(2_FIDELITY_LOGOS)FIDELITY
CAPITAL & INCOME
FUND
SEMIANNUAL REPORT
OCTOBER 31, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 30 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 34 Notes to the financial statements.
REPORT OF INDEPENDENT 39 The auditors' opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although the markets have been fairly positive this year, no one can
predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving for a college education, enables you to weather these ups and
downs in a long-term fund, which has higher potential returns. An
intermediate-length fund could be appropriate if your investment horizon is
two to four years, and a short-term bond fund could be the right choice if
you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. A fund's total
return includes changes in a fund's share price, reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells securities that have grown in value). You can also look at the fund's
income to measure performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1995 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Capital & Income 7.78% 14.51% 136.80% 207.59%
Merrill Lynch High Yield Master 7.71% 17.17% 120.20% 210.96%
Index
Average High Current Yield Fund 6.68% 12.73% 113.47% 156.32%
Consumer Price Index 1.18% 2.81% 15.13% 41.40%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, the value of your investment would be $1,050. You can compare
the fund's returns to the performance of the Merrill Lynch High Yield
Master Index, - a broad measure of the high yield bond market. To measure
how the fund's performance stacked up against its peers, you can compare it
to the average high current yield fund, which reflects the performance of
128 funds with similar objectives tracked by Lipper Analytical Services
over the past six months. These benchmarks include reinvested dividends and
capital gains, if any. Comparing the fund's performance to the consumer
price index (CPI) helps show how your fund did compared to inflation.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Capital & Income 14.51% 18.82% 11.89%
Merrill Lynch High Yield Master Index 17.17% 17.10% 12.01%
Average High Current Yield Fund 12.73% 16.27% 9.76%
Consumer Price Index 2.81% 2.86% 3.52%
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 10 YEARS
Capital & IncomeHigh Yield Mast
10/31/85 10000.00 10000.00
11/30/85 10166.41 10188.14
12/31/85 10569.10 10485.96
01/31/86 10620.93 10557.12
02/28/86 11102.90 11005.72
03/31/86 11471.38 11246.54
04/30/86 11634.85 11422.17
05/31/86 11765.98 11555.38
06/30/86 11920.01 11672.44
07/31/86 11828.19 11518.76
08/31/86 11975.67 11731.34
09/30/86 12026.19 11828.43
10/31/86 12368.72 12036.53
11/30/86 12406.04 12134.54
12/31/86 12470.29 12200.07
01/31/87 12891.55 12545.03
02/28/87 13111.47 12752.13
03/31/87 13227.32 12893.13
04/30/87 12895.68 12611.96
05/31/87 12813.46 12555.13
06/30/87 13025.03 12728.69
07/31/87 13007.61 12797.95
08/31/87 13140.71 12926.19
09/30/87 12705.68 12628.78
10/31/87 12198.33 12291.36
11/30/87 12473.35 12602.19
12/31/87 12633.78 12769.53
01/31/88 13042.73 13118.96
02/29/88 13402.95 13474.94
03/31/88 13315.98 13452.66
04/30/88 13413.27 13491.51
05/31/88 13419.75 13561.93
06/30/88 13686.91 13821.22
07/31/88 13831.99 13967.28
08/31/88 13837.81 14013.17
09/30/88 13984.74 14154.42
10/31/88 14135.12 14374.95
11/30/88 14128.98 14428.80
12/31/88 14224.01 14489.85
01/31/89 14485.81 14707.15
02/28/89 14566.43 14805.98
03/31/89 14478.10 14792.81
04/30/89 14424.59 14836.47
05/31/89 14683.48 15109.60
06/30/89 14992.69 15323.67
07/31/89 15020.89 15396.24
08/31/89 15019.46 15472.29
09/30/89 14554.80 15324.99
10/31/89 13909.24 15082.59
11/30/89 13939.56 15116.39
12/31/89 13766.63 15102.73
01/31/90 13305.11 14807.56
02/28/90 13065.48 14591.91
03/31/90 13193.91 14789.16
04/30/90 13236.13 14864.30
05/31/90 13517.17 15132.80
06/30/90 13818.53 15425.98
07/31/90 14122.97 15751.97
08/31/90 13783.92 15148.95
09/30/90 13414.86 14490.10
10/31/90 12989.88 14121.37
11/30/90 13162.89 14240.99
12/31/90 13237.12 14446.19
01/31/91 13308.86 14650.40
02/28/91 13976.52 15737.80
03/31/91 14588.49 16414.46
04/30/91 15197.63 16999.01
05/31/91 15250.62 17082.01
06/30/91 15571.99 17425.65
07/31/91 16074.37 17843.18
08/31/91 16291.54 18218.21
09/30/91 16512.64 18450.25
10/31/91 16914.83 18998.51
11/30/91 17013.11 19217.96
12/31/91 17184.32 19441.22
01/31/92 18220.66 20120.95
02/29/92 18990.28 20620.66
03/31/92 19801.01 20908.38
04/30/92 20205.43 21060.56
05/31/92 20449.53 21396.49
06/30/92 20684.99 21662.33
07/31/92 21095.20 22101.23
08/31/92 21306.59 22393.84
09/30/92 21511.24 22648.99
10/31/92 21292.83 22362.94
11/30/92 21495.48 22679.65
12/31/92 22004.41 22971.67
01/31/93 22844.62 23537.32
02/28/93 23319.15 23982.85
03/31/93 24060.35 24398.64
04/30/93 24252.62 24573.77
05/31/93 24738.72 24904.56
06/30/93 25700.05 25372.46
07/31/93 25938.64 25645.18
08/31/93 26151.41 25889.65
09/30/93 26291.97 26017.40
10/31/93 26820.52 26507.50
11/30/93 27106.71 26652.47
12/31/93 27484.37 26918.98
01/31/94 28309.89 27508.91
02/28/94 28296.19 27311.08
03/31/94 27564.78 26421.09
04/30/94 27274.59 26112.34
05/31/94 27242.24 26019.30
06/30/94 26891.60 26115.07
07/31/94 27070.01 26298.65
08/31/94 27072.23 26481.32
09/30/94 27037.37 26471.29
10/31/94 26862.14 26538.56
11/30/94 26386.83 26312.82
12/31/94 26217.21 26605.50
01/31/95 26620.70 26981.44
02/28/95 27694.22 27823.30
03/31/95 27842.71 28210.50
04/30/95 28538.69 28871.01
05/31/95 29055.13 29773.01
06/30/95 29162.83 30000.41
07/31/95 30185.22 30343.38
08/31/95 30280.58 30527.55
09/30/95 30695.19 30876.81
10/31/95 30759.40 31095.68
$10,000 OVER TEN YEARS: Let's say you invested $10,000 in Fidelity Capital
& Income Fund on October 31, 1985. As the chart shows, by October 31, 1995,
the value of your investment would have grown to $30,759 - a 207.59%
increase on your initial investment. For comparison, look at how the
Merrill Lynch High Yield Master Index did over the same period. With
dividends reinvested, the same $10,000 investment would have grown to
$31,096 - a 210.96% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will
do tomorrow. Bond prices,
for example, generally move
in the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
SIX YEARS ENDED APRIL 30,
MONTHS
ENDED
OCTOBER
31,
1995 1995 1994 1993 1992 1991
Dividend return 5.93% 9.01% 9.34% 8.25% 12.72% 11.69%
Capital appreciation 1.85% -4.38% 3.12% 11.78% 20.23% 3.13%
return
Total return 7.78% 4.63% 12.46% 20.03% 32.95% 14.82%
DIVIDEND returns and capital appreciation returns are both part of a bond
fund's total return. A dividend return reflects the actual dividends paid
by the fund. A capital appreciation return reflects both the amount paid by
the fund to shareholders as capital gain distributions and changes in the
fund's share price. Both returns assume the dividends or gains are
reinvested.
