(2_FIDELITY_LOGOS)FIDELITY
CAPITAL & INCOME
FUND
ANNUAL REPORT
APRIL 30, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 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, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT
RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND NOR FIDELITY
DISTRIBUTORS
CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING
CHARGES
AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU
INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although there have been some positive market indications so far in 1995,
no one can predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving for a college education, enables you to weather these ups and
downs in a long-term fund, which has higher potential returns. An
intermediate-length fund could be appropriate if your investment horizon is
two to four years, and a short-term bond fund could be the right choice if
you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, 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 APRIL 30, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Capital & Income 4.63% 115.61% 216.03%
Merrill Lynch High Yield Master Index 10.57% 94.23% 220.32%
Salomon Brothers Long Term High Yield 11.90% 110.13% 214.14%
Index
Average High Current Yield Fund 5.54% 84.57% 161.12%
Consumer Price Index 3.05% 17.84% 42.10%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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 and
the Salomon Brothers Long Term High Yield Index - both are broad measures
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 99 funds with similar
objectives tracked by Lipper Analytical Services over the past 12 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 APRIL 30, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Capital & Income 4.63% 16.61% 12.19%
Merrill Lynch High Yield Master Index 10.57% 14.20% 12.35%
Salomon Brothers Long Term High Yield 11.90% 16.01% 12.13%
Index
Average High Current Yield Fund 5.54% 12.96% 9.97%
Consumer Price Index 3.05% 3.34% 3.58%
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 Maste
04/30/85 10000.00 10000.00
05/31/85 10563.59 10402.76
06/30/85 10637.14 10599.18
07/31/85 10725.04 10673.35
08/31/85 10883.31 10849.46
09/30/85 10936.09 10970.78
10/31/85 11073.58 11094.77
11/30/85 11257.86 11303.50
12/31/85 11703.79 11633.93
01/31/86 11761.18 11712.88
02/28/86 12294.89 12210.59
03/31/86 12702.93 12477.78
04/30/86 12883.95 12672.63
05/31/86 13029.16 12820.43
06/30/86 13199.73 12950.30
07/31/86 13098.05 12779.80
08/31/86 13261.36 13015.65
09/30/86 13317.31 13123.37
10/31/86 13696.61 13354.26
11/30/86 13737.94 13462.99
12/31/86 13809.09 13535.69
01/31/87 14275.58 13918.42
02/28/87 14519.11 14148.20
03/31/87 14647.40 14304.64
04/30/87 14280.15 13992.68
05/31/87 14189.11 13929.63
06/30/87 14423.39 14122.19
07/31/87 14404.10 14199.03
08/31/87 14551.50 14341.31
09/30/87 14069.75 14011.34
10/31/87 13507.94 13636.98
11/30/87 13812.48 13981.84
12/31/87 13990.14 14167.50
01/31/88 14442.99 14555.19
02/29/88 14841.87 14950.14
03/31/88 14745.57 14925.41
04/30/88 14853.30 14968.52
05/31/88 14860.48 15046.65
06/30/88 15156.33 15334.33
07/31/88 15316.98 15496.37
08/31/88 15323.42 15547.29
09/30/88 15486.13 15704.00
10/31/88 15652.64 15948.68
11/30/88 15645.85 16008.42
12/31/88 15751.08 16076.16
01/31/89 16041.00 16317.25
02/28/89 16130.27 16426.90
03/31/89 16032.46 16412.28
04/30/89 15973.21 16460.72
05/31/89 16259.89 16763.76
06/30/89 16602.30 17001.26
07/31/89 16633.53 17081.77
08/31/89 16631.95 17166.15
09/30/89 16117.40 17002.73
10/31/89 15402.53 16733.79
11/30/89 15436.10 16771.29
12/31/89 15244.61 16756.13
01/31/90 14733.54 16428.64
02/28/90 14468.18 16189.40
03/31/90 14610.40 16408.24
04/30/90 14657.16 16491.60
05/31/90 14968.36 16789.49
06/30/90 15302.08 17114.77
07/31/90 15639.20 17476.45
08/31/90 15263.75 16807.42
09/30/90 14855.07 16076.43
10/31/90 14384.47 15667.33
11/30/90 14576.05 15800.05
12/31/90 14658.25 16027.72
01/31/91 14737.70 16254.29
02/28/91 15477.04 17460.73
03/31/91 16154.71 18211.47
04/30/91 16829.25 18860.01
05/31/91 16887.92 18952.10
06/30/91 17243.80 19333.36
07/31/91 17800.11 19796.60
08/31/91 18040.60 20212.69
09/30/91 18285.44 20470.13
10/31/91 18730.81 21078.41
11/30/91 18839.64 21321.89
12/31/91 19029.23 21569.59
01/31/92 20176.83 22323.73
02/29/92 21029.08 22878.15
03/31/92 21926.85 23197.36
04/30/92 22374.68 23366.21
05/31/92 22644.99 23738.91
06/30/92 22905.73 24033.86
07/31/92 23359.98 24520.81
08/31/92 23594.06 24845.45
09/30/92 23820.68 25128.54
10/31/92 23578.83 24811.17
11/30/92 23803.24 25162.55
12/31/92 24366.82 25486.54
01/31/93 25297.22 26114.12
02/28/93 25822.70 26608.42
03/31/93 26643.47 27069.73
04/30/93 26856.38 27264.04
05/31/93 27394.67 27631.04
06/30/93 28459.21 28150.17
07/31/93 28723.41 28452.74
08/31/93 28959.02 28723.98
09/30/93 29114.68 28865.71
10/31/93 29699.97 29409.46
11/30/93 30016.89 29570.31
12/31/93 30435.09 29865.99
01/31/94 31349.24 30520.50
02/28/94 31334.07 30301.01
03/31/94 30524.14 29313.60
04/30/94 30202.79 28971.04
05/31/94 30166.98 28867.82
06/30/94 29778.69 29504.04
07/31/94 29976.25 29711.39
08/31/94 29978.72 29917.83
09/30/94 29940.11 29906.43
10/31/94 29746.06 29982.44
11/30/94 29219.72 29727.39
12/31/94 29031.90 29518.19
01/31/95 29478.70 29935.29
02/28/95 30667.48 30869.31
03/31/95 30831.90 31298.91
04/28/95 31602.61 32031.73
$10,000 OVER TEN YEARS: Let's say you invested $10,000 in Fidelity Capital
& Income Fund on April 30, 1985. As the chart shows, by April 30, 1995, the
value of your investment would have grown to $31,603 - a 216.03% 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 $32,032 - a
220.32% increase.
The fund will now compare its performance to that of the Merrill Lynch High
Yield Master Index rather than the Salomon Brothers Long Term High Yield
Index. Previously, the Merrill Lynch High Yield Master Index was not
available for comparison since it did not have the required performance
history.
