Fidelity China Region Fund€¦ · Fidelity® China Region Fund Key Takeaways •For the fiscal...

PORTFOLIO MANAGER Q&A | AS OF OCTOBER 31, 2019

Fidelity® China Region Fund

Key Takeaways

• For the fiscal year ending October 31, 2019, the fund's Retail Class shares gained 25.72%, well ahead of the 15.36% advance of the benchmark, the MSCI Golden Dragon Index.

• Amid seeming progress on U.S.–China trade talks and signs China's monetary and fiscal-stimulus measures were beginning to take hold, the benchmark delivered a strong double-digit advance the past 12 months, providing a favorable backdrop for the bottom-up, fundamental investment approach of Co-Portfolio Managers Stephen Lieu and Ivan Xie.

• Stock selection largely drove the fund's outperformance of the benchmark, especially in the consumer discretionary, information technology and consumer staples sectors. Overall, the managers added value in nine of 11 market sectors.

• By country, stock selection in China stood out as a strong positive versus the benchmark. Picks in Taiwan helped to a lesser extent.

• The co-managers gained a significant advantage by increasing certain positions during market weakness late in 2018, which paid off when share prices recovered in 2019.

• Conversely, positioning in the materials and real estate sectors detracted versus the benchmark this period. A small cash position alsoheld back the fund's relative result in a rising market.

• Stock selection in Hong Kong also detracted, along with a non-benchmark allocation to the United States.

• Stephen and Ivan plan to continue to monitor progress on trade talks between the U.S. and China, as well as China's economic progress.

• As of October 31, the co-managers plan to pay particular attention to how much stocks seem to have priced in some kind of trade deal, and will look for investments they believe have attractive potential for reward, relative to risk.

MARKET RECAP

The MSCI ACWI (All Country World Index) ex USA Index gained 11.47% for the 12 months ending October 31, 2019, as international stocks reflected a confluence of factors, including escalating trade tension, and moderating but still positive global economic growth. Currency fluctuations were largely modest and varied by region, muting the overall impact on international equity returns. In late December, the U.S. Federal Reserve shifted from raising interest rates to a more dovish policy in 2019, joining many foreign central banks. In June, international stocks rose 6.03%, as policy stimulus in China stabilized that country's economic growth. The Fed cut its policy rate in July for the first time since 2008. However, the index returned -1.21% for the month, followed by -3.08%in August. In September, the Fed cut its policy rate another quarter point, citing concerns about slowing economic growth and muted inflation, and did the same in October, leading to monthly gains of 2.59% and 3.49%, respectively. For the full 12 months, the growth-oriented information technology sector (+22%) led the way, followed by utilities (+20%) and real estate (+18%), two high-dividend-yielding categories. Conversely,energy was roughly flat, while materials (+6%) and communication services (7%) also lagged. By region, Asia Pacific ex Japan (+16%), Europe ex U.K. (+13%), Canada (+12%) and emerging markets (+12%) fared best. Meanwhile, the U.K. (+7%) and Japan (+10%) trailed the broader market.

Not FDIC Insured • May Lose Value • No Bank Guarantee


2 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

Stephen LieuCo-Manager

Ivan XieCo-Manager

Fund Facts

Trading Symbol: FHKCX

Start Date: November 01, 1995

Size (in millions): $1,217.98

Investment Approach• Fidelity® China Region Fund is a regional equity fund

that seeks long-term growth of capital by investing primarily in the common stocks of companies located, orwith primary operations, in Hong Kong, Taiwan or China.

• We employ an actively managed investment strategy emphasizing diligent bottom-up stock selection and focused portfolio construction. We believe that in-depth,independent fundamental research can provide differentiated insights that help develop our best ideas.

• The fund pursues a two-pronged approach: Seek growthat a reasonable price in core holdings and opportunistically invest in cyclically depressed stocks and/or turnaround stories with attractive risk-reward.

