expenses 0. 94 After 5 years $93 on redemptions % Redemption fee None Total fund operating 1.71 After 10 $202 expenses % years PACIFIC BASIN FUND Maximum sales charge Management fee 0. 80 After 1 year $46 on purchases 3.00 % (as a % of offering price) % 12b-1 fee None After 3 years $79 Deferred sales charge None Other expenses 0. 79 After 5 years $114 on redemptions % Redemption fee None Total fund operating 1.59 After 10 $213 expenses % years
EMERGING MARKET FUNDS Transaction expenses Operating expenses Examples
EMERGING MARKETS Maximum sales charge Management fee 0. 77 After 1 year $19 FUND on purchases 3.00 % (as a % of offering price) %A 12b-1 fee None After 3 years $60 Deferred sales charge None Other expenses 1.14 After 5 years $103 on redemptions % Redemption fee 1.50 Total fund operating 1.91 After 10 $223 (on shares held less % expenses % years than 90 days) LATIN AMERICA FUND Maximum sales charge Management fee 0. 00 on purchases 3.00 % B,C (as a % of offering price) %A 12b-1 fee None After 1 year $20 Deferred sales charge None Other expenses 2.00 After 3 years $63 on redemptions % B,C Redemption fee 1.50 Total fund operating 2.00 (on shares held less % expenses % than 90 days) SOUTHEAST ASIA FUND Maximum sales charge Management fee 0. 00 % on purchases 3.00 B,C (as a % of offering price) %A 12b-1 fee None After 1 year $20 Deferred sales charge None Other expenses 2.00 After 3 years $63 on redemptions % B,C Redemption fee 1.50 Total fund operating 2 .00 (on shares held less % expenses % than 90 days)
A THE SALES CHARGE FOR THESE FUNDS IS WAIVED UNTIL MAY 31, 1994. B FMR HAS VOLUNTARILY AGREED TO TEMPORARILY LIMIT THE TOTAL OPERATING EXPENSES OF LATIN AMERICA FUND AND SOUTHEAST ASIA FUND TO 2.00% OF AVERAGE NET ASSETS. IF THIS AGREEMENT WERE NOT IN EFFECT ESTIMATES OF THE FUNDS' MANAGEMENT FEE, OTHER EXPENSES, AND TOTAL OPERATING EXPENSES IN ACCORDANCE WITH A STATE LIMITATION WOULD HAVE BEEN .09%, 2.51%, AND 2.60%, RESPECTIVELY, FOR LATIN AMERICA FUND, AND .23%, 2.37%, AND 2.60%, RESPECTIVELY, FOR SOUTHEAST ASIA FUND . EXPENSES ELIGIBLE FOR REIMBURSEMENT DO NOT INCLUDE INTEREST, TAXES, BROKERAGE COMMISSIONS, OR EXTRAORDINARY EXPENSES. C NET OF REIMBURSEMENT FINANCIAL HIGHLIGHTS. The tables that follow provide financial histories for all the funds. The broadly diversified funds are listed first, followed by the regional/single country funds, and ending with the emerging market funds. This information has been audited by Coopers & Lybrand, and Price Waterhouse (Latin America Fund and Southeast Asia Fund), independent accountants. Their unqualified reports are included in the funds' Annual Report. The Annual Report is incorporated by reference into (is legally a part of) the Statement of Additional Information. DIVERSIFIED INTERNATIONAL
1.Selected Per-Share Data and Ratios 2.Years ended October 31 1992D 1993 3.Net asset value, beginning of period $ 10.00 $ 8.46 4.Income from Investment Operations 5. Net investment income .07 .07 6. Net realized and unrealized gain (loss) on investments (1.61) 2.89 7. Total from investment operations (1.54) 2.96 8.Less Distributions 9. From net investment income -- (.10) 10.Net asset value, end of period $ 8.46 $ 11.32 11.Total returnB,C (15.40)% 35.38 % 12.Net assets, end of period (000 omitted) $ 36,439 $ 255,0 29 13.Ratio of expenses to average net assets 2.00%A 1.47 ,C % 14.Ratio of expenses to average net assets before expense reductions 2.34%A 1.47 % 15.Ratio of net investment income to average net assets 1.38%A .84 % 16.Portfolio turnover rate 56%A 56 % A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C DURING THE PERIOD DECEMBER 27, 1991 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1992, THE FUND'S INVESTMENT ADVISER VOLUNTARILY AGREED TO REDUCE THE FUND'S EXPENSES TO THE EXTENT THAT THE AGGREGATE OPERATING EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) OF THE FUND WERE IN EXCESS OF AN ANNUAL RATE OF 2.00% OF THE AVERAGE NET ASSETS. TOTAL RETURN FOR THE PERIOD WOULD HAVE BEEN LOWER HAD THE ADVISER NOT REDUCED EXPENSES. D FROM DECEMBER 27, 1991 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1992. INTERNATIONAL GROWTH & INCOME
17.Selected Per-Share Data and Ratios 18.Years ended October 31 1987G 1988 1989 1990 1991 1992 1993 19.Net asset value, beginning of period $ 10.00 $ 10.42 $ 11.81 $ 12.87 $ 13.71 $ 13.99 $ 13.29 20.Income from Investment Operations 21. Net investment income .09 .16 .30 .25 .30B .31 .14D 22. Net realized and unrealized gain (loss) on .39 1.26 .96 .75 .41 (.84) 4.14 investments 23. Total from investment operations .48 1.42 1.26 1.00 .71 (.53) 4.28 24.Less Distributions 25. From net investment income (.06) - (.13) (.16) (.38) (.16) (.31) 26. From net realized gain - (.03)C (.07)C - (.05) (.01)C (.01)C C 27. Total distributions (.06) (.03) (.20) (.16) (.43) (.17) (.32) 28.Net asset value, end of period $ 10.42 $ 11.81 $ 12.87 $ 13.71 $ 13.99 $ 13.29 $ 17.25 29.Total returnE,F 4.69% 13.68% 10.85% 7.79% 5.43 (3.81) 32.94% % % 30.Net assets, end of period (000 omitted) $ 40,822 $ 31,662 $ 26,333 $ 35,380 $ 49,73 $ 60,007 $ 1,002,8 8 47 31.Ratio of expenses to average net assets 2.72% 2.58% 1.92% 1.98% 1.89 1.62% 1.52% A E E % 32.Ratio of net investment income to average net assets 1.23% 1.08% 1.98% 2.31% 2.86 2.78% .87% A % 33.Portfolio turnover rate 158% 112% 147% 102% 117 76% 24% A %
A ANNUALIZED B INCLUDES $.02 PER SHARE FROM RECOVERY OF FOREIGN TAXES PREVIOUSLY WITHHELD ON DIVIDEND AND INTEREST PAYMENTS. C INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. D FOR THE PERIOD INDICATED, NET INVESTMENT INCOME PER SHARE WAS CALCULATED USING AVERAGE SHARES OUTSTANDING. E EFFECTIVE AUGUST 5, 1988, FMR VOLUNTARILY AGREED TO REIMBURSE THE FUND TO THE EXTENT THAT AGGREGATE OPERATING EXPENSES WERE IN EXCESS OF AN ANNUAL RATE OF 2.00% OF THE AVERAGE NET ASSETS. FOR THE YEAR ENDED OCTOBER 31, 1989, NET INVESTMENT INCOME PER SHARE INCLUDED A REIMBURSEMENT OF $0.01 PER SHARE FROM FIDELITY SERVICE CO. FOR ADJUSTMENTS TO PRIOR PERIODS' FEES. IF THESE EXPENSE REDUCTIONS HAD NOT EXISTED, THE RATIO OF EXPENSES TO AVERAGE NET ASSETS WOULD HAVE BEEN 2.16% FOR 1989 AND LIMITED TO 2.58% IN ACCORDANCE WITH A STATE EXPENSE LIMITATION IN 1988 AND TOTAL RETURNS WOULD HAVE BEEN LOWER. F TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED AND DO NOT INCLUDE THE ONE TIME SALES CHARGE. G FROM DECEMBER 31, 1986 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1987. OVERSEAS
34.Selected Per-Share Data and Ratios 35.Years Ended October 31 1985F 1986 1987 1988 1989 1990 1991 1992B 1993 36.Net asset value, beginning of period $ 10.00 $ 15.92 $ 26.91 $ 30.90 $ 25.30 $ 26.30 $ 27.47 $ 26.92 $ 21.96 37.Income from Investment Operations 38. Net investment income .19 (.03) (.19) .30 .30 .35 .54C .46 .27 39. Net realized and unrealized gain 5.73 11.15 7.49 2.34 1.28 2.16 .45 (3.82) 7.40 (loss) on investments 40. Total from investment operations 5.92 11.12 7.30 2.64 1.58 2.51 .99 (3.36) 7.67 41.Less Distributions 42. From net investment income - - - - (.24) (.21) (.46) (.44) (.37) 43. From net realized gain - (.13) (3.31) (8.24) (.34) (1.13)D (1.08) (1.16) (2.10)D D D 44. Total distributions - (.13) (3.31) (8.24) (.58) (1.34) (1.54) (1.60) (2.47) 45.Net asset value, end of period $ 15.92 $ 26.91 $ 30.90 $ 25.30 $ 26.30 $ 27.47 $ 26.92 $ 21.96 $ 27.16 46.Total returnE,G 59.20% 70.29% 28.74% 11.62% 6.40 9.58% 4.12 (13.05) 39.01% % % % 47.Net assets, end of period (000 $ 119,199 $ 1,766,0 $ 1,393,4 $ 1,149,7 $ 876,5 $ 1,011,1 $ 969,4 $ 801,84 $ 1,490,6 omitted) 12 42 63 67 52 36 5 66 48.Ratio of expenses to average net 1.72%A 1.57% 1.71% 1.38% 1.06 1.26% 1.53 1.52% 1.27% assets ,G % % 49.Ratio of net investment income to .73%A (.32) (.53) 1.21% 1.06 1.34% 2.19 1.78% 1.00% average net assets % % % % 50.Portfolio turnover rate 63%A 107% 122% 115% 100 96% 132 122% 64% % %
A ANNUALIZED B AS OF NOVEMBER 1, 1991, THE FUND DISCONTINUED THE USE OF EQUALIZATION ACCOUNTING. C INCLUDES $.08 PER SHARE FROM RECOVERY OF FOREIGN TAXES PREVIOUSLY WITHHELD ON DIVIDEND AND INTEREST PAYMENTS. D INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. E TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED AND DO NOT INCLUDE THE ONE TIME SALES CHARGE. F FROM DECEMBER 4, 1984 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1985. G DURING THE PERIOD DECEMBER 4, 1984 (COMMENCEMENT OF OPERATIONS) TO AUGUST 19, 1985, FMR VOLUNTARILY AGREED TO REIMBURSE THE FUND TO THE EXTENT THAT AGGREGATE OPERATING EXPENSES WERE IN EXCESS OF AN ANNUAL RATE OF 2.00% OF THE AVERAGE NET ASSETS. IF THESE EXPENSE REDUCTIONS HAD NOT EXISTED, THE RATIO OF EXPENSES TO AVERAGE NET ASSETS WOULD HAVE BEEN 2.16% AND TOTAL RETURN WOULD HAVE BEEN LOWER. WORLDWIDE
51.Selected Per-Share Data and Ratios 52.Years ended October 31 1990E 1991 1992 1993 53.Net asset value, beginning of period $ 10.00 $ 8.95 $ 9.61 $ 9.63 54.Income from Investment Operations 55. Net investment income .05 .21 .20 .11 56. Net realized and unrealized gain (loss) on investments (1.10) .53 (.08) 3.28 57. Total from investment operations (1.05) .74 .12 3.39 58.Less Distributions 59. From net investment income - (.08) (.10) (.24) 60. From net realized gain - - - (.02) B 61. Total distributions - (.08) (.10) (.26) 62.Net asset value, end of period $ 8.95 $ 9.61 $ 9.63 $ 12.76 63.Total returnC,D (10.50)% 8.33 1.32 36.10 % % % 64.Net assets, end of period (000 omitted) $ 94,851 $ 105,0 $ 103,6 $ 287,2 29 27 78 65.Ratio of expenses to average net assets 2.00%A 1.69 1.51 1.40 ,C % % % 66.Ratio of net investment income to average net assets 2.09%A 2.19 2.02 1.99 % % % 67.Portfolio turnover rate 123%A 129 130 57 % % %
A ANNUALIZED B INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. C DURING THE PERIOD MAY 30, 1990 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1990, FMR VOLUNTARILY AGREED TO REDUCE THE FUND'S EXPENSES TO THE EXTENT THAT THE AGGREGATE OPERATING EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) OF THE FUND WERE IN EXCESS OF AN ANNUAL RATE OF 2.00% OF THE AVERAGE NET ASSETS. IF THESE EXPENSES HAD BEEN INCURRED BY THE FUND, THE RATIO OF EXPENSES TO AVERAGE NET ASSETS WOULD HAVE BEEN 2.46% (ANNUALIZED) AND TOTAL RETURN FOR THE PERIOD WOULD HAVE BEEN LOWER. D TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED AND DO NOT INCLUDE THE ONE TIME SALES CHARGE. E FROM MAY 30, 1990 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1990. CANADA
68.Selected Per-Share Data and Ratios 69.Years ended October 31 1988F 1989 1990 1991 1992 1993 70.Net asset value, beginning of period $ 10.00 $ 12.74 $ 15.45 $ 13.57 $ 16.28 $ 14.23 71.Income from Investment Operations 72. Net investment income .32 .02B .05B .03B (.02)B (.15) 73. Net realized and unrealized gain (loss) on investments 2.42 2.96 (1.24) 3.59 (1.11) 3.76 74. Total from investment operations 2.74 2.98 (1.19) 3.62 (1.13) 3.61 75.Less Distributions 76. From net investment income - (.12) (.01) (.06) - (.02) 77. From net realized gain - (.15) (.68) (.85) (.92) - C 78. Total distributions - (.27) (.69) (.91) (.92) (.02) 79.Net asset value, end of period $ 12.74 $ 15.45 $ 13.57 $ 16.28 $ 14.23 $ 17.82 80.Total returnE,G 27.40% 23.94 (8.16) 28.13 (7.09) 25.40% % % % % 81.Net assets, end of period (000 omitted) $ 10,802 $ 24,33 $ 17,736 $ 23,32 $ 21,701 $ 95,977 1 7 82.Ratio of expenses to average net assetsD 2.02% 2.06 2.05% 2.01 2.00% 2.00% A % % 83.Ratio of expenses to average net assets before expense 4.17% 2.87 2.31% 2.26 2.07% 2.00% reductionsD A % % 84.Ratio of net investment income to average net assets 4.24% .16 .34% .17 (.11) (.66) A % % % % 85.Portfolio turnover rate 401% 152 164% 68 55% 131% A % %
A ANNUALIZED B FOR THE YEARS ENDED OCTOBER 31, 1992, 1991, 1990 AND 1989, NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED USING AVERAGE SHARES OUTSTANDING. C INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. D EFFECTIVE AUGUST 5, 1988, FMR VOLUNTARILY AGREED TO REDUCE THE FUND'S EXPENSES TO THE EXTENT THAT AGGREGATE OPERATING EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) OF THE FUND WERE IN EXCESS OF AN ANNUAL RATE OF 2.00% OF THE AVERAGE NET ASSETS. E THE TOTAL RETURN WOULD HAVE BEEN LOWER IF THE ADVISER HAD NOT REDUCED EXPENSES OF THE FUND DURING THE PERIODS SHOWN. F FROM NOVEMBER 17, 1987 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1988. G TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. EUROPE
86.Selected Per-Share Data and Ratios 87.Years ended October 31 1986G 1987 1988 1989 1990 1991 1992D 1993 88.Net asset value, beginning of period $ 10.00 $ 9.99 $ 12.09 $ 12.96 $ 15.04 $ 16.28 $ 15.93 $ 15.12 89.Income from Investment Operations 90. Net investment income .01 .08 .12 .25E .46 .43F .27 .25 91. Net realized and unrealized gain (loss) on (.02) 2.03 .75 2.11 .97 (.40) (.57) 3.35 investments 92. Total from investment operations (.01) 2.11 .87 2.36 1.43 .03 (.30) 3.60 93.Less Distributions 94. From net investment income - (.01) - (.24) (.19) (.35) (.48) (.29) 95. From net realized gain - - - (.04)B - (.03) (.03)B - B 96. Total distributions - (.01) - (.28) (.19) (.38) (.51) (.29) 97.Net asset value, end of period $ 9.99 $ 12.09 $ 12.96 $ 15.04 $ 16.28 $ 15.93 $ 15.12 $ 18.43 98.Total returnC,E (.10) 21.13 7.20 18.62% 9.50 .15 (1.89) 24.24 % % % % % % % 99.Net assets, end of period (000 omitted) $ 19,375 $ 131,4 $ 102,0 $ 97,288 $ 389,2 $ 297,8 $ 431,22 $ 528,9 31 29 73 31 3 29 100.Ratio of expenses to average net assets 1.50% 1.91 2.66 1.89% 1.45 1.31 1.22% 1.25 A % % E % % % 101.Ratio of net investment income to average net 2.77% .48 .97 1.67% 2.87 2.83 2.38% 1.44 assets A % % % % % 102.Portfolio turnover rate 9% 241 180 160% 148 80 95% 76 A % % % % %
A ANNUALIZED B INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED AND DO NOT INCLUDE THE ONE TIME SALES CHARGE. D AS OF NOVEMBER 1, 1991, THE FUND DISCONTINUED THE USE OF EQUALIZATION ACCOUNTING. E FOR THE PERIOD ENDED OCTOBER 31, 1989, NET INVESTMENT INCOME PER SHARE INCLUDES A REIMBURSEMENT OF $.008 PER SHARE FROM FIDELITY SERVICE CO. FOR ADJUSTMENTS TO PRIOR PERIODS' FEES. IF THIS EXPENSE REDUCTION HAD NOT EXISTED, THE RATIO OF EXPENSES TO AVERAGE NET ASSETS WOULD HAVE BEEN 1.94% AND TOTAL RETURN FOR THE PERIOD WOULD HAVE BEEN LOWER. F INCLUDES $.05 PER SHARE FROM RECOVERY OF FOREIGN TAXES PREVIOUSLY WITHHELD ON DIVIDEND AND INTEREST PAYMENTS. G OCTOBER 1, 1986 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1986. JAPAN
103.Selected Per-Share Data and Ratios 104.Years ended October 31 1992D 1993 105.Net asset value, beginning of period $ 10.00 $ 9.84 106.Income from Investment Operations 107. Net investment income .00 (.09) 108. Net realized and unrealized gain (loss) on investments (.16) 3.60 109. Total from investment operations (.16) 3.51 110.Net asset value, end of period $ 9.84 $ 13.35 111.Total returnC (1.60)% 35.67% B 112.Net assets, end of period (000 omitted) $ 2,953 $ 118,19 5 113.Ratio of expenses to average net assets 2.00%A 1.71% 114.Ratio of expenses to average net assets before expense reductions 3.59%A 1.71% ,B 115.Ratio of net investment income to average net assets .03%A (.77) % 116.Portfolio turnover rate -% 257%
A ANNUALIZED B EXPENSES LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. TOTAL RETURN WOULD HAVE BEEN LOWER HAD THE LIMITATION NOT BEEN IN EFFECT. C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D FROM SEPTEMBER 15, 1992 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1992. PACIFIC BASIN
117.Selected Per-Share Data and Ratios 118.Years ended October 31 1986F 1987 1988 1989 1990 1991 1992B 1993 119.Net asset value, beginning of period $ 10.00 $ 9.90 $ 12.42 $ 13.99 $ 15.78 $ 12.89 $ 13.15 $ 12.00 120.Income from Investment Operations 121. Net investment income .012 (.11) -D (.027)D .12 .02D .08D .20 122. Net realized and unrealized gain (loss) on (.112) 2.64 1.71 1.927 (2.37) .40 (1.23) 5.39 investments 123. Total from investment operations (.100) 2.53 1.71 1.900 (2.25) .42 (1.15) 5.59 124.Less Distributions 125. From net investment income - (.01) - (.003) (.01) (.16) - (.11) 126. From net realized gain - - (.14) (.107)C (.63) - - - C 127. Total distributions - (.01) (.14) (.110) (.64) (.16) - (.11) 128.Net asset value, end of period $ 9.90 $ 12.42 $ 13.99 $ 15.78 $ 12.89 $ 13.15 $ 12.00 $ 17.48 129.Total returnE,G (1.00)% 25.57% 13.82 13.65% (14.99) 3.37 (8.75) 47.06 % % % % % 130.Net assets, end of period (000 omitted) $ 22,020 $ 159,91 $ 136,0 $ 111,811 $ 86,354 $ 95,05 $ 116,27 $ 493,5 7 60 1 7 33 131.Ratio of expenses to average net assets 1.50%A 2.10% 1.80 1.40% 1.59% 1.88 1.84% 1.59 ,G % % % 132.Ratio of net investment income to average net 3.53%A (.83) .04 (.18) .88% .12 .65% .15 assets % % % % % 133.Portfolio turnover rate -% 324% 228 133% 118% 143 105% 77 % % %
A ANNUALIZED B AS OF NOVEMBER 1, 1991, THE FUND DISCONTINUED THE USE OF EQUALIZATION ACCOUNTING. C INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. D FOR THE YEARS ENDED OCTOBER 31, 1992, 1991, 1989, AND 1988, NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED AND DO NOT INCLUDE THE ONE TIME SALES CHARGE. F FROM OCTOBER 1, 1986 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1986. G EXPENSES LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. TOTAL RETURN WOULD HAVE BEEN LOWER HAD THE LIMITATION NOT BEEN IN EFFECT. EMERGING MARKETS
134.Selected Per-Share Data and Ratios 135.Years ended October 31 1991E 1992 1993 136.Net asset value, beginning of period $ 10.00 $ 10.40 $ 11.05 137.Income from Investment Operations 138. Net investment income .12 .08 .06D 139. Net realized and unrealized gain (loss) on investments .30 .76 5.28 140. Total from investment operations .42 .84 5.34 141.Less Distributions 142. From net investment income (.04) (.08) (.08) 143. From net realized gain - (.14) (.15) 144. Total distributions (.04) (.22) (.23) 145.Redemption fees added to paid in capital .02 .03 .02 146.Net asset value, end of period $ 10.40 $ 11.05 $ 16.18 147.Total returnB,C 4.41%C 8.56% 49.58% C 148.Net assets, end of period (000 omitted) $ 6,450 $ 13,732 $ 757,73 7 149.Ratio of expenses to average net assets 2.60%A, 2.60% 1.91% B,C C 150.Ratio of net investment income to average net assets 1.34%A .90% .44% 151.Portfolio turnover rate 45%A 159% 57% A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED AND DO NOT INCLUDE THE ONE TIME SALES CHARGE. C EXPENSES LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. TOTAL RETURNS WOULD HAVE BEEN LOWER HAD THE LIMITATIONS NOT BEEN IN EFFECT. D FOR THE PERIOD, NET INVESTMENT INCOME PER SHARE WAS CALCULATED USING AVERAGE SHARES OUTSTANDING. E FROM NOVEMBER 1, 1990 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1991.
LATIN AMERICA
152.Selected Per-Share Data and Ratios 153.Years ended October 31 1993C 154.Net asset value, beginning of period $ 10.00 155.Income from Investment Operations 156. Net investment income .03 157. Net realized and unrealized gain (loss) on investments 3.23 158. Total from investment operations 3.26 159.Redemption fees added to paid in capital .02 160.Net asset value, end of period $ 13.28 161.Total returnB 32.80% 162.Net assets, end of period (000 omitted) $ 342,93 4 163.Ratio of expenses to average net assets 1.94% A 164.Ratio of net investment income to average net assets 1.21% A 165.Portfolio turnover rate 72% A
A ANNUALIZED B TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED. C FROM APRIL 19, 1993 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1993. SOUTHEAST ASIA
166.Selected Per-Share Data and Ratios 167.Years ended October 31 1993D 168.Net asset value, beginning of period $ 10.00 169.Income from Investment Operations 170. Net investment income .01 171. Net realized and unrealized gain (loss) on investments 3.22 172. Total from investment operations 3.23 173.Redemption fees added to paid in capital .01 174.Net asset value, end of period $ 13.24 175.Total returnB,C 32.40% 176.Net assets, end of period (000 omitted) $ 499,66 9 177.Ratio of expenses to average net assets 2.00% A 178.Ratio of expenses to average net assets before expense reductions 2.06% A 179.Ratio of net investment income to average net assets .45% A 180.Portfolio turnover rate 14% A A ANNUALIZED B TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD THE ADVISER NOT REDUCED CERTAIN EXPENSES DURING THE PERIOD SHOWN. D FROM APRIL 19, 1993 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1993.
PERFORMANCE Mutual fund performance is commonly measured as TOTAL RETURN. The total returns in this section are based on historical fund results and do not reflect the effect of of taxes. An explanation of the terms, and performance measures, appears on page . Each fund's fiscal year runs from November 1 through October 31. The tables below and on page show the funds' performance over past fiscal years compared to two measures: an unmanaged index of related stocks and the Consumer Price Index (CPI). The unmanaged index shows the general performance of stocks in a region; the CPI indicates inflation, or loss of purchasing power if no investment was made. 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 value of its currency create these risks. Because these funds invest in stocks, their performance is also related to foreign stock markets. For these reasons an international fund's performance may be more volatile than that of a fund that invests exclusively in the United States. (checkmark) BROADLY DIVERSIFIED FUNDS
Fiscal years ended October 31 Average Annual Total Return Cumulative Total Return
Past 1 year Past 5 years Life of fund Past 1 year Past 5 years Life of fund DIVERSIFIED INTERNATIONAL FUND N 35.38 % n/a 7.62 %B 35.38 % n/a 14.53 % DIVERSIFIED INTERNATIONAL FUND (LOAD 31.32% n/a 5.86% 31.32% n/a 11.10% ADJ.A)O EAFE Index/GDP-weighted P 36.22 % n/a 13.25% 36.22 % n/a 25.87 % INTERNATIONAL GROWTH & INCOME 32.94 % 10.01 % 9.98% C 32.94 % 61.10 % 91.72 % FUND N INTERNATIONAL GROWTH & INCOME 30.28 % 9.56 % 9.66% 30.28 % 57.88 % 87.89 % FUND (LOAD ADJ.A) EAFE Index 37.46 % 3.76 % 9.06 % 37.46 % 20.28 % 80.95 % OVERSEAS FUND 39.01 % 7.97 % 21.60 % 39.01 % 46.72 % 471.58 D % OVERSEAS FUND (LOAD ADJ.A) 34.84 % 7.31 % 21.18 % 34.84 % 42.32 % 454.44 % EAFE Index 37.46 % 3.76 % 19.43 % 37.46 % 20.28 % 386.79 % WORLDWIDE FUND N 36.10 % n/a 8.84 %E 36.10 % n/a 33.70 % WORLDWIDE FUND (LOAD ADJ.A) 32.02 % n/a 7.88 % 32.02 % n/a 29.69 % World Index 27.01 % n/a 6.48 % 27.01 % n/a 24.02 % Consumer Price Index 2.75 % 3.92 % n/a 2.75 % 21.21 % n/a
REGIONAL/SINGLE COUNTRY FUNDS
Fiscal years ended October 31 Average Annual Total Return Cumulative Total Return
Past 1 year Past 5 years Life of fund Past 1 year Past 5 years Life of fund CANADA FUNDN 25.40 % 11.19% 13.83 % 25.40 % 69.92% 116.48 F % CANADA FUND (LOAD ADJ.A) 21.64 % 10.51% 13.25 % 21.64 % 64.82% 109.98 % TSE 300 Index 23.19 % 6.72 % 10.00 % 23.19 % 38.43 % 76.55 % EUROPE FUND 24.24 % 9.66 % 10.71 % 24.24 % 58.57 % 105.69 G % EUROPE FUND (LOAD ADJ.A) 20.52 % 8.99 % 10.23 % 20.52 % 53.81 % 99.52 % Europe Index 25.67 % 10.75 % 11.29 % 25.67 % 66.60 % 113.55 % JAPAN FUNDN 35.67 % n/a 29.16 % 35.67 % n/a 33.50 % H JAPAN FUND (LOAD ADJ.A)O 31.60% n/a 25.73% 31.60% n/a 29.50% Topix Index 46.06 % n/a 31.57% 46.06% n/a 36.31% PACIFIC BASIN FUND 47.06 % 6.03 % 9.45 %I 47.06 % 34.03 % 89.64 % PACIFIC BASIN FUND (LOAD ADJ.A) 42.65 % 5.39 % 8.98 % 42.65 % 30.00 % 83.95 % Pacific Index 48.75 % -.36 % 7.91 % 48.75 % -1.81 % 71.54 % Consumer Price Index 2.75% 3.92% n/a 2.75% 21.21% n/a
EMERGING MARKET FUNDS
Fiscal years ended October 31 Average Annual Total Return Cumulative Total Return
Past 1 year Past 5 years Life of fund Past 1 year Past 5 years Life of fund EMERGING MARKETS FUNDN 49.58 % n/a 19.22 % 49.58% n/a 69.55 % J EMERGING MARKETS FUND (LOAD ADJ.A) 45.09 % n/a 18.02 % 45.09 % n/a 64.46 % Emerging Markets Index 44.97 % n/a 35.91 % 44.97 % n/a 151.28 % LATIN AMERICA FUNDN n/a n/a 69.60 % n/a n/a 32.80 % K,M LATIN AMERICA FUND (LOAD ADJ.A)O n/a n/a 60.25% n/a n/a 28.82% M Latin America Index n/a n/a 47.35% n/a n/a 23.14 % SOUTHEAST ASIA FUNDN n/a n/a 68.65 % n/a n/a 32.40 % L,M SOUTHEAST ASIA FUND (LOAD ADJ.A)O n/a n/a 59.35% n/a n/a 28.43% M Far East Ex-Japan Free Index n/a n/a 93.12 % n/a n/a 42.39 % Consumer Price Index 2.75% 3.92% n/a 2.75% 21.21% n/a
A LOAD-ADJUSTED RETURNS INCLUDE THE EFFECT OF PAYING A FUND'S SALES CHARGE B FROM DECEMBER 27, 1991 C FROM DECEMBER 31, 1986 D FROM DECEMBER 4, 1984 E FROM MAY 30, 1990 F FROM NOVEMBER 17, 1987 G FROM OCTOBER 1, 1986 H FROM SEPTEMBER 15, 1992 I FROM OCTOBER 1, 1986 J FROM NOVEMBER 1, 1990 K FROM APRIL 19, 19 93 L FROM APRIL 19, 1993 M ANNUALIZED N THE FUND'S SALES CHARGE HAS BEEN WAIVED THROUGH MAY 31, 1994. O THE FUND'S 3% SALES CHARGE HAS BEEN WAIVED SINCE ITS INCEPTION. P THE GDP-WEIGHTED VERSION IS AN APPROXIMATE REPRESENTATION OF EACH COUNTRY'S SHARE OF THE VALUE OF GOODS AND SERVICES PRODUCED BY ALL THE COUNTRIES IN THE INDEX. THE FUND HAS CHOSEN TO COMPARE ITS PERFORMANCE TO THE GDP-WEIGHTED VERSION BECAUSE IT MORE ACCURATELY REPRESENTS EACH COUNTRY'S RELATIVE PRODUCTION. The following charts show the funds' performance over past calendar years compared to groupings of funds with similar objectives. The competitive funds averages are defined on page . Comparisons for Canada, Europe Capital Appreciation, Latin America, and Southeast Asia Funds are not included because the competitive average does not represent Canada Fund's objective and the other funds have not completed one full calendar year of operations. DIVERSIFIED INTERNATIONAL FUND
Calendar years 199 2 199 3 DIVERSIFIED INTERNATIONAL FUND -13.8 36.67 1 % % Lipper International Funds Average -4.77 39.40 % %
Row: 1, Col: 1, Value: 0.0 Row: 1, Col: 2, Value: 0.0 Row: 2, Col: 1, Value: 0.0 Row: 2, Col: 2, Value: 0.0 Row: 3, Col: 1, Value: 0.0 Row: 3, Col: 2, Value: 0.0 Row: 4, Col: 1, Value: 0.0 Row: 4, Col: 2, Value: 0.0 Row: 5, Col: 1, Value: 0.0 Row: 5, Col: 2, Value: 0.0 Row: 6, Col: 1, Value: 0.0 Row: 6, Col: 2, Value: 0.0 Row: 7, Col: 1, Value: 0.0 Row: 7, Col: 2, Value: 0.0 Row: 8, Col: 1, Value: 0.0 Row: 8, Col: 2, Value: 0.0 Row: 9, Col: 1, Value: 0.0 Row: 9, Col: 2, Value: 0.0 Row: 10, Col: 1, Value: -13.81 Row: 10, Col: 2, Value: -4.77 Row: 11, Col: 1, Value: 36.67 Row: 11, Col: 2, Value: 39.4 % DIVERSIFIED INTERNATIONAL FUND Lipper International Funds Average % % % % INTERNATIONAL GROWTH & INCOME FUND
Calendar years 1987 1988 1989 1990 1991 1992 1993 INTERNATIONAL GROWTH & INCOME 8.33% 11.56 19.12 -3.23 8.04% -3.34 35.08 FUND % % % % % Lipper International Funds Average 7.89 % 16.24 21.75 -11.7 12.76 -4.77 39.40 % % 4 % % % %
Row: 1, Col: 1, Value: 0.0 Row: 1, Col: 2, Value: 0.0 Row: 2, Col: 1, Value: 0.0 Row: 2, Col: 2, Value: 0.0 Row: 3, Col: 1, Value: 0.0 Row: 3, Col: 2, Value: 0.0 Row: 4, Col: 1, Value: 8.33 Row: 4, Col: 2, Value: 7.89 Row: 5, Col: 1, Value: 11.56 Row: 5, Col: 2, Value: 16.24 Row: 6, Col: 1, Value: 19.12 Row: 6, Col: 2, Value: 21.75 Row: 7, Col: 1, Value: -3.23 Row: 7, Col: 2, Value: -11.74 Row: 8, Col: 1, Value: 8.039999999999999 Row: 8, Col: 2, Value: 12.76 Row: 9, Col: 1, Value: -3.34 Row: 9, Col: 2, Value: -4.77 Row: 10, Col: 1, Value: 35.08 Row: 10, Col: 2, Value: 39.4 % INTERNATIONAL GROWTH & INCOME FUND Lipper International Funds Average % % % % OVERSEAS FUND
Calendar years 1985 1986 1987 1988 1989 1990 1991 1992 1993 OVERSEAS FUND 78.67 69.25 18.37 8.26% 16.93 -6.60 8.61% -11.4 40.05 % % % % % 6% % Lipper International Funds Average 45.03% 47.03 7.89 % 16.24 21.75 -11.7 12.76 -4.77 39.40 % % % 4 % % % %
Row: 1, Col: 1, Value: 0.0 Row: 1, Col: 2, Value: 0.0 Row: 2, Col: 1, Value: 78.66999999999999 Row: 2, Col: 2, Value: 45.03 Row: 3, Col: 1, Value: 69.25 Row: 3, Col: 2, Value: 47.03 Row: 4, Col: 1, Value: 18.37 Row: 4, Col: 2, Value: 7.89 Row: 5, Col: 1, Value: 8.26 Row: 5, Col: 2, Value: 16.24 Row: 6, Col: 1, Value: 16.93 Row: 6, Col: 2, Value: 21.75 Row: 7, Col: 1, Value: -6.6 Row: 7, Col: 2, Value: -11.74 Row: 8, Col: 1, Value: 8.609999999999999 Row: 8, Col: 2, Value: 12.76 Row: 9, Col: 1, Value: -11.46 Row: 9, Col: 2, Value: -4.77 Row: 10, Col: 1, Value: 40.05 Row: 10, Col: 2, Value: 39.4 % OVERSEAS FUND Lipper International Funds Average % % % % % WORLDWIDE FUND
Calendar years 1991 1992 1993 WORLDWIDE FUND 7.88 6.21 36.55 % % % Lipper Global Funds Average 18.44 .01% 31.04 % %
Row: 1, Col: 1, Value: 0.0 Row: 1, Col: 2, Value: 0.0 Row: 2, Col: 1, Value: 0.0 Row: 2, Col: 2, Value: 0.0 Row: 3, Col: 1, Value: 0.0 Row: 3, Col: 2, Value: 0.0 Row: 4, Col: 1, Value: 0.0 Row: 4, Col: 2, Value: 0.0 Row: 5, Col: 1, Value: 0.0 Row: 5, Col: 2, Value: 0.0 Row: 6, Col: 1, Value: 0.0 Row: 6, Col: 2, Value: 0.0 Row: 7, Col: 1, Value: 0.0 Row: 7, Col: 2, Value: 0.0 Row: 8, Col: 1, Value: 7.88 Row: 8, Col: 2, Value: 18.44 Row: 9, Col: 1, Value: 6.21 Row: 9, Col: 2, Value: 0.01 Row: 10, Col: 1, Value: 36.55 Row: 10, Col: 2, Value: 31.04 % WORLDWIDE FUND Lipper Global Funds Average % % % % EUROPE FUND
Calendar years 1987 1988 1989 1990 1991 1992 1993 EUROPE FUND 14.90 5.84% 32.33 -4.59 4.16% -2.52 27.16 % % % % % Lipper European Region Funds 17.12 7.23 % 25.22 -3.51 6.60 % -7.93 25.76 Average % % % % %
Row: 1, Col: 1, Value: 0.0 Row: 1, Col: 2, Value: 0.0 Row: 2, Col: 1, Value: 0.0 Row: 2, Col: 2, Value: 0.0 Row: 3, Col: 1, Value: 0.0 Row: 3, Col: 2, Value: 0.0 Row: 4, Col: 1, Value: 14.9 Row: 4, Col: 2, Value: 17.12 Row: 5, Col: 1, Value: 5.84 Row: 5, Col: 2, Value: 7.23 Row: 6, Col: 1, Value: 32.33 Row: 6, Col: 2, Value: 25.22 Row: 7, Col: 1, Value: -4.59 Row: 7, Col: 2, Value: -3.51 Row: 8, Col: 1, Value: 4.159999999999999 Row: 8, Col: 2, Value: 6.6 Row: 9, Col: 1, Value: -2.52 Row: 9, Col: 2, Value: -7.930000000000001 Row: 10, Col: 1, Value: 27.16 Row: 10, Col: 2, Value: 25.76 % EUROPE FUND Lipper European Region Funds Average % % % % JAPAN FUND
Calendar years 1993 JAPAN FUND 20.45 % Lipper Japanese Funds Average 22.94 %
Row: 1, Col: 1, Value: 0.0 Row: 1, Col: 2, Value: 0.0 Row: 2, Col: 1, Value: 0.0 Row: 2, Col: 2, Value: 0.0 Row: 3, Col: 1, Value: 0.0 Row: 3, Col: 2, Value: 0.0 Row: 4, Col: 1, Value: 0.0 Row: 4, Col: 2, Value: 0.0 Row: 5, Col: 1, Value: 0.0 Row: 5, Col: 2, Value: 0.0 Row: 6, Col: 1, Value: 0.0 Row: 6, Col: 2, Value: 0.0 Row: 7, Col: 1, Value: 0.0 Row: 7, Col: 2, Value: 0.0 Row: 8, Col: 1, Value: 0.0 Row: 8, Col: 2, Value: 0.0 Row: 9, Col: 1, Value: 0.0 Row: 9, Col: 2, Value: 0.0 Row: 10, Col: 1, Value: 20.45 Row: 10, Col: 2, Value: 22.94 % JAPAN FUND Lipper Japanese Funds Average % % % % PACIFIC BASIN FUND
Calendar years 1987 1988 1989 1990 1991 1992 1993 PACIFIC BASIN FUND 24.99 10.45 11.44 -27.2 12.54 -7.62 63.91 % % % 1% % % % Lipper Pacific Region Funds Average 17.54 21.34 24.47 -16.0 17.04 1.14 % 63.81 % % % 5 % % %
Row: 1, Col: 1, Value: 0.0 Row: 1, Col: 2, Value: 0.0 Row: 2, Col: 1, Value: 0.0 Row: 2, Col: 2, Value: 0.0 Row: 3, Col: 1, Value: 0.0 Row: 3, Col: 2, Value: 0.0 Row: 4, Col: 1, Value: 24.99 Row: 4, Col: 2, Value: 17.54 Row: 5, Col: 1, Value: 10.45 Row: 5, Col: 2, Value: 21.34 Row: 6, Col: 1, Value: 11.44 Row: 6, Col: 2, Value: 24.47 Row: 7, Col: 1, Value: -27.21 Row: 7, Col: 2, Value: -16.05 Row: 8, Col: 1, Value: 12.54 Row: 8, Col: 2, Value: 17.04 Row: 9, Col: 1, Value: -7.619999999999999 Row: 9, Col: 2, Value: 1.14 Row: 10, Col: 1, Value: 63.91 Row: 10, Col: 2, Value: 63.81 % % PACIFIC BASIN FUND Lipper Pacific Region Funds Average % % % % % % EMERGING MARKETS FUND
Calendar years 1991 1992 1993 EMERGING MARKETS FUND 6.76% 5.85% 81.76 % Lipper International Funds Average 12.76 -4.77 39.40 % % %
Row: 1, Col: 1, Value: 0.0 Row: 1, Col: 2, Value: 0.0 Row: 2, Col: 1, Value: 0.0 Row: 2, Col: 2, Value: 0.0 Row: 3, Col: 1, Value: 0.0 Row: 3, Col: 2, Value: 0.0 Row: 4, Col: 1, Value: 0.0 Row: 4, Col: 2, Value: 0.0 Row: 5, Col: 1, Value: 0.0 Row: 5, Col: 2, Value: 0.0 Row: 6, Col: 1, Value: 0.0 Row: 6, Col: 2, Value: 0.0 Row: 7, Col: 1, Value: 0.0 Row: 7, Col: 2, Value: 0.0 Row: 8, Col: 1, Value: 6.76 Row: 8, Col: 2, Value: 12.76 Row: 9, Col: 1, Value: 5.85 Row: 9, Col: 2, Value: -4.77 Row: 10, Col: 1, Value: 81.76000000000001 Row: 10, Col: 2, Value: 39.4 % % EMERGING MARKETS FUND Lipper International Funds Average % % % % % % % EXPLANATION OF TERMS TOTAL RETURN is the change in value of an investment in a fund over a given period, assuming reinvestment of any dividends and capital gains. A CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that, if achieved annually, would have produced the same cumulative total return if performance had been constant over the entire period. Average annual total returns smooth out variations in performance; they are not the same as actual year-by-year results. Average annual total returns covering periods of less than one year assume that performance will remain constant for the rest of the year. COMPARATIVE MARKET INDEXES used on pages 1 4 and 1 5 reflect the performance of stocks in applicable regions. Each index is translated into U.S. dollars and includes reinvestment of dividends. BROADLY DIVERSIFIED INDEXES: (bullet) The EAFE Index, also known as the Morgan Stanley Capital International Europe, Australia, Far East, is an unmanaged index of over 1,000 foreign stock prices. (bullet) The World Index, also known as the Morgan Stanley Capital International World Index, is an unmanaged index of over 1,400 foreign stock prices. REGIONAL/SINGLE COUNTRY INDEXES: (bullet) The TSE 300 Index, also known as the Toronto Stock Exchange Composite 300 Index, is an unmanaged index of 300 stocks traded on the Toronto Stock Exchange. (bullet) The Europe Index, also known as the Morgan Stanley Capital International Europe Index, is an unmanaged index of over 600 companies representing twelve European countries. (bullet) The TOPIX Index, also known as the Tokyo Stock Price Index, includes over 1,200 companies representing over 90% of the total market capitalization in Japan. (bullet) The Pacific Index, also known as the Morgan Stanley Capital International Pacific Index, is an unmanaged index of over 400 companies from Australia, Hong Kong, Japan, and Singapore/Malaysia. EMERGING MARKET INDEXES: (bullet) The Emerging Markets Index, also known as the Morgan Stanley Capital International Emerging Markets Free Index, is an unmanaged index of over 560 foreign stock prices. (bullet) The Latin America Index, also known as the Morgan Stanley Capital International Latin America Free Index, is an unmanaged index of over 130 foreign stock prices. (bullet) The Southeast Asia Index, also known as the Morgan Stanley Capital International Combined Far East ex-Japan Free Index , is an unmanaged index of over 380 foreign stock prices. THE CONSUMER PRICE INDEX is a widely recognized measure of inflation , calculated by the U.S. government. YIELD, if quoted, refers to the income generated by an investment in a fund over a given period of time, expressed as an annual percentage rate. Yields are calculated according to a standard that is required for all stock and bond funds. Because this differs from other accounting methods, the quoted yield may not equal the income actually paid to shareholders. This difference may be significant for funds whose investments are denominated in foreign currencies. COMPETITIVE FUNDS AVERAGES used on pages through reflect the performance of funds with similar objectives. Each average is published by Lipper Analytical Services and assumes reinvestment of distributions. BROADLY DIVERSIFIED AVERAGES: (bullet) Diversified International Fund, International Growth & Income Fund, Overseas Fund, and Emerging Markets Fund are compared to the Lipper International Funds average, which reflects the performance of over 161 international funds. (bullet) Worldwide Fund is compared to the Lipper Global Funds average, which reflects the performance of over 89 global funds. REGIONAL/SINGLE COUNTRY AVERAGES: (bullet) Europe Fund is compared to the Lipper European Region Funds average, which reflects the performance of over 89 funds investing in Europe. (bullet) Japan Fund is compared to the Lipper Japanese Funds average, which reflects the performance of 7 funds investing in Japan. (bullet) Pacific Basin Fund is compared to the Lipper Pacific Region Funds average, which reflects the performance of over 37 funds investing in the Pacific region. Other illustrations of fund performance may show moving averages over specific periods. The funds' recent strategies, performance, and holdings are detailed twice a year in f inancial reports, which are sent to all shareholders. For current performance or a free annual report, call 1-800-544-8888. TOTAL RETURNS ARE BASED ON PAST RESULTS AND ARE NOT AN INDICATION OF FUTURE PERFORMANCE. <r>THE FUNDS IN DETAIL</r> CHARTER EACH FUND IS A MUTUAL FUND: an investment that pool s shareholders' money and invest s it toward a specified goal. In technical terms, each fund is a diversified fund of Fidelity Investment Trust, an open-end, management investment company. The trust was organized as a Massachusetts business trust on April 20, 1984. EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for protecting the interests of shareholders. The trustees are experienced executives who meet throughout the year to oversee a fund's activities, review contractual arrangements with companies that provide services to a fund, and review performance. The majority of trustees are not otherwise affiliated with Fidelity. EACH FUND MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These meetings may be called to elect or remove trustees, change fundamental policies, approve a management contract, or for other purposes. Shareholders not attending these meetings are encouraged to vote by proxy. Fidelity will mail proxy materials in advance, including a voting card and information about the proposals to be voted on. You are entitled to one vote for each share you own. FMR AND ITS AFFILIATES The funds are managed by FMR, which handles their business affairs and, with the assistance of foreign affiliates, chooses the funds' investments. Greg Fraser is manager of Diversified International, which he has managed since 1991. Previously, he managed Select Defense and Aerospace, and Select Environmental Services. Mr. Fraser joined Fidelity in 1988 as an equity analyst . Rick Mace is manager of International Growth & Income, which he has managed since January 1994. Previously, he managed Select Transportation. He joined Fidelity in 1988 as an analyst. John R. Hickling is a manager and vice president of Fidelity Overseas, which he has managed since January 1993; and is manager of Japan, which he has managed since May 1993. Mr. Hickling also manages Advisor Overseas and VIP Overseas. Previously, he managed Emerging Markets, Europe, International Opportunities, and Pacific Basin. Mr. Hickling joined Fidelity in 1982. FIDELITY FACTS Fidelity offers the broadest selection of mutual funds in the world. (bullet) Number of Fidelity mutual funds: over 200 (bullet) Assets in Fidelity mutual funds: over $200 billion (bullet) Number of shareholder accounts: over 14 million (bullet) Number of investment analysts and portfolio managers: over 200 (checkmark) Penelope Dobkin is manager and vice president of Worldwide, which she has managed since its inception in May 1990. Previously, Ms. Dobkin managed Europe, United Kingdom, and Select Financial Services. She also served as the research analyst for the banking and savings and loans industries, real estate investment trusts, and finance companies. Ms. Dobkin joined Fidelity in 1980. George Domolky is vice president and manager of Canada, which he has managed since November 1987. Mr. Domolky also manages several funds for Fidelity Investments Canada Limited . Previously, he managed Select Food and Agriculture and assisted on Magellan. Mr. Domolky joined Fidelity in 1981. Sally Walden is vice president and manager of Europe, which she has managed since July 1992. Ms. Walden also serves as investment director for Fidelity Investment Services Ltd. and Fidelity Pensions Management Ltd. In addition, she manages European Opportunities and U.K. Growth Trust, a number of Canadian retail products, as well as institutional money for various international investors. Ms. Walden joined Fidelity in 1984. Kevin McCarey is manager of Europe Capital Appreciation, which he has managed since December 1993. Previously, Mr. McCarey managed Advisor Overseas and served as an equity analyst in both the London and Boston offices. He joined Fidelity in 1985 . Simon Fraser is manager and vice president of Pacific Basin, which he has managed since May 1993. Mr. Fraser also manages several funds for United Kingdom, European and Asian investors including Growth, Japan OTC & Regional Markets and Japan Smaller Companies Trust. He joined Fidelity in 1981 as an investment analyst. Richard Hazlewood is manager of Emerging Markets, w h i c h he has managed since July 1993. Previuosly, he assisted on Low-Priced Stock and Contrafund, and served as a U.S. equities analyst. He joined Fidelity Investments Japan Ltd. in March 1991 as an analyst specializing in Japanese equities. Before that, he was a director of research at Sassoon Ltd. in Tokyo. Patricia Satterthwaite is vice president and manager of Latin America, which she has managed since April 1993. Ms. Satterthwaite also manages Latin America Capital, a closed-end fund. Previously, she managed Pacific Basin and served as an analyst following the U.S., Mexico, Brazil, and Far East markets. Ms. Satterthwaite joined Fidelity in 1986. Allan Liu is manager of Southeast Asia, which he has managed since April 1993. Previously, he was an analyst and manager for Fidelity Investments Management Ltd. in Hong Kong. Mr. Liu joined Fidelity in 1987 . Affiliates assist FMR with foreign securities for the funds: Fidelity Management & Research (U.K.) Inc. (FMR U.K.), Fidelity Management & Research (Far East) Inc. (FMR Far East), Fidelity International Investment Advisors (FIIA), and Fidelity Investments Japan Ltd. (FIJ). FIIA, in turn, has entered into sub-advisory agreements with its wholly owned subsidiaries Fidelity International Investment Advisors (U.K.) Limited (FIIAL U.K.). FDC distributes and markets Fidelity's funds and services. Fidelity Service Co. (FSC) performs transfer agent servicing functions for the funds . FMR Corp., or Fidelity International Limited (FIL), is the parent company of these organizations. Through ownership of voting common stock, Edward C. Johnson 3d, (President and a trustee of the trust), Johnson family members, and various trusts for the benefit of Johnson family form a controlling group with respect to FMR Corp. This group also owns, directly or indirectly, more than 25% of the voting common stock of FIL. A broker-dealer may use a portion of the commissions paid by the fund to reduce a fund's custodian or transfer agent fees. FMR may use its broker-dealer affiliates and other firms that sell fund shares to carry out the fund's transactions, provided, that each fund receives services and commission rates comparable to those of other broker-dealers. INVESTMENT PRINCIPLES AND RISKS The funds may invest in all types of issuers, including companies and other business organizations as well as governments and government agencies. The funds have the flexibility to invest in any type of instrument. However, they tend to focus on the equity securities of large and small companies. The stocks of small companies often involve more risk than those of larger companies. The funds may invest in short-term debt securities and money market instruments for cash management purposes. Investing in foreign securities typically involves more risk than investing in the U.S. market. The performance of international funds is sensitive to economic and political conditions outside the U.S. General economic and political factors in the various world markets can also impact the value of your investment. Because many of the funds' investments are denominated in foreign currencies, changes in the value of foreign currencies can significantly affect a fund's share price. Currencies have different yield, risk, and return characteristics, and FMR may use a variety of techniques to increase or decrease a fund's exposure to any currency. Each fund will spread investment risk by limiting its holdings in any one company or industry. FMR may use various techniques to hedge a fund's risks, but there is no guarantee that these strategies will work as FMR intends. When you sell your shares, they may be worth more or less than what you paid for them. FMR determines where an issuer or its principal business are located by looking at such factors as its country of organization, the primary trading market for its securities, and the location of its assets personnel, sales, and earnings. When allocating the funds' investments among countries and regions, FMR considers such factors as the potential for economic growth, expected levels of inflation, governmental policies, and the outlook for currency relationships. FMR normally invests a fund's assets according to its investment strategy. When FMR considers it appropriate for defensive purposes , however, it may temporarily invest substantially in money market instruments, U.S. government securities, and high-quality debt obligations of U.S. issuers. BROADLY DIVERSIFIED FUNDS These funds increase diversification by spreading investments among different countries and geographic regions. These funds invest in securities of both developed and emerging markets. DIVERSIFIED INTERNATIONAL FUND seeks capital growth by investing primarily in equity securities of companies located anywhere outside the U.S. The fund normally invests in equity securities of companies from at least three countries outside of the U.S. The fund expects to invest most of its assets in equity securities, but may also invest in debt securities of any quality. The fund invests in stocks that FMR determines are undervalued compared to industry norms within their countries. Using a highly disciplined approach to help identify these instruments and focusing on companies with market capitalizations of $100 million or more, FMR hopes to generate more capital growth than that of the EAFE Index. The disciplined approach involves computer-aided, quantitative analysis supported by fundamental research. FMR's computer model systematically reviews thousands of stocks, using historical earnings, dividend yield, earnings per share, and many other factors. Then, potential investments are analyzed further using fundamental criteria, such as the company's growth potential and estimates of current earnings. INTERNATIONAL GROWTH & INCOME FUND seeks capital growth and current income by investing principally in foreign securities. FMR normally invests at least 65% of the fund's total assets in securities of issuers whose principal activities are outside of the U.S. FMR normally invests a majority of the fund's assets in equity securities, selected generally for growth potential. In pursuit of income, FMR normally invests at least 25% of the fund's total assets in debt securities of any quality and in repurchase agreements. The fund may invest in equity and debt securities of U.S. issuers. FMR expects that the fund will normally invest in at least six different countries, although it may invest all of its assets in a single country. OVERSEAS FUND seeks long-term growth of capital by investing primarily in securities of issuers whose principal activities are outside of the U.S. FMR normally invests at least 65% of the fund's total assets in securities of issuers from at least three different countries outside of North America (the U.S., Canada, Mexico, and Central America). The fund expects to invest a majority of its assets in equity securities , but may also invest in debt securities of any quality . WORLDWIDE FUND seeks growth of capital by investing in securities issued anywhere in the world . The fund will normally invest in at least three different countries, one of which will be the U.S. The fund expects its equity investments to include established companies as well as newer or smaller capitalization companies. The fund expects to invest a majority of its assets in equity securities, but may also invest in debt securities of any quality. REGIONAL/SINGLE COUNTRY FUNDS These funds offer investors the ability to concentrate an investment in a particular region or country that they believe to offer strong long-term growth potential. The region in which each fund focuses is the fund's "focal region." Each fund's performance is closely tied to economic and political conditions within its focal region. The funds may invest in all types of issuers that have their principal activities within their focal regions. The funds focus on equity securities, but may also invest in debt securities of any quality. CANADA FUND seeks growth of capital over the long term by investing in securities of issuers that have their principal activities in Canada or are registered in Canadian markets. FMR normally invests at least 65% of the fund's total assets in these securities. FMR expects that most of the fund's investments will be Canadian securities listed on the Toronto Stock Exchange, but it may also invest in U.S. securities. Canadian securities are sensitive to conditions within Canada, but also tend to track the U.S. market. The country's economy relies strongly on the production and processing of natural resources. Also, the government has attempted to reduce restrictions against foreign investment, and its recent trade agreements with the U.S. and Mexico are expected to increase trade. EUROPE FUND seeks growth of capital over the long term by investing in securities of issuers that have their principal activities in Western Europe. FMR normally invests at least 65% of the fund's total assets in these securities. Western European countries include Austria, Belgium, Denmark, Germany, Finland, France, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. The fund may also invest in Eastern Europe. FMR expects that the fund will normally invest in at least three different countries, although it may invest all of its assets in a single country. The fund's performance is closely tied to economic and political conditions within Europe. Some European countries, particularly those in Eastern Europe, have less stable economies. Most of Europe remains in a recession. The passing of the Maastricht Treaty, the movement of many Eastern European countries toward market economies, and the movement toward a unified common market may significantly effect European economies and markets. Eastern European countries are considered emerging markets. EUROPE CAPITAL APPRECIATION FUND seeks capital appreciation over the long term by investing in securities of issuers that have their principal activities in E astern and W estern Europe. In addition to Western European countries listed above, European countries also include Belarus, Bosnia, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Russia, Slovenia, and Turkey. These countries are considered emerging markets. FMR normally invests at least 65% of the fund's total assets in these securities. The fund's investments are subject to the same risks as Europe Fund. JAPAN FUND seeks long term growth of capital by investing in securities of Japanese issuers . FMR normally invests at least 65% of the fund's total assets in these securities, but the fund may also invest in other Southeast Asian securities. Japan is a major force in the global economy. The country is heavily dependent upon international trade, so its economy is especially sensitive to trade barriers. Japan's economy is in a recession and , its stock market has declined in the last several years. PACIFIC BASIN FUND seeks growth of capital over the long term by investing in securities of issuers that have their principal activities in the Pacific Basin. FMR normally invests at least 65% of the fund's total assets in these securities , but may also invest in other Asian countries . The Pacific Basin includes Australia, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, the People's Republic of China, the Philippines, Singapore, Taiwan, and Thailand. FMR expects that the fund will normally invest in at least three different countries, although it may invest all of its assets in a single country. Countries in the Pacific Basin are in various stages of economic development - some are considered emerging markets - but each has unique risks. Most countries in the Pacific Basin are heavily dependent on international trade. Some have prosperous economies, but are sensitive to world commodity prices. Others are especially vulnerable to recession in other countries. Some countries in the Pacific Basin have experienced rapid growth, although many suffer with obsolete financial systems, economic problems, or archaic legal systems. In addition, many are experiencing political and social uncertainties. Japan's economy is in a recession and its market has declined in recent years. The return o f Hong Kong to Chinese dominion will affect the entire Pacific Basin. EMERGING MARKET FUNDS These funds are designed for aggressive investors interested in the investment opportunities offered by securities in emerging markets. While FMR believes that these investments present the possibility for significant growth over the long term, they also entail significant risks. Many investments in emerging markets can be considered speculative, and their prices can be much more volatile than in the more developed nations of the world. This difference reflects the greater uncertainties of investing in less established markets and economies. EMERGING MARKETS FUND seeks capital appreciation aggressively by investing in emerging markets. In pursuit of its goal, the fund emphasizes countries with relatively low gross national product per capita compared to the world's major economies, and with the potential for rapid economic growth. FMR normally invests at least 65% of the fund's total assets in securities of emerging markets issuers. Countries with emerging markets include those that have an emerging stock market as defined by the International Finance Corporation, those with low- to middle-income economies according to the World Bank, and those listed in World Bank publications as developing. FMR expects that the fund will normally invest in at least six different countries, although it may invest all of its assets in a single country. The fund focuses on equity securities, but may also invest in other types of instruments, including debt securities of any quality. LATIN AMERICA FUND seeks high total investment return, which is the combination of income and changes in value. FMR normally invests at least 65% of the fund's total assets in securities of Latin American issuers . Latin America includes Argentina, Brazil, Chile, Colombia, Ecuador, Mexico , Peru, Panama, and Venezuela. In pursuit of its goal, the fund tends to focus on equity securities, but may invest in any combination of equity and debt securities of any quality. Although there has been significant improvement in some Latin American economies, others continue to struggle with high interest and inflation rates. Recovery will depend on economic conditions in other countries and on world commodity prices. This region is vulnerable to political instability. The North American Free Trade Agreement will also have a significant impact on the region. SOUTHEAST ASIA FUND seeks capital appreciation by investing in securities of Southeast Asian issuers . FMR normally invests at least 65% of the fund's total assets in these securities , but may also invest in other Asian and South Pacific securities . Southeast Asia includes Hong Kong, Indonesia, Korea, Malaysia, the Philippines, the People's Republic of China, Singapore, Taiwan, and Thailand, but the fund does not anticipate investing in Japan. In pursuit of its goal, the fund focuses on equity securities, but it may also invest in other types of instruments, including debt securities of any quality. Countries in Southeast Asia are in various stages of economic development - some are considered emerging markets - but each has its own risks. Most countries in Southeast Asia are heavily dependent on international trade. Some have prosperous economies, but are sensitive to world commodity prices. Others are especially vulnerable to recession in other countries. Some countries in Southeast Asia have experienced rapid growth, although many suffer with obsolete financial systems, economic problems, or archaic legal systems. Most Southeast Asian countries are heavily dependent upon international trade, and many are experiencing political and social uncertainties. In addition, the return of Hong Kong to Chinese dominion will affect the entire Southeast Asian region. SECURITIES AND INVESTMENT PRACTICES The following pages contain more detailed information about types of instruments in which the funds may invest, and strategies FMR may employ in pursuit of the funds' investment objectives. A summary of risks and restrictions associated with these instrument types and investment practices is included as well. Policies and limitations are considered at the time of purchase; the sale of instruments is not required in the event of a subsequent change in circumstances. FMR may not buy all of these instruments or use all of these techniques to the full extent permitted unless it believes that doing so will help the funds achieve their goals. As a shareholder, you will receive financial reports every six months detailing fund holdings and describing recent investment activities. EQUITY SECURITIES may include common stocks, preferred stocks, convertible securities, and warrants. Common stocks, the most familiar type, represent an equity (ownership) interest in a corporation. This ownership interest often gives a fund the right to vote on measures affecting the company's organization and operations. Although common stocks have a history of long-term growth in value, their prices tend to fluctuate in the short term, particularly those of smaller companies. RESTRICTIONS: With respect to 75% of total assets, a fund may not own more than 10% of the outstanding voting securities of a single issuer. FOREIGN SECURITIES and foreign currencies may involve additional risks. These include currency fluctuations, risks relating to political or economic conditions in the foreign country, and the potentially less stringent investor protection and disclosure standards of foreign markets. In addition to the political and economic factors that can affect foreign securities, a governmental issuer may be unwilling to repay principal and interest when due and may require that the conditions for payment be renegotiated. These factors could make foreign investments, especially those in developing countries, more volatile. DEBT SECURITIES. Bonds and other debt instruments are used by issuers to borrow money from investors. The issuer pays the investor a fixed or variable rate of interest, and must repay the amount borrowed at maturity. Some debt securities, such as zero coupon bonds, do not pay current interest, but are purchased at a discount from their face values. Debt securities have varying degrees of quality and varying levels of sensitivity to changes in interest rates. Longer-term bonds are generally more sensitive to interest rate cha n ges than short-term bonds. Lower-quality debt securities ( sometimes called "junk bonds") are often considered to be speculative and involve greater risk of default or price changes due to changes in the issuer's creditworthiness. The market prices of these securities may fluctuate more than higher-quality securities and may decline significantly in periods of general economic difficulty. The tables on page provides a summary of ratings assigned to debt holdings (not including money market instruments) in each fund's portfolio. These figures are dollar-weighted averages of month-end portfolio holdings during fiscal 1993, and are presented as a percentage of total investments. These percentages are historical and do not necessarily indicate the fund's current or future debt holdings. RESTRICTIONS: A fund does not currently intend to invest more than 35% of its assets in lower-quality debt securities (those rated below Baa by Moody's or BBB by S&P, and unrated securities judged by FMR to be of equivalent quality) . DIRECT DEBT. Loans and other direct debt instruments are interests in amounts owed to another party by a company, government, or other borrower. They have additional risks beyond conventional debt securities because they may entail less legal protection for a fund, or there may be a requirement that a fund supply additional cash to a borrower on demand. ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to increase or decrease its exposure to changing security prices, interest rates, currency exchange rates, commodity prices, or other factors that affect security values. These techniques may involve derivative transactions such as buying and selling options and futures contracts, entering into currency exchange contracts or swap agreements, purchasing indexed securities, and selling securities short. FMR can use these practices to adjust the risk and return characteristics of a fund's portfolio of investments. If FMR judges market conditions incorrectly or employs a strategy that does not correlate well with the fund's investments, these techniques could result in a loss, regardless of whether the intent was to reduce risk or increase return. These techniques may increase the volatility of the fund and may involve a small investment of cash relative to the magnitude of the risk assumed. In addition, these techniques could result in a loss if the counterparty to the transaction does not perform as promised. REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at one price and simultaneously agrees to sell it back at a higher price. Delays or losses could result if the other party to the agreement defaults or becomes insolvent. FOREIGN REPURCHASE AGREEMENTS may be less well secured than U.S. repurchase agreements, and may be denominated in foreign currencies. They may involve greater risk of loss if the counterparty defaults. Some counterparties in these transactions may be less creditworthy than those in U.S. markets. ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by FMR, under the supervision of the Board of Trustees, to be illiquid, which means that they may be difficult to sell promptly at an acceptable price. The sale of other securities may be subject to legal restrictions. Difficulty in selling securities may result in a loss or may be costly to a fund. RESTRICTIONS: A fund may not purchase a security if, as a result, more than 15% of its assets would be invested in illiquid securities. OTHER INSTRUMENTS may include rights and securities of closed-end investment companies. DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the risks of investing. This may include limiting the amount of money invested in any one issuer or, on a broader scale, in any one industry. RESTRICTIONS: With respect to 75% of total assets, a fund may not invest more than 5% of its total assets in any one issuer. A fund may not invest more than 25% of its total assets in any one industry. These limitations do not apply to U.S. government securities. For International Growth & Income Fund, the last restriction also does not apply to securities issued by foreign governments and supranational organizations. FISCAL 1994 DEBT HOLDINGS, BY S&P RATING E S&P Diversified International Emerging Latin South east Rating International Growth & Income Overseas Worldwide Canada Europe Japan Pacific Basin Markets Ameri ca Asia INVESTMENT GRADE Highest quality AAA High quality AA 0% 4.0% 0.30% 2.1% 0% 0% 4.0% 0% 0% 0% 0% Upper-medium grade A Medium grade BBB 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% LOWER QUALITY Moderately speculative BB 0% 0% 0% 0% 0% 0% 0% 0% 0.3% 1.4% 0% Speculative B 0% 0% 0% 0.5% 0% 0% 0% 0% 0% 0.2% 0% Highly speculative CCC 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Poor quality CC,C 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Lowest quality, no interest D In default, in arrears -- 0% 4.0% 0.30% 2.6% 0% 0% 4.0% 0% 0.3% 1.6% 0% FISCAL 1994 DEBT HOLDINGS, BY MOODY'S RATING MOODY'S Diversified International Emerging Latin South east Rating International Growth & Income Overseas Worldwide Canada Europe Japan Pacific Basin Markets Ameri ca Asia INVESTMENT GRADE Highest quality Aaa High quality Aa 0% 3.4% 0.30% 1.1% 0% 0% 4.0% 0% 0% 0% 0% Upper-medium grade A Medium grade Baa 0% 0% 0% 0% 0% 0% 0% 0% 0.2% 0.2% 0% LOWER QUALITY Moderately speculative Ba 0% 0.4% 0% 0% 0% 0% 0% 0% 0.3% 4.3% 0% Speculative B 0% 0% 0.45% 0.4% 0% 0% 0% 0% 0.9% 10.8% 0% Highly speculative Caa 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Poor quality Ca 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Lowest quality, no interest C In default, in arrears -- 0% 3.8% 0.75% 1.5% 0% 0% 4.0% 0% 1.4% 15.3% 0% A FOR SOME FOREIGN GOVERNMENT OBLIGATIONS, FMR HAS ASSIGNED THE RATINGS OF THE SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT. THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED DIRECTLY OR INDIRECTLY BY MOODY'S OR S&P ARE OUTLINED IN THE CHART ON PAGE 26. THIS MAY INCLUDE SECURITIES RATED BY OTHER NATIONALLY RECOGNIZED RATING SERVICES, AS WELL AS UNRATED SECURITIES. UNRATED SECURITIES ARE NOT NECESSARILY LOWER-QUALITY SECURITIES. REFER TO THE FUND'S STATEMENT OF ADDITIONAL INFORMATION FOR A MORE COMPLETE DISCUSSION OF THESE RATINGS. BORROWING. A fund may borrow from banks or from other funds advised by FMR, or through reverse repurchase agreements. If a fund borrows money, its share price may be subject to greater fluctuation until the borrowing is paid off. If the fund makes additional investments while borrowings are outstanding, this may be considered a form of leverage. RESTRICTIONS: A fund may borrow only for temporary or emergency purposes, but not in an amount exceeding 33% of its total assets. LENDING. Lending securities to broker-dealers and institutions, including FBSI, an affiliate of FMR, is a means of earning income. This practice could result in a loss or a delay in recovering a fund's securities. A fund may also lend money to other funds advised by FMR. RESTRICTIONS: Loans, in the aggregate, may not exceed 33% of a fund's total assets.
Debt Holdings Not Rated Directly or Indirectly by Moody's or S&P Dollar Weighted Average % Diversified International 0. 0 % International Growth & Income 0.7% Overseas 0.0% Worldwide 5.8% Canada 0.0% Europe 0.0% Japan 1.1% Pacific Basin 2.2% Emerging Markets 1.1% Latin America 22.0% Southeast Asia 1.6%
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS Some of the policies and restrictions discussed on the preceding pages are fundamental, that is, subject to change only by shareholder approval. The following paragraphs restate all those that are fundamental. All policies stated throughout this prospectus, other than those identified in the following paragraphs, can be changed without shareholder approval. DIVERSIFIED INTERNATIONAL FUND seeks capital growth by investing primarily in equity securities of companies located anywhere outside the U.S. INTERNATIONAL GROWTH & INCOME FUND seeks capital growth and current income, consistent with reasonable investment risk, by investing principally in foreign securities. Under normal conditions, the fund will have at least 25% of its total assets invested in debt securities. OVERSEAS FUND seeks long-term growth of capital primarily through investments in foreign securities. The fund defines foreign securities as securities of issuers whose principal activities are located outside of the U.S. Normally, at least 65% of the fund's total assets will be invested in securities of issuers from at least three different countries outside of North America. When market conditions warrant, FMR can make substantial temporary defensive investments in U.S. government obligations or investment-grade debt obligations of companies incorporated in and having principal business activities in the U.S. WORLDWIDE FUND seeks growth of capital by investing in securities issued anywhere in the world. CANADA FUND seeks growth of capital over the long term through investments in securities of issuers that have their principal activities in Canada or are registered in Canadian markets. EUROPE FUND seeks growth of capital over the long term through investments in securities of issuers that have their principal activities in Western Europe. Normally, at least 65% of the fund's total assets will be invested in such securities. In determining whether an issuer's principal activities are in Western Europe, FMR will look at such factors as the location of its assets, personnel, sales, and earnings. When allocating investments among geographic regions and individual countries, FMR will consider various criteria, such as the relative economic growth potential of the various economies and securities markets, expected levels of inflation, government policies influencing business conditions, and the outlook for currency relationships. When market conditions warrant, FMR can make substantial temporary defensive investments in U.S. government obligations or investment-grade debt obligations of companies incorporated in and having principal business activities in the U.S. EUROPE CAPITAL APPRECIATION FUND seeks long-term capital appreciation. JAPAN FUND seeks long-term growth of capital. PACIFIC BASIN FUND seeks growth of capital over the long term through investments in securities of issuers that have their principal activities in the Pacific Basin. Normally, at least 65% of the fund's total assets will be invested in such securities. In determining whether an issuer's principal activities are in the Pacific Basin, FMR will look at such factors as the location of its assets, personnel, sales, and earnings. When allocating investments among geographic regions and individual countries, FMR will consider various criteria, such as the relative economic growth potential of the various economies and securities markets, expected levels of inflation, government policies influencing business conditions, and the outlook for currency relationships. When market conditions warrant, FMR can make substantial temporary defensive investments in U.S. government obligations or investment-grade debt obligations of companies incorporated in, and having principal business activities in, the U.S. EMERGING MARKETS FUND seeks capital appreciation. LATIN AMERICA FUND seeks high total investment return. SOUTHEAST ASIA FUND seeks capital appreciation. EACH FUND, with respect to 75% of total assets, may not invest more than 5% of total assets in any one issuer, and may not own more than 10% of the outstanding voting securities of a single issuer. Each fund may not invest more than 25% of its total assets in any one industry. Each fund may borrow only for temporary or emergency purposes, but not in an amount exceeding 33% of its total assets. Loans, in the aggregate, may not exceed 33% of total assets. BREAKDOWN OF EXPENSES Like all mutual funds, the funds pay expenses related to their daily operations. Expenses paid out of a fund's assets are reflected in its share price or dividends; they are neither billed directly to shareholders nor deducted from shareholder accounts. Each fund pays a MANAGEMENT FEE to FMR for managing its investments and business affairs. FMR in turn pays fees to affiliates who provide assistance with these services . Each fund also pays OTHER EXPENSES, which are explained on page . FMR may, from time to time, agree to reimburse the funds for management fees and other expenses above a specified limit. FMR retains the ability to be repaid by a fund if expenses fall below the specified limit prior to the end of the fiscal year. Reimbursement arrangements, which may be terminated at any time without notice, decrease a fund's expenses and boost its performance. MANAGEMENT FEE INTERNATIONAL GROWTH & INCOME FUND, WORLDWIDE FUND, EMERGING MARKETS FUND, AND LATIN AMERICA FUND. The management fee is calculated and paid to FMR every month. The fee for each fund is calculated by adding a group fee rate to an individual fund fee rate, and multiplying the result by the respective fund's average net assets. The group fee rate is based on the average net assets of all the mutual funds advised by FMR. This rate cannot rise above .52%, and it drops as total assets under management increase. For October 1993, the group fee rate was .33 %. The individual fund fee rate is .45% for the funds. The total management fee for fiscal 1993 was .77% for International Growth & Income, Emerging Markets and Latin America Fund (annualized) . The total management fee for fiscal 1993 for Worldwide Fund was .78%. The management fee rate for the funds is higher than that of most domestic mutual funds, but not necessarily higher than those of the typical international fund. DIVERSIFIED INTERNATIONAL FUND, OVERSEAS FUND, CANADA FUND, EUROPE FUND, EUROPE CAPITAL APPRECIATION FUND, JAPAN FUND, PACIFIC BASIN FUND, AND SOUTHEAST ASIA FUND. The management fee is calculated and paid to FMR every month. The amount of the fee is determined by taking a BASIC FEE and then applying a PERFORMANCE ADJUSTMENT. The performance adjustment either increases or decreases the management fee, depending on how well the fund has performed relative to its benchmark index. However, for Europe Capital Appreciation and Southeast Asia the performance adjustment will not take effect until December 1994 and April 1994, respectively. Management = Basic +/- Performance Fee Fee Adjustment THE BASIC FEE RATE (calculated monthly) is calculated by adding a group fee rate to an individual fund fee rate, and multiplying the result by the fund's average net assets. The group fee rate is based on the average net assets of all the mutual funds advised by FMR. This rate cannot rise above .52%, and it drops as total assets under management increase. For October 1993, the group fee rate was .33 %. The individual fund fee rate is .45%. The basic fee for fiscal 1993 was .76% for Diversified International Fund, .78% for Overseas Fund, and .77% for Canada Fund, Europe Fund, Japan Fund, Pacific Basin Fund, and Southeast Asia Fund (annualized). FUND BENCHMARK Diversified International EAFE Index/GDP Weighted Overseas EAFE Index/Cap Weighted Canada TSE 300 Index Europe Europe Index Europe Capital Appreciation Europe Index Japan TOPIX Index Pacific Basin Pacific Index Southeast Asia Combined Far East ex-Japan Free Index THE PERFORMANCE ADJUSTMENT RATE is calculated monthly by comparing the fund's performance to that of its benchmark Index over the most recent 36-month period. The difference is translated into a dollar amount that is added to or subtracted from the basic fee. The maximum annualized performance adjustment rate is + .20%. The total management fee for the funds for fiscal 1993 is outlined in the chart below. The management fee rate for the funds is higher than that of most domestic mutual funds, but not necessarily higher than those of the typical international fund. Fund Managem ent fee Diversified International . 73 % Overseas .77 % Canada .86 % Europe .64 % Japan .77 % Pacific Basin .80 % Southeas t Asia .77 % A A ANNUALIZED FMR HAS SUB-ADVISORY AGREEMENTS with four affiliates: FMR U.K., FMR Far East, FIJ and FIIA. FIIA in turn has a sub-advisory agreement with FIIAL U.K. FMR U.K. focuses on companies based in Europe. FMR Far East focus es on companies based in Asia and the Pacific Basin. FIJ focuses on companies based in Japan and elsewhere around the world. FIIA focuses on companies based in Hong Kong, Australia, New Zealand, and Southeast Asia (other than Japan). FIIAL U.K. focuses on companies based in the United Kingdom and Europe. The sub-advisers are compensated for providing investment research and advice. FMR pays FMR U.K. and FMR Far East fees equal to 110% and 105%, respectively, of the costs of providing these services. FMR pays FIJ and FIIA 30% of its management fee associated with investments for which FIJ and FIIA provided investment advice. FIIA pays FIIAL U.K. a fee equal to 110% of these costs of providing these services. The sub-advisers may also provide investment management services . In return, FMR pays FMR U.K., FMR Far East, FIJ and FIIA 50% of its management fee rate, with respect to a fund's investments that the sub-adviser manages on a discretionary basis. FIIA pays FIIAL U.K. a fee equal to 110% of the costs of providing these services. ABOTHER EXPENSES While the management fee is a significant component of the funds' annual operating costs, the funds have other expenses as well. The funds contract with FSC to perform many transaction and accounting functions. These services include processing shareholder transactions, valuing the funds' investments, and handling securities loans. In fiscal 1993 the funds paid FSC the fees outlined in the following chart: Fee to Fund FSC Diversified International .07 % International Growth & Income .05 % Overseas .05 % Worldwide .06 % Canada .08 % Europe .06 % Japan .08 % Pacific Basin .06 % Emerging Markets .07 % Latin America .07 % Southeast Asia .07 % The funds also pay other expenses, such as legal, audit, and custodian fees; proxy solicitation costs; and the compensation of trustees who are not affiliated with Fidelity. For fiscal 1993, the portfolio turnover rates for the funds having a full fiscal year of performance are outlined in the table below. These rates vary from year to year. High turnover rates increase transaction costs, and may increase taxable capital gains. Of course, FMR considers these effects when evaluating the anticipated benefits of short-term investing. Fund Turnover % Diversified International 56 % International Growth & Income 24 % Overseas 64 % Worldwide 57 % Canada 131 % Europe 76 % Japan 257 % Pacific Basin 77 % Emerging Markets 57 % Latin America 72 %A Southeast Asia 14 %A A ANNUALIZED. <r>YOUR ACCOUNT</r> DOING BUSINESS WITH FIDELITY Fidelity Investments was established in 1946 to manage one of America's first mutual funds. Today, Fidelity is the largest mutual fund company in the country, and is known as an innovative provider of high-quality financial services to individuals and institutions. In addition to its mutual fund business, the company operates one of America's leading discount brokerage firms, Fidelity Brokerage Services, Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered retirement plans for individuals investing on their own or through their employer. Fidelity is committed to providing investors with practical information to make investment decisions. Based in Boston, Fidelity provides customers with complete service 24 hours a day, 365 days a year, through a network of telephone service centers around the country. To reach Fidelity for general information, call these numbers: (bullet) For mutual funds, 1-800-544-8888 (bullet) For brokerage, 1-800-544-7272 If you would prefer to speak with a representative in person, Fidelity has over 70 walk-in Investor Centers across the country. TYPES OF ACCOUNTS You may set up an account directly in the funds or, if you own or intend to purchase individual securities as part of your total investment portfolio, you may consider investing in a fund through a Fidelity brokerage account. If you are investing through FBSI or another financial institution or investment professional, refer to its program materials for any special provisions regarding your investment in a fund. The different ways to set up (register) your account with Fidelity are listed at right. The account guidelines that follow may not apply to certain retirement accounts. If your employer offers a fund through a retirement program, contact your employer for more information. Otherwise, call Fidelity directly. WAYS TO SET UP YOUR ACCOUNT INDIVIDUAL OR JOINT TENANT FOR YOUR GENERAL INVESTMENT NEEDS Individual accounts are owned by one person. Joint accounts can have two or more owners (tenants). RETIREMENT TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES Retirement plans allow individuals to shelter investment income and capital gains from current taxes. In addition, contributions to these accounts may be tax deductible. Retirement accounts require special applications and typically have lower minimums. INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal age and under 70 with earned income to save up to $2,000 per tax year. Individuals can also invest in a spouses's IRA if the spouse has earned income of less than $250. ROLLOVER IRAS retain special tax advantages for certain distributions from employer-sponsored retirement plans. KEOGH OR CORPORATE PROFIT SHARING AND MONEY PURCHASE PENSION PLANS allow self-employed individuals or small business owners (and their employees) to make tax deductible contributions for themselves and any eligible employees up to $30,000 per year. SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small business owners or those with self-employed income (and their eligible employees) with many of the same advantages as a Keogh, but with fewer administrative requirements. 403(B) CUSTODIAL ACCOUNTS are available to employees of most tax-exempt institutions, including schools, hospitals, and other charitable organizations. 401(K) PROGRAMS allow employees of corporations of all sizes to contribute a percentage of their wages on a tax-deferred basis. These accounts need to be established by the trustee of the plan. GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA) TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS These custodial accounts provide a way to give money to a child and obtain tax benefits. An individual can give up to $10,000 a year per child without paying federal gift tax. Depending on state laws, you can set up a custodial account under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA). TRUST FOR MONEY BEING INVESTED BY A TRUST The trust must be established before an account can be opened. BUSINESS OR ORGANIZATION FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, INSTITUTIONS, OR OTHER GROUPS Requires a special application. HOW TO BUY SHARES Shares are purchased at the next share price calculated after your investment is received and accepted. Share price is normally calculated at 4 p.m. Eastern time. IF YOU ARE NEW TO FIDELITY, complete and sign an account application and mail it along with your check. You may also open your account in person or by wire as described at right. If there is no application accompanying this prospectus, call 1-800-544-8888. IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can: (bullet) Mail in an application with a check, or (bullet) Open your account by exchanging from another Fidelity fund. IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an IRA, for the first time, you will need a specially marked application. Retirement investing also involves its own investment procedures. Call 1-800-544-8888 for more information and a retirement application. If you buy shares by check or Fidelity Money Line(Registered trademark) , and then sell those shares by any method other than by exchange to another Fidelity fund, the payment may be delayed for up to seven business days to ensure that your previous investment has cleared. SHARE PRICE Once each business day, two share prices are calculated for each fund: the offering price and the net asset value (NAV). The offering price includes the sales charge, if any, which you pay when you buy shares, unless you qualify for a deduction or waiver as described on page s 35 and 36 . When you buy shares at the offering price, Fidelity deducts the amount of any sales charge and invests the rest at the NAV. MINIMUM INVESTMENTS TO OPEN AN ACCOUNT $2,500 For Fidelity retirement accounts $500 TO ADD TO AN ACCOUNT $250 For Fidelity retirement accounts $250 Through automatic investment plans $100 MINIMUM BALANCE $1,000 For Fidelity retirement accounts $500 Key Information (phone_graphic) (Phone 1-800-544-7777 (bullet) To open an account, exchange from another Fidelity fund account with the same registration, including name, address, and taxpayer ID number. (bullet) To add to an account, exchange from another Fidelity fund account with the same registration, including name, address, and taxpayer ID number. You can also use Fidelity Money Line to transfer from your bank account. Call before your first use to verify that this service is in place on your account. Maximum Money Line: $50,000. (mail_graphic) Mail (bullet) To open an account, complete and sign the application. Make your check payable to the complete name of the fund of your choice. Mail to the address indicated on the application. (bullet) To add to an account, make your check payable to the complete name of the fund. Indicate your fund account number on your check. Mail to the address printed on your account statement. (hand_graphic) In Person (bullet) To open an account, bring your application and check to a Fidelity Investor Center. Call 1-800-544-9797 for the center nearest you. (bullet) To add to an account, bring your check to a Fidelity Investor Center. Call 1-800-544-9797 for the center nearest you. (wire_graphic) Wire Not available for retirement accounts. (bullet) To open an account, call 1-800-544-7777 to set up your account and to arrange a wire transaction. Wire within 24 hours to the wire address below. Specify the complete name of the fund and include your new account number and your name. (bullet) To add to an account, wire to the wire address below. Specify the complete name of the fund and include your account number and your name. (bullet) Wire address: Bankers Trust Company, Bank Routing #021001033, Account # 00163053. (automatic_graphic) Automatically New accounts cannot be opened with these services. (bullet) Use Fidelity Automatic Account Builder or Direct Deposit to automatically purchase more shares. Sign up for these services when opening your account, or call 1-800-544-6666. (bullet) Use Directed Dividends or Fidelity Automatic Exchange Service to automatically send money from one Fidelity fund into another. Call 1-800-544-6666 for instructions. (tdd_graphic) TDD - Service for the Deaf and Hearing#Impaired: 1-800-544-0118 HOW TO SELL SHARES You can arrange to take money out of your fund account at any time by selling (redeeming) some or all of your shares. Your shares will be sold at the next share price calculated after your order is received and accepted. Share price is normally calculated at 4 p.m. Eastern time. TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods described on this page. TO SELL SHARES IN A FIDELITY RETIREMENT ACCOUNT, your request must be made in writing, except for exchanges to other Fidelity funds, which can be requested by phone or in writing. Call 1-800-544-6666 for a retirement distribution form. IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000 worth of shares in the account to keep it open ($500 for retirement accounts). TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign up for these services in advance. CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to protect you and Fidelity from fraud. Your request must be made in writing and include a signature guarantee if any of the following situations apply: (bullet) You wish to redeem more than $100,000 worth of shares, (bullet) Your account registration has changed within the last 30 days, (bullet) The check is not being mailed to the address on your account (record address), (bullet) The check is not being made out to the account owner, or (bullet) The redemption proceeds are being transferred to a Fidelity account with a different registration. You should be able to obtain a signature guarantee from a bank, broker (including Fidelity Investor Centers), dealer, credit union (if authorized under state law), securities exchange or association, clearing agency, or savings association. A notary public cannot provide a signature guarantee. SELLING SHARES IN WRITING Write a "letter of instruction" with: (bullet) Your name (bullet) The fund's name, (bullet) Your fund account number, (bullet) The dollar amount or number of shares to be redeemed, and (bullet) Any other applicable requirements listed in the table at right. Unless otherwise instructed, Fidelity will send a check to the record address. Deliver your letter to a Fidelity Investor Center, or mail it to: Fidelity Investments P.O. Box 660602 Dallas, TX 75266-0602 FEES AND KEY INFORMATION IF YOU SELL SHARES OF EMERGING MARKETS, LATIN AMERICA, AND SOUTHEAST ASIA FUNDS AFTER HOLDING THEM LESS THAN 90 DAYS, THE FUND WILL DEDUCT A REDEMPTION FEE EQUAL TO 1.50 OF THE VALUE OF THOSE SHARES.
PHONE 1-800-544-7777 ALL ACCOUNT TYPES EXCEPT RETIREMENT (bullet) Maximum check request: $100,000. (bullet) For Money Line transfers to your bank account; minimum: $10 ; maximum: $100,000. ALL ACCOUNT TYPES (bullet) You may exchange to other Fidelity funds if both accounts are registered with the same name(s), address, and taxpayer ID number. MAIL OR IN PERSON INDIVIDUAL, JOINT TENANTS, SOLE PROPRIETORSHIPS, UGMA, UTMA (bullet) The letter of instruction must be signed by all persons required to sign for transactions, exactly as their names appear on the account. RETIREMENT ACCOUNTS (bullet) The account owner should complete a retirement distribution form. Call 1-800-544-6666 to request one. TRUSTS (bullet) The trustee must sign the letter indicating capacity as trustee. If the trustee's name is not in the account registration, provide a copy of the trust document certified within the last 60 days. BUSINESSES OR ORGANIZATIONS (bullet) At least one person authorized by corporate resolution to act on the account must sign the letter. (bullet) Include a corporate resolution with corporate seal or a signature guarantee. EXECUTORS, ADMINISTRATORS, CONSERVATORS, GUARDIANS (bullet) Call 1-800-544-6666 for instructions. WIRE ALL ACCOUNT TYPES EXCEPT RETIREMENT (bullet) You must sign up for the wire feature before using it. To verify that it is in place, call 1-800-544-6666. Minimum wire: $5,000. (bullet) Your wire redemption request must be received by Fidelity before 4 p.m. Eastern time for money to be wired on the next business day.