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
YEARS ENDED APRIL 30,
1995 1994 1993 1992 1991
Dividend return 9.01% 9.34% 8.25% 12.72% 11.69%
Capital appreciation return -4.38% 3.12% 11.78% 20.23% 3.13%
Total return 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 APRIL 30, 1995 PAST PAST 6 PAST
MONTH MONTHS YEAR
Dividends per share 5.50(cents) 34.23(cents) 81.93(cents)
Annualized dividend rate 7.35% 7.79% 9.05%
30-day annualized yield 8.39% - -
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 $9.10 over
the past month, $8.86 over the past six months and $9.05 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
MARKET RECAP
A late 1994 and early 1995 rally
sparked by diminished fears of
sharp interest rate increases
helped generate positive total
returns for high-yield bond
investors for the 12 months
ended April 30, 1995. The Merrill
Lynch High Yield Master Index
had a total return of 10.57% for
the period. High-yield issues
outpaced those in most other
U.S. bond markets. The Lehman
Brothers Aggregate Bond Index
- - a broader measure of the
performance of taxable bonds in
the U.S. - returned 6.51% during
the same period. The Federal
Reserve Board, concerned that
an improving economy might
trigger higher inflation, raised the
fed funds rate - the rate banks
charge each other for overnight
loans - to 6.00% through
February 1995. Through much of
1994, these hikes ignited heavy
selling in all sectors of the bond
market. However, indications of
an economic slowdown and
muted inflation pushed yields on
benchmark Treasury issues
down during the first four months
of 1995. As a result, bond prices
rebounded. Continued strong
earnings reports also have had a
positive effect on credit quality
enhancement in the high-yield
market. In addition, the forces of
supply and demand have spurred
bond prices in the high-yield
market higher. While there has
been a limited supply of new
high-yield issues, demand has
increased, sparked in part by the
return of investors to U.S. markets
on the heels of Mexico's
December 1994 devaluation of
the peso.
An interview with David Breazzano, Portfolio Manager of Fidelity Capital &
Income Fund
Q. DAVID, HOW DID THE FUND PERFORM?
A. For the 12 months ended April 30, 1995, the fund had a total return of
4.63%. That compared to the average high current yield fund which returned
5.54% for the same period, as tracked by Lipper Analytical Services.
Q. WHY DIDN'T THE FUND PERFORM AS WELL AS THE AVERAGE HIGH-YIELD FUND?
A. The fund's assets dropped by nearly one-third during the period due in
large part to shareholder redemptions. As money went out of the fund, I was
forced to sell some of its holdings - mostly junk bonds - in a down market.
Redemptions continued to plague this and several other high-yield funds
throughout most of 1994. Additionally, the fund is 20% in distressed debt,
the debt of bankrupt companies, which performed poorly last year. Most
other high-yield funds had much less or no investments in distressed
companies.
Q. HAS THERE BEEN ANY IMPROVEMENT IN THE FUND'S DISTRESSED COMPANY HOLDINGS
OVER THE PAST SIX MONTHS?
A. Yes, but not until fairly recently. Historically, November and December
are difficult months for distressed debt, for a number of technical market
reasons. That trend continued to hold true in 1994. However, by January
distressed debt started a rebound that generally lasted until the end of
the period. For example, Columbia Gas, which also languished in 1994,
improved this year on the announcement that the company will reorganize.
Q. TWO OF THE FUND'S LARGEST HOLDINGS - NEXTEL AND US AIR - ALSO HAD
PROBLEMS IN 1994. HOW HAVE THEY DONE SO FAR IN 1995?
A. Nextel detracted from the fund's performance last year, but made a
positive contribution this year. The bonds of the wireless communications
company fell after MCI backed down from its offer to purchase part of the
company. But Craig McCaw, who started and grew his company, McCaw Cellular,
into one of the most successful communications companies during the 1980s,
made a substantial investment in Nextel this year. US Air bonds, which had
suffered price declines when one of the carrier's planes crashed in
Pittsburgh, also turned into a significant positive for the fund. The
company recently announced cost-cutting agreements with its unions, and US
Air bonds have enjoyed a nice rally this year.
Q. WHAT WAS YOUR STRATEGY WITH THE JUNK BOND PORTION OF THE FUND?
A. The junk bond portion of the fund remained relatively steady - at
roughly 70% of the fund's assets - from January through April. While junk
bond prices in general have risen quite a bit in 1995, there are some
values out there still. One is Harrah's Jazz, which was one of the fund's
larger holdings at the end of the period. The company is building the only
land-based casino in New Orleans and its debt has a high coupon of 14.25%
and will receive a percentage of the casino's cash flow.
Q. ARE YOU OPTIMISTIC THAT THE HIGH-YIELD MARKET CAN CONTINUE AT ITS RECENT
STRONG PACE?
A. In my view, it has a lot to do with the economy and interest rates. The
primary factor that's been driving the bond market rally is the
anticipation that the economy is slowing. This has two implications for the
junk bond market. If the economy slows, interest rates probably won't rise
or may even fall. Either would probably be a positive for all bonds. Also,
a relatively healthy economy might send interest rates higher. A less
positive implication could be that a slower economy might mean that the
credit quality of some high-yielding bonds deteriorates. However, I don't
think we're in danger of experiencing default rates reaching 1990 and 1991
levels.
Q. WHAT CHANGES IN STRATEGY DO YOU SEE IN STORE OVER THE NEXT SIX MONTHS?
A. I'll continue to keep some cash on hand to meet any further
redemptions. There has been some money coming into - rather than out of -
the fund over the past couple of months. However, I'm still somewhat
cautious. History suggests that following a year as bad as 1994, distressed
companies can do well. As a result, I'll probably start adding more
distressed companies.
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 April 30, 1995,
more than $2.2 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 ON THE ROLE OF
EQUITIES IN A HIGH-YIELD BOND
FUND:
"As of April 30, 1995, stocks
made up 13.7% of the fund's
total investments. Some of
these investments initially
were made in the bonds of
distressed companies. When
a bankrupt, or distressed,
company restructures, it
often issues stocks to
replace its debt. That's what
happened to holdings like
Thermadyne. I continue to
hold these securities
because I think their price
doesn't fully reflect their
value and they could
appreciate. I also buy some
stocks when I think they're
undervalued. That has two
benefits. First, since I
emphasize large companies
with familiar names, I've
added an element of liquidity
to the fund. Second, they
offer the potential for
significant price
appreciation."
DISTRIBUTIONS
A total of 3% of the dividends
distributed during the fiscal
year qualifies for the
dividends-received
deductions for corporate
shareholders. The fund will
notify shareholders in
January 1996 of the
applicable percentage for use
in preparing 1995 income tax
returns.
