0000744822-95-000019.txt : 19950824 0000744822-95-000019.hdr.sgml : 19950824 ACCESSION NUMBER: 0000744822-95-000019 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950823 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIDELITY INVESTMENT TRUST CENTRAL INDEX KEY: 0000744822 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04008 FILM NUMBER: 95566099 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 ZH1 CITY: BOSTON STATE: MA ZIP: 02109 FORMER COMPANY: FORMER CONFORMED NAME: FIDELITY OVERSEAS FUND DATE OF NAME CHANGE: 19861228 N-30D 1 (2_FIDELITY_LOGOS)FIDELITY SHORT-TERM WORLD INCOME FUND SEMIANNUAL REPORT JUNE 30, 1995 CONTENTS PRESIDENT'S MESSAGE 3 Ned Johnson on investing strategies. PERFORMANCE 4 How the fund has done over time. FUND TALK 7 The manager's review of fund performance, strategy and outlook. INVESTMENT CHANGES 10 A summary of major shifts in the fund's investments over the past six months. INVESTMENTS 11 A complete list of the fund's investments with their market values. FINANCIAL STATEMENTS 17 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. NOTES 21 Notes to the financial statements. REPORT OF INDEPENDENT 26 The auditors' opinion. ACCOUNTANTS THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. PRESIDENT'S MESSAGE DEAR SHAREHOLDER: Although there have been positive market indications so far in 1995, no one can predict what lies ahead for investors. Last year, stocks posted below-average returns and bonds had one of the worst years in history. This downturn followed a period in which the investing environment was generally very positive. These market ups and downs are a normal part of investing, and there are some basic principles that are helpful for investors to remember in different types of markets. Keeping in mind that the effects of interest rate changes on your bond investments will only be "paper" gains or losses unless you sell your shares, staying in your bond fund may be appropriate if your investment horizon is at least a year or more. The longer your investing time frame, the more likely it is that you will retain your principal investment through both up and down markets. For example, a 10-year time frame, such as saving for a college education, enables you to weather these ups and downs in a long-term fund, which has higher potential returns. An intermediate-length fund could be appropriate if your investment horizon is two to four years, and a short-term bond fund could be the right choice if you need your money in one or two years. If your time horizon is less than a year, you might want to consider moving some of your bond investment into a money market fund, which seeks income and a stable share price by investing in high-quality, short-term investments. Of course, there is no assurance that a money market fund will achieve its goal, and it is important to remember that money market funds are not insured or guaranteed by any agency of the U.S. government. No matter what your investment horizon or portfolio diversity, it makes good sense to follow a regular investment plan - investing a certain amount of money at the same time each month or quarter - and to review your portfolio periodically. A periodic investment plan will not, of course, assure a profit or protect against a loss. If you have any questions, please call us at 1-800-544-8888. We stand ready to provide the information you need to make the investments that are right for you. Best regards, Edward C. Johnson 3d 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 figure includes changes in a fund's share price, as well as reinvestment of any dividends (or income) and capital gains (the profits the fund earns when it sells bonds that have grown in value). You can also look at the fund's dividends and yield. CUMULATIVE TOTAL RETURNS PERIODS ENDED JUNE 30, 1995 PAST 6 PAST 1 LIFE OF MONTHS YEAR FUND Short-Term World Income 3.25% 3.03% 16.08% Lehman Brothers 1-3 Year Government 6.60% 7.67% Bond Index n/a Salomon Brothers 1-3 Year World 6.09% 7.77% Government Bond Index n/a Average Short World Multi-Market 3.09% 1.69% Income Fund n/a Consumer Price Index 1.87% 3.04% 11.15% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, six months, one year, or since the fund started on October 4, 1991. For example, if you invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Lehman Brothers 1-3 Year Government Bond Index - a broad gauge of the performance of short-term U.S. government bonds or to the Salomon Brothers 1-3 Year World Government Bond Index which includes both U.S. and foreign government bonds (with foreign currency exposure hedged into U.S. dollars). To measure how the fund's performance stacked up against its peers, you can compare it to the average short world multi-market income fund, which reflects the performance of 160 funds with similar objectives tracked by Lipper Analytical Services over the past six months. Both benchmarks include reinvested dividends and capital gains, if any, and exclude sales charges. Comparing the fund's performance to the consumer price index (CPI) helps show how your fund did compared to inflation. (The CPI returns begin on the month-end closest to the fund's start date.) AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED JUNE 30, 1995 PAST 1 LIFE OF YEAR FUND Short-Term World Income 3.03% 4.07% Lehman Brothers 1-3 Year Government 7.67% n/a Bond Index Salomon Brothers 1-3 Year World 7.77% n/a Government Bond Index Average Short World Multi-Market Income Fund 1.69% n/a Consumer Price Index 3.04% 2.86% AVERAGE ANNUAL TOTAL 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 Short-Term World IncSB030 10/31/91 10000.00 10000.00 11/30/91 9953.55 10077.00 12/31/91 10013.89 10199.94 01/31/92 10073.94 10219.32 02/29/92 10167.77 10249.98 03/31/92 10203.63 10242.80 04/30/92 10340.52 10322.70 05/31/92 10393.30 10395.99 06/30/92 10450.55 10477.08 07/31/92 10563.77 10568.23 08/31/92 10594.04 10624.24 09/30/92 10348.11 10730.48 10/31/92 10510.46 10756.23 11/30/92 10442.45 10754.08 12/31/92 10497.71 10828.29 01/31/93 10595.46 10917.08 02/28/93 10718.75 10997.86 03/31/93 10825.83 11027.56 04/30/93 10901.95 11086.00 05/31/93 11019.75 11100.42 06/30/93 11203.34 11199.21 07/31/93 11348.48 11238.41 08/31/93 11487.08 11319.32 09/30/93 11471.74 11355.55 10/31/93 11633.27 11410.05 11/30/93 11676.59 11431.73 12/31/93 11819.14 11496.89 01/31/94 11890.79 11532.53 02/28/94 11700.76 11463.34 03/31/94 11369.94 11435.83 04/30/94 11247.98 11422.10 05/31/94 11417.32 11435.81 06/30/94 11157.58 11430.09 07/31/94 11239.08 11504.39 08/31/94 11320.82 11504.39 09/30/94 11380.60 11521.64 10/31/94 11421.99 11566.58 11/30/94 11462.67 11588.55 12/31/94 11134.20 11610.57 01/31/95 11064.33 11746.42 02/28/95 11083.40 11865.05 03/31/95 11111.02 11958.79 04/30/95 11246.96 12075.98 05/31/95 11436.96 12271.62 06/30/95 11496.19 12317.02 $10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity Short-Term World Income Fund on October 31, 1991, shortly after the fund started. As the chart shows, by June 30, 1995, the value of your investment would have grown to $11,496 - a 14.96% increase on your initial investment. For comparison, look at how the Salomon Brothers 1-3 Year World Government Bond Index did over the same period. With dividends reinvested, the same $10,000 investment would have grown to $12,317 - a 23.17% increase. Beginning with this report the fund will compare its performance to the Salomon Brothers 1-3 Year World Government Bond Index rather than the Lehman Brothers 1-3 Year Government Bond Index. The Salomon Brothers Index includes both U.S. and foreign government bonds (with foreign currency exposure hedged into U.S. dollars), which is more reflective of the fund's range of permitted investments. For comparison purposes, both indexes are shown on Page 4. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. Bond prices, for example, generally move in the opposite direction of interest rates. In turn, the share price, return, and yield of a fund that invests in bonds will vary. That means if you sell your shares during a market downturn, you might lose money. But if you can ride out the market's ups and downs, you may have a gain. (checkmark) DIVIDENDS AND YIELD PERIODS ENDED JUNE 30, 1995 PAST PAST 6 PAST 1 MONTH MONTHS YEAR A Dividends per share 4.61(cents) 29.28(cents) 65.95(cents) Annualized dividend rate 6.29% 6.70% 7.30% 30-day annualized yield 5.46% - - DIVIDENDS per share show the income paid by the fund for a set period. If you annualize this number, based on the fund's average share price of $8.91 over the past month, $8.81 over the past six months and $9.04 over the past year, you can compare the fund's income distributions over these three periods. The 30-day annualized YIELD is a standard formula for all bond funds based on the yields of the bonds in the fund, averaged over the past 30 days. This figure shows you the yield characteristics of the fund's investments at the end of the period. It also helps you compare funds from different companies on an equal basis. It does not reflect the cost of hedging and other currency gains and losses. A DIVIDENDS PAID ARE BASED ON THE FUND'S INVESTMENT INCOME AND DO NOT REFLECT CURRENCY RELATED LOSSES. AS A RESULT OF CURRENCY LOSSES, DIVIDENDS PAID DURING 1994 OF APPROXIMATELY 45.7(CENTS) PER SHARE WERE A NON-TAXABLE RETURN OF CAPITAL. FUND TALK: THE MANAGER'S OVERVIEW An interview with Scott Kuldell, Portfolio Manager of Fidelity Short-Term World Income Fund Q. HOW HAS THE FUND PERFORMED, SCOTT? A. The fund's total return for the six months ended June 30, 1995, was 3.25%. That's better than the 3.09% that the average short world multi-market income fund returned during the same time period, according to Lipper Analytical Services. For the 12-month comparison, the fund returned 3.03% versus 1.69% for the Lipper average. Q. THOSE RETURNS LOOK BETTER THAN THEY HAVE IN THE LAST FEW REPORTS. HAVE YOU MADE A CHANGE TO THE FUND'S STRATEGY? A. Yes. The fund is positioned very differently from the way it was six months ago and my investment strategy has changed significantly. When investing in emerging markets you're exposed to event risk because those markets - and countries - are, by definition, less stable and an event such as a political assassination or a natural disaster can have more of an impact there than in developed countries. In the first place, this fund no longer actively invests in emerging markets securities. In the past, though this fund delivered a significantly higher yield than a regular U.S. short-term bond fund, it was subject to event risk, or the risk that some unforeseen event could negatively affect the fund's investments in a foreign country. Another concern was currency risk. Currencies are very unpredictable. While bond prices may fluctuate until maturity, a currency may go down and almost never recover. For that reason, almost all currency holdings in the fund are hedged. Since I've removed all significant emerging markets investments and reduced the fund's exposure to currency risk, I feel very confident that the fund's performance will be more stable going forward than in the past. Q. WHAT DO YOU MEAN BY THE CURRENCY EXPOSURE BEING HEDGED? A. The fund buys forward foreign currency contracts. They are investments designed to reduce the fund's exposure to foreign currency risk - the chance that movements in a country's currency will negatively affect the fund's investments there - by tying the value of selected foreign investments to the U.S. dollar. The goal is to try to reduce the volatility of the fund's share price. In this fund, I'll look at a foreign bond, let's say a 3-year Italian bond yielding 12%. If short-term interest rates in Italy are 10%, the difference is 2%. At the same time, if comparable short-term interest rates in the U.S. are 6%, a hedged Italian bond will return 6%, plus 2%, or 8% in dollars, with no currency risk. It's also important for shareholders to know that the fund is 51% invested in the U.S. and the remainder that is invested outside the U.S. is almost fully hedged. Q. WHERE DO YOU FIND INVESTMENT OPPORTUNITIES FOR THE FUND? A. Many places. For example, in some countries coupon payments on bonds are taxable. Whoever owns the bond when the coupon is paid is obligated to pay the tax. That means that the bonds are inexpensive just before the coupon gets paid since domestic investors don't want to pay the tax. That presents an opportunity for this fund since, as "foreigners" we don't pay tax in that country, and we can buy the bond just before it pays its coupon and can realize the value. Another opportunity is the corporate credit market abroad. In the U.S., the corporate market is well understood and is dominated by well-informed institutional investors. However, buyers of corporate bonds overseas are typically retail investors who prefer household names. With the credit analysis and research strength of Fidelity, we are able to find the investment opportunities waiting to be unearthed. Q. WHAT DOES THE FUND LOOK LIKE NOW? A. The investments by country break down as follows: 51% U.S., 30% in European countries, 7% Canada, 2% Latin America and 1% Australia. There is also a 9% stake in supranational obligations. The proportions probably won't change significantly in the near future, but the U.S. component may drop at some point. The fund is significantly invested in government securities outside the U.S., as well as in some corporates and supranational securities, such as bonds issued by the World Bank. The fund also is invested in investment-grade securities, although the policies of the fund allow it to own some lower-rated "BB" securities. Q. YOU SAID THE FUND DIDN'T ACTIVELY INVEST IN LATIN AMERICA DURING THE PERIOD. YET THERE ARE STILL HOLDINGS IN MEXICO AND ARGENTINA . . . A. About 2% of the fund's investments were in Latin America on June 30, 1995 - that's down from 32% six months ago. When Mexico devalued the peso in December of 1994, it had a devastating effect on Latin American securities. I sold off most of the fund's position due to the extraordinary increase in default risk, but have held on to a few illiquid securities that I'm confident will pay off. In retrospect, however, it may have benefitted the fund somewhat if I'd held on to a little more of the fund's emerging market position - the dollar-denominated securities - for a little longer. I cut them back severely because the risk of default- the government failing to pay principal and interest payments on bonds - was so high. However, when the immediate risk of default began to come down, the prices went up. Finally, though the risks of sovereign default have decreased, the risk of individual corporate defaults is still higher than I'm comfortable with. Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS? A. Over time, I think this fund has a chance to perform well relative to the short-term bond market. I feel good about the future of the fund. Now that the fund is following a new index, the Salomon Brothers 1-3 Year World Government Bond Index, it is on a more even playing field when compared against domestic bond funds, which are the best, but by no means the only, comparison. Besides, the index that the fund is following has historically outperformed Treasury bills. I think the new strategy has worked well so far. However, you have to take what the market gives you - and it hasn't given much yield lately. FUND FACTS GOAL: high current income and preservation of capital by investing mainly in short-term debt securities around the world START DATE: October 4, 1991 SIZE: as of June 30, 1995, more than $153 million MANAGER: Scott Kuldell, since April 1994; manager, Fidelity Deutsche Mark, Sterling and Yen Portfolios, since March 1994; joined Fidelity in 1987 (checkmark) SCOTT KULDELL ON THE STRATEGY OF FIDELITY SHORT-TERM WORLD INCOME FUND: "The fund's shift in strategy has the goal of increasing the quality of its holdings while decreasing currency and event risk. To do that, I've begun to manage the fund relative to the global short-term government bond market, and I've directly hedged virtually all the currency risk. This market includes only developed countries with consistent records of paying debt. The return of the market, as measured by the Salomon Brothers 1-3 Year World Government Bond Index, has historically outperformed Treasury bills, with slightly less volatility than the short-term Treasury bond market. Although that may not be the case in the future, I feel confident that returns will be more consistent than in the past. The fund's goal is to outperform its peers by exploiting anomalies and inefficiencies in the market by using Fidelity's worldwide credit research. "The fund has the potential to add value to investors by lowering their overall portfolio risk through global diversification and increasing the potential for higher returns by exploiting global market inefficiencies." INVESTMENT CHANGES The charts below highlight three different aspects of the fund's investments: the country where they were issued, their sensitivity to interest rate changes, and their currency exposure. The top countries in each table differ because some securities have more interest rate risk than others, because securities issued in one country may be denominated in another country's currency, and because of the effects of currency hedging. TOP COUNTRIES AS OF JUNE 30, 1995 (BY LOCATION OF ISSUER) % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS SIX MONTHS AGO United States 51 27 Italy 9 2 Canada 7 5 Germany 5 0 Belgium 4 0 TOP COUNTRIES ARE BASED ON THE LOCATION OF THE ISSUER OF EACH SECURITY, INDICATING WHERE THE FUND IS EXPOSED TO POLITICAL AND CREDIT RISKS. THE FUND'S LARGEST POSITION AS OF JUNE 30 WAS IN SECURITIES OF UNITED STATES ISSUERS. TOP INTEREST RATE EXPOSURES AS OF JUNE 30, 1995 (ESTIMATED, BY COUNTRY) % OF FUND'S TOTAL % OF INTEREST RATE INTEREST RATE EXPOSURE EXPOSURE SIX MONTHS AGO United States 44 34 Japan 17 0 Italy 9 5 Germany 6 0 France 5 2 FIDELITY ESTIMATES INTEREST-RATE EXPOSURES BASED ON THE DURATION, OR INTEREST-RATE SENSITIVITY, OF THE FUND'S HOLDINGS. AS OF JUNE 30, THE FUND WAS MOST SENSITIVE TO INTEREST-RATE MOVEMENTS IN THE U.S., WHICH ACCOUNTED FOR APPROXIMATELY 44% OF THE FUND'S INTEREST-RATE EXPOSURE. TOP CURRENCY EXPOSURES AS OF JUNE 30, 1995 (ESTIMATED, BY CURRENCY) % OF FUND'S % OF NET ASSETS NET ASSETS SIX MONTHS AGO U.S. dollar 99 62 Thai Baht 0 10 Czech Koruna 0 8 Argentine peso 0 7 New Zealand dollar 0 4 THE U.S. DOLLAR EXPOSURE ABOVE INCLUDES THE EFFECTS OF FOREIGN INVESTMENTS WHOSE CURRENCY RISK IS FULLY HEDGED. THERE WERE NO FOREIGN CURRENCY EXPOSURES IN EXCESS OF 0.5% AS OF JUNE 30. INVESTMENTS JUNE 30, 1995 Showing Percentage of Total Value of Investment in Securities NONCONVERTIBLE BONDS - 10.3% MOODY'S RATINGS (B) PRINCIPAL VALUE (UNAUDITED) AMOUNT (A) (NOTE 1) CANADA - 6.1% Ford Motor Credit Co. of Canada Ltd. 10 1/2%, 5/17/96 Aa3 CAD 4,300,000 $ 3,209,727 General Motors Acceptance Corp. of Canada Ltd.: 10%, 8/30/95 A1 CAD 2,400,000 1,754,929 11 7/8%, 9/7/95 A1 CAD 3,900,000 2,862,557 Household Financial Ltd. 7 1/4%, 9/17/98 A1 CAD 2,000,000 1,426,390 9,253,603 MEXICO - 0.6% First Mexican Acceptance Corp. SA 8 3/4%, 9/15/96 - 1,000,000 900,000 UNITED STATES OF AMERICA - 3.6% Associates Corp. North America 8 3/8%, 6/1/96 Aa3 1,310,000 1,334,549 Beneficial Corp. 8.26%, 8/20/96 A2 1,000,000 1,023,440 Fleet Financial Group, Inc. 5 5/8%, 7/1/95 A2 1,000,000 1,000,000 General Motors Acceptance Corp. 8.80%, 3/20/96 A3 1,000,000 1,018,030 Wells Fargo & Co. 8.20%, 11/1/96 A2 1,000,000 1,021,500 5,397,519 TOTAL NONCONVERTIBLE BONDS (Cost $17,235,894) 15,551,122 GOVERNMENT OBLIGATIONS (F) - 66.7% ARGENTINA - 1.7% Province of Chaco 11 7/8%, 9/10/97 (d) - 2,583,333 2,635,775 AUSTRALIA - 0.7% Australian Government 12 1/2%, 9/15/97 Aa2 AUD 1,350,000 1,042,710 BELGIUM - 3.6% Kingdom of Belgium: 6 1/4%, 11/25/96 AAA BEF 100,000,000 3,552,820 9 1/4%, 1/2/98 AAA BEF 50,000,000 1,888,730 5,441,550 CANADA - 0.7% Canadian Government 10 1/4%, 12/1/98 Aa1 CAD 1,405,000 1,109,873 GOVERNMENT OBLIGATIONS (F) - CONTINUED MOODY'S RATINGS (B) PRINCIPAL VALUE (UNAUDITED) AMOUNT (A) (NOTE 1) DENMARK - 1.0% Kingdom of Denmark 7%, 8/15/97 Aa1 DKK 8,000,000 $ 1,476,124 FRANCE - 2.4% French Government OAT: 8 1/8%, 5/25/99 Aaa FRF 5,000,000 1,071,982 9 1/2%, 1/25/01 Aaa FRF 10,900,000 2,492,264 3,564,246 GERMANY - 4.9% Federal Republic of Germany: 6 1/8%, 7/21/97 Aaa DEM 6,000,000 4,401,028 6 3/8%, 8/14/98 Aaa DEM 4,100,000 3,018,944 7,419,972 ITALY - 8.7% Republic of Italy (c): 8 1/2%, 1/1/97 A1 ITL 7,000,000 4,119,997 8 1/2%, 8/1/97 A1 ITL 9,000,000 5,186,273 8 1/2%, 1/1/99 A1 ITL 7,000,000 3,870,752 13,177,022 NETHERLANDS - 2.5% Netherland Government 6 1/4%, 7/15/98 Aaa NLG 5,700,000 3,727,815 SPAIN - 2.2% Kingdom of Spain 7.30%, 7/30/97 (c) AAA ESP 427,000 3,298,618 SWEDEN - 1.5% Kingdom of Sweden 10 3/4%, 1/23/97 Aa1 SEK 16,000,000 2,211,248 UNITED KINGDOM - 2.9% United Kingdom, Great Britain & Northern Ireland: 10 1/2%, 2/21/97 Aaa GBP 1,000,000 1,666,253 14%, 5/22/01 Aaa GBP 1,500,000 2,752,755 4,419,008 GOVERNMENT OBLIGATIONS (F) - CONTINUED MOODY'S RATINGS (B) PRINCIPAL VALUE (UNAUDITED) AMOUNT (A) (NOTE 1) UNITED STATES OF AMERICA - 33.9% Federal Home Loan Banks: 4.83%, 9/21/98 (callable) Aaa $ 275,000 $ 264,043 4.89%, 10/14/98 (callable) Aaa 340,000 326,550 Federal Home Loan Mortgage Corporation: 4.78%, 2/10/97 (callable) Aaa 210,000 205,833 6.47%, 7/7/97 Aaa 350,000 352,789 Federal National Mortgage Association: 5.2%, 7/10/98 (callable) Aaa 230,000 223,603 3%, 7/13/98 (e) Aaa 300,000 299,766 4.70%, 9/10/98 (callable) Aaa 270,000 258,219 4.95%, 9/30/98 Aaa 1,680,000 1,618,116 4 7/8%, 10/15/98 (callable) Aaa 140,000 134,438 4.82%, 10/21/98 (callable) Aaa 370,000 356,447 4.94%, 10/30/98 (callable) Aaa 1,350,000 1,294,734 5.18%, 2/1/99 (callable) Aaa 2,000,000 1,934,688 Government Trust Certificates: Class T-2 (assets of trust guaranteed by U.S. Government through Defense Security Assistance Agency) 9.40%, 11/15/96 Aaa 749,070 765,939 Class 3-B (assets of the Trust guaranteed by U.S. Government through Defense Security Assistance Agency) 8.55%, 11/15/97 Aaa 382,616 391,573 Class 1-C (assets of Trust guaranteed by U.S. Government through Defense Security Assistance Agency) 9 1/4%, 11/15/01 Aaa 180,000 198,274 Private Export Funding Corp. secured 9.10% 10/30/98 Aaa 60,000 65,184 Tennessee Valley Authority 4.60%, 12/15/96 Aaa 260,000 255,011 U.S. Treasury Notes: 4 3/8%, 11/15/96 Aaa 4,940,000 4,848,165 7 1/4%, 11/30/96 Aaa 22,530,000 22,956,042 5 1/8%, 3/31/98 Aaa 4,260,000 4,178,123 4 3/4%, 8/31/98 Aaa 775,000 748,356 6 3/4%, 6/30/99 Aaa 2,300,000 2,359,294 7 1/8%, 9/30/99 Aaa 2,210,000 2,301,163 7 3/4% 12/31/99 Aaa 4,500,000 4,804,470 51,140,820 TOTAL GOVERNMENT OBLIGATIONS (Cost $99,485,740) 100,664,781 SUPRANATIONAL OBLIGATIONS - 9.5% MOODY'S RATINGS (B) PRINCIPAL VALUE (UNAUDITED) AMOUNT (A) (NOTE 1) Eurofima euro 11 3/8%, 11/30/99 Aaa GBP 200,000 $ 351,045 International Bank for Reconstruction & Development Worldbank 4 1/2%, 12/22/97(c) Aaa JPY 1,100,000 14,005,670 TOTAL SUPRANATIONAL OBLIGATIONS (Cost $13,470,852) 14,356,715 INTEREST INDEXED SECURITIES - 2.8% UNITED STATES OF AMERICA - 2.8% Citibank Nassau 7.4375%, 3/13/96 (Coupon inversely indexed to JPY LIBOR and principal indexed to value of 3-year Japanese securities) (g) (Cost $4,000,000) 4,000,000 4,243,200 COMMERCIAL PAPER - 9.9% UNITED STATES OF AMERICA - 9.9% Corporate Asset Funding Co. 5.87%, 7/5/95 5,000,000 4,996,793 US Leasing International, Inc. 5.90%, 7/20/95 10,000,000 9,969,372 TOTAL COMMERCIAL PAPER (Cost $14,970,508) 14,966,165 REPURCHASE AGREEMENTS - 0.8% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 6.15%, dated 6/30/95 due 7/3/95 $ 1,196,613 1,196,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $150,358,994) $ 150,977,983 FORWARD FOREIGN CURRENCY CONTRACTS SETTLEMENT UNREALIZED DATE(S) VALUE GAIN/(LOSS) CONTRACTS TO BUY 2,239,595 AUD 8/1/95 $ 1,586,297 $ (24,598) 2,758,979 CAD 7/27/95 2,008,795 (6,398) 3,063,016 DEM 7/24/95 to 8/1/95 2,219,656 25,578 18,894,902 FRF 7/6/95 3,902,003 9,487 3,877,068 GBP 7/20/95 to 8/1/95 6,179,809 (49,160) 11,148,817 NZD 7/21/95 to 8/1/95 7,440,957 530,695 TOTAL CONTRACTS TO BUY (Payable amount $22,851,913) $ 23,337,517 $ 485,604 THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 15.5% CONTRACTS TO SELL 3,358,849 AUD 8/1/95 $ 2,379,061 $ 120,939 158,557,353 BEF 9/27/95 5,601,579 (32,300) 17,440,697 CAD 7/27/95 12,698,456 17,315 13,720,080 DEM 7/24/95 to 8/1/95 9,945,037 (212,339) 8,258,017 DKK 10/4/95 1,527,901 (9,660) 400,901 ESP 8/10/95 to 9/27/95 3,294,140 (181,190) 36,593,765 FRF 7/6/95 7,557,010 (122,491) 6,698,311 GBP 7/20/95 to 8/1/95 10,675,704 114,911 22,079,321 ITL 9/27/95 13,360,926 20,480 1,167,846,869 JPY 8/1/95 13,860,516 (76,862) 6,055,015 NLG 8/10/95 3,920,923 51,968 11,148,817 NZD 7/21/95 to 8/1/95 7,440,957 (317,360) 16,514,296 SEK 10/4/95 2,253,773 (1,814) TOTAL CONTRACTS TO SELL (Receivable amount $93,887,580) $ 94,515,983 $ (628,403) THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 62.6% $ (142,799) CURRENCY ABBREVIATIONS AUD - Australian dollar BEF - Belgian franc GBP - British pound CAD - Canadian dollar DKK - Danish krone NLG - Dutch guilder FRF - French franc DEM - German deutsche mark ITL - Italian lira JPY - Japanese yen NZD - New Zealand dollar ESP - Spanish peseta SEK - Swedish krona LEGEND 1. Principal amount is stated in United States dollars unless otherwise noted. 2. Standard & Poor's Corporation credit ratings are used in the absence of a rating by Moody's Investors Service, Inc. 3. Principal amount in thousands. 4. Restricted securities - Investment in securities not registered under the Securities Act of 1933 (see Note 2 of Notes to Financial Statements). Additional information on each holding is as follows: ACQUISITION ACQUISITION SECURITY DATE COST Province of Chaco 11 7/8%, 9/10/97 3/9/94 $ 2,728,145 5. The coupon rate shown on floating or adjustable rate securities represents the rate at period end. 6. Some 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. 7. 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 may be considerably more volatile than the price of a comparable fixed rate security. The rate shown is the rate at period end. OTHER INFORMATION The composition of long-term debt holdings as a percentage of total value of investment in securities, is as follows (ratings are unaudited): MOODY'S RATINGS S&P RATINGS Aaa, Aa, A 78.4% AAA, AA, A 80.2% Baa 0.0% BBB 0.7% Ba 0.0% BB 0.0% B 0.0% B 0.0% Caa 0.0% CCC 0.0% Ca, C 0.0% CC, C 0.0% D 0.0% For some foreign government obligations, FMR has assigned the ratings of the sovereign credit of the issuing government. The percentage not rated by either S&P or Moody's amounted to 2.3%. FMR has determined that unrated debt securities that are lower quality account for 1.8% of the total value of investment in securities. INCOME TAX INFORMATION At June 30, 1995, the aggregate cost of investment securities for income tax purposes was $150,358,994. Net unrealized appreciation aggregated $618,989, of which $2,901,652 related to appreciated investment securities and $2,282,663 related to depreciated investment securities. At December 31, 1994, the fund had a capital loss carryforward of approximately $16,391,000 of which $349,000, $2,324,000 and $13,718,000 will expire on December 31, 1999, 2000 and 2002, respectively. The fund has elected to defer to its fiscal year ending December 31, 1995 $5,989,239 of losses recognized during the period November 1, 1994 to December 31, 1994. MARKET SECTOR DIVERSIFICATION (Unaudited) As a Percentage of Total Value of Investments Finance 31.7 Foreign Government Obligations 32.8 Government Obligations 33.9 Media & Leisure 0.6 Repurchase Agreements 0.8 Transportation 0.2 100.0% FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995 ASSETS Investment in securities, at value (including repurchase $ 150,977,983 agreements of $1,196,000) (cost $150,358,994) - See accompanying schedule Unrealized appreciation on foreign currency contracts 937,078 Receivable for closed foreign currency contracts 117,468 Interest receivable 3,322,562 TOTAL ASSETS 155,355,091 LIABILITIES Payable to custodian bank $ 121,076 Unrealized depreciation on foreign currency contracts 1,079,877 Payable for closed foreign currency contracts 4,820 Payable for fund shares redeemed 142,016 Distributions payable 130,756 Accrued management fee 78,439 Other payables and accrued expenses 105,453 TOTAL LIABILITIES 1,662,437 NET ASSETS $ 153,692,654 Net Assets consist of: Paid in capital $ 188,220,378 Distributions in excess of net investment income (4,178,972) Accumulated undistributed net realized gain (loss) on (31,037,912) investments and foreign currency transactions Net unrealized appreciation (depreciation) on 689,160 investments and assets and liabilities in foreign currencies NET ASSETS, for 17,276,742 shares outstanding $ 153,692,654 NET ASSET VALUE, offering price and redemption price per $8.90 share ($153,692,654 (divided by) 17,276,742 shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995 INVESTMENT INCOME $ 7,844,934 Interest Less foreign taxes withheld (310,563) TOTAL INCOME 7,534,371 EXPENSES Management fee $ 591,521 Transfer agent fees 235,553 Accounting fees and expenses 58,912 Non-interested trustees' compensation 693 Custodian fees and expenses 45,789 Registration fees 18,029 Audit 54,990 Legal 939 Interest 7,402 Miscellaneous 1,720 TOTAL EXPENSES 1,015,548 NET INVESTMENT INCOME 6,518,823 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities (12,194,220) Foreign currency transactions 389,947 (11,804,273) Change in net unrealized appreciation (depreciation) on: Investment securities 15,114,420 Assets and liabilities in foreign currencies (4,950,381) 10,164,039 NET GAIN (LOSS) (1,640,234) NET INCREASE (DECREASE) IN NET ASSETS $ 4,878,589 RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS YEAR ENDED ENDED DECEMBER 31, JUNE 30, 1995 1994 INCREASE (DECREASE) IN NET ASSETS Operations $ 6,518,823 $ 24,839,382 Net investment income Net realized gain (loss) (11,804,273) (33,931,861) Change in net unrealized appreciation (depreciation) 10,164,039 (13,418,051) NET INCREASE (DECREASE) IN NET ASSETS RESULTING 4,878,589 (22,510,530) FROM OPERATIONS Distributions to shareholders (6,509,586) (6,841,239) From net investment income In excess of net investment income - (1,710,314) Return of capital - (15,696,807) TOTAL DISTRIBUTIONS (6,509,586) (24,248,360) Share transactions 20,579,952 192,214,787 Net proceeds from sales of shares Reinvestment of distributions 5,483,541 20,522,507 Cost of shares redeemed (136,147,042) (323,172,774) NET INCREASE (DECREASE) IN NET ASSETS RESULTING (110,083,549) (110,435,480) FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) IN NET ASSETS (111,714,546) (157,194,370) NET ASSETS Beginning of period 265,407,200 422,601,570 End of period (including distributions in excess of $ 153,692,654 $ 265,407,200 net investment income of $(4,178,972) and $(4,188,209), respectively) OTHER INFORMATION Shares Sold 2,334,605 20,004,614 Issued in reinvestment of distributions 622,582 2,165,313 Redeemed (15,473,391) (33,838,814) Net increase (decrease) (12,516,204) (11,668,887)
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED TWO MONTH YEAR OCTOBER 4, 1991 ENDED JUNE 30, DECEMBER 31, PERIOD ENDED (COMMENCEME ENDED OCTOBER NT OF DECEMBER 31, OPERATIONS) TO 31, OCTOBER 31, 1995 1994 1993 D 1992 1992 1991
SELECTED PER-SHARE DATA Net asset value, $ 8.910 $ 10.190 $ 9.680 $ 9.800 $ 10.040 $ 10.000 beginning of period Income from .298 E .644 .564 .191 .835 .061 Investment Operations Net investment income Net realized and (.015) (1.218) .621 (.203) (.338) .037 unrealized gain (loss) Total from .283 (.574) 1.185 (.012) .497 .098 investment operations Less Distributions (.293) (.199) (.543) (.108) (.737) (.058) From net investment income In excess of net - (.050) (.132) - - - investment income Return of capital - (.457) - - - - Total distributions (.293) (.706) (.675) (.108) (.737) (.058) Net asset value, end $ 8.900 $ 8.910 $ 10.190 $ 9.680 $ 9.800 $ 10.040 of period TOTAL RETURN B, C 3.25% (5.80) 12.59% (.12) 5.10% .98% % % RATIOS AND SUPPLEMENTAL DATA Net assets, end of $ 153,693 $ 265,407 $ 422,602 $ 458,846 $ 648,448 $ 44,318 period (000 omitted) Ratio of expenses to 1.05% 1.01% 1.00% 1.20% 1.09% 1.00% average net assets A A A Ratio of expenses to 1.05% 1.01% 1.00% 1.23% 1.09% 2.87% average net assets A A A before expense reductions Ratio of net 6.72% 7.54% 8.00% 8.63% 9.04% 9.07% investment income A A A to average net assets Portfolio turnover rate 355% 134% 160% 117% 154% 62% A A A A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. D EFFECTIVE JANUARY 1, 1993 THE FUND ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES. E NET INVESTMENT INCOME PER-SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING.
