(2_FIDELITY_LOGOS)FIDELITY
ASSET MANAGER(trademark)
ANNUAL REPORT
SEPTEMBER 30, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
MARKET RECAP 6 An overview of the market's
performance and the factors driving
it.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 11 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 12 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 54 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 58 Notes to the financial statements.
REPORT OF INDEPENDENT 64 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 65
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 the markets have been fairly positive this year, no one can
predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
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 SEPTEMBER 30, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Asset Manager 10.09% 98.18% 122.86%
S&P 500(registered trademark) 29.75% 121.49% 160.27%
Average Flexible Portfolio Fund 19.38% 87.78% n/a
Consumer Price Index 2.54% 15.45% 27.14%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years or since the fund
started 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 142 funds with similar objectives tracked by
Lipper Analytical Services over the past 12 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 SEPTEMBER 30, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Asset Manager 10.09% 14.66% 12.58%
S&P 500 29.75% 17.24% 15.20%
Average Flexible Portfolio Fund 19.38% 13.23% n/a
Consumer Price Index 2.54% 2.91% 3.62%
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
Asset Manager (314) S&P 500 Fidelity Composite
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 11527.69 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 11759.51 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 11443.39 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 11780.58 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 13354.74 14266.22 12913.10
03/31/91 13578.25 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 14204.08 15258.87 13439.44
08/31/91 14528.17 15620.51 13678.66
09/30/91 14550.52 15359.65 13743.64
10/31/91 14662.28 15565.47 13865.96
11/30/91 14405.24 14938.18 13770.42
12/31/91 15019.76 16647.11 14448.89
01/31/92 15236.74 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 15899.73 16786.06 14595.86
06/30/92 15899.73 16535.95 14602.28
07/31/92 16225.20 17212.27 14998.88
08/31/92 16152.88 16859.42 14941.28
09/30/92 16273.42 17058.36 15106.53
10/31/92 16249.31 17118.06 15046.41
11/30/92 16610.94 17701.79 15247.13
12/31/92 16934.14 17919.52 15434.06
01/31/93 17225.45 18070.05 15626.98
02/28/93 17402.77 18315.80 15844.82
03/31/93 17975.71 18702.26 16007.39
04/30/93 18052.42 18249.67 15910.07
05/31/93 18435.97 18738.76 16080.94
06/30/93 18668.08 18793.10 16251.72
07/31/93 18951.91 18717.93 16272.52
08/31/93 19493.76 19427.34 16672.83
09/30/93 19481.53 19277.75 16655.82
10/31/93 20054.14 19676.80 16827.04
11/30/93 20015.09 19489.87 16697.47
12/31/93 20877.83 19725.69 16813.02
01/31/94 21555.68 20396.37 17143.23
02/28/94 20877.83 19843.63 16818.19
03/31/94 19867.84 18978.44 16383.61
04/30/94 19854.17 19221.37 16426.21
05/31/94 20018.25 19536.60 16536.92
06/30/94 19577.74 19057.95 16371.55
07/31/94 19962.97 19683.05 16717.32
08/31/94 20430.74 20490.06 17005.19
09/30/94 20182.51 19988.05 16755.89
10/31/94 20279.40 20437.78 16916.42
11/30/94 19974.87 19693.44 16670.65
12/31/94 19499.59 19985.49 16825.56
01/31/95 19344.50 20503.72 17140.06
02/28/95 19640.59 21302.75 17568.36
03/31/95 19953.26 21931.39 17837.22
04/30/95 20364.82 22577.27 18157.94
05/31/95 20847.33 23479.68 18759.47
06/30/95 21133.35 24025.12 19010.70
07/31/95 21718.80 24821.79 19252.97
08/31/95 21861.60 24884.09 19379.73
09/29/95 22219.16 25934.20 19798.72
$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 September 30, 1995, the value of your investment would have
grown to $22,219 - a 122.19% 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
$25,934 - a 159.34% 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 (+159.34%), Lehman Brothers Treasury Bond Index
(+85.69%), and the Salomon Brothers 3-month T-Bill Total Rate of Return
Index (+43.92%). With dividends and interest, if any, reinvested, a $10,000
investment in the index would have grown to $19,799 - a 97.99% 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)
Strong corporate earnings and a favorable interest rate environment helped
the U.S. stock market post strong returns for the 12 months ended September
30, 1995. U.S. bond markets also rallied during the 12-month period.
STOCKS: The Standard & Poor's Composite Index of 500 Stocks finished the
12-month period with a total return of 29.75% - well above its historical
annual average of roughly 12%. With inflation posing little threat,
interest rates fell during the first half of 1995. The Federal Reserve
Board cut the federal funds rate - the rate banks charge each other for
overnight loans - by 0.25% on July 6 to 5.75%. Large-capitalization stocks
led the rally. Technology companies - whose goods and services benefited
from both corporate and consumer demand - posted the strongest earnings
growth and stock price gains. Lower interest rates and continued merger and
acquisition activity helped financial stocks perform especially well. In
June, the Dow Jones Industrial Average closed above 4500 for the first
time. Returns from foreign markets suffered as investors brought capital
back to the U.S. The Morgan Stanley Emerging Markets Free Index was down
17.73% for the 12 months ended September 30. The Morgan Stanley EAFE
(Europe, Australia, Far East) Index returned 5.79% for the year ended
September 30. European markets have fared well through the first nine
months of 1995, while the Japanese market has struggled through much of the
year.
BONDS: A strong rally starting in November 1994 helped bonds recover from
the effects of the sharply rising interest rate environment seen earlier
that year. For the 12-month period, the Lehman Brothers Aggregate Bond
Index - a broad measure of U.S. taxable bonds - posted a total return of
14.06%. Indications of a slowing economy and a relative absence of
inflation pressures encouraged bond investors, helping to push interest
rates down. Monetary policy also played a role in the bond market's
performance, as the Fed - in an effort to thwart the possibility of a
recession - lowered the fed funds rate after a string of seven successive
interest rate increases in 1994 and early 1995. Mortgage-backed securities
rode along with the rally. The Salomon Brothers Mortgage Index returned
13.46% during the period. Outside of the U.S., markets had mixed returns.
Emerging fixed-income markets recovered from the lows caused by Mexico's
peso devaluation in December 1994. The J.P. Morgan Emerging Markets Bond
Index returned 6.04% during the 12-month period. Declining interest rates
and a weakening U.S. dollar helped the Salomon Brothers World Government
Bond Index - which includes U.S. issues - to post a 16.18% return.
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. Asset Manager performed reasonably well overall, though it lagged some
of its competitors. The fund's total return for the year ended September
30, 1995, was 10.09%, compared to 19.38% for the average flexible portfolio
fund, according to Lipper Analytical Services. Most of the reasons the fund
lagged can be traced to setbacks suffered during the final months of 1994
and the beginning of 1995. The fund's performance since then has been
significantly stronger, both in absolute and relative terms.
Q. WHAT CAUSED THE PROBLEMS EARLY IN THE YEAR?
A. Foreign investments were the main culprits. Last September, 29% of the
fund's investments was foreign stocks and bonds. That total included
investments in Mexico and other emerging markets in Latin America.
Shareholders who have been with the fund for any length of time will recall
how much those same emerging market investments boosted Asset Manager's
performance in years past. Unfortunately, with the surprise devaluation of
the Mexican peso in December 1994, emerging markets all over the world
suddenly lost credibility with investors and prices plummeted. I
immediately sold most of the fund's emerging market investments, preventing
further losses. Shortly afterward, what was left in the fund of Mexican
securities, for example, totalled only around 1% of its investments.
Q. WHAT'S YOUR ATTITUDE TOWARD FOREIGN INVESTMENTS NOW?
A. Foreign investments will probably always play a significant strategic
role in the fund. That's because in the new global economy, I don't think
it makes sense to ignore investment opportunities in other countries. It's
true, investing overseas can carry more risk, and with emerging markets
those risks can be even more significant. But by investing in a broad range
of foreign securities, in a wide variety of countries, I think I can
minimize those risks while still providing shareholders with exposure to
exciting opportunities they might otherwise miss. If there's a lesson in
the fund's recent bad experience with foreign investments, it's this: more
diversification is needed, not less. Lately, as the pendulum has swung back
in favor of foreign markets, I've again built a 21% stake in foreign
securities. Recently, I've tried to spread the risk around as much as
possible instead of concentrating those assets in a handful of foreign
countries. At the end of September, Asset Manager had a 4.2% stake in
Japan, and 4.0% in Germany, but no other foreign country by itself
accounted for more than 1.7% of the fund's total investments.
Q. WHY THE LARGE INVESTMENT IN JAPAN?
A. I began building a position in Japan in April and May, when the Nikkei
Index bottomed out around 14,000. For five years now, Japan has been paying
the price for the speculative bubble of the late 1980s. Real estate prices
have fallen, banks have suffered and consumer spending has slowed. And yet
foreign demand for Japanese goods has remained strong, resulting in a
significant trade surplus and, until this summer, a rising yen. The recent
surge in the U.S. dollar versus the yen is a sign that Japanese fiscal and
monetary policy is beginning to produce results. The fund has investments
in Hitachi and other consumer electronics companies whose earnings could
rise as the Japanese economy recovers.
Q. WHAT ABOUT DOMESTIC STOCKS?
A. Here at home, my focus has been on finance and technology stocks. While
the finance sector has benefited from rising bond prices and falling
interest rates, that's a cyclical story; many of the finance stocks I own
are growth stories. Large holdings include Fannie Mae (the Federal National
Mortgage Association) which continues to trade at a price-to-earnings ratio
lower than its growth rate; and American Express, a turnaround story with
significant upside potential if the market recognizes the gains made by its
management team. In the technology sector, I continue to own Compaq and
IBM, still cheap in light of projected earnings; and Intel, the dominant
player in the booming semiconductor industry. Lately I've added to the
fund's total position in REITs, or real estate investment trusts. With an
8% yield and a projected 3% growth rate, REITs are among the most
attractive values in today's market. As always, not everything performed as
well as I would have liked. Among the disappointments were RJR Nabisco,
Wal-Mart and General Motors, all selling at low price-to-earnings ratios
that belie their impressive growth rates. While it has taken longer than
expected for those stocks to come around, I believe that eventually the
market will recognize their value.
Q. HOW WERE THE FUND'S ASSETS DIVIDED AMONG STOCKS, BONDS AND SHORT-TERM
INVESTMENTS AT THE END OF THE PERIOD?
A. On September 30, 1995, the breakdown was 48% stocks, 25% bonds and 27%
short-term investments. That's somewhat more stock exposure than the fund
would have under neutral conditions, as well as more short-term holdings,
while the fund's bond exposure is significantly less than it would
otherwise be in a neutral environment.
Q. CAN YOU EXPLAIN WHY YOU HAVE THE FUND STRUCTURED LIKE THAT?
A. One portion of the fund's asset mix that has changed very little during
the past year is its exposure to domestic stocks. That's always been around
30%. Earlier in the year, though, when foreign stocks were less attractive,
the overall stock portion of the fund fell below a neutral weighting and
the cash portion rose. Then as Japan's prospects improved and foreign
stocks crept back into the fund, cash declined accordingly. Bonds are below
a neutral weighting only because the bond market has surged since the
beginning of the year, and would appear to be near its peak. In retrospect,
I wish I'd owned more bonds earlier in the year, but that opportunity has
passed. Barring external factors such as significant progress on a balanced
budget, now is probably not the time to go hunting for price gains in the
bond market. That's reflected in the average duration of the bond portion
of the fund, which at about 1.72 years at the end of the period is slightly
defensive. Duration measures how much a bond's price will vary with changes
in interest rates.
Q. WHAT WAS YOUR BOND STRATEGY DURING THE YEAR?
A. Much of the fund's exposure to emerging markets early in the period was
through bonds, which I sold together with emerging market stocks beginning
last December. Early this past summer, I took profits on a portion of the
fund's investment in U.S. Treasury securities and redeployed those assets
in German bonds. The German bond market until then had lagged the U.S.
market, indicating it might have greater upside potential. Also, Germany's
inflation outlook was especially promising, as were prospects for a rate
cut by the Bundesbank, Germany's central bank. Events unfolded as expected
in Germany, and the fund made a profit from its investment. Although the
deutsche mark declined versus the U.S. dollar last summer, because I had
hedged the fund's German investments, the gains were largely preserved. On
the domestic side, as economic growth has slowed, I've reduced the fund's
stake in so-called junk bonds, whose yield advantage over higher-rated
bonds has declined.
Q. HOW DID DERIVATIVES AFFECT THE FUND'S PERFORMANCE?
A. The overall impact was positive but hardly significant. Some that I own
can be found under indexed securities in the portfolio listing at the back
of this report, but they're often referred to as structured notes. One way
to think of them is as customized securities. They let me tailor a portion
of the fund's investments to match my outlook in very specific segments of
the market, so that I can take advantage of opportunities that might
otherwise be inaccessible. During the period, the fund made money on
structured notes tied to short-term interest rates in the U.K., and to the
price of oil. Structured notes tied to commodities such as gold and
platinum did not do well, but I'll probably keep them as a hedge against
inflation. If global inflation were to flare up suddenly for whatever
reason, those commodities could be among the first to react.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I'm cautiously optimistic. The U.S. economy has been expanding slowly
but steadily at an annual rate of less than 3%, right in line with the
long-term growth rate targeted by the Federal Reserve. Inflation, so far,
is almost a non-issue. The dollar appears to have stabilized. Together
those factors make for an unusually attractive investment climate. Given
1995's sharp gains in domestic markets, foreign markets appear to have more
relative value; foreign investments are therefore likely to remain a
significant part of the fund. The key variable I'll be watching this fall
is progress on the balanced budget. If the Republican Congress can broker
an agreement, and President Clinton doesn't veto it, we could be looking at
long-term interest rates approaching historic lows. Needless to say, that
would be a tremendous boost for financial markets. If, on the other hand,
the political parties deadlock on the budget, then the unknowns multiply
and the outlook becomes less promising. It all comes back to inflation. If
inflation returns with a vengeance, all bets are off, and we could be
looking at the first real bear market in more than a decade. But if
inflation stays low, then bond prices should keep rising and stocks will
have a chance to achieve still higher price-to-earnings multiples.
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 September 30,
1995, more than $11 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 THE STAYING
POWER OF THE BULL MARKET:
"If people are concerned
about the market, their
actions are not showing it. In
1995, investors have
increased equity exposure,
equity funds have reduced
cash, and there's been a
record number of initial and
secondary public offerings,
some of them frankly
speculative. We're definitely
not in the early stages of the
game anymore. We may, in
fact, be in the final innings. A
more challenging period lies
ahead. Whether that means a
market setback or simply
lower positive returns
depends on the outlook for
inflation."
(solid bullet) Foreign investments
totaled about 21% of the
funds investments at the end
of the period, up from about
12% six months ago. Total
investment in Mexico and
other emerging markets was
less than 8%. For a complete
breakdown of the fund's
foreign investments by
country, see page 52.
(solid bullet) The fund's asset mix at the
end of the period was 48%
stocks, 25% bonds and 27%
short-term investments. In a
neutral investment climate,
the breakdown would be
closer to 40% stocks, 40%
bonds and 20% short-term
investments.
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF SEPTEMBER 30, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Federal National Mortgage Association 1.7 1.3
Philip Morris Companies, Inc. 1.4 0.7
General Motors Corp. 1.1 0.5
Compaq Computer Corp. 1.0 0.6
International Business Machines Corp. 0.9 1.0
TOP FIVE FIXED-INCOME SECURITIES AS OF SEPTEMBER 30, 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) 14.9 17.3
German Government (various issues) 3.6 0.0
Brazil Federative Republic 0.8 0.3
SCI Television, Inc. (various issues) 0.5 0.6
Revlon Worldwide Corp. 0.3 0.5
</TABLE>
TOP FIVE COUNTRIES AS OF SEPTEMBER 30, 1995
(BY LOCATION OF ISSUER) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE COUNTRIES
6 MONTHS AGO
United States 78.9 88.3
Japan 4.2 3.0
Germany 4.0 0.3
Canada 1.7 1.3
Brazil 1.5 0.5
ASSET ALLOCATION
AS OF SEPTEMBER 30, 1995 * AS OF MARCH 31, 1995 **
Row: 1, Col: 1, Value: 27.0
Row: 1, Col: 2, Value: 25.0
Row: 1, Col: 3, Value: 48.0
Row: 1, Col: 1, Value: 36.0
Row: 1, Col: 2, Value: 26.0
Row: 1, Col: 3, Value: 38.0
Stock class 48%
Bond class 25%
Short-term class
and other 27%
FOREIGN
INVESTMENTS 21%
Stock class 38%
Bond class 26%
Short-term class
and other 36%
FOREIGN
INVESTMENTS 12%
*
**
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 SEPTEMBER 30, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 49.2%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 1.1%
AEROSPACE & DEFENSE - 0.5%
Alliant Techsystems, Inc. (a) 65,000 $ 3,055
Boeing Co. 339,300 23,157
General Motors Corp. Class H 58,300 2,390
Lockheed Martin Corp. 96,715 6,492
McDonnell Douglas Corp. 95,500 7,903
Northrop Grumman Corp. 30,000 1,826
Precision Castparts Corp. 111,000 4,052
Rockwell International Corp. 95,000 4,489
Thiokol Corp. 37,500 1,341
54,705
DEFENSE ELECTRONICS - 0.4%
Loral Corp. 290,200 8,271
Raytheon Co. 315,500 26,816
Tracor, Inc. (a) 366,600 6,049
41,136
SHIP BUILDING & REPAIR - 0.2%
Bremer Vulkan AG (a) 33,500 1,389
Far East-Levingston Shipbuilding Ltd. 214,000 938
General Dynamics Corp. 300,700 16,501
Jurong Shipyard Ltd. 237,000 1,696
Keppel Corp. Ltd. 486,000 3,887
24,411
TOTAL AEROSPACE & DEFENSE 120,252
BASIC INDUSTRIES - 2.2%
CHEMICALS & PLASTICS - 1.0%
Agrium, Inc. 39,300 1,443
Betz Laboratories, Inc. 49,200 2,011
Carbide/Graphite Group, Inc. (a) 12,200 172
DESC (Sociedad de Fomento Industrial SA) Class B (a) 803,400 3,020
du Pont (E.I.) de Nemours & Co. 170,000 11,688
Ferro Corp. 150,400 3,741
First Mississippi Corp. 75,000 2,991
Grace (W.R.) & Co. 210,000 14,018
Great Lakes Chemical Corp. 109,800 7,425
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
CHEMICALS & PLASTICS - CONTINUED
Han Wha Corp. 12,600 $ 223
Hercules, Inc. 197,900 11,478
Kemira OY sponsored ADR (h) 21,110 325
Korea Chemical Co. Ltd. (a) 2,800 284
LG Chemical Ltd. 134,364 2,956
Metacorp BHD 500,000 1,372
Nalco Chemical Co. 115,700 3,948
Oriental Chemical Industries Co. Ltd. 93,261 2,938
PT Tri Polyta Indonesia sponsored ADR 69,400 1,492
Perez Companc Class B 595,133 2,601
Potash Corp. of Saskatchewan 72,000 4,495
Raychem Corp. 410,400 18,468
Rhodia Ster SA GDR (h) 140,900 1,867
Rohm & Haas Co. 30,000 1,811
Sekisui Chemical Co. Ltd. 214,000 2,704
Shin-Etsu Chemical Co. Ltd. 115,000 2,214
Union Carbide Corp. 177,800 7,068
112,753
IRON & STEEL - 0.1%
Acesita Cia Acos Especiais Itabira Ord. 281,255,300 2,374
Carpenter Technology Corp. 50,000 1,956
Compania Siderurgica Nacional 127,153,300 3,362
Mannesmann AG Ord. 12,900 4,237
Nucor Corp. 19,200 859
Pohang Iron & Steel Co. Ltd. 5,780 574
Republic Engineered Steels, Inc. (a) 165,500 1,241
Wing Tiek Holdings BHD 1,000 5
14,608
METALS & MINING - 0.6%
Alcan Aluminium Ltd. 237,465 7,700
Alumax, Inc. (a) 18,650 629
Aluminum Co. of America 417,200 22,059
Compania Vale do Rio Doce PN Ord. 17,474,000 2,925
Dae Han Jung Suok (a) 606 18
Eramet SA 37,000 2,810
Noranda, Inc. 256,100 5,202
Reynolds Metals Co. 322,000 18,596
Stillwater Mining Co. (a) 50,000 1,038
Sungei Way Holdings BHD 94,000 320
61,297
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
PACKAGING & CONTAINERS - 0.2%
Corning, Inc. 291,500 $ 8,344
Owens-Illinois, Inc. (a) 1,028,000 12,978
Sonoco Products Co. 34,545 959
22,281
PAPER & FOREST PRODUCTS - 0.3%
Arab Malaysian Corp. BHD 1,550,000 5,455
Aokam Perdana BHD 1,000,000 2,008
Bowater, Inc. 99,000 4,616
Champion International Corp. 57,000 3,071
Crown Vantage, Inc. (a) 15,340 341
Gadek BHD 500,000 2,963
Klabin Industria de Papel e Celulose PN 1,300,500 1,760
James River Corp. 203,400 6,509
Malakoff BHD 1,370,000 4,168
30,891
TOTAL BASIC INDUSTRIES 241,830
CONGLOMERATES - 0.4%
Allied-Signal, Inc. 149,900 6,614
Crane Co. 80,000 2,760
Grupo Carso SA de CV Class A-1 (a) 1,011,700 5,989
ITT Corp. 44,400 5,506
Mark IV Industries, Inc. 125,000 2,781
Tyco International Ltd. 134,970 8,503
United Technologies Corp. 179,000 15,820
47,973
CONSTRUCTION & REAL ESTATE - 3.5%
BUILDING MATERIALS - 0.2%
Armstrong World Industries, Inc. 162,800 9,035
Cooper Cameron Corp. (a) 35,572 920
Hong Leong Industries BHD 200,000 1,050
Keumkang Ltd. 15,800 1,302
Lafarge Corp. 55,671 1,023
Masco Corp. 223,100 6,135
Medusa Corp. 49,650 1,403
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
BUILDING MATERIALS - CONTINUED
Owens-Corning Fiberglas Corp. (a) 27,900 $ 1,245
Pioneer International Ltd. 207,600 549
22,662
CONSTRUCTION - 0.4%
Butler Manufacturing Co. 50,000 1,400
Centex Corp. 121,590 3,526
DR Horton, Inc. 180,858 1,944
Daelim Industrial Co. 106,840 2,503
Daelim Industrial Co. (RFD) (a) 25,641 561
Daito Trust Construction 61,500 709
Dong Ah Construction Industries Co. Ltd. 51,600 2,228
Hopewell Holdings Ltd. 33,240,554 22,570
Kaufman & Broad Home Corp. 25,000 316
McDermott (J. Ray) SA 150,000 3,375
NCI Building Systems, Inc. (a) 75,000 1,763
Pulte Corp. 136,000 3,859
Ryland Group, Inc. 53,900 835
Samsung Engineering & Construction Co. (RFD) (a) 3,705 119
Schuler Homes, Inc. (a) 125,000 1,453
Suh Kwang Construction Co. 35,000 611
YTL Corp. BHD 477,500 2,469
50,241
ENGINEERING - 0.2%
Bukaka Teknik Utama (For. Reg.) (a) 1,000,000 1,633
Fluor Corp. 135,600 7,594
Foster Wheeler Corp. 70,000 2,476
Hanil Development Co. (a) 119,668 3,022
Hyundai Engineering & Construction Co. Ltd. (a) 89,620 4,819
Hyundai Engineering & Construction Co. Ltd. (RFD) (a) 6,138 231
19,775
REAL ESTATE - 0.4%
Bandar Raya Development BHD 2,266,000 4,272
Ciputra Development PT (For. Reg.) 378,500 810
Daiman Development BHD 690,000 763
Fondo Opcion SA de CV Class 2, Series B (a) 377,400 467
Great Eagle Holdings Ltd. (a) 1,588,000 3,923
Hong Kong Land Holdings Ltd. 814,000 1,425
Klepierre SA 3,900 459
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE - CONTINUED
Land & House PCL (For. Reg.) (a) 125,000 $ 1,963
Liu Chong Hing Investment Ltd. 1,910,000 2,001
Malaysian Resources Corp. BHD 2,781,000 4,601
Mitsubishi Estate Co. Ltd. 403,000 4,486
New World Development Co. 2,500,000 9,862
Putra Surya Perkasa, PT (For. Reg.) 1,000,000 375
Sime UEP Properties BHD 446,000 788
Singapore Land Ltd. 668,000 3,866
Tan & Tan Development BHD 1,297,000 1,269
41,330
REAL ESTATE INVESTMENT TRUSTS - 2.3%
Bay Apartment Communities, Inc. 507,900 10,920
Beacon Properties Corp. 8,000 171
Bradley Real Estate Trust (SBI) 329,700 5,275
CBL & Associates Properties, Inc. 351,700 7,298
Cali Realty Corp. 52,300 1,059
Capstead Mortgage Corp. 18,366 585
CenterPoint Properties Corp. 63,200 1,414
Colonial Properties Trust (SBI) 326,100 8,112
DeBartolo Realty Corp. 170,500 2,387
Developers Diversified Realty Corp. 278,700 8,396
Duke Realty Investors, Inc. 417,300 12,988
Duta Anggada Realty Ord. 1,250,000 814
Equity Inns, Inc. 200,000 2,350
Equity Residential Properties Trust (SBI) 479,200 14,436
Evans Withycombe Residential, Inc. 131,900 2,671
Excel Realty Trust, Inc. 571,400 11,285
Felcor Suite Hotels, Inc. 298,300 8,949
Franchise Finance Corp. of America 311,100 6,689
Glimcher Realty Trust (SBI) 326,900 6,661
Haagen Alexander Properties, Inc. 148,600 1,727
Highwoods Properties, Inc. 360,300 9,503
Innkeepers USA Trust 93,800 891
JDN Realty Corp. 230,000 4,888
Kimco Realty Corp. 407,000 16,224
LTC Properties, Inc. 43,000 624
Liberty Property Trust (SBI) 88,300 1,876
Macerich Co. 285,400 6,065
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - CONTINUED
National Golf Properties, Inc. 300,000 $ 6,563
Oasis Residential, Inc. 161,800 3,641
Omega Healthcare Investors, Inc. 299,600 8,014
Patriot American Hospitality, Inc. 333,600 8,549
Post Properties, Inc. 134,700 4,176
RFS Hotel Investors, Inc. 309,300 4,717
Realty Income Corp. 347,300 7,337
Security Capital Industrial Trust, Inc. 95,666 1,555
Shurgard Storage Centers, Inc. 347,200 8,637
Simon Properties Group, Inc. 134,700 3,418
Sovran Self Storage, Inc. 327,000 8,134
Speiker Properties, Inc. 304,800 7,315
Starwood Lodging Trust combined certificate (SBI) 177,900 5,003
Storage Equities, Inc. 567,300 10,566
Storage Trust Realty (SBI) 280,900 5,723
Storage USA, Inc. 163,800 5,057
Sun Communities, Inc. 50,000 1,300
Sunstone Hotel Investors, Inc. 178,000 1,713
Trinet Corporate Realty Trust, Inc. 25,000 694
256,370
TOTAL CONSTRUCTION & REAL ESTATE 390,378
DURABLES - 3.6%
AUTOS, TIRES, & ACCESSORIES - 2.5%
Asia Motors Co., Inc. 12,031 171
BMW AG 4,300 2,358
Capco Automotive Products Corp. 94,100 870
Chrysler Corp. 1,467,804 77,794
Cummins Engine Co., Inc. 66,500 2,560
Daimier Benz AG Ord. 15,000 7,396
Dae Won Kang Up Co. 13,491 378
Dana Corp. 322,200 9,304
Discount Auto Parts, Inc. (a) 153,800 4,652
Eaton Corp. 60,100 3,185
Echlin, Inc. 47,900 1,712
Fiat Spa 1,094,000 4,080
Ford Motor Co. 34,300 1,068
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
AUTOS, TIRES, & ACCESSORIES - CONTINUED
General Motors Corp. 2,504,492 $ 117,398
Honda Motor Co. Ltd. 325,000 5,801
Hyundai Motor Co. Ltd. (a) 58,300 3,538
Hyundai Motor Service Co. Ltd. 5,675 308
Iochpe Maxion PN Ord. 1,396,300 460
Johnson Controls, Inc. 26,200 1,657
Kia Motors Corp. sponsored GDR (a)(h) 64,200 1,396
Magna International, Inc. Class A 325,700 14,749
Superior Industries International, Inc. 14,000 376
Suzuki Motor Corp. 211,000 2,264
Titan Wheel International, Inc. 77,250 1,323
Toyota Motor Corp. 446,000 8,453
Volvo AB Class B 275,400 6,741
279,992
CONSUMER ELECTRONICS - 0.7%
Black & Decker Corp. 230,000 7,849
Brasmotor PN 10,255,900 2,626
Electrolux AB 72,000 3,436
Matsushita Electric Industrial Co. Ltd. 1,274,000 19,418
Oyl Industries BHD 338,000 2,796
Sony Corp. 508,700 26,219
Whirlpool Corp. 265,000 15,304
77,648
HOME FURNISHINGS - 0.0%
Dapta-Mallinjoud SA 7,100 180
Haverty Furniture Companies, Inc. 12,500 170
Polyvision Corp. (a) 11,584 38
388
TEXTILES & APPAREL - 0.4%
Baikyang Co. 5,500 855
Burlington Industries, Inc. (a) 564,800 7,131
Coteminas PN 6,097,300 1,996
Fila Holding Spa sponsored ADR 99,100 3,506
Hat Brands, Inc. (warrants) (a)(g) 90,346 994
Kellwood Co. 39,000 804
Nam Yeung Corp. 6,140 875
NIKE, Inc. Class B 80,000 8,890
Nine West Group, Inc. (a) 225,200 10,247
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
Russell Corp. 100,000 $ 2,550
Tommy Hilfiger (a) 25,000 813
Warnaco Group, Inc. Class A 163,800 3,931
Westpoint Stevens, Inc. Class A 77,300 1,662
Yagi Corp. 68,000 866
45,120
TOTAL DURABLES 403,148
ENERGY - 4.2%
ENERGY SERVICES - 0.8%
BJ Services Co. (a) 107,800 2,722
Baker Hughes, Inc. 340,900 6,946
Commercial del Plata (a) 414,200 973
Halliburton Co. 188,300 7,862
McDermott International, Inc. 95,900 1,894
Nabors Industries, Inc. (a) 268,500 2,534
Noble Drilling Corp. (a) 400,000 3,100
Offshore Logistics, Inc. (a) 100,000 1,388
Reading & Bates Corp. (a) 300,000 3,600
Schlumberger Ltd. 653,250 42,625
Smith International, Inc. (a) 140,000 2,433
Sonat Offshore Drilling, Inc. 203,600 6,642
Weatherford International, Inc. (a) 353,200 4,592
87,311
INDEPENDENT POWER - 0.0%
Thermo Electron Corp. (a) 50,000 2,319
OIL & GAS - 3.4%
Amerada Hess Corp. 678,100 32,973
Amoco Corp. 140,300 8,997
Apache Corp. 90,800 2,384
Astra Cia Argentina de Peterol (For. Reg.) 1,441,000 2,507
Atlantic Richfield Co. 348,100 37,377
Blue Range Resource Corp.(a):
Class A 237,100 1,723
Class A (h) 61,700 448
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
British Petroleum PLC:
ADR 772,812 $ 69,453
Ord. 1,444 11
Burlington Resources, Inc. 522,600 20,251
Camco International, Inc. 150,000 3,675
Canada Occidental Petroleum Ltd. 310,000 9,850
Chesapeake Energy Corp. (a) 25,000 791
Coastal Corp. (The) 111,700 3,756
Daesung Industrial Co. Ltd. 13,200 1,095
Elf Aquitaine sponsored ADR 138,357 4,652
Global Natural Resources, Inc. (a) 15,500 153
Kerr-McGee Corp. 256,200 14,219
Louis Dreyfus Natural Gas Corp. (a) 130,000 1,788
Louisiana Land & Exploration Co. 209,800 7,474
Mobil Corp. 82,600 8,229
Murphy Oil Corp. 87,700 3,508
Newfield Exploration Co. (a) 150,100 4,522
Noble Affiliates, Inc. 72,600 1,915
Norsk Hydro AS 90,823 3,906
Norsk Hydro AS ADR 88,900 3,834
Occidental Petroleum Corp. 745,000 16,390
Petroleum Geo-Services AS (ADR) (a) 125,000 3,063
Phillips Petroleum Co. 357,300 11,612
PTT Exploration & Production (For. Reg.) (a) 250,000 2,431
Renaissance Energy Ltd. (a) 452,500 10,203
Renaissance Energy Ltd. (a)(h) 250,000 5,637
Rio Alto Exploration Ltd. (a) 832,800 2,700
Royal Dutch Petroleum Co. 14,800 1,817
Santa Fe Energy Resources, Inc. (a) 226,100 2,148
Texaco, Inc. 83,200 5,377
Tosco Corp. 240,300 8,290
Total SA:
Class B 213,211 12,904
sponsored ADR 501,426 15,105
Unocal Corp. 762,836 21,741
Vintage Petroleum, Inc. 151,900 3,190
Yukong Ltd. 9,510 386
Yukong Ltd. (New) 1,139 45
372,530
TOTAL ENERGY 462,160
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - 8.3%
BANKS - 2.9%
AmSouth Bancorporation 1,500 $ 57
Banc One Corp. 40,000 1,460
Banco Bilbao Vizcaya SA Ord. (Reg.) 89,200 2,745
Banco de Galicia Y Buenos Aires SA sponsored ADR
representing Class B shares 68,401 1,231
Banco Frances del Rio de la Plata SA ADR 30,000 649
Banco Intercontinental Espanol 10,100 881
Banco Popular Espanol 7,300 1,136
Bangkok Bank Ltd. 340,900 3,831
Bank of Boston Corp. 197,664 9,414
Bank Dagang Nasional Indonesia PT 4,705,000 4,309
Bank International Indonesia PT (For. Reg.) 464,600 1,600
Bank of Asia PCL (For. Reg.) 274,250 688
Bank of New York Co., Inc. 247,884 11,527
Barnett Banks, Inc. 183,100 10,368
BayBanks, Inc. 31,800 2,413
Boram Bank 125,018 2,034
BQE National Paris Ord. 58,404 2,289
Bradesco PN 292,207,517 2,791
Chase Manhattan Corp. 50,119 3,064
Chemical Banking Corp. 282,800 17,215
Cho Hung Bank Co. Ltd. 290,976 4,345
Comerica, Inc. 47,200 1,717
Commerce Asset Holding BHD 416,000 2,184
C. S. Holdings (Bearer) 45,175 4,245
Dao Heng Bank Group Ltd. 500,000 1,659
Deutsche Bank AG 175,000 8,338
Development Bank of Singapore Ltd. (For. Reg.) 1,002,000 11,387
Finance One PCL (For. Reg.) (a) 69,300 423
First Bank System, Inc. 60,000 2,888
First Chicago Corp. 25,000 1,716
First Union Corp. 3,008 153
Fleet Financial Group, Inc. 1,125,140 42,474
Grupo Financiero Banorte SA de CV Class B (a) 397,700 493
HSBC Holdings PLC 2,307,826 32,086
Hana Bank 19,656 440
Hanil Bank 69,531 972
Hong Leong Bank BHD 1,974,000 5,338
International Bank of Asia Ltd. 2,455,000 1,476
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Itaubanco PN (Pfd. Reg.) 3,000,000 $ 944
KeyCorp 82,337 2,820
Korea Long Term Credit Bank (a) 31,500 1,008
Krung Thai Bank (For. Reg.) 2,876,960 11,464
Kyung Nam Bank (a) 12,625 150
Kyungki Bank 112,062 1,306
Liu Chong Hing Bank Ltd. 1,000,000 1,242
National Bank of Canada 250,000 2,143
NationsBank Corp. 153,000 10,290
Overseas Union Bank Ltd. (For. Reg.) 1,583,000 10,105
Panin Bank PT (For. Reg.) 1,677,750 2,037
Public Bank BHD (For. Reg.) 994,000 1,842
Republic New York Corp. 57,200 3,346
SCF Finance and Securities Co. Ltd. (rights) (a) 24,813 -
Shawmut National Corp. 1,164,307 39,150
Siam City Bank PCL (For. Reg.) (a) 3,349,800 4,538
Siam City Credit Finance and Securities Co. Ltd. (rights) (a) 19,705 -
State Street Boston Corp. 68,000 2,720
Swiss Bank Corp. (Bearer) 14,990 5,738
Thai Farmers Bank PCL 680,500 5,911
Thai Military Bank Ltd. (For. Reg.) 852,540 3,397
Unibanco PN 22,486,700 755
Unidanmark AS Class A 25,000 1,092
United Overseas Bank Ltd.:
(For. Reg.) 450,400 3,886
(warrants) (a) 610,800 2,378
Shinhan Bank 129,340 3,184
Shinhan Bank (New) (a) 21,784 462
323,944
CLOSED END INVESTMENT COMPANY - 0.2%
Austria Fund, Inc. 183,300 1,489
Europe Fund, Inc. 27,400 356
First NIS Regional Fund (a) 480,000 3,072
France Growth Fund, Inc. 315,800 3,079
Germany Fund, Inc. 11,415 131
Growth Fund of Spain, Inc. 451,300 4,795
Morgan Stanley India Investment Fund, Inc. 1,071,000 11,112
Thai Fund, Inc. 27,761 666
24,700
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 0.9%
Acom Co. Ltd. 74,300 $ 2,407
Affin Holdings BHD 421,000 800
American Express Co. 1,314,885 58,348
Asia Credit PCL ACL (For. Reg.) 130,000 870
Beneficial Corp. 79,000 4,128
Benpress Holdings Corp. GDR (a) 125,000 750
Central Investment & Finance Corp. 22,000 490
Countrywide Credit Industries, Inc. 87,700 2,061
Equitable Companies, Inc. 150,700 3,692
Green Tree Acceptance, Inc. 110,000 6,710
Hong Leong Credit BHD 2,016,000 9,621
Industrial Finance Corp. (For. Reg.) 1,146,633 3,518
JCG Holdings Ltd. 6,558,000 4,877
Mercury Finance Co. 25,000 609
National Finance & Securities PCL (For. Reg.) (a) 250,000 1,205
North American Mortgage Co. 50,000 1,300
TA Enterprise BHD 1,000,000 1,408
102,794
FEDERAL SPONSORED CREDIT - 2.0%
Federal Home Loan Mortgage Corporation 451,700 31,224
Federal National Mortgage Association 1,769,800 183,174
214,398
INSURANCE - 1.2%
Aetna Life & Casualty Co. 40,000 2,935
Alexander & Alexander Services, Inc. 98,900 2,398
Allstate Corp. 1,022,213 36,161
American International Group, Inc. 70,050 5,954
Assicurazioni Generali Spa 114,310 2,640
Baloise-Holding (Reg.) 2,100 4,619
Berkley (W.R.) Corp. 61,300 2,781
CIGNA Corp. 43,000 4,477
CMAC Investments 37,000 1,947
Chubb Corp. (The) 6,300 605
Corporacion Mapfrecia International
de Reaseguros SA (Reg.) 39,200 2,025
General Re Corp. 134,500 20,310
HealthCare COMPARE Corp. (a) 100,000 3,875
International Nederlanden Groep NV 110,083 6,399
Loews Corp. 40,400 5,878
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
MGIC Investment Corp. 85,000 $ 4,866
NAC Re Corp. 69,500 2,519
Old Republic International Corp. 50,000 1,444
PMI Group, Inc. 65,500 3,103
Providian Corp. 100,100 4,154
Reliastar Financial Corp. 30,000 1,219
Renaissance RE Holdings (a) 35,000 853
Royal Insurance Holdings PLC 494,917 2,770
SAFECO Corp. 50,000 3,281
Skandia Foersaekrings AB 60,900 1,434
Torchmark Corp. 87,000 3,665