(TDD_GRAPHIC) TDD - SERVICE FOR THE DEAF AND HEARING-IMPAIRED: 1-800-544-0118 INVESTOR SERVICES Fidelity provides a variety of services to help you manage your account. INFORMATION SERVICES FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days a year. Whenever you call, you can speak with someone equipped to provide the information or service you need. STATEMENTS AND REPORTS that Fidelity sends to you include the following: (bullet) Confirmation statements (after every transaction, except reinvestments, that affects your account balance or your account registration) (bullet) Account statements (quarterly) (bullet) Fund reports (every six months) To reduce expenses, only one copy of most financial reports will be mailed to your household, even if you have more than one account in a fund. Call 1-800-544-6666 if you need copies of financial reports or historical account information. TRANSACTION SERVICES EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other Fidelity funds by telephone or in writing . The shares you exchange will carry credit for any sales charge you previously paid in connection with their purchase. Note that exchanges out of funds are limited to four per calendar year and that they may have tax consequences for you. For complete policies and restrictions governing exchanges, including circumstances under which a shareholder's exchange privilege may be suspended or revoked, see page . SYSTEMATIC WITHDRAWAL PLANS let you set up monthly or quarterly redemptions from your account. Because a sales charge may apply to your purchase, you may not want to set up a systematic withdrawal plan during a period when you are buying shares on a regular basis. FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by phone between your bank account and your fund account. Most transfers are complete within three business days of your call. REGULAR INVESTMENT PLANS One easy way to pursue your financial goals is to invest money regularly. Fidelity offers convenient services that let you transfer money into your fund account, or between fund accounts, automatically. While regular investment plans do not guarantee a profit and will not protect you against loss in a declining market, they can be an excellent way to invest for retirement, a home, educational expenses, and other long-term financial goals. Certain restrictions apply for retirement accounts. Call 1-800-544-6666 for more information. REGULAR INVESTOR PLANS FIDELITY AUTOMATIC ACCOUNT BUILDER SM TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND MINIMUM FREQUENCY SETTING UP OR CHANGING $100 Monthly or (bullet) For a new account, quarterly complete the appropriate section on the fund application. (bullet) For existing accounts, call 1-800-544-6666 for an application. (bullet) To change the amount or frequency of your investment, call 1-800- 544-6666 at least three business days prior to your next scheduled investment date. DIRECT DEPOSIT TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA MINIMUM FREQUENCY SETTING UP OR CHANGING $100 Every pay (bullet) Check the period appropriate box on the fund application, or call 1-800-544-6666 for an authorization form. (bullet) Changes require a new authorization form. FIDELITY AUTOMATIC EXCHANGE SERVICE TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND MINIMUM FREQUENCY SETTING UP OR CHANGING $100 Monthly, (bullet) To establish, call bimonthly, 1-800-544-6666 quarterly, or after both accounts annually are opened . (bullet) To c hange the amount or frequency of your investment, call 1-800-544-6666 . A BECAUSE THEIR SHARE PRICES FLUCTUATE, THESE FUNDS MAY NOT BE APPROPRIATE CHOICES FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK. <r>SHAREHOLDER AND ACCOUNT POLICIES</r> DIVIDENDS, CAPITAL GAINS, AND TAXES Each fund distributes substantially all of its net investment income and capital gains to shareholders each year . N ormally , dividends and capital gains are distributed in December. DISTRIBUTION OPTIONS When you open an account, specify on your application how you want to receive your distributions. If the option you prefer is not listed on the application, call 1-800-544-6666 for instructions. Each fund offers four options: 1. REINVESTMENT OPTION. Your dividend and capital gain distributions will be automatically reinvested in additional shares of the fund. If you do not indicate a choice on your application, you will be assigned this option. 2. INCOME-EARNED OPTION. Your capital gain distributions will be automatically reinvested, but you will be sent a check for each dividend distribution. 3. CASH OPTION. You will be sent a check for each dividend and capital gain distribution. 4. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and capital gain distributions will be automatically invested in another identically registered Fidelity fund. FOR RETIREMENT ACCOUNTS, all distributions are automatically reinvested. When you are over 59 years old, you can receive distributions in cash. When a fund deducts a distribution from its NAV , the reinvestment price is the fund's NAV at the close of business that day. Cash distribution checks will be mailed within seven days. TAXES As with any investment, you should consider how your investment in the fund will be taxed. If your account is not a tax-deferred retirement account, you should be aware of the following tax implications: TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax, and may also be subject to state or local taxes. If you live outside the United States, your distributions could also be taxed by the country in which you reside. Your distributions are taxable when they are paid, whether you take them in cash or reinvest them in additional shares. However, distributions declared in December and paid in January are taxable as if they were paid on December 31. For federal tax purposes, each fund's income and short-term capital gain distributions are taxed as dividends; long-term capital gain distributions are taxed as long-term capital gains. Every January, Fidelity will send you and the IRS a statement showing the taxable distributions paid to you in the previous year. TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other Fidelity funds - are subject to capital gains tax. A capital gain or loss is the difference between the cost of your shares and the price you receive when you sell them. Whenever you sell shares of a fund, Fidelity will send you a confirmation statement showing how many shares you sold and at what price. You will also receive a consolidated transaction statement every January. However, it is up to you or your tax preparer to determine whether this sale resulted in a capital gain and, if so, the amount of tax to be paid. Be sure to keep your regular account statements; the information they contain will be essential in calculating the amount of your capital gains. "BUYING A DIVIDEND." If you buy shares just before a fund deducts a distribution from its NAV , you will pay the full price for the shares and then receive a portion of the price back as a taxable distribution. UNDERSTANDING DISTRIBUTIONS As a fund shareholder, you are entitled to your share of the fund's net income and gains on its investments. The fund passes these earnings along to its investors as DISTRIBUTIONS. Each fund earns dividends from stocks and interest from bond, money market and other investments. These are passed along as DIVIDEND DISTRIBUTIONS. A fund realizes capital gains whenever it sells securities for a higher price than it paid for them. These are passed along as CAPITAL GAIN DISTRIBUTIONS. (checkmark) EFFECT OF FOREIGN TAXES. A fund sometimes pays withholding or other taxes to foreign governments during the year. These taxes reduce the fund's dividends, but are included in the taxable income reported on your tax statement. You may be able to claim an offsetting tax credit or itemized deduction for foreign taxes paid by the fund. Your tax statement will generally show the amount of foreign tax for which a credit or deduction may be available. CURRENCY CONSIDERATIONS. If a fund's dividends exceed its taxable income in any year, which is sometimes the result of currency-related losses, all or a portion of the fund's dividends may be treated as a return of capital to shareholders for tax purposes. To minimize the risk of a return of capital, a fund may adjust its dividends to take currency fluctuations into account, which may cause the dividends to vary. Any return of capital will reduce the cost basis of your shares, which will result in a higher reported capital gain or a lower reported capital loss when you sell your shares. The statement you receive in January will specify if any distributions included a return of capital. There are some tax requirements that all funds must follow in order to avoid federal taxation. In its effort to adhere to these requirements, a fund may have to limit its investment activity in some types of instruments. TRANSACTION DETAILS THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE) is open. Fidelity normally calculates each fund's NAV and offering price at the close of business of the NYSE, usually 4 p.m. Eastern time. EACH FUND'S NAV is the value of a single share. The NAV is computed by adding the value of the fund's investments, cash, and other assets, subtracting its liabilities, and then dividing the result by the number of shares outstanding. Each fund's assets are valued primarily on the basis of market quotations or, if quotations are not readily available, by a method that the Board of Trustees believes accurately reflects fair value. Foreign securities are valued on the basis of quotations from the primary market in which they are traded, and are translated from the local currency into U.S. dollars using current exchange rates. EACH FUND'S OFFERING PRICE (price to buy one share)is the fund's NAV plus a sales charge. The sales charge is 3% of the offering price, or 3.09% of the net amount invested for the funds with the exception of International Growth & Income. International Growth & Income's sales charge is 2% of the offering price or 2.04% of the offering price. The REDEMPTION PRICE (price to sell one share) is the fund's NAV. WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that your Social Security or taxpayer identification number is correct and that you are not subject to 31% backup withholding for failing to report income to the IRS. If you violate IRS regulations, the IRS can require a fund to withhold 31% of your taxable distributions and redemptions. YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will not be responsible for any losses resulting from unauthorized transactions if it follows reasonable procedures designed to verify the identi t y of the caller. Fidelity will request personalized security codes or other information, and may also record calls. You should verify the accuracy of your confirmation statements immediately after you receive them. If you do not want the ability to redeem and exchange by telephone, call Fidelity for instructions. IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods of unusual market activity), consider placing your order by mail or by visiting a Fidelity Investor Center. EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period of time. Each fund also reserves the right to reject any specific purchase order, including certain purchases by exchange. See "Exchange Restrictions" on page . Purchase orders may be refused if, in FMR's opinion, they are of a size that would disrupt management of a fund. WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the next offering price calculated after your order is received and accepted. Note the following: (bullet) All of your purchases must be made in U.S. dollars and checks must be drawn on U.S. banks. (bullet) Fidelity does not accept cash. (bullet) When making a purchase with more than one check, each check must have a value of at least $50. (bullet) Each fund reserves the right to limit the number of checks processed at one time. (bullet) If your check does not clear, your purchase will be cancelled and you could be liable for any losses or fees a fund or its transfer agent has incurred. TO AVOID THE COLLECTION PERIOD associated with check and Money Line purchases, consider buying shares by bank wire, U.S. Postal money order, U.S. Treasury check, Federal Reserve check, or d irect d eposit instead. YOU MAY BUY OR SELL SHARES OF THE FUNDS (AT THE OFFERING PRICE) OR SELL THEM THROUGH A BROKER, who may charge you a fee for this service. If you invest through a broker or other institution, read its program materials for any additional service features or fees that may apply. CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with Fidelity Distributors Corporation (FDC) may enter confirmed purchase orders on behalf of customers by phone, with payment to follow no later than the time when a fund is priced on the following business day. If payment is not received by that time, the financial institution could be held liable for resulting fees or losses. WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the next NAV calculated after your request is received and accepted. Note the following: (bullet) Normally, redemption proceeds will be mailed to you on the next business day, but if making immediate payment could adversely affect a fund, it may take up to seven days to pay you. (bullet) Fidelity Money Line redemptions generally will be credited to your bank account on the second or third business day after your phone call. (bullet) Each fund may hold payment on redemptions until it is reasonably satisfied that investments made by check or Fidelity Money Line have been collected, which can take up to seven business days. (bullet) Redemptions may be suspended or payment dates postponed on days when the NYSE is closed (other than weekends or holidays), when trading on the NYSE is restricted, or as permitted by the SEC. THE REDEMPTION FEE for Emerging Markets, Latin America, and Southeast Asia, if applicable, will be deducted from the amount of your redemption. This fee is paid to the fund rather than FMR, and it does not apply to shares that were acquired through reinvestment of distributions. If shares were not all held for the same length of time, those shares you held longest will be redeemed first for purposes of determining whether the fee applies. IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days' notice to reestablish the minimum balance. If you do not increase your balance, Fidelity reserves the right to close your account and send the proceeds to you. Your shares will be redeemed at the NAV on the day your account is closed. FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing historical account documents, that are beyond the normal scope of its services. FDC collects the proceeds from each fund 's sales charge and may pay a portion of them to securities dealers who have sold the fund's shares, or to others, including banks and other financial institutions (qualified recipients), under special arrangements in connection with FDC's sales activities. The sales charge paid is 2.75% of the offering price (except for International Growth & Income) which is 1.80%. FDC may, at its own expense, provide promotional incentives to q ualified r ecipients who support the sale of shares of the funds without reimbursement from the funds. In some instances, these incentives may be offered only to certain institutions whose representatives provide services in connection with the sale or expected sale of significant amounts of shares. EXCHANGE RESTRICTIONS As a shareholder, you have the privilege of exchanging shares of a fund for shares of other Fidelity funds. However, you should note the following: (bullet) The fund you are exchanging into must be registered for sale in your state. (bullet) You may only exchange between accounts that are registered in the same name, address, and taxpayer identification number. (bullet) Before exchanging into a fund, read its prospectus. (bullet) If you exchange into a fund with a sales charge, you pay the percentage-point difference between that fund's sales charge and any sales charge you have previously paid in connection with the shares you are exchanging. For example, if you had already paid a sales charge of 2% on your shares and you exchange them into a fund with a 3% sales charge, you would pay an additional 1% sales charge. (bullet) Exchanges may have tax consequences for you. (bullet) Because excessive trading can hurt fund performance and shareholders, each fund reserves the right to temporarily or permanently terminate the exchange privilege of any investor who makes more than four exchanges out of the fund per calendar year. Accounts under common ownership or control, including accounts with the same taxpayer identification number, will be counted together for purposes of the four exchange limit. (bullet) Each exchange limit may be modified for accounts in certain institutional retirement plans to conform to plan exchange limits and Department of Labor regulations. See your plan materials for further information. (bullet) Each fund also reserves the right to refuse exchange purchases by any person or group if, in FMR's judgment, the fund would be unable to invest the money effectively in accordance with its investment objective and policies, or would otherwise potentially be adversely affected. (bullet) Your exchanges may be restricted or refused if the funds receive or anticipate simultaneous orders affecting significant portions of the funds' assets. In particular, a pattern of exchanges that coincide with a "market timing" strategy may be disruptive to the funds. Although the funds will attempt to give you prior notice whenever they are reasonably able to do so, they may impose these restrictions at any time. The funds reserve the right to terminate or modify the exchange privilege in the future. OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose administrative fees of up to $7.50 and redemption fees of up to 1.50% on exchanges. Check each fund's prospectus for details. SALES CHARGE REDUCTIONS AND WAIVERS REDUCTIONS. A fund's sales charge (except for International Growth & Income) may be reduced if you invest directly with Fidelity or through prototype or prototype-like retirement plans sponsored by FMR or FMR Corp. The amount you invest, plus the value of your account, must fall within the ranges shown below. However, purchases made with assistance or intervention from a financial intermediary are not eligible. Call Fidelity to see if your purchase qualifies. Net amount Ranges Sales charge invested $0 - 249, 999 3% 3.09% $250,000 - 499,999 2% 2.04% $500,000 - 999,999 1% 1.01% $1,000,000 or more none none The sales charge for any of the funds will also be reduced by the percentage of any sales charge you previously paid on investments in other Fidelity funds (not including Fidelity's Foreign Currency Funds). Similarly, your shares carry credit for any sales charge you would have paid if the reductions in the table above had not been available. These sales charge credits only apply to purchases made in one of the ways listed below, and only if you continuously owned Fidelity fund shares or a Fidelity brokerage core account, or participated in The CORPORATEplan for Retirement Program, and only to purchases made in one of the following ways: 1. By exchange from another Fidelity fund. 2. With proceeds of a transaction within a Fidelity brokerage core account, including any free credit balance, core money market fund, or margin availability, to the extent such proceeds were derived from redemption proceeds from another Fidelity fund. 3. With redemption proceeds from one of Fidelity's Foreign Currency Funds , if the Foreign Currency Fund shares were originally purchased with redemption proceeds from a Fidelity fund. 4. Through the Directed Dividends Option (see page ). 5. By participants in The CORPORATEplan for Retirement Program when shares are purchased through plan-qualified loan repayments, and for exchanges into and out of the Managed Income Portfolio. WAIVERS. The fund's sales charge will not apply: 1. If you buy shares as part of an employee benefit plan having more than 200 eligible employees or a minimum of $3 million in plan assets invested in Fidelity mutual funds. Plan sponsors are encouraged to notify Fidelity when they first satisfy either of these requirements. 2. To shares in a Fidelity Rollover IRA account purchased with the proceeds of a distribution from an employee benefit plan, provided that at the time of the distribution, the employer or its affiliate maintained a plan that both qualified for waiver (1) above and had at least some of its assets invested in Fidelity-managed products. 3. If you are a charitable organization (as defined in Section 501(c)(3) of the Internal Revenue Code) investing $100,000 or more. 4. If you purchase shares for a charitable remainder trust or life income pool established for the benefit of a charitable organization (as defined by Section 501(c)(3) of the Internal Revenue Code). 5. If you are an investor participating in the Fidelity Trust Portfolios program. 6. To shares purchased through Portfolio Advisory Services. 7. If you are a current or former trustee or officer of a Fidelity fund or a current or retired officer, director, or full-time employee of FMR Corp. or its direct or indirect subsidiaries (a Fidelity Trustee or employee), the spouse of a Fidelity trustee or employee, a Fidelity trustee or employee acting as custodian for a minor child, or a person acting as trustee of a trust for the sole benefit of the minor child of a Fidelity trustee or employee. 8. If you are a bank trust officer, registered representative, or other employee of a qualified recipient, as defined on page . 9. To contributions and exchanges to a prototype or prototype-like retirement plan sponsored by FMR Corp. or FMR and which is marketed and distributed directly to plan sponsors or participants without any assistance or intervention from any intermediary distribution channel. 10. If you are a registered investment adviser (RIA) purchasing for your discretionary accounts, provided you execute a Fidelity RIA load waiver agreement which specifies certain aggregate minimum and operating provisions. This waiver is available only for shares purchased directly from Fidelity, without a broker, and is unavailable if the RIA is part of an organization principally engaged in the brokerage business. 11. If you are a trust institution or bank trust department purchasing for your non-discretionary, non-retirement fiduciary accounts, provided you execute a Fidelity Trust load waiver agreement which specifies certain aggregate minimum and operating provisions. This waiver is available only for shares purchased either directly from Fidelity or through a bank-affiliated broker, and is available, if the trust department or institution is part of an organization not principally engaged in banking or trust activities. These waivers must be qualified through FDC in advance. More detailed information about waivers (1), (2), (5), and (9) is contained in the Statement of Additional Information. A representative of your plan or organization should call Fidelity for more information. FIDELITY'S INTERNATIONAL EQUITY FUNDS FIDELITY DIVERSIFIED INTERNATIONAL FUND, FIDELITY INTERNATIONAL GROWTH & INCOME FUND, FIDELITY OVERSEAS FUND, FIDELITY WORLDWIDE FUND, FIDELITY CANADA FUND, FIDELITY EUROPE FUND, FIDELITY EUROPE CAPITAL APPRECIATION FUND, FIDELITY JAPAN FUND, FIDELITY PACIFIC BASIN FUND, FIDELITY EMERGING MARKETS FUND, FIDELITY LATIN AMERICA FUND, AND FIDELITY SOUTHEAST ASIA FUND FUNDS OF FIDELITY INVESTMENT TRUST STATEMENT OF ADDITIONAL INFORMATION FEBRUARY 28, 199 4 This Statement is not a prospectus but should be read in conjunction with the funds' current Prospectus (dated February 28, 199 4 ). Please retain this document for future reference. Each fund's Annual Report for the fiscal year ended October 31, 1993 is incorporated herein by reference. To obtain an additional copy of the Prospectus or the Annual Report, please call Fidelity Distributors Corporation at 1-800-544-8888. TABLE OF CONTENTS PAGE
Investment Policies and Limitations Special Considerations Affecting Europe Special Considerations Affecting the Japan, the Pacific Basin, and Southeast Asia Special Considerations Affecting Canada Special Considerations Affecting Latin America Special Considerations Affecting Africa Portfolio Transactions Valuation of Portfolio Securities Performance Additional Purchase and Redemption Information Distributions and Taxes FMR Trustees and Officers Management Contracts Contracts With Companies Affiliated With FMR Description of the Trust Financial Statements Appendix
INVESTMENT ADVISER Fidelity Management & Research Company (FMR) INVESTMENT SUB-ADVISORS Fidelity Management & Research (U.K.) Inc. (FMR U.K.) Fidelity Management & Research (Far East) Inc. (FMR Far East) Fidelity Investments Japan Ltd. (FIJ) Fidelity International Investment Advisors (FIIA) Fidelity International Investment Advisors (U.K.) Limited (FIIAL U.K.) DISTRIBUTOR Fidelity Distributors Corporation (FDC) TRANSFER AGENT Fidelity Service Co. (FSC) INT- ptb-294 INVESTMENT POLICIES AND LIMITATIONS The following policies and limitations supplement those set forth in the Prospectus. Unless otherwise noted, whenever an investment policy or limitation states a maximum percentage of a fund's assets that may be invested in any security or other asset, or sets forth a policy regarding quality standards, such standard or percentage limitation will be determined immediately after and as a result of each fund's acquisition of such security or other asset. Accordingly, any subsequent change in values, net assets, or other circumstances will not be considered when determining whether the investment complies with the funds' investment policies and limitations. Each fund's fundamental investment policies and limitations cannot be changed without approval by a "majority of the outstanding voting securities" (as defined in the Investment Company Act of 1940) of a fund. However, for Diversified International Fund, International Growth & Income Fund, Worldwide Fund, Canada Fund, Europe Capital Appreciation Fund, Japan Fund, Emerging Markets Fund, Latin America Fund, and Southeast Asia Fund - except for the fundamental investment limitations set forth below - the investment policies and limitations described in this Statement of Additional Information are not fundamental and may be changed without shareholder approval. INVESTMENT POLICIES AND LIMITATIONS OF DIVERSIFIED INTERNATIONAL FUND THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT: (1) with respect to 75% of the fund's total assets, purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government, or any of its agencies or instrumentalities) if, as a result thereof, (a) more than 5% of the fund's total assets would be invested in the securities of that issuer, or (b) the fund would hold more than 10% of the outstanding voting securities of that issuer; (2) issue senior securities, except as permitted under the Investment Company Act of 1940; (3) borrow money, except that the fund may borrow money for temporary or emergency purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of its total assets (including the amount borrowed) less liabilities (other than borrowings). Any borrowings that come to exceed this amount will be reduced within three days (not including Sundays and holidays) to the extent necessary to comply with the 33 1/3% limitation; (4) underwrite securities issued by others, except to the extent that the fund may be considered an underwriter within the meaning of the Securities Act of 1933 in the disposition of restricted securities; (5) purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities) if, as a result, more than 25% of the fund's total assets would be invested in the securities of companies whose principal business activities are in the same industry; (6) purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business); (7) purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities); or (8) lend any security or make any other loan if, as a result, more than 33 1/3% of its total assets would be lent to other parties, but this limitation does not apply to purchases of debt securities or to repurchase agreements. THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL. (i) The fund does not currently intend to sell securities short, unless it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short, and provided that transactions in futures and options are not deemed to constitute selling securities short. (ii) The fund does not currently intend to purchase securities on margin, except that the fund may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin payments in connection with futures contracts and options on futures contracts shall not constitute purchasing securities on margin. (iii) The fund may borrow money only (a) from a bank or from a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) by engaging in reverse repurchase agreements with any party (reverse repurchase agreements are treated as borrowings for purposes of fundamental investment limitation (3)). The fund will not purchase any security while borrowings representing more than 5% of its total assets are outstanding. The fund will not borrow from other funds advised by FMR or its affiliates if total outstanding borrowings immediately after such borrowing would exceed 15% of the fund's total assets. (iv) The fund does not currently intend to purchase any security if, as a result, more than 15% of its net assets would be invested in securities that are deemed to be illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. (v) The fund does not currently intend to invest in securities of real estate investment trusts that are not readily marketable, or to invest in securities of real estate limited partnerships that are not listed on the New York Stock Exchange or the American Stock Exchange or traded on the NASDAQ National Market System. (vi) The fund does not currently intend to lend assets other than securities to other parties, except by (a) lending money (up to 5% of the fund's net assets) to a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) acquiring loans, loan participations, or other forms of direct debt instruments and, in connection therewith, assuming any associated unfunded commitments to the sellers. (This limitation does not apply to purchases of debt securities or to repurchase agreements.) (vii) The fund does not currently intend to (a) purchase securities of other investment companies, except in the open market where no commission except the ordinary broker's commission is paid, or (b) purchase or retain securities issued by other open-end investment companies. Limitations (a) and (b) do not apply to securities received as dividends, through offers of exchange, or as a result of a reorganization, consolidation, or merger. (viii) The fund does not currently intend to purchase the securities of any issuer (other than securities issued or guaranteed by domestic or foreign governments or political subdivisions thereof) if, as a result, more than 5% of its total assets would be invested in the securities of business enterprises that, including predecessors, have a record of less than three years of continuous operation. (ix) The fund does not currently intend to purchase warrants, valued at the lower of cost or market, in excess of 10% of the fund's net assets. Included in that amount, but not to exceed 2% of net assets, are warrants whose underlying securities are not traded on principal domestic or foreign exchanges. Warrants acquired by the fund in units or attached to securities are not subject to these restrictions. (x) The fund does not currently intend to invest in oil, gas, or other mineral exploration or development programs or leases. For the fund's limitations on futures and options transactions, see the section entitled "Limitations on Futures and Options Transactions" beginning on page 23. INVESTMENT LIMITATIONS OF INTERNATIONAL GROWTH & INCOME FUND THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT: (1) purchase the securities of any issuer (other than obligations issued or guaranteed by the government of the United States or its agencies or instrumentalities) if, as a result, more than 5% of the value of its total assets would be invested in the securities of any single issuer, or it would hold more than 10% of the voting securities of such issuer, except that up to 25% of the fund's assets may be invested without regard to these limitations; (2) issue senior securities, except as permitted under the Investment Company Act of 1940; (3) borrow money, except that the fund may borrow money for temporary or emergency purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of the value of its total assets (including the amount borrowed) less liabilities (other than borrowings). Any borrowings that come to exceed 33 1/3% of the fund's total assets by reason of a decline in net assets will be reduced within three business days to the extent necessary to comply with the 33 1/3% limitation; (4) underwrite securities issued by others (except to the extent that the fund may be deemed to be an underwriter within the meaning of the Securities Act of 1933 in the disposition of restricted securities); (5) purchase the securities of any issuer (other than obligations issued or guaranteed by the government of the United States or its agencies or instrumentalities, or by foreign governments or their political subdivisions, or by supranational organizations) if, as a result, more than 25% of the fund's total assets (taken at current value) would be invested in the securities of issuers having their principal business activities in the same industry; (6) purchase or sell real estate (but this shall not prevent the fund from investing in marketable securities issued by companies such as real estate investment trusts which deal in real estate or interests therein and participation interests in pools of real estate mortgage loans); (7) purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities); or (8) lend any security or make any other loan if, as a result, more than 33 1/3% of its total assets would be lent to other parties (but this limitation does not apply to purchases of debt securities or to repurchase agreements). Investment limitation (3) is construed in conformity with the Investment Company Act of 1940, and, accordingly, "three business days" means three days, exclusive of Sundays and holidays. THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL. (i) The fund does not currently intend to sell securities short, unless it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short, and provided that transactions in futures contracts and options are not deemed to constitute selling securities short. (ii) The fund does not currently intend to purchase securities on margin, except that the fund may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin payments in connection with futures contracts and options on futures contracts shall not constitute purchasing securities on margin. (iii) The fund may borrow money only (a) from a bank or from a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) by engaging in reverse repurchase agreements with any party (reverse repurchase agreements are treated as borrowings for purposes of fundamental investment limitation (3)). The fund will not purchase any security while borrowings representing more than 5% of its total assets are outstanding. The fund will not borrow from other funds advised by FMR or its affiliates if total outstanding borrowings immediately after such borrowing would exceed 15% of the fund's total assets. (iv) The fund does not currently intend to purchase any security if, as a result, more than 15% of its net assets would be invested in securities that are deemed to be illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. (v) The fund does not currently intend to invest in securities of real estate investment trusts that are not readily marketable, or to invest in securities of real estate limited partnerships that are not listed on the New York Stock Exchange or the American Stock Exchange or traded on the NASDAQ National Market System. (vi) The fund does not currently intend to lend assets other than securities to other parties, except by (a) lending money (up to 5% of the fund's net assets) to a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) acquiring loans, loan participations, or other forms of direct debt instruments and, in connection therewith, assuming any associated unfunded commitments of the sellers. (This limitation does not apply to purchases of debt securities or to repurchase agreements). (vii) The fund does not currently intend to (a) purchase securities of other investment companies, except in the open market where no commission except the ordinary broker's commission is paid, or (b) purchase or retain securities issued by other open-end investment companies. Limitations (a) and (b) do not apply to securities received as dividends, through offers of exchange, or as a result of a reorganization, consolidation, or merger. (viii) The fund does not currently intend to purchase the securities of any issuer (other than securities issued or guaranteed by domestic or foreign governments or political subdivisions thereof) if, as a result, more than 5% of its total assets would be invested in the securities of business enterprises that, including predecessors, have a record of less than three years of continuous operation. (ix) The fund does not currently intend to purchase warrants, valued at the lower of cost or market, in excess of 10% of the fund's net assets. Included in that amount, but not to exceed 2% of net assets, are warrants whose underlying securities are not traded on principal domestic or foreign exchanges. Warrants acquired by the fund in units or attached to securities are not subject to these restrictions. (x) The fund does not currently intend to invest in oil, gas, or other mineral exploration or development programs or leases. For the fund's limitations on futures and options transactions, see the section entitled "Limitations on Futures and Options Transactions" beginning on page 23. INVESTMENT LIMITATIONS OF OVERSEAS FUND THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT: (1) with respect to 75% of the fund's total assets, purchase the securities of any issuer (other than obligations issued or guaranteed by the government of the United States, its agencies or instrumentalities) if, as a result thereof: (a) more than 5% of the fund's total assets (taken at current value) would be invested in the securities of such issuer, or (b) the fund would hold more than 10% of the voting securities of such issuer; (2) issue senior securities, except as permitted under the Investment Company Act of 1940; (3) borrow money, except that the fund may borrow money for temporary or emergency purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of the value of its total assets (including the amount borrowed), less liabilities (other than borrowings). Any borrowings that come to exceed 33 1/3% of the fund's total assets by reason of a decline in net assets will be reduced within three business days to the extent necessary to comply with the 33 1/3% limitation; (4) underwrite any issue of securities (except to the extent that the fund may be deemed to be an underwriter within the meaning of the Securities Act of 1933 in the disposition of restricted securities); (5) purchase the securities of any issuer (other than obligations issued or guaranteed by the government of the United States, its agencies or instrumentalities) if, as a result thereof, more than 25% of the fund's total assets (taken at current value) would be invested in the securities of issuers having their principal business activities in the same industry; (6) purchase or sell real estate (but this shall not prevent the fund from investing in marketable securities issued by companies such as real estate investment trusts which deal in real estate or interests therein and participation interests in pools of real estate mortgage loans); (7) purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities); or (8) lend any security or make any other loan if, as a result, more than 33 1/3% of its total assets would be lent to other parties (but this limitation does not apply to purchases of debt securities or to repurchase agreements). Investment limitation (3) is construed in conformity with the Investment Company Act of 1940, and, accordingly, "three business days" means three days, exclusive of Sundays and holidays. THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL. (i) The fund does not currently intend to sell securities short, unless it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short, and provided that transactions in futures contracts and options are not deemed to constitute selling securities short. (ii) The fund does not currently intend to purchase securities on margin, except that the fund may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin payments in connection with futures contracts and options on futures contracts shall not constitute purchasing securities on margin. (iii) The fund may borrow money only (a) from a bank or from a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) by engaging in reverse repurchase agreements with any party (reverse repurchase agreements are treated as borrowings for purposes of fundamental investment limitation (3)). The fund will not purchase any security while borrowings representing more than 5% of its total assets are outstanding. The fund will not borrow from other funds advised by FMR or its affiliates if total outstanding borrowings immediately after such borrowing would exceed 15% of the fund's total assets. (iv) The fund does not currently intend to purchase any security if, as a result, more than 15% of its net assets would be invested in securities that are deemed to be illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. (v) The fund does not currently intend to invest in securities of real estate investment trusts that are not readily marketable, or to invest in securities of real estate limited partnerships that are not listed on the New York Stock Exchange or the American Stock Exchange or traded on the NASDAQ National Market System. (vi) The fund does not currently intend to lend assets other than securities to other parties, except by (a) lending money (up to 5% of the fund's net assets) to a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) acquiring loans, loan participations, or other forms of direct debt instruments and, in connection therewith, assuming any associated unfunded commitments of the sellers. (This limitation does not apply to purchases of debt securities or to repurchase agreements). (vii) The fund does not currently intend to (a) purchase securities of other investment companies, except in the open market where no commission except the ordinary broker's commission is paid, or (b) purchase or retain securities issued by other open-end investment companies. Limitations (a) and (b) do not apply to securities received as dividends, through offers of exchange, or as a result of a reorganization, consolidation, or merger. (viii) The fund does not currently intend to purchase the securities of any issuer (other than securities issued or guaranteed by domestic or foreign governments or political subdivisions thereof) if, as a result, more than 5% of its total assets would be invested in the securities of business enterprises that, including predecessors, have a record of less than three years of continuous operation. (ix) The fund does not currently intend to purchase warrants, valued at the lower of cost or market, in excess of 10% of the fund's net assets. Included in that amount, but not to exceed 2% of net assets, are warrants whose underlying securities are not traded on principal domestic or foreign exchanges. Warrants acquired by the fund in units or attached to securities are not subject to these restrictions. (x) The fund does not currently intend to invest in oil, gas, or other mineral exploration or development programs or leases. (xi) The fund does not currently intend to purchase the securities of any issuer if those officers and Trustees of the trust and those officers and directors of FMR who individually own more than 1/2 of 1% of the securities of such issuer together own more than 5% of such issuer's securities. For the fund's limitations on futures and options transactions, see the section entitled "Limitations on Futures and Options Transactions" beginning on page 23. INVESTMENT LIMITATIONS OF WORLDWIDE FUND THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT: (1) with respect to 75% of the fund's total assets, purchase the securities of any issuer (other than obligations issued or guaranteed by the government of the United States, or any of its agencies or instrumentalities) if, as a result thereof, (a) more than 5% of the fund's total assets would be invested in the securities of such issuer, or (b) the fund would hold more than 10% of the voting securities of such issuer; (2) issue senior securities, except as permitted under the Investment Company Act of 1940; (3) borrow money, except that the fund may borrow money for temporary or emergency purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of the value of its total assets (including the amount borrowed) less liabilities (other than borrowings). Any borrowings that come to exceed 33 1/3% of the value of the fund's total assets by reason of a decline in net assets will be reduced within three business days to the extent necessary to comply with the 33 1/3% limitation; (4) underwrite securities issued by others (except to the extent that the fund may be deemed to be an underwriter within the meaning of the Securities Act of 1933 in the disposition of restricted securities); (5) purchase the securities of any issuer (other than obligations issued or guaranteed by the government of the United States or any of its agencies or instrumentalities) if, as a result, more than 25% of the fund's total assets (taken at current value) would be invested in the securities of issuers having their principal business activities in the same industry; (6) purchase or sell real estate unless acquired as a result of ownership of securities (but this shall not prevent the fund from purchasing and selling marketable securities issued by companies or other entities or investment vehicles that deal in real estate or interests therein, nor shall this prevent the fund from purchasing interests in pools of real estate mortgage loans); (7) purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities); or (8) lend any security or make any other loan if, as a result, more than 33 1/3% of its total assets would be lent to other parties (but this limitation does not apply to purchases of debt securities or to repurchase agreements). Investment limitation (3) is construed in conformity with the Investment Company Act of 1940, and, accordingly, "three business days" means three days, exclusive of Sundays and holidays. THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL. (i) The fund does not currently intend to sell securities short, unless it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short, and provided that transactions in futures contracts and options are not deemed to constitute selling securities short. (ii) The fund does not currently intend to purchase securities on margin, except that the fund may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin payments in connection with futures contracts and options on futures contracts shall not constitute purchasing securities on margin. (iii) The fund may borrow money only (a) from a bank or from a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) by engaging in reverse repurchase agreements with any party (reverse repurchase agreements are treated as borrowings for purposes of fundamental investment limitation (3)). The fund will not purchase any security while borrowings representing more than 5% of its total assets are outstanding. The fund will not borrow from other funds advised by FMR or its affiliates if total outstanding borrowings immediately after such borrowing would exceed 15% of the fund's total assets. (iv) The fund does not currently intend to purchase any security if, as a result, more than 15% of its net assets would be invested in securities that are deemed to be illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. (v) The fund does not currently intend to invest in securities of real estate investment trusts that are not readily marketable, or to invest in securities of real estate limited partnerships that are not listed on the New York Stock Exchange or the American Stock Exchange or traded on the NASDAQ National Market System. (vi) The fund does not currently intend to purchase or sell futures contracts on physical commodities. (vii) The fund does not currently intend to lend assets other than securities to other parties, except by (a) lending money (up to 5% of the fund's net assets) to a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) acquiring loans, loan participations, or other forms of direct debt instruments and, in connection therewith, assuming any associated unfunded commitments of the sellers. (This limitation does not apply to purchases of debt securities or to repurchase agreements). (viii) The fund does not currently intend to (a) purchase securities of other investment companies, except in the open market where no commission except the ordinary broker's commission is paid, or (b) purchase or retain securities issued by other open-end investment companies. Limitations (a) and (b) do not apply to securities received as dividends, through offers of exchange, or as a result of a reorganization, consolidation, or merger. (ix) The fund does not currently intend to purchase the securities of any issuer (other than securities issued or guaranteed by domestic or foreign governments or political subdivisions thereof) if, as a result, more than 5% of its total assets would be invested in the securities of business enterprises that, including predecessors, have a record of less than three years of continuous operation. (x) The fund does not currently intend to purchase warrants, valued at the lower of cost or market, in excess of 10% of the fund's net assets. Included in that amount, but not to exceed 2% of net assets, are warrants whose underlying securities are not traded on principal domestic or foreign exchanges. Warrants acquired by the fund in units or attached to securities are not subject to these restrictions. (xi) The fund does not currently intend to invest in oil, gas, or other mineral exploration or development programs or leases. For the fund's limitations on futures and options transactions, see the section entitled "Limitations on Futures and Options Transactions" beginning on page 23. INVESTMENT LIMITATIONS OF CANADA FUND THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT: (1) with respect to 75% of the fund's total assets, purchase the securities of any issuer (other than obligations issued or guaranteed by the government of the United States, or any of its agencies or instrumentalities) if, as a result thereof, (a) more than 5% of the fund's total assets would be invested in the securities of such issuer, or (b) the fund would hold more than 10% of the voting securities of such issuer; (2) issue senior securities, except as permitted under the Investment Company Act of 1940; (3) borrow money, except that the fund may borrow money for temporary or emergency purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of the value of its total assets (including the amount borrowed) less liabilities (other than borrowings). Any borrowings that come to exceed 33 1/3% of the value of the fund's total assets by reason of a decline in net assets will be reduced within three business days to the extent necessary to comply with the 33 1/3% limitation; (4) underwrite securities issued by others (except to the extent that the fund may be deemed to be an underwriter within the meaning of the Securities Act of 1933 in the disposition of restricted securities); (5) purchase the securities of any issuer (other than obligations issued or guaranteed by the government of the United States or any of its agencies or instrumentalities) if, as a result, more than 25% of the fund's total assets (taken at current value) would be invested in the securities of issuers having their principal business activities in the same industry; (6) purchase or sell real estate unless acquired as a result of ownership of securities (but this shall not prevent the fund from purchasing and selling marketable securities issued by companies or other entities or investment vehicles that deal in real estate or interests therein, nor shall this prevent the fund from purchasing interests in pools of real estate mortgage loans); (7) purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities); or (8) lend any security or make any other loan if, as a result, more than 33 1/3% of its total assets would be lent to other parties, but this limitation does not apply to purchases of debt securities or to repurchase agreements. Investment limitation (3) is construed in conformity with the 1940 Act, and, accordingly, "three business days" means three days, exclusive of Sundays and holidays. THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL. (i) The fund does not currently intend to sell securities short, unless it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short, and provided that transactions in futures contracts and options are not deemed to constitute selling securities short. (ii) The fund does not currently intend to purchase securities on margin, except that the fund may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin payments in connection with futures contracts and options on futures contracts shall not constitute purchasing securities on margin. (iii) The fund may borrow money only (a) from a bank or from a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) by engaging in reverse repurchase agreements with any party (reverse repurchase agreements are treated as borrowings for purposes of fundamental investment limitation (3)). The fund will not purchase any security while borrowings representing more than 5% of its total assets are outstanding. The fund will not borrow from other funds advised by FMR or its affiliates if total outstanding borrowings immediately after such borrowing would exceed 15% of the fund's total assets. (iv) The fund does not currently intend to purchase any security if, as a result, more than 15% of its net assets would be invested in securities that are deemed to be illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. (v) The fund does not currently intend to invest in securities of real estate investment trusts that are not readily marketable, or to invest in securities of real estate limited partnerships that are not listed on the New York Stock Exchange or the American Stock Exchange or traded on the NASDAQ National Market System. (vi) The fund does not currently intend to lend assets other than securities to other parties, except by (a) lending money (up to 5% of the fund's net assets) to a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) acquiring loans, loan participations, or other forms of direct debt instruments and, in connection therewith, assuming any associated unfunded commitments of the sellers. (This limitation does not apply to purchases of debt securities or to repurchase agreements). (vii) The fund does not currently intend to (a) purchase securities of other investment companies, except in the open market where no commission except the ordinary broker's commission is paid, or (b) purchase or retain securities issued by other open-end investment companies. Limitations (a) and (b) do not apply to securities received as dividends, through offers of exchange, or as a result of a reorganization, consolidation, or merger. (viii) The fund does not currently intend to purchase warrants, valued at the lower of cost or market, in excess of 10% of the fund's net assets. Included in that amount, but not to exceed 2% of net assets, are warrants whose underlying securities are not traded on principal domestic or foreign exchanges. Warrants acquired by the fund in units or attached to securities are not subject to these restrictions. (ix) The fund does not currently intend to invest in oil, gas, or other mineral exploration or development programs or leases. For the fund's limitations on futures and options transactions, see the section entitled "Limitations on Futures and Options Transactions" beginning on page 23. INVESTMENT LIMITATIONS OF EUROPE FUND THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT: (1) with respect to 75% of the fund's total assets, purchase the securities of any issuer (other than obligations issued or guaranteed by the government of the United States, its agencies or instrumentalities) if, as a result thereof: (i) more than 5% of the fund's total assets would be invested in the securities of such issuer or (ii) the fund would hold more than 10% of the voting securities of such issuer; (2) issue senior securities, except as permitted under the Investment Company Act of 1940; (3) borrow money, except that the fund may borrow money for temporary or emergency purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of the value of its total assets (including the amount borrowed) less liabilities (other than borrowings). Any borrowings that come to exceed 33 1/3% of a fund's total assets by reason of a decline in net assets will be reduced within three business days to the extent necessary to comply with the 33 1/3% limitation; (4) underwrite any issue of securities (except to the extent that the fund may be deemed to be an underwriter within the meaning of the Securities Act of 1933 in the disposition of restricted securities); (5) purchase the securities of any issuer (other than obligations issued or guaranteed by the government of the United States, its agencies or instrumentalities) if, as a result thereof, more than 25% of the fund's total assets (taken at current value) would be invested in the securities of issuers having their principal business activities in the same industry; (6) purchase or sell real estate (but this shall not prevent the fund from investing in marketable securities issued by companies such as real estate investment trusts which deal in real estate or interests therein and participation interests in pools of real estate mortgage loans); (7) purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities); or (8) lend any security or make any other loan if, as a result, more than 33 1/3% of the fund's total assets would be lent to other parties, but this limitation does not apply to purchases of debt securities or to repurchase agreements. Investment limitation (3) is construed in conformity with the 1940 Act, and, accordingly, "three business days" means three days, exclusive of Sundays and holidays. THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL. (i) The fund does not currently intend to sell securities short, unless it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short, and provided that transactions in futures contracts and options are not deemed to constitute selling securities short. (ii) The fund does not currently intend to purchase securities on margin, except that the fund may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin payments in connection with futures contracts and options on futures contracts shall not constitute purchasing securities on margin. (iii) The fund may borrow money only (a) from a bank or from a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) by engaging in reverse repurchase agreements with any party (reverse repurchase agreements are treated as borrowings for purposes of fundamental investment limitation (3)). The fund will not purchase any security while borrowings representing more than 5% of its total assets are outstanding. The fund will not borrow from other funds advised by FMR or its affiliates if total outstanding borrowings immediately after such borrowing would exceed 15% of the fund's total assets. (iv) The fund does not currently intend to purchase any security if, as a result, more than 15% of its net assets would be invested in securities that are deemed to be illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. (v) The fund does not currently intend to invest in securities of real estate investment trusts that are not readily marketable, or to invest in securities of real estate limited partnerships that are not listed on the New York Stock Exchange or the American Stock Exchange or traded on the NASDAQ National Market System. (vi) The fund does not currently intend to lend assets other than securities to other parties, except by (a) lending money (up to 5% of the fund's net assets) to a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) acquiring loans, loan participations, or other forms of direct debt instruments and, in connection therewith, assuming any associated unfunded commitments of the sellers. (This limitation does not apply to purchases of debt securities or to repurchase agreements). (vii) The fund does not currently intend to (a) purchase securities of other investment companies, except in the open market where no commission except the ordinary broker's commissions is paid, or (b) purchase or retain securities issued by other open-end investment companies. Limitations (a) and (b) do not apply to securities received as dividends, through offers of exchange, or as a result of a reorganization, consolidation, or merger. (viii) The fund does not currently intend to purchase warrants, valued at the lower of cost or market, in excess of 10% of the fund's net assets. Included in that amount, but not to exceed 2% of net assets, are warrants whose underlying securities are not traded on principal domestic or foreign exchanges. Warrants acquired by the fund in units or attached to securities are not subject to these restrictions. (ix) The fund does not currently intend to invest in oil, gas, or other mineral exploration or development programs or leases. For the fund's limitations on futures and options transactions, see the section entitled "Limitations on Futures and Options Transactions" beginning on page 23. INVESTMENT LIMITATIONS OF EUROPE CAPITAL APPRECIATION FUND THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT: (1) with respect to 75% of the fund's total assets, purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities) if, as a result, (a) more than 5% of the fund's total assets would be invested in the securities of that issuer, or (b) the fund would hold more than 10% of the outstanding voting securities of that issuer; (2) issue senior securities, except as permitted under the Investment Company Act of 1940; (3) borrow money, except that the fund may borrow money for temporary or emergency purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of its total assets (including the amount borrowed) less liabilities (other than borrowings). Any borrowings that come to exceed this amount will be reduced within three days (not including Sundays and holidays) to the extent necessary to comply with the 33 1/3% limitation; (4) underwrite securities issued by others except to the extent that the fund may be considered an underwriter within the meaning of the Securities Act of 1933 in the disposition of restricted securities; (5) purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities) if, as a result, more than 25% of the fund's total assets would be invested in the securities of companies whose principal business activities are in the same industry; (6) purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business); (7) purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities); or (8) lend any security or make any other loan if, as a result, more than 33 1/3% of its total assets would be lent to other parties, but this limitation does not apply to purchases of debt securities or to repurchase agreements. THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL. (i) The fund does not currently intend to sell securities short, unless it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short, and provided that transactions in futures contracts and options are not deemed to constitute selling securities short. (ii) The fund does not currently intend to purchase securities on margin, except that the fund may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin payments in connection with futures contracts and options on futures contracts shall not constitute purchasing securities on margin. (iii) The fund may borrow money only (a) from a bank or from a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) by engaging in reverse repurchase agreements with any party (reverse repurchase agreements are treated as borrowings for purposes of fundamental investment limitation (3)). The fund will not purchase any security while borrowings representing more than 5% of its total assets are outstanding. The fund will not borrow from other funds advised by FMR or its affiliates if total outstanding borrowings immediately after such borrowing would exceed 15% of the fund's total assets. (iv) The fund does not currently intend to purchase any security if, as a result, more than 15% of its net assets would be invested in securities that are deemed to be illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. (v) The fund does not currently intend to invest in securities of real estate investment trusts that are not readily marketable, or to invest in securities of real estate limited partnerships that are not listed on the New York Stock Exchange or the American Stock Exchange or traded on the NASDAQ National Market System. (vi) The fund does not currently intend to lend assets other than securities to other parties, except by (a) lending money (up to 5% of the fund's net assets) to a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) acquiring loans, loan participations, or other forms of direct debt instruments and, in connection therewith, assuming any associated unfunded commitments of the sellers. (This limitation does not apply to purchases of debt securities or to repurchase agreements). (vii) The fund does not currently intend to (a) purchase securities of other investment companies, except in the open market where no commission except the ordinary broker's commissions is paid, or (b) purchase or retain securities issued by other open-end investment companies. Limitations (a) and (b) do not apply to securities received as dividends, through offers of exchange, or as a result of a reorganization, consolidation, or merger. (viii) The fund does not currently intend to purchase the securities of any issuer (other than securities issued or guaranteed by domestic or foreign governments or political subdivisions thereof) if, as a result, more than 5% of its total assets would be invested in the securities of business enterprises that, including predecessors, have a record of less than three years of continuous operation. (ix) The fund does not currently intend to purchase warrants, valued at the lower of cost or market, in excess of 10% of the fund's net assets. Included in that amount, but not to exceed 2% of net assets, are warrants whose underlying securities are not traded on principal domestic or foreign exchanges. Warrants acquired by the fund in units or attached to securities are not subject to these restrictions. (x) The fund does not currently intend to invest in oil, gas, or other mineral exploration or development programs or leases. (xi) The fund does not currently intend to purchase the securities of any issuer if those officers and Trustees of the trust and those officers and directors of FMR who individually own more than 1/2 of 1% of the securities of such issuer together own more than 5% of such issuer's securities. For the fund's limitations on futures and options transactions, see the section entitled "Limitations on Futures and Options Transactions" beginning on page 23. INVESTMENT LIMITATIONS OF JAPAN FUND THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT: (1) With respect to 75% of the fund's total assets, purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities) if, as a result thereof, (a) more than 5% of the fund's total assets would be invested in the securities of that issuer, or (b) the fund would hold more than 10% of the outstanding voting securities of that issuer; (2) issue senior securities, except as permitted under the Investment Company Act of 1940; (3) borrow money, except that the fund may borrow money for temporary or emergency purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of its total assets (including the amount borrowed) less liabilities (other than borrowings). Any borrowings that come to exceed this amount will be reduced within three days (not including Sundays and holidays) to the extent necessary to comply with the 33 1/3% limitation; (4) underwrite securities issued by others, except to the extent that the fund may be considered an underwriter within the meaning of the Securities Act of 1933 in the disposition of restricted securities; (5) purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities) if, as a result, more than 25% of the fund's total assets would be invested in the securities of companies whose principal business activities are in the same industry; (6) purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business); (7) purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities); or (8) lend any security or make any other loan if, as a result, more than 33 1/3% of its total assets would be lent to other parties, but this limitation does not apply to purchases of debt securities or to repurchase agreements. THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL. (i) The fund does not currently intend to sell securities short, unless it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short, and provided that transactions in futures contracts and options are not deemed to constitute selling securities short. (ii) The fund does not currently intend to purchase securities on margin, except that the fund may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin payments in connection with futures contracts and options on futures contracts shall not constitute purchasing securities on margin. (iii) The fund may borrow money only (a) from a bank or from a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) by engaging in reverse repurchase agreements with any party (reverse repurchase agreements are treated as borrowings for purposes of fundamental investment limitation (3)). The fund will not purchase any security while borrowings representing more than 5% of its total assets are outstanding. The fund will not borrow from other funds advised by FMR or its affiliates if total outstanding borrowings immediately after such borrowing would exceed 15% of the fund's total assets. (iv) The fund does not currently intend to purchase any security if, as a result, more than 15% of its net assets would be invested in securities that are deemed to be illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. (v) The fund does not currently intend to invest in securities of real estate investment trusts that are not readily marketable, or to invest in securities of real estate limited partnerships that are not listed on the New York Stock Exchange or the American Stock Exchange or traded on the NASDAQ National Market System. (vi) The fund does not currently intend to lend assets other than securities to other parties, except by (a) lending money (up to 5% of the fund's net assets) to a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) acquiring loans, loan participations, or other forms of direct debt instruments and, in connection therewith, assuming any associated unfunded commitments of the sellers. (This limitation does not apply to purchases of debt securities or to repurchase agreements). (vii) The fund does not currently intend to (a) purchase securities of other investment companies, except in the open market where no commission except the ordinary broker's commission is paid, or (b) purchase or retain securities issued by other open-end investment companies. Limitations (a) and (b) do not apply to securities received as dividends, through offers of exchange, or as a result of a reorganization, consolidation, or merger. (viii) The fund does not currently intend to purchase the securities of any issuer (other than securities issued or guaranteed by domestic or foreign governments or political subdivisions thereof) if, as a result, more than 5% of its total assets would be invested in the securities of business enterprises that, including predecessors, have a record of less than three years of continuous operation. (ix) The fund does not currently intend to purchase warrants, valued at the lower of cost or market, in excess of 10% of the fund's net assets. Included in that amount, but not to exceed 2% of net assets, are warrants whose underlying securities are not traded on principal domestic or foreign exchanges. Warrants acquired by the fund in units or attached to securities are not subject to these restrictions. (x) The fund does not currently intend to invest in oil, gas, or other mineral exploration or development programs or leases. For the fund's limitations on futures and options transactions, see the section entitled "Limitations on Futures and Options Transactions" beginning on page 23. INVESTMENT LIMITATIONS OF PACIFIC BASIN FUND THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT: (1) with respect to 75% of the fund's total assets, purchase the securities of any issuer (other than obligations issued or guaranteed by the government of the United States, its agencies or instrumentalities) if, as a result thereof: (i) more than 5% of the fund's total assets would be invested in the securities of such issuer or (ii) the fund would hold more than 10% of the voting securities of such issuer; (2) issue senior securities, except as permitted under the Investment Company Act of 1940; (3) borrow money, except that the fund may borrow money for temporary or emergency purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of the value of its total assets (including the amount borrowed) less liabilities (other than borrowings). Any borrowings that come to exceed 33 1/3% of a fund's total assets by reason of a decline in net assets will be reduced within three business days to the extent necessary to comply with the 33 1/3% limitation; (4) underwrite any issue of securities (except to the extent that the fund may be deemed to be an underwriter within the meaning of the Securities Act of 1933 in the disposition of restricted securities); (5) purchase the securities of any issuer (other than obligations issued or guaranteed by the government of the United States, its agencies or instrumentalities) if, as a result thereof, more than 25% of the fund's total assets (taken at current value) would be invested in the securities of issuers having their principal business activities in the same industry; (6) purchase or sell real estate (but this shall not prevent the fund from investing in marketable securities issued by companies such as real estate investment trusts which deal in real estate or interests therein and participation interests in pools of real estate mortgage loans); (7) purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities); or (8) lend any security or make any other loan if, as a result, more than 33 1/3% of the fund's total assets would be lent to other parties, but this limitation does not apply to purchases of debt securities or to repurchase agreements. Investment limitation (3) is construed in conformity with the 1940 Act, and, accordingly, "three business days" means three days, exclusive of Sundays and holidays. THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL. (i) The fund does not currently intend to sell securities short, unless it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short, and provided that transactions in futures contracts and options are not deemed to constitute selling securities short. (ii) The fund does not currently intend to purchase securities on margin, except that the fund may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin payments in connection with futures contracts and options on futures contracts shall not constitute purchasing securities on margin. (iii) The fund may borrow money only (a) from a bank or from a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) by engaging in reverse repurchase agreements with any party (reverse repurchase agreements are treated as borrowings for purposes of fundamental investment limitation (3)). The fund will not purchase any security while borrowings representing more than 5% of its total assets are outstanding. The fund will not borrow from other funds advised by FMR or its affiliates if total outstanding borrowings immediately after such borrowing would exceed 15% of the fund's total assets. (iv) The fund does not currently intend to purchase any security if, as a result, more than 15% of its net assets would be invested in securities that are deemed to be illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. (v) The fund does not currently intend to invest in securities of real estate investment trusts that are not readily marketable, or to invest in securities of real estate limited partnerships that are not listed on the New York Stock Exchange or the American Stock Exchange or traded on the NASDAQ National Market System. (vi) The fund does not currently intend to lend assets other than securities to other parties, except by (a) lending money (up to 5% of the fund's net assets) to a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) acquiring loans, loan participations, or other forms of direct debt instruments and, in connection therewith, assuming any associated unfunded commitments of the sellers. (This limitation does not apply to purchases of debt securities or to repurchase agreements). (vii) The fund does not currently intend to (a) purchase securities of other investment companies, except in the open market where no commission except the ordinary broker's commissions is paid, or (b) purchase or retain securities issued by other open-end investment companies. Limitations (a) and (b) do not apply to securities received as dividends, through offers of exchange, or as a result of a reorganization, consolidation, or merger. (viii) The fund does not currently intend to purchase warrants, valued at the lower of cost or market, in excess of 10% of the fund's net assets. Included in that amount, but not to exceed 2% of net assets, are warrants whose underlying securities are not traded on principal domestic or foreign exchanges. Warrants acquired by the fund in units or attached to securities are not subject to these restrictions. (ix) The fund does not currently intend to invest in oil, gas, or other mineral exploration or development programs or leases. For the fund's limitations on futures and options transactions, see the section entitled "Limitations on Futures and Options Transactions" beginning on page 23. INVESTMENT LIMITATIONS OF EMERGING MARKETS FUND THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT: (1) with respect to 75% of the fund's total assets, purchase the securities of any issuer (other than obligations issued or guaranteed by the government of the United States, or any of its agencies or instrumentalities) if, as a result thereof, (a) more than 5% of the fund's total assets would be invested in the securities of such issuer, or (b) the fund would hold more than 10% of the voting securities of such issuer; (2) issue senior securities, except as permitted under the Investment Company Act of 1940; (3) sell securities short, unless it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short, and provided that transactions in futures contracts and options are not deemed to constitute short sales; (4) purchase securities on margin, except that the fund may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin payments in connection with futures contracts and options on futures contracts shall not constitute purchasing securities on margin; (5) borrow money, except that the fund may borrow money for temporary or emergency purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of its total assets (including the amount borrowed) less liabilities (other than borrowings). Any borrowings that come to exceed 33 1/3% of the fund's total assets by reason of a decline in net assets will be reduced within three days (not including Sundays and holidays) to the extent necessary to comply with the 33 1/3% limitation; (6) underwrite securities issued by others except to the extent that the fund may be deemed to be an underwriter within the meaning of the Securities Act of 1933 in the disposition of restricted securities; (7) purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities) if, as a result, more than 25% of the fund's total assets would be invested in companies whose principal business activities are in the same industry; (8) purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business); (9) purchase or sell physical commodities unless acquired as a result of ownership of securities (but this shall not prevent the fund from purchasing or selling options and futures contracts or instruments backed by physical commodities); or (10) lend any security or make any other loan if, as a result, more than 33 1/3% of its total assets would be lent to other parties (for this purpose, purchasing debt securities and engaging in repurchase agreements do not constitute lending). THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL. (i) The fund does not currently intend to sell securities short. (ii) The fund may borrow money only (a) from a bank or from a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) by engaging in reverse repurchase agreements with any party (reverse repurchase agreements are treated as borrowings for purposes of fundamental investment limitation (5)). The fund will not purchase any security while borrowings representing more than 5% of its total assets are outstanding. The fund will not borrow from other funds advised by FMR or its affiliates if total outstanding borrowings immediately after such borrowing would exceed 15% of the fund's total assets. (iii) The fund does not currently intend to purchase any security if, as a result, more than 15% of its net assets would be invested in securities that are deemed to be illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. (iv) The fund does not currently intend to lend assets other than securities to other parties, except by a) lending money (up to 5% of the fund's net assets) to a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or b) acquiring loans, loan participations, or other forms of direct debt instruments and, in connection therewith, assuming any associated unfunded commitments of the sellers. (This limitation does not apply to purchases of debt securities or to repurchase agreements.) (v) The fund does not currently intend to invest in securities of real estate investment trusts that are not readily marketable, or to invest in securities of real estate limited partnerships that are not listed on the New York Stock Exchange or the American Stock Exchange or traded on the NASDAQ National Market System. (vi) The fund does not currently intend to (a) purchase securities of other investment companies, except in the open market where no commission except the ordinary broker's commission is paid, or (b) purchase or retain securities issued by other open-end investment companies. Limitations (a) and (b) do not apply to securities received as dividends, through offers of exchange, or as a result of a reorganization, consolidation, or merger. (vii) The fund does not currently intend to purchase the securities of any issuer (other than securities issued or guaranteed by domestic or foreign governments or political subdivisions thereof) if, as a result, more than 5% of its total assets would be invested in the securities of business enterprises that, including predecessors, have a record of less than three years of continuous operation. (viii) The fund does not currently intend to purchase warrants, valued at the lower of cost or market, in excess of 10% of the fund's net assets. Included in that amount, but not to exceed 2% of net assets, are warrants whose underlying securities are not traded on principal domestic or foreign exchanges. Warrants acquired by the fund in units or attached to securities are not subject to these restrictions. (ix) The fund does not currently intend to invest in oil, gas, or other mineral exploration or development programs or leases. For the fund's limitations on futures and options transactions, see the section entitled "Limitations on Futures and Options Transactions" beginning on page 23. INVESTMENT LIMITATIONS OF LATIN AMERICA FUND THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT: (1) with respect to 75% of the fund's total assets, purchase the securities of any issuer (other than securities issued or guaranteed by the U. S. government or any of its agencies or instrumentalities) if, as a result, (a) more than 5% of the fund's total assets would be invested in the securities of that issuer, or (b) the fund would hold more than 10% of the outstanding voting securities of that issuer; (2) issue senior securities, except as permitted under the Investment Company Act of 1940; (3) borrow money, except that the fund may borrow money for temporary or emergency purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of its total assets (including the amount borrowed) less liabilities (other than borrowings). Any borrowings that come to exceed this amount will be reduced within three days (not including Sundays and holidays) to the extent necessary to comply with the 33 1/3% limitation; (4) underwrite securities issued by others except to the extent that the fund may be considered an underwriter within the meaning of the Securities Act of 1933 in the disposition of restricted securities; (5) purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities) if, as a result, more than 25% of the fund's total assets would be invested in the securities of companies whose principal business activities are in the same industry; (6) purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business); (7) purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities); or (8) lend any security or make any other loan if, as a result, more than 33 1/3% of its total assets would be lent to other parties, but this limitation does not apply to purchases of debt securities or to repurchase agreements. THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL. (i) The fund does not currently intend to sell securities short, unless it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short, and provided that transactions in futures contracts and options are not deemed to constitute selling securities short. (ii) The fund does not currently intend to purchase securities on margin, except that the fund may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin payments in connection with futures contracts and options on futures contracts shall not constitute purchasing securities on margin. (iii) The fund may borrow money only (a) from a bank or from a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) by engaging in reverse repurchase agreements with any party (reverse repurchase agreements are treated as borrowings for purposes of fundamental investment limitation (3)). The fund will not purchase any security while borrowings representing more than 5% of its total assets are outstanding. The fund will not borrow from other funds advised by FMR or its affiliates if total outstanding borrowings immediately after such borrowing would exceed 15% of the fund's total assets. (iv) The fund does not currently intend to purchase any security if, as a result, more than 15% of its net assets would be invested in securities that are deemed to be illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. (v) The fund does not currently intend to invest in securities of real estate investment trusts that are not readily marketable, or to invest in securities of real estate limited partnerships that are not listed on the New York Stock Exchange or the American Stock Exchange or traded on the NASDAQ National Market System. (vi) The fund does not currently intend to lend assets other than securities to other parties, except by (a) lending money (up to 5% of the fund's net assets) to a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) acquiring loans, loan participations, or other forms of direct debt instruments and, in connection therewith, assuming any associated unfunded commitments of the sellers. (This limitation does not apply to purchases of debt securities or to repurchase agreements). (vii) The fund does not currently intend to (a) purchase securities of other investment companies, except in the open market where no commission except the ordinary broker's commission is paid, or (b) purchase or retain securities issued by other open-end investment companies. Limitations (a) and (b) do not apply to securities received as dividends, through offers of exchange, or as a result of a reorganization, consolidation, or merger. (viii) The fund does not currently intend to purchase the securities of any issuer (other than securities issued or guaranteed by domestic or foreign governments or political subdivisions thereof) if, as a result, more than 5% of its total assets would be invested in the securities of business enterprises that, including predecessors, have a record of less than three years of continuous operation. (ix) The fund does not currently intend to purchase warrants, valued at the lower of cost or market, in excess of 10% of the fund's net assets. Included in that amount, but not to exceed 2% of net assets, are warrants whose underlying securities are not traded on principal domestic or foreign exchanges. Warrants acquired by the fund in units or attached to securities are not subject to these restrictions. (x) The fund does not currently intend to invest in oil, gas, or other mineral exploration or development programs or leases. For the fund's limitations on futures and options transactions, see the section entitled "Limitations on Futures and Options Transactions" beginning on page 23. INVESTMENT LIMITATIONS OF SOUTHEAST ASIA FUND THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT: (1) with respect to 75% of the fund's total assets, purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities) if, as a result, (a) more than 5% of the fund's total assets would be invested in the securities of that issuer, or (b) the fund would hold more than 10% of the outstanding voting securities of that issuer; (2) issue senior securities, except as permitted under the Investment Company Act of 1940; (3) borrow money, except that the fund may borrow money for temporary or emergency purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of its total assets (including the amount borrowed) less liabilities (other than borrowings). Any borrowings that come to exceed this amount will be reduced within three days (not including Sundays and holidays) to the extent necessary to comply with the 33 1/3% limitation; (4) underwrite securities issued by others except to the extent that the fund may be considered an underwriter within the meaning of the Securities Act of 1933 in the disposition of restricted securities; (5) purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities) if, as a result, more than 25% of the fund's total assets would be invested in the securities of companies whose principal business activities are in the same industry; (6) purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business); (7) purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities); or (8) lend any security or make any other loan if, as a result, more than 33 1/3% of its total assets would be lent to other parties, but this limitation does not apply to purchases of debt securities or to repurchase agreements. THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL. (i) The fund does not currently intend to sell securities short, unless it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short, and provided that transactions in futures contracts and options are not deemed to constitute selling securities short. (ii) The fund does not currently intend to purchase securities on margin, except that the fund may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin payments in connection with futures contracts and options on futures contracts shall not constitute purchasing securities on margin. (iii) The fund may borrow money only (a) from a bank or from a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) by engaging in reverse repurchase agreements with any party (reverse repurchase agreements are treated as borrowings for purposes of fundamental investment limitation (3)). The fund will not purchase any security while borrowings representing more than 5% of its total assets are outstanding. The fund will not borrow from other funds advised by FMR or its affiliates if total outstanding borrowings immediately after such borrowing would exceed 15% of the fund's total assets. (iv) The fund does not currently intend to purchase any security if, as a result, more than 15% of its net assets would be invested in securities that are deemed to be illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. (v) The fund does not currently intend to invest in securities of real estate investment trusts that are not readily marketable, or to invest in securities of real estate limited partnerships that are not listed on the New York Stock Exchange or the American Stock Exchange or traded on the NASDAQ National Market System. (vi) The fund does not currently intend to lend assets other than securities to other parties, except by (a) lending money (up to 5% of the fund's net assets) to a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) acquiring loans, loan participations, or other forms of direct debt instruments and, in connection therewith, assuming any associated unfunded commitments of the sellers. (This limitation does not apply to purchases of debt securities or to repurchase agreements). (vii) The fund does not currently intend to (a) purchase securities of other investment companies, except in the open market where no commission except the ordinary broker's commission is paid, or (b) purchase or retain securities issued by other open-end investment companies. Limitations (a) and (b) do not apply to securities received as dividends, through offers of exchange, or as a result of a reorganization, consolidation, or merger. (x) The fund does not currently intend to purchase the securities of any issuer (other than securities issued or guaranteed by domestic or foreign governments or political subdivisions thereof) if, as a result, more than 5% of its total assets would be invested in the securities of business enterprises that, including predecessors, have a record of less than three years of continuous operation. (xi) The fund does not currently intend to purchase warrants, valued at the lower of cost or market, in excess of 10% of the fund's net assets. Included in that amount, but not to exceed 2% of net assets, are warrants whose underlying securities are not traded on principal domestic or foreign exchanges. Warrants acquired by the fund in units or attached to securities are not subject to these restrictions. (xii) The fund does not currently intend to invest in oil, gas, or other mineral exploration or development programs or leases. (xiii) The fund does not currently intend to purchase the securities of any issuer if those officers and Trustees of the Trust and those officers and directors of FMR who individually own more than 1/2 of 1% of those securities of such issuers together own more than 5% of such issuer's securities. For the fund's limitations on futures and options transactions, see the section entitled "Limitations on Futures and Options Transactions" beginning on page 23. INVESTMENT POLICIES FOR FIDELITY EMERGING MARKETS FUND COUNTRIES NOT CONSIDERED TO HAVE EMERGING MARKETS - EMERGING MARKETS FUND. Countries currently not considered to have an emerging market economy are as follows: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, the United Kingdom, and the United States. INVESTMENT POLICIES FOR REGIONAL AND SINGLE COUNTRY FUNDS PRIMARY BUSINESS ACTIVITIES - REGIONAL AND SINGLE COUNTRY FUNDS. FMR determines where an issuer or its principal activities are located by looking at such factors as its country of organization, the primary trading market for its securities, and the location of its assets, personnel, sales, and earnings. The issuer of a security is located in a particular country if: 1) the security is issued or guaranteed by the government of the country or any of its agencies, political subdivisions or instrumentalities, or has its primary trading market in that country; or 2) the issuer is organized under the laws of the country, derives at least 50% of its revenues or profits from goods sold, investments made or services performed in the country, or has at least 50% of its assets located in the country. INVESTMENT POLICIES SHARED BY THE FUNDS AFFILIATED BANKS TRANSACTIONS. Pursuant to exemptive orders issued by the Securities and Exchange Commission (SEC), the funds may engage in transactions with banks that are, or may be considered to be, "affiliated persons" of a fund under the Investment Company Act of 1940. Such transactions may be entered into only pursuant to procedures established and periodically reviewed by the Board of Trustees. These transactions may include repurchase agreements with custodian banks; purchases, as principal of short-term obligations of, and repurchase agreements with, the 50 largest U.S. banks (measured by deposits); transactions in municipal securities; and transactions in U.S. Government Securities with affiliated banks that are primary dealers in these securities . FUNDS' RIGHTS AS A SHAREHOLDER. The funds do not intend to direct or administer the day-to-day operations of any company. Each fund, however, may exercise its rights as a shareholder and may communicate its views on important matters of policy to management, the Board of Directors, and shareholders of a company when FMR determines that such matters could have a significant effect on the value of a fund's investment in the company. The activities that the funds may engage in, either individually or in conjunction with others, may include, among others, supporting or opposing proposed changes in a company's corporate structure or business activities; seeking changes in a company's directors or management; seeking changes in a company's direction or policies; seeking the sale or reorganization of the company or a portion of its assets; or supporting or opposing third party takeover efforts. This area of corporate activity is increasingly prone to litigation and it is possible that a fund could be involved in lawsuits related to such activities. FMR will monitor such activities with a view to mitigating, to the extent possible, the risk of litigation against a fund and the risk of actual liability if one or more of the funds is involved in litigation. No guarantee can be made, however, that litigation against a fund will not be undertaken or liabilities incurred. ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. Under the supervision of the Board of Trustees, FMR determines the liquidity of the funds' investments and, through reports from FMR, the Board monitors investments in illiquid instruments. In determining the liquidity of the funds' investments, FMR may consider various factors, including (1) the frequency of trades and quotations, (2) the number of dealers and prospective purchasers in the marketplace, (3) dealer undertakings to make a market, (4) the nature of the security (including any demand or tender features), and (5) the nature of the marketplace for trades (including the ability to assign or offset a fund's rights and obligations relating to the investment). Investments currently considered by the funds to be illiquid include repurchase agreements not entitling the holder to payment of principal and interest within seven days, over-the-counter options, and non-government stripped fixed-rate mortgage-backed securities. Also FMR may determine some restricted securities, government-stripped fixed-rate mortgage-backed securities, loans and other direct debt instruments, and swap agreements to be illiquid. However, with respect to over-the-counter options the funds write, all or a portion of the value of the underlying instrument may be illiquid depending on the assets held to cover the option and the nature and terms of any agreement the funds may have to close out the option before expiration. In the absence of market quotations, illiquid investments are priced at fair value as determined in good faith by a committee appointed by the Board of Trustees. If through a change in values, net assets, or other circumstances, a fund were in a position where more than 15% of its net assets were invested in illiquid securities, it would seek to take appropriate steps to protect liquidity. RESTRICTED SECURITIES generally can be sold in privately negotiated transactions, pursuant to an exemption from registration under the Securities Act of 1933, or in a registered public offering. Where registration is required, a fund may be obligated to pay all or part of the registration expense and a considerable period may elapse between the time it decides to seek registration and the time the fund may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, a fund might obtain a less favorable price than prevailed when it decided to seek registration of the security. SOVEREIGN DEBT OBLIGATIONS. Each fund may purchase sovereign debt instruments issued or guaranteed by foreign governments or their agencies, including debt of Latin American nations or other developing countries. Sovereign debt may be in the form of conventional securities or other types of debt instruments such as loans or loan participations. Sovereign debt of developing countries may involve a high degree of risk, and may be in default or present the risk of default. Governmental entities responsible for repayment of the debt may be unable or unwilling to repay principal and interest when due, and may require renegotiation or rescheduling of debt payments. In addition, prospects for repayment of principal and interest may depend on political as well as economic factors. LOWER-RATED DEBT SECURITIES. The funds may purchase lower-rated debt securities (those rated Ba or lower by Moody's Investors Service, Inc. or BB or lower by Standard & Poor's Corporation) that have poor protection with respect to the payment of interest and repayment of principal. These securities are often considered to be speculative and involve greater risk of loss or price changes due to changes in the issuer's capacity to pay. The market prices of lower-rated debt securities may fluctuate more than those of higher-rated debt securities and may decline significantly in periods of general economic difficulty, which may follow periods of rising interest rates. While the market for high-yield corporate debt securities has been in existence for many years and has weathered previous economic downturns, the 1980s brought a dramatic increase in the use of such securities to fund highly leveraged corporate acquisitions and restructurings. Past experience may not provide an accurate indication of future performance of the high yield bond market, especially during periods of economic recession. In fact, from 1989 to 1991, the percentage of lower-rated debt securities that defaulted rose significantly above prior levels, though the default rate decreased in 1992. The market for lower-rated debt securities may be thinner and less active than that for higher-rated debt securities, which can adversely affect the prices at which the former are sold. If market quotations are not available, lower-rated debt securities will be valued in accordance with procedures established by the Board of Trustees, including the use of outside pricing services. Judgment plays a greater role in valuing high-yield corporate debt securities than is the case for securities for which more external sources for quotations and last-sale information are available. Adverse publicity and changing investor perceptions may affect the ability of outside pricing services to value lower-rated debt securities and the fund's ability to sell these securities. Since the risk of default is higher for lower-rated debt securities, FMR's research and credit analysis are an especially important part of managing securities of this type held by a fund. In considering investments for a fund, FMR will attempt to identify those issuers of high-yielding debt securities whose financial condition is adequate to meet future obligations, has improved, or is expected to improve in the future. FMR's analysis focuses on relative values based on such factors as interest or dividend coverage, asset coverage, earnings prospects, and the experience and managerial strength of the issuer. Each fund may choose, at its expense or in conjunction with others, to pursue litigation or otherwise exercise its rights as security holder to seek to protect the interests of security holders if it determines this to be in the best interest of a fund's shareholders. LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are interests in amounts owed by a corporate, governmental, or other borrower to lenders or lending syndicates (loans and loan participations), to suppliers of goods or services (trade claims or other receivables), or to other parties. Direct debt instruments are subject to the fund's policies regarding the quality of debt securities. Purchasers of loans and other forms of direct indebtedness depend primarily upon the creditworthiness of the borrower for payment of principal and interest. Direct debt instruments may not be rated by any nationally recognized rating service. If a fund does not receive scheduled interest or principal payments on such indebtedness, a fund's share price and yield could be adversely affected. Loans that are fully secured offer a fund more protections than an unsecured loan in the event of non-payment of scheduled interest or principal. However, there is no assurance that the liquidation of collateral from a secured loan would satisfy the borrower's obligation, or that the collateral can be liquidated. Indebtedness of borrowers whose creditworthiness is poor involves substantially greater risks, and may be highly speculative. Borrowers that are in bankruptcy or restructuring may never pay off their indebtedness, or may pay only a small fraction of the amount owed. Direct indebtedness of developing countries will also involve a risk that the governmental entities responsible for the repayment of the debt may be unable, or unwilling, to pay interest and repay principal when due. Investments in loans through direct assignment of a financial institution's interests with respect to a loan may involve additional risks to a fund. For example, if a loan is foreclosed, a fund could become part owner of any collateral, and would bear the costs and liabilities associated with owning and disposing of the collateral. In addition, it is conceivable that under emerging legal theories of lender liability, a fund could be held liable as a co-lender. Direct debt instruments may also involve a risk of insolvency of the lending bank or other intermediary. Direct debt instruments that are not in the form of securities may offer less legal protection to a fund in the event of fraud or misrepresentation. In the absence of definitive regulatory guidance, the funds rely on FMR's research in an attempt to avoid situations where fraud or misrepresentation could adversely affect the funds. A loan is often administered by a bank or other financial institution that acts as agent for all holders. The agent administers the terms of the loan, as specified in the loan agreement. Unless, under the terms of the loan or other indebtedness, a fund has direct recourse against the borrower, it may have to rely on the agent to apply appropriate credit remedies against a borrower. If assets held by the agent for the benefit of a fund were determined to be subject to the claims of the agent's general creditors, the fund might incur certain costs and delays in realizing payment on the loan or loan participation and could suffer a loss of principal or interest. Direct indebtedness purchased by a fund may include letters of credit, revolving credit facilities, or other standby financing commitments obligating the fund to pay additional cash on demand. These commitments may have the effect of requiring a fund to increase its investment in a borrower at a time when it would not otherwise have done so. Each fund will set aside appropriate liquid assets in a segregated custodial account to cover its potential obligations under standby financing commitments. Each fund limits the amount of total assets that it will invest in any one issuer or in issuers within the same industry (see limitations (1) and (5) for all funds except for Emerging Markets see (1) and (7)). For purposes of these limitations, a fund generally will treat the borrower as the "issuer" of indebtedness held by the fund. In the case of loan participations where a bank or other lending institution serves as financial intermediary between a fund and the borrower, if the participation does not shift to the fund the direct debtor-creditor relationship with the borrower, SEC interpretations require the fund, in appropriate circumstances, to treat both the lending bank or other lending institution and the borrower as "issuers" for the purposes of determining whether the fund has invested more than 5% of its total assets in a single issuer. Treating a financial intermediary as an issuer of indebtedness may restrict a fund's ability to invest in indebtedness related to a single financial intermediary, or a group of intermediaries engaged in the same industry, even if the underlying borrowers represent many different companies and industries. SWAP AGREEMENTS. Swap agreements can be individually negotiated and structured to include exposure to a variety of different types of investments or market factors. Depending on their structure, swap agreements may increase or decrease a fund's exposure to long- or short-term interest rates (in the U.S. or abroad), foreign currency values, mortgage securities, corporate borrowing rates, or other factors such as security prices or inflation rates. Swap agreements can take many different forms and are known by a variety of names. A fund is not limited to any particular form of swap agreement if FMR determines it is consistent with a fund's investment objective and policies. In a typical cap or floor agreement, one party agrees to make payments only under specified circumstances, usually in return for payment of a fee by the other party. For example, the buyer of an interest rate cap obtains the right to receive payments to the extent that a specified interest rate exceeds an agreed-upon level, while the seller of an interest rate floor is obligated to make payments to the extent that a specified interest rate falls below an agreed-upon level. An interest rate collar combines elements of buying a cap and selling a floor. Swap agreements will tend to shift a fund's investment exposure from one type of investment to another. For example, if a fund agreed to exchange payments in dollars for payments in foreign currency, the swap agreement would tend to decrease the fund's exposure to U.S. interest rates and increase its exposure to foreign currency and interest rates. Caps and floors have an effect similar to buying or writing options. Depending on how they are used, swap agreements may increase or decrease the overall volatility of a fund's investment and its share price and yield. The most significant factor in the performance of swap agreements is the change in the specific interest rate, currency, or other factors that determine the amounts of payments due to and from a fund. If a swap agreement calls for payments by the fund, the fund must be prepared to make such payments when due. In addition, if the counterparty's creditworthiness declined, the value of a swap agreement would be likely to decline, potentially resulting in losses. The funds expect to be able to eliminate their exposure under swap agreements either by assignment or other disposition, or by entering into an offsetting swap agreement with the same party or a similarly creditworthy party. Each fund will maintain appropriate liquid assets in a segregated custodial account to cover its current obligations under swap agreements. If a fund enters into a swap agreement on a net basis, it will segregate assets with a daily value at least equal to the excess, if any, of a fund's accrued obligations under the swap agreement over the accrued amount the fund is entitled to receive under the agreement. If a fund enters into a swap agreement on other than a net basis, it will segregate assets with a value equal to the full amount of a fund's accrued obligations under the agreement. INDEXED SECURITIES. Each fund may purchase securities whose prices are indexed to the prices of other securities, securities indices, currencies, precious metals or other commodities, or other financial indicators. Indexed securities typically, but not always, are debt securities or deposits whose value at maturity or coupon rate is determined by reference to a specific instrument or statistic. Gold-indexed securities, for example, typically provide for a maturity value that depends on the price of gold, resulting in a security whose price tends to rise and fall together with gold prices. Currency-indexed securities typically are short-term to intermediate-term debt securities whose maturity values or interest rates are determined by reference to the values of one or more specified foreign currencies, and may offer higher yields than U.S. dollar-denominated securities of equivalent issuers. Currency-indexed securities may be positively or negatively indexed; that is, their maturity value may increase when the specified currency value increases, resulting in a security that performs similarly to a foreign-denominated instrument, or their maturity value may decline when foreign currencies increase, resulting in a security whose price characteristics are similar to a put on the underlying currency. Currency-indexed securities may also have prices that depend on the values of a number of different foreign currencies relative to each other. The performance of indexed securities depends to a great extent on the performance of the security, currency, or other instrument to which they are indexed, and may also be influenced by interest rate changes in the U.S. and abroad. At the same time, indexed securities are subject to the credit risks associated with the issuer of the security, and their values may decline substantially if the issuer's creditworthiness deteriorates. Recent issuers of indexed securities have included banks, corporations, and certain U.S. government agencies. Indexed securities may be more volatile than their underlying instruments. SECURITIES OF SMALL CAPITALIZATION COMPANIES. Smaller capitalization companies may have limited product lines, markets, or financial resources. These conditions may make them more susceptible to setbacks and reversals. Therefore, their securities may have limited marketability and may be subject to more abrupt or erratic market movements than securities of larger companies. CLOSED-END INVESTMENT COMPANIES. Each fund may purchase the equity securities of closed-end investment companies to facilitate investment in certain countries. Equity securities of closed-end investment companies generally trade at a discount to their net asset value. REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a security and simultaneously commits to resell that security to the seller at an agreed-upon price on an agreed-upon date within a number of days from the date of purchase. The resale price reflects the purchase price plus an agreed-upon incremental amount which is unrelated to the coupon rate or maturity of the purchased security. A repurchase agreement involves the obligation of the seller to pay the agreed-upon price, which obligation is in effect secured by the value (at least equal to the amount of the agreed-upon resale price and marked to market daily) of the underlying security. Each fund may engage in repurchase agreements with respect to any security in which it is authorized to invest. While it does not presently appear possible to eliminate all risks from these transactions (particularly the possibility of a decline in the market value of the underlying securities, as well as delays and costs to the funds in connection with bankruptcy proceedings), it is the current policy of each fund to limit repurchase agreement transactions to those parties whose creditworthiness has been reviewed and found satisfactory by FMR. REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund sells a portfolio instrument to another party, such as a bank or broker-dealer, in return for cash and agrees to repurchase the instrument at a particular price and time. While a reverse repurchase agreement is outstanding, a fund will maintain appropriate liquid assets in a segregated custodial account to cover its obligation under the agreement. The funds will enter into reverse repurchase agreements only with parties whose creditworthiness has been found satisfactory by FMR. Such transactions may increase fluctuations in the market value of a fund's assets and may be viewed as a form of leverage. FOREIGN REPURCHASE AGREEMENTS. Foreign repurchase agreements may include agreements to purchase and sell foreign securities in exchange for fixed U.S. dollar amounts, or in exchange for specified amounts of foreign currency. Unlike typical U.S. repurchase agreements, foreign repurchase agreements may not be fully collateralized at all times. The value of the security purchased by a fund may be more or less than the price at which the counterparty has agreed to repurchase the security. In the event of a default by the counterparty, a fund may suffer a loss if the value of the security purchased is less than the agreed-upon repurchase price, or if the fund is unable to successfully assert a claim to the collateral under foreign laws. As a result, foreign repurchase agreements may involve higher credit risks than repurchase agreements in U.S. markets, as well as risks associated with currency fluctuations. In addition, as with other emerging market investments, repurchase agreements with counterparties located in emerging markets or relating to emerging market securities may involve issuers or counterparties with lower credit ratings than typical U.S. repurchase agreements. SHORT SALES "AGAINST THE BOX." If one of the funds enter into a short sale against the box, it will be required to set aside securities equivalent in kind and amount to the securities sold short (or securities convertible or exchangeable into such securities) and will be required to hold such securities while the short sale is outstanding. The fund will incur transaction costs, including interest expense, in connection with opening, maintaining, and closing short sales against the box. INTERFUND BORROWING PROGRAM. The funds have received permission from the SEC to lend money to and borrow money from other funds advised by FMR or its affiliates. Interfund loans and borrowings normally will extend overnight, but can have a maximum duration of seven days. Loans may be called on one day's notice. The funds will lend through the program only when the returns are higher than those available at the same time from other short-term instruments (such as repurchase agreements), and will borrow through the program only when the costs are equal to or lower than the cost of bank loans. The funds may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed. Any delay in repayment to a lending fund could result in a lost investment opportunity or additional borrowing costs. SECURITIES LENDING. The funds may lend securities to parties such as broker-dealers or institutional investors, including Fidelity Brokerage Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange and a subsidiary of FMR Corp. Securities lending allows a fund to retain ownership of the securities loaned and, at the same time, to earn additional income. Since there may be delays in the recovery of loaned securities, or even a loss of rights in collateral supplied should the borrower fail financially, loans will be made only to parties deemed by FMR to be of good standing. Furthermore, they will only be made if, in FMR's judgment, the consideration to be earned from such loans would justify the risk. FMR understands that it is the current view of the SEC Staff that a fund may engage in loan transactions only under the following conditions: (1) the fund must receive 100% collateral in the form of cash or cash equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2) the borrower must increase the collateral whenever the market value of the securities loaned (determined on a daily basis) rises above the value of the collateral; (3) after giving notice, the fund must be able to terminate the loan at any time; (4) the fund must receive reasonable interest on the loan or a flat fee from the borrower, as well as amounts equivalent to any dividends, interest, or other distributions on the securities loaned and to any increase in market value; (5) the fund may pay only reasonable custodian fees in connection with the loan; and (6) the Board of Trustees must be able to vote proxies on the securities loaned, either by terminating the loan or by entering into an alternative arrangement with the borrower. Cash received through loan transactions may be invested in any security in which a fund is authorized to invest. Investing this cash subjects that investment, as well as the security loaned, to market forces (i.e., capital appreciation or depreciation). FOREIGN SECURITIES. Investing in securities issued by companies or other issuers whose principal activities are outside of the U.S. may involve significant risks not present in U.S. investments. The value of securities denominated in foreign currencies, and of dividends and interest paid with respect to such securities, will fluctuate based on the relative strength of the U.S. dollar. In addition, there is generally less publicly available information about foreign issuers, particularly those not subject to the disclosure and reporting requirements of the U.S. securities laws. Foreign issuers are generally not bound by uniform accounting, auditing, and financial reporting requirements and standards of practice comparable to those applicable to U.S. issuers. Investments in foreign securities also involve the risk of possible adverse changes in investment or exchange control regulations, expropriation or confiscatory taxation, limitation on the removal of monies or other assets of a fund, political or financial instability, or diplomatic and other developments which could affect such investments. Further, economies of particular countries or areas of the world may differ favorably or unfavorably from the economy of the U.S. It is anticipated that in most cases the best available market for foreign securities will be on exchanges or in over-the-counter markets located outside of the U.S. Foreign stock markets, while growing in volume and sophistication, are generally not as developed as those in the U.S., and securities of some foreign issuers (particularly those located in developing countries) may be less liquid and more volatile than securities of comparable U.S. issuers. Foreign security trading practices, including those involving securities settlement where fund assets may be released prior to receipt of payment, may expose a fund to increased risk in the event of a failed trade or the insolvency of a foreign broker-dealer. In addition, foreign brokerage commissions and other fees are generally higher than on securities traded in the U.S. and may be non-negotiable. In general, there is less overall governmental supervision and regulation of securities exchanges, brokers and listed companies than in the U.S. Each fund may invest in foreign securities that impose restrictions on transfer within the U.S. or to U.S. persons. Although securities subject to such transfer restrictions may be marketable abroad, they may be less liquid than foreign securities of the same class that are not subject to such restrictions. American Depositary Receipts and European Depositary Receipts (ADRs and EDRs) are certificates evidencing ownership of shares of a foreign-based issuer held in trust by a bank or similar financial institution. Designed for use in U.S. and European securities markets, respectively, ADRs and EDRs are alternatives to the purchase of the underlying securities in their national markets and currencies. FOREIGN CURRENCY TRANSACTIONS. The funds may conduct foreign currency transactions on a spot (i.e., cash) basis or by entering into forward contracts to purchase or sell foreign currencies at a future date and price. The funds will convert currency on a spot basis from time to time, and investors should be aware of the costs of currency conversion. Although foreign exchange dealers generally do not charge a fee for conversion, they do realize a profit based on the difference between the prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to a fund at one rate, while offering a lesser rate of exchange should the fund desire to resell that currency to the dealer. Forward contracts are generally traded in an interbank market conducted directly between currency traders (usually large commercial banks) and their customers. The parties to a forward contract may agree to offset or terminate the contract before its maturity, or may hold the contract to maturity and complete the contemplated currency exchange. Each fund may use currency forward contracts for any purpose consistent with its investment objective. The following discussion summarizes some, but not all, of the possible currency management strategies involving forward contracts that could be used by the funds. The funds may also use options and futures contracts relating to foreign currencies for the same purposes. When a fund agrees to buy or sell a security denominated in a foreign currency, it may desire to "lock in" the U.S. dollar price of the security. By entering into a forward contract for the purchase or sale, for a fixed amount of U.S. dollars, of the amount of foreign currency involved in the underlying security transaction, the fund will be able to protect itself against an adverse change in foreign currency values between the date the security is purchased or sold and the date on which payment is made or received. This technique is sometimes referred to as a "settlement hedge" or "transaction hedge." The funds may also enter into forward contracts to purchase or sell a foreign currency in anticipation of future purchases or sales of securities denominated in foreign currency, even if the specific investments have not yet been selected by FMR. The funds may also use forward contracts to hedge against a decline in the value of existing investments denominated in foreign currency. For example, if a fund owned securities denominated in pounds sterling, the fund could enter into a forward contract to sell pounds sterling in return for U.S. dollars to hedge against possible declines in the pound's value. Such a hedge, sometimes referred to as a "position hedge," would tend to offset both positive and negative currency fluctuations, but would not offset changes in security values caused by other factors. A fund could also hedge the position by selling another currency expected to perform similarly to the pound sterling -- for example, by entering into a forward contract to sell Deutschemarks or European Currency Units in return for U.S. dollars. This type of hedge, sometimes referred to as a "proxy hedge," could offer advantages in terms of cost, yield or efficiency, but generally will not hedge currency exposure as effectively as a simple hedge into U.S. dollars. Proxy hedges may result in losses if the currency used to hedge does not perform similarly to the currency in which the hedged securities are denominated. Each fund may enter into forward contracts to shift its investment exposure from one currency into another currency that is expected to perform better relative to the U.S. dollar. For example, if a fund held investments denominated in Deutschemarks, the fund could enter into forward contracts to sell Deutschemarks and purchase Swiss Francs. This type of strategy, sometimes known as a "cross-hedge," will tend to reduce or eliminate exposure to the currency that is sold, and increase exposure to the currency that is purchased, much as if the fund had sold a security denominated in one currency and purchased an equivalent security denominated in another. Cross-hedges protect against losses resulting from a decline in the hedged currency, but will cause the fund to assume the risk of fluctuations in the value of the currency it purchases. Under certain conditions, SEC guidelines require mutual funds to set aside appropriate liquid assets in a segregated custodial account to cover currency forward contracts. As required by SEC guidelines, the funds will segregate assets to cover currency forward contracts, if any, whose purpose is essentially speculative. The funds will not segregate assets to cover forward contracts entered into for hedging purposes, including settlement hedges, position hedges, and proxy hedges. Successful use of currency forward contracts will depend on FMR's skill in analyzing and predicting currency values. Forward contracts may substantially change a fund's investment exposure to changes in currency exchange rates, and could result in losses to the fund if currencies do not perform as FMR anticipates. For example, if a currency's value rose at a time when FMR had hedged a fund by selling that currency in exchange for dollars, the fund would be unable to participate in the currency's appreciation. If FMR hedges currency exposure through proxy hedges, a fund could realize currency losses from the hedge and the security position at the same time if the two currencies do not move in tandem. Similarly, if FMR increases a fund's exposure to a foreign currency, and that currency's value declines, the fund will realize a loss. There is no assurance that FMR's use of currency forward contracts will be advantageous to the funds or that they will hedge at an appropriate time. The policies described in this section are non-fundamental policies of the funds. LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Japan has filed and each of the remaining funds intend to file a notice of eligibility for exclusion from the definition of the term "commodity pool operator" with the Commodity Futures Trading Commission (CFTC) and the National Futures Association, which regulate trading in the futures markets, before engaging in any purchases or sales of futures contracts or options on futures contracts. The funds intend to comply with Section 4.5 of the regulations under the Commodity Exchange Act, which limits the extent to which the funds can commit assets to initial margin deposits and options premiums. In addition, each fund will not: (a) sell futures contracts, purchase put options or write call options if, as a result, more than 25% of a fund's total assets would be hedged with futures and options under normal conditions; (b) purchase futures contracts or write put options if, as a result, a fund's total obligations upon settlement or exercise of purchased futures contracts and written put options would exceed 25% of its total assets; or (c) purchase call options if, as a result, the current value of option premiums for call options purchased by a fund would exceed 5% of the fund's total assets. These limitations do not apply to options attached to or acquired or traded together with their underlying securities, and do not apply to securities that incorporate features similar to options. The above limitations on the funds' investments in futures contracts and options, and the funds' policies regarding futures contracts and options discussed elsewhere in this Statement of Additional Information, and are not fundamental policies and may be changed as regulatory agencies permit. FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees to purchase a specified underlying instrument at a specified future date. When a fund sells a futures contract, it agrees to sell the underlying instrument at a specified future date. The price at which the purchase and sale will take place is fixed when the fund enters into the contract. Futures can be held until their delivery dates, or can be closed out before then if a liquid secondary market is available. The value of a futures contract tends to increase and decrease in tandem with the value of its underlying instrument. Therefore, purchasing futures contracts will tend to increase a fund's exposure to positive and negative price fluctuations in the underlying instrument, much as if it had purchased the underlying instrument directly. When a fund sells a futures contract, by contrast, the value of its futures position will tend to move in a direction contrary to the market. Selling futures contracts, therefore, will tend to offset both positive and negative market price changes, much as if the underlying instrument had been sold. FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contracts is not required to deliver or pay for the underlying instrument unless the contract is held until the delivery date. However, both the purchaser and seller are required to deposit "initial margin" with a futures broker, known as a futures commission merchant (FCM), when the contract is entered into. Initial margin deposits are typically equal to a percentage of the contract's value. If the value of either party's position declines, that party will be required to make additional "variation margin" payments to settle the change in value on a daily basis. The party that has a gain may be entitled to receive all or a portion of this amount. Initial and variation margin payments do not constitute purchasing securities on margin for purposes of the funds' investment limitations. In the event of the bankruptcy of an FCM that holds margin on behalf of a fund, the fund may be entitled to return of margin owed to it only in proportion to the amount received by the FCM's other customers, potentially resulting in losses to the fund. PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund obtains the right (but not the obligation) to sell the option's underlying instrument at a fixed strike price. In return for this right, the fund pays the current market price for the option (known as the option premium). Options have various types of underlying instruments, including specific securities, indices of securities prices, and futures contracts. A fund may terminate its position in a put option it has purchased by allowing it to expire or by exercising the option. If the option is allowed to expire, the fund will lose the entire premium it paid. If the fund exercises the option, it completes the sale of the underlying instrument at the strike price. A fund may also terminate a put option position by closing it out in the secondary market at its current price, if a liquid secondary market exists. The buyer of a typical put option can expect to realize a gain if security prices fall substantially. However, if the underlying instrument's price does not fall enough to offset the cost of purchasing the option, a put buyer can expect to suffer a loss (limited to the amount of the premium paid, plus related transaction costs). The features of call options are essentially the same as those of put options, except that the purchaser of a call option obtains the right to purchase, rather than sell, the underlying instrument at the option's strike price. A call buyer typically attempts to participate in potential price increases of the underlying instrument with risk limited to the cost of the option if security prices fall. At the same time, the buyer can expect to suffer a loss if security prices do not rise sufficiently to offset the cost of the option. WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it takes the opposite side of the transaction from the option's purchaser. In return for receipt of the premium, the fund assumes the obligation to pay the strike price for the option's underlying instrument if the other party to the option chooses to exercise it. When writing an option on a futures contract, a fund will be required to make margin payments to an FCM as described above for futures contracts. A fund may seek to terminate its position in a put option it writes before exercise by closing out the option in the secondary market at its current price. If the secondary market is not liquid for a put option the fund has written, however, the fund must continue to be prepared to pay the strike price while the option is outstanding, regardless of price changes, and must continue to set aside assets to cover its position. If security prices rise, a put writer would generally expect to profit, although its gain would be limited to the amount of the premium it received. If security prices remain the same over time, it is likely that the writer will also profit, because it should be able to close out the option at a lower price. If security prices fall, the put writer would expect to suffer a loss. This loss should be less than the loss from purchasing the underlying instrument directly, however, because the premium received for writing the option should mitigate the effects of the decline. Writing a call option obligates a fund to sell or deliver the option's underlying instrument, in return for the strike price, upon exercise of the option. The characteristics of writing call options are similar to those of writing put options, except that writing calls generally is a profitable strategy if prices remain the same or fall. Through receipt of the option premium, a call writer mitigates the effects of a price decline. At the same time, because a call writer must be prepared to deliver the underlying instrument in return for the strike price, even if its current value is greater, a call writer gives up some ability to participate in security price increases. COMBINED POSITIONS. The funds may purchase and write options in combination with each other, or in combination with futures or forward contracts, to adjust the risk and return characteristics of the overall position. For example, a fund may purchase a put option and write a call option on the same underlying instrument, in order to construct a combined position whose risk and return characteristics are similar to selling a futures contract. Another possible combined position would involve writing a call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written call option in the event of a substantial price increase. Because combined options positions involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out. CORRELATION OF PRICE CHANGES. Because there are a limited number of types of exchange-traded options and futures contracts, it is likely that the standardized contracts available will not match a fund's current or anticipated investments exactly. A fund may invest in options and futures contracts based on securities with different issuers, maturities, or other characteristics from the securities in which it typically invests, which involves a risk that the options or futures position will not track the performance of the fund's other investments. Options and futures prices can also diverge from the prices of their underlying instruments, even if the underlying instruments match a fund's investments well. Options and futures prices are affected by such factors as current and anticipated short-term interest rates, changes in volatility of the underlying instrument, and the time remaining until expiration of the contract, which may not affect security prices the same way. Imperfect correlation may also result from differing levels of demand in the options and futures markets and the securities markets, from structural differences in how options and futures and securities are traded, or from imposition of daily price fluctuation limits or trading halts. A fund may purchase or sell options and futures contracts with a greater or lesser value than the securities it wishes to hedge or intends to purchase in order to attempt to compensate for differences in volatility between the contract and the securities, although this may not be successful in all cases. If price changes in a fund's options or futures positions are poorly correlated with its other investments, the positions may fail to produce anticipated gains or result in losses that are not offset by gains in other investments. LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid secondary market will exist for any particular options or futures contract at any particular time. Options may have relatively low trading volume and liquidity if their strike prices are not close to the underlying instrument's current price. In addition, exchanges may establish daily price fluctuation limits for options and futures contracts, and may halt trading if a contract's price moves upward or downward more than the limit in a given day. On volatile trading days when the price fluctuation limit is reached or a trading halt is imposed, it may be impossible for a fund to enter into new positions or close out existing positions. If the secondary market for a contract is not liquid because of price fluctuation limits or otherwise, it could prevent prompt liquidation of unfavorable positions, and potentially could require a fund to continue to hold a position until delivery or expiration regardless of changes in its value. As a result, a fund's access to other assets held to cover its options or futures positions could also be impaired. OTC OPTIONS. Unlike exchange-traded options, which are standardized with respect to the underlying instrument, expiration date, contract size, and strike price, the terms of over-the-counter options (options not traded on exchanges) generally are established through negotiation with the other party to the option contract. While this type of arrangement allows a fund greater flexibility to tailor an option to its needs, OTC options generally involve greater credit risk than exchange-traded options, which are guaranteed by the clearing organization of the exchanges where they are traded. OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures contracts are similar to forward currency exchange contracts, except that they are traded on exchanges (and have margin requirements) and are standardized as to contract size and delivery date. Most currency futures contracts call for payment or delivery in U.S. dollars. The underlying instrument of a currency option may be a foreign currency, which generally is purchased or delivered in exchange for U.S. dollars, or may be a futures contract. The purchaser of a currency call obtains the right to purchase the underlying currency, and the purchaser of a currency put obtains the right to sell the underlying currency. The uses and risks of currency options and futures are similar to options and futures relating to securities or indices, as discussed above. The funds may purchase and sell currency futures and may purchase and write currency options to increase or decrease their exposure to different foreign currencies. The funds may also purchase and write currency options in conjunction with each other or with currency futures or forward contracts. Currency futures and options values can be expected to correlate with exchange rates, but may not reflect other factors that affect the value of a fund's investments. A currency hedge, for example, should protect a Yen-denominated security from a decline in the Yen, but will not protect a fund against a price decline resulting from deterioration in the issuer's creditworthiness. Because the value of a fund's foreign-denominated investments changes in response to many factors other than exchange rates, it may not be possible to match the amount of currency options and futures to the value of a fund's investments exactly over time. ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The funds will comply with guidelines established by the SEC with respect to coverage of options and futures strategies by mutual funds, and if the guidelines so require will set aside appropriate liquid assets in a segregated custodial account in the amount prescribed. Securities held in a segregated account cannot be sold while the futures or option strategy is outstanding, unless they are replaced with other suitable assets. As a result, there is a possibility that segregation of a large percentage of a fund's assets could impede portfolio management or the fund's ability to meet redemption requests or other current obligations. SHORT SALES - FOR INTERNATIONAL GROWTH & INCOME FUND. The fund may enter into short sales with respect to stocks underlying its convertible security holdings. For example, if FMR anticipates a decline in the price of the stock underlying a convertible security the fund holds, it may sell the stock short. If the stock price subsequently declines, the proceeds of the short sale could be expected to offset all or a portion of the effect of the stock's decline on the value of the convertible security. The fund currently intends to hedge no more than 15% of its total assets with short sales on equity securities underlying its convertible security holdings under normal circumstances. When the fund enters into a short sale, it will be required to set aside securities equivalent in kind and amount to those sold short (or securities convertible or exchangeable into such securities and will be required to hold them aside while the short sale is outstanding. The fund will incur transaction costs, including interest expense, in connection with opening, maintaining, and closing short sales. WARRANTS. Warrants are securities that give a fund the right to purchase equity securities from the issuer at a specific price (the strike price) for a limited period of time. The strike price of warrants typically is much lower than the current market price of the underlying securities, yet they are subject to similar price fluctuations. As a result, warrants may be more volatile investments than the underlying securities and may offer greater potential for capital appreciation as well as capital loss. Warrants do not entitle a holder to dividends or voting rights with respect to the underlying securities and do not represent any rights in the assets of the issuing company. Also, the value of the warrant does not necessarily change with the value of the underlying securities and a warrant ceases to have value if it is not exercised prior to the expiration date. These factors can make warrants more speculative than other types of investments. SPECIAL CONSIDERATIONS AFFECTING EUROPE New developments surrounding the creation of a unified common market in Europe have helped to reduce physical and economic barriers promoting the free flow of goods and services throughout Western Europe. These new developments could make this new unified market one of the largest in the world. However, encouraging signs of stronger growth in North America contrasted with marked deterioration in economic performance in Europe, where recessionary tendencies persisted through much of 1993. The sharp slowing of growth in Europe reflects a range of adverse factors, including tight monetary conditions, inadequate progress toward inflation convergence and budgetary consolidation in many countries, and the attendant weakness of consumer and business confidence. More generally, the turbulence in foreign exchange markets since the middle of 1992 and an escalation of tensions over trade have contributed to increased uncertainty in many countries. The economic situation also remains difficult for Eastern European countries in transition from central planning, following what has already been a sizable decline in output. The contraction now appears to be bottoming out in parts of central Europe, where some countries are projected to register positive growth in 1994. But key aspects of the reform and stabilization efforts have not yet been fully implemented, and there remain risks of policy slippages. In the Russian Federation and most other countries of the former Soviet Union, economic conditions are of particular concern because of economic instability due to political unrest and armed conflicts in many regions. Notwithstanding the continued economic difficulties in many countries, recent positive developments offer hope for a cooperative growth strategy in the near term, which could also permit a strengthening of global economic performance over the medium term. Many developing countries are reaping the fruits of sustained reform and stabilization efforts. Efforts to enhance assistance to countries affected by the transition to market-based trading systems occurring in central Europe and the former Soviet Union, and to low-income countries to support strengthened stabilization and restructuring efforts, are moving forward. In Europe, exchange market tensions have eased, and interest rates have been falling and should continue to do so as evidence accumulates of the waning of inflationary pressures. The European Community (EC) consists of Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, and the United Kingdom (the member states). In 1986, the member states of the EC signed the "Single European Act," an agreement committing these countries to the establishment of a market among themselves, unimpeded by internal barriers or hindrances to the free movement of goods, persons, services, or capital. To meet this goal, a series of directives have been issued to the member states. Compliance with these directives is designed to eliminate three principal categories of barriers: 1) physical frontiers, such as customs posts and border controls; 2) technical barriers (which include restrictions operating within national territories) such as regulations and norms for goods and services (product standards); discrimination against foreign bids (bids by other EC members) on public purchases; or restrictions on foreign requests to establish subsidiaries; and ( 3) fiscal frontiers, notably the need to levy value - added taxes, tariffs, or excises on goods or services imported from other EC states. The ultimate goal of this project is to achieve a large unified domestic European market in which available resources would be more efficiently allocated through the elimination of the above - mentioned barriers and the added costs associated with those barriers. Elimination of these barriers would simplify product distribution networks, allow economies of scale to be more readily achieved, and free the flow of capital and other resources. The Maastricht Treaty on economic and monetary union (EMU) attempts to provide its members with a stable monetary framework consistent with the EC's broad economic goals. But until the EMU takes effect, which is intended to occur between 1997 and 1999, the community will face the need to reinforce monetary cooperation in order to reduce the risk of a recurrence of tensions between domestic and external policy objectives. The total European market, as represented by both EC and non - EC countries, consists of over 32 8 million consumers, making it larger currently than either the United States or Japanese markets. European businesses compete nationally and internationally in a wide range of industries including: telecommunications and information services, roads and transportation, building materials, food and beverages, broadcast and media, financial services, electronics, and textiles. Actual and anticipated actions on the part of member states to conform to the unified Europe directives has prompted interest and activity not only by European firms, but also by foreign entities anxious to establish a presence in Europe that will result from these changes. Indications of the effect of this response to a unified Europe can be seen in the areas of mergers and acquisitions, corporate expansion and development, GNP growth, and national stock market activity. The early experience of the former centrally planned economies has already demonstrated the crucially important link between structural reforms, macroeconomic stabilization, and successful economic transformation. Among the central European countries, the Czech Republic, Hungary, and Poland have made the greatest progress in structural reform; inflationary pressures there have abated following price liberalization, and output has begun to recover. These achievements will be difficult to sustain, however, in the absence of strong efforts to contain the large fiscal deficits that have accompanied the considerable losses of output and tax revenue since the start of the reform process. In the Baltic countries there are encouraging signs that reforms are taking hold and are being supported by strong stabilization efforts. In most other countries of the former Soviet Union, in contrast, inadequate stabilization efforts now threaten to lead to hyper-inflation, which could derail the reform process. Inflation, which had abated following the immediate impact of price liberalization in early 1992, surged to extremely high levels in late 1992 and early 1993. The main reason for this development has been excessive credit expansion to the government and to state enterprises. The transformation process is being seriously hampered by the widespread subsidization of inefficient enterprises and the resulting misallocation of resources. The lack of effective economic and monetary cooperation among the countries of the former Soviet Union exacerbates other problems by severely constraining trade flows and impeding inflation control. Partly as a result of these difficulties, some countries have decided that the introduction of separate currencies offers the best scope for avoiding hyper-inflation and for improving economic conditions. This development can facilitate the implementations of stronger stabilization programs. Economic conditions appear to have improved for some of the transition economies of central Europe during the past year. Following three successive years of output declines, there are preliminary indications of a turnaround in the former Czech and Slovak Federal Republic, Hungary and Poland; growth in private sector activity and strong exports, especially to Western Europe, now appear to have contained the fall in output. Most central European countries in transition, however, are expected to achieve positive real growth in 1994 as market reforms deepen. The strength of the projected output gains will depend crucially on the ability of the reforming countries to contain fiscal deficits and inflation and on their continued access to, and success in, export markets. Economic conditions in the former Soviet Union have continued to deteriorate. Real GDP in Russia is estimated to have fallen 19 percent in 1992, after a 9 percent decline in 1991. In many other countries of the region, output losses have been even larger. These declines reflect the adjustment difficulties during the early stages of the transition, high rates of inflation, the compression of imports, disruption in trade among the countries of the former Soviet Union, and uncertainties about the reform process itself. Large-scale subsidies are delaying industrial restructuring and are exacerbating the fiscal situation. A reversal of these adverse factors is not anticipated in the near term, and output is expected to decline further in most of these countries. A number of their governments, including those of Hungary, and Poland, are currently implementing or considering reforms directed at political and economic liberalization, including efforts to foster multi-party political systems, decentralize economic planning, and move toward free market economies. At present, no Eastern European country has a developed stock market, but Poland , Hungary and the Czech Republic have small securities markets in operation. Ethnic and civil conflict currently rage throughout the former Yugoslavia. The outcome is uncertain. Both the EC and Japan, among others, have made overtures to establish trading arrangements and assist in the economic development of the Eastern European nations . In the rest of Europe, monetary policy and financial market developments have been dominated by the currency turmoil that began in September 1992. At the same time, conditions are improving for significant reductions of official interest rates in Europe, which should help to contain recessionary forces and ensure that recovery takes hold by 1994. There is also an urgent need for positive steps to resist protectionist pressures, especially by bringing the multilateral trade negotiations under the Uruguay Round of the General Agreement on Trade and Tariffs (GATT) to a successful conclusion. Determined action to alleviate short-term difficulties and to achieve key medium-term objectives would unquestionably strengthen consumer and business confidence. Interest rates generally have declined somewhat with the easing of tensions in the Exchange Rate Mechanism (ERM), but for most countries tight monetary conditions remain an obstacle to stronger growth and a threat to exchange market stability. However, in the long - term, reunification could prove to be an engine for domestic and international growth. The conditions that have given rise to these developments are changeable, and there is no assurance that reforms will continue or that their goals will be achieved. REAL GDP ANNUAL RATE OF GROWTH OCTOBER 1993 Denmark 0.0% France 1.3 Germany 1.2 Italy 2.9 Netherlands 3.6 Spain 0.1 Switzerland (1.1) United Kingdom 1.1 Source: International Monetary Fund (Figures are quoted based on each country's domestic currency.) NATIONAL INDICES ( WITHOUT DIVIDENDS) OCTOBER 1993 GROWTH IN U.S. DOLLARS EUROPE 6 months 12 months 5 years Greece 10.45 24.86 14.74 Portugal 22.39 27.11 -1.69 Turkey 50.18 156.34 35.59 Source: Morgan Stanley NATIONAL INDICES ( WITHOUT DIVIDENDS) OCTOBER 1993 GROWTH IN LOCAL CURRENCY EUROPE 6 months 12 months 5 years Greece 23.04 49.41 26.64 Portugal 43.86 59.07 1.55 Turkey 101.04 322.29 104.04 Source: Morgan Stanley SPECIAL CONSIDERATIONS AFFECTING JAPAN, THE PACIFIC BASIN , AND SOUTHEAST ASIA Many Asian countries may be subject to a greater degree of social, political and economic instability than is the case in the United States and Western European countries. Such instability may result from (i) authoritarian governments or military involvement in political and economic decision-making; (ii) popular unrest associated with demands for improved political, economic and social conditions; (iii) internal insurgencies; (iv) hostile relations with neighboring countries; and (v) ethnic, religious and racial disaffection. The economies of most of the Asian countries are heavily dependent upon international trade and are accordingly affected by protective trade barriers and the economic conditions of their trading partners, principally, the United States, Japan, China and the European Community. The enactment by the United States or other principal trading partners of protectionist trade legislation, reduction of foreign investment in the local economies and general declines in the international securities markets could have a significant adverse effect upon the securities markets of the Asian countries. Thailand h as one of the fastest-grow ing stock markets in the world. The manufacturing sector is becoming increasingly sophisticated and is benefiting from export-oriented investing. The manufacturing and service sectors continue to account for the bulk of Thailand's economic growth. The agricultural sector continues to become less important. The government has followed fairly sound fiscal and monetary policies, aided by increased tax receipts from a fast moving economy. The government also continues to move ahead with new projects - especially telecommunications, roads and port facilities - needed to refurbish the country's overtaxed infrastructure. Nonetheless, political unrest coupled with the shooting of antigovernment demonstrators in May 1992 has caused many international businesses to question Thailand's political stability. Hong Kong's impending return to Chinese dominion in 1997 has not initially had a positive effect on its economic growth which was vigorous in the 1980s . Although China has committed by treaty to preserve the economic and social freedoms enjoyed in Hong Kong for 50 years after regaining control of Hong Kong, the continuation of the current form of the economic system in Hong Kong after the reversion will depend on the actions of the government of China. Business confidence in Hong Kong, therefore, can be significantly affected by such developments, which in turn can affect markets and business performance. In preparation for 1997, Hong Kong has continued to develop trade with China, where it is the largest foreign investor, while also maintaining its long - standing export relationship with the United States. Spending on infrastructure improvements is a significant priority of the colonial government while the private sector continues to diversify abroad based on its position as an established international trade center in the Far East. In terms of GDP, industrial standards and level of education, South Korea is second only to Japan in Asia. It enjoys the benefits of a diversified economy with wel l- developed sectors in electronics, automobiles, textiles and shoe manufacture, steel and shipbuilding among others. The driving force behind the economy's dynamic growth has been the planned development of an export - oriented economy in a vigorously entrepreneurial society. Real GDP grew about 4.3 % in 1993 . Labor unrest was noticeably calmer, unemployment averaged a low of 2.3%, and investment was strong. Inflation rates, however, are beginning to challenge South Korea's strong economic performance. B oth Koreas joined the United Nations separately in late 1991, creating another forum for negotiation and joint cooperation. Reunification of North Korea and South Korea could have a detrimental effect on the economy of South Korea. Indonesia is a mixed economy with many socialist institutions and central planning but with a recent emphasis on deregulation and private enterprise. Like Thailand, Indonesia has extensive natural wealth, yet with a large and rapidly increasing population, it remains a poor country. Indonesia's dependence on commodity exports makes it vulnerable to a fall in world commodity prices. Malaysia has one of the fastest - growing economies in the Asian-Pacific region. Malaysia has become the world's third-largest producer of semiconductor devices (after the U.S. and Japan) and the world's largest exporter of semiconductor devices. More remarkable is the country's ability to achieve rapid economic growth with relative price stability (2% inflation over the past five years) as the government followed prudent fiscal/monetary policies. Malaysia's high export dependence level leaves it vulnerable to a recession in the Organization for Economic Cooperation and Development countries or a fall in world commodity prices. Singapore has an open entrepreneurial economy with strong service and manufacturing sectors and excellent international trading links derived from its history. During the 1970s and the early 1980s, the economy expanded rapidly, achieving an average annual growth rate of 9%. Per capita GDP is among the highest in Asia. Singapore holds a position as a major oil refining and services center. Japan currently has the second - largest GDP in the world. The Japanese economy has grown substantially over the last three decades. Its growth rate averaged over 5% in the 1970s and 1980s. However, in 1992, the growth rate in Japan slowed to 0.6% and their budget showed a deficit of 1 1/2% percent of GDP. Despite small rallies and market gains, Japan has been plagued with economic sluggishness. Economic conditions have weakened considerably in Japan since October 1992. The boom in Japan's equity and property markets during the expansion of the late 1980's supported high rates of investment and consumer spending on durable goods, but both of these components of demand have now retreated sharply following the decline in asset prices. Profits have fallen sharply, the previously tight labor market conditions have eased considerably, and consumer confidence is low. The banking sector has experienced a sharp rise in non-performing loans, and strains in the financial system are likely to continue. The decline in interest rates and the two large fiscal stimulus packages should help to contain the recessionary forces, but substantial uncertainties remain. The general government position has deteriorated as a result of weakening economic growth, as well as stimulative measures taken recently to support economic activity and to restore financial stability. Although Japan's economic growth has declined significantly since 1990, many Japanese companies seem capable of rebounding due to increased investments, smaller borrowings, increased product development and continued government support. Growth is expected to recover in 1994. Japan's economic growth in the early 1980's was due in part to government borrowings. Japan is heavily dependent upon international trade and, accordingly, has been and may continue to be adversely affected by trade barriers, and other protectionist or retaliatory measures of, as well as economic conditions in, the U.S. and other countries with which they trade. Industry, the most important sector of the economy, is heavily dependent on imported raw materials and fuels. Japan's major industries are in the engineering, electrical, textile, chemical, automobile, fishing, and telecommunication fields. Japan imports iron ore, copper, and many forest products. Only 19% of its land is suitable for cultivation. Japan's agricultural economy is subsidized and protected. It is about 50% self - sufficient in food production. Even though Japan produces a minute rice surplus, it is dependent upon large imports of wheat, sorghum, and soybeans from other countries. Japan's high volume of exports such as automobiles, machine tools, and semiconductors have caused trade tensions with other countries, particularly the United States. Attempts to approve trading agreements between the countries may reduce the friction caused by the current trade imbalance. Australia has a prosperous Western - style capitalist economy, with a per capita GDP comparable to levels in industrialized Western European countries. It is rich in natural resources and is the world's largest exporter of beef and wool, second - largest for mutton, and is among the top wheat exporters. Australia is also a major exporter of minerals, metals and fossil fuels. Due to the nature of its exports, a downturn in world commodity prices can have a big impact on its economy. EMERGING MARKETS: ASIA MARKET CAPITALIZATION IN U.S. DOLLARS OCTOBER 1993 Billions: India 29.25 Indonesia 10.85 Korea 70.61 Malaysia 87.76 Pakistan 4.74 Philippines 14.28 Sri Lanka .79 Taiwan 52.34 Thailand 48.82 Source: Morgan Stanley NATIONAL INDICES (WITHOUT DIVIDENDS) OCTOBER 1993 GROWTH IN U.S. DOLLARS ASIA 6 months 12 months 5 years India 30.20 n/a n/a Indonesia 42.45 39.03 26.80 Israel 6.50 n/a n/a Jordan 7.41 34.15 4.70 Korea .30 19.89 -4.08 Malaysia 42.47 67.80 23.91 Pakistan 29.19 n/a n/a Philippines 32.73 47.36 24.44 Sri Lanka 57.91 n/a n/a Taiwan -13.43 5.81 -8.48 Thailand 41.73 42.95 24.47 Source: Morgan Stanley NATIONAL INDICES (WITHOUT DIVIDENDS) OCTOBER 1993 GROWTH IN LOCAL CURRENCY ASIA 6 months 12 months 5 years India 30.32 n/a n/a Indonesia 43.96 42.84 32.09 Israel 12.52 n/a n/a Jordan 9.92 36.89 13.63 Korea 1.79 23.82 -1.33 Malaysia 41.95 70.92 22.83 Pakistan 45.39 n/a n/a Philippines 46.90 74.26 32.75 Sri Lanka 62.12 n/a n/a Taiwan -10.24 12.01 -9.56 Thailand 42.47 42.83 24.48 Source: Morgan Stanley ASIAN STOCK MARKET RETURNS (OCTOBER 1993)
