FIDELITY FUNDS SOCIÉTÉ D’INVESTISSEMENT À CAPITAL VARIABLE ESTABLISHED IN LUXEMBOURG SEMI-ANNUAL REPORT & ACCOUNTS UNAUDITED October 2006 Fidelity Funds Contents Semi-Annual Report 2 Bond Funds Investment Manager’s Report 2 Euro Bond Fund 2,3,13,21 133 Board of Directors and Management Company 3 European High Yield Fund 2,3,13,21,25 135 Standardised Past Performance Information 4 International Bond Fund 21,25 138 Sterling Bond Fund 21 140 SCHEDULE OF INVESTMENTS US Dollar Bond Fund 13,21 142 13,21,25 Equity Funds US High Yield Fund 144 America Fund 1,2,3,21,24,25 6 Fidelity Lifestyle Funds 15 American Diversified Fund 2,3,9,21,24 8 Fidelity Target™ 2010 Fund 147 15 American Growth Fund 1,3,24 10 Fidelity Target™ 2020 Fund 159 ASEAN Fund 21,24,25 11 Fidelity Target™ 2010 Euro Fund (a fund also investing in shares, bonds and securities which 9,21,24 Asian Special Situations Fund 12 are not denominated in Euro) 15,21 169 Australia Fund 1,21 14 Fidelity Target™ 2015 Euro Fund China Focus Fund 17,24 15 (a fund also investing in shares, bonds and securities which are not denominated in Euro) 15,21 180 Consumer Industries Fund 1,2,3,4,24 16 1,2,3,16,21,24,25 Fidelity Target™ 2020 Euro Fund Emerging Markets Fund 17 (a fund also investing in shares, bonds and securities which Euro Blue Chip Fund 1,15,21,24 20 are not denominated in Euro) 15,21 191 EURO STOXX 50TM Fund 1,4,7,8,21 21 Fidelity Target™ 2025 Euro Fund European Aggressive Fund 2,3,15,17,21,24,25 22 (a fund also investing in shares, bonds and securities which are not denominated in Euro) 15,21 203 1,2,3,15,21,24 European Growth Fund 24 Fidelity Target™ 2030 Euro Fund 2,3,24 European Larger Companies Fund 27 (a fund also investing in shares, bonds and securities which European Mid Cap Fund 2,3,21 28 are not denominated in Euro) 15,21 215 European Smaller Companies Fund 1,2,3,15,21,24 29 INSTITUTIONAL RESERVED FUNDS Financial Services Fund 1,2,3,4,24 32 Equity Funds France Fund 21,24 33 Institutional America Fund 12 227 Germany Fund 21,24 34 Institutional Euro Blue Chip Fund 12,15 229 Global Focus Fund 2,3,9,15,24 35 Institutional European Larger Companies Fund 12 230 Global Property Fund 2,3,17,21 37 Institutional Global Focus Fund 12,15 231 Greater China Fund 2,3,9,24 38 Institutional Japan Fund 12 233 Health Care Fund 1,2,3,4,21,24 39 Institutional Pacific (ex-Japan) Fund Iberia Fund 2,3,21,24 40 (a fund that also invests in Hong Kong, Malaysia and Singapore) 12 234 India Focus Fund 9,19,24 41 Bond Funds Indonesia Fund 24 43 Institutional Euro Bond Fund 12 235 Industrials Fund 1,2,3,4,24 44 15,21,24,25 International Fund 45 Financial Statements 24 Italy Fund 57 Statement of Net Assets 236 1,2,3,21,24,25 Japan Fund 58 Statement of Operations and Changes in Net Assets 260 9,24 Japan Advantage Fund 59 Notes to the Financial Statements 272 1,21,24 Japan Smaller Companies Fund 60 Portfolio Turnover Ratio 279 1,24 Korea Fund 62 Total Expense Ratio 280 2,3,24 Latin America Fund 63 Footnotes 281 24 Malaysia Fund 64 Directory 282 Nordic Fund 1,21,24 65 Pacific Fund 1,24 66 Singapore Fund 24 69 South East Asia Fund 1,2,3,21,24,25 70 Switzerland Fund 21,24 72 Taiwan Fund 9,24 73 Technology Fund 1,2,3,4,24 74 Telecommunications Fund 1,2,3,4,21,24 75 Thailand Fund 24 76 United Kingdom Fund 24 77 World Fund 1,2,3,15,24 78 Asset Allocation Funds FIDELITY PORTFOLIO SELECTOR (FPS) FPS Defensive Fund 15,21 90 FPS Global Growth Fund 15,21 94 FPS Growth Fund 15,21 107 FPS Moderate Growth Fund 15,21 118 Balanced Funds Euro Balanced Fund 15,21 130 Fidelity Funds - Institutional European Corporate Bond Fund (Euro) was authorised for distribution in Switzerland on 19 April 2006 by the Federal Banking Commission but had not yet been launched on 30 April 2006. 1 Semi-Annual Report – 31 October 2006 This unaudited Semi-Annual Report of Fidelity Funds does not constitute an offer of Shares. Shares are offered on the basis of the information contained in the current Prospectus (and the documents referred to within it) supplemented by the last available Annual Report of Fidelity Funds (“the Company”) and the latest Semi-Annual Report if published after such an Annual Report. Copies of the current Prospectus, latest Annual and Semi-Annual Reports and Portfolio Changes for the funds are available free of charge from the registered office of the Company or from any of the companies registered as Distributors of Fidelity Funds, or, for investors in Switzerland, from the Representative of the Company in Switzerland. This Semi-Annual Report has been approved for circulation