• Fundamentals, valuation and risk-reward are the heart ofour buy discipline. In general, we invest the core of the portfolio in firms with high and sustainable rates of organic growth that are well-positioned among industry peers. We favor strong or improving balance sheets and reasonable valuation relative to growth potential.

• Our investment team works together to identify attractive opportunity sets, fully leveraging Fidelity's global research capabilities.

Q&AAn interview with Co-Portfolio Managers Stephen Lieu and Ivan Xie

Q: Stephen, how did the fund perform for the fiscal year ending October 31, 2019

S.L. The fund's Retail Class shares gained 25.72% the past 12months, well ahead of the 15.36% advance of the benchmark, the MSCI Golden Dragon Index. The fund outpaced its peer group average by a similar margin.

Q: What was noteworthy about the investment environment the past year

S.L. Amid seeming progress on U.S.–China trade talks and signs China's monetary and fiscal-stimulus measures were beginning to take hold, the benchmark delivered a strong double-digit advance for the 12 months, providing a favorable backdrop for our bottom-up, fundamental investment approach.

The fund's benchmark was volatile at times – particularly in December and late April to early May – but share prices enjoyed a sustained advance in the first few months of 2019, as fear of a global recession abated and the U.S. Federal Reserve shifted to a more accommodative monetary policy.

U.S.–China trade negotiations ran hot and cold this period, but the most recent meeting, in October, bolstered the benchmark and spurred optimism that some kind of interim agreement could be reached by the end of 2019.

Meanwhile, China's economy expanded at an annualized rate of 6.0% in the third quarter of 2018, its weakest growth rate since the first quarter of 1992.

Government leaders attempted to fuel economic activity by loosening credit requirements and lifting some restrictions on real estate investing. However, inflationary pressure prevented more-aggressive stimulus measures.

Q: What helped the fund top the benchmark by such a wide margin

S.L. Stock selection primarily drove the fund's outperformance of the benchmark, especially in the consumer discretionary, information technology and consumer staples sectors. Overall, we added value versus the benchmark in nine of 11 market sectors.

By country, stock selection in China stood out as a strong positive. Our picks in Taiwan helped to a lesser extent.



Q: How about individual contributors

S.L. An overweighted position in China-based social e-commerce site Pinduoduo (+135%) added more value than any other fund position.

This company's stock surged higher in August, after Pinduoduo reported blowout revenue growth and a smaller-than-expected loss.

Pinduoduo started with a Groupon-like business model of offering shoppers discounts as they encourage more of their friends and social-media contacts to shop the site and join in on a deal. The firm's revenue rose 169%, crushing the consensus estimate.

Importantly, the company's growth did not seem to be driven by a short-term tactic like an increase in fees, but, rather, by rising gross merchandise volume. This suggested that the trade conflict between China and the U.S. was not hurting its business.

Elsewhere, overweighting Meituan Dianping boosted the fund's relative performance. In August, this operator of a leading food-delivery service in China reported its first quarterly profit as a listed firm, as a summertime surge in food-delivery orders helped it take market share from rivals.

As China's middle class continues to expand, we expect the convenience of food delivery to drive strong longer-term growth for this company.

I'll note that it helped the fund meaningfully to boost our stake in both Pinduoduo and Meituan Dianping during the market weakness in the fourth quarter of 2018.

In communication services, not owning internet search provider Baidu, a weak-performing benchmark component, contributed notably. Although Baidu remains China's dominant search engine, competition in the online advertisement space increased the past 12 months.

Additionally, the company found it difficult to attract mobile traffic, and Baidu's management made investments in ancillary businesses, such as artificial intelligence and online video, that we did not think would contribute meaningfully toearnings in the foreseeable future.

Q: Turning to you, Ivan, what about detractors

I.X. Positioning in the materials and real estate sectors hurt the fund's performance versus the benchmark this period. A small cash position also held back our relative result in a rising market.

By country, stock selection in Hong Kong detracted, and so did a non-benchmark allocation to the United States.

At the stock level, a non-benchmark position in Bitauto Holdings (-37%), which we bought for the fund in January, hurt more than any other individual position.