INVESTMENT CHANGES
TOP FIVE HOLDINGS AS OF APRIL 30, 1995
(BY ISSUER, EXCLUDING REPURCHASE % OF FUND'S % OF FUND'S
AGREEMENTS) INVESTMENTS INVESTMENTS
6 MONTHS AGO
Nextel Communications, Inc. 4.7 3.6
Thermadyne Holdings Corp. 4.4 5.2
NWCG Holdings Corp 3.3 2.6
US Air, Inc. (various issues) 3.0 2.0
Bally's, Inc. (various issues) 2.9 4.5
TOP FIVE MARKET SECTORS AS OF APRIL 30, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Media & Leisure 16.9 17.3
Retail & Wholesale 9.5 8.0
Utilities 9.0 7.9
Industrial Machinery & Equipment 7.5 8.6
Construction & Real Estate 7.2 8.1
QUALITY DIVERSIFICATION AS OF APRIL 30, 1995
(MOODY'S RATINGS) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Aaa, Aa, A 0.3 0.0
Baa 0.0 0.0
Ba 3.1 1.0
B 35.5 36.1
Caa, Ca, C 10.9 7.7
Nonrated 24.8 33.6
TABLE EXCLUDES SHORT-TERM INVESTMENTS. UNRATED DEBT SECURITIES THAT ARE
EQUIVALENT TO BA AND BELOW AT APRIL 30, 1995 AND OCTOBER 31, 1994, ACCOUNT
FOR 24.4% AND 30.0%, RESPECTIVELY, OF THE FUND'S INVESTMENTS.
ASSET ALLOCATION
AS OF APRIL 30, 1995* AS OF OCTOBER 31, 1994**
Row: 1, Col: 1, Value: 6.5
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: 66.40000000000001
Row: 1, Col: 1, Value: 9.5
Row: 1, Col: 2, Value: 6.8
Row: 1, Col: 3, Value: 9.300000000000001
Row: 1, Col: 4, Value: 7.4
Row: 1, Col: 5, Value: 67.0
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%
Nonconvertible
bonds 67.0%
Convertible bonds,
preferred stocks 7.4%
Common stocks 9.3%
Short-term
investments 6.8%
Other 9.5%
FOREIGN
INVESTMENTS 5.3%
*
**
INVESTMENTS APRIL 30, 1995
Showing Percentage of Total Value of Investment in Securities
CORPORATE BONDS - 68.1%
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (D) AMOUNT (C) (000S) (000S)
CONVERTIBLE BONDS - 1.6%
BASIC INDUSTRIES - 0.2%
PAPER & FOREST PRODUCTS - 0.2%
Repap Enterprises, Inc. 8 1/2%, 8/1/97 - $ 4,270 $ 4,612
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
ELECTRICAL EQUIPMENT - 0.2%
Ampex Corp., Series C, 0%, 6/30/97 - 7,090 4,140
MEDIA & LEISURE - 0.8%
LODGING & GAMING - 0.8%
Argosy Gaming Co. 12%, 6/1/01 B3 3,760 3,741
Bally Entertainment Corp. 10%, 12/15/06 Caa 15,426 13,189
TOTAL MEDIA & LEISURE 16,930
RETAIL & WHOLESALE - 0.4%
APPAREL STORES - 0.4%
Dylex Ltd 9%, 8/15/00 (b) - CAD 6,330 2,101
Merry-Go-Round Enterprises, Inc.,
0%, 5/16/97 (g) - 8,914 6,774
8,875
GROCERY STORES - 0.0%
Farm Fresh, Inc. 7 1/2%, 3/1/10 B3 600 343
TOTAL RETAIL & WHOLESALE 9,218
TOTAL CONVERTIBLE BONDS 34,900
NONCONVERTIBLE BONDS - 66.5%
AEROSPACE & DEFENSE - 3.1%
AEROSPACE & DEFENSE - 2.6%
Alliant Techsystems, Inc. 11 3/4%, 3/1/03 (h) B2 15,750 16,380
Fairchild Corp.:
12%, 10/15/01 B3 10,845 9,327
13 1/8%, 3/15/06 B3 5,280 4,224
K & F Industries, Inc. 11 7/8%, 12/1/03 B1 7,190 7,280
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (D) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
AEROSPACE & DEFENSE - CONTINUED
AEROSPACE & DEFENSE - CONTINUED
RHI Holdings, Inc.:
11 7/8%, 3/1/99 B2 $ 13,970 $ 13,551
11 7/8%, 3/1/99 (g) - 2,570 2,486
Rohr, Inc. 11 5/8%, 5/15/03 Ba3 5,700 5,928
59,176
DEFENSE ELECTRONICS - 0.5%
Tracor, Inc. 10 7/8%, 8/15/01 B2 10,841 10,976
TOTAL AEROSPACE & DEFENSE 70,152
BASIC INDUSTRIES - 5.7%
CHEMICALS & PLASTICS - 2.2%
American Pacific Corp. 11%, 2/21/02 (h) - 3,400 3,230
Lanesborough Corp. 12 3/8%, 3/15/97 (b) Caa 5,345 1,336
NL Industries, Inc. 0%, 10/15/05 (e) B2 31,750 22,423
Pioneer Americas Acquisition Corp. 13 3/8%,
4/1/05 B2 1,000 1,030
Trans Resources, Inc. 11 7/8%, 7/1/02 (h) B2 22,700 20,430
48,449
PACKAGING & CONTAINERS - 0.2%
Crown Packaging Holdings Ltd. 0%,
11/1/03 (e) Caa 11,730 5,601
PAPER & FOREST PRODUCTS - 3.3%
Mail-Well Corp. 10 1/2%, 2/15/04 B- 8,000 7,040
Mail-Well Holdings, Inc 0%, 2/15/06 (e) - 10,640 4,575
Repap Enterprises, Inc.:
euro 9 1/8%, 7/21/97(i) - 10,539 10,433
9 1/8%, 7/21/97 (i) - 12,648 12,521
Repap New Brunswick, Inc. yankee 10 5/8%,
4/15/05 B2 15,340 15,570
Stone Container Corp.:
12 5/8%, 7/15/98 B1 16,100 17,489
10 3/4%, 10/01/02 B1 5,000 5,263
72,891
TOTAL BASIC INDUSTRIES 126,941
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (D) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
CONGLOMERATES - 0.1%
Jordan Industries, Inc. 10 3/8%, 8/1/03 B3 $ 1,640 $ 1,542
CONSTRUCTION & REAL ESTATE - 6.2%
BUILDING MATERIALS - 3.3%
Adience, Inc. 11%, 6/15/02 - 16,765 12,155
Building Materials Corp., America 0%,
