ANNUAL REPORT FOR THE PERIOD ENDED DECEMBER 31, 1993
VARIABLE
INSURANCE
PRODUCTS FUND
TABLE OF CONTENTS
VARIABLE INSURANCE PRODUCTS FUND
PAGE
Performance Update VIPF-1
Market Environment VIPF-6
Schedule of Investments and Financial Statements:
Money Market Portfolio VIPF-13
High Income Portfolio VIPF-18
Equity-Income Portfolio VIPF-28
Growth Portfolio VIPF-37
Overseas Portfolio VIPF-47
Notes to Financial Statements VIPF-58
Report of Independent Accountants VIPF-63
VARIABLE INSURANCE PRODUCTS FUND: MONEY MARKET PORTFOLIO
PERFORMANCE UPDATE
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED DECEMBER 31, 1993
One Year Five Years Ten Years
MONEY MARKET PORTFOLIO 3.23% 6.05% 6.92%
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.
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 10113.10
11/30/85 10270.82 10303.28
12/31/85 10614.12 10604.89
01/31/86 10745.59 10676.11
02/28/86 11109.08 11130.19
03/31/86 11383.11 11373.99
04/30/86 11576.25 11551.61
05/31/86 11753.02 11685.66
06/30/86 11900.73 11804.62
07/31/86 11864.54 11648.79
08/31/86 11912.44 11864.11
09/30/86 12013.61 11962.13
10/31/86 12372.55 12172.42
11/30/86 12412.21 12272.12
12/31/86 12490.70 12338.30
01/31/87 12946.07 12686.83
02/28/87 13170.09 12896.28
03/31/87 13290.06 13038.71
04/30/87 12874.73 12754.69
05/31/87 12755.04 12696.88
06/30/87 13030.51 12872.82
07/31/87 13044.44 12942.36
08/31/87 13152.50 13072.22
09/30/87 12694.50 12771.45
10/31/87 12087.45 12430.46
11/30/87 12443.46 12744.64
12/31/87 12642.62 12913.87
01/31/88 13058.27 13267.43
02/29/88 13449.23 13627.68
03/31/88 13352.60 13605.06
04/30/88 13456.68 13644.44
05/31/88 13436.67 13715.65
06/30/88 13718.28 13977.88
07/31/88 13861.09 14125.34
08/31/88 13794.88 14171.41
09/30/88 13905.47 14314.68
10/31/88 14056.83 14537.53
11/30/88 14003.17 14591.99
12/31/88 14114.44 14653.99
01/31/89 14453.61 14873.49
02/28/89 14524.71 14973.19
03/31/89 14338.07 14959.79
04/30/89 14179.28 15004.19
05/31/89 14441.27 15280.66
06/30/89 14854.89 15496.82
07/31/89 14757.09 15570.54
08/31/89 14671.50 15647.62
09/30/89 14158.15 15498.32
10/31/89 13551.17 15253.18
11/30/89 13562.59 15287.37
12/31/89 13525.41 15273.54
01/31/90 13226.43 14975.03
02/28/90 13022.77 14756.95
03/31/90 12885.37 14956.43
04/30/90 12923.55 15032.42
05/31/90 13189.09 15303.95
06/30/90 13396.84 15600.45
07/31/90 13603.77 15930.13
08/31/90 13376.20 15320.29
09/30/90 13059.03 14653.99
10/31/90 12742.14 14281.08
11/30/90 13041.02 14402.06
12/31/90 13223.37 14609.58
01/31/91 13503.93 14816.10
02/28/91 14252.07 15915.80
03/31/91 14757.06 16600.03
04/30/91 15280.76 17191.27
05/31/91 15505.20 17275.22
06/30/91 15841.86 17622.74
07/31/91 16440.38 18044.99
08/31/91 16664.82 18424.26
09/30/91 17038.89 18658.93
10/31/91 17618.70 19213.39
11/30/91 17768.32 19435.32
12/31/91 17861.84 19661.11
01/31/92 18815.72 20348.53
02/29/92 19498.88 20853.89
03/31/92 20129.18 21144.86
04/30/92 20271.51 21298.76
05/31/92 20515.50 21638.49
06/30/92 20739.16 21907.34
07/31/92 21145.81 22351.21
08/31/92 21593.13 22647.12
09/30/92 21816.78 22905.16
10/31/92 21491.46 22615.87
11/30/92 21755.79 22936.16
12/31/92 21999.78 23231.48
01/31/93 22589.42 23803.54
02/28/93 22974.74 24254.11
03/31/93 23504.93 24674.60
04/30/93 23659.57 24851.63
05/31/93 24013.03 25186.24
06/30/93 24631.58 25659.43
07/31/93 24874.58 25935.24
08/31/93 25139.67 26182.47
09/30/93 25228.04 26311.66
10/31/93 25824.50 26807.31
11/30/93 26067.50 26953.92
12/31/93 26487.23 27223.44
$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
DECEMBER 31, 1993, THE VALUE OF THE INVESTMENT WITH DIVIDENDS REINVESTED
WOULD HAVE GROWN TO $26,487 - A 164.87% INCREASE ON THE INITIAL INVESTMENT.
FOR COMPARISON, LOOK AT HOW A $10,000 INVESTMENT IN THE MERRILL LYNCH HIGH
YIELD MASTER, (WITH DIVIDENDS REINVESTED) DID OVER THE SAME PERIOD. IT
WOULD HAVE GROWN TO $27,223 - A 172.23% INCREASE.
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED DECEMBER 31, 1993
One Year Five Years Life of
Fund
HIGH INCOME PORTFOLIO 20.40% 13.42% 12.50%
MERRILL LYNCH HIGH YIELD
MASTER INDEX 17.18% 13.19% 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 DIVIDENDS 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
$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 DECEMBER 31, 1993,
THE VALUE OF THE INVESTMENT WITH DIVIDENDS REINVESTED WOULD HAVE GROWN TO
$21,961 - A 119.61% INCREASE ON THE INITIAL INVESTMENT. FOR COMPARISON,
LOOK AT HOW A $10,000 INVESTMENT IN THE S&P 500 (WITH DIVIDENDS
REINVESTED) DID OVER THE SAME PERIOD. IT WOULD HAVE GROWN TO $24,966 - A
149.66% INCREASE.
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED DECEMBER 31, 1993
One Year Five Years Life of
Fund
EQUITY-INCOME 18.29% 12.56% 11.48%
PORTFOLIO
S&P 500(Registered trademark) 10.08% 14.55% 13.48%
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 DIVIDENDS. 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
$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 DECEMBER 31, 1993,
THE VALUE OF THE INVESTMENT WITH DIVIDENDS REINVESTED WOULD HAVE GROWN TO
$26,490 - A 164.90% INCREASE ON THE INITIAL INVESTMENT. FOR COMPARISON,
LOOK AT HOW A $10,000 INVESTMENT IN THE S&P 500 (WITH DIVIDENDS
REINVESTED) DID OVER THE SAME PERIOD. IT WOULD HAVE GROWN TO $24,966 - A
149.66% INCREASE.
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED DECEMBER 31, 1993
One Year Five Years Life of
Fund
GROWTH PORTFOLIO 19.37% 17.13% 14.41%
S&P 500(Registered trademark) 10.08% 14.55% 13.48%
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 DIVIDENDS. 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) Morgan Stanley 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
$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 DECEMBER 31,
1993, THE VALUE OF THE INVESTMENT WITH DIVIDENDS REINVESTED WOULD HAVE
GROWN TO $16,826 - A 68.26% INCREASE ON THE INITIAL INVESTMENT. FOR
COMPARISON, LOOK AT HOW A $10,000 INVESTMENT IN THE MORGAN STANLEY EAFE
INDEX (WITH DIVIDENDS REINVESTED) DID OVER THE SAME PERIOD. IT WOULD HAVE
GROWN TO $15,959 - A 59.59% INCREASE.
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED DECEMBER 31, 1993
One Year Five Years Life of
Fund
OVERSEAS PORTFOLIO 37.35% 10.46% 7.80%
EAFE 32.56% 2.01% 6.98%
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 FOREIGN COMMON STOCK PRICES
TRANSLATED INTO U.S. DOLLARS AND COMPOSED OF MORE THAN 900 COMPANIES FROM
EUROPE, AUSTRALIA AND THE FAR EAST.
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.
MARKET ENVIRONMENT
In 1993, investors could have put their money into just about any type of
stock or bond investment portfolio and not lost money. For the first time
since 1986, all 31 investment categories tracked by Lipper Analytical
Services produced positive total returns. Despite posting strong numbers,
U.S. stock and bond markets generally lagged many of their overseas
counterparts, which turned in unusually high returns.
U.S. STOCK MARKETS
The Standard & Poor's 500 Composite Stock Price Index - a broad measure
of U.S. stock performance - rose 10.08% in the 12 months ended December 31,
1993, in line with the market's long-term average annual return. The NASDAQ
Composite Index - a measure of small stock performance - rose 14.75%. It
was outpaced by the Dow Jones Industrial Average - an index of 30 blue-chip
stocks - which was up 17.04%. In mid-November, the Dow closed above 3700
for the first time and finished the year at 3754.
Low inflation, falling interest rates and a gradually improving economy
boosted U.S. stocks. Technology was one of the best performing sectors,
although semiconductors gave back part of their gains in the fall.
Communications stocks soared as traditional telephone utilities, cellular
companies and entertainment firms scrambled to form alliances. Investors
speculated about what role technology companies would play in the building
of the so-called information superhighway, which will link the technologies
of computers, telephones and televisions. Financial stocks, notably
securities dealers,
were among the market leaders before falling off somewhat late in the year.
Also, economically-sensitive sectors like autos and steel took off as the
economy showed steady growth. The entertainment sector, especially casinos,
posted impressive gains. Heavy machinery and precious metals stocks also
performed well.
Market laggards included the health-care and consumer non-durable sectors,
although both showed signs of life near year-end. In 1993, consumers
shunned familiar brand-name products for cheaper generic or off-
brand items, which hurt many traditional big-name growth stocks.
Uncertainty over President Clinton's health-care reform plan scared many
investors away from that sector. Drug company stocks suffered as investors
feared these companies would lose the ability to raise prices.
FOREIGN STOCK MARKETS
1993's rally in international stocks was a dramatic turnaround for many
foreign markets that had previously fallen out of favor. The Morgan Stanley
EAFE (Europe, Australia, Far East) index was up 33%. Slowly falling
interest rates and investors' hopes of economic recovery combined to lift
stock prices in Europe. The Morgan Stanley Europe index rose 29% in 1993.
Falling interest rates, a strengthening yen, and government spending aimed
at stimulating economic growth fueled a furious market rally in Japan
through late spring, before political instability dragged the market back
down. Still, the TOPIX, an index that includes stocks from Japan's larger,
better known companies,
was up 24% for the year. Emerging markets reaped the biggest international
returns. The Morgan Stanley Emerging Markets Index shot up 73% in 1993.
Returns in markets like Hong Kong (up 117%), Malaysia (up 110%), and Brazil
(up 78%) reflected a favorable outlook for increases in corporate profits
as economic reforms began to take hold in these areas.
U.S. BOND MARKETS
Most all bond markets around the world richly rewarded investors in 1993.
The U.S. bond market posted relatively strong numbers on a historical
basis. Falling interest rates through most of the year fueled gains. The
yield on the benchmark 30-year Treasury bond hit a three decade low in
mid-October, yielding 5.79%. By year-end, mild inflation fears, fueled by a
strengthening economy, had pushed up the yield on the 30-year bond to
6.35%, which slightly dampened overall 1993 results for investors. The
Lehman Brothers Aggregate Bond Index - a broad
measure of taxable bonds in the U.S. market - returned 9.75% for the year.
Falling interest rates and a strengthening economy helped high-yield issues
post impressive results. The Merrill Lynch High Yield Master Index rose
17.18%. Mortgage-backed securities continued to be hurt by refinancings;
the Lehman Brothers mortgage index was up 6.84% in '93.
FOREIGN BOND MARKETS
In general, bond investors landed more impressive returns overseas than
here at home. Falling interest rates and low inflation fueled strong
returns in both developed nations and, more notably, in emerging markets.
The Salomon Brothers World Government Bond Index - which measures bond
market performance in developed nations including the United States - rose
13.27% for the year. That figure was dwarfed by the J.P. Morgan Emerging
Markets Bond Index, which was up 44.17%.
A MESSAGE FROM BOB LITTERST,
PORTFOLIO MANAGER OF
MONEY MARKET PORTFOLIO
After a fairly volatile first six months, short-term interest rates were
stable and trendless during the second half of the year. For example,
yields on six-month Treasury bills ranged between just 3.0% and 3.3%. Also,
the Federal Reserve kept the federal funds rate - the interest rate banks
charge each other for overnight loans - at 3%, where it's been since
September 1992. The economy grew at a moderate pace in '93. That, combined
with low inflation, is exactly what the Fed likes. That said, the fund's
yield closely traced short-term rates. A very stable rate environment meant
there weren't too many opportunities to take advantage of moving rates.
Within those confines, I made a few changes in the way in which I
positioned the fund. Over the summer, it became clear that yield spreads
were tightening. That meant there was less difference between the yields of
corporate and Treasury issues with similar maturities. When yields on
corporates fell relative to Treasuries, they were no longer as attractive
when weighed against their higher risk. So I increased the percentage of
the fund in Treasury and government agency debt - from about 10% at the end
of May, to about 20% by the beginning of November. The fund's emphasis on
government securities might have caused a slight reduction in yield.
However, I felt the small yield loss was offset by far greater quality and
liquidity. Lately, I've begun buying corporate issues again, as supply has
increased and spreads have widened. As for the fund's average maturity, I
kept it within a range of 60 to 80 days through most of the last six
months. That way I was ready to go shorter if interest rates started to
rise, but still benefited from higher rates on securities with longer
maturities.
Looking ahead, I believe the economy is showing stable upward momentum that
is sustainable. Labor market gains and low long-term interest rates are the
oil that's keeping the engine running. However, there are still many
factors keeping economic growth in check: corporate downsizing, higher
taxes and uncertainty over health care among them. I think the next
significant move in short-term interest rates will be up. The Fed could
trigger a rise in short-term rates by raising the federal funds rate if it
perceives inflation is no longer falling. But inflationary pressures appear
quite tame. If the Fed acts at all, I think it'll be a gentle nudge.
One way I'm preparing the fund for a possible rise in rates is by
purchasing variable and floating rate instruments, now 22% of the fund.
These issues are higher yielding because they have longer final maturities.
However, what makes them unique is a feature that resets their coupons
(stated interest rates) at fixed intervals - for example, weekly, monthly
or quarterly. When rates are rising, the fund can get a higher coupon on
these issues at their reset intervals. To minimize the risk of exposure to
longer maturities, our research staff carefully reviews each issue.
Also, I expect to keep the fund's average maturity in a neutral range of 60
to 75 days. That will allow for flexibility if rates do start creeping up.
The fund's longer-maturity issues are almost exclusively Treasuries and
government agency issues, which are extremely liquid. They'll be easy to
sell quickly if rates rise and I need to shorten the average maturity.
A MESSAGE FROM BARRY COFFMAN, PORTFOLIO MANAGER OF
HIGH INCOME PORTFOLIO
For the 12 months ended December 31, the fund finished ahead of the Merrill
Lynch High Yield Master Index, which rose 17.18%. Interest rates fell,
inflation remained low and the economy strengthened, which helped companies
improve their balance sheets and the credit quality of their high-yield
debt.
I decreased the fund's investment in supermarkets and food wholesalers in
the second half of the year, from 10% on June 30 to 7% on December 31.
Supermarkets had a tough year. Low inflation prevented them from raising
prices, and they faced ever-increasing competition. Instead, I shifted into
cyclicals - companies that rise and fall in tandem with the economy. For
example, 1993's home-building boom led me to invest in the bonds of
national home builders like U.S. Homes and regional builders like UDC Homes
(out of Phoenix). Also companies that supply building materials and home
furnishings did well. These included Color Tile and Wickes Lumber. Steel
producers, like Inland Steel and WCI Steel, are further examples of
cyclicals whose fortunes improved last year.
At year-end, media and leisure was the fund's largest sector investment at
25%. In the last six months of '93, I lessened the fund's stake in cable TV
companies whose bonds had already had solid price gains due to merger and
acquisition activity, and emphasized entertain-
ment companies. For example, Live Entertainment was one of the fund's
largest investments on December 31. The company contracts with independent
movie studios such as Carolco Pictures ("Basic Instinct" and "Terminator")
and Miramax Films ("The Crying Game" and "The Piano") to distribute videos
of feature films. SCI Television - which owns several TV stations
nationwide - was another recent investment. SCI received $100 million in
new equity upon emerging from bankruptcy in '93 and I feel is poised to
become a significant entertainment company.
Other top investments on December 31 included Mesa Capital, Insilco and IMC
Fertilizer. Mesa is a large natural gas exploration and production company
that recently restructured its debt. The company is rich in assets and well
positioned, based on the increasing demand for natural gas. Insilco is a
conglomerate that manufactures electrical products and automotive parts,
but the company is best known for its office products. Its Rolodex business
is up for sale and I expect the proceeds to substantially lower the
company's debt. IMC Fertilizer is another company with valuable assets. IMC
is benefiting from rising prices for its fertilizer products which, in
turn, boosted its stock price. That gave IMC the flexibility to improve its
balance sheet.
As for disappointments, Revlon was the biggest. I decreased the fund's
investment in the company after it reported disappointing sales and
earnings. Although, Revlon seems to be doing better than many other
cosmetics companies, the whole industry is in a slump. I also cut back on
bonds issued by Computervision. The company had disappointing sales,
primarily because of economic weakness in Europe.
Going forward, I have a cautiously optimistic outlook. Falling interest
rates helped the high-yield market substantially in '93, but rates appear
to have leveled out, and may be on the way up. A stronger than expected
economy in '94 could fuel a rise in rates, but that would not necessarily
be negative for the market. The business prospects of companies that issue
high yield bonds would likely improve in a better economy, which could
boost their credit ratings. That would help offset price losses on bonds
due to rising interest rates.
A MESSAGE FROM BETTINA
DOULTON, PORTFOLIO MANAGER OF
EQUITY-INCOME PORTFOLIO
Over the last six months, the fund continued to build upon its strong
performance in the first half of 1993. It ended the year comfortably ahead
of the total return of the Standard & Poor's 500 index.
The fund did well by avoiding consumer non-durable stocks - including
tobacco, food and drugs - which performed poorly through most of the year.
Low inflation kept companies from raising prices and consumers rebelled
against paying full price for brand-name items, flocking to generic or
off-brand products. The most dramatic example was Philip Morris, which was
forced to lower prices on its premium-brand cigarettes to compete with
cheaper brands. I avoided the stock until its price had dropped
substantially, and the company's premium-brand market share had stabilized.
Philip Morris was the fund's third largest holding at year-end. As the
stock prices of many consumer non-durables dropped, I increased the fund's
stake to 4.0% on December 31, from 1.5% on June 30.
Financial stocks performed well, mostly during the first half of the year.
Falling interest rates helped banks like Citicorp, NationsBank and Wells
Fargo boost their profit margins, while the improving economy brought down
credit costs. In October, interest rates rose and many of these stocks
quickly became less attractive. Investors sold in a hurry and my biggest
disappointment in the last six months was not reacting quickly enough. Some
financial stocks, which I held onto for too long, hurt the fund. The
finance sector still was 11.8% of the fund's total investments at year-end,
but that's down from 19.6% at the end of June.
Cyclical stocks - those that rise and fall in tandem with the economy - did
particularly well in the past six months as economic numbers picked up. The
auto stocks - Chrysler (up 12.7% from June 30 to December 31) and Ford (up
23.4%) - helped the fund. I shied away from General Motors, mainly because
of the company's huge pension liability. That was a mistake, as G.M.'s
stock came along for the ride (up 23.3%). Many industrial companies cut
costs, sold off unprofitable businesses and improved their balance sheets
in the second half of the year. General Electric performed well, up 9.5% in
the last six months. The company has improved its balance sheet, run a
profitable financial services business and grown its presence in the
developing world. Manufacturers of farm equipment - Deere, Tenneco and
Caterpillar - also provided strong returns.
As for other sectors, energy remained 8.7% of the fund at year-end. I
bought more energy stocks after prices fell in November. I think they'll
benefit from increasing worldwide demand and a supply that's proven shaky
at times. I kept the fund's stake in utilities relatively low, 9.2% on
December 31. I'm concerned about high stock prices, compared to other
measures like earnings, and I'm not convinced there'll be any strong
dividend growth in utilities. Retail stocks - 3.8% of the fund at year- end
- - suffered through most of the year, but there were exceptions. Both J.C.
Penney and Sears made internal changes that helped improve their
competitive positions. Both stocks helped the fund.
I'm not about to make guesses on how the stock market will perform in '94.
But it wouldn't take much to upset what has been a strong market. Many
stocks are expensive, so I'll likely stay very focused on value. If a stock
is cheap, then it's not likely to fall as far as more expensive securities
if the market does stumble.
A MESSAGE FROM
LAWRENCE GREENBERG,
PORTFOLIO MANAGER OF
GROWTH PORTFOLIO
Despite predictions of a stock market correction in '93, both the market
and the fund continued to provide strong returns. For the 12 months ended
December 31, the fund beat the Standard & Poor's 500 index, which rose
10.08%. The biggest factor behind the fund's success was its emphasis on
technology stocks, which were up over 14% in 1993. Despite a sell-off in
the fall, the sector's solid performance this year had a lot to do with the
economy. In the slow growth environment we had in '93, the only way many
businesses could increase their earnings was through greater productivity.
Because interest rates were so low and the cost of technology products was
coming down, technology investments offered a more cost-effective means of
improving productivity than hiring more workers. This boosted demand for
technology and telecommunications products and drove up the stock prices of
many companies that produce them.
At the end of December, the fund had a 18.6% stake in technology. Included
were companies that specialize in computer networking - like Cisco Systems
and Wellfleet Communications. These companies help businesses to downsize
their computer networks by making the move from mainframe systems to
personal computers. Both stocks did well. Companies that develop and market
the software used in these new downsized networks also helped the fund.
