FIDELITY U.S. BOND INDEX PORTFOLIO
SEMIANNUAL REPORT TO SHAREHOLDERS
AUGUST 31, 1993
FIDELITY U.S. BOND INDEX PORTFOLIO
INVESTMENTS/AUGUST 31, 1993 (UNAUDITED)
(Showing Percentage of Total Value of Investments)
MOODY'S PRINCIPAL VALUE MOODY'S PRINCIPAL VALUE
RATING AMOUNT (NOTE 1) RATING AMOUNT (NOTE 1)
NONCONVERTIBLE BONDS - 28.1%
BASIC INDUSTRIES - 0.4%
PAPER AND FOREST PRODUCTS - 0.4%
Chesapeake Corp. notes:
10 3/8%, 10/1/00 Baa3 $ 300,000 $ 366,000
9 7/8%, 5/1/03 Baa3 350,000 429,730
795,730
ENERGY - 1.8%
ENERGY SERVICES - 1.7%
McDermott International, Inc.
10 1/4%, 6/1/95 Baa3 1,650,000 1,792,048
Petroliam Nasional Berhad yankee
6 7/8%, 7/1/03 A2 1,250,000 1,303,125
3,095,173
OIL AND GAS - 0.1%
Societe Nationale Elf Aquitaine
7 3/4%, 5/1/99 Aa3 150,000 166,695
TOTAL ENERGY 3,261,868
FINANCE - 18.6%
ASSET-BACKED SECURITIES - 5.1%
Capital Auto Receivables Asset Trust:
6.20%, 12/15/97 A2 2,300,000 2,351,750
5.85%, 1/15/98 Aaa 1,000,000 1,021,875
Chase Manhattan Credit Card
7.65%, 11/15/98 Aaa 1,000,000 1,063,125
Discover Card Trust, 6 1/8%,
5/15/98 A2 1,435,000 1,463,987
Ford Credit Auto Loan Master
Trust 5 5/8%, 10/15/95 Aaa 125,000 128,212
Standard Credit Card Master Trust I:
8 1/4%, 9/7/95 A2 2,380,000 2,487,100
8 1/4%, 10/7/97 A2 250,000 271,641
5 1/2%, 9/7/98 A2 500,000 500,547
9,288,237
BANKS - 10.3%
Bancomer SA eurobonds 8%,
7/7/98 (a) - 1,000,000 1,012,500
Bank of Boston Corp.:
9 1/2%, 8/15/97 Baa2 100,000 114,625
10.30%, 9/1/00 Baa2 1,225,000 1,355,156
Citicorp:
8 1/2%, 2/11/97 Baa2 300,000 329,727
floating rate (b):
5 1/4%, 9/19/96 Baa2 340,000 340,680
euro 5 1/4%, 7/10/97 Baa2 110,000 110,165
Continental Bank Corp.:
9 3/4%, 3/15/95 Baa3 725,000 781,079
floating rate 4 1/2%, 5/18/00 (b) Baa3 1,500,000 1,498,125
First of America Bank Corp.
8 1/2%, 2/1/04 Baa1 $ 395,000 $ 457,054
First Fidelity Bancorporation:
9 3/4%, 5/25/95 Baa1 250,000 272,127
8 1/2%, 4/1/98 Baa1 260,000 291,663
First Interstate Bancorp:
9 3/8%, 1/23/02 Baa1 150,000 178,813
9 1/8%, 2/1/04 Baa1 270,000 326,643
First Maryland Bancorp:
10 3/8%, 8/1/99 Baa1 655,000 809,076
8 3/8%, 5/15/02 Baa1 775,000 881,562
First National Bank of Boston
8 3/8%, 12/15/02 Baa1 200,000 227,870
Fleet Financial Group, Inc.
8 1/8%, 7/1/04 Baa1 500,000 568,190
Fleet/Norstar Financial Group, Inc.
