(2_FIDELITY_LOGOS)FIDELITY INTERNATIONAL EQUITY FUNDS Broadly Diversified Funds FIDELITY DIVERSIFIED INTERNATIONAL FUND FIDELITY INTERNATIONAL GROWTH & INCOME FUND FIDELITY OVERSEAS FUND FIDELITY WORLDWIDE FUND Regional/Single Country Funds FIDELITY CANADA FUND FIDELITY EUROPE FUND FIDELITY EUROPE CAPITAL APPRECIATION FUND FIDELITY JAPAN FUND FIDELITY PACIFIC BASIN FUND Emerging Markets Funds FIDELITY EMERGING MARKETS FUND FIDELITY LATIN AMERICA FUND FIDELITY SOUTHEAST ASIA FUND ANNUAL REPORT AND PROSPECTUS OCTOBER 31, 1994 CONTENTS <TABLE> <CAPTION> <S> <C> <C> PRESIDENT'S MESSAGE NED JOHNSON ON OVERSEAS INVESTING. MARKET RECAP A-5 A REVIEW OF WHAT HAPPENED IN WORLD MARKETS DURING THE LAST YEAR. BROADLY DIVERSIFIED FUNDS DIVERSIFIED INTERNATIONAL FUND A-6 PERFORMANCE A-7 FUND TALK: THE MANAGER'S OVERVIEW A-9 INVESTMENT CHANGES A-10 INVESTMENTS A-14 FINANCIAL STATEMENTS INTERNATIONAL GROWTH & INCOME FUND A-16 PERFORMANCE A-17 FUND TALK: THE MANAGER'S OVERVIEW A-19 INVESTMENT CHANGES A-20 INVESTMENTS A-25 FINANCIAL STATEMENTS OVERSEAS FUND A-27 PERFORMANCE A-28 FUND TALK: THE MANAGER'S OVERVIEW A-30 INVESTMENT CHANGES A-31 INVESTMENTS A-36 FINANCIAL STATEMENTS WORLDWIDE FUND A-38 PERFORMANCE A-39 FUND TALK: THE MANAGER'S OVERVIEW A-41 INVESTMENT CHANGES A-42 INVESTMENTS A-46 FINANCIAL STATEMENTS REGIONAL/SINGLE COUNTRY FUNDS CANADA FUND A-48 PERFORMANCE A-49 FUND TALK: THE MANAGER'S OVERVIEW A-51 INVESTMENT CHANGES A-52 INVESTMENTS A-56 FINANCIAL STATEMENTS EUROPE FUND A-58 PERFORMANCE A-59 FUND TALK: THE MANAGER'S OVERVIEW A-61 INVESTMENT CHANGES A-62 INVESTMENTS A-65 FINANCIAL STATEMENTS EUROPE CAPITAL APPRECIATION FUND A-67 PERFORMANCE A-68 FUND TALK: THE MANAGER'S OVERVIEW A-70 INVESTMENT CHANGES A-71 INVESTMENTS A-74 FINANCIAL STATEMENTS JAPAN FUND A-76 PERFORMANCE A-77 FUND TALK: THE MANAGER'S OVERVIEW A-79 INVESTMENT CHANGES A-80 INVESTMENTS A-85 FINANCIAL STATEMENTS PACIFIC BASIN FUND A-87 PERFORMANCE A-88 FUND TALK: THE MANAGER'S OVERVIEW A-90 INVESTMENT CHANGES A-91 INVESTMENTS A-97 FINANCIAL STATEMENTS EMERGING MARKETS FUNDS EMERGING MARKETS FUND A-99 PERFORMANCE A-100 FUND TALK: THE MANAGER'S OVERVIEW A-102 INVESTMENT CHANGES A-103 INVESTMENTS A-113 FINANCIAL STATEMENTS LATIN AMERICA FUND A-115 PERFORMANCE A-116 FUND TALK: THE MANAGER'S OVERVIEW A-118 INVESTMENT CHANGES A-119 INVESTMENTS A-123 FINANCIAL STATEMENTS SOUTHEAST ASIA FUND A-125 PERFORMANCE A-126 FUND TALK: THE MANAGER'S OVERVIEW A-128 INVESTMENT CHANGES A-129 INVESTMENTS A-133 FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS A-135 NOTES TO THE FINANCIAL STATEMENTS REPORTS OF INDEPENDENT ACCOUNTANTS A-139 THE AUDITORS' OPINION / COOPERS & LYBRAND A-140 THE AUDITORS' OPINION / PRICE WATERHOUSE FIDELITY INTERNATIONAL EQUITY P-1 FUNDS PROSPECTUS </TABLE> 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: Overseas stock markets have proven volatile - but in some instances quite rewarding - over the past 12 months. Foreign stocks generally outperformed their U.S. counterparts during the period. The Morgan Stanley Europe, Australia and Far East (EAFE) index returned 10.09% during the period, while the Standard & Poor's 500 index - a common proxy of U.S. stocks - rose 3.87%. In my last report, I suggested that volatility is a fact of life in international markets. Events since then have provided further proof. Emerging markets are a good example. For the 12 months ended October 31, 1994, the Morgan Stanley Latin America Free Index had a total return of 46.22%. That's a solid return, but how it was achieved demonstrates the volatility inherent in investing in these markets. From November through January, the index rose 39.82%. In the next three months, the markets corrected and the index fell 16.39%. The index rose 32.74% through September, but lost nearly 5% in October. Investors who hung on during this period enjoyed substantial returns. But they endured a bumpy ride. Even within the same geographic region, markets can behave quite differently. In Latin America, Brazilian stocks rose 101.59% in U.S. dollars during the past 12 months. Yet Mexican stocks were flat by comparison, returning 12.70 % in U.S. dollars. In Europe, selected Scandinavian markets had strong gains. Finland was up 64.15%; Sweden was up 20.22%; Norway was up 16.48%. By comparison, some other European markets were weak. Spain returned 1.30% for the year and France had only a 4.15% return. Interestingly, returns in most foreign markets had one thing in common: they were boosted by a weak U.S. dollar. The disparity between returns in local currency and U.S. dollars varied from market to market, but the net effect was favorable for U.S. investors. For example, Japanese stocks had a total return, in yen, of -2.62% over the past 12 months. In U.S. dollars, however, the market was up 8.78%. The German market, meanwhile, returned - -0.85% in deutsche marks, but rose 10.15% in dollars. No one knows, of course, if these enhanced foreign returns due to the weak dollar will continue. You may wish to keep a few time-tested principles in mind when investing overseas. If you can tolerate the increased volatility of foreign markets in comparison with the U.S., you may be favorably rewarded. It can help if you diversify your investments. You may already be diversified by holding a portion of your portfolio overseas. You can further diversify by making sure your foreign stake includes markets in different regions of the world. Remember that diversification cannot eliminate risk, but may reduce it. Finally, you may want to consider a plan for making regular investments. Investing a fixed amount each month or each quarter cannot guarantee a profit or protect against a loss in a declining market. It may, however, keep you from investing large amounts when markets are at high levels. If we can be of any assistance, please contact us at 1-800-544-8888. We look forward to hearing from you. Sincerely, Edward C. Johnson 3d S&P 500 EAFE * YEAR TO DATE THROUGH OCTOBER 31, 1994 Row: 1, Col: 1, Value: 22.38 Row: 1, Col: 2, Value: 23.69 Row: 2, Col: 1, Value: 6.1 Row: 2, Col: 2, Value: 7.38 Row: 3, Col: 1, Value: 31.57 Row: 3, Col: 2, Value: 56.16 Row: 4, Col: 1, Value: 18.56 Row: 4, Col: 2, Value: 69.44000000000001 Row: 5, Col: 1, Value: 5.1 Row: 5, Col: 2, Value: 24.63 Row: 6, Col: 1, Value: 16.61 Row: 6, Col: 2, Value: 28.27 Row: 7, Col: 1, Value: 31.69 Row: 7, Col: 2, Value: 10.53 Row: 8, Col: 1, Value: -3.1 Row: 8, Col: 2, Value: -23.45 Row: 9, Col: 1, Value: 30.47 Row: 9, Col: 2, Value: 12.13 Row: 10, Col: 1, Value: 7.619999999999999 Row: 10, Col: 2, Value: -12.17 Row: 11, Col: 1, Value: 10.08 Row: 11, Col: 2, Value: 32.56 Row: 12, Col: 1, Value: -2.56 Row: 12, Col: 2, Value: 7.89 % MARKET RECAP After producing unusually strong returns in 1993, many overseas markets saw increased volatility during 1994. Several emerging markets experienced corrections after reaching high levels in 1993. Returns in other markets were dampened by rising interest rates and fears of inflation that could result from expanding economies. For the 12 months ended October 31, 1994, the Morgan Stanley EAFE index - which measures stock performance in Europe, Australia and the Far East - had a total return of 10.09%. AVERAGE ANNUAL STOCK MARKET RETURNS TEN YEARS Row: 1, Col: 1, Value: 20.79 Row: 2, Col: 1, Value: 20.3 Row: 3, Col: 1, Value: 20.17 Row: 4, Col: 1, Value: 19.61 Row: 5, Col: 1, Value: 18.64 Row: 6, Col: 1, Value: 18.19 Row: 7, Col: 1, Value: 17.68 Row: 8, Col: 1, Value: 17.64 Row: 9, Col: 1, Value: 13.59 Row: 10, Col: 1, Value: 13.6 Row: 11, Col: 1, Value: 7.94 50% 40% 30% 20% 10% 0% ONE YEAR Row: 1, Col: 1, Value: 17.0 Row: 2, Col: 1, Value: 4.149999999999999 Row: 3, Col: 1, Value: 12.33 Row: 4, Col: 1, Value: 1.3 Row: 5, Col: 1, Value: 10.89 Row: 6, Col: 1, Value: 10.15 Row: 7, Col: 1, Value: 8.779999999999999 Row: 8, Col: 1, Value: 18.64 Row: 9, Col: 1, Value: 11.51 Row: 10, Col: 1, Value: 3.72 Row: 11, Col: 1, Value: 3.09 50% 40% 30% 20% 10% 0% CHARTS SHOW THE PERFORMANCE OF THE MORGAN STANLEY CAPITAL INTERNATIONAL'S UNMANAGED STOCK INDEXES FOR THE 10 LARGEST INTERNATIONAL MARKETS PLUS THE UNITED STATES. AVERAGE ANNUAL TOTAL RETURNS, AS MEASURED IN U.S. DOLLARS, INCLUDE PRICE CHANGES, DIVIDENDS PAID ON THE STOCKS, AND THE EFFECT OF REINVESTING DIVIDENDS (NET OF FOREIGN TAXES). BROKERAGE COMMISSIONS AND OTHER FEES ARE NOT INCLUDED. RESULTS ARE HISTORICAL FOR THE PERIODS ENDED OCTOBER 31, 1994 AND DO NOT INDICATE FUTURE MARKET OR FIDELITY FUND PERFORMANCE. EUROPE: European markets produced mixed results. The Morgan Stanley Europe index rose 11.24% during the 12 months ended October 31. Many European economies began to recover in 1994. In several nations, however, the positive effects of that growth on corporate earnings were outweighed by the negative effects of higher interest rates. Rates rose both on fears that improving economies might trigger inflation and in sympathy to rate hikes in the United States. Generally, major European markets such as France and the U.K. produced lackluster returns; Germany fared somewhat better. Conversely, Scandinavian markets surged. Finland, Norway and Sweden experienced strong export growth. Previous currency devaluations and effective cost cutting made Scandinavian companies more competitive in the world marketplace. JAPAN AND THE FAR EAST: Japan's stock market showed improvement in 1994 as the country's economy appeared to emerge from a long recession. According to Morgan Stanley Capital International, Japanese stocks rose 8.78% in U.S. dollars over the 12 months ended October 31. In late 1993, the Japanese stock market was historically inexpensive. A large inflow of foreign capital combined with the spark of economic growth caused stocks to surge in January and February 1994. The rally couldn't be sustained, however, and Japanese stocks gave back some of their gains over the summer. Meanwhile, the Morgan Stanley Far East ex-Japan index - a measure of Far East markets excluding Japan - rose 15.46% during the period, mainly on the strength of gains made in late 1993. Hong Kong stocks, in particular, corrected sharply in 1994, but still rose nearly 5% for 12-month period. EMERGING MARKETS: Emerging markets were among the most volatile - but ultimately the most rewarding - over the past year. The Morgan Stanley Emerging Markets Free index had a total return of 29.36% for the 12 months ended October 31. Most of these markets - from the Pacific Rim to Latin America - had strong gains in late 1993, thanks to positive government reforms that fueled economic growth and to a huge inflow of money from foreign investors. As stock prices relative to earnings reached high levels by early 1994, many emerging markets began corrections that lasted several months. Over the summer, however, strong earnings growth and more attractive valuations gave rise to another rally in many emerging markets. The top performing market through October 1994 was Brazil, whose government recently implemented a successful plan to fight inflation. Other emerging markets making strong gains in 1994 included Chile, South Korea and India. U.S. AND CANADA: Rising interest rates contributed to below average returns in the U.S. stock market during the period. The Standard & Poor's Composite Index of 500 Stocks was up 3.87% - below its historical annual average return of more than 10%. When the U.S. market did make upward moves, it did so largely on the strength of improving corporate earnings. Many U.S. corporations recorded record profits in 1994. Canadian stocks fared somewhat worse over the past 12 months. Stocks included in the Toronto Stock Exchange 300 Index returned 0.73% for the period. BONDS: Many global bond markets were hurt by rising interest rates during the 12 months ended October 31. Yields rose - and prices fell - on most fixed-income investments. From February through August 1994, the Federal Reserve Board raised U.S. short-term interest rates five times. Higher rates followed in many foreign countries; the sell-off was most pronounced in emerging markets such as Argentina. For the 12 months ended October 31, the J.P. Morgan Emerging Markets Bond Index had a total return of -9.41%. That trailed the Lehman Brothers Aggregate Bond Index - a broad measure of taxable bonds in the U.S. market - which returned -3.67%. DIVERSIFIED INTERNATIONAL PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). Diversified International has a 3% sales charge, which has been waived since the fund's start on December 27, 1991 through June 30, 1995. CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF OCTOBER 31, 1994 YEAR FUND DIVERSIFIED INTERNATIONAL 11.14% 27.29% Morgan Stanley GDP- weighted EAFE Index 10.32% 38.86% Average International Fund 10.59% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, or since the fund started on December 27, 1991. You can compare the fund figures to the performance of the Morgan Stanley GDP-weighted EAFE index - a broad measure of the performance of stocks in Europe, Australia, and the Far East, weighted by each country's gross domestic product. You can also compare the fund's performance to the average international fund which currently reflects the performance of 149 funds with similar objectives tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF OCTOBER 31, 1994 YEAR FUND DIVERSIFIED INTERNATIONAL 11.14% 8.84% Morgan Stanley GDP- weighted EAFE Index 10.32% 12.21% Average International Fund 10.59% n/a 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 Diversified International (325) Morgan Stanley GDP 12/27/91 10000.00 10000.00 12/31/91 10060.00 10275.57 01/31/92 9860.00 10188.63 02/29/92 9680.00 10050.14 03/31/92 9140.00 9554.95 04/30/92 9240.00 9638.28 05/31/92 9750.00 10205.78 06/30/92 9540.00 9873.69 07/31/92 9190.00 9524.06 08/31/92 9350.00 9997.89 09/30/92 9140.00 9631.08 10/31/92 8460.00 9240.11 11/30/92 8460.00 9285.20 12/31/92 8671.06 9283.63 01/31/93 8873.42 9391.13 02/28/93 9176.95 9719.67 03/31/93 9915.56 10383.39 04/30/93 10522.64 11339.71 05/31/93 10785.70 11516.97 06/30/93 10482.17 11317.62 07/31/93 10805.94 11658.22 08/31/93 11362.42 12512.58 09/30/93 11210.66 12250.09 10/31/93 11453.49 12586.98 11/30/93 11028.53 11584.19 12/31/93 11850.64 12399.01 01/31/94 12739.44 13347.09 02/28/94 12484.04 13273.82 03/31/94 12085.61 13083.23 04/30/94 12320.58 13744.12 05/31/94 12300.15 13428.70 06/30/94 12136.69 13422.75 07/31/94 12555.55 13734.43 08/31/94 12872.25 13967.08 09/30/94 12504.47 13476.08 10/31/94 12729.22 13885.61 Let's say you invested $10,000 in Fidelity Diversified International Fund on its start date. By October 31, 1994, it would have grown to $12,729 - a 27.29% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley GDP-weighted EAFE index, which would have grown to $13,886 over the same period - a 38.86% 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) DIVERSIFIED INTERNATIONAL FUND TALK: THE MANAGER'S OVERVIEW An interview with Greg Fraser, Portfolio Manager of Fidelity Diversified International Fund Q. GREG, HOW DID THE FUND DO? A. The fund returned 11.14% for the year ended October 31, 1994. That's right in line with the average international fund tracked by Lipper Analytical Services, which was up 10.59%. It's also slightly better than the Morgan Stanley GDP-weighted EAFE index, a broad measure of stock performance in Europe, Australia and the Far East adjusted to reflect the size of each country's economy, which was up 10.32% for the same time period. Q. WHAT FACTORS CONTRIBUTED TO PERFORMANCE? A. The factors mostly had to do with country weightings. As I've discussed in past reports, a variety of computer models help me to decide which country weightings to change. I reduced investments in some countries over the past six months either because their recoveries were late in the cycle and I didn't see much growth potential, or because their interest rate environments became much less positive. Conversely, in countries where weightings increased, it was because I found compelling stock stories by using individually stock-oriented computer models. Based on that information I added to my holdings, rather than intentionally increasing investments in that particular country due to external economic influences. Q. CAN YOU GIVE US SOME EXAMPLES? A. Sure. Japan's weighting, still the largest in the fund at around 26%, has slightly decreased because I found attractive investments in other markets. One of those markets was Canada. In the past six months I've increased my stake in Canada from about 2.4% to 5.4% of the fund. It's not the investing environment in Canada per se - just a couple of good stock finds. The first is Alcan Aluminium, which I bought when the demand for aluminum began to increase. Another is Dominion Textile, a company that does a lot of business in the U.S., yet is traded at a much lower valuation compared to similar U.S. companies. Both stocks are new to the fund. In France, however, the story is different. France's weighting fell from 10.3% to 7.9% in the past six months because I was looking for further interest rate declines that just didn't happen. Around the start of the year, rates began to rise in the United States, and the rest of the world, and France became a less attractive market. Q. HAVE YOU INCREASED YOUR INVESTMENTS IN EMERGING MARKETS? A. Last year at this time I stated that emerging markets were an area in which the fund's stake was likely to increase - and it did. My total exposure to emerging markets, excluding Hong Kong, was under 5% six months ago, now it's near 10%. I expect to increase my exposure in the months to come. Q. WHAT'S YOUR STRATEGY IN THE SOMETIMES VOLATILE EMERGING MARKETS? A. I think there continues to be growth opportunities in the emerging markets. As I find reasonable ways to make use of those opportunities, the weightings will increase. One of my strategies is to play the emerging markets through large infrastructure companies. In that way, the political and economic risks associated with emerging markets are tempered because these companies are extremely important to their country's well-being. One example is Korea Electric Power, one of the largest names in Korea, which just listed on the New York Stock Exchange. It is a very effective way to play growth in the Korean economy since consumption of electricity should continue to rise as the economy develops. Another company that fits into this strategy is Telebras, the Brazilian telephone company. I'm taking it slow, but my investments in emerging markets probably will continue to grow in prudent and measured ways. Q. WHAT ROLE HAVE DERIVATIVES PLAYED IN THE FUND? A. Derivatives, which are financial instruments whose value "derives" from something else such as currencies, interest rates or indices, have played a minor role in the fund this year. I need to be convinced that a derivative will add value to my fund before I decide to use it. Occasionally, I use foreign currency contracts to hedge the fund's currency exposure, and for this fiscal year, a portion of the fund's yen and deutsche mark exposure was hedged. Q. ANY DISAPPOINTMENTS RECENTLY? A. Generally, the rapid increase of interest rates in Europe was a disappointment. With high levels of unemployment across Europe, I thought that higher interest rates would be unacceptable. A more specific disappointment was that the Deutsche Bank saga continued. In the last report, I explained that the bank's stock price declined after it sustained losses from a loan it made to a German developer who fled the country. I held on to the stock, believing it would be a solid performer as the German economy continued to recover. And it would have performed better had the bank not made a series of large loans to Metallgesellschaft, whose U.S. affiliate lost more than $1.0 billion from misplaced bets on oil futures. I thought the problems were over with the German developer; it just goes to show, international investing is not without risk. While I still like Deutsche Bank, I've trimmed my holdings somewhat. Q. OUTSIDE OF DEUTSCHE BANK, WHY DO THERE CONTINUE TO BE ONLY MODEST AMOUNTS OF CHANGE IN THE FUND'S TOP 10 INVESTMENTS? A. The few changes in the holdings reflect the fund's value philosophy. There's a moderate amount of turnover because I believe that companies that are undervalued can stay undervalued for a period of time. I've intentionally accumulated positions in more liquid stocks, a reflection of caution on my part since names such as Hitachi and Matsushita could be sold to raise cash if necessary. Q. WHAT DO YOU SEE HAPPENING IN THE COMING MONTHS? A. I'm being cautious in the near term. As interest rates continue to rise worldwide, bonds and other fixed-income alternatives become increasingly competitive with stock investments. However, in the long term I continue to expect investment in foreign markets to do well, especially the emerging markets. The fund is being positioned for greater growth in the years ahead. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in countries included in the Morgan Stanley GDP-weighted EAFE (Europe, Australia, Far East) index, with help from quantitative computer models START DATE: December 27, 1991 SIZE: as of October 31, 1994, more than $351 million MANAGER: Gregory Fraser, since December 1991; manager, Fidelity Select Defense and Aerospace Portfolio, 1989-1990; and Fidelity Select Environmental Services Portfolio, 1991; joined Fidelity in 1986 (checkmark) GREG FRASER ON FOREIGN CURRENCY EXPOSURE: "Somewhat unexpectedly, the dollar has been weak against most major currencies. For U.S. dollar-based investors who have invested in funds such as Fidelity Diversified International - which have hedged only modestly or not at all - the weak dollar has really helped returns. In the nearly 10 years that the dollar has been generally weak, dollar depreciation has been the wind in the sails of international funds. What investors have to understand is that this trend can reverse itself quickly and forcefully. To illustrate my point, imagine this scenario: a trade agreement between the U.S. and Japan combined with a forceful lift in U.S. interest rates could lead to a significant increase in the dollar's value vis-a-vis the yen. Unless I hedged the Japanese exposure, a development such as this could be quite painful to the fund's shareholders. Over time, there is probably some cost to performance from hedging, akin to buying insurance. So I only hedge occasionally and modestly. It's also important for shareholders to know that currency values don't go up and down in a straight line." DISTRIBUTIONS The Board of Trustees of Fidelity Diversified International Fund voted to pay on December 12, 1994, to shareholders of record at the opening of business on December 9, 1994, a distribution of $.39 derived from capital gains realized from sales of portfolio securities and a dividend of $.03 from net investment income. DIVERSIFIED INTERNATIONAL INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1994 United States 7.5% Netherlands 3.8% United Kingdom 5.1% Row: 1, Col: 1, Value: 7.5 Row: 1, Col: 2, Value: 5.1 Row: 1, Col: 3, Value: 5.4 Row: 1, Col: 4, Value: 24.3 Row: 1, Col: 5, Value: 3.0 Row: 1, Col: 6, Value: 25.6 Row: 1, Col: 7, Value: 3.7 Row: 1, Col: 8, Value: 4.4 Row: 1, Col: 9, Value: 9.300000000000001 Row: 1, Col: 10, Value: 7.9 Row: 1, Col: 11, Value: 3.8 France 7.9% Canada 5.4% Germany 9.3% Italy 4.4% Hong Kong 3.7% Other 24.3% Spain 3.0% Japan 25.6% AS OF APRIL 30, 1994 United States 7.0% Australia 4.7% United Kingdom 7.2% Row: 1, Col: 1, Value: 7.0 Row: 1, Col: 2, Value: 7.2 Row: 1, Col: 3, Value: 3.7 Row: 1, Col: 4, Value: 22.4 Row: 1, Col: 5, Value: 3.3 Row: 1, Col: 6, Value: 28.0 Row: 1, Col: 7, Value: 4.4 Row: 1, Col: 8, Value: 9.0 Row: 1, Col: 9, Value: 10.3 Row: 1, Col: 10, Value: 4.7 France 10.3% Switzerland 3.7% Germany 9.0% Italy 4.4% Other 22.4% Netherlands 3.3% Japan 28.0% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks and closed-end investment companies 92.5 92.5 Bonds - 0.5 Short-term investments 7.5 7.0 TOP TEN STOCKS <TABLE> <CAPTION> <S> <C> <C> % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Veba AG Ord. (Germany, Electric Utilities) 1.9 - Hitachi Ltd. (Japan, Electronics) 1.8 2.2 Matsushita Electric Industrial Co. Ltd. (Japan, Consumer Electronics) 1.4 1.9 Bayer AG (Germany, Chemicals & Plastics) 1.4 1.4 TDK Corp. (Japan, Electronics) 1.4 1.0 Sony Corp. (Japan, Consumer Electronics) 1.4 1.7 Nomura Securities Co. Ltd. (Japan, Securities Industry) 1.3 1.3 Nokia AB Free shares (Finland, Industrial Machinery & Equipment) 1.3 1.3 Toyota Motor Corp. (Japan, Autos, Tires, & Accessories) 1.2 1.1 Stet (Societa Finanziaria Telefonica Spa) Ord. (Italy, Telephone Services) 1.2 1.5 </TABLE> TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Finance 16.7 17.9 Durables 10.3 12.0 Utilities 9.7 6.1 Basic Industries 9.6 8.4 Energy 6.6 5.4 Technology 6.5 9.2 Industrial Machinery & Equipment 6.2 6.2 Health 5.8 3.7 Nondurables 5.1 7.2 Construction & Real Estate 5.0 4.6 DIVERSIFIED INTERNATIONAL INVESTMENTS OCTOBER 31, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 85.7% SHARES VALUE (NOTE 1) ARGENTINA - 1.7% Banco de Galicia Y Buenos Aires SA sponsored ADR representing Class B shares 70,000 $ 1,890,161 05953820 Banco Frances del Rio de la Plata SA ADR 70,000 1,793,750 05959110 Telecom Argentina Stet France Telecom SA 200,000 1,216,426 90899992 YPF Sociedad Anonima sponsored ADR representing Class D shares 50,000 1,206,250 98424510 6,106,587 AUSTRALIA - 1.5% Alcan Australia Ltd. (a) 250,000 573,775 06099G92 Boral Ltd. Ord. 308,700 774,991 09950910 CSR Ltd. 300,000 1,042,821 12639610 Caltex Australia Ltd. 500,000 1,151,265 13199392 National Australia Bank Ltd. 50,000 395,143 63252510 Pioneer International Ltd. 100,000 242,137 72371110 Santos Ltd. 419,899 1,235,045 80302110 5,415,177 BELGIUM - 0.6% Union Miniere SA (a) 20,000 1,772,602 90707392 Union Miniere SA (warrants) (a) 20,000 186,317 90707393 1,958,919 BERMUDA - 0.3% Jardine Strategic Holdings Ltd. Ord. 300,000 1,153,101 47199020 BRAZIL - 0.6% Telebras PN (Pfd. Reg.) 45,000,000 2,168,550 95499792 CANADA - 4.9% Alcan Aluminium Ltd. 100,000 2,678,538 01371610 American Barrick Resources Corp. 90,000 2,144,678 02451E10 Cambridge Shopping Centres Ltd. 78,400 774,818 13250910 Canadian Tire Corp. Ltd. Series A 50,000 411,017 13668120 Dominion Textile, Inc. (a) 400,000 2,660,064 25754310 FCA International Ltd. (a) 150,300 455,337 30290110 Hudsons Bay Co. Ord. 50,000 997,525 44420410 Intera Information Technologies Corp. Class A (a) 49,000 199,136 45837K10 Noranda, Inc. 100,000 1,958,104 65542210 Norcen Energy Resources Ltd. 100,000 1,293,088 65549285 Nowsco Well Service Ltd. 51,600 724,425 67012210 Placer Dome, Inc. 95,000 2,053,238 72590610 Royal Oak Mines, Inc. 45,000 182,880 78051D10 TVX Gold, Inc. 85,000 612,369 87308K10 Wascana Energy, Inc. (a) 50,000 438,726 93690110 17,583,943 FINLAND - 2.4% Cultor OY Series 2 Ord. 30,000 880,244 23099093 Instrumentarium OY Class B 57,200 1,417,257 45780510 Metsa-Serla Ltd. Class B 20,000 930,233 59299992 Nokia AB Free shares 30,000 4,518,583 65599992 Repola OY 38,700 811,682 75999A92 8,557,999 FRANCE - 7.9% Alcatel Alsthom Cie Generale d' Electricite SA 8,253 756,906 01390492 BHV (Bazar de l'Hotel de Ville) SA 10,000 1,103,663 06690099 Bon Marche SA 10,000 1,713,786 09799492 SHARES VALUE (NOTE 1) CGIP 12,000 $ 2,784,028 12506610 Credit Commercial de France Ord. 277 834 22499398 De Dietrich et CIE 2,500 1,258,137 24699293 Elf Sanofi SA 32,000 1,616,011 91399A92 Eridania Beghin Say Group Ord. 10,000 1,354,319 07720310 Europeene de Propulsion SA 21,455 1,250,656 29899792 Finextel 50,000 971,534 32299292 I.D.I.A. SA 23,500 739,726 45199D22 Lafarge Coppee SA 22,419 1,778,622 50586310 Peugeot SA Ord. (a) 12,000 1,797,727 71682510 Radiotechnique 10,000 979,306 75044610 Schneider SA 20,833 1,566,574 80687410 Societe Generale Class A 20,000 2,257,845 83357799 Technip SA (b) 40,000 1,996,698 87899D23 Total SA Class B 40,160 2,605,542 20434510 Vallourec SA (a) 30,000 1,629,263 92017610 28,161,177 GERMANY - 8.4% Andreae-Noris Zahn AG 15,000 3,600,998 03499892 Bayer AG 21,000 4,914,314 07273010 Commerzbank AG 9,000 1,894,264 20259710 Continental Gummi-Werke AG 10,000 1,470,989 21199010 Deutsche Bank AG 8,000 3,942,145 25152592 Hoechst AG Ord. 15,000 3,284,788 43439010 Karstadt AG 4,000 1,651,870 48576499 Pfaff (G.M.) AG Ord. (a) 4,000 484,123 71699592 Thyssen AG Ord. 10,000 1,910,557 88629110 Veba AG Ord. 20,000 6,703,242 92239110 29,857,290 HONG KONG - 3.7% Cheung Kong Holdings Ltd. 500,000 2,407,145 16674410 China Light & Power Co. Ltd. 210,000 1,092,533 16940010 Dairy Farm International Holdings Ltd. Ord. 566,038 736,206 23385910 Henderson Land Development Co. Ltd. 100,000 653,552 42599010 Hong Kong Telecommunications Ltd. 500,000 1,070,920 43857991 Hong Kong Electric Holdings Ltd. Ord. 150,000 471,723 43858010 Hong Kong Land Holdings Ltd. 2,917 7,475 43858292 Hutchison Whampoa Ltd. Ord. 500,000 2,310,080 44841510 Jardine Matheson Holdings Ltd. Ord. 150,024 1,247,450 47111510 Lai Sun Garment International Ltd. 300,000 572,667 50699093 Mandarin Oriental International Ltd. Ord. 400,000 528,020 56259499 Sun Hung Kai Properties Ltd. 200,500 1,530,930 86676H10 Winsor Industrial Corp. Ltd. 300,000 396,015 97551099 13,024,716 INDIA - 0.3% Bajaj Auto Ltd. GDR (b) 16,000 405,280 05710010 Reliance Industries Ltd. GDR (b) 30,000 757,500 75947010 1,162,780 IRELAND - 0.9% Bank of Ireland U.S. Holdings, Inc. 150,000 697,001 06278793 Elan Corp PLC ADR (a) 12,400 457,250 28413120 Independent Newspapers PLC 192,496 881,867 45399E92 IAWS Group PLC Class A (UK Reg.) 200,000 294,508 45399H23 Waterford Foods PLC Class A 500,000 736,265 94199392 3,066,891 ITALY - 3.9% Assicurazioni Generali Spa 110,000 2,748,891 04542910 Fiat Spa (a) 550,000 2,249,038 31562110 Istituto Mobiliare Italiano 100,000 656,427 45777M92 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) ITALY - CONTINUED Stet (Societa Finanziaria Telefonica Spa) Ord. 1,400,000 $ 4,233,264 85982510 Telecom Italia Ord. 1,476,010 4,038,496 87999R22 13,926,116 JAPAN - 25.6% Akita Bank Ltd. 100,000 834,838 00999692 Aisin Seiki Co. Ltd. 50,000 758,475 00999999 Aplus Co. Ltd. 150,000 735,257 03899A92 Canon, Inc. 120,000 2,228,987 13780199 Daidoh Ltd. 150,000 1,424,075 56299292 Dai-Tokyo Fire & Marine Insurance Ord. 300,000 2,287,809 23399210 Daiwa Securities Co. Ltd. 175,000 2,546,308 23499010 Dowa Fire & Marine Industries Co. Ltd. 100,000 674,888 26099192 Ezaki Glicko Co. Ltd. 75,000 789,433 30199492 Fuji Photo Film Co. Ltd. 50,000 1,191,889 35958610 Fuji Oil Co. Ltd. 150,000 1,391,570 35999310 Hanshin Department Store Ltd. 242,000 1,960,374 41199292 Hitachi Ltd. 600,000 6,253,548 43357810 Honda Motor Co. Ltd. 100,000 1,743,976 43812810 House Food Industrial Co. Ltd. 55,000 1,163,511 44144610 Hisamitsu Pharmaceutical Co., Inc. 100,000 846,190 46699092 Izumiya Co. Ltd. 100,000 1,888,447 46599310 Kao Corp. 275,000 3,263,505 48599210 Kasumi Stores 80,000 738,868 48599310 Kirin Brewery Co. Ltd. 225,000 2,693,360 49712510 Konica Corp. 150,000 1,164,027 50046M10 Matsushita Electric Industrial Co. Ltd. 300,000 4,984,263 57687910 Matsuyadenki Co. Ltd. (a) 60,000 712,037 57699890 Mitsubishi Heavy Industries Ltd. 200,000 1,628,398 60699310 Nomura Securities Co. Ltd. 225,000 4,713,379 65536110 Nissei Sangyo Co. Ltd. 100,000 1,444,714 66699592 Obayashi Corp. 200,000 1,428,202 67090410 Omron Corp. 100,000 1,805,892 68215110 Pokka Corp. 50,000 712,038 73299999 Renown Look, Inc. 70,000 635,674 75999J22 Ricoh Co. Ltd. Ord. 200,000 1,991,642 76565999 Royal Co. Ltd. 150,000 2,430,215 77999110 Sekisui House Ltd. 150,000 1,702,698 81607810 Sekisui Chemical Co. Ltd. 250,000 2,566,948 81699210 Shintokogio Ltd. 80,000 734,740 97199392 Shionogi & Co. Ltd. 100,000 927,713 82434910 Sony Corp. 80,000 4,879,006 83569999 TDK Corp. 100,000 4,912,027 87235110 Takeda Chemical Industries Ltd. 300,000 3,714,978 87405810 Tokyo Style Co. Ltd. 100,000 1,733,657 88999410 Toshiba Corp. 275,000 2,168,103 89149310 Toyota Motor Corp. 200,000 4,416,696 89399999 Toenec Corp. 55,000 647,026 96599592 Yamaha Motor Co. Ltd. 100,000 919,457 98456092 Yamatake-Honeywell Co. Ltd. 130,000 1,945,204 98491099 Zenitaka Corp. 150,000 1,191,890 64099292 91,525,932 KOREA (SOUTH) - 1.4% Korea Electric Power Corp. ADR 155,760 3,037,320 50063110 Samsung Electronics Co. Ltd.: GDS (b) 30,000 1,800,000 79605020 GDR (New) (a)(b) 1,516 90,960 79605030 GDR Part Dividend (b) 1,305 42,415 79605080 4,970,695 LUXEMBOURG - 0.2% Minorco SA sponsored ADR 30,000 798,750 60434030 SHARES VALUE (NOTE 1) MEXICO - 1.5% BANACCI SA de CV Class C 124,000 $ 851,193 06399893 Cemex SA, Series B 218,750 2,016,980 15299293 Grupo Carso SA de CV Class A-1 (a) 130,000 1,382,053 40099594 Grupo Financiero Bancomer SA de CV sponsored ADR, Series C (b) 50,000 1,150,000 40048610 5,400,226 NETHERLANDS - 3.8% ABN-AMRO Holdings NV 25,500 906,337 00399192 AKZO Nobel NV Ord. 7,000 884,294 01019910 Borsumij Wehry NV 26,225 434,153 09985610 Internationale Nederlanden Groep NV 25,375 1,187,971 46099892 Koninklijke PTT Nederland (b) 42,300 1,347,837 72699423 KLM Royal Dutch Airlines (a) 33,900 940,725 48251610 Philips Electronics 55,000 1,821,041 71833799 Pirelli Tyre Holdings NV Ord. 46,000 319,349 72499092 Royal Dutch Petroleum Co. 25,000 2,912,500 78025770 Telegraaf 15,000 1,691,094 87940410 Twentsche Kabel Holding NV 10,000 1,157,064 91030099 13,602,365 NETHERLANDS ANTILLES - 0.6% Intrum Justtia NV (Reg.) 160,000 201,574 Schlumberger Ltd. 35,000 2,056,250 2,257,824 NEW ZEALAND - 1.3% Brierley Investments Ltd. 5,078,459 3,818,747 10901410 Fletcher Challenge Ltd. (Reg.) 300,000 809,883 33999592 4,628,630 NORWAY - 1.7% Orkla AS Class B (non-vtg.) 20,000 573,526 39299192 Norsk Hydro AS ADR 82,956 3,338,979 65653160 Saga Petroleum AS Class B 100,000 1,139,405 84099794 Unitor AS 60,500 1,091,840 91699392 6,143,750 PANAMA - 0.3% Banco Latino Americano de Exportaciones SA Class E 25,000 928,125 06199A92 SINGAPORE - 0.1% Hour Glass Ltd. 394,500 451,470 44199E22 SOUTH AFRICA - 0.3% Rustenberg Platinum Holding Ltd. ADR (a) 35,000 997,500 78307820 SPAIN - 2.3% Banco Popular Espanol 2,500 313,573 05999110 Corporacion Bancaria de Espana SA sponsored ADR 60,000 1,155,000 21991310 Empresa Nacional de Electricidad SA sponsored ADR 15,000 688,125 29244720 Electric Zaragosa 9,375 238,024 29599192 Hidroelectrisa de Cantabrico SA 50,000 1,516,966 42899999 Repsol SA sponsored ADR 30,000 975,000 76026T20 Telefonica de Espana SA sponsored ADR 35,000 1,417,500 87938220 Union Electrica Fenosa SA 400,000 1,839,520 90659510 8,143,708 SWEDEN - 2.1% Astra AB Class A Free shares 100,000 2,717,220 04632292 Mo Och Domsjoe (Modo) AB (a) 20,000 916,451 61399792 Pharmacia AB Class A Free shares 200,000 3,799,918 71713093 7,433,589 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SWITZERLAND - 2.3% Also Holding AG (Reg.) (a) 5,400 $ 1,031,437 02199F93 Bank of International Settlements 100 811,779 06299B22 Bucher Holding AG : 08699292 (Bearer) 1,800 1,017,111 08699292 (warrants) (a) 2,000 2,388 08699293 CIBA-GEIGY AG (Reg.) 320 186,423 17199492 CIBA-GEIGY AG (warrants) (a) 120 315 17199494 Georg Fischer AG (Bearer) (a) 700 807,799 33771110 Industrieholding Cham AG (Reg.) 1,200 792,678 85599922 Nestle SA (Reg.) 1,000 934,341 64106992 Oerlikon-Buhrle Holding Ltd. (Reg.) (a) 10,000 1,034,620 67199092 Prodega AG (Bearer) 800 713,092 74599992 Sandoz AG (Reg.) 500 249,105 80005292 Sulzer Gebrueder AG (Part. Cert.) 1,000 688,420 86557799 Swiss Reinsurance Corp. Class B (warrants) (a) 1,000 7,959 87099399 8,277,467 UNITED KINGDOM - 5.1% Amstrad PLC 600,000 274,872 03299110 ASDA Group PLC 100,000 99,805 04399110 BAT Industries PLC Ord. 90,000 644,971 05527010 British Petroleum PLC: 11088940 ADR 35,236 2,995,060 11088940 Ord. 3 21 11088910 British Telecommunications PLC Ord. 125,000 805,804 11102110 Clinton Cards PLC 92,900 148,959 18799292 Finlay (James) PLC 200,000 245,422 31799F92 Guinness PLC Ord. 100,000 767,354 40203310 Imperial Chemical Industries PLC Ord. 100,000 1,307,284 45270440 Invesco Mim PLC 400,000 1,066,768 46199C92 Lonrho PLC Ord. 155,067 332,364 54337410 Northumbtian Water Croup PLC Ord. 150,000 1,725,320 67299295 Royal Insurance Holdings PLC 405,084 1,938,627 78074910 Standard Chartered Bank PLC 206,358 992,640 85256810 Tesco PLC Ord. 44,939 172,788 88157510 Vsel Consortium PLC 40,000 912,972 91828599 WPP Group PLC ADR 450,000 1,603,125 92930920 Welsh Water PLC Ord. 100,000 1,056,135 94999395 Zeneca Group PLC sponsored ADR 25,000 1,053,125 98934D10 18,143,416 TOTAL COMMON STOCKS (Cost $273,862,298) 305,846,693 NONCONVERTIBLE PREFERRED STOCKS - 2.2% AUSTRIA - 0.3% Creditanstal Bankverein 17,000 1,014,280 22539210 BELGIUM - 0.2% Cockerill Sambre SA (a) 100,000 627,527 19199392 CANADA - 0.5% Trilon Financial Corp. Class 1, Series A 167,200 1,775,963 89590330 FINLAND - 0.3% Nokia AB 7,000 1,057,379 65599910 GERMANY - 0.4% Wella AG 2,000 1,336,658 94599999 ITALY - 0.5% Fiat Spa (a) 800,000 1,938,432 31562120 TOTAL NONCONVERTIBLE PREFERRED STOCKS (Cost $5,792,761) 7,750,239 CLOSED-END INVESTMENT COMPANIES - 4.6% SHARES VALUE (NOTE 1) AUSTRALIA - 0.5% Kleinwort Benson Australia Income Fund 192,100 $ 1,752,913 49857710 CHILE - 0.5% Five Arrows Chile Investment Trust Ltd. 500,000 1,360,000 33899422 GT Chile Growth Fund Ltd. 7,500 251,250 49899E22 1,611,250 GERMANY - 0.5% New Germany Fund, Inc. (The) 150,000 1,893,750 64446510 INDIA - 0.3% Himalayan Fund (a) 45,000 770,400 43299792 India Fund 20,000 257,500 45408910 1,027,900 MALAYSIA - 0.7% Malaysia Equity Fund Ltd. 145,000 2,610,000 56099S22 PAKISTAN - 0.1% Pakistan Investment Fund, Inc. 35,000 380,625 69584410 PHILIPPINES - 0.6% First Philippine Fund, Inc. 100,000 2,262,500 33610010 REGIONAL AFRICA - 0.2% Morgan Stanley Africa Investment Fund, Inc. 70,000 857,500 61744410 SPAIN - 0.7% Growth Fund of Spain, Inc. (a) 250,000 2,562,500 39987710 THAILAND - 0.5% Thai Euro Fund IDR 52 1,778,400 94499C23 TOTAL CLOSED-END INVESTMENT COMPANIES (Cost $16,177,651) 16,737,338 REPURCHASE AGREEMENTS - 7.5% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 4.78% dated 10/31/94 due 11/1/94 26,671,541 26,668,000 99799N9L TOTAL INVESTMENT IN SECURITIES - 100% (Cost $322,500,710) $ 357,002,270 FORWARD FOREIGN CURRENCY CONTRACTS SETTLEMENT UNREALIZED DATE(S) VALUE GAIN/(LOSS) CONTRACTS TO BUY 1,700,625,000 JPY 1/11/95 $ 17,667,363 $ 55,074 (Payable amount $17,612,289) THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 4.9% CONTRACTS TO SELL 1,700,625,000 JPY 1/11/95 $ 17,667,363 (440,610) (Receivable amount $17,226,753) THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 4.9% $ (385,536) CURRENCY ABBREVIATIONS JPY - Japanese yen LEGEND (a) Non-income producing (b) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $7,590,690 or 2.2% of net assets. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $332,256,933 and $258,701,956, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of FMR. The commissions paid to these affiliated firms were $23,550 for the period (see Note 5 of Notes to Financial Statements). The fund participated in the bank borrowing program. The maximum loan and the average daily loan balances during the period for which loans were outstanding amounted to $3,190,000. The weighted average interest rate was 4.19% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At October 31, 1994, the aggregate cost of investment securities for income tax purposes was $322,918,762. Net unrealized appreciation aggregated $34,083,508, of which $42,627,853 related to appreciated investment securities and $8,544,345 related to depreciated investment securities. The fund hereby designates $5,462,566 as a capital gain dividend for the purpose of the dividend paid deduction. For the period, interest and dividends from foreign countries were $6,949,557, or $0.25 per share. Taxes paid to foreign countries were $937,803 or $0.03 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Aerospace & Defense 1.0% Basic Industries 9.6 Construction & Real Estate 5.0 Durables 10.3 Energy 6.6 Finance 16.7 Health 5.8 Holding Companies 2.1 Industrial Machinery & Equipment 6.2 Media & Leisure 1.7 Nondurables 5.1 Precious Metals 1.4 Retail & Wholesale 3.5 Services 1.0 Repurchase Agreements 7.5 Technology 6.5 Transportation 0.3 Utilities 9.7 100.0% DIVERSIFIED INTERNATIONAL FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES <TABLE> <CAPTION> <S> <C> <C> OCTOBER 31, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $26,668,000) (cost $322,500,710) - See $ 357,002,270 accompanying schedule Cash 220 Receivable for investments sold 8,356,963 Unrealized appreciation on foreign currency contracts 55,074 Receivable for fund shares sold 1,323,366 Dividends receivable 1,402,627 TOTAL ASSETS 368,140,520 LIABILITIES Payable for investments purchased $ 13,267,580 Unrealized depreciation on foreign currency contracts 440,610 Payable for fund shares redeemed 2,784,031 Accrued management fee 196,678 Other payables and accrued expenses 299,379 TOTAL LIABILITIES 16,988,278 NET ASSETS $ 351,152,242 Net Assets consist of: Paid in capital $ 303,607,025 Undistributed net investment income 819,988 Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 12,601,893 Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 34,123,336 NET ASSETS, for 28,175,902 shares outstanding $ 351,152,242 NET ASSET VALUE, offering price and redemption price per share ($351,152,242 (divided by) 28,175,902 shares) $12.46 </TABLE> STATEMENT OF OPERATIONS <TABLE> <CAPTION> <S> <C> <C> YEAR ENDED OCTOBER 31, 1994 INVESTMENT INCOME $ 6,878,460 Dividends Interest 1,037,857 7,916,317 Less foreign taxes withheld (937,803 ) TOTAL INCOME 6,978,514 EXPENSES Management fee $ 2,441,324 Basic fee Performance adjustment (169,790 ) Transfer agent fees 1,075,053 Accounting fees and expenses 191,050 Non-interested trustees' compensation 1,797 Custodian fees and expenses 269,885 Registration fees 96,411 Audit 35,694 Legal 2,367 Interest 1,113 Miscellaneous 3,145 Total expenses before reductions 3,948,049 Expense reductions (2,633 3,945,416 ) NET INVESTMENT INCOME 3,033,098 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 13,079,970 Foreign currency transactions (2,194,708 10,885,262 ) Change in net unrealized appreciation (depreciation) on: Investment securities 14,120,268 Assets and liabilities in foreign currencies (378,224 13,742,044 ) NET GAIN (LOSS) 24,627,306 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 27,660,404 OTHER INFORMATION $191,050 Accounting fees paid to FSC </TABLE> STATEMENT OF CHANGES IN NET ASSETS <TABLE> <CAPTION> <S> <C> <C> YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, 1994 1993 INCREASE (DECREASE) IN NET ASSETS Operations $ 3,033,098 $ 998,691 Net investment income Net realized gain (loss) 10,885,262 2,534,162 Change in net unrealized appreciation (depreciation) 13,742,044 24,127,201 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 27,660,404 27,660,054 Distributions to shareholders: (57,277 (425,331 From net investment income ) ) From net realized gain (2,281,540 - ) TOTAL DISTRIBUTIONS (2,338,817 (425,331 ) ) Share transactions 439,644,650 368,965,606 Net proceeds from sales of shares Reinvestment of distributions 2,282,423 411,649 Cost of shares redeemed (371,125,272 (178,021,677 ) ) Net increase (decrease) in net assets resulting from share transactions 70,801,801 191,355,578 TOTAL INCREASE (DECREASE) IN NET ASSETS 96,123,388 218,590,301 NET ASSETS Beginning of period 255,028,854 36,438,553 End of period (including undistributed net investment income of $819,988 and $893,244, respectively) $ 351,152,242 $ 255,028,854 OTHER INFORMATION Shares Sold 36,516,172 35,207,206 Issued in reinvestment of distributions 201,263 48,543 Redeemed (31,079,116 (17,022,973 ) ) Net increase (decrease) 5,638,319 18,232,776 SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. </TABLE> FINANCIAL HIGHLIGHTS <TABLE> <CAPTION> <S> <C> <C> <C> YEARS ENDED OCTOBER DECEMBER 27, 1991 31, (COMMENCEMENT OF OPERATIONS) TO SELECTED PER-SHARE DATA 1994 1993 OCTOBER 31, 1992 Net asset value, beginning of period $ 11.32 $ 8.46 $ 10.00 Income from Investment Operations Net investment income .05 .07 .07 Net realized and unrealized gain (loss) 1.20 2.89 (1.61) Total from investment operations 1.25 2.96 (1.54) Less Distributions (.01) (.10) - From net investment income From net realized gain (.10) - - Total distributions (.11) (.10) - Net asset value, end of period $ 12.46 $ 11.32 $ 8.46 TOTAL RETURNB, C 11.14% 35.38% (15.40)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 351,152 $ 255,029 $ 36,439 Ratio of expenses to average net assets 1.25% 1.47% 2.00% A Ratio of expenses to average net assets before expense reductions 1.25% 1.47% 2.34% A Ratio of net investment income to average net assets .96% .84% 1.38% A Portfolio turnover rate 89% 56% 56% A </TABLE> <TABLE> <CAPTION> <S><C> A ANNUALIZED B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. </TABLE> INTERNATIONAL GROWTH & INCOME PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). International Growth & Income had a 2% sales charge, which was waived through May 31, 1994. The sales charge was eliminated effective June 1, 1994. CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1994 YEAR YEARS FUND INTERNATIONAL GROWTH & INCOME 2.33% 48.71% 96.18% INTERNATIONAL GROWTH & INCOME (INCL. 2% SALES CHARGE) 0.28% 45.74% 92.26% Morgan Stanley EAFE Index 10.09% 22.45% 98.70% JP Morgan Global Bond Index 2.62% 58.21% 97.83% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on December 31, 1986. You can compare the fund's figures to the performance of the Morgan Stanley EAFE index - a broad measure of the performance of stocks in Europe, Australia, and the Far East. You can also compare the fund's performance to the JP Morgan Global Traded Government Bond Index - a broad measure of bond performance in developed countries, including the United States. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1994 YEAR YEARS FUND INTERNATIONAL GROWTH & INCOME 2.33% 8.26% 8.97% INTERNATIONAL GROWTH & INCOME (INCL. 2% SALES CHARGE) 0.28% 7.82% 8.69% Morgan Stanley EAFE Index 10.09% 4.13% 9.15% JP Morgan Global Bond Index 2.62% 9.61% 9.09% 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 Int'l G&I (305)MS EAFE JP Morgan Gl. Bon 12/31/86 9800.00 10000.00 10000.00 01/31/87 10456.60 11062.61 10257.00 02/28/87 10917.20 11393.69 10377.01 03/31/87 11387.60 12327.33 10565.87 04/30/87 11828.60 13631.69 10575.38 05/31/87 11907.00 13631.64 10475.97 06/30/87 12024.45 13197.34 10430.92 07/31/87 12525.06 13174.29 10305.75 08/31/87 12868.62 14162.12 10418.08 09/30/87 12976.78 13939.16 10164.92 10/31/87 10259.33 11925.20 10730.09 11/30/87 9993.50 12104.07 11008.00 12/31/87 10616.00 12463.49 11382.28 01/31/88 10240.74 12686.01 11440.33 02/29/88 10704.88 13531.62 11545.58 03/31/88 11169.02 14363.62 11636.79 04/30/88 11465.28 14572.35 11582.09 05/31/88 11317.15 14105.22 11457.01 06/30/88 11188.77 13733.43 11355.04 07/31/88 11188.77 14164.30 11266.47 08/31/88 10635.75 13243.36 11186.48 09/30/88 11020.89 13822.02 11465.02 10/31/88 11662.79 15004.67 11916.74 11/30/88 11870.17 15898.44 12021.61 12/31/88 11843.61 15987.08 11949.48 01/31/89 12064.61 16268.36 11831.18 02/28/89 12104.79 16351.98 11812.25 03/31/89 12104.79 16031.06 11711.85 04/30/89 12406.16 16179.74 11905.09 05/31/89 12054.56 15299.51 11776.52 06/30/89 12094.75 15041.96 12043.84 07/31/89 13239.93 16930.83 12523.19 08/31/89 13059.11 16169.38 12152.50 09/30/89 13581.48 16905.93 12344.51 10/31/89 12928.52 16226.69 12503.76 11/30/89 13410.70 17042.40 12615.04 12/31/89 14108.24 17671.22 12762.64 01/31/90 13864.30 17013.70 12572.47 02/28/90 13376.40 15826.23 12436.69 03/31/90 13366.24 14177.52 12360.83 04/30/90 13335.75 14065.01 12312.62 05/31/90 14199.72 15669.84 12706.62 06/30/90 14646.96 15531.83 12936.61 07/31/90 15327.98 15750.60 13316.95 08/31/90 14016.76 14221.09 13213.08 09/30/90 12664.89 12239.17 13337.28 10/31/90 13935.45 14146.27 13864.10 11/30/90 13620.35 13311.80 14108.11 12/31/90 13652.87 13527.45 14264.71 01/31/91 14135.97 13965.00 14588.52 02/28/91 14934.14 15462.03 14603.11 03/31/91 14398.53 14533.81 14147.49 04/30/91 14619.08 14676.53 14318.68 05/31/91 14598.07 14829.67 14331.56 06/30/91 13894.42 13739.97 14139.52 07/31/91 14377.53 14415.04 14437.86 08/31/91 14325.01 14122.30 14738.17 09/30/91 14787.11 14918.22 15276.12 10/31/91 14692.59 15129.70 15427.35 11/30/91 14283.01 14423.38 15678.81 12/31/91 14750.27 15168.25 16470.59 01/31/92 14729.00 14844.25 16147.77 02/29/92 14750.27 14312.95 16100.94 03/31/92 14271.71 13368.06 15952.81 04/30/92 14899.16 13431.61 16085.22 05/31/92 15569.14 14330.66 16542.04 06/30/92 15420.26 13650.92 16993.64 07/31/92 14920.43 13301.55 17367.50 08/31/92 15186.29 14135.84 17829.48 09/30/92 14931.06 13856.69 17811.65 10/31/92 14133.46 13129.85 17366.36 11/30/92 14101.56 13253.40 17058.97 12/31/92 14257.48 13321.95 17221.03 01/31/93 14388.19 13320.31 17513.79 02/28/93 14780.29 13722.68 17795.76 03/31/93 15880.38 14918.82 18069.82 04/30/93 16762.62 16334.66 18398.69 05/31/93 17154.73 16679.64 18516.44 06/30/93 16926.00 16419.41 18531.25 07/31/93 17492.38 16994.17 18538.66 08/31/93 18407.29 17911.56 19087.41 09/30/93 18287.48 17508.39 19289.73 10/31/93 18788.51 18047.95 19280.09 11/30/93 18145.89 16470.37 19139.34 12/31/93 19259.02 17659.65 19334.57 01/31/94 20267.46 19152.69 19516.31 02/28/94 19905.74 19099.65 19301.63 03/31/94 18842.49 18277.00 19212.84 04/30/94 19094.60 19052.47 19197.47 05/31/94 19445.36 18943.09 19038.13 06/30/94 18974.03 19210.79 19264.69 07/31/94 19291.91 19395.54 19445.78 08/31/94 19478.25 19854.73 19395.22 09/30/94 19028.83 19229.40 19490.25 10/31/94 19226.14 19869.74 19782.61 Let's say you invested $10,000 in Fidelity International Growth & Income Fund on its start date and paid the 2% sales charge. By October 31, 1994, it would have grown to $19,226 - a 92.26% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley EAFE index, which would have grown to $19,870 over the same period - a 98.70% increase. If you had put $10,000 in the J.P. Morgan Global Bond index, it would have grown to $19,783 - a 97.83% 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) INTERNATIONAL GROWTH & INCOME FUND TALK: THE MANAGER'S OVERVIEW An interview with Richard Mace, Portfolio Manager of International Growth & Income Fund Q. RICK, HOW DID THE FUND PERFORM? A. The fund had a total return of 2.33% for the 12 months ended October 31, 1994. When looking at performance, it's important to keep in mind that the fund invests in both stocks and bonds, and maintains at least a 25% investment in fixed-income investments. Because no index tracks both international stocks and bonds, we can look at the performance of two separate indexes. First, the Morgan Stanley EAFE index - which tracks the performance of stocks in Europe, Australia and the Far East - rose 10.09% during the period. The JP Morgan Global Government Bond Index, which tracks the performance of government bonds in 13 developed countries including the U.S., had a total return of 2.62% for the same 12 months. Q. WHY DID THE FUND TRAIL BOTH INDEXES? A. In a word: bonds. Over the past six months, the fund has maintained roughly a 35% stake in bonds, which is actually below its neutral mix of 40% bonds and 60% stocks. However, most bond markets around the world have fallen anywhere from 10% to 30% year-to-date through October. It all started back in February, when the Federal Reserve Board began raising short-term interest rates in the United States. The Fed was attempting to control future inflation that might result from an expanding U.S. economy. Once rates went up in the U.S., they rose around the world, and the extent of the correlation of these foreign markets to the U.S. market was surprising. In addition, one key reason why the fund underperformed the JP Morgan Global Bond index over the 12-month period is that roughly 10% of the fund's investments were in emerging market bonds during 1994. Markets such as Argentina were among the hardest hit during the worldwide sell-off. Because there are no emerging markets represented in the index, the fund suffered disproportionately. Q. BECAUSE OF THE PERFORMANCE OF BONDS, HAVE YOU CUT BACK ON THE FUND'S INVESTMENTS? A. No, just the opposite; the fund's stake in bonds has increased slightly over the past six months. It's important to point out that the reasons I found bonds in many foreign countries attractive earlier this year were even more pronounced by the end of October. Now that yields have risen -and prices have fallen - bonds offer very compelling value. In Argentina, for example, government bonds are offering yields that are roughly 7% higher than those of U.S. Treasuries with comparable maturities. In addition, inflation, which is a bond investor's worst enemy, is only 3 1/2%, while GNP is growing at 6%. Q. WHERE ELSE ARE YOU FINDING THE BEST VALUE IN BONDS? A. Behind Argentina, which made up 7.4% of the fund's investments on October 31, the largest countries represented on the bond side included Canada, France, Japan, Germany and the United States. In Canada and France especially, as in Argentina, the value story is quite compelling. Real yields - a bond's interest rate minus the rate of inflation - are at historically high levels. For that reason, I believe that bonds may offer favorable returns over the next year. Q. LET'S TURN TO STOCKS. JAPAN HAS REMAINED THE LARGEST COUNTRY REPRESENTED ON THE STOCK SIDE OVER THE PAST SIX MONTHS - 21.5% OF THE FUND ON OCTOBER 31. HOW DID THIS STRATEGY WORK OUT? A. Very well. Japan has been one of the world's best performing markets this year, while Southeast Asian markets - which the fund largely avoided - corrected sharply after a strong 1993. Earlier this year, I focused on major Japanese exporters that had effectively cut costs and were poised to benefit as Japan emerged from a long recession. Stocks such as Hitachi, Matsushita, Sony and Suzuki performed well during the first six months 1994. However, I began favoring companies that have more exposure to the domestic economy, believing that they will benefit once the Japanese recovery gains momentum. Examples include Ito-Yokado, which owns several retailers; and Mitsubishi Electric, a maker of consumer electronic goods. Q. WHERE ELSE HAVE YOU FOUND OPPORTUNITIES IN STOCKS? A. In Europe, I've focused largely on cyclical stocks - those that tend to rise and fall with the economy. Although they've turned in mixed results over the past six months, I believe there is plenty of potential going forward. Strengthening European economies have driven up the stocks of cyclical commodity-related companies such as DSM, a Dutch chemical company, and Hoogovens, another Dutch company that manufactures aluminum and steel. In fact, I've recently found many inexpensive stocks in the Netherlands. The fund's largest stock investment on October 31 was Koninklijke PPT Nederland (KPN), which runs the country's post office and the phone company. KPN just went public earlier this year when the government decided to privatize the company. The company has done an excellent job cutting costs, and that's especially clear on the telephone side of the business. Q. RICK, ARE YOU STILL USING DERIVATIVE INSTRUMENTS KNOWN AS FORWARD FOREIGN CURRENCY CONTRACTS TO HEDGE OVERSEAS INVESTMENTS? A. I am. Currently, I'm hedging a portion of both the fund's stock and bond investments. These contracts 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. Q. ARE THERE RISKS ASSOCIATED WITH HEDGING? A. The biggest risk is that the U.S. dollar will fall in value relative to the currencies of countries in which the fund is hedged. And that has happened over the past year. For foreign investments that were hedged, a weak dollar has meant the fund has given up a portion of any gains made by those investments in their local currency. So in that sense, the weak dollar has caused a lost opportunity in return for decreased volatility and currency risk. However, since hedging losses count against the fund's income for tax purposes, dividends this year will be lower than they might have been. I believe this is a temporary situation. If the dollar again strengthens relative to foreign currencies the fund has hedged, we should be back on track. Q. HAVE YOU USED ANY OTHER TYPES OF DERIVATIVES? A. Yes, on a limited basis. Over the past six months, I sold a roughly 3% stake in indexed securities, or structured notes. These securities are like customized bonds, and were constructed in a way that tied their value to short-term interest rates in Europe. They did very well when rates fell in 1993. However, when rates suddenly reversed in 1994, they negatively affected the fund's total return. In addition, the fund had a small stake in Japanese futures tied to the Nikkei stock index. These investments mirror the performance of the market to which they're tied, and allow the fund to take part in broad market moves until I find specific investments to replace them. Q. LET'S TALK ABOUT THE NEXT SIX MONTHS. WHAT'S YOUR OUTLOOK? A. Again, at some point down the line, I feel strongly that bonds will turn the corner and yields will begin to fall, and prices rise, once again. The valuations that exist in most worldwide bond markets are simply too attractive - relative to the risk of higher inflation - for investors to stay on the sidelines much longer. As for stocks, I believe that we could see some choppy markets going forward. Improving economies in Japan and Europe should boost corporate earnings. However, higher interest rates have drawn the prospect of higher stock prices into question. FUND FACTS GOAL: to increase the value of the fund's shares by investing in stocks and bonds, mainly in Europe, the Far East and Pacific Basin START DATE: December 31, 1986 SIZE: as of October 31, 1994, more than $1.3 billion MANAGER: Richard Mace, since January 1994; manager, Fidelity International Value Fund, since November 1994; co-manager, Fidelity Global Balanced Fund, February 1993-December 1993; Manager, Fidelity Select Chemicals and Industrial Materials Portfolios, January 1992-August 1992; Fidelity Select Transportation Portfolio, June 1989- December 1991; joined Fidelity in 1987 (checkmark) RICK MACE ON GLOBAL CONSOLIDATION: "There's growing evidence that industry consolidation - - prevalent in the U.S. in recent years - is spreading worldwide. In this country, we've seen consolidation in the banking, food and railroad industries. The companies that have deep pockets and excellent balance sheets, and that have established themselves as the low-cost producers within their industries, are coming out on top. As trade barriers come down and restrictions are eased, I believe we'll see consolidation across Europe. German companies will be buying Dutch companies, Italian companies will be buying German companies, and so forth. The auto industry has been consolidated for years, with a few key players such as G.M., Toyota, Chrysler and Honda battling for worldwide sales. But it hasn't been this way for, say, chemicals. You've always had your U.S. chemical companies and your European chemical companies. But again, as access to world markets increases and trade barriers come down, I think you'll see a few dominant players emerge. "What does this mean for the fund? There should be opportunities surrounding both the predators and the prey. First, I'll want to emphasize the strong companies that are dominating their industries, but whose stocks appear inexpensive relative to earnings and cash flow. In addition, I'll want to search out super cheap stocks of companies that are ripe for takeover. As world markets come together, it'll be interesting to see which players can emerge as the low-cost, successful producers within their given industries." (solid bullet) Following Japan, the largest countries represented among the fund's stock investments were the Netherlands, at 6.3% on October 31, Canada, at 4.0%, and Germany, at 4.0%. In Germany, the fund has leaned toward cyclical stocks - those that tend to do well as the economy improves - such as auto maker BMW. A notable exception is Deutsche Bank. The stock became more attractively valued after its price fell recently due to concerns over rising interest rates. In Canada, the stocks of commodity-related companies have performed well. Examples include aluminum producer Alcan and methanol producer Methanex. DISTRIBUTIONS The Board of Trustees of Fidelity International Growth & Income Fund voted to pay on December 12, 1994, to shareholders of record at the opening of business on December 9, 1994, a distribution of $.53 derived from capital gains realized from sales of portfolio securities. INTERNATIONAL GROWTH & INCOME INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1994 Argentina 7.4% Row: 1, Col: 1, Value: 15.6 Row: 1, Col: 2, Value: 16.3 Row: 1, Col: 3, Value: 7.6 Row: 1, Col: 4, Value: 27.5 Row: 1, Col: 5, Value: 7.3 Row: 1, Col: 6, Value: 6.1 Row: 1, Col: 7, Value: 5.6 Row: 1, Col: 8, Value: 8.6 Row: 1, Col: 9, Value: 7.4 United States 15.8% Canada 8.6% United Kingdom 5.6% Other 14.1% France 6.1% Germany 7.3% Netherlands 7.6% Japan 27.5% AS OF APRIL 30, 1994 Argentina 6.7% United States 10.7% Row: 1, Col: 1, Value: 10.7 Row: 1, Col: 2, Value: 2.3 Row: 1, Col: 3, Value: 14.5 Row: 1, Col: 4, Value: 3.9 Row: 1, Col: 5, Value: 37.5 Row: 1, Col: 6, Value: 5.2 Row: 1, Col: 7, Value: 5.5 Row: 1, Col: 8, Value: 5.3 Row: 1, Col: 9, Value: 3.1 Row: 1, Col: 10, Value: 5.3 Row: 1, Col: 11, Value: 6.7 Canada 5.3% Sweden 2.3% Denmark 3.1% France 5.3% Other 14.5% Germany 5.5% Italy 5.2% Netherlands 3.9% Japan 37.5% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks and equity futures 56.0 60.5 Bonds 35.0 31.6 Short-term investments 9.0 7.9 TOP TEN STOCKS % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Koninklijke PPT Nederland (Netherlands, Telephone Services) 2.3 - Hitachi Ltd. ADR (Japan, Electronics) 1.7 1.2 Alcan Aluminium Ltd. (Canada, Metals & Mining) 1.5 0.7 Veba AG Ord. (Germany, Electric Utilities) 1.5 1.2 Honda Motor Co. Ltd. (Japan, Autos, Tires, & Accessories) 1.3 1.2 British Petroleum PLC Ord. (United Kingdom, Oil and Gas) 1.3 1.0 Schlumberger Ltd. (Netherlands, Energy Services) 1.2 1.1 Sony Corp. (Japan, Consumer Electronics) 1.2 1.0 Omron Corp. (Japan, Electrical Equipment) 1.1 - Toyota Motor Corp. (Japan, Autos, Tires & Accessories) 1.1 1.0 TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Basic Industries 10.1 6.6 Durables 8.0 14.9 Technology 7.2 8.4 Utilities 7.1 3.7 Energy 5.5 4.1 Industrial Machinery & Equipment 5.4 2.7 Finance 5.4 10.2 Nondurables 2.2 1.2 Health 1.8 0.4 Retail & Wholesale 1.6 2.6 INTERNATIONAL GROWTH & INCOME INVESTMENTS OCTOBER 31, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 53.6% SHARES VALUE (NOTE 1) AUSTRALIA - 1.1% BTR Nylex Ltd. 1,000 $ 1,775 05587099 Goodman Fielder Ltd. Ord. 9,623,000 9,077,280 38238210 Pacific Dunlop 1,953,500 5,934,440 69418510 15,013,495 AUSTRIA - 0.6% Mayr Melnhof Karton AG (a) 54,200 2,937,462 57847192 Wienerberger Baustoffindustrie AG 14,000 4,948,395 98399292 7,885,857 BELGIUM - 0.2% Tessenderlo Chemie NV 8,900 2,835,678 88161299 BERMUDA - 0.3% Ace Ltd. 200,000 4,550,000 00499G92 CANADA - 4.0% Alcan Aluminium Ltd. 791,600 21,203,307 01371610 