<PAGE>
[ART WORK APPEARS HERE]
------------------------------------------------------------------------
ZENITH ACCUMULATOR
Individual Variable Annuity Contracts
Semiannual Reports
June 30, 1995
<PAGE>
This booklet has been prepared for contract owners of New England Mutual Life
Insurance Company's Zenith Accumulator Individual variable annuity contracts.
It may also be distributed to prospective contract owners when preceded or
accompanied by a current prospectus describing the Zenith Accumulator
Individual variable annuity contracts and the New England Zenith Fund. The
prospectus includes information on fees and expenses, including deferred
charges.
<PAGE>
August 24, 1995
TO OUR CONTRACT OWNERS:
I am pleased to provide you with your Semi-Annual Report for the Zenith
Accumulator. This report reviews the performance of the first six months of
1995 of the New England Zenith Accumulator. It identifies the specific
holdings in each of the portfolios and illustrates the investment history of
the fourteen Series of the Zenith Fund currently available through your
variable annuity contract. If you were invested in either of the Fidelity VIP
Portfolios as of June 30th, your Semi-Annual Report will also include an
annual report for those two funds.
The Zenith Accumulator, with its flexibility and superior long-term portfolio
performance, meets a number of financial objectives. It may be ideally suited
as a long-term savings vehicle and, in particular, can be an excellent way to
save for retirement. You now have the ability to diversify your investment
among a wide selection of funds and the Fixed Account. At the same time, you
can also take advantage of dollar cost averaging by making regular, periodic
payments to this contract.*
Your variable annuity also offers a number of other benefits. As you near
retirement and have a need for income, keep in mind that you can annuitize
your contract and receive payments that you cannot outlive, or you can utilize
the systematic withdrawal feature to obtain the additional income that you
require. The guaranteed minimum death benefit and immediate payment of death
proceeds to your named beneficiary without the long delays of probate provide
additional peace of mind.
The New England is committed to providing quality products and services to all
clients. Our representatives, among the finest in the industry, work with
clients like you to help them achieve their financial objectives.
Sincerely,
/s/ Bruce C. Long
Bruce C. Long
President
New England Annuities
* Dollar cost averaging neither assures a profit nor protects against a loss
in declining markets. However, it can reduce the average cost of units
relative to their market price.
[LOGO OF RECYCLED PAPER APPEARS HERE]
<PAGE>
The following is a list of the New England Zenith Funds available through your
Zenith Accumulator variable annuity contract.
<TABLE>
<S> <C>
Loomis Sayles Small Cap Series........... "Small Cap Series"
Draycott International Equity Series..... "International Equity Series"
Alger Equity Growth Series............... "Equity Growth Series"
Capital Growth Series.................... "Capital Growth Series"
Loomis Sayles Avanti Growth Series....... "Avanti Growth Series"
Venture Value Series..................... "Venture Value Series"
Westpeak Value Growth Series............. "Value Growth Series"
Westpeak Stock Index Series*............. "Stock Index Series"
Loomis Sayles Balanced Series............ "Balanced Series"
Back Bay Advisors Managed Series*........ "Managed Series"
Salomon Brothers Strategic Bond
Opportunities Series.................... "Strategic Bond Opportunities Series"
Back Bay Advisors Bond Income Series..... "Bond Income Series"
Salomon Brothers U.S. Government Series.. "U.S. Government Series"
Back Bay Advisors Money Market Series.... "Money Market Series"
</TABLE>
--------
* Not available to new Zenith Accumulator Contracts issued after May 1, 1995.
2
<PAGE>
THE FIVE YEAR PICTURE AS OF 6/30/95
<TABLE>
<CAPTION>
% ANNUAL
CHANGE IN UNIT EFFECTIVE
VALUE RATE
-------------- ---------
<S> <C> <C>
Small Cap#........................................... -- --
International Equity@................................ -- --
Overseas............................................. 51.63% 8.68%
Equity Growth@....................................... -- --
Capital Growth....................................... 128.01% 17.92%
Avanti Growth***..................................... -- --
Venture Value@....................................... -- --
Value Growth***...................................... -- --
Stock Index.......................................... 114.87% 16.53%
Equity-Income........................................ 69.96% 11.19%
Balanced@............................................ -- --
Managed.............................................. 85.25% 13.12%
Strategic Bond Opportunities@........................ -- --
Bond Income.......................................... 74.74% 11.81%
U.S. Government@..................................... -- --
Money Market......................................... 31.37% 5.61%
</TABLE>
<TABLE>
%
CHANGE
--------------
<S> <C> <C>
*Dow Jones Industrial Average....................... 83.99% 12.97%
**Standard & Poor's 500+............................. 76.69% 12.06%
</TABLE>
--------
+ with dividends reinvested
* The Dow Jones Industrial Average is a market value-weighted and
unmanaged index of 30 large industrial stocks traded on the New York
Stock Exchange.
** The S&P 500 Stock Index is an unmanaged weighted index of the stock
performance of 500 industrial, transportation, utility and financial
companies. Investment results shown assume the reinvestment of
dividends.
*** Inception Date: April 30, 1993
# Inception Date: May 2, 1994
@ Inception Date: October 31, 1994
NOTE: Investment performance results contained in this report represent past
performance and, except for the average annual total returns, do not
reflect the deduction of the $30 annual administrative charge, maximum
contingent deferred sales charge of 6.5%, or premium tax, if applicable
(maximum 2%). If included, these charges would reduce the performance
figures. The investment return on and principal value of your
investment will fluctuate, so that your contract may be worth more or
less than you invested.
For more information contact New England Annuities, Marketing Department, 501
Boylston Street, Boston, MA 02116.
3
<PAGE>
ACCUMULATION UNIT VALUE TABLE
<TABLE>
<CAPTION>
SMALL INTERNATIONAL EQUITY
DATE CAP % CHANGE EQUITY % CHANGE OVERSEAS % CHANGE GROWTH % CHANGE
---- ------- -------- ------------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/87................ 0.93448 - 6.8%(6)
12/31/88................ 1.01055 + 8.1%
12/31/89................ 1.23599 +22.3%
12/31/90................ 1.20490 - 2.5%
12/31/91................ 1.28381 + 6.6%
12/31/92................ 1.13075 -11.9%
12/31/93................ 1.53230 +35.5%
12/31/94................ 0.95909 - 4.1%(7) 1.02374 + 2.4%(8) 1.53788 + 0.5% 0.95589 - 4.4%(8)
6/30/95................ 1.05827 +10.3% 1.02384 0.0% 1.53230 - 0.4% 1.25738 +31.5%
</TABLE>
<TABLE>
<CAPTION>
CAPITAL AVANTI VENTURE VALUE
DATE GROWTH % CHANGE GROWTH % CHANGE VALUE % CHANGE GROWTH % CHANGE
---- -------- -------- ---------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/83................ 1.08350 + 8.4%(1)
12/31/84................ 1.06514 - 1.7%
12/31/85................ 1.76649 +65.8%
12/31/86................ 3.40215 +92.6%
12/31/87................ 5.12550 +50.7%
12/31/88................ 4.61069 -10.0%
12/31/89................ 5.98598 +29.8%
12/31/90................ 5.66586 - 5.4%
12/31/91................ 8.60766 +51.9%
12/31/92................ 7.97807 - 7.3%
12/31/93................ 9.04955 +13.4% 1.13704 +13.7%(4) 1.13211 +13.2%(4)
12/31/94................ 8.29757 - 8.5% 1.11879 - 1.6% 0.96286 - 3.7%(8) 1.10348 - 2.8%
6/30/95................ 10.51271 +26.7% 1.33293 +17.2% 1.17414 +17.9% 1.32078 +16.7%
</TABLE>
<TABLE>
<CAPTION>
STOCK EQUITY-
DATE INDEX % CHANGE INCOME % CHANGE BALANCED % CHANGE MANAGED % CHANGE
---- ------- -------- -------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/86 0.99893 - 0.1%(5)
12/31/87................ 0.86589 -13.0%(3) 0.97435 - 2.5% 0.98453 - 1.6%(2)
12/31/88................ 0.98542 +13.8% 1.17194 +20.3% 1.05947 + 7.6%
12/31/89................ 1.29814 +31.7% 1.38218 +17.9% 1.26006 +18.9%
12/31/90................ 1.20689 - 7.0% 1.14130 -17.4% 1.27222 + 1.0%
12/31/91................ 1.55310 +28.7% 1.48001 +29.7% 1.50838 +18.6%
12/31/92................ 1.64402 + 5.9% 1.70669 +15.3% 1.58783 + 5.3%
12/31/93................ 1.77968 + 8.3% 1.99186 +16.7% 1.73338 + 9.2%
12/31/94................ 1.77547 - 0.7% 2.10408 + 5.5% 0.99679 + 0.3%(8) 1.69115 - 2.7%
6/30/95................ 2.11733 +19.3% 1.99186 - 5.3% 1.14650 +15.0% 1.96268 +16.1%
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC BOND US MONEY
DATE BOND % CHANGE INCOME % CHANGE GOVERNMENT % CHANGED MARKET % CHANGE
---- --------- -------- ------- -------- ---------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/83................ 1.02555 + 2.6%(1) 1.02806 +2.8%(1)
12/31/84................ 1.14111 +11.3% 1.12205 +9.1%
12/31/85................ 1.33701 +17.2% 1.19848 +6.8%
12/31/86................ 1.51475 +13.3% 1.26285 +5.4%
12/31/87................ 1.52831 + 0.9% 1.32725 +5.1%
12/31/88................ 1.63250 + 6.8% 1.40866 +6.1%
12/31/89................ 1.80954 +10.8% 1.51807 +7.8%
12/31/90................ 1.93041 + 6.7% 1.61985 +6.7%
12/31/91................ 2.24657 +16.4% 1.69743 +4.8%
12/31/92................ 2.39766 + 6.7% 1.73821 +2.4%
12/31/93................ 2.66383 +11.1% 1.76587 +1.6%
12/31/94................ 0.98385 - 1.6%(8) 2.53980 - 4.6% 1.00377 +0.4%(8) 1.81143 +2.6%
6/30/95................ 1.09766 +11.6% 2.85262 +12.3% 1.09114 +8.7% 1.85060 +2.2%
</TABLE>
--------
(1) Since date of inception 8/26/93, when unit value was 1.000000
(2) Since date of inception 5/1/87, when unit value was 1.000063
(3) Since date of inception 5/1/87, when unit value was 0.995163
(4) Since date of inception 4/30/93, when unit value was 1.000000
(5) Since date of inception 10/9/86, when unit value was 1.000000
(6) Since date of inception 1/28/87, when unit value was 1.000000
(7) Since date of inception 5/2/94, when unit value was 1.000000
(8) Since date of inception 10/31/94, when unit value was 1.000000
4
<PAGE>
AVERAGE ANNUAL TOTAL RETURN FOR PERIOD ENDING JUNE 30, 1995
BASED ON A SINGLE PAYMENT OF $1,000 FOR THE TIME PERIODS LISTED BELOW
ASSUMES DEDUCTION OF CONTRACT CHANGES, INCLUDING CONTINGENT DEFERRED SALES
CHARGE
<TABLE>
<CAPTION>
ASSUMING
MAXIMUM PREMIUM ASSUMING NO
TAX OF 2% PREMIUM TAX
--------------- -----------
<S> <C> <C>
SMALL CAP
1 Year........................................... -0.71% 1.37%
Since Inception................................... -4.59% -2.85%
INTERNATIONAL EQUITY
From 10/31/94 to 6/30/95.......................... -7.42% -5.49%
FIDELITY OVERSEAS
1 Year........................................... -8.78% -6.86%
5 Years.......................................... -1.33% -0.87%
Since Inception................................... 2.26% 2.57%
EQUITY GROWTH
From 10/31/94 to 6/30/95.......................... 14.13% 16.50%
CAPITAL GROWTH
1 Year........................................... 12.21% 14.56%
5 Years.......................................... 3.81% 4.29%
10 Years.......................................... 20.74% 21.00%
Since Inception................................... 20.69% 20.92%
AVANTI GROWTH
1 Year........................................... 16.35% 18.79%
Since Inception................................... 7.54% 8.61%
VENTURE VALUE
From 10/31/94 to 6/30/95.......................... 6.45% 8.66%
VALUE GROWTH
1 Year........................................... 12.83% 15.19%
Since Inception................................... 7.10% 8.17%
STOCK INDEX
1 Year........................................... 12.30% 14.64%
5 Years.......................................... 6.17% 6.65%
Since Inception................................... 6.53% 6.86%
FIDELITY EQUITY-INCOME
1 Year........................................... 10.58% 12.90%
5 Years.......................................... 9.58% 10.08%
Since Inception................................... 7.81% 8.12%
BALANCED
From 10/31/94 to 6/30/95.......................... 3.90% 6.06%
MANAGED
1 Year........................................... 7.95% 10.21%
5 Years.......................................... 4.99% 5.47%
Since Inception................................... 5.46% 5.78%
STRATEGIC BOND OPPORTUNITIES
From 10/31/94 to 6/30/95.......................... -0.61% 1.46%
BOND INCOME
1 Year........................................... 2.01% 4.15%
5 Years.......................................... 5.24% 5.72%
10 Years.......................................... 6.03% 6.29%
Since Inception................................... 6.94% 7.17%
US GOVERNMENT
From 10/31/94 to 6/30/95.......................... -1.21% 0.85%
MONEY MARKET
1 Year........................................... -6.59% -4.62%
5 Years.......................................... -0.78% -0.32%
10 Years.......................................... 1.85% 2.12%
Since Inception................................... 2.64% 2.87%
</TABLE>
5
<PAGE>
HYPOTHETICAL INVESTMENTS*
ISSUE DATE: September 1, 1983 for Capital Growth
February 1, 1987 for Overseas
May 1, 1993 for Avanti Growth and Value Growth
May 2, 1994 for Small Cap
November 1, 1994 for International Equity, Equity Growth, and
Venture Value
$100 PAYMENT PER MONTH
CONTRACT VALUE
<TABLE>
<CAPTION>
CUMULATIVE CUMULATIVE INTERNATIONAL CUMULATIVE CUMULATIVE EQUITY
PAYMENTS SMALL CAP PAYMENTS EQUITY PAYMENTS OVERSEAS PAYMENTS GROWTH
---------- --------- ---------- ------------- ---------- --------- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/87 1,100 1,004.85
12/31/88 2,300 2,337.75
12/31/89 3,500 4,204.39
12/31/90 4,700 5,221.07
12/31/91 5,900 6,776.73
12/31/92 7,100 7,031.48
12/31/93 8,300 10,871.79
12/31/94 800 776.30 200 203.73 9,500 11,984.99 200 196.35
6/30/95 1,400 1,471.49 800 813.41 10,100 13,057.38 800 981.85
Annual Effective
Rate of Return 5.98%
Cumulative Return+ 8.23% 0.37% 4.54%
</TABLE>
<TABLE>
<CAPTION>
CUMULATIVE CAPITAL CUMULATIVE AVANTI CUMULATIVE VENTURE CUMULATIVE VALUE
PAYMENTS GROWTH PAYMENTS GROWTH PAYMENTS VALUE PAYMENTS GROWTH
---------- --------- ---------- -------- ---------- ------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/83 400 408.55
12/31/84 1,600 1,652.90
12/31/85 2,800 4,286.49
12/31/86 4,000 9,785.53
12/31/87 5,200 15,914.69
12/31/88 6,400 15,465.64
12/31/89 7,600 21,368.41
12/31/90 8,800 21,339.67
12/31/91 10,000 33,870.55
12/31/92 11,200 32,583.40
12/31/93 12,400 38,213.23 800 847.63 800 848.54
12/31/94 13,600 35,878.20 2,000 2,000.60 200 198.56 2,000 1,997.99
6/30/95 14,200 46,514.84 2,600 3,055.95 800 915.67 2,600 3,043.83
Annual Effective
Rate of Return 18.69% 15.05% 14.66%
Cumulative Return+ 2.99%
</TABLE>
*NOTE: These figures are net of all deductions, with the exception of premium
tax (which is charged in several states at a maximum of 2%) and the
contingent deferred sales charge (6 1/2% maximum). If included, these
charges would reduce the contract values.
6
<PAGE>
HYPOTHETICAL INVESTMENTS*
ISSUE DATE: September 1, 1983 for Bond Income and Money Market November 1, 1986
for Equity-Income
May 1, 1987 for Stock Index Series and Managed Series
November 1, 1994 for Balanced, Strategic Bond Opportunities, and
US Government
$100 PAYMENT PER MONTH
CONTRACT VALUE
<TABLE>
<CAPTION>
CUMULATIVE STOCK CUMULATIVE EQUITY- CUMULATIVE CUMULATIVE
PAYMENTS INDEX PAYMENTS INCOME PAYMENTS BALANCED PAYMENTS MANAGED
---------- --------- ---------- --------- ---------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/86 200 195.01
12/31/87 800 691.21 1,400 1,212.40 800 770.08
12/31/88 2,000 2,013.81 2,600 2,691.26 2,000 2,035.56
12/31/89 3,200 3,981.59 3,800 4,391.26 3,200 3,697.08
12/31/90 4,400 4,859.15 5,000 4,714.30 4,400 4,940.34
12/31/91 5,600 7,570.11 6,200 7,417.83 5,600 7,148.95
12/31/92 6,800 9,244.28 7,400 9,828.50 6,800 8,753.97
12/31/93 8,000 11,222.49 8,600 12,716.94 8,000 10,763.50
12/31/94 9,200 12,366.09 9,800 14,615.73 200 200.66 9,200 11,663.88
6/30/95 9,800 15,390.98 10,400 17,685.57 800 885.17 9,800 14,171.49
Annual Effective
Rate of Return 10.78% 11.90% 8.83%
Cumulative Return+ 2.24%
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC
CUMULATIVE BOND CUMULATIVE BOND CUMULATIVE US CUMULATIVE MONEY
PAYMENTS OPPORTUNITIES PAYMENTS INCOME PAYMENTS GOVERNMENT PAYMENTS MARKET
---------- ------------- ---------- --------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/83 400 404.51 400 406.73
12/31/84 1,600 1,720.39 1,600 1,673.10
12/31/85 2,800 3,304.00 2,800 2,998.89
12/31/86 4,000 4,981.88 4,000 4,361.45
12/31/87 5,200 6,207.06 5,200 5,787.75
12/31/88 6,400 7,827.20 6,400 7,353.43
12/31/89 7,600 9,909.41 7,600 9,143.25
12/31/90 8,800 11,804.98 8,800 10,986.40
12/31/91 10,000 15,034.52 10,000 12,691.67
12/31/92 11,200 17,270.47 11,200 14,180.13
12/31/93 12,400 20,402.48 12,400 15,585.77
12/31/94 200 196.45 13,600 20,560.58 200 200.74 13,600 17,181.74
6/30/95 800 867.78 14,200 23,790.75 800 849.82 14,200 18,155.70
Annual Effective
Rate of Return 8.37% 4.05%
Cumulative Return+ 1.80% 1.34%
</TABLE>
+ Cumulative Return is from November 1, 1994 to December 31, 1994.
*NOTE: These figures are net of all deductions, with the exception of premium
tax (which is charged in several states at a maximum of 2%) and the
contingent deferred sales charge (6 1/2% maximum). If included, these
charges would reduce the contract values.
7
<PAGE>
HYPOTHETICAL INVESTMENTS*
ISSUE DATE:September 1, 1983 for Capital Growth
February 1, 1987 for Overseas
May 1, 1993 for Avanti Growth and Value Growth
May 2, 1994 for Small Cap
November 1, 1994 for International Equity, Equity Growth, and
Venture Value
$10,000 SINGLE PAYMENT
CONTRACT VALUE
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY
SMALL CAP EQUITY OVERSEAS GROWTH
--------- ------------- --------- ---------
<S> <C> <C> <C> <C>
12/31/87 9,346.53
12/31/88 10,073.52
12/31/89 12,284.55
12/31/90 11,946.44
12/31/91 12,697.26
12/31/92 11,157.37
12/31/93 15,079.90
12/31/94 9,512.13 10,196.29 15,027.29 9,561.73
6/30/95 10,551.52 10,238.73 15,595.11 12,752.77
Annual Effective
Rate of Return 5.42%
Cumulative Return+ 4.73% 2.39% 27.53%
</TABLE>
<TABLE>
<CAPTION>
CAPITAL AVANTI VENTURE VALUE
GROWTH GROWTH VALUE GROWTH
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
12/31/83 10,444.58
12/31/84 10,236.94
12/31/85 16,941.07
12/31/86 32,597.59
12/31/87 49,085.06
12/31/88 44,124.36
12/31/89 57,258.18
12/31/90 54,167.35
12/31/91 82,257.93
12/31/92 76,208.53
12/31/93 86,412.36 11,306.07 11,357.58
12/31/94 78,619.20 10,972.12 9,657.56 11,004.10
6/30/95 100,348.55 13,184.21 11,741.82 13,181.79
Annual Effective
Rate of Return 21.51% 13.62% 13.61%
Cumulative Return+ 17.42%
</TABLE>
*NOTE: These figures are net of all deductions, with the exception of premium
tax (which is charged in several states at a maximum of 2%) and the
contingent deferred sales charge (6 1/2% maximum). If included, these
charges would reduce the contract values.
8
<PAGE>
HYPOTHETICAL INVESTMENTS*
ISSUE DATE:September 1, 1993 for Bond Income and Money Market
November 1, 1986 for Equity-Income
May 1, 1987 for Stock Index Series and Managed Series
November 1, 1994 for Balanced, Strategic Bond Opportunities, and
US Government
$10,000 SINGLE PAYMENT
<TABLE>
<CAPTION>
STOCK
INDEX EQUITY-INCOME BALANCED MANAGED
--------- ------------- --------- ---------
<S> <C> <C> <C> <C>
12/31/86 9,812.08
12/31/87 8,700.99 9,540.79 9,844.68
12/31/88 9,870.02 11,446.14 10,562.46
12/31/89 12,967.00 13,468.76 12,528.52
12/31/90 12,025.49 11,089.00 12,617.63
12/31/91 15,441.86 14,349.01 14,926.62
12/31/92 16,313.95 16,515.02 15,680.54
12/31/93 17,628.18 19,244.53 17,086.56
12/31/94 17,543.86 20,270.09 9,956.78 16,625.80
6/30/95 20,904.10 23,621.24 11,465.39 19,279.66
Annual Effective
Rate of Return 9.45% 10.43% 8.37%
Cumulative Return+ 14.65%
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC
BOND BOND US MONEY
OPPORTUNITIES INCOME GOVERNMENT MARKET
------------- --------- ---------- ---------
<S> <C> <C> <C> <C>
12/31/83 10,322.81 10,267.54
12/31/84 11,453.60 11,175.37
12/31/85 13,388.02 11,905.91
12/31/86 15,137.28 12,515.01
12/31/87 15,242.32 13,122.58
12/31/88 16,250.76 13,896.84
12/31/89 17,982.33 14,945.51
12/31/90 19,151.99 15,916.87
12/31/91 22,256.32 16,648.79
12/31/92 23,723.05 17,018.60
12/31/93 26,326.57 17,259.26
12/31/94 9,817.20 25,012.44 10,026.51 17,679.32
6/30/95 10,976.97 28,159.18 10,911.79 18,056.40
Annual Effective
Rate of Return 9.14% 5.12%
Cumulative Return+ 9.77% 9.12%
</TABLE>
+ Cumulative Return is from November 1, 1994 to December 31, 1994.
*NOTE: These figures are net of all deductions, with the exception of premium
tax (which is charged in several states at a maximum of 2%) and the
contingent deferred sales charge (6 1/2% maximum). If included, these
charges would reduce the contract values.
9
<PAGE>
Zenith Loomis Sayles Small Cap Series
Portfolio Managers: Mary Champagne and Jeffrey Petherick;
Loomis Sayles & Company, L.P.
-------------------------------------------------------------------------------
MARKET REVIEW
The Series had a return for the first six months of 1995 of 11.09%, compared
to a rise of 14.40% in the Russell 2000 Index/3/ for the same period. At
6/30/95, the growth portion accounted for 48% of total assets of the Series,
but this portion is expected to shift towards stocks with good earnings
potential that may be undervalued by the market during the second half of the
year.
During the early part of the year, large capitalization stocks were the
focus of interest, as investors flocked to the relative safety of the biggest
and most conservative companies. Despite a market that favored these well-
established, proven companies, the smaller cap stocks in our portfolio held
their own. In fact, although small caps lagged large caps for much of the
first half of the year, this gap has begun to narrow. As the economy continues
to slow, opportunity-minded stock market investors have begun to move beyond
the giants to small and mid-sized companies in search of stocks that may
deliver higher earnings growth.
On the growth side, we emphasized companies with strong fundamentals--above-
average profitability, skilled management with a clear growth strategy, and
most importantly, a clearly defined, attractive market niche. Although we
generally concentrate our search on companies with a market capitalization of
less than $500 million, we do have the flexibility to move into somewhat
larger companies--an option that we exercised during the first six months of
the year. We kept up weightings in technology and healthcare, and recently
broadened the portfolio to include some retail and financial stocks, as well
as some well-positioned cyclicals.
On the value side, the Series remains well diversified. Because our goal is
to add value through stock selection, rather than through sector bets, we're
typically not dramatically overweighted or underweighted in any particular
sector or industry. We are instead stock pickers, searching for those issues
that are out of favor, yet have strong earnings potential. Stocks that met our
demanding criteria include those in the financial services, energy and
technology sectors.
OUTLOOK AND STRATEGY
Looking ahead, our forecast is slow economic growth with a possible pickup
in the economy towards the latter half of the year. In such an environment, we
expect the market to continue to perform well and to expand its breadth beyond
the blue chips. In the months ahead, we anticipate small cap stocks may be
positioned to do well in a broadening market.
10
<PAGE>
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Average Annual Return
Zenith
Small
Cap
<S> <C>
6 mos. 11.09%*
1 Year 11.65%
Since Inception 6.39%
*not annualized
<CAPTION>
Zenith
Small
Cap Russell 2000
<S> <C> <C>
YTD 1995 $10,750 $11,471
1994 $ 9,677 $10,027
Inception 5/1/94 $10,000 $10,000
</TABLE>
Performance numbers are net of all fund operating expenses but do not
include any insurance, sales or administrative charges of the policies; if
included, the returns would be lower.
This information represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate so that shares,
upon redemption, may be worth more or less than original cost.
11
<PAGE>
Zenith Draycott International Equity Series
Portfolio Managers: Nicholas D. P. Carn, Timothy S. Griffen, Gregory D.
Eckersley and Nigel Hankin; Draycott Partners, Ltd.
-------------------------------------------------------------------------------
MARKET REVIEW
Instability characterized much of the international investment scene for the
first six months of 1995. The dollar's drop to historic lows against the
Japanese yen and the German mark early in the year was widely thought to hurt
the earnings outlook for many export-oriented international companies,
particularly Japan's. Add to this Mexico's sharp devaluation of the peso,
which had a ripple effect throughout many Latin American countries, and the
result was a challenging climate for international stocks.
In addition, most major international markets felt the effects of a cyclical
slowdown early in the year. Many countries, coming off periods of strong
economic growth, generated growth rates far below investors' expectations. An
example is Japan, which ended the first half of the year with the worst return
of the major markets down 14% in U.S. dollar terms. There were bright spots,
however. In contrast to Japan, Switzerland rewarded investors with a positive
return of 22% in U.S. dollar terms through the end of June. Such figures
indicate the wide disparity in international investment performance for the
first two quarters of "95.
Against this backdrop, the Series posted a total return of 0.68% for the six
months ended June 30, 1995 versus a total return of 2.61% for the Morgan
Stanley Capital EAFE Index/4/, an index that includes stocks traded on 16
exchanges in Europe, Australia and the Far East.
During the early part of 1995, we focused on those countries, sectors and
issues which we believed would benefit the most in a predominantly slow-growth
international environment. The Series remained fully invested among more than
14 countries, with heavy weightings in the United Kingdom, France, Switzerland
and the Netherlands. Despite a pervasive slowdown in much of Europe, these
countries continued to offer attractive stock valuations. This experience was
in sharp contrast to the rest of Europe where, seeing little in the way of
significant growth prospects, we underweighted the Series.
Perhaps the most significant change to the portfolio occurred early in the
year when we dramatically reduced our Japanese exposure. Despite the
beginnings of a cyclical recovery in the Japanese stock market last year,
deflationary forces began to intensify once again--a situation which we
believed might soon force the Japanese economy into a recession. Consequently,
we cut back our Japanese holdings from a high of approximately 40% of Series
assets at the beginning of the first quarter to our current 22.5%--a position
which is quite low relative to the Morgan Stanley Capital EAFE Index/4/. We
then shifted assets to Southeast Asian countries, such as Singapore, Malaysia,
and Thailand, which now offer increasingly attractive investment
opportunities.
When selecting stocks for the Series, we follow a carefully defined, top-
down investment approach. We focus first on countries with stable economies,
then seek to identify the most profitable sectors and industries within those
countries. Sectors we focused on early in 1995 included interest-sensitive
industries in Europe and the financial services sector in Japan.
During this period, we continued to emphasize blue-chip companies in major
non-U.S. markets. SmithKline Beecham, representing 0.8% of the portfolio, is
one example of the type of stock we selected. This major British
pharmaceutical company is undergoing financial and operational restructuring,
and is developing promising new products. Elsewhere in Europe, we bought
shares of Spain's Acerinox, Europe's largest stainless steel producer,
representing 2.7% of the portfolio. Benefiting from the combination of a weak
Spanish currency and the devaluation of the Mexican peso, Acerinox is also
enjoying a substantial increase in output from its Mexican operation. One of
12
<PAGE>
our favorite Japanese stocks was Kirin Beverage, 0.3% of the portfolio, the
country's largest soft drink manufacturer. Unlike many Japanese firms, Kirin
Beverage is not exposed to outside competition, a fact that appears to be
helping them to rapidly grow their soft drinks, tea and coffee markets.
Our disciplined strategy also led us to avoid Mexico and the extremely
speculative markets of Latin America during the early part of the year. This
deliberate move helped shelter the Series from dramatic underperformance in
that corner of the world.