9.90%, 6/15/01 Baa1 250,000 308,895
Manufacturers Hanover Corp.
8 1/2%, 2/15/99 Baa1 920,000 1,049,573
Marine Midland Banks, Inc.
8 5/8%, 3/1/97 Baa2 772,000 856,557
Mercantile Bancorporation, Inc.
7 5/8%, 10/15/02 Baa1 250,000 270,937
Merchants National Corp.
9 7/8%, 10/1/99 A2 680,000 817,700
Midland American Capital Corp. gtd.
12 3/4%, 11/15/03 A2 1,530,000 2,005,218
Provident Bank 7 1/8%, 3/15/03 Baa3 800,000 839,000
Shawmut Corp.:
8 1/8%, 4/1/96 Baa3 125,000 137,025
8 1/8%, 2/1/97 Baa3 500,000 545,395
Signet Banking Corp. floating rate
5 1/4%, 5/15/97 (b) Baa2 1,000,000 1,002,500
UJB Financial Corp. 8 5/8%,
12/10/02 Baa3 1,000,000 1,145,170
Wells Fargo & Co. floating rate
5 1/4%, 2/15/96 (b) Baa2 100,000 100,100
18,633,125
CREDIT AND OTHER FINANCE - 1.6%
Fleet Mortgage Group, Inc.
6 1/8%, 8/15/97 A3 200,000 207,096
General Motor Acceptance Corp.:
8 1/4%, 8/1/96 Baa1 500,000 539,165
7 3/4%, 1/28/97 Baa1 750,000 806,452
Greyhound Financial Corp.
6.95%, 1/28/98 Baa2 750,000 795,000
Margaretten Financial Corp.
6 3/4%, 6/15/00 Baa3 450,000 468,810
2,816,523
MOODY'S PRINCIPAL VALUE MOODY'S PRINCIPAL VALUE
RATING AMOUNT (NOTE 1) RATING AMOUNT (NOTE 1)
NONCONVERTIBLE BONDS - continued
FINANCE - CONTINUED
SAVINGS AND LOANS - 1.6%
Golden West Finance Corp.:
8 5/8%, 8/30/98 A3 $ 100,000 $ 113,023
8 3/8%, 4/15/02 A3 200,000 229,226
Home Savings of America:
10 1/4%, 12/15/96 Baa1 1,000,000 1,098,000
10 1/2%, 6/12/97 Baa1 600,000 676,692
Household Bank 8.45%, 12/10/02 Baa1 650,000 747,370
2,864,311
TOTAL FINANCE 33,602,196
MEDIA AND LEISURE - 0.5%
PUBLISHING - 0.5%
News America Holdings, Inc.
8 5/8%, 2/1/03 Ba2 750,000 827,722
NONDURABLES - 0.9%
TOBACCO - 0.9%
RJR Nabisco, Inc. 9 1/4%, 5/1/95 Baa3 1,516,000 1,603,519
RETAIL AND WHOLESALE - 0.7%
GENERAL MERCHANDISE STORES - 0.5%
Dayton Hudson Corp. 9.18%,
2/27/98 A3 250,000 288,125
May Department Stores Co.
9 7/8%, 12/1/02 A2 150,000 187,584
Strawbridge & Clothier 8 3/4%,
11/15/96 Baa3 500,000 504,550
980,259
GROCERY STORES - 0.2%
Great Atlantic & Pacific Tea, Inc.
9 1/8%, 1/15/98 Baa2 300,000 335,283
TOTAL RETAIL AND WHOLESALE 1,315,542
SERVICES - 1.4%
LEASING AND RENTAL - 1.4%
Ryder System, Inc. 9.20%, 3/15/98 Baa1 2,188,000 2,335,690
U.S. Leasing International, Inc.