Examples included Oracle Systems and Sybase. In the wireless communications
field, Motorola was a big contributor to the fund's return. It was the
fund's eighth largest investment at the end of December.
The fund had a 5.7% stake in the retail sector at year-end. Many of these
stocks had a tough year; people still didn't feel safe enough in their jobs
to do a lot of shopping. Lately, the numbers show consumer confidence is
picking up as the economy has strengthened. Lowe's is an example of a
retail stock that has done well recently. It's the second largest chain of
home improvement stores in the United States, behind Home Depot. Lowe's has
increased the size of its stores and its earnings are growing rapidly. I
think this shows there is finally some business to be had in retail.
I increased the fund's investment in the media and leisure sector during
the year. One of the biggest opportunities here resulted from the merger of
Tele-Communications, Inc. and Bell Atlantic. As the nation's largest cable
television company, TCI now appears able to become a prime service provider
on the so-called information superhighway, which will merge televisions,
telephones and computers.
My biggest disappointment this year was failing to take better advantage of
the run-up in international stocks. The fund had a 5.2% stake in foreign
investments at the end of the year. However, I could have participated more
in emerging markets, which had very strong returns. Many foreign stocks
have become expensive, but there are still opportunities overseas which
I'll be looking for in '94.
As for the next six months, I'm a bit cautious. We've gone through three
years now without a 10% correction in the U.S. stock market, the longest
such period this century. I think it's very reasonable to assume that a
correction of this size could come sometime soon. This may not be all bad;
it would bring price-to-earnings ratios for some stocks down to a level
that would make them more attractive.
A MESSAGE FROM JOHN HICKLING, PORTFOLIO MANAGER OF
OVERSEAS PORTFOLIO
It was a banner year for international funds. The fund's total return
easily topped the EAFE index, which rose 32.56% for the 12 months ended
December 31.
The fund's performance was due as much to avoiding certain sectors as
focusing on others. For example, in Europe, many countries rejected the
European Rate Mechanism (ERM) and allowed their currencies to find a level
relative to the deutsche mark that more accurately reflected local economic
activity. As a result, interest rates started to come down. European stock
markets did extremely well in local currencies - and well enough in dollars
too - despite continued economic weakness. However, as the year progressed,
I became less optimistic about the prospects for an imminent global
recovery. That's why I shifted away from European companies whose fortunes
are tied to the local economies. Instead, I looked for companies with
earnings stability and managements that have adjusted to the reality of a
deep and prolonged recessionary environment in Europe.
More specifically, I moved out of stocks in the technology and basic
industry sectors. Instead, I focused on those that would respond to
declining interest rates. Throughout the second half of the year, my
largest investment was in Stet, an Italian telephone utility. In addition
to meeting my earnings and interest rate criteria, it stood to benefit from
the government's move toward privatizing the industry. The stock had a
tremendous year. In the United Kingdom, I focused on banks and financial
stocks such as National Westminster and Barclays. I also emphasized bank
and insurance stocks in France, Germany, the Netherlands, and Scandinavia.
But my biggest allocation to financials was in Switzerland. Zurich
Versicherung, an insurance company, and C.S. Holdings, a bank, were among
the fund's largest investments and best performers.
Japanese stocks made a strong contribution to the fund's performance in the
first few months of the year. I emphasized brokerage firms and trust banks,
which did well. Stocks such as Nomura Securities and Murata Manufacturing
remain among the fund's largest investments, because I believe they still
have room to improve. However, the government's stop-gap measures that
rescued the Japanese financial system were not enough to bail out the
economy. I expect the economy to remain weak for some time. That's why I
cut back on my Japanese investments, from 22.8% six months ago to 14.7% at
the end of the year. Over the last six months, a stake in Japanese
government bonds also helped the fund.
As for disappointments, I turned somewhat bearish on Hong Kong too early. A
combination of factors in the Hong Kong market - including increasing
participation by retail investors, growing political risk and a general
sense of euphoria - led me to look for other opportunities in the Pacific
Basin. I turned to markets such as Malaysia, Singapore and Thailand, all
good performers. However, I missed out on a 20% upturn in the Hong Kong
market last fall by cutting back on my investments prematurely.
Looking ahead, I think any economic recovery in Europe or Japan will be
muted. That makes stock selection more important than ever. I expect to
remain focused on companies whose managements have correctly assessed the
current slow growth environment. After such an impressive year for foreign
stocks, anything resembling a repeat would be very unlikely.
VARIABLE INSURANCE PRODUCTS FUND: MONEY MARKET PORTFOLIO
INVESTMENTS/DECEMBER 31, 1993
(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)
Bank Notes - 1.3%
Bank of New York
3/6/94 3.49%(a) $ 5,000,000 $ 5,000,000 06499AAJ
Certificates of Deposit - 23.3%
DOMESTIC CERTIFICATES OF DEPOSIT - 1.3%
Old Kent Bank & Trust Company
3/31/94 3.40 5,000,000 5,000,000 679999CL
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 18.8%
Canadian Imperial Bank of Commerce
1/6/94 3.60 1,000,000 999,952 136990EA
Dai-Ichi Kangyo Bank, Ltd.
2/9/94 3.28 3,000,000 3,000,480 2379983K
Fuji Bank, Ltd.
1/28/94 3.46 5,000,000 5,000,000 35999DGU
1/31/94 3.45 5,000,000 5,000,000 35999DGT
Kingdom of Sweden
3/23/94 3.28(a) 13,000,000 13,000,000 998999AV
Industrial Bank of Japan, Ltd.
1/20/94 3.44 5,000,000 5,000,000 4559905P
Mitsubishi Bank, Ltd.
2/28/94 3.33 10,000,000 10,000,079 610998TW
Sakura Bank, Ltd.
1/5/94 3.52 5,000,000 5,000,000 793999JK
2/7/94 3.40 5,000,000 5,000,000 793999JN
Skandinaviska Enskilda Banken
2/17/94 3.39 5,000,000 5,000,000 880992FY
Societe Generale
4/25/94 3.43 5,000,000 5,000,000 833991SK
Sumitomo Bank, Ltd.
2/24/94 3.45 5,000,000 5,000,000 86699EBL
Swedish National Housing Finance Corp.
11/23/94 3.52(a) 3,000,000 3,000,000 956995AM
70,000,511
LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - 3.2%
Mitsubishi Bank, Ltd.
4/29/94 3.49 5,000,000 4,999,973 610998UD
Sumitomo Bank, Ltd.
1/10/94 3.43 7,000,000 6,999,943 86699EAM
11,999,916
Total Certificates of Deposit 87,000,427
Commercial Paper - 47.3%
American Brands, Inc.
2/28/94 3.34% $ 5,000,000 $ 4,973,256 024990ES
B.B.V. Finance (Delaware), Inc.
1/6/94 3.51 2,900,000 2,898,591 063999AJ
Bankers Trust Corporation
2/16/94 3.37 6,000,000 5,974,624 06699FAQ
Bear Stearns Companies Inc.
3/18/94 3.31 5,000,000 4,965,378 073999WS
Bell Atlantic Financial Services
2/25/94 3.43 5,000,000 4,974,028 077994AM
Bradford & Bingley Building Society
3/23/94 3.32 5,200,000 5,161,390 107993BQ
CIT Group Holdings, Inc.
3/30/94 3.59 4,000,000 3,965,778 172990PJ
CoreStates Capital Corp.
4/8/94 3.36(a) 5,000,000 5,000,000 2186939C
Corporate Asset Funding Company, Inc.
1/25/94 3.51 800,000 798,133 176992YY
1/26/94 3.51 600,000 598,541 1769922A
Dean Witter, Discover & Co.
1/31/94 3.44 5,000,000 4,985,750 24299AAC
Electronic Data Systems Corporation
2/10/94 3.43 8,200,000 8,169,022 285998DQ
2/17/94 3.45 1,500,000 1,493,303 285998DS
GTE Corporation
1/11/94 3.45 1,500,000 1,498,562 362991CG
1/21/94 3.51 5,000,000 4,990,278 362991CF
General Electric Capital Corporation
9/6/94 3.37(a) 5,000,000 5,000,000 369998LE
General Motors Acceptance Corporation
1/10/94 3.51 2,000,000 1,998,263 638998NP
1/12/94 3.51 5,000,000 4,994,691 638998NR
2/14/94 3.55 5,000,000 4,978,459 638998NV
3/9/94 3.45 2,000,000 1,987,344 638998MY
Goldman Sachs Group, L.P. (The)
3/11/94 3.40 5,000,000 4,967,752 696992KA
Grand Metropolitan Finance
4/28/94 3.55 680,000 672,265 386993AC
5/23/94 3.45 5,000,000 4,933,141 386993AD
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
IBM Corporation
1/31/94 3.45% $ 5,000,000 $ 4,985,708 4592009X
Kingdom of Denmark
2/10/94 3.38 10,000,000 9,963,000 249998BA
Merrill Lynch & Co., Inc.
2/14/94 3.27 1,000,000 996,027 59099A8U
Morgan Stanley Group, Inc.
2/22/94 3.42 5,000,000 4,975,516 61799EHP
2/28/94 3.38 5,000,000 4,973,013 61799EHT
NYNEX Corporation
3/7/94 3.36 5,000,000 4,969,938 67099CAA
Nationwide Building Society
3/3/94 3.45 9,000,000 8,947,845 638993HB
New Center Asset Trust
3/7/94 3.41 5,000,000 4,969,486 643995AS
3/8/94 3.41 5,000,000 4,969,017 643995AV
New South Wales Treasury Corp.
3/8/94 3.39 3,000,000 2,981,520 648992AM
Nordbanken North America, Inc.
1/18/94 3.44 10,000,000 9,983,850 684999BX
Prudential Funding Corporation
2/14/94 3.36 5,000,000 4,979,833 743994KA
Sears Credit Corp. B
1/26/94 3.47 5,000,000 4,988,021 81299GAD
Sears Roebuck Acceptance Corp.
1/27/94 3.54 3,000,000 2,992,373 81299EBX
Whirlpool Financial Corporation
1/4/94 3.44 677,000 676,808 9633289T
1/13/94 3.49 10,000,000 9,988,433 9633289N
Total Commercial Paper 176,318,937
Federal Agencies - 1.9%
FEDERAL HOME LOAN BANK - DISCOUNT NOTES
6/16/94 3.37 7,000,000 6,997,446 567995GP
U.S. Treasury Obligations - 1.3%
U. S. TREASURY BILLS
5/26/94 3.35 5,000,000 4,933,541 99399H5F
Medium-Term Notes (a) - 7.3%
Abbey National PLC, UK
6/24/94 3.31 1,000,000 1,000,000 007994GK
Abbey National Treasury Service
9/30/94 3.37 13,000,000 13,000,000 010998AJ
Goldman Sachs Group, L.P. (The)
6/16/94 3.49% $ 4,000,000 $ 4,000,000 696992KE
9/1/94 3.49 3,000,000 3,000,000 696992KB
Norwest Corporation
3/15/94 3.39 6,000,000 6,000,000 66899CBK
Total Medium-Term Notes 27,000,000
Short-Term Notes (a) - 6.2%
J.P. Morgan Securities
4/19/94 3.27 3,000,000 3,000,000 616998AW
5/23/94 3.25 6,000,000 6,000,000 616998EC
SMM Trust Company (1993 A) (b)
3/18/94 3.36 5,000,000 5,000,000 7845689Y
SMM Trust Company (1993 D) (b)
1/28/94 3.49 3,000,000 3,000,000 7845689S
SMM Trust Company (1993 F) (b)
2/15/94 3.53 6,000,000 6,000,000 7845689T
Total Short-Term Notes 23,000,000
Foreign Government Obligations
(United states dollars) - 1.3%
Canadian Treasury Bills
5/26/94 3.42 5,000,000 4,932,334 136992SS
Municipal Bonds - 7.7%
Massachusetts General Obligation
1/3/94 4.25 9,000,000 9,000,000 575825WM
New Orleans Aviation Board (MBIA Insured)
1/7/94 3.51 1,800,000 1,800,000 64763H9B
New York Public Housing Authority
1/3/94 4.75 18,000,000 18,000,000 649660JR
Total Municipal Bonds 28,800,000
MATURITY
AMOUNT
Repurchase Agreements - 2.4%
In a joint trading account
(U.S. Treasury Obligations)
dated 12/31/93, due 1/3/94
(Note 2)
At 3.23% $ 61,016 61,000 99799MMX
At 3.29% 8,782,406 8,780,000 99799MMU
Total Repurchase Agreements 8,841,000
Total Investments - 100% $ 372,823,685
Total cost for income tax purposes - $372,823,685
LEGEND:
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) 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 A) 3/18/93 $5,000,000 7845689Y
(1993 D) 10/28/93 $3,000,000 7845689S
(1993 F) 11/15/93 $6,000,000
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>
December 31, 1993
ASSETS
Investment in securities, at value (including repurchase agreements of $8,841,000) (Notes 1
and 2) - See $ 372,823,685
accompanying schedule
Interest receivable 678,856
TOTAL ASSETS 373,502,541
LIABILITIES
Payable to custodian bank $ 20,327,146
Accrued management fee 40,677
Other payables and accrued expenses 31,090
TOTAL LIABILITIES 20,398,913
NET ASSETS $ 353,103,628
Net Assets consist of:
Paid in capital $ 353,102,377
Accumulated net realized gain (loss) on investments 1,251
NET ASSETS, for 353,102,377 shares outstanding $ 353,103,628
NET ASSET VALUE, offering price and redemption price per share ($353,103,628 (divided by) 353,102,377 shares) $1.00
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Year Ended December 31, 1993
INTEREST INCOME $ 10,372,557
EXPENSES
Management fee (Note 3) $ 415,213
Transfer agent fees (Note 3) 87,208
Accounting fees and expenses (Note 3) 53,769
Non-interested trustees' compensation 2,884
Custodian fees and expenses 45,947
Registration fees 13,458
Reports to shareholders (Note 4) 47,668
Audit 18,530
Legal 3,509
Miscellaneous 4,264
Total expenses before 692,450
reductions
Expense reductions (Note 4) (24,100) 668,350
NET INTEREST INCOME 9,704,207
NET REALIZED GAIN (LOSS) ON 4,544
INVESTMENTS (NOTE 1)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 9,708,751
</TABLE>
Statement of Changes in Net Assets
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED DECEMBER 31,
1993 1992
INCREASE (DECREASE) IN NET ASSETS
Operations $ 9,704,207 $ 11,360,247
Net interest income
Net realized gain (loss) on investments 4,544 (4,346)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS 9,708,751 11,355,901
Dividends to shareholders from net interest income (9,704,207) (11,360,247)
Share transactions at net asset value of $1.00 per share 531,400,504 297,977,891
Proceeds from sales of shares
Reinvestment of dividends from net interest income 9,797,785 11,287,338
Cost of shares redeemed (489,101,476) (279,381,460)
Net increase (decrease) in net assets and shares
resulting from share transactions 52,096,813 29,883,769
TOTAL INCREASE (DECREASE) IN NET ASSETS 52,101,357 29,879,423
NET ASSETS
Beginning of period 301,002,271 271,122,848
End of period $ 353,103,628 $ 301,002,271
The accompanying notes are an integral part of the financial statements.
</TABLE>
Financial Highlights
DRAFT
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31,
1993 1992 1991 1990 1989
SELECTED PER-SHARE DATA
Net asset value, beginning of period
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income from Investment Operations
.032 .038 .059 .078 .087
Net interest income
Dividends from net interest income
(.032) (.038) (.059) (.078) (.087)
Net asset value, end of period
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN
3.23% 3.90% 6.09% 8.04% 9.12%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)
$ 353,104 $ 301,002 $ 271,123 $ 254,585 $ 142,970
Ratio of expenses to average net assets
.22%(dagger) .24% .38% .56% .67%
Ratio of expenses to average net assets before expense reductions
.23%(dagger) .24% .38% .56% .67%
Ratio of net interest income to average net assets
3.16% 3.85% 5.93% 7.76% 8.70%
</TABLE>
(dagger) SEE NOTE 4 OF NOTES TO FINANCIAL STATEMENTS.
VARIABLE INSURANCE PRODUCTS FUND: HIGH INCOME PORTFOLIO
INVESTMENTS/DECEMBER 31, 1993
(Showing Percentage of Total Value of Investments)
MOODY'S MOODY'S
RATINGS PRINCIPAL VALUE RATINGS PRINCIPAL VALUE
(UNAUDITED) (D) AMOUNT (A) (NOTE 1) (UNAUDITED) (D) AMOUNT (A) (NOTE 1)
CORPORATE BONDS - 88.2%
CONVERTIBLE BONDS - 2.2%
BASIC INDUSTRIES - 0.4%
IRON & STEEL - 0.4%
Stelco, Inc. 7 3/4%, 8/31/98 - CAD 3,000,000 $ 1,883,866 858525AB
HEALTH - 0.7%
MEDICAL FACILITIES MANAGEMENT - 0.7%
Abbey Healthcare Group, Inc.
6 1/2%, 12/1/02 (g) B2 2,140,000 3,017,400 002786AA
MEDIA & LEISURE - 0.3%
LODGING & GAMING - 0.3%
Bally Manufacturing Corp. 10%,
12/15/06 Caa 1,210,000 1,149,500 058732AJ
RESTAURANTS - 0.0%
Chi-Chi's, Inc. 9%, 10/15/09 B2 105,000 94,500 167060AB
TOTAL MEDIA & LEISURE 1,244,000
RETAIL & WHOLESALE - 0.0%
GROCERY STORES - 0.0%
Farm Fresh, Inc. 7 1/2%, 3/1/10 B3 186,000 124,620 307669AA
UTILITIES - 0.8%
TELEPHONE SERVICES - 0.8%
ALC Communications Corp. 9%,
5/15/03 B2 3,400,000 3,468,000 0015759A
TOTAL CONVERTIBLE BONDS 9,737,886
NONCONVERTIBLE BONDS - 86.0%
AEROSPACE & DEFENSE - 1.1%
AEROSPACE & DEFENSE - 0.1%
Fairchild Corp. 12 1/4%, 3/15/06 B3 485,000 480,150 303698AC
DEFENSE ELECTRONICS - 1.0%
Tracor, Inc. 10 7/8%, 8/15/01 B2 4,300,000 4,504,250 892349AC
TOTAL AEROSPACE & DEFENSE 4,984,400
BASIC INDUSTRIES - 8.7%
CHEMICALS & PLASTICS - 3.7%
American Pacific Corp. 11%,
12/15/02 (g) - 850,000 850,000 0287409C
IMC Fertilizer Group, Inc.:
9 1/4%, 10/1/00 B3 5,000,000 5,025,000 449669AH
10 1/8%, 6/15/01 B3 1,500,000 1,560,000 449669AF
10 3/4%, 6/15/03 B3 1,950,000 2,057,250 449669AG
9.45%, 12/15/11 B3 1,710,000 1,710,000 449669AB
Methanex Corp. 8 7/8%, 11/15/01 Ba3 $ 2,690,000 $ 2,770,700 59151KAA
OSI Specialties, Inc. 9 1/4%,
10/1/02 B1 930,000 953,250 671042AA
Trans Resources, Inc.:
11 7/8%, 7/1/02 B2 910,000 914,550 893320AD
14 1/2%, 9/1/96 B2 580,000 643,800 893320AB
16,484,550
IRON & STEEL - 3.4%
Inland Steel Industries, Inc.
12 3/4%, 12/15/02 Ba3 4,950,000 5,692,500 457472AB
Republic Engineered Steels, Inc.
9 7/8%, 12/15/01 B2 5,700,000 5,799,750 760391AA
WCI Steel, Inc. 10 1/2%, 3/1/02 B1 3,500,000 3,648,750 92923JAB
15,141,000
METALS & MINING - 0.1%
Renco Metals, Inc. 12%,
7/15/00 B3 600,000 597,000 759677AA
PACKAGING & CONTAINERS - 0.7%
All-American Bottling Corp.
secured 13%, 8/15/01 (g) Caa 3,000,000 3,090,000 016431AA
PAPER & FOREST PRODUCTS - 0.8%
Crown Packaging 10 3/4%, 11/1/00 B3 3,500,000 3,587,500 228444AA
TOTAL BASIC INDUSTRIES 38,900,050
CONGLOMERATES - 3.6%
Insilco Corp.:
10 3/8%, 7/1/97 - 4,000,000 4,010,000 4576599A
9 1/2%, 7/1/97 Ca 2,710,000 2,689,675 457659AC
9 1/2%, 7/1/97 (f) Ca 3,960,000 3,945,150 4576599C
Jordan Industries, Inc. 11 3/4%,
12/15/03 Caa 7,135,000 4,245,325 480695AD
Sequa Corp. 9 3/8%, 12/15/03 B3 1,470,000 1,475,512 817320AG
16,365,662
CONSTRUCTION & REAL ESTATE - 6.4%
BUILDING MATERIALS - 3.8%
Adience, Inc. 11%, 6/15/02 - 745,921 604,196 006905AA
DAL Tile International, Inc. secured
coupon, 0%, 7/15/98 Caa 11,605,000 6,919,481 23426RAA
Pace Industries, Inc. 10 5/8%,
12/1/02 B1 2,330,000 2,388,250 693724AA
USG Corp. 10 1/4%, 12/15/02 B2 7,000,000 7,175,000 903293AK
17,086,927
MOODY'S MOODY'S
RATINGS PRINCIPAL VALUE RATINGS PRINCIPAL VALUE
(UNAUDITED) (D) AMOUNT (A) (NOTE 1) (UNAUDITED) (D) AMOUNT (A) (NOTE 1)
CORPORATE BONDS - CONTINUED
NONCONVERTIBLE BONDS - CONTINUED
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - 2.0%
MDC Holdings, Inc. 8 3/4%,
12/15/05 - $ 1,100,000 $ 1,100,000 552676AJ
Robertson CECO Corp. 10%,
11/30/99 (h) - 870,640 626,861 770539AA
Ryland Group, inc. 9 5/8%, 6/1/04 Ba3 1,330,000 1,341,637 783764AC
UDC Homes 11 3/4%, 4/30/03 B2 2,000,000 2,115,000 93599DAA
US Home Corp. 9 3/4%, 6/15/03 Ba3 3,760,000 3,863,400 911920AB
9,046,898
REAL ESTATE - 0.6%
Baldwin Co., 10 3/8% 8/1/03 (g) B2 2,660,000 2,553,600 057826AA
TOTAL CONSTRUCTION & REAL ESTATE 28,687,425
DURABLES - 2.4%
TEXTILES & APPAREL - 2.4%
Acme Boot Co. 11 1/2%, 12/15/00 B2 3,000,000 3,015,000 004622AC
Dan River, Inc. 10 1/8%, 12/15/03 B1 1,150,000 1,162,937 235773AA
Fortsmann & Co., Inc.
