(2_FIDELITY_LOGOS)FIDELITY
ASSET MANAGER: INCOME
SEMIANNUAL REPORT
MARCH 31, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 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 49 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 53 Notes to the financial statements.
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.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term, as we witnessed last year. You also can help to manage some
of the risks of investing through diversification. Asset Manager funds are
already diversified because they invest in stocks, bonds and short-term
investments, both in the U.S. and overseas.
If you have a short investment time horizon, you might want to consider
moving some of your 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.
Finally, 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
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (or income) and capital gains (the profits
the fund earns when it sells securities that have grown in value). If
Fidelity had not reimbursed fund expenses, the fund's one year and life of
fund figures would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MARCH 31, 1995 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Asset Manager: Income 2.89% 4.14% 20.37%
Lehman Brothers Intermediate
Government-Corporate Bond Index 4.27% 4.49% 10.95%
Average Income Fund 4.30% 5.93% 17.11%
Consumer Price Index 1.34% 2.85% 7.15%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year or since the fund
began on October 1, 1992. 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
Lehman Brothers Intermediate Government-Corporate Bond Index - a broad
measure of the intermediate bond market's performance. To measure how the
fund's performance stacked up against its peers, you can compare it to the
average income fund, which reflects the performance of 15 funds with
similar objectives tracked by Lipper Analytical Services over the past six
months. Both 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. (The CPI returns begin
on the month end closest to the fund's start date.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MARCH 31, 1995 PAST 1 LIFE OF
YEAR FUND
Asset Manager: Income 4.14% 7.70%
Lehman Brothers Intermediate
Government-Corporate Bond Index 4.49% 4.25%
Average Income Fund 5.93% 6.50%
Consumer Price Index 2.85% 2.80%
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 LIFE OF FUND
Fidelity Asset ManagGovernment/CorporateFidelity Conservativ
10/01/92 10000.00 10000.00 10000.00
10/31/92 9890.00 9870.00 9975.00
11/30/92 10020.30 9832.49 10049.81
12/31/92 10222.01 9964.25 10139.26
01/31/93 10485.15 10157.56 10235.58
02/28/93 10657.37 10318.05 10336.91
03/31/93 10891.47 10359.32 10404.10
04/30/93 10973.52 10442.19 10390.58
05/31/93 11035.04 10419.22 10456.04
06/30/93 11158.50 10582.80 10545.96
07/31/93 11251.62 10608.20 10570.21
08/31/93 11500.54 10776.87 10735.11
09/30/93 11531.80 10821.06 10744.77
10/31/93 11688.42 10850.27 10815.69
11/30/93 11615.37 10789.51 10772.42
12/31/93 11794.95 10839.14 10825.21
01/31/94 11997.57 10959.46 10957.28
02/28/94 11783.97 10797.26 10840.03
03/31/94 11558.83 10619.10 10688.27
04/30/94 11569.50 10546.89 10706.44
05/31/94 11602.07 10554.27 10755.69
06/30/94 11536.91 10555.33 10713.75
07/31/94 11689.10 10707.33 10861.59
08/31/94 11809.11 10740.52 10971.30
09/30/94 11699.70 10641.71 10892.30
10/31/94 11732.90 10640.64 10962.01
11/30/94 11644.90 10592.76 10898.43
12/31/94 11634.28 10629.83 10975.81
01/31/95 11701.28 10808.42 11118.50
02/28/95 11913.80 11032.15 11300.84
03/31/95 12037.45 11095.03 11416.11
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Asset Manager: Income on October 1, 1992, when the fund started. As the
chart shows, by March 31, 1995, the value of your investment, would have
grown to $12,037 - a 20.37% increase on your initial investment. For
comparison, look at how the Lehman Brothers Intermediate
Government-Corporate Bond Index did over the same period. With dividends
reinvested, the same $10,000 investment would have grown to $11,095 - a
10.95% increase. You can also look at how the Conservative Asset Allocation
Composite Index, a hypothetical combination of unmanaged indices, did over
the same period. Reflecting the fund's neutral mix of 20% stocks, 30%
bonds, and 50% short-term instruments, this index combines returns from the
S&P 500, Lehman Brothers Treasury Bond Index, and the Salomon Brothers
3-month T-Bill Total Rate of Return Index. With dividends and interest, if
any, reinvested, the same $10,000 investment would have grown to $11,416 -
a 14.16% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, 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)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Bob Beckwitt, Portfolio Manager of Fidelity Asset
Manager: Income
Q. BOB, HOW DID THE FUND PERFORM?
A. Not as well as most other funds like it. Asset Manager: Income's total
return for the six months ended March 31, 1995, was 2.89%, compared to
4.30% for the average income fund, according to Lipper Analytical Services.
The fund also underperformed for the 12 months ended March 31, 1995. It
returned 4.14%, compared to 5.93% for the average income fund.
Q. HOW WOULD YOU CHARACTERIZE THE FUND'S PERFORMANCE?
A. I think the fund performed in line with reasonable expectations under
extremely challenging conditions. During 1994, a rare combination of low
interest rates on cash instruments, rising longer-term rates leading to
losses on bonds, a weak domestic stock market and sharp declines in
overseas markets produced negative returns for many investors. The first
three months of 1995 were a little better. Still, the happiest investors
lately have been those who assumed the least amount of risk. Asset Manager:
Income, with its large short-term investment component, not only helped
shareholders avoid losses - it even made them a little money.
Q. WHY DID THE FUND LAG ITS PEERS?
A. The main reason was the fund's foreign investments. It wasn't so much a
case of owning too few stocks, or too many bonds, or any other factor
having to do with the
fund's securities mix. It was that I invested heavily outside the United
States during a period when most foreign investments lost money. Lately
I've cut back sharply: foreign investments totaled 7% of the fund at the
end of the period, compared to 18% six months ago. But during most of the
period, Asset Manager: Income's stake in foreign securities was larger than
its average competitor's, and that obviously hurt performance.
Q. WHY INVEST OVERSEAS AT ALL?
A. Foreign investments - both in established markets such as Europe and
Japan as well as in emerging markets such as Latin America and Southeast
Asia - have always helped distinguish Asset Manager: Income from its
competitors. There are two good reasons not to ignore foreign investments.
One, many foreign economies are growing faster than the U.S. economy, which
makes foreign investments, while more risky, potentially more rewarding in
the long run. These investments helped the fund in 1992 and 1993. Two,
investing overseas helps me further diversify the fund's investments, and
diversification is at the core of the fund's investment strategy.
Q. CAN YOU OUTLINE THAT STRATEGY FOR US?
A. Sure. Asset Manager: Income invests in a broad range of foreign and
domestic securities, including stocks, bonds and short-term instruments.
The fund seeks higher returns than one might expect from a cash-only fund,
such as a money market fund; but with less volatility than if it were to
invest all its assets in either stocks or bonds. Why less volatility?
Because different investment vehicles usually behave in different ways -
while some are going down, others may be going up. There are exceptions,
however. In 1993 nearly every investment vehicle in the world rose and the
fund could do little wrong. In 1994, the situation was almost exactly the
opposite - most investments fell, although again, foreign investments as a
group had a much worse year than their domestic counterparts.
Q. IN LIGHT OF THE FUND'S RECENT PERFORMANCE, DO YOU STILL BELIEVE IN
DIVERSIFICATION?
A. Absolutely. I still believe diversification makes sense - it doesn't
eliminate risk, certainly, but it can reduce it. If anything, I'll be
diversifying even more. In the past I've sometimes been willing to invest
more heavily in individual foreign countries; in the future, I'll be less
likely to do so. I know, for example, that when the time comes to increase
the fund's exposure to emerging markets again, one of my goals will be to
spread that exposure around as widely as possible.
Q. WHAT WAS THE FUND'S STAKE IN EMERGING MARKETS AT THE END OF MARCH?
A. Only about 2%. That's down sharply from six months ago, due mainly to my
decision to pull out of Mexico as well as most of Latin America last
December. I still see potential opportunities in emerging markets,
especially since prices have fallen so dramatically. And I'll be looking
for ways to increase the fund's stake in the months ahead. The difference
is, going forward I'll likely attach a higher level of risk to emerging
market investments. That doesn't mean I'll avoid them, only that I'll
require a higher potential return in exchange for accepting that risk.
Q. HOW WERE THE FUND'S INVESTMENTS DIVIDED AMONG STOCKS, BONDS AND CASH
EQUIVALENTS AT THE END OF THE PERIOD?
A. Six months ago the fund was 16% stocks, 36% bonds and 48% short-term
instruments. As of March 31, 1995, the mix was 18% stocks, 31% bonds and
51% short-term instruments. So there has been little change except that
I've cut back slightly on bonds. Now, as six months ago, that leaves the
fund in what I would describe as a neutral posture.
Q. WHAT'S THE MAKE-UP OF THE BOND PORTION OF THE FUND?
A. Mainly domestic bonds, divided about evenly between high-quality
corporate bonds and long-term U.S. Treasury bonds. For a while last fall I
was buying Treasury bonds when it looked like long-term rates would be
peaking at around 8%. Because interest rates and bond prices generally move
in opposite directions, the fund made money when long-term rates headed
back towards 7%. I've since cut back on Treasury bonds, though, because I
don't expect long-term interest rates to fall as low as 6% again anytime in
the foreseeable future.
Q. WHY AREN'T THERE MORE CORPORATE BONDS IN THE FUND?
A. Because the rates aren't that much higher. With corporate bonds, you
assume more risk than with government bonds: risk that you won't be able to
sell it as easily as you can sell a government bond; and risk that in a
recession, the company that issued the bond might not be able to meet its
obligations. Risk is okay, as long as you're compensated for it. But in the
current environment, the extra price you pay for the added security of a
government bond is so small that it's insignificant.
Q. HOW DID STOCKS PERFORM DURING THE PERIOD?
A. Domestic stocks have done surprisingly well, especially in the past few
months. Technology remains the largest sector in the fund at 3% of total
investments, and many of those stocks have been top performers, especially
IBM and Intel. Another 3% of the fund's assets is in finance stocks, led by
Fannie Mae and American Express. Both are trading at price-to-earnings
ratios that make them seem cheap by comparison with most other stocks.
Foreign stocks, on the other hand, were a definite drag on performance.
Grupo Carso, a holding company, and Telmex, the Mexican telephone monopoly,
were both among the casualties when the Mexican stock market plunged last
winter, and both have since been sold. Hitachi, a Japanese electronics
company, has failed so far to meet my expectations, but I've held on. What
seems to be holding Hitachi back is the continuing strength of the yen; if
and when the yen stops rising, Hitachi's outlook improves dramatically.
Q. DOES THE FUND STILL INVEST IN
DERIVATIVES?
A. Yes, although less in the latest period than in the past. One type of
derivative I've used is an indexed security or a structured note.
Structured notes are like customized bonds. They let me tailor a portion of
the fund's investments to match my outlook in specific segments of the
market, giving me the ability to take advantage of investment opportunities
I might otherwise miss. In the past the fund has invested in structured
notes that were designed to capitalize on falling short-term interest rates
in Europe. I sold most of those at a loss last spring when interest rates
rose instead. Fortunately, those losses were largely offset by profits in
structured notes designed to capitalize on rising commodity prices. But as
commodity prices have risen, I've sold most of those, too. By the end of
March, those derivatives totaled less than 2% of the fund.
Q. WHAT ABOUT DERIVATIVES TIED TO THE VALUE OF FOREIGN CURRENCIES?
A. I sometimes use foreign currency contracts, which are also derivatives,
to hedge against currency fluctuations. For example, I hedged the fund's
Japanese investments during the period because I thought the yen was
overvalued. Unfortunately, the yen kept rising. The fund didn't lose money
as a result, other than the small costs associated with trading currency
contracts; but it did miss an opportunity to profit from the declining
dollar. In Europe, on the other hand, I stopped hedging early in 1994, and
that has helped the fund's performance.
Q. WHAT CAN WE REASONABLY EXPECT FROM THE FUND IN THE MONTHS AHEAD?
A. That depends largely on the outlook for inflation. It's better now than
it was six months ago, but it's still uncertain. If the economy accelerates
and inflation takes off with it, that would be bad news for both stocks and
bonds. On the other hand, many of the factors that made last year so
difficult are less likely to have as large an impact in 1995. Historically,
interest rates have tended to level off after rising as much as they did in
1994. And foreign markets should not hurt the fund as much this year simply
because that portion of the fund is smaller. The upshot should be less
volatility overall.
FUND FACTS
GOAL: high current income,
and when appropriate,
capital appreciation through
investments in stocks, bonds
and short-term instruments
of all types
START DATE: October 1, 1992
SIZE: as of March 31, 1995,
more than $510 million
MANAGER: Robert Beckwitt,
since 1992; manager, Fidelity
Asset Manager, since 1988;
Fidelity Asset Manager:
Growth, since 1991; joined
Fidelity in 1986
(checkmark)
BOB BECKWITT ON RISK AND
INVESTING IN FOREIGN MARKETS:
"Although lately I've cut back
on the fund's foreign
investments, I've by no
means stopped looking for
opportunities outside the
United States. On the other
hand, the level of risk I attach
to investments in Europe,
Japan and especially
emerging markets has to be
higher going forward than it
has been in the past. That
doesn't mean I'll avoid them,
necessarily - only that I'll be
looking for a higher potential
return before I invest. When
things get riskier, you demand
more return to balance the
risk. If your investment
horizon is greater than two
years, Asset Manager:
Income may be right for you."
(solid bullet) Foreign investments totaled
7% of the fund at the end of
March, down from 18% six
months ago. Only a fraction of
the fund's foreign investments
- - 2% overall - was in
emerging markets.
(solid bullet) The fund's asset mix at
the end of March was 18%
stocks, 31% bonds and 51%
short-term instruments.
Those proportions have
changed little during the past
year and are close to the
fund's neutral mix: 20-30-50.
INVESTMENT CHANGES
TOP FIVE FIXED-INCOME SECURITIES AS OF MARCH 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
(BY ISSUER, WITH MATURITIES OF MORE THAN ONE YEAR) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS IN
THESE SECURITIES
6 MONTHS AGO
U.S. Government & Government Agencies
(various issues) 30.2 30.8
Argentinian Government (various issues) 1.1 2.0
Bank of Boston (various issues) 1.0 1.1
Premier Auto Trust (various issues) 1.0 0.2
Resolution Trust Corp. (various issues) 0.9 0.7
</TABLE>
QUALITY DIVERSIFICATION AS OF MARCH 31, 1995
(MOODY'S RATINGS) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Aaa, Aa, A 40.8 38.7
Baa 6.8 10.0
Ba and Below 1.8 4.2
TOP FIVE STOCKS AS OF MARCH 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS IN
THESE STOCKS 6
MONTHS AGO
International Business Machines Corp. 0.5 0.4
American Express Co. 0.4 0.3
RJR Nabisco Holdings Corp. 0.4 0.1
Federal National Mortgage Association 0.4 0.2
Intel Corp. 0.4 0.1
ASSET ALLOCATION
AS OF MARCH 31, 1995 * AS OF SEPTEMBER 30, 1994 **
Row: 1, Col: 1, Value: 51.0
Row: 1, Col: 2, Value: 31.0
Row: 1, Col: 3, Value: 10.0
Row: 1, Col: 4, Value: 8.0
Row: 1, Col: 1, Value: 48.0
Row: 1, Col: 2, Value: 36.0
Row: 1, Col: 3, Value: 10.0
Row: 1, Col: 4, Value: 6.0
Stock class 18%
Bond class 31%
Short-term class
and other 51%
FOREIGN
INVESTMENTS 7%
Stock class 16%
Bond class 36%
Short-term class
and other 48%
FOREIGN
INVESTMENTS 18%
*
**
ASSET ALLOCATIONS IN PIE CHART REFLECT THE CATEGORIZATION OF ASSETS AS
DEFINED IN THE FUND'S PROSPECTUS. FINANCIAL STATEMENT CATEGORIZATIONS
CONFORM TO ACCOUNTING STANDARDS AND WILL DIFFER FROM THE PIE CHART.
INVESTMENTS MARCH 31, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 17.4%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.3%
AEROSPACE & DEFENSE - 0.2%
Boeing Co. 2,100 $ 113,079
Lockheed Martin Corp. 10,575 559,153
McDonnell Douglas Corp. 2,400 133,800
Sundstrand Corp. 1,300 65,488
871,520
DEFENSE ELECTRONICS - 0.1%
Loral Corp. 900 38,250
Raytheon Co. 4,100 298,788
337,038
SHIP BUILDING & REPAIR - 0.0%
Bremer Vulkan AG (a) 300 17,236
Far East-Levingston Shipbuilding Ltd. 4,000 16,578
General Dynamics Corp. 1,300 61,100
Keppel Corp. Ltd. 5,000 40,383
135,297
TOTAL AEROSPACE & DEFENSE 1,343,855
BASIC INDUSTRIES - 1.5%
CHEMICALS & PLASTICS - 0.6%
Betz Laboratories, Inc. 1,900 83,125
CGIP 100 22,544
Cominco Fertilizer Ltd. 900 25,165
du Pont (E.I.) de Nemours & Co. 11,900 719,950
Ferro Corp. 7,400 187,775
Grace (W.R.) & Co. 2,600 138,450
Great Lakes Chemical Corp. 5,800 361,775
Hoechst AG Ord. 200 41,455
Kemira OY sponsored ADR (a)(f) 800 12,300
Kureha Chemical Industries Co. Ltd. 5,000 24,827
Lyondell Petrochemical Co. 7,700 186,725
Nalco Chemical Co. 5,500 184,938
Potash Corp. of Saskatchewan 5,000 221,547
Praxair, Inc. 2,500 58,125
Sekisui Chemical 9,000 107,044
Union Carbide Corp. 17,800 545,125
Wellman, Inc. 4,200 106,050
3,026,920
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - CONTINUED
IRON & STEEL - 0.0%
Armco, Inc. (a) 20,200 $ 138,875
Inland Steel Industries, Inc. (a) 1,300 35,750
Kawasaki Steel Corp. (a) 7,000 27,563
Nakayama Steel Works Ltd. 2,000 13,811
Nucor Corp. 400 22,500
238,499
METALS & MINING - 0.5%
Alcan Aluminium Ltd. 35,940 953,563
Alumax, Inc. (a) 11,700 314,438
Aluminum Co. of America 16,900 699,238
Castech Aluminum Group (a) 1,000 14,875
Kanamoto Co. Ltd. 1,000 20,208
Mitsubishi Materials Corp. 8,000 38,799
Noranda, Inc. 6,900 117,733
Reynolds Metals Co. 4,800 236,400
Sungei Way Holdings BHD 14,000 56,465
2,451,719
PACKAGING & CONTAINERS - 0.1%
Carnaudmetalbox SA 200 7,490
Corning, Inc. 3,000 108,000
Owens-Illinois, Inc. (a) 11,800 132,750
Sonoco Products Co. 5,700 138,225
386,465
PAPER & FOREST PRODUCTS - 0.3%
Champion International Corp. 1,900 82,175
Federal Paper Board Co., Inc. 1,600 45,600
Georgia-Pacific Corp. 3,100 247,225
International Paper Co. 2,200 165,275
Jefferson Smurfit Corp. (a) 4,400 70,950
Kimberly-Clark Corp. 1,000 52,000
Kokuyo Co. Ltd. 3,000 77,252
Land & General BHD 5,000 15,322
Land & General BHD (RFD)(a) 5,000 15,322
Kumpulan Guthrie BHD 12,000 18,790
Malakoff BHD 16,000 41,123
Scott Paper Co. 3,100 277,063
Stone Container Corp. (a) 10,200 233,325
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - CONTINUED
Temple-Inland, Inc. 2,700 $ 121,163
Union Camp Corp. 1,300 67,438
1,530,023
TOTAL BASIC INDUSTRIES 7,633,626
CONGLOMERATES - 0.2%
Allied-Signal, Inc. 5,900 231,575
Suncor, Inc. 1,100 29,382
Tyco International Ltd. 1,961 103,688
United Technologies Corp. 9,300 642,863
1,007,508
CONSTRUCTION & REAL ESTATE - 0.8%
BUILDING MATERIALS - 0.1%
Armstrong World Industries, Inc. 4,900 223,563
Dexter Corp. 2,000 43,750
Masco Corp. 3,900 107,738
Pioneer International Ltd. 4,600 10,719
Siam Cement Ltd. (For. Reg.) 600 34,453
Tecumseh Products Co. Class A 1,600 79,200
499,423
CONSTRUCTION - 0.0%
Centex Corp. 1,400 33,775
Hopewell Holdings Ltd. 71,000 50,042
Kaneshita Construction Co. Ltd. Ord. 2,000 30,716
YTL Corp. BHD 15,500 76,611
191,144
ENGINEERING - 0.0%
Fluor Corp. 500 24,125
Glenayre Technologies, Inc. (a) 1,500 68,250
92,375
REAL ESTATE - 0.1%
Bolton Properties BHD 13,000 17,272
Cheung Kong Ltd. 10,000 43,582
Daiman Development BHD 15,000 17,556
Henderson Land 3,000 16,877
Hong Kong Land Ltd. 18,000 39,340
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE - CONTINUED
Mitsubishi Estate Co. Ltd. 10,000 $ 112,818
Sime UEP Properties BHD 9,000 17,082
Sun Hung Kai Properties Ltd. 7,000 47,753
Tan & Tan Development BHD 78,000 91,910
404,190
REAL ESTATE INVESTMENT TRUSTS - 0.6%
Bay Apartment Community 7,600 139,650
Bradley Real Estate Trust 2,800 45,850
CBL & Associates Properties 7,400 148,000
Cali Realty Corp. (a) 2,500 43,438
Colonial Property Trust (SBI) 900 20,700
DeBartolo Realty Corp. 6,300 88,988
Developers Diversified Realty 10,500 296,625
Duke Realty Investors, Inc. 10,600 280,900
Equity Residential Property Trust (SBI) 7,800 202,800
Evans Withycombe Residential, Inc. 1,100 22,000
Excel Realty Trust, Inc. 3,100 58,900
Felcor Suite Hotels, Inc. 7,500 179,063
Glimcher Realty Trust 2,700 54,000
Haagen Alexander Properties, Inc. 4,600 63,825
Horizon Outlet Centers, Inc. 100 2,225
Kimco Realty Corp. 8,300 318,500
Liberty Property Trust (SBI) 1,400 27,125
Macerich Co. 5,000 101,875
Oasis Residential, Inc. 3,400 77,350
Post Properties, Inc. 3,600 106,650
RFS Hotel Investors, Inc. 17,800 253,650
Simon Properties Group, Inc. 1,400 34,125
Storage Equities, Inc. 9,100 154,700
Storage USA, Inc. 2,900 84,463
Sun Communities 2,100 47,250
Tanger Factory Outlet Centers, Inc. 2,000 47,500
Trinet Corporate Realty Trust, Inc. 2,900 77,575
Vornado Realty Trust 300 10,763
Weeks Corp. 800 18,300
3,006,790
TOTAL CONSTRUCTION & REAL ESTATE 4,193,922
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DURABLES - 0.9%
AUTOS, TIRES, & ACCESSORIES - 0.6%
Aisin Seiki Co. Ltd. 2,000 $ 25,635
Allen Group, Inc. 1,500 37,125
Automotive Industries Holding, Inc. (a) 400 8,800
Bandag, Inc. 1,400 79,975
BMW AG 100 50,036
Bridgestone Corp. 2,000 29,792
Capaco Automotive Products Corp. 2,100 17,588
Chrysler Corp. 13,300 556,938
Dana Corp. 2,200 56,100
Discount Auto Parts, Inc. (a) 400 9,600
Echlin, Inc. 1,400 53,900
General Motors Corp. 20,097 889,292
Genuine Parts Co. 2,200 87,725
Johnson Controls, Inc. 3,600 183,150
Kia Motors Corp. sponsored GDR (a)(f) 2,600 39,650
Magna International, Inc. Class A 4,000 152,224
Pirelli Tyre Holdings NV Ord. 2,900 19,029
Sumitomo Rubber Industries 5,060 41,193
Suzuki Motor Corp. 5,000 53,637
Toyoda Machine Works 2,000 15,935
Toyota Motor Corp. 8,000 163,510
Volvo AB Class B 4,600 79,609
2,650,443
CONSUMER ELECTRONICS - 0.2%
Black & Decker Corp. 2,400 69,300
Electrolux AB 1,200 54,484
Matsushita Electric Industrial Co. Ltd. 26,000 420,323
Sharp Corp. 4,000 65,127
Sony Corp. 8,700 437,009
1,046,243
HOME FURNISHINGS - 0.0%
Dapta-Mallinjoud SA 300 8,118
TEXTILES & APPAREL - 0.1%
Burlington Industries, Inc. (a) 7,800 88,725
Fruit of the Loom, Inc. Class A 2,800 73,500
Jones Apparel Group, Inc. (a) 100 2,700
Kellwood Co. 2,500 46,563
Nisshinbo Industries 12,000 110,577
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
Nine West Group, Inc. (a) 800 $ 23,600
Russell Corp. 6,000 177,750
Tokyo Style Co. Ltd. 2,000 32,102
Unifi, Inc. 1,300 35,100
Westpoint Stevens, Inc. Class A (a) 2,900 43,500
634,117
TOTAL DURABLES 4,338,921
ENERGY - 1.9%
ENERGY SERVICES - 0.6%
BJ Services Co. (a) 5,500 112,750
Baker Hughes, Inc. 11,900 242,463
Enterra Corp. (a) 7,500 128,438
Halliburton Co. 13,200 480,150
McDermott International, Inc. 20,200 552,975
Nabors Industries, Inc. (a) 9,000 67,500
Noble Drilling Corp. (a) 14,632 89,621
Nowsco Well Service Ltd. 2,700 29,185
Offshore Logistics, Inc. 3,300 42,900
Pride Petroleum Services, Inc. (a) 300 2,063
Schlumberger Ltd. 19,000 1,132,875
Tidewater, Inc. 11,800 240,425
Weatherford International, Inc. (a) 9,700 101,850
3,223,195
INDEPENDENT POWER - 0.0%
Thermo Electron Corp. (a) 500 25,438
OIL & GAS - 1.3%
Amerada Hess Corp. 12,000 592,500
Amoco Corp. 800 50,900
Anderson Exploration Ltd. (a) 5,900 60,613
Atlantic Richfield Co. 3,400 391,000
Blue Range Resource Corp. Class A (a)(f) 2,600 19,743
British Petroleum PLC:
ADR 18,975 1,591,528
Ord. 118 819
Burlington Resources, Inc. 8,400 342,300
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Coastal Corp. 3,900 $ 112,125
Elf Aquitaine sponsored ADR 7,700 298,375
Exxon Corp. 4,900 327,075
Kerr-McGee Corp. 3,700 188,700
Louisiana Land & Exploration Co. 1,300 48,588
Murphy Oil Corp. 5,900 254,438
Newfield Exploration Co. (a) 2,900 62,350
Noble Affiliates, Inc. 200 5,475
Norsk Hydro AS 1,972 73,844
Norsk Hydro AS ADR 1,444 53,789
Occidental Petroleum Corp. (f) 14,100 308,438
Phillips Petroleum Co. 5,600 205,100
Renaissance Energy Ltd. (a)(f) 5,500 114,972
Renaissance Energy Ltd. (a) 22,000 459,889
Rio Alto Exploration Ltd. (a) 18,900 69,225
Texaco, Inc. 3,200 212,800
Tosco Corp. 3,100 96,100
Total SA Class B 2,900 173,131
Total SA Class B sponsored ADR 9,017 270,510
Unocal Corp. 3,312 95,220
6,479,547
TOTAL ENERGY 9,728,180
FINANCE - 2.7%
BANKS - 0.5%
Banco Bilbao Vizcaya SA Ord. 2,000 50,837
Banco Intercontinental Espanol 200 15,567
Banco Popular Espanol 200 25,892
Bangkok Bank 7,600 67,281
Bank International Indonesia Ord. 8,200 19,877
Bank of Asia PLC (For. Reg.) 18,800 41,990
Bank of Boston Corp. 7,414 220,567
BanPonce Corp. 2,700 85,050
BayBanks, Inc. 1,200 77,400
BNP CI Ord. 2,470 125,814
Chemical Banking Corp. 1,300 49,075
C. S. Holdings (Bearer) 228 93,461
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
BANKS - CONTINUED
Comerica, Inc. 1,700 $ 46,750
Commerce Asset Holding BHD 3,000 12,218
Deutsche Bank AG 200 94,473
Development Bank of Singapore (For. Reg.) 2,000 20,971
Grupo Financiero Bancomer SA de CV sponsored ADR,
Series C (a) 100 350
HSBC Holdings:
Ord. 3,687 41,802
PLC 6,000 67,701
Krung Thai Bank (For. Reg.) 49,300 139,141
Mitsubishi Trust & Banking 6,000 87,991
Overseas Union Bank Ltd. (For. Reg.) 19,000 113,071
Panin Bank PT (For. Reg.) 16,100 16,186
Siam City Bank PLC (For. Reg.) 74,800 75,939
Shawmut National Corp. 14,780 389,823
Swiss Bank Corp. (Bearer) 137 45,242
Thai Farmers Bank 15,200 128,390
Thai Military Bank (For. Reg.) 13,900 40,642
Toho Bank Ord. 6,000 48,430
Trustmark Corp. 200 3,050
United Overseas Bank Ltd.:
(For. Reg.) 4,000 39,674
(warrants)(a) 11,000 53,383
2,338,038
CLOSED END INVESTMENT COMPANIES - 0.1%
Austria Fund, Inc. 3,900 30,713
France Growth Fund, Inc. 6,700 64,488
Germany Fund, Inc. 213 2,423
Growth Fund of Spain, Inc. 9,600 84,000
Morgan Stanley India Investment Fund, Inc. 42,100 442,050
Thai Fund, Inc. 600 13,200
636,874
CREDIT & OTHER FINANCE - 0.8%
American Express Co. 63,938 2,229,838
Bank of New York Co., Inc. 6,620 217,633
Barnett Banks, Inc. 1,100 50,050
Beneficial Corp. 6,000 235,500
Boatmen's Bancshares, Inc. 1,500 45,375
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Citicorp 1,975 $ 83,938
First Union Corp. 1,914 83,020
Fleet Financial Group, Inc. 12,634 409,026
General Finance & Securities PLC (For. Reg.)(a) 2,000 8,122
Green Tree Acceptance, Inc. 1,800 73,800
Hong Leong Credit BHD 9,000 38,434
Industrial Finance Corp. (For. Reg.) 24,866 50,489
JCG Holdings 76,000 43,492
Keycorp 1,700 48,025
NationsBank Corp. 2,900 147,175
Promise Co. Ltd. 1,200 52,517
Republic New York Corp. 5,100 250,538
Schroders PLC (non-vtg.) 22 478
4,067,450
FEDERAL SPONSORED CREDIT - 0.5%
Federal Home Loan Mortgage Corporation 7,200 435,600
Federal National Mortgage Association 26,300 2,140,163
2,575,763
INSURANCE - 0.5%
Ace Ltd. 3,000 75,750
Alexander & Alexander Services, Inc. 8,400 198,450
Allstate Corp. 18,200 523,250
Assicurazioni Generali Spa 600 13,254
Baloise Holding 50 99,823
Berkley (W.R.) Corp. 3,300 120,863
Corporacion Mapfre International Reassurance 900 35,949
Dai-Tokyo Fire & Marine Insurance Ord. 7,000 52,540
General Re Corp. 400 52,800
International Nederlanden Groep CVA 1,963 97,053
John Alden Financial Corp. 3,200 58,800
Loews Corp. 2,400 237,000
MBIA, Inc. 500 31,438
MGIC Investment Corp. 1,500 61,125
NAC Re Corp. 5,400 163,350
Providian Corp. 1,300 45,663
Royale Insurance Co. Ltd. 11,019 51,116
SAFECO Corp. 900 49,275
Skandia International Holding Co. AB ADR 1,300 20,116
Tokio Marine & Fire Insurance Co. Ltd. 8,000 90,993
Torchmark Corp. 1,400 58,100
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
INSURANCE - CONTINUED
Travelers, Inc. 11,900 $ 459,638
UNUM Corp. 3,800 171,950
2,768,296
SAVINGS & LOANS - 0.1%
Ahmanson (H.F.) & Co. 12,100 217,800
Commercial Federal Corp. (a) 300 7,444
GP Financial Corp. 400 9,250
Golden West Financial Corp. 8,500 325,125
Standard Federal Bank 2,900 77,938
Washington Mutual, Inc. 1,500 30,094
667,651
SECURITIES INDUSTRY - 0.2%
Bear Stearns Companies, Inc. 3,300 61,050
Lehman Brothers Holdings, Inc. 8,080 145,440
Merrill Lynch & Co., Inc. 5,000 213,125
Midland Walwyn, Inc. (a) 10,500 54,404
Morgan Stanley Group, Inc. 1,200 80,850
Nikko Securities Co. Ltd. 4,000 35,104
Nomura Securities Co. Ltd. 21,000 392,841
982,814
TOTAL FINANCE 14,036,886
HEALTH - 0.8%
DRUGS & PHARMACEUTICALS - 0.4%
Allergan, Inc. 2,100 61,950
American Home Products Corp. 1,800 128,250
Amgen, Inc. (a) 2,400 161,700
Barr Laboratories, Inc. (a) 4,900 100,075
Biogen, Inc. (a) 3,500 139,125
Bristol-Myers Squibb Co. 2,000 126,000
Carter-Wallace, Inc. 2,300 27,313
Genentech, Inc. (redeemable)(a) 300 14,063
Ono Pharmaceutical Co. Ltd. 2,000 101,848
Pfizer, Inc. 1,700 145,775
Rhone Poulenc Rorer, Inc. 4,100 177,838
Rhone Poulenc SA Class A 4,000 93,922
Sankyo Co. Ltd. 9,900 228,637
Schering AG 200 147,636
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HEALTH - CONTINUED
DRUGS & PHARMACEUTICALS - CONTINUED
Schering-Plough Corp. 1,600 $ 119,000
Sigma Aldrich Corp. 2,800 108,500
Takeda Chemical Industries Ltd. 3,000 39,492
Yamanouchi Pharmaceutical 3,000 65,820
Zeneca Group PLC Ord. 6 85
1,987,029
MEDICAL EQUIPMENT & SUPPLIES - 0.2%
Baxter International, Inc. 3,300 108,075
Becton Dickinson & Co. 900 48,825
Medisense, Inc. 2,700 53,325
Nellcor, Inc. (a) 1,700 64,813
Pall Corp. 2,700 56,700
St. Jude Medical, Inc. 800 34,600
Spacelabs Medical, Inc. (a) 300 7,500
U.S. Surgical Corp. (f) 41,000 932,750
1,306,588
MEDICAL FACILITIES MANAGEMENT - 0.2%
Columbia/HCA Healthcare Corp. 6,835 293,905
Humana, Inc. (a) 5,200 133,250
Maxicare Health Plans, Inc. (a)(f) 14,304 248,532
U.S. Healthcare, Inc. 4,300 190,275
865,962
TOTAL HEALTH 4,159,579
HOLDING COMPANIES - 0.1%
Brierley Investments Ltd. 107,521 78,138
Christies International PLC 36,800 88,341
Cinergy Corp. 927 23,059
Jardine Matheson Holdings Ltd. 18,000 162,000
Lagardere Groupe SCA 2,700 63,116
Man AG Ord. 100 24,000
Westmont Land (Asia) BHD (a) 21,000 44,425
483,079
INDUSTRIAL MACHINERY & EQUIPMENT - 0.8%
ELECTRICAL EQUIPMENT - 0.2%
Emerson Electric Co. 1,100 73,150
General Electric Co. 900 48,713
Hitachi Koki Co. Ord. 6,000 61,940
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
ELECTRICAL EQUIPMENT - CONTINUED
Hutchison Whampoa Ltd. Ord. 16,000 $ 70,559
Mitsubishi Electric Co. Ord. 46,000 338,892
Mori Seiki Co. Ltd. Ord. 4,000 75,751
Nifco, Inc. 2,000 29,561
Omron Corp. 13,000 256,697
Philips Electronics NV 100 3,413
Philips Electronics 2,100 71,492
United Communication Industry (For. Reg.) 2,700 37,937
United Engineers BHD 6,000 35,113
1,103,218
INDUSTRIAL MACHINERY & EQUIPMENT - 0.5%
AIDA Engineering Ltd. Ord. 11,000 89,042
Amada Metrecs Co. Ltd. 4,000 59,122
Amadasonoike Co. Ltd. 8,000 62,818
Amtrol, Inc. 600 10,650
Caterpillar, Inc. 6,400 356,000
Clark Equipment Co. (a) 2,500 206,250
Commercial Intertech Corp. 1,100 24,200
Cooper Industries, Inc. 6,900 267,375
Deere & Co. 10,000 812,500
Duriron Co., Inc. 1,300 26,650
Enerflex Systems Ltd. 4,700 45,766
Finning Ltd. 1,700 23,691
Goulds Pumps, Inc. 2,100 49,350
Greenfield Industries, Inc. 2,800 79,100
Kennametal, Inc. 1,700 45,688
Keystone International, Inc. 1,500 32,438
Parker-Hannifin Corp. 500 22,125
Svedala 1,600 38,006
Tsugami Corp. 5,000 23,095
Valmet Corp. Ord. 1,800 35,016
2,308,882
POLLUTION CONTROL - 0.1%
Browning-Ferris Industries, Inc. 3,000 102,000
Safety Kleen Corp. 6,500 116,188
WMX Technologies, Inc. 20,400 561,000
779,188
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 4,191,288
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - 0.3%
BROADCASTING - 0.1%
British Sky Broadcasting Group ADR (a) 700 $ 17,238
Capital Cities/ABC, Inc. 3,000 264,750
Home Shopping Network, Inc. (a) 132 1,040
Tele-Communications, Inc. Class A (a) 12,600 264,600
Viacom, Inc.:
Class A (a) 1,000 45,750
Class B (non-vtg.)(a) 1,100 49,225
642,603
ENTERTAINMENT - 0.0%
Royal Caribbean Cruises Ltd. 3,100 80,988
LEISURE DURABLES & TOYS - 0.1%
Arctco, Inc. 3,100 46,500
Cobra Golf, Inc. 5,000 140,000
Outboard Marine Corp. 3,300 69,300
Polaris Industries, Inc. 500 24,125
Takara Co. Ltd. 1,000 11,894
291,819
LODGING & GAMING - 0.1%
Accor SA 300 35,845
Four Seasons Hotels, Inc. 2,648 28,623
Genting BHD 5,000 45,077
Host Marriott Corp. (a) 7,000 83,125
La Quinta Motor Inns, Inc. 500 13,563
Marriott International, Inc. 1,400 48,650
Promus Companies, Inc. (a) 800 30,000
284,883
PUBLISHING - 0.0%
Gannett Co., Inc. 700 37,363
Meredith Corp. 2,700 70,200
Scripps (E.W.) Co. Class A 1,900 61,275
Singapore Press Holdings Ltd. (For. Reg.) 3,000 50,797
Thomson Corp. 3,800 48,544
268,179
RESTAURANTS - 0.0%
McDonald's Corp. 900 30,713
Outback Steakhouse, Inc. (a) 1,600 40,600
71,313
TOTAL MEDIA & LEISURE 1,639,785
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - 1.0%
BEVERAGES - 0.1%
Compania Cervecerias Unidas SA ADR 3,200 $ 73,600
Emvasa del Valle de Enah Ord. (a) 300 181
LVMH 700 137,406
Panamerican Beverages, Inc. Class A 2,100 54,863
PepsiCo, Inc. 4,600 179,400
Quilmes Industries SA 3,400 56,100
Seagram Co. Ltd. 2,300 72,941
Whitbread Class A 2,959 26,445
600,936
FOODS - 0.1%
Dole Food, Inc. 700 20,300
General Mills, Inc. 900 53,663
Hormel (George A) & Co. 1,800 48,825
IBP, Inc. 3,300 107,663
Nippon Suisan Kaisha Ltd. (a) 9,000 43,441
RalCorp Holdings, Inc. (a) 900 21,375
Ralston Purina Co. 500 23,875
Tyson Foods, Inc. 3,500 84,438
Weston George Ltd. 2,800 86,046
489,626
HOUSEHOLD PRODUCTS - 0.1%
Alberto-Culver Co. Class A 900 23,625
Church & Dwight Co., Inc. 1,900 34,675
Colgate-Palmolive Co. 1,300 85,800
First Brands Corp. 1,600 60,200
NCH Corp. 800 50,700
Stanhome, Inc. 1,400 40,075
Tambrands, Inc. 6,800 303,450
598,525
TOBACCO - 0.7%
Imasco Ltd. 400 12,757
Philip Morris Companies, Inc. 14,350 936,338
RJR Nabisco Holdings Corp. 374,807 2,201,991
3,151,086
TOTAL NONDURABLES 4,840,173
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PRECIOUS METALS - 0.3%
Agnico Eagle Mines Ltd. 6,300 $ 76,541
Barrick Gold Corp. 28,300 702,823
Echo Bay Mines Ltd. 4,700 49,125
Homestake Mining Co. 8,600 159,100
Kloof Gold Mining Co. Ltd. Ord. 3,000 34,362
Placer Dome, Inc. 11,300 273,566
St. Barbara Mines Ltd. 18,400 15,689
Santa Fe Pacific Gold Corp. 10,840 136,855
1,448,061
RETAIL & WHOLESALE - 1.1%
APPAREL STORES - 0.2%
Edison Brothers Stores, Inc. 3,500 52,063
Esprit Asia Holdings Ltd. 58,000 22,878
Gap, Inc. 4,600 163,300
Gymboree Corp. (a) 4,600 116,725
Limited, Inc. 25,200 582,750
Ross Stores, Inc. 1,000 11,000
TJX Companies, Inc. 9,900 129,938
1,078,654
DRUG STORES - 0.0%
Revco (D.S.), Inc. (a) 6,100 140,300
GENERAL MERCHANDISE STORES - 0.4%
Consolidated Stores Corp. (a) 3,900 78,488
Dayton Hudson Corp. 3,000 214,500
Dillard Department Stores, Inc. Class A 17,400 480,675
Federated Department Stores, Inc. (Del.)(a) 20,300 449,138
Ito Yokado Co. Ltd. 6,000 297,921
May Department Stores Co. 3,400 125,800
Michaels Stores, Inc. (a) 1,000 33,250
Price/Costco, Inc. (a) 7,200 106,200
Sears, Roebuck & Co. 4,300 229,513
Wal-Mart Stores, Inc. 5,500 140,250
2,155,735
GROCERY STORES - 0.1%
Argyll Group PLC Ord. 7,300 34,050
Food Lion, Inc. Class A 11,000 61,875
Great Atlantic & Pacific Tea Co., Inc. 3,400 76,925
Izumi Co. Ord. 2,000 48,730
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - CONTINUED
Loblaw Companies, Ltd. 2,900 $ 53,368
Richfood Holdings, Inc. Class A 2,600 50,700
Safeway, Inc. (a) 5,100 177,225
Stop & Shop Companies, Inc. (a) 1,000 24,000
Supervalu, Inc. 4,300 115,025
641,898
RETAIL & WHOLESALE, MISCELLANEOUS - 0.4%
Amway Japan Ltd. 2,000 63,510
Best Buy Co., Inc. (a) 4,400 95,150
Cameron Ashley, Inc. (a) 3,000 48,000
Circuit City Stores, Inc. 2,800 73,850
Fingerhut Companies, Inc. 4,000 47,500
Gateway 2000, Inc. (a) 2,000 37,500
Home Depot, Inc. 5,900 261,075
Micro Warehouse, Inc. 1,600 49,600
Officemax, Inc. (a) 4,000 102,500
Rex Stores Corp. (a) 4,500 63,000
Smith (W H) Group Ord. 2,800 18,656
Sotheby's Holdings, Inc. Class A 4,000 49,000
Staples, Inc. (a) 450 11,869
Tiffany & Co., Inc. 3,000 93,000
Toys "R" Us, Inc. (a) 22,200 568,875
Uny Co. Ltd. 6,000 109,469
Williams-Sonoma, Inc. (a) 2,000 50,000
1,742,554
TOTAL RETAIL & WHOLESALE 5,759,141
SERVICES - 0.3%
ADVERTISING - 0.0%
Omnicom Group, Inc. 1,000 54,750
WPP Group PLC 18,800 30,951
85,701
LEASING & RENTAL - 0.0%
Hollywood Entertainment Corp. (a) 600 21,000
Orix Corp. 2,000 80,139
101,139
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - CONTINUED
PRINTING - 0.1%
Cadmus Communications Corp. 1,400 $ 26,250
Donnelley (R.R.) & Sons Co. 5,000 171,875
Komori Corp. 2,000 47,344
New England Business Service, Inc. 11,300 207,638
Wallace Computer Services, Inc. 2,600 83,525
536,632
SERVICES - 0.2%
ADT Ltd. (a) 19,400 237,650
BET PLC Ord. 19,500 34,159
Block (H & R), Inc. 700 30,363
Borg Warner Security Corp. (a) 500 3,938
Jostens, Inc. 6,500 129,188
Rural/Metro Corp. (a) 1,000 18,500
Western Atlas, Inc. (a) 6,500 280,313
734,111
TOTAL SERVICES 1,457,583
TECHNOLOGY - 2.9%
COMMUNICATIONS EQUIPMENT - 0.3%
Andrew Corp. (a) 1,000 40,750
Cabletron Systems, Inc. (a) 900 40,388
Cisco Systems, Inc. (a) 2,900 110,563
DSC Communications Corp. (a) 8,700 283,294
Dynatech Corp. (a) 4,600 72,450
Ericsson (L.M.) Telephone Co. Class B ADR 3,000 185,438
General Instrument Corp. (a) 800 27,800
Nokia Corp. Free shares 1,100 161,765
Northern Telecom Ltd. 1,800 68,179
Tellabs, Inc. (a) 1,400 81,550
3Com Corp. (a) 2,200 124,575
1,196,752
COMPUTER SERVICES & SOFTWARE - 0.4%
Automatic Data Processing, Inc. 800 50,400
Ceridian Corp. (a) 2,400 80,100
Computer Associates International, Inc. 3,600 213,750
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
CompUSA, Inc. (a) 2,000 $ 36,250
Informix Corp. (a) 1,900 65,313
Integrated Silicon Systems, Inc. (a) 300 8,700
Lotus Development Corp. (a) 700 26,775
McAfee Associates, Inc. 2,000 58,000
Mentor Graphics Corp. (a) 3,100 48,438
Microsoft Corp. (a) 11,300 803,713
Novell, Inc. (a) 15,400 292,600
Oracle Systems Corp. (a) 9,750 304,688
SHL Systemhouse, Inc. (a) 6,400 38,400
Sapiens International Corp. NV (a) 11,600 44,950
Softdesk, Inc. (a) 300 7,200
SunGard Data Systems, Inc. (a) 1,900 87,400
Symantec Corp. (a) 3,400 78,200
2,244,877
COMPUTERS & OFFICE EQUIPMENT - 1.1%
ADAPTEC, Inc. (a) 1,500 49,500
Amdahl Corp. 4,000 44,000
Apple Computer, Inc. 2,700 95,175
Bay Networks, Inc. (a) 3,500 129,063
Canon, Inc. 14,000 231,178
Compaq Computer Corp. (a) 22,400 772,800
Digital Equipment Corp. (a) 5,200 196,950
Filenet Corp. (a) 3,000 99,750
Fujitsu Ltd. 9,000 89,896
Hewlett-Packard Co. 1,300 156,488
International Business Machines Corp. 29,200 2,390,750
Norand Corp. 1,000 35,000
Pitney Bowes, Inc. 2,200 79,200
RICOH Co. Ltd. Ord. 6,000 56,397
SCI Systems, Inc. (a) 4,700 87,831
Sequent Computer Systems, Inc. (a) 2,800 46,200
Stratus Computer, Inc. (a) 1,300 40,625
Sun Microsystems, Inc. (a) 6,300 218,925
Symbol Technologies, Inc. (a) 1,000 30,750
Tandem Computers, Inc. (a) 1,100 17,050
Tech Data Corp. (a) 4,400 45,100
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
Wang Laboratories, Inc. (Del.)(a) 16,000 $ 207,000
Xerox Corp. 2,400 281,700
5,401,328
ELECTRONIC INSTRUMENTS - 0.0%
KLA Instruments Corp. (a) 1,900 120,175
Tektronix, Inc. 1,600 64,000
184,175
ELECTRONICS - 1.0%
Aiwa Co. Ltd. 3,000 77,945
Allgon AB B Free shares 4,100 70,677
AMP, Inc. 800 28,800
Hirose Electric Co. Ltd. 2,000 119,861
Hitachi Ltd. 58,000 602,771
Intel Corp. 22,100 1,875,738
Kyocera Corp. 2,000 149,192
Maxim Integrated Products, Inc. (a) 2,400 87,600
Micron Technology, Inc. 11,100 843,600
Molex, Inc. 375 12,656
Motorola, Inc. 4,200 229,425
Nichicon Corp. 14,000 215,012
Nitto Denko Corp. 13,000 204,157
Rohm Co. Ltd. 4,000 174,596
Ryoyo Electro Corp. Ord. 6,000 144,111
SGS-Thomson Microelectronic NV (a) 4,700 139,825
Solectron Corp. (a) 3,700 108,225
TDK Corp. 1,000 46,767
Texas Instruments, Inc. 600 53,100
Toshiba Corp. 7,000 47,610
5,231,668
PHOTOGRAPHIC EQUIPMENT - 0.1%
Fuji Photo Film Co. Ltd. 10,000 237,875
TOTAL TECHNOLOGY 14,496,675
TRANSPORTATION - 0.5%
AIR TRANSPORTATION - 0.1%
AMR Corp. (a) 3,200 207,200
Delta Air Lines, Inc. 1,000 62,750
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TRANSPORTATION - CONTINUED
AIR TRANSPORTATION - CONTINUED
KLM Royal Dutch Airlines Ord. (a) 800 $ 23,597
Northwest Airlines Corp. Class A (a) 7,800 211,575
Pittston Co. Services Group 2,800 77,000
Swire Pacific Class A 5,500 37,520
619,642
RAILROADS - 0.3%
Burlington Northern, Inc. 3,500 207,813
CSX Corp. 5,600 441,000
Canadian Pacific Ltd. Ord. 15,400 229,748
Conrail, Inc. 1,100 61,738
East Japan Railway Ord. 6 29,446
Illinois Central Corp., Series A 8,400 289,800
Southern Pacific Rail Corp. (a) 10,700 187,250
Wisconsin Central Transportation Corp. (a) 3,000 142,875
1,589,670
SHIPPING - 0.0%
Kawasaki Kisen Kaisha Ltd. (a) 11,000 36,074
Mitsui OSK Lines Ltd. 22,000 78,753
Peninsular & Oriental Steam Navigation Co. 94 906
Shun Tak Holdings Ltd. 56,000 33,133
148,866
TRUCKING & FREIGHT - 0.1%
Consolidated Freightways, Inc. 2,200 58,575
Hitachi Transport System Co. 9,000 89,480
Hunt (J.B.) Transport Services Inc. 1,000 18,375
Roadway Services, Inc. 2,500 120,625
287,055
TOTAL TRANSPORTATION 2,645,233
UTILITIES - 1.0%
CELLULAR - 0.2%
Airtouch Communications (a) 2,700 73,575
BCE Mobile Communications, Inc. (a) 1,700 56,191
Cellular Communications, Inc. Series A (redeemable) (a) 700 33,425
Rogers Cantel Mobile Communications, Inc.