7/1/04 (e) B1 45,390 26,326
Corimon SA CA 9%, 2/14/00 (g)(i) - 9,939 9,683
MVE, Inc. unit 12 1/2%, 12/15/02 B3 13,670 14,285
Nortek, Inc., 9 7/8%, 3/1/04 B3 12,500 11,750
USG Corp., Series B, 9 1/4%, 9/15/01 B1 1,222 1,211
75,410
CONSTRUCTION - 1.3%
Baldwin Co. Series B, 10 3/8%, 8/1/03 B2 8,050 5,112
Greystone Homes, Inc. 10 3/4%, 3/1/04 B2 11,500 10,120
UDC Homes 11 3/4%, 4/30/03 (b) B2 25,047 12,524
27,756
REAL ESTATE - 0.8%
Cadillac Fairview, Inc. unit (b)(g):
13 1/2%, 10/31/12 - CAD 59,641 1,759
13.689%, 10/31/12 - CAD 15,679 463
Littlefield Co. 10%, 12/31/95 (g) - 15,880 15,880
18,102
REAL ESTATE INVESTMENT TRUSTS - 0.8%
Mortgage & Realty Trust 7%, 12/31/95 (b)(i) - 20,861 16,741
TOTAL CONSTRUCTION & REAL ESTATE 138,009
DURABLES - 1.6%
AUTOS, TIRES, & ACCESSORIES - 0.5%
Aftermarket Technology Corp. Series B,
12%, 8/1/04 B3 11,360 12,042
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (D) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
DURABLES - CONTINUED
TEXTILES & APPAREL - 1.1%
Hat Brands, Inc.:
12 5/8%, 9/15/02 - $ 14,630 $ 15,398
Series D, 12 5/8%, 9/15/02 - 3,960 4,168
Leslie Fay Companies, Inc. (b)(g):
9.53%, 1/15/00 - 4,290 2,488
10.54%, 1/15/02 - 3,878 1,862
23,916
TOTAL DURABLES 35,958
ENERGY - 1.2%
OIL & GAS - 1.2%
Mesa Capital Corp.:
0%, 6/30/96 (e) Caa 5,032 4,818
secured 0%, 6/30/98 (e) Caa 14,606 14,022
Patrick Petroleum 10 3/4%, 5/10/98 - 4,500 4,478
Transamerican Refining Corp. 0%, 2/15/02 (i) Caa 5,320 3,271
TOTAL ENERGY 26,589
FINANCE - 1.3%
INSURANCE - 0.4%
American Annuity Group, Inc. 11 1/8%, 2/1/03 B2 2,480 2,554
American Financial Corp. Ohio 12 1/4%,
9/15/03 - 5,567 5,706
8,260
SAVINGS & LOANS - 0.5%
Centrust euro mortgage 0%, 2/15/10 AAA 50,600 7,717
Centrust Savings 0%, 2/15/10 AAA 13,000 1,983
Franklin Savings Association (Ottawa, Kan.)
0%, 12/12/19 Ca 49,400 2,717
12,417
SECURITIES INDUSTRY - 0.4%
CBO Partners LP 12.55%, 12/15/04 - 13,500 8,775
TOTAL FINANCE 29,452
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (D) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
HEALTH - 1.4%
MEDICAL FACILITIES MANAGEMENT - 1.4%
Integrated Health Services, Inc. 10%,
12/6/96 (b) - $ 141 $ 1
National Medical Enterprises 10 1/8%, 3/1/05 Ba3 29,930 31,277
TOTAL HEALTH 31,278
HOLDING COMPANIES - 0.3%
New Street Capital Corp. unit 12%, 2/28/98 (g) - 6,876 6,744
INDUSTRIAL MACHINERY & EQUIPMENT - 4.8%
INDUSTRIAL MACHINERY & EQUIPMENT - 4.7%
Alpine Group, Inc. 13 1/2%, 1/5/96 (g) Caa 2,770 2,756
Exide Corp. 10%, 4/15/05 (h) B1 2,500 2,538
Specialty Equipment Cos., Inc. 11 3/8%,
12/1/03 B3 29,550 29,550
Thermadyne Holdings Corp.:
10 1/4%, 5/1/02 - 17,891 17,176
10 3/4%, 11/1/03 - 53,189 51,859
103,879
POLLUTION CONTROL - 0.1%
Allied Waste Industries, Inc. 10 3/4%, 2/1/04 B3 3,000 3,060
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 106,939
MEDIA & LEISURE - 13.9%
BROADCASTING - 5.8%
Chancellor Broadcasting, Inc. 12 1/2%, 10/1/04 B3 3,340 3,357
Citicasters, Inc. 9 3/4%, 2/15/04 B- 12,500 12,313
Cooke Media Group, Inc. 11 5/8%, 4/1/99 - 1,540 1,448
NWCG Holdings Corp. 0%, 6/15/99 Caa 126,794 74,491
Robin Media Group, Inc. 11 1/8%, 4/1/97 - 24,610 24,241
SCI Television, Inc. secured:
7 1/2%, 6/30/98 (i) - 6,737 6,636
11%, 6/30/05 B3 6,792 7,064
129,550
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (D) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - 6.6%
Bally's Casino Holdings, Inc. 10 1/2%, 6/15/98 B3 $ 52,015 $ 35,110
Bally Gaming International, Inc. 10 3/8%,
7/15/98 - 10,000 10,300
Boyd Gaming Corp. 10 3/4%, 9/3/03 B2 20,000 20,150
Grand Casino Resorts, Inc. gtd. 12 1/2%, 2/100 Ba3 1,330 1,393
Harrah's Jazz Co. 14 1/4%, 11/15/01 B1 48,000 52,320
Maritime Group Ltd. pay-in-kind 14%,
2/15/97 (b)(i) - 9,525 4,286
Players International, Inc. 10 7/8%,
4/15/05 (h) Ba3 22,430 22,598
Stratosphere Corp. 14 1/4%, 5/15/02 B2 6,640 6,773
152,930
PUBLISHING - 0.0%
Maxwell Communications Corp. euro 5%,
6/16/95 (k) Caa CHF 10 1
RESTAURANTS - 1.2%
American Restaurant Group, Inc.:
12%, 9/15/98 B2 2,120 1,865
12%, 9/15/98 (New) B2 7,550 6,644
Flagstar Corp. 11 1/4%, 11/1/04 Caa 23,460 19,003
27,512
TOTAL MEDIA & LEISURE 309,993
NONDURABLES - 2.7%
BEVERAGES - 0.4%
Heileman Acquisition Corp. 9 5/8%, 1/31/04 B3 14,000 9,520
FOODS - 0.7%
Specialty Foods Corp. 11 1/4%, 8/15/03 Caa 14,750 14,529
HOUSEHOLD PRODUCTS - 1.6%
MacAndrews and Forbes Holding, Inc. s.f.