14 3/4%, 4/15/99 (h) Caa 500,000 590,000 346592AD
Hat Brands, Inc. 12 5/8%, 9/15/02 - 1,520,000 1,634,000 418730AA
Leslie Fay Companies, Inc.(f):
9.53%, 1/15/00 - 676,319 515,693 5270109H
10.54%, 1/15/02 - 611,353 403,522 5270109J
Westpoint Stevens 9 3/8%,
12/15/05 B3 3,300,000 3,333,000 961238AB
10,654,152
ENERGY - 5.3%
ENERGY SERVICES - 2.4%
TransTexas Gas Corp. 10 1/2%,
9/1/00 B1 10,270,000 10,886,200 893895AA
OIL & GAS - 2.9%
Mesa Capital Corp.:
0%, 6/30/96 - 2,009,000 1,599,666 590910AD
0%, 6/30/98 - 10,599,000 8,956,155 590910AF
Nuevo Energy Co. 12 1/2%,
6/15/02 B3 1,320,000 1,458,600 670509AA
Triton Energy Corp. 0%, 11/1/97 B1 1,600,000 1,112,000 896750AG
13,126,421
TOTAL ENERGY 24,012,621
FINANCE - 5.3%
CREDIT & OTHER FINANCE - 0.3%
Tiphook Finance Corp. 8%,
3/15/00 B3 $ 1,810,000 $ 1,470,625 887795AB
INSURANCE - 3.9%
American Annuity Group, Inc.:
11 1/8%, 2/1/03 B2 2,630,000 2,820,675 023840AA
9 1/2%, 8/15/01 Ba3 3,000,000 3,067,500 023840AB
American Financial Corp. s.f.
13 1/2%, 9/14/04 B 2,000,000 2,060,000 026087BB
Americo Life, Inc. 9 1/4%, 6/1/05 BB+ 4,900,000 4,863,250 03060NAB
Life Partners Group, Inc. 12 3/4%,
7/15/02 Ba3 2,250,000 2,621,250 532157AA
Nacolah, Inc. 9 1/2%, 12/1/03 B1 2,100,000 2,126,250 629667AA
17,558,925
SAVINGS & LOANS - 0.2%
Chevy Chase Savings Bank
9 1/4%, 12/1/05 B2 900,000 909,000 166784AE
MORTGAGE-BACKED SECURITIES - 0.6%
Mutual Benefit Overseas (c):
9 3/8%, 2/1/96 - 2,475,900 1,043,790 651995AD
9.37%, 2/1/96 - 6,301,870 1,729,907 651995AC
2,773,697
SECURITIES INDUSTRY - 0.3%
ECM Corp. extendible 14%,
6/1/02 (g) - 994,772 1,115,638 273996AA
TOTAL FINANCE 23,827,885
HEALTH - 2.6%
MEDICAL FACILITIES MANAGEMENT - 2.6%
American Medical International, Inc.
9 1/2%, 4/15/06 B 4,000,000 4,180,000 027429AZ
Hallmark Healthcare Corp.
10 5/8%, 11/15/03 B3 790,000 795,925 40624GAA
Hospital Corp. America 11 1/4%,
12/1/15 Ba2 1,150,000 1,230,500 441065AQ
Quorum Health Group, Inc.
11 7/8%, 12/15/02 B- 4,850,000 5,444,125 749084AA
11,650,550
MOODY'S MOODY'S
RATINGS PRINCIPAL VALUE RATINGS PRINCIPAL VALUE
(UNAUDITED) (D) AMOUNT (A) (NOTE 1) (UNAUDITED) (D) AMOUNT (A) (NOTE 1)
CORPORATE BONDS - CONTINUED
NONCONVERTIBLE BONDS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 5.1%
ELECTRICAL EQUIPMENT - 1.9%
Ampex, Inc.:
unit bond 14%, 1/15/98
(6 warrants each Series A & B
and .09 warrant N.H.
Holdings, Inc.) (e)(f) - $ 2,340,000 $ 1,450,800 0320929F
20%, 3/15/94 - 343,000 343,000 0320929K
Specialty Equipment Cos., Inc.
11 3/8%, 12/1/03 B3 6,000,000 6,090,000 847497AB
Telex Communications Group
14 1/2%, 6/1/99 - 850,000 901,000 87999AAA
8,784,800
INDUSTRIAL MACHINERY & EQUIPMENT - 3.2%
Joy Technologies, Inc. 10 1/4%,
9/1/03 B1 3,800,000 3,961,500 481206AD
Rexnord Corp. 10 3/4%, 7/1/02 Ba3 2,000,000 2,440,000 76168RAB
Rexnord Holdings, Inc.:
11 7/8%, 3/1/09 B2 2,160,000 2,224,800 76168TAA
11 7/8%, 3/1/99. (f) - 550,000 566,500 76168T9A
Thermadyne Industries, Inc. (h):
15%, 5/1/99 Ca 4,118,947 4,324,895 883436AD
10 1/2%, 11/1/99 Ca 1,172,623 874,097 883436AE
14,391,792
TOTAL INDUSTRIAL MACHINERY
& EQUIPMENT 23,176,592
MEDIA & LEISURE - 23.5%
BROADCASTING - 6.2%
Century Communications Corp.
0%, 3/15/03 Ba3 15,130,000 6,808,500 156503AF
Cooke Media Group, Inc. 11 5/8%,
4/1/99 - 350,000 353,500 216276AB
Helicon Group LP/Helicon Capital
Corp. 9 1/2%, 10/15/03 Caa 5,750,000 5,591,875 423265AB
Robin Media Group, Inc.
11 1/8%, 4/1/97 - 2,790,000 2,866,725 770685AA
SCI Television, Inc. secured
11%, 6/30/05 - 8,100,000 8,403,750 783895AJ
SPI Holding, Inc. reset notes
pay-in-kind 11 1/2%, 12/1/02 B+ 3,899,503 3,967,744 78462GAF
27,992,094
ENTERTAINMENT - 3.9%
Bally's Health & Tennis Corp. 13%,
1/15/03 B3 $ 585,000 $ 604,012 05873KAB
Carolco Pictures, Inc. 11 1/2%,
10/15/00 - 5,176,079 4,813,753 143763AF
Kloster Cruise, Ltd. 13%, 5/1/03 B2 2,300,000 2,547,250 498760AC
Live Entertainment, Inc.:
10%, 9/1/98 - 2,197,200 1,999,452 538032AC
12%, 9/15/94 (f) - 7,250,000 7,250,000 5380329B
Westwood Group, Inc. 14 1/4%,
8/15/97 (c) Caa 1,000,000 400,000 961754AA
17,614,467
LEISURE DURABLES & TOYS - 0.4%
Coleman Holdings 0%, 5/27/98 B 2,560,000 1,664,000 193551AC
LODGING & GAMING - 8.3%
Bally Gaming International, Inc.
10 3/8%, 7/29/98 - 3,000,000 3,000,000 0587319C
Bally's Casino Holdings, 10 1/2%,
6/15/98 (g) B3 10,450,000 6,688,000 05873EAA
Bally's Grand, Inc. 10 3/8%,
12/15/03 (g) B2 8,000,000 8,050,000 05873JAD
Boyd Gaming Corp. 10 3/4%,
9/1/03 (g) - 5,000,000 5,250,000 1033049A
Embassy Suites, Inc. 10 7/8%,
4/15/02 B1 2,000,000 2,240,000 290807AF
GNS Finance Corporation 9 1/4%,
3/15/03 B2 2,000,000 2,080,000 361916AK
Host Marriott Corp.:
10 1/2%, 5/1/06 B1 1,000,000 1,027,500 441080AH
11%, 5/1/06 B1 3,040,000 3,123,600 441080AJ
9 1/8%, 12/1/00 B1 1,500,000 1,526,250 441080AD
Resorts International, Inc.
secured pay-in-kind:
6%, 4/15/94 Ca 2,409,044 1,525,720 761185AG
15%, 4/15/94 Ca 1,292,030 809,676 761185AH
Trump Plaza Funding, Inc. gtd.
mtg. 10 7/8%,6/15/01 B3 2,300,000 2,288,500 898171AC
37,609,246
PUBLISHING - 2.2%
GACC Holding Co. 9 1/2%,
12/31/00 (c) - 4,080,000 3,855,600 3613549A
General Media, Inc. 10 5/8%,
12/31/00 - 1,310,000 1,332,925 370295AA
Marvel Holdings 0%,4/15/98 B3 7,000,000 4,550,000 573845AA
9,738,525
MOODY'S MOODY'S
RATINGS PRINCIPAL VALUE RATINGS PRINCIPAL VALUE
(UNAUDITED) (D) AMOUNT (A) (NOTE 1) (UNAUDITED) (D) AMOUNT (A) (NOTE 1)
CORPORATE BONDS - CONTINUED
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 2.5%
American Restaurant Group 12%,
9/15/98 B2 $ 3,170,000 $ 3,154,150 029309AC
Cafeteria Operated LP 11%,
6/30/98 (e)(f) - 7,000,000 5,600,000 127998AC
Restaurant Enterprises Group,
Inc. 12 1/4%, 12/15/96 (c) - 2,520,000 2,469,600 761255AA
11,223,750
TOTAL MEDIA & LEISURE 105,842,082
NONDURABLES - 2.4%
BEVERAGES - 0.7%
Canandaigua Wine, Inc. 8 3/4%,
12/15/03 B1 3,300,000 3,316,500 137219AB
FOODS - 0.4%
Doskocil Companies, Inc. 9 3/4%,
7/15/00 B2 1,800,000 $ 1,782,000 258486AD
HOUSEHOLD PRODUCTS - 1.3%
Revlon Consumer Products Corp.
9 3/8%, 4/1/01 B2 2,080,000 2,012,400 761519AF
Revlon World Wide secured 0%,
3/15/98 B3 7,950,000 4,034,625 76154KAB
6,047,025
TOTAL NONDURABLES 11,145,525
RETAIL & WHOLESALE - 9.9%
APPAREL STORES - 0.6%
Apparel Retailers, Inc. 12 3/4%,
8/15/05 Caa 1,590,000 906,300 037795AB
Lamonts Apparel, Inc. 11 1/2%,
11/1/99 - 2,067,000 1,999,822 5136289A
2,906,122
GENERAL MERCHANDISE STORES - 1.1%
Hills Stores Co. 10 1/4%,
9/30/03 - 5,038,000 5,226,925 431692AA
GROCERY STORES - 6.8%
Farm Fresh Holdings Corp.
14 1/4%, 10/1/02 (g) - 3,953,768 4,190,995 301923AB
Farm Fresh, Inc. 12 1/4%,
10/1/00 (g) B2 2,300,000 2,432,250 307669AD
Food 4 Less Holdings, Inc.
0%, 12/15/94 Caa 4,810,000 3,090,425 344753AC
Food 4 Less Supemarkets, Inc.
13 3/4%, 6/15/01 B2 $ 2,500,000 $ 2,787,500 344754AD
Megafoods Stores, Inc.
10 1/4%, 10/15/00 B2 5,800,000 5,771,000 584951AA
Penn Traffic Co.:
1 10 3/8%, 10/1/04 Ba3 1,500,000 1,623,750 707832AC
9 5/8%, 4/15/05 B2 6,000,000 6,180,000 707832AD
Super Rite Foods, Inc. 10 5/8%,
4/1/02 B3 4,160,000 4,430,400 868011AB
30,506,320
RETAIL & WHOLESALE, MISC - 1.4%
Color Tile, Inc. 10 3/4%, 12/15/01 B2 3,500,000 3,517,500 196267AD
Wickes Lumber Co. 11 5/8%,
12/15/03 B3 2,660,000 2,713,200 967446AA
6,230,700
TOTAL RETAIL & WHOLESALE 44,870,067
SERVICES - 3.5%
ADVERTISING - 0.9%
Lamar Advertising Co. 11%,
5/15/03 B2 1,000,000 1,050,000 512815AA
Outdoor Systems, Inc. 10 3/4%,
8/15/03 B2 2,900,000 3,023,250 690057AA
4,073,250
LEASING & RENTAL - 0.3%
Acme Holdings, Inc. 11 3/4%,
6/1/00 B3 1,420,000 1,263,800 004684AA
SERVICES - 2.3%
Comdata Network, Inc. 13 1/4%,
12/15/02 B3 4,300,000 4,826,750 200324AF
La Petite Holdings Corp. secured
9 5/8%, 8/1/01 B3 5,610,000 5,624,025 503754AA
10,450,775
TOTAL SERVICES 15,787,825
TECHNOLOGY - 1.9%
COMPUTER SERVICES & SOFTWARE - 0.3%
Computervision Corp. 11 3/8%,
8/15/99 B3 1,500,000 1,260,000 20557TAB
COMPUTERS & OFFICE EQUIPMENT - 0.9%
Bell & Howell Holdings Co.,
11 1/2%, 3/1/05 - 7,610,000 4,223,550 077905AB
ELECTRONICS - 0.7%
Berg Electronics, 11 3/8%,
5/1/03 (h) B3 3,130,000 3,270,850 083727AB
TOTAL TECHNOLOGY 8,754,400
MOODY'S
RATINGS PRINCIPAL VALUE VALUE
(UNAUDITED) (D) AMOUNT (A) (NOTE 1) SHARES (NOTE 1)
CORPORATE BONDS - CONTINUED
NONCONVERTIBLE BONDS - CONTINUED
TRANSPORTATION - 1.2%
RAILROADS - 1.0%
Transtar Holding Corp. 0%,
12/15/03 (e)(g) - $ 8,732,000 $ 4,322,340 89388QAA
TRUCKING & FREIGHT - 0.2%
Trism, Inc. 10 3/4%, 12/15/00 B2 1,060,000 1,094,450 896925AA
TOTAL TRANSPORTATION 5,416,790
UTILITIES - 3.1%
CELLULAR - 1.9%
Dial Call Communications, Inc. 0%,
12/15/05 (e)(g) - 2,800,000 1,736,000 25246PAB
Horizon Cellular Telephone Corp.
0%, 10/1/00 Caa 3,100,000 2,216,500 440415AA
Mobilmedia Communications, Inc.
0%, 12/1/03 (e) B3 2,750,000 1,684,375 607414AA
Pagemart, Inc. 0%, 11/1/00
(unit bond) (10, 12 1/4% sr.
discount notes due 11/1/03 and
46 warrants to purchase common
stock ) (g) 46,500 2,743,500 695534AA
8,380,375
ELECTRIC UTILITY - 1.2%
CMS Energy Corp. 9 7/8%,
10/1/99 Ba3 5,830,000 5,290,725 125896AC
TOTAL UTILITIES 13,671,100
TOTAL NONCONVERTIBLE BONDS 387,747,126
TOTAL CORPORATE BONDS
(Cost $384,874,600) 397,485,012
SHARES
COMMON STOCKS - 2.4%
BASIC INDUSTRIES - 0.1%
IRON & STEEL - 0.1%
Geneva Steel Co. (warrants) (b) 70,750 636,750
CONSTRUCTION & REAL ESTATE - 0.4%
BUILDING MATERIALS - 0.0%
Adience, Inc. 84,365 105,456 00690510
Southdown, Inc. (warrants) (b) 7,500 60,000 84129793
165,456
CONSTRUCTION - 0.4%
Robertson Ceco Corp. (b) 32,974 152,340 77053920
U.S. Home Corp. (b) 59,600 1,571,950 91192010
1,724,290
TOTAL CONSTRUCTION & REAL ESTATE 1,889,746
DURABLES - 0.3%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Lear Holdings Corp. (warrants) (b) 485 $ 218,250 52187111
TEXTILES & APPAREL - 0.3%
Acme Boot Co. Unit Stock 1,000 1,000,500 00462220
Hat Brands, Inc. (warrants) (b)(f) 9,153 315,779
1,316,279
TOTAL DURABLES 1,534,529
ENERGY - 0.4%
ENERGY SERVICES - 0.2%
Petrolane, Inc. Class B (b) 82,516 835,475 71654J10
OIL & GAS - 0.2%
Mesa, Inc. (b) 133,210 749,306 59091110
TOTAL ENERGY 1,584,781
FINANCE - 0.1%
CREDIT & OTHER FINANCE - 0.0%
Vestar/ LPA Investment Corp. 5,177 129,425 92545210
SECURITIES INDUSTRY - 0.1%
ECM Corp. LP (b)(g) 3,000 300,000 27399692
TOTAL FINANCE 429,425
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
Terex Corp. (rights) (b) 3,150 6,300 88077993
Thermadyne Industries, Inc. (warrants) (b) 540 27,011 88343612
33,311
MEDIA & LEISURE - 0.6%
ENTERTAINMENT - 0.1%
Live Entertainment, Inc. (warrants) (b):
$2.00 232,000 232,000 53803292
$2.72 221,765 139,712 53803293
371,712
LODGING & GAMING - 0.5%
Bally Gaming International, Inc.
(warrants) (b)(f) 90,000 720,000 05873194
Bally Manufacturing Corp. 127,017 1,079,645 05873210
Boyd Gaming Corp. 12,000 160,500 10330410
Trump Plaza Holding Associates
(warrants) (b) 270 213,300 89817E11
2,173,445
PUBLISHING - 0.0%
General Media, Inc. (warrants) (b) 1,310 19,650 37029511
TOTAL MEDIA & LEISURE 2,564,807
RETAIL & WHOLESALE - 0.5%
GENERAL MERCHANDISE STORES - 0.2%
Hills Stores Co. (b) 31,483 641,466 43169210
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - 0.3%
FF Holdings Corp. (b) 1,695 $ 68,224 30192310
Food 4 Less Holdings, Inc. (warrants) (b) 9,349 283,742 34475311
Grand Union Co. (warrants) (b) 342 232,560 38653295
Penn Traffic Co. (b) 20,000 725,000 70783210
1,309,526
RETAIL & WHOLESALE, MISC - 0.0%
Finlay Enterprises, Inc. 3,750 56,250 31788410
TOTAL RETAIL & WHOLESALE 2,007,242
UTILITIES - 0.0%
ELECTRIC UTILITY - 0.0%
Eastern Utilities Associates 3 84 27717310
Northeast Utilities Associates (warrants) (b) 21,789 54,473 66439711
54,557
GAS - 0.0%
UGI Corp. (warrants) (b) 14,033 22,804 90268612
TOTAL UTILITIES 77,361
TOTAL COMMON STOCKS
(Cost $8,241,697) 10,757,952
PREFERRED STOCKS - 5.2%
CONVERTIBLE PREFERRED STOCKS - 1.0%
BASIC INDUSTRIES - 0.4%
IRON & STEEL - 0.4%
Ico, Inc. $1.6875 76,000 1,843,000 44929440
MEDIA & LEISURE - 0.1%
LODGING & GAMING - 0.1%
Bally Manufacturing Corp. exchangeable $4.00 16,005 680,213 05873220
RETAIL & WHOLESALE - 0.0%
APPAREL STORES - 0.0%
Lamont's Apparel, Inc. (b) 17,935 35,870 51362830
SERVICES - 0.5%
La Petite Holdings Corp. (b) 78,800 2,044,860 50375420
TOTAL CONVERTIBLE PREFERRED STOCKS 4,603,943
NONCONVERTIBLE PREFERRED STOCKS - 4.2%
BASIC INDUSTRIES - 0.9%
IRON & STEEL - 0.8%
Geneva Steel Co. 14%, exchangeable (b) 25,000 3,087,500 37225240
Stelco, Inc. 7.76% 26,501 478,692
3,566,192
PAPER & FOREST PRODUCTS - 0.1%
Stone Savannah River Pulp & Paper
Corp. exchangeable $15.375 8,973 $ 493,515 86173520
TOTAL BASIC INDUSTRIES 4,059,707
CONSTRUCTION & REAL ESTATE - 0.7%
CONSTRUCTION - 0.7%
UDC Homes, Inc. prime exchangeable 287,152 3,230,460 90264640
ENERGY - 1.1%
OIL & GAS - 1.1%
Gulf Canada Resources Ltd. (f):
COR 76,940 77,523
40218L40AR 1,844,811 4,726,855
4,804,378
FINANCE - 0.1%
BANKS - 0.1%
Riggs National Corp. (Washington, D.C.) (b)(f) 25,423 667,354 76657092
MEDIA & LEISURE - 0.8%
ENTERTAINMENT - 0.8%
Live Entertainment, Inc. pay-in-kind (b) 494,583 3,585,727 53803230
SERVICES - 0.0%
Town & Country Corp. exchangeable (b) 4,000 36,000 89202730
TECHNOLOGY - 0.6%
ELECTRONICS - 0.6%
Berg Electronics Holding Corp. $3.4687 105,475 2,668,517 08372640
TOTAL NONCONVERTIBLE STOCKS 19,052,143
TOTAL PREFERRED STOCKS
(Cost $22,610,220) 23,656,086
OTHER SECURITIES - 0.6%
PURCHASED BANK DEBT - 0.6%
Barry's Jewelers, Inc.:
funded revolver 7 3/8%, 6/15/96 1,354,946 1,219,452 0688919A
term loan 8%, 6/14/96 590,523 531,471 0688919C
Leslie Fay Cos., Inc.:
funded revolver 0%, 1/15/96 79,941 64,802 5270109K
funded revolver 0%, 1/15/96 605,914 472,614 5270109E
term loan 1/15/96 777,600 606,528 5270109A
TOTAL OTHER SECURITIES
(Cost $2,692,388) 2,894,867
MATURITY VALUE
AMOUNT (NOTE 1)
Repurchase Agreements - 3.6%
Investments in repurchase agreements,
(U.S. Treasury obligations), in a
joint trading account at 3.23%
dated 12/31/93 due 1/3/94 $ 16,026,314 $ 16,022,000
TOTAL INVESTMENTS - 100%
(Cost $434,440,905) $ 450,815,917
CURRENCY TYPE ABBREVIATIONS:
CAD - Canadian dollar
LEGEND:
(a) Principal amount is stated in United States dollars unless otherwise
noted.
