SEMIANNUAL REPORT FOR THE PERIOD ENDED JUNE 30, 1994
VARIABLE
INSURANCE
PRODUCTS FUND
TABLE OF CONTENTS
VARIABLE INSURANCE PRODUCTS FUND
PAGE
Performance Updates VIPF-1
Market Environment VIPF-6
Portfolio Managers' Messages VIPF-7
Schedule of Investments and Financial Statements:
Money Market Portfolio VIPF-13
High Income Portfolio VIPF-20
Equity-Income Portfolio VIPF-30
Growth Portfolio VIPF-39
Overseas Portfolio VIPF-47
Notes to Financial Statements VIPF-57
VARIABLE INSURANCE PRODUCTS FUND: MONEY MARKET PORTFOLIO
PERFORMANCE UPDATE
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED JUNE 30, 1994
One Year Five Years Ten Years
MONEY MARKET PORTFOLIO 3.39% 5.48% 6.60%
AS OF JUNE 30, 1994
7-DAY NET YIELD 4.22%
PERFORMANCE DATA IS HISTORICAL AND INCLUDES CHANGES IN SHARE PRICE AND
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. WHILE MONEY MARKET PORTFOLIO
SEEKS TO MAINTAIN A STABLE $1.00 SHARE PRICE, THERE IS NO ASSURANCE THAT IT
WILL BE ABLE TO DO SO. AN INVESTMENT IN A SUB-ACCOUNT INVESTING IN MONEY
MARKET PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
PERFORMANCE NUMBERS ARE NET OF ALL FUND OPERATING EXPENSES, BUT DO NOT
INCLUDE ANY INSURANCE CHARGES IMPOSED BY YOUR INSURANCE COMPANY'S SEPARATE
ACCOUNT. IF PERFORMANCE INFORMATION INCLUDED THE EFFECT OF THESE ADDITIONAL
CHARGES, IT WOULD HAVE BEEN LOWER. IF THE ADVISOR HAD NOT REIMBURSED
CERTAIN FUND EXPENSES DURING THE PERIODS SHOWN, THE TOTAL RETURNS WOULD
HAVE BEEN LOWER. YIELD WILL VARY.
VARIABLE INSURANCE PRODUCTS FUND: HIGH INCOME PORTFOLIO
PERFORMANCE UPDATE
$10,000 OVER LIFE OF FUND
VIP High Income (045) Merrill Lynch High Yield Master
09/30/85 10000.00 10000.00
10/31/85 10124.78 10113.02
11/30/85 10270.82 10303.28
12/31/85 10614.12 10604.47
01/31/86 10745.59 10676.44
02/28/86 11109.08 11130.10
03/31/86 11383.11 11373.65
04/30/86 11576.25 11551.26
05/31/86 11753.02 11685.98
06/30/86 11900.73 11804.36
07/31/86 11864.54 11648.95
08/31/86 11912.44 11863.93
09/30/86 12013.61 11962.11
10/31/86 12372.55 12172.57
11/30/86 12412.21 12271.68
12/31/86 12490.70 12337.95
01/31/87 12946.07 12686.81
02/28/87 13170.09 12896.26
03/31/87 13290.06 13038.85
04/30/87 12874.73 12754.50
05/31/87 12755.04 12697.03
06/30/87 13030.51 12872.55
07/31/87 13044.44 12942.59
08/31/87 13152.50 13072.28
09/30/87 12694.50 12771.51
10/31/87 12087.45 12430.27
11/30/87 12443.46 12744.62
12/31/87 12642.62 12913.85
01/31/88 13058.27 13267.23
02/29/88 13449.23 13627.23
03/31/88 13352.60 13604.70
04/30/88 13456.68 13643.99
05/31/88 13436.67 13715.20
06/30/88 13718.28 13977.43
07/31/88 13861.09 14125.13
08/31/88 13794.88 14171.55
09/30/88 13905.47 14314.39
10/31/88 14056.83 14537.41
11/30/88 14003.17 14591.87
12/31/88 14114.44 14653.61
01/31/89 14453.61 14873.37
02/28/89 14524.71 14973.32
03/31/89 14338.07 14960.00
04/30/89 14179.28 15004.15
05/31/89 14441.27 15280.37
06/30/89 14854.89 15496.85
07/31/89 14757.09 15570.24
08/31/89 14671.50 15647.15
09/30/89 14158.15 15498.19
10/31/89 13551.17 15253.06
11/30/89 13562.59 15287.24
12/31/89 13525.41 15273.41
01/31/90 13226.43 14974.91
02/28/90 13022.77 14756.83
03/31/90 12885.37 14956.31
04/30/90 12923.55 15032.30
05/31/90 13189.09 15303.83
06/30/90 13396.84 15600.32
07/31/90 13603.77 15929.99
08/31/90 13376.20 15320.16
09/30/90 13059.03 14653.87
10/31/90 12742.14 14280.96
11/30/90 13041.02 14401.94
12/31/90 13223.37 14609.46
01/31/91 13503.93 14815.98
02/28/91 14252.07 15915.67
03/31/91 14757.06 16599.89
04/30/91 15280.76 17191.13
05/31/91 15505.20 17275.07
06/30/91 15841.86 17622.59
07/31/91 16440.38 18044.84
08/31/91 16664.82 18424.11
09/30/91 17038.89 18658.77
10/31/91 17618.70 19213.23
11/30/91 17768.32 19435.16
12/31/91 17861.84 19660.94
01/31/92 18815.72 20348.35
02/29/92 19498.88 20853.71
03/31/92 20129.18 21144.68
04/30/92 20271.51 21298.58
05/31/92 20515.50 21638.31
06/30/92 20739.16 21907.16
07/31/92 21145.81 22351.02
08/31/92 21593.13 22646.93
09/30/92 21816.78 22904.97
10/31/92 21491.46 22615.68
11/30/92 21755.79 22935.97
12/31/92 21999.78 23231.29
01/31/93 22589.42 23803.34
02/28/93 22974.74 24253.90
03/31/93 23504.93 24674.39
04/30/93 23659.57 24851.50
05/31/93 24013.03 25186.03
06/30/93 24631.58 25659.22
07/31/93 24874.58 25935.02
08/31/93 25139.67 26182.25
09/30/93 25228.04 26311.44
10/31/93 25824.50 26807.08
11/30/93 26067.50 26953.70
12/31/93 26487.23 27223.21
01/31/94 27370.87 27775.82
02/28/94 27338.06 27687.18
03/31/94 26417.10 26987.79
04/30/94 26150.50 26754.05
05/31/94 26198.98 26794.60
06/30/94 26102.03 26893.29
$10,000 OVER LIFE OF FUND: LET'S SAY $10,000 WAS INVESTED IN HIGH INCOME
PORTFOLIO ON SEPTEMBER 30, 1985, SHORTLY AFTER THE FUND STARTED. BY JUNE
30, 1994, THE VALUE OF THE INVESTMENT WITH DIVIDENDS REINVESTED WOULD HAVE
GROWN TO $26,102 - A 161.02% INCREASE ON THE INITIAL INVESTMENT. FOR
COMPARISON, LOOK AT HOW A $10,000 INVESTMENT IN THE MERRILL LYNCH HIGH
YIELD MASTER INDEX (WITH INCOME REINVESTED) DID OVER THE SAME PERIOD. IT
WOULD HAVE GROWN TO $26,893 - A 168.93% INCREASE.
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED JUNE 30, 1994
One Year Five Years Life of
Fund
HIGH INCOME PORTFOLIO 5.97% 11.93% 11.57%
MERRILL LYNCH HIGH YIELD
MASTER INDEX 4.81% 11.66% n/a
THE CHARTS ABOVE SHOW HIGH INCOME PORTFOLIO'S TOTAL RETURNS, WHICH INCLUDE
CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. THE
MERRILL LYNCH HIGH YIELD MASTER INDEX, AN UNMANAGED INDEX, IS A BROAD
MEASURE OF THE HIGH YIELD BOND MARKET. IT INCLUDES REINVESTED INCOME AND
CAPITAL GAINS, IF ANY.
FIGURES FOR MORE THAN ONE YEAR ASSUME A STEADY COMPOUNDED RATE OF RETURN
AND ARE NOT THE FUND'S YEAR-BY-YEAR RESULTS, WHICH FLUCTUATED OVER THE
PERIODS SHOWN. THE LIFE OF FUND FIGURES ARE FROM COMMENCEMENT OF
OPERATIONS, SEPTEMBER 19, 1985.
IF THE ADVISER HAD NOT REIMBURSED CERTAIN FUND EXPENSES DURING THE PERIODS
SHOWN, THE TOTAL RETURNS WOULD HAVE BEEN LOWER. PERFORMANCE NUMBERS ARE NET
OF ALL FUND OPERATING EXPENSES, BUT DO NOT INCLUDE ANY INSURANCE CHARGES
IMPOSED BY YOUR INSURANCE COMPANY'S SEPARATE ACCOUNT. IF PERFORMANCE
INFORMATION INCLUDED THE EFFECT OF THESE ADDITIONAL CHARGES, IT WOULD HAVE
BEEN LOWER.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. PRINCIPAL AND
INVESTMENT RETURN WILL VARY AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU
WITHDRAW YOUR MONEY. THE FUND INCLUDES HIGH YIELDING, LOWER-RATED
SECURITIES WHICH ARE SUBJECT TO GREATER PRICE VOLATILITY AND MAY INVOLVE
GREATER RISK OF DEFAULT. THE MARKET FOR THESE SECURITIES MAY BE LESS
LIQUID.
VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO
PERFORMANCE UPDATE
$10,000 OVER LIFE OF FUND
VIP Equity Income (211) S&P 500
10/09/86 10000.00 10000.00
10/31/86 10110.00 10329.97
11/30/86 10330.00 10580.99
12/31/86 10020.00 10311.18
01/31/87 11170.00 11700.09
02/28/87 11430.00 12162.25
03/31/87 11720.18 12513.74
04/30/87 11428.43 12402.36
05/31/87 11498.85 12510.26
06/30/87 11738.55 13142.03
07/31/87 12185.74 13808.33
08/31/87 12521.12 14323.38
09/30/87 12258.33 14009.70
10/31/87 9866.21 10992.01
11/30/87 9424.75 10086.27
12/31/87 9906.53 10853.84
01/31/88 10611.14 11310.78
02/29/88 11136.96 11837.86
03/31/88 10943.09 11472.07
04/30/88 11124.23 11599.41
05/31/88 11273.40 11700.33
06/30/88 11914.78 12237.37
07/31/88 11893.19 12190.87
08/31/88 11688.14 11776.38
09/30/88 12035.44 12278.06
10/31/88 12243.13 12619.39
11/30/88 12046.37 12438.93
12/31/88 12156.34 12656.61
01/31/89 12907.14 13583.07
02/28/89 12840.89 13244.86
03/31/89 13119.03 13553.46
04/30/89 13625.34 14256.89
05/31/89 14030.38 14834.29
06/30/89 14040.00 14749.73
07/31/89 14858.52 16081.64
08/31/89 15097.26 16396.84
09/30/89 14927.54 16329.61
10/31/89 14066.33 15950.76
11/30/89 14146.71 16276.16
12/31/89 14264.77 16666.78
01/31/90 13301.40 15548.44
02/28/90 13380.23 15749.02
03/31/90 13402.29 16166.37
04/30/90 12937.62 15762.21
05/31/90 13793.60 17299.02
06/30/90 13656.26 17181.39
07/31/90 13322.27 17126.41
08/31/90 12258.47 15578.18
09/30/90 11307.56 14819.52
10/31/90 11019.23 14755.80
11/30/90 11809.01 15709.03
12/31/90 12083.78 16147.31
01/31/91 12731.80 16851.33
02/28/91 13608.54 18056.20
03/31/91 13890.84 18493.16
04/30/91 13955.75 18537.54
05/31/91 14721.69 19338.37
06/30/91 14119.75 18452.67
07/31/91 14920.21 19312.56
08/31/91 15235.15 19770.27
09/30/91 15130.58 19440.11
10/31/91 15382.54 19700.60
11/30/91 14719.50 18906.67
12/31/91 15882.72 21069.59
01/31/92 16097.17 20677.70
02/29/92 16619.89 20946.51
03/31/92 16416.23 20538.05
04/30/92 16930.51 21141.87
05/31/92 17065.84 21245.47
06/30/92 16916.43 20928.91
07/31/92 17434.83 21784.90
08/31/92 17052.85 21338.31
09/30/92 17229.88 21590.10
10/31/92 17436.14 21665.67
11/30/92 18068.68 22404.47
12/31/92 18564.86 22680.04
01/31/93 19119.03 22870.55
02/28/93 19548.52 23181.59
03/31/93 20131.08 23670.73
04/30/93 20047.37 23097.89
05/31/93 20410.09 23716.92
06/30/93 20650.16 23785.70
07/31/93 20931.12 23690.55
08/31/93 21731.84 24588.43
09/30/93 21648.75 24399.09
10/31/93 21846.72 24904.16
11/30/93 21464.93 24667.57
12/31/93 21961.08 24966.04
01/31/94 22928.28 25814.89
02/28/94 22337.84 25115.31
03/31/94 21403.35 24020.28
04/30/94 22140.87 24327.74
05/31/94 22351.60 24726.71
06/30/94 22213.50 24120.91
$10,000 OVER LIFE OF FUND: LET'S SAY $10,000 WAS INVESTED IN EQUITY-INCOME
PORTFOLIO ON OCTOBER 9, 1986, WHEN THE FUND STARTED. BY JUNE 30, 1994, THE
VALUE OF THE INVESTMENT WITH DIVIDENDS REINVESTED WOULD HAVE GROWN TO
$22,214 - A 122.14% INCREASE ON THE INITIAL INVESTMENT. FOR COMPARISON,
LOOK AT HOW A $10,000 INVESTMENT IN THE S&P 500 (WITH INCOME REINVESTED)
DID OVER THE SAME PERIOD. IT WOULD HAVE GROWN TO $24,121 - A 141.21%
INCREASE.
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED JUNE 30, 1994
One Year Five Years Life of
Fund
EQUITY-INCOME 7.57% 9.61% 10.87%
PORTFOLIO
S&P 500(registered trademark) 1.41% 10.34% 12.06%
THE CHARTS ABOVE SHOW EQUITY-INCOME PORTFOLIO'S TOTAL RETURNS, WHICH
INCLUDE CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL
GAINS. FIGURES FOR THE S&P 500, AN UNMANAGED INDEX OF COMMON STOCKS,
INCLUDE REINVESTMENT OF INCOME. S&P 500 IS A REGISTERED TRADEMARK OF
STANDARD & POOR'S CORPORATION.
FIGURES FOR MORE THAN ONE YEAR ASSUME A STEADY COMPOUNDED RATE OF RETURN
AND ARE NOT THE FUND'S YEAR-BY-YEAR RESULTS, WHICH FLUCTUATED OVER THE
PERIODS SHOWN. THE LIFE OF FUND FIGURES ARE FROM COMMENCEMENT OF
OPERATIONS, OCTOBER 9, 1986.
PERFORMANCE NUMBERS ARE NET OF ALL FUND OPERATING EXPENSES, BUT DO NOT
INCLUDE ANY INSURANCE CHARGES IMPOSED BY YOUR INSURANCE COMPANY'S SEPARATE
ACCOUNT. IF PERFORMANCE INFORMATION INCLUDED THE EFFECT OF THESE ADDITIONAL
CHARGES, IT WOULD HAVE BEEN LOWER.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. PRINCIPAL AND
INVESTMENT RETURN WILL VARY AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU
WITHDRAW YOUR MONEY. THE FUND INCLUDES HIGH YIELDING, LOWER-RATED
SECURITIES WHICH ARE SUBJECT TO GREATER PRICE VOLATILITY AND MAY INVOLVE
GREATER RISK OF DEFAULT. THE MARKET FOR THESE SECURITIES MAY BE LESS
LIQUID.
VARIABLE INSURANCE PRODUCTS FUND: GROWTH PORTFOLIO
PERFORMANCE UPDATE
$10,000 OVER LIFE OF FUND
VIP Growth (212) S&P 500
10/09/86 10000.00 10000.00
10/31/86 10000.00 10329.97
11/30/86 10220.00 10580.99
12/31/86 10030.00 10311.18
01/31/87 11100.00 11700.09
02/28/87 11650.00 12162.25
03/31/87 11839.96 12513.74
04/30/87 11839.96 12402.36
05/31/87 11920.10 12510.26
06/30/87 12270.69 13142.03
07/31/87 12761.52 13808.33
08/31/87 13142.16 14323.38
09/30/87 12991.91 14009.70
10/31/87 10137.09 10992.01
11/30/87 9425.89 10086.27
12/31/87 10397.54 10853.84
01/31/88 10623.12 11310.78
02/29/88 11484.46 11837.86
03/31/88 11381.92 11472.07
04/30/88 11525.47 11599.41
05/31/88 11422.93 11700.33
06/30/88 11997.16 12237.37
07/31/88 11935.63 12190.87
08/31/88 11648.52 11776.38
09/30/88 11976.65 12278.06
10/31/88 12007.41 12619.39
11/30/88 11894.62 12438.93
12/31/88 12017.66 12656.61
01/31/89 12879.00 13583.07
02/28/89 12612.40 13244.86
03/31/89 12993.69 13553.46
04/30/89 13680.86 14256.89
05/31/89 14170.20 14834.29
06/30/89 13982.79 14749.73
07/31/89 15232.19 16081.64
08/31/89 15492.48 16396.84
09/30/89 15627.83 16329.61
10/31/89 15190.54 15950.76
11/30/89 15440.42 16276.16
12/31/89 15804.82 16666.78
01/31/90 14888.60 15548.44
02/28/90 15030.81 15749.02
03/31/90 15214.51 16166.37
04/30/90 14771.47 15762.21
05/31/90 16078.97 17299.02
06/30/90 16413.95 17181.39
07/31/90 16154.61 17126.41
08/31/90 14490.52 15578.18
09/30/90 12999.33 14819.52
10/31/90 12534.68 14755.80
11/30/90 13550.42 15709.03
12/31/90 13950.24 16147.31
01/31/91 14879.53 16851.33
02/28/91 15989.61 18056.20
03/31/91 16472.15 18493.16
04/30/91 16318.61 18537.54
05/31/91 17283.69 19338.37
06/30/91 16000.58 18452.67
07/31/91 17524.96 19312.56
08/31/91 18303.61 19770.27
09/30/91 18446.17 19440.11
10/31/91 19016.45 19700.60
11/30/91 17930.73 18906.67
12/31/91 20299.57 21069.59
01/31/92 21538.81 20677.70
02/29/92 21989.40 20946.51
03/31/92 20641.73 20538.05
04/30/92 19833.13 21141.87
05/31/92 19664.68 21245.47
06/30/92 18901.00 20928.91
07/31/92 19630.98 21784.90
08/31/92 19091.92 21338.31
09/30/92 19428.83 21590.10
10/31/92 20181.28 21665.67
11/30/92 21528.95 22404.47
12/31/92 22191.55 22680.04
01/31/93 22629.54 22870.55
02/28/93 22163.03 23181.59
03/31/93 23046.80 23670.73
04/30/93 22805.77 23097.89
05/31/93 24504.44 23716.92
06/30/93 24756.95 23785.70
07/31/93 24688.08 23690.55
08/31/93 25927.65 24588.43
09/30/93 26409.70 24399.09
10/31/93 26662.21 24904.16
11/30/93 25583.33 24667.57
12/31/93 26490.05 24966.04
01/31/94 27155.74 25814.89
02/28/94 26875.66 25115.31
03/31/94 25654.60 24020.28
04/30/94 25813.34 24327.74
05/31/94 25215.01 24726.71
06/30/94 23932.89 24120.91
$10,000 OVER LIFE OF FUND: LET'S SAY $10,000 WAS INVESTED IN GROWTH
PORTFOLIO ON OCTOBER 9, 1986, WHEN THE FUND STARTED. BY JUNE 30, 1994, THE
VALUE OF THE INVESTMENT WITH DIVIDENDS REINVESTED WOULD HAVE GROWN TO
$23,933 - A 139.33% INCREASE ON THE INITIAL INVESTMENT. FOR COMPARISON,
LOOK AT HOW A $10,000 INVESTMENT IN THE S&P 500 (WITH INCOME REINVESTED)
DID OVER THE SAME PERIOD. IT WOULD HAVE GROWN TO $24,121 - A 141.21%
INCREASE.
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED JUNE 30, 1994
One Year Five Years Life of
Fund
GROWTH PORTFOLIO -3.33% 11.35% 11.95%
S&P 500(registered trademark) 1.41% 10.34% 12.06%
THE CHARTS ABOVE SHOW GROWTH PORTFOLIO'S TOTAL RETURNS, WHICH INCLUDE
CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS.
FIGURES FOR THE S&P 500, AN UNMANAGED INDEX OF COMMON STOCKS, INCLUDE
REINVESTMENT OF INCOME. S&P 500 IS A REGISTERED TRADEMARK OF STANDARD &
POOR'S CORPORATION.
FIGURES FOR MORE THAN ONE YEAR ASSUME A STEADY COMPOUNDED RATE OF RETURN
AND ARE NOT THE FUND'S YEAR-BY-YEAR RESULTS, WHICH FLUCTUATED OVER THE
PERIODS SHOWN. THE LIFE OF FUND FIGURES ARE FROM COMMENCEMENT OF
OPERATIONS, OCTOBER 9, 1986.
PERFORMANCE NUMBERS ARE NET OF ALL FUND OPERATING EXPENSES, BUT DO NOT
INCLUDE ANY INSURANCE CHARGES IMPOSED BY YOUR INSURANCE COMPANY'S SEPARATE
ACCOUNT. IF PERFORMANCE INFORMATION INCLUDED THE EFFECT OF THESE ADDITIONAL
CHARGES, IT WOULD HAVE BEEN LOWER.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. PRINCIPAL AND
INVESTMENT RETURN WILL VARY AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU
WITHDRAW YOUR MONEY.