13%, 3/1/99 - 2,300 2,312
Revlon Consumer Products Corp. 10 1/2%,
2/15/03 B3 34,260 32,889
35,201
TOTAL NONDURABLES 59,250
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (D) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - 7.5%
APPAREL STORES - 1.4%
Apparel Retailers, Inc. 12 3/4%, 8/15/05 Caa $ 26,450 $ 16,135
Lamont's Apparel Corp. 10 1/4%,
11/1/99 (b)(h) - 18,686 9,623
Merry-Go-Round Enterprises, Inc. 7.09%,
9/1/03 (b)(g) - 7,500 5,700
31,458
GROCERY STORES - 2.4%
Dominicks Fine Foods 10 7/8%, 5/1/05 (h) B3 4,360 4,404
Pathmark Stores, Inc.:
11 5/8%, 6/15/02 B3 2,860 2,924
12 5/8%, 6/15/02 B3 3,455 3,654
0%, 11/1/03 (e) B3 21,240 12,000
Purity Supreme, Inc. 11 3/4%, 8/1/99 B3 27,750 29,970
52,952
RETAIL & WHOLESALE, MISC - 3.7%
Barrys Jewelers, Inc. 11%, 12/22/00 - 26,692 26,158
Finlay Fine Jewelry Corp. 10 5/8%, 5/1/03 B1 1,530 1,461
Rickel Home Centers, Inc. unit
13 1/2%, 12/15/01 B2 10,000 9,700
Town & Country Corp.:
11 1/2%, 9/15/97 B1 1,041 588
13%, 5/31/98 B3 12,623 4,807
Zale Delaware, Inc. 11%, 7/30/00 B3 41,716 40,569
83,283
TOTAL RETAIL & WHOLESALE 167,693
SERVICES - 2.3%
LEASING & RENTAL - 2.2%
GPA Delaware, Inc.:
8 1/2%, 3/3/97 - 27,100 23,780
gtd. 8 3/4%, 12/15/98 Caa 2,140 1,696
8 5/8%, 1/15/99 - 17,500 12,863
Scotsman Holdings, Inc. pay-in-kind
11%, 3/1/04 - 12,006 10,187
48,526
SERVICES - 0.1%
La Petite Holdings Corp. secured 9 5/8%,
8/1/01 B3 4,390 3,754
TOTAL SERVICES 52,280
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (D) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - 1.2%
ELECTRONICS - 1.2%
Berg Electronics, Inc. 11 3/8%, 5/1/03 B3 25,820 26,982
TRANSPORTATION - 4.5%
AIR TRANSPORTATION - 3.8%
CHC Helicopter Corp. 11 1/2%, 7/15/02 B3 8,910 7,262
Continental Airlines, Inc. 2nd priority secured
equipment certificate 11%, 3/15/00 (b) Caa 2,070 --
NWA Inc. 8 5/8%, 8/1/96 B2 9,100 9,055
US Air, Inc.:
9 5/8%, 2/1/01 B3 51,195 41,979
10%, 7/1/03 B3 20,960 17,030
9 5/8%, 9/1/03 B2 9,550 8,667
83,993
RAILROADS - 0.5%
Transtar Holdings L.P./Transtar Cap Corp.,
Series B, 0%, 12/15/03 (e) B- 20,230 11,732
TRUCKING & FREIGHT - 0.2%
St. Johnsbury Trucking Co. unit 11%,
7/15/98 (b)(g) - 7,550 5,285
TOTAL TRANSPORTATION 101,010
UTILITIES - 8.7%
CELLULAR - 5.5%
Dial Call Communications, Inc. 0%, 4/15/04 (e) Caa 19,780 9,692
In Flight Phone 0%, 5/15/02 unit (e)(h) - 12,000 7,978
Nextel Communications, Inc. 0%, 8/15/04 (e) B3 211,790 104,307
121,977
ELECTRIC UTILITY - 2.4%
Del Norte Funding Corp. secured leasing oblig.
11 1/4%, 1/2/14 (b) Ca 19,810 12,084
El Paso Funding Corp. lease oblig. (b):
9 3/8%, 10/1/96 Ca 3,780 2,334
9 1/5%, 7/2/97 Ca 3,000 1,860
10 3/8%, 1/2/11 Ca 19,330 11,936
10 3/4%, 4/1/13 Ca 39,440 24,354
52,568
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (D) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
GAS - 0.8%
Columbia Gas Systems, Inc. (b):
9.07%, 1/12/00 - $ 1,070 $ 1,498
9.24%, 12/30/14 - 2,500 3,525
9.30%, 12/18/19 Caa 1,200 1,695
tranche #5, 9.35%, 9/12/01 Caa 2,000 2,830
tranche #13, 9 1/4%, 9/30/04 Caa 1,000 1,410
tranche #18, 9 1/2%, 10/10/19 B1 5,500 7,823
18,781
TOTAL UTILITIES 193,326
TOTAL NONCONVERTIBLE BONDS 1,484,138
TOTAL CORPORATE BONDS
(Cost $1,577,871) 1,519,038
COMMERCIAL MORTGAGE SECURITIES - 1.6%
ACP Mortgage LP commercial floater Series F,
7.24729%, 2/28/28 (h)(i) B 2,813 1,983
Lennar Central Partners L.P. commercial series
1995-1 Class F, 11.70% 5/15/05 (h) - 5,000 4,974
New England Mutual Life Insurance Co. commercial
Series 1993-1 Class D, 8%, 12/15/23 (h) Ba2 10,004 7,903
Resolution Trust Corp. commercial Series:
1994-C2 Class F, 8%, 4/25/25 Aaa 7,772 6,538
1994-C1 Class E, 8%, 6/25/26 BB 7,847 6,221
SML, Inc. commercial Series 1994-C1 Class B-3,
11.69%, 9/18/99 - 4,800 4,385
Structured Asset Securities Corp. commercial
Series 1995-C1 Class E, 7 3/8%, 9/25/24 (h) BB 6,500 4,491
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $35,685) 36,495
COMMON STOCKS - 7.4%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.0%
DEFENSE ELECTRONICS - 0.0%
Tracor, Inc. (a) 78,000 $ 1,014
BASIC INDUSTRIES - 0.3%
CHEMICALS & PLASTICS - 0.1%
Atlantis Group, Inc. (Trivest/Winston) (a)(g) 33,115 190
Plastic Specialties & Technology, Inc. (a) 2,500 --
Rexene Corp. (a) 90,900 1,148
1,338
IRON & STEEL - 0.0%
LTV Corp. (a) 1,105 16
PAPER & FOREST PRODUCTS - 0.2%
Mail-Well Holdings, Inc. (a) 53,200 319
Repap Enterprises, Inc. (a) 694,400 4,865
5,184
TOTAL BASIC INDUSTRIES 6,538
CONSTRUCTION & REAL ESTATE - 0.3%
BUILDING MATERIALS - 0.1%