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1995 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 5.96(cents) 52.53(cents) 86.76(cents)
Annualized dividend rate 7.50% 11.19% 9.54%
30-day annualized yield 8.20% - -
DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $9.36 over
the past month, $9.31 over the past six months and $9.09 over the past
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis.
FUND TALK: THE MANAGER'S OVERVIEW
An interview with David Breazzano, Portfolio Manager of Fidelity Capital &
Income
Q. DAVID, HOW DID THE FUND PERFORM?
A. Fairly well. For the six- and 12-month periods ended October 31, 1995,
the fund had total returns of 7.78% and 14.51%, respectively. Those returns
beat the average high current yield fund which returned 6.68% for the same
six-month period and 12.73% for the same 12-month period, as tracked by
Lipper Analytical Services. The Merrill Lynch High Yield Master Index, for
the six- and 12-month periods ended October 31, 1995, returned 7.71% and
17.17%, respectively.
Q. WHAT DROVE THE HIGH-YIELD BOND MARKET'S RECENT RESULTS?
A. Interest rates and the economy, among other things. Generally speaking,
it was a fairly stable period for the high-yield market as interest rates
remained relatively flat during the past six months. And, as the economy
continued to grow at a moderate pace, a number of high-yield companies
experienced reasonable cash flow stability and growth. Technical market
factors - including supply and demand - were also favorable. Demand for
high-yield bonds was relatively strong throughout the period, as investors
continued to search for higher levels of income. Supply, meanwhile, was
firm partly because there was a fair amount of new issuance. However, the
past six months included a number of well-publicized defaults in the
discount retailing sector. Despite those defaults, the high-yield market
continued to enjoy a relatively low default rate.
Q. WHAT HELPED THE FUND TOP THE
RETURNS OF THE AVERAGE HIGH CURRENT YIELD FUND OVER THE PAST SIX MONTHS?
A. A number of the fund's larger holdings did quite well during the period.
US Air bonds, for example, appreciated significantly on the company's
improved financial performance and the news of its possible acquisition by
American Airlines or United Airlines. Even though such acquisitions won't
materialize over the near term, I think the outlook for US Air is good
because it should continue to report strong earnings, due primarily to the
strength in the airline industry. Likewise, airplane leasing concern
Guiness Peat Aviation, or GPA, also performed well as the supply of and
demand for narrow-body aircraft started to equalize, reversing a long-trend
of oversupply. Cadillac Fairview, a Canadian real estate company, also did
well after it completed its bankruptcy reorganization.
Q. WHERE ARE YOU FINDING OPPORTUNITIES LATELY?
A. Alpine Group, Inc., which is a leading manufacturer of copper wire, is a
recent addition to the fund. The proceeds from the bond issue I bought were
used to finance the company's acquisition of another copper wire division
from a French company. The two companies combined to give Alpine a dominant
market share. Concern that fiber optics would eventually replace copper
wire for telephone communications caused many telephone companies to hold
off ordering copper wire. Replacing copper wire with fiber optics proved to
be very expensive and with technological advances, copper wire can now
carry more data than originally thought possible. Since many phone
companies held back expenditures to replace copper wire, there's now
somewhat of a backlog of copper wire needed. I also like Alpine because it
should get improved operating margins from its acquisition. Finally, the
industry is showing moderate but very adequate growth, and the company is
operating near capacity.
Q. AT THE BEGINNING OF THIS YEAR YOU WERE KEEPING A FAIR AMOUNT OF CASH ON
HAND, RATHER THAN INVESTING IT. HAS THAT CHANGED?
A. Yes, I've gradually brought down the fund's cash position. After a
period of weakness in the high-yield market in 1994, the fund faced a fair
amount of shareholder redemptions. So through the end of last year and the
first part of this year, I kept more than a normal amount of cash on hand.
More recently, redemptions have slowed but I want to keep some cash on hand
to take advantage of potential opportunities in the market that may appear
near year's end. There is some seasonality to the high-yield market in that
the fourth quarter of the year historically is a relatively weak period. If
that trend holds true this year, I may want to invest some of the fund's
excess cash during that time, with an eye towards finding attractively
priced companies.
Q. WHAT WERE THE DISAPPOINTMENTS?
A. The New Orleans land-based casino Harrah's Jazz was a major
disappointment. During the period, its bonds traded down to a discounted
level, reflecting weaker than originally projected revenues at its
temporary location. After the period ended, the company filed for
bankruptcy protection because it claimed that its banks pulled their credit
lines. After the filing, the Harrah's Jazz bonds dropped considerably.
Fidelity has engaged legal counsel, and it is our belief that various
parties did not act in accordance with their financial and legal
obligations. There's a reasonable chance that a permanent facility will be
built. If the casino project is ultimately successful, the return to
bondholders could be attractive.
Q. WHAT CHANGES IN STRATEGY DO YOU SEE IN STORE OVER THE NEXT SIX MONTHS?
A. In terms of strategy, I'll most likely look for opportunities in the
distressed market. In addition, I'm trying to minimize the interest rate
risk of the fund. I'm doing that by generally avoiding lower yielding
issues. In my view, these types of bonds have had a strong rally this year
and now may be particularly susceptible to higher interest rates.
FUND FACTS
GOAL: seeks income and
capital growth by investing
mainly in debt and equity
securities, with an emphasis
on lower-quality debt
securities
START DATE: November 1,
1977
SIZE: as of October 31, 1995,
more than $2.3 billion
MANAGER: David Breazzano,
since November 1990; also
co-manages Belmont Capital
Partners II, a private
bankruptcy fund; joined
Fidelity in 1990
(checkmark)
DAVID BREAZZANO'S OUTLOOK FOR
THE HIGH YIELD MARKET:
"As always, it will be
determined by the economy
and interest rates to a large
extent. In my view, interest
rates should stay low and the
economy should continue to
grow at a moderate pace.
Steady, low interest rates
would probably mean that the
total return for high yield
bonds will be more dependent
on income, than on capital
appreciation.
"That said, 1996 is an election
year, and the rhetoric
surrounding the presidential
campaign could cause some
volatility in both the equity and
bond markets. But barring
higher interest rates, a major
decline in either the stock or
bond markets, or a significant
increase in the rate of
high-yield bond defaults -
which I don't anticipate - the
high-yield market could
remain relatively stable."
INVESTMENT CHANGES
TOP FIVE HOLDINGS AS OF OCTOBER 31, 1995
(BY ISSUER, EXCLUDING REPURCHASE AGREEMENTS) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Thermadyne Holdings Corp. (various 4.6 4.4
issues)
US Air, Inc. (various issues) 3.1 3.0
NWCG Holdings Co. 3.0 3.3
Harrah's Jazz Co. 3.0 2.3
Nextel Communications, Inc. 2.7 4.7
TOP FIVE MARKET SECTORS AS OF OCTOBER 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
Media & Leisure 17.8 16.9
Industrial Machinery & Equipment 7.9 7.5
Retail & Wholesale 7.9 9.5
Construction & Real Estate 6.8 7.2
Technology 6.8 2.3
QUALITY DIVERSIFICATION AS OF OCTOBER 31, 1995
(MOODY'S RATINGS) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Aaa, Aa, A 0.0 0.3
Baa 0.0 0.0
Ba 3.8 3.1
B 37.1 35.5
Caa, Ca, C 14.2 10.9
Nonrated 19.5 24.8
TABLE EXCLUDES SHORT-TERM INVESTMENTS. UNRATED DEBT SECURITIES THAT ARE
EQUIVALENT TO BA AND BELOW AT OCTOBER 31, 1995 AND APRIL 30, 1995, ACCOUNT
FOR 18.9% AND 24.4%, RESPECTIVELY, OF THE FUND'S INVESTMENTS.