Travelers, Inc. (The) 60,567 3,218
135,530
SAVINGS & LOANS - 0.3%
Ahmanson (H.F.) & Co. 463,800 11,769
Charter One Financial Corp. 69,300 2,044
Golden West Financial Corp. 337,400 17,039
Washington Mutual, Inc. 106,500 2,822
33,674
SECURITIES INDUSTRY - 0.8%
Bear Stearns Companies, Inc. 107,882 2,319
Czech Value Fund Unit (h) 24,000 1,236
Dah Sing Financial Holdings Ltd. 450,000 1,013
Daewoo Securities Co. Ltd. 32,760 1,115
Edwards (A.G.), Inc. 21,100 562
Hanshin Securities Co. Ltd. 13,356 311
Hyundai Securities Co. Ltd. 21,012 481
Korea First Securities Co. Ltd. 1,590 26
LG Securities Co. Ltd. 88,182 2,020
Lehman Brothers Holdings, Inc. 161,280 3,730
Merrill Lynch & Co., Inc. 344,800 21,550
Midland Walwyn, Inc. 496,500 3,100
Morgan Stanley Group, Inc. 240,000 23,075
Nomura Securities Co. Ltd. 942,000 18,325
Peregrine Investments Holdings Ltd. 573,000 860
Pioneer Group, Inc. 90,000 2,464
Salomon, Inc. 66,600 2,547
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SECURITIES INDUSTRY - CONTINUED
Schwab (Charles) Corp. 26,400 $ 739
Ssangyong Investment & Securities Co. Ltd. 14,392 322
United Asset Management Corp. 64,800 2,600
88,395
TOTAL FINANCE 923,435
HEALTH - 2.0%
DRUGS & PHARMACEUTICALS - 0.8%
Advanced Therapeutic Systems Ltd. (a) 5,250 149
Allergan, Inc. 60,700 2,026
American Home Products Corp. 24,800 2,105
Amgen, Inc. (a) 260,000 12,968
Biogen, Inc. (a) 244,500 14,670
Carter-Wallace, Inc. 130,200 1,628
Depotech Corp. 8,900 107
Dura Pharmaceuticals, Inc. (a) 27,500 818
Elan Corp. PLC ADR (a) 64,300 2,668
Elan Corp. PLC ADR (warrants) (a) 5,250 70
Gedeon Richter GDR 32,800 574
Genentech, Inc. (redeemable) (a) 132,100 6,423
Merck & Co., Inc. 52,500 2,940
Pharmacia AB:
Class A Free shares 223,700 6,715
Series A sponsored ADR 75,000 2,243
Roche Holdings Ltd. participation certificates 300 2,120
Schering-Plough Corp. 203,100 10,460
Sepracor, Inc. (a) 30,000 649
Sigma Aldrich Corp. 56,300 2,731
SmithKline Beecham PLC ADR 41,700 2,111
Yamanouchi Pharmaceutical Co. Ltd. 824,000 17,682
91,857
MEDICAL EQUIPMENT & SUPPLIES - 0.8%
Acuson Corp. (a) 113,200 1,514
Advanced Technology Laboratories, Inc. (a) 130,500 2,349
AMSCO International, Inc. (a) 15,500 308
Baxter International, Inc. 404,800 16,647
Becton, Dickinson & Co. 39,500 2,484
Boston Scientific Corp. (a) 67,200 2,864
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - CONTINUED
Coherent, Inc. (a) 68,200 $ 2,489
Hoya Corp. 72,000 2,108
Johnson & Johnson 44,100 3,269
Medtronic, Inc. 70,000 3,763
Millipore Corp. 160,000 6,000
Nellcor, Inc. (a) 90,500 4,502
Oakley, Inc. (a) 16,100 477
Pall Corp. 162,200 3,771
Shinhung Co. Ltd. (a) 4,170 116
St. Jude Medical, Inc. (a) 74,900 4,737
Spacelabs Medical, Inc. (a) 30,200 853
Thermedics, Inc. (a) 113,800 2,262
U.S. Surgical Corp. 803,200 21,487
82,000
MEDICAL FACILITIES MANAGEMENT - 0.4%
American Medical Response, Inc. (a) 105,000 2,979
Apria Healthcare Group, Inc. (a) 55,500 1,374
Columbia/HCA Healthcare Corp. 758,215 36,868
Pediatrix Medical Group 10,600 217
Tenet Healthcare Corp. (a) 105,400 1,831
TheraTx, Inc. (a) 15,500 203
United Dental Care, Inc. 10,700 321
43,793
TOTAL HEALTH 217,650
HOLDING COMPANIES - 0.5%
Astra International PT (For. Reg.) 500,000 993
Berjaya Group BHD 22,202,000 17,482
Brierley Investments Ltd. 4,743,081 3,615
Christies International PLC 300,000 964
First Pacific Co. Ltd. 1,876,000 2,002
Golden Plus Holdings BHD 400,000 899
Jardine Matheson Holdings Ltd. Ord. 304,400 2,055
Kamunting Corp. BHD 3,826,000 2,906
Malaysian Plantations BHD 3,683,000 3,413
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HOLDING COMPANIES - CONTINUED
SDW Holdings Corp. (warrants) (a) 68,700 $ 481
Sanluis Corp. Units (Class B, Class C, and Class D) 88,376 2,616
United Industrial Corp. Ltd. 4,780,000 4,225
U.S. Industries, Inc. (a) 200,000 3,100
Westmont Land Asia BHD 2,018,000 3,820
48,571
INDUSTRIAL MACHINERY & EQUIPMENT - 2.7%
ELECTRICAL EQUIPMENT - 1.4%
Allen Group, Inc. (The) 19,100 692
Amphenol Corp. Class A (a) 75,000 1,622
C COR Electronics, Inc. (a) 105,300 2,475
Cherry Corp. (a):
Class A 52,100 716
Class B 62,100 900
Emerson Electric Co. 40,000 2,860
General Electric Co. 175,200 11,169
Glenayre Technologies, Inc. 67,500 4,860
Hitachi Koki Co. Ltd. Ord. 290,000 2,510
Hutchison Whampoa Ltd. Ord. 3,957,000 21,443
Mitsubishi Electric Co. Ord. 5,249,000 40,792
Murata Manufacturing Co. Ltd. 362,000 13,504
Omron Corp. 1,583,000 36,509
Philips Electronics NV (Bearer) 92,500 4,514
Samsung Electro-Mechanics Co. 30,000 1,484
Samsung Electro-Mechanics Co. (New) 29,261 1,394
United Communication Industry PCL (For. Reg.) 127,200 1,652
United Engineers BHD 533,000 3,413
152,509
INDUSTRIAL MACHINERY & EQUIPMENT -1.1%
Aida Engineering Ltd. Ord. 314,000 2,251
Amada Metrecs Co. Ltd. 290,000 4,100
Cascade Corp. 93,000 1,418
Caterpillar, Inc. 568,000 32,305
Cooper Industries, Inc. 66,990 2,361
Deere & Co. 500,600 40,736
Duriron Co., Inc. 54,100 1,582
Exide Corp. 50,000 2,500
Greenfield Industries, Inc. 82,100 2,525
Harnischfeger Industries, Inc. 30,000 1,001
Hwacheon Machinery Works 6,300 207
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
Ingersoll-Rand Co. 65,000 $ 2,438
Keystone International, Inc. 50,000 1,075
Parker-Hannifin Corp. 45,000 1,710
Ssangyong Heavy Industries Co. Ltd. 41,550 462
Svedala Industri Free shares 203,200 6,115
Timken Co. 75,000 3,197
Valmet OY Class A 160,800 5,233
Van Der Horst Ltd. 1,818,000 9,438
120,654
POLLUTION CONTROL - 0.2%
Browning-Ferris Industries, Inc. 9,500 289
Safety Kleen Corp. 50,000 731
Thermo Instrument Systems, Inc. (a) 25,000 694
WMX Technologies, Inc. 694,000 19,779
21,493
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 294,656
MEDIA & LEISURE - 1.1%
BROADCASTING - 0.2%
Citicasters, Inc. (a) 25,000 834
Chancellor Trust Class I Unit (a)(g) 148 2,990
Liberty Media Group, Series A (a) 108,375 2,899
People's Choice TV Corp. (a) 37,100 909
Sinclair Broadcast Group, Inc. Class A (a) 10,200 293
TCI Group Class A 358,500 6,274
Television Francaise 1 SA 20,100 1,984
Viacom, Inc. (a):
Class A 4,000 199
Class B (non-vtg.) 127,307 6,334
22,716
ENTERTAINMENT - 0.1%
Live Entertainment, Inc. (a)(g):
$2.00 (warrants) 256,000 13
$2.72 (warrants) 244,706 12
Multi-Purpose Holdings BHD 5,960,000 9,244
Royal Caribbean Cruises Ltd. 146,400 3,550
12,819
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
LEISURE DURABLES & TOYS - 0.2%
Arctco, Inc. 125,700 $ 1,603
Cobra Golf, Inc. (a) 44,600 1,332
Fleetwood Enterprises, Inc. 524,100 10,418
Hasbro, Inc. 77,500 2,412
Mattel, Inc. 35,500 1,043
Outboard Marine Corp. 164,000 3,526
Takara Co. Ltd. 286,000 2,472
22,806
LODGING & GAMING - 0.2%
Accor SA 22,600 2,800
Bally Gaming International, Inc. (warrants) (a) 149,100 1,025
Bally's Grand, Inc. (warrants) (a) 28,618 243
Circus Circus Enterprises, Inc. (a) 234,400 6,563
Genting BHD 117,500 1,014
Harrah's Entertainment, Inc. 60,200 1,761
Host Marriott Corp. (a) 156,156 1,932
La Quinta Motor Inns, Inc. 106,775 2,990
Marriott International, Inc. 82,656 3,089
Prime Hospitality Corp. (a) 15,500 159
Sun International Hotels Ltd. (a) 7,684 469
Sun International Hotels Ltd. Class B (a) 1,613 98
22,143
PUBLISHING - 0.2%
American Media, Inc. Class A 84,500 486
Gannett Co., Inc. 52,600 2,873
Meredith Corp. 118,000 4,691
Nelson Thomas, Inc. 81,300 2,053
News Corp. Ltd. ADR 101,700 2,237
Singapore Press Holdings Ltd. (For. Reg.) 308,000 4,710
17,050
RESTAURANTS - 0.2%
Bertucci's, Inc. (a) 69,700 497
Brinker International, Inc. (a) 166,800 2,481
Cracker Barrel Old Country Store, Inc. 135,000 2,717
Darden Restaurants, Inc. (a) 99,000 1,139
Landry's Seafood Restaurants, Inc. (a) 300 5
Lone Star Steakhouse Saloon (a) 47,200 1,935
McDonald's Corp. 231,200 8,843
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - CONTINUED
Outback Steakhouse, Inc. (a) 71,200 $ 2,189
Yoshinoya D&C Co. Ltd. Ord. 13 193
19,999
TOTAL MEDIA & LEISURE 117,533
NONDURABLES - 2.9%
AGRICULTURE - 0.0%
Molinos Rio de La Plata SA Class B (Reg.) 289,938 1,769
BEVERAGES - 0.2%
Brahma (Cia Cervejaria) (Pfd. Reg.) 13,330,100 5,434
Compania Cervecerias Unidas SA ADR 108,400 2,317
El Aguila SA (a) 125,000 952
Emvasa del Valle de Enah Ord. (a) 1,112,000 1,219
Panamerican Beverages, Inc. Class A 164,600 4,424
PepsiCo, Inc. 110,000 5,610
Quilmes Industries SA 163,300 2,817
Redhook Ale Brewery, Inc. (a) 3,900 115
Whitbread Co. PLC Class A 133,332 1,294
24,182
FOODS - 0.2%
Boustead Holdings BHD 47,000 93
Cheil Foods & Chemical Industries 18,900 1,223
ConAgra, Inc. 64,000 2,536
Herdez SA de CV Class A (a) 456,800 117
Kellogg Co. 40,500 2,931
Miwon Co. Ltd. (a) 14,042 400
Ottogi Foods Co. Ltd. 21,700 633
RalCorp Holdings, Inc. (a) 198,100 4,680
Ralston Purina Co. 96,100 5,562
Samyang Foods Co. 12,600 582
Tyson Foods, Inc. 28,800 774
Universal Robina Corp. 3,800,000 1,823
Weston George Ltd. 79,200 2,745
24,099
HOUSEHOLD PRODUCTS - 0.1%
Avon Products, Inc. 40,000 2,870
First Brands Corp. 62,000 2,790
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - CONTINUED
Metro Pacific, Inc. Class B 9,812,000 $ 1,601
Pyung HWA Industrial Co. 18,800 614
Rubbermaid, Inc. 100,000 2,763
Tambrands, Inc. 59,400 2,606
13,244
TOBACCO - 2.4%
Gudang Garam PT (For. Reg.) 108,000 858
Imasco Ltd. 109,400 1,947
Philip Morris Companies, Inc. 1,858,500 155,183
RJR Nabisco Holdings Corp. 2,930,395 94,872
Sampoerna Hanjaya Mandala (For. Reg.) 624,000 5,812
Souza Cruz Industria Comerico 264,400 1,942
260,614
TOTAL NONDURABLES 323,908
PRECIOUS METALS - 0.9%
Agnico Eagle Mines Ltd. 293,500 4,075
Barrick Gold Corp. 1,621,200 41,994
Cambior, Inc. 500,000 5,311
Franco Nevada Mining Corp. 83,200 4,992
Golden Star Resources Ltd. (a) 216,800 1,293
Kinross Gold Corp. (a) 470,000 4,029
Kloof Gold Mining Co. Ltd. Ord. 144,500 1,612
Newmont Mining Corp. 399,800 16,992
Pegasus Gold, Inc. (a) 100,000 1,360
Placer Dome, Inc. 545,500 14,232
St. Barbara Mines Ltd. 873,200 620
Santa Fe Pacific Gold Corp. 422,650 5,336
101,846
RETAIL & WHOLESALE - 2.7%
APPAREL STORES - 0.2%
Claire's Stores, Inc. 30,000 615
Esprit Asia Holdings Ltd. 2,564,000 920
Gap, Inc. 90,000 3,240
Goldlion Holdings 1,013,000 557
Gymboree Corp. (a) 91,200 2,747
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
APPAREL STORES - CONTINUED
Lamonts Apparel Corp. (a) 213,794 $ 13
Lamonts Apparel Corp. (warrants) (a) 394,561 -
Limited, Inc. (The) 170,900 3,247
Talbots, Inc. 208,800 8,274
Urban Outfitters, Inc. (a) 25,000 638
20,251
DRUG STORES - 0.1%
Revco (D.S.), Inc. (a) 526,200 12,366
Walgreen Co. 60,000 1,680
14,046
GENERAL MERCHANDISE STORES - 1.4%
Carson Pirie Scott & Co. (a) 61,400 1,167
Consolidated Stores Corp. (a) 247,500 5,723
Dayton Hudson Corp. 110,100 8,354
Dillard Department Stores, Inc. Class A 151,900 4,842
Dollar General Corp. 60,000 1,763
Federated Department Stores, Inc. (a) 1,246,900 35,381
Hudson's Bay Co. Ord. 130,000 2,519
Ito-Yokado Co. Ltd. 353,000 19,398
Keumkang Development Industry Co. Ltd. 9,450 217
Keumkang Development Industry Co. Ltd. (New) (a) 1,537 33
Lechters, Inc. (a) 60,000 660
Mac Frugals Bargains Closeouts, Inc. (a) 115,500 1,819
Matahari Putra Prima PT (For. Reg.) 493,000 892
May Department Stores Co. (The) 65,000 2,844
Ministop Co. Ltd. 31,000 715
Price/Costco, Inc. (a) 240,500 4,119
Proffitts, Inc. (a) 100,000 2,750
Sears, Roebuck & Co. 232,300 8,566
Wal-Mart Stores, Inc. 2,025,000 50,370
152,132
GROCERY STORES - 0.2%
Albertson's, Inc. 40,000 1,365
Argyll Group PLC Ord. 340,700 1,823
Fleming Companies, Inc. 117 3
Food Lion, Inc. Class A 206,200 1,250
Giant Food, Inc. Class A 75,000 2,353
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - CONTINUED
Great Atlantic & Pacific Tea Co., Inc. 76,100 $ 2,131
Izumi Co. Ord. 199,000 4,151
Kroger Co. (The) (a) 50,000 1,706
Purity Supreme, Inc. (warrants) (a)(g) 12,534 -
Safeway, Inc. (a) 127,800 5,336
Stop & Shop Companies, Inc. (a) 108,400 2,534
Vons Companies, Inc. (a) 250,000 5,938
28,590
RETAIL & WHOLESALE, MISCELLANEOUS - 0.8%
Amway Japan Ltd. 72,700 2,814
Best Buy Co., Inc. (a) 253,700 6,660
Circuit City Stores, Inc. 423,200 13,384
Dickson Concepts International Ltd. 1,643,000 1,190
Friedmans, Inc. Class A (a) 100,000 2,175
Home Depot, Inc. (The) 280,900 11,201
Lowe's Companies, Inc. 495,000 14,850
Micro Warehouse, Inc. (a) 57,200 2,617
Office Depot, Inc. 167,650 5,050
Officemax, Inc. (a) 313,050 7,591
Petsmart, Inc. (a) 61,800 2,086
Pier 1 Imports, Inc. 50,000 506
Rex Stores Corp. (a) 84,000 1,575
Smith (W.H.) Group PLC Ord. 125,900 733
Sotheby's Holdings, Inc. Class A 126,900 1,777
Staples, Inc. (a) 195,975 5,536
Tiffany & Co., Inc. 55,000 2,303
Uny Co. Ltd. 169,000 2,728
Williams-Sonoma, Inc. (a) 76,800 1,594
86,370
TOTAL RETAIL & WHOLESALE 301,389
SERVICES - 0.4%
ADVERTISING - 0.0%
Omnicom Group, Inc. 50,000 3,256
WPP Group PLC 845,700 2,008
5,264
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
LEASING & RENTAL - 0.1%
Hollywood Entertainment Corp. (a) 59,100 $ 1,267
Orix Corp. 186,000 6,808
8,075
PRINTING - 0.0%
Komori Corp. 58,000 1,367
New England Business Service, Inc. 99,500 2,052
3,419
SERVICES - 0.3%
ADT Ltd. (a) 238,800 3,284
BET PLC Ord. 874,400 1,833
First Financial Management Corp. 15,500 1,513
Manpower, Inc. 140,000 4,060
Supercuts, Inc. (a) 124,800 1,061
Time Engineering BHD 700,000 1,879
Western Atlas, Inc. (a) 315,100 14,928
Zebra Technologies Corp. Class A (a) 25,900 1,379
29,937
TOTAL SERVICES 46,695
TECHNOLOGY - 7.2%
COMMUNICATIONS EQUIPMENT - 0.3%
Andrew Corp. (a) 18,000 1,100
Cisco Systems, Inc. (a) 149,000 10,281
DSC Communications Corp. (a) 71,400 4,230
Ericsson (L.M.) Telephone Co.:
Class B ADR 329,800 8,080
Class B ADR (rights) (a) 329,800 385
Nokia Corp. AB:
Series A 40,000 2,809
Series K 60,000 4,214
sponsored ADR 70,000 4,883
Northern Telecom Ltd. 700 25
3Com Corp.(a) 30,280 1,378
37,385
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - 0.7%
America Online, Inc. (a) 60,000 $ 4,125
American Business Information, Inc. (a) 45,000 911
Automatic Data Processing, Inc. 89,600 6,104
BancTec, Inc. (a) 60,000 1,290
CUC International, Inc. (a) 31,550 1,100
Ceridian Corp. (a) 40,000 1,775
Checkfree Corp. 14,500 290
CompUSA, Inc. (a) 25,000 1,075
Computer Management Sciences, Inc. 5,700 80
Computer Sciences Corp. (a) 90,000 5,794
Computron Software, Inc. (a) 7,600 131
ECI Telecom Ltd. 30,000 671
General Motors Corp. Class E 30,000 1,365
HBO & Co. 55,000 3,438
HPR, Inc. (a) 4,100 95
Harbinger Corp. (a) 12,300 169
Henry (Jack) & Associates, Inc. 30,000 608
Mercury Interactive Group Corp. (a) 20,000 555
MicroAge, Inc. (a) 87,600 975
Microsoft Corp. (a) 231,900 20,987
Novell, Inc. (a) 109,000 1,989
Oracle Systems Corp. (a) 100,000 3,838
Peoplesoft, Inc. (a) 73,000 6,634
Policy Management Systems Corp. (a) 50,000 2,563
Reuters Holdings PLC ADR Class B 20,000 1,058
SHL Systemhouse, Inc. (a) 180,500 2,270
Shared Medical Systems Corp. 8,900 369
Smith Micro Software, Inc. 5,500 54
Stratacom, Inc. (a) 55,100 3,044
Symantec Corp. (a) 66,800 2,004
Vantive Corp. (a) 2,400 38
Wonderware Corp. (a) 31,300 1,217
76,616
COMPUTERS & OFFICE EQUIPMENT - 3.3%
Apple Computer, Inc. 86,500 3,222
Bay Networks, Inc. (a) 213,800 11,412
Canon, Inc. 1,199,000 21,281
Compaq Computer Corp. (a) 2,266,700 109,652
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
Diebold, Inc. 55,000 $ 2,551
Digital Equipment Corp. (a) 202,300 9,230
Filenet Corp. (a) 25,000 1,106
Fujitsu Ltd. 469,000 5,879
Gateway 2000, Inc. (a) 32,000 980
Hewlett-Packard Co. 219,600 18,309
In Focus Systems, Inc. (a) 20,000 493
International Business Machines Corp. 1,057,000 99,754
NEC Corp. 1,979,000 27,386
Pitney Bowes, Inc. 75,500 3,171
Read Rite Corp. (a) 75,300 2,748
SCI Systems, Inc. (a) 474,900 16,384
Silicon Graphics, Inc. (a) 140,500 4,830
Sun Microsystems, Inc. (a) 252,700 15,920
Tech Data Corp. (a) 381,300 5,386
Wang Laboratories, Inc. (a) 125,000 1,984
Xerox Corp. 26,200 3,521
365,199
ELECTRONIC INSTRUMENTS - 0.1%
Measurex Corp. 20,000 685
Plasma & Materials Technologies, Inc. (a) 8,000 141
Silicon Valley Group, Inc. (a) 57,600 2,225
Teradyne, Inc. (a) 109,200 3,931
6,982
ELECTRONICS - 2.6%
AMP, Inc. 100,000 3,850
AVX Corp. (a) 42,500 1,424
Aiwa Co. Ltd. 119,000 2,530
Analog Devices, Inc. (a) 20,000 693
Arrow Electronics, Inc. (a) 20,000 1,088
Atmel Corp. (a) 32,200 1,087
Berg Electronics Holdings Corp. (a)(h) 260,290 1,562
Hirose Electric Co. Ltd. 64,050 3,995
Hitachi Ltd. 4,508,000 48,821
Intel Corp. 1,524,700 91,673
Kemet Corp. (a) 80,000 2,740
Kyocera Corp. 208,000 16,978
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Methode Electronics, Inc. Class A 39,200 $ 902
Micron Technology, Inc. 133,400 10,605
Molex, Inc. 101,563 3,402
Motorola, Inc. 39,300 3,002
Nichicon Corp. 850,000 11,421
Nitto Denko Corp. 978,000 14,805
Ryoyo Electro Corp. Ord. 303,000 7,262
Rohm Co. Ltd. 247,000 15,505
SGS-Thomson Microelectronics NV (NY Reg.)(a) 42,000 2,042
SAMSUNG Display Devices Ltd. 22,700 1,972
Samsung Electronics Co. Ltd.:
GDR (vtg.) (h) 1,196 144
GDR representing shares (non-vtg.) (h) 10,518 733
GDR representing shares (a)(h) 2,149 257
GDR partial dividend (h) 170 20
(vtg.) 27,835 6,536
(New) (a) 346 74
Solectron Corp. (a) 485,200 19,165
TDK Corp. 48,000 2,455
Thomas & Betts Corp. 24,100 1,557
Toshiba Corp. 697,000 5,067
Vishay Intertechnology, Inc. 80,000 3,360
Yageo Corp. GDR (a)(h) 75,000 956
Zycon Corp. 33,200 398
288,081
PHOTOGRAPHIC EQUIPMENT - 0.2%
Fuji Photo Film Co. Ltd. 943,000 23,356
TOTAL TECHNOLOGY 797,619
TRANSPORTATION - 1.0%
AIR TRANSPORTATION - 0.1%
AMR Corp. (a) 36,800 2,654
Atlantic Southeast Airlines, Inc. 45,000 1,052
Atlas Air, Inc. (a) 11,500 256
Delta Air Lines, Inc. 65,500 4,536
KLM Royal Dutch Airlines Ord. 36,468 1,280
Korean Air 86,160 3,125
Midwest Express Holdings, Inc. 9,900 223
Southwest Airlines Co. 100,000 2,525
15,651
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - CONTINUED
RAILROADS - 0.8%
Burlington Northern Sante Fe Corp. 274,200 $ 19,880
CSX Corp. 430,200 36,189
Canadian Pacific Ltd. Ord. 231,900 3,716
Conrail, Inc. 20,300 1,396
Illinois Central Corp., Series A 110,800 4,335
Southern Pacific Rail Corp. (a) 632,773 15,345
Wisconsin Central Transportation Corp. (a) 47,700 3,184
84,045
SHIPPING - 0.0%
Han Jin Transportation Co. (a) 46,712 1,715
Kawasaki Kisen Kaisha Ltd. (a) 574,000 1,727
3,442
TRUCKING & FREIGHT - 0.1%
Expeditors International of Washington, Inc. 4,200 113
Fritz Companies, Inc. (a) 25,000 1,842
Hunt (J.B.) Transport Services, Inc. 139,100 2,104
Roadway Services, Inc. 85,500 4,254
TNT Freightways Corp. 15,500 293
8,606
TOTAL TRANSPORTATION 111,744
UTILITIES - 4.5%
CELLULAR - 0.8%
Advanced Information Services (For. Reg.) 175,000 2,817
AirTouch Communications, Inc. (a) 265,100 8,119
Arch Communications Group, Inc. (a) 44 1
BCE Mobile Communications, Inc. (a) 120,700 3,734
Cellular Communications, Inc., Series A (redeemable) (a) 15,500 845
Korea Mobile Telecommunications Corp. 1,850 1,761
Palmer Wireless, Inc. (a) 112,500 2,503
Vanguard Cellular Systems, Inc. Class A (a) 37,500 961
Vodafone Group PLC 191,800 805
Vodafone Group PLC sponsored ADR 1,671,000 68,511
90,057
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
ELECTRIC UTILITY - 0.7%
Eletrobras PN Class B 19,662,910 $ 6,066
Central Costanera SA ADR (h) 23,700 575
China Light & Power Co. Ltd. 1,976,000 10,222
Consolidated Electric Power Asia Ltd. 6,856,600 13,745
Consolidated Edison Co. of New York, Inc. 35,300 1,072
Hong Kong Electric Holdings Ord. 2,446,000 8,178
Huaneng Power International, Inc. Class N sponsored ADR 138,000 2,381
Korea Electric Power Corp. 446,400 18,053
Light Servicos de Electricidade SA Ord. 15,760,200 5,871
Meralco Class B 115,000 878
Scottish Power PLC ADR 193,000 1,075
Union Electrica Fenosa SA 126,200 610
Veba AG Ord. 205,000 8,142
76,868
GAS - 0.2%
Enron Corp. 71,600 2,397
ENSERCH Corp. 94,100 1,553
MCN Corp. 591,400 11,680
Seagull Energy Corp. (a) 15,000 304
15,934
TELEPHONE SERVICES - 2.8%
AT&T Corp. 25,000 1,644
Ameritech Corp. 1,101,700 57,426
Bell Atlantic Corp. 394,700 24,225
BellSouth Corp. 459,800 33,623
DDI Corp. Ord. 465 3,814
Frontier Corp. 88,400 2,354
GTE Corp. 70,800 2,779
Indosat (Indonesia Satellite) sponsored ADR 143,000 5,023
Koninklijke PPT Nederland 163,300 5,773
NYNEX Corp. 1,140,100 54,440
Pacific Telesis Group 50,000 1,538
Philippine Long Distance Telephone Co. sponsored ADR 39,500 2,622
Portugal Telecom SA sponsored ADR (a) 228,800 4,404
SBC Communications, Inc. 691,500 38,033
Tele Danmark AS Class B 20,000 1,035
Telebras PN (Pfd. Reg.) 601,409,400 28,681
Telecom Argentina Class B sponsored ADR 48,000 2,010
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
Telecom Argentina Stet France Telecom SA 220,500 $ 926
Telecom Italia Mobile Spa (a) 3,217,500 5,342
Telecom Italia Ord. 3,217,500 5,260
Telefonica de Argentina SA:
sponsored ADR 25,000 597
Class B 431,600 1,036
Telefonica de Espana SA Ord. 161,000 2,217
Telefonos de Mexico SA sponsored ADR representing shares
Ord. Class L 171,000 5,429
Telephone & Data Systems, Inc. 50,000 2,100
Telesp PN (Pfd. Reg.) 63,884,600 10,480
Tel-Save Holdings, Inc. 10,300 158
Thai Telephone & Telecommunication PCL (For. Reg.) (a) 600,000 4,184
WorldCom, Inc. (a) 173,700 5,580
312,733
WATER - 0.0%
Generale des Eaux 19,985 1,920
Yorkshire Water Ord. 50,000 494
2,414
TOTAL UTILITIES 498,006
TOTAL COMMON STOCKS
(Cost $4,479,776) 5,448,793
PREFERRED STOCKS - 0.6%
CONVERTIBLE PREFERRED STOCKS - 0.4%
BASIC INDUSTRIES - 0.0%
METALS & MINING - 0.0%
Reynolds Metals Co. $3.31 40,200 2,080
PAPER & FOREST PRODUCTS - 0.0%
James River Corp. Series P cumulative 50,000 1,525
TOTAL BASIC INDUSTRIES 3,605
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
CONSTRUCTION & REAL ESTATE - 0.0%
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Oasis Residential, Inc. $0.75 50,000 $ 1,294
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Chrysler Corp., Series A $4.625 (h) 14,800 2,190
ENERGY - 0.1%
OIL & GAS - 0.1%
Atlantic Richfield Co. exchangeable $0.5575 93,400 2,381
Unocal Corp. $3.50 (h) 33,600 1,798
4,179
HEALTH - 0.2%
MEDICAL EQUIPMENT & SUPPLIES - 0.2%
U.S. Surgical Corp. $2.20 (h) 582,800 17,484
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
ELECTRICAL EQUIPMENT - 0.0%
Westinghouse Electric Corp. $1.30 (h) 212,500 3,188
NONDURABLES - 0.0%
TOBACCO - 0.0%
RJR Nabisco Holdings Corp. depositary shares
representing 1/10 pfd, Series C 237,300 1,602
RETAIL & WHOLESALE - 0.0%
GROCERY STORES - 0.0%
Supermarkets General Holdings Corp. exchangeable
pay-in-kind $3.52 (a) 70,123 2,034
TECHNOLOGY - 0.1%
COMPUTER SERVICES & SOFTWARE - 0.1%
Ceridian Corp. 3 1/2% 45,000 4,365
ELECTRONICS - 0.0%
Alpine Group, Inc. 8% cumulative 6,542 294
TOTAL TECHNOLOGY 4,659
TOTAL CONVERTIBLE PREFERRED STOCKS 40,235
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - 0.2%
BASIC INDUSTRIES - 0.0%
CHEMICALS & PLASTICS - 0.0%
Henkel KGAA 2,700 $ 1,021
IRON & STEEL - 0.0%
COSIPA (CIA Sidurg Paulista) Class B (a) 600,000 1,064
PAPER & FOREST PRODUCTS - 0.0%
S D Warren Co. exchangeable pay-in-kind 14% (a) 68,700 2,061
TOTAL BASIC INDUSTRIES 4,146
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Hyundai Motor Service Co. Ltd. 791 24
ENERGY - 0.0%
OIL & GAS - 0.0%
Gulf Canada Resources Ltd., Series 1, adj. rate 1,027,500 2,987
FINANCE - 0.0%
INSURANCE - 0.0%
SAI Sta Assicuratrice Industriale Spa 96,000 436
MEDIA & LEISURE - 0.1%
BROADCASTING - 0.1%
Cablevision System Corp., Series G exchangeable
pay-in-kind (h) 55,400 5,595
PUBLISHING - 0.0%
News Corp. Ltd. (ltd. vtg.) 250,000 1,239
TOTAL MEDIA & LEISURE 6,834
NONDURABLES - 0.0%
HOUSEHOLD PRODUCTS - 0.0%
Revlon Group, Inc., Series B exchangeable $14.875 18,400 1,895
TECHNOLOGY - 0.1%
COMPUTER SERVICES & SOFTWARE - 0.1%
SAP AG 48,000 7,823
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
UTILITIES - 0.0%
TELEPHONE SERVICES - 0.0%
Stet (Societa Finanziaria Telefonica) Spa 1,259,000 $ 2,923
TOTAL NONCONVERTIBLE PREFERRED STOCKS 27,068
TOTAL PREFERRED STOCKS
(Cost $55,714) 67,303
CORPORATE BONDS - 5.5%
MOODY'S RATINGS (D) PRINCIPAL
(UNAUDITED) AMOUNT (C) (000S)
CONVERTIBLE BONDS - 0.1%
BASIC INDUSTRIES - 0.1%
IRON & STEEL - 0.0%
Essar Gujarat Ltd. euro 5 1/2%, 8/5/98 - $ 800 792
METALS & MINING - 0.0%
Walsin Lihwa Corp. euro 3 1/4%, 6/16/04 - 1,000 1,140
PAPER & FOREST PRODUCTS - 0.1%
Stone Consolidated Corp. 8%, 12/31/03 - CAD 2,100 2,019
TOTAL BASIC INDUSTRIES 3,951
CONSTRUCTION & REAL ESTATE - 0.0%
REAL ESTATE INVESTMENT TRUSTS - 0.0%
LTC Properties, Inc. 8 1/2%, 1/1/01 B2 257 257
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
Cooper Industries, Inc. 7.05%, 1/1/15 A3 3,123 3,143
MEDIA & LEISURE - 0.0%
LODGING & GAMING - 0.0%
Bally Entertainment Corp. 10%, 12/15/06 Caa 1,200 1,140
TECHNOLOGY - 0.0%
COMPUTERS & OFFICE EQUIPMENT - 0.0%
Unisys Corp. 8 1/4%, 8/1/00 B2 2,000 1,995
TOTAL CONVERTIBLE BONDS 10,486
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - 5.4%
BASIC INDUSTRIES - 0.3%
CHEMICALS & PLASTICS - 0.1%
IMC Fertilizer Group, Inc. 10 1/8%, 6/15/01 B1 $ 6,070 $ 6,495
PAPER & FOREST PRODUCTS - 0.2%
Alto Parana (b):
euro 12%, 3/4/05 - 9,750 7,313
12%, 3/4/05 (h) - 5,000 3,750
Repap New Brunswick, Inc. yankee 9.09%,
7/15/00 (i) Ba3 15,000 15,000
26,063
TOTAL BASIC INDUSTRIES 32,558
CONSTRUCTION & REAL ESTATE - 1.0%
BUILDING MATERIALS - 0.7%
Building Materials Corp. of America
0%, 7/1/04 (e) B1 15,370 9,568
Cemex SA 8 7/8%, 6/10/98 (h) Ba3 36,927 34,711
Cemex SA and Tolmex SA de CV:
euro 8 7/8%, 6/10/98 Ba2 2,559 2,405
10%, 11/05/99 Ba2 14,170 13,426
Tolmex SA de CV 8 3/8%, 11/1/03 Ba3 12,063 9,590
69,700
CONSTRUCTION - 0.3%
U.S. Home Corp. 9 3/4%, 6/15/03 Ba3 23,835 23,716
WCI Communities LP 17%, 7/24/98 (g) - 10,051 9,925
33,641
TOTAL CONSTRUCTION & REAL ESTATE 103,341
DURABLES - 0.1%
TEXTILES & APPAREL - 0.1%
Hat Brands, Inc. 12 5/8%, 9/15/02 - 5,870 6,164
Samsonite Corp. 11 1/8%, 7/15/05 (h) B2 1,640 1,585
7,749
ENERGY - 0.2%
ENERGY SERVICES - 0.1%
Falcon Drilling, Inc. 9 3/4%, 1/15/01 B2 7,715 7,676
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
ENERGY - CONTINUED
INDEPENDENT POWER - 0.0%
Consolidated Hydro, Inc., Series B,
0%, 7/15/03 (e) - $ 6,265 $ 3,258
OIL & GAS - 0.1%
Mesa Capital Corp. secured 12 3/4%, 6/30/98 Caa 12,460 11,479
Transtexas Gas Corp. 11 1/2%, 6/15/02 B2 3,500 3,658
15,137
TOTAL ENERGY 26,071
FINANCE - 0.8%
BANKS - 0.2%
Bancomer SA 9%, 6/1/00 (h) Ba2 22,500 18,842
CREDIT & OTHER FINANCE - 0.0%
Tembec Finance Corp. yankee 9 7/8%, 9/30/05 B1 3,830 3,777
INSURANCE - 0.6%
American Annuity Group, Inc. 11 1/8%, 2/1/03 Ba3 8,728 9,164
American Financial Corp.:
9 3/4%, 4/20/04 Ba3 5,000 5,000
(Ohio) 9 3/4%, 4/20/04 Ba3 13,860 13,860
American Life Holdings 11 1/4%, 9/15/04 B1 3,200 3,376
CCP Insurance, Inc. 10 1/2%, 12/15/04 Ba2 8,355 8,835
Reliance Financial Services:
9.273%, 11/1/00 BBB 3,765 3,765
10.36%, 12/1/00 BBB 4,570 4,639
Reliance Group:
9%, 11/15/00 Ba3 14,195 14,124
9 3/4%, 11/15/03 B1 2,850 2,836
65,599
TOTAL FINANCE 88,218
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
IMO Industries, Inc. 12%, 11/1/00 B3 870 892
Thermadyne Holdings Corp. 10 3/4%,
11/1/03 Caa 31 31
923
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - 1.8%
BROADCASTING - 0.9%
Bell Cablemedia PLC 0%, 9/15/05 (e)(h) B2 $ 8,710 $ 5,139
Chancellor Broadcasting 12 1/2%, 10/1/04 B3 2,030 2,111
Citicasters, Inc. 9 3/4%, 2/15/04 B- 21,400 21,507
PTI Holdings, Inc. 7%, 12/17/02 - 490 294
Robin Media Group, Inc. 11 1/8%, 4/1/97 - 4,910 5,045
SCI Television, Inc. secured:
7 1/2%, 6/30/98 (i) - 16,728 16,728
11%, 6/30/05 B2 39,610 42,036
Telewest PLC 0%, 10/1/07 (e) B1 3,980 2,331
Univision Network Holdings LP 7%, 12/17/02 - 3,460 2,076
97,267
LODGING & GAMING - 0.9%
Bally's Casino Holdings, Inc. 10 1/2%, 6/15/98 B2 11,045 8,408
California Hotel Finance Corp. gtd.
11%, 12/1/02 B2 32,920 34,319
GNF Corp., Series B, 10 5/8%, 4/1/03 B2 4,450 3,894
Grand Casino Resorts, Inc. gtd.
12 1/2%, 2/1/00 Ba3 16,640 18,637
HMH Properties, Inc. 9 1/2%, 5/15/05 (h) B1 6,390 6,294
Harrah's Jazz Co. 14 1/4%, 11/15/01 B1 14,765 13,879
Mohegan Tribal Gaming Authority 13 1/2%,
11/15/02 (h) - 1,380 1,428
Players International, Inc. 10 7/8%,
4/15/05 (h) Ba3 1,250 1,191
Showboat, Inc. 13%, 8/1/09 B2 1,400 1,512
Stratosphere Corp. 14 1/4%, 5/15/02 B2 8,940 9,454
99,016
RESTAURANTS - 0.0%
Host Marriott Travel Plazas, Inc. 9 1/2%,
5/15/05 (h) B1 7,080 6,859
TOTAL MEDIA & LEISURE 203,142
NONDURABLES - 0.5%
BEVERAGES - 0.1%
Dr. Pepper/Seven-Up Companies, Inc.
0%, 11/1/02 (e) Baa1 3,680 3,330
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
NONDURABLES - CONTINUED
BEVERAGES - CONTINUED
Fomento Economico Mexicano SA de CV euro
9 1/2%, 7/22/97 - $ 7,140 $ 7,042
10,372
HOUSEHOLD PRODUCTS - 0.3%
Revlon Worldwide Corp. secured 0%, 3/15/98 B3 48,665 35,586
TOBACCO - 0.1%
Empresas La Moderna SA de CV:
euro 10 1/4%,11/12/97 - 490 480
10 1/4%, 11/12/97 (h) - 7,420 7,272
7,752
TOTAL NONDURABLES 53,710
RETAIL & WHOLESALE - 0.2%
APPAREL STORES - 0.1%
Apparel Retailers, Inc. 0%, 8/15/05 (e) Caa 4,960 3,075
Lamonts Apparel Corp. 10 1/4%, 11/1/99 (b)(h) - 13,118 6,034
9,109
GENERAL MERCHANDISE STORES - 0.0%
Parisian, Inc. 9 7/8%, 7/15/03 Caa 7,315 6,218
GROCERY STORES - 0.1%
Purity Supreme, Inc. 11 3/4%, 8/1/99 B3 6,220 6,795
TOTAL RETAIL & WHOLESALE 22,122
SERVICES - 0.0%
Borg Warner Security Corp. 9 1/8%, 5/1/03 Caa 1,890 1,590
TECHNOLOGY - 0.3%
COMMUNICATIONS EQUIPMENT - 0.2%
Echostar Communications Corp. Unit
0%, 6/1/04 (e) Caa 37,960 20,214
COMPUTERS & OFFICE EQUIPMENT - 0.1%
Unisys Corp. 9 3/4%, 9/15/96 Ba3 10,860 11,077
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - CONTINUED
ELECTRONICS - 0.0%
Grupo Condumex SA de CV
7 3/8%, 7/27/98 (h) - $ 6,000 $ 5,558
TOTAL TECHNOLOGY 36,849
TRANSPORTATION - 0.1%
TRUCKING & FREIGHT - 0.1%
MC-Cuernavaca Trust 9 1/4%, 7/25/01 (h) BBB+ 12,842 9,856
UTILITIES - 0.1%
CELLULAR - 0.1%
Mobilmedia Communications, Inc. 0%,
12/1/03 (e) B3 10,070 7,351
ELECTRIC UTILITY - 0.0%
Del Norte Funding Corp. 9.05%, 1/2/93 (b) Ca 662 414
El Paso Funding Corp. lease oblig. (b):
9 3/8%,10/1/96 Ca 720 450
9.20%, 7/2/97 Ca 240 150
1,014
TOTAL UTILITIES 8,365
TOTAL NONCONVERTIBLE BONDS 594,494
TOTAL CORPORATE BONDS
(Cost $613,697) 604,980
U.S. TREASURY OBLIGATIONS - 14.9%
6 1/4%, 2/15/03 Aaa 328,190 330,034
10 3/4%, 5/15/03 Aaa 21,960 27,975
11 1/4%, 8/15/03 Aaa 12,760 16,618
11 7/8%, 11/15/03 Aaa 61,890 83,957
12 3/8%, 5/15/04 Aaa 15,490 21,754
11 3/4%, 2/15/10 Aaa 410,180 566,688
12 3/4%, 11/15/10 Aaa 12,900 18,967
7 5/8%, 2/15/25 Aaa 433,870 491,288
6 7/8%, 8/15/25 Aaa 93,660 98,416
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $1,600,237) 1,655,697
COMMERCIAL MORTGAGE SECURITIES - 0.6%
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
American Southwest Financial Securities
commercial floater Series 1994-C2 Class B2,
14.1868%, 12/25/01 (h)(i) - $ 3,230 $ 3,182
Bardell Associates Note Trust
12 1/2%, 11/1/08 (g) - 18,638 18,939
CBA Mortgage Corp. commercial floater Series
1993-C1 Class E, 7.1542%, 12/25/03 (h)(i) Ba2 4,333 3,717
CS First Boston Mortgage Securities Corp.
commercial floater Series 1994-CFB1 Class E,
8.0764%, 1/25/28 (h)(i) Ba2 6,545 5,316
Kearny Street Mortgage commercial floater
Series 1995-1 Class E,
7.0399%, 2/20/30 (h)(i) BB 4,047 3,239
Oregon pass thru certificates commercial
floater Series 1995 Class 1-E,
9.9621%, 6/25/26 (h)(i) BB 2,240 1,952
Resolution Trust Corp.:
commercial:
Series 1994-C1 Class E, 8%, 6/25/26 BB 2,733 2,323
Series 1995-C1 Class F, 6.90%, 2/25/27 B1 1,765 1,538
Series 1994-C2 Class G, 8%, 4/25/25 B 2,521 2,099
Series 1994-N2 Class 5-A, 10 5/8%,
12/15/04 (f)(h) B2 3,400 3,383
floater Series 1991-M2 Class A1, 7.5120%,
9/25/20 (i) Ba3 1,024 757
sequential pay Series 1994-C1 Class F, 8%,
6/25/26 B 678 558
SKW Real Estate LP commercial Series II Class E,
11%, 4/15/05 (h) B 5,051 5,035
SML, Inc. commercial:
Series 1994-C1 Class B-3, 11.69%, 9/18/99 - 3,825 3,576
Series 1994-C1 Class C, 9.20%, 9/18/99 (g) - 5,225 3,475
Structured Asset Securities Corp. commercial
Series 1995-C1, Class D, 7 3/8%, 9/25/24 BBB 2,540 2,337
Whitehall Partners commercial Series 1995-C1
Class E, 8.01%, 7/20/25 (h) - 900 831
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $60,930) 62,257
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 2,980
FOREIGN GOVERNMENT OBLIGATIONS (K) - 4.7%
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
Brazil Federative Republic IDU euro 6.69%,
1/1/01 (i) B1 $ 96,178 $ 81,751
German Government 6 1/2%, 7/15/03 Aaa DEM 130,000 91,013
New Zealand Government 8%, 4/15/04 Aaa NZD 40,200 26,702
Polish Government Brady (h)(i):
past due interest 3 1/4%,10/27/14 - 145 91
discount 7 1/8%,10/27/24 - 273 211
Province of Chaco, Argentina
11 7/8%, 9/10/97 (g) - 6,467 6,621
Republic of Ecuador Brady (h)(i):
past due interest 6.8125%, 2/28/15 - 2,839 834
discount 6 3/4%,12/21/04 - 2,902 1,610
Siderurgica Brasileiras SA Inflation Indexed 6%,
8/15/99 (l) - BRR 40,164 5,627
Treuhandanstalt:
6 7/8%, 6/11/03 Aaa DEM 180,000 128,539
6 5/8%, 7/9/03 AAA DEM 258,400 181,955
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $519,450) 524,954
INDEXED SECURITIES - 0.9%
COMMODITY INDEXED - 0.9%
Goldman Sachs Group, LP note 5 5/8%,
1/31/96 (indexed to gold price) 48,650 48,684
Morgan Guaranty Trust Co. cert. of dep.:
5 3/4%, 10/10/95 (indexed to platinum price) 6,460 6,295
5.6992%, 10/11/95 (indexed to platinum price) 7,750 7,561
5.617%, 1/11/96 (indexed to gold price) 34,660 34,629
TOTAL INDEXED SECURITIES
(Cost $97,520) 97,169
REPURCHASE AGREEMENTS - 23.6%
MATURITY
AMOUNT (000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 6.46% dated
9/29/95 due 10/2/95 (Note 3) $ 2,610,694 2,609,289
PURCHASED OPTIONS - 0.0%
AMOUNTS IN THOUSANDS EXPIRATION DATE/ UNDERLYING FACE VALUE (NOTE 1)
STRIKE PRICE AMOUNT AT VALUE (000S)
797 Goldman, Sachs & Co. OTC Put
Option on S&P 500
Stock Index Nov. 95/558.55 $ 465,900 $ 1,690
891 Merrill Lynch Capital Markets
PLC OTC Put Option on S&P 500
Stock Index Nov. 95/561.20 $ 520,679 2,343
TOTAL PURCHASED OPTIONS
(Cost $19,895) 4,033
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $10,060,203) $ 11,077,455
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE VALUE GAIN/(LOSS)
CONTRACTS TO SELL
417,652 DEM 10/10/95 $ 292,676 $ 3,615
(Receivable amount $296,291)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.6%
CURRENCY ABBREVIATIONS
BRR - Brazilian real
CAD - Canadian dollar
DEM - German deutsche mark
NZD - New Zealand dollar
LEGEND
1. Non-income producing
2. Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
3. Principal amount is stated in United States dollars unless otherwise
noted.
4. Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
5. Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
6. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
7. 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)
Bardell Associates
Note Trust 12 1/2%,
11/1/08 4/19/94 $ 18,939
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 $ 6,783
Purity Supreme, Inc.
(warrants) 4/25/95 -
SML, Inc. commercial
Series 1994-C1
Class C, 9.20%,
9/18/99 8/11/94 $ 3,398
WCI Communities LP
17%, 7/24/98 7/24/95 $ 9,925
8. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $183,331,000 or 1.7% of net
assets.
9. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
10. Security represents right to receive monthly interest payments on an
underlying pool of mortgages. Principal shown is the par amount of the
mortgage pool.
11. 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.
12. Principal amount shown is original face amount and does not reflect the
inflation adjustments.
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 17.2% AAA, AA, A 18.8%
Baa 0.0% BBB 0.2%
Ba 1.9% BB 1.5%
B 2.8% B 2.0%
Caa 0.4% CCC 0.2%
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 1.2%.
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 4.2
Germany 4.0
Canada 1.7
Brazil 1.5
United Kingdom 1.4
Hong Kong 1.3
Mexico 1.2
Others (individually less than 1%) 5.8
TOTAL 100.0%
INCOME TAX INFORMATION
At September 30, 1995, the aggregate cost of investment securities for
income tax purposes was $10,074,850,000. Net unrealized appreciation
aggregated $1,002,605,000, of which $1,140,912,000 related to appreciated
investment securities and $138,307,000 related to depreciated investment
securities.
At September 30, 1995, the fund had a capital loss carryforward of
approximately $29,154,000 which will expire on September 30, 2003.