Class B (non-vtg.)(a) 2,300 58,353
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - CONTINUED
CELLULAR - CONTINUED
Vanguard Cellular Systems, Inc. Class A (a) 2,200 $ 49,500
Vodafone Group PLC sponsored ADR 22,800 755,250
1,026,294
ELECTRIC UTILITY - 0.3%
American Electric Power Co., Inc. 1,300 41,275
Baltimore Gas & Electric Co. 2,800 66,150
Central & South West Corp. 900 21,825
Consolidated Edison Co. of New York, Inc. 1,100 29,975
Consolidated Electric Power Asia Ltd. 34,600 71,594
Fuji Electric Co. Ltd. 41,000 213,048
Korea Elecric Power ADR 20,100 414,563
Pacific Gas & Electric Co. 1,700 42,288
PacifiCorp. 2,100 40,688
Peco Energy Co. 1,400 35,175
Public Service Enterprise Group, Inc. 900 24,638
SCEcorp 1,900 29,688
Southern Co. 2,000 40,750
Union Electrica Fenosa 2,900 10,965
Veba AG Ord. 600 217,091
1,299,713
GAS - 0.0%
ENSERCH Corp. 500 7,438
Williams Companies, Inc. 1,300 39,813
47,251
TELEPHONE SERVICES - 0.5%
ALC Communications Corp. (a) 800 27,300
AT&T Corp. 100 5,175
Ameritech Corp. 10,100 416,625
Bell Atlantic Corp. 800 42,200
BellSouth Corp. 700 41,650
DDI Corp. Ord. 15 129,908
Hong Kong Telecommunications Ltd. 25,200 49,048
Koninklijke PPT Nederland 6,700 237,669
LCI International, Inc. (a) 3,000 74,625
LDDS Communications, Inc. 3,300 77,138
Nippon Telegraph & Telephone Corp. Ord. 20 172,748
NYNEX Corp. 15,100 598,338
SBC Communications, Inc. 10,700 450,738
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
Telecom Italia Ord. 4,900 $ 11,433
Telefonica de Espana SA Ord. 3,600 45,611
Telesp PN 185,100 19,191
U.S. Long Distance Corp. (a) 3,000 43,125
2,442,522
TOTAL UTILITIES 4,815,780
TOTAL COMMON STOCKS
(Cost $81,953,911) 88,219,275
PREFERRED STOCKS - 0.7%
CONVERTIBLE PREFERRED STOCKS - 0.7%
BASIC INDUSTRIES - 0.1%
METALS & MINING - 0.1%
Alumax, Inc., Series A, $4.00 (a) 733 84,478
Freeport McMoran, Inc. $4.375 (f) 5,000 255,000
Reynolds Metals Co. $3.31 4,400 209,550
549,028
CONSTRUCTION & REAL ESTATE - 0.0%
BUILDING MATERIALS - 0.0%
Bird Corp. $1.85 (a) 3,700 67,525
DURABLES - 0.1%
TEXTILES & APPAREL - 0.1%
Fieldcrest Cannon, Inc. $3.00, Series A 6,200 296,050
ENERGY - 0.1%
OIL & GAS - 0.1%
Atlantic Richfield Co. exchangeable $.5575 9,000 225,000
Occidental Petroleum Corp.:
Indexed $3.00, Series A 5,700 296,400
$3.875 1,800 95,625
617,025
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
FINANCE - 0.1%
BANKS - 0.0%
ABN-AMRO Holdings NV 6% 62 $ 2,236
CREDIT & OTHER FINANCE - 0.1%
Citicorp $5.375 (f) 4,400 514,800
SAVINGS & LOANS - 0.0%
Glendale Federal Bank $2.1875, Series E 3,300 97,350
TOTAL FINANCE 614,386
HEALTH - 0.2%
DRUGS & PHARMACEUTICALS - 0.0%
Neorx Corp., Series 1, $2.44 3,700 66,600
MEDICAL EQUIPMENT & SUPPLIES - 0.2%
U.S. Surgical Corp. $2.20 29,500 767,000
TOTAL HEALTH 833,600
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
ELECTRICAL EQUIPMENT - 0.0%
Westinghouse Electric Corp. $1.30 (f) 8,800 124,300
NONDURABLES - 0.1%
FOODS - 0.1%
Conagra, Inc., Class E 4,900 165,375
TOBACCO - 0.0%
RJR Nabisco Holdings Corp. depositary shares
representing 1/10 pfd., Series C 7,100 45,263
TOTAL NONDURABLES 210,638
TRANSPORTATION - 0.0%
AIR TRANSPORTATION - 0.0%
Pittston Co. $3.125 (f) 2,400 91,200
TOTAL CONVERTIBLE PREFERRED STOCKS 3,403,752
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONCONVERTIBLE PREFERRED STOCKS - 0.0%
ENERGY - 0.0%
OIL & GAS - 0.0%
Gulf Canada Resources Ltd., Series 1, adj. rate 26,300 $ 77,256
FINANCE - 0.0%
INSURANCE - 0.0%
SAI Sta Assicuratrice Spa 2,200 8,880
UTILITIES - 0.0%
TELEPHONE SERVICES - 0.0%
Stet (Societa Finanziaria Telefonica) Spa 6,700 13,526
TOTAL NONCONVERTIBLE PREFERRED STOCKS 99,662
TOTAL PREFERRED STOCKS
(Cost $3,377,852) 3,503,414
CORPORATE BONDS - 16.5%
MOODY'S PRINCIPAL
RATINGS (C) AMOUNT (B)
CONVERTIBLE BONDS - 0.8%
BASIC INDUSTRIES - 0.0%
IRON & STEEL - 0.0%
Essar Gujarat Ltd. euro 5 1/2%, 8/5/98 - $ 15,000 18,375
PAPER & FOREST PRODUCTS - 0.0%
Champion Interational Corp. sinking fund
6 1/2%, 4/15/11 Baa2 100,000 124,000
Stone Consolidated Corp. 8%, 12/31/03 - CAD 140,000 125,067
249,067
TOTAL BASIC INDUSTRIES 267,442
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
CONVERTIBLE BONDS - CONTINUED
ENERGY - 0.5%
ENERGY SERVICES - 0.5%
Halliburton Co. liquid yield option note 0%,
3/31/06 A3 $ 4,700,000 $ 2,391,125
INDEPENDENT POWER - 0.0%
California Energy, Inc. 5%, 7/31/00 (f) B1 120,000 103,800
TOTAL ENERGY 2,494,925
FINANCE - 0.0%
CREDIT & OTHER FINANCE - 0.0%
Bank of New York Co., Inc. 7 1/2%,
8/15/01 A3 50,000 84,000
HEALTH - 0.1%
DRUGS & PHARMACEUTICALS - 0.1%
Centoco, Inc. 7 1/4%, 2/1/01 Caa 300,000 259,500
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
Mentor Corp. euro 6 3/4%, 7/22/02 - 20,000 31,300
MEDICAL FACILITIES MANAGEMENT - 0.0%
Abbey Healthcare Group, Inc. 6 1/2%,
12/1/02 (f) B2 50,000 92,500
TOTAL HEALTH 383,300
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
Cooper Industries, Inc. 7.05%, 1/1/15 A3 199,000 202,731
POLLUTION CONTROL - 0.0%
WMX Technologies, Inc. 2%, 1/24/05 A2 81,000 65,205
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 267,936
MEDIA & LEISURE - 0.0%
RESTAURANTS - 0.0%
Wendy's International, Inc. 7%, 4/1/06 Baa3 20,000 27,800
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
CONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - 0.1%
APPAREL STORES - 0.0%
Baker (J.), Inc. 7%, 6/1/02 B2 $ 50,000 $ 51,250
DRUG STORES - 0.1%
Rite Aid Corp. liquid yield option note 0%,
7/24/06 Baa1 1,000,000 471,250
TOTAL RETAIL & WHOLESALE 522,500
SERVICES - 0.0%
LEASING & RENTAL - 0.0%
Interpool, Inc. 5 1/4%, 12/15/18 B1 90,000 67,950
TOTAL CONVERTIBLE BONDS 4,115,853
NONCONVERTIBLE BONDS - 15.7%
AEROSPACE & DEFENSE - 0.1%
SHIP BUILDING & REPAIR - 0.1%
Tennessee Gas Pipeline Co. 9 1/4%, 5/15/96 Baa2 400,000 408,248
BASIC INDUSTRIES - 0.1%
PAPER & FOREST PRODUCTS - 0.1%
Chesapeake Corp. 11 3/4%, 8/1/95 Baa3 150,000 152,625
Kimberly-Clark Corp. euro 9 3/4%, 6/15/95 Aa2 120,000 120,600
273,225
DURABLES - 0.1%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Ford Motor Co. 1993-A Pass Thru Trust,
ctf 4.67%, 1/1/96 A1 400,000 393,640
ENERGY - 0.1%
ENERGY SERVICES - 0.1%
McDermott International, Inc. 10 1/4%, 6/1/95 Baa3 750,000 753,818
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - 10.9%
ASSET BACKED SECURITIES - 2.4%
Capital Auto Receivables Asset Trust, 5.85%,
1/15/98 Aaa $ 228,542 $ 224,292
Caterpillar Financial Asset Trust 6.65%, 6/25/00 A 571,079 564,141
Chase Manhattan Credit Card Master Trust,
8 3/4%, 8/15/99 Aaa 1,080,000 1,099,570
Concord Leasing, Inc. 5.04%, 7/15/98 (f) AAA 219,575 215,348
Discover Card:
6.90%, 2/16/00 A 580,000 572,025
6 1/8%, 5/15/98 A 500,000 493,125
5 1/2%, 5/16/98 Aaa 300,000 297,186
Midlantic Grantor Trust,
5.15%, 9/15/97 A 15,575 15,487
Premier Auto Trust:
5.89%, 8/17/98 Aaa 197,989 196,751
4.90%, 12/15/98 Aaa 2,069,987 2,018,884
4.95%, 2/2/99 A 733,481 709,643
8.05%, 4/4/00 Aaa 1,900,000 1,952,250
Railcar Trust, 7 3/4%, 6/1/04 Aaa 44,627 44,948
Sears Credit Act, 7%, 1/15/04 Aaa 2,000,000 1,974,375
Standard Credit Card:
5 7/8%, 7/7/96 Aaa 100,000 99,875
8 1/4%, 10/7/97 Aaa 525,000 532,875
7.65%, 2/15/00 A2 300,000 301,500
Union Federal Savings, 8.20%, 1/10/01 Baa 220,763 221,763
United Federal Savings Bank Grantor Trust:
6.975%, 7/10/00 Baa 237,701 234,841
7.275%, 11/10/00 Baa 230,304 228,577
11,997,456
BANKS - 5.1%
Bancomer SA 9%, 6/1/00 (f) Ba2 500,000 297,500
Bank of Boston Corp.:
9 1/2%, 8/15/97 Baa2 101,000 105,293
6.30%, 8/26/98 (d) Baa2 1,000,000 985,000
10.30%, 9/1/00 Baa2 1,288,000 1,307,320
6.3125%, 2/28/01 (d) Baa2 2,650,000 2,575,721
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
Baybanks, Inc. 6.4375%, 9/30/97 (d) Baa2 $ 800,000 $ 793,040
Chase Manhattan Corp. euro
6 5/8%, 5/31/00 (d) A3 1,700,000 1,672,375
Citicorp:
9 1/8, 8/15/95 A2 250,000 252,083
euro 5.6875%, 7/10/97 (d) A3 1,770,000 1,758,796
Continental Bank Mortgage Corp.
9 7/8%, 6/15/96 A2 250,000 256,883
Corporacion Andina De Fomento yankee bonds
7 1/4%, 4/30/98 (f) Baa3 1,000,000 925,000
First Bank Systems, Inc. euro 6.3125%,
11/29/96 (d) A3 2,000,000 1,998,750
First Fidelity Bancorporation 9 3/4%, 5/25/95 A3 250,000 250,930
First Hawaiian Bank secured 6.93%,
12/1/03 (f) A1 1,540,000 1,398,012
Keycorp 8.55%, 5/30/95 A1 100,000 100,306
Manufacturers Hanover Trust, NY euro 6 5/8%,
7/15/97 (d) A3 1,600,000 1,600,000
Marine Midland Bank euro:
6.4375%, 9/27/96 (d) Baa1 1,800,000 1,794,600
6.5625%, 3/29/99 (d) Baa1 900,000 894,600
Mellon Financial Co.:
6 1/8%, 11/15/95 A2 25,000 24,910
6 1/2%, 12/1/97 A2 200,000 196,106
NCNB Corp. 10 1/2%, 3/15/99 A3 1,000,000 1,031,250
Security PAC Corporation 9.87%, 3/15/96 A2 400,000 411,136
Signet Banking Corp.:
6.4375%, 5/15/97 (d) Baa2 3,900,000 3,836,625
6.4375%, 4/15/98 (d) Baa2 700,000 686,875
Sovran Financial Corp. 9 3/4%, 6/15/99 A3 100,000 106,877
Wells Fargo and Company euro 6 1/8%,
4/28/00 (d) A3 500,000 490,600
Zions Bancorporation 8 5/8%, 10/15/02 BBB 100,000 100,400
25,850,988
CREDIT & OTHER FINANCE - 2.0%
Associates Corp. of North America 6%, 12/1/95 Aa3 200,000 199,044
Beneficial Corporation 9.32%, 8/4/97 A2 100,000 104,079
Chrysler Financial Corp. 6.40%, 6/17/97 A3 1,400,000 1,373,148
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Citicorp euro 6.20%, 1/30/98 (d) A3 $ 500,000 $ 495,000
First of America Bank Corp. 7 3/4%, 7/15/04 A3 2,000,000 1,936,780
Fleet Financial Group, Inc.:
5 5/8%, 7/1/95 A3 50,000 49,878
7 5/8%, 12/1/99 A3 150,000 149,426
Fleet Mortgage Group 6 1/2%, 9/15/99 A3 500,000 476,085
General Motors Acceptance Corp.:
6.10%, 7/3/95 Baa1 250,000 249,693
8%, 2/03/97 Baa1 2,600,000 2,627,950
Greyhound Financial Corp. 6.94%, 1/28/98 Baa2 500,000 490,460
Household Finance Corp.:
9 3/4%, 5/15/95 A3 500,000 501,635
7 5/8%, 12/15/96 A2 70,000 70,491
Westinghouse Credit Corp.:
9.13%, 7/31/95 Ba1 100,000 100,519
8.79%, 5/22/96 Ba1 400,000 404,344
8 3/4%, 6/3/96 Ba1 265,000 267,965
8 3/4%, 6/5/96 Ba1 400,000 404,476
9.44%, 6/5/96 Ba1 200,000 202,750
9.01%, 7/10/96 Ba1 150,000 152,240
10,255,963
INSURANCE - 1.0%
ITT Hartford Group, Inc. 7 1/4%, 12/1/96 A1 50,000 49,880
Ohio National Life Insurance Co. 8 7/8%,
7/15/04 (f) A3 2,100,000 2,122,680
Western National Corp. 7 1/8%, 2/15/04 Baa1 2,800,000 2,594,872
4,767,432
SAVINGS & LOANS - 0.4%
Ahmanson (H.F.) & Co. 9 7/8%, 11/15/99 Baa2 50,000 53,604
Golden West Financial Corp.:
10 1/4%, 5/15/97 A3 900,000 946,863
8 5/8%, 8/30/98 A3 25,000 25,768
Home Savings of America 10 1/2%, 6/12/97 A3 645,000 664,756
World Savings & Loan 5 1/4%, 2/15/96 A1 500,000 494,465
2,185,456
TOTAL FINANCE 55,057,295
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
HEALTH - 0.0%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
Cardinal Distribution Inc. 8%, 3/1/97 Baa1 $ 200,000 $ 201,434
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
ELECTRICAL EQUIPMENT - 0.3%
Westinghouse Electric Corp.:
7 3/4%, 4/15/96 Ba1 135,000 135,090
8 1/2%, 6/10/96 Ba1 450,000 453,857
9.14%, 1/15/98 Ba1 300,000 306,519
8.71%, 2/13/98 Ba1 100,000 101,137
8.96%, 6/17/98 Ba1 300,000 305,232
1,301,835
MEDIA & LEISURE - 0.6%
BROADCASTING - 0.5%
Telecommunications, Inc.:
7.13%, 2/2/98 Baa3 500,000 492,160
6.58%, 2/15/05 Baa3 300,000 285,537
Time Warner, Inc. 6.05%, 7/1/95 (f) Ba1 1,650,000 1,645,611
2,423,308
LEISURE DURABLES & TOYS - 0.0%
Brunswick Corp. 8 1/8%, 4/1/97 Baa1 100,000 100,153
PUBLISHING - 0.1%
News America Holdings, Inc. 12%, 12/15/01 Ba1 500,000 561,560
TOTAL MEDIA & LEISURE 3,085,021
NONDURABLES - 0.9%
BEVERAGES - 0.3%
Fomento Economico Mexicano SA de CV
euro 9 1/2%, 7/22/97 - 1,570,000 1,334,500
FOODS - 0.1%
Ralcorp Holdings, Inc. 8 3/4%, 9/15/04 Ba1 650,000 664,625
TOBACCO - 0.5%
Empresas La Moderna SA de CV:
10 1/4%, 11/12/97 (f) - 70,000 54,950
euro 10 1/4%, 11/12/97 - 250,000 196,250
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
NONDURABLES - CONTINUED
TOBACCO - CONTINUED
Philip Morris Companies, Inc.:
9.40%, 10/1/95 A2 $ 50,000 $ 50,590
8 7/8%, 7/1/96 A2 500,000 509,990
9.80%, 12/15/98 A2 980,000 999,796
RJR Nabisco, Inc. 9 1/4%, 5/1/95 Baa3 741,000 741,956
2,553,532
TOTAL NONDURABLES 4,552,657
RETAIL & WHOLESALE - 0.1%
GENERAL MERCHANDISE STORES - 0.1%
Sears Roebuck & Co.:
8.55%, 8/1/96 A2 225,000 228,746
9%, 9/15/96 A2 500,000 512,300
741,046
GROCERY STORES - 0.0%
Supervalu, Inc. 5 7/8%, 11/15/95 A3 50,000 49,756
TOTAL RETAIL & WHOLESALE 790,802
SERVICES - 0.1%
ADVERTISING - 0.1%
Valassis Inserts, Inc. 9 3/8%, 3/15/99 Ba2 250,000 253,438
TECHNOLOGY - 0.9%
COMPUTERS & OFFICE EQUIPMENT - 0.7%
Comdisco, Inc.:
8.95%, 5/15/95 Baa2 600,000 601,170
7.73%, 2/18/97 Baa2 3,000,000 3,006,900
3,608,070
ELECTRONICS - 0.2%
Grupo Condumex SA de CV (f):
6 1/4%, 7/27/96 - 650,000 513,500
7 3/8%, 7/27/98 - 400,000 272,000
785,500
TOTAL TECHNOLOGY 4,393,570
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
TRANSPORTATION - 0.3%
AIR TRANSPORTATION - 0.2%
AMR Corp.:
7 3/4%, 12/1/97 Baa3 $ 560,000 $ 556,926
9 1/2%, 7/15/98 Baa3 525,000 546,961
1,103,887
TRUCKING & FREIGHT - 0.1%
Federal Express Corp. 9 3/4%, 5/15/96 Baa2 200,000 205,272
MC-Cuernavaca Trust 9 1/4%, 7/25/01 (f) A 668,411 367,626
572,898
TOTAL TRANSPORTATION 1,676,785
UTILITIES - 1.2%
ELECTRIC UTILITY - 1.0%
Commonwealth Edison Co.:
1st mtg. 6 1/8%, 5/15/95 Baa2 630,000 629,313
5 1/2%, 7/15/95 Baa3 1,000,000 995,780
Long Island Lighting Co.:
8 3/4%, 5/1/96 Baa3 1,050,000 1,064,354
7.30%, 7/15/99 Ba1 2,000,000 1,873,100
Public Service Co. of New Hampshire 1st mtg.
9.17%, 5/15/98 Baa3 400,000 412,000
4,974,547
GAS - 0.2%
Florida Gas 7 3/4%, 11/1/97 (f) Baa2 520,000 522,584
Panhandle Eastern Pipe Line Co. 9 7/8%,
10/15/96 Baa2 325,000 330,853
Southwest Gas Co. 9 3/4%, 6/15 /02 Baa3 300,000 326,583
1,180,020
TOTAL UTILITIES 6,154,567
TOTAL NONCONVERTIBLE BONDS 79,296,335
TOTAL CORPORATE BONDS
(Cost $86,069,652) 83,412,188
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 32.1%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
U.S. TREASURY OBLIGATIONS - 25.4%
4 1/4%, 5/15/96 Aaa $ 36,000,000 $ 35,105,760
9 1/4%, 8/15/98 Aaa 10,000 10,670
7 3/4%, 11/30/99 Aaa 1,200,000 1,230,744
6 1/4%, 2/15/03 Aaa 47,105,000 44,359,721
5 3/4%, 8/15/03 Aaa 5,020,000 4,554,094
11 7/8%, 11/15/03 Aaa 8,255,000 10,655,389
7 1/4%, 5/15/04 Aaa 4,400,000 4,402,068
11 5/8%, 11/15/04 Aaa 10,545,000 13,657,462
9%, 11/15/18 Aaa 5,460,000 6,294,343
8 7/8%, 2/15/19 Aaa 4,530,000 5,163,475
8 1/8%, 8/15/19 Aaa 1,550,000 1,640,815
6 1/4%, 8/15/23 Aaa 1,500,000 1,277,805
128,352,346
U.S. GOVERNMENT AGENCY OBLIGATIONS - 6.7%
Federal Home Loan Bank:
7.59%, 12/23/96 Aaa 2,410,000 2,435,606
5.60%, 3/1/99 Aaa 640,000 600,000
Federal National Mortgage Association:
discount note, 0%, 4/6/95 Aaa 12,120,000 12,118,788
5.33%, 6/26/98 Aaa 2,740,000 2,588,015
5.30%, 8/25/98 Aaa 1,790,000 1,685,397
4.70%, 9/10/98 Aaa 1,620,000 1,494,703
4.94%, 10/30/98 Aaa 1,200,000 1,112,625
Government Trust Certificates:
Class 1-C (assets of Trust guaranteed by U.S.
government through Defense Security
Assistance Agency) 9 1/4%, 11/15/01 Aaa 380,000 403,826
Class 2-E (assets of Trust guaranteed by U.S.
government through Defense Security
Assistance Agency) 9.40%, 5/15/02 Aaa 2,210,000 2,367,706
Series 1994-F (assets of Trust guaranteed by U.S.
Government through Export-Import Bank)
8.178%, 12/15/04 Aaa 3,357,138 3,440,116
State of Israel (guaranteed by U.S. Government
through Agency for International Development):
5 1/4%, 3/15/98 Aaa 660,000 626,588
7 3/4%, 4/1/98 Aaa 490,279 496,075
4 7/8%, 9/15/98 Aaa 1,070,000 994,766
6%, 2/15/99 Aaa 350,000 335,681
7 3/4%, 11/15/99 Aaa 340,000 344,927
8 1/2%, 4/1/06 Aaa 970,000 1,022,744
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
Tennessee Valley Authority 8 1/4%,
11/15/96 Aaa $ 710,000 $ 724,094
U.S. Housing & Urban Development 8.27%,
8/1/03 Aaa 1,000,000 1,041,875
33,833,532
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $160,265,094) 162,185,878
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 0.5%
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 0.5%
7 1/2%, 3/15/22 to 3/15/23 Aaa 1,721,404 1,661,155
9 1/2%, 8/15/16 Aaa 4,483 4,737
10%, 11/15/09 to 12/15/17 Aaa 823,797 889,115
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $2,704,530) 2,555,007
COMMERCIAL MORTGAGE SECURITIES - 2.2%
CS First Boston Mortgage Securities Corp.
commercial floater Series 1994-CFB1
Class A-1, 6.6125%, 1/25/28 (d) Aaa 677,290 676,444
FDIC commercial Series 1994-C1:
Class II-A1, 6.30%, 9/25/25 Aaa 182,287 181,547
Class II-A2, 7.85%, 9/25/25 Aaa 1,400,000 1,404,594
Lennar Central Partner LP commercial floater
Series 1994-1 Class B,
7 1/8%, 9/15/01 (d)(f) - 1,598,000 1,598,000
Nomura Asset Securities Corp. commercial
floater Series 1994-MD-II Class A-6,
5.765%, 7/4/03 (d) - 469,310 467,696
Resolution Trust Corp.:
commercial floater:
Series1992-C3 Class A-2,
6.975%, 8/25/23 (d) Aa2 327,952 328,311
Series 1993-C2 Class A-2,
5.6825%, 3/25/25 (d) AAA 1,306,469 1,316,267
Series 1994-C1 Class A-3,
5.6125%, 6/25/26 (d) AAA 1,019,190 1,015,687
COMMERCIAL MORTGAGE SECURITIES - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
Resolution Trust Corp. - continued
commercial:
Series 1994-N2 Class 3,
7 1/2%, 12/15/04 (f) Baa2 $ 1,000,000 $ 995,000
Series 1994-C2 Class A-2,
7 3/4%, 4/25/25 AAA 261,493 261,166
Series 1994-C2 Class A-4,
7 1/2%, 4/25/25 AAA 432,310 430,689
Series 1994-C1 Class A-4,
7 1/4%, 6/25/26 AAA 425,148 423,023
Ryland Mortgage Securities Corp. commercial
floater Series 1992-C3 Class A-2,
7 1/2%, 8/1/23 (d) Aaa 34,955 34,824
S C Finance Corp. commercial floater
6.05% 8/1/04 (d)(f) - 600,000 595,500
Structured Asset Securities Corp.:
commercial Series 1993-C1 Class A-1,
6.60%, 10/25/24 AA 446,666 431,312
commercial Series 1995-C1 Class D,
7 3/8%, 9/25/24 BBB 1,200,000 999,750
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $11,141,466) 11,159,810
FOREIGN GOVERNMENT OBLIGATIONS (G) - 1.3%
Argentina Republic BOTE:
1.6788%, 4/1/96 (d) - 5,860,000 1,987,712
1.7325%, 5/31/96 - 8,450,000 2,182,213
euro 3.4438%, 9/1/97 - 2,750,000 1,351,559
Province of Chaco, Argentina
11 7/8%, 9/10/97 (e) - 250,000 244,775
New Zealand Government 8%, 4/15/04 Aaa NZD 1,250,000 818,293
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $6,723,115) 6,584,552
INDEXED SECURITIES - 1.5%
COMMODITY INDEXED - 0.9%
Goldman Sachs Group, L.P. note 6.2375%,
9/27/95 (indexed to gold price) 2,100,000 2,134,860
INDEXED SECURITIES - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (B)
Morgan Guaranty Trust Co. cert. of dep.:
6%, 7/7/95 (indexed to platinum price) $ 300,000 $ 315,630
6%, 7/10/95 (indexed to platinum price) 400,000 421,600
6.1875%, 9/27/95 (indexed to gold price) 1,600,000 1,623,200
4,495,290
INTEREST INDEXED - 0.3%
Citibank Nassau cert. of dep.:
6.4125%, 12/22/95 (inversely indexed to
3-month GBP LIBOR, multiplied by 7.25) 230,000 239,499
6.43%, 12/22/95 (inversely indexed to 3-month
GBP LIBOR, multiplied by 7.25) 410,000 424,801
6.46%, 12/22/95 (inversely indexed to 3-month
GBP LIBOR, multiplied by 7.25) 360,000 374,616
6.46%, 12/22/95 (inversely indexed to 3-month
GBP LIBOR, multiplied by 7.25) 260,000 272,012
1,310,928
OTHER - 0.3%
Bankers Trust New York Corp. note 13.84%, 8/7/95
(inversely indexed to 1-month gold lease rate) 1,500,000 1,512,750
TOTAL INDEXED SECURITIES
(Cost $7,293,500) 7,318,968
MUNICIPAL SECURITIES - 0.1%
MOODY'S
RATINGS (C)
Louisiana Pub. Facs. Auth. Rev. 9.95% 6/1/96
(Cost $505,807) A3 465,000 479,322
REPURCHASE AGREEMENTS - 27.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 6.20%, dated
3/31/95 due 4/3/95 (Note 3) $ 140,378,491 140,306,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $500,340,927) $ 505,724,414
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO SELL
621,290,950 JPY 4/10/95 to 6/29/95 $ 7,205,466 $ (834,709) (Receivable
amount $6,370,757)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.4%
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
JPY - Japanese yen
NZD - New Zealand dollar
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(d) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(e) 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
Province of Chaco,
Argentina 11 7/8%,
9/10/97 3/9/94 $262,182
(f) 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 $14,381,296 or 2.8% of net
assets.
(g) Some foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
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 40.8% AAA, AA, A 40.1%
Baa 6.8% BBB 7.8%
Ba 1.6% BB 1.6%
B 0.1% B 0.0%
Caa 0.1% CCC 0.1%
Ca, C 0.0% CC, C 0.0%
D 0.0%
OTHER INFORMATION - CONTINUED
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 2.5%. FMR has determined that unrated
debt securities that are lower quality account for 1.3% of the total value
of investment in securities.
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 93.3%
Japan 1.6
Argentina 1.1
Others (individually less than 1%) 4.0
TOTAL 100.0%
INCOME TAX INFORMATION
At March 31, 1995, the aggregate cost of investment securities for income
tax purposes was $500,362,409. Net unrealized appreci-
ation aggregated $5,362,005, of which $5,592,804 related to appreciated
investment securities and $230,799 related to depreciated investment
securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
MARCH 31, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 505,724,414
agreements of $140,306,000) (cost $500,340,927) -
See accompanying schedule
Cash 617
Receivable for investments sold 6,299,001
Receivable for fund shares sold 1,948,324
Dividends receivable 259,685
Interest receivable 4,056,131
TOTAL ASSETS 518,288,172
LIABILITIES
Payable for investments purchased $ 4,734,028
Unrealized depreciation on foreign currency contracts 834,709
Payable for closed foreign currency contracts 16,587
Payable for fund shares redeemed 1,986,194
Accrued management fee 213,374
Other payables and accrued expenses 224,620
TOTAL LIABILITIES 8,009,512
NET ASSETS $ 510,278,660
Net Assets consist of:
Paid in capital $ 517,605,484
Undistributed net investment income 2,090,694
Accumulated undistributed net realized gain (loss) on (13,953,818)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 4,536,300
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 47,596,732 shares outstanding $ 510,278,660
NET ASSET VALUE, offering price and redemption price per $10.72
share ($510,278,660 (divided by) 47,596,732 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED MARCH 31, 1995 (UNAUDITED)
INVESTMENT INCOME $ 1,003,050
Dividends
Interest 14,354,137
TOTAL INCOME 15,357,187
EXPENSES
Management fee $ 1,245,770
Transfer agent fees 426,984
Accounting fees and expenses 99,804
Non-interested trustees' compensation 1,658
Custodian fees and expenses 96,201
Registration fees 9,868
Audit 1,010
Legal 2,813
Reports to shareholders 3,936
Miscellaneous 3,843
Total expenses before reductions 1,891,887
Expense reductions (1,824) 1,890,063
NET INVESTMENT INCOME 13,467,124
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (10,754,702)
Foreign currency transactions 258,516 (10,496,186)
Change in net unrealized appreciation (depreciation) on:
Investment securities 12,310,617
Assets and liabilities in foreign currencies (969,943) 11,340,674
NET GAIN (LOSS) 844,488
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 14,311,612
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
MARCH 31, 1995 1994
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 13,467,124 $ 19,648,437
Net investment income
Net realized gain (loss) (10,496,186) (5,923,379)
Change in net unrealized appreciation (depreciation) 11,340,674 (12,405,241)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 14,311,612 1,319,817
FROM OPERATIONS
Distributions to shareholders (12,537,697) (16,160,243)
From net investment income
From net realized gain - (979,342)
In excess of net realized gain - (599,324)
TOTAL DISTRIBUTIONS (12,537,697) (17,738,909)
Share transactions 118,060,668 592,325,759
Net proceeds from sales of shares
Reinvestment of distributions 11,151,135 15,427,608
Cost of shares redeemed (122,056,142) (289,222,137)
Net increase (decrease) in net assets resulting from 7,155,661 318,531,230
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 8,929,576 302,112,138
NET ASSETS
Beginning of period 501,349,084 199,236,946
End of period (including undistributed net investment $ 510,278,660 $ 501,349,084
income of $2,090,694 and $1,161,267, respectively)
OTHER INFORMATION
Shares
Sold 11,191,348 54,138,502
Issued in reinvestment of distributions 1,063,651 1,423,182
Redeemed (11,570,036) (26,651,808)
Net increase (decrease) 684,963 28,909,876
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEAR ENDED OCTOBER 1, 1992
ENDED SEPTEMBER (COMMENCEMENT
MARCH 31, 30, OF OPERATIONS) TO
1995 SEPTEMBER 30,
(UNAUDITED) 1994 1993
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.69 $ 11.07 $ 10.00
Income from Investment Operations
Net investment income .29 .45 .46
Net realized and unrealized gain (loss) .01 (.29) 1.04
Total from investment operations .30 .16 1.50
Less Distributions (.27) (.47) (.43)
From net investment income
From net realized gain - (.04) -
In excess of net realized gain - (.03) -
Total distributions (.27) (.54) (.43)
Net asset value, end of period $ 10.72 $ 10.69 $ 11.07
TOTAL RETURN B,C 2.89% 1.46% 15.32%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 510,279 $ 501,349 $ 199,237
Ratio of expenses to average net assets .77% .71% .65%
A
Ratio of expenses to average net assets .77% 1.00% 1.12%
before A
expense reductions
Ratio of net investment income to average 5.46% 4.92% 5.19%
net assets A
Portfolio turnover rate 170% 83% 47%
A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN
(SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended March 31, 1995 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Asset Manager:Income (the fund) is a fund of Fidelity Charles
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 exchange 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
exchange quotations are not readily available (and in certain cases debt
securities which trade on an exchange), are valued primarily using
dealer-supplied valuations or 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. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income, which includes accretion of original
issue discount, is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
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.
Dividends are declared daily and paid monthly from net interest income.
Distributions to shareholders from realized capital gains on investments,
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 futures
and options transactions, foreign currency transactions, market discount
and losses deferred due to wash sales. The fund also utilized earnings and
profits distributed to shareholders on redemption of shares as a part of
the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect net investment income per share. 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.
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. These contracts
involve market risk in excess of the unrealized gain or loss reflected in
the fund's Statement of Assets and Liabilities. The U.S. dollar value of
the currencies the fund has committed to buy or sell is shown in the
schedule of investments under the caption "Forward Foreign Currency
Contracts." This amount represents the aggregate exposure to each currency
the fund has acquired or hedged through currency contracts at period end.
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. Contracts that have been
2. OPERATING POLICIES -
CONTINUED
FORWARD FOREIGN CURRENCY
CONTRACTS - CONTINUED
offset with different counterparties are reflected as both a contract to
buy and a contract to sell in the schedule of investments under the caption
"Forward Foreign Currency Contracts."
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 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 advisor, is responsible for determining that the value of these
underlying securities remains at least equal to the resale price.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the
SEC, the fund, along with other registered investment companies having
management contracts with FMR, may participate in an interfund lending
program. This program provides an alternative credit facility allowing the
fund to borrow from, or lend money to, other participating funds.
FUTURES CONTRACTS AND OPTIONS.
The fund may use futures and options contracts to manage its exposure to
the stock and bond markets and to fluctuations in interest rates and
currency values. Buying futures, writing puts, and buying calls tend to
increase the fund's exposure to the underlying instrument. Selling futures,
buying puts, and writing calls tend to decrease the fund's exposure to the
underlying instrument, or hedge other fund investments. Losses may arise
from changes in the value of the underlying instruments, if there is an
illiquid secondary market for the contracts, or if the counterparties do
not perform under the contracts' terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options are valued using the last sale price or, in the absence of a sale,
the last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations.
INDEXED SECURITIES. The fund may invest in indexed securities whose values
are linked either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices, or other underlying instruments. The
fund uses these securities to increase or decrease its exposure to
different underlying instruments and to gain exposure to markets that might
be difficult to invest in through conventional securities. Indexed
securities may be more volatile than their underlying instruments, but any
loss is limited to the amount of the original investment.
2. OPERATING POLICIES -
CONTINUED
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 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 $244,775 or 0.1% 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 repurchase agreements were dated March 31,
1995 and due April 3. 1995. The maturity values of the joint trading
account investments were $140,378,491 at 6.20%. The investments in
repurchase agreements through the joint trading account are summarized as
follows:
SUMMARY OF JOINT TRADING
Number of dealers or banks 28
Maximum amount with one dealer or bank 14 1/2%
Aggregate principal amount of agreements $17,509,591,000
Aggregate maturity amount of agreements $17,518,640,314
Aggregate market value of collateral $17,915,919,361
Coupon rates of collateral 0% to 15 3/4%
Maturity dates of collateral 4/13/95 to 2/15/25
4. PURCHASES AND SALES
OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $314,448,466 and $325,224,509, respectively, of which U.S.
government and government agency obligations aggregated $31,062,012 and
$21,382,856, 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 .1200% to .3700% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .35%. For
the
5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
period, the management fee was equivalent to an annualized rate of .51% of
average net assets.
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 October 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. Fidelity Service Co. (FSC), an affiliate of FMR, maintains
the fund's accounting records. The 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 $34,047 for the period.
6. 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
$1,824 under this arrangement.
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)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
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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.
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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.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING
CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR
NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR
RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the
Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
1903 East Ninth Street
Cleveland, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
2701 Drexel Drive
Houston, TX
1010 Lamar Street
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
215 South State Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
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
William J. Hayes, Vice President
Robert Beckwitt, Vice President
Arthur S. Loring, Secretary
Stephen P. Jonas, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Robert H. Morrison, Manager,
Security Transactions
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
Chase Manhattan Bank, N.A.
New York, NY
FIDELITY'S ASSET ALLOCATION FUNDS
Asset Manager(trademark)
Asset Manager: Growth
Asset Manager: 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 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)FIDELITY
ASSET MANAGER: GROWTH
SEMIANNUAL REPORT
MARCH 31, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 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 52 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 56 Notes to the financial statements.
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.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term, as we witnessed last year. You also can help to manage some
of the risks of investing through diversification. Asset Manager funds are
already diversified because they invest in stocks, bonds and short-term
investments, both in the U.S. and overseas.
If you have a short investment time horizon, you might want to consider
moving some of your 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.
Finally, 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
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (or income) and capital gains (the profits
the fund earns when it sells securities that have grown in value). If
Fidelity had not reimbursed certain fund expenses, the fund's life of fund
figure would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MARCH 31, 1995 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Asset Manager: Growth -4.02% -2.04% 42.06%
S&P 500(registered trademark) 9.72% 15.57% 35.21%
Average Flexible Portfolio Fund 5.08% 6.88% n/a
Consumer Price Index 1.34% 2.85% 9.79%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year or since the fund
began on December 30, 1991. 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
Standard & Poor's Composite Index of 500 Stocks - a common proxy for the
U.S. stock market. To measure how the fund's performance stacked up against
its peers, you can compare it to the average flexible portfolio fund, which
reflects the performance of 105 funds with similar objectives tracked by
Lipper Analytical Services over the past six months. Both 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. (The CPI returns begin on the month end
closest to the fund's start date.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MARCH 31, 1995 PAST 1 LIFE OF
YEAR FUND
Asset Manager: Growth -2.04% 11.39%
S&P 500 15.57% 9.71%
Average Flexible Portfolio Fund 6.88% n/a
Consumer Price Index 2.85% 2.91%
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 LIFE OF FUND
Fidelity Asset ManagStandard & Poor's 50Fidelity Aggressive
12/31/91 10000.00 10000.00 10000.00
01/31/92 10367.06 9814.00 9832.85
02/29/92 10585.31 9941.58 9928.97
03/31/92 10436.50 9747.72 9786.93
04/30/92 10466.26 10034.30 9994.02
05/31/92 10684.52 10083.47 10082.67
06/30/92 10565.47 9933.23 10030.39
07/31/92 11001.98 10339.50 10375.29
08/31/92 10823.41 10127.54 10268.06
09/30/92 11071.42 10247.04 10393.07
10/31/92 11279.76 10282.91 10372.18
11/30/92 11686.50 10633.55 10597.15
12/31/92 11907.90 10764.35 10737.36
01/31/93 12079.89 10854.77 10866.69
02/28/93 12231.65 11002.39 11029.52
03/31/93 12707.15 11234.54 11193.09
04/30/93 12747.62 10962.67 11044.56
05/31/93 13010.67 11256.47 11234.36
06/30/93 13202.89 11289.11 11332.44
07/31/93 13445.71 11243.95 11324.50
08/31/93 13992.03 11670.10 11680.72
09/30/93 13931.33 11580.24 11637.38
10/31/93 14366.37 11819.95 11808.39
11/30/93 14244.96 11707.66 11697.98
12/31/93 15041.52 11849.32 11805.19
01/31/94 15622.07 12252.20 12116.50
02/28/94 15157.63 11920.17 11826.37
03/31/94 14387.08 11400.45 11413.39
04/30/94 14365.97 11546.37 11483.36
05/31/94 14482.08 11735.73 11603.53
06/30/94 14049.30 11448.21 11413.06
07/31/94 14397.63 11823.71 11720.75
08/31/94 14904.30 12308.48 12035.98
09/30/94 14682.63 12006.92 11795.99
10/31/94 14724.85 12277.08 11968.80
11/30/94 14302.63 11829.95 11680.79
12/31/94 13930.26 12005.39 11817.45
01/31/95 13583.09 12316.69 12084.93
02/28/95 13810.92 12796.67 12470.93
03/31/95 14092.99 13174.30 12736.77
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity Asset
Manager: Growth on December 31, 1991, just after the fund started. As the
chart shows, by March 31, 1995, the value of your investment would have
grown to $14,093 - a 40.93% increase on your initial investment. For
comparison, look at how the S&P 500 did over the same period. With
dividends reinvested, the same $10,000 investment would have grown to
$13,174 - a 31.74% increase. You can also look at how the Aggressive Asset
Allocation Composite Index, a hypothetical combination of unmanaged
indices, did over the same period. Reflecting the fund's neutral mix of 65%
stocks, 30% bonds, and 5% short-term instruments, this index combines
returns from the S&P 500 (31.74%), Lehman Brothers Treasury Bond Index
(20.02%), and the Salomon Brothers 3-month T-Bill Total Rate of Return
Index (12.85%). With dividends and interest, if any, reinvested, the same
$10,000 investment would have grown to $12,737 - a 27.37% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
growth in the long run and
volatility in the short run. In
turn, the share price and
return of a fund that invests in
stocks 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)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Bob Beckwitt, Portfolio Manager of Fidelity Asset
Manager: Growth
Q. BOB, HOW DID THE FUND PERFORM?
A. Pretty badly. Asset Manager: Growth's total return for the six months
ended March 31, 1995 was -4.02%, compared to 5.08% for the average flexible
portfolio fund, according to Lipper Analytical Services. The fund also
lagged its competitors for the 12-month period ended March 31, 1995. It
returned -2.04%, compared to 6.88% for the average flexible portfolio fund.
Q. WHY DID THE FUND DO SO POORLY?
A. Foreign investments hurt the most. It wasn't a case of owning too few
stocks, or too many bonds, or any other factor having to do with the fund's
securities mix. It was that I invested heavily outside the United States
during a period when most foreign investments lost money. Lately I've cut
back sharply; foreign investments totaled 21% of the fund at the end of the
period, compared to 36% six months ago. But during most of the period,
Asset Manager: Growth's stake in foreign securities was larger than its
average competitor's, and that obviously hurt performance.