VARIABLE INSURANCE PRODUCTS FUND: OVERSEAS PORTFOLIO
PERFORMANCE UPDATE
$10,000 OVER LIFE OF FUND
VIP Overseas (221) EAFE
01/28/87 10000.00 10000.00
01/31/87 10000.00 9997.46
02/28/87 10010.00 10296.66
03/31/87 10460.00 11140.41
04/30/87 11220.00 12319.18
05/31/87 11060.00 12319.14
06/30/87 10520.00 11926.66
07/31/87 10400.00 11905.82
08/31/87 11320.00 12798.54
09/30/87 11070.00 12597.05
10/31/87 8760.00 10777.00
11/30/87 8840.00 10938.65
12/31/87 9462.16 11263.46
01/31/88 9138.32 11464.55
02/29/88 9381.20 12228.75
03/31/88 9806.24 12980.64
04/30/88 9968.16 13169.27
05/31/88 9786.00 12747.12
06/30/88 9613.96 12411.13
07/31/88 9543.12 12800.51
08/31/88 9209.16 11968.24
09/30/88 9603.84 12491.19
10/31/88 10028.88 13559.96
11/30/88 10211.04 14367.68
12/31/88 10231.28 14447.79
01/31/89 10534.88 14701.99
02/28/89 10717.04 14777.56
03/31/89 10707.39 14487.53
04/30/89 11023.51 14621.89
05/31/89 10615.61 13826.42
06/30/89 10574.82 13593.67
07/31/89 11563.98 15300.67
08/31/89 11482.40 14612.54
09/30/89 12196.22 15278.16
10/31/89 11533.38 14664.33
11/30/89 12155.43 15401.50
12/31/89 12920.25 15969.77
01/31/90 12746.89 15375.56
02/28/90 12449.36 14302.43
03/31/90 12919.92 12812.46
04/30/90 12991.53 12710.78
05/31/90 13840.58 14161.09
06/30/90 14147.47 14036.37
07/31/90 14863.54 14234.08
08/31/90 13349.56 12851.83
09/30/90 12081.10 11060.74
10/31/90 13206.35 12784.21
11/30/90 12797.17 12030.10
12/31/90 12705.10 12224.98
01/31/91 12827.86 12620.40
02/28/91 13260.02 13973.29
03/31/91 12872.18 13134.44
04/30/91 13155.20 13263.42
05/31/91 13186.65 13401.82
06/30/91 12463.37 12417.04
07/31/91 13081.82 13027.11
08/31/91 13123.75 12762.56
09/30/91 13658.35 13481.84
10/31/91 13752.69 13672.96
11/30/91 13260.02 13034.64
12/31/91 13721.24 13707.79
01/31/92 13888.95 13415.00
02/29/92 13599.53 12934.85
03/31/92 13323.29 12080.93
04/30/92 14152.01 12138.36
05/31/92 14768.24 12950.85
06/30/92 14492.00 12336.56
07/31/92 13567.65 12020.83
08/31/92 13450.78 12774.79
09/30/92 12908.93 12522.52
10/31/92 12027.08 11865.66
11/30/92 11963.33 11977.32
12/31/92 12250.20 12039.27
01/31/93 12600.81 12037.79
02/28/93 12847.63 12401.41
03/31/93 13738.92 13482.39
04/30/93 14651.95 14761.90
05/31/93 14967.16 15073.67
06/30/93 14597.60 14838.49
07/31/93 15173.68 15357.91
08/31/93 15988.89 16186.97
09/30/93 15901.93 15822.62
10/31/93 16478.01 16310.23
11/30/93 15782.37 14884.55
12/31/93 16825.83 15959.32
01/31/94 17923.64 17308.60
02/28/94 17607.52 17260.66
03/31/94 17170.61 16517.22
04/30/94 17738.59 17218.03
05/31/94 17520.14 17119.18
06/30/94 17334.45 17361.11
$10,000 OVER LIFE OF FUND: LET'S SAY $10,000 WAS INVESTED IN OVERSEAS
PORTFOLIO ON JANUARY 28, 1987, WHEN THE FUND STARTED. BY JUNE 30, 1994, THE
VALUE OF THE INVESTMENT WITH DIVIDENDS REINVESTED WOULD HAVE GROWN TO
$17,334 - A 73.34% INCREASE ON THE INITIAL INVESTMENT. FOR COMPARISON, LOOK
AT HOW A $10,000 INVESTMENT IN THE MORGAN STANLEY EAFE INDEX (WITH INCOME
REINVESTED) DID OVER THE SAME PERIOD. IT WOULD HAVE GROWN TO $17,361 - A
73.61% INCREASE.
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED JUNE 30, 1994
One Year Five Years Life of
Fund
OVERSEAS PORTFOLIO 18.75% 10.39% 7.69%
EAFE 17.00% 5.01% 7.63%
THE CHARTS ABOVE SHOW OVERSEAS PORTFOLIO'S TOTAL RETURNS, WHICH INCLUDE
CHANGES IN SHARE PRICE, AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALIA, FAR EAST INDEX
(EAFE INDEX) IS AN UNMANAGED INDEX OF OVER 1,000 FOREIGN STOCKS THAT
REFLECTS THE COMMON STOCK PRICES OF THE INDEX COMPANIES TRANSLATED INTO
U.S. DOLLARS, AND ASSUMES REINVESTMENT OF ALL INCOME PAID BY THE INDEX
STOCK NET ANY APPLICABLE FOREIGN TAXES.
FIGURES FOR MORE THAN ONE YEAR ASSUME A STEADY COMPOUNDED RATE OF RETURN
AND ARE NOT THE FUND'S YEAR-BY-YEAR RESULTS, WHICH FLUCTUATED OVER THE
PERIODS SHOWN. THE LIFE OF FUND FIGURES ARE FROM COMMENCEMENT OF OPERATIONS
JANUARY 28, 1987.
PERFORMANCE NUMBERS ARE NET OF ALL FUND OPERATING EXPENSES, BUT DO NOT
INCLUDE ANY INSURANCE CHARGES IMPOSED BY YOUR INSURANCE COMPANY'S SEPARATE
ACCOUNT. IF PERFORMANCE INFORMATION INCLUDED THE EFFECT OF THESE ADDITIONAL
CHARGES, IT WOULD HAVE BEEN LOWER.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. PRINCIPAL AND
INVESTMENT RETURN WILL VARY AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU
WITHDRAW YOUR MONEY.
FOREIGN INVESTMENTS INVOLVE GREATER RISKS AND POTENTIAL REWARDS THAN U.S.
INVESTMENTS. THESE RISKS INCLUDE POLITICAL AND ECONOMIC UNCERTAINTIES OF
FOREIGN COUNTRIES, AS WELL AS THE RISK OF CURRENCY FLUCTUATIONS.
MARKET ENVIRONMENT
After strong performance in January, U.S. stocks stumbled through a
correction that - aside from a few brief upturns - continued through June
1994. The sell-off stretched into most market sectors. Once it began,
investors tended to seek safety in the stocks of larger, more established
companies, which generally outperformed those of smaller companies.
The Standard & Poor's 500 Composite Stock Index, a broad measure of the
U.S. market, had a total return of -3.39% for the six months ended June 30,
1994. The Dow Jones Industrial Average, which measures 30 large industrial
stocks, returned -2.06% for the same period. The NASDAQ Composite, which
tracks the performance of smaller stocks, fell 9.12%.
Several factors contributed to the market downturn, but rising interest
rates were key. The Federal Reserve Board raised short-term rates to curb
future inflation that might result from a strengthening economy. However,
investors worried that higher rates might slow the economic growth that had
begun to result in improving corporate profits. In addition, near the end
of the period, investors were concerned that a weakening dollar would make
U.S. stocks less attractive to foreign investors, and might cause the Fed
to boost interest rates further.
In overseas stock markets, results were mixed. The Morgan Stanley EAFE
(Europe, Australia and the Far East) index rose 8.78% for the six months
ended June 30, thanks largely to strong gains by Japanese stocks and the
yen. Europe, and more notably emerging markets in the Far East and Latin
America, suffered corrections on the heels of strong gains in 1993. The
Morgan Stanley Europe Index returned -2.81% during the period, while the
Morgan Stanley Emerging Markets Free Index was down 10.35%.
Rising interest rates sparked a sharp sell-off in the U.S. bond markets
from February through June. After reaching a low of 5.79% in October 1993,
the yield on the bellwether 30-year Treasury bond rose to 7.61% by June 30,
1994. Although the Fed was trying to ease the threat of inflation by
raising rates, investors feared higher inflation would diminish the value
of their bonds' interest payments - which are paid at a fixed rate. The
Lehman Brothers Aggregate Bond Index - a broad measure of taxable bonds in
the U.S. market - fell 3.87% during the period. Even though refinancings
slowed, mortgage-backed securities also suffered from rising rates. The
total return for the Lehman Brothers mortgage index was -2.87%. The
negative effects of rising rates on high-yield bonds were somewhat offset
by credit quality enhancements due to the improving economy. The Merrill
Lynch High Yield Master Index returned -1.21% during the period.
Many overseas bond markets were extremely volatile, and most took their cue
from the downturn in the U.S. markets. The Salomon Brothers World
Government Bond Index - a measure of bond market performance of developed
nations including the United States - rose 0.67% for the six months.
Corrections in emerging markets were especially severe. Political
instability in Mexico and a partial liquidation of the high amount of
borrowed money that backed investments in these markets contributed to poor
performance. The JP Morgan Emerging Markets Bond Index had a total return
of -19.94% during the period.
A MESSAGE FROM BOB LITTERST,
PORTFOLIO MANAGER OF
MONEY MARKET PORTFOLIO
We are seeing the end of a period characterized by slow economic growth,
low inflation and stable monetary policy. The economy has entered a
cyclical growth phase that is likely to create inflationary pressures. For
example, real GDP expanded at a 3.8% annual rate over the past four
quarters, far in excess of a long-term sustainable rate. Excess capacity,
as depicted by utilization rates in manufacturing and the unemployment
rate, has diminished. Leading indicators of inflation have begun to flash
warning signals. As a result, the Fed began to raise short-term rates in
February in an effort to move policy from an accommodative stance to a
neutral one. The fed funds' rate was increased in four steps to 4.25% from
3.0%.
The timing of the Fed's initial change in policy caught many market
participants by surprise and I was no exception. In January, I was still
expecting stable monetary policy because inflation looked under control and
first quarter economic statistics would be difficult to interpret due to
severe winter weather and the California earthquake. When the Fed boosted
rates in February, I reacted by selling our longest holdings that would be
likely to underperform in an environment of rising interest rates. At the
same time, I bought short-term securities to reduce the fund's exposure to
additional rate hikes. The fund's average maturity fell from 71 days in
late January to 53 days by March 31.
Because many investors focused exclusively on issues with very short
maturities after the Fed began to raise rates, I was able to find
overlooked bargains among securities with maturities of three to six months
and, thus, didn't reduce the fund's average maturity even more sharply.
Markets often overreact in very volatile times, and I tried to take
advantage of values created by sharp swings in market sentiment and prices.
It seems likely that short-term rates will continue to move higher. The
economy appears to have self-sustaining momentum. The boost to the economy
provided by lower interest rates has begun to fade, but much improved labor
market conditions are likely to support economic activity going forward. As
long as real growth exceeds potential, the threat of rising inflation will
persist and the Fed will probably continue to raise short-term rates. My
strategy will be to maintain a relatively short average maturity of 40 to
45 days emphasizing variable rate instruments with frequent resets and
short maturities. However, I will remain alert to opportunities to pick up
yield along the short-term yield curve.
A MESSAGE FROM BARRY COFFMAN, PORTFOLIO MANAGER OF
HIGH INCOME PORTFOLIO
Uncertainty over the Federal Reserve Board's monetary policy and a global
lack of confidence in the dollar has led to rising interest rates impacting
all fixed income markets. The Merrill Lynch High Yield Master Index
returned -1.21% and 4.81% for the six months and year ended June 30, 1994,
respectively. The fund slightly trailed the index for the six months, but
topped it for the year.
The economic environment - steady growth and moderate inflation - has been
a relatively favorable backdrop for high yield bonds. These investments can
perform better than other fixed income securities because they are more
influenced by the fortunes of individual companies than by interest rates.
A specific negative influence on the fund was its aggressive position at
the beginning of the year due to my anticipation of a robust economy. Part
of that posture was an approximate 20% concentration in deferred pay
securities, bonds that do not pay current interest and are sold at a deep
discount. Deferred pay securities are very sensitive to changes in the
marketplace, and most declined in price more than the market as a whole.
Over time, such investments should benefit the fund because they tend to be
issued by companies with attractive growth prospects. One example is Nextel
Communications. MCI has demonstrated its support for this nationwide
provider of wireless communications through its agreement to invest over $1
billion in Nextel stock.
Given the performance of the market and the way I have biased the fund, I'm
relatively pleased with its performance. Media and leisure
is the largest sector in the fund, 22.9%, including several securities of
Live Entertainment. This video distribution company is merging with its
largest contractor, Carolco Pictures. I invested in a private placement
security of Live, which allowed me to get warrants for 10% of the company
in addition to a very attractive bond.
Lodging and gaming securities - part of the media and leisure sector -
comprise 8.8% of the fund's investments, because I'm very bullish on the
hotel industry. Demand has finally caught up with the excess supply created
in the 1980s. As the economy improves, occupancy and room rates are going
up. The fund has invested in several bonds of Host Marriott, and has a
solid investment in the Boyd Gaming Corp., a successful Las Vegas casino
operator with prospects in many emerging growth markets.
I've been shifting more into cyclicals - companies that rise and fall in
tandem with the economy - especially commodity cyclicals like chemicals,
paper, metal and steel. I have 5% of the fund in paper and forest products,
including Container Corp., which has benefited from low inventories and
rising prices.
The fund also has 7.6% invested in the construction and real estate sector.
I have my largest investment in Dal Tile, a ceramic tile company that may
benefit from the improved housing market in California.
Looking forward, high yield continues to look like a favorable asset class
because of the rising current yields and improving credits. Inflation
should not be a significant concern because companies' cash flows will grow
faster than their fixed debt obligations. However, I would be concerned if
it appears further Fed tightening may jeopardize the economic recovery,
especially since the portfolio is skewed toward cyclicals.
A MESSAGE FROM BETTINA
DOULTON, PORTFOLIO MANAGER OF
EQUITY-INCOME PORTFOLIO
It's been a difficult past six months for stock investors. The Standard &
Poor's 500 index had total returns of -3.39% and 1.41% for the six months
and year ended June 30, 1994, respectively. The fund topped the index
during both periods, thanks to selected investments that performed well
despite the harsh environment.
In January, I began to make a sizable bet on chemical stocks, which has
paid off. I looked for companies that had effectively cut costs during the
recession, and whose stocks were cheap when measured by yardsticks such as
their price-to-earnings ratios. Over the next several months the improving
economy strengthened the demand for chemicals, which is typical in a
"cyclical" industry such as this. Union Carbide, du Pont, Georgia Gulf,
Lyondell, and Akzo NV - a Dutch chemical company - all performed well
despite the broad market downturn.
I also increased the fund's investment in financial stocks - its largest
sector bet - from 10.9% six months ago to 13.3% on June 30. Many investors
sold financial stocks last fall on fears that higher interest rates would
hurt profits in the sector. But the low stock valuations resulting from
that sell-off created opportunities. I tried to find companies that could
increase their earnings in the face of higher rates. American Express - the
fund's eighth largest investment on June 30 - is a good example. The
company has just finished a massive restructuring, and has improved its
core credit card and travel services businesses. The stock helped the fund
over the past few months, and I like its prospects going forward.
Rising oil prices have helped - and I feel may continue to help - selected
energy stocks. British Petroleum, which became the fund's largest
investment during the period, has benefited both from the higher oil prices
and very effective cost cutting.
I've also recently upped the fund's stake in health care stocks. Many of
these stocks have suffered over the past year due to uncertainty over the
course of health care reform. However, that has led to opportunities. For
example, Pfizer and Schering-Plough are two drug stocks that were selling
at very reasonable valuations.
Two of the fund's top 10 investments were among its biggest disappointments
over the past six months: General Electric and Philip Morris. G.E. suffered
from disappointing earnings and a scandal within a brokerage house it owns.
However, unless its underlying story changes, I plan to stick with the
company because it has good prospects for future earnings growth. Philip
Morris suffered from the controversy that has surrounded the tobacco
industry in recent months. But the company is cutting costs and generating
solid cash flow, which helps make the stock attractive going forward.
As for the next six months, I think the stock market may be in for another
rough ride. The Federal Reserve Board raised short-term interest rates from
February through May to curb future inflation that could result from the
strengthening economy. However, I'm now seeing some evidence that higher
rates have dampened economic growth, which is a concern because corporate
earnings may suffer. I'll be watching closely as the full effect of higher
rates on the economy, and on stocks, becomes clearer. I think good stock
selection will be critical in the months ahead.
A MESSAGE FROM
LAWRENCE GREENBERG,
PORTFOLIO MANAGER OF
GROWTH PORTFOLIO
A correction that essentially stretched from February through the end of
June dampened returns for both the stock market and the fund. For the six
months ended June 30, the Standard & Poor's 500 index had a total return of
- -3.39%. For the 12 months ended June 30, the index was up 1.41%. The fund's
performance trailed that of the index during both periods.
There are a couple of reasons for the fund's under-performance relative to
the S&P 500. First, as the economy has recovered, industrial production has
increased significantly. That generally has helped traditional cyclical
stocks - those whose earnings and stock prices are closely tied to
movements in the economy - to out-perform growth stocks - those of
companies with fast-growing earnings.
Second, the fund's growing dependence upon technology stocks - 31.4% of its
investments on June 30 - caused it to trail the index. Technology stocks,
far and away, offer better earnings growth than those in any other sector
of the market. However, this sector is very volatile; investors' confidence
level can change drastically on the slightest bit of negative news. For
example, Cisco Systems - a computer networking products supplier - reported
excellent earnings growth in the first quarter of 1994. However, based on
earlier figures, it appeared to investors as if Cisco's earnings growth was
actually slowing a bit. And when investors began to sell the stock, the
negative sentiment spread through much of the technology sector. That type
of story will happen from time to time; however, I believe the trend toward
corporations improving productivity through technology is solidly in place.
Some technology stocks helped the fund, despite the sector's downturn. Most
were tied to the boom in personal computers. For example, Compaq Computer
kept gaining market share while keeping expenses in line. Oracle and Sybase
- - relational database software companies - have benefited from an increased
demand for software to run local area networks (or LANs). In addition, the
demand for semiconductors for both computers and other uses remained
strong, which boosted the stock of Texas Instruments. Chip makers Intel and
Motorola were also among the fund's investments at the end of June.
My outlook for retail and wholesale stocks - 8.6% of the fund on June 30 -
has improved somewhat, though consumer demand still appears sluggish.
Lowe's - a home improvement chain - has remained among the fund's top 20
investments and has performed very well. In addition, after the recent
market correction, I bought the stocks of some fast-growing retailers that
I felt were too expensive earlier in the period. Examples include Sunglass
Hut, coffee shop chain Starbucks, and auto parts supplier Autozone.
As for the next six months, I think the potential exists for better
performance. Industrial production appears to be peaking, and hopefully
interest rates will stabilize. With that backdrop, I believe we'll see
investors drift away from stocks that rely on a stronger economy to grow
earnings - the cyclicals - and back toward companies that rely more heavily
on internal business practices to grow earnings - the growth stocks. I've
positioned the fund by targeting those companies that appear to have the
best prospects for rapid earnings growth.
A MESSAGE FROM JOHN HICKLING, PORTFOLIO MANAGER OF
OVERSEAS PORTFOLIO
Overseas stock markets have experienced mixed results over the past six
months, with Japan turning in strong performance and Europe holding its
own. Since the beginning of 1994, the fund has underperformed the EAFE
index - a broad measure of stocks in Europe, Australia and the Far East;
however, the fund turned in better results than the index over the past
year. The index returned 8.78% and 17.00%, respectively, for the six months
and year ended June 30, 1994.
The fund underperformed the EAFE index over the past six months mostly
because it was underweighted in Japanese stocks, and, therefore,
underweighted in yen, as compared to the index. During this period, the yen
was the strongest currency relative to the dollar, and as a result Japanese
yen-denominated assets were the best performing asset class. I should note
that the fund had an extremely heavy weighting in Japan, just not as heavy
as the index.
In addition, the fund was hurt during the second half of this period
because it was overweighted in European markets, relative to the index.
These markets were somewhat difficult for the fund and the index over the
past few months because they corrected in May and June as a reaction to the
falling U.S. bond market. However, going forward, I still think Europe's
long term growth prospects are strong.
As we look back over the past six months, it's been a time of change in
both Japan and Europe. In Japan, the country's economy, which
had been depressed, started to turn around at the beginning of 1994. Many
Japanese companies were well placed to profit from the improving economy
because they had taken significant steps to reduce their costs over the
past few years. I should note that Japanese companies have been able to
avoid cutting costs the American way - through factory closings and layoffs
- - because in Japan most workers' jobs have built-in wage flexibility. This
means an employee's pay is based largely on overtime and bonuses, both of
which tend to drop off when the economy falls. As a result, Japanese
companies can trim expenses without reducing head count. Japan's economy
also experienced a boost from tax cuts, an increase in the government's
investment spending, dropping oil prices (an important factor because Japan
imports all of its oil), and low interest rates. In addition, Japan
benefited from significant new export markets in the rest of Asia and
China.
However, over the same period, the Japanese economy was hurt by the
strengthening yen. That's because a strong yen made Japanese exports more
expensive in foreign countries. As a result, Japan's exports, and,
ultimately, its domestic economy, were affected. Despite the strong yen,
several companies the fund owned revised their earning estimates upward.
Good examples were Rohm, a Japanese computer components and parts
manufacturer, and Canon, which makes consumer electronics, such as copiers.
Another Japanese company worth noting is Toyota, which impressed me more
than any other Japanese company in terms of cost-cutting measures. Over the
period, it started focusing on keeping production simple and costs down -
what Toyota calls "value engineering."
One other trend to note in Japan is that a number of Japanese companies
began moving their operations overseas to less expensive locations, such as
Malaysia and the United States. This step allowed these Japanese companies
to be more competitive and more efficient by helping them reduce labor
costs, which are very high in Japan, and take advantage of the situation
from a currency standpoint. For example, one of the fund's holdings, Honda,
accelerated its use of reverse importing - or importing autos it
manufactures in the United States back to Japan. Japanese companies also
were importing more goods from other countries to reduce manufacturing
costs in Japan. For instance, Kirin Breweries was working with Budweiser to
import aluminum cans from the United States.
Switching to Europe, it looked like the recession was ending there. Despite
a correction in the late spring, Europe turned in a relatively good
performance during the period as many companies implemented strict
cost-cutting measures. As the economy started improving, there was a major
shift out of banks and insurance companies and into cyclical stocks, such
as chemical and automobile companies. Financial stocks fell out of favor
after their stock prices rose dramatically and many investors sold them to
take profits. Cyclicals are stocks that tend to perform well when the
economy does well or poorly when the economy is weak. Some cyclicals that
cut costs dramatically and turned in good results were the Swiss chemical
and pharmaceutical company Ciba-Geigy; German chemical companies Hoechst
and BASF, and the French automaker Peugeot.
These cyclical stocks looked especially good because they were oversold
when their earnings estimates and forecasts were being upgraded - usually a
definition of attractive stocks. I should note that while these cyclical
stocks were affected by the market correction, they still outperformed the
overall European market during that period.
As for regrets, as I expressed earlier, I wish I'd had more of the fund in
yen than in dollars. I also regret not dropping the fund's European
financial stocks, such as National Westminster Bank, earlier because their
prices dropped very quickly.
As a final note, I think it's helpful to briefly discuss derivatives, which
have been in the news a lot lately. The fund uses derivatives in a
conventional manner. I am currently using some forward foreign currency
contracts to hedge a portion of the fund against currency volatility, and
also have a very small position in indexed securities linked to European
bond markets.
Looking forward, it looks like 1994 will be a good year primarily because I
think the worst is over in terms of the global bond market and inflationary
scares. If the Japanese economy improves and the yen stops strengthening
- -which I anticipate - many companies will profit from their cost-cutting
efforts. I have similar expectations for Europe despite the drop in May and
June. Given the measures many European companies have taken to reduce
expenses and an expected moderate economic environment, I think European
companies may become increasingly profitable.
VARIABLE INSURANCE PRODUCTS FUND: MONEY MARKET PORTFOLIO
INVESTMENTS/JUNE 30, 1994 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
ANNUALIZED ANNUALIZED
YIELD AT YIELD AT
DUE TIME OF PRINCIPAL VALUE DUE TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1) DATE PURCHASE AMOUNT (NOTE 1)
BANKERS' ACCEPTANCES - 9.1%
DOMESTIC BANKERS ACCEPTANCE - 0.8%
Mellon Bank
7/5/94 4.63% $ 5,000,000 $ 4,997,444
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 8.3%
Credit Suisse
8/8/94 4.55 7,380,000 7,344,945
Dai-Ichi Kangyo Bank, Ltd.
7/18/94 4.36 5,800,000 5,788,086
Fuji Bank, Ltd.
7/11/94 4.32 1,100,000 1,098,686
7/11/94 4.43 1,300,000 1,298,411
7/25/94 4.43 10,000,000 9,970,667
8/8/94 4.45 2,100,000 2,090,180
8/9/94 4.45 3,500,000 3,483,203
Industrial Bank of Japan, Ltd.
8/15/94 4.54 8,000,000 7,954,900
Sakura Bank, Ltd.
7/8/94 4.29 10,000,000 9,991,678
Sumitomo Bank, Ltd.