(b) Non-income producing
(c) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
(d) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
(e) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(f) 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
Ampex, Inc. unit bond 14%, 1/15/98
(6 warrants each Series A & B
and .09 warrant N.H. Holdings, Inc.) 7/22/92 $1,630,797
Bally's Gaming International, Inc.
(warrants) 11/1/93 -
Cafeteria Operated LP 11%, 6/30/98 6/24/93 5,600,000
Gulf Canada Resources Ltd 10/15/93 76,940
Hat Brands, Inc. (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
Live Entertainment, Inc.:
(warrants) $2.00 3/23/93 220,717
(warrants) $2.72 3/23/93 131,863
12%, 9/15/94 3/23/93 6,897,420
Rexnord Holdings, Inc. 11 7/8%,
3/1/99 10/15/92 495,000
Riggs National Corp. (Washington, D.C.) 10/14/93 635,575
(g) 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 $46,339,723 or 10.0% of net
assets.
(h) 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 $702,467,854 and $484,642,721, 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 8.2% BB 9.0%
B 43.3% B 46.7%
Caa 6.2% CCC 3.9%
Ca, C 3.1% CC, C 0.3%
D 1.5%
The percentage not rated by either S&P or Moody's amounted to 24.1%
including long-term debt categorized as other securities.
INCOME TAX INFORMATION:
At December 31, 1993, the aggregate cost of investment securities for
income tax purposes was $434,481,747. Net unrealized appreciation
aggregated $16,334,170, of which $20,201,848 related to appreciated
investment securities and $3,867,678 related to depreciated investment
securities.
The fund hereby designates $2,089,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
HIGH INCOME PORTFOLIO
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
December 31, 1993
ASSETS
Investment in securities, at value (including repurchase agreements of $16,022,000)
(cost $434,440,905) (Notes $ 450,815,917
1 and 2) - See accompanying schedule
Cash 73,059
Receivable for investments sold 3,569,968
Receivable for fund shares sold 3,097,197
Dividends receivable 103,682
Interest receivable 6,885,074
Other receivables 918,519
Total assets 465,463,416
LIABILITIES
Payable for investments purchased $ 709,760
Payable for fund shares redeemed 485,558
Accrued management fee 195,556
Other payables and accrued expenses 141,237
Total liabilities 1,532,111
NET ASSETS $ 463,931,305
Net Assets consist of (Note 1):
Paid in capital $ 401,849,970
Undistributed net investment income 29,661,902
Accumulated undistributed net realized gain (loss) on investments 16,044,421
Net unrealized appreciation (depreciation) on investment securities 16,375,012
NET ASSETS, for 38,709,162 shares outstanding $ 463,931,305
NET ASSET VALUE, offering price and redemption price per share ($463,931,305 (divided by) 38,709,162 shares) $11.99
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Year Ended December 31, 1993
INVESTMENT INCOME $ 1,433,559
Dividends
Interest 30,590,018
Total income 32,023,577
EXPENSES
Management fee (Note 3) $ 1,764,257
Transfer agent fees (Note 3) 108,432
Accounting fees and expenses (Note 3) 138,642
Non-interested trustees' compensation 2,456
Custodian fees and expenses 63,009
Registration fees 69,922
Audit 30,106
Legal 7,522
Miscellaneous 66,797
Total expenses before reductions 2,251,143
Expense reductions (Note 4) (55,600) 2,195,543
Net investment income 29,828,034
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 16,098,896
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 14,925,422
Net gain (loss) 31,024,318
Net increase (decrease) in net assets resulting from operations $ 60,852,352
</TABLE>
Statement of Changes in Net Assets
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED DECEMBER 31,
1993 1992
INCREASE (DECREASE) IN NET ASSETS
Operations $ 29,828,034 $ 16,542,178
Net investment income
Net realized gain (loss) on investments 16,098,896 8,889,174
Change in net unrealized appreciation (depreciation) on investments 14,925,422 103,627
Net increase (decrease) in net assets resulting from operations 60,852,352 25,534,979
Distributions to shareholders from: (16,615,684) (6,948,312)
Net investment income
In excess of net investment income (748,060) -
Net realized gain (1,255,210) -
Total distributions (18,618,954) (6,948,312)
Share transactions 445,327,008 222,574,390
Net proceeds from sales of shares
Reinvestment of distributions from: 17,363,744 6,948,312
Net investment income
Net realized gain 1,255,210 -
Cost of shares redeemed (242,839,207) (117,577,934)
Net increase (decrease) in net assets resulting from share transactions 221,106,755 111,944,768
Total increase (decrease) in net assets 263,340,153 130,531,435
NET ASSETS
Beginning of period 200,591,152 70,059,717
End of period (including undistributed net investment income of $29,661,902
and $16,119,103, respectively) $ 463,931,305 $ 200,591,152
OTHER INFORMATION
Shares
Sold 40,016,073 21,754,334
Issued in reinvestment of distributions from: 1,687,438 747,130
Net investment income
Net realized gain 121,983 -
Redeemed (21,658,432) (11,294,558)
Net increase (decrease) 20,167,062 11,206,906
</TABLE>
FINANCIAL HIGHLIGHTS
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31,
1993 1992 1991 1990 1989
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.820 $ 9.550 $ 7.070 $ 8.110 $ 9.660
Income from Investment Operations .728 .790 .890 .858 1.202
Net investment income
Net realized and unrealized gain (loss)
on investments 1.332 1.290 1.590 (1.040) (1.550)
Total from investment operations 2.060 2.080 2.480 (.182) (.348)
Less Distributions (.794) (.810) - (.858) (1.202)
From net investment income
In excess of net investment income (.036) - - - -
From net realized gain on investments (.060) - - - -
Total distributions (.890) (.810) - (.858) (1.202)
Net asset value, end of period $ 11.990 $ 10.820 $ 9.550 $ 7.070 $ 8.110
TOTAL RETURN 20.40%(dagger) 23.17% 35.08% (2.23)%(dagger) (4.17)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 463,931 $ 200,591 $ 70,060 $ 29,990 $ 33,747
Ratio of expenses to average net assets .64%(double dagger) .67% .97% 1.00%(double dagger) .93%
Ratio of expenses to average net assets
before expense reductions .66%(double dagger) .67% .97% 1.12%(double dagger) .93%
Ratio of net investment income to average
net assets 8.69% 10.98% 12.94% 11.36% 12.94%
Portfolio turnover rate 155% 160% 154% 156% 124%
</TABLE>
(dagger) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 4 OF NOTES TO FINANCIAL
STATEMENTS).
(double dagger) SEE NOTE 4 OF NOTES TO FINANCIAL STATEMENTS.
VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO
INVESTMENTS/DECEMBER 31, 1993
(Showing Percentage of Total Value of Investments)
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - 70.6%
AEROSPACE & DEFENSE - 1.0%
AEROSPACE & DEFENSE - 0.0%
Aviall, Inc. (b) 27,050 $ 412,513 05366B10
DEFENSE ELECTRONICS - 1.0%
Loral Corp. 281,000 10,607,750 54385910
Raytheon Co. 38,400 2,534,400 75511110
13,142,150
TOTAL AEROSPACE & DEFENSE 13,554,663
BASIC INDUSTRIES - 7.6%
CHEMICALS & PLASTICS - 4.4%
Akzo NV Ord. 73,800 7,129,702 01019910
Betz Laboratories, Inc. 135,800 5,958,225 08777910
GEON 189,800 4,484,025 37246W10
Hercules, Inc. 88,700 10,023,100 42705610
Imperial Chemical Industries PLC:
ADR 61,000 2,882,250 45270450
Ord 360,700 4,256,704 45270440
Lyondell Petrochemical Co. 118,700 2,522,375 55207810
OM Group, Inc. (b) 167,800 3,460,875 67087210
Union Carbide Corp. 556,200 12,444,975 90558110
Vigoro Corp. 165,200 4,997,300 92675410
58,159,531
IRON & STEEL - 0.9%
Lukens, Inc. 88,800 3,241,200 54986610
Mannesmann AG (Rfd. 7/1/93) 3,275 780,031 56311595
Mannesmann AG Ord. 26,200 6,368,370 56377510
USX-U.S. Steel Group 44,400 1,925,850 90337T10
12,315,451
METALS & MINING - 1.3%
Alcan Aluminium Ltd. 167,700 3,520,843 01371610
Aluminum Co. of America 35,874 2,488,759 02224910
Outokumpu Oy Class A (b) 84,000 991,261 69099992
Reynolds Metals Co. 222,500 10,095,938 76176310
17,096,801
PAPER & FOREST PRODUCTS - 1.0%
Georgia-Pacific Corp. 77,000 5,293,750 37329810
International Paper Co. 115,700 7,838,675 46014610
13,132,425
TOTAL BASIC INDUSTRIES 100,704,208
CONGLOMERATES - 4.5%
Allied-Signal, Inc. 115,800 9,148,200 01951210
Canadian Pacific Ltd. Ord. 437,800 7,162,798 13644030
Dial Corp. (The) 252,500 10,194,688 25247010
ITT Corp. 107,800 9,836,750 45067910
Textron, Inc. 170,600 $ 9,937,450 88320310
Tomkins PLC Ord. 836,600 2,903,797 89003010
United Technologies Corp. 162,600 10,081,200 91301710
59,264,883
CONSTRUCTION & REAL ESTATE - 1.5%
BUILDING MATERIALS - 0.8%
Armstrong World Industries, Inc. 191,600 10,202,700 04247610
REAL ESTATE INVESTMENT TRUSTS - 0.7%
Federal Realty Investment Trust 83,400 2,085,000 31374720
Nationwide Health Properties, Inc. 60,600 2,151,300 63862010
Property Trust of America (SBI) 3 60 74344510
Simon Properties Group, Inc. (b) 118,200 2,674,275 82880510
Vornado Realty Trust 58,100 1,946,350 92904210
8,856,985
TOTAL CONSTRUCTION & REAL ESTATE 19,059,685
DURABLES - 1.9%
AUTOS, TIRES, & ACCESSORIES - 1.5%
Peugeot SA Ord. (b) 18,900 2,516,168 71682510
TRW, Inc. 81,000 5,609,250 87264910
Valeo SA 30,000 6,543,335 91899010
Volkswagen AG (b) 17,400 4,404,556 92866210
19,073,309
TEXTILES & APPAREL - 0.4%
Unifi, Inc. 220,400 5,923,250 90467710
TOTAL DURABLES 24,996,559
ENERGY - 8.5%
ENERGY SERVICES - 1.3%
Baker Hughes, Inc. 190,900 3,818,000 05722410
Halliburton Co. 186,100 5,931,947 40621610
McDermott International, Inc. 121,400 3,217,100 58003710
Schlumberger Ltd. 72,000 4,257,000 80685710
17,224,047
OIL & GAS - 7.2%
Amerada Hess Corp. 246,300 11,114,288 02355110
British Petroleum PLC ADR 525,000 33,600,000 11088940
Chevron Corp. 106,300 9,261,388 16675110
Kerr-McGee Corp. 88,900 4,011,613 49238610
Louisiana Land & Exploration Co. 198,200 7,952,775 54626810
Murphy Oil Corp. 98,700 3,948,000 62671710
Repsol SA:
sponsored ADR 188,400 5,816,850 76026T20
Ord. (b) 126,300 3,926,196 76026T10
Royal Dutch Petroleum Co. 47,000 4,905,625 78025770
Total Compagnie Francaise des Petroles
Class B (b) 70,000 3,816,354 20434510
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
ENERGY - CONTINUED
OIL & GAS - CONTINUED
YPF Sociedad Anonima sponsored ADR
representing Class D shares 247,500 $ 6,435,000 98424510
94,788,089
TOTAL ENERGY 112,012,136
FINANCE - 8.4%
BANKS - 4.2%
Bank of New York Co., Inc. 268,000 15,276,000 06405710
BanPonce Corp. 110,700 3,487,050 06670410
Chase Manhattan Corp. 61,693 2,089,850 16161010
Chemical Banking Corp. 125,300 5,027,663 16372210
First Chicago Corp. 122,200 5,285,150 31945510
First Fidelity Bancorporation 21 956 32019510
First Union Corp. 169,981 7,011,716 33735810
Mellon Bank Corp. 78,715 4,171,895 58550910
Midlantic Corp. (b) 40,500 1,032,750 59780E10
Paribas SA (Cie Financiere) Class A (b) 72,500 6,074,125 73999192
Signet Banking Corp. 98,864 3,435,524 82668110
Westpac Banking Corp. 943,500 2,966,364 96121410
55,859,043
CREDIT & OTHER FINANCE - 2.8%
American Express Co. 199,200 6,150,300 02581610
Argentaria Corporacion Bancaria
de Espana SA (b):
Ord. 158,200 6,675,012 21991392
sponsored ADR (b) 59,600 1,259,050 21991310
Beneficial Corp. 129,600 4,957,200 08172110
GFC Financial Corp. 241,750 7,010,750 36160910
Household International, Inc. 271,278 8,850,445 44181510
Primerica Corp. 62,633 2,434,871 74158910
37,337,628
INSURANCE - 1.1%
American Bankers Insurance Group, Inc. 70,537 1,851,596 02445610
Capital Holding Corp. 62,600 2,324,025 14018610
NWNL Companies, Inc. 62,400 1,996,800 62945T10
St. Paul Companies, Inc. (The) 87,600 7,873,050 79286010
14,045,471
SAVINGS & LOANS - 0.3%
Ahmanson (H.F.) & Co. 198,900 3,903,413 00867710
TOTAL FINANCE 111,145,555
HEALTH - 5.8%
DRUGS & PHARMACEUTICALS - 3.5%
Allergan, Inc. 388,900 8,798,863 01849010
American Cyanamid Co. 159,600 8,019,900 02532110
IMCERA Group, Inc. 230,900 $ 7,764,013 45245410
Pfizer, Inc. 93,500 6,451,500 71708110
Schering-Plough Corp. 136,000 9,316,000 80660510
Warner-Lambert Co. 85,300 5,757,750 93448810
46,108,026
MEDICAL EQUIPMENT & SUPPLIES - 1.5%
Bergen Brunswig Corp. Class A 254,700 4,489,088 08373910
Johnson & Johnson 220,200 9,853,950 47816010
McKesson Corp. 110,800 5,983,200 58155610
20,326,238
MEDICAL FACILITIES MANAGEMENT - 0.8%
HCA - Hospital Corporation of America
Class A (b) 309,600 10,565,100 40412010
TOTAL HEALTH 76,999,364
INDUSTRIAL MACHINERY & EQUIPMENT - 6.2%
ELECTRICAL EQUIPMENT - 3.8%
Alcatel Alsthom CGE 42,600 6,060,010 01390492
General Electric Co. 341,300 35,793,838 36960410
General Signal Corp. 124,400 4,276,250 37083810
Philips NV (b) 206,600 4,261,125 71833750
50,391,223
INDUSTRIAL MACHINERY & EQUIPMENT - 2.4%
Caterpillar, Inc. 110,200 9,807,800 14912310
Deere & Co. 123,000 9,102,000 24419910
Parker-Hannifin Corp. 143,000 5,398,250 70109410
Tenneco, Inc. 146,000 7,683,250 88037010
31,991,300
TOTAL INDUSTRIAL MACHINERY
& EQUIPMENT 82,382,523
MEDIA & LEISURE - 3.9%
ENTERTAINMENT - 0.3%
Cedar Fair LP 131,100 4,604,888 15018510
LEISURE DURABLES & TOYS - 1.0%
Brunswick Corp. 499,900 8,998,200 11704310
Outboard Marine Corp. 169,300 3,788,088 69002010
12,786,288
PUBLISHING - 2.6%
Gannett Co., Inc. 154,400 8,839,400 36473010
Harcourt General, Inc. 52,200 1,892,250 41163G10
Maclean Hunter Ltd. 392,800 3,751,920 55474980
McGraw-Hill, Inc. 101,400 6,857,175 58064510
Reader's Digest Association, Inc. (The)
Class A (non-vtg.) 99,000 4,455,000 75526710
Times Mirror Co., Series A 249,900 8,340,413 88736010
34,136,158
TOTAL MEDIA & LEISURE 51,527,334
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
NONDURABLES - 4.0%
BEVERAGES - 0.2%
Seagram Co. Ltd. 90,600 $ 2,381,956 81185010
FOODS - 0.2%
ConAgra, Inc. 97,400 2,568,925 20588710
HOUSEHOLD PRODUCTS - 1.1%
Colgate-Palmolive Co. 66,800 4,166,650 19416210
Gillette Company 132,500 7,900,313 37576610
Premark International, Inc. 38,400 3,081,600 74045910
15,148,563
TOBACCO - 2.5%
Phillip Morris Companies, Inc. 588,500 32,808,875 71815410
TOTAL NONDURABLES 52,908,319
RETAIL & WHOLESALE - 3.1%
APPAREL STORES - 0.2%
Charming Shoppes, Inc. 205,200 2,436,750 16113310
GENERAL MERCHANDISE STORES - 2.0%
Bradlees, Inc. 33,600 449,400 10449910
Carter Hawley Hale Stores, Inc. (b) 260,300 2,472,850 14622730
Dayton Hudson Corp. 66,000 4,405,500 23975310
May Department Stores Co. (The) 67,900 2,673,563 57777810
Penney (J.C.) Co., Inc. 165,200 8,652,350 70816010
Sears, Roebuck & Co. 139,100 7,337,525 81238710
25,991,188
GROCERY STORES - 0.2%
Fleming Companies, Inc. 41,700 1,032,075 33913010
Promodes SA Ord. (b) 11,200 2,106,031 74699692
3,138,106
RETAIL & WHOLESALE, MISC - 0.7%
Duty Free International, Inc. 136,000 2,703,000 26708410
Pinault Printemps SA 18,400 3,121,068 72199393
Sotheby's Holdings, Inc. Class A 199,500 3,067,313 83589810
8,891,381
TOTAL RETAIL & WHOLESALE 40,457,425
SERVICES - 1.9%
ADVERTISING - 0.2%
Foote Cone & Belding Communications, Inc. 44,000 2,112,000 34487210
LEASING & RENTAL - 1.0%
GATX Corp. 253,500 10,330,125 36144810
Ryder Systems, Inc. 108,200 2,867,300 78354910
13,197,425
PRINTING - 0.4%
Alco Standard Corp. 105,300 5,765,175 01378810
SERVICES - 0.3%
Pittston Company Services Group 140,900 4,068,488 72570110
TOTAL SERVICES 25,143,088
TECHNOLOGY - 1.7%
COMPUTERS & OFFICE EQUIPMENT - 1.1%
Xerox Corp. 159,000 $ 14,210,625 98412110
PHOTOGRAPHIC EQUIPMENT - 0.6%
Eastman Kodak Co. 142,500 7,980,000 27746110
TOTAL TECHNOLOGY 22,190,625
TRANSPORTATION - 1.4%
AIR TRANSPORTATION - 0.4%
UAL Corp. (b) 40,025 5,843,650 90254910
RAILROADS - 1.0%
CSX Corp. 123,000 9,963,000 12640810
Union Pacific Corp. 41,700 2,611,463 90781810
12,574,463
TOTAL TRANSPORTATION 18,418,113
UTILITIES - 9.2%
ELECTRIC UTILITY - 4.0%
American Electric Power Co., Inc. 75,800 2,814,075 02553710
DPL, Inc. 192,125 3,962,578 23329310
Entergy Corp. 369,100 13,287,600 29364F10
FPL Group, Inc. 50,500 1,975,813 30257110
Houston Industries, Inc. 137,600 6,553,200 44216110
Illinois Power Co. 374,700 8,290,238 45209210
PacifiCorp. 105,700 2,034,725 69511410
Philadelphia Electric Co. 186,300 5,635,575 71753710
Texas Utilities Co. 532 23,009 88284810
Veba Vereinigte Elektrizetaets & Bergwerks
AG Ord. 27,400 8,228,512 92239110
52,805,325
GAS - 1.6%
Coastal Corp. (The) 237,000 6,665,625 19044110
Consolidated Natural Gas Co. 73,700 3,463,900 20961510
Pacific Enterprises 108,700 2,581,625 69423210
Panhandle Eastern Corp. 313,500 7,406,438 69846210
20,117,588
TELEPHONE SERVICES - 3.6%
Ameritech Corp. 102,900 7,897,575 03095410
Bell Atlantic Corp. 145,100 8,560,900 07785310
BellSouth Corp. 126,300 7,309,613 07986010
Pacific Telesis Group 132,800 7,171,200 69489010
Southwestern Bell Corp. 206,700 8,578,050 84533310
U.S. West, Inc. 181,300 8,317,138 91288910
47,834,476
TOTAL UTILITIES 120,757,389
TOTAL COMMON STOCKS
(Cost $832,483,654) 931,521,869
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
PREFERRED STOCKS - 9.0%
CONVERTIBLE PREFERRED STOCKS - 8.8%
BASIC INDUSTRIES - 0.4%
METALS & MINING - 0.4%
Alumax, Inc., Series A, $4.00 20,566 $ 2,025,751 02219720
Cyprus Amax Minerals Co.,
Series A, $4.00 41,133 2,673,645 23280920
4,699,396
CONSTRUCTION & REAL ESTATE - 0.1%
REAL ESTATE - 0.1%
Rouse Co. Series A 17,800 956,750 77927320
DURABLES - 1.4%
AUTOS, TIRES, & ACCESSORIES - 1.4%
Chrysler Corp., Series A, $4.625 (e) 65,300 9,795,000 17119670
Ford Motor Co. (Del.), Series A, $4.20 83,600 9,070,600 34537020
18,865,600
ENERGY - 0.2%
ENERGY SERVICES - 0.2%
Chiles Offshore Corp. $1.50 119,100 2,709,525 16888720
FINANCE - 2.3%
BANKS - 2.3%
Citicorp $5.375 (e) 278,200 30,602,000 17303451
MEDIA & LEISURE - 0.3%
BROADCASTING - 0.3%
CBS, Inc. $10.00 Series B 20,000 4,250,000 12484593
NONDURABLES - 0.5%
TOBACCO - 0.5%
RJR Nabisco Holdings Corp.,
Series A, depositary shares
representing 1/4 share 1,024,000 7,168,000 74960K40
RETAIL & WHOLESALE - 0.7%
APPAREL STORES - 0.7%
TJX Companies, Inc., Series C, $3.125 141,800 9,589,225 87254020
SERVICES - 0.3%
LEASING & RENTAL - 0.1%
Gatx Corp. exchangeable $3.875 26,000 1,443,000 36144840
PRINTING - 0.2%
Alco Standard Corp., Series AA $2.30 42,200 2,927,625 01378850
TOTAL SERVICES 4,370,625
TECHNOLOGY - 0.3%
COMPUTER SERVICES & SOFTWARE - 0.3%
Ceridian Corp. (b) 66,800 3,373,400 15677T40
TRANSPORTATION - 2.3%
AIR TRANSPORTATION - 1.5%
AMR Corp. $3.00 (b) (e) 236,600 $ 12,658,100 00176588
UAL, Inc. 6 1/4% . (e) 67,600 7,444,450 90254930
20,102,550
RAILROADS - 0.8%
Burlington Northern Railroad Co. 6.2% 148,600 10,141,950 12189760
TOTAL TRANSPORTATION 30,244,500
TOTAL CONVERTIBLE PREFERRED STOCKS 116,829,021
Nonconvertible PREFERRED STOCKS - 0.2%
FINANCE - 0.2%
BANKS - 0.2%
Mellon Bank Corp. 80,000 2,190,000 58550986
MEDIA & LEISURE - 0.0%
ENTERTAINMENT - 0.0%
Live Entertainment, Inc. Series B PIk (b) 8,555 62,024 53803230
UTILITIES - 0.0%
ELECTRIC UTILITY - 0.0%
Gulf States Utilities Co., Series B, adj. rate 677 34,527 40255075
TOTAL NONCONVERTIBLE PREFERRED STOCKS 2,286,551
TOTAL PREFERRED STOCKS
(Cost $105,277,924) 119,115,572
MOODY'S
RATINGS (D) PRINCIPAL
(UNAUDITED) AMOUNT (A)
CORPORATE BONDS - 4.1%
NONCONVERTIBLE BONDS - 2.7%
AEROSPACE & DEFENSE - 0.1%
DEFENSE ELECTRONICS - 0.1%
Tracor, Inc. 10 7/8%, 8/15/01 B2 $ 1,220,000 1,277,950 892349AC
BASIC INDUSTRIES - 0.8%
CHEMICALS & PLASTICS - 0.8%
IMC Fertilizer Group, Inc. 9 1 /4,
10/1/00 B3 10,540,000 10,592,700 449669AH
PACKAGING & CONTAINERS - 0.0%
Owens Illinois, Inc. 10 1/4%,
4/1/99 B2 350,000 370,996 690768AG
TOTAL BASIC INDUSTRIES 10,963,696
CONGLOMERATES - 0.1%
Coltec Industries, Inc. 10 1/4 %,
4/1/02 Ba2 910,000 969,150 196879AB
MOODY'S MOODY'S
RATINGS PRINCIPAL VALUE RATINGS PRINCIPAL VALUE
(UNAUDITED) (D) AMOUNT (A) (NOTE 1) (UNAUDITED) (D) AMOUNT (A) (NOTE 1)
CORPORATE BONDS - CONTINUED
NONCONVERTIBLE BONDS - CONTINUED
DURABLES - 0.5%
TEXTILES & APPAREL - 0.5%
Westpoint Stevens:
9 3/8%, 12/15/05 B3 $ 4,250,000 $ 4,292,500 961238AB
8 3/4%, 12/15/01 B3 2,660,000 2,679,950 961238AA
6,972,450
FINANCE - 0.3%
BANKS - 0.0%
Signet Banking Corp. (f):
5 1/4%, 5/15/97 Baa2 340,000 340,850 065446AP
5 1/4%, 4/15/98 Baa2 190,000 190,475 065446AN
531,325
CREDIT & OTHER FINANCE - 0.3%
Chrysler Financial Corp. 9 1/2%,
12/15/99 Baa2 2,990,000 3,452,075 171205CY
TOTAL FINANCE 3,983,400
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Joy Technologies, Inc. 10 1/4%,
9/1/03 B1 3,020,000 3,148,350 481206AD
MEDIA & LEISURE - 0.2%
BROADCASTING - 0.0%
Turner Broadcasting System, Inc.