American Barrick Resources Corp. 35,500 845,956 02451E10 Canadian Natural Resources Ltd. (a)(e) 140,000 1,900,839 13638592 Canada Occidental Petroleum Ltd. 143,700 3,490,699 13642010 Canadian Pacific Ltd. Ord. 244,700 3,910,029 13644030 Inco Ltd. 1,000 30,110 45325840 Methanex Corp. (a) 926,300 13,860,106 59151K10 Midland Walwyn, Inc. 500,000 2,955,630 59780110 Quno Corp. (a) 58,900 1,088,041 74726H10 Rio Alto Exploration Ltd. (a) 36,600 212,971 76689210 Rio Alto Exploration Ltd. (a)(e) 89,000 517,881 76689292 Sherritt Gordon Ltd. (a) 450,500 4,868,337 82428010 54,883,906 DENMARK - 0.4% Den Danske Bank Group AS 25,000 1,341,598 24820692 FLS Industries (Smidth) Class B 24,800 1,642,524 35599092 Unidanmark AS Class A (a) 75,000 3,005,859 92399792 5,989,981 FINLAND - 0.5% Enso-Gutzeit OY Class R Free shares 215,000 1,911,215 29357810 Kone Corp. Class B Ord. 14,600 1,738,926 50400092 Kymmene Corp. 48,600 1,330,928 50699692 Repola OY 75,000 1,573,028 75999A92 Valmet OY Ord. (a) 50,100 1,088,894 92029991 7,642,991 FRANCE - 1.8% Accor SA 71,000 8,429,224 00439991 Eramet SA (a)(e) 8,000 584,475 29499H23 Lagardere Groupe SA (Reg.) 115,000 2,714,952 50699D22 Total SA: Class B 34,500 2,238,327 20434510 sponsored ADR 250,000 8,250,000 89151E10 Ugine SA (e) 36,300 2,729,642 90299G23 24,946,620 GERMANY - 4.0% Bayer AG 19,600 4,586,693 07273010 BMW AG 14,500 7,472,984 05528310 Deutsche Bank AG 16,600 8,179,950 25152592 Hoechst AG Ord. 24,400 5,343,255 43439010 Karstadt AG 5,000 2,064,838 48576499 Kaufhof Holding AG 8,700 2,950,623 48615210 SHARES VALUE (NOTE 1) Schering AG 2,300 $ 1,536,392 80658510 Veba AG: Ord. 59,400 19,908,628 92239110 (warrants) (a) 24,000 2,725,985 92239194 54,769,348 HONG KONG - 0.1% Sun Hung Kai Properties Ltd. 3,678,000 1,892,074 86690810 INDIA - 0.1% ITC Ltd. GDS (warrants) (a)(e) 78,000 887,640 45031810 IRELAND - 0.1% Smurfit (Jefferson) Group PLC 241,300 1,473,800 84699793 Smurfit (Jefferson) Group PLC (rights) (a) 24,130 13,818 84699794 1,487,618 ITALY - 0.5% Telecom Italia Ord. 2,310,000 6,320,368 87999R22 JAPAN - 21.5% Aiwa Co. Ltd. 100,000 2,724,318 00959999 Amada Metrecs Co. Ltd. 7,000 130,747 02299292 Canon, Inc. 430,000 7,987,203 13780199 Casio Computer Co. Ltd. Ord. 115,000 1,530,881 14761893 Daifuku Co. Ltd. 1,000 15,273 23299210 Daicel Chemical Industries Ltd. 256,000 1,561,283 23398110 Daiwa Securities Co. Ltd. 689,000 10,025,177 23499010 Daihatsu Motor Co. Ltd. 500,000 3,353,800 24199092 Ezaki Glicko Co. Ltd. 274,000 2,884,061 30199492 Fujitsu Ltd. 834,000 9,553,070 35959010 Fuji Electric Co. Ltd. 1,839,000 10,532,431 36599492 Hitachi Koki Co. Ltd. Ord. 312,000 3,348,434 43299492 Hitachi Ltd. ADR 2,260,000 23,555,031 43357810 Hitachi Maxell Ltd. 1,000 17,853 43358990 Hitachi Cable Ltd. 424,000 3,710,356 43399010 Hitachi Transport System Co. 267,000 3,058,357 43699992 Honda Motor Co. Ltd. 1,056,000 18,416,387 43812810 Ito-Yokado Co. Ltd. 96,000 5,240,597 46571410 Kaneka Corp. 377,000 3,065,643 48418199 Kawasaki Heavy Industries Ltd. 640,000 3,143,699 48639991 Kenwood Corp. 1,000 9,545 49178692 Kokuyo Co. Ltd. 38,000 976,420 50033399 Kyocera Corp. 1,000 76,157 50155610 Kokusai Securities Co. Ltd. 1,000 16,614 50299092 Matsushita Electric Industrial Co. Ltd. 510,000 8,473,247 57687910 Matsushita Electric Works Co. Ltd. 1,000 11,042 57688110 Matsuzakaya Co. Ltd. 8,000 113,926 57699492 Mazda Motor Corp. (a) 1,000 5,934 57878592 Mitsubishi Electric Co. Ord. 1,811,000 13,549,087 60673220 Mitsubishi Heavy Industries Ltd. 1,253,000 10,201,913 60699310 Nikko Securities Co. Ltd. 419,000 4,929,158 65399010 Nifco, Inc. 242,000 3,945,720 66099892 Nisshinbo Industries 615,000 7,171,460 65411310 Nippon Shokubai Co. Ltd. 143,000 1,564,213 65461299 Nissan Motor Co. Ltd. Ord. 135,000 1,152,108 65474491 Nitto Denko Corp. 407,000 7,013,982 65480230 Nomura Securities Co. Ltd. 619,000 12,967,029 65536110 Nichicon Corp. 100,000 1,434,395 66199793 Omron Corp. 845,000 15,259,787 68215110 Pioneer Electronic Corp. 1,000 26,108 72365710 Rohm Co. Ltd. 26,000 1,145,658 77536110 Sankyo Co. Ltd. 476,000 12,378,309 80029710 Sekisui Chemical Co. Ltd. 1,000 10,268 81699210 Shinetsu Chemical 228,000 4,846,808 82499210 COMMON STOCKS- CONTINUED SHARES VALUE (NOTE 1) JAPAN - CONTINUED Sony Corp. 267,500 $ 16,314,175 83569999 Sumitomo Chemical Co. Ltd. 180,000 1,062,484 86599610 Suzuki Motor Corp. 495,000 6,282,956 86958592 Taiyo Yuden Co. Ltd. 1,000 11,455 87404799 Takeda Chemical Industries Ltd. 236,000 2,922,449 87405810 Tokai Rika Denki Co. Ltd. 653,000 7,547,185 88199192 Toppan Printing Co. Ltd. 365,000 5,386,203 89074799 Toshiba Corp. 801,000 6,315,092 89149310 Toyoda Automatic Loom Works Ltd. 43,000 900,779 89200910 Toyota Motor Corp. 668,000 14,751,765 89399999 Toyobo Co. Ltd. 280,000 1,233,786 90899392 Uny Co. Ltd. 475,000 7,548,629 91529010 Yamanouchi Pharmaceutical Co. Ltd. 151,000 2,976,215 98414010 Zexel Corp. 1,000 6,697 99099392 294,393,359 MALAYSIA - 0.0% Tenaga Nasional BHD 1,000 5,320 92099992 MEXICO - 0.1% Telefonos de Mexico SA sponsored ADR representing shares Ord. Class L 37,500 2,067,188 87940378 NETHERLANDS - 6.3% AKZO Nobel NV Ord. 50,300 6,354,281 01019910 DSM NV 87,400 7,571,590 23332H92 Heineken NV 26,000 3,802,884 42301210 Hoogovens en Staalfabrieken NV (a) 27,000 1,259,242 43888410 Internationale Nederlanden Groep NV 45,000 2,106,747 46099892 KBB NV Ord. 57,100 3,581,243 48130092 KLM Royal Dutch Airlines Ord. (a) 297,300 8,273,523 48251620 Koninklijke PPT Nederland 1,010,000 32,182,398 72699422 Pirelli Tyre Holdings NV Ord. 822,200 5,708,025 72499092 Schlumberger Ltd. 279,200 16,403,000 80685710 87,242,933 NEW ZEALAND - 0.4% Brierley Investments Ltd. 7,147,211 5,374,345 10901410 NORWAY - 1.3% Helikopter Services AS 206,600 2,590,991 42499192 Norsk Hydro AS 194,600 7,842,333 65653150 Orkla AS Class A Free shares 165,100 4,848,084 39299193 Saga Petroleum AS Class B 188,000 2,142,081 84099794 17,423,489 SINGAPORE - 0.1% Kim Engineering Holdings Ltd. 620,000 772,886 49499D92 SOUTH AFRICA - 0.8% Anglo-American Corp. of South Africa (Reg.) 30,700 1,800,050 03486110 Buffelsfontein Gold Mining Co.Ltd. ADR 76,300 877,450 11987120 Driefontein Consolidated Ltd.: Ord. 75,500 1,200,497 26202630 ADR 42,500 666,719 26202640 Free State Consolidated Gold Mines Ltd.: ADR 148,382 2,392,660 35614220 Ord. 25,578 432,125 35614210 Vaal Reefs Exploration and Mining Co. Ltd.: ADR 60,000 607,500 91850640 (Reg.) 9,400 971,528 91850610 SHARES VALUE (NOTE 1) Western Deep Levels Ltd.: ADR 18,300 $ 969,042 95807720 Ord. 14,700 781,565 95807710 10,699,136 SPAIN - 1.3% Argentaria Corporacion Bancaria de Espana SA 214,000 8,278,085 21991392 FECSA (Fuerzas Electricas de Cataluna SA) Class A 750,000 4,257,488 35899E22 Telefonica de Espana SA Ord. 75,000 1,014,970 87938210 Union Electrica Fenosa SA 900,000 4,138,920 90659510 Viscofan Envolturas Celulo SA 40,000 707,385 92899999 18,396,848 SWEDEN - 1.1% Avesta Sheffield AB Ord. Free shares (a) 200,000 1,997,750 05399892 Celsius Industrier AB Class B 150,000 3,457,646 15199D22 Electrolux AB 40,000 2,087,161 01019810 Pharmacia AB Class A Free shares 240,000 4,559,902 71713093 SKF AB Ord. (a) 60,000 1,098,064 78437530 Stora Kopparbergs Bergslags AB Class A Free shares 35,000 2,185,651 86210999 15,386,174 SWITZERLAND - 0.2% Nestle SA (Reg.) 2,500 2,335,854 64106992 UNITED KINGDOM - 3.6% BET PLC Ord. 3,967,100 7,139,868 05538H10 British Petroleum PLC Ord. 2,502,365 17,809,957 11088910 British Petroleum PLC ADR 98,702 8,389,670 11088940 Forte PLC 1,785,000 6,702,604 34999592 Tomkins PLC Ord. 300,000 1,032,690 89003010 WPP Group PLC 735,700 1,324,091 92930910 WPP Group PLC (e) 3,660,000 6,587,158 92930997 48,986,038 UNITED STATES OF AMERCIA - 3.2% Aluminum Co. of America 111,300 9,488,325 02224910 Amerada Hess Corp. 59,300 2,950,175 02355110 American Express Co. 233,000 7,164,750 02581610 Ameritech Corp. 73,000 2,947,375 03095410 Great Lakes Chemical Corp. 78,500 4,611,875 39056810 Imo Industries, Inc. (a) 19,200 182,400 45254010 International Business Machines Corp. 59,000 4,395,500 45920010 Lockheed Corp. 40,000 2,880,000 53982110 Martin Marietta Corp. 80,000 3,670,000 57290010 RJR Nabisco Holdings Corp. (a) 595,000 4,090,625 74960K10 Reynolds Metals Co. 25,700 1,423,138 76176310 43,804,163 TOTAL COMMON STOCKS (Cost $677,867,004) 735,993,309 PREFERRED STOCKS - 0.4% CONVERTIBLE PREFERRED STOCKS - 0.4% UNITED STATES OF AMERICA - 0.4% Occidental Petroleum Corp. Indexed $3.00 Class A 56,100 2,819,025 67459979 Reynolds Metals Co. $3.31 50,600 2,656,500 76176350 5,475,525 PREFERRED STOCKS - CONTINUED SHARES VALUE (NOTE 1) NONCONVERTIBLE PREFERRED STOCKS - 0.0% ITALY - 0.0% Fiat Spa Ord. 1,000 $ 2,294 31599C95 TOTAL PREFERRED STOCKS (Cost $5,305,306) 5,477,819 CORPORATE BONDS - 7.1% MOODY'S RATINGS PRINCIPAL (UNAUDITED) AMOUNT (B) CONVERTIBLE BONDS - 6.1% ITALY - 0.8% Softe SA euro 4 1/4%, 7/30/98 (c) - ITL 15,865,000 11,357,960 84499DAA JAPAN - 4.0% Canon, Inc. 1.30%, 12/19/08 (c) A JPY 2,209,000 27,126,741 1378019A Matsushita Electric Works Co. Ltd. 2.70%, 5/31/02 (c) - JPY 1,479,000 17,246,471 5768819A Mazda Motor Corp. 6 1/2%, 3/31/99 (c) Baa3 JPY 215,000 2,606,940 5787859A Nitto Denko Corp. 3.90%, 3/30/01 (c) - JPY 414,000 5,639,342 6548029A Shin-Etsu Chemical Co. Ltd. 1.30%, 3/31/99 (c) A2 JPY 181,000 2,095,690 824992AA 54,715,184 NETHERLANDS - 1.3% Hoogovens en Staalfabrieken NV 4 1/2%, 4/11/01 (c) - NLG 27,130 17,426,112 4388849A TOTAL CONVERTIBLE BONDS 83,499,256 NONCONVERTIBLE BONDS - 1.0% MEXICO - 1.0% Bancomext: euro: 8%, 4/14/00 Ba2 1,000,000 913,750 0596129A 7 1/4% 2/2/04 Ba2 1,500,000 1,250,625 0596129D 8%, 8/5/03 (e) Ba2 1,500,000 1,278,750 059612AD El Puerto de Liverpool SA de CV 7 1/4%, 10/19/96 (e) - 1,000,000 968,750 28383QAA Empaques Ponderosa SA euro 8 3/4%, 12/6/96 - 1,530,000 1,487,925 2915789B Empresas La Moderna SA 10 1/4%, 11/12/97 (e) - 1,000,000 1,005,000 292449AA Grupo Industrial Durango 12%, 7/15/01 B1 750,000 742,500 40048EAA MC-Cuernavaca Trust 9 1/4%, 7/25/01 (e) A 1,500,000 1,451,250 579010AA Nacional Financiera SNC euro 10 5/8%, 11/22/01 Ba2 1,800,000 1,836,000 6295989S Tolmex SA 8 3/8%, 11/1/03 Ba2 3,000,000 2,603,790 889557AA TOTAL NONCONVERTIBLE BONDS 13,538,340 TOTAL CORPORATE BONDS (Cost $95,197,071) 97,037,596 GOVERNMENT OBLIGATIONS (G) - 27.7% MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) AMOUNT (B) (NOTE 1) ARGENTINA - 7.4% Province of Chaco 11 7/8%, 9/10/97 (d) - $ 300,000 $ 303,000 74399JAA Argentina Republic (f): BOCON 5.0625%, 4/1/01 B1 2,653,920 1,890,539 039995AF BOTE: 1.85%, 5/31/96 - 3,925,000 1,542,023 0401149D 3.2375%, 9/1/97 - 22,550,000 15,107,418 0401149V euro 6 1/2%, 3/31/05 BB- 83,550,000 60,260,438 039995AU Brady euro 4 1/4%, 3/31/23 B1 48,000,000 22,260,000 039995AD 101,363,418 CANADA - 4.6% Canadian Government (c): 7 1/2%, 12/1/03 Aaa CAD 19,000 12,691,890 135087UZ 9%, 12/1/04 Aaa CAD 69,245 50,771,653 135087VG 63,463,543 CZECH REPUBLIC - 0.1% Czech Republic 14%, 7/8/96 (c) - CSK 30,000 1,157,289 23299BAB FRANCE - 4.3% French Government (c): BTAN 7%, 11/12/99 Aaa FRF 45,000 8,463,132 351996CC 8 1/2%, 12/26/12 Aaa FRF 199,000 38,261,053 3517779J Strips 4/25/23 Aaa FRF 757,500 12,265,440 351996BL 58,989,625 GERMANY - 3.3% Federal Republic of Germany 9%, 10/20/00 (c) Aaa DEM 63,600 45,292,931 093992BJ ITALY - 1.0% Italian Government (c): 8 1/2%, 4/1/99 A1 ITL 19,600,000 11,428,341 46599BBL 10%, 8/1/03 A1 ITL 4,700,000 2,776,760 46599BAW 14,205,101 MEXICO - 0.4% Mexico Value Recovery (rights) (a) - 6,699,000 67 59304893 Mexican Government Brady 6.63%, 12/31/19 Ba2 FRF 54,750,000 6,170,216 597998VQ 6,170,283 NEW ZEALAND - 1.6% New Zealand Government 8%, 4/15/04 Aaa NZD 37,100,000 21,388,488 6501629K UNITED KINGDOM - 2.0% United Kingdom Treasury 10%, 2/26/01 Aaa GBP 15,900,000 27,372,432 9107689G UNITED STATES OF AMERICA - 3.0% U.S. Treasury Notes: 9 1/4%, 1/15/96 (h) Aaa 2,000,000 2,064,680 912827XB 6 1/4%, 2/15/03 Aaa 42,500,000 38,655,025 912827J7 40,719,705 TOTAL GOVERNMENT OBLIGATIONS (Cost $399,080,066) 380,122,815 INDEXED SECURITIES - 0.2% PRINCIPAL VALUE AMOUNT (B) (NOTE 1) UNITED STATES OF AMERICA - 0.2% Merrill Lynch & Co. Inc. Japan Index equity participation securities 0%, 1/31/00 (Cost $2,730,000) $ 2,730,000 $ 2,470,650 590188FE REPURCHASE AGREEMENTS - 11.0% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 4.78% dated 10/31/94 due 11/1/94 $ 150,708,008 150,688,000 99799N9L TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,330,867,447) $ 1,371,790,189 FUTURES CONTRACTS EXPIRATION UNDERLYING FACE UNREALIZED DATE AMOUNT AT VALUE GAIN/(LOSS) PURCHASED 274 Nikkei Stock Average Contracts Dec., 94 $ 27,365,750 $ (18,790) THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 2.0% FORWARD FOREIGN CURRENCY CONTRACTS SETTLEMENT UNREALIZED DATES VALUE GAIN/(LOSS) CONTRACTS TO BUY 47,682,800 FRF 11/2/94 to 11/16/94 $ 9,264,414 $ 118,946 15,081,500 CHF 11/2/94 12,002,785 34,291 TOTAL CONTRACTS TO BUY (Payable amount $21,113,962) $ 21,267,199 153,237 THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES --1.6% CONTRACTS TO SELL 12,192,497 GBP 11/28/94 $ 19,940,182 (944,338) 17,065,234 CAD 1/30/95 12,612,992 65,488 117,514,599 DEM 11/14/94 to 1/18/95 78,182,080 (1,948,564) 12,514,291,386 ITL 1/17/95 8,090,936 (163,725) 27,490,415,417 JPY 11/30/94 to 12/8/94 284,460,747 (7,469,816) 425,363,950 FRF 11/2/94 to 2/2/95 82,613,375 (2,802,142) 30,163,000 CHF 11/2/94 to 2/2/95 24,019,916 (787,273) 42,525,794 NLG 12/13/94 25,242,304 (742,633) TOTAL CONTRACTS TO SELL (Receivable amount $520,369,529) $ 535,162,532 (14,793,003) THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 39.0% $ (14,639,766) CURRENCY ABBREVIATIONS GBP - British pound CAD - Canadian dollar CSK - Czech koruna NLG - Dutch guilder FRF - French franc DEM - German deutsche mark ITL - Italian lira JPY - Japanese yen NZD - New Zealand dollar CHF - Swiss franc LEGEND (a) Non-income producing (b) Principal amount is stated in United States dollars unless otherwise noted. (c) Principal amount in thousands. (d) Restricted securities - Investment in securities not registered under the Securities Act of 1933. 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 $ 308,208 (e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $17,911,385 or 1.3% of net assets. (f) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. (g) Most foreign government obligations have not been individually rated by S&P or Moody's. The ratings listed are assigned to securities by FMR, the fund's investment adviser, based principally on S&P and Moody's ratings of the sovereign credit of the issuing government. (h) Security pledged to cover margin requirements for futures contracts, At the period end, the value of securities pledged amounted to $2,064,680. 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 21.9% AAA, AA, A 21.9% Baa 0.2% BBB 0.0% Ba 1.0% BB 5.2% B 1.8% 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 5.5% including long-term debt categorized as other securities. FMR has determined that unrated debt securities that are lower quality account for 5.1% of the total value of investment in securities. At the end of the period, restricted securities (excluding 144A issues) amounted to $303,000 or .02% of net assets (see Note 2 of Notes to Financial Statements). Purchases and sales of securities, other than short-term securities, aggregated $2,199,682,957 and $1,876,898,733, respectively. The market value of futures contracts opened and closed during the period amounted to $454,351,685 and $436,557,460, respectively (see Note 2 of Notes to Financial Statements). OTHER INFORMATION - CONTINUED The following is a summary of the fund's written options activity: NUMBER OF AGGREGATE CONTRACTS OF CONTRACTS FACE VALUE Call options on JPY Outstanding at November 1, 1993 - - Contracts opened 3 $ 71,432,942 Contracts closed (3) (71,432,942) Outstanding at October 31, 1994 - $ - The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of FMR. The commissions paid to these affiliated firms were $60,703 for the period (see Note 5 of Notes to Financial Statements). The fund participated in the bank borrowing program. The maximum loan and the average daily loan balances during the period for which loans were outstanding amounted to $14,177,000. The weighted average interest rate was 3 7/8% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At October 31, 1994, the aggregate cost of investment securities for income tax purposes was $1,332,350,093. Net unrealized appreciation aggregated $39,440,096, of which $81,326,141 related to appreciated investment securities and $41,886,045 related to depreciated investment securities. The fund hereby designates $17,199,532 as a capital gain dividend for the purpose of the dividend paid deduction. For the period, interest and dividends from foreign countries were $31,936,387, or $0.41 per share. Taxes paid to foreign countries were $1,721,529 or $0.02 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Aerospace & Defense 0.7% Basic Industries 10.1 Conglomerates 0.2 Construction & Real Estate 0.7 Durables 8.0 Energy 5.5 Finance 5.4 Government Obligations 27.7 Health 1.8 Holding Companies 0.6 Industrial Machinery & Equipment 5.4 Media & Leisure 1.1 Nondurables 2.2 Precious Metals 0.8 Retail & Wholesale 1.6 Services 1.5 Repurchase Agreements 11.0 Technology 7.2 Transportation 1.4 Utilities 7.1 100.0% INTERNATIONAL GROWTH & INCOME FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES <TABLE> <CAPTION> <S> <C> <C> OCTOBER 31, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $150,688,000) (cost $1,330,867,447) 1,371,790,189 - - See accompanying schedule Cash 794 Receivable for investments sold 27,834,784 Unrealized appreciation on foreign currency contracts 309,057 Receivable for fund shares sold 3,079,409 Dividends receivable 2,114,462 Interest receivable 9,837,312 Receivable for daily variation on futures contracts 27,400 TOTAL ASSETS 1,414,993,407 LIABILITIES Payable for investments purchased $ 21,639,917 Unrealized depreciation on foreign currency contracts 14,948,823 Payable for fund shares redeemed 8,508,909 Accrued management fee 882,943 Other payables and accrued expenses 1,074,396 TOTAL LIABILITIES 47,054,988 NET ASSETS 1,367,938,419 Net Assets consist of: Paid in capital 1,286,697,069 Undistributed net investment income 11,175,791 Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 43,504,320 Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 26,561,239 NET ASSETS, for 78,008,572 shares outstanding 1,367,938,419 NET ASSET VALUE, offering price and redemption price per share ($1,367,938,419 (divided by) 78,008,572 shares) $17.54 </TABLE> STATEMENT OF OPERATIONS <TABLE> <CAPTION> <S> <C> <C> YEAR ENDED OCTOBER 31, 1994 INVESTMENT INCOME $ 13,191,097 Dividends Interest 33,226,711 46,417,808 Less foreign taxes withheld (1,721,529 ) TOTAL INCOME 44,696,279 EXPENSES Management fee $ 10,246,289 Transfer agent fees 4,042,671 Accounting fees and expenses 555,323 Non-interested trustees' compensation 7,516 Custodian fees and expenses 899,151 Registration fees 197,917 Audit 43,300 Legal 8,790 Interest 1,526 Miscellaneous 12,416 Total expenses before reductions 16,014,899 Expense reductions (10,070 16,004,829 ) NET INVESTMENT INCOME 28,691,450 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 63,142,227 Foreign currency transactions (42,211,115 ) Futures contracts 9,590,315 Written options (764,826 29,756,601 ) Change in net unrealized appreciation (depreciation) on: Investment securities (29,816,160 ) Futures contracts (18,790 ) Assets and liabilities in foreign currencies (15,769,402 (45,604,352 ) ) NET GAIN (LOSS) (15,847,751 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 12,843,699 OTHER INFORMATION $6,314 Deferred sales charge withheld by FDC Accounting fees paid to FSC $548,580 </TABLE> STATEMENT OF CHANGES IN NET ASSETS INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, 1994 1993 <TABLE> <CAPTION> <S> <C> <C> Operations $ 28,691,450 $ 2,629,481 Net investment income Net realized gain (loss) 29,756,601 1,087,001 Change in net unrealized appreciation (depreciation) (45,604,352) 73,793,319 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 12,843,699 77,509,801 Distributions to shareholders: (1,769,894) (1,389,982) From net investment income From net realized gain (2,997,808) (29,697) In excess of net realized gain (1,647,620) - TOTAL DISTRIBUTIONS (6,415,322) (1,419,679) Share transactions 1,287,341,882 1,037,700,151 Net proceeds from sales of shares Reinvestment of distributions 6,281,612 1,310,736 Cost of shares redeemed (934,960,509) (172,260,456) Net increase (decrease) in net assets resulting from share transactions 358,662,985 866,750,431 TOTAL INCREASE (DECREASE) IN NET ASSETS 365,091,362 942,840,553 NET ASSETS Beginning of period 1,002,847,057 60,006,504 End of period (including undistributed net investment income of $11,175,791 and $3,611,891, $ 1,367,938,419 $ 1,002,847,057 respectively) OTHER INFORMATION Shares Sold 72,892,665 64,336,913 Issued in reinvestment of distributions 363,939 99,073 Redeemed (53,381,201) (10,819,492) Net increase (decrease) 19,875,403 53,616,494 </TABLE> <TABLE> <CAPTION> <S> <C> <C> SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. </TABLE> FINANCIAL HIGHLIGHTS <TABLE> <CAPTION> <S> <C> <C> <C> <C> <C> YEARS ENDED OCTOBER 31, SELECTED PER-SHARE DATA 1994 1993 1992 1991 1990 </TABLE> <TABLE> <CAPTION> <S> <C> <C> <C> <C> <C> Net asset value, beginning of period $ 17.25 $ 13.29 $ 13.99 $ 13.71 $ 12.87 Income from Investment Operations Net investment income .38 C .14 C .31 .30 E .25 Net realized and unrealized gain (loss) .02 F 4.14 (.84) .41 .75 Total from investment operations .40 4.28 (.53) .71 1.00 Less Distributions (.03) (.31) (.16) (.38) (.16) From net investment income From net realized gain (.05) (.01) (.01) (.05) - D D D In excess of net realized gain (.03) - - - - Total distributions (.11) (.32) (.17) (.43) (.16) Net asset value, end of period $ 17.54 $ 17.25 $ 13.29 $ 13.99 $ 13.71 TOTAL RETURN A, B 2.33% 32.94% (3.81) 5.43% 7.79% % RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 1,367,938 $ 1,002,847 $ 60,007 $ 49,738 $ 35,380 Ratio of expenses to average net assets 1.21% 1.52% 1.62% 1.89% 1.98% Ratio of net investment income to average net assets 2.16% .87% 2.78% 2.86% 2.31% Portfolio turnover rate 173% 24% 76% 117% 102% A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE . B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN. C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. E INCLUDES $.02 PER SHARE FROM RECOVERY OF FOREIGN TAXES PREVIOUSLY WITHHELD ON DIVIDEND AND INTEREST PAYMENTS. F THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD ENDED DUE TO THE TIMING OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND. </TABLE> OVERSEAS PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). Overseas has a 3% sales charge, which, beginning May 31, 1994, has been waived through June 30, 1995. CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1994 YEAR YEARS FUND OVERSEAS 9.13% 50.48% 523.75% OVERSEAS (INCL. 3% SALES CHARGE) 5.85% 45.97% 505.04% Morgan Stanley EAFE Index 10.09% 22.45% 435.93% Average International Fund 10.59% 52.74% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on December 4, 1984. You can compare the fund's figures to the performance of the Morgan Stanley EAFE index - a broad measure of the performance of stocks in Europe, Australia, and the Far East. You can also compare the fund's performance to the average international fund which currently reflects the performance of 149 funds with similar objectives tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1994 YEAR YEARS FUND OVERSEAS 9.13% 8.52% 20.28% OVERSEAS (INCL. 3% SALES CHARGE) 5.85% 7.86% 19.91% Morgan Stanley EAFE Index 10.09% 4.13% 18.45% Average International Fund 10.59% 8.61% n/a 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 Overseas (094) Europe, Asia, and t 12/04/84 9700.00 10000.00 12/31/84 9981.30 10193.53 01/31/85 10689.40 10422.65 02/28/85 10640.90 10361.03 03/31/85 11067.70 11164.76 04/30/85 11504.20 11126.55 05/31/85 12464.50 11599.34 06/30/85 12697.30 11897.35 07/31/85 13473.30 12511.82 08/31/85 14055.30 12913.71 09/30/85 14559.70 13669.40 10/31/85 15442.40 14599.44 11/30/85 16548.20 15198.76 12/31/85 17833.85 15918.65 01/31/86 18371.30 16317.71 02/28/86 21078.14 18125.28 03/31/86 24703.54 20674.06 04/30/86 25465.75 22027.83 05/31/86 24654.68 21048.78 06/30/86 26579.76 22481.82 07/31/86 29579.75 23869.90 08/31/86 31543.92 26221.76 09/30/86 30078.12 25952.02 10/31/86 26296.37 24218.32 11/30/86 28758.91 25614.83 12/31/86 30183.41 26972.00 01/31/87 34828.46 29838.08 02/28/87 35945.95 30731.05 03/31/87 40010.55 33249.27 04/30/87 43001.48 36767.40 05/31/87 42837.14 36767.26 06/30/87 39824.30 35595.88 07/31/87 40415.91 35533.69 08/31/87 43779.34 38198.08 09/30/87 43242.50 37596.71 10/31/87 33853.39 32164.65 11/30/87 33579.50 32647.11 12/31/87 35727.39 33616.52 01/31/88 34338.32 34216.71 02/29/88 35428.67 36497.48 03/31/88 37579.48 38741.56 04/30/88 38565.27 39304.55 05/31/88 37788.59 38044.60 06/30/88 36713.18 37041.81 07/31/88 36235.22 38203.95 08/31/88 35144.88 35719.99 09/30/88 36459.26 37280.76 10/31/88 37788.59 40470.59 11/30/88 38774.38 42881.27 12/31/88 38677.38 43120.36 01/31/89 39151.29 43879.03 02/28/89 40175.55 44104.58 03/31/89 39823.94 43238.97 04/30/89 40680.04 43639.99 05/31/89 38723.24 41265.84 06/30/89 37591.96 40571.18 07/31/89 41322.11 45665.83 08/31/89 40359.00 43612.06 09/30/89 42514.54 45598.67 10/31/89 40206.13 43766.63 11/30/89 42483.96 45966.76 12/31/89 45226.82 47662.81 01/31/90 44200.40 45889.35 02/28/90 43286.24 42686.52 03/31/90 44713.61 38239.61 04/30/90 44601.34 37936.14 05/31/90 47632.50 42264.70 06/30/90 48482.51 41892.44 07/31/90 50872.16 42482.52 08/31/90 45242.86 38357.11 09/30/90 40223.00 33011.49 10/31/90 44056.06 38155.31 11/30/90 42596.61 35904.60 12/31/90 42240.75 36486.24 01/31/91 43177.92 37666.39 02/28/91 44745.54 41704.18 03/31/91 43280.15 39200.58 04/30/91 43893.57 39585.54 05/31/91 43978.77 39998.59 06/30/91 41218.38 37059.46 07/31/91 43467.59 38880.26 08/31/91 43791.34 38090.68 09/30/91 45716.79 40237.43 10/31/91 45870.15 40807.83 11/30/91 44217.32 38902.74 12/31/91 45879.11 40911.80 01/31/92 46405.83 40037.93 02/29/92 45443.20 38604.89 03/31/92 44498.74 36056.33 04/30/92 47204.99 36227.73 05/31/92 49239.22 38652.66 06/30/92 48076.80 36819.27 07/31/92 45025.46 35876.95 08/31/92 44644.04 38127.18 09/30/92 42791.44 37374.28 10/31/92 39885.40 35413.83 11/30/92 39685.61 35747.08 12/31/92 40623.32 35931.97 01/31/93 41807.32 35927.55 02/28/93 42664.70 37012.81 03/31/93 45563.45 40239.06 04/30/93 48727.57 44057.85 05/31/93 49850.33 44988.34 06/30/93 48666.33 44286.43 07/31/93 50891.43 45836.67 08/31/93 53769.76 48311.07 09/30/93 53300.25 47223.62 10/31/93 55443.69 48678.94 11/30/93 52912.39 44423.89 12/31/93 56894.62 47631.62 01/31/94 60939.26 51658.65 02/28/94 59798.47 51515.57 03/31/94 58076.90 49296.72 04/30/94 60026.62 51388.34 05/31/94 59259.18 51093.30 06/30/94 58470.99 51815.35 07/31/94 60109.59 52313.66 08/31/94 60980.75 53552.19 09/30/94 59300.66 51865.54 10/31/94 60503.68 53592.66 Let's say you invested $10,000 in Fidelity Overseas Fund on its start date and paid the 3% sales charge. By October 31, 1994, it would have grown to $60,504 - a 505.04% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley EAFE index, which would have grown to $53,593 over the same period - a 435.93% 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) OVERSEAS FUND TALK: THE MANAGER'S OVERVIEW An interview with John Hickling, Portfolio Manager of Fidelity Overseas Fund Q. JOHN, HOW DID THE FUND DO? A. About average. For the year ended October 31, 1994, the fund had a total return of 9.13%. In contrast, the EAFE index - a broad measure of stocks in Europe, Australia and the Far East - returned 10.09%. Over the same period, the average international fund had a return of 10.59%, according to Lipper Analytical Services. Q. WHY DID THE EAFE INDEX OUTPERFORM THE FUND OVER THE PAST YEAR? A. There were two main reasons. The first was a matter of timing in the Southeast Asian markets. I reduced the fund's holdings there late in 1993 and increased its weighting in Japan. At that point, the Southeast Asian markets appeared to me to be overvalued and speculative. But, in fact, they significantly outperformed Japan until the end of 1993. However, in 1994, nearly all Southeast Asian markets experienced a notable correction and Japan's performance improved. So essentially, I got out of Southeast Asia too early in 1993, but was well positioned for Japanese growth in 1994. Q. WHAT WAS THE OTHER MAIN REASON? A. The strong Japanese yen versus the weak U.S. dollar. During 1994, the EAFE index was weighted about 50% in Japan. The fund also held many Japanese securities, but was underweighted in Japan compared to the index due to stock selection. For example, I focused on auto and electronics companies, but stayed away from stocks like large Japanese city banks, which I didn't think were attractive. These banks underperformed as I expected. However, because Japanese securities are denominated in yen, and the yen was very strong against the dollar, these stocks actually ended up boosting the performance of the index in dollar terms. Q. AS YOU NOTED, THE JAPANESE MARKET PICKED UP EARLY IN 1994. HOW DID JAPAN'S ECONOMY LOOK OVERALL AND WHAT STOCKS DID YOU LIKE? A. Over this calendar year, the economy has been slowly recovering. My goal during this period was to look for stocks whose earnings were recovering faster than the economy. One good example was automotive stocks, such as Toyota and Honda. These cyclical stocks - those that tend to perform well when an economy picks up and poorly when an economy falls - benefited from Japan's economic upturn. In addition, they took a number of cost-cutting measures that helped them reduce production costs. Another company that rode on the success of the auto industry was Tokio Marine and Fire Insurance Company, a large insurance company that has half of its business in auto insurance. This stock was still inexpensive at the end of the period, despite an increase in car premium rates and in the number of new cars on the road. I should also note that Japanese electrical companies, such as Hitachi and Toshiba, also looked good for much of the period because they were inexpensive and were benefiting from improving global and Japanese trends in the electronics industry. Q. STAYING WITH THAT PART OF THE WORLD, HOW HAVE THE SOUTHEAST ASIAN MARKETS LOOKED SINCE THEY PLUMMETED EARLY IN 1994? A. For the first six months of 1994, they fell badly, and I avoided the region, especially Hong Kong, which dropped dramatically. But around September of this year, some Southeast Asian markets started picking up noticeably. My approach in this environment was to look for value on a stock-by-stock basis. One standout was Matahari department store, which is known as the Wal-Mart of Indonesia. Matahari is benefiting from an emerging middle class that is demanding more consumer goods. Siam City Bank in Thailand also looked good because its stock was cheap, and it performed well over the past six months. It's also important to note that stock prices of many Southeast Asian companies have fallen significantly, and, at the end of the period, many companies there started looking like good buys. Q. LET'S SWITCH TO EUROPE. HOW DID THE MARKETS THERE LOOK? A. European markets went down hill during the period largely because European bond prices tumbled along with U.S. bonds and European stocks followed suit. I should note that many analysts were puzzled by the drop in European markets. That's because many of these countries are about a year behind the United States in the economic cycle and there is virtually no threat of inflation - a big enemy of bondholders since it eats away at a bond's fixed interest payments. Despite falling stock and bond prices, corporate earnings in Europe have generally come through and been positive. A lot of companies have been cutting costs and increasing productivity, and a number of industries started to recover in terms of demand and pricing. Q. YOU WERE BIG ON EUROPEAN CYCLICAL STOCKS SIX MONTHS AGO. HOW DID THEY DO IN THIS ENVIRONMENT? A. Like the U.S. economy, the European economy was growing despite the weak stock market. And cyclicals, such as chemical and automobile companies, benefited from the increasing demand for their products. However, early this fall, I thought they had begun to more fully reflect their earnings recovery. Around this time, I started to shift more of the fund into banks and financial stocks, which had been battered by the market and were very cheap. Many investors think that cyclical stocks will continue to perform well, but I think they're expensive and most of the money has already been made in them. Q. WHICH EUROPEAN FINANCIALS APPEALED TO YOU? A. I liked Deutsche Bank, Germany's pre-eminent bank. It had a tough year, but looks good going forward. Its stock price was low, and it took cost-cutting steps that I think may improve its performance. In addition, if anyone is going to benefit from the longer-term monetary trends in Eastern Europe, such as the growth in loans and investment, brokerage and underwriting services, I believe that it will be Deutsche Bank. Q. JOHN, LET'S TALK ABOUT DERIVATIVES. HOW DOES YOUR FUND USE THEM? A. As I've noted in previous reports, the fund has the authority to use derivatives to manage its investments more efficiently. I currently have an investment of 7.7% of the fund in forward foreign currency contracts to hedge the fund against currency volatility in both Japan and Europe. I should point out that this is one of the fund's first times hedging the highly volatile yen. Since the yen has appreciated against the dollar, my currency contracts have had a somewhat negative impact on the fund. Q. HOW DO YOU THINK THESE MARKETS LOOK GOING FORWARD? A. In terms of Japan, I think it looks great for 1995 since I expect the economy to continue improving. I'm also fairly optimistic about European markets because I expect - barring any major interest rate increase in the United States - that the stock and bond markets will begin recovering in 1995. However, as far as Southeast Asia goes, I remain cautious. That's because all the market optimists have jumped back on the bandwagon, and I think there's reason to be concerned that stock prices could become overly inflated. I fear this could lead to another correction in the region like we saw early in 1994. I should note, however, that we might see another correction as a buying opportunity to rebuild some of the fund's Southeast Asian holdings at inexpensive prices. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in stocks in Europe, the Far East, and the Pacific Basin START DATE: December 4, 1984 SIZE: As of October 31, 1994, more than $2.2 billion MANAGER: John Hickling, since January 1993; manager Advisor Overseas, since February 1993; VIP: Overseas, since January 1993; previously managed the Fidelity Japan, Fidelity Europe, International Growth and Income, International Opportunities (now Emerging Markets), and Pacific Basin funds; joined Fidelity in 1982 (checkmark) JOHN HICKLING ON SOME INTERESTING NEW STOCKS: "I tend to choose the fund's investments on a stock-by-stock basis. This summer I had the opportunity to discover a number of interesting stocks in Europe during an extended visit to Fidelity's London office. Although I am frequently overseas for company visits, this extended trip gave me the opportunity to spend more time with our London-based analysts as well as with a number of smaller companies, which the fund ended up investing in. While these companies didn't make up large positions in the fund, they have turned out to be very profitable investments. "Some of the standout companies I found were Arjo Wiggins, a U.K. paper distributor and manufacturer; Duerr, a German machinery company; and Rhone Poulenc, a chemical company that I feel is just beginning to turn in its strongest performance. Food retailers based in the United Kingdom, such as Tesco and Sainsbury, were also good values because they were just plain unfairly oversold and cheap." (solid bullet) Italy, which was a strong performer six months ago, turned in a fairly weak performance over the period. This was the result of a combination of falling stock and bond prices and political problems at home. Specifically, many Italians were nervous about the sustainability and longevity of the government leaders they had thought would improve the business environment in their country. (solid bullet) Over the period, the fund invested in several European oil companies, including the French company Total. (solid bullet) While the stock of Japanese investment house Nomura experienced a correction over the past few months, the company may remain well positioned to benefit from expected growth in Japan. That's why Nomura is one of the fund's top 10 stocks. (solid bullet) At the end of the period ended October 31, 1994, the fund had 12.3% in cash and short-term investments. This compares to 9.5% one year ago. DISTRIBUTIONS The Board of Trustees of Fidelity Overseas Fund voted to pay on December 12, 1994 to shareholders of record at the opening of business on December 9, 1994, a distribution of $.47 derived from capital gains realized from sales of portfolio securities. OVERSEAS INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1994 United States 12.3% Row: 1, Col: 1, Value: 12.3 Row: 1, Col: 2, Value: 10.0 Row: 1, Col: 3, Value: 6.9 Row: 1, Col: 4, Value: 3.7 Row: 1, Col: 5, Value: 21.1 Row: 1, Col: 6, Value: 4.9 Row: 1, Col: 7, Value: 23.2 Row: 1, Col: 8, Value: 3.5 Row: 1, Col: 9, Value: 7.1 Row: 1, Col: 10, Value: 7.3 France 7.3% Germany 7.0% Italy 3.5% United Kingdom 10.0% Switzerland 6.9% Japan 23.2% Spain 3.7% Other 21.2% Netherlands 4.9% AS OF APRIL 30, 1994 Australia 2.0% United States 16.4% Row: 1, Col: 1, Value: 16.4 Row: 1, Col: 2, Value: 8.800000000000001 Row: 1, Col: 3, Value: 5.7 Row: 1, Col: 4, Value: 3.7 Row: 1, Col: 5, Value: 4.7 Row: 1, Col: 6, Value: 13.5 Row: 1, Col: 7, Value: 5.1 Row: 1, Col: 8, Value: 20.5 Row: 1, Col: 9, Value: 5.4 Row: 1, Col: 10, Value: 7.3 Row: 1, Col: 11, Value: 6.9 Row: 1, Col: 12, Value: 2.0 France 6.9% Germany 7.3% United Kingdom 8.8% Italy 5.4% Switzerland 5.7% Japan 20.5% Sweden 3.7% Spain 4.7% Other 13.5% Netherlands 5.1% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks and closed-end investment companies 86.1 81.6 Bonds 1.6 2.0 Short-term investments 12.3 16.4 TOP TEN STOCKS % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Deutsche Bank AG (Germany, Banks) 1.3 0.8 Hitachi Ltd. (Japan, Electronics) 1.0 1.2 Hoechst AG Ord. (Germany, Chemicals & Plastics) 1.0 1.1 Nomura Securities Co. Ltd (Japan, Securities Industry) 1.0 0.8 Stet (Societa Finanziaria Telefonica) Spa (Italy, Telephone Services) 0.9 1.8 Holderbank Financiere Glarus AG (Bearer) (Switzerland, Building Materials) 0.9 1.0 Toshiba Corp. (Japan, Electronics) 0.9 1.0 Total SA Class B (France, Oil & Gas) 0.9 0.5 Tokio Marine & Fire Insurance Co. Ltd. (The) (Japan, Insurance) 0.9 0.4 Telefonica de Espana SA Ord. (Spain, Telephone Services) 0.9 1.0 TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Finance 20.7 17.5 Durables 10.6 12.6 Basic Industries 10.5 11.4 Utilities 7.1 7.8 Technology 6.1 7.6 Energy 4.2 3.6 Industrial Machinery & Equipment 4.0 3.8 Retail & Wholesale 3.8 2.0 Transportation 3.5 3.0 Construction & Real Estate 3.4 4.4 OVERSEAS INVESTMENTS OCTOBER 31, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 82.9% SHARES VALUE (NOTE 1) ARGENTINA - 0.6% Buenos Aires Embotelladora SA sponsored ADR 72,200 $ 2,770,675 11942420 Perez Companc Class B 500,700 2,704,726 71399723 Telecom Argentina Stet France Telecom SA 443,600 2,698,033 90899992 YPF Sociedad Anonima sponsored ADR representing Class D shares 185,800 4,482,425 98424510 12,655,859 AUSTRALIA - 1.7% Ampolex Ltd. Ord. 1,631,500 4,944,130 03212792 Brambles Industries Ltd. 404,000 4,044,957 10599010 FAI Insurance Ltd. Ord. 3,866,800 2,211,500 30239330 Lend Lease Corp. Ltd. 190,000 2,342,634 52599292 Pioneer International Ltd. 966,700 2,340,738 72371110 TNT Ltd. 3,141,200 5,622,842 93599292 Westpac Banking Corp. 4,924,181 16,568,183 96121410 38,074,984 AUSTRIA - 0.8% Mayr Melnhof Karton AG (a) 60,100 3,257,222 57847192 OEMV AG (a) 128,800 11,751,581 67399592 Steyr-Daimler-Puch AG (a) 83,500 1,550,450 86099322 VA Technologie AG (a) (c) 24,000 2,467,977 96399A23 19,027,230 BELGIUM - 1.3% Bekaert SA 3,670 2,843,167 07799A22 Delhaize Freres & Cie Le Lion SA 137,700 5,532,052 24650010 Petrofina SA 22,100 6,812,647 71648510 Petrofina SA (warrants) (a) 1,105 24,091 71648592 Solvay & Cie SA 27,505 13,656,857 83425810 28,868,814 BERMUDA - 0.2% Consolidated Electric Power Asia Ltd. sponsored ADR (a)(c) 67,400 1,550,200 20855210 Jardine Strategic Holdings Ltd. Ord. 894,500 3,438,163 47199020 4,988,363 BRAZIL - 0.6% Coteminas PN 4,900,000 2,088,772 22199692 Telebras PN (Pfd. Reg.) 217,135,515 10,464,672 95499792 12,553,444 CANADA - 0.6% Abitibi Price, Inc. (a) 274,700 3,678,972 00368010 Midland Walwyn, Inc. 277,800 1,642,148 59780110 Noranda, Inc. 460,700 9,020,985 65542210 14,342,105 CHILE - 0.0% Vina Concha y Toro SA sponsored ADR (a) 46,100 824,038 92719110 FINLAND - 0.4% Outokumpu OY Class A (a) 270,100 5,723,703 69099992 Valmet OY Ord. (a) 108,700 2,362,530 92029991 8,086,233 FRANCE - 7.0% Accor SA 93,418 11,090,721 00439991 BNP Ord. 328,020 16,246,440 05599996 Carnaudmetalbox SA 96,900 3,458,764 20999092 SHARES VALUE (NOTE 1) Club Mediterranee SA Ord. 29,300 $ 2,507,850 18947230 Compagnie Bancaire Ord. 32,600 3,179,870 20427310 Credit Lyonnais 40,400 3,650,248 22799392 Elf Aquitaine 254,544 18,819,390 28627199 Eramet SA (a)(c) 11,500 840,183 29499H23 GAN (Groupe des Assur. Natl.) 113,000 6,268,629 36599792 Havas SA 93,000 7,750,452 00822292 Lafarge Coppee SA 198,600 15,756,024 50586310 Pechiney International SA 85,100 2,634,106 71099094 Peugeot SA Ord. (a) 101,300 15,175,809 71682510 Rhone Poulenc SA Class A 605,750 14,959,844 76242695 Societe Generale Class A 78,200 8,828,175 83357799 Total SA Class B 330,500 21,442,523 20434510 Valeo SA 109,000 5,919,654 91899010 Vallourec SA (a) 66,800 3,627,825 92017610 162,156,507 GERMANY - 6.4% Allianz Versich Holdings Ord. (Reg.) 3,650 5,599,701 01882495 BASF AG 47,800 10,117,865 05526230 BMW AG 21,272 10,963,125 05528310 Continental Gummi-Werke AG 52,400 7,707,983 21199010 Deutsche Bank AG 61,900 30,502,344 25152592 Duerr Beteiligungs AG (RFD) 13,350 5,726,185 26499292 Gildemeister AG (a) 32,100 3,031,222 37550099 Gildemeister AG (RFD) (rights) (a) 25,680 1,753,253 37550092 Hoechst Krupp, Fried Krupp AG Ord. 101,300 22,183,269 43439010 Kolbenschmidt AG (a) 26,600 3,449,377 50799792 MAN AG Ord. 35,450 9,606,567 56154210 Schmalbach-Lubeca AG 14,350 3,893,466 80899792 Sixt AG Ord. 6,035 1,850,131 83002199 Thyssen AG Ord. 81,700 15,609,250 88629110 Veba AG Ord. 47,130 15,796,189 92239110 147,789,927 HONG KONG - 1.3% Amoy Properties Ltd. 2,785,000 3,460,084 03199192 Dickson Concepts International Ltd. 4,277,000 3,321,091 25399210 HSBC Holdings PLC 566,000 6,702,340 42199192 Hong Kong Land Holdings Ltd. 3,330,000 8,532,925 43858292 Hopewell Holdings Ltd. 3,310,000 3,405,527 44099999 Jardine Matheson Holdings Ltd. Ord. 528,000 4,390,320 47111510 29,812,287 INDIA - 0.2% ITC Ltd. GDS (warrants) (a)(c) 19,000 156,750 45031811 Reliance Industries Ltd. GDS 181,700 4,587,925 75947094 4,744,675 INDONESIA - 0.8% Astra International PT (For. Reg.) 440,000 972,770 04699894 Bank International Indonesia PT Ord. 1,556,300 5,268,605 06199B92 Jakarta International Hotels & Development Ord. 3,017,400 4,099,862 47399693 Matahari Putra Prima PT (For. Reg.) 805,500 1,706,629 57699C92 Sampoerna, Hanjaya Mandala (For. Reg.) 1,455,000 7,036,686 82299893 19,084,552 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) IRELAND - 0.7% Bank of Ireland U.S. Holdings, Inc. 894,200 $ 4,155,052 06278793 Fyffes PLC 2,367,000 3,872,767 34999G22 Independent Newspapers PLC 940,650 4,309,325 45399E92 Smurfit (Jefferson) Group PLC 356,100 2,174,970 84699793 Smurfit (Jefferson) Group PLC (rights) (a) 35,610 20,392 84699794 Waterford Wedgwood PLC Unit (a) 2,426,200 2,262,687 94151393 16,795,193 ITALY - 1.6% Alitalia Linee Aeree Italiane Class A (a) 3,333,000 2,060,761 01608910 Assicurazioni Generali Spa 391,160 9,775,057 04542910 Editoriale L'Espresso Spa 527,300 1,510,003 28199K22 Istituto Mobiliare Italiano 545,700 3,582,122 45777M92 Istituto Nazionale Delle Assicurazionl Spa (a) 2,134,000 3,090,245 46523492 Montedison Spa Ord. 5,637,300 4,641,189 61237610 SAI Sta Assieuratrice Industriale Spa 355,000 4,617,659 78399110 Telecom Italia Ord. 3,031,600 8,294,730 87999R22 37,571,766 JAPAN - 23.2% Ado Electronic Industrial Co. Ltd. 76,000 2,588,102 00699992 Advantest Corp. 143,000 5,017,285 00799010 Aida Engineering Ltd. Ord. 54,000 492,606 00871210 Akita Bank Ltd. 144,000 1,202,167 00999692 Alps Electric Co. Ltd. 271,000 3,663,484 02199292 Amada Metrecs Co. Ltd. 54,000 1,008,617 02299292 Amadasonoike Co. Ltd. 495,000 4,469,583 02499492 Aoyama Trading Co. Ord. Ltd. 136,000 4,182,241 03799092 Autobacs Seven Co. Ltd. 34,700 4,368,609 05299392 Bridgestone Corp. 692,000 11,425,626 10844110 Canon, Inc. 984,000 18,277,692 13780199 Daicel Chemical Industries Ltd. 592,000 3,610,466 23398110 Daiwa House Industry Co. Ltd. (warrants) (a) 75 28,875 23406297 East Japan Railway Co. Ord. 1,100 5,482,689 27399722 Fanuc Ltd. 58,100 2,817,914 30729599 Fujitsu Ltd. 1,274,000 14,593,058 35959010 Futaba Industrial Co. Ltd. 245,000 5,284,040 38299192 Hanshin Department Store Ltd. 72,000 583,252 41199292 Hachijuni Bank Ltd. 93,000 1,170,837 58799292 Higo Bank Ltd. Ord. 133,000 1,125,433 43299192 Hitachi Ltd. 2,213,000 23,065,170 43357810 Honda Motor Co. Ltd. 622,000 10,847,531 43812810 Ishihara Sangyo Kaisha Ltd. (a) 657,000 2,935,667 46427899 Izumi Co. Ord. 86,000 2,218,668 46399292 Japan Airlines Co. Ltd. 623,000 4,821,733 47103420 Joshin Denki Co. Ltd. Ord. 178,000 2,296,063 48199999 Kawasaki Steel Corp. 1,694,000 7,936,390 48636810 Komatsu Ltd. Ord. 693,000 6,579,224 50045899 Kyocera Corp. 26,000 1,980,084 50155610 Marubeni Corp. 662,000 3,825,605 57381010 Marukyo Corp. 55,000 1,946,752 57899792 Matsushita Electric Industrial Co. Ltd. 513,000 8,523,090 57687910 Minebea Co. Ltd. 924,000 8,019,026 60299392 Mitsubishi Chemical Industries Ltd. (a) 756,600 4,465,975 60799D22 Mitsubishi Estate Co. Ltd. 226,000 2,658,687 60678310 Mitsubishi Heavy Industries Ltd. 898,000 7,311,507 60699310 Mitsubishi Trust & Banking Corp. 750,000 11,609,310 60699410 Mitsui OSK Lines Ltd. 636,000 2,789,331 60799792 Mitsui Petrochemical Industries, Ltd. 493,000 4,649,937 60691110 Mitsui Trust and Banking Co. Ltd. 206,000 2,380,888 60684699 Murata Manufacturing Co. Ltd. Ord. 323,400 13,215,663 62699110 Nichido Fire & Marine Insurance Co. Ltd. 912,000 7,990,178 65399920 SHARES VALUE (NOTE 1) Nikko Securities Co. Ltd. 612,000 $ 7,199,629 65399010 Nintendo Co. Ltd. Ord. 42,000 2,357,773 65443999 Nippon Shinpan Co. Ltd. 226,000 1,777,122 65461710 Nippon Telegraph & Telephone Corp. Ord. 696 6,499,974 65462492 Nippon Yusen Kabushiki Kaisha 450,000 3,055,572 65463310 Nippon Zeon Co. Ltd. (a) 368,000 2,248,141 66499692 Nissan Motor Co. Ltd. Ord. 1,009,000 8,610,937 65474491 Nisshinbo Industries 447,000 5,212,427 65411310 Nitto Denko Corp. 175,000 3,015,840 65480230 Nomura Securities Co. Ltd. 1,058,000 22,163,354 65536110 Oji Paper Co. Ltd. 359,000 4,001,033 67811810 Omron Corp. 242,000 4,370,259 68215110 Orix Corp. 441,000 17,657,292 68616710 Pioneer Electronic Corp. 490,000 12,792,940 72365710 Rohm Co. Ltd. 207,000 9,121,200 77536110 Sankyo Co. Ltd. 615,000 15,992,983 80029710 Sanwa Bank Ltd. 183,000 3,833,548 80399410 Seino Transpotation Co. Ltd. 248,000 4,888,087 81605210 Sharp Corp. 246,000 4,594,810 81989991 Sony Corp. 155,700 9,495,765 83569999 Sumitomo Marine and Fire Insurance Co. Ltd. 655,000 5,927,816 94599392 Sumitomo Realty & Development Co. Ltd. 901,000 5,764,616 86562310 Sumitomo Rubber Industries Ltd. 330,000 3,439,451 86699892 Sumitomo Trust & Banking Co. Ltd. 535,000 7,784,427 86599310 Suzuki Motor Corp. 443,000 5,622,928 86958592 TDK Corp. 144,000 7,073,319 87235110 Tadano Ltd. 29,000 289,985 87357899 Takashimaya Co. Ltd. 342,000 4,835,046 87346710 Takeda Chemical Industries Ltd. 883,000 10,934,419 87405810 Tanabe Seiyaku Co. Ltd. 9,000 76,157 87599010 Tokio Marine & Fire Insurance Co. Ltd. (The) 1,738,000 20,625,350 88909099 Tokyo Electron Ltd. 75,000 2,507,611 89499999 Tokyo Steel Manufacturing Co. Ltd. 310,300 7,781,117 88998799 Tokyo Style Co. Ltd. 575,000 9,968,528 88999410 Toppan Printing Co. Ltd. (warrants) (a) 200 105,000 89074792 Toshiba Corp. 2,749,000 21,673,143 89149310 Toyobo Co. Ltd. 713,000 3,141,749 90899392 Toyota Motor Corp. 886,000 19,565,963 89399999 Tsugami Corp. 336,000 2,194,809 89853699 Yamanouchi Pharmaceutical Co. Ltd. 591,000 11,648,628 98414010 533,307,803 KOREA (SOUTH) - 0.7% Cho Hung Bank Co. Ltd. 79,000 1,397,155 17099E22 Cho Hung Bank Co. Ltd. (New) (a) 17,362 280,963 17099E25 Korea Electric Power Corp. ADR 285,000 10,832,967 50099B92 Korea First Securities Co. Ltd. (a) 6,422 116,009 50099K22 Korea First Securities Co. Ltd. (New) (a) 661 11,194 50099K24 Kyungki Bank (a) 135,000 1,524,180 61999922 Seoul Securities Co. (a) 120,870 2,122,788 83599P22 16,285,256 LUXEMBOURG - 0.1% Quilmes Industries SA 94,974 2,493,068 74899692 MALAYSIA - 1.0% Aokam Perdana BHD 101,000 833,682 01899792 Hong Leong Credit BHD 105,000 624,352 44699492 Kuala Lumpar Industries Holdings BHD (a) 570,000 1,088,159 49799B92 Magnum Corp. BHD 960,000 2,159,414 55999392 Malaysan Banking BHD 227,000 1,545,155 56090499 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) MALAYSIA - CONTINUED Resorts World BHD 769,000 $ 4,873,468 76199592 Sime Darby BHD 1,343,000 3,703,927 82861792 Telekom Malaysia BHD 977,000 7,911,551 94099892 Time Engineering BHD 317,000 942,476 93099592 23,682,184 MEXICO - 1.4% Cemex SA, Series B 594,300 5,479,731 15299293 Cifra SA Class C 2,428,100 6,539,917 17178594 Consorcio G Grupo Dina SA ADR 117,200 1,508,950 21030610 Grupo Dina Sponsored ADR, Series L (a) 42,244 427,721 21030620 Grupo Financiero Bancomer SA de CV sponsored ADR, Series C (c) 189,800 4,365,400 40048610 Telefonos de Mexico SA sponsored ADR representing shares Ord. Class L 230,400 12,700,800 87940378 31,022,519 NETHERLANDS - 4.9% AKZO Nobel NV Ord. 113,300 14,312,924 01019910 DSM NV 108,800 9,425,503 23332H92 Frans Maas Groep NV 113,400 3,606,622 35399322 Hoogovens en Staalfabrieken NV (a) 121,400 5,661,924 43888410 Internationale Nederlanden Groep NV 325,045 15,217,498 46099892 KLM Royal Dutch Airlines Ord. (a) 552,600 15,378,234 48251620 Koninklijke PPT Nederland 264,500 8,427,965 72699422 Koninklijke PPT Nederland (c) 143,300 4,566,077 72699423 Oce Van der Grinten NV 288,500 12,821,843 67462710 Philips Electronics 388,800 12,873,102 71833799 Pirelli Tyre Holdings NV Ord. 1,628,100 11,302,889 72499092 113,594,581 NEW ZEALAND - 0.2% Fletcher Challenge Ltd. (Reg.) 1,665,500 4,496,200 33999592 NORWAY - 2.1% Bergesen Group: Class A 168,800 3,665,917 08399010 Class B 408,700 8,938,457 08399011 Christiania Bank Free shares Ord. (a) 1,760,000 3,445,446 17100792 Den Norske Bank Class A Free shares (a) 1,267,700 3,295,995 25299792 Norsk Hydro AS 162,300 6,540,651 65653150 Norsk Hydro AS ADR 129,400 5,208,350 65653160 Norske Skogindustrier AS Class A Free shares 139,920 3,873,292 66499594 Orkla AS Class B (non-vtg.) 152,400 4,370,268 39299192 Saga Petroleum AS Class B 330,200 3,762,315 84099794 Unitor AS 286,300 5,166,842 91699392 48,267,533 PAKISTAN - 0.1% Pakistan Telecommunications Voucher GDR (a)(c) 14,900 2,458,500 69584910 SINGAPORE - 1.0% Kim Engineering Holdings Ltd. 4,950,000 6,170,609 49499D92 Neptune Orient Lines Ltd. 9,003,000 13,430,905 64099610 Overseas Union Bank Ltd. (For.) 456,000 2,609,264 68990192 Van Der Horst Ltd. 244,000 1,097,002 92099C22 23,307,780 SPAIN - 3.7% ACERINOX SA (Reg.) 35,775 3,958,814 00499192 Banco Bilbao Vizcaya SA Ord. (Reg.) 534,900 14,050,470 05945891 Banco Intercontinental Espanol 100,750 9,298,763 24699592 SHARES VALUE (NOTE 1) Corporacion Mapfrecia International de Reaseguros SA (Reg.) 287,150 $ 12,678,161 16899192 Iberdrola SA 729,500 4,805,092 45499892 Repsol SA Ord. 158,800 5,077,797 76026T10 Tabacalera SA, Series A 141,200 3,799,154 87399410 Telefonica de Espana SA Ord. 1,465,300 19,829,802 87938210 Union Electrica Fenosa SA 1,827,000 8,402,008 90659510 Uralita SA (a) 350,450 3,665,385 91799310 85,565,446 SWEDEN - 2.7% Electrolux AB 280,300 14,625,779 01019810 Investor AB Class B Free shares 401,000 10,083,751 46199A92 Marieberg Tidnings AB Class A Free shares 84,000 2,077,102 56799392 SKF AB Ord. (a) 504,300 9,229,230 78437530 Skandia International Holding 114,600 2,097,303 83055510 Skandinaviska Enskilada Banken Class A Free shares 1,178,600 7,738,723 88099222 Volvo AB Class B 759,100 15,058,882 92885630 60,910,770 SWITZERLAND - 6.9% Adia SA (Bearer) 94,000 16,608,038 00699793 Alusuisse-Lonza Holding AG (Reg.) 37,611 18,738,150 02239994 Ascom Holding AG (Bearer) (a) 2,820 3,422,602 04364492 Baloise Holding: (Reg.) 9,600 18,069,240 05899195 (warrants) (a) 6,700 87,983 05899196 CIBA-GEIGY AG: (Reg.) 22,765 13,262,220 17199492 (warrants) (a) 1,480 3,887 17199494 C. S. Holdings: (Bearer) 43,700 19,093,752 17599792 (Reg.) 135,600 11,493,354 17599795 (Bearer) (warrants) (a) 25,700 214,763 15099427 (Reg.) (warrants) (a) 135,600 199,649 15099428 Fischer (Georg) AG (Reg.) 23,300 5,006,765 33771192 Globus Magazine (Part. Cert.) 9,400 6,246,717 37957792 Holderbank Financiere Glarus AG: (Bearer) 28,325 21,843,951 43479593 (warrants) (a) 141,625 197,250 43479595 Oerlikon-Buhrle Holding Ltd. (Reg.) (a) 22,100 2,286,510 67199092 Surveillance, Societe Generale (Bearer) 1,690 2,447,911 86901193 Swiss Bank Corp. (Bearer) 63,950 18,424,115 87083610 157,646,857 THAILAND - 0.7% Bank of Asia PCL (For. Reg.) 511,600 1,395,849 06199D22 Krung Thai Bank: (Loc. Reg.) 632,500 2,157,141 50599292 (For. Reg.) 1,369,700 4,671,362 50599293 Phatra Thanakit PCL: (For Reg.) 11,300 116,976 71799593 (For. Reg.) (rights) (a) 45,200 449,769 71799595 Siam City Bank PCL (For. Reg.) 5,542,100 7,838,504 81199593 16,629,601 TURKEY - 0.0% Cimentas AS 900,000 579,519 17199G22 Tofas Turkey Otomobil Fabrikasi AS ADR (c) 150,900 528,150 90011010 1,107,669 UNITED KINGDOM - 10.0% Amstrad PLC 625,400 286,508 03299110 Argyll Group PLC Ord. 1,146,000 4,893,821 04099210 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) UNITED KINGDOM - CONTINUED Arjo Wiggins Appleton PLC 1,225,100 $ 5,371,916 04199592 Avon Rubber PLC 157,100 1,370,019 05399010 BET PLC Ord. 4,801,000 8,640,696 05538H10 Barclays PLC Ord. 1,607,200 15,304,389 06738E10 Bass PLC Ord. 1,012,600 9,228,188 06990492 Boots Co. PLC 769,400 6,671,929 09999410 British Gas PLC Ord. 533,200 2,556,118 11090199 British Steel PLC Ord. 4,476,000 11,735,759 11101510 British Vita PLC Ord. 1,356,000 5,258,134 11199192 De La Rue PLC 469,200 7,523,279 24642110 Dixons Group PLC 2,273,000 7,289,170 25587592 Electrocomponents PLC 429,400 3,238,814 28599192 English China Clay PLC 1,479,294 8,785,853 29321792 Forte PLC 3,051,200 11,457,134 34999592 General Electric Co. PLC Ord. 1,165,100 5,261,324 36963940 Great Universal Stores PLC Ord. Class A 658,400 6,032,550 39133420 Hanson Trust PLC Ord. 1,101,300 4,162,374 41135210 Ladbroke Group PLC Ord. 3,180,300 7,909,247 50572799 Lloyds Abbey Life PLC 887,900 5,084,586 53801099 London International Group PLC 4,668,400 6,607,046 54183310 Morrison (WM) Supermarkets PLC 478,700 1,041,139 61899894 National Westminster Bank PLC Ord. 1,438,980 11,842,561 63853930 North West Water Group PLC Ord. 721,600 6,658,845 67299195 Rolls Royce PLC Ord. 1,600,399 4,556,176 77577910 Royal Insurance Holdings PLC 1,652,600 7,908,914 78074910 Sainsbury (J.) PLC Ord. 1,197,800 7,819,526 78710310 Shanks & Mcewan Group PLC 1,553,300 2,338,120 81999294 Spring Ram Corp. PLC 2,317,600 1,668,454 83899492 Sturge Holdings PLC 176,400 213,576 86399822 Taylor Woodrow PLC 1,177,500 2,485,267 87667410 Tesco PLC Ord. 2,409,200 9,263,254 88157510 Transport Development Group PLC 930,600 3,304,049 89399610 Vickers PLC Ord. units 3,421,075 9,599,527 92549310 Vodafone Group PLC 1,470,000 5,092,889 92857T92 Whitbread Co. PLC Class A 1,346,600 12,580,464 96341499 231,041,615 TOTAL COMMON STOCKS (Cost $1,622,749,409) 1,909,193,359 NONCONVERTIBLE PREFERRED STOCKS - 3.0% AUSTRIA - 0.4% Creditanstaldt Bankverein 160,500 9,575,993 22539210 GERMANY - 0.6% Boss (Hugo) AG 4,250 2,667,997 44451094 FAG Kugelfischer Georg Schaef 46,200 6,851,272 50105492 Fuchs Petrolub AG Oel & Chemie 14,738 1,715,146 36499F22 Porsche AG Ord. (a) 7,200 3,073,925 73380110 14,308,340 ITALY - 1.9% Banco Ambro Veneto 2,320,900 3,551,209 06399592 Fiat Spa (a) 4,001,600 9,696,037 31562120 SAI Sta Assicuratrice Industriale Spa 1,190,200 8,066,093 78399192 Stet (Societa Finanziaria Telefonica) Spa 8,823,000 21,855,091 85982592 Telecom Italia 350,000 777,903 87999R24 43,946,333 KOREA (SOUTH) - 0.1% Korea First Securities Co. Ltd. (a) 66,140 846,300 50099K23 Korea First Securities Co. Ltd. (New) (a) 6,814 98,472 50099K25 944,772 TOTAL NONCONVERTIBLE PREFERRED STOCKS (Cost $52,217,098) 68,775,438 CLOSED-END INVESTMENT COMPANIES - 0.2% SHARES VALUE (NOTE 1) THAILAND - 0.2% Ruam Pattana Fund II (For. Reg.) 2,683,000 $ 1,910,806 76999523 Ruang Khao Unit Trust (For. Reg.) (a) 2,633,900 1,796,583 77399393 TOTAL CLOSED-END INVESTMENT COMPANIES (Cost $2,651,231) 3,707,389 CORPORATE BONDS - 0.0% MOODY'S RATINGS PRINCIPAL (UNAUDITED) AMOUNT (B) GRAND CAYMAN - 0.0% CT II Overseas Finance Ltd. euro 4 1/4%, 11/18/98 (c) (Cost $605,000) -- $ 605,000 484,000 126995AA GOVERNMENT OBLIGATIONS (E) - 1.6% ARGENTINA - 0.4% Argentina Republic BOCON 5 1/8%, 4/1/01 (d) B1 15,000,414 10,685,770 039995AF BRAZIL - 0.5% Brazil Federative Republic IDU euro 6.0625%, 1/1/01 (d) B2 13,181,000 10,758,991 1057569E DENMARK - 0.4% Danish Government Bullet 7%, 12/15/04 Aa1 DKK 62,500,000 9,244,713 249998AV FRANCE - 0.3% French Government Strips 0%, 4/25/23 Aaa FRF 420,000,000 6,800,640 351996BL TOTAL GOVERNMENT OBLIGATIONS (Cost $40,867,728) 37,490,114 REPURCHASE AGREEMENTS - 12.3% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations) in a joint trading account at 4.78% dated 10/31/94 due 11/1/94 $282,397,491 282,360,000 99799N9L TOTAL INVESTMENT IN SECURITIES -100% (Cost $2,001,450,466) $2,302,010,300 FORWARD FOREIGN CURRENCY CONTRACTS SETTLEMENT UNREALIZED DATE(S) VALUE GAIN/(LOSS) CONTRACTS TO SELL 425,178,909 FRF 11/16/94 $ 82,599,004 $ (3,154,525) 7,966,217,000 JPY 1/11/95 82,759,012 (2,208,368) 21,434,578 NLG 12/13/94 12,723,058 (374,315) TOTAL CONTRACTS TO SELL (Receivable amount $172,343,866) $178,081,074 $(5,737,208) THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 7.7% CURRENCY ABBREVIATIONS DKK - Danish krone NLG - Dutch guilder FRF - French franc JPY - Japanese yen LEGEND (a) Non-income producing (b) Principal amount is stated in United States dollars unless otherwise noted. (c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $17,417,237 or 0.8% of net assets. (d) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. (e) Most foreign government obligations have not been individually rated by S&P or Moody's. The ratings listed are assigned to securities by FMR, the fund's investment adviser, based principally on S&P and Moody's ratings of the sovereign credit of the issuing government. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $1,319,975,904 and $835,927,611, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of FMR. The commissions paid to these affiliated firms were $4,808 for the period (see Note 5 of Notes to Financial Statements). INCOME TAX INFORMATION At October 31, 1994 the aggregate cost of investment securities for income tax purposes was $2,001,593,454. Net unrealized appreciation aggregated $300,416,846, of which $353,123,838 related to appreciated investment securities and $52,706,992 related to depreciated investment securities. The fund hereby designates $19,039,080 as a capital gain dividend for the purpose of the dividend paid deduction. For the period, interest and dividends from foreign countries were $41,166,131 or $0.53 per share. Taxes paid to foreign countries were $6,624,148 or $0.08 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Aerospace & Defense 0.3% Basic Industries 10.5 Conglomerates 0.2 Construction & Real Estate 3.4 Durables 10.6 Energy 4.2 Finance 20.7 Government Obligations 1.6 Health 2.9 Holding Companies 0.8 Industrial Machinery & Equipment 4.0 Media & Leisure 2.4 Nondurables 2.4 Retail & Wholesale 3.8 Services 3.2 Repurchase Agreements 12.3 Technology 6.1 Transportation 3.5 Utilities 7.1 100.0% OVERSEAS FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES <TABLE> <CAPTION> <S> <C> <C> OCTOBER 31, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $282,360,000) (cost $2,001,450,466) $ 2,302,010,300 - - See accompanying schedule Cash 280 Receivable for investments sold 8,159,196 Receivable for fund shares sold 12,467,350 Dividends receivable 5,079,066 Interest receivable 1,503,034 Other receivables 15,417 TOTAL ASSETS 2,329,234,643 LIABILITIES Payable for investments purchased $ 9,171,567 Unrealized depreciation on foreign currency contracts 5,737,208 Payable for fund shares redeemed 28,143,770 Accrued management fee 1,454,843 Other payables and accrued expenses 1,515,792 TOTAL LIABILITIES 46,023,180 NET ASSETS $ 2,283,211,463 Net Assets consist of: Paid in capital $ 1,947,583,433 Distributions in excess of net investment income (5,581,700) Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 46,268,007 Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 294,941,723 NET ASSETS, for 78,273,736 shares outstanding $ 2,283,211,463 NET ASSET VALUE and redemption price per share ($2,283,211,463 (divided by) 78,273,736 shares) $29.17 Maximum offering price per share (100/97.00 of $29.17) $30.07 </TABLE> STATEMENT OF OPERATIONS <TABLE> <CAPTION> <S> <C> <C> YEAR ENDED OCTOBER 31, 1994 INVESTMENT INCOME $ 35,100,087 Dividends Interest 12,058,570 47,158,657 Less foreign taxes withheld (6,624,148 ) TOTAL INCOME 40,534,509 EXPENSES Management fee 14,621,202 Basic fee Performance adjustment 516,209 Transfer agent fees 5,826,092 Accounting fees and expenses 715,901 Non-interested trustees' compensation 10,587 Custodian fees and expenses 1,530,829 Registration fees 226,189 Audit 76,165 Legal 14,045 Miscellaneous 17,302 Total expenses 23,554,521 NET INVESTMENT INCOME 16,979,988 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 102,628,790 Foreign currency transactions (15,872,042 86,756,748 ) Change in net unrealized appreciation (depreciation) on: Investment securities 52,241,564 Assets and liabilities in foreign currencies (9,176,697 43,064,867 ) NET GAIN (LOSS) 129,821,615 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 146,801,603 OTHER INFORMATION $1,120,737 Sales charges paid to FDC Accounting fees paid to FSC $715,901 </TABLE> STATEMENT OF CHANGES IN NET ASSETS INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, 1994 1993 <TABLE> <CAPTION> <S> <C> <C> Operations $ 16,979,988 $ 10,233,528 Net investment income Net realized gain (loss) 86,756,748 (49,776,636) Change in net unrealized appreciation (depreciation) 43,064,867 370,524,952 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 146,801,603 330,981,844 Distributions to shareholders: (8,339,198) (11,187,669) From net investment income In excess of net investment income (9,043,942) - From net realized gain (6,172,422) (75,938,524) TOTAL DISTRIBUTIONS (23,555,562) (87,126,193) Share transactions 1,731,601,947 854,803,474 Net proceeds from sales of shares Reinvestment of distributions 22,888,570 84,813,750 Cost of shares redeemed (1,085,191,412) (494,651,306) Net increase (decrease) in net assets resulting from share transactions 669,299,105 444,965,918 TOTAL INCREASE (DECREASE) IN NET ASSETS 792,545,146 688,821,569 NET ASSETS Beginning of period 1,490,666,317 801,844,748 End of period (including under (over) distribution of net investment income of $(5,581,700) $ 2,283,211,463 $ 1,490,666,317 and $7,779,873, respectively) OTHER INFORMATION Shares Sold 60,924,762 35,327,981 Issued in reinvestment of distributions 855,349 4,255,602 Redeemed (38,395,055) (21,200,545) Net increase (decrease) 23,385,056 18,383,038 </TABLE> <TABLE> <CAPTION> <S> <C> <C> SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. </TABLE> FINANCIAL HIGHLIGHTS <TABLE> <CAPTION> <S> <C> <C> <C> <C> <C> YEARS ENDED OCTOBER 31, SELECTED PER-SHARE DATA 1994 1993 1992 D 1991 1990 </TABLE> <TABLE> <CAPTION> <S> <C> <C> <C> <C> <C> Net asset value, beginning of period $ 27.16 $ 21.96 $ 26.92 $ 27.47 $ 26.30 Income from Investment Operations Net investment income .18 .27 .46 .54 C .35 Net realized and unrealized gain (loss) 2.26 7.40 (3.82) .45 2.16 Total from investment operations 2.44 7.67 (3.36) .99 2.51 Less Distributions (.15) (.37) (.44) (.46) (.21) From net investment income In excess of net investment income (.17) - - - - From net realized gain (.11) (2.10) (1.16) (1.08) (1.13) B B B Total distributions (.43) (2.47) (1.60) (1.54) (1.34) Net asset value, end of period $ 29.17 $ 27.16 $ 21.96 $ 26.92 $ 27.47 TOTAL RETURN A 9.13% 39.01% (13.05) 4.12% 9.58% % RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 2,283,211 $ 1,490,666 $ 801,845 $ 969,436 $ 1,011,152 Ratio of expenses to average net assets 1.24% 1.27% 1.52% 1.53% 1.26% Ratio of net investment income to average net assets.90% 1.00% 1.78% 2.19% 1.34% Portfolio turnover rate 49% 64% 122% 132% 96% A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. B INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. C INCLUDES $0.08 PER SHARE FROM RECOVERY OF FOREIGN TAXES PREVIOUSLY WITHHELD ON DIVIDEND AND INTEREST PAYMENTS. D AS OF NOVEMBER 1, 1991, THE FUND DISCONTINUED THE USE OF EQUALIZATION ACCOUNTING. </TABLE> WORLDWIDE PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). Worldwide has a 3% sales charge, which has been waived through June 30, 1995. CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF OCTOBER 31, 1994 YEAR FUND WORLDWIDE 11.55% 49.14% WORLDWIDE (INCL. 3% SALES CHARGE) 8.21% 44.67% Morgan Stanley World Index 7.65% 33.51% Average Global Fund 8.09% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case one year, or since the fund started on May 30, 1990. You can compare the fund's figures to the performance of the Morgan Stanley World index, a broad measure of the performance of stocks across the world, weighted by each country's market capitalization (or the total value of its outstanding shares). You can also compare the fund's performance to the average global fund, which currently reflects the performance of 85 funds with similar objectives tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF OCTOBER 31, 1994 YEAR FUND WORLDWIDE 11.55% 9.45% WORLDWIDE (INCL. 3% SALES CHARGE) 8.21% 8.70% Morgan Stanley World Index 7.65% 6.75% Average Global Fund 8.09% n/a 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 Worldwide Fund (318) World Index 05/30/90 9700.00 10000.00 05/31/90 9729.10 10038.61 06/30/90 9981.30 9964.14 07/31/90 10252.90 10051.93 08/31/90 9098.60 9108.00 09/30/90 8196.50 8144.51 10/31/90 8681.50 8901.68 11/30/90 8681.50 8752.34 12/31/90 8631.28 8932.45 01/31/91 8875.93 9255.96 02/28/91 9365.23 10109.62 03/31/91 9042.29 9808.57 04/30/91 9130.37 9882.21 05/31/91 9198.87 10103.10 06/30/91 8543.20 9476.34 07/31/91 9071.65 9920.84 08/31/91 9208.65 9886.25 09/30/91 9365.23 10142.44 10/31/91 9404.37 10303.82 11/30/91 8905.29 9851.69 12/31/91 9311.08 10565.69 01/31/92 9410.03 10366.97 02/29/92 9696.98 10184.99 03/31/92 9469.40 9702.08 04/30/92 9884.99 9834.16 05/31/92 10300.57 10222.20 06/30/92 9944.35 9876.60 07/31/92 9845.41 9898.58 08/31/92 9706.88 10136.03 09/30/92 9706.88 10039.86 10/31/92 9528.77 9764.70 11/30/92 9677.19 9936.32 12/31/92 9889.02 10013.50 01/31/93 10214.25 10043.98 02/28/93 10458.17 10278.91 03/31/93 11057.81 10871.83 04/30/93 11332.22 11372.70 05/31/93 11687.94 11631.78 06/30/93 11565.98 11531.21 07/31/93 11820.07 11765.78 08/31/93 12562.00 12302.20 09/30/93 12429.87 12071.96 10/31/93 12968.54 12401.72 11/30/93 12734.78 11697.27 12/31/93 13503.03 12266.78 01/31/94 14466.79 13072.98 02/28/94 14249.17 12900.91 03/31/94 13710.29 12341.84 04/30/94 14186.99 12720.47 05/31/94 14166.26 12750.32 06/30/94 13876.10 12711.99 07/31/94 14300.98 12950.75 08/31/94 14539.33 13337.82 09/30/94 14259.53 12984.42 10/31/94 14466.79 13350.78 Let's say you invested $10,000 in Fidelity Worldwide Fund on its start date and paid a 3% sales charge. By October 31, 1994, it would have grown to $14,467 - a 44.67% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley World index, which would have grown to $13,351 over the same period - a 33.51% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. (checkmark) WORLDWIDE FUND TALK: THE MANAGER'S OVERVIEW An interview with Penny Dobkin, Portfolio Manager of Fidelity Worldwide Fund Q. HOW HAS THE FUND PERFORMED, PENNY? A. It has done well, besting the average global fund. For the year ended October 31, 1994, the fund had a total return of 11.55%. According to Lipper Analytical Services, the average global fund returned 8.09% during the same period. Q. WHAT CONTRIBUTED TO THE FUND'S SUCCESS? A. The fund's favorable performance was due largely to a strong first six months. During that period, the fund benefited from its concentration on small- and medium-sized European growth stocks, and its underweighting in investments in Southeast Asian markets, which were battered from the end of December 1993 to April 1994. As you would gather, Europe did quite well at that time. For the last six months, that situation has reversed. Overall, small European growth stocks have struggled, while the markets in Asia have rebounded well. I've also kept more of the fund in short-term cash instruments than usual, because, frankly, most of the markets are less attractive than I've seen in more than 10 years of managing money. Q. WHY HAVEN'T YOU SWITCHED MORE ASSETS OVER TO ASIA? A. Because the stocks are very expensive. In hindsight, the fund would have benefited from more investment in Asia from the end of April through the summer, as those stock markets rallied. But I'm not convinced that it's an area that will pay off over the next year. My premise has been and remains that European economic growth is going to surprise on the upside this year and next. I've also believed since last autumn that interest rates would rise. Therefore, my focus has been on small or medium capitalization stocks that are not sensitive to interest rate movements but rather to economic demand. Q. WHAT ARE SOME EXAMPLES? A. Volker Stevin, a Dutch construction company involved in public sector construction, is one. In order to maintain its status as the distribution headquarters of Europe, the Netherlands has to build more rail and tunnel capacity. The country is terribly short of such infrastructure, having seen no growth in real terms since around 1986. This stock is inexpensive and the company is already growing earnings at about 15% per year due to its involvement in private housing. The stock is down a bit in the last six months, but it's crucial to be patient. Smaller companies haven't performed as well as some of the European blue chips, because rising interest rates this year tended to pull investors away from the less tradable, but higher potential, smaller names. Q. WHAT ABOUT POSITIVE PERFORMERS? A. The fund profited from the sale of two stocks it no longer owns, Grupo Tribasa, a Mexican public works company; and Fidis Spa, an Italian financial services company the fund sold out of before the Italian market turned back down. Bremer Vulkan, a German shipbuilding company, is still in the fund. Management has turned the company around by cutting costs in the shipbuilding business and by developing related technical services. Q. ANY DISAPPOINTMENTS? A. Three French property companies - Bail, Unibail and Klepierre - have been among the disappointments. French interest rates have actually come down, property demand has increased, and supply and demand should have come into better balance. The expected take-up of office space in France has occurred, but at discounts to market rates. France has turned out to be a country whose growth has lagged the rest of Europe. Even though these stocks hurt performance, the fund still holds these investments because the trends are intact, but they have taken considerably longer to pay off than I thought. And even though the fund has tried to avoid interest rate-sensitive investments, its investment in Banco Pastor, a Spanish regional bank - susceptible to rising interest rates, naturally - hurt performance a bit. Q. WHAT ABOUT OPPORTUNITIES IN THE U.S.? A. I find the U.S. market intriguing. If there is going to be a worldwide problem with inflation in the next year, then it seems the Federal Reserve Board has gone further than other countries in trying to contain it. It is interesting that the U.S. is the only country that has raised short-term interest rates by more than 1%. I believe there is less of a downside to this market than to others. At the moment, the fund has about 14% of its assets in U.S. equities, and I'd like to buy more. I may buy futures contracts which participate in the movement of the stock market, if I can't find enough specific stocks to buy quickly. At present, IBM, Schering-Plough and Pfizer are three American stocks that are in the fund. IBM is attractive after its restructuring, while Schering-Plough and Pfizer, both pharmaceutical companies, should benefit from cutting costs and the lack of health care legislation in the foreseeable future. Q. ARE YOU STILL USING DERIVATIVE INSTRUMENTS KNOWN AS FORWARD FOREIGN CURRENCY CONTRACTS TO HEDGE OVERSEAS INVESTMENTS? A. I am, but I use them selectively and not very often. These contracts reduce the fund's exposure to foreign currency risk - the chance that movements in a country's currency will negatively affect the fund's investment there. Although they reduce the possibility of negative effects, they also reduce the possibility of positive currency effects. In August, the fund initiated a Japanese yen/U.S. dollar hedge with the expectation that, at 99 to 100 yen per dollar, there was little risk left of the yen rising further. The fund's holdings are of domestic Japanese companies whose earnings do not benefit if the yen weakens against the dollar. If that occurs, these investments will be worth less in dollar terms unless there is a currency hedge in place. Q. THE FUND'S ASSETS HAVE GROWN MARKEDLY. DOES THIS INCREASE AFFECT YOUR STRATEGY? A. Yes, it does. I will focus on larger companies. I used to look at companies with what I call a free flow of publicly traded stock of $100 million and up. Going forward, that size consideration will be over $200 million. In general, a bigger fund will have fewer smaller capitalization names because one can't buy enough shares to create a meaningful position. The alternative is to increase dramatically the number of holdings in the fund, making it very difficult to stay well-informed of fundamental business developments. Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS? A. There could be some trading rallies in European markets, but otherwise I think it will be a waiting period. Managers will want to nail down a forecast for 1995 based on 1994 business trends, but year-end earnings reports won't be out until February or March in the U.S., and March and April elsewhere. I wouldn't be surprised if economic growth in the fourth quarter were stronger than expected and long-term interest rates were to rise further. Should long-term rates rise, the market could drop some more, but I think that drop would be modest. I don't see Southeast Asia continuing its strong performance. I'll watch producer price indexes to get a read on whether inflation will be a problem. I prefer to invest in countries with hard currency that hasn't depreciated, such as Germany, the Netherlands and Switzerland. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in common stocks from around the world. START DATE: May 30, 1990 SIZE: as of October 31, 1994, more than $748 million MANAGER: Penelope Dobkin, since May 1990; manager Fidelity Europe Fund, 1986-1990; Fidelity United Kingdom Fund, 1987-1989; Fidelity Select Financial Services Portfolio, 1983-1986; joined Fidelity in 1980 (checkmark) PENNY DOBKIN ON THE DOLLAR AND THE U.S. MARKET: "The U.S. dollar is a very cheap currency at the moment. If American companies start showing better earnings in 1995, overseas investors could start to increase their investments in the U.S. One of the standard strategies in global investing is to buy in a country where earnings are continuing to grow well or turning positive, and where the currency has depreciated. It has been some time since these factors have combined to make the U.S. attractive. The U.S. dollar certainly fits the inexpensive category for European and Japanese investors. This potential scenario is one reason I will be focusing considerably more time on the U.S. going forward. "While some in the U.S have bemoaned the drop in the dollar's value, the situation has also been painful for those overseas. During the summer, it was reported that a number of export-oriented companies in Japan urged their government to alter monetary policy to bring the yen and the dollar into better balance, actually threatening to curtail exports because they were losing money on transactions. I've never heard of a group of companies curtailing business and thought it was amazing that they would publicly consider doing so. The Japanese government has responded by steadily purchasing dollars. If the dollar shows signs of strengthening and U.S. companies report better-than-expected 1994 earnings, then that could be the impetus for overseas investors to buy U.S. securities." (solid bullet) Political violence characterized by two assassinations and the Chiapas uprising may have long-term ramifications for the Mexican market, with respect to flows of foreign capital and stock market volatility. As a result, the fund's investments in Mexico have been reduced to 0.8% as of October 31, 1994. On April 30, 1994, Mexico led all other emerging markets with 4.6% of investments. India is now the emerging market with the largest representation in the fund, at 1.3% as of October 31, 1994, followed by Argentina (1.0%) and Mexico (0.8%). (solid bullet) A total of 32.5% of the fund is invested in short-term cash instruments, awaiting lower prices before buying stocks. (solid bullet) Sweden's recent market history may be a precursor to a general trend in Europe. The currency was devalued the last two years - thereby helping exports - - but there has been a corresponding increase in both export and domestic product prices recently. Short-term interest rates tend to climb with inflation, making the opportunity to invest in cash and bonds more attractive than stocks. Going forward, the fund's European investments will try to target stocks that are not sensitive to increases in interest rates. DISTRIBUTIONS The Board of Trustees of Fidelity Worldwide Fund voted to pay on December 12, 1994, to shareholders of record at the opening of business on December 9, 1994, a distribution of $.66 derived from capital gains realized from sales of portfolio securities and a dividend of $.07 from net investment income. WORLDWIDE INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1994 France 3.4% Row: 1, Col: 1, Value: 46.1 Row: 1, Col: 2, Value: 5.2 Row: 1, Col: 3, Value: 3.5 Row: 1, Col: 4, Value: 3.4 Row: 1, Col: 5, Value: 12.7 Row: 1, Col: 6, Value: 7.2 Row: 1, Col: 7, Value: 11.6 Row: 1, Col: 8, Value: 6.9 Row: 1, Col: 9, Value: 3.4 Germany 6.9% United States 46.1% Japan 11.6% Netherlands 7.2% Other 12.7% Spain 3.4% Switzerland 5.2% Sweden 3.5% AS OF APRIL 30, 1994 France 4.3% Row: 1, Col: 1, Value: 30.8 Row: 1, Col: 2, Value: 3.5 Row: 1, Col: 3, Value: 3.9 Row: 1, Col: 4, Value: 7.6 Row: 1, Col: 5, Value: 3.0 Row: 1, Col: 6, Value: 15.1 Row: 1, Col: 7, Value: 5.3 Row: 1, Col: 8, Value: 4.6 Row: 1, Col: 9, Value: 14.3 Row: 1, Col: 10, Value: 7.6 Row: 1, Col: 11, Value: 4.3 Germany 7.6% United States 30.8% Japan 14.3% Mexico 4.6% United Kingdom 3.5% Netherlands 5.3% Switzerland 3.9% Sweden 7.6% Other 15.1% Spain 3.0% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks 65.8 80.1 Bonds 1.7 3.8 Short-term investments 32.5 16.1 TOP TEN STOCKS % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Volker Stevin NV (Netherlands, Construction) 1.1 0.4 AKZO Nobel NV Ord. (Netherlands, Chemicals & Plastics) 1.0 0.2 Bremer Vulkan AG (Germany, Ship Building & Repair) 0.9 1.2 KBB NV Ord. (Netherlands, Apparel Stores) 0.8 0.2 Banco de Santander SA Ord. (Reg.) (Spain, Banks) 0.8 0.1 Banco Pastor SA (Spain, Banks) 0.8 0.7 Kone Corp. Class B Ord. (Finland, Industrial Machinery & Equipment) 0.7 0.3 Fuchs Petrolub AG (Bearer) (Switzerland, Chemicals & Plastics) 0.7 - Bail Investissement SA (France, Real Estate) 0.7 0.9 NCC AB Class B Free shares (Sweden,Construction) 0.7 0.8 TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Finance 14.5 18.9 Basic Industries 9.4 10.2 Construction & Real Estate 7.5 12.5 Retail & Wholesale 7.0 8.6 Durables 6.9 8.5 Industrial Machinery & Equipment 3.8 3.0 Energy 3.4 3.7 Media & Leisure 3.4 3.1 Technology 2.0 3.1 Nondurables 1.9 1.5 WORLDWIDE INVESTMENTS OCTOBER 31, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 62.7% SHARES VALUE (NOTE 1) AUSTRALIA - 0.5% Tabcorp Holding Ltd. sponsored (ADR) (a) (d) 211,000 $ 3,603,606 87330610 BELGIUM - 1.1% D'Ieteren Trading BV 49,000 3,708,879 24999592 D'Ieteren Trading BV (VVPR) (a) 4,339 328,425 24999596 GIB Holdings Ltd. 100,000 3,907,488 37499A23 7,944,792 CANADA - 1.1% Imasco Ltd. 150,000 4,419,588 45245170 Methanex Corp. (a) 265,600 3,974,138 59151K10 8,393,726 DENMARK - 0.6% Unidanmark AS Class A (a) 115,000 4,608,984 92399792 FINLAND - 2.4% Enso-Gutzeit OY Class R Free shares 430,000 3,822,429 29357810 Kansallis-Osake-Pankki 1,380,000 2,576,446 48199210 Kone Corp. Class B Ord. 47,050 5,603,869 50400092 Repola OY 167,600 3,515,192 75999A92 Unitas Bank Ltd. Class B Free shares 841,700 2,469,666 90499123 17,987,602 FRANCE - 3.4% Bail Investissement SA 31,300 5,291,169 05699092 Eramet SA (a) 3,500 255,708 29499H22 Eramet SA (a) (d) 4,000 292,237 29499H23 Immeubles de France, Ste Des 55,432 4,631,451 44999C22 Klepierre SA 48,350 4,894,657 49899822 UFB Locabail SA 24,000 1,720,781 90599B92 Ugine SA 19,345 1,454,681 90299G22 Ugine SA (d) 27,000 2,030,312 90299G23 Unibail 57,000 4,873,215 90499123 25,444,211 GERMANY - 4.6% Bayer AG 7,200 1,684,908 07273010 Bremer Vulkan AG (a) 98,000 6,706,035 10689999 Deutsche Babcock AG (a) 13,500 2,003,791 25159991 Deutsche Bank AG 6,700 3,301,546 25152592 Deutsche Bank AG (warrants) (a) 23,000 2,997,839 25152596 Felten & Guilleaume Energietechnik AG 5,900 1,326,151 31499292 Hoesch-Krupp, Fried Krupp AG (a) 39,100 5,070,324 43438199 Karstadt AG 6,300 2,601,696 48576499 Kaufhof Holding AG 2,000 678,304 48615210 Linotype AG (Bearer) (a) 6,950 1,548,296 53599092 Metallgesellschaft AG Ord. 19,000 1,986,234 59124810 Rheinhold & Mahla AG 9,700 2,193,184 76299692 Sixt AG 16,000 1,090,607 83002195 Sixt AG Ord. 748 229,312 83002199 Thyssen AG Ord. 4,200 802,434 88629110 34,220,661 HONG KONG - 0.3% Cheung Kong Holdings Ltd. 212,000 1,016,850 16674410 Luks Industrial Co. Ltd. 4,886,000 910,555 54999492 1,927,405 INDIA - 1.0% Arvind Mills Ltd. GDR (a) (d) 335,800 1,806,604 04334810 Bajaj Auto Ltd. GDR (d) 33,000 835,890 05710010 Indian Aluminum Ltd. GDR (a) (d) 213,700 2,164,781 45410110 Shriram Industries Ltd. GDR (a) (d) 56,800 2,343,000 82554620 7,150,275 SHARES VALUE (NOTE 1) INDONESIA - 0.4% Barito Pacific Timber PT (For. Reg.) 372,000 $ 633,959 06799F23 Dharmala International Land PT 1,462,500 2,004,005 25399592 2,637,964 ITALY - 0.4% Cementerie di Sardegna Spa 278,000 832,282 15199F22 Fila Holding Spa sponsored ADR 108,000 1,795,500 31685010 2,627,782 JAPAN - 11.6% Akita Bank Ltd. 257,000 2,145,534 00999692 Alps Electric Co. Ltd. 230,000 3,109,230 02199292 Aomori Bank Ltd. 470,000 2,958,565 02399592 Bandai Co. Ltd. 56,000 2,305,764 06099192 Bank of the Ryukyus Ltd. 51,900 3,159,899 83499192 Charle Co. Ltd. 40,000 866,828 15999392 Daihatsu Motor Co. Ltd. 340,000 2,280,584 24199092 Daiichi Corp. Ord. 122,000 2,643,827 23599B92 Daito Trust Construction 83,000 1,130,592 24999492 Daiwa Securities Co. Ltd. 233,000 3,390,227 23499010 Fukushima Bank Ltd. 467,000 2,592,705 36099A92 Hankyu Department Stores, Inc. 237,000 2,861,462 41099192 Hanshin Department Store Ltd. 403,000 3,264,590 41199292 Higo Bank Ltd. Ord. 278,000 2,352,408 43299192 Hyogo Sogo Bank Ltd. (a) 722,000 2,421,444 44999292 Iwate Bank 45,000 2,507,611 45699392 Kajima Corp. 240,000 2,278,519 48311110 Kaneshita Construction Co. Ltd Ord. 145,000 2,364,171 49099592 Kanto Auto Works Ltd., Yokosuka 172,000 1,306,352 48599092 Keio Teito Electric Railway Co. Ltd. 117,000 674,919 48766710 Kokuyo Co. Ltd. 60,000 1,541,716 50033399 Kumagai Gumi Co. Ltd. (warrants) (a) 6,400 80,000 50125193 Matsuya Co. Ltd. 251,000 1,709,508 57699E22 Mazda Motor Corp. (a) 255,000 1,513,081 57878592 Michinoku Bank 370,000 2,959,082 59499392 Mitsubishi Motors Corp. 198,000 1,851,173 60899692 Namura Shipbuilding Co. Ltd. 261,000 2,022,713 62999892 Nikko Securities Co. Ltd. 151,000 1,776,379 65399010 Nikku Sangyo Co. Ltd. 88,000 1,580,104 68799G22 Nomura Securities Co. Ltd. 156,000 3,267,943 65536110 Sankyo Co. Ltd. 145,000 3,770,703 80029710 Sekisui House Ltd. 220,000 2,497,290 81607810 Shimizu Bank Ltd. 32,000 2,569,114 82499592 Sogo Co. Ltd. 387,000 2,655,745 83599K22 Tachi-S Co. Ltd. 120,000 1,263,092 88099392 Toho Bank Ltd. Ord. 320,000 2,559,206 91799192 Tokyo Nissan Automatic Sales Co. Ltd. 244,000 2,351,748 88998599 Toyoda Automatic Loom Works Ltd. 130,000 2,723,286 89200910 Yorozu Corp. 80,000 2,055,622 99199792 87,362,736 MEXICO - 0.8% BANACCI SA de CV: Class L 182,000 1,206,980 06399895 Class B 210,000 1,282,722 06399896 Grupo Financiero Bancomer SA de CV sponsored ADR, Series C (d) 89,000 2,047,000 40048610 Telefonos de Mexico SA sponsored ADR representing shares Ord. Class L 33,000 1,819,125 87940378 6,355,827 NETHERLANDS - 7.2% AKZO Nobel NV Ord. 56,400 7,124,880 01019910 BAM Groep NV 18,832 1,173,299 05999892 CVG (Crown Van Gelder) NV 41,000 3,357,266 12699292 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) NETHERLANDS - CONTINUED Draka Holding NV 28,700 $ 677,778 26199B22 Econosto NV (c) 320,000 4,158,310 27903299 Geveke NV (a)(c) 215,200 4,405,387 37431310 KBB NV Ord. 97,525 6,116,651 48130092 Kempen & Co. NV 329,000 2,811,131 48899D22 Koninklijke PPT Nederland 43,000 1,370,142 72699422 Koninklijke PPT Nederland (d) 74,400 2,370,664 72699423 MacIntosh Confectionary Works 149,900 3,949,184 58199292 Pirelli Tyre Holdings NV: Ord. 328,666 2,281,724 72499092 (warrants) (a) 57,166 45,453 72499096 Samas-Groep NV 57,250 1,953,287 79499110 Telegraaf 17,600 1,984,216 87940410 Volker Stevin NV 165,000 8,439,446 92868894 Wereldhave NV 37,000 2,096,659 95199E22 54,315,477 NORWAY - 1.0% Den Norske Bank Class A Free shares (a) 874,700 2,274,203 25299792 Mosvold Shipping AS Class B 221,700 1,729,249 62099294 Petroleum Geo Services AS (a) 133,000 3,356,275 71699E92 7,359,727 PAKISTAN - 0.2% Pakistan Telecommunications Voucher GDR (a) (d) 10,100 1,666,500 69584910 SPAIN - 3.4% Banco Bilbao Vizcaya SA Ord. (Reg.) 179,600 4,717,638 05945891 Banco Central SA (Reg.) 91,000 2,179,641 05947010 Banco de Santander SA: Ord. (Reg.) 150,000 6,095,808 05957410 (RFD) (a) 9,587 375,443 05957494 Banco de Valencia SA (Reg.) 290,000 3,484,631 13499292 Banco Pastor SA 120,475 5,771,257 05999792 Conservera Campofrio SA 44,250 2,614,371 20899292 25,238,789 SWEDEN - 3.5% Arjo AB (d) 118,000 2,143,042 04069792 Avesta Sheffield AB Ord. Free shares (a) 491,428 4,908,751 05399892 Celsius Industrier AB Class B 135,000 3,111,881 15199D22 Marieberg Tidnings AB Class A Free shares 183,400 4,535,005 56799392 Munksjoe AB 445,200 3,793,937 62599922 NCC AB Class B Free shares (a) 539,000 5,120,387 63399192 Skandinaviska Enskilada Banken Class A Free shares 400,000 2,626,412 88099222 26,239,415 SWITZERLAND - 5.2% C. S. Holdings (Bearer) 11,130 4,863,008 17599792 Fuchs Petrolub AG (Bearer) 14,750 5,399,920 37899222 Industrieholding Cham AG (Reg.) 3,100 2,047,752 85599922 Jelmoli Grand Magasins SA (Reg.) 5,400 687,624 47469993 Merkur Holdings AG Ord. (Reg.) 8,500 2,225,627 59099393 Reisebuero Kuoni Part. Cert. 3,000 4,035,018 75999592 SMH (Schweizerische Geselischaft) (Bearer) 7,500 4,178,273 80899294 SIG AG (Reg.) 2,500 2,427,378 83199893 Swiss Bank Corp.: (Reg.) 27,257 3,763,700 87083694 (warrants) (a) 321 1,788 87087294 Swiss Reinsurance Corp.: (Reg.) 1,100 652,209 87099393 Class B (warrants) (a) 1,500 11,938 87099399 Swisslog Holding AG (Reg.) 9,000 2,514,127 87099G22 SHARES VALUE (NOTE 1) Von Moos Holdings AG Ord. (a) (c) 33,500 $ 3,599,284 94099293 Winterthur Schweizerische Versicherungs-Gesellschaft (Reg.) 5,250 2,502,786 97629994 38,910,432 UNITED KINGDOM - 1.2% Brown & Jackson PLC 19,000,000 932,520 11599092 Ladbroke Group PLC Ord. 1,325,000 3,295,209 50572799 Trafalgar House PLC Ord. 1,725,000 2,328,440 89270710 Wates City of London Properties PLC (a) 2,624,999 2,834,631 94299092 9,390,800 UNITED STATES OF AMERICA - 12.8% AMR Corp. (a) 47,000 2,590,875 00176510 Allstate Corp. 56,700 1,367,888 02000210 Amerada Hess Corp. 92,700 4,611,825 02355110 American Eagle Outfitters, Inc. 21,000 606,375 02553D10 American Ecology Corp. 25,400 215,900 02553310 Armco, Inc. (a) 660,400 4,705,350 04217010 BJ Services Co. (a) 19,300 393,238 05548210 Baker (J.), Inc. 171,000 2,885,625 05723210 Bruno's, Inc. 150,000 1,443,750 11688110 Burlington Industries, Inc. (a) 221,000 2,071,875 12169310 Caldor Corp. (a) 85,800 2,456,025 12878710 Casino America, Inc. (a) 144,400 1,552,300 14757510 Castech Aluminum Group 10,800 159,300 14838010 Chemical Banking Corp. 55,000 2,090,000 16372210 Cliffs Drilling Co. (a) 18,000 234,000 18682C10 Cobra Industries, Inc. (a) 71,000 310,625 19104E10 Dayton Hudson Corp. 32,900 2,549,750 23975310 Dresser Industries, Inc. 38,000 802,750 26159710 Enterra Corp. (a) 25,600 585,654 29380510 Exxon Corp. 61,000 3,835,375 30229010 GEON Co. 28,000 840,000 37246W10 Halliburton Co. 34,000 1,258,000 40621610 Harveys Casino Resorts 66,300 837,038 41782610 Helmerich & Payne, Inc. 32,000 1,000,000 42345210 International Business Machines Corp. 53,700 4,000,650 45920010 Kentucky Electric Steel, Inc. (a) 28,600 293,150 49127B10 Kerr-McGee Corp. 66,600 3,271,725 49238610 Kroger Co. (The) (a) 70,000 1,828,750 50104410 Lafarge Corp. 51,343 975,517 50586210 Liz Claiborne, Inc. 115,000 2,659,375 53932010 Medusa Corp. 47,400 1,078,350 58507230 Mellon Bank Corp. 16,589 922,763 58550910 OM Group, Inc. 90,000 1,800,000 67087210 Pfizer, Inc. 57,300 4,247,363 71708110 Philip Morris Companies, Inc. 26,000 1,592,500 71815410 RJR Nabisco Holdings Corp. (a) 468,700 3,222,313 74960K10 Reynolds Metals Co. 55,100 3,051,163 76176310 Ross Stores, Inc. 100,800 1,398,600 77829610 Santa Fe Pacific Corp. 21,700 333,638 80218310 Schering-Plough Corp. 47,000 3,348,750 80660510 Sears, Roebuck & Co. 96,000 4,752,000 81238710 Shawmut National Corp. 106,240 2,191,200 82048410 Station Casinos, Inc. (a) 199,900 2,598,700 85768910 Stop & Shop Companies, Inc. (a) 27,700 692,500 86209910 Sundstrand Corp. 23,000 1,046,500 86732310 Texaco, Inc. 34,300 2,242,363 88169410 Tidewater, Inc. 17,000 388,875 88642310 Tuboscope Vetco Corp. (a) 151,000 962,625 89860010 UAL Corp. 10,000 945,000 90254950 UDC Homes, Inc. (a) 60,200 142,975 90264610 Union Planters Corp. 63,542 1,461,466 90806810 Unisys Corp. (a) 105,000 1,115,625 90921410 United State Banknote Corp. (a) 125,000 328,125 91162310 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) UNITED STATES OF AMERICA - CONTINUED Western Co. of North America (a) 55,000 $ 976,250 95804340 Westpoint Stevens, Inc. Class A (a) 95,400 1,419,075 96123810 Whitney Holding Corp. 27,000 600,750 96661210 Wolverine Tube, Inc. (a) 36,000 904,500 97809310 96,196,654 TOTAL COMMON STOCKS (Cost $446,551,083) 469,583,365 PREFERRED STOCKS - 3.1% CONVERTIBLE PREFERRED STOCKS - 0.8% UNITED STATES OF AMERICA - 0.8% Consolidated Freightways, Inc., Series C, $1.54 67,300 1,489,013 20923720 Reynolds Metals Co. $3.31 21,500 1,128,750 76176350 Unisys Corp., Series A, $3.75 96,600 3,344,775 90921420 TOTAL CONVERTIBLE PREFERRED STOCKS 5,962,538 NONCONVERTIBLE PREFERRED STOCKS - 2.3% GERMANY - 2.3% BMW AG 5,563 2,034,680 05528393 Escada AG (non-vtg.) 22,000 4,359,767 29605192 FAG Kugelfischer Georg Schaef 16,000 2,372,735 50105492 Herlitz AG 10,000 1,822,111 42799393 Kaufhof Holding AG 9,300 2,331,571 48615294 Moebel Walther AG 3,900 1,828,429 61099B22 Schwabengarage AG 10,086 2,448,140 80899392 TOTAL NONCONVERTIBLE PREFERRED STOCKS 17,197,433 TOTAL PREFERRED STOCKS (Cost $20,585,613) 23,159,971 CORPORATE BONDS - 0.7% MOODY'S RATINGS PRINCIPAL (UNAUDITED) AMOUNT (B) CONVERTIBLE BONDS - 0.6% GRAND CAYMAN - 0.3% Filinvest Cayman Island Ltd. 3 3/4%, 2/28/04 (d) - $ 3,000,000 2,520,000 317015AA INDIA - 0.3% SCICI Ltd. euro 3 1/2%, 4/1/04 - 2,400,000 2,376,000 79599KAB TOTAL CONVERTIBLE BONDS 4,896,000 NONCONVERTIBLE BONDS - 0.1% ITALY - 0.1% Consorzio di Credito per le Opere Pubbliche 6%, 3/31/99 - ITL 1,300,000 676,863 210999AA TOTAL CORPORATE BONDS (Cost $6,853,672) 5,572,863 GOVERNMENT OBLIGATIONS (F) - 1.0% MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) AMOUNT (B) (NOTE 1) ARGENTINA - 1.0% Argentina Repubic: 6 1/2%, 3/31/05 (d) (e) - $ 187,000 $ 134,874 039995AT BOCON 5.0625%, 4/1/01 B1 1,500,041 1,068,577 039995AF Brady Euro 4 1/4%, 3/31/23 B1 13,315,000 6,174,832 039995AD TOTAL GOVERNMENT OBLIGATIONS (Cost $7,911,879) 7,378,283 REPURCHASE AGREEMENTS - 32.5% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 4.78% dated 10/31/94 due 11/1/94 $ 243,588,339 243,556,000 99799N9L TOTAL INVESTMENT IN SECURITIES - 100% (Cost $725,458,247) $ 749,250,482 FORWARD FOREIGN CURRENCY CONTRACTS SETTLEMENT UNREALIZED DATE(S) VALUE GAIN/(LOSS) CONTRACTS TO SELL 4,431,990,000 JPY 11/7/94 to 1/10/95 $ 45,873,861 $ (1,090,732) 33,265,250 NOK 1/30/95 5,075,865 (220,333) TOTAL CONTRACTS TO SELL (Receivable amount $49,638,661) $ 50,949,726 $ (1,311,065) THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES -- 6.8% CURRENCY ABBREVIATIONS ITL - Italian lira JPY - Japanese yen NOK - Norwegian krone LEGEND (a) Non-income producing (b) Principal amount is stated in United States dollars unless otherwise noted. (c) A company in which the fund has ownership of at least 5% of the voting securities is an affiliated company. A summary of the transactions during the period in which the issuers were affiliates is a follows: PURCHASES SALES DIVIDEND MARKET AFFILIATE COST COST INCOME VALUE Econosto NV $ $ 644,540 $ 102,055 $ 4,158,310 Geveke NV (a) 855,153 - - 4,405,387 Von Moos Holdings AG Ord. (a) - - - 3,599,284 TOTALS $ 855,153 $ 644,540 $ 102,055 $ 12,162,981 (d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $23,958,510 or 3.2% of net assets. (e) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. (f) Most foreign government obligations have not been individually rated by S&P or Moody's. The ratings listed are assigned to securities by FMR, the fund's investment adviser, based principally on S&P and Moody's ratings of the sovereign credit of the issuing government. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $499,611,929 and $275,297,269, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of FMR. The commissions paid to these affiliated firms were $46,548 for the period (see Note 5 of Notes to Financial Statements). INCOME TAX INFORMATION At October 31, 1994, the aggregate cost of investment securities for income tax purposes was $725,564,224. Net unrealized appreciation aggregated $23,686,258, of which $50,493,585 related to appreciated investment securities and $26,807,327 related to depreciated investment securities. The fund hereby designates $14,230,731 as a capital gain dividend for the purpose of the dividend paid deduction. For the period, interest and dividends from foreign countries were $7,957,704 or $0.15 per share. Taxes paid to foreign countries were $974,864 or $0.02 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Aerospace & Defense 1.7% Basic Industries 9.4 Construction & Real Estate 7.5 Durables 6.9 Energy 3.4 Finance 14.5 Government Obligations 1.0 Health 1.8 Holding Companies 0.3 Industrial Machinery & Equipment 3.8 Media & Leisure 3.4 Nondurables 1.9 Retail & Wholesale 7.0 Services 0.8 Repurchase Agreements 32.5 Technology 2.0 Transportation 1.1 Utilities 1.0 100.0% WORLDWIDE FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES <TABLE> <CAPTION> <S> <C> <C> OCTOBER 31, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $243,556,000) (cost $725,458,247) - $ 749,250,482 See accompanying schedule Cash 875,333 Receivable for investments sold 6,758,750 Receivable for fund shares sold 5,967,606 Dividends receivable 1,279,242 Interest receivable 367,546 Other receivables 7,487 TOTAL ASSETS 764,506,446 LIABILITIES Payable for investments purchased $ 6,485,685 Unrealized depreciation on foreign currency contracts 1,311,065 Payable for fund shares redeemed 6,892,359 Accrued management fee 470,041 Other payables and accrued expenses 609,116 TOTAL LIABILITIES 15,768,266 NET ASSETS $ 748,738,180 Net Assets consist of: Paid in capital 678,743,633 Undistributed net investment income 5,498,260 Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 41,987,225 Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 22,509,062 NET ASSETS, for 53,651,275 shares outstanding $ 748,738,180 NET ASSET VALUE, offering price and redemption price per share ($748,738,180 (divided by) 53,651,275 shares) $13.96 </TABLE> STATEMENT OF OPERATIONS <TABLE> <CAPTION> <S> <C> <C> YEAR ENDED OCTOBER 31, 1994 INVESTMENT INCOME $ 8,405,722 Dividends (including $102,055 received from affiliated issuers) Interest 7,002,209 15,407,931 Less foreign taxes withheld (974,864 ) TOTAL INCOME 14,433,067 EXPENSES Management fee $ 4,088,335 Transfer agent fees 1,903,267 Accounting fees and expenses 298,078 Non-interested trustees' compensation 2,758 Custodian fees and expenses 399,207 Registration fees 260,278 Audit 45,517 Legal 3,001 Miscellaneous 5,204 Total expenses before reductions 7,005,645 Expense reductions (15,367 6,990,278 ) NET INVESTMENT INCOME 7,442,789 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities (including 41,752,702 realized loss of $58,355 on sales of investment in affiliated issuers) Foreign currency transactions (820,648 40,932,054 ) Change in net unrealized appreciation (depreciation) on: Investment securities (3,222,085 ) Assets and liabilities in foreign (1,461,921 (4,684,006 currencies ) ) NET GAIN (LOSS) 36,248,048 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 43,690,837 OTHER INFORMATION $296,919 Accounting fees paid to FSC </TABLE> STATEMENT OF CHANGES IN NET ASSETS INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, 1994 1993 <TABLE> <CAPTION> <S> <C> <C> Operations $ 7,442,789 $ 2,970,026 Net investment income Net realized gain (loss) 40,932,054 10,114,657 Change in net unrealized appreciation (depreciation) (4,684,006 31,061,709 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 43,690,837 44,146,392 Distributions to shareholders: (2,354,702 (2,497,555 From net investment income ) ) From net realized gain (3,532,293 (158,811 ) ) TOTAL DISTRIBUTIONS (5,886,995 (2,656,366 ) ) Share transactions 948,710,537 277,973,551 Net proceeds from sales of shares Reinvestment of distributions 5,746,798 2,587,340 Cost of shares redeemed (530,801,158 (138,399,750 ) ) Net increase (decrease) in net assets resulting from share transactions 423,656,177 142,161,141 TOTAL INCREASE (DECREASE) IN NET ASSETS 461,460,019 183,651,167 NET ASSETS Beginning of period 287,278,161 103,626,994 End of period (including undistributed net investment income of $5,498,260 and $3,525,845, respectively) $ 748,738,180 $ 287,278,161 OTHER INFORMATION Shares Sold 69,814,518 23,493,059 Issued in reinvestment of distributions 451,414 270,077 Redeemed (39,135,881 (11,997,236 ) ) Net increase (decrease) 31,130,051 11,765,900 </TABLE> <TABLE> <CAPTION> <S> <C> <C> SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. </TABLE> FINANCIAL HIGHLIGHTS <TABLE> <CAPTION> <S> <C> <C> <C> <C> <C> YEARS ENDED OCTOBER 31, MAY 30, 1990 (COMMENCEMENT OF OPOERATIONS) TO OCTOBER 31, SELECTED PER-SHARE DATA 1994 1993 1992 1991 1990 </TABLE> <TABLE> <CAPTION> <S> <C> <C> <C> <C> <C> Net asset value, beginning of period $ 12.76 $ 9.63 $ 9.61 $ 8.95 $ 10.00 Income from Investment Operations Net investment income .08 .11 .20 .21 .05 Net realized and unrealized gain (loss) 1.37 3.28 (.08) .53 (1.10) Total from investment operations 1.45 3.39 .12 .74 (1.05) Less Distributions (.10) (.24) (.10) (.08) - From net investment income From net realized gain (.15) (.02) C - - - Total distributions (.25) (.26) (.10) (.08) - Net asset value, end of period $ 13.96 $ 12.76 $ 9.63 $ 9.61 $ 8.95 TOTAL RETURN A, B 11.55% 36.10% 1.32% 8.33% (10.50)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 748,738 $ 287,278 $ 103,627 $ 105,029 $ 94,851 Ratio of expenses to average net assets 1.32% 1.40% 1.51% 1.69% 2.00% D Ratio of expenses to average net assets before expense reductions 1.32% 1.40% 1.51% 1.69% 2.46% D Ratio of net investment income to average net assets 1.40% 1.99% 2.02% 2.19% 2.09% D Portfolio turnover rate 69% 57% 130% 129% 123% D A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. C INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. D ANNUALIZED. </TABLE> CANADA PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). Canada Fund has a 3% sales charge, which has been waived through June 30, 1995. CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1994 YEAR YEARS FUND CANADA -3.37% 32.47% 109.17% CANADA (INCL. 3% SALES CHARGE) -6.27% 28.50% 102.90% TSE 300 (Toronto Stock Exchange 300) Index 0.73% 11.49% 77.83% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on November 17, 1987. You can compare the fund's figures to the performance of the Toronto Stock Exchange (TSE) 300 index - a broad measure of the performance of the Canadian stock market. This index includes reinvested dividends and capital gains, if any, and excludes the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1994 YEAR YEARS FUND CANADA -3.37% 5.79% 11.18% CANADA (INCL. 3% SALES CHARGE) -6.27% 5.14% 10.70% TSE 300 (Toronto Stock Exchange 300) Index 0.73% 2.20% 8.62% 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 Canada (309) Toronto Stock Excha 11/17/87 9700.00 10000.00 11/30/87 9767.90 10153.53 12/31/87 10446.90 10895.36 01/31/88 10340.20 10759.36 02/29/88 11048.30 11447.90 03/31/88 11737.00 12111.13 04/30/88 12008.60 12268.35 05/31/88 11436.30 11947.11 06/30/88 12319.00 12906.84 07/31/88 12144.40 12762.32 08/31/88 11562.40 12139.94 09/30/88 11804.90 12401.15 10/31/88 12357.80 12753.48 11/30/88 12212.30 12830.11 12/31/88 12480.81 13188.28 01/31/89 13422.57 14213.27 02/28/89 13045.86 13881.50 03/31/89 13263.96 14027.96 04/30/89 13531.61 14346.43 05/31/89 13987.62 14383.31 06/30/89 14661.73 14845.75 07/31/89 15553.92 15890.01 08/31/89 15633.23 16147.42 09/30/89 15534.09 15922.92 10/31/89 15316.00 15949.98 11/30/89 15405.22 16197.04 12/31/89 15849.09 16474.68 01/31/90 14563.75 15023.40 02/28/90 14646.68 14920.74 03/31/90 14895.45 15084.12 04/30/90 14180.22 13930.65 05/31/90 15113.13 14884.87 06/30/90 15465.56 14908.13 07/31/90 15589.95 15161.03 08/31/90 14688.14 14235.18 09/30/90 14449.73 13514.44 10/31/90 14066.20 13073.85 11/30/90 14522.29 13439.96 12/31/90 14978.59 14019.82 01/31/91 15045.01 14077.13 02/28/91 16428.84 15100.37 03/31/91 17148.44 15213.01 04/30/91 17281.28 15194.26 05/31/91 18045.16 15713.88 06/30/91 18067.30 15474.06 07/31/91 18011.95 15696.55 08/31/91 17856.96 15774.78 09/30/91 17259.14 15380.42 10/31/91 18023.02 16117.15 11/30/91 17347.71 15691.20 12/31/91 17627.42 15764.11 01/31/92 17945.13 15903.64 02/29/92 18051.04 15778.39 03/31/92 17545.04 15003.00 04/30/92 17333.23 14750.06 05/31/92 17486.21 14781.51 06/30/92 17392.07 14899.21 07/31/92 17839.23 15353.94 08/31/92 17568.58 15073.09 09/30/92 16815.47 14065.44 10/31/92 16744.87 14331.45 11/30/92 16697.80 13610.56 12/31/92 17121.47 14127.27 01/31/93 17027.20 13986.24 02/28/93 18087.72 14844.82 03/31/93 19077.54 15446.95 04/30/93 19572.44 16106.36 05/31/93 19843.46 16559.37 06/30/93 20856.85 16822.63 07/31/93 20102.70 16806.78 08/31/93 20609.39 17107.05 09/30/93 19596.01 16373.43 10/31/93 20998.25 17654.85 11/30/93 20515.13 17182.05 12/31/93 21482.46 18005.65 01/31/94 22427.27 18880.15 02/28/94 21470.65 18093.83 03/31/94 20679.38 17332.87 04/30/94 20525.85 17106.99 05/31/94 20620.33 17383.62 06/30/94 19486.57 16219.73 07/31/94 19864.49 16810.87 08/31/94 20608.52 17737.69 09/30/94 20714.81 18158.66 10/31/94 20289.65 17783.29 Let's say you invested $10,000 in Fidelity Canada Fund on its start date and paid the 3% sales charge. By October 31, 1994, it would have grown to $20,290 - a 102.90% increase on your initial investment. That compares to $10,000 invested in the Toronto Stock Exchange (TSE) 300 index, which would have grown to $17,783 over the same period - a 77.83% 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) CANADA FUND TALK: THE MANAGER'S OVERVIEW An interview with George Domolky, Portfolio Manager of Fidelity Canada Fund Q. GEORGE, HOW HAS THE FUND PERFORMED? A. For the year ended October 31, 1994, the fund had a total return of - -3.37%. That lagged the Toronto Stock Exchange 300 index, the fund's benchmark index, which posted a return of 0.73% for the same period. Q. WHAT WERE THE REASONS BEHIND THE FUND'S PERFORMANCE? A. Throughout the year, the fund and the Canadian market have seesawed, as Canada's economic recovery and rising interest rates have had countervailing influences on performance. At some times the fund's performance has surpassed the index; at others, it has trailed. Over the past six months, the fund's concentration on energy companies and small emerging growth companies has been the most important factor influencing the fund. Q. AND THOSE TYPES OF STOCKS HAVEN'T DONE AS WELL? A. Right. Energy stocks such as Canadian Natural Resources, Renaissance Energy and Morrison Petroleums were hurt by the mild, cool summer weather and the increased use of nuclear fuel by utilities. Natural gas prices dropped precipitously from around $210 to about $135 per thousand cubic feet. Over the long term, however, I believe the natural gas story, specifically, and the energy story, in general, are intact. More and more energy users are switching to natural gas, a cleaner fossil fuel than many others including oil. Canada is the largest exporter of natural gas to the U.S. I believe that over the long run, as the Texas Panhandle runs out of natural gas, increased supply to the U.S. should significantly improve the cash flow and earnings of Canadian natural gas companies. And, as the global economic recovery expands, worldwide demand for oil and gasoline will help boost prices. Q. WHAT ABOUT THE SMALL EMERGING GROWTH COMPANIES? A. They were hurt by market uncertainty caused by rising interest rates. Investors tended to flock more to the larger capitalized stocks as a safety net. In addition, as rates rose, fixed-income investments offering higher yields may have been more appealing to some investors than the riskier small company stocks. Paramount Resources, Rio Alto Exploration and Archer Resources were three smaller stocks that disappointed. They all happen to be energy companies as well. And Rogers Communications, a diversified media company listed under utilities, underperformed because of increased competition and an unfavorable cable pricing environment. Nevertheless, the fund has retained a solid weighting in communications, newspaper, cable and cellular companies because these are high growth areas that should benefit from the economic turnaround. Q. WHERE DID YOU FIND POSITIVE RESULTS? A. Companies that deal with base metals - such as Alcan Aluminium, Noranda and Inco - were some of the stronger performers during the period. They did well because the economic recovery fueled demand. I've increased the fund's investments in this sector because it is believed economies will continue to grow worldwide. Periods of economic growth benefited North America and Europe in the 1980s, but this time Third World countries such as China, India, Malaysia and Indonesia are benefiting from expansion. I believe these countries will use more base metals as their economies reach a higher level and such goods as household products and automobiles become more attainable. Q. THIS IDEA OF TAKING ADVANTAGE OF ECONOMIC RECOVERY SEEMS TO BE A PREVAILING THEME. A. Absolutely. Canadian natural resource companies are well-positioned to take advantage of domestic and international growth. The fund has benefited from an infusion of new assets because investors like the natural resource orientation of Canada at this point in the cycle, as an inflation hedge. The country can supply the rest of the world with base metals, energy, gold and forest products, as the demand for housing, cars and household goods increases. Although at times the fund had substantial cash that couldn't be employed immediately, I've been successful at remaining nearly fully invested. Q. LET'S TOUCH UPON FOREST PRODUCTS AND GOLD. A. Paper and forest products generally do well at this point in the economic cycle. Newsprint, market pulp and fine paper prices are going up. Lumber prices have declined recently because of a surplus due to a short-term tapering off of the Canadian and U.S. housing markets. Timber companies that the fund is invested in, such as Riverside Forest Products and Slocan Forest Products, have suffered as prices have dropped, but still are good long-term prospects. The fund is also heavily weighted in gold stocks. Gold is an important commodity in Canada, especially now when investors are turning to it as a hedge against inflation. It's important to note, however, that if you added up all the world's gold stocks, they would not even match the market capitalization of Coca-Cola. Q. HOW HAS CANADA'S POLITICAL CLIMATE AFFECTED ITS STOCK MARKET AND CURRENCY? A. Canada should be very attractive to the investor because it has a stable government and a stable currency. The latest elections, which the Liberal party won, have been a positive influence. The new premier is Jean Chretien, a Quebecois who supports keeping the Canadian Federation together, and who has enjoyed a favorability rating of around 60%. The Canadian dollar declined this year before elections in Quebec, when it was feared voters in that province would select candidates who want to create a separate Quebec government. The separatist party won the provincial elections, but received only 45% of the popular vote. In order to secede, more than 50% of the voters would have to approve such a measure, which is seen as being rather difficult. After the Quebec election, the Canadian dollar rallied somewhat and the market responded favorably as well. Going forward, with separation apparently not as probable as it seemed before, the political backdrop is positive for both the market and the currency. Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS? A. Overall, I'm optimistic. Even though the past six months haven't gone as well as I would have liked, I manage the fund for long-term performance. I still believe the natural resource story will make the Canadian market quite attractive, as worldwide demand increases because of economic growth. Canada is a stable country with a democratic government, closely allied politically and economically with the U.S. Its markets tend to be more predictable than other foreign ones. Canada is participating nicely in the global economic recovery, and its own economic growth bodes well for the foreseeable future. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in Canadian common stocks and convertible securities START DATE: November 17, 1987 SIZE: as of October 31, 1994, more than $368 million MANAGER: George Domolky, since November 17, 1987; manager, Fidelity Select Food and Agriculture Portfolio, 1985-87; assistant, Fidelity Magellan Fund, 1983-86; joined Fidelity in 1981 (checkmark) GEORGE DOMOLKY ON THE CANADIAN ECONOMY: "The Canadian economy is presently recovering about as strongly as the American economy. The two economic systems are closely tied, with the U.S. usually about six to nine months ahead of Canada in the economic cycle. If one considers the U.S. economy to be strong now, it could mean that the Canadian economy may be very strong by late June 1995. "The Canadian stock market offers less choices than those in the U.S. Sometimes it takes a bit longer to develop positions in stocks because not as much is available. Canada's stock market did very well in 1993, but in 1994 it has been more inconsistent, what I would call a `Show Me' kind of market; stocks really had to be compelling in order to attract investor interest. The domestic economy is recovering, but not many sectors showed much upside. The only sector that did well was base metals, because prices were heading up due to mild inflationary pressures. I expect other sectors, such as energy, could have a better pricing environment going forward. Stronger growth in Canada as well as the U.S. should help the whole national economy. "Canada and the U.S. are strong trading partners. About 75% of Canadian exports go to the U.S. and roughly 25% of Canadian imports come from the U.S. Of course, the North American Free Trade Agreement has served to solidify this relationship. The Canadian dollar historically aligns with the U.S. dollar, and has been a stable currency. Going forward, it is hoped the Canadian dollar will strengthen as the economy grows, giving foreign investors an added, positive bump. Canada's gross domestic product is expected to reach a strong 4% for the next two years, with inflation under 2%, a very unusual combination. I remain optimistic about Canada's potential." (solid bullet) The fund's net assets increased significantly during the period, from $173 million on April 30, 1994, to $368 million on October 31, 1994. (solid bullet) Energy (21.6%), Basic Industries (20.8%) and Finance (10.0%) were the top three industries represented in the fund as of October 31, 1994. (solid bullet) The fund has the authority to invest in derivative instruments such as futures and currency forward contracts, but held no such investments during the period. CANADA INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1994 United States 8.1% Row: 1, Col: 1, Value: 8.1 Row: 1, Col: 2, Value: 91.90000000000001 Canada 91.9% AS OF APRIL 30, 1994 United States 5.8% Row: 1, Col: 1, Value: 5.8 Row: 1, Col: 2, Value: 94.2 Canada 94.2% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks 93.3 96.6 Bonds 3.3 1.8 Short-term investments 3.4 1.6 TOP TEN STOCKS % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO American Barrick Resources Corp. (Precious Metals) 4.8 0.6 Alcan Aluminium Ltd. (Metals & Mining) 4.7 1.8 Seagram Co. Ltd. (Beverages) 4.4 - Noranda, Inc. (Metals & Mining) 4.1 3.1 Inco Ltd. (Metals & Mining) 3.2 - Renaissance Energy Ltd. (Oil & Gas) 2.7 2.0 Canadian Natural Resources Ltd. (Oil & Gas) 2.5 0.6 Nova Corp. (Gas) 2.4 - Bank of Nova Scotia Halifax (Banks) 2.2 - Rogers Communications, Inc. Class B (Cellular) 2.2 1.8 TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Energy 21.6 24.4 Basic Industries 20.8 21.3 Finance 10.0 2.9 Precious Metals 9.9 6.4 Nondurables 7.3 3.1 Utilities 5.6 3.1 Media & Leisure 5.2 8.4 Industrial Machinery & Equipment 3.3 6.9 Services 2.1 1.5 Retail & Wholesale 2.1 5.2 CANADA INVESTMENTS OCTOBER 31, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 93.1% SHARES VALUE (NOTE 1) BASIC INDUSTRIES - 20.8% CHEMICALS & PLASTICS - 1.3% Dupont Canada Inc., Class A, Series 1 26,700 $ 369,915 26590210 Intertape Polymer Group, Inc. 100,500 1,670,854 46091910 Maax, Inc. (a) (c) 278,300 2,364,835 57777C10 Maax, Inc. (warrant) (a) 8,333 35,405 57777C11 Winpak Ltd. 30,000 493,220 97535P10 4,934,229 IRON & STEEL - 0.7% Linamar Corp. (a) 157,700 2,068,330 53278L10 Samuel Manu-Tech, Inc. 25,000 443,344 79606J10 2,511,674 METALS & MINING - 15.1% Alcan Aluminium Ltd. 643,110 17,225,946 01371610 Cominco Ltd. (a) 190,600 3,644,123 20043510 Dia Met Minerals Ltd.: Class A (a) 7,000 87,930 25243K20 Class B (a) 28,000 372,409 25243K30 Falconbridge Ltd. (a) 416,000 7,185,131 30609910 Inco Ltd. 390,477 11,757,446 45325840 Noranda, Inc. 765,744 14,994,064 65542210 55,267,049 PAPER & FOREST PRODUCTS - 3.7% Ainsworth Lumber Ltd. (a) 50,000 480,290 00891410 Canfor Corp. (a) 36,000 512,063 13790210 Doman Industries Ltd. Class B (non-vtg.), Series 2 40,000 350,981 25703930 Donohue, Inc. Class B 41,600 453,393 25804110 Harmac Pacific, Inc. (special unit warrants) (a) 1,000 1,265,379 41290411 International Forest Products Class A (a) 50,000 475,672 45953E10 MacMillan Bloedel Ltd. 300,000 4,211,772 55478320 Merfin Hygenic Products Ltd. (a) 456,200 1,365,210 58950K10 Noranda Forest, Inc. 179,000 1,537,574 65542L10 Riverside Forest Products 134,400 2,234,455 76890410 Slocan Forest Products Ltd. 73,800 736,173 83158C10 13,622,962 TOTAL BASIC INDUSTRIES 76,335,914 CONGLOMERATES - 1.8% Brascan Ltd. Class A 410,000 6,361,991 10550240 Federal Industries Ltd. Class A (a) 49,800 248,383 31345330 6,610,374 CONSTRUCTION & REAL ESTATE - 1.4% BUILDING MATERIALS - 0.1% Global Stone (a) 100,000 378,690 37936Q10 CONSTRUCTION - 0.2% Firan Corp. (a) 140,000 393,099 31809110 Royal Lepage Ltd. (a) 100,000 232,756 78033W10 625,855 REAL ESTATE - 0.3% Cambridge Shopping Centres Ltd. 105,900 1,046,597 13250910 Markborough Properties, Inc. (a) 200,000 344,330 57052F10 1,390,927 REAL ESTATE INVESTMENT TRUSTS - 0.8% Trizec Ltd. 400,000 2,918,684 89693310 TOTAL CONSTRUCTION & REAL ESTATE 5,314,156 SHARES VALUE (NOTE 1) DURABLES - 1.3% AUTOS, TIRES, & ACCESSORIES - 0.8% Armor All Products Corp. 24,400 $ 552,050 04225610 Discount Auto Parts, Inc. (a) 22,900 349,225 25464210 Meridian Technologies, Inc. (a) 214,600 852,312 58978510 Stackpole Ltd. (a) 85,000 722,282 85232N10 UAP, Inc. Class A 45,150 467,063 90255810 2,942,932 CONSUMER DURABLES - 0.2% Unican Security Systems Ltd. Class B 45,000 689,954 90458940 HOME FURNISHINGS - 0.3% Dorel Industries Class A (vtg.) (a)(d) 105,000 630,380 25822C30 Leons Furniture Ltd. 60,000 465,512 52668210 1,095,892 TOTAL DURABLES 4,728,778 ENERGY - 21.6% ENERGY SERVICES - 1.0% Akita Drilling Ltd. Class A (non-vtg.) (a) 60,700 188,377 00990510 Dreco Energy Services Ltd. Class A (a) 200 1,750 26152820 Enserv Corp. (a) 94,700 787,214 29357B10 Nowsco Well Service Ltd. 127,700 1,792,811 67012210 Precision Drilling Class A (a) 53,900 597,407 74022D10 Veritas Energy Service, Inc. (a) 40,000 251,228 92343H10 3,618,787 OIL & GAS - 20.6% Anderson Exploration Ltd. (a) 352,000 4,161,524 03390110 Archer Resources Ltd. (a) 199,700 2,434,736 03950K10 Barrett Resources Corp. (a) 45,000 894,375 06848020 Barrington Petroleum Ltd. (a) 153,000 650,054 06862610 Beau Canada Exploration 908,300 1,375,857 07428010 Blue Range Resource Corp. Class A (a) 30,900 242,593 09579K10 Canadian Natural Resources Ltd. (a) 671,600 9,118,595 13638510 Canadian Occidental Petroleum Ltd. 55,000 1,336,036 13642010 Chancellor Energy Resources (a) 380,000 631,765 15882910 Conwest Exploration Ltd. 53,200 953,264 21291010 DEKALB Energy Corp. Class B (a) 79,500 1,291,875 24487410 Ensign Resource Service Group Ord. (a) 68,100 236,502 29357T10 Excel Energy, Inc. (warrants) (a) 25,000 185 30065492 Gardiner Oil & Gas, Ltd. (a) 86,600 391,935 36553R10 Grad & Walker Energy Corp. 174,100 1,511,564 38391010 Gulf Canada Corp. (a) 80,000 302,952 40218L30 Home Oil Co. Ltd. (a) 130,000 1,820,000 43727F10 Intensity Resources Ltd. (a) 50,500 102,243 45816E10 Inverness Petroleum Ltd. (a) 475,200 3,686,853 46190810 Morgan Hydrocarbons, Inc. (a) 347,000 1,314,054 61790010 Morrison Petroleums Ltd. 654,000 4,349,205 61847310 Newfield Exploration Co. (a) 34,500 832,313 65129010 Northern Reef Exploration (a) 68,600 310,471 66566H10 Northstar Energy Corp. (a) 189,500 1,942,818 66703R10 Pan East Petroleum Corp., Inc. (a) 430,000 1,239,148 69790520 Pancanadian Petroleum Ltd. 96,700 3,063,518 69890020 Paramount Resources Ltd. 301,400 3,312,760 69932010 Petromet Resources Ltd. Ord. (a) 20,000 134,851 71673110 Poco Petroleums Ltd. (a) 190,000 1,193,335 73036110 Ranger Oil Ltd. 100,000 665,016 75280510 Renaissance Energy Ltd. (a) 419,722 9,730,503 75966610 Renaissance Energy Ltd. (a)(d) 15,000 347,748 75966692 Rigel Energy Corp. (a) 143,000 1,967,987 76655L10 Rio Alto Exploration Ltd. (a) 576,300 3,353,426 76689210 Rio Alto Exploration Ltd. (a)(d) 11,000 64,008 76689292 Serenpet, Inc. (a) 50,000 249,381 81750M10 Strike Energy, Inc. (a) 264,000 497,431 86331L10 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) ENERGY - CONTINUED OIL & GAS - CONTINUED Summit Resources Ltd. 218,300 $ 1,411,406 86624610 Talisman Energy, Inc. (a) 125,000 2,655,448 87425E10 Tarragon Oil & Gas Ltd. (a) 341,500 4,100,472 87629E20 Transwest Energy, Inc. (a) 311,100 514,917 89392110 Tri Link Resources Ltd. Class A (a) 84,900 815,532 89557D10 Ulster Petroleums Ltd. (a) 120,000 407,876 90384010 75,616,532 TOTAL ENERGY 79,235,319 FINANCE - 9.9% BANKS - 6.9% Bank of Montreal 170,000 3,156,057 06367110 Bank of Nova Scotia Halifax 400,000 8,127,980 06414910 Canadian Imperial Bank of Commerce 210,000 4,965,456 13606910 Royal Bank of Canada 180,000 3,773,968 78008710 Toronto Dominion Bank 340,000 5,150,184 89116050 25,173,645 CREDIT & OTHER FINANCE - 1.4% Power Corporation of Canada 65,000 900,543 73923910 Trimark Financial Corp. 145,300 4,133,484 89621H10 5,034,027 SECURITIES INDUSTRY - 1.6% First Marathon, Inc. Class A (non-vtg.) 154,300 1,482,173 32076L20 Investors Group, Inc. 170,000 2,009,827 46152H10 Mackenzie Financial Corp. 321,000 2,075,406 55453110 Power Financial Corp. 20,000 426,719 73927C10 5,994,125 TOTAL FINANCE 36,201,797 HEALTH - 0.8% DRUGS & PHARMACEUTICALS - 0.6% Bristol-Myers Squibb Co. 23,600 1,377,650 11012210 Noven Pharmaceuticals, Inc. (a) 23,500 358,375 67000910 Zenon Environmental, Inc. (a) 65,600 345,365 98942B10 2,081,390 MEDICAL EQUIPMENT & SUPPLIES - 0.2% Owens and Minor, Inc. 55,000 818,125 69073210 MEDICAL FACILITIES MANAGEMENT - 0.0% Spectral Diagnostics, Inc. (a) 10,000 164,407 84757410 TOTAL HEALTH 3,063,922 INDUSTRIAL MACHINERY & EQUIPMENT - 3.3% Champion Road Machinery Ltd. (d) 20,000 181,032 15864C92 Eagle Precision Tech. 159,400 706,690 26990010 Enerflex Systems Ltd. 15,000 196,734 29265B10 Exco Technologies Ltd. (a) (c) 972,800 5,930,169 30150P10 Finning Ltd. 128,300 1,967,137 31807140 Osmonics, Inc. 25,000 362,500 68835010 Trojan Technologies Corp. (a) 290,400 1,931,206 89692410 Valmont Industries, Inc. 48,700 815,738 92025310 12,091,206 MEDIA & LEISURE - 5.2% BROADCASTING - 0.3% Cogeco, Inc. 40,000 232,756 19238T10 Shaw Cablesystems Ltd. Class B (d) 88,000 666,494 82028K20 Videotron Group Ltd. 36,800 353,493 92558H10 1,252,743 SHARES VALUE (NOTE 1) ENTERTAINMENT - 0.2% Alliance Communications Corp. (a) 10,000 $ 124,691 01855R10 Cinar Films, Inc. (a) 82,000 416,559 17190510 541,250 LODGING & GAMING - 1.1% Four Seasons Hotels, Inc. 351,500 4,123,148 35100E10 PUBLISHING - 3.5% Hollinger, Inc. 21,500 210,496 43556C10 Thomson Corp. 457,598 5,494,489 88490310 Torstar Corp. Class B 409,000 7,026,452 89147420 12,731,437 RESTAURANTS - 0.1% Cara Operations Ltd. 91,500 236,635 14075420 Spectra Group of Great Restaurants, Inc. Class A (non-vtg.) (a) 4,900 24,892 84756E20 261,527 TOTAL MEDIA & LEISURE 18,910,105 NONDURABLES - 7.3% AGRICULTURE - 0.0% DEKALB Genetics Corp. Class B 4,700 141,000 24487820 BEVERAGES - 4.9% Dr. Pepper/Seven-Up Companies, Inc. (a) 82,900 2,103,588 25613130 Seagram Co. Ltd. 521,700 16,045,932 81185010 18,149,520 FOODS - 2.4% Ault Foods Ltd. 197,300 2,259,689 05150E10 Corporate Foods Ltd. 55,300 597,601 21989210 RalCorp Holdings, Inc. 25,900 524,612 75102510 Ralston Purina Co. 30,000 1,275,000 75127730 Stokeley USA, Inc. (a) 10,000 93,750 86150210 SYSCO Corp. 28,300 703,963 87182910 Tootsie Roll Industries, Inc. 24,937 1,549,211 89051610 Weston George Ltd. 55,000 1,645,916 96114850 8,649,742 TOTAL NONDURABLES 26,940,262 PRECIOUS METALS - 9.7% Aber Resources Ltd. 38,600 221,044 00291610 Agnico Eagle Mines Ltd. 246,100 3,136,828 00847410 American Barrick Resources Corp. 737,400 17,572,065 02451E10 Battle Mountain Gold Co. 37,500 417,188 07159310 Euro-Nevada Mining Corp. 43,000 1,163,686 29870P10 Franco Nevada Mining Corp. 35,600 2,137,289 35186010 Kinross Gold Corp. (a) 256,000 1,442,348 49690210 Placer Dome, Inc. 330,000 7,132,300 72590610 Prime Resources Group, Inc. (a) 70,300 551,918 74157L10 Rayrock Yellowknife Resources, Inc. (a) 46,200 571,803 75509N10 Teck Corp. Class B (sub.