8 3/4%, 5/1/96 A2 225,000 247,120
2,582,810
TECHNOLOGY - 0.9%
COMPUTERS AND OFFICE EQUIPMENT - 0.3%
Comdisco, Inc.:
9 3/4%, 1/15/97 Baa2 150,000 168,318
9 1/4%, 7/6/00 Baa2 375,000 424,687
593,005
PHOTOGRAPHIC EQUIPMENT - 0.6%
Eastman Kodak Co. 9 5/8%,
11/15/99 A2 $ 942,000 $ 998,595
TOTAL TECHNOLOGY 1,591,600
TRANSPORTATION - 0.2%
AIR TRANSPORTATION - 0.2%
AMR Corp. 9 1/2%, 7/15/98 Baa3 250,000 279,970
UTILITIES - 2.7%
ELECTRIC UTILITY - 1.9%
Gulf States Utilities Co.
9.72%, 7/1/98 Baa3 1,190,000 1,350,412
Long Island Lighting Co.:
11 3/4%, 11/15/94 Baa3 400,000 434,056
10 7/8%, 6/15/99 Baa3 500,000 550,300
Middle South Energy, Inc. 1st mtg.
11%, 5/1/00 Baa3 565,000 592,013
United Illuminating Co.
9.76%, 1/2/06 Baa3 337,000 390,920
3,317,701
GAS - 0.8%
Southwest Gas Co. 9 3/4%,
6/15/02 Ba2 1,250,000 1,466,850
TOTAL UTILITIES 4,784,551
TOTAL NONCONVERTIBLE BONDS
(Cost $49,037,802) 50,645,508
U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS - 40.7%
U.S. TREASURY OBLIGATIONS - 35.2%
9 1/2%, 10/15/94 Aaa 2,925,000 3,115,125
8 7/8%, 7/15/95 Aaa 2,500,000 2,725,000
8 7/8%, 2/15/96 Aaa 2,870,000 3,191,985
9 3/8%, 4/15/96 Aaa 2,000,000 2,258,740
7 3/8%, 5/15/96 Aaa 8,050,000 8,710,341
6%, 12/31/97 Aaa 4,950,000 5,216,854
9 1/4%, 8/15/98 Aaa 3,000,000 3,585,930
7 7/8%, 11/15/99 Aaa 3,300,000 3,797,574
6 3/8%, 1/15/00 Aaa 6,100,000 6,529,867
10 3/4%, 8/15/05 Aaa 3,230,000 4,652,718
9 7/8%, 11/15/15 Aaa 7,500,000 10,785,900
8 7/8%, 8/15/17 Aaa 2,405,000 3,186,240
8%, 11/15/21 Aaa 4,000,000 4,917,480
12%, 8/15/23 Aaa 605,000 966,106
63,639,860
MOODY'S PRINCIPAL VALUE MOODY'S PRINCIPAL VALUE
RATING AMOUNT (NOTE 1) RATING AMOUNT (NOTE 1)
U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
U.S. GOVERNMENT AGENCY OBLIGATIONS - 5.5%
Federal Agricultural Mortgage Corp.
7.63%, 1/16/01 Aaa $ 500,000 $ 563,750
Financing Corporation:
9.80%, 11/30/17 Aaa 1,000,000 1,396,250
9.80%, 4/6/18 Aaa 900,000 1,258,594
8.60%, 9/26/19 Aaa 1,950,000 2,447,859
Coupon Strips Series D, 2/3/97 Aaa 1,073,000 916,203
Government Trust Certificates
9 1/4%, 11/15/96 Aaa 1,571,000 1,706,420
Private Export Funding Corp. secd.