NOTES TO FINANCIAL STATEMENTS For the period ended June 30, 1995 1. SIGNIFICANT ACCOUNTING POLICIES. Fidelity Short-Term World Income Fund (the fund) is a fund of Fidelity Investment Trust (the trust) and is authorized to issue an unlimited number of shares. 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. The following summarizes the significant accounting policies of the fund: 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 of their purchase date are valued at amortized cost or original cost plus accrued interest, both of which approximate current value. FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the prevailing rates of exchange at period end. Purchases and sales of securities, income receipts, and expense payments are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of forward currency contracts and foreign currency options, disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions, and the difference between the amount of net investment income accrued and the U.S. dollar amount actually received. The effects of changes in foreign currency exchange rates on investments in securities are included with the net realized and unrealized gain or loss on investment securities. INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the fund is not subject to income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. The schedule of investments includes information regarding income taxes under the caption "Income Tax Information." INVESTMENT INCOME. Interest income, which includes accretion of original issue discount, is accrued as earned. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. EXPENSES. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned between the funds in the trust. DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED monthly from net investment income. Distributions from realized gains, if any, are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences, which may result in distribution reclassifications, are primarily due to differing treatments for futures and options transactions, foreign currency transactions, market discount, capital loss carryforwards and losses deferred due to wash sales, futures and options and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital and may affect the per-share allocation between net investment income and realized and unrealized gain (loss). Distributions in excess of net investment income and accumulated undistributed net realized gain (loss) on investments and foreign currency transactions may include temporary book and tax basis differences that will reverse in a subsequent period. Any taxable income or gain remaining at fiscal year end is distributed in the following year. For the period ended December 31, 1994, the fund's distributions exceeded the aggregate amount of taxable income and net realized gains resulting in a return of capital. This was due to certain foreign currency losses which decreased taxable income available for distribution after certain distributions had been made. 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 fund may use foreign currency contracts to facilitate transactions in foreign securities and to manage the fund's currency exposure. Contracts to buy generally are used to acquire exposure to foreign currencies, while contracts to sell are used to hedge the fund's investments against currency fluctuations. Also, a contract to buy or sell can offset a previous contract. These contracts involve market risk in excess of the unrealized gain or loss reflected in the fund's Statement of Assets and Liabilities. The U.S. dollar value of the currencies the fund has committed to buy or sell is shown in the schedule of investments under the caption "Forward Foreign Currency Contracts." This amount represents the aggregate exposure to each currency the fund has acquired or hedged through currency contracts at period end. Losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms. The U.S. dollar value of forward foreign currency contracts is determined using forward currency exchange rates supplied by a quotation service. Purchases and sales of forward foreign currency contracts having the same settlement date and broker are offset and any realized gain (loss) is recognized on the date of offset; 2. OPERATING POLICIES - CONTINUED FORWARD FOREIGN CURRENCY CONTRACTS - CONTINUED otherwise, gain (loss) is recognized on settlement date. Contracts that have been offset with different counterparties are reflected as both a contract to buy and a contract to sell in the schedule of investments under the caption "Forward Foreign Currency Contracts." JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with other affiliated entities of Fidelity Management & Research Company (FMR), may transfer uninvested cash balances into one or more joint trading accounts. These balances are invested in one or more repurchase agreements that mature in 60 days or less from the date of purchase, and are collateralized by U.S. Treasury or Federal Agency obligations. REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery of the underlying securities, whose market value is required to be at least 102% of the resale price at the time of purchase. FMR, the fund's investment adviser, is responsible for determining that the value of these underlying securities remains at least equal to the resale price. FUTURES CONTRACTS AND OPTIONS. The fund may use futures and options contracts to manage its exposure to the bond market and to fluctuations in interest rates and currency values. Buying futures, writing puts, and buying calls tend to increase the fund's exposure to the underlying instrument. Selling futures, buying puts, and writing calls tend to decrease the fund's exposure to the underlying instrument, or hedge other fund investments. Losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts, or if the counterparties do not perform under the contracts' terms. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. Exchange-traded options 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 fund may invest in indexed securities whose values are linked either directly or inversely to changes in foreign currencies, interest rates, commodities, indices, or other underlying instruments. The fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in through conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment. RESTRICTED SECURITIES. The fund is permitted to invest in privately placed restricted securities. These securities may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. At the end of the period, restricted securities (excluding 144A issues) amounted to $2,635,775 or 1.7% of net assets. 3. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $248,221,164 and $251,604,349, respectively, of which U.S. government and government agency obligations aggregated $98,415,104 and $59,375,537, respectively. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly fee that is calculated on the basis of a group fee rate plus a fixed individual fund fee rate applied to the average net assets of the fund. The group fee rate is the weighted average of a series of rates and is based on the monthly average net assets of all the mutual funds advised by FMR. The rates ranged from .1200% to .3700% for the period. In the event that these rates were lower than the contractual rates in effect during the period, FMR voluntarily implemented the above rates, as they resulted in the same or a lower management fee. The annual individual fund fee rate is .45%. For the period, the management fee was equivalent to an annualized rate of .60% of average net assets. SUB-ADVISER FEE. FMR, on behalf of the fund, entered into 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. DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or the fund's distributor, Fidelity Distributors Corporation (FDC), an affiliate of FMR, may use their resources to pay administrative and promotional expenses related to the sale of the fund's shares. Subject to the approval of the Board of Trustees, the Plan also authorizes payments to third parties that assist in the sale of the fund's shares or render shareholder support services. No payments were made to third parties under the Plan during the period. TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is the fund's transfer, dividend disbursing and shareholder servicing agent. Effective January 1, 1995, the Board of Trustees approved a revised transfer agent contract pursuant to which FSC receives account fees and asset-based fees that vary according to account size and type of account. Under the prior transfer agent contract, FSC received fees based on 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. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is based on the level of average net assets for the month plus out-of-pocket expenses. 5. BANK BORROWINGS. The fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The fund has established borrowing arrangements with certain banks. Under the most restrictive arrangement, the 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. The maximum loan and the average daily loan balances during the periods for which loans were outstanding amounted to $7,546,000 and $5,649,429, respectively. The weighted average interest rate was 6.7%. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Investment Trust and the Shareholders of Fidelity Short-Term World Income Fund: We have audited the accompanying statement of assets and liabilities of Fidelity Investment Trust: Fidelity Short-Term World Income Fund, including the schedule of portfolio investments, as of June 30 1995, and the related statement of operations for the six months then ended, the statement of changes in net assets for the six months ended June 30, 1995 and for the year ended December 31, 1994, and the financial highlights for the six months ended June 30, 1995, for each of the two years in the period ended December 31, 1994, for the two month period ended December 31, 1992, for the year ended October 31, 1992 and for the period October 4, 1991 (commencement of operations) to October 31, 1991. These financial statements and financial highlights are the responsibility of the fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our 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 securities owned as of June 30, 1995 by correspondence with the custodian and brokers. 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 Short-Term World Income Fund as of June 30, 1995, the results of its operations for the six months then ended, the changes in its net assets for the six months ended June 30, 1995 and for the year ended December 31, 1994, and the financial highlights for the six months ended June 30, 1995, for each of the two years in the period ended December 31, 1994, for the two month period ended December 31, 1992, for the year ended October 31, 1992 and for the period October 4, 1991 (commencement of operations) to October 31, 1991, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. Boston, Massachusetts August 14, 1995 TO CALL FIDELITY FOR FUND 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)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(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)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(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. INVESTMENT ADVISER Fidelity Management & Research Company, Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research (U.K.) Inc. London, England Fidelity Management & Research (Far East) Inc. Tokyo, Japan Fidelity International Investment Advisors Fidelity International Investment Advisors (U.K.) Limited OFFICERS Edward C. Johnson 3d, President J. Gary Burkhead, Senior Vice President Arthur S. Loring, Secretary Stephen P. Jonas, Treasurer John H. Costello, Assistant Treasurer Leonard M. Rush, Assistant Treasurer 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 CUSTODIAN Brown Brothers Harriman & Co. Boston, MA FIDELITY'S TAXABLE BOND FUNDS Capital & Income Ginnie Mae Global Bond Government Securities Intermediate Bond Investment Grade Bond Mortgage Securities New Markets Income Short-Intermediate Government Short-Term Bond Short-Term World Income Spartan(Registered trademark) Ginnie Mae Spartan Government Income Spartan High Income Spartan Investment Grade Bond Spartan Limited Maturity Government Spartan Long-Term Government Bond Spartan Short-Intermediate Government Spartan Short-Term Income 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) (registered trademark) * INDEPENDENT TRUSTEES AUTOMATED LINES FOR QUICKEST SERVICE (2_FIDELITY_LOGOS)FIDELITY NEW MARKETS INCOME FUND SEMIANNUAL REPORT JUNE 30, 1995 CONTENTS PRESIDENT'S MESSAGE 3 Ned Johnson on investing strategies. PERFORMANCE 4 How the fund has done over time. FUND TALK 7 The manager's review of fund performance, strategy and outlook. INVESTMENT CHANGES 10 A summary of major shifts in the fund's investments over the past six months. INVESTMENTS 11 A complete list of the fund's investments with their market values. FINANCIAL STATEMENTS 17 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. NOTES 21 Notes to the financial statements. THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. PRESIDENT'S MESSAGE DEAR SHAREHOLDER: Although there have been positive market indications so far in 1995, no one can predict what lies ahead for investors. Last year, stocks posted below-average returns and bonds had one of the worst years in history. This downturn followed a period in which the investing environment was generally very positive. These market ups and downs are a normal part of investing, and there are some basic principles that are helpful for investors to remember in different types of markets. Keeping in mind that the effects of interest rate changes on your bond investments will only be "paper" gains or losses unless you sell your shares, staying in your bond fund may be appropriate if your investment horizon is at least a year or more. The longer your investing time frame, the more likely it is that you will retain your principal investment through both up and down markets. For example, a 10-year time frame, such as saving for a college education, enables you to weather these ups and downs in a long-term fund, which has higher potential returns. An intermediate-length fund could be appropriate if your investment horizon is two to four years, and a short-term bond fund could be the right choice if you need your money in one or two years. If your time horizon is less than a year, you might want to consider moving some of your bond investment into a money market fund, which seeks income and a stable share price by investing in high-quality, short-term investments. Of course, there is no assurance that a money market fund will achieve its goal, and it is important to remember that money market funds are not insured or guaranteed by any agency of the U.S. government. No matter what your investment horizon or portfolio diversity, it makes good sense to follow a regular investment plan - investing a certain amount of money at the same time each month or quarter - and to review your portfolio periodically. A periodic investment plan will not, of course, assure a profit or protect against a loss. If you have any questions, please call us at 1-800-544-8888. We stand ready to provide the information you need to make the investments that are right for you. Best regards, Edward C. Johnson 3d 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. A fund's total return includes changes in a fund's share price, plus reinvestment of any dividends (or income) and capital gains (the profits the fund earns when it sells investments that have grown in value). You can also look at the fund's income to measure performance. If Fidelity had not reimbursed certain fund expenses during the periods shown, the total returns and dividends would have been lower. CUMULATIVE TOTAL RETURNS PERIODS ENDED JUNE 30, 1995 PAST 6 PAST 1 LIFE OF MONTHS YEAR FUND New Markets Income -7.99% 1.86% 6.60% J.P. Morgan Emerging Markets Bond 9.23% 10.94% n/a Index Average General World Income Fund 10.15% 10.61% n/a Consumer Price Index 1.87% 3.04% 5.90% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, six months, one year, or since the fund began on May 4, 1993. For example, if you invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to those of the J.P. Morgan Emerging Markets Bond Index - a broad measure of bond performance in developing countries available at month end. To measure how the fund's performance stacked up against its peers, you can compare it to the average general world income fund, which reflects the performance of 154 funds with similar objectives tracked by Lipper Analytical Services over the past six months. Both benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. Comparing the fund's performance to the consumer price index (CPI) helps show how the fund did compared to inflation. (The CPI returns begin on the month end closest to the fund's start date.) AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED JUNE 30, 1995 PAST 1 LIFE OF YEAR FUND New Markets Income 1.86% 3.00% J.P. Morgan Emerging Markets Bond Index 10.94% n/a Average General World Income Fund 10.61% n/a Consumer Price Index 3.04% 2.68% AVERAGE ANNUAL TOTAL 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 Fidelity New Markets IJP Morgan Emerging Ma 05/31/93 10000.00 10000.00 06/30/93 10397.82 10350.00 07/31/93 10924.43 10781.60 08/31/93 11248.31 10998.31 09/30/93 11606.78 11142.38 10/31/93 12523.77 12081.69 11/30/93 12661.08 11960.87 12/31/93 13478.16 12691.68 