7/11/94 4.40 5,900,000 5,892,822
54,913,578
TOTAL BANKERS' ACCEPTANCES 59,911,022
CERTIFICATES OF DEPOSIT - 10.1%
DOMESTIC CERTIFICATES OF DEPOSIT - 0.6%
Trust Company Bank
1/31/95 3.75 4,000,000 3,992,453
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 9.5%
Bank of Nova Scotia
9/1/94 4.64 5,000,000 5,000,000
Bank of Tokyo
7/25/94 4.45 7,000,000 6,999,478
Caisse Nationale de Credit Agricole
8/17/94 4.82 (a) 5,000,000 5,000,570
Industrial Bank of Japan, Ltd.
7/28/94 4.40 5,000,000 4,999,133
Mitsubishi Bank, Ltd.
7/7/94 3.45 10,000,000 10,000,000
8/15/94 4.40 8,000,000 8,003,134
Sanwa Bank, Ltd.
7/29/94 3.33 5,000,000 5,000,038
10/19/94 4.60 5,000,000 4,999,701
Sumitomo Bank, Ltd.
7/15/94 4.33 10,000,000 10,000,000
Union Bank of Switzerland
8/22/94 3.85 2,000,000 1,999,488
Westdeutsche Landesbank Gironzentrale
9/7/94 4.15% $ 1,000,000 $ 998,388
62,999,930
TOTAL CERTIFICATES OF DEPOSIT 66,992,383
COMMERCIAL PAPER - 46.7%
Abbey National (UK), PLC
8/29/94 4.55 5,000,000 4,963,125
Associates Corporation of North America
7/25/94 4.43 5,000,000 4,985,333
Beneficial Corporation
7/15/94 4.37 5,000,000 4,998,541
CIT Group Holdings, Inc.
7/28/94 4.44 5,000,000 4,983,425
CoreStates Capital Corp.
7/15/94 4.35 (a) 5,000,000 5,000,000
Credit Lyonnais North America
7/29/94 4.42 4,000,000 3,986,311
Dayton Hudson Corporation
7/6/94 4.31 3,000,000 2,998,208
Dean Witter, Discover & Co.
7/5/94 4.29 5,000,000 4,997,622
7/11/94 4.64 10,000,000 9,987,222
7/18/94 4.36 5,000,000 4,989,729
Eastman Kodak
7/22/94 4.39 2,500,000 2,493,620
Electronic Data Systems Corporation
7/14/94 4.32 5,000,000 4,992,236
8/10/94 4.48 1,000,000 995,055
Ford Motor Credit Corporation
7/7/94 4.43 10,000,000 9,992,667
General Electric Capital Corporation
7/15/94 4.27 (a) 5,000,000 5,000,000
9/6/94 4.49 (a) 5,000,000 5,000,000
9/19/94 4.09 14,000,000 13,875,555
12/20/94 4.85 5,000,000 4,887,722
1/11/95 5.58 3,000,000 2,913,104
General Motors Acceptance Corporation
7/19/94 4.38 3,000,000 2,993,460
7/20/94 4.36 6,000,000 5,986,225
7/26/94 4.49 3,000,000 2,990,708
8/17/94 4.63 2,000,000 1,987,989
9/6/94 4.58 4,000,000 3,966,277
Generale Bank
7/15/94 4.43 2,000,000 1,996,562
8/23/94 4.49 5,000,000 4,967,169
ANNUALIZED ANNUALIZED
YIELD AT YIELD AT
DUE TIME OF PRINCIPAL VALUE DUE TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1) DATE PURCHASE AMOUNT (NOTE 1)
COMMERCIAL PAPER - CONTINUED
Goldman Sachs Group, L.P. (The)
7/6/94 4.00% $ 5,000,000 $ 4,997,257
Grand Metropolitan Finance
10/24/94 5.12 10,000,000 9,840,277
GTE Corporation
7/12/94 4.56 2,000,000 1,997,219
Household Finance Corporation
7/5/94 4.04 10,000,000 9,995,555
ING Bank
8/5/94 4.38 3,000,000 2,987,312
ITT Corporation
7/18/94 4.39 5,000,000 4,989,658
7/18/94 4.45 4,000,000 3,991,651
ITT Financial
7/11/94 4.64 5,000,000 4,993,611
Kredietbank, N.A. Finance Corporation
8/31/94 4.66 2,000,000 1,984,326
Kredietbank, N.V.
8/31/94 4.55 10,000,000 9,923,750
Merrill Lynch & Co., Inc.
7/11/94 4.35 3,000,000 2,996,383
7/12/94 4.58 10,000,000 9,986,097
8/8/94 4.38 5,000,000 4,977,042
Morgan Stanley Group, Inc.
7/1/94 4.58 5,000,000 5,000,000
7/6/94 4.63 10,000,000 9,993,611
National Australia Funding Inc.
7/11/94 4.26 3,000,000 2,996,467
New Center Asset Trust
7/13/94 4.29 5,000,000 4,992,867
8/9/94 4.38 5,000,000 4,976,438
New South Wales Treasury Corp.
8/30/94 3.90 4,000,000 3,974,468
Norwest Corporation
7/19/94 4.48 5,000,000 4,988,876
7/28/94 4.43 5,000,000 4,983,500
PNC Financial/PNC Funding
10/11/94 4.34 5,000,000 4,939,793
Sears Credit Corp. A
7/7/94 4.30 5,000,000 4,996,425
Sears Roebuck Acceptance Corp.
7/6/94 4.39 1,000,000 999,393
7/7/94 4.39 2,000,000 1,998,543
7/18/94 4.36 5,000,000 4,989,729
7/26/94 4.37 2,000,000 1,993,958
8/8/94 4.52 3,000,000 2,985,750
Student Loan Corporation
7/18/94 4.31% $ 10,000,000 $ 9,979,694
Texaco Inc.
7/27/94 4.43 5,000,000 4,984,111
Textron, Inc.
7/1/94 4.55 3,000,000 3,000,000
7/20/94 4.47 3,000,000 2,992,954
Toronto Dominion Holdings USA, Inc.
7/11/94 4.26 10,000,000 9,988,222
UBS Finance (DE), Inc.
7/15/94 4.27 7,900,000 7,886,943
Unocal Corporation
7/18/94 4.39 4,000,000 3,991,737
TOTAL COMMERCIAL PAPER 308,221,482
FEDERAL AGENCIES - 2.5%
FEDERAL FARM CREDIT BANK - AGENCY COUPONS - 0.1%
7/1/94 4.95 (a) 800,000 797,885
FEDERAL NATIONAL MORTGAGE ASSOC. - DISCOUNT NOTES - 2.4%
10/26/94 4.45 10,000,000 9,858,626
11/25/94 3.45 6,000,000 5,917,926
15,776,552
TOTAL FEDERAL AGENCIES 16,574,437
U.S. TREASURY OBLIGATIONS - 0.1%
U.S. TREASURY BILLS
1/12/95 3.55 1,000,000 981,422
BANK NOTES - 6.4%
Bank of New York
7/1/94 4.95 (a) 5,000,000 4,998,072
9/6/94 4.61 (a) 5,000,000 5,000,000
Bank One, Dayton
7/1/94 4.94 (a) 5,000,000 5,000,000
Bank One, Milwaukee
7/1/94 4.36 (a) 5,000,000 4,996,644
Comerica Bank-Detroit
7/1/94 4.95 (a) 5,000,000 5,000,000
7/1/94 4.95 (a) 5,000,000 4,998,007
First National Bank of Boston
8/22/94 4.58 5,000,000 5,000,000
PNC Bank
11/10/94 4.74 2,000,000 1,991,607
Society National Bank
7/1/94 4.95 (a) 5,000,000 4,998,000
TOTAL BANK NOTES 41,982,330
ANNUALIZED ANNUALIZED
YIELD AT YIELD AT
DUE TIME OF PRINCIPAL VALUE DUE TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1) DATE PURCHASE AMOUNT (NOTE 1)
MASTER NOTES (a) - 3.3%
J.P. Morgan Securities
7/1/94 4.67% $ 7,000,000 $ 7,000,000
7/1/94 4.69 10,000,000 10,000,000
Morgan Stanley Group, Inc.
7/1/94 4.64 5,000,000 5,000,000
TOTAL MASTER NOTES 22,000,000
MEDIUM-TERM NOTES - 10.7%
Abbey National (UK), PLC (c)
7/1/94 4.96 (a) 5,000,000 4,999,184
Abbey National Treasury Service (c)
9/30/94 4.76 (a) 13,000,000 13,000,000
General Motors Acceptance Corporation
7/11/94 4.06 10,000,000 10,002,196
8/7/94 4.65 3,000,000 3,000,000
Goldman Sachs Group, L.P. (The) (c)
9/1/94 4.36 (a) 3,000,000 3,000,000
12/13/94 4.97 5,000,000 4,933,337
12/16/94 4.37 (a) 4,000,000 4,000,000
Kingdom of Sweden
6/23/94 4.25 (a) 2,000,000 2,000,000
6/23/94 4.62 (a) 2,000,000 2,000,000
9/23/94 4.62 (a) 2,000,000 2,000,000
Norwest Corporation
9/15/94 4.57 (a) 6,000,000 6,000,000
Norwest Financial Inc.
12/15/94 3.55 2,750,000 2,765,375
PHH Corporation
7/1/94 4.98 (a) 5,000,000 5,000,000
Swedish National Housing Finance Corp.
8/23/94 4.53 (a) 1,000,000 1,000,000
8/23/94 4.59 (a) 1,000,000 1,000,000
8/23/94 4.65 (a) 1,000,000 1,000,000
Westdeutsche Landesbank Gironzentrale
1/11/95 3.70 5,000,000 5,002,265
TOTAL MEDIUM-TERM NOTES 70,702,357
SHORT-TERM NOTES (a) - 4.9%
Capital One Funding Corp.
7/8/94 4.57 4,276,000 4,276,000
SMM Trust Company (1993-D)
7/28/94 4.27 3,000,000 3,000,000
SMM Trust Company (1993-F)
8/15/94 4.89 6,000,000 6,000,000
SMM Trust Company (1994-A)
9/18/94 4.60% $ 12,000,000 $ 12,000,000
SMM Trust Company (1994-E)
7/13/94 4.01 7,000,000 6,998,710
TOTAL SHORT-TERM NOTES 32,274,710
TIME DEPOSITS - 2.3%
Fuji Bank, Ltd.
7/7/94 4.31 10,000,000 10,000,000
Mitsubishi Bank, Ltd.
7/27/94 4.34 5,000,000 5,000,000
TOTAL TIME DEPOSITS 15,000,000
MUNICIPAL BONDS (a) - 2.9%
Harris County Texas Health Facilities Authority
7/5/94 4.37 10,000,000 10,000,000
Louisiana Public Facilities Authority
7/5/94 4.20 2,400,000 2,400,000
7/5/94 4.52 5,000,000 5,000,000
New Orleans Aviation Board (MBIA Insured)
7/8/94 4.62 1,800,000 1,800,000
TOTAL MUNICIPAL BONDS 19,200,000
MATURITY
AMOUNT
REPURCHASE AGREEMENTS - 1.0%
With First Boston Corporation:
At 4.30%, dated 6/30/94 due 7/20/94:
U.S. Treasury Obligations
(principal amount $5,142,145)
4.375%, 8/15/96 $ 5,011,944 5,000,000
In a joint trading account
(U.S. Treasury Obligations)
dated 6/30/94, due 7/1/94
(Note 2)
At 4.29% 1,457,174 1,457,000
TOTAL REPURCHASE AGREEMENTS 6,457,000
TOTAL INVESTMENTS - 100% $ 660,297,143
Total Cost for Income Tax Purposes - $660,297,143
LEGEND:
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due date on these types of
securities reflects the next interest rate reset date or when applicable,
the final maturity date.
2. 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
SMM Trust Company:
(1993-D) 10/28/93 $ 3,000,000
(1993-F) 11/15/93 $ 6,000,000
(1994-A) 3/17/94 $ 12,000,000
(1994-E) 4/13/94 $ 6,998,534
(c) 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 $29,932,521 or 4.5% of net
assets.
INCOME TAX INFORMATION:
At December 31, 1993, the fund had a capital loss carryforward of
approximately $13,800 of which $4,100, $500, $4,900, and $4,300 will expire
on December 31, 1995, 1996, 1997 and 2000, respectively.
MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, 1994 (Unaudited)
ASSETS
Investment in securities, at value $ 660,297,143
(including repurchase
agreements of $6,457,000)
(Notes 1 and 2) - See
accompanying schedule
Interest receivable 1,687,550
TOTAL ASSETS 661,984,693
LIABILITIES
Share transactions in process $ 587,736
Accrued management fee 96,752
Other payables and accrued 17,943
expenses
TOTAL LIABILITIES 702,431
NET ASSETS $ 661,282,262
Net Assets consist of:
Paid in capital $ 661,358,384
Accumulated net realized gain (76,122)
(loss) on investments
NET ASSETS, for 661,358,384 $ 661,282,262
shares outstanding
NET ASSET VALUE, offering price $1.00
and redemption price per share
($661,282,262<UNDEF>(divided by)<UNDEF>661,358,384
shares)
</TABLE>
Statement of Operations
DRAFT
Six Months Ended June 30, 1994 (Unaudited)
INTEREST INCOME $ 9,958,432
EXPENSES
Management fee (Note 3) $ 484,689
Transfer agent fees (Note 3) 48,246
Accounting fees and expenses 41,379
(Note 3)
Non-interested trustees' 1,401
compensation
Custodian fees and expenses 23,925
Registration fees 52,763
Audit 11,778
Miscellaneous 1,857
TOTAL EXPENSES 666,038
NET INTEREST INCOME 9,292,394
NET REALIZED GAIN (LOSS) ON (77,373)
INVESTMENTS (NOTE 1)
NET INCREASE IN NET ASSETS $ 9,215,021
RESULTING FROM OPERATIONS
Statement of Changes in Net Assets
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDE YEAR ENDED
D DECEMBER 31,
JUNE 30, 1994 1993
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 9,292,394 $ 9,704,207
Net interest income
Net realized gain (loss) (77,373) 4,544
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 9,215,021 9,708,751
Dividends to shareholders from net interest income (9,292,394) (9,704,207)
Share transactions at net asset value of $1.00 per share 660,139,917 531,400,504
Proceeds from sales of shares
Reinvestment of dividends from net interest income 9,343,585 9,797,785
Cost of shares redeemed (361,227,495) (489,101,476)
Net increase (decrease) in net assets and shares resulting from share transactions 308,256,007 52,096,813
TOTAL INCREASE (DECREASE) IN NET ASSETS 308,178,634 52,101,357
NET ASSETS
Beginning of period 353,103,628 301,002,271
End of period $ 661,282,262 $ 353,103,628
</TABLE>
FINANCIAL HIGHLIGHTS
DRAFT
SIX MONTHS ENDED
JUNE 30, 1994 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1993 1992 1991 1990 1989
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income from Investment Operations .018 .032 .038 .059 .078 .087
Net interest income
Less Distributions (.018) (.032) (.038) (.059) (.078) (.087)
From net interest income
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN B 1.78% 3.23% 3.90% 6.09% 8.04% 9.12%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 661,282 $ 353,104 $ 301,002 $ 271,123 $ 254,585 $ 142,970
Ratio of expenses to average net assets .26%A .22% .24% .38% .56% .67%
Ratio of expenses to average net assets .26%A .23% .24% .38% .56% .67%
before
expense reductions
Ratio of net interest income to average 3.65%A 3.16% 3.85% 5.93% 7.76% 8.70%
net assets
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED AND
WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN.
VARIABLE INSURANCE PRODUCTS FUND: HIGH INCOME PORTFOLIO
INVESTMENTS/JUNE 30, 1994 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF
INVESTMENT IN SECURITIES)
MOODY'S PRINCIPAL VALUE MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (C) (NOTE 1) RATINGS (B) AMOUNT (C) (NOTE 1)
CORPORATE BONDS - 77.6%
CONVERTIBLE BONDS - 0.3%
BASIC INDUSTRIES - 0.3%
IRON & STEEL - 0.3%
Stelco, Inc. 7 3/4%, 8/31/98 - CAD 3,000,000 $ 1,843,484
PAPER & FOREST PRODUCTS - 0.0%
Repap Enterprises, Inc. 8 1/2%,
8/1/97 - 60,000 53,400
TOTAL BASIC INDUSTRIES 1,896,884
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
ELECTRICAL EQUIPMENT - 0.0%
Ampex Corp. 0%, 6/30/97 - 469,000 146,082
RETAIL & WHOLESALE - 0.0%
GROCERY STORES - 0.0%
Farm Fresh, Inc. 7 1/2%, 3/1/10 B3 186,000 116,250
TOTAL CONVERTIBLE BONDS 2,159,216
NONCONVERTIBLE BONDS - 77.3%
AEROSPACE & DEFENSE - 0.6%
AEROSPACE & DEFENSE - 0.0%
Fairchild Corp. 12 1/4%, 3/15/06 B3 125,000 117,500
DEFENSE ELECTRONICS - 0.6%
Tracor, Inc. 10 7/8%, 8/15/01 B2 3,300,000 3,366,000
TOTAL AEROSPACE & DEFENSE 3,483,500
BASIC INDUSTRIES - 10.5%
CHEMICALS & PLASTICS - 2.1%
American Pacific Corp. 11%,
12/15/02 (f) - 850,000 850,000
Huntsman Corp. 11%, 3/31/04 B1 2,610,000 2,649,150
IMC Fertilizer Group, Inc. 9.45%,
12/15/11 B3 1,710,000 1,504,800
Methanex Corp. 8 7/8%, 11/15/01 Ba3 1,700,000 1,674,500
Rexene Corp.:
pay-in-kind, 10%, 11/15/02 - 598,500 554,612
9%, 11/15/99 - 2,650,000 2,570,500
Trans Resources, Inc.:
14 1/2%, 9/1/96 B2 580,000 609,000
11 7/8, 7/1/02 (f) B2 910,000 846,300
11,258,862
IRON & STEEL - 1.5%
Republic Engineered Steels, Inc.
9 7/8%, 12/15/01 B2 5,000,000 4,750,000
WCI Steel, Inc. 10 1/2%, 3/1/02 B1 3,000,000 3,052,500
7,802,500
METALS & MINING - 1.3%
Renco Metals, Inc. 12%, 7/15/01 B3 $ 2,650,000 $ 2,391,625
Sherritt Incorporated:
11%, 3/31/04 B1 3,950,000 2,743,453
10 1/2%, 3/31/14 B1 1,870,000 1,823,250
6,958,328
PACKAGING & CONTAINERS - 0.6%
All-American Bottling Corp.
13%, 8/15/01 Caa 3,000,000 3,060,000
PAPER & FOREST PRODUCTS - 5.0%
Container Corp. of America gtd.
11 1/4%, 5/1/04 B2 4,800,000 5,010,000
Crown Packaging Holdings Ltd. :
10 3/4%, 11/1/00 B3 6,000,000 5,925,000
0%, 11/1/03 (d) Caa 5,500,000 2,640,000
Domtar, Inc. 11 1/4%, 9/15/17 Ba1 4,500,000 4,522,500
Mail-Well Corp. 10 1/2%, 2/15/04 B3 1,420,000 1,292,200
Mail-Well Holdings, Inc. unit 0%,
2/15/06 Caa 1,850,000 860,250
Stone Container Corp.:
sr. sub. 10 3/4%, 4/1/02 B2 2,000,000 1,900,000
11 1/2%, 9/1/99 B2 1,000,000 1,000,000
9 7/8%, 2/1/01 B1 3,810,000 3,524,250
26,674,200
TOTAL BASIC INDUSTRIES 55,753,890
CONGLOMERATES - 3.9%
Insilco Corp.:
9 1/2%, 7/1/97 Ca 2,710,000 2,696,450
9 1/2%, 7/1/97 (e) Ca 3,960,000 3,920,400
10 3/8%, 7/1/97 - 3,597,000 3,597,000
Jordan Industries, Inc.:
10 3/8%, 8/1/03 B3 3,405,000 3,251,775
11 3/4%, 8/1/05 Caa 12,145,000 7,226,275
20,691,900
CONSTRUCTION & REAL ESTATE - 7.0%
BUILDING MATERIALS - 4.5%
Adience, Inc. 11%, 6/15/02 - 745,921 593,007
Building Materials Corp. of America
0%, 7/1/04 (d)(f) - 11,920,000 6,705,000
DAL Tile International, Inc. secured
coupon 0%, 7/15/98 Caa 17,545,000 10,746,312
USG Corp.:
9 1/4%, 9/15/01 B2 3,510,000 3,325,725
10 1/4%, 12/15/02 B1 890,000 890,000
10 1/4%, 12/15/02 B2 1,750,000 1,750,000
24,010,044
MOODY'S PRINCIPAL VALUE MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (C) (NOTE 1) RATINGS (B) AMOUNT (C) (NOTE 1)
CORPORATE BONDS - CONTINUED
NONCONVERTIBLE BONDS - CONTINUED
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - 1.5%
MDC Holdings, Inc. 8 3/4%,
12/15/05 - $ 1,100,000 $ 1,061,500
Peters J.M., Inc. 12 3/4%, 5/1/02
(10 sr. notes & 79 warrants) (f) B3 3,000,000 3,090,000
Robertson CECO Corp. 10 1/2%,
11/30/99 - 974,918 799,433
UDC Homes 11 3/4%, 4/30/03 B2 3,361,000 3,226,560
8,177,493
REAL ESTATE - 1.0%
Bramalea Ltd. 0%, 3/22/98 - 3,595,098 2,372,765
Littlefield Co. 10%, 8/31/94 (e) - 2,750,000 2,750,000
MBO Properties, Inc. 10%, 4/27/04 - 23,000 23,000
5,145,765
TOTAL CONSTRUCTION & REAL ESTATE 37,333,302
DURABLES - 3.0%
AUTOS, TIRES, & ACCESSORIES - 1.2%
Ferrellgas L.P./Ferrellgas Finance Corp.
10%, 8/1/01 B1 3,700,000 3,690,750
SPX Corp. 11 3/4%, 6/1/02 B3 2,660,000 2,713,200
6,403,950
TEXTILES & APPAREL - 1.8%
Fortsmann & Co., Inc. 14 3/4%,
4/15/99 (g) Caa 500,000 545,000
Hat Brands, Inc.:
12 5/8%, 9/15/02 - 1,520,000 1,634,000
12 5/8%, 9/15/02 (e) - 680,000 731,000
JPS Automotive Products Corp.
11.125% 6/15/01 B2 930,000 925,350
Leslie Fay Companies, Inc. (e)(h):
9.53%, 1/15/00 - 676,319 527,529
10.54%, 1/15/02 - 611,353 427,947
Westpoint Stevens 9 3/8%,
12/15/05 B3 5,300,000 4,809,750
9,600,576
TOTAL DURABLES 16,004,526
ENERGY - 7.2%
ENERGY SERVICES - 3.6%
Falcon Drilling, Inc. 9 3/4%,
1/15/01 (f) B2 7,752,000 7,441,920
TransTexas Gas Corp. 10 1/2%,
9/1/00 B1 11,730,000 11,788,650
19,230,570
OIL & GAS - 3.6%
Deeptech International, Inc. 12%,
12/15/00 B3 $ 6,160,000 $ 6,160,000
Mesa Capital Corp. 0%,
6/30/98 (d) B3 14,369,000 12,932,100
19,092,100
TOTAL ENERGY 38,322,670
FINANCE - 4.1%
CREDIT & OTHER FINANCE - 2.3%
GPA Delaware, Inc.:
8 1/2%, 3/3/97 - 2,000,000 1,760,000
gtd. 8 3/4%, 12/15/98 Caa 360,000 293,400
8 5/8%, 1/15/99 - 1,500,000 1,177,500
Indah Kiat International Finance Co.