This company provides internet content and marketing services, as well as transaction services, for China's automotive industry. A weak overall environment for autos hurt the company's earnings and revenue. We exited this position by period end.

Similarly, a non-benchmark stake in Uxin, an online used-car dealer in China, detracted on a relative basis. In addition to rising competition in the online used-car market, a short seller – meaning an investor betting on a decline in the stock – released a report in April that raised questions about the company's corporate governance and weighed on its shares.

Given this new uncertainty, we exited the stock, which returned -3% while held in the fund.

A sizable overweighting in Sinopec Engineering Group also worked against the fund, returning -36%. This company provides engineering and construction services for customers in the energy sector.

We remained quite bullish on the longer-term outlook for capital spending by China's large exploration & production companies, which we think could benefit Sinopec going forward. This period, though, orders came in below expectations, hurting the stock.

We maintained this position as of period end.

Q: What's your outlook as of October 31, Ivan

I.X. Stephen and I plan to continue to monitor progress on trade talks between the U.S. and China, as well as China's efforts to stabilize its economy.

We believe year-over-year comparisons on inflation could ease in the next year, potentially giving the government more room to apply stimulus measures.

We plan to give particular attention to the degree to which stocks seem to have priced in some kind of trade deal, and will look for those we believe have attractive potential for reward, relative to risk. ■



Co-managers Stephen Lieu and Ivan Xie on tailwinds lifting China's semiconductor industry:

S.L. "The Chinese government has prioritized the country's transition to a 5G wireless network standard.

"Over the course of 2019, China has been accelerating the build-out of its 5G infrastructure.

"In fact, three major Chinese providers of wireless telecommunication services began offering 5G service on November 1 across 50 cities in China.

"We believe 5G will drive a meaningful increase in semiconductor demand, through smartphone upgrades and the proliferation of new and existing applications, such as the 'internet of things' (connected devices of all kinds), autonomous driving and augmented reality/virtual reality."

I.X. "Additionally, as part of its Made in China 2025 campaign, China is determined to develop its semiconductor industry and become less reliant on U.S. technology.

"As of roughly mid-2019, we estimate only 16% of the semiconductors used in China are produced in the country, with half of the 16% made by Chinese firms, as opposed to foreign operators in China. Thegovernment is trying to change this through massivepublic funding, subsidies and tax incentives.

"We believe demand for semiconductors will increase meaningfully because of these tailwinds, which is why we've overweighted the fund's exposure to the semiconductor industry.

"Notably, the fund holds positions in SemiconductorManufacturing International Corporation (SMIC) andASM Pacific Technology. SMIC is Mainland China's leading foundry, or provider of outsourced semiconductors.

"ASM Pacific is the world's largest semiconductor equipment manufacturer.

"Given the increasing attempts of Chinese companies to build out their own semiconductor capabilities, we think each of these chip-related companies could benefit."

LARGEST CONTRIBUTORS VS. BENCHMARK

Holding Market Segment

Average Relative Weight

Relative Contribution

(basis points)*

Pinduoduo, Inc. ADR Consumer Discretionary 0.79% 185

Meituan Dianping Class B

Consumer Discretionary 1.71% 153

Baidu.com, Inc. sponsored ADR

Communication Services -1.44% 140

New Oriental Education & Technology Group, Inc. sponsored ADR

Consumer Discretionary 1.25% 94

ams AG Information Technology 0.48% 85

* 1 basis point = 0.01%.

LARGEST DETRACTORS VS. BENCHMARK

Holding Market Segment

Average Relative Weight

Relative Contribution (basis points)*

Bitauto Holdings Ltd. ADR

Communication Services 0.38% -74

Taiwan SemiconductorManufacturing Co. Ltd.

Information Technology -1.84% -64

Sinopec Engineering Group Co. Ltd. (H Shares)

Industrials 0.77% -50

Samsonite International SA

Consumer Discretionary 0.80% -48

LG Chemical Ltd. Materials 1.40% -47

* 1 basis point = 0.01%.



