(2_FIDELITY_LOGOS)FIDELITY
CAPITAL & INCOME
FUND
ANNUAL REPORT
APRIL 30, 1996
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 28 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 32 Notes to the financial statements.
REPORT OF INDEPENDENT 38 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 stocks have managed to post solid returns through the first four
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
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 APRIL 30, 1996 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Capital & Income 11.72% 109.80% 174.04%
Merrill Lynch High Yield Master 12.16% 90.50% 183.50%
Index
High Current Yield Funds Average 13.01% 86.98% 137.86%
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 - 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 high
current yield funds average, which reflects the performance of 132 funds
with similar objectives tracked by Lipper Analytical Services over the past
12 months. These benchmarks include reinvested dividends and capital gains,
if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1996 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Capital & Income 11.72% 15.97% 10.61%
Merrill Lynch High Yield Master Index 12.16% 13.76% 10.98%
High Current Yield Funds Average 13.01% 13.27% 8.95%
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
IMAHDR PRASUN SHR__CHT 19960430 19960524 151311 S00000000000001
Capital & Income ML High Yield Master
00038 ML002
1986/04/30 10000.00 10000.00
1986/05/31 10112.71 10116.63
1986/06/30 10245.09 10219.11
1986/07/31 10166.18 10084.57
1986/08/31 10292.93 10270.68
1986/09/30 10336.35 10355.68
1986/10/31 10630.75 10537.87
1986/11/30 10662.83 10623.67
1986/12/31 10718.05 10681.04
1987/01/31 11080.12 10983.05
1987/02/28 11269.14 11164.37
1987/03/31 11368.71 11287.81
1987/04/30 11083.67 11041.65
1987/05/31 11013.00 10991.90
1987/06/30 11194.84 11143.85
1987/07/31 11179.87 11204.48
1987/08/31 11294.27 11316.75
1987/09/30 10920.36 11056.38
1987/10/31 10484.31 10760.97
1987/11/30 10720.68 11033.09
1987/12/31 10858.57 11179.60
1988/01/31 11210.06 11485.53
1988/02/29 11519.66 11797.18
1988/03/31 11444.91 11777.67
1988/04/30 11528.53 11811.69
1988/05/31 11534.10 11873.34
1988/06/30 11763.72 12100.35
1988/07/31 11888.42 12228.22
1988/08/31 11893.41 12268.40
1988/09/30 12019.70 12392.06
1988/10/31 12148.95 12585.13
1988/11/30 12143.68 12632.27
1988/12/31 12225.35 12685.73
1989/01/31 12450.37 12875.97
1989/02/28 12519.65 12962.50
1989/03/31 12443.73 12950.96
1989/04/30 12397.75 12989.19
1989/05/31 12620.26 13228.31
1989/06/30 12886.02 13415.73
1989/07/31 12910.26 13479.26
1989/08/31 12909.03 13545.84
1989/09/30 12509.66 13416.89
1989/10/31 11954.81 13204.67
1989/11/30 11980.87 13234.26
1989/12/31 11832.24 13222.29
1990/01/31 11435.57 12963.87
1990/02/28 11229.61 12775.08
1990/03/31 11340.00 12947.77
1990/04/30 11376.28 13013.56
1990/05/31 11617.83 13248.62
1990/06/30 11876.85 13505.30
1990/07/31 12138.51 13790.70
1990/08/31 11847.10 13262.76
1990/09/30 11529.89 12685.94
1990/10/31 11164.64 12363.12
1990/11/30 11313.33 12467.85
1990/12/31 11377.13 12647.50
1991/01/31 11438.79 12826.29
1991/02/28 12012.64 13778.30
1991/03/31 12538.61 14370.71
1991/04/30 13062.17 14882.47
1991/05/31 13107.71 14955.14
1991/06/30 13383.93 15255.99
1991/07/31 13815.71 15621.53
1991/08/31 14002.37 15949.87
1991/09/30 14192.40 16153.02
1991/10/31 14538.08 16633.01
1991/11/30 14622.55 16825.14
1991/12/31 14769.70 17020.61
1992/01/31 15660.42 17615.70
1992/02/29 16321.90 18053.19
1992/03/31 17018.71 18305.08
1992/04/30 17366.30 18438.32
1992/05/31 17576.10 18732.42
1992/06/30 17778.48 18965.16
1992/07/31 18131.05 19349.42
1992/08/31 18312.73 19605.59
1992/09/30 18488.63 19828.98
1992/10/31 18300.91 19578.54
1992/11/30 18475.08 19855.81
1992/12/31 18912.51 20111.48
1993/01/31 19634.65 20606.70
1993/02/28 20042.51 20996.76
1993/03/31 20679.56 21360.78
1993/04/30 20844.81 21514.10
1993/05/31 21262.61 21803.71
1993/06/30 22088.86 22213.35
1993/07/31 22293.93 22452.11
1993/08/31 22476.79 22666.14
1993/09/30 22597.61 22777.98
1993/10/31 23051.89 23207.06
1993/11/30 23297.86 23333.99
1993/12/31 23622.46 23567.31
1994/01/31 24331.98 24083.78
1994/02/28 24320.21 23910.59
1994/03/31 23691.57 23131.41
1994/04/30 23442.15 22861.10
1994/05/31 23414.35 22779.65
1994/06/30 23112.98 22863.49
1994/07/31 23266.32 23024.22
1994/08/31 23268.23 23184.14
1994/09/30 23238.27 23175.37
1994/10/31 23087.66 23234.26
1994/11/30 22679.13 23036.62
1994/12/31 22533.35 23292.86
1995/01/31 22880.14 23622.00
1995/02/28 23802.82 24359.03
1995/03/31 23930.44 24698.03
1995/04/30 24528.63 25276.30
1995/05/31 24972.50 26065.99
1995/06/30 25065.07 26265.08
1995/07/31 25943.80 26565.34
1995/08/31 26025.76 26726.58
1995/09/30 26382.12 27032.35
1995/10/31 26437.30 27223.97
1995/11/30 25977.16 27489.72
1995/12/31 26305.37 27930.98
1996/01/31 26427.62 28372.10
1996/02/29 26930.60 28414.82
1996/03/31 26962.42 28337.65
1996/04/30 27404.49 28350.49
IMATRL PRASUN SHR__CHT 19960430 19960524 151316 R00000000000123
$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity Capital
& Income Fund on April 30, 1986. As the chart shows, by April 30, 1996, the
value of your investment would have grown to $27,404 - a 174.04% 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 $28,350 - a
183.50% 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
YEARS ENDED APRIL 30,
1996 1995 1994 1993 1992
Dividend return 9.87% 9.01% 9.34% 8.25% 12.72%
Capital appreciation return 1.85% -4.38% 3.12% 11.78% 20.23%
Total return 11.72% 4.63% 12.46% 20.03% 32.95%
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, 1996 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 5.15(cents) 33.18(cents) 85.71(cents)
Annualized dividend rate 6.74% 7.22% 9.25%
30-day annualized yield 7.01% - -
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 $9.29 over
the past month, $9.22 over the past six months, and $9.27 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
Although interest rates have
increased in 1996, a continued
positive supply and demand
backdrop, combined with
sustained confidence about
overall credit quality, helped the
high-yield market outpace most
other U.S. bond markets over the
12 months ended April 30,
1996. During that period, the
Salomon Brothers Composite
High Yield Index had a total return
of 13.00%. To contrast, the
Lehman Brothers Aggregate
Bond Index - a broader measure
of the performance of taxable bonds
in the U.S. - posted a total return
of 8.64% during the same period.