The fund intends to elect to defer to its fiscal year ending September 30,
1996 $99,162,000 of losses recognized during the period November 1, 1994 to
September 30, 1995.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) SEPTEMBER 30, 1995
ASSETS
Investment in securities, at value (including repurchase $ 11,077,455
agreements of $2,609,289) (cost $10,060,203) -
See accompanying schedule
Cash 484
Receivable for investments sold 57,708
Unrealized appreciation on foreign currency contracts 3,615
Receivable for fund shares sold 15,547
Dividends receivable 14,272
Interest receivable 43,613
Other receivables 282
U.S. Treasury obligations, at value, held as collateral for 100,949
securities loaned
TOTAL ASSETS 11,313,925
LIABILITIES
Payable for investments purchased $ 85,596
Payable for fund shares redeemed 27,145
Accrued management fee 6,576
Other payables and accrued expenses 2,012
Collateral on securities loaned, at value 108,935
TOTAL LIABILITIES 230,264
NET ASSETS $ 11,083,661
Net Assets consist of:
Paid in capital $ 10,189,455
Undistributed net investment income 15,484
Accumulated undistributed net realized gain (loss) on (141,021)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 1,019,743
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 716,385 shares outstanding $ 11,083,661
NET ASSET VALUE, offering price and redemption price per $15.47
share ($11,083,661 (divided by) 716,385 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED SEPTEMBER 30, 1995
INVESTMENT INCOME $ 102,362
Dividends
Interest (including income on securities loaned of 482,455
$2,873)
TOTAL INCOME 584,817
EXPENSES
Management fee $ 79,977
Transfer agent fees 25,755
Accounting and security lending fees 878
Non-interested trustees' compensation 116
Custodian fees and expenses 978
Registration fees 74
Audit 184
Legal 94
Interest 1
Reports to shareholders 190
Miscellaneous 108
Total expenses before reductions 108,355
Expense reductions (474) 107,881
NET INVESTMENT INCOME 476,936
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (253,434)
Foreign currency transactions 24,823
Futures contracts (4,262) (232,873)
Change in net unrealized appreciation (depreciation) on:
Investment securities 806,934
Assets and liabilities in foreign currencies 5,640
Futures contracts (6,527) 806,047
NET GAIN (LOSS) 573,174
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 1,050,110
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994
INCREASE (DECREASE) IN NET ASSETS
Operations $ 476,936 $ 373,021
Net investment income
Net realized gain (loss) (232,873) 95,914
Change in net unrealized appreciation (depreciation) 806,047 (301,077)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,050,110 167,858
FROM OPERATIONS
Distributions to shareholders (333,377) (300,081)
From net investment income
From net realized gain - (247,164)
In excess of net realized gain (72,865) (29,665)
TOTAL DISTRIBUTIONS (406,242) (576,910)
Share transactions 3,045,965 8,579,610
Net proceeds from sales of shares
Reinvestment of distributions 397,033 562,713
Cost of shares redeemed (4,795,597) (4,206,977)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (1,352,599) 4,935,346
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (708,731) 4,526,294
NET ASSETS
Beginning of period 11,792,392 7,266,098
End of period (including under (over) distribution of $ 11,083,661 $ 11,792,392
net investment income of $15,484 and $(21,393),
respectively)
OTHER INFORMATION
Shares
Sold 212,281 569,016
Issued in reinvestment of distributions 27,840 37,578
Redeemed (332,700) (282,864)
Net increase (decrease) (92,579) 323,730
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED SEPTEMBER 30,
1995 1994 C 1993 1992 1991
SELECTED PER-SHARE DATA
Net asset value, beginning $ 14.58 $ 14.97 $ 13.50 $ 13.02 $ 10.64
of period
Income from Investment
Operations
Net investment income .49 .34 .52 .46 .55
Net realized and unrealized .93 .21 B 2.01 .97 2.48
gain (loss)
Total from investment 1.42 .55 2.53 1.43 3.03
operations
Less Distributions (.44) (.44) (.87) (.45) (.65)
From net investment income
From net realized gain - (.45) (.19) (.50) -
In excess of net realized gain (.09) (.05) - - -
Total distributions (.53) (.94) (1.06) (.95) (.65)
Net asset value, end of period $ 15.47 $ 14.58 $ 14.97 $ 13.50 $ 13.02
TOTAL RETURN A 10.09% 3.60% 19.71% 11.84% 29.78%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 11,084 $ 11,792 $ 7,266 $ 2,762 $ 743
(in millions)
Ratio of expenses to average .97% 1.04% 1.09% 1.17% 1.17%
net assets
Ratio of net investment income 4.27% 3.63% 4.28% 5.58% 5.74%
to average net assets
Portfolio turnover rate 137% 109% 98% 134% 134%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 OF NOTES TO FINANCIAL
STATEMENTS).
B 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.
C EFFECTIVE OCTOBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
NOTES TO FINANCIAL STATEMENTS
For the period ended September 30, 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 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 income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. 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.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
EXPENSES - CONTINUED
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), defaulted bonds, market discount, partnerships,
non-taxable dividends and losses deferred due to wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
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
2. OPERATING POLICIES - CONTINUED
FORWARD FOREIGN CURRENCY CONTRACTS - CONTINUED
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 fund, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase, and are collateralized by U.S.
Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying U.S. Treasury or Federal Agency Securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
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. The underlying face amount at value is shown in the
schedule of investments under the caption "Purchased Options." 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.
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
2. OPERATING POLICIES - CONTINUED
INDEXED SECURITIES - CONTINUED
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 securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period,
restricted securities (excluding 144A issues) amounted to $42,969,000 or
0.4% of net assets.
3. JOINT TRADING ACCOUNT.
At the end of the period, the fund had 20% or more of its total investments
in repurchase agreements through a joint trading account. These repurchase
agreements were with entities whose creditworthiness has been reviewed and
found satisfactory by FMR. The maturity values of the joint trading account
investments having variable rates are calculated based on the rate at
period end. The maturity values of the joint trading account investments
were $2,610,694,000 at 6.46%. The investments in repurchase agreements
through the joint trading account are summarized as follows:
SUMMARY OF JOINT TRADING
Number of dealers or banks 21
Maximum amount with one dealer or bank 20 1/2%
Aggregate principal amount of agreements $17,444,261,000
Aggregate maturity amount of agreements $17,453,647,000
Aggregate market value of collateral $17,866,421,000
Coupon rates of collateral 0.0% to 15 3/4%
Maturity dates of collateral 9/30/95 to 8/15/25
4. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $11,368,572,000 and $12,560,958,000, respectively, of which U.S.
government and government agency obligations aggregated $5,118,064,000 and
$6,050,095,000, 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 annual 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 funds' accounting
records and administers their 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 $2,245,000 for the period.
6. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund negotiated
lenders' fees. These fees are included in interest income. The fund
receives U.S. Treasury obligations and/or cash as collateral against the
loaned securities, in an amount at least equal to 102% of the market value
of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 100% of the market value of the loaned
securities during the period of the loan. At period end, the value of the
securities loaned and the value of collateral amounted to $106,318,000 and
$108,935,000, respectively.
7. 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,
7. BANK BORROWINGS - CONTINUED
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 balance during the period for which the loan was
outstanding amounted to $1,173,000. The weighted average interest rate was
6.4%.
8. 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
$474,000 under this arrangement.
9. 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 September 30, 1995, the results of its
operations for the year then ended, and 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 at September 30, 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
November 7, 1995
DISTRIBUTIONS
A total of 23.6% of the dividends distributed during the fiscal year was
derived from interest on U.S. Government securities which is generally
exempt from state income tax.
A total of 24% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders.
The fund will notify shareholders in January 1996 of these percentages for
use in preparing 1995 income tax returns.
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)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)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)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)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 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(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
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
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
6300 Canoga Avenue
Woodland Hills, 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
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
56 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
511 Pine Street
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, 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
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
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 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: INCOME
ANNUAL REPORT
SEPTEMBER 30, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 11 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 12 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 51 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 55 Notes to the financial statements.
REPORT OF INDEPENDENT 60 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 61
.
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 the markets have been fairly positive this year, no one can
predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
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 life of fund figures
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED SEPTEMBER 30, 1995 PAST 1 LIFE OF
YEAR FUND
Asset Manager: Income 11.99% 31.02%
Lehman Brothers Intermediate
Government-Corporate Bond Index 11.29% 18.44%
Average Income Fund 15.39% 29.24%
Consumer Price Index 2.54% 8.42%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year or since the fund started 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 21 funds with similar
objectives tracked by Lipper Analytical Services over the past 12 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 SEPTEMBER 30, 1995 PAST 1 LIFE OF
YEAR FUND
Asset Manager: Income 11.99% 9.42%
Lehman Brothers Intermediate
Government-Corporate Bond Index 11.29% 5.80%
Average Income Fund 15.39% 8.89%
Consumer Price Index 2.54% 2.73%
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
Asset Manager: IncoLB Gov/Corp Int BoCONSERVATIVE ALL
10/01/92 10000.00 10000.00 10000.00
10/31/92 9890.00 9870.26 9975.00
11/30/92 10020.30 9832.75 10049.81
12/31/92 10222.02 9964.43 10139.26
01/31/93 10485.16 10158.23 10235.58
02/28/93 10657.39 10318.40 10336.91
03/31/93 10891.49 10359.45 10404.10
04/30/93 10973.54 10442.83 10390.58
05/31/93 11035.05 10419.65 10456.04
06/30/93 11158.52 10583.20 10545.96
07/31/93 11251.64 10609.11 10570.21
08/31/93 11500.56 10777.33 10735.11
09/30/93 11531.81 10822.08 10744.77
10/31/93 11688.44 10851.05 10815.69
11/30/93 11615.38 10790.53 10772.42
12/31/93 11794.96 10839.95 10825.21
01/31/94 11997.58 10960.35 10957.28
02/28/94 11783.98 10798.26 10840.03
03/31/94 11558.83 10620.06 10688.27
04/30/94 11569.50 10547.78 10706.44
05/31/94 11602.06 10554.87 10755.69
06/30/94 11536.90 10556.32 10713.75
07/31/94 11689.09 10708.27 10861.59
08/31/94 11809.10 10741.75 10971.30
09/30/94 11699.69 10642.92 10892.30
10/31/94 11732.89 10641.47 10962.01
11/30/94 11644.89 10593.18 10898.43
12/31/94 11634.28 10630.68 10975.81
01/31/95 11701.27 10809.84 11118.50
02/28/95 11913.79 11034.08 11300.84
03/31/95 12037.44 11097.18 11416.11
04/30/95 12194.96 11234.16 11555.39
05/31/95 12488.19 11573.81 11816.54
06/30/95 12612.60 11651.40 11927.61
07/31/95 12816.64 11653.01 12021.84
08/31/95 12930.56 11759.09 12097.58
09/29/95 13101.93 11844.24 12260.00
$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 September 30, 1995, the value of your investment, would
have grown to $13,102 - a 31.02% 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 $11,844 - an
18.44% 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 (+52.03%), Lehman Brothers Treasury Bond Index (+21.01%), and the
Salomon Brothers 3-month T-Bill Total Rate of Return Index (+12.92%). With
dividends and interest, if any, reinvested, the same $10,000 investment
would have grown to $12,260 - a 22.60% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
(checkmark)
Strong corporate earnings and a favorable interest rate environment helped
the U.S. stock market post strong returns for the 12 months ended September
30, 1995. U.S. bond markets also rallied during the 12-month period.
STOCKS: The Standard & Poor's Composite Index of 500 Stocks finished the
12-month period with a total return of 29.75% - well above its historical
annual average of roughly 12%. With inflation posing little threat,
interest rates fell during the first half of 1995. The Federal Reserve
Board cut the federal funds rate - the rate banks charge each other for
overnight loans - by 0.25% on July 6 to 5.75%. Large-capitalization stocks
led the rally. Technology companies - whose goods and services benefited
from both corporate and consumer demand - posted the strongest earnings
growth and stock price gains. Lower interest rates and continued merger and
acquisition activity helped financial stocks perform especially well. In
June, the Dow Jones Industrial Average closed above 4500 for the first
time. Returns from foreign markets suffered as investors brought capital
back to the U.S. The Morgan Stanley Emerging Markets Free Index was down
17.73% for the 12 months ended September 30. The Morgan Stanley EAFE
(Europe, Australia, Far East) Index returned 5.79% for the year ended
September 30. European markets have fared well through the first nine
months of 1995, while the Japanese market has struggled through much of the
year.
BONDS: A strong rally starting in November 1994 helped bonds recover from
the effects of the sharply rising interest rate environment seen earlier
that year. For the 12-month period, the Lehman Brothers Aggregate Bond
Index - a broad measure of U.S. taxable bonds - posted a total return of
14.06%. Indications of a slowing economy and a relative absence of
inflation pressures encouraged bond investors, helping to push interest
rates down. Monetary policy also played a role in the bond market's
performance, as the Fed - in an effort to thwart the possibility of a
recession - lowered the fed funds rate after a string of seven successive
interest rate increases in 1994 and early 1995. Mortgage-backed securities
rode along with the rally. The Salomon Brothers Mortgage Index returned
13.46% during the period. Outside of the U.S., markets had mixed returns.
Emerging fixed-income markets recovered from the lows caused by Mexico's
peso devaluation in December 1994. The J.P. Morgan Emerging Markets Bond
Index returned 6.04% during the 12-month period. Declining interest rates
and a weakening U.S. dollar helped the Salomon Brothers World Government
Bond Index - which includes U.S. issues - to post a 16.18% return.
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. Asset Manager: Income performed reasonably well overall, though it
lagged some of its competitors. The fund's total return for the year ended
September 30, 1995, was 11.99% compared to 15.39% for the average income
fund, according to Lipper Analytical Services. Because this is a relatively
conservative fund, it has a light weighting in stocks and is unable to take
full advantage of strong stock performance. In addition, the fund suffered
setbacks during the final months of 1994 and the beginning of 1995. Its
performance since then has been stronger, both in absolute and relative
terms.
Q. WHAT CAUSED THE PROBLEMS EARLY IN THE YEAR?
A. Foreign investments were the main culprits. Last September, 18% of the
fund's investments was foreign stocks and bonds. That total included
investments in Mexico and other emerging markets in Latin America.
Shareholders who have been with the fund for any length of time will recall
how much those same emerging market investments boosted Asset Manager:
Income's performance in years past. Unfortunately, with the surprise
devaluation of the Mexican peso in December 1994, emerging markets all over
the world suddenly lost credibility with investors and prices plummeted. I
immediately sold most of the fund's emerging market investments, preventing
further losses. Shortly afterward, what was left in the fund of emerging
market securities totalled only around 2% of its investments.
Q. WHAT'S YOUR ATTITUDE TOWARD FOREIGN INVESTMENTS NOW?
A. Foreign investments will probably always play a significant strategic
role in the fund. That's because in the new global economy, I don't think
it makes sense to ignore investment opportunities in other countries. It's
true, investing overseas can carry more risk, and with emerging markets
those risks can be even more significant. But by investing in a broad range
of foreign securities, in a wide variety of countries, I think I can
minimize those risks while still providing shareholders with exposure to
exciting opportunities. If there's a lesson in the fund's recent bad
experience with foreign investments, it's this: more diversification is
needed, not less. Lately, as the pendulum has swung back in favor of
foreign markets, I've again built a 10% stake in foreign securities.
Recently, I've tried to spread the risk around as much as possible instead
of concentrating those assets in a handful of foreign countries. At the
end of September, Asset Manager: Income had a 2.2% stake in Japan, 2.5% in
Germany, and 1.3% in Canada; but no other foreign country by itself
accounted for more than 1% of the fund's total investments.
Q. WHY JAPAN?
A. I began building a small position in Japan in April and May, when the
Nikkei Index bottomed out around 14,000. For five years now, Japan has been
paying the price for the speculative bubble of the late 1980s. Real estate
prices have fallen, banks have suffered and consumer spending has slowed.
And yet foreign demand for Japanese goods has remained strong, resulting in
a significant trade surplus and, until this summer, a rising yen. The
recent surge in the U.S. dollar versus the yen is a sign that Japanese
fiscal and monetary policy is beginning to produce results. The fund has
investments in Hitachi and other consumer electronics companies whose
earnings could rise if the Japanese economy recovers.
Q. WHAT ABOUT DOMESTIC STOCKS?
A. In recent months, I've built a significant position in REITs, or real
estate investment trusts. With an 8% yield and a projected 3% growth rate,
REITs are among the most attractive values in today's market. By the end of
September, REITs were part of the largest stock sector in the fund,
followed by finance and technology. While the finance sector has benefited
from rising bond prices and falling interest rates, that's a cyclical
story; many of the finance stocks I own are growth stories. Large holdings
include Fannie Mae (the Federal National Mortgage Association), which
continues to trade at a price-to-earnings ratio lower than its growth rate;
and American Express, a turnaround story with significant upside potential
once the market recognizes the gains made by its management team. In the
technology sector, I continue to own Compaq and IBM, still cheap in light
of projected earnings; and Intel, the dominant player in the booming
semiconductor industry. As always, not everything performed as well as I
would have liked. Among the disappointments were RJR Nabisco, Wal-Mart and
General Motors, all selling at low price-to-earnings ratios that belie
their impressive growth rates. While it has taken longer than expected for
those stocks to come around, I believe that eventually the market will
recognize their value.
Q. HOW WERE THE FUND'S ASSETS DIVIDED AMONG STOCKS, BONDS AND SHORT-TERM
INVESTMENTS AT THE END OF THE PERIOD?
A. On September 30, 1995, the breakdown was 28% stocks, 33% bonds and 39%
short-term investments. That's somewhat more exposure to stocks and bonds
than the fund would have under neutral conditions, and less short-term
investments.
Q. CAN YOU EXPLAIN WHY YOU HAVE THE FUND STRUCTURED LIKE THAT?
A. Throughout 1995, as economic growth slowed and the Federal Reserve moved
closer toward its rate cut in July, stocks became more attractive and I
added them to the fund. The bond portion of the fund has remained fairly
stable throughout the period at slightly above a neutral weighting. In
retrospect, I wish I'd owned more bonds earlier in the year, but that
opportunity has passed. Barring external factors such as significant
progress on a balanced budget, now is probably not the time to go hunting
for price gains in the bond market. That's reflected in the average
duration of the bond portion of the fund, which at about 2.28 years is
slightly defensive. Duration measures how much a bond's price will vary
with changes in interest rates.
Q. WHAT WAS YOUR BOND STRATEGY DURING THE YEAR?
A. Much of the fund's exposure to emerging markets early in the period was
through bonds, which I sold together with emerging market stocks beginning
last December. Early this past summer, I took profits on a portion of the
fund's investment in U.S. Treasury securities and redeployed those assets
in German bonds. The German bond market until then had lagged the U.S.
market, indicating it might have greater upside potential. Also, Germany's
inflation outlook was especially promising, as were prospects for a rate
cut by the Bundesbank, Germany's central bank. Events unfolded as expected
in Germany, and the fund made a profit from its investment. Although the
deutsche mark declined versus the U.S. dollar last summer, because I had
hedged the fund's German investments, the gains were largely preserved. On
the domestic side, some economic indicators show that economic growth has
slowed, so I've all but eliminated the fund's stake in so-called junk
bonds, whose yield advantage over higher-rated bonds has declined. Lately,
I've built about a 6% stake in mortgage-backed securities, which tend to
outperform Treasuries under relatively stable market conditions.
Q. HOW DID DERIVATIVES AFFECT THE FUNDS PERFORMANCE?
A. The overall impact was positive but hardly significant. Some that I own
can be found under indexed securities in the portfolio listings at the back
of this report, but they're often referred to as structured notes. One way
to think of them is as customized securities. They let me tailor a portion
of the fund's investments to match my outlook in very specific segments of
the market, so that I can take advantage of potential opportunities that
might otherwise be inaccessible. During the period, the fund made money on
structured notes tied to short-term interest rates in the U.K., and to the
price of oil. Structured notes tied to commodities such as gold and
platinum did not do well but I'll probably keep them as a hedge against
inflation. If global inflation were to flare up suddenly for whatever
reason, those commodities could be among the first to react.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I'm cautiously optimistic. The U.S. economy has been expanding slowly
but steadily at an annual rate of less than 3%, right in line with the
long-term growth rate targeted by the Federal Reserve. Inflation, so far,
is almost a non-issue. The dollar appears to have stabilized. Together,
those factors make for an unusually attractive investment climate. Given
1995's sharp gains in domestic markets, foreign markets appear to have more
relative value; foreign investments are therefore likely to remain a
significant part of the fund. One key variable I'll be watching in the near
future is progress on the balanced budget. If the Republican Congress can
broker an agreement, and President Clinton doesn't veto it, long-term
interest rates could approach historic lows. Needless to say, that would be
a tremendous boost for financial markets. If, on the other hand, the
political parties deadlock on the budget, then the unknowns multiply and
the outlook becomes less promising. It all comes back to inflation. If
inflation returns with a vengeance, all bets are off, and we could be
looking at the first real bear market in more than a decade. But if
inflation stays low, then bond prices should keep rising and stocks will
have a chance to achieve still higher price-to-earnings multiples.
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 September 30,
1995, more than $566 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 THE STAYING
POWER OF THE BULL MARKET:
"If people are concerned
about the market, their
actions are not showing it.
This year has been one of the
most bullish in memory, with
investors increasing equity
exposure, equity funds
reducing cash, and record
numbers of initial and
secondary public stock
offerings being made, some
of them frankly speculative.
We're definitely not in the
early stages of the game
anymore. We may, in fact, be
in the final innings. A more
challenging period lies ahead.
Whether that means a market
setback or simply lower
positive returns depends on
the outlook for inflation."
(solid bullet) Foreign investments totaled
10% of the fund's investments
at the end of the period, up
from 7% six months ago. Total
investment in emerging markets
was about 2%. For a complete
breakdown of the fund's foreign
investments by country, see
page 50.
(solid bullet) The fund's asset mix at the
end of the period was 28%
stocks, 33% bonds and 39%
short-term investments. In a
neutral investment climate, the
breakdown would be closer to
20% stocks, 30% bonds and
50% short-term investments.
INVESTMENT CHANGES
TOP FIVE FIXED-INCOME SECURITIES AS OF SEPTEMBER 30, 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) 24.5 30.2
Resolution Trust Corp. (various issues) 3.8 0.9
Premier Auto Trust (various issues) 1.3 1.0
Comdisco, Inc. (various issues) 1.3 0.7
Marine Midland Bank euro (various issues) 0.9 0.5
</TABLE>
QUALITY DIVERSIFICATION AS OF SEPTEMBER 30, 1995
(MOODY'S RATINGS) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Aaa, Aa, A 44.7 40.8
Baa 7.1 6.8
Ba and Below 1.6 1.8
TOP FIVE STOCKS AS OF SEPTEMBER 30, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS IN
THESE STOCKS 6
MONTHS AGO
Philip Morris Companies, Inc. 0.8 0.2
Federal National Mortgage Association 0.7 0.4
American Express Co. 0.6 0.4
RJR Nabisco Holdings Corp. 0.4 0.4
General Motors Corp. 0.4 0.2
ASSET ALLOCATION
AS OF SEPTEMBER 30, 1995 * AS OF MARCH 31, 1995 **
Row: 1, Col: 1, Value: 39.24
Row: 1, Col: 2, Value: 33.05
Row: 1, Col: 3, Value: 20.71
Row: 1, Col: 4, Value: 7.0
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
Stock class 28%
Bond class 33%
Short-term class
and other 39%
FOREIGN
INVESTMENTS 10%
Stock class 18%
Bond class 31%
Short-term class
and other 51%
FOREIGN
INVESTMENTS 7%
*
**
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 SEPTEMBER 30, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 27.1%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.8%
AEROSPACE & DEFENSE - 0.4%
Alliant Techsystems, Inc. (a) 3,000 $ 141,000
Boeing Co. 9,100 621,019
General Motors Corp. Class H 1,800 73,800
Lockheed Martin Corp. 6,575 441,347
McDonnell Douglas Corp. 4,600 380,650
Northrop Grumman Corp. 3,000 182,625
Precision Castparts Corp. 3,000 109,500
Rockwell International Corp. 4,900 231,525
Sundstrand Corp. 1,300 84,175
Thiokol Corp. 2,300 82,225
2,347,866
DEFENSE ELECTRONICS - 0.2%
Loral Corp. 6,800 193,800
Raytheon Co. 4,100 348,500
Tracor, Inc. (a) 17,500 288,750
831,050
SHIP BUILDING & REPAIR - 0.2%
Bremer Vulkan AG (a) 800 33,170
Far East-Levingston Shipbuilding Ltd. 4,000 17,538
General Dynamics Corp. 22,100 1,212,738
Jurong Shipyard Ltd. 3,000 21,466
Keppel Corp. Ltd. 5,000 39,986
1,324,898
TOTAL AEROSPACE & DEFENSE 4,503,814
BASIC INDUSTRIES - 1.3%
CHEMICALS & PLASTICS - 0.8%
Agrium, Inc. 900 33,040
Betz Laboratories, Inc. 1,900 77,663
CGIP 100 19,193
Carbide/Graphite Group, Inc. (a) 600 8,475
du Pont (E.I.) de Nemours & Co. 11,500 790,625
Ferro Corp. 7,400 184,075
First Mississippi Corp. 4,700 187,413
Grace (W.R.) & Co. 10,500 700,875
Great Lakes Chemical Corp. 8,800 595,100
Hercules, Inc. 6,400 371,200
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - CONTINUED
CHEMICALS & PLASTICS - CONTINUED
Kemira OY sponsored ADR (e) 800 $ 12,300
Nalco Chemical Co. 8,500 290,063
Potash Corp. of Saskatchewan 2,800 174,798
Praxair, Inc. 2,200 58,850
Raychem Corp. 9,400 423,000
Rhodia Ster SA GDR (e) 2,100 27,825
Rohm & Haas Co. 2,800 169,050
Union Carbide Corp. 14,100 560,475
4,684,020
IRON & STEEL - 0.0%
Carpenter Technology Corp. 600 23,475
Mannesmann AG Ord. 200 65,695
Nucor Corp. 400 17,900
Republic Engineered Steels, Inc. (a) 200 1,500
108,570
METALS & MINING - 0.3%
Alcan Aluminium Ltd. 7,201 233,494
Aluminum Co. of America 16,900 893,588
Eramet SA 800 60,767
Noranda, Inc. 5,700 115,780
Reynolds Metals Co. 4,800 277,200
1,580,829
PACKAGING & CONTAINERS - 0.1%
Carnaudmetalbox SA 200 8,392
Corning, Inc. 9,200 263,350
Owens-Illinois, Inc. (a) 11,500 145,188
Settsu Corp. (a) 19,000 56,204
Sonoco Products Co. 2,985 82,834
555,968
PAPER & FOREST PRODUCTS - 0.1%
Champion International Corp. 2,777 149,611
James River Corp. of Virginia 7,400 236,800
Land & General BHD 10,000 26,248
Kumpulan Guthrie BHD 12,000 17,753
Malakoff BHD 16,000 48,678
479,090
TOTAL BASIC INDUSTRIES 7,408,477
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONGLOMERATES - 0.3%
Allied-Signal, Inc. 5,900 $ 260,338
ITT Corp. 1,000 124,000
Mark IV Industries, Inc. 3,000 66,750
Suncor, Inc. 1,100 34,540
Tyco International Ltd. 4,361 274,743
United Technologies Corp. 10,300 910,263
1,670,634
CONSTRUCTION & REAL ESTATE - 4.3%
BUILDING MATERIALS - 0.1%
Armstrong World Industries, Inc. 4,900 271,950
Cooper Cameron Corp. (a) 1,676 43,367
Masco Corp. 5,800 159,500
Pioneer International Ltd. 4,600 12,164
Sherwin-Williams Co. 4,000 140,000
United Dominion Industries Ltd. 4,000 95,785
722,766
CONSTRUCTION - 0.1%
Centex Corp. 1,400 40,600
DIA Kensetsu Co. Ltd. 4,000 50,138
Hopewell Holdings Ltd. 72,261 49,065
Kaufman & Broad Home Corp. 3,300 41,663
McDermott (J. Ray) SA 9,200 207,000
Ryland Group, Inc. 2,000 31,000
YTL Corp. BHD 11,500 59,455
478,921
ENGINEERING - 0.0%
Fluor Corp. 1,900 106,400
Foster Wheeler Corp. 4,500 159,188
265,588
REAL ESTATE - 0.1%
Daiman Development BHD 15,000 16,584
Hong Kong Land Holdings Ltd. 18,000 31,500
Klepierre SA 100 11,780
Mitsubishi Estate Co. Ltd. 10,000 111,306
Sime UEP Properties BHD 9,000 15,892
Singapore Land Ltd. 4,000 23,150
Tan & Tan Development BHD 78,000 76,310
286,522
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - 4.0%
Bay Apartment Communities, Inc. 43,700 $ 939,550
Beacon Properties Corp. 2,000 42,750
Bradley Real Estate Trust (SBI) 46,400 742,400
CBL & Associates Properties, Inc. 35,400 734,550
Cali Realty Corp. 2,500 50,625
Capstead Mortgage Corp. 1,000 31,875
CenterPoint Properties Corp. 4,500 100,688
Colonial Properties Trust (SBI) 22,400 557,200
DeBartolo Realty Corp. 6,300 88,200
Developers Diversified Realty Corp. 22,500 677,813
Duke Realty Investors, Inc. 16,600 516,675
Equity Inns, Inc. 25,000 293,750
Equity Residential Properties Trust (SBI) 19,400 584,425
Evans Withycombe Residential, Inc. 7,300 147,825
Excel Realty Trust, Inc. 55,100 1,088,225
Felcor Suite Hotels, Inc. 14,900 447,000
Franchise Finance Corp. of America 38,000 817,000
Glimcher Realty Trust (SBI) 49,900 1,016,713
Haagen Alexander Properties, Inc. 19,600 227,850
Highwoods Properties, Inc. 43,700 1,152,588
JDN Realty Corp. 20,000 425,000
Kimco Realty Corp. 29,000 1,156,375
LTC Properties, Inc. 4,500 65,250
Liberty Property Trust (SBI) 4,500 95,625
Macerich Co. 26,800 569,500
National Golf Properties, Inc. 42,000 918,750
Oasis Residential, Inc. 7,400 166,500
Omega Healthcare Investors, Inc. 33,400 893,450
Patriot American Hospitality, Inc. 17,200 440,750
Post Properties, Inc. 3,600 111,600
RFS Hotel Investors, Inc. 34,800 530,700
Realty Income Corp. 52,900 1,117,513
Security Capital Industrial Trust, Inc. 7,000 113,750
Shurgard Storage Centers, Inc. 28,200 701,475
Simon Properties Group, Inc. 4,200 106,575
Sovran Self Storage, Inc. 34,000 845,750
Speiker Properties, Inc. 24,600 590,400
Starwood Lodging Trust combined certificate (SBI) 38,000 1,068,750
Storage USA, Inc. 3,200 98,800
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - CONTINUED
Storage Trust Realty (SBI) 39,500 $ 804,813
Storage Equities, Inc. 58,700 1,093,288
Sun Communities, Inc. 2,100 54,600
Sunstone Hotel Investors, Inc. 9,000 86,625
Trinet Corporate Realty Trust, Inc. 3,000 83,250
22,396,791
TOTAL CONSTRUCTION & REAL ESTATE 24,150,588
DURABLES - 1.4%
AUTOS, TIRES, & ACCESSORIES - 0.9%
Capaco Automotive Products Corp. 2,100 19,425
Chrysler Corp. 23,200 1,229,600
Daimier Benz AG. Ord. 500 246,533
Dana Corp. 4,200 121,275
Eaton Corp. 1,500 79,500
Echlin, Inc. 1,400 50,050
Fiat Spa 26,100 97,342
Ford Motor Co. 1,900 59,138
General Motors Corp. 44,542 2,087,906
Honda Motor Co. Ltd. 8,000 142,793
Johnson Controls, Inc. 3,600 227,700
Kia Motors Corp. GDR (a)(e) 1,100 23,925
Magna International, Inc. Class A 4,000 181,134
Suzuki Motor Corp. 5,000 53,648
Titan Wheel International, Inc. 3,750 64,219
Toyota Motor Corp. 10,000 189,521
TRW, Inc. 700 52,063
Volvo AB Class B 6,100 149,304
5,075,076
CONSUMER ELECTRONICS - 0.3%
Black & Decker Corp. 4,700 160,388
Electrolux AB 1,700 81,138
Matsushita Electric Industrial Co. Ltd. 32,000 487,741
Sony Corp. 12,700 654,580
Sunbeam-Oster, Inc. 4,000 59,500
Whirlpool Corp. 9,000 519,750
1,963,097
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DURABLES - CONTINUED
HOME FURNISHINGS - 0.0%
Dapta-Mallinjoud SA 100 $ 2,539
Haverty Furniture Companies, Inc. 300 4,088
Heilig-Meyers Co. 4,000 93,000
99,627
TEXTILES & APPAREL - 0.2%
Burlington Industries, Inc. (a) 7,800 98,475
Kellwood Co. 2,100 43,313
NIKE, Inc. Class B 3,700 411,163
Nine West Group, Inc. (a) 800 36,400
Russell Corp. 6,000 153,000
Shikibo Ltd. (a) 18,000 36,641
Warnaco Group, Inc. Class A 6,000 144,000
Westpoint Stevens, Inc. Class A 4,000 86,000
1,008,992
TOTAL DURABLES 8,146,792
ENERGY - 2.0%
ENERGY SERVICES - 0.5%
BJ Services Co. (a) 5,500 138,875
Baker Hughes, Inc. 11,900 242,463
Dresser Industries, Inc. 4,000 95,500
Enterra Corp. (a) 5,000 110,000
Halliburton Co. 6,400 267,200
Helmerich & Payne, Inc. 3,000 84,375
McDermott International, Inc. 3,100 61,225
Nabors Industries, Inc. (a) 9,000 84,938
Noble Drilling Corp. (a) 14,632 113,398
Offshore Logistics, Inc. (a) 3,300 45,788
Reading & Bates Corp. (a) 8,400 100,800
Schlumberger Ltd. 19,800 1,291,950
Sonat Offshore Drilling, Inc. 7,600 247,950
Weatherford International, Inc. (a) 3,700 48,100
2,932,562
INDEPENDENT POWER - 0.0%
Thermo Electron Corp. (a) 2,300 106,663
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
OIL & GAS - 1.5%
Amerada Hess Corp. 15,900 $ 773,138
Amoco Corp. 800 51,300
Atlantic Richfield Co. 9,700 1,041,538
Blue Range Resource Corp. (a):
Class A 2,600 18,896
Class A (e) 1,000 7,268
British Petroleum PLC:
ADR 22,079 1,984,350Ord. 119 895
Burlington Resources, Inc. 8,400 325,500
Canada Occidental Petroleum Ltd. 10,500 333,616
Chesapeake Energy Corp. (a) 2,300 72,738
Coastal Corp. (The) 3,900 131,138
Elf Aquitaine sponsored ADR 1,753 58,945
Global Natural Resources, Inc. (a) 5,200 51,350
Kerr-McGee Corp. 4,700 260,850
Louisiana Land & Exploration Co. 1,300 46,313
Murphy Oil Corp. 2,600 104,000
Newfield Exploration Co. (a) 5,400 162,675
Noble Affiliates, Inc. 200 5,275
Norsk Hydro AS 1,972 84,817
Norsk Hydro AS ADR 1,444 62,273
Occidental Petroleum Corp. 12,700 279,400
Petroleum Geo-Services AS ADR (a) 5,400 132,300
Phillips Petroleum Co. 5,600 182,000
Renaissance Energy Ltd. (a) 5,500 124,017
Renaissance Energy Ltd. (a) (e) 22,000 496,068
Rio Alto Exploration Ltd. (a) 18,900 61,284
Santa Fe Energy Resources, Inc. (a) 5,000 47,500
Texaco, Inc. 1,400 90,475
Tosco Corp. 2,900 100,050
Total SA:
Class B 6,100 369,190
sponsored ADR 9,238 278,295
Unocal Corp. 13,732 391,362
8,128,816
TOTAL ENERGY 11,168,041
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - 4.0%
BANKS - 1.0%
Banc One Corp. 5,600 $ 204,400
Banco Bilbao Vizcaya SA Ord. (Reg.) 2,000 61,548
Banco Intercontinental Espanol 200 17,444
Banco Popular Espanol 200 31,131
Bangkok Bank Ltd. 7,600 85,403
Bank International Indonesia PT Ord. 8,200 28,232
Bank of Boston Corp. 2,167 103,203
Bank of Asia PCL (For. Reg.) 5,780 14,510
Bank of New York Co., Inc. 13,120 610,080
Barnett Banks, Inc. 2,500 141,563
Boatmen's Bancshares, Inc. 1,500 55,500
BQE National Paris Ord. 30 1,176
Chase Manhattan Corp. 2,417 147,739
Chemical Banking Corp. 7,300 444,388
Commerce Asset Holding BHD 3,000 15,749
CS Holdings (Reg.) 1,140 107,114
Deutsche Bank AG 4,500 214,410
Development Bank of Singapore Ltd. (For. Reg.) 11,000 125,009
First Bank System, Inc. 3,000 144,375
First Chicago Corp. 2,000 137,250
First Interstate Bancorp 2,000 201,500
First Union Corp. 146 7,446
Fleet Financial Group, Inc. 15,086 569,497
HSBC Holdings:
PLC 18,187 252,859
Ord. 3,687 52,412
International Bank of Asia Ltd. 57,000 34,280
Krung Thai Bank (For. Reg.) 54,230 216,099
National Bank of Canada 2,500 21,430
NationsBank Corp. 1,100 73,975
Panin Bank PT (For. Reg.) 20,125 24,429
Republic New York Corp. 5,100 298,350
SCF Finance and Securities Co. Ltd. (rights) (a) 554 -
Siam City Bank PCL (For. Reg.) 74,800 101,343
Siam City Credit Finance and Securities Co. Ltd. (rights) (a) 440 -
Shawmut National Corp. 20,680 695,365
Swiss Bank Corp. (Bearer) 337 128,992
Thai Farmers Bank PCL 15,200 132,042
Thai Military Bank Ltd. (For. Reg.) 16,680 66,467