OUTLOOK AND STRATEGY
Our strategy for the remainder of the year remains essentially unchanged
from what is currently in place. Looking ahead, we expect slow growth to
continue for most major international markets through the remainder of 1995,
and into 1996. As economies around the world slow, however, there is the
increasing possibility that a recession will grip one or more of the developed
nations. Therefore, we are cautiously evaluating each new investment
opportunity as it arises. However, we do not share the prevailing opinion that
interest rates will increase worldwide; rather, we anticipate a stable-to-
lower rate environment, which would bode well for international stocks.
Finally, although Japan continues to make up a significant portion of the
portfolio, we are taking a somewhat neutral stance in terms of future
positioning. Long-term, we remain optimistic about the Japanese economy. In
the near term, however, we're awaiting significant forward-going changes in
government policy before we increase our holdings in Japan.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Average Annual Return
Zenith
Int'l
Equity
<S> <C>
6 mos. 0.68%*
Since Inception 3.30%*
*not annualized
<CAPTION>
Zenith
International
Equity EAFE
<S> <C> <C>
YTD 1995 $10,330 $ 9,833
1994 $10,260 $ 9,583
Inception 10/31/94 $10,000 $10,000
</TABLE>
Performance numbers are net of all fund operating expenses but do not
include any insurance, sales or administrative charges of the policies; if
included, the returns would be lower.
This information represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate so that shares,
upon redemption, may be worth more or less than original cost.
13
<PAGE>
Zenith Alger Equity Growth Series
Portfolio Manager: David D. Alger; Fred Alger Management, Inc.
-------------------------------------------------------------------------------
MARKET REVIEW
The Series entered the year in a very bullish posture and has been rewarded
with excellent results. For the six months ended June 30, 1995, the Series
returned 34.43% and according to Lipper Analytical Services, Inc. is rated
first out of eighty-nine Funds in the Lipper Variable Growth and Income Fund
Index for the period. Over the same period the S&P 500 Index** was up 20.15%.
The nature of markets is such that because of institutionalization, computers
and the globalization of finance, market moves are faster and more pronounced
than ever. Having a sense of the discontinuities is all the more important. In
our opinion, one glaring discontinuity is that despite this year's upside move
in the market and the Series' holdings, growth stocks remained exceedingly
undervalued.
As of June 30, 1995, the Series held 76 stocks with a median price/earnings
ratio of 22.4x, a weighted average estimated 1995 earnings per share (EPS)
growth of 37.6% and a weighted average annual five year EPS growth estimate of
21.4 %. The weighted average market cap was $12.5 billion. The top three
industry sectors at the quarter end were semi-conductors, healthcare and
retail. During the first six months of 1995, the Series purchased 57 new
stocks and eliminated 11 stocks. The Series held 24 stocks for the entire
period. Of the stocks held for the six month period, 20 advanced and 4
declined in price. The Series did not invest in derivative securities during
the quarter.
As 1995 dawned, the key questions facing the stock market concerned the need
for future tightening of interest rates by the Fed, the possible onset of
inflation and the excessive strength of the economy, all of which are
naturally interrelated. Now we are at mid-year and the concern of the markets
is not whether the economy is growing too fast, but whether it is growing too
slowly. In response to the sluggish economy the Federal Reserve lowered the
Fed Funds Rate by one quarter of a point on July 6, 1995, just after the
period's end. Currently, we believe we may be at an inflection point in the
economy and instead of a "soft landing" we may have a "touch and go landing."
At present, however, the inflation picture looks fair. I believe that
inflation will remain subdued for the year as a whole because of the slowing
in the economy. The key of course to continued record stock prices in the
market is the Fed.
OUTLOOK AND STRATEGY
Despite the rally year-to-date, growth stocks remain generally underpriced
relative to the market. Technology stocks continue to represent excellent
investments. While they have moved up a great deal, so have their earnings.
Consequently, their multiples have not increased. To get back to traditional
valuations, growth stocks could outperform relative to the general market over
the next few years. This would be combined with a generally optimistic feeling
about the market. This has been curiously absent despite the market's
strength. It is as though all of the "pundits" that were so negative last year
are "in denial" about this very strong market. The current sense of disbelief
about the permanence of this market rally is both refreshing (because it means
there is plenty of buying power left) and puzzling. It appears as though the
last two red lights on the road ahead, which are Fed Policy and the
possibility of a recession, have just turned green. Currently, short interest
is at a record high and stock buybacks still exceed new issues. We are
extremely excited about the prospects for the market and especially growth
stocks during the next five years, although there can be no assurance this
forecast will be borne out.
14
<PAGE>
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Average Annual Return
Zenith
Alger Equity
Growth
<S> <C>
6 mos. 32.43%*
Since Inception 26.87%*
*not annualized
<CAPTION>
Zenith
Alger Equity
Growth S&P 500
<S> <C> <C>
YTD 1995 $12,687 $11,767
1994 $ 9,580 $ 9,794
Inception 10/31/94 $10,000 $10,000
</TABLE>
Performance numbers are net of all fund operating expenses but do not
include any insurance, sales or administrative charges of the policies; if
included, the returns would be lower.
This information represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate so that shares,
upon redemption, may be worth more or less than original cost.
15
<PAGE>
Zenith Capital Growth Series
Portfolio Manager: G. Kenneth Heebner; Capital Growth Management, L.P.
-------------------------------------------------------------------------------
MARKET REVIEW
The Zenith Capital Growth Series achieved a total return of 27.55% for the
six months ended 6/30/95. This compared favorably to the 20.15% return of the
Standard & Poor's 500 Index** for the same six-month period.
In the first quarter of 1995, evidence of a weakening economy appeared in
the auto and housing sectors. The trend continued throughout the second
quarter spreading to retail sales and cutting construction spending by 1.5% in
May to make the month the worst in four years for construction spending and
the second down month in a row. Signs of weakness also took their toll on
consumer confidence as measured by an index drop from 102 in April to 92.8 in
May.
OUTLOOK AND STRATEGY
In its attempt to contain inflation, has the Federal Reserve Board
engineered the very first "soft landing" (slowdown without recession), or has
it ushered in a recession? Though the answer remains to be seen, we favor the
soft landing scenario. Lower interest rates will encourage consumer spending
in the months ahead. In fact, signs of an increase in consumer spending were
already evident in late June and employment gains were well above average.
Personal income should continue to rise and the weaker dollar might well
stimulate exports.
Interest rates on long-term government bonds have fallen significantly to
6.5% from 8.3% in the fall of 1994. We expect the decline in rates to carry
into 1996 as we experience a slow growth economy with no immediate threat of
higher inflation.
While the diminished threat of inflation and weaker business activity helped
bring about lower interest rates for the bond market, the driving force behind
the equity market has been rising corporate profits. One year ago, the
estimate of earnings per share of the S&P 500 Index** was $27. The S&P 500
Index** was at 444, a price 16.5 times earnings. Today, after an increase of
23%, the S&P 500 Index** has reached 544. However, the current earnings
estimate of $34 prices the market once again at roughly 16 times earnings.
The Series is positioned to capitalize on continued growth in corporate
earnings with major emphasis on technology, airlines and New York City banks.
The Series' three largest holdings are Citicorp (7.1% of the portfolio),
Hewlett-Packard Company (6.5% of the portfolio) and the Intel Corporation
(6.3% of the portfolio).
16
<PAGE>
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Average Annual Return
Zenith
Capital
Growth
<S> <C>
6 mos. 27.55%*
1 Year 25.78%
5 Years 9.65%
10 Years 23.62%
*not annualized
<CAPTION>
Zenith
Capital
Growth S&P 500
<S> <C> <C>
YTD 1995 $113,664 $45,871
1994 $ 89,113 $38,178
1993 $ 95,893 $37,666
1992 $ 83,407 $34,223
1991 $ 88,825 $31,803
1990 $ 57,679 $24,400
1989 $ 59,771 $25,186
1988 $ 45,696 $19,139
1987 $ 50,106 $16,429
1986 $ 32,813 $15,615
1985 $ 16,810 $13,164
12/31/84 $ 10,000 $10,000
</TABLE>
Performance numbers are net of all fund operating expenses but do not
include any insurance, sales or administrative charges of the policies; if
included, the returns would be lower.
This information represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate so that shares,
upon redemption, may be worth more or less than original cost.
17
<PAGE>
Zenith Loomis Sayles Avanti Growth Series
Portfolio Managers: Richard Hurckes and Scott Pape; Loomis Sayles & Company,
L.P.
-------------------------------------------------------------------------------
MARKET REVIEW
Equity markets in general, and growth stocks in particular, delivered very
strong results in the first six months of 1995. The economy has been expanding
rapidly, though this growth is beginning to moderate somewhat. Various
factors, including declining long-term interest rates, improving productivity
and low inflation, have been responsible for the strong profits that American
corporations have enjoyed year to date. In quite a few cases, corporations are
even outperforming their own expectations.
The decline of the U.S. dollar gave American companies doing business abroad
a competitive advantage. Corporations such as Coca-Cola and Gillette, who do a
large portion of their business outside the U.S., have posted record profits
thus far in 1995.
The market's focus on growth stocks during the first six months of 1995
enabled us to generate strong returns for the Series. The Series achieved an
impressive total return of 19.94% at net asset value as of 6/30/95. The Series
out performed its peer group, the Lipper Variable Growth Fund Average/7/, by
201 basis points.
We continue to pursue our investment approach of striving to build a
portfolio of America's premier companies--industry leaders with prospects for
better-than-average earnings growth. We also seek to identify companies that
have strong balance sheets and proven management teams.
Examples of our approach that have been very successful are McDonald's and
Coca-Cola, each representing 2.5% of the portfolio. Both are market leaders,
enjoy a significant international presence and have consistently delivered
strong earnings. In healthcare, Medtronic is the leading worldwide
manufacturer of pacemakers and implantable defibrillators. Intel and
Microsoft, representing 1.3% and 2.7% of the portfolio respectively, are
dominant in their industries and consistently on the cutting edge of
technological innovations. All these companies of the Series reported better
than expected earnings growth in the first half of 1995.
Because the market favored large-capitalization growth companies, the
Series' portfolio now holds a majority of its assets in this sector. We also
have a sizeable portion of the portfolio invested in emerging or mid-sized
companies where we anticipate strong growth potential later this year and into
1996. In anticipation of a slowing economy we reduced our exposure to stocks
that are cyclical in nature, selling or reducing positions in the energy,
retail and auto industries.
OUTLOOK AND STRATEGY
Over the next six months we may continue to overweight the sectors that have
contributed to the Series' strong year-to-date performance because we believe
they will continue to grow.
. TECHNOLOGY Both hardware and software companies did extremely well
because of the expanding economy and the increased momentum toward
networking for the private and business sectors.
. FINANCIAL SERVICES The expanding economy and declining interest rates
benefited banks and other financial institutions. There was an increase
in the number of credit cards issued, and the lower interest rates led to
increased numbers of loan applications.
. HEALTHCARE The health care debate in 1994 succeeded in bringing down the
stock prices of many well-established, solid companies. However, with the
failure to pass reforms and the realization that changes will take time,
we've seen several of these companies return to favor this year.
18
<PAGE>
. CONSUMER NON-DURABLES The decline of the dollar was good news for
American companies that supply consumable products such as food and
beverages to foreign countries.
We also believe that over the next six months the economy may continue to
grow, but at a slower pace. Leading companies with proprietary products and
dominant market positions may continue to generate strong earnings growth.
While during the first six months of 1995 the Series concentrated on large,
blue-chip companies, we believe that more growth opportunities in the second
half of 1995 may be found in emerging and mid-sized companies.
As always, we are committed to building a top portfolio of leading American
companies that are positioned to do well over the long term.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Average Annual Return
Zenith
Avanti
Growth
<S> <C>
6 mos. 19.94%*
1 Year 30.31%
Since Inception 15.73%
*not annualized
<CAPTION>
Zenith
Avanti
Growth S&P 500
<S> <C> <C>
YTD 1995 $13,725 $13,176
1994 $11,443 $10,966
1993 $11,474 $10,819
Inception 4/30/93 $10,000 $10,000
</TABLE>
Performance numbers are net of all fund operating expenses but do not
include any insurance, sales or administrative charges of the policies; if
included, the returns would be lower.
This information represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate so that shares,
upon redemption, may be worth more or less than original cost.
19
<PAGE>
Zenith Venture Value Series
Portfolio Manger: Shelby M.C. Davis; Selected/Venture Advisers, L.P.
-------------------------------------------------------------------------------
The Zenith Venture Value Series ended the six months through June 30, 1995
with a total return of 22.77% compared to a return of 20.15% for the S&P 500
Index** for the same period.
MARKET REVIEW
Financial stocks have performed well in the first half of 1995 spurred by a
robust bond market rally. The large capitalization stocks in which the
portfolio has substantial positions have also led the advance. Also, while the
portfolio has just a modest weighting in tech stocks -about 10%- the few names
in that group, like Hewlett-Packard, Texas Instruments and Intel, have
performed nicely over this period.
OUTLOOK AND STRATEGY
The Series has a large concentration of financial stocks. It is our sense
that the market has been trained to sell financial stocks in periods of rising
interest rates without regard to the underlying fundamentals. We hope that
this environment has created good buying opportunities in many of our core
holdings and we have taken advantage of price weakness to add to these
positions. Selected/Venture Advisers believes that the long-term growth
potential for financial stocks is strong while the downside risk is limited,
thanks, in part, to higher-than-market dividend yields and lower-than-market
price/earnings ratios.
At Selected/Venture Advisers we remain concerned about inflation. As a
hedge, the portfolio is building a position in oil stocks, with a recent
emphasis on Amerada Hess. For similar reasons, the portfolio has taken a
larger position in real estate investment trusts.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Average Annual Return
Zenith
Venture
Value
<S> <C>
6 mos 22.77%*
Since Inception 18.47%*
*not annualized
<CAPTION>
Zenith
Venture
Value S&P 500
<S> <C> <C>
YTD 1995 $11,847 $11,767
1994 $ 9,650 $ 9,794
Inception 10/31/94 $10,000 $10,000
</TABLE>
Performance numbers are net of all fund operating expenses but do not
include any insurance, sales or administrative charges of the policies; if
included, the returns would be lower.
This information represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate so that shares,
upon redemption, may be worth more or less than original cost.
20
<PAGE>
Zenith Westpeak Value Growth Series
Portfolio Managers: Gerald H. Scriver and Philip J. Cooper; Westpeak
Investment Advisors, L.P.
-------------------------------------------------------------------------------
MARKET REVIEW
The Zenith Westpeak Value Growth Series began operations on May 1, 1993. For
the six month period ending June 30, 1995, the Series returned 20.50%, while
the S&P 500 Index** returned 20.15% for the same time period. This performance
placed the Series 4th out of 55 funds in the Lipper Variable Growth and Income
Funds Index/1//2/. Since inception on May 1, 1993, the Series returned 36.00%,
while the S&P 500** returned 31.76%. This performance placed the Series 2nd
out of 40 funds in the above-referenced Lipper index for this period.
The first half of 1995 saw the S&P 500** return 20.15%, while the U.S. Long-
Term Treasury Bond returned 18.64%. As we expected, the S&P/BARRA Growth
Index/8/ outperformed the S&P/BARRA Value Index/9/ by 2.05% for the first six
months of 1995. For the past 12 months, the Growth Index/8/ outperformed the
Value Index/9/ by 9.54%. The technology sector was responsible for much of the
Growth Index's superior performance.
We believe the growth sector of the stock market will continue to lead the
way over the next quarter. However, market leadership should begin to change
to value type stocks as we approach the end of the year. By this time, we
could be approaching the "blowoff" stage of the market, at which time the
technology stocks would be vulnerable to a major setback.
During the first half of 1995, the Series benefited significantly from its
holdings in technology stocks. For the second quarter of 1995, the Series
returned 12.20% compared to 9.52% for the S&P 500. Significant contributors to
portfolio performance were Hewlett-Packard, up 24.16%; Intel, up 49.22%; Dell
Computer Corp., up 37.42%; and Andrew Corp., up 42.06%.
OUTLOOK AND STRATEGY
We believe the economy will stay subdued enough for the near term to reduce
inflationary pressures. This should allow the Fed to lower short-term interest
rates again soon. As a result, long-term rates will continue to decline, but
the bond rally will probably not extend into 1996. Under this scenario, the
bond market provides protection for the stock market, but a build-up in
speculation may be a warning that risk is increasing for stocks. Continued
cuts in short-term rates could lead to a further rush to buy stocks that
should last until late this year.
As we enter the third quarter of 1995, we remain overweighted in technology
and interest sensitive stocks, and underweighted in the consumer sector of the
stock market. However, we continue to believe that it is getting late in the
cycle for technology stocks and would expect to scale back if these stocks
move into the explosive stage.
21
<PAGE>
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Average Annual Return
Zenith
Value
Growth
<S> <C>
6 mos. 20.50%*
1 Year 26.46%
Since Inception 15.24%
*not annualized
<CAPTION>
Zenith
Value
Growth S&P 500
<S> <C> <C>
YTD 1995 $13,599 $13,176
1994 $11,286 $10,966
1993 $11,424 $10,819
Inception 4/30/93 $10,000 $10,000
</TABLE>
Performance numbers are net of all fund operating expenses but do not
include any insurance, sales or administrative charges of the policies; if
included, the returns would be lower.
This information represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate so that shares,
upon redemption, may be worth more or less than original cost.
22
<PAGE>
Zenith Westpeak Stock Index Series
Portfolio Managers: Gerald H. Scriver and Philip J. Cooper; Westpeak
Investment Advisors, L.P.
-------------------------------------------------------------------------------
MARKET REVIEW
The Zenith Westpeak Stock Index Series returned 20.03% compared to a return
of 20.15% for the S&P 500 Index** for the six month period ending June 30,
1995.
The Series is managed so as to track the performance of the S&P 500 Index**.
Westpeak's approach is to seek to emulate the S&P 500 Index** by owning a
majority of the stocks in the Index in the same proportion as the Index. This
process minimizes the tracking error to the Index. For example, during the
second quarter of 1995, the Series returned 9.55% while the S&P 500 Index**
returned 9.52%
OUTLOOK AND STRATEGY
We believe the economy will stay subdued enough for the near term to reduce
inflationary pressures. This should allow the Fed to lower short-term interest
rates again soon. As a result, long-term rates will continue to decline, but
the bond rally will probably not extend into 1996. Under this scenario, the
bond market provides protection for the stock market, but a build-up in
speculation is a warning that risk is increasing for stocks. We expect that
continued cuts in short-term rates could lead to a further rush to buy stocks
that should last until late this year.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Average Annual Return
Zenith
Stock
Index
<S> <C>
6 mos. 20.03%*
1 Year 25.88%
5 Years 11.75%
Since Inception 11.17%
*not annualized
<CAPTION>
Zenith
Stock
Index S&P 500
<S> <C> <C>
YTD 1995 $23,754 $24,431
1994 $19,785 $20,334
1993 $19,560 $20,061
1992 $17,827 $18,227
1991 $16,614 $16,938
1990 $12,744 $12,995
1989 $13,294 $13,414
1988 $10,215 $10,194
1987 $ 8,780 $ 8,750
Inception 4/30/87 $10,000 $10,000
</TABLE>
Performance numbers are net of all fund operating expenses but do not
include any insurance, sales or administrative charges of the policies; if
included, the returns would be lower.
This information represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate so that shares,
upon redemption, may be worth more or less than original cost.
23
<PAGE>
Zenith Loomis Sayles Balanced Series
Portfolio Managers: Meri Anne Beck and Douglas D. Ramos;
Loomis, Sayles & Company, L.P.
-------------------------------------------------------------------------------
MARKET REVIEW
Stock and bond markets posted excellent returns in the first six months of
1995. As measured by the Standard & Poor's 500 Index**, stocks produced a
total return of 20.15% for the six month period. Bonds, as measured by the 30-
year U.S. Treasury, returned 18.64% for the same period. Cash equivalents, as
measured by the 3-month Treasury bill, returned a meager 3.0% for the six
months ended 6/30/95. The total return for the Series for the six months ended
6/30/95 was 15.79%.
Asset allocation was a positive factor during the quarter. The Series held
very limited amounts of cash equivalents, though cash flows were substantial
in relation to the Series' size. During the second quarter, the percentage
held in stocks exceeded 50%, with 57% invested in stocks at June 30, a
positive for Fund performance. While the fixed-income portfolio outperformed
its benchmark, it did not come close to generating the returns posted by the
30-year Treasury. The equity portfolio, on the other hand, outperformed the
S&P 500 Index**.
Bond market investors went from celebrating the arrival of a "soft landing"
in the first quarter to concern about a "bumpy" to "belly" landing during the
second quarter. U.S. Treasuries and non-callable corporate bonds did provide
the best overall results. These bonds generally provide the most upside in
terms of price appreciation during strong rallies. Corporate bonds continued
to do very well as quality spreads have generally narrowed throughout the
market rally this year.
Stock market investors, helped by the bond markets, seemed to assume that
the Fed would do the right thing and keep the economy's growth fast enough to
support corporate profit growth but slow enough to keep inflation and interest
rates in check. Technology continued to lead the market and the equity
portfolio's performance. Within the portfolio's technology sector, the best
performing industry by far was electrical components thanks to the outstanding
returns generated by semiconductor stocks, Intel and Texas Instruments. The
financial sector was the second positive factor, while the negative for
portfolio performance was the energy sector, with natural gas pipelines and
major integrated oils performing equally badly.
OUTLOOK AND STRATEGY
Looking forward, our economists are projecting a "growth recession" for the
middle two quarters of 1995 followed by a stronger economy by year's end. The
odds of a recession are very small and the economy simply does not need the
Fed to move interest rates aggressively lower. Assuming no unexpected weakness
develops and a "soft takeoff" beginning in the fourth quarter of 1995, the
bigger part of the bond market rally may be behind us. In retrospect, it is
quite surprising that the stock market did so well in the second quarter after
such a strong first quarter performance and three discount rate increases. The
stock market appears to believe the Fed has succeeded in producing a slowdown
without a recession and is looking past the current slowdown. That said, it
would be even more surprising if the fireworks continued in the second half.
This is not to say that conditions are unfavorable. We will stick with the
current asset allocation, of approximately 60% stocks and 40% bonds.
24
<PAGE>
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Average Annual Return
Zenith
Balanced
<S> <C>
6 mos. 15.80%*
Since Inception 15.68%*
*not annualized
<CAPTION>
Zenith
Balanced S&P 500
<S> <C> <C>
YTD 1995 $11,568 $11,767
1994 $ 9,990 $ 9,794
Inception 10/31/94 $10,000 $10,000
</TABLE>
Performance numbers are net of all fund operating expenses but do not
include any insurance, sales or administrative charges of the policies; if
included, the returns would be lower.
This information represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate so that shares,
upon redemption, may be worth more or less than original cost.
25
<PAGE>
Zenith Back Bay Advisors Managed Series
Portfolio Manager: Peter Palfrey; Back Bay Advisors, L.P.
-------------------------------------------------------------------------------
MARKET REVIEW
The Zenith Managed Series ended the first six months of 1995 significantly
ahead of its peer group of Lipper Variable Flexible Funds Average/1//1/ which
includes 64 funds, with a total return of 16.82%, versus the comparable Lipper
average of 13.45%--an outperformance of 337 basis points. For the twelve month
period ended June 30, the Zenith Managed Series posted top 10% performance
with a total return of 21.13% versus 15.88% for its peer group average--an
outperformance of 525 basis points. During the first half of 1995, the Managed
Series remained "fully invested" in stocks and bonds, with an average asset
allocation of approximately 65% stocks, 33% bonds and 2% in cash equivalents.
This compares to the 62% stocks, 27% bonds and 13% in cash equivalents under
more adverse market conditions over the same period last year.
Year to date, stocks and bonds have enjoyed one of the best bull markets in
years. The S&P 500 Index** (including reinvestment of dividends) is up 20.15%
for the six months ended June 30. Bonds, as represented by the Lehman
Intermediate Government/Corporate Bond Index***, are up 9.60% over the same
period. Moderating U.S. economic growth (slowing from last year's heated
pace), coupled with benign inflationary data and the perception that the
Federal Reserve was shifting to a more neutral monetary policy, has driven
interest rates 150-200 basis points lower from year-end 1994 levels. Stocks,
in turn, have been buoyed by continued strong corporate earnings, lower
interest rates, a more accommodative stance by the Federal Reserve and the
prospect of a prolonged period of moderate but sustainable economic expansion.
OUTLOOK AND STRATEGY
The U.S. economy, which had shown considerable resilience to the rate hikes
orchestrated by the Federal Reserve over the preceding 12 months, finally
started to react to the more restrictive monetary policy in 1995. Second
quarter economic activity, particularly in the manufacturing sector, has shown
a marked slowdown. Citing the increased risk of a mild recession, a cautious
Federal Reserve Board elected to reverse course, voting in early July to ease
short rates by 1/4%. However, with the Fed's move already priced into the
fixed income market, investor euphoria proved short-lived. The most recent
economic data and comments from Fed officials suggest that additional easing
by the Federal Reserve is not imminent, and may prove unnecessary to keep the
U.S. economy moving along the Fed's targeted 2.5% annual growth trendline.
The recent uncertainty over future Fed policy direction heightened
volatility in both the bond and stock markets. Longer duration fixed-income
securities, in particular, have been under considerable pressure thus far in
the 3rd quarter, as market participants have been quick to seize on recent
strength in economic data as an excuse to reduce exposure. However, with the
inflation outlook still favorable, and with significantly above trendline
economic growth over the next several quarters unlikely, we remain
constructive on the fixed income market and may look to add duration if long
rates back up behind 7%. Similarly, neutral Fed monetary policy and stable to
declining interest rates, coupled with steady earnings growth, has been the
recipe for successive new highs in the stock market thus far in 1995. While
current stock valuations depend on relatively aggressive earnings forecasts
and look to be approaching "fully priced" by many historical measures, we feel
that there is still additional upside in stocks over the next several
quarters. However, this is likely to come at the cost of increased volatility.
Increased volatility is to be expected after a runup such as seen in the first
half of 1995. With solid fundamentals underpinning the market, investors can
take advantage of this higher volatility to increase exposure to stocks on
corrections.
26
<PAGE>
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Average Annual Return
Zenith
Managed
<S> <C>
6 mos. 16.82%*
1 Year 21.13%
5 Years 10.52%
Since Inception 10.08%
*not annualized
<CAPTION>
Zenith
Managed S&P 500
<S> <C> <C>
YTD 1995 $21,914 $24,431
1994 $18,755 $20,334
1993 $18,966 $20,061
1992 $17,141 $18,227
1991 $16,064 $16,938
1990 $13,365 $12,995
1989 $12,950 $13,414
1988 $10,873 $10,194
1987 $ 9,930 $ 8,750
Inception 4/30/87 $10,000 $10,000
</TABLE>
Performance numbers are net of all fund operating expenses but do not
include any insurance, sales or administrative charges of the policies; if
included, the returns would be lower.
This information represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate so that shares,
upon redemption, may be worth more or less than original cost.
27
<PAGE>
Zenith Salomon Brothers Strategic Bond Opportunities Series
Portfolio Managers: Steven Guterman, Peter J. Wilby and David Scott;
Salomon Brothers Asset Management Inc
-------------------------------------------------------------------------------
MARKET REVIEW
The U.S. fixed income markets staged a dramatic rally during the first half
of 1995. Consistently weak economic data forced buyers into the market and
pushed yields on two-year through ten-year benchmarks down by more than 100
basis points. The total return for the Series for the six month period ended
6/30/95 was 12.32%, versus 11.44% for the Lehman Aggregate Bond Index./2/
The strong performance of the Series was driven by gains of a little over 6%
in both the high yield and investment grade markets and a 22% gain in emerging
markets for the quarter, as defined by the appropriate Salomon Brothers
benchmarks.
The strong second quarter performance of emerging market debt resulted from
a combination of technical and fundamental factors. From a technical
standpoint, U.S. mutual funds and Japanese banks ended their widespread
selling of emerging market debt at March quarter-end. Fundamentally, a number
of positive developments helped the performance of the market. Poland received
an investment grade debt rating from Moody's, becoming the first Brady Bond
issuer to achieve investment grade status. Argentine President Menem was re-
elected by a comfortable margin in May, removing a potential uncertainty from
the outlook for the country. Mexico stabilized the peso during the June
quarter as the country continued to make progress in solving its liquidity
problem.
The Series is currently allocated as follows: 16% in non-U.S. investment
grade government bonds, 20% in U.S. investment grade securities, 40% in high
yield corporates, 22% in emerging market debt and 2% in short term
investments.
OUTLOOK AND STRATEGY
We are maintaining the exposure we had in the second quarter to the emerging
debt markets (approximately 22%); we believe that favorable developments in
this market should continue to provide investment opportunities. We are also
constructive on the U.S. high yield fixed income markets and plan to be
overweight in this sector. We believe both these sectors are attractive in a
low- to slow-growth environment.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Average Annual Return
Zenith
Salomon
Strategic Bd
<S> <C>
6 mos. 12.32%*
Since Inception 10.75%*
*not annualized
<CAPTION>
Zenith
Salomon Lehman
Strategic Bd Aggregate Bond
<S> <C> <C>
YTD 1995 $11,075 $11,132
1994 $ 9,860 $ 9,989
Inception 10/31/94 $10,000 $10,000
</TABLE>
28
<PAGE>
Performance numbers are net of all fund operating expenses but do not
include any insurance, sales or administrative charges of the policies; if
included, the returns would be lower.
This information represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate so that shares,
upon redemption, may be worth more or less than original cost.
29
<PAGE>
Zenith Back Bay Advisors Bond Income Series
Portfolio Manager: Cathy Bunting; Back Bay Advisors, L.P.
-------------------------------------------------------------------------------
MARKET REVIEW
The bond market staged a strong rally in the first half of 1995 as investors
grew more and more optimistic about the outlook for fixed-income securities.
The Federal Reserve Board's February 1995 rate increase, the last in a year-
long series, helped achieve the Fed's goal of cooling the economy while
allaying investor fears of rekindled inflation. The market drew strength from
the growing prospect of declining interest rates, which it saw as a likely
byproduct of a slowing economy. Sluggish economic activity, which implies
lower inflation, therefore led bond prices higher beginning early in the year,
in anticipation of lower rates to come. The markets' expectations proved
accurate as the Federal Reserve Board cut the Fed Funds rate by 1/4 of a
percentage point, just after the period's end, on July 6, 1995.