Q. WHY INVEST OVERSEAS AT ALL?
A. Foreign investments - both in established markets such as Europe and
Japan as well as in emerging markets such as Latin America and Southeast
Asia - have always helped distinguish Asset Manager: Growth from its
competitors. There are two good reasons not to ignore foreign investments.
First, many foreign economies are growing faster than the U.S. economy,
which makes foreign investments potentially more rewarding in the long run.
Although they tend to be more risky than domestic investments, it is these
markets that helped us to achieve strong positive performance in 1992 and
1993. Second, investing overseas helps me further diversify the fund's
investments, and diversification is at the core of the fund's investment
strategy.
Q. CAN YOU OUTLINE THAT STRATEGY FOR US?
A. Sure. Asset Manager: Growth invests in a broad range of foreign and
domestic securities, including stocks, bonds and short-term instruments.
The fund seeks above-average returns, but with less volatility than if it
were to invest all its assets in either stocks or bonds. Why less
volatility? Because different investment vehicles usually behave in
different ways - while some are going down, others may be going up. There
are exceptions, however. In 1993 nearly every investment vehicle in the
world rose and the fund could do little wrong. In 1994, the situation was
almost exactly the opposite - most investments fell, although again,
foreign investments as a group had a much worse year than their domestic
counterparts.
Q. IN LIGHT OF THE FUND'S RECENT PERFORMANCE, DO YOU STILL BELIEVE IN THE
STRATEGY OF DIVERSIFICATION?
A. Absolutely. I still believe diversification makes sense - it doesn't
eliminate risk, certainly, but it can help reduce it. If anything, I'll be
diversifying even more. Whereas in the past I've been willing sometimes to
invest more heavily in individual foreign countries, in the future I'll be
less likely to do so. The fund's stake in Mexico, for example, has at times
been fairly high. Six months ago it was 12.5% - still high, in retrospect,
given the losses the fund suffered last December when Mexico suddenly
devalued the peso. Currently, only about 1% of the fund's assets is in
Mexico. When the time comes to increase the fund's exposure to emerging
markets again, one of my goals will be to spread that exposure around more
widely.
Q. WHAT WAS THE FUND'S STAKE IN EMERGING MARKETS AT THE END OF MARCH?
A. Only about 7%. That's down sharply from six months ago, due mainly to my
decision to pull out of Mexico as well as most of Latin America last
December. I still see potential opportunities in emerging markets,
especially since prices have fallen so dramatically. And I'll be looking
for ways to increase the fund's stake in the months ahead. There's no
getting around the fact that it's the emerging market economies - not the
United States, not Europe and not Japan - that are outpacing the rest of
the world in terms of growth. If Asset Manager: Growth is to achieve the
long-term results it seeks, then it can't afford to ignore emerging
markets. The difference is, that going forward, I'll likely attribute a
somewhat higher level of risk to emerging market investments, and so
require a higher potential return.
Q. HOW WERE THE FUND'S ASSETS DIVIDED AMONG STOCKS, BONDS AND SHORT-TERM
INVESTMENTS AT THE END OF THE PERIOD?
A. Six months ago the fund was 57% stocks, 29% bonds and 14% short-term
investments. As of March 31, 1995, the mix was 57% stocks, 20% bonds and
23% short-term instruments. So, while stocks as a percentage of the fund's
total assets stayed the same during the period, bonds declined and cash
rose. That leaves the fund in what I would describe as a defensive posture,
especially with regard to bonds.
Q. WHY HAVE YOU BEEN SELLING BONDS?
A. The main reason the fund owns fewer bonds today than it did six months
ago is that I sold so many emerging market bonds in December. What's left,
mainly, are domestic bonds, divided between so-called junk bonds - which
are rated Ba or BB or lower by one of the credit rating agencies - and
long-term U.S. Treasury bonds. I actually began buying Treasury bonds again
last fall when it looked like long-term rates would be peaking at around
8%. Because interest rates and bond prices generally move in opposite
directions, the fund made money when long-term rates headed back towards
7%. I've since cut back on Treasury bonds, though, because I don't expect
long-term interest rates to fall as low as 6% again anytime in the
foreseeable future.
Q. HOW DID DOMESTIC STOCKS PERFORM DURING THE PERIOD?
A. Surprisingly well, especially in the past few months. Technology remains
the largest stock sector in the fund at 11.5% of total equity investments,
and many of those stocks have been top performers. I'd mention especially
IBM and Intel. Each company's story is unique but the underlying trend is
the same: strong demand for their products. Another 8.2% of the fund's
investments is in finance stocks, led by Fannie Mae and American Express.
Both are trading at price-to-earnings ratios that make them seem cheap by
comparison with most other stocks. The main issue seems to be the market's
unwillingness to completely buy into those company's growth stories, which
I think are exciting. The fact that others may disagree makes the
opportunities all the more attractive to me.
Q. WHAT ABOUT DISAPPOINTING STOCKS?
A. There were several, of course. Grupo Carso, a holding company, and
Telmex, the Mexican telephone monopoly, were both among the casualties when
the Mexican stock market plunged last winter, and both have since been
sold. Hitachi, a Japanese electronics company, has failed so far to meet my
expectations, but I've held on. What seems to be holding Hitachi back is
the continuing strength of the yen; if the yen stops rising, Hitachi's
outlook improves dramatically. Among domestic stocks, GM and Chrysler were
flat performers in a rising market. But both have exciting products in the
pipeline, so I'm willing to wait.
Q. DOES THE FUND STILL INVEST IN DERIVATIVES?
A. Yes, but less in the latest period than in the past. One type of
derivative I've used is an indexed security or a structured note.
Structured notes are like customized bonds. They let me tailor a portion of
the fund's investments to match my outlook in specific segments of the
market, and so take advantage of potential opportunities I might otherwise
miss. In the past the fund has invested in structured notes that were
designed to capitalize on falling short-term interest rates in Europe. I
sold most of those at a loss last spring when interest rates rose instead.
Fortunately, those losses were largely offset by profits in structured
notes designed to capitalize on rising commodity prices. But as commodity
prices have risen, I've sold most of those, too. By the end of March, this
type of derivative totaled less than 2% of the fund.
Q. WHAT ABOUT DERIVATIVES TIED TO THE VALUE OF FOREIGN CURRENCIES?
A. I sometimes use foreign currency contracts, which are also derivatives,
to hedge against currency fluctuations. For example, I hedged all of the
fund's Japanese investments during the period because I thought the yen was
overvalued. Unfortunately, the yen kept rising. The fund didn't lose money
as a result, other than the small costs associated with trading currency
contracts; but it did miss an opportunity to profit from the declining
dollar. In Europe, on the other hand, I stopped hedging early in 1994, and
that has helped the fund's performance.
Q. WHAT CAN WE REASONABLY EXPECT FROM THE FUND IN THE MONTHS AHEAD?
A. That depends largely on the outlook for inflation. It's better now than
it was six months ago, but it's still uncertain. If the economy accelerates
and inflation takes off with it, that would be bad news for both stocks and
bonds. On the other hand, many of the factors that hurt performance last
year are less likely to have as large an impact in 1995. Historically,
interest rates have tended to level off after the kind of year they had in
1994. Also, investments in emerging markets should not hurt the fund as
much this year simply because that portion of the fund has been cut way
back; and the same goes for investments in Europe and Japan. The upshot
should be somewhat less volatility overall. That said, the fund has by no
means eliminated its foreign investments, and may even be adding to them in
the months ahead. The key for shareholders, then, is to keep a long-term
perspective.
FUND FACTS
GOAL: maximum total return
over the long term through
investments in stocks, bonds
and short-term instruments
of all types
START DATE: December 30, 1991
SIZE: As of March 31, 1995,
more than $2.7 billion
MANAGER: Robert Beckwitt,
since 1991; manager,
Fidelity Asset Manager,
since 1988; Fidelity
Asset Manager: Income,
since 1992; joined Fidelity in
1986
(checkmark)
BOB BECKWITT ON
DIVERSIFICATION AND RISK:
"My approach during the past
couple of years has been to
invest roughly a quarter of the
fund in U.S. stocks, a quarter
in emerging markets, a
quarter in other foreign
markets, and a quarter in
Treasury and junk bonds. I felt
that if I did that, I'd get an
above-average return with
less volatility than one might
expect from a more
concentrated portfolio. But in
1994, almost everything went
down, and most foreign
markets went down a lot.
Therefore the level of risk I
attribute to those foreign
investments in the future has
to be higher. That doesn't
mean I'll avoid them, only that
I'll be looking for a higher
potential return before I invest
again. When things get riskier
you demand more potential
return to balance the risk."
(solid bullet) Foreign investments
totaled 21% of the fund at the
end of March, down from 36%
six months ago. About a third
of the fund's foreign
investments - 7% of the
overall portfolio - was in
emerging markets. For a
country-by-country
breakdown of the fund's
foreign investments, see page
51.
(solid bullet) Of the fund's 20% stake in
bonds, about 12% is Treasury
bonds and 5% is junk bonds
- - those with credit ratings
from Moody's or
S&P of Ba or BB or lower, or
those that are unrated. Junk
bonds compensate for their
higher credit risk by offering
more yield than less-risky
higher-rated bonds with
comparable maturities.
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF MARCH 31, 1995
% OF FUND'S INVESTMENTS
% OF FUND'S IN THESE STOCKS
INVESTMENTS 6 MONTHS AGO
International Business Machines Corp. 1.6 0.8
Federal National Mortgage Association 1.3 0.7
Intel Corp. 1.0 0.4
British Petroleum PLC ADR 0.9 0.6
Compaq Computer Corp. 0.8 0.4
TOP FIVE MARKET SECTORS AS OF MARCH 31, 1995
(STOCKS ONLY) % OF FUND'S INVESTMENTS
% OF FUND'S IN THESE MARKET SECTORS
INVESTMENTS 6 MONTHS AGO
Technology 11.5 7.1
Finance 8.2 7.2
Energy 5.3 3.3
Utilities 4.2 4.9
Durables 3.4 2.8
TOP FIVE COUNTRIES AS OF MARCH 31, 1995
(BY LOCATION OF ISSUER) % OF FUND'S INVESTMENTS
% OF FUND'S IN THESE COUNTRIES
INVESTMENTS 6 MONTHS AGO
United States 78.9 64.3
Japan 6.0 4.0
Canada 2.3 2.7
United Kingdom 2.0 1.5
Brazil 1.5 1.7
ASSET ALLOCATION
AS OF MARCH 31, 1995 * AS OF SEPTEMBER 30, 1994 **
Row: 1, Col: 1, Value: 23.0
Row: 1, Col: 2, Value: 20.0
Row: 1, Col: 3, Value: 57.0
Row: 1, Col: 1, Value: 14.0
Row: 1, Col: 2, Value: 29.0
Row: 1, Col: 3, Value: 57.0
Stock class 57%
Bond class 20%
Short-term class
and other 23%
FOREIGN
INVESTMENTS 21%
Stock class 57%
Bond class 29%
Short-term class
and other 14%
FOREIGN
INVESTMENTS 36%
*
**
ASSET ALLOCATIONS IN THE PIE CHART REFLECT THE CATEGORIZATION OF ASSETS AS
DEFINED IN THE FUND'S PROSPECTUS. FINANCIAL STATEMENT CATEGORIZATIONS
CONFORM TO ACCOUNTING STANDARDS AND WILL DIFFER FROM THE PIE CHART.
INVESTMENTS MARCH 31, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 54.1%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.7%
AEROSPACE & DEFENSE - 0.3%
Alliant Techsystems, Inc. (a) 15,300 $ 583
Boeing Co. 46,000 2,478
Lockheed Martin Corp. 54,967 2,906
McDonnell Douglas Corp. 38,100 2,124
Samsung Aerospace Industries (a) 1,014 30
8,121
DEFENSE ELECTRONICS - 0.3%
General Motors Corp. Class H 8,700 360
Loral Corp. 52,100 2,214
Raytheon Co. 81,000 5,903
8,477
SHIP BUILDING & REPAIR - 0.1%
Bremer Vulkan AG (a) 8,200 471
Far East-Levingston Shipbuilding Ltd. 111,000 460
General Dynamics Corp. 13,700 644
Han Jin Heavy Industries Co. Ltd. (a) 48,000 821
Keppel Corp. Ltd. 130,000 1,050
3,446
TOTAL AEROSPACE & DEFENSE 20,044
BASIC INDUSTRIES - 2.9%
CHEMICALS & PLASTICS - 0.9%
Albemarle Corp. 25,600 326
Cominco Fertilizer Ltd. 19,900 556
Perez Companc Class B 302,050 1,124
DESC (Soc. de Fomento Industrial SA) Class B 408,100 824
du Pont (E.I.) de Nemours & Co. 39,700 2,402
Eastman Chemical Co. 7,500 417
Ferro Corp. 55,000 1,396
Grace (W.R.) & Co. 12,000 639
Great Lakes Chemical Corp. 26,300 1,640
Han Wha Chemical Corp. (a) 6,864 172
Han Wha Corp. (a) 4,400 73
Hercules, Inc. 41,000 1,912
Hoechst AG Ord. 4,900 1,016
Kemira OY sponsored ADR (a)(f) 12,300 189
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - CONTINUED
CHEMICALS & PLASTICS - CONTINUED
Kureha Chemical Industries Co. Ltd. 133,000 $ 660
LG Chemical Ltd. 99,330 2,869
Lyondell Petrochemical Co. 95,800 2,323
Nalco Chemical Co. 26,800 901
Oriental Chemical Industries Co. Ltd. (a) 33,550 1,108
Potash Corp. of Saskatchewan 10,000 443
Praxair, Inc. 39,600 921
Union Carbide Corp. 104,800 3,210
Wellman, Inc. 13,300 336
25,457
IRON & STEEL - 0.2%
Bethlehem Steel Corp. (a) 28,000 452
Compania Siderurgica Nacional 65,431,500 1,526
Dongkuk Steel Mill Co. (a) 3,777 110
Inland Steel Industries, Inc. (a) 7,500 206
Kawasaki Steel Corp. (a) 150,000 591
Nakayama Steel Works Ltd. 9,000 62
Nucor Corp. 6,600 371
Pohang Iron & Steel Co. Ltd. 5,400 520
3,838
METALS & MINING - 0.7%
Alcan Aluminium Ltd. 165,980 4,404
Alumax, Inc. (a) 79,100 2,126
Aluminum Co. of America 82,100 3,396
Castech Aluminum Group (a) 24,000 357
Compania Vale do Rio Doce PN Ord. 8,986,700 1,213
Dae Chang Industrial Co. 463 9
Dae Han Jung Suok (a) 410 18
Dae Han Jung Suok (New)(a) 12 -
Kanamoto Co. Ltd. 25,000 505
Mitsubishi Materials Corp. 168,000 815
Noranda, Inc. 155,400 2,652
Reynolds Metals Co. 84,400 4,157
Sam Sun Industry (a) 5,200 42
Sungei Way Holdings BHD 331,000 1,335
21,029
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - CONTINUED
PACKAGING & CONTAINERS - 0.2%
Carnaudmetalbox SA 3,450 $ 129
Corning, Inc. 70,000 2,520
Owens-Illinois, Inc. (a) 233,000 2,621
Shorewood Packaging Corp. (a) 75,000 1,209
6,479
PAPER & FOREST PRODUCTS - 0.9%
Abitibi-Price, Inc. (a) 43,900 616
Bowater, Inc. 116,700 4,172
Champion International Corp. 15,800 683
Eagon Industrial Co. Ltd. 5,969 118
Federal Paper Board Co., Inc. 26,500 755
Georgia-Pacific Corp. 26,600 2,121
Klabin Industria de Papele Celulose PN 345,800 383
International Paper Co. 12,600 947
Jefferson Smurfit Corp. (a) 25,000 403
Kokuyo Co. Ltd. 78,000 2,009
Land & General BHD 100,000 306
Land & General BHD (RFD)(a) 112,500 345
Kumpulan Guthrie BHD 342,000 536
Maderas Y Sinteticos SA sponsored ADR 33,200 564
Malakoff BHD 401,000 1,031
Scott Paper Co. 72,400 6,471
Stone Container Corp. (a) 104,800 2,397
Sung Chang Enterprise Co. (a) 5,800 416
Temple-Inland, Inc. 7,800 350
24,623
TOTAL BASIC INDUSTRIES 81,426
CONGLOMERATES - 0.3%
Allied-Signal, Inc. 43,500 1,707
Tyco International Ltd. 46,334 2,450
United Technologies Corp. 77,200 5,337
9,494
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONSTRUCTION & REAL ESTATE - 2.1%
BUILDING MATERIALS - 0.5%
Armstrong World Industries, Inc. 51,800 $ 2,362
Cemex SA, Series B 1,182,487 2,600
Keum Kang Ltd. (a) 5,500 510
Lafarge Corp. 20,257 380
Lapeyre SA 11,600 750
Masco Corp. 61,600 1,702
Pioneer International Ltd. 106,500 248
Siam Cement Ltd. (For. Reg.) 13,700 787
Ssangyong Cement Co. 10,155 329
Tecumseh Products Co. Class A 41,800 2,069
USG Corp. (a) 33,900 780
Tong Yang Cement Co. (a) 4,350 158
12,675
CONSTRUCTION - 0.5%
Butler Manufacturing Co. 15,000 544
Centex Corp. 18,600 449
DR Horton, Inc. 4,664 45
Daelim Industrial Co. (a) 50,041 1,303
Dong Ah Construction Industries Co. Ltd. (a) 17,250 548
Hopewell Holdings Ltd. 1,640,000 1,156
Jean LeFebvre Entreprise 69,513 4,544
Jean LeFebvre Entreprise (warrants) (a) 2,771 29
Kaneshita Construction Co. Ltd. Ord. 49,000 753
Kun Young Construction Corp. 7,521 143
LG Construction Co. 884 17
NCI Building Systems, Inc. (a) 66,200 1,158
Pulte Corp. 9,400 221
Samsung Construction Co. Ltd. 2,860 85
Samsung Engineering & Construction Co. (RFD) 1,075 22
YTL Corp. BHD 340,500 1,683
12,700
ENGINEERING - 0.1%
Fluor Corp. 10,100 487
Glenayre Technologies, Inc. (a) 15,000 683
Hanil Development Co. (a) 56,898 1,142
Hyundai Engineering & Construction Co. Ltd. 27,438 1,329
3,641
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE - 0.3%
Bolton Properties BHD 319,000 $ 424
Cheung Kong Ltd. 228,000 994
Daiman Development BHD 355,000 415
Fondo Opcion SA de CV Class 2 , Series B (a) 145,100 178
Henderson Land 60,000 338
Hong Kong Land Ltd. 414,000 905
Immeubles de France, Ste Des 90 6
Mitsubishi Estate Co. Ltd. 205,000 2,313
Sime UEP Properties BHD 232,000 440
Sun Hung Kai Properties Ltd. 162,000 1,105
Tan & Tan Development BHD 1,890,000 2,227
9,345
REAL ESTATE INVESTMENT TRUSTS - 0.7%
Bay Apartment Community 41,000 753
CBL & Associates Properties 44,100 882
Cali Realty Corp. (a) 13,400 233
Colonial Property Trust (SBI) 5,100 117
DeBartolo Realty Corp. 37,200 525
Developers Diversified Realty 24,800 701
Duke Realty Investors, Inc. 50,500 1,338
Equity Residential Property Trust (SBI) 169,400 4,404
Evans Withycombe Residential, Inc. 6,000 120
Excel Realty Trust, Inc. 18,400 350
Felcor Suite Hotels, Inc. 40,900 976
Glimcher Realty Trust 14,300 286
Haagen Alexander Properties, Inc. 43,400 602
Horizon Outlet Centers, Inc. 700 16
Kimco Realty Corp. 66,700 2,560
Liberty Property Trust (SBI) 12,300 238
Macerich Co. 25,000 510
Merry Land & Investment Co., Inc. 32,068 625
Oasis Residential, Inc. 22,400 510
Post Properties, Inc. 21,600 640
RFS Hotel Investors, Inc. 75,000 1,069
Simon Properties Group, Inc. 33,000 804
Storage Equities, Inc. 26,700 454
Storage USA, Inc. 25,600 746
Vornado Realty Trust 2,700 97
19,556
TOTAL CONSTRUCTION & REAL ESTATE 57,917
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DURABLES - 3.4%
AUTOS, TIRES, & ACCESSORIES - 2.1%
Aichi Machine Industries 111,000 $ 647
Aisin Seiki Co. Ltd. 42,000 538
Allen Group, Inc. (The) 30,600 757
Asia Motors Co., Inc. 29,008 391
Automotive Industries Holding, Inc. 51,100 1,124
BMW AG 2,800 1,401
Bridgestone Corp. 38,000 566
Capaco Automotive Products Corp. 47,900 401
Chrysler Corp. 370,200 15,503
Dae Won Kang Up Co. (a) 4,709 152
Dana Corp. 32,800 836
Discount Auto Parts, Inc. (a) 41,100 986
Eaton Corp. 37,800 2,051
Echlin, Inc. 24,000 924
Ford Motor Co. 100 3
General Motors Corp. 388,381 17,186
Hyundai Motor Service Co. Ltd. (a) 2,311 122
Hyundai Motor Service Co. Ltd. (New)(a) 173 8
Johnson Controls, Inc. 14,200 722
Kia Motors Corp. sponsored GDR (a)(f) 46,900 715
Magna International, Inc. Class A 127,000 4,833
Pirelli Tyre Holdings NV Ord. 65,100 427
Sumitomo Rubber Industries 102,740 836
Suzuki Motor Corp. 108,000 1,160
Toyoda Machine Works 59,000 470
Toyota Motor Corp. 178,000 3,638
Volvo AB Class B 110,500 1,912
58,309
CONSUMER ELECTRONICS - 0.9%
Black & Decker Corp. 70,700 2,042
Brasmotor PN 4,101,500 934
Electrolux AB 26,500 1,203
Jeewon Industrial Co. 5,952 231
Matsushita Electric Industrial Co. Ltd. 573,000 9,264
Odetics, Inc. Class A (a) 50,000 275
Radiotechnique (LA) 50 5
Sharp Corp. 96,000 1,563
Sony Corp. 195,400 9,815
25,332
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DURABLES - CONTINUED
HOME FURNISHINGS - 0.1%
Dapta-Mallinjoud SA 7,300 $ 198
Miller (Herman), Inc. 127,000 2,778
2,976
TEXTILES & APPAREL - 0.3%
Burlington Industries, Inc. (a) 109,800 1,250
Coteminas PN 564,600 147
Cygne Designs, Inc. (a) 11,500 135
Fila Holding Spa sponsored ADR 100 2
Fruit of the Loom, Inc. Class A 11,700 307
Kellwood Co. 1,300 24
Korea Moolsan Co. 20,760 368
Korea Moolsan Co. (New) 5,343 76
Nam Yeung Corp. (a) 2,100 381
Nine West Group, Inc. (a) 17,900 528
Nisshinbo Industries 265,000 2,442
Russell Corp. 21,000 622
Tokyo Style Co. Ltd. 51,000 819
Unifi, Inc. 17,000 459
Warnaco Group, Inc. Class A (a) 36,100 645
Westpoint Stevens, Inc. Class A (a) 21,800 327
Yagi Corp. 19,000 285
Youngone Corp. 728 12
8,829
TOTAL DURABLES 95,446
ENERGY - 5.2%
ENERGY SERVICES - 1.1%
BJ Services Co. (a) 19,000 390
Baker Hughes, Inc. 136,500 2,781
Commercial del Plata 214,800 470
Energy Service Co., Inc. (a) 36,300 513
Enterra Corp. (a) 15,800 271
Global Industries Ltd. (a) 27,900 621
Halliburton Co. 114,500 4,165
McDermott International, Inc. 73,000 1,998
Nabors Industries, Inc. (a) 158,700 1,190
Noble Drilling Corp. (a) 86,200 528
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
ENERGY SERVICES - CONTINUED
Nowsco Well Service Ltd. 61,500 $ 665
Offshore Logistics, Inc. 24,400 317
Pride Petroleum Services, Inc. (a) 6,400 44
Schlumberger Ltd. 239,300 14,268
Tidewater, Inc. 66,500 1,355
Weatherford International, Inc. (a) 240,900 2,529
32,105
INDEPENDENT POWER - 0.0%
Thermo Electron Corp. (a) 10,600 539
OIL & GAS - 4.1%
Amerada Hess Corp. 167,900 8,290
Amoco Corp. 48,300 3,073
Anderson Exploration Ltd. (a) 131,500 1,351
Apache Corp. 22,500 613
Atlantic Richfield Co. 54,700 6,291
Blue Range Resource Corp. Class A (a)(f) 70,000 532
British Petroleum PLC:
ADR 290,199 24,340
Ord. 475 3
Burlington Resources, Inc. 157,300 6,410
Camco International, Inc. 56,000 1,155
Chevron Corp. 24,200 1,162
Coastal Corp. (The) 12,000 345
Daesung Industrial Co. Ltd. (a) 3,200 194
Elf Aquitaine sponsored ADR 69,700 2,701
Exxon Corp. 31,700 2,116
Isu Chemical Co. (a) 1 -
Kerr-McGee Corp. 76,500 3,902
Louis Dreyfus Natural Gas Corp. (a) 12,700 183
Louisiana Land & Exploration Co. 52,900 1,977
Mobil Corp. 43,600 4,038
Murphy Oil Corp. 40,500 1,747
Newfield Exploration Co. (a) 21,700 467
Noble Affiliates, Inc. 8,600 235
Norsk Hydro AS 46,400 1,738
Norsk Hydro AS ADR 32,800 1,222
Northstar Energy Corp. (a) 54,000 482
Occidental Petroleum Corp. 269,300 5,891
Pancanadian Petroleum Ltd. 5,700 178
Phillips Petroleum Co. 112,400 4,117
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Renaissance Energy Ltd. (a) 116,700 $ 2,440
Renaissance Energy Ltd. (a)(f) 70,000 1,463
Rio Alto Exploration Ltd. (a) 423,900 1,553
Royal Dutch Petroleum Co. 9,900 1,188
Tesoro Petroleum Corp. (a) 9,000 92
Texaco, Inc. 87,700 5,832
Tosco Corp. 61,200 1,897
Total SA Class B 64,556 3,854
Total SA Class B sponsored ADR 129,369 3,881
Triton Energy Corp. (a) 15,600 597
Unocal Corp. 189,881 5,459
Vintage Petroleum, Inc. 34,300 682
Western Gas Resources, Inc. 17,400 385
Yukong Ltd. 9,393 425
114,501
TOTAL ENERGY 147,145
FINANCE - 8.2%
BANKS - 2.0%
Aomori Bank Ltd. 85,000 579
Banacci SA de CV Class C 211,500 243
Banco Bilbao Vizcaya SA Ord. 45,600 1,159
Banco de Galicia Y Buenos Aires SA sponsored ADR
representing Class B shares 34,763 530
Banco Intercontinental Espanol 5,200 405
Banco Popular Espanol 3,700 479
Banco Weise sponsored ADR 158,767 1,111
Bangkok Bank 173,500 1,536
Bank International Indonesia Ord. 166,500 404
Bank of Asia PLC (For. Reg.) 461,900 1,032
Bank of Boston Corp. 88,517 2,633
BanPonce Corp. 11,400 359
BayBanks, Inc. 11,900 768
BNP CI Ord. 56,560 2,881
Boram Bank (a) 51,685 589
Bradesco PN 120,070,000 807
CPR (Comp Par Reescompte) 35,527 2,463
Chemical Banking Corp. 6,200 234
Cho Hung Bank Co. Ltd. 99,655 1,270
C.S. Holdings (Bearer) 4,601 1,886
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
BANKS - CONTINUED
Comerica, Inc. 35,600 $ 979
Commerce Asset Holding BHD 66,000 269
Deutsche Bank AG 3,800 1,795
Development Bank of Singapore (For. Reg.) 53,000 556
Grupo Financiero Bancomer SA de CV sponsored ADR,
Series C (a) 117,400 411
Grupo Financiero Banorte SA Class C 642,400 464
HSBC Holdings PLC 144,000 1,625
Hana Bank (a) 6,864 130
Hanil Bank (a) 24,240 273
Hyundai International Merchant Bank (a) 4,576 196
Korea First Bank, Inc. Ltd. (a) 6,796 72
Korea Long Term Credit Bank (a) 11,000 348
Krung Thai Bank (For. Reg.) 906,800 2,559
Kyung Nam Bank (a) 17,800 171
Kyungki Bank Ltd. (a) 39,132 360
Mitsubishi Trust & Banking 148,000 2,170
Overseas Union Bank Ltd. (For. Reg.) 475,000 2,827
Panin Bank PT (For. Reg.) 347,300 349
Siam City Bank PLC (For. Reg.) 1,704,900 1,731
Shawmut National Corp. 292,859 7,724
Shinhan Bank (a) 32,150 620
Shinhan Bank (New)(a) 5,223 90
State Street Boston Corp. 22,000 701
Swiss Bank Corp. (Bearer) 4,080 1,347
Thai Farmers Bank 346,300 2,925
Thai Military Bank (For. Reg.) 316,400 925
Toho Bank Ord. 50,000 404
United Overseas Bank Ltd.:
(For. Reg.) 87,000 863
(warrants) (a) 263,000 1,276
55,528
CLOSED END INVESTMENT COMPANY - 0.5%
Austria Fund, Inc. 94,600 745
Europe Fund, Inc. 14,100 162
First NIS Regional Fund (a) 480,000 1,560
France Growth Fund, Inc. 162,700 1,566
Germany Fund, Inc. 5,859 67
Growth Fund of Spain, Inc. 232,600 2,035
Morgan Stanley India Investment Fund, Inc. 643,600 6,758
Thai Fund, Inc. 13,900 306
13,199
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 1.5%
American Express Co. 274,245 $ 9,564
BankAmerica Corp. 12,200 588
Bank of New York Co., Inc. 32,500 1,068
Barnett Banks, Inc. (a) 42,300 1,925
Beneficial Corp. 35,300 1,386
Central Investment & Finance Corp. (a) 8,800 184
Equitable Companies, Inc. 51,300 1,128
First National Finance Corp. PLC 1,323,000 1,567
First Union Corp. 53,950 2,340
Fleet Financial Group, Inc. 287,063 9,294
General Finance & Securities PLC (For. Reg.)(a) 47,800 194
Green Tree Acceptance, Inc. 20,000 820
Hong Leong Credit BHD 219,000 935
Industrial Finance Corp. (For. Reg.) 592,166 1,202
JCG Holdings 1,834,000 1,050
Keycorp 59,371 1,677
LG Merchant Banking Corp. (a) 3,300 137
London American Growth Trust 708,000 528
NationsBank Corp. 80,432 4,082
Promise Co. Ltd. 18,000 788
Republic New York Corp. 17,000 835
Tong Yang Securities Co. Ltd. 736 10
41,302
FEDERAL SPONSORED CREDIT - 1.6%
Federal Home Loan Mortgage Corp. 137,300 8,306
Federal National Mortgage Association 456,800 37,172
45,478
INSURANCE - 1.4%
ACE Ltd. 23,200 586
Alexander & Alexander Services, Inc. 13,100 310
Allstate Corp. 210,200 6,043
American International Group, Inc. 6,100 636
American Travellers Corp. (a) 41,400 807
Assicurazioni Generali Spa 12,590 278
Baloise Holding 1,100 2,196
Berkley (W.R.) Corp. 12,800 469
Corporacion Mapfre International Reassurance 20,000 800
Dai-Tokyo Fire & Marine Insurance Ord. 165,000 1,238
GMIS, Inc. (a) 10,000 255
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
INSURANCE - CONTINUED
General Re Corp. 15,000 $ 1,980
International Nederlanden Groep NV 43,547 2,153
John Alden Financial Corp. 82,800 1,521
Loews Corp. 18,900 1,866
MBIA, Inc. 22,600 1,421
MGIC Investment Corp. 37,300 1,520
NAC Re Corp. 15,700 475
Providian Corp. 32,200 1,131
Reliastar Financial Corp. 25,000 850
Royale Insurance Co. Ltd. 252,900 1,173
SAFECO Corp. 10,800 591
Skandia International Holding Co. AB ADR 31,200 483
Tokio Marine & Fire Insurance Co. Ltd. (The) 201,000 2,286
Torchmark Corp. 32,100 1,332
Travelers, Inc. (The) 107,500 4,152
UNUM Corp. 53,900 2,440
Vital Forsikring AS, Series A (a) 10,000 107
Western National Corp. 20,000 250
39,349
SAVINGS & LOANS - 0.2%
Ahmanson (H.F.) & Co. 106,300 1,913
Commercial Federal Corp. (a) 6,300 156
GP Financial Corp. 10,200 236
Golden West Financial Corp. 79,700 3,049
Standard Federal Bank 31,100 836
Washington Mutual, Inc. 9,400 189
6,379
SECURITIES INDUSTRY - 1.0%
Bear Stearns Companies, Inc. 41,400 766
Coryo Securities 16,520 214
Daewoo Securities Co. Ltd. 11,440 347
Hanshin Securities Co. Ltd. 4,664 97
Hyundai Securities Co. Ltd. (a) 7,564 149
Korea First Securities Co. Ltd. (a) 35,657 485
Korea First Securities Co. Ltd. (New)(a) 3,628 52
LG Securities Co. Ltd. (a) 29,595 560
Lehman Brothers Holdings, Inc. 134,700 2,425
Merrill Lynch & Co., Inc. 128,000 5,456
Midland Walwyn, Inc. (a) 370,700 1,921
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
SECURITIES INDUSTRY - CONTINUED
Morgan Stanley Group, Inc. 46,000 $ 3,099
Nomura Securities Co. Ltd. 457,000 8,549
PaineWebber Group, Inc. 40,700 656
Schwab (Charles) Corp. 29,250 932
Ssangyong Investment & Securities Co. Ltd. 4,524 81
Ssangyong Investment & Securities Co. Ltd. (New)(a) 444 8
Sunkyong Securities Co. Ltd. (a) 35,710 490
United Asset Management Corp. 12,400 476
26,763
TOTAL FINANCE 227,998
HEALTH - 2.9%
DRUGS & PHARMACEUTICALS - 1.6%
Allergan, Inc. 61,900 1,826
American Home Products Corp. 14,700 1,047
Amgen, Inc. (a) 19,700 1,327
Biogen, Inc. (a) 113,800 4,524
Bristol-Myers Squibb Co. 7,600 479
Carter-Wallace, Inc. 42,900 509
COR Therapeutics, Inc. (a) 35,000 455
Elan Corp. PLC ADR (a) 34,400 1,281
Genentech, Inc. (redeemable)(a) 92,100 4,317
Genzyme Corp. 15,000 581
Hauser Chemical Research, Inc. (a) 38,300 192
Ono Pharmaceutical Co. Ltd. 48,000 2,444
Pfizer, Inc. 41,600 3,567
Rhone Poulenc Rorer, Inc. 96,700 4,194
Rhone Poulenc SA Class A 90,900 2,134
Sankyo Co. Ltd. 228,800 5,284
Schering AG 4,600 3,396
Schering-Plough Corp. 46,400 3,451
Sigma Aldrich Corp. 18,400 713
Takeda Chemical Industries Ltd. 67,000 882
Yamanouchi Pharmaceutical 87,000 1,910
44,513
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - 0.8%
Acuson Corp. (a) 54,600 $ 621
Advanced Technology Laboratories, Inc. (a) 45,900 689
Baxter International, Inc. 98,200 3,216
Becton Dickinson & Co. 39,700 2,154
Boston Scientific Corp. (a) 54,500 1,342
Coherent, Inc. (a) 20,000 535
Johnson & Johnson 35,100 2,088
Medtronic, Inc. 21,700 1,505
Nellcor, Inc. (a) 20,000 763
Owens and Minor, Inc. 38,550 501
Pall Corp. 91,300 1,917
St. Jude Medical, Inc. 15,700 679
Spacelabs Medical, Inc. (a) 7,700 193
U.S. Surgical Corp. 233,000 5,301
21,504
MEDICAL FACILITIES MANAGEMENT - 0.5%
Columbia/HCA Healthcare Corp. 139,450 5,996
Community Psychiatric Centers 91,500 1,178
Humana, Inc. (a) 85,600 2,194
Oxford Health Plans, Inc. (a) 64,400 3,606
U.S. Healthcare, Inc. 29,900 1,323
14,297
TOTAL HEALTH 80,314
HOLDING COMPANIES - 0.5%
Brierley Investments Ltd. 2,413,965 1,754
CEWE Color Holding AG 1,700 558
Cinergy Corp. 31,936 794
Grupo Carso SA de CV Class A-1 (a) 908,300 3,970
Jardine Matheson Holdings Ltd. 406,000 3,654
Lagardere Groupe SCA 61,700 1,442
Man AG Ord. 1,700 408
Sanluis Corp. Units (Class B, Class C & Class D)(a) 69,904 954
SDW Holdings Corp. (f) 17,700 540
Westmont Land (Asia) BHD (a) 527,000 1,115
15,189
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 2.6%
ELECTRICAL EQUIPMENT - 1.1%
Amphenol Corp. Class A (a) 38,300 $ 958
Avid Technology, Inc. (a) 2,900 88
C COR Electronics, Inc. 17,800 354
Cherry Corp. (a) 18,000 270
Cherry Corp. Class A (a) 12,200 195
Emerson Electric Co. 10,000 665
Fanuc Ltd. 11,000 480
General Electric Co. 82,000 4,438
Hitachi Koki Co. Ord. 157,000 1,621
Hutchison Whampoa Ltd. Ord. 363,000 1,601
Mitsubishi Electric Co. Ord. 925,000 6,815
Mori Seiki Co. Ltd. Ord. 88,000 1,667
Murata Manufacturing Co. Ord. 6,000 233
Nifco, Inc. 48,000 709
Omron Corp. 258,000 5,094
Philips Electronics 47,030 1,601
Philips Electronics NV 6,100 208
Samsung Electro-Mechanics Co. 15,000 674
Samsung Electro-Mechanics Co. (New) 11,117 491
Scientific-Atlanta, Inc. 11,400 266
United Communication Industry (For. Reg.) 67,300 946
United Engineers BHD 118,000 691
Yaesu Musen Co. Ltd. 50,000 722
30,787
INDUSTRIAL MACHINERY & EQUIPMENT - 1.4%
AIDA Engineering Ltd. Ord. 230,000 1,862
Amada Metrecs Co. Ltd. 92,000 1,360
Amadasonoike Co. Ltd. 204,000 1,602
Amtrol, Inc. 9,600 170
Cascade Corp. 50,000 663
Caterpillar, Inc. 144,100 8,016
Clark Equipment Co. (a) 37,000 3,053
Commercial Intertech Corp. 24,300 535
Cooper Industries, Inc. 19,300 748
Deere & Co. 175,400 14,250
Duriron Co., Inc. 27,500 564
Finning Ltd. 38,100 531
Greenfield Industries, Inc. 20,000 565
Han Wha Machinery Co. Ltd. (a) 22,000 413
Hwacheon Machinery Works 2,200 75
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
Kennametal, Inc. 25,495 $ 685
LG Industrial Systems Co. 7,700 267
Parker-Hannifin Corp. 13,400 593
Soosan Heavy Industrial Co. (a) 6,930 158
Soosan Heavy Industrial Co. (RFD)(a) 2,654 54
Ssangyong Heavy Industries Co. Ltd. (a) 23,100 266
Svedala 35,300 838
Toshiba Machine Co. Ltd. 87,000 497
Tsugami Corp. 131,000 605
Valmet Corp. Ord. 42,800 833
39,203
POLLUTION CONTROL - 0.1%
Browning-Ferris Industries, Inc. 35,500 1,207
Safety Kleen Corp. 34,700 620
WMX Technologies, Inc. 61,200 1,683
3,510
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 73,500
MEDIA & LEISURE - 1.3%
BROADCASTING - 0.5%
British Sky Broadcasting Group ADR (a) 15,000 369
Capital Cities/ABC, Inc. 53,000 4,677
Capital Radio PLC 207,000 1,199
Home Shopping Network, Inc. (a) 514 4
Scandinavian Broadcasting Corp. (a) 10,800 248
Tele-Communications, Inc. Class A (a) 203,600 4,276
Viacom, Inc. (a):
Class A 1,176 54
Class B (non-vtg.) 62,210 2,784
13,611
ENTERTAINMENT - 0.0%
Royal Carribean Cruises Ltd. 13,400 350
LEISURE DURABLES & TOYS - 0.1%
ARCTCO, Inc. 27,300 410
Cobra Golf, Inc. 25,000 700
Hasbro, Inc. 3,400 115
Outboard Marine Corp. 39,400 827
Polaris Industries, Inc. 11,200 540
Takara Co. Ltd. 32,000 381
West Marine, Inc. (a) 24,500 631
3,604
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - 0.3%
Accor SA 7,200 $ 860
Bally Gaming International, Inc. (warrants)(a) 37,500 253
Four Seasons Hotels, Inc. 51,408 556
Genting BHD 117,000 1,055
Grupo Posadas SA de CV Class L (a) 97,300 27
Host Marriott Corp. (a) 64,603 767
La Quinta Motor Inns, Inc. 74,112 2,010
Marriott International, Inc. 23,803 827
Mirage Resorts, Inc. (a) 33,700 944
Promus Companies, Inc. (a) 6,100 228
Trump Plaza Holding Associates (warrants)(a) 35 18
7,545
PUBLISHING - 0.2%
American Media, Inc. Class A 16,600 118
Gannett Co., Inc. 15,100 806
Meredith Corp. 11,600 302
News International PLC 400,000 1,862
Scholastic Corp. (a) 14,100 768
Singapore Press Holdings Ltd. (For. Reg.) 74,000 1,253
Thomson Corp. 66,400 848
5,957
RESTAURANTS - 0.2%
Bertucci's, Inc. (a) 13,900 120
Boston Chicken, Inc. 18,200 296
Brinker International, Inc. (a) 22,500 374
Cracker Barrel Old Country Store, Inc. 26,900 602
Landry's Seafood Restaurants, Inc. (a) 22,100 677
Lone Star Steakhouse Saloon (a) 36,500 990
McDonald's Corp. 36,000 1,229
Outback Steakhouse, Inc. (a) 64,400 1,634
Quality Dining, Inc. (a) 47,300 579
6,501
TOTAL MEDIA & LEISURE 37,568
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - 2.2%
AGRICULTURE - 0.0%
Molinos Rio de La Plata SA (a) 185,639 $ 937
BEVERAGES - 0.5%
Buenos Aires Embotelladora SA sponsored ADR 23,700 616
Compania Cervecerias Unidas SA ADR 70,800 1,628
Emvasa del Valle de Enah Ord. (a) 581,000 351
Fomento Economico Mexicano SA de CV Class B 443,500 744
LVMH 15,000 2,944
Panamerican Beverages, Inc. Class A 48,000 1,254
PepsiCo, Inc. 63,600 2,480
Quilmes Industries SA 84,700 1,398
Seagram Co. Ltd. 33,800 1,072
Whitbread Class A 68,134 610
13,097
FOODS - 0.3%
Cheil Foods & Chemical Industries 6,633 467
ConAgra, Inc. 24,800 822
Dean Foods Co. 18,900 534
Dole Food, Inc. 21,700 629
General Mills, Inc. 10,000 596
Herdez SA de CV Class A 455,900 125
Hudson Foods, Inc. Class A 30,150 577
IBP, Inc. 37,600 1,227
Miwon Co. Ltd. 5,162 186
Nippon Suisan Kaisha Ltd. (a) 198,000 956
Ottogi Foods Co. Ltd. (a) 7,200 240
RalCorp Holdings, Inc. (a) 23,200 551
Ralston Purina Co. 10,700 511
Samyang Foods Co. (a) 4,400 245
Weston George Ltd. 55,000 1,690
9,356
HOUSEHOLD PRODUCTS - 0.2%
Alberto-Culver Co. Class A 20,500 538
Avon Products, Inc. 12,300 744
Colgate-Palmolive Co. 28,200 1,861
First Brands Corp. 8,600 324
Pyung HWA Industrial Co. (a) 6,560 259
Tambrands, Inc. 34,400 1,535
5,261
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - CONTINUED
TOBACCO - 1.2%
Imasco Ltd. 1,600 $ 51
Philip Morris Companies, Inc. 290,700 18,968
RJR Nabisco Holdings Corp. 2,435,424 14,308
Sampoerna, Hanjaya Mandala (For. Reg.) 200,000 1,059
34,386
TOTAL NONDURABLES 63,037
PRECIOUS METALS - 1.2%
Agnico Eagle Mines Ltd. 152,700 1,855
Barrick Gold Corp. 620,600 15,413
Echo Bay Mines Ltd. 106,600 1,114
Franco Nevada Mining Corp. 31,600 1,570
Homestake Mining Co. 211,200 3,907
Industrias Penoles SA (a) 20,000 41
Kloof Gold Mining Co. Ltd. Ord. 73,500 842
Placer Dome, Inc. 248,000 6,004
St. Barbara Mines Ltd. 451,900 385
Santa Fe Pacific Gold Corp. 112,022 1,414
32,545
RETAIL & WHOLESALE - 2.9%
APPAREL STORES - 0.3%
AnnTaylor Stores Corp. (a) 14,600 544
Esprit Asia Holdings Ltd. 1,294,000 510
Gap, Inc. 18,100 643
Gymboree Corp. (a) 30,300 768
Lamonts Apparel Corp. (a) 25,828 6
Lamonts Apparel Corp. (warrants)(a) 47,666 -
Limited, Inc. (The) 91,300 2,111
Ross Stores, Inc. 25,800 284
TJX Companies, Inc. 114,400 1,502
Talbots, Inc. 10,000 339
Urban Outfitters, Inc. (a) 12,200 244
6,951
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - CONTINUED
DRUG STORES - 0.1%
Revco (D.S.), Inc. (a) 106,300 $ 2,445
GENERAL MERCHANDISE STORES - 1.1%
Cifra SA Class C 1,858,600 2,263
Consolidated Stores Corp. (a) 35,800 720
Dayton Hudson Corp. 17,600 1,258
Dillard Department Stores, Inc. Class A 53,700 1,483
Federated Department Stores, Inc. (Del.)(a) 254,900 5,640
Ito Yokado Co. Ltd. 130,000 6,455
Keum Kang Development Industries Co. (a) 2,800 60
Lechters, Inc. (a) 33,500 561
May Department Stores Co. (The) 18,200 673
Nordstrom, Inc. 10,500 428
Price/Costco, Inc. (a) 78,900 1,165
Sears, Roebuck & Co. 93,400 4,985
Wal-Mart Stores, Inc. 215,500 5,495
31,186
GROCERY STORES - 0.3%
Argyll Group PLC Ord. 178,000 830
Fleming Companies, Inc. 30 1
Food Lion, Inc. Class A 173,000 973
Great Atlantic & Pacific Tea Co., Inc. 15,000 339
Izumi Co. Ord. 59,000 1,438
Loblaw Companies Ltd. 65,200 1,200
Marukyo Corp. 25,000 606
Safeway, Inc. (a) 88,700 3,082
Stop & Shop Companies, Inc. (a) 38,900 934
Tae Gu Department Store Co. (a) 2,381 86
9,489
RETAIL & WHOLESALE, MISCELLANEOUS - 1.1%
Barnes & Noble, Inc. 13,700 416
Bed Bath & Beyond, Inc. (a) 37,600 931
Best Buy Co., Inc. (a) 122,600 2,651
Circuit City Stores, Inc. 60,900 1,606
Gateway 2000, Inc. (a) 52,700 988
Good Guys, Inc. (a) 15,000 176
Great Universal Stores PLC Ord. Class A 49,191 446
Home Depot, Inc. (The) 94,100 4,164
Lowe's Companies, Inc. 52,600 1,815
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED
Micro Warehouse, Inc. (a) 50,000 $ 1,550
Office Depot, Inc. (a) 28,850 703
Officemax, Inc. (a) 61,700 1,581
Petsmart, Inc. (a) 42,800 1,498
Rex Stores Corp. (a) 30,100 421
Smith (W H) Group Ord. 63,900 426
Sotheby's Holdings, Inc. Class A 107,700 1,319
Staples, Inc. (a) 34,150 901
Tiffany & Co., Inc. 22,900 710
Toys "R" Us, Inc. (a) 195,300 5,005
Uny Co. Ltd. 151,000 2,755
Williams-Sonoma, Inc. (a) 30,500 763
30,825
TRADING COMPANIES - 0.0%
Hyundai Corp. (a) 5,399 150
TOTAL RETAIL & WHOLESALE 81,046
SERVICES - 0.8%
ADVERTISING - 0.1%
Omnicom Group, Inc. 26,500 1,450
WPP Group PLC 429,300 707
2,157
LEASING & RENTAL - 0.1%
Hollywood Entertainment Corp. (a) 38,250 1,339
Orix Corp. 58,000 2,324
3,663
PRINTING - 0.1%
Cadmus Communications Corp. 30,300 568
Cyrk, Inc. (a) 24,900 426
Donnelley (R.R.) & Sons Co. 33,300 1,145
Komori Corp. 33,000 781
New England Business Service, Inc. 62,300 1,145
4,065
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - CONTINUED
SERVICES - 0.5%
ADT Ltd. (a) 101,400 $ 1,242
BET PLC Ord. 446,900 783
Block (H & R), Inc. 51,000 2,212
Borg Warner Security Corp. (a) 1,500 12
CPI Corp. 34,700 551
Earth Technology Corp. (USA)(a) 28,500 178
Manpower, Inc. 46,400 1,491
Medaphis Corp. (a) 16,500 1,040
Omnium Gestion Financement SA 27,884 3,773
Rural/Metro Corp. (a) 2,000 37
Supercuts, Inc. (a) 38,800 359
Western Atlas, Inc. (a) 44,200 1,905
Zebra Technologies Corp. Class A (a) 15,000 615
14,198
TOTAL SERVICES 24,083
TECHNOLOGY - 11.4%
COMMUNICATIONS EQUIPMENT - 1.1%
Andrew Corp. (a) 22,500 917
Cabletron Systems, Inc. (a) 42,300 1,898
Cisco Systems, Inc. (a) 102,000 3,889
DSC Communications Corp. (a) 82,900 2,699
Dynatech Corp. (a) 40,000 630
Ericsson (L.M.) Telephone Co. Class B ADR 19,700 1,218
General Instrument Corp. (a) 39,500 1,373
Harmon Industries, Inc. 2,200 31
Network Equipment Technologies (a) 28,700 728
Network General Corp. (a) 33,600 958
Newbridge Networks Corp. (a) 15,000 491
Nokia Corp. AB 4,400 642
Nokia Corp. AB sponsored ADR 24,000 1,764
Nokia Corp. Free shares 15,400 2,265
Northern Telecom Ltd. 18,000 682
Tellabs, Inc. (a) 23,900 1,392
3Com Corp. (a) 160,800 9,105
30,682
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - 1.9%
Ascend Communications, Inc. (a) 3,200 $ 207
Automatic Data Processing, Inc. (a) 8,000 504
BancTec, Inc. (a) 39,600 594
Broderbund Software, Inc. 10,000 519
CUC International, Inc. (a) 10,000 389
Ceridian Corp. (a) 35,300 1,178
Computer Associates International, Inc. 41,900 2,488
CompUSA, Inc. (a) 10,000 181
Corel Systems Corp. (a) 39,750 522
Fourth Dimension Software (a) 33,000 149
Globalink, Inc. (a) 75,100 948
Henry (Jack) & Associates, Inc. 40,000 430
Informix Corp. (a) 94,800 3,258
Integrated Silicon Systems, Inc. (a) 7,500 218
Lotus Development Corp. (a) 32,100 1,228
MicroAge, Inc. (a) 56,500 544
Microsoft Corp. (a) 96,200 6,842
Novell, Inc. (a) 335,200 6,368
Oracle Systems Corp. (a) 449,250 14,039
Parametric Technology Corp. (a) 19,500 780
Peoplesoft, Inc. (a) 43,800 1,938
Platinum Technology, Inc. (a) 54,500 1,138
SHL Systemhouse, Inc. (a) 63,700 382
Santa Cruz Operation, Inc. (a) 131,100 1,803
Shared Medical Systems Corp. 10,000 366
Softdesk, Inc. (a) 16,300 391
Spectrum Holobyte, Inc. (a) 43,000 691
Stratacom, Inc. (a) 62,700 2,696
SunGard Data Systems, Inc. (a) 14,100 649
Symantec Corp. (a) 16,900 389
Synopsys, Inc. (a) 9,700 463
Wonderware Corp. (a) 21,200 673
52,965
COMPUTERS & OFFICE EQUIPMENT - 4.2%
ADAPTEC, Inc. (a) 32,100 1,058
Amdahl Corp. 50,000 550
Apple Computer, Inc. 32,500 1,146
Bay Networks, Inc. (a) 82,000 3,024
Canon, Inc. 326,000 5,383
Compaq Computer Corp. (a) 644,800 22,245
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
Daewoo Telecommunication (a) 2,135 $ 27
Daewoo Telecommunication (New)(a) 30 -
Digital Equipment Corp. (a) 216,000 8,181
Filenet Corp. (a) 30,000 998
Fore Systems, Inc. (a) 400 16
Fujitsu Ltd. 220,000 2,196
GBC Technologies, Inc. (a) 30,800 208
Hewlett-Packard Co. 36,600 4,406
International Business Machines Corp. 539,500 44,172
International Imaging Materials, Inc. (a) 35,700 964
Norand Corp. 4,200 147
Plannar Systems, Inc. 70,600 1,483
Radius, Inc. (a) 26,200 341
Read Rite Corp. (a) 1 -
RICOH Co. Ltd. Ord. 101,000 949
SCI Systems, Inc. (a) 87,800 1,641
Sequent Computer Systems, Inc. (a) 25,000 413
Silicon Graphics, Inc. (a) 146,800 5,211
Stratus Computer, Inc. (a) 27,600 863
Sun Microsystems, Inc. (a) 180,700 6,279
Symbol Technologies, Inc. (a) 20,000 615
Tandem Computers, Inc. (a) 33,300 516
Tech Data Corp. (a) 76,900 788
Tricord Systems, Inc. (a) 40,200 206
Wang Laboratories, Inc. (Del.) (a) 133,800 1,731
Xerox Corp. 29,500 3,463
119,220
ELECTRONIC INSTRUMENTS - 0.2%
Credence Systems Corp. (a) 23,500 734
Electro Scientific Industries, Inc. (a) 7,300 176
KLA Instruments Corp. (a) 28,100 1,778
Kulicke & Soffa Industries, Inc. (a) 33,000 903
Lam Research Corp. (a) 100 4
Megatest Corp. (a) 26,100 290
Silicon Valley Group, Inc. (a) 16,300 458
Tektronix, Inc. 23,400 937
Teradyne, Inc. (a) 4,800 200
5,480
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONICS - 3.8%
Advanced Micro Devices, Inc. (a) 47,900 $ 1,623
Aiwa Co. Ltd. 62,000 1,611
Allgon AB Class B Free shares 20,000 345
AMP, Inc. 20,600 742
Atmel Corp. (a) 1,500 58
Cyrix Corp. (a) 9,100 200
Daewoo Electronics Components Co. (a) 1,596 21
GTI Corp. (a) 15,000 148
Hirose Electric Co. Ltd. 42,000 2,517
Hitachi Ltd. 1,249,000 12,980
Hitachi Ltd. ADR 3,900 396
Intel Corp. 336,000 28,518
Kyocera Corp. 39,000 2,910
LSI Logic Corp. (a) 58,900 3,092
Linear Technology Corp. 13,400 750
Maxim Integrated Products, Inc. (a) 20,000 730
Methode Electronics, Inc. Class A 23,500 370
Micron Technology, Inc. 190,600 14,486
Molex, Inc. 9,500 321
Motorola, Inc. 128,300 7,008
National Semiconductor Corp. (a) 100 2
Nitto Denko Corp. 277,000 4,350
Nichicon Corp. 305,000 4,684
Ryoyo Electro Corp. Ord. 94,000 2,258
Rohm Co. Ltd. 73,000 3,186
SGS-Thomson Microelectronic NV (a) 108,200 3,219
Samsung Electronics Co. Ltd. (a)(f):
GDR 2,913 189
GDR (New) 576 37
GDR (non-vtg.)(New) 2,750 119
GDS 13,900 608
Solectron Corp. (a) 136,300 3,987
TDK Corp. 24,000 1,122
Texas Instruments, Inc. 24,600 2,177
Thomas & Betts Corp. 9,600 622
Toshiba Corp. 154,000 1,047
106,433
PHOTOGRAPHIC EQUIPMENT - 0.2%
Fuji Photo Film Co. Ltd. 196,000 4,662
TOTAL TECHNOLOGY 319,442
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TRANSPORTATION - 1.3%
AIR TRANSPORTATION - 0.3%
AMR Corp. (a) 37,600 $ 2,435
KLM Royal Dutch Airlines Ord. (a) 18,200 537
Korean Air (a) 40,737 1,319
Mesa Airlines, Inc. (a) 72,100 442
Northwest Airlines Corp. Class A (a) 46,200 1,253
Pittston Co. Services Group 20,300 558
Swire Pacific Ltd. Class A 95,000 648
7,192
RAILROADS - 0.8%
Burlington Northern, Inc. 64,000 3,800
CSX Corp. 106,200 8,363
Canadian Pacific Ltd. Ord. 185,600 2,769
Conrail, Inc. 10,000 561
East Japan Railway Ord. 136 667
Illinois Central Corp., Series A 50,400 1,739
Southern Pacific Rail Corp. (a) 191,400 3,350
Wisconsin Central Transportation Corp. (a) 22,300 1,062
22,311
SHIPPING - 0.1%
Han Jin Transportation Co. (a) 16,312 611
Kawasaki Kisen Kaisha Ltd. (a) 272,000 892
Mitsui OSK Lines Ltd. 510,000 1,826
Shun Tak Holdings Ltd. 868,000 513
3,842
TRUCKING & FREIGHT - 0.1%
Expeditors International of Washington, Inc. 27,200 571
Hitachi Transport System Co. 194,000 1,929
Hunt (J.B.) Transport Services, Inc. 5,300 97
Roadway Services, Inc. 11,400 550
3,147
TOTAL TRANSPORTATION 36,492
UTILITIES - 4.2%
CELLULAR - 1.0%
Airtouch Communications (a) 112,900 3,077
Associated Group, Inc. (a):
Class A 3,600 71
Class B 3,600 68
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - CONTINUED
CELLULAR - CONTINUED
BCE Mobile Communications, Inc. (a) 41,700 $ 1,378
Cellular Communications, Inc., Series A (a) 5,800 277
Korea Mobile Telecom Corp. (a) 670 470
Rogers Cantel Mobile Communications, Inc.