Average annual stock market Stock market returns return (Local currency %) (Local currency%) 1989-1992 11 months to November 30,1993 China n/a n/a Hong Kong 17.9 64.6 India 36.9 27.6 Indonesia 4.0 80.5 Japan (14.2) 5.6 Korea (9.0) 19.7 Malaysia 12.2 67.8 Philippines 25.4 86.9 Singapore 7.1 32.2 Taiwan (11.2) 32.0 Thailand 22.5 53.6
Source: Morgan Stanley REAL GDP (OCTOBER 1993) Average Real GDP Growth for the Period Nominal GDP 1980-1992 1992 % (US$ billions) China 9.7 435 Hong Kong 6.8 96 India 5.3 266 Indonesia 5.6 126 Japan 4.0 3,670 Korea 9.2 297 Malaysia 5.9 55 Philippines 1.0 52 Singapore 6.5 46 Taiwan 7.6 207 Thailand 7.9 104 Source: Morgan Stanley SPECIAL CONSIDERATIONS AFFECTING CANADA Canada occupies the northern part of North America and is the second - largest country in the world (3.97 million square miles in area) extending from the Atlantic Ocean to the Pacific. The companies in which the fund may invest may include those involved in the energy industry, industrial materials (chemicals, base metals, timber and paper) and agricultural materials (grain cereals). The securities of companies in the energy industry are subject to changes in value and dividend yield which depend, to a large extent, on the price and supply of energy fuels. Rapid price and supply fluctuations may be caused by events relating to international politics, energy conservation and the success of exploration products. Canada is one the world's leading industrial countries, as well as a major exporter of agricultural products. Canada is rich in natural resources such as zinc, uranium, nickel, gold, silver, aluminum, iron and copper. Forest covers over 44% of land area, making Canada a leading world producer of newsprint. The economy of Canada is strongly influenced by the activities of companies and industries involved in the production and processing of natural resources. Canada is a major producer of hydroelectricity, oil and gas. The business activities of companies in the energy field may include the production, generation, transmission, marketing, control or measurement of energy or energy fuels. Economic prospects are changing due to recent government attempts to reduce restrictions against foreign investment. Canadian securities are not considered by FMR to have the same level of risk as other nation's securities. Canadian and U.S. companies are generally subject to similar auditing and accounting procedures, and similar government supervision and regulation. Canadian markets are more liquid than many other foreign markets and share similar characteristics with U.S. markets. The political system is more stable than in some other foreign countries, and the Canadian dollar is generally less volatile relative to the U.S. dollar. Many factors affect and could have an adverse impact on the financial condition of Canada, including social, environmental and economic conditions; factors which are not within the control of Canada. In Canada, where recovery is not yet as firmly established as in the United States, interest rates have been coming down after a sharp rise associated with exchange market developments in the fall of 1992. In light of the cyclical situation, there should be room for a further easing of interest rates without jeopardizing the progress made toward price stability. Continued perseverance in reducing the structural budget deficit also is required. FMR is unable to predict what effect, if any, such factors would have on instruments held in the fund's portfolio. Beginning in January 1989, the U.S. - Canada Free Trade Agreement will be phased in over a period of 10 years. This agreement will remove tariffs on U.S. technology and Canadian agricultural products in addition to removing trade barriers affecting other important sectors of each country's economy. Canada, the U.S. and Mexico will implement the North American Free Trade Agreement, beginning in 1994. This cooperation is expected to lend to increased trade and to reduce barriers. The majority of new equity issues or initial public offerings in Canada are through underwritten offerings. The Fund may elect to participate in these issues. SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICA Latin America is a region rich in natural resources such as oil, copper, tin, silver, iron ore, forestry, fishing, livestock, and agriculture. The region has a large population (roughly 300 million) representing a large domestic market. Economic growth was strong in the 1960s and 1970s, but slowed dramatically in the 1980s as a result of poor economic policies, higher international interest rates and the denial of access to new foreign capital. Capital flight has proven a persistent problem and external debt has been forcibly rescheduled. Political turmoil, high inflation, capital repatriation restrictions and nationalization have further exacerbated conditions. Changes in political leadership, the implementation of market - oriented economic policies, such as privatization, trade reform and fiscal and monetary reform are among the recent steps taken to renew economic growth. External debt is being restructured and flight capital (domestic capital that has left the home country) has begun to return. Inflation control efforts have also been implemented. A free trade zone has been established in various areas around the region, the most notable being a free zone between Mexico, the U.S., and Canada. Latin American equity markets can be extremely volatile and in the past have shown little correlation with the U.S. market. Currencies are typically weak, but most are now relatively free floating, and it is not unusual for the currencies to undergo wide fluctuations in value over short periods of time due to changes in the market. Mexico's economy is a mixture of state - owned industrial plants (notably oil), private manufacturing and services, and both large - scale and traditional agriculture. In the 1980s, Mexico experienced severe economic difficulties: the nation accumulated large external debts as world petroleum prices fell; rapid population growth outstripped the domestic food supply; and inflation, unemployment, and pressures to emigrate became more acute. Growth in national output however, appears to be recovering, rising from 1.4% in 1988 to 3.9% in 1990. The U.S. is Mexico's major trading partner, accounting for two - thirds of its exports and imports. In fact, the U.S. now exports more goods to Mexico than to Japan. After petroleum, border assembly plants and tourism are the largest earners of foreign exchange. The government, in consultation with international economic agencies, is implementing programs to stabilize the economy and foster growth. Mexico, the U.S. and Canada will implement the North American Free Trade Agreement, beginning in 1994. This cooperation is expected to lead to increased trade and reduced barriers. Brazil entered the 1990s with declining real growth, runaway inflation, an unserviceable foreign debt of $122 billion, and a lack of policy direction. A major long - run strength is Brazil's natural resources. Iron ore, bauxite, tin, gold, and forestry products make up som e of Brazil's basic natural resource base, which includes some of the largest mineral reserves in the world. A vibrant private sector is marred by an inefficient public sector. The government has embarked on an ambitious reform program that seeks to modernize and reinvigorate the economy by stabilizing prices, deregulating the economy, and opening it to increased foreign competition. In terms of population, Brazil is the sixth - largest in the world with about 155 million people and represents a huge domestic market. Chile, like Brazil, is endowed with considerable mining resources, in particular copper. Economic reform has been ongoing in Chile for at least 15 years, but political democracy has only recently returned to Chile. Privatization of the public sector beginning in the early 1980s has bolstered the equity market. A well organized pension system has created a long - term domestic investor base. Argentina is strong in wheat production and other foodstuffs and livestock ranching. A well - educated and skilled population boasts one of the highest literacy rates in the region. The country has been ravaged by decades of extremely high inflation and political instability. Recent attempts by the present political regime to slow inflation and rationalize government spending appear to be meeting with some success. Privatization is ongoing and should reduce the amount of external debt outstanding . Venezuela has substantial oil reserves. External debt is being renegotiated, and the government is implementing economic reform in order to reduce the size of the public sector. Internal gasoline prices, which are one - third those of international prices, are being increased in order to reduce subsidies. Plans for privatization and exchange and interest rate liberalization are examples of recently introduced reforms. EMERGING MARKETS: LATIN AMERICA MARKET CAPITALIZATION IN U.S. DOLLARS OCTOBER 1993 Billions: Argentina 24.99 Brazil 48.62 Chile 22.77 Colombia 4.89 Mexico 89.46 Peru 3.00 Venezuela 4.83 Source: Morgan Stanley NATIONAL INDICES (WITHOUT DIVIDENDS) OCTOBER 1993 GROWTH IN U.S. DOLLARS LATIN AMERICA 6 months 12 months 5 years Argentina 38.32 57.19 43.89 Brazil 34.75 59.55 17.76 Chile 22.52 5.29 39.10 Colombia 28.01 n/a n/a Mexico 19.14 23.46 55.30 Peru 49.87 n/a n/a Venezuela -2.97 n/a n/a Source: Morgan Stanley NATIONAL INDICES (WITHOUT DIVIDENDS) OCTOBER 1993 GROWTH IN LOCAL CURRENCY LATIN AMERICA 6 months 12 months 5 years Argentina 38.54 58.79 427.44 Brazil 626.43 3354.77 1434.40 Chile 24.74 16.14 54.05 Colombia 35.13 n/a n/a Mexico 19.87 23.74 65.40 Peru 66.63 n/a n/a Venezuela 13.46 n/a n/a Source: Morgan Stanley SPECIAL CONSIDERATIONS AFFECTING AFRICA Africa is a continent of roughly 50 countries with a total population of approximately 840 million people. Literacy rates (the percentage of people who are over 15 years of age and who can read and write) are relatively low, ranging from 20% to 60%. The primary industries include crude oil, natural gas, manganese ore, phosphate, bauxite, copper, iron, diamond, cotton, coffee, cocoa, timber, tobacco, sugar, tourism, and cattle. Many of the countries are fraught with political instability. However, there has been a trend over the past five years toward democratization. Many countries are moving from a military style, Marxist, or single party government to a multi-party system. Still, there remain many countries that do not have a stable political process. Other countries have been enmeshed in civil wars and border clashes. Economically, the Northern Rim countries (including Morocco, Egypt, and Algeria) and Nigeria, Zimbabwe, and South Africa are the wealthier countries on the continent due to their strong ties with the European nations. The market capitalization of these countries has been growing recently as more international companies invest in Africa and as local companies start to list on the exchanges. However, religious strife has been a significant source of instability. On the other end of the economic spectrum are countries, such as Burkina, Madagascar, and Malawi, that are considered to be among the poorest or least developed in the world. These countries are generally landlocked or have poor natural resources. The economies of many African countries are heavily dependent on international oil prices. Of all the African industries, oil has been the most lucrative, accounting for 40% to 60% of many countries' Gross Domestic Product. However, general decline in oil prices has had an adverse impact on many economies. PORTFOLIO TRANSACTIONS All orders for the purchase or sale of portfolio securities are placed on behalf of the funds by FMR pursuant to authority contained in each fund's management contract. If FMR grants investment management authority to the sub-advisers as described in the section entitled "Management Contracts" beginning on page , the sub-advisers will be authorized to place orders for the purchase and sale of portfolio securities and will do so in accordance with the policies described below. FMR is also responsible for the placement of transaction orders for other investment companies and accounts for which it or its affiliates act as investment adviser. In selecting broker-dealers, subject to applicable limitations of the federal securities laws, FMR will consider various relevant factors, including, but not limited to, the size and type of the transaction; the nature and character of the markets for the security to be purchased or sold; the execution efficiency, settlement capability, and financial condition of the broker-dealer firm; the broker-dealer's execution services rendered on a continuing basis , the reasonableness of any commissions , and arrangement for payment of fund expenses . Commissions for foreign investments traded on foreign exchanges generally will be higher than for U.S. investments and may not be subject to negotiation. The funds may execute portfolio transactions with broker-dealers who provide research and execution services to the funds or other accounts over which FMR or its affiliates exercise investment discretion. Such services may include advice concerning the value of securities; the advisability of investing in, purchasing, or selling securities; the availability of securities or the purchasers or sellers of securities; furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy, and performance of accounts; and effecting securities transactions and performing functions incidental thereto (such as clearance and settlement). The selection of such broker-dealers generally is made by FMR (to the extent possible consistent with execution considerations) in accordance with a ranking of broker-dealers determined periodically by FMR's investment staff based upon the quality of such research and execution services provided. The receipt of research from broker-dealers that execute transactions on behalf of the funds may be useful to FMR in rendering investment management services to the funds or its other clients, and conversely, such research provided by broker-dealers who have executed transaction orders on behalf of other FMR clients may be useful to FMR in carrying out its obligations to the funds. The receipt of such research has not reduced FMR's normal independent research activities; however, it enables FMR to avoid the additional expenses that could be incurred if FMR tried to develop comparable information through its own efforts. Subject to applicable limitations of the federal securities laws, broker-dealers may receive commissions for agency transactions that are in excess of the amount of commissions charged by other broker-dealers in recognition of their research and execution services. In order to cause the funds to pay such higher commissions, FMR must determine in good faith that such commissions are reasonable in relation to the value of the brokerage and research services provided by such executing broker-dealers, viewed in terms of a particular transaction or FMR's overall responsibilities to the funds and its other clients. In reaching this determination, FMR will not attempt to place a specific dollar value on the brokerage and research services provided, or to determine what portion of the compensation should be related to those services. FMR is authorized to use research services provided by and to place portfolio transactions with brokerage firms that have provided assistance in the distribution of shares of the funds or shares of other Fidelity funds to extent permitted by law. FMR may use research services provided by and place agency transactions with Fidelity Brokerage Services, Inc. (FBSI) and Fidelity Brokerage Services, Ltd. (FBSL), subsidiaries of FMR Corp., if the commissions are fair, reasonable, and comparable to commissions charged by non-affiliated, qualified brokerage firms for similar services. Prior to September 4, 1992, FBSL operated under the name Fidelity Portfolio Services, Ltd. (FPSL) as a a wholly owned subsidiary of Fidelity International Limited (FIL). Edward C. Johnson 3d is Chairman of FIL. Mr. Johnson 3d, Johnson family members, and various trusts for the benefit of the Johnson family own, directly or indirectly, more than 25% of the voting common stock of FIL. FMR may allocate brokerage transactions to broker-dealers who have entered into arrangements with FMR under which the broker-dealer allocates a portion of the commissions paid by the fund toward payment of the fund's expenses, such as transfer agent fees of FSC or custodian fees. The transaction quality must, however, be comparable to those of other qualified broker-dealers. Section 11(a) of the Securities Exchange Act of 1934 prohibits members of national securities exchanges from executing exchange transactions for accounts which they or their affiliates manage, except if certain requirements are satisfied . Pursuant to such requirements, the Board of Trustees has authorized FBSI to execute fund portfolio transactions on national securities exchanges in accordance with approved procedures and applicable SEC rules. The Trustees periodically review FMR's performance of its responsibilities in connection with the placement of portfolio transactions on behalf of the funds and review the commissions paid by the funds over representative periods of time to determine if they are reasonable in relation to the benefits to the funds. The funds' turnover rates for the fiscal years ended October 31, 1993 and 1992 are illustrated in the table below. TURNOVER RATES 1993 1992 Diversified International 1 56% 56%* International Growth & Income 24 76 Overseas 64 122 Worldwide 57 130 Canada 131 55 Europe 76 95 Japan 2 257 n/a Pacific Basin 77 105 Emerging Markets 57 159 Latin America 3 72* n/a Southeast Asia 3 14* n/a ____ 1 From December 27, 1991 (commencement of operations). 2 From September 15, 1992 (commencement of operations). 3 From April 19, 1993 (commencement of operations). * Annualized BROKERAGE COMMISSIONS. The table below lists the total brokerage commissions; the percentage of brokerage commissions paid to brokerage firms that provided research services; and the dollar amount of commissions paid to FBSI and FBSL for the fiscal periods ended October 31, 1993, 1992, and 1991. The tables also list the percentage of each fund's aggregate brokerage commissions paid to FBSI and FBSL during the 1993, 1992, and 1991 fiscal periods, as well as the percentage of each fund's aggregate dollar amount of transactions executed through FBSI and FBSL during the same periods. However, during fiscal 1993, the fund did not pay any commissions to FBSL. The difference in the percentage of the brokerage commissions paid to and the percentage of the dollar amount of transactions effected through FBSI and FBSL is a result of the low commission rates charged by FBSI and FBSL. % of % of % of % of Transactions Transactions Fiscal % Paid to Commissions Commissions Effected Effected Period Ended Firms Providing Paid Paid through through October 31 Total Research To FBSI To FBSL To FBSI FBSL To FBSI FBSL
DIVERSIFIED INTERNATIONAL 1993 $ 826,386 94.68% $ 4,142 $ 0 .50% 0 1.77% 0 19921 $ 160,423 99.80% $ 217 $ 182 .10% .10% .10% .10% INTERNATIONAL GROWTH & INCOME 1993 $ 1,928,776 87.29% $ 2,625 $ 0 .14% 0 .64% 0 1992 $ 245,327 89.9% 0 $ 5,458 0 2.22% 0 5.12% 1991 $ 192,832 84.63% 0 $ 2,387 0 1.24% 0 3.06% OVERSEAS 1993 $ 3,401,287 90.12% $ 3,290 $ 0 .10% 0 .40% 0 1992 $ 4,770,619 89.81% 0 $ 54,470 0 1.14% 0 1.83% 1991 $ 4,284,435 90.05% $ 683 $ 37,690 .02% .88% .05% 1.75% WORLDWIDE 1993 $ 708,837 87.03% $ 22,678 $ 0 3.20% 0% 9.39% 0 1992 $ 555,712 80.77% $ 28,469 $ 2,492 5.12% .45% 13.91% .96% 1991 $ 502,988 84.80% $ 33,308 $ 4,968 6.62% .99% 11.44% 1.93% CANADA 1993 $ 559,269 95.79% $ 6,234 $ 0 1.11% 0 2.36% 0 1992 $ 56,775 97.76% $ 1,190 $ 0 2.10% 0 7.11% 0 1991 $ 63,752 99.00% $ 385 $ 0 .60% 0 1.94% 0 EUROPE 1993 $ 1,377,988 81.75% $ 0 $ 0 0 0 0 0 1992 $ 1,266,800 83.55% 0 $ 26,013 0 2.05% 0 3.32% 1991 $ 936,015 85.22% $ 2,320 $ 48,609 .25% 5.19% .70% 8.79% JAPAN 1993 $ 1,680,833 94.76% $ 0 $ 0 0 0 0 0 19922 $ 11,099 85.68% 0 0 0 0 0 0 PACIFIC BASIN 1993 $ 3,067,285 96.86% $ 0 $ 0 0 0 0 0 1992 $ 1,152,821 97.12% 0 0 0 0 0 0 1991 $ 1,120,545 95.64% 0 0 0 0 0 0 EMERGING MARKETS 1993 $ 4,396,375 94.15% $ 12,982 $ 0 .30% 0 2.13% 0 1992 $ 157,678 86.76% 0 $ 0 0 0 0 0 1991 $ 34,455 93.59% $ 147 $ 0 .43% 0 .85% 0 LATIN AMERICA 19933 $ 902,099 85.11% $ 15,080 $ 0 1.67% 0 7.79% 0 SOUTHEAST ASIA 19933 $ 2,709,357 82.70% $ 0 $ 0 0% 0 0 0
_____ 1 From December 27, 1991 (commencement of operations). 2 From September 15, 1992 (commencement of operations). 3 From April 19, 1993 (commencement of operations). From time to time the Trustees will review whether the recapture for the benefit of the funds of some portion of the brokerage commissions or similar fees paid by the funds on portfolio transactions is legally permissible and advisable. The funds seek to recapture soliciting broker-dealer fees on the tender of portfolio securities, but at present no other recapture arrangements are in effect. The Trustees intend to continue to review whether recapture opportunities are available and are legally permissible and, if so, to determine in the exercise of their business judgment, whether it would be advisable for the funds to seek such recapture. Although the Trustees and officers of the funds are substantially the same as those of other funds managed by FMR, investment decisions for the funds are made independently from those of other funds managed by FMR or accounts managed by FMR affiliates. It sometimes happens that the same security is held in the portfolio of more than one of these funds or accounts. Simultaneous transactions are inevitable when several funds are managed by the same investment adviser, particularly when the same security is suitable for the investment objective of more than one fund. When two or more funds are simultaneously engaged in the purchase or sale of the same security, the prices and amounts are allocated in accordance with a formula considered by the officers of the funds involved to be equitable to each fund. In some cases this system could have a detrimental effect on the price or value of the security as far as the funds are concerned. In other cases, however, the ability of the funds to participate in volume transactions will produce better executions and prices for the funds. It is the current opinion of the Trustees that the desirability of retaining FMR as investment adviser to the funds outweighs any disadvantages that may be said to exist from exposure to simultaneous transactions. VALUATION OF PORTFOLIO SECURITIES Portfolio securities are valued by various methods depending on the primary market or exchange on which they trade. Equity securities for which the primary market is the U.S. are valued at last sale price or, if no sale has occurred, at the closing bid price. Equity securities for which the primary market is outside the U.S. are valued using the official closing price or the last sale price in the principal market where they are traded. If the last sale price (on the local exchange) is unavailable, the last evaluated quote or last bid price is normally used. Short-term securities are valued either at amortized cost or at original cost plus accrued interest, both of which approximate current value. Fixed-income securities are valued primarily by a pricing service that uses a vendor security valuation matrix which incorporates both dealer-supplied valuations and electronic data processing techniques. This twofold approach is believed to more accurately reflect fair value because it takes into account appropriate factors such as institutional trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data, without exclusive reliance upon quoted, exchange, or over-the counter prices. Use of pricing services has been approved by the Board of Trustees. Securities and other assets for which there is no readily available market are valued in good faith by a committee appointed by the Board of Trustees. The procedures set forth above need not be used to determine the value of the securities owned by the fund if, in the opinion of a committee appointed by the Board of Trustees, some other method (e.g., closing over-the-counter bid prices in the case of debt instruments traded on an exchange) would more accurately reflect the fair market value of such securities. Generally, the valuation of foreign and domestic equity securities, as well as corporate bonds, U.S. government securities, money market instruments, and repurchase agreements, is substantially completed each day at the close of the NYSE. The values of any such securities held by the fund are determined as of such time for the purpose of computing the fund's net asset value. Foreign security prices are furnished by independent brokers or quotation services which express the value of securities in their local currency. FSC gathers all exchange rates daily at the close of the NYSE using the last quoted price on the local currency and then translates the value of foreign securities from their local currency into U.S. dollars. Any changes in the value of forward contracts due to exchange rate fluctuations and days to maturity are included in the calculation of net asset value. If an extraordinary event that is expected to materially affect the value of a portfolio security occurs after the close of an exchange on which that security is traded, then the security will be valued as determined in good faith by a committee appointed by the Board of Trustees. PERFORMANCE The funds may quote their performance in various ways. All performance information supplied by the funds in advertising is historical and is not intended to indicate future returns. Each fund's share price and total returns (and International Growth & Income fund's yield) fluctuate in response to market conditions and other factors, and the value of fund shares when redeemed may be more or less than their original cost. INTERNATIONAL GROWTH & INCOME FUND ONLY: YIELD CALCULATIONS. Yields for the fund used in advertising are computed by dividing a fund's interest and dividend income for a given 30-day or one month period, net of expenses, by the average number of shares entitled to receive distributions during the period, dividing this figure by a fund's net asset value per share at the end of the period and annualizing the result (assuming compounding of income) in order to arrive at an annual percentage rate. Income is calculated for purposes of yield quotations in accordance with standardized methods applicable to all stock and bond funds. Dividends from equity investments are treated as if they were accrued on a daily basis, solely for the purpose of calculating yield. In general, interest income is reduced with respect to bonds trading at a premium over their par value by subtracting a portion of the premium from income on a daily basis, and is increased with respect to bonds trading at a discount by adding a portion of the discount to daily income. For a fund's investments denominated in foreign currencies, income and expenses are calculated first in their respective currencies then converted to U.S. dollars either when they are actually converted or at the end of the period, whichever is earlier. Capital gains and losses generally are excluded from the calculation as are gains and losses from currency exchange rate fluctuations. Income calculated for purposes of determining a fund's yield differs from income as determined for other accounting purposes. Because of the different accounting methods used, and because of the compounding of income assumed in yield calculations, a fund's yield may not equal its distribution rate, the income paid to your account, or income reported in a fund's financial statements. ALL FUNDS: TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all aspects of a fund's return, including the effect of reinvesting dividends and capital gain distributions, and any change in a fund's net asset value per share (NAV) over the period. Average annual returns are calculated by determining the growth or decline in value of a hypothetical historical investment in a fund over a stated period, and then calculating the annually compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period. For example, a cumulative return of 100% over ten years would produce an average annual return of 7.18%, which is the steady annual rate of return that would equal 100% growth on a compounded basis in ten years. Average annual returns covering periods of less than one year are calculated by determining the fund's total return for the period, extending that return for a full year (assuming performance remains contract over the year), and quoting the result as an annual return. While average annual returns are a convenient means of comparing investment alternatives, investors should realize that the funds' performance is not constant over time, but changes from year to year, and that average annual returns represent averaged figures as opposed to the actual year-to-year performance of the funds. In addition to average annual returns, each fund may quote unaveraged or cumulative total returns reflecting the simple change in value of an investment over a stated period. Average annual and cumulative total returns may be quoted as a percentage or as a dollar amount, and may be calculated for a single investment, a series of investments, or a series of redemptions, over any time period. Total returns may be broken down into their components of income and capital (including capital gains and changes in share price) in order to illustrate the relationship of these factors and their contributions to total return. Examples of this type of illustration are given below. Total returns and other performance information may be quoted numerically or in a table, graph, or similar illustration. Total returns may be quoted with or without taking a fund's sales charge into account. All of the funds have a 3% sales charge with the exception of International Growth & Income which has a 2% sales charge. Certain of the funds ' sales charges (Diversified International Fund, International Growth & Income Fund, Worldwide Fund, Canada Fund, Europe Capital Appreciation Fund, Japan Fund, Emerging Markets Fund, Latin America Fund, and Southeast Asia Fund) have been waived until May 31, 1994. Excluding a fund's sales charge from a total return calculation produces a higher total return figure. NET ASSET VALUE. Charts and graphs using a fund's net asset values, adjusted net asset values, and benchmark indices may be used to exhibit performance. An adjusted NAV includes any distributions paid by the fund and reflects all elements of its return. Unless otherwise indicated, the fund's Adjusted NAVs are not adjusted for sales loads, if any. MOVING AVERAGES. A fund may illustrate performance using moving averages. A long-term moving average is the average of each week's adjusted closing NAV for a specified period. A short-term moving average is the average of each day's adjusted closing NAV for a specified period. Moving Average Activity Indicators combine adjusted closing NAVs from the last business day of each week with moving averages for a specified period to produce indicators showing when an NAV has crossed, stayed above,or stayed below its moving average. The funds' 13- and 39-week long-term moving averages for the period ending October 29, 1993 are outlined in the chart below. FUND 13 WEEK LONG-TERM 39 WEEK LONG-TERM NAME MOVING AVERAGE MOVING AVERAGE Diversified International 11.18 10.40 International Growth & Income 16.93 15.62 Overseas 26.45 24.18 Worldwide 12.39 11.48 Canada 17.13 16.68 Europe 17.84 16.65 Japan 13.90 12.95 Pacific Basin 16.41 14.89 Emerging Markets 14.37 12.94 Latin America* 12.43 n/a Southeast Asia* 11.36 n/a * Fiscal Period from April 19, 1993 (commencements of operations) to October 31, 1993. HISTORICAL FUND RESULTS. The following table shows each fund's total returns for the periods ended October 31, 199 3 . The total return figures below include the effect of paying the funds' sales charges, as if these charges had been in effect throughout the periods shown. (Diversified International, International Growth & Income, Worldwide, Canada, Japan, Emerging Markets, La t in America, and Southeast Asia Funds have waived their sales charges through May 31, 1994.) Total returns generally will not include the effect of paying a fund's $25 exchange fee, which was in effect from December 1, 1987 through October 23, 1989, or other charges for special transactions or services, such as Emerging Market's, Latin America's, and Southeast Asia's redemption fee of 1.5% for shares held less then 90 days. Total returns may be quoted on a before-tax or after-tax basis. Average Annual Total Returns *** Cumulative Total Returns One Five Life of One Five Life of Year Years Fund Year Years Fund (Commencement of Operations) __________________________________________________________________________ __________________
Diversified International (12/27/91) * 35.38% n/a 7.62% 3 5 .38% n/a 14.53% International Growth & Income Fund 30.28% 9.56% 9.66% 32.94 % 61.10 % 91.72% (12/31/ 86 ) Overseas Fund (12/4/93) 34.84% 7.31% 21.18% 3 9.01 % 4 6.72 % 4 71.58 % Worldwide Fund (5/30/90) 32.02% n/a 7.88% 3 6.10 % n/a 33.70 % Canada (11/17/87) 21.64% 10.51% 13.25% 2 5.40 % 6 9.92 % 116.48 % Europe (10/1/86) 20.52% 8.99% 10.23% 2 4.24 % 5 8.57 % 105.69 % Japan (9/15/92) * 35.67% n/a 29.16% 35.67% n/a 33.50% Pacific Basin (10/1/96) 42.65% 5.39% 8.98% 4 7.06 % 3 4.03 % 8 9.64 % Emerging Markets (11/1/90) 45.09% n/a 18.02% 4 9.58 % n/a 6 9.55 % Latin America (4/19/93) * n/a n/a 69.60%** n/a n/a 32.80% Southeast Asia (4/19/93) * n/a n/a 68.65%** n/a n/a 32.40%
* The fund's sales charge has been waived since inception, therefore , it is not reflected in total return. * * Annualized. *** Load Adjusted The following tables show the income and capital elements of each fund's total return from the date it commenced operations through October 31, 1993. The funds may compare their total returns to the record of the following Morgan Stanley Capital International Indices: the World Index; the Europe, Australia, Far East Index (EAFE Index) ; the Europe Index; and the Pacific Index ; the Emerging Markets Free Index ; the Combined Far East ex-Japan Free Index; and the Latin America Free Index. The Europe Index includes over 600 companies from 14 European nations. The Pacific Index includes over 400 companies from Australia, Hong Kong, Japan, New Zealand, Singapore , and Malaysia. The EAFE Index combines the Europe and Pacific indices. The addition of Canada, the U.S. and South African Gold Mines to the EAFE index produces the World Index which includes over 1400 companies. The Combined Far East ex-Japan Free Index includes 7 countries and 130 companies. The Latin America Free Index includes 7 countries and 380 companies. The table s for Diversified International Fund, International Growth & Income, Overseas Fund, Worldwide, and Emerging Markets compares their total returns to the record of the EAFE INDEX (GDP weighted for Diversified International) , an unmanaged index of 900 foreign common stocks. Comparisons to the Europe, Pacific and EAFE indices would show the fund's performance measured against broad ranges of stocks from these regions. This index illustrates how a fund's total return compared to the record of a broad range of foreign stocks. Europe compares its total return to the record of the Morgan Stanley Capital International Europe Index (Europe Index), an unmanaged index of more than 500 companies from Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Spain, Sweden, Switzerland and the United Kingdom. Pacific Basin compares its total return to the record of the Morgan Stanley Capital International Pacific Index (Pacific Index), an unmanaged index of more than 350 companies from Australia, Hong Kong, Japan and Singapore/Malaysia. The Europe Index and Pacific Index are subsets of the Morgan Stanley Capital International World Index, which is also published by Morgan Stanley Capital International, S.A. The companies included in the indices change only in the event of mergers, takeovers, failures and the like, and minor adjustments may be made when Morgan Stanley Capital International, S.A. reviews the companies covered as to suitability every three or four years. The Europe and Pacific Indices are weighted by the market value of each country's stock exchange(s). Canada compares its total return to the record of the Toronto Stock Exchange 300 Composite Index (TSE 300 Index), an unmanaged index of 300 companies in Canada published by the Toronto Stock Exchange. Japan may compare its total returns to the record of the Tokyo Price Index (the "TOPIX Index"). The TOPIX Index includes over 1,200 companies representing over 90% of the total market capitalization in Japan. These indices illustrate how each fund's total return compared to the record of a broad range of respective foreign stock prices. Latin America Fund may compare its total returns to the return of the Morgan Stanley Latin America Free Index . Southeast Asia fund may compare its total returns to the Morgan Stanley Far East ex-Japan Free Index. Each table compares the funds' returns to the record of the Standard & Poor's 500 Composite Stock Price Index (S&P 500), the Dow Jones Industrial Average (DJIA), and the cost of living (measured by the Consumer Price Index, or CPI) over the same period. The CPI information is as of the month end closest to the initial investment date for each fund. The S&P 500 and DJIA comparisons are provided to show how each fund's total return compared to the record of a broad range of U.S. common stocks and a narrower set of stocks of major U.S. industrial companies, respectively, over the same period. The funds have the ability to invest in securities not included in the indices, and their investment portfolios may or may not be similar in composition to the indices. The EAFE Index, Europe Index, Pacific Index, Combined Far East Free Ex-Japan Index, TSE 300 Index, TOPIX Index, S&P 500, and DJIA are based on the prices of unmanaged groups of stocks and, unlike each fund's returns, their returns do not include the effect of paying brokerage commissions and other costs of investing. FIDELITY DIVERSIFIED INTERNATIONAL FUND: During the period December 27, 1991 (commencement of operations) to October 31, 1993, a hypothetical $10,000 investment in Fidelity Diversified International Fund would have grown to $ 11,453 , assuming all distributions were reinvested. This was a period of widely fluctuating stock prices and should not be considered representative of the dividend income or capital gain or loss that could be realized from an investment in the fund today. FIDELITY DIVERSIFIED INTERNATIONAL FUND INDICES
Value of Value of Value of GDP- Initial Reinvested Reinvested Weighte d Year Ended $10,000 Dividend Capital Gain Total EAFE October 31 Investment Distributions Distributions Value Index S&P DJIA CPI 500
1 9 92* $8,460 $0 $0 $8,460 $8,924 $10,598 $10,728 $10,283 1 9 93 11,320 133 0 11,453 12,267 12,183 12,599 10,566
* From December 27, 1991 (commencement of operations). Explanatory Notes: With an initial investment of $10,000 made on December 27, 1991, the net amount invested in fund shares was $10,000. The cost of the initial investment ($10,000), together with the aggregate cost of reinvested dividends and capital gain distributions for the period covered (their cash value at the time they were reinvested), amounted to $10, 1 00. If distributions had not been reinvested, cash payments would have come to $100. There were no capital gains distributions for this period. Tax consequences of different investments (with the exception of foreign tax withholding on dividends and capital gain distributions) have not been factored into the above figures. INTERNATIONAL GROWTH & INCOME FUND: During the period from December 31, 1986 (commencement of operations) through October 31, 1993, a hypothetical $10,000 investment in Fidelity International Growth & Income Fund would have grown to $ 18,789 after deducting the 2% sales charge and assuming (i) that the 2% sales charge had been in effect since commencement of operations and (ii) that all distributions were reinvested. This was a period of widely fluctuating stock and bond prices and should not be considered representative of the dividend income or capital gain or loss that could be realized from an investment in the fund today. FIDELITY INTERNATIONAL GROWTH & INCOME FUND INDICES
Value of Value of Value of Initial Reinvested Reinvested Year Ended $10,000 Dividend Capital Gain Total EAFE October 31 Investment Distributions Distributions Value Index S&P DJIA CPI 500
1987* $10,212 $48 $0 $10,259 $11,956 $10,60 $10,754 $10,434 9 1988 11,574 85 0 11,663 15,044 12,179 11,958 10,878 1989 12,613 316 0 12,929 16,269 15,395 15,276 11,367 1990 13,436 500 0 13,935 14,183 14,241 14,660 12,081 1991 13,710 982 0 14,693 15,169 19,014 19,069 12,434 1992 13,024 1,109 0 14,133 13,164 20,910 20,643 12,833 1993 16,905 1,884 0 18,789 18,095 24,036 24,244 13,186
* From December 31, 1986 (commencement of operations). Explanatory Notes: With an initial investment of $10,000 made on December 31, 1986, and after deducting the 2% sales charge, the net amount invested in fund shares was $9,800. The cost of the initial investment ($10,000), together with the aggregate cost of reinvested dividends and capital gain distributions for the period covered (their cash value at the time they were reinvested), amounted to $ 11,403 . If distributions had not been reinvested, the amount of distributions earned from the fund over time would have been different, and cash payments (dividends) for the period would have come to $ 1,343 . International Growth & Income did not distribute any capital gains during the period. Tax consequences of different investments (with the exception of foreign tax withholding on dividends and capital gain distributions) have not been factored into the above figures. OVERSEAS FUND: During the period from December 4, 1984 (commencement of operations) through October 31, 1993, a hypothetical $10,000 investment in Fidelity Overseas Fund would have grown to $ 55,444 after deducting the 3% sales charge and assuming that all distributions were reinvested. This was a period of widely fluctuating stock prices and should not be considered representative of the dividend income or capital gain or loss that could be realized from an investment in the fund today. FIDELITY OVERSEAS FUND INDICES
Value of Value of Value of Initial Reinvested Reinvested Year Ended $10,000 Dividend Capital Gain Total EAFE October 31 Investment Distributions Distributions Value Index S&P DJIA CPI 500
1985* $15,442 $0 $ 0 $15,442 $14,599 $12,12 $12,125 $10,323 2 1986 26,103 0 194 26,296 24,218 16,147 17,182 10,475 1987 29,973 0 3,880 33,853 32,165 17,182 18,801 10,950 1988 24,541 0 13,248 37,789 40,471 19,726 21,005 11,415 1989 25,511 924 13,771 40,206 43,767 24,933 26,832 11,928 1990 26,646 1,396 16,014 44,056 38,155 23,065 25,751 12,678 1991 26,112 2,558 17,199 45,870 40,808 30,795 33,496 13,048 1992 21,301 2,765 15,819 39,885 35,414 33,866 36,261 13,466 1993 26,345 4,336 24,763 55,444 48,679 38,929 42,586 13,837
* From December 4, 1984 (commencement of operations). Explanatory Notes: With an initial investment of $10,000 made on December 4, 1984, and after deducting the 3% sales charge, the net amount invested in fund shares was $9,700. The cost of the initial investment ($10,000), together with the aggregate cost of reinvested dividends and capital gain distributions for the period covered (their cash value at the time they were reinvested), amounted to $ 35,073 . If distributions had not been reinvested, the amount of distributions earned from the fund over time would have been smaller, and the cash payments for the period would have come to $ 2,280 for income dividends and $ 16,354 for capital gain distributions. Tax consequences of different investments (with the exception of foreign tax withholding on dividends and capital gain distributions) have not been factored into the above figures. WORLDWIDE FUND: During the period from May 30, 1990 (commencement of operations) through October 31, 1993, a hypothetical $10,000 investment in Fidelity Worldwide Fund would have grown to $12,969 , after deducting the 3% sales charge and assuming all dividends and capital gains were reinvested. This was a period of widely fluctuating stock prices and should not be considered representative of the dividend income or capital gain or loss that could be realized from an investment in the fund today. FIDELITY WORLDWIDE FUND INDICES
Value of Value of Value of Initial Reinvested Reinvested Year Ended $10,000 Dividend Capital Gain Total EAFE October 31 Investment Distributions Distributions Value Index S&P DJIA CPI 500
1990* $ 8,682 $ 0 $ 0 $ 8,682 $ 8,987 $ 8,546 $ 8,652 $10,333 1991 9,322 83 0 9,404 9,612 11,410 11,255 10,635 1992 9,341 188 0 9,529 8,341 12,548 12,183 10,975 1993 12,377 591 0 12,969 11,465 14,424 14,309 11,277
* From May 30, 1990 (commencement of operations). Explanatory Notes: With an initial $10,000 investment made on May 30, 1990, and after deducting the 3% sales charge, the net amount invested in fund shares was $9,700. The cost of the initial investment ($10,000), together with the aggregate cost of reinvested dividends and capital gain distributions for the period covered (their cash value at the time they were reinvested), amounted to $10,433 . If distributions had not been reinvested, the amount of distributions earned from the fund over time would have been smaller, and cash payments (dividends) for the period would have come to $ 427 . Worldwide did not distribute any capital gains during the period. Tax consequences of different investments have not been factored into the above figures. CANADA FUND: During the period from November 17, 1987 (commencement of operations) to October 31, 1993, a hypothetical $10,000 investment in Fidelity Canada Fund would have grown to $ 20,998 after deducting the 3% sales charge and assuming (i) that the 3% sales charge had been in effect since commencement of operations and (ii) that all distributions were reinvested. This was a period of widely fluctuating stock prices and should not be considered representative of the dividend income or capital gain or loss that could be realized from an investment in the fund today. FIDELITY CANADA FUND INDICES
Value of Value of Value of Initial Reinvested Reinvested Year Ended $10,000 Dividend Capital Gain Total TSE 300 October 31 Investment Distributions Distributions Value Index S&P DJIA CPI 500
1988* $ 12,358 $ 0 $ 0 $ 12,358 $ 12,753 $ 11,694 $ 11,408 $10,416 1989 14,987 146 183 15,316 15,950 14,782 14,573 10,884 1990 13,163 138 766 14,066 13,074 13,674 13,986 11,568 1991 15,792 241 1,991 18,023 16,117 18,257 18,192 11,906 1992 13,803 210 2,731 16,745 14,331 20,078 19,693 12,288 1993 17,285 292 3,421 20,998 17,655 23,079 23,129 12,626
* From November 17, 1987 (commencement of operations). Explanatory Notes: With an initial investment of $10,000 made on November 17, 1987, and after deducting the 3% sales charge, the net amount invested in fund shares was $9,700. The cost of the initial investment ($10,000), together with the aggregate cost of reinvested dividend and capital gain distributions for the period covered (their cash value at the time they were reinvested), amounted to $ 12,931 . If distributions had not been reinvested, the amount of distributions earned from the fund over time would have been smaller, and the cash payments for the period would have come to $ 204 for income dividends and $ 2,522 for capital gain distributions. Tax consequences of different investments (with the exception of foreign tax withholding on dividends and capital gain distributions) have not been factored into the above figures. EUROPE FUND: During the period from October 1, 1986 (commencement of operations) to October 31, 1993, a hypothetical $10,000 investment in Fidelity Europe Fund would have grown to $ 19,952 after deducting the 3% sales charge and assuming (i) that the 3% sales charge had been in effect since commencement of operations and (ii) that all distributions were reinvested. This was a period of widely fluctuating stock prices and should not be considered representative of the dividend income or capital gain or loss that could be realized from an investment in the fund today. FIDELITY EUROPE FUND INDICES
Value of Value of Value of Initial Reinvested Reinvested Year Ended $10,000 Dividend Capital Gain Total Europe October 31 Investment Distributions Distributions Value Index S&P DJIA CPI 500
1986* $ 9,690 $ 0 $ 0 $ 9,690 $ 10,061 $ 10,577 $ 10,655 $10,009 1987 11,727 11 0 11,738 11,136 11,255 11,659 10,463 1988 12,571 11 0 12,582 12,819 12,921 13,026 10,907 1989 14,589 336 0 14,925 14,339 16,332 16,640 11,397 1990 15,792 551 0 16,343 16,194 15,109 15,969 12,114 1991 15,452 915 0 16,367 17,319 20,172 20,772 12,468 1992 14,666 1,392 0 16,058 16,994 22,184 22,486 12,868 1993 17,877 2,075 0 19,952 21,355 25,500 26,409 13,221
* From October 1, 1986 (commencement of operations). Explanatory Notes: With an initial investment of $10,000 made on October 1, 1986, and after deducting the 3% sales charge, the net amount invested in fund shares was $9,700. The cost of the initial investment ($10,000), together with the aggregate cost of reinvested dividends and capital gain distributions for the period covered (their cash value at the time they were reinvested), amounted to $ 11,684 . If distributions had not been reinvested, the amount of distributions earned from the fund over time would have been smaller, and cash payments (dividends) for the period would have come to $ 1,610 . Europe did not distribute any capital gains during the period. Tax consequences of different investments (with the exception of foreign tax withholding on dividends and capital gain distributions) have not been factored into the above figures. PACIFIC BASIN FUND: During the period from October 1, 1986 (commencement of operations) to October 31, 1993, a hypothetical $10,000 investment in Fidelity Pacific Basin Fund would have grown to $ 18,395 after deducting the 3% sales charge and assuming (i) that the 3% sales charge had been in effect since commencement of operations and (ii) that all distributions were reinvested. This was a period of widely fluctuating stock prices and should not be considered representative of the dividend income or capital gain or loss that could be realized from an investment in the fund today. FIDELITY PACIFIC BASIN FUND INDICES
Value of Value of Value of Initial Reinvested Reinvested Year Ended $10,000 Dividend Capital Gain Total Pacifi c October 31 Investment Distributions Distributions Value Index S&P DJIA CPI 500
1986* $ 9,603 $0 $ 0 $ 9,603 $ 8,862 $10,577 $10,655 $10,009 1987 12,047 11 0 12,058 13,346 11,255 11,659 10,463 1988 13,570 155 0 13,725 17,470 12,921 13,026 10,907 1989 15,307 271 21 15,598 18,594 16,332 16,640 11,397 1990 12,503 229 528 13,260 13,796 15,109 15,969 12,114 1991 12,756 413 538 13,707 14,760 20,172 20,772 12,468 1992 11,640 377 491 12,508 11,532 22,184 22,486 12,868 1993 16,956 724 716 18,395 17,154 25,500 26,409 13,221
* From October 1, 1986 (commencement of operations). Explanatory Notes: With an initial investment of $10,000 made on October 1, 1986, and after deducting the 3% sales charge, the net amount invested in fund shares was $9,700. The cost of the initial investment ($10,000), together with the aggregate cost of reinvested dividends and capital gain distributions for the period covered (their cash value at the time they were reinvested) amounted to $ 11,165 . If distributions had not been reinvested, the amount of distributions earned from the fund over time would have been smaller, and the cash payments for the period would have come to $ 504 for income dividends and $ 631 for capital gain distributions. Tax consequences of different investments (with the exception of foreign tax withholding on dividends and capital gain distributions) have not been factored into the above figures. JAPAN FUND: During the period from September 15, 1992 (commencement of operations) to October 31, 1993, a hypothetical $10,000 investment in Fidelity Japan Fund would have grown to $ 13,350 assuming that all distributions were reinvested. This was a period of widely fluctuating stock prices and should not be considered representative of the dividend income or capital gain or loss that could be realized from an investment in the fund today. FIDELITY JAPAN FUND INDICES
Value of Value of Value of Initial Reinvested Reinvested Year Ended $10,000 Dividend Capital Gain Total TOPIX October 31 Investment Distributions Distributions Value Index S&P DJIA CPI 500
1992* $ 9,840 $ 0 $ 0 $ 9,840 $ 9,332 $ 9,873 $ 9,593 $10,035 1993 13,350 0 0 13,350 13,631 11,349 11,266 10,311
* From September 15, 1992 (commencement of operations). Explanatory Notes: With an initial investment of $10,000 made on September 15, 1992, the net amount invested in fund shares was $ 10,000. The cost of the initial investment ($10,000), together with the aggregate cost of reinvested dividends and capital gain distributions for the period covered (their cash value at the time they were reinvested) amounted to $ 10,000 . The fund did not pay any dividends or capital gains for the period. Tax consequences of different investments (with the exception of foreign tax withholding on dividends and capital gain distributions) have not been factored into the above figures. EMERGING MARKETS FUND: During the period from November 1, 1990 (commencement of operations) to October 31, 199 3, a hypothetical $10,000 investment in the fund would have grown to $ 16,446 after the 3% sales charge was deducted and assuming all dividends and capital gains were reinvested. This was a period of widely fluctuating stock prices and should not be considered representative of the dividend income or capital gain or loss that could be realized from an investment in the fund today. FIDELITY EMERGING MARKETS FUND INDICES
Value of Value of Value of Initial Reinvested Reinvested Year Ended $10,000 Dividend Capital Gain Total EAFE October 31 Investment Distributions Distributions Value Index S&P DJIA CPI 500
1991* $ 10,088 $ 40 $ 0 $ 10,128 $ 10,695 $ 13,351 $ 13,008 10,292 1992 10,719 128 149 10,995 9,281 14,683 14,081 10,622 1993 15,695 307 444 16,446 12,758 16,878 16,538 10,914
* From November 1, 1990 (commencement of operations). Explanatory Notes: With an initial $10,000 investment made on November 1, 1990 and after deduction of the 3% sales charge, the net amount invested in fund shares was $9,700. The cost of the initial investment ($10,000), together with the aggregate cost of reinvested dividends and capital gain distributions for the period covered (that is, their cash value at the time they were reinvested), amounted to $ 10,482 . If distributions had not been reinvested, the amount of distributions earned from the fund over time would have been smaller, and cash payments for the period would have amounted to $ 194 for income dividends and $ 281 for capital gain distributions. Tax consequences of different investments (with the exception of foreign tax withholding on dividends and capital gain distributions) have not been factored into the above figures. LATIN AMERICA FUND: During the period from April 19, 1993 (commencement of operations) to October 31, 1993, a hypothetical $10,000 investment in Fidelity Latin America Fund would have grown to $ 13,280 . This was a period of widely fluctuating stock prices and should not be considered representative of the dividend income or capital gain or loss that could be realized from an investment in the fund today. FIDELITY LATIN AMERICA FUND INDICES
Value of Value of Value of Initial Reinvested Reinvested Latin Year Ended $10,000 Dividend Capital Gain Total America October 31 Investment Distributions Distributions Value Free Index S&P DJIA CPI 500
1993* $13,280 $0 $0 $13,280 $12,314 $10,577 $10,741 $10,118
* From April 19, 1993 (commencement of operations) through October 31, 1993. Explanatory Notes: With an initial investment of $10,000 made on April 19, 1993, the net amount invested in fund shares was $ 10,000 . The cost of the initial investment ($10,000), together with the aggregate cost of reinvested dividends and capital gain distributions for the period covered (their cash value at the time they were reinvested) amounted to $10,000. Tax consequences of different investments (with the exception of foreign tax withholding on dividends and capital gain distributions) have not been factored into the above figures. SOUTHEAST ASIA FUND: During the period from April 19, 1993 (commencement of operations) to October 31, 1993, a hypothetical $10,000 investment in Fidelity Southeast Asia Fund would have grown to $ 13,240. This was a period of widely fluctuating stock prices and should not be considered representative of the dividend income or capital gain or loss that could be realized from an investment in the fund today. FIDELITY SOUTHEAST ASIA FUND INDICES
Value of Value of Value of Combined Initial Reinvested Reinvested Far East Year Ended $10,000 Dividend Capital Gain Total Ex-Japan October 31 Investment Distributions Distributions Value Free Index S&P DJIA CPI 500
1993* $13,240 $0 $0 $13,240 $14,239 $10,577 $10,74 $10,118 1
* From April 19, 1993 (commencement of operations) through October 31, 1993. Explanatory Notes: With an initial investment of $10,000 made on April 19, 1993, the net amount invested in fund shares was $ 10,000 . The cost of the initial investment ($10,000), together with the aggregate cost of reinvested dividends and capital gain distributions for the period covered (their cash value at the time they were reinvested) amounted to $10,000. The fund did not pay any dividends or capital gains for the period. Tax consequences of different investments have not been factored into the above figures. MARKET CAPITALIZATION. Companies outside the U.S. now make up nearly two-thirds of the world's stock market capitalization. According to Morgan Stanley Capital International, the size of the markets as measured in U.S. dollars grew from $2,011 billion in 1982 to $9,194 billion in 1992. NATIONAL STOCK MARKET PERFORMANCE. Certain national stock markets have outperformed the U.S. stock market. The first table on page 43 presents the performance of national stock markets as measured in U.S. dollars by the Morgan Stanley Capital International stock market indices for the twelve months ended October 31, 1993. The second table shows the same performance as measured in local currency. Each table measures total return based on the period's change in price, dividends paid on stocks in the index, and the effect of reinvesting dividends net of any applicable foreign taxes. These are unmanaged indices composed of a sampling of selected companies representing an approximation of the market structure of the designated country. STOCK MARKET PERFORMANCE (CUMULATIVE TOTAL RETURNS) MEASURED IN U.S. DOLLARS (INCLUDES NET DIVIDENDS REINVESTED MONTHLY) 12 MONTHS ENDED OCTOBER 31, 1993 Australia 43.2% Japan 47.4% Austria 20.5 Malaysia 70.2 Belgium 11.3 Netherlands 31.7 Canada 12.8 New Zealand 89.0 Denmark 27.5 Norway 40.8 Finland 88.3 Singapore 43.0 France 16.2 Spain 41.5 Germany 28.4 Sweden 57.3 Hong Kong 50.5 Switzerland 37.2 Ireland 38.2 United Kingdom 21.7 Italy 17.9 United States 13.4 STOCK MARKET PERFORMANCE (CUMULATIVE TOTAL RETURNS) MEASURED IN LOCAL CURRENCY (INCLUDES NET DIVIDENDS REINVESTED MONTHLY) 12 MONTHS ENDED OCTOBER 31, 1993 Australia 49.5% Japan 29.4% Austria 31.3 Malaysia 73.4 Belgium 27.3 Netherlands 42.8 Canada 20.0 New Zealand 79.1 Denmark 45.2 Norway 63.7 Finland 122.9 Singapore 40.1 France 30.2 Spain 72.8 Germany 39.4 Sweden 120.2 Hong Kong 50.5 Switzerland 47.7 Ireland 67.4 United Kingdom 27.8 Italy 45.2 United States 13.4 The following table shows the compound annual growth rate (including net dividends) measured in U.S. dollars for the periods shown. FIVE YEARS TEN YEARS ENDED ENDED OCTOBER 29 , 1993 OCTOBER 29 , 1993 Australia 6.3% 13.1% Austria 16.2 22.7 Belgium 6.9 23.8 Canada 4.5 7.4 Denmark 11.8 11.0 France 11.7 21.5 Germany 11.6 16.5 Hong Kong 33.4 33.3 Italy -1.0 15.8 Japan -2.3 19.0 Malaysia 26.1 N/A Netherlands 16.5 21.0 Norway 10.1 13.6 Singapore 19.3 11.0 Spain 2.2 22.3 Sweden 9.2 15.9 United Kingdom 11.4 18.1 United States 13.6 13. 7 These results are not indicative of future stock market performance or any fund's performance. Market conditions during the periods measured fluctuated widely. Brokerage commissions and other fees are not factored into the values of the indices. A fund's performance may be compared in advertising to the performance of other mutual funds in general, or to the performance of particular types of mutual funds. These comparisons may be expressed as mutual fund rankings prepared by Lipper Analytical Services, Inc. (Lipper), an independent service located in Summit, New Jersey that monitors the performance of mutual funds. Lipper generally ranks funds on the basis of total return, assuming reinvestment of distributions, but does not take sales charges or redemption fees into consideration and is prepared without regard to tax consequences. From time to time, a fund's performance also may be compared to other mutual funds tracked by financial or business publications and periodicals. For example, the fund may quote Morningstar, Inc. in its advertising materials. Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the basis of risk-adjusted performance. Rankings that compare the performance of Fidelity funds to one another in appropriate categories over specific periods of time may be quoted in advertising. Fidelity may provide information designed to help individuals understand their investment goals and explore various financial strategies. For example, Fidelity's FundMatchSM Program includes a workbook describing general principles of investing, such as asset allocation, diversification, risk tolerance, and goal setting; a questionnaire designed to help create a personal financial profile; and an action plan offering investment alternatives. Materials may also include discussions of Fidelity's three asset allocation funds and Portfolio Advisory Services. Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns of the capital markets in the United States, including common stocks, small capitalization stocks, long-term corporate bonds, intermediate-term government bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation (based on the CPI), and combinations of various capital markets. The performance of these capital markets is based on the returns of different indices. Fidelity funds may use the performance of these capital markets in order to demonstrate general risk-versus-reward investment scenarios. Performance comparisons may also include the value of a hypothetical investment in any of these capital markets. The risks associated with the security types in any capital market may or may not correspond directly to those of the funds. Ibbotson calculates total returns in the same method as the funds. The funds may also compare performance to that of other compilations or indices that may be developed and made available in the future. In advertising materials, Fidelity may reference or discuss its products or services, which may include: other Fidelity funds; retirement investing; brokerage products and services; the effects of dollar-cost averaging and saving for college; charitable giving; and the Fidelity credit card. In addition, Fidelity may quote financial or business publications and periodicals, including model portfolios or allocations, as they relate to fund management, investment philosophy, and investment techniques. Fidelity may also reprint, and use as advertising and sales literature, articles from Fidelity Focus, a quarterly magazine provided free of charge to Fidelity Fund shareholders. A fund may discuss its fund number, Quotron number, CUSIP number, and current portfolio manager. VOLATILITY. A fund may quote various measures of volatility and benchmark correlation in advertising. In addition, the fund may compare these measures to those of other funds. Measures of volatility seek to compare the fund's historical share price fluctuations or total returns to those of a benchmark. Measures of benchmark correlation indicate how valid a comparative benchmark may be. All measures of volatility and correlation are calculated using averages of historical data. MOMENTUM INDICATORS indicate a fund's price movements over specific periods of time. Each point on the momentum indicator represents the fund's percentage change in price movements over that period. A fund may advertise examples of the effects of periodic investment plans, including the principle of dollar cost averaging. In such a program, an investor invests a fixed dollar amount in a fund at periodic intervals, thereby purchasing fewer shares when prices are high and more shares when prices are low. While such a strategy does not assure a profit or guard against a loss in a declining market, the investor's average cost per share can be lower than if fixed numbers of shares are purchased at the same intervals. In evaluating such a plan, investors should consider their ability to continue purchasing shares during periods of low price levels. A fund may be available for purchase through retirement plans or other programs offering deferral of or exemption from income taxes, which may produce superior after-tax returns over time. For example, a $1,000 investment earning a taxable return of 10% annually would have an after-tax value of $1,949 after ten years, assuming tax was deducted from the return each year at a 31% rate. An equivalent tax-deferred investment would have an after-tax value of $2,100 after ten years, assuming tax was deducted at a 31% rate from the deferred earnings at the end of the ten-year period. As of October 31, 1993, FMR managed approximately $200 billion in equity fund assets as defined and tracked by Lipper. This figure represents the largest amount of equity fund assets under management by a mutual fund investment adviser in the United States, making FMR America's leading equity (stock) fund manager. FMR, its subsidiaries, and affiliates maintain a worldwide information and communications network for the purpose of researching and managing investments abroad. As of October 31, 1993, FMR managed foreign assets totalling approximately $30 billion. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION As provided for in Rule 22d-1 under the Investment Company Act of 1940 (the 1940 Act), FDC exercises its right to waive a fund's sales charge (Effective June 1, 1994, Diversified International, International Growth & Income, Worldwide, Canada, Europe Capital Appreciation, Japan, Pacific Basin, Emerging Markets, Latin America, and Southeast Asia funds' sales charges will go into effect.) on shares acquired through reinvestment of dividends and capital gain distributions or in connection with a fund's merger with or acquisition of any investment company or trust. In addition, the funds' sales charges will not apply (1) if you buy shares as part of an employee benefit plan (including the Fidelity-sponsored 403(b) and corporate IRA programs but otherwise as defined in the Employee Retirement Income Security Act) maintained by a U.S. employer and having more than 200 eligible employees, or a minimum of $3,000,000 in plan assets invested in Fidelity mutual funds, or as part of an employee benefit plan maintained by a U.S. employer that is a member of a parent-subsidiary group of corporations (within the meaning of Section 1563(a)(1) of the Internal Revenue Code, with "50%" substituted for "80%") any member of which maintains an employee benefit plan having more than 200 eligible employees, or a minimum of $3,000,000 in plan assets invested in Fidelity mutual funds, or as part of an employee benefit plan maintained by a non-U.S. employer having 200 or more eligible employees or a minimum of $3,000,000 in plan assets invested in Fidelity mutual funds, the assets of which are held in a bona fide trust for the exclusive benefit of employees participating therein; (2) to shares purchased by an insurance company separate account used to fund annuity contracts purchased by employee benefit plans (including 403(b) programs, but otherwise as defined in the Employee Retirement Income Security Act), which, in the aggregate, have either more than 200 eligible employees or a minimum of $3,000,000 in assets invested in Fidelity funds; (3) to shares in a Fidelity IRA account purchased (including purchases by exchange) with the proceeds of a distribution from an employee benefit plan provided that: (i) at the time of the distribution, the employer, or an affiliate (as described in exemption (1) above) of such employer, maintained at least one employee benefit plan that qualified for exemption (1) and that had at least some portion of its assets invested in one or more mutual funds advised by FMR, or in one or more accounts or pools advised by Fidelity Management Trust Company; and (ii) the distribution is transferred from the plan to a Fidelity Rollover IRA account within 60 days from the date of the distribution; (4) if you are a charitable organization (as defined in Section 501(c)(3) of the Internal Revenue Code) investing $100,000 or more; (5) if you purchase shares for a charitable remainder trust or life income pool established for the benefit of a charitable organization (as defined by Section 501(c)(3) of the Internal Revenue Code); (6) if you are an investor participating in the Fidelity Trust Portfolios program (these investors must make initial investments of $100,000 or more in Trust Portfolios funds and must, during the initial six-month period, reach and maintain an aggregate balance of at least $500,000 in all accounts and subaccounts purchased through the Trust Portfolios program); (7) to shares purchased through Portfolio Advisory Services; (8) if you are a current or former Trustee or officer of a Fidelity fund or a current or retired officer, director, or full-time employee of FMR Corp. or its direct or indirect subsidiaries (a Fidelity Trustee or employee), the spouse of a Fidelity Trustee or employee, a Fidelity Trustee or employee acting as custodian for a minor child, or a person acting as trustee of a trust for the sole benefit of the minor child of a Fidelity Trustee or employee; (9) if you are a bank trust officer, registered representative, or other employee of a Qualified Recipient. Qualified Recipients are securities dealers or other entities, including banks and other financial institutions, who have sold the funds' shares under special arrangements in connection with FDC's sales activities; or (10) to shares purchased by contributions and exchanges to the following prototype or prototype-like retirement plans sponsored by FMR Corp. or FMR and that are marketed and distributed directly to plan sponsors or participants without any intervention or assistance from any intermediary distribution channel: The Fidelity IRA, The Fidelity Rollover IRA, The Fidelity SEP-IRA and SARSEP, The Fidelity Retirement Plan, Fidelity Defined Benefit Plan, The Fidelity Group IRA, The Fidelity 403(b) Program, The Fidelity Investments 401(a) Prototype Plan for Tax-Exempt Employers, and The CORPORATEplan for Retirement (Profit Sharing and Money Purchase Plan). FDC has chosen to waive the funds' sales charges in these instances because of efficiencies involved in sales of shares to those investors. The funds ' sales charge s may be reduced to reflect sales charges previously paid or that would have been paid absent a reduction as noted in the prospectus, in connection with investments in other Fidelity funds. This includes reductions for investments in prototype or prototype-like retirement plans sponsored by FMR or FMR Corp., which are listed above. Each fund is open for business and its net asset value per share (NAV) is calculated each day the New York Stock Exchange (NYSE) is open for trading. The NYSE has designated the following holiday closings for 1994: Washington's Birthday (observed), Good Friday, Memorial Day (observed), Independence Day (observed) , Labor Day, Thanksgiving Day, and Christmas Day. Although FMR expects the same holiday schedule, with the addition of New Year's Day to be observed in the future, the NYSE may modify its holiday schedule at any time. FSC normally determines a fund's NAV as of the close of the NYSE (normally 4:00 p.m. Eastern time.) However, NAV may be calculated earlier if trading on the NYSE is restricted or as permitted by the SEC. To the extent that portfolio securities are traded in other markets on days when the NYSE is closed, a fund's NAV may be affected on days when investors do not have access to the fund to purchase or redeem shares. If the Trustees determine that existing conditions make cash payments undesirable, redemption payments may be made in whole or in part in securities or other property, valued for this purpose as they are valued in computing the funds' NAVs. Shareholders receiving securities or other property on redemption may realize a gain or loss for tax purposes, and will incur any costs of sale, as well as the associated inconveniences. Pursuant to Rule 11a-3 under the 1940 Act (1940 Act) , each fund is required to give shareholders at least 60 days' notice prior to terminating or modifying its exchange privilege. Under the Rule, the 60-day notification requirement may be waived if (i) the only effect of a modification would be to reduce or eliminate an administrative fee, redemption fee, or deferred sales charge ordinarily payable at the time of exchange, or (ii) a fund suspends the redemption of shares to be exchanged as permitted under the 1940 Act or the rules and regulations thereunder, or the fund to be acquired suspends the sale of its shares because it is unable to invest amounts effectively in accordance with its investment objective and policies. In the Prospectus, each fund has notified shareholders that it reserves the right at any time, without prior notice, to refuse exchange purchases by any person or group if, in FMR's judgment, the fund would be unable to invest effectively in accordance with its investment objective and policies, or would otherwise potentially be adversely affected. DISTRIBUTIONS AND TAXES DISTRIBUTIONS. If you request to have distributions mailed to you and the U.S. Postal Service cannot deliver your checks, or if your checks remain uncashed for six months, Fidelity may reinvest your distributions at the then-current NAV. All subsequent distributions will then be reinvested until you provide Fidelity with alternate instructions. DIVIDENDS. Because the funds invest primarily in foreign securities, corporate shareholders should not expect dividends from these funds to qualify for the dividends-received deduction. The funds will notify corporate shareholders annually of the percentage of dividends that qualify for the dividends-received deduction. Gains (losses) attributable to foreign currency fluctuations are generally taxable as ordinary income, and therefore will increase (decrease) dividend distributions. The funds will send each shareholder a notice in January describing the tax status of dividends and capital gain distributions for the prior year. CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the funds on the sale of securities and distributed to shareholders are federally taxable as long-term capital gains, regardless of the length of time shareholders have held their shares. If a shareholder receives a long-term capital gain distribution on shares of a fund, and such shares are held six months or less and are sold at a loss, the portion of the loss equal to the amount of the long-term capital gain distribution will be considered a long-term loss for tax purposes. Short-term capital gains distributed by the funds are taxable to shareholders as dividends, not as capital gains. Distributions from short-term capital gains do not qualify for the dividends-received deduction. FOREIGN TAXES. Foreign governments may withhold taxes on dividends or interest paid with respect to foreign securities, typically at a rate between 10% and 35%. If, at the close if its fiscal year, more than 50% of a fund's total assets are invested in securities of foreign issuers, it will elect to pass through foreign taxes paid, and thereby allow shareholders to take a credit or deduction on their individual tax returns. TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a "regulated investment company" for tax purposes, so that it will not be liable for federal tax at the fund level on income and capital gains distributed to shareholders. In order to qualify as a regulated investment company and avoid being subject to federal income or excise taxes at the fund level, each fund intends to distribute substantially all of its net taxable income and net realized capital gains within each calendar year as well as on a fiscal year basis. Each fund intends to comply with other tax rules applicable to regulated investment companies, including a requirement that capital gains from the sale of securities held less than three months constitute less than 30% of each fund's gross income for each fiscal year. Gains from some forward currency contracts, futures contracts, and options are included in this 30% calculation, which may limit the funds' investments in such instruments. If a fund purchases shares in certain foreign investment entities, defined as passive foreign investment companies (PFICs) in the Internal Revenue Code, it may be subject to U.S. federal income tax on a portion of any excess distribution or gain from the disposition of such shares. Interest charges may also be imposed on the fund with respect to deferred taxes arising from such distributions or gains. Each fund is treated as a separate entity from the other funds of Fidelity Investment Trust for tax purposes. OTHER TAX INFORMATION. The information above is only a summary of some of the tax consequences generally affecting the funds and their shareholders, and no attempt has been made to address individual tax consequences. In addition to federal income taxes, shareholders may be subject to state and local taxes on fund distributions. Investors should consult their tax advisers to determine whether the funds are suitable to their particular tax situation. FMR FMR is a wholly owned subsidiary of FMR Corp., a parent company organized in 1972. At present, the principal operating activities of FMR Corp. are those conducted by three of its divisions as follows: FSC, which is the transfer and shareholder servicing agent for certain of the funds advised by FMR; Fidelity Investments Institutional Operations Company, which performs shareholder servicing functions for certain institutional customers; and Fidelity Investments Retail Marketing Company, which provides marketing services to various companies within the Fidelity organization. Several affiliates of FMR are also engaged in the investment advisory business. Fidelity Management Trust Company provides trustee, investment advisory, and administrative services to retirement plans and corporate employee benefit accounts. FMR U.K. and FMR Far East, both wholly owned subsidiaries of FMR formed in 1986, supply investment research, and may supply portfolio management services, to FMR in connection with certain funds advised by FMR. Analysts employed by FMR, FMR U.K., and FMR Far East research and visit thousands of domestic and foreign companies each year. FMR Texas Inc., a wholly owned subsidiary of FMR formed in 1989, supplies portfolio management and research services in connection with certain money market funds advised by FMR. TRUSTEES AND OFFICERS The Trustees and executive officers of the trust are listed below. Except as indicated, each individual has held the office shown or other offices in the same company for the last five years. All persons named as Trustees also serve in similar capacities for other funds advised by FMR. Unless otherwise noted, the business address of each Trustee and officer is 82 Devonshire Street, Boston, Massachusetts 02109, which is also the address of FMR. Those Trustees who are "interested persons" (as defined in the Investment Company Act of 1940) by virtue of their affiliation with either the trust or FMR are indicated by an asterisk (*). *EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive Officer and a Director of FMR Corp.; a Director and Chairman of the Board and of the Executive Committee of FMR; Chairman and a Director of FMR Texas Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc. *J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR; and President and a Director of FMR Texas Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc. RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is President of Greenhill Petroleum Corporation (petroleum exploration and production, 1990). Prior to his retirement in March 1990, Mr. Cox was President and Chief Operating Officer of Union Pacific Resources Company (exploration and production). He is a Director of Bonneville Pacific Corporation (independent power, 1989) and CH2M Hill Companies (engineering). In addition, he served on the Board of Directors of the Norton Company (manufacturer of industrial devices, 1983-1990) and continues to serve on the Board of Directors of the Texas State Chamber of Commerce, and is a member of advisory boards of Texas A&M University and the University of Texas at Austin. PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton, NY, Trustee (1992). Prior to her retirement in September 1991, Mrs. Davis was the Senior Vice President of Corporate Affairs of Avon Products, Inc. She is currently a Director of BellSouth Corporation (telecommunications), Eaton Corporation (manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990), and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and Nabisco Brands, Inc. In addition, she serves as a Director of the New York City Chapter of the National Multiple Sclerosis Society, and is a member of the Advisory Council of the International Executive Service Corps. and the President's Advisory Council of The University of Vermont School of Business Administration. RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a Director of the Norton Company (manufacturer of industrial devices). He is currently a Director of Mechanics Bank and a Trustee of College of the Holy Cross and Old Sturbridge Village, Inc. E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990). Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive Officer of LTV Steel Company. Prior to May 1990, he was Director of National City Corporation (a bank holding company) and National City Bank of Cleveland. He is a Director of TRW Inc. (original equipment and replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries, Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham Steel Corporation, Hyster-Yale Materials Handling, Inc. (1989), and RPM, Inc. (manufacturer of chemical products, 1990). In addition, he serves as a Trustee of First Union Real Estate Investments, Chairman of the Board of Trustees and a member of the Executive Committee of the Cleveland Clinic Foundation, a Trustee and a member of the Executive Committee of University School (Cleveland), and a Trustee of Cleveland Clinic Florida. DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT, Trustee, is a Professor at Columbia University Graduate School of Business and a financial consultant. Prior to 1987, he was Chairman of the Financial Accounting Standards Board. Mr. Kirk is a Director of General Re Corporation (reinsurance) and Valuation Research Corp. (appraisals and valuations, 1993). In addition, he serves as Vice Chairman of the Board of Directors of the National Arts Stabilization Fund and Vice Chairman of the Board of Trustees of the Greenwhich Hospital Association. *PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to his retirement on May 31, 1990, he was a Director of FMR (1989) and Executive Vice President of FMR (a position he held until March 31, 1991); Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and Managing Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity Investments Corporate Services (1991-1992). He is a Director of W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation (engineering and construction). In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield (1989) and Society for the Preservation of New England Antiquities, and as an Overseer of the Museum of Fine Arts of Boston (1990). GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is Chairman of G.M. Management Group (strategic advisory services). Prior to his retirement in July 1988, he was Chairman and Chief Executive Officer of Leaseway Transportation Corp. (physical distribution services). Mr. McDonough is a Director of ACME-Cleveland Corp. (metal working, telecommunications and electronic products), Brush-Wellman Inc. (metal refining), York International Corp. (air conditioning and refrigeration, 1989), Commercial Intertech Corp. (water treatment equipment, 1992), and Associated Estates Realty Corporation (a real estate investment trust, 1993). EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee. Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric Investment Corporation and a Vice President of General Electric Company. He is a Director of Allegheny Power Systems, Inc. (electric utility), General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer). He is also a Trustee of Rensselaer Polytechnic Institute and of Corporate Property Investors and a member of the Advisory Boards of Butler Capital Corporation Funds and Warburg, Pincus Partnership Funds. MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is Chairman of the Board, President, and Chief Executive Officer of Lexmark International, Inc. (office machines, 1991). Prior to 1991, he held the positions of Vice President of International Business Machines Corporation ("IBM") and President and General Manager of various IBM divisions and subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals, 1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In addition, he serves as the Campaign Vice Chairman of the Tri-State United Way (1993) and is a member of the University of Alabama President's Cabinet (1990). THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA, Trustee, is President of The Wales Group, Inc. (management and financial advisory services). Prior to retiring in 1987, Mr. Williams served as Chairman of the Board of First Wachovia Corporation (bank holding company), and Chairman and Chief Executive Officer of The First National Bank of Atlanta and First Atlanta Corporation (bank holding company). He is currently a Director of BellSouth Corporation (telecommunications), ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc. (computer software), Georgia Power Company (electric utility), Gerber Alley & Associates, Inc. (computer software), National Life Insurance Company of Vermont, American Software, Inc. (1989), and AppleSouth, Inc. (restaurants, 1992). GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the Fidelity funds, Mr. French was Senior Vice President, Fund Accounting - Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund Accounting - Fidelity Accounting & Custody Services Co. (1990); and Senior Vice President, Chief Financial and Operations Officer - Huntington Advisers, Inc. (1985-1990). ARTHUR S. LORING, Secretary, is Senior Vice President and General Counsel of FMR, Vice President - Legal of FMR Corp., and Vice President and Clerk of FDC. PENELOPE DOBKIN, Vice President, Worldwide Fund (1990), is an employee of FMR. GEORGE DOMOLKY, Vice President, Canada Fund (1989), is an employee of FMR. SIMON FRASER, Vice President, Pacific Basin Fund (1993), is an employee of FMR. JOHN HICKLING, Vice President, Europe Fund (1991), Overseas (1993), and another fund advised by FMR, is an employee of FMR. PATRICIA SATTERTHWAITE, Vice President, Latin America Fund (1993), is an employee of FMR. SALLY WALDEN, Vice President, Europe Fund (1992), is an employee of FMR. ROBERT H. MORRISON, Manager, Security Transactions, is an employee of FMR. Under a retirement program that became effective on November 1, 1989, Trustees, upon reaching age 72, become eligible to participate in a defined benefit retirement program under which they receive payments during their lifetime from the fund based on their basic trustee fees and length of service. Currently, Messrs. Robert L. Johnson, William R. Spaulding, Bertram H. Witham, and David L. Yunich participate in the program. As of December 31, 1993, an FMR affiliate held approximately 15.01% of Europe Capital Appreciation Fund's total outstanding shares; and as of this date, approximately 1.2%, 1.8%, and 3.2% of the total outstanding shares of the Europe, Diversified International, and Japan funds, respectively, were held in various Fidelity employee retirement accounts. Mr. Edward C. Johnson 3d, President and a Trustee of the funds, by virtue of his controlling interest in FMR Corp., may be considered a beneficial owner of these shares. With the exception of Mr. Johnson 3d's beneficial interest in the aforementioned funds, the Trustees and officers of the funds owned, in the aggregate, less than 1% of each fund's outstanding shares on that date. As of December 31, 1993, Charles Schwab & Co., Inc./Mutual Funds Department, San Francisco, CA, was known to own of record or beneficially appproximately 6.5% and 6.4% of the total outstanding shares of Canada Fund and Worldwide Fund, respectively. Also as of this date, Insight Management, Inc., P.O. Box 9135, Wellseley Hills, MA, was known by International Growth & Income Fund to own of record or beneficially approximately 6.6% of the fund's total outstanding shares. MANAGEMENT CONTRACTS Each fund employs FMR to furnish investment advisory and other services. Under its management contract with each fund, FMR acts as investment adviser and, subject to the supervision of the Board of Trustees, directs the investments of each fund in accordance with its investment objective, policies, and limitations. FMR also provides each fund with all necessary office facilities and personnel for servicing a fund's investments, and compensates all officers of the trust, all Trustees who are "interested persons" of the trust or of FMR, and all personnel of the trust or FMR performing services relating to research, statistical, and investment activities. In addition, FMR or its affiliates, subject to the supervision of the Board of Trustees, provide the management and administrative services necessary for the operation of each fund. These services include providing facilities for maintaining each fund's organization; supervising relations with custodians, transfer and pricing agents, accountants, underwriters, and other persons dealing with the funds; preparing all general shareholder communications and conducting shareholder relations; maintaining each fund's records and the registration of each fund's shares under federal and state law; developing management and shareholder services for each fund; and furnishing reports, evaluations, and analyses on a variety of subjects to the Board of Trustees. In addition to the management fee payable to FMR and the fees payable to FSC, each fund pays all of its expenses, without limitation, that are not assumed by those parties. Each fund pays for typesetting, printing, and mailing proxy material to shareholders, legal expenses, and the fees of the custodian, auditor, and non-interested Trustees. Although each fund's management contract provides that the fund will pay for typesetting, printing, and mailing prospectuses, statements of additional information, notices, and reports to existing shareholders, pursuant to the trusts transfer agent agreement with FSC, FSC bears the cost of providing these services to existing shareholders. Other expenses paid by each fund include interest, taxes, brokerage commissions, each fund's proportionate share of insurance premiums and Investment Company Institute dues, and the costs of registering shares under federal and state securities laws. Each fund is also liable for such nonrecurring expenses as may arise, including costs of any litigation to which the fund may be a party and any obligation it may have to indemnify the trust's officers and Trustees with respect to litigation. FMR is Diversified International, International Growth & Income, Overseas, Worldwide, Europe, Pacific Basin, and Canada's manager pursuant to management contracts dated March 1, 1992, which were approved by shareholders on February 19, 1992. FMR is Japan's manager pursuant to a management contract dated July 16, 1992, which was approved by FMR, then the sole shareholder of Japan, on September 10, 1992. FMR is Emerging Markets manager pursuant to a management contract dated March 1, 1992, which was approved by shareholders on February 19, 1992. FMR is Latin America and Southeast Asia's manager pursuant to management contracts dated March 18, 1993, which were approved by FMR, then the sole shareholder of Latin America and Southeast Asia, on March 24, 1993. FMR is Europe Capital Appreciation Fund's manager pursuant to a management contract dated November 22, 1993, which was approved by FMR, then the sole shareholder of the fund on November 18, 1993. For the services of FMR under the contracts INTERNATIONAL GROWTH & INCOME, WORLDWIDE, EMERGING MARKETS, AND LATIN AMERICA pay FMR a monthly management fee composed of the sum of two elements: a group fee rate and an individual fund fee rate. COMPUTING THE MANAGEMENT FEE. For each fund, the group fee rate is based on the monthly average net assets of all of the registered investment companies with which FMR has management contracts and is calculated on a cumulative basis pursuant to the graduated fee rate schedule shown on the left. On the right, the effective fee rate schedule shows the results of cumulatively applying the annualized rates at varying asset levels. For example, the effective annual group fee rate at $223 billion of group net assets - their approximate level for October 1993 was .3254%, which is the weighted average of the respective fee rates for each level of group net assets up to $225 billion. GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES Average Group Annualized Group Net Effective Annual Assets Rate Assets Fee Rate 0 - $ 3 billion .520% $ 0.5 billion .5200% 3 - 6 .490 25 .4238 6 - 9 .460 50 .3823 9 - 12 .430 75 .3626 12 - 15 .400 100 .3512 15 - 18 .385 125 .3430 18 - 21 .370 150 .3371 21 - 24 .360 175 .3325 24 - 30 .350 200 .3284 30 - 36 .345 225 .3253 36 - 42 .340 250 .3223 42 - 48 .335 275 .3198 48 - 66 .325 300 .3175 66 - 84 .320 325 .3153 84 - 102 .315 350 .3133 102 - 138 .310 138 - 174 .305 174 - 228 .300 228 - 282 .295 282 - 336 .290 Over 336 .285 * The rates shown for average group assets in excess of $228 billion were adopted by FMR on a voluntary basis on November 1, 1993 pending shareholder approval of a new management contract reflecting the extended schedule. The extended schedule provides for lower management fees as total assets under management increase. Each fund's individual fund fee rate is .45%. Based on the average net assets of funds advised by FMR for October 1993, the annual management fee rate for International Growth & Income, Worldwide, Emerging Markets, and Latin America and the annual basic fee rate for Diversified International, Overseas, Canada, Europe, Japan, Pacific Basin, and Southeast Asia would be calculated as follows:
Group Fee Rate Individual Fund Fee Rate Management Fee Rate .3254% + .45% = .7754%
One-twelfth (1/12) of this annual management/basic fee rate is then applied to a fund's average net assets for the current month, giving a dollar amount which is the fee for that month. For the services of FMR under the contracts DIVERSIFIED INTERNATIONAL, OVERSEAS, CANADA, EUROPE, EUROPE CAPITAL APPRECIATION, JAPAN, PACIFIC BASIN, AND SOUTHEAST ASIA pay FMR a monthly management fee composed of the sum of two elements: a basic fee and a performance adjustment. THE FUNDS' BENCHMARK INDICES. Diversified International and Overseas compare their performance to the Morgan Stanley Capital International Europe, Australia, Far East Index (the EAFE Index). The EAFE Index may be compiled in two ways: a capitalization weighted (cap-weighted) version and a gross domestic product weighted (GDP-weighted) version. The cap-weighted EAFE is an approximate representation of each country's share of the stock market value of all countries in the index. The GDP-weighted version is an approximate representation of each country's share of the value of the value of goods and services produced by all the countries in the index. The primary difference between the two is that while the value of a country's stock may be very large, its relative GDP may be smaller. Diversified International uses the Gross Domestic Product (GDP) weighted version of the EAFE Index because it represents each countries relative production. Overseas uses the capitalization (Cap) weighted EAFE because it approximates each countries share of stock market value. The EAFE Index is published by Morgan Stanley Capital International, an international investment management and research company. The EAFE Index covers equity securities of over 900 companies in such countries as the United Kingdom, Germany, France, Switzerland, the Netherlands, Italy, Belgium, Spain, Sweden, Denmark, Austria, Norway, Australia, Japan, Hong Kong, and Singapore. Canada compares its performance to the Toronto Stock Exchange 300 Composite Index (TSE 300 Index). Europe and Europe Capital Appreciation compare their performance to the Morgan Stanley Capital International Europe Index (Europe Index); Pacific Basin compares its performance to the Morgan Stanley Capital International Pacific Index (Pacific Index). Japan compares its performance to the Tokyo Price Index (TOPIX Index). Southeast Asia Fund compares its performance to the record of the Morgan Stanley Capital International Combined Far East ex-Japan Free Index ( combined Far East ex-Japan Free Index ) over the same period. COMPUTING THE BASIC FEE. The annual basic fee rate is calculated by adding the group fee rate based on the schedule on page 50 to the individual fund fee rate. The individual fund fee rate is .45% Based on the average net assets of the funds advised by FMR for October 1993, the annual fee rate would be calculated as follows: Group Fee Rate Individual Fund Fee Rate Basic Fee Rate .3254% + .45% = .7754% One-twelfth (1/12) of these annual basic fee rate is then applied to the fund's average net assets for the current month, giving a dollar amount which is the monthly fee. COMPUTING THE PERFORMANCE ADJUSTMENT The basic fee is subject to an upward or downward adjustment, depending upon whether, and to what extent, each fund's investment performance for the performance period exceeds, or is exceeded by, the record of its comparative index over the same period. The performance period consists of the most recent month plus the previous 35 months. Diversified International, Europe Capital Appreciation, Japan, and Southeast Asia's performance period s commence d the first day of the first full month of operation following commencement of operations (January 1, 1992 , January 1, 1994 , October 1, 1992 , and May 1, 1993, respectively). Starting with the twelfth month, the performance adjustment will take effect. Each month subsequent to the twelfth month, a new month will be added to the performance period until the performance period equals 36 months. Thereafter, the performance period will consist of the most recent month plus the previous 35 months. Each percentage point of difference (up to a maximum difference of + 10) is multiplied by a performance adjustment rate of .02%. Thus, the maximum annualized adjustment rate is +.20%. This performance comparison is made at the end of each month. One twelfth (1/12) of this rate is then applied to each fund's average net assets for the entire performance period, giving a dollar amount which will be added to (or subtracted from) the basic fee. Each fund's performance is calculated based on change in net asset value. For purposes of calculating the performance adjustment, any dividends or capital gain distributions paid by each fund are treated as if reinvested in fund shares at the net asset value as of the record date for payment. The record of the comparative index is based on change in value and is adjusted for any cash distributions from the companies whose securities compose the index. FMR pays any costs of subscribing to the indices and of obtaining additional information needed to compute the management fee in conformance with applicable laws and regulations. Because the adjustment to the basic fee is based on each fund's performance compared to the investment record of the appropriate index, the controlling factor is not whether each fund's performance is up or down per se, but whether it is up or down more or less than the record of its respective index. Moreover, the comparative investment performance of each fund is based solely on the relevant performance period without regard to the cumulative performance over a longer or shorter period of time. INTERNATIONAL GROWTH & INCOME, WORLDWIDE, EMERGING MARKETS, AND LATIN AMERICA. The tables below show the management fee paid to FMR; the dollar amount reimbursed by FMR (as explained below); and the net management fee as a percentage of each fund's average net assets for the fiscal periods ended October 31, 1993, 1992, and 1991. MANAGEMENT FEE MANAGEMENT FEE AS A BEFORE AMOUNT OF % OF AVERAGE REIMBURSEMENT REIMBURSEMENT NET ASSETS INTERNATIONAL GROWTH & INCOME 1993 $2,323,230 $0 .7706% 1992 476,948 0 .7854% 199 1 314,971 0 .7928% WORLDWIDE 1993 $1,155,519 $0 .7760% 1992 831,818 0 .7852% 199 1 826,846 0 .7945% EMERGING MARKETS 1993 $1,111,793 $0 .7701% 1992 84,800 52,597 .7816% 199 1* 34,014 34,014 .7862% * From November 1, 1990 (commencement of operations) through October 31, 1991. LATIN AMERICA 1993* $479,545 -- .7697%** * From April 19, 1993 (commencement of operations) through October 31, 1993. ** Annualized DIVERSIFIED INTERNATIONAL, OVERSEAS, CANADA, EUROPE, JAPAN, PACIFIC BASIN AND SOUTHEAST ASIA FUNDS. The tables below show the management fee paid to FMR (including the effect of the performance adjustment); the dollar amount of negative or positive performance adjustments; and the net management fee as a percentage of the funds' average net assets for the periods ending October 31, 1993, 1992, and 1991. MANAGEMENT FEE MANAGEMENT FEE AS A INCLUDING PERFORMANCE PERFORMANCE % OF AVERAGE ADJUSTMENT ADJUSTMENT NET ASSETS DIVERSIFIED INTERNATIONAL 1993 $902,601 $(27,280) .7346% 1992* 101,938 0 .3700%** * From December 27, 1991 (commencement of operations) through October 31, 1992. ** Annualized OVERSEAS 1993 $7,984,147 $(58,499) .7731% 1992 9,212,187 1,956,702 .9990% 1991 9,824,997 2,081,177 1.0083% CANADA 1993 $471,845 $50,721 .8552% 1992 219,636 43,991 .9800% 1991 196,369 38,071 .9700% EUROPE 1993 $3,804,429 $(703,601) .6350% 1992 2,163,531 (540,073) .6300% 1991 2,384,684 (315,300) .7000% JAPAN 1993 $758,951 $4,307 .7660% 1992 * 2,175 0 .9500%** PACIFIC BASIN 1993 $1,945,428 $58,458 .7976% 1992 993,713 197,605 .9800% 1991 906,137 180,397 .9900% * From September 15, 1992 (commencement of operations). ** Annualized SOUTHEAST ASIA 1993* $582,244 $43,022 .7688%** * From April 19, 1993 (commencement of operations). ** Annualized The figures shown on page 51 reflect FMR's voluntary implementation of group fee rate schedule changes for the funds as described on page . If FMR had not voluntarily implemented these group fee rate changes, the funds' management fees would have been higher. During the fiscal periods reported, FMR voluntarily agreed to reimburse certain funds to the extent that the fund's aggregate operating expenses were in excess of an annual rate of its average net assets. The table below identifies the funds in reimbursement; the level at which reimbursement began; and the dollar amount reimbursed for each period.
FUND: LEVEL AT WHICH DOLLAR AMOUNT REIMBURSED: REIMBURSEMENT BEGAN: 1993 1992 1991 Canada 2.00% $0 $ 15,923 $ 51,419 Emerging Markets 2.60% 0 52,597 107,794* Japan 2.00% 0 13,797** N/A Latin America 2.00% 0 N/A N/A Southeast Asia 2.00% 43,332*** N/A N/A
* From November 30, 1990 (commencement of operations) through October 31, 1991. ** From September 15, 1992 (commencement of operations) through October 31, 1992. *** From April 19, 1993 (commencement of operations) through October 31, 1993. To comply with the California Code of Regulations, FMR will reimburse each fund if and to the extent that the fund's aggregate annual operating expenses exceed specified percentages of its average net assets. The applicable percentages are 2 1/2% of the first $30 million, 2% of the next $70 million, and 1 1/2% of average net assets in excess of $100 million. When calculating a fund's expenses for purposes of this regulation, each fund may exclude interest, taxes, brokerage commissions, and extraordinary expenses, as well as a portion of its custodian fees attributable to investments in foreign securities. SUB-ADVISORS. FMR has entered into sub-advisory agreements with FMR U.K., FMR Far East, FIJ, and FIIA. FIIA, in turn, has entered into a sub-advisory agreement with its wholly owned subsidiary FIIAL U.K. Pursuant to the sub-advisory agreements, FMR may receive investment advice and research services with respect to companies based outside the U.S. from the sub-advisors and may grant the sub-advisors investment management authority as well as the authority to buy and sell securities if FMR believes it would be beneficial to the funds. Currently, FMR U.K., FMR Far East, FIJ, FIIA, and FIIAL U.K. each focus on companies in countries other than the United States including countries in the United Kingdom, Europe, Asia, and the Pacific Basin. FMR U.K. and FMR Far East are wholly owned subsidiaries of FMR. FIJ and FIIA are a wholly owned subsidiaries of Fidelity International Limited (FIL), a Bermuda company formed in 1968 which primarily provides investment advisory services to non-U.S. investment companies and institutional investors investing in securities of issuers throughout the world. Edward C. Johnson 3d, together with various trusts for the benefit of Johnson family members owns , directly or indirectly, more than 25% of the voting stock of FIL. FIIA was organized in Bermuda in 1983; FIIAL U.K. was organized in the United Kingdom in 1984; and FIJ w as organized in Japan in 1986. Under the sub-advisory agreements FMR pays the fees of FMR U.K., FMR Far East, FIJ, and FIIA. FIIA, in turn, pays the fees of FIIAL U.K. For providing investment advice and research services the sub-advisors are compensated as follows: (bullet) FMR pays FMR U.K. and FMR Far East fees equal to 110% and 105%, respectively, of FMR U.K.'s and FMR Far East's costs incurred in connection with providing investment advice and research services. (bullet) FMR pays FIIA 30% of FMR's monthly management fee with respect to the average market value of investments held by the fund for which FIIA has provided FMR with investment advice. (bullet) FMR pays FIJ 30% of FMR's monthly management fee with respect to the average market value of investments held by the fund for which FIJ has provided FMR with investment advice. (bullet) FIIA pays FIIAL U.K. a fee equal to 110% of FIIAL U.K.'s costs incurred in connection with providing investment advice and research services. For providing investment management and executing portfolio transactions, the sub-advisors are compensated as follows: (bullet) FMR pays FMR U.K., FMR Far East, FIJ, and FIIA 50% of its monthly management fee (including any performance adjustment) with respect to the fund's average net assets managed by the sub-advisor on a discretionary basis. (bullet) FIIA pays FIIAL U.K. 110% of FIIAL U.K.'s costs incurred with providing investment management services. FMR entered into the sub-advisory agreements described above with respect to Diversified International September 16, 1992, and with International Growth & Income, Overseas, Worldwide, Emerging Markets, Europe, Pacific Basin, and Canada on March 1, 1992 following shareholder approval of the agreements on February 19, 1992. FMR entered into the sub-advisory agreements described above with respect to Japan on July 16, 1992, with respect to Latin America and Southeast Asia on March 18, 1993, and with respect to Europe Capital Appreciation on November 18, 1993. Prior to March 1, 1992, FMR had sub-advisory agreements with FMR Far East on behalf of the funds and FMR U.K. on behalf of the funds pursuant to which FMR Far East and FMR U.K. provided FMR with investment advice and research services. Under those agreements, FMR Far East and FMR U.K. were compensated for their services according to the same formulas as they are compensated currently for providing investment advice and research services. The fees paid to FMR U.K. and FMR Far East for fiscal 1993, 1992, and 1991 are set forth below. FEES PAID TO FOREIGN SUB-ADVISERS FEES PAID TO FMR U.K. FEES PAID TO FMR FAR EAST 1993 1992 1991 1993 1992 1991
Diversified International 1 $ 25,908 $ 6,0541 $ N/A $ 39,692 $ 4,9281 $ N/A International Growth & Income 58,672 16,110 26,000 91,684 14,428 27,000 Overseas 281,303 324,410 639,000 53,000 288,806 612,000 Worldwide 22,728 17,586 53,000 34,227 15,709 55,000 Canada 36 0 0 53 0 0 Europe 62,586 113,716 246,000 0 0 0 Japan 2 0 0 N/A 35,955 0 N/A Pacific Basin 67,972 0 0 102,379 31,155 72,000 Emerging Markets 3 32,294 N/A N/A 51,641 N/A N/A Latin America 4 0 N/A N/A 20,076 N/A N/A Southeast Asia 4 0 N/A N/A 30,403 N/A N/A
1 From December 27, 1991 (commencement of operations) through October 31, 1992. 2 From September 15, 1992 (commencement of operations) through October 31, 1992. 3 From November 1, 1990 (commencement of operations) through October 31, 1991. 4 From April 19, 1993 (commencement of operations) through October 31, 1993. CONTRACTS WITH COMPANIES AFFILIATED WITH FMR FSC is transfer, dividend disbursing, and shareholders' servicing agent for the funds. Under the trust's contract with FSC, each fund pays an annual fee of $25.50 per basic retail account with a balance of $5,000 or more; $15.00 per basic retail account with a balance of less than $5,000; and a supplemental activity charge of $5.61 for monetary transactions. These fees and charges are subject to annual cost escalation based on changes in postal rates and changes in wage and price levels as measured by the National Consumer Price Index for Urban Areas. With respect to certain institutional client master accounts, the funds pay FSC a per account fee of $95, and monetary transaction charges of $20 or $17.50, depending on the nature of services provided. With respect to certain broker-dealer master accounts, the funds pay FSC a per-account fee of $30, and a charge of $6 for monetary transactions. Fees for certain institutional retirement plan accounts are based on the net assets of all such accounts in the funds. FSC pays out-of-pocket expenses associated with providing transfer agent services. In addition, FSC bears the expense of typesetting, printing, and mailing prospectuses, statements of additional information, and all other reports, notices, and statements to shareholders, with the exception of proxy statements. Transfer agent fees paid to FSC for the fiscal periods ended October 31, 1993, 1992, and 1991 are shown in the table below. TRANSFER AGENT FEES PAID TO FSC FISCAL FISCAL FISCAL 1993 1992 1991
Diversified International $ 486,053 $ 124,268 $ N/A International Growth & Income 1,303,282 242,518 169,718 Overseas 3,518,007 3,066,851 3,165,394 Worldwide 579,654 421,749 454,122 Canada 466,176 102,105 85,849 Europe 2,017,635 1,319,523 1,239,196 Japan 546,438 6281 N/A Pacific Basin 1,064,457 477,691 455,920 Emerging Markets 782,066 45,901 22,1112 Latin America 351,5933 N/A N/A Southeast Asia 469,2803 N/A N/A
1 From September 15, 1992 (commencement of operations) through October 31, 1992. 2 From November 1, 1990 (commencement of operations) through October 31, 1991. 3 From April 19, 1993 (commencement of operations) through October 31, 1993. The trust's contract with FSC also provides that FSC will perform the calculations necessary to determine each fund's net asset value per share and dividends and maintain each fund's accounting records. Prior to July 1, 1991, the annual fee for these pricing and bookkeeping services was based on two schedules, one pertaining to each fund's average net assets, and one pertaining to the type and number of transactions the fund made. The fee rates in effect as of July 1, 1991 are based on each fund's average net assets, specifically, .06% for the first $500 million of average net assets and .03% for average net assets in excess of $500 million. The fee is limited to a minimum of $45,000 and a maximum of $750,000 per year. Pricing and bookkeeping fees paid to FSC for fiscal 199 3 , 199 2, and 199 1 are shown in the table below. PRICING AND BOOKKEEPING FEES PAID TO FSC FISCAL FISCAL FISCAL 1993 1992 1991
Diversified International $ 80,790 $ 38,296 $ N/A International Growth & Income 161,316 45,503 62,853 Overseas 474,717 426,747 429,098 Worldwide 91,854 64,800 127,218 Canada 51,311 45,206 51,990 Europe 297,155 207,346 202,343 Japan 77,908 4,3001 N/A Pacific Basin 153,830 62,422 110,943 Emerging Markets 101,833 45,611 33,3062 Latin America 44,8533 N/A N/A Southeast Asia 49,4863 N/A N/A
1 From September 15, 1992 (commencement of operations) through October 31, 1992. 2 From November 1, 1990 (commencement of operations) through October 31, 1991. 3 From April 19, 1992 (commencement of operations) through October 31, 1993. Each fund has a distribution agreement with FDC, a Massachusetts corporation organized on July 18, 1960. FDC is a broker-dealer registered under the Securities Exchange Act of 1934 and is a member of the National Association of Securities Dealers, Inc. The distribution agreement calls for FDC to use all reasonable efforts, consistent with its other business, to secure purchasers for shares of the funds, which are continuously offered. Promotional and administrative expenses in connection with the offer and sale of shares are paid by FDC. During fiscal 199 3 , 199 2 , and 199 1 , FDC received sales charge revenue and deferred sales charge revenue (for International Growth & Income, Canada, Europe, and Pacific Basin) as indicated in the table on page 56. PAID TO FDC SALES CHARGE REVENUE DEFERRED SALES CHARGE REVENUE FISCAL FISCAL FISCAL FISCAL FISCAL FISCAL 1993 1992 1991 1993 1992 1991
Diversified International N/A N/A N/A N/A N/A N/A International Growth & Income $87,704 $158,552 $108,477 $29,135 $37,682 $31,757 Overseas 1,367,026 1,127,543 1,411,217 N/A N/A N/A Worldwide 109,770 68,687* N/A N/A N/A N/A Canada 50,670 95,727 83,595 12,252 14,661 16,950 Europe 2,116,938 2,834,705 724,229 213,896 313,139 482,844 Japan N/A N/A N/A N/A N/A N/A Pacific Basin 2,239,532 716,574 554,803 56,119 103,024 96,194 Emerging Markets 103,572 137,405 119,807 N/A N/A N/A Latin America N/A N/A N/A N/A N/A N/A Southeast Asia N/A N/A N/A N/A N/A N/A
* During the period July 1, 1992 through October 31, 1993. DESCRIPTION OF THE TRUST TRUST ORGANIZATION. Fidelity Diversified International, Fidelity International Growth & Income Fund, Fidelity Overseas Fund, Fidelity Worldwide Fund, Fidelity Canada Fund, Fidelity Europe Fund, Fidelity Europe Capital Appreciation, Fidelity Japan Fund, Fidelity Pacific Basin Fund, Fidelity Emerging Markets Fund, Fidelity Latin America Fund, and Fidelity Southeast Asia Fund are funds of Fidelity Investment Trust (the trust), an open-end management investment company originally organized as a Massachusetts business trust on April 20, 1984. On November 3, 1986, the trust's name was changed from Fidelity Overseas Fund to Fidelity Investment Trust. Currently, there are seventeen funds of the trust: Fidelity Overseas Fund, Fidelity Europe Fund, Fidelity Europe Capital Appreciation Fund, Fidelity Pacific Basin Fund, Fidelity New Markets Income Fund, Fidelity International Growth & Income Fund, Fidelity Global Bond Fund, Fidelity Canada Fund, Fidelity Worldwide Fund, Fidelity International Opportunities Fund, Fidelity Short-Term World Income Fund, Fidelity Diversified International Fund, Fidelity Diversified Global Fund, Fidelity Japan Fund, Fidelity Emerging Markets Fund, Fidelity Latin America Fund, and Fidelity Southeast Asia Fund. The Declaration of trust permits the Trustees to create additional funds. In the event that FMR ceases to be the investment adviser to the trust or a fund, the right of the trust or fund to use the identifying name "Fidelity" may be withdrawn. There is a remote possibility that one fund might become liable for any misstatement in its prospectus or statement of additional information about another fund. The assets of the trust received for the issue or sale of shares of each fund and all income, earnings, profits, and proceeds thereof, subject only to the rights of creditors, are especially allocated to such fund and constitute the underlying assets of such fund. The underlying assets of each fund are segregated on the books of account, and are to be charged with the liabilities with respect to such fund and with a share of the general expenses of the trust. Expenses with respect to the trust are to be allocated in proportion to the asset value of the respective funds, except where allocations of direct expense can otherwise be fairly made. The officers of the trust, subject to the general supervision of the Board of Trustees, have the power to determine which expenses are allocable to a given fund, or which are general or allocable to all of the funds. In the event of the dissolution or liquidation of the trust, shareholders of each fund are entitled to receive as a class the underlying assets of such fund available for distribution. SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type commonly known as a "Massachusetts business trust." Under Massachusetts law, shareholders of such a trust may, under certain circumstances, be held personally liable for the obligations of the trust. The Declaration of Trust provides that the trust shall not have any claim against shareholders except for the payment of the purchase price of shares and requires that each agreement, obligation, or instrument entered into or executed by the trust or the Trustees include a provision limiting the obligations created thereby to the trust and its assets. The Declaration of Trust provides for indemnification out of each fund's property of any shareholder held personally liable for the obligations of the fund. The Declaration of Trust also provides that each fund shall, upon request, assume the defense of any claim made against any shareholder for any act or obligation of the fund and satisfy any judgment thereon. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which a fund itself would be unable to meet its obligations. FMR believes that, in view of the above, the risk of personal liability to shareholders is remote. The Declaration of Trust further provides that the Trustees, if they have exercised reasonable care, will not be liable for any neglect or wrongdoing, but nothing in the Declaration of Trust protects a Trustee against any liability to which they would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of their office. VOTING RIGHTS. Each fund's capital consists of shares of beneficial interest. The shares have no preemptive or conversion rights; the voting and dividend rights, the right of redemption, and the privilege of exchange are described in the Prospectus. Shares are fully paid and nonassessable, except as set forth under the heading "Shareholder and Trustee Liability" above. Shareholders representing 10% or more of the trust may, as set forth in the Declaration of Trust, call meetings of the trust or a fund for any purpose related to the trust or fund, as the case may be, including, in the case of a meeting of the entire trust, the purpose of voting on removal of one or more Trustees. The trust or any fund may be terminated upon the sale of its assets to another open-end management investment company, or upon liquidation and distribution of its assets, if approved by vote of the holders of a majority of the outstanding shares of the trust or the fund. If not so terminated, the trust and its funds will continue indefinitely. CUSTODIAN. Chase Manhattan Bank, N.A., 1211 Avenue of the Americas, New York, New York is custodian of the assets of Diversified International, International Growth & Income, Overseas, Worldwide, Europe, Europe Capital Appreciation, Japan, Pacific Basin, Emerging Markets and Southeast Asia. Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts, is custodian of the assets of the Canada and Latin America. The custodian is responsible for the safekeeping of the funds' assets and the appointment of subcustodian banks and clearing agencies. The custodian takes no part in determining the investment policies of the funds or in deciding which securities are purchased or sold by the funds. The funds may, however, invest in obligations of the custodian and may purchase securities from or sell securities to the custodian. Investors should understand that the expense ratios of the funds may be higher than those of investment companies that invest exclusively in U.S. securities since the cost of maintaining the custody of foreign securities is higher. FMR, its officers and directors, its affiliated companies, and the fund's Trustees may from time to time have transactions with various banks, including banks serving as custodians for certain of the funds advised by FMR. The Boston branch of Brown Brothers Harriman & Co. leases its office space from an affiliate of FMR at a lease payment which, when entered into, was consistent with prevailing market rates. Transactions that have occurred to date include mortgages and personal and general business loans. In the judgment of FMR, the terms and conditions of those transactions were not influenced by existing or potential custodial or other fund relationships. Portfolio securities (including ADRs) purchased in the United States are maintained in the custody of the funds' custodian and may be deposited into the Federal Reserve Treasury Department Book Entry System or the Security Depository System of the Depository Trust Company. The custodian has entered into sub-custodian agreements with several foreign banks or clearing agencies, pursuant to which portfolio securities purchased outside of the United States are maintained in the custody of these entities. AUDITOR. Coopers & Lybrand, One Post Office Square, Boston, Massachusetts serves as independent accountant to Diversified International, International Growth & Income, Overseas, Worldwide, Canada, Europe, Japan, Pacific Basin, and Emerging Markets. Price Waterhouse, 160 Federal Street, Boston, Massachusetts serves as independent accountant to Europe Capital Appreciation, Latin America and Southeast Asia. The auditors examine financial statements for the funds and provides other audit, tax, and related services. FINANCIAL STATEMENTS The funds' Annual Report (except for Europe Capital Appreciation Fund which commenced operations on December 4, 1993), for the fiscal year ended October 31, 1993 is a separate report supplied with this Statement of Additional Information and is incorporated herein by reference. APPENDIX DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS: AAA - Bonds rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. AA - Bonds rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. A - Bonds rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. BAA - Bonds rated Baa are considered as medium-grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. BA - Bonds rated Ba are judged to have speculative elements. Their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. B - Bonds rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or maintenance of other terms of the contract over any long period of time may be small. CAA - Bonds rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest. CA - Bonds rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked short-comings. C - Bonds rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating classification from Aa through B in its corporate bond rating system. The modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category. DESCRIPTION OF STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS: AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's to a debt obligation. Capacity to pay interest and repay principal is extremely strong. AA - Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest-rated issues only in small degree. A - Debt rated A has a strong capacity to pay interest and repay principal, although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions. BBB - Debt rated BBB is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher-rated categories. BB - Debt rate BB has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. B - Debt rated B has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial, or economic conditions will likely impair capacity or willingness to pay interest and repay principal. The B rating category is also used for debt subordinated to senior debt that is assigned an actual or implied BB- rating. CCC - Debt rated CCC has a currently identifiable vulnerability to default, and is dependent upon favorable business, financial, and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial, or economic conditions, it is not likely to have the capacity to pay interest and repay principal. CC - Debt rated CC is typically applied to debt subordinated to senior debt which is assigned an actual or implied CCC debt rating. C - The rating C is typically applied to debt subordinated to senior debt which is assigned an actual or implied CCC- debt rating. The C rating may be used to cover a situation where a bankruptcy petition has been filed but debt service payments are continued. CI - The rating CI is reserved for income bonds on which no interest is being paid. D - Debt rated D is in payment default. The D rating category is used when interest payments or principal payments are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The D rating will also be used upon the filing of a bankruptcy petition if debt service payments are jeopardized. The ratings from AA to CCC may be modified by the addition of a plus or minus to show relative standing within the major rating categories. PART C. OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) Financial Statements for Fidelity Diversified International Fund, Fidelity International Growth & Income Fund, Fidelity Overseas Fund, Fidelity Worldwide Fund, Fidelity Canada Fund, Fidelity Europe Fund, Fidelity Japan Fund, Fidelity Pacific Basin Fund, Fidelity Emerging Markets Fund, Fidelity Latin America Fund, and Fidelity Southeast Asia Fund for the fiscal year ended October 31, 1993 are incorporated by reference into the funds' Statement of Additional Information and are filed herein as Exhibit 24 (a). (b) Exhibits: (1) (a) Declaration of Trust dated April 20, 1984 is incorporated herein by reference to Exhibit 1 to Registration Statement No. 2-90649. (b) Amended and Restated Declaration of Trust dated August 2, 1984 is incorporated herein by reference to Exhibit 1(b) to Pre-Effective Amendment No. 1. (c) Supplement to the Declaration of Trust dated October 18, 1984 is incorporated herein by reference to Exhibit 1(c) to Pre-Effective Amendment No 2. (d) Supplement to the Declaration of Trust dated November 1, 1986 is incorporated herein by reference to Exhibit 1(d) to Post-Effective Amendment No. 6. (e) Supplement to the Declaration of Trust dated December 3, 1987 is incorporated herein by reference to Exhibit 1(e) to Post-Effective Amendment No. 11. (f) Supplement to the Declaration of Trust dated November 1, 1988 is incorporated herein by reference to Exhibit 1(f) to Post-Effective No. 18. (g) Supplement to the Declaration of Trust dated November 1, 1989 is incorporated herein by reference to Exhibit 1(g) to Post-Effective Amendment No. 19. (2) By-Laws of the Trust are incorporated herein by reference to Exhibit 2 to Registration Statement No. 2-90649. (a) Supplement to the By-Laws of the Trust is incorporated herein by reference to Exhibit 2(a) to Post-Effective Amendment No. 16. (3) Not applicable. (4) Not applicable. (5) (a) Management Contract between Fidelity Emerging Markets Fund (formerly "Fidelity International Opportunities Fund") and Fidelity Management & Research Company dated March 1, 1992 is incorporated herein by reference to Exhibit 5(c) to Post-Effective Amendment No. 38. (b) Management Contract between Fidelity Overseas Fund and Fidelity Management & Research Company dated March 1, 1992 is incorporated herein by reference to Exhibit 5(g) to Post-Effective Amendment No. 38. (c) Management Contract between Fidelity Worldwide Fund and Fidelity Management & Research Company dated March 1, 1992 is incorporated herein by reference to Exhibit 5(h) to Post-Effective Amendment No. 38. (d) Management Contract between Fidelity International Growth & Income Fund and Fidelity Management & Research Company dated March 1, 1992 is incorporated herein by reference to Exhibit 5(i) to Post-Effective Amendment No. 38. (e) Management Contract between Fidelity Canada Fund and Fidelity Management & Research Company dated March 1, 1992 is incorporated herein by reference to Exhibit 5(j) to Post-Effective Amendment No. 38. (f) Management Contract between Fidelity Europe Fund and Fidelity Management & Research Company dated March 1, 1992 is incorporated herein by reference to Exhibit 5(k) to Post-Effective Amendment No. 38. (g) Management Contract between Fidelity Pacific Basin Fund and Fidelity Management & Research Company dated March 1, 1992 is incorporated herein by reference to Exhibit 5(l) to Post-Effective Amendment No. 38. (h) Management Contract between Fidelity Diversified International Fund and Fidelity Management & Research Company dated October 1, 1992 is incorporated herein by reference to Exhibit 5(a) to Post-Effective Amendment No. 41. (i) Form of Management Contract between Fidelity Global Bond Fund and Fidelity Management & Research Company was filed as Exhibit 5(b) to Post-Effective Amendment No. 38. (j) Form of Management Contract between Fidelity Short-Term World Income Fund and Fidelity Management & Research Company was filed as Exhibit 5(d) to Post-Effective Amendment No. 38. (k) Management Contract between Fidelity Japan Fund and Fidelity Management & Research Company dated July 16, 1992 is incorporated herein by reference to Exhibit 5(k) to Post-Effective Amendment No. 51. (l) Management Contract between Fidelity Latin America Fund and Fidelity Management & Research Company dated March 18, 1993 is incorporated herein by reference to Exhibit 5(l) to Post-Effective Amendment No. 48. (m) Management Contract between Fidelity Southeast Asia Fund and Fidelity Management & Research Company dated March 18, 1993 is incorporated herein by reference to Exhibit 5(m) to Post-Effective Amendment No. 48. (n) Management Contract between Fidelity New Markets Income Fund and Fidelity Management & Research Company dated April 15, 1993 is incorporated herein by reference to Exhibit 5(n) to Post-Effective Amendment No. 48. (o) Management Contract between Fidelity Europe Capital Appreciation Fund and Fidelity Management & Research Company dated November 18, 1993 is incorporated herein by reference to Exhibit 5(o) to Post-Effective Amendment No. 51. (p) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (Far East) Inc. on behalf of Fidelity Diversified International Fund dated October 1, 1992 is incorporated herein by reference to Exhibit 5(p) to Post-Effective Amendment No. 51. (q) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (Far East) Inc. on behalf of Fidelity Overseas Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(o) to Post-Effective Amendment No. 38. (r) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (Far East) Inc. on behalf of Fidelity Europe Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(p) to Post-Effective Amendment No. 38. (s) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (Far East) Inc. on behalf of Fidelity Pacific Basin Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(q) to Post-Effective Amendment No. 38. (t) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (Far East) Inc. on behalf of Fidelity Canada Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(r) to Post-Effective Amendment No. 38. (u) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (Far East) Inc. on behalf of Fidelity International Growth & Income Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(s) to Post-Effective Amendment No. 38. (v) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (Far East) Inc. on behalf of Fidelity Worldwide Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(t) to Post-Effective Amendment No. 38. (w) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (Far East) Inc. on behalf of Fidelity Emerging Markets Fund (formerly "Fidelity International Opportunities Fund") dated April 1, 1992 is incorporated herein by reference to Exhibit 5(u) to Post-Effective Amendment No. 38. (x) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (Far East) Inc. on behalf of Fidelity Global Bond Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(v) to Post-Amendment No. 38. (y) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (Far East) Inc. on behalf of Fidelity Short-Term World Income Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(w) to Post-Effective Amendment No. 38. (z) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (Far East) Inc. on behalf of Fidelity Japan Fund dated July 16, 1992 is filed herein as Exhibit 5(z). (aa) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (Far East) Inc. on behalf of Fidelity Latin America Fund dated March 18, 1993 is incorporated herein by reference to Exhibit 5(z) to Post-Effective Amendment No. 48. (bb) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (Far East) Inc. on behalf of Fidelity Southeast Asia Fund dated March 18, 1993 is incorporated herein by reference to Exhibit 5(aa) to Post-Effective Amendment No. 48. (cc) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (Far East) Inc. on behalf of Fidelity New Markets Income Fund dated April 15, 1993 is incorporated herein by reference to Exhibit 5(bb) to Post-Effective Amendment No. 48. (dd) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (Far East) Inc. on behalf of Fidelity Europe Capital Appreciation Fund dated November 18, 1993 is filed herein as Exhibit 5(dd). (ee) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (U.K.) Inc. on behalf of Fidelity Overseas Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(x) to Post-Effective Amendment No. 38. (ff) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (U.K.) Inc. on behalf of Fidelity Europe Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(y) to Post-Effective Amendment No. 38. (gg) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (U.K.) Inc. on behalf of Fidelity Pacific Basin Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(z) to Post-Effective Amendment No. 38. (hh) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (U.K.) Inc. on behalf of Fidelity Canada Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(aa) to Post-Effective Amendment No. 38. (ii) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (U.K.) Inc. on behalf of Fidelity International Growth & Income Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(bb) to Post-Effective Amendment No. 38. (jj) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (U.K.) Inc. on behalf of Fidelity Worldwide Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(cc) to Post-Effective Amendment No. 38. (kk) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (U.K.) Inc. on behalf of Fidelity Emerging Markets Fund (formerly "Fidelity International Opportunities Fund") dated April 1, 1992 is incorporated herein by reference to Exhibit 5(dd) to Post-Effective Amendment No. 38. (ll) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (U.K.) Inc. on behalf of Fidelity Global Bond Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(ee) to Post-Effective Amendment No. 38. (mm) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (U.K.) on behalf of Fidelity Short-Term World Income Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(ff) to Post-Effective Amendment No. 38. (nn) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (U.K.) Inc. on behalf of Fidelity Diversified International Fund dated October 1, 1992 is incorporated herein to Exhibit 5(nn) to Post-Effective Amendment No. 51. (oo) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (U.K.) Inc. on behalf of Fidelity Japan Fund dated July 16, 1992 is filed herein as Exhibit 5(oo). (pp) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (U.K.) Inc. on behalf of Fidelity Latin America Fund is incorporated herein by reference to Exhibit 5(nn) to Post-Effective Amendment No. 48. (qq) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (U.K.) Inc. on behalf of Fidelity Southeast Asia Fund dated March 18, 1993 is incorporated herein by reference to Exhibit 5(oo) to Post-Effective Amendment No. 48. (rr) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (U.K.) Inc. dated April 15, 1993 on behalf of Fidelity New Markets Income Fund date April 15, 1993, is incorporated herein by reference to Exhibit 5(pp) to Post-Effective Amendment No. 48. (ss) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Management & Research (U.K.) Inc. on behalf of Fidelity Europe Capital Appreciation Fund dated November 18, 1993 is filed herein as Exhibit 5(ss). (tt) Sub-Advisory Agreement between Fidelity International Investment Advisors and Fidelity International Investment Advisors (U.K.) Limited on behalf of Fidelity Overseas Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(gg) to Post-Effective Amendment No. 38. (uu) Sub-Advisory Agreement between Fidelity International Investment Advisors and Fidelity International Investment Advisors (U.K.) Limited on behalf of Fidelity Europe Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(hh) to Post-Effective Amendment No. 38. (vv) Sub-Advisory Agreement between Fidelity International Investment Advisors and Fidelity International Investment Advisors (U.K.) Limited on behalf of Fidelity Pacific Basin Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(ii) to Post-Effective Amendment No. 38. (ww) Sub-Advisory Agreement between Fidelity International Investment Advisors and Fidelity International Investment Advisors (U.K.) Limited on behalf of Fidelity Canada Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(jj) to Post-Effective Amendment No. 38. (xx) Sub-Advisory Agreement between Fidelity International Investment Advisors and Fidelity International Investment Advisors (U.K.) Limited on behalf of Fidelity International Growth & Income Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(kk) to Post-Effective Amendment No. 38. (yy) Sub-Advisory Agreement between Fidelity International Investment Advisors and Fidelity International Investment Advisors (U.K.) Limited on behalf of Fidelity Worldwide Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(ll) to Post-Effective Amendment No. 38. (zz) Sub-Advisory Agreement between Fidelity International Investment Advisors and Fidelity International Investment Advisors (U.K.) Limited on behalf of Fidelity Emerging Markets Fund (formerly "Fidelity International Opportunities Fund") dated April 1, 1992 is incorporated herein by reference to Exhibit 5(mm) to Post-Effective Amendment No. 38. (aaa) Sub-Advisory Agreement between Fidelity International Investment Advisors and Fidelity International Investment Advisors (U.K.) Limited on behalf of Fidelity Global Bond Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(nn) to Post-Effective Amendment No. 38. (bbb) Sub-Advisory Agreement between Fidelity International Investment Advisors and Fidelity International Investment Advisors (U.K.) Limited on behalf of Fidelity Short-Term World Income Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(oo) to Post-Effective Amendment No. 38. (ccc) Form of Sub-Advisory Agreement between Fidelity International Investment Advisors and Fidelity International Investment Advisors (U.K.) Limited on behalf of Fidelity Japan Fund was filed as Exhibit 5(o) to Post-Effective Amendment No. 35. (ddd) Form of Sub-Advisory Agreement between Fidelity International Investment Advisors and Fidelity International Investment Advisors (U.K.) Limited on behalf of Fidelity Latin America Fund was filed as Exhibit 5(g) to Post-Effective Amendment No. 42. (eee) Form of Sub-Advisory Agreement between Fidelity International Investment Advisors and Fidelity International Investment Advisors (U.K.) Limited on behalf of Fidelity Southeast Asia Fund was filed as Exhibit 5(h) to Post-Effective Amendment No. 42. (fff) Sub-Advisory Agreement between Fidelity International Investment Advisors and Fidelity International Investment Advisors (U.K.) Limited on behalf of Fidelity New Markets Income Fund was filed as Exhibit 5(fff) to Post-Effective Amendment No. 50. (ggg) Form of Sub-Advisory Agreement between Fidelity International Investment Advisors and Fidelity International Investment Advisors (U.K.) Limited on behalf of Fidelity Europe Capital Appreciation Fund was filed as Exhibit 5(ggg) to Post-Effective Amendment No. 49. (hhh) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity International Investment Advisors on behalf of Fidelity Overseas Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(pp) to Post-Effective Amendment No. 38. (iii) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity International Investment Advisors on behalf of Fidelity Europe Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(qq) to Post-Effective Amendment No. 38. (jjj) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity International Investment Advisors on behalf of Fidelity Pacific Basin Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(rr) to Post-Effective Amendment No. 38. (kkk) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidel ity International Investment Advisors on behalf of Fidelity Canada Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(ss) to Post-Effective Amendment No. 38. (lll) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity International Investment Advisors on behalf of Fidelity International Growth & Income Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(tt) to Post-Effective Amendment No. 38. (mmm) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity International Investment Advisors on behalf of Fidelity Worldwide Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(uu) to Post-Effective Amendment No. 38. (nnn) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity International Investment Advisors on behalf of Fidelity Emerging Markets Fund (formerly "Fidelity International Opportunities Fund") dated April 1, 1992 is incorporated herein by reference to Exhibit 5(vv) to Post-Effective Amendment No. 38. (ooo) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity International Investment Advisors on behalf of Fidelity Global Bond Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(ww) to Post-Effective Amendment No. 38. (ppp) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity International Investment Advisors on behalf of Fidelity Short-Term World Income Fund dated April 1, 1992 is incorporated herein by reference to Exhibit 5(xx) to Post-Effective Amendment No. 38. (qqq) Form of Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity International Investment Advisors on behalf of Fidelity Japan Fund was filed as Exhibit 5(p) to Post-Effective Amendment No. 35. (rrr) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity International Investment Advisors on behalf of Fidelity Latin America Fund dated March 18, 1993 is incorporated herein by reference as Exhibit 5(rrr) to Post-Effective amendment No. 51. (sss) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity International Investment Advisors on behalf of Fidelity Southeast Asia Fund dated March 18, 1993 is incorporated herein by reference as Exhibit 5(sss) to Post-Effective Amendment No. 51. (ttt) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity International Investment Advisors on behalf of Fidelity New Markets Income Fund was filed as Exhibit 5(ttt) to Post-Effective Amendment No. 50. (uuu) Form of Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity International Investment Advisors on behalf of Fidelity Europe Capital Appreciation Fund was filed as Exhibit 5(uuu) to Post-Effective Amendment No. 49. (vvv) Form of Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Investments Japan Limited on behalf of Fidelity Southeast Asia Fund was filed as Exhibit 5(i) to Post-Effective Amendment No. 42. (www) Form of Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity Investments Japan Limited on behalf of Fidelity New Markets Income Fund was filed as Exhibit 5(rrr) to Post-Effective Amendment No. 45. (xxx) Sub-Advisory Agreement between Fidelity Management & Research Company and Fidelity International Investment Advisors on behalf of Fidelity Diversified International Fund dated October 1, 1992 is incorporated herein by reference as Exhibit 5(xxx) to Post-Effective Amendement No. 51. (yyy) Sub-Advisory Agreement between Fidelity International Investment Advisors and Fidelity International Investment Advisors (U.K.) Limited on behalf of Fidelity Diversified International Fund dated October 1, 1992 is incorporated herein by reference as Exhibit 5(yyy) to Post-Effective Amendment No. 51. (6) (a) General Distribution Agreement between Fidelity Overseas Fund and Fidelity Distributors Corporation dated April 1, 1987 is incorporated herein by reference to Exhibit 6(a) to Post-Effective Amendment No. 11. (b) General Distribution Agreement between Fidelity Europe Fund and Fidelity Distributors Corporation dated April 1, 1987 is incorporated herein by reference to Exhibit 6(b) to Post-Effective Amendment No. 11. (c) General Distribution Agreement between Fidelity Pacific Basin Fund and Fidelity Distributors Corporation dated April 1, 1987 is incorporated herein by reference to Exhibit 6(c) to Post-Effective Amendment No. 11. (d) General Distribution Agreement between Fidelity International Growth & Income Fund and Fidelity Distributors Corporation dated April 1, 1987 is incorporated herein by reference to Exhibit 6(d) to Post-Effective Amendment No. 11. (e) General Distribution Agreement between Fidelity Global Bond Fund and Fidelity Distributors Corporation dated April 1, 1987 is incorporated herein by reference to Exhibit 6(e) to Post-Effective Amendment No. 11. (f) General Distribution Agreement between Fidelity Canada Fund and Fidelity Distributors Corporation dated November 14, 1987 is incorporated herein by reference to Exhibit 6(f) to Post-Effective Amendment No. 11. (g) Amendment to General Distribution Agreement between Registrant and Fidelity Distributors Corporation dated January 1, 1988 is incorporated herein by reference to Exhibit 6(h) to Post-Effective Amendment No. 12. (h) General Distribution Agreement between Fidelity Worldwide Fund and Fidelity Distributors Corporation dated May 19, 1990 is incorporated herein by reference to Exhibit 6(h) to Post-Effective Amendment No. 24. (i) General Distribution Agreement between Fidelity Emerging Markets Fund (formerly "Fidelity International Opportunities Fund") and Fidelity Distributors Corporation dated September 30, 1990 is incorporated herein by reference to Exhibit 6(i) to Post-Effective Amendment No. 24. (j) General Distribution Agreement between Fidelity Short-Term World Income Fund and Fidelity Distributors Corporation dated September 20, 1991 is incorporated by reference to Exhibit 6(j) to Post-Effective Amendment No. 44. (k) General Distribution Agreement between Fidelity Diversified International Fund and Fidelity Distributors Corporation dated December 12, 1991 is incorporated herein by reference to Exhibit 6(k) to Post-Effective Amendment No. 38. (l) Form of General Distribution Agreement between Fidelity Japan Fund and Fidelity Distributors Corporation was filed as Exhibit 6(l) to Post-Effective Amendment No. 35. (m) Form of General Distribution Agreement between Fidelity Latin America Fund and Fidelity Distributors Corporation was filed as Exhibit 6(a) to Post-Effective Amendment No. 42. (n) Form of General Distribution Agreement between Fidelity Southeast Asia Fund and Fidelity Distributors Corporation was filed as Exhibit 6(b) to Post-Effective Amendment No. 42. (o) General Distribution Agreement between Fidelity New Markets Income Fund and Fidelity Distributors Corporation was filed as Exhibit 6(o) to Post-Effective Amendment No. 50. (p) Form of General Distribution Agreement between Fidelity Europe Capital Appreciation Fund and Fidelity Distributors Corporation was filed as Exhibit 6(p) to Post-Effective Amendment No. 49. (7) Retirement Plan for Non-Interested Person Trustees, Directors or General Partners, effective November 1, 1989, is incorporated herein by reference to Exhibit 7 to Post-Effective Amendment No. 29. (8)(a) Custodian Agreement between Fidelity Investment Trust and the Chase Manhattan Bank, N.A. dated July 18, 1991 is incorporated herein by reference to Exhibit 8(a) to Post-Effective Amendment No. 38. (9) (a) Amended Service Agreement between the Registrant, FMR Corp., and Fidelity Service Co. dated June 1, 1989 is incorporated herein by reference to Exhibit 9(a) to Post-Effective Amendment No. 18. (b) Schedules A, B, and C to the Amended Service Agreement for Fidelity Europe Fund, dated June 1, 1989, are incorporated herein by reference to Exhibit 9(b) to Post-Effective Amendment No. 18. (c) Schedules A, B, and C to the Amended Service Agreement for Fidelity Pacific Basin Fund, dated June 1, 1989, are incorporated herein by reference to Exhibit 9(c) to Post-Effective Amendment No. 18. (d) Schedules A, B, and C to the Amended Service Agreement for Fidelity International Growth & Income Fund, dated June 1, 1989, are incorporated herein by reference to Exhibit 9(d) to Post-Effective Amendment No. 18. (e) Schedules A, B, and C to the Amended Service Agreement for Fidelity Global Bond Fund, dated June 1, 1989, are incorporated herein by reference to Exhibit 9(e) to Post-Effective Amendment No. 18. (f) Schedules A, B, and C to the Amended Service Agreement for Fidelity Canada Fund, dated June 1, 1989, are incorporated herein by reference to Exhibit 9(f) to Post-Effective Amendment No. 18. (g) Schedules A, B, and C to the Amended Service Agreement for Fidelity Overseas Fund, dated June 1, 1989, are incorporated herein by reference to Exhibit 9(g) to Post-Effective Amendment No. 18. (h) Schedules A, B, and C to the Amended Service Agreement for Fidelity Worldwide Fund, dated May 19, 1990, are incorporated herein by reference to Exhibit 9(h) to Post-Effective Amendment No. 24. (i) Schedules A, B, and C to the Amended Service Agreement for Fidelity Emerging Markets Fund (formerly "Fidelity International Opportunities Fund"), dated September 30, 1990, are incorporated herein by reference to Exhibit 9(i) to Post-Effective Amendment No. 24. (j) Form of Schedules A, B, and C to the Amended Service Agreement for Fidelity Short-Term World Income Fund was filed as Exhibit 9(j) to Post-Effective Amendment No. 27. (k) Form of Schedules A, B, and C to the Amended Service Agreement for Fidelity Diversified International Fund was filed as Exhibit 9(k) to Post-Effective Amendment No. 29. (l) Form of Schedules A, B, and C to the Amended Service Agreement for Fidelity Japan Fund was filed as Exhibit 9(l) to Post-Effective Amendment No. 35. (n) Form of Schedules A, B, and C to the Amended Service Agreement for Fidelity Latin America Fund was filed as Exhibit 9(a) to Post-Effective Amendment No. 42. (o) Form of Schedules A, B, and C to the Amended Service Agreement for Fidelity Southeast Asia Fund was filed as Exhibit 9(b) to Post-Effective Amendment No. 42. (p) Form of Schedules A, B, and C to the Amended Service Agreement for Fidelity New Markets Income Fund was filed as Exhibit 9(p) to Post-Effective Amendment No. 45. (q) Form of Schedules A, B, and C to the Amended Service Agreement for Fidelity Europe Capital Appreciation Fund was filed as Exhibit 9(q) to Post-Effective Amendment No. 49. (10) Not applicable. (11) (a) Consent of Coopers & Lybrand is filed herein as Exhibit 11 (a). (b) Consent Price Waterhouse is filed herein as Exhibit 11 (b). (12) Not applicable. (13) Not applicable. (14)(a) Fidelity Individual Retirement Account Custodial Agreement and Disclosure Statement, as currently in effect, is incorporated herein by reference to Exhibit 14(a) to Post-Effective Amendment No. 38. (b) Fidelity Defined Contribution Retirement Plan and Trust Agreement, as currently in effect, is incorporated herein by reference to Exhibit 14(c) to Post-Effective Amendment No. 23. (c) Fidelity Defined Benefit Pension Plan and Trust, as currently in effect, is incorporated herein by reference to Exhibit 14(d) to Post-Effective Amendment No. 23. (d) Fidelity 401(a) Prototype Plan for Tax-Exempt Employers, as currently in effect, is incorporated herein by reference to Exhibit 14(e) to Post-Effective Amendment No. 23. (e) Fidelity Group Individual Retirement Account Custodial Agreement and Disclosure Statement, as currently in effect, is incorporated herein by reference to Exhibit 14(g) to Post-Effective Amendment No. 23. (f) Fidelity Master Plan for Savings and Investments, as currently in effect, is incorporated herein by reference to Exhibit 14(f) to Post-Effective Amendment No. 27. (g) Fidelity 403(b)(7) Custodial Agreement, as currently in effect, is incorporated herein by reference to Exhibit 14(g) to Post-Effective Amendment No. 27. (15) (a) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity Global Bond Fund is incorporated herein by reference to Exhibit 15 to Post-Effective Amendment No. 7. (b) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity Short-Term World Income Fund is incorporated herein by reference to Exhibit 15(b) to Post-Effective Amendment No. 27. (c) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity New Markets Income Fund is incorporated herein by reference to Exhibit 15(c) to Post-Effective Amendment No. 45. (16) (a) A schedule for computation of performance quotations is incorporated herein by reference to Exhibit 16 to Post-Effective Amendment No. 16. (b) A schedule for computation of performance quotations regarding adjusted net asset value is incorporated herein by reference to Exhibit 16(b) to Post-Effective Amendment No. 43 (c) Backup for the computation of moving averages for Europe Fund is filed herein as Exhibit 16(c). . Item 25. Persons Controlled by or Under Common Control with Registrant The Board of Trustees of Registrant is the same as the Board of Trustees of other funds advised by FMR, each of which has Fidelity Management & Research Company as its investment adviser. In addition, the officers of these funds are substantially identical. Nonetheless, Registrant takes the position that it is not under common control with these other funds since the power residing in the respective boards and officers arises as the result of an official position with the respective funds. Item 26. Number of Holders of Securities: January 1993 Title of Class: Shares of Beneficial Interest Name of Series Number of Record Holders Fidelity Overseas Fund 287,413 Fidelity Europe Fund 91,859 Fidelity Pacific Basin Fund 64,314 Fidelity International Growth & Income Fund 95,731 Fidelity Global Bond Fund 42,407 Fidelity Canada Fund 20,820 Fidelity Worldwide Fund 35,333 Fidelity Emerging Markets Fund 108,369 Fidelity New Markets Income Fund 16,256 Fidelity Short-Term World Income Fund 29,285 Fidelity Diversified International Fund 30,068 Fidelity Japan Fund 28,256 Fidelity Diversified Global Fund 0 Fidelity Latin America Fund 55,134 Fidelity Southeast Asia Fund 71,239 Fidelity Europe Capital Appreciation Fund 502 Item 27. Indemnification Article XI, Section 2 of the Declaration of Trust sets forth the reasonable and fair means for determining whether indemnification shall be provided to any past or present Trustee or officer. It states that the Registrant shall indemnify any present or past Trustee, or officer to the fullest extent permitted by law against liability and all expenses reasonably incurred by him in connection with any claim, action, suit or proceeding in which he is involved by virtue of his service as a trustee, an officer, or both. Additionally, amounts paid or incurred in settlement of such matters are covered by this indemnification. Indemnification will not be provided in certain circumstances, however. These include instances of willful misfeasance, bad faith, gross negligence, and reckless disregard of the duties involved in the conduct of the particular office involved. Item 28. Business and Other Connections of Investment Adviser (1) FIDELITY MANAGEMENT & RESEARCH COMPANY FMR serves as investment adviser to a number of other investment companies. The directors and officers of the Adviser have held, during the past two fiscal years, the following positions of a substantial nature.