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
BANKS - CONTINUED
Toho Bank Ord. 6,000 $ 39,108
United Overseas Bank Ltd.:
(For. Reg.) 4,800 41,417
(warrants) (a) 13,200 51,392
Unidanmark AS Class A 1,000 43,694
5,742,321
CLOSED END INVESTMENT COMPANIES - 0.1%
Austria Fund, Inc. 3,900 31,688
France Growth Fund, Inc. 6,700 65,325
Germany Fund, Inc. 215 2,473
Growth Fund of Spain, Inc. 9,600 102,000
Morgan Stanley India Investment Fund, Inc. 42,100 436,788
Thai Fund, Inc. 616 14,784
653,058
CREDIT & OTHER FINANCE - 0.8%
Acom Co. Ltd. 4,000 129,556
American Express Co. 75,938 3,369,749
Beneficial Corp. 6,000 313,500
Countrywide Credit Industries, Inc. 4,500 105,750
Equitable Companies, Inc. 3,600 88,200
Green Tree Acceptance, Inc. 3,700 225,700
Greenpoint Financial Corp. 400 11,050
Hong Leong Credit BHD 9,000 42,951
Industrial Finance Corp. (For. Reg.) 24,866 76,297
JCG Holdings Ltd. 76,000 56,518
Promise Co. Ltd. 400 16,846
Schroders PLC (non-vtg.) 33 585
4,436,702
FEDERAL SPONSORED CREDIT - 0.8%
Federal Home Loan Mortgage Corporation 9,300 642,863
Federal National Mortgage Association 36,100 3,736,350
4,379,213
INSURANCE - 0.7%
Aetna Life & Casualty Co. 2,000 146,750
Alexander & Alexander Services, Inc. 8,400 203,700
Allstate Corp. 26,608 941,258
American International Group, Inc. 2,350 199,750
Assicurazioni Generali Spa 2,700 62,362
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
INSURANCE - CONTINUED
Baloise Holding (Reg.) 50 $ 109,981
Berkley (W.R.) Corp. 3,300 149,738
Chubb Corp. (The) 1,000 96,000
CIGNA Corp. 1,000 104,125
Corporacion Mapfrecia International
de Reaseguros SA (Reg.) 900 46,501
General Re Corp. 2,400 362,400
HealthCare COMPARE Corp. (a) 5,000 193,750
International Nederlanden Groep NV 2,667 155,027
Loews Corp. 2,800 407,400
MGIC Investment Corp. 1,500 85,875
NAC Re Corp. 5,400 195,750
Old Republic International Corp. 3,000 86,625
PMI Group, Inc. 1,300 61,588
Providian Corp. 1,000 41,500
Reliastar Financial Corp. 700 28,438
Renaissance RE Holdings (a) 2,000 48,750
Royal Insurance Holdings PLC 11,019 61,661
SAFECO Corp. 1,900 124,688
Skandia Foersaekrings AB 1,300 30,602
Torchmark Corp. 3,400 143,225
4,087,444
SAVINGS & LOANS - 0.2%
Ahmanson (H.F.) & Co. 26,700 677,513
Charter One Financial Corp. 4,000 118,000
Golden West Financial Corp. 6,500 328,250
Standard Federal Bancorporation, Inc. 2,500 97,500
Washington Mutual, Inc. 3,500 92,750
1,314,013
SECURITIES INDUSTRY - 0.4%
Bear Stearns Companies, Inc. 3,465 74,498
Czech Value Fund Unit (e) 8,000 412,000
Edwards (A.G.), Inc. 1,000 26,625
First Marathon Inc. Class A (non-vtg.) 5,000 52,178
Inter-Regional Financial Group, Inc. 10,000 360,000
Lehman Brothers Holdings, Inc. 4,080 94,350
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
SECURITIES INDUSTRY - CONTINUED
Merrill Lynch & Co., Inc. 3,000 $ 187,500
Midland Walwyn, Inc. 10,500 65,549
Morgan Stanley Group, Inc. 4,300 413,338
Nikko Securities Co. Ltd. 4,000 39,348
Nomura Securities Co. Ltd. 23,000 447,431
2,172,817
TOTAL FINANCE 22,785,568
HEALTH - 1.2%
DRUGS & PHARMACEUTICALS - 0.5%
Allergan, Inc. 1,100 36,713
American Home Products Corp. 1,500 127,313
Amgen, Inc. (a) 11,200 558,600
Biogen, Inc. (a) 3,500 210,000
Carter-Wallace, Inc. 5,300 66,250
Depotech Corp. (a) 400 4,800
Dura Pharmaceuticals, Inc. (a) 300 8,925
Elan Corp. PLC ADR (a) 2,000 83,000
Gedeon Richter GDR 740 12,950
Genentech, Inc. (redeemable) (a) 3,000 145,875
Merck & Co., Inc. 1,300 72,800
Pharmacia AB:
Series A sponsored ADR 3,000 89,719
Class A Free shares 5,900 177,113
Schering-Plough Corp. 7,000 360,500
Sepracor, Inc. (a) 8,000 173,000
Sigma Aldrich Corp. 2,800 135,800
SmithKline Beecham PLC ADR 1,300 65,813
Yamanouchi Pharmaceutical Co. Ltd. 20,000 429,180
Zeneca Group PLC Ord. 6 109
2,758,460
MEDICAL EQUIPMENT & SUPPLIES - 0.5%
AMSCO International, Inc. (a) 3,900 77,513
Baxter International, Inc. 15,500 637,438
Becton, Dickinson & Co. 900 56,588
Hoya Corp. 2,000 58,561
Johnson & Johnson 2,200 163,075
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - CONTINUED
Medisense, Inc. (a) 2,700 $ 65,138
Medtronic, Inc. 2,000 107,500
Mentor Corp. 12 546
Millipore Corp. 2,000 75,000
Nellcor, Inc. (a) 1,900 94,525
Oakley, Inc. (a) 800 23,700
Pall Corp. 3,700 86,025
St. Jude Medical, Inc. (a) 3,800 240,350
Spacelabs Medical, Inc. (a) 300 8,475
Thermedics, Inc. (a) 800 15,900
U.S. Surgical Corp. 41,000 1,096,750
2,807,084
MEDICAL FACILITIES MANAGEMENT - 0.2%
American Medical Response (a) 2,000 56,750
Apria Healthcare Group, Inc. (a) 2,079 51,455
Columbia/HCA Healthcare Corp. 11,335 551,164
Maxicare Health Plans, Inc. (a) 2,704 50,362
Pediatrix Medical Group 600 12,300
Tenet Healthcare Corp. (a) 4,000 69,500
TheraTx, Inc. (a) 200 2,625
United Dental Care, Inc. 500 15,000
United HealthCare Corp. 3,000 146,625
955,781
TOTAL HEALTH 6,521,325
HOLDING COMPANIES - 0.1%
Brierley Investments Ltd. 107,521 81,944
Christies International PLC 36,800 118,256
U.S. Industries, Inc. (a) 5,000 77,500
Westmont Land BHD 21,000 39,753
317,453
INDUSTRIAL MACHINERY & EQUIPMENT - 1.4%
ELECTRICAL EQUIPMENT - 0.6%
Asea AB, Series B Free shares 1,000 99,056
Emerson Electric Co. 1,100 78,650
General Electric Co. 4,900 312,375
General Signal Corp. 2,000 58,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
ELECTRICAL EQUIPMENT - CONTINUED
Glenayre Technologies, Inc. 2,250 $ 162,000
Hitachi Koki Co. Ltd. Ord. 7,000 60,577
Honeywell, Inc. 2,000 85,750
Hutchison Whampoa Ltd. Ord. 16,000 86,705
Mitsubishi Electric Co. Ord. 121,000 940,336
Murata Manufacturing Co. Ltd. 9,000 335,723
Omron Corp. 40,000 922,537
Philips Electronics NV 100 4,875
Philips Electronics NV (Bearer) 2,100 102,490
United Engineers BHD 6,000 38,417
United Communication Industry PCL (For. Reg.) 2,700 35,075
3,323,066
INDUSTRIAL MACHINERY & EQUIPMENT - 0.5%
Aida Engineering Ltd. Ord. 8,000 57,358
Amada Metrecs Co. Ltd. 5,000 70,694
Caterpillar, Inc. 11,400 648,375
Cooper Industries, Inc. 3,155 111,214
Deere & Co. 10,000 813,750
Duriron Co., Inc. 6,300 184,275
Exide Corp. 2,500 125,000
Greenfield Industries, Inc. 2,800 86,100
Ingersoll-Rand Co. 5,300 198,750
Kennametal, Inc. 1,700 61,625
Keystone International, Inc. 1,500 32,250
Parker-Hannifin Corp. 750 28,500
Svedala Industri 5,100 153,465
Valmet OY Class A 4,500 146,434
2,717,790
POLLUTION CONTROL - 0.3%
Browning-Ferris Industries, Inc. 5,000 151,875
Safety Kleen Corp. 6,500 95,063
Thermo Instrument Systems, Inc. (a) 300 8,325
WMX Technologies, Inc. 50,400 1,436,400
1,691,663
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 7,732,519
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - 0.6%
BROADCASTING - 0.1%
British Sky Broadcasting Group sponsored ADR 700 $ 25,288
Citicasters, Inc. (a) 400 13,350
Sinclair Broadcast Group, Inc. Class A (a) 1,800 51,750
TCI Group Class A 10,600 185,500
Liberty Media Group, Series A (a) 3,400 90,950
Television Francaise 1 SA 700 69,094
Viacom, Inc. (a):
Class A 1,000 49,750
Class B (non-vtg.) 5,200 258,700
744,382
ENTERTAINMENT - 0.0%
Royal Caribbean Cruises Ltd. 3,600 87,300
LEISURE DURABLES & TOYS - 0.1%
Arctco, Inc. 3,100 39,525
Cobra Golf, Inc. (a) 1,100 32,863
Fleetwood Enterprises, Inc. 7,600 151,050
Hasbro, Inc. 6,300 196,088
Mattel, Inc. 1,200 35,250
Outboard Marine Corp. 2,100 45,150
Takara Co. Ltd. 7,000 60,506
560,432
LODGING & GAMING - 0.1%
Accor SA 500 61,945
Circus Circus Enterprises, Inc. (a) 5,700 159,600
Harrah's Entertainment, Inc. 2,400 70,200
Host Marriott Corp. (a) 3,900 48,263
La Quinta Motor Inns, Inc. 3,800 106,400
Marriott International, Inc. 3,100 115,863
Prime Hospitality Corp. (a) 200 2,050
564,321
PUBLISHING - 0.1%
Gannett Co., Inc. 700 38,238
Meredith Corp. 5,900 234,525
Nelson Thomas, Inc. 200 5,050
News Corp. Ltd.:
ADR 3,500 77,000
(vtg.) sponsored ADR (Pfd. Reg.) 300 5,963
Singapore Press Holdings Ltd. (For. Reg.) 3,600 55,054
415,830
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 0.2%
Apple South, Inc. 5,000 $ 113,750
Applebee's International, Inc. 4,000 109,000
Brinker International, Inc. (a) 10,000 148,750
Cracker Barrel Old Country Store, Inc. 2,000 40,250
Darden Restaurants, Inc. (a) 20,800 239,200
Dave & Busters, Inc. (a) 700 10,938
McDonald's Corp. 4,900 187,425
Outback Steakhouse, Inc. (a) 1,600 49,200
Starbucks Corp. (a) 3,000 113,625
Yoshinoya D&C Co. Ltd. Ord. 2 29,682
1,041,820
TOTAL MEDIA & LEISURE 3,414,085
NONDURABLES - 1.7%
BEVERAGES - 0.1%
Brahma (Cia Cervejaria) PN Class B (Pfd. Reg.) 288,100 117,453
Compania Cervecerias Unidas SA ADR 3,200 68,400
EL Aguila SA (a) 3,000 22,838
Emvasa del Valle de Enah Ord. (a) 300 329
Panamerican Beverages, Inc. Class A 2,100 56,438
PepsiCo, Inc. 10,000 510,000
Quilmes Industries SA 3,400 58,650
Redhook Ale Brewery, Inc. (a) 200 5,903
Whitbread Co. PLC Class A 2,959 28,714
868,725
FOODS - 0.1%
ConAgra, Inc. 3,000 118,875
Kellogg Co. 2,200 159,225
RalCorp Holdings, Inc. (a) 5,900 139,388
Ralston Purina Co. 5,000 289,375
Tyson Foods, Inc. 3,500 94,063
Weston George Ltd. 1,400 48,526
849,452
HOUSEHOLD PRODUCTS - 0.2%
Avon Products, Inc. 1,500 107,625
Clorox Co. 1,000 71,375
First Brands Corp. 4,600 207,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - CONTINUED
Procter & Gamble Co. 1,000 $ 77,000
Rubbermaid, Inc. 9,000 248,625
Tambrands, Inc. 4,000 175,500
887,125
TOBACCO - 1.3%
Dimon, Inc. 5,000 75,000
Imasco Ltd. 3,300 58,729
Philip Morris Companies, Inc. 54,850 4,579,975
RJR Nabisco Holdings Corp. 74,961 2,426,862
7,140,566
TOTAL NONDURABLES 9,745,868
PRECIOUS METALS - 0.3%
Agnico Eagle Mines Ltd. 6,300 87,464
Barrick Gold Corp. 33,300 862,566
Golden Star Resources, Ltd. Canada (a) 3,500 20,871
Kinross Gold Corp. (a) 500 4,286
Kloof Gold Mining Co. Ltd. Ord. 3,000 33,477
Newmont Mining Corp. 7,300 310,250
Placer Dome, Inc. 13,300 346,987
St. Barbara Mines Ltd. 18,400 13,068
Santa Fe Pacific Gold Corp. 10,840 136,855
1,815,824
RETAIL & WHOLESALE - 1.4%
APPAREL STORES - 0.1%
Claire's Stores, Inc. 4,000 82,000
Edison Brothers Stores, Inc. 3,500 20,125
Esprit Asia Holdings Ltd. 58,000 20,816
Gap, Inc. 4,600 165,600
Gymboree Corp. (a) 1,000 30,125
Limited, Inc. (The) 12,100 229,900
Talbots, Inc. 2,600 103,025
651,591
DRUG STORES - 0.1%
Revco (D.S.), Inc. (a) 12,100 284,350
Walgreen Co. 2,000 56,000
340,350
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - CONTINUED
GENERAL MERCHANDISE STORES - 0.8%
Consolidated Stores Corp. (a) 3,900 $ 90,188
Dayton Hudson Corp. 6,000 455,250
Dillard Department Stores, Inc. Class A 9,100 290,063
Dollar General Corp. 4,000 117,500
Federated Department Stores, Inc. (a) 33,800 959,075
Ito-Yokado Co. Ltd. 9,000 494,560
Lechters, Inc. (a) 1,000 11,000
Mac Frugals Bargains Closeouts, Inc. (a) 200 3,150
May Department Stores Co. (The) 3,400 148,750
Ministop Co. Ltd. 1,000 23,063
Price/Costco, Inc. (a) 7,200 123,300
Proffitts, Inc. (a) 6,000 165,000
Sears, Roebuck & Co. 4,000 147,500
Wal-Mart Stores, Inc. 54,000 1,343,250
4,371,649
GROCERY STORES - 0.1%
Albertson's, Inc. 2,000 68,250
Argyll Group PLC Ord. 7,300 39,059
Food Lion, Inc. Class A 9,900 60,019
Great Atlantic & Pacific Tea Co., Inc. 3,400 95,200
Izumi Co. Ord. 5,000 104,287
Richfood Holdings, Inc. Class A 2,600 65,488
Safeway, Inc. (a) 5,100 212,925
Stop & Shop Companies, Inc. (a) 3,600 84,150
Supervalu, Inc. 4,300 126,313
855,691
RETAIL & WHOLESALE, MISCELLANEOUS - 0.3%
Amway Japan Ltd. 4,000 154,826
Best Buy Co., Inc. (a) 4,400 115,500
Cameron Ashley, Inc. (a) 3,000 28,500
Circuit City Stores, Inc. 9,800 309,925
Fingerhut Companies, Inc. 4,000 64,500
Home Depot, Inc. (The) 4,100 163,488
Lowe's Companies, Inc. 5,200 156,000
Micro Warehouse, Inc. (a) 1,600 73,200
Officemax, Inc. (a) 9,800 237,650
Office Depot, Inc. 2,000 60,250
Rex Stores Corp. (a) 4,500 84,375
Smith (W.H.) Group PLC Ord. 2,800 16,311
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED
Sotheby's Holdings, Inc. Class A 4,000 $ 56,000
Staples, Inc. (a) 225 6,356
Tiffany & Co., Inc. 1,000 41,875
Uny Co. Ltd. 4,000 64,578
Williams-Sonoma, Inc. (a) 2,800 58,100
1,691,434
TOTAL RETAIL & WHOLESALE 7,910,715
SERVICES - 0.4%
ADVERTISING - 0.0%
Omnicom Group, Inc. 1,600 104,200
WPP Group PLC 18,800 44,641
148,841
LEASING & RENTAL - 0.0%
Orix Corp. 5,000 183,003
PRINTING - 0.0%
Bowne & Co., Inc. 5,000 101,250
SERVICES - 0.4%
ADT Ltd. (a) 19,400 266,750
BET PLC Ord. 19,500 40,882
First Financial Management Corp. 200 19,525
Manpower, Inc. 3,300 95,700
Rural/Metro Corp. (a) 1,000 24,250
Supercuts, Inc. (a) 3,000 25,500
Western Atlas, Inc. (a) 31,500 1,492,313
Zebra Technologies Corp. Class A (a) 1,000 53,250
2,018,170
TOTAL SERVICES 2,451,264
TECHNOLOGY - 3.8%
COMMUNICATIONS EQUIPMENT - 0.3%
Andrew Corp. (a) 1,000 61,125
Brite Voice Systems, Inc. 3,000 55,500
Cisco Systems, Inc. (a) 6,900 476,100
Dynatech Corp. (a) 4,600 72,450
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMMUNICATIONS EQUIPMENT - CONTINUED
Ericsson (L.M.) Telephone Co. Class B:
ADR 22,000 $ 539,000
ADR (rights) 22,000 25,661
General Instrument Corp. (a) 800 24,000
Nokia Corp. AB, Series K 4,400 309,021
Northern Telecom Ltd. 1,800 64,068
Octel Communications Corp. (a) 3,000 104,625
Tellabs, Inc. (a) 1,800 75,825
U.S. Robotics Corp. 1,200 102,300
1,909,675
COMPUTER SERVICES & SOFTWARE - 0.6%
America Online, Inc. 2,000 137,500
American Business Information, Inc. (a) 6,000 121,500
Automatic Data Processing, Inc. 6,400 436,000
Black Box Corp. (a) 3,400 62,900
Ceridian Corp. (a) 5,000 221,875
Checkfree Corp. 800 16,000
CompUSA, Inc. (a) 2,000 86,000
Computer Management Sciences, Inc. 300 4,200
Computer Sciences Corp. 2,000 128,750
Computron Software, Inc. (a) 400 6,900
CUC International, Inc. (a) 1,950 68,006
Harbinger Corp. (a) 600 8,250
HBO & Co. 1,400 87,500
HPR, Inc. (a) 1,500 34,875
Informix Corp. (a) 3,000 97,500
McAfee Associates, Inc. (a) 2,000 103,000
Mentor Graphics Corp. (a) 3,100 64,713
Mercury Interactive Group Corp. (a) 500 13,875
Microsoft Corp. (a) 6,900 624,450
Oracle Systems Corp. (a) 11,800 452,825
Policy Management Systems Corp. (a) 5,000 256,250
Reuters Holdings PLC ADR Class B 500 26,438
SHL Systemhouse, Inc. (a) 6,400 80,504
Smith Micro Software, Inc. 300 2,963
Stratacom, Inc. (a) 500 27,625
Symantec Corp. (a) 6,400 192,000
Systems & Computer Technology Corp. (a) 3,000 81,000
UUNET Technologies, Inc. (a) 500 23,125
Vantive Corp. (a) 1,200 19,200
3,485,724
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - 1.6%
ADAPTEC, Inc. (a) 1,200 $ 49,500
Apple Computer, Inc. 6,400 238,400
Canon, Inc. 30,000 532,464
Compaq Computer Corp. (a) 38,500 1,862,438
Diebold, Inc. 1,600 74,200
Digital Equipment Corp. (a) 6,700 305,688
Filenet Corp. (a) 3,000 132,750
Fujitsu Ltd. 12,000 150,414
Gateway 2000, Inc. (a) 1,800 55,125
Hewlett-Packard Co. 5,800 483,575
In Focus Systems, Inc. (a) 500 12,313
International Business Machines Corp. 17,500 1,651,563
NEC Corp. 79,000 1,093,206
Norand Corp. (a) 700 12,863
Pitney Bowes, Inc. 8,200 344,400
Read Rite Corp. (a) 4,800 175,200
Ricoh Co. Ltd. Ord. 6,000 59,684
SCI Systems, Inc. (a) 4,700 162,150
Silicon Graphics, Inc. (a) 5,500 189,063
Stratus Computer, Inc. (a) 1,300 34,125
Sun Microsystems, Inc. (a) 8,300 522,900
Symbol Technologies, Inc. (a) 1,000 33,125
Tech Data Corp. (a) 4,400 62,150
Wang Laboratories, Inc. (a) 26,000 412,750
8,650,046
ELECTRONIC INSTRUMENTS - 0.1%
Measurex Corp. 500 17,125
Plasma & Materials Technologies, Inc. (a) 500 8,813
Silicon Valley Group, Inc. (a) 1,500 57,938
Teradyne, Inc. (a) 5,000 180,000
263,876
ELECTRONICS - 1.1%
Aiwa Co. Ltd. 3,000 63,775
AMP, Inc. 2,800 107,800
AVX Corp. (a) 2,100 70,350
C-Cube Microsystems, Inc. (a) 2,000 91,500
Hirose Electric Co. Ltd. 2,100 130,980
Hitachi Ltd. 112,000 1,212,935
Intel Corp. 23,200 1,394,900
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Kyocera Corp. 6,000 $ 489,747
Linear Technology Corp. 3,200 132,800
Maxim Integrated Products, Inc. (a) 2,400 177,600
Micron Technology, Inc. 7,400 588,300
Molex, Inc. 469 15,703
Motorola, Inc. 900 68,738
Nitto Denko Corp. 26,000 393,683
Nichicon Corp. 21,000 282,176
Ryoyo Electro Corp. Ord. 8,000 191,727
Rohm Co. Ltd. 6,000 376,636
Solectron Corp. (a) 5,000 197,500
TDK Corp. 1,000 51,141
Thomas & Betts Corp. 1,200 77,550
Toshiba Corp. 17,000 123,590
Tec Corp. (a) 15,000 58,962
Zycon Corp. 1,700 20,400
6,318,493
PHOTOGRAPHIC EQUIPMENT - 0.1%
Fuji Photo Film Co. Ltd. 24,000 594,435
TOTAL TECHNOLOGY 21,222,249
TRANSPORTATION - 0.7%
AIR TRANSPORTATION - 0.1%
AMR Corp. (a) 1,000 72,125
Atlantic Southeast Airlines, Inc. 3,000 70,125
Atlas Air, Inc. (a) 600 13,350
Comair Holdings, Inc. 4,500 119,250
Delta Air Lines, Inc. 2,900 200,825
KLM Royal Dutch Airlines Ord. 819 28,749
Midwest Express Holdings, Inc. 500 11,250
Southwest Airlines Co. 1,400 35,350
551,024
RAILROADS - 0.5%
Bombardier, Inc. Class B 2,000 23,480
Burlington Northern Sante Fe Corp. 5,400 391,500
CSX Corp. 15,100 1,270,288
Canadian Pacific Ltd. Ord. 8,400 134,620
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TRANSPORTATION - CONTINUED
RAILROADS - CONTINUED
Illinois Central Corp., Series A 5,400 $ 211,275
Southern Pacific Rail Corp. (a) 12,396 300,603
Wisconsin Central Transportation Corp. (a) 3,000 200,250
2,532,016
SHIPPING - 0.0%
Shun Tak Holdings Ltd. 56,000 44,180
TRUCKING & FREIGHT - 0.1%
Fritz Companies, Inc. (a) 1,200 88,425
Hunt (J.B.) Transport Services Inc. 14,600 220,825
Roadway Services, Inc. 6,000 298,500
TNT Freightways Corp. 200 3,775
611,525
TOTAL TRANSPORTATION 3,738,745
UTILITIES - 1.4%
CELLULAR - 0.3%
AirTouch Communications, Inc. (a) 4,700 143,938
Arch Communications Group, Inc. (a) 4 105
BCE Mobile Communications, Inc. (a) 1,300 40,215
Cellular Communications, Inc.
Series A (redeemable) (a) 700 38,150
Palmer Wireless, Inc. (a) 300 6,675
Vanguard Cellular Systems, Inc. Class A (a) 2,200 56,375
Vodafone Group PLC sponsored ADR 27,800 1,139,800
Vodafone Group PLC 9,500 39,852
1,465,110
ELECTRIC UTILITY - 0.1%
Consolidated Edison Co. of New York, Inc. 900 27,338
Consolidated Electric Power Asia Ltd. 54,800 109,855
Korea Electric Power Corp. ADR 20,100 510,038
Scottish Power PLC ADR 4,500 25,075
Union Electrica Fenosa SA 2,900 14,021
Veba AG Ord. 5,000 198,592
884,919
GAS - 0.0%
ENSERCH Corp. 500 8,250
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - CONTINUED
TELEPHONE SERVICES - 1.0%
AT&T Corp. 4,000 $ 263,000
Ameritech Corp. 15,600 813,150
Bell Atlantic Corp. 4,700 288,463
BellSouth Corp. 4,700 343,688
Frontier Corp. 20,300 540,488
Hong Kong Telecommunications Ltd. 25,200 45,791
LCI International, Inc. (a) 6,000 117,750
NYNEX Corp. 19,700 940,675
Pacific Telesis Group 3,200 98,400
Portugal Telecom SA sponsored ADR (a) 5,600 107,800
Koninklijke PPT Nederland 5,700 201,508
SBC Communications, Inc. 14,700 808,500
Tel-Save Holdings, Inc. 500 7,688
Tele Danmark AS Class B 500 25,864
Telefonica de Espana SA Ord. 3,600 49,563
Telesp PN:
(Pfd. Reg.) 932,000 152,867
(rights) (a) 17,310 -
Telecom Italia:
Ord. 79,900 130,629
Mobile Spa (a) 79,900 132,656
U.S. Long Distance Corp. (a) 3,000 45,188
WorldCom, Inc. (a) 13,300 427,263
5,540,931
WATER - 0.0%
Generale des Eaux 509 48,897
TOTAL UTILITIES 7,948,107
TOTAL COMMON STOCKS
(Cost $132,140,655) 152,652,068
PREFERRED STOCKS - 0.6%
SHARES VALUE (NOTE 1)
CONVERTIBLE PREFERRED STOCKS - 0.6%
BASIC INDUSTRIES - 0.1%
METALS & MINING - 0.1%
Reynolds Metals Co. $3.31 4,400 $ 227,700
PAPER & FOREST PRODUCTS - 0.0%
James River Corp. Series P (cummulative) 9% 2,100 64,050
TOTAL BASIC INDUSTRIES 291,750
CONSTRUCTION & REAL ESTATE - 0.0%
BUILDING MATERIALS - 0.0%
Bird Corp. $1.85 3,700 70,300
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Oasis Residential, Inc. $0.75 5,000 129,375
TOTAL CONSTRUCTION & REAL ESTATE 199,675
ENERGY - 0.1%
OIL & GAS - 0.1%
Atlantic Richfield Co. exchangeable $.5575 9,000 229,500
Occidental Petroleum Corp. $3.875 (e) 1,800 102,600
Unocal Corp. $3.50 (e) 1,300 69,550
401,650
FINANCE - 0.2%
BANKS - 0.2%
ABN-AMRO Holdings NV 6% 62 2,428
Citicorp $5.375 (e) 4,400 852,500
854,928
HEALTH - 0.2%
DRUGS & PHARMACEUTICALS - 0.0%
Neorx Corp., Series 1, $2.44 3,700 62,900
MEDICAL EQUIPMENT & SUPPLIES - 0.2%
U.S. Surgical Corp. $2.20 (e) 29,500 885,000
TOTAL HEALTH 947,900
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 (e) 8,800 $ 132,000
NONDURABLES - 0.0%
FOODS - 0.0%
Conagra, Inc., Class E 4,900 197,225
TOBACCO - 0.0%
RJR Nabisco Holdings Corp., Series C, depositary
shares representing 1/10 share 7,100 47,925
TOTAL NONDURABLES 245,150
TECHNOLOGY - 0.0%
COMPUTER SERVICES & SOFTWARE - 0.0%
Ceridian Corp. 3 1/2% 1,900 184,300
TOTAL CONVERTIBLE PREFERRED STOCKS 3,257,353
NONCONVERTIBLE PREFERRED STOCKS - 0.0%
BASIC INDUSTRIES - 0.0%
CHEMICALS & PLASTICS - 0.0%
Henkel KGAA 100 37,820
ENERGY - 0.0%
OIL & GAS - 0.0%
Gulf Canada Resources Ltd., Series 1, adj. rate 26,300 76,456
FINANCE - 0.0%
INSURANCE - 0.0%
SAI Sta Assicuratrice Industriale Spa 2,200 9,987
MEDIA & LEISURE - 0.0%
PUBLISHING - 0.0%
News Corp. Ltd. (ltd. vtg.) 20,100 99,624
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
UTILITIES - 0.0%
TELEPHONE SERVICES - 0.0%
Stet (Societa Finanziaria Telefonica) Spa 29,400 $ 68,260
TOTAL NONCONVERTIBLE PREFERRED STOCKS 292,147
TOTAL PREFERRED STOCKS
(Cost $2,797,562) 3,549,500
CORPORATE BONDS - 18.6%
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (B)
CONVERTIBLE BONDS - 0.3%
BASIC INDUSTRIES - 0.0%
IRON & STEEL - 0.0%
Essar Gujarat Ltd. euro 5 1/2%, 8/5/98 - $ 15,000 14,850
PAPER & FOREST PRODUCTS - 0.0%
Stone Consolidated Corp. 8%, 12/31/03 - CAD 140,000 134,620
TOTAL BASIC INDUSTRIES 149,470
CONSTRUCTION & REAL ESTATE - 0.0%
REAL ESTATE INVESTMENT TRUSTS - 0.0%
LTC Properties, Inc. 8 1/2%, 1/1/01 B2 13,000 13,000
ENERGY - 0.0%
INDEPENDENT POWER - 0.0%
California Energy, Inc. 5%, 7/31/00 (e) B1 120,000 124,050
FINANCE - 0.0%
BANKS - 0.0%
Bank of New York Co., Inc. 7 1/2%, 8/15/01 A3 50,000 119,438
HEALTH - 0.1%
DRUGS & PHARMACEUTICALS - 0.1%
Centoco, Inc. 7 1/4%, 2/1/01 Caa 300,000 267,000
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
Cooper Industries, Inc. 7.05%, 1/1/15 A3 $ 199,000 $ 200,244
POLLUTION CONTROL - 0.0%
WMX Technologies, Inc. 2%, 1/24/05 A2 81,000 68,850
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 269,094
MEDIA & LEISURE - 0.0%
RESTAURANTS - 0.0%
Wendy's International, Inc. 7%, 4/1/06 Baa3 20,000 34,800
RETAIL & WHOLESALE - 0.1%
APPAREL STORES - 0.0%
Baker (J.), Inc. 7%, 6/1/02 B3 50,000 41,375
DRUG STORES - 0.1%
Rite Aid Corp. liquid yield option
notes 0%, 7/24/06 Baa1 1,000,000 500,000
TOTAL RETAIL & WHOLESALE 541,375
TOTAL CONVERTIBLE BONDS 1,518,227
NONCONVERTIBLE BONDS - 18.3%
AEROSPACE & DEFENSE - 0.1%
SHIP BUILDING & REPAIR - 0.1%
Tennessee Gas Pipeline Co. 9 1/4%, 5/15/96 Baa2 630,000 640,691
BASIC INDUSTRIES - 0.1%
PAPER & FOREST PRODUCTS - 0.1%
Boise Cascade Corp. 7 3/8%, 8/1/97 Baa3 760,000 769,606
DURABLES - 0.1%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Ford Motor Co. 1993-A Pass Thru Trust,
ctf 4.67%, 1/1/96 A1 400,000 398,600
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - 12.8%
ASSET BACKED SECURITIES - 4.0%
Capital Auto Receivables Asset Trust, 5.85%,
1/15/98 Aaa $ 197,373 $ 196,171
Caterpillar Financial Asset Trust
6.65%, 6/25/00 A2 444,411 444,962
Chase Manhattan Credit Card Master Trust
8 3/4%, 8/15/99 Aaa 4,080,000 4,148,830
Concord Leasing, Inc. 5.04%, 7/15/98 (e) AAA 141,587 138,756
Discover Card Master Trust I 6.90%, 2/16/00 A2 580,000 590,150
Discover Card Trust:
7 7/8%, 4/16/98 A2 430,000 433,225
5 1/2%, 5/16/98 Aaa 200,000 199,312
6 1/8%, 5/15/98 A2 500,000 498,750
KeyCorp Auto Grantor Trust 5.80%, 7/15/00 A3 526,734 522,151
MBNA Master Credit Card Trust 7 3/4%,
10/15/98 Aaa 800,000 812,000
Midlantic Grantor Trust, 5.15%, 9/15/97 A1 8,561 8,551
National Credit Card Trust 9.45%, 12/31/97 Aaa 2,000,000 2,041,240
Premier Auto Trust:
6.65%, 3/4/97 Aaa 1,730,000 1,735,406
6.85%, 10/4/97 Aaa 1,345,000 1,352,841
5.89%, 8/17/98 Aaa 130,072 129,930
4.90%, 12/15/98 Aaa 1,628,235 1,608,646
4.95%, 2/2/99 A2 728,493 718,363
8.05%, 4/4/00 Aaa 1,900,000 1,984,313
Railcar Trust 7 3/4%, 6/1/04 Aaa 42,936 45,244
Sears Credit Account Master Trust II 7%, 1/15/04 Aaa 2,000,000 2,054,688
Standard Credit Card Master Trust I:
8%, 10/7/97 Aaa 1,300,000 1,321,125
8 1/4%, 10/7/97 A2 525,000 535,664
7.65%, 2/15/00 A2 300,000 308,344
United Federal Savings Bank Grantor Trust:
6.975%, 7/10/00 Baa2 189,122 190,008
7.275%, 11/10/00 Baa2 179,208 180,720
Union Federal Savings 8.20%, 1/10/01 Baa2 181,997 186,263
22,385,653
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - 5.1%
Bancomer SA 9%, 6/1/00 (e) Ba2 $ 500,000 $ 418,700
Bank of Boston Corp.:
9 1/2%, 8/15/97 Baa1 101,000 106,808
euro 5.925%, 8/28/98 (f) Baa1 1,000,000 990,000
6 5/8%, 2/1/04 Baa1 1,750,000 1,708,543
Baybanks, Inc. 5.9375%, 9/30/97 (f) Baa2 1,550,000 1,544,575
Citicorp euro:
5.9375%, 7/10/97 (f) A2 1,770,000 1,765,730
5.95%, 1/30/98 (f) A2 500,000 496,875
Continental Bank Mortgage Corp.
9 7/8%, 6/15/96 A2 250,000 255,795
Corporacion Andina De Fomento yankee
7 1/4%, 4/30/98 (e) Baa3 1,000,000 992,500
First Bank Systems, Inc. euro 6.0625%,
11/29/96 (f) A3 2,000,000 1,998,750
First Fidelity Bancorporation 8 1/2%, 4/1/98 A3 570,000 598,044
First Hawaiian Bank secured 6.93%,
12/1/03 (e) A1 1,540,000 1,499,652
Firstar Corp. 7.15%, 9/1/00 A3 1,390,000 1,409,307
Fleet Financial Group, Inc. 7 5/8%, 12/1/99 A3 150,000 155,988
Manufacturers Hanover Trust, NY euro 6.1875%,
7/15/97 (f) A3 1,600,000 1,596,800
Marine Midland Bank euro (f):
5.9375%, 9/27/96 Baa1 3,800,000 3,792,400
6 1/8%, 3/29/99 Baa1 1,000,000 995,000
Mellon Financial Co.:
6 1/8%, 11/15/95 A2 25,000 24,994
6 1/2%, 12/1/97 A2 200,000 200,830
Meridian Bancorp, Inc. 6 5/8% 6/15/00 A3 2,100,000 2,094,750
NCNB Corp. 10 1/2%, 3/15/99 A3 1,000,000 1,018,780
Security PAC Corporation 9.87%, 3/15/96 A2 400,000 406,696
Signet Banking Corp.:
6%, 5/15/97 (f) Baa2 3,900,000 3,872,349
6%, 4/15/98 (f) Baa2 700,000 692,125
Sovran Financial Corp. 9 3/4%, 6/15/99 A3 100,000 109,913
Zions Bancorporation 8 5/8%, 10/15/02 BBB- 100,000 107,410
28,853,314
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 2.6%
Associates Corp. of North America
6% 12/1/95 Aa3 $ 200,000 $ 199,896
Beneficial Corporation 9.32%, 8/4/97 A2 100,000 105,184
CIT Group Holdings, Inc. 6 5/8%, 6/15/05 Aa3 1,510,000 1,493,345
General Motors Acceptance Corp.:
8%, 2/3/97 A3 2,600,000 2,660,112
5.65%, 12/15/97 A3 1,400,000 1,379,840
Greyhound Financial Corp. 6.94%, 1/28/98 Baa2 500,000 504,275
Household Financial Corp.:
7 5/8%, 12/15/96 A2 70,000 71,034
6 3/4%, 6/1/00 A2 1,250,000 1,257,125
6 3/8%, 6/30/00 A2 700,000 695,625
McDonnell Douglas Finance Corp. 7.31%,
2/19/96 Baa3 3,500,000 3,510,325
Westinghouse Credit Corp.:
8.79%, 5/22/96 Ba1 400,000 404,084
8 3/4%, 6/3/96 Ba1 1,365,000 1,380,930
8 3/4%, 6/5/96 Ba1 400,000 404,668
9.44%, 6/5/96 Ba1 200,000 201,000
9.01%, 7/10/96 Ba1 150,000 152,361
14,419,804
INSURANCE - 0.7%
ITT Hartford Group, Inc. 7 1/4%, 12/1/96 A1 50,000 50,460
Metropolitan Life Insurance Co. 6.30%,
11/1/03 (e) Aa3 1,790,000 1,699,784
Nationwide Mutual Insurance Co.
6 1/2%, 2/15/04 (e) Aa3 310,000 297,746
Ohio National Life Insurance Co.
8 7/8%, 7/15/04 (e) A3 1,950,000 2,138,370
4,186,360
SAVINGS & LOANS - 0.4%
Ahmanson (H.F.) & Co. 9 7/8%, 11/15/99 Baa2 50,000 55,774
Golden West Financial Corp.:
10 1/4%, 5/15/97 A3 900,000 950,688
8 5/8%, 8/30/98 A3 25,000 26,363
Home Savings of America
10 1/2%, 6/12/97 A3 645,000 656,829
World Savings & Loan 5 1/4%, 2/15/96 A1 500,000 498,775
2,188,429
TOTAL FINANCE 72,033,560
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
HEALTH - 0.0%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
Cardinal Distribution Inc. 8%, 3/01/97 A3 $ 200,000 $ 203,942
INDUSTRIAL MACHINERY & EQUIPMENT - 0.4%
ELECTRICAL EQUIPMENT - 0.4%
Westinghouse Electric Corp.:
7 3/4%, 4/15/96 Ba1 835,000 840,244
8 1/2%, 6/10/96 Ba1 500,000 505,220
9.14%, 1/15/98 Ba1 300,000 312,831
8.71%, 2/13/98 Ba1 100,000 103,472
8.96%, 6/17/98 Ba1 300,000 313,287
2,075,054
MEDIA & LEISURE - 0.3%
LEISURE DURABLES & TOYS - 0.0%
Brunswick Corp. 8 1/8%, 4/1/97 Baa1 100,000 101,523
PUBLISHING - 0.3%
News America Holdings, Inc. 12%, 12/15/01 Baa3 1,600,000 1,789,120
TOTAL MEDIA & LEISURE 1,890,643
NONDURABLES - 1.3%
BEVERAGES - 0.3%
Fomento Economico Mexicano SA de CV
euro 9 1/2%, 7/22/97 - 1,570,000 1,548,413
FOODS - 0.7%
Nabisco Inc. 6.70%, 6/15/02 Baa2 1,660,000 1,641,325
Ralcorp Holdings, Inc. 8 3/4%, 9/15/04 Ba1 2,300,000 2,501,250
4,142,575
TOBACCO - 0.3%
Empresas La Moderna SA de CV:
10 1/4%, 11/12/97 (e) - 70,000 68,600
euro 10 1/4%, 11/12/97 - 160,000 156,800
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
NONDURABLES - CONTINUED
TOBACCO - CONTINUED
Philip Morris Companies, Inc.:
9.40%, 10/1/95 A2 $ 50,000 $ 50,000
8 7/8%, 7/1/96 A2 500,000 510,255
9.80%, 12/15/98 A2 980,000 987,546
1,773,201
TOTAL NONDURABLES 7,464,189
RETAIL & WHOLESALE - 0.3%
GENERAL MERCHANDISE STORES - 0.3%
Sears Roebuck & Co.:
8.55%, 8/1/96 A2 225,000 229,127
9%, 9/15/96 A2 500,000 512,780
7 3/4%, 2/27/97 A2 900,000 916,983
1,658,890
GROCERY STORES - 0.0%
Supervalu, Inc. 5 7/8%, 11/15/95 A3 50,000 49,977
TOTAL RETAIL & WHOLESALE 1,708,867
SERVICES - 0.1%
ADVERTISING - 0.1%
Valassis Inserts, Inc. 9 3/8%, 3/15/99 Ba2 250,000 251,250
TECHNOLOGY - 1.7%
COMPUTERS & OFFICE EQUIPMENT - 1.3%
Comdisco, Inc.:
7.73%, 2/18/97 Baa2 3,000,000 3,048,570
6 1/2%, 6/15/00 Baa2 4,300,000 4,263,536
7,312,106
ELECTRONICS - 0.4%
Grupo Condumex SA de CV:
6 1/4%, 7/27/96 (e) - 1,010,000 975,913
6 1/4%, 7/27/96 - 750,000 724,688
7 3/8%, 7/27/98 (e) - 400,000 370,500
2,071,101
TOTAL TECHNOLOGY 9,383,207
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TRANSPORTATION - 0.3%
AIR TRANSPORTATION - 0.2%
AMR Corp.:
7 3/4%, 12/1/97 Baa3 $ 560,000 $ 571,766
9 1/2%, 7/15/98 Baa3 545,000 579,842
1,151,608
TRUCKING & FREIGHT - 0.1%
Federal Express Corp. 9 3/4%, 5/15/96 Baa2 200,000 204,010
MC-Cuernavaca Trust 9 1/4%,
7/25/01 (e) BBB 531,252 407,736
611,746
TOTAL TRANSPORTATION 1,763,354
UTILITIES - 0.8%
ELECTRIC UTILITY - 0.5%
Gulf States Utilities Co.:
5%, 1/1/96 Baa3 300,000 299,010
1st mtg. 6.67%, 11/1/96 Baa3 360,000 360,580
Long Island Lighting Co. 8 3/4%, 5/1/96 Baa3 1,050,000 1,063,094
Public Service Co. of New Hampshire 1st mtg.:
8 7/8%, 5/15/96 Baa3 260,000 264,883
9.17%, 5/15/98 Baa3 400,000 420,168
2,407,735
GAS - 0.3%
Florida Gas 7 3/4%, 11/1/97 (e) Baa2 520,000 532,631
Panhandle Eastern Pipe Line Co. 9 7/8%,
10/15/96 Baa1 325,000 327,616
Southwest Gas Co. 9 3/4%, 6/15/02 Baa3 300,000 342,480
Transcontinental Gas Pipe Line Corp. extendible
9.41%, 5/15/00 Baa1 560,000 559,339
1,762,066
TOTAL UTILITIES 4,169,801
TOTAL NONCONVERTIBLE BONDS 102,752,764
TOTAL CORPORATE BONDS
(Cost $104,733,953) 104,270,991
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 24.1%
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
U.S. TREASURY OBLIGATIONS - 19.4%
4 1/4%, 5/15/96 Aaa $ 32,000,000 $ 31,720,000
7 1/4%, 11/15/96 Aaa 3,320,000 3,370,829
5 1/4%, 7/31/98 Aaa 830,000 815,732
9 1/4%, 8/15/98 Aaa 9,460,000 10,278,858
5 1/8%, 12/31/98 Aaa 1,065,000 1,039,206
7 3/4%, 12/31/99 Aaa 2,553,000 2,716,162
11 7/8%, 11/15/03 Aaa 8,460,000 11,476,498
12 3/8%, 5/15/04 Aaa 610,000 856,666
11 3/4%, 2/15/10 Aaa 1,120,000 1,547,347
12 3/4%, 11/15/10 Aaa 40,000 58,812
9%, 11/15/18 Aaa 6,710,000 8,548,943
8 7/8%, 2/15/19 Aaa 4,530,000 5,710,609
8 1/8%, 8/15/19 Aaa 1,490,000 1,747,949
7 5/8%, 2/15/25 Aaa 21,610,000 24,469,867
6 7/8%, 8/15/25 Aaa 4,650,000 4,886,127
109,243,605
U.S. GOVERNMENT AGENCY OBLIGATIONS - 4.7%
Federal Home Loan Mortgage Corp.:
4.78%, 2/10/97 (callable) Aaa 330,000 324,367
5.6%, 3/1/99 (callable) Aaa 640,000 622,400
Federal National Mortgage Association
4 7/8%, 10/15/98 (callable) Aaa 160,000 154,044
Government Trust Certificates (assets of Trust
guaranteed by U.S. government through
Defense Security Assistance Agency):
Class T-2 9.40%, 11/15/96 Aaa 2,172,303 2,205,192
Class 2-D 9 1/4%, 11/15/96 Aaa 4,500,816 4,569,723
Class 3-B 8.55%, 11/15/97 Aaa 556,532 566,995
Class 1-C 9 1/4%, 11/15/01 Aaa 628,000 687,252
Class 2-E 9.40%, 5/15/02 Aaa 2,210,000 2,431,111
Class T-2 9 5/8%, 5/15/02 Aaa 110,000 120,932
Government Trust Certificates (assets of Trust
guaranteed by U.S. government through
Export-Import Bank):
Series 1995-A 6.28%, 6/15/04 Aaa 950,000 943,255
Series 1994-F 8.178%, 12/15/04 Aaa 3,172,695 3,367,511
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
State of Israel (guaranteed by U.S. government
through Agency for International Development)
5 1/4%, 3/15/98 Aaa $ 780,000 $ 766,350 7 3/4%, 4/1/98 Aaa 427,969
438,196
4 7/8%, 9/15/98 Aaa 1,070,000 1,035,225
6%, 2/15/99 Aaa 350,000 348,709
7 1/8%, 8/15/99 Aaa 1,180,000 1,215,424
7 3/4%, 11/15/99 Aaa 317,000 333,563
5 3/4%, 3/15/00 Aaa 1,440,000 1,414,800
8 1/2%, 4/1/06 Aaa 1,610,000 1,787,100
Private Export Funding Corp.:
secured notes, Series CC, 9 1/2%, 3/31/99 Aaa 180,000 199,224
8 3/4%, 6/30/03 Aaa 800,000 909,000
6.86%, 4/30/04 Aaa 306,000 309,157
U.S. Housing & Urban Development
8.27%, 8/1/03 Aaa 1,000,000 1,100,938
Tennessee Valley Authority 4.60%, 12/15/96 Aaa 400,000 393,560
26,244,028
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $131,510,442) 135,487,633
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 6.0%
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 3.0%
6%, 11/1/00 to 8/1/02 Aaa 17,381,967 17,023,384
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 3.0%
9 1/2%, 8/15/16 Aaa 4,438 4,803
10%, 11/15/09 to 12/15/17 Aaa 755,832 827,288
6 1/2%, 12/15/23 to 4/15/24 Aaa 6,859,635 6,619,548
7 1/2%, 3/15/22 to 6/15/24 Aaa 9,186,616 9,278,477
16,730,116
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $33,793,348) 33,753,500
COMMERCIAL MORTGAGE SECURITIES - 6.0%
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
CS First Boston Mortgage Securities Corp.
commercial floater Series 1994-CFB1
Class A-1, 0%, 1/25/28 (f) Aaa $ 671,749 $ 670,910
FDIC commercial Series 1994-C1 Class II-A1,
6.30%, 9/25/25 Aaa 140,277 140,190
Kearny Street Mortgage commercial floater
Series 1995-1 Class A1, 0%, 2/20/30 (e)(f) AAA 497,964 500,922
Lennar Central Partners LP commercial (e):
Series 1994-1 Class B, 6 7/8%, 9/15/01 (f) - 1,598,000 1,598,495Series
1995-1 Class D, 8.05%, 5/15/03 - 1,666,000 1,669,132
Meritor Mortgage Security Corp. commercial
Series 1987-1 Class A3, commercial,
9.40%, 6/1/99 Baa3 989,469 996,890
Morgan Stanley Capital commercial
Series 1995-1 Class A1, 7%, 2/15/02 (e) AAA 1,688,371 1,698,923
Nomura Asset Securities Corp. commercial floater
Series 1994-MD-II Class A-6, 7.14%, 7/4/03 (f) - 402,057 399,795
SKW Real Estate LP commercial:
Class A, 6.45%, 4/15/02 (e)(f) AA 624,432 625,408
Series II Class B, 6.90%, 4/15/02 (e)(h) A 300,000 300,469
SC Finance Corp. commercial
7.425%, 8/1/04 (e)(f) - 600,000 603,750
Whitehall Partners commercial Series 1995-C1
Class E, 8.01%, 7/20/25 (e) - 2,000,000 1,847,500
Resolution Trust Corp.:
commercial:
Series 1994-N2
Class 3, 7 1/2%, 12/15/04 (e)(h) Baa2 1,000,000 1,003,125
Series 1994-C2
Class A-2, 7 3/4%, 4/25/25 AAA 195,227 197,362
Series 1994-C2
Class A-4, 7 1/2%, 4/25/25 AAA 260,964 262,350
Series 1994-C1
Class A-4, 7 1/4%, 6/25/26 AAA 358,774 358,325
commercial floater (f)
Series 1992-C3 Class A-2,
6.85%, 8/25/23 Aa2 183,678 183,851
Series 1993-C2 Class A-2,
6.745%, 3/25/25 AAA 1,208,698 1,216,252
Series 1994-C1 Class A-3,
6.4875%, 6/25/26 AAA 980,747 980,747
Series 1995-C1 Class A2B,
6.55%, 2/25/27 Aaa 9,389,000 9,249,632
Series 1995-C1 Class A4B,
6.65%, 2/25/27 Aaa 6,785,000 6,681,105
Series 1995-C1 Class C, 6.90%, 2/25/27 A2 1,200,000 1,132,500
COMMERCIAL MORTGAGE SECURITIES - CONTINUED
MOODY'S RATINGS (D) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (C) (000S) (000S)
Structured Asset Securities Corp. commercial:
Series 1995-C1, Class D, 7 3/8%, 9/25/24 BBB $ 1,200,000 $ 1,104,000
Series 1993-C1 Class A-1, 6.60%, 10/25/24 AA+ 405,095 400,411
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $33,764,286) 33,822,044
FOREIGN GOVERNMENT OBLIGATIONS (G) - 3.7%
Argentina Republic BOTE (f):
0.9108%, 4/1/96 - 5,860,000 875,631
1.013536%, 5/31/96 - 8,450,000 1,335,776
euro 6.6875%, 9/1/97 - 2,750,000 1,212,778
Brazil Federative Republic IDU euro 6.6875%,
1/1/01 (f) B1 237,500 201,875
Government of New Zealand 8%, 4/15/04 Aaa NZD 1,250,000 830,284
Ontario Province yankee 7 3/4%, 6/4/02 Aa3 3,000,000 3,195,300
Province of Chaco, Argentina
11 7/8%, 9/10/97 (d) - 200,000 204,760
Treuhandanstalt:
6 7/8%, 6/11/03 Aaa DEM 7,700,000 5,498,613
6 5/8%, 7/9/03 AAA DEM 10,950,000 7,710,554
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $20,820,129) 21,065,571
COMMODITY INDEXED SECURITIES - 0.8%
Goldman Sachs Group, L.P. note 5 5/8%,
1/31/96 (indexed to gold price) 2,040,000 2,041,428
Morgan Guaranty Trust Co. cert. of dep.:
5 3/4%, 10/10/95 (indexed to platinum price) 310,000 302,095
5.6992%, 10/11/95 (indexed to platinum price) 420,000 409,752
5.617%, 1/11/96 (indexed to gold price) 1,560,000 1,558,596
TOTAL COMMODITY INDEXED SECURITIES
(Cost $4,330,000) 4,311,871
MUNICIPAL SECURITIES - 0.1%
Louisiana Pub. Facs. Auth. Rev 9.95%, 6/1/96
(Cost $505,807) A3 465,000 475,602
REPURCHASE AGREEMENTS - 13.0%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 6.46%
dated 9/29/95 due 10/2/95 $ 72,928,239 $ 72,889,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $537,285,182) $ 562,277,780
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE VALUE GAIN/(LOSS)
CONTRACTS TO SELL
17,409,794 DEM 10/4/95 $ 12,196,369 $ 151,441
(Receivable amount $12,347,810)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.2%
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
DEM - German deutsche mark
NZD - New Zealand dollar
LEGEND
10.Non-income producing
11.Principal amount is stated in United States dollars unless otherwise
noted.
12.Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
13.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 $209,746
14.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 $22,533,698 or 4.0% of net
assets.
15.The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
16.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.
17.Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
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 44.7% AAA, AA, A 41.7%
Baa 7.1% BBB 8.9%
Ba 1.4% BB 1.3%
B 0.1% B 0.0%
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 2.4%. FMR has determined that unrated
debt securities that are lower quality account for 1.7% 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 90.2%
Germany 2.5
Japan 2.2
Canada 1.3
Others (individually less than 1%) 3.8
TOTAL 100.0%
INCOME TAX INFORMATION
At September 30, 1995, the aggregate cost of investment securities for
income tax purposes was $537,501,148. Net unrealized appreciation
aggregated $24,776,632, of which $29,007,138 related to appreciated
investment securities and $4,230,506 related to depreciated investment
securities.
At September 30, 1995, the fund had a capital loss carryforward of
approximately $1,436,000 which will expire on September 30, 2003.
The fund has elected to defer to its fiscal year ending September 30, 1996
$71,000 of losses recognized during the period November 1, 1994 to
September 30, 1995.