-vtg.) 50,000 955,961 87874220 Viceroy Resources Corp. (a) 10,000 62,807 92564C10 35,365,237 RETAIL & WHOLESALE - 2.1% GENERAL MERCHANDISE STORES - 1.0% Hudsons Bay Co. Ord. 116,000 2,314,257 44420410 Sears Canada, Inc. 200,000 1,256,142 81234D10 3,570,399 GROCERY STORES - 1.1% Loblaw Companies Ltd. 141,800 2,200,318 53948110 Van Houtte (A.L.) 175,500 1,750,656 92090410 3,950,974 TOTAL RETAIL & WHOLESALE 7,521,373 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SERVICES - 2.1% ADVERTISING - 0.1% ADVO-Systems, Inc. 30,000 $ 532,500 00758510 PRINTING - 1.3% Moore Corporation Ltd. 245,000 4,457,920 61578510 Paxar Corp. (a) 21,375 227,109 70422710 4,685,029 SERVICES - 0.7% Arbor Memorial Services, Inc. Class B (non-vtg.) 43,300 543,909 03891620 G & K Services, Inc. Class A 117,500 1,938,750 36126810 2,482,659 TOTAL SERVICES 7,700,188 TECHNOLOGY - 0.2% COMMUNICATIONS EQUIPMENT - 0.2% Northern Telecom Ltd. 10,047 361,910 66581510 SR Telecom, Inc. 44,100 386,956 78464P10 748,866 UTILITIES - 5.6% CELLULAR - 3.2% BCE Mobile Communications, Inc. 46,900 1,442,504 05534G10 Call-Net Enterprises, Inc. (a) 78,000 489,895 13091010 Call-Net Enterprises Class B (non-vtg.) (a) 78,000 446,669 13091020 Rogers Cantel Mobile Communications, Inc. Class B (non-vtg.) (a) 40,000 1,219,197 77510210 Rogers Communications, Inc. Class B (a) 548,600 8,056,619 77510920 11,654,884 GAS - 2.4% Nova Corp. 895,070 8,845,869 66994310 TOTAL UTILITIES 20,500,753 TOTAL COMMON STOCKS (Cost $329,699,311) 341,268,250 PREFERRED STOCKS - 0.2% CONVERTIBLE PREFERRED STOCKS - 0.1% PRECIOUS METALS - 0.1% Battle Gold Co. 2,000 126,250 07159330 NONCONVERTIBLE PREFERRED STOCKS - 0.1% FINANCE - 0.1% SECURITIES INDUSTRY - 0.1% A G F Management Ltd. Class A 41,400 428,271 00109210 TOTAL PREFERRED STOCKS (Cost $584,121) 554,521 CORPORATE BONDS - 0.5% MOODY'S RATINGS PRINCIPAL (UNAUDITED) AMOUNT (B) CONVERTIBLE BONDS - 0.4% CONSTRUCTION & REAL ESTATE - 0.4% REAL ESTATE - 0.4% Markborough Properties, Inc. 6%, 3/14/04 - CAD 2,700,000 1,615,990 57052FAA MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) AMOUNT (B) (NOTE 1) NONCONVERTIBLE BONDS - 0.1% PRECIOUS METALS - 0.1 Agnico Eagle Mines Ltd. yankee 3 1/2%, 1/27/04 B1 $ 220,000 $ 182,600 008474AA TOTAL CORPORATE BONDS (Cost $2,183,331) 1,798,590 GOVERNMENT OBLIGATIONS (E) - 2.8% Canadian Government 7 3/4%, 9/01/99 (Cost $10,004,948) Aaa CAD 14,500,000 10,382,015 135087VE REPURCHASE AGREEMENTS - 3.4% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 4.78% dated 10/31/94 due 11/1/94 $ 12,412,648 12,411,000 99799N9L TOTAL INVESTMENT IN SECURITIES - 100% (Cost $354,882,711) $ 366,414,376 CURRENCY ABBREVIATIONS CAD - Canadian dollar LEGEND (a) Non-income producing (b) Principal amount is stated in United States dollars unless otherwise noted. (c) A company in which the fund has ownership of at least 5% of the voting securities is an affiliated company. A summary of the transactions during the period in which the issuers were affiliates is a follows: PURCHASES SALES DIVIDEND MARKET AFFILIATE COST COST INCOME VALUE Exco Technologies Ltd. (a) $ 1,542,435 $ - $ - $ 5,930,169 Maax, Inc. (a) - - - 2,364,835 TOTALS $ 1,542,435 $ - $ - $ 8,295,004 (d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $1,889,662 or 0.5% of net assets. (e) Most foreign government obligations have not been individually rated by S&P or Moody's. The ratings listed are assigned to securities by FMR, the fund's investment adviser, based principally on S&P and Moody's ratings of the sovereign credit of the issuing government. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $390,158,264 and $124,567,870, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of FMR. The commissions paid to these affiliated firms were $76,201 for the period (see Note 5 of Notes to Financial Statements). The fund participated in the bank borrowing program. The maximum loan and the average daily loan balances during the period for which loans were outstanding amounted to $3,867,000 and $1,799,400, respectively. The weighted average interest rate was 4.15% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At October 31, 1994, the aggregate cost of investment securities for income tax purposes was $355,554,959. Net unrealized appreciation aggregated $10,859,417, of which $24,911,151 related to appreciated investment securities and $14,051,734 related to depreciated investment securities. For the period, interest and dividends from foreign countries were $2,982,714 or $0.14 per share. Taxes paid to foreign countries were $403,620 or $0.02 per share. At October 31, 1994, the fund had a capital loss carryforward of approximately $5,787,129 all of which will expire on October 31, 2002. CANADA FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES <TABLE> <CAPTION> <S> <C> <C> OCTOBER 31, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $12,411,000) (cost $354,882,711) - See $ 366,414,376 accompanying schedule Cash 258 Receivable for investments sold 6,108,148 Receivable for fund shares sold 4,005,609 Dividends receivable 581,689 Interest receivable 154,882 Other receivables 417,242 TOTAL ASSETS 377,682,204 LIABILITIES Payable for investments purchased $ 4,439,443 Payable for fund shares redeemed 4,359,632 Accrued management fee 238,877 Other payables and accrued expenses 314,227 TOTAL LIABILITIES 9,352,179 NET ASSETS $ 368,330,025 Net Assets consist of: Paid in capital $ 363,269,721 Accumulated net investment (loss) (11,337 ) Accumulated undistributed net realized gain (loss) on investments (6,459,378 ) Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 11,531,019 NET ASSETS, for 21,437,341 shares outstanding $ 368,330,025 NET ASSET VALUE, offering price and redemption price per share ($368,330,025 (divided by) 21,437,341 shares) $17.18 </TABLE> STATEMENT OF OPERATIONS <TABLE> <CAPTION> <S> <C> <C> YEAR ENDED OCTOBER 31, 1994 INVESTMENT INCOME $ 2,768,354 Dividends Interest 721,856 3,490,210 Less foreign taxes withheld (403,620 ) TOTAL INCOME 3,086,590 EXPENSES Management fee 1,653,893 Basic fee Performance adjustment 60,175 Transfer agent fees 1,267,509 Accounting fees and expenses 129,531 Non-interested trustees' compensation 1,042 Custodian fees and expenses 67,942 Registration fees 165,228 Audit 30,998 Legal 1,107 Interest 1,037 Miscellaneous 2,624 Total expenses before reductions 3,381,086 Expense reductions (2,288 3,378,798 ) NET INVESTMENT INCOME (LOSS) (292,208 ) REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities (5,854,478 ) Foreign currency transactions 10,377 (5,844,101 ) Change in net unrealized appreciation (depreciation) on: Investment securities 1,033,207 Assets and liabilities in foreign currencies (646 1,032,561 ) NET GAIN (LOSS) (4,811,540 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (5,103,748 ) OTHER INFORMATION $5,130 Deferred sales charges withheld by FDC Accounting Fees paid by FSC $129,038 </TABLE> STATEMENT OF CHANGES IN NET ASSETS <TABLE> <CAPTION> <S> <C> <C> YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, 1994 1993 INCREASE (DECREASE) IN NET ASSETS Operations $ (292,208 $ (406,210 Net investment income (loss) ) ) Net realized gain (loss) (5,844,101 (215,792 ) ) Change in net unrealized appreciation (depreciation) 1,032,561 9,798,514 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (5,103,748 9,176,512 ) Distributions to shareholders: - (30,615 From net investment income ) In excess of net realized gain (242,990 - ) TOTAL DISTRIBUTIONS (242,990 (30,615 ) ) Share transactions 568,300,531 232,403,520 Net proceeds from sales of shares Reinvestment of distributions 238,390 29,289 Cost of shares redeemed (290,839,654 (167,302,323 ) ) Net increase (decrease) in net assets resulting from share transactions 277,699,267 65,130,486 TOTAL INCREASE (DECREASE) IN NET ASSETS 272,352,529 74,276,383 NET ASSETS Beginning of period 95,977,496 21,701,113 End of period (including accumulated net investment loss of $11,337 and $237,885, respectively) $ 368,330,025 $ 95,977,496 OTHER INFORMATION Shares Sold 32,698,397 13,751,993 Issued in reinvestment of distributions 13,408 2,020 Redeemed (16,658,932 (9,894,449 ) ) Net increase (decrease) 16,052,873 3,859,564 </TABLE> <TABLE> <CAPTION> <S> <C> <C> SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. </TABLE> FINANCIAL HIGHLIGHTS <TABLE> <CAPTION> <S> <C> <C> <C> <C> <C> YEARS ENDED OCTOBER 31, SELECTED PER-SHARE DATA 1994 1993 1992 1991 1990 </TABLE> <TABLE> <CAPTION> <S> <C> <C> <C> <C> <C> Net asset value, beginning of period $ 17.82 $ 14.23 $ 16.28 $ 13.57 $ 15.45 Income from Investment Operations Net investment income (loss) - (.15) (.02) C .03 C .05 C Net realized and unrealized gain (loss) (.60) 3.76 (1.11) 3.59 (1.24) Total from investment operations (.60) 3.61 (1.13) 3.62 (1.19) Less Distributions - (.02) - (.06) (.01) From net investment income From net realized gain - - (.92) (.85) (.68) In excess of net realized gain (.04) - - - - Total distributions (.04) (.02) (.92) (.91) (.69) Net asset value, end of period $ 17.18 $ 17.82 $ 14.23 $ 16.28 $ 13.57 TOTAL RETURN A, B (3.37)% 25.40% (7.09)% 28.13% (8.16)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 368,330 $ 95,977 $ 21,701 $ 23,327 $ 17,736 Ratio of expenses to average net assets 1.57% 2.00% 2.00% 2.01% 2.05% Ratio of expenses to average net assets before expense reductions 1.57% 2.00% 2.07% 2.26% 2.31% Ratio of net investment income to average net assets (.14)% (.66)% (.11)% .17% .34% Portfolio turnover rate 59% 131% 55% 68% 164% A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD(S) SHOWN. C NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. </TABLE> EUROPE PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). The fund has a 3% sales charge. CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1994 YEAR YEARS FUND EUROPE 15.41% 54.28% 137.39% EUROPE (INCL. 3% SALES CHARGE) 11.95% 49.65% 130.27% Morgan Stanley Europe Index 11.24% 65.67% 137.56% Average European Region Fund 9.13% 44.57% 105.77% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on October 1, 1986. You can compare the fund's figures to the performance of the Morgan Stanley Europe index - a broad measure of the performance of stocks in Europe, weighted by each country's market capitalization (or the total value of its outstanding shares). You can also compare the fund's performance to the average European region fund which currently reflects the performance of 30 funds with similar objectives tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1994 YEAR YEARS FUND EUROPE 15.41% 9.06% 11.28% EUROPE (INCL. 3% SALES CHARGE) 11.95% 8.40% 10.86% Morgan Stanley Europe Index 11.24% 10.62% 11.29% Average European Region Fund 9.13% 7.52% 9.24% 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 Europe (301) Europe Index 10/01/86 9700.00 10000.00 10/31/86 9690.30 10061.24 11/30/86 10078.30 10600.17 12/31/86 10485.70 10866.14 01/31/87 11563.06 11347.33 02/28/87 12300.92 11751.88 03/31/87 12922.28 12332.46 04/30/87 13456.26 12815.21 05/31/87 13679.56 12743.90 06/30/87 14232.95 13107.17 07/31/87 15252.37 13548.56 08/31/87 15572.75 13660.75 09/30/87 16135.86 13749.78 10/31/87 11737.82 11135.61 11/30/87 11213.55 10645.49 12/31/87 12048.50 11264.74 01/31/88 11475.68 10802.62 02/29/88 11533.94 11438.32 03/31/88 12067.91 11753.00 04/30/88 12407.72 11972.00 05/31/88 12271.80 11748.03 06/30/88 11999.95 11629.54 07/31/88 11873.74 11655.59 08/31/88 11252.38 11126.51 09/30/88 11776.65 11732.04 10/31/88 12582.48 12818.60 11/30/88 12737.81 12976.68 12/31/88 12751.83 13046.37 01/31/89 13357.17 13518.81 02/28/89 13386.94 13365.30 03/31/89 13615.18 13462.17 04/30/89 14200.67 13835.82 05/31/89 13813.65 13126.86 06/30/89 14190.75 13668.45 07/31/89 15460.97 15277.34 08/31/89 15341.89 15086.51 09/30/89 16036.54 15345.58 10/31/89 14925.09 14339.46 11/30/89 15798.37 15135.61 12/31/89 16874.84 16764.74 01/31/90 17085.65 16719.83 02/28/90 16643.95 16319.18 03/31/90 17145.88 16549.43 04/30/90 16804.57 16110.24 05/31/90 17838.54 17421.38 06/30/90 18581.39 18033.25 07/31/90 19705.71 18792.65 08/31/90 17356.69 16929.38 09/30/90 15640.09 14935.59 10/31/90 16342.79 16194.23 11/30/90 16322.71 16356.96 12/31/90 16100.11 16120.73 01/31/91 16418.62 16663.17 02/28/91 17415.24 18120.73 03/31/91 16480.27 16904.64 04/30/91 16439.17 16727.91 05/31/91 16511.09 17221.35 06/30/91 15062.39 15776.03 07/31/91 15822.70 16867.89 08/31/91 16141.21 17175.85 09/30/91 16726.85 17692.04 10/31/91 16367.25 17319.34 11/30/91 15874.07 16911.64 12/31/91 16769.90 18234.47 01/31/92 16844.24 18229.22 02/29/92 17046.03 18299.21 03/31/92 16461.90 17658.79 04/30/92 17545.20 18633.42 05/31/92 18405.47 19693.79 06/30/92 18235.54 19327.03 07/31/92 17577.06 18636.54 08/31/92 17630.16 18575.77 09/30/92 17354.03 18268.54 10/31/92 16058.32 16993.88 11/30/92 16047.70 16985.58 12/31/92 16346.72 17375.24 01/31/93 16260.11 17404.43 02/28/93 16357.54 17603.55 03/31/93 17429.28 18509.13 04/30/93 18003.04 18917.36 05/31/93 18219.55 19120.87 06/30/93 17710.75 18841.54 07/31/93 17721.57 18906.21 08/31/93 19161.38 20565.25 09/30/93 19139.73 20501.36 10/31/93 19951.65 21355.45 11/30/93 19561.93 20894.47 12/31/93 20787.26 22463.18 01/31/94 22287.60 23607.14 02/28/94 21765.74 22771.11 03/31/94 21156.91 22126.61 04/30/94 21765.74 23042.85 05/31/94 20928.60 22063.34 06/30/94 20678.54 21831.69 07/31/94 21624.41 22975.89 08/31/94 22309.34 23704.62 09/30/94 22004.93 22764.65 10/31/94 23026.90 23756.36 Let's say you invested $10,000 in Fidelity Europe Fund on its start date and paid the 3% sales charge. By October 31, 1994, it would have grown to $23,027 - a 130.27% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley Europe index, which would have grown to $23,756 over the same period - a 137.56% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. (checkmark) EUROPE FUND TALK: THE MANAGER'S OVERVIEW An interview with Sally Walden, Portfolio Manager of Fidelity Europe Fund Q. SALLY, HOW DID THE FUND DO? A. The fund has performed well. It returned 15.41% for the year ending October 31, 1994. That is more than both the average European fund which returned 9.13% according to Lipper Analytical Services and the Morgan Stanley Europe index which returned 11.24% for the same time period. Q. WHAT FACTORS CONTRIBUTED TO PERFORMANCE? A. The strength of European markets and the weakness of the U.S. dollar contributed to returns. I think the fund did well because I'm a stock picker and several of the stocks I own have done very well. Q. WHAT IS AN EXAMPLE? A. Nokia, a cellular communications company and the fund's largest holding, is up nearly 75% from six months ago and has had a large impact on overall performance. The cellular phone industry is growing all over the globe, and Nokia is a manufacturer of GSM, a digital standard in Europe and the fastest growing segment of the cellular business. Nokia is located in Finland where a low-cost manufacturing base has given it an advantage over its competitors in the export business. Q. HAS YOUR INVESTMENT STRATEGY CHANGED RECENTLY? A. Not really. My focus remains on growth stocks. I prefer to pick strong, growing companies and hold them at least 12-18 months and often much longer. I continue to be heavily invested in media stocks since deregulation and technology are always creating new opportunities. Financial service companies, especially those with exposure to the fast growing areas of life insurance and other savings products, continue to hold my interest. Q. HOW DO YOU DETERMINE THE COUNTRY DIVERSIFICATION WITHIN THE FUND? A. The fund is a mix of stocks that are held for their own individual reasons; where the stock happens to be listed is secondary. That said, I have recently noticed some disparity of performance among the different markets in Europe. The strongest performers have tended to be in the Nordic area in countries such as Sweden and Finland where the export boom started. In the major markets, Germany and Switzerland have done well while France and the United Kingdom have been weak. The U.K. is the largest market in Europe - 35% of the European index. Shareholders of the fund should understand that the fund is underweighted in the U.K. even though it's the fund's largest position with 26.5% of the fund invested there. Q. HOW HAVE RISING INTEREST RATES IN EUROPE INFLUENCED YOUR STOCK PICKING? A. Interest rates themselves haven't influenced my selection although they are the reason that some stocks have performed as badly as they have. Since I don't rotate the fund through sectors, I'm not likely to own financial stocks when rates are going down and vice versa. Higher rates haven't made me want to own different kinds of stocks. Q. CAN YOU DESCRIBE OTHER TOP 10 INVESTMENTS IN THE FUND? A. Of course. VNU is a Dutch publishing company that owns major stakes in two dominant commercial television stations. Its recent cost cutting has improved margins in its magazine and newspaper activities. Another is Skandia, a Swedish insurance company which is experiencing tremendous growth in the sale of its unit-linked life insurance policies in the U.S. and Europe. International Cabletel is a NASDAQ-listed cable company doing business in the U.K. Cable television is still in its infancy in the U.K., but the stock is very attractive due to the company's ability to offer telephone as well as television services. Natuzzi - which is not part of the top 10 - is an Italian company and is the world leader in leather furniture manufacturing. Its sophisticated systems and skilled work force give it a significant cost advantage over its competitors. It has a major market share in the United States and is now rapidly increasing its market share in Europe and the Far East. Q. WHAT STOCK PICKS HAVE BEEN DISAPPOINTING? A. Schering comes to mind as a stock that hasn't done as well as it should have. A German pharmaceutical company, Schering has been a long-term holding of this fund. I still own a lot of it but recent performance has been listless. Investors are skeptical of the company's plans to double its profit margins. I think it's possible, but lingering doubts are keeping the stock's price down. The stock price is much more affected by the fact that the company has recently introduced a drug for multiple sclerosis. Investors are questioning whether or not there's a competing drug coming out and whether pricing will be sustained. Once investors begin focusing on the underlying pharmaceutical business, the stock price should improve. Q. YOU HAVE RECENTLY ADDED SEVERAL STAINLESS STEEL STOCKS TO YOUR PORTFOLIO. WHAT'S THE ATTRACTION? A. In a nutshell, stainless steel is a growth market while there is structural erosion of the carbon steel market. Of the three stainless steel stocks that the fund currently owns, none was previously available to investors in its current form. Ugine, a French company, was a new issue in June; Outokumpu was recently privatized by the Finnish government; and Avesta Sheffield, a Swedish company, is a product of a merger. Due to their unfamiliarity with the sector, it took European investors a while to realize that stainless steel is very different from ordinary carbon steel and in fact replaces carbon in some manufactured products. Q. WHAT'S YOUR OUTLOOK FOR THE FUND? A. Increasing interest rates across Europe have made the markets nervous. However, company profits are booming and earnings are growing in many European markets. The earnings momentum should be the driving force going forward and I expect the fund's holdings to profit from it. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in common stocks in Western Europe START DATE: October 1, 1986 SIZE: as of October 31, 1994, more than $507 million MANAGER: Sally Walden, since July 1992; also manages various funds for non-U.S. investors, joined Fidelity in 1984 (checkmark) SALLY WALDEN ON GROWTH STOCKS IN SMALL INDUSTRIES: "I prefer growth stocks to recovery stocks. One of the most pleasant situations for me is to find a good growth company with a niche in an industry that's not big enough for a larger company to enter and compete. A good example is Ares Serono, a Swiss company that has created a drug to treat infertility. It dominates the world in infertility treatment and has a 70% global market share. Because infertility treatment is generally not reimbursable, it is not affected by healthcare reform. In addition to the fact that Ares Serono's effective drugs are also well-priced, the company is also positively impacted by worldwide demographics. Often, couples who experience infertility problems are older and more affluent and in a much better position to pay for uncovered medical treatments. Though infertility treatment is a worldwide market, it's a fairly small therapeutic area, hardly worth the barriers of entry to compete against a company that dominates such a large portion of the market. "Another dominant company in a small industry is Arjo, a Swedish company. Arjo owns massive market share in lifting equipment, apparatus that lifts incapacitated patients in hospitals. This is a company that, along with having a dominant product in a relatively small industry, is benefitting from structural change. In this case, the change is legislative. More working days are lost in hospitals due to nurses and orderlies who are stricken with back problems resulting from lifting and moving patients. Nursing unions in Europe have been vocal about hospitals installing this type of equipment. As a result, hospitals and nursing homes which install patient lifting equipment pay lower insurance premiums for their workers. In the U.K. it's obligatory for hospitals to have the equipment, and Germany is beginning to implement the same regulations. I expect that many other European countries won't be far behind. Arjo and Ares Serono are great investments because they manufacture products that are in great demand in markets that aren't large enough for anyone else to compete." DISTRIBUTIONS The Board of Trustees of Fidelity Europe Fund voted to pay on December 12, 1994, to shareholders of record at the opening of business on December 9, 1994, a distribution of $.11 derived from capital gains realized from sales of portfolio securities and a dividend of $.20 from net investment income. EUROPE INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1994 United States 6.3% Sweden 7.9% Row: 1, Col: 1, Value: 6.3 Row: 1, Col: 2, Value: 26.5 Row: 1, Col: 3, Value: 6.6 Row: 1, Col: 4, Value: 5.2 Row: 1, Col: 5, Value: 5.9 Row: 1, Col: 6, Value: 4.3 Row: 1, Col: 7, Value: 4.5 Row: 1, Col: 8, Value: 10.3 Row: 1, Col: 9, Value: 6.9 Row: 1, Col: 10, Value: 5.1 Row: 1, Col: 11, Value: 10.5 Row: 1, Col: 12, Value: 7.9 France 10.5% United Kingdom 26.5% Belgium 5.1% Finland 6.9% Switzerland 6.6% Germany 10.3% Netherlands 4.5% Spain 5.2% Other 5.9% Italy 4.3% AS OF APRIL 30, 1994 United States 3.6% Belgium 6.1% Row: 1, Col: 1, Value: 3.6 Row: 1, Col: 2, Value: 24.8 Row: 1, Col: 3, Value: 9.699999999999999 Row: 1, Col: 4, Value: 6.2 Row: 1, Col: 5, Value: 6.6 Row: 1, Col: 6, Value: 4.6 Row: 1, Col: 7, Value: 3.9 Row: 1, Col: 8, Value: 5.1 Row: 1, Col: 9, Value: 11.5 Row: 1, Col: 10, Value: 11.3 Row: 1, Col: 11, Value: 6.6 Row: 1, Col: 12, Value: 6.1 Finland 6.6% United Kingdom 24.8% France 11.3% Germany 11.5% Switzerland 9.7% Netherlands 5.1% Sweden 6.2% Italy 3.9% Spain 6.6% Other 4.6% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks 94.8 97.3 Bonds 0.2 0.1 Short-term investments 5.0 2.6 TOP TEN STOCKS % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Nokia AB Free shares (Finland, Electrical Equipment) 3.5 2.9 Schering AG (Germany, Drugs & Pharmaceuticals) 1.9 2.2 Telecom Italia Ord. (Italy, Telephone Services) 1.7 2.2 Skandia International Holding Co. ADR (Sweden, Insurance) 1.6 0.8 Audiofina (Belgium, Broadcasting) 1.3 1.8 International Cabletel, Inc. (United States, Broadcasting) 1.2 1.0 Gehe AG (Germany, Medical Equipment & Supplies) 1.2 1.2 Reisebuero Kuoni AG Part. Cert. (Switzerland, Entertainment) 1.2 1.6 TF-1 (France, Broadcasting) 1.1 1.0 VNU Ord. (Netherlands, Publishing) 1.1 1.1 TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Finance 15.5 16.3 Media & Leisure 14.0 14.6 Health 9.2 9.4 Durables 7.6 6.9 Industrial Machinery & Equipment 7.6 5.0 Retail & Wholesale 7.3 6.8 Utilities 6.8 8.2 Nondurables 5.4 6.9 Transportation 4.5 4.0 Construction & Real Estate 4.5 5.8 EUROPE INVESTMENTS OCTOBER 31, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 91.4% SHARES VALUE (NOTE 1) BELGIUM - 4.9% Audiofina 12,606 $ 6,707,705 05099292 Colruyt SA 11,840 2,723,028 19681599 Generale de Banque SA 16,112 3,913,994 37199592 GIB Holdings Ltd. 80,835 3,158,618 37499A23 Immob de Belgique 22,255 2,015,656 45099592 Quick Restaurants SA 50,185 3,887,856 74899B22 UCB Group 3,507 2,711,218 90262799 25,118,075 BERMUDA - 0.4% Bona Shipholdings Ltd. (a) 237,760 1,999,971 09776C93 DENMARK - 1.7% Kobenhaven Lufthave AS 47,090 2,734,955 49999B22 Teledanmark AS Class B 57,045 3,284,072 87924292 Unidanmark AS Class A (a) 65,400 2,621,109 92399792 8,640,136 FINLAND - 6.1% America Group Ltd. Class A 114,835 2,770,416 02351210 Kone Corp. Class B Ord. 26,000 3,096,718 50400092 Nokia AB Free shares 118,430 17,837,859 65599992 Outokumpu OY Class A (a) 130,820 2,772,213 69099992 Repola OY 126,000 2,642,686 75999A92 WSOY (Werner Soderstrom) Class B 23,360 1,675,462 94299J23 30,795,354 FRANCE - 10.5% Assurances Generales (Reg.) 67,810 2,770,901 04557510 BIC 38,590 4,761,420 08899292 BNP Ord. 92,045 4,558,879 05599996 BQE National Paris Ord. (a) 10,698 2,147,291 05599994 Ecco SA 32,243 4,166,248 27399292 Eiffage SA 11,282 1,918,148 27599522 Eurafrance (Ste) 395 136,771 29899892 Immeubles de France, Ste Des 33,036 2,760,222 44999C22 Omnium Gestion Financement SA 17,416 2,541,420 68099792 Publications Filippachi 13,070 2,460,863 75599999 Renault SA Part. Cert. 6,700 2,250,909 75999F92 Salomon SA Class A 6,504 2,516,169 93099292 Scor SA 93,370 2,050,094 80999992 TF-1 56,120 5,823,002 90399999 Taittinger SA 3,980 1,925,619 87657794 Thomson C.S.F (a) 82,100 2,228,577 88431610 Total SA Class B 58,758 3,812,163 20434510 Ugine SA 38,691 2,909,437 90299G22 Ugine SA (c) 21,000 1,579,132 90299G23 53,317,265 GERMANY - 7.9% Bayer AG 18,416 4,309,620 07273010 BMW AG 7,927 4,085,403 05528310 Duerr Beteiligungs AG (RFD) (a) 9,150 3,924,688 26499292 Gehe AG 17,881 6,111,943 68199492 Holsten Brauerei AG 6,005 1,385,692 43899D92 Otto Reichelt AG 16,720 3,780,416 69199A92 Rhoen Klinikum AG 2,600 2,330,707 76299494 Schering AG 14,210 9,492,233 80658510 Veba AG Ord. 14,091 4,722,769 92239110 40,143,471 SHARES VALUE (NOTE 1) IRELAND - 1.1% CRH PLC 653,650 $ 3,636,196 12626K10 IWP International (U.K. Reg.) 405,370 2,155,551 45199A93 5,791,747 ITALY - 4.3% Fila Holding Spa sponsored ADR 168,650 2,803,806 31685010 Industrie Natuzzi Spa ADR 160,700 5,182,575 45647810 Istituto Mobiliare Italiano 160,990 1,056,782 45777M92 Istituto Nazionale Delle Assicurazionl Spa (a) 1,500,000 2,172,150 46523492 Mondadori (Arnoldo) Editore Spa (c) 216,900 1,962,195 60999B23 Telecom Italia Ord. 3,125,400 8,551,376 87999R22 21,728,884 NETHERLANDS - 4.5% Heineken NV 35,535 5,197,518 42301210 Internationale Nederlanden Groep NV 97,370 4,558,531 46099892 PolyGram NV Ord. 78,600 3,497,893 73173392 Unilever NV ADR 33,310 3,955,563 90478450 VNU Ord. 50,860 5,432,149 92399010 22,641,654 NORWAY - 2.0% Bergesen Group : 08399010 Class A 71,780 1,558,884 08399010 Class B 32,480 710,353 08399011 Color Lines (a) 560,465 2,074,365 19699492 Helikopter Service AS 152,465 1,912,079 42499192 Oslo Havnelager (a) 48,700 18,620 68499D22 Smedvig Tankships Ltd. (a) 268,850 2,097,017 83169E92 Veidekke AS 106,100 1,817,420 93699592 10,188,738 PORTUGAL - 0.7% Banco Espirito Santo e Commercial de Lisboa (Reg.) 167,200 3,427,764 06699M22 SPAIN - 5.2% Banco Popular Espanol 21,130 2,650,318 05999110 Corporacion Financiera Alba SA 89,870 4,376,903 15199010 Corporacion Mapfre Cia International de Reaseguros SA (Reg.) 91,170 4,025,310 16899192 El Aguila SA (a) 177,063 1,378,335 28299292 Empresa Nacional de Electricidad SA Ord. 56,810 2,603,508 29244710 FOCSA (Fomento de Obras Y Construcciones SA) 44,295 4,456,024 34418599 Hidroelectrica del Cantabrico SA Class C 63,540 1,927,760 42899999 Iberdrola SA 280,275 1,846,124 45499892 Repsol SA Ord. 99,970 3,196,646 76026T10 26,460,928 SWEDEN - 7.9% Arjo AB (c) 222,820 4,046,716 04069792 Astra AB Class A Free shares 154,615 4,201,230 04632292 Autoliv AB (a) 78,000 2,767,793 05279892 Avesta Sheffield AB Ord. Free shares (a) 410,021 4,095,597 05399892 Bergman & Beving AB Class B Free shares 133,580 2,593,950 08399622 Catena AB Class A Free shares 209,800 1,934,438 14999G22 Custos AB Class A Free shares 127,270 1,653,539 23299A22 ICB Shipping Class B 410,270 3,095,056 44999B92 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SWEDEN - CONTINUED SKF AB Ord. (a) 140,240 $ 2,566,542 78437530 Skandia International Holding Co. ADR 448,543 8,208,817 83055510 Volvo AB Class B 239,800 4,757,107 92885630 39,920,785 SWITZERLAND - 6.6% Ares Serono SA Class B (Bearer) 8,240 4,459,371 03999392 Baloise Holding (Reg.) 1,765 3,322,105 05899195 Baloise Holding (warrants) (a) 2,405 31,582 05899196 BBC Brown Boveri & Cie (Bearer) 5,640 4,838,774 05599099 Intershop Holding AG (Bearer) 4,740 2,082,356 46299592 Nestle SA (Reg.) 3,286 3,070,246 64106992 Oerlikon-Buhrle Holding Ltd. (Reg.) (a) 45,525 4,710,108 67199092 Reisebuero Kuoni AG : 75999593 (Bearer) 50 1,432,551 75999593 Part. Cert. 4,516 6,074,047 75999592 Swiss Reinsurance Corp. (Reg.) 6,353 3,766,801 87099393 33,787,941 UNITED KINGDOM - 26.3% Abbey National PLC Ord. 410,810 2,792,769 00281099 Allied Lyons PLC 265,660 2,594,919 01925510 Angerstein Underwriting Trust PLC 1,584,400 2,203,473 03499A22 Argyll Group PLC Ord. 656,901 2,805,197 04099210 Arjo Wiggins Appleton PLC 500,530 2,194,764 04199592 Associated British Ports Holdings PLC Ord. 718,670 3,233,591 04599392 BAA PLC Ord. 412,034 3,471,869 10999999 Barclays PLC Ord. 398,500 3,794,672 06738E10 Boots Co. PLC 425,000 3,685,430 09999410 Burton Group PLC Ord. 1,981,030 2,123,030 12304910 Cadbury-Schweppes PLC Ord. 327,516 2,331,013 12720910 Chubb Security PLC 450,060 2,363,733 17299B92 CLM Insurance Fund PLC 1,424,100 2,050,433 18899322 Comcast UK Cable Partners PLC Class A (a) 86,000 1,720,000 20099622 Compass Group PLC Ord. 617,807 3,285,183 20499192 De La Rue PLC 168,303 2,698,616 24642110 Flextech PLC (a) 356,810 2,796,377 33999392 Hazlewood Foods PLC Ord. 798,700 1,620,427 42199292 Kwik Save Group PLC Ord. 184,085 1,647,513 50124310 London Insurance Market Investment Trust PLC 1,615,390 2,484,438 54199F22 MFI Furniture Group PLC 1,176,297 2,540,472 55299392 Mirror Group Newspaper PLC 2,190,690 5,053,856 60499792 Pearson PLC 246,010 2,551,908 70509991 Prudential Corp. PLC 1,007,000 5,255,855 74399992 Racal Electronics PLC Ord. 631,500 2,634,732 74981510 Rank Organization PLC 479,700 3,178,689 75304110 Reuters Holdings PLC Ord. 338,000 2,654,490 76132410 Royal Bank of Scotland Group PLC Ord. 536,890 3,847,536 78009792 Scottish & Newcastle Brewers PLC 471,802 3,992,856 80987810 Scottish Hydro-Electric PLC Ord. 255,925 1,339,941 81013395 Scottish Power PLC ADR (c) 39,200 2,303,000 81013T40 Scottish Television PLC 220,400 1,568,642 81099210 Smith (W.H.) Group PLC Ord. 326,110 2,481,077 83199393 Smithkline Beecham PLC Ord. Units 603,600 3,676,860 83237850 Standard Chartered Bank PLC 810,000 3,896,327 85256810 Storehouse PLC 715,000 2,538,572 86211210 Takare PLC Ord. 1,141,380 4,229,817 94499792 Tesco PLC Ord. 1,192,510 4,585,141 88157510 Ulster Television PLC Ord. 256,800 2,962,152 94299492 United Newspapers PLC Ord. 238,960 1,986,149 91120210 Vendome Luxury Group PLC SA 358,189 3,041,605 92299E22 SHARES VALUE (NOTE 1) Vodafone Group PLC 1,551,745 $ 5,376,098 92857T92 Westminster Health Care Holdings PLC 455,000 2,694,901 96099B92 Wickes PLC 1,674,390 2,424,500 96699392 Woolworth Holdings PLC Ord. 296,654 2,300,656 98088610 Zeneca Group PLC Ord. 180,670 2,539,231 98934D92 133,552,510 UNITED STATES OF AMERICA - 1.3% International Cabletel, Inc. (a) 204,000 6,324,000 45921610 TOTAL COMMON STOCKS (Cost $381,014,674) 463,839,223 PREFERRED STOCKS - 3.4% CONVERTIBLE PREFERRED STOCKS - 0.2% UNITED KINGDOM - 0.2% MAI PLC 5.90% cumulative 507,530 772,268 55699093 NONCONVERTIBLE PREFERRED STOCKS - 3.2% FINLAND - 0.8% Nokia AB 26,300 3,972,723 65599910 GERMANY - 2.4% Boss (Hugo) AG 5,310 3,333,426 44451094 Hornback AG 2,360 2,511,056 44050799 Moebel Walther AG 6,785 3,180,998 61099B22 Porsche AG: 73380110 Ord. (a) 6,610 2,822,025 73380110 (RFD) (a) 1,287 524,642 73380193 12,372,147 TOTAL NONCONVERTIBLE PREFERRED STOCKS 16,344,870 TOTAL PREFERRED STOCKS (Cost $11,943,203) 17,117,138 CONVERTIBLE BONDS - 0.2% MOODY'S RATINGS PRINCIPAL (UNAUDITED) AMOUNT (B) BELGIUM - 0.2% Audiofina 5%, 12/31/96 -- LUF 26,010,000 846,220 050992AE NORWAY - 0.0% Color Lines 7 1/2%, 12/31/00 -- NOK 2,433 364,645 196994AB TOTAL CONVERTIBLE BONDS (Cost $1,113,542) 1,210,865 REPURCHASE AGREEMENTS - 5.0% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 4.78% dated 10/31/94 due 11/1/94 $ 25,445,378 25,442,000 99799N9L TOTAL INVESTMENT IN SECURITIES - 100% (Cost $419,513,419) $ 507,609,226 CURRENCY ABBREVIATIONS LUF - Luxembourg franc NOK - Norwegian krone LEGEND (a) Non-income producing (b) Principal amount is stated in United States dollars unless otherwise noted. (c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $9,891,043 or 1.9% of net assets. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $230,608,703 and $319,489,637, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of FMR. The commissions paid to these affiliated firms were $182 for the period (see Note 5 of Notes to Financial Statements). The fund participated in the bank borrowing program. The maximum loan and the average daily loan balances during the period for which loans were outstanding amounted to $61,887,000 and $19,804,595, respectively. The weighted average interest rate was 3.58% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At October 31, 1994, the aggregate cost of investment securities for income tax purposes was $420,108,215. Net unrealized appreciation aggregated $87,501,011, of which $102,016,259 related to appreciated investment securities and $14,515,248 related to depreciated investment securities. The fund hereby designates $2,243,378 as a capital gain dividend for the purpose of the dividend paid deduction. For the period, interest and dividends from foreign countries were $11,195,540 of $0.47 per share. Taxes paid to foreign countries were $1,489,986 or $0.06 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Aerospace & Defense 1.4% Basic Industries 4.0 Construction & Real Estate 4.5 Durables 7.6 Energy 1.4 Finance 15.5 Health 9.2 Holding Companies 1.9 Industrial Machinery & Equipment 7.6 Media & Leisure 14.0 Nondurables 5.4 Retail & Wholesale 7.3 Services 2.9 Repurchase Agreements 5.0 Technology 1.0 Transportation 4.5 Utilities 6.8 100.0% EUROPE FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES <TABLE> <CAPTION> <S> <C> <C> OCTOBER 31, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $25,442,000) (cost $419,513,419) - See $ 507,609,226 accompanying schedule Cash 881 Receivable for investments sold 11,899,629 Receivable for fund shares sold 7,531,624 Dividends receivable 2,992,439 Interest receivable 17,434 TOTAL ASSETS 530,051,233 LIABILITIES Payable for investments purchased $ 14,061,535 Payable for fund shares redeemed 7,766,268 Accrued management fee 340,792 Other payables and accrued expenses 422,518 TOTAL LIABILITIES 22,591,113 NET ASSETS $ 507,460,120 Net Assets consist of: Paid in capital $ 415,052,130 Undistributed net investment income 2,640,665 Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 1,648,591 Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 88,118,734 NET ASSETS, for 23,959,234 shares outstanding 507,460,120 NET ASSET VALUE and redemption price per share ($507,460,120 (divided by) 23,959,234 shares) $21.18 Maximum offering price per share (100/97.00 of $21.18) $21.84 </TABLE> STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1994 <TABLE> <CAPTION> <S> <C> <C> INVESTMENT INCOME $ 11,298,493 Dividends Interest 1,030,869 12,329,362 Less foreign taxes withheld (1,489,986 ) TOTAL INCOME 10,839,376 EXPENSES Management fee 3,321,337 Basic fee Performance adjustment 243,702 Transfer agent fees 2,242,731 Accounting fees and expenses 296,042 Non-interested trustees' compensation 2,949 Custodian fees and expenses 355,372 Registration fees 73,260 Audit 41,330 Legal 5,044 Interest 72,956 Miscellaneous 6,025 Total expenses before reductions 6,660,748 Expense reductions (3,406 6,657,342 ) NET INVESTMENT INCOME 4,182,034 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 52,588,570 Foreign currency transactions (820,442 51,768,128 ) Change in net unrealized appreciation (depreciation) on: Investment securities 12,898,390 Assets and liabilities in foreign (1,574,714 11,323,676 currencies ) NET GAIN (LOSS) 63,091,804 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 67,273,838 OTHER INFORMATION $814,169 Sales charges paid to FDC Deferred sales charges withheld $85,678 by FDC Accounting fees paid to FSC $294,804 </TABLE> STATEMENT OF CHANGES IN NET ASSETS <TABLE> <CAPTION> <S> <C> <C> INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, 1994 1993 Operations $ 4,182,034 $ 7,012,018 Net investment income Net realized gain (loss) 51,768,128 (2,768,371 ) Change in net unrealized appreciation (depreciation) 11,323,676 93,922,600 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 67,273,838 98,166,247 Distributions to shareholders from net investment income (2,098,083 (8,045,499 ) ) Share transactions 549,191,101 549,154,003 Net proceeds from sales of shares Reinvestment of distributions 2,047,747 7,889,216 Cost of shares redeemed (637,883,238 (549,458,481 ) ) Net increase (decrease) in net assets resulting from share transactions (86,644,390 7,584,738 ) TOTAL INCREASE (DECREASE) IN NET ASSETS (21,468,635 97,705,486 ) NET ASSETS Beginning of period 528,928,755 431,223,269 End of period (including undistributed net investment income of $2,640,665 and $9,334,982, respectively) $ 507,460,120 $ 528,928,755 OTHER INFORMATION Shares Sold 27,996,564 33,375,671 Issued in reinvestment of distributions 109,623 525,251 Redeemed (32,845,483 (33,714,940 ) ) Net increase (decrease) (4,739,296 185,982 ) </TABLE> <TABLE> <CAPTION> <S> <C> <C> SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. </TABLE> FINANCIAL HIGHLIGHTS <TABLE> <CAPTION> <S> <C> <C> <C> <C> <C> YEARS ENDED OCTOBER 31, SELECTED PER-SHARE DATA 1994 1993 1992 E 1991 1990 </TABLE> <TABLE> <CAPTION> <S> <C> <C> <C> <C> <C> Net asset value, beginning of period $ 18.43 $ 15.12 $ 15.93 $ 16.28 $ 15.04 Income from Investment Operations Net investment income .18 .25 .27 .43 D .46 Net realized and unrealized gain (loss) 2.65 3.35 (.57) (.40) .97 Total from investment operations 2.83 3.60 (.30) .03 1.43 Less Distributions (.08) (.29) (.48) (.35) (.19) From net investment income From net realized gain - - (.03) C (.03) C - Total distributions (.08) (.29) (.51) (.38) (.19) Net asset value, end of period $ 21.18 $ 18.43 $ 15.12 $ 15.93 $ 16.28 TOTAL RETURN A, B 15.41% 24.24% (1.89)% .15% 9.50% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 507,460 $ 528,929 $ 431,223 $ 297,831 $ 389,273 Ratio of expenses to average net assets 1.35% 1.25% 1.22% 1.31% 1.45% Ratio of net investment income to average net assets .85% 1.44% 2.38% 2.83% 2.87% Portfolio turnover rate 49% 76% 95% 80% 148% A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. C INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME. D INCLUDES $.05 PER SHARE FROM RECOVERY OF FOREIGN TAXES PREVIOUSLY WITHHELD ON DIVIDEND AND INTEREST PAYMENTS. E AS OF NOVEMBER 1, 1991, THE FUND DISCONTINUED THE USE OF EQUALIZATION ACCOUNTING. </TABLE> EUROPE CAPITAL APPRECIATION PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). Europe Capital Appreciation Fund has a 3% sales charge, which has been waived since the fund's start on December 21, 1993 through June 30, 1995. CUMULATIVE TOTAL RETURNS PERIOD ENDED LIFE OF OCTOBER 31, 1994 FUND EUROPE CAPITAL APPRECIATION 13.50% Morgan Stanley Europe Index 7.16% Average European Region Fund 5.17% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case since the fund started on December 21, 1993. You can compare the fund's figures to the performance of the Morgan Stanley Europe index - a broad measure of the performance of stocks in Europe, weighted by each country's market capitalization (or the total value of its outstanding shares). You can also compare the fund's performance to the average European region fund which currently reflects the performance of 42 funds with similar objectives tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS 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. In the fund's next report we'll report these numbers for the fund and the benchmarks. $10,000 OVER LIFE OF FUND Europe Capital Appreciation (341)Europe Index 12/21/93 10000.00 10000.00 12/31/93 10030.00 10132.25 01/31/94 11490.00 10648.24 02/28/94 11000.00 10271.14 03/31/94 11120.00 9980.44 04/30/94 11590.00 10393.71 05/31/94 11160.00 9951.90 06/30/94 10930.00 9847.41 07/31/94 11490.00 10363.51 08/31/94 11690.00 10692.21 09/30/94 11280.00 10268.23 10/31/94 11360.00 10715.55 Let's say you invested $10,000 in Fidelity Europe Capital Appreciation Fund on its start date. By October 31, 1994, it would have grown to $11,350 - a 13.50% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley Europe index, which would have grown to $10,716 over the same period - a 7.16% 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) EUROPE CAPITAL APPRECIATION FUND TALK: THE MANAGER'S OVERVIEW An interview with Kevin McCarey, Portfolio Manager of Fidelity Europe Capital Appreciation Fund Q. KEVIN, HOW HAS THE FUND PERFORMED? A. Quite well. The fund was launched on December 21, 1993, and since then has returned 13.50%. That beats the Morgan Stanley Europe index which returned 7.16% for the same period. Q. HOW DO YOU EXPLAIN THE FUND'S OUTPERFORMING ITS BENCHMARK? A. As a stock picker, I try to choose stocks that outperform the market. During this period, several of the fund's large positions, such as Philips, were discovered by other investors as having good earnings. Thus, the stocks outperformed. I only have 13.7% of the fund in the U.K. - a market which has disappointed investors recently - far less than the 35% of U.K. stocks in the benchmark. Finally, owning cyclicals, especially steels and chemicals, helped the fund outperform the index in the past six months, although I've recently moved out of many of them. Q. HOW IMPORTANT IS COUNTRY ALLOCATION IN YOUR DECISION MAKING PROCESS? A. I look for stocks first; the country is secondary. However, with regard to countries, I must consider the external events that may be happening there. For example, Sweden is 7.9% of the fund's investments, nearly double that of the index. I need to think about whether or not there are some special risks in a particular country - such as an election - and whether or not it will matter to the market and whether those effects are positive or negative. I try to de-emphasize those kinds of decisions because they're virtually impossible to predict. Instead, I try to pick companies that are doing well on their own. Q. HAVE YOU MADE ANY STRATEGIC ADJUSTMENTS TO THE FUND'S HOLDINGS? A. Because investors got too enthusiastic about cyclical stocks such as paper, chemicals and steel, I have trimmed back my exposure to those areas. Though the sales and profits in these industries are good, these positive attributes are already reflected in the stock prices. I've also reversed my underweighted position in financial stocks and am now buying banks and insurance companies. Investors became too pessimistic about the outlook for financial companies, but I think companies such as Swiss Bank are performing far better than most people will credit. I also continue to have a large position in the Netherlands, which reflects my interest in the stocks there. The biggest is Philips Electronics, which is a leader in the European market for consumer electronics. Management has done a great job of restructuring and the company sells nearly one-third of its goods to emerging markets. An interesting new element in the fund is the introduction of pharmaceuticals. Though I didn't hold any six months ago, pharmaceuticals are now 7.2% of the fund. One of the most interesting stocks in that sector is Schering, a medium-sized German company that has recently introduced a drug to treat multiple sclerosis and has ambitious plans to expand operating profit margins with it's new state-of-the-art plant in Germany. Importantly, management's efforts to improve operating margins should help earnings grow faster than most investors are expecting. Q. WHAT ARE SOME OTHER CHANGES TO THE FUND'S TOP 10 INVESTMENTS? A. Pechiney, a French aluminum producer, is new to the fund's top 10 holdings. I have a positive outlook on aluminum demand and pricing over the next few years and think that Pechiney - currently the largest producer in Europe - is the best play on aluminum in Europe. The French government is the majority owner but will be privatizing it over the next few years. I have faith in the new management and the restructuring it is undertaking and think that compared to other aluminum companies in the world, Pechiney is attractively priced. I also dramatically reduced my position in Elf Acquitaine, a French oil producer. There are certain industry sectors - oil is one - in which stock prices tend to be greatly correlated with the underlying commodity. Like countries and currencies, their prices are much harder to predict than the earnings of an individual company. I replaced Elf Acquitaine with two other oil companies with stronger earnings growth. British Petroleum is new to the top 10 and Norsk Hydro is new to the fund. Though its difficult to predict, I believe that the price of oil should rebound and I want to be in a position to profit when it does. Q. WHAT INVESTMENTS HAVE BEEN DISAPPOINTING? A. Well, Pirelli Tyre Holdings has been a poor performer. The company is a real turnaround story and is currently moving from losses to profits. However, growth is happening more slowly than I anticipated despite the fact that the demand for tires continues to grow in Latin America, Europe and the United States. One problem is that the cost of raw materials to make tires - rubber and carbon black - is going up. Another problem is that the company has become somewhat withdrawn and less communicative to outside shareholders. Q. HAVE YOU VENTURED INTO THE EMERGING MARKETS AREA? A. Yes, although emerging markets for this fund refer mainly to European countries such as Poland, Turkey and the Czech Republic. I have done some very limited investing in those countries which, to date, has not greatly benefited the fund. Lately there's been a shift of investor attention from the countries I just mentioned over to Russia, which is a much more speculative market. With the lack of interest in stock markets in Poland and the Czech Republic, stocks there have been lackluster at best. Though the markets in those countries haven't been great performers, I think that over the next couple of years the companies in those economies will turn around and some exposure to those markets will help the fund. Q. HOW DO YOU USE DERIVATIVES IN THE FUND? A. The fund can use foreign exchange hedges to try to protect against declining foreign currencies. I used some of these instruments as a hedge against foreign currency exposure during the past six months when I thought the dollar might increase in value. Q. WHAT IS YOUR OUTLOOK FOR THE FUND? A. In general, I think that European markets are very linked to the U.S. stock market. The rise in interest rates in Europe has been fairly closely linked to those in the U.S., despite what looks like different economic cycles. In general, I think that the next six months could be a tricky time for most stock markets. However, it's becoming a more favorable environment for stock pickers to deal well. With markets flat to down, investors must make their bets on specific companies rather than economies, currencies or countries - and that's what this fund does. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in common stocks in Europe START DATE: December 21, 1993 SIZE: as of October 31, 1994, more than $352 million MANAGER: Kevin McCarey, since December 1993; manager, Plymouth Europe Fund (Now Fidelity Advisor Overseas Fund), 1992-1993; Fidelity Select Regional Banks Portfolio, 1986-1989; joined Fidelity in 1985 (checkmark) KEVIN MCCAREY ON FOREIGN INVESTING: "One of the major advantages of managing a European fund out of Boston is that you can observe domestic trends and see how they unfold throughout the world. I've found that many global trends often start in the United States because U.S. companies are more accountable to shareholders and the U.S. economy is the most competitive in the world - you have to be efficient to produce here. An example is consumers being less willing to pay extra for branded products and buying generic ones instead. This trend began in the United States several years ago. It spread first to Anglo markets such as the U.K. and Australia and is still trickling through other markets such as Japan and the rest of continental Europe. In a number of global industries, many major players have penetrated markets throughout the world. They'll often introduce a new program or product in the U.S. and then export it around the world, thus creating another kind of global trend. More generally, in the past few years the U.S. economy was ahead of other countries in the global recovery. Some of the same trends - such as consumers buying homes or cars before apparel - started in the U.S. and are playing out in Europe and Japan. Being aware of these kinds of trends gives an international observer an edge. Recognizing trends and acting on them are two of the keys to international investing." EUROPE CAPITAL APPRECIATION INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1994 Ireland 3.0% United States 4.1% United Kingdom 13.7% Row: 1, Col: 1, Value: 4.1 Row: 1, Col: 2, Value: 13.7 Row: 1, Col: 3, Value: 8.0 Row: 1, Col: 4, Value: 7.9 Row: 1, Col: 5, Value: 7.4 Row: 1, Col: 6, Value: 9.300000000000001 Row: 1, Col: 7, Value: 16.9 Row: 1, Col: 8, Value: 6.4 Row: 1, Col: 9, Value: 8.699999999999999 Row: 1, Col: 10, Value: 14.6 Row: 1, Col: 11, Value: 3.0 France 14.6% Switzerland 8.0% Germany 8.7% Italy 6.4% Sweden 7.9% Spain 7.4% Netherlands 16.9% Other 9.3% AS OF APRIL 30, 1994 Belgium 2.5% Row: 1, Col: 1, Value: 14.3 Row: 1, Col: 2, Value: 5.5 Row: 1, Col: 3, Value: 3.0 Row: 1, Col: 4, Value: 8.199999999999999 Row: 1, Col: 5, Value: 7.2 Row: 1, Col: 6, Value: 7.7 Row: 1, Col: 7, Value: 16.8 Row: 1, Col: 8, Value: 7.0 Row: 1, Col: 9, Value: 12.3 Row: 1, Col: 10, Value: 15.5 Row: 1, Col: 11, Value: 2.5 United States 14.3% France 15.5% United Kingdom 5.5% Switzerland 3.0% Germany 12.3% Sweden 8.2% Italy 7.0% Spain 7.2% Other 7.7% Netherlands 16.8% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks 95.9 85.7 Bonds - - Short-term investments 4.1 14.3 TOP TEN STOCKS % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Schering AG (Germany, Drugs & Pharmaceuticals) 2.8 - Philips Electronics (Netherlands, Electrical Equipment) 2.8 4.7 Baloise Holding (Reg.) (Switzerland, Insurance) 2.1 0.4 Swiss Bank Corp. (Bearer) (Switzerland, Banks) 2.0 - Bank of Ireland U.S. Holdings, Inc. (Ireland, Banks) 1.9 - Pechiney International SA (France, Metals & Mining) 1.9 - Pirelli Tyre Holdings NV Ord. (Netherlands, Autos, Tires, & Accessories) 1.7 2.2 British Petroleum PLC Ord. (United Kingdom, Oil & Gas) 1.7 0.1 Norsk Hydro AS (Norway, Oil & Gas) 1.7 - Internationale Nederlanden Groep NV (Netherlands, Insurance) 1.6 - TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Finance 25.4 13.8 Basic Industries 8.3 13.9 Retail & Wholesale 8.0 7.2 Health 7.2 0.9 Utilities 6.9 8.1 Durables 6.9 8.9 Industrial Machinery & Equipment 6.1 7.9 Energy 5.5 6.1 Nondurables 5.1 0.7 Construction & Real Estate 4.1 5.4 EUROPE CAPITAL APPRECIATION INVESTMENTS OCTOBER 31, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 95.0% SHARES VALUE (NOTE 1) AUSTRIA - 1.1% Bau Holding AG 10,000 $ 838,870 07199922 Hemingway Holding AG (a) 6,500 312,456 42399F22 Leykam Muerztaler Papier und Zelstoff AG Ord. (a) 17,500 692,775 52899092 Maculan Holding AG Ord. 20,000 2,035,911 55699592 3,880,012 CZECH REPUBLIC - 1.3% CEZ AS (a) 49,000 2,817,527 15721492 Fatra AS (a) 1,000 112,818 31199622 IPS AS 13,914 974,760 44999H22 ZPS Zlin (a) 9,600 641,095 98999T22 4,546,200 DENMARK - 1.0% Unidanmark AS Class A (a) 90,000 3,607,031 92399792 FINLAND - 1.7% Outokumpu OY Class A (a) 201,000 4,259,401 69099992 Tampella AB (a) 400,000 1,304,064 87532099 Valmet OY Ord. (a) 32,400 704,195 92029991 6,267,660 FRANCE - 14.6% Assurances Generales (Reg.) 70,000 2,860,390 04557510 BIS SA Ord. (a) 50,000 3,011,756 05528110 BNP Ord. 75,000 3,714,661 05599996 CERUS (Cie European Reunies) Ord. (a) 58,333 1,161,786 15799592 Credit Commercial de France Ord. 60,000 2,524,045 22499392 Dollfus Mieg & Cie (DMC) 13,000 815,894 25699392 Ecco Travaille Tempoire SA 20,000 1,255,222 27599292 Eramet SA (a) 24,000 1,753,425 29499H22 Eramet SA (a) (b) 2,000 146,119 29499H23 Guilbert SA 10,550 838,424 40199792 LVMH 24,000 3,870,592 50244199 Michel Thierry SA 12,185 1,917,779 60099492 Pechiney International SA 90,700 6,917,274 70599310 Plastic Omnium 4,950 610,755 72799622 Rexel SA 8,000 1,109,880 76199B22 Roussel-Uclaf Ord. 33,500 3,742,835 77929991 SAGA (Societe de Gerance & D'Armen) 30,000 2,972,894 78599E22 Societe Generale Class A 35,000 3,951,229 83357799 Sommers-Allibert SA 3,000 1,119,207 83530010 Synthelabo 90,925 3,674,808 93699794 Ugine SA 18,000 1,353,541 90299G22 Unibail 10,000 854,950 90499592 Vallourec SA (a) 45,000 2,443,894 92017610 52,621,360 GERMANY - 8.0% BASF AG 10,000 2,116,708 05526230 Deutsche Bank AG 3,500 1,724,688 25152592 Ex-Cell-O Holding AG Ord. 5,000 864,505 30099392 Gildemeister AG (rights) (a) 5,600 382,330 37550092 Gildemeister AG (a) 7,000 661,014 37550099 Hoechst Krupp, Fried Krupp AG Ord. 10,000 2,189,859 43439010 MAN AG Ord. 6,000 1,625,935 56154210 Schering AG 15,000 10,019,950 80658510 Sixt AG Ord. 3,757 1,151,772 83002199 Springer Axel Verlag AG (Reg.) 2,500 1,064,007 85029999 Thyssen Industries AG (a) 27,000 3,070,324 94499892 Veba AG Ord. 12,000 4,021,945 92239110 28,893,037 SHARES VALUE (NOTE 1) GREECE - 0.3% Hellenic Bottling Co. SA 34,000 $ 1,055,527 42399A92 HUNGARY - 0.3% FOTEX (First Hungarian-American Photo Service Co.) Ord. 211,000 735,850 35099293 Pick Szeged RT sponsored GDS (b) 7,300 496,400 71957110 1,232,250 IRELAND - 3.0% Bank of Ireland U.S. Holdings, Inc. 1,500,000 6,970,005 06278793 Grafton Group PLC (U.K. Reg.) 200,000 1,210,752 38499723 Green Property Co. (U.K. Reg.) 400,000 1,014,412 39399223 Irish Continental Group PLC (U.K. Reg.) 70,000 503,934 46299C92 Jurys Hotel Group PLC (U.K. Reg.) 500,000 1,268,015 48299E22 10,967,118 ITALY - 6.2% Banca Fideuram Spa 3,000,000 3,563,280 06399E22 Editoriale L'Espresso Spa 350,000 1,002,278 28199K22 FIDIS Spa Ord. 320,000 809,530 31650010 Istituto Bancario San Paolo 200,000 1,188,416 45399622 Istituto Mobiliare Italiano 600,000 3,938,562 45777M92 Marzotto & Figli Spa Ord. 250,000 1,766,678 57418910 Mondadori (Arnoldo) Editore Spa (a) 300,000 2,713,962 60999B25 Montedison Spa Ord. 2,500,000 2,058,250 61237610 SOGEFI Spa 237,500 577,636 83499L22 Telecom Italia Ord. 1,680,000 4,596,631 87999R22 22,215,223 NETHERLANDS - 16.9% BAM Groep NV 32,703 2,037,510 05999892 Borsumij Wehry NV 75,000 1,241,619 09985610 Ceteco Holdings NV (a) 22,000 574,378 15799G22 Hoogovens en Staalfabrieken NV (a) 40,000 1,865,543 43888410 Internationale Nederlanden Groep NV 120,000 5,617,991 46099892 KBB NV Ord. 80,000 5,017,504 48130092 KLM Royal Dutch Airlines Ord. (a) 200,000 5,565,774 48251620 Koninklijke PPT Nederland 160,000 5,098,202 72699422 MacIntosh Confectionary Works 150,000 3,951,819 58199292 Nijverdal-Ten Cate NV 30,000 1,482,822 67299B22 Norit NV 130,000 1,519,610 61089099 Philips Electronics 300,000 9,932,949 71833799 Pirelli Tyre Holdings NV Ord. 888,500 6,168,305 72499092 Polynorm NV Ord. 31,100 3,358,571 73199E22 Royal Dutch Petroleum Co. Ord. 30,000 3,492,553 78025710 Samas-Groep NV 80,000 2,729,484 79499110 Schuttersveld Holding NV 49,650 1,252,077 80899C22 60,906,711 NORWAY - 2.0% Norsk Forsvarsteknologi AS 35,000 663,761 67599G22 Norsk Hydro AS 150,000 6,044,964 65653150 Tomra Systems AS 230,000 548,750 95699692 7,257,475 POLAND - 0.7% Bank Slaski SA (a) 10,000 467,942 06599M22 Polifarb Cieszyn SA (a) 100,000 476,608 73199F22 Wedel SA 20,000 1,598,803 94899F22 2,543,353 PORTUGAL - 0.9% Banco Comercial Portugues SA (Reg.) 170,000 2,317,177 07299493 Unicer (Uniao Cervejeira) SA 33,000 498,113 93399A93 Unicer (Uniao Cervejeira) SA (New) 33,000 498,113 93399A95 3,313,403 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SPAIN - 7.4% Banco Bilbao Vizcaya SA Ord. (Reg.) 150,000 $ 3,940,121 05945891 Banco de Santander SA Ord. (Reg.) 125,000 5,079,840 05957410 Banco Popular Espanol 16,000 2,006,866 05999110 Banco Intercontinental Espanol 22,000 2,030,499 24699592 Corporacion Financiera Alba SA 31,000 1,509,781 15199010 Corporacion Mapfrecia International de Reaseguros SA (Reg.) 35,000 1,545,310 16899192 Fasa Renault Ord. 50,000 2,395,210 31199292 Hidroelectrica del Cantabrico SA 47,350 1,436,567 42899999 Prosegur Cia de Securidad SA (Reg.) 74,500 1,472,156 74291699 Telefonica de Espana SA Ord. 300,000 4,059,879 87938210 Uralita SA (a) 95,000 993,613 91799310 26,469,842 SWEDEN - 7.9% Electrolux AB 100,000 5,217,902 01019810 Atlas Copco AB Class A Free shares 143,000 1,967,784 04925599 ASG AB Class B Free shares 80,000 1,173,504 16599C22 Investor AB Class B Free shares 150,000 3,771,977 46199A92 Pharmacia AB Class A Free shares 175,000 3,324,928 71713093 Skandia International Holding Co. ADR 220,000 4,026,235 83055510 Skane-Gripen AB Ord. 72,000 528,077 93056099 Svedala 111,000 2,589,672 91199A92 Trelleborg AB Class C Free shares (a) 100,000 1,669,449 89499G23 Volvo AB Class B 200,000 3,967,561 92885630 28,237,089 SWITZERLAND - 8.0% Adia SA (Bearer) 25,000 4,417,032 00699793 Baloise Holding (Reg.) 4,000 7,528,850 05899195 Daetwyler Holdings AG 600 978,910 23799A92 Danzas Holding AG (Part. Cert.) 6,000 1,408,675 23799792 Interdiscount Holding AG (Part. Cert.) 7,700 1,072,423 45899594 Nestle SA (Reg.) 2,000 1,868,683 64106992 Swiss Bank Corp. (Bearer) 25,000 7,202,547 87083610 Swiss Reinsurance Corp. (Reg.) 7,000 4,150,418 87099393 Zschokke Holding AG (Reg.) (a) 375 214,883 98999R24 28,842,421 UNITED KINGDOM - 13.7% Argyll Group PLC Ord. 900,000 3,843,315 04099210 BET PLC Ord. 800,000 1,439,816 05538H10 British Borneo Petroleum PLC 225,000 791,487 11099D22 British Gas PLC Ord. 600,000 2,876,352 11090199 British Petroleum PLC Ord. 850,000 6,049,663 11088910 Chubb Security PLC 300,000 1,575,612 17299B92 Fisons PLC Ord. 1,000,000 1,897,930 33812310 Hambros Ord. 650,000 2,446,048 40699292 Hanson Trust PLC Ord. 1,000,000 3,779,510 41135210 Hartstone Group PLC Ord. (a) 2,520,000 577,231 41722610 Ibstock Johnsen PLC 1,200,000 1,511,808 45905799 London Clubs International PLC (a) 300,000 1,202,571 54199H22 Next PLC 650,000 2,605,571 64399999 Perkins Foods PLC 2,300,000 2,784,725 71499492 Prudential Corp. PLC 700,000 3,653,524 74399992 Smith (W. H.) Group PLC Ord. 700,000 5,325,670 83199393 Stakis PLC 1,500,000 1,914,300 85299092 Taunton Cider PLC 500,000 1,251,655 87699A92 Tesco PLC Ord. 1,000,000 3,844,950 88157510 49,371,738 TOTAL COMMON STOCKS (Cost $341,667,332) 342,227,450 NONCONVERTIBLE PREFERRED STOCKS - 0.9% SHARES VALUE (NOTE 1) GERMANY - 0.7% Fresenius AG 6,000 $ 2,513,716 35899B92 ITALY - 0.2% Banco di Napoli Ord. 1,000,000 707,450 42799594 TOTAL NONCONVERTIBLE PREFERRED STOCKS (Cost $3,643,564) 3,221,166 INDEXED SECURITIES - 0.0% PRINCIPAL VALUE AMOUNT (B) (NOTE 1) Salomon Brothers Holding Company, Inc. note 6 1/2%, 10/7/96 (indexed to common stock of Yuganskenftegas, a Russian joint-stock company) (c) (Cost $240,000) 240,000 105,432 79599CAB REPURCHASE AGREEMENTS - 4.1% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 4.78% dated 10/31/94 due 11/1/94 $ 14,823,968 14,822,000 99799N9L TOTAL INVESTMENT IN SECURITIES - 100% (Cost $360,372,896) $ 360,376,048 LEGEND (a) Non-income producing (b) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $642,519 or 0.2% of net assets. (c) Restricted securities - Investment in securities not registered under the Securities Act of 1933. Additional information on each holding is as follows: ACQUISITION ACQUISITION SECURITY DATE COST Salomon Brothers Holding Company, Inc. note 6 1/2%, 10/7/96 (indexed to common stock of Yuganskneftegas, a Russian joint-stock company) 9/9/94 $240,000 OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $1,039,026,087 and $695,780,710, respectively. At the end of the period, restricted securities (excluding 144A issues) amounted to $105,432 or .03% of net assets (see Note 2 of Notes to Financial Statements). The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of FMR. The commissions paid to these affiliated firms were $7,959 for the period (see Note 5 of Notes to Financial Statements). INCOME TAX INFORMATION At October 31, 1994, the aggregate cost of investment securities for income tax purposes was $361,094,970. Net unrealized depreciation aggregated $718,922, of which $13,279,674 related to appreciated investment securities and $13,998,596 related to depreciated investment securities. For the period, interest and dividends from foreign countries were $5,362,993 of $0.17 per share. Taxes paid to foreign countries were $894,266 or $0.03 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Aerospace & Defense 0.2% Basic Industries 8.3 Conglomerates 1.1 Construction & Real Estate 4.1 Durables 6.9 Energy 5.5 Finance 25.4 Health 7.2 Holding Companies 0.9 Industrial Machinery & Equipment 6.1 Media & Leisure 2.5 Nondurables 5.1 Retail & Wholesale 8.0 Services 4.0 Repurchase Agreements 4.1 Technology 0.5 Transportation 3.2 Utilities 6.9 100.0% EUROPE CAPITAL APPRECIATION FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES <TABLE> <CAPTION> <S> <C> <C> OCTOBER 31, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $14,822,000) (cost $360,372,896) - See $ 360,376,048 accompanying schedule Cash 805 Receivable for investments sold 6,078,890 Receivable for fund shares sold 2,470,396 Dividends receivable 964,174 Interest receivable 580 Prepaid expenses 4,845 TOTAL ASSETS 369,895,738 LIABILITIES Payable for investments purchased $ 6,417,632 Payable for fund shares redeemed 9,806,911 Accrued management fee 229,466 Other payables and accrued expenses 586,810 TOTAL LIABILITIES 17,040,819 NET ASSETS $ 352,854,919 Net Assets consist of: Paid in capital $ 350,801,806 Accumulated net investment loss (168,912 ) Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 2,193,510 Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 28,515 NET ASSETS, for 31,090,778 shares outstanding $ 352,854,919 NET ASSET VALUE, offering price and redemption price per share ($352,854,919 (divided by) 31,090,778 shares) $11.35 </TABLE> STATEMENT OF OPERATIONS DECEMBER 21, 1993 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1994 INVESTMENT INCOME $ 5,362,993 Dividends Interest 1,325,862 6,688,855 Less foreign taxes withheld (894,266) TOTAL INCOME 5,794,589 EXPENSES Management fee $ 1,908,662 Transfer agent fees 1,211,476 Accounting fees and expenses 152,111 Non-interested trustees' 1,175 compensation Custodian fees and expenses 297,779 Registration fees 227,973 Audit 24,054 Legal 549 Miscellaneous 1,975 Total expenses 3,825,754 NET INVESTMENT INCOME 1,968,835 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 2,305,519 Foreign currency transactions (2,249,756) 55,763 Change in net unrealized appreciation (depreciation) on: Investment securities 3,152 Assets and liabilities in foreign 25,363 28,515 currencies NET GAIN (LOSS) 84,278 NET INCREASE (DECREASE) IN NET $ 2,053,113 ASSETS RESULTING FROM OPERATIONS OTHER INFORMATION $151,780 Accounting fees paid by FSC STATEMENT OF CHANGES IN NET ASSETS <TABLE> <CAPTION> <S> <C> DECEMBER 21, 1993 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1994 INCREASE (DECREASE) IN NET ASSETS Operations $ 1,968,835 Net investment income Net realized gain (loss) 55,763 Change in net unrealized appreciation (depreciation) 28,515 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,053,113 