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President and Chief Executive Officer of FMR Corp.; Chairman of the Board and a Director of FMR, FMR Corp., FMR Texas Inc. (1989), Fidelity Management & Research (U.K.) Inc. and Fidelity Management & Research (Far East) Inc.; President and Trustee of funds advised by FMR; J. Gary Burkhead President of FMR; Managing Director of FMR Corp.; President and a Director of FMR Texas Inc. (1989), Fidelity Management & Research (U.K.) Inc. and Fidelity Management & Research (Far East) Inc.; Senior Vice President and Trustee of funds advised by FMR. Peter S. Lynch Vice Chairman of FMR (1992). David Breazzano Vice President of FMR (1993) and of a fund advised by FMR. Stephan Campbell Vice President of FMR (1993). Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR; Corporate Preferred Group Leader. Will Danof Vice President of FMR (1993) and of a fund advised by FMR. Scott DeSano Vice President of FMR (1993). Penelope Dobkin Vice President of FMR (1990) and of a fund advised by FMR. Larry Domash Vice President of FMR (1993). George Domolky Vice President of FMR (1993) and of a fund advised by FMR. Charles F. Dornbush Senior Vice President of FMR (1991); Chief Financial Officer of the Fidelity funds; Treasurer of FMR Texas Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc. Robert K. Duby Vice President of FMR. Margaret L. Eagle Vice President of FMR and of a fund advised by FMR. Kathryn L. Eklund Vice President of FMR (1991). Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised by FMR. Daniel R. Frank Vice President of FMR and of funds advised by FMR. Gary L. French Vice President of FMR (1991) and Treasurer of the funds advised by FMR (1991). Prior to assuming the position as Treasurer he was Senior Vice President, Fund Accounting - Fidelity Accounting & Custody Services Co. (1991) (Vice President, 1990-1991); and Senior Vice President, Chief Financial and Operations Officer - Huntington Advisers, Inc. (1985-1990). Michael S. Gray Vice President of FMR and of funds advised by FMR. Barry A. Greenfield Vice President of FMR and of a fund advised by FMR. William J. Hayes Senior Vice President of FMR (1989); Income/Growth Group Leader (1990) and International Group Leader (1990). Robert Haber Vice President of FMR (1991) and of funds advised by FMR. Daniel Harmetz Vice President of FMR (1991) and of a fund advised by FMR. Ellen S. Heller Vice President of FMR (1991).
John Hickling Vice President of FMR (1993) and of funds advised by FMR.
Robert F. Hill Vice President of FMR (1989); and Director of Technical Research. Stephan Jonas Vice President of FMR (1993). David B. Jones Vice President of FMR (1993). Steven Kaye Vice President of FMR (1993) and of a fund advised by FMR. Frank Knox Vice President of FMR (1993). Robert A. Lawrence Senior Vice President of FMR (1993); and High Income Group Leader. Alan Leifer Vice President of FMR and of a fund advised by FMR. Harris Leviton Vice President of FMR (1993) and of a fund advised by FMR. Bradford E. Lewis Vice President of FMR (1991) and of funds advised by FMR. Robert H. Morrison Vice President of FMR and Director of Equity Trading. David Murphy Vice President of FMR (1991) and of funds advised by FMR. Jacques Perold Vice President of FMR (1991). Brian Posner Vice President of FMR (1993) and of a fund advised by FMR. Anne Punzak Vice President of FMR (1990) and of funds advised by FMR. Richard A. Spillane Vice President of FMR (1990) and of funds advised by FMR; and Director of Equity Research (1989). Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised by FMR. Thomas Steffanci Senior Vice President of FMR (1993); and Fixed-Income Division Head. Gary L. Swayze Vice President of FMR and of funds advised by FMR; and Tax-Free Fixed-Income Group Leader. Donald Taylor Vice President of FMR (1993) and of funds advised by FMR. Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised by FMR. Joel Tillinghast Vice President of FMR (1993) and of a fund advised by FMR. Robert Tucket Vice President of FMR (1993). George A. Vanderheiden Senior Vice President of FMR; Vice President of funds advised by FMR; and Growth Group Leader (1990). Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised by FMR. Guy E. Wickwire Vice President of FMR and of a fund advised by FMR. Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of FMR; Vice President, Legal of FMR Corp.; and Secretary of funds advised by FMR.
(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.) FMR U.K. provides investment advisory services to Fidelity Management & Research Company and Fidelity Management Trust Company. The directors and officers of the Sub-Adviser have held the following positions of a substantial nature during the past two fiscal years.
Edward C. Johnson 3d Chairman and Director of FMR U.K.; Chairman of the Executive Committee of FMR; Chief Executive Officer of FMR Corp.; Chairman of the Board and a Director of FMR, FMR Corp., FMR Texas Inc. (1989), and Fidelity Management & Research (Far East) Inc.; President and Trustee of funds advised by FMR. J. Gary Burkhead President and Director of FMR U.K.; President of FMR; Managing Director of FMR Corp.; President and a Director of FMR Texas Inc. (1989) and Fidelity Management & Research (Far East) Inc.; Senior Vice President and Trustee (1987) of funds advised by FMR. Richard C. Habermann Senior Vice President of FMR U.K. (1991); Senior Vice President of Fidelity Management & Research (Far East) Inc. (1991); Director of Worldwide Research of FMR (1989). Charles F. Dornbush Treasurer of FMR U.K.; Treasurer of Fidelity Management & Research (Far East) Inc.; Treasurer of FMR Texas Inc. (1989); Senior Vice President and Chief Financial Officer of the Fidelity funds. David Weinstein Clerk of FMR U.K. (1989); Clerk of Fidelity Management & Research (Far East) Inc. (1989); Secretary of FMR Texas Inc. (1989).
(3) FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. (FMR Far East) FMR Far East provides investment advisory services to Fidelity Management & Research Company and Fidelity Management Trust Company. The directors and officers of the Sub-Adviser have held the following positions of a substantial nature during the past two fiscal years.
Edward C. Johnson 3d Chairman and Director of FMR Far East; Chairman of the Executive Committee of FMR; Chief Executive Officer of FMR Corp.; Chairman of the Board and a Director of FMR, FMR Corp., FMR Texas Inc. (1989) and Fidelity Management & Research (U.K.) Inc.; President and Trustee of funds advised by FMR. J. Gary Burkhead President and Director of FMR Far East; President of FMR; Managing Director of FMR Corp.; President and a Director of FMR Texas Inc. (1989) and Fidelity Management & Research (U.K.) Inc.; Senior Vice President and Trustee (1987) of funds advised by FMR. Richard C. Habermann Senior Vice President of FMR Far East (1991); Senior Vice President of Fidelity Management & Research (U.K.) Inc. (1991); Director of Worldwide Research of FMR (1989). William R. Ebsworth Vice President of FMR Far East. Charles F. Dornbush Treasurer of FMR Far East; Treasurer of Fidelity Management & Research (U.K.) Inc.; Treasurer of FMR Texas Inc. (1989); Senior Vice President and Chief Financial Officer of the Fidelity funds. David C. Weinstein Clerk of FMR Far East (1989); Clerk of Fidelity Management & Research (U.K.) Inc. (1989); Secretary of FMR Texas Inc. (1989).
(4) FIDELITY INTERNATIONAL INVESTMENT ADVISORS Pembroke Hall, 42 Crow Lane, Pembroke, Bermuda The directors and officers of Fidelity International Investment Advisors (FIIA) have held, during the past two fiscal years, the following positions of a substantial nature.
Anthony Bolton Director of FIIA and FIIAL (U.K.) (1989); Director of Fidelity International Management Holdings Limited. Martin P. Cambridge Director of FIIA (1989)and FIIAL (U.K.) (1990); Chief Financial Officer of Fidelity International Ltd. (1989) and Fidelity Investment Services Ltd. (1987-1989). Kirk Caza Vice President of FIIA (1991). Charles T. M. Collis Director and Secretary of FIIA; Partner in Conyers, Dill & Pearman, Hamilton, Bermuda; Secretary to many companies in the Fidelity international group of companies. Stephen A. DeSilva Treasurer of FIIA and Fidelity International Limited. Geoffrey J. Mansfield Director of FIIA (1990). Frank Mutch Assistant Secretary of FIIA. David J. Saul President, Director, and Controller of FIIA (1989); Director of Fidelity International Limited. Michael Sommerville Vice President of FIIA; Vice President of Fidelity International Limited. Toshiaki Wakabayashi Director of FIIA (1989); Executive Vice President and Director of FIIAL (Japan).
(5) FIDELITY INTERNATIONAL INVESTMENT ADVISORS (U.K.) LIMITED 27-28 Lovat Lane, London, England The directors and officers of Fidelity International Investment Advisors (U.K.) Limited (FIIAL (U.K.)) have held, during the past two fiscal years, the following positions of a substantial nature.
Anthony Bolton Director of FIIAL (U.K.) and FIIA (1989); Director of Fidelity International Management Holdings Limited (1980). Martin P. Cambridge Director and Secretary of FIIAL (U.K.) (1990) and FIIA (1989); Chief Financial Officer of Fidelity International Ltd. (1989) and Fidelity Investment Services Ltd. (1987-1989). C. Bruce Johnstone Director of FIIAL (U.K.) (1991).
(6) FIDELITY INVESTMENTS JAPAN LIMITED Hibiya Park Building, 1-8-1 Yuraku-cho, Chiyoda-Ku, Tokyo, Japan The directors and officers of Fidelity Investments Japan Limited have held, during the past two fiscal years, the following positions of a substantial nature.
Edward C. Johnson 3d Chairman and Director of FMR Far East; Chairman of the Executive Committee of FMR; Chief Executive Officer of FMR Corp.; Chairman of the Board and a Director of FMR, FMR Corp., FMR Texas Inc. (1989) and Fidelity Management & Research (U.K.) Inc.; President and Trustee of funds advised by FMR. Glen R. Moreno President of Fidelity International Limited; Chairman of Fidelity International Management Holdings Limited. Yasuo Kuramoto Vice Chairman of Fidelity Investments Japan Limited (1988), Chairman of Fidelity International Investment Advisors (Japan) Limited (1991). Yasukazu Akamatsu Masaharu Izumi Hiroshi Yamashita Kozo Tango Yoshiharu Okazaki President of Fidelity International Investment Advisors (Japan) Limited (1992), Director of Fidelity Investments Japan Limited (1989), Managing Director of Fidelity International Management Holding Limited (1988-1992) Takashi Kato Nobuhide Kamiyama Arthur M. Jesson Noboru Kawai Shinobu Kasaya
Item 29. Principal Underwriters (a) Fidelity Distributors Corporation (Distributors) acts as distributor for most funds advised by FMR and the following other funds: CrestFunds, Inc. The Victory Funds ARK Funds (b) Name and Principal Positions and Offices Positions and Offices Business Address* With Underwriter With Registrant Edward C. Johnson 3d Director Trustee, President Nita B. Kincaid Director None W. Humphrey Bogart Director None Kurt A. Lange President None Thomas W. Littauer Senior Vice President None William J. Kearns Senior Vice President None Harry Anderson Treasurer None Arthur S. Loring Vice President and Clerk Secretary * 82 Devonshire Street, Boston, MA (c) Not applicable. Item 30. Location of Accounts and Records All accounts, books, and other documents required to be maintained by Section 31a of the 1940 Act and the Rules promulgated thereunder are maintained by Fidelity Management & Research Company or Fidelity Service Co., 82 Devonshire Street, Boston, MA 02109, or the funds' respective custodians The Chase Manhattan Bank, 1211 Avenue of the Americas, New York, N.Y.and Brown Brothers Harriman & Co., 40 Water Street, Boston, MA. Item 31. Management Services Not applicable. Item 32. Undertakings (a) The Registrant on behalf of Fidelity Overseas Fund, Fidelity Europe Fund, Fidelity Pacific Basin Fund, Fidelity International Growth & Income Fund, Fidelity Global Bond Fund, Fidelity Canada Fund, Fidelity Worldwide Fund, Fidelity Emerging Markets Fund, Fidelity New Markets Income Fund, Fidelity Short-Term World Income Fund, Fidelity Diversified International Fund, Fidelity Japan Fund, Fidelity Diversified Global Fund, Fidelity Latin America Fund, Fidelity Southeast Asia Fund, and Fidelity Europe Capital Appreciation Fund undertakes, provided the information required by Item 5A is contained in the annual report, to furnish each person to whom a prospectus has been delivered, upon their request and without charge, a copy of the Registrant's latest annual report to shareholders. (b) The Registrant undertakes to file Post-Effective Amendments, using financial statements which need not be certified, within six months of Fidelity Diversified Global Fund's and Fidelity Europe Capital Appreciation Fund's effectiveness. (c) Each Registrant undertakes: 1) to call a meeting of shareholders for the purpose of voting upon the question of removal of a trustee or trustees, when requested to do so by record holders of not less than 10% of its outstanding shares; and 2) to assist in communications with other shareholders pursuant to Section 16(c)(1) and (2), whenever shareholders meeting the qualifications set forth in 16(c) seek the opportunity to communicate with other shareholders with a view toward requesting a meeting. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for the effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-Effective Amendment No. 53 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boston, and Commonwealth of Massachusetts, on the 24th day of February 1994. FIDELITY INVESTMENT TRUST By /s/Edward C. Johnson 3d (dagger) Edward C. Johnson 3d, President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. (Signature) (Title) (Date)
/s/Edward C. Johnson 3d(dagger) President and Trustee February 24, 1994 Edward C. Johnson 3d (Principal Executive Officer)
/s/Gary L. French Treasurer February 24, 1994 Gary L. French /s/J. Gary Burkhead Trustee February 24, 1994 J. Gary Burkhead /s/Ralph F. Cox * Trustee February 24, 1994 Ralph F. Cox /s/Phyllis Burke Davis * Trustee February 24, 1994 Phyllis Burke Davis /s/Richard J. Flynn * Trustee February 24, 1994 Richard J. Flynn /s/E. Bradley Jones * Trustee February 24, 1994 E. Bradley Jones /s/Donald J. Kirk * Trustee February 24, 1994 Donald J. Kirk /s/Peter S. Lynch * Trustee February 24, 1994 Peter S. Lynch /s/Edward H. Malone * Trustee February 24, 1994 Edward H. Malone /s/Marvin L. Mann_____* Trustee February 24, 1994 Marvin L. Mann /s/Gerald C. McDonough* Trustee February 24, 1994 Gerald C. McDonough /s/Thomas R. Williams * Trustee February 24, 1994 Thomas R. Williams (dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of attorney dated October 20, 1993 and filed herewith. * Signature affixed by Robert C. Hacker pursuant to a power of attorney dated October 20, 1993 and filed herewith. POWER OF ATTORNEY We, the undersigned Directors, Trustees or General Partners, as the case may be, of the following investment companies:
Fidelity Advisor Series I Fidelity Institutional Trust Fidelity Advisor Series II Fidelity Investment Trust Fidelity Advisor Series III Fidelity Magellan Fund Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust Fidelity Advisor Series V Fidelity Money Market Trust Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust Fidelity Advisor Series VII Fidelity Municipal Trust Fidelity Advisor Series VIII Fidelity New York Municipal Trust Fidelity California Municipal Trust Fidelity Puritan Trust Fidelity Capital Trust Fidelity School Street Trust Fidelity Charles Street Trust Fidelity Securities Fund Fidelity Commonwealth Trust Fidelity Select Portfolios Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P. Fidelity Contrafund Fidelity Summer Street Trust Fidelity Corporate Trust Fidelity Trend Fund Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P. Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities Fidelity Deutsche Mark Performance Fund, L.P. Portfolio, L.P. Fidelity Union Street Trust Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P. Fidelity Exchange Fund Spartan U.S. Treasury Money Market Fidelity Financial Trust Fund Fidelity Fixed-Income Trust Variable Insurance Products Fund Fidelity Government Securities Fund Variable Insurance Products Fund II Fidelity Hastings Street Trust Fidelity Income Fund
plus any other investment company for which Fidelity Management & Research Company acts as investment adviser and for which the undersigned individuals serve as Board Members (collectively, the "Funds"), hereby severally constitute and appoint Arthur J. Brown, Arthur C. Delibert, Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A. Xupolos, each of them singly, our true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for us and in our names in the appropriate capacities, all Pre-Effective Amendments to any Registration Statements of the Funds, any and all subsequent Post-Effective Amendments to said Registration Statements, any Registration Statements on Form N-14, and any supplements or other instruments in connection therewith, and generally to do all such things in our names and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and Investment Company Act of 1940, and all related requirements of the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof. WITNESS our hands on this twentieth day of October, 1993. /s/Edward C. Johnson 3d /s/Peter S. Lynch Edward C. Johnson 3d Peter S. Lynch /s/J. Gary Burkhead /s/Edward H. Malone J. Gary Burkhead Edward H. Malone /s/Richard J. Flynn /s/Gerald C. McDonough Richard J. Flynn Gerald C. McDonough /s/E. Bradley Jones /s/Thomas R. Williams E. Bradley Jones Thomas R. Williams /s/Donald J. Kirk Donald J. Kirk POWER OF ATTORNEY I, the undersigned President and Director, Trustee or General Partner, as the case may be, of the following investment companies:
Fidelity Advisor Series I Fidelity Institutional Trust Fidelity Advisor Series II Fidelity Investment Trust Fidelity Advisor Series III Fidelity Magellan Fund Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust Fidelity Advisor Series V Fidelity Money Market Trust Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust Fidelity Advisor Series VII Fidelity Municipal Trust Fidelity Advisor Series VIII Fidelity New York Municipal Trust Fidelity California Municipal Trust Fidelity Puritan Trust Fidelity Capital Trust Fidelity School Street Trust Fidelity Charles Street Trust Fidelity Securities Fund Fidelity Commonwealth Trust Fidelity Select Portfolios Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P. Fidelity Contrafund Fidelity Summer Street Trust Fidelity Corporate Trust Fidelity Trend Fund Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P. Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities Fidelity Deutsche Mark Performance Fund, L.P. Portfolio, L.P. Fidelity Union Street Trust Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P. Fidelity Exchange Fund Spartan U.S. Treasury Money Market Fidelity Financial Trust Fund Fidelity Fixed-Income Trust Variable Insurance Products Fund Fidelity Government Securities Fund Variable Insurance Products Fund II Fidelity Hastings Street Trust Fidelity Income Fund
plus any other investment company for which Fidelity Management & Research Company acts as investment adviser and for which the undersigned individual serves as President and Board Member (collectively, the "Funds"), hereby severally constitute and appoint J. Gary Burkhead, my true and lawful attorney-in-fact, with full power of substitution, and with full power to sign for me and in my name in the appropriate capacity, all Pre-Effective Amendments to any Registration Statements of the Funds, any and all subsequent Post-Effective Amendments to said Registration Statements, any Registration Statements on Form N-14, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorney-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and Investment Company Act of 1940, and all related requirements of the Securities and Exchange Commission. I hereby ratify and confirm all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof. WITNESS my hand on the date set forth below. /s/Edward C. Johnson 3d October 20, 1993 Edward C. Johnson 3d POWER OF ATTORNEY I, the undersigned Director, Trustee or General Partner, as the case may be, of the following investment cmpanies:
Fidelity Advisor Series I Fidelity Magellan Fund Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust Fidelity Advisor Series IV Fidelity Money Market Trust Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust Fidelity Advisor Series VIII Fidelity New York Municipal Trust Fidelity California Municipal Trust Fidelity Puritan Trust Fidelity Capital Trust Fidelity School Street Trust Fidelity Charles Street Trust Fidelity Select Portfolios Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P. Fidelity Congress Street Fund Fidelity Summer Street Trust Fidelity Contrafund Fidelity Trend Fund Fidelity Deutsche Mark Performance Fidelity Union Street Trust Portfolio, L.P. Fidelity U.S. Investments-Bond Fund, L.P. Fidelity Devonshire Trust Fidelity U.S. Investments-Government Securities Fidelity Financial Trust Fund, L.P. Fidelity Fixed-Income Trust Fidelity Yen Performance Portfolio, L.P. Fidelity Government Securities Fund Spartan U.S. Treasury Money Market Fidelity Hastings Street Trust Fund Fidelity Income Fund Variable Insurance Products Fund Fidelity Institutional Trust Variable Insurance Products Fund II Fidelity Investment Trust
plus any other investment company for which Fidelity Management & Research Company acts as investment adviser and for which the undersigned individual serves as a Board Member (collectively, the "Funds"), hereby severally constitute and appoint Arthur J. Brown, Arthur C. Delibert, Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A. Xupolos, each of them singly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate capacity, all Pre-Effective Amendments to any Registration Statements of the Funds, any and all subsequent Post-Effective Amendments to said Registration Statements, any Registration Statements on Form N-14, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and Investment Company Act of 1940, and all related requirements of the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof. WITNESS my hand on the date set forth below. /s/Ralph F. Cox October 20, 1993 Ralph F. Cox POWER OF ATTORNEY I, the undersigned Director, Trustee or General Partner, as the case may be, of the following investment companies:
Fidelity Advisor Series I Fidelity Investment Trust Fidelity Advisor Series III Fidelity Mt. Vernon Street Trust Fidelity Advisor Series IV Fidelity School Street Trust Fidelity Advisor Series VI Fidelity Select Portfolios Fidelity Advisor Series VIII Fidelity Sterling Performance Portfolio, L.P. Fidelity Beacon Street Trust Fidelity Trend Fund Fidelity Capital Trust Fidelity Union Street Trust Fidelity Commonwealth Trust Fidelity U.S. Investments-Bond Fund, L.P. Fidelity Contrafund Fidelity U.S. Investments-Government Securities Fidelity Deutsche Mark Performance Fund, L.P. Portfolio, L.P. Fidelity Yen Performance Portfolio, L.P. Fidelity Devonshire Trust Spartan U.S. Treasury Money Market Fidelity Financial Trust Fund Fidelity Fixed-Income Trust Variable Insurance Products Fund Fidelity Government Securities Fund Variable Insurance Products Fund II Fidelity Hastings Street Trust Fidelity Institutional Trust
plus any other investment company for which Fidelity Management & Research Company acts as investment adviser and for which the undersigned individual serves as a Board Member (collectively, the "Funds"), hereby severally constitute and appoint Arthur J. Brown, Arthur C. Delibert, Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A. Xupolos, each of them singly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate capacity, all Pre-Effective Amendments to any Registration Statements of the Funds, any and all subsequent Post-Effective Amendments to said Registration Statements, any Registration Statements on Form N-14, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and Investment Company Act of 1940, and all related requirements of the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof. WITNESS my hand on the date set forth below. /s/Phyllis Burke Davis October 20, 1993 Phyllis Burke Davis EX-24 2 Exhibit 24 (2_FIDELITY_LOGOS)FIDELITY INTERNATIONAL EQUITY FUNDS BROADLY DIVERSIFIED FUNDS Fidelity Diversified International Fund Fidelity International Growth & Income Fund Fidelity Overseas Fund Fidelity Worldwide Fund REGIONAL/SINGLE COUNTRY FUNDS Fidelity Canada Fund Fidelity Europe Fund Fidelity Japan Fund Fidelity Pacific Basin Fund EMERGING MARKET FUNDS Fidelity Emerging Markets Fund Fidelity Latin America Fund Fidelity Southeast Asia Fund ANNUAL REPORT OCTOBER 31, 1993 CONTENTS
PRESIDENT'S MESSAGE NED JOHNSON ON RECENT PERFORMANCE IN OVERSEAS MARKETS. MARKET RECAP A REVIEW OF WHAT HAPPENED IN WORLD MARKETS DURING THE LAST YEAR. BROADLY DIVERSIFIED FUNDS DIVERSIFIED INTERNATIONAL FUND PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS INTERNATIONAL GROWTH & INCOME FUND PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS OVERSEAS FUND PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS WORLDWIDE FUND PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS REGIONAL/SINGLE COUNTRY FUNDS CANADA FUND PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS EUROPE FUND PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS JAPAN FUND PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS PACIFIC BASIN FUND PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS EMERGING MARKETS FUNDS EMERGING MARKETS FUND PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS LATIN AMERICA FUND PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS SOUTHEAST ASIA FUND PERFORMANCE FUND TALK: THE MANAGER'S OVERVIEW INVESTMENT CHANGES INVESTMENTS FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS FOOTNOTES TO THE FINANCIAL STATEMENTS REPORTS OF INDEPENDENT ACCOUNTANTS THE AUDITOR'S OPINION / COOPERS & LYBRAND THE AUDITOR'S OPINION / PRICE WATERHOUSE
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. NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED BY THE FDIC. PRESIDENT'S MESSAGE DEAR SHAREHOLDER: The past year has been a strong one in the international markets. Most overseas stock indexes outperformed the Standard & Poor's 500 - a broad measure of the U.S. market, which was up 15% for the year ended October 31. All 11 of Fidelity's international stock funds turned in solid performances and seven more than doubled the S&P's return. What caused these returns? In the last year, we've seen many foreign stock indexes rebound as investors sensed that the recession was coming to an end. In addition, many investors have moved money into foreign stocks believing that they offer better values than their U.S. counterparts. Both factors have pushed markets up. In addition, specific initiatives - including the Japanese government's stimulus package - and the expectation that interest rates would fall in Europe have helped fuel the markets. But these events may to a great extent already be reflected in the prices of foreign stocks. That's why as we look ahead, it would be unwise to expect that these recent strong returns can be sustained for an extended period. History suggests that overseas markets won't always outperform the U.S. market. For example, from 1982 - 1987, many international markets outdistanced the U.S. market. But from 1988 - 1992, international performance lagged, mainly because of declines in the Japanese market. In addition, the risks that are unique to overseas markets can make their returns volatile. These include CURRENCY RISK, which can devalue overseas investments once they are converted back to dollars, and POLITICAL RISK, which can affect local markets when foreign governments are not seen to be as stable as in the United States. At times like this, when overseas markets have had such outstanding performance, it's helpful to keep a few basic investment principles in mind. First, take a long-term perspective. Money invested overseas should be money you can afford to leave invested throughout any market drops. As the chart below shows, overseas markets - according to a broad measure like the Morgan Stanley Europe, Australia, and Far East (EAFE) index - can be more volatile on a year-to-year basis than the U.S. market. On a cumulative basis, if you look back five years, the S&P outperformed the EAFE 97.35% to 20.28%. But over ten years, the EAFE outperformed the S&P 446.43% to 307.69%. So it can pay to have a long-term investment horizon. Second, it makes sense to diversify, especially when investing overseas. An international fund can play a significant role in a balanced portfolio and allow you to take advantage of stock market advances in other parts of the world. Over the long term, it can also lower your portfolio risk. If you invest both overseas and domestically, you may be able to ride out a market downturn in one part of the world while profiting from strong returns in another area. But it's important that your mix of foreign and U.S. investments reflects your goals and tolerance for risk. Third, consider following a regular investment plan. None of us can predict when stock markets here or abroad will be at a peak or low. But, by investing a certain amount of money at the same time each month or quarter, you can avoid buying all your shares at market highs. While this strategy won't protect you from a loss in a declining market or assure you of a profit, over time it should help lower the average cost of your purchase. It can only be effective, though, if you stick to your plan during both market ups and downs. We believe these principles are the foundation for sound investing. Over the years, many people have found them useful in building their savings. We hope you will too. If we can help with your investments, please call us at 1-800-544-8888. Best regards, Edward C. Johnson 3d S&P 500 EAFE * YEAR TO DATE THROUGH OCTOBER 31, 1993 Row: 1, Col: 1, Value: 22.38 Row: 1, Col: 2, Value: 23.69 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: 14.94 Row: 11, Col: 2, Value: 35.48 % MARKET RECAP This past year's international rally was a dramatic turnaround for many foreign markets that had previously fallen out of favor. Low inflation and falling interest rates around the world helped fuel strong returns overseas. As investors poured increasing amounts of money into foreign stocks and bonds, prices also rose. The Morgan Stanley EAFE index - which measures stock performance in Europe, Australia and the Far East - was up 37.46% for the 12 months ended October 31, 1993. AVERAGE ANNUAL STOCK MARKET RETURNS TEN YEARS Row: 1, Col: 1, Value: 22.38 Row: 2, Col: 1, Value: 21.54 Row: 3, Col: 1, Value: 20.98 Row: 4, Col: 1, Value: 19.02 Row: 5, Col: 1, Value: 18.48 Row: 6, Col: 1, Value: 18.15 Row: 7, Col: 1, Value: 16.5 Row: 8, Col: 1, Value: 15.84 Row: 9, Col: 1, Value: 13.69 Row: 10, Col: 1, Value: 13.09 Row: 11, Col: 1, Value: 7.39 50% 40% 30% 20% 10% 0% ONE YEAR Row: 1, Col: 1, Value: 41.49 Row: 2, Col: 1, Value: 16.2 Row: 3, Col: 1, Value: 31.72 Row: 4, Col: 1, Value: 47.38 Row: 5, Col: 1, Value: 37.19 Row: 6, Col: 1, Value: 21.66 Row: 7, Col: 1, Value: 28.38 Row: 8, Col: 1, Value: 17.89 Row: 9, Col: 1, Value: 13.4 Row: 10, Col: 1, Value: 43.16 Row: 11, Col: 1, Value: 12.81 50% 40% 30% 20% 10% 0% CHARTS SHOW THE PERFORMANCE OF THE MORGAN STANLEY CAPITAL INTERNATIONAL'S UNMANAGED STOCK INDEXES FOR THE 10 LARGEST INTERNATIONAL MARKETS PLUS THE UNITED STATES AVERAGE ANNUAL TOTAL RETURNS, AS MEASURED IN U.S. DOLLARS, INCLUDE PRICE CHANGES, DIVIDENDS PAID ON THE STOCKS, AND THE EFFECT OF REINVESTING DIVIDENDS (NET OF FOREIGN TAXES). BROKERAGE COMMISSIONS AND OTHER FEES ARE NOT INCLUDED. RESULTS ARE HISTORICAL AND DO NOT INDICATE FUTURE MARKET OR FIDELITY FUND PERFORMANCE. EUROPE: After trailing the U.S. market for five years, European stocks performed strongly by historical standards, but still were easily outpaced by other world markets. Slowly falling interest rates and investors' hopes of economic recovery combined to lift stock prices. The Morgan Stanley Europe index rose 25.67% for the year ended October 31. Europe struggled to move beyond the currency crisis that crippled much of the continent last fall. The value of the British pound and German deutschemark went down, which hurt foreign investments when translated back into dollars. But strong stock gains followed currency devaluations as exports became more attractive. Norwegian stocks, for example, returned nearly 43% through October, while Sweden was up 41% and Germany about 28%. Disappointingly slow interest-rate cuts and sluggish economies hurt returns in some markets like the United Kingdom and France, which returned about 22% and 15%, respectively. JAPAN AND THE FAR EAST: This region outperformed all others, but Japan took investors on a roller coaster ride along the way. The Morgan Stanley Far East ex-Japan Free index posted a gain of 52.85% for the year ended October 31. The TOPIX, an index that includes stocks from Japan's larger, better known companies, was up 46.06% for the same period, but only 3.54% for the last six months. Falling interest rates, a strengthening yen, and government spending aimed at stimulating economic growth all helped trigger the tremendous market rally in Japan that continued through late spring. But political instability, thanks to a no-confidence vote given to Prime Minister Miyazawa, dragged the market back down in the summer and early fall. Also, the surging yen - up 15.02% over the U.S. dollar so far this year - made the products of big Japanese exporters less attractive, which further slowed the country's already troubled economy. From August through October, the TOPIX actually lost ground, and was down 4.84%. EMERGING MARKETS: Investors reaped large returns in many developing countries. The Morgan Stanley Emerging Markets Free index shot up 44.97% for the year ended October 31. The returns reflected a favorable outlook for increases in corporate profits as economic reforms began to take hold in developing countries. Emerging markets in the Pacific Basin like Malaysia and Hong Kong - up 68% and 50% over the past 12 months, respectively - were especially attractive. Also, Latin American countries, particularly Brazil, produced sharp gains as political and economic reforms continued there. But doubt over passage of the North American Free Trade Agreement created turbulence in Mexico, which was up barely 5% in the first 10 months of 1993. U.S. AND CANADA: Low inflation, declining interest rates and a gradually improving economy led to a 14.94% return for the Standard & Poor's 500 Composite Price Index - a broad measure of the U.S. market's overall performance. This beat historical standards, but paled alongside most international markets. In Canada, the stocks included in the Toronto Stock Exchange 300 Index fared better, returning 23.19%. Most Canadian stocks were buoyed by falling interest rates and an economy that was slowly climbing out of a recession. Jitters surrounding national elections slowed returns in September and October. BONDS: Like foreign stocks, foreign bonds - particularly in developing countries - outpaced U.S. bonds. Falling interest rates helped push bond prices higher in Europe, Japan and elsewhere. Rapidly expanding economies and improved balance sheets in Mexico, Argentina and other Latin American countries contributed to an overall increase during the year in the J.P. Morgan Emerging Markets Bond Index of 38.66%. That was more than triple the 11.87% increase in the Lehman Brothers Aggregate Bond Index, which tracks U.S. bonds. 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. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). Diversified International has a 3% sales charge, which has been waived since the fund's start on December 27, 1991 through May 31, 1994. CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF OCTOBER 31, 1993 YEAR FUND Diversified International 35.38% 14.53% Morgan Stanley GDP-weighted EAFE Index 36.22% 25.87% Average International Fund 33.41% 24.76% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, or since the fund started on December 27, 1991. You can compare the fund figures to the performance of the Morgan Stanley GDP-weighted EAFE index - a broad measure of the performance of stocks in Europe, Australia, and the Far East, weighted by each country's gross domestic product. You can also compare the fund's performance to the average international fund which reflects the performance of 152 funds with similar objectives tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF OCTOBER 31, 1993 YEAR FUND Diversified International 35.38% 7.62% Morgan Stanley GDP-weighted EAFE Index 36.22% 13.25% Average International Fund 33.41% 12.75% AVERAGE ANNUAL RETURNS take the fund's actual (or 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 (325) Diversified Morgan Stanley International Fund GDP-Weighted EAFE 12/27/91 10000.00 10000.00 12/31/91 10060.00 10275.57 01/31/92 9860.00 10188.63 02/29/92 9680.00 10050.14 03/31/92 9140.00 9554.95 04/30/92 9240.00 9638.28 05/31/92 9750.00 10205.78 06/30/92 9540.00 9873.69 07/31/92 9190.00 9524.06 08/31/92 9350.00 9997.89 09/30/92 9140.00 9631.08 10/31/92 8460.00 9240.11 11/30/92 8460.00 9285.20 12/31/92 8671.06 9283.63 01/31/93 8873.42 9391.13 02/28/93 9176.95 9719.67 03/31/93 9915.56 10383.39 04/30/93 10522.64 11339.71 05/31/93 10785.70 11516.97 06/30/93 10482.17 11317.62 07/31/93 10805.94 11658.22 08/31/93 11362.42 12512.58 09/30/93 11210.66 12250.09 10/31/93 11453.49 12586.98 Let's say you invested $10,000 in Fidelity Diversified International Fund on its start date. By October 31, 1993, it would have grown to $11,453 - a 14.53% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley GDP-weighted EAFE index, which would have grown to $12,587 over the same period - a 25.87% 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 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. (checkmark) DIVERSIFIED INTERNATIONAL FUND TALK: THE MANAGER'S OVERVIEW An interview with Greg Fraser, Portfolio Manager of Fidelity Diversified International Fund Q. GREG, HOW DID THE FUND PERFORM? A. It was a very good year in most international markets, and the fund's performance reflects that. Diversified International's total return for the year ended October 31, 1993 was 35.38%. That was slightly less than the 36.22% total return for its benchmark, the Morgan Stanley GDP-weighted EAFE index, a broad measure of stock performance in Europe, Australia and the Far East, adjusted to reflect the size of each country's economy. However, the fund did beat the average international fund's total return during the same period: 33.41%, according to Lipper Analytical Services. Q. WHY DID THE FUND TRAIL THE INDEX? A. Part of the reason was all the cash in the fund, itself due mainly to the fund's popularity. Total assets swelled from about $36 million last October to more than $250 million at the end of the period. At times, cash totaled as much as 20% of the fund's investments. I pared that down to 11.6% at the end of October; 10% or lower is where I'd like it to be. Otherwise, I probably missed an opportunity to invest more heavily in Japan; it's about 40% of the index, but was only about 20% of the fund at the end of October. Japanese stocks rose sharply during the period. But as earnings estimates deteriorated throughout the year, the stocks began to look increasingly expensive, and were therefore less attractive to the computer models that guide my decision-making. Q. WHAT WERE SOME FACTORS THAT CONTRIBUTED TO PERFORMANCE? A. Most shareholders already know that I use a quantitative approach in managing the fund. Basically, that means I rely in part on a set of complex computer models to sift through vast quantities of data and find stocks that are cheap compared to their peers, as well as likely to post improved earnings. Of course, I follow up with old-fashioned research and company visits. Among the leaders in the early part of the year were Japanese brokerage stocks, which benefited from government intervention aimed at stimulating financial markets. More recently, the fund profited from its investments in Deutsche Bank, Germany's largest bank, which also owns big chunks of other companies; and Fletcher Challenge, a New Zealand natural resources conglomerate with interests in forest products, energy and construction. Q. AFTER JAPAN, THE FUND'S SECOND LARGEST CONCENTRATION OF INVESTMENTS WAS IN GREAT BRITAIN. WHY? A. The U.K. has begun to emerge from recession ahead of the rest of Europe. This was reflected in higher corporate earnings. Among my favorite U.K. stocks is Standard Chartered Bank. The stock suffered because of fallout from a scandal in India, but has since recovered. All told, British stocks totaled 13.1% of the fund's investments at the end of October. Q. ITALIAN STOCKS, ON THE OTHER HAND, TOTALED LESS THAN 2% OF THE FUND. WASN'T THE ITALIAN STOCK MARKET AMONG THE LEADERS IN EUROPE LAST YEAR? A. It was up 45.24% since last October, but only 17.89% in U.S. dollars. One of the goals of the fund is moderate volatility. That alone was reason enough to avoid Italy last year. But also, Italy is a very hard market to understand in quantitative terms. Much of the movement in Italian stock prices last year was sudden and unpredictable, and due largely to psychological factors. The models ignore psychological factors because they're not quantifiable. They make up for that by paying strict attention to basic measures of a company's health. I think that over the long term, that may work to the fund's advantage, no matter what shifts occur in market psychology. Q. STOCKS FROM ALL THE EUROPEAN COUNTRIES REPRESENTED ABOUT HALF THE FUND'S INVESTMENTS. GIVEN THAT, HOW SIGNIFICANT IS THE FUND'S CURRENCY RISK? A. I can't quantify it, but I will say currency risk is a factor shareholders should be aware of. If the dollar strengthened sharply compared to European currencies, the fund would definitely suffer. One way to lessen currency risk is by making offsetting investments - a strategy known as hedging. I don't do a lot of that, however, not because the fund has no currency risk, but because there's a cost associated with hedging. It only pays if you can predict the course of the dollar, and that happens to be among the toughest analytical tasks there are. On the other hand, picking stocks is something the models have done quite well, so that's the arena where I've chosen to make my bets. Q. THE FUND HAS ALMOST NO INVESTMENTS IN EMERGING MARKETS. WHY NOT? A. In fact, that's one area where the fund's stake is likely to increase in the months and years ahead. Countries like Argentina, Mexico and Brazil are growing at a pace not seen since the 1960s, and the investment opportunities are increasingly attractive. Partly what has held me back so far is that among the byproducts of rapid growth is high volatility, and that's something the fund seeks to avoid. Also, the models need reliable data to make sound, quantitative judgments, and in many cases those data aren't as well developed yet. In some cases, that's a function of questionable or inconsistent financial reporting standards. Or it may be simply because there aren't enough companies in a given industry to allow for useful comparisons. But these are all limitations that are likely to become less of an issue as time goes on. Q. WHAT'S YOUR OUTLOOK FOR THE FUND? A. A year ago, I couldn't have been more optimistic. Many of the markets I invest in had been hard-hit in recent years, meaning there were plenty of bargains. And the interest-rate climate favored rising stock prices. I should point out that interest rates are not normally among the models' main concerns. What the models do best is analyze the prospects of specific companies, what's known as a "bottom-up" approach. Still, it was clear last year that interest rates in Europe were going down, and there's no question that contributed to the markets' - and this fund's - strong performance. But a lot has changed in the last year. Many foreign markets are at or near their all-time highs. And interest rates - while they're still high across the continent, especially compared to the United States - have already fallen substantially. That suggests a more watchful attitude might be appropriate going forward. Long term, I remain as positive as ever about the growth prospects for foreign stocks; short term, I'm more cautious. In any case, back-to-back gains of more than 30% are rare for most investments. Shareholders probably shouldn't expect it of this one. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in countries included in the Morgan Stanley GDP-weighted EAFE (Europe, Australia, Far East) index, with help from quantitative computer models START DATE: December 27, 1991 SIZE: as of October 31, 1993, over $255 million MANAGER: Gregory Fraser, since December 1991; manager, Fidelity Select Defense and Aerospace Portfolio, 1989-1990; and Fidelity Select Environmental Services Portfolio, December 1991 (checkmark) GREG FRASER ON QUANTITATIVE INVESTING: "The fund's use of quantitative models is better understood not as an alternative approach but as a tool that's useful in achieving the same goal. What are the models trying to do? Find inexpensive stocks with improving fundamentals. By that I mean, among other things, improving earnings estimates and a low price-to-earnings ratio. There are over 3,000 stocks in the database. Keeping tabs on all those by hand would be hard to do. That's where the models help. Even so, if our analysts don't like a stock, I'll generally not buy it. When that happens, it's usually because the analysts know something the computer doesn't - about a pending lawsuit, for example, or a new competitor - and I'll take their advice." (bullet) The fund seeks to outperform the broader universe of stocks in Europe, Australia and the Far East. By emphasizing inexpensive stocks - which may have less room to fall in a declining market - the fund also hopes to reduce overall volatility. (bullet) At the end of October, the fund's investments broke down by regions of the world as follows: 51.7% in Europe, 21.2% in Asia, 6.3% in Australia and New Zealand, 5.9% in Canada, and the balance in the U.S. and South America. (bullet) Banks and other financial institutions remained the largest sector in the fund, at 15.2% of investments. Other leading sectors were utilities, 12.7%; basic industries, 9.1%; durables, including autos, consumer electronics and textiles, 7.2%; and nondurables, including food and beverages, 7.1%. (bullet) The sector that grew the most during the last six months was utilities, which more than doubled as a percentage of the fund's total investments to 12.7%. Utilities tend to do well when interest rates are falling, and that was true in most countries around the world. The fund profited especially from its investments in British electric utilities, including Manweb PLC. DISTRIBUTIONS The Board of Trustees of Fidelity Diversified International Fund voted to pay on December 13, 1993, to shareholders of record at the opening of business on December 10, 1993, a distribution of $.10 derived from capital gains realized from sales of portfolio securities and a dividend of $.01 from net investment income. DIVERSIFIED INTERNATIONAL INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1993 Cash 11.6% Row: 1, Col: 1, Value: 11.6 Row: 1, Col: 2, Value: 5.0 Row: 1, Col: 3, Value: 5.9 Row: 1, Col: 4, Value: 8.800000000000001 Row: 1, Col: 5, Value: 10.3 Row: 1, Col: 6, Value: 18.5 Row: 1, Col: 7, Value: 3.5 Row: 1, Col: 8, Value: 4.4 Row: 1, Col: 9, Value: 13.1 Row: 1, Col: 10, Value: 18.9 Other 18.9% Australia 5.0% Canada 5.9% United Kingdom 13.1% France 8.8% Switzerland 4.4% Germany 10.3% Spain 3.5% Japan 18.5% AS OF APRIL 30, 1993 Other 12.6% Row: 1, Col: 1, Value: 22.5 Row: 1, Col: 2, Value: 4.3 Row: 1, Col: 3, Value: 6.3 Row: 1, Col: 4, Value: 8.300000000000001 Row: 1, Col: 5, Value: 9.1 Row: 1, Col: 6, Value: 19.7 Row: 1, Col: 7, Value: 3.1 Row: 1, Col: 8, Value: 2.9 Row: 1, Col: 9, Value: 11.2 Row: 1, Col: 10, Value: 12.6 Cash 22.5% United Kingdom 11.2% Australia 4.3% Switzerland 2.9% Spain 3.1% Canada 6.3% France 8.3% Japan 19.7% Germany 9.1% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks 87.8 77.3 Bonds 0.6 0.2 Short-term investments 11.6 22.5 TOP TEN STOCKS
% OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Deutsche Bank AG Ord. (Germany, Banks) 1.5 1.1 Matsushita Electric Industrial Co. Ltd. (Japan, Consumer Electronics) 1.1 - Bayer AG (Germany, Chemicals & Plastics) 1.0 0.4 Tractebel Capital Shares (Belgium, Electric Utility) 1.0 - Manweb PLC (United Kingdom, Electric Utility) 1.0 - Sony Corp. (Japan, Consumer Electronics) 0.9 0.5 Empresa Nacional de Electricidad SA sponsored ADR (Spain, Electric Utility) 0.8 0.7 Eridania Beghin SAY Group Ord. (France, Foods) 0.8 0.2 Colonia Konzern AG (Germany, Insurance) 0.8 0.5 Sekisui House Ltd. (Japan, Construction) 0.8 0.4
TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Finance 15.2 11.1 Utilities 12.7 4.9 Basic Industries 9.1 7.9 Durables 7.2 7.0 Nondurables 7.1 8.7 Retail and Wholesale 5.6 6.0 Technology 5.4 4.4 Industrial Machinery and Equipment 4.7 2.7 Construction and Real Estate 4.4 4.6 Energy 3.8 3.9 DIVERSIFIED INTERNATIONAL INVESTMENTS OCTOBER 31, 1993 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 85.4% SHARES VALUE (NOTE 1) ARGENTINA - 0.6% Banco de Galicia Y Buenos Aire SSA schneider sponsored ADR representing Class B shares 30,000 $ 967,500 05953820 Telecom Argentina Stet France (b) 150,000 672,303 90899992 1,639,803 AUSTRALIA - 4.9% Adelaide Brighton Cement Ord. 350,000 512,948 00699692 Alcan Australia Ltd. (b) 290,000 295,614 06099G92 Australia & New Zealand Banking Group Ltd. 502,923 1,454,217 05252810 Australian Gas Light Co. 56,210 167,027 02699092 Burns Philp & Co. 61,397 175,895 12239310 Caltex Australia Ltd. 280,000 496,224 13199392 Delta Gold (b) 200,000 505,018 24763810 Email Ltd. 250,000 836,145 29099292 Gold Mines Kalgoorlie 400,000 298,480 38065310 Heath (CE) International Holdings 100,000 119,925 42299992 Leighton Holdings 225,000 340,288 52503210 Metal Manufactures Ltd. 200,000 493,026 60199B92 Mount Leyshon Gold Mines (b) 120,000 467,707 62199192 Normandy Poseidon Ltd. 302,651 528,302 68999192 North Flindes Mines Ltd. (b) 75,000 619,612 65940091 Poseidon Gold Ltd. 200,000 514,346 36899192 QUF Industries Ltd. 124,300 303,103 74899A92 Qct Resources Ltd. 507,751 585,239 74692099 Santos Ltd. 300,114 835,796 80302110 Sons of Gwalia 100,000 596,294 83568810 Tubemakers of Australia Ltd. 100,000 229,856 91599092 Wattyl Ltd. 36,065 174,205 94299D92 Wesfarmers Ltd. 60,000 306,608 95099192 Westpac Banking Corp. 500,000 1,509,055 96121410 Westralian Sands Ltd. 145,700 276,657 96199A22 12,641,587 AUSTRIA - 0.2% Verbund Gesellschaft 10,000 605,470 92299999 BELGIUM - 1.2% BARCO Electronics (b) 3,500 201,840 06799B92 Delhaize 13,000 471,948 24650010 Tractebel Capital Shares 10,000 2,553,893 92099A92 3,227,681 BRAZIL - 0.2% Telebras PN (Pfd. Reg.) 21,000,000 669,270 95499792 CANADA - 4.9% American Barrick Resources Corp. 10,600 286,985 02451E10 Baton Broadcasting (b) 48,000 236,283 07123240 CFCF, Inc. 13,300 167,452 12520510 CGC, Inc. 35,000 208,736 12527K10 Cambior, Inc. 25,000 312,393 13201L10 Cambridge Shopping Centres Ltd. 43,000 541,387 13250910 Canadian Pacific Ltd. Ord. 40,000 677,799 13644030 Dreco Energy Services Ltd. Class A (b) 20,000 395,000 26152820 FCA International Ltd. (b) 120,000 308,986 30290110 Gulf Canada Corp. (b) 45,000 170,397 40218L30 Horsham Corp. 18,000 240,259 44090710 Hudsons Bay Co. Ord. 40,000 1,117,044 44420410 Intera Information Technologies Corp. Class A (b) 29,600 201,749 45837K10 Kaufel Group Ltd. Class B (b) 25,000 160,930 48614M20 Lac Minerals Ltd. 15,000 109,338 50545810 London Insurance Group, Inc. 59,100 1,152,505 54183010 Maax, Inc. (b) 35,000 311,447 57777C10 MaClean Hunter Ltd. 50,000 454,390 55474980 SHARES VALUE (NOTE 1) Midland Walwyn, Inc. (b) 220,000 $ 1,957,666 59780110 Noranda, Inc. 25,700 435,486 65542210 Norcen Energy Resources Ltd. 14,000 222,651 65549285 Onex Corp. (sub. vtg.) 30,000 369,192 68272K10 Placer Dome, Inc. 20,000 490,363 72590610 Sceptre Resources Ltd. (b) 22,000 249,915 80621470 Seagram Co. Ltd. 10,000 287,781 81185010 TVX Gold, Inc. (b) 150,000 851,982 87308K10 Talisman Energy, Inc. (b) 9,000 198,512 87425E10 Total Petroleum (North America) Ltd. (b) 25,000 291,094 89150810 United Westburne Industries Ltd. (b) 90,000 400,432 91319710 12,808,154 FINLAND - 1.9% Cultor Oy Series II Ord. 30,000 739,203 23099093 Instrumentarium Class B (b) 21,000 1,284,559 45780510 Lassila & Tikahoja OY 14,000 410,094 66899D22 Metsa Serla B 9,000 375,288 59299992 Nokia AB free shares 8,400 470,402 65599992 Repola OY 70,000 1,033,677 75999A92 Tietotehdas OY B 6,000 713,356 93999892 5,026,579 FRANCE - 8.8% Alcatel Alsthom CGE 15,000 1,970,877 01390492 Assurances Generales (Reg.) 10,000 1,230,952 04557510 BNP CI 6,400 307,213 05599910 BNP CI Ord. 1,900 93,134 05599996 BNP CI (warrants) (b) 6,400 10,620 05599995 Bertrand Faure SA 3,700 300,711 08599392 Bollore Technologies SA (b) 6,200 402,486 09799E92 Bollore Technologies (rights) (b) 6,200 13,122 09799E93 CGIP 5,000 1,096,343 12506610 Credit Commercial France Ord. 5,000 233,661 22499392 Credit Local De France (c) 21,000 1,633,491 22699892 Credit Lyonnais CI 1,600 201,016 22799392 de Dietrich et CIE 1,000 328,649 24699293 Dollfus Mieg & CIE (DMC) 4,900 263,419 25699392 ETEX SA 520 189,299 29799595 Elf Aquitaine 4,000 311,141 28627199 Elf Sanofi SA 400 66,983 91399A92 Eridania Beghin SAY Group Ord. (b) 14,072 2,061,002 07720310 Essilor International SA 10,000 1,070,098 29728599 Eurafrance (Societe) 800 305,723 29899892 Europeene De Prop (Sep) 9,455 454,660 29899792 Financiere Bank de Suez Cie 2,000 118,388 31799110 Fromageries Bel 200 169,997 35899992 Fructivie SA 1,600 239,756 33099092 Generale des Eaux 450 208,618 37099210 IDIA-Inst de Devel des Ind Agr 10,000 405,520 45199D22 Interbail 1,200 113,376 46299692 Lafarge Coppee 3,477 254,328 50586310 Pechiney International 5,400 191,551 71099094 Pernod-Ricard 15,000 1,079,157 71404310 Pinault Printemps SA 2,600 371,995 72199393 Rhone Poulenc SA Class A 8,800 227,823 76242695 Schneider SA (b) 23,000 1,423,383 80687410 Schneider SA units (b) 3,833 272,905 80687492 Societe Generale Class A 10,000 1,176,769 83357799 Sovac 2,000 535,049 84599K22 Thomson C.S.F 20,000 554,352 88431610 Total Compagnie Francaise des Petroles Class B (b) 11,228 626,418 20434510 UIC (Union Inds de Credit) (b) 5,081 468,870 90299E92 Valeo SA 1,500 276,583 91899010 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) FRANCE - CONTINUED Vallourec (b) 18,000 $ 632,408 92017610 Zodiac SA 3,000 868,100 96599492 22,759,946 GERMANY - 9.1% Altana Industrie-Aktien 740 259,418 02199C92 Andrea Noris Zahn 3,530 726,583 03499892 Ava Alg Handels Verbrauchen 700 369,547 05399692 BASF AG 798 131,355 05526230 BMW (b) 399 148,751 05528310 Bayer AG 13,500 2,560,103 07273010 Beiersdorf AG 600 284,723 07799392 Berliner Kraft & Licht Class A 4,312 572,938 08453910 Berlinger Bank AG 1,000 250,912 10899492 Bremer Vulkan AG 10,000 580,123 10689999 Colonia Konzern AG 2,500 2,034,582 19619991 Commerzbank AG 3,000 608,951 20259710 Continental Gummi-Werke AG (b) 875 125,760 21199010 Deutsche Bank AG 8,000 4,011,270 25152592 Didier-Werke AG 2,700 240,235 25399892 Douglas Holdings AG 1,200 434,914 25950099 Dresdner Bank AG Ord. 247 63,807 26156110 Hapag-Lloyd AG (b) 700 176,884 41199092 Herlitz AG 4,000 842,305 42799392 Hoechst AG Ord. 770 130,400 43439010 Holsten Brauerei AG 2,666 830,234 43899D92 Hutschenreuther AG 946 168,062 44899E22 IKB AG (Deut Industriebank) 6,200 1,141,917 45999992 Karstadt AG 3,000 1,071,270 48576499 Kaufhof AG 2,000 677,996 48615210 Kunert AG 737 156,943 50499792 Pfaff (GM) Ord. (b) 8,000 901,622 71699592 Rosenthal AG 7,300 1,255,746 77774310 Schneider Rundfunk Ord. (b) 5,000 637,661 80799692 Siemens AG 230 98,775 82619710 Thyssen AG Ord. 10,000 1,408,785 88629110 Veba Vereinigte Elektrizetaets & Bergwerks AG Ord. 1,000 278,317 92239110 Vereinigte Elekt West 3,000 486,342 92399A92 23,667,231 HONG KONG - 1.1% Cafe De Coral Holdings Ltd. 500,000 362,340 12799092 Culturecom Holdings Ltd. 2,770,000 699,009 23099322 Giordano Holdings Ltd. Ord. 26,000 16,655 37599592 Gold Peak Industries Ltd. 800,000 380,456 38074499 Great Eagle Holdings Ltd. 300,000 193,140 39099394 Jardine Matheson & Co. Ltd. Ord. 3,060 29,303 47111510 Johnson Electric Industrial Manufacturing Ltd. (c) 154,500 369,880 47899999 New World Development Co. 10,119 35,094 65171310 Shun Tak Holdings Ltd. 107,244 127,679 82799192 Sing Tao Holdings Ltd. 210,000 323,389 82877099 Sun Hung Kai Properties Ltd. 5,000 34,293 86676H10 World International Holdings 75,000 160,142 98150010 2,731,380 INDIA - 0.4% ITC Ltd: GDR (c) 12,000 210,000 45031810 (warrants) (b) (c) 4,000 21,000 45031811 Southern Petrochemical Industries GDS (b) 67,000 737,000 84361310 968,000 SHARES VALUE (NOTE 1) IRELAND - 1.0% Allied Irish Bank 20,000 $ 84,149 01908810 Bank of Ireland U.S. Holdings, Inc. 88,000 366,346 06278793 Crean (James) Ltd. Ord. 100,000 412,853 22699D25 Elan PLC ADR 12,400 474,300 28413120 IAWS Group PLC A (U.K. Reg.) 300,000 311,115 45399H23 Independent News (b) 88,333 484,202 45399E92 Smurfit (Jeff) Group PLC (U.K.) 80,000 267,855 84699793 Waterford Wedgwood PLC (1 Ord. 1 Income share) (b) 280,000 163,853 94151393 2,564,673 ISRAEL - 0.3% ECI Telecom Ltd. 2,400 117,000 26825810 Fourth Dimension Software 30,000 660,000 35199792 777,000 ITALY - 1.4% Banco Lariano 32,000 86,933 06099792 Credito Fondiario Spa 28,000 62,963 22599692 Fiat Rinascente (rights) (b) 35,000 53 31599C96 Fiat Spa 35,000 79,235 31562110 Fiat SPA Ord (rights) (b) 35,000 42,245 31599C94 Fochi Filippo Spa 20,000 97,240 34499692 Gemina Ord. 180,000 156,434 36899692 Recordati Ind Chimica Spa 33,500 150,662 75624092 SIP Spa 726,010 1,572,552 78401792 Stet Societa Finanziaria Telefonica Spa Ord. 564,000 1,422,504 85982510 3,670,821 JAPAN - 18.5% Aisin Seiki Co. Ltd. 50,000 529,710 00999999 Akita Bank 100,000 723,169 00999692 Aoyama Trading Co. Ord. 16,000 1,196,868 03799092 Aplus Co. Ltd. 150,000 848,457 03899A92 Bando Chemical Industries 101,000 582,460 06099392 Canon, Inc. 100,000 1,372,639 13780199 Citizen Watch Co. Ltd. Ord. 60,000 527,867 17560010 Daido Hoxan Corp. 94,000 463,288 46699292 Daidoh Ltd. 150,000 1,271,304 56299292 Daisue Construction 100,000 432,980 25999292 Daiwa Securities 10,000 128,052 23499010 Ezaki Glicko Co. 75,000 822,202 30199492 Fuji Oil Co. Ltd. 100,000 847,536 35999310 Fuji Photo Film Co. Ltd. 19,000 442,837 35958610 Fukutoku Bank 142,000 601,750 38199692 Futaba Corp. 50,000 1,547,674 36399292 Futaba Industrial Co. Ltd. 24,000 400,184 38299192 Hanshin Elec. Railway Co. Ltd. 76,000 357,071 41899492 Hisamitsu Pharmaceutical Co. 70,000 581,022 46699092 Hitachi Ltd. 77,000 610,751 43357810 Honda Motor Co. Ltd. 11,000 161,124 43812810 House Food Industrial 14,000 334,040 44144610 Japan Securities Finance Co. Ltd. 25,000 368,494 47200099 Japan Synthetic Rubber Co. Ltd. 28,000 135,421 73599292 Kao Corporation 100,000 1,160,755 48599210 Kasumi Stores 80,000 724,459 48599310 Kimmon Manufacturing Co. 60,000 332,197 49499292 Kinsho-Matachi Corp. (b) 40,000 162,874 49799292 Kirin Brewery Co. Ltd. 50,000 580,377 49712510 Konica Corp. 109,000 721,981 50046M10 Kyotaru Co. 50,000 423,768 76999092 Matsushita Electric Industrial Co. Ltd. 210,000 2,843,851 57687910 Matsuya Denki Co. Ltd. 60,000 409,581 57699890 Mitsubishi Motors Corp. 50,000 378,167 60899692 Nakayama Steel Works Ltd. 100,000 635,652 62999310 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) JAPAN - CONTINUED Nissan Motor Co. Ltd. Ord. 28,000 $ 194,749 65474491 Nissei Sangyo 100,000 1,243,667 66699592 Oak & Co. Ltd. 60,000 436,665 83699092 Ohbayashi Corp. 100,000 596,960 67090410 Omron Corp. 100,000 1,280,516 68215110 Pokka Corp. 50,000 690,926 73299999 RICOH Co. Ltd. Ord. 200,000 1,319,208 76565999 Renown Look, Inc. 70,000 709,351 75999J22 Rinnai Corp. Ord. 15,000 425,610 76681999 SXL Corp. 40,000 538,001 93599392 Sekisui Chemical 100,000 958,084 81699210 Sekisui House Ltd. 150,000 1,989,867 81607810 Shintokogio Ltd. 80,000 519,576 97199392 Sony Corp. 50,000 2,266,237 83569999 Sumitomo Rubber Industries 17,000 137,034 86699892 Takasago Thermal Engineering Co. 40,000 608,015 87699892 Takeda Chemical Industries Ltd. 100,000 1,216,030 87405810 Takuma Co. Ltd. 70,000 767,388 87406099 Toda Construction 60,000 439,429 88899020 Toenec Corporation (b) 50,000 704,744 96599592 Tokyo Style Co. Ltd. 30,000 549,977 88999410 Toshiba Corp. 200,000 1,286,044 89149310 Toyoda Boshoku Corp. 150,000 605,251 89799B92 Toyoda Gosei Co. 59,000 492,437 90399292 Toyota Motor Corporation 12,000 207,831 89399999 Toyota Tsusho 20,000 145,187 90399792 Uny Co. Ltd. 39,000 492,215 91529010 Yamaha Motor Co. Ltd. (b) 100,000 745,279 98456092 Yamaichi Securities 12,000 85,122 98499210 Yamatake Honeywell Co. Ltd. 130,000 1,784,431 98491099 Zenitaka Corp. 150,000 1,037,770 64099292 48,134,163 KOREA (SOUTH) - 0.5% Korea Liberalization Fund IDR (b) 40,000 246,000 50599F92 Samsung Electronics Co. Ltd.: GDR (b) (c) 1,516 38,658 79605030 GDR representing shares (non vtg.) (b) (c) 30,000 967,500 79605040 1,252,158 LUXEMBOURG - 1.1% Minorco SA ADR 100,000 1,812,500 60434020 Scandinavian Broadcasting Corp. (b) 49,600 979,600 80699E92 2,792,100 MALAYSIA - 0.1% Granite Industries BHD 50,000 281,690 38799522 MEXICO - 0.4% Cemex SA, Series B (b) 15,500 359,026 15299293 Cifra SA Class C (b) 60,000 143,770 17178594 Fomento Economico Mexicano SA (FEMSA) B 45,000 231,470 34441892 Grupo Carso SA De CV Class A-1 (b) 32,000 246,390 40099594 Grupo Financiero Bancomer SA De CV sponsored ADR, Series C (c) 6,000 175,500 40048610 1,156,156 NETHERLANDS - 1.5% Akzo NV: Ord. 7,000 662,847 01019910 sponsored ADR 2,300 109,825 01019930 Bols Wessanen NV (KON) (b) 3,000 67,019 50046V92 Borsumij Wehry NV 5,100 311,091 09985610 SHARES VALUE (NOTE 1) IHC Caland NV 6,800 $ 140,058 56299392 Internatio-Muller NV 3,100 130,156 46098999 International Nederlanden Groep CVA 10,000 434,117 46099892 KLM Royal Dutch Airlines Ord. (b) 7,500 157,248 48251620 MacIntosh Confectionary Works (b) 13,400 392,765 58199292 Nijverdal-Ten Cate 4,627 209,663 67077010 Philips Electronics 5,000 103,248 71833799 Philips NV (b) 5,000 104,375 71833750 Textielgroep Twenthe NV 6,800 269,342 88399F22 Twentsche Kabel Holding NV 3,800 393,346 91030099 Volmac Software Groep NV 27,700 326,227 92899292 3,811,327 NETHERLANDS ANTILLES - 0.1% Intrum Justitia NV (Reg.) 160,000 293,930 46299292 NEW ZEALAND - 1.3% Brierley Investments Ltd. 2,504,000 1,775,636 10901410 Fletcher Challenge Ltd. (Reg.) 580,000 1,317,412 33999592 Fortex Group Ltd. 135,000 71,050 34999492 Lion Nathan Ltd. 197,500 363,258 53699692 3,527,356 NORWAY - 1.4% Bergesen Group Class A 50,000 1,018,814 08399010 Bonheur AS 14,000 260,545 09799399 Color Lines 103,100 343,130 19699492 Ganger Rolf 14,000 260,545 36472010 Hafslund Nycomed: Series B 4,000 76,615 40502992 sponsored ADR B 10,000 190,000 40502940 Helikopter Services 15,000 213,951 42499192 Norsk Hydro AS ADR (b) 15,000 450,000 65653160 Orkla AS Class B (non-vtg.) 4,000 147,796 39299192 Smedvig Tankships Ltd. Ord. (c) 40,000 425,000 83169E20 Unitor AS 10,500 146,200 91699392 3,532,596 PANAMA - 0.2% Banco Latino Americano de Exportaciones SA Class E 10,000 435,000 06199A92 PHILIPPINES - 0.2% First Philippine Fund 25,000 421,875 33610010 PORTUGAL - 0.1% Banco Portuguese Inv. Ord. 7,000 207,422 05999G93 SINGAPORE - 0.3% Hour Glass Ltd. 732,500 775,820 44199E22 SOUTH AFRICA - 1.3% Anglo American Corp. (Reg.) (b) 6,500 216,152 03486110 Barlow Rand Ltd. Ord. (b) 20,000 191,211 06768010 De Beers Consolidated Mines Ltd. ADR 16,000 318,000 24025330 Gencor Ltd. (Reg.) (b) 100,000 225,653 36868193 Impala Platinum Holdings Ltd. ADR 20,000 217,500 45255320 Rembrandt Group Ltd. (b) 30,000 190,974 75999L22 Rustenberg Platinum Holding Ltd. ADR 63,000 992,250 78307820 Sasol, Ltd. (b) 45,000 194,002 80386610 South African Brewers Ltd. 12,000 188,124 83621692 Standard Bank Investment Corp. (b) 10,000 224,466 85399A22 Vaal Reefs Exploration & Mining Co. Ltd. ADR 40,000 335,000 91850640 3,293,332 SPAIN - 3.5% Acerinox SA (Reg.) 1,500 101,111 00499192 Banco de Andalucia (Reg.) 2,000 245,926 08599193 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SPAIN - CONTINUED Banco Bilbao Vizcaya SA (Reg.) Ord. 3,500 $ 89,574 05945891 Banco de Santander Ord. (Reg.) (b) 4,000 210,074 05957410 Banco de Santander SA de Credito ADR 5,000 259,375 05957420 Banco Popular Espanol 2,500 324,074 05999110 Corporacion Bancaria de Espana SA sponsored ADR (b) 20,000 445,000 21991310 Electric Zaragosa 7,500 156,667 29599192 Empresa Nacional de Electricidad SA sponsored ADR 45,000 2,109,375 29244720 Gas Y Electricidad 2,500 105,185 37420099 Hidro Cantabrico 40,000 893,333 42899999 Iberdrola SA 26,000 171,215 45499892 Moulinex-Expana SA 3,000 67,778 62499592 Repsol SA sponsored ADR 63,000 1,866,375 76026T20 Telefonica De Espana SA sponsored ADR 50,000 1,943,750 87938220 8,988,812 SWEDEN - 1.0% Astra A Free 20,500 448,814 04632292 Ericsson (L.M.) Telephone Co. Class B ADR 22,000 1,232,000 29482140 Frontline (b) 114,000 376,468 35999F22 Svenska Handelsbanken (b) 30,000 410,959 86959991 2,468,241 SWITZERLAND - 4.4% Also Holding AG part. cert. (b) 2,000 616,932 02199F92 Baer Holding AG 400 415,759 05699B92 Bank of International Settlements 100 643,755 06299B22 Bucher Holding AG (Bearer) 500 1,274,099 08699292 Ciba-Geigy AG (Reg.) 320 165,874 17199492 Ciba Geigy Corp. (warrants) (b) 120 531 17199494 Eg Laufenburg (Bearer) (b) 420 540,754 26899592 Fotolabo Club SA (Bearer) 40 80,469 35099592 George Fischer AG (Bearer) (b) 700 460,017 33771110 Industrieholding Cham AG (Reg.) 1,200 812,741 85599922 Lindt and Spruengli PC 200 211,903 53599392 Nestle SA (Reg.) (b) 1,456 1,156,989 64106992 Prodega AG (Bearer) 1,000 784,577 74599992 Roche Holdings Division (rights certificates) (b) 300 1,156,748 77157092 Sandoz PC 100 245,096 80005220 Sulzer Gebrueder PC 1,000 515,004 86557799 Swiss Bank Corp. (Bearer) (b) 408 137,345 87083610 Swiss Reinsurance Corp. PC (b) 1,000 500,251 87099310 Swissair (Reg.) 178 82,957 87079592 Union Bank of Switzerland Ord. (Bearer) 176 154,018 90530910 Winterthur Schweiz (Bearer) (b) 1,000 546,521 97629993 Zurich Versicherungs (Bearer) (b) 1,000 916,010 99499592 11,418,350 THAILAND - 0.1% C.P. Feedmill Co. (For. Reg.) 40,000 265,193 16119999 UNITED KINGDOM - 13.1% Amstrad 600,000 426,672 03299110 Antofagasta Holdings PLC 40,000 574,822 03799492 Associated British Foods Ltd. Ord. (b) 100,000 731,120 04551910 B.A.T. Industries PLC Ord. 101,748 752,191 05527010 British Petroleum PLC: ADR 20,000 1,245,000 11088940 Ord. 99,488 514,397 11088910 British Steel PLC Ord. 90,000 172,336 11101510 Burton Group PLC Ord. 620,000 688,901 12304910 Cattles Holdings 333,896 717,269 14999B22 Clinton Cards PLC 150,000 360,004 18799292 SHARES VALUE (NOTE 1) East Midland Electricity PLC 50,000 $ 435,190 27365394 Eurotherm International PLC 13,000 120,757 29899992 Finlay (James) PLC 144,500 166,980 31799F92 Goal Petroleum Ord. 220,000 205,337 37199192 Granada Group 29,522 206,875 38480310 Guinness PLC Ord. 100,000 644,453 40203310 Hanson Trust PLC sponsored ADR 40,000 805,000 41135230 Hazlewood Foods Ord. 130,200 360,707 42199292 Imperial Chemical Industries Ord. 50,000 530,377 45270440 Invesco Mim PLC 200,000 506,674 46199C92 Kleinwort Benson Group Ord. 77,420 607,898 49801810 Lex Service Ord. 20,000 115,557 52884999 Lilley PLC 300,000 16,668 53299692 Linx Printing Technology 59,000 55,068 53699992 Lloyds Chemists PLC (b) 120,000 486,228 54099092 London Electricity PLC 100,000 899,271 54181095 London International Group 200,000 494,572 54183310 Lonrho Ltd. Ord. 153,221 293,961 54337410 Low (William) Ord. 54,000 130,402 54799010 Mansfield Brewery 28,000 87,112 56499992 Manweb PLC 250,000 2,468,550 56508495 Northern Electricity PLC 190,000 1,831,060 68499B92 Northumbtian Water Group PLC Ord. 80,459 800,428 67299295 Norweb PLC 190,000 1,829,652 66934493 Oriflame International SA 30,000 144,891 68620299 Owners Abroad Group 115,000 146,520 69199193 Paterson Zochonis 30,000 203,114 70399210 Premier Consolidated Oilfields Ltd. Ord (b). 408,500 157,350 74047810 Provident Financial Group 63,194 400,234 74399592 Seeboard PLC 190,000 1,883,136 81570594 Severn Trent PLC Ord. (b) 100,000 800,751 82999895 South Wales Electricity PLC 100,000 989,642 84060794 South West Water PLC Ord. (b) 50,000 430,376 83999295 Southend Property Hldgs. Ord. 225,000 286,670 84199692 Southern Electric PLC 100,000 924,456 84280994 Southern Water PLC Ord. 201,483 1,713,373 84499095 Standard Chartered Bank 60,461 947,234 85256810 Tesco PLC Ord. (b) 44,939 135,152 88157510 Unigate Ltd. Ord. 180,000 1,005,347 90475010 Vodafone Group PLC 176,757 1,448,117 92857T92 Vsel Consortium PLC 50,000 629,637 91828599 Welsh Water PLC Ord. 50,000 488,895 94999395 Wimpey George PLC 93,000 239,047 97263310 Yorkshire Water Ord. (b) 100,000 814,825 98899595 34,070,256 UNITED STATES OF AMERICA - 0.3% Rhone Poulenc Rorer, Inc. 20,000 900,000 76242T10 TOTAL COMMON STOCKS (Cost $202,344,366) 221,783,372 PREFERRED STOCKS - 2.4% CONVERTIBLE PREFERRED STOCKS - 0.1% AUSTRALIA - 0.1% TNT Ltd. 8% 141,000 145,609 93599293 NONCONVERTIBLE PREFERRED STOCKS - 2.3% AUSTRIA - 0.5% Creditanstaldt Bank 17,000 1,167,691 22539210 PREFERRED STOCKS - CONTINUED SHARES VALUE (NOTE 1) NONCONVERTIBLE PREFERRED STOCKS - CONTINUED BELGIUM - 0.1% Cockerill Sambre SA Pfd. 100,000 $ 378,965 19199392 CANADA - 0.4% Trilon Financial Corp. Class 1, Series A 120,000 1,090,537 89590330 GERMANY - 1.2% Fresenius AG 550 159,860 35899B92 Hornback Holdings AG 1,600 1,798,499 44050799 RWE AG 1,000 227,422 76204599 Wella AG 2,000 1,014,325 94599999 3,200,106 ITALY - 0.1% Danieli & C Spa N/C Risp 60,000 203,475 23599610 TOTAL NONCONVERTIBLE PREFERRED STOCKS 6,040,774 TOTAL PREFERRED STOCKS (Cost $5,246,819) 6,186,383 CORPORATE BONDS - 0.6% PRINCIPAL AMOUNT (A) CONVERTIBLE BONDS - 0.5% CANADA - 0.5% Brascan Ltd. 7%, 10/15/02 CAD 2,000,000 1,238,214 105502AA NONCONVERTIBLE BONDS - 0.1% CANADA - 0.1% Stelco, Inc. 10 7/8%, 9/15/94 CAD 500,000 371,086 8585258Y TOTAL CORPORATE BONDS (Cost $1,606,578) 1,609,300 REPURCHASE AGREEMENTS - 11.6% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 2.96% dated 10/29/93 due 11/1/93 $ 30,066,415 30,059,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $239,256,763) $ 259,638,055 CURRENCY TYPE ABBREVIATIONS CAD - Canadian dollar LEGEND 1. Principal amount is stated in United States dollars unless otherwise noted. 2. Non-income producing 3. Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $3,841,029 or1.5% of net assets. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, during the year ended October 31, 1993, aggregated $227,502,574 and $58,961,339, respectively. Brokerage commissions received by FBSI, an affiliate of the fund's investment adviser, from portfolio transactions during the year ended October 31, 1993, amounted to $4,142. (See Note 3 of Notes to the Financial Statements). INCOME TAX INFORMATION At October 31, 1993 the aggregate cost of investment securities for income tax purposes was $239,316,189. Net unrealized appreciation aggregated $20,321,866, of which $25,442,367 related to appreciated investment securities and $5,120,501 related to depreciated investment securities. The fund hereby designates $511,000 as a capital gain dividend for the purpose of the dividend paid deduction. For the period, interest and dividends from foreign countries were $1,954,310 or $0.09 per share. Taxes paid to foreign countries were $315,045 or $0.01 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Aerospace and Defense 0.9% Basic Industries 9.1 Conglomerates 2.5 Construction and Real Estate 4.4 Durables 7.2 Energy 3.8 Finance 15.2 Health 3.7 Industrial Machinery and Equipment 4.7 Media and Leisure 1.8 Nondurables 7.1 Precious Metals 2.4 Repurchase Agreements 11.6 Retail and Wholesale 5.6 Services 0.1 Technology 5.4 Transportation 1.8 Utilities 12.7 100.0% DIVERSIFIED INTERNATIONAL FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993 ASSETS Investment in securities, at value (including repurchase agreements of $30,059,000) (cost $239,256,763) $ 259,638,055 (Notes 1 and 2) - See accompanying schedule Receivable for investments sold 7,400,714 Receivable for fund shares sold 3,174,689 Dividends receivable 605,131 Interest receivable 10,457 TOTAL ASSETS 270,829,046 LIABILITIES Payable to custodian bank $ 8,139 Payable for investments purchased 9,335,046 Payable for fund shares redeemed 5,996,272 Accrued management fee 155,400 Other payables and accrued expenses 305,335 TOTAL LIABILITIES 15,800,192 NET ASSETS $ 255,028,854 Net Assets consist of: Paid in capital $ 232,240,501 Undistributed net investment income 893,244 Accumulated undistributed net realized gain (loss) on investments 1,513,817 Net unrealized appreciation (depreciation) on investment securities 20,381,292 NET ASSETS, for 22,537,583 shares outstanding $ 255,028,854 NET ASSET VALUE, offering price and redemption price per share ($255,028,854 (divided by) 22,537,583 shares) (Note 3) $11.32
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1993 INVESTMENT INCOME $ 2,377,750 Dividends Interest 683,516 3,061,266 Less foreign taxes withheld (Note 1) (315,045 ) TOTAL INCOME 2,746,221 EXPENSES Management fee (Note 3) $ 902,601 Basic fee Performance adjustment (27,280 ) Transfer agent fees (Note 3) 486,053 Accounting fees and expenses 80,790 (Note 3) Non-interested trustees' compensation 569 Custodian fees and expenses 148,279 Registration fees 136,844 Audit 18,955 Legal 683 Miscellaneous 36 TOTAL EXPENSES 1,747,530 NET INVESTMENT INCOME 998,691 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 2) Net realized gain (loss) on: Investment securities 3,643,268 Foreign currency contracts (1,109,106 2,534,162 ) Change in net unrealized appreciation (depreciation) on investment securities 24,127,201 NET GAIN (LOSS) 26,661,363 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 27,660,054 OTHER INFORMATION Accounting fees paid to FSC (Note 3) $79,778
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED DECEMBER 27, OCTOBER 31, 1991 1993 (COMMENCEMEN T OF OPERATIONS) TO OCTOBER 31, 1992 Operations $ 998,691 $ 319,884 Net investment income Net realized gain (loss) on investments 2,534,162 (1,020,345 ) Change in net unrealized appreciation (depreciation) on investments 24,127,201 (3,745,909 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 27,660,054 (4,446,370 ) Distributions to shareholders from net investment income (425,331 - ) Share transactions 368,965,606 60,695,967 Net proceeds from sales of shares Reinvestment of distributions from net investment income 411,649 - Cost of shares redeemed (178,021,677 (19,811,044 ) ) Net increase (decrease) in net assets resulting from share transactions 191,355,578 40,884,923 TOTAL INCREASE (DECREASE) IN NET ASSETS 218,590,301 36,438,553 NET ASSETS Beginning of period 36,438,553 - End of period (including undistributed net investment income of $893,244 and $319,884, respectively) $ 255,028,854 $ 36,438,553 OTHER INFORMATION Shares Sold 35,207,206 6,445,020 Issued in reinvestment of distributions from net investment income 48,543 - Redeemed (17,022,973 (2,140,213 ) ) Net increase (decrease) 18,232,776 4,304,807
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
SELECTED PER-SHARE DATA YEAR ENDED DECEMBER 27, OCTOBER 31, 1991 1993 (COMMENCEMEN T OF OPERATIONS) TO OCTOBER 31, 1992 Net asset value, beginning of period$ 8.46 $ 10.00 Income from Investment Operations Net investment income .07 .07 Net realized and unrealized gain (loss) on investments 2.89 (1.61) Total from investment operations 2.96 (1.54) Less Distributions From net investment income (.10) - Net asset value, end of period $ 11.32 $ 8.46 TOTAL RETURN #(double dagger) 35.38% (15.40)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 255,029 $ 36,439 Ratio of expenses to average net assets(double dagger) 1.47% 2.00%* Ratio of expenses to average net assets before expense reductions (double dagger) 1.47% 2.34%* Ratio of net investment income to average net assets .84% 1.38%* Portfolio turnover rate 56% 56%* * ANNUALIZED # TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. (double dagger) DURING THE PERIOD DECEMBER 27, 1991 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1992, THE FUND'S INVESTMENT ADVISER VOLUNTARILY AGREED TO REDUCE THE FUND'S EXPENSES TO THE EXTENT THAT THE AGGREGATE OPERATING EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) OF THE FUND WERE IN EXCESS OF AN ANNUAL RATE OF 2.00% OF THE AVERAGE NET ASSETS. TOTAL RETURN WOULD HAVE BEEN LOWER HAD THE ADVISER NOT REDUCED EXPENSES.