In the fourth quarter of 1995,
interest rates continued the
decline seen earlier in the year.
Nevertheless, as we entered 1996,
the economy was sufficiently
strong to allay major credit
concerns and the default rate -
a measure of how many
companies are unable to meet
the principal and interest
payments on their debt -
remained moderate. As a result,
there was relatively strong
demand for high-yield bonds that
easily absorbed the supply of new
issues that came to market.
When interest rates began to rise
toward the end of the period,
lower-quality bonds and cyclical
companies - those whose
earnings follow economic cycles
up and down - outperformed the
more interest-rate sensitive
segments of the market. In
addition, relatively positive credit
events, strong corporate
earnings and a high level of
merger and acquisition activity
benefited the high-yield market.
An interview with David Glancy, Portfolio Manager of Fidelity Capital &
Income Fund
Q. HOW DID THE FUND PERFORM, DAVID?
A. For the 12-month period ended April 30, 1996, the fund had a total
return of 11.72%. For the same 12-month period, the high current yield
funds average returned 13.01%, as tracked by Lipper Analytical Services.
The Merrill Lynch High Yield Master Index returned 12.16% for the same
12-month period. I began managing Capital & Income Fund in January 1996.
Q. WHAT FACTORS CAUSED THE FUND TO LAG THE AVERAGE HIGH CURRENT YIELD FUND?
A. Several investments in distressed companies didn't turn out as expected,
and the core high-income positions were only average performers. In early
February, I pared back or eliminated many of the holdings I believed
contributed to the fund's prior underperformance and, in my view, didn't
offer much potential.
Q. WERE THERE ANY SPECIFIC HOLDINGS THAT DETRACTED FROM PERFORMANCE?
A. Two high-profile positions - Merry Go Round, which is now in
liquidation, and Harrah's Jazz, which declared bankruptcy in late 1995 -
performed poorly. By the end of the period, however, Merry Go Round
represented roughly 0.06% of the fund's investments, while Harrah's Jazz
amounted to approximately 1.37% of investments. Fidelity has worked hard to
resurrect the Harrah's Jazz Casino project and we are still hopeful that it
can succeed.
Q. WHAT OTHER CHANGES DID YOU MAKE?
A. I cut the total number of positions and increased the average size of
the top positions. As a result, the fund's performance will be more
dependent on its top 20 holdings than it was previously. I also increased
the fund's cash balance to about 20% of total assets by the end of the
period. I prefer to keep a fair amount of cash on hand in order to take
advantage of opportunities in the high-yield market as they present
themselves.
Q. HIGH-YIELD BONDS, LIKE OTHER FIXED-INCOME SECURITIES, RISE AND FALL WITH
FLUCTUATIONS IN INTEREST RATES. HOW DO YOU MANAGE INTEREST RATE RISK?
A. Junk bonds do well for the same reasons stocks do well - the underlying
businesses perform well. I focus on getting the business fundamentals right
and try to insulate the fund from interest rate risk by having much shorter
duration, or average maturity, than the typical high-yield fund. While this
limits price appreciation in existing positions when interest rates go
down, investments in stocks and the debt or equity of distressed situations
- - when we judge the business fundamentals correctly - should more than
compensate.
Q. WHICH SPECIFIC INVESTMENTS DID YOU ADD SINCE TAKING OVER?
A. I built large positions in Revlon, satellite company Echostar, and
American Financial Group, a leading insurer. All three were among the
fund's top holdings at the end of the period and have performed well since
I've added them.
Q. ARE YOU FINDING VALUE IN THE DEBT OF DISTRESSED COMPANIES?
A. Very little. In my view, most of the distressed universe today consists
of small, insubstantial companies with difficult long-term earnings
outlooks. The easy balance sheet fixes of franchise companies - Macy's,
USG, and Columbia Gas - no longer exist. I'll continue to look for value,
but I'll be very selective. However, we are finding attractive total return
potential in the common stocks of successful high-yield companies. At the
end of the period, the fund had sizable positions in Thermadyne, Grand
Casino, American Financial Group and Olympic Financial, all of which traded
at less than 10 times 1997 projected earnings, in a market that is trading
at closer to 16 times earnings. Rapid earnings growth and debt repayment
usually have a powerful effect on stock prices. We intend to get involved
in distressed situations where inherent values can be realized without our
acting as an agent for change or catalyst to affect the process. While we
will always protect our investments aggressively, judging the business
prospects right is 90% of the process.
Q. WHAT'S AHEAD FOR THE FUND?
A. I'm very optimistic. My strategy is simple and I think it's appropriate
for the fund. I'll likely continue to focus on short-duration bonds to help
insulate the fund from interest rate risk. I'll balance that with good
total return opportunities that exist in distressed or bankrupt debt or
common or preferred stock of high-yield companies. Also, I'll likely keep a
large balance of cash on hand to be opportunistic when I find attractive
situations in those universes.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
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, 1996,
more than $2.2 billion
MANAGER: David Glancy,
since January, 1996;
manager, Spartan High
Income Fund, 1993 to
January 1996; joined Fidelity
in 1990
(checkmark)
DAVID GLANCY ON THE HIGH-YIELD
MARKET:
"In my view, now is not the
time to have a `Noah's Ark'
type of portfolio, where you
invest in two of everything.