For the year ended September 30, 1995, the net realized gain (loss) on
asset-backed and mortgage-backed security paydowns, foreign currency
transactions and market discount treated as ordinary income for income tax
purposes was $332,000.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SEPTEMBER 30, 1995
ASSETS
Investment in securities, at value (including repurchase $ 562,277,780
agreements of $72,889,000) (cost $537,285,182) -
See accompanying schedule
Cash 137,385
Receivable for investments sold 1,962,816
Unrealized appreciation on foreign currency contracts 151,441
Receivable for fund shares sold 2,052,640
Dividends receivable 511,963
Interest receivable 4,661,492
Other receivables 688
TOTAL ASSETS 571,756,205
LIABILITIES
Payable for investments purchased $ 3,733,647
Payable for fund shares redeemed 1,526,562
Accrued management fee 233,039
Other payables and accrued expenses 183,824
TOTAL LIABILITIES 5,677,072
NET ASSETS $ 566,079,133
Net Assets consist of:
Paid in capital $ 537,189,377
Undistributed net investment income 5,464,073
Accumulated undistributed net realized gain (loss) on (1,703,382)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 25,129,065
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 49,397,717 shares outstanding $ 566,079,133
NET ASSET VALUE, offering price and redemption price per $11.46
share ($566,079,133 (divided by) 49,397,717 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED SEPTEMBER 30, 1995
INVESTMENT INCOME $ 2,591,173
Dividends
Interest 28,214,163
TOTAL INCOME 30,805,336
EXPENSES
Management fee $ 2,611,365
Transfer agent fees 1,021,199
Accounting fees and expenses 204,869
Non-interested trustees' compensation 2,860
Custodian fees and expenses 148,104
Registration fees 38,961
Audit 56,662
Legal 3,977
Reports to shareholders 4,034
Miscellaneous 4,867
Total expenses before reductions 4,096,898
Expense reductions (10,065) 4,086,833
NET INVESTMENT INCOME 26,718,503
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 1,095,556
Foreign currency transactions 547,122 1,642,678
Change in net unrealized appreciation (depreciation) on:
Investment securities 31,919,728
Assets and liabilities in foreign currencies 13,711 31,933,439
NET GAIN (LOSS) 33,576,117
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 60,294,620
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994
INCREASE (DECREASE) IN NET ASSETS
Operations $ 26,718,503 $ 19,648,437
Net investment income
Net realized gain (loss) 1,642,678 (5,923,379)
Change in net unrealized appreciation (depreciation) 31,933,439 (12,405,241)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 60,294,620 1,319,817
FROM OPERATIONS
Distributions to shareholders (22,340,695) (16,160,243)
From net investment income
From net realized gain - (979,342)
In excess of net realized gain - (599,324)
TOTAL DISTRIBUTIONS (22,340,695) (17,738,909)
Share transactions 246,242,775 592,325,759
Net proceeds from sales of shares
Reinvestment of distributions 20,098,189 15,427,608
Cost of shares redeemed (239,564,840) (289,222,137)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 26,776,124 318,531,230
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 64,730,049 302,112,138
NET ASSETS
Beginning of period 501,349,084 199,236,946
End of period (including undistributed net investment $ 566,079,133 $ 501,349,084
income of $5,464,073 and $1,161,267, respectively)
OTHER INFORMATION
Shares
Sold 22,750,670 54,138,502
Issued in reinvestment of distributions 1,869,315 1,423,182
Redeemed (22,134,037) (26,651,808)
Net increase (decrease) 2,485,948 28,909,876
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEARS ENDED SEPTEMBER 30, OCTOBER 1, 1992
(COMMENCEMENT
OF OPERATIONS) TO
SEPTEMBER 30,
1995 1994 B 1993
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.69 $ 11.07 $ 10.00
Income from Investment Operations
Net investment income .56 .45 .46
Net realized and unrealized gain (loss) .68 (.29) 1.04
Total from investment operations 1.24 .16 1.50
Less Distributions (.47) (.47) (.43)
From net investment income
From net realized gain - (.04) -
In excess of net realized gain - (.03) -
Total distributions (.47) (.54) (.43)
Net asset value, end of period $ 11.46 $ 10.69 $ 11.07
TOTAL RETURN A 11.99% 1.46% 15.32%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 566,079 $ 501,349 $ 199,237
Ratio of expenses to average net assets .79% .71% .65%C
C
Ratio of net investment income to average 5.15% 4.92% 5.19%
net assets
Portfolio turnover rate 157% 83% 47%
</TABLE>
D THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
E EFFECTIVE OCTOBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
F FMR VOLUNTARILY AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
NOTES TO FINANCIAL STATEMENTS
For the period ended September 30, 1995
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 substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
INVESTMENT INCOME. 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.
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, foreign currency transactions, passive
foreign investment companies (PFIC), market discount, non-taxable
dividends, and losses deferred due to wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and
realized and unrealized gain (loss). Undistributed net investment income
and accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
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
2. OPERATING POLICIES - CONTINUED
FORWARD FOREIGN CURRENCY CONTRACTS - CONTINUED
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 more joint trading accounts.
These balances are invested in one or more repurchase agreements that
mature in 60 days or less from the date of purchase, and are collateralized
by U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying U.S. Treasury or Federal Agency Securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
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
2. OPERATING POLICIES - CONTINUED
FUTURES CONTRACTS AND OPTION -
CONTINUED
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 securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period,
restricted securities (excluding 144A issues) amounted to $204,760 or 0.1%
of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $729,466,192 and $641,200,567, respectively, of which U.S.
government and government agency obligations aggregated $343,268,498 and
$370,193,552, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1200% to .3700% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .35%.
For the period, the management fee was equivalent to an annual rate of .50%
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.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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 $65,686 for the period.
5. 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
$10,065 under this arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Charles Street Trust and the Shareholders of
Fidelity Asset Manager: Income
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: Income, (a fund
of Fidelity Charles Street Trust) at September 30, 1995, the results of its
operations for the year then ended, and 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: Income'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 at September 30, 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
November 7, 1995
DISTRIBUTIONS
A total of 27.4% of the dividends distributed during the fiscal year was
derived from interest on U.S. Government securities which is generally
exempt from state income tax.
A total of 7% of the dividends distributed during the fiscal year qualifies
for the dividends-received deductions for corporate shareholders.
The fund will notify shareholders in January 1996 of these percentages for
use in preparing 1995 income tax returns.
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)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)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)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)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 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(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
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
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
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
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
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
ANNUAL REPORT
SEPTEMBER 30, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 11 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 12 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 54 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 58 Notes to the financial statements.
REPORT OF INDEPENDENT 63 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 64
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 the markets have been fairly positive this year, no one can
predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
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 SEPTEMBER 30, 1995 PAST 1 LIFE OF
YEAR FUND
Asset Manager: Growth 9.95% 62.73%
S&P 500(registered trademark) 29.75% 59.89%
Average Flexible Portfolio Fund 19.38% n/a
Consumer Price Index 2.54% 11.09%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year or since the fund started 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 142 funds with similar objectives tracked by Lipper
Analytical Services over the past 12 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 SEPTEMBER 30, 1995 PAST 1 LIFE OF
YEAR FUND
Asset Manager: Growth 9.95% 13.84%
S&P 500 29.75% 13.31%
Average Flexible Portfolio Fund 19.38% n/a
Consumer Price Index 2.54% 2.85%
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
Asset Manager: GrowS&P 500 Fidelity Aggress
12/31/91 10000.00 10000.00 10000.00
01/31/92 10367.06 9814.00 9832.85
02/29/92 10585.32 9941.58 9928.97
03/31/92 10436.51 9747.72 9786.93
04/30/92 10466.27 10034.30 9994.02
05/31/92 10684.52 10083.47 10082.67
06/30/92 10565.48 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 11071.43 10247.04 10393.07
10/31/92 11279.76 10282.91 10372.18
11/30/92 11686.51 10633.55 10597.15
12/31/92 11907.91 10764.35 10737.36
01/31/93 12079.90 10854.77 10866.69
02/28/93 12231.66 11002.39 11029.52
03/31/93 12707.16 11234.54 11193.09
04/30/93 12747.63 10962.67 11044.56
05/31/93 13010.68 11256.47 11234.36
06/30/93 13202.90 11289.11 11332.44
07/31/93 13445.72 11243.95 11324.50
08/31/93 13992.04 11670.10 11680.72
09/30/93 13931.34 11580.24 11637.38
10/31/93 14366.38 11819.95 11808.39
11/30/93 14244.97 11707.66 11697.98
12/31/93 15041.53 11849.32 11805.19
01/31/94 15622.08 12252.20 12116.50
02/28/94 15157.64 11920.17 11826.37
03/31/94 14387.09 11400.45 11413.39
04/30/94 14365.98 11546.37 11483.36
05/31/94 14482.09 11735.73 11603.53
06/30/94 14049.31 11448.21 11413.06
07/31/94 14397.64 11823.71 11720.75
08/31/94 14904.30 12308.48 12035.98
09/30/94 14682.64 12006.92 11795.99
10/31/94 14724.86 12277.08 11968.80
11/30/94 14302.64 11829.95 11680.79
12/31/94 13930.27 12005.39 11817.45
01/31/95 13583.09 12316.69 12084.93
02/28/95 13810.93 12796.67 12470.93
03/31/95 14093.00 13174.30 12736.77
04/30/95 14483.57 13562.28 13033.69
05/31/95 14841.59 14104.36 13533.48
06/30/95 15156.22 14432.01 13773.08
07/31/95 15785.47 14910.57 14057.96
08/31/95 15872.26 14948.00 14133.12
09/29/95 16143.49 15578.81 14564.68
Asset Manager: GrowS&P 500 Fidelity Aggress
12/31/91 10000.00 10000.00 10000.00
01/31/92 10367.06 9814.00 9832.85
02/29/92 10585.32 9941.58 9928.97
03/31/92 10436.51 9747.72 9786.93
04/30/92 10466.27 10034.30 9994.02
05/31/92 10684.52 10083.47 10082.67
06/30/92 10565.48 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 11071.43 10247.04 10393.07
10/31/92 11279.76 10282.91 10372.18
11/30/92 11686.51 10633.55 10597.15
12/31/92 11907.91 10764.35 10737.36
01/31/93 12079.90 10854.77 10866.69
02/28/93 12231.66 11002.39 11029.52
03/31/93 12707.16 11234.54 11193.09
04/30/93 12747.63 10962.67 11044.56
05/31/93 13010.68 11256.47 11234.36
06/30/93 13202.90 11289.11 11332.44
07/31/93 13445.72 11243.95 11324.50
08/31/93 13992.04 11670.10 11680.72
09/30/93 13931.34 11580.24 11637.38
10/31/93 14366.38 11819.95 11808.39
11/30/93 14244.97 11707.66 11697.98
12/31/93 15041.53 11849.32 11805.19
01/31/94 15622.08 12252.20 12116.50
02/28/94 15157.64 11920.17 11826.37
03/31/94 14387.09 11400.45 11413.39
04/30/94 14365.98 11546.37 11483.36
05/31/94 14482.09 11735.73 11603.53
06/30/94 14049.31 11448.21 11413.06
07/31/94 14397.64 11823.71 11720.75
08/31/94 14904.30 12308.48 12035.98
09/30/94 14682.64 12006.92 11795.99
10/31/94 14724.86 12277.08 11968.80
11/30/94 14302.64 11829.95 11680.79
12/31/94 13930.27 12005.39 11817.45
01/31/95 13583.09 12316.69 12084.93
02/28/95 13810.93 12796.67 12470.93
03/31/95 14093.00 13174.30 12736.77
04/30/95 14483.57 13562.28 13033.69
05/31/95 14841.59 14104.36 13533.48
06/30/95 15156.22 14432.01 13773.08
07/31/95 15785.47 14910.57 14057.96
08/31/95 15872.26 14948.00 14133.12
09/29/95 16143.49 15578.81 14564.68
$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 September 30, 1995, the value of your investment would have
grown to $16,143 - a 61.43% 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
$15,579 - a 55.79% 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 (+55.79%), Lehman Brothers Treasury Bond Index
(+29.73%), and the Salomon Brothers 3-month T-Bill Total Rate of Return
Index (+16.09%). With dividends and interest, if any, reinvested, the same
$10,000 investment would have grown to $14,565 - a 45.65% 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)
Strong corporate earnings and a favorable interest rate environment helped
the U.S. stock market post strong returns for the 12 months ended September
30, 1995. U.S. bond markets also rallied during the 12-month period.
STOCKS: The Standard & Poor's Composite Index of 500 Stocks finished the
12-month period with a total return of 29.75% - well above its historical
annual average of roughly 12%. With inflation posing little threat,
interest rates fell during the first half of 1995. The Federal Reserve
Board cut the federal funds rate - the rate banks charge each other for
overnight loans - by 0.25% on July 6 to 5.75%. Large-capitalization stocks
led the rally. Technology companies - whose goods and services benefited
from both corporate and consumer demand - posted the strongest earnings
growth and stock price gains. Lower interest rates and continued merger and
acquisition activity helped financial stocks perform especially well. In
June, the Dow Jones Industrial Average closed above 4500 for the first
time. Returns from foreign markets suffered as investors brought capital
back to the U.S. The Morgan Stanley Emerging Markets Free Index was down
17.73% for the 12 months ended September 30. The Morgan Stanley EAFE
(Europe, Australia, Far East) Index returned 5.79% for the year ended
September 30. European markets have fared well through the first nine
months of 1995, while the Japanese market has struggled through much of the
year.
BONDS: A strong rally starting in November 1994 helped bonds recover from
the effects of the sharply rising interest rate environment seen earlier
that year. For the 12-month period, the Lehman Brothers Aggregate Bond
Index - a broad measure of U.S. taxable bonds - posted a total return of
14.06%. Indications of a slowing economy and a relative absence of
inflation pressures encouraged bond investors, helping to push interest
rates down. Monetary policy also played a role in the bond market's
performance, as the Fed - in an effort to thwart the possibility of a
recession - lowered the fed funds rate after a string of seven successive
interest rate increases in 1994 and early 1995. Mortgage-backed securities
rode along with the rally. The Salomon Brothers Mortgage Index returned
13.46% during the period. Outside of the U.S., markets had mixed returns.
Emerging fixed-income markets recovered from the lows caused by Mexico's
peso devaluation in December 1994. The J.P. Morgan Emerging Markets Bond
Index returned 6.04% during the 12-month period. Declining interest rates
and a weakening U.S. dollar helped the Salomon Brothers World Government
Bond Index - which includes U.S. issues - to post a 16.18% return.
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. Asset Manager: Growth performed reasonably well overall, though it
lagged some of its competitors. The fund's total return for the year ended
September 30, 1995, was 9.95%, compared to 19.38% for the average flexible
portfolio fund, according to Lipper Analytical Services. Most of the
reasons the fund lagged can be traced to setbacks suffered during the final
months of 1994 and the beginning of 1995. The fund's performance since then
has been stronger, both in absolute and relative terms.
Q. WHAT CAUSED THE PROBLEMS EARLY IN THE YEAR?
A. Foreign investments were the main culprits. Last September, 36% of the
fund's investments was foreign stocks and bonds. That total included
investments in Mexico and other emerging markets in Latin America.
Shareholders who have been with the fund for any length of time will recall
how much those same emerging market investments boosted Asset Manager:
Growth's performance in years past. Unfortunately, with the surprise
devaluation of the Mexican peso in December 1994, emerging markets all over
the world suddenly lost credibility with investors and prices plummeted. I
immediately sold most of the fund's emerging market investments, preventing
further losses. Shortly afterward, what was left in the fund of Mexican
securities, for example, totalled only around 1% of its investments.
Q. WHAT'S YOUR ATTITUDE TOWARD FOREIGN INVESTMENTS NOW?
A. Foreign investments will probably always play a significant strategic
role in the fund. That's because in the new global economy, I don't think
it makes sense to ignore investment opportunities in other countries. It's
true, investing overseas can carry more risk, and with emerging markets
those risks can be even more significant. But by investing in a broad range
of foreign securities, in a wide variety of countries, I think I can
minimize those risks while still providing shareholders with exposure to
exciting opportunities. If there's a lesson in the fund's recent bad
experience with foreign investments, it's this: more diversification is
needed, not less. Lately, as the pendulum has swung back in favor of
foreign markets, I've again built a 35% stake in foreign securities.
Recently, I've tried to spread the risk around as much as possible, instead
of concentrating those assets in a handful of foreign countries. At the end
of September, Asset Manager: Growth had a 7.9% stake in Japan, but no other
foreign country by itself accounted for more than 4.2% of the fund's total
investments.
Q. WHY THE LARGE INVESTMENT IN JAPAN?
A. I began building a position in Japan in April and May, when the Nikkei
Index bottomed out around 14,000. For five years now, Japan has been paying
the price for the speculative bubble of the late 1980s. Real estate prices
have fallen, banks have suffered and consumer spending has slowed. And yet
foreign demand for Japanese goods has remained strong, resulting in a
significant trade surplus and, until this summer, a rising yen. The recent
surge in the U.S. dollar versus the yen is a sign that Japanese fiscal and
monetary policy is beginning to produce results. The fund has investments
in Hitachi and other consumer electronics companies whose earnings could
rise if the Japanese economy recovers.
Q. WHAT ABOUT DOMESTIC STOCKS?
A. Here at home, my focus has been on technology and finance stocks. In the
technology sector, I continue to own Compaq and IBM, still cheap in light
of projected earnings; and Intel, the dominant player in the booming
semiconductor industry. While the finance sector has benefited from rising
bond prices and falling interest rates, that's a cyclical story; many of
the finance stocks I own are growth stories. Large holdings include Fannie
Mae (the Federal National Mortgage Association), which continues to trade
at a price-to-earnings ratio lower than its growth rate; and American
Express, a turnaround story with significant upside potential if the market
recognizes the gains made by its management team. Philip Morris remains
among the fund's largest investments. The main reason it's so cheap is the
uncertainty surrounding tobacco litigation, but earnings continue to grow,
especially overseas. As always, not everything performed as well as I would
have liked. Among the disappointments were RJR Nabisco, Wal-Mart and
General Motors, all selling at low price-to-earnings ratios that belie
their impressive growth rates. While it has taken longer than expected for
those stocks to come around, I believe that eventually the market will
recognize their value.
Q. HOW WERE THE FUND'S ASSETS DIVIDED AMONG STOCKS, BONDS AND SHORT-TERM
INVESTMENTS AT THE END OF THE PERIOD?
A. On September 30, 1995, the breakdown was 74% stocks, 21% bonds and 5%
short-term investments. That's somewhat more stock exposure than the fund
would have under neutral conditions, while the fund's bond exposure is
significantly less than it would be in a neutral environment.
Q. CAN YOU EXPLAIN WHY YOU HAVE THE FUND STRUCTURED LIKE THAT?
A. One portion of the fund's asset mix that has changed very little during
the past year is its exposure to domestic stocks. That's always been around
40%. Earlier in the year, though, when foreign stocks were less attractive,
the overall stock portion of the fund fell below a neutral weighting and
the short-term portion rose. Then as Japan's prospects improved and foreign
stocks crept back into the fund, cash declined accordingly. Bonds are below
a neutral weighting only because the bond market has surged since the
beginning of the year, and would appear to be near its peak. In retrospect,
I wish I'd owned more bonds earlier in the year, but that opportunity has
passed. Barring external factors such as significant progress on a balanced
budget, now is probably not the time to go hunting for price gains in the
bond market. That's reflected in the average duration of the bond portion
of the fund, which at about 1.45 years at the end of the period is slightly
defensive. Duration measures how much a bond's price will vary with changes
in interest rates.
Q. WHAT WAS YOUR BOND STRATEGY DURING THE YEAR?
A. Much of the fund's exposure to emerging markets early in the period was
through bonds, which I sold together with emerging market stocks beginning
last December. Early this past summer, I took profits on a portion of the
fund's investment in U.S. Treasury securities and redeployed those assets
in German bonds. The German bond market until then had lagged the U.S.
market, indicating it might have greater upside potential. Also, Germany's
inflation outlook was especially promising, as were prospects for a rate
cut by the Bundesbank, Germany's central bank. Events unfolded as expected
in Germany, and the fund made a profit from its investment. Although the
deutsche mark declined versus the U.S. dollar last summer, because I had
hedged the fund's German investments, the gains were largely preserved. On
the domestic side, some indicators show that economic growth has slowed, so
I've all but eliminated the fund's stake in so-called junk bonds, whose
yield advantage over higher-rated bonds has declined.
Q. HOW DID DERIVATIVES AFFECT THE FUNDS PERFORMANCE?
A. The overall impact was positive but hardly significant. Some that I own
can be found under indexed securities in the portfolio listings at the back
of this report, but they're often referred to as structured notes. One way
to think of them is as customized securities. They let me tailor a portion
of the fund's investments to match my outlook in very specific segments of
the market, so that I can take advantage of potential opportunities that
might otherwise be inaccessible. During the period, the fund made money on
structured notes tied to short-term interest rates in the U.K., and to the
price of oil. Structured notes tied to commodities such as gold and
platinum did not do well but I'll probably keep them as a hedge against
inflation. If global inflation were to flare up suddenly for whatever
reason, those commodities could be among the first to react.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I'm cautiously optimistic. The U.S. economy has been expanding slowly
but steadily at an annual rate of less than 3%, right in line with the
long-term growth rate targeted by the Federal Reserve. Inflation, so far,
is almost a non-issue. The dollar appears to have stabilized. Together
those factors make for an unusually attractive investment climate. Given
1995's sharp gains in domestic markets, foreign markets appear to have more
relative value; foreign investments are therefore likely to remain a
significant part of the fund. A key variable I'll be watching in the near
future is progress on the balanced budget. If the Republican Congress can
broker an agreement, and President Clinton doesn't veto it, we could be
looking at long-term interest rates approaching historic lows. Needless to
say, that would be a tremendous boost for financial markets. If, on the
other hand, the political parties deadlock on the budget, then the unknowns
multiply and the outlook becomes less promising. It all comes back to
inflation. If inflation returns with a vengeance, all bets are off, and we
could be looking at the first real bear market in more than a decade. But
if inflation stays low, then bond prices should keep rising and stocks will
have a chance to achieve still higher price-to-earnings multiples.
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 September 30,
1995, more than $2.8 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 THE STAYING
POWER OF THE BULL MARKET:
"If people are concerned
about the market, their
actions are not showing it.
This has been one of the most
bullish years in memory, with
investors increasing equity
exposure, equity funds
reducing cash, and record
numbers of initial and
secondary public stock
offerings being made, some of
them frankly speculative.
We're definitely not in the
early stages of the game
anymore. We may, in fact, be
in the final innings. A more
challenging period lies ahead.
Whether that means a market
setback or simply lower
positive returns depends on
the outlook for inflation."
(solid bullet) Foreign investments
totalled 35% of the fund's
investments at the end of the
period, up from 21% six
months ago. Total investment
in Mexico and other emerging
markets was less than 15%.
For a complete breakdown of
the fund's foreign investments
by country, see page 53.
(solid bullet) The fund's asset mix at the
end of the period was 74%
stocks, 21% bonds and 5%
short-term investments. In a
neutral investment climate,
the breakdown would be
closer to 65% stocks, 30%
bonds and 5% short-term
investments.
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
Federal National Mortgage Association 1.9 1.3
Philip Morris Companies, Inc. 1.7 0.7
International Business Machines Corp. 1.4 1.6
General Motors Corp. 1.3 0.6
Compaq Computers Corp. 1.3 0.8
TOP FIVE MARKET SECTORS AS OF SEPTEMBER 30, 1995
(STOCKS ONLY) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
Finance 12.6 8.2
Technology 12.0 11.5
Utilities 6.5 4.2
Energy 5.8 5.3
Durables 5.3 3.4
TOP FIVE COUNTRIES AS OF SEPTEMBER 30, 1995
(BY LOCATION OF ISSUER) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE COUNTRIES
6 MONTHS AGO
United States 65.0 78.9
Japan 7.9 6.0
Germany 4.2 0.6
Brazil 3.6 1.5
Hong Kong 2.6 0.6
</TABLE>
ASSET ALLOCATION
AS OF SEPTEMBER 30, 1995 * AS OF MARCH 31, 1995 **
Row: 1, Col: 1, Value: 5.0
Row: 1, Col: 2, Value: 21.0
Row: 1, Col: 3, Value: 74.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 1, Value: 23.0
Row: 1, Col: 2, Value: 20.0
Row: 1, Col: 3, Value: 7.0
Row: 1, Col: 4, Value: 50.0
Stock class 74%
Bond class 21%
Short-term
class and other 5%
FOREIGN
INVESTMENTS 35%
Stock class 57%
Bond class 20%
Short-term
class and other 23%
FOREIGN
INVESTMENTS 21%
*
**
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 SEPTEMBER 30, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 70.5%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 1.7%
AEROSPACE & DEFENSE - 0.7%
Alliant Techsystems, Inc. (a) 22,300 $ 1,048
Boeing Co. 123,500 8,429
General Motors Corp. Class H 18,700 767
Lockheed Martin Corp. 34,967 2,347
McDonnell Douglas Corp. 43,100 3,567
Northrop Grumman Corp. 15,000 913
Precision Castparts Corp. 45,100 1,646
Rockwell International Corp. 27,000 1,276
Thiokol Corp. 18,300 654
20,647
DEFENSE ELECTRONICS - 0.5%
Loral Corp. 94,200 2,685
Raytheon Co. 106,000 9,010
Tracor, Inc. (a) 92,900 1,533
Trimble Navigation Ltd. (a) 75,000 1,894
15,122
SHIP BUILDING & REPAIR - 0.5%
Bremer Vulkan AG (a) 17,000 705
Far East-Levingston Shipbuilding Ltd. 111,000 487
General Dynamics Corp. 170,000 9,329
Jurong Shipyard Ltd. 88,000 630
Keppel Corp. Ltd. 190,000 1,519
12,670
TOTAL AEROSPACE & DEFENSE 48,439
BASIC INDUSTRIES - 3.1%
CHEMICALS & PLASTICS - 1.6%
Agrium, Inc. 19,900 731
Avery Dennison Corp. 10,000 420
Betz Laboratories, Inc. 8,000 327
Carbide/Graphite Group, Inc. (a) 3,200 45
DESC (Sociedad de Fomento Industrial SA) Class B (a) 408,100 1,534
du Pont (E.I.) de Nemours & Co. 39,300 2,702
Eastman Chemical Co. 7,500 480
Ferro Corp. 55,000 1,368
First Mississippi Corp. 20,000 798
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
CHEMICALS & PLASTICS - CONTINUED
Fuller (H.B.) Co. 15,000 $ 473
Grace (W.R.) & Co. 125,000 8,344
Great Lakes Chemical Corp. 36,300 2,455
Han Wha Corp. 4,400 78
Hercules, Inc. 66,000 3,828
Kemira OY sponsored ADR (e) 12,300 189
Korea Chemical (a) 700 71
LG Chemical Ltd. 64,450 1,418
Metacorp BHD 250,000 686
Nalco Chemical Co. 46,800 1,597
Oriental Chemical Industries Co. Ltd. 32,298 1,017
Oriental Chemical Industries Co. Ltd. (RFD) (a) 1,280 38
Perez Companc Class B 302,050 1,320
Potash Corp. of Saskatchewan 24,100 1,505
Praxair, Inc. 33,100 885
Raychem Corp. 140,700 6,332
Rhodia Ster SA GDR (e) 71,100 942
Rohm & Haas Co. 10,000 604
Sekisui Chemical Co. Ltd. 109,000 1,377
Shin-Etsu Chemical Co. Ltd. 57,000 1,097
Union Carbide Corp. 88,300 3,510
46,171
IRON & STEEL - 0.2%
Acesita Cia Acos Especiais Itabira Ord. 106,044,700 895
Carpenter Technology Corp. 25,200 986
Compania Siderurgica Nacional 65,431,500 1,730
Dongkuk Steel Mill Co. 3,777 104
Mannesmann AG Ord. 6,500 2,135
Nucor Corp. 6,600 295
Pohang Iron & Steel Co. Ltd. 1,520 151
Republic Engineered Steels, Inc. (a) 7,800 59
6,355
METALS & MINING - 0.6%
Alcan Aluminium Ltd. 48,840 1,584
Aluminum Co. of America 82,100 4,341
Compania Vale do Rio Doce PN Ord. 8,986,700 1,504
Dae Han Jung Suok (a) 213 6
Eramet SA 18,500 1,405
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
METALS & MINING - CONTINUED
Noranda, Inc. 130,400 $ 2,649
Reynolds Metals Co. 84,400 4,874
Sungei Way Holdings BHD 48,000 163
16,526
PACKAGING & CONTAINERS - 0.2%
Carnaudmetalbox SA 3,450 145
Corning, Inc. 105,000 3,006
Owens-Illinois, Inc. (a) 248,300 3,135
6,286
PAPER & FOREST PRODUCTS - 0.5%
Aokam Perdana BHD 550,000 1,105
Arab Malaysian Corp. BHD 774,000 2,724
Bowater, Inc. 54,100 2,522
Champion International Corp. 15,800 851
Eagon Industrial Co. Ltd. 5,969 114
Gadek BHD 250,000 1,481
James River Corp. of Virginia 50,000 1,600
Klabin Industria de Papel e Celulose PN 488,200 661
Malakoff BHD 701,000 2,133
13,191
TOTAL BASIC INDUSTRIES 88,529
CONGLOMERATES - 0.7%
Allied-Signal, Inc. 43,500 1,919
Crane Co. 20,000 690
Grupo Carso SA de CV Class A-1 (a) 664,700 3,935
ITT Corp. 22,900 2,840
Mark IV Industries, Inc. 35,000 779
Tyco International Ltd. 46,334 2,919
United Technologies Corp. 87,200 7,706
20,788
CONSTRUCTION & REAL ESTATE - 3.3%
BUILDING MATERIALS - 0.3%
Armstrong World Industries, Inc. 51,800 2,875
Cooper Cameron Corp. (a) 8,291 215
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
BUILDING MATERIALS - CONTINUED
Hong Leong Industries BHD 100,000 $ 525
Keumkang Ltd. 5,500 453
Lafarge Corp. 20,466 376
Lapeyre SA 11,600 610
Masco Corp. 61,600 1,694
Pioneer International Ltd. 106,500 282
Sherwin-Williams Co. 20,000 700
7,730
CONSTRUCTION - 1.0%
Butler Manufacturing Co. 42,500 1,190
C & P Homes, Inc. (a)(e) 504,000 314
Centex Corp. 18,600 539
DR Horton, Inc. 7,117 77
Daelim Industrial Co. 50,041 1,173
Daelim Industrial Co. (RFD) (a) 12,009 263
Daito Trust Construction 15,600 180
Dong Ah Construction Industries Co. Ltd. 17,250 745
Hopewell Holdings Ltd. 16,669,129 11,318
Jean LeFebvre Entreprise 69,513 4,962
Jean LeFebvre Entreprise (warrants) (a) 2,771 23
Kaufman & Broad Home Corp. 35,000 442
McDermott (J. Ray) SA 75,000 1,688
NCI Building Systems, Inc. (a) 66,200 1,556
Pulte Corp. 9,400 267
Ryland Group, Inc. 25,000 388
Schuler Homes, Inc. (a) 50,000 581
Suh Kwang Construction Co. 15,000 259
YTL Corp. BHD 244,500 1,264
27,229
ENGINEERING - 0.3%
Bukaka Teknik Utama (For. Reg.) (a) 500,000 817
EG & G, Inc. 20,000 390
Fluor Corp. 34,700 1,943
Foster Wheeler Corp. 35,000 1,238
Hanil Development Co. (a) 56,920 1,437
Hyundai Engineering & Construction Co. Ltd. (a) 29,438 1,583
Hyundai Engineering & Construction Co. Ltd. (RFD) (a) 2,016 76
7,484
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE - 0.8%
Bandar Raya Development BHD 1,133,000 $ 2,136
Berjaya Sports Toto BHD 1,200,000 2,529
Ciputra Development PT (For. Reg.) 297,500 637
Daiman Development BHD 355,000 392
Fondo Opcion SA de CV Class 2, Series B (a) 145,100 180
Great Eagle Holdings Ltd. (a) 812,000 2,006
Hong Kong Land Holdings Ltd. 414,000 725
Immeubles de France, Ste Des 90 4
Jaya Real Property (For. Reg.) 150,000 450
Kawasan Industri Jababeka PT (For. Reg.) 250,000 480
Klepierre SA 925 109
Land & House PCL (For. Reg.) (a) 65,000 1,021
Liu Chong Hing Investment Ltd. 758,000 794
Malaysian Resources Corp. BHD 1,041,000 1,722
Mitsubishi Estate Co. Ltd. 205,000 2,282
Modernland Realty PT 250,000 350
New World Development Co. 1,250,000 4,931
Pakuwon Jati PT (For. Reg.) 454,000 346
Pt Putra Surya Perkasa (For. Reg.) 500,000 188
Sime UEP Properties BHD 232,000 410
Singapore Land Ltd. 334,000 1,933
Tan & Tan Development BHD 668,000 654
24,279
REAL ESTATE INVESTMENT TRUSTS - 0.9%
Bay Apartment Community, Inc. 41,000 882
CBL & Associates Properties, Inc. 51,900 1,077
Cali Realty Corp. 13,400 271
Colonial Properties Trust (SBI) 5,100 127
DeBartolo Realty Corp. 37,200 521
Developers Diversified Realty Corp. 24,800 747
Duke Realty Investors, Inc. 50,500 1,572
Duta Anggada Realty Ord. 625,000 407
Equity Residential Properties Trust (SBI) 169,400 5,103
Evans Withycombe Residential, Inc. 19,600 397
Excel Realty Trust, Inc. 91,200 1,801
Felcor Suite Hotels, Inc. 40,900 1,227
Glimcher Realty Trust (SBI) 14,300 291
Haagen Alexander Properties, Inc. 43,400 505
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - CONTINUED
Kimco Realty Corp. 87,000 $ 3,469
Liberty Property Trust (SBI) 13,300 283
Macerich Co. 25,000 531
Oasis Residential, Inc. 22,400 504
Post Properties, Inc. 21,600 670
RFS Hotel Investors, Inc. 75,000 1,144
Realty Income Corp. 6,300 133
Simon Properties Group, Inc. 103,900 2,636
Storage Equities, Inc. 33,900 631
Storage USA, Inc. 70,400 2,174
27,103
TOTAL CONSTRUCTION & REAL ESTATE 93,825
DURABLES - 5.2%
AUTOS, TIRES, & ACCESSORIES - 3.5%
Aichi Machine Industry Co. Ltd. 111,000 602
Asia Motors Co., Inc. 29,010 412
BMW AG 2,300 1,261
Capaco Automotive Products Corp. 72,900 674
Chrysler Corp. 469,400 24,878
Cummins Engine Co., Inc. 15,000 577
Dae Won Kang Up Co. 4,709 132
Daimler Benz AG Ord. 7,500 3,698
Dana Corp. 107,800 3,113
Discount Auto Parts, Inc. (a) 30,800 932
Eaton Corp. 23,700 1,256
Echlin, Inc. 24,000 858
Fiat Spa 528,000 1,969
Ford Motor Co. 21,400 666
General Motors Corp. 776,245 36,386
Honda Motor Co. Ltd. 166,000 2,963
Hyundai Motor Service Co. Ltd. (a) 11,700 710
Hyundai Motor Service Co. Ltd. (New) 2,539 138
Iochpe Maxion PN Ord. 718,000 237
Johnson Controls, Inc. 14,200 898
Kia Motors Corp. Sponsored GDR (a)(e) 16,500 359
Magna International, Inc. Class A 147,000 6,657
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
AUTOS, TIRES, & ACCESSORIES - CONTINUED
Mirgor Sacifia Class C sponsored ADR (e) 568,890 $ 1,138
Suzuki Motor Corp. 108,000 1,159
TRW, Inc. 3,700 275
Titan Wheel International, Inc. 19,500 334
Toyota Motor Corp. 226,000 4,283
Volvo AB Class B 140,500 3,439
100,004
CONSUMER ELECTRONICS - 1.3%
Black & Decker Corp. 70,700 2,413
Brasmotor PN 5,196,600 1,331
Electrolux AB 36,500 1,742
Matsushita Electric Industrial Co. Ltd. 652,000 9,938
Oyl Industries BHD 140,000 1,158
Radiotechnique (La) 50 3
Refrigeracao Parana SA 499,855,800 1,310
Sony Corp. 258,400 13,318
Whirlpool Corp. 110,000 6,352
37,565
HOME FURNISHINGS - 0.0%
Dapta-Mallinjoud SA 3,600 91
Haverty Furniture Companies, Inc. 6,300 86
Polyvision Corp. (a) 1,060 3
180
TEXTILES & APPAREL - 0.4%
Baikyang Co. 1,830 285
Burlington Industries, Inc. (a) 109,800 1,386
Coteminas PN 3,065,800 1,004
Cygne Designs, Inc. (a) 11,500 38
Nam Yeung Corp. 2,100 299
NIKE, Inc. Class B 40,000 4,445
Nine West Group, Inc. (a) 17,900 814
Russell Corp. 21,000 536
Warnaco Group, Inc. Class A 56,100 1,346
Westpoint Stevens, Inc. Class A 27,300 587
Yagi Corp. 27,000 344
Youngone Corp. 728 13
11,097
TOTAL DURABLES 148,846
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - 5.8%
ENERGY SERVICES - 1.3%
BJ Services Co. (a) 19,000 $ 480
Baker Hughes, Inc. 156,500 3,189
Commercial del Plata (a) 213,500 502
Enterra Corp. (a) 25,000 550
Halliburton Co. 88,500 3,695
McDermott International, Inc. 17,400 344
Nabors Industries, Inc. (a) 158,700 1,498
Noble Drilling Corp. (a) 136,200 1,056
Offshore Logistics, Inc. (a) 41,500 576
Reading & Bates Corp. (a) 100,000 1,200
Schlumberger Ltd. 227,400 14,838
Smith International, Inc. (a) 106,800 1,856
Sonat Offshore Drilling, Inc. 61,300 2,000
Weatherford International, Inc. (a) 240,900 3,132
34,916
INDEPENDENT POWER - 0.0%
Thermo Electron Corp. (a) 24,600 1,141
OIL & GAS - 4.5%
Amerada Hess Corp. 231,100 11,237
Amoco Corp. 48,300 3,097
Apache Corp. 16,000 420
Astra Comp Argentina de Petroleum (Reg.) 721,000 1,255
Atlantic Richfield Co. 134,700 14,463
Blue Range Resource Corp. Class A (a) 128,100 931
Blue Range Resource Corp. Class A (a)(e) 19,300 140
British Petroleum PLC ADR 269,989 24,265
British Petroleum PLC Ord. 482 4
Burlington Resources, Inc. 157,300 6,095
Camco International, Inc. 56,000 1,372
Canada Occidental Petroleum Ltd. 105,000 3,336
Chesapeake Energy Corp. (a) 12,600 398
Chevron Corp. 24,200 1,177
Coastal Corp. (The) 12,000 404
Daesung Industrial Co. Ltd. (a) 3,200 265
Elf Aquitaine sponsored ADR 46,119 1,551
Global Natural Resources, Inc. (a) 37,800 373
Kerr-McGee Corp. 91,500 5,078
Louis Dreyfus Natural Gas Corp. (a) 37,700 518
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Louisiana Land & Exploration Co. 52,900 $ 1,885
Mobil Corp. 25,000 2,491
Murphy Oil Corp. 31,800 1,272
Newfield Exploration Co. (a) 46,700 1,407
Noble Affiliates, Inc. 8,600 227
Norsk Hydro AS 46,400 1,996
Norsk Hydro AS ADR 32,800 1,414
Northstar Energy Corp. (a) 54,000 498
Occidental Petroleum Corp. 259,300 5,705
Petroleum Geo-Services AS ADR (a) 55,000 1,347
Phillips Petroleum Co. 112,400 3,653
PTT Exploration & Production (For. Reg.) (a) 125,000 1,215