ASSET ALLOCATION

Asset Class Portfolio Weight Index Weight Relative Weight

Relative Change From Six Months

Ago

International Equities 96.56% 100.00% -3.44% -0.10%

Emerging Markets 93.51% 100.00% -6.49% -0.35%

Developed Markets 3.05% 0.00% 3.05% 0.25%

Tax-Advantaged Domiciles 0.00% 0.00% 0.00% 0.00%

Domestic Equities 2.09% 0.00% 2.09% -0.03%

Bonds 0.00% 0.00% 0.00% 0.00%

Cash & Net Other Assets 1.35% 0.00% 1.35% 0.13%

Net Other Assets can include fund receivables, fund payables, and offsets to other derivative positions, as well as certain assets that do not fall into any ofthe portfolio composition categories. Depending on the extent to which the fund invests in derivatives and the number of positions that are held for futuresettlement, Net Other Assets can be a negative number.

"Tax-Advantaged Domiciles" represent countries whose tax policies may be favorable for company incorporation.

COUNTRY DIVERSIFICATION

Country Portfolio Weight Index Weight Relative Weight


Ago

China 66.92% 60.11% 6.81% 0.94%

Hong Kong 11.37% 17.40% -6.03% -0.74%

Taiwan 10.11% 22.49% -12.38% -4.61%

Korea (South) 5.13% -- 5.13% 3.91%

United States 2.09% -- 2.09% -0.03%

Netherlands 1.31% -- 1.31% 1.31%

Other Countries 1.74% N/A N/A N/A

Cash & Net Other Assets 1.33% 0.00% 1.33% 0.28%



10 LARGEST HOLDINGS

HoldingMarket Segment Portfolio Weight

Portfolio Weight Six Months Ago

Alibaba Group Holding Ltd. sponsored ADR Consumer Discretionary 10.95% 9.77%

Tencent Holdings Ltd. Communication Services 10.33% 11.82%

Taiwan Semiconductor Manufacturing Co. Ltd. Information Technology 5.84% 4.72%

AIA Group Ltd. Financials 4.55% 4.69%

China Construction Bank Corp. (H Shares) Financials 3.68% 3.81%

Industrial & Commercial Bank of China Ltd. (H Shares) Financials 2.06% 2.59%

Meituan Dianping Class B Consumer Discretionary 2.05% 2.81%

New Oriental Education & Technology Group, Inc. sponsored ADR Consumer Discretionary 1.94% 1.79%

Pinduoduo, Inc. ADR Consumer Discretionary 1.80% 0.14%

China Unicom Ltd. Communication Services 1.69% 1.92%

10 Largest Holdings as a % of Net Assets 44.88% 45.89%

Total Number of Holdings 87 103

The 10 largest holdings are as of the end of the reporting period, and may not be representative of the fund's current or future investments. Holdings do not include money market investments.

MARKET-SEGMENT DIVERSIFICATION

Market Segment Portfolio Weight Index Weight Relative Weight


Ago

Consumer Discretionary 24.37% 17.34% 7.03% 0.38%

Financials 17.41% 23.65% -6.24% -1.04%

Information Technology 16.86% 16.25% 0.61% 2.23%

Communication Services 15.35% 14.17% 1.18% 0.83%

Real Estate 5.66% 7.58% -1.92% 1.25%

Industrials 4.82% 5.85% -1.03% -1.76%

Health Care 4.65% 2.48% 2.17% 0.64%

Consumer Staples 3.23% 3.46% -0.23% -0.74%

Materials 3.00% 3.10% -0.10% -1.66%

Energy 1.97% 2.44% -0.47% 0.06%

Utilities 1.34% 3.68% -2.34% -0.34%

Other 0.00% 0.00% 0.00% 0.00%



FISCAL PERFORMANCE SUMMARY:Periods ending October 31, 2019

Cumulative Annualized

6Month YTD

1Year

3Year

5Year

10 Year/ LOF1

Fidelity China Region Fund Gross Expense Ratio: 0.96%2 1.14% 23.18% 25.72% 13.03% 7.41% 8.15%