12%, 10/15/01 B1 60,000 65,245 900262AN
ENTERTAINMENT - 0.0%
Live Entertainment, Inc. 10%,
9/1/98 - 56,900 51,779 538032AC
LODGING & GAMING - 0.1%
Bally's Grand, Inc. 1st mtg 12%,
8/20/01 D 163,000 168,297 05873JAC
Host Marriott Corp. (f):
10 1/2%, 5/1 /06 B1 630,000 647,325 441080AH
9 1/8%, 12 /1/00 B1 840,000 854,700 441080AD
9 7/8%, 5/ 1/01 B1 290,000 295,437 441080AE
1,965,759
TOTAL MEDIA & LEISURE 2,082,783
NONDURABLES - 0.4%
BEVERAGES - 0.4%
Canandaigua Wine, Inc. 8 3/4%,
12/15/03 B1 5,700,000 5,728,500 137219AB
UTILITIES - 0.1%
GAS - 0.1%
Columbia Gas Systems Inc. 9.91%,
5/28/20 (c) - $ 170,000 $ 195,010 19765ABN
Ferrellgas, Inc. 12%, 8/1/96 - 110,000 121,000 315290AD
SFP Pipeline Holdings, Inc.
exchangeable variable rate 0%,
8/15/10 (f) Baa3 470,000 611,000 784163AA
927,010
TOTAL NONCONVERTIBLE BONDS 36,053,289
CONVERTIBLE BONDS - 1.4%
CONSTRUCTION & REAL ESTATE - 0.2%
REAL ESTATE INVESTMENT TRUSTS - 0.2%
Centerpoint Properties 8.220%,
1/15/04 - 1,510,000 1,510,000 151895AA
Sizeler Property Investors, Inc.
8%, 7/15/03 - 1,500,000 1,492,500 830137AA
3,002,500
DURABLES - 0.2%
TEXTILES & APPAREL - 0.2%
Interface, Inc. 8%, 9/15/13 Ba 1,179,000 1,243,845 458665AA
Unifi, Inc. 6%, 3/15/02 Baa 1,040,000 1,154,400 904677AC
2,398,245
ENERGY - 0.0%
ENERGY SERVICES - 0.0%
Lone Star Technologies, Inc. euro
8%, 8/27/02 - 290,000 252,300 5423129A
FINANCE - 0.6%
BANKS - 0.5%
Bank of Boston Corp. 7 3/4%,
6/15/11 Baa 1,242,000 1,415,880 060716AF
Bank of New York Co., Inc. 7 1/2%,
8/15/01 Baa 1,150,000 1,874,500 064057AK
CS Holdings Euro 4 7/8%,
11/19/02 A 1,865,000 2,844,125 175997AC
6,134,505
INSURANCE - 0.2%
SCOR US Corp. conv. 5 1/4%,
4/1/00 (e) A 2,500,000 2,337,500 784027AB
TOTAL FINANCE 8,472,005
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Liebert Corp. 8%, 11/15/10 Aa 449,000 1,014,740 531735AA
MOODY'S
RATINGS (D) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (A) (NOTE 1)
CORPORATE BONDS - CONTINUED
CONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - 0.2%
APPAREL STORES - 0.2%
Petrie Stores Corp. sinking fund 8%,
12/15/10 Ba $ 1,540,000 $ 2,048,200 716434AC
RETAIL & WHOLESALE, MISC - 0.0%
Fabri-Centers of America, Inc.
6 1/4%, 3/1/02 B 250,000 222,500 302846AB
TOTAL RETAIL & WHOLESALE 2,270,700
TECHNOLOGY - 0.1%
COMPUTER SERVICES & SOFTWARE - 0.1%
Sterling Software, Inc. 5 3/4%,
2/01/03 B 850,000 1,009,375 859547AD
TOTAL CONVERTIBLE BONDS 18,419,865
TOTAL CORPORATE BONDS
(Cost $52,589,437) 54,473,154
FOREIGN GOVERNMENT OBLIGATIONS - 1.7%
French Government OAT
8 1/2%, 4/25/03 Aaa FRF 91,000,000 18,564,361 351996AQ
Spanish Government 10.9%,
8/30/03 Aa ESP 450,000,000 3,707,820 84699AAL
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $20,827,996) 22,272,181
U.S. TREASURY OBLIGATIONS - 7.5%
Bills, yield at date of purchase
3.13% to 3.15%, 2/24/94 to
3/13/94
(Cost $99,519,286) 100,000,000 99,544,000 99399H5H
Repurchase Agreements - 7.1%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 3.23%
dated 12/31/93 due 1/3/94 $ 93,469,152 93,444,000
TOTAL INVESTMENTS - 100%
(Cost $1,204,142,297) $ 1,320,370,776
CURRENCY TYPE ABBREVIATIONS:
FRF - French franc
ESP - Spanish peseta
LEGEND:
(a) Principal amount is stated in United States dollars unless otherwise
noted.
(b) Non-income producing
(c) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
(d) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
(e) 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 $62,837,050 or 4.8% of net
assets.
(f) 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 $1,475,273,032 and $977,359,163, respectively,.
INCOME TAX INFORMATION:
At December 31, 1993, the aggregate cost of investment securities for
income tax purposes was $1,205,152,060. Net unrealized appreciation
aggregated $115,218,716, of which $129,043,982 related to appreciated
investment securities and $13,825,266 related to depreciated investment
securities.
The fund hereby designates $55,774,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
EQUITY-INCOME PORTFOLIO
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
December 31, 1993
ASSETS
Investment in securities, at value (including repurchase agreements of $93,444,000)
(cost $1,204,142,297) $ 1,320,370,776
(Notes 1 and 2) - See accompanying schedule
Cash 158
Receivable for investments sold 34,834,242
Receivable for fund shares sold
4,479,596
Dividends receivable
2,841,179
Interest receivable
1,712,092
Other receivables
149,984
Total assets
1,364,388,027
LIABILITIES
Payable for investments purchased $ 44,283,588
Payable for fund shares redeemed 697,739
Accrued management fee 557,464
Other payables and accrued expenses 348,787
Total liabilities
45,887,578
NET ASSETS $
1,318,500,449
Net Assets consist of (Note 1):
Paid in capital $
1,138,682,953
Distributions in excess of net investment income (Note 1)
(823,095)
Accumulated undistributed net realized gain (loss) on investments
64,412,112
Net unrealized appreciation (depreciation) on investment securities
116,228,479
NET ASSETS, for 85,409,862 shares outstanding $
1,318,500,449
NET ASSET VALUE, offering price and redemption price per share ($1,318,500,449 (divided by) 85,409,862 shares)
$15.44
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Year Ended December 31, 1993
INVESTMENT INCOME $ 26,016,832
Dividends
Interest 7,150,467
Total income 33,167,299
EXPENSES
Management fee (Note 3) $ 5,004,191
Transfer agent fees (Note 3) 111,756
Accounting fees and expenses (Note 3) 439,891
Non-interested trustees' compensation 6,107
Custodian fees and expenses 104,732
Registration fees 210,396
Audit 37,082
Legal 9,551
Miscellaneous 17,784
Total expenses before reductions 5,941,490
Expense reductions (Note 4) (60,160) 5,881,330
Net investment income 27,285,969
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1)
Net realized gain (loss) on:
Investment securities 76,059,688
Foreign currency contracts (5,317,598) 70,742,090
Change in net unrealized appreciation (depreciation) on investment securities 46,208,348
Net gain (loss) 116,950,438
Net increase (decrease) in net assets resulting from operations $ 144,236,407
</TABLE>
Statement of Changes in Net Assets
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED DECEMBER 31,
1993 1992
INCREASE (DECREASE) IN NET ASSETS
Operations $ 27,285,969 $ 14,340,690
Net investment income
Net realized gain (loss) on investments 70,742,090 14,435,781
Change in net unrealized appreciation (depreciation) on investments 46,208,348 38,750,692
Net increase (decrease) in net assets resulting from operations 144,236,407 67,527,163
Distributions to shareholders (23,402,249) (14,263,249)
From net investment income
In excess of net investment income (2,791,192) -
Total Distributions (26,193,441) (14,263,249)
Share transactions 665,403,591 272,723,382
Net proceeds from sales of shares
Reinvestment of distributions from net investment income 26,157,025 14,263,248
Cost of shares redeemed (83,982,840) (29,541,879)
Net increase (decrease) in net assets resulting from share transactions 607,577,776 257,444,751
Total increase (decrease) in net assets 725,620,742 310,708,665
NET ASSETS
Beginning of period 592,879,707 282,171,042
End of period (including undistributed net investment income (loss) of
($823,095) and $955,059, respectively) $ 1,318,500,449 $ 592,879,707
OTHER INFORMATION
Shares
Sold 45,052,691 21,693,895
Issued in reinvestment of distributions from net investment income 1,761,238 1,123,843
Redeemed (5,646,913) (2,382,927)
Net increase (decrease) 41,167,016 20,434,811
</TABLE>
Financial Highlights
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31,
1993 1992 1991 1990 1989
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 13.40 $ 11.85 $ 9.51 $ 12.29 $ 11.01
Income from Investment Operations
Net investment income .37 .40 .50 .58 .60
Net realized and unrealized gain (loss) on investments2.06 1.57 2.43 (2.38) 1.29
Total from investment operations 2.43 1.97 2.93 (1.80) 1.89
Less Distributions
From net investment income (.35) (.42) (.59) (.59) (.52)
In excess of net investment income (.04) - - - -
From net realized gain - - - (.39) (.09)
Total distributions (.39) (.42) (.59) (.98) (.61)
Net asset value, end of period $ 15.44 $ 13.40 $ 11.85 $ 9.51 $ 12.29
TOTAL RETURN 18.29% 16.89% 31.44% (15.29)% 17.34%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,318,500 $ 592,880 $ 282,171 $ 154,080 $ 142,572
Ratio of expenses to average net assets .62% .65% .74% .78% .85%
Ratio of net investment income to average net assets 2.87% 3.52% 4.83% 6.01% 5.82%
Portfolio turnover rate 120% 74% 107% 94% 78%
</TABLE>
VARIABLE INSURANCE PRODUCTS FUND: GROWTH PORTFOLIO
INVESTMENTS/DECEMBER 31, 1993
(Showing Percentage of Total Value of Investments)
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - 79.7%
AEROSPACE & DEFENSE - 0.6%
AEROSPACE & DEFENSE - 0.2%
Orbital Sciences Corporation (a) 58,000 $ 1,189,000 68556410
Rockwell International Corp. 50,000 1,856,250 77434710
3,045,250
DEFENSE ELECTRONICS - 0.4%
Loral Corp. 100,000 3,775,000 54385910
Raytheon Co. 35,000 2,310,000 75511110
6,085,000
TOTAL AEROSPACE & DEFENSE 9,130,250
BASIC INDUSTRIES - 2.1%
CHEMICALS & PLASTICS - 1.0%
Airgas, Inc. (a) 165,000 3,588,750 00936310
Akzo N V sponsored ADR 30,000 1,451,250 01019930
du Pont (E.I.) de Nemours & Co. 55,000 2,653,750 26353410
GEON 64,900 1,533,263 37246W10
Hanna (M.A.) Co. 40,000 1,305,000 41052210
Imperial Chemical Industries PLC ADR 30,000 1,417,500 45270450
Morton International, Inc. 15,000 1,402,500 61933110
Union Carbide Corp. 55,000 1,230,625 90558110
14,582,638
IRON & STEEL - 0.6%
Geneva Steel Class A (a) 91,600 1,557,200 37225210
Inland Steel Industries, Inc. (a) 140,000 4,637,500 45747210
LTV Corp. (a) 100,000 1,612,500 50192110
Nucor Corp. 18,000 954,000 67034610
8,761,200
METALS & MINING - 0.1%
Reynolds Metals Co. 25,000 1,134,375 76176310
PAPER & FOREST PRODUCTS - 0.4%
Bowater, Inc. 60,000 1,380,000 10218310
International Paper Co. 50,000 3,387,500 46014610
Weyerhaeuser Co. 25,000 1,115,625 96216610
5,883,125
TOTAL BASIC INDUSTRIES 30,361,338
CONGLOMERATES - 0.9%
Allied-Signal, Inc. 60,000 4,740,000 01951210
ITT Corp. 60,000 5,475,000 45067910
Textron, Inc. 35,000 2,038,750 88320310
12,253,750
CONSTRUCTION & REAL ESTATE - 3.2%
BUILDING MATERIALS - 0.4%
Armstrong World Industries, Inc. 50,000 2,662,500 04247610
Lafarge Corp. 100,100 2,289,788 50586210
Puerto Rican Cement, Inc. 40,000 980,000 74507510
5,932,288
CONSTRUCTION - 2.4%
Centex Corp. 100,000 $ 4,200,000 15231210
Clayton Homes, Inc. (a) 187,500 4,546,875 18419010
Continental Homes Holding Corp. 80,700 1,856,100 21148C10
Kaufman & Broad Home Corp. 100,000 2,375,000 48616810
Lennar Corp. 50,000 1,706,250 52605710
Oakwood Homes Corp. 229,700 6,201,900 67409810
Pulte Corp. 98,800 3,581,500 74586710
Redman Industries (a) 81,000 1,640,250 75764210
Schuler Homes, Inc. (a) 180,000 5,040,000 80818810
Southern Energy Homes, Inc. (a) 100,000 1,887,500 84281410
Standard Pacific Corp. 25,000 278,125 85375C10
Toll Brothers, Inc. (a) 15,000 256,875 88947810
33,570,375
ENGINEERING - 0.3%
Foster Wheeler Corp. 30,000 1,005,000 35024410
Glenayre Technologies, Inc. 65,000 2,827,500 37789910
3,832,500
REAL ESTATE INVESTMENT TRUSTS - 0.1%
G&L Realty Corp. 50,000 843,750 36127110
Simon Properties Group, Inc. (a) 50,000 1,131,250 82880510
1,975,000
TOTAL CONSTRUCTION & REAL ESTATE 45,310,163
DURABLES - 6.4%
AUTOS, TIRES, & ACCESSORIES - 4.1%
Chrysler Corp. 200,000 10,650,000 17119610
Dana Corp. 45,000 2,694,375 23581110
Echlin, Inc. 40,000 1,330,000 27874910
Federal-Mogul Corp. 75,000 2,175,000 31354910
Ford Motor Co. 200,000 12,900,000 34537010
General Motors Corp. 290,000 15,913,741 37044210
Goodyear Tire & Rubber Co. 74,100 3,390,075 38255010
Mascotech, Inc. 150,000 4,181,250 57467010
Smith (A.O.) Corp. Class B 139,400 4,983,550 83186520
58,217,991
CONSUMER DURABLES - 0.2%
Forschner Group, Inc. (a) 115,000 1,753,750 34659010
Oneida Ltd. 25,000 343,750 68250510
2,097,500
CONSUMER ELECTRONICS - 0.9%
Duracraft Corp. (a) 21,000 519,750 26633210
Harman International Industries, Inc. (a) 125,000 3,593,750 41308610
Newell Co. 30,000 1,211,250 65119210
Universal Electronics, Inc. (a) 150,000 2,962,500 91348310
Whirlpool Corp. 55,000 3,657,500 96332010
11,944,750
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
DURABLES - CONTINUED
HOME FURNISHINGS - 0.4%
Heilig-Meyers Co. 50,000 $ 1,950,000 42289310
LADD Furniture, Inc. 100,000 1,000,000 50573910
Leggett & Platt, Inc. 40,000 2,000,000 52466010
4,950,000
TEXTILES & APPAREL - 0.8%
Interface, Inc. Class A 27,500 419,375 45866510
Jones Apparel Group, Inc. (a) 65,000 1,941,875 48007410
Kellwood Co. 115,000 4,614,375 48804410
Nine West Group, Inc. (a) 75,000 2,212,500 65440D10
Tommy Hilfiger (a) 40,000 1,250,000 89299B92
Westpoint Stevens, Inc. Class A (a) 75,000 1,406,250 96123810
11,844,375
TOTAL DURABLES 89,054,616
ENERGY - 2.2%
ENERGY SERVICES - 0.2%
Halliburton Co. 40,000 1,275,000 40621610
Schlumberger Ltd. 20,000 1,182,500 80685710
2,457,500
INDEPENDENT POWER - 0.1%
Thermo Electron Corp. 30,000 1,260,000 88355610
OIL & GAS - 1.9%
Basin Exploration, Inc. (a) 70,000 796,250 07010710
Beau Canada Exp. 501,300 891,286 07428010
Burlington Resources, Inc. 65,000 2,754,375 12201410
Canadian Natural Resources Ltd. (a) 163,300 2,223,870 13638510
Encal Energy Ltd. (a) 758,000 2,609,347 29250D10
Grad & Walker Energy Corp. 107,000 1,011,916 38391010
Inverness Petroleum Ltd. (a) 250,000 1,844,145 46190810
Murphy Oil Corp. 110,000 4,400,000 62671710
Noble Affiliates, Inc. 60,000 1,590,000 65489410
Northstar Energy Corp. 49,300 969,775 66703R10
Petromet Resources Ltd. Ord. 205,000 969,359 71673110
Renaissance Energy Ltd. 52,900 1,130,641 75966610
Rio Alto Exploration Ltd. 184,400 1,150,975 76689210
Summit Resources Ltd. 175,000 1,141,952 86624610
Tarragon Oil & Gas Ltd. 66,700 870,494 87629E20
Tide West Oil Co. (a) 37,500 393,750 88635540
YPF Sociedad Anonima sponsored ADR
representing Class D shares 74,600 1,939,600 98424510
26,687,735
TOTAL ENERGY 30,405,235
FINANCE - 3.8%
BANKS - 1.7%
Bank of Boston Corp. 135,519 $ 3,116,937 06071610
Bank of New York Co., Inc. 65,000 3,705,000 06405710
BanPonce Corp. 41,800 1,316,700 06670410
Citicorp (a) 150,000 5,512,500 17303410
First Interstate Bancorp 40,000 2,565,000 32054810
Norwest Corp. 135,000 3,290,625 66938010
Shawmut National Corp. 125,000 2,718,750 82048410
Signet Banking Corp. 60,996 2,119,611 82668110
24,345,123
CREDIT & OTHER FINANCE - 0.5%
Arbor National Holdings, Inc. (a) 123,600 2,224,800 03876110
Foothill Group, Inc., Class A 100,000 1,662,500 34510920
Green Tree Acceptance, Inc. 60,000 2,880,000 39350510
6,767,300
FEDERAL SPONSORED CREDIT - 1.1%
Federal Home Loan Mortgage Corporation 85,000 4,239,375 31340030
Federal National Mortgage Association 140,000 10,990,000 31358610
15,229,375
SAVINGS & LOANS - 0.5%
Collective Bancorp, Inc. 75,000 1,631,250 19390110
Great Western Financial Corp. 111,472 2,229,440 39144210
Standard Federal Bank 90,300 2,709,000 85338910
6,569,690
TOTAL FINANCE 52,911,488
HEALTH - 5.2%
DRUGS & PHARMACEUTICALS - 2.9%
Amgen, Inc. (a) 65,000 3,217,500 03116210
Biogen, Inc. (a) 55,000 2,193,125 09059710
COR Therapeutics, Inc. (a) 5,000 75,313 21775310
Cephalon, Inc. (a) 49,400 808,925 15670810