ASSET ALLOCATION
AS OF OCTOBER 31, 1995* AS OF APRIL 30, 1995**
Nonconvertible
bonds 68.4%
Convertible bonds,
preferred stocks 6.9%
Common stocks 8.4%
Short-term
investments 11.3%
Other 5.0%
FOREIGN
INVESTMENTS 5.8%
Nonconvertible
bonds 66.5%
Convertible bonds,
preferred stocks 7.9%
Common stocks 7.4%
Short-term
investments 11.8%
Other 6.4%
FOREIGN
INVESTMENTS 7.9%
Row: 1, Col: 1, Value: 5.0
Row: 1, Col: 2, Value: 11.3
Row: 1, Col: 3, Value: 8.4
Row: 1, Col: 4, Value: 6.9
Row: 1, Col: 5, Value: 18.4
Row: 1, Col: 6, Value: 50.0
Row: 1, Col: 1, Value: 6.4
Row: 1, Col: 2, Value: 11.8
Row: 1, Col: 3, Value: 7.4
Row: 1, Col: 4, Value: 7.9
Row: 1, Col: 5, Value: 16.5
Row: 1, Col: 6, Value: 50.0
*
**
INVESTMENTS OCTOBER 31, 1995
Showing Percentage of Total Value of Investment in Securities
CORPORATE BONDS - 69.4%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (D) AMOUNT (C) (000S) (000S)
CONVERTIBLE BONDS - 1.0%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
ELECTRICAL EQUIPMENT - 0.3%
Ampex Corp. Series C, 0%, 6/30/97 - $ 7,090 $ 6,901
MEDIA & LEISURE - 0.4%
LODGING & GAMING - 0.4%
Bally Entertainment Corp. 10%, 12/15/06 B3 10,977 10,703
RETAIL & WHOLESALE - 0.3%
APPAREL STORES - 0.3%
Merry-Go-Round Enterprises, Inc.,
0%, 5/16/97 (g) - 8,914 6,061
GROCERY STORES - 0.0%
Farm Fresh, Inc. 7 1/2%, 3/1/10 B3 600 341
TOTAL RETAIL & WHOLESALE 6,402
TOTAL CONVERTIBLE BONDS 24,006
NONCONVERTIBLE BONDS - 68.4%
AEROSPACE & DEFENSE - 3.7%
AEROSPACE & DEFENSE - 3.2%
Alliant Techsystems, Inc. 11 3/4%, 3/1/03 B2 15,750 17,246
Fairchild Corp.:
12%, 10/15/01 Caa 12,585 11,956
13 1/8%, 3/15/06 Caa 5,280 4,752
K & F Industries, Inc. 11 7/8%, 12/1/03 B1 7,190 7,639
RHI Holdings, Inc. 11 7/8%, 3/1/99 B2 14,420 14,132
Rohr, Inc. 11 5/8%, 5/15/03 Ba3 6,300 6,741
Wyman-Gordon Co. 10 3/4%, 3/15/03 B1 13,065 13,490
75,956
DEFENSE ELECTRONICS - 0.5%
Tracor, Inc. 10 7/8%, 8/15/01 B2 10,841 11,220
TOTAL AEROSPACE & DEFENSE 87,176
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (D) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - 4.4%
CHEMICALS & PLASTICS - 2.3%
American Pacific Corp. 11%, 2/21/02 (h) - $ 3,400 $ 3,060
G-I Holdings, Inc. Series B, 0%, 10/1/98 Ba3 1,930 1,438
Harris Chemical Corp. 0%, 7/15/01 (e) B2 19,400 17,048
NL Industries, Inc. 0%, 10/15/05 (e) B2 14,750 11,118
Trans Resources, Inc. 11 7/8%, 7/1/02 (h) B2 22,700 21,452
54,116
IRON & STEEL - 0.1%
AK Steel Corp. 10 3/4%, 4/1/04 Ba3 1,300 1,419
METALS & MINING - 1.0%
International Wire Group, Inc.
11 3/4%, 6/1/05 (h) B3 24,370 23,944
PACKAGING & CONTAINERS - 0.2%
Crown Packaging Holdings Ltd.
0%, 11/1/03 (e) Caa 11,730 5,366
PAPER & FOREST PRODUCTS - 0.8%
Mail-Well Corp. 10 1/2%, 2/15/04 B- 8,000 7,720
Mail-Well Holdings, Inc. 0%, 2/15/06 (e) - 10,640 6,384
Stone Container Corp.:
10 3/4%, 10/01/02 B1 3,840 4,018
11 1/2%, 10/1/04 B1 780 811
18,933
TOTAL BASIC INDUSTRIES 103,778
CONSTRUCTION & REAL ESTATE - 4.7%
BUILDING MATERIALS - 1.9%
Building Materials Corp. of America
0%, 7/1/04 (e) B1 43,450 28,460
Nortek, Inc., 9 7/8%, 3/1/04 B3 12,500 11,625
Standard Brands Paint Co.