Overall, corporate bonds outperformed U.S. government securities thanks
primarily to rising corporate profits. Strong equity markets also benefited
bonds, as investor confidence spread to fixed-income securities; rising stock
prices also meant lower dividend yields, diminishing the appeal of stocks for
income-oriented investors. And for most of the period, the supply of corporate
securities of the type the Series invests in was restrained.
The economic scenario we have been observing is the much-discussed "soft
landing". Despite slowdowns in key industries like housing, retail sales and
manufactured goods, the economy appears to be slackening without sliding into
recession. Companies are maintaining inventories to support current sales
levels, in contrast to late 1994 when firms stockpiled inventory to meet
anticipated demand for goods.
The Series turned in a strong performance in the first half of 1995. Within
an overall climate of robust markets and improving corporate earnings, a
number of sectors contributed to the Series' positive results. For the period
January through June, the Series had a total return on net asset value of
13.1%. This compares favorably with a return of 9.60% for the Lehman
Intermediate Government/Corporate Bond Index***, and 11.6% for the Lipper
Variable A-Rated Corporate Bond Fund Average/1//0/ for the same period.
To take advantage of strength where it was most concentrated, we committed
around 10% of the portfolio to the electric and gas utilities and 9% to the
cable and media sectors. We favored gas utilities because of increased
profitability in the sector. Electric utilities were attractive thanks to an
overall industry recovery, improved balance sheets and our belief that these
securities had overreacted to the prospect of competition in their
marketplaces. In the cable and media sectors, takeovers and consolidations led
to stronger credits and a number of upgrades.
We also devoted almost 15% of the Series to Canadian securities, both U.S.
dollar- and Canadian dollar-denominated. In Canada we were attracted to better
yields than were available domestically. The Canadian dollar is stabilizing
and Canadian goods, at today's currency levels, are attractively priced in
world markets. In addition, concerns about the separatist movement in Quebec
have abated in the wake of flagging popular support. Canada also appears to be
taking effective steps to deal with its budget deficit.
We are also holding a smaller percentage of the Series in corporates than
has been our practice. With corporate bond yields not much higher than those
available on U.S. Treasuries, we feel that the higher quality of the U.S.
government issues is an attractive trade-off for the slight give-up in income.
Therefore the portfolio's overall quality is roughly equivalent to a security
rated in the lower range of AA.
30
<PAGE>
OUTLOOK AND STRATEGY
Last December we expressed an optimistic view for the fixed-income markets,
and that view has been borne out. Our outlook for the second half of the year
calls for economic growth in the range of 2-2.5% on an annualized basis. While
the Federal Reserve Board has taken an initial step toward loosening the
monetary reins, it does not follow that there will be a series of cuts
parallel to the increases of 1994-95. Rather, we think the Fed will opt to
wait and assess the effects of its first move before undertaking another cut.
In managing the Series, we seek to deliver attractive income with reasonable
risk. With 1994's challenges behind us, we are again very optimistic about the
outlook for bonds. Although past performance does not predict future results,
we believe our record of positive returns in 11 of the last 12 years, plus
strong performance in the first half of 1995, continue to justify your long-
term confidence.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Average Annual Return
Zenith
Bond
Income
<S> <C>
6 mos. 13.05%*
1 Year 14.61%
5 Years 10.61%
10 Years 10.08%
*not annualized
<CAPTION>
Zenith Lehman
Bond Intermediate Cost
Income Govt/Corp of Living
<S> <C> <C> <C>
YTD 1995 $28,815 $26,141 $14,621
1994 $25,484 $23,851 $14,218
1993 $26,370 $24,320 $13,847
1992 $23,418 $22,355 $13,476
1991 $21,643 $20,860 $13,096
1990 $18,341 $18,197 $12,707
1989 $16,967 $16,669 $11,976
1988 $15,109 $14,783 $11,443
1987 $13,938 $13,844 $10,959
1986 $13,745 $13,354 $10,494
1985 $11,870 $11,805 $10,380
12/31/84 $10,000 $10,000 $10,000
</TABLE>
Performance numbers are net of all fund operating expenses but do not
include any insurance, sales or administrative charges of the policies; if
included, the returns would be lower.
This information represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate so that shares,
upon redemption, may be worth more or less than original cost.
31
<PAGE>
Zenith Salomon Brothers U.S. Government Series
Portfolio Managers: Steven Guterman and Roger Lavan; Salomon Brothers Asset
Management Inc
-------------------------------------------------------------------------------
MARKET REVIEW
The U.S. fixed income markets staged a dramatic rally during the second
quarter of 1995. Consistently weak economic data forced buyers into the market
and pushed yields on two-year through ten-year benchmarks down by 100 basis
points. The total return for the Series for the six months ended 6/30/95 was
9.44%, versus 9.03% for the same period for the Lehman Brothers Intermediate
Government Bond Index./1/
The Series was well positioned for the rally. The Series began the second
quarter with a duration of 4.5 years and underweighted in callable mortgages.
As the rally ensued, additional strategic underweighting of callable mortgages
proved beneficial as most mortgage products had a difficult time keeping pace
with Treasuries during the rally.
OUTLOOK AND STRATEGY
Looking forward, we remain constructive on the market and believe the Fed
will continue to lower rates, albeit slowly. We expect to keep the duration of
the Series near the upper end of its three-to five-year duration band. In
terms of sector allocation, discount and current coupon mortgages are becoming
increasingly more attractive and it would not be surprising to see a
commitment by the Series back into those areas over the next few months.
Presently, the Series is allocated as follows: 15% cash, 33% Treasuries; 33%
agency debentures, 13% agency mortgage pass-throughs, 6% agency PAC CMOs.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Average Annual Return
Zenith
Salomon
US Govt.
<S> <C>
6 mos. 9.44%*
Since Inception 10.09%*
*not annualized
<CAPTION>
Zenith
Salomon Lehman
US Govt. Inter Govt
<S> <C> <C>
YTD 1995 $11,010 $10,954
1994 $10,060 $10,047
Inception 10/31/94 $10,000 $10,000
</TABLE>
Performance numbers are net of all fund operating expenses but do not
include any insurance, sales or administrative charges of the policies; if
included, the returns would be lower.
This information represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate so that shares,
upon redemption, may be worth more or less than original cost.
32
<PAGE>
Zenith Back Bay Advisors Money Market Series
Portfolio Manager: J. Scott Nicholson; Back Bay Advisors, L.P.
-------------------------------------------------------------------------------
MARKET REVIEW
From February 1994 through February 1995, the Federal Reserve Board raised
short-term rates seven times in an effort to slow down a rapidly growing
economy and ward off potential inflationary pressures. Throughout 1994 and
into 1995, yields on the Series have risen in response to the Fed's actions.
Indeed, yields have been at their highest level in recent years. However,
during the first six months of the year evidence accumulated that the economy
had slowed dramatically in response to the Fed's monetary policy. The markets
began to anticipate that the Fed would be forced to reduce rates to prevent
the economy from slipping into recession. Then, on July 6, just after the end
of this reporting period, the Fed reversed direction and lowered short-term
rates by a modest 0.25%, signaling a possible change in interest rate policy.
Shareholders in the Series enjoyed relatively high rates throughout the
first half of the year as the effects of the Fed's interest rate hikes worked
their way through the system. At June 30, 1995, the 7-day yield for the Series
stood at 5.67% (compared to 5.34% on December 31, 1994). The 7-day yields for
the Series as of June 30 continue to compare favorably with the average money
market deposit account (MMDA), which was yielding 3.42%. (Source: Wall Street
Journal, 7/6/95)*.
In a period of rising interest rates, money market fund managers will reduce
the average days to maturity of their fund's holdings so that assets can be
quickly rolled over into higher-yielding instruments. During periods of
declining rates, the average maturity of the fund will be extended, in order
to lock in the higher yields for as long as possible. At the end of 1994, we
believed that economic growth would perhaps pause for a short while and then
continue on its upward path, leading to continued interest rate hikes by the
Fed. Accordingly, we had shortened the average maturity of the Series (which
had dipped as low as 27 days at year-end).
In the first few months of 1995, our outlook on the economy began to shift.
As the evidence mounted that the economy was indeed slowing, we thought it
less likely that the Fed would continue raising rates and that it might even
reverse trend. Consequently, we lengthened the average maturity to about 48
days at June 30, 1995 for the Series. At mid-year our outlook is generally
positive, although concerns remain that lower interest rates may spur
excessive growth in the economy later in the year.
OUTLOOK AND STRATEGY
We have probably seen the peak of the current interest rate cycle and we
think that yields will stabilize or edge downward from their June 30 levels.
Of course, this scenario could change if economic numbers in the latter part
of the year point toward resurgent inflation, and we will be looking for signs
of an economic rebound later in the year that would cause the Fed to keep
short rates at current levels for an extended period of time.
No matter the economic climate, however, the Series can form a key part of
an investor's portfolio. We manage the series conservatively, following strict
investment guidelines to seek high current income and stability.
*Money Market Funds are not insured or guaranteed by the U.S. government.
There can be no assurance that the Funds will maintain a stable net asset
value of $1.00 per share. MMDAs are insured and offer fixed rates for
specified periods.
33
<PAGE>
FOOTNOTES
** Standard & Poor's 500 Index (S&P 500) is an unmanaged index representing
the performance of 500 major companies, most of which are listed on the
New York Stock Exchange. The S&P 500 performance has not been adjusted for
ongoing management, distribution and operating expenses and sales charges
applicable to mutual fund investments.
*** Lehman Intermediate Government/Corporate Bond Index is an unmanaged index
of investment grade bonds issued by the U.S. government and U.S.
corporations having maturities between one and ten years. The Index
performance has not been adjusted for ongoing management, distribution and
operating expenses and sales charges applicable to mutual fund
investments.
(1) Lehman Brothers Intermediate Government Bond Index includes most
obligations of theU.S. Treasury, agencies and quasi-federal corporations
having maturities of 1 to 10 years. The Index performance has not been
adjusted for ongoing management, distribution and operating expenses and
sales charges applicable to mutual fund investments.
(2) Lehman Aggregate Bond Index includes most obligations of the U.S.
Treasury, agencies and quasi-federal corporations, most publicly issued
investment grade corporate bonds, and most bonds backed by mortgage pools
of GNMA, FNMA and FHLMC. The Index performance has not been adjusted for
ongoing management, distribution and operating expenses and sales charges
applicable to mutual fund investments.
(3) Russell 2000 Index consists of 2000 small market capitalization stocks
having an average market cap of $160 million. The Index performance has
not been adjusted for ongoing management, distribution and operating
expenses and sales charges applicable to mutual fund investments.
(4) EAFE-Morgan Stanley Capital International Europe, Australia, Far East
Index is an arithmetical average (weighted by market value) of the
performance (in U.S. dollars) of 1,036 companies representing the stock
markets of Europe, Australia, New Zealand and the Far East. The Index
performance has not been adjusted for ongoing management, distribution and
operating expenses and sale charges applicable to mutual fund investments.
(5) COL (Cost of Living) is based on the Consumer Price Index, a widely
recognized measure of the cost of goods and services in the United States,
calculated by the U.S. Bureau of Labor Statistics.
(6) Lipper Intermediate Investment Grade Debt Average is an average of the
total return performance (calculated on the basis of net asset value) of
funds with similar investment objectives as calculated by Lipper
Analytical Services, an independent mutual fund ranking service.
(7) Lipper Variable Growth Fund Average is an average of the total return
performance (calculated on the basis of net asset value) of funds with
similar investment objectives as calculated by Lipper Analytical Services,
an independent mutual fund ranking service.
(8) S&P/BARRA Growth Index is constructed by dividing stocks in the S&P 500
according to price-to-book ratios. The Growth Index contains stocks with
higher price-to-book ratios than the average ratio. The Index performance
has not been adjusted for ongoing management, distribution and operating
expenses and sales charges applicable to mutual fund investments.
34
<PAGE>
(9) S&P/BARRA Value Index is constructed by dividing stocks in the S&P 500
according to price-to-book ratios. The Value Index contains stocks with
lower price-to-book ratios than the average ratio. The Index performance
has not been adjusted for ongoing management, distribution and operating
expenses and sales charges applicable to mutual fund investments.
(10) Lipper Variable A-Rated Corporate Bond Fund Average is an average of the
total return performance (calculated on the basis of net asset value) of
funds with similar investment objectives as calculated by Lipper
Analytical Services, an independent mutual fund ranking service.
(11) Lipper Variable Flexible Funds Average is an average of the total return
performance (calculated on the basis of net asset value) of funds with
similar investment objectives as calculated by Lipper Analytical
Services, an independent mutual fund ranking service.
(12) Lipper Variable Growth and Income Fund Average is an average of the total
return performance (calculated on the basis of net asset value) of funds
with similar investment objectives as calculated by Lipper Analytical
Services, an independent mutual fund ranking service.
35
<PAGE>
New England Zenith Fund
(Small Cap Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-82.7% of Total Net Assets
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
AUTOMOBILE & RELATED-3.1%
3,300 Durakon Industries, Inc................................... $ 50,325
5,200 Elsag Bailey Process Auto................................. 143,000
4,020 Hahn Automotive Wholesale, Inc. .......................... 39,195
7,900 Masland Corp.............................................. 101,712
5,800 Walbro Corp............................................... 104,400
-----------
438,632
-----------
BANKS/SAVINGS & LOAN-0.6%
3,050 Commercial Federal Corp................................... 83,113
-----------
COMPUTERS & BUSINESS EQUIPMENT-4.0%
2,100 Analysts International Corp............................... 54,600
3,600 Ceridian Corp............................................. 132,750
1,950 Computer Horizons Corp. .................................. 31,200
7,000 Gilat Satellite Networks.................................. 159,250
700 Komag, Inc................................................ 36,400
5,600 Office Max, Inc. ......................................... 156,100
-----------
570,300
-----------
CHEMICALS-SPECIALTY-1.9%
1,900 Cytec Industries, Inc..................................... 77,662
2,700 Dallas Semiconductor Corp................................. 55,350
4,300 Intertape Polymer Group, Inc.............................. 101,050
1,700 Learonal, Inc. ........................................... 35,913
-----------
269,975
-----------
ELECTRICAL EQUIPMENT-1.1%
2,400 Gasonics International Corp. ............................. 68,400
4,500 Gelman Sciences, Inc...................................... 84,938
-----------
153,338
-----------
ELECTRONICS-6.3%
1,600 Altera Corp. ............................................. 69,200
3,000 American Electronic Components............................ 22,500
4,800 Amphenol Corp. ........................................... 139,800
4,700 Cable Design Technologies................................. 101,050
2,900 Cyrix Corp. .............................................. 69,962
2,900 Exar Corp. ............................................... 85,550
2,000 Lam Research Corp. ....................................... 128,000
1,600 Microcom, Inc............................................. 24,000
7,700 Numerex Corp. ............................................ 86,625
7,600 Union Switch & Signal..................................... 95,475
1,600 Zilog, Inc................................................ 79,800
-----------
901,962
-----------
</TABLE>
36
<PAGE>
New England Zenith Fund
(Small Cap Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
ENVIROMENTAL SERVICES-1.8%
1,100 Corrpro Companies, Inc.................................... $ 7,288
4,500 International Recovery Corp............................... 66,375
7,400 Thermo Fibertek, Inc...................................... 147,075
1,000 United Waste Systems, Inc................................. 36,000
-----------
256,738
-----------
FINANCIAL & BUSINESS SERVICES-8.0%
5,000 Aames Financial Corp...................................... 90,625
1,600 Advanta Corp.............................................. 60,400
3,500 Banta Corp................................................ 116,375
2,900 Bolt Bernek & Newman, Inc................................. 79,388
6,200 Chateau Properties, Inc................................... 129,425
6,200 Control Data Systems, Inc................................. 55,800
4,900 Eaton Vance Corp.......................................... 158,025
5,100 Horizon Outlet Centers.................................... 118,575
6,800 Imperial Credit Industries, Inc........................... 84,150
5,400 Liberty Property.......................................... 105,975
2,350 Money Store, Inc.......................................... 84,158
4,500 Spectrum Holobyte, Inc.................................... 64,406
-----------
1,147,302
-----------
FOOD AND BEVERAGE-0.9%
3,700 Universal Foods Corp...................................... 119,788
-----------
HEALTH CARE-(DRUGS & HEALTH CARE SERVICES)-11.0%
4,800 American Medical Response................................. 134,400
3,400 Community Health Systems, Inc............................. 115,175
2,200 Conmed Corp............................................... 54,450
7,800 Evergreen Healthcare, Inc................................. 96,525
4,200 Genesis Health Ventures, Inc.............................. 124,425
6,600 Health Images, Inc........................................ 40,425
5,900 Health South Corp......................................... 102,512
1,400 Invacare Corp............................................. 58,100
2,900 Lunar Corp................................................ 81,925
9,800 Medisense, Inc............................................ 189,875
3,000 Mentor Corp............................................... 83,625
4,500 Mylan Labs, Inc........................................... 138,375
11,800 Regency Health Services................................... 123,900
4,500 Sierra Health Services, Inc............................... 110,250
1,800 Sofamor/Danek Group, Inc.................................. 40,725
4,250 Summit Care Corp.......................................... 77,563
-----------
1,572,250
-----------
HOME PRODUCTS-1.6%
2,400 Aptargroup, Inc........................................... 77,100
1,700 Bush Boake Allen, Inc..................................... 51,638
6,150 US Can Corp............................................... 96,093
-----------
224,831
-----------
HOTELS & RESTAURANTS-0.3%
3,000 Supertel Hospitality...................................... 40,500
-----------
</TABLE>
See accompanying notes to financial statements.
37
<PAGE>
New England Zenith Fund
(Small Cap Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
HOUSING CONSTRUCTION & BUILDING MATERIALS-4.4%
5,200 Congoleum Corp............................................ $ 69,550
10,500 Crossman Communities, Inc. ............................... 107,625
9,900 Giant Cement Holdings, Inc. .............................. 121,275
13,400 Griffon Corp.............................................. 107,200
6,150 NCI Building Systems, Inc................................. 103,012
1,800 W.H. Brady Co............................................. 122,400
-----------
631,062
-----------
INSURANCE-3.9%
4,400 Allied Group.............................................. 125,400
4,900 Capital Resource Corp..................................... 127,400
4,500 Protective Life Corp...................................... 122,625
4,300 Reinsurance Group of America, Inc. ....................... 123,088
2,900 Triad Guaranty, Inc. ..................................... 60,900
-----------
559,413
-----------
LEISURE-2.5%
2,050 Carmike Cinemas, Inc...................................... 49,713
3,900 Harman International Industries, Inc. .................... 157,950
9,250 Monaco Coach Corp......................................... 148,000
1,000 Mountasia Entertainment International, Inc................ 6,750
-----------
362,413
-----------
MACHINERY-3.7%
10,200 Digital Biometrics, Inc................................... 109,650
2,500 Greenfield Industries, Inc. .............................. 72,500
3,600 Scotsman Industries, Inc.................................. 66,600
1,500 Thermo Volter Corp........................................ 21,563
8,900 Thermedics, Inc. ......................................... 173,550
2,800 Wolverine Tube, Inc....................................... 89,950
-----------
533,813
-----------
MEDIA & ENTERTAINMENT-1.4%
3,700 International Cabletel, Inc............................... 120,250
2,700 Sinclair Broadcast Group.................................. 75,600
-----------
195,850
-----------
METALS-5.3%
8,000 Castech Aluminum Group, Inc............................... 143,000
12,000 Cold Metal Products, Inc. ................................ 82,500
5,000 GreenBrier Companies, Inc................................. 65,625
7,200 Huntco, Inc. ............................................. 117,000
9,600 Johnstown America Industries, Inc......................... 99,600
3,100 Quanex Corp............................................... 76,725
6,100 Republic Engineered Steels................................ 47,275
3,000 Steel Technologies, Inc................................... 34,500
13,000 UNR Industries, Inc....................................... 95,875
-----------
762,100
-----------
</TABLE>
See accompanying notes to financial statements.
38
<PAGE>
New England Zenith Fund
(Small Cap Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
MINING-0.5%
1,800 Cleveland Cliffs, Inc..................................... $ 69,300
-----------
MOBILE HOMES-0.4%
2,400 Oakwood Homes Corp........................................ 61,500
-----------
OIL-INDEPENDENT PRODUCERS-2.7%
6,800 Belden & Blake Corp....................................... 110,500
6,300 Cross Timbers Oil Co...................................... 100,012
4,500 International Colin Energy................................ 23,625
9,100 Lomak Petroleum, Inc...................................... 69,388
4,300 Vintage Petroleum, Inc.................................... 80,625
-----------
384,150
-----------
OIL-SERVICES-2.9%
6,250 J. Ray McDermott.......................................... 138,280
8,700 Production Operators Corp................................. 274,050
-----------
412,330
-----------
PUBLISHING-0.7%
1,400 American Publishing Co.................................... 15,050
1,600 Houghton Mifflin Co....................................... 84,400
-----------
99,450
-----------
PAPER PRODUCTS-0.7%
5,800 Caraustar Industries, Inc................................. 104,400
-----------
RETAIL (FOOD & DRUG)-0.5%
5,500 National Convenience Stores............................... 69,438
-----------
RETAIL (SPECIALTY)-5.7%
7,200 Borders Group, Inc........................................ 103,500
10,150 Cato Corp................................................. 82,468
7,600 Haverty Furniture Companies, Inc.......................... 77,900
5,500 Inbrand Corp.............................................. 89,375
3,400 Jones Apparel Group....................................... 101,575
3,600 Kenneth Cole Productions, Inc............................. 120,150
4,800 Lillian Vernon Corp....................................... 88,200
4,400 Sunglass Hut International, Inc........................... 154,000
-----------
817,168
-----------
SOFTWARE-1.8%
4,200 Micronics Computers Inc................................... 17,325
1,100 Pyxis Corp................................................ 24,888
3,200 SAP (ADR) (b)............................................. 132,800
2,000 Sterling Software, Inc.................................... 77,000
-----------
252,013
-----------
</TABLE>
See accompanying notes to financial statements.
39
<PAGE>
New England Zenith Fund
(Small Cap Series)
Investments as of June 30, 1995 (Unaudited)
-------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
-------------------------------------------------------------------------------
<C> <S> <C>
TELECOMMUNICATIONS-4.8%
5,800 Centennial Cellular Corp. .......................... $ 97,150
7,200 Cole National Corp.................................. 74,700
6,800 Davel Communications Group.......................... 85,850
2,100 Highwaymaster Communications, Inc................... 32,025
11,600 Intelcom Group, Inc................................. 103,675
12,300 Intervoice, Inc..................................... 215,250
3,900 Pronet Inc.......................................... 79,950
-----------
688,600
-----------
TRUCKING & FREIGHT-0.2%
1,500 Mark VII, Inc....................................... 24,563
-----------
Total Common Stocks (Identified Cost $11,102,241)... 11,806,292
-----------
-------------------------------------------------------------------------------
Short-Term Investment-18.8%
<CAPTION>
FACE
AMOUNT
-------------------------------------------------------------------------------
<C> <S> <C>
$2,690,000 Repurchase Agreement with State Street Bank & Trust
Company dated 6/30/95 at 5.500% to be repurchased at
$2,691,233 on 7/3/95 collateralized by $2,825,000
U.S. Treasury Bonds 5.125% due 12/31/98 with a value
of $2,747,313....................................... 2,690,000
-----------
Total Short-Term Investment (Identified Cost
$2,690,000)......................................... 2,690,000
-----------
Total Investments-101.5% (Identified Cost
$13,792,241) (b).................................... 14,496,292
Cash and Receivables................................ 147,545
Liabilities......................................... (362,309)
-----------
Total Net Assets-100%............................... $14,281,528
===========
</TABLE>
(a) See Note 1A.
(b) An American Depository Receipt (ADR) is a certificate issued by a U.S.
bank representing the right to receive securities of the foreign issuer
described. The values of ADR's are significantly influenced by trading on
exchanges not located in the United States or Canada.
(c) Federal Tax Information: At June 30, 1995 the net unrealized appreciation
on investments based on cost of $13,792,241 for federal income tax
purposes was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value over tax cost................... $1,127,139
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value................... (423,088)
----------
Net unrealized appreciation........................................ $ 704,051
==========
</TABLE>
See accompanying notes to financial statements.
40
<PAGE>
New England Zenith Fund
(International Equity Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-92.2% of Total Net Assets
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
AUSTRALIA-3.1%
1,400 Amcor Ltd.................................................. $ 10,328
16,000 Ampolex Ltd................................................ 36,390
4,300 Broken Hill Property....................................... 52,932
1,100 CRA Ltd.................................................... 14,964
8,400 CSR Ltd.................................................... 26,269
6,800 Gio Australia.............................................. 12,662
2,000 Lend Lease Corp............................................ 25,558
7,900 Mayne Nickless Ltd......................................... 32,510
4,300 National Australia Bank.................................... 33,984
5,500 North Ltd.................................................. 13,291
13,200 Normandy Mining Ltd........................................ 16,324
13,300 Woolworths Ltd............................................. 27,602
----------
302,814
----------
FINLAND-1.2%
2,000 Nokia (AB) OY.............................................. 117,069
----------
FRANCE-10.0%
1,900 AXA........................................................ 102,612
300 Bazar Hot de Ville......................................... 35,248
3,200 Cap Gemini Sogeti.......................................... 98,943
1,525 Casino Guich Perr.......................................... 44,480
1,500 Credit Comm France......................................... 67,126
1,000 Danone (EX BSN)............................................ 168,202
1,000 Eaux (Cie General)......................................... 111,310
1,200 LaFarge.................................................... 93,303
400 Saint Louis................................................ 123,678
2,000 Sanofi..................................................... 110,692
----------
955,594
----------
GERMANY-4.6%
2,530 Dresdner Bank AG........................................... 73,180
200 Henkel KGAA................................................ 77,084
140 Hochtief AG................................................ 77,142
430 Mannesmann AG.............................................. 131,373
220 Veba Ag.................................................... 86,463
----------
445,242
----------
GREAT BRITAIN-20.0%
41,500 ASDA Group................................................. 62,379
12,100 BAT Industries............................................. 92,766
6,100 Bass....................................................... 58,361
6,450 British Aerospace.......................................... 57,760
14,000 British Petroleum.......................................... 100,318
4,500 British Telecommunication.................................. 28,058
22,700 British Steel.............................................. 62,012
12,900 British Sky Broadcast...................................... 56,323
18,500 Caradon PLC................................................ 69,445
12,100 Compass Group.............................................. 71,595
7,800 Courtaulds................................................. 55,643
</TABLE>
See accompanying notes to financial statements.
41
<PAGE>
New England Zenith Fund
(International Equity Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
GREAT BRITAIN-CONTINUED
18,000 Forte...................................................... $ 65,134
3,850 Glaxo Welcome.............................................. 47,245
28,900 Hanson..................................................... 100,899
12,520 J. Sainsbury............................................... 87,921
8,450 Kingfisher................................................. 57,055
9,580 LLoyds Bank................................................ 95,008
8,900 Marks & Spencer............................................ 57,191
6,700 National Power............................................. 47,477
15,900 Pillar Properties Inv. .................................... 41,223
2,500 RMC Group.................................................. 41,991
7,850 Reed International......................................... 110,252
9,100 Rexam...................................................... 69,838
3,340 Shell Transportation & Trading............................. 39,924
5,950 Siebe...................................................... 59,528
8,800 Smithkline Beecham......................................... 79,644
20,600 Telewest Communications.................................... 53,409
3,990 Thorn EmI.................................................. 82,631
7,400 United News & Media PLC.................................... 61,206
----------
1,912,236
----------
JAPAN-22.5%
9,000 Asahi Bank................................................. 96,101
4,000 Asahi Glass Co............................................. 44,174
3,000 Bank of Tokyo.............................................. 48,139
2,000 Daiwa Securities........................................... 21,096
4,000 Fuji Bank.................................................. 80,703
5,000 Fujitsu.................................................... 49,850
10,000 Hitachi.................................................... 99,699
3,000 Honda Motor Co. ........................................... 46,015
3,000 Isetan Co.................................................. 40,706
13,000 Ishikawajima Har........................................... 51,077
2,000 Kirin Beverage............................................. 33,272
3,000 Kirin Brewery Co........................................... 31,857
5,000 Makino Milling............................................. 29,025
5,000 Matsushita Electronic Industries........................... 77,871
4,000 Mitsubishi Bank............................................ 86,367
4,000 Mitsubishi Corp............................................ 45,543
8,000 Mitsubishi Chemical........................................ 34,263
3,000 Mitsubishi Heavy Industrial................................ 20,388
4,000 Mitsui & Co................................................ 31,243
9,000 MItsukoshi................................................. 64,350
4,000 Mitsui Fudosan Co.......................................... 45,826
3,000 Nippondenso Co............................................. 54,510
19,000 Nippon Steel Corp.......................................... 61,872
3,000 Nomura Securities.......................................... 52,386
9,000 Odakyu Electric Railway.................................... 65,412
4,000 Okumura Securities......................................... 37,992
4,000 Sakura Bank................................................ 41,767
4,000 Sanwa Bank................................................. 75,512
</TABLE>
See accompanying notes to financial statements.
42
<PAGE>
New England Zenith Fund
(International Equity Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
JAPAN-CONTINUED
5,000 Sharp Corp. ............................................... $ 66,073
2,000 Sony Corp. ................................................ 96,042
5,000 Sumitomo Bank.............................................. 86,720
8,000 Sumitomo Realty & Development.............................. 47,761
7,000 Sumitomo Rubber............................................ 52,032
3,000 Takashimaya Co............................................. 40,352
7,000 Tokai Bank................................................. 77,636
2,000 Tokyo Electric Power....................................... 61,353
5,000 Yakult Honsha Co. ......................................... 72,562
4,000 Yamanouchi Pharmaceutical.................................. 90,142
----------
2,157,689
----------
MALAYSIA-5.2%
8,000 Genting Berhad............................................. 79,081
25,000 Land & General BHD......................................... 83,573
11,000 Malayan Bank BHD........................................... 87,080
28,000 Sime Darby BHD............................................. 78,097
11,000 Telekom Malaysia........................................... 83,470
21,000 Tenaga Nasional............................................ 85,705
----------
497,006
----------
NETHERLAND-5.5%
1,200 Akzo Nobel NV.............................................. 143,427
2,100 Fortis Amev NV............................................. 114,521
110 Hunter Douglas NV.......................................... 4,792
3,600 N.V. Koninklijke Sphinx Gus................................ 128,712
3,000 Philips Electronic......................................... 127,009
400 Vendex International....................................... 10,584
----------
529,045
----------
NORWAY-2.7%
36,100 Christiania Bank........................................... 83,783
1,800 Norsk Hydro AS............................................. 75,517
3,100 Norske Skogsindust......................................... 103,141
----------
262,441
----------
SINGAPORE-3.4%
12,000 City Developments.......................................... 73,417
8,000 Dev Bank Singapore......................................... 91,020
9,400 Keppel Corp................................................ 76,680
8,800 United Overseas Bank....................................... 83,120
----------
324,237
----------
SPAIN-6.0%
2,100 Acerinox SA................................................ 257,808
2,100 BCO Santander SA........................................... 82,786
1,300 Centros Com Pryca.......................................... 24,149
3,300 Empresa Nacl Celul......................................... 83,913
1,050 Gas Natural Sdg SA......................................... 125,350
----------
574,006
----------
</TABLE>
See accompanying notes to financial statements.