BV gtd. 11 7/8%, 6/15/02 Ba3 6,320,000 6,383,200
New Street Capital Corp. unit
12%, 2/28/98 (e) - 1,060,000 1,060,000
Tiphook Finance Corp. 8%,
3/15/00 Caa 2,070,000 1,508,512
12,182,612
INSURANCE - 1.3%
American Annuity Group, Inc.
11 1/8%, 2/01/03 B2 2,210,000 2,232,100
Americo Life, Inc. 9 1/4%, 6/1/05 Ba2 4,900,000 4,532,500
6,764,600
SAVINGS & LOANS - 0.3%
Anchor Bancorp, Inc. 8 7/8%,
7/9/03 Ba3 2,000,000 1,860,000
SECURITIES INDUSTRY - 0.2%
ECM Corp. extendible 14%,
6/1/02 (f) - 920,792 1,012,872
TOTAL FINANCE 21,820,084
HEALTH - 1.0%
MEDICAL FACILITIES MANAGEMENT - 1.0%
Quorum Health Group, Inc. 11 7/8%,
12/15/02 B3 4,850,000 5,238,000
INDUSTRIAL MACHINERY & EQUIPMENT - 5.0%
ELECTRICAL EQUIPMENT - 1.6%
Specialty Equipment Cos., Inc.
11 3/8%, 12/1/03 B3 6,000,000 6,090,000
Telex Communications Group:
16%, 9/30/94 - 1,660,000 1,660,000
14 1/2%, 6/1/99 - 850,000 901,000
8,651,000
MOODY'S PRINCIPAL VALUE MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (C) (NOTE 1) RATINGS (B) AMOUNT (C) (NOTE 1)
CORPORATE BONDS - CONTINUED
NONCONVERTIBLE BONDS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 3.4%
Maritime Group Ltd. 13 1/2%,
2/15/97 (f) - $ 1,539,728 $ 1,290,678
Rexnord Holdings, Inc.:
11 7/8%, 3/1/99 B2 2,160,000 2,160,000
11 7/8%, 3/1/09 (e) - 550,000 550,000
Thermadyne Holdings Corp.:
10 1/4%, 5/1/02 - 5,824,902 5,766,653
10 3/4%, 11/1/03 - 8,256,509 8,173,944
17,941,275
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 26,592,275
MEDIA & LEISURE - 21.0%
BROADCASTING - 4.8%
Cooke Media Group, Inc. 11 5/8%,
4/1/99 - 350,000 332,500
Helicon Group L.P./Helicon Capital
Corp. 9%,11/1/03 Caa 5,750,000 4,945,000
NWCG Holdings Corp. 0%,
6/15/02 (f) - 2,970,000 1,553,963
Robin Media Group, Inc. 11 1/8%,
4/1/97 - 11,210,000 10,537,400
SCI Television, Inc. secured 11%,
6/30/05 - 6,100,000 6,283,000
Spectravision, Inc. pay-in-kind
11.65%, 12/1/02 B3 4,145,611 1,906,981
25,558,844
ENTERTAINMENT - 3.3%
Carolco Pictures, Inc. 11 1/2%,
10/15/00 - 5,176,079 4,244,385
Live Entertainment, Inc.:
12%, 9/15/94 (e) - 7,250,000 7,177,500
10%, 9/1/98 - 2,716,600 2,227,612
Plitt Theatres, Inc. 10 7/8%,
6/15/04 B3 4,110,000 4,156,237
17,805,734
LODGING & GAMING - 8.5%
Bally Gaming Intl., Inc., 10 3/8%,
7/15/98 - 3,000,000 2,880,000
Bally's Casino Holdings, Inc.
10 1/2%, 6/15/98 B3 10,450,000 6,426,750
Ballys Grand, Inc., 10 3/8%,
12/15/03 (f) - 6,750,000 6,176,250
Boyd Gaming Corp. 10 3/4%,
9/3/03 - 5,000,000 5,000,000
California Hotel Finance Corp.
gtd. 11%, 12/01/02 B2 $ 4,825,000 $ 4,909,437
Casino Magic Financial Corp.
11 1/2%, 10/15/01 B1 2,010,000 1,788,900
Four Seasons Hotels, Inc.
9 1/8%, 7/01/00 (f) B1 500,000 457,500
GB Property Funding Corp. gtd. 1st
mtg. 10 7/8%, 1/15/044 B2 1,820,000 1,428,700
HWCC-Tunica, Inc. 1st mtg.
13 1/2%, 9/30/98 (f) - 4,000,000 4,000,000
Host Marriott Corp.:
9 1/8%, 12/1/00 B1 1,500,000 1,485,000
10 1/2%, 5/1/06 B1 4,304,000 4,304,000
11%, 5/1/06 B1 1,000,000 996,250
10 3/8%, 6/15/11 B1 1,000,000 992,500
Mammons (John Q.) Motels L.P./
Mammons Motels Finance Corp.
8 7/8%, 2/15/04 - 1,000,000 892,500
Motels of America, Inc. 12%,
4/15/04 ($1000 sr. sub.
note & common) (f) B3 3,000,000 3,060,000
Resorts International Hotel
Financing, Inc.:
mtg. 11%, 9/15/03 - 954,000 715,500
11 3/8%, 12/15/04 ($1000 jr.
mtg. notes & 1 Class B) - 267,000 186,900
45,700,187
PUBLISHING - 2.3%
GACC Holding Co. 9 3/4%,
3/1/04 (f) - 12,500,000 12,218,750
RESTAURANTS - 2.1%
American Restaurant Group:
12%, 9/15/98 B2 2,430,000 2,320,650
12%, 9/15/98 (New) B2 3,170,000 3,027,350
Cafeteria Operated LP 11%,
6/30/98 (e)(h) - 7,000,000 2,800,000
Flagstar Corp. 11 1/4%, 11/1/04 B2 3,290,000 3,006,237
11,154,237
TOTAL MEDIA & LEISURE 112,437,752
NONDURABLES - 2.0%
HOUSEHOLD PRODUCTS - 2.0%
Revlon Consumer Products Corp.:
9 3/8%, 4/1/01 B2 6,450,000 5,514,750
10 1/2%, 2/15/03 B2 710,000 614,150
Revlon World Wide secured 0%,
3/15/98 B3 10,440,000 4,384,800
10,513,700
MOODY'S PRINCIPAL VALUE MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (C) (NOTE 1) RATINGS (B) AMOUNT (C) (NOTE 1)
CORPORATE BONDS - CONTINUED
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - 3.5%
APPAREL STORES - 0.9%
Apparel Retailers, Inc. 12 3/4%,
8/15/05 Caa $ 5,130,000 $ 3,078,000
Lamonts Apparel Corp. 10 1/4%,
11/1/99 - 2,067,000 1,591,590
Specialty Retailers, Inc., 11%,
8/15/03 B3 110,000 107,250
4,776,840
DRUG STORES - 0.7%
Thrifty Payless, Inc. 12 1/4%,
4/15/04 B3 3,750,000 3,787,500
GROCERY STORES - 0.2%
Farm Fresh Holdings Corp.
14 1/4%, 10/1/02 (f) B3 1,385,473 1,280,704
RETAIL & WHOLESALE, MISCELLANEOUS - 1.7%
Barrys Jewelers, Inc. 11%,
12/22/00 - 1,595,000 1,563,100
Color Tile, Inc. 10 3/4%,
12/15/01 B2 7,750,000 7,517,500
9,080,600
TOTAL RETAIL & WHOLESALE 18,925,644
SERVICES - 2.4%
LEASING & RENTAL - 0.3%
Acme Holdings, Inc. 11 3/4%,
6/1/00 B3 2,930,000 1,318,500
PRINTING - 1.1%
BFP Holdings Corp. 0%, 4/15/04
($1000 sr. disc. note Series A
& Class D) (f) Caa 10,000,000 5,600,000
SERVICES - 1.0%
Comdata Network, Inc. 13 1/4%,
12/15/02 B3 3,500,000 3,876,250
Scotsman Holdings, Inc. 0%,
3/1/04 (d)(f) - 1,870,000 1,670,060
5,546,310
TOTAL SERVICES 12,464,810
TECHNOLOGY - 0.6%
ELECTRONICS - 0.6%
Berg Electronics 11 3/8%, 5/1/03 B3 3,130,000 3,239,550
TRANSPORTATION - 0.6%
AIR TRANSPORTATION - 0.6%
US Air, Inc.:
9 5/8%, 9/1/94 B1 $ 1,280,000 $ 1,113,600
10 3/8%, 3/1/13 B1 2,680,000 2,334,950
3,448,550
UTILITIES - 4.9%
CELLULAR - 4.9%
Cencall Communications Corp. 0%,
1/15/04 Caa 4,970,000 2,783,200
Dial Call Communications, Inc. 0%,
12/15/05 (d)(f) Caa 2,800,000 1,568,000
Horizon Cellular Telephone
0%, 10/1/00 (d) Caa 6,800,000 4,692,000
Mobilmedia Communications, Inc.
0%, 12/1/03 (d) B3 14,770,000 8,714,300
Nextel Communications, Inc.
0%, 8/15/04 (d) B3 10,750,000 6,181,250
Pagemart, Inc. 0%, 11/1/00 (f) - 33,500 2,093,624
26,032,374
TOTAL NONCONVERTIBLE BONDS 412,302,527
TOTAL CORPORATE BONDS
(Cost $428,989,427) 414,461,743
FOREIGN GOVERNMENT OBLIGATIONS - 0.9%
Argentina Republic, Brady euro 4%,
3/31/23 (g) (Cost $5,659,375) - 10,000,000 4,937,500
COLLATERALIZED MORTGAGE
OBLIGATIONS - 0.9%
CS First Boston Mortgage Securities
Corp. 6.4769%, 1/25/28 (f) 3,025,000 2,400,148
Nomura Asset Securities Corp. Commerical
Pass-Through Cert. Series 1994-MD1
Class B-1 8.4253%, 3/25/18 3,260,000 2,539,744
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS (Cost $5,509,522) 4,939,892
SHARES
COMMON STOCKS - 2.1%
BASIC INDUSTRIES - 0.2%
IRON & STEEL - 0.2%
Algoma Steel, Inc. 86,068 808,881
CONSTRUCTION & REAL ESTATE - 0.1%
BUILDING MATERIALS - 0.0%
Adience, Inc. 84,365 84,365
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - 0.0%
Robertson Ceco Corp. 32,974 $ 94,800
REAL ESTATE - 0.1%
MBO Properties, Inc. 177,583 710,332
TOTAL CONSTRUCTION & REAL ESTATE 889,497
DURABLES - 0.1%
TEXTILES & APPAREL - 0.1%
Hat Brands, Inc. (a):
(warrants) (e) 27,465 315,854
Unit Trust 340,000 340,000
655,854
ENERGY - 0.1%
OIL & GAS - 0.1%
Mesa, Inc. 133,212 749,318
FINANCE - 0.1%
SECURITIES INDUSTRY - 0.1%
ECM Corp. LP interest (f) 3,000 300,000
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
ELECTRICAL EQUIPMENT - 0.0%
Ampex Corp.:
Class A (warrants) (a) 57,344 57,344
Class C 286 290
57,634
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Terex Corp. (rights) (a) 3,150 3,150
Thermadyne Holdings Corp. 65,418 768,662
771,812
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 829,446
MEDIA & LEISURE - 1.0%
BROADCASTING - 0.4%
Citicasters, Inc. 115,526 2,021,705
ENTERTAINMENT - 0.2%
Live Entertainment, Inc. (warrants) (a)(e):
$2.00 232,000 232,000
$2.72 221,765 221,765
Sun International Hotels Ltd. 15,285 382,125
835,890
LODGING & GAMING - 0.3%
Bally Entertainment Corp. 102,017 663,111
Bally Gaming Intl., Inc. (warrants) (a) 90,000 652,500
Boyd Gaming Corp. 12,000 177,000
Resorts International, Inc. 130,480 122,325
Trump Plaza Holding Associates
(warrants) (a) 270 175,500
1,790,436
PUBLISHING - 0.0%
General Media, Inc. (warrants) (a) 1,310 $ 13,100
RESTAURANTS - 0.1%
American Restaurants Group
Holdings, Inc. 5,557 138,925
Back Bay Restaurant Group, Inc. 45,986 609,315
748,240
TOTAL MEDIA & LEISURE 5,409,371
NONDURABLES - 0.0%
BEVERAGES - 0.0%
Brown Bottling Co. (warrants) (a) 1,424 8,544
RETAIL & WHOLESALE - 0.2%
APPAREL STORES - 0.0%
Lamonts Apparel, Inc. 35,870 44,839
DRUG STORES - 0.0%
Thrifty Payless Holdings, Inc. Class C 71,250 160,313
GENERAL MERCHANDISE STORES - 0.0%
Hills Stores Co. 613 11,647
GROCERY STORES - 0.1%
FF Holdings Corp. (e) 33,900 67,800
Food 4 Less Holdings, Inc. (warrants) (a) 9,348 283,712
Grand Union Co. (warrants) (a) 342 206,911
558,423
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
Barrys Jewelers, Inc. 227,883 206,519
Barrys Jewelers, Inc. (warrants) (a) 5,697 1,424
Finlay Enterprises, Inc. 3,750 46,875
254,818
TOTAL RETAIL & WHOLESALE 1,030,040
SERVICES - 0.1%
Scotsman Holdings, Inc. 15,281 199,938
Vestar/LPA Investment, Corp. 5,177 134,602
334,540
UTILITIES - 0.0%
CELLULAR - 0.0%
Dial Page, Inc. (warrants) (a)(f) 4,321 43,210
ELECTRIC UTILITY - 0.0%
Eastern Utilities Associates 3 69
Northeast Utilities Associates (warrants) (a) 21,789 32,684
32,753
GAS - 0.0%
UGI Corp. (warrants) (a) 14,033 15,787
TOTAL UTILITIES 91,750
TOTAL COMMON STOCKS
(Cost $9,993,794) 11,107,241
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
PREFERRED STOCKS - 5.8%
CONVERTIBLE PREFERRED STOCKS - 2.1%
BASIC INDUSTRIES - 0.3%
IRON & STEEL - 0.3%
Ico, Inc. $1.6875 76,000 $ 1,520,000
METALS & MINING - 0.0%
Kaiser Aluminum Corp. $0.96 12,200 123,525
TOTAL BASIC INDUSTRIES 1,643,525
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Ampex Corp. 8% 1,981 633,920
MEDIA & LEISURE - 0.0%
LODGING & GAMING - 0.0%
Bally Entertainment Corp., exchangeable 5,178 181,230
NONDURABLES - 0.9%
TOBACCO - 0.9%
RJR Nabisco Holdings Corp., depositary shares
representing 1/4 share 750,000 4,687,500
SERVICES - 0.8%
La Petite Holdings Corp. 160,800 4,221,000
TOTAL CONVERTIBLE PREFERRED STOCKS 11,367,175
NONCONVERTIBLE PREFERRED STOCKS - 3.7%
BASIC INDUSTRIES - 0.0%
IRON & STEEL - 0.0%
Stelco, Inc. 7.76% 7,207 108,112
CONSTRUCTION & REAL ESTATE - 0.5%
CONSTRUCTION - 0.5%
UDC Homes, Inc. prime exchangeable 312,477 2,812,321
ENERGY - 0.9%
OIL & GAS - 0.9%
Gulf Canada Resources Ltd.:
Series 1 1,890,742 4,608,684
Series 2 (e) 31,009 81,399
4,690,083
FINANCE - 0.8%
CREDIT & OTHER FINANCE - 0.8%
National Intergroup, Inc., $4.20 exchangeable 128,281 4,457,765
MEDIA & LEISURE - 0.9%
ENTERTAINMENT - 0.9%
Live Entertainment, Inc. pay-in-kind 581,895 4,582,422
SERVICES - 0.0%
Town & Country Corp. exchangeable 4,000 26,000
TECHNOLOGY - 0.6%
ELECTRONICS - 0.6%
Berg Electronics Holding Corp. $3.4687 119,810 $ 2,995,250
TOTAL NONCONVERTIBLE PREFERRED
STOCKS 19,671,953
TOTAL PREFERRED STOCKS
(Cost $32,352,967) 31,039,128
PRINCIPAL
AMOUNT
OTHER SECURITIES - 0.2%
PURCHASED BANK DEBT - 0.2%
Leslie Fay Cos., Inc:
revolving loan $ 685,855 534,963
term loan 777,600 606,530
TOTAL OTHER SECURITIES
(Cost $1,190,769) 1,141,493
MATURITY
AMOUNT
REPURCHASE AGREEMENTS - 12.5%
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 4.29% dated
6/30/94 due 7/1/94 $ 67,060,990 67,053,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $550,748,854) $ 534,679,997
LEGEND:
(c) Non-income producing.
(c) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(c) Principal amount is stated in United States dollars unless otherwise
noted.
CAD - Canadian dollar
(c) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(c) 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
Cafeteria Operated LP 11%,
6/30/98 6/24/93 $ 5,600,000
FF Holdings Corp. 10/2/92 $ 135,753
Gulf Canada Resources Ltd. Series 2 10/15/93 $ 76,940
Hat Brands, Inc.:
12 5/8%, 9/15/02 2/22/94 $ 680,000
(warrants) 9/2/92 -
Insilco Corp. 9 1/2%, 7/1/97 7/14/93 $ 3,964,950
Leslie Fay Companies, Inc.:
9.53%, 1/15/00 7/19/93 $ 512,312
10.54%, 1/15/02 7/19/93 $ 404,156
Littlefield Co. 10%, 8/31/94 2/28/94 $ 2,750,000
Live Entertainment, Inc.:
12%, 9/15/94 3/23/93 $ 6,897,420
$2.00 (warrants) 3/23/93 $ 220,717
$2.72 (warrants) 3/23/93 $ 131,863
New Street Capital Corp. unit
12%, 2/28/98 2/25/94 $ 1,060,000
Rexnord Holdings, Inc. 11 7/8%,
3/1/09 10/15/92 $ 495,000
(c) 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 $63,658,979 or 12.6% of net
assets.
(c) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(c) Non-income producing-issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
OTHER INFORMATION:
Purchases and sales of securities, other than short-term securities,
aggregated $428,458,888 and $299,123,580, respectively.
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 S&P
RATINGS RATINGS
Aaa, Aa, A 0.0% AAA, AA, A 0.0%
Baa 0.0% BBB 0.0%
Ba 3.6% BB 10.6%
B 41.0% B 29.4%
Caa 9.3% CCC 8.1%
Ca, C 1.2% CC, C 0.3%
D 1.2%
The percentage not rated by either S&P or Moody's amounted to 23.0%
including long-term debt categorized as other securities. FMR has
determined that unrated debt securities that are lower quality account for
23.0% of the total value of investment in securities.
INCOME TAX INFORMATION:
At June 30, 1994, the aggregate cost of investment securities for income
tax purposes was $550,766,143. Net unrealized depreciation aggregated
$16,086,146, of which $7,274,646 related to appreciated investment
securities and $23,360,792 related to depreciated investment securities.
FIDELITY INVESTMENTS
PUBLISHING OPERATION
617-330-0126
FIDELITY MAGELLAN FUND
Statement of Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, 1994 (Unaudited)
ASSETS
Investment in securities, at value (including repurchase agreements of $67,053,000) (cost $550,748,854) $ 534,679,997
(Notes 1 and 2) - See accompanying schedule
Cash 788
Receivable for investments sold 9,908,486
Receivable for fund shares sold 405,697
Dividends receivable 176,758
Interest receivable 7,384,537
Other receivables 6,747
Total assets 552,563,010
LIABILITIES
Payable for investments purchased $ 20,648,858
Payable for fund shares redeemed 26,148,135
Accrued management fee 268,553
Other payables and accrued expenses 56,573
Total liabilities 47,122,119
NET ASSETS $ 505,440,891
Net Assets consist of (Note 1):
Paid in capital $ 495,787,184
Undistributed net investment income 19,554,039
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 6,168,604
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies (16,068,936)
NET ASSETS, for 46,913,230 shares outstanding $ 505,440,891
NET ASSET VALUE, offering price and redemption price per share ($505,440,891 (divided by) 46,913,230 shares) $10.77
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Ended June 30, 1994 (Unaudited)
INVESTMENT INCOME $ 1,043,394
Dividends
Interest 20,439,827
Total income 21,483,221
EXPENSES
Management fee (Note 3) $ 1,468,345
Transfer agent fees (Note 3) 74,875
Accounting fees and expenses (Note 3) 96,372
Non-interested trustees' compensation 1,597
Custodian fees and expenses 539
Registration fees 14
Audit 17,670
Legal 593
Interest (Notes 4 and 5) 11,576
Miscellaneous 1,214
Total expenses 1,672,795
Net investment income 19,810,426
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1)
Net realized gain (loss) on:
Investment securities 6,367,152
Foreign currency transactions (4,055) 6,363,097
Change in net unrealized appreciation (depreciation) on:
Investment securities (32,443,869)
Assets and liabilities in foreign currencies (79) (32,443,948)
Net gain (loss) (26,080,851)
Net increase (decrease) in net assets resulting from operations $ (6,270,425)
</TABLE>
Statement of Changes in Net Assets
DRAFT
SIX MONTHS ENDED
JUNE 30, 1994 YEAR ENDED
INCREASE (DECREASE) IN NET ASSETS (UNAUDITED) DECEMBER 31, 1993
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 19,810,426 $ 29,828,034
Net investment income
Net realized gain (loss) 6,363,097 16,098,896
Change in net unrealized appreciation (depreciation) (32,443,948) 14,925,422
Net increase (decrease) in net assets resulting from operations (6,270,425) 60,852,352
Distributions to shareholders: (30,631,598) (16,615,684)
From net investment income
In excess of net investment income - (748,060)
From net realized gain (15,525,605) (1,255,210)
Total distributions (46,157,203) (18,618,954)
Share transactions 306,052,082 445,327,008
Net proceeds from sales of shares
Reinvestment of distributions 46,157,203 18,618,954
Cost of shares redeemed (258,272,071) (242,839,207)
Net increase (decrease) in net assets resulting from share transactions 93,937,214 221,106,755
Total increase (decrease) in net assets 41,509,586 263,340,153
NET ASSETS
Beginning of period 463,931,305 200,591,152
End of period (including undistributed net investment income of $19,554,039 and $29,661,902, $ 505,440,891 $ 463,931,305
respectively)
OTHER INFORMATION
Shares
Sold 27,213,694 40,016,073
Issued in reinvestment of distributions 4,073,892 1,809,421
Redeemed (23,083,518) (21,658,432)
Net increase (decrease) 8,204,068 20,167,062
</TABLE>
Financial Highlights
DRAFT
SIX MONTHS ENDED
JUNE 30, 1994 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1993 1992 1991 1990 1989
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.990 $ 10.820 $ 9.550 $ 7.070 $ 8.110 $ 9.660
Income from Investment Operations .381 .728 .790 .890 .858 1.202
Net investment income
Net realized and unrealized gain (loss) (.501) 1.332 1.290 1.590 (1.040) (1.550)
Total from investment operations (.120) 2.060 2.080 2.480 (.182) (.348)
Less Distributions (.730) (.794) (.810) - (.858) (1.202)
From net investment income
In excess of net investment income - (.036) - - - -
From net realized gain on investments (.370) (.060) - - - -
Total distributions (1.100) (.890) (.810) - (.858) (1.202)
Net asset value, end of period $ 10.770 $ 11.990 $ 10.820 $ 9.550 $ 7.070 $ 8.110
TOTAL RETURN B, C (1.45)% 20.40% 23.17% 35.08% (2.23)% (4.17)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 505,441 $ 463,931 $ 200,591 $ 70,060 $ 29,990 $ 33,747
Ratio of expenses to average net assets D .70%A .64% .67% .97% 1.00% .93%
Ratio of expenses to average net assets .70%A .66% .67% .97% 1.12% .93%
before expense reductions D
Ratio of net investment income to average net 8.32%A 8.69% 10.98% 12.94% 11.36% 12.94%