Chiron Corp. (a) 60,000 5,040,000 17004010
Collagen Corp. (a) 35,000 971,250 19419410
Elan PLC ADR. (a) 70,000 2,966,250 28413120
Genetics Institute, Inc. depositary share. (a) 25,000 1,206,250 37185530
Immune Response Corp.. (a) 125,000 1,281,250 45252T10
IMCERA Group, Inc. 50,000 1,681,250 45245410
IVAX Corp. 35,000 1,006,250 46582310
Merck & Co., Inc. 120,000 4,125,000 58933110
Nature's Bounty, Inc. 100,000 2,075,000 63901730
Perspective Biosystems, Inc. 8,300 238,625 71527110
Pfizer, Inc. 105,600 7,286,400 71708110
Schering-Plough Corp. 90,000 6,165,000 80660510
40,337,388
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - 0.8%
Cardinal Distribution, Inc. 17,200 $ 817,000 14148710
Cordis Corp. (a) 20,000 987,500 21852510
Johnson & Johnson 65,000 2,908,750 47816010
Medtronic, Inc. 60,000 4,927,500 58505510
Owens & Minor, Inc. 53,500 1,230,500 69073010
Sunrise Medical, Inc. (a) 35,000 1,050,000 86791010
11,921,250
MEDICAL FACILITIES MANAGEMENT - 1.5%
Columbia Healthcare Corp. 190,625 6,338,281 19767910
Healthsouth Rehabilitation Corp. (a) 300,000 7,575,000 42192410
Relife, Inc. 65,000 1,023,750 75952N10
U.S. Healthcare, Inc. 110,000 6,338,750 91191010
21,275,781
TOTAL HEALTH 73,534,419
INDUSTRIAL MACHINERY & EQUIPMENT - 4.2%
ELECTRICAL EQUIPMENT - 2.6%
Amphenol Corp. Class A (a) 85,000 1,402,500 03209420
Antec Corp. (a) 75,000 1,875,000 03664P10
Duracell International, Inc. 40,000 1,435,000 26633L10
General Electric Co. 225,000 23,596,875 36960410
Itel Corp. (a) 44,900 1,257,200 46564210
Roper Industries, Inc. 89,100 2,895,750 77669610
Scientific-Atlanta, Inc. 110,000 3,630,000 80865510
36,092,325
INDUSTRIAL MACHINERY & EQUIPMENT - 1.6%
AGCO Corp. 158,700 5,415,638 00108410
Briggs & Stratton Corp. 30,000 2,475,000 10904310
Caterpillar, Inc. 125,000 11,125,000 14912310
Deere & Co. 35,000 2,590,000 24419910
Perspective Technologies Corp. (a) 27,500 625,625 71527520
22,231,263
POLLUTION CONTROL - 0.0%
Envirotest Systems Corp. (a) 10,000 215,000 29409W10
TOTAL INDUSTRIAL MACHINERY &
EQUIPMENT 58,538,588
MEDIA & LEISURE - 11.2%
BROADCASTING - 4.4%
CBS, Inc. 10,000 2,885,000 12484510
Capital Cities/ABC, Inc. 6,000 3,717,000 13985910
Century Communications Corp. Class A 107,300 1,233,950 15650310
Chris-Craft Industries, Inc. 20,000 732,500 17052010
Clear Channel Communications, Inc. (a) 55,000 $ 2,530,000 18450210
Comcast Corp. Class A 145,000 5,220,000 20030020
EZ Communications, Inc. (a) 75,900 1,195,425 26928810
Home Shopping Network, Inc. 185,000 2,751,875 43735110
Infinity Broadcasting Corp. (a) 50,072 1,514,678 45662610
International Cabletel, Inc. 65,000 1,527,500 45921610
Jacor Communications, Inc. Class A 42,300 608,063 46985840
Liberty Media Corp. Class A (a) 25,000 728,125 53071530
Multimedia, Inc. (a) 30,000 1,027,500 62545K10
NTN Communications, Inc. (a) 75,100 751,000 62941030
Peoples Choice TV Corp. (a) 48,500 1,497,438 71084710
Saga Communications, Inc. Class A (a) 33,500 573,688 78659810
Tele-Communications, Inc. Class A (a) 675,000 20,418,750 87924010
Time Warner, Inc. 175,872 7,782,336 88731510
Turner Broadcasting System, Inc. Class B 100,000 2,700,000 90026250
Viacom, Inc. (non-vtg.) (a) 65,000 2,916,875 92552430
62,311,703
ENTERTAINMENT - 1.1%
Carnival Cruise Lines, Inc. Class A 45,000 2,131,875 14365810
Disney (Walt) Co. 110,000 4,688,750 25468710
MGM Grand, Inc. (a) 25,000 978,125 55295310
Paramount Communications, Inc. 25,000 1,934,375 69921610
Players International, Inc. (a) 86,000 2,128,500 72790310
Royal Carribean Cruises Ltd. 115,000 3,076,250 78015392
Savoy Pictures Entertainment, Inc. (a) 25,000 525,000 80537510
15,462,875
LEISURE DURABLES & TOYS - 1.1%
Callaway Golf Co. 40,000 2,135,000 13119310
Champion Enterprises, Inc. (a) 176,200 3,083,500 15849610
Coachmen Industries, Inc. 200,000 3,250,000 18987310
Cobra Industries, Inc. (a) 100,000 800,000 19104E10
Fleetwood Enterprises, Inc. 223,900 5,317,625 33909910
Thor Industries, Inc. 46,400 1,194,800 88516010
15,780,925
LODGING & GAMING - 2.5%
Boyd Gaming Corp. (a) 85,000 1,136,875 10330410
Caesars World, Inc. (a) 50,077 2,672,860 12769510
Hilton Hotels Corp. 35,000 2,126,250 43284810
Hospitality Franchise Systems, Inc. (a) 108,600 5,769,375 44091210
International Game Technology 115,000 3,392,500 45990210
La Quinta Motor Inns, Inc. 30,000 1,057,500 50419510
Marriott International, Inc. 60,000 1,740,000 57190010
Mirage Resorts, Inc. (a) 210,000 5,013,750 60462E10
President Riverboat Casinos, Inc. (a) 150,750 3,316,500 74084810
Promus Companies, Inc. (a) 135,000 6,176,250 74342A10
Sholodge, Inc. 141,000 3,243,000 82503410
35,644,860
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
MEDIA & LEISURE - CONTINUED
PUBLISHING - 1.1%
American Greetings Corp. Class A 85,000 $ 2,890,000 02637510
Dow Jones & Co Inc. 20,000 715,000 26056110
Dun & Bradstreet Corp. 25,000 1,540,625 26483010
Gannett Co., Inc. 45,000 2,576,250 36473010
Houghton Mifflin Co. 34,400 1,672,700 44156010
Lee Enterprises, Inc. 40,000 1,400,000 52376810
MaClean Hunter Ltd. 292,700 2,795,791 55474980
Times Mirror Co., Series A 60,000 2,002,500 88736010
15,592,866
RESTAURANTS - 1.0%
Back Bay Restaurant Group, Inc. 120,800 2,038,500 05635V10
Bertucci's, Inc. (a) 83,400 2,043,300 08606310
McDonald's Corp. 110,000 6,270,000 58013510
Quantum Restaurant Group, Inc. (a) 304,600 3,731,350 74763T10
14,083,150
TOTAL MEDIA & LEISURE 158,876,379
NONDURABLES - 2.6%
BEVERAGES - 1.6%
Coca-Cola Company (The) 250,000 11,218,750 19121610
COTT Corp. 50,000 1,229,430 22163N10
PepsiCo, Inc. 200,000 8,175,000 71344810
Snapple Beverage Corp. (a) 75,000 1,968,750 83303710
22,591,930
FOODS - 0.2%
IBP, Inc. 100,000 2,587,500 44922310
HOUSEHOLD PRODUCTS - 0.2%
Safeskin Corp. (a) 72,400 1,158,400 78645410
Unilever NV ADR 20,000 2,310,000 90478450
3,468,400
TOBACCO - 0.6%
Philip Morris Companies, Inc. 150,000 8,362,500 71815410
TOTAL NONDURABLES 37,010,330
PRECIOUS METALS - 0.3%
American Barrick Resources Corp. 115,000 3,273,596 02451E10
Homestake Mining Co. 50,000 1,100,000 43761410
4,373,596
RETAIL & WHOLESALE - 5.7%
APPAREL STORES - 0.8%
Catherines Stores Corp. (a) 90,000 1,575,000 14916F10
Cato Corp. Class A 140,000 2,800,000 14920510
Charter Golf, Inc. (a) 60,000 645,000 16122P10
Designs, Inc. (a) 51,000 $ 854,250 25057L10
Gap, Inc. 75,000 2,953,125 36476010
One Price Clothing Stores, Inc. (a) 115,000 2,702,500 68241110
11,529,875
APPLIANCE STORES - 0.2%
Cellstar Corp. (a) 200,000 3,350,000 15092510
DRUG STORES - 0.0%
General Nutrition Companies, Inc. (a) 20,000 570,000 37047F10
GENERAL MERCHANDISE STORES - 1.2%
May Department Stores Co. (The) 50,000 1,968,750 57777810
Penney (J.C.) Co., Inc. 85,000 4,451,875 70816010
Price/Costco, Inc. 100,000 1,925,000 74143W10
Proffitts, Inc. (a) 50,000 1,093,750 74292510
Sears, Roebuck & Co. 80,000 4,220,000 81238710
Wal-Mart Stores, Inc. 100,000 2,500,000 93114210
16,159,375
GROCERY STORES - 0.1%
Safeway, Inc. (a) 75,000 1,593,750 78651420
RETAIL & WHOLESALE, MISC - 3.4%
Best Buy Co., Inc. (a) 30,000 1,395,000 08651610
CML Group, Inc. 250,000 5,906,250 12582010
Futures Shops Ltd. 30,900 724,721 36091310
Home Depot, Inc. (The) 135,166 5,339,057 43707610
Little Switzerland, Inc. (a) 5,200 48,100 53752810
Lowe's Companies, Inc. 180,600 10,700,550 54866110
Micro Warehouse, Inc. (a) 55,000 2,289,375 59501B10
Musicland Stores Corp. (a) 80,000 1,660,000 62758B10
Office Depot, Inc. (a) 75,000 2,521,875 67622010
Rex Stores Corp. (a) 150,000 3,393,750 76162410
Spiegel, Inc. Class A 50,000 1,125,000 84845710
Sport Supply Group, Inc (warrants) (a) 31,350 148,913 84891512
Sport Supply Group, Inc. 125,400 2,413,950 84891510
Staples, Inc. 25,000 637,500 85503010
Sun Television & Appliances, Inc. 105,000 2,231,250 86688110
Sunglass Hut International, Inc. (a) 73,600 2,318,400 86736F10
Toys "R" Us, Inc. (a) 100,000 4,087,500 89233510
Ultimate Electronics, Inc. (a) 44,700 603,450 90384910
47,544,641
TOTAL RETAIL & WHOLESALE 80,747,641
SERVICES - 1.1%
LEASING & RENTAL - 0.2%
Blockbuster Entertainment Corp. 100,000 3,062,500 09367610
PRINTING - 0.5%
Cryk, Inc. (a) 25,000 575,000 23281710
Reynolds & Reynolds Co. Class A 110,000 5,018,750 76169510
Wallace Computer Services, Inc. 33,400 1,131,425 93227010
6,725,175
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
SERVICES - CONTINUED
SERVICES - 0.4%
Franklin Quest Co. (a) 33,900 $ 1,194,975 35459610
Medaphis Corp. (a) 110,000 3,630,000 58402810
Zebra Technologies Corp. Class A (a) 25,000 1,415,625 98920710
6,240,600
TOTAL SERVICES 16,028,275
TECHNOLOGY - 18.6%
COMMUNICATIONS EQUIPMENT - 6.5%
ADC Telecommunications, Inc. (a) 25,000 890,625 00088610
Cabletron Systems, Inc. (a) 80,000 9,000,000 12692010
Centigram Communications Corp. (a) 185,000 6,567,500 15231710
Cisco Systems, Inc. (a) 140,000 9,047,500 17275R10
DSC Communications Corp. (a) 425,000 26,137,500 23331110
General Instrument Corp. (a) 90,000 5,051,250 37012110
Inter-Tel, Inc. (a) 89,000 778,750 45837210
MB Communications, Inc. (a) 300,000 6,375,000 55262M10
Newbridge Networks Corp. (a) 170,000 9,307,500 65090110
Wellfleet Communications, Inc. (a) 165,000 10,642,500 94949710
Xircom, Inc. (a) 50,000 850,000 98392210
3Com Corp. (a) 154,400 7,256,800 88553510
91,904,925
COMPUTER SERVICES & SOFTWARE - 5.3%
Adobe Systems, Inc. 80,000 1,780,000 00724F10
America Online, Inc. (a) 10,000 585,000 02364J10
BancTec, Inc .(a) 103,000 2,497,750 05978410
CUC International, Inc. (a) 185,000 6,660,000 12654510
Ceridian Corp. (a) 50,000 950,000 15677T10
Chipcom Corp. (a) 120,000 6,060,000 16961710
Electronic Arts (a) 40,000 1,200,000 28551210
Electronics For Imaging Incorporated (a) 127,600 2,105,400 28608210
Equifax Inc. 100,000 2,737,500 29442910
Fiserv, Inc. (a) 50,000 962,500 33773810
IMRS, Inc. (a) 115,000 2,932,500 44969610
Informix Corp. (a) 200,000 4,250,000 45677910
Intelligent Electronics, Inc. 110,000 3,011,250 45815710
Lotus Development Corp. (a) 70,000 3,850,000 54570010
Microsoft Corp. (a) 80,000 6,450,000 59491810
Oracle Systems Corp. (a) 360,000 10,350,000 68389X10
Parametric Technology Corp. (a) 120,000 4,650,000 69917310
Recognition Equipment, Inc. (a) 50,900 763,500 75623110
Sierra On-Line, Inc. (a) 60,000 1,102,500 82640910
SunGard Data Systems, Inc. (a) 35,000 1,443,750 86736310
Sybase, Inc. (a) 150,000 6,300,000 87113010
Synopsys, Inc. (a) 50,000 $ 2,262,500 87160710
Viewlogic Systems, Inc. (a) 95,000 2,161,250 92672110
75,065,400
COMPUTERS & OFFICE EQUIPMENT - 5.0%
ADAPTEC, Inc. (a) 100,000 3,975,000 00651F10
AST Research, Inc. (a) 40,000 910,000 00190710
Compaq Computer Corp. (a) 150,000 11,100,000 20449310
Creative Technologies, Corp. (a) 285,000 9,048,750 22599992
Danka Business Systems PLC
sponsored ADR 26,500 1,060,000 23627710
Dell Computer Corporation (a) 43,000 972,875 24702510
EMC Corp. (a) 210,000 3,465,000 26864810
Hewlett-Packard Co. 45,000 3,555,000 42823610
Hutchinson Technology, Inc. (a) 25,000 731,250 44840710
International Business Machines Corp. 225,000 12,712,500 45920010
International Imaging Materials, Inc. (a) 70,000 1,391,250 45968C10
Media Vision Technology, Inc. (a) 75,000 3,281,250 58445H10
Quantum Corp. (a) 40,800 576,300 74790610
Seagate Technology (a) 25,000 593,750 81180410
Silicon Graphics, Inc. (a) 375,000 9,281,250 82705610
Sun Microsystems, Inc. (a) 55,000 1,601,875 86681010
SynOptics Communications, Inc. (a) 25,000 696,875 87160910
Tech Data Corp. (a) 157,200 5,659,200 87823710
70,612,125
ELECTRONIC INSTRUMENTS - 0.3%
ASECO Corp. (a) 59,200 384,800 04365910
Applied Materials, Inc. (a) 20,000 775,000 03822210
Megatest Corp. (a) 150,000 1,931,250 58495810
Novellus System, Inc. (a) 20,000 685,000 67000810
3,776,050
ELECTRONICS - 1.5%
Intel Corp. 80,000 4,960,000 45814010
Motorola, Inc. 125,000 11,546,875 62007610
Sanmina Corp. (a) 62,300 1,666,525 80090710
Texas Instruments, Inc. 55,000 3,492,500 88250810
Zero Corp. 30,000 483,750 98948410
22,149,650
TOTAL TECHNOLOGY 263,508,150
TRANSPORTATION - 2.7%
AIR TRANSPORTATION - 1.1%
AMR Corp. (a) 30,000 2,010,000 00176510
Atlantic Southeast Airlines, Inc. 65,000 2,226,250 04886910
Comair Holdings, Inc. 150,050 3,432,394 19978910
Mesa Airlines, Inc. (a) 188,700 3,349,425 59048110
SkyWest, Inc. 70,000 2,415,000 83087910
UAL Corp. (a) 12,000 1,752,000 90254910
15,185,069
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
TRANSPORTATION - CONTINUED
RAILROADS - 1.3%
Burlington Northern, Inc. 35,000 $ 2,025,625 12189710
Conrail, Inc. 55,000 3,678,125 20836810
CSX Corp. 60,000 4,860,000 12640810
Illinois Central Corp., Series A 41,900 1,503,163 45184110
Norfolk Southern Corp. 35,000 2,467,500 65584410
Santa Fe Pacific Corp. 137,600 3,061,600 80218310
Southern Pacific Rail Corp. (a) 75,000 1,481,250 84358410
19,077,263
TRUCKING & FREIGHT - 0.3%
Federal Express Corp. (a) 40,000 2,835,000 31330910
Landstar System, Inc. (a) 44,000 973,500 51509810
3,808,500
TOTAL TRANSPORTATION 38,070,832
UTILITIES - 8.9%
CELLULAR - 2.1%
Cencall Communications Corp. (a) 85,000 2,380,000 15129710
IDB Communications Group, Inc. (a) 115,000 6,325,000 44935510
LIN Broadcasting Corp. (a) 20,000 2,210,000 53276310
McCaw Cellular Communications, Inc.
Class A (a) 125,000 6,312,500 57946810
Pactel Corp. (a) 125,000 3,109,375 69525210
Qualcomm, Inc. (a) 15,000 795,000 74752510
Rogers Communications, Inc. Class B (a) 325,000 5,378,760 77510920
Vodafone Group PLC sponsored ADR 40,000 3,570,000 92857T10
30,080,635
ELECTRIC UTILITY - 0.1%
Consolidated Electric Power Asia Ltd.
sponsored ADR (b) 30,500 518,500 20855210
Meralco Class B (a) 50,000 913,200 58799A92
1,431,700
TELEPHONE SERVICES - 6.7%
ACC Corp. 60,000 1,132,500 03095410
ALC Communications Corp. (a) 50,000 1,437,500 03095410
Ameritech Corp. 105,000 8,058,750 03095410
Bell Atlantic Corp. 100,000 5,900,000 07785310
BellSouth Corp. 160,000 9,260,000 07986010
British Telecommunications PLC ADR. 50,000 3,556,250 11102140
Cable & Wireless PLC ADR 100,000 2,400,000 12683020
Davel Communications GRP, Inc. (a) 8,600 132,225 23833810
GTE Corp. 225,000 7,875,000 36232010
LCI International, Inc. (a) 90,000 3,330,000 50181310
LDDS Communications, Inc. (a) 75,045 3,620,921 50182L10
MCI Communications Corp. 210,000 5,932,500 55267310
NYNEX Corp. 110,000 4,413,750 67076810
Pacific Telesis Group 100,000 $ 5,400,000 69489010
Philippine Long Distance Telephone Co. 7,400 600,325 71825210
Southwestern Bell Corp. 240,000 9,960,000 84533310
Sprint Corporation 165,000 5,733,750 85206110
Telefonos de Mexico SA sponsored ADR
representing shares Ord. Class L 30,000 2,025,000 87940378
Telephone & Data Systems, Inc. 118,772 6,190,990 87943310
U.S. West, Inc. 180,000 8,257,500 91288910
95,216,961
TOTAL UTILITIES 126,729,296
TOTAL COMMON STOCKS
(Cost $928,541,017) 1,126,844,346
PRINCIPAL
AMOUNT
US TREASURY OBLIGATIONS - 7.1%
U.S. Treasury Bills, yields at date of
purchase 3.13% to 3.15%,
2/24/94 to 3/3/94
(Cost $99,519,285) $ 100,000,000 99,544,000 99399H5Q
MATURITY
AMOUNT
REPURCHASE AGREEMENTS - 13.2%
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 3.23%
dated 12/31/93 due 1/3/94, $187,046,340 186,996,000
TOTAL INVESTMENTS - 100.0%
(Cost $1,215,056,302) $1,413,384,346
LEGEND:
(a) Non-income producing
(b) 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 $518,500 or .04% of net
assets.