01/31/94 13983.39 12725.95 02/28/94 12575.86 11667.15 03/31/94 10685.31 10332.43 04/30/94 10235.00 10337.59 05/31/94 10771.77 11050.89 06/30/94 10158.89 10161.29 07/31/94 10438.23 10411.26 08/31/94 11589.51 11155.66 09/30/94 12162.19 11264.99 10/31/94 11932.04 10946.19 11/30/94 11881.46 11057.84 12/31/94 11247.49 10321.39 01/31/95 9945.27 9964.27 02/28/95 9236.93 9445.13 03/31/95 8944.32 9177.83 04/30/95 9574.00 10163.53 05/31/95 10210.80 11058.94 06/30/95 10348.34 11273.48 $10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity New Markets Income Fund on May 31, 1993, shortly after the fund started. As the chart shows, by June 30, 1995, the value of your investment would have grown to $10,348 - a 3.48% increase on your initial investment. For comparison, look at how the J.P. Morgan Emerging Markets Bond Index did over the same period. With dividends reinvested, the same $10,000 would have grown to $11,272 - a 12.72% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. (checkmark) DIVIDENDS AND YIELD PERIODS ENDED JUNE 30, 1995 PAST PAST 6 PAST 1 MONTH MONTHS YEAR Dividends per share 7.0(cents) 38.84(cents) 69.05(cents) Annualized dividend rate 9.65% 9.18% 7.24% 30-day annualized yield 11.51% - - DIVIDENDS per share show the income paid by the fund for a set period and do not reflect any tax reclassifications. If you annualize this number, based on an average net asset value of $8.83 over the past month, $8.53 over the past six months and $9.54 over the past year, you can compare the fund's income over these three periods. The 30-day annualized YIELD is a standard formula for all bond funds based on the yields of the bonds in the fund, averaged over the past 30 days. This figure shows you the yield characteristics of the fund's investments at the end of the period. It also helps you compare funds from different companies on an equal basis. It does not reflect the cost of hedging and other currency gains and losses. If Fidelity had not reimbursed certain fund expenses during the period shown, the yield would have been 11.47%. FUND TALK: THE MANAGER'S OVERVIEW NOTE TO SHAREHOLDERS: On June 20, 1995, John Carlson (right photo) became portfolio manager of Fidelity New Markets Income Fund. The following is an interview with Jonathan Kelly - who managed the fund during most of the period covered by this report - with some comments from John Carlson on changes in the fund, and his outlook and strategy. Q. JONATHAN, HOW HAS THE FUND PERFORMED? J.K. It has been a difficult six months for the fund. For the six months ended June 30, 1995, the fund had a total return of -7.99%. During the same period, the average general world income fund returned 10.15%, according to Lipper Analytical Services. The J.P. Morgan Emerging Markets Bond Index returned 9.23% for the same period. For the 12 months ended June 30, the fund returned 1.86%, while the average general world income fund tracked by Lipper returned 10.61%. The J.P. Morgan Emerging Markets Bond Index returned 10.94% for the same period. Q. WHY DID THE FUND UNDERPERFORM? A. When comparing the fund's returns to the Lipper average, it's important to note that many other funds in the group don't share the objective of investing mainly in emerging markets. Instead, many invest in countries with an investment-grade rating. Those countries generally performed well in the first six months of the year. Emerging markets, on the other hand, were staggered by the fallout from Mexico's devaluation of the peso in December 1994. Q. YET THE EMERGING MARKET INDEX POSTED POSITIVE RETURNS FOR BOTH THE SIX- AND 12-MONTH PERIODS, BUT THE FUND LAGGED . . . A. Right. The index had positive returns because emerging markets rebounded smartly starting in March. In order to explain the fund's relative performance, let's take a step back. I took over the fund at the end of January during a period of great turbulence in the emerging markets. At that time, the fund was aggressively positioned in a way that had helped it perform quite well during parts of 1994. In the aftermath of the Mexican devaluation and subsequent sell-offs in many emerging markets, the fund suffered because it held some securities that quickly became illiquid - or difficult to trade - as the markets were falling. In addition, shareholder flows were volatile and in order to meet redemptions I initially maintained a minimum 15% cash position that was later reduced to a 10% minimum cash position. Over the period, I also reduced the fund's investments in some of the more aggressive and less liquid securities. As a result of these two factors, the fund was not able to take full advantage of the market recovery beginning in mid-March. Q. WHAT HELPED EMERGING MARKETS TURN AROUND? A. Over long periods of time, the most important factor in investing in emerging markets is the perception of whether a country's creditworthiness is improving or deteriorating. However, there are also periods of time when emerging markets enter a liquidity-driven phase, when cash flows into or out of the markets can affect debt payments. After Mexico devalued the peso - which was unforeseen because the Mexican government had given assurances it would not do so - the question was no longer, "Are long-term credit fundamentals improving?" but rather, "Will I get paid tomorrow?" Three factors helped turn the situation around. First, the precipitous fall in bond prices created a dramatically oversold environment, where value had become compelling. Second, the external balance in Mexico adjusted much more quickly than expected so that the country changed from being a net importer to a net exporter. The trade surplus increased the country's supply of hard currency, making it easier to repay debt. Finally, the U.S. bond market rallied, helping the market for all long-duration assets, such as Brady bonds - emerging market securities that are dollar-denominated and partially backed by U.S. government bonds. I should add that the re-election of President Menem in Argentina - who had run on a platform of continued economic reform - and Poland's attainment of an investment grade rating from Moody's Investors Service also helped improve investor sentiment regarding emerging markets. Q. TURNING TO YOU, JOHN, WHAT CHANGES HAVE YOU MADE SINCE TAKING OVER THE FUND? J.C. I've added some Latin short-term, high-quality corporate securities to the portfolio. At this stage in the emerging market liquidity cycle, these securities represent good value. The lack of new issuance since the Mexican devaluation and the demand from buyers crossing over from high-yield markets should cause these securities to perform well. Beyond that, I'm looking to broaden the universe of securities in the fund, creating more of a balance among Latin America, Eastern Europe, Africa and Southeast Asia. That will take us to places such as South Africa and Russia. I also will take a critical look at local currencies. As always, the security selection will be research-driven, backed by Fidelity's sovereign, corporate and quantitative research staffs. Q. WHAT'S YOUR OUTLOOK? A. I believe there will be a continued increase in liquidity globally, with a likelihood of lower interest rates and a relatively stronger flow of funds into Latin America and out of Eastern Europe. More capital should flow into the major markets - such as Mexico, Brazil and Argentina - relative to smaller markets such as Ecuador or Panama. Even though there is also a strong likelihood of continued volatility in the Latin markets, I'll use our research to identify investments with a good risk/reward profile. I'll also look for opportunities in Eastern Europe, where I believe there is a good chance for relative stability. FUND FACTS GOAL: high current income, followed by capital appreciation, by investing mainly in debt securities and other instruments of issuers in emerging markets around the world START DATE: May 4, 1993 SIZE: as of June 30, 1995, more than $171 million MANAGER: Jonathan Kelly, January 1995 to June 1995; John Carlson, since June 1995; manager, Fidelity Advisor Emerging Markets Income Fund, since June 1995; joined Fidelity in June 1995 (checkmark) JOHN CARLSON ON HIS INVESTMENT APPROACH: "I have a mosaic approach to investing. That is, I build an overall picture from many little pieces of information. I start by looking at what's happening in developed markets, including the actions of the Federal Reserve Board, the German Bundesbank and the Bank of Japan. These are the big drivers globally. I layer in what's happening regionally in terms of trade and capital flows. I then analyze each country's monetary and fiscal policy, paying particular attention to the independence of the central bank and the strength of its currency. Financial reserves, local capital markets, demographics, education level and politics are among some of the other variables studied. Historical perspective is also crucial to fully comprehending a country in terms of its social and economic policies. Corporate bonds are evaluated from the bottom up, using research to discern an issuer's ability to meet its obligations. When you put all of this together, you get a comprehensive picture of the world in terms of financial flows and investment opportunities." INVESTMENT CHANGES The charts below highlight two different aspects of the fund's investments: the country where they were issued and their currency exposure. The top countries in each table may differ because securities issued in one country may be denominated in another country's currency, and because of the effects of currency hedging. TOP COUNTRIES AS OF JUNE 30, 1995 (EXCLUDING REPURCHASE AGREEMENTS) % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Brazil 32.8 23.2 Argentina 17.3 13.5 Mexico 6.4 8.3 Bulgaria 4.5 6.9 Czech Republic 4.2 0 TOP COUNTRIES ARE BASED ON THE LOCATION OF THE ISSUER OF EACH SECURITY, INDICATING WHERE THE FUND IS EXPOSED TO POLITICAL AND CREDIT RISKS. THE FUND'S LARGEST POSITION AS OF JUNE 30, 1995, WAS IN SECURITIES OF BRAZILIAN ISSUERS. TOP CURRENCY EXPOSURES AS OF JUNE 30, 1995 (ESTIMATED, BY CURRENCY) % OF FUND'S % OF NET ASSETS NET ASSETS 6 MONTHS AGO U.S. dollar 81 66 Brazilian real 8 22 Czech koruna 4 0 Thai baht 4 0 Indonesian rupiah 2 0 THE U.S. DOLLAR EXPOSURE ABOVE INCLUDES THE EFFECTS OF FOREIGN INVESTMENTS WHOSE CURRENCY RISK IS FULLY HEDGED. THE BRAZILIAN REAL, AT APPROXIMATELY 8% OF ASSETS, WAS THE FUND'S LARGEST FOREIGN CURRENCY EXPOSURE AS OF JUNE 30, 1995. AVERAGE YEARS TO MATURITY AS OF JUNE 30, 1995 6 MONTHS AGO Years 12.8 9.5 AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR AMOUNT. ASSET ALLOCATION AS OF JUNE 30, 1995 AS OF DECEMBER 31, 1994 Row: 1, Col: 1, Value: 22.8 Row: 1, Col: 2, Value: 5.6 Row: 1, Col: 3, Value: 2.1 Row: 1, Col: 4, Value: 65.5 Row: 1, Col: 5, Value: 4.0 Row: 1, Col: 1, Value: 4.8 Row: 1, Col: 2, Value: 20.5 Row: 1, Col: 3, Value: 9.4 Row: 1, Col: 4, Value: 58.8 Row: 1, Col: 5, Value: 6.5 Corporate bonds 4.1% Government obligations 67.4% Stocks 0.1% Other 5.6% Short-term investments 22.8% Corporate bonds 6.5% Government obligations 58.8% Stocks 9.4% Other 20.5% Short-term investments 4.8% INVESTMENTS JUNE 30, 1995 (UNAUDITED) Showing Percentage of Total Value of Investment in Securities NONCONVERTIBLE BONDS - 4.1% MOODY'S RATINGS (B) PRINCIPAL VALUE (UNAUDITED) AMOUNT (A) (NOTE 1) BRAZIL - 0.6% Ceval Alimentos 10 3/4%, 7/11/96 (e) - $ 1,000,000 $ 995,000 COLOMBIA - 1.5% Banco Commercial Columbia 8 5/8%, 6/2/00 (e) - 1,000,000 1,008,750 Centragas Transpotadora De Gas 10.65%, 12/1/10 (e) - 1,400,000 1,445,500 2,454,250 MEXICO - 2.0% First Mexican Acceptance Corp. euro 10 3/4%, 9/15/96 - 2,000,000 900,000 Grupo Condumex SA de CV 6 1/4%, 7/27/96 - 620,000 576,600 Grupo Televisa SA de CV 5.8125%, 4/7/96 (g) - 1,750,000 1,653,750 Third Mexican Acceptance Corp. coll. notes gtd. by Grupo Sidek SA and Grupo Situr SA 10 1/2%, 3/15/98 (e) - 190,000 85,500 3,215,850 TOTAL NONCONVERTIBLE BONDS (Cost $7,914,520) 6,665,100 FOREIGN GOVERNMENT OBLIGATIONS - 67.4% (J) ARGENTINA - 17.3% Argentina Republic: BOCON 6.0625%, 4/1/01 (g) B1 4,195,499 2,617,278 Brady euro: discount 6 7/8%, 3/31/23 (g) B1 7,000,000 4,016,250 par 5%, 3/31/23 (h) B1 33,500,000 15,954,375 7.3125%, 3/31/05 (g) BB- 9,600,000 5,892,000 28,479,903 BRAZIL - 32.2% Brazil Federative Republic: Brady: capitalization bond 8%, 4/15/14 B2 15,085,800 7,410,899 eligible interest 7 1/4%, 4/15/06 (g) - 10,000,000 5,987,500 par euro 4 1/4%, 4/15/24 (h) - 27,000,000 11,981,250 par 4 1/4%, 4/15/24 (h) - 2,500,000 1,109,375 IDU euro 7.8125%, 1/1/01 (g) B1 13,337,500 10,736,688 Siderurgica Brasileiras SA inflation indexed 6%, 8/15/99 (f) - BRR 108,975,600 15,692,247 52,917,959 FOREIGN GOVERNMENT OBLIGATIONS - CONTINUED MOODY'S RATINGS (B) PRINCIPAL VALUE (UNAUDITED) AMOUNT (A) (NOTE 1) BULGARIA - 4.5% Republic of Bulgaria Brady discount 7.5625%, 7/28/24 (g) - $ 15,000,000 $ 7,443,750 ECUADOR - 3.7% Republic of Ecuador Brady: discount 6 3/4%, 12/21/04 (e)(g) - 1,130,025 627,164 par euro 3%, 2/28/25 (e)(h) - 5,256,000 1,695,060 past due interest (i)(e) - 9,650,000 2,870,875 past due interest 7 1/4%, 2/28/15 (e) - 2,899,000 862,453 6,055,552 MEXICO - 4.4% Mexican Government Brady par 6 1/4%, 12/31/19 Ba3 12,000,000 7,290,000 Mexico Value Recovery (rights) (a) - 10,001,000 100 7,290,100 PANAMA - 1.1% Republic of Panama euro 7 1/4%, 5/10/02 (g) - 2,500,000 1,900,000 POLAND - 4.2% Polish Government Brady: discount euro 7 1/8%, 10/27/24 (g) - 5,500,000 4,214,375 past due interest 3 1/4%, 10/27/14 (g) - 4,500,000 2,688,750 6,903,125 TOTAL FOREIGN GOVERNMENT OBLIGATIONS (Cost $102,560,486) 110,990,389 COMMON STOCKS - 0.1% SHARES PHILIPPINES - 0.1% International Container Terminal Services, Inc. (a) (Cost $134,105) 232,786 161,784 PURCHASED BANK DEBT - 5.6% PRINCIPAL AMOUNT (B) MOROCCO - 2.5% Kingdom of Morocco loan participation 7 3/8%, 1/1/04 (g) $ 7,000,000 4,112,500 PURCHASED BANK DEBT - CONTINUED PRINCIPAL VALUE AMOUNT (B) (NOTE 1) RUSSIA - 2.5% Bank for Foreign Economic Affairs of the USSR (Vnesheconombank) loan participation (a) $ 12,500,000 $ 4,046,875 VIETNAM - 0.6% Socialist Republic of Vietnam loans restructured under 1985 agreement (a) DEM 2,500,000 1,088,078 TOTAL PURCHASED BANK DEBT (Cost $9,290,143) 9,247,453 CERTIFICATES OF DEPOSIT - 3.6% THAILAND - 3.6% Bangkok Bank PCL: 12 1/2%, 10/26/95 THB 10,000,000 406,814 11 1/2%, 11/13/95 THB 20,000,000 811,614 Krung Thai Bank PCL 11%, 12/4/95 THB 75,000,000 3,039,315 Morgan Guaranty Trust Co. NY 0%, 7/17/95 THB 24,565,000 987,452 Thai Military Bank PCL 12 3/4%, 8/3/95 THB 15,000,000 608,325 TOTAL CERTIFICATES OF DEPOSIT (Cost $5,865,374) 5,853,520 COMMERCIAL PAPER - 6.8% CZECH REPUBLIC - 4.2% Unilever NV: 0%, 7/3/95 CSK 15,000,000 579,865 0%, 7/5/95 CSK 60,000,000 2,318,064 0%, 7/12/95 CSK 20,000,000 770,986 0%, 7/25/95 CSK 35,000,000 1,343,948 0%, 8/16/95 CSK 25,000,000 953,385 0%, 9/15/95 CSK 25,000,000 944,778 6,911,026 INDONESIA - 2.0% Indah Kiat Pulp and Paper PT: 0%, 7/24/95 (c) IDR 1,000,000 445,270 0%, 8/3/95 (c) IDR 1,000,000 443,070 Tjiwi Kimia Pabrik Kertas PT: 0%, 10/4/95 (c) IDR 4,600,000 1,977,540 0%, 11/2/95 (c) IDR 1,000,000 424,000 3,289,880 COMMERCIAL PAPER - CONTINUED PRINCIPAL VALUE AMOUNT (B) (NOTE 1) THAILAND - 0.6% Citibank Thailand 0%, 7/27/95 THB 25,000,000 $ 1,006,803 TOTAL COMMERCIAL PAPER (Cost $11,182,019) 11,207,709 REPURCHASE AGREEMENTS - 12.4% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 6.15%, dated 6/30/95 due 7/3/95 $ 20,431,466 20,421,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $157,367,647) $ 164,546,955 FORWARD FOREIGN CURRENCY CONTRACTS SETTLEMENT UNREALIZED DATES VALUE GAIN/(LOSS) CONTRACTS TO BUY 5,972,338 DEM 8/15/95 $ 4,331,264 $ (5,158) 57,402,375 JPY 8/15/95 682,490 (766) TOTAL CONTRACTS TO BUY (Payable amount $5,019,678) $ 5,013,754 (5,924) THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 3.0% CONTRACTS TO SELL 2,458,500 BRR 7/5/95 2,674,463 (174,463) 5,972,338 DEM 8/15/95 4,331,264 (156,264) 57,402,375 JPY 8/15/95 682,490 (6,663) TOTAL CONTRACTS TO SELL- (Receivable amount $7,350,827) $ 7,688,217 (337,390) THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 4.7% $ (343,314) CURRENCY ABBREVIATIONS BRR - Brazilian real CSK - Czech koruna DEM - German deutsche mark IDR - Indonesian rupiah JPY - Japanese yen THB - Thai baht LEGEND 1. Non-income producing 2. Principal amount is stated in United States dollars unless otherwise noted. 3. Principal amount in thousands. 4. Standard & Poor's Corporation credit ratings are used in the absence of a rating by Moody's Investors Service, Inc. 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 $9,590,302 or 5.6% of net assets. 6. Principal amount shown is original face amount and does not reflect the inflation adjustments. 7. The coupon rate shown on floating or adjustable rate securities represents the rate at period end. 8. Debt obligation initially issued at one coupon which converts to a higher coupon at a specified date. 9. Security purchased on a delayed delivery basis (see Note 2 of Notes to Financial Statements). 10. Some 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. OTHER INFORMATION The composition of long-term debt holdings as a percentage of total value of investment in securities, is as follows (ratings are unaudited): MOODY'S RATINGS S&P RATINGS Aaa, Aa, A 0.0% AAA, AA, A 0.0% Baa 0.0% BBB 0.0% Ba 4.3% BB 5.7% B 24.8% 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 44.7% including long-term debt categorized as other securities. FMR has determined that unrated debt securities that are lower quality account for 21.6% of the total value of investment in securities. INCOME TAX INFORMATION At June 30,1995, the aggregate cost of investment securities for income tax purposes was $157,725,707. Net unrealized appreciation aggregated $6,821,248 of which $10,294,263 related to appreciated investment securities and $3,473,015 related to depreciated investment securities. At December 31, 1994, the fund had a capital loss carryforward of approximately $6,130,000 which will expire on December 31, 2002. The fund has elected to defer to its fiscal year ending December 31, 1995 $6,577,000 of losses recognized during the period November 1, 1994 to December 31, 1994. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investment in Securities (unaudited) Basic Industries 2.1% Finance 5.5 Government Obligations 67.4 Media & Leisure 1.6 Nondurables 4.2 Purchased Bank Debt 5.6 Repurchase Agreements 12.4 Technology 0.3 Utilities 0.9 100.0% FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995 (UNAUDITED) ASSETS Investment in securities, at value (including repurchase $ 164,546,955 agreements of $20,421,000) (cost $157,367,647) - See accompanying schedule Cash 816 Receivable for investments sold 14,959,743 Regular delivery Delayed delivery 213,733 Interest receivable 3,406,537 Redemption fees receivable 748 TOTAL ASSETS 183,128,532 LIABILITIES Payable for investments purchased $ 6,479,995 Regular delivery Delayed delivery 3,551,500 Unrealized depreciation on foreign currency contracts 343,314 Payable for closed foreign currency contracts 149,739 Payable for fund shares redeemed 337,024 Distributions payable 120,445 Accrued management fee 104,038 Other payables and accrued expenses 500,226 TOTAL LIABILITIES 11,586,281 NET ASSETS $ 171,542,251 Net Assets consist of: Paid in capital $ 222,899,496 Distributions in excess of net investment income (170,912) Accumulated undistributed net realized gain (loss) on (57,956,644) investments and foreign currency transactions Net unrealized appreciation (depreciation) on 6,770,311 investments and assets and liabilities in foreign currencies NET ASSETS, for 19,147,380 shares outstanding $ 171,542,251 NET ASSET VALUE, offering price and redemption price per $8.96 share ($171,542,251 (divided by) 19,147,380 shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED) INVESTMENT INCOME $ 8,402,419 Interest Less foreign taxes withheld (89,032) TOTAL INCOME 8,313,387 EXPENSES Management fee $ 560,008 Transfer agent 200,536 Fees Redemption fees (10,635) Accounting fees and expenses 48,230 Non-interested trustees' compensation 470 Custodian fees and expenses 84,892 Registration fees 50,153 Audit 27,031 Legal 465 Miscellaneous 4,088 Total expenses before reductions 965,238 Expense reductions (18,077) 947,161 NET INVESTMENT INCOME 7,366,226 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities (42,937,280) Foreign currency transactions (1,135,120) (44,072,400) Change in net unrealized appreciation (depreciation) on: Investment securities 23,071,608 Assets and liabilities in foreign currencies (536,099) 22,535,509 NET GAIN (LOSS) (21,536,891) NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (14,170,665) FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS YEAR ENDED ENDED DECEMBER 31, JUNE 30, 1995 1994 (UNAUDITED) INCREASE (DECREASE) IN NET ASSETS Operations $ 7,366,226 $ 13,936,916 Net investment income Net realized gain (loss) (44,072,400) (14,958,712) Change in net unrealized appreciation (depreciation) 22,535,509 (36,994,200) NET INCREASE (DECREASE) IN NET ASSETS RESULTING (14,170,665) (38,015,996) FROM OPERATIONS Distributions to shareholders (7,213,600) (11,818,195) From net investment income In excess of net investment income - (1,279,408) From net realized gain - (4,749,230) TOTAL DISTRIBUTIONS (7,213,600) (17,846,833) Share transactions 147,610,479 898,437,029 Net proceeds from sales of shares Reinvestment of distributions 6,453,100 15,556,080 Cost of shares redeemed (140,528,305) (965,609,596) Redemption fees 277,447 - NET INCREASE (DECREASE) IN NET ASSETS RESULTING 13,812,721 (51,616,487) FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) IN NET ASSETS (7,571,544) (107,479,316) NET ASSETS Beginning of period 179,113,795 286,593,111 End of period (including distributions in excess of net $ 171,542,251 $ 179,113,795 investment income of $170,912 and $323,538, respectively) OTHER INFORMATION Shares Sold 17,002,427 81,572,692 Issued in reinvestment of distributions 753,942 1,354,349 Redeemed (16,183,245) (87,272,908) Net increase (decrease) 1,573,124 (4,345,867)
FINANCIAL HIGHLIGHTS
SIX MONTHS YEAR ENDED MAY 4, 1993 ENDED DECEMBER 31, (COMMENCEMENT JUNE 30, 1995 1994 OF OPERATIONS) TO (UNAUDITED) DECEMBER 31, 1993 SELECTED PER-SHARE DATA Net asset value, beginning of period $ 10.190 $ 13.070 $ 10.000 Income from Investment Operations .398 .573 E .486 D Net investment income Net realized and unrealized gain (loss) (1.255) (2.687) 3.302 Total from investment operations (.857) (2.114) 3.788 Less Distributions (.388) (.529) G (.486) From net investment income In excess of net investment income - (.057) (.062) From net realized gain on investments - (.180) G (.170) Total distributions (.388) (.766) (.718) Redemption fees added to paid in capital .015 - - Net asset value, end of period $ 8.960 $ 10.190 $ 13.070 TOTAL RETURN B, C (7.99)% (16.55)% 38.84% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 171,542 $ 179,114 $ 286,593 Ratio of expenses to average net assets 1.20% 1.28% 1.24% A A F Ratio of expenses to average net assets 1.22% 1.50% 1.68% A before expense reductions A F Ratio of net investment income to average 9.33% 5.87% 6.29% A net assets A Portfolio turnover rate 218% 409% 324% A A
A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E INCLUDES INTEREST EXPENSE OF $.008 PER SHARE. F INCLUDES INTEREST EXPENSE OF .08% OF AVERAGE NET ASSETS G THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES. NOTES TO FINANCIAL STATEMENTS For the period ended June 30, 1995 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES. Fidelity New Markets Income Fund (the fund) is a fund of Fidelity Investment Trust (the trust) and is authorized to issue an unlimited number of shares. 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. The following summarizes the significant accounting policies of the fund: 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 of their purchase date are valued at amortized cost or original cost plus accrued interest, both of which approximate current value. FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the prevailing rates of exchange at period end. Purchases and sales of securities, income receipts, and expense payments are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of forward currency contracts, disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions, and the difference between the amount of net investment income accrued and the U.S. dollar amount actually received. The effects of changes in foreign currency exchange rates on investments in securities are included with the net realized and unrealized gain or loss on investment securities. INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the fund is not subject to U.S. federal income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. The fund may be subject to foreign taxes on income, gains on investments or currency repatriation. The fund accrues such taxes as applicable. The schedule of investments includes information regarding income taxes under the caption "Income Tax Information." INVESTMENT INCOME. Interest income, which includes accretion of original issue discount, is accrued as earned. Interest income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. EXPENSES. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned between the funds in the trust. 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid monthly from net investment income. Distributions from realized gains, if any, are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences, which may result in distribution reclassifications, are primarily due to differing treatments for futures and options transactions, foreign currency transactions, market discount and losses deferred due to wash sales, futures and options and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital and may affect the per-share allocation between net investment income and realized and unrealized gain (loss). Distributions in excess of net investment income and accumulated undistributed net realized gain (loss) on investments and foreign currency transactions may include temporary book and tax basis differences that will reverse in a subsequent period. Any taxable income or gain remaining at fiscal year end is distributed in the following year. REDEMPTION FEES. In November 1994, the Board of Trustees approved a 1.00% redemption fee on shares held in the fund less than 180 days which is effective for shares purchased after February 10,1995. 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 fund and its 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 fund may use foreign currency contracts to facilitate transactions in foreign securities and to manage the fund's currency exposure. Contracts to buy generally are used to acquire exposure to foreign currencies, while contracts to sell are used to hedge the fund's investments against currency fluctuations. Also, a contract to buy or sell can offset a previous contract. These contracts involve market risk in excess of the unrealized gain or loss reflected in the fund's Statement of Assets and Liabilities. The U.S. dollar value of the currencies the fund has committed to buy or sell is shown in the schedule of investments under the caption "Forward Foreign Currency Contracts." This amount represents the aggregate exposure to each currency the fund has acquired or hedged through currency contracts at period end. Losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms. 2. OPERATING POLICIES - CONTINUED FORWARD FOREIGN CURRENCY CONTRACTS - CONTINUED The U.S. dollar value of forward foreign currency contracts is determined using forward currency exchange rates supplied by a quotation service. Purchases and sales of forward foreign currency contracts having the same settlement date and broker are offset and any realized gain (loss) is recognized on the date of offset; otherwise, gain (loss) is recognized on settlement date. Contracts that have been offset with different counterparties are reflected as both a contract to buy and a contract to sell in the schedule of investments under the caption "Forward Foreign Currency Contracts." JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with other affiliated entities of Fidelity Management & Research Company (FMR), may transfer uninvested cash balances into one or more joint trading accounts. These balances are invested in one or more repurchase agreements that mature in 60 days or less from the date of purchase, and are collateralized by U.S. Treasury or Federal Agency obligations. REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery of the underlying securities, whose market value is required to be at least 102% of the resale price at the time of purchase. FMR, the fund's investment adviser, is responsible for determining that the value of these underlying securities remains at least equal to the resale price. DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on a when-issued or forward commitment basis. Payment and delivery may take place a month or more after the date of the transaction. The price of the underlying securities is fixed at the time the transaction is negotiated. The market value of the securities purchased on a when-issued or forward commitment basis is identified as such in the fund's schedule of investments. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract. 3. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $137,015,637 and $164,608,427, respectively. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly fee that is calculated on the basis of a group fee rate plus a fixed individual fund fee rate applied to the average net assets of the fund. The group fee rate is the weighted average of a series of rates and is based on the monthly average net assets of all the mutual funds advised by FMR. The rates ranged from .1200% to 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED MANAGEMENT FEE - CONTINUED .3700% for the period. In the event that these rates were lower than the contractual rates in effect during the period, FMR voluntarily implemented the above rates, as they resulted in the same or a lower management fee. The annual individual fund fee rate is .55%. For the period, the management fee was equivalent to an annualized rate of .70% of average net assets. SUB-ADVISER FEE. FMR, on behalf of the fund, entered into 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. DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or the fund's distributor, Fidelity Distributors Corporation (FDC), an affiliate of FMR, may use their resources to pay administrative and promotional expenses related to the sale of the fund's shares. Subject to the approval of the Board of Trustees, the Plan also authorizes payments to third parties that assist in the sale of the fund's shares or render shareholder support services. No payments were made to third parties under the Plan during the period. TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is the fund's transfer, dividend disbursing and shareholder servicing agent. Effective January 1, 1995, the Board of Trustees approved a revised transfer agent contract pursuant to which FSC receives account fees and asset-based fees that vary according to account size and type of account. Under the prior transfer agent contract, FSC received 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 FEES. FSC maintains the fund's accounting records. The fee is based on the level of average net assets for the month plus out-of-pocket expenses. 5. EXPENSE REDUCTIONS. FMR voluntarily agreed to reimburse the fund's operating expenses (excluding interest, taxes, brokerage commissions and extraordinary expenses) above an annual rate of 1.20% of average net assets. For the period, the reimbursement reduced the expenses by $18,077. 6. CREDIT RISK. The fund's relatively large investment in countries with limited or developing capital markets may involve greater risks than investments in more developed markets and the prices of such investments may be volatile. The yields of emerging market debt obligations reflect, among other things, perceived credit risk. The consequences of political, social or economic changes in these markets may have disruptive effects on the market prices of the fund's investments and the income they generate, as well as the fund's ability to repatriate such amounts. 7. LITIGATION. The fund is engaged in litigation against the obligor on the inflation adjusted debt of Siderurgica Brasileiras SA, contesting the calculation of the principal adjustment. The probability of success cannot be predicted and the amount of recovery cannot be estimated. Any recovery from this litigation would inure to the benefit of the fund. TO CALL FIDELITY FOR FUND 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)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(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)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(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. TO WRITE FIDELITY If more than one address is listed, please locate the address that is closest to you. We'll give your correspondence immediate attention and send you written confirmation upon completion of your request. (LETTER_GRAPHIC)MAKING CHANGES TO YOUR ACCOUNT (such as changing name, address, bank, etc.) Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0002 (LETTER_GRAPHIC)FOR NON-RETIREMENT ACCOUNTS BUYING SHARES Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0003 OVERNIGHT EXPRESS Fidelity Investments 100 Crosby Parkway - KP2C Covington, KY 41015-4399 SELLING SHARES Fidelity Investments P.O. Box 660602 Dallas, TX 75266-0602 OVERNIGHT EXPRESS Fidelity Investments Attn: Redemptions - CP6I 400 East Las Colinas Blvd. Irving, TX 75309-5517 GENERAL CORRESPONDENCE Fidelity Investments P.O. Box 193 Boston, MA 02210-0193 (LETTER_GRAPHIC)FOR RETIREMENT ACCOUNTS BUYING SHARES Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0003 SELLING SHARES Fidelity Investments P.O. Box 660602 Dallas, TX 75266-0602 OVERNIGHT EXPRESS Fidelity Investments Attn: Redemptions - CP6R 400 East Las Colinas Blvd. Irving, TX 75309-5517 GENERAL CORRESPONDENCE Fidelity Investments P.O. Box 660602 Dallas, TX 75266-0602 TO VISIT FIDELITY For directions and hours, please call 1-800-544-9797. ARIZONA 7373 N. 