43
<PAGE>
New England Zenith Fund
(International Equity Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
-------------------------------------------------------------------------------
<C> <S> <C>
SWITZERLAND-6.4%
255 Alusuisse Lonza HD................................. $ 159,887
655 CS Holdings........................................ 60,011
730 Holderbank Fin..................................... 983
175 Holderbank FN Glarus............................... 143,617
20 Roche Holdings AG.................................. 128,875
97 Zurich Versicherun................................. 121,892
----------
615,265
----------
THAILAND-1.4%
3,100 Bangkok............................................ 34,158
500 Siam Cement Co. ................................... 31,922
10,400 Telecomasia........................................ 36,654
3,600 Thi Farmers Bank................................... 34,418
----------
137,152
----------
Total Common Stocks (Identified Cost $8,684,409)... 8,829,796
----------
-------------------------------------------------------------------------------
Short-Term Investment-8.5%
<CAPTION>
FACE
AMOUNT
-------------------------------------------------------------------------------
<C> <S> <C> <C>
$815,000 Repurchase agreement with State Street Bank & Trust
Company dated 6/30/95 at 5.500% to be repurchased
at $815,374 on 7/03/95 collateralized by $830,000
U.S. Treasury Notes
4.375%, due 8/15/96 with a value of $831,351....... 815,000
----------
Total Short-Term Investment (Identified Cost
$815,000)......................................... 815,000
----------
Total Investments-100% (Identified Cost
$9,499,409)(b).................................... 9,644,796
Cash and Receivables (c)........................... 809,935
Liabilities........................................ (875,124)
----------
Total Net Assets-100%.............................. $9,579,607
==========
(a)See Note 1A.
(b)Federal Tax Information: At June 30, 1995 the net unrealized appreciation on
investments based on cost
of $9,499,409 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value
over tax cost............................................ $ 419,382
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost
over value............................................... (273,995)
----------
Net unrealized appreciation.................................. $ 145,387
==========
</TABLE>
(c)Including deposits in foreign denominated currencies with a value of
$243,519 and a cost of $240,151.
See accompanying notes to financial statements.
44
<PAGE>
New England Zenith Fund
(Equity Growth Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-94.9% of Total Net Assets
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
APPAREL-1.5%
10,000 Tommy Hilfiger Corporation.................................. $ 280,000
----------
BIOTECHNOLOGY-1.7%
4,000 Amgen Corp. (c)............................................. 321,750
----------
BUILDING & CONSTRUCTION-1.4%
9,200 Pulte Corp.................................................. 257,600
----------
CASINOS & RESORTS-1.4%
5,000 Circus Circus Enterprises, Inc.............................. 176,250
2,800 Mirage Resorts, Inc......................................... 85,750
----------
262,000
----------
COMMUNICATIONS-11.4%
2,700 Airtouch Communications, Inc................................ 76,950
3,000 Century Telephone Enterprises, Inc.......................... 85,125
3,500 DSC Communications Corp..................................... 162,750
5,000 Glenayre Technologies, Inc.................................. 255,000
8,000 Motorola, Inc............................................... 537,000
1,400 Telephone & Data Systems, Inc............................... 50,925
5,400 Tellabs, Inc................................................ 259,875
4,000 US Robotics, Inc............................................ 436,000
4,000 Viacom Inc.-Class B (c)..................................... 185,500
2,700 Vodafone Group PLC.......................................... 102,263
----------
2,151,388
----------
COMPUTER SOFTWARE-2.2%
6,000 Informix Corporation........................................ 152,250
3,000 Microsoft Corp. (c)......................................... 271,125
----------
423,375
----------
COMPUTER TECHNOLOGY-1.4%
6,500 Silicon Graphics, Inc....................................... 259,187
----------
COMPUTER RELATED & BUSINESS EQUIPMENT-8.9%
10,500 Bay Networks, Inc........................................... 434,438
4,000 Cisco Systems, Inc. (c)..................................... 202,250
1,875 Dell Computer Corp.......................................... 112,734
5,300 First Data Corp............................................. 301,438
6,000 General Instrument Corp..................................... 230,250
3,100 International Business Machines Corp........................ 297,600
2,400 Seagate Technology.......................................... 94,200
----------
1,672,910
----------
CONSUMER PRODUCTS-2.3%
6,000 Gillette Company............................................ 267,750
5,800 Nabisco Holdings Corp. Class A.............................. 156,600
----------
424,350
----------
DEFENSE-3.0%
3,000 Lockheed Martin Corp........................................ 189,375
7,200 Loral Corp.................................................. 372,600
----------
561,975
----------
</TABLE>
See accompanying notes to financial statements.
45
<PAGE>
New England Zenith Fund
(Equity Growth Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
ELECTRONICS-1.5%
3,800 Hewlett-Packard Company..................................... $ 283,100
----------
FINANCIAL SERVICES-3.5%
4,000 First Financial Management Corp............................. 342,000
4,500 Lehman Brothers Holdings, Inc............................... 98,437
4,000 Merrill Lynch & Co., Inc.................................... 210,000
----------
650,437
----------
FOODS & BEVERAGES-1.0%
3,000 Coca-Cola Company........................................... 191,250
----------
FREIGHT-0.4%
3,000 Landstar Systems, Inc. ..................................... 77,250
----------
HEALTH CARE-9.9%
8,400 Apria Health Care Group, Inc................................ 237,300
7,000 Cardinal Health, Inc........................................ 330,750
1,400 Columbia/HCA Healthcare Corp................................ 60,550
2,300 Health Management Associates, Inc........................... 67,275
9,600 Merck & Co., Inc............................................ 470,400
20,000 Occusystems, Inc............................................ 342,500
8,000 R.P. Scherer Corp........................................... 338,000
500 United Healthcare Corp. .................................... 20,688
----------
1,867,463
----------
HEALTH CARE-ADMINISTRATIVE SERVICES-1.5%
7,800 Healthsource, Inc........................................... 273,000
----------
HEALTH MAINTENANCE SERVICES-1.0%
4,000 Oxford Health Plans, Inc.................................... 189,000
----------
LEISURE & ENTERTAINMENT-1.8%
3,500 Carnival Corporation Class A................................ 81,813
4,500 Walt Disney Co.............................................. 250,312
----------
332,125
----------
MACHINERY-0.8%
2,400 Caterpillar, Inc............................................ 154,200
----------
MANUFACTURING-2.0%
4,100 Integrated Device Tech., Inc................................ 189,625
3,000 Lam Research Corp........................................... 192,000
----------
381,625
----------
MEDICAL SERVICES-1.3%
3,200 Medtronic, Inc.............................................. 246,800
----------
MISCELLANEOUS-1.5%
7,000 Diamond Multimedia Systems, Inc............................. 143,500
4,000 Loewen Group, Inc. ......................................... 142,500
----------
286,000
----------
PHARMACEUTICALS-3.3%
4,100 Eli Lilly & Company......................................... 321,850
1,200 Forest Laboratories, Inc. Class A........................... 53,250
2,600 Pfizer, Inc................................................. 240,175
----------
615,275
----------
</TABLE>
See accompanying notes to financial statements.
46
<PAGE>
New England Zenith Fund
(Equity Growth Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
RESTAURANTS & LODGING-3.8%
7,150 Cracker Barrel Old Country Store........................... $ 147,469
13,000 Lone Star Steakhouse Saloon................................ 394,061
6,000 Outback Steakhouse, Inc.................................... 173,250
-----------
714,780
-----------
RETAILING-9.0%
8,000 Circuit City Stores, Inc................................... 253,000
7,000 Comp USA, Inc.............................................. 232,750
6,400 Creative Computers, Inc.................................... 169,600
3,875 Dollar General Corp........................................ 122,547
5,000 Office Depot, Inc.......................................... 140,625
14,000 Officemax, Inc............................................. 390,250
3,900 Tandy Corporation.......................................... 202,313
5,000 Viking Office Products, Inc................................ 183,125
-----------
1,694,210
-----------
SEMI-CONDUCTORS-14.8%
3,550 Adaptec, Inc............................................... 131,350
13,000 Altera Corp................................................ 562,250
10,100 Intel Corp................................................. 639,456
10,000 LSI Logic Corp............................................. 391,250
2,500 Linear Technology Corporation.............................. 165,000
10,000 Maxim Integrated Products, Inc............................. 510,000
4,000 Xilinx, Inc................................................ 376,000
-----------
2,775,306
-----------
SEMI-CONDUCTORS-CAPITAL EQUIPMENT-2.6%
5,600 Applied Materials, Inc..................................... 485,100
-----------
Total Common Stocks (Identified Cost $15,764,662).......... 17,831,456
-----------
--------------------------------------------------------------------------------
Preferred Stock-0.6%
--------------------------------------------------------------------------------
COMMUNICATIONS-0.6%
1,800 Nokia Corp. 1/2% Cum. Pfd.................................. 107,325
-----------
Total Preferred Stock (Identified Cost $69,993)............ 107,325
-----------
</TABLE>
See accompanying notes to financial statements.
47
<PAGE>
New England Zenith Fund
(Equity Growth Series)
Investments as of June 30, 1995 (Unaudited)
-------------------------------------------------------------------------------
Short-Term Investment-7.7%
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE (a)
-------------------------------------------------------------------------------
<C> <S> <C>
$1,447,983 Seven Seas U.S. Government Money Market Fund......... $ 1,447,983
-----------
Total Short-Term Investment (Identified cost
$1,447,983)......................................... 1,447,983
-----------
Total Investments-103.2% (Identified cost
$17,282,637) (b).................................... 19,386,764
Cash & Receivables................................... 89,580
Liabilities.......................................... (686,860)
-----------
Total Net Assets-100%................................ $18,789,484
===========
(a)See Note 1A.
(b)Federal Tax Information: At June 30, 1995 the net unrealized appreciation
on investments
based on cost of $17,282,637 for federal income tax purposes was as
follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value over
tax cost..................................................... $ 2,278,381
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost
over value................................................... (174,254)
-----------
Net unrealized appreciation...................................... $ 2,104,127
===========
</TABLE>
(c)Non-income producing security.
(d) An American Depository Receipt (ADR) is a certificate issued by a U.S.
bank representing the right to receive securities of the foreign issuer
described. The values of ADRs are significantly influenced by trading on
exchanges not located in the United States or Canada.
See accompanying notes to financial statements.
48
<PAGE>
New England Zenith Fund
(Capital Growth Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-99.7% of Total Net Assets
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
AEROSPACE-4.9%
661,000 Boeing Company........................................... $ 41,395,125
------------
AIRLINES-10.8%
600,000 AMR Corporation (c)...................................... 44,775,000
630,000 Delta Air Lines, Inc..................................... 46,462,500
------------
91,237,500
------------
ALUMINUM-5.6%
942,000 Aluminum Company of America.............................. 47,217,750
------------
AUTO & RELATED-2.4%
465,000 General Motors Corp. .................................... 20,227,500
------------
BANKS-MONEY CENTER-13.3%
265,000 BankAmerica Corp......................................... 13,945,625
930,000 Chemical Banking Corporation............................. 43,942,500
936,000 Citicorp................................................. 54,171,000
------------
112,059,125
------------
BANKS-REGIONAL-4.7%
988,000 Bank of New York, Inc.................................... 39,890,500
------------
BROKERS/INVESTMENT SERVICES-2.0%
325,000 Merrill Lynch & Co., Inc. ............................... 17,062,500
------------
CHEMICALS-2.2%
330,000 Air Products & Chemicals, Inc............................ 18,397,500
------------
COMPUTER SOFTWARE & SERVICES-5.1%
480,000 Microsoft Corporation (c)................................ 43,380,000
------------
ELECTRONIC & COMMUNICATION EQUIPMENT-2.5%
360,000 Nokia Corp............................................... 21,465,000
------------
ELECTRONIC COMPONENTS-12.9%
836,400 Intel Corporation........................................ 52,954,575
659,000 Micron Technology, Inc................................... 36,162,625
150,500 Texas Instruments, Incorporated.......................... 20,148,188
------------
109,265,388
------------
INSURANCE-5.0%
370,900 American International Group, Inc. ...................... 42,282,600
------------
LEISURE-4.6%
645,000 Eastman Kodak Company.................................... 39,103,125
------------
MACHINERY-5.1%
504,000 Deere & Company.......................................... 43,155,000
------------
MICRO-COMPUTERS-6.2%
700,000 Hewlett Packard Company.................................. 52,150,000
------------
PAPER-5.3%
853,000 Champion International Corporation....................... 44,462,625
------------
</TABLE>
See accompanying notes to financial statements.
49
<PAGE>
New England Zenith Fund
(Capital Growth Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE (a)
-------------------------------------------------------------------------------
<C> <S> <C>
FOOD-RETAILERS/WHOLESALERS-4.9%
$559,000 Philip Morris Companies, Inc.......................... $ 41,575,625
------------
MISCELLANEOUS-2.2%
238,000 United Technologies Corporation....................... 18,593,750
------------
Total Common Stocks (Identified Cost $678,078,298).... 842,920,613
------------
Total Investments-99.7% (Identified Cost
$678,078,298)........................................ 842,920,613
Cash and Receivables.................................. 32,529,025
Liabilities........................................... (30,482,734)
------------
Total Net Assets-100%................................. $844,966,904
============
</TABLE>
(a)See Note 1A.
(b)Federal Tax Information: At June 30, 1995 the net unrealized appreciation on
investments based on cost of $678,078,298 for federal income tax purposes
was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value
over tax cost................................................ $166,077,716
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax
cost over value.............................................. (1,235,401)
------------
Net unrealized appreciation................................... $164,842,315
============
</TABLE>
(c)Non-income producing security.
See accompanying notes to financial statements.
50
<PAGE>
New England Zenith Fund
(Avanti Growth Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-95.2% of Total Net Assets
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
AUTO & RELATED-0.9%
5,300 Bandag, Inc. .............................................. $ 331,250
-----------
BANKS-SAVINGS & LOAN-1.8%
16,600 First Bank Systems, Inc.................................... 680,600
-----------
BEVERAGES-3.5%
14,200 Coca Cola Co............................................... 905,250
8,500 PepsiCo, Inc. ............................................. 387,813
-----------
1,293,063
-----------
BUSINESS SERVICES-7.3%
13,700 Cintas Corp................................................ 486,350
12,200 First Data Corp. .......................................... 693,875
24,750 Fiserv, Inc................................................ 696,094
13,000 Medaphis Corp.............................................. 282,750
15,000 Paychex, Inc. ............................................. 543,750
-----------
2,702,819
-----------
CHEMICALS MAJOR-1.9%
12,700 Air Products & Chemicals, Inc.............................. 708,025
-----------
COMPUTER SOFTWARE & SERVICES-9.5%
9,700 Autodesk, Inc.............................................. 417,100
23,000 Informix Corp.............................................. 583,625
11,200 Microsoft Corp. (c)........................................ 1,012,200
10,000 Parametric Technology Corp................................. 497,500
26,000 Oracle Systems (c)......................................... 1,004,250
-----------
3,514,675
-----------
ELECTRICAL EQUIPMENT-1.6%
10,400 General Electric........................................... 586,300
-----------
ELECTRONIC COMPONENTS-9.0%
7,500 Intel Corp................................................. 474,844
16,400 Micron Technology, Inc..................................... 899,950
13,000 Motorola, Inc.............................................. 872,625
16,700 Premier Industrial Corp.................................... 394,538
8,000 Solectron Corp............................................. 273,000
3,000 Texas Instruments, Inc..................................... 401,625
-----------
3,316,582
-----------
FINANCIAL SERVICES-MISCELLANEOUS-2.0%
21,500 MBNA Corp.................................................. 725,625
-----------
FOOD-PACKAGED & MISCELLANEOUS-2.4%
10,500 Dreyers Grand Ice Cream.................................... 384,562
13,700 Starbucks Corp............................................. 488,063
-----------
872,625
-----------
HEALTH CARE-DRUGS-3.8%
8,200 Amgen, Inc. (c)............................................ 659,588
5,500 Johnson & Johnson.......................................... 371,937
40,000 Oncor, Inc................................................. 242,500
10,000 Somatogen, Inc............................................. 135,000
-----------
1,409,025
-----------
</TABLE>
See accompanying notes to financial statements.
51
<PAGE>
New England Zenith Fund
(Avanti Growth Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
HEALTH CARE-MED TECH-3.0%
15,000 Biomet, Inc. (c)........................................... $ 232,500
7,000 Medtronic, Inc............................................. 539,875
21,000 Ventritex, Inc............................................. 354,375
-----------
1,126,750
-----------
HEALTH CARE SERVICES-3.6%
16,300 Columbia/HCA Healthcare Corp............................... 704,975
13,800 Healthsouth Corp........................................... 239,775
8,000 Steris Corp................................................ 388,000
-----------
1,332,750
-----------
HOME PRODUCTS-4.5%
12,400 Duracell International, Inc................................ 536,300
17,200 Gillette Co................................................ 767,550
5,000 Proctor & Gamble........................................... 359,375
-----------
1,663,225
-----------
HOTELS & RESTAURANTS-5.1%
20,500 Circus Circus Enterprises.................................. 722,625
20,700 McDonalds Corp............................................. 809,887
14,900 Primadonna Resorts, Inc.................................... 357,600
-----------
1,890,112
-----------
HOUSING & BUILDING MATERIALS-2.1%
19,500 Home Depot, Inc............................................ 792,187
-----------
INSURANCE-4.6%
6,000 American International Group, Inc.......................... 684,000
20,500 MGIC Investment Corp....................................... 960,937
-----------
1,644,937
-----------
MACHINERY-1.3%
7,500 Caterpillar, Inc........................................... 481,875
-----------
MEDIA & ENTERTAINMENT-3.2%
6,000 Broderbund Software, Inc................................... 382,500
17,400 Viacom, Inc., Class B (c).................................. 806,925
-----------
1,189,425
-----------
METALS-0.6%
4,200 Nucor Corp................................................. 224,700
-----------
NATURAL GAS-PIPELINES-1.9%
19,900 Enron Corp................................................. 698,988
-----------
OFFICE EQUIPMENT-5.1%
12,200 Cisco Systems, Inc. (c).................................... 616,862
23,500 EMC Corp................................................... 569,875
17,400 Silicon Graphics, Inc. (c)................................. 693,825
-----------
1,880,562
-----------
</TABLE>
See accompanying notes to financial statements.
52
<PAGE>
New England Zenith Fund
(Avanti Growth Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
-------------------------------------------------------------------------------
<C> <S> <C>
OIL-INDEPENDENT PRODUCERS-2.3%
19,300 Anadarko Petroleum Corp.............................. $ 832,313
-----------
OIL-MAJOR INTEGRATED-1.6%
18,000 Phillips Petroleum Co................................ 600,750
-----------
RETAIL-GENERAL MERCHANDISE-1.3%
11,200 Nordstrom, Inc....................................... 463,400
-----------
RETAIL-SPECIALTY-5.2%
10,700 CUC International, Inc. ............................. 449,400
12,000 Gymboree Corp........................................ 348,750
21,300 Office Depot, Inc.................................... 599,062
19,250 PetsMart, Inc........................................ 553,438
-----------
1,950,650
-----------
TELECOMMUNICATIONS-3.8%
23,500 General Instrument Corp.............................. 901,812
15,000 Qualcomm, Inc........................................ 518,438
-----------
1,420,250
-----------
TOBACCO-2.3%
11,500 Philip Morris Cos., Inc. ............................ 855,311
-----------
Total Common Stocks (Identified Cost $28,863,412).... 35,188,774
-----------
-------------------------------------------------------------------------------
Short-Term Investment-5.1%
<CAPTION>
FACE
AMOUNT
-------------------------------------------------------------------------------
<C> <S> <C>
$1,868,787 Associates Corp. of North America 6% 7/3/95.......... 1,868,787
-----------
Total Short-Term Investment (Identified Cost
$1,868,787)......................................... 1,868,787
-----------
Total Investments-100.3% (Identified Cost
$30,732,198) (b).................................... 37,057,561
Cash and Receivables................................. 93,847
Liabilities.......................................... (208,101)
-----------
Total Net Assets-100%................................ $36,943,307
===========
</TABLE>
(a) See Note 1A
(b) Federal Tax Information: At June 30, 1995 the net unrealized appreciation
on investments based on cost of $30,732,198 for federal income tax purposes
was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value
over tax cost.................................................. $6,683,792
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax
cost over value................................................ (358,429)
----------
Net unrealized appreciation..................................... $6,325,363
==========
</TABLE>
As of December 31, 1994, the Series had a net tax basis capital
loss carryforward as follows: Expiring December 31, 2002 $429,848
(c) Non-income producing security.
See accompanying notes to financial statements.
53
<PAGE>
New England Zenith Fund
(Venture Value Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-93.9% of Total Net Assets
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
AGRICULTURE-1.9%
17,050 Archer-Daniels-Midland Co. ................................ $ 317,556
-----------
BANKS AND SAVINGS & LOANS-11.3%
5,300 Banc One Corp. ............................................ 170,925
3,400 Barnett Banks, Inc. ....................................... 174,250
9,600 First Bank Systems, Inc. .................................. 393,600
100 First Union Corp. ......................................... 4,525
6,300 Golden West Financial Corp. ............................... 296,887
2,200 Republic New York Corp. ................................... 123,200
7,800 State Street Boston Corp. ................................. 287,625
2,600 Wells Fargo & Co. ......................................... 468,650
-----------
1,919,662
-----------
CHEMICALS-0.1%
100 Dow Chemical Co. .......................................... 7,187
-----------
COMPUTER PRODUCTS AND SERVICES-12.8%
6,200 Cirrus Logic, Inc. ........................................ 388,662
6,200 Hewlett-Packard Co. ....................................... 461,900
12,300 Intel Corp. ............................................... 778,744
4,000 Texas Instruments, Inc. ................................... 535,500
-----------
2,164,806
-----------
CONSUMER PRODUCTS-7.7%
300 American Brands, Inc. ..................................... 11,925
7,400 Coca-Cola Company.......................................... 471,750
400 General Electric Co. ...................................... 22,550
7,700 General Motors Corp. ...................................... 360,937
3,900 Gillette Co. .............................................. 174,037
300 Maytag Corp. .............................................. 4,800
4,500 Nestle SA (ADR)............................................ 234,157
400 Philip Morris Cos., Inc. .................................. 29,750
-----------
1,309,906
-----------
ENERGY-4.8%
5,900 Amerada Hess Corp. ........................................ 288,362
100 Amoco Corp. ............................................... 6,663
200 Atlantic Richfield Co. .................................... 21,950
6,700 Burlington Resources, Inc. ................................ 247,062
500 Chevron Corp. ............................................. 23,313
3,100 Energy Ventures, Inc. ..................................... 55,800
900 Exxon Corp. ............................................... 63,563
100 Mobil Corp. ............................................... 9,600
1,600 Schlumberger, Ltd. ........................................ 99,400
100 Sonat, Inc. ............................................... 3,050
-----------
818,763
-----------
ENTERTAINMENT-0.4%
1,100 Walt Disney Company........................................ 61,187
-----------
FINANCIAL SERVICES-12.7%
13,300 American Express Co. ...................................... 467,163
1,700 Dean Witter, Discover & Co. ............................... 79,900
4,500 Federal Home Loan Mortgage Corporation..................... 309,375
</TABLE>
54
<PAGE>
New England Zenith Fund
(Venture Value Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES-CONTINUED
5,300 J.P. Morgan & Co., Inc. ................................... $ 371,662
5,800 Morgan Stanley Group, Inc. ................................ 469,800
9,000 SunAmerica, Inc. .......................................... 459,000
-----------
2,156,900
-----------
FOOD-0.6%
4,600 Tyson Foods Inc. (Del.).................................... 106,375
-----------
INSURANCE-17.1%
5,900 Allstate Corp. ............................................ 174,788
500 AMBAC, Inc. ............................................... 20,063
2,600 American International Group, Inc. ........................ 296,400
5,200 Chubb Corp. ............................................... 416,650
8,700 Equitable Companies, Inc. ................................. 181,612
3,200 General Re Corp. .......................................... 428,400
6,100 NAC Re Corp. .............................................. 189,862
2,700 National Re Holdings Corp. ................................ 90,450
5,000 Progressive Corp. ......................................... 191,875
2,400 Transatlantic Holdings Inc. ............................... 156,000
10,200 The Travelers Group, Inc. ................................. 446,250
9,300 20th Century Industries, Inc. ............................. 116,250
5,600 W.R. Berkley Corp. ........................................ 198,800
-----------
2,907,400
-----------
METALS AND MINERALS-0.3%
500 Alumax, Inc. .............................................. 15,563
700 Reynolds Metals Co. ....................................... 36,225
-----------
51,788
-----------
NEWSPAPER, TELEVISION AND RADIO-5.2%
5,700 Gannett Co., Inc. ......................................... 309,225
18,300 News Corp. Ltd. ADR (d).................................... 366,000
3,300 Tribune Co. ............................................... 202,538
-----------
877,763
-----------
PAPER-2.5%
100 International Paper Co. ................................... 8,575
2,800 Mead Corp. ................................................ 166,250
4,200 Union Camp Corp. .......................................... 243,075
-----------
417,900
-----------
PHARMACEUTICAL AND HEALTH CARE-4.3%
100 American Home Products Corp. .............................. 7,738
100 Bristol-Myers Squibb Co. .................................. 6,813
2,000 Johnson & Johnson.......................................... 135,250
1,400 Merck & Co., Inc. ......................................... 68,600
3,400 Pfizer, Inc. .............................................. 314,075
2,200 Warner-Lambert Co. ........................................ 190,025
-----------
722,501
-----------
</TABLE>
See accompanying notes to financial statements.
55
<PAGE>
New England Zenith Fund
(Venture Value Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
-------------------------------------------------------------------------------
<C> <S> <C>
REAL ESTATE-3.7%
3,400 Federal Realty Investment Trust......................... $ 73,525
18,500 Host Marriott Corp. .................................... 196,562
500 Kimco Realty Corp. ..................................... 19,000
1,900 Mid-Atlantic Realty Trust............................... 16,625
2,200 Saul Centers, Inc. ..................................... 35,200
3,600 United Dominion Realty Trust, Inc. ..................... 53,100
5,400 Vornado Realty Trust.................................... 188,325
1,100 Weingarten Realty, Inc. ................................ 41,525
-----------
623,862
-----------
RETAIL-4.6%
9,500 Federated Department Stores, Inc. ...................... 244,625
3,700 Harcourt General, Inc. ................................. 157,250
2,900 Sears Roebuck & Co. .................................... 173,637
3,900 Tandy Corp. ............................................ 202,313
-----------
777,825
-----------
TELECOMMUNICATIONS-2.8%
5,900 Airtouch Communications................................. 168,150
1,100 AT & T Corp............................................. 58,438
1,600 Cellular Communications, Inc............................ 72,800
7,800 MCI Communications Corp................................. 171,600
100 SBC Communications, Inc................................. 4,763
-----------
475,751
-----------
TRANSPORTATION-1.3%
2,700 Illinois Central Corp. ................................. 93,150
2,100 Union Pacific Corp. .................................... 116,288
-----------
209,438
-----------
UTILITIES-0.0%
100 Duke Power Co........................................... 4,150
-----------
Total Common Stocks (Identified Cost $14,228,826)....... 15,930,720
-----------
-------------------------------------------------------------------------------
Preferred Stocks-2.6%
-------------------------------------------------------------------------------
500 Banc One Corp., $3.50, Ser. C Conv. Pfd. ............... 29,125
2,600 Citicorp, $5.375, Ser. 13 Conv. Pfd..................... 413,400
-----------
Total Preferred Stocks (Identified Cost $357,284)....... 442,525
-----------
-------------------------------------------------------------------------------
Short-Term Investment-4.5%
<CAPTION>
FACE
AMOUNT
-------------------------------------------------------------------------------
<C> <S> <C>
765,000 Repurchase Agreement with State Street Bank & Trust Co.
dated 6/30/95 at 5.800% to be
repurchased at $765,370 on 7/03/95 collateralized by
$760,000 U.S. Treasury Notes 6.875%
due 3/31/97 with a value of $784,985.................... 765,000
-----------
Total Short-Term Investment (Identified Cost $765,000).. 765,000
-----------
</TABLE>
See accompanying notes to financial statements.
56
<PAGE>
New England Zenith Fund
(Venture Value Series)
Investments as of June 30, 1995 (Unaudited)
-------------------------------------------------------------------------------
<TABLE>
<C> <S> <C>
Total Investments-101.1% (Identified Cost $15,351,109)(b)... $17,138,245
Cash & Receivables.......................................... 245,737
Liabilities................................................. (427,157)
-----------
Total Net Assets-100%....................................... $16,956,825
===========
</TABLE>
(a) See Note 1A.
(b) Federal Tax Information: At June 30, 1995 the net unrealized appreciation
on investments based on cost of $15,351,109 for federal income tax
purposes was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value over tax cost................... $1,835,788
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value................... (48,652)
---------
Net unrealized appreciation........................................ $1,787,136
==========
</TABLE>
(c) Non-income producing security.
(d) An American Depository Receipt (ADR) is a certificate issued by a U.S.
bank representing the right to receive securities of the foreign issuer
described. The values of ADRs are significantly influenced by trading on
exchanges not located in the United States or Canada.
See accompanying notes to financial statements.