That may have been
appropriate in 1990, when the
high-yield market was weak
and many bonds were
trading at 50 cents on the
dollar. In that type of
environment, the winners
generally outweigh the losers.
In the current environment,
there's a greater potential for
losers to outweigh winners.
So I'll be very selective,
focusing on investments with
discernible business risk and
the potential for appreciation."
DISTRIBUTIONS
A total of 2% of the dividends
distributed during the fiscal
year qualifies for the
dividends-received deduction
for corporate shareholders.
The fund will notify
shareholders in January 1997
of the applicable percentage
for use in preparing 1996
income tax returns.
INVESTMENT CHANGES
TOP FIVE HOLDINGS AS OF APRIL 30, 1996
(BY ISSUER, EXCLUDING REPURCHASE AGREEMENTS) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Revlon Worldwide Corp. 5.9 0.0
Thermadyne Holdings Corp. (various 4.6 4.6
issues)
First Nationwide Parent Holding, Inc. 3.0 0.0
Bally's Casino Holdings, Inc. 2.7 1.0
Gulf Canada Resources Ltd. (various 2.6 2.3
issues)
TOP FIVE MARKET SECTORS AS OF APRIL 30, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
Media & Leisure 22.0 17.8
Nondurables 8.3 2.9
Finance 7.7 1.0
Industrial Machinery & Equipment 6.5 7.9
Utilities 5.3 6.3
QUALITY DIVERSIFICATION AS OF APRIL 30, 1996
(MOODY'S RATINGS) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Aaa, Aa, A 0.0 0.0
Baa 0.0 0.0
Ba 5.7 3.8
B 36.2 37.1
Caa, Ca, C 7.1 14.2
Nonrated 9.0 19.5
TABLE EXCLUDES SHORT-TERM INVESTMENTS. UNRATED DEBT SECURITIES THAT ARE
EQUIVALENT TO BA AND BELOW AT APRIL 30, 1996, AND OCTOBER 31, 1995 ACCOUNT
FOR 9.0% AND 18.9%, RESPECTIVELY, OF THE FUND'S INVESTMENTS.
ASSET ALLOCATION
AS OF APRIL 30, 1996 * AS OF OCTOBER 31, 1995 **
Nonconvertible
bonds 54.6%
Convertible bonds,
preferred stocks 8.8%
Common stocks 13.1%
Short-term
investments 20.5%
Other 3.0%
FOREIGN
INVESTMENTS 3.8%
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%
Row: 1, Col: 1, Value: 3.1
Row: 1, Col: 2, Value: 20.5
Row: 1, Col: 3, Value: 13.1
Row: 1, Col: 4, Value: 8.800000000000001
Row: 1, Col: 5, Value: 4.5
Row: 1, Col: 6, Value: 50.0
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
*
**
INVESTMENTS APRIL 30, 1996
Showing Percentage of Total Value of Investment in Securities
CORPORATE BONDS - 55.3%
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
CONVERTIBLE BONDS - 0.7%
MEDIA & LEISURE - 0.7%
LODGING & GAMING - 0.7%
Bally Entertainment Corp. 10%, 12/15/06 B3 $ 15,236 $ 15,350
RETAIL & WHOLESALE - 0.0%
APPAREL STORES - 0.0%
Merry-Go-Round Enterprises, Inc.
0%, 5/16/97 (b)(h) - 8,914 357
GROCERY STORES - 0.0%
Farm Fresh, Inc. 7 1/2%, 3/1/10 B3 600 330
TOTAL RETAIL & WHOLESALE 687
TOTAL CONVERTIBLE BONDS 16,037
NONCONVERTIBLE BONDS - 54.6%
AEROSPACE & DEFENSE - 4.3%
AEROSPACE & DEFENSE - 3.7%
Alliant Techsystems, Inc. 11 3/4%, 3/1/03 B2 15,750 17,187
Fairchild Corp.:
12%, 10/15/01 Caa 11,335 11,165
13 1/8%, 3/15/06 Caa 2,780 2,683
K & F Industries, Inc. 11 7/8%, 12/1/03 B1 7,190 7,765
RHI Holdings, Inc. 11 7/8%, 3/1/99 B2 14,420 14,420
Rohr, Inc. 11 5/8%, 5/15/03 Ba3 10,310 11,341
Wyman-Gordon Co. 10 3/4%, 3/15/03 B1 17,070 18,094
82,655
DEFENSE ELECTRONICS - 0.6%
Tracor, Inc.:
10 7/8%, 8/15/01 B2 2,930 3,077
10 7/8%, 8/15/01 (h) B2 10,841 11,383
14,460
TOTAL AEROSPACE & DEFENSE 97,115
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - 0.9%
CHEMICALS & PLASTICS - 0.7%
American Pacific Corp. 11%, 2/21/02 (i) - $ 2,975 $ 2,826
G-I Holdings, Inc., Series B, 0%, 10/1/98 Ba3 2,775 2,206
Trans Resources, Inc. 11 7/8%, 7/1/02 (i) B2 12,700 11,176
16,208
PACKAGING & CONTAINERS - 0.2%
Crown Packaging Holdings Ltd.,
Series B, 0%, 11/1/03 (e) Caa 11,730 5,015
TOTAL BASIC INDUSTRIES 21,223
CONGLOMERATES - 0.2%
American Standard, Inc. 11 3/8%, 5/15/04 Ba3 3,820 4,159
CONSTRUCTION & REAL ESTATE - 1.8%
BUILDING MATERIALS - 0.1%
Standard Brands Paint Co. 14 1/2%,
5/17/97 (b)(h)(k) - 5,000 2,500
CONSTRUCTION - 1.2%
Emcor Group, Inc., Series C, 11%,
12/15/01 pay-in-kind - 217 197
Grand Bay Residences of Key Biscayne 15%,
12/31/99 (h) - 2,500 2,500
UDC Homes, Inc.:
Series A, 12 1/2%, 5/1/00 - 16,558 15,564
Series B, 12 1/2%, 5/1/00 - 3,636 3,418
WCI Communities LP 17%, 7/24/98 (h) - 5,000 5,000
26,679
REAL ESTATE - 0.5%
Littlefield Co. 10%, 12/31/95 (b)(h) - 15,880 12,093
TOTAL CONSTRUCTION & REAL ESTATE 41,272
DURABLES - 1.6%
AUTOS, TIRES, & ACCESSORIES - 0.5%
APS, Inc. 11 7/8%, 1/15/06 (i) Ba2 10,010 10,335
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
DURABLES - CONTINUED
HOME FURNISHINGS - 0.4%
Knoll, Inc. 10 7/8%, 3/15/06 (i) B3 $ 8,350 $ 8,559
TEXTILES & APPAREL - 0.7%
CMI Industries, Inc. 9 1/2%, 10/1/03 B1 2,550 2,116
Hat Brands, Inc. (b):
Series B, 12 5/8%, 9/15/02 - 14,630 10,973
Series D, 12 5/8%, 9/15/02 - 3,960 2,970
16,059
TOTAL DURABLES 34,953
ENERGY - 1.0%
OIL & GAS - 1.0%
TransTexas Gas Corp. 11 1/2%, 6/15/02 B2 21,500 21,608
FINANCE - 5.4%
CREDIT & OTHER FINANCE - 0.8%
Olympic Financial Ltd. 13%, 5/1/00 B2 16,960 18,317
INSURANCE - 0.3%
American Premier Underwriters, Inc.