Renaissance Energy Ltd. (a) 116,700 2,631
Renaissance Energy Ltd. (a)(e) 70,000 1,578
Rio Alto Exploration Ltd. (a) 351,800 1,141
Royal Dutch Petroleum Co. 4,900 601
Santa Fe Energy Resources, Inc. (a) 50,000 475
Tesoro Petroleum Corp. (a) 9,000 74
Texaco, Inc. 24,100 1,557
Tosco Corp. 58,100 2,004
Total SA Class B 97,856 5,923
Total SA Class B Sponsored ADR 158,158 4,765
Unocal Corp. 264,586 7,541
Vintage Petroleum, Inc. 34,300 720
Yukong Ltd. 9,393 381
Yukong Ltd. (New) 1,125 44
128,924
TOTAL ENERGY 164,981
FINANCE - 12.5%
BANKS - 5.0%
BQE National Paris Ord. 30,249 1,186
Banc One Corp. 20,000 730
Banco Bilbao Vizcaya SA Ord. (Reg.) 45,600 1,403
Banco de Columbia GDR (a)(e) 765,000 4,973
Banco de Galicia Y Buenos Aires SA sponsored ADR
representing Class B shares 34,763 626
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Banco Frances del Rio de la Plata SA ADR 15,000 $ 324
Banco Intercontinental Espanol 5,200 454
Banco Popular Espanol 3,700 576
Banco Weise sponsored ADR 158,767 1,072
Bangkok Bank Ltd. 173,500 1,950
Bank Dagang Nas Indonesia PT 2,640,000 2,418
Bank International Indonesia PT Ord. 166,500 573
Bank of Asia PCL (For. Reg.) 141,990 356
Bank of Boston Corp. 41,358 1,970
Bank of New York Co., Inc. 81,900 3,808
Barnett Banks, Inc. 46,400 2,627
BayBanks, Inc. 22,000 1,669
Boram Bank 51,685 841
Bradesco PN 149,738,225 1,430
CPR (Comp Par Reescompte) 35,527 2,381
C.S. Holdings 23,005 2,162
Chase Manhattan Corp. 20,119 1,230
Chemical Banking Corp. 91,200 5,552
Cho Hung Bank Co. Ltd. 99,655 1,488
Comerica, Inc. 24,500 891
Commerce Asset Holding BHD 206,000 1,081
Dao Heng Bank Group Ltd. 250,000 829
Deutsche Bank AG 88,000 4,193
Development Bank of Singapore Ltd. (For. Reg.) 503,000 5,716
Finance One PCL (For. Reg.) (a) 17,700 108
First Bank System, Inc. 20,000 963
First Chicago Corp. 8,800 604
First Interstate Bancorp 15,000 1,511
First Union Corp. 1,557 79
Fleet Financial Group, Inc. 347,197 13,107
Grupo Financiero Banorte SA de CV Class B (a) 204,400 254
HSBC Holdings PLC 1,155,934 16,071
Hana Bank 6,864 154
Hanil Bank 24,240 339
Hong Leong Bank BHD 2,402,000 6,496
International Bank of Asia Ltd. 1,246,000 749
Itaubanco PN (Pfd. Reg.) 1,000,000 315
KeyCorp 15,971 547
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Korea Long Term Credit Bank (a) 11,000 $ 352
Krung Thai Bank (For. Reg.) 1,372,480 5,469
Kyung Nam Bank (a) 3,963 47
Kyungki Bank 39,132 456
Liu Chong Hing Bank Ltd. 800,000 993
National Bank of Canada 125,000 1,072
NationsBank Corp. 37,732 2,537
Overseas Union Bank Ltd. (For. Reg.) 800,000 5,107
Panin Bank PT (For. Reg.) 684,125 830
Public Bank BHD (For. Reg.) 497,000 921
Republic New York Corp. 19,500 1,141
SCF Finance & Securities Co. Ltd. (rights) (a) 12,629 -
Shawmut National Corp. 369,559 12,426
Shinhan Bank 32,150 792
Shinhan Bank (New) (a) 5,223 111
Siam City Bank PCL (For. Reg.) 1,704,900 2,310
Siam City Credit Finance and Securities Co. Ltd. (rights) (a) 10,029 -
State Street Boston Corp. 12,000 480
Swiss Bank Corp. (Bearer) 7,580 2,901
Thai Farmers Bank PCL 346,300 3,008
Thai Military Bank Ltd. (For. Reg.) 407,080 1,622
Toho Bank Ord. 50,000 326
Unibanco PN 10,153,300 341
Unidanmark AS Class A 12,500 546
United Overseas Bank Ltd.:
(For. Reg.) 229,400 1,979
(warrants) (a) 315,600 1,229
142,802
CLOSED-END INVESTMENT COMPANIES - 0.6%
Austria Fund, Inc. 94,600 769
Europe Fund, Inc. 14,100 183
First NIS Regional Fund (a) 480,000 3,072
France Growth Fund, Inc. 162,700 1,586
Germany Fund, Inc. 5,923 68
Growth Fund of Spain, Inc. 232,600 2,471
Morgan Stanley India Investment Fund, Inc. 643,600 6,677
Templeton Russia Fund, Inc. (a) 135,000 1,777
Thai Fund, Inc. 14,292 343
16,946
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 1.4%
Acom Co. Ltd. 20,000 $ 648
Affin Holdings BHD 108,000 205
American Express Co. 399,245 17,716
Asia Credit PCL (For. Reg.) 33,000 221
Beneficial Corp. 35,300 1,844
Benpress Holdings Corp. GDR (a) 65,000 390
Central Investment & Finance Corp. 8,800 196
Countrywide Credit Industries, Inc. 22,600 531
Equitable Companies, Inc. 71,300 1,747
Green Tree Acceptance, Inc. 53,500 3,264
Greenpoint Financial Corp. 10,200 282
Hong Leong Credit BHD 1,036,000 4,944
Industrial Finance Corp. (For. Reg.) 592,166 1,817
JCG Holdings Ltd. 3,234,000 2,405
London American Growth Trust (a) 708,000 717
Mercury Finance Co. 25,000 609
National Finance & Securities PCL (For. Reg.) (a) 125,000 603
TA Enterprise BHD 500,000 704
38,843
FEDERAL SPONSORED CREDIT - 2.2%
Federal Home Loan Mortgage Corporation 148,200 10,244
Federal National Mortgage Association 511,800 52,971
63,215
INSURANCE - 1.7%
Aetna Life & Casualty Co. 15,000 1,101
Alexander & Alexander Services, Inc. 13,100 318
Allstate Corp. 332,309 11,755
American International Group, Inc. 23,550 2,002
Assicurazioni Generali Spa 57,990 1,339
Baloise Holding 1,100 2,420
Berkley (W.R.) Corp. 12,800 581
CIGNA Corp. 15,000 1,562
CMAC Investments 10,000 526
Chubb Corp. (The) 10,000 960
Corporacion Mapfre Cia Internacional
de Reaseguros SA (Reg.) 20,000 1,033
General Re Corp. 45,000 6,795
HealthCare COMPARE Corp. (a) 40,000 1,550
International Nederlanden Groep NV 55,797 3,243
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
Loews Corp. 16,900 $ 2,459
MGIC Investment Corp. 37,300 2,135
NAC Re Corp. 15,700 569
Old Republic International Corp. 20,000 578
PMI Group, Inc. 27,800 1,317
Providian Corp. 22,500 934
Reliastar Financial Corp. 25,000 1,016
Renaissance RE Holdings (a) 10,000 244
Royal Insurance Holdings PLC 252,900 1,415
SAFECO Corp. 10,800 709
Samsung Fire & Marine Insurance 2,500 1,179
Skandia Foersaekrings AB 31,200 734
Torchmark Corp. 32,100 1,352
Vital Forsikring AS Series A 10,000 169
49,995
SAVINGS & LOANS - 0.3%
Ahmanson (H.F.) & Co. 106,300 2,697
Golden West Financial Corp. 77,520 3,915
Washington Mutual, Inc. 44,400 1,177
7,789
SECURITIES INDUSTRY - 1.3%
Bear Stearns Companies, Inc. 43,470 935
Czech Value Fund Unit (e) 24,000 1,236
Daewoo Securities Co. Ltd. 11,440 389
Dah Sing Financial Holdings Ltd. 224,800 506
Edwards (A.G.), Inc. 5,400 144
First Marathon Inc. Class A (non-vtg.) 100,000 1,044
Hanshin Securities Co. Ltd. 4,664 109
Hyundai Securities Co. Ltd. 7,564 173
LG Securities Co. Ltd. 29,595 678
Lehman Brothers Holdings, Inc. 58,740 1,358
Merrill Lynch & Co., Inc. 129,600 8,100
Midland Walwyn, Inc. 370,700 2,314
Morgan Stanley Group, Inc. 76,800 7,382
Nomura Securities Co. Ltd. 482,000 9,377
Peregrine Investments Holdings Ltd. 148,000 222
Pioneer Group, Inc. 30,000 821
Salomon, Inc. 18,000 688
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SECURITIES INDUSTRY - CONTINUED
Schwab (Charles) Corp. 58,500 $ 1,638
Ssangyong Investment & Securities Co. Ltd. 4,968 111
37,225
TOTAL FINANCE 356,815
HEALTH - 2.8%
DRUGS & PHARMACEUTICALS - 1.3%
Allergan, Inc. 20,700 691
American Home Products Corp. 8,400 713
Amgen, Inc. (a) 135,000 6,733
Biogen, Inc. (a) 102,900 6,174
Carter-Wallace, Inc. 72,900 911
COR Therapeutics, Inc. (a) 25,000 278
Depotech Corp. 2,200 26
Dura Pharmaceuticals, Inc. (a) 9,000 268
Elan Corp. PLC ADR (a) 24,400 1,013
Gedeon Richter GDR 16,600 290
Genentech, Inc. (a) 66,600 3,238
Hauser Chemical Research, Inc. (a) 38,300 218
Merck & Co., Inc. 21,300 1,193
Pharmacia AB, Series A sponsored ADR 25,000 748
Pharmacia AB Class A Free shares 37,400 1,123
Schering-Plough Corp. 69,800 3,595
Sepracor, Inc. (a) 20,000 432
Sigma Aldrich Corp. 18,400 892
SmithKline Beecham PLC ADR 14,200 719
Yamanouchi Pharmaceutical Co. Ltd. 414,000 8,884
38,139
MEDICAL EQUIPMENT & SUPPLIES - 1.0%
AMSCO International, Inc. (a) 26,700 531
Acuson Corp. (a) 54,600 730
Advanced Technology Laboratories, Inc. (a) 45,900 826
Baxter International, Inc. 148,200 6,095
Boston Scientific Corp. (a) 14,200 605
Coherent, Inc. (a) 20,000 730
Hillenbrand Industries, Inc. 15,000 420
Hoya Corp. 35,000 1,025
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - CONTINUED
Johnson & Johnson 14,000 $ 1,038
Medtronic, Inc. 23,400 1,258
Millipore Corp. 70,000 2,625
Nellcor, Inc. (a) 27,800 1,383
Oakley, Inc. (a) 4,100 121
Pall Corp. 48,300 1,123
St. Jude Medical, Inc. (a) 30,700 1,942
Shinhung Co. Ltd. (a) 3,400 95
Spacelabs Medical, Inc. (a) 7,700 218
Thermedics, Inc. (a) 3,600 72
U.S. Surgical Corp. 233,000 6,233
27,070
MEDICAL FACILITIES MANAGEMENT - 0.5%
American Medical Response (a) 40,000 1,135
Apria Healthcare Group, Inc. (a) 26,900 666
Columbia/HCA Healthcare Corp. 239,350 11,638
Pediatrix Medical Group 2,800 57
Tenet Healthcare Corp. (a) 26,800 466
TheraTx, Inc. (a) 7,800 102
United Dental Care, Inc. 2,800 84
United HealthCare Corp. 15,000 733
14,881
TOTAL HEALTH 80,090
HOLDING COMPANIES - 0.9%
Astra International PT (For. Reg.) 250,000 497
Berjaya Group BHD 12,444,000 9,799
Brierley Investments Ltd. 2,413,965 1,840
CEWE Color Holding AG 1,700 518
CINergy Corp. 2,094 58
First Pacific Co. Ltd. 470,000 501
Golden Plus Holdings BHD 200,000 449
Jardine Matheson Holdings Ltd. Ord. 156,000 1,053
Kamunting Corp. BHD 1,913,000 1,453
Malaysian Plantations BHD 1,678,000 1,555
Prime Utilities BHD 256,000 2,571
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HOLDING COMPANIES - CONTINUED
SDW Holdings Corp. (warrants) (a) 17,700 $ 124
Sanluis Corp. Units (Class B, Class C, and Class D) 39,904 1,181
United Industrial Corp. Ltd. 2,390,000 2,113
U.S. Industries, Inc. (a) 70,000 1,085
Westmont Land BHD 1,027,000 1,944
26,741
INDUSTRIAL MACHINERY & EQUIPMENT - 4.3%
ELECTRICAL EQUIPMENT - 2.4%
Amphenol Corp. Class A (a) 38,300 828
C-COR Electronics, Inc. (a) 50,000 1,175
Cherry Corp. (a) 18,000 261
Cherry Corp. Class A (a) 12,200 168
Emerson Electric Co. 10,000 715
General Electric Co. 53,300 3,398
General Signal Corp. 15,000 439
Glenayre Technologies, Inc. 22,500 1,620
Hitachi Koki Co. Ltd. 148,000 1,281
Honeywell, Inc. 20,000 857
Hutchison Whampoa Ltd. Ord. 1,807,000 9,792
Mitsubishi Electric Co. Ord. 2,007,000 15,597
Murata Manufacturing Co. Ltd. 185,000 6,901
Omron Corp. 814,000 18,774
Philips Electronics NV 6,100 297
Philips Electronics NV (Bearer) 47,030 2,295
Samsung Electro-Mechanics Co. 15,000 742
Samsung Electro-Mechanics Co. (New) (a) 11,117 530
TSX Corp. (a) 25,000 575
United Communication Industry PCL (For. Reg.) 67,300 874
United Engineers BHD 268,000 1,716
Yaesu Musen Co. Ltd. 50,000 652
69,487
INDUSTRIAL MACHINERY & EQUIPMENT - 1.7%
Aida Engineering Ltd. Ord. 160,000 1,147
Amada Metrecs Co. Ltd. 147,000 2,078
Cascade Corp. 50,000 763
Caterpillar, Inc. 192,000 10,920
Cooper Industries, Inc. 15,615 550
Deere & Co. 175,400 14,273
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
Duriron Co., Inc. 52,500 $ 1,536
Exide Corp. 25,000 1,250
Greenfield Industries, Inc. 20,000 615
Harnischfeger Industries, Inc. 1,000 33
Hwacheon Machinery Works 2,200 72
Ingersoll-Rand Co. 48,600 1,822
Kennametal, Inc. 25,721 932
Parker-Hannifin Corp. 20,100 764
Ssangyong Heavy Industries Co. Ltd. 23,100 257
Svedala Industri 102,600 3,087
Timken Co. 20,000 853
Valmet OY Class A 75,600 2,460
Van Der Horst Ltd. 819,000 4,252
47,664
POLLUTION CONTROL - 0.2%
Browning-Ferris Industries, Inc. 15,500 471
Safety Kleen Corp. 34,700 507
Thermo Instrument Systems, Inc. (a) 12,600 350
WMX Technologies, Inc. 205,300 5,851
7,179
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 124,330
MEDIA & LEISURE - 1.7%
BROADCASTING - 0.3%
British Sky Broadcasting Group sponsored ADR 15,000 542
Capital Radio PLC 207,000 1,540
Citicasters, Inc. (a) 12,500 417
Liberty Media Group, Series A 38,875 1,040
Sinclair Broadcast Group, Inc. Class A (a) 6,000 172
TCI Group Class A 125,500 2,196
Television Francaise 1 SA 7,640 754
Viacom, Inc.:
Class A (a) 1,176 59
Class B (non-vtg.) (a) 47,210 2,349
9,069
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
ENTERTAINMENT - 0.2%
Grammy Entertainment PCL (For. Reg.) (a) 50,000 $ 458
Multi-Purpose Holdings BHD 2,980,000 4,622
Royal Carribean Cruises Ltd. 23,400 567
5,647
LEISURE DURABLES & TOYS - 0.3%
Arctco, Inc. 27,300 348
Cobra Golf, Inc. (a) 9,300 278
Fleetwood Enterprises, Inc. 148,300 2,947
Hasbro, Inc. 29,700 924
Mattel, Inc. 17,800 523
Outboard Marine Corp. 25,400 546
Takara Co. Ltd. 141,000 1,219
West Marine, Inc. (a) 24,500 784
7,569
LODGING & GAMING - 0.2%
Accor SA 11,500 1,425
Bally Gaming International, Inc. (warrants) (a) 37,500 258
Circus Circus Enterprises, Inc. (a) 52,000 1,456
Genting BHD 62,000 535
Harrah's Entertainment, Inc. 11,100 325
Host Marriott Corp. (a) 38,703 479
La Quinta Motor Inns, Inc. 54,112 1,515
Marriott International, Inc. 23,803 890
Prime Hospitality Corp. (a) 7,800 80
6,963
PUBLISHING - 0.3%
American Media, Inc. Class A 16,600 95
Gannett Co., Inc. 15,100 825
Meredith Corp. 31,600 1,256
Nelson Thomas, Inc. 20,800 525
News Corp. Ltd. ADR 37,100 816
News International PLC 400,000 2,014
Singapore Press Holdings Ltd. (For. Reg.) 158,800 2,429
7,960
RESTAURANTS - 0.4%
Apple South, Inc. 20,000 455
Applebee's International, Inc. 20,000 545
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - CONTINUED
Bertucci's, Inc. (a) 13,900 $ 99
Brinker International, Inc. (a) 62,500 930
Cracker Barrel Old Country Store, Inc. 66,900 1,346
Darden Restaurants, Inc. (a) 75,000 862
Landry's Seafood Restaurants, Inc. (a) 100 2
Lone Star Steakhouse Saloon (a) 8,200 336
McDonald's Corp. 71,000 2,716
Outback Steakhouse, Inc. (a) 34,400 1,058
Quality Dining, Inc. (a) 47,300 863
Starbucks Corp. (a) 20,000 757
Yoshinoya D&C Co. Ltd. Ord. 5 74
10,043
TOTAL MEDIA & LEISURE 47,251
NONDURABLES - 3.4%
AGRICULTURE - 0.0%
Molinos Rio de La Plata SA 147,139 898
BEVERAGES - 0.4%
Brahma (Cia Cervejaria) PN Class B 3,530,800 1,439
Compania Cervecerias Unidas SA ADR 70,800 1,513
El Aguila SA (a) 65,000 495
Emvasa del Valle de Enah Ord. (a) 581,000 637
Panamerican Beverages, Inc. Class A 83,000 2,231
PepsiCo, Inc. 62,600 3,193
Quilmes Industries SA 84,700 1,461
Redhook Ale Brewery, Inc. (a) 1,000 30
Whitbread & Co. PLC Class A 68,134 661
11,660
FOODS - 0.4%
Boustead Holdings Berhad 12,000 24
Cheil Foods & Chemical Industries 6,633 429
ConAgra, Inc. 24,800 983
Herdez SA de CV Class A (a) 235,900 61
Kellogg Co. 22,800 1,650
Miwon Co. Ltd. (a) 5,174 148
Ottogi Foods Co. Ltd. 7,200 210
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
FOODS - CONTINUED
RalCorp Holdings, Inc. (a) 75,100 $ 1,774
Ralston Purina Co. 47,600 2,755
Samyang Foods Co. 4,400 203
Universal Robina Corp. 1,900,000 912
Weston George Ltd. 40,000 1,386
10,535
HOUSEHOLD PRODUCTS - 0.2%
Avon Products, Inc. 12,300 883
First Brands Corp. 23,600 1,062
Metro Pacific, Inc. Class B 2,467,000 402
Procter & Gamble Co. 10,000 770
Pyung HWA Industrial Co. 6,560 214
Rubbermaid, Inc. 25,000 691
Tambrands, Inc. 24,300 1,066
5,088
TOBACCO - 2.4%
Dimon, Inc. 40,000 600
Gudang Garam PT Perusahaan 52,000 413
Imasco Ltd. 53,200 947
Philip Morris Companies, Inc. 590,900 49,340
RJR Nabisco Holdings Corp. 487,084 15,769
Sampoerna Hanjaya Mandala (For. Reg.) 283,500 2,640
Souza Cruz Industria Comerico 67,900 499
70,208
TOTAL NONDURABLES 98,389
PRECIOUS METALS - 1.4%
Agnico Eagle Mines Ltd. 152,700 2,120
Barrick Gold Corp. 820,600 21,256
Cambior, Inc. 120,000 1,275
Franco Nevada Mining Corp. 24,600 1,476
Golden Star Resources, Ltd. Canada (a) 29,700 177
Industrias Penoles SA 20,000 75
Kinross Gold Corp. (a) 10,000 86
Kloof Gold Mining Co. Ltd. Ord. 73,500 820
Newmont Mining Corp. 87,600 3,723
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
PRECIOUS METALS - CONTINUED
Placer Dome, Inc. 262,600 $ 6,851
St. Barbara Mines Ltd. 451,900 321
Santa Fe Pacific Gold Corp. 112,022 1,414
39,594
RETAIL & WHOLESALE - 3.5%
APPAREL STORES - 0.2%
Claire's Stores, Inc. 25,000 512
Esprit Asia Holdings Ltd. 1,294,000 464
Gap, Inc. 18,100 652
Goldlion Holdings 277,000 152
Gymboree Corp. (a) 10,300 310
Lamonts Apparel Corp. (a) 25,828 2
Lamonts Apparel Corp. (warrants) (a) 47,666 -
Limited, Inc. (The) 61,300 1,165
Lojas Renner SA 30,000,000 677
Talbots, Inc. 37,800 1,498
Urban Outfitters, Inc. (a) 12,200 311
5,743
DRUG STORES - 0.2%
Revco (D.S.), Inc. (a) 182,700 4,293
Walgreen Co. 20,000 560
4,853
GENERAL MERCHANDISE STORES - 1.6%
Consolidated Stores Corp. (a) 35,800 828
Dayton Hudson Corp. 32,600 2,474
Dillard Department Stores, Inc. Class A 53,700 1,712
Dollar General Corp. 20,000 587
Federated Department Stores, Inc. (a) 398,000 11,293
Hudson's Bay Co. Ord. 17,000 329
Ito-Yokado Co. Ltd. 173,000 9,507
Keumkang Development Industry Co. Ltd. 2,800 64
Keumkang Development Industry Co. Ltd. (New) (a) 455 10
Lechters, Inc. (a) 33,500 368
Mac Frugals Bargains Closeouts, Inc. (a) 8,800 139
Matahari Putra Prima PT (For. Reg.) 43,500 79
May Department Stores Co. (The) 18,200 796
Ministop Co. Ltd. 11,000 254
Price/Costco, Inc. (a) 40,900 700
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GENERAL MERCHANDISE STORES - CONTINUED
Proffitts, Inc. (a) 30,000 $ 825
Sears, Roebuck & Co. 62,400 2,301
Wal-Mart Stores, Inc. 562,600 13,995
46,261
GROCERY STORES - 0.4%
Albertson's, Inc. 20,000 683
Argyll Group PLC Ord. 178,000 952
Fleming Companies, Inc. 30 1
Food Lion, Inc. Class A 86,000 521
Great Atlantic & Pacific Tea Co., Inc. 15,000 420
Izumi Co. Ord. 98,000 2,044
Kroger Co. (The) (a) 5,353 183
Marukyo Corp. 25,000 401
Safeway, Inc. (a) 88,700 3,703
Stop & Shop Companies, Inc. (a) 28,800 673
9,581
RETAIL & WHOLESALE, MISCELLANEOUS - 1.1%
Amway Asia Pacific Ltd. 100,000 3,738
Amway Japan Ltd. 32,000 1,239
Best Buy Co., Inc. (a) 95,400 2,504
Circuit City Stores, Inc. 140,900 4,456
Dickson Concepts International Ltd. 602,000 436
Great Universal Stores PLC Ord. Class A 49,191 463
Home Depot, Inc. (The) 86,000 3,429
Lowe's Companies, Inc. 90,500 2,715
Micro Warehouse, Inc. (a) 30,000 1,372
Office Depot, Inc. 43,250 1,303
Officemax, Inc. (a) 95,050 2,305
Petsmart, Inc. (a) 49,200 1,660
Rex Stores Corp. (a) 30,100 564
Smith (W.H.) Group PLC Ord. 63,900 372
Sotheby's Holdings, Inc. Class A 107,700 1,508
Staples, Inc. (a) 41,475 1,172
Tiffany & Co., Inc. 22,900 959
Uny Co. Ltd. 87,000 1,405
Williams-Sonoma, Inc. (a) 15,500 322
31,922
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
TRADING COMPANIES - 0.0%
Bimantara Citra (For. Reg.) (a) 1,193,500 $ 961
TOTAL RETAIL & WHOLESALE 99,321
SERVICES - 0.7%
ADVERTISING - 0.1%
CMG Information Services, Inc. (a) 25,000 713
Omnicom Group, Inc. 16,800 1,094
WPP Group PLC 429,300 1,019
2,826
LEASING & RENTAL - 0.1%
Hollywood Entertainment Corp. (a) 16,500 354
Orix Corp. 95,000 3,477
3,831
PRINTING - 0.0%
Komori Corp. 28,000 660
SERVICES - 0.5%
ADT Ltd. (a) 101,400 1,394
BET PLC Ord. 446,900 937
First Financial Management Corp. 7,800 761
Manpower, Inc. 84,000 2,436
Rural/Metro Corp. (a) 2,000 48
Supercuts, Inc. (a) 42,300 360
Time Engineering BHD 350,000 940
Western Atlas, Inc. (a) 94,200 4,463
Zebra Technologies Corp. Class A (a) 13,000 692
12,031
TOTAL SERVICES 19,348
TECHNOLOGY - 11.7%
COMMUNICATIONS EQUIPMENT - 0.7%
Andrew Corp. (a) 19,500 1,192
Cisco Systems, Inc. (a) 68,800 4,747
DSC Communications Corp. (a) 32,900 1,949
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMMUNICATIONS EQUIPMENT - CONTINUED
Dynatech Corp. (a) 40,000 $ 630
Ericsson (L.M.) Telephone Co.:
Class B ADR 108,800 2,666
Class B ADR (rights) (a) 108,800 127
Network Equipment Technologies 28,700 1,195
Network General Corp. (a) 4,800 198
Newbridge Networks Corp. (a) 15,000 441
Nokia Corp. AB:
Series A 17,600 1,236
Series K 34,000 2,388
sponsored ADR 22,400 1,562
Northern Telecom Ltd. 18,000 641
18,972
COMPUTER SERVICES & SOFTWARE - 1.4%
Adobe Systems, Inc. 10,000 517
America Online, Inc. (a) 30,000 2,062
American Business Information, Inc. (a) 67,500 1,367
Ascend Communications, Inc. (a) 6,400 512
Automatic Data Processing, Inc. 36,100 2,459
BancTec, Inc. (a) 39,600 851
Broderbund Software, Inc. (a) 10,000 761
Ceridian Corp. (a) 20,000 887
Checkfree Corp. 3,700 74
CompUSA, Inc. (a) 10,000 430
Computer Management Sciences, Inc. 1,400 20
Computer Sciences Corp. (a) 33,000 2,124
Computron Software, Inc. (a) 1,900 33
Epic Design Technology (a) 25,400 1,232
Fourth Dimension Software (a) 33,000 194
GMIS, Inc. (a) 10,000 160
General Motors Corp. Class E 23,700 1,078
Globalink, Inc. (a) 75,100 779
HBO & Co. 25,700 1,606
HPR, Inc. (a) 600 14
Harbinger Corp. (a) 3,100 43
Henry (Jack) & Associates, Inc. 40,000 810
Mercury Interactive Group Corp. (a) 10,000 277
MicroAge, Inc. (a) 56,500 629
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
Microsoft Corp. (a) 114,400 $ 10,353
Novell, Inc. (a) 49,800 909
Oracle Systems Corp. (a) 50,000 1,919
Peoplesoft, Inc. (a) 23,600 2,145
Policy Management Systems Corp. (a) 30,000 1,537
Reuters Holdings PLC ADR Class B 10,000 529
SHL Systemhouse, Inc. (a) 63,700 801
Shared Medical Systems Corp. 2,200 91
Smith Micro Software, Inc. 1,500 15
Stratacom, Inc. (a) 24,800 1,370
Symantec Corp. (a) 36,900 1,107
Vantive Corp. (a) 1,800 29
Wonderware Corp. (a) 21,200 824
40,548
COMPUTERS & OFFICE EQUIPMENT - 4.9%
Amdahl Corp. (a) 25,000 241
Apple Computer, Inc. 54,200 2,019
Bay Networks, Inc. (a) 97,300 5,193
Canon, Inc. 614,000 10,898
Compaq Computer Corp. (a) 747,000 36,136
Diebold, Inc. 30,000 1,391
Digital Equipment Corp. (a) 92,800 4,234
Filenet Corp. (a) 30,000 1,328
Fujitsu Ltd. 240,000 3,008
Hewlett-Packard Co. 69,300 5,778
In Focus Systems, Inc. (a) 10,000 246
International Business Machines Corp. 423,200 39,939
NEC Corp. 521,000 7,210
Pitney Bowes, Inc. 42,900 1,802
Radius, Inc. (a) 26,200 187
Read Rite Corp. (a) 25,601 934
Ricoh Co. Ltd. Ord. 101,000 1,005
SCI Systems, Inc. (a) 87,800 3,029
Silicon Graphics, Inc. (a) 68,900 2,368
Stratus Computer, Inc. (a) 27,600 724
Sun Microsystems, Inc. (a) 106,000 6,678
Symbol Technologies, Inc. (a) 5,000 166
Tech Data Corp. (a) 97,100 1,372
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
Wang Laboratories, Inc. (a) 133,800 $ 2,124
Xerox Corp. 8,300 1,115
139,125
ELECTRONIC INSTRUMENTS - 0.1%
Credence Systems Corp. (a) 18,750 680
Fluke Corp. 19,300 733
Lam Research Corp. (a) 100 6
Measurex Corp. 10,000 343
Plasma & Materials Technologies, Inc. (a) 2,000 35
Silicon Valley Group, Inc. (a) 25,600 989
Teradyne, Inc. (a) 36,400 1,310
4,096
ELECTRONICS - 4.2%
AMP, Inc. 20,600 793
AVX Corp. (a) 10,900 365
Advanced Micro Devices, Inc. 100 3
Aiwa Co. Ltd. 62,000 1,318
Analog Devices, Inc. (a) 15,000 519
Arrow Electronics, Inc. (a) 10,000 544
Atmel Corp. (a) 18,600 628
Hirose Electric Co. Ltd. 32,550 2,030
Hitachi Ltd. 2,308,000 24,995
Hitachi Ltd. ADR 3,900 429
Intel Corp. 509,900 30,658
Kyocera Corp. 106,000 8,652
Micron Technology, Inc. 92,100 7,322
Motorola, Inc. 20,500 1,566
Nichicon Corp. 420,000 5,644
Nitto Denko Corp. 481,000 7,283
Rohm Co. Ltd. 121,000 7,595
Ryoyo Electro Corp. Ord. 150,000 3,595
SGS Thomson Microelectronics NV (a) 18,200 885
Samsung Display Devices Ltd. 7,600 660
Samsung Electronics Co. Ltd.:
GDR partial dividend (e) 48 6
GDR representing shares (non-vtg.) (e) 3,186 222
GDR representing shares (a)(e) 647 77
GDR (vtg.) (e) 361 43
(New) (a) 166 35
(vtg.) 13,456 3,160
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Solectron Corp. (a) 156,300 $ 6,174
TDK Corp. 24,000 1,227
Thomas & Betts Corp. 9,600 620
Toshiba Corp. 357,000 2,595
Vishay Intertechnology, Inc. 15,000 630
Yageo Corp. GDR (a)(e) 38,000 485
Zycon Corp. 8,600 103
120,861
PHOTOGRAPHIC EQUIPMENT - 0.4%
Fuji Photo Film Co. Ltd. 483,000 11,963
TOTAL TECHNOLOGY 335,565
TRANSPORTATION - 1.4%
AIR TRANSPORTATION - 0.2%
AMR Corp. (a) 12,200 880
Atlantic Southeast Airlines, Inc. 15,000 351
Atlas Air, Inc. (a) 2,900 65
Comair Holdings, Inc. 30,000 795
Delta Air Lines, Inc. 26,900 1,863
KLM Royal Dutch Airlines Ord. 18,643 654
Korean Air 35,736 1,296
Midwest Express Holdings, Inc. 2,600 59
Southwest Airlines Co. 35,600 899
6,862
RAILROADS - 1.0%
Burlington Northern Sante Fe Corp. 84,000 6,090
CSX Corp. 156,700 13,182
Canadian Pacific Ltd. Ord. 70,600 1,131
Conrail, Inc. 1,100 76
Illinois Central Corp., Series A 40,400 1,581
Southern Pacific Rail Corp. (a) 190,679 4,624
Wisconsin Central Transportation Corp. (a) 22,300 1,489
28,173
SHIPPING - 0.1%
Han Jin Transportation Co. (a) 16,312 599
Kawasaki Kisen Kaisha Ltd. (a) 294,000 884
Shun Tak Holdings Ltd. 868,000 685
2,168
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - CONTINUED
TRUCKING & FREIGHT - 0.1%
Expeditors International of Washington, Inc. 1,100 $ 30
Fritz Companies, Inc. (a) 9,200 678
Hunt (J.B.) Transport Services, Inc. 70,100 1,060
Roadway Services, Inc. 26,400 1,313
TNT Freightways Corp. 7,800 147
3,228
TOTAL TRANSPORTATION 40,431
UTILITIES - 6.4%
CELLULAR - 1.2%
Advanced Information Services (For. Reg.) 85,200 1,372
AirTouch Communications, Inc. (a) 89,200 2,732
Arch Communications Group, Inc. (a) 24 1
BCE Mobile Communications, Inc. (a) 61,400 1,899
Cellular Communications, Inc., Series A (a) 5,800 316
Korea Mobile Telecommunications Corp. 670 638
Palmer Wireless, Inc. (a) 56,300 1,253
Security Services Ord. 160,000 2,563
Vanguard Cellular Systems, Inc. Class A (a) 11,600 297
Vodafone Group PLC 48,700 204
Vodafone Group PLC sponsored ADR 543,700 22,292
33,567
ELECTRIC UTILITY - 1.4%
Central Costanera SA ADR (e) 12,200 296
China Light & Power Co. Ltd. 988,000 5,111
Consolidated Edison Co. of New York, Inc. 1,200 36
Consolidated Electric Power Asia Ltd. 3,472,000 6,960
Electrobras PN Class B 9,918,200 3,060
Hong Kong Electric Holdings Ord. 1,224,000 4,092
Huaneng Power International, Inc. Class N
sponsored ADR 70,000 1,208
Korea Electric Power Corp. 171,400 6,932
Light Servicos de Electricidade SA Ord. 15,689,200 5,845
Meralco Class B 60,000 458
Scottish Power PLC ADR 98,000 546
Union Electrica Fenosa SA 63,500 307
Veba AG Ord. 113,000 4,488
39,339
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
GAS - 0.1%
Enron Corp. 13,400 $ 449
ENSERCH Corp. 10,100 167
Gas Natural SDG SA Series E 5,000 630
MCN Corp. 23,800 470
1,716
TELEPHONE SERVICES - 3.7%
AT&T Corp. 23,000 1,512
Ameritech Corp. 163,200 8,507
Bell Atlantic Corp. 85,900 5,272
BellSouth Corp. 83,700 6,121
DDI Corp. Ord. 238 1,952
Frontier Corp. 81,200 2,162
Indosat (Indonesia Satellite) sponsored ADR 79,000 2,775
Koninklijke PPT Nederland 85,000 3,005
LCI International, Inc. (a) 20,000 393
MFS Communications, Inc. (a) 10,000 438
NYNEX Corp. 184,900 8,829
Pacific Telesis Group 20,000 615
Philippine Long Distance Telephone Co. sponsored ADR 19,200 1,274
Portugal Telecom SA sponsored ADR (a) 58,600 1,128
SBC Communications, Inc. 185,584 10,207
Telebras:
ON 100,000,000 4,019
PN 301,447,102 14,377
Telecom Argentina Class B sponsored ADR 38,000 1,591
Telecom Argentina Stet France Telecom SA 111,900 470
Telecom Italia Mobile Spa (a) 1,610,700 2,674
Telecom Italia Ord. 1,610,700 2,633
Tele Danmark AS Class B 10,000 517
Telefonica de Argentina SA:
Class B 219,000 526
sponsored ADR 15,000 358
Telefonica de Espana SA Ord. 82,300 1,133
Telefonos de Mexico SA sponsored ADR representing
shares Ord. Class L 75,000 2,381
Telepar PN 2,443,600 872
Telesp PN 84,151,449 13,803
Tel-Save Holdings, Inc. 2,700 42
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
Thai Telephone & Telecommunication PCL (For. Reg.) (a) 300,000 $ 2,092
U.S. Long Distance Corp. (a) 20,000 301
WorldCom, Inc. (a) 99,900 3,209
105,188
WATER - 0.0%
Generale des Eaux 10,094 970
Yorkshire Water Ord. 19,400 191
1,161
TOTAL UTILITIES 180,971
TOTAL COMMON STOCKS
(Cost $1,777,614) 2,014,254
PREFERRED STOCKS - 1.0%
CONVERTIBLE PREFERRED STOCKS - 0.5%
BASIC INDUSTRIES - 0.0%
METALS & MINING - 0.0%
Reynolds Metals Co. $3.31 14,100 730
DURABLES - 0.1%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Chrysler Corp., Series A, $4.625 (e) 8,000 1,184
General Motors Corp. $3.25 200 13
1,197
ENERGY - 0.0%
OIL & GAS - 0.0%
Atlantic Richfield Co. exchangeable $.5575 32,500 829
Unocal Corp. $3.50 (e) 5,400 289
1,118
HEALTH - 0.3%
MEDICAL EQUIPMENT & SUPPLIES - 0.3%
U.S. Surgical Corp. $2.20 (e) 256,100 7,683
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
ELECTRICAL EQUIPMENT - 0.0%
Westinghouse Electric Corp. $1.30 (e) 32,600 489
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
NONDURABLES - 0.0%
TOBACCO - 0.0%
RJR Nabisco Holdings Corp., Series C,
depositary shares representing 1/10 shares 96,400 $ 651
RETAIL & WHOLESALE - 0.0%
GROCERY STORES - 0.0%
Supermarkets General Holdings Corp.
exchangeable pay-in-kind $3.52 (a) 18,200 528
TECHNOLOGY - 0.1%
COMPUTER SERVICES & SOFTWARE - 0.1%
Ceridian Corp. 3 1/2% 16,800 1,630
ELECTRONICS - 0.0%
Alpine Group, Inc. 8% cumulative 713 32
TOTAL TECHNOLOGY 1,662
TOTAL CONVERTIBLE PREFERRED STOCKS 14,058
NONCONVERTIBLE PREFERRED STOCKS - 0.5%
BASIC INDUSTRIES - 0.0%
CHEMICALS & PLASTICS - 0.0%
Henkel KGAA 1,400 529
IRON & STEEL - 0.0%
COSIPA (CIA Sidurg Paulista) Class B (a) 300,000 532
Dongbu Steel Co. Ltd. 15,400 261
793
PAPER & FOREST PRODUCTS - 0.0%
S D Warren Co. exchangeable pay-in-kind (a) 17,700 531
TOTAL BASIC INDUSTRIES 1,853
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Hyundai Motor Service Co. Ltd. 3,100 92
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
ENERGY - 0.0%
OIL & GAS - 0.0%
Gulf Canada Resources Ltd., Series 1, adj. rate 161,200 $ 469
FINANCE - 0.1%
INSURANCE - 0.0%
SAI Sta Assicuratrice Industriale Spa 48,900 222
SECURITIES INDUSTRY - 0.1%
Fleming Russia Securities Fund (a) 232,693 1,658
TOTAL FINANCE 1,880
MEDIA & LEISURE - 0.1%
BROADCASTING - 0.1%
Cablevision System Corp., Series G
exchangeable pay-in-kind (e) 14,300 1,444
PUBLISHING - 0.0%
News Corp. Ltd. (ltd. vtg.) 150,000 743
TOTAL MEDIA & LEISURE 2,187
NONDURABLES - 0.0%
HOUSEHOLD PRODUCTS - 0.0%
Revlon Group, Inc., Series B,
exchangeable pay-in-kind $14.875 4,600 474
TECHNOLOGY - 0.2%
COMPUTER SERVICES & SOFTWARE - 0.2%
SAP AG 29,000 4,726
UTILITIES - 0.1%
TELEPHONE SERVICES - 0.1%
Stet (Societa Finanziaria Telefonica) Spa 639,000 1,484
TOTAL NONCONVERTIBLE PREFERRED STOCKS 13,165
TOTAL PREFERRED STOCKS
(Cost $22,627) 27,223
CORPORATE BONDS - 3.3%
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (I) (000S) (000S)
CONVERTIBLE BONDS - 0.2%
BASIC INDUSTRIES - 0.0%
IRON & STEEL - 0.0%
Essar Gujarat Ltd. euro 5 1/2%, 8/5/98 - $ 420 $ 416
METALS & MINING - 0.0%
Walsin Lihwa Corp. euro 3 1/4%, 6/16/04 - 500 570
PAPER & FOREST PRODUCTS - 0.0%
Stone Consolidated Corp. 8%, 12/31/03 - CAD 840 808
TOTAL BASIC INDUSTRIES 1,794
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
Cooper Industries, Inc. 7.05%, 1/1/15 A3 363 365
TECHNOLOGY - 0.2%
COMPUTERS & OFFICE EQUIPMENT - 0.0%
Acer, Inc. 4%, 6/10/01 - 200 640
Unisys Corp. 8 1/4%, 8/1/00 B2 150 150
790
ELECTRONICS - 0.2%
United Microelectronics Corp. euro
1 1/4%, 6/8/04 - 3,730 5,987
TOTAL TECHNOLOGY 6,777
TOTAL CONVERTIBLE BONDS 8,936
NONCONVERTIBLE BONDS - 3.1%
BASIC INDUSTRIES - 0.2%
CHEMICALS & PLASTICS - 0.0%
IMC Fertilizer Group, Inc.
10 1/8%, 6/15/01 B1 730 781
PAPER & FOREST PRODUCTS - 0.2%
Empaques Ponderosa SA euro
8 3/4%, 12/6/96 - 5,940 5,702
TOTAL BASIC INDUSTRIES 6,483
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (I) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
CONSTRUCTION & REAL ESTATE - 0.4%
BUILDING MATERIALS - 0.2%
Building Materials Corp. of America 8 7/8%,
7/1/04 (c) B1 $ 4,260 $ 2,652
Cemex SA 8 7/8%, 6/10/98 (e) Ba3 571 537
Cemex SA and Tolmex SA de CV euro
8 7/8%, 6/10/98 Ba2 377 354
Tolmex SA de CV 8 3/8%, 11/1/03 Ba3 1,133 901
4,444
CONSTRUCTION - 0.2%
U.S. Home Corp. 9 3/4%, 6/15/03 Ba3 5,530 5,502
TOTAL CONSTRUCTION & REAL ESTATE 9,946
DURABLES - 0.0%
TEXTILES & APPAREL - 0.0%
Hat Brands, Inc., Series B, 12 5/8%, 9/15/02 - 250 263
Samsonite Corp. 11 1/8%, 7/15/05 (e) B2 430 415
678
ENERGY - 0.2%
ENERGY SERVICES - 0.1%
Falcon Drilling, Inc. 9 3/4%, 1/15/01 B2 1,920 1,910
INDEPENDENT POWER - 0.0%
Consolidated Hydro, Inc., Series B,
0%, 7/15/03 (c) - 1,110 577
OIL & GAS - 0.1%
Mesa Capital Corp. secured 12 3/4%,
6/30/98 (c) Caa 2,439 2,247
TOTAL ENERGY 4,734
FINANCE - 0.3%
BANKS - 0.1%
Bancomer SA 9%, 6/1/00 (e) Ba2 2,500 2,094
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (I) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
INSURANCE - 0.2%
American Annuity Group, Inc.
11 1/8%, 2/1/03 Ba3 $ 840 $ 882
American Life Holdings Co. 11 1/4%, 9/15/04 B1 830 876
Reliance Financial Services:
9.273%, 11/1/00 BBB 680 680
10.36%, 12/1/00 BBB 820 832
Reliance Group:
9%, 11/15/00 Ba3 2,940 2,925
9 3/4%, 11/15/03 B1 690 687
6,882
TOTAL FINANCE 8,976
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
IMO Industries, Inc. 12%, 11/1/00 B3 220 226
MEDIA & LEISURE - 1.3%
BROADCASTING - 0.7%
Bell Cablemedia PLC 0%, 9/15/05 (c)(e) B2 2,250 1,328
Chancellor Broadcasting 12 1/2%, 10/1/04 B3 530 551
Citicasters, Inc. 9 3/4%, 2/15/04 B- 4,525 4,548
PTI Holdings, Inc. 7%, 12/17/02 - 120 72
Robin Media Group, Inc. 11 1/8%, 4/1/97 - 1,250 1,284
SCI Television, Inc. secured:
7 1/2%, 6/30/98 (f) - 3,445 3,445
11%, 6/30/05 B2 8,136 8,634
Telewest PLC 0%, 10/1/07 (c) B1 1,020 593
Univision Network Holding LP 7%, 12/17/02 - 870 522
20,977
LODGING & GAMING - 0.6%
Bally's Casino Holdings, Inc.
10 1/2%, 6/15/98 B2 2,270 1,728
California Hotel Finance Corp. gtd.
11%, 12/1/02 B2 5,705 5,947
GNF Corp., Series B, 10 5/8%, 4/1/03 B2 1,150 1,006
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (I) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - CONTINUED
Grand Casino Resorts, Inc. gtd. 1st Mtg.
12 1/2%, 2/1/00 Ba3 $ 3,080 $ 3,450
Harrah's Jazz Co. 14 1/4%, 11/15/01 B1 1,805 1,697
Players International, Inc. 10 7/8%,
4/15/05 (e) Ba3 320 305
Showboat, Inc. 13%, 8/1/09 B2 360 389
Stratosphere Corp. 14 1/4%, 5/15/02 B2 1,440 1,523
16,045
TOTAL MEDIA & LEISURE 37,022
NONDURABLES - 0.3%
BEVERAGES - 0.0%
Dr. Pepper/Seven-Up Companies, Inc. 0%,
11/1/02 (c) Baa1 450 407
HOUSEHOLD PRODUCTS - 0.3%
Revlon Worldwide Corp. secured 0%, 3/15/98 B3 10,154 7,425
TOTAL NONDURABLES 7,832
RETAIL & WHOLESALE - 0.0%
APPAREL STORES - 0.0%
Apparel Retailers, Inc. 0%, 8/15/05 (c) Caa 700 434
Lamonts Apparel Corp. 10 1/4%,
11/1/99 pay-in-kind (e)(j) - 1,584 729
1,163
GENERAL MERCHANDISE STORES - 0.0%
Parisian, Inc. 9 7/8%, 7/15/03 Caa 1,275 1,084
TOTAL RETAIL & WHOLESALE 2,247
SERVICES - 0.0%
Borg Warner Security Corp. 9 1/8%, 5/1/03 Caa 470 395
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (I) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - 0.3%
COMMUNICATIONS EQUIPMENT - 0.1%
Echostar Communications Corp. Unit 0%,
6/1/04 ($1,000 Sr. secured disc.
notes & 6 warrants) (c) Caa $ 3,830 $ 2,039
COMPUTERS & OFFICE EQUIPMENT - 0.1%
Unisys Corp. 9 3/4%, 9/15/96 Ba3 2,000 2,040
ELECTRONICS - 0.1%
Grupo Condumex SA de CV
6 1/4%, 7/27/96 - 1,720 1,662
TOTAL TECHNOLOGY 5,741
UTILITIES - 0.1%
CELLULAR - 0.1%
Mobilmedia Communications, Inc.
0%, 12/1/03 (c) B3 2,610 1,905
ELECTRIC UTILITY - 0.0%
Del Norte Funding Corp. 9.05%, 1/2/93 (j) Ca 170 106
El Paso Funding Corp. lease oblig. (j):
9 3/8%, 10/1/96 Ca 190 119
9.20%, 7/2/97 Ca 70 44
269
TOTAL UTILITIES 2,174
TOTAL NONCONVERTIBLE BONDS 86,454
TOTAL CORPORATE BONDS
(Cost $95,276) 95,390
U.S. TREASURY OBLIGATIONS - 12.4%
6 1/4%, 2/15/03 (k) Aaa 120,585 121,263
10 3/4%, 5/15/03 Aaa 15,700 20,000
11 1/4%, 8/15/03 Aaa 8,970 11,682
11 7/8%, 11/15/03 Aaa 12,110 16,428
U.S. TREASURY OBLIGATIONS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (I) (000S) (000S)
12 3/8%, 5/15/04 Aaa $ 3,030 $ 4,255
11 3/4%, 2/15/10 Aaa 22,160 30,615
12 3/4%, 11/15/10 Aaa 700 1,029
7 5/8%, 2/15/25 Aaa 110,260 124,852
6 7/8%, 8/15/25 Aaa 23,830 25,040
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $343,423) 355,164
COMMERCIAL MORTGAGE SECURITIES - 0.3%
American Southwest Financial Securities
commercial Series 1994-C2 Class B2,
14.1868%, 12/25/01 (e)(f) - 820 808
CBA Mortgage Corp. commercial Series 1993-C1
Class E, 7.1542%, 12/25/03 (e)(f) Ba2 741 636
CS First Boston Mortgage Securities Corp.
commercial Series 1994-CFB1 Class E,
0%, 1/25/28 (e)(f) Ba2 1,053 855
Oregon pass thru certificates commercial Series
1995 Class 1-E, 9.9621%, 6/25/26 (e)(f) BB 580 505
Resolution Trust Corp. commercial Series:
1994-C2 Class G, 8%, 4/25/25 B 562 468
SKW Real Estate LP commercial Series II
Class E, 11%, 4/15/05 (e) B 1,200 1,196
1994-C1 Class E, 8%, 6/25/26 BB 854 726
SML, Inc. commercial Series 1994-C1:
Class B-3, 11.69%, 9/18/99 - 1,000 935
Class C, 9.20%, 9/18/99 (d) - 1,325 881
Structured Asset Securities Corp.
commercial Series 1995-C1, Class D,
7 3/8%, 9/25/24 BBB 650 598
Whitehall Partners commercial Series 1995-C1
Class E, 8.01%, 7/20/25 (e) - 250 231
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $7,557) 7,839
COMPLEX MORTGAGE SECURITIES - 0.0%
INTEREST ONLY STRIPS - 0.0%
SML, Inc. commercial Series 1994-C1
Class S, 0.81% 9/18/99 (g)
(Cost $936) - 31,799 755
FOREIGN GOVERNMENT OBLIGATIONS (H) - 5.5%
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (I) (000S) (000S)
Brazil Federative Republic IDU euro
6.6875%, 1/1/01 (f) B1 $ 36,262 $ 30,822
Germany Federal Republic of
6 1/2%, 7/15/03 Aaa DEM 30,000 21,003
Mexico Value Recovery (rights 6/30/03) (a) - 63,995 1
New Zealand Government 8%, 4/15/04 Aaa NZD 7,500 4,982
Poland Government Brady (e)(f):
discount 7 1/8%, 10/27/24 - 2,340 1,811
past due interest 3 1/4%, 10/27/14 - 1,297 818
Province of Chaco, Argentina
11 7/8%, 9/10/97 (d) - 733 751
Republic of Ecuador Brady (e)(f):
discount 6 3/4%, 12/21/04 - 2,769 1,537
past due interest 6 13/16%, 2/28/15 - 2,206 648
Siderurgica Brasileiras SA Inflation Indexed
6%, 8/15/99 (l) - BRR 114,277 16,010
Treuhandanstalt:
6 7/8%, 6/11/03 Aaa DEM 45,000 32,135
6 5/8%, 7/9/03 AAA DEM 64,850 45,665
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $152,720) 156,183
INDEXED SECURITIES - 0.9%
COMMODITY INDEXED - 0.9%
Goldman Sachs Group, L.P. note 5 5/8%,
1/31/96 (indexed to gold price) 12,750 12,759
Morgan Guaranty Trust Co. cert. of dep.:
5 3/4%, 10/10/95 (indexed to platinum price) 1,630 1,588
5.6992%, 10/11/95 (indexed to platinum price) 1,960 1,912
5.617%, 1/11/96 (indexed to gold price) 9,050 9,042
TOTAL INDEXED SECURITIES
(Cost $25,390) 25,301
PURCHASED BANK DEBT - 0.0%
Socialist Republic of Vietnam loans restructured
under 1985 agreement (a)
(Cost $1,234) 2,500 1,234
REPURCHASE AGREEMENTS - 6.1%
MATURITY VALUE (NOTE 1)
AMOUNT (000S)
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 6.46% dated
9/29/95 due 10/2/95 $ 174,689 $ 174,595
PURCHASED OPTIONS - 0.0%
AMOUNTS IN THOUSANDS EXPIRATION DATE/ UNDERLYING FACE
STRIKE PRICE AMOUNT AT VALUE
PURCHASED OPTIONS - 0.0%
178 Merrill Lynch Capital Markets PLC OTC
Put Option on S&P 500 Stock Index
(Cost $2,100) Nov. 95/561.20 $ 104,136 469
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $2,603,472) $ 2,858,407
FUTURES CONTRACTS
AMOUNTS IN THOUSANDS EXPIRATION UNDERLYING FACE UNREALIZED DATE AMOUNT
AT VALUE GAIN/(LOSS)
PURCHASED
677 Midcap 400 Stock Index Contracts Dec. 1995 $ 73,725 $ (652)
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.6%
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE VALUE GAIN/(LOSS)
CONTRACTS TO SELL
104,681,941 DEM 10/4/95 $ 73,335 $ 911
(Receivable amount $74,246)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.6%
CURRENCY ABBREVIATIONS
BRR - Brazilian real
CAD - Canadian dollar
DEM - German deutsche mark
NZD - New Zealand dollar
LEGEND
1. Non-income producing
2. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
3. Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
4. 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)
Province of Chaco,
Argentina 11 7/8%,
9/10/97 3/9/94 $ 769
SML, Inc. commercial
Series 1994-C1 Class C,
9.20%, 9/18/99 8/11/94 $ 862
5. 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 $37,540,000 or 1.3% of net
assets.
6. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
7. Security represents right to receive monthly interest payments on an
underlying pool of mortgages. Principal shown is the par amount of the
mortgage pool.
8. 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.
9. Principal amount is stated in United States dollars unless otherwise
noted.
10. Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
11. A portion of the security was pledged to cover margin requirements for
futures contracts. At the period end, the value of securities pledged
amounted to $1,508,000.
12. Principal amount shown is original face amount and does not reflect the
inflation adjustments.
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 14.5% AAA, AA, A 16.0%
Baa 0.0% BBB 0.1%
Ba 0.7% BB 0.8%
B 2.5% B 1.2%
Caa 0.2% 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 1.7%.
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 65.0%
Japan 7.9
Germany 4.2
Brazil 3.6
Hong Kong 2.6
Canada 2.4
United Kingdom 2.2
Malaysia 2.1
Korea 1.3
Others (individually less than 1%) 8.7
TOTAL 100.0%
INCOME TAX INFORMATION
At September 30, 1995, the aggregate cost of investment securities for
income tax purposes was $2,606,242,000. Net unrealized appreciation
aggregated $252,165,000, of which $316,016,000 related to appreciated
investment securities and $63,851,000 related to depreciated investment
securities.
The fund hereby designates $1,725,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
The fund has elected to defer to its fiscal year ending September 30, 1996
$32,143,000 of losses recognized during the period November 1, 1994 to
September 30, 1995.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investment in securities, at value (including repurchase $ 2,858,407
agreements of $174,595) (cost $2,603,472) - See
accompanying schedule
Cash 413
Receivable for investments sold 22,594
Unrealized appreciation on foreign currency contracts 911
Receivable for fund shares sold 4,668
Dividends receivable 4,536
Interest receivable 9,801
Other receivables 116
TOTAL ASSETS 2,901,446
LIABILITIES
Payable for investments purchased $ 41,721
Payable for fund shares redeemed 6,644
Accrued management fee 1,696
Payable for daily variation on futures contracts 203
Other payables and accrued expenses 882
TOTAL LIABILITIES 51,146
NET ASSETS $ 2,850,300
Net Assets consist of:
Paid in capital $ 2,604,888
Undistributed net investment income 22,089
Accumulated undistributed net realized gain (loss) on (31,861)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 255,184
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 191,507 shares outstanding $ 2,850,300
NET ASSET VALUE, offering price and redemption price per $14.88
share ($2,850,300 (divided by) 191,507 shares)
</TABLE>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 31,146
Dividends
Interest 88,106
TOTAL INCOME 119,252
EXPENSES
Management fee $ 20,425
Transfer agent fees 7,354
Accounting fees and expenses 768
Non-interested trustees' compensation 24
Custodian fees and expenses 525
Registration fees 36
Audit 26
Legal 23
Interest 3
Miscellaneous 64
Total expenses before reductions 29,248
Expense reductions (174) 29,074
NET INVESTMENT INCOME 90,178
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (62,349)
Foreign currency transactions (4,735)
Futures contracts 9,510 (57,574)
Change in net unrealized appreciation (depreciation) on:
Investment securities 217,485
Assets and liabilities in foreign currencies 3,823
Futures contracts 1,759 223,067
NET GAIN (LOSS) 165,493
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 255,671
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994
INCREASE (DECREASE) IN NET ASSETS
Operations $ 90,178 $ 64,499
Net investment income
Net realized gain (loss) (57,574) 11,343
Change in net unrealized appreciation (depreciation) 223,067 (42,372)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 255,671 33,470
FROM OPERATIONS
Distributions to shareholders (59,879) (19,851)
From net investment income
From net realized gain - (39,839)
In excess of net realized gain (18,902) (5,132)
TOTAL DISTRIBUTIONS (78,781) (64,822)
Share transactions 848,263 3,355,758
Net proceeds from sales of shares
Reinvestment of distributions 77,855 63,888
Cost of shares redeemed (1,323,295) (1,560,750)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (397,177) 1,858,896
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (220,287) 1,827,544
NET ASSETS
Beginning of period 3,070,587 1,243,043
End of period (including undistributed net investment $ 2,850,300 $ 3,070,587
income of $22,089 and $27,680, respectively)
OTHER INFORMATION
Shares
Sold 62,951 237,619
Issued in reinvestment of distributions 6,016 4,613
Redeemed (98,213) (111,723)
Net increase (decrease) (29,246) 130,509
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEARS ENDED SEPTEMBER 30, DECEMBER 30, 1991
(COMMENCEMENT OF
OPERATIONS) TO
SEPTEMBER 30,
1995 1994 F 1993 1992
SELECTED PER-SHARE DATA
Net asset value, beginning $ 13.91 $ 13.77 $ 11.16 $ 10.00
of period
Income from Investment
Operations
Net investment income .26 .13 .18 .14
Net realized and unrealized 1.07 .61 D 2.66 1.02
gain (loss)
Total from investment 1.33 .74 2.84 1.16
operations
Less Distributions (.27) (.18) (.15) -
From net investment income
From net realized gain - (.37) (.08) -
In excess of net realized gain (.09) (.05) - -
Total distributions (.36) (.60) (.23) -
Net asset value, end of period $ 14.88 $ 13.91 $ 13.77 $ 11.16
TOTAL RETURN B, C 9.95% 5.39% 25.83% 11.60%
RATIOS AND SUPPLEMENTAL
DATA
Net assets, end of period $ 2,850,300 $ 3,070,587 $ 1,243,043 $ 94,416
(000 omitted)
Ratio of expenses to average 1.03% 1.15% 1.19% 1.64% A
net assets E
Ratio of expenses to average 1.02% 1.15% 1.19% 1.64% A
net assets after expense
reductions
Ratio of net investment income 3.16% 2.64% 3.02% 3.50% A
to average net assets
Portfolio turnover rate 119% 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 (SEE NOTE 6 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.
E FMR VOLUNTARILY AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
F EFFECTIVE OCTOBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
NOTES TO FINANCIAL STATEMENTS
For the period ended September 30, 1995
1. 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 income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. 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, 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 the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
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
2. OPERATING POLICIES - CONTINUED
FORWARD FOREIGN CURRENCY
CONTRACTS - CONTINUED
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 U.S. Treasury or Federal Agency Securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
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. 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 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 involve, to
varying degrees, risk of loss in excess of the futures variation margin
reflected in the Statement of Assets and Liabilities. The underlying face
amount at value is shown in the schedule of investments under the captions
"Purchased Options," and "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 securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period,
restricted securities (excluding 144A issues) amounted to $1,632,000 or
0.1% of net assets
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $2,941,011,000 and $2,881,565,000, respectively, of which U.S.
government and government agency obligations aggregated $705,033,000 and
$768,668,000, respectively.
The market value of futures contracts opened and closed during the period
amounted to $438,393,000 and $600,521,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .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 annual rate of .72% of
average net assets.
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.
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 $823,000 for the period.
5. 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 period for
which loans were outstanding amounted to $7,994,000 and $6,510,000,
respectively. The weighted average interest rate was 5.9%.
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
$174,000 under this arrangement.
7. 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: Growth:
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: Growth (a fund
of Fidelity Charles Street Trust) at September 30, 1995, the results of its
operations for the year then ended, and 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: Growth'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 at September 30, 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
November 7, 1995
DISTRIBUTIONS
A total of 20.9% of the dividends distributed during the fiscal year was
derived from interest on U.S. Government securities which is generally
exempt from state income tax.
A total of 40.0% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders.
The fund will notify shareholders in January 1996 of these percentages for
use in preparing 1995 income tax returns.
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)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)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
6300 Canoga Avenue
Woodland Hills, 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
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
56 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
511 Pine Street
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, 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)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(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 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(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
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
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
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
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
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)SPARTAN(registered trademark)
SHORT-TERM INCOME
FUND
ANNUAL REPORT
SEPTEMBER 30, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 21 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 25 Notes to the financial statements.
REPORT OF INDEPENDENT 28 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 the markets have been fairly positive this year, no one can
predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving
for a college education, enables you to weather these ups and downs in a
long-term fund, which has higher potential returns. An intermediate-length
fund could be appropriate if your investment horizon is two to four years,
and a short-term bond fund could be the right choice if you need your money
in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. 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 on
an average sized account. You can also look at the fund's income to measure
performance. If Fidelity had not reimbursed certain fund expenses, the
fund's life of fund total returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED SEPTEMBER 30, 1995 PAST 1 LIFE OF
YEAR FUND
Spartan Short-Term Income Fund 4.33% 12.00%
Lehman Brothers 1-3 Year Government-Corporate
Bond Index 8.29% 15.15%
Average Short Investment Grade Bond Fund 7.95% n/a
Consumer Price Index 2.54% 8.42%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year or since the fund started 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 136
funds with similar objectives tracked by Lipper Analytical Services over
the past 12 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 SEPTEMBER 30, 1995 PAST 1 LIFE OF
YEAR FUND
Spartan Short-Term Income Fund 4.33% 3.85%
Lehman Brothers 1-3 Year Government-Corporate Bond 8.29% 4.81%
Index
Average Short Investment Grade Bond Fund 7.95% n/a
Consumer Price Index 2.54% 2.73%
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 Sho1-3 Year Gov
10/01/92 10000.00 10000.00
10/31/92 9933.83 9939.84
11/30/92 9941.15 9925.83
12/31/92 10033.23 10019.57
01/31/93 10177.58 10126.50
02/28/93 10293.46 10209.11
03/31/93 10359.82 10242.28
04/30/93 10422.38 10306.56
05/31/93 10447.70 10283.07
06/30/93 10563.40 10360.95
07/31/93 10625.81 10384.64
08/31/93 10730.26 10471.58
09/30/93 10769.15 10505.37
10/31/93 10828.20 10529.88
11/30/93 10852.94 10532.97
12/31/93 10937.02 10575.62
01/31/94 11008.69 10642.99
02/28/94 10928.78 10578.50
03/31/94 10722.16 10524.11
04/30/94 10602.28 10484.15
05/31/94 10704.77 10498.36
06/30/94 10566.90 10525.97
07/31/94 10645.16 10621.77
08/31/94 10701.15 10657.62
09/30/94 10734.70 10633.92
10/31/94 10721.91 10658.23
11/30/94 10730.94 10613.53
12/31/94 10431.41 10633.72
01/31/95 10514.42 10779.79
02/28/95 10616.21 10928.94
03/31/95 10675.48 10990.96
04/30/95 10781.00 11090.46
05/31/95 10960.94 11282.47
06/30/95 11029.96 11343.87
07/31/95 11074.81 11389.19
08/31/95 11144.76 11458.21
09/29/95 11201.30 11514.86
$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 September 30, 1995, the value of your investment would have
grown to $11,201 - a 12.01% increase on your initial investment. This
assumes you still owned the fund on September 30, 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 $11,515 - a 15.15% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEARS ENDED SEPTEMBER 30, OCTOBER 1, 1992
(COMMENCEMENT OF
OPERATIONS) TO
1995 1994 SEPTEMBER 30, 1993
Dividend return 6.49% A 6.19% A 7.79%
Capital appreciation return -2.16% -6.53% -0.11%
Total return 4.33% -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 on an average sized account.
DIVIDENDS AND YIELD
PERIODS ENDED SEPTEMBER 30, 1995 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share A 4.63(cents) 28.78(cents) 58.45(cents)
Annualized dividend rate 6.16% 6.31% 6.43%
30-day annualized yield 5.73% - -
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 $9.14 over
the past month, $9.10 over the past six months and $9.09 over the past
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis.
A NON-TAXABLE DIVIDENDS: DIVIDENDS PAID ARE BASED ON THE FUND'S INVESTMENT
INCOME AND DO NOT REFLECT CURRENCY RELATED LOSSES. AS A RESULT OF CURRENCY
LOSSES, DIVIDENDS PAID DURING 1995 OF APPROXIMATELY 14.2(CENTS) PER SHARE
ARE EXPECTED TO BE A NON-TAXABLE RETURN OF CAPITAL. DIVIDENDS PAID DURING
1994 OF APPROXIMATELY 11.0(CENTS) PER SHARE WERE A NON-TAXABLE RETURN OF
CAPITAL. THE EXACT NON-TAXABLE AMOUNT TO USE IN PREPARING YOUR INCOME TAX
RETURN WILL DEPEND ON YOUR SHARE ACTIVITY AND WILL BE REPORTED TO YOU IN
JANUARY 1996.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
U.S. bond markets posted strong
returns during the 12 months
ended September 30, 1995. For
the 12-month period, the Lehman
Brothers Aggregate Bond Index
- - a broad measure of U.S.
taxable bonds - posted a total
return of 14.06%. A strong rally
starting in November 1994 helped
bonds recover from the effects of
the sharply rising interest rate
environment seen earlier that
year. Indications of a slowing
economy and a relative
absence of inflation pressures
encouraged bond investors,
helping to push interest rates
down. Monetary policy also
played a role in the bond market's
performance. In an effort to thwart
the possibility of a recession, the
Federal Reserve Board lowered
the fed funds rate - the rate banks
charge each other for overnight
loans - by 0.25% in July to
5.75%, after a string of seven
successive interest rate increases
in 1994 and early 1995.
Mortgage-backed securities rode
along with the rally. The
Salomon Brothers Mortgage
Index returned 13.46% during the
period.
An interview with Charles Morrison, Portfolio Manager of Spartan Short-Term
Income Fund
Q. CHARLIE, HOW HAS THE FUND PERFORMED?
A. For the 12 months ended September 30, 1995, the fund had a total return
of 4.33%. During the same period, the average short investment grade bond
fund returned 7.95%, according to Lipper Analytical Services, and the
Lehman Brothers 1-3 Year Government-Corporate Bond Index was up 8.29%.
Q. WHAT ACCOUNTED FOR THE FUND'S SUBPAR PERFORMANCE?
A. The fund's 12-month performance was markedly affected by emerging market
debt investments, especially in Mexico, that it held in the latter part of
1994 and the beginning of 1995. After I assumed management responsibility
for the fund in February, I significantly reduced the fund's emerging
market debt investments. The fund currently holds less than 0.5% of its
total assets in emerging market, dollar-denominated debt, and I don't
intend to invest abroad in the foreseeable future. If we were to look at
the fund's performance over the past six months, we would see that it has
performed much better. Over that period, the fund posted a return that is
much more in line with its peers and the short-term government/corporate
market.
Q. WHERE HAVE YOU FOUND INVESTMENT OPPORTUNITIES?
A. There have been three main areas within the market where I have recently
taken advantage of attractive opportunities. First, I have reduced the
overall corporate exposure within the fund to try to take advantage of
historically tight yield spreads - or the difference in yield between
corporate and Treasury bonds with similar maturities. Although both the
fundamentals - factors relating to the fiscal health of issuers - and
technicals - the supply of and demand for corporate issues - of the
corporate market are in good shape, the valuation of that market is
increasingly less attractive because corporates have become relatively
expensive. Second, I've added to the fund's commercial mortgage-backed
investments, which made up 12.0% of the fund at the end of the period. This
market continues to present itself as a cheap alternative to similarly
rated corporate securities. It has done well over the past six months, as
the market has matured and the buyer universe has grown, increasing
liquidity. By reducing corporates and buying higher-rated - primarily
AAA-rated - commercial mortgage-backed securities, I have increased the
overall credit quality of the fund.
Q. AND THE THIRD AREA?
A. I have taken advantage of the flattening of the yield curve - when the
yield difference between long-term rates and short-term rates diminishes -
by selling very short, three- to six-month securities and long, five-year
securities and purchasing two-year issues. This makes sense to me given the
relative historical flatness of the yield curve, and limits the risk to the
fund should the curve steepen, with long rates going up more than short
rates. I should add that I have moved the fund's duration - its sensitivity
to changes in interest rates - so that it is more in line with the duration
of the fund's benchmark index, the Lehman Brothers 1-3 Year
Government-Corporate Bond Index. In this way, I manage the fund to reflect
that part of the market, while looking to actively position the fund to
provide outperformance, using research to find opportunities.
Q. DID CURRENCIES AFFECT THE FUND?
A. In general, currencies were a negative factor during the fund's fiscal
year. The fund realized currency losses from selling some bonds whose
currencies had weakened versus the dollar. Most of these currency losses
were realized early in the fiscal year when the fund was eliminating a lot
of its foreign holdings. Going forward, I don't expect to be making
significant investments in non dollar-denominated bonds. For tax purposes,
these currency losses will cause part of this year's dividend to be treated
as a return of capital, which won't be taxable to the fund's shareholders.
The exact amount will be reported on shareholders' 1995 tax information
that we'll be sending out in January.
Q. WHAT'S YOUR OUTLOOK?
A. I consider the fund to be defensively positioned at this time. This
comes not from a particular concern over the direction of the economy, but
more from the historically high valuations that exist within many of the
investment alternatives available in the short end of the market. I will
continue to focus on special situations that look to provide value in the
market, but don't expect to significantly change the overall structure of
the fund until we see greater variations within the various subsectors of
the market, such as corporates and mortgages.
FUND FACTS
GOAL: high current income
START DATE: October 1, 1992
SIZE: as of September 30,
1995, more than $521 million
MANAGER: Charles Morrison,
since February 1995; also
manages Fidelity Advisor
Short Fixed-Income Fund
and Fidelity Short-Term Bond
Portfolio, both since
February 1995; vice
president of Fidelity
Management Trust
Company, since 1992; joined
Fidelity in 1987
(checkmark)
CHARLIE MORRISON ON THE
FEDERAL BUDGET AND THE FEDERAL
RESERVE BOARD:
"There has been a great deal
of discussion lately about
Washington's attempts to
reduce government spending
and the federal budget deficit.
Generally, reduced
government spending leads
to a drag on the economy. In
such a scenario, it would not
be unusual for the Federal
Reserve Board to ease
monetary policy by lowering
interest rates. This is similar to
how the Fed might increase
rates to curb growth and
inflation in a period of high
government spending.
"In terms of overall strategic
direction for the fund, I'll
continue to focus less on
active interest rate
forecasting and more on
adding value in the ways I
described in the last report.
These include
research-driven security
selection, market sector
rotation, yield curve
positioning and opportunistic
trading."
DISTRIBUTIONS
A total of 21.87% of the
dividends distributed during
the fiscal year was derived
from interest on U.S.
Government securities, that
generally is exempt from state
income tax. The fund will notify
shareholders in January 1996
of the applicable percentage
for use in preparing 1995
income tax returns.
INVESTMENT CHANGES
QUALITY DIVERSIFICATION AS OF SEPTEMBER 30, 1995
(MOODY'S RATINGS) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS
6 MONTHS AGO
Aaa 53.2 37.8
Aa 0.7 1.1
A 13.3 19.5
Baa 17.4 22.8
Ba 3.8 9.5
Not rated 10.4 7.0
TABLE EXCLUDES SHORT-TERM INVESTMENTS. SECURITIES RATED "BA" OR BELOW WERE
RATED INVESTMENT GRADE OR ASSIGNED AN INVESTMENT GRADE RATING AT THE TIME
OF ACQUISITION BY FIDELITY, BUT DOWNGRADED SUBSEQUENT TO ACQUISITION DATE.
AVERAGE YEARS TO MATURITY AS OF SEPTEMBER 30, 1995
6 MONTHS AGO
Years 2.3 2.5
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 SEPTEMBER 30, 1995
6 MONTHS AGO
Years 1.7 1.7
DURATION SHOWS HOW MUCH A BOND FUND'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 SEPTEMBER 30, 1995 * AS OF MARCH 31, 1995 **
Corporate bonds 39.8%
U.S. government
and government
agency
obligations 44.7%
CMOs and other
mortgage-related
securities 12.5%
Short-term and
other investments 3.0%
FOREIGN INVESTMENTS 0.7%
Corporate bonds 57.1%
U.S. government
and government
agency
obligations 29.4%
CMOs and other
mortgage-related
securities 9.9%
Short-term and
other investments 3.6%
FOREIGN INVESTMENTS 0.6%
Row: 1, Col: 1, Value: 3.0
Row: 1, Col: 2, Value: 12.5
Row: 1, Col: 3, Value: 44.7
Row: 1, Col: 4, Value: 39.8
Row: 1, Col: 1, Value: 3.6
Row: 1, Col: 2, Value: 9.9
Row: 1, Col: 3, Value: 29.4
Row: 1, Col: 4, Value: 57.1
*
**
INVESTMENTS SEPTEMBER 30, 1995
Showing Percentage of Total Value of Investments in Securities
NONCONVERTIBLE BONDS - 39.8%
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (I) (000S) (000S)
AEROSPACE & DEFENSE - 0.3%
SHIP BUILDING & REPAIR - 0.3%
Tennessee Gas Pipeline Co. 9 1/4%, 5/15/96 Baa2 $ 1,470 $ 1,495
BASIC INDUSTRIES - 0.9%
CHEMICALS & PLASTICS - 0.6%
Methanex Corp. 8 7/8%, 11/15/01 A3 2,990 3,270
PAPER & FOREST PRODUCTS - 0.3%
Boise Cascade Corp. 7 3/8%, 8/1/97 Baa3 1,310 1,327
TOTAL BASIC INDUSTRIES 4,597
ENERGY - 0.9%
OIL & GAS - 0.9%
McDermott, Inc. 7.95%, 7/2/97 Baa3 4,500 4,599
FINANCE - 23.1%
ASSET-BACKED SECURITIES - 12.3%
Toyota Auto Receivables Grantor Trust 6.15%,
1/15/99 Baa2 1,100 1,092
Boatmens Auto Trust 6.35%, 10/15/01 A2 610 607
Case Equipment Loan Trust 6.45%, 9/15/02 A3 1,330 1,319
Caterpillar Financial Asset Trust 6.65%, 6/25/00 A2 1,586 1,588
Chase Manhattan Credit Card Master Trust
8 3/4%, 8/15/99 Aaa 5,430 5,522
Concord Leasing, Inc. 5.04%, 7/15/98 (c) AAA 2,041 2,001
Discover Card Master Trust I 6.90%, 2/16/00 A2 1,900 1,933
Discover Card Trust:
7 7/8%, 4/16/98 A2 450 453
6 1/8%, 5/15/98 A2 3,300 3,292
Ford Credit Auto Loan Master Trust
5 5/8%, 10/15/97 Aaa 700 700
General Motors Acceptance Corp. Grantor Trust
1995-A, 7.15%, 3/15/00 Aaa 4,802 4,862
KeyCorp Auto Grantor Trust 5.80%, 7/15/00 A3 563 558
MBNA Master Credit Card Trust 7 3/4%,
10/15/98 Aaa 820 832
Midlantic Grantor Trust, Class B, 5.15%, 9/15/97 A1 13 13
Premier Auto Trust:
1992-5, 4.90%, 12/15/95 Aa3 1,004 994
1993-3, 4.90%, 12/15/98 Aaa 4,680 4,624
6.85%, 10/4/97 Aaa 6,900 6,940
4.95%, 2/2/99 A2 201 198
8.05%, 4/4/00 Aaa 4,500 4,700
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (I) (000S) (000S)
FINANCE - CONTINUED
ASSET-BACKED SECURITIES - CONTINUED
Standard Credit Card Master Trust 4.85%,
3/7/99 A2 $ 5,000 $ 4,889
Standard Credit Card Master Trust I:
8 1/2%, 8/7/97 Aaa 1,160 1,179
8%, 10/7/97 Aaa 1,350 1,372
8 1/4%, 10/7/97 A2 5,400 5,510
7.65%, 2/15/00 A2 700 719
Standard Credit Card Master Trust I, participation
certificate, 9%, 8/7/97 A2 5,000 5,117
Union Acceptance Corp. 7.075%, 7/10/02 Baa2 770 773
United Federal Savings Bank Grantor Trust:
1994-B, 6.975%, 7/10/00 Baa2 679 682
7.275%, 11/10/00 Baa2 609 614
Union Federal Savings 1994-D
8.20%, 1/10/01 Baa2 548 561
63,644
BANKS - 6.7%
Bank of Boston Corp. 9 1/2%, 8/15/97 Baa1 850 899
Citicorp:
5.70%, 2/12/96 A2 2,000 1,996
9.47%, 5/22/96 A2 250 255
First Fidelity Bancorporation 8 1/2%, 4/1/98 A3 950 997
First Tennessee National Corp.
7 3/8%, 12/1/97 - 536 536
First Union Corp. 6 3/4%, 1/15/98 A2 500 503
Keycorp 7.10%, 3/28/97 A1 1,180 1,193
Manufacturers Hanover Trust, NY euro 6.188%,
7/15/97 (b) A3 8,950 8,932
Marine Midland Banks, Inc. 8 5/8%, 3/1/97 Baa1 1,285 1,320
Mellon Financial Co.:
6 1/8%, 11/15/95 A2 1,000 1,000
6 1/2%, 12/1/97 A2 600 602
Meridian Bancorp, Inc. 6.00%, 12/1/96 (b) Baa1 1,575 1,570
Shawmut Bank of Boston, NA euro 6.313%,
2/24/97 (b) Baa2 5,250 5,243
Signet Banking Corp.:
6.00%, 5/15/97 (b) Baa2 3,970 3,942
6.0625%, 4/15/98 (b) Baa2 5,950 5,883
34,871
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (I) (000S) (000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 3.8%
Advanta Corp. 8.18%, 2/9/97 Baa3 $ 1,710 $ 1,748
Associates Corp. of North America:
6%, 12/1/95 Aa3 1,000 999
6 7/8%, 1/15/97 Aa3 380 383
Beneficial Corp. 9.4%, 2/7/96 A2 200 202
Chrysler Financial Corp. euro
9 1/2%, 4/12/96 BBB+ 520 528
Fleet Financial Group, Inc. 7 7/8%, 7/19/96 A2 1,900 1,931
Ford Motor Credit 6.05%, 3/31/98 A1 1,370 1,362
General Motors Acceptance Corp.:
7 7/8%, 2/27/97 A3 1,850 1,891
7.90%, 3/12/97 A3 3,030 3,100
7 1/8% 5/23/97 A3 2,500 2,534
Greyhound Financial Corp. 6.94%, 1/28/98 Baa2 2,500 2,521
Household Finance Corp. 7 5/8%, 12/15/96 A2 300 304
Society Corporation 8 7/8%, 5/15/96 A1 200 203
Westinghouse Credit Corp.:
8.79%, 5/22/96 Ba1 1,000 1,010
8 3/4%, 6/5/96 Ba1 600 607
8.84%, 10/21/96 Ba1 500 511
19,834
INSURANCE - 0.2%
ITT Hartford Group, Inc. 7 1/4%, 12/1/96 A1 1,175 1,186
SAVINGS & LOANS - 0.1%
Golden West Financial Corp.:
10 1/4%, 5/15/97 A3 100 106
8 5/8%, 8/30/98 A3 100 105
211
TOTAL FINANCE 119,746
HEALTH - 0.4%
MEDICAL EQUIPMENT & SUPPLIES - 0.4%
Cardinal Distribution, Inc. 8%, 3/01/97 A3 2,000 2,039
INDUSTRIAL MACHINERY & EQUIPMENT - 0.5%
ELECTRICAL EQUIPMENT - 0.3%
Westinghouse Electric Corp.:
7.75%, 4/15/96 Ba1 1,000 1,006
9.14%, 1/15/98 Ba1 700 730
1,736
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (I) (000S) (000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Tenneco Corp. gtd. 11%, 11/15/95 Baa2 $ 1,000 $ 1,009
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 2,745
MEDIA & LEISURE - 2.5%
LEISURE DURABLES & TOYS - 0.4%
Brunswick Corp. 8 1/8%, 4/1/97 Baa1 200 203
Mattel, Inc. 6 7/8%, 8/1/97 Baa1 2,000 2,004
2,207
PUBLISHING - 2.1%
News America Holdings, Inc.
12%, 12/15/01 Baa3 9,945 11,120
TOTAL Media & LEisure 13,327
RETAIL & WHOLESALE - 0.9%
GENERAL MERCHANDISE STORES - 0.9%
Sears Roebuck & Co.:
9.41%, 4/3/96 A2 1,400 1,428
8.55%, 8/1/96 A2 1,500 1,528
8.95%, 11/27/96 A2 210 223
9.22%, 1/30/97 A2 1,450 1,506
7.30%, 6/12/97 A2 210 213
4,898
TECHNOLOGY - 1.5%
COMPUTERS & OFFICE EQUIPMENT - 1.5%
Comdisco, Inc.:
6.89%, 8/30/96 Baa2 2,030 2,040
7 3/4%, 1/29/97 Baa2 2,000 2,032
7.73%, 2/18/97 Baa2 2,100 2,134
7 1/4%, 4/15/98 Baa2 1,370 1,394
7,600
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (I) (000S) (000S)
TRANSPORTATION - 2.2%
AIR TRANSPORTATION - 1.9%
AMR Corp.:
7 3/4%, 12/1/97 Baa3 $ 3,980 $ 4,064
9 1/2%, 7/15/98 Baa3 3,230 3,436
United Air Lines, Inc. 6 3/4%, 12/1/97 Baa3 2,420 2,415
9,915
TRUCKING & FREIGHT - 0.3%
Federal Express Corp. 9 3/4%, 5/15/96 Baa2 1,475 1,505
TOTAL TRANSPORTATION 11,420
UTILITIES - 6.6%
ELECTRIC UTILITY - 3.4%
Gulf States Utilities Co.:
5%, 1/1/96 Baa3 525 523
9.72%, 7/1/98 Ba1 5,881 6,147
Long Island Lighting Co. 8 3/4%, 5/1/96 Baa3 3,710 3,756
Public Service Co. of New Hampshire 1st mtg.:
8 7/8%, 5/15/96 Baa3 500 509
9.17%, 5/15/98 Baa3 6,175 6,486
17,421
GAS - 3.2%
ARKLA, Inc.:
9.45%, 10/15/95 Ba2 7,120 7,124
9 7/8%, 4/15/97 Ba2 2,680 2,793
Florida Gas 7 3/4%, 11/1/97 (c) Baa2 1,560 1,598
Panhandle Eastern Pipe Line Co. 9 7/8%,
10/15/96 Baa1 3,439 3,467
Transcontinental Gas Pipe Line Corp.:
9%, 11/15/96 Baa1 510 524
6.21%, 5/15/00 Baa1 1,220 1,219
16,725
TOTAL UTILITIES 34,146
TOTAL NONCONVERTIBLE BONDS
(Cost $210,154) 206,612
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 44.7%
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (I) (000S) (000S)
U.S. TREASURY OBLIGATIONS - 42.3%
4 3/8%, 11/15/96 Aaa $ 8,700 $ 8,566
7 1/4%, 11/15/96 Aaa 58,723 59,622
5 1/8%, 3/31/98 Aaa 64,080 62,959
9%, 5/15/98 Aaa 210 226
5 1/4%, 7/31/98 Aaa 1,500 1,474
9 1/4%, 8/15/98 Aaa 13,030 14,158
5 1/8% 12/31/98 Aaa 6,695 6,533
7 3/4%, 12/31/99 Aaa 62,383 66,370
219,908
U.S. GOVERNMENT AGENCY OBLIGATIONS - 2.4%
Federal Home Loan Mortgage Corp.:
4.78%, 2/10/97 (callable) Aaa 730 718
5.6%, 3/1/99 (callable) Aaa 1,450 1,410
Government Trust Certificates (assets of the
Trust guaranteed by U.S. Government
through Defense Security Assistance Agency):
Class 3-B 8.55%, 11/15/97 Aaa 1,273 1,297
Class 1-C 9 1/4%, 11/15/01 Aaa 1,400 1,532
Government Trust Certificates (assets of the
Trust guaranteed by U.S. Government
through Export-Import Bank):
Series 1994-C 6.61%, 9/15/99 Aaa 324 327
Series 1995-A 6.28%, 6/15/04 Aaa 1,990 1,976
Private Export Funding Corp.:
Series CC, 9 1/2%, 3/31/99 Aaa 300 332
6.86%, 4/30/04 Aaa 680 686
State of Israel (guaranteed by
U.S. Government through Agency for
International Development):
5 1/4%, 3/15/98 Aaa 1,030 1,012
4 7/8%, 9/15/98 Aaa 1,790 1,732
6%, 2/15/99 Aaa 660 658
7 3/4%, 11/15/99 Aaa 563 592
12,272
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $230,869) 232,180
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.5%
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (I) (000S) (000S)
U.S. GOVERNMENT AGENCY - 0.2%
Federal National Mortgage Association
planned amortization class Series 155-PC,
5 1/4%, 3/25/13 Aaa $ 1,140 $ 1,124
PRIVATE SPONSOR - 0.3%
General Electric Capital Mortgage Services, Inc.
planned amortization class series 1993-18
Class A-5, 6%, 2/25/02 AAA 1,500 1,494
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $2,599) 2,618
COMMERCIAL MORTGAGE SECURITIES - 12.0%
CS First Boston Mortgage Securities Corp.
commercial floater Series 1994-CFB1
Class A-1, 6.425%, 1/25/28 Aaa 4,192 4,186
FDIC commercial Series 1994-C1 Class II-A1,
6.30%, 9/25/25 Aaa 1,609 1,608
Kearny Street Mortgage commercial floater Series
1995-1 Class A1, 7.04%, 2/20/30 (b)(c) AAA 797 802
Kearny Street Mortgage commercial :
Class II-B, 6.60%, 10/15/02 (c) - 900 900
Class II-C, 7.30%, 10/15/03 (c) - 400 400
Class II-D, 7 3/4%, 10/15/05 (c) - 200 200
Lennar Central Partners LP commercial Series
1995-1 Class C, 7.55%, 5/15/03 (c) - 1,100 1,102
Lennar Central Partner LP commercial floater
Series 1994-1 Class B, 6 1/8%,
9/15/01 (c) - 4,930 4,932
Meritor Mortgage Security Corp.
commercial Series 1987-1 Class A3,
commercial, 9.40%, 6/1/99 Baa3 1,743 1,756
Morgan Stanley Capital commercial Series
1995-1 Class A1, 7%, 2/15/02 (c) AAA 5,661 5,696
Nomura Asset Securities Corp.
commercial floater Series 1994-MD-II
Class A-6, 7.14% 7/4/03 (b) - 1,313 1,305
Oregon pass thru certificates commercial Series
1995 Class 1-A, 7.15%, 6/25/26 (c) AAA 4,500 4,494
COMMERCIAL MORTGAGE SECURITIES - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (I) (000S) (000S)
Resolution Trust Corp.:
commercial floater Series 1992-C3
Class A-2, 6.85%, 8/25/23 Aa2 $ 641 $ 642
commercial floater Series 1993-C2
Class A-2, 6.745% 3/25/25 AAA 4,871 4,902
commercial floater Series 1994-C1
Class A-3, 6.425%, 6/25/26 AAA 2,989 2,989
commercial Series 1994-C2 Class A-2,
7 3/4%, 4/25/25 AAA 517 522
commercial Series 1994-C2 Class A-4,
7 1/2%, 4/25/25 AAA 783 787
commercial Series 1994-C2 Class E,
8%, 4/25/25 BB+ 3,267 2,992
commercial Series 1994-C1 Class A-4
7 1/4%, 6/25/26 AAA 1,136 1,135
commercial Series 1995-C1 Class A2A,
6 1/4%, 2/25/27 Aaa 2,115 2,097
commercial Series 1995-C1 Class A4A,
6 1/4%, 2/25/27 Aaa 1,163 1,154
commercial Series 1994-N2
Class 3, 7 1/2%, 12/15/04 (c)(d) Baa2 3,000 3,009
SC Finance Corp. commercial Floater
7.425%, 8/1/04 (b)(c) - 4,300 4,327
SKW Real Estate LP commercial floater
Class A, 6.45%, 4/15/02 (b)(c) AA 3,044 3,049
Structured Asset Securities Corp.
commercial Series 1993-C1
Class A-1, 6.60%, 10/25/24 AA+ 1,418 1,402
Whitehall Partners commercial
Series 1995-C1 Class A2,
6.91%, 7/20/25 (c) - 5,674 5,710
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $61,600) 62,098
SUPRANATIONAL OBLIGATIONS - 0.1%
African Development Bank
9 1/2%, 12/15/95 (Cost $560) Aa1 500 503
CERTIFICATES OF DEPOSIT - 0.3%
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (I) (000S) (000S)
Advanta National Bank
6.26%, 9/1/97 (Cost $1,697) - $ 1,700 $ 1,696
MUNICIPAL SECURITIES - 1.4%
Louisiana Pub. Facs. Auth. Rev.
9.95%, 6/1/96 A3 3,955 4,045
Shreveport Louisiana Water & Sewer Rev.,
taxable refunding
0%, 12/1/96 Aaa 3,500 3,264
TOTAL MUNICIPAL SECURITIES
(Cost $7,647) 7,309
REPURCHASE AGREEMENTS - 1.2%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 6.46%
dated 9/29/95 due 10/2/95 $ 6,122 6,119
TOTAL INVESTMENT IN SECURITIES - 100.0%
(Cost $521,245) $ 519,135
LEGEND
8. Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
9. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
10. 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 $38,220,000 or 7.3% of net
assets.
11. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
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 67.2% AAA, AA, A 68.2%
Baa 17.4% BBB 14.5%
Ba 3.8% BB 9.1%
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 4.9%.
INCOME TAX INFORMATION
At September 30, 1995, the aggregate cost of investment securities for
income tax purposes was $521,403,000. Net unrealized depreciation
aggregated $2,268,000 of which $3,261,000 related to appreciated investment
securities and $5,529,000 related to depreciated investment securities.
At September 30, 1995, the fund had a capital loss carryforward of
approximately $39,973,000 all of which will expire on September 30, 2003.
The fund has elected to defer to its fiscal year ending September 30, 1996,
approximately $34,138,000 of losses recognized during the period November
1, 1994 to September 30, 1995.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) SEPTEMBER 30, 1995
ASSETS
Investment in securities, at value (including repurchase $ 519,135
agreements of $6,119) (cost $521,245) -
See accompanying schedule
Receivable for investments sold 22
Interest receivable 9,585
TOTAL ASSETS 528,742
LIABILITIES
Payable for investments purchased $ 5,003
Payable for fund shares redeemed 1,284
Distributions payable 453
Accrued management fee 288
TOTAL LIABILITIES 7,028
NET ASSETS $ 521,714
Net Assets consist of:
Paid in capital $ 600,788
Distributions in excess of net investment income (2,696)
Accumulated undistributed net realized gain (loss) on (74,268)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on (2,110)
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 57,132 shares outstanding $ 521,714
NET ASSET VALUE, offering price and redemption price per $9.13
share ($521,714 (divided by) 57,132 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED SEPTEMBER 30, 1995
INVESTMENT INCOME $ 42,354
Interest
EXPENSES
Management fee $ 3,874
Non-interested trustees' compensation 3
TOTAL EXPENSES 3,877
NET INVESTMENT INCOME 38,477
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (51,331)
Foreign currency transactions 1,683 (49,648)
Change in net unrealized appreciation (depreciation) on:
Investment securities 32,082
Assets and liabilities in foreign currencies (161) 31,921
NET GAIN (LOSS) (17,727)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 20,750
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994
INCREASE (DECREASE) IN NET ASSETS
Operations $ 38,477 $ 78,910
Net investment income
Net realized gain (loss) (49,648) (49,883)
Change in net unrealized appreciation (depreciation) 31,921 (38,516)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 20,750 (9,489)
FROM OPERATIONS
Distributions to shareholders (28,969) (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 (9,325) (13,958)
TOTAL DISTRIBUTIONS (38,294) (80,617)
Share transactions 194,476 1,136,168
Net proceeds from sales of shares
Reinvestment of distributions 30,914 69,186
Cost of shares redeemed (484,585) (1,787,990)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (259,195) (582,636)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (276,739) (672,742)
NET ASSETS
Beginning of period 798,453 1,471,195
End of period (including distributions in excess of net $ 521,714 $ 798,453
investment income of $2,696 and $4,029,
respectively)
OTHER INFORMATION
Shares
Sold 21,389 115,378
Issued in reinvestment of distributions 3,403 7,117
Redeemed (53,259) (184,224)
Net increase (decrease) (28,467) (61,729)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEARS ENDED SEPTEMBER 30, OCTOBER 1, 1992
(COMMENCEMEN
T OF OPERATIONS)
TO SEPTEMBER
30,
1995 1994 C 1993
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.330 $ 9.990 $ 10.000
Income from Investment Operations .584 .574 .747
Net investment income
Net realized and unrealized gain (loss) (.199) (.604) (.009)
Total from investment operations .385 (.030) .738
Less Distributions (.443) (.477) (.747)
From net investment income
In excess of net investment income - (.033) (.001)
In excess of net realized gain - (.010) -
Return of capital (.142) (.110) -
Total distributions (.585) (.630) (.748)
Net asset value, end of period $ 9.130 $ 9.330 $ 9.990
TOTAL RETURN A, B 4.35% (.32)% 7.69%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 522 $ 798 $ 1,471
Ratio of expenses to average net assets .65% .54% .20% D
D
Ratio of net investment income to average 6.45% 6.42% 7.32%
net assets
Portfolio turnover rate 159% 97% 112%
</TABLE>
G THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
H TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
I EFFECTIVE OCTOBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF
INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT
COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT
CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
J FMR VOLUNTARILY AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
NOTES TO FINANCIAL STATEMENTS
For the period ended September 30, 1995
1. 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 substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Interest income, which includes accretion of original
issue discount, is accrued as earned.
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.
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 paydown
gains/losses on certain securities, foreign currency transactions, market
discount, capital loss carryforwards 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 the per-share allocation between net investment income and realized
and unrealized gain (loss). 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 which will reverse in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed in the
following year.
For the periods ended September 30, 1995 and 1994, the fund's distributions
exceeded the aggregate amount of taxable income and net realized gains
resulting in returns of capital. This was due to certain foreign currency
losses which decreased
taxable income available for distribution after certain distributions had
been made. (The tax treatment of distributions for the 1995 calendar year
will be reported to shareholders prior to February 1, 1996.)
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may use foreign currency
contracts to facilitate transactions in foreign securities and to manage
the fund's currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge the fund's investments against currency fluctuations. Also, a
contract to buy or sell can offset a previous contract. Losses may arise
from changes in the value of the foreign currency or if the counterparties
do not perform under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR), may
transfer uninvested cash balances into one or more joint trading accounts.
These balances are invested in one or more repurchase agreements that
mature in 60 days or less from the date of purchase, and are collateralized
by U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying U.S. Treasury or Federal Agency Securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $836,057,000 and $855,835,000, respectively, of which U.S.
government and government agency obligations aggregated $676,386,000 and
$477,064,000, respectively.
4. 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
$29,000 for the period.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Charles Street Trust and the Shareholders of
Spartan Short-Term Income Fund:
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 Spartan Short-Term Income Fund (a fund
of Fidelity Charles Street Trust) at September 30, 1995, the results of its
operations for the year then ended, and 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 Spartan Short-Term Income Fund'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 at September 30, 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
November 3, 1995
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)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)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
6300 Canoga Avenue
Woodland Hills, 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
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
56 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
511 Pine Street
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, 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
Fred L. Henning, Jr., Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
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
ANNUAL REPORT
SEPTEMBER 30, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 13 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 17 Notes to the financial statements.