Class B (non-vtg.)(a) 42,400 1,076
Security Services PLC Ord. 160,000 2,058
Technology Resources Industries BHD (a) 351,000 1,006
Vanguard Cellular Systems, Inc. Class A (a) 11,600 261
Vodafone Group PLC sponsored ADR 523,700 17,348
27,090
ELECTRIC UTILITY - 1.1%
Aboitiz Equity Ventures, Inc. (a)(f) 3,748,000 687
AES Corp. 9,300 165
American Electric Power Co., Inc. 29,100 924
Baltimore Gas & Electric Co. 33,500 791
Carolina Power & Light Co. 18,000 488
Central & South West Corp. 29,000 703
Central Costanera SA ADR (f) 12,200 354
Consolidated Edison Co. of New York, Inc. 37,900 1,033
Consolidated Electric Power Asia Ltd. 715,800 1,481
Detroit Edison Co. 26,600 728
Dominion Resources, Inc. 27,900 1,004
Electrobras PN Class B 5,918,200 1,131
Fuji Electric Co. Ltd. 505,000 2,625
Korea Electric Power Corp. 160,400 5,798
Light Servicos de Electricidade SA Ord. 3,674,700 1,082
Ohio Edison Co. 31,500 630
Pacific Gas & Electric Co. 45,600 1,134
PacifiCorp. 54,400 1,054
Peco Energy Co. 54,600 1,372
Public Service Enterprise Group, Inc. 37,600 1,029
SCEcorp 49,100 767
Southern Co. 54,800 1,117
Union Electrica Fenosa 63,500 240
Veba AG Ord. 14,100 5,102
31,439
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - CONTINUED
GAS - 0.1%
Enron Corp. 13,400 $ 442
ENSERCH Corp. 10,100 150
Gas Natural SDG SA, Series E 5,000 411
MCN Corp. 47,800 878
Williams Companies, Inc. 28,500 874
2,755
TELEPHONE SERVICES - 2.0%
ALC Communications Corp. (a) 17,400 594
AT&T Corp. 3,900 202
Ameritech Corp. 213,200 8,795
Bell Atlantic Corp. 40,900 2,157
BellSouth Corp. 54,700 3,255
DDI Corp. Ord. 300 2,597
Hong Kong Telecommunications Ltd. 581,600 1,132
Koninklijke PPT Nederland 110,000 3,902
LCI International, Inc. (a) 10,000 249
LDDS Communications, Inc. 24,900 582
MFS Communications, Inc. (a) 10,000 350
Nippon Telegraph & Telephone Corp. Ord. 378 3,265
NYNEX Corp. 145,200 5,754
Pakistan Telecommunications Voucher GDR (a)(f) 8,650 779
SBC Communications, Inc. 180,884 7,620
Telebras ON 100,000,000 2,322
Telebras PN 110,972,702 2,984
Telecom Argentina Stet France Telecom SA 111,900 487
Telecom Italia Ord. 110,700 258
Telefonica de Argentina SA Class B 219,000 537
Telefonica de Espana SA Ord. 82,300 1,043
Telepar PN 1,400,000 334
Telesp PN 72,151,449 7,454
U.S. Long Distance Corp. (a) 20,000 288
56,940
TOTAL UTILITIES 118,224
TOTAL COMMON STOCKS
(Cost $1,477,076) 1,520,910
PREFERRED STOCKS - 0.5%
SHARES VALUE (NOTE 1)
CONVERTIBLE PREFERRED STOCKS - 0.3%
BASIC INDUSTRIES - 0.1%
METALS & MINING - 0.1%
Reynolds Metals Co. $3.31 26,000 $ 1,238
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Chrysler Corp., Series A, $4.625 (f) 8,000 930
General Motors Corp. $3.25 200 12
942
ENERGY - 0.1%
OIL & GAS - 0.1%
Atlantic Richfield Co. exchangeable $.5575 32,500 813
Unocal Corp. $3.50 (f) 21,200 1,102
1,915
HEALTH - 0.0%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
U.S. Surgical Corp. $2.20 (f) 34,500 897
INDUSTRIAL MACHINERY & EQUIPMENT --0.0%
ELECTRICAL EQUIPMENT - 0.0%
Westinghouse Electric Corp. $1.30 (f) 32,600 460
NONDURABLES - 0.1%
HOUSEHOLD PRODUCTS - 0.0%
Revlon Group, Inc., Series B, exchangeable
pay-in-kind $14.875 4,600 460
TOBACCO - 0.1%
RJR Nabisco Holdings Corp., Series C, depositary shares
representing 1/10 shares 96,400 615
TOTAL NONDURABLES 1,075
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - 0.0%
GROCERY STORES - 0.0%
Supermarkets General Holdings Corp. exchangeable
pay-in-kind $3.52 (a) 18,200 $ 436
TECHNOLOGY - 0.0%
COMPUTER SERVICES & SOFTWARE - 0.0%
Ceridian Corp. 3 1/2% 6,800 524
TOTAL CONVERTIBLE PREFERRED STOCKS 7,487
NONCONVERTIBLE PREFERRED STOCKS - 0.2%
BASIC INDUSTRIES - 0.1%
IRON & STEEL - 0.1%
Dongbu Steel Co. Ltd. 15,400 267
Geneva Steel Co., Series B, exchangeable 14% (a) 4,500 477
744
CONSTRUCTION & REAL ESTATE - 0.0%
CONSTRUCTION - 0.0%
Dongbu Construction Co. (a) 1,100 11
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Hyundai Motor Service Co. (a) 3,100 85
ENERGY - 0.0%
OIL & GAS - 0.0%
Gulf Canada Resources Ltd., Series 1, adj. rate 161,200 474
FINANCE - 0.0%
CREDIT & OTHER FINANCE - 0.0%
Tong Yang Securities 36,853 339
INSURANCE - 0.0%
SAI Sta Assicuratrice Industriale Spa 48,900 197
TOTAL FINANCE 536
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - 0.1%
COMPUTER SERVICES & SOFTWARE - 0.1%
SAP AG 2,900 $ 2,261
UTILITIES - 0.0%
TELEPHONE SERVICES - 0.0%
Stet (Societa Finanziaria Telefonica) Spa 149,700 302
TOTAL NONCONVERTIBLE PREFERRED STOCKS 4,413
TOTAL PREFERRED STOCKS
(Cost $12,248) 11,900
CORPORATE BONDS - 5.0%
MOODY'S PRINCIPAL
RATINGS (C) AMOUNT (B) (000S)
CONVERTIBLE BONDS - 0.1%
BASIC INDUSTRIES - 0.1%
IRON & STEEL - 0.0%
Essar Gujarat Ltd. euro 5 1/2%, 8/5/98 - $ 420 515
PAPER & FOREST PRODUCTS - 0.1%
Stone Consolidated Corp. 8%, 12/31/03 - CAD 840 750
TOTAL BASIC INDUSTRIES 1,265
DURABLES - 0.0%
TEXTILES & APPAREL - 0.0%
Shinwon Corp. euro 0.5%, 12/31/08 - 180 166
FINANCE - 0.0%
CREDIT & OTHER FINANCE - 0.0%
SCICI Ltd. euro 3 1/2%, 4/1/04 - 330 292
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
Cooper Industries, Inc. 7.05%, 1/1/15 A3 363 370
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
CONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - 0.0%
GROCERY STORES - 0.0%
Kroger Co. 6 3/8%, 12/1/99 B2 $ 100 $ 141
TECHNOLOGY - 0.0%
COMPUTERS & OFFICE EQUIPMENT - 0.0%
Unisys Corp. 8 1/4%, 8/1/00 B2 150 156
TOTAL CONVERTIBLE BONDS 2,390
NONCONVERTIBLE BONDS - 4.9%
BASIC INDUSTRIES - 0.3%
CHEMICALS & PLASTICS - 0.2%
G-I Holdings, Inc., Series B, 0%, 10/1/98 Ba3 5,710 3,697
IMC Fertilizer Group, Inc. 10 1/8%, 6/15/01 B1 730 759
4,456
METALS & MINING - 0.0%
Kaiser Aluminum & Chemical Corp.
12 3/4%, 2/1/03 B2 380 393
PAPER & FOREST PRODUCTS - 0.1%
Repap Wisconsin, Inc. 9 7/8%, 5/1/06 B3 630 577
Stone Container Corp. 12 5/8%, 7/15/98 B1 1,250 1,347
1,924
TOTAL BASIC INDUSTRIES 6,773
CONSTRUCTION & REAL ESTATE - 0.5%
BUILDING MATERIALS - 0.3%
Adience, Inc. 11%, 6/15/02 - 700 508
Building Materials Corp. America
0%, 7/1/04 (d) B1 4,260 2,279
Cemex SA 8 7/8%, 6/10/98 (f) Ba3 805 560
Cemex SA and Tolmex SA de CV euro
8 7/8%, 6/10/98 Ba2 377 262
Tolmex SA de CV 8 3/8%, 11/1/03 Ba3 1,903 913
USG Corp., Series B, 9 1/4%, 9/15/01 B1 4,710 4,580
9,102
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - 0.2%
Baldwin Co., Series B, 10 3/8%, 8/1/03 B2 $ 1,100 $ 682
U.S. Home Corp. 9 3/4%, 6/15/03 Ba3 5,530 5,115
5,797
TOTAL CONSTRUCTION & REAL ESTATE 14,899
DURABLES - 0.0%
TEXTILES & APPAREL - 0.0%
Hat Brands, Inc., Series B, 12 5/8%, 9/15/02 - 250 263
ENERGY - 0.9%
ENERGY SERVICES - 0.8%
Falcon Drilling, Inc. 9 3/4%, 1/15/01 B2 1,920 1,813
TransTexas Gas Corp. 10 1/2%, 9/1/00 B1 18,440 18,717
20,530
INDEPENDENT POWER - 0.0%
Consolidated Hydro 0%, 7/15/03 (d) - 1,110 622
OIL & GAS - 0.1%
Mesa Capital Corp. secured 0%, 6/30/98 (d) B3 3,609 3,474
TOTAL ENERGY 24,626
FINANCE - 0.4%
BANKS - 0.1%
Bancomer SA 9%, 6/1/00 (f) Ba2 2,500 1,488
INSURANCE - 0.3%
American Annuity Group, Inc. 11 1/8%, 2/1/03 B2 840 855
American Life Holdings Co. 11 1/4%, 9/15/04 B1 830 838
Reliance Financial Services:
9.273%, 11/1/00 BBB 1,370 1,295
10.36%, 12/1/00 BBB 1,640 1,636
Reliance Group:
9%, 11/15/00 Ba3 2,940 2,748
9 3/4%, 11/15/03 B1 2,120 1,940
9,312
TOTAL FINANCE 10,800
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
IMO Industries, Inc. 12%, 11/1/00 B3 $ 220 $ 225
MEDIA & LEISURE - 1.8%
BROADCASTING - 0.7%
Chancellor Broadcasting 12 1/2%, 10/1/04 B3 530 530
Citicasters, Inc. 9 3/4%, 2/15/04 B- 4,525 4,423
PTI Holdings, Inc. 7%, 12/17/02 - 120 71
Robin Media Group, Inc. 11 1/8%, 4/1/97 - 1,250 1,222
SCI Television, Inc. secured:
7 1/2%, 6/30/98 (h) - 5,854 5,781
11%, 6/30/05 B3 7,066 7,242
Univision Network Holding LP 7%, 12/17/02 - 870 513
19,782
ENTERTAINMENT - 0.1%
Stratosphere Corp. 14 1/4%, 5/15/02 B2 1,570 1,609
LODGING & GAMING - 1.0%
Bally's Casino Holdings, Inc. 10 1/2%,
6/15/98 B3 10,260 6,720
Boyd Gaming Corp. 10 3/4%, 9/3/03 B2 480 472
California Hotel Finance Corp. gtd. 11%,
12/1/02 B2 9,295 9,225
Fitzgeralds Gaming Corp. unit 13 3/4%,
3/15/96 ($1,000 bonds & 1.54 warrants) (h) - 410 217
GNF Corp., Series B, 10 5/8%, 4/1/03 B2 970 749
Grand Casino Resorts, Inc. gtd.
12 1/2%, 2/1/00 Ba3 3,080 3,203
Harrah's Jazz Co. 14 1/4%, 11/15/01 B1 4,315 4,639
Host Marriott Hospitality, Inc.:
10 5/8%, 2/1/00 B1 191 193
9 1/8%, 12/1/00 B1 79 79
11 1/4%, 7/18/05 B1 2 2
10 1/2%, 5/1/06 B1 1,063 1,058
11%, 5/1/06 B1 168 171
Red Roof Inns, Inc. 9 5/8%, 12/15/03 B3 855 819
Showboat, Inc. 13%, 8/1/09 B2 360 373
27,920
RESTAURANTS - 0.0%
Family Restaurants, Inc. 9 3/4%, 2/1/02 B1 380 260
TOTAL MEDIA & LEISURE 49,571
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
NONDURABLES - 0.4%
BEVERAGES - 0.0%
Dr. Pepper/Seven-Up Companies, Inc.
0%, 11/1/02 (d) Baa1 $ 450 $ 388
FOODS - 0.0%
Chiquita Brands International, Inc.
9 1/8%, 3/1/04 B1 400 366
Specialty Foods Corp. 10 1/4%, 8/15/01 B2 450 439
805
HOUSEHOLD PRODUCTS - 0.4%
Revlon Consumer Products Corp.
10 1/2%, 2/15/03 B3 950 888
Revlon Worldwide Corp. secured 0%, 3/15/98 B3 19,664 11,774
12,662
TOTAL NONDURABLES 13,855
RETAIL & WHOLESALE - 0.2%
APPAREL STORES - 0.1%
Apparel Retailers, Inc. 12 3/4%, 8/15/05 Caa 2,050 1,215
Lamonts Apparel Corp. 10 1/4%, 11/1/99 (f)(k) - 1,584 815
2,030
DRUG STORES - 0.0%
Thrifty Payless Holdings, Inc. 11 3/4%, 4/15/03 B2 1,330 1,393
GENERAL MERCHANDISE STORES - 0.1%
Parisian, Inc. 9 7/8%, 7/15/03 B3 2,045 1,432
GROCERY STORES - 0.0%
Ralph's Grocery Co. 9%, 4/1/03 B2 520 510
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Musicland Group, Inc. 9%, 6/15/03 B1 260 222
TOTAL RETAIL & WHOLESALE 5,587
SERVICES - 0.0%
Borg Warner Security Corp. 9 1/8%, 5/1/03 B2 600 483
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - 0.1%
COMMUNICATIONS EQUIPMENT - 0.0%
Echostar Communications Corp. unit
0%, 6/1/04 ($1,000 Sr. secured discount
notes & 6 warrants) (d) Caa $ 2,680 $ 1,260
COMPUTERS & OFFICE EQUIPMENT - 0.1%
Alpine Group, Inc. 13 1/2%, 1/5/96 (e) Caa 110 109
Unisys Corp. 9 3/4%, 9/15/96 Ba3 2,000 2,025
2,134
ELECTRONICS - 0.0%
Berg Electronics, Inc. 11 3/8%, 5/1/03 B3 335 344
TOTAL TECHNOLOGY 3,738
TRANSPORTATION - 0.1%
RAILROADS - 0.1%
Transtar Holdings LP/Transtar Capital Corp.,
Series B, 0%, 12/15/03 (d) B- 3,040 1,687
UTILITIES - 0.2%
CELLULAR - 0.1%
Mobilmedia Communications, Inc.
0%, 12/1/03 (d) B3 2,610 1,475
ELECTRIC UTILITY - 0.0%
Del Norte Funding Corp. 9.05%, 1/2/93 (k) Ca 170 104
El Paso Funding Corp. lease oblig. (k):
9 3/8%, 10/1/96 Ca 190 115
9 1/5%, 7/2/97 Ca 70 42
10 3/4%, 4/1/13 Ca 960 586
847
GAS - 0.0%
Columbia Gas System, Inc. (The)
10 1/2%, 6/1/12 (k) Caa 540 736
TELEPHONE SERVICES - 0.1%
MFS Communications 0%, 1/15/04 (d) B2 2,535 1,607
TOTAL UTILITIES 4,665
TOTAL NONCONVERTIBLE BONDS 137,172
TOTAL CORPORATE BONDS
(Cost $146,889) 139,562
U.S. TREASURY OBLIGATIONS - 12.2%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
6 1/4%, 2/15/03 (j) Aaa $ 277,585 $ 261,407
10 3/4%, 5/15/03 Aaa 25,000 30,320
11 7/8%, 11/15/03 Aaa 15,350 19,813
11 5/8%, 11/15/04 Aaa 24,870 32,212
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $342,851) 343,752
COMMERCIAL MORTGAGE SECURITIES - 0.2%
CBA Mortgage Corp. commercial Series 1993-C1
Class E, 7.158%, 12/25/03 (f) Ba2 741 603
CS First Boston Mortgage Securities Corp.
commercial Series 1994-CFB1
Class E, 6.4769%, 1/25/28 (f) Ba2 838 631
Resolution Trust Corp.:
commercial Series 1994-C1 Class E,
8%, 6/25/26 BB 878 690
commercial Series 1994-C2 Class G,
8%, 4/25/25 B 588 454
SML, Inc.:
commercial Series 1994-C1 Class B-3,
11.69%, 9/18/99 - 1,000 905
commercial Series 1994-C1 Class C,
9.20%, 9/18/99 (e) - 1,325 866
Structured Asset Securities Corp. commercial
Series 1995-C1 Class D, 7 3/8%, 9/25/24 BBB 650 542
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $4,676) 4,691
COMPLEX MORTGAGE SECURITIES - 0.0%
INTEREST ONLY STRIPS - 0.0%
SML, Inc. commercial Series 1994-C1 Class S,
0.81%, 9/18/99 (i)
(Cost $936) - 31,799 874
FOREIGN GOVERNMENT OBLIGATIONS (M) - 1.7%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
Brazil Federative Republic IDU euro 7.8125%,
1/1/01 (h) B1 $ 9,700 $ 7,123
Mexico Value Recovery (rights)(a) - 63,995 1
New Zealand Government 8%, 4/15/04 Aaa NZD 7,500 4,910
Polish Government Brady (f)(h):
discount 6.8125%, 10/27/24 - 2,340 1,498
past due interest 3 1/2%, 10/27/24 - 1,297 519
Province of Chaco, Argentina
11 7/8%, 9/10/97 (e) - 917 898
Republic of Ecuador:
7 5/8%, 12/21/04 (f)(h) - 2,840 1,292
discount 7 1/4%, 2/28/25 (f)(h) - 20,081 8,936
euro discount 7 1/4%, 2/28/25 (h) - 4,000 1,780
past due interest (g)(f) - 16,000 3,340
past due interest 7 1/4%, 2/28/15 (f)(h) - 16,586 3,462
Siderurgica Brasileiras Inflation Indexed 6%,
8/15/99 (l) - BRR 114,277 14,480
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $53,896) 48,239
INDEXED SECURITIES - 1.4%
INTEREST INDEXED - 0.3%
Citibank Nassau:
6.4125%, 12/22/95 (inversely indexed to
3-month GBP LIBOR, multiplied by 7.25) 1,520 1,583
6.43%, 12/22/95 (inversely indexed to
3-month GBP LIBOR, multiplied by 7.25) 2,690 2,787
6.46%, 12/22/95 (inversely indexed to
3-month GBP LIBOR, multiplied by 7.25) 2,350 2,445
6.46%, 12/22/95 (inversely indexed to
3-month GBP LIBOR, multiplied by 7.25) 1,680 1,758
8,573
COMMODITY INDEXED - 1.0%
Goldman Sachs Group, LP note
6.2375%, 9/27/95 (indexed to gold price) 13,100 13,317
Morgan Guaranty Trust Co. cert. of dep.:
6%, 7/7/95 (indexed to platinum price) 1,580 1,662
6%, 7/10/95 (indexed to platinum price) 1,900 2,003
6.1875%, 9/27/95 (indexed to gold price) 9,300 9,435
26,417
INDEXED SECURITIES - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
OTHER - 0.1%
Salomon Brothers, Inc. (e):
7.20%, 11/22/96 (indexed to common
stock of St. Petersburg Telephone Network,
a Russian joint-stock company) $ 4,470 $ 2,108
7.90%, 12/20/96 (indexed to common
stock of Chernogorneft, a Russian
joint-stock company) 2,050 1,646
3,754
TOTAL INDEXED SECURITIES
(Cost $40,640) 38,744
PURCHASED BANK DEBT - 0.0%
Socialist Republic of Vietnam loans
restructured under 1985 agreement (a)
(Cost $1,234) 2,500 1,036
REPURCHASE AGREEMENTS - 24.9%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 6.20%, dated
3/31/95 due 4/3/95 (Note 3) $ 699,985 699,624
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $2,780,070) $ 2,809,332
FUTURES CONTRACTS
AMOUNTS IN THOUSANDS EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
677 Midcap 400 Stock Index Contracts June 1995 $ 62,047 $ 1,180
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.2%
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
370,268 JPY 4/10/95 $ 4,280 $ 280
(Payable amount $4,000)
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.2%
CONTRACTS TO SELL
13,652,065 JPY 4/10/95 to 6/29/95 $ 157,972 (18,195)
(Receivable amount $139,777)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 5.6%
$ (17,915)
CURRENCY ABBREVIATIONS
BRR - Brazilian real
GBP - British pound
CAD - Canadian dollar
JPY - Japanese yen
NZD - New Zealand dollar
LEGEND
(h) Non-income producing
(i) Principal amount is stated in United States dollars unless otherwise
noted.
(j) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(k) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(l) 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 COST
SECURITY DATE (000S)
Alpine Group, Inc.
13 1/2%, 1/5/96 1/4/95 $ 108
Province of Chaco,
Argentina 11 7/8%,
9/10/97 3/9/94 $ 961
Salomon Brothers, Inc.:
7.20%, 11/22/96
(indexed to common
stock of St. Petersburg
Telephone Network, a
Russian joint-stock
company) 11/1/94 $ 4,470
7.90%, 12/20/96
(indexed to common
stock of Chernogorneft,
a Russian joint-stock
company) 12/6/94 $ 2,050
SML, Inc. commercial
Series 1994-C1 Class C,
9.20%, 9/18/99 8/11/94 $ 862
(m) 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 $32,745,000 or 1.2% of net
assets.
(n) Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
(o) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(p) Security represents right to receive monthly interest payments on an
underlying pool of mortgages. Principal shown is the par amount of the
mortgage pool.
(q) A portion of the security was pledged to cover for futures contracts
and delayed delivery purchases. At the period end, the value of securities
pledged amounted to $7,095,000.
(r) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
(s) Principal amount shown is original face amount and does not reflect the
inflation adjustments.
(t) Some foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
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 12.4% AAA, AA, A 12.4%
Baa 0.0% BBB 0.1%
Ba 0.8% BB 1.2%
B 3.6% B 2.5%
Caa 0.1% CCC 0.1%
Ca, C 0.0% CC, C 0.0%
D 0.0%
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 1.8%.
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 78.9%
Japan 6.0
Canada 2.3
United Kingdom 2.0
Brazil 1.5
France 1.4
Korea 1.3
Others (individually less than 1%) 6.6
TOTAL 100.0%
INCOME TAX INFORMATION
At March 31, 1995, the aggregate cost of investment securities for income
tax purposes was $2,780,860,000. Net unrealized appreciation aggregated
$28,472,000, of which $148,417,000 related to appreciated investment
securities and $119,945,000 related to depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
(EXCEPT PER-SHARE AMOUNTS) MARCH 31, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 2,809,332
agreements of $699,624) (cost $2,780,070) -
See accompanying schedule
Receivable for investments sold 15,188
Unrealized appreciation on foreign currency contracts 280
Receivable for fund shares sold 7,679
Dividends receivable 4,699
Interest receivable 9,052
TOTAL ASSETS 2,846,230
LIABILITIES
Payable to custodian bank $ 460
Payable for investments purchased 32,356
Regular delivery
Delayed delivery 5,626
Unrealized depreciation on foreign currency contracts 18,195
Payable for closed foreign currency contracts 533
Payable for fund shares redeemed 17,215
Accrued management fee 1,645
Payable for daily variation on futures contracts 559
Other payables and accrued expenses 1,357
TOTAL LIABILITIES 77,946
NET ASSETS $ 2,768,284
Net Assets consist of:
Paid in capital $ 2,904,047
Undistributed net investment income 27,564
Accumulated undistributed net realized gain (loss) on (175,881)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 12,554
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 213,032 shares outstanding $ 2,768,284
NET ASSET VALUE, offering price and redemption price per $12.99
share ($2,768,284 (divided by) 213,032 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED MARCH 31, 1995 (UNAUDITED)
INVESTMENT INCOME $ 13,926
Dividends
Interest 51,147
TOTAL INCOME 65,073
EXPENSES
Management fee $ 10,374
Transfer agent fees 3,833
Accounting fees and expenses 387
Non-interested trustees' compensation 11
Custodian fees and expenses 144
Registration fees 161
Audit 25
Legal 15
Interest 3
Reports to shareholders 39
Miscellaneous 23
Total expenses before reductions 15,015
Expense reductions (98) 14,917
NET INVESTMENT INCOME 50,156
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (155,413)
Foreign currency transactions 1,744
Futures contracts (2,424) (156,093)
Change in net unrealized appreciation (depreciation) on:
Investment securities (8,189)
Assets and liabilities in foreign currencies (14,965)
Futures contracts 3,591 (19,563)
NET GAIN (LOSS) (175,656)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ (125,500)
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
MARCH 31, 1995 1994
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 50,156 $ 64,499
Net investment income
Net realized gain (loss) (156,093) 11,343
Change in net unrealized appreciation (depreciation) (19,563) (42,372)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (125,500) 33,470
FROM OPERATIONS
Distributions to shareholders (41,578) (19,851)
From net investment income
From net realized gain (19,955) (39,839)
In excess of net realized gain (17,248) (5,132)
TOTAL DISTRIBUTIONS (78,781) (64,822)
Share transactions 469,864 3,355,758
Net proceeds from sales of shares
Reinvestment of distributions 77,854 63,888
Cost of shares redeemed (645,740) (1,560,750)
Net increase (decrease) in net assets resulting from (98,022) 1,858,896
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS (302,303) 1,827,544
NET ASSETS
Beginning of period 3,070,587 1,243,043
End of period (including undistributed net investment $ 2,768,284 $ 3,070,587
income of $27,564 and $27,680, respectively)
OTHER INFORMATION
Shares
Sold 35,912 237,619
Issued in reinvestment of distributions 6,016 4,613
Redeemed (49,649) (111,723)
Net increase (decrease) (7,721) 130,509
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED DECEMBER 30, 1991
ENDED SEPTEMBER 30, (COMMENCEMENT OF
MARCH 31, 1995 OPERATIONS) TO
SEPTEMBER 30,
(UNAUDITED) 1994 1993 1992
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 13.91 $ 13.77 $ 11.16 $ 10.00
period
Income from Investment
Operations
Net investment income .19 .13 .18 .14
Net realized and unrealized (.75) .61 E 2.66 1.02
gain (loss)
Total from investment (.56) .74 2.84 1.16
operations
Less Distributions (.19) (.18) (.15) -
From net investment
income
From net realized gain (.09) (.37) (.08) -
In excess of net realized gain (.08) (.05) - -
Total distributions (.36) (.60) (.23) -
Net asset value, end of period $ 12.99 $ 13.91 $ 13.77 $ 11.16
TOTAL RETURN B, C (4.02)% 5.39% 25.83% 11.60%
RATIOS AND SUPPLEMENTAL
DATA
Net assets, end of period $ 2,768,284 $ 3,070,587 $ 1,243,043 $ 94,416
(000 omitted)
Ratio of expenses to average 1.03% A 1.15% 1.19% 1.64% A
net assets D
Ratio of expenses to average 1.04% A 1.15% 1.29% 1.64% A
net assets before expense D
reductions
Ratio of net investment 3.47% A 2.64% 3.02% 3.50% A
income to average net
assets
Portfolio turnover rate 131% A 104% 97% 693% A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
D EFFECTIVE NOVEMBER 1, 1992, FMR HAS VOLUNTARILY AGREED TO REIMBURSE THE
FUND FOR TOTAL OPERATING EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE
COMMISSIONS AND EXTRAORDINARY EXPENSES) ABOVE AN ANNUAL RATE OF 1.20% OF
AVERAGE NET ASSETS.
E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD ENDED DUE TO THE TIMING OF
SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET
VALUES OF THE INVESTMENTS OF THE FUND.
NOTES TO FINANCIAL STATEMENTS
For the period ended March 31, 1995 (Unaudited)
7. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Asset Manager: Growth (the fund) is a fund of Fidelity Charles
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 exchange 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
exchange quotations are not readily available (and in certain cases debt
securities which trade on an exchange), are valued primarily using
dealer-supplied valuations or 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 and foreign currency options, 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 U.S. federal
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. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income, which includes accretion of original
issue discount, is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
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 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, futures and options
transactions, foreign currency transactions, passive foreign investment
companies (PFIC), market discount, non-taxable dividends and losses
deferred due to wash sales. The fund also utilized earnings and profits
distributed to shareholders on redemption of shares as a part of the
dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect net investment income per share. Undistributed net investment income
and accumulated undistributed net realized 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.
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.
8. 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. These contracts
involve market risk in excess of the unrealized gain or loss reflected in
the fund's Statement of Assets and Liabilities. The U.S. dollar value of
the currencies the fund has committed to buy or sell is shown in the
schedule of investments under the caption "Forward Foreign Currency
Contracts." This amount represents the aggregate exposure to each currency
the fund has acquired or hedged through currency contracts at period end.
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
2. OPERATING POLICIES -
CONTINUED
FORWARD FOREIGN CURRENCY
CONTRACTS - CONTINUED
of offset; otherwise, gain (loss) is recognized on settlement date.
Contracts that have been offset with different counterparties are reflected
as both a contract to buy and a contract to sell in the schedule of
investments under the caption "Forward Foreign Currency Contracts."
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, 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.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The
market value of the securities purchased or sold on a when-issued or
forward commitment basis are identified as such in the fund's schedule of
investments. With respect to purchase commitments, the fund identifies
securities as segregated in its custodial records with a value at least
equal to the amount of the commitment. Losses may arise due to changes in
the market value of the underlying securities or if the counterparty does
not perform under the contract.
FUTURES CONTRACTS AND OPTIONS. The fund may use futures and options
contracts to manage its exposure to the stock market. Buying futures,
writing puts, and buying calls tend to increase the fund's exposure to the
underlying instrument. Selling futures, buying puts, and writing calls tend
to decrease the fund's exposure to the underlying instrument, or hedge
other fund investments. Futures contracts and written options involve, to
varying degrees, risk of loss in excess of the futures variation margin or
the option value reflected in the Statement of Assets and Liabilities. The
underlying face amount at value is shown in the schedule of investments
under the captions "Futures Contracts." This amount reflects each
contract's exposure to the underlying instrument at period end. Losses may
arise from changes in the value of the underlying instruments, if there is
an illiquid secondary market for the contracts, or if the counterparties do
not perform under the contracts' terms.
2. OPERATING POLICIES -
CONTINUED
FUTURES CONTRACTS AND OPTIONS - CONTINUED
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options are valued using the last sale price or, in the absence of a sale,
the last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations.
INDEXED SECURITIES. The fund may invest in indexed securities whose values
are linked either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices, or other underlying instruments. The
fund uses these securities to increase or decrease its exposure to
different underlying instruments and to gain exposure to markets that might
be difficult to invest in through conventional securities. Indexed
securities may be more volatile than their underlying instruments, but any
loss is limited to the amount of the original investment.
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 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 $5,627,000 or 0.2% of net assets.
9. 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 repurchase agreements were dated March 31,
1995 and due April 3, 1995. The maturity values of the joint trading
account investments were $699,985,000 at 6.20%. The investments in
repurchase agreements through the joint trading account are summarized as
follows:
SUMMARY OF JOINT TRADING
Number of dealers or banks 28
Maximum amount with one dealer or bank 14 1/2%
Aggregate principal amount of agreements $17,509,591,000
Aggregate maturity amount of agreements $17,518,640,000
Aggregate market value of collateral $17,915,919,000
Coupon rates of collateral 0% to 15 3/4%
Maturity dates of collateral 4/13/95 to 2/15/25
10. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,560,981,000 and $1,750,963,000, respectively, of which U.S.
government and government agency obligations aggregated $484,173,000 and
$533,841,000, respectively.
The market value of futures contracts opened and closed during the period
amounted to $298,028,000 and $461,672,000, respectively.
11. 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 .2700% to .5200% 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 .40%. For
the period, the management fee was equivalent to an annualized rate of .72%
of average net assets.
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 October 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 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 $539,000 for the period.
12. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding
6. BANK BORROWINGS - CONTINUED
amounted to $7,994,000 and $6,510,000, respectively. The weighted average
interest rate was 5.90%.
13. 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
$98,000 under this arrangement.
14. LITIGATION.
The fund is engaged in litigation against the obligor on the inflation
adjusted debt of Siderurgica Brasileiras SA, contesting the calculation of
the principal adjustment. The probability of success cannot be predicted
and the amount of recovery cannot be estimated. Any recovery from this
litigation would inure to the benefit of the fund.
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)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(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)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
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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.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING
CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR
NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR
RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
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
William J. Hayes, Vice President
Robert Beckwitt, Vice President
Arthur S. Loring, Secretary
Stephen P. Jonas, Treasurer
John H . Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Robert H. Morrison, Manager,
Security Transactions
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
Chase Manhattan Bank, N.A.
New York, NY
FIDELITY'S ASSET ALLOCATION FUNDS
Asset Manager(trademark)
Asset Manager: Growth
Asset Manager: 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.)
Tax Reporting 1-800-544-1877
TDD Service 1-800-544-0118
(for the deaf and hearing impaired)
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)FIDELITY
ASSET MANAGER(trademark)
SEMIANNUAL REPORT
MARCH 31, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 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 53 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 57 Notes to the financial statements.
REPORT OF INDEPENDENT 63 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.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term, as we witnessed last year. You also can help to manage some
of the risks of investing through diversification. Asset Manager funds are
already diversified because they invest in stocks, bonds and short-term
investments, both in the U.S. and overseas.
If you have a short investment time horizon, you might want to consider
moving some of your 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.