Share transactions 942,473,601 Net proceeds from sales of shares Cost of shares redeemed (591,671,795) Net increase (decrease) in net assets resulting from share transactions 350,801,806 TOTAL INCREASE (DECREASE) IN NET ASSETS 352,854,919 NET ASSETS Beginning of period - End of period (including accumulated net investment loss of $168,912) $ 352,854,919 OTHER INFORMATION Shares Sold 83,509,152 Redeemed (52,418,374) Net increase (decrease) 31,090,778 </TABLE> <TABLE> <CAPTION> <S> <C> <C> SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. </TABLE> FINANCIAL HIGHLIGHTS DECEMBER 21, 1993 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, <TABLE> <CAPTION> <S> <C> SELECTED PER-SHARE DATA 1994 Net asset value, beginning of period $ 10.00 Income from Investment Operations Net investment income .08 D Net realized and unrealized gain (loss) 1.27 C Total from investment operations 1.35 Net asset value, end of period $ 11.35 TOTAL RETURN A 13.50% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 352,855 Ratio of expenses to average net assets 1.54% B Ratio of net investment income to average net assets .79% B Portfolio turnover rate 317% B A TOTAL RETURNS FOR PERIODS OF LESS THAN THE YEAR ARE NOT ANNUALIZED AND DO NOT INCLUDE THE ONE TIME SALES CHARGE. B ANNUALIZED. C THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET GAIN ON INVESTMENTS FOR THE PERIOD ENDED DUE TO THE TIMING OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. </TABLE> JAPAN PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). Japan Fund has a 3% sales charge, which has been waived since the fund's start on September 15, 1992 through June 30, 1995. CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF OCTOBER 31, 1994 YEAR FUND JAPAN 10.45% 47.46% TOPIX Index 9.54% 49.31% Average Japanese Fund 9.73% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year or since the fund started on September 15, 1992. You can compare the fund's figures to the performance of the TOPIX index - a broad measure of the Japanese stock market's performance, similar to the Standard & Poor's 500 stock index in the U.S. You can also compare the fund's performance to the average Japanese fund which currently reflects the performance of seven funds with similar objectives - in this case, a very small peer group - tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF OCTOBER 31, 1994 YEAR FUND JAPAN 10.45% 20.01% TOPIX Index 9.54% 20.72% Average Japanese Fund 9.73% n/a 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 Japan Fund (350)TOPIX Total Ret 09/15/92 10000.00 10000.00 09/30/92 9940.00 9811.27 10/31/92 9840.00 9332.17 11/30/92 9940.00 9572.82 12/31/92 9960.00 9433.21 01/31/93 10050.00 9384.24 02/28/93 10620.00 9811.42 03/31/93 11840.00 11248.65 04/30/93 13440.00 13164.83 05/31/93 13820.00 13960.79 06/30/93 13000.00 13384.04 07/31/93 13870.00 14324.51 08/31/93 14110.00 14644.62 09/30/93 13730.00 13883.59 10/31/93 13350.00 13630.65 11/30/93 11600.00 11425.15 12/31/93 11997.00 11710.09 01/31/94 13412.66 13580.32 02/28/94 14043.00 14243.17 03/31/94 13805.33 13839.98 04/30/94 14125.66 14380.65 05/31/94 14518.33 14642.50 06/30/94 15396.66 15458.92 07/31/94 14890.33 14904.58 08/31/94 14838.66 14941.03 09/30/94 14477.00 14546.44 10/31/94 14745.66 14931.14 Let's say you invested $10,000 in Fidelity Japan Fund on its start date. By October 31, 1994, it would have grown to $14,746 - a 47.46% increase on your initial investment. That compares to $10,000 invested in the TOPIX index, which would have grown to $14,931 over the same period - a 49.31% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. (checkmark) JAPAN FUND TALK: THE MANAGER'S OVERVIEW An interview with Shigeki Makino, Portfolio Manager of Japan Fund Q. HOW DID THE FUND PERFORM OVER THE PAST YEAR, SHIGEKI? A. Relatively well. The fund had a total return of 10.45% for the year ended October 31, 1994, outperforming the TOPIX index - a measure of the overall performance of the Japanese market - which returned 9.54%. It also beat the average Japanese Fund, which returned 9.73%, according to Lipper Analytical Services. Q. SO IT DID BETTER THAN THE INDEX. HOW DO YOU ACCOUNT FOR THE FUND'S OVERALL PERFORMANCE DURING THE PAST YEAR? A. I think there are a lot of factors - both positive and negative - that affected how the fund performed over the period. Before we talk about why the fund beat the index, it's important to point out two negative factors. The first was that the fund experienced tremendous cash volatility in February of 1994 caused by political uncertainty. As a result, shareholder inflows and outflows were much higher than usual during this period. The second negative for the fund was the strength of the Japanese yen. I believed that the yen would not continue to strengthen against the dollar over the period so I hedged some of the fund's investments. But I was wrong: the yen appreciated about 8% compared to the dollar in 1994. I estimate that the fund lost a few percentage points compared to the index because of these two factors. Q. STILL, THE FUND TURNED IN A STRONGER PERFORMANCE THAN THE INDEX AND SIMILAR FUNDS. LET'S TALK ABOUT THE POSITIVE FACTORS . . . A. I hate to simplify it like this, but I think the fund did well because of good stock picking. For the most part, the fund was overweighted versus the index on the right Japanese stocks and underweighted on the stocks that were weak performers. By overweighted or underweighted, I mean that the fund had more or less invested in these stocks than the index did. Q. WHICH JAPANESE SECTORS WERE MOST ATTRACTIVE? A. In 1994, the Japanese economy began improving and the performance of cyclical stocks picked up. Cyclical stocks tend to do well when the economy picks up and poorly when it slows down. Some cyclicals that I liked were automakers and electronics companies. This year, I also had a significant investment in companies that make electrical or auto components, which also were benefiting from the improving cyclical environment. Many of these companies were way ahead of the rest of the market in cutting costs. On top of this, these stocks were very inexpensive - some of the cheapest in the market. Q. ELECTRONICS COMPANIES MADE UP MANY OF YOUR TOP 10 STOCKS. WHICH ONES WERE THE STANDOUTS? A. Nichicon and Hitachi looked great. Nichicon, an electrical components company that makes capacitors, is attractive because it's one of the cheapest electrical companies in Japan, yet it's well-managed and its business has been taking off on the audiovisual as well as communications side. I like this company because it's underfollowed and may have growth potential going forward. World-class electronics company Hitachi was also a standout. It was inexpensive compared to its Japanese competitors and even to competitors in Europe and the United States. In addition, I expect Hitachi to do well because it's a very sensitive cyclical company that will benefit from any upturn in the economy. I should also point out that consumer electronics companies Matsushita and Sony - my top holdings - continued to turn in strong performances over the period. Q. WHICH OTHER SECTORS WERE YOU HEAVILY INVESTED IN? A. I increased my weighting in basic industries, such as steel and chemical companies, which are also considered cyclical stocks. Another sector that I increased my holdings in was real estate. The industry has been hurting in Japan over the past few years. However, in the past six months, stock prices of real estate companies have come down a lot, and real estate yields looked fairly attractive compared to long-term bond yields. On top of this, it looks like rents in the central part of Tokyo have bottomed out and are geared to pick up, and I expect there to be very little quality supply in central Tokyo next year. This bodes well for Mitsubishi Estate Company because it owns many properties in central Tokyo. This company is also attractive based on the sentiment that no one is buying real estate companies right now, which brings down the stock price. Q. YOU ALSO SAID YOU WERE UNDERWEIGHTED IN SOME SECTORS . . . A. I was referring to financial stocks. I shifted out of them in late 1993 and early 1994. In the past, these stocks had proven themselves to be good investments when interest rates came down, but bad investments when they went up. My decision to get out of financial stocks when I did paid off. Interest rates did increase and these stocks turned in poor performances in 1994. Q. SHIGEKI, IN OCTOBER OF THIS YEAR, YOU BECAME THE MANAGER OF THIS FUND AFTER SERVING AS THE FUND'S ANALYST FOR ONE YEAR. HAVE YOU MADE ANY CHANGES? A. No. There have been no material changes to the operation of this fund since I became its sole manager. Q. OVERALL, WHEN WE LOOK AT JAPAN, IT'S IMPOSSIBLE NOT TO TALK ABOUT THE STRONG YEN VERSUS THE WEAK DOLLAR. HOW HAS THIS DYNAMIC AFFECTED JAPAN'S ECONOMY? A. When the yen first started appreciating at the beginning of the year, a lot of people worried that it was so strong it would hurt the Japanese economy. That's because a strong yen often hurts Japanese exporters since it makes their products more expensive in overseas markets. In addition, a strong yen usually isn't good for Japan's domestic economy either because it usually causes prices to go down, which leads to deflation. Right now people have a wait-and-see attitude because the yen has not had a significant impact on the economy. This may be because Japanese companies have taken significant cost-cutting steps. Q. LET'S SWITCH DIRECTION A BIT AND TALK ABOUT THE FUND'S HOLDINGS IN DERIVATIVES . . . A. Over the past year, the fund has held a small portion of futures contracts, a type of financial derivative that helped the fund obtain exposure to the broad Japanese market. The fund didn't hold any futures at the end of the period. However, on October 31, 1994, roughly 16% of the fund's investments were hedged using forward foreign currency contracts. Q. HOW DO YOU THINK THE FUND LOOKS GOING FORWARD? A. I'm very bullish if I look at the Japanese market in yen terms over the next six months. That's because the economy is improving steadily, and, in the six months from November to May, the Japanese market usually experiences a seasonal high. That said, I think its important to remember that the fund looks at Japan from both short-term and long-term perspectives. Short term, Japan is experiencing a cyclical recovery. But over the long term, it is going through a transition from a fully automated manufacturing economy to a service economy. I keep both of these perspectives in mind when I plan the fund's strategy going forward. FUND FACTS GOAL: To increase the value of the fund's shares by investing mainly in Japanese securities START DATE: September 15, 1992 SIZE: As of October 31, 1994, more than $469 million MANAGER: Shigeki Makino, since October 1994; Analyst, Fidelity Japan Fund 1993 to October 1994; joined Fidelity in 1990 (checkmark) SHIGEKI MAKINO ON HOW MOST JAPANESE COMPANIES CUT COSTS: "Over the past year, many Japanese companies have been taking steps to cut costs, but most of them have taken a very Japanese, as opposed to Western, approach. "The Japanese approach to cost cutting is much more deliberate and involves more steps than the American approach. When a Japanese company first realizes that business is weaker than expected, it starts cutting back on things such as entertainment and smaller items, like paper and pencils. If it becomes clear that the situation is going to stay bad, the company cuts out capital spending. After this, the company may admit that it needs to take more difficult steps. It may hire fewer people or not replace people who are retiring. It may also reevaluate the profitability of the way it's conducting business. This might mean taking steps like reorganizing unprofitable areas and redesigning unprofitable products. "While this approach may not improve company performance as quickly as Western cost-cutting methods, it's working. For instance, several Japanese auto parts companies that have cut their costs dramatically look like they will hit peak profitability in 1995 even though their sales are expected to be lower than in prior years. Since Japan is a consensus driven country, as more companies cut costs, more are likely to follow suit. "As I see it, things are changing in Japan. Companies used to have a different motive: they wanted to maintain lifetime employment and grow sales. Now increasing profits is just as important to Japanese companies. "Omron, which makes control systems for factory automation equipment, is a very interesting company because it is starting to undertake some very Western-style restructuring, which is almost unheard of in Japan. Omron is attempting to cut its production costs in half over the next three years, as well as to reduce its head count and administrative overhead." (solid bullet) As of October 1994, Shigeki Makino became the fund's manager. Mr. Makino was previously the fund's analyst. (solid bullet) While top 10 stock investment house Nomura experienced a correction over the past few months, it may remain well positioned to benefit from expected growth in Japan. DISTRIBUTIONS The Board of Trustees of Fidelity Japan Fund voted to pay on December 5, 1994, to shareholders of record at the opening of business on December 2, 1994, a distribution of $.36 derived from capital gains realized from sales of portfolio securities. JAPAN INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1994 United States 3.8% Row: 1, Col: 1, Value: 3.8 Row: 1, Col: 2, Value: 6.5 Row: 1, Col: 3, Value: 89.7 Other 6.5% Japan 89.7% AS OF APRIL 30, 1994 United States 10.0% Row: 1, Col: 1, Value: 10.0 Row: 1, Col: 2, Value: 1.5 Row: 1, Col: 3, Value: 88.5 Other 0.5% Japan 89.5% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks and closed-end investment companies 96.3 89.9 Bonds 0.2 0.6 Short-term investments 3.5 9.5 TOP TEN STOCKS % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Matsushita Electric Industrial Co. Ltd. (Consumer Electronics) 2.0 2.9 Sony Corp. (Consumer Electronics) 1.7 2.2 Hitachi Ltd. (Electronics) 1.5 1.0 Nichicon Corp. (Electronics) 1.2 0.8 Aiwa Co. Ltd. (Electronics) 1.2 - Murata Manufacturing Co. Ltd. Ord. (Electrical Equipment) 1.1 - Nomura Securities Co. Ltd. (Securities Industry) 1.1 1.9 Rohm Co. Ltd. (Electronics) 1.0 - Kyocera Corp. (Electronics) 1.0 0.3 Canon, Inc. (Computers & Office Equipment) 1.0 1.2 TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Durables 19.3 21.3 Technology 13.1 12.9 Basic Industries 13.0 4.2 Industrial Machinery & Equipment 11.5 6.8 Retail & Wholesale 7.8 4.2 Finance 6.8 11.0 Construction & Real Estate 6.7 3.7 Transportation 4.8 3.0 Nondurables 4.8 4.6 Services 2.5 2.1 JAPAN INVESTMENTS OCTOBER 31, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 96.0% SHARES VALUE (NOTE 1) AEROSPACE & DEFENSE - 0.4% SHIP BUILDING & REPAIR - 0.4% Namura Shipbuilding Co. Ltd. 117,000 $ 906,703 62999892 Sasebo Heavy Industries Co. Ltd. 219,100 945,280 80398910 1,851,983 BASIC INDUSTRIES - 13.0% CHEMICALS & PLASTICS - 4.0% Daicel Chemical Industries Ltd. 355,000 2,165,060 23398110 Denki Kagaku Kogyo (a) 242,000 1,081,326 24899092 Gun-Ei Chemical Industries Co. Ltd. Ord. 200,000 1,114,494 40280799 JSP Corp. 51,000 852,587 47399492 Kanegafuchi Chemical Industry Co. Ltd. 288,000 2,341,924 48418199 Kureha Chemical Industries Co. Ltd. 258,000 1,490,946 50156010 Mitsui Petrochemical Industries Ltd. 113,000 1,065,811 60691110 Reliance Industries Ltd. GDS 35,500 896,375 75947094 Shin-Etsu Chemical Co. Ltd. 214,000 4,549,197 82499210 Tokuyama Corp. 294,000 1,838,544 88909199 Tayca Corp. (a) 299,000 1,357,618 94799392 18,753,882 IRON & STEEL - 2.9% Araya Industrial Co. Ltd. 83,000 392,281 03899592 Bunka Shutter Co. Ltd. 64,000 486,745 12099192 Kawasaki Steel Corp. 291,000 1,363,335 48636810 Nakayama Steel Works Ltd. 128,000 965,569 62999310 Nippon Yakin Kogyo Co. Ltd. (a) 342,000 2,071,658 65467010 Nisshin Steel Co. Ltd. 269,000 1,412,941 65476310 Sumitomo Metal Industries Ltd. 240,000 908,930 86599999 Tadano Ltd. 143,000 1,429,926 87357899 Tokyo Steel Manufacturing Co. Ltd. 179,500 4,501,162 88998799 13,532,547 METALS & MINING - 3.4% Broken Hill Proprietary Co. Ltd. (The) 100,000 1,534,522 05599810 Dowa Mining Co. Ltd. 263,000 1,574,118 26099292 Kanamoto Co. Ltd. 114,400 2,644,404 48399B22 Mitsubishi Materials Corp. 600,000 3,411,588 60680092 Nittetsu Mining Co. Ltd. 220,000 2,204,426 65479099 Pacific Metals Co. Ltd. (a) 400,000 2,063,876 69455699 QNI Ltd. 547,600 927,344 74799B92 Teikoku Oil Co. Ltd. 200,000 1,601,568 87999692 15,961,846 PACKAGING & CONTAINERS - 0.5% Carnaudmetalbox Asia Ltd. 157,000 577,520 17699C22 Dainippon Shigyo Co. Ltd. 9,000 100,304 23599592 Singamas Containers Holdings Ltd. 1,900,000 620,882 83399C22 Sinocan Holdings Ltd. 5,000,000 1,242,400 84999422 2,541,106 PAPER & FOREST PRODUCTS - 2.2% Chuetsu Pulp & Paper Co. Ltd. 429,000 2,505,690 17199092 Daio Paper Corp. 37,000 523,090 24299492 Hokushin Co. Ltd. 58,000 969,609 43799392 Indah Kiat Pulp & Paper (For. Reg.) 868,000 1,029,465 45499B23 Kokuyo Co. Ltd. 139,000 3,571,643 50033399 Rengo Co. Ltd. 225,000 1,871,420 75999292 Tjiwa Kimia Pabrik Kertas PT (For. Reg.) 10,000 25,793 95499293 10,496,710 TOTAL BASIC INDUSTRIES 61,286,091 SHARES VALUE (NOTE 1) CONSTRUCTION & REAL ESTATE - 6.7% BUILDING MATERIALS - 2.6% Berger International (a) 1,161,000 $ 605,020 08499J22 C.I. Holdings BHD 85,000 329,193 12099492 Cphofu Seisakusho Co. Ltd. 99,000 2,635,777 16999999 Chugoku Marine Paints Ltd. Ord. 144,000 863,361 17199392 Gantan Beauty Industries Co. Ltd. 45,000 1,277,024 36499E22 Ishikawajima Construction Materials Co. 62,000 1,247,614 46599492 Kansai Paint Co. Ltd. 215,000 1,324,544 48499492 Nakakita Seisakusho Co. Ltd. 47,000 239,111 62899492 Natoco Paint Co. Ltd. 15,000 626,903 63199C22 Tostem Corp. 90,000 2,554,048 89299110 Tsuruya Co. Ltd. 19,000 509,778 93099L22 12,212,373 CONSTRUCTION - 1.6% Dia Kensetsu Co. Ltd. (a) 19,000 303,906 25299492 Japan Foundation Engineering Co. Ltd. 150,000 3,374,439 47399892 Kaneshita Construction Co. Ltd. Ord. 102,000 1,663,072 49099592 Subaru Enterprise Co. Ltd. Ord. 72,000 638,976 86499292 Taisei Rotec Corp. 109,000 953,842 87599492 Tsuken Corp. 50,000 851,350 90699A92 7,785,585 ENGINEERING - 0.4% C-Cubu Corp. 40,100 467,602 17499793 Nippon Denwa Shisetsu Co. Ltd. Ord. 92,000 1,376,606 68599292 1,844,208 REAL ESTATE - 2.1% Filinvest Land, Inc. Ord. (a) 1,420,000 642,081 31699J22 Hankyu Realty Co. Ltd. Ord. 58,000 494,980 41099292 Hwasung Industrial Co. 1,000 58,835 44899G22 Keihanshin Real Estate Co. Ltd. 79,000 766,317 48799692 Mitsubishi Estate Co. Ltd. 358,000 4,211,548 60678310 Mitsui Real Estate Sales Co. Ltd. 32,000 627,419 60999892 Mitsui Fudosan Co. 80,000 899,850 61399492 Nichimo Corp. (a) 152,000 627,418 68599492 Tachihi Enterprise Co. Ltd. 29,000 1,197,049 88699792 TOC Co. Ltd. 25,000 490,171 88889910 10,015,668 TOTAL CONSTRUCTION & REAL ESTATE 31,857,834 DURABLES - 19.2% AUTOS, TIRES, & ACCESSORIES - 7.2% Aisin Seiki Co. Ltd. 125,000 1,896,188 00999999 Aichi Toyoto Motor Co. Ltd. 20,000 379,753 02199393 Calsonic Corp. 335,000 2,713,741 13199292 Chuo Malleable Iron Co. Ltd. 27,000 242,124 17299392 Daido Metal Co. Ltd. 232,000 2,025,406 45599792 Gastec Service, Inc. 40,000 334,348 37599292 Gifu Hino Motor Co. Ltd. 1,000 28,894 38199K22 Honda Motor Co. Ltd. 147,000 2,563,645 43812810 Izumi Industries Ltd. 10,000 154,791 46499G22 Jidosha Denki Kogyo Co. Ltd. 94,000 675,135 47799092 Kansei Corp. 114,000 1,132,883 48540099 Kasai Kogyo Co. Ltd. 305,000 1,982,869 31699192 Keihin Seiki Manufacturing Co. Ltd. 103,000 733,399 48799792 Kiriu Machine Manufacturing Co. Ltd. 1,000 9,814 49799493 Meiwa Industry Co. Ltd. 2,000 13,725 58699592 Mitsuba Electric Manufacturing Co. Ltd. 63,000 845,158 60899392 Nippon Cable Systems, Inc. 33,000 483,566 65799392 Ohi Seisakusho Co. 9,000 107,734 69699392 Royal Ltd. 35,000 1,516,950 78099B22 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) DURABLES - CONTINUED AUTOS, TIRES, & ACCESSORIES - CONTINUED SNT Corp. 80,000 $ 1,015,427 96399093 Sumitomo Rubber Industries Ltd. 186,000 1,938,600 86699892 Tokai Rika Denki Co. Ltd. 180,000 2,080,388 88199192 Tokyu Car Corp. (a) 104,000 687,932 88799792 Tokyo Nissan Auto Sales Co. Ltd. 9,000 86,745 88998599 Toyota Motor Corp. 204,000 4,505,030 89399999 Toyo Tire & Rubber Co. Ltd. (a) 147,000 732,686 90299892 Toyota Corrolla Gifu Co. Ltd. 2,000 81,730 90399J22 Toyoda Gosei Co. 186,000 1,813,839 90399292 Toyoda Machine Works Ltd. 208,000 1,888,860 90799692 Unisia Jecs Corp. 105,000 736,801 91699E22 Yorozu Corp. 25,000 642,382 99199792 34,050,543 CONSUMER DURABLES - 0.5% Aderans Co. Ltd. 81,000 2,256,850 00699092 CONSUMER ELECTRONICS - 6.3% Alpine Electronics, Inc. Ord. 110,000 2,247,562 02099192 Daiichi Corp. Ord. 90,000 1,950,364 23599B92 Hana Microelectronics Co. Ltd. (For. Reg.) 52,000 367,211 40999693 Matsushita Electric Industrial Co. Ltd. 569,000 9,453,485 57687910 Rinnai Corp. Ord. 110,000 2,565,399 76681999 Sharp Corp. 220,000 4,109,180 81989991 Sony Corp. 132,000 8,050,359 83569999 Zojirushi Thermos 64,000 997,265 91199492 29,740,825 HOME FURNISHINGS - 1.5% Home Wide Corp. 42,000 910,170 43799A92 Komatsu Wall Industry Co. Ltd. 70,000 1,964,811 50299K22 Lilycolor Co. Ltd. 35,000 433,414 53299592 Matsuyadenki Co. Ltd. (a) 74,000 878,179 57699890 Okamura Corp. 184,000 1,697,498 67899010 Pricerite Group Ltd. 740,000 130,247 74199D22 Shimachu Co. Ltd. 30,000 1,021,619 82399010 7,035,938 TEXTILES & APPAREL - 3.7% Bridgestone Metalpha Corp. 45,000 873,020 10899722 Daidoh Ltd. 69,000 655,074 56299292 Daiwabo Spinning Co. Ltd. 601,000 1,966,021 23699792 Japan Wool Textile Co. Ltd. 130,000 1,582,993 47084510 Kimuratan Co. Ltd. 162,000 977,968 49439999 Kurabo Industries Ltd. 400,000 1,894,640 50157710 Komatsu Seiren Co. Ltd. 51,000 778,907 50299592 Miyuki Keori Co. Ltd. 58,000 487,797 60299292 Morishita Co. Ltd. 44,000 699,241 61799N22 Nisshinbo Industries 245,000 2,856,923 65411310 Nippon Felt Co. Ltd. 54,000 344,936 65899592 Nigai Co. Ltd. 265,000 1,824,003 66299092 Roda Vivatex PT (For. Reg.) (a) 710,000 1,569,696 77499293 Sangetsu Co. Ltd. 45,000 1,337,392 80019999 17,848,611 TOTAL DURABLES 90,932,767 ENERGY - 0.3% OIL & GAS - 0.3% Ampolex Ltd. Ord. 210,000 636,388 03212792 Hokuriku Gas Co. 40,000 206,800 43899592 Portman Minning Ltd. 1,150,000 614,997 73699422 1,458,185 SHARES VALUE (NOTE 1) FINANCE - 6.5% BANKS - 2.3% Akita Bank Ltd. 337,000 $ 2,813,404 00999692 Bank of the Ryukyus Ltd. 5,400 328,776 83499192 Mitsubishi Trust & Banking Corp. 265,000 4,101,956 60699410 Okinawa Bank (a) 4,600 246,840 67899792 Sumitomo Trust & Banking Co. Ltd. 200,000 2,910,066 86599310 Union Bank of Philippines (a) 310,500 574,074 90499E92 10,975,116 CREDIT & OTHER FINANCE - 0.3% World Co. Ltd. 25,000 1,184,150 98199923 INSURANCE - 1.5% Dai-Tokyo Fire & Marine Insurance Ord. 306,000 2,333,565 23399210 Sumitomo Marine and Fire Insurance Co. Ltd. 260,000 2,353,026 94599392 Tokio Marine & Fire Insurance Co. Ltd. (The) 190,000 2,254,785 88909099 6,941,376 SECURITIES INDUSTRY - 2.4% Boo Kook Securities Co. Ltd. (a) 448 9,498 09899122 Daiwa Securities Co. Ltd. 310,000 4,510,602 23499010 Nomura Securities Co. Ltd. 241,000 5,048,552 65536110 Osaka Shoken Daiko Co. Ltd. 21,000 253,547 68799C22 Osaka Securities Finance Co. Ltd. Ord. 165,000 972,241 68799192 Seoul Securities Co. (a) 1,000 17,563 83599P22 Tokyo Securities Co. Ltd. 107,000 845,798 89799C92 11,657,801 TOTAL FINANCE 30,758,443 HEALTH - 1.2% DRUGS & PHARMACEUTICALS - 0.9% Fujirebio, Inc. 58,000 622,465 35999410 Sankyo Co. Ltd. 138,000 3,588,669 80029710 4,211,134 MEDICAL EQUIPMENT & SUPPLIES - 0.3% Hitachi Medical Corp Ord. 52,000 1,003,457 43999792 Nishimoto Sangyo Co. Ltd. 40,000 676,952 66899B92 1,680,409 TOTAL HEALTH 5,891,543 HOLDING COMPANIES - 0.0% Seven Network Ltd. 60,000 136,814 81799F22 INDUSTRIAL MACHINERY & EQUIPMENT - 11.5% ELECTRICAL EQUIPMENT - 6.2% Hitachi Koki Co. Ltd. Ord. 240,000 2,575,718 43299492 Hokuetsu Industries Co. Ltd. 38,000 239,595 43699392 Icom, Inc. 117,000 1,750,684 44999A92 Inaba Denkisangyo Co. Ltd. 77,000 2,121,563 45399D92 Mitsubishi Electric Co. Ord. 600,000 4,488,930 60673220 Mori Seiki Co. Ltd. Ord. 81,000 2,281,926 61799999 Murata Manufacturing Co. Ltd. Ord. 131,000 5,353,284 62699110 Nifco, Inc. 150,000 2,445,695 66099892 Nippo Ltd. 35,000 794,593 68699992 Omron Corp. 250,000 4,514,730 68215110 Stanley Electric Co. Ltd. 238,000 1,908,322 85499092 Yaesu Musen Co. Ltd. 42,000 710,799 98499F92 29,185,839 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED INDUSTRIAL MACHINERY & EQUIPMENT - 5.0% Aida Engineering Ltd. Ord. 142,000 $ 1,295,372 00871210 Amada Co. Ltd. 150,000 1,981,322 02263110 Amada Metrecs Co. Ltd. 51,000 952,583 02299292 Amadasonoike Co. Ltd. 119,000 1,074,506 02499492 Fuji Machine Manufacturing Co. Ltd. Ord. 60,000 1,968,938 36099892 Fujitec Co. Ltd. 250,400 2,971,569 37199292 Hamada Printing Press Co. Ltd. (a) 47,000 426,810 40699B22 Hitachi Construction Machinery Co. Ltd. 134,000 1,783,809 47199692 Kato Works Co. Ltd. 47,000 332,233 48699192 Kito Corp. 36,000 635,261 49899A22 Kobe Diesel Co. Ltd. 51,000 184,201 49999692 Kyokuto Kaihatsu Kogyo Co. Ltd. Ord. 50,000 1,573,706 74599692 Okuma Corp. (a) 237,000 2,389,443 67999192 Seirei Industry Co. Ltd. 48,000 284,320 81699592 Shibuya Industries 28,000 343,842 88699092 Shintokogio Ltd. 99,000 909,241 97199392 Star Micronics Co. Ltd. Ord. 97,000 1,081,059 58999492 Tsugami Corp. 120,000 783,860 89853699 Toshiba Machine Co. Ltd. 200,000 1,539,652 90199892 Toyo Machinery & Metal Co. Ltd. 28,000 169,898 92299792 Zuiko Corp. 46,000 901,914 91399892 23,583,539 POLLUTION CONTROL - 0.3% Maezawa Industries, Inc. 47,000 1,576,286 55899392 TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 54,345,664 MEDIA & LEISURE - 2.4% BROADCASTING - 0.2% Asahi Broadcasting Corp. 5,000 644,962 04399292 Nine Network Australia Ltd. 156,000 470,429 68999792 1,115,391 ENTERTAINMENT - 0.2% Ten Allied Co. Ltd. 40,000 1,073,216 88299492 LEISURE DURABLES & TOYS - 0.5% Combi Corp. 7,000 91,017 20099522 Shimano, Inc. 60,000 1,194,985 82498099 Shimano, Inc. (warrants) (a) 180 216,811 82498093 Takara Co. Ltd. 77,000 790,620 87599892 2,293,433 PUBLISHING - 0.2% Fairfax (John) Holdings Ltd. 335,000 691,725 30399692 RESTAURANTS - 1.3% Aiya Co. Ltd. 13,000 362,210 00999J22 Green House Co. Ltd. 23,000 947,010 39399192 Joyfull Co. Ltd. 17,000 471,906 49499F22 Ohsho Food Service Corp. 84,000 2,557,144 68899992 Royal Co. Ltd. 51,000 826,273 77999110 Yoshinoya D&C Co. Ltd. Ord. 90 1,114,450 98999192 Yaohan International Caterers Ltd. 300,000 91,239 99099692 6,370,232 TOTAL MEDIA & LEISURE 11,543,997 NONDURABLES - 4.8% BEVERAGES - 0.2% Hokkaido Coca-Cola Bottling Co. Ltd. 26,000 397,090 43499C22 Kinki Coca-Cola Bottling Co. Ltd. 10,000 151,695 49699392 SHARES VALUE (NOTE 1) Shikoku Coca-Cola Bottling Co. Ltd. 12,000 $ 182,034 80099B22 Sanyo Coca-Cola Bottling Co. Ltd. 31,000 447,861 80399999 1,178,680 FOODS - 3.4% Ariake Japan Co. Ltd. 49,000 2,149,012 04099992 Burns Philp & Co. Ltd. 606,000 1,548,366 12239310 Chubu Suisan Co. Ltd. 200,000 1,095,918 17199A22 Ezaki Glicko Co. Ltd. 393,000 4,136,628 30199492 Marudai Food Co. Ltd. 151,000 1,162,437 57381110 Morozoff Ltd. 86,000 504,969 61744010 Nippon Suisan Kaisha Ltd. (a) 532,000 2,651,626 65462010 Nong Shim Co. 23,650 1,252,776 65599C22 Sonton Food Industry Co. Ltd. 59,000 852,381 83599692 Toho Co. Ltd. 45,000 506,166 94499B22 15,860,279 HOUSEHOLD PRODUCTS - 0.6% Comany, Inc. 48,000 847,015 19999192 Matsumoto Yushi-Seiyaku Co. Ltd. 18,000 668,696 58099192 Metro Drug, Inc. Class B (a) 4,400,000 831,204 59699292 Pigeon Corp. 16,000 511,841 72099292 2,858,756 TOBACCO - 0.6% Sampoerna, Hanjaya Mandala (For. Reg.) 540,000 2,611,553 82299893 TOTAL NONDURABLES 22,509,268 PRECIOUS METALS - 0.2% Plutonic Resources Ltd. 159,900 773,164 72999192 RETAIL & WHOLESALE - 7.7% APPAREL STORES - 1.0% Charle Co. Ltd. 70,000 1,516,950 15999392 Esprit Asia Holdings Ltd. 2,020,000 954,187 29699522 Marutomi Group Co. Ltd. 34,300 438,904 57899292 Xebio Co. Ltd. 40,000 1,651,102 98399192 4,561,143 APPLIANCE STORES - 0.5% Eidensha Co. Ltd. 110,000 1,521,078 26849999 Japan CBM Corp. 28,000 1,126,877 47099B22 2,647,955 GENERAL MERCHANDISE STORES - 1.8% Ito Yokado Co. Ltd. 70,000 3,821,269 46571410 Matsuzakaya Co. Ltd. 64,000 911,408 57699492 Marui Co. Ltd. 96,000 1,753,470 60444310 Nikku Sangyo Co. Ltd. 30,000 538,672 68799G22 Robinson & Co. Ltd. 334,000 1,547,138 77099392 8,571,957 GROCERY STORES - 2.1% Davids Ltd. 490,000 484,051 23899F22 Heiwado Co. Ltd. 92,000 1,746,866 42399492 Heromini Supermarket PT (For. Reg.) (a) 430,000 970,467 42799494 Izumi Co. Ord. 160,000 4,127,754 46399292 Marukyo Corp. 48,000 1,698,984 57899792 U Store Co. Ltd. 14,000 223,931 95599292 Yamae Hisano Co. Ltd. 35,000 512,874 98899392 9,764,927 RETAIL & WHOLESALE, MISCELLANEOUS - 1.9% Belluna Co. Ltd. (a) 22,000 973,944 07999522 Komeri Co. Ltd. 26,000 692,224 50699292 Modern Photo Film PT 98,000 537,141 61299792 Senshukai Co. Ltd. 68,000 1,999,897 81719999 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) RETAIL & WHOLESALE - CONTINUED RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED Tachibana Shokai Ltd. 41,000 $ 486,559 88699192 Uny Co. Ltd. 260,000 4,131,881 91529010 8,821,646 TRADING COMPANIES - 0.4% Kanematsu-Gosho Ltd. 295,000 1,659,098 48418999 Li & Fung Ltd. 670,000 398,864 51899592 Namsung Corp. 1,200 24,086 63299D22 2,082,048 TOTAL RETAIL & WHOLESALE 36,449,676 SERVICES - 2.5% LEASING & RENTAL - 0.9% Nishio Rent All Co. Ltd. Ord. 37,000 855,271 68399692 Orix Corp. 89,000 3,563,490 68616710 4,418,761 PRINTING - 0.5% Komori Corp. 83,000 2,218,358 50046299 SERVICES - 1.1% Secom Co. Ltd. 35,000 2,336,825 81399292 Tasaki Shinju Co. Ltd. Ord. 140,000 1,921,469 87899392 Wesco, Inc. 24,000 1,010,474 95099B92 5,268,768 TOTAL SERVICES 11,905,887 TECHNOLOGY - 13.1% COMMUNICATIONS EQUIPMENT - 0.4% Japan Radio Co. Ltd. 95,000 1,784,222 47199210 COMPUTER SERVICES & SOFTWARE - 0.4% Ines Corp. Ord. 32,000 409,473 45699192 ISR Group Ltd. (a) 338,500 351,989 46499F22 Multipolar PT (For. Reg.) 790,000 755,027 62599492 Sumisho Computer Service Corp. 21,000 314,225 86899692 1,830,714 COMPUTERS & OFFICE EQUIPMENT - 1.9% Canon, Inc. 245,000 4,550,848 13780199 Fujitsu Ltd. 200,000 2,290,904 35959010 Nihon Unisys Ltd. 121,000 1,598,266 66899292 Nissho Electronics Corp. 31,000 575,822 68299892 9,015,840 ELECTRONIC INSTRUMENTS - 0.6% Kaga Electronics Co. Ltd. 130,000 2,374,490 48299392 Ono Sokki Co. Ltd. (a) 33,000 287,756 68299192 Topcon Corp. (a) 38,000 309,788 89599592 2,972,034 ELECTRONICS - 9.8% Aiwa Co. Ltd. 202,000 5,503,122 00959999 Alps Electric Co. Ltd. 138,000 1,865,538 02199292 Fujitsu Business Systems Ltd. 30,000 996,853 38199592 Hirose Electric Co. Ltd. 69,000 4,094,216 43354399 Hitachi Ltd. 700,000 7,295,806 43357810 Kinseki Ltd. Ord. 20,000 418,967 49799092 Kyocera Corp. 60,000 4,569,424 50155610 Nitto Denko Corp. 64,000 1,102,936 65480230 Nichicon Corp. 405,000 5,809,300 66199793 Ryoyo Electro Corp. Ord. 136,000 3,803,312 74999999 Rohm Co. Ltd. 110,000 4,847,015 77536110 Ryoden Trading Co. Ltd. 135,000 1,198,080 78379999 Ryosan Co. Ltd. 55,000 1,498,375 78399999 Sanshin Electronics Co. Ltd. 96,000 1,188,793 80199892 SHARES VALUE (NOTE 1) U-Shin Ltd. 51,000 $ 499,448 91399293 Varitronix International Ltd. 440,000 652,001 95099792 Wako Electric Co. Ltd. 58,000 1,089,314 93199292 46,432,500 TOTAL TECHNOLOGY 62,035,310 TRANSPORTATION - 4.8% AIR TRANSPORTATION - 0.6% Japan Airlines Co. Ltd. 270,000 2,089,676 47103420 Japan Airport Terminal Co. 40,000 520,097 47299892 Korea Air Terminal Service (a) 1,320 35,602 52299422 Technology Resources Industries BHD (a) 100,000 389,242 93699692 3,034,617 RAILROADS - 0.2% Hanshin Electric Railway Co. Ltd. 150,000 724,421 41899492 SHIPPING - 2.7% Howard Smith 85,000 391,429 44178699 Isewan Terminal Service Co. Ltd. 46,000 345,101 46499D22 Kawasaki Kisen Kaisha Ltd. 686,000 2,951,981 48639892 Mitsui OSK Lines Ltd. 722,000 3,166,504 60799792 Neptune Orient Lines Ltd. 1,306,000 1,948,330 64099610 Nippon Yusen Kabushiki Kaisha 380,000 2,580,261 65463310 Shinwa Kaiun Kaisha Ltd. (a) 338,000 1,339,372 98499092 Tokyo Kisen Co. Ltd. 19,000 178,422 88999999 12,901,400 TRUCKING & FREIGHT - 1.3% Daito Koun Co. Ltd. 30,000 352,923 23799G22 Fukuyama Transporting Co. Ltd. 27,000 325,524 35959110 Hitachi Transport System Co. 239,000 2,737,630 43699992 Nippon Konpo Unyu Soko Co. Ltd. 100,000 989,629 65457599 Yamato Transport Co. Ltd. 140,000 1,762,551 99399892 6,168,257 TOTAL TRANSPORTATION 22,828,695 UTILITIES - 1.7% TELEPHONE SERVICES - 1.7% DDI Corp. Ord. 370 3,352,355 23399J22 Nippon Telegraph & Telephone Corp. Ord. 450 4,202,570 65462492 Pakistan Telecommunications Voucher GDR (c) 2,900 478,500 69584910 8,033,425 TOTAL COMMON STOCKS (Cost $442,183,314) 454,598,746 CLOSED-END INVESTMENT COMPANIES - 0.3% FINANCE - 0.3% Morgan Stanley Asia-Pacific Fund, Inc. (Cost $1,330,587) 105,000 1,299,375 61744U10 CONVERTIBLE BONDS - 0.2% MOODY'S RATINGS PRINCIPAL (UNAUDITED) AMOUNT (B) DURABLES - 0.1% AUTOS, TIRES, & ACCESSORIES - 0.1% Kiriu Machine Manufacturing Co. Ltd. 5 1/5%, 9/30/98 - JPY 40,000,000 553,120 497994AA CONVERTIBLE BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) AMOUNT (B) (NOTE 1) RETAIL & WHOLESALE - 0.1% GENERAL MERCHANDISE STORES - 0.1% Aoyama Trading Co. Ltd. 0%, 9/30/97 - JPY 30,000,000 $ 278,622 037990AB RETAIL & WHOLESALE, MISCELLANEOUS - 0.0% Laox Co. Ltd. 1.90%, 3/31/03 - JPY 10,000,000 100,098 539993AA TOTAL RETAIL & WHOLESALE 378,720 TECHNOLOGY - 0.0% COMMUNICATIONS EQUIPMENT - 0.0% Uniden Corp. 1.60%, 3/30/01 - JPY 5,000,000 48,243 904993AA TOTAL CONVERTIBLE BONDS (Cost $919,879) 980,083 U.S. TREASURY OBLIGATIONS - 0.3% U.S. Treasury Bill yield at time of purchase 4.063%, 12/8/94 (Cost $1,244,155) 1,250,000 1,244,250 912794P4 REPURCHASE AGREEMENTS - 3.2% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 4.78% dated 10/31/94 due 11/1/94 $ 15,218,020 15,216,000 99799N9L TOTAL INVESTMENT IN SECURITIES - 100% (Cost $460,893,935) $ 473,338,454 FORWARD FOREIGN CURRENCY CONTRACTS SETTLEMENT UNREALIZED DATE(S) VALUE GAIN/(LOSS) CONTRACTS TO BUY 3,422,765,000 JPY 11/1/94 $ 35,320,826 $ (36,490) (Payable amount $35,357,316) THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 7.5% CONTRACTS TO SELL 10,795,810,000 JPY 11/1/94 to 2/1/95 $ 112,031,434 (558,291) (Receivable amount $111,473,143) THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 23.7% $ (594,781) CURRENCY ABBREVIATIONS JPY - Japanese yen LEGEND (a) Non-income producing (b) Principal amount is stated in United States dollars unless otherwise noted. (c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $478,500 or 0.1% of net assets. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $779,732,394 and $471,404,842, respectively. The market value of futures contracts opened and closed during the period amounted to $177,670,563 and $178,438,825, respectively (see Note 2 of Notes to Financial Statements). The fund participated in the bank borrowing program. The maximum loan and the average daily loan balances during the period for which loans were outstanding amounted to $5,604,000 and $2,478,200, respectively. The weighted average interest rate was 3.99% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At October 31, 1994, the aggregate cost of investment securities for income tax purposes was $461,333,625. Net unrealized appreciation aggregated $12,004,829, of which $28,237,338 related to appreciated investment securities and $16,232,509 related to depreciated investment securities. The fund hereby designates $3,639,498 as a capital gain dividend for the purpose of the dividend paid deduction. For the period, interest and dividends from foreign countries were $2,483,091, or $0.08 per share. Taxes paid to foreign countries were $360,912 or $0.01 per share. JAPAN FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES <TABLE> <CAPTION> <S> <C> <C> OCTOBER 31, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $15,216,000) (cost $460,893,935) - See $ 473,338,454 accompanying schedule Cash 752 Receivable for investments sold 4,136,298 Receivable for fund shares sold 3,205,426 Dividends receivable 951,481 Interest receivable 3,036 Redemption fees receivable 2,156 TOTAL ASSETS 481,637,603 LIABILITIES Payable for investments purchased $ 3,466,711 Unrealized depreciation on foreign currency contracts 594,781 Payable for fund shares redeemed 7,112,078 Accrued management fee 289,070 Other payables and accrued expenses 535,873 TOTAL LIABILITIES 11,998,513 NET ASSETS $ 469,639,090 Net Assets consist of: Paid in capital $ 439,242,946 Undistributed net investment income 316,078 Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 18,212,131 Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 11,867,935 NET ASSETS, for 32,918,445 shares outstanding $ 469,639,090 NET ASSET VALUE, offering price $14.27 and redemption price per share ($469,639,090 (divided by) 32,918,445 shares) </TABLE> STATEMENT OF OPERATIONS <TABLE> <CAPTION> <S> <C> <C> YEAR ENDED OCTOBER 31, 1994 INVESTMENT INCOME $ 2,460,214 Dividends Interest 1,887,550 4,347,764 Less foreign taxes withheld (360,912 ) TOTAL INCOME 3,986,852 EXPENSES Management fee 2,776,170 Basic fee Performance adjustment (76,576 ) Transfer agent Fees 1,752,382 Redemption fees (48,874 ) Accounting fees and expenses 208,339 Non-interested trustees' compensation 1,989 Custodian fees and expenses 306,033 Registration fees 202,453 Audit 31,783 Legal 1,845 Interest 1,374 Miscellaneous 4,680 TOTAL EXPENSES 5,161,598 NET INVESTMENT INCOME (LOSS) (1,174,746 ) REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 22,187,546 Foreign currency transactions (2,079,598 ) Futures contracts 768,262 20,876,210 Change in net unrealized appreciation (depreciation) on: Investment securities 10,557,017 Assets and liabilities in foreign currencies (962,040 9,594,977 ) NET GAIN (LOSS) 30,471,187 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 29,296,441 OTHER INFORMATION $208,003 Accounting fees paid to FSC </TABLE> STATEMENT OF CHANGES IN NET ASSETS <TABLE> <CAPTION> <S> <C> <C> YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, 1994 1993 INCREASE (DECREASE) IN NET ASSETS Operations $ (1,174,746 $ (757,305 Net investment income (loss) ) ) Net realized gain (loss) 20,876,210 4,923,789 Change in net unrealized appreciation (depreciation) 9,594,977 2,318,483 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 29,296,441 6,484,967 Distributions to shareholders from net realized gains (2,956,786 - ) Share transactions 1,298,877,029 473,221,868 Net proceeds from sales of shares Reinvestment of distributions 2,893,660 - Cost of shares redeemed (977,683,984 (364,464,963 ) ) Redemption fees 1,017,597 - Net increase (decrease) in net assets resulting from share transactions 325,104,302 108,756,905 TOTAL INCREASE (DECREASE) IN NET ASSETS 351,443,957 115,241,872 NET ASSETS Beginning of period 118,195,133 2,953,261 End of period (including undistributed net investment income (loss) of $316,078 and ($757,225), respectively) $ 469,639,090 $ 118,195,133 OTHER INFORMATION Shares Sold 95,609,478 36,026,261 Issued in reinvestment of distributions 247,321 - Redeemed (71,792,044 (27,472,802 ) ) Net increase (decrease) 24,064,755 8,553,459 </TABLE> <TABLE> <CAPTION> <S> <C> <C> SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. </TABLE> FINANCIAL HIGHLIGHTS YEARS ENDED OCTOBER SEPTEMBER 15, 31, 1992 (COMMENCEMENT OF OPERATIONS) TO SELECTED PER-SHARE DATA 1994 1993 OCTOBER 31, 1992 <TABLE> <CAPTION> <S> <C> <C> <C> Net asset value, beginning of period $ 13.35 $ 9.84 $ 10.00 Income from Investment Operations Net investment loss (.04) B (.09) - Net realized and unrealized gain (loss) 1.31 3.60 (.16) Total from investment operations 1.27 3.51 (.16) Less Distributions from net realized gain (.39) - - Redemption fees added to paid in capital .04 - - Net asset value, end of period $ 14.27 $ 13.35 $ 9.84 TOTAL RETURNC 10.45% 35.67% (1.60)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 469,639 $ 118,195 $ 2,953 Ratio of expenses to average net assets 1.42% 1.71% 2.00% A Ratio of expenses to average net assets before expense reductions 1.42% 1.71% 3.59% A, D Ratio of net investment income to average net assets (.32)% (.77)% .03% A Portfolio turnover rate 153% 257% -% A ANNUALIZED B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. TOTAL RETURN WOULD HAVE BEEN LOWER HAD THE LIMITATION NOT BEEN IN EFFECT. </TABLE> PACIFIC BASIN PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). Pacific Basin has a 3% sales charge which, beginning May 31, 1994, has been waived through June 30, 1995. CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1994 YEAR YEARS FUND PACIFIC BASIN 16.88% 37.83% 121.65% PACIFIC BASIN (INCL. 3% SALES CHARGE) 13.37% 33.70% 115.00% Morgan Stanley Pacific Index 9.06% .61% 87.07% Average Pacific Region Fund 9.41% 60.46% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on October 1, 1986. You can compare the fund's figures to the performance of the Morgan Stanley Pacific index, a broad measure of the performance of stocks in the Pacific region, weighted by each country's market capitalization (or total value of its outstanding shares). You can also compare the fund's performance to the average Pacific region fund which currently reflects the performance of 36 funds with similar objectives tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF OCTOBER 31, 1994 YEAR YEARS FUND PACIFIC BASIN 16.88% 6.63% 10.34% PACIFIC BASIN (INCL. 3% SALES CHARGE) 13.37% 5.98% 9.92% Morgan Stanley Pacific Index 9.06% 0.12% 8.05% Average Pacific Region Fund 9.41% 9.53% n/a 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 Pacific Basin (302) Pacific Index 10/01/86 9700.00 10000.00 10/31/86 9603.00 8862.00 11/30/86 10146.20 9399.07 12/31/86 10611.80 10088.05 01/31/87 12300.82 11598.87 02/28/87 12689.17 11904.22 03/31/87 13951.29 13131.82 04/30/87 15349.33 15062.31 05/31/87 15397.87 15062.31 06/30/87 14329.92 14116.01 07/31/87 14407.59 13782.70 08/31/87 15203.70 15420.34 09/30/87 14999.82 14974.05 10/31/87 12058.11 13345.52 11/30/87 12339.66 13875.39 12/31/87 13264.01 14088.57 01/31/88 13264.01 14793.36 02/29/88 13813.41 15831.10 03/31/88 14578.64 17064.31 04/30/88 15118.23 17280.12 05/31/88 14578.64 16620.65 06/30/88 13744.73 16055.73 07/31/88 13479.85 16785.08 08/31/88 13430.79 15542.64 09/30/88 13627.01 16142.75 10/31/88 13725.11 17469.62 11/30/88 14608.07 18911.35 12/31/88 14649.47 19018.54 01/31/89 14926.24 19193.41 02/28/89 15252.45 19438.67 03/31/89 14896.59 18821.29 04/30/89 15282.10 18832.42 05/31/89 14689.01 17780.12 06/30/89 14006.95 16987.42 07/31/89 15677.50 19192.02 08/31/89 14837.28 18004.64 09/30/89 16063.01 19105.05 10/31/89 15598.42 18593.72 11/30/89 16102.55 19478.89 12/31/89 16325.64 19500.06 01/31/90 15770.14 18396.74 02/28/90 14782.58 16611.35 03/31/90 13867.02 13619.98 04/30/90 13712.72 13711.64 05/31/90 15039.75 15616.28 06/30/90 15266.07 14987.13 07/31/90 15780.43 14873.33 08/31/90 13681.86 13454.50 09/30/90 11449.55 11345.09 10/31/90 13260.08 13796.09 11/30/90 12046.21 12266.22 12/31/90 11882.89 12788.36 01/31/91 12112.21 13186.92 02/28/91 13206.69 14812.56 03/31/91 13039.91 14005.66 04/30/91 13602.78 14365.60 05/31/91 13508.97 14309.99 06/30/91 13279.65 13374.87 07/31/91 13446.43 13825.95 08/31/91 12539.58 13124.61 09/30/91 13321.35 14157.05 10/31/91 13707.02 14759.53 11/30/91 13060.76 13809.99 12/31/91 13373.47 14233.78 01/31/92 13029.49 13682.29 02/29/92 12904.40 12724.00 03/31/92 12091.36 11513.90 04/30/92 11966.28 10986.10 05/31/92 12925.25 11842.95 06/30/92 12654.24 10911.67 07/31/92 12091.36 10759.99 08/31/92 12445.77 12234.05 09/30/92 12362.38 11953.73 10/31/92 12508.31 11531.67 11/30/92 12456.19 11749.15 12/31/92 12354.65 11614.67 01/31/93 12480.93 11593.05 02/28/93 13207.06 12155.13 03/31/93 14101.56 13623.52 04/30/93 15532.76 15794.04 05/31/93 16290.46 16253.52 06/30/93 15448.57 15987.05 07/31/93 16269.41 16932.23 08/31/93 17016.58 17433.05 09/30/93 17058.67 16781.05 10/31/93 18395.17 17153.59 11/30/93 17490.14 14733.35 12/31/93 20250.33 15760.40 01/31/94 20799.67 17584.75 02/28/94 21004.33 18038.08 03/31/94 19431.70 17042.36 04/30/94 19970.27 17779.27 05/31/94 20562.70 18202.23 06/30/94 20476.53 18797.67 07/31/94 20433.44 18394.37 08/31/94 21402.87 18714.06 09/30/94 21122.81 18245.66 10/31/94 21499.81 18707.18 Let's say you invested $10,000 in Fidelity Pacific Basin Fund on its start date and paid the 3% sales charge. By October 31, 1994, it would have grown to $21,500 - a 115.00% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley Pacific index, which would have grown to $18,707 over the same period - an 87.07% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. (checkmark) PACIFIC BASIN FUND TALK: THE MANAGER'S OVERVIEW An interview with Simon Fraser, Portfolio Manager of Pacific Basin Fund Q. SIMON, HOW DID THE FUND DO? A. Very well. For the year ended October 31, 1994, the fund had a total return of 16.88%, nearly doubling the 9.06% return of the Morgan Stanley Pacific index. It also outperformed the average Pacific region fund, which was up 9.41% over the year, according to Lipper Analytical Services. Q. WHY DID IT PERFORM SO MUCH BETTER THAN THE INDEX? A. There were two factors. First, Japan made up roughly 80% of the index during the period. So late in 1993, when the Japanese market fell hard, the index fell with it. Meanwhile, the fund was more heavily invested in the Southeast Asian markets, which turned in stellar performances at the end of 1993. In fact, a number of Southeast Asian markets, such as Hong Kong and Malaysia, were up by as much as 25% in December of 1993 alone. In 1994, when the Japanese market picked up, the fund increased its weighting there to more closely match the index. I think I should point out that in some ways the fund and the index are a mismatch. If Japan performs well, the index will most likely outperform the fund. That's because the fund would have to invest more than 80% of its assets in Japan to beat the index. To my way of thinking, that would virtually make it a Japan fund. On the other hand, if Southeast Asia does well, the fund usually beats the index. Q. WHAT WAS THE OTHER FACTOR BEHIND THE FUND'S STRONG PERFORMANCE? A. Good stock picking. Within each of the countries where the fund had a large holding, the stocks we chose outperformed the local index. That sounds like a simple explanation, but stock picking is definitely the key to the success of any mutual fund. Q. BEFORE WE TALK ABOUT SOME OF THE STOCKS YOU LIKED, CAN YOU PROVIDE A QUICK OVERVIEW OF HOW JAPAN AND SOUTHEAST ASIA PERFORMED IN 1994? A. Sure. We've already touched on it, but here's a broader picture. For the three years before 1994, Southeast Asia consistently outperformed Japan. Then, at the beginning of 1994, the situation turned around. Prices of Southeast Asian stocks were highly-inflated, and, as a result, they corrected at the beginning of the year. Around the same time, Japan's economy started picking up. For the first six months of 1994, Japanese stocks had a big jump, and the Southeast Asian markets generally fell. In June of 1994, Japan stumbled a little as some analysts started to question whether earnings were really going to come through as expected. About that time, several Southeast Asian markets experienced a recovery. When you look at it objectively, I suppose it all seems like a seesaw, with Japan and Southeast Asia going in opposite directions. Q. SIMON, WHY DOES THERE SEEM TO BE AN INVERSE RELATIONSHIP BETWEEN THE PERFORMANCE OF SOUTHEAST ASIA AND JAPAN? A. The most obvious reason is that their economies are way out of sync. Japan was going through a severe recession during part of the period (that it was just beginning to emerge from at the end of the period), while Southeast Asia was one of the fastest growing parts of world. That means that in Japan there were fears of deflation and in Southeast Asia fears of inflation. It also means that when interest rates rose and bond prices fell around the world, which caused world stock markets to tumble as well, Japan was considered a safe haven. That's because inflation - which is considered the worst enemy of bonds because it eats away at fixed-interest payments - was not a problem there. Just the opposite is true in Southeast Asia. As a result, the worldwide fall of bond prices negatively impacted Southeast Asia, but may have even benefited Japan in relative terms. Q. JAPAN IS STILL THE FUND'S LARGEST COUNTRY HOLDING - ABOUT 41% OF THE FUND IS INVESTED THERE. TELL US ABOUT THE OVERALL ECONOMY AND WHAT STOCKS YOU PICKED THERE. A. I believe that a recovery was just beginning to happen in Japan near the end of the period. This recovery is similar to the one the U.S. market has experienced over the past few years. Along with its own recovering economy, Japan got a boost from the improving global economy. As a result of these two factors, industrial production in Japan since the beginning of 1994 improved for the first time in four years. In this environment, I invested in mostly steel and chemical companies, which are cyclical stocks - those that tend to do well when the economy is improving or poorly when the economy is weak. This approach worked out very well, especially during the third quarter when steel and chemical companies turned in strong performances, even though the overall Japanese market had weakened. Q. WHICH COMPANIES DID YOU OWN? A. I thought Sumitomo Metals was the best pick of the top four or five Japanese steel companies that the fund invested in. During this period, Sumitomo - like other steel companies - was a major beneficiary of the increasing global demand for steel. In 1993, Korea and other countries were exporting their steel - which was much less expensive than Japanese steel - into Japan. However, in 1994, Korean steel companies exported less steel to Japan because they needed it at home to support their own growing economy. Also as the Korean economy recovered, its steel increased in price, and the price gap between Japanese and Korean steel narrowed. What this meant for Japanese steel companies was that there was less of a threat from cheap imported steel and more demand for their steel. Another sector that we expect to benefit from the recovery is Japanese construction companies, such as Obayashi, one of the fund's top holdings. Construction companies were hit hard by the Japanese recession but now their stock prices have become very cheap. Q. WHAT OTHER SOUTHEAST ASIAN COUNTRIES LOOKED GOOD? A. Malaysia was a standout. In fact, in the third quarter it was one of the best performing markets in the region, if not the world. That's mostly because the rise in interest rates worldwide, which worsened the economic situation in Southeast Asian markets, didn't affect Malaysia. In that country, interest rates stayed low over the past year, and the economy and money supply continued to grow. In this environment, the real estate market was strong since many people had more money to spend on new homes. One of the Malaysian property developers the fund owns is Land & General. This large company has benefited from the increased demand for middle-class housing. Q. LET'S MOVE TO ANOTHER TOPIC THAT CONTINUED TO BE IN THE NEWS - DERIVATIVES. DOES THE FUND HOLD THEM? A. The fund can use currency contracts - a type of derivative - to hedge its currency exposure and futures contracts to manage its market exposure, but in the last 12 months I have not used them because of my commitment to picking stocks rather than predicting broad market movements. Q. ANY REGRETS OVER THE PERIOD? A. Sure. I wish I had moved out of Southeast Asia and into Japan faster at the very beginning of 1994. I also wish I'd cut back on my position in Japan when it experienced a somewhat disappointing third quarter. Q. HOW DOES THE FUND LOOK GOING FORWARD? A. I'm relatively optimistic. In 1994, my biggest concern in most of the Southeast Asian equity markets was inflation. However, I think that the effects of inflation have already been discounted in many markets, and that they will now focus on growth. The bottom line is that economic growth in Southeast Asia combined with a cyclical recovery in Japan means that the 12-month outlook is pretty positive. FUND FACTS GOAL: To increase the value of the fund's shares by investing mainly in stocks in the Pacific Basin region START DATE: October 1, 1986 SIZE: As of October 31, 1994, more than $553 million MANAGER: Simon Fraser, since May 1993; also manages various funds for non-U.S. investors; joined Fidelity in 1981 (checkmark) SIMON FRASER ON THE TREND AWAY FROM HONG KONG PROPERTY STOCKS: "Office space in several Southeast Asian countries - specifically Singapore and Malaysia - has started to look very attractive to companies interested in locating their headquarters outside of Hong Kong. There are two reasons some companies are considering a move. The first is the highly inflated property prices in Hong Kong. As an example, property is eight to 10 times more expensive in Hong Kong than it is in the Malaysian capital of Kuala Lumpur. "The second reason is that business leaders have not forgotten who will be in charge of Hong Kong in 1997. While they may not expect a dramatic change, they are not certain how the Chinese Government will behave. As a result, a number of companies are looking for second offices in places like Singapore. "I should note that most companies looking to relocate favor Singapore over Malaysia because they consider the Malaysian infrastructure to be less developed. The fund owns several property companies in Singapore, including Wing Tai Holdings, a very inexpensive holding that could turn in strong results going forward." (solid bullet) Sampoerna, an Indonesian cigarette company, was a large and unique fund holding. The company makes hand-rolled clove cigarettes, which are smoked almost exclusively in Indonesia. Sampoerna is considered to make the most "macho" brand in the country. This brand is favored by workers, who most frequently purchase single cigarettes, as opposed to packs. (solid bullet) The fund was not heavily invested in China because the country's economy was overheated. In fact, there are some concerns that China's inflationary environment could have an effect on the entire region. China's economic situation could mean that investors there could see losses. It could also mean that the flow of money from China to Hong Kong could dry up. DISTRIBUTIONS The Board of Trustees of Fidelity Pacific Basin Fund voted to pay on December 5, 1994, to shareholders of record at the opening of business on December 2, 1994, a distribution of $2.02 derived from capital gains realized from sales of portfolio securities and a dividend of $.02 from net investment income. PACIFIC BASIN INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1994 United States 3.7% Australia 8.8% Thailand 6.3% Row: 1, Col: 1, Value: 3.7 Row: 1, Col: 2, Value: 6.3 Row: 1, Col: 3, Value: 8.1 Row: 1, Col: 4, Value: 6.3 Row: 1, Col: 5, Value: 8.800000000000001 Row: 1, Col: 6, Value: 3.7 Row: 1, Col: 7, Value: 40.8 Row: 1, Col: 8, Value: 7.7 Row: 1, Col: 9, Value: 5.8 Row: 1, Col: 10, Value: 8.800000000000001 Hong Kong 5.8% Singapore 8.1% Other 6.3% Indonesia 7.7% Malaysia 8.8% Korea (South) 3.7% Japan 40.8% AS OF APRIL 30, 1994 United States 4.1% Australia 7.9% Thailand 7.0% Row: 1, Col: 1, Value: 4.1 Row: 1, Col: 2, Value: 7.0 Row: 1, Col: 3, Value: 5.8 Row: 1, Col: 4, Value: 6.0 Row: 1, Col: 5, Value: 11.8 Row: 1, Col: 6, Value: 3.7 Row: 1, Col: 7, Value: 38.0 Row: 1, Col: 8, Value: 6.7 Row: 1, Col: 9, Value: 8.9 Row: 1, Col: 10, Value: 7.9 Hong Kong 8.9% Singapore 5.9% Other 6.0% Indonesia 6.7% Malaysia 11.8% Korea (South) 3.7% Japan 38.0% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks and closed-end investment companies 93.1 92.6 Bonds 3.2 3.3 Short-term investments 3.7 4.1 TOP TEN STOCKS % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Sumitomo Metal Industries Ltd. (Japan, Iron & Steel) 1.7 1.0 East Japan Railway Co. (Japan, Railroads) 1.4 0.4 Obayashi Corp. (Japan, Construction) 1.3 1.4 Sampoerna, Hanjaya Mandala (For. Reg.) (Indonesia, Tobacco) 1.3 1.1 Taisei Corp. (Japan, Construction) 1.2 0.4 Wing Tai Holdings Ltd. (Singapore, Textiles & Apparel) 1.1 1.1 Nippon Shokubai Co. Ltd. (Japan, Chemical & Plastics) 1.1 - Toshiba Corp. (Japan, Electronics) 1.0 0.9 Kawasaki Kisen Kaisha Ltd. (Japan, Shipping) 1.0 0.9 Toyo Communication Equipment Ltd. (Japan, Communications Equipment) 0.9 - TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Construction & Real Estate 17.4 15.3 Basic Industries 15.5 12.9 Finance 13.9 19.8 Technology 5.6 5.1 Durables 5.6 6.9 Retail & Wholesale 5.4 3.0 Industrial Machinery & Equipment 5.3 9.6 Transportation 4.9 3.8 Nondurables 4.9 5.1 Media & Leisure 4.0 3.8 PACIFIC BASIN INVESTMENTS OCTOBER 31, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 91.8% SHARES VALUE (NOTE 1) AUSTRALIA - 8.6% Accor Asia Pacific Ltd. 775,979 $ 553,304 00499N22 Amcor Ltd. 126,885 844,425 02341R10 Ampolex Ltd. Ord. 1,700,000 5,151,714 03212792 Australian National Industries Ltd. (a) 1,451,935 1,563,719 05290110 Broken Hill Proprietary Co. Ltd. (The) 329,741 5,059,948 05599810 Burns Philp & Co. Ltd. 215,412 550,391 12239310 CRA Ltd. Ord. 41,000 583,475 12627210 CSR Ltd. 154,257 536,208 12639610 Coca-Cola Amatil Ltd. 127,543 805,227 19108593 Comalco Ltd. 652,000 2,784,568 19983099 Commonwealth Bank of Australia (c) 341,763 1,891,142 20299492 Country Road Ltd. 766,163 574,760 22299392 Fosters Brewing Group Ltd. 2,000,000 1,767,740 35025810 Gold Mines Kalgoorlie Ltd. 479,390 437,961 38065310 Memtec Ltd. Ord. 837,700 933,307 58699192 North Broken Hill Holdings Ltd. 150,000 420,026 65786499 Nine Network Australia Ltd. 350,000 1,055,450 68999792 Oil Search Ltd. 4,038,000 2,879,256 67799992 Pacific BBA Ltd. (c) 1,119,832 3,135,720 69399292 Parbury Ltd. 16,180 8,412 69999392 Plutonic Resources Ltd. 658,125 3,182,232 72999192 QNI Ltd. 1,694,880 2,870,228 74799B92 Rothmans Holdings Ltd. Ord. 344,500 1,325,447 77869910 Shomega Ltd. 715,000 929,364 82599M22 TNT Ltd. (a) 500,000 895,015 93599292 VOX Ltd. 1,010,000 127,533 92899B92 W.D. & H.O. Wills Holdings Ltd. 155,700 416,326 94299892 Western Mining Corp. Holdings Ltd. 364,680 2,272,565 95869410 Woodside Petroleum Ltd. 500,000 1,864,305 98022810 Woolworths Ltd. 1,296,098 2,772,509 98088892 48,192,277 GRAND CAYMAN - 0.0% Sanzo Finance Ltd. (warrants) (a) 250 115,625 80599B22 HONG KONG - 5.2% Allan International Holdings Ltd. 100,000 6,341 01699522 Applied International Holding Ord. 2,000,000 302,840 03792310 Associated International Hotels Ltd. 300,000 215,478 04599492 Benelux International Ltd. 3,250,000 290,225 08199922 CDL Hotels International Ltd. 978,465 449,536 14999792 Chinney Investments Ltd. 5,682,000 1,007,419 16999B22 Chow Sang Sang Holdings International Ltd. 2,000,000 776,500 17399K92 China Paint Holdings Ltd. 2,000,000 178,600 17799392 Culturecom Holdings Ltd. 2,000,664 160,533 23099322 Culturecom Holdings Ltd. (warrants) (a) 1,523,332 23,657 23099324 Denway Investment Ltd. 1,000,000 155,300 24999C23 Dickson Concepts International Ltd. 3,150,000 2,445,975 25399210 Esprit Asia Holdings Ltd. 500,000 236,185 29699522 First Pacific Co. Ltd. 1,309,752 923,794 33699192 Fortei Holdings Ltd. 1,500,000 229,065 34999D22 Grand Hotel Holdings Ltd. Class A 1,500,000 621,195 38599292 Great Eagle Holdings Ltd. 3,000,000 1,708,290 39099394 Great Wall Electronic International Ltd. 750,000 82,500 39199922 Great Wall Electriconic International Ltd. (warrants) (a) 75,000 2,330 39199923 Guangzhou Investment Co. Ltd. 920,000 294,685 40099G22 Herald Holdings Ltd. 1,000,000 144,950 42699892 Hong Kong Ferry Holdings Ltd. 525,000 733,793 43899A92 Hopewell Holdings Ltd. 456,000 469,160 44099999 HKR International Ltd. 2,249,600 2,241,749 43999192 International Bank of Asia Ltd. 2,184,000 911,536 45899E22 International Tak Cheung Holdings Ltd. 3,000,067 772,637 46399892 SHARES VALUE (NOTE 1) JCG Holdings Ltd. 330,000 $ 215,672 46799792 Jardine International Motor Corp. 918,000 1,128,644 47499292 K. Wah International Holdings Ltd. Ord. 7,000,288 2,242,262 49099292 Kumagai Gumi Co. Ltd. 600,000 671,670 50099210 Lam Soon Food Industries Ltd. 1,624,000 380,406 51299592 Lamex Holdings Ltd. 750,000 325,155 51399292 Le Saunda Holdings Ltd. (c) 900,000 111,816 52199792 Leefung Asco Printers Holdings Ltd. 2,387,000 376,883 52499692 Mingly Corp. Ltd. 1,642,000 331,503 60399C22 M.C. Packaging Hong Kong Ltd. 1,213,333 451,445 62399092 National Mutual Asia Ltd. 3,000,000 1,941,240 63699592 Prod-Art Technology Holdings Ltd. 2,659,500 199,622 74499C92 Sime Darby Hong Kong Ltd. 200,000 271,774 82899392 Siu-Fung Ceramics Holdings Ltd. 1,000,000 231,660 82999G22 South China Brokerage Co. Ltd. 530,000 74,078 83799E22 Star Paging International Holdings Ltd. 636,000 218,116 85599692 Star Paging International Holdings Ltd. (warrants) (a) 143,600 6,784 85599693 Stone Electronic Technology Ltd. 200,000 41,154 86199B22 SHK Hong Kong Industries Ltd. 363,000 36,641 90699B92 SHK Convertibles Ltd. 3,630 3,171 90699G22 Shougang Concord International Enterprises Co. Ltd. 2,000,000 685,900 99099L22 S. Megga International Holdings Ltd. 2,000,000 308,020 99999C92 S. Megga International Holdings Ltd. (warrants) (a) 1,250,000 54,188 99999C93 Tai Cheung Holdings Ltd. 525,767 707,646 93499892 Wah Kwong Shipping Holdings Ltd. 1,026,000 2,177,613 93056692 Wing Shan International Ltd. 1,000,000 248,480 97499722 Yaohan International Caterers Ltd. 542,000 164,838 99099692 Yips Hang Cheung Holdings Ltd. 784,817 281,851 99599592 29,272,505 INDIA - 1.0% Bombay Dyeing & Manufacturing Co. GDR 35,000 498,750 09799H23 CESC Ltd. GDR (c) 95,000 1,045,000 15712810 CESC Ltd. GDR (warrants) (a)(c) 38,000 95,000 15712811 Great Eastern Shipping Co. Ltd. GDR 25,000 318,750 39099823 Himalayan Fund (a) 67,299 1,152,159 43299792 Himalayan Fund (warrants) (a) 13,459 33,648 43299793 Indo Gulf Fertilizer and Chemicals Corp. Ltd. GDR (a)(c) 17,000 50,150 45577P10 Southern Petrochemical Industries Corp. GDS (a) 130,000 1,852,500 84361310 Tata Electric Companies GDR (a)(c) 210 88,200 87656610 Tube Investments of India Ltd. GDR (a) 110,000 770,000 90699F23 5,904,157 INDONESIA - 7.4% Argha Karya Prima PT 150,000 193,448 01099992 Andayani Megah PT 400,000 829,064 03399722 Astra International PT (For. Reg.) 1,286,400 2,844,025 04699894 Bakrie & Bros. PT Ord. (For. Reg.) 970,000 3,194,433 05799292 Bank Dagang Nas Indonesia PT 525,000 1,015,602 06099Q22 Bank International Indonesia PT Ord. 760,000 2,572,858 06199B92 Bank Mashill Utama PT (For. Reg.) (a) 276,500 292,913 06399L22 Bank Tiara Asia PT (a) 290,000 520,927 06599J22 Barito Pacific Timber PT (For. Reg.) 480,000 818,011 06799F23 Dharmala International Land PT 180,000 246,647 25399592 Duta Anggada Realty Ord. 554,166 561,536 26699192 Duta Pertiwi Nusantara PT (For. Reg.) 85,000 114,515 26699922 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) INDONESIA - CONTINUED Gadjah Tunggal PT (For. Reg.) 242,000 $ 412,414 36599294 Indah Kiat Pulp & Paper (For. Reg.) 3,073,000 3,644,639 45499B23 Indosat (Indonesia Satellite) sponsored ADR 15,600 