Standard Brands Paint Co. (a)(f)(g) 7,630,307 3,052
Waxman Industries, Inc. (warrants) (a) 420,000 105
3,157
CONSTRUCTION - 0.1%
Hillsborough/Jim Walter Corp. $5.00 (a) 34,280 -
U.S. Home Corp. (a) 167,206 3,051
3,051
REAL ESTATE INVESTMENT TRUSTS - 0.1%
Prime Retail, Inc. 111,000 1,374
TOTAL CONSTRUCTION & REAL ESTATE 7,582
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - 0.2%
TEXTILES & APPAREL - 0.2%
HM/Hat Brands Trust Class I unit (a)(f)(g) 1,980,000 $ 1,980
Hat Brands, Inc. (warrants) (a)(g) 246,278 2,709
TOTAL DURABLES 4,689
ENERGY - 0.1%
ENERGY SERVICES - 0.1%
Welltech, Inc. (a)(f)(g) 31,958 2,748
OIL & GAS - 0.0%
Patrick Petroleum Co. (warrants) (a) 460,000 92
TOTAL ENERGY 2,840
FINANCE - 0.1%
INSURANCE - 0.1%
American Annuity Group, Inc. 190,000 1,876
INDUSTRIAL MACHINERY & EQUIPMENT - 1.9%
ELECTRICAL EQUIPMENT - 0.4%
Ampex, Inc. (a):
Class A 602,265 1,129
Class C (f) 3,470,204 6,507
Class A (warrants) 662,447 1,242
Class C (warrants) 206,879 388
9,266
INDUSTRIAL MACHINERY & EQUIPMENT - 1.5%
Specialty Equipment Companies, Inc. (a) 222,947 2,759
Terex Corp. (rights) (a) 29,100 15
Thermadyne Holdings Corp. (a)(f) 2,252,642 29,565
32,339
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 41,605
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 1.4%
BROADCASTING - 0.2%
Chancellor Trust Class I unit (a)(g) 273 $ 5,515
ENTERTAINMENT - 0.0%
Live Entertainment, Inc. (a)(g):
$2.00 (warrants) 256,000 64
$2.72 (warrants) 244,706 61
125
LODGING & GAMING - 1.2%
Bally's Gaming International, Inc. (a) 452,207 4,409
Bally's Gaming International, Inc. (warrants) (a) 300,000 2,063
Bally's Grand, Inc. (warrants) (a) 117,265 733
Casino Magic Finance Corp. (warrants) (a) 19,500 -
Maritime Group Ltd. (warrants) (a) 103,320 1
Resorts International, Inc. Litigate
Trust Certificate (a) 77,112 -
Sun International Hotels Ltd. (a)(f) 464,451 16,256
Sun International Hotels Ltd., Class B 97,534 3,074
26,536
TOTAL MEDIA & LEISURE 32,176
NONDURABLES - 0.7%
BEVERAGES - 0.3%
Heileman G. Brewing, Inc., Class 1 units (a)(f)(g) 400 6,400
TOBACCO - 0.4%
RJR Nabisco Holdings Corp. 320,000 8,760
TOTAL NONDURABLES 15,160
RETAIL & WHOLESALE - 1.3%
APPAREL STORES - 0.0%
Lamont's Apparel, Inc. (a) 307,603 96
Lamont's Apparel, Inc. (warrants) (a) 562,033 -
Merry-Go-Round Enterprises, Inc. (a) 1,258,700 1,180
1,276
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GENERAL MERCHANDISE STORES - 0.6%
Federated Department Stores, Inc. (a) 612,260 $ 12,934
Federated Department Stores, Inc.,
Series A (warrants) (a) 20,055 90
13,024
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, MISC - 0.7%
Art Store Holding Company (a)(f)(g) 842 2,526
Barrys Jewelers, Inc. (a)(f) 380,545 1,284
Barrys Jewelers, Inc. (warrants) (a) 47,568 12
Crown Books Corp. (a)(f) 376,600 5,178
Little Switzerland, Inc. (a)(f) 634,076 2,853
Standard Brands Paint Property Holdings (a)(f)(g) 842 2,526
Zale Corp. LP unit (a) 1,768,285 427
14,806
TOTAL RETAIL & WHOLESALE 29,131
SERVICES - 0.1%
LEASING & RENTAL - 0.1%
Scotsman Holdings, Inc. (a) 88,173 1,154
SERVICES - 0.0%
Vestar/LPA Investment Corp. (a) 2,550 66
TOTAL SERVICES 1,220
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - 0.7%
COMPUTERS & OFFICE EQUIPMENT - 0.0%
Intelogic Trace, Inc. (a)(f) 3,931,987 $ 40
ELECTRONICS - 0.7%
AMP, Inc. 300,000 12,825
Berg Electronics Holdings Corp. (a)(h) 502,637 2,513
15,338
TOTAL TECHNOLOGY 15,378
TRANSPORTATION - 0.0%
AIR TRANSPORTATION - 0.0%
CHC Helicopter Corp. (warrants) (a) 108,320 -
UTILITIES - 0.3%
ELECTRIC UTILITY - 0.1%
Great Bay Power (a) 146,751 1,175
GAS - 0.2%
Columbia Gas System, Inc. (The) (a) 134,400 3,965
UGI Corp. (warrants) (a) 81,500 12
3,977
TOTAL UTILITIES 5,152
TOTAL COMMON STOCKS
(Cost $209,586) 164,361
PREFERRED STOCKS - 6.3%
CONVERTIBLE PREFERRED STOCKS - 2.1%
CONSTRUCTION & REAL ESTATE - 0.7%
BUILDING MATERIALS - 0.4%
Corimon SA CA, Series A (a)(g) 516,129 8,129
REAL ESTATE INVESTMENT TRUSTS - 0.3%
Prime Retail, Inc. 2 1/8%, Class B 400,000 6,800
TOTAL CONSTRUCTION & REAL ESTATE 14,929
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
ENERGY - 1.0%
OIL & GAS - 1.0%
Atlantic Richfield Co. exchangeable $.5575 837,000 $ 21,553
Patrick Petroleum Co., Series B 57,300 372
TOTAL ENERGY 21,925
FINANCE - 0.1%
BANKS - 0.1%
First City Bancorporation of Texas, Inc. $5.50, Series B 35,000 1,068
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
Alpine Group, Inc., 8% (a) 9,874 444
RETAIL & WHOLESALE - 0.3%
GROCERY STORES - 0.3%
Supermarkets General Holdings Corp.