Finally, 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
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (or income) and capital gains (the profits
the fund earns when it sells securities that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MARCH 31, 1995 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Asset Manager -1.14% 0.43% 75.66% 100.13%
S&P 500(registered trademark) 9.72% 15.57% 71.70% 120.10%
Average Flexible Portfolio Fund 5.08% 6.88% 61.53% n/a
Consumer Price Index 1.34% 2.85% 17.64% 25.64%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years or since
the fund began on December 28, 1988. 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 Standard & Poor's Composite Index of 500 Stocks - a
common proxy for the U.S. stock market. To measure how the fund's
performance stacked up against its peers, you can compare it to the average
flexible portfolio fund, which reflects the performance of 105 funds with
similar objectives tracked by Lipper Analytical Services over the past six
months. Both 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. (The CPI returns begin
on the month end closest to the fund's start date.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MARCH 31, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Asset Manager 0.43% 11.93% 11.72%
S&P 500 15.57% 11.42% 13.43%
Average Flexible Portfolio Fund 6.88% 10.00% n/a
Consumer Price Index 2.85% 3.30% 3.72%
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 LIFE OF FUND
Fidelity Asset ManagStandard & Poor's 50Fidelity Composite I
12/31/88 10000.00 10000.00 10000.00
01/31/89 10378.86 10732.00 10291.60
02/28/89 10219.34 10464.77 10200.52
03/31/89 10309.07 10708.60 10320.38
04/30/89 10578.27 11264.38 10593.04
05/31/89 10887.34 11720.59 10846.43
06/30/89 11006.98 11653.78 10999.47
07/31/89 11326.02 12706.12 11415.14
08/31/89 11355.93 12955.15 11426.55
09/30/89 11355.93 12902.04 11453.98
10/31/89 11405.78 12602.71 11519.49
11/30/89 11485.54 12859.81 11656.69
12/31/89 11527.70 13168.44 11771.16
01/31/90 11158.89 12284.84 11487.36
02/28/90 11243.19 12443.31 11560.76
03/31/90 11359.10 12773.06 11674.52
04/30/90 11169.43 12453.74 11566.76
05/31/90 11759.52 13667.97 12058.70
06/30/90 11854.35 13575.03 12133.82
07/31/90 11843.81 13531.59 12207.84
08/31/90 11443.40 12308.34 11830.25
09/30/90 11211.58 11708.92 11724.49
10/31/90 11243.19 11658.57 11808.55
11/30/90 11780.59 12411.72 12162.69
12/31/90 12147.79 12758.00 12361.92
01/31/91 12795.97 13314.25 12597.66
02/28/91 13354.75 14266.22 12913.10
03/31/91 13578.26 14611.46 13053.34
04/30/91 13790.59 14646.53 13138.97
05/31/91 14137.03 15279.26 13347.62
06/30/91 13835.29 14579.47 13174.63
07/31/91 14204.09 15258.87 13439.44
08/31/91 14528.18 15620.51 13678.66
09/30/91 14550.53 15359.65 13743.64
10/31/91 14662.28 15565.47 13865.96
11/30/91 14405.25 14938.18 13770.42
12/31/91 15019.77 16647.11 14448.89
01/31/92 15236.75 16337.47 14290.96
02/29/92 15526.05 16549.86 14382.28
03/31/92 15526.05 16227.13 14278.30
04/30/92 15743.03 16704.21 14453.92
05/31/92 15899.74 16786.06 14595.86
06/30/92 15899.74 16535.95 14602.28
07/31/92 16225.21 17212.27 14998.88
08/31/92 16152.88 16859.42 14941.28
09/30/92 16273.43 17058.36 15106.53
10/31/92 16249.32 17118.06 15046.41
11/30/92 16610.95 17701.79 15247.13
12/31/92 16934.15 17919.52 15434.06
01/31/93 17225.46 18070.05 15626.98
02/28/93 17402.78 18315.80 15844.82
03/31/93 17975.72 18702.26 16007.39
04/30/93 18052.43 18249.67 15910.07
05/31/93 18435.98 18738.76 16080.94
06/30/93 18668.09 18793.10 16251.72
07/31/93 18951.92 18717.93 16272.52
08/31/93 19493.77 19427.34 16672.83
09/30/93 19481.55 19277.75 16655.82
10/31/93 20054.16 19676.80 16827.04
11/30/93 20015.12 19489.87 16697.47
12/31/93 20877.86 19725.69 16813.02
01/31/94 21555.71 20396.37 17143.23
02/28/94 20877.86 19843.63 16818.19
03/31/94 19867.87 18978.44 16383.61
04/30/94 19854.20 19221.37 16426.21
05/31/94 20018.28 19536.60 16536.92
06/30/94 19577.78 19057.95 16371.55
07/31/94 19963.00 19683.05 16717.32
08/31/94 20430.78 20490.06 17005.19
09/30/94 20182.54 19988.05 16755.89
10/31/94 20279.44 20437.78 16916.42
11/30/94 19974.90 19693.44 16670.65
12/31/94 19499.62 19985.49 16825.56
01/31/95 19344.53 20503.72 17140.06
02/28/95 19640.62 21302.75 17568.36
03/31/95 19953.29 21931.39 17837.22
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Asset Manager on December 31, 1988, shortly after the fund started. As the
chart shows, by March 31, 1995, the value of your investment would have
grown to $19,953 - a 99.53% increase on your initial investment. For
comparison, look at how the S&P 500 did over the same period. With
dividends reinvested, the same $10,000 investment would have grown to
$21,931 - a 119.31% increase. You can also look at how the Asset
Allocation Composite Index, a hypothetical combination of unmanaged
indices, did over the same period. Reflecting the fund's neutral mix of 40%
stocks, 40% bonds, and 20% short-term instruments, this index combines
returns from the S&P 500 (119.31%), Lehman Brothers Treasury Bond Index
(71.78%), and the Salomon Brothers 3-month T-Bill Total Rate of Return
Index (39.90%). With dividends and interest, if any, reinvested, a $10,000
investment in the index would have grown to $17,837 - a 78.37% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
growth in the long run and
volatility in the short run. In
turn, the share price and
return of a fund that invests in
stocks 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)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Bob Beckwitt, Portfolio Manager of Fidelity
Asset Manager
Q. BOB, HOW DID THE FUND PERFORM?
A. Pretty badly. Asset Manager's total return for the six months ended
March 31, 1995, was -1.14%, compared to 5.08% for the average flexible
portfolio fund, according to Lipper Analytical Services. The fund also
lagged its competitors for the 12-month period ended March 31, 1995. It
returned 0.43%, compared to 6.88% for the average flexible portfolio fund.
Q. WHY DID THE FUND DO SO POORLY?
A. Foreign investments hurt the most. It wasn't a case of owning too few
stocks, or too many bonds, or any other factor having to do with the fund's
securities mix. It was that I invested heavily outside the United States
during a period when most foreign investments lost money. Lately I've cut
back sharply; foreign investments totaled 12% of the fund at the end of the
period, compared to 29% six months ago and 36% a year ago. But during most
of the period, Asset Manager's stake in foreign securities was larger than
its average competitor's, and that obviously hurt performance.
Q. WHY INVEST OVERSEAS AT ALL?
A. Foreign investments - both in established markets such as Europe and
Japan as well as in emerging markets such as Latin America and Southeast
Asia - have always helped distinguish Asset Manager from its competitors.
There are two good reasons not to ignore foreign investments. One, many
foreign economies are growing faster than the U.S. economy, which makes
foreign investments potentially more rewarding in the long run. Although
they tend to be more risky than domestic investments, it is these markets
that helped us to achieve strong positive performance in 1992 and 1993.
Two, investing overseas helps me further diversify the fund's investments,
and diversification is at the core of the fund's investment strategy.
Q. CAN YOU OUTLINE THAT STRATEGY FOR US?
A. Sure. Asset Manager invests in a broad range of foreign and domestic
securities, including stocks, bonds and short-term instruments. The fund
seeks above-average returns, but with less volatility than if it were to
invest all its assets in either stocks or bonds. Why less volatility?
Because different investment vehicles usually behave in different ways -
while some are going down, others may be going up. There are exceptions,
however. In 1993 nearly every investment vehicle in the world rose and the
fund virtually could do no wrong. In 1994, the situation was almost exactly
the opposite - most investments fell, although again, foreign investments
as a group had a much worse year than their domestic counterparts.
Q. IN LIGHT OF THE FUND'S RECENT PERFORMANCE, DO YOU STILL BELIEVE IN THE
STRATEGY OF DIVERSIFICATION?
A. Absolutely. I still believe diversification makes sense - it doesn't
eliminate risk, certainly, but it can help reduce it. If anything, I'll be
diversifying even more. Whereas in the past I've been willing sometimes to
invest more heavily in individual foreign countries, in the future I'll be
less likely to do so. The fund's stake in Mexico, for example, has at times
been fairly high. Six months ago it was around 15% - still high, in
retrospect, given the losses the fund suffered last December when Mexico
suddenly devalued the peso. Currently, only about 1% of the fund's
investments is in Mexico. When the time comes to increase the fund's
exposure to emerging markets again, one of my goals will be to spread that
exposure around more widely.
Q. WHAT WAS THE FUND'S STAKE IN EMERGING MARKETS AT THE END OF MARCH?
A. Only about 4%. That's down sharply from six months ago, due mainly to my
decision to pull out of Mexico as well as most of Latin America last
December. I still see opportunities in emerging markets, especially since
prices have fallen so dramatically. And I'll be looking for ways to
increase the fund's stake in the months ahead. The difference is that going
forward, I'll likely attach a somewhat higher level of risk to emerging
market investments. That doesn't mean I'll avoid them, only that I'll
require higher potential returns in exchange for accepting the inherently
higher risk of emerging markets.
Q. HOW WERE THE FUND'S ASSETS DIVIDED AMONG STOCKS, BONDS AND SHORT-TERM
INVESTMENTS AT THE END OF THE PERIOD?
A. Six months ago the fund was 37% stocks, 35% bonds and 28% short-term
investments. As of March 31, 1995, the mix was 38% stocks, 26% bonds and
36% short-term instruments. So, while stocks as a percentage of the fund's
total assets stayed about the same during the period, bonds declined and
cash and short-term investments rose. That leaves the fund in what I would
describe as a defensive posture, especially with regard to bonds.
Q. WHY HAVE YOU BEEN SELLING BONDS?
A. The main reason the fund owns fewer bonds today than it did six months
ago is that I sold many emerging market bonds in December. What's left,
mainly, are domestic bonds, divided between so-called junk bonds - which
are rated Ba or BB or lower by one of the credit rating agencies - and
long-term U.S. Treasury bonds. I actually began buying Treasury bonds again
last fall when it looked like long-term rates would be peaking at around
8%. Because interest rates and bond prices generally move in opposite
directions, the fund made money when long-term rates headed back towards
7%. I've since cut back on Treasury bonds, though, because I don't expect
long-term interest rates to fall as low as 6% again anytime in the
foreseeable future.
Q. HOW DID DOMESTIC STOCKS PERFORM DURING THE PERIOD?
A. Surprisingly well, especially in the past few months. Technology remains
the largest stock sector in the fund at 6% of total investments, and many
of those stocks have been top performers. I'd mention especially IBM and
Intel. Each company's story is unique but the underlying trend is the same
- - strong demand for their products. Another 5.9% of the fund's investments
is in finance stocks, led by Fannie Mae and American Express. Both are
trading at price-to-earnings ratios that make them seem cheap by comparison
with most other stocks. The main issue seems to be the market's
unwillingness to completely buy into those companies' growth stories, which
I think are exciting. The fact that others may disagree makes the
opportunities all the more attractive to me.
Q. WHAT ABOUT DISAPPOINTING STOCKS?
A. There were several, of course. Grupo Carso, a holding company, and
Telmex, the Mexican telephone monopoly, were both among the casualties when
the Mexican stock market plunged last winter, and I have since sold most of
these holdings. Hitachi, a Japanese electronics company, has failed so far
to meet my expectations, but I've held on. What seems to be holding Hitachi
back is the continuing strength of the yen; if and when the yen stops
rising, Hitachi's outlook probably will improve. Among domestic stocks, GM
and Chrysler were flat performers in a rising market. But both have
exciting products in the pipeline, so I'm willing to wait.
Q. DOES THE FUND STILL INVEST IN DERIVATIVES?
A. Yes, although less in the latest period than in the past. One type of
derivative I've used is an indexed security or a structured note.
Structured notes are like customized bonds. They let me tailor a portion of
the fund's investments to match my outlook in specific segments of the
market, and so take advantage of potential opportunities I might otherwise
miss. In the past the fund has invested in structured notes that were
designed to capitalize on falling short-term interest rates in Europe. I
sold some of those at a loss last spring when interest rates rose instead.
Fortunately, those losses were largely offset by profits in structured
notes designed to capitalize on rising commodity prices. But as commodity
prices have risen, I've sold most of those, too. By the end of March, this
type of derivative totaled less than 2% of the fund.
Q. WHAT ABOUT DERIVATIVES TIED TO THE VALUE OF FOREIGN CURRENCIES?
A. I sometimes use foreign currency contracts, which are also derivatives,
to hedge against currency fluctuations. For example, I hedged the fund's
Japanese investments during the period because I thought the yen was
overvalued. Unfortunately, the yen kept rising. The fund didn't lose money
as a result, other than the small costs associated with trading currency
contracts; but it did miss an opportunity to profit from the declining
dollar. In Europe, on the other hand, I stopped hedging early in 1994, and
that has helped the fund's performance.
Q. WHAT CAN WE REASONABLY EXPECT FROM THE FUND IN THE MONTHS AHEAD?
A. That depends largely on the outlook for inflation. It's better now than
it was six months ago, but it's still uncertain. If the economy accelerates
and inflation takes off with it, that would be bad news for both stocks and
bonds. On the other hand, many of the factors that hurt performance so much
last year are less likely to have as large an impact in 1995. Historically,
interest rates have tended to level off after the kind of year they had in
1994. Also, investments in emerging markets can't hurt the fund as much
this year simply because that portion of the fund has been cut way back;
and the same goes for investments in Europe and Japan. The upshot should be
less volatility overall, meaning that even if everything were to go the
fund's way this year, the results aren't likely to be as starry as they
were in 1993. On the other hand, though, if nothing works out, things
shouldn't be as bad as they were in 1994.
FUND FACTS
GOAL: high total return with
reduced risk over the long term
by allocating assets among
stocks, bonds and short-term
instruments of all types
START DATE: December 28,
1988
SIZE: as of March 31, 1995,
more than $10.9 billion
MANAGER: Robert Beckwitt,
since December 1988; Fidelity
Asset Manager: Growth, since
1991; Fidelity Asset Manager:
Income, since 1992; joined
Fidelity in 1986
(checkmark)
BOB BECKWITT ON
DIVERSIFICATION AND RISK:
"My approach during the past
couple of years has been to
invest roughly a quarter of the
fund in U.S. stocks, a quarter
in emerging markets, a
quarter in other foreign
markets, and a quarter in
Treasury and junk bonds. I felt
that if I did that, I'd get an
above-average return with
less volatility than one might
expect from a more
concentrated portfolio. But in
1994, almost everything went
down, and most foreign
markets went down a lot.
Therefore, I'll attribute greater
risk to those foreign
investments in the future.
That doesn't mean I'll avoid
them, only that I'll be looking
for a higher potential return
before I invest again. When
things get riskier you demand
more return potential to
sustain the risk. Investors
should remember that this
fund is for those who have an
investment horizon of at least
four years."
(solid bullet) Foreign investments
totaled 12% of the fund at the
end of March, 1995, down
from 29% six months ago.
Less than a third of the fund's
foreign investments - 4% of
the portfolio - was in
emerging markets.
(solid bullet) Of the fund's 26% stake in
bonds, 17% is Treasury bonds
and about 7% is junk bonds -
those with Moody's or S&P
credit ratings of Ba or BB or
lower, or those that are
unrated. Junk bonds
compensate for their higher
credit risk by offering more
yield than higher-rated bonds
with comparable maturities.
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF MARCH 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Federal National Mortgage Association 1.3 0.9
International Business Machines Corp. 1.0 0.6
RJR Nabisco Holdings Corp. 0.8 0.2
Intel Corp. 0.8 0.4
Philip Morris Companies, Inc. 0.7 0.9
TOP FIVE FIXED-INCOME SECURITIES AS OF MARCH 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
(BY ISSUER, WITH MATURITIES OF MORE THAN ONE YEAR) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECURITIES
6 MONTHS AGO
U.S. Treasury Obligations (various issues) 17.3 15.0
TransTexas Gas Corp. 10 1/2%, 9/1/00 0.7 0.3
SCI Television, Inc. (various issues) 0.6 0.7
Revlon Worldwide Corp. secured 0%, 3/15/98 0.5 0.3
California Hotel Finance Corp. gtd. 11%, 12/1/02 0.4 0.3
</TABLE>
TOP FIVE COUNTRIES AS OF MARCH 31, 1995
(BY LOCATION OF ISSUER) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE COUNTRIES
6 MONTHS AGO
United States 88.3 71.4
Japan 3.0 2.0
Canada 1.3 1.9
United Kingdom 1.1 1.2
Mexico 1.1 14.7
ASSET ALLOCATION
AS OF MARCH 31, 1995 * AS OF SEPTEMBER 30, 1994 **
Row: 1, Col: 1, Value: 36.0
Row: 1, Col: 2, Value: 26.0
Row: 1, Col: 3, Value: 30.0
Row: 1, Col: 4, Value: 8.0
Row: 1, Col: 1, Value: 28.0
Row: 1, Col: 2, Value: 35.0
Row: 1, Col: 3, Value: 17.0
Row: 1, Col: 4, Value: 20.0
Stock class 38%
Bond class 26%
Short-term class
and other 36%
FOREIGN
INVESTMENTS 12%
Stock class 37%
Bond class 35%
Short-term class
and other 28%
FOREIGN
INVESTMENTS 29%
*
**
ASSET ALLOCATIONS IN THE PIE CHART REFLECT THE CATEGORIZATION OF ASSETS AS
DEFINED IN THE FUND'S PROSPECTUS. FINANCIAL STATEMENT CATEGORIZATIONS
CONFORM TO ACCOUNTING STANDARDS AND WILL DIFFER FROM THE PIE CHART.
INVESTMENTS MARCH 31, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 37.8%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.5%
AEROSPACE & DEFENSE - 0.2%
Boeing Co. 141,100 $ 7,602
Lockheed Martin Corp. 136,715 7,229
McDonnell Douglas Corp. 13,500 753
15,584
DEFENSE ELECTRONICS - 0.2%
Loral Corp. 164,200 6,979
Raytheon Co. 265,500 19,348
26,327
SHIP BUILDING & REPAIR - 0.1%
Bremer Vulkan AG (a) 15,900 914
Far East-Levingston Shipbuilding Ltd. 214,000 887
General Dynamics Corp. 40,000 1,880
Han Jin Heavy Industries Co. Ltd. (a) 136,000 2,325
Keppel Corp. Ltd. 251,000 2,027
8,033
TOTAL AEROSPACE & DEFENSE 49,944
BASIC INDUSTRIES - 1.9%
CHEMICALS & PLASTICS - 0.6%
Albemarle Corp. 32,300 412
Betz Laboratories, Inc. 43,100 1,886
Cominco Fertilizer Ltd. 39,300 1,099
DESC (Soc. de Fomento Industrial SA) 803,400 1,622
Dow Chemical Co. 20,000 1,460
du Pont (E.I.) de Nemours & Co. 145,000 8,773
Ferro Corp. 150,400 3,816
Geon Co. 30,200 846
Grace (W.R.) & Co. 15,600 831
Great Lakes Chemical Corp. 131,800 8,221
Han Wha Corp. (a) 12,600 209
Han Wha Chemical Corp. (a) 19,656 494
Hercules, Inc. 76,900 3,585
Hoechst AG Ord. 9,600 1,990
Kemira OY sponsored ADR (a)(g) 21,110 325
Kureha Chemical Industries Co. Ltd. 255,000 1,266
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - CONTINUED
CHEMICALS & PLASTICS - CONTINUED
LG Chemical Ltd. (a) 190,074 $ 5,490
Lyondell Petrochemical Co. 88,700 2,151
Nalco Chemical Co. 115,700 3,890
Oriental Chemical Industries Co. Ltd. (a) 96,876 3,200
Perez Companc Class B 595,133 2,214
Potash Corp. of Saskatchewan 30,000 1,329
Raychem Corp. 30,000 1,219
Union Carbide Corp. 277,800 8,508
Wellman, Inc. 25,000 631
65,467
IRON & STEEL - 0.1%
Compania Siderurgica Nacional 127,153,300 2,965
Kawasaki Steel Corp. (a) 296,000 1,166
Nakayama Steel Works Ltd. 36,000 249
Nucor Corp. 19,200 1,080
Pohang Iron & Steel Co. Ltd. 18,300 1,764
7,224
METALS & MINING - 0.7%
Alcan Aluminium Ltd. 554,745 14,719
Alumax, Inc. (a) 216,950 5,831
Aluminum Co. of America 515,400 21,325
Castech Aluminum Group (a) 90,000 1,339
Compania Vale do Rio Doce PN Ord. 17,474,000 2,359
Dae Han Jung Suok (a) 1,160 52
Dae Han Jung Suok (New)(a) 34 1
English China Clay PLC 123,200 711
Kanamoto Co. Ltd. 45,000 909
Mitsubishi Materials Corp. 331,000 1,605
Noranda, Inc. 306,100 5,223
Reynolds Metals Co. 387,000 19,060
Sam Sun Industry (a) 15,100 121
Sungei Way Holdings BHD 643,000 2,593
75,848
PACKAGING & CONTAINERS - 0.1%
Corning, Inc. 70,800 2,549
Owens-Illinois, Inc. (a) 1,029,400 11,581
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - CONTINUED
PACKAGING & CONTAINERS - CONTINUED
Shorewood Packaging Corp. (a) 75,000 $ 1,209
Sonoco Products Co. 32,900 798
16,137
PAPER & FOREST PRODUCTS - 0.4%
Abitibi-Price, Inc. (a) 85,900 1,205
Bowater, Inc. 197,700 7,068
Champion International Corp. 57,000 2,465
Georgia-Pacific Corp. 48,100 3,836
Klabin Industria de Papel e Celulose PN 733,900 815
Industrial Oxygen, Inc. BHD 2,000 3
International Paper Co. 32,800 2,464
Jefferson Smurfit Corp. (a) 24,500 395
Kimberly-Clark Corp. 29,300 1,524
Kokuyo Co. Ltd. 151,000 3,888
Land & General BHD 198,000 607
Land & General BHD (RFD) (a) 221,000 677
Kumpulan Guthrie BHD 536,000 839
Maderas Y Sinteticos SA sponsored ADR 65,300 1,110
Malakoff BHD 770,000 1,979
Scott Paper Co. 94,700 8,464
Sung Chang Enterprise Co. (a) 16,150 1,159
Stone Container Corp. (a) 120,700 2,761
Temple-Inland, Inc. 38,100 1,710
Union Camp Corp. 13,300 690
43,659
TOTAL BASIC INDUSTRIES 208,335
CONGLOMERATES - 0.2%
Allied-Signal, Inc. 149,900 5,884
Tyco International Ltd. 134,970 7,137
United Technologies Corp. 159,000 10,991
24,012
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONSTRUCTION & REAL ESTATE - 1.4%
BUILDING MATERIALS - 0.3%
Armstrong World Industries, Inc. 162,800 $ 7,428
Cemex SA, Series B 2,172,837 4,778
Keum Kang Ltd. (a) 15,800 1,465
Lafarge Corp. 55,102 1,033
Masco Corp. 161,300 4,456
Medusa Corp. 49,650 1,210
Pioneer International Ltd. 207,600 484
Ssangyong Cement Co. 29,270 948
Siam Cement Ltd. (For. Reg.) 27,100 1,556
Tecumseh Products Co. Class A 134,500 6,658
Tong Yang Cement Co. 12,500 453
30,469
CONSTRUCTION - 0.2%
Centex Corp. 121,590 2,933
DR Horton, Inc. 118,518 1,156
Daelim Industrial Co. (a) 106,840 2,781
Dong Ah Construction Industries Co. Ltd. (a) 51,600 1,640
Hopewell Holdings Ltd. 3,184,000 2,244
Kaneshita Construction Co. Ltd. Ord. 92,000 1,413
Kun Young Construction Corp. 21,085 401
NCI Building Systems, Inc. (a) 75,000 1,313
Pulte Corp. 136,000 3,196
Samsung Construction Co. Ltd. 9,855 292
Samsung Engineering & Construction Co. (RFD) 3,705 77
Standard Pacific Corp. 144,300 938
YTL Corp. BHD 672,500 3,324
21,708
ENGINEERING - 0.1%
EA Engineering Science & Technology, Inc. (a) 2,100 15
Fluor Corp. 45,000 2,171
Glenayre Technologies, Inc. (a) 45,000 2,048
Hanil Development Co. (a) 119,605 2,401
Hyundai Engineering & Construction Co. Ltd. 82,620 4,002
10,637
REAL ESTATE - 0.2%
Bolton Properties BHD 614,000 816
Cheung Kong Ltd. 442,000 1,926
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE - CONTINUED
Daiman Development BHD 690,000 $ 808
Fondo Opcion SA de CV Class 2, Series B (a) 377,400 464
Franchise Finance Corp. of America 25,000 484
Henderson Land 117,000 658
Hong Kong Land Ltd. 814,000 1,779
Mitsubishi Estate Co. Ltd. 403,000 4,547
Sime UEP Properties BHD 446,000 846
Sun Hung Kai Properties Ltd. 314,000 2,142
Tan & Tan Development BHD 3,668,000 4,322
18,792
REAL ESTATE INVESTMENT TRUSTS - 0.6%
Bay Apartment Community 161,500 2,968
Bradley Real Estate Trust 39,200 642
CBL & Associates Properties 153,900 3,078
Cali Realty Corp. (a) 52,300 909
Colonial Property Trust (SBI) 20,100 462
DeBartolo Realty Corp. 170,500 2,408
Developers Diversified Realty 154,700 4,370
Duke Realty Investors, Inc. 249,700 6,617
Equity Residential Property Trust (SBI) 333,700 8,676
Evans Withycombe Residential, Inc. 23,400 468
Excel Realty Trust, Inc. 71,800 1,364
Felcor Suite Hotels, Inc. 139,500 3,331
Glimcher Realty Trust 57,500 1,150
Haagen Alexander Properties, Inc. 98,600 1,368
Horizon Outlet Centers, Inc. 2,700 60
Kimco Realty Corp. 241,700 9,275
LTC Properties, Inc. 25,000 331
Liberty Property Trust (SBI) 30,400 589
Macerich Co. 70,000 1,426
Merry Land & Investment Co., Inc. 33,572 655
Oasis Residential, Inc. 101,800 2,316
Post Properties, Inc. 109,700 3,250
RFS Hotel Investors, Inc. 309,300 4,408
Security Capital Industrial Trust 25,000 406
Simon Properties Group, Inc. 83,000 2,023
Storage Equities, Inc. 126,500 2,151
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - CONTINUED
Storage USA, Inc. 104,700 $ 3,049
Sun Communities 25,000 563
Tanger Factory Outlet Centers, Inc. 47,600 1,131
Trinet Corporate Realty Trust, Inc. 25,000 669
Vornado Realty Trust 20,700 743
Weeks Corp. 19,300 441
71,297
TOTAL CONSTRUCTION & REAL ESTATE 152,903
DURABLES - 2.5%
AUTOS, TIRES, & ACCESSORIES - 1.6%
Aisin Seiki Co. Ltd. 81,000 1,038
Allen Group, Inc. (The) 61,400 1,520
Asia Motors Co., Inc. 12,026 162
Automotive Industries Holding, Inc. (a) 51,300 1,129
BMW AG 5,500 2,752
Bandag, Inc. 39,300 2,245
Breed Technologies, Inc. 57,500 1,258
Bridgestone Corp. 74,000 1,102
Capaco Automotive Products Corp. 94,100 788
Chrysler Corp. 1,532,804 64,186
Dae Won Kang Up Co. (a) 13,491 437
Dana Corp. 128,000 3,264
Discount Auto Parts, Inc. (a) 231,100 5,546
Eaton Corp. 108,000 5,859
Echlin, Inc. 47,900 1,844
General Motors Corp. 1,333,447 59,005
Genuine Parts Co. 42,100 1,679
Hyundai Motor Service Co. Ltd. (a) 5,020 265
Hyundai Motor Service Co. Ltd. (New) (a) 496 24
Johnson Controls, Inc. 26,200 1,333
Kia Motors Corp. sponsored GDR (a)(g) 132,300 2,018
Magna International, Inc. Class A 175,700 6,686
Pirelli Tyre Holdings NV Ord. 128,000 840
Snap-on Tools Corp. 27,500 1,004
Sumitomo Rubber Industries 202,330 1,647
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DURABLES - CONTINUED
AUTOS, TIRES, & ACCESSORIES - CONTINUED
Suzuki Motor Corp. 211,000 $ 2,263
Toyoda Machine Works 113,000 900
Toyota Motor Corp. 349,000 7,133
Volvo AB Class B 215,400 3,728
181,655
CONSUMER ELECTRONICS - 0.5%
Black & Decker Corp. 230,000 6,641
Brasmotor PN 7,955,900 1,812
Electrolux AB 52,000 2,361
Jeewon Industrial Co. 17,043 662
Matsushita Electric Industrial Co. Ltd. 1,232,000 19,917
Sharp Corp. 186,000 3,028
Sony Corp. 383,700 19,274
53,695
HOME FURNISHINGS - 0.1%
Dapta-Mallinjoud SA 14,400 390
Miller (Herman), Inc. 295,700 6,468
6,858
TEXTILES & APPAREL - 0.3%
Burlington Industries, Inc. (a) 553,800 6,299
Coteminas PN 1,097,300 287
Fila Holding Spa sponsored ADR 50,300 1,025
Fruit of the Loom, Inc. Class A (a) 44,900 1,179
Hat Brands, Inc. (warrants) (a)(f) 90,346 994
Kellwood Co. 59,000 1,099
Korea Moolsan Co. 53,420 948
Korea Moolsan Co. (New) 13,749 196
Nam Yeung Corp. (a) 6,140 1,113
Nine West Group, Inc. (a) 35,200 1,038
Nisshinbo Industries 520,000 4,792
Russell Corp. 100,000 2,963
Tokyo Style Co. Ltd. 101,000 1,621
Unifi, Inc. 158,200 4,271
Warnaco Group, Inc. Class A (a) 73,800 1,319
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
Westpoint Stevens, Inc. Class A (a) 55,900 $ 839
Yagi Corp. 38,000 570
30,553
TOTAL DURABLES 272,761
ENERGY - 4.5%
ENERGY SERVICES - 1.0%
BJ Services Co. (a) 107,800 2,210
Baker Hughes, Inc. 487,500 9,933
Commercial del Plata 416,900 913
Energy Service Co., Inc. (a) 53,800 760
Enterra Corp. (a) 116,900 2,002
Global Industries Ltd. (a) 64,800 1,442
Halliburton Co. 446,500 16,241
McDermott International, Inc. 275,000 7,528
Nabors Industries, Inc. (a) 268,500 2,014
Noble Drilling Corp. (a) 200,000 1,225
Nowsco Well Service Ltd. 120,800 1,306
Offshore Logistics, Inc. 96,300 1,252
Pride Petroleum Services, Inc. (a) 12,500 86
Schlumberger Ltd. 899,250 53,618
Tidewater, Inc. 221,400 4,511
Weatherford International, Inc. (a) 353,200 3,709
108,750
INDEPENDENT POWER - 0.0%
Thermo Electron Corp. (a) 20,800 1,058
OIL & GAS - 3.5%
Amerada Hess Corp. 662,800 32,726
Amoco Corp. 193,600 12,318
Anderson Exploration Ltd. (a) 258,300 2,654
Apache Corp. 127,800 3,483
Atlantic Richfield Co. 203,100 23,357
Blue Range Resource Corp. Class A (a)(g) 123,800 940
British Petroleum PLC:
ADR 809,451 67,893
Ord. 1,421 10
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Burlington Resources, Inc. 652,600 $ 26,593
Camco International, Inc. 150,000 3,094
Coastal Corp. (The) 111,700 3,211
Daesung Industrial Co. Ltd. (a) 13,200 802
Elf Aquitaine sponsored ADR 189,100 7,328
Exxon Corp. 105,200 7,022
Kerr-McGee Corp. 256,200 13,066
Louis Dreyfus Natural Gas Corp. (a) 130,000 1,869
Louisiana Land & Exploration Co. 239,800 8,963
Mobil Corp. 114,200 10,578
Murphy Oil Corp. 159,400 6,874
Newfield Exploration Co. (a) 120,100 2,582
Noble Affiliates, Inc. 72,600 1,987
Norsk Hydro AS 90,823 3,401
Norsk Hydro AS ADR 63,900 2,380
Occidental Petroleum Corp. 820,000 17,938
Pancanadian Petroleum Ltd. 53,400 1,679
Phillips Petroleum Co. 357,300 13,086
Renaissance Energy Ltd. (a) 452,500 9,459
Renaissance Energy Ltd. (a)(g) 250,000 5,226
Rio Alto Exploration Ltd. (a) 832,800 3,050
Royal Dutch Petroleum Co. 34,800 4,176
Santa Fe Energy Resources, Inc. 26,100 251
Texaco, Inc. 333,800 22,198
Tosco Corp. 284,300 8,813
Total SA:
Class B 126,811 7,571
Class B sponsored ADR 489,412 14,682
Triton Energy Corp. (a) 50,000 1,913
Unocal Corp. 866,358 24,908
Vintage Petroleum, Inc. 151,900 3,019
Western Gas Resources, Inc. 52,500 1,162
Yukong Ltd. 9,510 431
382,693
TOTAL ENERGY 492,501
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - 5.9%
BANKS - 1.2%
AmSouth Bancorporation 1,500 $ 46
BNP CI Ord. 111,050 5,656
Banacci SA de CV Class C 409,800 470
Banco Bilbao Vizcaya SA Ord. 89,200 2,266
Banco de Galicia Y Buenos Aires SA sponsored ADR
representing Class B shares 68,401 1,042
Banco Intercontinental Espanol 10,100 785
Banco Popular Espanol 7,300 944
Bangkok Bank 340,900 3,017
Bank of Asia PLC 1,000 2
Bank of Asia PLC (For. Reg.) 891,500 1,990
Bank of Boston Corp. 379,049 11,276
Bank International Indonesia Ord. 464,600 1,125
BanPonce Corp. 30,000 944
Boram Bank (a) 125,018 1,424
Bradesco PN 233,000,000 1,565
C. S. Holdings (Bearer) 9,035 3,703
Chemical Banking Corp. 42,800 1,615
Cho Hung Bank Co. Ltd. 290,976 3,707
Comerica, Inc. 112,000 3,079
Commerce Asset Holding BHD 131,000 533
Deutsche Bank AG 7,500 3,542
Development Bank of Singapore (For. Reg.) 103,000 1,079
Grupo Financiero Bancomer SA de CV sponsored ADR,
Series C (a) 275,600 964
Grupo Financiero Banorte SA Class C 1,249,700 902
HSBC Holdings PLC 284,000 3,204
Hana Bank (a) 19,656 371
Hanil Bank (a) 69,531 782
Hyundai International Merchant Bank (a) 13,104 561
Korea First Bank, Inc. Ltd. (a) 19,462 205
Korea Long Term Credit Bank (a) 31,500 996
Krung Thai Bank 4,600 12
Krung Thai Bank (For. Reg.) 1,933,600 5,456
Mitsubishi Trust & Banking 285,000 4,179
Kyung Nam Bank (a) 56,700 542
Kyungki Bank Ltd. (a) 112,062 1,029
North Fork Bancorporation, Inc. 781 11
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
BANKS - CONTINUED
Overseas Union Bank Ltd. (For. Reg.) 910,000 $ 5,416
Panin Bank PT (For. Reg.) 942,200 947
Shawmut National Corp. 1,173,607 30,954
Siam City Bank PLC (For. Reg.) 3,349,800 3,401
State Street Boston Corp. 108,000 3,443
Swiss Bank Corp. (Bearer) 7,990 2,639
Thai Farmers Bank 680,500 5,748
Thai Military Bank (For. Reg.) 621,700 1,818
Trustmark Corp. 9,800 149
United Overseas Bank Ltd.:
(For. Reg.) 167,000 1,656
(warrants) (a) 509,000 2,470
Shinhan Bank (a) 129,340 2,496
Shinhan Bank (New) (a) 21,784 375
130,536
CLOSED END INVESTMENT COMPANIES - 0.2%
Austria Fund, Inc. 183,300 1,443
Europe Fund, Inc. 27,400 315
First NIS Regional Fund (a) 480,000 1,560
France Growth Fund, Inc. 315,800 3,040
Germany Fund, Inc. 11,292 128
Growth Fund of Spain, Inc. 451,300 3,949
Morgan Stanley India Investment Fund, Inc. 1,071,000 11,246
Thai Fund, Inc. 27,000 594
22,275
CREDIT & OTHER FINANCE - 1.1%
American Express Co. 1,064,885 37,138
BankAmerica Corp. 39,100 1,887
Bank of New York Co., Inc. 87,884 2,889
Barnett Banks, Inc. 128,200 5,833
Beneficial Corp. 79,000 3,101
Central Investment & Finance Corp. (a) 22,000 459
Equitable Companies, Inc. 100,700 2,215
First Union Corp. 274,273 11,897
Fleet Financial Group, Inc. 794,340 25,717
General Finance & Securities PLC (rights)(For. Reg.) (a) 94,400 383
Hong Leong Credit BHD 425,000 1,815
Industrial Finance Corp. (For. Reg.) 1,146,633 2,328
JCG Holdings 3,558,000 2,036
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Keycorp 239,237 $ 6,758
LG Merchant Banking Corp. (a) 6,400 265
NationsBank Corp. 223,700 11,353
Promise Co. Ltd. 36,000 1,576
Republic New York Corp. 47,200 2,319
119,969
FEDERAL SPONSORED CREDIT - 1.6%
Federal Home Loan Mortgage Corp. 457,900 27,703
Federal National Mortgage Association 1,769,800 144,017
171,720
INSURANCE - 1.0%
Ace Ltd. 44,400 1,121
Alexander & Alexander Services, Inc. 98,900 2,337
Allstate Corp. 716,200 20,591
American International Group, Inc. 27,900 2,909
American Travellers Corp. (a) 75,000 1,463
Assicurazioni Generali Spa 24,710 546
Baloise Holding 2,100 4,193
Berkley (W.R.) Corp. 61,300 2,245
Corporacion Mapfre International Reassurance 39,200 1,566
Dai-Tokyo Fire & Marine Insurance Ord. 318,000 2,387
General Re Corp. 29,500 3,894
International Nederlanden Groep CVA 85,649 4,235
John Alden Financial Corp. 306,000 5,623
Loews Corp. 45,400 4,483
MBIA, Inc. 52,000 3,270
MGIC Investment Corp. 50,000 2,038
NAC Re Corp. 69,500 2,102
Providian Corp. 145,600 5,114
Reliastar Financial Corp. 30,000 1,020
Royale Insurance Co. Ltd. 494,917 2,296
Skandia International Holding Co. AB ADR 60,900 942
Tokio Marine & Fire Insurance Co. Ltd. (The) 387,000 4,402
Torchmark Corp. 87,000 3,611
Travelers, Inc. (The) 334,067 12,903
UNUM Corp. 280,900 12,711
108,002
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
SAVINGS & LOANS - 0.2%
Ahmanson (H.F.) & Co. 543,800 $ 9,788
Charter One Financial Corp. 69,300 1,403
Commercial Federal Corp. (a) 48,500 1,203
Golden West Financial Corp. 346,900 13,269
Standard Federal Bank 69,900 1,879
Washington Mutual, Inc. 36,500 732
28,274
SECURITIES INDUSTRY - 0.6%
Bear Stearns Companies, Inc. 102,745 1,901
Daewoo Securities Co. Ltd. 32,760 993
Hanshin Securities Co. Ltd. 13,356 279
Hyundai Securities Co. Ltd. (a) 21,012 414
Korea First Securities Co. Ltd. (a) 54,590 742
LG Securities Co. Ltd. 88,183 1,667
Lehman Brothers Holdings, Inc. 504,180 9,075
Merrill Lynch & Co., Inc. 425,900 18,154
Midland Walwyn, Inc. (a) 496,500 2,573
Morgan Stanley Group, Inc. 176,200 11,871
Nomura Securities Co. Ltd. 899,000 16,817
PaineWebber Group, Inc. 68,450 1,104
Salomon, Inc. 35,600 1,206
Schwab (Charles) Corp. 50,400 1,607
Ssangyong Investment & Securities Co. Ltd. 13,104 236
Ssangyong Investment & Securities Co. Ltd. (New) (a) 1,288 25
United Asset Management Corp. 54,800 2,103
70,767
TOTAL FINANCE 651,543
HEALTH - 2.2%
DRUGS & PHARMACEUTICALS - 1.2%
Allergan, Inc. 389,700 11,496
American Home Products Corp. 112,300 8,001
Amgen, Inc. (a) 30,000 2,021
Biogen, Inc. (a) 319,200 12,688
Bristol-Myers Squibb Co. 2,300 145
Carter-Wallace, Inc. 80,000 950
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HEALTH - CONTINUED
DRUGS & PHARMACEUTICALS - CONTINUED
Elan Corp. PLC ADR (a) 297,200 $ 11,071
Elan PLC therapeutic systems unit
(1 Common & 1 ADR warrant) (a) 8,850 281
Genentech, Inc. (redeemable) (a) 132,500 6,211
Genzyme Corp. 20,000 775
Ono Pharmaceutical Co. Ltd. 94,000 4,787
Pfizer, Inc. 187,800 16,104
Pharmacia AB Class A Free shares 84,100 1,495
Rhone Poulenc Rorer, Inc. 184,600 8,007
Rhone Poulenc SA Class A 177,900 4,177
Roche Holdings Ltd. (participation certificates) 300 1,737
Sankyo Co. Ltd. 443,300 10,238
Schering AG 9,000 6,644
Schering-Plough Corp. 176,400 13,120
Sigma Aldrich Corp. 56,300 2,182
Takeda Chemical Industries Ltd. 133,000 1,751
Yamanouchi Pharmaceutical 167,000 3,664
127,545
MEDICAL EQUIPMENT & SUPPLIES - 0.7%
Acuson Corp. (a) 100,000 1,138
Advanced Technology Laboratories, Inc. (a) 130,500 1,958
Baxter International, Inc. 404,800 13,257
Beckman Instruments, Inc. 39,200 1,161
Becton Dickinson & Co. 135,200 7,335
Bergen Brunswig Corp. Class A 9,120 244
Boston Scientific Corp. (a) 232,200 5,718
Johnson & Johnson 143,200 8,520
Nellcor, Inc. (a) 75,000 2,859
Owens and Minor, Inc. 120,100 1,561
Pall Corp. 245,700 5,160
St. Jude Medical, Inc. 164,900 7,132
Spacelabs Medical, Inc. (a) 87,300 2,183
Thermedics, Inc. (a) 140,000 2,188
U.S. Surgical Corp. 803,200 18,273
78,687
MEDICAL FACILITIES MANAGEMENT - 0.3%
Columbia/HCA Healthcare Corp. 494,415 21,260
Community Psychiatric Centers 175,800 2,263
Humana, Inc. 105,400 2,701
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT - CONTINUED
Oxford Health Plans, Inc. (a) 117,400 $ 6,574
U.S. Healthcare, Inc. 70,950 3,140
35,938
TOTAL HEALTH 242,170
HOLDING COMPANIES - 0.3%
Brierley Investments Ltd. 4,743,081 3,447
Christies International PLC 300,000 720
Cinergy Corp. 196,231 4,881
Grupo Carso SA de CV Class A-1 (a) 1,382,100 6,040
Jardine Matheson Holdings Ltd. 804,400 7,240
Lagardere Groupe SCA 122,300 2,859
Man AG Ord. 3,400 816
SDW Holdings Corp. (g) 68,700 2,095
Sanluis Corp. units (Class B, Class C & Class D) (a) 138,376 1,889
Westmont Land (Asia) BHD (a) 1,018,000 2,154
32,141
INDUSTRIAL MACHINERY & EQUIPMENT - 1.6%
ELECTRICAL EQUIPMENT - 0.6%
Amphenol Corp. Class A (a) 75,000 1,875
C COR Electronics, Inc. 35,000 696
Cherry Corp.:
Class A (a) 52,100 834
Class B (a) 62,100 932
Emerson Electric Co. 15,000 998
Fanuc Ltd. 22,000 960
General Electric Co. 289,900 15,691
Hitachi Koki Co. Ord. 302,000 3,118
Hutchison Whampoa Ltd. Ord. 704,000 3,105
Mitsubishi Electric Co. Ord. 2,453,000 18,072
Mori Seiki Co. Ltd. Ord. 170,000 3,219
Murata Manufacturing Co. Ord. 11,000 428
Nifco, Inc. 96,000 1,419
Omron Corp. 540,000 10,663
Philips Electronics 92,500 3,149
United Communication Industry (For. Reg.) 127,200 1,787
United Engineers BHD 233,000 1,364
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
ELECTRICAL EQUIPMENT - CONTINUED
Samsung Electro-Mechanics Co. (a) 30,000 $ 1,348
Samsung Electro-Mechanics Co. (New) (a) 29,261 1,292
70,950
INDUSTRIAL MACHINERY & EQUIPMENT - 0.9%
AIDA Engineering Ltd. Ord. 455,000 3,683
Amada Metrecs Co. Ltd. 180,000 2,661
Amadasonoike Co. Ltd. 393,000 3,086
Amtrol, Inc. 21,800 387
Caterpillar, Inc. 464,600 25,843
Clark Equipment Co. (a) 22,900 1,889
Commercial Intertech Corp. 47,900 1,054
Cooper Industries, Inc. 82,800 3,209
Deere & Co. 500,600 40,674
Duriron Co., Inc. 54,100 1,109
Enerflex Systems Ltd. 4,700 46
Finning Ltd. 74,800 1,042
Greenfield Industries, Inc. 25,000 706
Han Wha Machinery Co. Ltd. (a) 63,000 1,183
Harnischfeger Industries, Inc. 30,000 840
Hwacheon Machinery Works 6,300 215
Keystone International, Inc. 50,000 1,081
LG Industrial Systems Co. 22,000 764
Soosan Heavy Industrial Co. (a) 12,738 290
Soosan Heavy Industrial Co. (RFD) (a) 5,935 122
Ssangyong Heavy Industries Co. Ltd. (a) 41,550 478
Svedala 69,400 1,649
Toshiba Machine Co. Ltd. 200,000 1,143
Tsugami Corp. 252,000 1,164
Valmet Corp. Ord. 83,500 1,624
95,942
POLLUTION CONTROL - 0.1%
Browning-Ferris Industries, Inc. 129,500 4,403
Safety Kleen Corp. 50,000 894
TETRA Technologies, Inc. (a) 100,000 1,200
WMX Technologies, Inc. 394,000 10,835
17,332
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 184,224
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - 0.9%
BROADCASTING - 0.3%
British Sky Broadcasting Group ADR (a) 32,800 $ 808
Capital Cities/ABC, Inc. 52,800 4,660