57
<PAGE>
New England Zenith Fund
(Value Growth Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-96.8% of Total Net Assets
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
AEROSPACE-3.4%
6,200 Lockheed Martin Corp..................................... $ 391,375
9,900 McDonnell Douglas Corp................................... 759,825
------------
1,151,200
------------
AGRICULTURE & FOOD-3.5%
16,100 George A. Hormel & Co.................................... 420,612
11,200 IBP, Inc. ............................................... 487,200
2,200 Unilever NV.............................................. 286,275
------------
1,194,087
------------
AIR-1.7%
6,900 AMR Corp. (c)............................................ 514,912
1,900 Northwest Airlines Corp.................................. 67,212
------------
582,124
------------
APPAREL-1.3%
5,200 Nike, Inc................................................ 436,800
------------
BANKS-6.9%
11,600 Bank of Boston Corp...................................... 435,000
18,600 Bank of New York, Inc.................................... 750,975
5,100 Chemical Banking Corp.................................... 240,975
6,200 Citicorp................................................. 358,825
1,300 Suntrust Banks, Inc...................................... 75,725
11,700 Union Bank of San Francisco.............................. 494,325
------------
2,355,825
------------
BUSINESS MACHINES-3.4%
4,200 Dell Computer Corp....................................... 252,525
10,400 Hewlett Packard Co. ..................................... 774,800
3,100 Seagate Technology....................................... 121,675
------------
1,149,000
------------
CHEMICALS-2.2%
14,300 Cabot Corp............................................... 754,325
------------
CONTAINERS-0.2%
2,100 Ball Corp. .............................................. 73,238
------------
COSMETICS-3.8%
8,900 Johnson & Johnson........................................ 601,863
9,800 Procter & Gamble Co...................................... 704,375
------------
1,306,238
------------
DRUGS & MEDICINE-3.4%
9,500 Abbott Labs.............................................. 384,750
3,100 Amgen, Inc. (c).......................................... 249,356
2,100 Bergen Brunswig Corp. ................................... 48,037
9,500 Merck & Co., Inc......................................... 465,500
------------
1,147,643
------------
</TABLE>
See accompanying notes to financial statements.
58
<PAGE>
New England Zenith Fund
(Value Growth Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
ELECTRIC UTILITIES-3.4%
15,200 Consolidated Edison Co. of New York...................... $ 448,400
6,500 Houston Industries, Inc. ................................ 273,812
20,500 Rochester Gas & Electric Corp............................ 435,625
------------
1,157,837
------------
ELECTRONICS-9.5%
7,700 ADC Telecomunications, Inc............................... 275,275
7,300 Advanced Micro Devices (c)............................... 265,538
12,350 Andrew Corp. (c)......................................... 714,756
8,400 Intel Corp............................................... 531,825
1,800 KLA Instruments Corp..................................... 139,050
700 Novellus Systems, Inc.................................... 47,425
5,900 Raytheon Co.............................................. 457,988
12,000 Tellabs, Inc. (c)........................................ 577,500
6,510 Vishay Intertechnology, Inc.............................. 235,174
------------
3,244,531
------------
FINANCE-2.8%
12,000 Beneficial Corp.......................................... 528,000
500 Federal Home Loan Mortgage Corp.......................... 34,375
2,700 Household International, Inc............................. 133,650
5,000 Merrill Lynch & Co. ..................................... 262,500
------------
958,525
------------
GAS UTILITIES-2.2%
24,600 MCN Corp................................................. 485,850
10,900 Pacific Enterprises...................................... 267,050
------------
752,900
------------
HEALTH-3.1%
2,000 Becton Dickinson & Co.................................... 116,500
8,400 Medtronics, Inc.......................................... 647,850
6,200 St. Jude Medical (c)..................................... 310,775
------------
1,075,125
------------
HOTELS & RESTAURANTS-0.9%
6,400 LaQuinta Inns, Inc....................................... 172,800
3,000 McDonalds Corp........................................... 117,376
------------
290,176
------------
INTERNATIONAL OIL-6.3%
4,100 Chevron Corp............................................. 191,163
15,200 Exxon Corp............................................... 1,073,500
9,300 Mobil Corp. ............................................. 892,800
------------
2,157,463
------------
LIFE INSURANCE-3.7%
9,000 American General Corp.................................... 303,750
9,400 American National Insurance Co........................... 573,400
12,600 Protective Life Corp. ................................... 343,350
800 SunAmerica, Inc.......................................... 40,800
------------
1,261,300
------------
</TABLE>
See accompanying notes to financial statements.
59
<PAGE>
New England Zenith Fund
(Value Growth Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
MEDIA-3.8%
4,400 Capital Cities/ABC, Inc.................................. $ 475,200
8,600 Clear Channel Communications............................. 553,625
2,500 E.W. Scripps Co.......................................... 80,625
5,700 Media General, Inc....................................... 178,125
------------
1,287,575
------------
MORTGAGE-1.4%
10,700 Green Tree Financial Corp................................ 474,812
------------
MOTOR VEHICLES-1.6%
18,900 Ford Motor Co............................................ 562,275
------------
OIL REFINEMENT/DISTRIBUTION-2.2%
9,600 Amoco Corp............................................... 639,600
900 Royal Dutch Petroleum Co. ADR (d)........................ 109,687
------------
749,287
------------
OTHER INSURANCE-5.5%
6,900 AFLAC, Inc. ............................................. 301,875
900 American International Group, Inc........................ 102,600
8,700 Cigna Corp............................................... 675,337
1,900 ITT Corp................................................. 223,250
900 MGIC Investment Corp..................................... 42,188
11,000 St. Paul Cos., Inc....................................... 541,750
------------
1,887,000
------------
PAPER-2.8%
3,200 Champion International Corp.............................. 166,800
800 Consolidated Papers...................................... 46,100
8,000 Federal Paperboard....................................... 283,000
2,700 International Paper Co................................... 231,525
3,100 Union Camp Corp.......................................... 179,413
1,000 Westvaco Corp............................................ 44,250
------------
951,088
------------
PRODUCERS' GOODS-8.1%
2,200 Applied Materials, Inc................................... 190,575
13,900 Cummins Engine, Inc...................................... 606,387
1,900 Danaher Corp............................................. 57,475
3,300 Deere & Co............................................... 282,562
5,200 Illinois Tool Works, Inc................................. 286,000
600 Lam Research............................................. 38,400
3,900 Modine Manufacturing Co.................................. 143,325
1,800 Parker Hannifin Corp..................................... 65,250
9,900 Premark International, Inc............................... 513,563
3,200 TRW, Inc................................................. 255,600
200 U.S. Robotics Corp....................................... 21,800
5,600 Varian Associates, Inc................................... 309,400
------------
2,770,337
------------
PUBLISHING-0.3%
3,700 Reynolds & Reynolds...................................... 109,150
------------
</TABLE>
See accompanying notes to financial statements.
60
<PAGE>
New England Zenith Fund
(Value Growth Series)
Investments as of June 30, 1995 (Unaudited)
-------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
-------------------------------------------------------------------------------
<C> <S> <C>
RAILROADS-1.8%
5,600 Burlington Northern, Inc............................... $ 354,900
3,400 GATX................................................... 160,225
3,000 Illinois Central Corp.................................. 103,500
-----------
618,625
-----------
RETAIL (FOOD)-0.9%
7,800 Safeway, Inc........................................... 291,525
-----------
RETAIL (OTHER)-1.3%
4,800 Barnes & Noble, Inc.................................... 163,200
1,200 Circuit City Stores, Inc............................... 37,950
8,100 Jack Eckerd Corp....................................... 259,200
-----------
460,350
-----------
SERVICES-1.4%
1,600 Comdisco, Inc.......................................... 48,600
3,600 Computer Associates International, Inc................. 243,900
2,000 Microsoft Corp. (c).................................... 180,750
-----------
473,250
-----------
TELEPHONE-3.7%
13,800 Ameritech Corp......................................... 607,200
13,400 SBC Communications, Inc................................ 638,175
-----------
1,245,375
-----------
THRIFT-0.3%
3,000 Standard Federal Bank--Troy, MI........................ 100,875
-----------
Total Common Stocks (Identified Cost $27,237,732)...... 33,029,861
-----------
-------------------------------------------------------------------------------
Short-Term Investment-2.8%
<CAPTION>
FACE
AMOUNT
-------------------------------------------------------------------------------
<C> <S> <C>
$960,000 Repurchase agreement with State Street Bank & Trust
Company dated 6/30/95 at 5.5% to be repurchased at
$960,293 on 7/3/95 collateralized by $980,000 U.S.
Treasury Notes 4 3/8% due 8/15/96 with a value of
$981,595............................................... 960,000
-----------
Total Short-Term Investment............................ 960,000
-----------
Total Investments-99.6% (Identified cost $28,197,732)
(b).................................................... 33,989,861
Cash and Receivables................................... 159,139
Liabilities............................................ (41,928)
-----------
Total Net Assets--100%................................. $34,107,072
===========
</TABLE>
(a) See Note 1A.
(b) Federal Tax Information:
<TABLE>
<S> <C>
At June 30, 1995 the net unrealized appreciation on investments
based on cost of $28,197,732 for federal income tax purposes was
as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value over tax cost................. $ 5,819,071
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value................. (26,942)
-----------
Net unrealized appreciation....................................... $ 5,792,129
===========
</TABLE>
(c) Non-income producing security.
(d) An American Depository Receipt (ADR) is a certificate issued by a U.S.
Bank representing the right to receive securities of the foreign issuer
described. The values of ADR's are significantly influenced by trading on
exchanges not located in the United States or Canada.
See accompanying notes to financial statements.
61
<PAGE>
New England Zenith Fund
(Stock Index Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-99.0% of Total Net Assets
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
AEROSPACE-2.0%
3,100 Allied Signal, Inc......................................... $ 137,950
4,500 Boeing Co.................................................. 281,812
900 General Dynamics Corp...................................... 39,938
2,815 Lockheed Martin Corp....................................... 177,697
1,500 McDonnell Douglas Corp..................................... 115,125
400 Northrop Grumman Corp...................................... 20,850
2,300 Rockwell International Corp................................ 105,225
900 Teledyne, Inc.............................................. 22,050
1,300 United Technologies Corp................................... 101,562
-----------
1,002,209
-----------
AGRICULTURE AND FOOD-4.8%
6,282 Archer-Daniels-Midland Co.................................. 117,002
3,300 Campbell Soup Company...................................... 161,700
3,050 Conagra, Inc............................................... 106,369
1,600 CPC International, Inc..................................... 98,800
2,200 General Mills, Inc......................................... 113,025
3,200 H.J. Heinz Co.............................................. 142,000
700 Hershey Foods Corp......................................... 38,675
3,400 Kellogg Co................................................. 242,675
10,200 Philip Morris Companies, Inc............................... 758,625
800 Pioneer Hi Bred International, Inc......................... 33,600
1,600 Quaker Oats Co............................................. 52,600
6,000 Sara Lee Corp.............................................. 171,000
2,200 Unilever N.V............................................... 286,275
1,300 William Wrigley Jr. Co..................................... 60,287
-----------
2,382,633
-----------
AIR TRANSPORT-0.4%
900 AMR Corp. (c).............................................. 67,163
900 Delta Airlines, Inc........................................ 66,375
700 Federal Express Corp. (c).................................. 42,525
1,600 Southwest Airlines Co...................................... 38,200
400 US Air Group, Inc. (c)..................................... 4,650
-----------
218,913
-----------
ALUMINUM-0.4%
2,400 Alcan Aluminum, Ltd........................................ 72,600
2,000 Aluminum Company of America................................ 100,250
900 Reynolds Metals Co......................................... 46,575
-----------
219,425
-----------
APPAREL-0.5%
100 Brown Group, Inc........................................... 2,275
600 Liz Claiborne, Inc......................................... 12,750
1,200 Nike, Inc.................................................. 100,800
1,200 Reebok International Ltd................................... 40,800
300 Russell Corp............................................... 8,625
100 Springs Industries, Inc.................................... 3,725
</TABLE>
See accompanying notes to financial statements.
62
<PAGE>
New England Zenith Fund
(Stock Index Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
APPAREL-CONTINUED
400 Stride Rite Corp........................................... $ 4,150
1,000 VF Corp.................................................... 53,750
-----------
226,875
-----------
BANKS-5.8%
4,978 Banc One Corp.............................................. 160,540
2,200 Bank of New York, Inc...................................... 88,825
1,300 Bank of Boston Corp........................................ 48,750
4,428 BankAmerica Corp........................................... 233,023
900 Bankers Trust New York Corp................................ 55,800
1,100 Barnett Banks of Florida, Inc.............................. 56,375
1,500 Boatmens Bancshares, Inc................................... 52,875
2,200 Chase Manhattan Corp....................................... 103,400
3,282 Chemical Banking Corp...................................... 155,074
4,700 Citicorp................................................... 272,012
1,700 Core States Financial Corp................................. 59,288
1,000 First Chicago Corp......................................... 59,875
1,000 First Fidelity Bancorporation.............................. 59,000
1,100 First Interstate Bancorp................................... 88,275
2,100 First U.N. Corp............................................ 95,025
2,500 Fleet Financial Group...................................... 92,812
2,400 J.P. Morgan & Co., Inc. ................................... 168,300
3,100 Keycorp.................................................... 97,262
1,750 Mellon Bank Corp. ......................................... 72,844
1,800 National City Corp. ....................................... 52,875
3,316 Nationsbank Corp. ......................................... 177,820
1,700 NBD Bancorp, Inc. ......................................... 54,400
3,700 Norwest Corp. ............................................. 106,375
3,000 PNC Bank Corp.............................................. 79,125
700 Republic New York Corp..................................... 39,200
2,200 Shawmut National Corp. (c)................................. 70,125
1,100 Suntrust Banks, Inc........................................ 64,075
1,200 U.S. Bancorp............................................... 28,875
1,900 Wachovia Corp. ............................................ 67,925
600 Wells Fargo & Co........................................... 108,150
-----------
2,868,300
-----------
BEVERAGES-3.0%
16,100 Coca Cola Co............................................... 1,026,375
9,500 PepsiCo, Inc............................................... 433,438
1,300 Whitman Corp............................................... 25,187
-----------
1,485,000
-----------
BUSINESS MACHINES-4.2%
1,400 Amdahl Corporation (c)..................................... 15,575
1,400 Apple Computer, Inc........................................ 65,013
1,000 Cabletron Systems, Inc. (c)................................ 53,250
3,600 Cisco Systems, Inc......................................... 182,025
3,300 Compaq Computer Corp. (c).................................. 149,737
300 Cray Research, Inc. (c).................................... 7,312
</TABLE>
See accompanying notes to financial statements.
63
<PAGE>
New England Zenith Fund
(Stock Index Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
BUSINESS MACHINES-CONTINUED
300 Data General Corp. (c)..................................... $ 2,888
1,800 Digital Equipment Corp. (c)................................ 73,350
6,300 Hewlett-Packard Co......................................... 469,350
7,300 International Business Machines Corp....................... 700,800
1,700 Pitney Bowes, Inc.......................................... 65,237
1,700 Silicon Graphics, Inc. (c)................................. 67,787
1,400 Sun Microsystems, Inc. (c)................................. 67,900
1,800 Tandem Computers, Inc. (c)................................. 29,025
2,200 Unisystems, Corp. (c)...................................... 23,925
1,000 Xerox Corp................................................. 117,250
-----------
2,090,424
-----------
CHEMICALS-3.5%
1,000 Air Products and Chemicals, Inc............................ 55,750
900 Avery Dennison Corp........................................ 36,000
800 B.F. Goodrich Co........................................... 42,900
3,050 Dow Chemical Co............................................ 219,219
1,300 Eastman Chemical Co........................................ 77,350
6,500 E.I. du Pont De Nemours & Co............................... 446,875
950 Engelhard Corp............................................. 40,731
300 FMC Corp................................................... 20,175
100 First Mississippi Corp..................................... 3,413
800 Great Lakes Chemical Corp.................................. 48,200
900 Hercules, Inc.............................................. 43,875
1,300 Monsanto Company........................................... 117,163
2,100 Morton International, Inc. ................................ 61,425
1,000 Nalco Chemical Co.......................................... 36,375
3,300 Occidental Petroleum Corp.................................. 75,487
2,300 PPG Industries, Inc........................................ 98,900
2,000 Praxair, Inc............................................... 50,000
1,000 Rohm & Haas Co............................................. 54,875
1,000 Sigma-Aldrich Corp. ....................................... 49,125
2,200 Union Carbide Corp......................................... 73,425
1,700 W.R. Grace & Co............................................ 104,338
-----------
1,755,601
-----------
CONSTRUCTION-0.3%
800 Armstrong World Industries, Inc............................ 40,100
700 Centex Corp................................................ 19,775
1 Emcor Group, Inc........................................... 12
900 Fluor Corp. ............................................... 46,800
700 Morrison Knudsen Corp...................................... 4,725
700 Sherwin Williams Co........................................ 24,937
100 Skyline Corp............................................... 1,813
100 Zurn Industries, Inc....................................... 2,000
-----------
140,162
-----------
CONSUMER DURABLES-0.3%
100 Bassett Furniture Industries, Inc. ........................ 2,800
1,000 Black & Decker Corp. ...................................... 30,875
</TABLE>
See accompanying notes to financial statements.
64
<PAGE>
New England Zenith Fund
(Stock Index Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
CONSUMER DURABLES-CONTINUED
2,000 Masco Corp. ............................................... $ 54,000
800 Maytag Corp................................................ 12,800
1,000 Whirlpool Corp. ........................................... 55,000
700 Zenith Electronics Corp. (c)............................... 5,163
-----------
160,638
-----------
CONTAINERS-0.3%
200 Ball Corp. ................................................ 6,975
400 Bemis, Inc. ............................................... 10,400
1,300 Crown Cork & Seal, Inc. (c)................................ 65,163
900 Temple Inland, Inc......................................... 42,862
-----------
125,400
-----------
COSMETICS-2.3%
200 Alberto Culver Co. ........................................ 6,050
800 Avon Products, Inc......................................... 53,600
7,600 Johnson & Johnson.......................................... 513,950
8,060 Procter & Gamble Co........................................ 579,313
-----------
1,152,913
-----------
DOMESTIC OIL RESERVES-0.9%
2,000 Atlantic Richfield Co...................................... 219,500
1,600 Burlington Resources, Inc. ................................ 59,000
700 Louisiana Land & Exploration............................... 27,913
800 Pennzoil Company........................................... 37,700
2,900 Phillips Petroleum Company................................. 96,787
1,711 Santa Fe Energy Research, Inc. ............................ 16,255
-----------
457,155
-----------
DRUGS & MEDICINE-6.0%
9,400 Abbott Laboratories, Inc. ................................. 380,700
700 Allergan, Inc.............................................. 18,988
1,600 Alza Corp. (c)............................................. 37,400
3,700 American Home Products Corp. .............................. 286,287
1,900 Amgen, Inc. ............................................... 152,831
6,140 Bristol Myers & Squibb Co. ................................ 418,286
3,600 Eli Lilly & Company........................................ 282,600
15,100 Merck & Co., Inc........................................... 739,900
4,000 Pfizer, Inc................................................ 369,500
4,600 Schering-Plough Corp. ..................................... 202,975
2,400 Upjohn Co. ................................................ 90,900
-----------
2,980,367
-----------
ELECTRIC UTILITIES-3.7%
2,000 American Electric Power Co., Inc. ......................... 70,250
1,600 Baltimore Gas & Electric Co. .............................. 40,000
1,700 Carolina Power & Light Co. ................................ 51,425
1,900 Central & South West Corp. ................................ 49,875
2,111 Cinergy Corp. ............................................. 55,414
3,100 Consolidated Edison Co. of New York........................ 91,450
</TABLE>
See accompanying notes to financial statements.
65
<PAGE>
New England Zenith Fund
(Stock Index Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
ELECTRIC UTILITIES-CONTINUED
1,600 Detroit Edison Co.......................................... $ 47,200
2,050 Dominion Resources, Inc.................................... 74,825
2,300 Duke Power Co. ............................................ 95,450
3,200 Entergy Corp............................................... 77,200
2,300 FPL Group, Inc............................................. 88,838
1,500 General Public Utilities Corp.............................. 44,625
2,000 Houston Industries, Inc. .................................. 84,250
2,000 Niagara Mohawk Power Corp.................................. 29,500
500 Northern States Power Co. ................................. 23,062
2,100 Ohio Edison Co............................................. 47,513
5,600 Pacific Gas & Electric Corp................................ 162,400
3,500 Pacificorp................................................. 65,625
3,500 PECO Energy Co............................................. 96,687
2,700 Public Service Enterprise Group............................ 74,925
5,700 SCE Corp................................................... 97,613
7,800 Southern Co................................................ 174,525
2,500 Texas Utilities Company.................................... 85,937
2,700 Unicom Corp................................................ 71,888
800 Union Electric Co.......................................... 29,800
-----------
1,830,277
-----------
ELECTRONICS-4.2%
1,600 Advanced Micro Devices, Inc................................ 58,200
3,000 AMP, Inc................................................... 126,750
225 Andrew Corp. (c)........................................... 13,022
300 Harris Corp................................................ 15,488
1,400 Honeywell, Inc............................................. 60,375
10,200 Intel Corp................................................. 645,787
900 Loral Corp................................................. 46,575
200 M/A Company, Inc........................................... 2,350
2,400 Micron Technology, Inc..................................... 131,700
7,300 Motorola, Inc.............................................. 490,012
1,800 National Semiconductor Corp. (c)........................... 49,950
3,100 Northern Telecom, Ltd...................................... 113,150
1,300 Raytheon Co................................................ 100,913
1,100 Scientific Atlanta, Inc.................................... 24,200
200 Tektronix, Inc............................................. 9,850
1,100 Tellabs, Inc. (c).......................................... 52,938
1,000 Texas Instruments, Inc..................................... 133,875
100 Thomas & Betts Corp. ...................................... 6,837
-----------
2,081,972
-----------
FINANCE-1.9%
6,400 American Express Co........................................ 224,800
400 Beneficial Corp............................................ 17,600
1,902 Dean Witter Discover & Co.................................. 89,394
2,400 Federal Home Loan Mortgage Corp............................ 165,000
1,200 Household International, Inc............................... 59,400
1,550 MBNA Corp.................................................. 52,313
</TABLE>
See accompanying notes to financial statements.
66
<PAGE>
New England Zenith Fund
(Stock Index Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
FINANCE-CONTINUED
2,300 Merrill Lynch & Co., Inc................................... $ 120,750
1,200 Salomon, Inc............................................... 48,150
3,384 Travelers Group, Inc....................................... 148,050
-----------
925,457
-----------
FOREIGN OIL RESERVES-0.1%
900 Kerr McGee Corp............................................ 48,263
-----------
FOREST PRODUCTS-0.1%
1,300 Louisiana Pacific Corp..................................... 34,125
-----------
GAS UTILITIES-1.1%
900 Columbia Gas System, Inc. ................................. 28,575
1,100 Consolidated Natural Gas Co................................ 41,525
700 Eastern Enterprises........................................ 20,913
3,200 Enron Corp................................................. 112,400
700 Ensearch Corporation....................................... 11,987
400 Nicor, Inc................................................. 10,750
1,300 Noram Energy Corp.......................................... 8,450
200 Oneok, Inc................................................. 4,275
1,100 Pacific Enterprises, Ltd................................... 26,950
1,829 Panhandle Eastern Corporation.............................. 44,582
300 Peoples Energy Corp........................................ 7,762
1,000 Sonat, Inc................................................. 30,500
2,800 Tenneco, Inc............................................... 128,800
1,600 Williams Companies, Inc.................................... 55,800
-----------
533,269
-----------
GOLD-0.6%
5,200 Barrick Gold Corp.......................................... 131,300
800 Echo Bay Mines, Ltd........................................ 7,200
1,500 Homestake Mining Co. ...................................... 24,750
624 Newmont Mining Corp........................................ 26,130
3,000 Placer Dome, Inc........................................... 78,375
1,200 Santa Fe Pacific Gold Corp................................. 14,550
-----------
282,305
-----------
HEALTH CARE-2.2%
400 Bausch & Lomb, Inc......................................... 16,600
3,400 Baxter International, Inc. ................................ 123,675
600 Becton Dickinson & Co...................................... 34,950
1,300 Beverly Enterprises, Inc. ................................. 16,088
1,300 Biomet, Inc................................................ 20,150
1,900 Boston Scientific Corp. (c)................................ 60,562
5,291 Columbia/HCA Healthcare Corp. ............................. 228,836
1,300 Community Psychiatric Centers.............................. 14,625
400 C.R. Bard Inc.............................................. 12,000
400 Manor Care, Inc. .......................................... 11,650
1,800 Medtronics, Inc............................................ 138,825
200 Millipore Corp............................................. 13,500
400 St. Jude Medical, Inc. (c)................................. 20,050
</TABLE>
See accompanying notes to financial statements.
67
<PAGE>
New England Zenith Fund
(Stock Index Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
HEALTH CARE-CONTINUED
2,000 Tenet Healthcare Corp. (c)................................. $ 28,750
2,600 U.S. Healthcare, Inc. ..................................... 79,625
2,300 United Healthcare Corp..................................... 95,162
700 United States Surgical Corp. .............................. 14,613
1,900 Warner-Lambert Company..................................... 164,112
-----------
1,093,773
-----------
HOTELS AND RESTAURANTS-1.3%
1,000 Bally Entertainment Group (c).............................. 12,250
2,200 Darden Restaurants, Inc. (c)............................... 23,925
400 Hilton Hotels Corp......................................... 28,100
700 Loews Corp................................................. 84,700
200 Luby's Cafeterias, Inc. ................................... 4,025
1,700 Marriott Corporation....................................... 60,988
8,600 McDonald's Corp. .......................................... 336,475
1,750 Promus Companies, Inc...................................... 68,250
400 Ryans Family Steak Houses (c).............................. 3,150
800 Shoney's, Inc. (c)......................................... 9,400
1,200 Wendys International, Inc.................................. 21,450
-----------
652,713
-----------
INTERNATIONAL OIL-4.3%
7,800 Chevron Corporation........................................ 363,675
15,800 Exxon Corporation.......................................... 1,115,875
4,900 Mobil Corporation.......................................... 470,400
1,200 Oryx Energy Corp. (c)...................................... 16,500
2,700 Texaco, Inc................................................ 177,188
-----------
2,143,638
-----------
LEISURE-0.2%
1,200 Brunswick Corp. ........................................... 20,400
900 Hasbro, Inc................................................ 28,575
2,500 Mattel, Inc................................................ 65,000
100 Outboard Marine Corp....................................... 1,963
-----------
115,938
-----------
LIFE INSURANCE-0.5%
3,100 American General Corp...................................... 104,625
350 Jefferson Pilot Corp....................................... 19,163
700 Lincoln National Corp., Inc................................ 30,625
1,400 Providian Corp............................................. 50,750
600 Transamerica Corp.......................................... 34,950
700 USLife Corp................................................ 28,175
-----------
268,288
-----------
LIQUOR-0.7%
300 Adolph Coors Co. .......................................... 4,912
2,900 Anheuser-Busch Companies, Inc.............................. 164,938
1,100 Brown Forman Corp. "B"..................................... 36,712
4,100 Seagram Company, Ltd....................................... 141,963
-----------
348,525
-----------
</TABLE>
See accompanying notes to financial statements.
68
<PAGE>
New England Zenith Fund
(Stock Index Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
MEDIA-2.6%
2,000 Capital Cities/ABC, Inc. .................................. $ 216,000
825 CBS, Inc................................................... 55,275
2,600 Comcast Corp. ............................................. 48,263
200 Handleman Co. ............................................. 1,925
250 King World Productions (c)................................. 10,125
8,500 Tele-Communications A (c).................................. 199,219
4,500 Time-Warner, Inc........................................... 185,062
1,000 Tribune Co................................................. 61,375
4,357 Viacom, Inc. (c)........................................... 202,056
5,900 Walt Disney Co. ........................................... 328,187
-----------
1,307,487
-----------
METALS-0.3%
800 Asarco, Inc................................................ 24,400
1,050 Cyprus Amax Minerals Co.................................... 29,925
1,400 Inco, Ltd.................................................. 39,550
1,000 Phelps Dodge Corp.......................................... 59,000
-----------
152,875
-----------
MORTGAGE-0.7%
3,500 Federal National Mortgage Association...................... 330,313
-----------
MOTOR VEHICLES-2.2%
4,800 Chrysler Corp.............................................. 229,800
800 Dana Corp.................................................. 22,900
400 Echlin, Inc................................................ 13,900
800 Fleetwood Enterprises, Inc. ............................... 15,800
12,000 Ford Motor Co.............................................. 357,000
9,100 General Motors Corp........................................ 426,562
100 Nacco Industries, Inc...................................... 5,988
1,220 Navistar International Corp., Inc. (c)..................... 18,453
345 Paccar, Inc................................................ 16,129
-----------
1,106,532
-----------
OIL REFINEMENT/DISTRIBUTION-3.0%
1,200 Amerada Hess Corp. ........................................ 58,650
6,400 Amoco Corp................................................. 426,400
600 Ashland Oil Co............................................. 21,075
800 Coastal Corp............................................... 24,300
6,400 Royal Dutch Petroleum Co. ADR (d).......................... 780,000
800 Sun, Inc................................................... 21,900
3,000 Unocal Corp................................................ 82,875
3,000 USX Marathon Group......................................... 59,250
-----------
1,474,450
-----------
OIL SERVICES-0.6%
2,000 Baker Hughes, Inc.......................................... 41,000
1,300 Halliburton Co............................................. 46,475
300 Helmerich & Payne, Inc. ................................... 8,850
1,100 Rowan Companies, Inc....................................... 8,938
3,100 Schlumberger, Ltd.......................................... 192,587
300 Western Atlas, Inc......................................... 13,313
-----------
311,163
-----------
</TABLE>
See accompanying notes to financial statements.