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Atlanta, GA 1000 Abernathy Road Atlanta, GA HAWAII 700 Bishop Street Honolulu, HI ILLINOIS 215 East Erie Street Chicago, IL One North Franklin Chicago, IL 540 Lake Cook Road Deerfield, IL 1415 West 22nd Street Oak Brook, IL 1700 East Golf Road Schaumburg, IL LOUISIANA 201 St. Charles Avenue New Orleans, LA MAINE 3 Canal Plaza Portland, ME MARYLAND 7401 Wisconsin Avenue Bethesda, MD 1 West Pennsylvania Ave. Towson, MD MASSACHUSETTS 470 Boylston Street Boston, MA 21 Congress Street Boston, MA 25 State Street Boston, MA 300 Granite Street Braintree, MA 44 Mall Road Burlington, MA 416 Belmont Street Worcester, MA MICHIGAN 280 North Woodward Ave. Birmingham, MI 26955 Northwestern Hwy. Southfield, MI MINNESOTA 7600 France Avenue South Edina, MN MISSOURI 700 West 47th Street Kansas City, MO 8885 Ladue Road Ladue, MO 200 North Broadway St. Louis, MO NEW JERSEY 60B South Street Morristown, NJ 501 Route 17, South Paramus, NJ 505 Millburn Avenue Short Hills, NJ NEW YORK 1050 Franklin Avenue Garden City, NY 999 Walt Whitman Road Melville, L.I., NY 1271 Avenue of the Americas New York, NY 71 Broadway New York, NY 350 Park Avenue New York, NY 10 Bank Street White Plains, NY NORTH CAROLINA 4611 Sharon Road Charlotte, NC 2200 West Main Street Durham, NC OHIO 600 Vine Street Cincinnati, OH 28699 Chagrin Boulevard Woodmere Village, OH 1903 East Ninth Street Cleveland, OH OREGON 121 S.W. Morrison Street Portland, OR PENNSYLVANIA 1735 Market Street Philadelphia, PA 439 Fifth Avenue Pittsburgh, PA TENNESSEE 5100 Poplar Avenue Memphis, TN TEXAS 10000 Research Boulevard Austin, TX 7001 Preston Road Dallas, TX 1155 Dairy Ashford Houston, TX 2701 Drexel Drive Houston, TX 1010 Lamar Street Houston, TX 400 East Las Colinas Blvd. Irving, TX 14100 San Pedro San Antonio, TX UTAH 215 South State Street Salt Lake City, UT VERMONT 199 Main Street Burlington, VT VIRGINIA 8180 Greensboro Drive McLean, VA WASHINGTON 411 108th Avenue, N.E. Bellevue, WA 1001 Fourth Avenue Seattle, WA WASHINGTON, DC 1775 K Street, N.W. Washington, DC WISCONSIN 222 East Wisconsin Avenue Milwaukee, WI INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research (U.K.) Inc. London, England Fidelity Management & Research (Far East) Inc. Tokyo, Japan Fidelity International Investment Advisors Fidelity International Investment Advisors (U.K.) Limited Fidelity Investments Japan Limited OFFICERS Edward C. Johnson 3d, President J. Gary Burkhead, Senior Vice President Arthur S. Loring, Secretary Stephen P. Jonas, Treasurer John H. Costello, Assistant Treasurer Leonard M. Rush, Assistant Treasurer 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 CUSTODIAN Chase Manhattan Bank, N.A. New York, NY FIDELITY'S TAXABLE BOND FUNDS Capital & Income Fund Ginnie Mae Portfolio Global Bond Fund Government Securities Fund Intermediate Bond Fund Investment Grade Bond Fund Mortgage Securities Portfolio New Markets Income Fund Short-Intermediate Government Fund Short-Term Bond Portfolio Short-Term World Income Fund Spartan(registered trademark) Ginnie Mae Fund Spartan Government Income Fund Spartan High Income Fund Spartan Investment Grade Bond Fund Spartan Limited Maturity Government Fund Spartan Long-Term Government Bond Fund Spartan Short-Intermediate Government Fund Spartan Short-Term Income Fund 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) (registered trademark) * INDEPENDENT TRUSTEES AUTOMATED LINES FOR QUICKEST SERVICE (2_FIDELITY_LOGOS)FIDELITY GLOBAL BOND FUND SEMIANNUAL REPORT JUNE 30, 1995 CONTENTS PRESIDENT'S MESSAGE 3 Ned Johnson on investing strategies. PERFORMANCE 4 How the fund has done over time. FUND TALK 7 The manager's review of fund performance, strategy and outlook. INVESTMENT CHANGES 10 A summary of major shifts in the fund's investments over the past six months. INVESTMENTS 11 A complete list of the fund's investments with their market values. FINANCIAL STATEMENTS 20 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. NOTES 24 Notes to the financial statements. THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. PRESIDENT'S MESSAGE DEAR SHAREHOLDER: Although there have been positive market indications so far in 1995, no one can predict what lies ahead for investors. Last year, stocks posted below-average returns and bonds had one of the worst years in history. This downturn followed a period in which the investing environment was generally very positive. These market ups and downs are a normal part of investing, and there are some basic principles that are helpful for investors to remember in different types of markets. Keeping in mind that the effects of interest rate changes on your bond investments will only be "paper" gains or losses unless you sell your shares, staying in your bond fund may be appropriate if your investment horizon is at least a year or more. The longer your investing time frame, the more likely it is that you will retain your principal investment through both up and down markets. For example, a 10-year time frame, such as saving for a college education, enables you to weather these ups and downs in a long-term fund, which has higher potential returns. An intermediate-length fund could be appropriate if your investment horizon is two to four years, and a short-term bond fund could be the right choice if you need your money in one or two years. If your time horizon is less than a year, you might want to consider moving some of your bond investment into a money market fund, which seeks income and a stable share price by investing in high-quality, short-term investments. Of course, there is no assurance that a money market fund will achieve its goal, and it is important to remember that money market funds are not insured or guaranteed by any agency of the U.S. government. No matter what your investment horizon or portfolio diversity, it makes good sense to follow a regular investment plan - investing a certain amount of money at the same time each month or quarter - and to review your portfolio periodically. A periodic investment plan will not, of course, assure a profit or protect against a loss. If you have any questions, please call us at 1-800-544-8888. We stand ready to provide the information you need to make the investments that are right for you. Best regards, Edward C. Johnson 3d 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 figure includes changes in a fund's share price, as well as reinvestment of any dividends (or income) and capital gains (the profits the fund earns when it sells bonds that have grown in value). You can also look at the fund's dividends and yields. CUMULATIVE TOTAL RETURNS PERIODS ENDED JUNE 30, 1995 PAST 6 PAST 1 PAST 5 LIFE OF MONTHS YEAR YEARS FUND Global Bond 5.20% 5.21% 37.52% 90.05% Salomon Brothers World Government Bond Index 16.85% 18.79% 83.76% n/a Average General World Income Fund 10.15% 10.61% 53.00% n/a Consumer Price Index 1.87% 3.04% 17.40% 38.01% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, six months, one year, five years or since the fund started on December 30, 1986. For example, if you invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Salomon Brothers World Government Bond Index - a widely used world government bond indicator. To measure how the fund's performance stacked up against its peers, you can compare it to the average general world income fund, which reflects the performance of 154 funds with similar objectives tracked by Lipper Analytical Services over the past six months. Both benchmarks include reinvested dividends and capital gains, if any, and exclude sales charges. Comparing the fund's performance to the consumer price index (CPI) helps show how your fund did compared to inflation. (The CPI returns begin on the month end closest to the fund's start date.) AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED JUNE 30, 1995 PAST 1 PAST 5 LIFE OF YEAR YEARS FUND Global Bond 5.21% 6.58% 7.84% Salomon Brothers World Government Bond Index 18.79% 12.94% n/a Average General World Income Fund 10.61% 8.82% n/a Consumer Price Index 3.04% 3.26% 3.86% AVERAGE ANNUAL TOTAL 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 Global Bond Fund (451)Salomon Brothers World Go 12/31/86 10000.00 10000.00 01/31/87 10311.24 10300.00 02/28/87 10451.57 10460.68 03/31/87 10698.66 10702.32 04/30/87 10786.19 10825.40 05/31/87 10625.67 10718.23 06/30/87 10585.27 10632.48 07/31/87 10339.13 10419.83 08/31/87 10556.94 10577.17 09/30/87 10392.69 10279.95 10/31/87 10975.54 10972.82 11/30/87 11449.59 11354.68 12/31/87 11913.69 11840.66 01/31/88 11584.23 11776.72 02/29/88 11669.26 11879.17 03/31/88 11956.20 12091.81 04/30/88 11945.58 12032.56 05/31/88 11892.44 11919.45 06/30/88 11764.91 11659.61 07/31/88 11775.53 11588.49 08/31/88 11690.51 11458.70 09/30/88 11828.67 11754.33 10/31/88 12190.02 12297.38 11/30/88 12413.20 12485.53 12/31/88 12350.32 12358.18 01/31/89 12315.76 12177.75 02/28/89 12212.07 12186.27 03/31/89 12177.51 12016.88 04/30/89 12338.80 12175.51 05/31/89 12131.43 11918.60 06/30/89 12384.89 12158.17 07/31/89 12788.12 12712.58 08/31/89 12603.78 12285.44 09/30/89 12753.55 12517.63 10/31/89 12926.37 12622.78 11/30/89 13064.62 12737.65 12/31/89 13329.59 12894.32 01/31/90 13293.50 12724.12 02/28/90 13125.08 12528.16 03/31/90 13281.47 12404.14 04/30/90 13281.47 12365.68 05/31/90 13461.93 12777.46 06/30/90 13750.66 13012.56 07/31/90 14231.87 13419.86 08/31/90 14147.66 13315.18 09/30/90 14328.11 13462.98 10/31/90 14664.96 14064.78 11/30/90 14821.35 14298.25 12/31/90 14966.02 14439.80 01/31/91 15294.80 14800.80 02/28/91 15439.46 14805.24 03/31/91 15229.04 14267.81 04/30/91 15439.46 14487.53 05/31/91 15623.57 14468.70 06/30/91 15439.46 14318.23 07/31/91 15597.48 14624.64 08/31/91 15744.37 14908.35 09/30/91 16105.47 15491.27 10/31/91 16323.48 15653.93 11/30/91 16241.73 15899.70 12/31/91 16877.42 16726.48 01/31/92 16707.23 16430.42 02/29/92 16778.14 16338.41 03/31/92 16749.97 16165.22 04/30/92 16977.66 16280.00 05/31/92 17290.75 16779.79 06/30/92 17505.10 17249.63 07/31/92 17767.43 17651.54 08/31/92 18025.90 18145.79 09/30/92 17774.98 18327.24 10/31/92 17659.43 17828.74 11/30/92 17394.30 17545.27 12/31/92 17619.52 17650.54 01/31/93 17823.07 17959.42 02/28/93 18097.52 18313.22 03/31/93 18496.21 18595.25 04/30/93 18672.10 18987.61 05/31/93 19015.32 19177.48 06/30/93 19397.07 19137.21 07/31/93 19692.25 19190.79 08/31/93 20189.71 19768.44 09/30/93 20304.78 20003.68 10/31/93 20830.76 19969.67 11/30/93 20764.44 19827.89 12/31/93 21479.33 19996.43 01/31/94 21713.86 20156.40 02/28/94 20531.66 20025.38 03/31/94 19053.47 19997.35 04/30/94 18678.26 20019.34 05/31/94 18782.43 19843.17 06/30/94 17973.21 20128.91 07/31/94 18300.43 20289.95 08/31/94 18527.75 20218.93 09/30/94 18528.69 20364.51 10/31/94 18613.12 20690.34 11/30/94 18690.13 20404.81 12/31/94 17975.74 20461.95 01/31/95 17818.85 20891.65 02/28/95 17768.50 21426.47 03/31/95 17884.41 22699.21 04/30/95 18186.00 23119.14 05/31/95 18734.45 23771.10 06/30/95 18909.95 23911.35 $10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity Global Bond Fund on December 31, 1986, shortly after the fund started. As the chart shows, by June 30, 1995, the value of your investment would have grown to $18,910 - a 89.10% increase on your initial investment. For comparison, look at how the Salomon Brothers World Government Bond Index did over the same period. With dividends reinvested, the same $10,000 would have grown to $23,911 - a 139.11% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. (checkmark) DIVIDENDS AND YIELD PERIODS ENDED JUNE 30, 1995 PAST PAST 6 PAST 1 MONTH MONTHS YEAR A Dividends per share 4.42(cents) 28.23(cents) 64.26(cents) Annualized dividend rate 5.32% 5.81% 6.39% 30-day annualized yield 4.91% - - DIVIDENDS per share show the income paid by the fund for a set period. If you annualize this number, based on the fund's average share price of $10.10 over the past month, $9.79 over the past six months and $10.06 over the past year, you can compare the fund's income over these three periods. The 30-day annualized YIELD is a standard formula for all funds based on the yields of the bonds in the fund, averaged over the past 30 days. This figure shows you the yield characteristics of the fund's investments at the end of the period. It also helps you compare funds from different companies on an equal basis. It does not reflect the cost of hedging and other currency gains and losses. A DIVIDENDS PAID ARE BASED ON THE FUND'S INVESTMENT INCOME AND DO NOT REFLECT CURRENCY-RELATED LOSSES. AS A RESULT OF CURRENCY LOSSES, DIVIDENDS PAID DURING 1994 OF APPROXIMATELY 41.1(CENTS) PER SHARE WERE A NON-TAXABLE RETURN OF CAPITAL. FUND TALK: THE MANAGER'S OVERVIEW An interview with Jonathan Kelly, Portfolio Manager of Fidelity Global Bond Fund Q. JONATHAN, HOW DID THE FUND PERFORM? A. For the six months ended June 30, 1995, the fund had a total return of 5.20%. During the same period, the average general world income fund tracked by Lipper Analytical Services returned 10.15%, and the Salomon Brothers World Government Bond Index had a return of 16.85%. For the 12 months ended June 30, the fund had a total return of 5.21%, while the average general world income fund returned 10.61%, and the index returned 18.79% during the same period. Q. WHAT ACCOUNTED FOR THE FUND'S RELATIVE PERFORMANCE OVER THE PAST SIX MONTHS? A. I'd like to tackle the first quarter and second quarter separately. In the first quarter, the fund was plagued by the two problems that held it back in 1994: specifically, emerging market debt exposure and currency exposure that was mostly hedged. The Mexican peso devaluation in December 1994 created significant turmoil in emerging markets that lasted for much of the first quarter. In addition, the U.S. dollar continued its slide against both European currencies and the Japanese yen. Given the turmoil in Latin America, emerging market exposure was reduced to 3% of the fund as of June 30, with no plans to increase that exposure in the near future. Q. DOES THIS MEAN THAT THE FUND NO LONGER WILL INVEST IN EMERGING MARKETS? A. The fund historically has invested mainly in investment-grade securities. A key premise to the fund's investments in emerging markets was the assumption that Mexico - seen as a bellwether for the Latin American emerging markets - was transforming itself through economic and political reform from a non-investment-grade to an investment-grade entity. The events of the past year suggest that this may not be the case at the present time. I am not saying that the fund will never invest in emerging markets again; but in order to invest there, I will need to be convinced that the key bellwether countries are once again solidly on the path to investment-grade status. Q. WAS THERE ANYTHING ELSE THAT AFFECTED PERFORMANCE IN THE FIRST QUARTER? A. During the first quarter, I was hedging much of the fund's foreign currency exposure. That is, I used investments called foreign forward currency contracts to try to control currency risk - the risk that depreciation in the currency of the country in which an investment is made will reduce returns from those investments. As the dollar depreciated instead during the first quarter - the main risk associated with foreign forward currency contracts, because it makes investments in them unprofitable - the fund missed an opportunity to add value through foreign currency gains. That's because - all else being equal - foreign investments increase in value for American investors when the dollar depreciates versus local currencies. Q. WHAT HAPPENED IN THE SECOND QUARTER? A. The fund performed better. Global bond markets performed exceptionally well, with interest rates generally falling as most economies around the world slowed down. The fund also was helped somewhat by the fact that I moved away from hedging the fund's foreign investments. In Japan, specifically, the fund benefited from the depreciation of the dollar versus the yen, as well as from sharply falling interest rates. Going forward, I'll be measuring the fund's performance more closely against the Salomon Brothers World Government Bond Index. My goal will continue to be to generate returns that are better than the global market as a whole, while attempting to dampen relative volatility. The index - which is a representation of the global bond market - is unhedged and does not have an emerging markets component. Overall, the shifts in strategy provided favorable returns in the second quarter. Q. HOW WILL YOU SEEK TO ADD VALUE USING THIS NEW APPROACH? A. The best way to describe my strategy would be that rather than basing the fund's structure on where markets are going, I'm going to let the markets come to me. By that I mean that I'm not going to try to predict currency movements or the direction of interest rates. Rather, I'm going to look for opportunities that present themselves in the marketplace, looking to buy assets that are undervalued and sell those that have become rich - or priced high in light of historical levels. The government bond market in the U.S. is the most liquid and efficient in the world; at the same time, there are a lot of markets in economically developed countries that are still somewhat inefficient. That is, from time to time opportunities arise to buy or sell securities that are temporarily under-priced or over-priced. I'll seek to take advantage of this through opportunistic trading; that's what I mean by letting markets come to me, instead of trying to dictate strategy by predicting where markets are going. In addition, I will continue to leverage Fidelity's worldwide analyst network to explore corporate bond opportunities. Q. WHAT OTHER MOVES HAVE YOU MADE IN TERMS OF COUNTRY WEIGHTING AND CURRENCY EXPOSURE, JONATHAN? A. I've been adjusting the fund's structure to better reflect the major composition of the marketplace. I've reduced exposure to New Zealand, taking profits after investments there worked well. I've also increased exposure to Japan, because the Japanese market is the second-largest bond market worldwide. I'm seeking to align the portfolio to what's going on in the market, attempting to outperform it by looking for individual securities or sectors that I feel will perform well. Q. WHAT'S YOUR OUTLOOK? A. In general, I'm cautious on global bond markets. The first six months of 1995 - with interest rates on the decline - has been a very good period for bonds. I believe we would be hard-pressed to have interest rates come down as much in the second half. At the same time, the outlook is still pretty good, because global growth - which was particularly strong in 1994 - has slowed considerably. A slowdown in