Chancellor Trust Class I unit (a)(f) 148 2,990
Home Shopping Network, Inc. (a) 11,754 93
People's Choice TV Corp. (a) 37,100 992
Tele-Communications, Inc. Class A (a) 802,400 16,850
Viacom, Inc. Class A (a) 4,000 183
Viacom, Inc. Class B (non-vtg.) (a) 160,407 7,178
33,754
ENTERTAINMENT - 0.0%
Live Entertainment, Inc.:
$2.00 (warrants) (a)(f) 256,000 64
$2.72 (warrants) (a)(f) 244,706 61
Royal Caribbean Cruises Ltd. 115,100 3,007
3,132
LEISURE DURABLES & TOYS - 0.1%
ARCTCO, Inc. 125,700 1,886
Cobra Golf, Inc. 50,000 1,400
Outboard Marine Corp. 254,900 5,353
Polaris Industries, Inc. 22,100 1,066
Takara Co. Ltd. 65,000 773
10,478
LODGING & GAMING - 0.2%
Accor SA 14,100 1,685
Bally Gaming International, Inc. (warrants) (a) 149,100 1,006
Bally's Grand, Inc. (warrants) (a) 28,618 118
Four Seasons Hotels, Inc. 122,635 1,326
Genting BHD 227,500 2,051
Grupo Posadas SA de CV Class L (a) 430,300 119
Host Marriott Corp. (a) 195,356 2,320
La Quinta Motor Inns, Inc. 106,775 2,896
Marriott International, Inc. 82,656 2,872
Mirage Resorts, Inc. (a) 57,600 1,613
Promus Companies, Inc. (a) 50,000 1,875
Sun International Hotels Ltd. (a) 7,684 254
Trump Plaza Holding Associates (warrants) (a) 285 143
18,278
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - CONTINUED
PUBLISHING - 0.1%
American Media, Inc. Class A 115,700 $ 824
Gannett Co., Inc. 93,300 4,980
Meredith Corp. 43,000 1,118
Scripps (E.W.) Co. Class A 8,800 284
Singapore Press Holdings Ltd. (For. Reg.) 140,000 2,371
Thomson Corp. 172,300 2,201
11,778
RESTAURANTS - 0.2%
Au Bon Pain, Inc. Class A (a) 46,300 631
Bertucci's, Inc. (a) 69,700 601
Boston Chicken, Inc. 47,500 772
Brinker International, Inc. (a) 80,300 1,335
Cracker Barrel Old Country Store, Inc. 75,000 1,678
Landry's Seafood Restaurants, Inc. (a) 40,000 1,225
Lone Star Steakhouse Saloon (a) 65,000 1,763
McDonald's Corp. 211,200 7,207
Outback Steakhouse, Inc. (a) 194,400 4,933
20,145
TOTAL MEDIA & LEISURE 97,565
NONDURABLES - 2.0%
AGRICULTURE - 0.0%
Molinos Rio de La Plata SA (a) 379,338 1,916
BEVERAGES - 0.3%
Buenos Aires Embotelladora SA sponsored ADR 46,000 1,196
Compania Cervecerias Unidas SA ADR 108,400 2,493
Emvasa del Valle de Enah Ord. (a) 1,112,000 672
Fomento Economico Mexicano SA (FEMSA) Class B 861,500 1,445
LVMH 29,400 5,771
Panamerican Beverages, Inc. Class A 94,600 2,471
PepsiCo, Inc. 173,200 6,755
Quilmes Industries SA 163,300 2,694
Seagram Co. Ltd. 79,200 2,512
Whitbread Class A 133,332 1,192
27,201
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - CONTINUED
FOODS - 0.1%
Cheil Foods & Chemical Industries 18,900 $ 1,332
ConAgra, Inc. 34,000 1,126
Dole Food, Inc. 22,000 638
General Mills, Inc. 29,000 1,729
Herdez SA de CV Class A 882,800 242
Hormel (George A.) & Co. 13,000 353
IBP, Inc. 17,200 561
Miwon Co. Ltd. 14,007 504
Nabisco Holdings Class A 2,000 57
Nippon Suisan Kaisha Ltd. (a) 387,000 1,868
Ottogi Foods Co. Ltd. (a) 21,700 722
RalCorp Holdings, Inc. (a) 45,000 1,069
Ralston Purina Co. 21,100 1,008
Samyang Foods Co. (a) 12,600 702
Tyson Foods, Inc. 28,800 695
Weston George Ltd. 109,200 3,356
15,962
HOUSEHOLD PRODUCTS - 0.1%
Alberto-Culver Co. Class A 40,400 1,061
Colgate-Palmolive Co. 60,000 3,960
First Brands Corp. 27,000 1,016
Pyung HWA Industrial Co. (a) 18,800 743
Safety First, Inc. (a) 12,000 308
Tambrands, Inc. 163,600 7,301
14,389
TOBACCO - 1.5%
Imasco Ltd. 4,700 150
Philip Morris Companies, Inc. 1,178,700 76,910
RJR Nabisco Holdings Corp. 14,584,378 85,683
Sampoerna, Hanjaya Mandala (For. Reg.) 300,000 1,588
164,331
TOTAL NONDURABLES 223,799
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PRECIOUS METALS - 0.7%
Agnico Eagle Mines Ltd. 293,500 $ 3,566
Amax Gold, Inc. 100,000 588
Barrick Gold Corp. 1,221,200 30,328
Battle Mountain Gold Co. 100,000 1,200
Cambior, Inc. 100,000 1,152
Echo Bay Mines Ltd. 209,400 2,189
Franco Nevada Mining Corp. 98,200 4,878
Golden Star Resources Ltd. (a) 82,100 653
Homestake Mining Co. 454,100 8,401
Kinross Gold Corp. 100,000 563
Kloof Gold Mining Co. Ltd. Ord. 144,500 1,655
Newmont Mining Corp. 99,800 4,266
Placer Dome, Inc. 488,100 11,817
Prime Resources Group, Inc. 50,000 339
St. Barbara Mines Ltd. 873,200 745
Santa Fe Pacific Gold Corp. 643,950 8,130
80,470
RETAIL & WHOLESALE - 2.3%
APPAREL STORES - 0.2%
AnnTaylor Stores Corp. (a) 33,300 1,240
Esprit Asia Holdings Ltd. 2,564,000 1,011
Gap, Inc. 90,000 3,195
Gymboree Corp. (a) 105,000 2,664
Lamonts Apparel, Inc. (a) 213,794 53
Lamonts Apparel Corp. (warrants) (a) 394,561 -
Limited, Inc. (The) 245,900 5,686
Ross Stores, Inc. 51,900 571
TJX Companies, Inc. 479,600 6,295
Talbots, Inc. 100 3
Urban Outfitters, Inc. (a) 25,000 500
21,218
DRUG STORES - 0.1%
Revco (D.S.), Inc. (a) 276,200 6,353
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - CONTINUED
GENERAL MERCHANDISE STORES - 1.0%
Cifra SA Class C 3,661,100 $ 4,457
Consolidated Stores Corp. (a) 142,500 2,868
Dayton Hudson Corp. 110,100 7,872
Dillard Department Stores, Inc. Class A 201,900 5,577
Federated Department Stores, Inc. (a) 1,146,900 25,375
Ito Yokado Co. Ltd. 256,000 12,711
Keum Kang Development Industries Co. (a) 9,450 201
Lechters, Inc. (a) 60,000 1,005
May Department Stores Co. (The) 40,000 1,480
Price/Costco, Inc. (a) 315,500 4,654
Sears, Roebuck & Co. 452,300 24,142
Wal-Mart Stores, Inc. 903,400 23,037
113,379
GROCERY STORES - 0.1%
Argyll Group PLC Ord. 340,700 1,589
Fleming Companies, Inc. 117 3
Food Lion, Inc. Class A 440,100 2,476
Great Atlantic & Pacific Tea Co., Inc. 76,100 1,722
Izumi Co. Ord. 114,000 2,778
Loblaw Companies, Ltd. 128,000 2,356
Safeway, Inc. (a) 77,800 2,704
Stop & Shop Companies, Inc. (a) 128,400 3,082
Tae Gu Department Store Co. (a) 6,813 246
16,956
RETAIL & WHOLESALE, MISCELLANEOUS - 0.9%
Barnes & Noble, Inc. (a) 30,000 911
Bed Bath & Beyond, Inc. (a) 95,000 2,351
Best Buy Co., Inc. (a) 480,700 10,395
Circuit City Stores, Inc. 276,800 7,301
Friedmans, Inc. Class A 15,000 289
Gateway 2000, Inc. (a) 117,000 2,194
Good Guys, Inc. (a) 103,100 1,211
Hechinger Co. Class A 50,000 556
Home Depot, Inc. (The) 373,900 16,545
Land's End, Inc. 25,000 438
Lowe's Companies, Inc. 169,500 5,848
Micro Warehouse, Inc. (a) 117,200 3,633
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED
Office Depot, Inc. (a) 93,350 $ 2,275
Officemax, Inc. (a) 210,900 5,404
Petsmart, Inc. (a) 91,200 3,192
Rex Stores Corp. (a) 84,000 1,176
Smith (W.H.) Group Ord. 125,900 839
Sotheby's Holdings, Inc. Class A 126,900 1,555
Staples, Inc. (a) 146,550 3,865
Tiffany & Co., Inc. 55,000 1,705
Toys "R" Us, Inc. (a) 703,100 18,017
Uny Co. Ltd. 297,000 5,419
Williams-Sonoma, Inc. (a) 73,400 1,835
96,954
TRADING COMPANIES - 0.0%
Hyundai Corp. (a) 13,958 389
TOTAL RETAIL & WHOLESALE 255,249
SERVICES - 0.5%
ADVERTISING - 0.0%
Omnicom Group, Inc. 44,200 2,420
WPP Group PLC 845,700 1,392
3,812
LEASING & RENTAL - 0.1%
Hollywood Entertainment Corp. (a) 84,550 2,959
Orix Corp. 111,000 4,448
7,407
PRINTING - 0.1%
Cadmus Communications Corp. 59,300 1,112
Komori Corp. 73,000 1,728
New England Business Service, Inc. 319,500 5,871
Wallace Computer Services, Inc. 25,000 803
9,514
SERVICES - 0.3%
ADT Ltd. (a) 197,600 2,421
BET PLC Ord. 874,400 1,532
Block (H & R), Inc. 120,000 5,205
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - CONTINUED
SERVICES - CONTINUED
Borg Warner Security Corp. (a) 101,600 $ 800
CPI Corp. 124,000 1,969
Jostens, Inc. 80,000 1,590
Manpower, Inc. 65,000 2,088
Medaphis Corp. (a) 30,000 1,890
Pinkertons, Inc. (a) 79,900 1,298
Supercuts, Inc. (a) 49,800 461
Western Atlas, Inc. (a) 215,100 9,276
Zebra Technologies Corp. Class A (a) 40,900 1,677
30,207
TOTAL SERVICES 50,940
TECHNOLOGY - 5.9%
COMMUNICATIONS EQUIPMENT - 0.3%
Cabletron Systems, Inc. (a) 114,900 5,156
Cisco Systems, Inc. (a) 159,500 6,081
DSC Communications Corp. (a) 126,400 4,116
General Instrument Corp. (a) 64,700 2,248
Nokia Corp. AB 10,000 1,459
Nokia Corp. AB Free shares 15,000 2,206
Nokia Corp. AB sponsored ADR 50,000 3,675
Northern Telecom Ltd. 35,000 1,326
Tellabs, Inc. (a) 21,800 1,270
3Com Corp. (a) 102,140 5,784
33,321
COMPUTER SERVICES & SOFTWARE - 0.7%
Automatic Data Processing, Inc. 24,600 1,550
BancTec, Inc. (a) 60,000 900
Ceridian Corp. (a) 20,000 668
Computer Associates International, Inc. 55,400 3,289
CompUSA, Inc. (a) 25,000 453
Informix Corp. (a) 134,000 4,606
Integrated Silicon Systems, Inc. (a) 19,300 560
Lotus Development Corp. (a) 90,800 3,473
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
Microsoft Corp. (a) 190,100 $ 13,521
MicroAge, Inc. (a) 53,800 518
Novell, Inc. (a) 675,000 12,825
Oracle Systems Corp. (a) 469,350 14,667
Parametric Technology Corp. (a) 25,600 1,024
Peoplesoft, Inc. (a) 92,500 4,093
Platinum Technology, Inc. (a) 144,400 3,014
SHL Systemhouse, Inc. (a) 280,500 1,683
Santa Cruz Operation, Inc. (a) 100,000 1,375
Shared Medical Systems Corp. 20,000 733
Softdesk, Inc. (a) 12,500 300
Spectrum Holobyte, Inc. (a) 9,100 146
Stratacom, Inc. (a) 141,000 6,063
SunGard Data Systems, Inc. (a) 20,000 920
Symantec Corp. (a) 46,800 1,076
Synopsys, Inc. (a) 22,400 1,070
Wonderware Corp. (a) 31,300 994
79,521
COMPUTERS & OFFICE EQUIPMENT - 2.6%
ADAPTEC, Inc. (a) 73,500 2,426
Apple Computer, Inc. 35,000 1,234
Bay Networks, Inc. (a) 191,200 7,051
Canon, Inc. 639,000 10,552
Compaq Computer Corp. (a) 1,838,900 63,442
Digital Equipment Corp. (a) 384,000 14,544
Daewoo Telecommunications (a) 6,092 77
Daewoo Telecommunications (New) (a) 87 1
Filenet Corp. (a) 25,000 831
Fujitsu Ltd. 427,000 4,265
Hewlett-Packard Co. 137,600 16,564
International Business Machines Corp. 1,353,200 110,793
Pitney Bowes, Inc. 40,000 1,440
Planar Systems, Inc. (a) 46,000 966
SCI Systems, Inc. (a) 474,900 8,875
Silicon Graphics, Inc. (a) 268,200 9,521
Sun Microsystems, Inc. (a) 370,500 12,875
Tandem Computers, Inc. (a) 100,300 1,555
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
Tech Data Corp. (a) 302,100 $ 3,097
Wang Laboratories, Inc. (a) 125,000 1,617
Xerox Corp. 72,400 8,498
280,224
ELECTRONIC INSTRUMENTS - 0.1%
KLA Instruments Corp. (a) 18,000 1,139
Kulicke & Soffa Industries, Inc. (a) 113,300 3,102
Tektronix, Inc. 46,200 1,848
6,089
ELECTRONICS - 2.1%
Aiwa Co. Ltd. 119,000 3,092
Allgon AB Class B Free shares 50,000 862
AMP, Inc. 40,000 1,440
Atmel Corp. (a) 29,700 1,147
Berg Electronics Holdings Corp. (a)(g) 260,290 1,301
Hirose Electric Co. Ltd. 82,000 4,914
Hitachi Ltd. 2,464,000 25,607
Intel Corp. 972,100 82,507
Kyocera Corp. 90,000 6,714
LSI Logic Corp. (a) 11,700 614
Maxim Integrated Products, Inc. (a) 25,000 913
Methode Electronics, Inc. Class A 79,200 1,247
Micron Technology, Inc. 176,400 13,406
Molex, Inc. 131,250 4,430
Motorola, Inc. 389,100 21,255
Nitto Denko Corp. 541,000 8,496
Nichicon Corp. 600,000 9,215
Rohm Co. Ltd. 152,000 6,635
Ryoyo Electro Corp. Ord. 199,000 4,780
SGS-Thomson Microelectronic NV (a) 211,700 6,298
Samsung Electronics Co. Ltd.:
GDR (a)(g) 9,670 629
GDR (New) (a)(g) 1,913 124
GDR (non-vtg.) (a)(g) 9,271 402
GDS (a)(g) 46,850 2,050
Solectron Corp. 574,700 16,810
TDK Corp. 48,000 2,245
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Texas Instruments, Inc. 10,900 $ 965
Thomas & Betts Corp. 24,100 1,560
Toshiba Corp. 302,000 2,054
231,712
PHOTOGRAPHIC EQUIPMENT - 0.1%
Fuji Photo Film Co. Ltd. 395,000 9,396
TOTAL TECHNOLOGY 640,263
TRANSPORTATION - 0.9%
AIR TRANSPORTATION - 0.1%
AMR Corp. (a) 114,300 7,401
KLM Royal Dutch Airlines Ord. (a) 35,600 1,050
Korean Air 116,164 3,761
Northwest Airlines Corp. Class A (a) 80,000 2,170
Pittston Co. Services Group 40,000 1,100
Swire Pacific Class A 186,000 1,269
16,751
RAILROADS - 0.6%
Burlington Northern, Inc. 215,700 12,807
CSX Corp. 330,200 26,003
Canadian Pacific Ltd. Ord. 668,000 9,966
Conrail, Inc. 20,300 1,139
East Japan Railway Ord. 267 1,310
Illinois Central Corp., Series A 135,800 4,685
Southern Pacific Rail Corp. (a) 694,000 12,145
Wisconsin Central Transportation Corp. (a) 78,700 3,748
71,803
SHIPPING - 0.1%
Han Jin Transportation Co. (a) 46,712 1,748
Kawasaki Kisen Kaisha Ltd. (a) 520,000 1,705
Mitsui OSK Lines Ltd. 993,000 3,555
7,008
TRUCKING & FREIGHT - 0.1%
Expeditors International of Washington, Inc. 25,000 525
Hitachi Transport System Co. 379,000 3,768
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TRANSPORTATION - CONTINUED
TRUCKING & FREIGHT - CONTINUED
Hunt (J.B.) Transport Services, Inc. 21,000 $ 386
Roadway Services, Inc. 35,500 1,713
6,392
TOTAL TRANSPORTATION 101,954
UTILITIES - 3.6%
CELLULAR - 0.6%
Airtouch Communications (a) 456,600 12,442
BCE Mobile Communications, Inc. (a) 80,700 2,667
Cellular Communications, Inc., Series A (redeemable) (a) 15,500 740
Korea Mobile Telecom Corp. (a) 1,850 1,298
Rogers Cantel Mobile Communications, Inc. Class B (non-vtg.) (a) 84,200
2,136
Technology Resources Industries BHD (a) 693,000 1,987
Vanguard Cellular Systems, Inc. Class A (a) 37,500 844
Vodafone Group PLC sponsored ADR 1,325,200 43,897
66,011
ELECTRIC UTILITY - 0.8%
AES Corp. 202,400 3,593
American Electric Power Co., Inc. 148,700 4,721
Baltimore Gas & Electric Co. 176,500 4,170
Carolina Power & Light Co. 108,100 2,932
Central & South West Corp. 104,400 2,532
Central Costanera SA ADR (g) 23,700 687
Consolidated Edison Co. of New York, Inc. 91,300 2,488
Consolidated Electric Power Asia Ltd. 1,407,400 2,912
Detroit Edison Co. 130,900 3,583
Dominion Resources, Inc. 55,700 2,005
Electrobras PN Class B 11,662,910 2,229
Fuji Electric Co. Ltd. 993,000 5,160
Korea Electric Power Corp. 397,700 14,375
Light Servicos de Electricidade SA Ord. 7,194,700 2,118
Ohio Edison Co. 148,000 2,960
PacifiCorp. 78,100 1,513
Pacific Gas & Electric Co. 91,200 2,269
Peco Energy Co. 153,100 3,847
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
Public Service Co. of Colorado 10,000 $ 308
Public Service Enterprise Group, Inc. 21,100 578
SCEcorp 120,900 1,889
Southern Co. 173,400 3,533
Unicom Corp. 90,700 2,154
Union Electrica Fenosa 126,200 477
Veba AG Ord. 27,800 10,059
83,092
GAS - 0.2%
Enron Corp. 71,600 2,363
ENSERCH Corp. 255,000 3,793
MCN Corp. 691,400 12,704
Pacific Enterprises 100,400 2,485
Williams Companies, Inc. 209,400 6,413
27,758
TELEPHONE SERVICES - 2.0%
ALC Communications Corp. (a) 34,200 1,167
Ameritech Corp. 1,301,700 53,695
Bell Atlantic Corp. 344,700 18,183
BellSouth Corp. 484,800 28,846
DDI Corp. Ord. 598 5,179
GTE Corp. 125,800 4,183
Hong Kong Telecommunications Ltd. 1,130,800 2,201
Koninklijke PPT Nederland 213,300 7,566
LDDS Communications, Inc. 63,700 1,489
MCI Communications Corp. 58,900 1,215
Nippon Telegraph & Telephone Corp. Ord. 726 6,271
NYNEX Corp. 1,060,100 42,006
Pakistan Telecommunications Voucher GDR (a)(g) 31,260 2,813
SBC Communications, Inc. 795,500 33,510
Telebras PN (Pfd.) 215,483,800 5,794
Telecom Argentina Stet France Telecom SA 220,500 959
Telecom Italia Ord. 217,500 507
Telefonica de Argentina SA Class B 431,600 1,057
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
Telefonica de Espana SA Ord. 161,000 $ 2,040
Telesp PN (Pfd.) 32,561,500 3,365
222,046
TOTAL UTILITIES 398,907
TOTAL COMMON STOCKS
(Cost $3,799,731) 4,159,681
PREFERRED STOCKS - 0.4%
CONVERTIBLE PREFERRED STOCKS - 0.3%
BASIC INDUSTRIES - 0.1%
METALS & MINING - 0.1%
Reynolds Metals Co. $3.31 78,600 3,743
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Chrysler Corp., Series A, $4.625 (g) 14,800 1,721
ENERGY - 0.1%
ENERGY SERVICES - 0.0%
Noble Drilling Corp. $1.50 79,500 1,590
OIL & GAS - 0.1%
Atlantic Richfield Co. exchangeable $.5575 93,400 2,335
Unocal Corp. $3.50 (g) 33,600 1,747
4,082
TOTAL ENERGY 5,672
HEALTH - 0.1%
MEDICAL EQUIPMENT & SUPPLIES - 0.1%
U.S. Surgical Corp. $2.20 (g) 245,400 6,380
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
ELECTRICAL EQUIPMENT - 0.0%
Westinghouse Electric Corp. $1.30 (g) 212,500 $ 3,002
NONDURABLES - 0.0%
HOUSEHOLD PRODUCTS - 0.0%
Revlon Group, Inc., Series B, pay-in-kind $14.875
exchangeable 18,400 1,840
TOBACCO - 0.0%
RJR Nabisco Holdings Corp. depositary shares
representing 1/10 pfd., Series C 237,300 1,513
TOTAL NONDURABLES 3,353
RETAIL & WHOLESALE - 0.0%
GROCERY STORES - 0.0%
Supermarkets General Holdings Corp. exchangeable
pay-in-kind $3.52 (a) 70,123 1,683
TECHNOLOGY - 0.0%
COMPUTER SERVICES & SOFTWARE - 0.0%
Ceridian Corp. 3 1/2% 30,000 2,310
COMPUTERS & OFFICE EQUIPMENT - 0.0%
Alpine Group, Inc. 8% cumulative (a) 2,493 112
TOTAL TECHNOLOGY 2,422
TOTAL CONVERTIBLE PREFERRED STOCKS 27,976
NONCONVERTIBLE PREFERRED STOCKS - 0.1%
BASIC INDUSTRIES - 0.1%
IRON & STEEL - 0.1%
Geneva Steel Co., Series B, exchangeable 14% (a) 37,500 3,975
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Hyundai Motor Service Co. (a) 791 22
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
ENERGY - 0.0%
OIL & GAS - 0.0%
Gulf Canada Resources Ltd. sr., Series 1, adj. rate 627,500 $ 1,843
FINANCE - 0.0%
INSURANCE - 0.0%
SAI Sta Assicuratrice Industriale SPA 96,000 387
TECHNOLOGY - 0.0%
COMPUTER SERVICES & SOFTWARE - 0.0%
SAP AG 4,800 3,742
UTILITIES - 0.0%
TELEPHONE SERVICES - 0.0%
Stet (Societa Finanziaria Telefonica) Spa 294,100 594
TOTAL NONCONVERTIBLE PREFERRED STOCKS 10,563
TOTAL PREFERRED STOCKS
(Cost $37,255) 38,539
CORPORATE BONDS - 6.8%
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (D) (000S)
CONVERTIBLE BONDS - 0.1%
BASIC INDUSTRIES - 0.0%
IRON & STEEL - 0.0%
Essar Gujarat Ltd. euro 5 1/2%, 8/5/98 - $ 800 980
PAPER & FOREST PRODUCTS - 0.0%
Stone Consolidated Corp. 8%, 12/31/03 - CAD 2,100 1,876
TOTAL BASIC INDUSTRIES 2,856
DURABLES - 0.0%
TEXTILES & APPAREL - 0.0%
Shinwon Corp. euro 0.5% 12/31/08 - 500 460
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
CONVERTIBLE BONDS - CONTINUED
FINANCE - 0.0%
CREDIT & OTHER FINANCE - 0.0%
SCICI Ltd. euro 3 1/2%, 4/1/04 - $ 880 $ 779
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
Cooper Industries, Inc. 7.05%, 1/1/15 A3 3,123 3,182
MEDIA & LEISURE - 0.0%
LODGING & GAMING - 0.0%
Bally Entertainment Corp. 10%, 12/15/06 Caa 1,200 1,013
TECHNOLOGY - 0.0%
COMPUTERS & OFFICE EQUIPMENT - 0.0%
Unisys Corp. 8 1/4%, 8/1/00 B2 2,000 2,085
TOTAL CONVERTIBLE BONDS 10,375
NONCONVERTIBLE BONDS - 6.7%
BASIC INDUSTRIES - 0.3%
CHEMICALS & PLASTICS - 0.2%
G-I Holdings, Inc., Series B, 0%, 10/1/98 Ba3 31,440 20,357
IMC Fertilizer Group, Inc. 10 1/8%, 6/15/01 B1 6,070 6,313
26,670
METALS & MINING - 0.0%
Kaiser Aluminum & Chemical Corp.
12 3/4%, 2/1/03 B2 1,470 1,521
PAPER & FOREST PRODUCTS - 0.1%
Alto Parana:
12%, 3/4/05 (b) - 9,750 4,875
12%, 3/4/05 (b)(g) - 5,000 2,500
Repap Wisconsin, Inc. 9 7/8%, 5/1/06 B3 2,480 2,269
Stone Container Corp. 12 5/8%, 7/15/98 B1 4,800 5,172
14,816
TOTAL BASIC INDUSTRIES 43,007
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
CONSTRUCTION & REAL ESTATE - 1.0%
BUILDING MATERIALS - 0.8%
Adience, Inc. 11%, 6/15/02 - $ 3,975 $ 2,882
Building Materials Corp. of America
0%, 7/1/04 (e) B1 15,370 8,223
Cemex SA 8 7/8%, 6/10/98 (g) Ba3 46,693 32,452
Cemex SA and Tolmex SA de CV:
euro 8 7/8%, 6/10/98 Ba2 2,559 1,779
10%, 11/5/99 Ba2 14,170 10,202
Tolmex SA de CV 8 3/8%, 11/1/03 Ba3 20,293 9,741
USG Corp., Series B, 9 1/4%, 9/15/01 B1 23,485 22,839
88,118
CONSTRUCTION - 0.2%
Baldwin Co., Series B, 10 3/8%, 8/1/03 B2 4,370 2,709
US Home Corp. 9 3/4%, 6/15/03 Ba3 23,835 22,047
24,756
TOTAL CONSTRUCTION & REAL ESTATE 112,874
DURABLES - 0.1%
TEXTILES & APPAREL - 0.1%
Hat Brands, Inc., Series B, 12 5/8%, 9/15/02 - 5,870 6,178
ENERGY - 0.9%
ENERGY SERVICES - 0.8%
Falcon Drilling, Inc. 9 3/4%, 1/15/01 B2 7,715 7,291
TransTexas Gas Corp. 10 1/2%, 9/1/00 B1 76,715 77,866
85,157
INDEPENDENT POWER - 0.0%
Consolidated Hydro 0%, 7/15/03 (e) - 6,265 3,508
OIL & GAS - 0.1%
Mesa Capital Corp. secured 0%, 6/30/98 (e) B3 15,050 14,486
TOTAL ENERGY 103,151
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - 0.6%
BANKS - 0.1%
Bancomer SA 9%, 6/1/00 (g) Ba2 $ 22,500 $ 13,388
INSURANCE - 0.5%
American Annuity Group, Inc. 11 1/8%, 2/1/03 B2 8,728 8,881
American Life Holdings 11 1/4%, 9/15/04 B1 3,200 3,232
Reliance Financial Services:
9.273%, 11/1/00 BBB 7,560 7,144
10.36%, 12/1/00 BBB 9,180 9,157
Reliance Group:
9%, 11/15/00 Ba3 14,195 13,272
9 3/4%, 11/15/03 B1 8,540 7,814
49,500
TOTAL FINANCE 62,888
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
IMO Industries, Inc. 12%, 11/1/00 B3 870 890
Thermadyne Holdings Corp. 10 3/4%, 11/1/03 - 31 30
920
MEDIA & LEISURE - 2.2%
BROADCASTING - 0.9%
Chancellor Broadcasting 12 1/2%, 10/1/04 B3 2,030 2,030
Citicasters, Inc. 9 3/4%, 2/15/04 B- 21,400 20,919
PTI Holdings, Inc., 7%, 12/17/02 - 490 289
Robin Media Group, Inc. 11 1/8%, 4/1/97 - 4,910 4,800
SCI Television, Inc. secured:
7 1/2%, 6/30/98 (i) - 28,423 28,067
11%, 6/30/05 B3 35,430 36,316
Univision Network Holdings, LP 7%, 12/17/02 - 3,460 2,041
94,462
ENTERTAINMENT - 0.1%
Stratosphere Corp. 14 1/4%, 5/15/02 B2 6,220 6,376
LODGING & GAMING - 1.2%
Bally's Casino Holdings, Inc. 10 1/2%, 6/15/98 B3 45,625 29,884
Boyd Gaming Corp. 10 3/4%, 9/3/03 B2 1,890 1,857
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - CONTINUED
California Hotel Finance Corp. gtd. 11%, 12/1/02 B2 $ 46,930 $ 46,578
First Mexican Acceptance Corp. euro
10 3/4%, 9/15/96 - 1,900 497
Fitzgeralds Gaming Corp. unit 13 3/4%,
3/15/96 ($1,000 bonds & 1.54 warrants)(i) - 1,640 869
GNF Corp., Series B, 10 5/8%, 4/1/03 B2 3,790 2,928
Grand Casino Resorts, Inc. gtd. 12 1/2%, 2/1 00 Ba3 16,640 17,306
Harrah's Jazz Co. 14 1/4%, 11/15/01 B1 16,620 17,867
Host Marriott Hospitality, Inc.:
9 1/8%, 12/1/00 B1 458 456
10 1/2%, 5/1/06 B1 9,208 9,162
10 5/8%, 2/1/00 B1 1,097 1,111
11%, 5/1/06 B1 951 965
11 1/4%, 7/18/05 B1 15 15
Red Roof Inns, Inc. 9 5/8%, 12/15/03 B3 3,890 3,725
Showboat, Inc. 13%, 8/1/09 B2 1,400 1,449
Sun International Hotels Ltd. 10 1/2%, 12/12/95 (f) - 58 58
134,727
RESTAURANTS - 0.0%
Family Restaurants, Inc. 9 3/4%, 2/1/02 B1 1,480 1,014
TOTAL MEDIA & LEISURE 236,579
NONDURABLES - 0.7%
BEVERAGES - 0.1%
Dr. Pepper/Seven-Up Companies, Inc.
0%, 11/1/02 (e) Baa1 3,680 3,174
Fomento Economico Mexicano SA de CV euro
9 1/2%, 7/22/97 - 7,140 6,069
9,243
FOODS - 0.0%
Chiquita Brands International, Inc.
9 1/8%, 3/1/04 B1 1,650 1,510
Specialty Foods Corp. 10 1/4%,8/15/01 B2 3,680 3,588
5,098
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - 0.5%
Revlon Consumer Products Corp. 10 1/2%,
2/15/03 B3 $ 6,580 $ 6,152
Revlon Worldwide Corp. secured 0%, 3/15/98 B3 89,735 53,729
59,881
TOBACCO - 0.1%
Empresas La Moderna SA de CV:
euro 10 1/4%, 11/12/97 - 2,400 1,884
10 1/4%, 11/12/97 (g) - 8,420 6,610
8,494
TOTAL NONDURABLES 82,716
RETAIL & WHOLESALE - 0.3%
APPAREL STORES - 0.1%
Apparel Retailers, Inc. 12 3/4%, 8/15/05 Caa 10,300 6,103
Lamonts Apparel Corp. 10 1/4%, 11/1/99 (b)(g) - 13,118 6,756
12,859
DRUG STORES - 0.1%
Thrifty Payless Holdings, Inc. 11 3/4%, 4/15/03 B2 5,270 5,520
GENERAL MERCHANDISE STORES - 0.1%
Parisian, Inc. 9 7/8%, 7/15/03 B3 10,505 7,354
GROCERY STORES - 0.0%
Ralph's Grocery Co. 9%, 4/1/03 B2 2,415 2,367
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Town & Country Corp. 13%, 5/31/98 B3 3,981 1,596
TOTAL RETAIL & WHOLESALE 29,696
SERVICES - 0.1%
PRINTING - 0.1%
Continental Graphic Corp. 11.64%, 10/31/98 - 6,143 5,160
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
SERVICES - CONTINUED
SERVICES - 0.0%
Borg Warner Security Corp. 9 1/8%, 5/1/03 B2 $ 2,400 $ 1,932
TOTAL SERVICES 7,092
TECHNOLOGY - 0.2%
COMMUNICATIONS EQUIPMENT - 0.0%
Echostar Communications Corp. unit 0%,
6/1/04 ($1000 Sr. secd. disc. notes &
6 warrants) (e) Caa 10,270 4,827
COMPUTERS & OFFICE EQUIPMENT - 0.1%
Alpine Group, Inc. 13 1/2%, 1/5/96 (f) Caa 660 653
Unisys Corp. 9 3/4%, 9/15/96 Ba3 10,860 10,996
11,649
ELECTRONICS - 0.1%
Berg Electronics, Inc. 11 3/8%, 5/1/03 B3 2,115 2,173
Grupo Condumex SA de CV 7 3/8%, 7/27/98 (g) - 4,000 2,720
4,893
TOTAL TECHNOLOGY 21,369
TRANSPORTATION - 0.1%
RAILROADS - 0.0%
Transtar Holdings L.P./Transtar Cap Corp.,
Series B, 0%, 12/15/03 (e) B- 12,070 6,699
TRUCKING & FREIGHT - 0.1%
MC-Cuernavaca Trust 9 1/4%, 7/25/01 (g) A 16,137 8,876
TOTAL TRANSPORTATION 15,575
UTILITIES - 0.2%
CELLULAR - 0.1%
Mobilmedia Communications, Inc. 0%, 12/1/03 (e) B3 10,070 5,690
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
ELECTRIC UTILITY - 0.0%
Del Norte Funding Corp. 9.05%, 1/02/93 (b) Ca $ 662 $ 404
El Paso Funding Corp. lease oblig.:
9 3/8%, 10/1/96 (b) Ca 720 439
9 1/5%, 7/2/97 (b) Ca 240 144
10 3/4%, 4/1/13 (b) Ca 3,710 2,263
3,250
GAS - 0.0%
Columbia Gas System, Inc. (The),
10 1/2%, 6/1/12 (b) Caa 2,080 2,834
TELEPHONE SERVICES - 0.1%
MFS Communications 0%, 1/15/04 B2 10,650 6,749
TOTAL UTILITIES 18,523
TOTAL NONCONVERTIBLE BONDS 740,568
TOTAL CORPORATE BONDS
(Cost $833,356) 750,943
U.S. TREASURY OBLIGATIONS - 17.3%
6 1/4%, 2/15/03 Aaa 1,191,290 1,121,862
10 3/4%, 5/15/03 Aaa 25,000 30,320
5 3/4%, 8/15/03 Aaa 143,600 130,272
11 7/8%, 11/15/03 Aaa 15,300 19,749
11 5/8%, 11/15/04 Aaa 460,340 596,214
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $1,863,851) 1,898,417
COMMERCIAL MORTGAGE SECURITIES - 0.4%
Bardell Associates Note Trust 12 1/2%, 11/1/08 (f) - 18,913 19,218
CBA Mortgage Corp. commercial Series 1993-C1
Class E, 7.158%, 12/25/03 (g) Ba2 4,333 3,526
CS First Boston Mortgage Securities Corp.
commercial Series 1994-CFB1 Class E,
6.4769%, 1/25/28 (g) Ba2 5,241 3,944
COMMERCIAL MORTGAGE SECURITIES - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
Resolution Trust Corp. commercial:
Series 1994-N2 Class 5-A,
10 5/8%, 12/15/04 (g) B2 $ 2,400 $ 2,354
Series 1994-C2 Class G, 8%, 4/25/25 B 2,321 1,795
Series 1994-C1 Class E, 8%, 6/25/26 BB 2,808 2,208
SML, Inc. commercial:
Series 1994-C1 Class C, 9.28%, 9/18/99 (f) - 5,225 3,416
Series 1994-C1 Class B-3, 11.69%, 9/18/99 - 3,825 3,462
Structured Asset Securities Corp. commercial
Series 1995-C1 Class D, 7 3/8%, 9/25/24 BBB 2,540 2,116
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $42,035) 42,039
COMPLEX MORTGAGE SECURITIES - 0.0%
INTEREST ONLY STRIPS - 0.0%
SML, Inc. commercial Series 1994-C1 Class S,
0.81% 9/18/99 (j) (Cost $3,695) - 125,474 3,451
FOREIGN GOVERNMENT OBLIGATIONS (L) - 0.8%
Brazil Federative Republic IDU euro 7.8125%,
1/1/01 (i) B1 38,509 28,280
New Zealand Government 8%, 4/15/04 Aaa NZD 40,200 26,316
Polish Government Brady:
past due interest 3 1/4%, 10/27/14 (g)(i) - 145 58
discount 6.8125%, 10/27/14 (g)(i) - 273 175
Province of Chaco, Argentina
11 7/8%, 9/10/97 (f) - 8,083 7,914
Republic of Ecuador:
past due interest (g)(h) - 20,250 4,227
7 5/8%, 12/21/04 (g) - 2,976 1,354
past due interest 7 1/4%, 2/28/15 (g)(i) - 20,691 4,319
euro discount 7 1/4%, 2/28/25 (i) - 5,000 2,225
discount 7 1/4%, 2/28/25 (g)(i) - 27,500 12,238
Siderurgica Brasileiras Inflation Indexed 6%,
8/15/99 (k) - BRR 40,164 5,089
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $100,074) 92,195
INDEXED SECURITIES - 1.4%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (D) (000S) (000S)
INTEREST INDEXED - 0.5%
Citibank Nassau cert. of dep.:
6.4125%, 12/22/95 (inversely indexed to
3-month GBP LIBOR, multiplied by 7.25) $ 8,700 $ 9,059
6.43%, 12/22/95 (inversely indexed to
3-month GBP LIBOR, multiplied by 7.25) 15,410 15,966
6.46%, 12/22/95 (inversely indexed to
3-month GBP LIBOR, multiplied by 7.25) 13,500 14,048
6.46%, 12/22/95 (inversely indexed to
3-month GBP LIBOR, multiplied by 7.25) 9,660 10,106
49,179
COMMODITY INDEXED - 0.9%
Goldman Sachs Group, L.P. note 6.2375%, 9/27/95
(indexed to gold price) 50,000 50,830
Morgan Guaranty Trust Co. cert. of dep.:
6%, 7/7/95 (indexed to platinum price) 6,270 6,597
6%, 7/10/95 (indexed to platinum price) 7,500 7,905
6.1875%, 9/27/95 (indexed to gold price) 35,700 36,218
101,550
TOTAL INDEXED SECURITIES
(Cost $146,740) 150,729
REPURCHASE AGREEMENTS - 35.1%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 6.20%, dated
3/31/95 due 4/3/95 (Note 3) $ 3,863,372 3,861,377
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $10,688,114) $ 10,997,371
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATES VALUE GAIN/(LOSS)
CONTRACTS TO BUY
740,536 JPY 4/10/95 $ 8,562 $ 562
(Payable amount $8,000)
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.1%
CONTRACTS TO SELL
26,465,090 JPY 4/10/95 to 6/29/95 $ 306,534 (36,706)(Receivable amount
$269,828)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.8%
$ (36,144)
CURRENCY ABBREVIATIONS
BRR - Brazilian real
GBP - British pound
CAD - Canadian dollar
JPY - Japanese yen
NZD - New Zealand dollar
LEGEND
Non-income producing
Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
Standard & Poor's Corporation credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
Principal amount is stated in United States dollars unless otherwise
noted.
Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
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 $ 647
Bardell Associates
Note Trust 12 1/2%,
11/1/08 4/19/94 $ 19,218
Chancellor Trust
Class I unit 10/12/94 $ 2,990
Hat Brands, Inc.
(warrants) 9/2/92
to 2/23/94 -
Live Entertainment, Inc.:
$2.00 (warrants) 3/23/93 $ 241
$2.72 (warrants) 3/23/93 $ 230
Province of Chaco,
Argentina 11 7/8%,
9/10/97 3/9/94 $ 8,478
SML, Inc. commercial
Series 1994-C1
Class C, 9.28%,
9/18/99 8/11/94 $ 3,398
Sun International
Hotels Ltd. 10 1/2%,
12/12/95 12/12/94 $ 58
LEGEND - CONTINUED
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 $136,957,000 or 1.2% of net
assets.
Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
The coupon rate shown on floating or adjustable rate securities represents
the rate at period end.
Security represents right to receive monthly interest payments on an
underlying pool of mortgages. Principal shown is the par amount of the
mortgage pool.
Principal amount shown is original face amount and does not reflect the
inflation adjustments.
Some foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
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 17.5% AAA, AA, A 17.6%
Baa 0.0% BBB 0.2%
Ba 1.5% BB 1.5%
B 4.2% B 3.1%
Caa 0.1% CCC 0.1%
Ca, C 0.0% CC, C 0.0%
D 0.0%
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 1.4%.
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 88.3%
Japan 3.0
Canada 1.3
United Kingdom 1.1
Mexico 1.1
Others (individually less than 1%) 5.2
TOTAL 100.0%
INCOME TAX INFORMATION
At March 31, 1995, the aggregate cost of investment securities for income
tax purposes was $10,690,569,000. Net unrealized appreciation aggregated
$306,802,000, of which $593,516,000 related to appreciated investment
securities and $286,714,000 related to depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
(EXCEPT PER-SHARE AMOUNT) MARCH 31, 1995
ASSETS
Investment in securities, at value (including repurchase $ 10,997,371
agreements of $3,861,377) (cost $10,688,114) -
See accompanying schedule
Receivable for investments sold 55,454
Unrealized appreciation on foreign currency contracts 562
Receivable for fund shares sold 65,711
Dividends receivable 14,773
Interest receivable 51,732
Other receivables 81
TOTAL ASSETS 11,185,684
LIABILITIES
Payable to custodian bank $ 1,796
Payable for investments purchased 60,043
Regular delivery
Delayed delivery 7,124
Unrealized depreciation on foreign currency contracts 36,706
Payable for closed foreign currency contracts 949
Payable for fund shares redeemed 45,706
Accrued management fee 6,485
Other payables and accrued expenses 2,387
Collateral on securities loaned, at value 62,597
TOTAL LIABILITIES 223,793
NET ASSETS $ 10,961,891
Net Assets consist of:
Paid in capital $ 11,133,169
Undistributed net investment income 99,614
Accumulated undistributed net realized gain (loss) on (542,978)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 272,086
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 779,703 shares outstanding $ 10,961,891
NET ASSET VALUE, offering price and redemption price $14.06
per share ($10,961,891 (divided by) 779,703 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED MARCH 31, 1995
INVESTMENT INCOME $ 50,224
Dividends
Interest (including income on securities loaned of 266,778
$1,391)
TOTAL INCOME 317,002
EXPENSES
Management fee $ 40,368
Transfer agent fees 13,053
Accounting and security lending fees 463
Non-interested trustees' compensation 61
Custodian fees and expenses 1,086
Registration fees 53
Audit 151
Legal 61
Reports to shareholders 174
Miscellaneous 87
Total expenses before reductions 55,557
Expense reductions (279) 55,278
NET INVESTMENT INCOME 261,724
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (479,074)
Foreign currency transactions 17,191
Futures contracts (3,927) (465,810)
Change in net unrealized appreciation (depreciation) on:
Investment securities 98,939
Assets and liabilities in foreign currencies (34,022)
Futures contracts (6,527) 58,390
NET GAIN (LOSS) (407,420)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (145,696)
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
MARCH 31, 1994
1995
INCREASE (DECREASE) IN NET ASSETS
Operations $ 261,724 $ 373,021
Net investment income
Net realized gain (loss) (465,810) 95,914
Change in net unrealized appreciation (depreciation) 58,390 (301,077)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (145,696) 167,858
FROM OPERATIONS
Distributions to shareholders (140,717) (300,081)
From net investment income
From net realized gain (62,442) (247,164)
In excess of net realized gain (72,085) (29,665)
TOTAL DISTRIBUTIONS (275,244) (576,910)
Share transactions 1,776,404 8,579,610
Net proceeds from sales of shares
Reinvestment of distributions 269,070 562,713
Cost of shares redeemed (2,455,035) (4,206,977)
Net increase (decrease) in net assets resulting from (409,561) 4,935,346
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS (830,501) 4,526,294
NET ASSETS
Beginning of period 11,792,392 7,266,098
End of period (including under (over) distribution of $ 10,961,891 $ 11,792,392
net investment income of $99,614 and $(21,393),
respectively)
OTHER INFORMATION
Shares
Sold 126,481 569,016
Issued in reinvestment of distributions 19,283 37,578
Redeemed (175,025) (282,864)
Net increase (decrease) (29,261) 323,730
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED SEPTEMBER 30,
ENDED
MARCH 31,
1995 1994 1993 1992 1991 1990
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning $ 14.58 $ 14.97 $ 13.50 $ 13.02 $ 10.64 $ 11.39
of period
Income from Investment
Operations
Net investment income .33 .34 .52 .46 .55 .58
Net realized and (.50) .21 D 2.01 .97 2.48 (.71)
unrealized gain (loss)
Total from investment (.17) .55 2.53 1.43 3.03 (.13)
operations
Less Distributions (.18) (.44) (.87) (.45) (.65) (.38)
From net investment
income
From net realized gain (.08) (.45) (.19) (.50) - (.24)
In excess of net (.09) (.05) - - - -
realized gain
Total distributions (.35) (.94) (1.06) (.95) (.65) (.62)
Net asset value, end of $ 14.06 $ 14.58 $ 14.97 $ 13.50 $ 13.02 $ 10.64
period
TOTAL RETURN B, C (1.14)% 3.60 19.71 11.84 29.78 (1.27)
% % % % %
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 10,962 $ 11,792 $ 7,266 $ 2,762 $ 743 $ 346
(in millions)
Ratio of expenses to .98% A 1.04 1.09 1.17 1.17 1.17
average net assets % % % % %
Ratio of expenses to .99% A 1.04 1.09 1.17 1.17 1.17
average net assets % % % % %
before expense
reductions
Ratio of net investment 4.66% A 3.63 4.28 5.58 5.74 5.89
income to average net % % % % %
assets
Portfolio turnover rate 153% A 109 98 134 134 105
% % % % %
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
D THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD ENDED DUE TO THE TIMING OF
SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET
VALUES OF THE INVESTMENTS OF THE FUND.
NOTES TO FINANCIAL STATEMENTS
For the period ended March 31, 1995
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Asset Manager (the fund) is a fund of Fidelity Charles 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 exchange 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
exchange quotations are not readily available (and in certain cases debt
securities which trade on an exchange), are valued primarily using
dealer-supplied valuations or 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 U.S. federal
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. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income, which includes accretion of original
issue discount, is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
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 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 paydown
gains/losses on certain securities, futures and options transactions,
foreign currency transactions, passive foreign investment companies (PFIC),
market discount, partnerships, non-taxable dividends, and losses deferred
due to wash sales. The fund also utilized earnings and profits distributed
to shareholders on redemption of shares as a part of the dividends paid
deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect net investment income per share. 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.
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. These contracts involve market risk in
excess of the unrealized gain or loss reflected in the fund's Statement of
Assets and Liabilities. The U.S. dollar value of the currencies the fund
has committed to buy or sell is shown in the schedule of investments under
the caption "Forward Foreign Currency Contracts." This amount represents
the aggregate exposure to each currency the fund has acquired or hedged
through currency contracts at period end. 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
2. OPERATING POLICIES -
CONTINUED
FORWARD FOREIGN CURRENCY
CONTRACTS - CONTINUED
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. Contracts
that have been offset with different counterparties are reflected as both a
contract to buy and a contract to sell in the schedule of investments under
the caption "Forward Foreign Currency Contracts."
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 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.
DELAYED DELIVERY TRANSACTIONS.
The fund may purchase or sell securities on a when-issued or forward
commitment basis. Payment and delivery may take place a month or more after
the date of the transaction. The price of the underlying securities and the
date when the securities will be delivered and paid for are fixed at the
time the transaction is negotiated. The market value of the securities
purchased or sold on a when-issued or forward commitment basis are
identified as such in the fund's schedule of investments. With respect to
purchase commitments, the fund identifies securities as segregated in its
custodial records with a value at least equal to the amount of the
commitment. Losses may arise due to changes in the market value of the
underlying securities or if the counterparty does not perform under the
contract.
FUTURES CONTRACTS AND OPTIONS. The fund may use futures and options
contracts to manage its exposure to the stock and bond markets and to
fluctuations in interest rates and currency values. Buying futures, writing
puts, and buying calls tend to increase the fund's exposure to the
underlying instrument. Selling futures, buying puts, and writing calls tend
to decrease the fund's exposure to the underlying instrument, or hedge
other fund investments. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparties do not perform under the contracts'
terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options are valued using the last sale price or, in the
2. OPERATING POLICIES -
CONTINUED
FUTURES CONTRACTS AND OPTIONS - CONTINUED
absence of a sale, the last offering price. Options traded over-the-counter
are valued using dealer-supplied valuations.
INDEXED SECURITIES. The fund may invest in indexed securities whose values
are linked either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices, or other underlying instruments. The
fund uses these securities to increase or decrease its exposure to
different underlying instruments and to gain exposure to markets that might
be difficult to invest in through conventional securities. Indexed
securities may be more volatile than their underlying instruments, but any
loss is limited to the amount of the original investment.