69
<PAGE>
New England Zenith Fund
(Stock Index Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
OTHER INSURANCE-2.3%
1,200 Aetna Life and Casualty Company............................ $ 75,450
3,875 American International Group, Inc. ........................ 441,750
800 Chubb Corp................................................. 64,100
1,000 CIGNA Corp. ............................................... 77,625
800 General Reinsurance Corp................................... 107,100
1,300 ITT Corporation............................................ 152,750
500 Safeco Corp................................................ 28,719
600 St. Paul Companies, Inc.................................... 29,550
1,450 Torchmark Inc. ............................................ 54,737
1,700 UNUM Corp.................................................. 79,688
2,100 USF&G Corp................................................. 34,125
-----------
1,145,594
-----------
PAPER-1.9%
800 Alco Standard Corp......................................... 63,900
933 Boise Cascade Corp......................................... 37,787
1,100 Champion International Corp................................ 57,338
800 Federal Paper Board, Inc................................... 28,300
1,200 Georgia Pacific Corp....................................... 104,100
1,900 International Paper Co..................................... 162,925
900 James River Corp........................................... 24,863
1,700 Kimberly Clark Corp. ...................................... 101,788
900 Mead Corp.................................................. 53,437
200 Potlatch Corp.............................................. 8,350
2,700 Scott Paper Co............................................. 133,650
1,100 Stone Container Corp. ..................................... 23,375
500 Union Camp Corp............................................ 28,937
450 Westvaco Corporation....................................... 19,913
2,500 Weyerhaeuser Co............................................ 117,812
-----------
966,475
-----------
PHOTOGRAPHY-0.6%
4,050 Eastman Kodak Co........................................... 245,531
800 Polaroid Corp.............................................. 32,600
-----------
278,131
-----------
POLLUTION CONTROL-0.7%
2,800 Browning-Ferris Industries, Inc............................ 101,150
4,200 Laidlaw, Inc............................................... 40,425
700 Safety Kleen Corp.......................................... 11,288
6,900 WMX Technologies, Inc...................................... 195,787
-----------
348,650
-----------
PRODUCER GOODS-6.5%
2,600 American Brands, Inc. ..................................... 103,350
1,500 Applied Materials, Inc..................................... 129,936
700 Briggs & Stratton Corp..................................... 24,150
2,900 Caterpillar Tractor Co..................................... 186,325
700 Cincinnati Milacron, Inc................................... 18,900
1,300 Cooper Industries, Inc..................................... 51,350
</TABLE>
See accompanying notes to financial statements.
70
<PAGE>
New England Zenith Fund
(Stock Index Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
PRODUCER GOODS-CONTINUED
200 Crane Co................................................... $ 7,250
700 Cummins Engine, Inc. ...................................... 30,538
1,400 Deere & Co................................................. 119,875
1,000 Dover Corporation.......................................... 72,750
1,600 Dresser Industries, Inc.................................... 35,600
1,800 DSC Communications Corp. (c)............................... 83,700
1,000 Eaton Corp................................................. 58,125
3,100 Emerson Electric Co. ...................................... 221,650
300 Foster Wheeler Corp. ...................................... 10,575
20,600 General Electric Co. ...................................... 1,161,325
500 General Signal Corp........................................ 19,875
1,400 Genuine Parts Company...................................... 53,025
400 Giddings & Lewis, Inc. .................................... 7,150
300 Harnischfeger Industries, Inc.............................. 10,388
1,300 Illinois Tool Works, Inc. ................................. 71,500
1,200 Ingersoll Rand Co. ........................................ 45,900
300 Johnson Controls, Inc...................................... 16,950
600 Mallinckrodt Group, Inc.................................... 21,300
600 McDermott International, Inc. ............................. 14,475
4,600 Minnesota Mining & Mfg. Co. ............................... 263,350
400 National Services Industries, Inc.......................... 11,550
800 Owens Corning Fiberglas Co. (c)............................ 29,500
1,400 Pall Corp.................................................. 31,150
600 Parker Hannifin Corp. ..................................... 21,750
300 Perkin Elmer Corp.......................................... 10,650
800 Premark International, Inc. ............................... 41,500
300 Raychem Corp. ............................................. 11,512
300 Snap-On Tools Corp. ....................................... 11,625
100 SPX Corp................................................... 1,138
300 Stanley Works.............................................. 11,363
1,000 Textron, Inc. ............................................. 58,125
200 Timken Co.................................................. 9,225
700 Trinova Corp............................................... 24,500
500 TRW, Inc................................................... 39,938
500 TYCO International Ltd..................................... 27,000
500 Varity Corp. (c)........................................... 22,000
900 W.W. Grainger, Inc. ....................................... 52,875
-----------
3,254,713
-----------
PROPERTY-0.0%
300 Kaufman & Broad Home Corp.................................. 4,350
200 Pulte Corp. ............................................... 5,600
-----------
9,950
-----------
PUBLISHING-0.7%
1,100 American Greetings Corp. .................................. 32,313
1,600 Gannett Co., Inc........................................... 86,800
300 John H. Harland Co......................................... 6,862
800 Jostens, Inc. ............................................. 17,000
</TABLE>
See accompanying notes to financial statements.
71
<PAGE>
New England Zenith Fund
(Stock Index Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
PUBLISHING-CONTINUED
600 Knight-Ridder, Inc......................................... $ 34,125
400 McGraw-Hill Companies, Inc................................. 30,350
200 Meredith Corp.............................................. 5,075
1,200 Moore Corp., Ltd........................................... 26,550
1,000 New York Times Co.......................................... 23,500
1,700 R.R. Donnelly & Sons Co.................................... 61,200
1,900 Times Mirror Co. .......................................... 45,363
-----------
369,138
-----------
RAILROADS-1.0%
1,300 Burlington Northern, Inc. ................................. 82,388
900 Conrail, Inc............................................... 50,063
1,300 CSX Corporation............................................ 97,662
1,500 Norfolk Southern Corp. .................................... 101,063
2,000 Santa Fe Pacific Corp...................................... 51,000
2,300 Union Pacific Corp......................................... 127,362
-----------
509,538
-----------
RETAIL-FOOD-0.8%
2,800 Albertson's, Inc........................................... 83,300
2,100 American Stores Co......................................... 59,063
1,100 Brunos, Inc................................................ 12,787
300 Fleming Companies, Inc..................................... 7,950
600 Giant Foods, Inc........................................... 17,025
800 Great Atlantic & Pacific Tea Company, Inc.................. 21,100
1,400 Kroger Co. (c)............................................. 37,625
1,300 SuperValu Stores, Inc...................................... 37,863
2,700 Sysco Corp. ............................................... 79,650
600 Winn-Dixie Stores, Inc..................................... 34,650
-----------
391,013
-----------
RETAIL-OTHER-5.0%
2,100 Charming Shoppes, Inc. .................................... 11,025
1,200 Circuit City Stores, Inc. ................................. 37,950
800 Dayton Hudson Corp......................................... 57,400
1,200 Dillard Department Stores, Inc............................. 35,250
600 Harcourt General, Inc...................................... 25,500
5,849 Home Depot, Inc............................................ 237,616
2,500 J.C. Penney Company, Inc. ................................. 120,000
5,400 K-Mart Corp................................................ 78,975
200 Longs Drug Stores Corp..................................... 7,500
2,400 Lowes Companies, Inc....................................... 71,700
2,700 May Department Stores Co................................... 112,387
1,100 Melville Corporation....................................... 37,675
250 Mercantile Stores Co., Inc................................. 11,625
1,400 Nordstrom, Inc............................................. 57,925
900 Pep Boys: Manny, Moe & Jack................................ 24,075
2,239 Price Costco (c)........................................... 36,384
900 Rite Aid Corp. ............................................ 23,062
4,300 Sears, Roebuck & Co........................................ 257,462
</TABLE>
See accompanying notes to financial statements.
72
<PAGE>
New England Zenith Fund
(Stock Index Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
RETAIL-OTHER-CONTINUED
1,200 Tandy Corp................................................. $ 62,250
2,600 The Gap, Inc............................................... 90,675
4,400 The Limited, Inc........................................... 96,800
1,300 TJX Companies, Inc. ....................................... 17,225
3,475 Toys R Us, Inc. (c)........................................ 101,644
1,300 Walgreen Co................................................ 65,162
28,700 Wal-Mart Stores, Inc....................................... 767,725
1,800 Woolworth Corp. (c)........................................ 27,225
-----------
2,472,217
-----------
SERVICES-4.1%
800 Alexander & Alexander Services............................. 19,100
600 Autodesk, Inc.............................................. 25,800
1,500 Automatic Data Processing, Inc............................. 94,313
300 Ceridian Corp. ............................................ 11,062
2,000 Computer Associates International, Inc..................... 135,500
700 Computer Sciences Corp. (c)................................ 39,813
1,400 CUC International, Inc. (c)................................ 58,800
1,000 De Luxe Corp. ............................................. 33,125
1,200 Dow Jones & Co., Inc....................................... 44,250
2,320 Dun & Bradstreet Corp. .................................... 121,800
400 EG & G, Inc................................................ 6,700
1,300 First Data Corp............................................ 73,937
1,200 H & R Block, Inc........................................... 49,350
400 Intergraph Corp. (c)....................................... 4,450
800 Interpublic Group Companies, Inc........................... 30,000
600 Lotus Development Corp. (c)................................ 38,250
1,000 Marsh & McLennan Companies................................. 81,125
7,800 Microsoft Corp. (c)........................................ 704,925
4,500 Novell, Inc. (c)........................................... 89,719
300 Ogden Corp. ............................................... 6,562
5,250 Oracle Systems Corp. (c)................................... 202,780
800 Pittston Service Group..................................... 19,200
800 Ryder Systems, Inc......................................... 19,100
1,050 Service Corporation International.......................... 33,206
200 Shared Medical System...................................... 8,025
4,400 Westinghouse Electric Corp................................. 64,350
-----------
2,015,242
-----------
SOAPS-1.6%
400 Clorox Co.................................................. 26,100
1,700 Colgate Palmolive Co. ..................................... 124,313
3,300 Corning, Inc. ............................................. 108,075
1,100 Dial Corp. ................................................ 27,225
700 Ecolab, Inc................................................ 17,150
6,600 Gillette Co................................................ 294,525
1,300 International Flavours & Fragrances, Inc................... 64,675
1,900 Newell Co.................................................. 46,550
1,800 Ralston Purina Co.......................................... 91,800
1,700 Rubbermaid, Inc............................................ 47,175
-----------
847,588
-----------
</TABLE>
See accompanying notes to financial statements.
73
<PAGE>
New England Zenith Fund
(Stock Index Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
STEEL & IRON-0.3%
1,300 Armco, Inc................................................ $ 8,775
1,200 Bethlehem Steel Corp...................................... 19,500
300 Inland Steel Industries, Inc.............................. 9,150
1,000 Nucor Corp. .............................................. 53,500
1,020 USX US Steel Corp. ....................................... 35,063
600 Worthington Industries, Inc. ............................. 12,262
------------
138,250
------------
TELEPHONE-7.8%
5,900 Airtouch Communications................................... 168,150
3,000 ALLTEL Corp. ............................................. 76,125
6,900 Ameritech Corp............................................ 303,600
19,535 AT & T Corp............................................... 1,037,795
5,100 Bell Atlantic Corp........................................ 285,600
6,000 BellSouth Corp. .......................................... 381,000
11,500 GTE Corp.................................................. 392,437
8,400 MCI Communications Corp. ................................. 184,800
4,400 NYNEX Corp................................................ 177,100
5,100 Pacific Telesis Group..................................... 136,425
7,600 SBC Communications, Inc................................... 361,950
4,400 Sprint Corp............................................... 147,950
5,600 U.S. West, Inc............................................ 233,100
------------
3,886,032
------------
THRIFT-0.2%
700 Golden West Financial Corp................................ 32,988
1,450 Great Western Financial Corp. ............................ 29,906
1,300 H.F. Ahmanson & Co........................................ 28,600
------------
91,494
------------
TIRES AND RUBBER GOODS-0.2%
600 Cooper Tire & Rubber Co................................... 14,625
1,600 Goodyear Tire & Rubber Company............................ 66,000
------------
80,625
------------
TOBACCO-0.2%
3,000 UST, Inc. ................................................ 89,250
------------
TRUCKING AND FREIGHT-0.1%
300 Consolidated Freightways, Inc............................. 6,638
300 Roadway Services, Inc..................................... 14,175
300 Yellow Corp............................................... 5,437
------------
26,250
------------
Total Common Stocks (Identified cost $40,216,422)......... 49,227,528
------------
</TABLE>
See accompanying notes to financial statements.
74
<PAGE>
New England Zenith Fund
(Stock Index Series)
Investments as of June 30, 1995 (Unaudited)
-------------------------------------------------------------------------------
Short-Term Investment-2.0%
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE (a)
-------------------------------------------------------------------------------
<C> <S> <C>
$1,014,000 Repurchase Agreement with State Street Bank & Trust
Co. dated 6/30/95 at 5.500% to be repurchased at
$1,014,465 on 7/03/95 collateralized by $1,035,000
U.S. Treasury Notes 4.375% due 8/15/96, with a value
of $1,036,685........................................ $ 1,014,000
-----------
Total Short-Term Investment (Identified cost
$1,014,000)......................................... 1,014,000
-----------
Total Investments-101.0% (Identified cost
$41,230,422) (b).................................... 50,241,528
Cash and Receivables................................. 336,948
Liabilities.......................................... (836,901)
-----------
Total Net Assets-100%................................ $49,741,575
===========
</TABLE>
(a)See Note 1A.
(b) Federal Tax Information:
At June 30, 1995 the net unrealized appreciation on investments based on
cost of $41,230,422 for federal income tax purposes was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value
over tax cost.................................................. $9,533,185
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax
cost over value................................................ (522,079)
----------
Net unrealized appreciation.................................... $9,011,106
==========
</TABLE>
(c)Non-income producing security.
(d) An American Depository Receipt (ADR) is a certificate issued by a U.S.
bank representing the right to receive securities of the foreign issuer
described. The values of ADR's are significantly influenced by trading on
exchanges not located in the United States or Canada.
See accompanying notes to financial statements.
75
<PAGE>
New England Zenith Fund
(Balanced Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-54.6% of Total Net Assets
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
AEROSPACE-2.5%
1,900 Lockheed Martin Corp....................................... $ 119,938
1,300 Raytheon................................................... 100,913
----------
220,851
----------
AIRLINES-0.8%
1,000 AMR Corp. Del.............................................. 74,625
----------
AUTOMOBILES-2.3%
2,300 Chrysler Corp.............................................. 110,113
1,000 Ford Motor Co.............................................. 29,750
1,400 General Motors Corp. ...................................... 65,625
----------
205,488
----------
BANKS-3.7%
2,400 Chemical Banking Group..................................... 113,400
1,300 First Interstate Bancorp................................... 104,325
3,000 Fleet Financial Group...................................... 111,375
----------
329,100
----------
CHEMICALS-5.4%
2,700 E.I. du Pont de Nemours & Co............................... 185,625
2,000 Georgia Gulf Corp.......................................... 65,250
2,700 PPG Industries, Inc........................................ 116,100
4,800 Praxair, Inc............................................... 120,000
----------
486,975
----------
ELECTRICAL EQUIPMENT-2.4%
1,900 General Electric Co. ...................................... 107,112
2,600 Honeywell, Inc............................................. 112,125
----------
219,237
----------
ELECTRONIC COMPONENTS-2.5%
1,800 Intel Corp................................................. 113,962
800 Texas Instruments.......................................... 107,100
----------
221,062
----------
ENGINEERING & CONSTRUCTION-1.0%
3,800 McDermott International.................................... 91,675
----------
FINANCIAL SERVICES-4.8%
1,600 Federal Home Loan Mortgage Corp............................ 110,000
1,100 Federal National Mortgage Association...................... 103,812
3,300 MBNA Corp.................................................. 111,375
3,000 Meditrust SBI.............................................. 102,375
----------
427,562
----------
FOREST PRODUCTS-1.3%
2,400 Weyerhaeuser Co. .......................................... 113,100
----------
FREIGHT-TRANSPORTATION-1.1%
5,700 Canadian Pacific Ltd. ..................................... 99,038
----------
</TABLE>
See accompanying notes to financial statements.
76
<PAGE>
New England Zenith Fund
(Balanced Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
HEALTH CARE-DRUGS-0.9%
1,700 Smithkline Beecham PLC..................................... $ 76,925
----------
HEALTH CARE-SERVICES-0.7%
5,100 Beverly Enterprises........................................ 63,112
----------
HEALTH CARE-MED TECH-1.2%
3,700 C.R. Brad, Inc............................................. 111,000
----------
HOME PRODUCTS-1.3%
2,200 Premark International...................................... 114,125
----------
INSURANCE-4.4%
5,100 Ace Ltd.................................................... 147,900
400 American International Group, Inc.......................... 45,600
1,200 Chubb Corp................................................. 96,150
3,000 Providian Corp. ........................................... 108,750
----------
398,400
----------
LEISURE TIME-1.3%
4,900 Carnival Corp. Class A..................................... 114,538
----------
MACHINERY-0.3%
900 Case Corp.................................................. 26,775
----------
MULTI-INDUSTRY-3.6%
2,700 Allied Signal, Inc......................................... 120,150
900 ITT Corp................................................... 105,750
1,700 Textron, Inc............................................... 98,812
----------
324,712
----------
NATURAL GAS-PIPELINES-1.5%
900 El Paso Nat. Gas Co........................................ 25,650
1,900 Mapco, Inc................................................. 110,200
----------
135,850
----------
OFFICE EQUIPMENT-3.5%
1,400 Hewlett Packard Co......................................... 104,300
1,100 International Business Machines............................ 105,600
900 Xerox Corp................................................. 105,525
----------
315,425
----------
OIL-MAJOR INTEGRATED-2.5%
3,400 Repsol ADR................................................. 107,525
400 Sun, Inc................................................... 10,950
4,300 Ultramar Corp.............................................. 108,575
----------
227,050
----------
PAPER-1.3%
2,000 Mead Corp.................................................. 118,750
----------
RETAIL-0.6%
800 Dayton Hudson Corp......................................... 57,400
----------
TOBACCO-1.3%
1,600 Phillip Morris Cos. Inc.................................... 119,000
----------
</TABLE>
See accompanying notes to financial statements.
77
<PAGE>
New England Zenith Fund
(Balanced Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
UTILITIES-TELECOMMUNICATIONS-1.1%
1,600 GTE Corp................................................. $ 54,600
900 Sprint Corp.............................................. 30,263
500 Telefonos de Mexico SA (d)............................... 14,813
----------
99,676
----------
UTILITIES-ELECTRIC-1.3%
1,600 Pacific Gas & Electric Co................................ 46,400
3,900 SCE Corp................................................. 66,787
----------
113,187
----------
Total Common Stocks (Identified Cost $4,468,316)......... 4,904,638
----------
--------------------------------------------------------------------------------
Preferred Stock-1.2%
--------------------------------------------------------------------------------
TOBACCO-1.2%
17,600 RJR Nabisco Holding Corp................................. 107,800
----------
Total Preferred Stock (Identified Cost $109,835)......... 107,800
----------
--------------------------------------------------------------------------------
Medium & Long Term Bonds & Notes-36.9%
<CAPTION>
FACE
AMOUNT
--------------------------------------------------------------------------------
<C> <S> <C>
AIR TRANSPORT-1.3%
$100,000 AMR Corp 10.290%, 3/08/21................................ 120,464
----------
ASSET BACKED-0.6%
$ 50,000 Standard Credit Card Trust 8.625%, 1/07/02............... 52,163
----------
AUTO & RELATED-1.2%
100,000 General Motors Corp. 9.125%, 7/15/01..................... 110,747
----------
BANKS-5.1%
125,000 Bank of Boston 10.300%, 9/01/00.......................... 125,722
100,000 Bankers Trust New York Corp. 8.125%, 4/01/02............. 105,718
50,000 Chase Manhattan Corp. 9.050%, 2/01/02.................... 51,762
125,000 Mellon Financial Corp. 6.125% 11/15/95................... 124,980
50,000 Norwest Corp. Mountain Bank 7.650%, 3/15/05.............. 53,557
----------
461,739
----------
EQUIPMENT TRUST-0.3%
25,000 American Airlines 10.180%, 1/02/13....................... 29,063
----------
FINANCE-3.3%
125,000 Associates Corp. NA 8.350%, 12/22/98..................... 132,711
50,000 International Lease Finance Corp. 8.040%, 12/01/97....... 51,770
100,000 Secured Finance Investment, Inc. 9.050%, 12/15/04........ 113,897
----------
298,378
----------
HEALTH CARE-0.6%
50,000 Columbia/HCA Healthcare Corp. 8.020%, 8/5/02............. 53,111
----------
</TABLE>
See accompanying notes to financial statements.
78
<PAGE>
New England Zenith Fund
(Balanced Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Medium & Long Term Bonds & Notes-Continued
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE (a)
-------------------------------------------------------------------------------
<C> <S> <C>
INDUSTRIAL-2.8%
$50,000 Coastal Corp. 10.000% 2/1/01............................. $ 56,731
25,000 Standard Oil Co. 9.000%, 6/01/19......................... 27,172
150,000 Tenneco Credit Corp. 9.625%, 8/15/01..................... 170,234
----------
254,137
----------
LEISURE TIME-1.7%
150,000 Carnival Corp. 7.050%, 5/15/05........................... 150,492
----------
MORTGAGED BACKED-2.4%
50,000 G.E. Capital Mortgage, Inc. 10.000%, 3/25/24............. 53,218
75,000 Paine Webber CMO Tr. 9.000%, 10/20/03.................... 78,257
75,000 Western Mortgage Financial Corp. 8.950%, 8/01/18......... 83,882
----------
215,357
----------
SECURITIES-4.1%
25,000 Lehman Bros. Inc. 7.000% 5/15/97......................... 24,997
100,000 Lehman Bros. Inc. 5.750% 11/15/98........................ 95,464
100,000 Merrill Lynch & Co. 8.375%, 2/09/00...................... 106,769
145,000 Salomon, Inc. 7.500%, 2/01/03............................ 142,884
----------
370,114
----------
UTILITIES-1.2%
100,000 Louisiana Power & Light Co. 10.670%, 1/02/17............. 107,018
----------
YANKEE/SUPRANATIONAL-1.2%
50,000 Province of Quebec 8.625%, 1/19/05....................... 55,526
50,000 Aktiebolaget SKF 7.625% 7/15/03.......................... 51,469
----------
106,995
----------
U.S. GOVERNMENT & AGENCIES-11.0%
50,000 Federal Home Loan Banks 8.150%, 2/24/99.................. 50,601
100,000 Federal Home Loan Mortgage 6.750%, 9/15/06............... 98,437
30,000 Federal National Mortgage Association Zero Coupon Bond
10/10/01................................................. 27,713
200,000 U.S. Treasury Notes 6.875%, 2/28/97...................... 203,250
100,000 U.S. Treasury Notes 6.500%, 5/15/97...................... 101,141
200,000 U.S. Treasury Notes 8.750%, 10/15/97..................... 212,124
25,000 U.S. Treasury Notes 8.250%, 7/15/98...................... 26,602
100,000 U.S. Treasury Notes 7.500%, 10/31/99..................... 105,609
125,000 U.S. Treasury Bonds 10.750%, 2/15/03..................... 159,180
----------
984,657
----------
Total Bonds & Notes (Identified Cost $3,173,494)......... 3,314,435
----------
</TABLE>
See accompanying notes to financial statements.
79
<PAGE>
New England Zenith Fund
(Balanced Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Short-Term Investments-6.5%
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE (a)
-------------------------------------------------------------------------------
<C> <S> <C>
$250,000 Associates Corp. of North America 6.000%, 7/03/95...... $ 250,000
328,000 Repurchase Agreement with State Street Bank & Trust
Company dated 6/30/95 at 5.500% to be repurchased at
$328,150 on 7/03/95 collateralized by $830,000 U.S.
Treasury Notes 4.375% due 8/15/96, with a value of
$335,545............................................... 328,000
----------
Total Short-Term Investments (Identified Cost
$578,000).............................................. 578,000
----------
Total Investments-99.2% (Identified Cost $8,329,645
(b))................................................... 8,904,873
Cash & Receivables..................................... 238,878
Liabilities............................................ (167,366)
----------
Total Net Assets-100%.................................. $8,976,385
----------
(a)See Note 1A.
(b) Federal Tax Information: At June 30, 1995 the net
unrealized appreciation on investments based on cost of
$8,329,645 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over tax cost......... $ 613,366
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value......... (38,138)
----------
Net unrealized appreciation................................. $ 575,228
==========
(c) Non-income producing security.
(d) An American Depository Receipt (ADR) is a certificate
issued by a U.S. bank representing the right to receive
securities of the foreign issuer described. The values of
ADRs are significantly influenced by trading on exchanges
not located in the United States or Canada.
</TABLE>
See accompanying notes to financial statements.
80
<PAGE>
New England Zenith Fund
(Managed Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-65.2% of Total Net Assets
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
AEROSPACE-0.9%
5,025 Boeing Co. ............................................... $ 314,691
14,600 Rockwell International Corp. ............................. 667,950
2,500 United Technologies Corp.................................. 195,313
------------
1,177,954
------------
APPAREL-0.2%
7,400 Melville Corp. ........................................... 253,450
------------
AIR TRANSPORT-0.0%
255 UAL, Inc.................................................. 35,764
------------
BANKS-3.0%
29,260 BancOne Corp.............................................. 943,635
10,144 Bank America Corp......................................... 533,828
5,400 Bankers Trust New York Corp. ............................. 334,800
19,000 Citicorp.................................................. 1,099,625
10,900 J.P. Morgan & Co., Inc.................................... 764,363
7,200 NationsBank Corp.......................................... 386,100
------------
4,062,351
------------
BUSINESS MACHINES-0.3%
8,500 Apple Computer............................................ 394,719
------------
BUSINESS SERVICES-1.8%
28,500 Browning Ferris Industries, Inc. ......................... 1,029,563
10,000 Dun & Bradstreet Corp. ................................... 525,000
9,200 H & R Block, Inc. ........................................ 378,350
39,200 Rollins Environmental Services............................ 186,200
9,500 WMX Technologies.......................................... 269,563
------------
2,388,676
------------
CHEMICALS-2.8%
14,200 Allied-Signals Inc........................................ 631,900
8,200 Dow Chemical Co........................................... 589,375
13,700 E.I. Du Pont de Nemours & Co.............................. 941,875
11,200 Monsanto Co............................................... 1,009,400
15,600 PPG Industries, Inc....................................... 670,800
------------
3,843,350
------------
CONSTRUCTION-1.2%
28,600 Home Depot, Inc. ......................................... 1,161,875
14,900 Masco Corp. .............................................. 402,300
------------
1,564,175
------------
CONSUMER DURABLES-0.0%
800 Whirlpool Corp............................................ 44,000
------------
DOMESTIC OIL-1.6%
2,400 Amoco Corp................................................ 159,900
2,700 Atlantic Richfield Co..................................... 296,325
3,600 Halliburton Co............................................ 128,700
69,300 Oryx Energy Co............................................ 952,875
934 Santa Fe Energy Co........................................ 8,873
</TABLE>
See accompanying notes to financial statements.
81
<PAGE>
New England Zenith Fund
(Managed Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
DOMESTIC OIL-CONTINUED
4,400 Sun Company............................................... $ 120,450
800 Tenneco, Inc.............................................. 36,800
15,600 Unocal Corp............................................... 430,950
------------
2,134,873
------------
DRUGS & MEDICINE-5.1%
8,800 Abbott Laboratories....................................... 356,400
11,000 American Home Products Corp............................... 851,125
37,100 Baxter International, Inc................................. 1,349,512
7,600 Eli Lilly & Co............................................ 596,600
5,200 Johnson & Johnson......................................... 351,650
31,500 Merck & Co., Inc.......................................... 1,543,500
9,600 Pfizer, Inc............................................... 886,800
10,800 Schering Plough Corp...................................... 476,550
12,900 Upjohn Co................................................. 488,588
------------
6,900,725
------------
ELECTRONICS-3.8%
43,200 AMP, Inc.................................................. 1,825,200
9,400 Emerson Electric Co....................................... 672,100
22,400 Hewlett-Packard........................................... 1,668,800
6,400 Motorola, Inc............................................. 429,600
7,700 Raytheon Co............................................... 597,713
------------
5,193,413
------------
ENERGY & UTILITIES-3.1%
18,300 American Electric Power, Inc.............................. 642,787
11,700 Consolidated Edison Co. of New York....................... 345,150
45,700 Pacific Gas & Electric Co................................. 1,325,300
7,700 Public Service Enterprise Group........................... 213,675
40,200 SCE Corp.................................................. 688,425
10,200 Southern Co............................................... 228,225
8,900 Texas Utilities Co........................................ 305,938
17,300 Unicom Corp............................................... 460,612
------------
4,210,112
------------
ENERGY RAW MATERIALS-1.1%
58,800 Occidental Petroleum Corp................................. 1,345,050
3,200 Schlumberger, Ltd......................................... 198,800
------------
1,543,850
------------
FINANCE-0.7%
4,449 Dean Witter Discover & Co................................. 209,103
11,600 Federal Home Loan Mortgage Corp........................... 797,500
------------
1,006,603
------------
FOOD & AGRICULTURE-4.5%
19,900 Coca Cola Bottling Co..................................... 1,268,625
5,000 General Mills, Inc........................................ 256,875
27,900 H. J. Heinz Co............................................ 1,238,062
24,600 Kellogg Co................................................ 1,755,825
</TABLE>
82
<PAGE>
New England Zenith Fund
(Managed Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
FOOD & AGRICULTURE-CONTINUED
8,100 PepsiCo, Inc.............................................. $ 369,563
13,300 Ralston Purina Co......................................... 678,300
16,000 Sara Lee Corp............................................. 456,000
------------
6,023,250
------------
GOLD-0.2%
18,434 Santa Fe Pacific Gold Corp. .............................. 223,512
------------
INSURANCE-1.8%
11,500 Aetna Life & Casualty Co.................................. 723,062
14,400 American General Corp..................................... 486,000
4,312 American International Group, Inc......................... 491,568
2,700 CIGNA Corp................................................ 209,588
4,300 General Reinsurance Corp.................................. 575,663
------------
2,485,881
------------
INTERNATIONAL OIL-4.4%
11,000 Chevron Corp.............................................. 512,875
9,400 Cooper Industries, Inc.................................... 371,300
25,100 Exxon Corp................................................ 1,772,686
7,800 Mobil Corp. .............................................. 748,800
9,800 Royal Dutch Petroleum Co. ADR (d)......................... 1,194,375
21,200 Texaco, Inc............................................... 1,391,250
------------
5,991,286
------------
LIQUOR-0.4%
3,300 Anheuser-Busch Companies, Inc............................. 187,688
11,700 Seagram, Ltd.............................................. 405,112
------------
592,800
------------
MEDIA-2.4%
21,000 Capital Cities/ABC, Inc................................... 2,268,000
2,540 CBS, Inc.................................................. 170,180
3,000 Gannett Co., Inc.......................................... 162,750
15,200 Tele Communications Inc................................... 356,250
7,200 Time-Warner, Inc. ........................................ 296,100
------------
3,253,280
------------
MISCELLANEOUS FINANCE-1.2%
25,000 American Express Co....................................... 878,125
5,000 Lehman Brothers Holdings, Inc............................. 109,375
16,900 Salomon, Inc.............................................. 678,113
------------
1,665,613
------------
MOTOR VEHICLES-1.4%
20,300 Chrysler Corp. ........................................... 971,862
4,600 Ford Motor Co............................................. 136,850
12,500 General Motors Corp....................................... 585,938
6,750 Genuine Parts Co.......................................... 255,656
------------
1,950,306
------------
</TABLE>
See accompanying notes to financial statements.