OTHER INFORMATION:
Purchases and sales of securities, other than short-term securities,
aggregated $1,782,855,465 and $1,475,462,863, respectively.
INCOME TAX INFORMATION:
At December 31, 1993, the aggregate cost of investment securities for
income tax purposes was $1,222,085,677. Net unrealized appreciation
aggregated $191,298,669, of which $209,380,263 related to appreciated
investment securities and $18,081,594 related to depreciated investment
securities.
The fund hereby designates $34,580,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
GROWTH PORTFOLIO
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
December 31, 1993
ASSETS
Investment in securities, at value (including repurchase agreements of $186,996,000)
(cost $1,215,056,302) $ 1,413,384,346
(Notes 1 and 2) - See accompanying schedule
Cash 131
Receivable for investments sold 14,293,378
Receivable for fund shares sold 3,637,072
Dividends receivable 1,128,873
Other receivables 115,162
Total assets 1,432,558,962
LIABILITIES
Payable for investments purchased $ 42,295,216
Payable for fund shares redeemed 5,490,705
Accrued management fee 691,954
Other payables and accrued expenses 231,739
Total liabilities 48,709,614
NET ASSETS $ 1,383,849,348
Net Assets consist of (Note 1):
Paid in capital $ 1,105,822,344
Undistributed net investment income 7,251,541
Accumulated undistributed net realized gain (loss) on investments 72,447,419
Net unrealized appreciation (depreciation) on investment securities 198,328,044
NET ASSETS, for 59,947,383 shares outstanding $ 1,383,849,348
NET ASSET VALUE, offering price and redemption price per share ($1,383,849,348 (divided by) 59,947,383 shares) $23.08
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Year Ended December 31, 1993
INVESTMENT INCOME $ 9,210,149
Dividends
Interest 5,323,222
Total income 14,533,371
EXPENSES
Management fee (Note 3) $ 6,358,701
Transfer agent fees (Note 3) 140,122
Accounting fees and expenses (Note 3) 456,795
Non-interested trustees' compensation 6,589
Custodian fees and expenses 74,222
Registration fees 159,722
Audit 30,080
Legal 10,334
Miscellaneous 20,207
Total expenses before reductions 7,256,772
Expense reductions (Note 4) (88,297) 7,168,475
Net investment income 7,364,896
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 77,232,971
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 86,481,802
Net gain (loss) 163,714,773
Net increase (decrease) in net assets resulting from operations $ 171,079,669
</TABLE>
Statement of Changes in Net Assets
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED DECEMBER 31,
1993 1992
INCREASE (DECREASE) IN NET ASSETS
Operations $ 7,364,896 $ 4,307,187
Net investment income
Net realized gain (loss) on investments 77,232,971 8,662,755
Change in net unrealized appreciation (depreciation) on investments 86,481,802 47,619,060
Net increase (decrease) in net assets resulting from operations 171,079,669 60,589,002
Distributions to shareholders from: (4,411,941) (1,078,184)
Net investment income
Net realized gain (8,449,098) (9,272,379)
In excess of net realized gain (4,786,725) -
Total distributions (17,647,764) (10,350,563)
Share transactions 798,421,513 492,499,404
Net proceeds from sales of shares
Reinvestment of distributions from: 4,411,941 1,078,184
Net investment income
Net realized gain 13,235,823 9,272,379
Cost of shares redeemed (335,488,823) (174,713,000)
Net increase (decrease) in net assets resulting from share transactions 480,580,454 328,136,967
Total increase (decrease) in net assets 634,012,359 378,375,406
NET ASSETS
Beginning of period 749,836,989 371,461,583
End of period (including undistributed net investment income of $7,251,541
and $5,248,552, respectively) $ 1,383,849,348 $ 749,836,989
OTHER INFORMATION
Shares
Sold 37,006,075 27,004,989
Issued in reinvestment of distributions from: 220,487 54,017
Net investment income
Net realized gain 661,460 464,548
Redeemed (15,878,913) (9,652,468)
Net increase (decrease) 22,009,109 17,871,086
</TABLE>
Financial Highlights
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31,
1993 1992 1991 1990 1989
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 19.76 $ 18.51 $ 12.91 $ 15.18 $ 11.72
Income from Investment Operations
Net investment income .12 .09 .09(dagger) .24 .24
Net realized and unrealized gain (loss) on investments3.64 1.64 5.72 (1.98) 3.41
Total from investment operations 3.76 1.73 5.81 (1.74) 3.65
Less Distributions
From net investment income (.11) (.05) (.21) (.21) (.19)
From net realized gain (.21) (.43) - (.32) -
In excess of net realized gain (.12) - - - -
Total distributions (.44) (.48) (.21) (.53) (.19)
Net asset value, end of period $ 23.08 $ 19.76 $ 18.51 $ 12.91 $ 15.18
TOTAL RETURN 19.37% 9.32% 45.51% (11.73)% 31.51%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,383,849 $ 749,837 $ 371,462 $ 135,487 $ 77,261
Ratio of expenses to average net assets .71% .75% .84% .88% 1.02%
Ratio of net investment income to average net assets .72% .83% .56% 2.69% 2.83%
Portfolio turnover rate 159% 262% 261% 88% 111%
</TABLE>
(dagger) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
VARIABLE INSURANCE PRODUCTS FUND: OVERSEAS PORTFOLIO
INVESTMENTS/DECEMBER 31, 1993
(Showing Percentage of Total Value of Investments)
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - 72.5%
AUSTRALIA - 2.7%
Ampolex Ltd. Ord. 1,088,100 $ 4,100,829 03212792
FAI Insurance Ltd. Ord. 1,531,900 1,102,646 30239330
Lend Lease Corp. Ltd. 81,000 973,554 52599292
TNT Ltd. (b) 1,658,800 2,140,184 93599292
Westpac Banking Corp. 2,866,300 9,011,647 96121410
Westpac Banking Corp. sponsored ADR 8,000 127,000 96121430
Woolworths, Ltd. 1,800,000 3,935,772 98088892
21,391,632
AUSTRIA - 0.4%
Verbund Gesellschaft 47,100 2,866,368 92299999
BERMUDA - 0.4%
Consolidated Electric Power Asia Ltd.
sponsored ADR (c) 30,000 510,000 20855210
Jardine Strategic Holdings Ord. 748,000 3,508,898 47199020
4,018,898
BRAZIL - 0.5%
Telebras PN (Pfd. Reg.) 118,632,600 4,044,185 95499792
CANADA - 0.6%
Abitibi-Price Inc. 126,900 1,500,142 00368010
Noranda, Inc. 150,600 2,948,194 65542210
4,448,336
CHILE - 0.1%
Maderas Y Sinteticos Sociedad Anonima
Masisa, sponsored ADR 24,700 691,600 55646510
DENMARK - 0.3%
Den Danske Bank Group AS 36,900 2,085,329 24820692
FINLAND - 0.8%
America Group Ltd. Class A 119,300 2,181,721 02351210
Huhtamaki Ord. 41,200 1,286,556 44499392
Kansallis-Osake-Pankki 127,400 290,132 48199210
Outokumpu Oy Class A (b) 125,700 1,483,352 69099992
Repola OY 35,000 544,059 75999A92
Unitas Bank Ltd. B Free shares 31,900 77,050 90499123
5,862,870
FRANCE - 4.4%
Assurances Generales (Reg.) 26,400 3,180,132 04557510
BNP CI Ord. 102,140 4,961,184 05599996
Bail Investissement (b) 3,400 660,585 05699092
Credit Lyonnais CI 16,500 2,132,539 22799392
Elf Aquitaine 18,100 1,274,247 28627199
Financiere Bank de Suez Cie 45,900 $ 2,767,648 31799110
GAN (Groupe Des Assur Natl.) 40,400 3,678,932 36599792
Klepierre SA (b) 5,700 733,806 49899822
Lafarge Coppee 24,900 1,962,889 50586310
Paribas SA (Cie Financiere) Class A (b) 37,400 3,133,411 73999192
Pechiney SA CIP 15,550 1,016,701 70599310
Societe Generale Class A 37,600 4,865,957 83357799
Sophia SA 5,700 512,316 84199C22
Total Compagnie Francaise des Petroles
Class B (b) 12,800 697,848 20434510
UFB Locabail SA (b) 10,700 780,943 90599B92
Unibail 20,300 2,071,498 90499592
34,430,636
GERMANY - 6.2%
Allianz Versich Holdings Ord. (Reg.) (b) 3,150 5,342,423 01882495
Bayer AG 35,100 7,471,522 07273010
Bayerische Vereinsbank AG Ord. 4,200 1,408,699 07276110
BHF Bank:
(warrants) (b) 2,200 253,135 05549995
(Bank Berlin Hand) 10,400 3,141,181 05549991
Commerzbank AG 8,100 1,826,717 20259710
Computer 2000 AG (b) 1,600 777,816 20599492
Continental Gummi-Werke AG (b) 7,400 1,179,266 21199010
Deutsche Bank AG 15,300 7,803,159 25152592
Deutsche Bank AG (warrants) (b) 21,300 751,174 25299992
Hoechst AG Ord. 16,200 2,963,756 43439010
Munich Reinsurance (Reg.) (b) 2,300 5,021,574 62699492
Sixt AG ord (b) 1,200 386,607 83002199
Thyssen AG Ord. 15,300 2,425,009 88629110
Veba Vereinigte Elektrizetaets &
Bergwerks AG Ord. 27,400 8,228,512 92239110
48,980,550
HONG KONG - 1.2%
Cathay Pacific Airways Ltd. 874,000 1,696,539 14890610
Dickson Concept 1,933,000 2,026,171 25399210
Hong Kong Land Holdings Ltd. 1,210,000 4,290,394 43858292
Semi-Tech Microelectronics 100,000 208,347 81699192
Swire Pacific Class A 97,000 872,403 87079410
9,093,854
INDIA - 0.1%
ITC Ltd.:
(warrants) (b) (c) 8,000 108,000 45031811
GDR (b) (c) 24,000 684,000 45031810
792,000
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
INDONESIA - 0.9%
Astra International
(rights) 8,000 $ 6,403 04699895
(For. Reg.) 40,000 422,448 04699894
Bank International Indonesia Ord 643,500 3,154,263 06199B92
Jakarta International Hotels &
Development Ord. (b) 1,047,000 3,185,874 47399693
6,768,988
IRELAND - 0.6%
Anglo Irish Bank 196,600 177,131 03599592
Bank of Ireland U.S. Holdings, Inc. 440,300 1,885,937 06278793
Irish Life PLC 728,200 2,312,436 46299B92
4,375,504
ITALY - 1.1%
Assicurazioni Generali Spa 226,100 5,170,070 04542910
SAI (Soc Assicur Industriale) 95,000 1,095,282 78399110
SIP Spa 1,268,400 2,657,247 78401792
8,922,599
JAPAN - 14.7%
ADO Electronic Industrial Co. 23,000 396,960 00699992
Amadasonoike Co. Ltd. 38,000 210,686 02499492
Aoyama Trading Co. Ord. 15,000 858,484 03799092
Asahi Glass (warrants) (b) 50 33,125 04339392
Canon, Inc. 375,000 5,164,320 13780199
Chudenko Corporation 12,000 375,587 17123410
Cosmo Oil Company Ltd. 96,000 685,929 22199092
Daiwa House Industry Co. Ltd. (b) 28,000 375,587 23406299
East Japan Railway Ord. (b) 700 2,629,108 27399722
Fujitsu Ltd. 511,000 3,856,778 35959010
Hitachi Maxell Ltd. (b) 165,000 2,375,587 43358990
Hitachi, Ltd. (b) 923,000 6,784,761 43357810
Honda Motor Co. Ltd. 233,000 3,167,092 43812810
IO Data Device, Inc. 6,000 464,118 45099A92
Izumi Co. Ord. 42,000 837,559 46399292
Joshin Denki Co. Ltd. Ord. (b) 20,000 207,467 48199999
Konica Corp. 382,000 2,148,697 50046M10
Kyocera Corporation (b) 17,000 896,937 50155610
Marubeni Corp. 216,000 855,695 57381010
Marukyo Corp. 16,000 393,472 57899792
Matsushita Electric Industrial Co. Ltd. 278,000 3,704,180 57687910
Minebea Co. 349,000 1,513,658 60299392
Mitsubishi Bank of Japan 78,000 1,855,399 60674210
Mitsubishi Heavy Industry (b) 221,000 1,215,425 60699310
Mitsubishi Trust & Banking 305,000 $ 3,272,970 60699410
Murata Manufacturing Co. (b) 211,000 7,226,737 62699110
Nichido Fire & Marine Insurance Co. 404,000 2,312,185 65399920
Nikko Securities 68,000 662,821 65399010
Nippon Sheet Glass (warrants) (b) 100 13,750 65461393
Nippon Shinpan Ltd. 74,000 610,794 65461710
Nippon Telegraph & Telephone Ord. (b) 400 2,661,301 65462492
Nomura Securities Co. Ltd. 201,000 3,217,437 65536130
Oji Paper Ltd. (b) 88,000 696,445 67811810
Orix Corp. 178,000 4,854,907 68616710
Pioneer Electronic Corp. 107,000 2,688,755 72365710
Sankyo Co. Ltd. 2,000 114,465 82299792
Sanwa Bank (b) 170,000 3,146,882 80399410
Sony Corp. 169,400 8,346,917 83569999
Sumitomo Realty & Development Co. Ltd. 123,000 681,959 86562310
Sumitomo Trust & Banking Co. 186,000 1,846,277 86599310
Suzuki Motor Corp. 391,000 3,671,361 86958592
TDK Corp. 143,000 4,833,803 87235110
Tobu Railway (b) 80,000 450,704 88739110
Tohoku Electric Power Inc. (b) 92,000 2,427,006 88906099
Tokio Marine & Fire Insurance Co. Ltd. (The) 300,000 3,272,970
88909099
Tokyo Electric Power Co., Inc. 74,000 2,038,185 88910710
Tokyo Style Co. Ltd. 213,000 3,066,667 88999410
Toshiba Corp. (b) 1,028,000 6,251,196 89149310
Toyota Motor Corporation 376,000 5,985,066 89399999
115,358,171
KOREA (SOUTH) - 1.2%
Cho Hing Bank Co. Ltd. 157,000 2,022,920 17099E22
Korea Electric Power Corp. 147,470 4,001,230 50099B92
Korea First Securities Co. (b) 5,000 119,556 50099K22
Kyungki Bank Ltd. (b) 135,000 1,973,611 61999922
Seoul Securities Co. (b) 71,000 1,574,552 83599P22
9,691,869
LUXEMBOURG - 0.0%
Arbed SA 1,200 133,721 03899030
MALAYSIA - 1.4%
Ekran Berhad Ord. (b) 133,000 839,303 28299792
Magnum Corp. BHD 262,500 779,538 55999392
Renong BHD 191,000 303,455 75999H22
Resorts World BHD 148,000 950,444 76199592
Tanjong PLC (Reg) 114,500 722,558 87599993
Telekom Malaysia BHD 417,000 3,420,951 94099892
Tenega Nasional BHD 527,000 3,775,602 92099992
10,791,851
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
MEXICO - 1.4%
Grupo Dina (Consorcio G) ADR 34,800 $ 970,050 21030610
Grupo Financiero Bancomer SA de CV
sponsored ADR, Series C (c) 70,200 2,930,850 40048610
Telefonos de Mexico SA sponsored ADR
representing share Ord. Class L 100,600 6,790,500 87940378
10,691,400
NETHERLANDS - 5.1%
ABN-AMRO Holdings NV 129,182 4,746,410 00399192
Aegon NV Ord. 75,650 4,101,272 00792493
Akzo NV Ord. 53,700 5,187,873 01019910
Amev NV CVA 2,900 128,160 03199092
Hoogovens en Staalfabrieken (b) 57,900 1,431,136 43888410
International Nederlanden Groep CVA
(warrants) (b) 100,000 215,313 46099893
International Nederlanden Groep CVA 98,000 4,678,417 46099892
KBB NV Ord. 18,400 993,751 48130092
Oce Van Der Grinten NV 86,700 3,051,876 67462710
Philips Electronics 269,800 5,545,734 71833799
Pirelli Tyre Holdings NV Ord. (b) 852,600 6,352,876 72499092
Stad Rotterdam 50,100 1,225,468 85299822
Wereldhave NV 36,300 2,210,457 95199E22
39,868,743
NEW ZEALAND - 0.0%
Brierley Investments Ltd. 330,800 255,073 10901410
NORWAY - 1.4%
Bergesen Group Class B 83,200 1,617,882 08399011
Christiania Bank Free shares Ord (b) 860,000 1,558,174 17100792
Den Norske Bank Class A Free shares (b) 477,800 1,220,851 25299792
Mosvold Shipping AS 'B' 26,400 161,194 62099294
Norske Skogindustrier A Free shares (b) 39,300 918,102 66499594
Olav Thon Eiendomsselskp Ord. 36,100 551,050 67941099
Orkla AS
Class A Free shares 6,450 252,562 39299193
Class B (non-vtg.) 39,500 1,457,565 39299192
Smedvig AS 24,400 453,423 79799892
Unitor AS 149,600 2,521,861 91699392
10,712,664
SINGAPORE - 1.0%
Kim Eng Holdings Ltd (rights) (b) 90,800 90,321 49499D93
Kim Eng Holdings Ltd. 454,000 1,072,552 49499D92
Neptune Orient Lines Ltd. (b) 2,902,000 5,358,369 64099610
Singapore Aerospace (For. Reg.) (b) 22,000 44,588 83999793
United Overseas Bank (warrants) (b) 237,375 1,180,604 91199E92
7,746,434
SOUTH AFRICA - 0.2%
De Beers Consolidated Mines Ltd. ADR 24,000 $ 582,000 24025330
Driefontein Consolidated Ltd. ADR 47,300 608,988 26202640
1,190,988
SPAIN - 4.0%
Acerinox SA (Reg.) 13,750 1,064,268 00499192
Argentaria Corp. Bancaria de Esp (b) 47,350 1,997,862 21991392
Banco Bilbao Vizcaya SA Ord. (Reg.) 182,500 4,035,015 05945891
Banco Central SA (Reg.) 13,700 330,178 05947010
Banco Intercontinental Espanol 49,350 4,036,944 24699592
Banesto (Reg.) 86,800 909,536 05981699
Corporacion Mapfre International
Reas (Reg.) (b) 93,100 4,877,750 16899192
Iberdrola SA 220,500 1,578,851 45499892
Repsol SA Ord. (b) 105,400 3,276,493 76026T10
Telefonica de Espana SA Ord. 463,850 6,043,172 87938210
Union Electrica Fenosa (b) 679,500 2,852,805 90659510
Vallehermoso SA (b) 54,250 1,051,650 91899210
32,054,524
SWEDEN - 2.2%
Aktiebolaget Electrolux (b) 114,400 3,894,048 01019810
Foreningsbanken AB, Class A, ord (b) 157,000 352,825 34599E22
Frontline (b) 152,000 400,795 35999F22
ICB Shipping (b) 25,000 281,660 44999B92
Marieberg Tidnings 'A' (b) 36,600 679,939 56799392
OM Gruppen AB Ord. (b) 17,200 439,102 68199E22
SKF AB Ord. (b) 217,400 3,517,630 78437530
Scribona AB B Free shares (b) 8,700 31,282 81199B92
Securitas B Free Shares 6,000 169,715 81399792
Skandia International Holding Co. AB ADR 35,400 717,046 83055510
Skandinaviska Enskilda Banken
Class A Free shares 429,100 2,905,788 88099222
Skanska Class B (b) 196,800 4,198,576 93899392
17,588,406
SWITZERLAND - 8.2%
Alusuisse Lonza (Reg.) 8,105 3,518,703 02239994
Baloise Holding (Reg.) (b) 4,800 8,870,968 05899195
C.S. Holdings:
(Bearer) (b) 1,000 495,296 17599792
(Reg.) 101,000 9,977,822 17599795
Ciba-Geigy AG (Reg.) 12,980 7,850,806 17199492
Globus Magazine Part. Cert 4,669 3,686,878 37957792
Holderbank Financiere AG PC (Bearer) 8,800 5,500,000 43479593
Sulzer Gebrueder A G, Class B
(warrants) (b) 6,240 31,032 86557692
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
SWITZERLAND- CONTINUED
Surveillance, Societe Generale (Bearer) (b) 410 $ 515,255 86901193
Swiss Bank Corp. (Bearer) (b) 21,600 6,909,677 87083610
Swiss Reinsurance Corp.:
(Bearer)(b) 3,200 1,677,419 87099392
(Reg.) (b) 1,250 617,440 87099393
Class A (warrants) (b) 4,450 34,392 87099D22
Class B (warrants) (b) 4,450 30,654 87099399
Winterthur Schweiz (Reg.) 11,750 6,483,031 97629994
Zurich Versicherung (Reg.) 8,450 8,603,327 99499597
64,802,700
TAIWAN (FREE CHINA) - 0.1%
Taiwan Fund, Inc. 25,800 1,009,425 87403610
THAILAND - 0.3%
Ruam Pattana Fund II (For.) 1,117,000 766,117 76999523
Ruang Khao Unit Trust (For. Reg.) (b) 836,800 614,931 77399393
Telecomasia Corp. Public Ltd. 185,000 1,109,347 87928D92
2,490,395
UNITED KINGDOM - 11.0%
BET Public Ltd. Co. Ord. 1,529,800 3,027,750 05538H10
Barclays PLC Ord. 617,000 5,786,812 06738E10
Bass PLC Ord. 304,800 2,415,269 06990492
British Petroleum PLC Ord. 407,600 2,170,303 11088910
British Steel PLC Ord. 2,040,100 3,811,743 11101510
British Vita Ord. 534,300 1,968,960 11199192
Burton Group PLC Ord. 2,014,700 2,068,130 12304910
Dixons Group PLC 536,400 2,242,104 25587592
English China Clay PLC (b) 157,100 1,072,010 29321792
First National Finance Corporation PLC 549,500 482,912 33599392
Great Universal Stores PLC Ord Class A 381,600 3,657,915 39133420
Ladbroke Group PLC Ord. 1,765,500 4,224,382 50572799
Midlands Electricity PLC 361,400 3,837,934 59780293
Mirror Group Newspaper PLC (b) 1,002,700 2,488,060 60499792
National Westminster Bank PLC Ord. 707,000 6,474,282 63853930
North West Water Ord. 337,700 2,917,880 67299195
Rolls Royce Ltd. Ord. 874,433 2,092,291 77577910
Royale Insurance Co. Ltd. 773,900 3,880,660 78074910
Saatchi & Saatchi PLC Ord. (b) 733,200 1,440,305 78514310
Sainsbury J PLC Ord. 664,300 4,356,400 78710310
Sedgwick Group 223,000 597,513 81482610
Storehouse PLC 373,900 1,303,311 86211210
TSB Group PLC 296,600 1,055,768 87199010
Taylor Woodrow PLC 322,500 688,302 87667410
Tesco PLC Ord. (b) 1,490,500 4,689,128 88157510
Tomkins PLC Ord. 429,200 1,489,732 89003010
Trafalgar House PLC Ord. 260,600 $ 361,812 89270710
Vickers PLC Ord. Unit 1,933,650 4,998,002 92549310
Vodafone Group PLC 150,000 1,314,900 92857T92
Warburg (SG) Group PLC Ord. 231,000 3,176,451 81799099
Whitbread Class A 565,000 4,844,304 96341499
Willis Coroon PLC Ord. (b) 419,100 1,392,774 97062410
86,328,099
TOTAL COMMON STOCKS
(Cost $486,102,933) 569,487,812
PREFERRED STOCKS - 3.4%
CONVERTIBLE PREFERRED STOCKS - 0.0%
NETHERLANDS - 0.0%
ABN-AMRO Holdings NV 6% (b) 6,552 240,734 00399194
NONCONVERTIBLE PREFERRED STOCKS - 3.4%
AUSTRIA - 0.9%
Creditanstaldt Bank 92,500 6,069,305 22539210
MaCulan Holding Ord. 6,700 673,709 55699594
6,743,014
GERMANY - 0.4%
Boss (Hugo) AG 1,700 860,660 44451094
RWE AG (b) 10,200 2,447,014 76204599
3,307,674
ITALY - 1.9%
Banco Ambro Veneto N/C Risp 734,200 1,304,578 06399592
SAI (Sta Assicur Industriale) N/C Risp 500,500 2,672,345 78399192
SIP (Societa Ital Per L'Eser)
Spa Di Risp N/C Ord. 150,000 273,085 78401796
Stet Societa Finanziaria Telefonica Spa 5,126,900 10,349,365 85982592
Unicem Di Risp 143,900 465,275 91199792
15,064,648
KOREA (SOUTH) - 0.2%
Korea First Securities Co. (b) 66,140 1,499,550 50099K23
TOTAL NONCONVERTIBLE PREFERRED STOCKS 26,614,886
TOTAL PREFERRED STOCKS
(Cost $22,239,956) 26,855,620
MOODY'S MOODY'S
RATINGS PRINCIPAL VALUE RATINGS PRINCIPAL VALUE
(UNAUDITED) (D) AMOUNT (A) (NOTE 1) (UNAUDITED) (D) AMOUNT (A) (NOTE 1)
Corporate BONDS - 0.9%
CONVERTIBLE BONDS - 0.3%
GRAND CAYMAN - 0.0%
CTII Overseas Finance
4 1/4%, 11/18/98 (c) - XEU 265,000 $ 280,900 126995AA
HONG KONG - 0.1%
Hon Kwok Land Treasury Ltd.