14 1/2%, 5/17/97 (g)(j) - 5,000 5,000
45,085
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (D) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - 2.2%
Grand Bay Residences of Key Biscayne
15%, 12/31/99 (g) - $ 2,500 $ 2,500
Greystone Homes, Inc. 10 3/4%, 3/1/04 B2 11,500 10,177
UDC Homes, Inc. 11 3/4%, 4/30/03 (b) B2 41,147 33,741
WCI Communities LP 17%, 7/24/98 (g) - 5,000 4,937
51,355
REAL ESTATE - 0.6%
Cadillac Fairview Corp. 12%, 7/31/05 - CAD 35 23
Littlefield Co. 10%, 12/31/95 (g) - 15,880 14,390
14,413
TOTAL CONSTRUCTION & REAL ESTATE 110,853
DURABLES - 2.5%
AUTOS, TIRES, & ACCESSORIES - 1.5%
Aftermarket Technology Corp. Series B,
12%, 8/1/04 B3 16,100 17,026
Harvard Industries, Inc.:
12%, 7/15/04 B3 10,000 10,500
11 1/8%, 8/1/05 (h) B3 6,570 6,669
34,195
TEXTILES & APPAREL - 1.0%
Hat Brands, Inc.:
Series B, 12 5/8%, 9/15/02 - 14,630 15,362
Series D, 12 5/8%, 9/15/02 - 3,960 4,158
Leslie Fay Companies, Inc. (b)(g):
9.53%, 1/15/00 - 4,290 2,574
10.54%, 1/15/02 - 3,878 1,939
24,033
TOTAL DURABLES 58,228
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (D) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
ENERGY - 2.9%
ENERGY SERVICES - 0.0%
Welltech, Inc. 12%, 1/7/98 - $ 661 $ 661
OIL & GAS - 2.9%
Mesa Capital Corp. secured
12 3/4%, 6/30/98 (e) Caa 40,864 36,778
Transamerican Refining Corp. 0%, 2/15/02 (j) Caa 15,366 10,756
Transtexas Gas Corp. 11 1/2%, 6/15/02 B2 20,000 20,850
68,384
TOTAL Energy 69,045
FINANCE - 0.9%
INSURANCE - 0.1%
I.C.H. Corp. 11 1/4%, 12/1/96 (b) C 5,630 2,702
SAVINGS & LOANS - 0.5%
Centrust euro mortgage 0%, 2/15/10 AAA 50,600 11,764
SECURITIES INDUSTRY - 0.3%
CBO Partners LP 12.55%, 12/15/04 (b) - 13,500 7,628
TOTAL FINANCE 22,094
HEALTH - 1.9%
MEDICAL FACILITIES MANAGEMENT - 1.9%
Integrated Healthcare Facilities LP
10%, 12/6/96 (b) - 141 1
Tenet Healthcare Corp.:
8 5/8%, 12/1/03 Ba2 28,050 28,821
10 1/8%, 3/1/05 Ba3 13,930 15,044
43,866
INDUSTRIAL MACHINERY & EQUIPMENT - 5.1%
INDUSTRIAL MACHINERY & EQUIPMENT - 4.9%
MVE, Inc. 12 1/2%, 2/15/02 B3 13,670 14,012
Specialty Equipment Cos., Inc. 11 3/8%, 12/1/03 B3 29,550 30,437
Thermadyne Holdings Corp.:
10 1/4%, 5/1/02 B3 17,891 17,802
10 3/4%, 11/1/03 Caa 53,189 52,657
114,908
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (D) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
POLLUTION CONTROL - 0.2%
Envirosource, Inc. 9 3/4%, 6/15/03 B3 $ 6,000 $ 5,280
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 120,188
MEDIA & LEISURE - 14.0%
BROADCASTING - 4.6%
Citicasters, Inc. 9 3/4%, 2/15/04 B- 12,500 12,562
Cooke Media Group, Inc. 11 5/8%, 4/1/99 - 1,540 1,463
NWCG Holdings Corp. 0%, 6/15/99 Caa 104,974 70,595
Robin Media Group, Inc. 11 1/8%, 4/1/97 - 24,610 25,287
109,907
LODGING & GAMING - 9.4%
Bally's Casino Holdings, Inc. 10 1/2%, 6/15/98 B2 32,015 24,812
Bally Gaming International, Inc.,
10 3/8%, 7/15/98 - 10,000 10,300
Grand Casino Resorts, Inc. gtd.
1st Mtg. 12 1/2%, 2/1/00 Ba3 1,330 1,490
HMH Properties, Inc. 9 1/2%, 5/15/05 (h) B1 19,990 20,090
Harrah's Jazz Co. 14 1/4%, 11/15/01 (l) B1 79,930 69,939
Horseshoe Gaming LLC 12 3/4%, 9/30/00 (h) 7,000 6,947
Maritime Group Ltd. pay-in-kind
14%, 2/15/97 (b)(j) - 9,525 1,810
Mohegan Tribal Gaming Authority
13 1/2%, 1/15/02 (h) - 12,970 13,586
Players International, Inc. 10 7/8%, 4/15/05 Ba3 28,610 27,180
President Riverboat Casinos 13%, 9/15/01 B 5,440 4,842
Stratosphere Corp. 14 1/4%, 5/15/02 B2 31,280 33,391
Trump Plaza Funding, Inc. gtd. mtg.
10 7/8%, 6/15/01 B3 8,590 8,075
222,462
PUBLISHING - 0.0%
Maxwell Communication Corp.
PLC euro 5%, 6/16/99 (k) - CHF 7 1
TOTAL MEDIA & LEISURE 332,370
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (D) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
NONDURABLES - 2.5%
FOODS - 1.0%
Specialty Foods Corp.:
Series B, 11 1/8%, 10/1/02 B3 $ 4,410 $ 4,123
11 1/4%, 8/15/03 Caa 17,750 14,910
Van De Kamps, Inc. 12%, 9/15/05 B3 5,190 5,320
24,353
HOUSEHOLD PRODUCTS - 1.5%
MacAndrews and Forbes Holdings, Inc.
13%, 3/1/99 - 2,300 2,311
Revlon Consumer Products Corp.
10 1/2%, 2/15/03 B3 32,260 33,147
35,458
TOTAL NONDURABLES 59,811
RETAIL & WHOLESALE - 6.7%
APPAREL STORES - 1.8%
Apparel Retailers, Inc. 0%, 8/15/05 (e) Caa 26,450 16,267
Lamonts Apparel Inc. 10 1/4%, 11/1/99 (b)(h) - 18,686 4,672
Merry-Go-Round Enterprises
7.09%, 9/1/03 (b)(g) - 7,500 5,100
Specialty Retailers, Inc.:
10%, 8/15/00 B1 11,000 10,560
11%, 8/15/03 B3 5,180 4,869
41,468
GENERAL MERCHANDISE STORES - 0.1%
Parisian, Inc. 9 7/8%, 7/15/03 Caa 2,970 2,525
GROCERY STORES - 3.1%
Pathmark Stores, Inc.:
11 5/8%, 6/15/02 B3 7,860 8,194
12 5/8%, 6/15/02 B3 3,455 3,645
9 5/8%, 5/1/03 B2 6,950 6,863
0%, 11/1/03 (e) B3 38,510 24,839
Purity Supreme, Inc. 11 3/4%, 8/1/99 B3 27,750 30,352
73,893
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (D) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - 1.7%
Art Store Holdings (g):
9%, 7/31/96 - $ 842 $ 842
9%, 7/31/97 - 842 842
Barry's Jewelers, Inc. 11%, 12/22/00 - 26,692 26,158
Color Tile, Inc. 10 3/4%, 12/15/01 Caa 1,750 665
Finlay Fine Jewelry Corp. 10 5/8%, 5/1/03 B1 3,120 3,073
Town & Country Corp.:
11 1/2%, 9/15/97 B3 986 927
13%, 5/31/98 (b) Caa 13,443 8,604
41,111
TOTAL RETAIL & WHOLESALE 158,997
SERVICES - 3.0%
LEASING & RENTAL - 2.8%
GPA Delaware, Inc.:
8 1/2%, 3/3/97 - 27,100 25,813
gtd. notes 8 3/4%, 12/15/98 Caa 8,050 7,205
8 5/8%, 1/15/99 26,700 23,229
Scotsman Holdings, Inc. pay-in-kind 11%, 3/1/04 - 12,666 10,661
66,908
SERVICES - 0.2%
Acetex Corp. 9 3/4%, 10/1/03 (h) B1 3,850 3,956
TOTAL SERVICES 70,864
TECHNOLOGY - 5.7%
COMMUNICATIONS EQUIPMENT - 0.8%
Echostar Communications Corp. unit
0%, 6/1/04 (e) Caa 28,135 18,006
COMPUTERS & OFFICE EQUIPMENT - 1.3%
Bell & Howell Holdings Co.