growth is good for bond markets because strong growth sparks inflation, which erodes the value of a bond's fixed payments. The Federal Reserve Board reduced interest rates by 0.25% shortly after the period, European economies are sluggish and Japan's economy is not growing and prices there are deflating; all of these are indications that bonds might perform well. I think the fundamental backdrop for global bonds is positive, but, again, I think we would be hard-pressed to duplicate the drop in interest rates we saw in the first half. FUND FACTS GOAL: high total return by investing in debt securities from around the world START DATE: December 30, 1986 SIZE: as of June 30, 1995, more than $277 million MANAGER: Jonathan Kelly, since October 1993; Fidelity Advisor Emerging Markets Fund and Fidelity New Markets Income Fund, January 1995 to June 1995; joined Fidelity in 1991 (checkmark) JONATHAN KELLY ON THE SHIFT IN STRATEGY FOR FIDELITY GLOBAL BOND FUND: "The fund's shift in strategy increases the relative quality of its holdings while attempting to decrease volatility. To do that, I've begun to manage the fund relative to the opportunities found in the global market for developed country debt. This strategy is designed to help the fund exceed the performance of the broad market by utilizing research-driven investment ideas that I believe have a high probability of success. I also feel confident that returns will be more consistent with the overall performance of the market than in the past. I'll seek to outperform by exploiting anomalies and inefficiencies in the market by using Fidelity's quantitative research capabilities. "While the fund is still mainly invested in government issues, it does have a meaningful stake in corporate bonds, especially in the U.S., the U.K. and Canada. One of the strengths of Fidelity is a firm research commitment. While Fidelity's U.S. corporate research is well-known, we also have a worldwide research presence. I am working to tap that network to help with "bottom up" investing: choosing corporate securities one by one by using the research to discern an issuer's ability to meet its obligations." INVESTMENT CHANGES The charts below highlight three different aspects of the fund's investments: the country where they were issued, their sensitivity to interest rate changes, and their currency exposure. The top countries in each table differ because some securities have more interest rate risk than others, because securities issued in one country may be denominated in another country's currency, and because of the effects of currency hedging. TOP COUNTRIES AS OF JUNE 30, 1995 (BY LOCATION OF ISSUER) % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS SIX MONTHS AGO United States 34 39 Germany 13 6 France 7 4 Netherlands 7 1 Austria 5 0 TOP COUNTRIES ARE BASED ON THE LOCATION OF THE ISSUER OF EACH SECURITY, INDICATING WHERE THE FUND IS EXPOSED TO POLITICAL AND CREDIT RISKS. THE FUND'S LARGEST POSITION AS OF JUNE 30 WAS IN SECURITIES OF UNITED STATES ISSUERS. TOP INTEREST RATE EXPOSURES AS OF JUNE 30, 1995 (ESTIMATED, BY COUNTRY) % OF FUND'S TOTAL % OF INTEREST RATE INTEREST RATE EXPOSURE EXPOSURE SIX MONTHS AGO United States 33 22 Japan 23 8 Germany 11 18 France 7 13 United Kingdom 6 8 FIDELITY ESTIMATES INTEREST RATE EXPOSURES BASED ON THE DURATION, OR INTEREST RATE SENSITIVITY, OF THE FUND'S HOLDINGS. AS OF JUNE 30, THE FUND WAS MOST SENSITIVE TO INTEREST RATE MOVEMENTS IN THE U.S., WHICH ACCOUNTED FOR APPROXIMATELY 33% OF THE FUND'S INTEREST RATE EXPOSURE. TOP CURRENCY EXPOSURES AS OF JUNE 30, 1995 (ESTIMATED, BY CURRENCY) % OF FUND'S % OF NET ASSETS NET ASSETS SIX MONTHS AGO U.S. dollar 35 74 Japanese yen 23 0 German deutsche mark 8 0 French franc 7 0 Dutch guilder 6 0 THE U.S. DOLLAR EXPOSURE ABOVE INCLUDES THE EFFECTS OF FOREIGN INVESTMENTS WHOSE CURRENCY RISK IS FULLY HEDGED. THE JAPANESE YEN, AT APPROXIMATELY 23% OF ASSETS, WAS THE FUND'S LARGEST FOREIGN CURRENCY EXPOSURE AS OF JUNE 30. INVESTMENTS JUNE 30, 1995 (UNAUDITED) Showing Percentage of Total Value of Investment in Securities NONCONVERTIBLE BONDS - 18.1% MOODY'S RATINGS (B) PRINCIPAL VALUE (UNAUDITED) AMOUNT (A) (NOTE 1) ARGENTINA - 1.2% Alto Parana: euro 12%, 3/4/05 (h) - $ 1,610,000 $ 1,127,000 12%, 3/4/05 (g)(h) - 3,000,000 2,100,000 3,227,000 CANADA - 1.8% Canada Mortgage & Housing 8.8%, 3/1/00 Aa1 CAD 2,550,000 1,938,000 Ford Credit Canada Ltd. 8 3/4%, 3/20/00 - CAD 2,100,000 1,547,344 Ontario Hydro euro 9%, 6/24/02 Aa2 CAD 1,652,000 1,259,612 4,744,956 GERMANY - 4.7% Deutsche Bank Finance NV 4 1/8%, 11/15/99 (b) Aaa JPY 810,000 10,377,396 Lake Baden Wuerttemberg Finance NV euro 3 3/4%, 6/21/99 (b) Aaa JPY 190,000 2,398,294 12,775,690 MEXICO - 0.3% First Mexican Acceptance Corp. SA euro 10 3/4%, 9/15/96 - 1,500,000 675,000 NETHERLANDS - 0.2% Cable & Wireless International Finance euro 8 5/8%, 3/25/19 A2 GBP 300,000 446,253 NETHERLANDS ANTILLES - 0.2% Deutsche Bank Finance NV 10 1/4%, 2/24/97 Aaa SEK 3,600,000 492,634 UNITED KINGDOM - 2.1% Anglian Water PLC 12%, 1/7/14 Aa3 GBP 170,000 332,461 Argyll Group PLC 8 1/8%, 3/10/00 - GBP 200,000 307,739 ASDA Group PLC 10 7/8%, 4/20/10 Baa1 GBP 200,000 346,198 British Gas PLC 8 7/8%, 7/8/08 Aa2 GBP 335,000 522,620 East Midlands Electricity PLC 12%, 3/25/16 Aa2 GBP 200,000 399,323 Eastern Electricity PLC 8 3/8%, 3/31/04 Aa1 GBP 250,000 381,310 Ford Credit Europe PLC: euro 8 5/8%, 11/21/97 A1 GBP 200,000 318,422 11.70%, 11/18/98 (b) A1 ITL 1,185,000 725,339 Lloyds Bank PLC 7 3/8%, 3/11/04 Aa3 GBP 250,000 350,033 Pearson PLC 10 1/2%, 6/13/08 - GBP 250,000 433,664 NONCONVERTIBLE BONDS - CONTINUED MOODY'S RATINGS (B) PRINCIPAL VALUE (UNAUDITED) AMOUNT (A) (NOTE 1) UNITED KINGDOM - CONTINUED Rolls-Royce PLC 11 5/8%, 7/30/98 A3 GBP 250,000 $ 430,236 Royal Insurance Holdings PLC 9 5/8%, 3/25/03 - GBP 200,000 315,520 Severn Trent PLC 11 1/2%, 7/12/99 A1 GBP 235,000 407,494 Tesco PLC 8 3/4%, 2/20/03 Aa3 GBP 250,000 389,457 5,659,816 UNITED STATES OF AMERICA - 7.6% Bank of Boston Corp. 9 1/2%, 8/15/97 Baa2 320,000 338,400 CIT Group Holdings, Inc. 6 5/8%, 6/15/05 Aa3 730,000 716,699 Chrysler Financial Corp.: euro 9 1/2%, 4/12/96 BBB+ 150,000 153,225 10.34%, 5/15/08 A3 1,000,000 1,032,250 Comdisco, Inc. 6 1/2%, 6/15/00 Baa2 600,000 593,256 Continental Bank Mortgage Corp. 9 7/8%, 6/15/96 A2 190,000 195,231 Discover Card Trust: 7 1/5%, 4/16/98 Aaa 166,667 167,083 6 1/8%, 5/15/98 A2 170,000 169,415 First Bank Systems, Inc. 9.89%, 3/6/96 A3 140,000 143,589 Ford Credit Auto Loan Master Trust: 5 5/8%, 10/15/95 Aaa 295,000 294,558 7 3/8%, 4/15/99 Aaa 230,000 233,795 Ford Motor Credit Co. 9 1/2%, 4/15/00 A1 250,000 278,500 General Electric Capital Corp.: 8%, 10/29/98 (b) AAA ITL 500,000 277,462 7 3/8%, 2/8/99 (b) Aaa ITL 9,435,000 5,094,062 6 1/2%, 2/8/99 Aaa SEK 6,250,000 749,683 9.55%, 8/25/03 (b) Aaa ITL 2,800,000 1,511,751 Golden West Financial Corp. 9.15%, 5/23/98 A3 150,000 160,881 Green Tree Securitized Net Interest Margin Trust 6.90%, 2/15/04 Baa3 171,304 168,948 Gulf States Utilities Co. 9.72%, 7/1/98 Ba1 350,000 368,022 Long Island Lighting Co.: 8 3/4%, 5/1/96 Baa3 290,000 295,075 7.3%, 7/15/99 Ba1 175,000 171,952 MBNA Master Credit Card Trust 7 1/4%, 6/15/99 Aaa 390,000 395,725 Manufacturers Hanover Corp. 8 1/2%, 2/15/99 A3 130,000 137,535 Meridian Bancorp, Inc. 6.1875%, 12/1/96 (i) Baa1 445,000 442,855 Morgan Guaranty Trust Co. NY 11 3/8%, 10/6/97 (b) Aa1 ITL 4,000,000 2,423,600 NONCONVERTIBLE BONDS - CONTINUED MOODY'S RATINGS (B) PRINCIPAL VALUE (UNAUDITED) AMOUNT (A) (NOTE 1) UNITED STATES OF AMERICA - CONTINUED North Atlantic Energy Corp. 9.05%, 6/1/02 Ba1 $ 170,000 $ 174,080 Premier Auto Trust 4.90%, 12/15/98 Aaa 332,211 328,111 Public Service Co. of New Hampshire 1st mtg. 8 7/8%, 5/15/96 Baa3 430,000 437,826 Ralcorp Holdings, Inc. 8 3/4%, 9/15/04 Ba1 135,000 145,463 Shawmut Corp. 8 1/8%, 2/1/97 Baa1 370,000 379,494 Standard Credit Card Master Trust I: 6 1/8%, 8/7/95 A2 260,000 260,000 9%, 8/7/97 A2 360,000 370,575 6 1/4%, 9/7/98 A2 650,000 647,969 5 1/2%, 9/7/98 A2 85,000 83,539 Texas Gas Transmission Corp. 8 5/8%, 4/1/04 Baa1 110,000 122,051 Transcontinental Gas Pipe Line Corp.: 9%, 11/15/96 Baa1 750,000 775,328 8.875%, 9/15/02 Baa1 90,000 98,555 Valassis Inserts, Inc. 9 3/8%, 3/15/99 Ba2 290,000 301,238 20,637,781 TOTAL NONCONVERTIBLE BONDS (Cost $49,789,657) 48,659,130 GOVERNMENT OBLIGATIONS - 64.8% (D) ARGENTINA - 1.7% Province of Chaco 11 7/8%, 9/10/97 (f) - 4,500,000 4,591,350 AUSTRALIA - 0.9% Commonwealth of Australia: 7%, 8/15/98 Aa2 AUD 1,300,000 892,233 12%, 11/15/01 Aa2 AUD 425,000 346,869 9 1/2%, 8/15/03 Aa2 AUD 1,500,000 1,089,027 2,328,129 AUSTRIA - 5.4% Republic of Austria euro: 11%, 12/16/97 (b) Aaa ITL 4,200,000 2,558,480 4 1/2%, 9/28/05 (b) Aaa JPY 900,000 12,014,190 14,572,670 GOVERNMENT OBLIGATIONS - CONTINUED MOODY'S RATINGS (B) PRINCIPAL VALUE (UNAUDITED) AMOUNT (A) (NOTE 1) BELGIUM - 2.5% Kingdom of Belgium: 9 1/4%, 8/29/97 AAA BEF 67,000,000 $ 2,515,334 8 3/4%, 6/25/02 Aa1 BEF 37,000,000 1,411,602 7 1/2%, 7/29/08 AAA BEF 85,000,000 2,891,496 6,818,432 CANADA - 1.0% Manitoba Province 9 3/8%, 11/15/04 A1 CAD 1,331,000 1,041,041 Ontario Province 7 3/4%, 12/8/03 Aa2 CAD 2,629,000 1,856,103 2,897,144 DENMARK - 1.4% Danish Government: 9%, 11/15/98 Aa1 DKK 7,200,000 1,383,255 Bullet 9%, 11/15/00 Aa1 DKK 4,800,000 923,950 Bullet 8%, 5/15/03 Aa1 DKK 2,500,000 450,626 8%, 3/15/06 Aaa DKK 6,000,000 1,060,361 3,818,192 FRANCE - 6.9% French Government: OAT 9 1/2%, 1/25/01 Aaa FRF 21,850,000 4,995,961 OAT 7 3/4%, 10/25/05 Aaa FRF 3,400,000 707,318 OAT 8 1/2%, 10/25/19 Aaa FRF 9,750,000 2,086,337 8 1/2%, 12/26/12 Aaa FRF 26,000,000 5,631,231 BTF 0%, 7/27/95 Aaa FRF 25,000,000 5,139,420 18,560,267 GERMANY - 8.5% Federal Republic of Germany: 8 3/8%, 5/21/01 Aaa DEM 13,550,000 10,605,968 8 3/4%, 8/20/01 Aaa DEM 7,800,000 6,204,654 6%, 6/20/16 Aaa DEM 10,000,000 6,063,194 22,873,816 NETHERLANDS - 6.4% Netherland Government: 6 1/4%, 7/15/98 Aaa NLG 17,500,000 11,445,047 7%, 6/15/05 Aaa NLG 2,500,000 1,610,131 8 1/4%, 2/15/07 AAA NLG 5,900,000 4,116,696 17,171,874 GOVERNMENT OBLIGATIONS - CONTINUED MOODY'S RATINGS (B) PRINCIPAL VALUE (UNAUDITED) AMOUNT (A) (NOTE 1) SPAIN - 1.9% Kingdom of Spain: 7.30%, 7/30/97 (b) AAA ESP 121,000 $ 934,737 7.4%, 7/30/99 (b) - ESP 51,000 365,690 10.30%, 6/15/02 (b) Aa2 ESP 500,000 3,854,254 5,154,681 SWEDEN - 0.7% Kingdom of Sweden 10 1/4%, 5/5/03 Aa1 SEK 15,000,000 1,997,261 UNITED KINGDOM - 3.3% United Kingdom, Great Britain & Northern Ireland: 13 1/4%, 1/22/97 Aaa GBP 350,000 604,465 12%, 11/20/98 Aaa GBP 560,000 995,606 9 3/4%, 8/27/02 Aaa GBP 2,060,000 3,512,544 13 1/2%, 3/26/08 Aaa GBP 720,000 1,491,017 9%, 10/13/08 Aaa GBP 500,000 829,140 8 3/4%, 8/25/17 Aaa GBP 900,000 1,474,514 8,907,286 UNITED STATES OF AMERICA - 24.2% Federal Home Loan Bank: 4 3/4%, 2/24/97 (callable) Aaa 210,000 204,288 4.55%, 8/3/98 (callable) (e) Aaa 220,000 211,860 5.60%, 2/23/99 (callable) Aaa 260,000 252,525 Federal National Mortgage Association: 4.70%, 9/10/98 (callable) Aaa 500,000 478,184 4 7/8%, 10/15/98 (callable) Aaa 160,000 153,644 5.20%, 7/10/98 (callable) Aaa 360,000 349,988 Government Trust Certificates: (assets of Trust guaranteed by U.S. Government through Defense Security Assistance Agency): Class 2-D 9 1/4%, 11/15/96 Aaa 263,856 269,714 Class 1-C 9 1/4%, 11/15/01 Aaa 790,000 870,201 Class 2-E 9.40%, 5/15/02 Aaa 280,000 309,674 Series 1994-F (assets of Trust guaranteed by U.S. Government through Export-Import Bank) 8.178%, 12/15/04 Aaa 450,283 479,676 GOVERNMENT OBLIGATIONS - CONTINUED MOODY'S RATINGS (B) PRINCIPAL VALUE (UNAUDITED) AMOUNT (A) (NOTE 1) UNITED STATES OF AMERICA - CONTINUED State of Israel (guaranteed by U.S. Government through Agency for International Development): 6%, 2/15/99 Aaa $ 170,000 $ 169,115 8%, 11/15/01 Aaa 180,000 194,780 6 1/8%, 3/15/03 Aaa 100,000 98,188 Private Export Funding Corp. 8 3/4%, 6/30/03 Aaa 200,000 228,141 U.S. Treasury 5 5/8%, 1/31/98 Aaa 11,000,000 10,926,080 5 1/8%, 6/30/98 Aaa 870,000 851,373 4 3/4%, 8/31/98 Aaa 1,790,000 1,728,460 6 3/4%, 6/30/99 Aaa 3,120,000 3,200,434 7 1/8%, 9/30/99 Aaa 910,000 947,538 7 3/4%, 12/31/99 Aaa 230,000 245,562 7 1/2%, 11/15/01 Aaa 1,350,000 1,449,144 6 1/4%, 2/15/03 Aaa 5,140,000 5,153,672 10 3/4%, 5/15/03 Aaa 590,000 754,185 11 7/8%, 11/15/03 Aaa 3,670,000 5,000,962 12 3/8%, 5/15/04 Aaa 8,480,000 11,963,414 7 7/8%, 11/15/04 Aaa 130,000 144,788 11 5/8%, 11/15/04 Aaa 5,423,000 7,454,944 8 3/4%, 5/15/20 Aaa 9,100,000 11,291,098 65,381,632 TOTAL GOVERNMENT OBLIGATIONS (Cost $170,923,292) 175,072,734 SUPRANATIONAL OBLIGATIONS - 15.4% African Development Bank 9 1/2%, 12/15/95 Aa1 250,000 253,745 European Investment Bank EIB: 4 1/4%, 7/16/98 (b) Aaa JPY 250,000 3,191,081 5 7/8%, 11/26/99 (b) Aaa JPY 145,000 1,993,857 InterAmerica Development Bank euro: 6%, 10/30/01 (b) Aaa JPY 342,000 4,844,977 7.7%, 2/3/04 (b) Aaa ITL 5,080,000 2,443,988 International Bank for Reconstruction & Development: 4 1/2%, 12/22/97 (b) Aaa JPY 1,615,000 20,562,870 4 3/4%, 1/15/04 (b) Aaa JPY 600,000 8,197,282 TOTAL SUPRANATIONAL OBLIGATIONS (Cost $39,858,573) 41,487,800 REPURCHASE AGREEMENTS - 1.7% MATURITY VALUE AMOUNT (NOTE 1) Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 6.15%, dated 6/30/95 due 7/3/95 $ 4,624,369 $ 4,622,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $265,193,522) $ 269,841,664 FORWARD FOREIGN CURRENCY CONTRACTS SETTLEMENT UNREALIZED DATE VALUE GAIN/(LOSS) CONTRACTS TO BUY 11,400,000,000 IDR 7/3/95 $ 5,118,952 $ 118,952 39,155,400 JPY 8/2/95 464,773 28,778 TOTAL CONTRACTS TO BUY (Payable amount $5,435,995) $ 5,583,725 147,730 THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 2.1% CONTRACTS TO SELL 11,400,000,000 IDR 7/3/95 $ 5,118,952 $ (115,112) 39,155,400 JPY 8/2/95 464,773 (59,772) TOTAL CONTRACTS TO SELL (Receivable amount $5,408,841) $ 5,583,725 (174,884) THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 2.1% $ (27,154) CURRENCY ABBREVIATIONS AUD - Australian dollar BEF - Belgian franc GBP - British pound CAD - Canadian dollar DKK - Danish krone NLG - Dutch guilder FRF - French franc DEM - German deutsche mark IDR - Indonesian rupiah ITL - Italian lira JPY - Japanese yen ESP - Spanish peseta SEK - Swedish krona LEGEND 1. Principal amount is stated in United States dollars unless otherwise noted. 2. Principal amount in thousands. 3. Standard & Poor's Corporation credit ratings are used in the absence of a rating by Moody's Investors Service, Inc. 4. Some 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. Debt obligation initially issued at one coupon which converts to a higher coupon at a specified date. 6. Restricted securities - Investment in securities not registered under the Securities Act of 1933 (see Note 2 of Notes to Financial Statements). Additional information on each holding is as follows: ACQUISITION ACQUISITION SECURITY DATE COST Province of Chaco 11 7/8%, 9/10/97 3/9/94 $ 5,547,749 7. Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $2,100,000 or 0.8% of net assets. 8. Partial interest payment received on the last interest payment date. 9. 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 investment in securities, is as follows (ratings are unaudited): MOODY'S RATINGS S&P RATINGS Aaa, Aa, A 86.2% AAA, AA, A 80.5% Baa 1.5% BBB 1.2% Ba 0.4% BB 0.5% B 0.0% B 0.0% Caa 0.0% CCC 0.0% Ca, C 0.0% CC, C 0.0% D 0.0% For some foreign government obligations, FMR has assigned the ratings of the sovereign credit of the issuing government. The percentage not rated by either S&P or Moody's amounted to 4.2% including long-term debt categorized as other securities. INCOME TAX INFORMATION At June 30, the aggregate cost of investment securities for income tax purposes was $265,193,522. Net unrealized appreciation aggregated $4,648,142, of which $7,535,880 related to appreciated investment securities and $2,887,738 related to depreciated investment securities. At December 31, 1994, the fund had a capital loss carryforward of approximately $81,884,000 all of which will expire on December 31, 2002. The fund has elected to defer to its fiscal year ending December 31, 1995 $4,205,000 of losses recognized during the period November 1, 1994 to December 31, 1994. MARKET SECTOR DIVERSIFICATION As a Percentage of Total Value of Investments in Securities (Unaudited) Aerospace & Defense 0.2% Basic Industries 1.2 Finance 12.6 Government Obligations 64.8 Media & Leisure 0.5 Nondurables 0.1 Retail & Wholesale 0.4 Repurchase Agreements 1.7 Services 0.7 Supranational Obligations 15.4 Technology 0.2 Utilities 2.2 100.0% FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995 (UNAUDITED) ASSETS Investment in securities, at value (including repurchase $ 269,841,664 agreements of $4,622,000) (cost $265,193,522) - See accompanying schedule Cash 471,252 Receivable for investments sold 10,637,096 Unrealized appreciation on foreign currency contracts 147,730 Receivable for closed foreign currency contracts 6,337 Interest receivable 6,406,289 Other receivables 502,071 TOTAL ASSETS 288,012,439 LIABILITIES Payable for investments purchased $ 9,883,824 Unrealized depreciation on foreign currency contracts 174,884 Distributions payable 58,511 Accrued management fee 168,670 Other payables and accrued expenses 179,579 TOTAL LIABILITIES 10,465,468 NET ASSETS $ 277,546,971 Net Assets consist of: Paid in capital $ 370,962,813 Distributions in excess of net investment income (7,722,631) Accumulated undistributed net realized gain (loss) on (90,789,341) investments and foreign currency transactions Net unrealized appreciation (depreciation) on 5,096,130 investments and assets and liabilities in foreign currencies NET ASSETS, for 27,490,376 shares outstanding $ 277,546,971 NET ASSET VALUE, offering price and redemption price per $10.10 share ($277,546,971 (divided by) 27,490,376 shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED) INVESTMENT INCOME $ 11,401,593 Interest Less foreign taxes withheld (509,237) TOTAL INCOME 10,892,356 EXPENSES Management fee $ 1,015,036 Transfer agent fees 384,571 Accounting fees and expenses 86,681 Non-interested trustees' compensation 958 Custodian fees and expenses 119,590 Registration fees 19,943 Audit 42,116 Legal 1,231 Interest 307 Miscellaneous 3,747 TOTAL EXPENSES 1,674,180 NET INVESTMENT INCOME 9,218,176 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities (5,048,080) Foreign currency transactions (1,279,374) (6,327,454) Change in net unrealized appreciation (depreciation) on: Investment securities 11,048,201 Assets and liabilities in foreign currencies (2,781,019) 8,267,182 NET GAIN (LOSS) 1,939,728 NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 11,157,904 FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS YEAR ENDED ENDED JUNE 30, DECEMBER 31, 1995 1994 (UNAUDITED) INCREASE (DECREASE) IN NET ASSETS Operations $ 9,218,176 $ 36,075,353 Net investment income Net realized gain (loss) (6,327,454) (109,647,947) Change in net unrealized appreciation (depreciation) 8,267,182 (39,772,490) NET INCREASE (DECREASE) IN NET ASSETS RESULTING 11,157,904 (113,345,084) FROM OPERATIONS Distributions to shareholders (8,323,251) (11,242,839) From net investment income In excess of net investment income - (2,708,940) From net realized gain - - In excess of net realized gain - (1,579,995) Return of capital - (20,501,873) TOTAL DISTRIBUTIONS (8,323,251) (36,033,647) Share transactions 110,757,973 657,341,508 Net proceeds from sales of shares Reinvestment of distributions 7,453,618 32,369,334 Cost of shares redeemed (226,301,788) (843,781,261) NET INCREASE (DECREASE) IN NET ASSETS RESULTING (108,090,197) (154,070,419) FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) IN NET ASSETS (105,255,544) (303,449,150) NET ASSETS Beginning of period 382,802,515 686,251,665 End of period (including distributions in excess of net $ 277,546,971 $ 382,802,515 investment income of $(7,722,631) and $(8,617,556), respectively) OTHER INFORMATION Shares Sold 11,193,593 58,056,699 Issued in reinvestment of distributions 758,682 2,994,322 Redeemed (23,202,722) (76,721,130) Net increase (decrease) (11,250,447) (15,670,109)