MSCI Golden Dragon Net MA Index -3.63% 13.83% 15.36% 9.65% 6.39% 6.39%

Fidelity China Region Fund Linked Index -3.63% 13.83% 15.36% 9.65% 6.39% 6.39%

Morningstar Fund China Region -3.99% 17.40% 15.71% 7.51% 4.86% 5.34%

% Rank in Morningstar Category (1% = Best) -- -- 9% 10% 23% 1%

# of Funds in Morningstar Category -- -- 91 75 71 401 Life of Fund (LOF) if performance is less than 10 years. Fund inception date: 11/01/1995.2 This expense ratio is from the prospectus in effect as of the date shown above and generally is based on amounts incurred during that fiscal year. It does not include any fee waivers or reimbursements, which would be reflected in the fund's net expense ratio.

Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate; therefore, you may have again or loss when you sell your shares. Current performance may be higher or lower than the performance stated. Performance shown is that of the fund's Retail Class shares (if multiclass). You may own another share class of the fund with a different expense structure and, thus, have different returns. To learn more or to obtain the most recent month-end or other share-class performance, visit fidelity.com/performance, institutional.fidelity.com, or 401k.com. Total returns are historical and include change in share value and reinvestment of dividends and capital gains, if any. Cumulative total returns are reported as of the period indicated. Please see the last page(s) of this Q&A document for most-recent calendar-quarter performance.


8 |

Definitions and Important Information

Information provided in this document is for informational and educational purposes only. To the extent any investment information in this material is deemed to be a recommendation, it is not meant to be impartial investment advice or advice in a fiduciary capacity and is not intended to be used as a primary basis for you or your client's investment decisions. Fidelity, and its representatives may have a conflict of interest in the products or services mentioned in this material because they have a financial interest in, and receive compensation, directly or indirectly, in connection with the management, distribution and/or servicing of these products or services including Fidelity funds, certain third-party funds and products, and certain investment services.

FUND RISKSStock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks, all of which are magnified in emerging markets. The risks are particularly significant for funds that focus on a single country or region.

IMPORTANT FUND INFORMATIONRelative positioning data presented in this commentary is based on the fund's primary benchmark (index) unless a secondary benchmarkis provided to assess performance.

INDICESIt is not possible to invest directly in an index. All indices representedare unmanaged. All indices include reinvestment of dividends and interest income unless otherwise noted.

Fidelity China Region Fund Linked Index represents the performance of the MSCI Golden Dragon Index since June 1, 2007, and the MSCI Golden Dragon Plus Index prior to that date.

MSCI Golden Dragon Net MA Index is a market capitalization-weighted index designed to represent the performance of the equitymarkets of Hong Kong, Taiwan, and China.

MSCI ACWI (All Country World Index) ex USA Index is a market-capitalization-weighted index designed to measure the investable equity market performance for global investors of developed and emerging markets, excluding the United States.

MARKET-SEGMENT WEIGHTSMarket-segment weights illustrate examples of sectors or industries in which the fund may invest, and may not be representative of the fund's current or future investments. They should not be construed or used as a recommendation for any sector or industry.

RANKING INFORMATION© 2019 Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or redistributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are

responsible for any damages or losses arising from any use of this information. Fidelity does not review the Morningstar data and, for mutual fund performance, you should check the fund's current prospectus for the most up-to-date information concerning applicable loads, fees and expenses.

% Rank in Morningstar Category is the fund's total-return percentile rank relative to all funds that have the same MorningstarCategory. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. The top-performing fund in a category will always receive a rank of 1%. % Rank in Morningstar Category is based on total returns which include reinvested dividends and capital gains, if any, and exclude sales charges. Multiple share classes of a fund have a common portfolio but impose different expense structures.

RELATIVE WEIGHTSRelative weights represents the % of fund assets in a particular market segment, asset class or credit quality relative to the benchmark. A positive number represents an overweight, and a negative number is an underweight. The fund's benchmark is listedimmediately under the fund name in the Performance Summary.