10 7/8%, 5/1/11 Ba3 6,000 7,020
Reliance Group 9%, 11/15/00 Ba3 1,000 998
8,018
SAVINGS & LOANS - 4.1%
First Nationwide Holdings, Inc.
12 1/4%, 5/15/01 Ba2 11,510 12,661
9 1/8%, 1/15/03 (i) Ba3 13,430 12,960
First Nationwide Parent Holding, Inc.
12 1/2%, 4/15/03 (i) B2 65,030 66,656
92,277
SECURITIES INDUSTRY - 0.2%
CBO Partners LP (b):
12.55%, 12/15/04 - 13,500 3,644
13.52%, 12/15/04 (h) - 4,818 -
16%, 12/15/04 Class C (h) - 2,095 -
3,644
TOTAL FINANCE 122,256
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
HEALTH - 0.0%
MEDICAL FACILITIES MANAGEMENT - 0.0%
Integrated Healthcare Facilities LP
10%, 12/6/96 (b) - $ 141 $ -
INDUSTRIAL MACHINERY & EQUIPMENT - 2.4%
Howmet Corp. 10%, 12/1/03 (i) B3 6,120 6,426
Thermadyne Holdings Corp.:
10 1/4%, 5/1/02 B3 11,711 11,711
10 3/4%, 11/1/03 Caa 35,239 35,239
53,376
MEDIA & LEISURE - 14.4%
BROADCASTING - 4.7%
Citicasters, Inc. 9 3/4%, 2/15/04 B- 12,500 12,750
Cooke Media Group, Inc. 11 5/8%, 4/1/99 - 1,540 1,463
NWCG Holdings Corp. 0%, 6/15/99 Caa 60,844 44,112
Robin Media Group, Inc. 11 1/8%, 4/1/97 - 24,610 24,610
Telemundo Group, Inc. 7%, 2/15/06 (f) B1 26,420 23,316
106,251
LODGING & GAMING - 6.8%
Aztar Corp. 13 3/4%, 10/1/04 B2 1,930 2,162
Bally's Casino Holdings, Inc.
0%, 6/15/98 B2 72,265 61,245
Bally Gaming International, Inc.
10 3/8%, 7/15/98 - 10,000 10,300
GNF Corp., Series B, 10 5/8%, 4/1/03 B1 2,000 2,065
Grand Casinos, Inc. 10 1/8%, 12/1/03 Ba3 11,290 11,798
HMH Properties, Inc., Series B,
9 1/2%, 5/15/05 B1 9,990 9,715
Harrah's Jazz Co. 14 1/4%, 11/15/01 (b) Caa 67,790 30,843
Horseshoe Gaming LLC 12 3/4%,
9/30/00 (i) B1 21,760 23,610
Maritime Group Ltd. pay-in-kind
14%, 2/15/97 (b) - 9,525 1,715
153,453
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
PUBLISHING - 2.9%
Marvel Holdings, Inc., Series B, 0%, 4/15/98 B3 $ 52,110 $ 40,125
Marvel Parent Holdings, Inc. 0%, 4/15/98 B3 31,500 23,940
Maxwell Communication Corp. PLC euro
5%, 6/16/99 (l) - CHF 7 -
64,065
TOTAL MEDIA & LEISURE 323,769
NONDURABLES - 8.3%
FOODS - 0.2%
Specialty Foods Corp.,
Series B, 11 1/8%, 10/1/02 B3 6,030 5,668
HOUSEHOLD PRODUCTS - 8.1%
MacAndrews and Forbes Group, Inc.
12 1/4%, 7/1/96 - 2,839 2,846
MacAndrews and Forbes Holdings, Inc.
13%, 3/1/99 - 2,300 2,312
Revlon Consumer Products Corp.
10 1/2%, 2/15/03 B3 41,950 42,946
Revlon Worldwide Corp. secured
0%, 3/15/98 B3 164,365 133,547
181,651
TOTAL NONDURABLES 187,319
RETAIL & WHOLESALE - 3.9%
APPAREL STORES - 1.3%
Apparel Retailers, Inc. 0%, 8/15/05 (e) Caa 15,500 11,160
Lamonts Apparel, Inc. 10 1/4%, 11/1/99
pay-in-kind (b)(i) - 18,686 841
Merry-Go-Round Enterprises, Inc.