exchangeable pay-in-kind $3.52 (a) 274,736 7,143
RETAIL & WHOLESALE, MISC - 0.0%
Town & Country Corp. (a) 634,076 476
TOTAL RETAIL & WHOLESALE 7,619
SERVICES - 0.0%
La Petite Holdings Corp. exchangeable (a) 41,200 1,030
TOTAL CONVERTIBLE PREFERRED STOCKS 47,015
NONCONVERTIBLE PREFERRED STOCKS - 4.2%
CONSTRUCTION & REAL ESTATE - 0.0%
CONSTRUCTION - 0.0%
UDC Homes, Inc. prime exchangeable 148,144 222
ENERGY - 2.4%
OIL & GAS - 2.4%
Gulf Canada Resources Ltd. (a)(g) 220,666 634
Gulf Canada Resources Ltd. Series 1, adj. rate 18,695,804 52,582
TOTAL ENERGY 53,216
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
HEALTH - 0.0%
MEDICAL FACILITIES MANAGEMENT - 0.0%
Integrated Health Services, Inc., Series A (a) 1,404 $ -
INDUSTRIAL MACHINERY & EQUIPMENT - 0.6%
ELECTRICAL EQUIPMENT - 0.6%
Ampex Corp., 8% (a)(g) 23,995 13,227
MEDIA & LEISURE - 0.8%
BROADCASTING - 0.8%
Panamsat Corp., 12 3/4% (a) 17,157 17,414
TECHNOLOGY - 0.4%
COMPUTERS & OFFICE EQUIPMENT - 0.0%
Intelogic Trace, Inc., 10% (a) 645,723 969
ELECTRONICS - 0.4%
Berg Electronics Holding Corp. $3.4687, Series E 314,284 8,644
TOTAL TECHNOLOGY 9,613
TOTAL NONCONVERTIBLE PREFERRED STOCKS 93,692
TOTAL PREFERRED STOCKS
(Cost $152,175) 140,707
PURCHASED BANK DEBT - 4.8%
PRINCIPAL
AMOUNT (C) (000S)
Cadillac Fairview Corp. (b):
funded U.S. letter of credit CAD $ 56 $ 51
revolving loan CAD 3,542 2,403
term loan CAD 23,312 16,987
Calton, Inc. 7%, 6/1/95 (b) 11,086 7,760
El Paso Electric Co. secured loan (b) 10,050 9,748
Intelogic Trace Postpetition Loan 4,657 4,657
Isosceles PLC 0%, 6/30/98 term loan (b) GBP 192 96
PURCHASED BANK DEBT - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (C) (000S) (000S)
Leslie Fay Cos., Inc. (b):
revolving loan $ 4,351 $ 2,524
term loan 4,933 2,861
Merry-Go-Round Enterprises, Inc., trade claim (b) 11,966 9,094
Somerfield Holdings Ltd.:
revolving loan GBP 2,218 3,012
term loan GBP 5,040 6,418
Standard Brands Paint Co.:
2nd mtg. 4,428 4,429
3rd mtg 4,251 4,251
TAK Communications term loan (b) 30,446 29,229
Trivest 1992 Special Fund Ltd. loan 11.4 (j) 2,900
Welltech, Inc. term loan secured 12%, 1/7/98 1,404 1,405
TOTAL PURCHASED BANK DEBT
(Cost $98,267) 107,825
REPURCHASE AGREEMENTS - 11.8%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.93%,
dated 4/28/95 due 5/1/95 $ 263,680 263,550
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $2,337,134) $ 2,231,976
CURRENCY ABBREVIATIONS
GBP - British pound
CAD - Canadian dollar
CHF - Swiss franc
LEGEND
(a) Non-income producing
(b) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
(c) Principal amount is stated in United States dollars unless otherwise
noted.
(d) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(e) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(f) Affiliated company (see Note 5 of Notes to Financial Statements).
(g) 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)
Alpine Group, Inc.
13 1/2%, 1/5/96 1/4/95 $ 2,723
Ampex Corp. 8% 2/16/95 $ 12,598
Art Store Holding
Company 2/15/95 $ 2,618
Atlantis Group, Inc.
(Trivest/Winston) 4/6/94 $ 39
Cadillac Fairview,
Inc. unit :
13 1/2%,
10/31/12 8/11/94
to 12/30/94 $ 7,860
13.689%,
10/31/12 8/11/94
to 12/30/94 $ 2,066
Chancellor Trust
Class1 unit 10/12/94 $ 5,515
Corimon SA CA:
Series A 2/13/95 $ 8,000
9%, 2/14/00 2/13/95 $ 9,939
FF Holdings Corp. 10/2/92
to 1/14/94 $ 48
Gulf Canada
Resources Ltd. 10/15/93
to 8/31/94 $ 550
HM/Hat Brands Trust
Class 1 unit 2/22/94 $ 1,980
Hat Brands, Inc
(warrants) 9/2/92
to 2/23/94 $ -
Heileman G Brewing,
Inc. Class 1 units 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
ACQUISITION ACQUISITION
SECURITY DATE COST (000S)
Live Entertainment, Inc.:
$2.00 (warrants) 3/23/94 $ 244
$2.72 (warrants) 3/23/93 $ 146
Merry-Go-Round
Enterprises, Inc.:
7.09%, 9/1/03 3/21/94 $ 6,457
0%, 5/16/97 3/2/94
to 3/24/94 $ 7,680
New Street
Capital Corp. unit
12%, 2/28/98 2/25/94
to 2/15/95 $ 6,876
Purity Supreme, Inc.
(warrants) 4/25/95 $ 1
RHI Holdings
11 7/8%,
3/1/99 10/16/92
to 12/8/93 $ 2,313
St. Johnsbury
Trucking Co.
unit 11%, 7/15/98 2/1/93 $ 7,550
Standard Brands
Paint Co. 6/14/93 $ 20,956
Standard Brands Paint
Property Holdings 2/15/95 $ 2,526
Welltech, Inc. 6/14/91
to 1/20/94 $ 3,863
(h) 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 $109,045,000 or 4.8% of net
assets.
(i) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(j) Represents number of units held.
(k) Non-income producing - the company moved to seek a court appointed
administrator under British bankruptcy law.
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 0.3% AAA, AA, A 0.7%
Baa 0.0% BBB 0.5%
Ba 3.1% BB 3.5%
B 35.5% B 31.2%
Caa 8.4% CCC 9.8%
Ca, C 2.5% CC, C 0.0%
D 1.0%
For some foreign government obligations, FMR has assigned the ratings of
the sovereign credit of the issuing government.The percentage not rated by
either S&P or Moody's amounted to 22.4% including long-term debt
categorized as other securities. FMR has determined that unrated debt
securities that are lower quality account for 22.4% of the total value of
investment in securities.
INCOME TAX INFORMATION
At April 30, 1995, the aggregate cost of investment securities for income
tax purposes was $2,337,392,000. Net unrealized depreciation aggregated
$105,416,000, of which $95,146,000 related to appreciated investment
securities and $200,562,000 related to depreciated investment securities.