83
<PAGE>
New England Zenith Fund
(Managed Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
NON-FERROUS METALS-0.7%
8,075 Alcan Aluminum Ltd........................................ $ 244,268
14,000 Aluminum Co. of America................................... 701,750
220 USX U.S. Steel Corp....................................... 7,563
------------
953,581
------------
OFFICE EQUIPMENT-2.7%
28,400 Digital Equipment Corp. (c)............................... 1,157,300
5,900 International Business Machines Corp. .................... 566,400
16,900 Xerox Corp................................................ 1,981,525
------------
3,705,225
------------
OPTICAL PHOTO, EQUIPMENT-0.2%
3,600 Eastman Kodak Co.......................................... 218,250
------------
PAPER & FOREST PRODUCTS-0.8%
3,600 Georgia-Pacific Corp. .................................... 312,300
5,900 International Paper Co. .................................. 505,925
1,400 Kimberly Clark Corp....................................... 83,825
4,050 Weyerhaeuser Co........................................... 190,856
------------
1,092,906
------------
PRODUCER GOODS-2.3%
5,600 Caterpillar, Inc. ........................................ 359,800
8,000 Deere & Co................................................ 685,000
34,400 General Electric Co. ..................................... 1,939,300
4,200 Westinghouse Electric Corp................................ 61,425
------------
3,045,525
------------
RAILROADS & SHIPPING-1.0%
4,500 Norfolk Southern Corp..................................... 303,188
30,723 Santa Fe Southern Pacific Corp............................ 783,436
4,200 Union Pacific Corp........................................ 232,575
------------
1,319,199
------------
RESTAURANTS-0.3%
5,000 Darden Restaurants, Inc. ................................. 54,375
9,200 McDonald's Corp........................................... 359,950
------------
414,325
------------
RETAIL-3.5%
19,000 Albertsons, Inc. ......................................... 565,250
8,000 Dayton Hudson Corp. ...................................... 574,000
15,600 J.C. Penney Company, Inc. ................................ 748,800
38,900 K Mart Corp. ............................................. 568,913
7,800 May Department Stores Co. ................................ 324,675
11,400 Sears Roebuck and Co...................................... 682,575
5,400 The Limited, Inc. ........................................ 118,800
11,625 Toys R US (c)............................................. 340,031
29,200 Wal-Mart Stores, Inc...................................... 781,100
------------
4,704,144
------------
</TABLE>
See accompanying notes to financial statements.
84
<PAGE>
New England Zenith Fund
(Managed Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Common Stocks-Continued
<TABLE>
<CAPTION>
SHARES VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
SOAPS & COSMETICS-2.7%
6,260 Bristol-Myers Squibb Co.............................. $ 426,463
18,400 Gillette Co. ........................................ 821,100
10,300 Procter & Gamble Co.................................. 740,312
12,400 Unilever, N.V. ...................................... 1,613,550
------------
3,601,425
------------
STEEL-0.9%
64,700 USX Marathon Group................................... 1,277,825
------------
TELEPHONE-5.0%
15,500 Airtouch Communications.............................. 441,750
35,200 Ameritech Corp....................................... 1,548,800
27,261 AT & T Co. .......................................... 1,448,240
12,200 Bell Atlantic Corp. ................................. 683,200
8,100 BellSouth Corporation................................ 514,350
10,600 GTE Corp. ........................................... 361,725
14,600 NYNEX Corp........................................... 587,650
15,500 Pacific Telesis Group................................ 414,625
7,200 SBC Communications Inc. ............................. 342,900
9,700 U.S. West, Inc....................................... 403,762
------------
6,747,002
------------
TOBACCO-1.0%
8,500 American Brands, Inc. ............................... 337,875
13,600 Philip Morris Companies, Inc. ....................... 1,011,500
------------
1,349,375
------------
TRAVEL & RECREATION-1.4%
33,700 Walt Disney Productions.............................. 1,874,563
------------
MISCELLANEOUS & CONGLOMERATES-0.8%
2,200 ITT Corporation...................................... 258,500
13,800 Minnesota Mining & Manufacturing Co. ................ 790,050
------------
1,048,550
------------
Total Common Stocks (Identified cost $67,742,369).... 88,291,838
------------
--------------------------------------------------------------------------------
Medium & Long Term Bonds & Notes-33.6%
<CAPTION>
FACE
AMOUNT
--------------------------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS-16.2%
$ 2,000,000 Appalachian Power Co., 8.750%, 2/01/22............... 2,060,000
2,500,000 Banco de Comercio Exterior 8.625%, 6/02/00........... 2,520,750
1,000,000 Boston Edison Co. 7.800%, 5/15/10.................... 1,025,030
2,000,000 Cemex SA 8.875%, 6/10/98............................. 1,726,250
1,000,000 Chrysler Financial Corp. 13.250%, 10/15/99........... 1,232,740
2,000,000 Lehman Brothers Holdings, Inc. 8.500%, 5/01/07....... 2,116,460
1,000,000 Maxus Energy Corp. 9.375%, 11/01/03.................. 925,000
2,000,000 Oklahoma Gas & Electric Co., 8.625% 1/01/06.......... 2,070,980
1,500,000 Public Service Electric & Gas Co. 8.750%, 11/01/21... 1,612,155
3,000,000 Tele Communications, Inc. 9.800%, 2/1/12............. 3,298,680
10,000,000 Time-Warner, Inc. Zero Coupon 12/17/12............... 3,337,500
30,000 Viacom, Inc. 8.000%, 7/07/06......................... 29,213
------------
21,954,758
------------
</TABLE>
See accompanying notes to financial statements.
85
<PAGE>
New England Zenith Fund
(Managed Series)
Investments as of June 30, 1995 (Unaudited)
-------------------------------------------------------------------------------
Medium & Long Term Bonds & Notes-Continued
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE (a)
-------------------------------------------------------------------------------
<C> <S> <C>
FOREIGN-3.5%
$6,000,000 Government of Canada 9.000%, 12/01/04 (e)........... $ 4,666,108
------------
YANKEE-12.0%
3,000,000 Hydro Quebec 9.400%, 2/01/21........................ 3,535,890
2,000,000 Hydro Quebec 8.050%, 7/07/24........................ 2,185,860
4,000,000 News America Holdings, Inc. 9.250%, 2/01/13......... 4,484,840
5,000,000 Province of Manitoba 9.125%, 1/15/18................ 6,054,450
------------
16,261,040
------------
U.S. GOVERNMENT BONDS-1.9%
Government National Mortgage Association 10.000%,
623,056 9/15/18............................................ 679,555
Government National Mortgage Association 11.500%
734,151 with various maturities to 6/15/13................. 822,357
1,000,000 U.S. Treasury Bonds 7.625% 2/15/23.................. 1,129,370
------------
2,631,282
------------
Total Medium & Long Term Bonds & Notes (Identified
Cost $43,698,296).................................. 45,513,188
------------
-------------------------------------------------------------------------------
Short-Term Investment-0.4%
-------------------------------------------------------------------------------
565,000 Household Finance Corp. 6.050%, 7/03/95............. 564,810
------------
Total Short-Term Investment (Identified Cost
$564,810)........................................... 564,810
------------
Total Investments-99.2% (Identified Cost
$112,005,475) (b)................................... 134,369,836
Cash and Receivables................................ 1,301,936
Liabilities......................................... (245,101)
------------
Total Net Assets-100%............................... $135,426,671
============
</TABLE>
(a) See Note 1A
(b) Federal Tax Information:
At June 30, 1995 the net unrealized appreciation on investments based on
cost of $112,005,475 for federal income tax purposes was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value
over tax cost................................................. $24,462,271
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax
cost over value............................................... (2,097,910)
-----------
Net unrealized appreciation.................................... $22,364,361
===========
</TABLE>
(c) Non-income producing security.
(d) An American Depository Receipt (ADR) is a certificate issued by a U.S.
bank representing the right to receive securities of the foreign issuer
described. The values of ADRs are significantly influenced by trading on
exchanges not located in the United States or Canada.
(e) Denominated in Canadian Dollars.
See accompanying notes to financial statements.
86
<PAGE>
New England Zenith Fund
(Strategic Bond Opportunities Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Bonds & Notes-89.6% of Total Net Assets
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS-38.0%
$ 150,000 Bally's Park Place Funding 9.25%, 3/15/2004.......... $ 142,500
150,000 Foamex LP Foamex Capital Corp. 11.25%, 10/01/02...... 150,563
200,000 In Flight Phone Corp. Zero Coupon, 5/15/02........... 131,000
150,000 Jordan Industries, Inc. 10.375% 8/01/03.............. 142,688
150,000 Katz Corp. 12.75% 11/15/02........................... 157,500
150,000 National Medical Enterprises 10.125% 3/01/05......... 159,374
150,000 Pathmark Stores, Inc. 9.625%, 5/01/03................ 145,688
150,000 Renco Metals, Inc. 12.00%, 7/15/00................... 150,750
100,000 Rogers Cable Systems Ltd. 10.00% 3/15/05............. 103,250
150,000 Telex Communications, Inc. 12.00%, 7/15/04........... 151,875
150,000 UCAR Global Enterprises, Inc. 12.00%, 1/15/05........ 161,063
100,000 United States Leasing International 8.45%, 1/25/05... 110,265
50,000 Waters Corp. 12.75%, 9/30/04......................... 53,063
150,000 Williamhouse Regency 11.50%, 6/15/05................. 152,250
----------
1,911,829
----------
FOREIGN BONDS-35.4%
$ 312,120 Brazil C Bonds 4.00%, 4/15/14........................ 154,499
NLG 50,000 Dutch Government 6.25% 7/15/98....................... 32,707
NLG 10,000 Dutch Government 7.00% 6/15/05....................... 6,438
DM 120,000 Federal Republic of Germany 6.375% 5/20/98........... 88,423
DM 180,000 Federal Republic of Germany 6.875% 5/12/05........... 129,563
FFR 120,000 Government of France 7.50%, 4/25/05.................. 24,550
FFR 200,000 Government of France 8.00%, 5/12/98.................. 42,430
ESP 5,600,000 Government of Spain 10.00%, 2/28/05.................. 41,758
$ 50,000 Indah Kiat International Finance Co.12.5%, 6/15/06... 51,750
JPY 2,200,000 Japan 4.60% 3/20/05.................................. 29,560
JPY14,850,000 Japan 4.90% 3/20/98.................................. 191,821
BEF 1,000,000 Kingdom of Belgium 6.50%, 3/31/05.................... 32,616
DKK 30,000 Kingdom of Denmark 7.00% 12/15/04.................... 5,008
DKK 60,000 Kingdom of Denmark 9.00% 11/15/98.................... 11,501
$ 250,000 Mexico Par Series B 6.25%, 12/31/19.................. 150,313
$ 250,000 Republic of Argentina 7.312%, 3/31/05................ 151,875
$ 500,000 Republic of Ecuador 3.00% 2/28/25.................... 162,500
ITL10,000,000 Republic of Italy 9.50% 4/25/05...................... 5,805
ITL90,000,000 Republic of Italy 8.00% 5/12/98...................... 46,530
$ 600,000 Republic of Poland 3.25%, 10/27/14................... 366,000
GBP 19,000 UK Treasury 8.50%, 12/07/05.......................... 30,306
GBP 18,000 UK Treasury 7.25%, 3/30/98........................... 28,174
----------
1,784,127
----------
U.S. GOVERNMENT BONDS-16.2%
500,000 Federal Home Loan Bank 6.49%, 9/8/97................. 503,260
250,000 United States Treasury Bonds 8.875%, 8/15/17......... 311,553
----------
814,813
----------
Total Bonds & Notes (Identified Cost $4,331,688)..... 4,510,769
----------
</TABLE>
See accompanying notes to financial statements.
87
<PAGE>
New England Zenith Fund
(Strategic Bond Opportunities Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Short-Term Investment-8.3%
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
$419,000 Repurchase agreement with State Street Bank & Trust
Company dated 6/30/95 at 6.00% to be repurchased at
$419,210 on 7/3/95 collateralized by $415,000 U.S.
Treasury Notes
6.875% due 3/31/97 with a value of $428,649............. $ 419,000
----------
Total Short-Term Investment (Identified Cost $419,000).. 419,000
----------
Total Investments-97.9% (Identified Cost $4,750,688)(b). 4,929,769
Cash & Receivables...................................... 919,865
Liabilities............................................. (815,420)
----------
Total Net Assets-100%................................... $5,034,214
==========
(a)See Note 1A.
(b) Federal Tax Information: At June 30, 1995 the net unrealized appreciation
on investments based on
cost of $4,750,688 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value
over tax cost................................................. $ 238,149
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost
over value.................................................... (59,068)
----------
Net unrealized appreciation....................................... $ 179,081
==========
</TABLE>
BEF = Belgian francs GBP = British pounds sterling
DKK = Danish krone ITL = Italian lira
DM = German Deutsche marks
JPY = Japanese yen
ESP = Spanish pesetas NLG = Netherlands guilders
FFR = French francs $ = United States dollars
See accompanying notes to financial statements.
88
<PAGE>
New England Zenith Fund
(Bond Income Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Bonds and Notes-88.3% of Total Net Assets
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS AND NOTES-67.5%
CHEMICALS-3.1%
$4,000,000 Dow Chemical Co. 8.550%, 10/15/09..................... $ 4,537,680
------------
FINANCIAL-16.3%
4,000,000 American General Finance Corp. 8.450%, 10/15/09....... 4,548,800
4,160,000 Associates Corp of North America 8.550%, 7/15/09...... 4,799,017
4,600,000 ITT Financial Corp. 8.350% 11/01/04................... 5,187,190
4,000,000 News America Holdings, Inc. 9.500%, 7/15/24........... 4,705,000
2,500,000 Pitney Bowes Credit Corp. 8.625% 2/15/08.............. 2,895,750
1,275,000 Toronto Dominion Bank Ontario 7.875%, 8/15/04......... 1,341,173
------------
23,476,930
------------
FOREIGN-7.7%
2,500,000 Government of Canada 6.250%, 2/01/98 (b).............. 1,778,686
4,000,000 Government of Canada 8.500%, 4/01/02 (b).............. 3,024,362
2,000,000 Government of Canada 9.000%, 12/01/04 (b)............. 1,555,369
2,500,000 Province of Alberta 6.375%, 6/01/04 (b)............... 1,623,316
3,000,000 Province of British Columbia 7.750% 6/16/03 (b)....... 2,141,565
1,300,000 Province of Ontario 8.000% 3/11/03 (b)................ 933,568
------------
11,056,866
------------
OIL AND GAS-6.7%
1,050,000 Coastal Corp. 10.000%, 2/01/01........................ 1,192,149
2,180,000 Coastal Corp. 10.250%, 10/15/04....................... 2,615,673
600,000 Maxus Energy Corp. 10.190% 5/09/96.................... 599,250
750,000 Oryx Energy Co. 9.750%, 9/15/98....................... 751,875
800,000 Oryx Energy Co. 10.000%, 6/15/99...................... 859,000
3,290,000 Oryx Energy Co. 10.000%, 4/01/01...................... 3,602,550
------------
9,620,497
------------
PUBLISHING-4.2%
3,000,000 Time Warner Co. 10.150%, 5/01/12...................... 3,506,250
750,000 Time Warner Co. 8.875%, 10/01/12...................... 791,250
2,150,000 Western Publishing Group, Inc. 7.650%, 9/15/02........ 1,749,563
------------
6,047,063
------------
TELECOMMUNICATIONS-4.2%
2,750,000 Tele-Communications, Inc., 9.250%, 1/15/03............ 2,796,860
3,000,000 US-West Communication, 8.875% 6/01/31................. 3,339,210
------------
6,136,070
------------
UTILITIES-(DIVERSIFIED)-3.7%
1,250,000 Arizona Public Service Co. 10.250% 5/15/20............ 1,461,788
1,250,000 New York State Electric & Gas Co. 9.875%, 2/01/20..... 1,331,863
2,250,000 New York State Electric & Gas Co. 8.875%, 11/01/21.... 2,499,186
------------
5,292,837
------------
</TABLE>
See accompanying notes to financial statements.
89
<PAGE>
New England Zenith Fund
(Bond Income Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Bonds and Notes-Continued
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
UTILITIES-(ELECTRIC)-9.1%
$4,200,000 Arizona Public Service Co. 8.000%, 12/30/15.......... $ 4,195,716
7,000,000 Tennesse Valley Electric, 6.125%, 7/15/03............ 6,816,390
300,000 Texas Utilities Electric Co. 10.150%, 3/01/99........ 335,253
1,700,000 Texas Utilities Electric Co. 8.875%, 2/01/22......... 1,836,850
------------
13,184,209
------------
UTILITIES-(GAS)-2.8%
2,400,000 Southern California Gas Co. 8.750%, 10/01/2021....... 2,693,496
1,250,000 USX Marathon Group 9.125%, 1/15/13................... 1,325,113
------------
4,018,609
------------
YANKEE-9.7%
900,000 British Columbia Hydro & Power 12.500% 9/01/13....... 1,083,555
5,000,000 Hydro Quebec 8.050% 7/07/24.......................... 5,446,300
450,000 Petroleos Mexicanos 7.100%, 4/07/97.................. 421,083
2,400,000 Petroleos Mexicanos 8.625%, 12/01/23................. 1,608,000
1,500,000 Province of Ontario 6.125%, 8/17/99.................. 1,493,400
1,500,000 Republic of Columbia 8.750%, 10/6/99................. 1,553,130
2,500,000 Republic of Columbia 7.750%, 2/23/04................. 2,362,125
------------
13,967,593
------------
Total Corporate Bonds and Notes (Identified Cost
$94,030,390)........................................ 97,338,354
------------
U.S. GOVERNMENT AND AGENCIES-20.8%
70,546 Federal Home Loan Bank 9.000%, 5/01/01............... 73,258
26,343 Federal Home Loan Bank 9.000%, 9/01/01............... 27,356
6,000,000 Federal National Mortgage Association 7.850% 9/10/04. 6,221,160
Government National Mortgage Association 7.000%
5,762,273 2/15/24............................................. 5,679,468
Government National Mortgage Association 7.500%
4,353,855 7/15/23............................................. 4,385,160
Government National Mortgage Association 8.500% with
2,530,051 various maturities to 2022.......................... 2,630,469
Government National Mortgage Association 9.000%
258,940 10/15/16............................................ 272,291
2,500,000 Student Loan Marketing Association 7.820% 10/14/99... 2,534,950
1,500,000 U.S. Treasury Notes 6.375% 7/15/99................... 1,520,910
2,500,000 U.S. Treasury Notes 8.500% 11/15/00.................. 2,781,650
3,500,000 U.S. Treasury Notes 8.000% 5/15/01................... 3,836,070
------------
Total U.S. Government and Agencies (Identified Cost
$30,244,425)........................................ 29,962,742
------------
Total Bonds and Notes (Identified Cost $124,274,815). 127,301,096
------------
</TABLE>
See accompanying notes to financial statements.
90
<PAGE>
New England Zenith Fund
(Bond Income Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Short-Term Investments-9.9%
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE (a)
-------------------------------------------------------------------------------
<C> <S> <C>
$2,255,000 American Express Credit Corp. 5.500%, 7/03/95....... $ 2,254,311
6,000,000 General Motors Acceptance Corp. 5.800%, 7/03/95..... 5,998,066
6,000,000 Household Finance Corp. 6.050%, 7/03/95............. 5,997,983
------------
Total Short-Term Investments (Identified Cost
$14,250,360)....................................... 14,250,360
------------
Total Investments-98.2% (Identified Cost
$138,825,644) (b).................................. 141,551,456
Cash and Receivables................................ 2,852,049
Liabilities......................................... (304,190)
------------
Total Net Assets-100%............................... $144,099,315
============
</TABLE>
(a)See Note 1A.
(b) Federal Tax Information: At June 30, 1995 the net unrealized appreciation
on investments based on cost of $138,825,644 for federal income tax
purposes was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value
over tax cost................................................ $ 5,133,618
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax
cost over value.............................................. (2,407,806)
------------
Net unrealized appreciation................................... $ 2,725,812
============
</TABLE>
(c)Denominated in Canadian dollars.
See accompanying notes to financial statements.
91
<PAGE>
New England Zenith Fund
(U.S. Government Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Bonds & Notes-82.8% of Total Net Assets
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C>
FEDERAL AGENCY-50.9%
$250,000 Federal Home Loan Banks 6.49% 9/08/97..................... $ 251,630
300,000 Federal Home Loan Banks 5.94% 6/13/00..................... 297,961
100,000 Federal Home Loan Mortgage 5.25% 11/15/13................. 96,544
100,000 Federal National Mortgage Association 6.25% 3/25/18....... 98,054
250,000 Federal National Mortgage Association 5.94% 1/29/98....... 248,345
450,000 Federal National Mortgage Association Pool TBA 1/01/99.... 432,844
250,000 Student Loan Marketing Association 7.50% 3/08/00.......... 262,995
----------
1,688,373
----------
U.S. TREASURY-31.9%
350,000 U.S. Treasury Bonds 8.875% 8/15/17........................ 436,173
200,000 U.S. Treasury Notes 7.75% 1/31/00......................... 213,732
100,000 U.S. Treasury Notes 6.75% 4/30/00......................... 103,048
300,000 U.S. Treasury Notes 6.25% 5/31/00......................... 303,129
----------
1,056,082
----------
Total Bonds & Notes (Identified Cost $2,658,381).......... 2,744,455
----------
</TABLE>
--------------------------------------------------------------------------------
Short-Term Investments-27.3%
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
<C> <S> <C>
904,000 Repurchase agreement with State Street Bank & Trust
Company dated 7/3/95 at 6.00% to be repurchased at
$904,452 on 7/3/95 collateralized by $895,000.00 U.S.
Treasury Notes
6.875% due 3/31/97 with a value of $924,445............. 904,000
----------
Total Short-Term Investments (Identified Cost $904,000). 904,000
----------
Total Investments-110.1% (Identified Cost $3,562,381)(b) 3,648,455
Cash & Receivables...................................... 118,888
Liabilities............................................. (451,865)
----------
Total Net Assets-100%................................... $3,315,478
==========
(a)See Note 1A.
(b)Federal Tax Information: At June 30, 1995 the net unrealized appreciation on
investments based on cost
of $3,562,381 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value over
tax cost...................................................... $ 90,297
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost
over value.................................................... (4,223)
----------
Net unrealized appreciation....................................... $ 86,074
==========
</TABLE>
See accompanying notes to financial statements.
92
<PAGE>
New England Zenith Fund
(Money Market Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Investments-98.4% of Total Net Assets
<TABLE>
<CAPTION>
FACE INTEREST MATURITY
VALUE DESCRIPTION RATE DATE VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
BANKERS ACCEPTANCE-2.7%
$1,000,000 First Union National Bank............ 6.140% 8/23/95 $ 990,961
1,219,635 State Street Bank & Trust............ 6.090 9/05/95 1,206,018
-----------
Total Bankers Acceptance ($2,196,979)................... 2,196,979
-----------
CERTIFICATE OF DEPOSIT-4.8%
1,000,000 Societe Generale..................... 6.010 7/18/95 1,000,004
1,000,000 Societe Generale..................... 6.020 7/24/95 999,994
1,000,000 Canadian Imperial Bank............... 5.980 8/24/95 1,000,000
1,000,000 Rabobank Nederland NV................ 6.660 2/27/96 998,738
-----------
Total Certificate of Deposit ($3,998,736)............... 3,998,736
-----------
COMMERCIAL PAPER-92.6%
AUTOMOTIVE-9.3%
1,300,000 Ford Motor Credit Corp............... 5.960 7/11/95 1,297,848
800,000 General Motors Acceptance Corp....... 5.970 7/17/95 797,877
1,400,000 Ford Motor Credit Corp............... 5.950 7/24/95 1,394,678
1,500,000 General Motors Acceptance Corp....... 5.990 7/27/95 1,493,511
250,000 General Motors Acceptance Corp....... 6.000 8/01/95 248,708
1,400,000 General Motors Acceptance Corp....... 6.050 8/08/95 1,391,059
1,000,000 Ford Motor Credit Corp............... 6.050 1/12/96 967,229
-----------
7,590,910
-----------
BANKING-20.1%
1,000,000 Banque Nationale de Paris............ 6.420 7/03/95 999,643
400,000 Deutsche Bank........................ 6.200 7/06/95 399,656
1,300,000 Societe Generale..................... 6.100 7/10/95 1,298,017
1,500,000 Canadian Imperial Holding, Inc....... 5.920 7/26/95 1,493,833
1,000,000 J.P. Morgan & Co., Inc............... 6.170 7/31/95 994,858
855,000 Commerzbank.......................... 5.950 8/04/95 850,195
1,145,000 Dresdner US Finance.................. 6.150 8/07/95 1,137,762
1,000,000 ABN Bank Canada...................... 5.910 8/09/95 993,598
1,000,000 Bank of Nova Scotia.................. 5.830 8/10/95 993,522
1,000,000 Canadian Imperial Holding, Inc....... 5.930 8/16/95 992,423
1,300,000 Toronto Dominion Holdings............ 6.120 9/18/95 1,282,541
1,000,000 Commerzbank.......................... 5.880 9/08/95 988,730
1,000,000 Norwest Corp......................... 5.880 9/28/95 985,463
1,000,000 Commerzbank.......................... 6.160 10/03/95 983,916
1,000,000 Dresdner US Finance.................. 6.060 11/01/95 979,295
1,000,000 Commerzbank.......................... 6.050 11/02/95 979,161
-----------
16,352,613
-----------
DRUGS-3.7%
315,000 American Home Products Corp.......... 5.970 7/07/95 314,687
1,000,000 American Home Products Corp.......... 5.980 7/19/95 997,010
1,000,000 American Home Products Corp.......... 5.950 8/03/95 994,546
705,000 American Home Products Corp.......... 5.960 8/09/95 700,448
-----------
3,006,691
-----------
</TABLE>
See accompanying notes to financial statements.
93
<PAGE>
New England Zenith Fund
(Money Market Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Investments-Continued
<TABLE>
<CAPTION>
FACE INTEREST MATURITY
VALUE DESCRIPTION RATE DATE VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
ELECTRICAL EQUIPMENT-3.0%
$1,800,000 General Electric Capital Corp. ...... 6.230% 7/06/95 $ 1,798,442
270,000 General Electric Capital Corp. ...... 5.950 8/31/95 267,278
400,000 General Electric Capital Corp. ...... 5.850 10/25/95 392,460
-----------
2,458,180
-----------
FINANCE-25.3%
1,000,000 Sears Roebuck Acceptance Corp........ 5.950 7/11/95 998,347
1,000,000 American Express Credit Corp......... 6.120 7/12/95 998,130
735,000 Beneficial Corp...................... 6.000 7/12/95 733,653
1,500,000 Transamerica Financial Group......... 5.960 7/13/95 1,497,020
1,000,000 American General Corp. .............. 6.040 7/14/95 997,819
965,000 Beneficial Corp...................... 5.940 7/20/95 961,975
645,000 American Express Credit Corp......... 6.080 7/25/95 642,386
1,050,000 Avco Financial Services, Inc. ....... 5.960 7/25/95 1,045,828
1,200,000 Sears Roebuck Acceptance Corp........ 5.980 7/26/95 1,195,017
1,000,000 Hanson Finance PLC................... 6.000 7/27/95 995,667
1,000,000 Avco Financial Services, Inc. ....... 5.960 7/31/95 995,033
1,310,000 Household Financial Corp............. 5.950 8/01/95 1,303,288
1,000,000 Transamerica Financial Group......... 6.250 8/03/95 994,271
1,000,000 Avco Financial Services, Inc. ....... 5.950 8/08/95 993,719
1,000,000 USAA Capital Corp. .................. 5.890 8/10/95 993,455
1,000,000 Sears Roebuck Acceptance Corp. ...... 5.950 8/11/95 993,224
1,690,000 USAA Capital Corp. .................. 5.950 8/21/95 1,675,755
1,000,000 American Express Credit Corp......... 5.870 10/06/95 984,184
300,000 Transamerica Financial Group......... 5.890 11/02/95 293,914
700,000 American Express Credit Corp. ....... 5.910 11/10/95 684,831
600,000 American Express Credit Corp......... 5.700 12/26/95 583,090
-----------
20,560,606
-----------
FOOD & TOBACCO-9.1%
2,000,000 BAT Capital Corp..................... 5.970 7/17/95 1,994,693
800,000 Philip Morris Companies, Inc......... 5.930 7/17/95 797,892
1,000,000 Philip Morris Companies, Inc......... 5.770 8/22/95 991,665
1,200,000 Philip Morris Companies, Inc......... 5.900 9/05/95 1,187,020
1,000,000 Pepsico, Inc......................... 6.410 10/31/95 978,277
500,000 Coca Cola Co......................... 6.050 1/11/96 483,699
1,000,000 Coca Cola Co......................... 6.100 1/11/96 967,128
-----------
7,400,374
-----------
INSURANCE-4.7%
1,300,000 Prudential Funding Corp.............. 5.950 7/05/95 1,329,121
1,275,000 Met Life Funding Corp................ 6.000 7/07/95 1,273,725
1,200,000 Prudential Funding Corp.............. 5.980 7/14/95 1,197,409
-----------
3,800,255
-----------
MANAGEMENT SERVICES-2.4%
1,000,000 PHH Corp. ........................... 5.870 7/12/95 998,206
965,000 PHH Corp. ........................... 5.960 7/28/95 960,686
-----------
1,958,892
-----------
</TABLE>
See accompanying notes to financial statements.