7.09%, 9/1/03 (b)(h) - 7,500 300
Specialty Retailers, Inc.:
10%, 8/15/00 B1 11,000 10,945
11%, 8/15/03 B3 5,180 5,102
28,348
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - 1.8%
Pathmark Stores, Inc.:
11 5/8%, 6/15/02 B3 $ 7,860 $ 7,939
12 5/8%, 6/15/02 B3 3,455 3,541
9 5/8%, 5/1/03 B2 7,390 7,076
0%, 11/1/03 (e) B3 36,650 22,906
41,462
RETAIL & WHOLESALE, MISCELLANEOUS - 0.8%
Barry's Jewelers, Inc. 11%, 12/22/00 B3 19,066 17,350
TOTAL RETAIL & WHOLESALE 87,160
SERVICES - 0.1%
LEASING & RENTAL - 0.1%
Scotsman Holdings, Inc.
pay-in-kind 11%, 3/1/04 - 3,376 3,068
TECHNOLOGY - 3.9%
COMMUNICATIONS EQUIPMENT - 2.9%
Echostar Communications Corp.
0%, 6/1/04 (e) B2 60,395 44,843
Echostar Satellite Broadcasting Corp. 0%,
3/15/04 (e)(i) Caa 33,240 20,692
65,535
COMPUTERS & OFFICE EQUIPMENT - 1.0%
Bell & Howell Co., Series B,
0%, 3/1/05 (e) B3 23,235 15,684
Unisys Corp. 12%, 4/15/03 (i) B1 7,850 7,870
23,554
TOTAL TECHNOLOGY 89,089
TRANSPORTATION - 2.6%
AIR TRANSPORTATION - 1.9%
US Air, Inc.:
9 5/8%, 2/1/01 B3 35,595 32,836
9 5/8%, 9/1/03 B1 7,050 6,786
10%, 7/1/03 B3 2,900 2,675
42,297
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TRANSPORTATION - CONTINUED
RAILROADS - 0.7%
Transtar Holdings LP/Transtar Capital Corp.,
Series B, 0%, 12/15/03 (e) B- $ 22,790 $ 16,523
TRUCKING & FREIGHT - 0.0%
St. Johnsbury Trucking Co.
Unit 11%, 7/15/98 (b)(h) - 7,550 620
TOTAL TRANSPORTATION 59,440
UTILITIES - 3.8%
ELECTRIC UTILITY - 2.3%
El Paso Electric Co. 1st Mtg.:
Series A, 7 1/4%, 2/1/99 Ba3 10,034 9,896
Series B, 7 3/4%, 5/1/01 Ba3 11,382 11,112
Series C, 8 1/4%, 2/1/03 Ba3 13,851 13,435
Series D, 8.90%, 2/1/06 Ba3 14,131 13,955
Series E, 9.40%, 5/1/11 Ba3 3,090 3,059
51,457
TELEPHONE SERVICES - 1.5%
Brooks Fiber Properties, Inc.
10 7/8%, 3/1/06 (i) - 20,780 11,429
MFS Communications, Inc. 0%,
1/15/06 (e) B1 37,440 23,260
34,689
TOTAL UTILITIES 86,146
TOTAL NONCONVERTIBLE BONDS 1,231,953
TOTAL CORPORATE BONDS
(Cost $1,310,706) 1,247,990
COMMERCIAL MORTGAGE SECURITIES - 2.8%
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
ACP Mortgage LP Commercial floater (i)(k):
Series E, 7.557505%, 2/28/28 BB $ 2,335 $ 1,749
Series F, 7.557505%, 2/28/28 B 2,214 1,846
CS First Boston Mortgage Securities Corp.:
commercial Series 1994-M1 Class E,
12.60%, 2/15/02 (i) - 5,892 5,871
commercial floater Series 1995-AEWI Class E,
10.430720%, 11/25/97 (i)(k) - 4,840 4,070
DLJ Mortgage Acceptance Corp. commercial
Series 1994-MF11 Class B-2,
8.10%, 6/18/04 (i) Ba2 3,770 3,005
Lennar Central Partners LP commercial
Series 1995-1 Class F, 11.70%, 5/15/05 (i) - 5,000 5,057
Merrill Lynch Mortgage Investments, Inc.
commercial 8.060551%, 6/25/22 (i)(k) Ba2 5,000 4,277
Morgan Stanley Capital I commercial
Series 1995-TNE Class D2,
8.24%, 12/15/23 (i) Ba3 4,005 3,470
Resolution Trust Corp.:
sequential pay Series 1994-C1 Class F,
8%, 6/25/26 B 6,136 5,060
commercial:
floater Series 1991-M2 Class A1,
7.083177%, 9/25/20 (k) Ba3 3,981 2,787
Series 1994-C1 Class E, 8%, 6/25/26 BB 11,042 9,514
Series 1994-C2:
Class F, 8%, 4/25/25 BB 6,975 6,049
Class G, 8%, 4/25/25 B 1,320 1,084
Series 1995-C1 Class F, 6.90%, 2/25/27 B1 1,961 1,637
Series 1995-C2:
Class E, 7%, 5/25/27 Ba2 1,369 1,124
Class F, 7%, 5/25/27 B1 3,104 2,530
Structured Asset Securities Corp. commercial
Series 1995-C1 Class E, 7 3/8%, 9/25/24 (i) BB 6,500 4,749
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $62,598) 63,879
COMMON STOCKS - 13.1%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.5%
DEFENSE ELECTRONICS - 0.5%
Tracor, Inc. (a) 558,600 $ 10,544
BASIC INDUSTRIES - 0.4%
CHEMICALS & PLASTICS - 0.3%
Atlantis Group, Inc. (Trivest/Winston) (h) 33,115 178
NL Industries, Inc. 332,700 4,783
Plastic Specialties & Technology, Inc. (a) 2,500 -
Trivest 1992 Special Fund Ltd. 11.4(j) 2,193
7,154
PAPER & FOREST PRODUCTS - 0.1%
Mail-Well Holdings, Inc. (a)(i) 151,141 1,247
TOTAL BASIC INDUSTRIES 8,401
CONSTRUCTION & REAL ESTATE - 1.2%
BUILDING MATERIALS - 0.1%
Corimon CA SACA sponsored ADR (a)(h) 1,359,203 1,614
Standard Brands Paint Co. (a)(g) 8,246,743 82
Standard Brands Paint Co., Series B (non-vtg.) (a)(h) 8,417 4
Waxman Industries, Inc. (warrants) (a) 420,000 53
1,753
CONSTRUCTION - 0.0%
Walter Industries, Inc. (a) 544 7
REAL ESTATE - 1.1%
Cadillac Fairview Corp. (a) 1,928,008 24,772
Cadillac Fairview Corp. (warrants) (a) 187,104 584
25,356
TOTAL CONSTRUCTION & REAL ESTATE 27,116
DURABLES - 0.1%
HOME FURNISHINGS - 0.0%
Polyvision Corp. (a) 154,746 319
TEXTILES & APPAREL - 0.1%
Hat Brands, Inc. (warrants) (a)(h) 246,278 1,232
HM/Hat Brands Trust Class I Unit (a)(h) 1,980,000 1,980
3,212
TOTAL DURABLES 3,531
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - 0.8%
ENERGY SERVICES - 0.2%
Dawson Production Services, Inc. (a)(h) 117,536 $ 1,340
Key Energy Group, Inc. (a) 446,395 3,794
Key Energy Group, Inc. (warrants) (a) 67,910 195
5,329