612,300 71568010 Inti Indorayon Utama PT (For. Reg.) 200,000 543,498 69364L94 Jaya Real Property (For. Reg.) (a) 25,000 101,042 47399B22 Kabel Metal PT 360,000 518,166 84599B92 Kalbe Farma (For. Reg.) 100,000 442,167 48699994 Mayorma Indah PT 405,600 2,241,788 83099A92 Medco Energi Corp. (For. Reg.) (a) 1,234,500 3,070,436 58399C22 Modernland Realty PT 247,000 864,621 60999A92 Modern Photo Film PT 442,500 2,425,356 61299792 Mulia Industrindo PT (For.) (a) 225,000 658,069 62499B23 Pakuwon Jati PT (For. Reg.) (a) 1,229,000 1,316,099 69599393 Panin Bank PT (For. Reg.) 1,300,000 2,275,325 69899823 PT Inco 93,000 274,144 78999992 Semen Cibinong PT (For. Reg.) 324,000 1,149,082 81799693 Sampoerna, Hanjaya Mandala (For. Reg.) 1,459,500 7,058,448 82299893 Sumalindo Lestari Jaya PT (For. Reg.) (a) 100,000 299,384 86599G22 SUCACO PT 61,300 204,698 89399292 Unilever PT 12,802 229,963 94399592 41,545,618 JAPAN - 40.8% Acom Co. Ltd. 57,000 2,094,010 00499M22 Aida Engineering Ltd. Ord. 12,000 109,468 00871210 Aim Services Co. Ltd. (a) 50,000 1,620,144 01999522 Amway Japan Ltd. 70,000 2,268,201 03399592 Aplus Co. Ltd. 110,000 539,188 03899A92 Bandai Co. Ltd. (warrants) (a) 100 125,000 06099193 CMK Corp. 179,000 3,306,434 12580599 Catena Corp. 28,000 690,573 14899792 Charle Co. Ltd. 26,000 563,438 15999392 Chofu Seisakusho Co. Ltd. 45,000 1,198,080 16999999 Chiyoda Corp. 150,000 2,027,759 17098910 Chiyoda Fire & Marine Insurance Co., Inc. 200,000 1,322,946 17099010 Chuo Trust & Banking Co. Ltd. 85,000 1,447,294 17499492 Citizens Watch Co. Ltd. (warrants) (a) 500 218,750 17560092 C Itoh Fuel (warrants) (a) 360 265,500 73299194 Daicel Chemical Industries Ltd. 250,000 1,524,690 23398110 Daiwa House Industry Co. Ltd. (warrants) (a) 1,000 200,000 23406298 Daiki Co. Ltd. 31,200 743,739 23999D22 Denki Kagaku Kogyo (a) 429,000 1,916,896 24899092 Daiwa Industries (warrants) (a) 250 131,250 24899693 Denki Kogyo Co. Ltd. 200,000 2,456,014 24899792 Denki Kogyo Co. Ltd. (warrants) (a) 2,500 226,821 24899793 Denyo Co. Ltd. (warrants) (a) 740 666,000 24999193 Daito Trust Construction 120,000 1,634,591 24999492 Dia Kensetsu Co. Ltd. (a) 24,000 383,881 25299492 East Japan Railway Co. Ord. 1,600 7,974,821 27399722 Enix Corp. 15,000 569,630 29399A22 FCC Co. Ltd. (a) 47,000 1,930,344 30199822 Fanuc Ltd. 40,000 1,940,044 30729599 Fujikura Ltd. (warrants) (a) 3,000 470,354 35958793 Fujisawa Pharmaceutical Co. Ltd. 50,000 577,886 35999110 Fuji Oil Co. Ltd. (warrants) (a) 200 45,000 35999392 Fujisash Co. Ltd. 14,700 216,924 36099C22 Fuso Pharmaceutical Industries Ltd. 97,000 806,790 36113299 Fuji Coca-Cola Bottling Co. Ltd. 27,000 378,928 36499D22 Funai Research & Development, Inc. 32,000 495,331 36499492 Fujitsu Kiden Ltd. 15,000 278,623 39599092 Heiwa Corp. 50,000 1,253,806 42399792 Hitachi Ltd. ADR 23,800 2,433,550 43357850 SHARES VALUE (NOTE 1) Hokko Chemical Industries Co. Ltd. 69,000 $ 433,631 43599592 Hitachi Transport System Co. 150,000 1,718,178 43699992 Honda Motor Co. Ltd. 150,000 2,615,964 43812810 IDEC Izumi Corp. 1,000 9,948 45199392 Impact 21 Co. Ltd. 23,000 450,957 45299C22 Inui Tatemono Co. Ltd. 27,000 345,493 46299892 Japan Associated Finance Co. 2,000 295,134 47099692 Japan Radio Co. Ltd. (warrants) (a) 4,000 346,996 47199223 Kagoshima Bank Ltd. 150,000 1,191,890 48299592 Katokichi Co. Ltd. 25,000 614,004 48579610 Kawasaki Kisen Kaisha Ltd. (a) 1,250,000 5,378,975 48639892 Kawasaki Heavy Industries Ltd. 500,000 2,456,015 48639991 Kawasaki Heavy Industries Ltd. (warrants) (a) 1,000 237,500 48639992 Keiyo Co. Ltd. 30,000 489,139 48779210 Kinki Nippon Railway Co. Ltd. #3 (warrants) (a) 4,000 471,150 49570093 Koa Fire & Marine Insurance Co. Ltd. 11,000 77,189 49999010 Komatsu Ltd. Ord. 350,000 3,322,841 50045899 Kumagai Gumi Co. Ltd. 800,000 4,020,432 50125110 Kyushu Matsushita Electric Co. Ltd. 130,000 3,273,309 50199110 Mabuchi Motors Co. 100 7,657 55409799 Matsushita Electric Works Co. Ltd. (warrants) (a) 400 400,000 57688192 Maruha Corp. 300,000 1,318,818 57699G22 Matsuzakaya Co. Ltd. 113,000 1,609,205 57699492 Marukyo Corp. 27,000 955,678 57899792 Miyosha Oil & Fat Co. Ltd. Ord. 150,000 820,391 59999192 Marui Co. Ltd. 200,000 3,653,062 60444310 Miroku Jyoho Service Co. Ltd. 14,000 452,196 60499D92 Mitsubishi Kasei (warrants) (a) 400 380,000 60675092 Mitsubishi Corp. 355,000 4,835,664 60676910 Mitsubishi Estate Co. Ltd. 150,000 1,764,615 60678310 Mitsubishi Rayon Co. Ltd. 200,000 934,936 60681010 Mitsui Mining & Smelting Co. Ltd. 300,000 1,374,543 60684410 Mitsui Mining & Smelting Co. Ltd. (warrants) (a) 1,200 402,215 60684492 Mitsui Engineer & Shipbuilding Co. Ltd. 1,000,000 3,580,830 60700099 Mitsubishi Chemical Industries Ltd. (a) 426,000 2,514,546 60799D22 Mitsui OSK Lines Ltd. 500,000 2,192,870 60799792 Mitsuba Electric Manufacturing Co. Ltd. (warrants) (a) 3,000 1,157,979 60899394 Mitsubishi Kakoki Kaisha Ltd. (warrants) (a) 4,000 388,380 60999793 Mitsui High-Tec, Inc. 76,000 2,133,223 61099092 Mori Seiki Co. Ltd. Ord. 125,000 3,521,490 61799999 NEC Corp. 125,000 1,599,505 62999410 Nakayama Steel Works Ltd. 122,000 920,303 62999310 Namura Shipbuilding Co. Ltd. 430,000 3,332,440 62999892 Navix Line Ltd. (a) 500,000 1,981,320 63899592 NGK Insulators Ltd. (warrants) (a) 2,650 1,225,625 64350093 Nichii Co. Ltd. (warrants) (a) 2,000 100,279 65299195 Nichicon Corp. 160,000 2,295,032 66199793 Nintendo Co. Ltd. Ord. 15,000 842,062 65443999 Nippon Crane Works Ltd. (a) 100,000 309,582 68299492 Nippon Computer Systems Corp. 200,000 2,930,706 68599692 Nippon Kokan KK (a) 1,000,000 3,085,500 65457410 Nippon Shokubai Co. Ltd. 552,000 6,038,080 65461299 Nippon Telegraph & Telephone Corp. Ord. 300 2,801,713 65462492 Nippon Yakin Kogyo Co. Ltd. 25,000 151,437 65467010 Nippon Shokubai Kagaku Kagyo 200,000 1,523,142 65499710 Nippon Shinyaku Co. Ltd. (warrants) (a) 3,000 346,200 65699094 Nippon Zeon Co. Ltd. (a) 152,000 928,580 66499692 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) JAPAN - CONTINUED Nissan Chemical Industries Ltd. 155,000 $ 1,225,221 65699692 Nissan Fire & Marine Insurance Co. Ltd. 200,000 1,533,460 66699492 Nissha Printing Co. Ltd. 52,000 1,110,779 66999492 Nissei Build Kogyo Co. Ltd. 41,000 537,330 67299792 Nomura Securities Co. Ltd. 200,000 4,189,670 65536110 Obayashi Corp. 1,000,000 7,141,010 67090410 Oliver Corp. (warrants) (a) 2,000 160,764 68099193 Olympus Optical Co. Ltd. 100,000 1,104,174 68162710 Omron Corp. (warrants) (a) 400 200,000 68215192 Ono Pharmaceutical Co. Ltd. 15,000 702,750 68299010 Orient Finance Co. Ltd. 300,000 1,965,843 68616610 Promise Co. Ltd. 70,000 3,900,728 74499E22 Sampei Construction Co. Ltd. 3 30,649 79599G22 San-In Godo Bank Ltd. 30,000 284,815 79999492 Sankyo Co. Ltd. 152,000 3,952,737 80029710 Shikoku Coca-Cola Bottling Co. Ltd. 24,000 364,068 80099B22 Sanwa Shutter Corp. (warrants) (a) 1,500 112,500 80302493 Sanyo Coca-Cola Bottling Co. Ltd. 41,000 592,333 80399999 Sekisui House Ltd. (warrants) (a) 500 112,500 81607897 Seiren Co. Ltd. 150,000 1,609,824 81699692 Senko Co. Ltd. (warrants) (a) 450 61,875 81799293 Shimizu Construction Co. Ltd. 102,000 1,052,578 82499110 Shinko Shoji Co. Ltd. 50,000 706,878 90699492 Sony Corp. 50,000 3,049,379 83569999 Sumitomo Cement Co. Ltd. (warrants) (a) 750 253,388 86560593 Sumitomo Realty & Development Co. Ltd. 750,000 4,798,515 86562310 Sumitomo Chemical Co. Ltd. 200,000 1,180,538 86599610 Sumitomo Chemical Co. Ltd. (warrants) (a) 2,000 445,553 86599692 Sumitomo Metal Industries Ltd. 2,550,000 9,657,386 86599999 Sumitomo Sitix Corp. 200,000 3,240,286 68799692 Sun Wave Co. Ltd. (warrants) (a) 300 82,500 86699B93 Super Daiei Co. Ltd. 12,000 163,459 98499H22 Taisei Corp. 1,000,000 6,697,280 87346610 Tada Corp. 80,000 491,202 87499592 Tanseisha Co. Ltd. 30,000 492,235 87599292 Tasaki Shinju Co. Ltd. Ord. 50,000 686,239 87899392 Tokyo Electric Power Co., Inc. 20,000 586,141 88910710 Tohoku Telecommunications Construction Co. Ltd. 20,000 224,963 89099792 Toshiba Corp. 750,000 5,913,008 89149310 Toshoku Co. Ltd. 93,500 709,174 89191190 Tokyo Electron Ltd. 30,000 1,003,044 89499999 Tokyo Securities Co. Ltd. 234,000 1,849,688 89799C92 Tomoku Co. Ltd. 43,000 316,382 90099892 Toshiba Chemical Corp. 16,000 189,877 90199792 Toyo Communication Equipment Ltd. (a) 164,000 5,330,994 90999392 Tokyo Kososushi Co. Ltd. 27,000 529,384 91599C22 Valor Co. Ltd. 6,000 102,162 92099B22 Techno Ryowa Ltd. 19,000 527,424 95999892 Yamanouchi Pharmaceutical Co. Ltd. 170,000 3,350,705 98414010 Yamaichi Securities Co. Ltd. 200,000 1,585,058 98499210 Yamaha Corp. 250,000 3,328,003 98463499 Yaohan Japan Corp. (warrants) (a) 200 62,500 98899894 Yoshinoya D&C Co. Ltd. Ord. 30 371,498 98999192 Yorozu Corp. 10,000 256,953 99199792 229,738,651 KOREA (SOUTH) - 3.5% Boram Bank (a) 30,000 391,394 09999322 Boram Bank (New) 7,130 86,760 09999325 Boram Securities Co. Ltd. 25,000 423,383 18599622 Coryo Securities 100,000 1,906,793 22199822 SHARES VALUE (NOTE 1) Daeyu Securities 71,820 $ 1,627,133 23399G22 Daewoo Electronics (a) 40,000 662,360 23899C22 Daewoo Electronics (New) 1,200 18,968 23899C23 Dong Ah Construction Industries Co. Ltd. (a) 21,277 798,071 25799K22 Hanjin Engineering & Construction Co. Ltd. (a) 35,020 878,630 41099822 Jaeil Investment Finance (a) 30,000 477,953 16399B22 Hanshin Securities Co. Ltd. 440 15,222 41899722 Kia Motors Corp. GDR (a)(c) 71,500 1,340,625 49373820 Kolon Industries, Inc. 9,882 433,635 50899292 Korean Air 45,000 1,665,308 52299522 Korean Air (RFD) (a) 5,700 147,657 52299526 Miwon Co. Ltd. 26,028 803,223 61299693 Namsung Corp. 52,000 1,043,718 63299D22 Nong Shim Co. 26,857 1,422,656 65599C22 Ssangyong Cement Co. 19,712 846,640 76899392 Ssangyong Investment & Securities Co. Ltd. 41,200 1,085,367 77699522 Ssangyong Investment & Securities Co. Ltd. (New) (a) 4,124 99,330 77699524 Sam Yang Co. Ltd. (warrants) (a) 300 213,750 83999B23 Tong Yang Investment & Finance Co. Ltd. (a) 45,000 1,010,475 93899D22 Tong Yang Securities Co. Ltd. 20,400 412,018 93999B22 Yukong Ltd. 25,000 1,565,640 98899K22 Yukong Ltd. (New) 1,504 83,016 98899K25 19,459,725 MALAYSIA - 8.3% Affin Holdings BHD 352,000 592,117 00899492 Aokam Perdana BHD 150,000 1,238,142 01899792 Aokam Perdana BHD Class A (RFD) (a) 40,000 312,958 01899795 Bandar Raya Development BHD (warrants) (a) 891,000 1,122,357 06000292 Berjaya Leisure BHD (warrants) (a) 265,000 149,282 08410594 Bolton Properties BHD 1,135,000 1,776,037 09799592 CHG Industries BHD 453,000 1,417,700 16699892 CHG Industries BHD (warrants) (a) 142,500 197,340 16699893 Commerce Asset Holding BHD (warrants) (a) 66,666 134,310 20099493 Daiman Development BHD 200,000 336,430 23499C23 Development & Commercial Bank BHD 500,000 1,378,975 25199692 Ekovest BHD 200,000 1,017,114 28299922 General Lumber Fabric & Building BHD (a) 738,000 1,587,873 37099B22 Genting BHD 187,500 1,723,716 37245210 Golden Pharos BHD (a) 799,000 2,766,218 38299D22 Hong Leong Properties BHD 235,000 398,983 43899L22 Hume Industries BHD 280,000 1,172,030 44599692 Kuala Lumpur Kepong BHD Ord. 430,000 1,042,935 49399792 Kumpulan Guthrie BHD 1,300,000 2,339,363 53999492 Kim Hin Industry BHD 143,750 781,662 49499C92 Kim Hin Industry BHD (warrants) (a) 18,750 30,073 49499C95 Land & General BHD 350,000 1,725,185 51499693 Lingui Development BHD 89,333 300,543 53599722 Malakoff BHD 200,000 492,910 56099J22 Mycom BHD 250,000 586,798 63199892 New Straits Times Press BHD 200,000 782,396 64999592 Olympia Industries BHD 130,000 164,772 68199D92 Pengkalen Holdings BHD 2,000 3,951 70799322 Perlis Plantations BHD 332,000 1,168,899 71390092 Phileo Allied BHD 125,000 586,798 71899822 Phileo Allied BHD (rights) (a) 100,000 176,039 71899823 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) MALAYSIA - CONTINUED Public Finance BHD: 87799994 (For. Reg.) 111,000 $ 217,115 87799994 (Loc. Reg.) 154,000 296,402 87799992 Resorts World BHD 200,000 1,267,482 76199592 Rothmans of Pallmall Malysia BHD Ord. 100,000 657,213 77869810 Sime Darby BHD 495,000 1,365,185 82861792 Sime UEP Properties BHD 331,000 763,971 82899492 Sitt Tatt BHD 200,000 586,798 82999392 Sriwani Holdings BHD 175,000 400,489 84499592 Sriwani Holdings BHD (rights) (a) 62,500 35,941 84499593 Sungei Way Holdings BHD 1,011,500 3,996,538 86799892 Sungei Way Holdings BHD (warrants) (a) 144,500 236,288 89499H22 Tanjong PLC 415,000 1,623,472 87599993 Tan & Tan Development BHD 2,500,000 3,716,375 89699B22 Telekom Malaysia BHD 100,000 809,780 94099892 Tongkah Holdings BHD (warrants) (a) 133,333 128,313 94999C96 Westmont BHD (a) 150,000 1,062,102 98499G22 YTL Corp. BHD 340,000 1,928,606 98799092 46,595,976 NEW ZEALAND - 1.0% Brierley Investments Ltd. 2,153,738 1,619,503 10901410 Carter Holt Harvey Ltd. 1,342,263 3,259,578 14699292 Ceramco Corp. Ltd. 314,300 712,886 15699692 U-Bix Business Machines Ltd. 105,858 105,045 90299J22 5,697,012 PAKISTAN - 0.6% Adamjee Insurance Ltd. (a) 119,520 952,431 00599492 Bank of Punjab (a) 42,900 98,075 79899A92 National Development Leasing Corp. (a) 451,750 634,411 63599492 Pakistan State Oil Co. Ltd. 108,720 1,569,405 34799292 Pakistan Suzuki Motors Ltd. (a) 26,000 43,943 43499A92 Pakistan International Airlines (a) 247,500 103,059 69599B92 3,401,324 PHILIPPINES - 1.5% Ayala Corp. Class B 240,000 424,438 05499092 Ayala Land, Inc. Class B 1,655,500 2,595,029 05499392 Basic Petroleum & Mineral, Inc. (a) 91,000,000 65,520 06999122 Benpress Holdings Corp. GDR 59,220 681,030 08230093 Filinvest Land, Inc. Ord. (a) 1,875,000 847,819 31699J22 JG Summit Holdings, Inc. Class B 2,450,000 984,729 46615292 Manila Mining Corp. Class B 26,635,000 192,571 59399C22 Oriental Petroleum & Mineral Corp. Class B (a) 45,000,000 56,250 69499F22 Oriental Petroleum & Mineral Corp. (New) (a) 3,000,000 2,400 69499F24 Petrofields Exploration & Development Corp., Inc. (a) 136,000,000 48,960 71699H22 Philex Mining Corp. (a) 2,389,000 403,287 71814230 SM Prime Holdings, Inc. (a) 2,216,000 757,074 83160592 Universal Robina Corp. (a) 1,270,500 1,110,671 91399F22 8,169,778 SINGAPORE - 7.9% Avimo Singapore Ltd. 635,000 769,957 05399A92 Bukit Sembawang Estates Ltd. (a) 32,000 706,267 12099892 Clipsal Industries Ltd. 558,000 2,901,600 18899192 Clipsal Industries Ltd. (warrants) (a) 41,600 76,544 18899193 Courts Singapore Ltd. 500,000 705,040 22299992 Creative Technology Corp. Ltd. (a) 60,000 862,500 22599992 DBS Land Ltd. 1,100,000 3,858,987 24399292 Falmac Ltd. 150,000 74,081 30699722 Far East-Levingston Shipbuilding Ltd. 455,000 2,247,104 30799192 First Capital Corp. Ltd. 493,015 1,947,878 31999792 SHARES VALUE (NOTE 1) Genting International 810,000 $ 1,320,300 37245393 Hotel Plaza Ltd. (Loc. Reg.) 300,000 245,232 58099392 Hotel Properties Ltd. 760,000 1,553,136 44199492 Hotel Properties Ltd. (warrants) (a) 190,000 252,385 44199494 Informatics Holdings Ltd. 401,000 314,135 45699D22 Jurong Shipyard Ltd. 274,000 2,463,761 48254699 Kim Engineering Holdings Ltd. 1,000,000 1,246,590 49499D92 Malayan Credit Ltd. 20,000 52,589 56099092 Overseas Chinese Banking Corp. 469,693 5,055,278 68999610 Pacific Can Investment Holdings Ltd. 400,000 362,396 69499C22 Pacific Can Investment Holdings Ltd. (warrants) (a) 60,000 26,771 69499C24 Parkway Holdings Ltd. 1,000,000 2,479,560 70199192 Parkway Holdings Ltd. (warrants) (a) 550,000 741,824 70199193 Pentex Schweizer Circuits Ltd. 256,000 413,297 70999222 Resource Development Corp. 125,000 532,186 76199492 Robinson & Co. Ltd. 100,000 463,215 77099392 Singapore Press Holdings Ltd. Class A (For. Reg.) 80,000 1,449,591 82999993 Singapore Computer Systems Ltd. 400,000 316,076 83899A92 Steamers Maritime Holdings Ltd. 200,000 162,126 85799192 United Overseas Bank Ltd. (warrants) (a) 379,043 2,246,372 91199E92 United Overseas Land Ltd. 850,000 1,783,377 91199292 United Overseas Land Ltd. (warrants) (a) 545,000 568,015 91199294 Wing Tai Holdings Ltd. 2,984,000 6,098,102 97499392 44,296,272 SRI LANKA - 0.9% Associated Motorways Ltd. (a) 13,500 35,116 04599H22 Ceylon Tea Services Ltd. (a) 100,000 503,461 15799B22 Development Finance Corp. of Ceylon (a) 214,933 2,502,366 25199C92 Distilleries Co. of Sri Lanka Ltd. (a) 2,542,000 533,261 25499D92 John Keells Holdings Ltd. GDR (c) 70,000 822,500 48730210 Kelani Tyres Ltd. (Loc. Reg.) (a) 233,000 295,710 48799N22 National Development Bank 47,000 435,788 63599B22 5,128,202 TAIWAN (FREE CHINA) - 0.5% Yageo Corp. GDR (a)(c) 150,000 3,112,500 98432610 THAILAND - 4.6% Asia Fiber Co. PCL (For. Reg.) 400,000 397,224 04499592 Asia Securities Trading (For. Reg.) 450,000 1,625,004 04599D23 Bank of Ayudhya PCL (For. Reg.) 120,000 469,446 05999998 Bangkok Steel Industry Co. Ltd. (For. Reg) 250,000 641,978 06099P23 Bangkok Metropolitan Bank PCL (For. Reg.) 1,200,000 1,600,932 06199E23 Dhana Siam Finance & Securities PCL (For. Reg.) 10,500 279,742 24299593 Finance One PCL: (For. Reg.) 45,000 910,003 31799E93 (For. Reg.) (warrants) (a) 8,180 78,771 31799E96 First Bangkok City Bank PCL (For. Reg.) 790,000 760,746 31899D93 Five Star Property Co. Ltd. (For. Reg.) (a) 200,000 890,744 33899223 Goodyear (Thailand) Ltd. 23,600 388,236 38399893 International Engineering PCL (For. Reg.) 81,000 832,003 46299A93 Kiatnakin Finance & Securities PCL (For. Reg.) 19,000 106,729 49699794 Kiatnakin Finance & Securities PCL (a) 57,000 300,746 49699797 Krisda Mahanakorn Company PCL (For. Reg.) (a) 400,000 1,139,508 50199D93 Krung Thai Bank (For. Reg.) 752,100 2,565,037 50599293 Land & House PCL (For. Reg.) 105,000 2,157,043 51499393 MDX PCL (For. Reg.) 242,000 1,359,387 55699293 Padaeng Industry Co. Ltd. (For. Reg.) 460,000 885,928 69199922 Phatra Thanakit PCL (For. Reg.) 15,100 156,313 71799593 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) THAILAND - CONTINUED Phatra Thanakit PCL (For. Reg.) (rights) (a) 60,400 $ 601,019 71799595 Pizza PCL: (For. Reg.) 150,000 418,289 72599593 (warrants) (a) 37,500 0 72599596 Precious Shipping Ltd.: (Loc. Reg.) (a) 1,900 24,395 73999622 (For. Reg.) 30,000 385,187 73999623 Saha Union Corp. Ltd. (For. Reg.) 401,363 454,941 78699594 Siam Cement PCL (For. Reg.) 15,000 865,466 78799010 Siam City Bank PCL (For. Reg.) 800,000 1,131,488 81199593 Telecomasia Corp. PCL (For. Reg.) 150,000 607,872 87928D93 Thai Farmers Bank PCL 100,000 882,719 90199010 Thai Military Bank Ltd. (For. Reg.) 200,000 930,868 90199989 Thai President Food Ltd. (For. Reg.) (a) 30,500 330,418 90299992 Thai Airways International Ltd.: (Loc. Reg.) 18,000 40,445 90799C92 (For. Reg.) 361,700 812,711 90799C93 Thai German Ceramic Industry Co. Ltd.: (For. Reg.) 200,000 810,496 94699893 (warrants) (a) .. 59,940 112,434 94699894 United Foods Co. Ltd. (For. Reg.) 114,200 160,374 91699B93 26,114,642 TOTAL COMMON STOCKS (Cost $456,915,526) 516,744,264 PREFERRED STOCKS - 0.5% CONVERTIBLE PREFERRED STOCKS - 0.2% AUSTRALIA - 0.2% Ampolex Ltd. 8% 300,000 958,149 03210593 NONCONVERTIBLE PREFERRED STOCKS - 0.3% KOREA (SOUTH) - 0.1% Dongbu Construction Co. Ltd. (a) 10,910 139,600 25799M23 Hanshin Securities Co. Ltd. (a) 22,000 375,337 41899724 514,937 THAILAND - 0.2% Thai Prime Fund Ltd. 75,000 1,275,000 92599B23 TOTAL NONCONVERTIBLE PREFERRED STOCKS 1,789,937 TOTAL PREFERRED STOCKS (Cost $2,635,086) 2,748,086 CLOSED-END INVESTMENT COMPANIES - 0.8% INDONESIA - 0.1% Indonesia Development Fund Ltd. (SG) 70,000 602,000 71499722 SINGAPORE - 0.2% Singapore SESDAQ Fund Ltd. 50,000 850,000 94899G22 TAIWAN (FREE CHINA) - 0.1% R.O.C. Taiwan Fund (SBI) 52,500 597,188 74965110 THAILAND - 0.4% Kamrai Tawee Capital Fund (For. Reg.) (a) 947,900 912,799 48399E25 Ruang Khao Unit Trust (For. Reg.) (a) 2,282,200 1,556,689 77399393 2,469,488 TOTAL CLOSED-END INVESTMENT COMPANIES (Cost $3,631,331) 4,518,676 CORPORATE BONDS - 3.2% MOODY'S RATINGS PRINCIPAL (UNAUDITED) AMOUNT (B) CONVERTIBLE BONDS - 3.1% GRAND CAYMAN - 0.5% Bangkok Land euro 4 1/2%, 10/13/03 (c) - $ 900,000 $ 643,500 06099LAA Henderson Capital International Ltd. euro 4%, 10/27/96 (c) - 1,500,000 1,466,250 4247309A JG Summit Cayman Ltd. euro 3 1/2%, 12/23/03 - 1,000,000 777,500 46699CAA 2,887,250 HONG KONG - 0.6% Hon Kwok Land Treasury Ltd. euro 4 7/8%, 12/15/00 - 1,000,000 740,000 43899JAA Lai Fung Overseas Finance Ltd. euro 5 1/4%, 2/5/98 (d) - 500,000 400,000 50699CAA Sino Land Co. Ltd. euro 5%, 10/21/00 (c) - 1,000,000 1,257,500 8293109A Stelux Holdings Ltd. 1 3/4%, 3/31/01 - CHF 2,000,000 970,951 858991AA 3,368,451 INDIA - 0.2% Jindal Strips Ltd. euro 4 1/4% 3/31/99 (c) - 280,000 364,000 642994AA SCICI Ltd. euro 3 1/2%, 4/1/04 - 640,000 633,600 79599KAB 997,600 INDONESIA - 0.2% Inti Indorayon Utama PT 7%, 5/2/06 - 1,000,000 990,000 69364L9C KOREA (SOUTH) - 0.1% Ssangyong Oil Refining euro 3 3/4%, 12/8/08 - 550,000 715,000 78099AAA MALAYSIA - 0.5% Land & General BHD euro 4 1/2%, 7/26/04 - 1,600,000 1,984,000 514996AB United Engineers Malaysia BHD 2%, 3/1/04 (c) - 880,000 875,600 910213AA 2,859,600 THAILAND - 1.0% Asia Credit PCL 3 3/4%, 11/17/03 (c) - 505,000 621,150 044909AA Hemaraj Land and Development PCL euro 3 1/2%, 9/9/03 - 500,000 426,250 42399BAA Juldis Development PCL euro 4 1/4%, 12/22/03 - 700,000 525,000 48199AAA Phatra Thanakit PCL euro 3 1/2%, 12/13/03 - 1,100,000 1,498,750 717995AA Thai Central Chemical PCL euro 3 3/4% 10/25/03 - 1,250,000 1,140,625 94299GAA Wattachak PCL euro 3 1/2%, 12/6/03 - 1,800,000 1,566,000 94299HAA 5,777,775 TOTAL CONVERTIBLE BONDS 17,595,676 CORPORATE BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL (UNAUDITED) AMOUNT (B) NONCONVERTIBLE BONDS - 0.1% MALAYSIA - 0.0% Berjaya Leisure BHD 5%, 1/18/99 - MYR 265,000 $ 84,489 0841059A Tongkah Holdings BHD 5% 5/26/99 - MYR 133,333 39,641 94999CAA 124,130 SINGAPORE - 0.0% Hotel Properties Ltd. 3 1/2%, 10/15/98 - SGD 304,000 192,589 441994AA Pacific Can Investment Holdings Ltd. 2 1/2%, 4/30/99 - SGD 60,000 29,837 69499CAA 222,426 THAILAND - 0.1% Finance One PCL 3 3/4%, 2/7/01 - CHF 818 32,821 31799EAA Thai German Ceramic Industry PCL 3%, 7/8/99 - THB 666 267,631 946998AA 300,452 TOTAL NONCONVERTIBLE BONDS 647,008 TOTAL CORPORATE BONDS (Cost $19,092,684) 18,242,684 REPURCHASE AGREEMENTS - 3.7% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 4.78% dated 10/31/94 due 11/1/94 $ 20,964,783 20,962,000 99799N9L TOTAL INVESTMENT IN SECURITIES - 100% (Cost $503,236,627) $563,215,710 CURRENCY ABBREVIATIONS MYR - Malaysian ringgit SGD - Singapore dollar CHF - Swiss franc THB - Thai baht LEGEND (a) Non-income producing (b) Principal amount is stated in United States dollars unless otherwise noted. (c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $16,920,653 or 3.1% of net assets. (d) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $431,522,832 and $448,264,433, respectively. The fund participated in the interfund lending program as a borrower. The maximum loan and the average daily loan balances during the periods for which loans were outstanding amounted to $33,549,00 and $28,085,143, respectively. The weighted average interest rate was 3.38% (see Note 2 of Notes to Financial Statements). The fund participated in the bank borrowing program. The maximum loan and the average daily loan balances during the period for which loans were outstanding amounted to $15,712,000 and $4,681,174, respectively. The weighted average interest rate was 4.05%. Interest expense includes $12,121 paid under the bank borrowing program (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At October 31, 1994, the aggregate cost of investment securities for income tax purposes was $503,584,874. Net unrealized appreciation aggregated $59,630,836, of which $96,333,912 related to appreciated investment securities and $36,703,076 related to depreciated investment securities. The fund hereby designates $30,576,305 as a capital gain dividend for the purpose of the dividend paid deduction. For the period, interest and dividends from foreign countries were $8,376,038 or $0.30 per share. Taxes paid to foreign countries were $974,027 or $0.04 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Aerospace & Defense 2.1% Basic Industries 15.5 Conglomerates 0.2 Construction & Real Estate 17.4 Durables 5.6 Energy 3.2 Finance 13.9 Health 2.1 Holding Companies 2.2 Industrial Machinery & Equipment 5.3 Media & Leisure 4.0 Nondurables 4.9 Precious Metals 1.2 Retail & Wholesale 5.4 Services 1.4 Repurchase Agreements 3.7 Technology 5.6 Transportation 4.9 Utilities 1.4 100.0% PACIFIC BASIN FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES <TABLE> <CAPTION> <S> <C> <C> OCTOBER 31, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $20,962,000) (cost $503,236,627) - See $ 563,215,710 accompanying schedule Cash 301 Receivable for investments sold 5,982,675 Receivable for fund shares sold 10,929,267 Dividends receivable 966,674 Interest receivable 366,819 TOTAL ASSETS 581,461,446 LIABILITIES Payable for investments purchased $ 3,708,982 Payable for fund shares redeemed 23,244,843 Accrued management fee 398,227 Other payables and accrued expenses 577,255 TOTAL LIABILITIES 27,929,307 NET ASSETS $ 553,532,139 Net Assets consist of: Paid in capital $ 400,629,774 Distributions in excess of net investment income (352,101 ) Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 93,264,474 Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 59,989,992 NET ASSETS, for 27,733,187 shares outstanding $ 553,532,139 NET ASSET VALUE, offering price $19.96 and redemption price per share ($553,532,139 (divided by) 27,733,187 shares) </TABLE> STATEMENT OF OPERATIONS <TABLE> <CAPTION> <S> <C> <C> YEAR ENDED OCTOBER 31, 1994 INVESTMENT INCOME $ 7,764,339 Dividends Interest 1,305,366 9,069,705 Less foreign taxes withheld (974,027 ) TOTAL INCOME 8,095,678 EXPENSES Management fee 3,932,158 Basic fee Performance adjustment 443,566 Transfer agent fees 2,151,218 Accounting fees and expenses 302,476 Non-interested trustees' compensation 2,911 Custodian fees and expenses 869,471 Registration fees 85,005 Audit 41,820 Legal 4,273 Interest 30,577 Miscellaneous 5,136 Total expenses 7,868,611 NET INVESTMENT INCOME 227,067 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 95,915,294 Foreign currency transactions (23,112 95,892,182 ) Change in net unrealized appreciation (depreciation) on: Investment securities (23,614,927 ) Assets and liabilities in foreign currencies 10,909 (23,604,018 ) NET GAIN (LOSS) 72,288,164 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 72,515,231 OTHER INFORMATION $1,709,242 Sales Charges Paid to FDC Deferred sales charges withheld $24,748 by FDC Accounting fees paid to FSC $299,541 </TABLE> STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED YEAR ENDED INCREASE (DECREASE) IN NET ASSETS OCTOBER 31, OCTOBER 31, 1994 1993 <TABLE> <CAPTION> <S> <C> <C> Operations $ 227,067 $ 382,796 Net investment income Net realized gain (loss) 95,892,182 17,437,804 Change in net unrealized appreciation (depreciation) (23,604,018 80,580,451 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 72,515,231 98,401,051 Distributions to shareholders: (256,048 (1,023,177 From net investment income ) ) In excess of net investment income (2,801,167 - ) From net realized gain (6,809,163 - ) TOTAL DISTRIBUTIONS (9,866,378 (1,023,177 ) ) Share transactions 965,069,943 607,340,439 Net proceeds from sales of shares Reinvestment of distributions 9,613,028 1,000,772 Cost of shares redeemed (977,332,983 (328,462,549 ) ) Net increase (decrease) in net assets resulting from share transactions (2,650,012 279,878,662 ) TOTAL INCREASE (DECREASE) IN NET ASSETS 59,998,841 377,256,536 NET ASSETS Beginning of period 493,533,298 116,276,762 End of period (including distributions in excess of net investment income of $352,101 and $2,348,481, $ 553,532,139 $ 493,533,298 respectively) OTHER INFORMATION Shares Sold 51,298,442 40,739,229 Issued in reinvestment of distributions 566,134 87,252 Redeemed (52,364,846 (22,282,360 ) ) Net increase (decrease) (500,270 18,544,121 ) </TABLE> <TABLE> <CAPTION> <S> <C> <C> SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. </TABLE> FINANCIAL HIGHLIGHTS <TABLE> <CAPTION> <S> <C> <C> <C> <C> <C> YEARS ENDED OCTOBER 31, SELECTED PER-SHARE DATA 1994 1993 1992 C 1991 1990 </TABLE> <TABLE> <CAPTION> <S> <C> <C> <C> <C> <C> Net asset value, beginning of period $ 17.48 $ 12.00 $ 13.15 $ 12.89 $ 15.78 Income from Investment Operations Net investment income .10 .20 .08 B .02 B .12 Net realized and unrealized gain (loss) 2.78 5.39 (1.23) .40 (2.37) Total from investment operations 2.88 5.59 (1.15) .42 (2.25) Less Distributions (.01) (.11) - (.16) (.01) From net investment income In excess of net investment income (.11) - - - - From net realized gain (.28) - - - (.63) Total distributions (.40) (.11) - (.16) (.64) Net asset value, end of period $ 19.96 $ 17.48 $ 12.00 $ 13.15 $ 12.89 TOTAL RETURN A 16.88% 47.06% (8.75)% 3.37% (14.99)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 553,532 $ 493,533 $ 116,277 $ 95,051 $ 86,354 Ratio of expenses to average net assets 1.54% 1.59% 1.84% 1.88% 1.59% Ratio of net investment income to average net assets .04% .15% .65% .12% .88% Portfolio turnover rate 88% 77% 105% 143% 118% A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. C AS OF NOVEMBER 1, 1991 THE FUND DISCONTINUED THE USE OF EQUALIZATION ACCOUNTING. </TABLE> EMERGING MARKETS PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). Emerging Markets Fund has a 3% sales charge, which had been waived through May 31, 1994. CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF OCTOBER 31, 1994 YEAR FUND EMERGING MARKETS 19.32% 102.30% EMERGING MARKETS (INCL. 3% SALES CHARGE) 15.74% 96.24% Morgan Stanley Emerging Markets Free Index 29.36% 225.05% Average Emerging Markets Fund 22.53% 110.52% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, or since the fund started on November 1, 1990. You can compare the fund's figures to the performance of the Morgan Stanley Emerging Markets Free Index - a broad measure of the performance of stocks in developing countries, weighted by each country's market capitalization (or the total value of its outstanding shares). Mexico, Malaysia, Brazil, and Thailand are most heavily weighted, and together account for over 60% of the index. Keep in mind that before February 1992, the fund's objective was more broadly defined, and did not focus specifically on emerging markets. However, you can also compare the fund's performance to the average emerging markets fund, which currently reflects the performance of 14 funds with similar objectives tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF OCTOBER 31, 1994 YEAR FUND EMERGING MARKETS 19.32% 19.25% EMERGING MARKETS (INCL. 3% SALES CHARGE) 15.74% 18.34% Morgan Stanley Emerging Markets Free Index 29.36% 34.27% Average Emerging Markets Fund 22.53% 20.44% 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 Emerging Mkts FuMorgan Stanley EMF 11/01/90 9700.00 10000.00 11/30/90 9564.20 9479.74 12/31/90 9777.33 9880.37 01/31/91 9709.16 10679.30 02/28/91 10118.18 12260.21 03/31/91 10108.44 12766.06 04/30/91 10332.42 12903.41 05/31/91 10332.42 13918.67 06/30/91 9972.10 13421.82 07/31/91 10186.35 14119.08 08/31/91 10108.44 14418.70 09/30/91 10225.30 13869.26 10/31/91 10127.92 14439.40 11/30/91 9991.58 14225.77 12/31/91 10438.07 15824.40 01/31/92 10517.68 17656.36 02/29/92 10826.14 18442.83 03/31/92 10806.24 19068.46 04/30/92 11064.96 18940.35 05/31/92 11542.58 18873.02 06/30/92 11522.68 17002.12 07/31/92 11144.56 17189.36 08/31/92 10865.95 16390.47 09/30/92 10796.29 16450.88 10/31/92 10995.30 17332.58 11/30/92 10905.75 17144.49 12/31/92 11048.91 17652.99 01/31/93 11201.38 17738.37 02/28/93 11770.60 18033.91 03/31/93 12095.86 18628.41 04/30/93 12482.12 19056.85 05/31/93 12756.56 19581.32 06/30/93 12919.19 20162.41 07/31/93 13142.81 20705.31 08/31/93 14057.63 22457.49 09/30/93 14372.73 23058.76 10/31/93 16446.31 25127.66 11/30/93 17096.84 26239.62 12/31/93 20082.32 30576.92 01/31/94 19501.26 31133.23 02/28/94 18950.78 30579.38 03/31/94 17115.84 27812.28 04/30/94 16952.74 27255.97 05/31/94 17391.08 28188.79 06/30/94 16167.80 27411.79 07/31/94 17401.28 29116.21 08/31/94 19613.39 32729.91 09/30/94 20112.90 33101.88 10/31/94 19623.58 32504.77 Let's say you invested $10,000 in Fidelity Emerging Markets Fund on its start date and paid the 3% sales charge. By October 31, 1994, it would have grown to $19,624 - a 96.24% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley Emerging Markets Free Index, which would have grown to $32,505 over the same period - a 225.05% 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) EMERGING MARKETS FUND TALK: THE MANAGER'S OVERVIEW An interview with Richard Hazlewood, Portfolio Manager of Fidelity Emerging Markets Fund Q. RICHARD, HOW HAS THE FUND PERFORMED OVER THE PAST YEAR? A. It has been a pretty volatile year for emerging market stocks, which is not unusual. Despite wide market swings in both directions, the fund returned 19.32% for the 12 months ended October 31, 1994. The Morgan Stanley Emerging Markets Free Index rose 29.36% during the same period, while the average emerging markets fund tracked by Lipper Analytical Services was up 22.53%. Q. IT SOUNDS LIKE THE FUND HAD ITS SHARE OF UPS AND DOWNS. CAN YOU ELABORATE? A. Sure. Emerging market stocks soared during the final two months of 1993. Many investors were still discovering these markets for the first time, and heavy inflows of money helped drive stock prices to historically high levels. We then saw a consolidation in the markets during the first few months of 1994, as prices adjusted downward to more reasonable levels relative to company earnings. During this time, some newer investors jumped ship at the first sign of trouble. That created heavy outflows of money from the emerging markets and from the fund, which further fueled the correction. Keep in mind that emerging market companies were still reporting very strong earnings - that hadn't changed. By late summer, stock valuations - their prices relative to earnings - had fallen to quite attractive levels. That allowed earnings to drive the market, and emerging market stocks staged a late-summer rally. This flurry of activity illustrates a key point: investors in these markets should have a long-term outlook. While the fund has the potential for excellent returns over time, it is prone to volatility. Q. WHY, SPECIFICALLY, DID THE FUND TRAIL THE INDEX AND THE AVERAGE FUND? A. As I mentioned in the last report, the index includes several countries to which the fund has very limited access due to trading restrictions. In addition, the stocks in many of these smaller markets often are bought and sold very infrequently. I can't invest in several countries because I must maintain a reasonable level of liquidity within the fund. For example, the index's top performing countries over the past year included Chile, Colombia and India - three countries in which I'm able to make only a limited amount of investments. Liquidity issues also had to do with why the fund slightly underperformed its peers. Brazil has been the best performing market in the world this year, thanks to an effective inflation fighting plan and a more stable currency. However, the fund was underweighted there early in 1994. Brazil is another market in which it can be difficult to trade, and considering the fund's volatile asset inflows and outflows earlier this year, I didn't think it wise to invest there any more heavily than I did. However, as the year wore on, I felt increasingly comfortable making the move, and the fund did catch much of the run-up in Brazilian stocks over the summer. The fund had a 13.3% stake in Brazil on October 31, compared to a 7.8% stake six months ago. Q. WHERE ELSE HAVE YOU FOUND OPPORTUNITIES LATELY? A. If you look at any country in which the fund is invested, you'll probably see stocks in three fast-growing emerging market industries: telecommunications, electricity generation and banking. A story comes to mind that illustrates my optimism about the telecommunications industry. Recently, I returned to a hotel in the Philippines whose restaurant is finally serving meals now that electricity is running with regularity there. I was amazed at the scene; it was as if the "power breakfast" had arrived in the Philippines. I was surrounded by business people, all with cellular phones on their tables. It's easier to get a cellular phone line than a fixed line in the Philippines, and I've invested in First Pacific, a Hong Kong company, which has a major cellular license in the Philippines. Research among Far East cellular companies then led me to Nokia, a Finnish company that is a favorite provider of phones. And these cellular companies are selling the phones as fast as Nokia can make them. Q. HOW ABOUT THE ELECTRIC COMPANIES? A. Another compelling story. Consider that Asia will have to spend roughly $300 billion dollars over the next six years to build electric power plants to keep up with growing demand. Governments won't lay out that kind of money. So they're contracting with private electric companies to build and run these plants at guaranteed rates of return on their investment. The growth potential among these so-called independent power producers is almost limitless. For example, Consolidated Electric Power Asia (CEPA) - one of the fund's top 10 investments at the end of October - is building plants in India, Indonesia, Pakistan and the Philippines. Ban Pu Coal of Thailand and YTL in Malaysia are two more electricity generating companies that are experiencing tremendous growth. Q. AND THE BANKS? A. It doesn't matter whether you're in Buenos Aires or Bangkok, banks in emerging market countries are always crowded. People in these countries use banks much more often than we do; for example, that's where they pay electric and phone bills. These banks are anything but automated. They're just beginning to implement computer technology that will allow them to lower staffing levels and expand their branches. As this technology expands, banks will become more efficient, which reduces costs. On the revenue side, banks are seeing increasing loan demand due to the explosion of infrastructure projects in these countries. That boosts revenues derived from fees that the banks charge. Banks such as Bangkok Bank and Thai Farmers Bank in Thailand are growing earnings at an annual rate of 25% to 30%, and their stocks are still attractively valued. Q. OVER THE PAST YEAR, MALAYSIA HAS REMAINED THE COUNTRY IN WHICH THE FUND HAD THE LARGEST STAKE. WHY? A. Malaysia breaks the mold of the three investment themes I've been describing. Although the performance of the Malaysian market has been relatively flat this year, there still are more excellent stock stories here than anywhere else in the emerging markets. Part of the reason is the government's willingness to foster development by privatizing assets. Any company in Malaysia can approach the government with a proposal to privatize something. If the proposal is sound, the company can suddenly jump into what is often a very lucrative project. Q. CAN YOU GIVE US AN EXAMPLE? A. No problem. If you wanted to drive the length of Malaysia in past years - - from the Singapore border to the Thai border - you had to navigate a very primitive and rustic road. It was an arduous journey, often taking up to 18 hours - longer in heavy rain. Well, a few years ago a company called United Engineers (UE) won a government concession to build a new road. The company recently finished the project, and the driving time for that same trip has been cut to just seven hours. Now everybody wants a car, and UE is making a bundle from tolls. The stock has performed well for the fund and I see excellent earnings prospects going forward. Meanwhile, UE's parent company - - Renong Group - has a proposal on the table in India to build 10,000 kilometers of new roads. It's a $25 billion dollar project, in U.S. dollars. These types of huge construction projects are happening all across Asia. In fact, the joke in Shanghai these days is that the national bird of China is the "crane." Q. LET'S TALK ABOUT YOUR OUTLOOK FOR THE FUND. WHAT DO YOU SEE ON THE HORIZON? A. I'm optimistic. As painful as it was, many emerging markets needed the consolidation we've seen in 1994. They were simply overbought, meaning there were fewer buyers left to drive up prices further. Through it all, though, most of the fund's companies have continued to show excellent earnings growth. And historically, stock prices follow earnings over time. That said, there are so many economic, political and psychological factors that influence these markets in the short term. The key is that if I've picked companies that continue to expand their earnings, stock prices - in the long run - should reflect that growth. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in common stocks of emerging economies and developing capital markets START DATE: November 1, 1990 SIZE: As of October 31, 1994, more than $1.9 billion MANAGER: Richard Hazlewood, since July 1993; assistant, Fidelity Low Priced Stock Fund and Fidelity Contrafund, 1992-1993; analyst, Japanese stocks, 1991-1992; joined Fidelity in 1991 (checkmark) RICHARD HAZLEWOOD ON EMERGING MARKET INVESTMENT OPPORTUNITIES: "Just within the past year, I've seen many emerging markets become gradually more accessible to foreign investors. It's slow going, but the door appears to be opening even in unsophisticated markets such as Pakistan and very restrictive markets such as Korea. "Often, the process begins when governments begin to privatize industry. Companies that take on infrastructure projects and the like can raise equity in New York by issuing American Depository Receipts (ADRs). ADRs are simply receipts for the shares of a foreign-based corporation that entitle the shareholder to all dividends and capital gains from that company's stock. The fund often can invest in these companies much more freely through ADRs than by buying stock in their native countries. In addition, companies that issue ADRs have reporting requirements that make it easier to learn about their business prospects. I think as economies continue to grow in these countries, we'll see bigger stock markets and better access." (solid bullet) The fund's stake in Hong Kong was reduced from 10.9% to 5.7% over the past six months. Because of the tremendous development happening across China - in Shanghai, for example - the fund is focusing on Hong Kong companies whose business extends into the rest of China. That has meant a reduction in the stocks of Hong Kong banks and property companies, whose businesses tend to be highly localized. (solid bullet) The fund's investment in emerging market bonds was 4.4% on October 31, down from 11.3% six months ago. These bonds appeared to offer attractive value compared to stocks early in 1994. However, when interest rates rose in the U.S., the subsequent sell-off in bonds was magnified in emerging markets. (solid bullet) Although the fund is allowed to use derivative investments such as futures and forward foreign currency contracts, it had only a very small stake in derivatives on October 31. This was a 0.1% investment in indexed securities, or structured notes, tied to the performance of Russian stocks. Structured notes are like customized bonds; they often are used to reflect an investor's view on the direction of interest rates. However, in this case, they are used to gain customized exposure to a foreign market that would otherwise be inaccessible. DISTRIBUTIONS The Board of Trustees of Fidelity Emerging Markets Fund voted to pay on December 5, 1994, to shareholders of record at the opening of business on December 2, 1994, a dividend of $.04 from net investment income. EMERGING MARKETS INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1994 India 5.8% Argentina 4.1% Row: 1, Col: 1, Value: 5.8 Row: 1, Col: 2, Value: 13.1 Row: 1, Col: 3, Value: 3.5 Row: 1, Col: 4, Value: 15.1 Row: 1, Col: 5, Value: 15.1 Row: 1, Col: 6, Value: 20.9 Row: 1, Col: 7, Value: 3.4 Row: 1, Col: 8, Value: 5.7 Row: 1, Col: 9, Value: 13.3 Row: 1, Col: 10, Value: 4.1 Brazil 13.3 % Thailand 13.1 % Philippines 3.5 % Hong Kong 5.7% Korea (South) 3.4% Other 15.1 % Malaysia 20.9% Mexico 15.1% AS OF APRIL 30, 1994 United States 7.9% Argentina 9.4% Row: 1, Col: 1, Value: 7.9 Row: 1, Col: 2, Value: 9.300000000000001 Row: 1, Col: 3, Value: 3.4 Row: 1, Col: 4, Value: 11.9 Row: 1, Col: 5, Value: 17.2 Row: 1, Col: 6, Value: 18.5 Row: 1, Col: 7, Value: 3.7 Row: 1, Col: 8, Value: 10.9 Row: 1, Col: 9, Value: 7.8 Row: 1, Col: 10, Value: 9.4 Thailand 9.3 % Brazil 7.8% Singapore 3.4% Hong Kong 10.9% Other 11.9% Korea (South) 3.7% Mexico 17.2% Malaysia 18.5% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks and closed-end investment companies 94.2 80.8 Bonds 4.4 11.3 Short-term investments 1.4 7.9 TOP TEN STOCKS % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Grupo Carso SA de CV Class A-1 (Mexico, Holding Companies) 1.9 2.0 Telebras PN (Pfd. Reg.) (Brazil, Telephone Services) 1.8 0.9 Cemex SA, Series B (Mexico, Building Materials) 1.8 1.3 Consolidated Electric Power Asia Ltd. (Hong Kong, Electric Utility) 1.5 0.9 Technology Resources BHD (Malaysia, Air Transportation) 1.4 1.9 Bangkok Bank Ltd. (Thailand, Banks) 1.3 0.5 Telefonos de Mexico SA sponsored ADR representing shares Ord. Class L (Mexico, Telephone Services) 1.3 2.0 Thai Farmers Bank PCL (Thailand, Banks) 1.3 0.2 Petrobras PN (Pfd. Reg.) (Brazil, Oil and Gas) 1.3 0.8 Electrobras PN Class B (Brazil, Electric Utility) 1.3 0.4 TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Finance 22.8 23.1 Basic Industries 15.6 10.5 Construction & Real Estate 13.9 15.8 Utilities 12.6 10.6 Holding Companies 8.5 - Nondurables 5.3 4.7 Durables 4.9 3.1 Energy 3.6 2.8 Retail & Wholesale 3.0 3.4 Media & Leisure 2.5 4.7 EMERGING MARKETS INVESTMENTS OCTOBER 31, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 93.8% SHARES VALUE (NOTE 1) ARGENTINA - 4.1% Astra Comp Argentina de Petroleum (Reg.) 1,812,720 $ 3,808,053 04699B94 Bagley Y Cia Ltd. SA Class B (Reg.) 117,760 471,205 05699C23 Banco de Galicia Y Buenos Aires SA sponsored ADR representing Class B shares 96,385 2,602,395 05953820 Banco del Sud SA 23,652 331,244 05957M92 Banco Frances del Rio de la Prata SA (Reg.) 421,859 3,587,059 21199692 Buenos Aires Embotelladora SA sponsored ADR 109,200 4,190,550 11942420 Capex SA Class A (a) (e) 100,000 970,340 13961293 Central Costanera SA ADR (e) 118,300 4,066,563 15324M10 Central Puerto SA ADR (e) 22,300 719,175 15503810 Commercial del Plata 1,088,940 3,671,013 20199392 Interamericania de Auto Ord. 515,854 7,198,681 26899722 Mirgor Sacifia Class C sponsored ADR (e) 208,000 1,846,000 60470110 Molinos Rio de La Plata SA (Reg.) (a) 710,615 6,205,843 60899C22 Perez Companc Class B 1,998,850 10,797,568 71399723 Telefonica de Argentina SA Class B 666,200 4,111,893 87999D92 Transportadora de Gas del Sur SA: Class B 95,000 227,130 89387092 Class B (e) 185,000 434,902 89387093 Telecom Argentina Stet France Telecome SA 2,304,979 14,019,182 90899992 YPF Sociedad Anonima sponsored ADR representing Class D shares 507,500 12,243,438 98424510 81,502,234 BANGLADESH - 0.1% Beximco Pharmaceuticals Ltd. (a) 39,268 1,400,741 08899522 Bangladesh Lamps Ltd. (a) 161 5,880 52799322 Padma Textile Mills Ltd. (a) 55,000 648,617 69399G22 2,055,238 BERMUDA - 0.7% Central European Media Class A (a) 36,000 585,000 15399422 Consolidated Electric Power Asia Ltd. sponsored ADR (e) 76,800 1,766,400 20855210 Jardine Strategic Holdings Ltd. Ord. 2,922,000 11,231,204 47199020 13,582,604 BRAZIL - 13.3% Acesita Cia Acos Especiais Itabira Ord. 22,111,700 2,094,641 00499L22 Aracruz Celulose SA ADR (a) 290,050 3,698,138 03849610 Bradesco PN 1,518,824,420 14,208,067 10599992 Brahma (Cia Cervejaria): PN (Pfd. Reg.) Class B 31,070,087 10,927,039 15799492 ON (warrants) (a) 1,676,255 148,885 15799494 PN (warrants) (a) 130,763 4,802 15799498 Brasmotor PN 28,575,500 11,843,116 10599892 Casa Anglo PN Ord. (a) 12,031,557 3,134,341 13599392 Cimento Itau PN Ord. 1,234,000 540,652 14799392 Celesc PN Class B Ord. (a) 890,000 948,482 15199E22 CESP (Cia Energetica de Sao Paulo) PN 180,000 249,912 20440P92 Compania Energertica Minas Gerais 38,054,500 3,875,470 15199992 Companhia Paran de Energetica-Copel 75,341,100 747,384 20441B92 Compania Vale do Rao Doce PN Ord. 111,090,500 24,073,311 20499792 Compania Paulista de Forca Luz Ord. 34,602,260 3,073,027 20499922 Copene-Petroquimica do Nordeste SA 800,000 748,368 21799722 Coteminas PN 12,156,252 5,181,967 22199692 Compania Siderurgica Nacional ON 530,990,000 24,395,988 24499523 Duratex Corp. PN 20,365,000 1,495,198 26699493 Electrobras: PN Class B 64,895,784 24,820,691 69699993 ON 6,491,811 2,529,080 69699998 SHARES VALUE (NOTE 1) Iochpe Maxion PN Ord. 1,540,000 $ 1,066,789 46199F22 Itaubanco PN (Pfd. Reg.) 16,056,900 5,152,659 46599A92 Karsten PN 1,451,638 73,061 48599B92 Klabin Industria de Papel e Celulose PN 1,351,810 2,369,074 45599A22 Light Servicos de Electricidade SA Ord. 17,817,100 6,920,162 53299892 Lojas Americanas (Reg.) 4,410,000 151,969 54199A92 Lojas Americanas 28,772,262 885,898 54199A93 Moinho Santista-Industrias Gerais SA Ord. (a) 343,700 1,343,056 60899F22 Multibras Electrodomesticos PN 116,150 178,798 62599B22 Papel Simao, Industries De SA PN 24,340,000 1,126,442 69899792 Petrobras PN (Pfd. Reg.) 163,252,600 25,131,105 71699794 Sadia Concordia PN (Pfd. Reg.) 94,750 144,173 78699B93 Souza Cruz Industria Comerico 70,000 663,114 84599D92 Telebras: PN (Pfd. Reg.) 723,149,209 34,851,059 95499792 ON 111,055,700 4,511,083 95499795 Telesp PN: (Pfd. Reg.) 35,516,900 18,084,495 87999B93 (rights) (a) 525,236 5,778 90999C24 Telepar PN 1,009,095 370,419 87999F22 Unibanco PN 51,278,034 1,621,411 90599A94 Usiminas PN sponsored ADS (a) (e) 57,000 954,750 91730210 Usiminas PN (Pfd. Reg.) 661,993,600 17,549,048 97199693 261,892,902 CANADA - 0.0% Bolivar Goldfields Ltd. (a) 51,750 82,213 09760Q10 CHILE - 1.6% Chilgener SA sponsored ADR 34,000 960,500 16889410 Compania Cervecerias Unidas SA ADR 397,700 10,588,763 20442910 Cristalerias de Chile SA sponsored ADR 73,200 1,573,800 22671410 Embotelladora Andina SA sponsored ADR 72,700 2,008,338 29081P10 Empresa Nacional de Electricidad SA 83,000 2,334,375 29244T10 Empresas Telex Chile SA sponsored ADR (a) 63,600 1,168,650 29245D10 Enersis SA sponsored ADR 235,000 6,903,125 29274F10 Madeco SA ADR 55,100 1,721,875 55630410 Maderas Y Sinteticos SA sponsored ADR 123,100 3,446,800 55646510 Soc. Quimica y Minera de Chile ADR 38,900 1,317,738 83363510 Vina Concha y Toro SA sponsored ADR (a) 20,200 361,075 92719110 32,385,039 CHINA (PEOPLES REP.) - 0.6% China First Pencil Co. Ltd. Class B (c) 3,199,802 1,209,525 19099622 Dongfang Electrical Machinery Co. Class H (a) 1,200,000 660,024 25899C22 Huaneng Power International, Inc. Class N sponsored ADR 10,000 185,000 44330410 Luoyang Glass Ltd Class H (a) (e) 1,200,000 691,080 55043410 Luoyang Glass Ltd. Class H 600,000 345,540 55043492 Qingling Motors Ltd. Class H (a) (e) 2,007,000 850,647 74727395 Shandong Huaneng Power Development Ltd. Class N sponsored ADR 70,170 754,328 81941910 Shanghai Petrochemical Co. Ltd. Class H ADR 10,000 337,500 81942410 Shanghai Diesel Engine Class B (a) 896,800 959,576 84299A22 Shanghai Hero Ltd. Class B (a)(c) 2,549,600 963,749 84399B22 Shanghai Industrial Sewing Machine Corp. Class B (a) 1,135,600 595,054 84399D22 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) CHINA (PEOPLES REP.) - CONTINUED Shanghai Refrigerator Compressor Co. Ltd. Class B (c) 2,703,400 $ 1,157,055 84599H92 Shanghai Jin Jiang Tower Co. Ltd. 13 8 84599U22 Shanghai Vacuum Electron Devices Co. Ltd. (c) 5,119,598 1,146,790 84599992 Tsingtao Brewery Co. Ltd. 1,732,000 1,300,057 87299922 Yizheng Chemical Fibre Co. Ltd. Class H 1,000,000 397,960 99599E22 11,553,893 COLOMBIA - 0.4% Banco Ganadero SA ADR (a)(e) 58,000 1,696,500 05959410 Carulla & CIA SA Class B sponsored ADR (a)(e) 88,100 1,321,500 14679410 Cementos Diamante SA Class B ADR (a)(e) 50,000 1,150,000 15126110 Cementos Paz del Rio sponsored ADR (a)(e) 102,000 2,499,000 15126410 Corporacion Financiera del Valle ADR Class B (a) (e) 7,747 170,434 21986910 6,837,434 FINLAND - 0.1% Nokia Corp. sponsored ADR (a) 20,000 1,502,500 65490220 GREECE - 0.0% Hellenic Bottling Co. SA 7,500 232,837 42399A92 HONG KONG - 5.4% CDL Hotels International Ltd. 5,159,583 2,370,467 14999792 Chevalier International Holdings Ltd. 3,302,000 542,717 16699B22 Chevalier International Holdings Ltd. (warrants) (a) 660,400 17,091 16699B23 Chevalier (OA) International Ltd. 1,000,000 91,890 16699E22 Chinney Investments Ltd. 1,984,000 351,763 16999B22 Consolidated Electric Power Asia Ltd. 12,408,723 28,986,281 20855292 Dao Heng Bank Group Ltd. 702,000 2,330,310 23799F22 Dah Sing Financial Holdings Ltd. 766,875 1,955,148 23899892 Esprit Asia Holdings Ltd. 2,204,000 1,041,103 29699522 First Pacific Co. Ltd. 16,475,346 11,620,391 33699192 First Pacific Bancshares Holding Ltd. 3,050,000 588,132 33699292 Glynhill International Ltd. (a) 500,000 23,620 37199492 Grand Hotel Holdings Ltd. Class A 4,675,000 1,936,058 38599292 Great Eagle Holdings Ltd. 200,000 113,886 39099394 Guoco Group Ltd. 1,424,000 6,726,549 40299692 Henderson Investment Ltd. 3,900,000 3,583,554 42599422 Hong Kong Ferry Holdings Ltd. 350,000 489,195 43899A92 Hopewell Holdings Ltd. 19,883,439 20,457,275 44099999 International Bank of Asia Ltd. 1,710,000 713,703 45899E22 Island Dyeing & Printing Co. Ltd. (a) 151,000 235,480 46099C22 JCG Holdings Ltd. 8,286,000 5,415,315 46799792 Jardine International Motor Corp. 558,000 686,039 47499292 Kwong Sang Hong International Ltd. 2,000,000 666,500 50599192 Lai Sun Development Co. Ltd. 500,000 91,885 50699992 Liu Chong Hing Bank Ltd. (a) 1,100,000 1,437,821 54399A22 Liu Chong Hing Investment Ltd. 1,100,000 1,345,278 54999592 Mingly Corp. Ltd. 5,010,000 1,011,469 60399C22 Nanyang Holdings Ltd. (a) 430,000 612,139 63099D22 Peregrine Investments Holdings Ltd. 1,827,000 3,191,988 71399492 Pricerite Group Ltd. 2,756,000 485,084 74199D22 Regal Hotels International Holdings Ltd. 1,120,000 272,496 75999110 San Miguel Brewery Ltd. 300,000 264,009 79999K22 Shaw Bros. Hong Kong Ltd. 1,712,000 2,979,993 82028710 Shangri-La Asia Ltd. 300,000 432,897 84599M22 Tian Teck Land Ltd. 2,800,000 692,132 93699C22 Tai Ping Carpets International Ltd. 50,000 31,060 94099A22 SHARES VALUE (NOTE 1) Watary International Holdings Ltd. 2,500,000 $ 287,950 94199D22 Wing On Co. International Ltd. 1,603,000 2,136,783 97499092 106,215,451 INDIA - 5.0% Alacrity Housing Ltd. (a) 160,000 305,963 01199C22 Apollo Hospitals Enterprises Ltd. (a) 100,000 137,046 03799722 Bharti Telecom Ltd. (a) 14,000 46,851 05599K22 Bajaj Auto Ltd. GDR (e) 88,000 2,229,040 05710010 Bombay Dyeing & Manufacturing Co. GDR 69,000 983,250 09799H23 Century Textiles & Industries GDR (a) (e) 30,500 6,862,500 15669010 CESC Ltd. GDR (e) 37,500 412,500 15712810 Chemicals & Plastics India Ltd. (a) (e) 315,000 2,560,059 16399D23 Core Parenterals Ltd. GDR (a) 348,000 3,264,240 21899123 Cosmo Films Ltd. (a) 20,275 109,852 22199B22 Crompton Greaves Ltd. (a) 300,000 2,103,501 22799522 East India Hotels Ltd. GDR (a) (e) 180,000 2,597,400 27315110 Finolex Cables Ltd. GDR (a) (e) 240,000 4,711,200 31790610 Finolex Cables Ltd. GDR (a) 55,000 1,079,650 31790693 Grasim Industries Ltd. GDR (RFD) (a) (e) 212,000 5,088,000 38870620 Great Eastern Shipping Co. Ltd. GDR 97,700 1,245,675 39099823 Gujarat Ambuja Cement Ltd. GDR (a) 20,000 420,000 40204293 Himachal Futuristic Communications Ltd. (a) 20,000 95,614 43299A22 Hindalco Industries Ltd. GDR (a) (e) 77,000 2,656,500 43306410 Hindalco Industries Ltd. (RFD) GDR (a) (e) 10,000 345,000 43306430 Hindalco Industries Ltd. (RFD) GDR (a) 20,000 690,000 43306494 Housing Development Finance Corp. Ltd. (a) 21,000 1,840,564 44299U22 ITC Ltd. GDS (warrants) (a) (e) 142,000 1,615,960 45031810 India Cements Ltd. GDR (a) (e) 236,500 2,365,000 45408P10 Indian Aluminum Ltd. GDR (a) (e) 85,000 861,050 45410110 Indian Rayon & Industries, Inc. GDR (a) 110,000 2,062,500 45435293 Indo Gulf Fertilizer and Chemicals Corp. Ltd. GDR (a) (e) 387,000 1,141,650 45577P10 Industrial Credit & Investments Corp. Ltd. (a) 17,000 780,208 45605292 JCT Ltd. GDR (a) (e) 218,000 4,796,000 46612510 JCT Ltd. GDR (a) 23,000 506,000 46612593 JK Corp. Ltd. GDR (e) 250,000 1,900,000 46618810 JCT Electronics Ltd. (a) 50,000 147,405 46899122 Mahindra & Mahindra Ltd. GDR (a) 125,000 1,360,000 55999923 Maral Overseas Ltd. (a) 405,000 839,010 56599722 Mukand Ltd. 95,000 1,059,718 62499D22 Nicholas Piramal India Ltd. (a) 25,000 438,230 66699922 NIIT Ltd. (a) 10,000 95,614 66999922 Ranbaxy Laboratories Ltd. GDR (a) (e) 260,000 5,395,000 75188110 Reliance Industries Ltd. GDR (e) 90,000 2,272,500 75947010 Reliance Industries Ltd. (a) 1,000,000 12,549,300 75947092 Reliance Industries Ltd. GDS (a) 120,000 3,030,000 75947094 SIV Industries Ltd. GDR (a) (e) 104,000 2,288,000 78427P20 Sanghi Polyesters Ltd. GDR (a) (e) 333,400 2,333,800 80100P10 Shriram Industries Ltd. GDR (a)(e) 45,200 1,864,500 82554620 Southern Petrochemical Industries Corp. GDS (a) 50,000 712,500 84361310 State Bank Of India (a) 20,000 127,485 85599E22 Tata Electric Companies GDR (a) (e) 700 294,000 87656610 Tata Engineering & Locomotive Ltd. GDR (a) (e) 307,000 4,835,250 87656810 Tata Engineering & Locomotive Ltd. (warrants) (a) (e) 282,000 1,305,660 87656811 Tube Investments of India Ltd. GDR (e) 37,000 259,000 90699F24 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) INDIA - CONTINUED Unitech Ltd. 254,350 $ 1,013,308 90799M22 United Phosphorus GDR (a) 10,000 290,000 91199K24 Zee Telefilms Ltd. (a) 58,300 464,523 98999X22 98,787,576 INDONESIA - 2.8% Andayani Megah PT 44,000 91,197 03399722 Astra International PT (For. Reg.) 1,317,600 2,913,003 04699894 Bank Dagang Nas Indonesia PT 2,025,000 3,917,322 06099Q22 Bank Niaga PT 261,000 1,081,929 06399C22 Barito Pacific Timber PT (For. Reg.) 160,000 272,670 06799F23 Dharmala International Land PT 455,000 623,468 25399592 Duta Anggada Realty Ord. 295,000 298,924 26699192 Gudang Garam PT Perusahaan 1,096,500 7,222,042 40199393 Heromini Supermarket PT (For. Reg.) (a) 447,000 1,008,834 42799494 Indah Kiat Pulp & Paper (For. Reg.) 449,400 532,997 45499B23 Indo Rama Synthetics PT (For. Reg.) 250,000 1,001,785 57099794 Indosat (Indonesia Satellite) sponsored ADR 75,200 2,951,600 71568010 Jakarta International Hotels & Development Ord. 50,000 67,937 47399693 Lippo Bank (For. Reg.) (a) 1,393,050 2,983,565 53699A23 Matahari Putra Prima PT (For. Reg.) 2,100,000 4,449,312 57699C92 Pakuwon Jati PT (For. Reg.) (a) 656,500 703,026 69599393 Panin Bank PT (For. Reg.) 1,771,000 3,099,693 69899823 Roda Vivatex PT (For. Reg.) (a) 1,040,000 2,299,274 77499293 Sampoerna Hanjaya Mandala (For. Reg.) 3,091,250 14,949,934 82299893 SUCACO PT 50,000 166,964 89399292 Trias Sentosa (For. Reg.) 803,000 1,664,346 89599D22 United Tractors PT (For Reg.) 984,000 2,538,041 91599594 54,837,863 KOREA (SOUTH) - 3.2% Boram Bank 27,067 329,361 09999325 Central Investment & Finance Corp. (a) 19,897 409,347 15499422 Cho Hung Bank Co. Ltd. (a) 13,537 219,065 17099E25 Cho Kwang Paint Industry Co. Ltd. (a) 8,600 571,787 17399N22 Chosun Brewery Co. Ltd. (a) 10,728 368,748 22899822 Chosun Refractories Co. (a) 10,000 420,247 28099322 Chosun Refractories Co. (RFD) (a) 11,824 444,985 28099323 Dae Chang Industrial Co. 69,150 1,509,390 23399M22 Dai Han Investment & Finance (a) 30,000 583,328 23399P22 Daewoo Electronics Components Co. Ltd. 1,800 27,548 23799E23 Daewoo Heavy Industries Ltd. (a) 49,510 906,788 23999492 Daewoo Heavy Industries Ltd. (RFD) (a) 490 8,852 23999497 Daewoo Metal Co. Ltd. 28,180 512,589 24999B22 Dong Chang Paper Mfg. Co. Ltd. (a) 20,000 204,478 25799Y22 Dong-A Investment & Finance (a) 38,603 590,800 25899822 Hanjin Engineering & Construction Co. Ltd. (a) 3,300 82,795 41099822 Han Shin Construction (a) 2,465 27,521 41199D23 Hyundai Engineering & Construction Co. Ltd. 44,808 2,473,251 41599122 Hyundai Corp. (a) 20,000 649,815 40999922 Hyundai Corp. (New) (a) 6,135 180,090 40999923 Hyundai Securities Co. Ltd. (a) 30,294 918,454 42699A22 Hung Chang Products Co. (a) 20,000 1,156,620 44599A22 Jinro Ltd. 28,000 906,228 73299422 Keumkang Development Industries Co. Ltd. (a) 40,110 956,018 49299F22 KLB Securities Co. 919 17,062 49899C22 Korea Electric Power Corp. ADR 431,450 8,413,275 50063110 Korea Electric Power Corp. 199,410 7,579,656 50099B92 Korea First Securities Co. Ltd. (a) 19,922 359,878 50099K22 SHARES VALUE (NOTE 1) Korea First Securities Co. Ltd. (New) (a) 2,052 $ 34,751 50099K24 Korea Iron & Steel Co Ltd. (a) 50,644 1,492,986 50099N22 Korea Iron & Steel Co. Ltd. (New) (a) 13,986 364,936 50099N23 Korea Line Corp. 38,060 1,179,304 50599N22 Korea Tungsten Mining Co. 600 27,849 50599S24 Korean Air 61,500 2,275,921 52299522 Korean Air (RFD) (a) 7,790 201,798 52299526 Kukdong Construction Co. 106,104 1,943,321 50199L22 Kumkang Industrial Co. Ltd. 30,600 548,931 50299H22 Kumkang Industrial Co. Ltd. (RFD) (a) 7,833 124,793 50299H24 Lucky Co. Ltd. (a) 134,000 4,488,239 54999E22 Lucky Co. Ltd. (FP) (a) 6,190 165,864 54999E24 Midopa Co. (a) 31,164 590,323 59899E22 Miwon Co. Ltd. 10,300 317,857 61299693 Naewae Semiconductor Co. 16,647 538,785 63099E22 Naewae Semiconductor Co. (New) (a) 5,216 143,953 63099E23 Namsung Corp. 37,000 742,646 63299D22 Onyang Pulp Co. 35,000 583,955 53499222 Oriental Chemical Industries Co. Ltd. (RFD) (a) 613 19,994 68999C24 Samsung Heavy Industries Co. Ltd. 30,000 1,554,287 82199C22 Samsung Heavy Industries Co. Ltd (FP) 3,722 134,985 82199C23 Seoul Securities Co. (a) 800 14,050 83599P22 Samyang Foods Co. (a) 30,000 1,354,826 84699F22 Shinhan Investment & Finance (a) 39,045 1,053,086 95599C22 Ssangyong Cement Co. 40,258 1,729,102 76899392 Ssangyong Heavy Industries Co. Ltd. (a) 34,312 563,868 77299122 Taeyoung Corp. (a) 13,780 1,161,658 90899D22 Taekwang Industrial Co. 60 34,247 91099F22 Tai Han Electric Wire Co. Ltd. (a) 30,000 963,432 95199G22 Taihan Textile Co. (a) 5,000 293,546 95199H22 Yeonhap Insupanel Co. 31,500 580,882 98699C22 Yu Hwa Securities Co. (a) 79,030 1,417,712 98799E22 Yukong Ltd. GDR (a) (e) 192,000 4,800,000 98849K10 Yukong Ltd. (New) 1,384 76,392 98899K25 Youl Chon Chemical Co. 30,000 1,223,107 99399P22 63,569,362 LUXEMBOURG - 0.1% Banque Indosuez Luxembourg SA (warrants) (a)(e) 1,500 15 06674N11 Quilmes Industries SA 37,700 989,625 74899692 989,640 MALAYSIA - 20.1% Arab Malaysian Corp. BHD 1,600,000 5,257,696 00499F92 Arab Malaysian Finance BHD (For. Reg.) (a) 1,242,666 3,986,249 00699A93 Advance Synergy BHD (a) 3,700,000 10,276,787 00799B22 Affin Holdings BHD 1,564,000 2,630,883 00899492 Amalgamated Steel Mills BHD 200,000 334,866 02499692 Amalgamated Steel Mills BHD (rights) (a) 25,000 5,379 02499696 Bandar Raya Development BHD 2,636,000 4,991,002 06000210 Berjaya Group BHD 7,900,000 12,547,254 08199A22 Berjaya Sports Toto BHD 1,022,000 1,591,223 08499E22 Berjaya South Island BHD (c) 1,721,000 18,851,060 08499G22 Berjaya Textile BHD 298,000 1,352,294 08499H22 British-American Life Insurance BHD 836,000 3,155,950 11099E22 Buildcon BHD 52,000 321,408 11999322 Carlsberg Brewery BHD 50,000 240,587 14299522 CHG Industries BHD 744,000 2,328,408 16699892 Commerce Asset Holding BHD 100,000 445,966 20099492 Construction & Supplies House BHD (a) 110,000 303,375 21099722 Development & Commercial Bank BHD 1,440,000 3,971,448 25199692 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) MALAYSIA - CONTINUED Dunlop Estates BHD 350,000 $ 1,143,275 