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 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 $35,368,000 or 0.3% 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 repurchase agreements were dated March 31,
1995 and due April 3, 1995. The maturity values of the joint trading
account investments were $3,863,372,000 at 6.20%. The investments in
repurchase agreements through the joint trading account are summarized as
follows:
SUMMARY OF JOINT TRADING
Number of dealers or banks 28
Maximum amount with one dealer or bank 14 1/2%
Aggregate principal amount of agreements $17,509,591,000
Aggregate maturity amount of agreements $17,518,640,000
Aggregate market value of collateral $17,915,919,000
Coupon rates of collateral 0% to 15 3/4%
Maturity dates of collateral 4/13/95 to 2/15/25
4. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $6,512,372,000 and $8,101,281,000, respectively, of which U.S.
government and government agency obligations aggregated $3,510,811,000 and
$4,066,278,000, respectively.
The market value of futures contracts opened and closed during the period
amounted to $1,643,324,000 and $2,032,254,000, 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 .2700% to .5200% 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 .40%. For
the period, the management fee was equivalent to an annualized rate of .72%
of average net assets.
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 October 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 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 $1,448,000 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
6. SECURITY LENDING - CONTINUED
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 $61,068,000 and $62,597,000,
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
$279,000 under this arrangement.
8. LITIGATION.
The fund is engaged in litigation against the obligor on the inflation
adjusted debt of Siderurgica Brasileiras SA, contesting the calculation of
the principal adjustment. The probability of success cannot be predicted
and the amount of recovery cannot be estimated. Any recovery from this
litigation would inure to the benefit of the fund.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Charles Street Trust and the Shareholders of
Fidelity Asset Manager:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments (except for Moody's and Standard &
Poor's ratings), and the related statements of operations and of changes in
net assets and the financial highlights present fairly, in all material
respects, the financial position of Fidelity Asset Manager (a fund of
Fidelity Charles Street Trust) at March 31, 1995, the results of its
operations for the period then ended, the changes in its net assets and the
financial highlights for the periods indicated in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fidelity Asset Manager's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities owned at March 31, 1995 by
correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
May 9, 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
William J. Hayes, Vice President
Robert Beckwitt, Vice President
Arthur S. Loring, Secretary
Stephen P. Jonas, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Robert H. Morrison, Manager,
Security Transactions
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 Chase Manhattan Bank, N.A.
New York, NY
FIDELITY'S ASSET ALLOCATION FUNDS
Asset Manager(trademark)
Asset Manager: Growth
Asset Manager: 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 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)SPARTAN(registered trademark)
SHORT-TERM INCOME
FUND
SEMIANNUAL REPORT
MARCH 31, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 22 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 26 Notes to the financial statements.
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 a few 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 bonds
that have grown in value), and the effect of the $5 account closeout fee.
You can also look at the fund's income to measure performance. If Fidelity
had not reimbursed certain fund expenses, the fund's 1 year and life of
fund total returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MARCH 31, 1995 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Spartan Short-Term Income Fund -0.57% -0.45% 6.74%
Lehman Brothers 1-3 Year Government-Corporate
Bond Index 3.36% 4.44% 9.91%
Average Short Investment Grade Bond Fund 2.78% 3.35% n/a
Consumer Price Index 1.34% 2.85% 7.15%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year or since the fund
began on October 1, 1992. 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 Lehman Brothers 1-3 Year Government-Corporate Bond Index - a broad
measure of the performance of the short-term bond market. To measure how
the fund's performance stacked up against its peers, you can compare it to
the average short investment grade bond fund, which reflects the
performance of 137 funds with similar objectives tracked by Lipper
Analytical Services over the past six months. Both 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. (The CPI returns begin on the month end closest to
the fund's start date.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MARCH 31, 1995 PAST 1 LIFE OF
YEAR FUND
Spartan Short-Term Income Fund -0.45% 2.64%
Lehman Brothers 1-3 Year Government-Corporate Bond 4.44% 3.85%
Index
Average Short Investment Grade Bond Fund 3.35% n/a
Consumer Price Index 2.85% 2.80%
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 LIFE OF FUND
Spartan Short-Term B1-3 Year Government/
10/01/92 10000.00 10000.00
10/31/92 9933.83 9940.00
11/30/92 9941.15 9926.08
12/31/92 10033.22 10019.39
01/31/93 10177.57 10126.60
02/28/93 10293.45 10209.63
03/31/93 10359.81 10242.31
04/30/93 10422.37 10306.83
05/31/93 10447.69 10283.13
06/30/93 10563.39 10361.28
07/31/93 10625.81 10385.11
08/31/93 10730.26 10472.34
09/30/93 10769.15 10505.86
10/31/93 10828.20 10530.02
11/30/93 10852.94 10533.18
12/31/93 10937.02 10576.36
01/31/94 11008.69 10644.05
02/28/94 10928.78 10579.12
03/31/94 10722.16 10524.11
04/30/94 10602.29 10484.12
05/31/94 10704.78 10498.80
06/30/94 10566.92 10526.10
07/31/94 10645.17 10621.88
08/31/94 10701.16 10658.00
09/30/94 10734.72 10634.55
10/31/94 10721.92 10659.01
11/30/94 10730.95 10614.24
12/31/94 10431.42 10634.41
01/31/95 10514.42 10780.10
02/28/95 10616.22 10928.87
03/31/95 10675.49 10991.16
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
Short-Term Income Fund on October 1, 1992, when the fund started. As the
chart shows, by March 31, 1995, the value of your investment would have
grown to $10,675 - a 6.75% increase on your initial investment. This
assumes you still owned the fund on March 31, 1995, and therefore does not
include the effect of the $5 account closeout fee. For comparison, look at
how the Lehman Brothers 1-3 Year Government-
Corporate Bond Index did over the same period. With dividends reinvested,
the same $10,000 investment would have grown to $10,991 - a 9.91% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, move in the
opposite direction of interest
rates. In turn, the share price,
return, and yield of a fund
that invests in bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
SIX OCTOBER 1, 1992
MONTHS YEAR ENDED (COMMENCEMENT OF
ENDED SEPTEMBER 30, OPERATIONS) TO
MARCH 31, 1994 SEPTEMBER 30, 1993
1995
Dividend return 3.20% 6.19% 7.79%
Capital appreciation return -3.77% -6.53% -0.11%
Total return -0.57% -0.34% 7.68%
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. Capital appreciation and total returns include the effect of
the $5 account closeout fee.
DIVIDENDS AND YIELD
PERIODS ENDED MARCH 31, 1995 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 5.01(cents) 29.67(cents) 59.59(cents)
Annualized dividend rate 6.58% 6.55% 6.45%
30-day annualized yield 6.58% - -
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 $8.97 over
the past month, $9.09 over the past six months and $9.24 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
NOTE TO SHAREHOLDERS: On February 13, 1995, Charles Morrison (right photo)
became portfolio manager of Spartan Short-Term Income Fund. The following
is an interview with Donald Taylor - who managed the fund during most of
the period covered by this report - with some comments from Charlie
Morrison on changes in the fund, outlook and strategy:
Q. DON, HOW HAS THE FUND PERFORMED?
D.T. For the six and 12 months ended March 31, 1995, the fund had total
returns of -0.57% and -0.45%, respectively. During the same periods, the
average short-term investment grade bond fund returned 2.78% and 3.35%,
respectively, according to Lipper Analytical Services.
Q. WHAT ACCOUNTED FOR THE FUND'S SUB-PAR PERFORMANCE?
A. The fund's exposure to emerging market debt, especially in Mexico. I was
using diversification as a strategy to try to reduce risk and enhance
returns, because different market sectors or regions tend not to move in
tandem. Given low expectations for the U.S. bond market in early 1994, I
sought opportunities abroad in both developed and emerging markets.
Unfortunately, European bond markets declined in part because stronger than
expected growth fueled inflation fears, and the markets of many emerging
markets were hurt by rising rates in the U.S. The situation for the fund
worsened in December, when Mexico unexpectedly devalued the peso in an
attempt to shore up the dwindling foreign currency reserves of its central
bank.
Q. HOW DID THAT AFFECT THE FUND?
A. At the time of the devaluation, about 10% of the fund's assets was
invested in Mexico. The fund's net asset value dropped due to peso
devaluation as well as the declining market value of dollar-denominated
Mexican bonds.
Q. WHY WAS THE FUND INVESTED IN MEXICO?
A. Last year, our research indicated that the country's long-term prospects
were solid. More importantly, the Mexican government had made a commitment
to maintaining a stable peso. With that backdrop, it made sense to explore
opportunities in Mexico, in order to diversify the fund's investments so
that returns could be enhanced.
Q. DID YOU MAINTAIN THE FUND'S INVESTMENTS IN MEXICO AFTER THE DEVALUATION?
A. No. I sought to liquidate the fund's Mexican holdings as quickly as
possible. Unfortunately, I had to do that into the teeth of a very
difficult market. Nevertheless, the fund held no peso-denominated debt as
of February 1, 1995, and held less than 1% in dollar-denominated Mexican
debt at the end of the period.
Q. TURNING TO YOU, CHARLIE, WHAT CHANGES HAVE YOU MADE TO THE FUND?
C.M. I've been working to reduce the volatility of the fund. I've done
this in two ways. First, since I believe the current environment for
foreign bonds isn't attractive, I've dropped the fund's foreign positions
to under 1% of its investments. Second, I've reduced the fund's investments
in long-duration corporate positions. Duration is a measure of the average
time required to receive all cash flows - principal and interest - from a
bond. It is also a good indicator of how sensitive a bond is to movements
in interest rates. By cutting back on these investments, I hope to reduce
share price volatility.
Q. WHERE HAVE YOU FOUND OPPORTUNITIES?
A. Given the fact that short-term bonds across most sectors of the market
were relatively rich - or priced relatively high in light of their
historical levels - I began to position the fund somewhat defensively over
the period. I have been focused on upgrading the credit quality of the
fund, in addition to shortening the average maturity of its corporate bond
investments. However, I'm continuing to concentrate a large portion of the
fund's investments in corporate bonds, primarily in higher-quality finance
issues and asset-backed securities - bonds issued by creditors that are
backed by loans or credit payments. I believe these investments continue to
be supported by positive fundamentals - or factors relating to the fiscal
health of an issuer - and technicals - or market environment variables,
such as supply and demand.
Q. YOU'VE ALSO INVESTED IN SOME COMMERCIAL MORTGAGE-BACKED SECURITIES.
WHAT'S THEIR APPEAL?
A. The portfolio's investments in commercial mortgages consist primarily of
high quality - AA- or AAA-rated - well-structured securities that offer
incremental yield above most other alternatives in the short end of the
market. The commercial mortgage-backed market trades cheaply due to the
fact that it is a relatively new and under-followed market. There are few
firms that have committed the same resources as Fidelity to follow this
market, which offers me a tremendous opportunity to buy attractive
securities.
Q. HOW DO THESE INVESTMENTS FIT INTO THE PORTFOLIO?
A. I look at them as an alternative to investing in corporate bonds. Unlike
investments such as Ginnie Mae mortgage pass-throughs - securities issued
by the Government National Mortgage Association that are backed by the full
faith and credit of the U.S. government - these issues depend on the
underlying economic fundamentals of the businesses that are responsible for
supporting and retiring the mortgages on their properties. An important
benefit of commercial mortgage-backed securities versus corporate bonds is
that commercial mortgage-backed securities are secured obligations - they
are backed by real estate. Most corporate securities are unsecured
obligations. I have focused my efforts in the commercial mortgage-backed
market primarily on the highest quality, shortest duration securities. As I
have said, these offer attractive investment opportunities due to the fact
that the market is still relatively new and under-followed.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. I have positioned the fund relatively defensively, given my view that
many sectors of the market already reflect a great deal of positive news.
However, as I've said, there are opportunities to add value to the fund
through sector weighting and security selection. I'll continue to focus on
commercial mortgage-backed, asset-backed and very short corporate
securities. In addition, I am maintaining a neutral duration for the fund -
that is, matching the fund's benchmark index - given uncertainty over the
direction of interest rates, a result of conflicting economic statistics
and unclear Federal Reserve Board interest rate policy.
FUND FACTS
GOAL: high current income
with preservation of capital
by investing in
investment-grade debt
securities while maintaining
an average maturity of three
years or less
START DATE: October 1, 1992
SIZE: as of March 31, 1995,
more than $519 million
MANAGER: Donald Taylor,
1992 - February 1995;
Charles Morrison, starting
February 13, 1995; also
manages Fidelity Advisor
Short Fixed-Income Fund and
Fidelity Short-Term Bond
Fund, both since February
1995; Vice President of
Fidelity Management Trust
Company since 1992; joined
Fidelity in 1987
(checkmark)
CHARLIE MORRISON ON HIS
INVESTMENT APPROACH:
"My approach will center
around trying to provide
consistency and stability of
performance. I plan to focus
less on making active bets on
the direction of interest rates,
and more on looking for areas
where I think I can truly add
value. The way I'll do this is
fourfold: First, there is
security selection, looking at
corporate credit research,
issuer selection and mortgage
research. Second, I'll focus
on market sector rotation,
deciding when to focus more
of the fund's investments in
different sectors, such as
corporates or
mortgage-backed securities.
Yield curve positioning is
third. This strategy involves
focusing the fund's
investments on particular
parts of the maturity
spectrum. Finally, due to
short-term volatility in the
markets, from time to time
opportunities arise to buy or
sell securities that are
temporarily under-priced or
over-priced. I'll seek to take
advantage of this through
opportunistic trading.
"If I can focus on these
objectives, I hope to add
significant incremental value
to the fund. Adding
incremental value while
lowering risk and
volatility - that's the bottom
line of what I'm trying to do."
INVESTMENT CHANGES
QUALITY DIVERSIFICATION AS OF MARCH 31, 1995
(MOODY'S RATINGS) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS 6 MONTHS AGO
Aaa 37.8 17.7
Aa 1.1 1.7
A 19.5 13.6
Baa 22.8 22.4
Ba 9.5 8.6
B 0.0 0.0
Not Rated 7.0 10.0
TABLE EXCLUDES SHORT-TERM INVESTMENTS. SECURITIES RATED AS "BA" BY MOODY'S
WERE RATED INVESTMENT GRADE BY OTHER NATIONALLY RECOGNIZED RATING AGENCIES
OR ASSIGNED AN INVESTMENT GRADE RATING AT THE TIME OF ACQUISITION BY
FIDELITY.
AVERAGE YEARS TO MATURITY AS OF MARCH 31, 1995
6 MONTHS AGO
Years 2.5 2.6
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL THE PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF MARCH 31, 1995
6 MONTHS AGO
Years 1.7 1.4
DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A BOND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY, A
BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
ASSET ALLOCATION
AS OF MARCH 31, 1995* AS OF SEPTEMBER 30, 1994**
Row: 1, Col: 1, Value: 13.5
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 29.4
Row: 1, Col: 4, Value: 57.1
Corporate bonds 47.1%
U.S. government
and government
agency
obligations 11.2%
Foreign government
obligations 10.5%
Short-term and
other investments 31.2%
Corporate bonds 57.1%
U.S. government
and government
agency
obligations 29.4%
Foreign government
obligations 0.0%
Short-term and
other investments 13.5%
Row: 1, Col: 1, Value: 31.2
Row: 1, Col: 2, Value: 10.5
Row: 1, Col: 3, Value: 11.2
Row: 1, Col: 4, Value: 47.1
* FOREIGN INVESTMENTS - 0.6%
** FOREIGN INVESTMENTS - 19.7%
INVESTMENTS MARCH 31, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
NONCONVERTIBLE BONDS - 57.1%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
AEROSPACE & DEFENSE - 0.2%
SHIP BUILDING & REPAIR - 0.2%
Tennessee Gas Pipeline Co. 9 1/4%, 5/15/96 Baa2 $ 1,000 $ 1,021
BASIC INDUSTRIES - 0.6%
IRON & STEEL - 0.1%
Grupo Simec 8 7/8%, 12/15/98 (d) - 1,890 491
PAPER & FOREST PRODUCTS - 0.5%
Boise Cascade Corp. 9 5/8%, 7/15/98
(callable 1995) Baa3 770 773
Chesapeake Corp. 11 3/4%, 8/1/95 Baa3 1,150 1,170
Kimberly-Clark Corp. euro 9 3/4%, 6/15/95 Aa2 700 704
2,647
TOTAL BASIC INDUSTRIES 3,138
ENERGY - 2.2%
ENERGY SERVICES - 1.0%
McDermott International, Inc.
10 1/4%, 6/1/95 Baa3 4,987 5,012
OIL & GAS - 1.2%
BP Capital euro 0%, 6/20/95 A1 2,000 1,974
McDermott, Inc. 7.95%, 7/2/97 Baa3 4,500 4,481
6,455
TOTAL ENERGY 11,467
FINANCE - 35.8%
ASSET-BACKED SECURITIES - 10.6%
Caterpillar Financial Asset Trust
6.65%, 6/25/00 A2 2,038 2,013
Chase Manhattan Credit Card Master Trust,
Series 1991-1, 8 3/4%, 8/15/99 Aaa 2,000 2,036
Concord Leasing, Inc. 5.04%, 7/15/98 (d) AAA 3,166 3,105
Discover Card Master Trust I 6.90%, 2/16/00 A2 1,900 1,875
Discover Card Trust 6 1/8%, 5/15/98 A2 3,300 3,255
Ford Credit Auto Loan Master Trust
5 5/8%, 10/15/95 Aaa 700 696
Ford Credit Grantor Trust 6 1/2%, 11/15/96 Aaa 380 380
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
FINANCE - CONTINUED
ASSET-BACKED SECURITIES - CONTINUED
General Motors Acceptance Corp. Grantor Trust
1995-A, 7.15%, 3/15/00 Aaa $ 6,180 $ 6,180
Midlantic Grantor Trust, Series 1992-1
Class B, 5.15%, 9/15/97 A1 23 23
Premier Auto Trust:
1992-5, 4.90%, 12/15/95 Aa3 1,460 1,432
1993-3, 4.90%, 12/15/98 Aaa 5,950 5,803
6.85%, 10/4/97 Aaa 5,500 5,448
8.05%, 4/4/00 Aaa 4,500 4,624
Standard Credit Card Master Trust:
5 7/8%, 7/7/96 Aaa 300 300
4.85%, 3/7/99 A2 5,000 4,768
Standard Credit Card Master Trust I:
participation certificate 9%, 8/7/97 A2 5,000 5,116
8 1/4%, 10/7/97 A2 5,400 5,482
1995-4B, 7.65%, 2/15/00 A2 680 683
United Federal Savings Bank Grantor Trust:
1994-B, 6.975%, 7/10/00 Baa2 853 843
7.275%, 11/10/00 Baa2 783 777
Union Federal Savings 1994-D, 8.20%,
1/10/01 Baa2 665 668
55,507
BANKS - 14.1%
Bancomer SA 9%, 6/1/00 (d) Ba2 2,500 1,488
Bank of Boston Corp.:
9 1/2%, 8/15/97 Baa2 825 860
10.30%, 9/1/00 Baa2 1,040 1,056
Baybanks, Inc. 6 3/8%, 9/30/97 (c) Baa2 4,670 4,629
Citicorp:
euro 5.6875%, 7/10/97 (c) A3 5,100 5,068
9 1/8, 8/15/95 A2 1,250 1,260
5.70%, 2/12/96 A2 2,000 1,980
9.47%, 5/22/96 A2 250 257
Citicorp Person to Person, Inc. 6.4375%,
1/30/97 (c) A3 4,300 4,268
First Bank Systems, Inc. euro 6.3125%,
11/29/96 (c) A3 10,350 10,344
First Fidelity Bancorporation 9 3/4%, 5/25/95 A3 300 301
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
FINANCE - CONTINUED
BANKS - CONTINUED
First Tennessee National Corp.
7 3/8%, 12/1/97 - $ 536 $ 536
KeyCorp.:
8.55%, 5/30/95 A1 300 301
7.10%, 3/28/97 A1 1,180 1,177
Manufacturers Hanover Trust, NY euro 6 5/8%,
7/15/97 (c) A3 8,950 8,950
Marine Midland Banks, Inc.:
euro 6 3/8%, 9/27/96 (c) Baa1 7,720 7,697
8 5/8%, 3/1/97 Baa1 1,285 1,308
Mellon Financial Co.:
6 1/8%, 11/15/95 A2 1,000 996
6 1/2%, 12/1/97 A2 600 588
Meridian Bancorp, Inc. 6 3/8%,
12/1/96 (c) Baa1 1,575 1,568
Shawmut Bank of Boston, NA euro 6 5/8%,
2/24/97 (c) Baa2 5,250 5,237
Signet Banking Corp.:
6.4375%, 5/15/97 (c) Baa2 3,870 3,807
6.4375%, 4/15/98 (c) Baa2 5,800 5,691
Sovran Financial Corp. 9 3/4%, 6/15/99 A3 200 214
Valley National Corp. 11 3/4%, 4/15/95 Aa3 220 220
Wells Fargo and Company euro 6 1/8%,
4/28/00 (c) A3 3,500 3,434
73,235
CREDIT & OTHER FINANCE - 8.8%
Associates Corp. of North America:
6% 12/1/95 Ba3 1,000 995
6 7/8%, 1/15/97 Ba3 380 378
Beneficial Corp. 9.40%, 2/7/96 A2 200 204
Caterpillar Financial Services Corp.
7.14%, 4/10/95 A3 500 500
Chrysler Financial Corp.:
euro 9 1/2%, 4/12/96 BBB+ 520 530
6.40%, 6/17/97 A3 3,000 2,942
10.34%, 5/15/08 A3 6,550 6,764
First Union Corp. 6 3/4%, 1/15/98 A2 500 490
Fleet Financial Group, Inc.:
5 5/8%, 7/1/95 A2 200 200
7 7/8%, 7/19/96 A2 1,900 1,920
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
General Motors Acceptance Corp.:
9.45%, 5/15/95 Baa1 $ 1,675 $ 1,680
9.40%, 5/18/95 Baa1 100 100
9.45%, 5/18/95 Baa1 300 301
6.10%, 7/3/95 Baa1 3,000 2,996
7.90%, 9/15/95 Baa1 2,300 2,310
8.95%, 2/5/96 Baa1 1,200 1,218
7 7/8%, 2/27/97 Baa1 1,850 1,865
7.90%, 3/12/97 Baa1 3,030 3,055
Greyhound Finacial Corp.:
5 3/4%, 7/28/95 Baa2 1,500 1,495
6.94%, 1/28/98 Baa2 2,500 2,452
Household Financial Corp. 7 5/8%, 12/15/96 A2 300 302
Society Corporation 8 7/8%, 5/15/96 A1 200 203
Tenneco Credit Corp. 9%,7/15/ 95 Baa2 1,361 1,370
Third Mexican Acceptance Corp. coll. notes
gtd. by Grupo Sidek SA and Grupo
Situr SA 10 1/2%, 3/15/98 (d) - 3,000 900
Westinghouse Credit Corp.:
9.15%, 7/12/95 Ba1 1,135 1,140
9.15%, 7/13/95 Ba1 100 100
8 7/8%, 8/1/95 Ba1 5,400 5,427
9.13%, 8/1/95 Ba1 1,500 1,508
5.92%, 9/11/95 Ba1 250 248
8.79%, 5/22/96 Ba1 1,000 1,011
8 3/4%, 6/5/96 Ba1 600 607
8.84%, 10/21/96 Ba1 500 507
45,718
INSURANCE - 0.2%
ITT Hartford Group, Inc. 7 1/4%, 12/1/96 A1 1,175 1,172
SAVINGS & LOANS - 2.1%
Golden West Financial Corp.:
10 1/4%, 5/15/97 A3 100 105
8 5/8%, 8/30/98 A3 100 103
Great Western Bank 10 1/4%, 6/15/20 A3 550 595
Home Savings of America 10 1/2%, 6/12/97 A3 6,870 7,080
World Savings & Loan 5 1/4%, 2/15/96 A3 3,000 2,967
10,850
TOTAL FINANCE 186,482
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
HEALTH - 0.4%
MEDICAL EQUIPMENT & SUPPLIES - 0.4%
Cardinal Health, Inc. 8%, 3/1/97 Baa1 $ 2,000 $ 2,014
INDUSTRIAL MACHINERY & EQUIPMENT - 0.5%
ELECTRICAL EQUIPMENT - 0.3%
Westinghouse Electric Corp.:
7 3/4%, 4/15/96 Ba1 1,000 1,001
9.14%, 1/15/98 Ba1 700 715
1,716
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Tenneco Corp. gtd. 11%, 11/15/95 Baa2 1,000 1,021
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 2,737
MEDIA & LEISURE - 4.7%
BROADCASTING - 3.3%
Time Warner, Inc. 6.05%, 7/1/95 (d) Ba1 17,500 17,453
LEISURE DURABLES & TOYS - 0.4%
Brunswick Corp. 8 1/8%, 4/1/97 Baa1 200 200
Mattel, Inc. 6 7/8%, 8/1/97 Baa1 2,000 1,964
2,164
PUBLISHING - 1.0%
News America Holdings, Inc.
12%, 12/15/01 Ba1 4,430 4,975
TOTAL MEDIA & LEISURE 24,592
NONDURABLES - 1.3%
TOBACCO - 1.3%
Philip Morris Companies, Inc.
9.80%, 12/15/98 A2 2,050 2,091
RJR Nabisco, Inc. 9 1/4%, 5/1/95 Baa3 4,635 4,641
6,732
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
RETAIL & WHOLESALE - 1.1%
GENERAL MERCHANDISE STORES - 0.9%
Sears Roebuck & Co.:
9.41%, 4/3/96 A2 $ 1,400 $ 1,432
8.55%, 8/1/96 A2 1,500 1,525
8.95%, 11/27/96 A2 210 216
9.22%, 1/30/97 A2 1,450 1,499
7.30%, 6/12/97 A2 210 209
4,881
GROCERY STORES - 0.2%
Supervalu, Inc. 5 7/8%, 11/15/95 A3 650 647
TOTAL RETAIL & WHOLESALE 5,528
SERVICES - 0.3%
ADVERTISING - 0.3%
Valassis Inserts, Inc. 9 3/8%, 3/15/99 Ba2 1,100 1,116
LEASING & RENTAL - 0.0%
Hertz Corp. 8%, 4/1/95 - 200 200
TOTAL Services 1,316
TECHNOLOGY - 2.3%
COMPUTERS & OFFICE EQUIPMENT - 2.3%
Comdisco, Inc.:
8.95%, 5/15/95 Baa2 5,510 5,521
9 3/4%, 1/15/97 Baa2 2,300 2,379
7 3/4%, 1/29/97 Baa2 2,000 2,005
7.73%, 2/18/97 Baa2 2,100 2,105
12,010
TRANSPORTATION - 1.3%
AIR TRANSPORTATION - 1.0%
AMR Corp.:
7 3/4%, 12/1/97 Baa3 2,000 1,989
9 1/2%, 7/15/98 Baa3 3,100 3,230
5,219
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
TRANSPORTATION - CONTINUED
TRUCKING & FREIGHT - 0.3%
Federal Express Corp. 9 3/4%, 5/15/96 Baa2 $ 1,475 $ 1,514
TOTAL TRANSPORTATION 6,733
UTILITIES - 6.4%
ELECTRIC UTILITY - 3.2%
Commonwealth Edison Co. 1st mtg.,
6 1/8%, 5/15/92 Baa2 1,300 1,299
Gulf States Utilities Co. 9.72%, 7/1/98 Baa3 4,140 4,267
Long Island Lighting Co.:
8 3/4%, 5/1/96 Baa2 3,000 3,041
7.30%, 7/15/99 Ba1 1,985 1,859
Public Service Co. of New Hampshire 1st mtg.,
9.17%, 5/15/98 Baa3 6,175 6,360
16,826
GAS - 3.2%
ARKLA, Inc.:
9.45%, 10/15/95 Ba2 7,120 7,191
9 7/8%, 4/15/97 Ba2 2,920 3,002
Florida Gas 7 3/4%, 11/1/97 (d) Baa2 1,560 1,568
Houston Natural Gas Corp.
12 1/8%, 4/15/95 Baa2 1,000 1,001
Panhandle Eastern Pipe Line Co.
9 7/8%, 10/15/96 Baa2 3,439 3,501
Transcontinental Gas Pipe Line Corp.
9%, 11/15/96 Baa1 510 523
16,786
TOTAL UTILITIES 33,612
TOTAL NONCONVERTIBLE BONDS
(Cost $310,745) 297,382
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 29.4%
U.S. TREASURY OBLIGATIONS - 23.0%
5 1/8%, 3/31/98 Aaa 27,470 26,144
6 3/4%, 6/30/99 Aaa 94,940 93,827
119,971
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
U.S. GOVERNMENT AGENCY OBLIGATIONS - 6.4%
Federal Home Loan Bank 7.59%, 12/23/96 Aaa $ 3,040 $ 3,072
Federal Home Loan Mortgage Corp.
5.60%, 3/1/99 Aaa 1,450 1,359
Federal National Mortgage Association:
5.19%, 7/20/98 Aaa 16,650 15,641
5.30%, 8/25/98 Aaa 3,800 3,578
4.70%, 9/10/98 Aaa 2,250 2,075
4.94%, 10/30/98 Aaa 2,120 1,966
Government Trust Certificates current coupon
certificates Class 1-C 9 1/4%, 11/15/01 Aaa 650 691
State of Israel (guaranteed by U.S. Government
through Agency for International Development):
5 1/4%, 3/15/98 Aaa 800 760
4 7/8%, 9/15/98 Aaa 1,790 1,664
6%, 2/15/99 Aaa 400 384
7 3/4%, 11/15/99 Aaa 605 614
Tennessee Valley Authority
8 1/4%, 11/15/1996 Aaa 1,280 1,305
33,109
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $151,494) 153,080
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.3%
PRIVATE SPONSOR - 0.3%
General Electric Capital Mortgage Services, Inc.
planned amortization class series 1993-18
Class A-5, 6%, 2/25/02 (Cost $1,477) AAA 1,500 1,478
COMMERCIAL MORTGAGE SECURITIES - 9.6%
CS First Boston Mortgage Securities Corp.
commercial floater Series 1994-CFB1
Class A-1, 6 5/8%, 1/25/28 (c) Aaa 4,226 4,221
FDIC:
commercial Series 1994-C1 Class II-A1,
6.30%, 9/25/25 Aaa 1,033 1,030
commercial Series 1994-C1 Class II-A2,
7.85%, 9/25/25 - 9,900 9,932
Lennar Central Partner LP commercial floater
Series 1994-1 Class B, 7 1/8%,
9/15/01 (c)(d) - 4,930 4,930
COMMERCIAL MORTGAGE SECURITIES - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
Nomura Asset Securities Corp. commercial
floater Series 1994-MD-II Class A-6,
5.765%, 7/4/03 (c) - $ 1,532 $ 1,527
Resolution Trust Corp.:
commercial floater Series 1992-C3 Class A-2,
6.975%, 8/25/23 (c) Aa2 1,145 1,146
commercial floater Series 1993-C2 Class A-2,
5.6825%, 3/25/25 (c) AAA 9,224 9,294
commercial floater Series 1994-C1 Class A-3,
5.6125%, 6/25/26 (c) AAA 3,106 3,095
commercial Series 1994-C1 Class A-4,
7 1/4%, 6/25/26 AAA 1,382 1,375
commercial Series 1994-C2 Class A-2,
7 3/4%, 4/25/25 AAA 692 691
commercial Series 1994-C2 Class A-4,
7 1/2%, 4/25/25 AAA 1,297 1,292
commercial Series 1994-C2 Class E,
8%, 4/25/25 BB 3,356 2,886
commercial Series 1994-N2 Class 3,
7 1/2%, 12/15/04 (d) Baa2 3,000 2,985
SC Finance Corp. commercial floater
6.05%, 8/1/04 (c)(d) - 4,300 4,268
Structured Asset Securities Corp. commercial
Series 1993-C1 Class A-1, 6.60%,
10/25/24 AA+ 1,659 1,602
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $50,096) 50,274
SUPRANATIONAL OBLIGATIONS - 0.1%
African Development Bank:
9 1/2%, 12/15/95 Aa1 500 509
6 3/4%, 7/30/99 Aa1 200 194
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost $755) 703
MUNICIPAL SECURITIES - 1.4%
Louisiana Pub. Facs. Auth. Rev. 9.95%, 6/1/96 A3 3,955 4,077
Shreveport Louisiana Water & Sewer Rev., taxable
refunding 0%, 12/1/96 Aaa 3,500 3,115
TOTAL MUNICIPAL SECURITIES
(Cost $7,559) 7,192
REPURCHASE AGREEMENTS - 2.1%
MATURITY VALUE (NOTE 1)
AMOUNT (000S)
(000S)
Investments in repurchase agreements (U.S. Treasury
obligations) in a joint trading account at
6.20%, dated 3/31/95 due 4/3/95 $ 11,119 11,113
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $533,239) $ 521,222
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATES VALUE GAIN/(LOSS)
CONTRACTS TO BUY
2,413 AUD 6/6/95 $ 1,768 $ (47)
412 DEM 6/6/95 300 33
336 GBP 6/5/95 377 11
127,873 JPY 6/6/95 1,489 177
TOTAL CONTRACTS TO BUY
(Payable amount $3,760) $ 3,934 174
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.8%
CONTRACTS TO SELL
2,413 AUD 6/6/95 1,768 67
411 DEM 6/5/95 300 (37)
336 GBP 6/6/95 377 (14)
127,873 JPY 6/5/95 1,489 (180)
TOTAL CONTRACTS TO SELL
(Receivable amount $3,770) $ 3,934 (164)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.8%
$ 10
CURRENCY ABBREVIATIONS
AUD - Australian dollar
DEM - German deutsche mark
GBP - British pound
JPY - Japanese yen
LEGEND
(u) Principal amount is stated in United States dollars unless otherwise
noted.
(v) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(w) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(x) 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 $37,188,000 or 7.2% of net
assets.
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 58.4% AAA, AA, A 56.4%
Baa 22.8% BBB 26.6%
Ba 9.5% BB 8.1%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 2.4%.
INCOME TAX INFORMATION
At March 31, 1995, the aggregate cost of investment securities for income
tax purposes was $533,239,000. Net unrealized depreciation aggregated
$12,017,000, of which $2,479,000 related to appreciated investment
securities and $14,496,000 related to depreciated investment securities.
The fund has elected to defer to its fiscal year ending September 30, 1995
$32,239,000 of losses recognized during the period November 1, 1993 to
September 30, 1994.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
(EXCEPT PER SHARE AMOUNTS) MARCH 31, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 521,222
agreements of $11,113) (cost $533,239) - See
accompanying schedule
Cash 19
Receivable for investments sold 581
Unrealized appreciation on foreign currency contracts 289
Receivable for closed foreign currency contracts 1
Interest receivable 8,067
TOTAL ASSETS 530,179
LIABILITIES
Payable for investments purchased $ 8,871
Unrealized depreciation on foreign currency contracts 279
Payable for fund shares redeemed 651
Dividends payable 546
Accrued management fee 288
TOTAL LIABILITIES 10,635
NET ASSETS $ 519,544
Net Assets consist of:
Paid in capital $ 617,549
Distributions in excess of net investment income (3,800)
Accumulated undistributed net realized gain (loss) on (82,198)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on (12,007)
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 57,880 shares outstanding $ 519,544
NET ASSET VALUE, offering price and redemption price per $8.98
share ($519,544 (divided by) 57,880 shares)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED MARCH 31, 1995 (UNAUDITED)
INVESTMENT INCOME 23,141
Interest
EXPENSES
Management fee $ 2,083
Non-interested trustees' compensation 1
TOTAL EXPENSES 2,084
NET INVESTMENT INCOME 21,057
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (51,076)
Foreign currency transactions 1,673 (49,403)
Change in net unrealized appreciation (depreciation) on:
Investment securities 22,175
Assets and liabilities in foreign currencies (151) 22,024
NET GAIN (LOSS) (27,379)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (6,322)
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
MARCH 31, 1995 1994
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 21,057 $ 78,910
Net investment income
Net realized gain (loss) (49,403) (49,883)
Change in net unrealized appreciation (depreciation) 22,024 (38,516)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (6,322) (9,489)
FROM OPERATIONS
Distributions to shareholders: (20,828) (60,742)
From net investment income
In excess of net investment income - (4,289)
In excess of net realized gain - (1,628)
Return of capital - (13,958)
TOTAL DISTRIBUTIONS (20,828) (80,617)
Share transactions 84,927 1,136,168
Net proceeds from sales of shares
Reinvestment of distributions 16,805 69,186
Cost of shares redeemed (353,491) (1,787,990)
Net increase (decrease) in net assets resulting from (251,759) (582,636)
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS (278,909) (672,742)
NET ASSETS
Beginning of period 798,453 1,471,195
End of period (including distributions in excess of net $ 519,544 $ 798,453
investment income of $(3,800) and $(4,029),
respectively)
OTHER INFORMATION
Shares
Sold 9,294 115,378
Issued in reinvestment of distributions 1,854 7,117
Redeemed (38,867) (184,224)
Net increase (decrease) (27,719) (61,729)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SIX MONTHS YEAR ENDED OCTOBER 1, 1992
ENDED MARCH SEPTEMBER 30, (COMMENCEMENT
31, 1995 OF
OPERATIONS) TO
SEPTEMBER 30,
(UNAUDITED) 1994 1993
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.330 $ 9.990 $ 10.000
Income from Investment Operations .278 .574 .747
Net investment income
Net realized and unrealized gain (loss) (.331) (.604) (.009)
Total from investment operations (.053) (.030) .738
Less Distributions (.297) (.477) (.747)
From net investment income
In excess of net investment income - (.033) (.001)
In excess of net realized gain on - (.010) -
investments
Return of capital - (.110) -
Total distributions (.297) (.630) (.748)
Net asset value, end of period $ 8.980 $ 9.330 $ 9.990
TOTAL RETURN B, C (.55)% (.32)% 7.69%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 520 $ 798 $ 1,471
Ratio of expenses to average net assets .65% A .54% .20%
Ratio of expenses to average net assets .65% A .65% .65%
before expense reductions
Ratio of net investment income to 6.58% A 6.42% 7.32%
average net assets
Portfolio turnover rate 131% A 97% 112%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
For the period ended March 31, 1995 (Unaudited)
9. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Short-Term Income Fund (the fund) is a fund of Fidelity Charles
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 are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days of their purchase date are valued either at
amortized cost or original cost plus accrued interest, both of which
approximate current value. 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.
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.
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 on investments, if any, are
recorded on the ex-dividend date.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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, 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 net investment income per share. Distributions in excess of net
investment income and accumulated undistributed net realized gain (loss) on
investments and foreign currency transactions may include temporary book
and tax basis differences that will reverse in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed in the
following year.
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.
10. 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. These contracts involve market risk in
excess of the unrealized gain or loss reflected in the fund's Statement of
Assets and Liabilities. The U.S. dollar value of the currencies the fund
has committed to buy or sell is shown in the schedule of investments under
the caption "Forward Foreign Currency Contracts." This amount represents
the aggregate exposure to each currency the fund has acquired or hedged
through currency contracts at period end. 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. Contracts that have been offset with different
counterparties are reflected as both a contract to buy and a contract to
sell in the schedule of investments under the caption "Forward Foreign
Currency Contracts."
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
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
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.
11. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $337,094,000 and $348,725,000, respectively, of which U.S.
government and government agency obligations aggregated $280,922,000 and
$232,599,000, respectively.
12. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR pays all expenses,
except the compensation of the non-interested Trustees and certain
exceptions such as interest, taxes, brokerage commissions and extraordinary
expenses. FMR receives a fee that is computed daily at an annual rate of
.65% of the fund's average net assets.
FMR also bears the cost of providing shareholder services to the fund. To
offset the cost of providing these services, FMR or its affiliates collect
certain transaction fees from the fund's shareholders which amounted to
$19,000 for the period.
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)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(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)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(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.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the
Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
1903 East Ninth Street
Cleveland, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
2701 Drexel Drive
Houston, TX
1010 Lamar Street
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
215 South State Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
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
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
* INDEPENDENT TRUSTEES
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 Income
Spartan(registered trademark) Ginnie Mae
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 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 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
AUTOMATED LINES FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)SPARTAN(registered trademark)
INVESTMENT GRADE BOND
FUND
SEMIANNUAL REPORT
MARCH 31, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 20 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 24 Notes to the financial statements.
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 a few 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 bonds
that have grown in value), and the effect of the $5 account closeout fee.
You can also look at the fund's income to measure performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MARCH 31, 1995 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Spartan Investment Grade Bond 6.07% 4.51% 16.88%
Lehman Brothers Corporate Bond Index 6.38% 5.47% 14.35%
Average Corporate BBB-Rated Bond 4.66% 3.36% n/a
Fund
Consumer Price Index 1.34% 2.85% 7.15%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year or since the fund
began on October 1, 1992. 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
Lehman Brothers Corporate Bond Index - a broad measure of corporate bond
performance. To measure how the fund's performance stacked up against its
peers, you can compare it to the average corporate BBB-rated bond fund,
which reflects the performance of 82 funds with similar objectives tracked
by Lipper Analytical Services over the past six months. Both benchmarks
include reinvested dividends and capital gains, if any. Comparing the
fund's performance to the consumer price index helps show how your fund did
compared to inflation. (The CPI returns begin on the month end closest to
the fund's start date.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MARCH 31, 1995 PAST 1 LIFE OF
YEAR FUND
Spartan Investment Grade Bond 4.51% 6.44%
Lehman Brothers Corporate Bond Index 5.47% 5.51%
Average Corporate BBB-Rated Bond Fund 3.36% n/a
Consumer Price Index 2.85% 2.80%
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 LIFE OF FUND
Spartan Investment-GCorporate Bond Index
10/01/92 10000.00 10000.00
10/31/92 9812.22 9822.11
11/30/92 9910.57 9837.80
12/31/92 10141.51 10019.37
01/31/93 10397.72 10252.82
02/28/93 10729.65 10488.19
03/31/93 10789.99 10524.86
04/30/93 10830.04 10605.88
05/31/93 10871.84 10618.37
06/30/93 11226.71 10876.15
07/31/93 11392.80 10954.93
08/31/93 11782.45 11227.28
09/30/93 11816.74 11254.02
10/31/93 11913.99 11310.70
11/30/93 11705.43 11171.88
12/31/93 11740.03 11237.53
01/31/94 11984.81 11455.61
02/28/94 11571.42 11185.17
03/31/94 11183.64 10841.89
04/30/94 11070.37 10737.49
05/31/94 11000.04 10697.94
06/30/94 10994.07 10671.68
07/31/94 11184.71 10941.16
08/31/94 11183.63 10953.49
09/30/94 11019.15 10749.34
10/31/94 10995.79 10724.68
11/30/94 11028.09 10707.07
12/31/94 11132.80 10795.61
01/31/95 11333.43 11024.58
02/28/95 11549.38 11342.41
03/31/95 11689.79 11434.79
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
Investment Grade Bond Fund on October 1, 1992, when the fund started. As
the chart shows, by March 31, 1995, the value of your investment would have
grown to $11,690 - a 16.90% increase on your initial investment. This
assumes you still owned the fund on March 31, 1995 and therefore does not
include the effect of the $5 account closeout fee. For comparison, look at
how the Lehman Brothers Corporate Bond Index did over the same period. With
dividends reinvested, the same $10,000 investment would have grown to
$11,435 - a 14.35% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, move in the
opposite direction of interest
rates. In turn, the share price,
return, and yield of a fund
that invests in bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
SIX OCTOBER 1, 1992
MONTHS (COMMENCEMENT OF
ENDED YEAR ENDED OPERATIONS) TO
MARCH 31, SEPTEMBER 30, 1994 SEPTEMBER 30, 1993
1995
Dividend return 3.76% 6.24% 8.77%
Capital appreciation return 2.31% -13.01% 9.37%
Total return 6.07% -6.77% 18.14%
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. Capital appreciation and total returns include the effect of
the $5 account closeout fee.
DIVIDENDS AND YIELD
PERIODS ENDED MARCH 31, 1995 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 5.72(cents) 34.44(cents) 68.91(cents)
Annualized dividend rate 6.96% 7.28% 7.18%
30-day annualized yield 7.13% - -
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 $9.68 over
the past month, $9.49 over the past six months and $9.60 over the past
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis.
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Michael Gray, Portfolio Manager of Spartan Investment
Grade Bond Fund
Q. MICHAEL, HOW DID THE FUND PERFORM?
A. It has done very well. For the six and 12 months ended March 31, 1995,
the fund had total returns of 6.07% and 4.51%, respectively. During the
same periods, the average BBB-rated corporate bond fund returned 4.66% and
3.36%, respectively, according to Lipper Analytical Services.
Q. HOW WOULD YOU CHARACTERIZE THE BOND MARKET OF THE PAST FEW MONTHS?
A. The market environment has been one of transition. The bear market that
we saw through much of 1994 - in which interest rates had been rising
sharply - tailed off at the beginning of November. Since then, the market
has rallied. The reason for this turnaround was the perception that Federal
Reserve Board interest rate increases were beginning to slow down the
economy. Growth seemed to have peaked in the fourth quarter of 1994, and it
appeared inflation had remained under control. The combination of moderate
growth and low inflation is a good formula for bonds. Consequently, the
bond market has been stronger.
Q. WHAT HELPED THE FUND PERFORM BETTER THAN THE LIPPER AVERAGE?
A. I attribute the fund's performance to two factors. First, the fund's
duration - a measure of its sensitivity to interest rates - was longer than
that of the average fund. That means the value of the fund's bonds
increased more than those of its peers, because longer-term interest rates
fell over the past six months. Second, the fund had a fairly heavy
concentration in long-term corporate bonds, and they have performed quite
well.
Q. YET YOU'VE REDUCED THE FUND'S INVESTMENTS IN CORPORATE BONDS . . .
A. Yes, I've been taking advantage of the strength in the corporate market
by swapping corporate bonds for Treasury bonds. During the period,
corporate bonds offered a yield advantage - also called a yield spread - to
Treasuries with similar maturities. As the spread narrowed, corporate bond
prices rose and thus became attractive sell candidates. Corporate bonds
have had a good run, but the feeling is that the best is behind us for the
near future. The ability for spreads to tighten further seems small. I plan
to be ready to purchase more corporate bonds if yield spreads start to
widen again, which could result from a wave of new issues, weakness in the
economy or a shift by investors to another asset class.
Q. WHAT'S BEEN BEHIND THE FUND'S HIGH CASH AND SHORT-TERM INVESTMENT
POSITION?
A. I've kept the fund's cash and short-term investment position fairly high
as part of a strategy called barbelling - focusing most of the fund's
investments at opposite ends of the maturity spectrum, in this case in cash
and longer-term securities. Although the fund usually focuses on medium-
and long-term bonds, I followed this strategy because I believed that the
Fed would increase short-term interest rates significantly. I felt this
action probably would hurt short- and intermediate-term securities more
than others. In fact, there was a flattening of the yield curve - or a
narrowing of the difference between short- and long-term interest rates -
from the beginning of the period until December. That is, shorter rates
rose while longer rates did not, hurting the performance of bonds on the
shorter end of the maturity spectrum. As a result, for the first three
months of the period the barbell worked well. However, since then, the
curve has steepened again, with short rates falling more than long rates.
The fund would have added even more value over the past three months by
being less barbelled.
Q. DO YOU STILL FEEL THERE IS A POSSIBILITY THE FED WILL RAISE INTEREST
RATES AGAIN?
A. Yes, I do feel there is a possibility. There are some indications that
the economic slowdown will be short-lived. First, personal income growth
was strong in the first quarter, but consumption was weak. Therefore,
consumers have been saving and will have more money to spend. Second, the
government has been slow in making tax refunds. When people get their
refund checks in March and April, there could be a boost in consumption.