assets
Portfolio turnover rate 139%A 155% 160% 154% 156% 124%
</TABLE>
1. ANNUALIZED
2. TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
3. THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
4. SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS.
VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO
INVESTMENTS/JUNE 30, 1994 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN
SECURITIES)
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - 79.0%
AEROSPACE & DEFENSE - 0.4%
DEFENSE ELECTRONICS - 0.4%
Loral Corp. 199,000 $ 6,965,000
BASIC INDUSTRIES - 12.4%
CHEMICALS & PLASTICS - 9.5%
Akzo NV Ord. 103,100 11,059,871
du Pont (E.I.) de Nemours & Co. 252,500 14,739,671
Eastman Chemical Co. 259,800 12,405,450
GEON 254,400 6,614,400
Georgia Gulf Corp. (a) 196,100 6,716,425
Grace (W.R.) & Co. 229,100 9,135,363
Great Lakes Chemical Corp. 230,100 12,454,163
Hercules, Inc. 30,700 3,284,900
Hoechst AG Ord. 49,300 10,062,175
Imperial Chemical Industries PLC:
ADR 61,000 2,897,500
Ord. 360,700 4,327,275
Lyondell Petrochemical Co. 379,000 9,332,875
Methanex Corp. (a) 512,500 5,974,382
Nalco Chemical Co. 359,100 11,446,313
OM Group, Inc. (a) 331,900 6,638,000
Olin Corp. 101,600 5,473,700
Rohm & Haas Co. 31,400 1,954,650
Union Carbide Corp. 758,800 20,297,900
Witco Corp. 208,500 6,202,875
161,017,888
IRON & STEEL - 0.3%
Avesta Sheffield AB Ord. free shares (a) 193,700 1,315,707
Lukens, Inc. 136,500 4,470,375
5,786,082
METALS & MINING - 1.8%
Alcan Aluminium Ltd. 548,900 12,400,595
Outokumpu OY Class A (a) 84,000 1,368,707
Reynolds Metals Co. 335,900 16,123,200
29,892,502
PACKAGING & CONTAINERS - 0.0%
Ball Corp. 23,332 606,632
PAPER & FOREST PRODUCTS - 0.8%
Champion International Corp. 235,100 7,728,913
Temple-Inland, Inc. 129,400 6,162,675
13,891,588
TOTAL BASIC INDUSTRIES 211,194,692
CONGLOMERATES - 0.6%
Dial Corp. (The) 60,500 2,586,375
United Technologies Corp. 120,600 7,748,550
10,334,925
CONSTRUCTION & REAL ESTATE - 1.3%
REAL ESTATE - 0.1%
South West Property Trust, Inc. 134,200 $ 1,643,950
REAL ESTATE INVESTMENT TRUSTS - 1.2%
Amli Residential Properties Trust (SBI) 73,000 1,569,500
Camden Property Trust (SBI) (a) 148,300 3,633,350
Debartolo Realty Corp. 211,900 3,099,038
Liberty Property Trust (SBI) 79,400 1,588,000
Nationwide Health Properties, Inc. 31,400 1,224,600
Simon Properties Group, Inc. (a) 118,200 3,147,075
Smith (Charles E.) Residential Realty, Inc. 185,000 4,740,679
Vornado Realty Trust 58,100 2,120,650
21,122,892
TOTAL CONSTRUCTION & REAL ESTATE 22,766,842
DURABLES - 1.8%
AUTOS, TIRES, & ACCESSORIES - 0.9%
Autoliv AB (a)(e) 90,000 2,045,588
BMW AG (a) 14,981 7,360,975
Johnson Controls, Inc. 125,600 6,075,900
15,482,463
TEXTILES & APPAREL - 0.9%
Kellwood Co. 217,100 4,640,513
Liz Claiborne, Inc. 333,400 6,668,000
Unifi, Inc. 127,800 2,987,325
Westpoint Stevens, Inc. Class A (a) 3,800 52,963
14,348,801
TOTAL DURABLES 29,831,264
ENERGY - 10.1%
ENERGY SERVICES - 3.3%
Halliburton Co. 354,400 11,961,000
Helmerich & Payne, Inc. 130,400 3,455,600
McDermott International, Inc. 401,800 10,045,000
Schlumberger Ltd. 506,300 29,935,003
55,396,603
OIL & GAS - 6.8%
Amerada Hess Corp. 403,300 19,862,525
British Petroleum PLC ADR 708,800 50,856,400
Burlington Resources, Inc. 127,900 5,291,863
Chevron Corp. 169,000 7,076,875
Coastal Corp. (The) 165,100 4,457,700
Mobil Corp. 155,400 12,684,525
Murphy Oil Corp. 98,700 4,219,425
Royal Dutch Petroleum Co. 70,100 7,334,213
Total Compagnie Francaise des Petroles
Class B 70,000 4,032,329
115,815,855
TOTAL ENERGY 171,212,458
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
FINANCE - 13.0%
BANKS - 4.8%
Banc One Corp. 474,370 $ 16,247,219
Bank of New York Co., Inc. 589,700 17,027,588
Chase Manhattan Corp. 184 7,038
Chemical Banking Corp. 462,200 17,794,700
Comerica, Inc. 258,900 7,313,925
First Chicago Corp. 122,200 5,880,875
First Fidelity Bancorporation 21 974
Fleet Financial Group, Inc. 141,000 5,322,750
NationsBank Corp. 136,619 7,018,801
Regions Financial Corp. 156,200 5,447,475
Signet Banking Corp. 628 25,356
82,086,701
CREDIT & OTHER FINANCE - 3.0%
American Express Co. 816,600 21,027,450
Beneficial Corp. 47,200 1,722,800
Dean Witter Discover & Co. 419,600 15,735,000
Equitable Companies, Inc. (a) 129,200 2,293,300
GFC Financial Corp. 311,750 10,404,656
Household International, Inc. 41 1,394
51,184,600
FEDERAL SPONSORED CREDIT - 1.9%
Federal Home Loan Mortgage Corporation 137,400 8,312,700
Federal National Mortgage Association 285,300 23,822,550
32,135,250
INSURANCE - 2.5%
Allstate Corp. 319,900 7,597,625
General Re Corp. 133,000 14,497,000
SAFECO Corp. 135,100 7,514,938
Travelers, Inc. (The) 420,633 13,565,425
43,174,988
SAVINGS & LOANS - 0.6%
Ahmanson (H.F.) & Co. 198,900 3,754,238
GP Financial Corp. (a) 262,600 5,842,850
9,597,088
SECURITIES INDUSTRY - 0.2%
Lehman Brothers Holdings, Inc. 227,240 3,437,005
TOTAL FINANCE 221,615,632
HEALTH - 10.8%
DRUGS & PHARMACEUTICALS - 6.9%
Allergan, Inc. 615,500 13,310,188
American Cyanamid Co. 751,100 42,061,600
Lilly (Eli) & Co. 229,500 13,052,813
Pfizer, Inc. 363,000 22,914,375
Schering-Plough Corp. 239,900 $ 14,693,875
Warner-Lambert Co. 154,900 10,223,400
116,256,251
MEDICAL EQUIPMENT & SUPPLIES - 3.9%
Baxter International, Inc. 561,000 14,726,250
Becton, Dickinson & Co. 137,900 5,636,663
Bergen Brunswig Corp. Class A 304,000 5,092,000
Johnson & Johnson 230,100 9,865,538
Mallinckrodt Group, Inc. 376,900 12,249,250
McKesson Corp. 46,200 3,332,175
St. Jude Medical, Inc. 451,100 14,660,750
65,562,626
TOTAL HEALTH 181,818,877
INDUSTRIAL MACHINERY & EQUIPMENT - 4.5%
ELECTRICAL EQUIPMENT - 2.3%
General Electric Co. 851,000 39,677,875
INDUSTRIAL MACHINERY & EQUIPMENT - 0.9%
Caterpillar, Inc. 87,100 8,710,000
Parker-Hannifin Corp. 143,000 6,095,375
14,805,375
POLLUTION CONTROL - 1.3%
Browning-Ferris Industries, Inc. 385,300 11,703,488
Safety Kleen Corp. 23,400 397,800
WMX Technologies, Inc. 344,400 9,126,600
21,227,888
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 75,711,138
MEDIA & LEISURE - 0.5%
ENTERTAINMENT - 0.2%
Cedar Fair LP 131,100 4,227,975
PUBLISHING - 0.3%
Houghton Mifflin Co. 109,500 4,845,375
TOTAL MEDIA & LEISURE 9,073,350
NONDURABLES - 5.8%
FOODS - 1.0%
ConAgra, Inc. 413,300 12,605,650
Dole Food, Inc. 168,200 4,541,400
17,147,050
HOUSEHOLD PRODUCTS - 0.4%
Premark International, Inc. 91,900 6,915,475
TOBACCO - 4.4%
Philip Morris Companies, Inc. 958,900 49,383,350
RJR Nabisco Holdings Corp. (a) 2,329,400 14,267,575
UST, Inc. 396,800 10,763,200
74,414,125
TOTAL NONDURABLES 98,476,650
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
RETAIL & WHOLESALE - 5.3%
APPAREL STORES - 1.4%
Charming Shoppes, Inc. 231,700 $ 2,172,188
Limited, Inc. (The) 458,800 7,914,300
Melville Corp. 317,100 12,287,625
Ross Stores, Inc. (a) 25,500 372,938
22,747,051
GENERAL MERCHANDISE STORES - 1.7%
Bradlees, Inc. 33,600 478,800
Dayton Hudson Corp. 108,200 8,764,200
Mercantile Stores Co., Inc. 90,300 2,900,888
Sears, Roebuck & Co. 246,000 11,808,000
Wal-Mart Stores, Inc. 209,400 5,077,950
29,029,838
GROCERY STORES - 2.0%
Fleming Companies, Inc. 485,178 13,463,690
Great Atlantic & Pacific Tea Co., Inc. 254,900 5,480,350
Supervalu, Inc. 512,100 15,491,025
34,435,065
RETAIL & WHOLESALE, MISCELLANEOUS - 0.2%
Duty Free International, Inc. 274,000 2,911,250
TOTAL RETAIL & WHOLESALE 89,123,204
SERVICES - 1.3%
PRINTING - 1.1%
Alco Standard Corp. 153,500 8,768,688
Donnelley (R.R.) & Sons Co. 367,800 10,206,450
18,975,138
SERVICES - 0.2%
Jostens, Inc. 178,200 2,873,475
TOTAL SERVICES 21,848,613
TECHNOLOGY - 2.6%
COMPUTERS & OFFICE EQUIPMENT - 1.9%
International Business Machines Corp. 291,300 17,113,875
Xerox Corp. 161,400 15,776,850
32,890,725
PHOTOGRAPHIC EQUIPMENT - 0.7%
Polaroid Corp. 345,000 10,996,875
TOTAL TECHNOLOGY 43,887,600
TRANSPORTATION - 1.4%
RAILROADS - 1.2%
CSX Corp. 110,900 8,372,950
Canadian Pacific Ltd. Ord. 553,800 8,157,363
Union Pacific Corp. 60,400 3,420,150
19,950,463
TRUCKING & FREIGHT - 0.2%
Yellow Corp. 228,800 $ 3,975,400
TOTAL TRANSPORTATION 23,925,863
UTILITIES - 7.2%
ELECTRIC UTILITY - 1.7%
DPL, Inc. 247,325 4,884,669
Entergy Corp. 316,000 7,821,000
Illinova Corp. 194,400 3,645,000
Veba Vereinigte Elektrizetaets & Bergwerks
AG Ord. 39,900 12,529,623
28,880,292
GAS - 0.2%
Consolidated Natural Gas Co. 40,200 1,517,550
Pacific Enterprises 83,700 1,663,538
3,181,088
TELEPHONE SERVICES - 5.3%
Ameritech Corp. 236,000 9,027,000
BellSouth Corp. 209,000 12,905,750
Koninklijke PTT Nederland (e) 104,400 2,925,898
NYNEX Corp. 326,500 12,366,188
Rochester Telephone Corp. 468,600 10,602,075
Southwestern Bell Corp. 433,300 18,848,550
Telefonica de Espana SA Ord. 494,100 6,668,374
Telefonica de Espana SA sponsored ADR 103,400 4,161,850
U.S. West, Inc. 308,200 12,905,875
90,411,560
TOTAL UTILITIES 122,472,940
TOTAL COMMON STOCKS
(Cost $1,295,677,886) 1,340,259,048
PREFERRED STOCKS - 2.1%
CONVERTIBLE PREFERRED STOCKS - 1.9%
BASIC INDUSTRIES - 0.2%
METALS & MINING - 0.2%
Alumax, Inc., Series A, $4.00 20,566 2,365,090
Reynolds Metals Co. $3.31 32,700 1,630,913
3,996,003
ENERGY - 0.2%
ENERGY SERVICES - 0.2%
Chiles Offshore Corp. $1.50 (a) 119,100 2,709,525
NONDURABLES - 0.4%
TOBACCO - 0.4%
RJR Nabisco Holdings Corp., Series A,
depositary shares representing 1/4 share 1,113,000 6,956,250
VALUE MOODY'S PRINCIPAL VALUE
SHARES (NOTE 1) RATINGS (C) AMOUNT (D) (NOTE 1)
PREFERRED STOCKS - CONTINUED
CONVERTIBLE PREFERRED - CONTINUED
RETAIL & WHOLESALE - 0.5%
APPAREL STORES - 0.5%
TJX Companies, Inc., Series C, $3.125 147,300 $ 7,788,488
SERVICES - 0.2%
PRINTING - 0.2%
Alco Standard Corp., Series AA, $2.30 (a) 62,000 4,154,000
TRANSPORTATION - 0.4%
RAILROADS - 0.4%
Burlington Northern Railroad Co. 6.2% 111,100 7,027,075
TOTAL CONVERTIBLE PREFERRED STOCKS 32,631,341
NONCONVERTIBLE PREFERRED STOCKS - 0.2%
FINANCE - 0.2%
BANKS - 0.2%
Riggs National Corp. 136,300 3,305,275
MEDIA & LEISURE - 0.0%
ENTERTAINMENT - 0.0%
Live Entertainment, Inc., Series B,
pay-in-kind (a) 8,555 67,371
UTILITIES - 0.0%
ELECTRIC UTILITY - 0.0%
Gulf States Utilities Co., Series B, ARP 631 31,392
TOTAL NONCONVERTIBLE PREFERRED STOCKS 3,404,038
TOTAL PREFERRED STOCKS
(Cost $38,654,900) 36,035,379
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (D) (NOTE 1)
CORPORATE BONDS - 3.3%
CONVERTIBLE BONDS - 0.7%
CONSTRUCTION & REAL ESTATE - 0.2%
REAL ESTATE INVESTMENT TRUSTS - 0.2%
Centerpoint Properties 8.22%,
1/15/04 - $ 1,510,000 1,676,100
Liberty Property Limited Partnership
8%, 7/1/01 - 750,000 746,250
Sizeler Property Investors, Inc.
8%, 7/15/03 - 1,500,000 1,485,000
3,907,350
DURABLES - 0.3%
TEXTILES & APPAREL - 0.3%
Interface, Inc. 8%, 9/15/13 Ba3 $ 1,179,000 $ 1,102,365
Unifi, Inc. 6%, 3/15/02 Baa1 3,990,000 3,975,037
5,077,402
ENERGY - 0.0%
ENERGY SERVICES - 0.0%
Lone Star Technologies, Inc. euro
8%, 8/27/02 - 290,000 234,900
FINANCE - 0.2%
BANKS - 0.2%
Bank of Boston Corp. 7 3/4%,
6/15/11 Baa2 1,242,000 1,363,095
Bank of New York Co., Inc. 7 1/2%,
8/15/01 Baa1 1,150,000 1,714,937
3,078,032
RETAIL & WHOLESALE - 0.0%
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Fabri-Centers of America, Inc.
6 1/4%, 3/1/02 B2 250,000 192,500
TOTAL CONVERTIBLE BONDS 12,490,184
NONCONVERTIBLE BONDS - 2.6%
AEROSPACE & DEFENSE - 0.1%
DEFENSE ELECTRONICS - 0.1%
Trancor, Inc. 10 7/8%, 8/15/01 B2 1,220,000 1,244,400
BASIC INDUSTRIES - 1.0%
CHEMICALS & PLASTICS - 0.6%
IMC Fertilizer Group, Inc. 9 1/4,
10/1/00 B3 10,540,000 10,013,000
PACKAGING & CONTAINERS - 0.0%
Owens Illinois, Inc. 10 1/4%,
4/1/99 B2 350,000 351,750
PAPER & FOREST PRODUCTS - 0.4%
Stone Container Corp. 9 7/8%,
2/1/01 B1 $ 7,760,000 7,178,000
TOTAL BASIC INDUSTRIES 17,542,750
CONGLOMERATES - 0.1%
Coltec Industries, Inc. 10 1/4%,
4/1/02 B1 910,000 919,100
DURABLES - 0.6%
TEXTILES & APPAREL - 0.6%
Westpoint Stevens, Inc.:
8 3/4%, 12/15/01 B1 2,660,000 2,427,250
9 3/8%, 12/15/05 B3 7,850,000 7,123,875
9,551,125
MOODY'S PRINCIPAL VALUE MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (C) (NOTE 1) RATINGS (B) AMOUNT (C) (NOTE 1)
CORPORATE BONDS - CONTINUED
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - 0.2%
BANKS - 0.0%
Signet Banking Corp.:
5 1/4%, 5/15/97 (f) Baa1 $ 340,000 $ 339,150
5 1/4%, 4/15/98 (f) Baa1 190,000 189,525
528,675
CREDIT & OTHER FINANCE - 0.2%
Chrysler Financial Corp. 9 1/2%,
12/15/99 A3 2,990,000 3,222,891
TOTAL FINANCE 3,751,566
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Joy Technologies, Inc. 10 1/4%,
9/1/03 B1 3,020,000 2,948,275
MEDIA & LEISURE - 0.1%
BROADCASTING - 0.0%
Turner Broadcasting System, Inc.
12%, 10/15/01 B1 60,000 63,524
ENTERTAINMENT - 0.0%
Live Entertainment, Inc. 10%,
9/1/98 - 56,900 46,658
LODGING & GAMING - 0.1%
Host Marriott Corp.:
9 1/8%, 12/1/00 B1 840,000 831,600
9 7/8%, 5/1/01 B1 290,000 290,000
10 1/2%, 5/1/06 B1 630,000 630,000
1,751,600
TOTAL MEDIA & LEISURE 1,861,782
NONDURABLES - 0.3%
BEVERAGES - 0.3%
Canandaigua Wine, Inc. 8 3/4%,
12/15/03 B1 $ 5,700,000 5,044,500
UTILITIES - 0.0%
GAS - 0.0%
Columbia Gas Systems Inc. 9.91%,
5/28/20 (b) - 170,000 207,400
Ferrellgas, Inc. 12%, 8/1/96 Ba3 110,000 119,350
SFP Pipeline Holdings, Inc.
exchangeable 0%, 8/15/10 (f) Baa3 470,000 573,400
900,150
TOTAL NONCONVERTIBLE BONDS 43,763,648
TOTAL CORPORATE BONDS
(Cost $58,651,982) 56,253,832
FOREIGN GOVERNMENT OBLIGATIONS - 1.1%
French Government OAT 8 1/2%,
4/25/03 (Cost $17,404,049) Aaa FRF 91,000,000 $ 17,815,543
U.S. TREASURY OBLIGATIONS - 6.7%
Bills, yield at date of purchase 4.23%,
9/29/94 (Cost $113,795,532) 115,000,000 113,809,750
MATURITY
AMOUNT
REPURCHASE AGREEMENTS - 7.8%
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 4.29% dated
6/30/94 due 7/1/94 $ 132,955,842 132,940,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,657,124,349) $ 1,697,113,552
LEGEND:
(c) Non-income producing
(c) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
(c) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(c) Principal amount is stated in United States dollars unless otherwise
noted.
FRF - French franc
(c) 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 $4,971,486 or 0.3% of net
assets.
(c) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
OTHER INFORMATION:
Purchases and sales of securities, other than short-term securities,
aggregated $1,244,362,972 and $912,463,930, respectively.
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 89.7%
United Kingdom 3.4
Germany 1.8
Canada 1.6
France 1.3
Netherlands 1.3
Others (individually less than 1%) 0.9
TOTAL 100.0%
INCOME TAX INFORMATION:
At June 30, 1994, the aggregate cost of investment securities for income
tax purposes was $1,657,389,427. Net unrealized appreciation aggregated
$39,724,125, of which $88,443,685 related to appreciated investment
securities and $48,719,560 related to depreciated investment securities.