OIL & GAS - 0.6%
Goodrich Petroleum Corp. (a) 358,125 358
Goodrich Petroleum Corp. (warrants) (a)(h) 460,000 -
Mesa, Inc. (a) 1,340,900 5,196
TransTexas Gas Corp. (a) 705,000 7,138
12,692
TOTAL ENERGY 18,021
FINANCE - 2.3%
CREDIT & OTHER FINANCE - 0.9%
Olympic Financial Ltd. (a) 957,000 21,293
INSURANCE - 1.4%
American Annuity Group, Inc. 193,713 2,421
American Financial Group, Inc. 955,900 29,275
31,696
TOTAL FINANCE 52,989
HOLDING COMPANIES - 0.0%
SDW Holdings Corp., Series B (warrants) (a) 12,555 167
INDUSTRIAL MACHINERY & EQUIPMENT - 2.5%
Terex Corp. (rights) (a)(h) 29,100 3
Thermadyne Holdings Corp. (a)(g) 2,343,876 56,253
56,256
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 3.3%
BROADCASTING - 1.0%
Chancellor Trust Class I Unit (a)(h) 273 $ 5,516
New World Communications Group, Inc. Class A (a) 819,300 15,259
Telemundo Group, Inc. Class A (a) 97,500 1,950
22,725
ENTERTAINMENT - 0.0%
Live Entertainment, Inc. (warrants) (a)(h):
$2.00 256,000 13
$2.72 244,706 12
25
LODGING & GAMING - 2.3%
Bally Gaming International, Inc. (warrants) (a) 300,000 900
Bally's Grand, Inc. (warrants) (a) 114,965 1,480
Casino Magic Finance Corp. (warrants) (a) 19,500 -
Grand Casinos, Inc. (a) 1,374,500 44,499
Griffin Gaming & Entertainment, Inc.
Litigate Trust Certificate (a) 77,112 -
Maritime Group Ltd. (warrants) (a) 103,320 1
WMS Industries, Inc. (a) 189,400 3,433
50,313
PUBLISHING - 0.0%
Marvel Entertainment Group, Inc. (a) 70,000 691
TOTAL MEDIA & LEISURE 73,754
NONDURABLES - 0.0%
BEVERAGES - 0.0%
Heileman G Brewing, Inc. Unit Class 1 (a)(h) 400 400
RETAIL & WHOLESALE - 0.1%
APPAREL STORES - 0.0%
Lamonts Apparel, Inc. (a):
(New) 307,603 68
(warrants) 562,033 -
Merry-Go-Round Enterprises, Inc. (a) 1,258,700 1
69
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - 0.0%
FF Holdings Corp. (a)(h) 11,900 $ 24
Grand Union Capital Corp. Class B 1,506 -
Little Rock Groceries, Inc. (warrants) (a) 51 -
24
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
Barry's Jewelers, Inc. (warrants) (a) 47,568 6
Barry's Jewelers, Inc. (a)(g) 264,245 859
Town & Country Jewelry Manufacturing
Corp. Class A 1,116,816 768
Zale Corp. Unit (a)(h) 1,768,285 17
1,650
TOTAL RETAIL & WHOLESALE 1,743
SERVICES - 0.0%
LEASING & RENTAL - 0.0%
Scotsman Holdings, Inc. (a) 16,529 216
SERVICES - 0.0%
Vestar/LPA Investment Corp. (a) 2,550 23
TOTAL SERVICES 239
TECHNOLOGY - 0.9%
COMMUNICATIONS EQUIPMENT - 0.8%
Echostar Communications Corp. Class A (a) 523,922 17,551
COMPUTERS & OFFICE EQUIPMENT - 0.0%
Intelogic Trace, Inc. (a)(g) 3,931,987 -
ELECTRONIC INSTRUMENTS - 0.1%
Berg Electronics Corp. (a)(i) 73,634 1,850
TOTAL TECHNOLOGY 19,401
TRANSPORTATION - 0.0%
AIR TRANSPORTATION - 0.0%
CHC Helicopter Corp. (warrants) (a) 108,320 -
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 1.0%
ELECTRIC UTILITY - 1.0%
El Paso Electric Co. (a)(g) 4,228,441 $ 22,464
Great Bay Power Corp. (a) 25,848 200
22,664
GAS - 0.0%
UGI Corp. (warrants) (a) 81,500 12
TOTAL UTILITIES 22,676
TOTAL COMMON STOCKS
(Cost $318,651) 295,238
PREFERRED STOCKS - 8.1%
CONVERTIBLE PREFERRED STOCKS - 0.5%
RETAIL & WHOLESALE - 0.5%
GROCERY STORES - 0.5%
Supermarkets General Holdings Corp. exchangeable
pay-in-kind $3.52 (a) 416,933 10,736
NONCONVERTIBLE PREFERRED STOCKS - 7.6%
BASIC INDUSTRIES - 0.0%
PAPER & FOREST PRODUCTS - 0.0%
S D Warren Co. 14% exchangeable pay-in-kind (a) 27,816 834
ENERGY - 2.6%
OIL & GAS - 2.6%
Gulf Canada Resources Ltd., Series 1, adj. rate 18,059,904 57,678
Gulf Canada Resources Ltd. (h) 220,666 636
58,314
HEALTH - 0.0%
MEDICAL FACILITIES MANAGEMENT - 0.0%
Integrated Healthcare Facilities LP, Series A 1,404 -
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
HOLDING COMPANIES - 0.2%
SDW Holdings Corp. (a) 125,550 $ 3,767
INDUSTRIAL MACHINERY & EQUIPMENT - 0.7%
ELECTRICAL EQUIPMENT - 0.7%
Ampex Corp. 8% (a)(h) 23,995 16,631
MEDIA & LEISURE - 3.6%
BROADCASTING - 3.6%
Cablevision System Corp.:
Series G exchangeable pay-in-kind (i) 307,975 31,106
$11.125 pay-in-kind (i) 201,626 19,709
Chancellor Radio Broadcasting Co. exchangeable
pay-in-kind (i) 190,700 18,784
Time Warner, Inc., Series K exchangeable 10,670 10,683
80,282
TECHNOLOGY - 0.0%
COMPUTERS & OFFICE EQUIPMENT - 0.0%
Intelogic Trace, Inc. 10% (a) 645,723 -
UTILITIES - 0.5%
ELECTRIC UTILITY - 0.1%
El Paso Electric Co., Series A pay-in-kind (a) 25,600 2,611
TELEPHONE SERVICES - 0.4%
Intelecom Group USA, Inc. 9,116 9,276
TOTAL UTILITIES 11,887
TOTAL NONCONVERTIBLE PREFERRED STOCKS 171,715
TOTAL PREFERRED STOCKS
(Cost $178,870) 182,451
PURCHASED BANK DEBT - 0.2%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (C) (000S) (000S)
Art Store Holdings term loan (h):
9%, 7/31/96 $ 842 $ 842
9%, 7/31/97 842 842
Isosceles PLC 0%, 6/30/98 GBP 192 204
Merry-Go-Round Enterprises, Inc. (b) 52 2
Merry-Go-Round Enterprises, Inc. TC Double Light (b) 12 -
Merry-Go-Round Enterprises, Inc.