0%, 3/1/05 (e) B3 23,235 14,870
Dictaphone Corp. 11 3/4%, 8/1/05 B3 16,970 16,631
31,501
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (D) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - CONTINUED
ELECTRONICS - 3.6%
Alpine Group, Inc. 12 1/4%, 7/15/03 (h) B $ 60,800 $ 57,456
Berg Electronics, Inc. 11 3/8%, 5/1/03 B3 25,820 28,918
86,374
TOTAL TECHNOLOGY 135,881
TRANSPORTATION - 4.1%
AIR TRANSPORTATION - 3.5%
CHC Helicopter Corp. 11 1/2%, 7/15/02 B3 8,910 7,908
Continental Airlines, Inc. 2nd priority secured
equipment certificate 11%, 3/15/00 (b) Caa 2,070 -
US Air, Inc.:
9 5/8%, 2/1/01 B3 51,195 45,564
10%, 7/1/03 B3 24,430 21,559
9 5/8%, 9/1/03 B1 7,050 6,803
81,834
RAILROADS - 0.6%
Transtar Holdings L.P./Transtar Cap. Corp.,
Series B, 0%, 12/15/03 (e) B- 22,790 15,155
TRUCKING & FREIGHT - 0.0%
St. Johnsbury Trucking Co. unit
11%, 7/15/98 (b)(g) - 7,550 854
TOTAL TRANSPORTATION 97,843
UTILITIES - 6.3%
CELLULAR - 3.2%
Dial Call Communications, Inc. (e):
0%, 4/15/04 Caa 17,280 8,770
0%, 12/15/05 Caa 5,000 2,387
Nextel Communications, Inc.
0%, 8/15/04 (e) B3 125,980 63,620
USA Mobile Communications, Inc. II
9 1/2%, 2/1/04 B3 460 440
75,217
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (D) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
ELECTRIC UTILITY - 2.3%
Del Norte Funding Corp. secured leasing oblig.
11 1/4%, 1/2/14 (b) Ca $ 19,810 $ 12,579
El Paso Funding Corp. lease oblig. (b):
9 3/8%, 10/1/96 Ca 3,780 2,391
9.20%, 7/2/97 Ca 3,000 1,905
10 3/8%, 1/2/11 Ca 19,330 12,226
10 3/4%, 4/1/13 Ca 39,440 24,946
54,047
GAS - 0.8%
Columbia Gas Systems, Inc. (b):
9.07%, 1/12/00 - 1,070 1,557
9.35%, 9/1/00 Caa 2,000 2,940
9 1/4%, 9/30/04 Caa 1,000 1,460
9.24%, 12/30/14 - 2,500 3,663
9 1/2%, 10/10/19 B1 5,500 8,112
9.30%, 12/18/19 Caa 1,200 1,758
19,490
TOTAL UTILITIES 148,754
TOTAL NONCONVERTIBLE BONDS 1,619,748
TOTAL CORPORATE BONDS
(Cost $1,636,667) 1,643,754
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 0.1%
CenTrust Savings 0%, 2/15/10 (Cost $2,605) AAA 13,000 3,023
COMMERCIAL MORTGAGE SECURITIES - 2.0%
ACP Mortgage LP commercial floater (h)(j):
Series E, 7.6448%, 2/28/28 BB 2,433 1,863
Series F, 7.6448%, 2/28/28 B 2,537 2,036
CS First Boston Mortgage Securities Corp.
commercial Series 1995-AEWI Class E,
9.187%, 11/25/97 (h)(j) - 4,000 3,456
COMMERCIAL MORTGAGE SECURITIES - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (D) AMOUNT (C) (000S) (000S)
Lennar Central Partners LP commercial Series
1995-1 Class F, 11.70%, 5/15/05 (h) - $ 5,000 $ 5,013
Morgan Stanley Capital I commercial Series
1995-TNE, Class D2, 8.24%, 12/15/23 (h) Ba3 4,005 3,449
Resolution Trust Corp. commercial:
floater Series:
1991-M2 Class A1, 7.3802%, 9/25/20 (j) Ba3 4,594 3,400
Series 1994-C1
Class E, 8%, 6/25/26 BB 10,104 8,746
Class F, 8%, 6/25/26 B 2,724 2,227
Series 1994-C2:
Class F, 8%, 4/25/25 BB 7,391 6,583
Class G, 8%, 4/25/25 B 1,393 1,149
Series 1995-C1 Class F, 6.90%, 2/25/27 B1 3,666 3,215
Structured Asset Securities Corp. commercial
Series 1995-C1 Class E, 7 3/8%, 9/25/24 (h) BB 6,500 4,857
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $43,721) 45,994
COMMON STOCKS - 8.4%
SHARES
AEROSPACE & DEFENSE - 0.1%
DEFENSE ELECTRONICS - 0.1%
Tracor, Inc. (a) 132,900 2,126
BASIC INDUSTRIES - 0.4%
CHEMICALS & PLASTICS - 0.2%
Atlantis Group, Inc. (Trivest/Winston) (a)(g) 33,115 215
Plastic Specialties & Technology, Inc. (a) 2,500 -
Rexene Corp. (a) 65,900 601
Trivest 1992 Special Fund LP 11.4 (i) 2,790
3,606
PAPER & FOREST PRODUCTS - 0.2%
Mail-Well Holdings, Inc. (a)(h) 53,200 1,756
Repap Enterprises, Inc. (a) 567,200 3,586
5,342
TOTAL BASIC INDUSTRIES 8,948
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - 1.8%
BUILDING MATERIALS - 0.9%
Corimon SA CA ADR (a)(g) 1,359,203 $ 5,649
Standard Brands Paint Co. (a)(f) 8,246,743 14,432
Standard Brands Paint Co. Series B (non-vtg.) (a)(g) 8,417 8
Waxman Industries, Inc. (warrants) (a) 420,000 105
20,194
REAL ESTATE - 0.9%
Cadillac Fairview Corp. (a) 1,861,413 21,459
Cadillac Fairview Corp. (warrants) (a) 187,104 696
22,155
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Prime Retail, Inc. 51,000 618
TOTAL CONSTRUCTION & REAL ESTATE 42,967
DURABLES - 0.2%
HOME FURNISHINGS - 0.0%
Polyvision Corp. (a) 47,428 116
TEXTILES & APPAREL - 0.2%
Hat Brands, Inc. (warrants) (a)(g) 246,278 2,709
HM/Hat Brands Trust unit Class I (a)(g) 1,980,000 1,980
4,689
TOTAL DURABLES 4,805
ENERGY - 0.1%
ENERGY SERVICES - 0.1%
Welltech, Inc. (a)(f)(g) 31,958 2,876
OIL & GAS - 0.0%
Goodrich Petroleum Corp. (a) 358,125 358
Goodrich Petroleum Corp. (warrants) (a)(g) 460,000 -
358
TOTAL ENERGY 3,234
FINANCE - 0.1%
INSURANCE - 0.1%
American Annuity Group, Inc. 193,713 2,082
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - 0.0%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
MVE, Inc. (warrants) (a) 13,670 $ 273
HOLDING COMPANIES - 0.2%
SDW Holdings Corp. (warrants) (a) 27,816 167
SDW Holdings Corp. unit (a)(h) 12,555 3,767
3,934
INDUSTRIAL MACHINERY & EQUIPMENT - 1.9%
ELECTRICAL EQUIPMENT - 0.2%
Ampex Corp. (a):
Class A 262,465 820
Class A (warrants) 662,447 2,070
Class C 152,977 478
Class C (warrants) 206,879 646
4,014
INDUSTRIAL MACHINERY & EQUIPMENT - 1.7%
Specialty Equipment Companies, Inc. (a) 115,247 1,224
Terex Corp. (rights) (a)(g) 29,100 4
Thermadyne Holdings Corp. (a)(f) 2,252,642 39,140
40,368
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 44,382
MEDIA & LEISURE - 2.0%
BROADCASTING - 0.2%
Chancellor Trust unit Class I (a)(g) 273 5,515
ENTERTAINMENT - 0.0%
Live Entertainment, Inc. (a)(g):
$2.00 (warrants) 256,000 13