Manager Facts

Stephen Lieu is a portfolio manager in the Equity division at Fidelity Investments. Fidelity Investments is a leading provider ofinvestment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and other financial products and services to more than 26 million individuals, institutions and financial intermediaries.

In this role, Mr. Lieu is co-manager of Fidelity and Fidelity Advisor China Region Fund.

Prior to assuming this role, Mr. Lieu was a research analyst responsible for covering Asian technology stocks and Chinese consumer stocks. Prior to joining Fidelity in 2013, Mr. Lieu was an investment associate at Deutsche Bank's DB Masdar Clean Tech Fund. Prior to that, he worked in the investment banking divisions of Greenhill & Co and UBS. He has been in the financialindustry since 2008.

Mr. Lieu earned his bachelor of science in finance and accounting from The Wharton School of the University of Pennsylvania and his master of business administration from Columbia Business School.

Ivan Xie is a portfolio manager in the Equity division of Fidelity Investments. Fidelity Investments is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and other financial products and services to more than 26 million individuals, institutions and financial intermediaries.

In this role, Mr. Xie co-manages Fidelity and Fidelity Advisor China Region Fund.

Previously, Mr. Xie was a research analyst responsible for covering the Southeast Asian financials, Indonesia consumers, and Great China materials sectors. Prior to joining Fidelity in 2010, Mr. Xie worked as an investment associate with Bain Capital. Previously, Mr. Xie was a consulting associate at McKinsey & Company. He has been in the financial industry since 2008.

Mr. Xie earned his minor degree in management science and engineering from Stanford University, his bachelor of science degree in computer science from National University of Singapore, and his master of business administration degree from The Wharton School of the University of Pennsylvania.

PERFORMANCE SUMMARY:Quarter ending March 31, 2020

Annualized

1Year

3Year

5Year

10 Year/ LOF1

Fidelity China Region Fund Gross Expense Ratio: 0.95%2 1.36% 9.44% 5.17% 7.30%

1 Life of Fund (LOF) if performance is less than 10 years. Fund inception date: 11/01/1995.2 This expense ratio is from the prospectus in effect as of the date shown above and generally is based on amounts incurred during that fiscal year. It does not include any fee waivers or reimbursements, which would be reflected in the fund's net expense ratio.Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate; therefore, you may have again or loss when you sell your shares. Current performance may be higher or lower than the performance stated. Performance shown is that of the fund's Retail Class shares (if multiclass). You may own another share class of the fund with a different expense structure and, thus, have different returns. To learn more or to obtain the most recent month-end or other share-class performance, visit fidelity.com/performance, institutional.fidelity.com, or 401k.com. Total returns are historical and include change in share value and reinvestment of dividends and capital gains, if any. Cumulative total returns are reported as of the period indicated.

Before investing in any mutual fund, please carefully consider the investment objectives, risks, charges, and expenses. For this and other information, call or write Fidelity for a free prospectus or, if available, a summary prospectus. Read it carefully before you invest. Past performance is no guarantee of future results.

Views expressed are through the end of the period stated and do not necessarily represent the views of Fidelity. Views are subject to change at any time based upon market or other conditions and Fidelity disclaims anyresponsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund. The securities mentioned are not necessarily holdings invested in by the portfolio manager(s) or FMR LLC. References to specific company securities should not be construed as recommendations or investment advice.

Diversification does not ensure a profit or guarantee against a loss.

Information included on this page is as of the most recent calendar quarter.S&P 500 is a registered service mark of Standard & Poor's Financial Services LLC. Other third-party marks appearing herein are the property of their respective owners. All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. Fidelity Brokerage Services LLC, Member NYSE, SIPC., 900 Salem Street, Smithfield, RI 02917. Fidelity Distributors Company LLC, 500 Salem Street, Smithfield, RI 02917.© 2020 FMR LLC. All rights reserved. Not NCUA or NCUSIF insured. May lose value. No credit union guarantee.

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