FINANCIAL HIGHLIGHTS SIX MONTHS YEARS ENDED DECEMBER TWO MONTH YEARS ENDED OCTOBER 31, ENDED JUNE 30, 31, PERIOD ENDED 1995 DECEMBER 31, SELECTED PER-SHARE DATA (UNAUDITED) 1994 1993F 1992 1992 D 1991 1990
Net asset value, beginning of period $ 9.880 $ 12.610 $ 11.340 $ 11.830 $ 11.980 $ 12.190 $ 11.220 Income from Investment Operations Net investment income .224 .569 .731 .145 .839 .74 .89 E Net realized and unrealized gain (loss) .278 (2.589) 1.648 (.173) .110 .52 .57 Total from investment operations .502 (2.020) 2.379 (.028) .949 1.26 1.46 Less Distributions (.282) (.225) (.629) (.332) (1.099) (1.03) (.49) From net investment income In excess of net investment income - (.054) - - - - - From net realized gain on investments - - (.280) (.130)C - (.44)C - In excess of net realized gain on investments - (.020) (.200) - - - - Return of capital - (.411) - - - - - Total distributions (.282) (.710) (1.109) (.462) (1.099) (1.47) (.49) Net asset value, end of period $ 10.100 $ 9.880 $ 12.610 $ 11.340 $ 11.830 $ 11.980 $ 12.190 TOTAL RETURN B 5.20% (16.31)% 21.91% (.23)% 8.18% 11.31% 13.45% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $ 278 $ 383 $ 686 $ 279 $ 332 $ 160 $ 126 Ratio of expenses to average net assets 1.17%A 1.14% 1.17% 1.37%A 1.23% 1.35% 1.40% Ratio of net investment income to average 6.45%A 6.50% 6.79% 6.92%A 8.02% 7.92% 7.82% net assets Portfolio turnover rate 467%A 367% 198% 142%A 81% 228% 154% A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. D EFFECTIVE JULY 1, 1992, DIVIDENDS FROM NET INVESTMENT INCOME WERE DECLARED DAILY AND PAID MONTHLY. E NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. F EFFECTIVE JANUARY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
NOTES TO FINANCIAL STATEMENTS For the period ended June 30, 1995 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES. Fidelity Global Bond (the fund) is a fund of Fidelity Investment Trust (the trust) and is authorized to issue an unlimited number of shares. 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. The following summarizes the significant accounting policies of the fund: 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 of their purchase date are valued at amortized cost or original cost plus accrued interest, both of which approximate current value. FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the prevailing rates of exchange at period end. Purchases and sales of securities, income receipts, and expense payments are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of forward currency contracts, disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions, and the difference between the amount of net investment income accrued and the U.S. dollar amount actually received. The effects of changes in foreign currency exchange rates on investments in securities are included with the net realized and unrealized gain or loss on investment securities. INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the fund is not subject to U.S. federal income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. The fund may be subject to foreign taxes on income, gains on investments or currency repatriation. The fund accrues such taxes as applicable. The schedule of investments includes information regarding income taxes under the caption "Income Tax Information." INVESTMENT INCOME. Interest income, which includes accretion of original issue discount, is accrued as earned. Interest income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED EXPENSES. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned between the funds in the trust. DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid monthly from net investment income. Distributions from realized gains, if any, are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences, which may result in distribution reclassifications, are primarily due to differing treatments for futures and options transactions, foreign currency transactions, market discount and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital and may affect the per-share allocation between net investment income and realized and unrealized gain (loss). Distributions in excess of net investment income and accumulated undistributed net realized gain (loss) on investments and foreign currency transactions may include temporary book and tax basis differences that will reverse in a subsequent period. Any taxable income or gain remaining at fiscal year end is distributed in the following year. For the period ended December 31, 1994, the fund's distributions exceeded the aggregate amount of taxable income and net realized gains resulting in a return of capital. This was due to certain foreign currency losses which decreased taxable income available for distribution after certain distributions had been made. 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 fund may use foreign currency contracts to facilitate transactions in foreign securities and to manage the fund's currency exposure. Contracts to buy generally are used to acquire exposure to foreign currencies, while contracts to sell are used to hedge the fund's investments against currency fluctuations. Also, a contract to buy or sell can offset a previous contract. These contracts involve market risk in excess of the unrealized gain or loss reflected in the fund's Statement of Assets and Liabilities. The U.S. dollar value of the currencies the fund has committed to buy or sell is shown in the schedule of investments under the caption "Forward Foreign Currency Contracts." This amount represents the aggregate exposure to each currency the fund has acquired or hedged through currency contracts at period end. Losses may arise from changes in the value of the foreign 2. OPERATING POLICIES - CONTINUED FORWARD FOREIGN CURRENCY CONTRACTS - CONTINUED currency or if the counterparties do not perform under the contracts' terms. The U.S. dollar value of forward foreign currency contracts is determined using forward currency exchange rates supplied by a quotation service. Purchases and sales of forward foreign currency contracts having the same settlement date and broker are offset and any realized gain (loss) is recognized on the date of offset; otherwise, gain (loss) is recognized on settlement date. Contracts that have been offset with different counterparties are reflected as both a contract to buy and a contract to sell in the schedule of investments under the caption "Forward Foreign Currency Contracts." JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with other affiliated entities of Fidelity Management & Research Company (FMR), may transfer uninvested cash balances into one or more joint trading accounts. These balances are invested in one or more repurchase agreements that mature in 60 days or less from the date of purchase, and are collateralized by U.S. Treasury or Federal Agency obligations. REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery of the underlying securities, whose market value is required to be at least 102% of the resale price at the time of purchase. FMR, the fund's investment adviser, is responsible for determining that the value of these underlying securities remains at least equal to the resale price. INDEXED SECURITIES. The fund may invest in indexed securities whose values are linked either directly or inversely to changes in foreign currencies, interest rates, commodities, indices, or other underlying instruments. The fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in through conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment. RESTRICTED SECURITIES. The fund is permitted to invest in privately placed restricted securities. These securities may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. At the end of the period, restricted securities (excluding 144A issues) amounted to $4,591,350 or 1.7% of net assets. 3. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $590,512,892 and $652,081,481, respectively, 3. PURCHASES AND SALES OF INVESTMENTS - CONTINUED of which U.S. government and government agency obligations aggregated $119,084,927 and $156,512,341, respectively. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly fee that is calculated on the basis of a group fee rate plus a fixed individual fund fee rate applied to the average net assets of the fund. The group fee rate is the weighted average of a series of rates and is based on the monthly average net assets of all the mutual funds advised by FMR. The rates ranged from .1200% to .3700% for the period. In the event that these rates were lower than the contractual rates in effect during the period, FMR voluntarily implemented the above rates, as they resulted in the same or a lower management fee. The annual individual fund fee rate is .55%. For the period, the management fee was equivalent to an annualized rate of .70% of average net assets. SUB-ADVISER FEE. FMR, on behalf of the fund, entered into 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. DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or the fund's distributor, Fidelity Distributors Corporation (FDC), an affiliate of FMR, may use their resources to pay administrative and promotional expenses related to the sale of the fund's shares. Subject to the approval of the Board of Trustees, the Plan also authorizes payments to third parties that assist in the sale of the fund's shares or render shareholder support services. FMR or FDC has informed the fund that payments made to third parties under the Plan amounted to $10,640 for the period. TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is the fund's transfer, dividend disbursing and shareholder servicing agent. Effective January 1, 1995, the Board of Trustees approved a revised transfer agent contract pursuant to which FSC receives account fees and asset-based fees that vary according to account size and type of account. Under the prior transfer agent contract, FSC received 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. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is based on the level of average net assets for the month plus out-of-pocket expenses. 5. BANK BORROWINGS. The fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The fund has established borrowing arrangements with certain banks. Under the most restrictive arrangement, the 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. The maximum loan and the average daily loan balances during the periods for which loans were outstanding amounted to $1,881,000. The weighted average interest rate was 5.875%. TO CALL FIDELITY FOR FUND 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)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(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)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(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. TO VISIT FIDELITY For directions and hours, please call 1-800-544-9797. ARIZONA 7373 N. Scottsdale Road Scottsdale, AZ CALIFORNIA 851 East Hamilton Avenue Campbell, CA 527 North Brand Boulevard Glendale, CA 19100 Von Karman Avenue Irvine, CA 10100 Santa Monica Blvd. Los Angeles, CA 811 Wilshire Boulevard Los Angeles, CA 251 University Avenue Palo Alto, CA 1760 Challenge Way Sacramento, CA 7676 Hazard Center Drive San Diego, CA 455 Market Street San Francisco, CA 1400 Civic Drive Walnut Creek, CA 6300 Canoga Avenue Woodland Hills, CA COLORADO 1625 Broadway Denver, CO CONNECTICUT 185 Asylum Street Hartford, CT 265 Church Street New Haven, CT 300 Atlantic Street Stamford, CT DELAWARE 222 Delaware Avenue Wilmington, DE FLORIDA 4400 N. Federal Highway Boca Raton, FL 90 Alhambra Plaza Coral Gables, FL 4090 N. Ocean Boulevard Ft. Lauderdale, FL 4001 Tamiami Trail, North Naples, FL 1907 West State Road 434 Orlando, FL 2401 PGA Boulevard Palm Beach Gardens, FL 8065 Beneva Road Sarasota, FL 2000 66th Street, North St. Petersburg, FL GEORGIA 3525 Piedmont Road, N.E. Atlanta, GA 1000 Abernathy Road Atlanta, GA HAWAII 700 Bishop Street Honolulu, HI ILLINOIS 215 East Erie Street Chicago, IL One North Franklin Chicago, IL 540 Lake Cook Road Deerfield, IL 1415 West 22nd Street Oak Brook, IL 1700 East Golf Road Schaumburg, IL LOUISIANA 201 St. Charles Avenue New Orleans, LA MAINE 3 Canal Plaza Portland, ME MARYLAND 7401 Wisconsin Avenue Bethesda, MD 1 West Pennsylvania Ave. Towson, MD MASSACHUSETTS 470 Boylston Street Boston, MA 21 Congress Street Boston, MA 25 State Street Boston, MA 300 Granite Street Braintree, MA 44 Mall Road Burlington, MA 416 Belmont Street Worcester, MA MICHIGAN 280 North Woodward Ave. Birmingham, MI 26955 Northwestern Hwy. Southfield, MI MINNESOTA 7600 France Avenue South Edina, MN MISSOURI 700 West 47th Street Kansas City, MO 8885 Ladue Road Ladue, MO 200 North Broadway St. Louis, MO NEW JERSEY 60B South Street Morristown, NJ 501 Route 17, South Paramus, NJ 505 Millburn Avenue Short Hills, NJ NEW YORK 1050 Franklin Avenue Garden City, NY 999 Walt Whitman Road Melville, L.I., NY 1271 Avenue of the Americas New York, NY 71 Broadway New York, NY 350 Park Avenue New York, NY 10 Bank Street White Plains, NY NORTH CAROLINA 4611 Sharon Road Charlotte, NC 2200 West Main Street Durham, NC OHIO 600 Vine Street Cincinnati, OH 28699 Chagrin Boulevard Woodmere Village, OH 1903 East Ninth Street Cleveland, OH OREGON 121 S.W. Morrison Street Portland, OR PENNSYLVANIA 1735 Market Street Philadelphia, PA 439 Fifth Avenue Pittsburgh, PA TENNESSEE 5100 Poplar Avenue Memphis, TN TEXAS 10000 Research Boulevard Austin, TX 7001 Preston Road Dallas, TX 1155 Dairy Ashford Houston, TX 2701 Drexel Drive Houston, TX 1010 Lamar Street Houston, TX 400 East Las Colinas Blvd. Irving, TX 14100 San Pedro San Antonio, TX UTAH 215 South State Street Salt Lake City, UT VERMONT 199 Main Street Burlington, VT VIRGINIA 8180 Greensboro Drive McLean, VA WASHINGTON 411 108th Avenue, N.E. Bellevue, WA 1001 Fourth Avenue Seattle, WA WASHINGTON, DC 1775 K Street, N.W. Washington, DC WISCONSIN 222 East Wisconsin Avenue Milwaukee, WI INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research (U.K.) Inc. London, England Fidelity Management & Research (Far East) Inc. Tokyo, Japan Fidelity International Investment Advisors Fidelity International Investment Advisors (U.K.) Limited OFFICERS Edward C. Johnson 3d, President J. Gary Burkhead, Senior Vice President Arthur S. Loring, Secretary Stephen P. Jonas, Treasurer John H. Costello, Assistant Treasurer Leonard M. Rush, Assistant Treasurer 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 CUSTODIAN Chase Manhattan Bank, N.A. New York, NY FIDELITY'S TAXABLE BOND FUNDS Capital & Income Fund Ginnie Mae Portfolio Global Bond Fund Government Securities Fund Intermediate Bond Fund Investment Grade Bond Fund Mortgage Securities Portfolio New Markets Income Fund Short-Intermediate Government Fund Short-Term Bond Portfolio Short-Term World Income Fund Spartan(registered trademark) Ginnie Mae Fund Spartan Government Income Fund Spartan High Income Fund Spartan Investment Grade Bond Fund Spartan Limited Maturity Government Fund Spartan Long-Term Government Bond Fund Spartan Short-Intermediate Government Fund Spartan Short-Term Income Fund 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) (registered trademark) * INDEPENDENT TRUSTEES AUTOMATED LINES FOR QUICKEST SERVICE