notes, Series II, 8.40%, 7/31/01 Aaa 500,000 590,625
Student Loan Marketing Association
5.86%, 7/2/01 Aaa 1,000,000 1,020,937
9,900,638
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $70,066,216) 73,540,498
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 23.3%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 1.2%
8%, 7/1/16 Aaa 98,084 102,284
8 1/2%, 9/1/19 Aaa 134,731 141,131
9%, 9/1/16 Aaa 775,000 823,918
10%, 6/1/20 Aaa 731,020 801,607
12%, 2/1/13 to 7/1/15 Aaa 258,532 291,336
2,160,276
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 10.0%
6 1/2%, 6/1/08 to 10/1/22 Aaa 3,707,227 3,765,917
7%, 3/1/08 to 9/1/22 Aaa 1,878,588 1,944,938
7 1/2%, 9/1/22 to 8/1/23 Aaa 3,550,000 3,705,312
8%, 7/1/02 to 7/1/23 Aaa 5,248,933 5,517,467
8 1/2%, 6/1/17 to 2/1/23 Aaa 678,490 717,318
9%, 11/1/01 to 7/1/06 Aaa 1,046,778 1,112,852
10 1/2%, 4/1/01 Aaa 301,551 324,545
11 1/4%, 5/1/14 Aaa 223,834 251,604
12 1/4%, 6/1/13 Aaa 127,591 144,417
12 1/2%, 1/1/15 Aaa 107,147 121,613
14%, 3/1/12 to 10/1/14 Aaa 439,545 504,380
18,110,363
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 12.1%
7%, 12/15/07 to 9/15/23 Aaa $ 5,578,890 $ 5,785,442
7 1/2%, 8/15/22 to 8/15/23 Aaa 3,492,894 3,670,744
8%, 5/15/23 Aaa 637,844 677,308
8 1/2%, 6/15/16 to 10/15/22 Aaa 1,321,420 1,409,790
9%, 4/15/16 to 10/15/21 Aaa 6,376,508 6,844,744
9 1/2%, 8/15/16 to 6/15/21 Aaa 955,325 1,037,693
11%, 6/15/10 to 9/15/13 Aaa 917,412 1,041,265
11 1/2%, 3/15/10 to 4/15/15 Aaa 1,217,837 1,398,996
21,865,982
TOTAL U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES
(Cost $41,672,490) 42,136,621
FOREIGN GOVERNMENT OBLIGATIONS - 1.8%
Czech National Bank Prague
7%, 4/6/96 Baa3 500,000 513,125
Export-Import Bank Korea
7.85%, 11/1/96 A1 500,000 539,720
Korea Development Bank
6 1/4%, 5/1/00 A1 850,000 867,000
Malaysia eurobond 9 1/2%,
10/31/96 A2 820,000 924,550
Victorian Public Authorities Finance
Agency 8.45%, 10/1/01 A1 300,000 347,640
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $3,081,853) 3,192,035
OTHER SECURITIES - 0.6%
INDEXED SECURITIES - 0.6%
Skandinaviska Enskilda Banken note
(indexed to total return of Merrill
Lynch Mortgage Index) 8%,
9/16/93 (Cost $1,002,856) - 1,000,000 1,001,440
MATURITY
AMOUNT
REPURCHASE AGREEMENTS - 5.5%
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 3.32% dated
8/31/93 due 9/1/93 $ 9,983,921 9,983,000
TOTAL INVESTMENTS - 100%
(Cost $174,844,217) $ 180,499,102
LEGEND:
(a) 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 this security amounted to $1,012,500 or 0.6% of net
assets.
(b) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
OTHER INFORMATION:
The composition of long-term debt holdings as a percentage of total value
of investments for the period ended is as follows:
MOODY'S S&P
RATINGS RATINGS
Aaa, Aa, A 74.3% AAA, AA, A 77.7%
Baa 17.7% BBB 14.9%
Ba 1.3% BB 0.7%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 0.6%.
INCOME TAX INFORMATION:
At August 31, 1993, the aggregate cost of investment securities for income
tax purposes was $174,896,356. Net unrealized appreciation aggregated
$5,602,746, of which $5,905,200 related to appreciated investment
securities and $302,454 related to depreciated investment securities.