Finally, over the past several years a pattern has emerged where growth
drops off in the first quarter, then accelerates through the rest of the
year.
Q. ARE THERE FACTORS IN ADDITION TO THE STRENGTH OF THE ECONOMY THAT MIGHT
INDICATE FURTHER FED ACTIONS?
A. Yes. The dollar has been very weak, although it has appreciated versus
the currency of two of our largest trading partners, Canada and Mexico.
Nonetheless, the dollar has weakened significantly versus the rest of the
industrialized world, and this could create problems for the U.S. economy
for two reasons. First, import prices will be higher, which could stimulate
inflation. Second, the Fed has indicated it is concerned about the dollar
and what impact its weakness might have on the long-term sustained growth
of the economy, and therefore may raise short-term interest rates in order
to bolster it. In addition, inflationary pressures have bubbled under the
surface, as we've seen some strength in commodity prices - such as oil
prices - and an increase in the price of gold. Added together, these are
all reasons the Fed might raise interest rates again.
Q. SO, HOW WOULD YOU SUMMARIZE YOUR OUTLOOK?
A. I think that the economy is going to strengthen a little bit over the
remainder of the year. That, coupled with a weak dollar, might put further
pressure on the Fed to consider another interest rate hike. Re-acceleration
of growth may cause inflation fears to pick up again. The Fed may want to
do something to quell those fears and to try to make sure that inflation
doesn't actually rise. I think that we'll have a pick-up in the economy,
some resurgence in inflationary pressures and further Fed interest rate
increases to keep everything in check. As a result, I intend to keep the
fund in a barbell, because the structure can help insulate it from the
negative effects of rising short- and intermediate-term interest rates.
Also, I anticipate working to shorten the fund's duration in order to
reduce risk.
FUND FACTS
GOAL: high current income
by investing mainly in
investment grade corporate
debt securities, with a focus
on medium- and long-term
bonds
START DATE: October 1, 1992
SIZE: as of March 31, 1995,
more than $136 million
MANAGER: Michael Gray,
since 1992; manager Fidelity
Investment Grade Bond,
Fidelity Intermediate Bond,
and Fidelity Advisor Limited
Term Bond funds, since
1987; joined Fidelity in 1982
(checkmark)
MICHAEL GRAY ON THE RECENT
STRENGTHS OF CORPORATE BONDS:
"The corporate bond market
has been strong over the past
six months for two reasons.
The first is that overall credit
quality has improved. The
growth in the economy has
helped companies post strong
earnings. In addition,
companies engaged in a fair
amount of cost cutting in the
early '90s, which has really
helped their balance sheets
through this recovery. They
also took advantage of low
interest rates in 1993,
refinancing high-cost debt
with low-cost debt.
"At the same time, a second
factor has helped. There's
been a very limited supply of
new corporate issues. That's
because strong earnings
have made it less necessary
for companies to issue debt in
order to finance capital
improvements or for other
reasons. In 1994, new
corporate issuance was about
25% of what it had been in
1993. With limited supply,
strong demand and improved
credit, it has been a very
favorable environment for
corporate bonds."
(solid bullet) As of March 31, 1995,
corporate bonds made up
61.9% of the fund's
investments, while U.S.
government and agency
issues made up 19.5%. Six
months ago, corporate issues
made up 73.5% of the fund,
while U.S. government and
agency issues made up
13.1%.
INVESTMENT CHANGES
QUALITY DIVERSIFICATION AS OF MARCH 31, 1995
(MOODY'S RATINGS) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
6 MONTHS AGO
Aaa 19.5 13.1
Aa 6.6 5.3
A 21.5 29.7
Baa 29.3 34.1
Ba 5.1 5.4
Non-rated 0.2 --
COUPON DISTRIBUTION SHOWS THE RANGE OF STATED INTEREST RATES ON THE FUND'S
INVESTMENTS, EXCLUDING REPURCHASE AGREEMENTS.
AVERAGE YEARS TO MATURITY AS OF MARCH 31, 1995
6 MONTHS AGO
Years 16.4 17.9
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF MARCH 31, 1995
6 MONTHS AGO
Years 5.8 5.5
DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
ASSET ALLOCATION
AS OF MARCH 31, 1995* AS OF SEPTEMBER 30, 1994**
Row: 1, Col: 1, Value: 17.8
Row: 1, Col: 2, Value: 1.0
Row: 1, Col: 3, Value: 19.5
Row: 1, Col: 4, Value: 61.9
Corporate bonds 73.5%
U.S. government
and agency
obligations 13.1%
Foreign government
obligations 1.0%
Short-term and
other investments 12.4%
TOTAL FOREIGN
INVESTMENTS 4.1%
Corporate bonds 61.9%
U.S. government
and agency
obligations 19.5%
Foreign government
obligations 0.8%
Short-term and
other investments 17.8%
TOTAL FOREIGN
INVESTMENTS 3.4%
Row: 1, Col: 1, Value: 12.4
Row: 1, Col: 2, Value: 1.2
Row: 1, Col: 3, Value: 13.1
Row: 1, Col: 4, Value: 73.5
*
**
INVESTMENTS MARCH 31, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
NONCONVERTIBLE BONDS - 61.9%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
AEROSPACE & DEFENSE - 1.0%
DEFENSE ELECTRONICS - 1.0%
Loral Corp.:
8 3/8%, 1/15/23 Baa2 $ 400,000 $ 389,036
8 3/8%, 6/15/24 Baa2 1,000,000 972,290
TOTAL AEROSPACE & DEFENSE 1,361,326
BASIC INDUSTRIES - 7.6%
CHEMICALS & PLASTICS - 1.0%
du Pont (E.I.) de Nemours & Co.
7.95%, 1/15/23 Aa2 500,000 485,525
Witco Corp. 7 3/4%, 4/1/23 A3 1,000,000 924,700
1,410,225
PACKAGING & CONTAINERS - 0.7%
Crown Cork & Seal, Inc., 8%, 4/15/23 Baa1 1,000,000 943,630
PAPER & FOREST PRODUCTS - 5.9%
Boise Cascade Corp. 9.875%, 2/15/01 Baa3 1,000,000 1,053,750
Georgia Pacific Corp.:
9 1/2%, 12/1/11 Baa3 1,000,000 1,080,000
9 7/8%, 11/1/21 Baa3 1,200,000 1,294,752
International Paper Co. 7 5/8% , 3/1/23 A3 1,000,000 926,960
Kimberly-Clark Corp. 7 7/8%, 2/1/23 Aa2 500,000 484,430
Mead Corp. 8 1/8%, 2/1/23 A3 500,000 490,025
Scott Paper Company 7%, 8/15/23 A2 1,000,000 864,900
Westvaco Corporation 7.07%, 7/1/23 A1 2,000,000 1,740,040
7,934,857
TOTAL BASIC INDUSTRIES 10,288,712
CONGLOMERATES - 0.6%
BHP Finance USA Ltd. 6 3/4%, 11/1/13 A2 1,000,000 850,100
DURABLES - 0.4%
AUTOS, TIRES, & ACCESSORIES - 0.4%
Ford Motor Co. Del. 8 7/8%, 1/15/22 A1 500,000 532,515
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
ENERGY - 2.4%
OIL & GAS - 2.4%
Atlantic Richfield Co. 9%, 4/1/21 A2 $ 1,000,000 $ 1,082,500
Coastal Corp. 9 3/4%, 8/1/03 Baa3 1,175,000 1,271,609
Mobil Corp. 8 5/8%, 8/15/21 Aa2 250,000 267,830
Phillips Petroleum Co.:
9.18%, 9/15/21 Baa2 200,000 207,834
8.86%, 5/15/22 Baa2 100,000 102,624
8.49%, 1/1/23 Baa2 300,000 294,660
TOTAL ENERGY 3,227,057
FINANCE - 16.4%
BANKS - 4.8%
Central Fidelity Banks, Inc. 8.15%, 11/15/02 Baa2 1,000,000 1,003,880
Continental Bank N.A. 7 7/8%, 2/1/03 A2 500,000 493,500
Fleet/Norstar Financial Group, Inc. 9%, 12/1/01 A3 250,000 261,663
Huntington Bancshares, Inc. 7 7/8%, 11/15/02 Baa1 1,000,000 992,950
MBNA American Bank, N.A. 7 1/4%, 9/15/02 A3 460,000 438,477
NCNB Corp. 10.20%, 7/15/15 A3 2,000,000 2,310,800
UJB Financial Corp. 8 5/8%, 12/10/02 Baa3 1,000,000 1,015,490
6,516,760
CREDIT & OTHER FINANCE - 7.8%
Associates Corp. (North America)
7 1/2%, 10/15/96 Aa3 3,000,000 3,015,000
Chrysler Financial Corp. 6%, 4/15/96 A3 2,000,000 1,980,720
Commercial Credit Group, Inc. 10%, 5/15/09 A1 350,000 405,171
Fleet Mortgage Group 6 1/2%, 9/15/99 A3 250,000 238,043
Ford Motor Credit Co. 8 3/8%, 1/15/23 A1 500,000 487,545
General Motors Acceptance Corp.:
8.80%, 3/20/96 Baa1 1,000,000 1,015,740
8 3/4%, 8/1/96 Baa1 1,000,000 1,020,380
4.95%, 2/3/97 Baa1 1,000,000 959,600
Grand Metropolitan Investment Corp. gtd.
9%, 8/15/11 A2 250,000 269,398
IBM Credit Corp. 5 1/2%, 3/29/96 A3 500,000 492,940
Republic New York Corp. 9.30%, 6/1/21 A1 225,000 250,317
Texaco Capital, Inc. gtd. 9 3/4%, 3/15/20 A1 350,000 409,969
10,544,823
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
FINANCE - CONTINUED
INSURANCE - 0.9%
CIGNA Corp. 7.65%, 3/1/23 Baa1 $ 1,000,000 $ 829,340
Protective Life Corp. 7.95%, 7/1/04 A3 400,000 396,080
1,225,420
SAVINGS & LOANS - 2.9%
Ahmanson (H.F.) & Co. 9 7/8%, 11/15/99 Baa2 1,000,000 1,072,070
Great Western Financial Corp. 6 3/8%, 7/1/00 Baa1 2,000,000 1,872,660
Household Bank FSB Newport Beach Calif.
6 1/2%, 7/15/03 A3 1,000,000 907,250
3,851,980
TOTAL FINANCE 22,138,983
HOLDING COMPANIES - 0.1%
Norfolk Southern Corp. 9%, 3/1/21 Aa3 150,000 165,615
INDUSTRIAL MACHINERY & EQUIPMENT - 4.4%
ELECTRICAL EQUIPMENT - 2.1%
Philips Electronics NV 7 1/4%, 8/15/13 A3 1,000,000 894,870
Westinghouse Electric Corp.:
7 3/4%, 4/15/96 Ba1 1,000,000 1,000,670
7 7/8%, 9/1/23 Ba1 1,000,000 882,200
2,777,740
INDUSTRIAL MACHINERY & EQUIPMENT - 1.6%
Caterpillar, Inc.:
9 3/4%, 6/1/19 A3 500,000 549,700
8%, 2/15/23 A3 500,000 492,520
Tenneco, Inc. 9%, 11/15/12 Baa2 1,000,000 1,051,240
2,093,460
POLLUTION CONTROL - 0.7%
Laidlaw, Inc. 8 1/4%, 5/15/23 Baa2 1,000,000 925,020
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 5,796,220
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
MEDIA & LEISURE - 7.4%
BROADCASTING - 1.4%
Telecommunications, Inc.:
7 7/8%, 8/1/13 Baa3 $ 1,000,000 $ 871,830
9 1/4%, 1/15/23 Baa3 1,000,000 962,020
1,833,850
ENTERTAINMENT - 0.7%
Paramount Communications, Inc. 8 1/4%,
8/1/22 Ba3 1,000,000 875,870
LEISURE DURABLES & TOYS - 0.7%
Brunswick Corp. 7 3/8%, 9/1/23 Baa1 1,000,000 886,550
LODGING & GAMING - 0.7%
Circus Circus Enterprises, Inc. 7 5/8%,
7/15/13 Baa3 1,000,000 889,590
PUBLISHING - 3.9%
Harcourt General, Inc. 8 7/8%, 6/1/22 Baa1 1,150,000 1,174,150
News America Holdings, Inc. 9 1/4%, 2/1/13 Ba1 1,500,000 1,540,950
Time Warner Entertainment Co. LP:
10.15%, 5/1/12 Ba2 250,000 265,865
8 7/8%, 10/1/12 Ba2 750,000 717,698
8 3/8%, 3/15/23 Baa3 1,750,000 1,551,498
5,250,161
TOTAL MEDIA & LEISURE 9,736,021
NONDURABLES - 5.0%
BEVERAGES - 1.5%
Anheuser Busch Companies, Inc.
7 3/8%, 7/1/23 A1 1,000,000 918,340
Seagram Joseph E. & Sons, Inc. gtd.
9%, 8/15/21 A2 500,000 533,660
Seagram Ltd. 8.35%, 1/15/22 A2 500,000 500,190
1,952,190
FOODS - 1.9%
Archer Daniels Midland Co. 7 1/8%, 5/1/21 Aa2 1,000,000 912,890
Campbell Soup Co. 8 7/8%, 5/1/21 Aa2 500,000 546,285
Conagra, Inc. 9 3/4%, 3/1/21 Baa2 1,000,000 1,122,340
2,581,515
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - 0.7%
Proctor & Gamble Co. 7 3/8%, 3/1/23 Aa2 $ 1,000,000 $ 920,710
TOBACCO - 0.9%
American Brands, Inc. 7 7/8%, 1/15/23 A2 500,000 475,190
RJR Nabisco, Inc. gtd. 8 3/4%, 4/15/04 Baa3 800,000 791,048
1,266,238
TOTAL NONDURABLES 6,720,653
RETAIL & WHOLESALE - 4.5%
APPAREL STORES - 0.7%
The Limited, Inc. 7 1/2%, 3/15/23 A1 1,000,000 876,210
GENERAL MERCHANDISE STORES - 2.4%
Dayton Hudson Corp. 8 1/2%, 12/1/22 A3 1,000,000 993,030
Dillard Dept. Stores, Inc. 7.85%, 10/1/12 A2 100,000 96,647
K Mart Corp. 7.95%, 2/1/23 Baa1 1,000,000 892,800
Penney (J.C.), Inc. 9 3/4%, 6/15/21 A1 100,000 110,971
Wal-Mart Stores, Inc.:
pass thru trust 8.07%, 12/21/12 Aa1 250,000 244,653
7 1/4%, 6/1/13 Aa1 1,000,000 931,100
3,269,201
GROCERY STORES - 0.8%
Supervalu, Inc. 8 7/8%, 11/15/22 A3 1,000,000 1,023,360
RETAIL & WHOLESALE, MISC - 0.6%
Toys 'R' Us, Inc. 8 3/4%, 9/1/21 Aa3 770,000 830,137
TOTAL RETAIL & WHOLESALE 5,998,908
TRANSPORTATION - 3.7%
AIR TRANSPORTATION - 0.8%
United Air Lines, Inc. 10 1/4%, 7/15/21 Baa3 1,000,000 1,010,000
RAILROADS - 0.6%
Consolidated Rail Corp. 9 3/4%, 3/1/21 A2 750,000 870,630
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
TRANSPORTATION - CONTINUED
TRUCKING & FREIGHT - 2.3%
Airborne Freight Corp. 8 7/8%, 12/15/02 Baa3 $ 1,000,000 $ 1,037,710
Federal Express Corp.:
9.65%, 6/15/12 Baa2 1,000,000 1,094,870
1993 Pass Thru Ctfs. 8.76%, 5/22/15 Baa1 1,000,000 1,004,050
3,136,630
TOTAL TRANSPORTATION 5,017,260
UTILITIES - 8.4%
ELECTRIC UTILITY - 4.5%
Cleveland Electric Illum. Co. 1st mtg. 7 3/8%,
6/1/03 Ba2 1,000,000 843,390
Commonwealth Edison Co. 1st mtg.:
8 5/8%, 2/1/22 Baa2 1,000,000 975,850
8 3/8%, 9/15/22 Baa2 100,000 96,019
8 3/8%, 2/15/23 Baa2 250,000 238,728
Georgia Power Co. 1st mtg. 8.94%, 6/1/22 A2 100,000 101,844
Houston Lighting & Power 1st mtg.
9.15%, 3/15/21 A2 175,000 192,015
Hydro-Quebec:
yankee 8%, 2/1/13 A1 250,000 239,365
8.40%, 1/15/22 A1 300,000 295,260
Long Island Lighting Co. 8.20%, 3/15/23 Ba1 1,000,000 794,860
Philadelphia Electric Co. 1st & ref. mtg. :
8 5/8%, 6/1/22 Baa1 300,000 288,894
8 1/4%, 9/1/22 Baa1 100,000 94,428
7 3/4%, 5/1/23 Baa1 1,000,000 912,000
Texas Utilities Electric Co.:
1st mtg. 9 3/4%, 5/1/21 Baa2 100,000 108,234
1st mtg & collateral trust, 7 7/8%, 4/1/24 Baa2 1,000,000 925,060
6,105,947
GAS - 0.9%
Centragas Transpotadora De Gas 10.65%, (a) - 208,000 196,560
Panhandle Eastern Corp. 8 5/8%, 12/1/99 Baa3 1,000,000 1,029,550
1,226,110
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
UTILITIES - CONTINUED
TELEPHONE SERVICES - 3.0%
GTE Corp.:
8 3/4%, 11/1/21 Baa1 $ 200,000 $ 207,772
7.83%, 5/1/23 Baa1 2,000,000 1,846,580
MCI Communications Corp.:
8 1/4%, 1/20/23 A2 1,500,000 1,478,085
7 3/4%, 3/15/24 A2 500,000 467,790
4,000,227
TOTAL UTILITIES 11,332,284
TOTAL NONCONVERTIBLE BONDS
(Cost $88,229,697) 83,165,654
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 19.5%
U.S. TREASURY OBLIGATIONS - 19.4%
5 1/8%, 3/31/98 Aaa 1,025,000 975,513
7 3/4%, 11/30/99 Aaa 1,070,000 1,097,413
5 3/4%, 8/15/03 Aaa 1,680,000 1,524,079
11 7/8%, 11/15/03 Aaa 2,140,000 2,762,269
9%, 11/15/18 Aaa 910,000 1,049,057
8 7/8%, 2/15/19 Aaa 1,635,000 1,863,638
8 1/8%, 8/15/19 Aaa 240,000 254,062
7 1/4%, 8/15/22 (c) Aaa 2,850,000 2,756,492
7 5/8%, 11/15/22 Aaa 4,750,000 4,806,383
7 1/2%, 11/15/24 Aaa 6,000,000 6,011,220
7 5/8%, 2/15/25 Aaa 3,000,000 3,064,680
26,164,806
U.S. GOVERNMENT AGENCY OBLIGATIONS - 0.1%
Financing Corp. 0%, 3/7/19 (b) Aaa 475,000 72,936
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $25,982,828) 26,237,742
FOREIGN GOVERNMENT OBLIGATIONS - 0.8%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
Manitoba Province of Canada yankee
8.80%, 1/15/20 A1 $ 300,000 $ 319,071
New Brunswick Province of Canada yankee
7 5/8%, 2/15/13 A1 500,000 476,345
Saskatchewan Province of Canada yankee
8 1/2%, 7/15/22 A3 300,000 306,975
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $1,116,570) 1,102,391
REPURCHASE AGREEMENTS - 17.8%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 6.20%, dated
3/31/95 due 4/3/95 $ 23,941,363 23,929,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $139,258,095) $ 134,434,787
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SOLD
117 U.S. Treasury Bond Contracts June 95 $ 12,143,001 $ (14,030)
THE FACE VALUE OF FUTURES SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 9.0%
LEGEND
(y) 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 $196,560 or 0.2% of net
assets.
(z) Principal Only Strips represent the right to receive the monthly
principal payments on an underlying pool of mortgage loans.
(aa) Security was pledged to cover margin requirements for futures
contracts. At the period end, the value of securities pledged amounted to
$2,756,492.
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 47.6% AAA, AA, A 46.1%
Baa 29.3% BBB 31.5%
Ba 5.1% BB 4.4%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 0.2% .
INCOME TAX INFORMATION
At March 31, 1995, the aggregate cost of investment securities for income
tax purposes was $139,340,181. Net unrealized depreciation aggregated
$4,905,394, of which $865,454 related to appreciated investment securities
and $5,770,848 related to depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
MARCH 31, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 134,434,787
agreements of $23,929,000) (cost $139,258,095) -
See accompanying schedule
Cash 572
Receivable for investments sold 160,535
Interest receivable 2,405,029
TOTAL ASSETS 137,000,923
LIABILITIES
Payable for investments purchased $ 166,418
Payable for fund shares redeemed 168,167
Dividends payable 239,461
Accrued management fee 72,353
TOTAL LIABILITIES 646,399
NET ASSETS $ 136,354,524
Net Assets consist of:
Paid in capital $ 143,004,100
Distributions in excess of net investment income (369,449)
Accumulated undistributed net realized gain (loss) on (1,442,789)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on (4,837,338)
investments
NET ASSETS, for 14,063,308 shares outstanding $ 136,354,524
NET ASSET VALUE, offering price and redemption price per $9.70
share ($136,354,524 (divided by) 14,063,308 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED MARCH 31, 1995 (UNAUDITED)
INVESTMENT INCOME $ 4,710,210
Interest
EXPENSES
Management fee $ 383,034
Non-interested trustees' compensation 227
TOTAL EXPENSES 383,261
NET INVESTMENT INCOME 4,326,949
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (591,729)
Futures contracts (218,449) (810,178)
Change in net unrealized appreciation (depreciation) on:
Investment securities 4,358,963
Futures contracts (500,806) 3,858,157
NET GAIN (LOSS) 3,047,979
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 7,374,928
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
MARCH 31, 1995 1994
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 4,326,949 $ 7,936,737
Net investment income
Net realized gain (loss) (810,178) (549,207)
Change in net unrealized appreciation (depreciation) 3,858,157 (15,299,934)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 7,374,928 (7,912,404)
FROM OPERATIONS
Distributions to shareholders: (4,293,287) (7,926,431)
From net investment income
From net realized gain (369,197) -
In excess of net realized gain - (115,335)
TOTAL DISTRIBUTIONS (4,662,484) (8,041,766)
Share transactions 74,273,322 118,983,535
Net proceeds from sales of shares
Reinvestment of distributions 3,121,185 5,044,936
Cost of shares redeemed (49,959,555) (130,726,831)
Net increase (decrease) in net assets resulting from 27,434,952 (6,698,360)
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 30,147,396 (22,652,530)
NET ASSETS
Beginning of period 106,207,128 128,859,658
End of period (including distributions in excess of $ 136,354,524 $ 106,207,128
net investment income of $369,449 and
$403,111, respectively)
OTHER INFORMATION
Shares
Sold 7,838,376 11,589,057
Issued in reinvestment of distributions 328,254 497,135
Redeemed (5,272,662) (12,700,880)
Net increase (decrease) 2,893,968 (614,688)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SIX MONTHS YEAR ENDED OCTOBER 1, 1992
ENDED MARCH SEPTEMBER 30, (COMMENCEMEN
31, 1995 T OF OPERATIONS
TO SEPTEMBER
30,
(UNAUDITED) 1994 1993
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.510 $ 10.940 $ 10.000
Income from Investment Operations .354 .668 .799
Net investment income
Net realized and unrealized gain (loss) .210 (1.384) .940
Total from investment operations .564 (.716) 1.739
Less Distributions (.344) (.704) (.798)
From net investment income
In excess of net investment income - - (.001)
From net realized gain on investments (.030) - -
In excess of net realized gain on - (.010) -
investments
Total distributions (.374) (.714) (.799)
Net asset value, end of period $ 9.700 $ 9.510 $ 10.940
TOTAL RETURN B 6.09% (6.75)% 18.17%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 136,355 $ 106,207 $ 128,860
Ratio of expenses to average net assets .65% A .65% .65%
Ratio of net investment income to 7.34% A 6.90% 7.58%
average
net assets
Portfolio turnover rate 44% A 44% 55%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
For the period ended March 31, 1995 (Unaudited)
13. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan Investment Grade Bond Fund (the fund) is a fund of Fidelity Charles
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 are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days of their purchase date are valued either at
amortized cost or original cost plus accrued interest, both of which
approximate current value. 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.
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.
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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
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 and losses deferred due to wash sales. The fund also
utilized earnings and profits distributed to shareholders on redemption of
shares as a part of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect net investment income per share. Undistributed net investment loss
and accumulated undistributed net realized gain (loss) on investments may
include temporary book and tax basis differences which will reverse in a
subsequent period. Distributions in excess of net investment income and
accumulated undistributed net realized gain (loss) on investments may
include temporary book and tax basis differences that will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
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.
14. 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 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.
2. OPERATING POLICIES - CONTINUED
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 advisor, is responsible for determining that the value of these
underlying securities remains at least equal to the resale price.
FUTURES CONTRACTS AND OPTIONS. The fund may use futures and options
contracts to manage its exposure to the bond market and to fluctuations in
interest rates and currency values. Buying futures, writing puts, and
buying calls tend to increase the fund's exposure to the underlying
instrument. Selling futures, buying puts, and writing calls tend to
decrease the fund's exposure to the underlying instrument, or hedge other
fund investments.Futures contracts and written options involve, to varying
degrees, risk of loss in excess of the futures variation margin or the
option value reflected in the Statement of Assets and Liabilities. The
underlying face amount at value is shown in the schedule of investments
under the caption "Futures Contracts." This amount reflects each
contract's exposure to the underlying instrument at period end. Losses may
arise from changes in the value of the underlying instruments, if there is
an illiquid secondary market for the contracts, or if the counterparties do
not perform under the contracts' terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options are valued using the last sale price or, in the absence of a sale,
the last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations.
15. PURCHASES AND SALES
OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $37,455,947 and $22,322,600, respectively, of which U.S.
government and government agency obligations aggregated $28,846,633 and
$17,206,676, respectively.
The market value of futures contracts opened and closed during the period
amounted to $23,624,698 and $27,225,422, respectively.
16. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR pays all expenses,
except the compensation of the non-interested Trustees and certain
exceptions such as interest, taxes, brokerage commissions and extraordinary
expenses. FMR receives a fee that is computed daily at an annual rate of
.65% of the fund's average net assets.
FMR also bears the cost of providing shareholder services to the fund. To
offset the cost of providing these services, FMR or its affiliates collect
certain transaction fees from the fund's shareholders which amounted to
$3,115 for the period.
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)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
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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.
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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.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the
Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
1903 East Ninth Street
Cleveland, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
2701 Drexel Drive
Houston, TX
1010 Lamar Street
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
215 South State Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING
CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
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NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR
RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
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
Michael Gray, 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
* INDEPENDENT TRUSTEES
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 Income
Spartan(registered trademark) Ginnie Mae
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 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 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
AUTOMATED LINES FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)FIDELITY
SHORT-INTERMEDIATE
GOVERNMENT
FUND
SEMIANNUAL REPORT
MARCH 31, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 13 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 17 Notes to the financial statements.
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 a few 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, plus reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells bonds that have grown in value). You can also look at the fund's
income.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MARCH 31, 1995 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Short-Intermediate Government 3.78% 4.05% 17.17%
Lehman Brothers 1-3 Year Government
Bond Index 3.33% 4.37% n/a
Average Short U.S. Government 3.12% 2.90% n/a
Fund
Consumer Price Index 1.34% 2.85% 10.83%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, or since the fund
started on September 13, 1991. 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 Lehman Brothers 1-3 Year Government Bond Index - a broad measure of the
performance of short-term government bonds. To measure how the fund stacked
up against its peers, you can compare it to the average short U.S.
government fund, which reflects the performance of 135 funds with similar
objectives tracked by Lipper Analytical Services over the past six months.
Both 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. (The CPI returns begin on the
month end closest to the fund's start date.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MARCH 31, 1995 PAST 1 LIFE OF
YEAR FUND
Short-Intermediate Government 4.05% 4.56%
Lehman Brothers 1-3 Year Government Bond Index 4.37% n/a
Average Short U.S. Government Fund 2.90% n/a
Consumer Price Index 2.85% 2.91%
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 LIFE OF FUND
Fidelity Short-Inter1-3 Year Government
09/30/91 10000.00 10000.00
10/31/91 10124.47 10108.17
11/30/91 10206.40 10212.00
12/31/91 10363.11 10366.95
01/31/92 10270.74 10353.03
02/29/92 10301.42 10384.29
03/31/92 10286.47 10380.87
04/30/92 10374.48 10475.57
05/31/92 10511.20 10572.33
06/30/92 10602.20 10678.90
07/31/92 10620.67 10811.25
08/31/92 10766.62 10889.53
09/30/92 10813.26 10991.53
10/31/92 10714.26 10928.55
11/30/92 10721.94 10912.58
12/31/92 10851.34 11014.35
01/31/93 11000.35 11129.60
02/28/93 11099.60 11218.14
03/31/93 11141.24 11252.60
04/30/93 11190.06 11321.06
05/31/93 11193.01 11293.67
06/30/93 11276.44 11377.88
07/31/93 11314.33 11402.52
08/31/93 11364.69 11497.23
09/30/93 11382.59 11533.97
10/31/93 11391.71 11559.75
11/30/93 11374.06 11561.58
12/31/93 11424.52 11607.45
01/31/94 11516.84 11680.02
02/28/94 11419.43 11609.05
03/31/94 11219.03 11550.40
04/30/94 11165.15 11506.36
05/31/94 11169.93 11521.87
06/30/94 11175.55 11550.85
07/31/94 11292.39 11654.69
08/31/94 11315.71 11693.02
09/30/94 11247.79 11666.55
10/31/94 11255.28 11693.25
11/30/94 11211.39 11644.65
12/31/94 11267.21 11667.24
01/31/95 11430.38 11826.07
02/28/95 11611.13 11986.95
03/31/95 11673.33 12054.49
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Short-Intermediate Government Fund on September 30, 1991, shortly after the
fund started. As the chart shows, by March 31, 1995, the value of your
investment, with dividends reinvested would have grown to $11,673 - a
16.73% increase on your initial investment. For comparison, look at how the
Lehman Brothers 1-3 Year Government Bond Index did over the same period.
With dividends reinvested, the same $10,000 investment would have grown to
$12,054 - a 20.54% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, move in the
opposite direction of interest
rates. In turn, the share price,
return, and yield of a fund
that invests in bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
SIX
MONTHS
ENDED YEARS ENDED SEPTEMBER 30,
MARCH 31,
1995 1994 1993 1992
Dividend return 3.46% 5.55% 6.34% 6.73%
Capital appreciation return 0.32% -6.73% -1.08% 1.40%
Total return 3.78% -1.18% 5.26% 8.13%
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 MARCH 31, 1995 PAST PAST 6 PAST
MONTH MONTHS YEAR
Dividends per share 4.99(cents) 31.38(cents) 59.78(cents)
Annualized dividend rate 6.30% 6.83% 6.42%
30-day annualized yield 6.26% - -
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 $9.32 over
the past month, $9.22 over the past six months and $9.31 over the past
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis.
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Curt Hollingsworth, Portfolio Manager of Fidelity
Short-Intermediate Government Fund
Q. CURT, HOW HAS THE FUND PERFORMED?
A. For the six and 12 months ended March 31, 1995, the fund had total
returns of 3.78% and 4.05%, respectively. During the same period, the
average short-term government bond fund returned 3.12% and 2.90%,
respectively, according to Lipper Analytical Services.
Q. HOW WOULD YOU CHARACTERIZE THE BOND MARKET ENVIRONMENT OVER THE PAST SIX
MONTHS?
A. I would say that the bond market has found its feet. Longer-term
interest rates have rallied a fair amount, meaning that they have fallen,
and bonds within that maturity spectrum have increased in price. Yields on
the shorter end of the spectrum have come down - and prices have risen -
but not as much. The Federal Reserve Board increased short-term interest
rates only twice during the period, after having raised them five times
during early 1994. In addition, there were indications that the economy was
slowing down, so the market became less fearful about possible inflation,
which eats away at a bond's fixed payments.
Q. WHAT HELPED THE FUND TOP THE LIPPER AVERAGE OVER THE PAST SIX MONTHS?
A. Let me start by reminding shareholders that I am free to invest in
Ginnie Maes - securities issued by the Government National Mortgage
Association - as well as U.S. government and agency obligations. Moves
involving Ginnie Maes helped the fund during the period. The fund began the
period with about 30% of its assets invested in Ginnie Maes. During the
fourth quarter of 1994, they performed well relative to U.S. Treasury and
agency issues, and I started selling them to take profits near the end of
January. The fund's investment in them has dropped to 4% as of March 31.
Having more Ginnie Maes when they were performing well, and owning less
when they weren't, was a key to the fund's performance.
Q. WHERE ARE YOU FINDING OPPORTUNITIES NOW?
A. The fund had almost all of its assets - 90% at the end of the period -
invested in U.S. Treasury and agency securities. Of that, about 17% was
invested in A.I.D. to Israel bonds issued by the Agency for International
Development, backed by the full faith and credit of the U.S. government.
These securities are offering an attractive yield relative to Treasuries,
and are non-callable - not redeemable before their maturity date. This
non-callable feature makes them more attractive than Ginnie Maes. That's
because Ginnie Maes are exposed to prepayment risk - the chance that
mortgage holders will pay off their outstanding balances early, in order to
refinance at a lower rate or because they are moving.
Q. WHY HAVE GINNIE MAES BECOME LESS ATTRACTIVE INVESTMENTS RECENTLY?
A. Ginnie Maes haven't been as attractive because rising interest rates
have slowed prepayment activity; home owners, naturally, haven't been
refinancing at higher rates. Usually, sellers of mortgage-backed bonds need
to compensate buyers with higher yields than those of U.S. Treasury bonds
with similar maturities, because of prepayment risk. However, this yield
advantage, which is called the yield spread, has decreased because
prepayment activity has dropped because of a slowdown in refinancing. I
should add that not all Ginnie Maes have underperformed. Fifteen-year
Ginnie Mae securities performed well through the end of March, although the
fund didn't own any.
Q. ARE YOU MAKING OTHER MOVES WITH THE PORTFOLIO?
A. I've been trying to consolidate the Treasury securities I own into a
smaller number of issues, in order to add value more aggressively by
selling those issues that have performed well in the market and swap into
cheaper securities. To do this, I'm breaking the portfolio up into what I
call duration cells. Duration is a measure of a bond's interest-rate
sensitivity, measured in years. For example, I'll seek to own only a few
issues with durations between one and two years, and a few with durations
between two and three years. Using this strategy, it should be easier for
me to make sure that I own the cheapest Treasury within a cell at any point
in time. If a bond performs well at all, I'll try to sell it at a profit
and buy a cheaper one to take its place.
Q. WHAT KINDS OF INFORMATION MIGHT HELP DICTATE YOUR STRATEGY?
A. One thing I'll look at is interest rate volatility. If interest rates
and Treasury yields go up or down a lot, that hurts Ginnie Mae investments.
That's because when you buy a Ginnie Mae, you're effectively selling an
option to refinance to a home owner. Whenever you sell an option, a pick-up
in volatility hurts you. Ginnie Maes typically do best when interest rates
and Treasury yields are fairly stable. Economic reports suggesting an
economic slowdown or a recession would increase volatility. At that point,
interest rates might fall, hurting Ginnie Maes because mortgage holders
probably would want to refinance at a lower rate. However, I don't see
anything on the horizon that suggests a pick-up in Treasury yield
volatility.
Q. DOES THAT MEAN YOU FEEL POSITIVE GOING FORWARD?
A. Not necessarily. It's very difficult to predict the direction of
interest rates. At present, I expect to keep the fund in a neutral
position. If I felt the Federal Reserve Board was going to lower interest
rates, I would bullet, or focus, the fund's investments on a maturity where
I felt interest rates would drop the most. But I don't think the Fed is
going to do that. Given the weakness of the dollar, the continued,
reasonable strength in the economy, Congress' failure to pass the balanced
budget amendment, and talk about tax cuts, I don't think the Fed will cut
rates soon. Furthermore, if new data showed the economy strengthening, I
wouldn't be surprised to see the Fed raise rates again.
FUND FACTS
GOAL: high current income
with preservation of capital
START DATE: September 13,
1991
SIZE: as of March 31, 1995,
more than $171 million
MANAGER: Curt Hollingsworth,
since 1991; also manages
Spartan Limited Maturity
Government, Spartan
Long-Term Government
Bond, Spartan
Short-Intermediate
Government funds and
Fidelity Institutional
Short-Intermediate
Government Portfolio; Fidelity
Government Securities Fund,
1990 - February 1995;
Fidelity Advisor Government
Investment Fund, 1992 -
February 1995; joined
Fidelity in 1983
(checkmark)
CURT HOLLINGSWORTH ON THE
DOLLAR AND ITS IMPACT ON THE
FED:
"It can be very difficult to put
the value of the dollar into
perspective. The media
regularly publish information
about the dollar's value versus
the yen or the deutschemark.
However, two of our three
biggest trading partners are
Canada and Mexico, and the
dollar has been strong against
those currencies.
"The Federal Reserve Bank
of Dallas regularly issues a
report looking at how the
dollar is doing against 101
foreign currencies. It weighs
the strength of each currency
according to the volume of its
trade with the U.S. For
example, if one country does
twice as much trading with the
U.S., its currency value
receives twice as much
weight. According to the data
supplied by the report, the
dollar has fallen against the
yen and deutschemark since
1990. However, the report
states it actually has trended
higher against the broad,
trade-weighted currency
index.
"But what does a weak dollar
mean to the Federal Reserve
Board? I don't believe the
exchange rate would be the
top driving factor in
determining Fed policy. At the
same time, a weak dollar
might make the Fed more
inclined to raise interest rates
if other economic data were
already pushing it that way."
INVESTMENT CHANGES
COUPON DISTRIBUTION AS OF MARCH 31, 1995
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
6 MONTHS AGO
4 - 4.99% 11.4 -
5 - 5.99% 16.9 -
6 - 6.99% 4.8 -
7 - 7.99% 17.1 13.8
8 - 8.99% 32.6 24.2
9 - 9.99% 10.2 51.8
10 - 10.99% 1.1 4.0
11 - 11.99% - -
12 - 12.99% 0.1 3.8
13% and over 0.1 0.1
COUPON DISTRIBUTION SHOWS THE RANGE OF STATED INTEREST RATES ON THE FUND'S
INVESTMENTS, EXCLUDING REPURCHASE AGREEMENTS.
AVERAGE YEARS TO MATURITY AS OF MARCH 31, 1995
6 MONTHS AGO
Years 2.7 4.1
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF MARCH 31, 1995
6 MONTHS AGO
Years 2.2 2.7
DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
ASSET ALLOCATION
AS OF MARCH 31, 1995 AS OF SEPTEMBER 30, 1994
Row: 1, Col: 1, Value: 5.7
Row: 1, Col: 2, Value: 4.0
Row: 1, Col: 3, Value: 17.3
Row: 1, Col: 4, Value: 37.0
Row: 1, Col: 5, Value: 36.0
Row: 1, Col: 1, Value: 2.3
Row: 1, Col: 2, Value: 30.0
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 37.7
Row: 1, Col: 5, Value: 30.0
U.S. Treasury
obligations 73.0%
U.S. government
agency
obligations 17.3%
Government
National Mortgage
Association
(GNMA)
Securities 4.0%
Short-term
investments 5.7%
U.S. Treasury
obligations 67.7%
U.S. government
agency
obligations -
Government
National Mortgage
Association
(GNMA)
Securities 30.0%
Short-term
investments 2.3%
INVESTMENTS MARCH 31, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 90.3%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (B) (NOTE 1)
U.S. TREASURY OBLIGATIONS - 73.0%
9 1/4%, 1/15/96 3,200,000 $ 3,266,496
4 1/4%, 5/15/96 15,460,000 15,075,974
8%, 10/15/96 30,400,000 30,965,136
4 3/8%, 11/15/96 4,000,000 3,856,880
5 1/2%, 7/31/97 22,500,000 21,849,525
8 7/8%, 11/15/97 18,200,000 19,041,750
5 3/8%, 5/31/98 1,120,000 1,069,600
5 1/4%, 7/31/98 5,800,000 5,501,822
9 1/4%, 8/15/98 13,010,000 13,882,060
6 3/4%, 6/30/99 8,075,000 7,980,361
122,489,604
U.S. GOVERNMENT AGENCY OBLIGATIONS - 17.3%
State of Israel (guaranteed by U.S. Government
through the Agency for International Development):
4 7/8%, 9/15/98 260,000 241,719
6%, 2/15/99 110,000 105,500
7 1/8%, 8/15/99 28,801,000 28,617,077
7 3/4%, 11/15/99 195,000 197,826
29,162,122
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS (Cost $151,220,213) 151,651,726
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 4.0%
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
8 1/2%, 1/15/17 to 3/15/22 4,614,509 4,680,753
10%, 11/15/09 to 8/15/17 1,674,541 1,805,947
12%, 1/15/14 to 3/15/14 101,184 110,796
12 1/2%, 4/15/10 to 10/15/15 42,949 41,460
13%, 9/15/14 74,872 83,808
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES (Cost $6,775,856) 6,722,764
REPURCHASE AGREEMENTS - 5.7%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations) in a
joint trading account at 6.20%,
dated 3/31/95 due 4/3/95 $ 9,625,971 $ 9,621,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $167,617,069) $ 167,995,490
INCOME TAX INFORMATION
At March 31, 1995, the aggregate cost of investment securities for income
tax purposes was $167,751,113. Net unrealized appreciation aggregated
$244,377, of which $1,263,342 related to appreciated investment securities
and $1,018,965 related to depreciated investment securities.
At September 30, 1994, the fund had a capital loss carryforward of
approximately $1,724,000 of which $320,000 and $1,404,000 will expire on
September 30, 2001 and September 30, 2002, respectively.
The fund has elected to defer to its fiscal year ending September 30, 1995
$5,237,000 of losses recognized during the period November 1, 1993 to
September 30, 1994.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
MARCH 31, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 167,995,490
agreements of $9,621,000) (cost $167,617,069) -
See accompanying schedule
Cash 947
Receivable for investments sold 4,644,781
Interest receivable 2,974,536
TOTAL ASSETS 175,615,754
LIABILITIES
Payable for investments purchased on a delayed $ 3,946,567
delivery basis
Payable for fund shares redeemed 64,270
Dividends payable 197,757
Accrued management fee 65,142
Other payables and accrued expenses 79,648
TOTAL LIABILITIES 4,353,384
NET ASSETS $ 171,262,370
Net Assets consist of:
Paid in capital $ 182,932,849
Distributions in excess of net investment income (518,769)
Accumulated undistributed net realized gain (loss) on (11,530,131)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 378,421
investments
NET ASSETS, for 18,369,444 shares outstanding $ 171,262,370
NET ASSET VALUE, offering price and redemption price per $9.32
share ($171,262,370 (divided by) 18,369,444 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED MARCH 31, 1995 (UNAUDITED)
INVESTMENT INCOME $ 5,653,186
Interest
EXPENSES
Management fee $ 328,641
Transfer agent fees 230,614
Accounting fees and expenses 28,055
Non-interested trustees' compensation 353
Custodian fees and expenses 29,822
Registration fees 6,513
Audit 3,704
Legal 711
Interest 2,743
TOTAL EXPENSES 631,156
NET INVESTMENT INCOME 5,022,030
REALIZED AND UNREALIZED GAIN (LOSS) (4,221,497)
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on 5,035,787
investment securities
NET GAIN (LOSS) 814,290
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 5,836,320
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
MARCH 31, 1995 1994
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 5,022,030 $ 9,982,922
Net investment income
Net realized gain (loss) (4,221,497) (7,336,287)
Change in net unrealized appreciation (depreciation) 5,035,787 (4,337,336)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 5,836,320 (1,690,701)
FROM OPERATIONS
Distributions to shareholders from net investment income (4,891,365) (8,444,364)
Share transactions 98,437,339 97,823,842
Net proceeds from sales of shares
Reinvestment of distributions 3,978,733 7,179,256
Cost of shares redeemed (64,564,754) (130,693,881)
Net increase (decrease) in net assets resulting from 37,851,318 (25,690,783)
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 38,796,273 (35,825,848)
NET ASSETS
Beginning of period 132,466,097 168,291,945
End of period (including distributions in excess of net $ 171,262,370 $ 132,466,097
investment income of $(518,769) and $(649,434),
respectively)
OTHER INFORMATION
Shares
Sold 10,681,137 10,118,463
Issued in reinvestment of distributions 430,919 747,673
Redeemed (6,994,275) (13,515,563)
Net increase (decrease) 4,117,781 (2,649,427)
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED SEPTEMBER 30, SEPTEMBER 13,
ENDED MARCH 1991,
31, 1995 (COMMENCEMENT OF
OPERATIONS) TO
SEPTEMBER 30,
(UNAUDITED) 1994 1993 1992 1991
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 9.290 $ 9.960 $ 10.140 $ 10.010 $ 10.000
beginning of period
Income from .331 .533 .722 .694 .027
Investment
Operations
Net investment
income
Net realized and .013 (.648) (.209) .096 .010
unrealized gain
(loss)
Total from investment .344 (.115) .513 .790 .037
operations
Less Distributions (.314) (.555) (.623) (.650) (.027)
From net investment
income
From net realized - - (.070) (.010) -
gain
on investments
Total distributions (.314) (.555) (.693) (.660) (.027)
Net asset value, end of $ 9.320 $ 9.290 $ 9.960 $ 10.140 $ 10.010
period
TOTAL RETURN B, C 3.78% (1.18) 5.26% 8.13% .37%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 171,262 $ 132,466 $ 168,292 $ 172,863 $ 1,339
period (000 omitted)
Ratio of expenses to .88% .95% .61% .28% .65% A
average net assets A
Ratio of expenses to .88% .95% .90% 1.29% 2.50% A
average net assets A
before expense
reductions
Ratio of net investment 6.98% 6.80% 7.19% 7.91% 5.67% A
income to average A
net assets
Portfolio turnover rate 242% 184% 348% 419% -%
A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
NOTES TO FINANCIAL STATEMENTS
For the period ended March 31, 1995 (Unaudited)
17. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Short-Intermediate Government Fund (the fund) is a fund of
Fidelity Charles 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 are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days of their purchase date are valued either at
amortized cost or original cost plus accrued interest, both of which
approximate current value. 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.
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.
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 paydown
gains/losses on certain securities and losses deferred due to wash sales
and excise tax regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect net investment income per share. Distributions in excess of net
investment income and accumulated undistributed net realized gain (loss) on
investments may include temporary book and tax basis differences that will
reverse in a subsequent period. Any taxable income or gain remaining at
fiscal year end is distributed in the following year.
1. SIGNIFICANT ACCOUNTING POLICIES- CONTINUED
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.
18. OPERATING POLICIES.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, 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 advisor, is responsible for determining that the value of these
underlying securities remains at least equal to the resale price.
19. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of long-term U.S. government and government agency
obligations aggregated $199,993,435 and $172,437,608, respectively.
20. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1200% to .3700% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .30%. For
the period, the management fee was equivalent to an annualized rate of .46%
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 $13,368 for the
period.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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 October 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 fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
21. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $4,586,000 and $1,950,250,
respectively. The weighted average interest rate was 6.4%.
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)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(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)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(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.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING
CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR
NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR
RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the
Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
1903 East Ninth Street
Cleveland, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
2701 Drexel Drive
Houston, TX
1010 Lamar Street
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
215 South State Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Curtis Hollingsworth, 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
* INDEPENDENT TRUSTEES
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 Income
Spartan(registered trademark) Ginnie Mae
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 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 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
AUTOMATED LINES FOR QUICKEST SERVICE