INTERNATIONAL GROWTH AND 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. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). International Growth and Income has a 2% sales charge, which has been waived through May 31, 1994. CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1993 YEAR YEARS FUND International Growth and Income 32.94% 61.10% 91.72% International Growth and Income (incl. 2% sales charge) 30.28% 57.88% 87.89% Morgan Stanley EAFE Index 37.46% 20.28% 80.95% Average International Fund 33.41% 57.11% 94.14% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - one year, five years, or since the fund started on December 31, 1986. You can compare the fund's figures to the performance of the Morgan Stanley EAFE index - a broad measure of the performance of stocks in Europe, Australia, and the Far East. You can also compare the fund's performance to the average international fund, which reflects the performance of 152 funds with similar objectives tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1993 YEAR YEARS FUND International Growth and Income 32.94% 10.01% 9.98% International Growth and Income (incl. 2% sales charge) 30.28% 9.56% 9.66% Morgan Stanley EAFE Index 37.46% 3.76% 9.06% Average International Fund 33.41% 9.18% 9.93% AVERAGE ANNUAL RETURNS take the fund's actual (or 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 Growth & Income (305) EAFE 12/31/86 9800.00 10000.00 01/31/87 10456.60 11091.44 02/28/87 10917.20 11423.38 03/31/87 11387.60 12359.45 04/30/87 11828.60 13667.22 05/31/87 11907.00 13667.17 06/30/87 12024.45 13231.74 07/31/87 12525.06 13208.62 08/31/87 12868.62 14199.03 09/30/87 12976.78 13975.49 10/31/87 10259.33 11956.28 11/30/87 9993.50 12135.62 12/31/87 10616.00 12495.97 01/31/88 10240.74 12719.07 02/29/88 10704.88 13566.88 03/31/88 11169.02 14401.06 04/30/88 11465.28 14610.33 05/31/88 11317.15 14141.98 06/30/88 11188.77 13769.22 07/31/88 11188.77 14201.21 08/31/88 10635.75 13277.87 09/30/88 11020.89 13858.05 10/31/88 11662.79 15043.77 11/30/88 11870.17 15939.87 12/31/88 11843.61 16028.75 01/31/89 12064.61 16310.76 02/28/89 12104.79 16394.60 03/31/89 12104.79 16072.84 04/30/89 12406.16 16221.91 05/31/89 12054.56 15339.38 06/30/89 12094.75 15081.17 07/31/89 13239.93 16974.95 08/31/89 13059.11 16211.52 09/30/89 13581.48 16949.99 10/31/89 12928.52 16268.98 11/30/89 13410.70 17086.82 12/31/89 14108.24 17717.27 01/31/90 13864.30 17058.04 02/28/90 13376.40 15867.48 03/31/90 13366.24 14214.47 04/30/90 13335.75 14101.66 05/31/90 14199.72 15710.68 06/30/90 14646.96 15572.31 07/31/90 15327.98 15791.65 08/31/90 14016.76 14258.15 09/30/90 12664.89 12271.07 10/31/90 13935.45 14183.13 11/30/90 13620.35 13346.50 12/31/90 13652.87 13562.71 01/31/91 14135.97 14001.39 02/28/91 14934.14 15502.33 03/31/91 14398.53 14571.68 04/30/91 14619.08 14714.78 05/31/91 14598.07 14868.32 06/30/91 13894.42 13775.78 07/31/91 14377.53 14452.61 08/31/91 14325.01 14159.11 09/30/91 14787.11 14957.10 10/31/91 14692.59 15169.13 11/30/91 14283.01 14460.97 12/31/91 14750.27 15207.78 01/31/92 14729.00 14882.94 02/29/92 14750.27 14350.25 03/31/92 14271.71 13402.90 04/30/92 14899.16 13466.61 05/31/92 15569.14 14368.01 06/30/92 15420.26 13686.50 07/31/92 14920.43 13336.22 08/31/92 15186.29 14172.68 09/30/92 14931.06 13892.81 10/31/92 14133.46 13164.07 11/30/92 14101.56 13287.94 12/31/92 14257.48 13356.67 01/31/93 14388.19 13355.03 02/28/93 14780.29 13758.44 03/31/93 15880.38 14957.71 04/30/93 16762.62 16377.23 05/31/93 17154.73 16723.11 06/30/93 16926.00 16462.20 07/31/93 17492.38 17038.46 08/31/93 18407.29 17958.25 09/30/93 18287.48 17554.02 10/31/93 18788.51 18094.99 Let's say you invested $10,000 in Fidelity International Growth and Income Fund on its start date and paid the 2% sales charge. By October 31, 1993, it would have grown to $18,789 - an 87.89% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley EAFE index, which would have grown to $18,095 over the same period - an 80.95% 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 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. (checkmark) INTERNATIONAL GROWTH AND INCOME FUND TALK: THE MANAGER'S OVERVIEW An Interview with John Hickling and Rick Mace, Portfolio Managers of Fidelity International Growth & Income Fund Q. HOW DID THE FUND PERFORM DURING THE PAST YEAR? J.H. The fund, which owns a combination of stocks and bonds, returned 32.94% for the 12 months ended October 31, 1993. That was slightly below the EAFE index - a broad measure of the performance of stocks (only) in Europe, Australia and the Far East - which returned 37.46% over the same period. The fund's return almost matched that of the average international fund, which returned 33.41% according to Lipper Analytical Services. Q. WHAT FACTORS CONTRIBUTED TO THESE RESULTS? J.H. The primary drivers were geopolitical events and fortunate sector selection. When the major European economic powers broke rank with the European Rate Mechanism (ERM) one year ago, their stock and bond markets responded with one of the best years ever. European investments, which accounted for approximately 37% of the fund's investments, were carried upward as nearly all major markets there rose during the year, delivering the strongest gains in the first half. By focusing on interest-rate sensitive financial, banking and insurance sectors in both the U.K. and throughout Europe, the fund enjoyed additional gains. In the U.K., I did well with my investments in National Westminster Bank and Barclays. In Switzerland, I made large investments in insurance companies Zurich Versicherung and Winterthur Schweiz and banks such as CS Holdings and Swiss Bank. Also, because I believed that the recovery in Europe would be slow and somewhat painful, I avoided most of the stocks that are tied to the economic cycle, which were favored by analysts with a more optimistic view on the European economic condition. Q. DID THE FLOOD OF ASSETS INTO THE FUND AFFECT YOUR PERFORMANCE? J.H. Flood is right! A year ago, the fund stood at $60 million. By the end of the period, it had swelled to about $1 billion. As a result, the fund's cash position ran higher than normal throughout the period. Did it affect my performance? That's hard to figure. Investing as well as possible is more important to me than investing as quickly as possible, so I'm comfortable with taking extra time to find good ideas. A little extra cash on the sidelines, however, is one reason the fund lagged the index somewhat; that, and the fund's fixed-income investments. However, shareholders should keep in mind that while these less volatile investments may keep performance down somewhat when foreign stock markets are rising, they can also cushion a decline when stock markets head the other way. Q. HOW DID THE FUND'S 25 - 30% STAKE IN BONDS AND OTHER FIXED-INCOME INVESTMENTS DO DURING THE PERIOD? J.H. Pretty well. Interest rates started to come down in the U.K., Italy and Spain, as well as Sweden and Finland, as currencies were allowed to float down to a level that was more realistic in terms of the local economies. That helped the fund's bond investments. However, the bonds with the biggest impact on the fund's gains were in France and Denmark, whose currencies remained tied to the deutschemark, and in Japan. France and Denmark are both struggling with recession and high interest rates, yet both countries have inflation under control, and so their bonds were attractive. Once Germany began easing interest rates, the prices of the fund's French and Danish bond investments rose. But when the economies of these two countries pick up, they should have even farther to go. I added the Japanese bonds in the summer, when it became apparent that a quick recovery was out of the question for Japan. That meant the government would have to ease interest rates to stimulate spending. In fact, that's exactly what happened, boosting the price of Japanese bonds. These contributed significantly to the fund's performance in the second half of the period. Q. WHAT ABOUT JAPANESE STOCKS? J.H. Last summer it became apparent that the positive steps the Japanese government had taken on behalf of the nation's financial system were not going to induce a speedy, broad-based economic recovery. However, on a recent trip I found that, although the Nikkei index dropped significantly in November, the broader market was still doing relatively well. I remained optimistic that many of the interest-rate sensitive stocks that the fund owns - which contributed to this year's performance - still had room for further appreciation. I emphasized utilities, brokerage companies, and trust banks and stayed away from the blue chips and household names which I believed were more sensitive to currency fluctuations and had more downside in terms of future earnings. Overall, I generally maintained the fund's Japanese investments at the end of October. However, as the fund increased in size, those investments represented a smaller percentage of the fund's total investments: 14.7% at the end of October compared to 24.9% six months earlier. Q. WERE THERE ANY DISAPPOINTMENTS DURING THE YEAR? J.H. In retrospect, I cut back on my investments in Hong Kong somewhat prematurely. Speculation among retail investors and a general sense of euphoria suggested to me that the market had more risk than upside potential. Instead, I sought opportunities in the markets of Indonesia, Singapore, Thailand, and Mexico. Those investments did well, but not as well as Hong Kong. While I had anticipated a drop in the Japanese market this fall, it turned out to be bigger than I'd expected. So, of course, having even 15% of the fund's investments in Japan hurt. I also missed out on the quick burst in gold and gold stocks earlier in the year. I didn't anticipate the effect of inflation fears, which, coupled with rising demand for gold jewelry and no additions to production capacity, sent gold and gold stocks soaring in the spring. Gold prices have settled back down, but selected gold stocks have continued to do well. Q. TURNING TO YOU, RICK: AS YOU PREPARE TO TAKE OVER THE FUND ON JANUARY 1, WHAT'S YOUR OUTLOOK FOR THE YEAR AHEAD? R.M. The fund had an extraordinary year as both stock and bond markets in most countries did well. We've seen bond prices rise as economies in Europe and Japan weakened and interest rates dropped substantially. We've also seen stocks rally both in response to lower yields and the prospects of economic recovery. I believe interest rates in Europe could continue to drop in the coming year, but at a slower rate. If so, the bond market returns of 1993 could be difficult to repeat. Still, corporate and government bonds could continue to benefit from both lower inflation and improvements in credit quality (the ability of bond issuers to make their principal and interest payments). Convertible bonds could also do well as selected stocks rise. On the stock side, the companies that should prosper are those with improving business prospects or compelling valuations (measured by yardsticks like price-to-earnings ratios and dividend yields). Given that I don't expect a strong economic recovery, identifying these stocks will become increasingly important. I'll try to do this by calling on companies and working closely with our analysts and managers based in offices around the world. FUND FACTS GOAL: to increase the value of the fund's shares by investing in stocks and bonds, mainly in Europe, the Far East, and Pacific Basin START DATE: December 31, 1986 SIZE: as of October 31, over $1 billion MANAGERS: John Hickling, 1987-1993. Richard R. Mace, Jr., starting January 1994; co-manager, Fidelity Global Balanced, February - - December 1993; manager, Fidelity Select Portfolios: Chemicals, Industrial Materials, January - August 1992, Transportation, June 1989 - December 1991 (checkmark) RICK MACE'S INVESTMENT APPROACH: "I focus on stock picking based on thoroughly researching individual companies and their business prospects. The process of visiting companies or calling them directly, as well as working with our analysts, leads me to conclusions on industries and economies. However, the key to my stock selection is a company's valuation - its price compared to measures such as the rate its earnings are growing. I'm looking for companies that appear to be undervalued or cheap compared to what I think they're worth. "Before buying a stock, I like to talk or visit with the company's management. On average, I visit 25 companies a month in person and sit in on dozens of conference calls. Often these company contacts lead me to other stocks or sectors that look attractive. But, most important, they help me monitor local and industry business conditions. "I usually don't try to allocate assets based on industry or country selection. If the fund is overweighted or underweighted in a particular area compared to the EAFE index, then it's mainly because of where I'm finding attractive stocks. For example, recently I've found numerous opportunities in the Netherlands, Korea, Norway, and France. Let's take the Netherlands; there stocks are cheap with strong balance sheets and managements that have been quick to cut costs in response to weakening business trends. The cost cutting should continue to offset earnings declines while providing the potential for strong earnings growth in an economic recovery. If these trends continue, the fund will probably remain overweighted in the Netherlands as it was at the end of October when about 5% of its investments were there compared to the 3% in the EAFE index. "I don't plan to make any major changes to its structure. To the extent that I can find exciting stock ideas, the fund will be 60 - 70% in stocks. Over time, I'll only increase the fixed- income component if it becomes difficult to find attractive stocks." (bullet) As the fund grew from $60 million to $1 billion in assets over the year ended October 31, 1993, its earnings from interest income and dividends were spread over a larger number of shares. So, although the total earnings increased compared to previous years' levels, the fund's per share income distribution decreased substantially. DISTRIBUTIONS The Board of Trustees of Fidelity International Growth & Income Fund voted to pay on December 13, 1993, to shareholders of record at the opening of business on December 10, 1993, a distribution of $.05 derived from capital gains realized from sales of portfolio securities and a dividend of $.06 from net investment income. INTERNATIONAL GROWTH AND INCOME INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1993 Denmark 2.3% United Kingdom 7.5% Netherlands 4.9% Row: 1, Col: 1, Value: 2.3 Row: 1, Col: 2, Value: 4.9 Row: 1, Col: 3, Value: 3.5 Row: 1, Col: 4, Value: 14.9 Row: 1, Col: 5, Value: 14.8 Row: 1, Col: 6, Value: 7.4 Row: 1, Col: 7, Value: 7.5 Row: 1, Col: 8, Value: 2.7 Row: 1, Col: 9, Value: 2.9 Row: 1, Col: 10, Value: 19.3 Row: 1, Col: 11, Value: 7.4 Row: 1, Col: 12, Value: 4.9 Row: 1, Col: 13, Value: 7.5 Sweden 3.5% Spain 4.9% Germany 7.4% Japan 14.9% Cash 19.3% Other 14.8% Italy 2.9% Switzerland 7.4% France 7.5% United States 2.7% AS OF APRIL 30, 1993 Canada 3.0% United Kingdom 10.1% Netherlands 2.8% Row: 1, Col: 1, Value: 3.0 Row: 1, Col: 2, Value: 2.8 Row: 1, Col: 3, Value: 26.9 Row: 1, Col: 4, Value: 11.1 Row: 1, Col: 5, Value: 4.9 Row: 1, Col: 6, Value: 5.4 Row: 1, Col: 7, Value: 2.2 Row: 1, Col: 8, Value: 2.3 Row: 1, Col: 9, Value: 20.6 Row: 1, Col: 10, Value: 6.9 Row: 1, Col: 11, Value: 3.8 Row: 1, Col: 12, Value: 10.1 Spain 3.8% Germany 6.9% Japan 26.9% Cash 20.6% Other 11.1% Italy 2.3% Switzerland 4.9% France 5.4% Hong Kong 2.2% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks 69.5 69.1 Bonds 8.7 9.4 Short-term and other investments 21.8 21.5 TOP TEN STOCKS
% OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Zurich Versicherung (Reg.) (Switzerland, Insurance) 1.4 0.8 CS Holdings (Bearer) (Switzerland, Banks) 1.2 1.1 Winterthur Schweiz (Reg.) (Switzerland, Insurance) 1.1 - Deutsche Bank AG (Germany, Banks) 1.1 0.7 BHF Bank (Bank Berlin Hand) (Germany, Banks) 1.0 0.3 Swiss Bank Corp. (Bearer) (Switzerland, Banks) 1.0 0.5 Veba Vereinigte Elektrizetaets & Bergwerks AG Ord. (Germany, Electric Utility) 1.0 0.3 Repsol SA Ord. (Spain, Oil & Gas) 0.9 - Telefonica de Espana SA Ord. (Spain, Telephone Services) 0.9 0.9 Bayer AG (Germany, Chemicals & Plastics) 0.9 -
TOP TEN INDUSTRIES (BY MAJOR INDUSTRY) % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Finance 32.7 31.2 Utilities 7.8 6.3 Construction & Real Estate 5.4 6.6 Retail & Wholesale 5.1 2.5 Basic Industries 3.6 1.8 Technology 3.0 4.6 Energy 2.5 0.9 Industrial Machinery & Equipment 2.3 2.5 Durables 2.3 5.3 Media & Leisure 2.3 2.7 INTERNATIONAL GROWTH AND INCOME INVESTMENTS OCTOBER 31, 1993 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 65.7% SHARES VALUE (NOTE 1) AUSTRALIA - 1.6% FAI Insurance Ltd. Ord. New 2,458,400 $ 1,736,196 30239330 Gold Mines Kalgoorlie 80,000 59,696 38065310 Lend Lease Corp. Ltd. 130,050 1,634,141 52599292 National Australia Bank Ltd. 150,000 1,265,209 63252510 Rothmans Holdings Ltd. Ord. 85,000 430,397 77869910 TNT Ltd. (b) 4,600,000 5,363,324 93599292 Westpac Banking Corp. 1,493,100 4,506,340 96121410 Woolworths Ltd. (Astl.) ADR (b)(e) 62,000 1,209,000 98088830 16,204,303 CANADA - 0.2% American Barrick Resources Corp. 38,000 1,028,816 02451E10 Canadian Pacific Ltd. Ord. 14,700 249,091 13644030 Noranda, Inc. 30,000 508,349 65542210 Royal Bank of Canada 25,000 515,922 78008710 2,302,178 CHILE - 0.1% Maderas Y Sinteticos Sociedad Anonima Masisa sponsored ADR (b) 41,200 741,600 55646510 DENMARK - 0.3% Den Danske Bank Group AS 49,900 2,939,444 24820692 FINLAND - 0.6% Kansallis-Osake-Pankki 450,000 1,108,804 48199210 Repola OY 297,600 4,394,607 75999A92 Unitas Bank Ltd. B Free shares 125,100 342,737 90499123 5,846,148 FRANCE - 5.3% Assurances Generales (Reg.) 28,300 3,483,593 04557510 BNP CI 134,800 6,470,674 05599910 BNP CI Ord. 7,700 377,438 05599996 BNP CI (warrants) (b) 134,800 223,678 05599995 Bail Investissement (b) 5,400 1,033,187 05699092 Credit Lyonnais CI 24,500 3,078,056 22799392 Financiere Bank de Suez Cie 115,000 6,807,315 31799110 GAN (Groupe Des Assur Natl.) 93,200 8,663,529 36599792 Klepierre SA (b) 10,000 1,208,940 49899822 Lyonnaise des Eaux Dumez SA 25,000 2,306,976 55160010 Paribas SA (Cie Financiere) Class A (b) 53,000 4,307,484 73999192 Publicis SA (b) 11,567 1,699,993 74499999 Redoute (LA) 19,000 2,911,446 75799492 Simco (Reg.) (b) 20,000 2,028,446 82899B22 Societe Generale Class A 34,700 4,083,390 83357799 Sophia SA 22,000 1,892,313 84199C22 UFB Locabail SA (b) 33,400 2,143,346 90599B92 Unibail 25,900 2,284,778 90499592 55,004,582 GERMANY - 6.4% Allianz Versich Holdings Ord. (Reg.) (b) 3,000 5,082,303 01882495 BHF Bank (Bank Berlin Hand) 32,883 10,220,774 05549991 BHF Bank (warrants) (b) 5,000 594,655 05549995 Bayer AG 47,500 9,007,771 07273010 Bayerische Vereinsbank AG Ord. 3,000 930,688 07276110 Berlinger Bank AG 9,300 2,333,482 10899492 Commerzbank AG 15,700 3,186,843 20259710 Computer 2000 AG (b) 4,000 2,040,514 20599492 Deutsche Bank AG 22,000 11,030,993 25152592 Deutsche Bank AG (warrants) (b) 250 45,229 25152596 Hoechst AG Ord. 22,500 3,810,392 43439010 Koelnische Ruckesich (Reg.) 1,725 941,365 50099592 Munich Reinsurance (Reg.) 1,100 2,609,959 62699492 SHARES VALUE (NOTE 1) Thyssen AG Ord. 33,300 $ 4,691,254 88629110 Veba Vereinigte Elektrizetaets & Bergwerks AG Ord. 35,200 9,796,744 92239110 66,322,966 HONG KONG - 0.5% Cathay Pacific Airways Ltd. 776,000 1,265,299 14890610 Giordano Holdings Ltd. Ord. 210,000 134,520 37599592 Hong Kong Land Holdings Ltd. 275,000 736,655 43858292 Hutchison Whampoa Ltd. Ord. 425,000 1,600,452 44841510 National Mutual Asia Ltd. (b) 78,000 56,021 63699592 National Mutual Asia Ltd. (warrants) (b) 15,600 5,905 63699593 Sun Hung Kai Properties Ltd. 170,000 1,165,965 86676H10 Wing Hang Bank Ltd. (b) 16,000 44,310 97499522 5,009,127 INDIA - 0.1% ITC Ltd.: GDR (e) 39,000 682,500 45031810 (warrants) (b)(e) 13,000 68,250 45031811 750,750 INDONESIA - 1.1% Astra International (For. Reg.) 150,000 1,320,453 04699894 Bank International Indonesia Ord. (b) 1,080,200 3,598,008 06199B92 Jakarta International Hotels & Development Ord. 951,200 6,110,347 47399693 Sampoerna, Hanjaya Mandala 230,000 848,183 82299892 11,876,991 IRELAND - 0.4% Anglo Irish Bank 191,900 172,712 03599592 Bank of Ireland U.S. Holdings, Inc. 240,000 999,125 06278793 Irish Life PLC 940,000 3,056,778 46299B92 4,228,615 ITALY - 1.2% Assicurazioni Generali Spa 221,800 5,358,267 04542910 SIP Spa 2,825,000 6,119,020 78401792 Saipem Spa Ord. (b) 416,400 706,058 79299292 Simint Spa Priv. New 398,996 533,478 83799498 12,716,823 JAPAN - 14.7% ADO Electronic Industrial Co. 62,000 1,433,625 00699992 Acom Co. Ltd. (b) 12,000 1,067,895 00499M22 Aichi Machine Industries 85,000 450,253 02299192 Akita Bank 134,000 969,047 00999692 Aoyama Trading Co. Ord. 101,000 7,555,228 03799092 Canon, Inc. 306,000 4,200,275 13780199 Catena Corp. 60,000 1,989,866 14899792 Chudenko Corporation 40,000 1,437,126 17123410 Cosmo Oil Company Ltd. 700,000 5,616,765 22199092 Daiei Finance, Inc. 308,000 3,858,867 23375099 Daikyo, Inc. 147,000 1,570,889 23376610 Daiwa House Industry Co. Ltd. 93,000 1,370,797 23406299 Fuji Photo Film Co. Ltd. 8,000 186,458 35958610 Fujitsu Ltd. 851,000 6,718,628 35959010 Hankyu Corporation 75,000 456,011 41035310 Hankyu Department Stores, Inc. 400,000 4,606,172 41099192 Hitachi Ltd. 469,000 3,720,028 43357810 Hitachi Ltd. ADR 10,000 792,500 43357850 IO Data Device, Inc. 19,000 1,547,305 45099A92 Ishikawajima Harima Heavy Ind. 125,000 518,195 46489210 Izumi Co. Ord. 152,000 3,094,611 46399292 Japan Radio Co. Ltd. 16,000 272,685 47199210 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) JAPAN - CONTINUED Joshin Denki Co. Ltd. Ord. 44,000 $ 571,534 48199999 Kandenko Co. Ltd. 40,000 965,454 48400092 Kanematsu-Gosho Ltd. 65,000 299,401 48418999 Koa Fire & Marine Insurance Co. Ltd. 392,000 2,563,982 49999010 Kokusai Securities 57,000 903,178 50299092 Konica Corp. 446,000 2,954,160 50046M10 Kyocera Corporation 30,000 1,699,678 50155610 Kyokuto Kaihatsu Kogyo Co. Ltd. Ord. 13,000 328,144 74599692 Marubeni Corp. 717,000 3,395,100 57381010 Marukyo Corp. 87,000 2,484,570 57899792 Mitsubishi Bank of Japan 99,000 2,809,028 60674210 Mitsubishi Corp. 267,000 2,927,038 60676910 Mitsubishi Heavy Industry 600,000 3,731,000 60699310 Mitsubishi Trust & Banking 604,000 8,235,100 60699410 National House Industry 23,000 453,432 63699192 Nichido Fire & Marine Insurance Co. 476,000 3,433,515 65399920 Nikko Securities 442,000 4,845,509 65399010 Nippon Hodo Co. Ltd. 30,000 577,614 65499910 Nippon Shinpan Ltd. 404,000 3,796,223 65461710 Nissan Motor Co. Ltd. Ord. 70,000 486,872 65474491 Nomura Securities Co. Ltd. 236,000 4,326,487 65536130 Orix Corp. 130,000 4,922,156 68616710 Sanwa Bank 200,000 4,366,652 80399410 Sega Enterprises 73,400 6,126,247 81599792 Shinko Shoji 40,000 359,282 90699492 Sho Bond Corp. Ord. 40,000 1,098,112 82699692 Sumitomo Realty & Development Co. Ltd. 225,000 1,575,310 86562310 Sumitomo Trust & Banking Co. 300,000 4,035,007 86599310 Suzuki Motor Corp. 333,000 2,880,580 86958592 Tobu Railway 127,000 873,966 88739110 Tohoku Electric Power, Inc. 136,000 4,046,798 88906099 Tokio Marine & Fire Insurance Co. (The) 525,000 6,432,520 88909099 Tokyo Electric Power Co., Inc. 62,000 1,970,521 88910710 Toshiba Corp. 215,000 1,382,497 89149310 Tostem Corp. 27,000 982,497 89299110 Toyota Motor Corporation 250,000 4,329,802 89399999 U Store Co. Ltd. 1,000 19,438 95599292 Yoshicon Co. Ltd. (b) 1,000 24,135 Yoshinoya D&C Co. Ltd. Ord. 25 437,586 98999192 151,083,351 KOREA (SOUTH) - 0.7% Cho Hing Bank Co. Ltd. 155,000 1,905,006 17099E22 Korea Electric Power Corp. 235,000 5,613,588 50099B92 7,518,594 LUXEMBOURG - 0.1% Scandinavian Broadcasting Corp. 45,600 900,600 80699E92 MALAYSIA - 1.8% Ekran Berhad Ord. (b) 268,000 1,625,196 28299792 Magnum Corp. BHD 555,000 1,367,958 55999392 Renong BHD 820,000 1,148,517 75999H22 Resorts World BHD 271,000 1,484,351 76199592 Telekom Malaysia BHD 824,000 6,963,380 94099892 Tenega Nasional BHD 1,148,000 5,973,552 92099992 18,562,954 MEXICO - 1.0% Aerovias de Mexico SA de CV sponsored ADR representing B shares (b)(e) 37,000 189,625 00806510 Grupo Dina (Consorcio G) ADR (b) 32,000 672,000 21030610 Grupo Financiero Bancomer SA de CV sponsored ADR, Series C (e) 182,000 5,323,500 40048610 SHARES VALUE (NOTE 1) Grupo Video Visa SA de CV sponsored ADR representing B shares (b)(e) 2,800 $ 36,750 40049410 Telefonos de Mexico SA sponsored ADR representing shares Ord. Class L 75,000 4,106,250 87940378 10,328,125 NETHERLANDS - 4.9% ABN-AMRO Holdings NV 112,500 4,265,910 00399192 Aegon NV Ord. 21,000 1,081,331 00792493 Akzo NV Ord. 91,000 8,617,006 01019910 Amev NV CVA 12,000 519,039 03199092 Hoogovens en Staalfabrieken (b) 12,500 279,905 43888410 International Nederlanden Groep CVA 199,800 8,673,652 46099892 KBB NV Ord. 92,900 4,763,977 48130092 Pakhoed Holding 170,000 4,156,852 69563010 Philips Electronics 335,000 6,917,613 71833799 Philips NV (warrants) (b) 20,000 124,637 71833792 Pirelli Tyre Holdings NV: Ord. (b) 146,100 1,003,063 72499092 (warrants) (b) 36,000 57,037 72499093 Stad Rotterdam 106,200 2,462,202 85299822 Volker Stevin NV 93,700 3,513,441 92868894 Wereldhave NV 63,000 3,779,667 95199E22 50,215,332 NEW ZEALAND - 0.0% Brierley Investments Ltd. 441,400 313,006 10901410 NORWAY - 1.0% Bergesen Group Class B 220,000 4,452,897 08399011 Den Norske Bank Class A Free shares (b) 574,900 1,991,436 25299792 Olav Thon Eiendomsselskp Ord. 140,000 2,149,018 67941099 Vital Forsikring Free shares 100,000 1,222,577 93999692 9,815,928 SINGAPORE - 0.5% Development Bank of Singapore (For. Reg.) 43,750 444,064 25159493 Kim Eng Holdings Ltd. 1,240,000 2,642,291 49499D92 Sembawang Shipyard Ltd. 79,000 657,421 81661599 United Overseas Bank (warrants) (b) 401,625 1,316,637 91199E92 5,060,413 SOUTH AFRICA - 0.1% De Beers Consolidated Mines Ltd. ADR 47,800 950,025 24025330 SPAIN - 4.9% Argentaria Corp. Bancaria de Esp (b) 65,300 2,926,407 21991392 Banco de Santander Ord. (Reg.) 25,000 1,312,963 05957410 Banco Intercontinental Espanol (b) 101,800 8,882,992 24699592 Banesto (Reg.) 184,200 3,738,578 05981699 Corporacion Mapfre International Reas (Reg.) 173,600 7,998,460 16899192 Iberdrola SA 550,000 3,621,852 45499892 Repsol SA: Ord. 310,000 9,265,555 76026T10 sponsored ADR 14,000 414,750 76026T20 Telefonica de Espana SA Ord. 707,000 9,217,185 87938210 Vallehermoso SA 140,000 2,582,222 91899210 49,960,964 SWEDEN - 3.5% Aktiebolaget Electrolux 185,000 6,471,380 01019810 Frontline (b) 760,000 2,509,786 35999F22 OM Gruppen AB Ord. (b) 70,000 1,952,055 68199E22 SKF AB Ord. (b) 507,200 7,816,439 78437530 Scribona AB B Free shares (b) 416,800 1,784,246 81199B92 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SWEDEN - CONTINUED Securitas B Free shares 23,500 $ 658,207 81399792 Skandia International Holding Co. AB ADR (b) 68,200 1,443,077 83055510 Skandinaviska Enskilda Banken Class A Free shares 619,400 4,545,498 88099222 Skanska Class B (b) 399,200 8,398,042 93899392 35,578,730 SWITZERLAND - 6.9% BBC Brown Boveri & Cie (Bearer) 1,900 1,276,647 05599099 Baloise Holding (Reg.) (b) 5,600 8,749,707 05899195 CS Holdings: (Bearer) (b) 5,430 12,434,837 17599792 (Bearer) (warrants) (b) 1,230 92,791 15099426 Globus Magazine Part. Cert. 12,725 8,490,444 37957792 Swiss Bank Corp. (Bearer) (b) 30,000 10,098,910 87083610 Swiss Reinsurance Corp. (Bearer) 950 2,465,381 87099392 Union Bank of Switzerland Ord. (Bearer) 2,500 2,187,762 90530910 Winterthur Schweiz (Reg.) 22,000 11,344,845 97629994 Zurich Versicherung (Reg.) 15,550 14,097,972 99499597 71,239,296 THAILAND - 0.3% Ruam Pattana Fund II (b) 3,800,000 2,136,938 76999522 Ruang Khao Unit Trust (For. Reg.) 1,156,300 616,024 77399393 2,752,962 UNITED KINGDOM - 7.5% BET Public Ltd. Co. Ord. 2,787,800 5,203,958 05538H10 Barclays PLC Ord. 402,000 3,394,709 06738E10 Bass PLC Ord. 750,000 5,416,734 06990492 British Land Ord. 100,000 594,082 11099510 British Petroleum PLC Ord. 1,000,000 5,170,435 11088910 British Steel PLC Ord. 950,000 1,819,097 11101510 British Vita Ord. 513,400 1,901,505 11199192 Dixons Group PLC 1,147,800 4,429,713 25587592 First National Finance Corporation PLC 899,900 1,146,554 33599392 Great Universal Stores PLC Ord. Class A 620,000 4,914,136 39133420 Ladbroke Group PLC Ord. 950,000 2,427,810 50572799 McAlpine (Alfred) Ord. 35,100 109,201 57999010 Midlands Electricity PLC 400,000 3,745,232 59780293 Mirror Group Newspaper PLC (b) 1,192,800 2,827,413 60499792 National Westminster Bank PLC Ord 421,000 3,455,362 63853930 North West Water Ord. 459,500 3,604,566 67299195 Royale Insurance Co. Ltd. 495,000 2,317,362 78074910 TSB Group PLC 394,600 1,324,120 87199010 Taylor Woodrow PLC 600,000 1,093,350 87667410 Tesco PLC Ord. (b) 183,600 552,168 88157510 Tomkins PLC Ord. 1,610,000 5,939,193 89003010 Trafalgar House PLC Ord. 500,000 722,230 89270710 United Newspapers PLC Ord. 195,000 1,574,465 91120210 Vickers PLC Ord. units 1,841,300 3,846,328 92549310 Vodafone Group PLC 480,000 3,932,496 92857T92 Westland Group PLC Ord. 180,000 578,675 96090210 Whitbread Class A 710,000 5,448,661 96341499 77,489,555 TOTAL COMMON STOCKS (Cost $614,630,698) 675,713,362 PREFERRED STOCKS - 3.8% SHARES VALUE (NOTE 1) CONVERTIBLE PREFERRED STOCKS - 0.0% NETHERLANDS - 0.0% ABN-AMRO Holdings NV 6% 833 $ 31,587 NONCONVERTIBLE PREFERRED STOCKS - 3.8% AUSTRIA - 1.3% Creditanstaldt Bank 121,500 8,345,559 22539210 MaCulan Holding Ord. 50,000 5,299,979 55699594 13,645,538 GERMANY - 0.7% Boss (Hugo) AG 2,800 1,503,099 44451094 RWE AG 24,600 5,594,590 76204599 7,097,689 ITALY - 1.7% Autostrade 'B' 520,000 527,770 05399792 Banco Ambro Veneto N/C Risp 3,080,400 5,260,646 06399592 SAI (Sta Assicur Industriale) N/C Risp 1,211,600 7,202,987 78399192 SIP (Societa Ital Per L'Eser) Spa Di Risp. N/C Ord. 2,200,000 3,886,811 78401796 Simint Spa Priv. Ord. 399,000 380,228 83799496 Stet Societa Finanziaria Telefonica Spa 140,000 272,272 85982592 17,530,714 KOREA (SOUTH) - 0.1% Daewoo Heavy Industries Ltd. 73,360 998,774 23999494 TOTAL NONCONVERTIBLE PREFERRED STOCKS 39,272,715 TOTAL PREFERRED STOCKS (Cost $36,712,008) 39,304,302 CORPORATE BONDS - 1.3% MOODY'S RATINGS PRINCIPAL (UNAUDITED) AMOUNT (A) CONVERTIBLE BONDS - 0.8% FINLAND - 0.1% Amer Group Ltd. 6 1/4%, 6/15/03 (e) - $ 1,000,000 870,000 023512AA GRAND CAYMAN - 0.1% Bangkok Land Euro 4 1/2%, 10/13/03 (e) - 600,000 696,000 06099LAA INDIA - 0.1% Scici Ltd. Euro 3 1/2%, 4/1/04 (e) - 1,370,000 1,496,725 79599KAA JAPAN - 0.0% Capcom Co. 3.90%, 9/30/96 - JPY 12,000,000 171,349 138993AB SWITZERLAND - 0.5% CS Holdings Euro 4 7/8%, 11/19/02 A2 3,400,000 4,913,000 175997AC TOTAL CONVERTIBLE BONDS 8,147,074 NONCONVERTIBLE BONDS - 0.5% JAPAN - 0.2% Japan Development Bank Euro 6 1/2%, 9/20/01 Aaa JPY 225,000,000 2,433,442 4710529B MEXICO - 0.3% Cemex SA 8 7/8%, 6/10/98 (e) Baa2 3,000,000 3,146,250 151290AG TOTAL NONCONVERTIBLE BONDS 5,579,692 TOTAL CORPORATE BONDS (Cost $13,088,729) 13,726,766 GOVERNMENT OBLIGATIONS (D) - 7.4% PRINCIPAL AMOUNT (A) ARGENTINA - 1.5% Argentina Republic (f): BOCON 3 1/4%, 4/1/01 B1 $ 14,446,172 $ 11,694,177 039995AF Brady Euro 4%, 3/31/23 B1 6,000,000 3,975,000 039995AD 15,669,177 BRAZIL - 1.0% Brazil Federative Republic IDU Euro 8 3/4%, 1/1/01 (f) B2 13,000,000 10,367,500 1057569E CANADA - 0.1% Canadian Government 9 1/4%, 10/1/94 Aaa CAD 1,700,000 1,337,006 135087SQ DENMARK - 2.0% Danish Government Bullet: 8%, 5/15/03 Aa1 DKK 93,000,000 15,229,736 249998AG 7%, 12/15/04 Aa1 DKK 31,250,000 4,826,206 249998AV 20,055,942 FRANCE - 2.2% French Government: OAT: 8 1/2%, 11/25/02 Aaa FRF 10,500,000 2,097,795 3517779U 8 1/2%, 4/25/03 Aaa FRF 50,000,000 9,964,445 351996AQ 8 1/2%, 4/25/23 Aaa FRF 25,000,000 5,298,002 351996AC Strips 4/25/23 Aaa FRF 210,000,000 5,319,342 351996BL 22,679,584 GERMANY - 0.3% German Government: 8 5/8%, 2/20/96 Aaa DEM 3,000,000 1,903,906 3741369H 8 3/8%, 5/21/01 Aaa DEM 1,400,000 955,589 3741369J 2,859,495 MEXICO - 0.1% Mexican Government Cetes: 0%, 12/30/93 - MXN 1,700,000 531,166 597998RT 0%, 6/30/94 - MXN 2,400,000 705,861 597998UR 1,237,027 UNITED STATES OF AMERICA - 0.2% U.S. Treasury Notes 9 1/4%, 1/15/96 Aaa 2,000,000 2,216,240 912827XB TOTAL GOVERNMENT OBLIGATIONS (Cost $72,765,164) 76,421,971 INDEXED SECURITIES - 2.5% UNITED STATES OF AMERICA - 2.5% Bankers Trust Company notes (c)(f): 8.135%, 10/14/94 (coupon inversely indexed to JPY LIBOR and principal indexed to value of 9-year Japanese securities, both multiplied by 3) 5,000,000 5,029,500 0669918N PRINCIPAL VALUE (NOTE 1) AMOUNT (A) 8.025%, 10/28/94 (coupon inversely indexed to JPY LIBOR and principal indexed to value of 9-year Japanese securities, both multiplied by 3) $ 3,600,000 $ 3,598,200 0669918T 11.025%, 7/12/96 (coupon inversely indexed to 6-month JPY LIBOR, multiplied by 10) 5,000,000 6,481,000 0669917D 10.295%, 7/15/96 (coupon inversely indexed to 6-month JPY LIBOR, multiplied by 10) 1,000,000 1,275,900 0669917F 9.34%, 7/29/96 (coupon inversely indexed to 6-month JPY LIBOR, multiplied by 10) 3,000,000 3,742,500 0669917S ITT Corp. note 3.66%, 6/27/94 (inversely indexed to 1-year SEK swap rate, multiplied by 10) 5,000,000 5,242,000 4506799M TOTAL INDEXED SECURITIES (Cost $22,600,000) 25,369,100 REPURCHASE AGREEMENTS - 19.3% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 2.96% dated 10/29/93 due 11/1/93 $199,216,128 199,167,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $958,963,599) $1,029,702,501 FORWARD FOREIGN CURRENCY CONTRACTS SETTLEMENT UNREALIZED DATE(S) VALUE GAIN/(LOSS) CONTRACTS TO SELL 368,500,000 BEF 2/4/94 $ 9,973,116 $ 433,548 137,100,165 DKK 2/4/94 19,924,068 286,763 1,371,117,000 ESP 11/15/93 to 2/1/94 10,057,887 299,137 139,542,602 FRF 1/27/94 23,426,946 278,182 22,164,000 NOK 2/8/94 2,992,116 35,586 40,902,500 SEK 2/4/94 4,950,179 93,473 TOTAL CONTRACTS TO SELL (Receivable amount $72,751,001) $ 71,324,312 $ 1,426,689 THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 6.9% CURRENCY TYPE ABBREVIATIONS BEF - Belgian franc CAD - Canadian dollar DKK - Danish krone FRF - French franc DEM - German Deutsche mark JPY - Japanese yen MXN - Mexican peso NOK - Norwegian krone ESP - Spanish peseta SEK - Swedish krona LEGEND 1. Principal amount is stated in United States dollars unless otherwise noted. 2. Non-income producing 3. Inverse floating rate security (inverse floater) is a security where the coupon is inversely indexed to a floating interest rate multiplied by a specified factor. If the floating rate is high enough, the coupon rate may be zero or be a negative amount that is carried forward to reduce future interest and/or principal payments. The price of an inverse floater may be considerably more volatile than the price of a comparable fixed rate security. 4. Most foreign government obligations have not been individually rated by S&P or Moody's. The ratings listed are assigned to securities by FMR, the fund's investment adviser, based principally on S&P and Moody's ratings of the sovereign credit of the issuing government. 5. Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $13,718,600 or 1.4% of net assets. 6. The coupon rate shown on floating or adjustable rate securities represents the rate at period end. OTHER INFORMATION The composition of long-term debt holdings as a percentage of total value of investments for the period ended is as follows (ratings are unaudited): MOODY'S RATINGS S&P RATINGS Aaa, Aa, A 5.5% AAA, AA, A 4.8% Baa 0.0% BBB 0.0% Ba 0.3% BB 0.0% B 2.5% B 0.0% Caa 0.0% CCC 0.0% Ca, C 0.0% CC, C 0.0% D 0.0% For some foreign government obligations, FMR has assigned the ratings of the sovereign credit of the issuing government. The percentage not rated by either S&P or Moody's amounted to 0.8%. Purchases and sales of securities, other than short-term securities, during the year ended October 31, 1993, aggregated $759,279,627 and $58,621,259, respectively. Brokerage commissions received by FBSI, an affiliate of the fund's investment adviser, from portfolio transactions during the year ended October 31, 1993, amounted to $2,625. (See Note 3 of Notes to Financial Statements). INCOME TAX INFORMATION At October 31, 1993, the aggregate cost of investment securities for income tax purposes was $959,005,124. Net unrealized appreciation aggregated $70,697,377, of which $83,332,495 related to appreciated investment securities and $12,635,118 related to depreciated investment securities. The fund hereby designates $208,000 as a capital gain dividend for the purpose of the dividend paid deduction. For the period, interest and dividends from foreign countries were $4,014,706 or $0.07 per share. Taxes paid to foreign countries were $515,766 or $0.01 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Aerospace and Defense 0.1% Basic Industries 3.6 Conglomerates 1.8 Construction and Real Estate 5.4 Durables 2.3 Energy 2.5 Finance 32.7 Government Obligations 7.4 Industrial Machinery and Equipment 2.3 Media and Leisure 2.3 Nondurables 1.3 Precious Metals 0.1 Repurchase Agreements 19.3 Retail and Wholesale 5.1 Services 1.5 Technology 3.0 Transportation 1.5 Utilities 7.8 100.0% INTERNATIONAL GROWTH AND INCOME FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993 ASSETS Investment in securities, at value (including repurchase agreements of $199,167,000) (cost $958,963,599) $ 1,029,702,501 (Notes 1 and 2) - See accompanying schedule Short foreign currency contracts $ (71,324,312 (Note 2) ) Contracts held, at value Receivable for contracts held 72,751,001 1,426,689 Cash 291,514 Receivable for investments sold 4,710,264 Receivable for fund shares sold 13,544,183 Dividends receivable 658,861 Interest receivable 2,786,359 TOTAL ASSETS 1,053,120,371 LIABILITIES Payable for investments purchased 43,068,072 Payable for fund shares redeemed 5,811,524 Accrued management fee 614,721 Other payables and accrued expenses 778,997 TOTAL LIABILITIES 50,273,314 NET ASSETS $ 1,002,847,057 Net Assets consist of: Paid in capital $ 926,918,265 Undistributed net investment income 3,611,891 Accumulated undistributed net realized gain (loss) on 151,310 investments Net unrealized appreciation (depreciation) on: Investment securities 70,738,902 Foreign currency contracts 1,426,689 NET ASSETS, for 58,133,169 shares outstanding $ 1,002,847,057 NET ASSET VALUE, offering price and redemption price per share ($1,002,847,057 (divided by) 58,133,169 shares) (Note 3) $17.25
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1993 INVESTMENT INCOME $ 3,148,684 Dividends Interest 4,566,599 7,715,283 Less foreign taxes withheld (Note 1) (515,766 ) TOTAL INCOME 7,199,517 EXPENSES Management fee (Note 3) $ 2,323,230 Transfer agent fees (Note 3) 1,303,282 Accounting fees and expenses 161,316 (Note 3) Non-interested trustees' compensation 1,477 Custodian fees and expenses 286,535 Registration fees 456,250 Audit 35,249 Legal 1,142 Miscellaneous 1,555 TOTAL EXPENSES 4,570,036 NET INVESTMENT INCOME 2,629,481 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 2) Net realized gain (loss) on: Investment securities 3,434,423 Foreign currency contracts (2,347,422 1,087,001 ) Change in net unrealized appreciation (depreciation) on: Investment securities 72,366,630 Foreign currency contracts 1,426,689 73,793,319 NET GAIN (LOSS) 74,880,320 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 77,509,801 OTHER INFORMATION $87,704 Sales charges paid to FDC (Note 3) Deferred sales charges withheld by $29,135 FDC (Note 3) Accounting fees paid to FSC $158,558 (Note 3)
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, INCREASE (DECREASE) IN NET ASSETS 1993 1992 Operations $ 2,629,481 $ 1,691,042 Net investment income Net realized gain (loss) on investments 1,087,001 149,967 Change in net unrealized appreciation (depreciation) on investments 73,793,319 (4,308,180 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 77,509,801 (2,467,171 ) Distributions to shareholders from: (1,389,982 (642,111 Net investment income ) ) Net realized gain (29,697 (24,240 ) ) Share transactions 1,037,700,151 49,581,158 Net proceeds from sales of shares Reinvestment of distributions from: 1,283,318 595,241 Net investment income Net realized gain 27,418 22,475 Cost of shares redeemed (172,260,456 (36,796,653 ) ) Net increase (decrease) in net assets resulting from share transactions 866,750,431 13,402,221 TOTAL INCREASE (DECREASE) IN NET ASSETS 942,840,553 10,268,699 NET ASSETS Beginning of period 60,006,504 49,737,805 End of period (including undistributed net investment income of $3,611,891 and $2,372,392, respectively) $ 1,002,847,057 $ 60,006,504 OTHER INFORMATION Shares Sold 64,336,913 3,548,940 Issued in reinvestment of distributions from: 97,001 44,925 Net investment income Net realized gain 2,072 1,667 Redeemed (10,819,492 (2,635,207 ) ) Net increase (decrease) 53,616,494 960,325
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, SELECTED PER-SHARE DATA 1993 1992 1991 1990 1989 Net asset value, beginning of period $ 13.29 $ 13.99 $ 13.71 $ 12.87 $ 11.81 Income from Investment Operations Net investment income .14(dagger) .31 .30* .25 .30 Net realized and unrealized gain (loss) on investments 4.14 (.84) .41 .75 .96 Total from investment operations 4.28 (.53) .71 1.00 1.26 Less Distributions From net investment income (.31) (.16) (.38) (.16) (.13) From net realized gain (.01)** (.01)** (.05)** - (.07)** Total distributions (.32) (.17) (.43) (.16) (.20) Net asset value, end of period $ 17.25 $ 13.29 $ 13.99 $ 13.71 $ 12.87 TOTAL RETURN(dagger)(dagger) 32.94% (3.81)% 5.43% 7.79% 10.85% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 1,002,847 $ 60,007 $ 49,738 $ 35,380 $ 26,333 Ratio of expenses to average net assets 1.52% 1.62% 1.89% 1.98% 1.92%(double dagger) Ratio of net investment income to average net assets .87% 2.78% 2.86% 2.31% 1.98% Portfolio turnover rate 24% 76% 117% 102% 147% * INCLUDES $.02 PER SHARE FROM RECOVERY OF FOREIGN TAXES PREVIOUSLY WITHHELD ON DIVIDEND AND INTEREST PAYMENTS. ** INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. (dagger) FOR THE PERIOD INDICATED, NET INVESTMENT INCOME PER SHARE WAS CALCULATED USING AVERAGE SHARES OUTSTANDING. (double dagger) FOR THE PERIOD INDICATED, FMR VOLUNTARILY AGREED TO REDUCE THE EXPENSES OF THE FUND TO THE EXTENT THAT AGGREGATE OPERATING EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) OF THE FUND WERE IN EXCESS OF AN ANNUAL RATE OF 2.00% OF THE AVERAGE NET ASSETS. ALSO FOR THE SAME PERIOD, NET INVESTMENT INCOME PER SHARE INCLUDED A REIMBURSEMENT OF $0.01 PER SHARE FROM FIDELITY SERVICE CO. FOR ADJUSTMENTS TO PRIOR PERIODS' FEES. IF THESE EXPENSE REDUCTIONS HAD NOT EXISTED, THE RATIO OF EXPENSES TO AVERAGE NET ASSETS WOULD HAVE BEEN 2.16% AND TOTAL RETURN FOR THE PERIOD WOULD HAVE BEEN LOWER. (dagger)(dagger) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
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. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1993 YEAR YEARS FUND Overseas 39.01% 46.72% 471.58% Overseas (incl. 3% sales charge) 34.84% 42.32% 454.44% Morgan Stanley EAFE Index 37.46% 20.28% 386.79% Average International Fund 33.41% 57.11% 307.26% 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 4, 1984. You can compare the fund's figures to the performance of the Morgan Stanley EAFE index - a broad measure of the performance of stocks in Europe, Australia, and the Far East. You can also compare the fund's performance to the average international fund which reflects the performance of 152 funds with similar objectives tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1993 YEAR YEARS FUND Overseas 39.01% 7.97% 21.60% Overseas (incl. 3% sales charge) 34.84% 7.31% 21.18% Morgan Stanley EAFE Index 37.46% 3.76% 19.43% Average International Fund 33.41% 9.18% 10.92% AVERAGE ANNUAL RETURNS take the fund's actual (or 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 Overseas (094) MS EAFE 12/04/84 9700.00 10000.00 12/31/84 9981.30 10193.53 01/31/85 10689.40 10422.65 02/28/85 10640.90 10361.03 03/31/85 11067.70 11164.76 04/30/85 11504.20 11126.55 05/31/85 12464.50 11599.34 06/30/85 12697.30 11897.35 07/31/85 13473.30 12511.82 08/31/85 14055.30 12913.71 09/30/85 14559.70 13669.40 10/31/85 15442.40 14599.44 11/30/85 16548.20 15198.76 12/31/85 17833.85 15918.66 01/31/86 18371.30 16317.71 02/28/86 21078.14 18125.28 03/31/86 24703.54 20674.06 04/30/86 25465.75 22027.83 05/31/86 24654.68 21048.78 06/30/86 26579.76 22481.82 07/31/86 29579.75 23869.90 08/31/86 31543.92 26221.76 09/30/86 30078.12 25952.02 10/31/86 26296.37 24218.32 11/30/86 28758.91 25614.83 12/31/86 30183.41 26972.00 01/31/87 34828.46 29838.08 02/28/87 35945.95 30731.05 03/31/87 40010.55 33249.27 04/30/87 43001.48 36767.40 05/31/87 42837.14 36767.26 06/30/87 39824.30 35595.88 07/31/87 40415.91 35533.69 08/31/87 43779.34 38198.08 09/30/87 43242.50 37596.71 10/31/87 33853.39 32164.65 11/30/87 33579.50 32647.11 12/31/87 35727.39 33616.52 01/31/88 34338.32 34216.71 02/29/88 35428.67 36497.48 03/31/88 37579.48 38741.56 04/30/88 38565.27 39304.55 05/31/88 37788.59 38044.60 06/30/88 36713.18 37041.81 07/31/88 36235.22 38203.95 08/31/88 35144.88 35719.99 09/30/88 36459.26 37280.76 10/31/88 37788.59 40470.59 11/30/88 38774.38 42881.27 12/31/88 38677.38 43120.36 01/31/89 39151.29 43879.03 02/28/89 40175.55 44104.58 03/31/89 39823.94 43238.97 04/30/89 40680.04 43639.99 05/31/89 38723.24 41265.84 06/30/89 37591.96 40571.18 07/31/89 41322.11 45665.83 08/31/89 40359.00 43612.06 09/30/89 42514.54 45598.67 10/31/89 40206.13 43766.63 11/30/89 42483.96 45966.76 12/31/89 45226.82 47662.81 01/31/90 44200.40 45889.35 02/28/90 43286.24 42686.52 03/31/90 44713.61 38239.61 04/30/90 44601.34 37936.14 05/31/90 47632.50 42264.70 06/30/90 48482.51 41892.44 07/31/90 50872.16 42482.52 08/31/90 45242.86 38357.11 09/30/90 40223.00 33011.49 10/31/90 44056.06 38155.31 11/30/90 42596.61 35904.60 12/31/90 42240.75 36486.24 01/31/91 43177.92 37666.39 02/28/91 44745.54 41704.18 03/31/91 43280.15 39200.58 04/30/91 43893.57 39585.54 05/31/91 43978.77 39998.59 06/30/91 41218.38 37059.46 07/31/91 43467.59 38880.26 08/31/91 43791.34 38090.68 09/30/91 45716.79 40237.43 10/31/91 45870.15 40807.83 11/30/91 44217.32 38902.74 12/31/91 45879.11 40911.80 01/31/92 46405.83 40037.93 02/29/92 45443.20 38604.89 03/31/92 44498.74 36056.33 04/30/92 47204.99 36227.73 05/31/92 49239.22 38652.66 06/30/92 48076.80 36819.27 07/31/92 45025.46 35876.95 08/31/92 44644.04 38127.18 09/30/92 42791.44 37374.28 10/31/92 39885.40 35413.83 11/30/92 39685.61 35747.08 12/31/92 40623.32 35931.97 01/31/93 41807.32 35927.55 02/28/93 42664.70 37012.81 03/31/93 45563.45 40239.06 04/30/93 48727.57 44057.85 05/31/93 49850.33 44988.34 06/30/93 48666.33 44286.43 07/31/93 50891.43 45836.67 08/31/93 53769.76 48311.07 09/30/93 53300.25 47223.62 10/31/93 55443.69 48678.94 Let's say you invested $10,000 in Fidelity Overseas Fund on its start date and paid the 3% sales charge. By October 31, 1993, it would have grown to $55,444 - a 454.44% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley EAFE index, which would have grown to $48,679 over the same period - a 386.79% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the 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. (checkmark) OVERSEAS FUND TALK: THE MANAGER'S OVERVIEW An Interview with John R. Hickling, Portfolio Manager of Fidelity Overseas Fund Q. HOW HAS THE FUND PERFORMED, JOHN? A. The fund returned 39.01% for the year ended October 31, 1993. It outperformed the EAFE index - a broad measure of the performance of stocks in Europe, Australia and the Far East - which rose 37.46% during the same 12 months. And it beat the average international fund, which was up 33.41% during that period, according to Lipper Analytical Services. Q. WHAT ACCOUNTS FOR THE FUND'S STRONG PERFORMANCE DURING THE YEAR? A. In general, the fund benefited from a great year for foreign financial markets. Although two-thirds of the gains came in the first half of the year, the second half was also strong. In Europe, many countries rescued their economies by rejecting the European Rate Mechanism (ERM) and allowing their currencies to find a level relative to the deutschemark that more accurately reflected local economic activity. As a result, interest rates started to come down somewhat and European stock markets did extremely well in local currencies - and well enough in dollars, too - despite continued economic weakness. Because I became less optimistic about the prospects for an imminent global recovery, I shifted away from European companies whose fortunes are tied to the local economies. Instead, I looked for companies with earnings stability and management which have adjusted to the reality of a deep and prolonged recessionary environment in Europe. Q. FOR EXAMPLE? A. I shifted away from stocks in the technology and basic industry sectors and focused on those that would respond to declining interest rates. For instance, throughout the second half of the period, my largest investment was in Stet Societa Finanziaria Telefonica, an Italian telephone utility. In addition to meeting my earnings and interest rate criteria, it stood to benefit from the government's move toward privatizing the industry. The stock had a tremendous year. In the U.K., I focused on banks and financial stocks such as National Westminster and Barclays. I also emphasized bank and insurance stocks in France, Germany, the Netherlands, and Scandinavia. But my biggest allocation to financials was in Switzerland, where Zurich Versicherung, an insurance company, and CS Holdings, a bank, were among the fund's largest investments and best performers. In addition to these investments, steering clear of laggards - such as pharmaceuticals, brewers, and food retailers in the U.K. - also helped performance. Q. HOW ABOUT JAPAN? A. Japan made a strong contribution to fund's performance in the first half of the period. I emphasized brokerage firms and trust banks, which did well plus we had an extra boost from currency gains. Stocks such as Nomura Securities and Murata Manufacturing remain among the fund's largest investments, because I believe they still may have room to improve. However, the stop-gap government measures that rescued the Japanese financial system were not enough to bail out the economy. I expect the economy to remain weak for some time. That's why I cut back my Japanese investments during the second half of the period, from 28% six months ago to 18% at the end of October. Q. THE FUND'S CURRENCY CONTRACTS ARE UP SUBSTANTIALLY FROM THE FIRST HALF OF THE YEAR. HAS CURRENCY HEDGING HELPED THE FUND'S PERFORMANCE? A. Yes, it has. In general, I believe that hedging adds flexibility to my ability to manage an international portfolio. It can either help the fund by protecting the gains on stocks denominated in local currencies from devaluation when translated back into dollars. Or, since there's a cost to hedging, it can take away from the fund's gains if the dollar falls or stays the same. In this case, hedging helped by offsetting devaluations of the Spanish peseta, Finnish markka, and Swedish krona, and actually making a positive contribution to performance. Recently the fund also avoided losing money due to a rising dollar by hedging against a declining deutschemark. I started the period with about 3% of the fund invested in currency contracts and ended with about 10%. Q. HAVE YOU BEEN DISAPPOINTED BY ANY OF THE STRATEGIC DECISIONS YOU MADE DURING THE YEAR? A. Yes, on two fronts. In retrospect, I turned somewhat bearish on Hong Kong too early. A combination of increasing participation by retail investors, growing political risk, and a general sense of euphoria over the Hong Kong market led me to look for other opportunities in the Pacific Basin. I found them in markets such as Malaysia, Singapore, and Thailand, which were good performers. However, I missed out on the most recent 20% upturn in the Hong Kong market by cutting back on my investments prematurely. Second, I missed out on the quick rise in gold stocks, which had a very good move earlier this year. It was short, but sharp, and some of it has already been given back. Nevertheless, I'm disappointed that I didn't own more gold stocks. Q. WHAT'S YOUR VIEW ON THE WORLD FINANCIAL MARKETS FOR THE PERIOD AHEAD? A. I think any economic recovery in Europe or Japan will be muted. That makes stock selection more important than ever. I'll continue to be selective about stocks that are closely tied to the economic cycle in either market and remain focused on companies that have restructured and whose managements have correctly assessed the current slow growth environment. I share the consensus expectation that interest rates should come down in Europe and in Japan over the next year. However, I think the improvement has probably been widely overestimated and I expect earnings disappointments to outnumber earnings surprises. That means another year of double digit gains could be hard to achieve. If the world's lagging economies pick up faster than expected, I would loosen my rigorous stock selection criteria and gravitate toward countries that would be the biggest beneficiaries of rapid recovery. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in stocks in Europe, the Far East, and Pacific Basin START DATE: December 4, 1984 SIZE: as of October 31, 1993, over $1.4 billion MANAGER: John Hickling, since January 1993; manager, VIP: Overseas, since January 1993; Fidelity Advisor Overseas, since February 1993; Fidelity Japan Fund, since May 1993: previously managed Fidelity Europe, International Growth & Income, International Opportunities (now Emerging Markets), and Pacific Basin funds (checkmark) JOHN HICKLING ON CURRENCY HEDGING: "Foreign securities involve risks above and beyond those of the financial markets here at home. Some risks are unavoidable: no one can predict political events or the fortunes of a foreign company. But U.S. investors are also vulnerable to currency risk, which can be minimized if not entirely avoided by using a strategy called hedging. Of course, there's also a potential downside to hedging. That means if the dollar doesn't move as expected, it can hurt the fund's returns. "Most people are familiar with the concept of hedging as it applies to their everyday lives. Say you're planning an outdoor party for the month of June. Because you're going to spend a lot of money for invitations, food, and music, you also reserve a tent just in case it rains. Placing a deposit on the tent costs you something, but not a lot unless you actually need to use it. And if you do, you're happy to have an option that lets you go on with your party. If you don't need it, you cancel it, forfeit the deposit and your party goes on without a hitch. But if it rains, you're covered. "A portfolio manager hedges his or her investments in much the same way. If a stock is purchased on a foreign exchange in a foreign currency, and the stock rises in value, a U.S. investor makes money under two scenarios: first, if the value of the U.S. dollar stays the same; or second, if the dollar falls during the period. "However, if the dollar rises -- which sounds like it ought to be a good thing -- it actually takes more of the foreign currency to equal a dollar, and that means the investment gives up some of its gains in the process. "A portfolio manager can minimize the effect of the currency fluctuation by hedging. Here's what that means: at the same time the foreign shares are purchased, a futures contract is purchased that makes it possible to earn a gain on the dollar if it rises in value. The hedge protects your investment's value in dollars, because if the dollar goes up, offsetting any gain on the shares, the manager sells the futures contract and takes a profit in the rising dollar. If the dollar declines or does nothing, all the cost to the fund is limited to the cost of the futures contract." DISTRIBUTIONS The Board of Trustees of Fidelity Overseas Fund voted to pay on December 13, 1993, to shareholders of record at the opening of business on December 10, 1993, a distribution of $.43 from net investment income. OVERSEAS INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1993 U.S. 2.3% Netherlands 5.4% Row: 1, Col: 1, Value: 2.3 Row: 1, Col: 2, Value: 5.4 Row: 1, Col: 3, Value: 7.2 Row: 1, Col: 4, Value: 18.1 Row: 1, Col: 5, Value: 8.6 Row: 1, Col: 6, Value: 12.9 Row: 1, Col: 7, Value: 4.9 Row: 1, Col: 8, Value: 4.9 Row: 1, Col: 9, Value: 2.7 Row: 1, Col: 10, Value: 8.0 Row: 1, Col: 11, Value: 5.3 Row: 1, Col: 12, Value: 3.1 Row: 1, Col: 13, Value: 16.6 Other 16.6% Cash 7.2% Australia 3.1% France 5.3% Japan 18.1% Germany 8.0% Sweden 2.7% Switzerland 8.6% Italy 4.9% Spain 4.9% United Kingdom 12.9% AS OF APRIL 30, 1993 Finland 2.4% Other 11.1% Netherlands 4.9% Row: 1, Col: 1, Value: 2.4 Row: 1, Col: 2, Value: 4.9 Row: 1, Col: 3, Value: 7.5 Row: 1, Col: 4, Value: 28.0 Row: 1, Col: 5, Value: 7.3 Row: 1, Col: 6, Value: 17.3 Row: 1, Col: 7, Value: 4.7 Row: 1, Col: 8, Value: 6.0 Row: 1, Col: 9, Value: 5.8 Row: 1, Col: 10, Value: 5.0 Row: 1, Col: 11, Value: 11.1 Cash 7.5% France 5.0% Germany 5.8% Italy 6.0% Japan 28.0% Spain 4.7% United Kingdom 17.3% Switzerland 7.3% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks 87.6 92.5 Bonds 2.9 - Short-term and other investments 9.5 7.5 TOP TEN STOCKS
% OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stet Societa Finanziaria Telefonica Spa (Italy, Telephone Services) 1.9 2.7 Murata Manufacturing Co. (Japan, Electrical Equipment) 1.6 2.1 Zurich Versicherung (Reg.) (Switzerland, Insurance) 1.5 0.2 Orix Corp. (Japan, Credit & Other Finance) 1.5 1.5 Westpac Banking Corp. (Australia, Banks) 1.5 0.1 CS Holdings (Reg.) (Switzerland, Banks) 1.4 0.5 Deutsche Bank AG (Germany, Banks) 1.3 0.8 Swiss Bank Corp. (Bearer) (Switzerland, Banks) 1.3 0.7 Munich Reinsurance (Reg.) (Germany, Insurance) 1.3 1.5 Veba Vereinigte Elektrizetaets & Bergwerks AG Ord. (Germany, Electric Utility) 1.2 1.0
TOP TEN INDUSTRIES (BY MAJOR INDUSTRY) % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Finance 38.8 24.7 Utilities 10.4 8.2 Durables 5.8 9.6 Technology 5.6 11.9 Basic Industries 5.4 10.3 Construction & Real Estate 4.9 4.6 Industrial Machinery & Equipment 3.1 4.2 Services 2.8 2.4 Energy 2.7 4.4 Nondurables 2.5 3.6 OVERSEAS INVESTMENTS OCTOBER 31, 1993 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 82.7% SHARES VALUE (NOTE 1) AUSTRALIA - 3.1% Ampolex Ltd. Ord. 2,892,300 $ 12,486,927 03212792 FAI Insurance Ltd. Ord. New 3,866,800 2,730,850 30239330 Gold Mines Kalgoorlie 220,000 164,164 38065310 Lend Lease Corp. Ltd. 190,000 2,387,441 52599292 TNT Ltd. (b) 3,141,200 3,662,451 93599292 Westpac Banking Corp. 7,336,081 22,141,099 96121410 Westpac Banking Corp. sponsored ADR 22,000 335,500 96121430 Woolworths Ltd. (Astl.) ADR (b)(e) 62,000 1,209,000 98088830 45,117,432 AUSTRIA - 0.4% Verbund Gesellschaft 91,900 5,564,266 92299999 BERMUDA - 0.9% Jardine Strategic Holdings Ord. 3,095,000 12,816,550 47199020 BRAZIL - 0.7% Telebras PN (Pfd. Reg.) 344,286,800 10,972,420 95499792 CANADA - 0.5% Noranda, Inc. 460,700 7,806,552 65542210 CHILE - 0.1% Maderas Y Sinteticos Sociedad Anonima Masisa sponsored ADR (b) 78,500 1,413,000 55646510 DENMARK - 0.4% Den Danske Bank Group AS 96,300 5,672,714 24820692 FINLAND - 1.1% America Group Ltd. Class A Free shares 408,000 6,538,065 02351210 Huhtamaki Ord. 213,700 6,885,769 44499392 Kansallis-Osake-Pankki 322,600 794,890 48199210 Repola OY 100,000 1,476,682 75999A92 Unitas Bank Ltd. B Free shares 109,200 299,175 90499123 15,994,581 FRANCE - 4.6% Assurances Generales (Reg.) 56,100 6,905,638 04557510 BNP CI 228,600 10,973,264 05599910 BNP CI Ord. 8,200 401,947 05599996 BNP CI (warrants) (b) 228,600 379,323 05599995 Bail Investissement (b) 8,300 1,588,046 05699092 Credit Lyonnais CI 21,900 2,751,405 22799392 Elf Aquitaine 53,400 4,153,735 28627199 Financiere Bank de Suez Cie 105,900 6,268,649 31799110 GAN (Groupe Des Assur Natl.) 77,900 7,241,297 36599792 Lyonnaise des Eaux Dumez SA 18,300 1,688,706 55160010 Paribas SA (Cie Financiere) Class A (b) 57,600 4,681,341 73999192 Pechiney SA CIP 32,150 1,823,612 70599310 Societe Generale Class A 96,500 11,355,825 83357799 Sophia SA 16,900 1,453,640 84199C22 Total Compagnie Francaise des Petroles Class B 53,100 2,962,487 20434510 UFB Locabail SA (b) 25,500 1,636,387 90599B92 Unibail 27,800 2,452,387 90499592 68,717,689 GERMANY - 7.5% Allianz Versich Holdings Ord. (Reg.) (b) 6,850 11,604,591 01882495 BHF Bank (Bank Berlin Hand) 23,900 7,428,656 05549991 BHF Bank (warrants) (b) 2,800 333,007 05549995 Bayer AG 81,200 15,398,547 07273010 Bayerische Vereinsbank AG Ord. 13,400 4,157,072 07276110 Commerzbank AG 26,400 5,358,769 20259710 Deutsche Bank AG 39,500 19,805,647 25152592 Deutsche Bank AG (warrants) (b) 68,700 2,314,654 25299992 Hoechst AG Ord. 24,300 4,115,224 43439010 SHARES VALUE (NOTE 1) Munich Reinsurance (Reg.) 7,855 $ 18,637,483 62699492 Thyssen AG Ord. 22,300 3,141,590 88629110 Veba Vereinigte Elektrizetaets & Bergwerks AG Ord. 64,830 18,043,264 92239110 110,338,504 HONG KONG - 1.2% Cathay Pacific Airways Ltd. 1,050,000 1,712,067 14890610 Hong Kong Land Holdings Ltd. 6,035,000 16,166,196 43858292 17,878,263 INDIA - 0.1% ITC Ltd.: GDR (e) 57,000 997,500 45031810 (warrants) (b)(e) 19,000 99,750 45031811 1,097,250 INDONESIA - 1.0% Astra International (For. Reg.) 110,000 968,332 04699894 Bank International Indonesia Ord. (b) 1,556,300 5,183,833 06199B92 Jakarta International Hotels & Development Ord. 1,005,800 6,461,088 47399693 Sampoerna, Hanjaya Mandala 400,000 1,475,100 82299892 14,088,353 IRELAND - 1.0% Anglo Irish Bank 844,900 760,418 03599592 Bank of Ireland U.S. Holdings, Inc. 1,427,000 5,940,630 06278793 Irish Life PLC 2,360,100 7,674,786 46299B92 14,375,834 ITALY - 1.7% Assicurazioni Generali Spa 478,200 11,552,403 04542910 SAI (Soc Assicur Industriale) 355,000 4,466,060 78399110 SIP Spa 3,031,600 6,566,506 78401792 Saipem Spa Ord. (b) 323,800 549,046 79299292 Simint Spa Priv. New 1,214,278 1,623,550 83799498 24,757,565 JAPAN - 18.1% ADO Electronic Industrial Co. 62,000 1,433,025 00699992 Aoyama Trading Co. Ord. 44,000 3,291,386 03799092 Asahi Glass (warrants) (b) 200 190,000 04339392 Canon, Inc. 842,000 11,557,620 13780199 Canon, Inc. (warrants) (b) 150 99,375 13800695 Chudenko Corporation 43,000 1,544,910 17123410 Cosmo Oil Company Ltd. 270,000 2,166,466 22199092 Daikyo, Inc. 176,000 1,880,792 23376610 Daiwa House Industry Co. Ltd. 72,000 1,061,262 23406299 Daiwa House Industry Co. Ltd. (warrants) (b) 75 71,258 23406297 Fujitsu Ltd. 1,059,000 8,360,784 35959010 Hitachi Maxell Ltd. 514,000 8,523,261 43358990 Hitachi Ltd. 1,974,000 15,657,432 43357810 Honda Motor Co. Ltd. 549,000 8,041,549 43812810 IO Data Device, Inc. 13,000 1,058,683 45099A92 Izumi Co. Ord. 86,000 1,750,898 46399292 Joshin Denki Co. Ltd. Ord. 50,000 649,470 48199999 Konica Corp. 520,000 3,444,314 50046M10 Kyocera Corporation 26,000 1,473,054 50155610 Marubeni Corp. 585,000 2,770,063 57381010 Marukyo Corp. 55,000 1,570,705 57899792 Matsushita Electric Industrial Co. Ltd. 779,000 10,549,335 57687910 Minebea Co. 646,000 3,136,272 60299392 Mitsubishi Bank of Japan 199,000 5,646,430 60674210 Mitsubishi Heavy Industry 583,000 3,625,286 60699310 Mitsubishi Trust & Banking 637,000 8,685,030 60699410 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) JAPAN - CONTINUED Murata Manufacturing Co. (b) 654,000 $ 22,954,765 62699110 Nichido Fire & Marine Insurance Co. 710,000 5,121,422 65399920 Nikko Securities 206,000 2,258,314 65399010 Nippon Sheet Glass (warrants) (b) 350 161,875 65461393 Nippon Shinpan Ltd. 226,000 2,123,629 65461710 Nomura Securities Co. Ltd. 570,000 10,449,565 65536130 Oji Paper Ltd. 275,000 2,609,398 67811810 Orix Corp. 591,000 22,376,879 68616710 Sankyo Co. Ltd. 8,000 655,919 82299792 Sanwa Bank 386,000 8,427,638 80399410 Sony Corp. 180,700 8,190,181 83569999 Sumitomo Realty & Development Co. Ltd. 352,000 2,464,486 86562310 Sumitomo Trust & Banking Co. 372,000 5,003,407 86599310 Suzuki Motor Corp. 558,000 4,826,918 86958592 TDK Corp. 137,000 4,808,567 87235110 Tobu Railway 215,000 1,479,548 88739110 Tohoku Electric Power, Inc. 255,000 7,587,747 88906099 Tokio Marine & Fire Insurance Co. Ltd. (The) 675,000 8,270,383 88909099 Tokyo Electric Power Co., Inc. 62,000 1,970,521 88910710 Tokyo Style Co. Ltd. 659,000 12,081,164 88999410 Toppan Printing (warrants) (b) 200 127,500 89074792 Toshiba Corp. 2,254,000 14,493,716 89149310 Toyota Motor Corporation 642,000 11,118,933 89399999 267,801,135 KOREA (SOUTH) - 0.6% Cho Hing Bank Co. Ltd. 79,000 970,938 17099E22 Korea Electric Power Corp. 245,000 5,852,464 50099B92 Seoul Securities Co. (b) 118,500 2,493,347 83599P22 9,316,749 MALAYSIA - 1.8% Ekran Berhad Ord. (b) 313,000 1,898,082 28299792 Magnum Corp. BHD 960,000 2,366,198 55999392 Renong BHD 629,000 880,996 75999H22 Resorts World BHD 497,000 2,722,223 76199592 Telekom Malaysia BHD 1,139,000 9,625,347 94099892 Tenega Nasional BHD 1,799,000 9,360,989 92099992 26,853,835 MEXICO - 0.9% Grupo Dina (Consorcio G) ADR (b) 117,200 2,461,200 21030610 Grupo Financiero Bancomer SA de CV sponsored ADR, Series C (e) 189,800 5,551,650 40048610 Telefonos de Mexico SA sponsored ADR representing shares Ord. Class L 94,000 5,146,500 87940378 13,159,350 NETHERLANDS - 5.3% ABN-AMRO Holdings NV 334,810 12,695,727 00399192 Aegon NV Ord. 196,000 10,092,422 00792493 Akzo NV Ord. 129,200 12,234,254 01019910 Amev NV CVA 7,700 333,050 03199092 Hoogovens en Staalfabrieken (b) 52,700 1,180,079 43888410 International Nederlanden Groep CVA 223,000 9,680,802 46099892 KBB NV Ord. 56,700 2,907,616 48130092 Oce Van Der Grinten NV 288,500 8,684,710 67462710 Philips Electronics 623,300 12,870,889 71833799 Pirelli Tyre Holdings NV: Ord. (b) 185,400 1,272,880 72499092 (warrants) (b) 838,600 1,328,653 72499093 Stad Rotterdam 105,600 2,448,292 85299822 Wereldhave NV 48,800 2,927,742 95199E22 78,657,116 SHARES VALUE (NOTE 1) NEW ZEALAND - 0.0% Brierley Investments Ltd. 338,700 $ 240,179 10901410 NORWAY - 1.3% Bergesen Group Class B 271,900 5,503,376 08399011 Den Norske Bank Class A Free shares (b) 1,328,700 4,602,577 25299792 Mosvold Shipping AS 'B' 87,300 753,046 62099294 Olav Thon Eiendomsselskp Ord. 103,900 1,594,879 67941099 Orkla AS Class B (non-vtg.) 152,400 5,631,026 39299192 Smedvig AS 76,500 1,766,624 79799892 19,851,528 SINGAPORE - 1.0% Kim Eng Holdings Ltd. 1,096,000 2,335,444 49499D92 Neptune Orient Lines Ltd. (b) 9,003,000 10,159,705 64099610 United Overseas Bank (warrants) (b) 565,875 1,855,097 91199E92 14,350,246 SOUTH AFRICA - 0.1% Driefontein Consolidated Ltd. ADR 157,300 1,769,625 26202640 SPAIN - 4.9% Acerinox SA (Reg.) 35,775 2,411,500 00499192 Argentiria Corp. Bancaria de Esp (b) 90,400 4,051,259 21991392 Banco Bilbao Vizcaya SA Ord. (Reg.) 472,900 12,102,736 05945891 Banco Central SA (Reg.) 50,700 1,408,333 05947010 Banco Intercontinental Espanol (b) 95,450 8,328,895 24699592 Banesto (Reg.) 199,000 4,038,964 05981699 Corporacion Mapfre International Reas (Reg.) 184,450 8,498,362 16899192 Iberdrola SA 729,500 4,803,889 45499892 Metalurgica Duro Felguera (b) 188,400 866,640 60299792 Repsol SA Ord. 269,600 8,058,045 76026T10 Telefonica de Espana SA Ord. (b) 1,124,000 14,653,633 87938210 Vallehermoso SA 153,500 2,831,222 91899210 72,053,478 SWEDEN - 2.7% Aktiebolaget Electrolux 204,400 7,150,000 01019810 Frontline (b) 453,000 1,495,965 35999F22 ICB Shipping (b) 65,000 739,359 44999B92 ICB Shipping (rights) (b) 130,000 159,002 44999B93 OM Gruppen AB Ord. (b) 52,800 1,472,407 68199E22 SKF AB Ord. (b) 440,600 6,790,069 78437530 Scribona AB B Free shares (b) 91,100 389,983 81199B92 Securitas B Free Shares 17,100 478,951 81399792 Skandia International Holding Co. AB ADR (b) 114,600 2,424,878 83055510 Skandinaviska Enskilda Banken Class A Free shares 1,178,600 8,649,215 88099222 Skanska Class B (b) 487,200 10,249,314 93899392 39,999,143 SWITZERLAND - 8.6% Alusuisse Lonza (Reg.) 13,510 4,892,137 02239994 Baloise Holding (Reg.) (b) 7,800 12,187,091 05899195 CS Holdings (b): (Bearer) 600 1,374,015 17599792 (Bearer) (warrants 1A 12/21/93) 600 45,264 15099426 (NA) (warrants 12/21/93) 28,200 406,572 15099425 (Reg.) 46,700 20,762,515 17599795 Ciba-Geigy AG: (Reg.) 7,065 3,662,193 17199492 (warrants) (b) 1,480 6,550 17199494 Globus Magazine Part. Cert. 8,200 5,471,249 37957792 Holderbank Financiere AG PC (Bearer) 17,040 9,426,991 43479593 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SWITZERLAND - CONTINUED Leu Holdings 5,400 $ 2,100,251 52699B22 Sulzer Gebrueder AG Class B (warrants) (b) 20,830 82,412 86557692 Surveillance, Societe Generale (Bearer) (b) 1,690 2,039,899 86901193 Swiss Bank Corp. (Bearer) (b) 55,600 18,716,647 87083610 Swiss Reinsurance Corp. (Bearer) (b) 2,275 5,903,940 87099392 Swiss Reinsurance Corp. (Reg.) 850 2,143,168 87099393 Winterthur Schweiz (Reg.) 30,750 15,856,999 97629994 Zurich Versicherung (Reg.) 25,000 22,665,549 99499597 127,743,442 THAILAND - 0.2% Ruam Pattana Fund II (b) 2,683,000 1,508,785 76999522 Ruang Khao Unit Trust (For. Reg.) 2,633,900 1,403,210 77399393 2,911,995 UNITED KINGDOM - 12.9% BET Public Ltd. Co. Ord. 4,570,000 8,530,773 05538H10 Barclays PLC Ord. 1,596,700 13,483,413 06738E10 Bass PLC Ord. 736,500 5,319,231 06990492 British Petroleum PLC Ord. 1,042,400 5,389,667 11088910 British Steel PLC Ord. 6,075,300 11,633,227 11101510 British Vita Ord. 495,500 1,835,208 11199192 Burton Group PLC Ord. 5,911,300 6,568,223 12304910 Dixons Group PLC 662,200 2,555,635 25587592 First National Finance Corporation PLC 1,227,800 1,564,328 33599392 Great Universal Stores PLC Ord. Class A 658,400 5,218,498 39133420 Hillsdown Holdings PLC 2,668,400 6,443,786 43258610 Ladbroke Group PLC Ord. 4,086,800 10,444,185 50572799 London & Scottish Marine Oil Ltd. Ord. 341,200 730,431 54179710 Midlands Electricity PLC 944,200 8,840,620 59780293 Mirror Group Newspaper PLC (b) 663,700 1,573,234 60499792 National Westminster Bank PLC Ord. 1,833,100 15,045,187 63853930 North West Water Ord. 665,600 5,221,326 67299195 Rolls Royce Ltd. Ord. 3,040,299 6,891,446 77577910 Royale Insurance Co. Ltd. 2,259,000 10,575,599 78074910 Saatchi & Saatchi PLC Ord. (b) 2,439,500 6,649,979 78514310 Slough Estates PLC 1,878,100 7,192,522 83199110 Storehouse PLC 971,900 2,807,751 86211210 TSB Group PLC 1,129,300 3,789,479 87199010 Taylor Woodrow PLC 1,177,500 2,145,699 87667410 Tesco PLC Ord. 211,400 635,775 88157510 Tomkins PLC Ord. 620,800 2,290,094 89003010 Trafalgar House PLC Ord. 1,020,900 1,474,649 89270710 Vickers PLC Ord. units 5,805,475 12,127,173 92549310 Vodafone Group PLC 490,000 4,014,423 92857T92 Warburg (SG) Group PLC Ord. 659,400 9,026,566 81799099 Whitbread Class A 1,346,600 10,334,037 96341499 190,352,164 TOTAL COMMON STOCKS (Cost $992,319,925) 1,221,670,958 PREFERRED STOCKS - 4.9% CONVERTIBLE PREFERRED STOCKS - 0.1% NETHERLANDS - 0.1% ABN-AMRO Holdings NV 6% 22,320 846,357 SHARES VALUE (NOTE 1) NONCONVERTIBLE PREFERRED STOCKS - 4.8% AUSTRIA - 1.1% Creditanstaldt Bank 210,300 $ 14,445,030 22539210 MaCulan Holding Ord. 18,300 1,939,792 55699594 16,384,822 GERMANY - 0.5% RWE AG 22,800 5,185,230 76204599 Boss (Hugo) AG 4,250 2,281,490 44451094 7,466,720 ITALY - 3.2% Banco Ambro Veneto N/C Risp 1,976,400 3,375,256 06399592 Danieli & C Spa N/C Risp 1,841,600 6,245,326 23599610 SAI (Sta Assicur Industriale) N/C Risp 1,190,200 7,075,763 78399192 SIP (Societa Ital Per L'Eser) Spa Di Risp N/C Ord. 350,000 618,355 78401796 Simint Spa Priv. Ord. 1,214,300 1,157,167 83799496 Stet Societa Finanziaria Telefonica Spa 14,226,700 27,668,086 85982592 Unicem Di Risp 368,900 1,026,833 91199792 47,166,786 TOTAL NONCONVERTIBLE PREFERRED STOCKS 71,018,328 TOTAL PREFERRED STOCKS (Cost $58,854,709) 71,864,685 CORPORATE BONDS - 0.0% PRINCIPAL AMOUNT (A) CONVERTIBLE BONDS - 0.0% GRAND CAYMAN - 0.0% Bangkok Land Euro 4 1/2%, 10/13/03 (e) (Cost $600,000) - $ 600,000 696,000 GOVERNMENT OBLIGATIONS (D) - 2.9% ARGENTINA - 0.8% Argentina Republic BOCON 3 1/4%, 4/1/01 (f) B1 14,446,172 11,694,177 039995AF BRAZIL - 0.7% Brazil Federative Republic IDU Euro 8 3/4%, 1/1/01 (f) B2 13,450,000 10,726,375 249998AV DENMARK - 0.7% Danish Government Bullet 7%, 12/15/04 Aa1 DKK 62,500,000 9,652,412 249998AV FRANCE - 0.7% French Government Strips 4/25/23 Aaa FRF 420,000,000 10,638,684 351996BL TOTAL GOVERNMENT OBLIGATIONS (Cost $40,183,662) 42,711,648 INDEXED SECURITIES - 2.3% PRINCIPAL VALUE (NOTE 1) AMOUNT (A) UNITED STATES OF AMERICA - 2.3% Bankers Trust Company (c)(f): 8.0225%, 10/28/94 (coupon inversely indexed to JPY LIBOR and principal indexed to value of 9-year Japanese securities, both multiplied by 3) $ 13,300,000 $ 13,293,350 0669918T 11.025%, 7/12/96 (coupon inversely indexed to 6-month JPY LIBOR, multiplied by 10) 5,000,000 6,481,000 0669917D 10.295%, 7/15/96 (coupon inversely indexed to 6-month JPY LIBOR, multiplied by 10) 3,000,000 3,827,700 0669917F 10.245%, 7/23/96 (coupon inversely indexed to 6-month JPY LIBOR, multiplied by 10) 3,000,000 3,817,800 0669917H Citibank Nassau 4 5/8%, 7/30/96 (inversely indexed to 1-year SEK swap rate, multiplied by 10) 1,125,000 1,096,425 223991AH ITT Corp. 3.66%, 6/27/94 (inversely indexed to 1-year SEK swap rate, multiplied by 10) 5,000,000 5,242,000 4506799M TOTAL INDEXED SECURITIES (Cost $30,425,000) 33,758,275 REPURCHASE AGREEMENTS - 7.2% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 2.96% dated 10/29/93 due 11/1/93 $ 107,287,458 107,261,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,229,644,296) $ 1,477,962,566 FORWARD FOREIGN CURRENCY CONTRACTS SETTLEMENT UNREALIZED DATE(S) VALUE GAIN/(LOSS) CONTRACTS TO SELL 737,000,000 BEF 2/4/94 $ 19,946,233 $ 867,096 161,320,930 DKK 12/1/93 to 2/9/94 23,466,448 679,605 3,956,826,000 ESP 11/15/93 to 2/1/94 29,084,906 876,132 59,195,000 FIM 2/4/94 10,108,887 109,480 275,657,909 FRF 2/9/94 46,237,298 718,397 73,880,000 NOK 2/8/94 9,973,720 118,625 90,507,500 SEK 2/4/94 10,953,567 189,251 TOTAL CONTRACTS TO SELL (Receivable amount $153,329,645) $ 149,771,059 $ 3,558,586 THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 10.1% CURRENCY TYPE ABBREVIATIONS BEF - Belgian franc DKK - Danish krone FIM - Finnish markka FRF - French franc JPY - Japanese yen NOK - Norwegian krone ESP - Spanish peseta SEK - Swedish krona LEGEND 1. Principal amount is stated in United States dollars unless otherwise noted. 2. Non-income producing 3. Inverse floating rate security (inverse floater) is a security where the coupon is inversely indexed to a floating interest rate multiplied by a specified factor. If the floating rate is high enough, the coupon rate may be zero or be a negative amount that is carried forward to reduce future interest and/or principal payments. The price of an inverse floater may be considerably more volatile than the price of a comparable fixed rate security. 4. Most foreign government obligations have not been individually rated by S&P or Moody's. The ratings listed are assigned to securities by FMR, the fund's investment adviser, based principally on S&P and Moody's ratings of the sovereign credit of the issuing government. 5. Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $8,553,900 or 0.6% of net assets. 6. 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, during the year ended October 31, 1993, aggregated $900,078,190 and $608,420,634, respectively. Brokerage commissions received by FBSI, an affiliate of the fund's investment adviser, from portfolio transactions during the year ended October 31, 1993, amounted to $3,290. (See Note 3 of Notes to Financial Statements). The fund participated in the interfund lending program as a lender. The maximum loan and the average daily loan balances during the periods for which loans were outstanding amounted to $3,706,000. The weighted average interest rate was 3.41%. Interest earned from the interfund lending program amounted to $1,053 and is included in interest income on the Statement of Operations. (See Note 2 of Notes to Financial Statements). INCOME TAX INFORMATION At October 31, 1993, the aggregate cost of investment securities for income tax purposes was $1,229,864,219. Net unrealized appreciation aggregated $248,098,347, of which $264,161,850 related to appreciated investment securities and $16,063,503 related to depreciated investment securities. At October 31, 1993, the fund had a capital loss carryforward of approximately $46,417,000 which will expire on October 31, 2001. For the period, interest and dividends from foreign countries were $19,290,679 or $0.35 per share. Taxes paid to foreign countries were $3,723,473 or $0.07 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Aerospace and Defense 0.5% Basic Industries 5.4 Conglomerates 1.5 Construction and Real Estate 4.9 Durables 5.8 Energy 2.7 Finance 38.8 Government Obligations 2.9 Health 0.2 Industrial Machinery and Equipment 3.1 Media and Leisure 1.6 Nondurables 2.5 Precious Metals 0.1 Repurchase Agreements 7.2 Retail and Wholesale 2.3 Services 2.8 Technology 5.6 Transportation 1.7 Utilities 10.4 100.0% OVERSEAS FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993 ASSETS Investment in securities, at value (including repurchase agreements of $107,261,000) (cost $1,229,644,296) $ 1,477,962,566 (Note 2) - See accompanying schedule Short foreign currency contracts (Note 2) $ (149,771,059 Contracts held, at value ) Receivable for contracts held 153,329,645 3,558,586 Cash 447,241 Receivable for investments sold 21,719,883 Receivable for fund shares sold 7,444,494 Dividends receivable 3,451,545 Interest receivable 1,430,031 Other receivables 840,689 TOTAL ASSETS 1,516,855,035 LIABILITIES Payable for investments purchased 18,772,794 Payable for fund shares redeemed 5,766,975 Accrued management fee 903,982 Other payables and accrued expenses 744,967 TOTAL LIABILITIES 26,188,718 NET ASSETS $ 1,490,666,317 Net Assets consist of: Paid in capital $ 890,242,081 Undistributed net investment income 7,779,873 Accumulated undistributed net realized gain (loss) on 340,767,507 investments Net unrealized appreciation (depreciation) on: Investment securities 248,318,270 Foreign currency contracts 3,558,586 NET ASSETS, for 54,888,680 shares outstanding $ 1,490,666,317 NET ASSET VALUE and redemption price per share ($1,490,666,317 (divided by) 54,888,680 shares) $27.16 Maximum offering price per share (100/97 of $27.16) $28.00
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1993 INVESTMENT INCOME $ 23,731,172 Dividends Interest 3,248,654 26,979,826 Less foreign taxes withheld (Note 1) (3,723,473 ) TOTAL INCOME 23,256,353 EXPENSES Management fee (Note 3) $ 7,984,147 Basic fee Performance adjustment (58,499 ) Transfer agent fees (Note 3) 3,518,007 Accounting fees and expenses 474,717 (Note 3) Non-interested trustees' 6,351 compensation Custodian fees and expenses 885,104 Registration fees 120,308 Audit 68,394 Legal 12,501 Miscellaneous 11,795 TOTAL EXPENSES 13,022,825 NET INVESTMENT INCOME 10,233,528 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 2) Net realized gain (loss) on: Investment securities (45,317,120 ) Foreign currency contracts (4,459,516 (49,776,636 ) ) Change in net unrealized appreciation (depreciation) on: Investment securities 366,966,366 Foreign currency contracts 3,558,586 370,524,952 NET GAIN (LOSS) 320,748,316 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 330,981,844 OTHER INFORMATION $1,367,026 Sales charges paid to FDC (Note 3) Accounting fees paid to FSC $458,583 (Note 3)
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, INCREASE (DECREASE) IN NET ASSETS 1993 1992 Operations $ 10,233,528 $ 16,387,158 Net investment income Net realized gain (loss) on investments (49,776,636 77,932,655 ) Change in net unrealized appreciation (depreciation) on investments 370,524,952 (216,659,619 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 330,981,844 (122,339,806 ) Distributions to shareholders from: (11,187,669 (15,672,517 Net investment income ) ) Net realized gain (75,938,524 (41,321,476 ) ) Share transactions 854,803,474 343,987,997 Net proceeds from sales of shares Reinvestment of distributions from: 10,699,443 15,141,925 Net investment income Net realized gain 74,114,307 40,349,242 Cost of shares redeemed (494,651,306 (387,736,435 ) ) Net increase (decrease) in net assets resulting from share transactions 444,965,918 11,742,729 TOTAL INCREASE (DECREASE) IN NET ASSETS 688,821,569 (167,591,070 ) NET ASSETS Beginning of period 801,844,748 969,435,818 End of period (including undistributed net investment income of $7,779,873 and $8,734,014, respectively) $ 1,490,666,317 $ 801,844,748 OTHER INFORMATION Shares Sold 35,327,981 13,611,105 Issued in reinvestment of distributions from: 536,856 623,867 Net investment income Net realized gain 3,718,746 1,662,515 Redeemed (21,200,545 (15,401,175 ) ) Net increase (decrease) 18,383,038 496,312 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, SELECTED PER-SHARE DATA 1993 1992(DAGGER) 1991 1990 1989 Net asset value, beginning of period $ 21.96 $ 26.92 $ 27.47 $ 26.30 $ 25.30 Income from Investment Operations Net investment income .27 .46 .54* .35 .30 Net realized and unrealized gain (loss) on investments 7.40 (3.82) .45 2.16 1.28 Total from investment operations 7.67 (3.36) .99 2.51 1.58 Less Distributions From net investment income (.37) (.44) (.46) (.21) (.24) From net realized gain (2.10)** (1.16) (1.08)** (1.13)** (.34)** Total distributions (2.47) (1.60) (1.54) (1.34) (.58) Net asset value, end of period $ 27.16 $ 21.96 $ 26.92 $ 27.47 $ 26.30 TOTAL RETURN(double dagger) 39.01% (13.05)% 4.12% 9.58% 6.40% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 1,490,666 $ 801,845 $ 969,436 $ 1,011,152 $ 876,567 Ratio of expenses to average net assets 1.27% 1.52% 1.53% 1.26% 1.06% Ratio of net investment income to average net assets 1.00% 1.78% 2.19% 1.34% 1.06% Portfolio turnover rate 64% 122% 132% 96% 100% (dagger) AS OF NOVEMBER 1, 1991, THE FUND DISCONTINUED THE USE OF EQUALIZATION ACCOUNTING. * INCLUDES $.08 PER SHARE FROM RECOVERY OF FOREIGN TAXES PREVIOUSLY WITHHELD ON DIVIDEND AND INTEREST PAYMENTS. ** INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. (double dagger) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
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. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). Worldwide has a 3% sales charge, which has been waived through May 31, 1994. CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF OCTOBER 31, 1993 YEAR FUND Worldwide 36.10% 33.70% Worldwide (incl. 3% sales charge) 32.02% 29.69% Morgan Stanley World Index 27.01% 24.02% Average Global Fund 28.37% 32.17% 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 May 30, 1990. You can compare the fund's figures to the performance of the Morgan Stanley World index - a broad measure of the performance of stocks across the world, weighted by each country's market capitalization (or the total value of its outstanding shares). You can also compare the fund's performance to the average global fund, which reflects the performance of 77 funds with similar objectives tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF OCTOBER 31, 1993 YEAR FUND Worldwide 36.10% 8.84% Worldwide (incl. 3% sales charge) 32.02% 7.88% Morgan Stanley World Index 27.01% 6.48% Average Global Fund 28.37% 8.40% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND Worldwide Fund (318) MS World Index 05/30/90 9700.00 10000.00 05/31/90 9729.10 10038.61 06/30/90 9981.30 9964.14 07/31/90 10252.90 10051.93 08/31/90 9098.60 9108.00 09/30/90 8196.50 8144.51 10/31/90 8681.50 8901.68 11/30/90 8681.50 8752.34 12/31/90 8631.28 8932.45 01/31/91 8875.93 9255.96 02/28/91 9365.23 10109.62 03/31/91 9042.29 9808.57 04/30/91 9130.37 9882.21 05/31/91 9198.87 10103.10 06/30/91 8543.20 9476.34 07/31/91 9071.65 9920.84 08/31/91 9208.65 9886.25 09/30/91 9365.23 10142.44 10/31/91 9404.37 10303.82 11/30/91 8905.29 9851.69 12/31/91 9311.08 10565.69 01/31/92 9410.03 10366.97 02/29/92 9696.98 10184.99 03/31/92 9469.40 9702.08 04/30/92 9884.99 9834.16 05/31/92 10300.57 10222.20 06/30/92 9944.35 9876.60 07/31/92 9845.41 9898.58 08/31/92 9706.88 10136.03 09/30/92 9706.88 10039.86 10/31/92 9528.77 9764.70 11/30/92 9677.19 9936.32 12/31/92 9889.02 10013.50 01/31/93 10214.25 10043.98 02/28/93 10458.17 10278.91 03/31/93 11057.81 10871.83 04/30/93 11332.22 11372.70 05/31/93 11687.94 11631.78 06/30/93 11565.98 11531.21 07/31/93 11820.07 11765.78 08/31/93 12562.00 12302.20 09/30/93 12429.87 12071.96 10/31/93 12968.54 12401.72 Let's say you invested $10,000 in Fidelity Worldwide Fund on its start date and paid a 3% sales charge. By October 31, 1993, it would have grown to $12,969 - a 29.69% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley World index, which would have grown to $12,402 over the same period - a 24.02% 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 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. (checkmark) WORLDWIDE FUND TALK: THE MANAGER'S OVERVIEW An interview with Penny Dobkin, Portfolio Manager of Fidelity Worldwide Fund Q. PENNY, HOW DID THE FUND PERFORM? A. Better than its benchmark and its peers. Total return for the fund's fiscal year, which ended October 31, 1993, was 36.10%. During the same period, the Morgan Stanley World index rose 27.01%; and the average global fund's total return was 28.37%, according to Lipper Analytical Services. Q. HOW DID YOU MANAGE TO BEAT THE INDEX AND OUTPERFORM YOUR PEERS? A. By overemphasizing Europe, underemphasizing the U.S. and Japan, and largely avoiding Mexico. Within Europe, which totaled about 40% of the fund's investments, I owned more stocks in Switzerland and the Netherlands than the index does, and both countries did well; at the same time, I owned less stocks in France, and that, too, worked out to the fund's advantage. Basically, though, it was a year when the secret to beating the index lay in avoiding as much as possible those handful of markets that lagged the index. If you did that, then you had a chance to do well. Q. CAN YOU TELL US MORE ABOUT WHAT WORKED IN EUROPE? A. Swiss stocks totaled about 4% of the fund. I had good luck there with banks, insurance companies and other finance-sector stocks - companies like Leu Holdings - that profited when Switzerland lowered interest rates ahead of other European countries. Dutch stocks were only about 3% of the fund at the end of April but were nearly twice that six months later. There the most exciting stories were distribution companies, infrastructure companies and retailers; Volker Stevin in construction and MacIntosh Confectionary in retailing, for example. With the exception of the retailers, most were classic cyclicals, or stocks that react quickly to changes in the economy. Q. DO YOU HAVE ANY REGRETS? A. Of course. Among developing countries, I missed Malaysia and Brazil, and both were phenomenal. I also missed the French finance sector - banks and insurance companies - mainly because I didn't believe their earnings potential was as great as others did. Finally, I reduced Hong Kong early because I was worried about rising interest rates and slowing economic growth in China, but the market kept climbing. Q. TELL US ABOUT YOUR EXPERIENCE WITH U.S. STOCKS DURING THE PERIOD. A. U.S. stocks were more than one-third of the fund last April, but had fallen to less than one-fifth of the fund by the end of October. That may still seem high, and in fact I owned more U.S. stocks than those of any other country. But U.S. stocks are more than 40% of the global index, so you can see how little I really owned. My big remaining bets were mostly energy-related - oil, natural gas, and oil-service companies. Most did well, although I've cut back sharply in the sector. I also had success with farm equipment manufacturers, generally regarded as cyclicals - companies like Deere. But in general, domestic stocks were not the big story last year. Consider the fact that the S&P 500 index, a broad measure of U.S. stock performance, rose 14.94% during the fund's fiscal year; while the EAFE index, which tracks stocks in Europe, Australia and the Far East, was up 37.46% Q. IS CURRENCY RISK SOMETHING YOU WORRY ABOUT? A. Currency risk - or the risk that when you translate an investment back into U.S. dollars it will be worth less because of currency devaluations - is definitely a factor, especially in Europe and Japan. One way to reduce that risk is by making offsetting investments - a process known as hedging. I've done some hedging against the Spanish peseta, the Japanese yen and the Norwegian krone. Altogether, about 5% of the fund's investments are hedged. But there's a cost to hedging - you lose if the currency stays level or rises - so it's not something I do indiscriminately. As a rule, the stocks I'm looking for anyway are the ones that have the potential to make a big move - enough, one hopes, to overcome the effect of currency fluctuations. Q. WHAT HAPPENED IN JAPAN? A. While Japanese stocks rose during the period, they gave back a good part of those gains in September and October, when the fund's stake totaled about 12%. By contrast, about 7.8% of the index was made up of Japanese stocks. The theme I've been playing lately is consumption: retailers, autos and consumer electronics. The government has lowered interest rates in Japan and raised public-sector investment, but they haven't done anything yet for the consumer. When they do - probably in the form of tax relief - these are the kinds of stocks that could benefit the most. Q. THE FUND HAS LIMITED INVESTMENTS IN SO-CALLED EMERGING MARKETS, OR DEVELOPING COUNTRIES. WHY? A. I haven't exactly ignored emerging markets. Investments in Latin America and underdeveloped Asian countries totaled about 14% of the fund at the end of October. That included about a 6% stake in Mexican stocks, led by three stocks in the fund's top 10: Grupo Tribasa, a construction company; Grupo Carso, a conglomerate; and Cemex, a cement company. Now that inflation has settled down in Mexico, I think economic growth could pick up noticeably next year. That said, my decision not to emphasize these markets in 1993 was simply the result of my finding equally good opportunities in more established markets, particularly in Europe. Q. WHAT'S YOUR OUTLOOK? A. It's positive, although no one should expect another year of 30%-plus returns. It's not often that the gap between foreign markets and domestic markets gets as wide as it did last year, and I expect it will narrow. That said, the interest-rate climate is still attractive, and that was a big reason why European stocks surged last year. We may be as much as two-thirds of the way through the interest-rate cycle in Europe, but we could see more cuts in the months ahead. As for sector selections, finance stocks were the focus of the fund last year, nearly 18% of the total. That's likely to continue as long as interest rates are falling, but eventually I'll probably cut back on banks as rates stabilize. When I do, I may replace them with metals, heavy-machinery and other late-cyclical stocks; construction and real estate stocks alone have nearly doubled as a percentage of the fund's total investments in the last six months. Finally, I may be looking more at small-company European stocks in the months ahead. They've lagged larger companies for almost three years, but may have begun lately to make their move. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in common stocks from around the world START DATE: May 30, 1990 SIZE: as of October 31, 1993, over $287 million MANAGER: Penelope Dobkin, since May 1990; manager, Fidelity Europe Fund, 1986-1990; Fidelity United Kingdom Fund, 1987-1989; Fidelity Select Financial Services Portfolio, 1983-1986; analyst, banking and real estate (checkmark) PENNY DOBKIN ON THE EARNINGS OUTLOOK FOR EUROPEAN BUSINESS: "In order for European markets to keep climbing, eventually we'll have to see better earnings growth. The high returns we enjoyed in Europe last year were due almost entirely to falling interest rates and hopes for an economic recovery. And except for the U.K. most of Europe is still mired in a deep recession, marked by high unemployment and lagging earnings. On the positive side, what has amazed me lately is the amount of cost-cutting European business has undertaken. That used to be my big bugaboo about Europe, but conditions have changed dramatically in the last 12 months. So when business picks up, earnings growth could be significant. My hope is that we'll begin to see evidence to that effect with the release of final 1993 earnings in the spring of 1994." (bullet) Those European countries with the greatest percentage of the fund's total investments at the end of October were the Netherlands, 6.8%, compared to 3.3% six months ago; the U.K, 5.9%, compared to 6.1%; Germany, 4.8%, compared to 4.1%; Switzerland, 4.4%, compared to 4.5%; and Sweden, 4.0%, compared to 2.4%. (bullet) 40.3% of the fund was invested in Europe, 18.5% in the United States, 14.6% in emerging markets and 11.4% in Japan. (bullet) Among the emerging markets where the fund may increase its stake in the months ahead are India, which has the largest middle-class population in the world and more than 7,000 publicly traded stocks to choose from; and the Philippines, where political conditions have stabilized and earnings growth in 1994 could lead all of Asia. DISTRIBUTIONS The Board of Trustees of Fidelity Worldwide Fund voted to pay on December 13, 1993, to shareholders of record at the opening of business on December 10, 1993, a distribution of $0.15 derived from capital gains realized from sales of portfolio securities and a dividend of $0.10 from net investment income. WORLDWIDE INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1993 Finland 2.2% Hong Kong 2.4% Row: 1, Col: 1, Value: 2.2 Row: 1, Col: 2, Value: 6.8 Row: 1, Col: 3, Value: 10.0 Row: 1, Col: 4, Value: 11.4 Row: 1, Col: 5, Value: 4.4 Row: 1, Col: 6, Value: 2.2 Row: 1, Col: 7, Value: 7.4 Row: 1, Col: 8, Value: 5.9 Row: 1, Col: 9, Value: 14.0 Row: 1, Col: 10, Value: 4.1 Row: 1, Col: 11, Value: 18.5 Row: 1, Col: 12, Value: 4.8 Row: 1, Col: 13, Value: 2.6 Row: 1, Col: 14, Value: 3.3 Row: 1, Col: 15, Value: 2.4 Spain 3.3% Netherlands 6.8% Norway 2.6% Germany 4.8% Other 10.1% United States 18.5% Japan 11.4% Switzerland 4.4% Sweden 4.0% France 2.2% Mexico 7.4% Cash 14.0% United Kingdom 5.9% AS OF APRIL 30, 1993 Netherlands 3.3% Argentina 3.5% Row: 1, Col: 1, Value: 3.3 Row: 1, Col: 2, Value: 8.6 Row: 1, Col: 3, Value: 9.9 Row: 1, Col: 4, Value: 4.5 Row: 1, Col: 5, Value: 7.4 Row: 1, Col: 6, Value: 6.1 Row: 1, Col: 7, Value: 13.0 Row: 1, Col: 8, Value: 2.4 Row: 1, Col: 9, Value: 35.1 Row: 1, Col: 10, Value: 4.1 Row: 1, Col: 11, Value: 4.7 Row: 1, Col: 12, Value: 3.5 Spain 4.7% Other 8.6% Germany 4.1% Japan 9.9% Switzerland 4.5% United States 35.1% Mexico 4.8% United Kingdom 6.1% Cash 13.0% Sweden 2.4% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks 80.4 75.8 Bonds 5.6 11.2 Short-term investments 14.0 13.0 TOP TEN STOCKS
% OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Grupo Tribasa SA de CV sponsored ADR (Mexico, Construction) 2.0 - Marieberg Tidnings 'A' (Sweden, Publishing) 1.1 - Jurong Cement (Singapore, Building Materials) 0.9 - Grupo Carso SA de CV Class A-1 (Mexico, Conglomerates) 0.9 0.1 Cemex SA, Series B (Mexico, Building Materials) 0.7 - Kong Wah Holdings Ltd. (Hong Kong, Consumer Electronics) 0.7 - Fosters Brewing Group Ltd. (Australia, Beverages) 0.6 - MacIntosh Confectionary Works (Netherlands, Apparel Stores) 0.6 - Scribona AB B Free shares (Sweden, Computers & Office Equipment) 0.6 - Banco Bilbao Vizcaya SA Ord. (Reg.) (Spain, Banks) 0.6 1.5
TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Finance 17.9 19.2 Construction & Real Estate 11.8 6.8 Basic Industries 9.4 6.4 Retail & Wholesale 7.7 8.7 Durables 7.6 4.2 Energy 4.5 11.3 Industrial Machinery & Equipment 3.8 4.7 Media & Leisure 3.8 1.8 Transportation 2.7 2.9 Nondurables 2.2 1.4 WORLDWIDE INVESTMENTS OCTOBER 31, 1993 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 78.7% SHARES VALUE (NOTE 1) ARGENTINA - 0.2% Cinba SA Ord. 131,159 $ 505,189 17899B92 AUSTRALIA - 1.2% Fosters Brewing Group Ltd. 1,912,500 1,822,115 35025810 Heath (CE) International Holdings 514,900 617,494 42299992 QNI Ltd. 456,000 264,316 74799B92 Woolworths Ltd. (Astl.) ADR (b)(d) 41,000 799,500 98088830 3,503,425 AUSTRIA - 0.3% Verbund Gesellschaft 16,000 968,751 92299999 BRAZIL - 0.2% Telebras PN (Pfd. Reg.) 17,500,000 557,695 95499792 CANADA - 0.1% Alcan Aluminum Ltd. 10,000 204,476 01371610 Chateau Stores of Canada Ltd. Class A (b) 13,100 137,905 16174310 342,381 DENMARK - 0.3% Burmeister & Wain Holdings AS: Series B 15,600 769,616 12299292 Series B New 3,120 148,870 12299296 918,486 FINLAND - 2.2% Enso Gutzeit OY R Free shares 160,000 1,083,475 29357810 Kansallis-Osake-Pankki 425,000 1,047,204 48199210 Kone Corp. Ord. Class B 13,000 1,225,285 50400092 Metsa Serla 'B' 15,000 625,479 59299992 Repola OY 77,400 1,142,952 75999A92 Unitas Bank Ltd.: A Free shares 270,000 860,680 90499122 B Free shares 122,700 336,161 90499123 6,321,236 FRANCE - 2.2% BNP CI Ord. 2,100 102,938 05599996 Bail Investissement (b) 5,400 1,033,187 05699092 Fonciere Financiere et Part SA 12,500 502,667 34499A22 Gascogne SA 9,000 547,071 37499722 Immeubles de France, Ste Des (b) 6,250 1,148,197 44999C22 Klepierre SA (b) 9,900 1,196,851 49899822 Pechiney SA CIP 14,000 794,108 70599310 UFB Locabail SA (b) 13,000 834,236 90599B92 6,159,255 GERMANY - 3.3% Bayer AG 4,600 872,331 07273010 Bayer AG (warrants) (b) 2,600 276,834 07273031 Commerzbank AG 2,509 509,286 20259710 Commerzbank AG (warrants) (b) 12,000 425,661 20259998 Continental Gummi-Werke AG (b) 4,800 689,883 21199010 Deutsche Babcock AG 5,500 713,824 25159991 Deutsche Bank AG (warrants) (b) 9,500 1,718,718 25152596 Felten & Guilleaume Enrg. AG (b) 1,900 483,495 31499292 Herlitz AG 2,800 589,614 42799392 Linotype-Hell AG (Bearer) (b) 1,700 350,276 53599092 Mannesmann AG 912 136,217 56311595 Mannesmann AG Ord. 7,300 1,474,419 56377510 Rheinhold & Mahla AG 2,200 502,417 76299692 Thyssen AG Ord. 4,200 591,690 88629110 9,334,665 HONG KONG - 2.4% Bossini International Ltd. (b) 525,000 47,560 10099822 SHARES VALUE (NOTE 1) Cathay Pacific Airways Ltd. 453,000 $ 738,635 14890610 Crocodile Garments 4,300,000 740,073 22699192 Hong Kong Land Holdings Ltd. 170,000 455,386 43858292 Kong Wah Holdings Ltd. (b) 10,000,000 2,036,900 50599B92 Kumagai Gumi 922,000 1,264,726 50099210 Laws International Holdings 350,000 140,406 52099192 Oriental Press Group Ltd. 1,700,000 1,209,958 68620099 6,633,644 INDIA - 0.1% ITC Ltd. (d): GDR 12,000 210,000 45031810 (warrants) (b) 4,000 21,000 45031811 231,000 INDONESIA - 1.1% Andayani Megah PT (b) 20,000 50,677 03399722 Astra International (For. Reg.) 55,000 484,166 04699894 Barito Pacific Timber (For. Reg.) (b) 236,000 1,285,813 06799F23 Duta Anggada Realty Ord. 218,750 666,175 26699192 Kabelmetal Indonesia PT (b) 141,000 469,653 84599B92 Modern Photo Film PT 24,000 202,136 61299792 3,158,620 IRELAND - 0.4% Anglo Irish Bank 509,700 458,735 03599592 Aran Energy (b) 1,536,000 773,699 03899999 1,232,434 ITALY - 1.1% Cementerie Di Sardegna Spa 319,000 860,793 15199F22 Fila Holding Spa sponsored ADR (b) 100,000 1,512,500 31685010 Simint Ord. 465,600 664,975 83799492 3,038,268 JAPAN - 11.4% Akita Bank 57,000 412,206 00999692 Bridgestone Corp. 95,000 1,190,235 10844110 Charle Co. Ltd. 22,000 456,011 15999392 Citizens Watch Co. Ltd. (warrants) (b) 700 691,250 17560092 Daito Trust Construction 39,000 966,467 24999492 Daiwa House Industry Co. Ltd. 37,000 545,371 23406299 Eidensha Co. Ltd. 28,000 355,965 26849999 Fuji Car Manufacturing Co. Ltd. 35,000 158,959 36099292 Fuji Distribution Co. 81,000 746,200 36299992 Hankyu Department Stores, Inc. 87,000 1,001,842 41099192 Hanshin Department Store 195,000 1,088,623 41199292 Hyogo Bank Ltd. 77,000 297,927 44999292 Joyfull Co. Ltd. (b) 36,000 636,757 49499F22 Kanamoto Co. Ltd. 60,000 1,304,468 48399B22 Kaneshita Construction Co. Ltd. Ord. (b) 31,000 457,311 49099592 Keio Teito Electric Railway 159,000 908,152 48766710 Kenwood Corp. 174,000 1,081,989 49178692 Koa Fire & Marine Insurance Co. Ltd. 97,000 634,455 49999010 Kumagai Gumi Co. Ltd. (warrants) (b) 3,300 363,000 50125193 Matsuya Co. Ltd. 45,000 259,097 57699E22 Mazda Motor Corp. 105,000 424,643 57878592 Mitsubishi Motors Corp. 128,000 968,108 60899692 Mitsubishi Trust & Banking 90,000 1,227,084 60699410 Namura Shipbuilding 50,000 502,073 62999892 Nichia Steel Works Ltd. Ord. 59,000 559,834 65399692 Nichii Co. Ltd. 66,000 954,583 65299110 Nomura Securities Co. Ltd. 77,000 1,411,608 65536130 Onward Kashiyama Co. Ltd. (warrants) (b) 950 890,625 48551393 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) JAPAN - CONTINUED Sekisui House Ltd. 51,000 $ 676,555 81607810 Shimzu Bank Ltd. 10,000 832,796 82499592 Sogo Co. Ltd. 177,000 1,061,511 83599K22 Sony Corp. New 21,000 958,125 83569930 Sumitomo Marine and Fire 150,000 1,300,323 94599392 Sumitomo Trust & Banking Co. 89,000 1,197,052 86599310 Sumiya Co. Ltd. (b) 20,400 426,605 93899B22 Tohu Railway Co. Ltd. (warrants) (b) 500 350,000 88739192 Toho Bank Ord. 80,000 591,801 91799192 Tokio Marine & Fire Insurance Co. Ltd. (The) 85,000 1,041,456 88909099 Tokyo Nissan Auto Sales Co. Ltd. 105,000 783,510 88998599 Tokyu Department Stores Co. Ltd. 179,000 1,127,922 88914593 Toyota Motor Corporation 84,000 1,454,814 89399999 32,297,313 LUXEMBOURG - 0.5% Scandinavian Broadcasting Corp. (b) 71,000 1,402,250 80699E92 MALAYSIA - 0.6% Berjaya Sports Toto BHD (b) 274,000 589,593 08499E22 Buildcon BHD (b) 206,000 745,502 11999322 Public Finance BHD (Loc. Reg.) 310,000 342,020 87799992 1,677,115 MEXICO - 5.7% Bancacci SA de CV (b): Class B 185,000 998,882 06399896 Class C 55,000 339,137 06399893 Cemex SA, Series B (b) 90,000 2,084,665 15299293 Grupo Carso SA de CV Class A-1 (b) 315,000 2,425,399 40099594 Grupo Dina (Consorcio G) ADR (b) 57,000 1,197,000 21030610 Grupo Financiero Bancomer SA de CV sponsored ADR, Series C (d) 59,000 1,725,750 40048610 Grupo Tribasa SA de CV sponsored ADR (b) 303,000 5,643,375 40049F10 Telefonos de Mexico SA sponsored ADR representing shares Ord. Class L 29,000 1,587,750 87940378 16,001,958 NETHERLANDS - 6.8% Akzo NV Ord. 5,400 511,339 01019910 Bam Groep NV 18,600 995,078 05999892 Draka Holding NV 48,700 985,059 26199B22 Econosto NV 105,000 1,353,050 27903299 Geveke Trade 96,500 1,401,505 37431310 Hoogovens en Staalfabrieken (b) 40,500 906,892 43888410 KBB NV Ord. 26,800 1,374,323 48130092 KNP BT NV, Koninklijke 60,000 1,273,832 50099193 Kempen & Company NV 240,000 1,533,667 48899D22 MacIntosh Confectionary Works (b) 62,000 1,817,270 58199292 Nationale Investeringsbank A Free shares 28,500 1,535,252 94999D92 Philips Electronics 29,400 607,098 71833799 Philips NV 31,400 655,475 71833750 Pirelli Tyre Holdings NV Ord. (b) 136,900 939,899 72499092 Samas-Groep NV 45,600 1,078,891 79499110 Volker Stevin NV 42,600 1,597,359 92868894 Wereldhave NV 8,800 527,954 95199E22 19,093,943 NORWAY - 2.6% Color Lines 312,600 1,040,373 19699492 Den Norske Bank Class A Free shares (b) 299,700 1,038,152 25299792 Dyno Industrier AS 76,000 1,125,314 26999392 SHARES VALUE (NOTE 1) Mosvold Shipping AS B Free shares 71,700 $ 618,481 62099294 Petroleum Geo Services AS (b) 39,000 1,340,352 71699E92 Smedvig AS 31,100 718,196 79799892 Vital Forsikring Free shares 110,000 1,344,835 93999692 7,225,703 PHILIPPINES - 0.2% Filinvest Land, Inc. Ord. (b) 1,258,000 338,943 31699J22 Philippine Long Distance Telephone Co. 1,400 89,075 71825210 428,018 PORTUGAL - 0.2% Engil Soc de Const. 21,000 520,771 29299192 SINGAPORE - 0.9% Jurong Cement (b) 935,000 2,428,569 48299792 SPAIN - 2.8% Banco Bilbao Vizcaya SA Ord. (Reg.) 69,600 1,781,244 05945891 Banco Central SA (Reg.) 22,000 611,111 05947010 Banco de Santander Ord. (Reg.) 8,000 420,148 05957410 Banco Pastor SA (b) 25,750 1,316,111 05999792 Banco Popular Espanol 4,700 609,259 05999110 Banesto (Reg.) 65,500 1,329,408 05981699 Conservera Campo Frio 8,000 393,481 20899292 FECSA (Fuerzas Elec Cat) Class A 36,285 219,054 35899E22 Hisalba (b) 20,000 199,259 46199592 Iberdrola SA 74,000 487,303 45499892 Sevillana de Electricidad 150,000 654,444 81806599 8,020,822 SWEDEN - 3.8% Hennes & Mauritz AB B Free shares 27,900 836,044 42599110 Marieberg Tidnings 'A' (b) 200,000 3,204,500 56799392 Scribona AB B Free shares (b) 420,000 1,797,944 81199B92 Securitas B Free Shares 23,000 644,203 81399792 Skandinaviska Enskilda Banken Class A Free shares 150,000 1,100,782 88099222 Skanska Class B 40,000 841,487 93899392 Trelleborg AB Class C Free shares 156,000 1,335,616 89491092 Trustor AB B Free shares 185,500 1,066,352 89899D22 10,826,928 SWITZERLAND - 4.4% Bucher Holding AG (Bearer) 350 891,869 08699292 CS Holdings: (Reg.) (b) 1,300 577,971 17599795 (warrants) (b) 1,300 18,743 15099425 Globus Magazine Part. Cert. 1,800 1,201,006 37957792 Industrieholding Cham AG (Reg.) 1,500 1,015,926 85599922 Jelmoli Grands Magasins SA 1,150 609,220 47469910 Jelmoli Grand Magasins SA (Reg.) 4,000 399,665 47469993 Leu Holdings 3,400 1,322,381 52699B22 Merkur Holdings AG Ord. (Reg.) 6,000 1,255,323 59099393 Reisebuero Kuoni Part. Cert. 1,400 1,483,319 75999592 Surveillance, Societe Generale (Bearer) (b) 625 754,401 86901193 Swiss Bank Corp. (Reg.) 4,936 807,634 87083694 Swiss Reinsurance Corp. (Reg.) (b) 300 756,412 87099393 Winterthur Schweiz (Reg.) 1,750 902,431 97629994 ZehnderHoldings AG (Bearer) 300 438,558 98999K22 12,434,859 UNITED KINGDOM - 5.7% Fisons PLC Ord. 205,000 485,932 33812310 Glaxo Holdings PLC sponsored ADR 53,000 1,073,250 37732730 Guinness PLC Ord. 160,000 1,031,125 40203310 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) UNITED KINGDOM - CONTINUED Hammerson Property Ord. 194,333 $ 1,071,004 40831592 Hanson PLC Ord. 190,000 762,120 41135210 Hanson Trust PLC sponsored ADR 15,000 301,875 41135230 Hartstone Group PLC Ord. 654,600 591,575 41722610 Heath (CE) 107,000 643,593 42299892 Howden Group Ord. 617,142 740,583 44299210 Imperial Chemical Industries PLC: ADR New 15,000 645,000 45270450 Ord. 50,000 530,377 45270440 Ladbroke Group PLC Ord. 445,000 1,137,238 50572799 MEPC PLC 92,400 733,049 62949999 Rolls Royce Ltd. Ord. 318,750 722,511 77577910 Royale Insurance Co. Ltd. 190,000 889,493 78074910 Sedgwick Group 240,000 656,009 81482610 Slough Estates PLC 202,000 773,595 83199110 Trafalgar House PLC Ord. 500,000 722,230 89270710 Wates City of London Property (b) 1,124,999 1,500,017 94299092 Wellcome PLC sponsored ADR 90,000 900,000 94947820 Zeneca Group PLC sponsored ADR (b) 8,749 298,560 98934D10 16,209,136 UNITED STATES OF AMERICA - 17.8% AGCO Corp. 21,400 583,150 00108410 AMAX, Inc. 26,600 595,175 02312710 AMR Corp. (b) 10,000 701,250 00176510 Allstate Corp. (b) 21,000 658,875 02000210 Amax Gold, Inc. 10,000 72,500 02312010 American Ecology Corp. (b) 25,400 292,100 02553310 Astec Industries, Inc. (b) 67,000 921,250 04622410 BJ Services Co. 19,300 436,663 05548210 Bank of Boston Corp. 32,386 761,071 06071610 Baroid Corp. 80,000 660,000 06827710 Bruno's, Inc. 93,000 999,750 11688110 Burlington Industries Equity, Inc. (b) 41,000 604,750 12169010 Citicorp (b) 25,000 906,250 17303410 Cliffs Drilling Co. (b) 14,000 182,000 18682C10 Cobra Industries, Inc. (b) 71,000 994,000 19104E10 Dayton Hudson Corp. 19,900 1,383,050 23975310 Deckers Footwear Corp. 300 6,975 24353710 Deere & Co. 4,000 309,000 24419910 Deposit Guaranty Corp. 25,000 728,125 24955510 Diamond Shamrock R&M, Inc. 28,800 770,400 25274710 Eastman Kodak Co. 19,000 1,197,000 27746110 Enterra Corp. (b) 17,000 399,500 29380510 Exxon Corp. 9,000 588,375 30229010 First Fidelity Bancorporation 12,015 488,109 32019510 First Security Corp. 19,775 543,813 33629410 GEON 12,000 264,000 37246W10 Georgia Gulf Corp. (b) 23,800 449,225 37320020 Global Marine, Inc. New 80,000 400,000 37935240 Global Ocean Carriers Ltd. (b) 26,200 65,500 37935710 Grace (W.R.) & Co. 10,900 411,475 38388310 Great Atlantic & Pacific Tea Co., Inc. 13,300 352,450 39006410 Halliburton Co. 14,000 446,250 40621610 Helmerich & Payne, Inc. 17,000 510,000 42345210 Kemper Corp. 17,829 677,502 48839610 Kentucky Electric Steel, Inc. (b) 28,600 343,200 49127B10 Kroger Co. (The) (b) 40,000 785,000 50104410 Lafarge Corp. 34,200 705,375 50586210 Lilly (Eli) & Co. 17,000 920,125 53245710 Lowe's Companies, Inc. 9,400 438,275 54866110 Medusa Corp. 47,400 1,303,500 58507230 SHARES VALUE (NOTE 1) Mellon Bank Corp. 21,215 $ 1,142,958 58550910 Micropolis Corp. (b) 54,050 425,644 59490710 Midlantic Corp. (b) 20,800 504,400 59780E10 Navistar International Corp. (b) 12,000 327,000 63934E10 North Side Savings Bank (Bronx, NY) 16,950 355,950 66248810 OM Group, Inc. (b) 50,000 850,000 67087210 Offshore Logistics, Inc. (b) 36,000 594,000 67625510 Oryx Energy Co. 24,000 573,000 68763F10 Philip Morris Companies, Inc. 26,000 1,397,500 71815410 Pulitzer Publishing Co. 16,600 558,175 74577110 RJR Nabisco Holdings Corp. (b) 53,700 308,775 74960K10 Reliance Electric Co. Class A 4,000 68,000 75945810 Reynolds Metals Co. 26,400 1,115,400 76176310 Ross Stores, Inc. (b) 62,900 982,813 77829610 Santa Fe Pacific Corp. 59,000 1,113,625 80218310 Schering-Plough Corp. 26,000 1,768,000 80660510 Sears, Roebuck & Co. 11,000 631,125 81238710 Shawmut National Corp. 25,000 553,125 82048410 Stop & Shop Companies, Inc. (b) 22,700 445,488 86209910 Supervalue, Inc. 17,000 573,750 86853610 Temple-Inland, Inc. 18,000 765,000 87986810 Texaco, Inc. 10,300 701,688 88169410 Textron, Inc. 19,000 1,061,625 88320310 Tidewater, Inc. 17,000 386,750 88642310 Time Warner, Inc. 26 1,164 88731510 Titan Wheel International, Inc. (b) 25,000 575,000 88832810 Tosco Corp. 46,800 1,310,400 89149030 Tuboscope Vetco Corp. (b) 34,000 276,250 89860010 UAL Corp. (b) 8,000 1,216,000 90254910 USX-U.S. Steel Group 13,700 513,750 90337T10 Ultimate Electronics, Inc. (b) 6,000 62,250 90384910 Union Planters Corp. 41,680 1,078,470 90806810 Unisys Corp. (b) 70,000 805,000 90921410 United States Banknote Corp. (b) 125,000 765,625 91162310 Vons Companies, Inc. (b) 31,300 575,138 92886910 Weatherford International, Inc. (b) 42,500 483,438 94707610 Weirton Steel Corp. (b) 32,100 244,763 94877410 Whitney Holding Corp. 18,000 643,500 96661210 Wolverine Tube, Inc. (b) 36,000 625,500 97809310 50,235,047 VENEZUELA - 0.2% CA Venepal GDR Class A ADR (b)(d) 134,501 504,379 12477610 TOTAL COMMON STOCKS (Cost $196,891,957) 222,211,860 PREFERRED STOCKS - 1.7% CONVERTIBLE PREFERRED STOCKS - 0.7% AUSTRALIA - 0.1% TNT Ltd. 8% 151,000 155,936 93599293 UNITED STATES OF AMERICA - 0.6% Chiles Offshore Corp. $1.50 (b) 13,000 346,125 16888720 Consolidated Freightways, Inc., Series C, $1.54 32,300 718,675 20923720 Unisys Corp., Series A, $3.75 (b) 14,600 695,325 90921420 1,760,125 TOTAL CONVERTIBLE PREFERRED STOCKS 1,916,061 PREFERRED STOCKS - CONTINUED SHARES VALUE (NOTE 1) NONCONVERTIBLE PREFERRED STOCKS - 1.0% GERMANY - 0.9% Kaufhof AG 1,800 $ 444,168 48615294 Moebel Walther AG 3,600 1,025,002 61099B22 Schwabengarage AG 5,400 1,185,159 80899392 2,654,329 PORTUGAL - 0.1% Engil Soc de Const 10,000 181,243 29299194 TOTAL NONCONVERTIBLE PREFERRED STOCKS 2,835,572 TOTAL PREFERRED STOCKS (Cost $3,894,634) 4,751,633 CONVERTIBLE BONDS - 1.7% PRINCIPAL AMOUNT (A) DENMARK - 0.5% Burmeister & Wain Holdings AS 7%, 10/4/98 - DKK 7,160,000 1,265,316 122992AA GERMANY - 0.2% Commerzbank AG 7%, 12/31/00 (e) - DEM 500,000 435,982 202990MS NEW ZEALAND - 0.1% Carter Holt Harvey Euro 7%, 3/2/95 - CHF 350,000 314,501 146992AC NORWAY - 0.4% Sparbanken 13.09%, 3/24/97 - NOK 7,500,000 1,222,577 84699EAA SPAIN - 0.2% Banco Santander Euro 9%, 6/24/94 A1 ESP 50,000,000 478,705 0595749B UNITED KINGDOM - 0.2% Royal Insurance Holdings PLC Euro 7 1/4%, 12/12/07 - GBP 375,000 688,897 7807499B UNITED STATES OF AMERICA - 0.1% Western Co. North America 7 1/4%, 1/15/15 B3 315,000 321,300 958043AH TOTAL CONVERTIBLE BONDS (Cost $4,258,224) 4,727,278 GOVERNMENT OBLIGATIONS (C) - 3.9% ARGENTINA - 1.3% Argentina Promissory 4 1/4%, 3/15/05 (d)(e) - 206,471 152,712 0401149J Argentina Republic (e): BOCON 3 1/4%, 4/1/01 B1 1,444,617, 1,169,417 039995AF Brady 4% 3/31/23 (d) - 3,315,000 2,196,187 0401149Y 3,518,316 GERMANY - 0.4% German Government 8 3/8%, 5/21/01 Aaa DEM 1,600,000 1,092,102 3741369J MEXICO - 1.7% Mexican Government 10.60%, 10/20/94 (e) - MXN 15,000,000 4,818,834 597998TH MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1) (UNAUDITED) AMOUNT (A) SPAIN - 0.3%. Spanish Government 13.65%, 3/15/94 Aa2 ESP 120,000,000 $ 899,736 8463329K SWEDEN - 0.2% Swedish Government 11 1/2%, 9/1/95 Aa2 SEK 6,000,000 794,325 8702009B TOTAL GOVERNMENT OBLIGATIONS (Cost $10,754,949) 11,123,313 REPURCHASE AGREEMENTS - 14.0% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 2.96% dated 10/29/93 due 11/1/93 $39,388,713 39,379,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $255,178,764) $ 282,193,084 FORWARD FOREIGN CURRENCY CONTRACTS SETTLEMENT UNREALIZED DATE(S) VALUE GAIN/(LOSS) CONTRACTS TO BUY 198,765,000 ESP 11/15/93 (Payable amount $1,500,000) $ 1,466,886 $ (33,114) THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 0.5% CONTRACTS TO SELL 396,477,500 ESP 11/15/93 $ 2,926,890 $ 109,158 638,700,000 JPY 1/4/94 5,895,909 104,091 33,265,250 NOK 12/28/93 4,501,387 (1,387) TOTAL CONTRACTS TO SELL (Receivable amount $13,536,048) $ 13,324,186 $ 211,862 THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 4.7% CURRENCY TYPE ABBREVIATIONS GBP - British pound DKK - Danish krone DEM - German Deutsche mark JPY - Japanese yen MXN - Mexican peso NOK - Norwegian krone ESP - Spanish peseta SEK - Swedish krona CHF - Swiss franc LEGEND 1. Principal amount is stated in United States dollars unless otherwise noted. 2. Non-income producing 3. Most foreign government obligations have not been individually rated by S&P or Moody's. The ratings listed are assigned to securities by FMR, the fund's investment adviser, based principally on S&P and Moody's ratings of the sovereign credit of the issuing government. 4. 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 $5,609,528 or 2.0% of net assets. 5. 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, during the year ended October 31, 1993, aggregated $192,143,426 and $73,212,254 respectively. Brokerage commissions received by FBSI, an affiliate of the fund's investment adviser, from portfolio transactions during the year ended October 31, 1993, amounted to $22,678. (See Note 3 of Notes to Financial Statements). INCOME TAX INFORMATION At October 31, 1993, the aggregate cost of investment securities for income tax purposes was $255,257,559. Net unrealized appreciation aggregated $26,935,525, of which $35,490,476 related to appreciated investment securities and $8,554,951 related to depreciated investment securities. The fund hereby designates $2,008,000 as a capital gain dividend for the purpose of the dividend paid deduction. For the period, interest and dividends from foreign countries were $2,888,438 or $0.13 per share. Taxes paid to foreign countries were $297,088 or $0.01 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Aerospace and Defense 1.3% Basic Industries 9.4 Conglomerates 2.2 Construction and Real Estate 11.8 Durables 7.6 Energy 4.5 Finance 17.9 Government Obligations 4.0 Health 1.9 Industrial Machinery and Equipment 3.8 Media and Leisure 3.8 Nondurables 2.2 Repurchase Agreements 14.0 Retail and Wholesale 7.7 Services 1.5 Technology 2.1 Transportation 2.7 Utilities 1.6 100.0% WORLDWIDE FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993 ASSETS Investment in securities, at value (including repurchase agreements of $39,379,000) (cost $255,178,764) $ 282,193,084 (Notes 1 and 2) - See accompanying schedule Long foreign currency contracts held, at value (cost $1,500,000) 1,466,886 (Note 2) Short foreign currency contracts $ (13,324,186 (Note 2) ) Contracts held, at value Receivable for contracts held 13,536,048 211,862 Cash 5,391 Receivable for investments sold 8,469,075 Receivable for fund shares sold 10,196,796 Dividends receivable 329,539 Interest receivable 309,797 Other receivables 170,712 TOTAL ASSETS 303,353,142 LIABILITIES Payable for foreign currency contracts held (Note 2) 1,500,000 Payable for investments purchased 9,904,495 Payable for fund shares redeemed 3,942,735 Accrued management fee 173,895 Other payables and accrued expenses 553,856 TOTAL LIABILITIES 16,074,981 NET ASSETS $ 287,278,161 Net Assets consist of: Paid in capital $ 252,966,217 Undistributed net investment income 3,525,845 Accumulated undistributed net realized gain (loss) on investments 3,593,031 Net unrealized appreciation (depreciation) on: Investment securities 27,014,320 Foreign currency contracts 178,748 NET ASSETS, for 22,521,224 shares outstanding $ 287,278,161 NET ASSET VALUE, offering price and redemption price per share ($287,278,161 (divided by) 22,521,224 shares) (Note 3) $12.76
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1993 INVESTMENT INCOME $ 2,863,979 Dividends Interest 2,493,828 5,357,807 Less foreign taxes withheld (Note 1) (297,088 ) TOTAL INCOME 5,060,719 EXPENSES Management fee (Note 3) $ 1,155,519 Transfer agent fees (Note 3) 580,272 Accounting fees and expenses 91,854 (Note 3) Non-interested trustees' compensation 1,012 Custodian fees and expenses 132,156 Registration fees 93,390 Audit 34,058 Legal 1,609 Miscellaneous 1,441 Total expenses before reductions 2,091,311 Expense reductions (Note 5) (618 (2,090,693 ) ) NET INVESTMENT INCOME 2,970,026 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 2) Net realized gain (loss) on: Investment securities 9,789,795 Foreign currency contracts 324,862 10,114,657 Change in net unrealized appreciation (depreciation) on: Investment securities 30,882,961 Foreign currency contracts 178,748 31,061,709 NET GAIN (LOSS) 41,176,366 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $44,146,392 OTHER INFORMATION $109,770 Sales charges paid to FDC (Note 3) Accounting fees paid to FSC $89,027 (Note 3)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, 1993 1992 Operations $ 2,970,026 $ 2,142,666 Net investment income Net realized gain (loss) on investments 10,114,657 6,372,574 Change in net unrealized appreciation (depreciation) on investments 31,061,709 (8,662,190 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 44,146,392 (146,950 ) Distributions to shareholders from: (2,497,555 (1,064,683 Net investment income ) ) Net realized gain (158,811 - ) Share transactions 277,973,551 94,997,562 Net proceeds from sales of shares Reinvestment of distributions from: 2,432,655 1,041,530 Net investment income Net realized gain 154,685 - Cost of shares redeemed (138,399,750 (96,229,260 ) ) Net increase (decrease) in net assets resulting from share transactions 142,161,141 (190,168 ) TOTAL INCREASE (DECREASE) IN NET ASSETS 183,651,167 (1,401,801 ) NET ASSETS Beginning of period 103,626,994 105,028,795 End of period (including undistributed net investment income of $3,525,845 and $3,053,374, respectively) $ 287,278,161 $ 103,626,994 OTHER INFORMATION Shares Sold 23,493,059 9,603,706 Issued in reinvestment of distributions from: 253,930 115,856 Net investment income Net realized gain 16,147 - Redeemed (11,997,236 (9,890,335 ) ) Net increase (decrease) 11,765,900 (170,773 )
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
SELECTED PER-SHARE DATA YEARS ENDED OCTOBER 31, MAY 30, 1990 1993 1992 1991 (COMMENCEMEN T OF OPERATIONS) TO OCTOBER 31, 1990 Net asset value, beginning of period $ 9.63 $ 9.61 $ 8.95 $ 10.00 Income from Investment Operations Net investment income .11 .20 .21 .05 Net realized and unrealized gain (loss) on investments 3.28 (.08) .53 (1.10) Total from investment operations 3.39 .12 .74 (1.05) Less Distributions From net investment income (.24) (.10) (.08) - From net realized gain (.02)** - - - Total distributions (.26) (.10) (.08) - Net asset value, end of period $ 12.76 $ 9.63 $ 9.61 $ 8.95 TOTAL RETURN(double dagger)(dagger) 36.10% 1.32% 8.33% (10.50)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 287,278 $ 103,627 $ 105,029 $ 94,851 Ratio of expenses to average net assets 1.40% 1.51% 1.69% 2.00%* (dagger) Ratio of net investment income to average net assets 1.99% 2.02% 2.19% 2.09%* Portfolio turnover rate 57% 130% 129% 123%* * ANNUALIZED ** INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. (dagger) DURING THE PERIOD MAY 30, 1990 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1990, FMR VOLUNTARILY AGREED TO REDUCE THE FUND'S EXPENSES TO THE EXTENT THAT THE AGGREGATE OPERATING EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) OF THE FUND WERE IN EXCESS OF AN ANNUAL RATE OF 2.00% OF THE AVERAGE NET ASSETS. IF THESE EXPENSES HAD BEEN INCURRED BY THE FUND, THE RATIO OF EXPENSES TO AVERAGE NET ASSETS WOULD HAVE BEEN 2.46% (ANNUALIZED) AND THE TOTAL RETURN WOULD HAVE BEEN LOWER. (double dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED, AND DO NOT INCLUDE THE ONE TIME SALES CHARGE.