26599392 Ekran BHD: Ord. 1,433,000 5,830,103 28299792 Class A (a) 1,433,000 5,549,808 28299793 Faber Group BHD (a) 200,000 226,112 30299892 Gadek BHD 1,053,000 7,167,613 36399D22 Gamuda BHD 200,000 1,017,114 36499A92 Ganda Holdings BHD (a) 4,600,000 13,316,402 36999C22 Genting BHD 3,000 27,579 37245210 Glenealy Plantations BHD 50,000 224,939 37899322 Golden Pharos BHD (a) 1,585,000 5,487,429 38299D22 Golden Plus Holdings BHD 50,000 242,543 38399492 Grand United Holding BHD (a) 42,000 65,721 38699922 Granite Industries BHD (a) 1,600,000 4,350,128 38799522 Ho Hup Construction Co. BHD 108,000 464,743 40899592 Hock Hua Bank BHD 755,000 2,392,369 43499B22 Hong Leong Industries BHD 544,000 2,915,519 43859992 Hong Leong Properties BHD 1,000 1,698 43899L22 Hume Industries BHD 3,299,000 13,809,020 44599692 Hong Leong Credit BHD 3,391,000 20,163,598 44699492 IGB Corp. BHD (Reg.) 50,000 49,682 44960092 Idris Hydraulic BHD (a) 1,665,000 3,113,433 45199B92 IJM Corp. BHD 37,000 139,677 45499592 Island & Peninsular BHD 370,000 1,027,679 45699592 Industrial Oxygen, Inc. BHD 1,650,000 2,104,262 45999892 Johan Holdings BHD 4,500,000 5,052,330 92599D22 Johan Holdings BHD (warrants) (a) 465,000 318,339 92599D24 Kamunting Corp. BHD 2,000,000 1,971,640 48399C22 Kelanamas Industries BHD 1,672,000 4,022,615 48799K22 Kelanamas Industries BHD (warrants) (a) 16,000 27,791 48799K25 Kent (George) BHD 650,000 1,767,240 49099792 Kent (George) BHD (warrants) (a) 10,000 9,819 49099793 Kuala Lumpur Kepong BHD Ord. 400,000 970,172 49399792 Kuala Lumpur Industries Holdings BHD 4,570,000 8,724,359 49799B92 Land & General BHD 1,123,000 5,535,379 51499693 Larut Consolidated BHD 276,000 647,824 51799222 Leong Hup Holdings BHD 62,400 136,700 52699692 Leong Hup Holdings BHD (warrants) (a) 10,400 12,856 52699695 Lien Hoe Corp. BHD 100,000 154,914 53199722 Lingui Development BHD 729,999 2,455,936 53599722 London & Pacific Insurance Co. BHD 226,500 788,596 54199E22 Long Huat Timber Industry BHD 342,000 551,215 54299592 MGR Corp. BHD 665,000 4,916,771 55399492 Magnum Corp. BHD 1,000 2,249 55999392 Malaysian Airlines System BHD 200,000 535,942 56084110 Malakoff BHD 3,584,000 8,832,947 56099J22 Malaysia Industrial Development Finance BHD Ord. 1,401,000 2,290,929 56099L22 Malaysia Industrial Development Finance BHD (rights) (a) 560,400 372,688 56099L23 Malaysian Helicopter Services BHD 2,648,400 6,527,114 56099M22 Malaysia British Assurance BHD 173,000 389,144 56099N22 Malaysian Plantations BHD 4,582,000 4,857,607 56099R22 Malaysian Plantations BHD (rights) (a) 2,291,000 1,093,403 56099R23 Malaysian Resources Corp. BHD 6,011,000 13,403,508 56099793 Maruichi Malaysia Steel Tube BHD 550,000 1,613,695 57388699 Mentiga Corp. BHD 100,000 365,770 58799B22 Metacorp BHD 1,105,000 4,279,510 59099E92 Metroplex BHD 50,000 50,856 59299G22 Minho BHD 20,000 49,682 60399822 Mycom BHD 641,000 1,504,549 63199892 Multi-Purpose Holdings BHD 1,630,000 2,754,667 00099292 SHARES VALUE (NOTE 1) Multi-Purpose Holdings BHD (warrants) (a) 582,000 $ 537,320 00099295 Negara Properties BHD 336,000 1,708,752 63999822 North Borneo Timber BHD (c) 3,158,000 14,577,770 65799B22 OSK Holdings BHD 913,000 5,321,740 67899922 OSK Holdings BHD (warrants) (a) 207,500 917,262 67899926 Omega Holdings BHD 1,000,000 2,914,430 68199G22 Oyl Industries BHD 1,000,000 7,080,680 69599492 Park May BHD 1,063,000 3,243,574 70099222 Pelangi BHD 400,000 491,344 70699492 Perlis Plantations BHD 100,000 352,078 71390092 Pernas International Hotel & Property BHD 85,000 121,701 71499392 Promet BHD 2,000,000 2,441,080 74399G22 Public Finance BHD (For. Reg.) 899,000 1,758,435 87799994 Rashid Hussain BHD 1,378,000 4,258,654 75399492 Red Box BHD 1,000 1,815 75699922 Renong BHD 1,860,000 2,910,509 75999H22 Resorts World BHD 600,000 3,802,446 76199592 Samanda Holdings BHD 950,000 3,121,757 91599193 Syarikat Kayu Wangi BHD 326,000 573,887 93599F22 Southern Bank BHD 207,000 603,287 84199992 Sungei Way Holdings BHD 1,557,250 6,152,850 86799892 Sungei Way Holdings BHD (warrants) (a) 236,750 387,136 89499H22 Sungei Bagen Rubber Co. BHD 10,000 567,237 88599B22 Super Enterprise Holdings BHD 19,000 40,137 98999Q22 Taiping Consolidated BHD 100,000 224,939 95599B22 Tan & Tan Development BHD 1,131,000 1,681,288 89699B22 Time Engineering BHD 427,000 1,269,518 93099592 Technology Resources BHD (a) 7,321,000 28,496,407 93699692 TA Enterprise BHD 2,940,000 9,546,004 94899892 Tongkah Holdings BHD 1,619,600 2,914,486 94999C92 Tongkah Holdings BHD (warrants) (a) 302,666 291,271 94999C96 Uniphone Telecommunications BHD 18,000 44,010 95499A92 Uniphone Telecommunications BHD (warrants) (a) 9,000 880 95499A94 United Engineers BHD 1,616,000 8,724,024 93099692 United Merchant Group BHD (a) 4,605,800 10,810,688 91099L22 Wing Tiek Holdings BHD 200,000 735,452 97499292 Yeo Hiap Seng BHD 150,000 756,968 98581093 YTL Corp. BHD 1,336,600 7,581,690 98799092 YTL Corp. BHD (warrants) (a) 217,200 866,676 98799094 Zalik BHD 1,233,000 6,945,797 98899P22 395,187,016 MEXICO - 15.1% BANACCI SA de CV: Class C 2,490,400 17,095,251 06399893 Class B 501,800 3,065,095 06399896 Bufete Industrial SA de CV sponsored ADR representing 3 ordinary certificate Banco 49,700 2,012,850 11942H10 Cementos Apasco SA de CV Class A 1,076,400 10,018,851 15299392 Cemex SA, Series B 3,772,200 34,781,495 15299293 Cifra SA Class C 6,143,600 16,547,357 17178594 Consorcio G Grupo Dina SA ADR 113,700 1,463,888 21030610 Controladora Commercial Mexicana SA Class B-1 1,174,800 2,139,111 21299692 Corporacion Geo SA de CV (a) 234,000 1,599,477 21986V92 DESC (Soc. de Fomento Industrial SA): Class B 1,270,000 9,382,785 25299692 Class C 402,348 2,785,306 25299693 Elektra (Grupo) SA (a) 188,700 2,115,876 62799425 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) MEXICO - CONTINUED Empresas Ica Sociedad Controladora SA de CV sponsored ADR representing Ord. (Part. Cert.) 414,900 $ 12,291,413 29244810 Emvasa del Valle de Enah Ord. (a) 317,000 1,512,160 29299E22 Farmacia Benevides SA de CV Ord. 575,800 2,143,755 31299422 Fomento Economico Mexicano SA (FEMSA) Class B 1,614,000 7,088,833 34441892 Gruma SA Class B (a) 62,200 417,923 40013192 Grupo Carso SA de CV Class A-1 (a) 3,498,900 37,197,436 40099594 Grupo Casa Autrey SA sponsored ADR 93,700 2,857,850 40048P10 Grupo Dina sponsored ADR, Series L (a) 40,983 414,953 21030620 Grupo Embotellador de Mexico SA GDR (a) 187,250 4,751,469 40048J30 Grupo Financiero Bancomer SA de CV sponsored ADR, Series C (e) 296,500 6,819,500 40048610 Grupo Financiero Banorte SA Grupo Financiero GBM Atantico SA sponsored ADR (e) 16,100 309,925 40048F10 Grupo Financiero Inbursa SA Class C (a) 50,000 215,242 44499922 Grupo Financiero Probursa SA Class B Ord. 309,000 179,755 48999K22 Grupo Financiero Serfin SA sponsored ADR 220,600 3,915,650 40049A10 Grupo Industrial Bimbo SA de CV, Series A Ord. 212,830 1,727,154 60899995 Grupo Industrial Maseca SA de CV ADR 14,000 346,500 40048840 Grupo Iusacell SA Class D ADR (a) 19,790 554,120 40049W20 Grupo Mexicano de Desarrollo SA Class L ADR (a) 198,410 4,017,803 40048G20 Grupo Modelo SA de CV Class C Ord. 22,500 484,293 40099M22 Class L 28,737 37,614 48999K23 CLass B 922,900 1,503,266 57899894 Grupo Posadas SA de CV Class L (a) 390,000 406,107 40048992 Class B (a) 487,000 1,929,304 44499923 Grupo Radio Centro SA de CV sponsored ADR 39,800 671,625 40049C10 Grupo Sidek SA de CV Class B Ord. 2,007,400 8,583,120 40099F22 Grupo Simec SA de CV ADR (a) 59,000 1,460,250 40049110 Grupo Situr SA de CV Class B (a) 1,998,113 6,044,312 40049292 Grupo Tribasa SA de CV sponsored ADR (a) 25,179 789,991 40049F10 Grupo Televisa SA de CV 46,000 1,016,870 40049J97 Grupo Televisa SA de CV GDS (e) 81,200 3,603,250 40049J20 Class L ADR (a) 46,185 1,420,189 40049W30 Class L 44,572 191,875 40099F25 Class C Ord. 1,565,200 7,639,334 40099H22 Herdez SA de CV Class A 1,321,407 1,153,060 42799F22 Hylsamex SA sponsored ADR (e) 68,000 1,462,000 44891910 Kimberly Clark de Mexico SA Class A 477,000 9,462,312 49499392 Sanluis Corp. Ord., Series A-2 74,000 811,460 21987020 Sears Roebuck de Mexico SA de CV ADR representing Series B-1 (a) (e) 52,700 1,231,863 81240K10 Sears Roebuck de Mexico SA de CV (a) 689,600 8,083,443 81240K92 Servicios Financieros Quadrum SA sponsored ADR (a) 3,200 46,400 81763810 Sigma Alimentos Class B (a) (e) 28,400 487,376 80599G23 Telefonos de Mexico SA sponsored ADR representing shares Ord. Class L 478,400 26,371,800 87940378 Tolmex SA Class B2 1,213,500 17,648,343 94399492 SHARES VALUE (NOTE 1) Transportacion Maritima Mexicana SA de CV Class A 99,000 $ 696,859 94899592 Vitro SA sponsored ADR 174,200 3,592,875 92850230 Vitro SA 96,900 677,864 92850292 297,275,838 PAKISTAN - 1.7% Adamjee Insurance Ltd. (a) 128,900 1,027,178 00599492 Al-Faysal Investment Bank Ltd. (a) 320,000 846,522 01099F22 Askari Commercial Bank (a) 359,200 797,715 03999C22 Askari Leasing Ltd. (a) 384,400 790,911 04299322 Bank of Punjab (a) 33,150 75,785 79899A92 Crescent Investment Bank Ltd. (a) 500,000 1,110,405 22599B22 Crescent Investment Bank Ltd. (rights) (a) 150,000 235,145 22599B23 Dandot Cement Co. Ltd. (a) 300,000 1,420,668 23699K22 DG Kahn Cement Ltd. (a) (c) 795,000 1,759,057 23999E22 DG Kahn Cement Ltd. (rights) (a) 88,000 36,643 23999E23 Engro Chemical Pakistan Ltd. (a) 20,000 173,093 29399E22 Fauji Fertilizer Co. Ltd. (a) 850,000 2,748,254 31199822 First Grindlays Modarba (a) 565,200 544,536 32099E22 Ibrahim Energy Ltd. (a) 237,000 549,553 45499J22 Maple Leaf Cement Factory Ltd. (a) 80,000 399,746 56599622 Muslim Commercial Bank Ltd. (a) 225,000 595,211 62899D22 Muslim Commercial Bank Ltd. (rights) (a) 33,750 45,192 62899D23 National Development Leasing Corp. (a) 347,625 488,184 63599492 Nishat Tek Ltd. (a) 47,000 72,911 65999C22 Packages Ltd. (a) 10,000 58,786 69599Q22 Pakistan State Oil Co. Ltd. 240,800 3,476,017 34799292 Pakistan Telecommunications Voucher GDR (a) (e) 63,890 10,541,850 69584910 Pak Electron Ltd. (a) 40,000 192,035 69599P22 Pakland Cement Ltd. (a) 200,000 1,097,344 47799622 PEL Appliances Ltd. (a) 27,500 197,363 70599922 Sunflo Cit-Russ Ltd. (a) 2,350,000 997,740 80599E22 Sui Southern Gas Pipelines Ltd. (a) 462,200 1,037,782 89499F22 Trust Leasing Corp. Ltd. (a) 231,200 388,865 89899F22 Trust Leasing Corp. Ltd. (rights) (a) 59,350 41,674 89899F23 Union Bank Ltd. (a) 493,600 673,029 90499P22 32,419,194 PANAMA - 0.5% Banco Latino Americano de Exportaciones SA Class E 127,100 4,718,588 06199A92 Panamerican Beverages, Inc. Class A 141,700 4,888,650 69829W10 9,607,238 PERU - 0.7% Banco Wiese sponsored ADR 40,000 850,000 05965110 Banco Wiese Ltd. 101,711 534,960 05999T22 Banco de Credito del Peru Class T 1,209,245 2,870,228 06899B22 Cementos Lima SA Class C (e) 2,920 1,191,221 15199M22 Cementos No Pacasmayo Class T 9,100 34,086 15199N22 Compania Peruana Telefonos Class T 2,645,639 3,675,004 24499622 La Fabril SA Class T 462,985 884,551 50399B23 Minsur SA Class T (a) 123,893 1,461,987 60499F22 Southern Peru Copper Corp. Class T (a) 452,149 2,784,646 84399F22 14,286,683 PHILIPPINES - 3.5% Ayala Corp. Class B 4,719,040 8,345,575 05499092 Ayala Land, Inc. Class B 5,003,625 7,843,282 05499392 Bacnotan Cement Corp. 320,000 456,592 07499222 Belle Resources Corp. (a) 7,760,000 2,027,300 07899324 Belle Resources Corp. (rights) (a) 1,253,333 226,690 07899323 Benpress Holdings Corp. GDR (e) 175,000 2,012,500 08230010 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) PHILIPPINES - CONTINUED Benpress Holdings Corp. GDR 81,000 $ 931,500 08230093 Filinvest Land, Inc. Ord. (a) 9,562,750 4,323,989 31699J22 First Phillipines Holdings Corp. 1,256,850 6,314,565 33699492 First Phillipines Holdings Corp. (rights) (a) 418,950 1,334,477 33699494 Guoco Holdings, Inc. 30,140,000 8,601,052 40299A22 House of Investments, Inc. 1,019,000 2,129,741 44199C92 Interport Resources Corp. Class B (a) 100,000,000 104,501 46099E22 Kuok Phil Properties, Inc. Class B (a) 192,000 15,588 60599792 Lepanto Consolidated Mining Co. 92,170,000 1,000,045 52673292 Liberty Telecoms Holdings, Inc. 13,594,000 1,748,460 53199822 Liberty Telecoms Holdings, Inc. (a) (e) 20,919,000 2,690,602 53199823 Manila Electric Co. Class B 81,165 1,141,790 58799A92 Metropolitan Bank & Trust Co. 4,700 138,846 59199D22 Metropolitan Bank & Trust Co. (rights) (a) 940 20,213 59199D23 Manila Mining Corp. Class B 291,788,000 2,109,627 59399C22 Metro Drug, Inc. Class B (a) 51,687,166 9,764,223 59699292 Mondragon International Philippines, Inc. (a)(c) 6,380,000 1,871,956 60999D22 Negros Navigation Co. (a) 1,000,000 452,170 63999D22 Philex Mining Corp. (a) 8,500,000 1,434,885 71814230 Robinson's Land Corp. (a) 7,770,000 1,452,213 77099492 San Miguel Corp. Class B 5,000 27,130 79908540 Sanitary Wares Manufacturing Corp. 186,000 114,007 81099792 SM Prime Holdings, Inc. (a) 1,700,000 580,788 83160592 Steniel Manufacturing Corp. 520,500 194,558 85899622 69,408,865 PORTUGAL - 0.0% CIN 6,250 161,028 17599592 Mague (Constru Metalom) 1,586 40,243 55999192 Unicer (Uniao Cervejeira) SA 5,000 75,472 93399A93 Unicer (Uniao Cervejeira) SA (New) 5,000 75,472 93399A95 352,215 SINGAPORE - 1.5% Chuan Hup Holdings Ltd. 100,000 98,774 14899992 Courts Singapore Ltd. 50,000 70,504 22299992 DBS Land Ltd. 20,000 70,163 24399292 Falmac Ltd. 50,000 24,694 30699722 Focal Finance Ltd. 403,200 983,280 34499B22 Hong Leong Finance Ltd. (warrants) (a) 424,600 543,764 44999D23 Hong Leong Finance Ltd. (For. Reg.) 894,000 3,410,351 44999D26 Informatics Holdings Ltd. 1,480,000 1,159,402 45699D22 Ipco International Ltd. 80,000 400,000 46299D22 Jurong Cement Ltd. 41,750 163,530 48299792 Kay Hian James Capel Holding (For. Reg.) 267,400 389,808 48699B22 Keppel Finance Ltd. 1,848,000 3,033,843 49299D22 Kim Engineering Holdings Ltd. 2,776,000 3,460,534 49499D92 Malayan Credit Ltd. 150,000 394,415 56099092 Overseas Union Trust Ltd. (For. Reg.) 712,000 2,260,166 69499B23 Parkway Holdings Ltd. 100,000 247,956 70199192 Sal Industrial Leasing Ltd. 200,000 162,126 81499792 Sembawang Maritime Ltd. 130,000 624,319 81799592 Singapore Finance Ltd. 226,000 409,510 41499722 Singapore Finance Ltd. (warrants) (a) 2,351,400 2,338,585 41499725 Tat Lee Finance Ltd. 576,000 1,169,263 87699E22 Tat Lee Finance Ltd. (warrants) (a) 300,000 237,057 87699E23 Transmarco Ltd. 907,000 3,985,113 89499492 Van Der Horst Ltd. (a) 957,000 4,302,586 92099C22 29,939,743 SHARES VALUE (NOTE 1) SOUTH AFRICA - 0.7% Anglovaal Ltd. Class N (e) 102,000 $ 3,091,620 03599723 Cashbuild Ltd. 10,000 37,267 14799622 First National Bank Holdings Ltd. 50,000 254,659 99599F22 Genbel Investments Ltd. Ord. 100,000 236,025 36867310 ISCOR Ltd. 404,800 470,673 46499C22 Nedcor Ltd. 30,000 244,100 00099E22 Pepkor Ltd. 320,000 1,868,323 71335092 Sasol Ltd. 421,800 3,720,225 80386610 Sentrachem Ltd. 150,000 559,007 81799J22 Sappi Ltd. 150,000 2,515,529 82799B92 South African Breweries Ltd. ADR 5,000 116,250 83621620 South African Brewers Ltd. 22,529 526,143 83621692 Southern Life Association Ltd., The 10,000 81,988 84399H22 Standard Bank Investment Corp. 5,000 127,950 85399A22 13,849,759 SRI LANKA - 0.3% Aitken Spence & Co. Ltd. 95,000 717,432 00999F22 Asia Capital Ltd. (a) 903,100 592,027 04499D22 Blue Diamond Jewelry Worldwide Ltd. (a) 443,630 362,943 09599222 Blue Diamond Jewelry Worldwide Ltd. (rights) (a) 80,660 23,689 09599223 Development Finance Corp. of Ceylon (a) 157,866 1,837,961 25199C92 John Keells Holdings Ltd. GDR (a) 86,500 537,110 44499822 John Keells Holdings Ltd. (a) 15,000 176,250 48730292 Kelani Tyres Ltd. (Loc. Reg.) (a) 114,100 144,809 48799N22 Lanka Tiles Ltd. (a) 181,100 332,416 51599722 Lanka Ceramic Ltd. (a) 101,300 204,003 51599922 National Development Bank 100,800 934,626 63599B22 Sampath Bank Ltd. (a) 90,000 99,119 79599N22 Vanik, Inc. Ltd. (a) 38,400 63,638 92199E22 6,026,023 TAIWAN (FREE CHINA) - 0.2% Hocheng Corp. GDR (a) (e) 12,800 355,200 43414110 Shanghai Tyre & Rubber Class B shares (a) 150,000 87,000 84599R22 Taiwan Fund, Inc. 55,500 1,526,250 87403610 Yageo Corp. GDR (a) (e) 44,000 913,000 98432610 2,881,450 THAILAND - 11.7% Advanced Information Services (Loc. Reg.) 143,000 2,478,675 00799792 (For. Reg.) 241,200 4,258,236 00799793 Bangkok Bank Ltd. 2,435,400 26,383,589 06099210 Bank of Ayudhya PCL (For. Reg.) 2,000,000 7,824,100 05999998 Bank of Asia PCL: (Loc. Reg.) 780,600 2,129,789 06199D22 (For. Reg.) 4,483,800 12,233,600 06199D23 Bangkok Metropolitan Bank PLC (For. Reg.) 5,153,600 6,875,469 06199E23 Ban Pu Coal (For. Reg.) 542,000 13,744,090 06199593 Berli Jucker PCL 5,000 18,858 08499F23 Electricity Generating Authority of Thailand (e) 614,000 547,074 28599C23 Finance One PCL: (For. Reg) 50,000 1,011,114 31799E93 (warrants) (For. Reg.) (a) 2,720 26,193 31799E96 First Bangkok City Bank PCL (For. Reg.) 231,200 222,639 31899D93 General Engineering Ltd. (a) 20,000 58,179 36999D23 Hana Microelectronics Co. Ltd. (For. Reg.) 223,200 1,576,183 40999693 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) THAILAND - CONTINUED Industrial Finance Corp. (Loc. Reg.) (a) 4,000,000 $ 10,351,880 45799893 (For. Reg.) 5,743,500 14,864,006 45799896 International Broadcasting Corp. (For. Reg.) 20,000 150,062 45999E93 Kiatnakin Finance & Securities PCL (For. Reg.) 12,000 67,408 49699794 Kiatnakin Finance & Securities PCL (a) 36,000 189,945 49699797 Krung Thai Bank: (Loc. Reg.) 5,500,000 18,757,750 50599292 (For. Reg.) 5,492,300 18,731,489 50599293 Lanna Lignite PCL (For. Reg.) 10,000 136,420 51599A23 Loxley PCL: (Loc. Reg.) 84,200 1,608,121 54899522 (For. Reg.) 100,000 1,909,882 54899523 Nithipat Capital PCL (Loc. Reg.) 100,000 750,311 67399922 Nithipat Capital PCL (a) 70,000 525,218 67399923 OCC Co. (For. Reg.) (a) 46,500 139,931 68999593 Pacific Insurance PCL 66 358 69599L23 Phatra Thanakit PCL: (For. Reg.) 4,200 43,478 71799593 (For. Reg.) (rights) (a) 16,800 167,171 71799595 Property Perfect Co. PCL (For. Reg.) (warrants) (a) 4,444 16,761 74399F24 Quality Houses PCL (warrants) (a) 60,000 223,889 74799G25 Renown Leatherwears PCL (a) 295,600 1,755,359 75999K23 Safety Insurance PCL (For. Reg.) 179,200 427,813 79899393 Shinawatra Computer & Communication PCL 10,000 311,359 94799192 Shinawatra Computer & Communication PCL (For. Reg.) 20,000 622,718 94799193 Shinawatra Satellite PCL: (Loc. Reg.) (a) 670,000 3,279,704 95199K22 (For. Reg.) (a) 180,000 881,114 95199K23 Siam Cement PCL (For. Reg.) 6,600 380,805 78799010 Siam City Bank PCL (For. Reg.) 8,046,300 11,380,365 81199593 Siam City Cement Co. Ltd. (For. Reg.) 218,560 4,700,404 82570798 Siam Commercial Bank PCL (For. Reg.) 100,000 1,035,188 78851090 Siam City Credit Finance & Securities PCL (a) 220,000 2,418,649 82699D23 Siam Commercial Life Assurance (For. Reg.) 215,100 440,159 82799293 Siam General Factoring PCL (For. Reg.) 25,000 114,352 82899C23 Siam Makro (For. Reg.) (a) 250,000 1,023,153 83099E23 S Khon Kaen Food Industry PCL (For. Reg.) 30,700 99,775 56499F23 Swedish Motors Corp. PCL (For. Reg.) 128,400 783,083 87099593 Thai Farmers Bank PCL 2,909,400 25,681,827 90199010 Thai Military Bank Ltd. (For. Reg.) 2,005,900 9,336,141 90199989 Thai Wah Resorts Development PCL (For. Reg.) (a) 400,000 413,272 91099E23 Thai Wah Food Products PCL (For. Reg.) 211,300 423,906 93699B23 Thai Reinsurance Co. Ltd. (For. Reg.) 120,000 390,001 93799D23 Thai German Ceramic Industry Co. Ltd. (warrants) (a) 36,990 69,385 94699894 Tong Hua Communications PCL (For. Reg.) 669,000 1,066,995 92199D23 TPI Polene Co. Ltd.: (For. Reg.) 386,000 4,181,681 94799093 (rights) (a) 96,500 1,006,701 94799094 Tipco Asphalt PCL (Loc. Reg.) Ord. 20,000 163,704 95499592 United Communication Industry PCL: (For. Reg.) 272,700 8,053,093 91399E23 (Loc. Reg.) 97,500 2,879,269 91399E22 231,341,843 SHARES VALUE (NOTE 1) TURKEY - 0.1% Adana Cimento (a) 127,710 $ 67,932 00699B92 Akcimento AS 100,000 162,377 00999H22 Alarko Holding 238,000 163,244 01199B22 Anadolu Anonim Turk Sigorta SK 3,000,000 419,940 03299J22 Arcelik AS 312,500 87,488 03999B22 Aygaz AS 250,000 47,593 05499822 Brisa Bridgestone Sabanci Lastik San & Tic SA 500,000 95,185 10999822 Cimentas AS 760,000 489,372 17199G22 Cukurova Electrik AS (a) 85,000 16,657 22999192 Goodyear (a) 287,250 118,617 68999992 Guney Biraciliu (a) 498,800 198,991 40299792 Maret (a) 306,000 57,396 56899692 Medya Holdings AS Class C 100,000 5,039 58699922 Migros 50,000 113,384 59899C22 Sarkuysan Elektronik Bakir Sanayi AS 200,000 114,784 80499C22 Teletas (a) 120,000 31,915 87999C92 Turkiye Garanti Bankasi AS 1,400,000 333,158 90014892 Turkiye Garanti Bankasi AS: ADR (e) 35,000 83,125 (New) 17,250 4,105 90014896 Turk Demir Dokum 115,999 17,212 90099A92 Turk Demir Dokum (New) 69,599 1,949 90099A95 USAS (Ucak Servisi Anonim Sirketi) 10,000 81,188 93899G22 2,710,651 UNITED KINGDOM - 0.0% Cathay International Holdings PLC (a) 1,296,385 636,331 14999D22 UNITED STATES OF AMERICA - 0.1% Capco Automotive Products Corp. (a) 168,600 2,086,425 13916810 VENEZUELA - 0.2% CA Venepal GDR Class A ADR (a)(e) 2,864 8,950 12477610 Corimon SA CA sponsored ADR 16,700 167,000 21872820 Electricidad de Caracas 1,179,914 2,285,621 42799922 Mavesa SA sponsored ADR (e) 266,000 1,463,000 57771720 Venezolana de Prerreducidos Caroni Venpreca CA GDR (e) 1,500 8,813 92264410 3,933,384 TOTAL COMMON STOCKS (Cost $1,582,057,902) $ 1,847,969,444 NONCONVERTIBLE PREFERRED STOCKS - 0.2% BRAZIL - 0.0% COSIPA (Cia Siderurgica Paulista) Class B (a) 194,000 590,385 13299622 KOREA (SOUTH) - 0.2% Daelim Industrial Co. (a) 59,460 984,598 23699F23 Daewoo Heavy Industries Ltd. 2,300 27,150 23999494 Dongbu Steel Co. Ltd. 57,230 1,148,692 25799L23 Hyundai Motor Service Co. Ltd. (a) 39,000 1,443,267 42199424 Korea First Securities Co. Ltd. (a) 20,000 255,912 50099K23 Korea First Securities Co. Ltd. (New) (a) 2,060 29,770 50099K25 Kolon International Corp. (a) 20,000 303,581 73099423 4,192,970 TOTAL NONCONVERTIBLE PREFERRED STOCKS (Cost $6,443,627) 4,783,355 CLOSED-END INVESTMENT COMPANIES - 0.2% SHARES VALUE (NOTE 1) CHILE -0.1% Chile Fund, Inc. 47,556 $ 2,365,911 16883410 INDIA - 0.1% Morgan Stanley India Investment Fund 50,000 700,000 61745C10 PHILIPPINES -0.0% Private Development Corp. of Philippines Class B (a) 200,000 265,274 74299B22 TOTAL CLOSED-END INVESTMENT COMPANIES (Cost $2,919,528) 3,331,185 CORPORATE BONDS - 4.2% MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) AMOUNT (B) (NOTE 1) CONVERTIBLE BONDS - 4.2% GRAND CAYMAN - 0.8% Bank Of Asia PCL 3 3/4%, 2/09/04 - $ 2,500,000 2,425,000 06199GAA Filinvest Cayman Islands Ltd.: 3 3/4%, 2/28/04 (e) - 4,000,000 3,360,000 317015AA euro 3 3/4%, 2/28/04 (e) - 2,500,000 2,100,000 3170159A Henderson Capital euro 4% 10/27/96 (e) - 2,050,000 2,003,875 4247309A House of Investments Cayman Island Ltd. 4%, 10/17/01 (e) - 3,000,000 2,947,500 44176PAA JG Summit Cayman Ltd. 3 1/2%, 12/23/03 (e) - 3,050,000 2,371,375 466149AA 15,207,750 HONG KONG - 0.3% Lai Fung Overseas Finance Ltd. euro 5 1/4%, 2/5/98 (f) - 5,290,000 4,232,000 50699CAA Regal International Ltd. euro 5 1/4%, 12/5/08 - 500,000 467,500 759991AB 4,699,500 INDIA - 0.7% Ballarpur Industries Ltd. 4%, 4/1/99 - 500,000 557,500 0585889A Essar Gujarat Ltd. euro 5 1/2%, 8/5/98 - 1,940,000 3,860,600 296994AA Gujarat Ambuja Cement Ltd.: 3 1/2%, 6/30/99 (e) - 190,000 336,300 402042AA euro 3 1/2%, 6/30/99 - 2,000,000 3,540,000 4020429A Jindal Strips Ltd. euro 4 1/4% 3/31/99 (e) - 460,000 598,000 642994AA Nippon Denro Ispat Ltd.: 3%, 4/1/01 (e) - 2,535,000 2,066,025 654554AA euro 3%, 4/1/01 (e) - 550,000 448,250 6545549A Reliance Industries Ltd. euro 3 1/2%, 11/3/99 (e) - 200,000 268,000 7594709A SCICI Ltd. euro 3 1/2%, 4/1/04 - 1,370,000 1,356,300 79599KAB 13,030,975 MALAYSIA - 0.8% Arab Malyasian Finance BHD 7 1/2%, 12/31/99 - MYR 1,242,666 413,209 00699AAB MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) AMOUNT (B) (NOTE 1) Land & General BHD 4 1/2%, 7/26/04 (e) - $ 4,000,000 $ 4,960,000 51462QAA Renong BHD 2 1/2%, 1/15/05 (e) - 10,000,000 10,025,000 759883AA 15,398,209 MEXICO - 0.0% Grupo Financiero Invermexico 7 1/2%, 6/16/01 (e) - 1,000,000 860,000 40048LAA PAKISTAN - 0.0% Dewan Salman Fibre Ltd. 5%, 5/5/01 - 1,000,000 890,000 25199MAA PHILIPPINES - 0.0% Bacnotan Consolidated Industries, Inc. 5 1/2%, 6/21/04 (e) - 1,000,000 957,500 056395AA TAIWAN (FREE CHINA) - 0.2% Cheng Loong Ltd. 2 1/2%, 10/11/01 (e) - 1,000,000 960,000 16411PAA Formosa Chemicals & Fibre Corp. 1 3/4%, 7/19/01 - 475,000 446,500 3463979A Kinpo Electronics, Inc. euro 3%, 7/21/01 - 1,600,000 1,664,000 4971269A Nan Ya Plastics Corp. 1 3/4%, 7/19/01 - 490,000 456,925 630995AA Walsin Lihwa Corp. 3 1/4% 6/16/04 (e) - 1,000,000 1,002,500 933133AA 4,529,925 THAILAND - 1.4% Asia Credit PCL: 3 3/4%, 11/17/03 (e) - 1,300,000 1,599,000 044909AA euro 3 3/4%, 11/17/03 - 1,000,000 1,230,000 047994AA CMIC Finance & Securities PCL euro 3 1/2%, 11/8/03 - 1,500,000 1,878,750 125993AA Dhana Siam Finance & Securities PCL euro 4%, 10/6/03 - 300,000 675,000 242995AA Kiatnakin Finance & Securities PCL euro 4%, 11/30/03 - 1,000,000 990,000 496997AA Phatra Thanakit PCL: 3 1/2%, 12/13/03 (e) - 3,000,000 4,087,500 717227AA euro 3 1/2%, 12/13/03 - 4,420,000 6,022,250 717995AA Siam Commercial Bank PCL 3 1/4%, 1/24/04 (e) - 1,000,000 927,500 825715AA Siam Syntech Construction PCL 4 1/2%, 2/25/02 (e) - 500,000 305,000 825719AA Somprasong Land & Development PCL 3 7/8%, 1/21/04 euro - 3,000,000 2,160,000 83599CAA Wall St. Finance and Securities PCL 3 3/4%, 2/3/04 (e) - 480,000 319,200 93299BAB Wattachak PCL euro 3 1/2%, 12/6/03 - 9,000,000 7,830,000 94299HAA 28,024,200 TOTAL CONVERTIBLE BONDS 83,598,059 CORPORATE BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) AMOUNT (B) (NOTE 1) NONCONVERTIBLE BONDS - 0.0% THAILAND - 0.0% Finance One 3 3/4%, 2/7/01 - THB 272 $ 10,914 31799EAA Quality Houses PCL 5 3/4%, 1/01/00 - 6,000 1,810 74799GAB Thai German Ceramic Industry Co. Ltd. 3%, 7/08/99 - THB 411 164,908 946998AA TOTAL NONCONVERTIBLE BONDS 177,632 TOTAL CORPORATE BONDS (Cost $85,856,082) 83,775,691 INDEXED SECURITIES - 0.1% UNITED STATES OF AMERICA - 0.1% Salomon Brothers Holding Company, Inc. note 6 1/2%, 10/7/96 (indexed to common stock of Yuganskneftegas, a Russian joint-stock company) (d) 590,000 259,187 79599CAB Salomon Brothers Holding Company, Inc. note 6 1/2%, 10/7/96 (indexed to common stock of EAO Edinaya Energeticheskay Saa Sistema Rosii, a Russian joint-stock company)(d) 1,800,000 1,177,740 79599CAD Salomon Brothers Holding Company, Inc. note 6 1/2%, 10/17/96 (indexed to common stock of Komineft, a Russian joint-stock company)(d) 670,000 264,784 79599CAE TOTAL INDEXED SECURITIES (Cost $3,060,000) 1,701,711 PURCHASED BANK DEBT - 0.1% ECUADOR - 0.1% Republic of Equador: loan participation under 1983 and 1984 extension and refinancing agreements (a) 1,750,000 925,750 88399HAH loan participation (a) 1,000,000 605,300 88399HAG TOTAL PURCHASED BANK DEBT (Cost $1,345,191) 1,531,050 REPURCHASE AGREEMENTS - 1.4% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 4.78% dated 10/31/94 due 11/1/94 $ 27,937,709 $ 27,934,000 99799N9L TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,709,616,330) $1,971,026,436 CURRENCY ABBREVIATIONS MYR - Malaysian ringgit THB - Thai baht LEGEND (a) Non-income producing (b) Principal amount is stated in United States dollars unless otherwise noted. (c) A company in which the fund has ownership of at least 5% of the voting securities is an affiliated company. A summary of the transactions during the period in which the issuers were affiliates is a follows: PURCHASES SALES DIVIDEND MARKET AFFILIATE COST COST INCOME VALUE Berjaya South Island BHD $ 588,464 $ - $ - $ 18,851,060 China First Pencil Co. Ltd. Class B 168,612 - - 1,209,525 DG Kahn Cement Ltd. (a) 563,420 - 21,652 1,759,057 Mondragon International Philippines, Inc. (a) 542,624 - - 1,871,956 North Borneo Timber BHD 1,161,326 297,882 8,110 14,577,770 Shanghai Hero Ltd. Class B (a) 343,816 - - 963,749 Shanghai Refrigerator Compressor Co. Ltd. Class B 48,875 - - 1,157,055 Shanghai Vacuum Electron Devices Co. Ltd. - - - 1,146,790 TOTALS $ 3,417,137 $ 297,882 $ 29,762 $ 41,536,962 (d) Restricted securities - Investment in securities not registered under the Securities Act of 1933 Additional information on each holding is as follows: ACQUISITION ACQUISITION SECURITY DATE COST Salomon Brothers Holding Company, Inc. note 6 1/2%, 10/7/96 (indexed to common stock of Yuganskneftegas, a Russian joint-stock company) 9/9/94 79599CAB$ 590,000 Salomon Brothers Holding Company, Inc. note 6 1/2%, 10/7/96 (indexed to common stock of EAO Edinaya Energeticheskay Saa Sistema Rosii, a Russian joint-stock company) 9/13/94 79599CAD 79599CAB 1,800,000 Salomon Brothers Holding Company, Inc. note 6 1/2%, 10/17/96 (indexed to common stock of Komineft, a Russian joint-stock company) 9/16/94 670,000 LEGEND - CONTINUED (e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $164,250,269 or 8.3% of net assets. (f) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. OTHER INFORMATION At the end of the period, restricted securities (excluding 144A issues) amounted to $1,701,711 or 0.1% of net assets (see Note 2 of Notes to Financial Statements). Purchases and sales of securities, other than short-term securities, aggregated $2,726,100,583 and $1,619,121,214, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of FMR. The commissions paid to these affiliated firms were $52,584 for the period (see Note 5 of Notes to Financial Statements). The fund participated in the interfund lending program as a lender. The maximum loan and the average daily loan balances during the period for which loans were outstanding amounted to $31,339,000. The weighted average interest rate was 4.075%. Interest earned from the interfund lending program amounted to $2,996 and is included in interest income on the Statement of Operations (see Note 2 of Notes to Financial Statements). The fund participated in the bank borrowing program. The maximum loan and the average daily loan balances during the period for which loans were outstanding amounted to $3,464,000. The weighted average interest rate was 3 7/8% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At October 31, 1994, the aggregate cost of investment securities for income tax purposes was $1,719,189,521. Net unrealized appreciation aggregated $251,836,914, of which $335,373,375 related to appreciated investment securities and $83,536,461 related to depreciated investment securities. The fund hereby designates $8,760,524 as a capital gain dividend for the purpose of the dividend paid deduction. The fund has elected to defer to its tax fiscal year ending September 30, 1995 $19,417,143 of losses recognized during the period November 1, 1993 to September 30, 1994. For the period ended October 31, 1994, interest and dividends from foreign countries were $23,612,062, or $0.23 per share. Taxes paid to foreign countries were $1,067,117 or $0.01 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Aerospace & Defense 0.1% Basic Industries 15.6 Construction & Real Estate 13.9 Durables 4.9 Energy 3.6 Finance 22.8 Government Obligations 0.1 Health 0.5 Holding Companies 8.5 Industrial Machinery & Equipment 1.8 Media & Leisure 2.5 Nondurables 5.3 Precious Metals 0.1 Retail & Wholesale 3.0 Services 0.5 Repurchase Agreements 1.4 Technology 0.6 Transportation 2.2 Utilities 12.6 100.0% EMERGING MARKETS FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES <TABLE> <CAPTION> <S> <C> <C> OCTOBER 31, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $27,934,000) (cost $1,709,616,330) - $ 1,971,026,435 See accompanying schedule Cash 1,988,411 Receivable for investments sold 42,692,960 Receivable for fund shares sold 9,879,924 Dividends receivable 1,601,347 Interest receivable 1,735,770 Redemption fees receivable 20,826 TOTAL ASSETS 2,028,945,673 LIABILITIES Payable for investments purchased $ 34,040,496 Payable for fund shares redeemed 14,313,914 Accrued management fee 1,284,186 Other payables and accrued expenses 2,935,671 TOTAL LIABILITIES 52,574,267 NET ASSETS $ 1,976,371,406 Net Assets consist of: Paid in capital $ 1,730,192,184 Undistributed net investment income 2,603,242 Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (17,723,398) Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 261,299,378 NET ASSETS, for 102,649,164 shares outstanding $ 1,976,371,406 NET ASSET VALUE and redemption price per share ($1,976,371,406 (divided by) 102,649,164 shares) $19.25 Maximum offering price per share (100/97.00 of $19.25) $19.85 </TABLE> STATEMENT OF OPERATIONS <TABLE> <CAPTION> <S> <C> <C> YEAR ENDED OCTOBER 31, 1994 INVESTMENT INCOME $ 20,031,945 Dividends (including $29,762 received from affiliated issuers) Interest 12,257,512 32,289,457 Less foreign taxes withheld (1,067,117 ) TOTAL INCOME 31,222,340 EXPENSES Management fee $ 12,659,735 Transfer agent Fees 6,698,076 Redemption fees (336,508 ) Accounting fees and expenses 645,238 Non-interested trustees' compensation 9,755 Custodian fees and expenses 4,525,032 Registration fees 599,921 Audit 55,472 Legal 8,721 Interest 373 Miscellaneous 12,141 Total expenses before reductions 24,877,956 Expense reductions (2,803 24,875,153 ) NET INVESTMENT INCOME 6,347,187 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities (including realized gain of $242,990 on sales of investments in affiliated issuers and net of (15,438,264 Brazilian IPMF tax of $474,544) ) Foreign currency transactions (2,996,213 (18,434,477 ) ) Change in net unrealized appreciation (depreciation) on: Investment securities 152,117,540 Assets and liabilities in foreign currencies (110,727 152,006,813 ) NET GAIN (LOSS) 133,572,336 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 139,919,523 OTHER INFORMATION $2,416,374 Sales charges paid to FDC Accounting fees paid to FSC $641,914 </TABLE> STATEMENT OF CHANGES IN NET ASSETS INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, 1994 1993 <TABLE> <CAPTION> <S> <C> <C> Operations $ 6,347,187 $ 630,663 Net investment income Net realized gain (loss) (18,434,477) (387,679) Change in net unrealized appreciation (depreciation) 152,006,813 109,236,178 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 139,919,523 109,479,162 Distributions to shareholders: (2,588,073) (101,676) From net investment income In excess of net investment income (549,335) - From net realized gain - (191,171) TOTAL DISTRIBUTIONS (3,137,408) (292,847) Share transactions 2,784,381,422 671,166,140 Net proceeds from sales of shares Reinvestment of distributions 3,076,294 282,611 Cost of shares redeemed (1,715,598,654) (36,857,488) Redemption fees 9,993,085 227,559 Net increase (decrease) in net assets resulting from share transactions 1,081,852,147 634,818,822 TOTAL INCREASE (DECREASE) IN NET ASSETS 1,218,634,262 744,005,137 NET ASSETS Beginning of period 757,737,144 13,732,007 End of period (including undistributed net investment income of $2,603,242 and $628,805, respectively) $ 1,976,371,406 $ 757,737,144 OTHER INFORMATION Shares Sold 151,470,579 48,273,320 Issued in reinvestment of distributions 178,437 26,476 Redeemed (95,823,026) (2,719,187) Net increase (decrease) 55,825,990 45,580,609 </TABLE> <TABLE> <CAPTION> <S> <C> <C> SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. </TABLE> FINANCIAL HIGHLIGHTS <TABLE> <CAPTION> <S> <C> <C> <C> <C> YEARS ENDED OCTOBER 31, NOVEMBER 1, 1990 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, SELECTED PER-SHARE DATA 1994 1993 1992 1991 </TABLE> <TABLE> <CAPTION> <S> <C> <C> <C> <C> Net asset value, beginning of period $ 16.18 $ 11.05 $ 10.40 $ 10.00 Income from Investment Operations Net investment income .06 .06 C .08 .12 Net realized and unrealized gain (loss) 2.97 5.28 .76 .30 Total from investment operations 3.03 5.34 .84 .42 Less Distributions (.04) (.08) (.08) (.04) From net investment income In excess of net investment income (.01) - - - From net realized gain - (.15) (.14) - Total distributions (.05) (.23) (.22) (.04) Redemption fees added to paid in capital .09 .02 .03 .02 Net asset value, end of period $ 19.25 $ 16.18 $ 11.05 $ 10.40 TOTAL RETURN A, B 19.32% 49.58% 8.56% 4.41% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 1,976,371 $ 757,737 $ 13,732 $ 6,450 Ratio of expenses to average net assets 1.52% 1.91% 2.60% D 2.60% D Ratio of net investment income to average net assets .39% .44% .90% 1.34% Portfolio turnover rate 107% 57% 159% 45% A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN. C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. </TABLE> LATIN AMERICA PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). Latin America Fund has a 3% sales charge, which had been waived since the fund's start on April 19, 1993 through May 31, 1994. CUMULATIVE TOTAL RETURNS PERIOD ENDED PAST 1 LIFE OF OCTOBER 31, 1994 YEAR FUND LATIN AMERICA 22.89% 63.19% LATIN AMERICA (INCL. 3% SALES CHARGE) 19.20% 58.30% Morgan Stanley Latin America Free Index 46.22% 80.06% Average Latin America Fund 30.56% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, or since the fund started on April 19, 1993. You can compare the fund's figures to the performance of the Morgan Stanley Latin America Free index, a broad measure of the performance of stocks in Latin American markets weighted by each country's market capitalization (or the total value of the shares outstanding). You can also compare the fund's performance to the average Latin American fund, which currently reflects the performance of nine funds with similar objectives - in this case, a very small peer group - tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIOD ENDED PAST 1 LIFE OF OCTOBER 31, 1994 YEAR FUND LATIN AMERICA 22.89% 37.53% LATIN AMERICA (INCL. 3% SALES CHARGE) 19.20% 34.83% Morgan Stanley Latin America Free Index 46.22% 46.61% Average Latin American Fund 30.56% n/a 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 Latin America FuMorgan Stanley EMF 04/19/93 9700.00 10000.00 04/30/93 9641.80 9568.13 05/31/93 9874.60 9818.14 06/30/93 10379.00 10436.73 07/31/93 10737.90 10716.71 08/31/93 11746.70 11640.43 09/30/93 11960.10 11844.71 10/31/93 12881.60 12314.07 11/30/93 13861.30 13120.91 12/31/93 15722.23 14784.37 01/31/94 16981.96 17217.49 02/28/94 16093.31 16719.16 03/31/94 14462.50 15584.66 04/30/94 13437.14 14395.32 05/31/94 14169.54 15245.68 06/30/94 12851.21 14269.20 07/31/94 14042.59 15621.61 08/31/94 16132.37 18162.47 09/30/94 16679.23 18941.58 10/31/94 15829.65 18005.81 Let's say you invested $10,000 in Fidelity Latin America Fund on its start date and paid the 3% sales charge. By October 31, 1994, it would have grown to $15,830 - a 58.30% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley Latin America Free index, which would have grown to $18,006 over the same period - a 80.06% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. (checkmark) LATIN AMERICA FUND TALK: THE MANAGER'S OVERVIEW An interview with Patti Satterthwaite, Portfolio Manager of Fidelity Latin America Fund Q. PATTI, HOW HAS THE FUND PERFORMED? A. The Latin American investment environment continues to be volatile. The fund's total return for the 12 months ended October 31, 1994, was 22.89%. That trailed the average Latin America fund, which returned 30.56% during the same time period, according to Lipper Analytical Services. The fund also lagged the Morgan Stanley Latin America Free index, which returned 46.22%. Q. WHY HAS THE FUND TRAILED THE INDEX OVER THE PAST 12 MONTHS? A. There are three key reasons why the fund underperformed the index and its peer group average. First, although the fund's stake in Brazil totaled roughly 29% by the end of October, it was significantly lower than that - and lower than the index weighting - through the first half of the period. This is important because Brazil was one of the top performing markets in the world over the past 12 months - up more than 100% in U.S. dollars. Second, the fund had more than 19.1% stake in Latin American bonds a year ago. I bought these bonds not only because I felt they offered excellent value, but also to help give the fund flexibility. However, when interest rates rose sharply in the U.S., both Latin American stocks - and to a greater extent, bonds - suffered corrections. That resulted in significant shareholder redemptions in February and March, and I sold these bonds in a falling market. In fact, heavy inflows and outflows of cash is the third key to the fund's underperformance relative to the index. Rapid shifts in the fund's assets can disrupt long-term investment strategies because the fund is often forced to buy or sell stocks and bonds when market conditions are negative. Q. HOW DO YOU THINK CASH FLOWS WILL AFFECT THE FUND GOING FORWARD? A. The fund's performance actually was quite volatile during the month of October yet there were not many redemptions. I think since the days when international mutual funds were first introduced, investors have become more savvy and better educated about the risks and rewards in these markets. It may be that investors realize that a long-term investment approach is necessary in these types of funds. Going forward, I don't see cash flows having as significant of an impact on performance. As the size of the fund continues to grow, I believe that redemption issues will become less significant. Q. WHY DIDN'T YOU HAVE MORE OF THE FUND INVESTED IN BRAZIL SINCE THAT MARKET DID SO WELL? A. The answer again ties in with managing the fund's shifting assets. Early in the year when assets surged, I had concerns about the liquidity of Brazilian stocks, meaning how frequently they are bought and sold. As it turned out, I feel that I made the right decision. Given the magnitude of redemptions the fund experienced from February through April - the months during which the fund's performance suffered most - it would not have been prudent to have been heavily invested in Brazil. However, as the year went on, I gained more confidence in the stability of the Brazilian economy and the liquidity of its stock market. I then felt more comfortable increasing the fund's investments, and the fund did participate more fully in large, upward moves in the Brazilian market over the summer. Q. WHY WAS THE BRAZILIAN MARKET UP SO MUCH? A. Brazil implemented an economic plan to reduce inflation that was very successful. This helped elect the reform candidate Fernando Henrique Cardoso, to the country's presidency in October 1994. During the election, inflation fell to historically low levels and the market rallied. The fact that many companies in Brazil are likely candidates for privatization also had a positive impact on the market because privatization can lead to profitability and growth. These types of stocks currently account for about half of the fund's investment in Brazil. Q. HOW DID SOME OF THE FUND'S LARGEST STOCK INVESTMENTS PERFORM? A. My individual stock selections were very good. Two of the fund's Mexican investments, which are currently the top two holdings in the fund, had strong performance. Cemex - a building materials company - returned 18.9% and Grupo Carso - a large conglomerate - returned 38% for the 12 months ending October 31, 1994. This compares to a 12.7% return for the Mexican stock market during the same time period. By the end of October, Grupo Carso represented 4% of the fund's investments and Cemex, 3.7%. Q. WHAT ARE THE FUND'S LARGEST COUNTRY ALLOCATIONS? A. The largest is Mexico - about 40% of the fund at the end of October. As I mentioned earlier, Brazil accounts for 29% while the next largest allocation is Argentina, at 12.5%. One reason why the fund has its largest stake in Mexico is that Mexican stocks are among the most frequently traded in Latin America. That, again, helped give the fund flexibility in a period of volatility. In addition, I felt that there were a lot of attractively valued stocks in Mexico. Q. WHAT IS YOUR OUTLOOK FOR MEXICO? A. This has been a difficult year for Mexico. In January, the Chiapas peasants staged a rebellion. Then popular presidential candidate Colosio was assassinated, adding uncertainty to the August elections. In addition, the Mexican peso remained weak relative to other currencies. All of these situations caused the market to underperform. Now that those events have passed, I think the economic and political climates have improved. Over the past year, many of the fund's Mexican stocks delivered excellent performance and my expectations going forward are positive. Q. WHAT ARE YOUR VIEWS GOING FORWARD ON LATIN AMERICA? A. After the spectacular returns experienced in the Latin American markets in 1993, my belief is that 1994 was a year of consolidation. This geographical area created a lot of headlines with important elections in Mexico, Brazil and Colombia that have resulted in positive economic news and new political climates. Moving into 1995, the focus will turn to the political and economic agendas of these newly elected leaders and how effective they are at implementing their plans. Overall, I think these new leaders will act upon their election promises which should produce enthusiasm in the stock and bond markets of these countries. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in Latin American securities. START DATE: April 19, 1993 SIZE: as of October 31, 1994, more than $888 million MANAGER: Patti Satterthwaite, since April 1993; assistant manager, Latin American portion of Fidelity Emerging Markets Fund, since 1990; securities and Latin American analyst, 1986-1990; joined Fidelity in 1986. (checkmark) PATTI SATTERTHWAITE'S 1995 OUTLOOK: "As far as my investment strategy, I'm focusing on medium-sized companies because in many cases they offer the best value. I will continue to the use the "bottom-up" approach - picking stocks on the merits of individual companies, rather than choosing industries or countries first. Similar to 1994, I think that the highest risks and rewards in the coming year will be in Brazil. Although I plan to invest in this country more fully than in the past year, my basic approach to investing in Brazil most likely will remain somewhat cautious." (solid bullet) As of October 31, 1994, the fund had stock investments in the following countries from highest to lowest, based on the percentage of net assets invested: Mexico, Brazil, Argentina, Chile, Peru, Panama, Colombia, and Ecuador. (solid bullet) Despite political and economical uncertainties, operating profits in Mexico have grown 15% as of October 31, 1994. The fund's investments in Mexico, such as Cemex and Grupo Carso, were star performers as a result of improving earnings. (solid bullet) Although Chile's market index returned roughly 79.29% for the 12 months ended on October 31, the fund had 4.9% of its assets invested in this country. This is because Chile restricts the ability of investors to remove money from its stock market. LATIN AMERICA INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1994 United States 6.7% Argentina 12.5% Row: 1, Col: 1, Value: 6.7 Row: 1, Col: 2, Value: 7.1 Row: 1, Col: 3, Value: 39.8 Row: 1, Col: 4, Value: 4.9 Row: 1, Col: 5, Value: 29.0 Row: 1, Col: 6, Value: 12.5 Other 7.1% Brazil 29.0% Mexico 39.8% Chile 4.9% AS OF APRIL 30, 1994 United States 9.1% Row: 1, Col: 1, Value: 9.1 Row: 1, Col: 2, Value: 2.5 Row: 1, Col: 3, Value: 3.9 Row: 1, Col: 4, Value: 42.9 Row: 1, Col: 5, Value: 4.9 Row: 1, Col: 6, Value: 18.3 Row: 1, Col: 7, Value: 18.4 Panama 2.5% Argentina 18.4% Other 3.8% Brazil 18.5% Mexico 42.8% Chile 4.9% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks and closed-end investment companies 90.8 84.7 Bonds 3.1 5.1 Short-term investments 6.1 10.2 TOP TEN STOCKS % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Grupo Carso SA de CV Class A-1 (Mexico, Holding Companies) 4.0 4.8 Cemex SA, Series B (Mexico, Building Materials) 3.7 3.0 Telebras PN (Pfd. Reg.) (Brazil, Telephone Services) 3.5 1.6 Telefonos de Mexico SA sponsored ADR representing shares Ord. Class L (Mexico, Telephone Services) 3.4 3.4 Compania Siderurgica National (Brazil, Iron & Steel) 2.8 2.1 Tolmex SA Class B2 (Mexico, Building Materials) 2.3 1.9 Telesp PN (Pfd. Reg.) (Brazil, Telephone Services) 2.1 1.6 Grupo Sidek SA de CV Class B Ord. (Mexico, Holding Companies) 2.1 2.6 BANACCI SA de CV Class C (Mexico, Banks) 2.0 2.3 Compania Vale do Rao Doce PN Ord. (Brazil, Metals & Mining) 1.9 - TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Utilities 21.0 17.3 Basic Industries 15.5 11.8 Nondurables 10.7 11.8 Finance 10.5 21.1 Construction & Real Estate 10.1 8.4 Holding Companies 7.1 - Durables 4.7 3.9 Energy 4.5 5.1 Retail & Wholesale 4.5 4.7 Media & Leisure 2.5 2.5 LATIN AMERICA INVESTMENTS OCTOBER 31, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 90.4% SHARES VALUE (NOTE 1) ARGENTINA - 12.1% Astra Comp Argentina de Petroleum (Reg.) 2,865,800 $ 6,022,292 04699B94 Bagley Y Cia Ltd. SA Class B (Reg.) 440,119 1,761,092 05699C23 Banco de Galicia Y Buenos Aires SA sponsored ADR representing Class B shares 181,075 4,889,025 05953820 Banco del Sud SA 169,700 2,376,632 05957M92 Banco del Sud SA (rights) 169,700 2 05957M93 Banco Frances del Rio de la Prata SA (Reg.) 576,800 4,904,519 21199692 Buenos Aires Embotelladora SA sponsored ADR 144,100 5,529,838 11942420 Capex SA Class A (a) (c) 100,000 970,340 13961293 Central Costanera SA ADR (c) 130,200 4,475,625 15324M10 Central Puerto SA ADR (c) 28,800 928,800 15503810 Citicorp Equity Investment Class B 146,700 719,082 17399P22 Commercial del Plata 1,804,580 6,083,564 20199392 Interamericania de Auto Ord. 741,423 10,346,469 26899722 Mirgor Sacifia Class C sponsored ADR (c) 245,710 2,180,676 60470110 Molinos Rio de La Plata SA (Reg.) (a) 1,123,273 9,809,611 60899C22 Perez Companc Class B 2,594,225 14,013,718 71399723 Telecom Argentina Stet France Telecom SA 1,915,200 11,648,495 90899992 Telefonica de Argentina SA Class B 1,478,900 9,128,007 87999D92 Transportadora de Gas Del Sur SA: Class B 95,000 227,130 89387092 Class B (c) 185,000 434,902 89387093 YPF Sociedad Anonima sponsored ADR representing Class D shares 502,400 12,120,400 98424510 108,570,219 BRAZIL - 27.7% Acesita Cia Acos Especiais Itabira Ord. 52,245,900 4,949,254 00499L22 Aracruz Celulose SA ADR (a) 319,350 4,071,713 03849610 Bradesco PN 1,056,290,428 9,881,224 10599992 Brahma (Cia Cervejaria): PN Class B (Pfd. Reg.) 30,428,254 10,701,233 15799492 ON (warrants) (a) 1,510,428 134,156 15799494 PN (warrants) (a) 117,827 4,327 15799498 Brasmotor PN 24,800,100 10,278,401 10599892 BR Petrobras Distribuidora PN (Pfd. Reg.) 3,000 170 11299622 Casa Anglo PN Ord. (a) 3,192,269 831,618 13599392 Celesc PN Class B Ord. (a) 5,371,000 5,723,928 15199E22 CESP (Cia Energetica de Sao Paulo) PN 480,000 794,015 20440P92 Companhia Paran de Energetica-Copel 75,341,200 747,385 20441B92 Compania Siderurgica Nacional 545,390,000 25,057,587 24499523 Compania Energertica Minas Gerais 35,874,400 3,653,449 15199992 Compania Paulista de Forca Luz Ord. 66,873,597 5,939,044 20499922 Compania Vale do Rao Doce PN Ord. 76,855,500 16,654,300 20499792 Copene Petroquimica do Nordeste SA 2,070,000 1,936,402 21799722 Coteminas PN 22,725,310 9,687,345 22199692 Duratex Corp. PN 19,017,000 1,396,228 26699493 Electrobras PN Class B 38,294,010 14,646,316 69699993 Electrobras ON 2,700,000 1,073,736 69699998 Fertilizantes Fosfatados PN 73,365,200 477,607 65599N22 Iochpe Maxion PN Ord. 3,075,311 2,130,329 46199F22 Itaubanco PN (Pfd. Reg.) 10,602,500 3,402,342 46599A92 Klabin Industriade Papel e Celulose PN 2,260,932 3,962,329 45599A22 Light Servicos de Electricidade SA Ord. 27,989,900 10,871,277 53299892 Lojas Americanas 24,000,000 738,960 54199A93 Marco Polo PN Ord. Class B 4,052,000 1,007,611 56699692 Moinho Santista-Industrias Gerais SA Ord. (a) 610,700 2,386,396 60899F22 Papel Simao, Industries De SA PN 24,340,000 1,224,926 69899792 Petrobras PN (Pfd. Reg.) 105,664,500 16,265,984 71699794 SHARES VALUE (NOTE 1) Sadia Concordia PN (Pfd. Reg.) 230,000 $ 349,970 78699B93 Souza Cruz Industria Comerico 28,000 265,246 84599D92 Telebras ON 250,462,800 10,173,771 95499795 PN (Pfd. Reg.) 649,874,297 31,317,442 95499792 Telepar PN 7,029,944 2,580,552 87999F22 Telecomunicacoes do Rio Janeiro PN (rights) (a) 117,541 1 87999N24 Telerj SA PN 1,747,000 114,184 87999N22 Telesp PN (Pfd. Reg.) 37,741,300 19,217,115 87999B93 Telesp ON 290,000 144,229 87999B98 Telesp PN (rights) (a) 562,419 6,187 90999C24 Unibanco PN 59,279,808 1,874,428 90599A94 Usinimas PN ADS (a)(c) 66,600 1,115,550 91730210 Usiminas PN (Pfd. Reg.) 5,691,711,900 9,368,241 97199693 Vidraria Santa Marina Cia 179,600 1,010,184 92699992 248,166,692 CANADA - 0.0% Bolivar Goldfields Ltd. (a) 51,750 82,213 09760Q10 CHILE - 4.6% Chilgener SA sponsored ADR 42,000 1,186,500 16889410 Compania Cervecerias Unidas SA ADR 504,600 13,434,975 20442910 Compania de Telefonos de Chile SA sponsored ADR (a) 100 9,413 20444920 Cristalerias de Chile SA sponsored ADR 124,700 2,681,050 22671410 Embotelladora Andina SA sponsored ADR 33,200 917,150 29081P10 Empresa Nacional de Electricidad SA 93,000 2,615,625 29244T10 Empresas Telex Chile SA sponsored ADR (a) 75,400 1,385,475 29245D10 Enersis SA sponsored ADR 273,300 8,028,188 29274F10 Madeco SA ADR 123,000 3,843,750 55630410 Maderas Y Sinteticos SA sponsored ADR 111,400 3,119,200 55646510 Soc. Quimica y Minera de Chile ADR 103,300 3,499,288 83363510 Vina Concha y Toro SA sponsored ADR (a) 24,100 430,788 92719110 41,151,402 COLOMBIA - 1.1% Banco Ganadero SA ADR (a) (c) 81,800 2,392,650 05959410 Carulla & CIA SA Class B sponsored ADR (a) (c) 88,200 1,323,000 14679410 Cementos Diamante SA Class B ADR (a) (c) 25,000 575,000 15126110 Cementos Paz del Rio sponsored ADR (a) (c) 122,000 2,989,000 15126410 Compania Nacional de Chocolates 96,000 1,031,642 20499E22 Suramericana de Seguros SA 63,250 1,427,374 91499J22 9,738,666 LUXEMBOURG - 0.5% Quilmes Industries SA 155,550 4,083,188 74899692 MEXICO - 39.5% Altos Hornos de Mexico SA (AHAMSA) (a) 90,000 458,115 02206992 BANACCI SA de CV: Class C 2,625,100 18,019,894 06399893 Class B 404,100 2,468,324 06399896 Bufete Industrial SA de CV sponsored ADR representing 3 ordinary certificates Banco 90,200 3,653,100 11942H10 Cementos Apasco SA de CV Class A 1,040,300 9,682,842 15299392 Cemex SA, Series B 3,585,113 33,056,463 15299293 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) MEXICO - CONTINUED Cifra SA Class C 5,516,700 $ 14,858,845 17178594 Consorcio G Grupo Dina SA ADR 120,200 1,547,575 21030610 Corporacion Geo SA de CV Class B sponsored ADR (a) (c) 25,000 675,000 21986V10 Corporaction Geo SA de CV (a) 286,640 1,959,290 21986V92 DESC (Soc. de Fomento Industrial SA) Class B 1,508,700 11,146,306 25299692 Class C 554,648 3,839,623 25299693 Empaques Ponderosa SA Class B Ord. 190,600 767,279 29157892 Empresas Ica Sociedad Controladora SA de CV sponsored ADR representing Ord. (Part. Cert). 406,600 12,045,525 29244810 Emvasa del Valle de Enah Ord. (a) 2,243,600 10,702,466 29299E22 Farmacia Benevides SA de CV Ord. 1,698,700 6,324,413 31299422 Fomento Economico Mexicano SA (FEMSA) Class B 1,343,000 5,898,577 34441892 Fondo Opcion SA de CV Class 2, Series B (a) 142,000 358,510 34499892 Gruma SA Class B (a) 461,800 3,102,843 40013192 Grupo Casa Autrey SA sponsored ADR 60,000 1,830,000 40048P10 Grupo Carso SA de CV Class A-1 (a) 3,360,100 35,721,828 40099594 Grupo Dina Sponsored ADR, Series L (a) 43,326 438,676 21030620 Grupo Elektra SA 272,500 3,055,518 62799425 Grupo Embotellador de Mexico SA GDR 363,500 9,223,813 40048J30 Grupo Financiero Bancomer SA de CV sponsored ADR, Series C (c) 360,300 8,286,900 40048610 Grupo Financiero Banorte SA Class C Ord. 1,190,000 5,808,081 40099H22 Grupo Financiero GBM Atantico SA de CV sponsored ADR (c) 139,000 2,675,750 40048F10 Grupo Financiero Inbursa SA: Class B (a) 318,200 1,260,584 44499923 Class C (a) 1,018,800 4,385,761 44499922 Groupo Financiero Serfin SA sponsored ADR 226,100 4,013,275 40049A10 Grupo Industrial Alfa SA Class A 240,000 3,280,978 44499692 Grupo Industrial Bimbo SA de CV Ord., Series A 311,765 2,530,029 60899995 Grupo Industrial Maseca SA de CV Class B 909,500 1,481,439 57899894 Grupo Iusacell SA: Class D ADR (a) 9,200 257,600 40049W20 Class L ADR (a) 21,400 658,050 40049W30 Grupo Mexicano de Desarrollo SA Class L ADR (a) 195,769 3,964,322 40048G20 Grupo Posadas SA de CV Ord. (a) 1,520,000 1,494,358 40048993 Grupo Radio Centro SA de CV sponsored ADR 118,700 2,003,063 40049C10 Grupo Sidek SA de CV: Class B Ord. 4,337,700 18,546,877 40099F22 Class L 102,772 442,416 40099F25 Grupo Simec SA de CV ADR (a) 146,400 3,623,400 40049110 Grupo Situr SA de CV Class B (a) 3,841,545 11,620,712 40049292 Grupo Televisa SA de CV 58,500 1,293,194 40049J97 Grupo Televisa SA de CV GDS (c) 110,100 4,885,688 40049J20 Grupo Tribasa SA de CV sponsored ADR (a) 19,472 610,934 40049F10 Herdez SA de CV Class A 1,567,900 1,368,150 42799F22 Hylsamex SA sponsored ADR (c) 80,325 1,726,988 44891910 Kimberly Clark de Mexico SA Class A 385,800 7,653,157 49499392 SHARES VALUE (NOTE 1) Sanluis Corp. Ord., Series A-2 488,200 $ 5,353,445 21987020 Sears Roebuck de Mexico SA de CV (a) 638,900 7,489,141 81240K92 Servicios Financieros Quadrum SA sponsored ADR (a) 21,700 314,650 81763810 Sigma Alimentos Class B (a) (c) 28,400 487,376 80599G23 Telefonos de Mexico SA sponsored ADR representing shares Ord. Class L 544,500 30,015,563 87940378 Tolmex SA Class B2 1,400,900 20,373,765 94399492 Transportacion Maritima Mexicana SA de CV: Class A 104,500 735,573 94899592 Class L 36,000 294,241 94899593 ADR representing L share 87,100 696,800 89386820 Vitro SA sponsored ADR 78,900 1,627,313 92850230 Vitro SA 221,200 1,547,372 92850292 353,641,770 PANAMA - 1.9% Banco Latino Americano de Exportaciones SA Class E 159,900 5,936,288 06199A92 Panamerican Beverages, Inc. CLass A 332,600 11,474,700 69829W10 17,410,988 PERU - 2.0% Banco Wiese Ltd. 147,810 777,423 05999T22 Banco Wiese sponsored ADR 48,000 1,020,000 05965110 Banco de Credito del Peru Class T 1,797,908 4,267,460 06899B22 Cementos Lima SA Class C (c) 1,100 448,748 15199M22 Cementos No Pacasmayo Class T 8,400 31,466 15199N22 Compania Peruana Telefonos Class T 2,663,732 3,700,137 24499622 La Fabril SA Class T 759,903 1,451,825 50399B23 Minsur SA Class T (a) 123,893 1,461,987 60499F22 Southern Peru Copper Corp. Class T (a) 621,134 3,825,372 84399F22 Tele 2000 SA (a) 221,102 611,274 87999M22 17,595,692 UNITED STATES OF AMERICA - 0.6% Capaco Automotive Products Corp. (a) 265,700 3,288,038 13916810 Duty Free International, Inc. 130,800 1,749,450 26708410 5,037,488 VENEZUELA - 0.4% Electricidad de Caracas 717,109 1,401,547 42799922 Mavesa SA sponsored ADR (c) 334,266 1,838,463 57771720 3,240,010 TOTAL COMMON STOCKS (Cost $716,728,135) 808,718,328 NONCONVERTIBLE PREFERRED STOCKS - 0.1% BRAZIL - 0.1% COSIPA (Cia Siderurgica Paulista) Class B (a) (Cost $305,958) 194,000 590,385 13299622 CLOSED-END INVESTMENT COMPANIES - 0.3% CHILE - 0.3% Chile Fund, Inc. (Cost $2,519,133) 52,456 2,609,686 16883410 CORPORATE BONDS - 0.2% MOODY'S RATINGS PRINCIPAL (UNAUDITED) AMOUNT (B) CONVERTIBLE BONDS - 0.1% MEXICO - 0.1% Grupo Financiero Invermexico 7 1/2%, 6/16/01 (c) -- $ 1,000,000 $ 860,000 40048LAA NONCONVERTIBLE BONDS - 0.1% MEXICO - 0.1% Bancomer SA 9% 6/1/00 (c) Ba2 500,000 475,000 059682AA First Mexican Acceptance Corp. euro 10 3/4%, 9/15/96 - 500,000 495,780 321998AA 970,780 TOTAL CORPORATE BONDS (Cost $1,984,625) 1,830,780 GOVERNMENT OBLIGATIONS (G) - 2.0% ARGENTINA - 0.4% Province of Cordoba 10%, 1/28/95 (f) - 775,002 761,439 74399HAC Province of Chaco 11 7/8%, 9/10/97 (f) - 2,600,000 2,626,000 74399JAA 3,387,439 BRAZIL - 1.2% Brazil Federative Republic euro 6.0625%, 1/1/01 (d) B2 735,000 599,944 1057569E Brazil Federative Republic euro 6 3/4%, 4/15/12 (d) - 5,000,000 3,100,000 1057569J Minas Gerais State (warrants) (a) (c) - 2,000 160,000 60251711 Siderurgica Brasileiras Inflation Indexed 6%, 8/15/99 (e) - BRR 43,398,700 7,148,530 82599PAB 11,008,474 ECUADOR - 0.2% Republic of Ecuador New Money Bonds (Final) - 4,000,000 1,860,000 88399HAK PANAMA - 0.2% Republic of Panama (Final) - 2,500,000 1,412,500 6982999D Republic of Panama 0%, 10/31/05 - 1,250,000 709,375 6982999C 2,121,875 TOTAL GOVERNMENT OBLIGATIONS (Cost $17,508,757) 18,377,788 PURCHASED BANK DEBT - 0.8% MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) AMOUNT (B) (NOTE 1) ECUADOR - 0.5% Republic of Equador: loan participation under 1983 and 1984 extension and refinancing agreements (a) $ 500,000 $ 264,500 88399HAH loan participation (a) 3,500,000 2,118,550 88399HAA loan participation (a) 2,500,000 1,453,250 88399HAB consilidated (Final) (d) 1,000,000 605,300 88399HAG 4,441,600 MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) AMOUNT (B) (NOTE 1) PERU - 0.3% Empressa de Electricidad del Peru SA loan participation 0% (a) $ 5,250,000 $ 2,926,875 28599BAA TOTAL PURCHASED BANK DEBT (Cost $7,799,914) 7,368,475 CERTIFICATES OF DEPOSIT - 0.1% MEXICO - 0.1% Ridgefield Investments Ltd. sub. participating notes 0%, 2/2/95 (collateralized by Mexican gov't securities) (c)(Cost $2,530,000) 3,660,000 690,276 76599AAB REPURCHASE AGREEMENTS - 6.1% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 4.78% dated 10/31/94 due 11/1/94 $ 54,808,276 54,801,000 99799N9L TOTAL INVESTMENTS IN SECURITIES - 100% (Cost $804,177,522) $ 894,986,718 CURRENCY ABBREVIATIONS BRR - Brazilian real LEGEND (a) Non-income producing (b) Principal amount is stated in United States dollars unless otherwise noted. (c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $40,595,732 or 4.6% of net assets. (d) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. (e) Principal amount shown is original face amount and does not reflect the inflation adjustments. (f) 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 Cordoba 10%, 1/28/95 1/27/94 $ 775,002 Province of Chaco 11 7/8%, 9/10/97 3/9/94 $ 2,717,987 (g) Most foreign government obligations have not been individually rated by S&P or Moody's. The ratings listed are assigned to securities by FMR, the fund's investment adviser, based principally on S&P and Moody's ratings of the sovereign credit of the issuing government. OTHER INFORMATION At the end of the period, restricted securities (excluding 144A issues) amounted to $3,387,439 or 0.4% of net assets (see Note 2 of Notes to Financial Statements). Purchases and sales of securities, other than short-term securities, aggregated $985,500,129 and $538,575,368, respectively. The following is a summary of the fund's written options activity: AGGREGATE NUMBER OF FACE VALUE CONTRACTS OF CONTRACTS Call Options on Republic of Venezuela Debt Conversion Bonds: Outstanding at November 1, 1993 - $ - Contracts opened 1 1,000,000 Contracts closed (1) (1,000,000 Outstanding at October 31, 1994 - - The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of FMR. The commissions paid to these affiliated firms were $57,533 for the period (see Note 5 of Notes to Financial Statements). The fund participated in the interfund lending program as a lender. The maximum loan and the average daily loan balances during the periods for which loans were outstanding amounted to $17,304,000 and $13,788,143, respectively. The weighted average interest rate was 3.66%. Interest earned from the interfund lending program amounted to $ 9,814 and is included in interest income on the Statement of Operations (see Note 2 of Notes to Financial Statements). The fund participated in the bank borrowing program. The maximum loan and the average daily loan balances during the period for which loans were outstanding amounted to $6,884,000. The weighted average interest rate was 4.0% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At October 31, 1994, the aggregate cost of investment securities for income tax purposes was $808,958,895. Net unrealized appreciation aggregated $86,027,823, of which $133,857,244 related to appreciated investment securities and $47,829,421 related to depreciated investment securities. The fund hereby designates $333,391 as a capital gain dividend for the purpose of the dividend paid deduction. For the period, interest and dividends from foreign countries were $12,598,034 or $0.23 per share. Taxes paid to foreign countries were $306,026 or $0.01 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Basic Industries 15.5% Construction & Real Estate 10.1 Durables 4.7 Energy 4.5 Finance 10.5 Holding Companies 7.1 Government Obligations 2.6 Media & Leisure 2.5 Nondurables 10.7 Retail & Wholesale 4.5 Repurchase Agreements 6.1 Transportation 0.2 Utilities 21.0 100.0% LATIN AMERICA FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES <TABLE> <CAPTION> <S> <C> <C> OCTOBER 31, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $54,801,000) (cost $804,177,522) - $ 894,986,718 See accompanying schedule Cash 826 Receivable for investments sold 7,432,481 Regular delivery Delayed delivery 2,536,875 Receivable for fund shares sold 3,214,375 Dividends receivable 119,631 Interest receivable 265,757 Redemption fees receivable 8,788 Other receivables 2,971 TOTAL ASSETS 908,568,422 LIABILITIES Payable for investments purchased $ 10,484,124 Payable for fund shares redeemed 7,798,291 Accrued management fee 597,105 Other payables and accrued expenses 1,158,921 TOTAL LIABILITIES 20,038,441 NET ASSETS $ 888,529,981 Net Assets consist of: Paid in capital $ 793,347,450 Undistributed net investment income 2,630,483 Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 1,799,868 Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 90,752,180 NET ASSETS, for 54,817,130 shares outstanding $ 888,529,981 NET ASSET VALUE and redemption price per share ($888,529,981 (divided by) 54,817,130 shares) $16.21 Maximum offering price per share (100/97.00 of $16.21) $16.71 </TABLE> STATEMENT OF OPERATIONS <TABLE> <CAPTION> <S> <C> <C> YEAR ENDED OCTOBER 31, 1994 INVESTMENT INCOME $ 8,138,918 Dividends Interest 7,382,789 15,521,707 Less foreign taxes withheld (306,026 ) TOTAL INCOME 15,215,681 EXPENSES Management fee $ 6,050,004 Transfer agent 3,235,475 Fees Redemption fees (223,359 ) Accounting fees and expenses 384,868 Non-interested trustees' compensation 4,691 Custodian fees and expenses 1,704,617 Registration fees 320,092 Audit 57,661 Legal 12,856 Interest 765 Miscellaneous 5,812 Total expenses before reductions 11,553,482 Expense reductions (7,604 11,545,878 ) NET INVESTMENT INCOME 3,669,803 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities (net of Brazilian IPMF tax of $663,125) 3,109,836 Foreign currency transactions (818,697 ) Written options 21,000 2,312,139 Change in net unrealized appreciation (depreciation) on: Investment securities 58,437,238 Assets and liabilities in foreign currencies (57,016 58,380,222 ) NET GAIN (LOSS) 60,692,361 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 64,362,164 OTHER INFORMATION $1,245,387 Sales charges paid to FDC Accounting fees paid to FSC $382,374 </TABLE> STATEMENT OF CHANGES IN NET ASSETS INCREASE (DECREASE) IN NET ASSETS YEAR ENDED APRIL 19, 1993 OCTOBER 31, (COMMENCEMENT 1994 OF OPERATIONS) TO OCTOBER 31, 1993 <TABLE> <CAPTION> <S> <C> <C> Operations $ 3,669,803 $ 750,722 Net investment income Net realized gain (loss) 2,312,139 1,877,469 Change in net unrealized appreciation (depreciation) 58,380,222 32,371,958 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 64,362,164 35,000,149 Distributions to shareholders: (1,988,207) - From net investment income From net realized gain (1,988,193) - TOTAL DISTRIBUTIONS (3,976,400) - Share transactions 1,515,609,862 360,615,904 Net proceeds from sales of shares Reinvestment of distributions 3,877,609 - Cost of shares redeemed (1,041,351,744) (53,208,347) Redemption fees 7,074,858 525,926 Net increase (decrease) in net assets resulting from share transactions 485,210,585 307,933,483 TOTAL INCREASE (DECREASE) IN NET ASSETS 545,596,349 342,933,632 NET ASSETS Beginning of period 342,933,632 - End of period (including undistributed net investment income of $2,630,483 and $750,722, respectively) $ 888,529,981 $ 342,933,632 OTHER INFORMATION Shares Sold 95,990,469 30,145,557 Issued in reinvestment of distributions 261,277 - Redeemed (67,265,359) (4,314,814) Net increase (decrease) 28,986,387 25,830,743 </TABLE> <TABLE> <CAPTION> <S> <C> <C> SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. </TABLE> FINANCIAL HIGHLIGHTS <TABLE> <CAPTION> <S> <C> <C> SELECTED PER-SHARE DATA YEAR ENDED APRIL 19, 1993 OCTOBER 31, (COMMENCEMENT 1994 OF OPERATIONS) TO OCTOBER 31, 1993 Net asset value, beginning of period $ 13.28 $ 10.00 Income from Investment Operations Net investment income .07 .03 Net realized and unrealized gain (loss) 2.82 3.23 Total from investment operations 2.89 3.26 Less Distributions (.05) - From net investment income From net realized gain (.05) - Total distributions (.10) - Redemption fees added to paid in capital .14 .02 Net asset value, end of period $ 16.21 $ 13.28 TOTAL RETURN A, C 22.89% 32.80% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 888,530 $ 342,934 Ratio of expenses to average net assets 1.48% 1.94% B Ratio of net investment income to average net assets .47% 1.21% B Portfolio turnover rate 77% 72% B A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. B ANNUALIZED C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. </TABLE> SOUTHEAST ASIA PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). Southeast Asia Fund has a 3% sales charge, which had been waived since the fund's start on April 19, 1993 through May 31, 1994. CUMULATIVE TOTAL RETURNS PERIOD ENDED PAST 1 LIFE OF OCTOBER 31, 1994 YEAR FUND SOUTHEAST ASIA 10.87% 46.79% SOUTHEAST ASIA (INCL. 3% SALES CHARGE) 7.54% 42.39% Morgan Stanley Far East ex-Japan Free Index 15.46% 64.41% Average Pacific Region Fund 9.41% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, or since the fund started on April 19, 1993. You can compare the fund's figures to the performance of the Morgan Stanley Far East ex-Japan Free index, a broad measure of the performance of stocks in the Far East region, excluding Japan. The index is weighted by each country's market capitalization (or the total value of its outstanding shares). You can also compare the fund's performance to the average Pacific region fund which currently reflects the performance of 36 funds with similar objectives tracked by Lipper Analytical Services. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effects of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIOD ENDED PAST 1 LIFE OF OCTOBER 31, 1994 YEAR FUND SOUTHEAST ASIA 10.87% 28.37% SOUTHEAST ASIA (INCL. 3% SALES CHARGE) 7.54% 25.85% Morgan Stanley Far East ex-Japan Free Index 15.46% 36.74% Average Pacific Region Fund 9.41% n/a 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 Southeast Asia Fund (351Morgan Stanley EMF C 04/19/93 9700.00 10000.00 04/30/93 9651.50 10378.31 05/31/93 10078.30 10975.91 06/30/93 9835.80 10687.54 07/31/93 9826.10 10760.98 08/31/93 10543.90 11661.43 09/30/93 10873.70 12024.42 10/31/93 12842.80 14239.20 11/30/93 13240.50 14143.38 12/31/93 15992.99 17581.63 01/31/94 14696.79 16380.67 02/28/94 14004.83 15439.89 03/31/94 12221.33 13760.40 04/30/94 12533.20 14408.66 05/31/94 13069.23 15023.00 06/30/94 12299.30 14355.17 07/31/94 12952.27 15156.89 08/31/94 14141.27 16391.33 09/30/94 14131.53 16127.43 10/31/94 14238.73 16440.91 Let's say you invested $10,000 in Fidelity Southeast Asia Fund on its start date. By October 31, 1994, it would have grown to $14,239 - a 42.39% increase on your initial investment. That compares to $10,000 invested in the Morgan Stanley Far East ex-Japan Free index, which would have grown to $16,441 over the same period - a 64.41% increase. UNDERSTANDING PERFORMANCE Many markets around the globe offer the potential for significant growth over time; however, investing in foreign markets means assuming greater risks than investing in the United States. Factors like changes in a country's financial markets, its local political and economic climate, and the fluctuating value of its currency create these risks. For these reasons an international fund's performance may be more volatile than a fund that invests exclusively in the United States. (checkmark) SOUTHEAST ASIA FUND TALK: THE MANAGER'S OVERVIEW An interview with Allan Liu, Portfolio Manager of Fidelity Southeast Asia Fund Q. HOW DID THE FUND PERFORM, ALLAN? A. It turned in mixed results. For the year ended October 31, 1994, the fund had a total return of 10.87%. It underperformed the Morgan Stanley Far East ex-Japan Free index, which returned 15.46%, but outperformed the average Pacific region fund, which returned 9.41%, according to Lipper Analytical Services. Q. WHY DID THE INDEX PERFORM BETTER THAN THE FUND? A. There were three main reasons. The biggest reason is that the fund experienced dramatic capital inflows and outflows over the period. During the fourth quarter of 1993 - when the Southeast Asian markets were some of the best performing markets in the world - investors poured a massive amount of money into the fund. I had a very short amount of time to invest this money. As a result, the fund was not fully invested during this period and couldn't take full advantage of the strong markets. Conversely, heavy investor redemptions during the first quarter of 1994 - when the Southeast Asian markets plummeted - forced me to sell the fund's investments in a falling market. To give you an idea of the scope of the problem, the fund's total net assets increased over 11 times in the second half of 1993 and dropped 42% in the first six months of 1994. Q. WHAT WERE THE OTHER TWO REASONS? A. The second reason is that the fund is constrained by legal requirements that limit it to investing no more than 15% in illiquid markets, or markets where it is extremely difficult to trade securities. This meant that when the fund size increased sharply late in 1993, it couldn't even build a neutral weighting in Malaysia - where the index had over a 20% weighting - which was one of the region's best performers in 1993. That's because Malaysian shares are classified as illiquid initially, since, in most cases, it takes six to eight weeks after the stocks are purchased for them to be able to be traded. The third reason for the fund's relative underperformance was that it held many growth stocks. Stocks of these companies outperformed market averages in 1993. However, in early 1994, when the markets retreated, their prices fell faster than market averages. Q. IN LIGHT OF THIS ENVIRONMENT, HAVE YOU CHANGED THE FUND'S STRATEGY? A. Yes. I've replaced a number of my growth stocks with more defensive, big capitalization stocks. This way, if there's another drain of cash out of the fund, fund performance won't be affected as badly as it was at the beginning of the year. That's because these stocks are liquid - meaning they are easy to sell - and their selling prices often fluctuate less than those of smaller capitalization stocks. I should also note that I reduced the fund's cash during the summer of 1994, when some Southeast Asian markets saw an upturn. At that time, I could buy stocks at more reasonable prices and the fund's inflows and outflows appeared to have stabilized. Q. CLEARLY, SOUTHEAST ASIA EXPERIENCED SOME DRAMATIC UPS AND DOWNS OVER THE PERIOD. HOW DID ITS OVERALL ECONOMIC PICTURE LOOK? A. Despite the correction at the beginning of 1994, economic growth in the region continued to be buoyant throughout the year. And, as I just mentioned, prices of stocks came down to more reasonable levels as a result of the correction. In addition, we saw stock markets in some Southeast Asian countries - such as Korea and Thailand - pick up in the third quarter of 1994. The only country that I believe is in pretty rough shape is China, which has been plagued by inflation. I should note that China's overheated economy has also affected Hong Kong, which is closely connected to the Chinese economy. Throughout this period, the fund continued to focus on infrastructure plays, banks and economically sensitive companies. Q. IF, AS YOU JUST MENTIONED, HONG KONG FELT THE EFFECTS OF CHINA'S INFLATIONARY ECONOMY, WHY IS IT STILL YOUR TOP COUNTRY? A. Actually, the fund's investments in Hong Kong dropped from 33.1% of the fund six months ago to 27.4% at the end of the period. Currently, the fund is underweighted in Hong Kong compared to the index. There are two reasons for this. First, as I mentioned, Hong Kong didn't look as attractive because of its connection to China. Secondly, Hong Kong's property market was problematic, dropping throughout 1994. However, at the end of the period, it looked like the price of residential property - not office space - - had probably bottomed out. That meant that some property company stocks were inexpensive and had the potential to do well going forward. I thought Sun Hung Kai Properties looked attractive. I was also bullish on Hong Kong-based conglomerate Hutchison Whampoa, which owns property companies as well as a number of other successful ventures. Stepping back to the issue of China, I should point out that if China can slow down and control inflation, it could still be a very good potential market for many Southeast Asian countries. One of the fund's top investments in Hong Kong that already has its foot in the door in China is Hong Kong Telecommunications. China desperately needs a better telephone system, and this company is trying to negotiate a role in that massive communications project. Q. WHAT ABOUT YOUR SECOND LARGEST COUNTRY - THAILAND? A. A couple of different sectors were attractive in Thailand. The banking and financial sectors reported excellent earnings growth due to the country's still buoyant economy. In addition, the recovery of construction material companies, especially cement companies, was better than expected. My top Thai holding, Siam Cement, was attractive because it was well positioned to take advantage of a pickup in building projects in the country. At the end of the period, most Southeast Asian countries were experiencing a shortage of cement - a major building material in the region - - because of continuing economic growth. Cement is used to build homes, roads, seaports and other building projects to support Southeast Asia's growing infrastructure. Q. THERE CLEARLY WERE FACTORS AFFECTING THE FUND THAT YOU COULDN'T CONTROL - - SUCH AS THE FLOW OF ASSETS IN AND OUT OF THE FUND - BUT WERE THERE INVESTMENT DECISIONS YOU MADE THAT YOU REGRET? A. Yes, I wish the fund had not been so heavily invested in growth stocks, such as Berjaya Singer, a Malaysian consumer electronics distributor, when the market corrected in 1994. These stocks fell much harder than other Southeast Asian stocks during this period. Q. HOW DO YOU THINK THE FUND LOOKS GOING FORWARD? A. I'm still cautiously optimistic. As I noted earlier, the drop in the stock market has not really done much damage to the real economies, and some Southeast Asian countries picked up significantly in the second half of 1994. However, I still think it's wise for investors to take a long-term, not a short-term, approach to these markets. Keep in mind, that these and other foreign markets tend to be more volatile than the U.S. market. FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in Southeast Asian stocks, including those from Thailand, Hong Kong, South Korea, Malaysia, Indonesia, Singapore, the Philippines, China and Taiwan START DATE: April 19, 1993 SIZE: as of October 31, 1994, more than $825 million MANAGER: Allan Liu, since April 1993; manager, various funds for non-U.S. investors; analyst, Southeast Asian markets, 1987-1990; joined Fidelity in 1987 (checkmark) ALLAN LIU ON INVESTING IN SINGAPORE: "Since the beginning of 1994, Singapore has turned in decent performance compared to the rest of the region. Its economy was stronger over the period than most people expected it to be, which benefited a number of sectors, especially banks and property companies. "Banks, such as United Overseas Bank, were some of the main beneficiaries of Singapore's improving economy. Banks like United were enjoying strong loan growth both in Singapore and throughout the region. They also saw substantial increases in non-interest income. "One of the reasons that the office property market is picking up in Singapore is that some businesses are beginning to move their offices from Hong Kong to Singapore, where rents and the costs of doing business are much less expensive. This also means that the costs of maintaining an expatriate employee there are significantly lower. Also keep in mind that businesses have not forgotten that control of Hong Kong will fall into China's hands in 1997. As a result, some Hong Kong-based companies are considering opening a second office elsewhere in Asia." (solid bullet) Malaysian casino operators were still doing well at the end of the period, but company stocks were no longer cheap. The other gaming companies, which focus on lottery operation, have been negatively affected by new government regulations, such as a gaming tax. (solid bullet) As of October 31, 1994, the fund's top five countries were Hong Kong (27.4%), Thailand (18.4%), Malaysia (14.6%), Korea (13.8%), and Singapore (13.3%). SOUTHEAST ASIA INVESTMENT CHANGES GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1994 United States 2.3% Row: 1, Col: 1, Value: 2.7 Row: 1, Col: 2, Value: 18.4 Row: 1, Col: 3, Value: 13.4 Row: 1, Col: 4, Value: 3.0 Row: 1, Col: 5, Value: 1.75 Row: 1, Col: 6, Value: 14.6 Row: 1, Col: 7, Value: 13.8 Row: 1, Col: 8, Value: 6.3 Row: 1, Col: 9, Value: 27.4 Row: 1, Col: 10, Value: 0.0 Thailand 18.4% Hong Kong 27.4% Singapore 13.3% Indonesia 6.3% Philippines 3.0% Other 0.9% Korea (South) 13.8% Malaysia 14.6% AS OF APRIL 30, 1994 United States 7.4% Row: 1, Col: 1, Value: 7.4 Row: 1, Col: 2, Value: 12.7 Row: 1, Col: 3, Value: 5.0 Row: 1, Col: 4, Value: 4.5 Row: 1, Col: 5, Value: 1.75 Row: 1, Col: 6, Value: 18.9 Row: 1, Col: 7, Value: 15.2 Row: 1, Col: 8, Value: 2.6 Row: 1, Col: 9, Value: 33.1 Row: 1, Col: 10, Value: nil Thailand 12.7% Hong Kong 33.1% Singapore 5.0% Philippines 4.5% Other 0.6% Indonesia 2.6% Malaysia 18.9% Korea (South) 15.2% ASSET ALLOCATION % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Stocks and closed-end investment companies 96.6 88.7 Bonds 1.1 3.9 Short-term investments 2.3 7.4 TOP TEN STOCKS % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Sun Hung Kai Properties Ltd. (Hong Kong, Real Estate) 3.5 2.9 Hutchison Whampoa Ltd. Ord. (Hong Kong, Electrical Equipment) 3.2 3.7 Hong Kong Telecommunications Ltd. (Hong Kong, Telephone Services) 2.7 1.0 United Overseas Bank (For. Reg.) (Singapore, Banks) 2.5 - Overseas Union Bank Ltd. (For. Reg.) (Singapore, Banks) 2.5 0.3 Swire Pacific Ltd. Class A (Hong Kong, Air Transportation) 2.5 2.6 Jardine Matheson Holdings Ltd. Ord. (Hong Kong, Holding Companies) 2.5 0.6 Samsung Electronics Co. Ltd. GDS (Korea (South), Electronics) 2.1 0.4 Keppel Corp. Ltd. (Singapore, Ship Building & Repair) 2.1 - HSBC Holdings PLC Corp. (Hong Kong, Banks) 1.9 1.6 TOP TEN INDUSTRIES % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Finance 21.5 22.7 Construction & Real Estate 20.5 24.5 Utilities 10.8 7.0 Basic Industries 7.5 8.1 Media & Leisure 6.3 8.3 Transportation 6.1 4.3 Industrial Machinery & Equipment 5.9 6.6 Holding Companies 4.8 - Technology 4.6 2.2 Nondurables 4.1 2.3 SOUTHEAST ASIA INVESTMENTS OCTOBER 31, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 96.3% SHARES VALUE (NOTE 1) CHINA (PEOPLES REP.) - 0.6% Huaneng Power International, Inc. Class N sponsored ADR (a) 223,250 $ 4,130,159 44330410 Shandong Huaneng Power Development Ltd. Class N sponsored ADR 63,500 682,625 81941910 4,812,784 GRAND CAYMAN - 0.0% Four Seas Mercantile Holdings Ltd. 600,000 194,124 35099622 HONG KONG - 27.4% Associates International Hotels Ltd. 1,840,000 1,321,598 04599492 Cheung Kong Holdings Ltd. 2,840,000 13,672,584 16674410 China Light & Power Co. Ltd. 1,070,000 5,566,718 16940010 Citic Pacific Ltd. Ord. 1,800,000 5,416,074 45299792 Consolidated Electric Power Asia Ltd. 1,300,000 3,036,748 20855292 Dah Sing Financial Holdings Ltd. 680,000 1,733,660 23899892 Dao Heng Bank Group Ltd. 162,550 539,590 23799F22 First Pacific Co. Ltd. 1,788,255 1,261,292 33699192 Furama Hotel Enterprises Ltd. 245,000 380,485 36199E22 Grand Hotel Holdings Ltd. Class A 4,460,000 1,847,020 38599292 HSBC Holdings PLC 1,347,844 15,960,616 42199192 Hang Seng Bank 400,000 2,898,924 40987820 Hanny Magnetics Holding Ltd. 500,000 68,590 41099592 Harbour Ring International Holdings Ltd. (warrants) (a) 333 6 41199B93 Henderson Investment Ltd. 1,640,000 1,506,930 42599422 Henderson Land Development Co. Ltd. 1,324,000 8,653,028 42599010 Hong Kong & Shanghai Hotels Ltd. 1,000,000 1,410,640 71899292 Hong Kong Electric Holdings Ltd. Ord. 2,700,000 8,491,014 43858010 Hong Kong Land Holdings Ltd. 1,918,485 4,916,003 43858292 Hong Kong Telecommunications Ltd. 10,550,000 22,596,412 43857991 Hopewell Holdings Ltd. 4,300,000 4,424,098 44099999 Hutchison Whampoa Ltd. Ord. 5,759,000 26,607,501 44841510 Hysan Development Co. Ltd. 1,180,000 3,145,856 44916510 Jardine Matheson Holdings Ltd. Ord. 2,445,366 20,333,218 47111510 Ka Wah Bank Ltd. 2,522,500 1,338,464 48999G22 Kong Wah Holdings Ltd. 3,000,000 399,900 50599B92 Mandarin Oriental International Ltd. Ord. 786,000 1,037,559 56259499 Manhattan Card Co. Ltd. 3,416,000 1,392,567 56299B22 Oriental Press Group Ltd. 2,000,000 1,235,920 68620099 Orient Telecom & Technology Holdings Ltd. (a) 200,000 90,592 69599F22 Peregrine Investments Holdings Ltd. 1,100,000 1,921,832 71399492 Regal Hotels International Holdings Ltd. 8,500,000 2,068,050 75999110 Siu-Fung Ceramics Holdings Ltd. 5,000,000 1,158,300 82999G22 Sun Hung Kai Properties Ltd. 3,829,000 29,236,559 86676H10 Swire Pacific Ltd. Class A 2,670,000 20,386,945 87079410 Swire Pacific Ltd. 1,400,000 1,657,824 87079492 Television Broadcast Ltd Ord. 990,000 4,573,958 87953110 Wharf Holdings Ltd. (c) 1,100,000 4,341,920 96299110 226,628,995 INDONESIA - 6.3% Andayani Megah PT 200,000 414,532 03399722 Astra International PT (For. Reg.) 2,068,000 4,572,017 04699894 Bank Dagang Nas Indonesia PT (a) 600,000 1,160,688 06099Q22 Dharmala International Land PT 1,897,500 2,600,068 25399592 Duta Anggada Realty Ord. 1,166,666 1,182,183 26699192 Enseval Puttera Megatrading PT (For. Reg.) (a) 100,000 391,502 29399D22 Indah Kiat Pulp & Paper (For. Reg.) 770,000 913,235 45499B23 Indocement Tungaal Prakarsa PT (For. Reg.) 1,253,000 5,194,086 68399093 Indofood Sukses Makmur (For. Reg.) (a) 1,400,000 6,190,338 71099122 Indosat (Indonesia Satellite) sponsored ADR 24,200 949,850 71568010 SHARES VALUE (NOTE 1) Jakarta International Hotels & Development Ord. 580,000 $ 788,069 47399693 Kalbe Farma (For. Reg.) 260,000 1,149,634 48699994 Mayora Indah PT 644,000 3,559,446 83099A92 Multibreeder Adirama Indo PT (a) 55,000 92,464 62599A22 Sampoerna, Hanjaya Mandala (For. Reg.) 2,820,000 13,638,112 82299893 Semen Gresik (For. Reg.) 347,000 1,869,952 84399693 SUCACO PT 350,000 1,168,748 89399292 Tempo-Scan Pacific (For. Reg.) 110,000 582,648 87999P22 Tjiwa Kimia Pabrik Kertas PT (For. Reg.) 1,000,500 2,580,600 95499293 United Tractors PT (For Reg.) 1,195,000 3,082,275 91599594 52,080,447 KOREA (SOUTH) - 13.0% Anam Electronics Co. Ltd. (a) 30,000 703,757 03399492 Boram Bank (New) 24,457 297,601 09999325 Cheil Foods & Chemical Industries 82,660 6,103,453 16399C22 Cho Hung Bank Co. Ltd. (New) (a) 76,130 1,231,985 17099E25 Chosun Brewery Co. Ltd. (a) 6,380 219,296 22899822 Dae Chang Industrial Co. 872 19,034 23399M22 Daewoo Corp. (a) 22,507 458,554 23799B22 Daewoo Corp. (RFD) 1,011 18,390 23799B26 Daewoo Corp. (warrants) (a) 1,150 1,523,750 23799B25 Daewoo Electronics 3,462 54,721 23899C23 Daewoo Heavy Industries Ltd. (a) 450,162 8,244,830 23999492 Daewoo Heavy Industries Ltd. (RFD) (a) 6,326 114,275 23999497 Daewoo Metal Co. Ltd. 3,868 70,358 24999B22 Daewoo Securities Co. Ltd. 42,230 1,880,656 25999322 Daewoo Telecommunication Co. Ltd. 9,743 152,779 27999193 Daeyu Securities 19,620 444,505 23399G22 Daeyoung Electronics Industries (a) 611 27,900 30999122 Dong Ah Securities Co. (a) 20,160 338,887 25799X22 Dongbu Securities Co. Ltd. 400 6,473 25899A22 Dongkuk Steel Mill Co. Ltd. 21,000 1,034,213 25799S22 Dongsuh Securities Co. (a) 50,000 997,303 25799P22 Gold Star Co. Ltd. 56,050 2,894,786 38099392 Gold Star Co. Ltd. GDS (a) 57,070 970,190 38099394 Hanil Cement Manufacturing Co. Ltd. (a) 36,940 2,456,025 41099D22 Hanjin Engineering & Construction Co. Ltd. (a) 3,600 90,322 41099822 Hanshin Securities Co. Ltd. 500 17,297 41899722 Hyundai Engineering & Construction Co. Ltd. 10,000 551,966 41599122 Hyundai Motor Service Co. Ltd. (a) 11,590 705,156 42199422 Il Shin Spinning Co. Ltd. (a) 3,159 356,658 45199F22 Inchon Iron & Steel Co. Ltd. 107,920 5,777,778 45399J22 Keang Nam Enterprises 471 11,758 48699D22 Korea Container Terminal Co. 3,290 222,869 50099L22 Korea Electric Power Corp. 394,510 14,995,487 50099B92 Korea First Securities Co. Ltd. (a) 898 16,222 50099K22 Korea First Securities Co. Ltd. (New) (a) 92 1,558 50099K24 Korea Mobile Telecommunications Corp. (a) 7,400 7,783,855 50599W22 Korean Air 42,000 1,554,287 52299522 Korean Air (RFD) (a) 7,854 203,456 52299526 Kyung Nam Woolen Textile Industries (a) 2,650 62,830 61699A22 Lotte Confectionary Co. 5,600 840,193 54499692 Midopa Co. (a) 4,352 82,438 59899E22 Miwon Co. Ltd. 4,500 138,870 61299693 Orion Electric Co. Ltd. 60,000 1,821,489 68699H22 Pohang Iron & Steel Co. Ltd. 77,855 8,590,518 73045092 Pohang Iron & Steel Co. Ltd. sponsored ADR 20,500 673,938 73045010 Samsung Construction Co. Ltd. 49,887 1,983,840 90499J22 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) KOREA (SOUTH) - CONTINUED Samsung Electronics Co. Ltd. 94,070 $ 17,278,127 79611092 GDR Part Dividend (c) 2,983 96,953 79605080 GDR (a) 8,765 525,900 79611094 GDS (c) 72,000 4,320,000 79605020 (RFD) (a) 2,952 494,376 79611098 Samsung Engineering & Construction Co. Ltd. (a) 12,606 461,764 90499J25 Sangup Securities Co. Ltd. (a) 153,650 3,488,760 80099C22 Sangup Securities Co. Ltd. (New) (a) 24,159 521,276 80099C23 Seoul Securities Co. (a) 2,800 49,175 83599P22 Shin Won Corp. 33,670 1,744,428 98499D92 Ssangyong Cement Co. 36,620 1,572,848 76899392 Tong Yang Cement Co. 5,000 203,851 93899C22 Yukong Ltd. 3,129 172,710 98899K25 107,676,674 MALAYSIA - 14.2% Aokam Perdana BHD 168,000 1,386,719 01899792 Aokam Perdana BHD Class A (RFD) (a) 132,000 1,032,763 01899795 Bandar Raya Development BHD 1,000,000 1,893,400 06000210 Bandar Raya Development BHD (warrants) (a) 1,080,000 1,360,433 06000292 Berjaya Sports Toto BHD 2,738,000 4,262,984 08499E22 Commerce Asset Holding BHD 1,000,000 4,459,660 20099492 Country Heights Holdings BHD 400,000 977,996 22299D22 Daiman Development BHD 550,000 925,183 23499C23 EON (Edaran Otomobil Nasional) BHD 486,000 3,460,223 29599292 Econstates BHD (a) 1,410,000 3,750,812 27999222 Ekran BHD Ord. (a) 800,000 3,254,768 28299792 Ekran BHD Class A 1,026,000 3,973,554 28299793 Gamuda BHD 110,000 559,413 36499A92 Genting BHD 1,375,500 12,645,178 37245210 Kim Hin Industry BHD (warrants) (a) 40,000 64,156 49499C95 Land & General BHD 2,240,000 11,041,184 51499693 Leader Universal Holdings BHD 564,000 3,133,026 52199192 Malaysian Airlines System 2,290,000 6,136,536 56084110 Malaysia Assurance Alliance BHD (a) 1,233,000 2,725,263 56099Q22 Malayan Banking BHD 200,000 1,361,370 56090499 Malaysian Helicopter Services BHD 824,000 2,030,789 56099M22 Metacorp BHD 190,000 735,843 59099E92 Pacific Chemicals BHD 1,049,000 6,360,685 69599H22 Press Metal BHD 100,000 234,719 74199B22 Rashid Hussain BHD 300,000 927,138 75399492 Resorts World BHD 2,037,000 12,909,304 76199592 Sungei Way Holdings BHD 313,250 1,237,682 86799892 Sungei Way Holdings BHD (warrants 1997) (a) 374,934 1,026,716 86799894 (warrants 1999) (a) 44,750 73,176 89499H22 TH Loy Industries BHD (a) 330,000 1,258,679 87799A22 Taiping Consolidated BHD 1,200,000 2,699,268 95599B22 Technology Resources Industries BHD (a) 2,140,000 8,329,779 93699692 Tenaga Nasional BHD 300,000 1,596,087 92099992 United Engineers BHD 1,070,000 5,776,427 93099692 Westmont BHD (a) 50,800 359,699 98499G22 YTL Corp. BHD 550,000 3,119,804 98799092 YTL Corp. BHD (warrants) (a) 120,000 478,826 98799094 117,559,242 PAKISTAN - 0.2% Pakistan Telecommunications Voucher GDR (a) (c) 11,135 1,837,275 69584910 PHILIPPINES - 3.0% Bacnotan Consolidated Industries, Inc. 37,660 450,316 08099423 Benpress Holdings Corp. GDR (c) 72,000 777,600 08230010 First Phillipines Holdings Corp. 622,420 3,127,113 33699492 SHARES VALUE (NOTE 1) First Phillipines Holdings Corp. (rights) (a) 230,540 $ 734,337 33699494 House of Investments, Inc. 2,062,000 4,309,642 44199C92 Manila Electric Co. Class B 174,185 2,450,351 58799A92 Metropolitan Bank & Trust Co. 140,000 4,135,852 59199D22 Metropolitan Bank & Trust Co. (rights) (a) 28,000 602,090 59199D23 Philippine Long Distance Telephone Co. 100,000 5,700,000 71825210 Philippine National Bank 60 941 71899392 SM Prime Holdings, Inc. (a) 987,000 337,199 83160592 Universal Robina Corp. (a) 2,071,500 1,810,905 91399F22 24,436,346 SINGAPORE - 13.3% City Developments Ltd. 1,010,400 5,953,651 17799010 City Developments Ltd. (warrants) (a) 5,913 23,362 17799025 Comfort Group Ltd. (a) 1,000,000 735,690 20099722 DBS Land Ltd. 900,000 3,157,353 24399292 Development Bank of Singapore Ltd. (For. Reg.) 340,000 3,613,078 25159493 Hong Leong Finance Ltd. (For. Reg.) 540,000 2,059,943 44999D26 Ipco International Ltd. 200,000 1,000,000 46299D22 Intraco Ltd. 465,000 864,747 46099992 Jurong Cement Ltd. 500,000 1,958,445 48299792 Jurong Engineering Ltd. 335,000 2,270,607 49499692 Keppel Corp. Ltd. 1,870,000 17,196,875 49205199 O 41499725verseas Chinese Banking Corp. 350,000 3,767,029 68999610 Overseas Union Bank Ltd. (For. Reg.) 3,580,000 20,485,011 68990192 Singapore Finance Ltd. (warrants) (a) 54,000 53,706 Singapore International Airlines Ltd. 350,000 3,361,715 82868910 Singapore Press Holdings Ltd. (For. Reg.) 580,000 10,628,065 82999910 Singapore Shipbuilding & Engineering (For. Reg.) 33,600 82,856 96599192 Ssangyong Cement Ltd. 1,140,000 4,271,113 75299093 Straits Steamship Co. Ltd. Ord. 1,900,000 6,794,951 86299292 United Overseas Bank Ltd. (For. Reg.) 1,900,000 20,837,870 91128092 Van Der Horst Ltd. (a) 252,000 1,132,969 92099C22 110,249,036 THAILAND - 18.3% Advanced Information Service (For. Reg.)(a) 510,000 9,003,734 00799793 Bangkok Bank Ltd. 940,700 10,190,951 06099210 Bangkok Metropolitan Bank PCL (For. Reg.) 3,968,100 5,293,882 06199E23 Dhana Siam Finance & Securities PCL (For. Reg.) 170,900 4,553,128 24299593 Dhana Siam Finance & Securities PCL (warrrants) (For. Reg.) (a) 210,000 3,623,159 24299599 Ekachart Finance & Security Co. Ltd. (warrants) (For. Reg.) (a) 20,280 94,390 28199J24 Finance One PCL (For. Reg.) 310,100 6,270,929 31799E93 Finance One PCL (warrants) (For. Reg.) (a) 176,350 1,698,191 31799E96 First Pacific Land PCL (warrants) (a) 199,400 77,606 70699194 General Finance & Securities PCL (For. Reg.) 332,800 3,685,464 36999693 Hemeraj Land & Development PCL (For. Reg.) 81,500 392,409 42399B23 Industrial Finance Corp. (For. Reg.) 400,000 1,035,188 45799896 International Broadcasting Corp. (For. Reg.) 363,200 2,725,130 45999E93 (Loc. Reg.) (a) 16,800 126,052 45999E92 Italian Thai Development PCL (For. Reg.) (a) 160,000 2,105,685 46599F22 Krung Thai Bank: (For. Reg.) 1,940,900 6,619,439 50599293 (Loc. Reg.) 169,900 579,444 50599292 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) THAILAND - CONTINUED NTS Steel Group PCL (For. Reg.) 553,000 $ 1,364,583 64999893 National Finance & Securities PCL (For. Reg.) 160,000 943,707 63199593 National Finance & Securities PCL (rights) (a) 480,000 2,651,429 63599822 Nava Finance & Securities Co. Ltd (For. Reg.) 110,000 856,237 63999B23 One Holding PCL (For. Reg.) 2,050,000 7,443,919 68299B23 Phatra Thanakit PCL (For. Reg.) 38,000 393,371 71799593 Phatra Thanakit PCL (rights) (For. Reg.) (a) 152,000 1,512,499 71799595 Property Perfect PCL (For. Reg.) 300,600 3,907,812 74399F23 Property Perfect PCL (warrants) (For. Reg.) (a) 66,800 251,944 74399F24 Quality Houses Co. Ltd. (For. Reg.) 250,000 1,745,375 74799G23 Sammakorn Co. Ltd. (For. Reg.) 140,000 814,509 79599F23 Securities One PCL (For. Reg.) 190,000 5,946,314 81399693 Shinawatra Computer & Communication PCL 10,000 311,359 94799192 Shinawatra Computer & Communication PCL (For. Reg.) 273,000 8,500,101 94799193 Siam Cement PCL (For. Reg.) 210,000 12,116,519 78799010 Siam City Cement Co. Ltd. (For. Reg.) 421,800 9,071,332 82570798 Siam Commercial Bank PCL (For. Reg.) 473,300 4,899,545 78851090 Supalai PCL (For. Reg.) 80,000 475,063 97199923 TPI Polene Co. Ltd. (For. Reg.) 709,900 7,690,609 94799093 TPI Polene Co. Ltd. (rights) (a) 177,475 1,851,442 94799094 Telecomasia Corp. PCL (a) 200,000 810,496 87928D92 Thai Airways International Ltd. (For. Reg.) 109,500 246,038 90799C93 Thai Farmers Bank PCL 901,900 7,961,243 90199010 Thai Military Bank Ltd. (For. Reg.) 1,346,400 6,266,603 90199989 United Communication Industry: (For. Reg.) 17,600 519,745 91399E23 (Loc. Reg.) 12,400 366,184 91399E22 Univest Land PCL (For. Reg.) 1,070,000 3,992,694 91599F22 Wattachak PCL (For. Reg.) (a) 131,500 316,574 94299H23 151,302,027 TOTAL COMMON STOCKS (Cost $713,146,764) 796,776,950 NONCONVERTIBLE PREFERRED STOCKS - 0.2% KOREA (SOUTH) - 0.2% Baik Yang Co. (a) 4,290 361,581 05699D23 Cheil Food & Chemical Industries (a) 13,500 509,754 16399C23 Samsung Electronics Co. Ltd. 11,040 1,101,022 79611095 TOTAL NONCONVERTIBLE PREFERRED STOCKS (Cost $2,161,449) 1,972,357 CLOSED-END INVESTMENT COMPANIES - 0.1% UNITED KINGDOM - 0.1% Korea Europe Fund IDR (Cost $690,000) 150 618,750 50799893 CORPORATE BONDS - 1.1% MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) AMOUNT (B) (NOTE 1) CONVERTIBLE BONDS - 1.1% KOREA (SOUTH) - 0.6% Daewoo Corp. euro 0.25%, 12/31/08 - KRW 2,510,000 $ 2,698,250 23799BAB Haitai Confectionary Co. 0.25%, 5/31/99 - CHF 1,250,000 785,913 404996AB Jinro Ltd. euro 0.25%, 9/30/09 - 500,000 451,250 732994AA Samsung Electro-Mechanics Co. Ltd. 0.25%, 12/31/00 (c) - CHF 500,000 270,593 95099DAA Shin Won Corp. euro 0.5% 12/31/08 - 350,000 367,500 98499DAA 4,573,506 MALAYSIA - 0.4% Berjaya Sport Culs 9%, 10/30/97 - MYR 1,225,000 1,763,521 08499EAB Land & General BHD 4 1/2%, 12/31/94 - MYR 970,000 1,798,650 514996AA 3,562,171 THAILAND - 0.1% Siam Syntech Construction PCL 4 1/2%, 2/25/02 (c) - 1,500,000 915,000 825719AA TOTAL CONVERTIBLE BONDS 9,050,677 NONCONVERTIBLE BONDS - 0.0% THAILAND - 0.0% Finance One PCL 3 3/4%, 2/7/01 - THB 5,635 226,096 31799EAA TOTAL CORPORATE BONDS (Cost $9,716,304) 9,276,773 REPURCHASE AGREEMENTS - 2.3% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account at 4.78% dated 10/31/94 due 11/1/94 $ 18,969,518 18,967,000 99799N9L TOTAL INVESTMENT IN SECURITIES - 100% (Cost $744,681,517) $ 827,611,830 CURRENCY ABBREVIATIONS KRW - Korean won MYR - Malaysian ringgit CHF - Swiss franc THB - Thai baht LEGEND (a) Non-income producing (b) Principal amount is stated in United States dollars unless otherwise noted. (c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $12,559,341 or 1.5% of net assets. OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $1,519,490,570 and $1,200,682,832, respectively. The fund participated in the interfund lending program as a lender. The maximum loan and the average daily loan balances during the periods for which loans were outstanding amounted to $28,748,000 and $20,019,000, respectively. The weighted average interest rate was 3.92%. Interest earned from the interfund lending program amounted to $26,162 and is included in interest income on the Statement of Operations (see Note 2 of Notes to Financial Statements). The fund participated in the bank borrowing program. The maximum loan and the average daily loan balances during the period for which loans were outstanding amounted to $5,861,000 and $5,361,000, respectively. The weighted average interest rate was 3.70% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At October 31, 1994, the aggregate cost of investment securities for income tax purposes was $750,182,911. Net unrealized appreciation aggregated $77,428,919, of which $117,000,860 related to appreciated investment securities and $39,571,941 related to depreciated investment securities. The fund hereby designates $2,547,765 as a capital gain dividend for the purpose of the dividend paid deduction. For the period, interest and dividends from foreign countries were $13,400,297, or $0.24 per share. Taxes paid to foreign countries were $1,111,840 or $0.02 per share. INDUSTRY DIVERSIFICATION As a Percentage of Total Value of Investments (Unaudited) Aerospace & Defense 2.1% Basic Industries 7.5 Construction & Real Estate 20.5 Durables 2.5 Finance 21.5 Health 0.2 Holding Companies 4.8 Industrial Machinery & Equipment 5.9 Media & Leisure 6.3 Nondurables 4.1 Retail & Wholesale 0.7 Services 0.1 Repurchase Agreements 2.3 Technology 4.6 Transportation 6.1 Utilities 10.8 100.0% SOUTHEAST ASIA FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES <TABLE> <CAPTION> <S> <C> <C> OCTOBER 31, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $18,967,000) (cost $744,681,517) - $ 827,611,830 See accompanying schedule Cash 663,506 Receivable for investments sold 6,576,295 Receivable for fund shares sold 2,035,310 Dividends receivable 872,941 Interest receivable 73,435 Redemption fees receivable 10,480 TOTAL ASSETS 837,843,797 LIABILITIES Payable for investments purchased $ 5,108,116 Payable for fund shares redeemed 5,399,749 Accrued management fee 431,983 Other payables and accrued expenses 1,169,854 TOTAL LIABILITIES 12,109,702 NET ASSETS $ 825,734,095 Net Assets consist of: Paid in capital $ 738,891,731 Distributions in excess of net investment income (1,366,477 ) Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 5,271,958 Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 82,936,883 NET ASSETS, for 56,511,847 shares outstanding $ 825,734,095 NET ASSET VALUE and redemption price per share ($825,734,095 (divided by) 56,511,847 shares) $14.61 Maximum offering price per share (100/97.00 of $14.61) $15.06 </TABLE> STATEMENT OF OPERATIONS <TABLE> <CAPTION> <S> <C> <C> YEAR ENDED OCTOBER 31, 1994 INVESTMENT INCOME $ 13,029,171 Dividends Interest 1,711,124 14,740,295 Less foreign taxes withheld (1,111,840 ) TOTAL INCOME 13,628,455 EXPENSES Management fee 6,231,794 Basic fee Performance adjustment (633,730 ) Transfer agent 3,529,853 Fees Redemption fees (249,341 ) Accounting fees and expenses 395,097 Non-interested trustees' compensation 4,338 Custodian fees and expenses 2,235,995 Registration fees 250,274 Audit 55,994 Legal 5,161 Interest 1,103 Miscellaneous 7,016 TOTAL EXPENSES 11,833,554 NET INVESTMENT INCOME 1,794,901 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 7,032,810 Foreign currency transactions (906,930 6,125,880 ) Change in net unrealized appreciation (depreciation) on: Investment securities 8,847,826 Assets and liabilities in foreign currencies 6,570 8,854,396 NET GAIN (LOSS) 14,980,276 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 16,775,177 OTHER INFORMATION $763,269 Sales Charges Paid to FDC </TABLE> Accounting fees paid to FSC $395,097 STATEMENT OF CHANGES IN NET ASSETS <TABLE> <CAPTION> <S> <C> <C> INCREASE (DECREASE) IN NET ASSETS YEAR ENDED APRIL 19, 1993 OCTOBER 31, (COMMENCEMENT 1994 OF OPERATIONS) TO OCTOBER 31, 1993 Operations $ 1,794,901 $ 338,637 Net investment income Net realized gain (loss) 6,125,880 (386,089) Change in net unrealized appreciation (depreciation) 8,854,396 74,082,487 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 16,775,177 74,035,035 Distributions to shareholders: (2,133,538) - From net investment income In excess of net investment income (1,834,307) - TOTAL DISTRIBUTIONS (3,967,845) - Share transactions 1,349,887,034 464,080,850 Net proceeds from sales of shares Reinvestment of distributions 3,847,389 - Cost of shares redeemed (1,048,177,751) (38,754,143) Redemption fees 7,700,655 307,694 Net increase (decrease) in net assets resulting from share transactions 313,257,327 425,634,401 TOTAL INCREASE (DECREASE) IN NET ASSETS 326,064,659 499,669,436 NET ASSETS Beginning of period 499,669,436 - End of period (including under (over) distribution of net investment income of $(1,366,477) and $338,637, $ 825,734,095 $ 499,669,436 respectively) OTHER INFORMATION Shares Sold 92,561,106 41,377,754 Issued in reinvestment of distributions 259,959 - Redeemed (74,053,904) (3,633,068) Net increase (decrease) 18,767,161 37,744,686 SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. </TABLE> FINANCIAL HIGHLIGHTS <TABLE> <CAPTION> <S> <C> <C> SELECTED PER-SHARE DATA YEAR ENDED APRIL 19, 1993 OCTOBER 31, (COMMENCEMENT 1994 OF OPERATIONS) TO OCTOBER 31, 1993 Net asset value, beginning of period $ 13.24 $ 10.00 Income from Investment Operations Net investment income .04 .01 Net realized and unrealized gain (loss) 1.23 3.22 Total from investment operations 1.27 3.23 Less Distributions (.04) - From net investment income In excess of net investment income (.03) - Total distributions (.07) - Redemption fees added to paid in capital .17 .01 Net asset value, end of period $ 14.61 $ 13.24 TOTAL RETURN B, C 10.87% 32.40% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 825,734 $ 499,669 Ratio of expenses to average net assets 1.47% 2.00% A Ratio of expenses to average net assets before expense reductions 1.47% 2.06% A Ratio of net investment income to average net assets .22% .45% A Portfolio turnover rate 157% 14% A A ANNUALIZED B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN. </TABLE> NOTES TO FINANCIAL STATEMENTS For the period ended October 31, 1994 a SIGNIFICANT ACCOUNTING POLICIES. Fidelity Canada Fund, Fidelity Diversified International Fund, Fidelity Emerging Markets Fund, Fidelity Europe Fund, Fidelity Europe Capital Appreciation Fund, Fidelity International Growth & Income Fund, Fidelity Japan Fund, Fidelity Latin America Fund, Fidelity Overseas Fund, Fidelity Pacific Basin Fund, Fidelity Southeast Asia Fund and Fidelity Worldwide Fund (the funds) are funds of Fidelity Investment Trust (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Each fund is authorized to issue an unlimited number of shares. The following summarizes the significant accounting policies of the funds: SECURITY VALUATION. Securities for which quotations are readily available are valued at the last sale price, or if no sale price, at the closing bid price in the principal market in which such securities are normally traded. Securities, including restricted securities for which quotations are not readily available, are valued primarily using dealer-supplied valuations or at their fair value as determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. Korean equity securities that have reached the limit for aggregate foreign ownership and for which premiums to the local exchange prices may be paid by foreign investors are valued 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 each 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. Effective November 1, 1993, the funds adopted Statement of Position (SOP) 93-4: Foreign Currency Accounting and Financial Statement Presentation for Investment Companies. In accordance with this SOP, reported 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. Further, as permitted under the SOP, the effects of changes in foreign currency exchange rates on investments in securities are not segregated in the Statement of Operations from the effects of changes in market prices of those securities, but are included with the net realized and unrealized gain or loss on investment in securities. INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, each fund is not subject to U.S. federal income taxes to the extent that it distributes all of its taxable income for its fiscal year. Each fund may be subject to foreign taxes on income, gains on investments or currency repatriation and accrues such taxes as applicable. The schedules of investments include information regarding income taxes under the caption "Income Tax Information." INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, are recorded as soon as the funds are informed of the ex-dividend date. 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. PREPAID EXPENSES. FMR bears all organizational expenses except for registering and qualifying a fund and shares of a fund for distribution under federal and state securities law. These expenses were borne by Europe Capital Appreciation and are being amortized over one year. DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the ex-dividend date. Certain foreign currency gains (losses) are taxable as ordinary income and, therefore, increase (decrease) taxable ordinary income available for distribution. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences are primarily due to differing treatments for futures transactions, foreign currency transactions, passive foreign investment companies (PFIC), and losses deferred due to wash sales. Certain funds also utilized earnings and profits distributed to shareholders on redemption of shares as a part of the dividends paid deduction for income tax purposes. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital and may affect net investment income per share. Undistributed net investment income, accumulated net investment loss, or distributions in excess of net investment income may include temporary book and tax basis differences which will reverse in a subsequent period. Any taxable income or gain remaining at fiscal year end is distributed in the following year. REDEMPTION FEES. Shares held in Emerging Markets, Latin America and Southeast Asia less than 90 days are subject to a redemption fee equal to 1.50% of the proceeds of the redeemed shares. Shares held in Japan less than 90 days are subject to a 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED REDEMPTION FEES - CONTINUED redemption fee equal to 1.00% of the proceeds of the redeemed shares. A portion of the fee is accounted for as a reduction of transfer agent expenses. This portion of the redemption fee is used to offset the transaction costs and other expenses that short-term trading imposes on those funds and their shareholders. The remainder of the redemption fee is accounted for as an addition to paid in capital. SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS Effective November 1, 1993, the funds 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, the funds changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of October 31, 1993 have been reclassified as follows: INCREASE (DECREASE) (INCREASE) DECREASE INCREASE (DECREASE) (INCREASE) DECREASE INCREASE (DECREASE) IN UNDISTRIBUTED IN ACCUMULATED IN ACCUMULATED IN ACCUMULATED FUND IN PAID IN CAPITAL NET INVESTMENT INCOME NET INVESTMENT LOSS NET REALIZED GAIN NET REALIZED LOSS Canada $ 992,455 $ - $ 237,762 $ (1,230,217) $ - Diversified International 2,234 (1,181,221) - 1,178,987 - Emerging Markets 50,022 (120,832) - - 70,810 Europe 17,123,165 (8,962,504) - - (8,160,661) International Growth & Income 941,401 (3,608,501) - 2,667,100 - Japan 166 - (364,505) 364,339 - Latin America - 26,874 - (26,874) - Overseas 391,398,948 (4,020,684) - (387,378,264) - Pacific Basin 40,875,663 - 2,434,566 (43,310,229) - Southeast Asia - (97,222) - - 97,222 Worldwide (47,579) (689,914) - 737,493 - No adjustments were necessary for the Europe Capital Appreciation Fund. b OPERATING POLICIES. FORWARD FOREIGN CURRENCY CONTRACTS. The funds may enter into forward foreign currency contracts. These contracts involve market risk in excess of the amount reflected in each applicable fund's Statement of Assets and Liabilities. The face or contract amount in U.S. dollars, as reflected in each applicable fund's schedule of investments under the caption "Forward Foreign Currency Contracts", reflects the total exposure the fund has in that particular currency contract. The U.S. dollar value of forward foreign currency contracts is determined using forward currency exchange rates supplied by a quotation service. Losses may arise due to changes in the value of the foreign currency or if the counterparty does not perform under the contract. Purchases and sales of forward foreign currency contracts having the same settlement date and broker are offset and any realized gain (loss) is recognized on the date of offset, otherwise gain (loss) is recognized on settlement date. REPURCHASE AGREEMENTS. The funds, through their respective custodians, receive delivery of the underlying securities, whose market value is required to be at least 102% of the resale price at the time of purchase. The funds' investment adviser, Fidelity Management & Research Company (FMR), is responsible for determining that the value of these underlying securities remains at least equal to the resale price. JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the funds, along with other affiliated entities of 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. INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the SEC, the funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow 2. OPERATING POLICIES - CONTINUED INTERFUND LENDING PROGRAM - CONTINUED from, or lend money to, other participating funds. The schedules of investments include information regarding interfund lending for the applicable funds under the caption "Other Information." DELAYED DELIVERY TRANSACTIONS. Each 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 and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. Each fund identifies securities as segregated in its custodial records with a value at least equal to the amount of the purchase commitment. FUTURES CONTRACTS AND OPTIONS. The funds may invest in futures contracts, and may also write options. These investments involve to varying degrees, elements of market risk and risks in excess of the amount recognized in each applicable fund's Statement of Assets and Liabilities. The face or contract amounts, as reflected in each applicable fund's schedule of investments under the captions "Purchased Options," "Written Options," or "Futures Contracts," reflect the extent of the involvement each fund has in the particular classes of instruments. Risks may be caused by an imperfect correlation between movements in the price of the instruments and the price of the underlying securities and interest rates. Risks also may arise if there is an illiquid secondary market for the instruments, or due to the inability of counterparties to perform. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. Options traded on an exchange are valued using the last sale price or, in the absence of a sale, the last offering price. Options traded over-the-counter are valued using dealer-supplied valuations. INDEXED SECURITIES. The funds may invest in indexed securities whose value is linked either directly or inversely to changes in foreign currencies, interest rates, commodities, indices, or other reference instruments. Indexed securities may be more volatile than the reference instrument itself, but any loss is limited to the amount of the original investment. RESTRICTED SECURITIES. The funds are 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. Restricted securities (excluding 144A issues) at the end of the period are shown under the caption "Other Information" at the end of each applicable fund's schedule of investments. c JOINT TRADING ACCOUNT. At the end of the period, Worldwide had 20% or more of its total investments in repurchase agreements through a joint trading account. These repurchase agreements were with entities whose creditworthiness has been reviewed and found satisfactory by FMR. The repurchase agreements were dated October 31, 1994 and due November 1, 1994. The maturity values of the joint trading account investments were $243,588,330 at 4.78%. The investments in repurchase agreements through the joint trading account are summarized as follows: SUMMARY OF JOINT TRADING ACCOUNT Number of dealers or banks 26 Maximum amount with one dealer or bank 10.3% Aggregate principal amount of agreements $18,074,295,000 Aggregate maturity amount of agreements $18,076,694,215 Aggregate market value of collateral $18,470,937,775 Coupon rates of collateral 3% to 15 3/4% Maturity dates of collateral 11/3/94 to 11/15/24 d PURCHASES AND SALES OF INVESTMENTS. Information regarding purchases and sales of securities (other than short-term securities), the market value of future contracts opened and closed, and written options is included under the caption "Other Information" at the end of each applicable fund's schedule of investments. e FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As each fund's investment adviser, FMR receives a monthly basic fee that is calculated on the basis of a group fee rate plus a fixed individual fund fee rate applied to the average net assets of each fund. The group fee rate is the weighted average of a series of rates and is based on the monthly average net assets of all the mutual funds advised by FMR. The rates ranged from .2850% to .5200% for the period November 1, 1993 to July 31, 1994 and .2700% to .5200% for the period August 1, 1994 to October 31, 1994. In the event that these rates were lower than the contractual rates in effect during those periods, 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 each fund in the trust. The basic fee for Canada, Diversified International, Europe, Japan, Overseas, Pacific Basin, and Southeast Asia is subject to a performance adjustment (up to a maximum of (plus/minus) .20%) based on each fund's investment performance as compared to the appropriate index over a specified period of time. 5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED MANAGEMENT FEE - CONTINUED For the period, each fund's management fee was equivalent to the following annual rates expressed as a percentage of average net assets: Canada .80% Diversified International .72% Emerging Markets, International Growth & Income, Latin America and Worldwide .77% Europe Capital Appreciation .77%* Europe .72% Japan .75% Overseas .80% Pacific Basin .86% Southeast Asia .69% * Annualized SUB-ADVISER FEE. FMR, on behalf of the funds, 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. SALES LOAD. Fidelity Distributors Corporation (FDC), an affiliate of FMR, is the general distributor of the funds. FDC is paid a 3% sales charge on sales of shares of each fund, except for International Growth & Income which, effective June 1, 1994, became a no-load fund. Prior to May 31, 1994, FDC was paid a 2% sales charge on sales of shares of International Growth & Income. The sales charge for Emerging Markets, Latin America and Southeast Asia was waived through May 31, 1994. The sales charge for Canada, Diversified International, Europe Capital Appreciation, Japan and Worldwide has been waived through June 30, 1995. Additionally, beginning May 31, 1994, the sales charge for Overseas and Pacific Basin has been waived through June 30, 1995. Shares of Canada, Europe, Pacific Basin and International Growth & Income purchased before October 12, 1990 are subject to the deferred sales charge upon redemption. The amount received by FDC for sales charges and deferred sales charges are shown under the caption "Other Information" on each applicable fund's Statement of Operations. TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the funds' transfer, dividend disbursing and shareholder servicing agent. FSC receives fees based on the type, size, number of accounts and the number of transactions made by shareholders. FSC pays for typesetting, printing and mailing of all shareholder reports, except proxy statements. ACCOUNTING FEE. FSC maintains the funds' accounting records. The fee is based on the level of average net assets for the month plus out-of-pocket expenses. The accounting and pricing fees paid to FSC are shown under the caption "Other Information" on each fund's Statement of Operations. BROKERAGE COMMISSIONS. Certain funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of FMR. The commissions paid to these affiliated firms are shown under the caption "Other Information" at the end of each applicable fund's schedule of investments. f TRANSACTIONS WITH AFFILIATED COMPANIES. An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Information regarding affiliated companies is included under the caption "Other Information" at the end of each applicable fund's schedule of investments. g BANK BORROWINGS. Each fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. Each fund has established borrowing arrangements with certain banks. Under the most restrictive arrangement, each fund must pledge to the bank securities having a market value in excess of 220% of the total bank borrowings. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The maximum loan and the average daily loan balances during the periods for which loans were outstanding are shown under the caption "Other Information" at the end of each applicable fund's schedule of investments. h EXPENSE REDUCTIONS. FMR directed certain portfolio trades to brokers who paid a portion of certain funds' expenses. For the period, the expenses of Canada, Diversified International, Emerging Markets, Europe, International Growth & Income, Latin America, and Worldwide were reduced by $2,288, $2,633, $2,803, $3,406, $10,070, $7,604 and $15,367, respectively, under this arrangement. i CONCENTRATION OF RISK. The relatively large investments of Emerging Markets, Latin America and Southeast Asia 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 consequences of political, social or economic changes in these markets may have disruptive effects on the market prices of these funds' investments and the income they generate, as well as the fund's ability to repatriate such amounts. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Investment Trust and the Shareholders of: Fidelity Canada Fund, Fidelity Diversified International Fund, Fidelity Emerging Markets Fund, Fidelity Europe Fund, Fidelity International Growth & Income Fund, Fidelity Japan Fund, Fidelity Overseas Fund, Fidelity Pacific Basin Fund and Fidelity Worldwide Fund: We have audited the accompanying statements of assets and liabilities of Fidelity Investment Trust: Fidelity Canada Fund, Fidelity Diversified International Fund, Fidelity Emerging Markets Fund, Fidelity Europe Fund, Fidelity International Growth & Income Fund, Fidelity Japan Fund, Fidelity Overseas Fund, Fidelity Pacific Basin Fund, and Fidelity Worldwide Fund, including the schedules of portfolio investments, as of October 31, 1994, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated. These financial statements and financial highlights are the responsibility of the funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1994 by correspondence with the custodians 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 Canada Fund, Fidelity Diversified International Fund, Fidelity Emerging Markets Fund, Fidelity Europe Fund, Fidelity International Growth & Income Fund, Fidelity Japan Fund, Fidelity Overseas Fund, Fidelity Pacific Basin Fund, and Fidelity Worldwide Fund as of October 31, 1994, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. Boston, Massachusetts December 13, 1994 REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Investment Trust and the Shareholders of Fidelity Europe Capital Appreciation Fund, Fidelity Latin America Fund and Fidelity Southeast Asia Fund: In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Europe Capital Appreciation Fund, Fidelity Latin America Fund and Fidelity Southeast Asia Fund (funds of Fidelity Investment Trust) at October 31, 1994, the results of each of their operations for the period then ended, the changes in each of their net assets and the financial highlights for the periods indicated, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Investment Trust's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities owned at October 31, 1994 by correspondence with the custodians and brokers and the application of alternative auditing procedures where confirmations from brokers were not received, provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP Boston, Massachusetts December 13, 1994 INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research (U.K.) Inc. (FMR U.K.) London, England Fidelity Management & Research (Far East) Inc. (FMR Far East) Tokyo, Japan Fidelity Investments Japan Ltd. (FIJ) Fidelity International Investment Advisors (FIIA) Fidelity International Investment Advisors (U.K.) Limited (FIIAL U.K.) OFFICERS Edward C. Johnson 3d, PRESIDENT J. Gary Burkhead, SENIOR VICE PRESIDENT Penelope Dobkin, VICE PRESIDENT, WORLDWIDE FUND George C. Domolky, VICE PRESIDENT, CANADA FUND Gregory Fraser, VICE PRESIDENT, DIVERSIFIED INTERNATIONAL Simon Fraser, VICE PRESIDENT, PACIFIC BASIN FUND Richard Hazelwood,, VICE PRESIDENT, EMERGING MARKETS John R. Hickling, VICE PRESIDENT, OVERSEAS FUND Patricia Satterthwaite, VICE PRESIDENT, LATIN AMERICA FUND Sally Walden, VICE PRESIDENT, EUROPE FUND Gary L. French, TREASURER John H. Costello, ASSISTANT TREASURER Leonard M. Rush, ASSISTANT TREASURER Arthur S. Loring, SECRETARY Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS BOARD OF TRUSTEES J. Gary Burkhead Ralph F. Cox* Phyllis Burke Davis* Richard J. Flynn* Edward C. Johnson 3d E. Bradley Jones* Donald J. Kirk* Peter S. Lynch Edward H. Malone* Marvin L. Mann* Gerald C. McDonough* Thomas R. Williams* GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENT Fidelity Service Co. Boston, MA CUSTODIANS Chase Manhattan Bank, N.A. New York, NY DIVERSIFIED INTERNATIONAL FUND, INTERNATIONAL GROWTH & INCOME FUND, OVERSEAS FUND, WORLDWIDE FUND, EUROPE FUND, EUROPE CAPITAL APPRECIATION FUND, JAPAN FUND, PACIFIC BASIN FUND, EMERGING MARKETS FUND, SOUTHEAST ASIA FUND Brown Brothers Harriman & Co. Boston, MA CANADA FUND, LATIN AMERICA FUND FIDELITY INTERNATIONAL EQUITY FUNDS Canada Fund Emerging Markets Fund Europe Fund Europe Capital Appreciation Fund Diversified International Fund International Growth and Income Fund International Value Fund Japan Fund Latin America Fund Pacific Basin Fund Southeast Asia Fund Overseas Fund Worldwide Fund CORPORATE HEADQUARTERS 82 Devonshire Street Boston, MA 02109 1-800-544-8888 THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Account Balances 1-800-544-7544 Exchanges/Redemptions 1-800-544-7777 Mutual Fund Quotes 1-800-544-8544 Account Assistance 1-800-544-6666 Product Information 1-800-544-8888 Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.) TDD Service 1-800-544-0118 for the deaf and hearing impaired (9 a.m. - 9 p.m. Eastern time) * INDEPENDENT TRUSTEES AUTOMATED LINES FOR QUICKEST SERVICE BULK RATE U.S. POSTAGE P A I D F I D E L I T Y INVESTMENTS (registered trademark) P.O. Box 193 Boston, MA 02101 INT-12-94A