Statement of Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, 1994 (Unaudited)
ASSETS
Investment in securities, at value (including repurchase agreements of $132,940,000) (cost $ 1,697,113,552
$1,657,124,349) (Notes 1 and 2) - See accompanying schedule
Cash 400
Receivable for investments sold 39,370,751
Receivable for fund shares sold 4,720,207
Dividends receivable 4,442,444
Interest receivable 1,529,321
Total assets 1,747,176,675
LIABILITIES
Payable for investments purchased $ 57,354,439
Payable for fund shares redeemed 801,179
Accrued management fee 729,950
Other payables and accrued expenses 162,210
Total liabilities 59,047,778
NET ASSETS $ 1,688,128,897
Net Assets consist of (Note 1):
Paid in capital $ 1,583,785,798
Undistributed net investment income 1,188,175
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 63,165,721
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 39,989,203
NET ASSETS, for 115,063,918 shares outstanding $ 1,688,128,897
NET ASSET VALUE, offering price and redemption price per share ($1,688,128,897 (divided by) 115,063,918 shares) $14.67
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Ended June 30, 1994 (Unaudited)
INVESTMENT INCOME $ 20,156,412
Dividends
Interest 6,234,337
Total income 26,390,749
EXPENSES
Management fee (Note 3) $ 3,903,891
Transfer agent fees (Note 3) 80,921
Accounting fees and expenses (Note 3) 297,231
Non-interested trustees' compensation 4,269
Custodian fees and expenses 67,780
Registration fees 37
Audit 15,822
Legal 4,477
Miscellaneous 11,698
Total expenses before reductions 4,386,126
Expense reductions (Note 6) (152,881) 4,233,245
Net investment income 22,157,504
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1)
Net realized gain (loss) on: 67,295,058
Investment securities
Foreign currency transactions (7,649) 67,287,409
Change in net unrealized appreciation (depreciation) on investment securities (76,239,276)
Net gain (loss) (8,951,867)
Net increase (decrease) in net assets resulting from operations $ 13,205,637
</TABLE>
Statement of Changes in Net Assets
DRAFT
SIX MONTHS ENDED
JUNE 30, 1994 YEAR ENDED
INCREASE (DECREASE) IN NET ASSETS (UNAUDITED) DECEMBER 31, 1993
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 22,157,504 $ 27,285,969
Net investment income
Net realized gain (loss) 67,287,409 70,742,090
Change in net unrealized appreciation (depreciation) (76,239,276) 46,208,348
Net increase (decrease) in net assets resulting from operations 13,205,637 144,236,407
Distributions to shareholders: (20,146,234) (23,402,249)
From net investment income
In excess of net investment - (2,791,192)
From net realized gain (68,533,800) -
Total distributions (88,680,034) (26,193,441)
Share transactions 468,185,104 665,403,591
Net proceeds from sales of shares
Reinvestment of distributions 88,680,033 26,157,025
Cost of shares redeemed (111,762,292) (83,982,840)
Net increase (decrease) in net assets resulting from share transactions 445,102,845 607,577,776
Total increase (decrease) in net assets 369,628,448 725,620,742
NET ASSETS
Beginning of period 1,318,500,449 592,879,707
End of period (including under (over) distribution of net investment income of $1,188,175 and $ 1,688,128,897 $ 1,318,500,449
($823,095), respectively)
OTHER INFORMATION
Shares
Sold 31,367,320 45,052,691
Issued in reinvestment of distributions 5,902,998 1,761,238
Redeemed (7,616,262) (5,646,913)
Net increase (decrease) 29,654,056 41,167,016
</TABLE>
Financial Highlights
DRAFT
SIX MONTHS ENDED
JUNE 30, 1994 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1993 1992 1991 1990 1989
SELECTED PER-SHARE DATA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.44 $ 13.40 $ 11.85 $ 9.51 $ 12.29 $ 11.01
Income from Investment Operations
Net investment income .21 .37 .40 .50 .58 .60
Net realized and unrealized gain (loss) (.02) 2.06 1.57 2.43 (2.38) 1.29
Total from investment operations .19 2.43 1.97 2.93 (1.80) 1.89
Less Distributions
From net investment income (.19) (.35) (.42) (.59) (.59) (.52)
In excess of net investment income - (.04) - - - -
From net realized gain (.77) - - - (.39) (.09)
Total distributions (.96) (.39) (.42) (.59) (.98) (.61)
Net asset value, end of period $ 14.67 $ 15.44 $ 13.40 $ 11.85 $ 9.51 $ 12.29
TOTAL RETURNB, C 1.15% 18.29% 16.89% 31.44% (15.29)% 17.34%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,688,129 $ 1,318,500 $ 592,880 $ 282,171 $ 154,080 $ 142,572
Ratio of expenses to average net assetsD .57%A .62% .65% .74% .78% .85%
Ratio of expenses to average net assets .59%A .62% .65% .74% -% -%
before expense reductionsD
Ratio of net investment income to average net 2.98%A 2.87% 3.52% 4.83% 6.01% 5.82%
assets
Portfolio turnover rate 136%A 120% 74% 107% 94% 78%
</TABLE>
1. ANNUALIZED
2. TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
3. THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
4. SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS.
VARIABLE INSURANCE PRODUCTS FUND: GROWTH PORTFOLIO
INVESTMENTS/JUNE 30, 1994 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF
INVESTMENT IN SECURITIES)
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - 86.2%
AEROSPACE & DEFENSE - 0.0%
Orbital Sciences Corporation (a) 11,200 $ 182,000
BASIC INDUSTRIES - 2.8%
CHEMICALS & PLASTICS - 1.5%
Airgas, Inc. (a) 288,200 7,601,275
du Pont (E.I.) de Nemours & Co. 90,000 5,253,750
GEON 59,000 1,534,000
Hanna (M.A.) Co. 150,000 3,806,250
Methanex Corp. (a) 91,900 1,071,309
Union Carbide Corp. 125,000 3,343,750
22,610,334
IRON & STEEL - 0.9%
Birmingham Steel Corp. 133,000 3,591,000
Nucor Corp. 152,800 10,466,800
14,057,800
PAPER & FOREST PRODUCTS - 0.4%
International Paper Co. 60,000 3,975,000
Weyerhaeuser Co. 60,000 2,400,000
6,375,000
TOTAL BASIC INDUSTRIES 43,043,134
CONGLOMERATES - 0.7%
Allied-Signal, Inc. 125,000 4,328,125
Dial Corp. (The) 70,000 2,992,500
ITT Corp. 50,000 4,081,250
11,401,875
CONSTRUCTION & REAL ESTATE - 1.3%
BUILDING MATERIALS - 0.2%
Tecumseh Products Co. Class A 30,400 1,413,600
York International Corp. 40,000 1,470,000
2,883,600
CONSTRUCTION - 0.6%
Oakwood Homes Corp. 234,000 5,499,000
Redman Industries (a) 81,000 1,336,500
Schuler Homes, Inc. (a) 190,000 3,277,500
10,113,000
ENGINEERING - 0.4%
Fluor Corp. 40,000 2,035,000
Glenayre Technologies, Inc. 110,000 4,317,500
6,352,500
REAL ESTATE INVESTMENT TRUSTS - 0.1%
Liberty Property Trust SBI 43,000 860,000
TOTAL CONSTRUCTION & REAL ESTATE 20,209,100
DURABLES - 5.0%
AUTOS, TIRES, & ACCESSORIES - 3.1%
Autozone, Inc. (a) 200,000 $ 4,875,000
Breed Technologies, Inc. (a) 150,000 4,162,500
Chrysler Corp. 150,000 7,068,750
Danaher Corp. 60,000 2,505,000
Ford Motor Co. 100,000 5,900,000
General Motors Corp. 225,000 11,306,250
Smith (A.O.) Corp. Class B 127,600 3,221,900
Suzuki Motor Corp. 225,000 2,990,866
TRW, Inc. 50,000 3,225,000
Toyota Motor Corp. ADR 65,000 2,900,625
48,155,891
CONSUMER ELECTRONICS - 1.0%
Fossil, Inc. 90,000 1,800,000
Harman International Industries, Inc. (a) 176,900 4,422,500
Matsushita Electric Industrial Co. Ltd. 75,000 1,377,473
Newell Co. 35,000 1,618,750
Sony Corp. ADR 40,000 2,430,000
Whirlpool Corp. 80,000 4,200,000
15,848,723
TEXTILES & APPAREL - 0.9%
Ashworth, Inc. (a) 150,000 1,256,250
Cygne Designs, Inc. (a) 45,000 967,500
Farah, Inc. (a) 125,400 1,739,925
Galey & Lord, Inc. (a) 65,600 1,115,200
Mohawk Industries Inc. (a) 92,900 1,625,750
Nine West Group, Inc. 60,000 1,560,000
St. John Knits (a) 28,900 801,975
Tokyo Style Co. Ltd. 55,000 1,093,861
Tommy Hilfiger (a) 109,300 4,344,675
14,505,136
TOTAL DURABLES 78,509,750
ENERGY - 2.4%
ENERGY SERVICES - 0.2%
Schlumberger Ltd. 49,100 2,903,038
OIL & GAS - 2.2%
Amerada Hess Corp. 56,200 2,767,850
Amoco Corp. 50,400 2,872,800
British Petroleum PLC ADR 50,000 3,587,500
Burlington Resources, Inc. 65,000 2,689,375
Canadian Natural Resources Ltd. (a) 163,300 2,331,593
Grad & Walker Energy Corp. 107,000 1,082,957
Inverness Petroleum Ltd. (a) 200,000 1,662,750
Murphy Oil Corp. 110,000 4,702,500
Northstar Energy Corp. (a) 223,200 2,501,065
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Petromet Resources Ltd. Ord. (a) 205,000 $ 1,352,340
Renaissance Energy Ltd. (a) 52,900 1,104,274
Rio Alto Exploration Ltd. (a) 184,400 1,199,784
Summit Resources Ltd. 175,000 1,138,623
Unocal Corp. 150,000 4,293,750
YPF Sociedad Anonima sponsored ADR
representing Class D shares 74,600 1,781,075
35,068,236
TOTAL ENERGY 37,971,274
FINANCE - 7.1%
BANKS - 2.6%
Bank of Boston Corp. 132,705 3,267,861
Bank of New York Co., Inc. 81,000 2,338,875
BankAmerica Corp. 50,000 2,287,500
Chemical Banking Corp. 100,000 3,850,000
Citicorp 75,378 3,005,698
First Union Corp. 40,000 1,845,000
Fleet Financial Group, Inc. 70,000 2,642,500
NationsBank Corp. 110,747 5,689,627
Norwest Corp. 150,000 3,918,750
PNC Financial Corp. 90,000 2,598,750
Shawmut National Corp. 135,000 2,970,000
Signet Banking Corp. 387 15,625
State Street Boston Corp. 115,000 4,441,875
Union Planters Corp. 45,000 1,203,750
40,075,811
CREDIT & OTHER FINANCE - 0.3%
Dean Witter Discover & Co. 90,000 3,375,000
Mercury Finance Co. 50,000 825,000
4,200,000
FEDERAL SPONSORED CREDIT - 2.8%
Federal Home Loan Mortgage Corporation 160,000 9,680,000
Federal National Mortgage Association 400,000 33,400,000
43,080,000
INSURANCE - 0.2%
Travelers, Inc. (The) 75,000 2,418,750
SAVINGS & LOANS - 1.1%
Anchor Bancorp Inc. (a) 77,800 1,205,900
Brooklyn Bancorp, Inc. 44,000 1,540,000
Charter One Financial Corp. 167,700 3,395,925
Collective Bancorp, Inc. 102,800 2,261,600
Commercial Federal Corp. (a) 40,400 949,400
Dime Bancorp, Inc. 176,700 1,744,913
Great Western Financial Corp. 43,100 791,963
Standard Federal Bank 124,600 $ 3,115,000
Washington Mutual Savings Bank 125,000 2,578,125
17,582,826
SECURITIES INDUSTRY - 0.1%
Nomura Securities Co. Ltd. (a) 80,000 1,932,014
TOTAL FINANCE 109,289,401
HEALTH - 4.4%
DRUGS & PHARMACEUTICALS - 2.4%
ALZA Corp. Class A 140,000 3,290,000
Amgen, Inc. (a) 60,000 2,572,500
COR Therapeutics, Inc. (a) 75,000 881,250
Cellpro, Inc. (a) 68,700 1,322,475
Cephalon, Inc. (a) 115,000 1,035,000
Creative Biomolecules, Inc. (a) 15,700 49,063
Elan PLC ADR (a) 100,000 3,475,000
Genentech, Inc. (redeemable)(a) 50,000 2,462,500
Perspective Biosystems, Inc. (a) 50,000 812,500
Pfizer, Inc. 160,000 10,100,000
Schering-Plough Corp. 100,000 6,125,000
Warner-Lambert Co. 75,000 4,950,000
37,075,288
MEDICAL EQUIPMENT & SUPPLIES - 0.1%
Mallinckrodt Group, Inc. 24,600 799,500
MEDICAL FACILITIES MANAGEMENT - 1.9%
Columbia/HCA Healthcare Corp. 160,025 6,000,938
Humana, Inc. 175,000 2,821,875
Lincare Holdings, Inc. (a) 55,500 1,075,313
U.S. Healthcare, Inc. 200,000 7,400,000
United HealthCare Corp. 225,000 10,012,500
Vencor, Inc. (a) 10,300 355,350
Vivra, Inc. (a) 85,000 2,040,000
29,705,976
TOTAL HEALTH 67,580,764
INDUSTRIAL MACHINERY & EQUIPMENT - 4.6%
ELECTRICAL EQUIPMENT - 3.0%
Avid Technology, Inc. (a) 70,000 1,907,500
Duracell International, Inc. 64,200 2,503,800
General Electric Co. 700,000 32,637,500
Hitachi Cable Ltd. (a) 156,000 1,480,061
Mitsubishi Electric Co. Ord. 370,000 2,511,719
Oak Industries, Inc. (a) 125,000 2,484,375
Scientific-Atlanta, Inc. 90,900 3,124,688
46,649,643
INDUSTRIAL MACHINERY & EQUIPMENT - 1.4%
AGCO Corp. 100,000 3,662,500
Caterpillar, Inc. 125,000 12,500,000
Nokia AB free shares 41,500 3,381,031
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
Perspective Technologies Corp. Unit Stock (a) 50,000 $ 912,500
TRINOVA Corp. 50,000 1,731,250
22,187,281
POLLUTION CONTROL - 0.2%
Browning-Ferris Industries, Inc. 100,000 3,037,500
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 71,874,424
MEDIA & LEISURE - 4.0%
BROADCASTING - 1.8%
ACS Enterprises, Inc. (a) 30,000 375,000
Capital Cities/ABC, Inc. 70,000 4,978,750
Clear Channel Communications, Inc. (a) 60,050 2,259,381
Home Shopping Network, Inc. (a) 132,100 1,552,175
Infinity Broadcasting Corp. (a) 100,072 2,426,746
NTN Communications, Inc. (a) 50,000 331,250
Peoples Choice TV Corp. (a) 48,500 1,054,875
Scandinavian Broadcasting Corp. (a) 50,000 1,225,000
Tele-Communications, Inc. Class A (a) 450,000 9,168,750
Time Warner, Inc. 125,000 4,390,625
27,762,552
ENTERTAINMENT - 0.7%
Carnival Cruise Lines, Inc. Class A 100,000 4,425,000
Disney (Walt) Co. 70,000 2,913,750
Royal Carribean Cruises Ltd. 150,000 4,162,500
11,501,250
LEISURE DURABLES & TOYS - 0.6%
Callaway Golf Co. 97,100 3,786,900
Coachmen Industries, Inc. 120,400 1,505,000
Cobra Golf, Inc. 70,000 2,406,250
Coleman, Inc. (a) 50,000 1,500,000
9,198,150
LODGING & GAMING - 0.5%
Hospitality Franchise Systems, Inc. (a) 43,600 1,068,200
La Quinta Motor Inns, Inc. 37,500 979,688
Marriott International, Inc. 90,000 2,396,250
Sholodge, Inc. (a) 188,000 3,854,000
8,298,138
RESTAURANTS - 0.4%
Apple South, Inc. 215,000 3,117,500
Brinker International, Inc. (a) 55,000 1,155,000
Landry's Seafood Restaurants, Inc. 70,000 1,290,625
Uno Restaurant Corp. (a) 112,500 1,167,188
6,730,313
TOTAL MEDIA & LEISURE 63,490,403
NONDURABLES - 0.4%
BEVERAGES - 0.1%
Snapple Beverage Corp. (a) 113,500 $ 2,298,375
HOUSEHOLD PRODUCTS - 0.3%
Gillette Company 45,000 2,930,625
Safeskin Corp. (a) 72,600 1,089,000
4,019,625
TOTAL NONDURABLES 6,318,000
PRECIOUS METALS - 0.1%
American Barrick Resources Corp. 65,000 1,550,696
RETAIL & WHOLESALE - 8.6%
APPAREL STORES - 0.9%
Gap, Inc. 95,000 4,061,250
Gymboree Corp. (a) 55,200 2,180,400
Norton McNaughton, Inc. 125,000 2,531,250
One Price Clothing Stores, Inc. (a) 341,300 5,375,475
14,148,375
GENERAL MERCHANDISE STORES - 2.2%
Michaels Stores, Inc. (a) 185,000 6,220,625
Penney (J.C.) Co., Inc. 90,000 4,882,500
Sears, Roebuck & Co. 150,000 7,200,000
Stein Mart, Inc. (a) 75,000 1,312,500
Wal-Mart Stores, Inc. 575,000 13,943,750
33,559,375
GROCERY STORES - 0.2%
Starbucks Corp. (a) 130,000 3,282,500
RETAIL & WHOLESALE, MISCELLANEOUS - 5.3%
Bed Bath & Beyond, Inc. (a) 102,600 2,936,925
Books-A-Million, Inc. (a) 140,000 3,290,000
Brookstone, Inc. (a) 146,500 2,234,125
Circuit City Stores, Inc. 150,050 3,076,025
Home Depot, Inc. (The) 325,066 13,693,405
Lillian Vernon Corp. 60,000 1,110,000
Lowe's Companies, Inc. 725,000 24,831,250
Micro Warehouse, Inc. (a) 74,100 1,574,625
Office Depot, Inc. (a) 150,000 3,000,000
Petsmart, Inc. (a) 135,000 3,813,750
Rex Stores Corp. (a) 65,000 1,056,250
Spiegel, Inc. Class A 80,000 1,520,000
Sport Supply Group, Inc. (b) 371,950 5,997,694
Sport Supply Group, Inc. (warrants) (a) 21,850 64,184
Staples, Inc. 125,000 3,375,000
Sunglass Hut International, Inc. (a) 250,000 6,812,500
Toys "R" Us, Inc. (a) 65,000 2,128,750
Viking Office Products, Inc. (a) 50,000 1,250,000
81,764,483
TOTAL RETAIL & WHOLESALE 132,754,733
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
SERVICES - 0.6%
LEASING & RENTAL - 0.1%
Hollywood Entertainment Corp. (a) 54,800 $ 1,808,400
PRINTING - 0.5%
Cyrk, Inc. (a) 70,000 1,592,500
Reynolds & Reynolds Co. Class A 175,000 4,046,875
Wallace Computer Services, Inc. 50,000 1,600,000
7,239,375
SERVICES - 0.0%
Careerstaff Unlimited, Inc. 5,000 58,750
TOTAL SERVICES 9,106,525
TECHNOLOGY - 31.4%
COMMUNICATIONS EQUIPMENT - 6.7%
Aspect Telecommunications Corp. 50,000 1,393,750
Cabletron Systems, Inc. (a) 311,800 30,127,675
Centigram Communications Corp. (a) 125,800 2,390,200
Cisco Systems, Inc. (a) 115,000 2,688,125
DSC Communications Corp. (a) 1,458,300 28,527,994
General Instrument Corp. (a) 150,000 8,550,000
Inter-Tel, Inc. (a) 89,000 812,125
Newbridge Networks Corp. (a) 433,200 14,891,250
3Com Corp. (a) 200,000 10,275,000
Wellfleet Communications, Inc. (a) 200,000 5,000,000
104,656,119
COMPUTER SERVICES & SOFTWARE - 10.6%
CUC International, Inc. (a) 285,000 7,623,750
Cambridge Technology Partners, Inc. 75,000 1,143,750
Cheyenne Software, Inc. 17,600 149,600
Chipcom Corp. (a) 175,000 6,868,750
Compuware Corp. (a) 240,300 9,942,413
Equifax, Inc. 125,000 3,531,250
Health Management Systems, Inc. 50,500 1,142,563
IMRS, Inc. (a) 125,000 2,687,500
Informix Corp. (a) 86,200 1,336,100
LEGENT Corp. (a) 205,500 5,548,500
Landmark Graphics Corp. (a) 100,000 3,075,000
Lotus Development Corp. (a) 119,900 4,406,325
Microsoft Corp. (a) 240,000 12,360,000
MicroAge, Inc. (a) 63,800 1,004,850
Oracle Systems Corp. (a) 1,700,000 63,750,000
Parametric Technology Corp. (a) 100,000 2,262,500
Peoplesoft, Inc. (a) 200,000 7,000,000
Powersoft Corp. (a) 118,400 5,742,400
Stratacom, Inc. (a) 150,000 3,150,000
SunGard Data Systems, Inc. (a) 85,400 $ 3,095,750
Sybase, Inc. (a) 377,000 18,473,000
164,294,001
COMPUTERS & OFFICE EQUIPMENT - 6.3%
ADAPTEC, Inc. (a) 308,300 5,395,250
Canon, Inc. ADR 5shares 35,000 3,053,750
Compaq Computer Corp. (a) 1,150,000 37,087,500
Danka Business Systems PLC sponsored ADR 90,000 3,588,750
EMC Corp. (a) 600,000 8,100,000
Fore Systems, Inc. (a) 15,300 447,525
International Business Machines Corp. 258,800 15,204,500
Micom Communication Corp. 187,300 2,107,125
Quantum Corp. (a) 107,000 1,384,313
Silicon Graphics, Inc. (a) 500,000 11,062,500
Sunward Technologies, Inc. (a) 131,700 1,712,100
Syquest Technology, Inc. (a) 58,900 552,188
Tech Data Corp. (a) 400,000 6,600,000
Western Digital Corp. (a) 151,400 1,930,350
98,225,851
ELECTRONIC INSTRUMENTS - 1.4%
ASECO Corp. (a) 105,300 763,425
Advantest Corp. 50,000 1,841,704
Applied Materials, Inc. (a) 325,000 13,893,750
Megatest Corp. (a) 135,000 2,126,250
Novellus System, Inc. (a) 84,000 2,919,000
21,544,129
ELECTRONICS - 6.4%
Advanced Micro Devices, Inc. (a) 434,000 10,795,750
California Micro Devices Corp. (a) 50,000 1,075,000
Cirrus Logic, Inc. (a) 150,000 4,650,000
Cypress Semiconductor Corp. 97,100 1,577,875
Electroglas, Inc. (a) 55,000 1,890,625
Hitachi Ltd. ADR 40,000 4,160,000
Intel Corp. 285,000 16,672,500
Lattice Semiconductor Corp. (a) 70,000 1,303,750
Linear Technology Corp. 50,000 2,200,000
Maxim Integrated Products, Inc. (a) 33,300 1,731,600
Micron Technology, Inc. 260,000 8,970,000
Motorola, Inc. 380,000 16,910,000
National Semiconductor Corp. (a) 250,000 4,312,500
Solectron Corp. (a) 125,000 3,171,875
Texas Instruments, Inc. 215,000 17,092,500
Tokyo Electron Ltd. 73,000 2,437,037
98,951,012
TOTAL TECHNOLOGY 487,671,112
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
TRANSPORTATION - 1.7%
AIR TRANSPORTATION - 0.6%
Atlantic Southeast Airlines, Inc. 147,100 $ 3,567,175
Comair Holdings, Inc. 150,050 3,038,513
Mesa Airlines, Inc. (a) 113,900 1,124,763
Technology Resources (a) 340,000 1,383,919
9,114,370
RAILROADS - 0.8%
CSX Corp. 170,000 12,835,000
TRUCKING & FREIGHT - 0.3%
Federal Express Corp. (a) 49,800 3,716,318
Landstar System, Inc. 44,000 1,298,000
5,014,318
TOTAL TRANSPORTATION 26,963,688
UTILITIES - 11.1%
CELLULAR - 5.4%
Airtouch Communications 825,000 19,490,625
Arch Communications Group, Inc. 75,000 1,106,250
Commnet Cellular, Inc. (a) 22,500 402,188
McCaw Cellular Communications, Inc.
Class A (a) 500,000 25,875,000
Metrocall, Inc. (a) 75,000 975,000
Nextel Communications, Inc. Class A (a) 55,000 1,663,750
Onecomm Corp. 115,000 2,386,250
Rogers Communications, Inc. Class B (a) 475,000 6,824,961
United States Cellular Corp. (a) 78,900 1,962,638
Vanguard Cellular Systems, Inc. Class A 649,200 21,423,600
Vodafone Group PLC sponsored ADR 25,000 1,893,750
84,004,012
TELEPHONE SERVICES - 5.7%
ALC Communications Corp. (a) 129,000 3,966,750
Ameritech Corp. 265,000 10,136,250
Bell Atlantic Corp. 175,000 9,800,000
BellSouth Corp. 200,000 12,350,000
GTE Corp. 200,000 6,300,000
LCI International, Inc. (a) 150,000 4,800,000
LDDS Communications, Inc. (a) 130,090 2,276,575
MCI Communications Corp. 225,000 4,978,125
Rochester Telephone Corp. 185,000 4,185,625
Southwestern Bell Corp. 275,000 11,962,500
Sprint Corporation 165,000 $ 5,754,375
Telephone & Data Systems, Inc. 135,659 5,018,643
U.S. West, Inc. 185,000 7,746,875
89,275,718
TOTAL UTILITIES 173,279,730
TOTAL COMMON STOCKS
(Cost $1,282,132,834) 1,341,196,609
PREFERRED STOCKS - 0.4%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
Nokia 51,900 4,267,568
UTILITIES - 0.1%
TELEPHONE SERVICES - 0.1%
Stet (Societa Finanziaria Telefonica) Spa 1,000,000 2,645,260
TOTAL PREFERRED STOCKS
(Cost $5,733,668) 6,912,828
MATURITY
AMOUNT
REPURCHASE AGREEMENTS - 13.4%
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 4.29% dated
6/30/94 due 7/1/94, $ 207,953,778 207,929,000
TOTAL INVESTMENT in securitieS - 100%
(Cost $1,495,795,502) $ 1,556,038,437
LEGEND:
(c) Non-income producing.
(c) Affiliated company (see Note 7 of Notes to Financial Statements).
OTHER INFORMATION:
Purchases and sales of securities, other than short-term securities,
aggregated $1,440,292,591 and $1,051,151,715, respectively.