4 7/8%, 12/15/00 - XEU 540,000 561,600 43899JAA
INDIA - 0.1%
Jindal Strip euro 4 1/4%
3/31/99 (c) - XEU 355,000 457,950 642994AA
THAILAND - 0.1%
Asia Credit 3 3/4%, 11/17/03 (c) - 635,000 933,450 044909AA
TOTAL CONVERTIBLE BONDS 2,233,900
NONCONVERTIBLE BONDS - 0.6%
BRAZIL - 0.6%
Brazil Federative Republic IDU euro
8 3/4%, 1/1/01 B2 5,250,000 4,364,062 1057569E
TOTAL CORPORATE BONDS
(Cost $5,860,514) 6,597,962
GOVERNMENT OBLIGATIONS - 4.8%
ARGENTINA - 0.5%
Argentina Republic BOCON
3 1/4%, 4/1/01 B1 5,570,980 4,827,811 039995AF
DENMARK - 0.5%
Danish Government Bullet
7%, 12/15/04 Aa1 DKK 25,000,000 3,935,672 249998AV
FRANCE - 0.6%
French Government Strips 4/25/23 Aaa FRF 168,000,000 4,473,185 351996BL
UNITED STATES OF AMERICA - 3.2%
U.S. Treasury Bills, yield at date of
purchase 3.153%, 2/24/94 25,000,000 24,872,250 99399H5H
TOTAL GOVERNMENT OBLIGATIONS
(Cost $36,593,799) 38,108,918
PRINCIPAL VALUE
AMOUNT (A) (NOTE 1)
Indexed SECURITIES - 1.4%
UNITED STATES OF AMERICA - 1.4%
Bankers Trust Company note
8.1425%, 10/28/94
(coupon inversely indexed to
JPY LIBOR and principal
indexed to value of 9-year
Japanese securities, both
multiplied by 3) $ 4,900,000 $ 5,440,470 0669918T
Bankers Trust Company note
11.595%, 8/19/97
(coupon inversely indexed
to JPY LIBOR, multiplied by 7) 3,600,000 4,766,760 0669918C
Citibank Nassau 4.625%, 7/30/96
(inversely indexed to 1-year
SEK swap rate, multiplied by 10) 900,000 942,570 223991AH
TOTAL indexed securities
(Cost $9,400,000) 11,149,800
MATURITY
AMOUNT
REPURCHASE AGREEMENTS - 17.0%
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 3.23%
dated 12/31/93 due 1/3/94, $ 133,640,967 133,605,000
TOTAL INVESTMENTS - 100%
(Cost $693,802,202) $ 785,805,112
Forward Foreign Currency Contracts
SETTLEMENT UNREALIZED
CONTRACTS TO BUY DATE(S) VALUE GAIN/(LOSS)
16,900 DKK 2/9/94 $ 2,477,196 $ 13,082
(Payable amount $2,464,114)
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.3%.
CONTRACTS TO SELL
271,221,570 BEF 2/1/94 $ 7,455,095 $ 9,019
33,888,672 DKK 2/9/94 4,967,389 104,474
24,045,200 FIM 2/15/94 4,135,220 (41,444)
228,920,092 FRF 2/10/94 38,525,419 412,835
1,467,000,000 ESP 2/1/94 10,188,962 815,463
49,776,600 CHF 2/8/94 to 2/10/94 33,411,760 (411,760)
TOTAL CONTRACTS TO SELL
(Receivable amount $99,572,432) $98,683,845 $ 888,587
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 12.6%
CURRENCY TYPE ABBREVIATIONS:
XEU - European currency unit
BEF - Belgian franc
DKK - Danish krone
FIM - Finnish markka
FRF - French franc
ESP - Spanish peseta
CHF - Swiss franc
LEGEND:
(a) Principal amount is stated in United States dollars unless otherwise
noted.
(b) Non-income producing
(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 $5,905,150 or 0.8% of net
assets.
(d) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
OTHER INFORMATION:
Purchases and sales of securities, other than short-term securities,
aggregated $504,578,066 and $144,313,315, respectively.
INCOME TAX INFORMATION:
At December 31,1993, the aggregate cost of investment securities for income
tax purposes was $694,278,825. Net unrealized appreciation aggregated
$91,526,287, of which $107,169,263 related to appreciated investment
securities and $15,642,976 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
AS A PERCENTAGE OF TOTAL VALUE OF INVESTMENTS
Aerospace and Defense - 0.3%
Basic Industries - 5.3%
Chemicals and Plastics 2.2%
Iron and Steel 1.2
Nonferrous Metals and Mining 1.3
Paper and Forest Products 0.6
Conglomerates - 0.7%
Construction and Real Estate - 3.7%
Building Materials 1.0
Construction 0.9
Engineering 0.1
Real Estate 1.6
Real Estate Investment Trusts 0.1
Durables - 6.3%
Autos, Tires, and Accessories 3.4
Textiles and Apparel 0.5
Consumer Electronics 2.4
Consumer Durables 0.0
Energy - 1.6%
Energy Services 0.1
Oil and Gas 1.5
Finance - 31.0%
Banks 17.5
Closed End Investment Company 0.5
Credit and Other Finance 0.7
Insurance 10.7
Securities industry 1.6
Government Obligations - 5.4%
Health - 1.0%
Drugs and Pharmaceuticals 1.0
Industrial Machinery and Equipment - 2.3%
Electrical Equipment 1.7
Industrial Machinery and Equipment 0.6
Media and Leisure - 1.7%
Lodging and Gaming 1.3
Publishing 0.4
Nondurables - 1.4%
Beverages 0.9
Foods 0.2
Tobacco 0.1
Household Products 0.2
Precious Metals - 0.0%
Repurchase Agreements - 17.0%
Retail and Wholesale - 4.0%
Apparel Stores 0.6%
General Merchandise Stores 1.1
Grocery Stores 1.3
Retail, Miscellaneous 1.0
Services - 1.7%
Advertising 0.2
Leasing & Rental 0.6
Services 0.9
Technology - 5.0%
Computer Services and Software 0.1
Computers and Office Equipment 1.6
Photographic Equipment 0.3
Electronics 3.0
Transportation - 2.0%
Air Transportation 0.3
Shipping 1.0
Trucking and Freight 0.3
Railroads 0.4
Utilities - 9.6%
Cellular 0.1
Electric Utility 4.4
Telephone Services 4.8
Water 0.3
100.0%
OVERSEAS PORTFOLIO
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
December 31, 1993
ASSETS
Investment in securities, at value (including repurchase agreements of $133,605,000)
(cost $693,802,202) $ 785,805,112
(Notes 1 and 2) - See accompanying schedule
Net long foreign currency contracts held, at value (cost $2,464,114) (Note 2) 2,477,196
Short foreign currency contracts (Note 2) $ (98,683,845)
Contracts held, at value
Receivable for contracts held 99,572,432 888,587
Receivable for investments sold 2,772,102
Receivable for fund shares sold 11,107,198
Dividends receivable 996,396
Interest receivable 522,510
Total assets 804,569,101
LIABILITIES
Payable to custodian bank 75,751
Payable for foreign currency contracts held (Note 2) 2,464,114
Payable for investments purchased 18,933,216
Payable for fund shares redeemed 4,282,949
Accrued management fee 453,537
Other payables and accrued expenses 398,963
Total liabilities 26,608,530
NET ASSETS $ 777,960,571
Net Assets consist of (Note 1):
Paid in capital $ 692,949,364
Undistributed net investment income 4,331,859
Accumulated undistributed net realized gain (loss) on investments (12,225,231)
Net unrealized appreciation (depreciation) on:
Investment securities 92,002,910
Foreign currency contracts 901,669
NET ASSETS, for 50,263,845 shares outstanding $ 777,960,571
NET ASSET VALUE, offering price and redemption price per share ($777,960,571 (divided by) 50,263,845 shares) $15.48
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Year Ended December 31, 1993
INVESTMENT INCOME $ 7,674,983
Dividends
Interest 2,511,532
Foreign exchange gain (loss) (80,985)
10,105,530
Less foreign taxes withheld (1,161,704)
Total income 8,943,826
EXPENSES
Management fee (Note 3) $ 3,078,432
Transfer agent fees (Note 3) 143,222
Accounting fees and expenses (Note 3) 230,456
Non-interested trustees' compensation 2,581
Custodian fees and expenses 427,774
Registration fees 192,304
Audit 29,570
Legal 3,524
Miscellaneous 17,785
Total expenses 4,125,648
Net investment income 4,818,178
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1)
Net realized gain (loss) on:
Investment securities (4,067,835)
Foreign currency contracts (3,247,227) (7,315,062)
Change in net unrealized appreciation (depreciation) on:
Investment securities 109,010,629
Foreign currency contracts 901,669 109,912,298
Net gain (loss) 102,597,236
Net increase (decrease) in net assets resulting from operations $ 107,415,414
</TABLE>
Statement of Changes in Net Assets
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED DECEMBER 31,
1993 1992
INCREASE (DECREASE) IN NET ASSETS
Operations $ 4,818,178 $ 2,915,760
Net investment income
Net realized gain (loss) on investments (7,315,062) (1,610,618)
Change in net unrealized appreciation (depreciation) on investments 109,912,298 (21,875,864)
Net increase (decrease) in net assets resulting from operations 107,415,414 (20,570,722)
Distributions to shareholders from: (2,858,933) (1,776,419)
Net investment income
In excess of net investment income (696,125) -
Net realized gain (807,968) -
Total distributions (4,363,026) (1,776,419)
Share transactions 601,451,901 117,253,224
Net proceeds from sales of shares
Reinvestment of distributions from: 3,555,058 1,776,419
Net investment income
Net realized gain 807,968 -
Cost of shares redeemed (111,743,493) (42,336,032)
Net increase (decrease) in net assets resulting from share transactions 494,071,434 76,693,611
Total increase (decrease) in net assets 597,123,822 54,346,470
NET ASSETS
Beginning of period 180,836,749 126,490,279
End of period (including undistributed net investment income of $4,331,859 and
$3,403,350, respectively) $ 777,960,571 $ 180,836,749
OTHER INFORMATION
Shares
Sold 42,197,124 9,287,695
Issued in reinvestment of distributions from: 303,332 134,069
Net investment income
Net realized gain 68,939 -
Redeemed (7,983,962) (3,402,818)
Net increase (decrease) 34,585,433 6,018,946
</TABLE>
Financial Highlights
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31,
1993 1992 1991 1990 1989
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.53 $ 13.09 $ 12.42 $ 12.67 $ 10.11
Income from Investment Operations
Net investment income .06 .16 .24 .18 .07
Net realized and unrealized gain (loss)
on investments 4.16 (1.54) .74 (.39) 2.57
Total from investment operations 4.22 (1.38) .98 (.21) 2.64
Less Distributions
From net investment income (.18) (.18) (.17) (.04) (.08)
In excess of net investment income (.04) - - - -
From net realized gain - - (.14)# - -
In excess of net realized gain (.05) - - - -
Total distributions (.27) (.18) (.31) (.04) (.08)
Net asset value, end of period $ 15.48 $ 11.53 $ 13.09 $ 12.42 $ 12.67
TOTAL RETURN 37.35% (10.72)% 8.00% (1.67)% 26.28%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 777,961 $ 180,837 $ 126,490 $ 80,554 $ 25,865
Ratio of expenses to average net assets 1.03% 1.14% 1.26% 1.41% 1.50%(double dagger)
Ratio of expenses to average net assets
before expense reductions 1.03% 1.14% 1.26% 1.41% 1.98%(double dagger)
Ratio of net investment income to average
net assets 1.21% 1.86% 2.33% 1.89% .66%
Portfolio turnover rate 42% 61% 168% 100% 78%
</TABLE>
(double dagger) SEE NOTE 4 OF NOTES TO FINANCIAL STATEMENTS.
# INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY
RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED DECEMBER 31, 1993
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. 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 (including restricted
securities) for which exchange quotations are not readily available (and in
certain cases debt securities which trade on an exchange), are valued
primarily using dealer-supplied valuations or at their fair value as
determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees. Short-term securities
maturing within sixty days 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 current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
funds' Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
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 is
accrued as earned. Dividend and interest income is recorded net of foreign
taxes where recovery of such taxes is not assured.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. 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.
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 and certain foreign
investments.
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.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective January
1, 1993, the funds adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the funds changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of December 31, 1992 have been restated as follows:
INCREASE (DECREASE) INCREASE (DECREASE) INCREASE (DECREASE) (INCREASE)
DECREASE
FUND IN PAID IN CAPITAL IN UNDISTRIBUTED NET INVESTMENT INCOME IN
ACCUMULATED NET REALIZED GAIN IN ACCUMULATED NET REALIZED LOSS
High Income $162,034 $330,448 $(492,482) $ --
Equity-Income 7,969 (607,841) -- 599,872
Growth 695,219 (999,375) 304,156 --
Overseas (66,781) (510,272) -- 577,053
No adjustments were necessary for the Money Market Portfolio.
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
each 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 presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker 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.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, 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.
RESTRICTED SECURITIES. Each fund is permitted to invest in privately placed
restricted securities. These securities may be resold in transactions
exempt from registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations and
expense, and prompt sale at an acceptable price may be difficult. At the
end of the period, restricted securities (excluding 144A issues) for the
Money Market and High Income Portfolios amounted to $14,000,000 and
$21,884,000 or 4.0% and 4.7% 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, the monthly fee is computed daily and paid
monthly, based on the fund's gross income at the rate of 4% of the gross
income equivalent to an annualized yield of 5% or less, and at the rate of
6% of the gross income in excess of an annualized yield of 5%. For this
purpose, gross income includes interest accrued or discount earned
(including both original issue and market discount), less amortization of
premium. The amount of management fee paid is limited to a weighted average
of a graduated series of annual limitation rates ranging from .50% of the
fund's average net assets up to $1.5 billion to .40% of the fund's average
net assets in excess of $6 billion. For the period, the management fee was
equivalent to an annual rate of .14% 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 which range from .14% to .37% 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 rates are
.35%, .20%, .30% and .45% for the High Income Portfolio, Equity-Income,
Growth, and Overseas Portfolios, respectively. For the period, the
management fee was equivalent to an annual rate of .51%, .53%, .63 %, and
.77% of average net assets for the High Income Portfolio, Equity-Income,
Growth, and Overseas Portfolios, respectively.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .1325% to .3700% for the High Income Portfolio and .2850% to
.5200% for the Equity-Income, Growth, and Overseas Portfolios. Effective
November 1, 1993, FMR has voluntarily agreed to implement this new group
fee rate schedule as it results in the same or a lower management fee.
SUB-ADVISER FEES.
As 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 Overseas Portfolio, entered into sub-advisory
agreements with affiliates of FMR. In addition, one of the sub-advisers,
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. and FIIAL Japan a fee based on costs
incurred for either service.
TRANSFER AGENT FEE. 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 FEE. Fidelity Service Co. (FSC), 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 were $712,270, $750,137, and
$3,119 for the Equity-Income, Growth and Overseas Portfolios, respectively
for the period.
4. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse the funds' operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above an annual rate of 1.00% for the High Income Portfolio and
1.50% for the Equity-Income, Growth and Overseas Portfolios of average net
assets. During the period, there was no reimbursement under this agreement.
For the period January 1, 1993 to December 31, 1993, FMR directed certain
portfolio trades of the Equity income and Growth Portfolios to brokers who
paid a portion of the funds' expenses. For the period, the funds' expenses
were reduced by $60,160 and $88,297, respectively.
A special meeting of shareholders of the Money Market Portfolio and the
High Income Portfolio was held December 15, 1993. All expenses in
connection with this meeting, including the preparation of the proxy
statement, its enclosures and all solicitations were reimbursed by FMR.
5. 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 42 1 23
High Income 21 2 53
Equity-Income 29 2 41
Growth 20 1 32
Overseas 20 1 47
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL INFORMATION OF THE
SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS
PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR
FIDELITY DISTRIBUTORS CORPORATION IS A
BANK AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED BY
THE FDIC.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Variable Insurance Products Trust and the Shareholders
of Money Market Portfolio, High Income Portfolio, Equity-Income Portfolio,
Growth Portfolio and Overseas Portfolio:
We have audited the accompanying statements of assets and liabilities of
Variable Insurance Products Trust: Money Market Portfolio, High Income
Portfolio, Equity-Income Portfolio, Growth Portfolio and Overseas
Portfolio, including the schedules of portfolio investments, as of December
31,1993, and the related statements of operations for the year then ended,
the statements of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the five years
in the period then ended. These financial statements and financial
highlights are the responsibility of the funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1993 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Variable Insurance Products Trust: Money Market Portfolio, High Income
Portfolio, Equity-Income Portfolio, Growth Portfolio and Overseas Portfolio
as of December 31,1993, the results of their operations for the year then
ended, the changes in their net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years
in the period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND
Boston, Massachusetts
February 8, 1994
DISTRIBUTIONS
The Board of Trustees of Variable Insurance Products Fund voted to pay on
February 4, 1994 to shareholders of record at the opening of business on
February 4, 1994, the following distributions derived from capital gains
realized from sales of portfolio securities, and dividends derived from net
investment income:
Fund Dividends Capital Gains
High Income $ .73 $ .37
Equity-Income $ - $ .77
Growth $ .12 $ 1.27
Overseas $ .08 $ -
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
Gary L. French, TREASURER
John H. Costello, 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 Portfolio: The Chase Manhattan Bank, N.A., New York, NY
Growth & Overseas Portfolios: Brown Brothers Harriman & Co.,
Boston, MA
VIPI-2-94A