$2.72 (warrants) 244,706 12
25
LODGING & GAMING - 1.8%
Bally Gaming International, Inc. (a) 452,207 4,748
Bally Gaming International, Inc. (warrants) (a) 300,000 2,062
Bally's Grand, Inc. (warrants) (a) 117,265 865
Casino Magic Finance Corp. (warrants) (a) 19,500 -
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - CONTINUED
Griffin Gaming & Entertainment, Inc. Litigate
Trust Certificates (a) 77,112 $ -
Horseshoe Gaming LLC (warrants) (a) 3,500,000 700
Maritime Group Ltd. (warrants) (a) 103,320 1
Sun International Hotels Ltd. (a)(f) 928,902 27,867
Sun Internaitonal Hotels Ltd. Class B (a) 195,068 5,998
42,241
TOTAL MEDIA & LEISURE 47,781
NONDURABLES - 0.4%
BEVERAGES - 0.0%
Heileman G Brewing Inc. unit Class 1 (a)(g) 400 400
TOBACCO - 0.4%
RJR Nabisco Holdings Corp. 320,000 9,840
TOTAL NONDURABLES 10,240
RETAIL & WHOLESALE - 0.5%
APPAREL STORES - 0.1%
Dylex Ltd. (a) 1,185,595 2,019
Dylex Ltd. (warrants) (a) 239,140 80
Lamonts Apparel Inc. (a) 307,603 10
Lamonts Apparel Inc. (warrants) (a) 562,033 -
Merry-Go-Round Enterprises, Inc. (a) 1,258,700 629
2,738
GROCERY STORES - 0.0%
FF Holdings Corp. (a)(f)(g) 11,900 24
Grand Union Capital Corp. Class B (a) 1,506 -
Little Rock Groceries, Inc. (warrants) (a) 51 -
Purity Supreme, Inc. (warrants) (a)(g) 55,961 1
25
RETAIL & WHOLESALE, MISCELLANEOUS - 0.4%
Barry's Jewelers, Inc. (a)(f) 380,545 1,570
Barry's Jewelers, Inc. (warrants) (a) 47,568 12
Crown Books Corp. (a)(f) 376,600 4,331
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED
Little Switzerland, Inc. (a)(f) 634,076 $ 2,378
Zale Corp. unit (a)(g) 1,768,285 35
8,326
TOTAL RETAIL & WHOLESALE 11,089
SERVICES - 0.1%
LEASING & RENTAL - 0.1%
Scotsman Holdings, Inc. 88,173 1,153
SERVICES - 0.0%
Vestar/LPA Investment Corp. (a) 2,550 48
TOTAL SERVICES 1,201
TECHNOLOGY - 0.6%
COMPUTERS & OFFICE EQUIPMENT - 0.0%
Intelogic Trace, Inc. (a)(f) 3,931,987 -
ELECTRONICS - 0.6%
AMP, Inc. 300,000 11,775
Berg Electronics Holdings Corp. (a)(h) 502,637 3,016
14,791
TOTAL TECHNOLOGY 14,791
TRANSPORTATION - 0.0%
AIR TRANSPORTATION - 0.0%
CHC Helicopter Corp. (warrants) (a) 108,320 -
RAILROADS - 0.0%
Westinghouse Air Brake Co. (a) 118,000 1,032
TOTAL TRANSPORTATION 1,032
UTILITIES - 0.0%
ELECTRIC UTILITY - 0.0%
Great Bay Power (a) 94,731 734
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
GAS - 0.0%
UGI Corp. (warrants) (a) 81,500 $ 12
TOTAL UTILITIES 746
TOTAL COMMON STOCKS
(Cost $224,598) 199,631
PREFERRED STOCKS - 5.9%
CONVERTIBLE PREFERRED STOCKS - 1.2%
CONSTRUCTION & REAL ESTATE - 0.3%
REAL ESTATE INVESTMENT TRUSTS - 0.3%
Prime Retail, Inc. Series B, $2.125 400,000 7,650
ENERGY - 0.4%
OIL & GAS - 0.4%
Atlantic Richfield Co. exchangeable $.5575 441,300 9,929
RETAIL & WHOLESALE - 0.4%
GROCERY STORES - 0.4%
Supermarkets General Holdings Corp.
exchangeable pay-in-kind $3.52 (a) 307,893 8,775
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Town & Country Corp. (a) 542,144 434
TOTAL RETAIL & WHOLESALE 9,209
SERVICES - 0.0%
SERVICES - 0.0%
La Petite Holdings Corp. exchangeable (a) 41,200 824
TECHNOLOGY - 0.1%
ELECTRONICS - 0.1%
Alpine Group, Inc. 8% cumulative 26,953 1,213
TOTAL CONVERTIBLE PREFERRED STOCKS 28,825
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - 4.7%
BASIC INDUSTRIES - 0.0%
PAPER & FOREST PRODUCTS - 0.0%
S D Warren Co. exchangeable pay-in-kind 27,816 $ 890
CONSTRUCTION & REAL ESTATE - 0.0%
CONSTRUCTION - 0.0%
UDC Homes, Inc. prime exchangeable (a) 148,144 -
ENERGY - 2.3%
OIL & GAS - 2.3%
Gulf Canada Resources Ltd. Series 1, adj. rate 18,695,804 52,841
Gulf Canada Resources Ltd. (g) 220,666 607
53,448
HEALTH - 0.0%
MEDICAL FACILITIES MANAGEMENT - 0.0%
Integrated Healthcare Facilities LP Series A (a) 1,404 -
INDUSTRIAL MACHINERY & EQUIPMENT - 0.6%
ELECTRICAL EQUIPMENT - 0.6%
Ampex Corp. 8% (a)(g) 23,995 14,832
MEDIA & LEISURE - 1.4%
BROADCASTING - 1.4%
Cablevision System Corp. Series G,
exchangeable pay-in-kind (a)(h) 200,800 20,733
PanAmSat Corp. pay-in-kind 12 3/4% (a) 10,970 11,930
TOTAL MEDIA & LEISURE 32,663
TECHNOLOGY - 0.4%
COMPUTERS & OFFICE EQUIPMENT - 0.0%
Intelogic Trace, Inc. 10% (a) 645,723 -
ELECTRONICS - 0.4%
Berg Electronics Holding Corp. Series E, pay-in-kind $3.4687 335,652
9,398
TOTAL TECHNOLOGY 9,398
TOTAL NONCONVERTIBLE PREFERRED STOCKS 111,231
TOTAL PREFERRED STOCKS
(Cost $147,560) 140,056
PURCHASED BANK DEBT - 2.9%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (C) (000S) (000S)
Calton, Inc. revolving loan (b) $ 9,087 $ 6,361
Dylex Ltd. trade claim (b) CAD 5,893 2,290
El Paso Electric Co. secured loan RGRT facility (b) 10,050 10,251
Intelogic Trace Postpetition Loan (b) 231 231
Isosceles PLC term loan (b) GBP 192 176
Leslie Fay Companies., Inc. (b):
term loan 4,933 2,960
revolving loan 4,351 2,610
Merry-Go-Round Enterprises, Inc. (b):
lease indemnity claim 805 548
term loan 4,129 2,808
trade claim 7,583 5,156
Somerfield Holdings Ltd.:
revolving loan GBP 3,718 5,226
term loan GBP 8,365 11,481
TAK Communications term loan (b) 36,907 18,269
Welltech, Inc.:
Vanguard loan participation (b) 743 371
TOTAL PURCHASED BANK DEBT
(Cost $49,890) 68,738
REPURCHASE AGREEMENTS - 11.3%
MATURITY VALUE (NOTE 1)
AMOUNT (000S) (000S)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.88%, dated
10/31/95 due 11/1/95 $ 266,253 $ 266,210
TOTAL INVESTMENT IN SECURITIES - 100.0%
(Cost $2,371,251) $ 2,367,406
CURRENCY ABBREVIATIONS
GBP - British pound
CAD - Canadian dollar
CHF - Swiss franc
LEGEND
1. Non-income producing
2. Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
3. Principal amount is stated in United States dollars unless otherwise
noted.
4. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
5. Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
6. Affiliated company (see Note 6 of Notes to Financial Statements).
7. 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 (000S)
Ampex Corp. 8% 2/16/95 $ 12,598
Art Store Holdings:
9%, 7/31/96 8/1/95 $ 842
9%, 7/31/97 8/1/95 $ 842
Atlantis Group, Inc.
(Trivest/Winston) 4/6/93 $ 39
Chancellor Trust
unit Class 1 10/12/94 $ 5,515
Corimon SA CA ADR 7/27/95 $ 9,005
FF Holdings Corp. 10/2/92
to 1/14/94 $ 48
Goodrich Petroleum
Corp. (warrants) 2/5/93 $ 438
ACQUISITION ACQUISITION
SECURITY DATE COST (000S)
Grand Bay Residences
of Key Biscayne
15%, 12/31/99 7/20/95 $ 2,500
Gulf Canada
Resources Ltd. 10/15/93
to 8/31/94 $ 550
Hat Brands, Inc.
(warrants) 9/2/92
to 2/23/94 $ -
HM/Hat Brands Trust
unit Class 1 2/22/94 $ 1,980
Heileman G Brewing
Inc. unit Class 1 1/21/94 $ 8,019
Leslie Fay
Companies, Inc.:
9.53%, 1/15/00 7/19/93 $ 3,250
10.54%, 1/15/02 7/19/93
to 11/11/93 $ 2,565
Littlefield Co.
10%, 12/31/95 2/28/94 $ 15,880
Live Entertainment, Inc.:
$2.00 (warrants) 3/23/93 $ 244
$2.72 (warrants) 3/23/93 $ 146
Merry-Go-Round
Enterprises, Inc.:
0%, 5/16/97 3/1/94
to 3/24/94 $ 7,680
7.09%, 9/1/03 3/21/94 $ 6,457
Purity Supreme, Inc.
(warrants) 4/25/95 $ 1
St. Johnsbury Trucking Co.
unit 11%, 7/15/98 2/1/93 $ 3,060
Standard Brands Paint Co.:
Series B, (non-vtg.) 3/16/95 $ 8
14 1/2%, 5/17/97. 5/18/95 $ 5,000
Terex Corp. (rights) 7/29/92 $ -
WCI Communities LP
17%, 7/24/98 7/24/95 $ 4,937
Welltech, Inc. 6/14/91
to 1/20/94 $ 3,863
Zale Corp. unit 2/6/91
to 7/30/93 $ 329
8. 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 $211,778,000 or 8.8% of net
assets.
9. Represents number of units held.
10. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due dates on these types of
securities reflects the next interest rate reset date or, when applicable,
the final maturity date.
11. Non-income producing - the company moved to seek a court appointed
administrator under British bankruptcy law.
12. Non-income producing - subsequent to October 31, 1995 issuer filed for
protection under the Federal Bankruptcy Code or is in default of interest
payment.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 0.0% AAA, AA, A 0.6%
Baa 0.0% BBB 0.3%
Ba 3.8% BB 6.6%
B 37.1% B 34.9%
Caa 11.8% CCC 11.5%
Ca, C 2.4% CC, C 0.0%
D 1.1%
The percentage not rated by either S&P or Moody's amounted to 13.8%
including long- term debt categorized as other securities. FMR has
determined that unrated debt securities that are lower quality account for
13.8% of the total value of investment in securities.
INCOME TAX INFORMATION
At October 31, 1995, the aggregate cost of investment securities for income
tax purposes was $2,373,115,000. Net unrealized depre- ciation aggregated
$5,709,000, of which $163,161,000 related to appreciated investment
securities and $168,870,000 related to depreciated investment securities.
At April 30, 1995, the fund had a capital loss carryforward of
approximately $64,478,000 all of which will expire on April 30, 1999.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) OCTOBER 31, 1995
ASSETS
Investment in securities, at value (including repurchase $ 2,367,406
agreements of $266,210) (cost $2,371,251) -
See accompanying schedule
Cash 248
Receivable for investments sold 12,676
Dividends receivable 873
Interest receivable 41,363
Redemption fees receivable 3
Other receivables 44
TOTAL ASSETS 2,422,613
LIABILITIES
Payable for investments purchased $ 9,964
Payable for fund shares redeemed 405
Distributions payable 1,937
Accrued management fee 1,387
Other payables and accrued expenses 644
Collateral on securities loaned, at value 13,155
TOTAL LIABILITIES 27,492
NET ASSETS $ 2,395,121
Net Assets consist of:
Paid in capital $ 2,477,876
Undistributed net investment income 8,395
Accumulated undistributed net realized gain (loss) on (87,003)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on (4,147)
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 256,303 shares outstanding $ 2,395,121
NET ASSET VALUE, offering price and redemption price per $9.34
share ($2,395,121 (divided by) 256,303 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED OCTOBER 31, 1995
INVESTMENT INCOME $ 5,434
Dividends
Interest (including income on securities loaned of $34) 100,896
TOTAL INCOME 106,330
EXPENSES
Management fee $ 8,207
Transfer agent: 2,378
Fees
Redemption fees (27)
Accounting and security lending fees 288
Non-interested trustees' compensation 5
Registration fees 67
Audit 81
Legal 825
Miscellaneous 3
TOTAL EXPENSES 11,827
NET INVESTMENT INCOME 94,503
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized loss of (20,590)
$11,797
on sales of investments in affiliated issuers)
Foreign currency transactions 309 (20,281)
Change in net unrealized appreciation (depreciation) on:
Investment securities 101,313
Assets and liabilities in foreign currencies (53) 101,260
NET GAIN (LOSS) 80,979
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 175,482
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED OCTOBER APRIL 30,
31, 1995
1995
INCREASE (DECREASE) IN NET ASSETS
Operations $ 94,503 $ 176,514
Net investment income
Net realized gain (loss) (20,281) 46,501
Change in net unrealized appreciation (depreciation) 101,260 (141,906)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 175,482 81,109
FROM OPERATIONS
Distributions to shareholders (98,229) (164,874)
From net investment income
In excess of net investment income (33,322) (54,199)
TOTAL DISTRIBUTIONS (131,551) (219,073)
Share transactions 250,402 451,397
Net proceeds from sales of shares
Reinvestment of distributions 114,746 189,645
Cost of shares redeemed (270,773) (982,932)
Redemption fees 543 2,603
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 94,918 (339,287)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 138,849 (477,251)
NET ASSETS
Beginning of period 2,256,272 2,733,523
End of period (including undistributed net investment $ 2,395,121 $ 2,256,272
income of $8,395 and $45,443, respectively)
OTHER INFORMATION
Shares
Sold 26,893 49,736
Issued in reinvestment of distributions 12,446 20,933
Redeemed (29,098) (109,523)
Net increase (decrease) 10,241 (38,854)
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED APRIL 30,
ENDED
OCTOBER 31,
1995 1995 1994 C 1993 1992 1991
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 9.170 $ 9.590 $ 9.300 $ 8.320 $ 6.920 $ 6.710
beginning of period
Income from .373 .814 .871 .645 .725 .722
Investment
Operations
Net investment
income
Net realized and .320 (.427) .249 .942 1.418 .196
unrealized gain
(loss)
Total from .693 .387 1.120 1.587 2.143 .918
investment
operations
Less Distributions (.392) (.617) (.730) (.619) (.746) (.708)
From net investment
income
In excess of net (.133) (.202) (.119) - - -
investment income
Total distributions (.525) (.819) (.849) (.619) (.746) (.708)
Redemption fees .002 .012 .019 .012 .003 -
added to paid in
capital
Net asset value, end $ 9.340 $ 9.170 $ 9.590 $ 9.300 $ 8.320 $ 6.920
of period
TOTAL RETURN B 7.78% 4.63 12.46 20.03 32.95 14.82
% % % % %
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 2,395 $ 2,256 $ 2,734 $ 2,124 $ 1,579 $ 953
period (in millions)
Ratio of expenses to 1.00%A .96 .97 .91 .80 .81
average net assets % % % % %
Ratio of net investment 8.02%A 7.38 6.78 7.45 9.77 11.26
income to average % % % % %
net assets
Portfolio turnover rate 76%A 78 100 102 132 108
% % % % %
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF
INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT
COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT
CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1995
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Capital & Income Fund (the fund) is a fund of Fidelity Summer
Street Trust (the trust) and is authorized to issue an unlimited number of
shares. The trust is registered under the Investment Company Act of 1940,
as amended (the 1940 Act), as an open-end management investment company
organized as a Massachusetts business trust. The following summarizes the
significant accounting policies of the fund:
SECURITY VALUATION. Debt securities for which quotations are readily
available are valued by a pricing service at their market values as
determined by their most recent bid prices in the principal market (sales