lease indemnity claim (b) 1,711 68
Merry-Go-Round Enterprises, Inc. term loan (b) 4,129 165
Merry-Go-Round Enterprises, Inc. trade claim (b) 7,593 304
TAK Communications term loan (b) 36,907 1,846
Welltech, Inc. Vanguard loan participation (b) 744 371
TOTAL PURCHASED BANK DEBT
(Cost $14,647) 4,644
REPURCHASE AGREEMENTS - 20.5%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.33%, dated
4/30/96 due 5/1/96 (Note 3) $ 461,413 461,345
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $2,346,817) $ 2,255,547
CURRENCY ABBREVIATIONS
GBP - British pound
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. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
7. Affiliated company (see Note 8 of Notes to Financial Statements).
8. 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
term loan:
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
CBO Partners LP:
13.52%, 12/15/04 12/1/95 $ 5
16%, 12/15/04
Class C 12/1/95 $ -
Chancellor Trust
Class 1 Unit 10/12/94 $ 5,515
Corimon CA SACA
sponsored ADR 7/27/95 $ 9,005
Dawson Production
Services Inc. 3/1/96 $ 1,264
FF Holdings 10/2/92
Corp. 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 10/15/93
Resources Ltd. to 8/31/94 $ 550
Hat Brands, Inc. 9/2/92
(warrants) to 2/23/94 $ -
HM/Hat Brands Trust
Class 1 Unit 2/22/94 $ 1,980
Heileman G Brewing
Inc. Unit Class 1 1/21/94 $ 8,019
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.: 3/1/94
0%, 5/16/97 to 3/24/94 $ 7,680
7.09%, 9/1/03 3/21/94 $ 6,457
St. Johnsbury Trucking Co.
Unit 11%, 7/15/98 2/1/93 $ 2,827
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 $ -
Tracor, Inc.
10 7/8%, 8/15/01 4/7/95 $ 10,922
WCI Communities LP
17%, 7/24/98 7/24/95 $ 4,937
Zale Corp. unit 2/6/91
to 7/30/93 $ -
9. 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 $290,170,000 or 12.8% of net
assets.
10. Represents number of units held.
11. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
12. 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 0.0% AAA, AA, A 0.0%
Baa 0.0% BBB 0.0%
Ba 5.7% BB 8.3%
B 36.2% B 35.8%
Caa 7.1% CCC 3.7%
Ca, C 0.0% CC, C .0%
D 1.4%
The percentage not rated by either S&P or Moody's amounted to 6.4%. FMR has
deter- mined that unrated debt securities that are lower quality account
for 6.4% of the total value of investment in securities.
INCOME TAX INFORMATION
At April 30, 1996, the aggregate cost of investment securities for income
tax pur- poses was $2,353,642,000. Net unrealized depreciation aggregated
$98,095,000, of which $107,945,000 related to appreciated investment
securities and $206,040,000 related to depreciated investment securities.