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S>
<C> <C>
August 31, 1993 (Unaudited)
ASSETS
Investment in securities, at value (including repurchase agreements of $9,983,000)
(cost $174,844,217) $ 180,499,102
(Notes 1 and 2) - See accompanying schedule
Cash
88,690
Receivable for investments sold
10,025,797
Interest receivable
2,608,836
Receivable from investment adviser - expense reimbursements (Note 5)
117,353
Total assets
193,339,778
LIABILITIES
Payable for investments purchased
$ 20,754,422
Dividends payable
160,162
Accrued management fee
44,553
Other payables and accrued expenses
70,932
Total liabilities
21,030,069
NET ASSETS
$ 172,309,709
Net Assets consist of (Note 1):
Paid in capital
$ 163,772,160
Undistributed net investment income
941,422
Accumulated undistributed net realized gain (loss) on investments
1,941,242
Net unrealized appreciation (depreciation) on investment securities
5,654,885
NET ASSETS, for 15,261,344 shares outstanding
$ 172,309,709
NET ASSET VALUE, offering price and redemption price per share
($172,309,709 (divided by) 15,261,344 shares) $11.29
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Ended August 31, 1993 (Unaudited)
INVESTMENT INCOME $ 5,399,272
Interest
EXPENSES
Management fee (Note 4) $ 230,489
Transfer agent fees (Note 4) 206,958
Accounting fees and expenses (Note 4) 30,481
Non-interested trustees' compensation 456
Custodian fees and expenses 10,826
Registration fees 14,483
Legal 1,376
Miscellaneous 564
Total expenses before reimbursement 495,633
Reimbursement of expenses (Note 5) (263,155) 232,478
Net investment income 5,166,794
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 3) 1,997,851
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 967,602
Net gain (loss) 2,965,453
Net increase (decrease) in net assets resulting from operations $ 8,132,247
</TABLE>
Statement of Changes in Net Assets
DRAFT
SIX MONTHS ENDED
AUGUST 31, 1993 FOUR MONTHS ENDED YEAR ENDED
INCREASE (DECREASE) IN NET ASSETS (UNAUDITED) FEBRUARY 28, 1993 OCTOBER
31, 1992
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
Operations
$ 5,166,794 $ 2,529,616 $ 4,284,181
Net investment income
Net realized gain (loss) on investments
1,997,851 59,118 1,516,990
Change in net unrealized appreciation (depreciation) on investments
967,602 3,410,551 (584,433)
Net increase (decrease) in net assets resulting from operations
8,132,247 5,999,285 5,216,738
Distributions to shareholders from:
4,900,553) (2,451,588) (4,259,084)
Net investment income
Net realized gain
- - - - (1,395,998) (287,653)
Share transactions
137,600,616 49,854,118 105,408,120
Net proceeds from sales of shares
Reinvestment of distributions from:
4,243,586 2,014,595 3,276,643
Net investment income
Net realized gain
- - - - 1,301,100 266,949
Cost of shares redeemed
(96,117,308) (18,119,062) (62,617,445)
Net increase (decrease) in net assets resulting from share transactions
45,726,894 35,050,751 46,334,267
Total increase (decrease) in net assets
48,958,588 37,202,450 47,004,268
NET ASSETS
Beginning of period
123,351,121 86,148,671 39,144,403
End of period (including undistributed net investment income of $941,422, $108,004,
$ 172,309,709 $ 123,351,121 $ 86,148,671
and $29,976, respectively)
OTHER INFORMATION
Shares
Sold
12,438,516 4,615,505 9,692,453
Issued in reinvestment of distributions from:
381,344 184,714 301,485
Net investment income
Net realized gain
- - - - 121,598 24,856
Redeemed
(8,704,494) (1,671,882) (5,777,014)
Net increase (decrease)
4,115,366 3,249,935 4,241,780
</TABLE>
FINANCIAL HIGHLIGHTS
DRAFT
SIX MONTHS FOUR MONTHS MARCH 8, 1990
ENDED ENDED (COMMENCEMENT OF AUGUST 31, 1993 FEBRUARY 28, YEARS ENDED
OCTOBER 31, OPERATIONS) TO
(UNAUDITED) 1993 1992 1991 OCTOBER 31, 1990
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.070 $ 10.910 $ 10.710 $ 10.040 $ 10.000
Income from Investment Operations .380 .260 .839 .863 .559
Net investment income
Net realized and unrealized gain (loss) on investments .219 .324 .277 .668 .040
Total from investment operations .599 .584 1.116 1.531 .599
Less Distributions (.379) (.254) (.836) (.861) (.559)
From net investment income
From net realized gain on investments - (.170) (.080) - -
Total distributions (.379) (.424) (.916) (.861) (.559)
Net asset value, end of period $ 11.290 $ 11.070 $ 10.910 $ 10.710 $ 10.040
TOTAL RETURN (dagger) (double dagger) 5.51% 5.50% 10.84% 15.86% 6.14%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 172,310 $ 123,351 $ 86,149 $ 39,144 $ 25,600