prices if the principal market is an exchange) in which such securities are
normally traded. Equity securities for which quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities (including restricted securities) for which
market quotations are not readily available 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 the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in foreign
currency exchange rates on investments in securities are included with the
net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Interest income, which includes accretion of original
issue discount, is accrued as earned and dividend income is recorded on the
ex-dividend date. The fund may place a debt obligation on non-accrual
status and reduce related interest income by ceasing current accruals and
writing off interest receivables when the collection of all or a
1. SIGNIFICANT ACCOUNTING POLICIES- CONTINUED
INVESTMENT INCOME - CONTINUED
portion of interest has become doubtful based on consistently applied
procedures, under the general supervision of the Board of Trustees of the
fund. A debt obligation is removed from non-accrual status when the issuer
resumes interest payments or when collectibility of interest is reasonably
assured.
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. Legal expenditures that are expected to result in the
restructuring of or a plan of reorganization for an investment are recorded
as realized loss on investment transactions. Ongoing expenditures to
protect or enhance an investment, or expenditures incurred to pursue other
claims or legal actions are recorded as operating expenses.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net investment income. Distributions from realized gains, if
any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for litigation
proceeds, foreign currency transactions, market discount, partnerships,
capital loss carryforwards, non-taxable dividends and losses deferred due
to wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions 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 the fund less than 365 days are subject to
a redemption fee equal to 1.50% of the proceeds of the redeemed shares. A
portion of the fee is accounted for as a reduction of transfer agent
expenses. This portion of the redemption fee is used to offset the
transaction costs and other expenses that short-term trading imposes on the
fund and its shareholders. The remainder of the redemption fee is accounted
for as an addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may use foreign currency
contracts to facilitate transactions in foreign securities and to manage
the fund's currency exposure. Contracts
2. OPERATING POLICIES- CONTINUED
FORWARD FOREIGN CURRENCY
CONTRACTS - CONTINUED
to buy generally are used to acquire exposure to foreign currencies, while
contracts to sell are used to hedge the fund's investments against currency
fluctuations. Also, a contract to buy or sell can offset a previous
contract. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR), may
transfer uninvested cash balances into one or more joint trading accounts.
These balances are invested in one or more repurchase agreements that
mature in 60 days or less from the date of purchase, and are collateralized
by U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying U.S. Treasury or Federal Agency securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
RESTRICTED SECURITIES. The fund is permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period,
restricted securities (excluding 144A issues) amounted to $79,919,000 or
3.3% of net assets.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. The fund is permitted to invest in
loans and loan participations, trade claims or other receivables. These
investments may include standby financing commitments that obligate the
fund to supply additional cash to the borrower on demand. Loan
participations involve a risk of insolvency of the lending bank or other
financial intermediary. At the end of the period, these investments
amounted to $73,583,000 or 3.2% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $815,963,000 and $786,315,000, respectively, of which U.S.
government and government agency obligations aggregated $21,131,000 and
$15,232,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1200% to .3700% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .55%. For
the period, the management fee was equivalent to an annualized rate of .70%
of average net assets .
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $30,000 for the
period.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
FSC receives account fees and asset-based fees that vary according to
account size and type of account. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's accounting
records and administers the security lending program. The security lending
fee is based on the number and duration of lending transactions. The
accounting fee is based on the level of average net assets for the month
plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. 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 $103,000 for the period.
5. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund negotiated
lenders' fees. These fees are included in interest income. The fund
receives U.S. Treasury obligations and/or cash as collateral against the
loaned securities,
5. SECURITY LENDING - CONTINUED
in an amount at least equal to 102% of the market value of the loaned
securities at the inception of each loan. This collateral must be
maintained at not less than 100% of the market value of the loaned
securities during the period of the loan. At period end, the value of the
securities loaned and the value of collateral amounted to $12,813,000 and
$13,155,000, respectively.
6. TRANSACTIONS WITH
AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions during the period with
companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Ampex Corp. Class C $ - $ 7,464 $ - $ -
Art Store Holdings - 2,618 - -
Barry's Jewelers, Inc. - - 1,570
Crown Books Corp. - - - 4,331
FF Holdings Corp. - - - -
Intelogic Trace, Inc. - - - -
Little Switzerland, Inc. - - - 2,378
Standard Brands Paint Co. - 18,721 - 14,432
Standard Brands Paint Property
Holdings - 2,526 - -
Sun International Hotels Ltd. - - - 27,867
Thermadyne Holdings Corp. - - - 39,140
Welltech, Inc. - - 2,876
TOTALS $ - $ 31,329 $ - $ 92,594
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Summer Street Trust and the Shareholders of
Fidelity Capital & Income Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Summer Street Trust: Fidelity Capital & Income Fund, including the
schedule of portfolio investments, as of October 31, 1995, and the related
statement of operations for the six months then ended, the statement of
changes in net assets for the six month period then ended and the year
ended April 30, 1995 and the financial highlights for the six months ended
October 31, 1995 and each of the five years in the period ended April 30,
1995. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1995 by correspondence with the
custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Summer Street Trust: Fidelity Capital & Income Fund as of
October 31, 1995, the results of its operations for the six months then
ended , the changes in its net assets for the six months then ended and the
year ended April 30, 1995, and the financial highlights for the six months
ended October 31, 1995 and each of the five years in the period ended April
30, 1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 12, 1995
INVESTMENT ADVISER
Fidelity Management & Research Company, Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
David J. Breazzano, Vice President
Robert A. Lawrence, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The Bank of New York
New York, NY
FIDELITY'S TAXABLE BOND FUNDS
Capital & Income
Ginnie Mae
Global Bond
Government Securities
Intermediate Bond
Investment Grade Bond
Mortgage Securities
Short-Term Bond
Short-Term World Income
Spartan Ginnie Mae
(registered trademark)
Spartan Government Income
Spartan High Income
Spartan Investment Grade Bond
Spartan Limited Maturity Government
Spartan Long-Term Government
Spartan Short-Term Income
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0111
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