in the United Kingdom by Fidelity Investments International, UK Distributor of Fidelity Funds, authorised and regulated in the UK by the Financial Services Authority. Investment Manager’s Report Performance Overview Global equity markets, with the exception of Japan, advanced over the six months under review. During this period, the MSCI World Index returned 4.8% in US dollar terms. Political instability, notably in the Middle East, nuclear testing in North Korea and rising interest rates helped engender uncertainty among investors. Nonetheless, most major markets rallied amid strong corporate results and a revival of consumer confidence in the US. However, slower-than-expected economic growth in the US dampened investor sentiment towards the end of October. In economic news, an upward trend in the price of oil throughout the first half of the period added to inflationary pressures and, as a result, the Federal Reserve (Fed) increased its benchmark lending rate, to 5.25% from 4.75% in two steps. However, in response to a slowing economy, the Fed paused its monetary tightening in August. Elsewhere, the Bank of England (BoE) increased its base rate by a quarter of a percentage point, to 4.75% in August, in a bid to control inflation. Meanwhile, the European Central Bank (ECB) increased its key interest rate three times to 3.25%. The ECB judged that risks to price stability in the medium to longer term remained high. Japan’s central bank ended its zero-rate policy and raised the overnight call rate to 0.25% in early July, as the country moved out of a deflationary phase. The performance of Japanese and South East Asian markets was strikingly divergent over the review period. Japan’s TOPIX returned -5.3% in yen terms, while the MSCI Pacific ex Japan Index returned 5.6% in US dollar terms. Japanese markets, in light of geopolitical tensions and weak economic data, were particularly erratic during the period. Despite concerns about a global slowdown and increases in interest rates, South East Asian bourses rose to record highs during the review period. However, there were minor setbacks in these markets following political crises in Taiwan and Thailand (in August and September), and nuclear testing by North Korea in October. In the UK, the FTSE All-Share Index returned 3.7% in sterling terms. Rising global interest rates and geopolitical tensions weighed upon the performance of equities in the beginning of the period. However, stocks picked up later, following a truce in the Lebanon and a dip in the price of oil in the second half of the period. Higher commodity prices, continuing bid talks and encouraging earnings growth further supported markets. Inflation remained above the BoE’s target level of 2%, while economic activity continued to be robust. The MSCI Europe ex-UK Index returned 6.3% in euro terms. After an uneasy start, stocks rose strongly due largely to encouraging corporate results, continued merger & acquisition activity and strong economic growth in the region. This buoyancy persisted in spite of concerns about the direction of oil prices and interest rates. The S&P 500 Composite Index returned 6.1% in US dollar terms. A deceleration in the housing market provided cause for concern, given the level of securitised debt (consumers borrowing against their homes) to fund spending. Besides having an adverse effect on GDP growth, this made equity investors apprehensive about the prospects of those companies whose earnings are driven by consumer demand. Nonetheless, healthy corporate earnings bolstered investor confidence, and the S&P touched a five-year high towards the end of October. Global bonds also performed robustly during the six-month period ending 31 October 2006, with the Lehman Brothers Global Aggregate Index returning 4.3% hedged in US dollar terms. This was due largely to the effect of monetary policy as well as inflationary expectations, which, in turn, were driven by rising oil prices. The prospect of a slowdown in the US economy buoyed bond markets towards the end of the period, as did a pause in monetary tightening by the Fed. Those investors searching for high yields preferred corporate bonds to government-issued securities. As a result, sub-investment-grade and emerging-market bonds outperformed investment-grade assets. 2 Board of Directors Edward C. Johnson 3d Chairman of the Board USA Barry R.J. Bateman Director United Kingdom Sir Charles Fraser, K.C.V.O.* Director United Kingdom Glen S. Fukushima* Director Japan Jean Hamilius* Director Grand Duchy of Luxembourg Simon M.