INCOME TAX INFORMATION:
At June 30, 1994, the aggregate cost of investment securities for income
tax purposes was $1,499,913,280. Net unrealized appreciation aggregated
$56,125,157, of which $129,795,492 related to appreciated investment
securities and $73,670,335 related to depreciated investment securities.
Statement of Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, 1994 (Unaudited)
ASSETS
Investment in securities, at value (including repurchase agreements of $207,929,000) (cost $ 1,556,038,437
$1,495,795,502) (Notes 1 and 2) - See accompanying schedule
Cash 141
Receivable for investments sold 48,376,125
Receivable for fund shares sold 6,611,942
Dividends receivable 1,122,800
Other receivables 142,987
Total assets 1,612,292,432
LIABILITIES
Payable for investments purchased $ 18,322,209
Payable for fund shares redeemed 1,696,950
Accrued management fee 826,699
Other payables and accrued expenses 216,517
Total liabilities 21,062,375
NET ASSETS $ 1,591,230,057
Net Assets consist of (Note 1):
Paid in capital $ 1,564,506,703
Undistributed net investment income 4,245,712
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (37,765,293)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 60,242,935
NET ASSETS, for 81,203,269 shares outstanding $ 1,591,230,057
NET ASSET VALUE, offering price and redemption price per share ($1,591,230,057 (divided by) 81,203,269 shares) $19.60
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Ended June 30, 1994 (Unaudited)
INVESTMENT INCOME $ 6,017,123
Dividends (including $13,294 received from affiliated issuers) (Note 7)
Interest 3,791,894
Total income 9,809,017
EXPENSES
Management fee (Note 3) $ 4,746,923
Transfer agent fees (Note 3) 95,346
Accounting fees and expenses (Note 3) 306,191
Non-interested trustees' compensation 4,424
Custodian fees and expenses 50,385
Registration fees 127,895
Audit 23,045
Legal 4,627
Interest (Note 5) 9,901
Miscellaneous 5,411
Total expenses before reductions 5,374,148
Expense reductions (Note 6) (148,825) 5,225,323
Net investment income 4,583,694
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1)
Net realized gain (loss) on: (29,886,134)
Investment securities
Foreign currency transactions (6,028) (29,892,162)
Change in net unrealized appreciation (depreciation) on investment securities (138,085,109)
Net gain (loss) (167,977,271)
Net increase (decrease) in net assets resulting from operations $ (163,393,577)
</TABLE>
Statement of Changes in Net Assets
DRAFT
SIX MONTHS ENDED
JUNE 30, 1994 YEAR ENDED
INCREASE (DECREASE) IN NET ASSETS (UNAUDITED) DECEMBER 31, 1993
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 4,583,694 $ 7,364,896
Net investment income
Net realized gain (loss) (29,892,162) 77,232,971
Change in net unrealized appreciation (depreciation) (138,085,109) 86,481,802
Net increase (decrease) in net assets resulting from operations (163,393,577) 171,079,669
Distributions to shareholders: (7,589,523) (4,411,941)
From net investment income
From net realized gain (80,320,550) (8,449,098)
In excess of net realized gain - (4,786,725)
Total distributions (87,910,073) (17,647,764)
Share transactions 593,353,888 798,421,513
Net proceeds from sales of shares
Reinvestment of distributions 87,910,073 17,647,764
Cost of shares redeemed (222,579,602) (335,488,823)
Net increase (decrease) in net assets resulting from share transactions 458,684,359 480,580,454
Total increase (decrease) in net assets 207,380,709 634,012,359
NET ASSETS
Beginning of period 1,383,849,348 749,836,989
End of period (including undistributed net investment income of $4,245,712 and $7,251,541, $ 1,591,230,057 $ 1,383,849,348
respectively)
OTHER INFORMATION
Shares
Sold 27,551,270 37,006,075
Issued in reinvestment of distributions 4,039,977 881,947
Redeemed (10,335,361) (15,878,913)
Net increase (decrease) 21,255,886 22,009,109
</TABLE>
Financial Highlights
DRAFT
SIX MONTHS ENDED
JUNE 30, 1994 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1993 1992 1991 1990 1989
SELECTED PER-SHARE DATA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 23.08 $ 19.76 $ 18.51 $ 12.91 $ 15.18 $ 11.72
Income from Investment Operations
Net investment income .05 .12 .09 .09 .24 .24
Net realized and unrealized gain (loss) (2.14) 3.64 1.64 5.72 (1.98) 3.41
Total from investment operations (2.09) 3.76 1.73 5.81 (1.74) 3.65
Less Distributions
From net investment income (.12) (.11) (.05) (.21) (.21) (.19)
From net realized gain (1.27) (.21) (.43) - (.32) -
In excess of net realized gain - (.12) - - - -
Total distributions (1.39) (.44) (.48) (.21) (.53) (.19)
Net asset value, end of period $ 19.60 $ 23.08 $ 19.76 $ 18.51 $ 12.91 $ 15.18
TOTAL RETURNB, C (9.65)% 19.37% 9.32% 45.51% (11.73)% 31.51%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,591,230 $ 1,383,849 $ 749,837 $ 371,462 $ 135,487 $ 77,261
Ratio of expenses to average net assetsD .69%A .71% .75% .84% .88% 1.02%
Ratio of expenses to average net assets .71%A .71% .75% .84% .88% 1.02%
before expense reductionsD
Ratio of net investment income to average net .60%A .72% .83% .56% 2.69% 2.83%
assets
Portfolio turnover rate 159%A 159% 262% 261% 88% 111%
</TABLE>
1. ANNUALIZED
2. TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
3. THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
4. SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS.
5. NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
VARIABLE INSURANCE PRODUCTS FUND: OVERSEAS PORTFOLIO
INVESTMENTS/JUNE 30, 1994 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF
INVESTMENTS IN SECURITIES
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - 81.2%
ARGENTINA - 0.2%
YPF Sociedad Anonima sponsored ADR
representing Class D shares 100,500 $ 2,399,438
AUSTRALIA - 1.7%
Ampolex Ltd. Ord. 846,300 2,519,706
Brambles Industries 213,500 2,026,642
FAI Insurance Ltd. Ord. 2,037,900 1,068,104
Hazelton Airlines Ltd. 370,600 647,468
Lend Lease Corp. Ltd. 81,000 958,754
Pioneer International Ltd. 493,300 1,027,021
TNT Ltd. (a) 1,658,800 2,716,932
Westpac Banking Corp. 2,521,000 8,203,183
19,167,810
AUSTRIA - 0.8%
Austrian Airlines/Oster Luftve 1,400 239,721
Mayr Melnhof Karton AG 17,000 1,050,069
OEMV AG 59,300 4,683,608
Steyr Daimler Puch AG 41,500 848,267
VA Technologie AG (a)(d) 15,000 1,237,169
Verbund Gesellschaft 3,400 194,777
8,253,611
BELGIUM - 1.2%
CMB (Cie Maritime Belge) Ord. 7,900 544,944
Delhaize (a) 70,900 2,880,200
Petrofina SA 11,900 3,694,804
Petrofina SA (warrants)(a) 595 15,835
Solvay 14,625 6,330,394
13,466,177
BERMUDA - 0.2%
Consolidated Electric Power Asia Ltd.
sponsored ADR (d) 30,000 472,500
Jardine Strategic Holdings Ord. (a) 439,500 1,665,999
2,138,499
BRAZIL - 0.5%
Coteminas PN (a) 2,500,000 566,375
Telebras "PN" (Pfd. Reg.)(a) 118,632,600 4,464,895
5,031,270
CANADA - 0.5%
Abitibi-Price, Inc. (a) 126,900 1,525,186
Noranda, Inc. 245,400 4,191,270
5,716,456
FINLAND - 0.6%
America Group Ltd. Class A 119,300 2,796,314
Huhtamaki Ord. 41,200 $ 1,362,884
Kansallis-Osake-Pankki 127,400 264,903
Outokumpu Oy Class A 125,700 2,048,172
Repola OY 26,500 458,343
6,930,616
FRANCE - 7.0%
Accor SA 50,500 5,695,628
BNP CI Ord. 133,940 5,720,252
Carnaudmetalbox SA 53,100 1,630,845
Club Mediterranee Ord. 15,700 1,104,537
Compagnie Bancaire Ord. 18,700 1,686,572
Credit Lyonnais CI 16,500 1,433,597
Elf Aquitaine 154,500 10,772,998
GAN (Groupe Des Assur Natl.) 56,000 4,032,329
Havas Group SA 21,400 1,670,647
Lafarge Coppee 125,100 9,352,626
Paribas SA (Cie Financiere) Class A 16,500 1,046,253
Pechiney SA CIP 15,550 1,119,406
Peugeot SA Ord. (a) 74,800 10,607,200
Plastic Omnium, CIE 15,100 1,755,749
Plastic Omnium, CIE (rights)(a) 5,500 30
Rhone Poulenc SA Class A 314,250 7,157,789
Total Compagnie Francaise des Petroles
Class B 176,400 10,161,469
Vallourec (a) 33,200 1,725,254
76,673,181
GERMANY - 7.1%
Allianz Versich Holdings Ord. (Reg.)(a) 1,650 2,440,518
Altana Industrie-Aktien 2,700 1,046,017
BASF AG 45,600 8,675,045
BMW AG (a) 11,018 5,413,739
Bayer AG 25,000 5,425,368
Computer 2000 AG (a) 4,300 1,733,598
Continental Gummi-Werke AG (a) 41,800 6,456,493
Deutsche Bank AG 24,200 10,427,289
Duerr Beteiligungs AG 3,150 1,311,632
Gildemeister AG (a) 13,900 1,795,017
Hoechst AG Ord. 56,900 11,613,342
Kolbenschmidt AG (a) 13,400 1,814,860
Man AG ord (a) 12,000 2,979,873
Metallgesellschaft A G Ord. 3,500 445,368
Sixt AG ord (a) 3,100 869,004
Thyssen AG Ord. 44,400 8,035,604
Traub AG (a) 5,410 766,796
Veba Vereinigte Elektrizetaets & Bergwerks
AG Ord. 21,900 6,877,162
78,126,725
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
HONG KONG - 0.6%
Dairy Farm International Holdings Ltd. Ord. 307,000 $ 424,983
Dickson Concept 2,108,000 1,302,238
HSBC Holdings PLC (a) 104,000 1,136,943
Hong Kong Land Holdings Ltd. (a) 678,000 1,710,458
Jardine Matheson & Co. Ltd. Ord. (a) 284,000 2,186,170
Semi-tech Microelectronics 100,000 182,418
6,943,210
INDIA - 0.0%
ITC Ltd. (warrants) (a)(d) 8,000 80,000
INDONESIA - 0.3%
Astra International (For. Reg.) 40,000 285,718
Bank International Indonesia Ord. (a) 643,500 2,038,762
Jakarta International Hotels &
Development Ord. 1,047,000 1,411,293
3,735,773
IRELAND - 0.7%
Aran Energy (a) 1,780,200 858,946
Bank of Ireland U.S. Holdings, Inc. 440,300 1,747,146
Fyffes PLC (UK) 1,358,000 1,845,142
Independent News 363,850 1,572,996
Smurfit (Jefferson) Group PLC (UK) 194,000 1,012,432
Waterford Wedgwood PLC Unit (a) 1,231,400 1,026,692
8,063,354
ITALY - 1.5%
Alitalia (Linee Aeree Italy) Class A 1,683,700 1,109,996
Assicurazioni Generali SPA 198,700 5,113,940
Editoriale L'Espresso SPA (a) 220,700 605,193
Montedison SPA Ord. 2,962,700 2,739,342
SAI (Soc Assicur Industriale) 189,000 2,407,130
SIP Spa . . 1,597,600 4,001,461
Safilo SPA 186,300 961,556
16,938,618
JAPAN - 24.9%
ADO Electronic Industrial Co. 19,000 655,505
Advantest Corp. 74,000 2,725,723
Alpine Electronics, Inc. (warrants) (a) 50 185,000
Alps Electric Co. Ltd. 149,000 2,146,931
Amadasonoike Co. Ltd. (a) 89,000 731,507
Aoyama Trading Co. Ord. (a) 73,000 2,859,259
Asahi Glass (warrants) (a) 50 60,000
Autobacs Seven Co. Ltd. (a) 15,600 2,152,816
Bridgestone Corp. 379,000 6,153,220
Canon, Inc. 552,000 9,690,106
Casio Computer Co. Ltd. Ord. (a) 109,000 $ 1,493,151
Chudenko Corporation (a) 12,000 498,021
Daiwa House Industry Co. Ltd. 28,000 437,544
East Japan Railway Ord. (a) 700 3,587,012
Fujitsu Ltd. (a) 726,000 8,324,505
Futaba Industrial Co. Ltd. (a) 61,000 1,268,899
Hanshin Department Store 36,000 275,799
Hitachi Ltd. 1,351,000 14,120,044
Hitachi Maxell Ltd. 274,000 5,838,661
Honda Motor Co. Ltd. 316,000 5,547,235
Ishihara Sangyo Kaisha Ltd. (a) 343,000 1,500,080
Izumi Co. Ord. 42,000 1,167,732
Japan Airlines Co. Ltd. 302,000 2,188,005
Joshin Denki Co. Ltd. Ord. 92,000 1,502,993
Kawasaki Steel Corp. 743,000 3,151,434
Komatsu Limited Ord. 367,000 3,575,039
Kyocera Corporation 17,000 1,271,334
Marubeni Corp. (a) 339,000 1,871,294
Marukyo Corp. 16,000 657,534
Matsushita Electric Industrial Co. Ltd. 359,000 6,593,505
Minebea Co. 432,000 3,743,561
Mitsubishi Estate, Ltd. 127,000 1,572,196
Mitsubishi Heavy Industry 492,000 3,938,996
Mitsubishi Petro Chemical 324,000 2,321,097
Mitsubishi Trust & Banking (a) 395,000 6,573,313
Mitsui OSK Lines 357,000 1,459,877
Mitsui Petrochemical Industries Inc. (a) 270,000 2,364,385
Mitsui Trust and Banking 103,000 1,275,088
Murata Manufacturing Co. Ord. 184,000 8,663,217
NGK Spark Plug Co. (warrants)(a) 50 199,375
Nichido Fire & Marine Insurance Co 502,000 4,523,346
Nikko Securities (a) 253,000 3,465,753
Nintendo Co. Ltd. Ord. (a) 22,000 1,593,912
Nippon Sheet Glass (warrants)(a) 100 47,500
Nippon Shinpan Ltd. (a) 74,000 700,579
Nippon Telegraph & Telephone Ord. (a) 400 3,551,497
Nippon Yusen Kabushiki Kaisha 252,000 1,610,958
Nissan Motor Co. Ltd. Ord. 539,000 4,785,641
Nisshinbo Industries 248,000 2,843,632
Nomura Securities Co. Ltd. (a) 557,000 13,451,650
Oji Paper Ltd. (a) 154,000 1,640,791
Orix Corp. 232,000 9,557,788
Pioneer Electronic Corp. 355,000 10,050,227
Rohm Co. Ltd. 128,000 5,948,655
Sanwa Bank 95,000 2,159,310
Sega Enterprises 19,000 1,474,886
Sharp Corp. 124,000 2,252,258
Sharp Corp. (warrants) (a) 500 352,443
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
JAPAN - CONTINUED
Sony Corp. 121,400 $ 7,452,764
Sumitomo Marine and Fire 345,000 3,371,233
Sumitomo Realty & Development Co. Ltd. 374,000 2,550,257
Sumitomo Rubber Industries 180,000 1,917,808
Sumitomo Trust & Banking Co. (a) 260,000 4,300,356
Suzuki Motor Corp. 228,000 3,030,745
TDK Corp. 226,000 11,214,002
Tokio Marine & Fire Insurance Co. Ltd. (The) 805,000 10,373,922
Tokyo Electron Ltd. 38,000 1,268,595
Tokyo Style Co. Ltd. 380,000 7,557,584
Toshiba Corp. 1,470,000 12,052,354
Toyobo Co. 367,000 1,664,628
Toyota Motor Corporation 565,000 12,670,215
273,776,282
KOREA (SOUTH) - 1.0%
Cho Hung Bank Co. Ltd. 157,000 2,067,202
Cho Hung Bank Co. Ltd. (New)(a) 34,504 432,881
Korea Electric Power Corp. 147,470 4,909,256
Korea First Securities Co. (a) 5,100 115,297
Kyungki Bank Ltd. (a) 135,000 1,593,069
Seoul Securities Co. (a) 72,420 1,331,366
10,449,071
LUXEMBOURG - 0.3%
Arbed SA (a) 25,100 3,416,742
MALAYSIA - 0.4%
Ekran Berhad Ord. 133,000 893,748
KL Industries Holdings BHD 290,000 367,482
Magnum Corp. BHD 262,500 559,432
Resorts World BHD 148,000 852,470
Telekom Malaysia BHD 164,000 1,221,718
Tenega Nasional BHD 3,000 16,819
Time Engineering BHD (a) 161,000 377,122
4,288,791
MEXICO - 0.7%
Grupo Dina (Consorcio G) ADR (a) 34,800 365,400
Grupo Financiero Bancomer SA de CV
sponsored ADR, Series C (d) 70,200 1,544,400
Telefonos de Mexico SA sponsored ADR
representing shares Ord. Class L 100,600 5,621,025
7,530,825
NETHERLANDS - 4.9%
Akzo NV Ord. 81,000 8,689,132
DSM NV 83,900 5,965,594
Fokker Aircraft Ord. 55,500 $ 476,916
Frans Maas Groep NV (koninklj) 61,400 1,827,689
Hoogovens en Staalfabrieken 72,100 2,899,388
International Nederlanden Groep CVA (a) 129,200 5,543,882
KLM Royal Dutch Airlines Ord. (a) 92,600 2,584,791
Koninklijke PTT Nederland (d) 80,600 2,258,883
Oce Van Der Grinten NV 136,700 5,719,826
Philips Electronics 328,500 9,483,237
Pirelli Tyre Holdings NV Ord. (a) 911,700 8,141,554
53,590,892
NEW ZEALAND - 0.2%
Fletcher Challenge Ltd. (Reg.) (a) 870,100 1,898,236
NORWAY - 2.1%
Bergesen Group:
Class A 81,200 1,876,589
Class B 226,500 5,267,289
Christiania Bank free shares Ord. (a) 860,000 1,602,438
Den Norske Bank Class A free shares (a) 477,800 1,097,330
Norsk Hydro A.S. ADR (a) 70,600 2,215,075
Norske Skogindustrier AS A free shares (a) 67,100 1,511,960
Olav Thon Eiendomsselskp Ord. 20,700 269,095
Orkla AS
B (non-vtg.) 39,500 1,215,262
Class A free shares 93,250 3,003,633
Saga Petroleum AS B 113,700 1,322,055
Unitor AS 192,300 3,305,364
22,686,090
SINGAPORE - 0.7%
Neptune Orient Lines Ltd. (a) 4,661,000 7,241,283
Van Der Horst Ltd. (a) 176,000 755,686
7,996,969
SOUTH AFRICA - 0.2%
Anglovaal Ltd. Class N (d) 75,800 2,024,466
De Beers Consolidated Mines Ltd. ADR 24,000 534,000
2,558,466
SPAIN - 4.2%
Acerinox SA (Reg.) 18,850 1,904,403
Argentaria Corp. Bancaria de Esp 15,250 593,023
Banco Bilbao Vizcaya SA Ord. (Reg.) 289,500 6,357,301
Banco Intercontinental Espanol 49,350 4,142,917
Corporacion Mapfre International Reas
(Reg.) (a) 96,100 3,685,726
FOCSA (Fomento de Obras Y
Construcciones SA) 22,625 2,380,671
Iberdrola SA 388,500 2,731,202
Repsol SA Ord. (a) 235,600 6,790,454
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
SPAIN - CONTINUED
Telefonica de Espana SA Ord. 797,450 $ 10,762,385
Union Electrica Fenosa 985,100 4,784,660
Uralita SA (a) 189,550 2,196,843
46,329,585
SWEDEN - 3.4%
ASG AB Class B Free shares Ord. 42,900 661,250
Aktiebolaget Electrolux (a) 148,900 6,865,874
Autoliv AB (a)(d) 25,000 568,219
ICB Shipping Class B (a) 25,000 244,922
Investor AB Free shares B 224,700 4,813,638
Marieberg Tidnings 'A' (a) 36,600 726,693
Skandia International Holding Co. AB ADR 35,400 499,405
Skandinaviska Enskilda Banken Class A
free shares 621,100 3,699,582
Skanska Class B (a) 259,800 4,988,648
SKF AB Ord. (a) 349,400 6,161,452
Volvo Aktiebolaget Class B 93,100 8,147,998
37,377,681
SWITZERLAND - 6.9%
Adia SA (BR) 52,200 8,807,319
Alusuisse Lonza (Reg.) 20,039 9,677,265
Baloise Holdings:
(Reg.)(a) 3,400 6,106,258
(warrants)(a) 3,400 36,969
C. S. Holdings:
(Bearer)(a) 14,300 5,983,578
(Reg.)(a) 68,900 5,605,827
C. S. Holdings (warrants):
(Bearer)(a) 14,300 120,637
(Reg.)(a) 68,900 103,333
Ciba-Geigy AG (Reg.) 22,880 13,537,040
Fischer (Georg) AG (Reg.) 12,400 2,417,607
Globus Magazine Part. Cert 4,669 3,396,146
Holderbank Financiere AG PC (Bearer) 15,925 10,508,791
Oerlikon-Buhrle Holding Ltd. (Reg.)(a) 12,000 1,250,797
Surveillance, Societe Generale (Bearer)(a) 410 611,826
Swiss Bank Corp. (Bearer)(a) 23,450 6,928,349
Von Roll AG (Reg.) 5,950 330,171
75,421,913
THAILAND - 0.1%
Ruam Pattana Fund II (For.) 1,117,000 $ 636,433
Ruang Khao Unit Trust (Loc.)(a) 836,800 585,526
1,221,959
UNITED KINGDOM - 8.3%
Avon Rubber 77,200 679,422
BET Public Ltd. Co. Ord. 2,629,800 4,669,473
Barclays PLC Ord. 965,000 7,732,892
Bass PLC Ord. 387,900 3,009,561
British Petroleum PLC Ord. 695,400 4,182,052
British Steel PLC Ord. 3,040,100 6,665,358
British Vita Ord. 580,900 2,152,583
English China Clay PLC (a) 811,094 4,201,564
Forte PLC (a) 1,313,600 4,563,446
General Electric PLC Ord. 5 pence 634,900 2,759,504
Great Universal Stores PLC Ord Class A 381,600 3,317,142
Independent News PLC. . . . . . . . . . . . . . . . . . . 157,200 679,607
Ladbroke Group PLC Ord. 2,153,700 5,087,729
Lloyds Abbey Life 499,600 2,537,848
London International Group (a) 1,147,300 1,594,288
Midlands Electricity PLC 449,400 4,170,180
National Westminster Bank PLC Ord 720,720 4,807,260
North West Water Ord. 337,700 2,471,478
RTZ Corp. PLC Ord. (a) 139,100 1,765,413
Rolls Royce Ltd. Ord. 874,433 2,328,965
Royale Insurance Co. Ltd. 854,500 3,278,580
Sainsbury J PLC Ord. 223,800 1,377,006
Shanks & McEwan Group PLC 756,000 1,003,847
TSB Group PLC 300 936
Taylor Woodrow PLC 322,500 657,281
Vickers PLC Ord. Unit 2,750,350 7,367,748
Vodafone Group PLC (a) 260,000 1,965,049
Whitbread Class A 715,000 5,519,800
Willis Coroon PLC Ord. (a) 449,900 1,002,025
91,548,037
TOTAL COMMON STOCKS
(Cost $798,314,407) 893,756,277
NONCONVERTIBLE PREFERRED STOCKS - 3.6%
AUSTRIA - 0.5%
Creditanstaldt Bank (a) 81,800 5,243,355
GERMANY - 0.7%
Boss (Hugo) AG 1,700 872,783
FAG Kugelfischer Georg Schaef 25,550 3,637,469
Fuchs Petrolub AG Oel & Chemie (a) 6,532 781,807
Porsche AG Ord. 5,200 2,522,284
7,814,343
VALUE MOODY'S PRINCIPAL VALUE
SHARES (NOTE 1) RATINGS (C) AMOUNT (D) (NOTE 1)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
ITALY - 2.3%
Banco Ambro Veneto N/C Risp 1,197,000 $ 2,004,281
Fiat SPA Priv 2,193,000 5,460,789
Gilardini Risp Spa pfd 236,100 408,191
SAI (Sta Assicur Industriale) N/C Risp 650,500 4,330,899
SIP (Societa Ital Per L'Eser) Spa Di Risp
N/C Ord. 150,000 309,394
Stet (Societa Finanziaria Telefonica) SPA (a) 4,835,300 12,790,626
Unicem Di Risp 11,100 44,813
25,348,993
KOREA (SOUTH) - 0.1%
Korea First Securities Co. (a) 67,462 1,357,536
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $30,326,548) 39,764,227
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (C) (NOTE 1)
CONVERTIBLE BONDS - 0.1%
GRAND CAYMAN - 0.1%
CTII Overseas Finance euro
4 1/4%, 11/18/98 (d) - $ 265,000 215,975
Peregrine Investment Finance
Cayman Ltd. 4 1/2%, 12/1/00 (d) - 600,000 459,000
TOTAL CONVERTIBLE BONDS
(Cost $865,000) 674,975
GOVERNMENT OBLIGATIONS - 8.5%
ARGENTINA - 0.4%
Argentina Republic BOCON
4 1/2%, 4/1/01 (e) B1 5,684,500 3,892,194
BRAZIL - 0.3%
Brazil Federative Republic IDU
euro 8 3/4%, 1/1/01 B2 5,197,500 3,612,262
DENMARK - 0.3%
Danish Government Bullet 7%,
12/15/04 Aa1 DKK 25,000,000 3,633,957
FRANCE - 0.3%
French Government
Strips 4/25/23 Aaa FRF 168,000,000 2,952,986
UNITED STATES OF AMERICA - 7.2%
U.S. Treasury Bills
4.23%, 9/29/94 $ 80,000,000 $ 79,172,000
TOTAL GOVERNMENT OBLIGATIONS
(Cost $95,004,387) 93,263,399
INDEXED SECURITIES - 0.2%
Bankers Trust Company note 0%, 1/31/95
(coupon inversely indexed to STIBOR and
principal indexed to value of 2-year Swedish
securities, both multiplied by 9) (f) 1,200,000 402,360
Bayerische Landesbank cert. of dep.