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. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). Canada Fund has a 3% sales charge, which has been waived through May 31, 1994. CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1993 YEAR YEARS FUND Canada 25.40% 69.92% 116.48% Canada (incl. 3% sales charge) 21.64% 64.82% 109.98% TSE 300 (Toronto Stock Exchange 300) Index 23.19% 38.43% 76.55% 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 17, 1987. You can compare the fund's figures to the performance of the Toronto Stock Exchange (TSE) 300 index - a broad measure of the performance of the Canadian stock market. This index includes reinvested dividends and capital gains, if any, and excludes the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1993 YEAR YEARS FUND Canada 25.40% 11.19% 13.83% Canada (incl. 3% sales charge) 21.64% 10.51% 13.25% TSE 300 (Toronto Stock Exchange 300) Index 23.19% 6.72% 10.00% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND Canada (309) Toronto Stock Exchange 11/17/87 9700.00 10000.00 11/30/87 9767.90 10153.53 12/31/87 10446.90 10895.36 01/31/88 10340.20 10759.36 02/29/88 11048.30 11447.90 03/31/88 11737.00 12111.13 04/30/88 12008.60 12268.35 05/31/88 11436.30 11947.11 06/30/88 12319.00 12906.84 07/31/88 12144.40 12762.32 08/31/88 11562.40 12139.94 09/30/88 11804.90 12401.15 10/31/88 12357.80 12753.48 11/30/88 12212.30 12830.11 12/31/88 12480.81 13188.28 01/31/89 13422.57 14213.27 02/28/89 13045.86 13881.50 03/31/89 13263.96 14027.96 04/30/89 13531.61 14346.43 05/31/89 13987.62 14383.31 06/30/89 14661.73 14845.75 07/31/89 15553.92 15890.01 08/31/89 15633.23 16147.42 09/30/89 15534.09 15922.92 10/31/89 15316.00 15949.98 11/30/89 15405.22 16197.04 12/31/89 15849.09 16474.68 01/31/90 14563.75 15023.40 02/28/90 14646.68 14920.74 03/31/90 14895.45 15084.12 04/30/90 14180.22 13930.65 05/31/90 15113.13 14884.87 06/30/90 15465.56 14908.13 07/31/90 15589.95 15161.03 08/31/90 14688.14 14235.18 09/30/90 14449.73 13514.44 10/31/90 14066.20 13073.85 11/30/90 14522.29 13439.96 12/31/90 14978.59 14019.82 01/31/91 15045.01 14077.13 02/28/91 16428.84 15100.37 03/31/91 17148.44 15213.01 04/30/91 17281.28 15194.26 05/31/91 18045.16 15713.88 06/30/91 18067.30 15474.06 07/31/91 18011.95 15696.55 08/31/91 17856.96 15774.78 09/30/91 17259.14 15380.42 10/31/91 18023.02 16117.15 11/30/91 17347.71 15691.20 12/31/91 17627.42 15764.11 01/31/92 17945.13 15903.64 02/29/92 18051.04 15778.39 03/31/92 17545.04 15003.00 04/30/92 17333.23 14750.06 05/31/92 17486.21 14781.51 06/30/92 17392.07 14899.21 07/31/92 17839.23 15353.94 08/31/92 17568.58 15073.09 09/30/92 16815.47 14065.44 10/31/92 16744.87 14331.45 11/30/92 16697.80 13610.56 12/31/92 17121.47 14127.27 01/31/93 17027.20 13986.24 02/28/93 18087.72 14844.82 03/31/93 19077.54 15446.95 04/30/93 19572.44 16106.36 05/31/93 19843.46 16559.37 06/30/93 20856.85 16822.63 07/31/93 20102.70 16806.78 08/31/93 20609.39 17107.05 09/30/93 19596.01 16373.43 10/31/93 20998.25 17654.85 Let's say you invested $10,000 in Fidelity Canada Fund on its start date and paid the 3% sales charge. By October 31, 1993, it would have grown to $20,998 - a 109.98% increase on your initial investment. That compares to $10,000 invested in the Toronto Stock Exchange (TSE) 300 index, which would have grown to $17,655 over the same period - a 76.55% 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 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. (checkmark) CANADA FUND TALK: THE MANAGER'S OVERVIEW An interview with George Domolky, Portfolio Manager of Fidelity Canada Fund Q. HOW DID THE FUND DO, GEORGE? A. For the 12 months ended October 31, 1993, the fund had a total return of 25.40%, beating the 23.19% return of the Toronto Stock Exchange 300 index. Q. WHY DID CANADIAN STOCKS DO SO WELL? A. Even though there were jitters caused by the October federal elections, Canadian stocks were buoyed by falling interest rates through most of the period. At the same time the economy was slowly climbing out of its recession. Despite this rebound and an increasingly large federal deficit, Canada's inflation rate remained very low at about 2%. Canadian companies, too, did their part to help stock prices by cutting costs and improving productivity. Q. WHICH OF THE FUND'S INVESTMENTS BENEFITED MOST FROM THAT RALLY? A. Canada's economy relies heavily on natural resources, not manufactured goods. That's mostly why Canadian stocks lagged U.S. stocks from 1991-1992. After falling on hard times for a couple of years, many natural resource companies rebounded handsomely over the past 12 months. Companies involved in the mining or production of gold, oil and gas did particularly well. Gold mining stocks, in particular, benefited when the price of gold skyrocketed about 80% during 1993. Gold rallied because the balance between the world's demand for precious metals and the available supply tightened. Companies like Placer Dome, American Barrick, Franco Nevada and Euro Nevada are examples of gold stocks that helped the fund. Q. DID YOU FAVOR ANY OTHER NATURAL RESOURCES? A. Nickel, aluminum and copper companies have begun to look more attractive than they have for some time. Even though these stocks haven't performed at all well during the past several years, I believe that eventually they'll recover. A worldwide economic rebound could ignite demand for base metals. I'm playing this hunch with one of the fund's largest investments - Noranda - - which acts as a proxy for all base metals. Q. WHAT'S ATTRACTIVE ABOUT OIL AND GAS COMPANIES? A. These industries, too, benefited from rising prices resulting from increased demand. In particular, I emphasized companies with significant natural gas businesses. Cash flows were strong throughout the period, as demand for natural gas from around the world increased. More countries, including the United States, are turning to natural gas as a cleaner energy alternative to coal and nuclear fuel. Renaissance Energy, one of the fund's largest holdings, rose 80% over the period. Q. THERE MUST HAVE BEEN SOME DISAPPOINTMENTS ALONG THE WAY . . . A. There usually are. Four Seasons Hotels' acquisition of Regent Hotels didn't translate into improved profits as quickly as I'd hoped. In fact, any financial benefit from this combination is still probably a year or so off. But I'm holding on for now because I'm still optimistic. Global occupancy rates have risen and new hotel openings could be a positive for the stock. Q. ARE THE FUND'S INVESTMENTS IN PAPER AND FOREST COMPANIES A BET ON ECONOMIC RECOVERY? A. For the most part. As the economy recovers and demand for housing rises, demand for lumber also should increase. In the first part of 1993, I began adding to this sector with companies like Noranda Forest and Canfor. The paper and forest products sector now represents 8.7% of the fund, slightly higher than six months ago. Q. ONE OF THE LARGEST SHIFTS YOU MADE OVER THE PAST 12 MONTHS WAS A CUT IN THE FOOD, BEVERAGES AND TOBACCO GROUP. HAS THE GROUP SHOWED SIGNS OF WEAKNESS? A. Not really. It was just that I didn't think they'd do as well as some other industries. I invested in food, beverages and tobacco as a defensive move in 1991 and 1992 . These types of stocks tend to do well during economic recessions. However, as I became more optimistic about the prospects for an economic recovery, I wanted to be more aggressive. So, I started to look elsewhere for opportunities. One area, in particular, that would have a lot going for it is media. Some companies - like Torstar, publisher of the Toronto Star and other newspapers - could benefit as the economy improves and advertising revenues increase. Torstar also owns Harlequin, which publishes romance novels worldwide. I also like MaClean Hunter, which owns cable television stations, and publishes books and magazines, and the broadcaster Rogers Communications. Q. WHERE ARE YOU FINDING OTHER OPPORTUNITIES? A. Canadian mutual fund companies are exciting. Trimark Financial, Investors Group and Mackenzie Financial have all benefited from increased investor interest in mutual funds. The mutual fund industry, still in its early stages in Canada, has shown impressive growth over the last five years. Mutual funds have a low rate of penetration, meaning the number of investors who hold mutual funds on a percentage basis is still low, and far less than in the United States. Also, the mutual fund industry could continue to grow rapidly over the next five years. Q. SO WHAT DOES THE FUTURE HOLD FOR CANADIAN STOCKS? A. There are some bright spots that are encouraging. While it may be unrealistic to expect the same level of high returns we've enjoyed this year, I'm still upbeat. The country's economy is improving. I think interest rates could continue to come down, and inflation will remain low and stay flat. I also believe Canadian stocks could benefit from economic growth, both at home and abroad. Add to those factors companies' drive to improve profitability and you have a recipe for continued strong stock prices and the potential for decent returns. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in Canadian common stocks and convertible securities START DATE: November 17, 1987 SIZE: as of October 31, 1993, over $95 million MANAGER: George Domolky, since November 17, 1987; manager, Fidelity Select Food & Agriculture Portfolio, 1985-87; assistant, Fidelity Magellan Fund, 1983-86. (checkmark) GEORGE DOMOLKY'S INVESTMENT PHILOSOPHY: "My philosophy is a simple one. I think, first of all, that the investment business is very humbling, and you have to understand your own limitations. I never try to play the economist; I just try to find good companies with a strong market share and a strong balance sheet. I like companies that have no debt and good cash flow. I'm also price conscious. If the stock I buy is cheap, over time it will probably come out ahead - no matter whether the market goes up or down. That sounds very basic, but some people seem to forget that simple notion. "Usually, the toughest position to take is to go against the consensus. Although you don't want to make that a priority, you still have to go for value when others don't see it. I like to talk to a company about three times prior to investing. One contact may not be enough to judge the character of a company. But I don't let management do all the talking. I like to go see a company for myself. Visiting Canadian companies in person - which I do several times a month - can give me a real edge. Sometimes I see something there that isn't reflected in a financial report. For example, I might see a sign that says the injury rate in a plant has dropped by half. That kind of information is meaningful. Being a Canadian investor located in Boston can be an advantage. From that vantage point, I can filter out some of the economic and political noise. But I try to remember that investing is a marathon, not a 100-yard dash." (bullet) Nearly half of the fund is concentrated in three industries: energy; metals and mining, and media and leisure. (bullet) Canadian media stocks could benefit from an increase in advertising revenues as the economic recovery picks up steam. (bullet) Recently the fund's investments in natural resource stocks has increased, reflecting a view that these stocks will do better than other sectors of the economy as Canada's recession continues to fade. DISTRIBUTIONS The Board of Trustees of Canada Fund voted to pay on December 6, 1993, to shareholders of record at the opening of business on December 3, 1993, a distribution of $.04 derived from capital gains realized from sales of portfolio securities. CANADA INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1993 United States of America 3.4% Cash 4.8% Row: 1, Col: 1, Value: 4.8 Row: 1, Col: 2, Value: 3.4 Row: 1, Col: 3, Value: 91.8 Canada 91.8% AS OF APRIL 30, 1993 Cash 10.8% Row: 1, Col: 1, Value: 10.8 Row: 1, Col: 2, Value: 2.1 Row: 1, Col: 3, Value: 87.09999999999999 United States of America 2.1% Canada 87.1% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks 94.3 87.7 Bonds 0.9 1.5 Short-term investments 4.8 10.8 TOP TEN STOCKS % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Noranda, Inc. (Metals and Mining) 3.9 4.0 Renaissance Energy Ltd. (Oil and Gas) 3.6 4.0 Exco Technologies Ltd. (Industrial Machinery & Equipment) 3.0 0.8 Placer Dome, Inc. (Precious Metals) 3.0 0.5 MaClean Hunter Ltd. (Publishing) 2.4 0.4 Maax, Inc. (Chemicals and Plastics) 2.2 0.2 Thomson Corp. (Publishing) 2.2 1.1 Finning Ltd. (Industrial Machinery & Equipment) 2.1 1.8 Morrison Petroleums Ltd. (Oil and Gas) 2.0 2.9 Noranda Forest, Inc. (Paper and Forest) 1.7 1.8 TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Energy 23.9 19.3 Basic Industries 18.9 19.2 Media and Leisure 10.3 7.1 Precious Metals 10.0 4.0 Industrial Machinery and Equipment 8.0 2.0 Retail and Wholesale 4.6 6.3 Utilities 4.4 5.0 Finance 3.0 2.7 Services 2.9 3.7 Durables 2.6 1.5 CANADA INVESTMENTS OCTOBER 31, 1993 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 94.2% SHARES VALUE (NOTE 1) CANADA - 90.9% Abitibi-Price, Inc. 134,000 $ 1,357,302 00368010 Agnico Eagle Mines Ltd. 76,000 1,165,547 00847410 Agra Industries Ltd.: Class A cv 2,000 13,632 00848930 Class B (b) 20,000 136,317 00848940 Ainsworth Lumber Ltd. (b) 50,000 572,721 00891410 Akita Drilling Ltd. Class A (non-vtg.) 60,700 220,652 00990510 Alcan Aluminum Ltd. 837 17,115 01371610 American Barrick Resources Corp. 25,000 676,852 02451E10 Andres Wines Ltd. Class A 14,700 125,241 03442040 Arbor Capital, Inc. Class B (b) 43,300 504,175 03875820 Archer Resources Ltd. (b) 47,100 695,558 03950K10 Astral Bellevue Pathe, Inc. Class A 22,000 326,972 04634620 BCE Mobile Communications, Inc. 26,900 863,257 05534G10 Battle Creek Developments Ltd. (b) 200,000 446,818 07134E10 Beau Canada Exp. 100,000 203,718 07428010 Call-Net Enterprises, Inc. 78,000 716,233 13091010 Call-Net Enterprises, Inc. Class B (non-vtg.) (b) 78,000 716,233 13091020 Cambridge Shopping Centres Ltd. 105,900 1,333,323 13250910 Cameco, Inc. 30,000 567,988 13321L10 Canadian Natural Resources Ltd. (b) 50,400 763,376 13638510 Canfor Corp. 18,000 504,373 13790210 Cara Operations Ltd. 61,500 223,560 14075420 Chai-Na-Ta Ginseng Products 20,705 109,762 15745J10 Chancellor Energy Resources (b) 300,000 636,147 15882910 Chum Ltd. Class B 7,000 99,398 17132220 Co-Steel Inc. (sub-vtg.) 21,200 409,406 18975N10 Cogeco, Inc. 40,000 340,793 19238T10 Cominco Fertilizer Ltd. 50,000 714,718 20043C10 Computalog Gearhart Ltd. (b) 50,000 104,131 20490810 Corby Distilleries Ltd. 6,000 227,195 21834310 Delrina Corporation (b) 20,000 318,073 24735L10 Donohue, Inc. Class B (b) 20,800 342,611 25804110 Dorel Industries Class B (sub-vtg.) (a)(b) 12,000 99,966 25822C20 Dorset Exploration Ltd. (b) 72,500 974,573 25842E10 Dreco Energy Services Ltd. Class A (b) 5,700 112,575 26152820 Dupont of Canada Class A, Series1 8,900 299,936 26590210 EICON Technology Corp. (b) 15,000 157,617 28248F10 Eagle Precision Tech 138,500 1,179,995 26990010 Empire Ltd. Class A 19,600 233,784 29184340 Encal Energy Ltd. 146,300 567,827 29250D10 Enserv Corp. 69,700 804,972 29357B10 Ensign Resource Service Group Ord. (b) 36,700 218,874 29357T10 Euro-Nevada Mining Corp. 43,000 1,278,163 29870P10 Excel Energy, Inc. (b) 50,000 250,861 30065410 Excel Energy, Inc. (warrants) (b) 25,000 12,306 30065492 Exco Technologies Ltd. 286,400 2,928,093 30150P10 Federal Industries Ltd. Class A cv (b) 89,800 586,561 31345330 Finning Ltd. 143,300 2,089,079 31807140 First Marathon Inc. Class A (non-vtg.) 46,200 581,676 32076L20 Fletcher Challenge Ltd.: Class A 90,100 1,296,452 33932D10 Receipts 10,000 80,465 33932D20 Four Seasons Hotels, Inc. 53,200 694,990 35100E10 Franco Nevada Mining Corp. 25,600 1,485,554 35186010 Futures Shops Ltd. 25,600 436,215 36091310 GTC Transcontinental Group Class A 74,900 659,406 36229K20 Gardiner Oil & Gas Ltd. (b) 27,700 170,444 36553R10 Glamis Gold Ltd. 25,000 156,197 37677510 Global Stone (b) 100,000 425,991 37936Q10 Grad & Walker Energy Corp. 22,000 224,923 38391010 Granges, Inc. (b) 60,000 165,853 38719W10 Hayes-Dana, Inc. 13,300 171,230 42077610 Hemlo Gold Mines, Inc. 40,000 405,165 42366F10 SHARES VALUE (NOTE 1) Hudsons Bay Co. Ord. 36,000 $ 1,005,339 44420410 ISG Technologies, Inc. (b) 5,000 63,750 45021P30 Intensity Resources Ltd. (b) 92,900 232,171 45816E10 International Forest Products Class A (b) 50,000 747,851 45953E10 Intertape Polymer Group, Inc. 52,000 635,011 46091910 Inverness Petroleum Ltd. (b) 62,500 656,736 46190810 Investors Group, Inc. 20,000 643,720 46152H10 Labatt (John) Ltd. 100,000 691,052 50537250 Lac Minerals Ltd. 40,000 291,567 50545810 Laperriere & Verreault, Inc. 11,300 26,101 39945L20 Leons Furniture Ltd. 80,000 764,890 52668210 Linamar Corp. 15,000 397,592 53278L10 Loblaw Companies Ltd. 90,100 1,526,743 53948110 Lynx Energy Services Corp. Class B (b) 2,000 14,389 55190420 MDC Corp. Class A (b) 200,000 242,342 55267W10 Maax, Inc. (b) 243,300 2,165,000 57777C10 Maax, Inc. (warrants) (b) 8,333 33,920 57777C11 Mackenzie Financial Corporation 101,000 784,014 55453110 MaClean Hunter Ltd. 261,800 2,379,189 55474980 Merfin Hygenic Products Ltd. (b) 366,200 1,345,049 58950K10 Meridian Technologies, Inc. 44,600 299,765 58978510 Moore Corporation Ltd. 45,000 941,440 61578510 Morgan Hydrocarbons, Inc. (b) 247,000 1,098,962 61790010 Morrison Petroleums Ltd. 243,600 1,937,066 61847310 Noma Industries Ltd. Class A (a) 26,200 146,333 65531630 Noranda Forest, Inc. 197,000 1,659,757 65542L10 Noranda, Inc. 227,944 3,862,507 65542210 Northridge Exploration Ltd. (b) 100,800 114,507 66667T10 Northstar Energy Corp. (b) 4,000 79,518 66703R10 Newgas Ltd. (b) 30,000 122,117 67051K10 Oshawa Group Ltd. Class A 30,000 525,389 68820520 Pancanadian Petroleum Ltd. 24,200 863,664 69890020 Paramount Resources Ltd. 74,700 1,103,146 69932010 Pegasus Gold, Inc. 17,000 370,139 70556K10 Placer Dome, Inc. 120,000 2,942,179 72590610 Poco Petroleums Ltd. (b) 80,000 552,842 73036110 Power Corporation of Canada 50,000 762,051 73923910 Power Financial Corp. 20,000 461,964 73927C10 Precision Drilling Class A 40,800 502,102 74022D10 Rayrock Yellowknife Resources, Inc. (b) 16,200 185,562 75509N10 Remington Energy (warrants) (b) 25,000 86,145 75958D92 Renaissance Energy Ltd. (b) 144,822 3,537,059 75966610 Rigel Energy Corp. (b) 33,000 537,317 76655L10 Rio Alto Exploration Ltd. (b) 66,700 473,560 76689210 Riverside Forest Products 6,600 127,457 76890410 Rogers Communications, Inc. Class B (b) 88,600 1,627,135 77510920 SR Telecom, Inc. 44,100 400,772 78464P10 Saskatchewan Oil & Gas Co. (b) 36,500 286,787 80384T10 Scott Paper Ltd. 8,300 69,143 80989410 Shaw Cablesystems Ltd. Class B cv (a) 44,000 799,727 82028K20 Shaw Industries Ltd. Class A 6,300 61,428 82090420 Slocan Forest Products Ltd. 11,400 227,706 83158C10 Solid State Geophysical Class A (b) 55,000 338,427 83420Q10 Southernera Resources Ltd. (b) 7,000 31,145 84390110 St. Lawrence Cement, Inc. Class A (b) 10,000 69,105 79106010 Stackpole Limited (b) 105,000 1,003,919 85232N10 Summit Resources Ltd. 85,600 632,058 86624610 Talisman Energy, Inc. (b) 40,000 882,275 87425E10 Tarragon Oil & Gas Ltd. (b) 62,200 836,117 87629E20 Thomson Corp. 171,798 2,146,743 88490310 Toronto Sun Publishing Co. 8,000 74,217 89199110 Torstar Corp. Class B 169,000 2,783,711 89147420 Tri Link Resources Ltd. Class A (b) 64,900 737,248 89557D10 Trimark Financial Corp. 13,600 391,382 89621H10 Trojan Technologies Corp. (b) 110,000 780,983 89692410 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) CANADA - CONTINUED UAP Inc. Class A 10,100 $ 160,627 90255810 Ulster Petroleums Ltd. (b) 50,000 194,062 90384010 Van Houtte (A.L.) (b) 20,000 196,903 92090410 Venezuelan Goldfields Ltd. (b) 50,000 492,256 92265D10 Viceroy Homes Ltd. Class A 109,100 423,444 92562710 Viceroy Resources Corp. (b) 10,000 90,878 92564C10 Videotron Group Ltd. 8,400 178,916 92558H10 Westcoast Energy, Inc. 25,000 399,958 95751D10 Winfield Energy Spec (warrants) (b) 160,000 540,786 97390592 88,999,772 UNITED STATES OF AMERICA - 3.3% DEKALB Genetics Corp. Class B 4,900 132,300 24487820 Electronic Retailing Systems 15,000 95,625 28582510 G&K Services, Inc. Class A 20,000 470,000 36126810 General Mills, Inc. 5,000 320,000 37033410 Longview Fibre Co. 10,000 177,500 54321310 Stop & Shop Companies, Inc. 29,800 584,825 86209910 Tootsie Roll Industries, Inc. 9,648 757,338 89051610 Valmont Industries, Inc. 48,700 730,500 92025310 3,268,088 TOTAL COMMON STOCKS (Cost $81,760,059) 92,267,860 CONVERTIBLE PREFERRED STOCKS - 0.1% UNITED STATES OF AMERICA - 0.1% Battle Gold Co. (Cost $100,000) 2,000 120,750 07159330 CONVERTIBLE BONDS - 0.9% PRINCIPAL AMOUNT (A) CANADA - 0.9% Abitibi-Price, Inc. 7.85%, 3/1/03 (Cost $870,715) CAD 1,000,000 840,622 003680AD REPURCHASE AGREEMENTS- 4.8% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 2.96% dated 10/29/93 due 11/1/93 $4,689,156 4,688,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $87,418,774) $ 97,917,232 CURRENCY TYPE ABBREVIATIONS CAD - Canadian dollar LEGEND (a) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $1,046,026 or 1.1% of net assets. (b) Non-income producing OTHER INFORMATION Purchases and sales of securities, other than short-term securities, during the year ended October 31, 1993, aggregated $141,430,513 and $78,984,306, respectively. Brokerage commissions received by FBSI, an affiliate of the fund's investment adviser, from portfolio transactions during the year ended October 31, 1993, amounted to $6,234. (See Note 3 of Notes to Financial Statements.) The fund participated in the bank borrowing program. The maximum loan and the average daily loan balances during the periods for which loans were outstanding amounted to $14,953,000 and $5,064,760, respectively. The weighted average interest rate was 3.69%. Interest expense includes $13,194 paid under the bank borrowing program. (See Note 4 of Notes to Financial Statements.) INCOME TAX INFORMATION At October 31, 1993, the aggregate cost of investment securities for income tax purposes was $87,450,728. Net unrealized appreciation aggregated $10,466,504, of which $12,540,368 related to appreciated investment securities and $2,073,864 related to depreciated investment securities. For the period, interest and dividends from foreign countries were $684,135 or $0.13 per share. Taxes paid to foreign countries were $115,434 or $0.02 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Basic Industries 18.9% Conglomerates 0.6 Construction and Real Estate 2.5 Durables 2.6 Energy 23.9 Finance 3.0 Industrial Machinery and Equipment 8.0 Media and Leisure 10.3 Nondurables 2.4 Precious Metals 10.0 Repurchase Agreements 4.8 Retail and Wholesale 4.6 Services 2.9 Technology 1.1 Utilities 4.4 100.0% CANADA FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993 ASSETS Investment in securities, at value (including repurchase agreements of $4,688,000) (cost $87,418,774) (Notes 1 $ 97,917,232 and 2) - See accompanying schedule Cash 133,222 Receivable for investments sold 1,011,895 Receivable for fund shares sold 2,129,978 Dividends receivable 52,165 Interest receivable 9,743 TOTAL ASSETS 101,254,235 LIABILITIES Payable for investments purchased $ 2,224,649 Payable for fund shares redeemed 2,621,915 Accrued management fee 64,759 Other payables and accrued expenses 365,416 TOTAL LIABILITIES 5,276,739 NET ASSETS $ 95,977,496 Net Assets consist of: Paid in capital $ 84,886,125 Accumulated net investment (loss) (237,885 ) Accumulated undistributed net realized gain (loss) on 830,798 investments Net unrealized appreciation (depreciation) on investment securities 10,498,458 NET ASSETS, for 5,384,468 shares outstanding $ 95,977,496 NET ASSET VALUE, offering price and redemption price per share ($95,977,496 (divided by) 5,384,468 shares) (Note 3) $17.82
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1993 INVESTMENT INCOME $ 818,431 Dividends Interest 112,928 931,359 Less foreign taxes withheld (Note 1) (115,434 ) TOTAL INCOME 815,925 EXPENSES Management fee (Note 3) $ 471,845 Basic fee Performance adjustment 50,721 Transfer agent fees (Note 3) 466,176 Accounting fees and expenses 51,311 (Note 3) Non-interested trustees' 382 compensation Custodian fees and expenses 44,467 Registration fees 93,773 Audit 29,854 Legal 412 Interest (Note 4) 13,194 TOTAL EXPENSES 1,222,135 NET INVESTMENT INCOME (LOSS) (406,210 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) (215,792 Net realized gain (loss) on ) investment securities Change in net unrealized appreciation (depreciation) on investment securities 9,798,514 NET GAIN (LOSS) 9,582,722 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 9,176,512 OTHER INFORMATION $50,670 Sales charges paid to FDC (Note 3) Deferred sales charges withheld by $12,252 FDC (Note 3) Accounting fees paid to FSC $50,881 (Note 3)
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, 1993 1992 INCREASE (DECREASE) IN NET ASSETS Operations $ (406,210 $ (24,222 Net investment income (loss) ) ) Net realized gain (loss) on investments (215,792 (167,044 ) ) Change in net unrealized appreciation (depreciation) on investments 9,798,514 (1,530,378 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 9,176,512 (1,721,644 ) Distributions to shareholders from: (30,615 - Net investment income ) Net realized gain - (1,301,829 ) Share transactions 232,403,520 14,294,414 Net proceeds from sales of shares Reinvestment of distributions from: 29,289 - Net investment income Net realized gain - 1,271,828 Cost of shares redeemed (167,302,323 (14,168,947 ) ) Net increase (decrease) in net assets resulting from share transactions 65,130,486 1,397,295 TOTAL INCREASE (DECREASE) IN NET ASSETS 74,276,383 (1,626,178 ) NET ASSETS Beginning of period 21,701,113 23,327,291 End of period (including undistributed net investment income (loss) of $(237,885) and $198,940, respectively) $ 95,977,496 $ 21,701,113 OTHER INFORMATION Shares Sold 13,751,993 950,933 Issued in reinvestment of distributions from net realized gain 2,020 86,992 Redeemed (9,894,449 (945,574 ) ) Net increase (decrease) 3,859,564 92,351 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, SELECTED PER-SHARE DATA 1993 1992 1991 1990 1989 Net asset value, beginning of period $ 14.23 $ 16.28 $ 13.57 $ 15.45 $ 12.74 Income from Investment Operations Net investment income (.15) (.02)* .03* .05* .02* Net realized and unrealized gain (loss) on investments 3.76 (1.11) 3.59 (1.24) 2.96 Total from investment operations 3.61 (1.13) 3.62 (1.19) 2.98 Less Distributions From net investment income (.02) - (.06) (.01) (.12) From net realized gain - (.92) (.85) (.68) (.15)(dagger) Total distributions (.02) (.92) (.91) (.69) (.27) Net asset value, end of period $ 17.82 $ 14.23 $ 16.28 $ 13.57 $ 15.45 TOTAL RETURN(diamond) 25.40% (7.09)% 28.13% (8.16)% 23.94% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 95,977 $ 21,701 $ 23,327 $ 17,736 $ 24,331 Ratio of expenses to average net assets # 2.00% 2.00% 2.01% 2.05% 2.06% Ratio of expenses to average net assets before expense reductions # 2.00% 2.07% 2.26% 2.31% 2.87% Ratio of net investment income to average net assets (.66)% (.11)% .17% .34% .16% Portfolio turnover rate 131% 55% 68% 164% 152% * FOR THE YEARS ENDED OCTOBER 31, 1992, 1991, 1990 AND 1989, NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED USING AVERAGE SHARES OUTSTANDING. (dagger) INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. # EFFECTIVE AUGUST 5, 1988, FMR VOLUNTARILY AGREED TO REDUCE THE FUND'S EXPENSES TO THE EXTENT THAT AGGREGATE OPERATING EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) OF THE FUND WERE IN EXCESS OF AN ANNUAL RATE OF 2.00% OF THE AVERAGE NET ASSETS. (diamond) THE TOTAL RETURN WOULD HAVE BEEN LOWER IF THE ADVISER HAD NOT REDUCED EXPENSES OF THE FUND DURING THE PERIODS SHOWN.
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. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). Europe Fund has a 3% sales charge, which has been waived through May 31, 1994. CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1993 YEAR YEARS FUND Europe 24.24% 54.57% 105.69% Europe (incl. 3% sales charge) 20.52% 53.81% 99.52% Morgan Stanley Europe Index 25.67% 66.60% 113.55% Average European Region Fund 24.46% 43.31% 86.35% 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 October 1, 1986. You can compare the fund's figures to the performance of the Morgan Stanley Europe index - a broad measure of the performance of stocks in Europe, weighted by each country's market capitalization (or the total value of its outstanding shares). You can also compare the fund's performance to the average European region fund which reflects the performance of 31 funds with similar objectives tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1993 YEAR YEARS FUND Europe 24.24% 9.66% 10.71% Europe (incl. 3% sales charge) 20.52% 8.99% 10.23% Morgan Stanley Europe Index 25.67% 10.75% 11.29% Average European Region Fund 24.46% 7.33% 9.13% AVERAGE ANNUAL RETURNS take the fund's actual (or 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 (301) MS Europe Index 10/01/86 9700.00 10000.00 10/31/86 9690.30 10061.24 11/30/86 10078.30 10600.17 12/31/86 10485.70 10866.14 01/31/87 11563.06 11347.33 02/28/87 12300.92 11751.88 03/31/87 12922.28 12332.46 04/30/87 13456.26 12815.21 05/31/87 13679.56 12743.90 06/30/87 14232.95 13107.17 07/31/87 15252.37 13548.56 08/31/87 15572.75 13660.75 09/30/87 16135.86 13749.78 10/31/87 11737.82 11135.61 11/30/87 11213.55 10645.49 12/31/87 12048.50 11264.74 01/31/88 11475.68 10802.62 02/29/88 11533.94 11438.32 03/31/88 12067.91 11753.00 04/30/88 12407.72 11972.00 05/31/88 12271.80 11748.03 06/30/88 11999.95 11629.54 07/31/88 11873.74 11655.59 08/31/88 11252.38 11126.51 09/30/88 11776.65 11732.04 10/31/88 12582.48 12818.60 11/30/88 12737.81 12976.68 12/31/88 12751.83 13046.37 01/31/89 13357.17 13518.81 02/28/89 13386.94 13365.30 03/31/89 13615.18 13462.17 04/30/89 14200.67 13835.82 05/31/89 13813.65 13126.86 06/30/89 14190.75 13668.45 07/31/89 15460.97 15277.34 08/31/89 15341.89 15086.51 09/30/89 16036.54 15345.58 10/31/89 14925.09 14339.46 11/30/89 15798.37 15135.61 12/31/89 16874.84 16764.74 01/31/90 17085.65 16719.83 02/28/90 16643.95 16319.18 03/31/90 17145.88 16549.43 04/30/90 16804.57 16110.24 05/31/90 17838.54 17421.38 06/30/90 18581.39 18033.25 07/31/90 19705.71 18792.65 08/31/90 17356.69 16929.38 09/30/90 15640.09 14935.59 10/31/90 16342.79 16194.23 11/30/90 16322.71 16356.96 12/31/90 16100.11 16120.73 01/31/91 16418.62 16663.17 02/28/91 17415.24 18120.73 03/31/91 16480.27 16904.64 04/30/91 16439.17 16727.91 05/31/91 16511.09 17221.35 06/30/91 15062.39 15776.03 07/31/91 15822.70 16867.89 08/31/91 16141.21 17175.85 09/30/91 16726.85 17692.04 10/31/91 16367.25 17319.34 11/30/91 15874.07 16911.64 12/31/91 16769.90 18234.47 01/31/92 16844.24 18229.22 02/29/92 17046.03 18299.21 03/31/92 16461.90 17658.79 04/30/92 17545.20 18633.42 05/31/92 18405.47 19693.79 06/30/92 18235.54 19327.03 07/31/92 17577.06 18636.54 08/31/92 17630.16 18575.77 09/30/92 17354.03 18268.54 10/31/92 16058.32 16993.88 11/30/92 16047.70 16985.58 12/31/92 16346.72 17375.24 01/31/93 16260.11 17404.43 02/28/93 16357.54 17603.55 03/31/93 17429.28 18509.13 04/30/93 18003.04 18917.36 05/31/93 18219.55 19120.87 06/30/93 17710.75 18841.54 07/31/93 17721.57 18906.21 08/31/93 19161.38 20565.25 09/30/93 19139.73 20501.36 10/31/93 19951.65 21355.45 Let's say you invested $10,000 in Fidelity Europe Fund on its start date and paid the 3% sales charge. By October 31, 1993, it would have grown to $19,952 - a 99.52% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley Europe index, which would have grown to $21,355 over the same period - a 113.55% 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 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. (checkmark) EUROPE FUND TALK: THE MANAGER'S OVERVIEW An interview with Sally Walden, Portfolio Manager of Fidelity Europe Fund Q. SALLY, HOW DID THE FUND DO? A. For the year ended October 31, 1993 the fund's total return was 24.24%, compared to 25.67% for the Morgan Stanley Europe index. For the same one-year period, the average European fund returned 24.46%, according to Lipper Analytical Services. Q. THAT'S A STRONG GAIN. WHAT TRIGGERED IT? A. After trailing the U.S. market for five years, most European markets rallied over the past 12 months. Battered by currency turmoil in the summer of 1992, stocks began to surge in the fall. Investors worldwide were encouraged by falling interest rates and hopes for an economic recovery, and looked to European stocks to provide above-average returns. That, in turn, increased demand and drove stock prices higher. Q. WHAT WERE SOME OF THE FUND'S STRONGEST PERFORMERS? A. Banks, insurance companies and other financial services stocks did extremely well. As interest rates fell, stocks like the U.K.'s National Westminster posted gains during the period. Once the Exchange Rate Mechanism collapsed, other countries followed Britain's lead with interest rate cuts of their own. Companies like France's Credit Locale benefited in this falling interest rate climate. Also, some other individual stocks helped the fund. Nokia, for example, the fund's largest investment, is one of the continent's largest cellular telephone handsets and switching producers. Q. THE FUND'S STAKE IN THE STOCK NEARLY DOUBLED DURING THE PERIOD, YET THE FUND SLIGHTLY TRAILED THE INDEX . . . A. . . . which is in part accounted for by the fund's low exposure to cyclical stocks - or stocks that do well when economies are recovering. Many of Europe's strongest performers came from the steel, auto and engineering sectors. I avoided these stocks because I felt that the continent's economies would remain fairly weak throughout 1993, which is in fact what happened. European economies continue to limp along, notwithstanding the run-up in cyclicals. But one of my investment themes is to emphasize stocks that do well because they're growing, not because they'll do well in a given economic cycle. In hindsight, the fund might have done better over the short term had I focused more on cyclical stocks. But over the past several months, investors' excitement about cyclicals has waned and the stocks have started to disappoint. Q. MANY OF THESE AUTO, STEEL AND ENGINEERING COMPANIES ARE BASED IN GERMANY. IS THAT WHY THE FUND HAD ONLY 11% OF ITS INVESTMENTS THERE? A. That's one reason, but there are others. Germany has a huge economy but its stock market isn't proportionately as large. The market there is dominated by a half-dozen companies. So, as a fund manager it's difficult to know something about one of those companies that most other investors don't already know. Also, I'm worried that German exporters are very uncompetitive in an increasingly global marketplace. And the currency volatility on the continent over the past 12 months underscored that lack of competitiveness. Every time there's an upturn in world trade, German companies have taken a smaller share of it. And the country's goods are priced higher - based in part on more expensive labor - than other world manufacturers. As the deutschemark grew stronger, product prices went even higher. Finally, accounting standards in Germany are somewhat mysterious, which makes it difficult to understand a company's financial picture. Q. INSTEAD OF CYCLICALS, WHAT INDUSTRIES DID YOU FOCUS ON? A. Media stocks, for one, which have been an area of substantial growth in Europe and made up the fund's second largest sector concentration. Deregulation has provided investors plenty of opportunities. Five years ago, commercial television didn't really exist and all you could see in Germany, Holland, and Spain was government sponsored-programming. Despite the persistent recession, TV advertising has continued to increase because it's at such an early stage in its development. Some of the fund's largest investments - broadcasters TF-1 in France and Audiofina in Belgium - should benefit as commercial TV grows. Even in the more mature areas, like the U.K., media stocks look attractive as the economy improves, and ad revenues rise. Q. MOST INVESTORS IN THE UNITED STATES HAVE SHUNNED THE PHARMACEUTICAL STOCKS. WHY IS HEALTH ONE OF THE FUND'S LARGEST SECTOR CONCENTRATIONS? A. European pharmaceuticals got caught in the U.S. health-care reform down draft. It now appears that the market overreacted to the threat of cost controls for drugs sold in the United States. But European drug companies are quite accustomed to operating in a regulated health-care environment at home, and so their prices had reflected something that probably won't affect them so negatively. I focused on companies like Schering in Germany - - the fund's second largest investment at the end of October - that have strong volume growth, unique new drugs or an emphasis on cost cutting, and could do quite well in a more regulated U.S. health-care environment. Schering has shed its chemical businesses, preferring to focus on its drug business. Its new drug to treat multiple sclerosis, Betaseron, was recently launched in the United States. Q. HOW IMMINENT IS A EUROPEAN ECONOMIC RECOVERY? A. Europe seems to be coming out of its recession, but I think that it won't be a "V-shaped" recovery, rocketing from its bottom to vastly improved levels. Rather, I think most European economies will continue to bump along at the bottom. Even though most economies appear to have bottomed out, they haven't started to improve yet, either. Over the next 12 months, I expect continued interest rate cuts so the continent could be operating under a low-growth, low inflation environment for some time. Despite having come down already, interest rates still hover at historically high levels. I think there's room for them to drop another 2-3% over the next year. Q. WHAT'S THE IMPACT OF THAT SCENARIO ON THE MARKETS? A. Traditionally, when interest rates drop and fixed-income investments provide lower yields, more people are motivated to buy stocks to get a higher return. What's complicating that outlook, though, is that European stocks, in large part, have been driven higher by foreign investors - namely from the United States. U.S. investors put money in German stocks this past year at a level not seen since the Berlin wall came down. The $64,000 question, then, is whether this trend will continue. If U.S. investors turn their backs on European stocks, the markets won't make as much progress as they have. If the dollar starts strengthening, and investors start to worry about currency losses, it could also have an impact on European markets. Q. HOW WILL YOU INVEST GOING FORWARD? A. I'll stick to my basic investment themes, emphasizing pharmaceutical, media and interest rate-sensitive sectors. I'll mostly continue to avoid heavy industrial and cyclical areas. However, I'm beginning to look at some manufacturing companies, especially those that have slashed costs and improved profits. I'm looking for companies that aren't sitting on their hands waiting for economies to improve. Instead, I'll focus on companies that realize that global competition is unbelievably tough, and the only way to survive is to cut costs and make themselves lean. Looking ahead, it's probably unrealistic to expect European markets to repeat the fantastic return of the past year. It's nearly impossible to predict where the market's going. But, I'm optimistic that picking good stocks can help the fund weather any kind of market. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in common stocks in Western Europe START DATE: October 1, 1986 SIZE: as of October 31, 1993, over $528 million MANAGER: Sally Walden, since July 1992; also manages various funds for non-U.S. investors (checkmark) SALLY WALDEN'S INVESTMENT APPROACH: "I look at stocks first, industries second and the country last. I build the fund `brick by brick' investing in companies for individual reasons. I prefer to look for companies with very low debt, strong management and good growth prospects. I'm also interested in change within companies - either management changes, a refocused strategy or companies whose prospects are brighter for tomorrow because of restructuring or other factors. "When markets are very speculative, or when there's currency volatility, and economic themes driving markets, my approach can go through a period when it doesn't look very smart. If you take it over any three- to five-year period, though, I'm very confident that this approach works. But now and then, you're going to have a six-month or year period when currency or sector-rotations drive the market, and they'll have an edge over my strategy. "Companies where there is more than meets the eye interest me. European accounting disclosure is not as complete as it is in the United States. In particular, European companies may not consolidate all of their activities. Another stumbling block is that companies don't split out profits from various divisions, which may conceal the profitability of key activities. Doing the analytical detective work to get the true figures helps me evaluate a company's real prospects. " (bullet) The fund's stake in the United Kingdom was cut to 27.1% at the end of October, down from 32.3% six months ago because the market there had already improved dramatically and other European markets offered better opportunities. (bullet) Nokia, a Finnish cellular equipment company, is the fund's largest investment because European demand for cellular products is growing very rapidly. Nokia grew from 1.7% of the fund's investments at the end of April to 3.7% at the end of October. DISTRIBUTIONS The Board of Trustees of Europe Fund voted to pay on December 13, 1993, to shareholders of record at the opening of business on December 10, 1993, a distribution of $.08 from net investment income. EUROPE INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1993 Finland 4.9% Netherlands 6.8% Row: 1, Col: 1, Value: 27.1 Row: 1, Col: 2, Value: 4.3 Row: 1, Col: 3, Value: 6.8 Row: 1, Col: 4, Value: 11.0 Row: 1, Col: 5, Value: 2.3 Row: 1, Col: 6, Value: 2.0 Row: 1, Col: 7, Value: 3.7 Row: 1, Col: 8, Value: 14.3 Row: 1, Col: 9, Value: 8.800000000000001 Row: 1, Col: 10, Value: 3.2 Row: 1, Col: 11, Value: 4.8 Row: 1, Col: 12, Value: 6.8 Row: 1, Col: 13, Value: 4.9 Belgium 4.8% United Kingdom 27.1% Italy 3.2% Switzerland 8.8% Sweden 4.2% Spain 6.8% France 14.4% Other 3.7% Germany 11% Cash 2.0% Ireland 2.3% AS OF APRIL 30, 1993 Netherlands 6.9% Belgium 3.4% Row: 1, Col: 1, Value: 32.3 Row: 1, Col: 2, Value: 2.1 Row: 1, Col: 3, Value: 5.8 Row: 1, Col: 4, Value: 7.2 Row: 1, Col: 5, Value: 2.5 Row: 1, Col: 6, Value: 10.2 Row: 1, Col: 7, Value: 3.6 Row: 1, Col: 8, Value: 14.5 Row: 1, Col: 9, Value: 9.1 Row: 1, Col: 10, Value: 2.4 Row: 1, Col: 11, Value: 3.4 Row: 1, Col: 12, Value: 6.9 Italy 2.4% United Kingdom 32.3% Switzerland 9.1% France 14.5% Sweden 2.1% Spain 5.8% Other 3.6% Cash 10.2% Germany 7.2% Ireland 2.5% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks 97.6 89.7 Bonds 0.4 0.1 Short-term investments 2.0 10.2 TOP TEN STOCKS (BY ISSUER) % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Nokia AB (Finland, Communications Equipment) 3.7 1.7 Schering (Germany, Drugs and Pharmaceuticals) 2.6 1.3 TF-1 (France, Broadcasting) 1.6 0.9 Astra A Free shares (Sweden, Drugs & Pharmaceuticals) 1.6 1.2 IHC Caland NV (Netherlands, Energy Services) 1.4 1.6 SIP Spa (Italy, Telephone Services) 1.3 - Reisebuero Kuoni Part. Cert. (Switzerland, Entertainment) 1.3 0.9 Audiofina (Belgium, Broadcasting) 1.3 1.0 Repsol SA Ord. (Spain, Oil and Gas) 1.2 1.0 Gehe AG (Germany, Medical Supplies and Equipment) 1.2 1.1 TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Finance 21.4 23.2 Media and Leisure 13.8 10.7 Health 10.7 10.7 Utilities 8.2 10.1 Nondurables 6.9 8.1 Retail and Wholesale 6.0 6.0 Construction and Real Estate 5.9 1.6 Industrial Machinery and Equipment 4.6 4.5 Energy 4.3 4.8 Technology 4.2 - EUROPE INVESTMENTS OCTOBER 31, 1993 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 93.9% SHARES VALUE (NOTE 1) BELGIUM - 4.5% Audiofina 16,698 $ 6,648,936 05099292 GB-INNO-BM SA GIB 94,565 3,272,056 36149699 Generale de Banque SA 12,570 3,058,361 37199592 Immob de Belgique (a) 22,495 2,230,041 45099592 Quick Restaurants SA (a) 97,895 5,054,033 74899B22 UCB Group 4,830 3,133,564 90262799 23,396,991 FINLAND - 3.5% Kone Corp. Class B Ord. 12,200 1,149,882 50400092 Nokia AB Free shares 213,000 11,928,045 65599992 Repola OY 328,000 4,843,517 75999A92 17,921,444 FRANCE - 14.4% Alcatel Alsthom CGE 50 6,570 01390492 Assurances Generales (Reg.) 43,685 5,377,412 04557510 BIC 20,050 4,141,720 08899292 BNP CI Ord. 45,028 2,207,180 05599996 BQE National Paris Ord. (a) 14,663 2,656,520 05599994 CPR (Comp Par Reescompte) (a) 56,950 5,255,291 12599592 Credit Locale de France (b) 46,700 3,632,574 22699892 Ecco SA 32,565 2,977,497 27399292 Eiffage SA 23,540 4,384,355 27599522 Elf Aquitaine 56,232 4,374,023 28627199 Eurafrance (Societe) 9,297 3,552,883 29899892 Filippachi SA units (a) 14,500 1,969,015 75599995 Fructivie SA 33,600 5,034,880 33099092 Galeries Lafayette SA 2,565 820,835 36341399 Gaz Et Eaux SA (a) 10 3,420 38199F92 Immeubles de France, Ste Des (a) 24,100 4,427,447 44999C22 Omnium Gestion Financement SA 26,286 2,884,072 68099792 Renault SA Partners Cert. (a) 13,570 5,365,044 75999F92 Salomon SA 7,585 2,452,988 93099292 TF-1 86,400 8,250,864 90399999 Total Compagnie Francaise des Petroles Class B (a) 76,800 4,284,727 20434510 74,059,317 GERMANY - 9.4% Ava Alg Handels Verbrauchen 7,802 4,118,860 05399692 Bayer AG 25,200 4,778,859 07273010 Duerr Beteiligungs AG 12,050 4,681,763 26499292 Gehe AG 22,700 6,140,048 68199492 Holsten Brauerei AG 6,654 2,072,159 43899D92 Munich Reinsurance (Reg.) 2,300 5,457,188 62699492 Otto Reichelt AG 12,295 2,990,153 69199A92 Schering 21,000 13,571,492 80658510 Veba Vereinigte Elektrizetaets & Bergwerks AG Ord. 17,000 4,731,382 92239110 48,541,904 HONG KONG - 0.9% HSBC Holdings Ord. 393,500 4,439,317 42199194 IRELAND - 2.3%. Bank of Ireland U.S. Holdings, Inc. 757,000 3,151,406 06278793 CRH PLC 1,128,720 5,468,095 12626K10 Irish Life PLC 1,080,000 3,512,041 46299B92 12,131,542 ITALY - 2.5% Edison Spa 943,700 3,917,818 28099092 Luxottica Group Spa sponsored ADR (a) 87,800 2,173,050 55068R20 SIP Spa 3,200,000 6,931,264 78401792 13,022,132 SHARES VALUE (NOTE 1) NETHERLANDS - 6.8% Heineken NV 49,125 $ 5,230,314 42301210 IHC Caland NV 342,595 7,056,354 56299392 International Nederlanden Groep 124,510 5,405,187 46099892 PolyGram NV Ord. 109,400 4,096,362 73173392 Unilever NV ADR 47,900 5,496,525 90478450 VNU Ord. 80,200 6,289,780 92399010 Wereldhave NV 27,900 1,673,853 95199E22 35,248,375 NORWAY - 1.8% Color Lines 465,225 1,548,329 19699492 Helikopter Services 176,600 2,518,916 42499192 Smedvig Tankships Ltd. Ord. (b) 258,500 2,746,563 83169E20 Veidekke A S 138,800 2,677,390 93699592 9,491,198 SPAIN - 6.8% Aumar (Reg.) 246,940 2,725,487 05199292 Banco Popular Espanol 28,150 3,649,074 05999110 Corporacion Financiera Alba 97,600 3,423,229 15199010 Corporacion Mapfre International Reas (Reg.) 87,080 4,012,130 16899192 EL Aguila SA 336,110 2,651,535 28299292 Empresa Nacional de Electricidad SA Ord. 107,200 5,050,311 29244710 FOCSA (Fomento de Obras Y Construcciones SA) 31,205 3,296,172 34418599 Gas Y Electricidad 41,200 1,733,452 37420099 Hidro Cantabrico 95,000 2,121,666 42899999 Repsol SA Ord. 212,500 6,351,389 76026T10 35,014,445 SWEDEN - 4.2% Astra A Free shares 375,400 8,218,764 04632292 Avesta Sheffield AB Ord. (a) 471,100 2,736,948 05399892 SKF AB Ord. 252,800 3,895,891 78437530 Sila AB Class B (a) 194,000 949,120 84099392 Skandia International Holding Co. AB ADR (a) 272,000 5,755,381 83055510 21,556,104 SWITZERLAND - 8.8% Ares Serono B 11,390 5,766,605 03999392 BBC Brown Boveri & Cie (Bearer) 8,100 5,442,548 05599099 Baloise Holding (Reg.) (a) 2,430 3,796,748 05899195 Nestle SA (Reg.) (a) 4,000 3,178,541 64106992 Reisebuero Kuoni AG (Bearer) 63 1,394,067 75999593 Reisebuero Kuoni Part. Cert. 6,400 6,780,889 75999592 Roche Holdings Division (rights) 1,400 5,398,156 77157092 Swiss Bank Corp. (Bearer) (a) 13,100 4,409,857 87083610 Swiss Reinsurance Corp. PC (a) 10,650 5,327,678 87099310 Winterthur Schweiz (Reg.) 7,400 3,815,993 97629994 45,311,082 UNITED KINGDOM - 27.1% Abbey National PLC Ord. 567,000 3,523,843 00281099 Allied Lyons PLC 332,600 2,892,426 01925510 Anglia Television Group 190,300 1,051,598 03499310 Argyll Group PLC 947,900 4,156,769 04099210 Arjo Wiggins Appleton PLC 648,600 2,162,030 04199592 Associated British Ports Ord. 663,230 4,932,528 04599392 BAA PLC Ord. 294,200 3,783,241 10999999 Bass PLC Ord. 335,900 2,425,974 06990492 Boots Co. PLC 312,300 2,401,272 09999410 British Telecommunications PLC Ord. 763,800 5,222,192 11102110 Burton Group PLC Ord. 2,450,000 2,722,268 12304910 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) UNITED KINGDOM - CONTINUED Cable & Wireless PLC Ord. 604,600 $ 4,483,055 12699910 Cadbury-Schweppes PLC Ord. 478,666 3,393,254 12720910 Chubb Security 634,600 3,393,980 17299B92 Compass Group Ord. 287,000 2,402,328 20499192 De La Rue Co. 232,100 2,613,307 24642110 Hazlewood Foods Ord. 753,800 2,088,335 42199292 Kwik Save Group PLC Ord. 185,000 1,756,838 50124310 LWT Holdings PLC 664,430 4,626,459 55080499 MFI Furniture Group PLC 1,528,800 3,193,541 55299392 Mirror Group Newspaper PLC (a) 2,173,700 5,152,538 60499792 National Westminster Bank PLC Ord. 665,800 5,464,560 63853930 North West Water Ord. 437,775 3,434,143 67299195 Prudential Corp. 1,051,500 5,709,330 74399992 Racal Electronics Ltd. Ord. 1,281,000 3,852,543 74981510 Rank Organization PLC 262,000 3,264,368 75304110 Reuters Holdings PLC Ord. (a) 104,300 2,524,091 76132410 Rothmans International PLC SA 70,596 437,178 77869592 Royale Insurance Co., Ltd. 866,400 4,056,086 78074910 Scottish & Newcastle Brewers: PLC 492,450 3,407,069 80987810 units 123,112 412,202 80987892 Scottish Hydro-Electric PLC Ord. 323,400 1,959,591 81013395 Scottish Power ADR (b) 46,600 2,865,900 81013T40 Scottish Television 797,800 5,052,794 81099210 Smithkline Beecham Ord. units 589,900 3,294,745 83237850 Tesco PLC Ord. (a) 999,900 3,007,149 88157510 Trafalgar House PLC Ord. 1,296,500 1,872,742 89270710 Ulster Television Ord. 285,000 1,992,914 94299492 United Newspapers PLC Ord. 384,000 3,100,485 91120210 Vendome Lux Group PLC SA units (a) 397,569 1,855,347 92299E22 Wickes PLC 1,480,700 2,478,840 96699392 Wolseley Ord. 256,100 2,674,857 97799092 Woolworth Holdings PLC Ord. 357,042 3,464,675 98088610 Zeneca Group PLC Ord. (a) 455,000 5,210,660 98934D92 139,770,045 UNITED STATES OF AMERICA - 0.9% Rhone Poulenc Rorer, Inc. 106,920 4,764,874 76242T92 TOTAL COMMON STOCKS (Cost $415,641,027) 484,668,770 NONCONVERTIBLE PREFERRED STOCKS - 3.7% FINLAND - 1.4% Nokia AB 128,300 7,074,291 65599910 GERMANY - 1.6% Boss (Hugo) AG 7,250 3,891,954 44451094 Krones AG 2,815 4,458,315 50199A93 8,350,269 ITALY - 0.7% SAI (Sta Assicur Industriale) N/C Risp 627,100 3,728,122 78399192 TOTAL NONCONVERTIBLE PREFERRED STOCKS (Cost $13,544,154) 19,152,682 CONVERTIBLE BONDS - 0.4% PRINCIPAL AMOUNT (A) BELGIUM - 0.3% Audiofina, 5%, 12/31/99 BEF 3,308 $ 1,344,457 050992AA NORWAY - 0.1% Color Lines 7 1/2%, 12/31/00 NOK 2,433 332,155 196994AB TOTAL CONVERTIBLE BONDS (Cost $1,115,466) 1,676,612 REPURCHASE AGREEMENTS - 2.0% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 2.96% dated 10/29/93 due 11/1/93 $10,533,598 10,531,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $440,831,647) $ 516,029,064 FORWARD FOREIGN CURRENCY CONTRACTS SETTLEMENT UNREALIZED DATE(S) VALUE GAIN/(LOSS) CONTRACTS TO SELL 3,643,750,000 ESP 2/1/94 $ 26,571,932 $ 760,976 7,881,600 NLG 2/2/94 4,131,734 183,286 460,000,000 BEF 2/4/94 12,449,480 541,201 70,830,500 SEK 2/4/94 8,572,181 112,178 TOTAL CONTRACTS TO SELL (Receivable amount $53,322,968) $ 51,725,327 $ 1,597,641 THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 10.0% CURRENCY TYPE ABBREVIATIONS BEF - Belgian franc NLG - Dutch guilder NOK - Norwegian krone ESP - Spanish peseta SEK - Swedish krona LEGEND (a) Non-income producing (b) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $9,245,037 or 1.7% of net assets. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, during the year ended October 31, 1993, aggregated $389,118,426 and $346,854,709, respectively. The fund participated in the interfund lending program as a borrower. The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $53,500,000 and $23,541,857, respectively. The weighted average interest rate paid was 3.5%. Interest expense includes $15,994 paid under the interfund lending program. (See Note 2 of Notes to Financial Statements). The fund participated in the bank borrowing program. The maximum loan and the average daily loan balances during the periods for which loans were outstanding amounted to $71,634,000 and $23,575,593, respectively. The weighted average interest rate was 3.7%. Interest expense includes $66,647 paid under the bank borrowing program. (See Note 4 of Notes to Financial Statements.) INCOME TAX INFORMATION At October 31, 1993, the aggregate cost of investment securities for income tax purposes was $440,890,607. Net unrealized appreciation aggregated $75,138,457, of which $88,472,943 related to appreciated investment securities and $13,334,486 related to depreciated investment securities. At October 31, 1993, the fund had a capital loss carryforward of approximately $49,180,000 of which $7,285,000, $4,932,000 and $36,963,000 will expire on October 31, 1996, 1998 and 1999, respectively. For the period, interest and dividends from foreign countries were $10,713,947 or $0.37 per share. Taxes paid to foreign countries were $2,464,167 or $0.09 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Basic Industries 2.9% Conglomerates 0.3 Construction and Real Estate 5.9 Durables 3.2 Energy 4.3 Finance 21.4 Health 10.7 Industrial Machinery and Equipment 4.6 Media and Leisure 13.8 Nondurables 6.9 Repurchase Agreements 2.0 Retail and Wholesale 6.0 Services 2.3 Technology 4.2 Transportation 3.3 Utilities 8.2 100.0% EUROPE FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993 ASSETS Investment in securities, at value (including repurchase agreements of $10,531,000) (cost $440,831,647) $ 516,029,064 (Notes 1 and 2) - See accompanying schedule Short foreign currency contracts (Note 2) $ (51,725,327 Contracts held, at value ) Receivable for contracts held 53,322,968 1,597,641 Cash 939 Receivable for investments sold 16,756,409 Receivable for fund shares sold 3,287,036 Dividends receivable 2,154,828 Other receivables 812,761 TOTAL ASSETS 540,638,678 LIABILITIES Payable for investments purchased 5,536,403 Payable for fund shares redeemed 4,825,046 Accrued management fee 272,815 Other payables and accrued expenses 1,075,659 TOTAL LIABILITIES 11,709,923 NET ASSETS $ 528,928,755 Net Assets consist of: Paid in capital $ 484,573,354 Undistributed net investment income 9,334,982 Accumulated undistributed net realized gain (loss) on investments (41,774,639 ) Net unrealized appreciation (depreciation) on: Investment securities 75,197,417 Foreign currency contracts 1,597,641 NET ASSETS, for 28,698,530 shares outstanding $ 528,928,755 NET ASSET VALUE and redemption price per share ($528,928,755 (divided by) 28,698,530 shares) $18.43 Maximum offering price per share (100/97 of $18.43) $19.00
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1993 INVESTMENT INCOME $ 14,580,526 Dividends Interest 996,050 15,576,576 Less foreign taxes withheld (Note 1) (2,464,167 ) TOTAL INCOME 13,112,409 EXPENSES Management fee (Note 3) $ 3,804,429 Basic fee Performance adjustment (703,601 ) Transfer agent fees (Note 3) 2,017,635 Accounting fees and expenses (Note 3) 297,155 Non-interested trustees' compensation 3,794 Custodian fees and expenses 441,315 Registration fees 110,153 Audit 34,798 Legal 6,845 Interest (Notes 2 and 4) 82,641 Miscellaneous 5,227 TOTAL EXPENSES 6,100,391 NET INVESTMENT INCOME 7,012,018 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 2) Net realized gain (loss) on: Investment securities 1,610,948 Foreign currency contracts (4,379,319 (2,768,371 ) ) Change in net unrealized appreciation (depreciation) on: Investment securities 92,324,959 Foreign currency contracts 1,597,641 93,922,600 NET GAIN (LOSS) 91,154,229 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 98,166,247 OTHER INFORMATION $2,116,938 Sales charges paid to FDC (Note 3) Deferred sales charges withheld by $213,896 FDC (Note 3) Accounting fees paid to FSC $286,229 (Note 3)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, 1993 1992 Operations $ 7,012,018 $ 8,208,117 Net investment income Net realized gain (loss) on investments (2,768,371 278,178 ) Change in net unrealized appreciation (depreciation) on investments 93,922,600 (34,062,837 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 98,166,247 (25,576,542 ) Distributions to shareholders from: (8,045,499 (8,580,197 Net investment income ) ) Net realized gain - (511,950 ) Share transactions 549,154,003 415,937,030 Net proceeds from sales of shares Reinvestment of distributions from: 7,889,216 7,812,021 Net investment income Net realized gain - 501,194 Cost of shares redeemed (549,458,481 (256,189,594 ) ) Net increase (decrease) in net assets resulting from share transactions 7,584,738 168,060,651 TOTAL INCREASE (DECREASE) IN NET ASSETS 97,705,486 133,391,962 NET ASSETS Beginning of period 431,223,269 297,831,307 End of period (including undistributed net investment income of $9,334,982 and $10,368,463, respectively) $ 528,928,755 $ 431,223,269 OTHER INFORMATION Shares Sold 33,375,671 25,019,767 Issued in reinvestment of distributions from: 525,251 555,360 Net investment income Net realized gain - 32,561 Redeemed (33,714,940 (15,788,075 ) ) Net increase (decrease) 185,982 9,819,613
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, SELECTED PER-SHARE DATA 1993 1992(DAGGER) 1991 1990 1989 Net asset value, beginning of period $ 15.12 $ 15.93 $ 16.28 $ 15.04 $ 12.96 Income from Investment Operations Net investment income .25 .27 .43(double dagger) .46 .25(diamond) Net realized and unrealized gain (loss) on investments 3.35 (.57) (.40) .97 2.11 Total from investment operations 3.60 (.30) .03 1.43 2.36 Less Distributions From net investment income (.29) (.48) (.35) (.19) (.24) From net realized gain - (.03)* (.03)* - (.04)* Total distributions (.29) (.51) (.38) (.19) (.28) Net asset value, end of period$ 18.43 $ 15.12 $ 15.93 $ 16.28 $ 15.04 TOTAL RETURN**(diamond) 24.24% (1.89)% .15% 9.50% 18.62% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 528,929 $ 431,223 $ 297,831 $ 389,273 $ 97,288 Ratio of expenses to average net assets 1.25% 1.22% 1.31% 1.45% 1.89%(diamond) Ratio of net investment income to average net assets 1.44% 2.38% 2.83% 2.87% 1.67% Portfolio turnover rate 76% 95% 80% 148% 160% * INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. ** TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. (dagger) AS OF NOVEMBER 1, 1991, THE FUND DISCONTINUED THE USE OF EQUALIZATION ACCOUNTING. (diamond) FOR THE PERIOD ENDED OCTOBER 31, 1989, NET INVESTMENT INCOME PER SHARE INCLUDES A REIMBURSEMENT OF $.008 PER SHARE FROM FIDELITY SERVICE CO. FOR ADJUSTMENTS TO PRIOR PERIODS' FEES. IF THIS EXPENSE REDUCTION HAD NOT EXISTED, THE RATIO OF EXPENSES TO AVERAGE NET ASSETS WOULD HAVE BEEN 1.94% AND THE TOTAL RETURN WOULD HAVE BEEN LOWER. (double dagger) INCLUDES $.05 PER SHARE FROM RECOVERY OF FOREIGN TAXES PREVIOUSLY WITHHELD ON DIVIDEND AND INTEREST PAYMENTS.
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. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). Japan Fund has a 3% sales charge, which has been waived since the fund's start on September 15, 1992 through May 31, 1994. CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF OCTOBER 31, 1993 YEAR FUND Japan 35.67% 33.50% TOPIX Index 46.06% 36.31% Average Japanese Fund 38.17% 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 September 15, 1992. You can compare the fund's figures to the performance of the TOPIX index - a broad measure of the Japanese stock market's performance, similar to the Standard & Poor's 500 stock index in the U.S. You can also compare the fund's performance to the average Japanese fund which reflects the performance of seven funds with similar objectives - in this case, a very small peer group - tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF OCTOBER 31, 1993 YEAR FUND Japan 35.67% 29.16% TOPIX Index 46.06% 31.57% Average Japanese Fund 38.17% n/a AVERAGE ANNUAL RETURNS take the fund's actual (or 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 (350) TOPIX Total Return Index 09/15/92 10000.00 10000.00 09/30/92 9940.00 9811.27 10/31/92 9840.00 9332.17 11/30/92 9940.00 9572.82 12/31/92 9960.00 9433.21 01/31/93 10050.00 9384.24 02/28/93 10620.00 9811.42 03/31/93 11840.00 11248.65 04/30/93 13440.00 13164.83 05/31/93 13820.00 13960.79 06/30/93 13000.00 13384.04 07/31/93 13870.00 14324.51 08/31/93 14110.00 14644.62 09/30/93 13730.00 13883.59 10/31/93 13350.00 13630.65 Let's say you invested $10,000 in Fidelity Japan Fund on its start date. By October 31, 1993, it would have grown to $13,350 - a 33.50% increase on your initial investment. That compares to $10,000 invested in the TOPIX index, which would have grown to $13,631 over the same period - a 36.31% 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 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. (checkmark) JAPAN FUND TALK: THE MANAGER'S OVERVIEW An interview with John Hickling, Portfolio Manager, and Shigeki Makino, Tokyo-based Analyst, Fidelity Japan Fund Q. JOHN, HOW HAS THE FUND DONE? J.H. The fund returned 35.67% for the year ended October 31, 1993 versus a return of 46.06% for the TOPIX index - which measures the overall performance of the Japanese market. By another measure, the fund trailed the average Japan fund return of 38.17% for the year ended October 31, 1993, according to Lipper Analytical Services. Q. WHAT CAUSED THE FUND TO TRAIL THE INDEX? J.H. Largely our focus on growth stocks - or companies with rapid earnings growth - which we felt would do well over the long term. For most of the year, growth stocks didn't do as well as some other types of stocks, though many of these companies may have had strong prospects. For example, the fund owned Sega, which makes video game computers and has taken a lot of market share from Nintendo. Although the company's earnings grew 15-20% annually for several years, and the amusement business was doing well, many investors preferred even higher-earning stocks and avoided companies like Sega. We held on, however, because we believe over the long term Sega's future seems bright. In hindsight, the fund probably would have done better if it had more invested in cyclical stocks, meaning stocks that do well during periods of economic recovery. Q. STILL, THE FUND'S RETURN WAS IMPRESSIVE. HOW DO YOU ACCOUNT FOR IT? J.H. Most of the fund's gains came in the first six months of the period, when we had the wind at our back in two ways. First, Japanese stocks enjoyed a terrific rally in the spring, driven in part by the government's stimulus packages and a sense that the economy had finally hit bottom. Second, the appreciation of the yen accounted for about half of the fund's return. Because the market fell off from its peak and the yen started to depreciate, the fund didn't do as well during the most recent six months. Q. BUT IT COULDN'T HAVE BEEN JUST THE MARKET AND THE YEN. YOU MUST HAVE MADE SOME GOOD INVESTMENT CHOICES . . . J.H. Japanese brokers really helped the fund. Brokerage stocks, like Nomura, Nikko and Daiwa, were at very depressed levels at the beginning of 1993, but rose when stock market trading volume increased during the spring rally. Over the last three months, though, trading volume has slowed and the brokerage stocks may be due for a breather. They've risen very high, very quickly. So, we've pared back the fund's investment in brokerage stocks to just 6.7% of investments and reinvested in other industries. Q. SUCH AS? S.M. We increased the fund's stake in electronics stocks because their prices - particularly computer and semiconductor companies - fell when the yen appreciated. In certain cases this presented good buying opportunities. Many companies were able to offset that negative currency impact by raising product prices, so it hasn't hurt their earnings. Murata, a world leader in manufacturing computer capacitors, is a good example of a company that has successfully battled the rising yen so far. The stock sells for about 20 times earnings, which makes it inexpensive compared to other industries. Another area we've favored is banking. Q. WHY ? S.M. Declining interest rates have made two types of bank stocks attractive. First, trust banks, like Sumitomo Trust and Mitsubishi Trust, benefited from the decline in interest rates and from a regulatory change that allowed them to pay time depositors less. That meant that the banks paid less to their depositors while earning the same amount from loans they issued, and increasing their profits. Second, the fund also invested in several regional banks, which were priced more attractively than some larger, money center banks. The fund's regional banks - like Akita Bank - have above-average loan growth, below-average loan losses and very high regional market shares. Many also could benefit from increased loan activity driven by the government's mandate for more regional public works programs. Q. WHAT ABOUT OIL AND GAS STOCKS? S.M. We also increased the fund's stake in energy stocks - from 0.1% six months ago to 11.3% at the end of October. The Japanese government has undertaken a number of measures to help make the country's oil and gas industries stronger and more globally competitive before Japan starts allowing imports in 1996. First, they've enforced a "no-discounting policy," and as a result, prices went higher. Second, to encourage infrastructure improvements, the government now allows the companies to pass on to wholesalers all indirect costs. The net effect of these changes was a price hike. Cosmo Oil and Showa Shell are two stocks that have already benefited from rising energy prices. Q. JOHN, WHAT WERE THE REASONS FOR CUTTING BACK ON INDUSTRIAL EQUIPMENT AND AUTOMOBILE STOCKS? J.H. Japan, unlike the United States, overinvested in industrial equipment and machinery in the 1980s. Until this excess capacity works itself off, these sectors may have a tough go of it. Autos and related businesses, on the other hand, are facing stiff competition from U.S. and European manufacturers. The United States and Europe are producing better, more competitively-priced cars than they did during the previous decade. So, here too, Japanese auto makers could have a tough time during the next several years. Q. LATELY, YOU'VE BEEN BUYING SOME KOREAN STOCKS. HOW DO THESE FIT INTO THE FUND? J.H. There are several similarities between Japanese and Korean companies - including the way they're managed and structured. At the end of the period, Korean stocks made up 7.1% of the fund's investments. We bought them because they're also cheap relative to Japanese stocks. And few investors follow them, which also has kept their prices lower than similar Japanese companies. We own Korea Electric Power, for example, the largest power company in South Korea. We like it, in part, because the stock prices of electric companies usually move in the opposite direction of long-term interest rates. Since it appears that long-term rates will go down, electric stocks could do well. Q. JOHN, WHAT SHOULD INVESTORS EXPECT OVER THE NEXT SIX MONTHS? J.H. It's extremely unlikely that investors will enjoy this kind of return for the next 12 months. For the past five years, the Japanese stock market has returned less than 5% per year on average. Stock prices still seem high right now, even after falling quite a bit in the early part of November this year. And the economy is showing no real signs of improvement. Looking out over the next 24 months, though, things look a little better. Prospects for a recovery, led by depreciation in the yen, are improving. A recovery could increase company earnings and drive stocks higher. Even so, I don't see the market heading up too much again until the second half of 1994. And over the near term, it's likely to be a volatile time for Japanese stocks. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in Japanese securities START DATE: September 15, 1992 SIZE: as of October 31, 1993, over $118 million MANAGER: John Hickling, since May 1993; manager, Fidelity Overseas and VIP: Overseas, since January 1993; Fidelity International Growth & Income, since January 1987; and Fidelity Advisor Overseas, since February 1993; previously managed Fidelity Emerging Markets, Europe, International Opportunities and Pacific funds (checkmark) SHIGEKI MAKINO ON JAPANESE STIMULUS EFFORTS: "Initially, the government's `supplemental budgets' that increased and accelerated public spending positively influenced the stock market. However, the most recent package was preceded by so many leaks that it had already been factored into the market by the time it was enacted, and so had little effect. Looking ahead, it appears the Japanese government has played many of its stimulus cards. They've cut rates, they've intervened to keep the yen weak, and they've undertaken some government programs to encourage growth. So, there are only a couple of measures left. The plan to cut income taxes has already leaked out, so it probably won't have much of an impact. However, if in early 1994 the government announces a corporate income tax cut, that could have a dramatic impact on the stock market." (bullet) Compared to the TOPIX index, at the end of the period the fund had a smaller stake in auto stocks but a larger investment in banks. (bullet) The fund's investment in finance stocks nearly doubled over the past six months from 12.5% to 23.5%. Finance stocks include brokerage companies and banks. (bullet) The leasing company Orix was the fund's largest investment on October 31, 1993. Orix was cheap relative to other leasing stocks and was gaining a larger share of the market than its competitors. (bullet) The fund's stake in energy stocks - including oil and gas companies - grew from less than one percent six months ago, to 11.3% at the end of October 1993. DISTRIBUTIONS The Board of Trustees of Japan Fund voted to pay on December 6, 1993, to shareholders of record at the opening of business on December 3, 1993, a distribution of $.39 derived from capital gains realized from sales of portfolio securities. JAPAN INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1993 Korea (South) 7.1% Row: 1, Col: 1, Value: 7.1 Row: 1, Col: 2, Value: 2.2 Row: 1, Col: 3, Value: 90.7 Cash 2.2% Japan 90.7% AS OF APRIL 30, 1993 Other 0.8% Row: 1, Col: 1, Value: 0.8 Row: 1, Col: 2, Value: 24.1 Row: 1, Col: 3, Value: 75.09999999999999 Cash 24.1% Japan 75.1% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks 96.8 72.6 Bonds 1.0 2.5 Short-term investments 2.2 24.9 TOP TEN STOCKS % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Orix Corp. (Leasing and Rental) 5.0 - Cosmo Oil Company Ltd. (Oil and Gas) 4.2 - Showa Shell Sekiyu (Oil and Gas) 4.0 - Aoyoma Trading Co. Ord. (General Merchandise Stores) 3.3 2.0 Daiwa Securities Co. Ltd. (Securities Industry) 3.2 1.6 Mitsubishi Trust & Banking (Banks) 3.0 - Sumitomo Trust & Banking Co. (Banks) 2.8 - Murata Manufacturing Co. (Electrical Equipment) 2.8 - Matsushita Electric Industrial Co. Ltd. (Consumer Electronics) 2.6 - Catena Corp. (Computers and Office Equipment) 2.5 1.1 TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Finance 23.5 12.5 Durables 12.4 10.8 Industrial Machinery and Equipment 11.7 11.0 Energy 11.3 0.1 Technology 10.0 6.8 Retail and Wholesale 8.1 9.9 Services 5.6 0.3 Basic Industries 4.2 5.2 Nondurables 3.0 1.6 Media and Leisure 2.7 3.4 JAPAN INVESTMENTS OCTOBER 31, 1993 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 96.1% SHARES VALUE (NOTE 1) JAPAN - 90.4% ADO Electronic Industrial Co. 36,000 $ 832,428 00699992 AIDA Engineering Ltd. Ord. 116,000 835,670 00871210 Akita Bank 416,000 3,008,383 00999692 Amadasonoike Co. Ltd. 214,000 1,340,579 02499492 Aoyama Trading Co. Ord. 52,000 3,889,820 03799092 Aplus Co. Ltd. 155,000 876,739 03899A92 Bank of the Ryukyus 8,700 549,010 83499192 Bank of Saga Ord. 64,000 512,943 88299692 Catena Corp. 91,000 3,017,964 14899792 Charle Co. Ltd. 40,000 829,111 15999392 Chubu Steel Plate Co. Ltd. 103,000 564,579 17126499 Chubu Suisan 200,000 1,050,208 17199A22 Chuetsu Pulp & Paper Co. Ltd. 226,000 782,828 17199092 Cosmo Oil Company Ltd. 620,000 4,974,849 22199092 Daewoo Corp. 305,000 305,000 Daido Metal Co. 118,000 563,095 45599792 Daiichi Corp. Ord. 67,000 1,067,803 23599B92 Daikyo, Inc. 245,000 2,618,148 23376610 Daio Paper Corp. 103,000 1,034,270 24299492 Daiwa Securities Co. Ltd. 299,000 3,828,743 23499010 East Japan Railway Ord. (b) 330 1,580,838 27399722 Eighteenth Bank 236,000 2,391,525 26899192 First Credit Corp. 126,000 1,590,235 31999592 Fuji Coca-Cola Bottling Co. Ltd. 20,000 327,959 36499D22 Futaba Corp. 50,000 1,547,674 36399292 Hokkaido Coca-Cola Bottling Co. 3,000 49,194 43499C22 Hokuriku Gas Co. (b) 1,000 5,113 43899592 ICOM, Inc. 128,000 1,509,350 44999A92 IO Data Device, Inc. 16,000 1,302,994 45099A92 Izumi Co. Ord. 20,000 407,186 46399292 Joyfull Co. Ltd. (b) 24,000 424,505 49499F22 Kagoshima Bank Ltd. 216,000 1,631,690 48299592 Kaneshita Construction Co. Ltd. Ord. (b) 30,000 442,192 49099592 Kentucky Fried Chicken Japan 11,000 254,353 49199292 Keyence Corp. 10,000 873,330 49399292 Kinki Coca-Cola Bottling Co. 18,000 323,353 49699392 Kinseki Ord. 134,000 1,654,168 49799092 Kobe Diesel Co. 146,000 490,926 49999692 Marukyo Corp. 30,000 856,748 57899792 Matsushita Electric Industrial Co. Ltd. 230,000 3,114,694 57687910 Mikuni Coca-Cola Bottling Co. 45,000 808,383 60241010 Mitsubishi Oil (warrants) (b) 410 225,500 60799922 Mitsubishi Trust & Banking 260,000 3,544,910 60699410 Murata Manufacturing Co. (b) 95,000 3,334,408 62699110 Nakayama Steel Works Ltd. 198,000 1,258,591 62999310 Nichicon Corp. 162,000 1,850,576 66199793 Nichiei Co. Ltd. 2,000 186,089 68999392 Niigata Chuo Bank 30,000 144,542 67099692 Nikko Securities 245,000 2,685,859 65399010 Nippon Cable Systems 119,000 1,129,158 65799392 Nissan Motor Co. Ltd. Ord. 300,000 2,086,596 65474491 Nisshin Steel Ltd. (b) 330,000 1,170,427 65476310 Ohsho Food Service Corp. 30,000 870,567 68899992 Okinawa Bank 10,200 573,192 67899792 Orix Corp. 157,000 5,944,450 68616710 Osaka Securities Finance Co. Ltd. Ord. 130,000 826,348 68799192 Ralse Co. Ltd. 3,000 34,546 75199622 Royal Co. Ltd. 105,000 1,363,888 77999110 Sagami Co. Ltd. 109,000 845,490 78699492 Sangetsu Company Ltd. 40,000 1,403,961 80019999 Sanyo Coca-Cola Bottling Co. 10,000 148,319 80399999 Sanyo Shinpan Finance Co. Ltd. 1,100 154,030 80499B22 Seika Corp. Ord. 100,000 720,405 81599492 SHARES VALUE (NOTE 1) Senshukai Co. Ltd. 48,000 $ 1,476,923 81719999 Shikoku Coca-Cola Bottling Co. Ltd. (b) 7,000 135,421 80099B22 Shintokogio Ltd. 84,000 545,555 97199392 Showa Shell Sekiyu 426,000 4,787,840 82510310 Sogo Co. Ltd. 80,000 479,779 83599K22 Sonton Food Industry Co. Ltd. 41,000 604,330 83599692 Sony Corp. 32,000 1,450,392 83569999 Sumitomo Trust & Banking Co. 250,000 3,362,505 86599310 Suzuki Motor Corp. 53,000 458,471 86958592 Taiyo Co. Ltd. (b) 13,000 417,964 93499A22 Tasaki Shinju Co. Ord. 48,000 632,335 87899392 Toho Titanium Co. Ltd. 36,000 238,784 88790999 Tokyo Kikai Seisak 201,000 1,244,331 89599292 Tokyo Kisen Co. Ltd. 12,000 91,092 88999999 Tokyo Securities Co. Ltd. 94,000 638,213 89799C92 Toyota Motor Corporation 120,000 2,078,305 89399999 Uniden 50,000 1,579,917 90499392 Yaesu Musen Co. Ltd. 33,000 501,612 98499F92 Yamaguchi Bank 78,000 1,286,228 98599492 Yorozu Corp. 31,000 482,635 99199792 107,063,064 KOREA (SOUTH) - 5.7% Bolak Co. Ltd. (b) 2,050 47,447 06599F22 Daeil Chemical Co. Ltd. (b) 3,000 240,609 23699D22 Daewoo Heavy Industries Ltd. 150,000 2,153,598 23999492 Dongbu Construction Co. (b) 40,100 823,887 25799M22 Korea Electric Power Corp. 100,000 2,388,761 50099B92 Orient Watch Industrial Co. (b) 13,910 817,779 68899B22 Sameseong Publishing Co. (b) 10,000 250,015 86399922 Suheung Capsule Co. Ltd. 250 7,055 88499H22 6,729,151 TOTAL COMMON STOCKS (Cost $111,917,683) 113,792,215 NONCONVERTIBLE PREFERRED STOCKS - 0.7% KOREA (SOUTH) - 0.7% Dongbu Construction (Cost $803,492) 40,000 772,325 25799M23 CONVERTIBLE BONDS - 1.0% PRINCIPAL AMOUNT (A) JAPAN - 0.3% Aoyama Trading 9/30/97 JPY 30,000,000 298,488 037990AB Laox Co. Ltd. 1.9%, 3/31/03 JPY 10,000,000 94,703 539993AA Uniden Corp. 1.6%, 3/30/01 JPY 5,000,000 51,497 904993AA 444,688 KOREA (SOUTH) - 0.7% Sangyong Oil Refining 3 3/4%, 12/31/08 750,000 797,250 78099AAA TOTAL CONVERTIBLE BONDS (Cost $1,197,801) 1,241,938 REPURCHASE AGREEMENTS - 2.2% MATURITY AMOUNT Investments in repurchase agreements, (U.S. Treasury obligations), in a joint trading account at 2.96% dated 10/29/93 due 11/1/93 $2,614,645 $ 2,614,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $116,532,976) $ 118,420,478 FORWARD FOREIGN CURRENCY CONTRACTS SETTLEMENT UNREALIZED DATE(S) VALUE GAIN/(LOSS) CONTRACTS TO SELL 1,157,940,000 JPY 11/30/93 $ 10,674,143 $ 385,456 (Receivable amount $11,059,599) THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 9.0% CURRENCY TYPE ABBREVIATIONS JPY - Japanese yen LEGEND (a) Principal amount is stated in United States dollars unless otherwise noted. (b) Non-income producing OTHER INFORMATION Purchases and sales of securities, other than short-term securities, during the year ended October 31, 1993, aggregated $321,334,497 and $215,617,535, respectively. The face value of futures contracts opened and closed amounted to $50,083,423 and $66,113,209, respectively INCOME TAX INFORMATION At October 31, 1993, the aggregate cost of investment securities for income tax purposes was $116,532,976. Net unrealized appreciation aggregated $1,887,502 of which $7,716,664 related to appreciated investment securities and $5,829,162 related to depreciated investment securities. The fund hereby designates $32,000 as a capital gain dividend for the purpose of the dividend paid deduction. For the period, interest and dividends from foreign countries were $575,492 or $0.07 per share. Taxes paid to foreign countries were $59,010 or $0.01 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Basic Industries 4.2% Construction and Real Estate 1.7 Durables 12.4 Energy 11.3 Finance 23.5 Health 0.2 Industrial Machinery and Equipment 11.7 Media and Leisure 2.7 Nondurables 3.0 Repurchase Agreements 2.2 Retail and Wholesale 8.1 Services 5.6 Technology 10.0 Transportation 1.4 Utilities 2.0 100.0% JAPAN FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993 ASSETS Investment in securities, at value (including repurchase agreements of $2,614,000) (cost $116,532,976) (Notes $ 118,420,478 1 and 2) - See accompanying schedule Short foreign currency contracts $ (10,674,143 (Note 2) ) Contracts held, at value Receivable for contracts held 11,059,599 385,456 Cash 848 Receivable for investments sold 5,963,699 Receivable for fund shares sold 1,074,920 Dividends receivable 267,291 Interest receivable 7,991 TOTAL ASSETS 126,120,683 LIABILITIES Payable for investments purchased 305,000 Payable for fund shares redeemed 7,369,572 Accrued management fee 89,791 Other payables and accrued expenses 161,187 TOTAL LIABILITIES 7,925,550 NET ASSETS $ 118,195,133 Net Assets consist of: Paid in capital $ 111,755,611 Accumulated net investment loss (757,225 ) Accumulated undistributed net realized gain (loss) on investments 4,923,789 Net unrealized appreciation (depreciation) on: Investment securities 1,887,502 Foreign currency contracts 385,456 NET ASSETS, for 8,853,690 shares outstanding $ 118,195,133 NET ASSET VALUE, offering price and redemption price per share ($118,195,133 (divided by) 8,853,690 shares) (Note 3)$13.35
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1993 INVESTMENT INCOME $ 422,309 Dividends Interest 560,721 983,030 Less foreign taxes withheld (Note 1) (59,010 ) TOTAL INCOME 924,020 EXPENSES Management fee (Note 3) $ 758,951 Basic fee Performance adjustment (4,307 ) Transfer agent fees (Note 3) 546,438 Accounting fees and expenses 77,908 (Note 3) Non-interested trustees' compensation 512 Custodian fees and expenses 89,268 Registration fees 180,064 Audit 29,762 Legal 225 Miscellaneous 2,504 TOTAL EXPENSES 1,681,325 NET INVESTMENT INCOME (LOSS) (757,305 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 2) Net realized gain (loss) on: Investment securities 5,922,814 Foreign currency contracts (1,052,186 ) Futures contracts 53,161 4,923,789 Change in net unrealized appreciation (depreciation) on: Investment securities 1,933,027 Foreign currency contracts 385,456 2,318,483 NET GAIN (LOSS) 7,242,272 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 6,484,967 OTHER INFORMATION $ 76,445 Accounting fees paid to FSC (Note 3)
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 15, OCTOBER 31, 1992 1993 (COMMENCEMEN T OF OPERATIONS) TO OCTOBER 31, 1992 INCREASE (DECREASE) IN NET ASSETS Operations $ (757,305 $ 80 Net investment income (loss) ) Net realized gain (loss) on investments 4,923,789 - Change in net unrealized appreciation (depreciation) on investments 2,318,483 (45,525 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 6,484,967 (45,445 ) Share transactions 473,221,868 3,221,005 Net proceeds from sales of shares Cost of shares redeemed (364,464,963 (222,299 ) ) Net increase (decrease) in net assets resulting from share transactions 108,756,905 2,998,706 TOTAL INCREASE (DECREASE) IN NET ASSETS 115,241,872 2,953,261 NET ASSETS Beginning of period 2,953,261 - End of period (including undistributed net investment income (loss) of $(757,225) and $80, respectively) $ 118,195,133 $ 2,953,261 OTHER INFORMATION Shares Sold 36,026,261 322,611 Redeemed (27,472,802 (22,380 ) ) Net increase (decrease) 8,553,459 300,231
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED SEPTEMBER 15, OCTOBER 31, 1992 (COMMENCEMEN T OF OPERATIONS) TO OCTOBER 31, 1993 1992 SELECTED PER-SHARE DATA Net asset value, beginning of period $ 9.84 $ 10.00 Income from Investment Operations Net investment income (.09) .00 Net realized and unrealized gain (loss) on investments 3.60 (.16) Total from investment operations 3.51 (.16) Net asset value, end of period $ 13.35 $ 9.84 TOTAL RETURN(diamond) 35.67% (1.60)%# RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 118,195 $ 2,953 Ratio of expenses to average net assets 1.71% 2.00%* Ratio of expenses to average net assets before expense reductions 1.71% 3.59%* # Ratio of net investment income (loss) to average net assets (.77)% .03%* Portfolio turnover rate 257% -% * ANNUALIZED # EXPENSES LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. TOTAL RETURN WOULD HAVE BEEN LOWER HAD THE LIMITATION NOT BEEN IN EFFECT. (diamond) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
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. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1993 YEAR YEARS FUND Pacific Basin 47.06% 34.03% 89.64% Pacific Basin (incl. 3% sales charge) 42.65% 30.00% 83.95% Morgan Stanley Pacific 48.75% -1.81% 71.54% Index Average Pacific Region Fund 44.26% 65.66% 121.22% 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 October 1, 1986. You can compare the fund's figures to the performance of the Morgan Stanley Pacific index, a broad measure of the performance of stocks in the Pacific region, weighted by each country's market capitalization (total value of its outstanding shares). You can also compare the fund's performance to the average Pacific region fund which reflects the performance of 33 funds with similar objectives tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1993 YEAR YEARS FUND Pacific Basin 47.06% 6.03% 9.45% Pacific Basin (incl. 3% sales charge) 42.65% 5.39% 8.98% Morgan Stanley Pacific 48.75% -0.36% 7.90% Index Average Pacific Region Fund 44.26% 10.37% 11.75% AVERAGE ANNUAL RETURNS take the fund's actual (or 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 Pacific Basin (302) MS Pacific Index 10/01/86 9700.00 10000.00 10/31/86 9603.00 8862.00 11/30/86 10146.20 9399.07 12/31/86 10611.80 10088.05 01/31/87 12300.82 11598.87 02/28/87 12689.17 11904.22 03/31/87 13951.29 13131.82 04/30/87 15349.33 15062.31 05/31/87 15397.87 15062.31 06/30/87 14329.92 14116.01 07/31/87 14407.59 13782.70 08/31/87 15203.70 15420.34 09/30/87 14999.82 14974.05 10/31/87 12058.11 13345.52 11/30/87 12339.66 13875.39 12/31/87 13264.01 14088.57 01/31/88 13264.01 14793.36 02/29/88 13813.41 15831.10 03/31/88 14578.64 17064.31 04/30/88 15118.23 17280.12 05/31/88 14578.64 16620.65 06/30/88 13744.73 16055.73 07/31/88 13479.85 16785.08 08/31/88 13430.79 15542.64 09/30/88 13627.01 16142.75 10/31/88 13725.11 17469.62 11/30/88 14608.07 18911.35 12/31/88 14649.47 19018.54 01/31/89 14926.24 19193.41 02/28/89 15252.45 19438.67 03/31/89 14896.59 18821.29 04/30/89 15282.10 18832.42 05/31/89 14689.01 17780.12 06/30/89 14006.95 16987.42 07/31/89 15677.50 19192.02 08/31/89 14837.28 18004.64 09/30/89 16063.01 19105.05 10/31/89 15598.42 18593.72 11/30/89 16102.55 19478.89 12/31/89 16325.64 19500.06 01/31/90 15770.14 18396.74 02/28/90 14782.58 16611.35 03/31/90 13867.02 13619.98 04/30/90 13712.72 13711.64 05/31/90 15039.75 15616.28 06/30/90 15266.07 14987.13 07/31/90 15780.43 14873.33 08/31/90 13681.86 13454.50 09/30/90 11449.55 11345.09 10/31/90 13260.08 13796.09 11/30/90 12046.21 12266.22 12/31/90 11882.89 12788.36 01/31/91 12112.21 13186.92 02/28/91 13206.69 14812.56 03/31/91 13039.91 14005.66 04/30/91 13602.78 14365.60 05/31/91 13508.97 14309.99 06/30/91 13279.65 13374.87 07/31/91 13446.43 13825.95 08/31/91 12539.58 13124.61 09/30/91 13321.35 14157.05 10/31/91 13707.02 14759.53 11/30/91 13060.76 13809.99 12/31/91 13373.47 14233.78 01/31/92 13029.49 13682.29 02/29/92 12904.40 12724.00 03/31/92 12091.36 11513.90 04/30/92 11966.28 10986.10 05/31/92 12925.25 11842.95 06/30/92 12654.24 10911.67 07/31/92 12091.36 10759.99 08/31/92 12445.77 12234.05 09/30/92 12362.38 11953.73 10/31/92 12508.31 11531.67 11/30/92 12456.19 11749.15 12/31/92 12354.65 11614.67 01/31/93 12480.93 11593.05 02/28/93 13207.06 12155.13 03/31/93 14101.56 13623.52 04/30/93 15532.76 15794.04 05/31/93 16290.46 16253.52 06/30/93 15448.57 15987.05 07/31/93 16269.41 16932.23 08/31/93 17016.58 17433.05 09/30/93 17058.67 16781.05 10/31/93 18395.17 17153.59 Let's say you invested $10,000 in Fidelity Pacific Basin Fund on its start date and paid the 3% sales charge. By October 31, 1993, it would have grown to $18,395 - a 83.95% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley Pacific index, which would have grown to $17,154 over the same period - a 71.54% 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 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. (checkmark) PACIFIC BASIN FUND TALK: THE MANAGER'S OVERVIEW An interview with Simon Fraser, Portfolio Manager of Fidelity Pacific Basin Fund Q. SIMON, YOU TOOK OVER MANAGING THE FUND LAST MAY. HOW HAS IT PERFORMED? A. The fund had a good year. For the 12 months ended October 31, 1993, its total return was 47.06%, compared with 48.75% for the Morgan Stanley Pacific index. The average Pacific region fund was up 44.26% over the same period, according to Lipper Analytical Services. Q. WHAT WAS BEHIND THESE RESULTS? A. You can't tell from these numbers, but the fund really picked up in the second half of the period. That's because at the end of October it had only about 35% of its investments in Japan, compared to the 80% weighting the index holds. I had anticipated some weakness in the Japanese market and had lightened up from six months earlier when the fund had about 43% of its investments in Japan. So in the last six months, when the Japanese market did weaken and other markets were doing better, the fund prospered. By contrast, in the first half of the year, the Japanese market trounced all other Asian markets, making it hard for the fund to keep up with the index. Q. WHERE DID YOU FIND BETTER OPPORTUNITIES? A. Malaysia, for one. Its economy has grown 8% per year in the last few years, plus inflation has been relatively low. During the last six months of the period, I increased the fund's stake in Malaysia to about 14% compared with 3% in the index. I especially liked gaming stocks (gambling is very popular there) as well as hardwood products manufacturers (since Malaysia is one of the biggest producers of hardwoods, especially for Japan). But Malaysian stocks have done quite well, making them expensive. So at this point I don't have plans to add any more. In fact, I may be taking profits. Hong Kong was a close second. It's very much intertwined with China. So, when Chinese authorities decided to put the brakes on the economy this year, the Hong Kong market underperformed. But companies trading in Hong Kong continued to grow and the market rose 36% from April 30 through the end of October. There has also been extraordinary movement in that market as investors discovered that cheap stocks weren't as risky as they thought. My feeling is, we still have further to go in Hong Kong. So, I have 15% of the fund invested there, compared with 6% of the index. Q. WHAT KIND OF STOCKS DID YOU BUY IN HONG KONG? A. If there's one theme I found it was that the larger companies weren't extremely cheap any longer, but there still seemed to be good small and medium size companies that were, such as Lai Sun Development, a property company. So that's largely where I've focused. I also bought stock in hotels, stock brokers and some companies that are selling cars and paging systems in China. At the end of October, my largest holding there was Hutchison Whampoa, a conglomerate which is in many businesses - containers, shipping, cellular communications. Q. HAVE YOU BOUGHT ANY STOCKS RECENTLY IN JAPAN? A. Yes, despite the recent decline in the Nikkei index, I'm optimistic that, long term, we'll see a cyclical recovery in Japan. Interest rates are down, and the liquidity that's been driving the other Asian markets will eventually hit Japan. It just hasn't found a trigger yet. In September and October, I added to the fund's investments in some of the depressed exporters - consumer electronics companies like Sony and Toshiba - which have really been hammered by the yen. My view is that the yen is close to its peak and the worst is over for those companies. Long term, I'm also interested in specialty retailers, such as Aoyama Trading, that cater to the changing demands of the consumer market. Of course, in the short term, the Japanese market may be in for a bumpy ride. Q. WHAT ARE THE ADVANTAGES AND RISKS OF INVESTING IN PACIFIC BASIN MARKETS? A. Except in Japan, where companies tend to be more mature, there are very attractive cost structures across Asia. Corporate earnings have been growing 20% to 30% a year, even though western demand hasn't grown that fast. Asian companies are taking market share because they can sell more cheaply and their product quality has improved dramatically. I think those trends will continue. Moreover, there is a huge latent demand for consumer goods within the region. But there are definitely some risks. If U.S. interest rates rise, most of Southeast Asia will follow. Low interest rates, along with fast earnings growth, are the primary factors luring people into these markets. If one of those factors disappears, investors may become less enthralled. And the Hong Kong market could be hurt if China decides to reapply tough austerity measures. It's difficult to gauge when, but at some stage the party is going to come to an end in Southeast Asia. However, in northern Asia - such as Korea and Taiwan - the party hasn't even started. Q. DO YOU HAVE AN ALLOCATION TARGET FOR MARKETS OR INDUSTRIES? A. Not really. I worry more about stock picks than asset allocation. But it is fair to say that I've found more interesting stocks in Hong Kong and Malaysia. I've also invested more heavily where economic growth has been quite strong, such as in Thailand, which now represents 7% of the fund and Indonesia, which is up to 5.4%. The index doesn't include either of those countries. Q. THE FUND'S TOP-10 HOLDINGS HAVE NEARLY ALL CHANGED SINCE YOU TOOK OVER IN MAY. IS THAT A REFLECTION OF DIFFERENT INVESTMENT STYLES? A. To some extent, yes. My style has been slightly more aggressive. But I still hold half of the stocks that were among the top 10 when I began to manage the fund. I just don't have as much of them percentage-wise. The change hasn't been radical. Without selling any of those stocks, they would represent a smaller proportion of the fund because the fund's assets have grown so fast - about $200 million in the last six months. Kim Eng Holdings, a Singapore stock broker, Nomura and Toshiba are the three largest holdings now. If there's a recurring theme, it's that I've bought stock brokerages in all these countries because they benefit from lower interest rates and greater market activity. Consumer finance companies and banks tend to charge customers fixed interest rates, but their financing costs have come down. Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS? A. We're still experiencing good growth in Southeast Asia, but I've become a little more cautious in some markets, particularly Malaysia and Singapore. In Hong Kong, I'm less concerned, because valuations - yardsticks such as price-to-earnings ratios and dividend yields - are not as stretched. In Japan, it's hard to know when the recovery will emerge, but I hope to see positive signs sometime next year. In the next six months, I envision moving more money to northern Asia: Taiwan and Korea because those economies are due for improvement. Overall, I'm optimistic, but, realistically, it would be difficult to match the returns of the last 12 months. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in stocks in the Pacific Basin region START DATE: October 1, 1986 SIZE: as of October 31, 1993, over $493 million MANAGER: Simon Fraser, since May 1993; also manages various funds for non-U.S. investors (checkmark) SIMON FRASER'S APPROACH TO INVESTING: "First, I try to understand the business companies are in and study the fundamentals - earnings potential, management, prospects. That requires visits, screening, analysis. I lived in Japan for five years, so I know the region well. And I travel there three or four times a year, for up to three weeks at a time. In addition, Fidelity has a large number of analysts in Tokyo and Hong Kong and we're in daily communication. Also, three or four representatives of Asian companies come through our offices every week. "The second part is deciding whether those fundamentals have already been recognized by the market. A mistake a lot of investors make in Japan is to assume that, if it's a good company, it must be a good stock. Terrible-looking companies are often quite good stocks because they are turning around from a low base. I try to determine if those fundamentals have already been figured into the price. It's a little harder in Asia, where the markets are much less efficient than in the U.S. and U.K. They are driven more by individuals rather than institutional investors or mutual funds. There are more pricing anomalies and they're less predictable. "Both in Japan and in smaller markets, I'm looking for long-term growth potential, companies that haven't been discovered. I'm constantly searching for the next Apple Computer. Smaller companies don't yet represent a high percentage of the fund, but they're growing. I feel there's more growth potential with smaller companies than well- recognized, established players. " (bullet) Japan has not yet shown signs of economic recovery, but the fund has begun to buy shares in some large consumer electronics firms, in the expectation that the yen has peaked and export sales will begin to pick up. (bullet) The fund has steadily increased its exposure in Malaysia to about 14%, compared with less than 4% a year ago, with lumber and gaming stocks leading the purchases. (bullet) The fund has taken advantage of declining interest rates in several countries with aggressive purchases in the financial sector, including brokers, banks and consumer finance companies. DISTRIBUTIONS The Board of Trustees of Pacific Basin Fund voted to pay on December 6, 1993, to shareholders of record at the opening of business on December 3, 1993, a distribution of $.27 derived from capital gains realized from sales of portfolio securities and a dividend of $.13 from net investment income. PACIFIC BASIN INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1993 Singapore 9.4% Thailand 7.0% Row: 1, Col: 1, Value: 9.4 Row: 1, Col: 2, Value: 5.4 Row: 1, Col: 3, Value: 5.4 Row: 1, Col: 4, Value: 35.6 Row: 1, Col: 5, Value: 1.1 Row: 1, Col: 6, Value: 2.4 Row: 1, Col: 7, Value: 14.3 Row: 1, Col: 8, Value: 4.6 Row: 1, Col: 9, Value: 14.8 Row: 1, Col: 10, Value: 7.0 Indonesia 5.4% Hong Kong 14.8% Australia 5.4% Other 4.6% Malaysia 14.3% Japan 35.6% Korea (South) 2.4% Cash 1.1% AS OF APRIL 30, 1993 Singapore 7.2% Thailand 5.0% Row: 1, Col: 1, Value: 7.2 Row: 1, Col: 2, Value: 3.1 Row: 1, Col: 3, Value: 5.4 Row: 1, Col: 4, Value: 43.2 Row: 1, Col: 5, Value: 8.9 Row: 1, Col: 6, Value: 10.8 Row: 1, Col: 7, Value: 2.5 Row: 1, Col: 8, Value: 13.9 Row: 1, Col: 9, Value: 5.0 Indonesia 3.1% Australia 5.4% Hong Kong 13.9% Other 2.5% Malaysia 10.8% Japan 43.2% Cash 8.9% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks 96.0 89.2 Bonds 2.9 1.8 Short-term investments 1.1 9.0 TOP TEN STOCKS % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Kim Eng Holdings Ltd. (Singapore, Securities Industry) 1.6 0.9 Nomura Securities Co. Ltd. (Japan, Securities Industry) 1.5 0.9 Toshiba Corp. (Japan, Electronics) 1.4 0.3 Sony Corp. (Japan, Consumer Electronics) 1.4 0.8 Overseas Chinese Banking Corp. (Singapore, Banks) 1.3 0.8 Hutchinson Whampoa Ltd. Ord. (Hong Kong, Electrical Equipment) 1.1 0.8 Sumitomo Metal Industries Ltd. (Japan, Iron and Steel) 1.0 0.9 Swire Pacific Class A (Hong Kong, Air Transportation) 1.0 1.0 Japan Associated Finance Co. (Japan, Credit and Other Finance) 0.9 1.0 Suzuki Motor Corp. (Japan, Autos, Tires, and Accessories) 0.9 1.6 TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Finance 24.4 19.3 Construction and Real Estate 14.0 11.7 Durables 9.6 11.7 Basic Industries 8.8 4.6 Technology 6.5 5.8 Industrial Machinery and Equipment 5.8 6.8 Media and Leisure 4.8 5.8 Nondurables 4.4 3.9 Transportation 4.3 3.0 Retail and Wholesale 4.2 6.1 PACIFIC BASIN INVESTMENTS OCTOBER 31, 1993 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 95.5% SHARES VALUE (NOTE 1) AUSTRALIA - 5.0% Amcor Ltd. 124,659 $ 828,029 02341R10 Ampolex Ltd. Ord. 400,000 1,726,920 03212792 Broken Hill Proprietary Co. Ltd. (The) 321,000 3,789,710 05599810 Burns Philp & Co. 200,000 572,976 12239310 CRA Ltd. Ord. 41,000 445,801 12627210 CSR Ltd. 150,000 487,695 12639610 Coca-Cola Amatil Ltd. (b) 100,000 686,238 19108593 Comalco Ltd. 252,000 621,213 19983099 Commonwealth Bank of Australia 100,000 672,913 20299492 Country Road Ltd. 750,000 569,647 22299392 Fosters Brewing Group Ltd. 500,000 476,370 35025810 Gold Mines Kalgoorlie 479,390 357,720 38065310 National Foods Limited 7,804 9,723 63699292 Nine Network Australia Ltd. 100,000 357,110 68999792 Pacific BBA Ltd. (c) 1,080,000 2,050,715 69399292 Parbury Ltd. (b) 100,000 25,984 69999392 Plutonic Resources Ltd. 585,000 2,884,196 72999192 QNI Ltd. 1,284,000 744,258 74799B92 Rothmans Holdings Ltd. Ord. 344,500 1,744,376 77869910 TNT Ltd. (b) 1,500,000 1,748,910 93599292 WD & HO Wills Holdings Ltd. 155,700 378,633 94299892 Western Mining Corp. Holdings Ltd. 317,634 1,182,977 95869410 Woodside Petroleum Ltd. 500,000 1,549,030 98022810 Woolworths Ltd. 300,000 653,592 98088892 24,564,736 CHINA - 0.3% Shanghai Petrochemical Class H (b) 5,000,000 1,649,950 81942494 GRAND CAYMAN - 0.1% Pico Far East Holdings Ltd. 750,000 147,525 71999522 Sanzo Fin #5 (warrants) (b) 250 168,750 80599B22 316,275 HONG KONG - 14.6% ASM Pacific Technology Ltd. 500,000 279,845 04599992 Allan International Holdings 100,000 17,082 Amoy Properties Ltd. 1,140,000 1,475,251 03199192 Association International Hotels (b) 124,000 89,860 04599492 CDL Hotels International Ltd. 5,530,937 2,469,342 14999792 Cafe De Coral Holdings Ltd. 1,392,500 1,009,117 12799092 Chen Hsong Holdings Ltd. 2,000,000 1,138,800 16599292 Chinney Investments Ltd. (b) 6,784,000 1,413,472 16999B22 Chow Sang Sang Holdings Ltd. (b) 2,000,000 931,740 17399K92 Companion Building Material Ltd. (b) 1,000,000 397,930 20399922 Crocodile Garments 3,000,000 516,330 22699192 Culturecom Holdings Ltd. 7,162,000 1,807,331 23099322 Culturecom Holdings Ltd. (warrants) (b) 1,790,000 233,953 23099323 Dickson Concept 1,779,000 1,438,855 25399210 Evergo International Holdings Co. Ltd. (b) 1,000,000 711,740 30099822 Fairwood Holdings Ltd. (b)(c) 224,000 107,253 30699392 First Pacific Co. Ltd. 1,530,991 629,038 33699192 Fortei Holdings Ltd. 1,500,000 388,230 34999D22 Grand Hotel Holdings Ltd. Class A 1,000,000 417,340 38599292 Grande Holdings Ltd. 1,670,000 1,221,037 38699622 Great Eagle Holdings Ltd. 4,000,000 2,575,200 39099394 Great Wall Electronic International Ltd. (b) 750,000 138,787 39199922 Great Wall Electric (warrants) (b) 75,000 2,669 39199923 Guangdong Investments Ltd. Ord. 2,300,000 1,279,835 40199492 Guangzhou Investment Co. Ltd. 6,500,000 2,250,105 40099G22 HKR International Ltd. 4,999,600 3,396,678 43999192 Hang Lung Development Corp. 930,000 1,793,207 41099310 Hanny Magnetics Holding Ltd. (b) 1,000,000 287,930 41099592 Herald Holdings 1,000,000 252,350 42699892 Hong Kong Telecommunications Ltd. 1,328,000 2,869,954 43857991 SHARES VALUE (NOTE 1) Hutchison Whampoa Ltd. Ord. 1,471,000 $ 5,539,448 44841510 Hysan Development Co. Ltd. 600,000 1,739,244 44916510 International TaK Cheung Holdings 1,845,779 865,855 46399892 Jardine International Motor Corp. 918,000 1,271,127 47499292 Kumagai Gumi 500,000 685,860 50099210 Kwah International Holdings Ord. (b) 5,296,000 1,970,377 49099292 Lai Sun Development Co. Ltd. (b) 1,000,000 213,520 50699992 Lai Sun Garment International Ltd 1,250,000 2,798,450 50699093 Lam Soon (Hong Kong) Ltd. 265,000 176,609 51299092 Lam Soon Food Industries Ltd. 1,624,000 483,367 51299592 Lamex Holdings Ltd. 2,690,000 1,061,716 51399292 Leefung Asco Printers Holdings Ltd. 2,387,000 441,714 52499692 M.C. Packaging (b) 1,213,333 635,908 62399092 National Mutual Asia Ltd. (b) 3,038,000 2,181,922 63699592 Peregrine Investments Holdings 700,000 1,349,726 71399492 Prod-Art Technology Ltd. 3,720,000 1,588,626 74499C92 S Megga International 2,326,000 940,634 99999C92 S Megga International (warrants) (b) 1,250,000 300,875 99999C93 Shougang Concord International Enterprises Co. (b) 2,000,000 1,319,960 99099L22 Sime Darby Hong Kong Ltd. 664,000 996,750 82899392 Star Paging International Holdings Ltd. 1,951,000 845,798 85599692 Sun Hung Kai Properties Ltd. 500,000 3,429,310 86676H10 Swire Pacific Class A 700,000 4,665,157 87079410 Tai Cheung Holdings Ltd. 1,052,700 1,607,483 93499892 Wing On Co. International Ltd. 1,000,000 1,384,670 97499092 Wo Kee Hong Holdings (b) 696,000 409,812 95499492 Yaohan International Caterers Ltd. 42,000 16,849 99099692 Yips Hang Cheung Holdings Ltd. 5,024,000 1,511,571 99599592 71,972,599 INDIA - 0.5% Himalayan Fund NV, IS (b) 60,000 727,800 43299792 ITC Ltd.: GDS (c) 21,000 367,500 45031810 (warrants) (b)(c) 7,000 36,750 45031811 Southern Petrochemical Industries GDS (b) 130,000 1,430,000 84361310 2,562,050 INDONESIA - 5.4% Andayani Megah PT (b) 200,000 506,768 03399722 Argha Karya Prima PT (b) 100,000 297,399 01099992 Astra International PT 268,000 2,359,209 04699894 Bank International Indonesia Ord. (b) 1,000,000 3,330,870 06199B92 Bank Tiara Asia PT (b) 290,000 331,696 06599J22 Barito Pacific Timber (b) 240,000 1,307,606 06799F23 Dharmala International Land 120,000 216,983 25399592 Duta Anggada Realty Ord. 332,500 1,012,586 26699192 Gadjah Tunniggal Ord. 121,000 259,095 36599292 Indah Kiat Pulp & Paper 500,000 469,890 45499B23 Indonesia Development Fund Ltd. (b) 70,000 700,000 71499722 Jembo Cable Co. PT (b)(c) 50,000 165,354 81699B92 Kabelmetal Indonesia PT (b) 280,000 932,644 84599B92 Kalbe Farma 240,000 1,644,499 48699992 Mayora Indah PT (c) 312,000 1,261,925 83099A92 Modern Photo Film PT 177,000 1,490,756 61299792 Modernland Realty PT (b) 247,000 1,069,542 60999A92 Pakuwon Jati Ord. 620,250 1,062,501 69599392 Panin Bank 1,400,000 2,198,378 69899823 Private Development Finance Co., Inc. PT (b) 600,000 749,448 69399092 PT Inco 93,000 199,139 78999992 Sampoerna, Hanjaya Mandala 643,000 2,371,223 82299892 Semen Cibinong PT (b) 180,000 762,295 81799693 Sinar Mas Agro Res & Tech PT (c) 350,000 911,827 73599592 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) INDONESIA - CONTINUED Sucaco (b) 61,300 $ 373,362 89399292 Tigaraksa Satria PT (b) 100,000 387,809 95099892 Unilever Indonesia 12,802 201,026 94399592 26,573,830 JAPAN - 35.3% Acom Co. Ltd. (b) 10,000 889,912 00499M22 Ajinomoto 175,000 2,224,782 00999030 Amada Ltd. (b) 186,000 1,662,090 02263110 Aoyama Trading Company Ord. 30,000 2,244,127 03799092 Aplus Co. Ltd. 50,000 282,819 03899A92 Aucnet, Inc. (b) 25,000 1,266,697 05099592 Beltecno Corp. (b) 3,000 110,548 08099322 Best Denki Co. Ord. 76,000 1,162,229 08653093 C Itoh Fuel #3 (warrants) (b) 360 369,000 73299194 Catena Corp. 94,000 3,117,457 14899792 Cecile Co. 11,100 414,141 13799592 Charle Co. Ltd. 26,000 538,922 15999392 Chiyoda Corporation 120,000 1,558,729 17098910 Chiyoda Fire & Marine Insurance Ltd. 300,000 1,904,193 17099010 Chuetsu Pulp & Paper Co. Ltd. 8,000 27,711 17199092 Chujitsuya Co. 40,000 589,590 17199692 Chuo Trust & Banking 85,000 1,393,827 17499492 DDI Corp. Ord. 6 349,885 23399J22 DIA Kensetsu Co. Ltd. 89,000 1,041,272 25299492 Daiei Finance, Inc. 225,000 2,818,978 23375099 Daiki Co. Ltd. (b) 20,000 661,446 23999D22 Dainippon Screen Manufacturing Co. 74,000 422,662 23699492 East Japan Railway Ord. (b) 180 862,275 27399722 Enix Corp. (b) 34,000 1,346,845 29399A22 Fuji Coca-Cola Bottling Co. Ltd. 25,000 409,949 36499D22 Fuji Electric Co. Ltd. (b) 400,000 1,927,224 36599492 Fuji Oil Co. (warrants) (b) 200 107,500 35999392 Fujisah Co. Ltd. 14,700 369,701 36099C22 Fujitsu Kiden 5,000 82,911 39599092 Funai Consulting Co. Ltd. 32,000 515,891 36499492 Fuso Pharmaceutical Industries Ltd. 97,000 880,194 36113299 Getz Bros Co. Ltd. 10,000 672,501 37499392 Heiwa Corp. 50,000 1,432,519 42399792 Hitachi Ltd. 350,000 2,776,140 43357810 Hitachi Ltd. ADR 26,800 2,123,900 43357850 Hitachi Transport System Co. 150,000 1,575,310 43699992 Hokko Chemical Industries 69,000 444,956 43599592 Hokuriku Seiyaku Ord. (b) 30,000 594,196 50699392 Hokushin Co. Ltd. 30,000 619,069 43799392 Ichiken Co. (b) 28,000 309,535 73299092 Impact 21 Co. Ltd. 37,000 565,822 45299C22 Inui Tatemono Co. Ltd. (b) 27,000 298,480 46299892 Japan Associated Finance Co. 42,000 4,604,330 47099692 Japan Metals & Chemicals Co. (b) 231,000 1,174,684 47299192 Kagoshima Bank Ltd. 150,000 1,133,118 48299592 Kahma Co. Ltd. (b) 18,000 797,605 48499B22 Kawasaki Heavy Industries (warrants) (b) 1,000 250,000 48639992 Kawasaki Heavy Industries Ltd. 500,000 1,819,440 48639991 Kawasaki Kisen Kaisha Ltd. (b) 950,000 2,914,324 48639892 Kawasaki Steel #1 (warrants) (b) 400 20,000 48636893 Koa Fire & Marine Insurance Co. Ltd 150,000 981,115 49999010 Konica Corp. 510,000 3,378,077 50046M10 Kumagai Gumi Co. Ltd. 100,000 427,453 50125110 Kuraray Co. #7 (warrants) (b) 2,000 156,915 50199493 Kyocera Corporation 50,000 2,832,796 50155610 Mabuchi Motor Co. Ltd. 14,100 887,177 55409799 Marukyo Corp. 22,000 628,282 57899792 Matshushita-Kotobuk (b) 50,000 1,045,601 57699392 SHARES VALUE (NOTE 1) Matsushita Electric Industrial Co. Ltd. 250,000 $ 3,385,537 57687910 Matsushita Electric Works (warrants) (b) 400 501,600 57688192 Matsuzakaya Co. Ltd. 75,000 891,295 57699492 Miroku Jyoho Service Co. Ltd. 14,000 464,302 60499D92 Mitsubishi Heavy Industry 500,000 3,109,165 60699310 Mitsubishi Oil #5 (warrants) (b) 200 197,500 60799923 Mitsui and Co. Ltd. 200,000 1,464,762 60699999 Mitsui Petrochemical Industries, Inc. 410,000 2,477,753 60691110 Miyosha Oil & Fat Co. Ltd. Ord. 120,000 652,234 59999192 Mochida Pharmaceutical Co. Ltd. 50,000 1,174,574 60899110 NEC Corp. 70,000 613,266 62999410 NGK Spark Plug Co. (warrants) (b) 300 435,000 64499922 Nakayama Steel Works Ltd. 128,000 813,635 62999310 Namura Shipbuilding 245,000 2,460,158 62999892 Navix Line Ltd. 750,000 1,810,222 63899592 Nichii Co. (warrants) (b) 2,000 187,762 65299195 Nippon Crane Works Ltd. (b) 100,000 247,812 68299492 Nippon Sanso KK 200,000 924,920 66199692 Nippon Shinpan Ltd. 85,000 798,710 65461710 Nippon Shokubai Kagaku Kagyo 273,000 1,926,468 65499710 Nippon Telegraph & Telephone Ord. 400 3,062,183 65462492 Nissan Chemical Industries Co. 155,000 886,735 65699692 Nissan Fire & Marine Insurance (b) 333,000 2,503,251 66699492 Nissei Build Kogyo Co. Ltd. 60,000 724,090 67299792 Nissha Printing Co. Ltd. 80,000 1,731,921 66999492 Nitto Denko Corp. 75,000 981,115 65480230 Nomura Securities Co. Ltd. 400,000 7,333,028 65536130 Oliver Corp. (warrants) (b) 2,000 230,679 68099193 Orient Finance Co. Ltd. 350,000 2,595,579 68616610 Parco Co. Ltd. (warrants) (b) 1,000 109,737 69999293 Pioneer Electronic Corp. 50,000 1,275,910 72365710 Promise Co. Ltd. (b) 25,000 1,966,836 74499E22 Sampei Construction Co. Ltd. (b) 3 36,205 79599G22 San-In Godo Bank 87,000 777,429 79999492 Sanwa Shutter #4 (warrants) (b) 1,500 693,750 80302493 Sanyo Coca-Cola Bottling Co. 56,000 830,585 80399999 Seikagaku Corp. 12,000 961,769 81599892 Seiren Co. Ltd. 175,000 1,233,302 81699692 Sekisui House (warrants) (b) 500 550,000 81607897 Senko Co. Ltd. (warrants) (b) 450 354,375 81799293 Shikoku Coca-Cola Bottling Co. Ltd. (b) 20,000 386,918 80099B22 Shinko Shoji 84,000 754,491 90699492 Sho Bond Corp. Ord. 69,000 1,894,243 82699692 Sieno Transport (warrants) (b) 500 425,000 81605293 Sony Corp. 150,000 6,798,711 83569999 Sumitomo Bank 100,000 2,229,387 86560110 Sumitomo Metal Industries Ltd. 1,650,000 4,772,922 86599999 Sumitomo Rubber Industries 286,000 2,305,389 86699892 Sumitomo Sitix Corporation 100,000 1,087,057 68799692 Super Daiei Co. Ltd. (b) 12,000 131,552 98499H22 Suzuki Motor Corp. (b) 500,000 4,325,195 86958592 TDK Corp. 10,000 350,990 87235110 Tada Corp. 80,000 475,357 87499592 Taisho Pharmaceutical 150,000 3,136,803 87399010 Tanseisha Co. Ltd. 30,000 339,935 87599292 Tasaki Shinju Co. Ord. 50,000 658,682 87899392 Techno Ryowa Ltd. (b) 8,000 198,250 95999892 Teijin Seiki Co. (b) 100,000 608,015 87999392 Tohoku Telecom Construction (b) 20,000 243,206 89099792 Tokyo Kososushi Co. Ltd. 25,000 760,018 91599C22 Tokyo Securities Co. Ltd. 248,000 1,683,796 89799C92 Tomoku Co. Ltd. 100,000 765,546 90099892 Toshiba Chemical 16,000 176,877 90199792 Toshiba Corp. 1,100,000 7,073,242 89149310 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) JAPAN - CONTINUED Toyobo Co. 1,000,000 $ 3,519,120 90899392 Toyota Motor Corporation 100,000 1,731,921 89399999 UBE Industries Ltd. 250,000 861,355 90261099 Valor Co. Ltd. (b) 5,000 124,367 92099B22 Victor Co. (b) 100,000 792,262 92584310 Yamaichi Securities 300,000 2,128,053 98499210 Yamato Transport #2 (warrants) (b) 200 507,500 99399893 Yaohan Japan Corp. (warrants) (b) 200 205,000 98899894 Yokogawa Electric 237,000 1,949,709 98605299 Yorozu Corp. 10,000 155,689 99199792 Yoshinoya D&C Co. Ltd. Ord. 30 525,104 98999192 173,473,668 KOREA (SOUTH) - 2.1% Cheil Investment Finance (b) 30,000 523,547 16399B22 Coryo Securities 100,000 2,066,959 22199822 Daewoo Electronics Co. Ltd. 40,000 722,817 23899C22 Daeyu Securities Co. Ltd. (b) 46,820 1,048,879 23399G22 Hanshin Securities Co. Ltd. 22,000 481,960 41899722 Miwon Co. Ltd. 20,000 393,589 61299693 Nong Shim Co. (b) 20,000 789,653 65599C22 Sam Yang (warrants) (b) 300 491,250 83999B23 Ssangyong Cement Co. (b) 16,000 449,533 76899392 Ssangyong Investment & Securities 40,000 1,005,012 77699522 Tong Yang Investment & Finance (b) 45,000 1,058,233 93899D22 Tong Yang Securities Co. Ltd. (b) 20,000 450,523 93999B22 Yukong Ltd. 25,000 736,431 98899K22 10,218,386 MALAYSIA - 14.2% Affin Holdings BHD 1,029,000 1,690,843 00899492 Arab Malaysian Corp. 250,000 831,377 00499F92 Arab Malaysian Finance (b) 70,000 272,496 00699A93 Berjaya Simger BHD 100,000 258,216 08499A92 Berjaya Sports Toto BHD (b) 100,000 215,180 08499E22 Bolton Properties BHD 668,000 987,885 09799592 CHG Industries BHD 200,000 680,752 16699892 Commerce Asset Holding BHD 200,000 622,066 20099492 Commerce Asset (warrants) (b) 66,666 43,036 20099493 Development & Commercial Bank 1,454,000 2,525,729 25199692 Dunlop Estates BHD 410,000 1,307,318 26599392 Ekran Berhad Ord. (b) 532,000 3,226,133 28299792 Genting BHD 375,000 3,887,910 37245210 Golden Pharos BHD (b) 300,000 692,487 38299D22 Golden Plus Holdings BHD (b) 100,000 359,937 38399492 Hume Industries Malay BHD 180,000 661,972 44599692 IJM Corp. BHD 600,000 1,737,090 45499592 Idris Hydraulic Malaysia BHD (b) 1,400,000 3,204,222 45199B92 Kian Jod Can Factory (Loc.) (b) 62,000 248,303 Kumpulan Emas BHD 1,669,000 2,598,833 52399493 Larut Consolidated BHD 530,000 933,097 51799222 MBF Holdings BHD (b) 250,000 187,792 61799L22 MWE Holdings BHD 290,000 589,985 59699492 Magnum Corp. BHD 517,500 1,275,529 55999392 Malaysian Banking 321,000 2,222,886 56090499 Mercury Industry BHD (b) 100,000 430,360 58999A22 Minho BHD 500,000 1,467,135 60399822 New Straits Times Press 475,000 1,626,077 64999592 Nylex Malaysia SDN BHD 500,000 1,095,460 69199592 Press Metal BHD 53,000 155,373 Public Finance BHD: (For. Reg.) 235,000 354,890 87799994 (Loc. Reg.) 354,000 390,565 87799992 RJ Reynolds BHD 95,000 152,387 74999392 Rashid Hussain BHD 1,571,000 3,564,866 75399492 Resorts World BHD 500,000 2,738,655 76199592 SHARES VALUE (NOTE 1) Rothmans Pallmall Malysia Ord. 200,000 $ 1,447,574 77869810 Shapadu Kontena BHD (b) 200,000 422,536 85699222 Sime Darby BHD 1,500,000 3,315,735 82861792 Sistem Televisyen Malaysian 550,000 1,045,775 82999692 Sungei Way Holdings 500,000 2,151,800 86799892 Super Enterprise Holdings BHD 100,000 203,443 98999Q22 TA Enterprise BHD 410,000 1,764,476 94899892 Tan & Tan Development BHD (b) 350,000 509,390 89699B22 Tanjong PLC 415,000 2,760,580 87599993 Technology Resources (b) 700,000 3,094,679 93699692 Telekom Malaysia BHD 455,000 3,845,068 94099892 Tongkah Holdings BHD 1,000,000 1,940,530 94999C92 United Engineers BHD 823,000 3,896,049 93099692 69,634,477 NEW ZEALAND - 0.7% Brierley Investments Ltd. 2,000,000 1,418,240 10901410 Carter Holt Harvey Ltd. 530,000 1,086,394 14699292 Ceramco Corp. Ltd. 200,000 1,030,440 15699692 3,535,074 PAKISTAN - 0.4% Adamjee Insurance 99,600 729,914 00599492 Bank of Punjab (b) 33,000 91,789 79899A92 National Development Leasing Corp. 361,400 409,314 63599492 Pakistan International Airway (b) 225,000 119,920 69599B92 Pakistan State Oil 90,600 769,587 34799292 Pakistan Suzuki Motors (b) 26,000 54,131 43499A92 2,174,655 PHILIPPINES - 0.5% Ayala Corp. Class B 95,200 148,178 05499092 Ayala Land, Inc. Class B 1,324,400 1,441,053 05499392 Filinvest Land, Inc. Ord. (b) 1,250,000 336,787 31699J22 JG Summit Holdings, Inc. Class B (b) 2,225,000 768,559 46615292 2,694,577 SINGAPORE - 9.4% ACMA Ltd. 100,000 819,569 00299392 Cerebos Pacific Ltd. 130,000 577,796 15699592 City Development 538,000 2,374,226 17799010 Clipsal Industries Holdings Ltd. (b) 358,000 2,058,500 18899192 Clipsal Industries Holdings Ltd. (warrants) (b) 41,600 119,808 18899193 Courts Sing Ltd. 1,000,000 1,620,220 22299992 Development Bank of Singapore Ltd. 236,250 2,397,947 25159493 First Capital Corp. Ltd. 588,015 2,502,268 31999792 Fraser & Neave (warrants) (b) 228,159 707,692 35499393 Genting International 290,000 725,000 37245393 Hotel Properties Ltd. 760,000 1,082,840 44199492 Hotel Properties (rights) (b) 38,000 120,981 44199495 Informatics Holdings Ltd. (b) 226,000 242,213 45699D22 Jurong Shipyard Ltd. 207,000 1,761,758 48254699 Keppel Corporation Ltd. 300,000 1,891,314 49205199 Kim Eng Holdings Ltd. 3,595,000 7,660,514 49499D92 Overseas Chinese Banking Corp. (b) 719,693 6,215,981 68999610 Pacific Can Investment Holdings (b) 200,000 213,088 69499C22 Pacific Carriers Ltd. 1,495,000 1,526,858 69599792 Parkway Holding (b) 2,200,000 3,730,936 70199192 Parkway Holding (warrants) (b) 550,000 273,927 70199193 Rotary Engineering Ltd. (b) 100,000 104,022 77899622 Singapore Computer Systems Ltd. 522,000 450,851 83899A92 Singapore Land Ltd. 507,000 1,614,141 82929310 Thai Prime Fund (b) 75,000 1,132,500 92599B22 United Overseas Bank (warrants) (b) 168,750 553,210 91199E92 Wing Tai Holdings Ltd. 1,492,000 3,724,823 97499392 46,202,983 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SRI LANKA - 0.4% Development Co. of Ceylon 214,933 $ 1,762,577 25199C92 Distillery Co. of Sri Lanka 2,542,000 479,523 25499D92 2,242,100 TAIWAN - 0.1% R.O.C. Taiwan Fund (SBI) 52,500 505,313 74965110 THAILAND - 6.5% Asia Fiber Co.: (For. Reg.) 200,000 292,028 04499592 (Loc. Reg.) 200,000 292,028 04499593 Asia SECS Trading Co. Ltd. (Loc. Reg.) (b) 1,000,000 3,058,410 04599D22 Ban Pu Coal (For. Reg.) 100,000 931,334 06199593 Bangkok Bank 200,000 1,578,532 06099210 Bangkok Metropolitan Bank 1,000,000 1,114,840 06199E22 Bank of Ayudhya (For. Reg.) 120,000 430,939 05999998 CMIC Finance & Securities: (For. Reg.) 42,000 623,204 (Loc. Reg.) (b) 200,000 1,704,814 12599394 Finance One Public Co. (For. Reg.) 102,000 1,094,870 31799E93 First Bangkok City Bank (For. Reg.) 790,000 709,254 31899D93 General Finance & Secs. (Loc. Reg.) (b) 100,000 666,761 Goodyear (Thailand) Ltd. 23,600 379,984 38399893 International Engineering (For. Reg.) 27,000 677,664 46299A93 Kiatnakin Finance & Securities (For. Reg.) 19,000 302,920 49699794 Krisda Mahanakorn Co. (Loc. Reg.) (b) 300,000 1,799,526 50199D92 Land & House (For. Reg.) 105,000 1,906,078 51499393 MDX Co. Ltd. (For. Reg.) 242,000 1,719,020 55699293 National Finance & Securities Co. (For. Reg.) 41,500 1,264,325 63199593 Phatra Thanakit (For. Reg.) 50,000 1,286,503 71799593 Pizza Co. (Thai) Ltd. (Loc. Reg.) (b) 150,000 476,520 72599592 Ruang Khao Unit Trust (For. Reg.) 2,282,200 1,215,842 77399393 Saha Union Corp. (Loc. Reg.) 420,000 650,551 78699595 Shinawatra Computer & Communication Co. (For. Reg.) (b) 45,000 1,584,057 94799193 Siam Cement (For. Reg.) 15,000 483,031 78799010 Siam City Bank Ltd. (For. Reg.) 1,850,000 1,825,173 81199593 Thai Farmers Bank 146,000 685,635 90199010 Thai German Ceramic Industry (Loc. Reg.) (b) 400,000 1,262,824 94699892 Thai Military Bank (For. Reg.) 320,000 1,161,798 90199989 Thai President Food Co. (For. Reg.) 30,500 327,388 90299992 United Foods Co. Ltd. (For. Reg.) 114,200 301,949 91699B93 31,807,802 TOTAL COMMON STOCKS (Cost $388,939,000) 470,128,475 CONVERTIBLE PREFERRED STOCKS - 0.5% AUSTRALIA - 0.4% Ampolex Ltd. 8% 300,000 1,339,164 03210593 TNT Ltd. 8% 397,000 409,978 93599293 1,749,142 MALAYSIA - 0.1% IJM Corp. 7% 270,000 517,606 45499594 TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $1,564,580) 2,266,748 CONVERTIBLE BONDS - 2.9% PRINCIPAL AMOUNT (A) GRAND CAYMAN - 0.5%. Bangkok Land Euro 4 1/2%, 10/10/03 (c) $ 900,000 $ 1,044,000 06099LAA Henderson Capital 4%, 10/27/96 (c) 1,500,000 1,498,050 4247309A 2,542,050 HONG KONG - 0.2% Sino Land 5%, 10/21/00 (c) 1,000,000 1,067,500 8293109A INDIA - 0.3% Essar Gujarat Ltd. 5 1/2%, 8/5/98 750,000 896,250 296994AC Scici Ltd. Euro 3 1/2%, 4/1/04 (c) 640,000 699,200 79599KAA 1,595,450 JAPAN - 0.3% Bridgestone Corp 3.70%, 12/31/98 JPY 108,000,000 1,169,046 1084419A KOREA (SOUTH) - 0.3% Dong AH Construction Industries Co. Ltd. 3 1/4%, 12/31/97 CHF 750,000 697,821 25799KAB Kolon Industries 4%, 12/31/05 215,000 273,050 508992AA Sangyong Oil Refining 3 3/4%, 12/31/08 550,000 584,650 78099AAA 1,555,521 NEW ZEALAND - 0.5% Carter Holt Harvey: Euro 7%, 3/2/95 CHF 985,000 885,096 146992AC 8%, 2/7/96 CHF 1,500,000 1,632,020 146992AB 2,517,116 SWITZERLAND - 0.3% Stelux Holding 1 3/4%, 3/31/01 CHF 1,000,000 146992AC1,378,038 THAILAND - 0.5% Hemaraj Land DV 3 1/2%, 9/9/03 500,000 550,000 42399BAA Thai CN Chememical 3 3/4%, 10/25/03 THB 1,750,000 1,925,000 94299GAA 2,475,000 TOTAL CONVERTIBLE BONDS (Cost $12,597,354) 14,299,721 REPURCHASE AGREEEMENTS - 1.1% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 2.96% dated 10/29/93 due 11/1/93 $5,383,328 5,382,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $408,482,934) $ 492,076,944 CURRENCY TYPE ABBREVIATIONS JPY - Japanese yen CHF - Swiss franc THB - Thai baht LEGEND 1. Principal amount is stated in United States dollars unless otherwise noted. 2. Non-income producing (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 $9,210,074 or 1.9% of net assets. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, during the year ended October 31, 1993, aggregated $464,567,805 and $188,438,733, respectively. The face value of futures contracts opened and closed amounted to $14,098,599 and $14,094,482, respectively. Brokerage commissions received by FBSI, an affiliate of the fund's investment adviser, from portfolio transactions during the year ended October 31, 1993, amounted to $3,067,285. (See Note 3 of Notes to Financial Statements). INCOME TAX INFORMATION At October 31, 1993, the aggregate cost of investment securities for income tax purposes was $408,628,822. Net unrealized appreciation aggregated $83,448,122, of which $102,816,131 related to appreciated investment securities and $19,368,009 related to depreciated investment securities. The fund hereby designates $550,000 as a capital gain dividend for the purpose of the dividend paid deduction. For the period, interest and dividends from foreign countries were $3,867,843 or $0.14 per share. Taxes paid to foreign countries were $567,360 or $0.02 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Aerospace and Defense 1.4% Basic Industries 8.8 Conglomerates 0.9 Construction and Real Estate 14.0 Durables 9.6 Energy 2.5 Finance 24.4 Health 2.2 Industrial Machinery and Equipment 5.8 Media and Leisure 4.8 Nondurables 4.4 Precious Metals 1.0 Repurchase Agreements 1.1 Retail and Wholesale 4.2 Services 1.6 Technology 6.5 Transportation 4.3 Utilities 2.5 100.0% PACIFIC BASIN FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993 ASSETS Investment in securities, at value (including repurchase agreements of $5,382,000) (cost $408,482,934) (Notes $ 492,076,944 1 and 2) - See accompanying schedule Receivable for investments sold 3,366,510 Receivable for fund shares sold 9,199,061 Dividends receivable 722,340 Interest receivable 78,359 Other receivables 590,419 TOTAL ASSETS 506,033,633 LIABILITIES Payable to custodian bank $ 790 Payable for investments purchased 8,647,230 Payable for fund shares redeemed 3,127,251 Accrued management fee 314,760 Other payables and accrued expenses 410,304 TOTAL LIABILITIES 12,500,335 NET ASSETS $ 493,533,298 Net Assets consist of: Paid in capital $ 361,727,793 Accumulated net investment loss (2,348,481 ) Accumulated undistributed net realized gain (loss) on investments 50,559,976 Net unrealized appreciation (depreciation) on investment securities 83,594,010 NET ASSETS, for 28,233,457 shares outstanding $ 493,533,298 NET ASSET VALUE and redemption price per share ($493,533,298 (divided by) 28,233,457 shares) $17.48 Maximum offering price per share (100/97 of $17.48) $18.02
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1993 INVESTMENT INCOME $ 4,172,303 Dividends Interest 760,314 4,932,617 Less foreign taxes withheld (Note 1) (567,360 ) TOTAL INCOME 4,365,257 EXPENSES Management fee (Note 3) $ 1,945,428 Basic fee Performance adjustment 58,458 Transfer agent fees (Note 3) 1,064,457 Accounting fees and expenses (Note 3) 153,830 Non-interested trustees' compensation 1,616 Custodian fees and expenses 531,999 Registration fees 185,972 Audit 35,969 Legal 1,965 Miscellaneous 2,767 TOTAL EXPENSES 3,982,461 NET INVESTMENT INCOME 382,796 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 2) Net realized gain (loss) on: Investment securities 17,441,920 Futures contracts (4,116 17,437,804 ) Change in net unrealized appreciation (depreciation) on investment securities 80,580,451 NET GAIN (LOSS) 98,018,255 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 98,401,051 OTHER INFORMATION $2,239,532 Sales charges paid to FDC (Note 3) Deferred sales charges withheld by $56,119 FDC (Note 3) Accounting fees paid to FSC $150,276 (Note 3)
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, 1993 1992 INCREASE (DECREASE) IN NET ASSETS Operations $ 382,796 $ 661,413 Net investment income Net realized gain (loss) on investments 17,437,804 91,181 Change in net unrealized appreciation (depreciation) on investments 80,580,451 (6,740,050 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 98,401,051 (5,987,456 ) Distributions to shareholders from net investment income (1,023,177 - ) Share transactions 607,340,439 188,595,573 Net proceeds from sales of shares Reinvestment of distributions from net investment income 1,000,772 - Cost of shares redeemed (328,462,549 (161,382,351 ) ) Net increase (decrease) in net assets resulting from share transactions 279,878,662 27,213,222 TOTAL INCREASE (DECREASE) IN NET ASSETS 377,256,536 21,225,766 NET ASSETS Beginning of period 116,276,762 95,050,996 End of period (including accumulated net investment loss of $2,348,481 and $1,708,100, respectively)$ 493,533,298 $ 116,276,762 OTHER INFORMATION Shares Sold 40,739,229 15,862,884 Issued in reinvestment of distributions from net investment income 87,252 - Redeemed (22,282,360 (13,404,503 ) ) Net increase (decrease) 18,544,121 2,458,381
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, 1993 1992* 1991 1990 1989 SELECTED PER-SHARE DATA Net asset value, beginning of period $ 12.00 $ 13.15 $ 12.89 $ 15.78 $ 13.99 Income from Investment Operations Net investment income .20 .08(diamond) .02(diamond) .12 (.027)(diamond) Net realized and unrealized gain (loss) on investments 5.39 (1.23) .40 (2.37) 1.927 Total from investment operations 5.59 (1.15) .42 (2.25) 1.900 Less Distributions From net investment income (.11) - (.16) (.01) (.003) From net realized gain - - - (.63) (.107)(dagger) Total distributions (.11) - (.16) (.64) (.110) Net asset value, end of period $ 17.48 $ 12.00 $ 13.15 $ 12.89 $ 15.78 TOTAL RETURN(double dagger) 47.06% (8.75)% 3.37% (14.99)% 13.65% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted)$ 493,533 $ 116,277 $ 95,051 $ 86,354 $ 111,811 Ratio of expenses to average net assets 1.59% 1.84% 1.88% 1.59% 1.40% Ratio of net investment income to average net assets .15% .65% .12% .88% (.18)% Portfolio turnover rate 77% 105% 143% 118% 133% * AS OF NOVEMBER 1, 1991, THE FUND DISCONTINUED THE USE OF EQUALIZATION ACCOUNTING. (dagger) INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. (diamond) FOR THE YEARS ENDED OCTOBER 31, 1992, 1991 AND 1989, NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. (double dagger) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
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. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). Emerging Markets Fund (formerly named International Opportunities Fund) has a 3% sales charge, which has been waived through May 31, 1994. CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF OCTOBER 31, 1993 YEAR FUND Emerging Markets 49.58% 69.55% Emerging Markets (incl. 3% sales charge) 45.09% 64.46% Morgan Stanley Emerging Markets Free Index 44.97% 151.28% Average International Fund 33.41% 39.86% 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, 1990. You can compare the fund's figures to the performance of the Morgan Stanley Emerging Markets Free index - a broad measure of the performance of stocks in developing countries weighted by each country's market capitalization (the total value of its outstanding shares). Mexico, Malaysia, Brazil, and Thailand are most heavily weighted, and together account for over 60% of the index. Keep in mind that before February 1992, the fund's objective was more broadly defined, and did not focus specifically on emerging markets. So you can also compare the fund's performance to the average international fund which reflects the performance of 152 funds with similar objectives tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF OCTOBER 31, 1993 YEAR FUND Emerging Markets 49.58% 19.22% Emerging Markets (incl. 3% sales charge) 45.09% 18.02% Morgan Stanley Emerging Markets Index 44.97% 35.91% Average International Fund 33.41% 11.67% AVERAGE ANNUAL RETURNS take the fund's actual (or 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 (322) MS EMF Emerging Markets Free Index 11/01/90 9700.00 10000.00 11/30/90 9564.20 9479.74 12/31/90 9777.33 9880.37 01/31/91 9709.16 10679.30 02/28/91 10118.18 12260.21 03/31/91 10108.44 12766.06 04/30/91 10332.42 12903.41 05/31/91 10332.42 13918.67 06/30/91 9972.10 13421.82 07/31/91 10186.35 14119.08 08/31/91 10108.44 14418.70 09/30/91 10225.30 13869.26 10/31/91 10127.92 14439.40 11/30/91 9991.58 14225.77 12/31/91 10438.07 15824.40 01/31/92 10517.68 17656.36 02/29/92 10826.14 18442.83 03/31/92 10806.24 19068.46 04/30/92 11064.96 18940.35 05/31/92 11542.58 18873.02 06/30/92 11522.68 17002.12 07/31/92 11144.56 17189.36 08/31/92 10865.95 16390.47 09/30/92 10796.29 16450.88 10/31/92 10995.30 17332.58 11/30/92 10905.75 17144.49 12/31/92 11048.91 17652.99 01/31/93 11201.38 17738.37 02/28/93 11770.60 18033.91 03/31/93 12095.86 18628.41 04/30/93 12482.12 19056.85 05/31/93 12756.56 19581.32 06/30/93 12919.19 20162.41 07/31/93 13142.81 20705.31 08/31/93 14057.63 22457.49 09/30/93 14372.73 23058.76 10/31/93 16446.31 25127.66 Let's say you invested $10,000 in Fidelity Emerging Markets Fund on its start date and paid the 3% sales charge. By October 31, 1993, it would have grown to $16,446 - a 64.46% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley Emerging Markets Free index, which would have grown to $25,128 over the same period - a 151.28% 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 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. (checkmark) EMERGING MARKETS FUND TALK: THE MANAGER'S OVERVIEW An interview with Richard Hazelwood, Portfolio Manager of Fidelity Emerging Markets Fund Q. RICHARD, HOW DID THE FUND PERFORM? A. Most investors in emerging markets had a profitable year, and the fund was no exception. The total return for the fund's fiscal year ended October 31, 1993 was 49.58%. That beat the Morgan Stanley Emerging Markets Free index, which rose 44.97% during the same period. It also beat the average international fund, whose total return was 33.41%, according to Lipper Analytical Services. Q. BROADLY SPEAKING, WHY DID THE FUND DO SO WELL? A. The developing economies of Asia and Latin America are simply growing at a much faster pace than the developed economies of Japan, Europe and North America, and that fact was expressed last year in sharply rising stock prices. Why is that happening? Well, one reason is that many of these countries have a much lower wage structure and lower taxes than the United States. When they import sophisticated Western technology, the result is often soaring productivity and rapid growth. Q. ARE THESE MAINLY EXPORT-DRIVEN STOCKS? A. Not all of them, no. The other factor driving economic growth in the developing world is the spread of Western, middle-class values. These days, it seems, everybody wants a house, a couple of kids, a garage with a car inside it, a TV, all this stuff. To get there you need capitalist, pro-growth policies. And as these policies have been implemented - lower taxes, reduced tariffs and so on - growth has been phenomenal. That fact is partly reflected in the explosion in the number of stocks available for purchase by the fund - currently around 6,000 but possibly headed toward 16,000 over the next three years. Q. WHICH INDUSTRIES WORKED BEST FOR THE FUND THIS YEAR? A. I don't normally think in terms of sectors of the economy as much as I do specific stocks. That said, utilities were 10.5% of the fund and had a big impact on performance. In the U.S., investors buy telephone and electric utilities mainly for the dividend yield; the stocks themselves may hardly grow. But in the developing world, where countries are furiously building up their infrastructures, utilities are growth stocks. Three of the fund's top-10 stocks are telephone utilities: Telefonos in Mexico, Telebras in Brazil and Telecom in Argentina. Q. ANY OTHER NOTABLE SUCCESS STORIES? A. Hotels. I recently visited Korea, and when I arrived at my hotel on a Sunday evening, it was overbooked by 25 rooms. The same thing happened to me in Hong Kong, where there won't be another new luxury hotel opening until sometime after the year 2000. So the first thing I did when I got back was buy hotel stocks - Mandarin Oriental, for example, as well as Shangri-La Asia - and saw many of them rise as much as 30% almost immediately. Airlines were another good story. I've found I can hardly get a seat when I fly anywhere in Asia. I keep getting bumped from flights. Now airlines are a terrible business; it's very hard to make money. But Asia is booming, and so I bought Swire Pacific, which owns Cathay Pacific, and Citic Pacific, which owns Dragon Air in China. These are just a couple of the growth stories I've tried to capitalize on in Asia. Q. AND IN LATIN AMERICA? A. Lately the investment environment in Latin America has been extremely favorable. We're seeing growing political stability in these countries along with progress in reducing deficits, increasing privatization of industry, reduction of trade barriers, deregulation and a return to economic growth with lower inflation. All this has taken place, however, against a background of extreme volatility. To invest in these markets requires patience, a long-term view and a pretty high tolerance for risk. Q. WHICH LATIN AMERICAN COUNTRIES SEEM THE MOST PROMISING? A. Stocks in every Latin American country where the fund had investments rose sharply during the period but Brazil - 7.9% of the fund - was up the most, over 35% in the last six months. The theme in Brazil is stabilization of the political and economic environment. About half the fund's Brazilian investments were in state-sponsored monopolies: Telebras, which I've already mentioned, but also Petrobras, Eletrobras and other electric utilities. All have benefited from a new policy, applied consistently throughout the year, to raise tariffs above the rate of inflation. As a result, profitability improved dramatically and the stocks considerably outperformed the broader market. Q. IS THERE ANYTHING YOU WISH YOU'D DONE DIFFERENTLY? A. Not really. Most of my regrets had to do with opportunities missed rather than investments that didn't work out. The Polish stock market tripled during the period and I didn't own any of it. I probably missed opportunities as well in Turkey, Portugal and Eastern Europe, not to mention South Africa. So, the opportunities were many; more than anything else, it became a question of being in a position to take advantage of them. Q. WHAT CAN WE EXPECT GOING FORWARD? A. It has been a remarkable year, both for these markets and for the fund. It would be unrealistic to expect another year like it. Malaysia, which represents one-fifth of the fund, had the kind of year that probably can't be repeated. Brazil alone was up 60%; you could make a pretty good case for Brazilian stocks climbing even higher, but common sense would suggest otherwise. I'm not pessimistic about the prospects in these countries; I'm just not as optimistic as I was last year. If I worry about anything, it's that with so many new issues coming to market, supply might outstrip demand, perhaps weakening prices. Looking ahead, shareholders would do well to lower their expectations. Q. ANY CHANGES PLANNED? A. I think my biggest challenge in the year ahead will be picking the right stocks in unexplored markets. As so many new markets open to foreign investors and investment choices expand, inefficiencies are inevitable; no one can keep track of everything. So my goal will be to look harder than anybody else and try to capitalize on opportunities others may miss. In the months ahead, I plan on paying particular attention to India. Everybody sees the potential of China, but what about India? It has the largest middle class in the world. And what was a closed, nationalistic system is just beginning to open up, with fewer restrictions on foreign trade, lower taxes and a manageable inflation rate. At the end of October, Indian stocks were less than 1% of the fund; looking ahead, I can imagine shifting as much as 10% of the fund there. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in common stocks of emerging economies and developing capital markets START DATE: November 1, 1990 SIZE: as of October 31, 1993, over $757 million MANAGER: Richard Hazelwood, since July 1993; assistant, Fidelity Low Priced Stock Fund and Fidelity Contrafund, 1992-1993; analyst, Japanese stocks, 1991-1992 (checkmark) RICHARD HAZELWOOD'S INVESTMENT STYLE: "I'd describe myself as a "bottom-up" investor. By that I mean I look at stocks first, then at sectors and regions of the world. That said, one of the first things I did after I took over the fund in July was to increase the stake in Malaysia, Thailand and Hong Kong, and it paid off. But I wasn't looking for stocks in those countries; I was just looking for stocks, and that's where I found them. The stocks I like tend to be growth stocks, with an emphasis on unit growth; ideally, they'll be growing at 30% per year and trading at 10 times earnings. I also concentrate on trying to make the right call on the big stocks in each market; my goal is to catch them when they're about to turn and try to get everything I can out of them. That's where having analysts on the scene, as Fidelity does, is especially helpful." (bullet) At the end of October, almost 60% of the fund's investments were in Asian countries, 16% in Latin America and less than 10% in cash. (bullet) Finance stocks made up the largest sector in the fund, totaling 17.3% of investments, compared to 15.1% six months ago. Grupo Financiero Bancomer, a Mexican banking stock, was the largest single investment in the sector. (bullet) After finance, the fund's leading sectors were construction and real estate, 16.2%, compared to 13.7% six months ago; utilities, 10.5%, compared to 5.9%; media and leisure, 8.1%, compared to 4.6%; and basic industries, 7.9%, compared to 5.9%. (bullet) Cemex, a Mexican cement company, became one of the fund's largest investments during the last six months, and was 1.6% of the fund at the end of October. It represents a bet on rapid growth in construction spending in Mexico. DISTRIBUTIONS The Board of Trustees of Fidelity Emerging Markets Fund voted to pay on December 6, 1993, to shareholders of record at the opening of business on December 3, 1993, a distribution of $.05 from net investment income. EMERGING MARKETS INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1993 Other 7.8% Cash 8.5% Row: 1, Col: 1, Value: 7.9 Row: 1, Col: 2, Value: 5.9 Row: 1, Col: 3, Value: 7.9 Row: 1, Col: 4, Value: 12.9 Row: 1, Col: 5, Value: 2.9 Row: 1, Col: 6, Value: 19.9 Row: 1, Col: 7, Value: 16.4 Row: 1, Col: 8, Value: 8.0 Row: 1, Col: 9, Value: 9.6 Row: 1, Col: 10, Value: 8.6 Argentina 5.9% Thailand 9.6% Brazil 7.9% Singapore 7.9% Hong Kong 12.8% Mexico 16.3% Indonesia 2.8% Malaysia 20.5% AS OF APRIL 30, 1993 Other 11.0% Cash 12.5% Row: 1, Col: 1, Value: 11.0 Row: 1, Col: 2, Value: 5.4 Row: 1, Col: 3, Value: 7.7 Row: 1, Col: 4, Value: 2.2 Row: 1, Col: 5, Value: 11.3 Row: 1, Col: 6, Value: 6.8 Row: 1, Col: 7, Value: 8.9 Row: 1, Col: 8, Value: 25.0 Row: 1, Col: 9, Value: 9.199999999999999 Row: 1, Col: 10, Value: 12.5 Argentina 5.4% Thailand 9.2% Brazil 7.7% Chile 2.2% Mexico 25.0% Hong Kong 11.3% Indonesia 6.8% Malaysia 8.9% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks 89.7 79.1 Bonds 1.7 8.4 Short-term investments 8.6 12.5 TOP TEN STOCKS
% OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Grupo Carso SA de CV Class A-1 (Mexico, Conglomerates) 1.6 1.8 Cemex SA, Series B (Mexico, Building Materials) 1.6 - Technology Resources (Malaysia, Air Transportation) 1.6 0.5 YPF Sociedad Anonima sponsored ADR representing Class D shares (Argentina, Oil & Gas) 1.3 - Telefonos de Mexico SA sponsored ADR representing share Ord. Class L (Mexico, Telephone Services) 1.3 - Telebras PN (Pfd. Reg.) (Brazil, Telephone Services) 1.2 1.6 Grupo Financiero Bancomer SA de CV sponsored ADR, Series C (Mexico, Banks) 1.1 1.1 Telecom Argentina Stet France (Argentina, Telephone Services) 1.1 0.3 Tolmex B2 SA (Mexico, Building Materials) 1.1 1.8 Tanjong PLC (Reg.) (Malaysia, Lodging & Gaming) 1.0 1.1
TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Finance 17.3 15.1 Construction & Real Estate 16.2 13.7 Utilities 10.5 5.9 Media & Leisure 8.1 4.6 Basic Industries 7.9 5.9 Transportation 5.2 1.7 Nondurables 5.1 11.2 Durables 3.7 6.4 Industrial Machinery & Equipment 3.5 2.2 Retail & Wholesale 3.2 3.6 EMERGING MARKETS INVESTMENTS OCTOBER 31, 1993 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 89.4% SHARES VALUE (NOTE 1) ARGENTINA - 5.3% Astra Comp Argentina de Petroleum (Reg.) 30,720 $ 72,839 04699B94 Bagley Y Cia Ltd. SA (b) 314,800 1,400,613 05699C22 Banco de Galicia Y Buenos Aire SSA sponsored ADR representing Class B shares 103,900 3,350,775 05953820 Banco Frances Del Rio PL (Reg.) 160,753 1,592,172 21199692 Buenos Aires Embotelladora sponsored ADR representing 2 shares Class B (b) 77,400 2,854,125 11942420 Commercial Del Plata (b) 432,770 2,779,634 20199392 Molinos Rio de La Plata (Reg.) 139,700 1,621,249 60899C22 Perez Companc Class B (b) 500,500 3,099,491 71399723 Telecom Argentina Stet France (b) 1,925,379 8,629,587 90899992 Telefonica Argentina Class B (b) 866,600 4,577,711 87999D92 YPF Sociedad Anonima sponsored ADR representing Class D shares 367,200 10,052,100 98424510 40,030,296 BERMUDA - 0.3% Jardine Strategic Holdings Ord. 420,000 1,739,241 47199020 Siu Fung Ceramics Holdings Ltd. (b) 1,600,000 496,928 82999G22 2,236,169 BRAZIL - 7.9% Aracruz Celulose SA ADR (b) 11,000 101,750 03849610 Bradesco PN 211,751,472 5,598,709 10599992 Brahma (Cia Cer) PN (Pfd. Reg.) Class B 16,204,000 3,118,784 15799492 Brahma (Cia Cervejaria) 984,887 189,561 15799496 Brahma (Cia Cervejaria): (warrants) (b) 1,676,255 28,228 15799494 (warrants) (b) 130,763 4,870 15799498 Brasmotor PN 18,046,000 3,132,244 10599892 Casa Anglo PN Ord. (b) 6,500,000 691,080 13599392 Celedsc PN B Ord. (b) 890,000 445,009 15199E22 Cimento Itau PN Ord. (b) 1,234,000 336,870 14799392 Comp Vale Do Rao Doce PN Ord. (b) 30,000,000 2,138,100 20499792 Comp Paulista de Forca Luz Ord. 25,402,260 919,816 20499922 Compania Siderurgica Nacional (b) 336,400,000 6,573,256 24499523 Consul PN (Pfd. Reg.) 115,000 83,938 21099392 Copene Petro Do Nordeste SA (b) 800,000 195,408 21799722 Coteminas PN 3,600,000 579,312 22199692 Duratex Corp. PN 20,365,000 928,237 26699493 Eletrobras: ON (b) 8,400,000 1,177,932 69699998 PN B 12,520,390 1,726,937 69699993 Itaubanco PN (Pfd. Reg.) 5,612,200 2,451,353 46599A92 Karsten PN 1,451,638 57,572 48599B92 Light (Servicos de Electr) SA Ord. 6,062,000 1,532,595 53299892 Lojas Americanas 11,499 13,548 54199A93 Lojas Americanas (Reg.) (b) 90,000 106,036 54199A92 Lojas Americanas (warrants) (b) 11,907 684 54199A95 Petrobras PN (Pfd. Reg.) 58,450,000 4,232,364 71699794 Sadia Concordia PN (Pfd. Reg.) 9,475,000 62,630 78699B93 Telebras PN (Pfd. Reg.) 299,992,200 9,560,751 95499792 Telebras ON 48,043,000 1,283,709 95499795 Telepar 1,000,000 266,040 87999F22 Telepar (rights) (b) 9,000 78 87999F24 Telesp PN (Pfd. Reg.) (b) 21,778,000 6,758,802 87999B93 Unibanco PN Class A 15,380,000 857,435 90599A92 Usiminas PN (Pfd. Reg.) 7,800,300,000 4,390,528 97199693 59,544,166 CHILE - 1.4% Chile Fund, Inc. 21,556 724,821 16883410 SHARES VALUE (NOTE 1) Compania de Telefonos de Chile SA sponsored ADR 16,700 $ 1,496,738 20444920 Comp Cervecerias Unidas SA ADR 180,700 4,494,913 20442910 Enersis SA sponsored ADR (b) 45,000 922,500 29274F10 Madeco SA ADR (b) 40,200 834,150 55630410 Maderas Y Sinteticos Sociedad Anonima Masisa sponsored ADR (b) 62,500 1,125,000 55646510 Soc Quimica Y Minera de Chile ADR (b) 23,000 629,625 83363510 10,227,747 CHINA (PEOPLE'S REP.) - 0.2% Shanghai Petrochemical Class H (b) 312,000 96,901 81942494 Tsingtao Brewery Co. Ltd. 1,582,000 1,218,108 87299922 1,315,009 COLUMBIA - 0.0% Corp. Fin. Del Valle ADR B (b) (c) 7,300 124,100 21986910 GREECE - 0.0% Hellenic Bottling Co. SA (b) 7,500 195,516 42399A92 HONG KONG - 12.7% Allen International Holdings Ltd. 3,810,000 660,692 01699522 Amoy Properties Ltd. 2,805,000 3,629,894 03199192 Applied International Holding Ord. 1,700,000 1,187,960 03792310 Bossini International Ltd. (b) 1,055,000 95,572 10099822 CDL Hotels International Ltd. 4,184,000 1,867,989 14999792 Cheung Kong Ltd. 389,000 1,837,399 16674410 Chimney Investments Ltd. (b) 5,014,000 1,044,667 16999B22 China Paint Holdings Ltd. 300,000 43,482 17799392 China Travel International Investment Hong Kong Ltd. 572,000 212,813 24299892 Chuangs China Investment 50,000 13,911 15999722 Citic Pacific Ltd. Ord. 1,270,000 3,451,314 45299792 City Chiu Chow Holdings Ltd. 700,000 92,400 89999B22 Crocodile Garments 3,469,000 597,050 22699192 Dairy Farm International Holdings Ltd. Ord. 3,028 5,681 23385910 Evergo International Holdings Co. Ltd. (b) 820,000 583,627 30099822 First Pacific Bancshares Holding (b) 800,000 217,408 33699292 First Pacific Co. Ltd. 7,489,305 3,077,131 33699192 Fortei Holdings Ltd. 4,506,000 1,166,243 34999D22 Four Seas Travel International Ltd. 500,000 78,290 35099722 Gold Peak Industries Ltd. 444,000 211,153 38074499 Grand Hotel Holdings Ltd. A 3,616,000 1,509,101 38599292 Grande Holdings Ltd. 100,000 73,116 38699622 Guangdong Investments Ltd. Ord. 218,000 121,306 40199492 Guoco Group Ltd. 23,000 101,941 40299692 HKR International Ltd. 1,090,000 740,535 43999192 Henderson Land 376,000 1,544,871 42599010 High Fashion International 2,210,000 1,186,858 42999392 Hon Kwok Land Investment Ltd. Ord. 8,248,000 3,388,856 43899192 Hong Kong & Shanghai Hotels 1,220,500 1,642,598 71899292 Hong Kong Aircraft & Engineering Co. (b) 259,600 1,604,128 43899410 Hong Kong Daily News Holdings Ltd 2,502,000 1,027,997 50899192 Hong Kong Electric Holdings Ord. 956,000 3,092,852 43858010 Hong Kong Land Holdings Ltd. 120,000 321,449 43858292 Hong Kong Telecommunications Ltd. 900,000 1,944,999 43857991 Hopewell Holdings Ltd. 3,900,000 3,911,349 44099999 Hutchison Whampoa Ltd. Ord. 1,927,000 7,256,639 44841510 Hysan Development Co. Ltd. 999,000 2,895,841 44916510 JCG Holdings 3,426,000 2,637,951 46799792 Jardine International Motor Corp. 144,000 199,392 47499292 Jardine Matheson & Co. Ltd. Ord. 90,000 861,857 47111510 Joyce Boutique Holdings Ltd. 6,046,000 1,181,449 49499592 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) HONG KONG - CONTINUED Laws International Holdings 4,012,000 $ 1,609,454 52099192 Li & Fung Ltd. 134,000 83,435 51899592 Liu Chong Hing Investment 492,000 541,185 54999592 Lucky Man Properties Ltd. 50,000 55,322 54999B22 M.C. Packaging 240,000 125,784 62399092 Mandarin Oriental International Ltd. Ord. 632,000 736,071 56259499 Nanyang Holdings Ltd. 22,500 32,902 63099D22 National Mutual Asia Ltd. (b) 900,000 646,389 63699592 Oriental Press Group Ltd. 6,393,000 4,550,154 68620099 Peregrine Investments Holdings 108,000 207,622 71399492 Prod-Art Technology Holdings Ltd. 1,596,000 681,572 74499C92 Regal Hotels Holding 520,000 113,724 75999110 S Megga International 403,000 162,973 99999C92 Shangri-La Asia Ltd. (b) 870,000 996,376 84599M22 Shaw Bros Hong Kong Ltd. 1,930,000 3,146,942 82028710 Shell Electric Manufacturing Co. Ltd. 263,000 99,551 82299B22 Shun Tak Holdings Ltd. 4,168,000 4,962,212 82799192 Sime Darby Hong Kong Ltd. 942,000 1,414,065 82899392 Sing Tao Holdings Ltd. 1,478,000 2,276,046 82877099 South China Morning Post Holdings 666,000 400,765 84249992 Star Paging International Holdings Ltd. 828,000 358,955 85599692 Starlite Holdings Ltd. (b) 1,268,000 311,776 85599892 Sun Hung Kai Properties Ltd. 430,000 2,949,207 86676H10 Swire Pacific Class A 482,000 3,212,294 87079410 Tai Cheung Holdings Ltd. 286,000 436,725 93499892 Techtronic Industries Co. Ord. 500,000 93,820 94799592 Television Broadcast Ltd. Ord. 767,000 2,799,013 87953110 Wharf Holdings (c) 537,000 1,980,526 96299110 Wing On Co. International Ltd. 360,000 498,481 97499092 World International Holding 1,860,000 3,971,528 98150010 Yips Hang Cheung Holdings Ltd. 966,000 290,640 99599592 97,065,270 INDIA - 0.4% Grasim Industries GDS (b) (c) 20,000 325,000 38870610 Himalayan Fund NV IS (b) 22,000 266,860 43299792 Hindalco Industries Ltd. GDR (b)(c) 12,000 229,500 43306410 ITC Ltd.: GDR (c) 21,000 367,500 45031810 (warrants) (b) (c) 7,000 36,750 45031811 Reliance Industries Ltd. GDR (c) 14,000 236,250 75947010 Southern Petrochemical Industries GDS (b) 130,000 1,430,000 84361310 2,891,860 INDONESIA - 2.8% Andayani Megah PT (b) 44,000 111,489 03399722 Astra International (For.) 421,000 3,706,071 04699894 Bank International Indonesia Ord. (b) 1,261,000 4,200,227 06199B92 Bank Niaga PT (b) 15,000 65,665 06399C22 Dharmala International Land 190,000 343,556 25399592 Duta Anggada Realty Ord. 277,500 845,090 26699192 Iki Indah Kabel Indonesia PT 91,000 82,272 45199C22 Indah Kiat Pulp and Paper PT (b) 19,500 17,630 45499B22 Inter Pacific Finance Corp. 95,000 171,778 46299792 Jakarta International Hotels & Development Ord. 298,000 1,914,301 47399693 Kabelmetal Indonesia PT (b) 91,700 305,441 84599B92 Kalbe Farma 165,000 1,130,593 48699992 Lippo Bank (For.) 328,666 946,174 53699A23 Mayora Indah PT (c) 83,200 336,513 83099A92 Modernland Realty PT (b) 83,000 359,401 60999A92 Pakuwon Jati Ord. 406,250 695,914 69599392 Polysindo Eka Perkasa PT (For.) (b) 570,000 3,525,970 73199B23 SHARES VALUE (NOTE 1) Sampoerna, Hanjaya Mandala 126,500 $ 466,500 82299892 Semen Gresik (For. Reg.) (b) 150,000 642,382 84399693 Sinar Mas Agro Res & Tech PT (c) 100,000 260,522 73599592 Sucaco (b) 50,000 304,5 8939929237 Trias Sentosa (For.) (b) 384,500 1,175,520 89599D22 21,607,546 KOREA (SOUTH) - 0.8% Byucksan Engineering & Construction 30,000 527,260 12499122 Cho Hing Bank Co. Ltd. 61,600 757,086 17099E22 Daewoo Heavy Industries Ltd. (b) 49,510 698,575 23999493 Daeyu Securities Co. Ltd. (b) 14,980 335,588 23399G22 Hanshin Construction 17,800 273,185 41199D22 Hyundai Securities Co. Ltd. (b) 10,000 235,163 42699A22 Jinro Ltd. (b) 28,000 706,974 73299422 Korea Air Terminal Service 20,000 616,375 52299422 Korea Electric Power Corp. 38,400 917,284 50099B92 Nae Wae Semiconductor Co. (b) 13,350 394,907 63099E22 Nae Wae Semiconductor Co. New (b) 3,000 84,659 63099E23 Nong Shim Co. (b) 2,000 78,965 65599C22 Samsung Electronics Co. Ltd. GDA (b) (c) 505 12,878 79605030 Sangyong Cement Co. (b) 10,000 280,958 76899392 Sung Chang Enterprise Co. (b) 2,700 140,021 82699B22 6,059,878 MALAYSIA - 20.2% Amalgamated Steel Mills 600,000 957,759 02499692 Aokam Perdana BHD 514,000 5,831,767 01899792 Arab Malaysian Corp. 250,000 831,377 00499F92 Arab Malaysian Finance (For. Reg.) (b) 119,000 463,243 00699A93 Austral Amalgamated Tin BHD 1,189,000 2,279,384 05299C22 Ayer Hitam Tin Dredging Malaysia BHD 50,000 109,546 05499722 Bandar Raya Developments BHD (b) 91,000 99,001 06099N22 Bedford Berhad (b) 618,000 1,281,454 07599322 Berjaya Industrial BHD (b) 86,000 105,303 08299522 Berjaya Leisure BHD 950,000 1,568,469 08410592 Berjaya Singer BHD 142,000 366,667 08499A92 Berjaya Singer BHD (b) 130,000 121,048 08499A96 Berjaya Sports Toto BHD (b) 1,106,000 2,379,891 08499E22 Bolton Properties BHD 814,000 1,203,800 09799592 British American Life Insurance BHD (b) 99,000 201,409 11099E22 Buildcon BHD 75,000 271,420 11999322 CHG Industries BHD 104,000 353,991 16699892 Construction & Supplies (b) 50,000 58,294 21099722 Cycle & Carriage Bintang BHD 40,000 76,369 23299092 DNP Holdings BHD (b) 100,000 122,066 23399L22 Development & Commercial Bank 2,422,000 4,207,232 25199692 Ekran Berhad Ord. (b) 846,000 5,130,279 28299792 Faber Group BHD 3,291,000 3,888,415 30299892 Genting BHD 319,000 3,307,315 37245210 Golden Hope Plantation BHD 86,000 101,678 38499392 Golden Plus Holdings BHD (b) 569,000 2,048,041 38399492 Granite Industries BHD 1,265,000 7,126,757 38799522 Hock Hua Bank BHD (b) 132,000 294,367 43499B22 Hume Industries Malay BHD 400,000 1,471,048 44599692 IJM Corp. BHD 539,000 1,560,486 45499592 Idris Hydraulic Malaysia BHD (b) 835,000 1,911,090 45199B92 Industrial Oxygen, Inc. BHD (b) 516,000 539,014 45999892 Innovest BHD (b) 344,000 320,312 45799B22 Island & Peninsular BHD 314,000 601,957 45699592 Kimara Capital BHD 50,000 112,480 49499K22 Land & General BHD 1,013,000 3,289,474 51499693 Larut Consolidated BHD 550,000 968,308 51799222 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) MALAYSIA - CONTINUED Leong Hup Holdings BHD (b) 40,000 $ 90,767 52699692 London & Pacific Insurance Co. (b) 110,000 288,341 54199E22 Long Huat Timber Industry BHD (b) 55,000 121,811 54299592 MBF Capital BHD (b) 617,000 579,344 61199892 MBF Holdings BHD (b) 950,000 713,611 61799L22 MCSB Systems Malaysian BHD 553,000 2,596,247 56399222 Magnum Corp. BHD 1,915,000 4,720,073 55999392 Malayan United Industries BHD 78,000 242,414 56091099 Malayawata Steel BHD 50,000 106,612 56099192 Malaysian Banking 403,000 2,790,727 56090499 Malaysia British Assurance BHD 241,000 565,728 56099N22 Malaysian Helicopter Services BHD 1,062,000 7,063,383 56099M22 Malaysian Industries Development BHD Ord. 500,000 743,350 56099L22 Malaysian Oxygen BHD (b) 129,000 434,037 56099P22 Malpac Holdings BHD (b) 130,000 383,998 56199622 Metacorp Berhad 866,000 4,607,821 59099E92 Metrojaya BHD 578,000 1,322,886 59599F22 Mulpha International Ltd. 1,096,000 814,712 62499A22 Multi-Purpose Holding BHD (b) 1,802,000 3,701,290 00099292 Negara Properties BHD 238,000 633,178 63999822 New Straits Times Press 50,000 171,166 64999592 Olympia Industries BHD 184,000 325,384 68199D92 OSK Holdings BHD (b) 115,000 409,429 67899922 OSK Holdings BHD (For. Reg.) 150,000 534,038 67899923 Pacific Chemicals BHD (b) 78,000 582,864 69599H22 Pelangi BHD 900,000 795,771 70699492 Pernas International Hotel & Property BHD (b) 166,000 194,557 71499392 Press Metal BHD 36,000 107,042 74199B22 Public Finance BHD (For. Reg.) 243,000 366,971 87799994 Rashid Hussain BHD 1,690,000 3,834,897 75399492 Renong BHD 4,508,000 6,314,040 75999H22 Resorts World BHD 552,000 3,023,475 76199592 Road Builder (M) Holdings BHD 172,000 982,473 75999G92 SPK Sentosa Corp. BHD (b) 100,000 165,884 84899322 Shangri-La Hotels Malaysia BHD (b) 208,000 270,171 84599P22 Sig Holdings BHD (b) 40,000 84,507 83499J22 Sime Darby BHD 1,650,000 3,647,308 82861792 Sistem Televisyen Malaysian 200,000 380,282 82999692 Southern Bank BHD 340,000 811,424 84199992 Sungei Way Holdings 887,000 3,817,293 86799892 Super Enterprise Holdings BHD 100,000 203,443 98999Q22 TA Enterprise BHD 654,000 2,814,554 94899892 Tan & Tan Development BHD (b) 1,407,000 2,047,748 89699B22 Tanjong PLC (Reg.) 1,143,000 7,603,238 87599993 Technology Resources (b) 2,709,000 11,976,408 93699692 Telekom Malaysia BHD 459,000 3,878,871 94099892 Tenega Nasional BHD 488,000 2,539,279 92099992 Time Engineering BHD (b) 601,000 1,222,692 93099592 Tongkah Holdings BHD 69,000 133,897 94999C92 UMW Holdings BHD (b) 31,000 89,750 90302599 Uniphone Telecom BHD (b) 107,000 468,858 95499A92 United Engineers BHD 1,257,000 5,950,588 93099692 Wing Tiek Holdings BHD (b) 50,000 144,757 97499292 YTL Corporation (b) 174,000 558,216 98799092 YTL Corporation (warrants) (b) 120,000 122,065 98799094 154,654,181 MEXICO - 15.8% Banacci SA de CV (b): Class B 259,000 1,459,775 06399896 Class C 820,500 5,059,310 06399893 Cementos Apasco SA de CV Class A (b) 992,000 6,687,280 15299392 Cemex SA, Series B (b) 531,500 12,311,103 15299293 SHARES VALUE (NOTE 1) Cifra SA Class C (b) 2,867,000 $ 6,869,820 17178594 Coca-Cola Femsa SA de CV sponsored ADR 21,000 588,000 19124110 Controladora Commercial Mexicana SA B-1 (b) 1,773,300 3,546,600 21299692 Desc Class B 821,000 3,921,392 25299692 Emvasa Del Valle de Enah Ord. (b) 219,000 762,652 29299E22 Farmacia Benevides SA de CV Ord. (b) 143,000 648,754 31299422 Fomento Economico Mexicano SA (FEMSA) B 1,093,000 5,622,141 34441892 Grupo Carso SA de CV Class A-1 (b) 1,638,500 12,615,926 40099594 Grupo Cementos Chihuahua B (b) 305,000 258,228 41599092 Grupo Dina (Consorcio G) ADR (b) 279,400 5,867,400 21030610 Grupo Embot. Mex. Class B ADS (c) 31,400 902,750 40048J10 Grupo Financiero Bancomer SA de CV: Class B (b) 180,000 217,381 40048694 sponsored ADR, Series C (c) 299,300 8,754,525 40048610 Grupo Industry Bimbo 2 (b) 192,000 1,533,546 60899994 Grupo Industrial Maseca SA de CV: ADR (c) 14,000 245,000 40048830 Class B (b) 2,105,600 2,489,051 57899894 Grupo Posadas SA de CV Class L (b) 390,000 307,765 40048992 Grupo Radio Centro SA de CV sponsored ADR (b) 21,200 384,250 40049C10 Grupo Sidek B Free shares 485,100 1,208,874 40099F22 Grupo Simec SA de CV ADR (b) 35,600 645,250 40049110 Grupo Situr SA de CV Class B (b) 1,240,113 2,282,130 40049292 Grupo Televisa SA de CV: ADR (c) 4,200 232,050 40049J10 Class L (b) 46,000 1,280,064 40049J92 Grupo Tribasa SA de CV sponsored ADR (b) 119,500 2,225,688 40049F10 Herdez SA de CV Class A (b) 1,211,407 1,033,379 42799F22 Interceramicin SA de CV: Class A-2 31,000 147,572 46399593 Class C (b) 4,000 19,808 46399592 Kimberly Clark de Mexico Class A (b) 302,000 4,631,309 49499392 Mexico Value Recovery (rights) (b) 2,537,000 25 59304893 Sanluis Corp. Ord., Series A-2 (b) 40,000 215,974 21987020 Sears Roebuck de Mexico SA de CV (b) 284,000 3,683,835 81240K92 Sears Roebuck de Mexico SA de CV ADR representing Series B-1 (b) (c) 52,700 1,343,850 81240K10 Telefonos de Mexico SA sponsored ADR representing share Ord Class L 177,200 9,701,700 87940378 Tolmex B2 SA (b) 743,000 8,189,613 94399492 Transport Maritima Mexico A (b) 69,000 628,275 94899592 Transport Maritima Mexico Class L (b) 36,000 355,399 94899593 Vitro SA (b) 367,000 2,157,442 92850292 121,034,886 PAKISTAN - 0.2% Adamjee Insurance 36,000 263,824 00599492 Bank of Punjab (b) 25,500 70,928 79899A92 National Development Leasing Corp. 178,100 201,712 63599492 Pakistan State Oil 24,000 203,864 34799292 Pakistan Suzuki Motors (b) 26,000 54,131 43499A92 Pel Appliances Ltd. (b) 110,000 681,546 70599922 1,476,005 PANAMA - 0.5% Banco Latino Americano Ex Class E 76,500 3,327,750 06199A92 Panamerican Beverages, Inc. Class A 18,700 607,750 69829W10 3,935,500 PHILIPPINES - 2.6% Ayala Corp. Class B 315,800 396,683 05499092 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) PHILIPPINES - CONTINUED Ayala Land, Inc. Class B 1,763,800 $ 1,919,156 05499392 Filinvest Land, Inc. Ord. (b) 1,782,000 480,124 31699J22 First Philippines Holdings Corp. 250,000 613,125 33699492 International Container Terminal Services 100,800 121,865 45999B92 JG Summit Holdings, Inc. B (b) 4,062,000 1,403,096 46615292 Meralco B (b) 491,240 4,963,307 58799A92 Metro Drug, Inc. Class B (b) 11,275,000 1,713,687 59699292 Philippine Long Distance Telephone Co. 110,400 7,024,200 71825210 San Miguel Corp. Class B 179,000 1,236,614 79908540 Sanitary Wares Manufacure Corp. (b) 3,000 995 81099792 19,872,852 PORTUGAL - 0.0% CIN 5,000 148,159 17599592 Mague (Constru Metalom) 1,586 53,384 55999192 Unicer Uniao Cervejeira SA (b) 5,000 154,776 93399A93 356,319 SINGAPORE - 7.9% ACMA Ltd. 417,000 3,417,603 00299392 Amtek Engineering Ltd. (b) 97,000 209,142 03299999 CWT Distribution Ltd. (b) 112,000 199,117 17999922 Chuan Hup Holdings Ltd. (b) 631,000 680,250 14899992 City Development 45,000 198,588 17799010 Compact Metal Industry Ltd. (b) 200,000 274,870 20499B22 DBS Land Ltd. 904,000 2,165,677 24399292 First Capital Corp. Ltd. 326,000 1,387,277 31999792 Focal Finance Ltd. (b) 74,000 194,074 34499B22 GK Goh Holdings Ltd. (b) 188,000 367,420 36199B22 Genting International 167,000 417,500 37245393 Haw Par Brothers International Ltd. 1,755,000 4,138,009 41998990 Hitachi Zosen Singapore Ltd. 1,761,000 2,253,710 43399A22 Hong Leong Finance Ltd. (b) 1,147,000 3,442,009 44999D22 Hong Leong Finance Ltd. (warrants) (b) 140,000 52,956 44999D23 Hour Glass Ltd. 800,000 847,312 44199E22 IPC Corp. Ltd. 88,000 102,635 46299E22 Informatics Holdings Ltd. (b) 1,430,000 1,532,588 45699D22 International Factors (b) 50,000 53,272 45999H22 Jurong Cement (b) 828,750 2,152,595 48299792 Jurong Engineering Ltd. 129,000 951,519 49499692 Kay Hian James Capel Holding (For. Reg.) 782,000 1,390,263 48699B22 Keppel Corporation Ltd. 630,000 3,971,759 49205199 Keppel Finance Ltd. 1,617,000 1,957,281 49299D22 Kim Eng Holdings Ltd. 3,149,000 6,710,141 49499D92 Liang Court Holdings Ltd. 1,400,000 1,253,308 52599A92 Lum Chang Holdings Ltd. (b) 82,000 108,044 54999F22 Overseas Union Bank Ltd. (For. Reg.) 332,000 1,674,442 68990192 Overseas Union Trust Ltd. 246,000 589,332 69499B22 PCI (Printed Circuits) Ltd. (b) 324,000 367,672 74399B92 Pacific Can Investment Holdings (b) 570,000 607,301 69499C22 Pentex Schweizer Circuits Ltd. 1,210,000 1,907,069 70999222 Sal Industrial Leasing Ltd. 605,000 659,849 81499792 San Teh Ltd. (b) 92,000 82,941 79999992 Sembawang Maritime Ltd. 379,500 1,794,382 81799592 Ssangyong Cement (Sing) Ltd. 623,000 1,437,510 75299093 Straits Steamship Land Ord. 1,300,000 2,950,454 86299292 Straits Trading Co. 600,000 1,286,094 86299592 Summa Investments Ltd. 591,000 447,109 93999C22 Tat Lee Finance Ltd. (b) 189,000 309,797 87699E22 Tibs Holdings 578,000 2,313,896 94999792 Tiger Medicals Ltd. 165,000 277,740 88699A22 Transmarco Ltd. 326,000 731,661 89499492 Van Der Horst Ltd. (b) 413,000 708,208 92099C22 Venture Manufacturing 498,000 1,117,692 92399992 Wing Tai Holdings Ltd. 430,000 1,073,508 97499392 60,765,576 SHARES VALUE (NOTE 1) SRI LANKA - 0.2% Aitken Spence & Co. Ltd. 100,000 $ 683,295 00999F22 Development Co. of Ceylon (DFCC) 50,666 415,491 25199C92 Distillery Co. of Sri Lanka 1,350,000 254,664 25499D92 1,353,450 TAIWAN (FREE CHINA) - 0.0% Taiwan Fund, Inc. 11,400 287,850 87403610 THAILAND - 9.6% Advanced Information Service : (For. Reg.) 107,400 2,729,502 00799793 (Loc. Reg.) 50,100 1,486,787 00799792 Asia Fiber Co.: (For. Reg.) 200,000 292,028 04499592 (Loc. Reg.) 178,500 260,635 04499593 Ayudhya Insurance Co. (Loc. Reg.) 124,800 1,310,056 05499592 Ban Pu Coal (For. Reg.) 343,800 3,201,926 06199593 Bangkok Land Co.: (For. Reg.) 10,000 60,379 06199993 (Loc. Reg.) (b) 425,000 2,515,783 06199992 Bangkok Metropolitan Bank (L) 1,131,000 1,260,884 06199E22 Bank of Ayudhya (Loc. Reg.) 60 202 05999994 Banpu Coal (Loc. Reg.) 147,500 1,385,360 06199592 Christiani & Nielsen (For. Reg.) 28,400 239,842 17599692 Deves Insurance Co. Ltd. (Loc. Reg.) (b) 3,000 38,358 25299E22 Eastern Printing Co.: (For. Reg.) 200,000 643,252 27699323 (Loc. Reg.) 400,000 1,286,504 27699322 Finance One Public Co.: (For. Reg.) 15,000 161,010 31799E93 (Loc. Reg.) 57,500 530,979 31799E92 First Bangkok City Bank: (For. Reg.) 830,000 745,166 31899D93 (Loc. Reg.) 115,000 103,246 31899D92 General Financial & Services (Loc. Reg.) (b) 34,000 232,123 36999692 Industrial Finance Thai (For. Reg.) 994,000 2,137,846 45799896 International Broadcasting Corp.: (For. Reg.) (b) 110,000 1,684,294 45999E93 (Loc. Reg.) (b) 82,000 1,255,564 45999E92 Juldis Development Co. (Loc. Reg.) (b) 620,500 4,089,325 48199A92 Krung Thai Bank: (For. Reg.) 1,340,000 2,855,567 50599293 (Loc. Reg.) 1,917,000 4,501,250 50599292 Land & House: (For. Reg.) 288,000 5,228,099 51499393 (Loc. Reg.) 34,400 624,467 51499392 MDX Co. Ltd.: 55699292 (For. Reg.) 70,000 497,237 55699293 (Loc. Reg.) 50,000 317,679 55699292 Matichon Newspaper Group (b) 10,000 116,811 60899793 Mutual Fund Co. Ltd. (Loc. Reg.) (b) 22,000 375,059 65499B22 NTS Steel Group Co. Ltd.: (For. Reg.) 700,000 2,223,757 64999893 (Loc. Reg.) 410,000 1,302,488 64999892 National Finance & Securities Co. (For. Reg.) 29,900 910,924 63199593 PTT Exploration & Production (b) 342,000 1,248,424 74099B22 Property Perfect Co. Ltd. (Loc. Reg.) (b) 57,800 862,210 74399F22 Quality Houses Co. Ltd. (Loc. Reg.) (b) 527,000 2,932,402 74799G22 Raimon Land Co. Ltd. (Loc. Reg.) (b) 168,400 963,615 75099823 Regional Container Lines (For. Reg.) 14,600 303,062 75899293 Renown Co. Ltd.: (For. Reg.) 107,800 476,464 75999K23 (rights) (b) 107,800 433,923 75999K24 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) THAILAND - CONTINUED S Khon Kaen Industries Co. Ltd. (b) 327,000 $ 1,354,974 56499F22 S&J International Enterprises (Loc. Reg.) (b) 124,000 469,772 88499E92 SRI Thai Superware (Loc. Reg.) 20,000 175,217 84499892 Sammakorn Co. Ltd.: (For. Reg.) (b) 22,000 345,541 79599F23 (Loc. Reg.) (b) 115,100 1,998,579 79599F22 Seafresh Industry (Thai) Co. (Loc. Reg.) (b) 35,600 214,949 81199D22 Shinawatra Computer & Comm. Co.: (For. Reg.) (b) 15,000 528,019 94799193 (Loc. Reg.) 16,600 584,341 94799192 Siam City Bank Ltd.: (For. Reg.) 2,826,300 2,788,371 81199593 (Loc. Reg.) 232,500 213,323 81199592 Siam City Cement (Loc. Reg.) 334,000 2,346,173 82570799 Siam Commercial Bank (Loc. Reg.) 33,000 205,762 78851094 Strongpack Co. Ltd.: (For. Reg.) 132,000 380,268 86399393 (Loc. Reg.) 100,000 288,082 86399392 Thai Granite Company Ltd.: (For. Reg.) 180,000 838,201 95599A93 (Loc. Reg.) 156,700 834,827 95599A92 Thai Military Bank (For. Reg.) 410,000 1,488,554 90199989 Thai Modern Plastic Industry Co.: (For. Reg.) 190,000 1,102,211 90699D93 (Loc. Reg.) (b) 46,800 271,492 90699D92 Thai Wah Food Products: (For. Reg.) 126,800 385,303 93699B23 (Loc. Reg.) 90,100 273,784 93699B22 Tong Hua Daily News (Loc. Reg.) 196,500 709,540 92199D22 Union Bank of Bangkok Ltd. 1,000 29,519 90499K22 Union Mosaic Industries Ltd.: (For. Reg.) 19,000 92,975 93199493 (Loc. Reg.) (b) 10,000 48,934 93199492 Unique Gas & Petrochemicals Co.: (For. Reg.) (b) 60,000 743,489 47799523 (Loc. Reg.) 90,600 1,136,969 47799522 73,673,658 TURKEY - 0.2% Adana Cimento (b) 106,425 58,502 00699B92 Cukurova Electrik AS (b) 85,000 72,007 22999192 Goodyear 91,500 136,078 68999992 Guney Biraciliu (b) 72,000 85,391 40299792 Maret 153,000 87,560 56899692 Teletas (b) 120,000 83,132 87999C92 Turk Demir Dokum (b) 77,333 85,893 90099A92 Turkiye Garanti Bankasi ADR (b) 140,000 1,006,600 90014810 1,615,163 UNITED KINGDOM - 0.2% Cathay International Holdings PLC (b) 1,986,385 1,868,692 14999D22 VENEZUELA - 0.2%. CA Venepal GDS Class B ADR (b) (c) 2,864 10,740 12477610 Corimon SA CA sponsored ADR 16,700 194,138 21872820 Electricidad de Caracas LA (b) 436,773 1,576,812 42799922 Venezolana de Prerreducidos Caroni Venpreca CA GDR (c) 1,500 9,375 92264410 1,791,065 TOTAL COMMON STOCKS (Cost $577,080,377) 683,982,754 CONVERTIBLE PREFERRED STOCKS - 0.3% SHARES VALUE (NOTE 1) HONG KONG - 0.1% Amoy Properties Ltd. 5 1/2% (c) 1,000 $ 1,040,000 03189292 PHILIPPINES - 0.2% Philippine Long Distance Telephone 1.4375 GDR representing 1 share preferred, Series 2 (c) 38,800 1,396,800 71825250 TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $1,999,100) 2,436,800 CORPORATE BONDS - 0.8% PRINCIPAL AMOUNT (A) CONVERTIBLE BONDS - 0.6% ARGENTINA - 0.0%. Alpargatas SAIC 9%, 3/15/98 (c) - $ 20,000 $ 18,800 020545AA INDIA - 0.3% Essar Gujarat Ltd. 5 1/2%, 8/5/98 - 190,000 227,050 296994AA Reliance Industries Ltd. 3 1/2%, 11/3/93 (c) - 1,000,000 1,062,500 759470AA Scici Ltd. Euro 3 1/2%, 4/1/04 (c) - 870,000 950,475 79599KAA 2,240,025 MALAYSIA - 0.3% Berjaya Singer Culs 6%, 9/1/98 - MYR 52,000 47,809 08499AAB Berjaya Sport Culs 9%, 10/30/97 - MYR 1,260,000 2,021,127 08499EAB 2,068,936 SINGAPORE - 0.0% Sembawang Maritime Ltd. Culs 1 1/2%, 12/31/98 - SGD 50,000 54,218 817995AC TOTAL CONVERTIBLE BONDS 4,381,979 NONCONVERTIBLE BONDS - 0.2% MALAYSIA - 0.0% Berjaya Singer Culs 5%, 12/31/98 - MYR 130,000 38,908 08499AAA MEXICO - 0.1% Controladora Comercial Mexicana SA de CV Euro 8 3/4%, 4/21/98 - 750,000 773,438 212996AA Hylsa de CV 11%, 2/23/98 (c) - 200,000 215,000 449086AA 988,438 UNITED STATES OF AMERICA - 0.1% PDV America, Inc. gtd. 7 7/8%, 8/1/03 Baa3 1,000,000 1,015,000 69329RAC TOTAL NONCONVERTIBLE BONDS 2,042,346 TOTAL CORPORATE BONDS (Cost $1,997,743) 6,424,325 GOVERNMENT OBLIGATIONS (E) - 0.9% PRINCIPAL AMOUNT (A) ARGENTINA - 0.6% Argentina Promissory Note PDI 0% 5/26/06 (c) - $ 131,445 $ 107,292 0401149J Argentina Republic: BOCON 3 1/4%, 4/1/01 (d) B1 2,778,110 2,248,880 BOTE 2.08%, 5/31/96 (d) - 140,000 86,450 Brady: 4%, 3/31/23 (c)(d) - 264,000 174,900 0401149Y Euro 4%, 3/31/23 (d) B1 3,000,000 1,987,500 039995AD 4,605,022 MEXICO - 0.3% Mexican Adjustabonos 7 1/4%, 2/17/94 AA- MXN 150,000 66,211 Mexican Government Brady: 4.1875%, 12/31/19 (d) Ba3 250,000 216,562 597998QD 6 1/4%, 12/31/19 Ba3 1,000,000 812,500 597998PF 4.0781%, 12/31/19 (d) Ba3 500,000 433,125 4 1/4%,13/31/19 (d) Ba3 250,000 597998MN 216,562 597998NC 1,744,960 TOTAL GOVERNMENT OBLIGATIONS (Cost $8,822,877) 6,349,982 COMMERICAL PAPER - 0.1% MEXICO - 0.1% Banco International Mexico 0%, 12/21/93 (Cost $599,529) MXN 1,915,000 598,330 282996AA REPURCHASE AGREEMENTS - 8.5% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 2.96% dated 10/29/93 due 11/1/93 $65,338,113 65,322,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $655,821,626) $ 765,114,191 CURRENCY TYPE ABBREVIATIONS MYR - Malaysian ringgit MXN - Mexican peso SGD - Singapore dollar LEGEND 1. Principal amount is stated in United States dollars unless otherwise noted. 2. Non-income producing 3. Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $20,373,596 or 2.7% of net assets. 4. The coupon rate shown on floating or adjustable rate securities represents the rate at period end. 5. Most foreign government obligations have not been individually rated by S&P or Moody's. The ratings listed are assigned to securities by FMR, the fund's investment adviser, based principally on S&P and Moody's ratings of the soverign credit of the issuing government. 6. Standard & Poor's Corporation credit ratings are used in the absence of a rating by Moody's Investor Service, Inc. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, during the year ended October 31, 1993, aggregated $661,586,758 and $81,438,984, respectively. Brokerage commissions received by FBSI, an affiliate of the fund's investment adviser, from portfolio transactions during the year ended October 31, 1993, amounted to $12,982. (See Note 3 of Notes to Financial Statements). INCOME TAX INFORMATION At October 31, 1993, the aggregate cost of investment securities for income tax purposes was $656,252,452. Net unrealized appreciation aggregated $108,861,739 of which $115,539,315 related to appreciated investment securities and $6,677,576 related to depreciated investment securities. At September 30, 1993, the fund's fiscal tax year end, the fund had a capital loss carryforward of approximately $2,182,000 which will expire on October 31, 2001. For the period, interest and dividends from foreign countries were $2,260,656 or $0.05 per share. Taxes paid to foreign countries were $204,613 or $0.004 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Aerospace and Defense 1.0% Basic Industries 7.9 Conglomerates 3.2 Construction and Real Estate 16.2 Durables 3.7 Energy 3.2 Finance 17.3 Government Obligations 0.8 Health 0.2 Industrial Machinery and Equipment 3.5 Media and Leisure 8.1 Nondurables 5.1 Repurchase Agreements 8.8 Retail and Wholesale 3.2 Services 0.9 Technology 1.2 Transportation 5.2 Utilities 10.5 100.0% EMERGING MARKETS FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993 ASSETS Investment in securities, at value (including repurchase agreements of $65,322,000) (cost $655,821,626) $ 765,114,191 (Notes 1 and 2) - See accompanying schedule Cash 9,266 Receivable for investments sold 16,145,422 Receivable for fund shares sold 33,755,811 Dividends receivable 428,178 Interest receivable 109,711 Redemption fees receivable (Note 1) 20,142 Other receivables 11,017 TOTAL ASSETS 815,593,738 LIABILITIES Payable for investments purchased $ 55,628,651 Payable for fund shares redeemed 1,197,571 Accrued management fee 370,510 Other payables and accrued expenses 659,862 TOTAL LIABILITIES 57,856,594 NET ASSETS $ 757,737,144 Net Assets consist of: Paid in capital $ 648,276,854 Undistributed net investment income 628,805 Accumulated undistributed net realized gain (loss) on investments (461,080 ) Net unrealized appreciation (depreciation) on investment securities 109,292,565 NET ASSETS, for 46,823,174 shares outstanding $ 757,737,144 NET ASSET VALUE, offering price and redemption price per share ($757,737,144 (divided by) 46,823,174 shares) (Note 3)$16.18
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1993 INVESTMENT INCOME $ 2,283,643 Dividends Interest 1,369,719 Foreign exchange gain (loss) (Note 1) (67,170 ) 3,586,192 Less foreign taxes withheld (204,613 ) TOTAL INCOME 3,381,579 EXPENSES Management fee (Note 3) $ 1,111,793 Transfer agent fees (Note 3) 782,066 Redemption fees (Note 1) (5,446 ) Accounting fees and expenses 101,833 (Note 3) Non-interested trustees' compensation 614 Custodian fees and expenses 359,309 Registration fees 365,579 Audit 34,220 Legal 349 Miscellaneous 599 TOTAL EXPENSES 2,750,916 NET INVESTMENT INCOME 630,663 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 2) (387,679 Net realized gain (loss) on investment securities ) Change in net unrealized appreciation (depreciation) on investment securities 109,236,178 NET GAIN (LOSS) 108,848,499 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 109,479,162 OTHER INFORMATION Sales Charges paid to FDC $103,572 (Note 3) Accounting fees paid to FSC $100,767 (Note 3)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, 1993 1992 Operations $ 630,663 $ 97,958 Net investment income Net realized gain (loss) on investments (387,679 114,233 ) Change in net unrealized appreciation (depreciation) on investments 109,236,178 115,730 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 109,479,162 327,921 Distributions to shareholders from: (101,676 (49,363 Net investment income ) ) Net realized gain (191,171 (86,385 ) ) Share transactions 671,166,140 13,639,021 Net proceeds from sales of shares Reinvestment of distributions from: 96,558 48,678 Net investment income Net realized gain 186,053 85,393 Cost of shares redeemed (36,857,488 (6,715,074 ) ) Redemption fees (Note 1) 227,559 31,935 Net increase (decrease) in net assets resulting from share transactions 634,818,822 7,089,953 TOTAL INCREASE (DECREASE) IN NET ASSETS 744,005,137 7,282,126 NET ASSETS Beginning of period 13,732,007 6,449,881 End of period (including undistributed net investment income of $628,805 and $99,818, respectively) $ 757,737,144$ 13,732,007 OTHER INFORMATION Shares Sold 48,273,320 1,230,089 Issued in reinvestment of distributions from: 9,072 4,815 Net investment income Net realized gain 17,404 8,447 Redeemed (2,719,187 (621,150 ) ) Net increase (decrease) 45,580,609 622,201 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31, NOVEMBER 1, 1990 (COMMENCEMENT OF OPERATIONS) TO SELECTED PER-SHARE DATA 1993 1992 OCTOBER 31, 1991 Net asset value, beginning of period $ 11.05 $ 10.40 $ 10.00 Income from Investment Operations Net investment income .06* .08 .12 Net realized and unrealized gain (loss) on investments 5.28 .76 .30 Total from investment operations 5.34 .84 .42 Less Distributions From net investment income (.08) (.08) (.04) From net realized gain (.15) (.14) - Total distributions (.23) (.22) (.04) Redemption fees added to paid in capital .02 .03 .02 Net asset value, end of period $ 16.18 $ 11.05 $ 10.40 TOTAL RETURN (dagger) 49.58% 8.56% 4.41%(double dagger) (double dagger) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 757,737 $ 13,732 $ 6,450 Ratio of expenses to average net assets 1.91% 2.60% 2.60%(double dagger) (double dagger) Ratio of net investment income to average net assets .44% .90% 1.34% Portfolio turnover rate 57% 159% 45% (dagger) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. (double dagger) EXPENSES LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. TOTAL RETURNS WOULD HAVE BEEN LOWER HAD THE LIMITATIONS NOT BEEN IN EFFECT. * FOR THE PERIOD, NET INVESTMENT INCOME PER SHARE WAS CALCULATED USING AVERAGE SHARES OUTSTANDING.
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. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). Latin America Fund has a 3% sales charge, which has been waived since the fund's start on April 19, 1993 through May 31, 1994. CUMULATIVE TOTAL RETURNS PERIOD ENDED LIFE OF OCTOBER 31, 1993 FUND Latin America 32.80% Morgan Stanley Latin America Free Index 23.14% Average Latin America Fund 23.91% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case since the fund started on April 19, 1993. You can compare the fund's figures to the performance of the Morgan Stanley Latin America index, a broad measure of the performance of stocks in Latin American markets weighted by each country's market capitalization (the total value of the shares outstanding). You can also compare the fund's performance to the average Latin American fund, which reflects the performance of eight funds with similar objectives - in this case, a very small peer group - tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. ANNUALIZED TOTAL RETURNS PERIOD ENDED LIFE OF OCTOBER 31, 1993 FUND Latin America 69.60% Morgan Stanley Latin America Free Index 47.35% Average Latin American Fund 51.04% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. Since the fund is less than a year old, the return is an annualized number. $10,000 OVER LIFE OF FUND Latin America (349) MS EMF Latin America Index 04/19/93 10000.00 10000.00 04/30/93 9940.00 9568.13 05/31/93 10180.00 9818.14 06/30/93 10700.00 10436.73 07/31/93 11070.00 10716.71 08/31/93 12110.00 11640.43 09/30/93 12330.00 11844.71 10/31/93 13280.00 12314.07 Let's say you invested $10,000 in Fidelity Latin America Fund on its start date. By October 31, 1993, it would have grown to $13,280 - a 32.80% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley Latin America index, which would have grown to $12,314 over the same period - a 23.14% 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 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. (checkmark) LATIN AMERICA FUND TALK: THE MANAGER'S OVERVIEW An interview with Patti Satterthwaite, Portfolio Manager of Fidelity Latin America Fund Q. PATTI, HOW DID THE FUND PERFORM? A. The fund's track record is quite short, so performance numbers to date should be taken with a grain of salt. That said, the fund has done very well so far. Its total return from the fund's start date on April 19, 1993 through October 31, 1993 was 32.80%. The fund outperformed its benchmark - the Morgan Stanley Latin America index - by a comfortable margin. During the six months from the end of April through the end of October, the fund's total return was 33.60%, compared to 28.70% for the index and 23.90% for the average Latin America fund, according to Lipper Analytical Services. Q. WHAT BOOSTED PERFORMANCE OVER THE LAST SIX MONTHS? A. There were two main factors. First, the fund averaged about a 20% stake in Brazilian stocks throughout the period. All the Latin American stock markets where the fund had investments rose sharply during the period but Brazil was up the most, over 35% in the last six months. The theme in Brazil is stabilization of the political and economic environment. About half the fund's Brazilian investments were in state-sponsored monopolies including Telebras, Petrobras and several electric utilities. All benefited from a new policy, applied consistently throughout the year, to raise tariffs above the inflation rate. As a result, profitability improved dramatically and these stocks outperformed the index considerably. Q. AND THE SECOND FACTOR? A. Second was simply good stock selection in Mexico. Inflation in Mexico has receded to international levels, and the theme there is growth. Mexican stocks accounted for more than one-third of the fund's total investments during the period. The fund's largest position was Cemex, a cement producer with a 60% market share in Mexico. Cemex's stock suffered after the company made a large investment in Spain, and investors signaled their disapproval. But the company subsequently came through on earnings projections and the stock recovered nicely. Cemex was up more than 40% during the period, compared to the index return in Mexico of 6.9%. Q. ARGENTINA ACCOUNTED FOR ABOUT 11% OF THE FUND'S STOCK INVESTMENTS AT THE END OF THE PERIOD. WHAT'S THE THEME THERE? A. In Argentina, the basket of stocks is not nearly as large as it is in Mexico or Brazil, but it's growing. If there's a theme, it's privatization. Where we're seeing the strongest, most consistent earnings growth in Argentina is among former state-run companies that are just now opening up to private investors. Chief among them is YPF, the recently privatized Argentine oil company. Although it still has a big cost-cutting job ahead of it, production is increasing and the stock looks cheap compared to other international oil companies. Q. WHEN YOU LOOK AT THE BIG PICTURE, WHAT WOULD YOU SAY IS THE CASE FOR INVESTING IN LATIN AMERICA? A. We've seen progress on so many fronts in Latin America, all of which contributes to a favorable investment environment. The big themes include growing political stability, real progress in reducing deficits, increasing privatization of industry, deregulation, reduction of trade barriers, and a return to economic growth accompanied by lower inflation. All this has taken place, I should stress, against a background of extreme volatility in the financial markets. One example will suffice. Last year in Brazil, when President Collor was charged with corruption and was impeached, the stock market plunged over 50%, and Telebras - a large position - lost 60%. The market and Telebras later recovered, but the lesson is obvious: you need patience, a long-term view and a pretty high tolerance for risk to invest in these markets. Q. DO YOU WORRY ABOUT CURRENCY RISK? A. Most Latin American currencies are tied to the U.S. dollar. In practical terms, that means that price swings of the kind that daily affect the value of European investments are not nearly as big an issue in Latin America. On the other hand, there is always the possibility of a sharp, one-time devaluation, which can happen in times of economic instability. The key to anticipating that kind of event is keeping tabs on what the locals are doing with their money. If they're taking money out of the country, then a devaluation could be in the offing. But all we've seen during the last three years is money flowing back into these countries, with people buying real assets: banks, telephone companies, that sort of thing. Unless that trend reverses, currency devaluations are not among my major worries with this fund. Q. WHAT DO YOU WORRY ABOUT? A. That one day some of these countries will decide they've had enough reform, and conditions revert to those that prevailed during the late 1970s and '80s. Reform - both economic and political - is the crux of the positive story in Latin America. If that should ever change - and change can happen fast in Latin America - the outlook changes with it. That said, I see little on the horizon to suggest that the course of reform is threatened. Q. WHAT'S YOUR OUTLOOK? A. Long term, I'm very positive. Nearly all the countries in the region have been growing at a pace not seen since the 1960s. And given the favorable investment climate, I would expect growth to continue. Short term, however, shareholders should expect more of the same in terms of volatility. During the fall, most markets swung sharply up and down with the shifting outlook for the North American Free Trade Agreement (NAFTA). Nafta's passage, which occurred after the end of the period, is a big positive for the whole region, not just Mexico. Most South American countries view it as the first step toward liberalizing trade with them, too. Still, volatility should be the norm going forward, not the exception. Looking ahead, most countries in the region have major elections scheduled within the next year - except in Argentina, where the election is not until 1995 - and those, too, will likely cause some short-term blips in the market. If so, investors will do well to remember the lesson of the NAFTA debate. To me, that's simply that short-term swings in mood and market psychology should not obscure the basic outlook for the market, which remains positive. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in Latin American stocks and, to a lesser extent, bonds START DATE: April 19, 1993 SIZE: as of October 31, 1993, over $342 million MANAGER: Patti Satterthwaite, since April 1993; assistant manager, Latin American portion of Fidelity Emerging Markets Fund, since 1990; securities and Latin American analyst, 1986-1990 (checkmark) PATTI SATTERTHWAITE ON INVESTING IN LATIN AMERICA: "Latin America is a formidable region with dynamic prospects. The potential rewards for investors are enormous, thanks to the positive political and economic environment, the move toward free-market reforms, and current high rates of economic growth. Market inefficiencies - including lower financial reporting standards, less legal protection, complicated settlement procedures, and restrictions on foreign investment - can result sometimes in added volatility, but also added opportunity. That said, emerging market investing is not without its hazards, and is typically not for the faint of heart. A long-term view, a good tolerance for risk, and patience are absolute essentials for investing in these kinds of markets." (bullet) Nearly 26% of the fund was invested in cash and bonds at the end of October. That was an unusually high percentage, due mainly to the fact that the fund was new and growing fast. Going forward, I expect the fund to focus more heavily on stocks. (bullet) To the extent it invested in bonds, the fund emphasized Argentine Brady bonds, which are denominated in U.S. dollars and therefore have no currency risk. (bullet) Among the sectors favored by the fund were utilities, 15.5%; finance, 12.8%; and nondurables, including food and beverages, 10.8%. The last is a play on improving demographics, pointing toward higher per-capita consumption. (bullet) Unlike utilities in the developed world, which are attractive mainly for their dividend yields, utilities in Latin America tend to be growth stocks. Earnings growth occurs as countries commit to improving components of their infrastructures, including electrical and telephone lines. DISTRIBUTIONS The Board of Trustees of Fidelity Latin America Fund voted to pay on December 13, 1993, to shareholders of record at the opening of business on December 10, 1993, a distribution of $.05 derived from capital gains realized from sales of portfolio securities and a dividend of $.05 from net investment income. LATIN AMERICA INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1993 Row: 1, Col: 1, Value: 44.6 Row: 1, Col: 2, Value: 4.9 Row: 1, Col: 3, Value: 2.9 Row: 1, Col: 4, Value: 2.1 Row: 1, Col: 5, Value: 4.4 Row: 1, Col: 6, Value: 18.9 Row: 1, Col: 7, Value: 22.2 Argentina 22.2% Mexico 44.6% Brazil 18.9% Chile 4.4% Cash 4.9% United States 2.1% Other 2.9% AS OF APRIL 30, 1993 Argentina 8.4% Row: 1, Col: 1, Value: 43.5 Row: 1, Col: 2, Value: 28.3 Row: 1, Col: 3, Value: 4.4 Row: 1, Col: 4, Value: 15.4 Row: 1, Col: 5, Value: 8.4 Brazil 15.4% Mexico 43.5% Other 4.4% Cash 28.3% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks 73.7 47.9 Bonds 19.1 23.8 Short-term and other investments 7.2 28.3 TOP TEN STOCKS
% OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Cemex SA, Series B (Mexico, Building Materials) 4.0 1.7 Grupo Carso SA de CV Class A-1 (Mexico, Conglomerates) 3.8 1.2 Telefonos de Mexico SA sponsored ADR representing share Ord. Class L (Mexico, Telephone Services) 3.2 - YPF Sociedad Anonima sponsored ADR representing Class D shares (Argentina, Oil & Gas) 2.7 - Cifra SA Class C (Mexico, General Merchandise Stores) 2.4 1.5 Tolmex B2 SA (Mexico, Building Materials) 2.2 2.0 Grupo Financiero Bancomer SA de CV sponsored ADR, Series C (Mexico, Banks) 2.1 1.7 Sears Roebuck de Mexico SA (Mexico, General Merchandise Stores) 2.0 0.9 Cementos Apasco SA de CV Class A (Mexico, Building Materials) 1.9 2.2 Telecom Argentina Stet France Class B (Argentina, Telephone Services) 1.8 -
TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Utilities 15.5 7.0 Finance 12.8 8.7 Nondurables 10.8 7.3 Construction & Real Estate 9.4 8.0 Basic Industries 9.1 8.1 Retail & Wholesale 7.4 3.5 Energy 4.5 0.9 Conglomerates 4.0 1.2 Durables 3.8 10.6 Media & Leisure 2.6 1.0 LATIN AMERICA INVESTMENTS OCTOBER 31, 1993 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 73.7% SHARES VALUE (NOTE 1) ARGENTINA - 11.1% Bagley Y Cia Ltd. SA (b) 436,240 $ 1,942,140 05699C22 Banco de Galicia Y Buenos Aires SA sponsored ADR representing Class B shares New (b) 120,500 3,886,125 05953820 Banco Frances Del Rio PL (Reg.) 241,072 2,387,688 21199692 Buenos Aires Embotelladora sponsored ADR 49,800 1,836,375 11942420 Commercial Del Plata (b) 478,890 3,075,858 20199392 Molinos Rio de La Plata (Reg.) 168,955 1,960,760 60899C22 Perez Companc Class B (b) 600,800 3,720,629 71399723 Telecom Argentina Stet France Class B (b) 1,406,900 6,305,754 90899992 Telefonica Argentina Class B (b) 866,500 4,577,182 87999D92 YPF Sociedad Anonima sponsored ADR representing Class D shares 344,800 9,438,900 98424510 39,131,411 BRAZIL - 15.2% Bradesco PN 124,974,039 3,304,314 10599992 Brahma (Cia Cervejaria) PN: New 887,454 170,808 15799496 ON (warrants 9/30/96) (b) 1,510,428 25,436 15799494 (Pfd. Reg.) Class B 14,342,000 2,760,405 15799492 (warrants 9/30/96) (b) 117,827 4,388 15799498 Brasmotor PN 18,674,000 3,241,246 10599892 Celedsc PN B Ord. (b) 5,551,000 2,775,556 15199E22 Comp Paulista de Forca Luz Ord. 49,773,597 1,802,302 20499922 Comp Vale Do Rao Doce PN Ord. (b) 12,300,000 876,621 20499792 Compania Siderurgica Nacional (b) 258,990,000 5,060,665 24499523 Copene Petro Do Nordeste SA (b) 1,230,000 300,440 21799722 Coteminas PN 12,531,000 2,016,489 22199692 Duratex Corp. PN 19,017,000 866,795 26699493 Eletrobras PN B 4,087,200 563,747 69699993 Eletrobras ON (b) 2,100,000 294,483 69699998 Itaubanco PN (Pfd. Reg.) 4,860,000 2,122,780 46599A92 Light (Servicos de Electric) SA Ord. 11,315,000 2,860,658 53299892 Marco Polo PN Ord. B 4,052,000 605,480 56699692 Petrobras PN (Pfd. Reg.) 42,933,000 3,108,986 71699794 Souza Cruz Industria Comerico (b) 9,300 66,175 Telebras ON 96,050,000 2,566,890 95499795 Telebras PN (Pfd. Reg.) 196,985,000 6,277,571 95499792 Telepar 4,062,000 1,080,654 87999F22 Telepar (rights) (b) 36,558 315 87999F24 Telesp PN (Pfd. Reg.) 19,115,000 5,932,327 87999B93 Telesp (Telecom de Sao Paulo) 290,000 78,335 87999B98 Unibanco (Banco de Inv. Brazil) (Pfd. Reg.) 754,000 41,168 90599A93 Unibanco PN Class A 17,026,000 949,164 90599A92 Usiminas PN (Pfd. Reg.) 5,111,388,000 2,878,870 97199693 Vidraria Santa Marina, CIA 179,600 701,895 92699992 53,334,963 CHILE - 4.4% Chile Fund, Inc. 1,156 38,871 16883410 Comp Cervecerias Unidas SA ADR 242,900 6,042,138 20442910 Compania de Telefonos de Chile SA sponsored ADR 27,500 2,464,688 20444920 Enersis SA sponsored ADR (b) 102,300 2,097,150 29274F10 Madeco SA ADR (b) 84,800 1,759,600 55630410 Maderas Y Sinteticos Sociedad Anonima Masisa sponsored ADR (b) 70,700 1,272,600 55646510 Soc Quimica Y Minera de Chile ADR (b) 60,500 1,656,188 83363510 15,331,235 SHARES VALUE (NOTE 1) MEXICO - 41.4% Banacci SA de CV: Class B (b) 155,000 $ 836,901 06399896 Class C 699,600 4,313,825 06399893 Cementos Apasco SA de CV Class A 970,500 6,542,244 15299392 Cemex SA, Series B (b) 601,600 13,934,956 15299293 Cifra SA Class C (b) 3,445,000 8,254,792 17178594 Coca-Cola Femsa SA de CV sponsored ADR 5,000 140,000 19124110 Controladora Commercial Mexicana SA B-1 (b) 1,788,400 3,576,800 21299692 Desc (Soc. De Fomento Indus.) Class B 1,121,000 5,354,300 25299692 Emvasa Del Valle de Enah Ord. (b) 1,786,000 6,219,620 29299E22 Farmacia Benevides SA de CV Ord. (b) 911,600 4,135,692 31299422 Fomento Economico Mexicano SA B 1,045,000 5,375,240 34441892 Fondo Opcion SA de CV Class 2, Series B 142,000 332,090 34499892 Grupo Carso SA de CV Class A-1 1,716,600 13,217,270 40099594 Grupo Cementos Chihuahua B (b) 40,000 33,866 41599092 Grupo Dina (Consorcio G) ADR (b) 253,400 5,321,400 21030610 Grupo Embotellador de Mexico Class B (b) 80,500 1,167,636 40048J94 Grupo Financiero Bancomer SA de CV: Class B (b) 705,000 851,406 40048694 sponsored ADR, Series C (d) 252,200 7,376,850 40048610 Grupo Industrial Bimbo `2' (b) 271,000 2,164,537 60899994 Grupo Industrial Maseca SA de CV: ADR (d) 86,000 1,505,000 40048830 Class B 1,460,900 1,726,944 57899894 Grupo Posadas SA de CV Ord. (b) 450,000 329,233 40048993 Grupo Radio Centro SA de CV sponsored ADR (b) 125,400 2,272,875 40049C10 Grupo Sidek B Free shares 1,450,200 3,613,913 40099F22 Grupo Simec SA de CV ADR (b) 60,400 1,094,750 40049110 Grupo Situr SA de CV Class B (b) 1,928,745 3,549,384 40049292 Grupo Televisa SA de CV: ADR (d) 10,300 569,075 40049J10 Class L (b) 63,500 1,767,045 40049J92 Grupo Tribasa SA de CV sponsored ADR (b) 159,700 2,974,413 40049F10 Herdez SA de CV Class A 1,545,900 1,318,707 42799F22 Interceramic SA de CV Class A-2 8,000 38,083 46399593 Kimberly Clark de Mexico Class A (b) 288,700 4,427,347 49499392 Mavesa SA ADR (d) 150,000 1,224,000 Sanluis Corp. Ord., Series A-2 (b) 148,000 799,105 21987020 Sears Roebuck de Mexico SA (b) 549,000 7,121,216 81240K92 Servicios Financieros Quadrum SA sponsored ADR (b) 8,200 186,550 81763810 Tablex SA de CV II 131,395 298,052 88399G22 Telefonos de Mexico SA sponsored ADR representing share Ord. Class L 205,700 11,262,075 87940378 Tolmex B2 SA (b) 713,400 7,863,357 94399492 Transport Maritima Mexicana A (b) 104,500 951,517 94899592 Transport Maritima Mexicana Class L (b) 16,000 157,955 94899593 Vitro SA (b) 212,000 1,299,168 92850292 145,499,189 PANAMA - 1.3% Banco Latinoamericano de Exportaciones, SA Class E 69,100 3,005,850 06199A92 Panamerican Beverages, Inc. Class A 49,800 1,618,500 69829W10 4,624,350 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) VENEZUELA - 0.3% Corimon SA CA sponsored ADR 8,300 $ 96,488 21872820 Electricidad de Caracas LA (b) 213,333 770,162 42799922 866,650 TOTAL COMMON STOCKS (Cost $231,884,440) 258,787,798 CORPORATE BONDS - 4.5% MOODY'S RATINGS PRINCIPAL (UNAUDITED) AMOUNT (A) CONVERTIBLE BONDS - 0.2% ARGENTINA - 0.0% Alpargatas SAIC 9%, 3/15/98 (d) - $ 50,000 47,000 020545AA PHILIPPINES - 0.2% ICTS, Inc. unsecured 6%, 2/19/00 (d) - 400,000 548,000 459360AA TOTAL CONVERTIBLE BONDS 595,000 NONCONVERTIBLE BONDS - 4.3% ARGENTINA - 0.6% Acindar Euro 9 1/2%, 10/23/95 - 250,000 250,625 0045149G Alpargatas SA 9%, 3/15/98 - 1,225,000 1,151,500 0205459A Invertrad SA 9 1/4%, 10/14/94 - 540,000 539,325 46127RAA Petrolera Argentina San Jorge SA Euro 11%, 2/9/98 250,000 262,500 71654P9A 2,203,950 BRAZIL - 0.8% Banco Estado Minas Gerais 10%, 1/15/96 - 500,000 505,000 139996AA Telebras 17 1/2%, 7/1/05 - BRC 132,857,816 2,477,758 954997AE 2,982,758 MEXICO - 2.5% Bancomer SA 9%, 6/1/00 (d) - 500,000 536,250 059682AA Cemex SA 8 7/8%, 6/10/98 (d) Ba2 1,000,000 1,048,750 151290AG Citibank Mexico Euro 13.6087%, 6/25/94 - 100,000 104,750 17699AAF Controladora Comercial Mexicana SA de CV Euro 8 3/4%, 4/21/98 - 450,000 464,063 212996AA First Mexican Acceptance Corp. Euro 10 3/4%, 9/15/96 - 500,000 519,220 321998AA Grupo Dina (Consorcio G) 10 1/2%, 11/18/97 (d) - 150,000 162,750 210996AA Grupo Embotellador de Mexico Euro 10 3/4%, 11/19/97 Ba2 220,000 240,900 40048J9A Grupo Imsa SA de CV Euro 8 3/4%, 7/7/98 (d) - 250,000 255,000 40048TAA PRINCIPAL AMOUNT (A) Hylsa de CV: Euro 11%, 2/23/98 - $ 100,000 $ 107,500 4490869A 11%, 2/23/98 (d) - 50,000 53,750 449086AA Nacional Financiera SNC 10 5/8%, 11/22/01 Ba2 1,000,000 1,160,000 6295989S Offshore Mexican Bond Ltd. secured 0%, 7/20/94 (d) - 2,000,000 2,340,000 676257AA Transport Maritima Mexicana: 8 1/2%, 10/15/00 - 500,000 497,500 893868AB 9 1/4%, 5/12/03 - 1,250,000 1,265,625 893868AA 8,756,058 VENEZUELA - 0.4% Bariven SA gtd. Euro 10 5/8%, 3/17/02 Ba1 1,250,000 1,353,125 067593AD TOTAL NONCONVERTIBLE BONDS 15,295,891 TOTAL CORPORATE BONDS (Cost $15,546,277) 15,890,891 GOVERNMENT OBLIGATIONS (C) - 14.6% ARGENTINA - 10.4% Argentina Republic (e): BOCON: 0.40%, 4/1/01 - 6,126,500 4,226,737 039995AH 3 1/4%, 4/1/01 B1 18,221,253 14,750,104 039995AF 3.1875%, 9/1/02 - 13,186,384 9,850,229 039995AM 3.1875%, 4/1/07 B1 2,777,763 1,916,379 039995AQ BOTE: 3.19%, 4/1/96 - 40,000 27,400 0401149N 3.19%, 4/3/00 - 100,000 91,500 0401149W Brady: Euro 4%, 3/31/23 B1 7,500,000 4,968,750 039995AD 4%, 3/31/23 (d) - 250,000 165,625 0401149Y Euro 4 1/4%, 3/31/05 B1 500,000 410,000 039995AK 4 1/4%, 3/31/05 (d) B1 250,000 204,062 039995AG 36,610,786 BRAZIL - 2.8% Brazil Federative Republic IDU Euro 8 3/4%, 1/1/01 (e) B2 12,250,000 9,769,375 1057569E MEXICO - 0.8% Mexican Government: Aztec Euro 5.0156%, 3/31/08 (e) Ba3 250,000 238,437 597998ND Brady 6 1/4%, 12/31/19 Ba3 2,750,000 2,234,375 597998PF Cetes 0%, 12/2/93 - 737,660 232,806 597998RC 2,705,618 MOROCCO - 0.2% Morocco Trust 4.3125%, 1/3/09 (d)(e) - 750,000 602,812 617727AA NIGERIA - 0.3% Nigeria Brady 5 1/2%, 11/15/20 - 1,750,000 1,082,812 997999AC GOVERNMENT OBLIGATIONS (C) - CONTINUED PRINCIPAL AMOUNT (A) VENEZUELA - 0.1% Venezuela Republic yankee 9%, 5/27/96 - $ 250,000 $ 258,125 9226469E TOTAL GOVERNMENT OBLIGATIONS (Cost $47,327,733) 51,029,528 OTHER SECURITIES - 2.3% INDEXED SECURITIES - 2.1% UNITED STATES OF AMERICA - 2.1% Morgan Guaranty Trust Co. cert. of dep.: 0%, 3/14/94 (indexed to the change in yield on Argentine Par Bonds) 2,313,799 2,991,742 61799KAA 8.816%, 3/16/94 (indexed to the change in yield on Mexican Par Bonds) 3,295,000 3,983,550 0%, 8/22/94 (indexed to $481 par of Westport Investments Ltd. sr. notes, collateralized by Mexican govt. securities, per $100 par) 500,323 452,250 61799FAF 7,427,542 PURCHASED BANK DEBT - 0.2% COLOMBIA - 0.2% Republic of Colombia amortizing loan participation (e): 7%, 3/15/94 300,082 296,331 1953259C 6 3/8%, 1/31/98 444,116 420,800 1953259E 717,131 TOTAL OTHER SECURITIES (Cost $6,722,482) 8,144,673 REPURCHASE AGREEMENTS - 4.9% MATURITY AMOUNT Investments in repurchase agreements, (U.S. Treasury obligations), in a joint trading account at 2.96% dated 10/29/93 due11/1/93 $ 17,248,254 17,244,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $318,724,932) $ 351,096,890 CURRENCY TYPE ABBREVIATIONS BRC - Brazilian cruzeiro LEGEND 1. Principal amount is stated in United States dollars unless otherwise noted. 2. Non-income producing 3. Most foreign government obligations have not been individually rated by S&P or Moody's. The ratings listed are assigned to securities by FMR, the fund's investment adviser, based principally on S&P and Moody's ratings of the sovereign credit of the issuing government. 4. 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 $16,638,924 or 4.9% of net assets. 5. The coupon rate shown on floating or adjustable rate securities represents the rate at period end. OTHER INFORMATION The composition of long-term debt holdings as a percentage of total value of investments for the period ended is as follows (ratings are unaudited): MOODY'S RATINGS S&P RATINGS Aaa, Aa, A 0.0% AAA, AA, A 0.0% Baa 0.0% BBB 0.0% Ba 2.3% BB 2.0% B 9.6% B 0.0% Caa 0.0% CCC 0.0% Ca, C 0.0% CC, C 0.0% D 0.0% For some foreign government obligations, FMR has assigned the ratings of the sovereign credit of the issuing government. The percentage not rated by either S&P or Moody's amounted to 7.0%. Purchases and sales of securities, other than short-term securities, during the year ended October 31, 1993, aggregated $337,461,098 and $46,409,975, respectively. Brokerage commissions received by FBSI, an affiliate of the fund's investment adviser, from portfolio transactions during the year ended October 31, 1993, amounted to $15,080. (See Note 3 of Notes to Financial Statements). INCOME TAX INFORMATION At October 31, 1993, the aggregate cost of investment securities for income tax purposes was $318,837,895. Net unrealized appreciation aggregated $32,258,995, of which $35,974,365 related to appreciated investment securities and $3,715,370 related to depreciated investment securities. For the period, interest and dividends from foreign countries were $1,539,993 or $0.06 per share. Taxes paid to foreign countries were $38,899 or $0.002 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Basic Industries 9.1% Conglomerates 4.0 Construction and Real Estate 9.4 Durables 3.8 Energy 4.5 Finance 12.8 Government Obligations 14.4 Media and Leisure 2.6 Nondurables 10.8 Repurchase Agreements 4.9 Retail and Wholesale 7.4 Transportation 0.8 Utilities 15.5 100.0% LATIN AMERICA FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993 ASSETS Investment in securities, at value (including repurchase agreements of $17,244,000) (cost $318,724,932) (Note $ 351,096,890 1) - See accompanying schedule Receivable for investments sold 4,291,242 Receivable for fund shares sold 7,680,021 Dividends receivable 39,491 Interest receivable 1,259,929 Redemption fees receivable (Note 1) 35,712 Other receivables 549,980 TOTAL ASSETS 364,953,265 LIABILITIES Payable to custodian bank $ 4,786,093 Payable for investments purchased 10,541,426 Payable for fund shares redeemed 6,199,602 Accrued management fee 192,456 Other payables and accrued expenses 300,056 TOTAL LIABILITIES 22,019,633 NET ASSETS $ 342,933,632 Net Assets consist of: Paid in capital $ 307,933,483 Undistributed net investment income 750,722 Accumulated undistributed net realized gain (loss) on investments 1,877,469 Net unrealized appreciation (depreciation) on investment securities 32,371,958 NET ASSETS, for 25,830,743 shares outstanding $ 342,933,632 NET ASSET VALUE, offering price and redemption price per share ($342,933,632 (divided by) 25,830,743 shares) (Note 3)$13.28
STATEMENT OF OPERATIONS
APRIL 19, 1993 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1993 INVESTMENT INCOME $ 419,418 Dividends Interest 1,580,934 2,000,352 Less foreign taxes withheld (Note 1) (38,899 ) TOTAL INCOME 1,961,453 EXPENSES Management fee (Note 3) $ 479,545 Transfer agent fees (Note 3) 351,593 Fees Redemption fees (13,384 ) Accounting fees and expenses 44,853 (Note 3) Non-interested trustees' 218 compensation Custodian fees and expenses 131,633 Registration fees 194,016 Audit 21,957 Miscellaneous 300 TOTAL EXPENSES 1,210,731 NET INVESTMENT INCOME 750,722 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 1,877,469 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 32,371,958 NET GAIN (LOSS) 34,249,427 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 35,000,149 OTHER INFORMATION $ 44,467 Accounting fees paid to FSC (Note 3)
STATEMENT OF CHANGES IN NET ASSETS
APRIL 19, 1993 (COMMENCEMEN T OF OPERATIONS) TO OCTOBER 31, 1993 INCREASE (DECREASE) IN NET ASSETS Operations $ 750,722 Net investment income Net realized gain (loss) on investments 1,877,469 Change in net unrealized appreciation (depreciation) on investments 32,371,958 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 35,000,149 Share transactions 360,615,904 Net proceeds from sales of shares Cost of shares redeemed (53,208,347 ) Redemption fees (Note 1) 525,926 Net increase (decrease) in net assets resulting from share transactions 307,933,483 TOTAL INCREASE (DECREASE) IN NET ASSETS 342,933,632 NET ASSETS Beginning of period - End of period (including undistributed net investment income of $750,722) $ 342,933,632 OTHER INFORMATION Shares Sold 30,145,557 Redeemed (4,314,814 ) Net increase (decrease) 25,830,743
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
APRIL 19, 1993 (COMMENCEMEN T OF OPERATIONS) TO OCTOBER 31, 1993 SELECTED PER-SHARE DATA Net asset value, beginning of period $ 10.00 Income from Investment Operations Net investment income .03 Net realized and unrealized gain (loss) on investments 3.23 Total from investment operations 3.26 Redemption fees added to paid in capital .02 Net asset value, end of period $ 13.28 TOTAL RETURN(dagger) 32.80% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 342,934 Ratio of expenses to average net assets 1.94%* Ratio of net investment income to average net assets 1.21%* Portfolio turnover rate 72%* * ANNUALIZED (dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED AND DO NOT INCLUDE THE ONE TIME SALES CHARGE.