REPORT OF INDEPENDENT 20 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 21
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 the markets have been fairly positive this year, no one can
predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving
for a college education, enables you to weather these ups and downs in a
long-term fund, which has higher potential returns. An intermediate-length
fund could be appropriate if your investment horizon is two to four years,
and a short-term bond fund could be the right choice if you need your money
in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. A fund's total
return includes changes in a fund's share price, 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 to measure performance. If Fidelity had not reimbursed certain fund
expenses, the life of fund figures would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED SEPTEMBER 30, 1995 PAST 1 LIFE OF
YEAR FUND
Short-Intermediate Government 9.15% 23.23%
Lehman Brothers 1-3 Year Government Bond Index 8.19% n/a
Salomon Brothers 1-5 Year Treasury Index 9.26% n/a
Average Short U.S. Government Fund 8.20% n/a
Consumer Price Index 2.54% 12.15%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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 and Salomon Brothers 1-5 Year
Treasury Index - both 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 133 funds with similar objectives tracked by Lipper
Analytical Services over the past 12 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 SEPTEMBER 30, 1995 PAST 1 LIFE OF
YEAR FUND
Short-Intermediate Government 9.15% 5.29%
Lehman Brothers 1-3 Year Government Bond Index 8.19% n/a
Salomon Brothers 1-5 Year Treasury Index 9.26% n/a
Average Short U.S. Government Fund 8.20% n/a
Consumer Price Index 2.54% 2.85%
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 ShSalomon Brot
09/30/91 10000.00 10000.00
10/31/91 10124.47 10111.64
11/30/91 10206.40 10230.09
12/31/91 10363.10 10424.75
01/31/92 10270.73 10371.48
02/29/92 10301.41 10402.37
03/31/92 10286.46 10376.30
04/30/92 10374.47 10482.28
05/31/92 10511.20 10604.40
06/30/92 10602.19 10741.83
07/31/92 10620.67 10905.61
08/31/92 10766.62 11020.09
09/30/92 10813.25 11151.00
10/31/92 10714.24 11041.63
11/30/92 10721.93 11001.39
12/31/92 10851.32 11125.78
01/31/93 11000.33 11304.58
02/28/93 11099.58 11429.83
03/31/93 11141.22 11469.50
04/30/93 11190.03 11561.30
05/31/93 11192.99 11520.78
06/30/93 11276.42 11645.46
07/31/93 11314.31 11667.56
08/31/93 11364.67 11806.69
09/30/93 11382.56 11847.50
10/31/93 11391.68 11868.18
11/30/93 11374.03 11844.38
12/31/93 11424.48 11892.27
01/31/94 11516.80 11987.76
02/28/94 11419.40 11873.00
03/31/94 11219.00 11752.85
04/30/94 11165.11 11686.55
05/31/94 11169.90 11701.57
06/30/94 11175.51 11720.84
07/31/94 11292.35 11844.66
08/31/94 11315.67 11881.50
09/30/94 11247.75 11817.74
10/31/94 11255.23 11832.76
11/30/94 11211.34 11770.42
12/31/94 11267.16 11800.46
01/31/95 11430.33 11984.36
02/28/95 11611.08 12181.58
03/31/95 11673.28 12248.17
04/30/95 11797.39 12372.56
05/31/95 12051.10 12655.63
06/30/95 12114.07 12730.16
07/31/95 12143.32 12761.61
08/31/95 12210.19 12847.47
09/29/95 12277.38 12914.62
$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 September 30, 1995, the value of your
investment, with dividends reinvested would have grown to $12,277 - a
22.77% increase on your initial investment. For comparison, look at how the
Salomon Brothers 1-5 Year Treasury Index did over the same period. With
dividends reinvested, the same $10,000 investment would have grown to
$12,916 - a 29.16% increase. Beginning with this report the fund will
compare its performance to the Salomon Brothers 1-5 Year Treasury Index
rather than the Lehman Brothers 1-3 Year Government Bond Index. The
Salomon Brothers Index's average maturity is closer to the range permitted
for the fund, which normally maintains an average maturity of between two
and five years. For comparison purposes, both indices are shown on page 4.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEARS ENDED SEPTEMBER 30,
1995 1994 1993 1992
Dividend return 7.00% 5.55% 6.34% 6.73%
Capital appreciation return 2.15% -6.73% -1.08% 1.40%
Total return 9.15% -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 SEPTEMBER 30, 1995 PAST PAST 6 PAST
MONTH MONTHS YEAR
Dividends per share 5.22(cents) 30.78(cents) 62.16(cents)
Annualized dividend rate 6.69% 6.48% 6.65%
30-day annualized yield 5.13% - -
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 $9.50 over
the past month, $9.47 over the past six months and $9.35 over the past
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
U.S. bond markets posted strong
returns during the 12 months
ended September 30, 1995. For
the 12-month period, the Lehman
Brothers Aggregate Bond Index
- - a broad measure of U.S.
taxable bonds - posted a total
return of 14.06%. A strong rally
starting in November 1994 helped
bonds recover from the effects of
the sharply rising interest rate
environment seen earlier that
year. Indications of a slowing
economy and a relative absence
of inflation pressures encouraged
bond investors, helping to push
interest rates down. Monetary
policy also played a role in the
bond market's performance. In an
effort to thwart the possibility of a
recession, the Federal Reserve
Board lowered the fed funds rate -
the rate banks charge each other
for overnight loans - by 0.25% in
July to 5.75%, after a string of
seven successive interest rate
increases in 1994 and early 1995.
Mortgage-backed securities rode
along with the rally. The Salomon
Brothers Mortgage Index returned
13.46% during the period.
An interview with Curt Hollingsworth, Portfolio Manager of Fidelity
Short-Intermediate Governmen.t Fund
Q. CURT, HOW HAS THE FUND PERFORMED?
A. It has done well. For the 12 months ended September 30, 1995, the fund
had a total return of 9.15%. That beat the 8.20% return for the average
short U.S. government bond fund tracked by Lipper Analytical Services. The
Salomon Brothers 1-5 Year Treasury Index returned 9.26% during the past 12
months.
Q. WHAT HELPED THE FUND TOP THE LIPPER AVERAGE OVER THE PAST YEAR?
A. My sense is that as interest rates were rising in 1994, other bond fund
managers structured their funds so that they would have shorter and shorter
durations. Duration is a measure of a bond's or bond fund's sensitivity to
changes in interest rates. Perhaps other fund managers were concerned that
interest rates would keep rising and didn't expect the drop in rates we saw
in 1995. While interest rates were rising, this fund didn't undergo a
marked decrease in duration; it stayed the course and maintained a duration
that was in line with the market for Treasury notes maturing in one to five
years. As a result, the fund was better able to participate in the bond
market rally we've seen since November 1994, as interest rates have come
down significantly. I also added value by investing in Ginnie Mae mortgage
securities. These securities have done very well, although I've scaled back
that position to 1.4% of the fund as of September 30.
Q. WHAT IS MEANT BY TOTAL RETURN?
A. Total return reflects changes in share price as well as income. Interest
income is the main source of return for a bond fund over the long term.
However, over the shorter term, changes in a bond fund's share price can
play a significant role. Fortunately, total return is easy to explain by
using a "dollars in, dollars out" example. If someone invested $100 in this
bond fund a year ago and reinvested all dividends and capital gains, then
the investment would be worth $109.15 today. That is what is meant by a
cumulative total return of 9.15%.
Q. DO YOU INTEND TO INCREASE YOUR INVESTMENT IN GINNIE MAES IN THE NEAR
FUTURE?
A. That depends on how they perform. In the past, the fund has owned larger
stakes in Ginnie Maes than it does at present. We're starting to see the
Ginnie Mae market lag behind the Treasury market, cheapening relative to
Treasuries. If interest rates fall to an extent that
Ginnie Maes start to lag Treasuries in a more significant way, I would
consider increasing that position as a way to enhance the income and
performance of the fund.
Q. WHAT OTHER CHANGES HAVE YOU MADE TO THE FUND'S STRUCTURE?
A. I have invested more of the fund in Treasury notes, and in State of
Israel notes that are fully guaranteed by the United States, acting through
the Agency for International Development. These agency notes were purchased
because they offer more yield than Treasuries.
Q. WHY DID YOU REDUCE THE FUND'S SHORT-TERM INVESTMENTS FROM NEARLY 6% ON
MARCH 31, 1995, TO 0% AT THE END OF THE PERIOD?
A. I've moved the portfolio to a more laddered structure - with the fund
invested rather evenly along the maturity spectrum - increasing exposure to
intermediate Treasury notes maturing in two to three years. I've also
avoided investing in current five-year Treasuries because they are less
attractive than four-year and six-year Treasury notes.
Q. THE FUND'S AVERAGE MATURITY WAS LITTLE CHANGED FROM SIX MONTHS AGO . . .
A. My approach is not to guess the direction of the market, but rather to
focus my attention on identifying the opportunities within the market. As a
result, I don't intend to actively manage the fund's duration in
anticipation of interest
rate changes. Instead, I will manage the fund so that it will have
approximately the same duration as the Salomon Brothers 1-5 Year Treasury
Index.
Q. WITH THAT IN MIND, WHAT'S YOUR OUTLOOK?
A. My outlook is that both inflation and interest rates will be more stable
in the coming year than they have been in recent years. As a result, I plan
to spend more time looking for opportunities in the Ginnie Mae market,
because these securities tend to perform better during periods of
stability.
FUND FACTS
GOAL: high current income
with preservation of capital
START DATE: September 13,
1991
SIZE: as of September 30,
1995, more than $140 million
MANAGER: Curt
Hollingsworth, since 1991;
also manages Spartan
Limited Maturity Government
Fund, Spartan
Short-Intermediate
Government Fund and
Fidelity Institutional
Short-Intermediate
Government Portfolio;
previously managed the
Spartan Long-Term
Government Bond, Fidelity
Government Securities and
Fidelity Advisor Government
Investment funds; joined
Fidelity in 1983
(checkmark)
CURT HOLLINGSWORTH ON
MANAGING THROUGH THE UPS AND
DOWNS OF THE MARKET:
"Since November 1994, we've
seen a big bull market in
bonds that has reversed most
of the sharp declines that
occurred through much of
1994. In some ways, it's been
a rather quiet rally, especially
after headlines in 1994
highlighted the severe
downturn. But, again, most of
last year's bond market
losses have been recouped
this year.
"The fund has benefited from
the rally because it remained
fully invested, even when
things looked the worst for
bonds. When the bond
market finally turned and
started rising, that helped this
fund, apparently more than
others. If the fund hadn't
remained fully invested -
selling securities and holding
cash instead - it wouldn't
have fully participated in the
rebound of the bond market
when it turned.
"It can be difficult to remain fully
invested when things look the
bleakest; the overwhelming
temptation can be to do the
opposite. But it's important to
maintain discipline and not
sell something just because it
has gone down in price, when
you've determined it can add
value going forward. Holding
on to it and riding out
short-term fluctuations often
can help you achieve better
investment results."
INVESTMENT CHANGES
COUPON DISTRIBUTION AS OF SEPTEMBER 30, 1995
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
6 MONTHS AGO
4 - 4.99% 0.2 11.4
5 - 5.99% 0.3 16.9
6 - 6.99% 0.1 4.8
7 - 7.99% 25.7 17.1
8 - 8.99% 46.3 32.6
9 - 9.99% 26.2 10.2
10% and over 1.2 1.3
COUPON DISTRIBUTION SHOWS THE RANGE OF STATED INTEREST RATES ON THE FUND'S
INVESTMENTS, EXCLUDING REPURCHASE AGREEMENTS.
AVERAGE YEARS TO MATURITY AS OF SEPTEMBER 30, 1995
6 MONTHS AGO
Years 2.6 2.7
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 SEPTEMBER 30, 1995
6 MONTHS AGO
Years 2.3 2.2
DURATION SHOWS HOW MUCH A BOND FUND'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 SEPTEMBER 30, 1995 AS OF MARCH 31, 1995
Row: 1, Col: 1, Value: 0.0
Row: 1, Col: 2, Value: 2.0
Row: 1, Col: 3, Value: 22.0
Row: 1, Col: 4, Value: 36.0
Row: 1, Col: 5, Value: 40.0
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: 33.0
Row: 1, Col: 5, Value: 40.0
U.S. Treasury
obligations 76.1%
U.S. Government
agency
obligations 22.5%
Government
National Mortgage
Association
(GNMA)
securities 1.4%
Short-term
investments 0.0%
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%
INVESTMENTS SEPTEMBER 30, 1995
Showing Percentage of Total Value of Investment in Securities
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 98.6%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
U.S. TREASURY OBLIGATIONS - 76.1%
8 1/2%, 5/15/97 $ 60,870,000 $ 63,352,277
9%, 5/15/98 8,180,000 8,784,584
9 1/4%, 8/15/98 22,700,000 24,664,912
8 7/8%, 11/15/98 800,000 865,872
9 1/8%, 5/15/99 2,810,000 3,092,321
7 3/4%, 12/31/99 4,984,000 5,302,527
106,062,493
U.S. GOVERNMENT AGENCY OBLIGATIONS - 22.5%
State of Israel (guaranteed by U.S. Government
through the Agency for International Development):
4 7/8%, 9/15/98 260,000 251,550
6%, 2/15/99 110,000 109,594
7 1/8%, 8/15/99 29,401,000 30,283,618
7 3/4%, 11/15/99 182,000 191,510
5 3/4%, 3/15/00 490,000 481,425
31,317,697
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS (Cost $135,876,335) 137,380,190
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 1.4%
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
8 1/2%, 1/15/17 to 7/15/17 228,388 240,281
10%, 11/15/09 to 8/15/17 1,387,952 1,519,297
12%, 1/15/14 to 3/15/14 89,746 98,946
13%, 9/15/14 74,377 83,300
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES (Cost $1,947,603) 1,941,824
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $137,823,938) $ 139,322,014
INCOME TAX INFORMATION
At September 30, 1995, the aggregate cost of investment securities for
income tax purposes was $137,832,157. Net unrealized appreciation
aggregated $1,489,857, of which $1,614,868 related to appreciated
investment securities and $125,011 related to depreciated investment
securities.
At September 30, 1995, the fund had a capital loss carryforward of
approximately $7,378,000 of which $320,000, $1,404,000 and $5,654,000 will
expire on September 30, 2001, 2002 and 2003, respectively.
The fund has elected to defer to its fiscal year ending September 30, 1996
approximately $2,499,000 of losses recognized during the period November 1,
1994 to September 30, 1995.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 30, 1995
ASSETS
Investment in securities, at value (cost $137,823,938) - $ 139,322,014
See accompanying schedule
Cash 997,208
Interest receivable 2,976,028
TOTAL ASSETS 143,295,250
LIABILITIES
Payable for investments purchased $ 2,509,446
Payable for fund shares redeemed 21,119
Distributions payable 195,537
Accrued management fee 54,792
Other payables and accrued expenses 43,081
TOTAL LIABILITIES 2,823,975
NET ASSETS $ 140,471,275
Net Assets consist of:
Paid in capital $ 149,140,539
Distributions in excess of net investment income (281,882)
Accumulated undistributed net realized gain (loss) (9,885,458)
on investments
Net unrealized appreciation (depreciation) on 1,498,076
investments
NET ASSETS, for 14,809,773 shares outstanding $ 140,471,275
NET ASSET VALUE, offering price and redemption price per $9.49
share ($140,471,275 (divided by) 14,809,773 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED SEPTEMBER 30, 1995
INVESTMENT INCOME $ 11,639,524
Interest
EXPENSES
Management fee $ 704,636
Transfer agent fees 425,194
Accounting fees and expenses 62,672
Non-interested trustees' compensation 765
Custodian fees and expenses 42,071
Registration fees 28,349
Audit 7,772
Legal 1,061
Interest 2,743
TOTAL EXPENSES 1,275,263
NET INVESTMENT INCOME 10,364,261
REALIZED AND UNREALIZED GAIN (LOSS) (2,281,074)
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on 6,155,442
investment securities
NET GAIN (LOSS) 3,874,368
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 14,238,629
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994
INCREASE (DECREASE) IN NET ASSETS
Operations $ 10,364,261 $ 9,982,922
Net investment income
Net realized gain (loss) (2,281,074) (7,336,287)
Change in net unrealized appreciation (depreciation) 6,155,442 (4,337,336)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 14,238,629 (1,690,701)
FROM OPERATIONS
Distributions to shareholders from net investment income (10,292,325) (8,444,364)
Share transactions 138,314,808 97,823,842
Net proceeds from sales of shares
Reinvestment of distributions 7,794,252 7,179,256
Cost of shares redeemed (142,050,186) (130,693,881)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 4,058,874 (25,690,783)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 8,005,178 (35,825,848)
NET ASSETS
Beginning of period 132,466,097 168,291,945
End of period (including distributions in excess of net $ 140,471,275 $ 132,466,097
investment income of $281,882 and $649,434,
respectively)
OTHER INFORMATION
Shares
Sold 14,890,383 10,118,463
Issued in reinvestment of distributions 833,568 747,673
Redeemed (15,165,841) (13,515,563)
Net increase (decrease) 558,110 (2,649,427)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED SEPTEMBER 30, SEPTEMBER 13,
1991
(COMMENCEMENT
OF
OPERATIONS) TO
SEPTEMBER 30,
1995 1994 D 1993 1992 1991
SELECTED PER-SHARE DATA
Net asset value, beginning $ 9.290 $ 9.960 $ 10.140 $ 10.010 $ 10.000
of period
Income from Investment .648 .533 .722 .694 .027
Operations
Net investment income
Net realized and .174 (.648) (.209) .096 .010
unrealized gain (loss)
Total from investment .822 (.115) .513 .790 .037
operations
Less Distributions (.622) (.555) (.623) (.650) (.027)
From net investment
income
From net realized gain - - (.070) (.010) -
Total distributions (.622) (.555) (.693) (.660) (.027)
Net asset value, end $ 9.490 $ 9.290 $ 9.960 $ 10.140 $ 10.010
of period
TOTAL RETURN B, C 9.15% (1.18) 5.26% 8.13% 0.37%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 140,471 $ 132,466 $ 168,292 $ 172,863 $ 1,339
(000 omitted)
Ratio of expenses to .82% .95% .61% .28% .65% A,
average net assets E E E
Ratio of net investment 6.67% 6.80% 7.19% 7.91% 5.67% A
income to average
net assets
Portfolio turnover rate 266% 184% 348% 419% -%
</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 OCTOBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF
INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT
COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT
CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
E FMR VOLUNTARILY AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
NOTES TO FINANCIAL STATEMENTS
For the period ended September 30, 1995
1. 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 substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Interest income, which includes accretion of original
issue discount, is accrued as earned.
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, market discount 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 the per-share allocation between net investment income and realized
and unrealized gain (loss). Distributions in excess of net investment
income and accumulated undistributed net realized gain (loss) on
investments may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining at
fiscal year end is distributed in the following year.
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.
2. 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 U.S. Treasury or Federal Agency Securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of long-term U.S. government and government agency
obligations aggregated $407,629,714 and $402,186,441, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1200% to .3700% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .30%.
For the period, the management fee was equivalent to an annual rate of .45%
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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
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 $23,087 for the period.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
During the period 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.
5. 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 period for
which loans were outstanding amounted to $4,586,000 and $1,950,250,
respectively. The weighted average interest rate was 6.4%.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Charles Street Trust and the Shareholders
of Fidelity Short-Intermediate
Government Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, 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 Short-Intermediate Government Fund, (a fund of Fidelity Charles
Street Trust) at September 30, 1995, the results of its operations for the
year then ended, and 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 Short-Intermediate Government Fund '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 at September 30, 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
November 1, 1995
DISTRIBUTIONS
A total of 70.5% of the dividends distributed during the fiscal year was
derived from interest on U.S. Government securities which is generally
exempt from state income tax.
The fund will notify shareholders in January 1996 of the applicable
percentage for use in preparing 1995 income tax returns.
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)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)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)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)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 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(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
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
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
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The Bank of New York
New York, NY
* 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
(2_FIDELITY_LOGOS)SPARTAN(registered trademark)
INVESTMENT GRADE BOND
FUND
ANNUAL REPORT
SEPTEMBER 30, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 17 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 21 Notes to the financial statements.
REPORT OF INDEPENDENT 24 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 25
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 the markets have been fairly positive this year, no one can
predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving
for a college education, enables you to weather these ups and downs in a
long-term fund, which has higher potential returns. An intermediate-length
fund could be appropriate if your investment horizon is two to four years,
and a short-term bond fund could be the right choice if you need your money
in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. A fund's total
return includes changes in a fund's share price, reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells bonds that have grown in value), and the effect of the $5 account
closeout fee on an average sized account. You can also look at the fund's
income to measure performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED SEPTEMBER 30, 1995 PAST 1 LIFE OF
YEAR FUND
Spartan Investment Grade Bond 14.93% 26.64%
Lehman Brothers Corporate Bond Index 16.99% 25.76%
Lehman Brothers Aggregate Bond Index 14.06% 21.39%
Average Corporate BBB-Rated Bond Fund 14.43% n/a
Consumer Price Index 2.54% 8.42%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year or since the fund started 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 or to the Lehman Brothers Aggregate Bond
Index - both broad measures 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 77 funds with similar objectives tracked by Lipper Analytical Services
over the past 12 months. These benchmarks include reinvested dividends and
capital gains, if any. Comparing the fund's performance to the consumer
price index (CPI) helps show how your fund did compared to inflation. (The
CPI returns begin on the month end closest to the fund's start date.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED SEPTEMBER 30, 1995 PAST 1 LIFE OF
YEAR FUND
Spartan Investment Grade Bond 14.93% 8.19%
Lehman Brothers Corporate Bond Index 16.99% 7.94%
Lehman Brothers Aggregate Bond Index 14.06% 6.68%
Average Corporate BBB-Rated Bond Fund 14.43% n/a
Consumer Price Index 2.54% 2.73%
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 InvAggregate Bo
10/01/92 10000.00 10000.00
10/31/92 9812.23 9867.42
11/30/92 9910.58 9869.65
12/31/92 10141.51 10026.59
01/31/93 10397.72 10218.86
02/28/93 10729.65 10397.75
03/31/93 10789.98 10441.07
04/30/93 10830.04 10513.78
05/31/93 10871.84 10527.17
06/30/93 11226.71 10717.95
07/31/93 11392.79 10778.57
08/31/93 11782.44 10967.50
09/30/93 11816.73 10997.62
10/31/93 11913.99 11038.71
11/30/93 11705.42 10944.81
12/31/93 11740.02 11004.13
01/31/94 11984.80 11152.70
02/28/94 11571.41 10958.94
03/31/94 11183.62 10688.76
04/30/94 11070.36 10603.41
05/31/94 11000.02 10601.92
06/30/94 10994.05 10578.49
07/31/94 11184.69 10788.61
08/31/94 11183.61 10802.00
09/30/94 11019.13 10643.01
10/31/94 10995.76 10633.53
11/30/94 11028.07 10609.91
12/31/94 11132.78 10683.18
01/31/95 11333.41 10894.60
02/28/95 11549.35 11153.63
03/31/95 11689.77 11222.06
04/30/95 11838.95 11378.82
05/31/95 12332.88 11819.15
06/30/95 12424.27 11905.80
07/31/95 12383.63 11879.21
08/31/95 12539.11 12022.57
09/29/95 12665.77 12139.00
$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 September 30, 1995, the value of your investment would
have grown to $12,666 - a 26.66% increase on your initial investment. This
assumes you still owned the fund on September 30, 1995 and therefore does
not include the effect of the $5 account closeout fee. For comparison, look
at how the Lehman Brothers Aggregate Bond Index did over the same period.
With dividends reinvested, the same $10,000 investment would have grown to
$12,139 - a 21.39% increase. Beginning with this report the fund will
compare its performance to the Lehman Brothers Aggregate Bond Index rather
than the Lehman Brothers Corporate Bond Index. The Aggregate Bond Index
includes government bonds, as well as corporate bonds, which are more
reflective of the fund's range of permitted investments. For comparison
purposes, both indices are shown on page 4.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEARS ENDED SEPTEMBER 30, OCTOBER 1, 1992
(COMMENCEMENT OF
OPERATIONS) TO
1995 1994 SEPTEMBER 30, 1993
Dividend return 7.66% 6.24% 8.77%
Capital appreciation return 7.27% -13.01% 9.37%
Total return 14.93% -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 on an average sized account.
DIVIDENDS AND YIELD
PERIODS ENDED SEPTEMBER 30, 1995 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 5.22(cents) 33.16(cents) 67.61(cents)
Annualized dividend rate 6.25% 6.59% 6.93%
30-day annualized yield 5.98% - -
DIVIDENDS per share show the income paid by the fund for a set period and
do not reflect any tax reclassifications. If you annualize this number,
based on an average share price of $10.16 over the past month, $10.04 over
the past six months and $9.76 over the past year, you can compare the
fund's income over these three periods. The 30-day annualized YIELD is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
U.S. bond markets posted strong
returns during the 12 months
ended September 30, 1995. For
the 12-month period, the Lehman
Brothers Aggregate Bond Index
- - a broad measure of U.S.
taxable bonds - posted a total
return of 14.06%. A strong rally
starting in November 1994
helped bonds recover from the
effects of the sharply rising
interest rate environment seen
earlier that year. Indications of a
slowing economy and a relative
absence of inflation pressures
encouraged bond investors,
helping to push interest rates
down. Monetary policy also
played a role in the bond market's
performance. In an effort to thwart
the possibility of a recession, the
Federal Reserve Board lowered
the fed funds rate - the rate
banks charge each other for
overnight loans - by 0.25% in
July to 5.75%, after a string of
seven successive interest rate
increases in 1994 and early
1995. Mortgage-backed
securities rode along with the
rally. The Salomon Brothers
Mortgage Index returned 13.46%
during the period. Outside of the
U.S., markets had mixed returns.
Emerging markets recovered
from the lows caused by Mexico's
peso devaluation in December
1994. The J.P. Morgan Emerging
Markets Bond Index returned
6.04% during the 12-month
period. Declining interest rates
and a weakening U.S. dollar
helped the Salomon Brothers
World Government Bond Index
- - which includes U.S. issues -
to post a 16.18% return.
An interview with Michael Gray, Portfolio Manager of Spartan
Investment Grade Bond Fund
Q. MICHAEL, HOW HAS THE FUND PERFORMED?
A. For the 12 months ended September 30, 1995, the fund had a total return
of 14.93%. That beat the average BBB-rated corporate bond fund tracked by
Lipper Analytical Services, which returned 14.43% for the same 12-month
period. The Lehman Brothers Aggregate Bond Index returned 14.06% during the
12 months ended September 30, 1995.
Q. WHAT HELPED YOU BEAT THE AVERAGE FUND?
A. My feeling is that the fund had a heavier weighting in corporate bonds
during the period than other funds, and corporate issues performed very
well. In addition, the fund's corporate bonds were of long duration.
Duration is a measure of a bond's or bond fund's sensitivity to interest
rates. The longer the duration, the more sensitive the bond or fund is to
changes in interest rates. Since interest rates dropped significantly
during the period, the long-duration bonds that the fund held increased in
value more than bonds with shorter durations. In addition, yield spreads
versus U.S. Treasuries narrowed, allowing for better performance. I should
add that going forward, I'll be measuring the fund's performance more
closely against the Lehman Brothers Aggregate Bond Index - a broad measure
of U.S. taxable bonds that includes both government and corporate
securities. My goal will be to generate returns that are better than the
broad market - utilizing research-driven investment ideas that I believe
have a high probability of success while limiting volatility relative to
the benchmark. As a result, I've moved the fund's duration so that it is
more in line with the duration of this index.
Q. YOU MENTIONED THAT CORPORATE BONDS HAVE PERFORMED WELL. WHY HAS IT BEEN
SUCH A FAVORABLE ENVIRONMENT FOR THESE SECURITIES?
A. With continued growth in the economy and low inflation, corporate
profits have been strong, helped by the restructuring many corporations
have undergone during the past couple of years. In addition, in the lower
interest rate environment, many corporations have reduced the interest rate
expense on their balance sheets. At the same time, many corporations have
taken advantage of the strong stock market to look toward equity as a
source of capital instead of debt. That has helped reduce the supply of
corporate securities, while demand has stayed strong. With that kind of
supply/demand dynamic, corporate bonds have performed well.
Q. IF CORPORATE BONDS HAVE DONE WELL, WHY HAVE YOU DECREASED THE FUND'S
STAKE IN THEM TO 23.2% AT THE END OF THE PERIOD FROM 61.9% ON MARCH 31?
A. I've used the opportunity presented by strong corporate bond valuations
to restructure the fund, reducing corporate bond investments by selling
bonds for what I perceive to be good prices, and swapping into Treasury
securities. The yield spread - the difference between bonds with the same
maturity but different credit quality - between corporates and Treasuries
is very tight, meaning the corporate bonds don't offer much of a yield
advantage for more credit risk. On a risk/reward basis, it made sense to
reduce the fund's investments in corporate bonds. These investments were
performing so well that there seemed to be little room for better
performance, but a lot of room for underperformance.
Q. THE FUND'S AVERAGE YEARS TO MATURITY AND DURATION HAVE DROPPED NOTABLY
WITHIN THE PAST SIX MONTHS. WHAT'S THE REASON BEHIND THIS MOVE?
A. I shortened the fund's duration following a strong market rally over the
first half of 1995. I changed to a more neutral view and reduced the fund's
sensitivity to interest rates; I'll maintain that neutral view going
forward.
Q. IN ADDITION, IT LOOKS LIKE THE CREDIT QUALITY OF THE FUND'S BONDS IS
HIGHER THAN PREVIOUSLY . . .
A. That's right. I cut back on the fund's lower-quality issues for two
reasons. First, they performed well, better than higher-quality securities
on a relative basis. As a result, they were attractive sell candidates.
Second, they had performed to an extent where it appeared there was more
risk than reward to holding on to them.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. The economy seems to be growing at a moderate rate and inflation seems
to be low. On the corporate front, business prospects for corporations look
positive and the supply/demand dynamic appears favorable. However, I'm
positioning the fund a bit more defensively in terms of credit structure,
because much of the good news is already reflected in bond prices. It's
impossible to pinpoint when things will change, but it appears the possible
downside is greater than the limited upside in the market.
FUND FACTS
GOAL: high current income
START DATE: October 1, 1992
SIZE: as of September 30,
1995, more than $147 million
MANAGER: Michael Gray,
since 1992; manager,
Fidelity Investment Grade
Bond Fund, since 1987;
Variable Insurance Products
Fund II: Investment Grade
Bond Portfolio, since August
1995; Fidelity Intermediate
Bond Fund and Fidelity Advisor
Limited Term Bond
Fund, 1987 - October 1995;
joined Fidelity in 1982
(checkmark)
MICHAEL GRAY ON BUDGET CUTS
AND THE FEDERAL
RESERVE BOARD:
"If Congress is able to cut
federal spending and make
some inroads into balancing
the federal budget, it probably
would be viewed as a positive
move in the bond market. At
the same time, it could have a
destabilizing effect on the
economy, because
government spending is
viewed as a stimulus to
economic growth. However, if
Congress does cut spending,
the Federal Reserve Board
could offset some of that
fiscal constraint with
monetary easing to prevent
the economy from sliding into
a recession. In other words,
the Fed might lower interest
rates to stimulate the
economy and offset the
reduction in spending.
"Probably the best
environment - in the general
view of the bond market - is
a combination of deficit cuts
and Fed interest rate
reductions. Fiscal constraint
and monetary expansion
could offset each other,
allowing the economy to grow
at a reasonable level."
(solid bullet) The fund has 8.6%
invested in both U.S.
government agency
mortgage-backed securities
and commercial mortgage
securities, versus 0% six
months ago. The manager has
taken advantage of what he
has found to be good values in
the mortgage market to add to
the position, which, for the
most part,
is made up of Ginnie Maes,
Fannie Maes and Freddie
Macs.
INVESTMENT CHANGES
QUALITY DIVERSIFICATION AS OF SEPTEMBER 30, 1995
(MOODY'S RATINGS) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
6 MONTHS AGO
Aaa 59.1 19.5
Aa 2.0 6.6
A 9.7 21.5
Baa 10.5 29.3
Ba 1.4 5.1
Non-rated 0.7 0.2
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 SEPTEMBER 30, 1995
6 MONTHS AGO
Years 8.1 16.4
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 SEPTEMBER 30, 1995
6 MONTHS AGO
Years 4.6 5.8
DURATION SHOWS HOW MUCH A BOND FUND'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 SEPTEMBER 30, 1995* AS OF MARCH 31, 1995**
Corporate bonds 23.2%
U.S. government
and government
agency obligations 50.8%
U.S. government agency -
mortgage-backed
securities 7.5%
Commercial
mortgage securities 1.1%
Foreign government
obligations 0.8%
Short-term and
other investments 16.6%
Corporate bonds 61.9%
U.S. government
and government
agency obligations 19.5%
U.S. government agency -
mortgage-backed
securities 0.0%
Commercial
mortgage securities 0.0%
Foreign government
obligations 0.8%
Short-term and
other investments 17.8%
Row: 1, Col: 1, Value: 16.6
Row: 1, Col: 2, Value: 1.8
Row: 1, Col: 3, Value: 3.1
Row: 1, Col: 4, Value: 7.5
Row: 1, Col: 5, Value: 47.8
Row: 1, Col: 6, Value: 24.2
Row: 1, Col: 1, Value: 17.8
Row: 1, Col: 2, Value: 1.8
Row: 1, Col: 3, Value: 19.5
Row: 1, Col: 4, Value: 29.9
Row: 1, Col: 5, Value: 29.0
* TOTAL FOREIGN
INVESTMENTS 2.0%
** TOTAL FOREIGN
INVESTMENTS 3.4%
INVESTMENTS SEPTEMBER 30, 1995
Showing Percentage of Total Value of Investment in Securities
NONCONVERTIBLE BONDS - 23.2%
MOODY'S RATINGS (B) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
BASIC INDUSTRIES - 1.4%
PACKAGING & CONTAINERS - 0.7%
Crown Cork & Seal, Inc. 8%, 4/15/23 Baa1 $ 1,000,000 $ 1,000,000
PAPER & FOREST PRODUCTS - 0.7%
Boise Cascade Corp. 9 7/8%, 2/15/01 Baa3 1,000,000 1,080,000
TOTAL BASIC INDUSTRIES 2,080,000
CONGLOMERATES - 0.6%
BHP Finance USA Ltd. 6 3/4%, 11/1/13 A2 1,000,000 938,090
DURABLES - 0.4%
AUTOS, TIRES, & ACCESSORIES - 0.4%
Ford Motor Co. 8 7/8%, 1/15/22 A1 500,000 585,455
ENERGY - 1.7%
OIL & GAS - 1.7%
Atlantic Richfield Co. 9%, 4/1/21 A2 1,000,000 1,205,570
Coastal Corp. 9 3/4%, 8/1/03 Baa3 1,175,000 1,351,849
2,557,419
FINANCE - 9.7%
ASSET-BACKED SECURITIES - 0.3%
Discover Card Trust 7 7/8%, 4/16/98 A2 120,000 120,900
Standard Credit Card Master Trust I,
8%, 10/7/97 Aaa 370,000 376,013
496,913
BANKS - 1.9%
Central Fidelity Banks, Inc.
8.15%, 11/15/02 Baa2 1,000,000 1,061,880
Fleet/Norstar Financial Group, Inc.
9%, 12/1/01 A3 250,000 276,085
MBNA American Bank, N.A.
7 1/4%, 9/15/02 A3 460,000 467,769
UJB Financial Corp. 8 5/8%, 12/10/02 Baa3 1,000,000 1,096,360
2,902,094
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 6.5%
Associates Corp. (North America)
7 1/2%, 10/15/96 Aa3 $ 3,000,000 $ 3,046,500
Chrysler Financial Corp. 6%, 4/15/96 A3 2,000,000 1,996,660
Commercial Credit Group, Inc.
10%, 5/15/09 A1 350,000 435,309
Fleet Mortgage Group:
6 1/2%, 9/15/99 A3 250,000 248,873
8 3/8%, 1/15/23 A1 500,000 519,695
General Motors Acceptance Corp.:
8.80%, 3/20/96 A3 1,000,000 1,011,810
8 3/4%, 8/1/96 A3 1,000,000 1,020,920
4.95%, 2/3/97 A3 1,000,000 984,680
IBM Credit Corp. 5 1/2%, 3/29/96 A3 500,000 498,330
9,762,777
INSURANCE - 0.3%
Protective Life Corp. 7.95%, 7/1/04 A3 400,000 422,856
SAVINGS & LOANS - 0.7%
Ahmanson (H.F.) & Co. 9 7/8%, 11/15/99 Baa2 1,000,000 1,115,480
TOTAL FINANCE 14,700,120
INDUSTRIAL MACHINERY & EQUIPMENT - 1.4%
ELECTRICAL EQUIPMENT - 0.7%
Westinghouse Electric Corp. 7 3/4%, 4/15/96 Ba1 1,000,000 1,006,280
POLLUTION CONTROL - 0.7%
Laidlaw, Inc. 8 1/4%, 5/15/23 Baa2 1,000,000 1,048,000
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 2,054,280
MEDIA & LEISURE - 2.8%
PUBLISHING - 2.8%
Harcourt General, Inc. 8 7/8%, 6/1/22 Baa1 1,150,000 1,286,264
Time Warner Entertainment Co. LP:
10.15%, 5/1/12 Ba2 250,000 298,658
8 7/8%, 10/1/12 Ba2 750,000 808,905
8 3/8%, 3/15/23 Baa3 1,750,000 1,790,845
4,184,672
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
TRANSPORTATION - 0.8%
AIR TRANSPORTATION - 0.8%
United Air Lines, Inc. 10 1/4%, 7/15/21 Baa3 $ 1,000,000 $ 1,168,530
UTILITIES - 4.4%
ELECTRIC UTILITY - 1.3%
Hydro-Quebec:
yankee 8%, 2/1/13 A2 250,000 262,725
8.40%, 1/15/22 A2 300,000 325,110
Philadelphia Electric Co. 1st & ref. mtg.:
8 5/8%, 6/1/22 Baa1 300,000 311,994
8 1/4%, 9/1/22 Baa1 100,000 103,070
7 3/4%, 5/1/23 Baa1 1,000,000 971,710
1,974,609
GAS - 0.9%
Centragas Transpotadora De Gas
10.65%, 12/1/10 (a) BBB- 208,000 217,360
Panhandle Eastern Corp. 8 5/8%, 12/1/99 Baa2 1,000,000 1,066,750
1,284,110
TELEPHONE SERVICES - 2.2%
GTE Corp.:
8 3/4%, 11/1/21 Baa1 200,000 228,834
7.83%, 5/1/23 Baa1 1,000,000 1,026,610
MCI Communications Corp.:
8 1/4%, 1/20/23 A2 1,500,000 1,597,290
7 3/4%, 3/15/24 A2 500,000 513,545
3,366,279
TOTAL UTILITIES 6,624,998
TOTAL NONCONVERTIBLE BONDS
(Cost $34,119,472) 34,893,564
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 50.8%
MOODY'S RATINGS (B) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
U.S. TREASURY OBLIGATIONS - 50.0%
5 1/8%, 3/31/98 Aaa $ 952,000 $ 935,340
7 3/4%, 12/31/99 Aaa 24,800,000 26,384,968
7 7/8%, 8/15/01 Aaa 1,600,000 1,739,504
6 1/4%, 2/15/03 Aaa 28,430,000 28,589,777
11 7/8%, 11/15/03 Aaa 4,730,000 6,416,529
9%, 11/15/18 Aaa 8,420,000 10,727,585
8 1/8%, 8/15/19 Aaa 240,000 281,549
75,075,252
U.S. GOVERNMENT AGENCY OBLIGATIONS - 0.8%
Government Trust Certificates:
Series 1995-A (assets of Trust guaranteed by
U.S. Government through Export-Import Bank)
6.28%, 6/15/04 Aaa 1,050,000 1,042,545
Series 1994-C (assets of Trust guaranteed by
U.S. Government through Export-Import Bank)
6.61%, 9/15/99 Aaa 88,497 89,231
Series 1994-A (assets of Trust guaranteed by
U.S. Government through Export-Import Bank)
7.39%, 6/26/06 Aaa 64,167 66,742
1,198,518
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $74,999,320) 76,273,770
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 7.5%
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION:
8%, 2/15/24 to 9/15/25 Aaa 3,862,921 3,972,172
9%, 7/15/24 to 10/15/25 Aaa 5,521,966 5,813,214
9 1/2%, 7/15/16 to 3/15/22 Aaa 1,374,593 1,475,944
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $11,221,360) 11,261,330
COMMERCIAL MORTGAGE SECURITIES - 1.1%
MOODY'S RATINGS (B) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
Kearny Street Mortgage commercial floater
Series 1995-1 Class A1, 7.04%,
2/20/30 (a)(c) AAA $ 199,186 $ 200,368
Oregon pass thru certificates commercial
Series 1995 Class 1-A, 7.15%, 6/25/26 (a) AAA 500,000 499,375
Resolution Trust Corp. commercial Series:
1995-C1 Class A2A, 6 1/4%, 2/25/27 Aaa 592,281 587,285
1995-C1 Class A4A, 6 1/4%, 2/25/27 Aaa 357,958 354,938
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $1,645,704) 1,641,966
FOREIGN GOVERNMENT OBLIGATIONS (D) - 0.8%
Manitoba Province of Canada yankee
8.80%, 1/15/20 A1 300,000 350,955
New Brunswick Province of Canada yankee
7 5/8%, 2/15/13 A1 500,000 520,700
Saskatchewan Province of Canada yankee
8 1/2%, 7/15/22 A3 300,000 337,206
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $1,116,570) 1,208,861
REPURCHASE AGREEMENTS - 16.6%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 6.46% dated
9/29/95 due 10/2/95 $ 25,022,463 25,009,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $148,111,426) $ 150,288,491
LEGEND
1. 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 $917,103 or 0.6% of net
assets.
2. Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
3. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
4. 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 70.8% AAA, AA, A 68.0%
Baa 10.5% BBB 12.3%
Ba 1.4% BB 2.4%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
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 percentages not rated
by either S&P or Moody's amounted to 0.0%.
INCOME TAX INFORMATION
At September 30, 1995, the aggregate cost of investment securities for
income tax purposes was $148,111,426. Net unrealized appreciation aggre-
gated $2,177,065, of which $2,766,831 related to appreciated investment
securities and $589,766 related to depreciated investment securities.
At September 30, 1995, the fund had a capital loss carryforward of
approximately $105,000 which will expire on September 30, 2003.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 30, 1995
ASSETS
Investment in securities, at value (including repurchase $ 150,288,491
agreements of $25,009,000) (cost $148,111,426) -
See accompanying schedule
Cash 869
Interest receivable 2,227,451
TOTAL ASSETS 152,516,811
LIABILITIES
Payable for investments purchased $ 4,587,905
Payable for fund shares redeemed 19,733
Distributions payable 209,784
Accrued management fee 79,201
TOTAL LIABILITIES 4,896,623
NET ASSETS $ 147,620,188
Net Assets consist of:
Paid in capital $ 147,010,742
Distributions in excess of net investment income (418,388)
Accumulated undistributed net realized gain (loss) on (1,149,231)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 2,177,065
investments
NET ASSETS, for 14,512,344 shares outstanding $ 147,620,188
NET ASSET VALUE, offering price and redemption price per $10.17
share ($147,620,188 (divided by) 14,512,344 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED SEPTEMBER 30, 1995
INVESTMENT INCOME $ 10,413,190
Interest
EXPENSES
Management fee $ 893,041
Non-interested trustees' compensation 642
TOTAL EXPENSES 893,683
NET INVESTMENT INCOME 9,519,507
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 667,576
Futures contracts (1,235,544) (567,968)
Change in net unrealized appreciation (depreciation) on:
Investment securities 11,359,336
Futures contracts (486,776) 10,872,560
NET GAIN (LOSS) 10,304,592
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 19,824,099
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994
INCREASE (DECREASE) IN NET ASSETS
Operations $ 9,519,507 $ 7,936,737
Net investment income
Net realized gain (loss) (567,968) (549,207)
Change in net unrealized appreciation (depreciation) 10,872,560 (15,299,934)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 19,824,099 (7,912,404)
FROM OPERATIONS
Distributions to shareholders (9,551,251) (7,926,431)
From net investment income
In excess of net realized gain (301,382) (115,335)
TOTAL DISTRIBUTIONS (9,852,633) (8,041,766)
Share transactions 140,438,576 118,983,535
Net proceeds from sales of shares
Reinvestment of distributions 6,708,954 5,044,936
Cost of shares redeemed (115,705,936) (130,726,831)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 31,441,594 (6,698,360)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 41,413,060 (22,652,530)
NET ASSETS
Beginning of period 106,207,128 128,859,658
End of period (including distributions in excess of net $ 147,620,188 $ 106,207,128
investment income of $(418,388) and $(403,111),
respectively)
OTHER INFORMATION
Shares
Sold 14,472,404 11,589,057
Issued in reinvestment of distributions 684,893 497,135
Redeemed (11,814,293) (12,700,880)
Net increase (decrease) 3,343,004 (614,688)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEARS ENDED OCTOBER 1, 1992
SEPTEMBER 30, (COMMENCEMENT OF
OPERATIONS) TO
SEPTEMBER 30,
1995 1994 B 1993
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.510 $ 10.940 $ 10.000
Income from Investment Operations .693 .668 .799
Net investment income
Net realized and unrealized gain (loss) .673 (1.384) .940
Total from investment operations 1.366 (.716) 1.739
Less Distributions (.686) (.704) (.798)
From net investment income
In excess of net investment income - - (.001)
In excess of net realized gain (.020) (.010) -
Total distributions (.706) (.714) (.799)
Net asset value, end of period $ 10.170 $ 9.510 $ 10.940
TOTAL RETURN A 14.94% (6.75)% 18.17%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 147,620 $ 106,207 $ 128,860
Ratio of expenses to average net assets .65% .65% .65%
Ratio of net investment income to average 6.92% 6.90% 7.58%
net assets
Portfolio turnover rate 147% 44% 55%
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE.
B EFFECTIVE NOVEMBER 1, 1993 , THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF
INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT
COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT
CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
NOTES TO FINANCIAL STATEMENTS
For the period ended September 30, 1995
1. 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 substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Interest income, which includes accretion of original
issue discount, is accrued as earned.
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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
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, futures and options transactions,
market discount and losses deferred due to wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). 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.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may use foreign currency
contracts to facilitate transactions in foreign securities and to manage
the fund's currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge the fund's investments against currency fluctuations. Also, a
contract to buy or sell can offset a previous contract. Losses may arise
from changes in the value of the foreign currency or if the counterparties
do not perform under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the 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 U.S. Treasury or Federal Agency Securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
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. 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.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $191,268,359 and $169,622,202, respectively, of which U.S.
government and government agency obligations aggregated $180,965,529 and
$109,458,021, respectively.
The market value of futures contracts opened and closed during the period
amounted to $34,434,399 and $51,195,220, respectively.
4. 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
$7,635 for the period.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Charles Street Trust and the Shareholders of
Spartan Investment Grade Bond Fund:
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 Spartan Investment Grade Bond Fund (a
fund of Fidelity Charles Street Trust) at September 30,1995, the results of
its operations for the year then ended, and 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 Spartan Investment Grade Bond Fund'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 at September 30, 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
November 3, 1995
DISTRIBUTIONS
A total of 27.6% of the dividends distributed during the fiscal year was
derived from interest on U.S. Government securities which is generally
exempt from state income tax.
* The fund will notify shareholders in January 1996 of the applicable
percentage for use in preparing 1995 income tax returns.
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)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)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)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)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 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(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
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
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
6300 Canoga Avenue
Woodland Hills, 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
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
56 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
511 Pine Street
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, 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
Fred L. Henning Jr., Vice President
Michael Gray, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
* 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