6.2675%, 1/27/95 (coupon inversely
indexed to HELIBOR and principal
indexed to value of 2-year Finnish
securities, both multiplied by 8) (f) 3,000,000 1,092,000
Citibank Nassau:
0%, 1/31/95 (coupon inversely indexed
to STIBOR and principal indexed to
2-year Swedish securities, both
multiplied by 9) (f) 800,000 257,120
4 5/8%, 7/30/96 (inversely indexed to 1-year
SEK swap rate, multiplied by 10) 900,000 562,950
TOTAL INDEXED SECURITIES
(Cost $5,900,000) 2,314,430
MATURITY
AMOUNT
REPURCHASE AGREEMENTS - 6.4%
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 4.29%, dated
6/30/94 due 7/1/94 $ 69,954,335 69,946,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,000,356,342) $ 1,099,719,308
Forward Foreign Currency Contracts
SETTLEMENT UNREALIZED
CONTRACTS TO SELL DATES VALUE GAIN/(LOSS)
19,770,750 CHF 8/9/94 $ 14,831,493 $ (859,724)
228,920,092 FRF 8/16/94 41,996,340 (2,163,368)
4,043,255,600 JPY 7/6/94 41,043,875 (1,919,678)
TOTAL CONTRACTS TO SELL-
(Receivable amount $92,928,938) $ 97,871,708 $ (4,942,770)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 8.9%
CURRENCY ABBREVIATIONS:
DKK - Danish krone
FRF - French franc
JPY - Japanese yen
CHF - Swiss franc
LEGEND:
(c) Non-income producing.
(c) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(c) Principal amount is stated in United States dollars unless otherwise
noted.
(c) 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 $8,860,612 or .8% of net
assets.
(c) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(c) Coupon is inversely indexed to a floating interest rate multiplied by a
specified factor. If the floating rate is high enough, the coupon rate may
be zero or be a negative amount that is carried forward to reduce future
interest and/or principal payments. The price may be considerably more
volatile than the price of a comparable fixed rate security. The rate shown
is the rate at period end.
OTHER INFORMATION:
Purchases and sales of securities, other than short-term securities,
aggregated $499,207,057 and $195,380,082, respectively.
INCOME TAX INFORMATION:
At June 30, 1994, the aggregate cost of investment securities for income
tax purposes was $1,000,779,400. Net unrealized appreciation aggregated
$98,939,908, of which $136,208,838 related to appreciated investment
securities and $37,268,930 related to depreciated investment securities.
At December 31, 1993, the fund had a capital loss carryforward of
approximately $8,614,000, all of which will expire on December 31, 2001.
INDUSTRY DIVERSIFICATION
(Unaudited)
AS A PERCENTAGE OF TOTAL VALUE OF INVESTMENTS
Aerospace & Defense 0.4%
Basic Industries - 11.1%
Chemicals & Plastics 5.3
Iron & Steel 2.7
Metals & Mining 2.2
Packaging & Containers 0.1
Paper & Forest Products 0.8
Construction & Real Estate - 3.6%
Building Materials 1.9
Construction 1.1
Engineering 0.2
Real Estate 0.3
Real Estate Investment Trusts 0.1
Durables - 13.2%
Autos, Tires, & Accessories 8.7
Consumer Durables 0.1
Consumer Electronics 3.2
Textiles & Apparel 1.2
Energy - 4.9%
Oil & Gas 4.9
Finance - 19.0%
Banks 9.7
Closed End Investment Company 0.1
Credit & Other Finance 1.9
Insurance 5.5
Securities Industry 1.8
Government Obligations 8.5
Health - 2.1%
Drugs & Pharmaceuticals 2.0
Medical Equipment & Supplies 0.1
Industrial Machinery & Equipment - 4.0%
Electrical Equipment 1.9
Industrial Machinery & Equipment 2.0
Pollution Control 0.1
Media & Leisure - 2.3%
Entertainment 0.1%
Leisure Durables & Toys 0.1
Lodging & Gaming 1.8
Publishing 0.3
Nondurables - 1.7%
Beverages 0.8
Foods 0.4
Household Products 0.5
Retail & Wholesale - 1.8%
General Merchandise Stores 0.6
Grocery Stores 0.8
Retail & Wholesale, Miscellaneous 0.4
Services - 2.9%
Advertising 0.2
Leasing & Rental 1.1
Services 1.6
Repurchase Agreements 6.4
Technology - 8.1%
Computer Services & Software 0.2
Computers & Office Equipment 2.3
Electronic Instruments 0.3
Electronics 5.3
Transportation - 3.3%
Air Transportation 0.8
Railroads 0.4
Shipping 1.7
Trucking & Freight 0.4
Utilities - 6.7%
Cellular 0.2
Electric Utility 2.2
Telephone Services 4.1
Water 0.2
100.0%
Statement oF Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, 1994 (Unaudited)
ASSETS
Investment in securities, at value (including repurchase agreements of $69,946,000) (cost $ 1,099,719,308
$1,000,356,342) (Notes 1 and 2) - See accompanying schedule
Cash 385
Receivable for investments sold 7,038,542
Receivable for fund shares sold 3,650,833
Dividends receivable 2,334,673
Interest receivable 411,646
Total assets 1,113,155,387
LIABILITIES
Payable for investments purchased $ 6,028,089
Unrealized depreciation on foreign currency contracts (Note 2) 4,942,770
Payable for fund shares redeemed 1,488,160
Accrued management fee 719,103
Other payables and accrued expenses 516,183
Total liabilities 13,694,305
NET ASSETS $ 1,099,461,082
Net Assets consist of (Note 1):
Paid in capital $ 999,451,425
Undistributed net investment income 3,814,827
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 1,699,133
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 94,495,697
NET ASSETS, for 69,279,577 shares outstanding $ 1,099,461,082
NET ASSET VALUE, offering price and redemption price per share ($1,099,461,082 (divided by) 69,279,577 shares) $15.87
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Ended June 30, 1994 (Unaudited)
INVESTMENT INCOME $ 10,056,220
Dividends
Interest 3,740,640
13,796,860
Less foreign taxes withheld (2,204,751)
Total income 11,592,109
EXPENSES
Management fee (Note 3) $ 3,752,444
Transfer agent fees (Note 3) 67,240
Accounting fees and expenses (Note 3) 222,495
Non-interested trustees' compensation 2,697
Custodian fees and expenses 335,519
Audit 23,790
Legal 2,451
Miscellaneous 3,207
Total expenses 4,409,843
Net investment income 7,182,266
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1)
Net realized gain (loss) on:
Investment securities 16,772,057
Foreign currency transactions (6,081,796) 10,690,261
Change in net unrealized appreciation (depreciation) on:
Investment securities 7,360,056
Assets and liabilities in foreign currencies (5,768,938) 1,591,118
Net gain (loss) 12,281,379
Net increase (decrease) in net assets resulting from operations $ 19,463,645
</TABLE>
Statement of Changes in Net Assets
DRAFT
SIX MONTHS ENDED
JUNE 30, 1994 YEAR ENDED
INCREASE (DECREASE) IN NET ASSETS (UNAUDITED) DECEMBER 31, 1993
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 7,182,266 $ 4,818,178
Net investment income
Net realized gain (loss) 10,690,261 (7,315,062)
Change in net unrealized appreciation (depreciation) 1,591,118 109,912,298
Net increase (decrease) in net assets resulting from operations 19,463,645 107,415,414
Distributions to shareholders: (4,465,195) (2,858,933)
From net investment income
In excess of net investment income - (696,125)
In excess of net realized gain - (807,968)
Total distributions (4,465,195) (4,363,026)
Share transactions 591,715,667 601,451,901
Net proceeds from sales of shares
Reinvestment of distributions 4,465,195 4,363,026
Cost of shares redeemed (289,678,801) (111,743,493)
Net increase (decrease) in net assets resulting from share transactions 306,502,061 494,071,434
Total increase (decrease) in net assets 321,500,511 597,123,822
NET ASSETS
Beginning of period 777,960,571 180,836,749
End of period (including undistributed net investment income of $3,814,827 and $4,331,859, $ 1,099,461,082 $ 777,960,571
respectively)
OTHER INFORMATION
Shares
Sold 36,963,349 42,197,124
Issued in reinvestment of distributions 274,107 372,271
Redeemed (18,221,724) (7,983,962)
Net increase (decrease) 19,015,732 34,585,433
</TABLE>
Financial Highlights
DRAFT
SIX MONTHS ENDED
JUNE 30, 1994 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1993 1992 1991 1990 1989
SELECTED PER-SHARE DATA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.48 $ 11.53 $ 13.09 $ 12.42 $ 12.67 $ 10.11
Income from Investment Operations
Net investment income .05 .06 .16 .24 .18 .07
Net realized and unrealized gain (loss) .42 4.16 (1.54) .74 (.39) 2.57
Total from investment operations .47 4.22 (1.38) .98 (.21) 2.64
Less Distributions
From net investment income (.08) (.18) (.18) (.17) (.04) (.08)
In excess of net investment income - (.04) - - - -
From net realized gain - - - (.14)E - -
In excess of net realized gain - (.05) - - - -
Total distributions (.08) (.27) (.18) (.31) (.04) (.08)
Net asset value, end of period $ 15.87 $ 15.48 $ 11.53 $ 13.09 $ 12.42 $ 12.67
TOTAL RETURN B, C 3.02% 37.35% (10.72)% 8.00% (1.67)% 26.28%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,099,461 $ 777,961 $ 180,837 $ 126,490 $ 80,554 $ 25,865
Ratio of expenses to average net assets D .91%A 1.03% 1.14% 1.26% 1.41% 1.50%
Ratio of expenses to average net assets .91%A 1.03% 1.14% 1.26% 1.41% 1.98%
before expense reductions D
Ratio of net investment income to average net 1.49%A 1.21% 1.86% 2.33% 1.89% .66%
assets
Portfolio turnover rate 47%A 42% 61% 168% 100% 78%
</TABLE>
1. ANNUALIZED
2. TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
3. THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
4. SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS.
5. INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY
RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 1994 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES.
The Money Market Portfolio, High Income Portfolio, Equity-Income Portfolio,
Growth Portfolio and Overseas Portfolio (the funds) are funds of Variable
Insurance Products Fund (the trust). 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.
Each fund is authorized to issue an unlimited number of shares. Shares of
each fund may only be purchased by insurance companies for the purpose of
funding variable annuity or variable life insurance contracts. The
following summarizes the significant accounting policies of the funds:
SECURITY VALUATION.
MONEY MARKET PORTFOLIO. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
HIGH INCOME PORTFOLIO. Securities for which quotations are readily
available are valued by a pricing service at their market values as
determined by their most recent bid prices in the principal market (sales
prices if the principal market is an exchange) in which such securities are
normally traded. Securities (including restricted securities) for which
market quotations are not readily available are valued at their fair value
as determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees. Short-term securities
maturing within sixty days are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
EQUITY-INCOME AND GROWTH PORTFOLIOS. 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 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 are valued at
amortized cost or original cost plus accrued interest, both of which
approximate current value.
OVERSEAS PORTFOLIO. Securities for which quotations are readily available
are valued at the last sale price, or if no sale price, at the closing bid
price in the principal market in which such securities are normally traded.
Securities for which quotations are not readily available 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 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 funds 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.
Effective January 1, 1994, the funds adopted Statement of Position (SOP)
93-4: Foreign Currency Accounting and Financial Statement Presentation for
Investment Companies. In accordance with this SOP, reported 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. Further, as permitted under the SOP, the effects of
changes in foreign currency exchange rates on investments in securities are
not segregated in the Statement of Operations from the effects of changes
in market prices of those securities, but are included with the net
realized and unrealized gain or loss on investments.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes all of its taxable income for the fiscal
year. The schedules of investments include information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME.
MONEY MARKET PORTFOLIO. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as earned.
HIGH INCOME, EQUITY-INCOME, GROWTH AND OVERSEAS PORTFOLIOS. 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 funds are 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. Dividends are declared daily and paid
monthly from net interest income for the Money Market Portfolio.
Distributions are recorded on the ex-dividend date for all other funds. For
the Overseas Portfolio, certain foreign currency gains (losses) are taxable
as ordinary income and, therefore, increase (decrease) taxable ordinary
income available for distribution.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency transactions, market discount, partnerships, non-taxable
dividends and losses deferred due to wash sales. The funds (excluding the
Money Market Portfolio) 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.
Undistributed net investment income 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 funds may enter into forward
foreign currency contracts. These contracts involve market risk in excess
of the amount reflected in the fund's Statement of Assets and Liabilities.
The face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
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.
REPURCHASE AGREEMENTS. The funds, through their custodian, receive delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The funds' investment
adviser, Fidelity Management & Research Company (FMR), is responsible for
determining that the value of these underlying securities remains at least
equal to the resale price.
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the funds, along with other
registered investment companies having management contracts with FMR, may
transfer uninvested cash balances into a joint trading account. These
balances are invested in one or more repurchase agreements that are
collateralized by U.S. Treasury or Federal Agency obligations.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the
SEC, the funds, 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
funds to borrow from, or lend money to, other participating funds.
INDEXED SECURITIES. The funds (excluding the Money Market Portfolio) may
invest in indexed securities whose value is linked either directly or
inversely to changes in foreign currencies, interest rates, commodities,
indices, or other reference instruments. Indexed securities may be more
volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
RESTRICTED SECURITIES. The funds are permitted to invest in privately
placed restricted securities. These securities may be resold in
transactions exempt from registration or to the public if the securities
are registered. Disposal of these securities may involve time-consuming
negotiations and expense, and prompt sale at an acceptable price may be
difficult. At the end of the period, restricted securities (excluding 144A
issues) for the Money Market and High Income Portfolios amounted to
$28,000,000 and $20,863,194 or 4.2% and 4.1% of net assets, respectively
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a monthly
fee.
For the Money Market Portfolio, FMR receives a monthly fee that is
calculated on the basis of a basic fund fee rate of .03% of the fund's
average net assets, plus a fixed income group fee rate and an income-based
fee. The group fee rate is the weighted average of a series of rates
ranging from .1325% to .3700% and is based on the monthly average net
assets of all the mutual funds advised by FMR. The income-based fee is
added only when the fund's yield exceeds 5%. At that time the income-based
fee would equal 6% of that portion of the fund's gross income that
represents a gross yield of more than 5% per year. The maximum income-based
component is 0.24% (annualized) of average net assets. For the period, the
management fee was equivalent to an annualized rate of .19% of average net
assets.
For all other funds, 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 each fund. The group fee rate is the weighted
average of a series of rates ranging from .1325% to .3700% for the High
Income Portfolio and .30% to .52% for the Equity-Income, Growth and
Overseas Portfolios and is based on the monthly average net assets of all
the mutual funds advised by FMR. The annual individual fund fee rate are
.45%, .20%, .30% and .45% for the High Income, Equity-Income, Growth and
Overseas Portfolios, respectively. For the period, the management fees were
equivalent to annualized rates of .62%, .53%, .63% and .78% of average net
assets for the High Income, Equity-Income, Growth and Overseas Portfolios,
respectively.
For the High Income Portfolio, the Board of Trustees approved a new group
fee rate schedule with rates ranging from .12% to .37%. Effective August 1,
1994, FMR has voluntarily agreed to implement this new group fee rate
schedule as it results in the same or a lower management fee.
For the Equity-Income, Growth and Overseas Portfolios, the Board of
Trustees previously approved a group fee rate schedule with rates ranging
from .2850% to .52%. Effective November 1, 1993, FMR voluntarily
implemented this group fee rate schedule as it resulted in the same or
lower management fee. In July 1994, the Board of Trustees approved a new
group fee rate schedule with rates ranging from .27% to .52%. Effective
August 1, 1994, FMR has voluntarily agreed to implement this new group fee
rate schedule as it results in the same or a further reduction in
management fees.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SUB-ADVISER FEES.
As the Money Market Portfolio's investment sub-adviser, FMR Texas Inc., a
wholly owned subsidiary of FMR, receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect, and after reducing the fee
for any payments by FMR pursuant to the fund's Distribution and Service
Plan.
FMR, on behalf of the High Income and Overseas Portfolios, entered into
sub-advisory agreements with affiliates of FMR. In addition, one of the
sub-advisers of the Overseas Portfolio, Fidelity International Investment
Advisors (FIIA), entered into a sub-advisory agreement with its subsidiary,
Fidelity International Investment Advisors (U.K.) Limited (FIIAL U.K.).
Under the sub-advisory arrangements, FMR may receive investment advice and
research services and may grant the sub-advisers investment management
authority to buy and sell securities. FMR pays its sub-advisers either a
portion of its management fee or a fee based on costs incurred for these
services. FIIA pays FIIAL U.K. a fee based on costs incurred for either
service.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations Company
(FIIOC), an affiliate of FMR, is the funds' transfer, dividend disbursing
and shareholder servicing agent. FIIOC receives fees based on the type,
size, number of accounts and the number of transactions made by
shareholders. FIIOC pays for typesetting, printing and mailing of all
shareholder reports, except proxy statements.
ACCOUNTING FEES. Fidelity Service Co., an affiliate of FMR, maintains the
funds' accounting records. The fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. Some of the funds placed a portion of their
portfolio transactions with brokerage firms which are affiliates of FMR.
The commissions paid to these affiliated firms for the period were $5,440,
$759,670, $579,901 and $1,054, for the High Income, Equity-Income, Growth
and Overseas Portfolios, respectively .
4. INTERFUND LENDING PROGRAM.
The Money Market Portfolio participated in the interfund lending program as
a lender. The maximum loan and the average daily loan balances during the
periods for which loans were outstanding amounted to $28,856,000 and
$20,646,333, respectively. The weighted average interest rate was 3.91%.
Interest earned from the interfund lending program amounted to $6,753 and
is included in interest income on the Statement of Operations.
The High Income Portfolio participated in the interfund lending program as
a borrower. The maximum loan and the average daily loan balances during the
periods for which loans were outstanding amounted to $20,158,000 and
$16,203,167, respectively. The weighted average interest rate was 3.61%.
Interest expense includes $9,755 paid under the interfund lending program.
5. BANK BORROWINGS.
Each fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. Each fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, each 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. For
the High Income and Growth Portfolios, the maximum loan during the periods
for which loans were outstanding amounted to $5,228,000 and $18,017,000,
respectively, and the average daily loan balances were $2,745,833 and
$13,731,167, respectively. The weighted average interest rate was 3.97%and
4.33% for the High Income and Growth Portfolios, respectively. Interest
expense for the High Income and Growth Portfolios includes $1,821 and
$9,901, respectively, paid under the bank borrowing program.
6. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse the funds' total operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above an annual rate of 1.00% of average net assets for the High
Income Portfolio and 1.50% of average net assets for the Equity-Income,
Growth and Overseas Portfolios. For the period, there was no reimbursement
under this agreement.
FMR has directed certain portfolio trades of the Equity-Income and Growth
Portfolios to brokers who paid a portion of each fund's expenses. For the
period, the Equity-Income and Growth Portfolios expenses were reduced under
this arrangement by $152,881 and 148,825, respectively.
7. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. A summary of transactions with companies
which are or were affiliates of the Growth Portfolio is as follows:
Purchase Sales Dividend Market
Affiliate Cost Cost Income Value
Sport Supply Group, Inc. $ 624,649 - $ 13,294 $ 5,997,694
8. BENEFICIAL INTEREST.
At the end of the period, Fidelity Investments Life Insurance Company
(FILI) , an affiliate of FMR, was record owner of more than 5% of the
outstanding shares of the funds and certain unaffiliated insurance
companies were record owners of more than 10% of the outstanding shares:
FILI UNAFFILIATED INSURANCE COMPANIES
FUND % OF OWNERSHIP # OF % OF OWNERSHIP
Money Market 49 2 31
High Income 21 1 38
Equity-Income 31 1 29
Growth 21 1 30
Overseas 24 1 40
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL INFORMATION OF THE
SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS IN THE FUNDS 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 FUNDS NOR
FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
William J. Hayes, VICE PRESIDENT
Thomas J. Steffanci, VICE PRESIDENT
Fred L. Henning, Jr., VICE PRESIDENT
Robert A. Lawrence, VICE PRESIDENT
Lawrence Greenberg, VICE PRESIDENT
Barry J. Coffman, VICE PRESIDENT
Robert Litterst, VICE PRESIDENT
John R. Hickling, VICE PRESIDENT
Gary L. French, TREASURER
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
Arthur S. Loring, SECRETARY
Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox
Phyllis Burke Davis
Richard J. Flynn
Edward C. Johnson 3d
E. Bradley Jones
Donald J. Kirk
Peter S. Lynch
Edward H. Malone
Marvin L. Mann
Gerald C. McDonough
Thomas R. Williams
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Co.
Boston, MA
CUSTODIAN
MONEY MARKET PORTFOLIO:
Morgan Guaranty Trust Company of New York,
New York, NY
HIGH INCOME PORTFOLIO:
The Bank of New York, New York, NY
EQUITY-INCOME AND OVERSEAS PORTFOLIOS:
The Chase Manhattan Bank, N.A.,
New York, NY
GROWTH PORTFOLIO:
Brown Brothers Harriman & Co., Boston, MA
VIPI-8-94S