At April 30, 1996, the fund had a capital loss carryforward of
approximately $44,527,000 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) APRIL 30, 1996
ASSETS
Investment in securities, at value (including repurchase $ 2,255,547
agreements of $461,345) (cost $2,346,817) -
See accompanying schedule
Cash 825
Receivable for investments sold 29,433
Dividends receivable 365
Interest receivable 23,427
Redemption fees receivable 2
Other receivables 213
TOTAL ASSETS 2,309,812
LIABILITIES
Payable for investments purchased $ 8,193
Payable for fund shares redeemed 3,247
Distributions payable 1,679
Accrued management fee 1,321
Other payables and accrued expenses 2,086
Collateral on securities loaned, at value 22,872
TOTAL LIABILITIES 39,398
NET ASSETS $ 2,270,414
Net Assets consist of:
Paid in capital $ 2,357,294
Undistributed net investment income 55,904
Accumulated undistributed net realized gain (loss) on (51,263)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on (91,521)
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 243,153 shares outstanding $ 2,270,414
NET ASSET VALUE, offering price and redemption price per $9.34
share ($2,270,414 (divided by) 243,153 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED APRIL 30, 1996
INVESTMENT INCOME $ 12,877
Dividends
Interest (including income on securities loaned of $151) 196,914
TOTAL INCOME 209,791
EXPENSES
Management fee $ 16,273
Transfer agent fees 4,732
Accounting and security lending fees 650
Non-interested trustees' compensation 10
Custodian fees and expenses 53
Registration fees 78
Audit 126
Legal 980
Miscellaneous 16
Total expenses before reductions 22,918
Expense reductions (131) 22,787
NET INVESTMENT INCOME 187,004
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized gain of 53,350
$2,007 on sales of investments in affiliated issuers)
Foreign currency transactions 267 53,617
Change in net unrealized appreciation (depreciation) on:
Investment securities 13,888
Assets and liabilities in foreign currencies (2) 13,886
NET GAIN (LOSS) 67,503
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 254,507
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,
1996 1995
INCREASE (DECREASE) IN NET ASSETS
Operations $ 187,004 $ 176,514
Net investment income
Net realized gain (loss) 53,617 46,501
Change in net unrealized appreciation (depreciation) 13,886 (141,906)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 254,507 81,109
FROM OPERATIONS
Distributions to shareholders (181,546) (164,874)
From net investment income
In excess of net investment income (33,323) (54,199)
TOTAL DISTRIBUTIONS (214,869) (219,073)
Share transactions 461,604 451,397
Net proceeds from sales of shares
Reinvestment of distributions 187,273 189,645
Cost of shares redeemed (675,669) (982,932)
Redemption fees 1,296 2,603
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (25,496) (339,287)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 14,142 (477,251)
NET ASSETS
Beginning of period 2,256,272 2,733,523
End of period (including undistributed net investment $ 2,270,414 $ 2,256,272
income of $55,904 and $45,443, respectively)
OTHER INFORMATION
Shares
Sold 49,805 49,736
Issued in reinvestment of distributions 20,325 20,933
Redeemed (73,039) (109,523)
Net increase (decrease) (2,909) (38,854)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED APRIL 30,
1996 1995 1994 A 1993 1992
SELECTED PER-SHARE DATA
Net asset value, beginning $ 9.170 $ 9.590 $ 9.300 $ 8.320 $ 6.920
of period
Income from Investment .902 .814 .871 .645 .725
Operations
Net investment income
Net realized and unrealized .119 (.427) .249 .942 1.418
gain (loss)
Total from 1.021 .387 1.120 1.587 2.143
investment operations
Less Distributions (.724) (.617) (.730) (.619) (.746)
From net investment income
In excess of net (.133) (.202) (.119) - -
investment income
Total distributions (.857) (.819) (.849) (.619) (.746)
Redemption fees added to .006 .012 .019 .012 .003
paid in capital
Net asset value, end of period $ 9.340 $ 9.170 $ 9.590 $ 9.300 $ 8.320
TOTAL RETURN 11.72% 4.63% 12.46% 20.03% 32.95%
RATIOS AND SUPPLEMENTAL
DATA
Net assets, end of period $ 2,270 $ 2,256 $ 2,734 $ 2,124 $ 1,579
(in millions)
Ratio of expenses to average .98% .96% .97% .91% .80%
net assets
Ratio of net investment income 8.03% 7.38% 6.78% 7.45% 9.77%
to average net assets
Portfolio turnover rate 119% 78% 100% 102% 132%
</TABLE>
A EFFECTIVE MAY 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 April 30, 1996
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Capital & Income (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 financial statements have
been prepared in conformity with generally accepted accounting principles
which permit management to make certain estimates and assumptions at the
date of the financial statements. 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."
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
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 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, paydown gains/losses on certain securities, foreign currency
transactions, defaulted bonds, market discount, partnerships, capital loss
carryforwards 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. The
fee, which is retained by the fund, is accounted for as a direct 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 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 $66,037,000 or
2.9% 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 $4,644,000 or 0.2% of net assets.
3. JOINT TRADING ACCOUNT.
At the end of the period, the fund had 20% or more of its total investments
in repurchase agreements through a joint trading account. These repurchase
agreements were with entities whose creditworthiness has been reviewed and
found satisfactory by FMR. The maturity values of the joint trading account
investments were $461,413,000 at 5.33%. The investments in repurchase
agreements through the joint trading account are summarized as follows:
SUMMARY OF JOINT TRADING
DATED APRIL 30, 1996, DUE MAY 1, 1996
Number of dealers or banks 23
Maximum amount with one dealer or bank 11.8%
Aggregate principal amount of agreements $24,542,776,000
Aggregate maturity amount of agreements $24,546,409,934
Aggregate market value of collateral $25,046,511,376
Coupon rates of collateral 0.0% to 14.25%
Maturity dates of collateral 5/2/96 to 2/15/26
4. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $2,379,052,000 and $2,667,306,000, respectively, of which U.S.
government and government agency obligations aggregated $88,658,000 and
$67,144,000, respectively.
5. 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 .1100% 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 annual 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
5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
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 $42,000 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. For the
period, the transfer agent fees were equivalent to an annual rate of .20%
of average net assets.
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 $24,000 for the period.
6. 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, 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 $20,695,000 and
$22,872,000, respectively.
7. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$30,000 under this arrangement.
In addition, the fund has entered into arrangements with its custodian and
transfer agent whereby interest earned on uninvested cash balances was used
to offset a portion of the fund's expenses. During the period, the fund's
custodian and transfer agent fees were reduced by $53,000 and $48,000,
respectively, under these arrangements.
8. 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
AFFILIATE COST COST INCOME VALUE
Ampex, Inc. Class C $ - $ 7,464 $ - $ -
Art Store Holding Company - 2,618 - -
Barry's Jewelers, Inc. - 785 - 859
Crown Books Corp. - 5,897 - -
EL Paso Electric Co. - - - 22,464
FF Holdings Corp. - - - -
Intelogic Trace, Inc. - - - -
Little Switzerland, Inc. - 1,579 - -
Standard Brands Paint Co. - 18,721 - 82
Standard Brands Paint Property
Holdings - 2,526 - -
Sun International Hotels Ltd. - 12,540 - -
Thermadyne Holdings Corp. 1,647 1,409 - 56,253
Welltech, Inc. - 3,793 - -
TOTALS $ 1,647 $ 57,332 $ - $ 79,658
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, 1996, 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, 1996 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, 1996, 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 10, 1996
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call -
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
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
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
New Markets Income
Short-Intermediate Government
Short-Term Bond
Short-Term World Bond
Spartan Ginnie Mae
(registered trademark)
Spartan Government Income
Spartan High Income
Spartan Investment Grade Bond
Spartan Limited Maturity Government
Spartan Long-Term Government Bond
Spartan Short-Intermediate Government
Spartan Short-Term Bond
Target Timeline 1999, 2001, 2003
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