At April 30, 1995, the fund had a capital loss carryforward of
approximately $65,200,000, 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 AMOUNTS) APRIL 30, 1995
ASSETS
Investment in securities, at value (including repurchase $ 2,231,976
agreements of $263,550) (cost $2,337,134) -
See accompanying schedule
Cash 6,396
Receivable for investments sold 63,293
Dividends receivable 911
Interest receivable 35,724
Redemption fees receivable 4
Other receivables 43
TOTAL ASSETS 2,338,347
LIABILITIES
Payable for investments purchased $ 78,379
Distributions payable 1,810
Accrued management fee 1,298
Other payables and accrued expenses 588
TOTAL LIABILITIES 82,075
NET ASSETS $ 2,256,272
Net Assets consist of:
Paid in capital $ 2,382,958
Undistributed net investment income 45,443
Accumulated undistributed net realized gain (loss) on (66,722)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on (105,407)
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 246,062 shares outstanding $ 2,256,272
NET ASSET VALUE, offering price and redemption price $9.17
per share ($2,256,272 (divided by) 246,062 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED APRIL 30, 1995
INVESTMENT INCOME $ 8,102
Dividends (including $12 received from affiliated issuers)
Interest 191,338
TOTAL INCOME 199,440
EXPENSES
Management fee $ 16,899
Transfer agent: 4,834
Fees
Redemption fees (141)
Accounting fees and expenses 588
Non-interested trustees' compensation 14
Custodian fees and expenses 244
Registration fees 28
Audit 114
Legal 317
Miscellaneous 29
TOTAL EXPENSES 22,926
NET INVESTMENT INCOME 176,514
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized gain (loss) of 46,104
$(4,303) on sales of investment in affiliated issuers)
Foreign currency transactions 397 46,501
Change in net unrealized appreciation (depreciation) on:
Investment securities (141,657)
Assets and liabilities in foreign currencies (249) (141,906)
NET GAIN (LOSS) (95,405)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 81,109
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1995 1994
INCREASE (DECREASE) IN NET ASSETS
Operations $ 176,514 $ 179,285
Net investment income
Net realized gain (loss) 46,501 227,262
Change in net unrealized appreciation (depreciation) (141,906) (130,683)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 81,109 275,864
FROM OPERATIONS
Distributions to shareholders (164,874) (195,145)
From net investment income
In excess of net investment income (54,199) (31,659)
TOTAL DISTRIBUTIONS (219,073) (226,804)
Share transactions 451,397 1,492,000
Net proceeds from sales of shares
Reinvestment of distributions 189,645 196,671
Cost of shares redeemed (982,932) (1,132,066)
Redemption fees 2,603 3,994
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (339,287) 560,599
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (477,251) 609,659
NET ASSETS
Beginning of period 2,733,523 2,123,864
End of period (including undistributed net investment $ 2,256,272 $ 2,733,523
income of $45,443 and $54,175, respectively)
OTHER INFORMATION
Shares
Sold 49,736 152,114
Issued in reinvestment of distributions 20,933 20,179
Redeemed (109,523) (115,846)
Net increase (decrease) (38,854) 56,447
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED APRIL 30,
1995 1994 1993 1992 1991
SELECTED PER-SHARE DATA
Net asset value, beginning $ 9.590 $ 9.300 $ 8.320 $ 6.920 $ 6.710
of period
Income from Investment .814 .871 .645 .725 .722
Operations
Net investment income
Net realized and (.427) .249 .942 1.418 .196
unrealized gain (loss)
Total from investment .387 1.120 1.587 2.143 .918
operations
Less Distributions (.617) (.730) (.619) (.746) (.708)
From net investment
income
In excess of net (.202) (.119) - - -
investment income
Total distributions (.819) (.849) (.619) (.746) (.708)
Redemption fees added .012 .019 .012 .003 -
to paid in capital
Net asset value, end $ 9.170 $ 9.590 $ 9.300 $ 8.320 $ 6.920
of period
TOTAL RETURN 4.63% 12.46% 20.03% 32.95% 14.82%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,256 $ 2,734 $ 2,124 $ 1,579 $ 953
(in millions)
Ratio of expenses to .96% .97% .91% .80% .81%
average net assets
Ratio of net investment 7.38% 6.78% 7.45% 9.77% 11.26%
income to average
net assets
Portfolio turnover rate 78% 100% 102% 132% 108%
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1995
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Capital & Income Fund (the fund) is a fund of 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. 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. 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 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 portion of
interest has become
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
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.
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 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 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 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
2. OPERATING POLICIES -
CONTINUED
FORWARD FOREIGN CURRENCY
CONTRACTS - CONTINUED
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 (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 securities, whose market value is required to be at least
102% of the resale price at the time of purchase. FMR, the fund's
investment adviser, is responsible for determining
that the value of these underlying securities remains at least equal to the
resale price.
RESTRICTED SECURITIES. The fund is permitted to invest in privately placed
restricted securities. These securities may be resold in transactions
exempt from registration or to the public if these 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 $111,666,000 or 4.9% 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 $107,825,000 or 4.8%
of net assets.
3. PURCHASES AND SALES
OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,691,437,000 and $2,202,236,000, respectively, of which U.S.
government and government agency obligations aggregated $92,303,000 and
$93,131,000, 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 .1325% to .3700% for the period May 1, 1994 to July 31,
1994 and .1200% to .3700% for the period August 1, 1994 to April 30, 1995.
In the event that these rates were lower than the contractual rates in
effect during those periods, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. The annual
individual fund fee rate is .55%. For the period, the management fee was
equivalent to an annual rate of .71% 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 $57,000 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.
During the period May 1, 1994 to December 31, 1994, FSC received fees based
on the type, size, number of accounts and the number of transactions made
by shareholders. Effective January 1, 1995, the Board of Trustees approved
a revised transfer agent contract pursuant to which FSC receives account
fees and asset-based fees that vary according to account size and type of
account. FSC pays for typesetting, printing and mailing of all shareholder
reports, except proxy statements.
ACCOUNTING FEES. FSC maintains the fund's accounting records. 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 $36,000 for the period.
5. 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 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
Adience, Inc. $ - $ 444 $ - $ -
AirTran Corp. - 2,831 12 -
Ampex, Inc. Class C (a) 7,808 - - 6,507
Art Store Holding Company (a) 2,526 - - 2,526
Bally's Grand, Inc. - 12,142 - -
Barry's Jewelers, Inc. (a) - - - 1,284
Calton, Inc. 22 5,455 - -
Crown Books Corp. (a) - - - 5,178
Electromedics, Inc. - 3,703 - -
FF Holdings Corp. (a) - - - 24
Grand Casinos, Inc. - 1,637 - -
HM/Hat Brands Trust
Class I units (a) - - - 1,980
Heileman G. Brewing, Inc.,
Class 1 units (a) - - - 6,400
Intelogic Trace, Inc. (a) 437 - - 40
Little Switzerland, Inc. (a) 3,999 - - 2,853
Petrolane, Inc. Class B - 5,511 - -
Resorts International, Inc. 3,964 7,138 - -
Standard Brands Paint Co. (a) - - - 3,052
Standard Brands Paint Property
Holdings (a). 2,526 - - 2,526
Sun International Hotels Ltd. (a) 16,256
Thermadyne Holdings Corp. (a) - - - 29,565
Town & Country Jewelry
Manufacturing Corp. Class A - 4,466 - -
Welltech, Inc. (a) - - - 2,748
TOTALS $ 21,282 $ 43,327 $ 12 $ 80,939
(a) Non-income producing
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 April 30, 1995, and the related
statement of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then ended.
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 April 30, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Summer Street Trust: Fidelity Capital & Income Fund as of
April 30, 1995, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 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
Stephen P. Jonas, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann*
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
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
FIDELITY CAPITAL & INCOME FUND
82 DEVONSHIRE STREET
BOSTON, MASSACHUSETTS 02109
The following information corrects the description of the first security
listed on Page 15 and the description of the first security listed on Page
26.
The description of the first security listed on Page 15 should be
Integrated Healthcare Facilities LP 10%, 12/6/96 (b). The description of
the first security listed on Page 26 should be Integrated Healthcare
Facilities LP Series A (a).