Ratio of expenses to average net assets ** .32%* .32%* .32% .32% .32%*
Ratio of expenses to average net assets before voluntary .68%* .87%* .83% .90% .84%*
expense
limitation **
Ratio of net investment income to average net assets 7.11%* 7.34%* 7.70% 8.33% 8.62%*
Portfolio turnover rate 118%* 89%* 113% 50% 62%*
</TABLE>
* ANNUALIZED
** SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS.
(dagger) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD THE ADVISER NOT
REIMBURSED CERTAIN EXPENSES DURING THE PERIODS SHOWN.
(double dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
NOTES TO FINANCIAL STATEMENT
FOR THE PERIOD ENDED AUGUST 31, 1993 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity U.S. Bond Index Portfolio (the fund) is a fund of Fidelity
Institutional Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company Act
of 1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. On November 19, 1992,
the Trustees approved a change in the fiscal year-end of the trust to
February 28. The following summarizes the significant accounting policies
of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities for which market quotations are not readily available are valued
at their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities, 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
fund's 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.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Interest income, which includes accretion of original
issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net investment income. Distributions from realized gains, if
any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
mortgage-backed securities and losses deferred due to wash sales.
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 March 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund 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 February 28, 1993 have been restated to reflect
a decrease in paid in capital of $277,287, an increase in undistributed net
investment income of $567,177 and a decrease in accumulated net realized
gain on investments of $289,890.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and 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 are
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's 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 fund, 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.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The fund
may receive compensation for entering into delayed delivery transactions
for interest forgone. The fund identifies securities as segregated in its
custodial records with a value at least equal to the amount of the purchase
commitment.
INDEXED SECURITIES. The fund may invest in indexed securities whose value
is linked either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices, or other reference instruments.
Indexed securities may be more volatile than the reference instrument
itself, but any loss is limited to the amount of the original investment.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $130,190,035 and $83,796,514, respectively, of which U.S.
government and government agency obligations aggregated $100,510,716 and
$69,458,951, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a fee that
is computed daily at an annual rate of .32% of the fund's average net
assets.
TRANSFER AGENT FEE. Fidelity Investments Institutional Operations Company
(FIIOC), an affiliate of FMR, is the fund's 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., an affiliate of FMR, maintains the
fund's accounting records. The fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
5. REIMBURSEMENT OF EXPENSES.
FMR has voluntarily agreed to reimburse the fund for total operating
expenses (excluding interest, taxes, brokerage commissions and
extraordinary expenses) above an annual rate of .32% of average net assets.
For the period, the reimbursement amounted to $263,155.
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.
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
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
Gerald C. McDonough
Thomas R. Williams
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND
SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional
Operations Company
Boston, MA
CUSTODIAN
Bank of New York
New York, NY UBI-10-93S