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. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). Southeast Asia Fund has a 3% sales charge, which has been waived since the fund's start on April 19, 1993 through May 31, 1994. CUMULATIVE TOTAL RETURNS PERIOD ENDED LIFE OF OCTOBER 31, 1993 FUND Southeast Asia 32.40% Morgan Stanley Far East ex-Japan Free Index 42.39% Average Pacific Region Fund n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case since the fund started on April 19, 1993. You can compare the fund's figures to the performance of the Morgan Stanley Far East ex-Japan Free index, a broad measure of the performance of stocks in the Far East region, excluding Japan. The index is weighted by each country's market capitalization or the total value of its outstanding shares. You can also compare the fund's performance to the average Pacific region fund which reflects the performance of 33 funds with similar objectives tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. ANNUALIZED TOTAL RETURNS PERIOD ENDED LIFE OF OCTOBER 31, 1993 FUND Southeast Asia 68.65% Morgan Stanley Far East ex-Japan Free Index 93.12% Average Pacific Region Fund n/a AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. Since the fund is less than a year old, the return is an annualized number. $10,000 OVER LIFE OF FUND Southeast Asia (351) MS EMF Combined Far East ex Japan Index 04/19/93 10000.00 10000.00 04/30/93 9950.00 10378.31 05/31/93 10390.00 10975.91 06/30/93 10140.00 10687.54 07/31/93 10130.00 10760.98 08/31/93 10870.00 11661.43 09/30/93 11210.00 12024.42 10/31/93 13240.00 14239.20 Let's say you invested $10,000 in Fidelity Southeast Asia Fund on its start date. By October 31, 1993, it would have grown to $13,240 - a 32.40% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley Far East ex-Japan Free index, which would have grown to $14,239 over the same period - a 42.39% 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 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. (checkmark) SOUTHEAST ASIA FUND TALK: THE MANAGER'S OVERVIEW An interview with Allan Liu, Portfolio Manager of Fidelity Southeast Asia Fund Q. ALLAN, HOW DO YOU RATE THE FUND'S FIRST SIX MONTHS? A. I'm relatively happy so far. The fund began trading April 19 and, as of October 31, 1993, it had earned a total return of 32.40%. For the six months beginning April 30, it had a return of 33.07%. That was behind the Morgan Stanley Far East ex-Japan Free index, which had a return of 37.20% for the same six-month period. But it was ahead of the average Pacific region fund, which returned 22.87%, according to Lipper Analytical Services. Q. WHAT IN PARTICULAR DROVE THE FUND'S PERFORMANCE? A. The fund benefited from the general upward trend in the region's markets. Driving stock prices higher were the many new investors who came hoping to profit from the area's fast-growing economies. In particular, the fund's focus on infrastructure-related companies and financial firms helped performance. Infrastructure spending, for example, has been a major factor in economic growth in the region. At the end of October, I had 20.5% of the fund in construction and real estate companies. One company that prospered over the last six months was United Engineers, which owns a 50% stake in the major toll roads in Malaysia. Q. WHAT ELSE? A. Another boost to the fund's returns came from its 12% stake in banking , companies such as Hong Kong and Shanghai Bank. These stocks did well due in part to low interest rates and fast economic growth. Unlike U.S. banks - where profit margins have been squeezed by competition, the banking industry in Southeast Asia has an understanding not to compete aggressively on price. For Thai banks, the proportion of revenue from fees is still low, so there remains good growth potential. Finally, telecommunications stocks - - about 5% of the fund's investments - rose a lot in the last six months. One of the fund's top-10 investments was Philippine Long Distance, the least expensive phone company stock in the region. Q. SO WHAT HELD THE FUND BACK AND CAUSED IT TO LAG THE INDEX? A. Primarily the huge inflow of money that came into the fund in a short period, which made it difficult to keep the fund as fully invested as I would have liked. The second reason had to do with legal restrictions, which prevented the fund from owning too many illiquid shares. To be more specific, in Malaysia, I must physically deliver shares I'm buying to the registrar in order to change ownership. The process takes six to eight weeks. During this period, the shares are considered illiquid. I wanted to own Malaysian companies at about the same proportion as the index - about 22% - but I was held to about 15%. Since the Malaysian market was up about 43% over the last six months, that hurt the fund during the period. But I think that, fairly quickly, I may be able to increase the fund's stake to about 20% as more shares come out of registration, so it shouldn't continue to be as much of a problem. Q. WHAT ABOUT THE RESTRICTIONS IN KOREA? A. It's true that there's a restriction in the form of a 10% ceiling on foreign ownership, which has been a bit of a headache. But, so far, I've been able to find attractive stocks of companies whose foreign ownership limit hasn't been reached. At the end of October, I was actually overweighted in Korea, at about 10% of the fund, compared with the index weighting of 4%. That's because the Korean economy has shown some signs of improvement and I'm hoping for some turnarounds there. Q. SO WHERE HAVE YOU FOUND THE BEST OPPORTUNITIES? A. Certainly in Malaysia, where the economy is growing at 8%, inflation stands at 3% and their trade surplus is growing. With a general election planned next year, I anticipate more government incentives for the private sector. In fact, I wouldn't be surprised if Malaysian stocks moved from third to second place in my portfolio. Malaysian Resources, which has strong political backing to take part in infrastructure projects like power plants, has been one of my favorites. Q. WHERE ELSE? A. In Hong Kong, companies are uniquely positioned to take advantage of whatever growth occurs in China's economy as it moves toward a more capitalist enterprise. The fund's top three holdings - Hong Kong and Shanghai Bank, Hong Kong Telecommunication and Jardine Matheson - may have promising prospects ahead. Jardine Matheson is a conglomerate that's in everything from wine to hotels, commercial property and supermarkets. It's a very solid company that was accused by the People's Republic of China of supporting political reform in Hong Kong, and that was reflected in its relatively low share price. I believe there may be enough good opportunities in Hong Kong to boost the fund's stake there from 37% to about 40%, closer to the index benchmark of 43%. Thailand's a different story. The Thai market has had a very good run, beyond my expectations, so it may be time to back off somewhat. Q. BACK TO HONG KONG, WHICH IS IN FACT YOUR BIGGEST CONCENTRATION. WON'T THAT MARKET BE AFFECTED BY THE FAST-APPROACHING TRANSITION TO CHINESE RULE IN 1997? A. As investors have become more familiar with the way China is handling economic matters, they've become more comfortable with the prospect. So I expect the Hong Kong market to keep moving up, unless there's a major change in economic policy from the People's Republic of China. So far, they've made it fairly clear that they intend to allow Hong Kong to have economic, although not political, freedom. A year ago, the market took a hit when the British and Chinese governments locked heads over democratic reforms proposed by the British governor. But after a while, even though they couldn't reach an agreement, investors kind of shrugged and said, "Well, business is business. We have to invest in China." So they returned to the Hong Kong market. Many people thought that the recent austerity measures in China would hurt a lot of Hong Kong companies. But I've found that property investors with financial strength have benefited because the measures have squeezed out marginal competitors, leaving their position more secure. I've invested in Hutchison Whampoa, Sun Hung Kai Properties and Wharf Holdings, some of the bigger property players with staying power. All three have outperformed Hong Kong stocks in general. Q. WHAT'S YOUR STRATEGY AND OUTLOOK FOR THE NEXT HALF-YEAR? A. My style is really stock picking. In choosing investments, I focus on earnings growth and management quality. I don't spend a lot of time trading stocks. I'm looking at earnings potential a year or more down the road. I feel investors who are putting money in this part of the world are looking for growth, not a defensive story. Of course, I try to diversify the portfolio to reduce the risk. In the last six months, the performance of Southeast Asian stock markets has been exceptional as liquidity and low interest rates have driven the markets to historic highs. I think the fund will probably continue to see a reasonable return, but not as impressive as the last six months. There's a long-term growth story here, but when the markets reach such high levels, there's bound to be volatility. These markets can move up and down quickly. That's why it's so important for shareholders to have a long-term investment horizon. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in Southeast Asian stocks, including those from Thailand, Hong Kong, South Korea, Malaysia, Indonesia, and Singapore START DATE: April 19, 1993 SIZE: as of October 31, 1993, over $499 million MANAGER: Allan Liu, since April 1993; manager, various funds for non-U.S. investors; analyst, Southeast Asian markets, 1987-1990 (checkmark) ALLAN LIU ON THE REGION'S MARKETS: "The markets in Southeast Asia are volatile and, over time, that volatility will have an impact on the fund. Except for Hong Kong, the markets in the region are small by world standards and very sensitive to the sentiment of local investors, who can be unpredictable. They're also sensitive to funds flowing from the U.S. and Europe. Hong Kong has been volatile in the past because of the huge influence exerted by China. Lately, all the markets in the region have been moving up, but it remains to be seen how many investors will duck out if there's a downturn, because they were in for the short run. Some investors may just want a taste of the fast growth in Southeast Asia, which is dramatic compared with the stagnant economies of the West. That economic growth is slowing, but it may continue to be strong, relatively speaking. U.S. investors have really helped liberate the underlying value of shares in many mid-size Asian companies. The traditional investors from Asia and the U.K., in a sense, didn't realize what they had; they took it for granted that these good companies traded well below market multiples. Still, because the fund has grown so fast, I would like to make investors aware of the inherent volatility. It's not a free ride." (bullet) Record-setting markets and fast economic growth have been reflected in the growth of the fund. In its first six months, the fund grew to $499.6 million in assets. (bullet) Interest remains high in Hong Kong companies that have made investments in mainland China. Despite some uncertainty over the 1997 transition and China's economic policies, investors feel they cannot be left out of that huge market. As of October 31, the fund had 37% of its investments in Hong Kong. (bullet) The countries in the region are expanding domestic consumption and infrastructure spending. Companies are less dependent on exports and the internal markets still have major growth potential. DISTRIBUTIONS The Board of Trustees of Fidelity Southeast Asia Fund voted to pay on December 13, 1993, to shareholders of record at the opening of business on December 10, 1993, a distribution of $.07 from net investment income. SOUTHEAST ASIA INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1993 Korea (South) 11.1% Row: 1, Col: 1, Value: 37.0 Row: 1, Col: 2, Value: 5.9 Row: 1, Col: 3, Value: 18.0 Row: 1, Col: 4, Value: 1.5 Row: 1, Col: 5, Value: 6.8 Row: 1, Col: 6, Value: 3.1 Row: 1, Col: 7, Value: 16.6 Row: 1, Col: 8, Value: 11.1 Hong Kong 37.0% Malaysia 16.6% Philippines 3.1% Singapore 6.8% Cash 5.9% Other 1.5% Thailand 18.0% AS OF APRIL 30, 1993 Malaysia 12.4% Row: 1, Col: 1, Value: 43.5 Row: 1, Col: 2, Value: 11.9 Row: 1, Col: 3, Value: 17.4 Row: 1, Col: 4, Value: 13.9 Row: 1, Col: 5, Value: 0.9 Row: 1, Col: 6, Value: 12.4 Philippines 0.9% Hong Kong 43.5% Singapore 13.9% Thailand 17.4% Cash 11.9% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks 92.7 88.1 Bonds 1.4 - Short-term investments 5.9 11.9 TOP TEN STOCKS % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO HSBC Holdings PLC (Hong Kong, Banks) 3.8 4.2 Hong Kong Telecommunications Ltd. (Hong Kong, Telephone Services) 3.3 - Jardine Matheson & Co., Ltd. (Hong Kong, Conglomerates) 2.4 - Sun Hung Kai Properties, Ltd. (Hong Kong, Real Estate) 2.0 3.2 Hutchinson Whampoa Ltd. Ord. (Hong Kong, Electrical Equipment) 1.8 - Malaysian Resources Corp. BHD (Malaysia, Real Estate) 1.6 0.1 General Financial & Services (Thailand, Credit and Other Finance) 1.5 - Philippine Long Distance Telephone Co. (Philippines, Telephone Services) 1.5 - Bangkok Metropolitan Bank (Loc. Reg.) (Thailand, Banks) 1.5 - United Engineers BHD (Malaysia, Electrical Equipment) 1.5 1.4 TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Finance 21.6 21.0 Construction and Real Estate 20.5 27.0 Media and Leisure 9.8 9.1 Utilities 8.6 4.5 Basic Industries 6.3 3.3 Industrial Machinery and Equipment 5.8 3.7 Durables 4.6 7.7 Conglomerates 3.5 1.2 Retail and Wholesale 2.7 4.1 Technology 2.7 - SOUTHEAST ASIA INVESTMENTS OCTOBER 31, 1993 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 92.3% SHARES VALUE (NOTE 1) BERMUDA - 0.2% Jardine Strategic Holdings Ord. 140,000 $ 579,747 47199020 Siu Fung Ceramics Holdings Ltd. (b) 2,000,000 618,380 82999G22 1,198,127 HONG KONG - 37.0% Acme Landis Holdings Ltd. 436,000 98,174 00499A92 Allan International Holdings Ltd 5,010,000 868,784 01699522 Amoy Properties Ltd. 1,201,500 1,554,837 03199192 Bank of East Asia 500,000 2,458,750 06199010 Cafe De Coral Holdings Ltd. 1,986,600 1,439,649 12799092 Cathay Pacific Airways Ltd. 500,000 815,270 14890610 China Light & Power Co. Ltd. 663,500 4,464,831 16940010 China Resources Enterprise Ltd. 7,512,000 3,718,365 18899292 Chow Sang Sang Holdings Ltd. (b) 1,456,000 678,307 17399K92 Citic Pacific Ltd. Ord. 43,000 116,856 45299792 Culturecom Holdings Ltd. (b) 18,986,000 4,791,117 23099322 Culturecom Holdings Ltd. (warrants) (b) 21,730,000 2,840,111 23099323 Dah Sing Financial Holdings 341,200 1,187,741 23899892 Dairy Farm International Holdings Ltd. Ord. 968,074 1,816,513 23385910 First Pacific Bancshares Holdings 1,000,000 271,760 33699292 First Pacific Co. Ltd. 4,919,834 2,021,412 33699192 Fortei Holdings Ltd. 1,000,000 258,820 34999D22 Grand Hotel Holdings Ltd. A 4,056,000 1,692,731 38599292 Great Eagle Holdings Ltd. 3,941,000 2,537,216 39099394 Group Sense International Ltd. 436,000 111,149 39999592 Guangzhou Investment Co. Ltd. 11,000,000 3,807,870 40099G22 Guangdong Investments Co. Ltd. Ord. 5,600,000 3,116,120 40199492 Guangzhou Shipyard International H Free shares (b) 1,000,000 511,160 40199922 Guoco Group Ltd. 51,000 222,744 40299692 HSBC Holdings PLC 1,658,000 19,202,973 42199192 Hai Hong Holding Co. Ltd. 1,068,000 321,329 45099B92 Hang Lung Development Corp. 355,000 684,504 41099310 Harbour Ring International Holdings 10,222,000 1,322,829 41199B92 High Fashion International 3,142,000 1,687,380 42999392 Hon Kwok Land Investment Ltd. Ord. 6,050,000 2,485,763 43899192 Hong Kong & Shanghai Hotels 2,867,000 3,858,523 71899292 Hong Kong Aircraft & Engineering Co. (b) 228,800 1,413,808 43899410 Hong Kong Electric Holdings Ord. 2,024,000 6,548,045 43858010 Hong Kong Land Holdings Ltd. 1,959,000 5,247,652 43858292 Hong Kong Telecommunications Ltd. 7,700,000 16,640,547 43857991 Hopewell Holdings Ltd. 4,490,000 4,503,066 44099999 Hutchison Whampoa Ltd. Ord. 2,427,000 9,139,524 44841510 JCG Holdings 3,194,000 2,459,316 46799792 Jardine International Motor Corp. 1,348,000 1,866,535 47499292 Jardine Matheson & Co. Ltd. Ord. 1,260,000 12,065,999 47111510 Ka Wah Bank Ltd. 3,544,000 2,247,250 48999G22 Kingboard Chemical Holdings Ltd. 600,000 134,651 48999G22 Le Saunda Holdings Ltd. (b)(c) 400,000 95,760 52199792 Li & Fung Ltd. 5,310,000 3,418,578 51899592 New World Development Co. Ltd 86,000 265,293 51899592 Orient Power Holdings Ltd. 5,372,000 688,207 69399392 Oriental Press Group Ltd. 7,586,000 5,399,260 68620099 QPL International Ltd. Ord. 300,000 39,600 74899492 Regal Hotels Holding (b) 9,270,000 2,027,349 75999110 Ryoden Development Ltd. 6,172,000 2,156,497 78399B22 Ryoden Development Ltd. (warrants) (b) 173,600 13,928 78399B23 Shangri-La Asia Ltd. (b) 4,158,000 4,761,991 84599M22 Shell Electric Manufacturing Co. Ltd. (b) 5,500,000 2,081,860 82299B22 Sime Darby Hong Kong Ltd. 1,448,000 2,173,636 82899392 Sing Tao Holdings Ltd. 3,124,000 4,810,804 82877099 South China Morning Post Holdings 800,000 481,400 84249992 Star Paging International Holdings Ltd. (b) 1,706,000 739,585 85599692 SHARES VALUE (NOTE 1) Sun Hung Kai Properties Ltd. 1,450,000 $ 9,944,999 86676H10 Swire Pacific Class A 533,000 3,552,184 87079410 Television Broadcast Limited Ord. 205,000 748,106 87953110 Union Bank of Hong Kong 500,000 488,515 90499C92 Varitronix International Ltd. 375,000 473,149 95099792 Wai Kee Holdings 2,206,000 820,742 93099E22 Wharf Holdings (c) 384,000 1,416,242 96299110 Wing Lung Bank 246,900 2,092,779 97499999 Winton Holdings Ltd. 870,000 312,426 97699122 Wo Kee Hong Holdings 2,458,000 1,447,295 95499492 World International Holdings 590,000 1,259,786 98150010 Yue Yuen Industrial Holdings Ltd. (b) 6,812,000 1,542,646 98899D92 186,482,598 INDONESIA - 1.3% Argha Karya Prima PT (b) 263,000 782,159 01099992 Astra International (For. Reg.) 210,000 1,848,634 04699894 Bank International Indonesia Ord. (b) 200,000 666,174 06199B92 Barito Pacific Timber (For. Reg.)(b) 120,000 653,803 06799F23 Duta Anggada Realty Ord. (b) 312,500 951,678 26699192 Gadjah Tunniggal Ord. 50,000 107,064 36599292 Indocement Tunggal PT (b) 50,000 375,913 68399092 Sampoerna, Hanjaya Mandala 143,000 527,348 82299892 Semen Gresik (For. Reg.) (b) 90,000 385,429 84399693 Sinar Mas Agro Resource & Technology PT (c) 183,000 476,755 73599592 6,774,957 KOREA (SOUTH) - 9.9% Cheil Foods & Chemical Industries (b) 1,433 53,209 16399C22 Cheil Foods & Chemical Industries New 2,094 74,642 16399C24 Choongnam Spinning Co. (b) 190,100 3,311,960 17099F22 Chosun Brewery Co. Ltd. 100,100 2,254,867 22899822 Crown Confectionery Co. (b) 23,000 684,655 22899922 Daewoo Corp. 50,000 829,259 23799B22 Daewoo Electronics Co. Ltd. 85,000 1,535,986 23899C22 Daewoo Heavy Industries Ltd. 224,000 3,216,040 23999492 Daewoo Heavy Industries Ltd. New (b) 178,072 2,512,557 23999493 Daewoo Securities Co. Ltd. 40,000 1,024,816 25999322 Daewoo Telecommunication 280,000 6,341,975 27999192 Daeyoung Electronics Industry (b) 40,730 1,320,782 30999122 Daihan Wool Textile Co. (b) 100 3,453 23499B22 Dong Bang Forwarding Co. Ltd. 21,000 509,437 25799N22 Dong-Il Corp. (b) 25,820 1,169,641 25799U22 Dongbu Construction Co. 40,100 823,887 25799M22 Dongsuh Securities Co. 50,000 1,076,799 25799P22 Hanil Development Co. 120,000 2,376,384 41099822 Inchon Iron & Steel Co. (b) 139,920 4,329,475 45399J22 KIA Service Co. (b) 40,020 975,795 48699C22 Korea Electric Power Corp. 45,000 1,074,942 50099B92 Korea First Bank, Inc. Ltd. 29,000 358,933 50099E22 Korea Kumho Petrochemical Co. 100,000 1,435,732 50299E22 Korea Line Corp. (b) 10,000 227,737 50599N22 Miwon Co. Ltd. (b) 150,000 2,951,914 61299693 Pohang Iron & Steel Co. Ltd. 30,000 976,545 73045092 Samsung Construction Co. Ltd. 39,580 984,662 90499J22 Sangyong Heavy Industries Co. Ltd. 89,000 1,365,926 77299122 Sung Chang Enterprise Co. (b) 25,020 1,297,528 82699B22 Sungshin Cement Industrial (b) 78,000 2,828,640 90399G22 Taihan Electric Wire Co. (b) 55,000 1,191,286 95199G22 Taihan Electric Wire Co. New (b) 6,608 137,403 95199G23 Taihan Textile Co. (b) 60 2,072 95199H22 Yukong Ltd. 25,000 736,431 98899K22 49,995,370 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) MALAYSIA - 16.1% Aluminum Co. of Malaysia (b) 60,000 $ 85,915 02399892 Aokam Perdana BHD 120,000 1,361,502 01899792 Arab Malaysian Corp. 302,000 1,004,304 00499F92 Berjaya Leisure BHD 1,700,000 2,806,734 08410592 Berjaya Singer BHD 756,000 1,952,113 08499A92 Berjaya Singer BHD (b) 190,000 176,917 08499A96 Berjaya Sports Toto BHD (b) 126,000 271,127 08499E22 Cement Industry of Malaysia BHD 455,000 1,557,611 15199792 Cement Manufacturers Sarawak 257,000 1,347,340 15199C22 Diversified Resources BHD 1,330,000 4,813,190 25499F22 EON (Edaran Otomobil NAS BHD) 350,000 1,917,058 29599292 Ekran Berhad Ord. (b) 351,000 2,128,520 28299792 Faber Group BHD 1,746,000 2,062,951 30299892 Genting BHD 414,000 4,292,253 37245210 Hock Hua Bank BHD (b) 100,000 223,005 43499B22 Hume Industries BHD 280,000 1,029,734 44599692 Kim Hin Industry BHD 112,000 538,968 49499C92 Land & General BHD 1,209,000 3,925,937 51499693 Leader Universal Holdings BHD 230,000 1,169,796 52199192 Magnum Corp. BHD 925,000 2,279,931 55999392 Malaysian Assurance Alliance BHD 750,000 1,886,818 56099793 Malaysian Resources Corp. BHD 3,033,000 7,891,017 56099793 Metacorp Berhad 250,000 1,330,202 59099E92 Mulpha International Ltd. 1,000,000 743,350 62499A22 Nam Fatt BHD (b) 386,000 1,336,502 63299492 Oyl Industries Ltd. 93,000 374,765 69599492 Pacific Chemicals BHD (b) 651,000 4,864,669 69599H22 Press Metal BHD 100,000 297,340 74199B22 Promet BHD 2,500,000 3,795,000 74399G22 RJ Reynolds BHD 95,000 152,387 74999392 Resorts World BHD 600,000 3,286,386 76199592 Southern Bank BHD 50,000 119,327 84199992 Sungei Way Holdings 345,000 1,484,742 86799892 Sungei Way Holdings (warrants) (b) 237,000 676,879 86799894 TH Loy Industry BHD (b) 220,000 877,934 87799A22 Technology Resources (b) 1,630,000 7,206,181 93699692 United Engineers BHD 1,550,000 7,337,638 93099692 YTL Corporation (b) 400,000 1,283,256 98799092 YTL Corporation (warrants) (b) 100,000 101,721 Yangtzekiang BHD 100,000 919,405 98499G22 Yeo Hiap Seng BHD 70,000 87,637 98581093 80,998,062 PHILIPPINES - 3.1% Bacnotan Consolidated Industry, Inc. 152,000 1,995,164 08099423 First Philippines Holdings Corp. 452,600 1,110,001 33699492 House of Investments, Inc. (b) 200,000 469,776 44199C92 JG Summit Holdings, Inc. B (b) 3,335,000 1,151,976 46615292 Meralco B (b) 150,790 1,523,526 58799A92 Philippine Long Distance Telephone Co. 118,500 7,539,563 71825210 San Miguel Corp. Class B 257,550 1,779,274 79908540 15,569,280 SINGAPORE - 6.7% ACMA Ltd. 29,000 237,675 00299392 Bonvests Holdings Ltd. (b) 4,000,000 3,278,280 09899022 British American Tobacco (Loc. Reg.) 14,000 61,783 11199492 City Development 104,000 458,958 17799010 City Development (warrants) (b) 5,400 3,404 17799025 DBS Land Ltd. 500,000 1,197,830 24399292 Development Bank of Singapore 168,000 1,705,207 25159493 Goldtron Ltd. 853,750 1,022,647 38199B92 Goldtron Ltd. (rights) (b) 170,750 196,994 38199B95 HTP Holdings Ltd. 3,372,000 2,827,355 44299S22 SHARES VALUE (NOTE 1) Hitachi Zosen Singapore Ltd. 2,480,000 $ 3,173,879 43399A22 Hour Glass Ltd. 750,000 794,355 44199E22 IPC Corp. Ltd. 2,000,000 2,332,620 46299E22 IPCO International 357,000 2,374,050 46299D22 Jurong Engineering Ltd. 334,000 2,463,624 49499692 Keppel Corporation Ltd. 200,000 1,260,876 49205199 Liang Court Holdings Ltd. 3,497,000 3,130,584 52599A92 Natsteel Ltd. 84,000 229,832 63660099 Parkway Holding 1,973,000 3,345,971 70199192 Parkway Holding (warrants) (b) 493,250 245,663 70199193 QAF Ltd. 550,000 565,185 74799D92 QAF Ltd. (warrants) (b) 220,000 87,380 74799D94 Sembawang Maritime Ltd. 241,250 1,140,698 81799592 Singapore Aerospace. (For. Reg.) 195,000 349,136 83999793 United Overseas Bank (For. Reg.) 138,000 1,096,204 91128092 33,580,190 THAILAND - 18.0% Advanced Information Service: (For. Reg.) 50,000 1,270,718 00799793 (Loc. Reg.) 110,000 3,264,404 00799792 Ban Pu Coal (For. Reg.) 180,000 1,676,401 06199593 Bangkok Bank 20,000 157,853 06099210 Bangkok Land Co. (Loc. Reg.) (b) 200,000 1,183,898 06199992 Bangkok Metropolitan Bank (Loc. Reg.) 6,640,000 7,402,538 06199E22 Bank of Asia Public Co. Ltd.: (For. Reg.) 1,500,000 2,989,350 06199D23 (Loc. Reg.) (b) 300,000 597,870 06199D22 Bank of Ayudhya (For. Reg.) 109,500 393,232 05999998 Dhana Siam Finance & Securities (For. Reg.) 307,000 4,555,327 24299593 Eastern Printing Co. 401,400 1,291,007 27699323 Finance One Public Co. 222,000 2,382,952 31799E93 First Pacific Land (warrants) (b) 1,000,000 1,164,170 70699194 First Pacific Land Ltd. (b) 1,355,100 2,312,871 70699193 General Financial & Services (b) 1,120,000 7,646,408 36999692 Industrial Finance Thai 1,000,000 2,150,750 45799896 Kiatnakin Finance & Securities (For. Reg.) 83,400 1,329,660 49699794 Krung Thai Bank: (For. Reg) 1,504,000 3,205,054 50599293 (Loc. Reg.) 1,260,500 2,959,742 50599292 Land & House (For. Reg.) 185,000 3,358,327 51499393 Nakornthon Bank Ltd. 40,000 121,547 63099C22 Nation Publishing Group (For. Reg.) 72,000 301,184 63799323 One Holding Ltd. (b) 550,000 2,604,580 68299B22 Property Perfect Co. Ltd.: (For. Reg.)(b) 240,000 3,580,111 74399F23 (Loc. Reg.)(b) 114,500 1,708,011 74399F22 Ramkamhaeng Hospital Co. (For. Reg.) 100,000 343,331 75199493 Securities One Ltd.: (For. Reg.) 90,000 1,846,883 81399693 (Loc. Reg.) 112,000 2,298,343 81399692 Shinawatra Computer & Comm. Co. 90,000 3,168,113 94799192 Siam Cement (For. Reg.) 55,000 1,771,113 78799010 Siam City Bank Ltd. 3,390,500 3,344,999 81199593 Siam City Cement (Loc. Reg.) 310,000 2,177,586 82570799 Siam Commercial Bank 93,000 689,976 78851090 Siam General Factoring (Loc. Reg.) (b) 700,000 2,209,942 82899C22 Siam Syntech Construction Public Co. Ltd. (b) 200,000 1,570,640 83499H22 Sitca Investments & Services Co. Ltd (Loc. Reg.) (b) 400,000 1,183,900 82999D22 TPI Polene Co. Ltd. (b) 450,000 2,237,571 94799092 Thai Farmers Bank 400,000 1,878,452 90199010 Thai Granite Company Ltd. (For. Reg) 38,500 179,282 95599A93 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) THAILAND - CONTINUED Thai Military Bank 640,800 $ 2,326,501 90199989 Thai Wire Products (Loc. Reg.) (b) 320,500 1,024,488 92299492 Union Asia Finance (For. Reg.) 204,500 1,371,941 91599793 Union Mosiac Industries 63,500 310,734 93199493 Unique Gas & Petrochemicals Co. 80,000 1,003,946 47799522 90,545,706 TOTAL COMMON STOCKS (Cost $392,831,526) 465,144,290 NONCONVERTIBLE PREFERRED STOCKS - 0.4% KOREA (SOUTH) - 0.4% Baikyang Co. (b) 4,290 403,009 05699D23 Cheil Food & Chemical Industry 13,500 439,445 16399C23 Dongbu Construction (b) 60,360 1,165,438 25799M23 TOTAL NONCONVERTIBLE PREFERRED STOCKS (Cost $1,984,969) 2,007,892 CORPORATE BONDS - 1.4% PRINCIPAL AMOUNT (A) CONVERTIBLE BONDS - 1.4% KOREA (SOUTH) - 0.8% Daewoo Corp. Euro 0.25%, 12/31/08 $ 2,460,000 2,460,000 23799BAB Ssangyong Oil Refining 3 3/4%, 12/31/08 XEU 1,500,000 1,594,500 78099AAA 4,054,500 MALAYSIA - 0.5% Berjaya Sport Culs: 9%, 10/30/97 MYR 1,525,000 2,446,205 6%, 9/1/98 MYR 76,000 69,875 08499AAB 2,516,080 SINGAPORE - 0.1% Sembawang Maritime Ltd. Culs 1 1/2%, 12/31/98 SGD 113,000 122,735 817995AC TOTAL CONVERTIBLE BONDS 6,693,315 NONCONVERTIBLE BONDS - 0.0% MALAYSIA - 0.0% Berjaya Singer Culs 5%, 12/31/98 MYR 190,000 56,866 08499AAB SINGAPORE - 0.0% QAF Ltd. Ln. Stk. 2%, 2/31/98 SGD 110,000 54,092 74799DAA TOTAL NONCONVERTIBLE BONDS 110,958 TOTAL CORPORATE BONDS (Cost $5,057,473) 6,804,273 REPURCHASE AGREEMENTS - 5.9% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 2.96% dated 10/29/93 due 11/1/93, $29,901,374 $ 29,894,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $429,767,968) $ 503,850,455 LEGEND 1. Principal amount is stated in United States dollars unless otherwise noted. 2. Non-income producing 3. Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $1,988,757 or 0.4% of net assets. CURRENCY TYPE ABBREVIATIONS XEU - European currency unit MYR - Malaysian ringgit SGD - Singapore dollar OTHER INFORMATION Purchases and sales of securities, other than short-term securities, during the year ended October 31, 1993, aggregated $412,911,096 and $12,753,731, respectively. INCOME TAX INFORMATION At October 31, 1993, the aggregate cost of investment securities for income tax purposes was $429,767,968. Net unrealized appreciation aggregated $74,082,487, of which $77,385,768 related to appreciated investment securities and $3,303,281 related to depreciated investment securities. At October 31, 1993, the fund had a capital loss carryforward of approximately $282,000 which will expire on October 31, 2001. For the period, interest and dividends from foreign countries were $1,686,674 or $0.04 per share. Taxes paid to foreign countries were $91,661 or $.002 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Aerospace and Defense 1.3% Basic Industries 6.3 Conglomerates 3.5 Construction and Real Estate 20.5 Durables 4.6 Energy 0.8 Finance 21.6 Health 0.1 Industrial Machinery and Equipment 5.8 Media and Leisure 9.8 Nondurables 2.4 Repurchase Agreements 5.9 Retail and Wholesale 2.7 Services 0.3 Technology 2.7 Transportation 3.1 Utilities 8.6 100.0% SOUTHEAST ASIA FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993 ASSETS Investment in securities, at value (including repurchase agreements of $29,894,000) (cost $429,767,968) $ 503,850,455 (Notes 1 and 2) - See accompanying schedule Receivable for fund shares sold 38,293,168 Dividends receivable 383,553 Interest receivable 37,570 Redemption fees receivable (Note 1) 3,442 Receivable from investment adviser for expense reductions (Note 5) 43,332 TOTAL ASSETS 542,611,520 LIABILITIES Payable to custodian bank $ 257,505 Payable for investments purchased 41,063,740 Payable for fund shares redeemed 1,010,044 Accrued management fee 220,283 Other payables and accrued expenses 390,512 TOTAL LIABILITIES 42,942,084 NET ASSETS $ 499,669,436 Net Assets consist of: Paid in capital $ 425,634,401 Undistributed net investment income 338,637 Accumulated undistributed net realized gain (loss) on investments (386,089 ) Net unrealized appreciation (depreciation) on investment securities 74,082,487 NET ASSETS, for 37,744,686 shares outstanding $ 499,669,436 NET ASSET VALUE, offering price and redemption price per share ($499,669,436 (divided by) 37,744,686 shares) (Note 3)$13.24
STATEMENT OF OPERATIONS
APRIL 19, 1993 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1993 INVESTMENT INCOME $ 1,746,314 Dividends Interest 198,575 1,944,889 Less foreign taxes withheld (Note 1) (91,661 ) TOTAL INCOME 1,853,228 EXPENSES Management fee (Note 3) $ 582,244 Transfer agent fees (Note 3) 469,280 Redemption fees (Note 1) (9,564 ) Accounting fees and expenses 49,486 (Note 3) Custodian fees and expenses 231,730 Registration fees 213,239 Audit 21,508 Total expenses before reductions 1,557,923 Expense reductions (Note 5) (43,332 1,514,591 ) NET INVESTMENT INCOME 338,637 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) (386,089 Net realized gain (loss) on investment securities ) Change in net unrealized appreciation (depreciation) on investment securities 74,082,487 NET GAIN (LOSS) 73,696,398 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 74,035,035 OTHER INFORMATION Accounting fees paid to FSC (Note 3) $ 49,486
STATEMENT OF CHANGES IN NET ASSETS
APRIL 19, 1993 (COMMENCEMEN T OF OPERATIONS) TO OCTOBER 31, 1993 INCREASE (DECREASE) IN NET ASSETS Operations $ 338,637 Net investment income Net realized gain (loss) on investments (386,089 ) Change in net unrealized appreciation (depreciation) on investments 74,082,487 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 74,035,035 Share transactions 464,080,850 Net proceeds from sales of shares Cost of shares redeemed (38,754,143 ) Redemption fees (Note 1) 307,694 Net increase (decrease) in net assets resulting from share transactions 425,634,401 TOTAL INCREASE (DECREASE) IN NET ASSETS 499,669,436 NET ASSETS Beginning of period - End of period (including undistributed net investment income of $338,637) $ 499,669,436 OTHER INFORMATION Shares Sold 41,377,754 Redeemed (3,633,068 ) Net increase (decrease) 37,744,686
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
APRIL 19, 1993 (COMMENCEMEN T OF OPERATIONS) TO OCTOBER 31, 1993 SELECTED PER-SHARE DATA Net asset value, beginning of period $ 10.00 Income from Investment Operations Net investment income .01 Net realized and unrealized gain (loss) on investments 3.22 Total from investment operations 3.23 Redemption fees added to paid in capital .01 Net asset value, end of period $ 13.24 TOTAL RETURN(dagger)(double dagger) 32.40% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 499,679 Ratio of expenses to average net assets 2.00%* Ratio of expenses to average net assets before expense reductions 2.06%* Ratio of net investment income to average net assets .45%* Portfolio turnover rate 14%* * ANNUALIZED (dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED AND DO NOT INCLUDE THE ONE TIME SALES CHARGE. (double dagger) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD THE ADVISER NOT REIMBURSED CERTAIN EXPENSES DURING THE PERIOD SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS For the period ended October 31, 1993 1. SIGNIFICANT ACCOUNTING POLICIES. Fidelity Canada Fund, Fidelity Diversified International Fund, Fidelity Emerging Markets Fund, Fidelity Europe Fund, Fidelity International Growth and Income Fund, Fidelity Japan Fund, Fidelity Latin America Fund, Fidelity Overseas Fund, Fidelity Pacific Basin Fund, Fidelity Southeast Asia Fund and Fidelity Worldwide Fund (the funds) are funds of Fidelity Investment Trust (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Each fund is authorized to issue an unlimited number of shares. The following summarizes the significant accounting policies of the funds: SECURITY VALUATION. Securities for which quotations are readily available are valued at the last sale price, or if no sale price, at the closing bid price in the principal market in which such securities are normally traded. Securities including restricted securities for which quotations are not readily available are valued primarily using dealer-supplied valuations or at their fair value as determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. Short-term securities maturing within sixty days are valued at amortized cost or original cost plus accrued interest, both of which approximate current value. FOREIGN CURRENCY TRANSLATION. The accounting records of each fund are maintained in U.S. dollars. Investment securities, other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the current exchange rate. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the exchange rate on the dates of the transactions. It is not practical to identify the portion of each amount shown in each fund's Statement of Operations under the caption "Realized and Unrealized Gain (Loss) on Investments" that arises from changes in foreign currency exchange rates. Investment income includes net realized and unrealized currency gains and losses recognized between accrual and payment dates. INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, each fund is not subject to income taxes to the extent that it distributes all of its taxable income for the fiscal year. 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. Interest income, which includes accretion of original issue discount, is accrued as earned. Investment income is recorded net of foreign taxes where recovery of such taxes is not assured. 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 are primarily due to differing treatments for futures transactions, foreign currency transactions, and losses deferred due to wash sales. The fund also utilized earnings and profits distributed to shareholders on redemption of shares as a part of the dividends paid deduction for income tax purposes. REDEMPTION FEES. Shares held in Emerging Markets, Latin America and Southeast Asia less than 90 days are subject to a redemption fee equal to 1.50% of the proceeds of the redeemed shares. A portion of the fee is accounted for as a reduction of transfer agent expenses. This portion of the redemption fee is used to offset the transaction costs and other expenses that short-term trading imposes on the funds and their shareholders. The remainder of the redemption fee is 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. FORWARD FOREIGN CURRENCY CONTRACTS. The funds may enter into forward foreign currency contracts. These contracts involve market risk in excess of the amounts reflected in the funds' Statement of Assets and Liabilities. The face or contract amount in U.S. dollars reflects the total exposure the funds have in that particular currency contract. The U.S. dollar value of forward foreign currency contracts is determined using forward currency exchange rates supplied by a quotation service. Losses may arise due to changes in the value of the foreign currency or if the counterparty does not perform under the contract. Purchases and sales of forward foreign currency contracts having the same settlement date and broker are offset and presented net on the Statement of Assets and Liabilities. Gain (loss) on the purchase or sale of forward foreign currency contracts having the same settlement date and broker is recognized on the date of offset, otherwise gain (loss) is recognized on settlement date. REPURCHASE AGREEMENTS. The funds, through their custodian, receive delivery of the underlying securities, whose market value is required to be at least 102% of the resale price at the time of purchase. The funds' investment adviser, Fidelity Management & Research Company (FMR), is responsible for determining that the value of these underlying securities remains at least equal to the resale price. 2. OPERATING POLICIES - CONTINUED JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the funds, along with other registered investment companies having management contracts with FMR, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Federal Agency obligations. INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, 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. The schedules of investments include information regarding interfund lending for the applicable funds under the caption "Other Information". FUTURES CONTRACTS AND OPTIONS. The funds may invest in futures contracts and write options. These investments involve, to varying degrees, elements of market risk and risks in excess of the amount recognized in the Statements of Assets and Liabilities. The face or contract amounts reflect the extent of the involvement the funds have in the particular classes of instruments. Risks may be caused by an imperfect correlation between movements in the price of the instruments and the price of the underlying securities and interest rates. Risks also may arise if there is an illiquid secondary market for the instruments, or due to the inability of counterparties to perform. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. Options traded on an exchange are valued using the last sale price or, in the absence of a sale, the last offering price. Options traded over-the-counter are valued using dealer-supplied valuations. INDEXED SECURITIES. The funds may invest in indexed securities whose value is linked either directly or inversely to changes in foreign currencies, interest rates, commodities, indices, or other reference instruments. Indexed securities may be more volatile than the reference instrument itself, but any loss is limited to the amount of the original investment. 3. 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 which range from .30% to .52% and is based on the monthly average net assets of all the mutual funds advised by FMR. The annual individual fund fee rate is .45% for each fund in the trust. The basic fee for Canada, Diversified International, Europe, Japan, Overseas and Pacific Basin is subject to a performance adjustment (up to a maximum of ".20%) based on the funds' investment performance as compared to the appropriate index over a specified period of time. Beginning September 1993, eleven months after Japan's first full month of operations (October 1992), the fund started adjusting the basic fee based on its performance over the performance period. For the period, each fund's management fee was equivalent to the following annual rates expressed as a percentage of average net assets: Canada .86% Diversified International .73% Emerging Markets, International Growth and Income, Japan and Overseas .77% Europe .64% Latin America and Southeast Asia .77%* Pacific Basin .80% Worldwide .78% * ANNUALIZED The Board of Trustees approved a new group fee rate schedule with rates ranging from .2850% to .5200%. Effective November 1, 1993, FMR has voluntarily agreed to implement this new group fee rate schedule as it results in the same or a lower management fee. SUB-ADVISER FEE. FMR, on behalf of the funds, entered into certain sub-advisory agreements with affiliates of FMR. In addition, one of the sub-advisers, Fidelity International Investment Advisors (FIIA), entered into a sub-advisory agreement with its subsidiary, Fidelity International Investment Advisors (U.K.) Limited (FIIAL U.K.). Under the sub-advisory arrangements, FMR may receive investment advice and research services and may grant the sub-advisers investment management authority to buy and sell securities. FMR pays its sub-advisers either a portion of its management fee or a fee based on costs incurred for these services. FIIA pays FIIAL U.K. a fee based on costs incurred for either service. SALES LOAD. Fidelity Distributors Corporation (FDC), an affiliate of FMR, is the general distributor of the funds. FDC is paid a 2% sales charge on sales of shares of International Growth and Income and a 3% sales charge on sales of shares of each of the other funds. Effective April 16, 1993, the sales charge for Canada, Emerging Markets, International Growth and Income and Worldwide has been waived through May 31, 1994. The sales charge for Diversified International, Japan, Latin America and Southeast Asia has also been waived through May 31, 1994. Prior to October 12, 1990, FDC was paid a 2% sales charge and a 1% deferred sales charge from sales of shares of Canada, Europe, and Pacific Basin, and a 1% sales charge and 1% deferred sales charge from International Growth and Income. Shares purchased before October 12, 1990 are subject to the deferred sales charge upon redemption. The amounts received by FDC for sales charges and deferred sales charges are shown under the caption "Other Information" on each applicable fund's Statement of Operations. 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the funds' transfer, dividend disbursing and shareholder servicing agent. FSC receives fees based on the type, size, number of accounts and the number of transactions made by shareholders. FSC pays for typesetting, printing and mailing of all shareholder reports, except proxy statements. ACCOUNTING FEE. FSC maintains the funds' accounting records. The fee is based on the level of average net assets for the month plus out-of-pocket expenses. The accounting and pricing fees paid to FSC are shown under the caption "Other Information" on each fund's Statement of Operations. 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" on the applicable fund's schedule of investments. 4. BANK BORROWINGS. Each fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. Each fund has established borrowing arrangements with certain banks. Under the most restrictive arrangement, each fund must pledge to the bank securities having a market value in excess of 220% of the total bank borrowings. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, the maximum loan and average daily loan balances during the periods for which loans were outstanding are shown under the caption "Other Information" at the end of each applicable fund's schedule of investments. 5. REDUCTION OF EXPENSES. For the period ended October 31, 1993, FMR has voluntarily agreed to reduce the expenses of Canada, Japan, Latin America and Southeast Asia for total operating expenses (excluding interest, taxes, brokerage commissions and extraordinary expenses) above an annual rate of 2.00% of average net assets. For the period, the expenses of Southeast Asia were reduced by $43,332 or .06% (annualized) of average net assets under this arrangement. For the period ended October 31, 1993, FMR directed certain portfolio trades to brokers who paid a portion of Worldwide's expenses. For the period, the expenses of Worldwide were reduced by $618 under this arrangement. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees and the Shareholders of Fidelity Investment Trust: Fidelity Canada Fund, Fidelity Diversified International Fund, Fidelity Emerging Markets Fund, Fidelity Europe Fund, Fidelity International Growth and Income Fund, Fidelity Japan Fund, Fidelity Overseas Fund, Fidelity Pacific Basin Fund and Fidelity Worldwide Fund: We have audited the accompanying statements of assets and liabilities of Fidelity Investment Trust: Fidelity Canada Fund, Fidelity Diversified International Fund, Fidelity Emerging Markets Fund, Fidelity Europe Fund, Fidelity International Growth and Income Fund, Fidelity Japan Fund, Fidelity Overseas Fund, Fidelity Pacific Basin Fund and Fidelity Worldwide Fund, including the schedules of portfolio investments, as of October 31, 1993, and the related statements of operations for the year then ended and the statements of changes in net assets and the financial highlights for each of the periods indicated. These financial statements and financial highlights are the responsibility of the funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits 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 investments and cash held by the custodian as of October 31, 1993, and confirmation by correspondence with brokers as to securities purchased but not received at that date or other auditing procedures where confirmations from brokers were not received. 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, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Fidelity Investment Trust: Fidelity Canada Fund, Fidelity Diversified International Fund, Fidelity Emerging Markets Fund, Fidelity Europe Fund, Fidelity International Growth and Income Fund, Fidelity Japan Fund, Fidelity Overseas Fund, Fidelity Pacific Basin Fund and Fidelity Worldwide Fund as of October 31, 1993, the results of their operations for the year then ended and the changes in net assets and the financial highlights for each of the periods indicated, in conformity with generally accepted accounting principles. COOPERS & LYBRAND Boston, Massachusetts December 13, 1993 REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Investment Trust and the Shareholders of Fidelity Latin America Fund and Fidelity Southeast Asia Fund: In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments (except for Moody's and Standard & Poor's ratings), 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 Latin America Fund and Fidelity Southeast Asia Fund; (funds of Fidelity Investment Trust) at October 31, 1993, the results of their operations, the changes in their net assets and the financial highlights for the period April 19, 1993 (commencement of operations) through October 31, 1993, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the management of Fidelity Latin America Fund and Fidelity Southeast Asia Fund; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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 audit, which included confirmation of securities owned at October 31, 1993 by correspondence with the custodian and brokers and the application of alternative auditing procedures where confirmations from brokers were not received, provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE Boston, Massachusetts December 13, 1993 TO CALL FIDELITY FOR PORTFOLIO INFORMATION AND QUOTES The Fidelity Telephone Connection offers you special automated telephone services for quotes and balances. The services are easy to use, confidential and quick. All you need is a Touch Tone telephone. YOUR PERSONAL IDENTIFICATION NUMBER (PIN) The first time you call one of our automated telephone services, we'll ask you to set up your Personal Identification Number (PIN). The PIN assures that only you have automated telephone access to your account information. Please have your Customer Number (T-account #) handy when you call -- you'll need it to establish your PIN. If you would ever like to change your PIN, just choose the "Change your Personal Identification Number" option when you call. If you forget your PIN, please call a Fidelity representative at 1-800-544-6666 for assistance. (PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES* 1-800-544-8544 Just make a selection from this record-ed menu: PRESS For quotes on funds you own. 1 For an individual fund quote. 2 For the ten most frequently requested Fidelity fund quotes. 3 For quotes on Fidelity Select Portfolios(Registered trademark). 4 To change your Personal Identification Number (PIN). 5 To speak with a Fidelity representative. 6 (PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT BALANCES 1-800-544-7544 Just make a selection from this record- ed menu: PRESS For balances on funds you own. 1 For your most recent fund activity (purchases, redemptions, and dividends). 2 To change your Personal Identification Number (PIN). 3 To speak with a Fidelity representative. 4 * WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. FOR MORE INFORMATION ON ANY FIDELITY FUND INCLUDING MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. TO WRITE FIDELITY Please locate the address that is closest to you. We'll give your correspondence immediate attention and send you written confirmation upon completion of your request. Please send ALL correspondence about retirement accounts to Dallas. (LETTER_GRAPHIC)MAKING CHANGES TO YOUR ACCOUNT (such as changing name, address, bank, etc.) Fidelity Investments P.O. Box 2269 Boston, MA 02107-2269 Fidelity Investments P.O. Box 660602 Dallas, TX 75266-0602 Fidelity Investments P.O. Box 30280 Salt Lake City, UT 84130-0280 (LETTER_GRAPHIC)FOR NON-RETIRMENT ACCOUNTS BUYING SHARES Fidelity Investments Additional Payments P.O. Box 2656 Boston, MA 02293-0656 Fidelity Investments Additional Payments P.O. Box 620024 Dallas, TX 75262-0024 Fidelity Investments Additional Payments P.O. Box 31455 Salt Lake City, UT 84131-0455 OVERNIGHT EXPRESS Fidelity Investments Additional Payments World Trade Center 164 Northern Avenue Boston, MA 02210 SELLING SHARES Fidelity Investments P.O. Box 193 Boston, MA 02103-0878 Fidelity Investments P.O. Box 660602 Dallas, TX 75266-0602 Fidelity Investments P.O. Box 30281 Salt Lake City, UT 84130-0281 OVERNIGHT EXPRESS Fidelity Investments Attn: Redemptions World Trade Center 164 Northern Avenue Boston, MA 02210 GENERAL CORRESPONDENCE Fidelity Investments P.O. Box 193 Boston, MA 02101-0193 Fidelity Investments P.O. Box 660602 Dallas, TX 75266-0602 (LETTER_GRAPHIC)FOR RETIREMENT ACCOUNTS BUYING SHARES Fidelity Investments P.O. Box 620024 Dallas, TX 75262-0024 SELLING SHARES Fidelity Investments P.O. Box 660602 Dallas, TX 75266-0602 GENERAL CORRESPONDENCE Fidelity Investments P.O. Box 660602 Dallas, TX 75266-0602 INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research (U.K.) Inc. (FMR U.K.) London, England Fidelity Management & Research (Far East) Inc. (FMR Far East) Tokyo, Japan Fidelity Investments Japan Ltd. (FIJ) Fidelity International Investment Advisors (FIIA) Fidelity International Investment Advisors (U.K.) Limited (FIIAL U.K.) OFFICERS Edward C. Johnson 3d, PRESIDENT J. Gary Burkhead, SENIOR VICE PRESIDENT Penelope Dobkin, VICE PRESIDENT George C. Domolky, VICE PRESIDENT John R. Hickling, VICE PRESIDENT Sally Walden, VICE PRESIDENT Gary L. French, TREASURER John H. Costello, ASSISTANT TREASURER Arthur S. Loring, SECRETARY Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS BOARD OF TRUSTEES J. Gary Burkhead Ralph F. Cox* Phyllis Burke Davis* Richard J. Flynn* Edward C. Johnson 3d E. Bradley Jones* Donald J. Kirk* Peter S. Lynch Edward H. Malone* Marvin L. Mann* Gerald C. McDonough* Thomas R. Williams* GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENT Fidelity Service Co. Boston, MA CUSTODIANS Chase Manhattan Bank, N.A. New York, NY DIVERSIFIED INTERNATIONAL FUND, INTERNATIONAL GROWTH & INCOME FUND, OVERSEAS FUND, WORLDWIDE FUND, EUROPE FUND, JAPAN FUND, PACIFIC BASIN FUND, EMERGING MARKETS FUND, SOUTHEAST ASIA FUND Brown Brothers Harriman & Co. Boston, MA CANADA FUND, LATIN AMERICA FUND FIDELITY INTERNATIONAL EQUITY FUNDS Canada Fund Emerging Markets Fund Europe Fund Diversified International Fund International Growth and Income Fund Japan Fund Latin America Fund Pacific Basin Fund Southeast Asia Fund Overseas Fund Worldwide Fund CORPORATE HEADQUARTERS 82 Devonshire Street Boston, MA 02109 1-800-544-8888 THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Account Balances 1-800-544-7544 Exchanges/Redemptions 1-800-544-7777 Mutual Fund Quotes 1-800-544-8544 Account Assistance 1-800-544-6666 Product Information 1-800-544-8888 Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.) TDD Service 1-800-544-0118 for the deaf and hearing impaired (9 a.m. - 9 p.m. Eastern time) * INDEPENDENT TRUSTEES AUTOMATED LINES FOR QUICKEST SERVICE BULK RATE U.S. POSTAGE P A I D F I D E L I T Y INVESTMENTS (Registered trademark) P.O. Box 193 Boston, MA 02101 INT-12-93A EX-5.Z 3 EXHIBIT 5Z SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY and FIDELITY MANAGEMENT & RESEARCH COMPANY (Far East) INC. and FIDEILTY INVESTMENT TRUST ON BEHALF OF Fidelity Japan Fund AGREEMENT made this 16th day of July, 1992, by Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "Advisor"); Fidelity Management & Research Company (Far East) Inc. (hereinafter called the "Sub-Advisor"); and Fidelity Investment Trust, a Massachusetts business trust which may issue one or more series of shares of beneficial interest (hereinafter called the "Trust") on behalf of Fidelity Japan Fund (hereinafter called the "Portfolio"). WHEREAS the Trust and the Advisor have entered into a Management Contract on behalf of the Portfolio, pursuant to which the Advisor acts as investment manager of the Portfolio; and WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons have personnel in various locations throughout the world and have been formed in part for the purpose of researching and compiling information and recommendations with respect to the economies of various countries, including securities issued in and issuers located in such countries, and providing investment advisory services in connection therewith; NOW, THEREFORE, in consideration of the premises and the mutual promises hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as follows: 1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor to perform one or more of the following services with respect to all or a portion of the investments of the Portfolio. The services and the portion of the investments of the Portfolio to be advised or managed by the Sub-Advisor shall be as agreed upon from time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all personnel of the Sub-Advisor performing services for the Portfolio relating to research, statistical and investment activities. (a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the Sub-Advisor shall provide investment advice to the Portfolio and the Advisor with respect to all or a portion of the investments of the Portfolio, and in connection with such advice shall furnish the Portfolio and the Advisor such factual information, research reports and investment recommendations as the Advisor may reasonably require. Such information may include written and oral reports and analyses. (b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor, the Sub-Advisor shall, subject to the supervision of the Advisor, manage all or a portion of the investments of the Portfolio in accordance with the investment objective, policies and limitations provided in the Portfolio's Prospectus or other governing instruments, as amended from time to time, the Investment Company Act of 1940 (the"1940 Act") and rules thereunder, as amended from time to time, and such other limitations as the Trust or Advisor may impose with respect to the Portfolio by notice to the Sub-Advisor. With respect to the portion of the investments of the Portfolio under its management, the Sub-Advisor is authorized to make investment decisions on behalf of the Portfolio with regard to any stock, bond, other security or investment instrument, and to place orders for the purchase and sale of such securities through such broker-dealers as the Sub-Advisor may select. The Sub-Advisor may also be authorized, but only to the extent such duties are delegated in writing by the Advisor, to provide additional investment management services to the Portfolio, including but not limited to services such as managing foreign currency investments, purchasing and selling or writing futures and options contracts, borrowing money, or lending securities on behalf of the Portfolio. All investment management and any other activities of the Sub-Advisor shall at all times be subject to the control and direction of the Advisor and the Trust's Board of Trustees. (c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all of the services contemplated by this Agreement directly or through such of its subsidiaries or other affiliated persons as the Sub-Advisor shall determine; provided, however, that performance of such services through such subsidiaries or other affiliated persons shall have been approved by the Trust to the extent required pursuant to the 1940 Act and rules thereunder. 2. Information to be Provided to the Trust and the Advisor: The Sub-Advisor shall furnish such reports, evaluations, information or analyses to the Trust and the Advisor as the Trust's Board of Trustees or the Advisor may reasonably request from time to time, or as the Sub-Advisor may deem to be desirable. 3. Brokerage: In connection with the services provided under subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor, at its own expense, shall place all orders for the purchase and sale of portfolio securities for the Portfolio's account with brokers or dealers selected by the Sub-Advisor, which may include brokers or dealers affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute portfolio transactions at prices which are advantageous to the Portfolio and at commission rates which are reasonable in relation to the benefits received. In selecting brokers or dealers qualified to execute a particular transaction, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of l934) to the Portfolio and to any other accounts over which the Sub-Advisor or Advisor exercise investment discretion. The Sub-Advisor is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for the Portfolio which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Sub-Advisor determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer. This determination may be viewed in terms of either that particular transaction or the overall responsibilities which the Sub-Advisor has with respect to accounts over which it exercises investment discretion. The Trustees of the Trust shall periodically review the commissions paid by the Portfolio to determine if the commissions paid over representative periods of time were reasonable in relation to the benefits to the Portfolio. 4. Compensation: The Advisor shall compensate the Sub-Advisor on the following basis for the services to be furnished hereunder. (a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 105% of the Sub-Advisor's costs incurred in connection with rendering the services referred to in subparagraph (a) of paragraph 1 of this Agreement. The Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or fee waivers by the Advisor, if any, in effect from time to time. (b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor a monthly Investment Management Fee. The Investment Management Fee shall be equal to: (i) 50% of the monthly management fee rate (including performance adjustments, if any) that the Portfolio is obligated to pay the Advisor under its Management Contract with the Advisor, multiplied by: (ii) the fraction equal to the net assets of the Portfolio as to which the Sub-Advisor shall have provided investment management services divided by the net assets of the Portfolio for that month. If in any fiscal year the aggregate expenses of the Portfolio exceed any applicable expense limitation imposed by any state or federal securities laws or regulations, and the Advisor waives all or a portion of its management fee or reimburses the Portfolio for expenses to the extent required to satisfy such limitation, the Investment Management Fee paid to the Sub-Advisor will be reduced by 50% of the amount of such waivers or reimbursements multiplied by the fraction determined in (ii). If the Sub-Advisor reduces its fees to reflect such waivers or reimbursements and the Advisor subsequently recovers all or any portion of such waivers and reimbursements, then the Sub-Advisor shall be entitled to receive from the Advisor a proportionate share of the amount recovered. To the extent that waivers and reimbursements by the Advisor required by such limitations are in excess of the Advisor's management fee, the Investment Management Fee paid to the Sub-Advisor will be reduced to zero for that month, but in no event shall the Sub-Advisor be required to reimburse the Advisor for all or a portion of such excess reimbursements. (c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have provided both investment advisory services under subparagraph (a) and investment management services under subparagraph (b) of paragraph 1 for the same portion of the investments of the Portfolio for the same period, the fees paid to the Sub-Advisor with respect to such investments shall be calculated exclusively under subparagraph (b) of this paragraph 4. 5. Expenses: It is understood that the Portfolio will pay all of its expenses other than those expressly stated to be payable by the Sub-Advisor hereunder or by the Advisor under the Management Contract with the Portfolio, which expenses payable by the Portfolio shall include, without limitation, (i) interest and taxes; (ii) brokerage commissions and other costs in connection with the purchase or sale of securities and other investment instruments; (iii) fees and expenses of the Trust's Trustees other than those who are "interested persons" of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and transfer agent fees and expenses; (vi) fees and expenses related to the registration and qualification of the Trust and the Portfolio's shares for distribution under state and federal securities laws; (vii) expenses of printing and mailing reports and notices and proxy material to shareholders of the Portfolio; (viii) all other expenses incidental to holding meetings of the Portfolio's shareholders, including proxy solicitations therefore; (ix) a pro rata share, based on relative net assets of the Portfolio and other registered investment companies having Advisory and Service or Management Contracts with the Advisor, of 50% of insurance premiums for fidelity and other coverage; (x) its proportionate share of association membership dues; (xi) expenses of typesetting for printing Prospectuses and Statements of Additional Information and supplements thereto; (xii) expenses of printing and mailing Prospectuses and Statements of Additional Information and supplements thereto sent to existing shareholders; and (xiii) such non-recurring or extraordinary expenses as may arise, including those relating to actions, suits or proceedings to which the Portfolio is a party and the legal obligation which the Portfolio may have to indemnify the Trust's Trustees and officers with respect thereto. 6. Interested Persons: It is understood that Trustees, officers, and shareholders of the Trust are or may be or become interested in the Advisor or the Sub-Advisor as directors, officers or otherwise and that directors, officers and stockholders of the Advisor or the Sub-Advisor are or may be or become similarly interested in the Trust, and that the Advisor or the Sub-Advisor may be or become interested in the Trust as a shareholder or otherwise. 7. Services to Other Companies or Accounts: The services of the Sub-Advisor to the Advisor are not to be deemed to be exclusive, the Sub-Advisor being free to render services to others and engage in other activities, provided, however, that such other services and activities do not, during the term of this Agreement, interfere, in a material manner, with the Sub-Advisor's ability to meet all of its obligations hereunder. The Sub-Advisor shall for all purposes be an independent contractor and not an agent or employee of the Advisor or the Trust. 8. Standard of Care: In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to liability to the Advisor, the Trust or to any shareholder of the Portfolio for any act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security. 9. Duration and Termination of Agreement; Amendments: (a) Subject to prior termination as provided in subparagraph (d) of this paragraph 9, this Agreement shall continue in force until July 31, 1993 and indefinitely thereafter, but only so long as the continuance after such period shall be specifically approved at least annually by vote of the Trust's Board of Trustees or by vote of a majority of the outstanding voting securities of the Portfolio. (b) This Agreement may be modified by mutual consent of the Advisor, the Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to be authorized by vote of a majority of the outstanding voting securities of the Portfolio. (c) In addition to the requirements of subparagraphs (a) and (b) of this paragraph 9, the terms of any continuance or modification of this Agreement must have been approved by the vote of a majority of those Trustees of the Trust who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval. (d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time on sixty (60) days' prior written notice to the other parties, terminate this Agreement, without payment of any penalty, by action of its Board of Trustees or Directors, or with respect to the Portfolio by vote of a majority of its outstanding voting securities. This Agreement shall terminate automatically in the event of its assignment. 10. Limitation of Liability: The Sub-Advisor is hereby expressly put on notice of the limitation of shareholder liability as set forth in the Declaration of Trust or other organizational document of the Trust and agrees that any obligations of the Trust or the Portfolio arising in connection with this Agreement shall be limited in all cases to the Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction of any such obligation from the shareholders or any shareholder of the Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such obligation from the Trustees or any individual Trustee. 11. Governing Law: This Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts. The terms "registered investment company," "vote of a majority of the outstanding voting securities," "assignment," and "interested persons," when used herein, shall have the respective meanings specified in the 1940 Act as now in effect or as hereafter amended. IN WITNESS WHEREOF the parties hereto have caused this instrument to be signed in their behalf by their respective officers thereunto duly authorized, and their respective seals to be hereunto affixed, all as of the date written above. FIDELITY MANAGEMENT & RESEARCH COMPANY (FAR EAST) INC. By: /s/ Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY By: /s/ J. Gary Burkhead J. Gary Burkhead President FIDELITY INVESTMENT TRUST ON BEHALF OF FIDELITY JAPAN FUND By: /s/ J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-5.DD 4 EXHIBIT 5DD SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY and FIDELITY MANAGEMENT & RESEARCH COMPANY (Far East) INC. and FIDEILTY INVESTMENT TRUST ON BEHALF OF Fidelity Europe Capital Appreciation Fund AGREEMENT made this 18th day of November, 1993, by Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "Advisor"); Fidelity Management & Research Company (Far East) Inc. (hereinafter called the "Sub-Advisor"); and Fidelity Investment Trust, a Massachusetts business trust which may issue one or more series of shares of beneficial interest (hereinafter called the "Trust") on behalf of Fidelity Europe Capital Appreciation Fund (hereinafter called the "Portfolio"). WHEREAS the Trust and the Advisor have entered into a Management Contract on behalf of the Portfolio, pursuant to which the Advisor acts as investment manager of the Portfolio; and WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons have personnel in various locations throughout the world and have been formed in part for the purpose of researching and compiling information and recommendations with respect to the economies of various countries, including securities issued in and issuers located in such countries, and providing investment advisory services in connection therewith; NOW, THEREFORE, in consideration of the premises and the mutual promises hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as follows: 1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor to perform one or more of the following services with respect to all or a portion of the investments of the Portfolio. The services and the portion of the investments of the Portfolio to be advised or managed by the Sub-Advisor shall be as agreed upon from time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all personnel of the Sub-Advisor performing services for the Portfolio relating to research, statistical and investment activities. (a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the Sub-Advisor shall provide investment advice to the Portfolio and the Advisor with respect to all or a portion of the investments of the Portfolio, and in connection with such advice shall furnish the Portfolio and the Advisor such factual information, research reports and investment recommendations as the Advisor may reasonably require. Such information may include written and oral reports and analyses. (b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor, the Sub-Advisor shall, subject to the supervision of the Advisor, manage all or a portion of the investments of the Portfolio in accordance with the investment objective, policies and limitations provided in the Portfolio's Prospectus or other governing instruments, as amended from time to time, the Investment Company Act of 1940 (the"1940 Act") and rules thereunder, as amended from time to time, and such other limitations as the Trust or Advisor may impose with respect to the Portfolio by notice to the Sub-Advisor. With respect to the portion of the investments of the Portfolio under its management, the Sub-Advisor is authorized to make investment decisions on behalf of the Portfolio with regard to any stock, bond, other security or investment instrument, and to place orders for the purchase and sale of such securities through such broker-dealers as the Sub-Advisor may select. The Sub-Advisor may also be authorized, but only to the extent such duties are delegated in writing by the Advisor, to provide additional investment management services to the Portfolio, including but not limited to services such as managing foreign currency investments, purchasing and selling or writing futures and options contracts, borrowing money, or lending securities on behalf of the Portfolio. All investment management and any other activities of the Sub-Advisor shall at all times be subject to the control and direction of the Advisor and the Trust's Board of Trustees. (c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all of the services contemplated by this Agreement directly or through such of its subsidiaries or other affiliated persons as the Sub-Advisor shall determine; provided, however, that performance of such services through such subsidiaries or other affiliated persons shall have been approved by the Trust to the extent required pursuant to the 1940 Act and rules thereunder. 2. Information to be Provided to the Trust and the Advisor: The Sub-Advisor shall furnish such reports, evaluations, information or analyses to the Trust and the Advisor as the Trust's Board of Trustees or the Advisor may reasonably request from time to time, or as the Sub-Advisor may deem to be desirable. 3. Brokerage: In connection with the services provided under subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor, at its own expense, shall place all orders for the purchase and sale of portfolio securities for the Portfolio's account with brokers or dealers selected by the Sub-Advisor, which may include brokers or dealers affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute portfolio transactions at prices which are advantageous to the Portfolio and at commission rates which are reasonable in relation to the benefits received. In selecting brokers or dealers qualified to execute a particular transaction, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of l934) to the Portfolio and to any other accounts over which the Sub-Advisor or Advisor exercise investment discretion. The Sub-Advisor is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for the Portfolio which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Sub-Advisor determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer. This determination may be viewed in terms of either that particular transaction or the overall responsibilities which the Sub-Advisor has with respect to accounts over which it exercises investment discretion. The Trustees of the Trust shall periodically review the commissions paid by the Portfolio to determine if the commissions paid over representative periods of time were reasonable in relation to the benefits to the Portfolio. 4. Compensation: The Advisor shall compensate the Sub-Advisor on the following basis for the services to be furnished hereunder. (a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 105% of the Sub-Advisor's costs incurred in connection with rendering the services referred to in subparagraph (a) of paragraph 1 of this Agreement. The Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or fee waivers by the Advisor, if any, in effect from time to time. (b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor a monthly Investment Management Fee. The Investment Management Fee shall be equal to: (i) 50% of the monthly management fee rate (including performance adjustments, if any) that the Portfolio is obligated to pay the Advisor under its Management Contract with the Advisor, multiplied by: (ii) the fraction equal to the net assets of the Portfolio as to which the Sub-Advisor shall have provided investment management services divided by the net assets of the Portfolio for that month. If in any fiscal year the aggregate expenses of the Portfolio exceed any applicable expense limitation imposed by any state or federal securities laws or regulations, and the Advisor waives all or a portion of its management fee or reimburses the Portfolio for expenses to the extent required to satisfy such limitation, the Investment Management Fee paid to the Sub-Advisor will be reduced by 50% of the amount of such waivers or reimbursements multiplied by the fraction determined in (ii). If the Sub-Advisor reduces its fees to reflect such waivers or reimbursements and the Advisor subsequently recovers all or any portion of such waivers and reimbursements, then the Sub-Advisor shall be entitled to receive from the Advisor a proportionate share of the amount recovered. To the extent that waivers and reimbursements by the Advisor required by such limitations are in excess of the Advisor's management fee, the Investment Management Fee paid to the Sub-Advisor will be reduced to zero for that month, but in no event shall the Sub-Advisor be required to reimburse the Advisor for all or a portion of such excess reimbursements. (c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have provided both investment advisory services under subparagraph (a) and investment management services under subparagraph (b) of paragraph 1 for the same portion of the investments of the Portfolio for the same period, the fees paid to the Sub-Advisor with respect to such investments shall be calculated exclusively under subparagraph (b) of this paragraph 4. 5. Expenses: It is understood that the Portfolio will pay all of its expenses other than those expressly stated to be payable by the Sub-Advisor hereunder or by the Advisor under the Management Contract with the Portfolio, which expenses payable by the Portfolio shall include, without limitation, (i) interest and taxes; (ii) brokerage commissions and other costs in connection with the purchase or sale of securities and other investment instruments; (iii) fees and expenses of the Trust's Trustees other than those who are "interested persons" of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and transfer agent fees and expenses; (vi) fees and expenses related to the registration and qualification of the Trust and the Portfolio's shares for distribution under state and federal securities laws; (vii) expenses of printing and mailing reports and notices and proxy material to shareholders of the Portfolio; (viii) all other expenses incidental to holding meetings of the Portfolio's shareholders, including proxy solicitations therefore; (ix) a pro rata share, based on relative net assets of the Portfolio and other registered investment companies having Advisory and Service or Management Contracts with the Advisor, of 50% of insurance premiums for fidelity and other coverage; (x) its proportionate share of association membership dues; (xi) expenses of typesetting for printing Prospectuses and Statements of Additional Information and supplements thereto; (xii) expenses of printing and mailing Prospectuses and Statements of Additional Information and supplements thereto sent to existing shareholders; and (xiii) such non-recurring or extraordinary expenses as may arise, including those relating to actions, suits or proceedings to which the Portfolio is a party and the legal obligation which the Portfolio may have to indemnify the Trust's Trustees and officers with respect thereto. 6. Interested Persons: It is understood that Trustees, officers, and shareholders of the Trust are or may be or become interested in the Advisor or the Sub-Advisor as directors, officers or otherwise and that directors, officers and stockholders of the Advisor or the Sub-Advisor are or may be or become similarly interested in the Trust, and that the Advisor or the Sub-Advisor may be or become interested in the Trust as a shareholder or otherwise. 7. Services to Other Companies or Accounts: The services of the Sub-Advisor to the Advisor are not to be deemed to be exclusive, the Sub-Advisor being free to render services to others and engage in other activities, provided, however, that such other services and activities do not, during the term of this Agreement, interfere, in a material manner, with the Sub-Advisor's ability to meet all of its obligations hereunder. The Sub-Advisor shall for all purposes be an independent contractor and not an agent or employee of the Advisor or the Trust. 8. Standard of Care: In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to liability to the Advisor, the Trust or to any shareholder of the Portfolio for any act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security. 9. Duration and Termination of Agreement; Amendments: (a) Subject to prior termination as provided in subparagraph (d) of this paragraph 9, this Agreement shall continue in force until July 31, 1994 and indefinitely thereafter, but only so long as the continuance after such period shall be specifically approved at least annually by vote of the Trust's Board of Trustees or by vote of a majority of the outstanding voting securities of the Portfolio. (b) This Agreement may be modified by mutual consent of the Advisor, the Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to be authorized by vote of a majority of the outstanding voting securities of the Portfolio. (c) In addition to the requirements of subparagraphs (a) and (b) of this paragraph 9, the terms of any continuance or modification of this Agreement must have been approved by the vote of a majority of those Trustees of the Trust who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval. (d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time on sixty (60) days' prior written notice to the other parties, terminate this Agreement, without payment of any penalty, by action of its Board of Trustees or Directors, or with respect to the Portfolio by vote of a majority of its outstanding voting securities. This Agreement shall terminate automatically in the event of its assignment. 10. Limitation of Liability: The Sub-Advisor is hereby expressly put on notice of the limitation of shareholder liability as set forth in the Declaration of Trust or other organizational document of the Trust and agrees that any obligations of the Trust or the Portfolio arising in connection with this Agreement shall be limited in all cases to the Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction of any such obligation from the shareholders or any shareholder of the Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such obligation from the Trustees or any individual Trustee. 11. Governing Law: This Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts. The terms "registered investment company," "vote of a majority of the outstanding voting securities," "assignment," and "interested persons," when used herein, shall have the respective meanings specified in the 1940 Act as now in effect or as hereafter amended. IN WITNESS WHEREOF the parties hereto have caused this instrument to be signed in their behalf by their respective officers thereunto duly authorized, and their respective seals to be hereunto affixed, all as of the date written above. FIDELITY MANAGEMENT & RESEARCH COMPANY (FAR EAST) INC. By: /s/ Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY By: /s/ J. Gary Burkhead J. Gary Burkhead President FIDELITY INVESTMENT TRUST ON BEHALF OF FIDELITY EUROPE CAPITAL APPRECIATION FUND By: /s/ J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-5.OO 5 EXHIBIT 5OO SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH COMPANY (U.K.) INC. AND FIDELITY INVESTMENT TRUST ON BEHALF OF FIDELITY JAPAN FUND AGREEMENT made this 16th day of July, 1992, by Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "Advisor"); Fidelity Management & Research Company (U.K.) Inc. (hereinafter called the "Sub-Advisor"); and Fidelity Investment Trust, a Massachusetts business trust which may issue one or more series of shares of beneficial interest (hereinafter called the "Trust") on behalf of Fidelity Japan Fund (hereinafter called the "Portfolio"). WHEREAS the Trust and the Advisor have entered into a Management Contract on behalf of the Portfolio, pursuant to which the Advisor acts as investment manager of the Portfolio; and WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons have personnel in various locations throughout the world and have been formed in part for the purpose of researching and compiling information and recommendations with respect to the economies of various countries, including securities issued in and issuers located in such countries, and providing investment advisory services in connection therewith; NOW, THEREFORE, in consideration of the premises and the mutual promises hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as follows: 1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor to perform one or more of the following services with respect to all or a portion of the investments of the Portfolio. The services and the portion of the investments of the Portfolio to be advised or managed by the Sub-Advisor shall be as agreed upon from time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all personnel of the Sub-Advisor performing services for the Portfolio relating to research, statistical and investment activities. (a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the Sub-Advisor shall provide investment advice to the Portfolio and the Advisor with respect to all or a portion of the investments of the Portfolio, and in connection with such advice shall furnish the Portfolio and the Advisor such factual information, research reports and investment recommendations as the Advisor may reasonably require. Such information may include written and oral reports and analyses. (b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor, the Sub-Advisor shall, subject to the supervision of the Advisor, manage all or a portion of the investments of the Portfolio in accordance with the investment objective, policies and limitations provided in the Portfolio's Prospectus or other governing instruments, as amended from time to time, the Investment Company Act of 1940 (the"1940 Act") and rules thereunder, as amended from time to time, and such other limitations as the Trust or Advisor may impose with respect to the Portfolio by notice to the Sub-Advisor. With respect to the portion of the investments of the Portfolio under its management, the Sub-Advisor is authorized to make investment decisions on behalf of the Portfolio with regard to any stock, bond, other security or investment instrument, and to place orders for the purchase and sale of such securities through such broker-dealers as the Sub-Advisor may select. The Sub-Advisor may also be authorized, but only to the extent such duties are delegated in writing by the Advisor, to provide additional investment management services to the Portfolio, including but not limited to services such as managing foreign currency investments, purchasing and selling or writing futures and options contracts, borrowing money or lending securities on behalf of the Portfolio. All investment management and any other activities of the Sub-Advisor shall at all times be subject to the control and direction of the Advisor and the Trust's Board of Trustees. (c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all of the services contemplated by this Agreement directly or through such of its subsidiaries or other affiliated persons as the Sub-Advisor shall determine; provided, however, that performance of such services through such subsidiaries or other affiliated persons shall have been approved by the Trust to the extent required pursuant to the 1940 Act and rules thereunder. 2. Information to be Provided to the Trust and the Advisor: The Sub-Advisor shall furnish such reports, evaluations, information or analyses to the Trust and the Advisor as the Trust's Board of Trustees or the Advisor may reasonably request from time to time, or as the Sub-Advisor may deem to be desirable. 3. Brokerage: In connection with the services provided under subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor, at its own expense, shall place all orders for the purchase and sale of portfolio securities for the Portfolio's account with brokers or dealers selected by the Sub-Advisor, which may include brokers or dealers affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute portfolio transactions at prices which are advantageous to the Portfolio and at commission rates which are reasonable in relation to the benefits received. In selecting brokers or dealers qualified to execute a particular transaction, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of l934) to the Portfolio and to any other accounts over which the Sub-Advisor or Advisor exercise investment discretion. The Sub-Advisor is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for the Portfolio which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Sub-Advisor determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer. This determination may be viewed in terms of either that particular transaction or the overall responsibilities which the Sub-Advisor has with respect to accounts over which it exercises investment discretion. The Trustees of the Trust shall periodically review the commissions paid by the Portfolio to determine if the commissions paid over representative periods of time were reasonable in relation to the benefits to the Portfolio. 4. Compensation: The Advisor shall compensate the Sub-Advisor on the following basis for the services to be furnished hereunder. (a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 110% of the Sub-Advisor's costs incurred in connection with rendering the services referred to in subparagraph (a) of paragraph 1 of this Agreement. The Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or fee waivers by the Advisor, if any, in effect from time to time. (b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor a monthly Investment Management Fee. The Investment Management Fee shall be equal to: (i) 50% of the monthly management fee rate (including performance adjustments, if any) that the Portfolio is obligated to pay the Advisor under its Management Contract with the Advisor, multiplied by: (ii) the fraction equal to the net assets of the Portfolio as to which the Sub-Advisor shall have provided investment management services divided by the net assets of the Portfolio for that month. If in any fiscal year the aggregate expenses of the Portfolio exceed any applicable expense limitation imposed by any state or federal securities laws or regulations, and the Advisor waives all or a portion of its management fee or reimburses the Portfolio for expenses to the extent required to satisfy such limitation, the Investment Management Fee paid to the Sub-Advisor will be reduced by 50% of the amount of such waivers or reimbursements multiplied by the fraction determined in (ii). If the Sub-Advisor reduces its fees to reflect such waivers or reimbursements and the Advisor subsequently recovers all or any portion of such waivers or reimbursements, then the Sub-Advisor shall be entitled to receive from the Advisor a proportionate share of the amount recovered. To the extent that waivers and reimbursements by the Advisor required by such limitations are in excess of the Advisor's management fee, the Investment Management Fee paid to the Sub-Advisor will be reduced to zero for that month, but in no event shall the Sub-Advisor be required to reimburse the Advisor for all or a portion of such excess reimbursements. (c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have provided both investment advisory services under subparagraph (a) and investment management services under subparagraph (b) of paragraph (1) for the same portion of the investments of the Portfolio for the same period, the fees paid to the Sub-Advisor with respect to such investments shall be calculated exclusively under subparagraph (b) of this paragraph 4. 5. Expenses: It is understood that the Portfolio will pay all of its expenses other than those expressly stated to be payable by the Sub-Advisor hereunder or by the Advisor under the Management Contract with the Portfolio, which expenses payable by the Portfolio shall include, without limitation, (i) interest and taxes; (ii) brokerage commissions and other costs in connection with the purchase or sale of securities and other investment instruments; (iii) fees and expenses of the Trust's Trustees other than those who are "interested persons" of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and transfer agent fees and expenses; (vi) fees and expenses related to the registration and qualification of the Trust and the Portfolio's shares for distribution under state and federal securities laws; (vii) expenses of printing and mailing reports and notices and proxy material to shareholders of the Portfolio; (viii) all other expenses incidental to holding meetings of the Portfolio's shareholders, including proxy solicitations therefore; (ix) a pro rata share, based on relative net assets of the Portfolio and other registered investment companies having Advisory and Service or Management Contracts with the Advisor, of 50% of insurance premiums for fidelity and other coverage; (x) its proportionate share of association membership dues; (xi) expenses of typesetting for printing Prospectuses and Statements of Additional Information and supplements thereto; (xii) expenses of printing and mailing Prospectuses and Statements of Additional Information and supplements thereto sent to existing shareholders; and (xiii) such non-recurring or extraordinary expenses as may arise, including those relating to actions, suits or proceedings to which the Portfolio is a party and the legal obligation which the Portfolio may have to indemnify the Trust's Trustees and officers with respect thereto. 6. Interested Persons: It is understood that Trustees, officers, and shareholders of the Trust are or may be or become interested in the Advisor or the Sub-Advisor as directors, officers or otherwise and that directors, officers and stockholders of the Advisor or the Sub-Advisor are or may be or become similarly interested in the Trust, and that the Advisor or the Sub-Advisor may be or become interested in the Trust as a shareholder or otherwise. 7. Services to Other Companies or Accounts: The services of the Sub-Advisor to the Advisor are not to be deemed to be exclusive, the Sub-Advisor being free to render services to others and engage in other activities, provided, however, that such other services and activities do not, during the term of this Agreement, interfere, in a material manner, with the Sub-Advisor's ability to meet all of its obligations hereunder. The Sub-Advisor shall for all purposes be an independent contractor and not an agent or employee of the Advisor or the Trust. 8. Standard of Care: In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to liability to the Advisor, the Trust or to any shareholder of the Portfolio for any act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security. 9. Duration and Termination of Agreement; Amendments: (a) Subject to prior termination as provided in subparagraph (d) of this paragraph 9, this Agreement shall continue in force until July 31, 1993 and indefinitely thereafter, but only so long as the continuance after such period shall be specifically approved at least annually by vote of the Trust's Board of Trustees or by vote of a majority of the outstanding voting securities of the Portfolio. (b) This Agreement may be modified by mutual consent of the Advisor, the Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to be authorized by vote of a majority of the outstanding voting securities of the Portfolio. (c) In addition to the requirements of subparagraphs (a) and (b) of this paragraph 9, the terms of any continuance or modification of this Agreement must have been approved by the vote of a majority of those Trustees of the Trust who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval. (d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time on sixty (60) days' prior written notice to the other parties, terminate this Agreement, without payment of any penalty, by action of its Board of Trustees or Directors, or with respect to the Portfolio by vote of a majority of its outstanding voting securities. This Agreement shall terminate automatically in the event of its assignment. 10. Limitation of Liability: The Sub-Advisor is hereby expressly put on notice of the limitation of shareholder liability as set forth in the Declaration of Trust or other organizational document of the Trust and agrees that any obligations of the Trust or the Portfolio arising in connection with this Agreement shall be limited in all cases to the Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction of any such obligation from the shareholders or any shareholder of the Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such obligation from the Trustees or any individual Trustee. 11. Governing Law: This Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts. The terms "registered investment company," "vote of a majority of the outstanding voting securities," "assignment," and "interested persons," when used herein, shall have the respective meanings specified in the 1940 Act as now in effect or as hereafter amended. IN WITNESS WHEREOF the parties hereto have caused this instrument to be signed in their behalf by their respective officers thereunto duly authorized, and their respective seals to be hereunto affixed, all as of the date written above. FIDELITY MANAGEMENT & RESEARCH COMPANY (U.K.) INC. By: /s/ Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY By: /s/ J. Gary Burkhead J. Gary Burkhead President FIDELITY INVESTMENT TRUST ON BEHALF OF FIDELITY JAPAN FUND By: /s/ J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-5.SS 6 EXHIBIT 5SS SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH COMPANY (U.K.) INC. AND FIDELITY INVESTMENT TRUST ON BEHALF OF FIDELITY EUROPE CAPITAL APPRECIATION FUND AGREEMENT made this 18th day of November, 1993, by Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "Advisor"); Fidelity Management & Research Company (U.K.) Inc. (hereinafter called the "Sub-Advisor"); and Fidelity Investment Trust, a Massachusetts business trust which may issue one or more series of shares of beneficial interest (hereinafter called the "Trust") on behalf of Fidelity Europe Capital Appreciation Fund (hereinafter called the "Portfolio"). WHEREAS the Trust and the Advisor have entered into a Management Contract on behalf of the Portfolio, pursuant to which the Advisor acts as investment manager of the Portfolio; and WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons have personnel in various locations throughout the world and have been formed in part for the purpose of researching and compiling information and recommendations with respect to the economies of various countries, including securities issued in and issuers located in such countries, and providing investment advisory services in connection therewith; NOW, THEREFORE, in consideration of the premises and the mutual promises hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as follows: 1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor to perform one or more of the following services with respect to all or a portion of the investments of the Portfolio. The services and the portion of the investments of the Portfolio to be advised or managed by the Sub-Advisor shall be as agreed upon from time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all personnel of the Sub-Advisor performing services for the Portfolio relating to research, statistical and investment activities. (a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the Sub-Advisor shall provide investment advice to the Portfolio and the Advisor with respect to all or a portion of the investments of the Portfolio, and in connection with such advice shall furnish the Portfolio and the Advisor such factual information, research reports and investment recommendations as the Advisor may reasonably require. Such information may include written and oral reports and analyses. (b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor, the Sub-Advisor shall, subject to the supervision of the Advisor, manage all or a portion of the investments of the Portfolio in accordance with the investment objective, policies and limitations provided in the Portfolio's Prospectus or other governing instruments, as amended from time to time, the Investment Company Act of 1940 (the"1940 Act") and rules thereunder, as amended from time to time, and such other limitations as the Trust or Advisor may impose with respect to the Portfolio by notice to the Sub-Advisor. With respect to the portion of the investments of the Portfolio under its management, the Sub-Advisor is authorized to make investment decisions on behalf of the Portfolio with regard to any stock, bond, other security or investment instrument, and to place orders for the purchase and sale of such securities through such broker-dealers as the Sub-Advisor may select. The Sub-Advisor may also be authorized, but only to the extent such duties are delegated in writing by the Advisor, to provide additional investment management services to the Portfolio, including but not limited to services such as managing foreign currency investments, purchasing and selling or writing futures and options contracts, borrowing money or lending securities on behalf of the Portfolio. All investment management and any other activities of the Sub-Advisor shall at all times be subject to the control and direction of the Advisor and the Trust's Board of Trustees. (c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all of the services contemplated by this Agreement directly or through such of its subsidiaries or other affiliated persons as the Sub-Advisor shall determine; provided, however, that performance of such services through such subsidiaries or other affiliated persons shall have been approved by the Trust to the extent required pursuant to the 1940 Act and rules thereunder. 2. Information to be Provided to the Trust and the Advisor: The Sub-Advisor shall furnish such reports, evaluations, information or analyses to the Trust and the Advisor as the Trust's Board of Trustees or the Advisor may reasonably request from time to time, or as the Sub-Advisor may deem to be desirable. 3. Brokerage: In connection with the services provided under subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor, at its own expense, shall place all orders for the purchase and sale of portfolio securities for the Portfolio's account with brokers or dealers selected by the Sub-Advisor, which may include brokers or dealers affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute portfolio transactions at prices which are advantageous to the Portfolio and at commission rates which are reasonable in relation to the benefits received. In selecting brokers or dealers qualified to execute a particular transaction, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of l934) to the Portfolio and to any other accounts over which the Sub-Advisor or Advisor exercise investment discretion. The Sub-Advisor is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for the Portfolio which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Sub-Advisor determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer. This determination may be viewed in terms of either that particular transaction or the overall responsibilities which the Sub-Advisor has with respect to accounts over which it exercises investment discretion. The Trustees of the Trust shall periodically review the commissions paid by the Portfolio to determine if the commissions paid over representative periods of time were reasonable in relation to the benefits to the Portfolio. 4. Compensation: The Advisor shall compensate the Sub-Advisor on the following basis for the services to be furnished hereunder. (a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 110% of the Sub-Advisor's costs incurred in connection with rendering the services referred to in subparagraph (a) of paragraph 1 of this Agreement. The Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or fee waivers by the Advisor, if any, in effect from time to time. (b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor a monthly Investment Management Fee. The Investment Management Fee shall be equal to: (i) 50% of the monthly management fee rate (including performance adjustments, if any) that the Portfolio is obligated to pay the Advisor under its Management Contract with the Advisor, multiplied by: (ii) the fraction equal to the net assets of the Portfolio as to which the Sub-Advisor shall have provided investment management services divided by the net assets of the Portfolio for that month. If in any fiscal year the aggregate expenses of the Portfolio exceed any applicable expense limitation imposed by any state or federal securities laws or regulations, and the Advisor waives all or a portion of its management fee or reimburses the Portfolio for expenses to the extent required to satisfy such limitation, the Investment Management Fee paid to the Sub-Advisor will be reduced by 50% of the amount of such waivers or reimbursements multiplied by the fraction determined in (ii). If the Sub-Advisor reduces its fees to reflect such waivers or reimbursements and the Advisor subsequently recovers all or any portion of such waivers or reimbursements, then the Sub-Advisor shall be entitled to receive from the Advisor a proportionate share of the amount recovered. To the extent that waivers and reimbursements by the Advisor required by such limitations are in excess of the Advisor's management fee, the Investment Management Fee paid to the Sub-Advisor will be reduced to zero for that month, but in no event shall the Sub-Advisor be required to reimburse the Advisor for all or a portion of such excess reimbursements. (c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have provided both investment advisory services under subparagraph (a) and investment management services under subparagraph (b) of paragraph (1) for the same portion of the investments of the Portfolio for the same period, the fees paid to the Sub-Advisor with respect to such investments shall be calculated exclusively under subparagraph (b) of this paragraph 4. 5. Expenses: It is understood that the Portfolio will pay all of its expenses other than those expressly stated to be payable by the Sub-Advisor hereunder or by the Advisor under the Management Contract with the Portfolio, which expenses payable by the Portfolio shall include, without limitation, (i) interest and taxes; (ii) brokerage commissions and other costs in connection with the purchase or sale of securities and other investment instruments; (iii) fees and expenses of the Trust's Trustees other than those who are "interested persons" of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and transfer agent fees and expenses; (vi) fees and expenses related to the registration and qualification of the Trust and the Portfolio's shares for distribution under state and federal securities laws; (vii) expenses of printing and mailing reports and notices and proxy material to shareholders of the Portfolio; (viii) all other expenses incidental to holding meetings of the Portfolio's shareholders, including proxy solicitations therefore; (ix) a pro rata share, based on relative net assets of the Portfolio and other registered investment companies having Advisory and Service or Management Contracts with the Advisor, of 50% of insurance premiums for fidelity and other coverage; (x) its proportionate share of association membership dues; (xi) expenses of typesetting for printing Prospectuses and Statements of Additional Information and supplements thereto; (xii) expenses of printing and mailing Prospectuses and Statements of Additional Information and supplements thereto sent to existing shareholders; and (xiii) such non-recurring or extraordinary expenses as may arise, including those relating to actions, suits or proceedings to which the Portfolio is a party and the legal obligation which the Portfolio may have to indemnify the Trust's Trustees and officers with respect thereto. 6. Interested Persons: It is understood that Trustees, officers, and shareholders of the Trust are or may be or become interested in the Advisor or the Sub-Advisor as directors, officers or otherwise and that directors, officers and stockholders of the Advisor or the Sub-Advisor are or may be or become similarly interested in the Trust, and that the Advisor or the Sub-Advisor may be or become interested in the Trust as a shareholder or otherwise. 7. Services to Other Companies or Accounts: The services of the Sub-Advisor to the Advisor are not to be deemed to be exclusive, the Sub-Advisor being free to render services to others and engage in other activities, provided, however, that such other services and activities do not, during the term of this Agreement, interfere, in a material manner, with the Sub-Advisor's ability to meet all of its obligations hereunder. The Sub-Advisor shall for all purposes be an independent contractor and not an agent or employee of the Advisor or the Trust. 8. Standard of Care: In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to liability to the Advisor, the Trust or to any shareholder of the Portfolio for any act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security. 9. Duration and Termination of Agreement; Amendments: (a) Subject to prior termination as provided in subparagraph (d) of this paragraph 9, this Agreement shall continue in force until July 31, 1994 and indefinitely thereafter, but only so long as the continuance after such period shall be specifically approved at least annually by vote of the Trust's Board of Trustees or by vote of a majority of the outstanding voting securities of the Portfolio. (b) This Agreement may be modified by mutual consent of the Advisor, the Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to be authorized by vote of a majority of the outstanding voting securities of the Portfolio. (c) In addition to the requirements of subparagraphs (a) and (b) of this paragraph 9, the terms of any continuance or modification of this Agreement must have been approved by the vote of a majority of those Trustees of the Trust who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval. (d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time on sixty (60) days' prior written notice to the other parties, terminate this Agreement, without payment of any penalty, by action of its Board of Trustees or Directors, or with respect to the Portfolio by vote of a majority of its outstanding voting securities. This Agreement shall terminate automatically in the event of its assignment. 10. Limitation of Liability: The Sub-Advisor is hereby expressly put on notice of the limitation of shareholder liability as set forth in the Declaration of Trust or other organizational document of the Trust and agrees that any obligations of the Trust or the Portfolio arising in connection with this Agreement shall be limited in all cases to the Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction of any such obligation from the shareholders or any shareholder of the Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such obligation from the Trustees or any individual Trustee. 11. Governing Law: This Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts. The terms "registered investment company," "vote of a majority of the outstanding voting securities," "assignment," and "interested persons," when used herein, shall have the respective meanings specified in the 1940 Act as now in effect or as hereafter amended. IN WITNESS WHEREOF the parties hereto have caused this instrument to be signed in their behalf by their respective officers thereunto duly authorized, and their respective seals to be hereunto affixed, all as of the date written above. FIDELITY MANAGEMENT & RESEARCH COMPANY (U.K.) INC. By: /s/ Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY By: /s/ J. Gary Burkhead J. Gary Burkhead President FIDELITY INVESTMENT TRUST ON BEHALF OF FIDELITY EUROPE CAPITAL APPRECIATION FUND By: /s/ J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-11 7 Exhibit 11(a) CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectus and Statement of Additional Information constituting part of this Post Effective Amendment No. 53 to the Registration Statement on Form N-1A (the "Registration Statement") of Fidelity Investment Trust: Fidelity Diversified International Fund, Fidelity International Growth & Income Fund, Fidelity Overseas Fund, Fidelity Worldwide Fund, Fidelity Canada Fund, Fidelity Europe Fund, Fidelity Japan Fund, Fidelity Pacific Basin Fund, and Fidelity Emerging Markets Fund of our report dated December 13, 1993, relating to the financial statements and financial highlights, which are incorporated by reference in said Statement of Additional Information. We further consent to the references to our Firm in the Prospectus and Statement of Additional Information under the headings "Financial Highlights" and "Auditor". /s/ COOPERS & LYBRAND COOPERS & LYBRAND Boston, Massachusetts February 23, 1994 Exhibit 11(b) CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference into the Prospectus and Statement of Additional Information constituting parts of this Post Effective Amendment No. 53 to the registration statement on Form N-1A (the "Registration Statement") of our report dated December 13, 1993, relating to the financial statements and financial highlights appearing in the October 31, 1993 Annual Report to Shareholders of Fidelity Latin America Fund and Fidelity Southeast Asia Fund, which is incorporated by reference in such Registration Statement. We further consent to the references to us under the headings "Auditor" in the Statement of Additional Information and "Financial Highlights" in the Prospectus. /s/ PRICE WATERHOUSE PRICE WATERHOUSE February 23, 1994 EX-16.C 8 Europe Fund 39 Week Moving Averages Date Factor Adjusted NAV 05-Feb-93 1.000000 15.06 08-Feb-93 1.000000 15.05 09-Feb-93 1.000000 14.93 10-Feb-93 1.000000 14.83 11-Feb-93 1.000000 14.84 12-Feb-93 1.000000 14.92 15-Feb-93 1.000000 15.15 16-Feb-93 1.000000 15.15 17-Feb-93 1.000000 15.17 18-Feb-93 1.000000 15.24 19-Feb-93 1.000000 15.27 22-Feb-93 1.000000 15.35 23-Feb-93 1.000000 15.18 24-Feb-93 1.000000 15.04 25-Feb-93 1.000000 15.04 26-Feb-93 1.000000 15.11 01-Mar-93 1.000000 15.27 02-Mar-93 1.000000 15.39 03-Mar-93 1.000000 15.45 04-Mar-93 1.000000 15.48 05-Mar-93 1.000000 15.41 08-Mar-93 1.000000 15.51 09-Mar-93 1.000000 15.52 10-Mar-93 1.000000 15.52 11-Mar-93 1.000000 15.52 12-Mar-93 1.000000 15.36 15-Mar-93 1.000000 15.42 16-Mar-93 1.000000 15.46 17-Mar-93 1.000000 15.40 18-Mar-93 1.000000 15.68 19-Mar-93 1.000000 15.81 22-Mar-93 1.000000 15.56 23-Mar-93 1.000000 15.63 24-Mar-93 1.000000 15.53 25-Mar-93 1.000000 15.53 26-Mar-93 1.000000 15.72 29-Mar-93 1.000000 15.82 30-Mar-93 1.000000 15.90 31-Mar-93 1.000000 16.10 01-Apr-93 1.000000 16.24 02-Apr-93 1.000000 16.18 05-Apr-93 1.000000 16.10 06-Apr-93 1.000000 16.05 07-Apr-93 1.000000 15.99 08-Apr-93 1.000000 16.14 09-Apr-93 1.000000 16.14 12-Apr-93 1.000000 16.29 13-Apr-93 1.000000 16.53 14-Apr-93 1.000000 16.48 15-Apr-93 1.000000 16.34 16-Apr-93 1.000000 16.22 19-Apr-93 1.000000 16.47 20-Apr-93 1.000000 16.53 21-Apr-93 1.000000 16.52 22-Apr-93 1.000000 16.64 23-Apr-93 1.000000 16.78 26-Apr-93 1.000000 16.86 27-Apr-93 1.000000 16.73 28-Apr-93 1.000000 16.66 29-Apr-93 1.000000 16.58 30-Apr-93 1.000000 16.63 03-May-93 1.000000 16.64 04-May-93 1.000000 16.66 05-May-93 1.000000 16.63 06-May-93 1.000000 16.70 07-May-93 1.000000 16.59 10-May-93 1.000000 16.36 11-May-93 1.000000 16.44 12-May-93 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1.000000 16.32 08-Jul-93 1.000000 16.39 09-Jul-93 1.000000 16.25 12-Jul-93 1.000000 16.16 13-Jul-93 1.000000 16.35 14-Jul-93 1.000000 16.34 15-Jul-93 1.000000 16.22 16-Jul-93 1.000000 16.22 19-Jul-93 1.000000 16.36 20-Jul-93 1.000000 16.39 21-Jul-93 1.000000 16.34 22-Jul-93 1.000000 16.30 23-Jul-93 1.000000 16.17 26-Jul-93 1.000000 16.24 27-Jul-93 1.000000 16.23 28-Jul-93 1.000000 16.38 29-Jul-93 1.000000 16.32 30-Jul-93 1.000000 16.37 02-Aug-93 1.000000 16.66 03-Aug-93 1.000000 16.77 04-Aug-93 1.000000 16.83 05-Aug-93 1.000000 16.82 06-Aug-93 1.000000 16.99 09-Aug-93 1.000000 16.98 10-Aug-93 1.000000 16.75 11-Aug-93 1.000000 16.83 12-Aug-93 1.000000 16.99 13-Aug-93 1.000000 17.04 16-Aug-93 1.000000 17.28 17-Aug-93 1.000000 17.35 18-Aug-93 1.000000 17.72 19-Aug-93 1.000000 17.64 20-Aug-93 1.000000 17.69 23-Aug-93 1.000000 17.49 24-Aug-93 1.000000 17.50 25-Aug-93 1.000000 17.52 26-Aug-93 1.000000 17.63 27-Aug-93 1.000000 17.71 30-Aug-93 1.000000 17.68 31-Aug-93 1.000000 17.70 01-Sep-93 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1.000000 18.34 28-Oct-93 1.000000 18.44 29-Oct-93 1.000000 18.43 -----END PRIVACY-ENHANCED MESSAGE-----