94
<PAGE>
New England Zenith Fund
(Money Market Series)
Investments as of June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
Investments-Continued
<TABLE>
<CAPTION>
FACE INTEREST MATURITY
VALUE DESCRIPTION RATE DATE VALUE (a)
--------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
POLLUTION CONTROL-2.4%
$1,045,000 WMX Technologies, Inc............... 6.300% 8/09/95 $ 1,037,868
918,000 WMX Technologies, Inc............... 6.280 9/12/95 906,310
-----------
1,944,178
-----------
SECURITIES-12.6%
500,000 Smith Barney, Inc................... 5.950 7/06/95 499,587
325,000 Merrill Lynch & Co.................. 5.960 7/07/95 324,677
1,200,000 Goldman Sachs Group................. 6.230 7/10/95 1,198,131
910,000 Merrill Lynch & Co.................. 5.950 7/13/95 908,195
865,000 Merrill Lynch & Co.................. 5.930 7/21/95 862,150
900,000 Merrill Lynch & Co.................. 5.970 7/24/95 896,567
2,000,000 Smith Barney, Inc................... 5.970 8/02/95 1,989,387
1,000,000 Smith Barney, Inc................... 5.940 8/04/95 994,390
1,000,000 Goldman Sachs Group................. 5.880 10/13/95 983,013
800,000 Goldman Sachs Group................. 5.840 11/14/95 782,350
790,000 Goldman Sachs Group................. 5.650 11/21/95 772,270
-----------
10,210,717
-----------
Total Commercial Paper (Cost $75,283,416).............. 75,283,416
-----------
Total Investments-100.1% (Cost $81,479,131) (b)........ 81,479,131
Cash and Receivables................................... 486,640
Liabilities............................................ (625,568)
-----------
Total Net Assets-100%.................................. $81,340,203
===========
</TABLE>
(a)See Note 1A.
(b)The aggregate cost for federal income tax purposes was $81,479,131.
See accompanying notes to financial statements.
95
<PAGE>
New England Zenith Fund
--------------------------------------------------------------------------------
Statement of Assets and Liabilities
June 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
BOND CAPITAL MONEY STOCK AVANTI VALUE SMALL
INCOME GROWTH MARKET INDEX MANAGED GROWTH GROWTH CAP
------------ ------------ ----------- ----------- ------------ ----------- ----------- -----------
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments at value
Securities.......... $141,551,456 $842,920,613 $81,479,131 $49,227,528 $134,369,836 $37,057,561 $33,029,861 $11,806,292
Repurchase
Agreements......... 0 0 0 1,014,000 0 0 960,000 2,690,000
------------ ------------ ----------- ----------- ------------ ----------- ----------- -----------
Total Investments.... 141,551,456 842,920,613 81,479,131 50,241,528 134,369,836 37,057,561 33,989,861 14,496,292
------------ ------------ ----------- ----------- ------------ ----------- ----------- -----------
Cash................. 9,414 537,766 3,643 128 3,243 0 544 3,607
Receivable for:
Shares of the Fund
sold............... 144,869 534,121 440,211 53,537 41,557 46,980 82,142 85,263
Securities sold..... 0 30,170,243 0 160,669 0 0 0 49,856
Dividends and
Interest........... 2,697,766 1,286,895 42,786 108,181 1,254,077 33,211 59,598 8,819
Withholding Tax..... 0 0 0 1,997 3,059 0 0 0
Receivable due from
advisor............. 0 0 0 12,436 0 13,656 16,855 0
------------ ------------ ----------- ----------- ------------ ----------- ----------- -----------
144,403,505 875,449,638 81,965,771 50,578,476 135,671,772 37,151,408 34,149,000 14,643,837
------------ ------------ ----------- ----------- ------------ ----------- ----------- -----------
LIABILITIES
Payable for:
Securities
purchased.......... 0 29,346,000 0 769,864 0 161,326 0 358,274
Shares of the Fund
redeemed........... 172,967 538,111 184,072 11,022 114,260 10,457 3,078 1,516
Dividends declared.. 0 0 358,826 0 0 0 0 0
Accrued expenses:
Management fees..... 21,567 435,240 21,395 4,023 31,356 15,234 14,617 2,519
Deferred trustees'
fees............... 31,460 41,029 23,792 29,075 26,703 681 680 0
Other expenses...... 78,196 122,354 37,483 22,917 72,782 20,403 23,553 0
------------ ------------ ----------- ----------- ------------ ----------- ----------- -----------
304,190 30,482,734 625,568 836,901 245,101 208,101 41,928 362,309
------------ ------------ ----------- ----------- ------------ ----------- ----------- -----------
NET ASSETS........... $144,099,315 $844,966,904 $81,340,203 $49,741,575 $135,426,671 $36,943,307 $34,107,072 $14,281,528
============ ============ =========== =========== ============ =========== =========== ===========
Net Assets consist
of:
Capital paid in..... $138,633,629 $648,737,327 $81,340,203 $39,765,752 $110,340,704 $30,513,320 $28,627,896 $13,342,996
Undistributed net
investment income.. 4,959,902 3,770,603 0 510,889 2,732,399 95,473 232,422 48,869
Accumulated net
realized gains
(losses)........... (2,220,426) 27,616,659 0 453,828 (10,882) 9,151 (545,375) 185,612
Unrealized
appreciation
(depreciation) on
investments,
options and
futures............ 2,726,210 164,842,315 0 9,011,106 22,364,450 6,325,363 5,792,129 704,051
------------ ------------ ----------- ----------- ------------ ----------- ----------- -----------
NET ASSETS........... $144,099,315 $844,966,904 $81,340,203 $49,741,575 $135,426,671 $36,943,307 $34,107,072 $14,281,528
============ ============ =========== =========== ============ =========== =========== ===========
Shares of beneficial
interest
outstanding, no par
value............... 1,334,260 2,121,401 813,402 549,979 889,733 273,134 259,601 133,061
============ ============ =========== =========== ============ =========== =========== ===========
Computation of
offering price:
Net asset value and
redemption price per
share
(Net assets/Shares of
beneficial interest
outstanding)........ $ 108.00 $ 398.31 $ 100.00 $ 90.44 $ 152.21 $ 135.26 $ 131.38 $ 107.33
============ ============ =========== =========== ============ =========== =========== ===========
Identified cost of
investments......... $138,825,644 $678,078,298 $81,479,131 $41,230,422 $112,005,475 $30,732,198 $28,197,732 $13,792,241
============ ============ =========== =========== ============ =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
96
<PAGE>
New England Zenith Fund
--------------------------------------------------------------------------------
Statement of Assets and Liabilities--Continued
June 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
INTERNATIONAL STRATEGIC BOND
BALANCED EQUITY U.S. GOVERNMENT OPPORTUNITIES VENTURE VALUE EQUITY GROWTH
SERIES SERIES SERIES SERIES SERIES SERIES
---------- ------------- --------------- -------------- ------------- -------------
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments at value
Securities............. $8,576,873 $ 8,829,796 $2,744,455 $4,510,769 $16,373,245 $19,386,764
Repurchase Agreements.. 328,000 815,000 904,000 419,000 765,000 0
---------- ----------- ---------- ---------- ----------- -----------
Total Investments....... 8,904,873 9,644,796 3,648,455 4,929,769 17,138,245 19,386,764
---------- ----------- ---------- ---------- ----------- -----------
Cash.................... 495 2,415 206 550 2,110 0
Foreign currency at
value.................. 0 243,519 0 0 0 0
Receivable for:
Shares of the Fund
sold.................. 15,809 24,247 40,055 18,101 33,675 45,106
Securities sold........ 101,725 220,239 0 0 141,659 0
Foreign currency sold.. 0 225,864 0 2,276 0 0
Foreign exchange
contracts............. 0 0 0 758,406 0 0
Dividends and interest. 82,295 48,170 41,229 105,256 30,520 12,652
Unamortized organization
expenses............... 8,719 8,719 8,719 8,719 8,719 8,719
Receivable due from
advisor................ 29,835 36,762 28,679 26,557 29,054 23,103
---------- ----------- ---------- ---------- ----------- -----------
9,143,751 10,454,731 3,767,343 5,849,634 17,383,982 19,476,344
---------- ----------- ---------- ---------- ----------- -----------
LIABILITIES
Payable for:
Securities purchased... 139,745 601,673 436,072 0 393,560 631,786
Foreign currency
purchased............. 0 226,203 0 2,281 0 0
Foreign exchange
contracts............. 0 0 0 764,664 0
Shares of the Fund
redeemed.............. 6,298 11,007 0 30,920 3,553 30,137
Foreign taxes.......... 0 5,944 0 305 0 158
Accrued expenses:
Management fees........ 3,321 5,718 489 1,375 5,815 6,359
Deferred trustees'
fees.................. 128 127 128 127 128 127
Other expenses......... 17,874 24,452 15,176 15,748 24,101 18,293
---------- ----------- ---------- ---------- ----------- -----------
167,366 875,124 451,865 815,420 427,157 686,860
---------- ----------- ---------- ---------- ----------- -----------
$8,976,385 $ 9,579,607 $3,315,478 $5,034,214 $16,956,825 $18,789,484
========== =========== ========== ========== =========== ===========
NET ASSETS
Net Assets consist of:
Capital paid in........ $8,212,372 $ 9,382,882 $3,133,046 $4,655,247 $15,055,098 $16,194,492
Undistributed/(in
excess) net investment
income................ 118,378 92,406 65,912 171,975 76,914 20,212
Accumulated net
realized gains
(losses).............. 70,407 (43,964) 30,446 34,134 37,677 470,653
Unrealized appreciation
(depreciation) on
investments, options
and futures........... 575,228 148,283 86,074 172,858 1,787,136 2,104,127
---------- ----------- ---------- ---------- ----------- -----------
NET ASSETS.............. $8,976,385 $ 9,579,607 $3,315,478 $5,034,214 $16,956,825 $18,789,484
========== =========== ========== ========== =========== ===========
Shares of beneficial
interest outstanding,
no par value........... 780,034 929,721 304,229 460,066 1,435,390 1,484,355
========== =========== ========== ========== =========== ===========
Computation of offering
price:
Net asset value and
redemption price per
share
(Net assets / Shares of
beneficial interest
outstanding)........... $ 11.51 $ 10.30 $ 10.90 $ 10.94 $ 11.81 $ 12.66
========== =========== ========== ========== =========== ===========
Identified cost of
investments............ $8,329,645 $ 9,499,409 $3,562,381 $4,750,688 $15,351,109 $17,282,637
========== =========== ========== ========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
97
<PAGE>
New England Zenith Fund
--------------------------------------------------------------------------------
Statement of Operations
For the Six Months Ended June 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
BOND CAPITAL MONEY STOCK AVANTI VALUE SMALL
INCOME GROWTH MARKET INDEX MANAGED GROWTH GROWTH CAP
----------- ------------ ---------- ---------- ----------- ---------- ---------- --------
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends............... $ 5,982,181 $ 566,594 $ 1,224,551 $ 163,691 $ 311,820 $ 28,533
Interest................ $ 5,328,412 48,273 $2,286,274 30,038 1,922,703 59,445 38,631 63,679
----------- ------------ ---------- ---------- ----------- ---------- ---------- --------
5,328,412 6,030,454 2,286,274 596,632 3,147,254 223,136 350,451 92,212
----------- ------------ ---------- ---------- ----------- ---------- ---------- --------
EXPENSES
Management fees......... 268,007 2,341,174 129,404 53,587 320,278 105,131 97,196 43,342
Trustees' fees and
expenses............... 14,524 16,650 11,748 9,000 14,515 8,979 8,974 8,953
Custodian fees.......... 35,579 67,573 25,882 35,865 30,691 33,372 29,419 38,901
Audit................... 8,893 8,893 5,392 5,459 8,892 4,958 4,958 4,870
Legal................... 6,078 3,958 6,078 6,078 6,078 6,230 6,230 7,862
Printing................ 30,950 87,413 12,358 9,703 27,962 8,645 8,510 1,609
Miscellaneous........... 6,326 12,929 1,005 5,452 6,524 1,440 4,189 1,662
----------- ------------ ---------- ---------- ----------- ---------- ---------- --------
370,357 2,538,590 191,867 125,144 414,940 168,755 159,476 107,199
Less expenses assumed by
the investment adviser. (1,847) 0 (6,999) (39,401) 0 (41,092) (41,447) (63,856)
----------- ------------ ---------- ---------- ----------- ---------- ---------- --------
NET INVESTMENT INCOME... 4,959,902 3,491,864 2,101,406 510,889 2,732,314 95,473 232,422 48,869
----------- ------------ ---------- ---------- ----------- ---------- ---------- --------
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS, FUTURES
CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS
Realized gain (loss)
on:
Investments-net........ 74,268 27,616,659 0 587,753 1,095,415 438,999 88,643 187,466
Futures Contracts-net.. 0 0 0 0 84,750 0 0 0
Foreign Currency
transactions-net...... 639 0 0 0 (1,210) 0 0 0
----------- ------------ ---------- ---------- ----------- ---------- ---------- --------
Total realized gain
(loss) on investments,
futures contracts and
foreign currency
transactions........... 74,907 27,616,659 0 587,753 1,178,955 438,999 88,643 187,466
----------- ------------ ---------- ---------- ----------- ---------- ---------- --------
Unrealized appreciation
(depreciation) on:
Investments--net....... 11,560,588 152,701,833 0 6,788,066 16,163,947 5,177,818 5,049,111 745,422
Foreign Currency
transactions-net....... 4,070 0 0 0 89 0 0 0
----------- ------------ ---------- ---------- ----------- ---------- ---------- --------
Total unrealized
appreciation
(depreciation) on
investments and foreign
currency transactions.. 11,564,658 152,701,833 0 6,788,066 16,164,036 5,177,818 5,049,111 745,422
----------- ------------ ---------- ---------- ----------- ---------- ---------- --------
Net gain (loss) on
investments, futures
contracts and foreign
currency transactions.. 11,639,565 180,318,492 0 7,375,819 17,342,991 5,616,817 5,137,754 932,888
----------- ------------ ---------- ---------- ----------- ---------- ---------- --------
NET INCREASE (DECREASE)
IN NET ASSETS FROM
OPERATIONS............. $16,599,467 $183,810,356 $2,101,406 $7,886,708 $20,075,305 $5,712,290 $5,370,176 $981,757
=========== ============ ========== ========== =========== ========== ========== ========
</TABLE>
See accompanying notes to financial statements.
98
<PAGE>
New England Zenith Fund
--------------------------------------------------------------------------------
Statement of Operations--Continued
For the Six Months Ended June 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
INTERNATIONAL STRATEGIC BOND
BALANCED EQUITY U.S. GOVERNMENT OPPORTUNITIES VENTURE VALUE EQUITY GROWTH
SERIES SERIES SERIES SERIES SERIES SERIES
-------- ------------- --------------- -------------- ------------- -------------
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends............... $ 33,551 $ 93,415* $ 93,859 $ 26,861
Interest................ 106,017 40,575 $ 73,471 $188,465 25,670 31,148
-------- --------- -------- -------- ---------- ----------
139,568 133,990 73,471 188,465 119,529 58,009
-------- --------- -------- -------- ---------- ----------
EXPENSES
Management fees......... 17,658 28,787 5,940 12,611 35,512 31,127
Trustees' fees and
expenses............... 8,955 8,954 8,954 8,956 8,955 8,953
Custodian fees.......... 23,481 53,539 18,000 18,534 39,395 26,302
Audit................... 11,581 11,581 11,581 11,581 11,581 11,581
Legal................... 6,728 6,728 6,728 6,728 6,728 6,728
Printing................ 570 1,818 204 455 1,647 1,032
Registration............ 7 7 7 7 7 7
Organization............ 1,333 1,333 1,333 1,333 1,333 1,333
Miscellaneous........... 887 887 886 889 867 886
-------- --------- -------- -------- ---------- ----------
71,200 113,634 53,633 61,094 106,025 87,949
Less expenses assumed by
investment adviser..... (49,758) (72,050) (46,074) (44,604) (63,410) (50,152)
-------- --------- -------- -------- ---------- ----------
NET INVESTMENT INCOME... 118,126 92,406 65,912 171,975 76,914 20,212
-------- --------- -------- -------- ---------- ----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS, FUTURES
CONTRACTS AND
FOREIGN CURRENCY
TRANSACTIONS
Realized gain (loss)
on:
Investments-net........ 70,407 (139,843) 36,693 67,655 37,677 478,591
Foreign Currency
transactions-net...... 0 96,202 0 2,639 0 0
-------- --------- -------- -------- ---------- ----------
Total realized gain
(loss) on investments,
futures contracts and
foreign currency
transactions........... 70,407 (43,641) 36,693 70,294 37,677 478,591
-------- --------- -------- -------- ---------- ----------
Unrealized appreciation
(depreciation) on
investments-net........ 577,063 89,772 87,170 227,456 1,810,478 2,182,743
-------- --------- -------- -------- ---------- ----------
Net gain (loss) on
investments, futures
contracts and foreign
currency transactions.. 647,470 46,131 123,863 297,750 1,848,155 2,661,334
-------- --------- -------- -------- ---------- ----------
NET INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS........ $765,596 $ 138,537 $189,775 $469,725 $1,925,069 $2,681,546
======== ========= ======== ======== ========== ==========
</TABLE>
* Net of foreign withholding tax of $12,839.
See accompanying notes to financial statements.
99
<PAGE>
New England Zenith Fund
--------------------------------------------------------------------------------
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
BOND INCOME CAPITAL GROWTH
---------------------------- -----------------------------
YEAR ENDED SIX MONTHS YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30, DECEMBER 31, ENDED JUNE 30,
1994 1995 1994 1995
------------ -------------- ------------- --------------
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income... $ 8,708,335 $ 4,959,902 $ 10,848,989 $ 3,491,864
Net realized gain (loss)
on investments and
foreign currency
transactions........... (2,245,611) 74,907 18,279,890 27,616,659
Unrealized appreciation
(depreciation) on
investments and foreign
currency transactions.. (10,925,944) 11,564,658 (79,261,045) 152,701,833
------------ ------------ ------------- -------------
Increase (decrease) in
net assets from
operations............. (4,463,220) 16,599,467 (50,132,166) 183,810,356
------------ ------------ ------------- -------------
FROM DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income... (8,697,370) 0 (10,566,409) 0
In excess of net
investment income...... (6,472) 0 0 0
Net realized gain on
investments............ 0 0 (19,094,533) 0
------------ ------------ ------------- -------------
(8,703,842) 0 (29,660,942) 0
------------ ------------ ------------- -------------
FROM CAPITAL SHARES
TRANSACTIONS
Proceeds from the sale
of shares.............. 50,909,294 20,910,329 265,969,106 102,166,425
Net asset value of
shares issued in
connection with the
reinvestment of:
Distributions from net
investment income..... 8,703,842 0 10,556,416 0
Distributions from net
realized gain......... 0 0 18,284,122 0
------------ ------------ ------------- -------------
59,613,136 20,910,329 294,809,644 102,166,425
Cost of shares redeemed. (51,454,492) (19,644,098) (192,273,754) (108,136,578)
------------ ------------ ------------- -------------
Increase (decrease) in
net assets derived from
capital share
transactions........... 8,158,644 1,266,231 102,535,890 (5,970,153)
------------ ------------ ------------- -------------
Total increase
(decrease) in net
assets................. (5,008,418) 17,865,698 22,742,782 177,840,203
NET ASSETS
Beginning of the period. 131,242,035 126,233,617 644,383,919 667,126,701
------------ ------------ ------------- -------------
End of the period....... $126,233,617 $144,099,315 $ 667,126,701 $ 844,966,904
============ ============ ============= =============
UNDISTRIBUTED NET
INVESTMENT INCOME
Beginning of the period. $ 0 $ 0 ($1,766) $ 278,739
============ ============ ============= =============
End of the period....... $ 0 $ 4,959,902 $ 278,739 $ 3,770,603
============ ============ ============= =============
NUMBER OF SHARES OF THE
FUND:
Issued from the sale of
shares................. 493,361 206,276 773,701 301,977
Issued in connection
with the reinvestment
of:
Distributions from net
investment income..... 90,987 0 33,768 0
Distributions from net
realized gain......... 0 0 58,487 0
------------ ------------ ------------- -------------
584,348 206,276 865,956 301,977
Redeemed................ (499,476) (193,379) (562,304) (316,783)
------------ ------------ ------------- -------------
Net change.............. 84,872 12,897 303,652 (14,806)
============ ============ ============= =============
</TABLE>
See accompanying notes to financial statements.
100
<PAGE>
New England Zenith Fund
--------------------------------------------------------------------------------
Statement of Changes in Net Assets (Unaudited)-Continued
<TABLE>
<CAPTION>
MONEY MARKET STOCK INDEX
----------------------------- ----------------------------
YEAR ENDED SIX MONTHS YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30, DECEMBER 31, ENDED JUNE 30,
1994 1995 1994 1995
------------- -------------- ------------ --------------
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income... $ 2,614,216 $ 2,101,406 $ 861,746 $ 510,889
Net realized gain (loss)
on investments and
foreign currency
transactions........... 0 0 85,627 587,753
Unrealized appreciation
(depreciation) on
investments and foreign
currency transactions.. 0 0 (489,644) 6,788,066
------------- ------------ ------------ -----------
Increase (decrease) in
net assets from
operations............. 2,614,216 2,101,406 457,729 7,886,708
------------- ------------ ------------ -----------
FROM DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income... (2,614,206) (2,101,406) (861,687) 0
Net realized gain on
investments............ 0 0 (74,418) 0
Paid in capital......... 0 0 (28,861) 0
------------- ------------ ------------ -----------
(2,614,206) (2,101,406) (964,966) 0
------------- ------------ ------------ -----------
FROM CAPITAL SHARES
TRANSACTIONS
Proceeds from the sale
of shares.............. 149,478,320 67,378,860 18,433,352 10,020,630
Net asset value of
shares issued in
connection with the
reinvestment of:
Distributions from net
investment income..... 2,445,979 2,054,214 861,687 0
Distributions from net
realized gain......... 0 0 74,418 0
Distributions from paid
in capital............ 0 0 28,861 0
------------- ------------ ------------ -----------
151,924,299 69,433,074 19,398,318 10,020,630
Cost of shares redeemed. (137,007,701) (62,053,274) (10,543,643) (5,330,051)
------------- ------------ ------------ -----------
Increase (decrease) in
net assets derived from
capital share
transactions........... 14,916,598 7,379,800 8,854,675 4,690,579
------------- ------------ ------------ -----------
Total increase
(decrease) in net
assets................. 14,916,608 7,379,800 8,347,438 12,577,287
NET ASSETS
Beginning of the period. 59,043,795 73,960,403 28,816,850 37,164,288
------------- ------------ ------------ -----------
End of the period....... $ 73,960,403 $ 81,340,203 $ 37,164,288 $49,741,575
============= ============ ============ ===========
UNDISTRIBUTED NET
INVESTMENT INCOME
Beginning of the period. $ 0 $ 0 $ (2,244) $ 0
============= ============ ============ ===========
End of the period....... $ 0 $ 0 $ 0 $ 510,889
============= ============ ============ ===========
NUMBER OF SHARES OF THE
FUND:
Issued from the sale of
shares................. 1,494,783 673,789 324,734 121,378
Issued in connection
with the reinvestment
of:
Distributions from net
investment income..... 24,460 20,542 7,275 0
Distributions from net
realized gain......... 0 0 4,176 0
Distributions from paid
in capital............
------------- ------------ ------------ -----------
1,519,243 694,331 336,185 121,378
Redeemed................ (1,370,077) (620,533) (100,656) (64,644)
============= ============ ============ ===========
Net change.............. 149,166 73,798 235,529 56,734
============= ============ ============ ===========
</TABLE>
See accompanying notes to financial statements.
101
<PAGE>
New England Zenith Fund
--------------------------------------------------------------------------------
Statement of Changes in Net Assets (Unaudited)-Continued
<TABLE>
<CAPTION>
MANAGED AVANTI GROWTH
---------------------------- ----------------------------
YEAR ENDED SIX MONTHS YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30, DECEMBER 31, ENDED JUNE 30,
1994 1995 1994 1995
------------ -------------- ------------ --------------
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income... $ 4,885,826 $ 2,732,314 $ 133,225 $ 95,473
Net realized gain (loss)
on investments and
foreign currency
transactions........... (1,227,890) 1,178,955 (429,848) 438,999
Unrealized appreciation
(depreciation) on
investments and foreign
currency transactions.. (4,971,428) 16,164,036 522,519 5,177,818
------------ ------------ ------------ -----------
Increase (decrease) in
net assets from
operations............. (1,313,492) 20,075,305 225,896 5,712,290
------------ ------------ ------------ -----------
FROM DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income... (4,847,688) 0 (133,225) 0
In excess of net
investment income...... 0 0 (1,266) 0
------------ ------------ ------------ -----------
(4,847,688) 0 (134,491) 0
------------ ------------ ------------ -----------
FROM CAPITAL SHARES
TRANSACTIONS
Proceeds from sale of
shares................. 38,433,190 12,579,098 24,276,118 10,487,560
Net asset value of
shares issued in
connection with
reinvestment of:
Distributions from net
investment income..... 4,847,688 0 134,491 0
------------ ------------ ------------ -----------
43,280,878 12,579,098 24,410,609 10,487,560
Cost of shares redeemed. (36,581,093) (19,105,064) (10,852,176) (4,878,803)
------------ ------------ ------------ -----------
Increase (decrease) in
net assets derived from
capital share
transactions........... 6,699,785 (6,525,966) 13,558,433 5,608,757
------------ ------------ ------------ -----------
Total increase
(decrease) in net
assets................. 538,605 13,549,339 13,649,838 11,321,047
NET ASSETS
Beginning of the period. 121,338,727 121,877,332 11,972,422 25,622,260
------------ ------------ ------------ -----------
End of the period....... $121,877,332 $135,426,671 $ 25,622,260 $36,943,307
============ ============ ============ ===========
UNDISTRIBUTED NET
INVESTMENT INCOME
Beginning of the period. $ 6,388 $ 44,585 $ 0 $ 0
============ ============ ============ ===========
End of the period....... $ 44,526 $ 2,732,399 $ 0 $ 95,473
============ ============ ============ ===========
NUMBER OF SHARES OF THE
FUND:
Issued from the sale of
shares................. 285,556 90,196 219,339 85,998
Issued in connection
with the reinvestment
of:
Distributions from net
investment income..... 37,014 0 1,197 0
------------ ------------ ------------ -----------
322,570 90,196 220,536 85,998
Redeemed................ (271,720) (135,858) (98,649) (40,074)
------------ ------------ ------------ -----------
Net change.............. 50,850 (45,662) 121,887 45,924
============ ============ ============ ===========
</TABLE>
See accompanying notes to financial statements.
102
<PAGE>
New England Zenith Fund
--------------------------------------------------------------------------------
Statement of Changes in Net Assets (Unaudited)-Continued
<TABLE>
<CAPTION>
VALUE GROWTH SMALL CAP
---------------------------- -----------------------------
FOR THE PERIOD
MAY 1, 1994(a)
YEAR ENDED SIX MONTHS THROUGH SIX MONTHS
DECEMBER 31, ENDED JUNE 30, DECEMBER 31, ENDED JUNE 30,
1994 1995 1994 1995
------------ -------------- -------------- --------------
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income... $ 387,990 $ 232,422 $ 4,483 $ 48,869
Net realized gain (loss)
on investments and
foreign currency
transactions........... (633,620) 88,643 455 187,466
Unrealized appreciation
(depreciation) on
investments and foreign
currency transactions.. 298,917 5,049,111 (41,371) 745,422
----------- ----------- ----------- -----------
Increase (decrease) in
net assets from
operations............. 53,287 5,370,176 (36,433) 981,757
----------- ----------- ----------- -----------
FROM DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income... (387,990) 0 (4,709) 0
Paid in capital......... (9,110) 0 0 0
----------- ----------- ----------- -----------
(397,100) 0 (4,709) 0
----------- ----------- ----------- -----------
FROM CAPITAL SHARES
TRANSACTIONS
Proceeds from sale of
shares................. 23,191,269 9,271,190 5,264,621 12,334,105
Net asset value of
shares issued in
connection with
reinvestment of:
Distributions from net
investment income..... 387,990 0 4,709 0
Distributions from paid
in capital............ 9,110 0 0 0
----------- ----------- ----------- -----------
23,588,369 9,271,190 5,269,330 12,334,105
Cost of shares redeemed. (9,392,660) (3,468,456) (2,123,311) (2,139,211)
----------- ----------- ----------- -----------
Increase (decrease) in
net assets derived from
capital share
transactions........... 14,195,709 5,802,734 3,146,019 10,194,894
----------- ----------- ----------- -----------
Total increase
(decrease) in net
assets................. 13,851,896 11,172,910 3,104,877 11,176,651
NET ASSETS
Beginning of the period. 9,082,266 22,934,162 0 3,104,877
----------- ----------- ----------- -----------
End of the period....... $22,934,162 $34,107,072 $ 3,104,877 $14,281,528
=========== =========== =========== ===========
UNDISTRIBUTED NET
INVESTMENT INCOME
Beginning of the period. $ (315) $ 0 $ 0 $ 0
=========== =========== =========== ===========
End of the period....... $ (9,425) $ 232,422 $ 0 $ 48,869
=========== =========== =========== ===========
NUMBER OF SHARES OF THE
FUND:
Issued from the sale of
shares................. 212,075 78,417 95,218 121,943
Issued in connection
with the reinvestment
of:
Distributions from net
investment income..... 3,558 0 49 0
Distributions from paid
in capital............ 73 0 0 0
----------- ----------- ----------- -----------
215,706 78,417 95,267 121,943
Redeemed................ (86,227) (29,154) (63,128) (21,021)
----------- ----------- ----------- -----------
Net change.............. 129,479 49,263 32,139 100,922
=========== =========== =========== ===========
</TABLE>
--------
(a) Commencement of Operations
See accompanying notes to financial statements.
103
<PAGE>
New England Zenith Fund
--------------------------------------------------------------------------------
Statement of Changes in Net Assets (Unaudited)-Continued
<TABLE>
<CAPTION>
INTERNATIONAL
BALANCED SERIES EQUITY SERIES
---------------------------------- ----------------------------------
FOR THE PERIOD FOR THE PERIOD
OCTOBER 31, 1994(a) SIX MONTHS OCTOBER 31, 1994(a) SIX MONTHS
THROUGH ENDED JUNE 30, THROUGH ENDED JUNE 30,
DECEMBER 31, 1994 1995 DECEMBER 31, 1994 1995
------------------- -------------- ------------------- --------------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income... $ 12,585 $ 118,126 $ 7,643 $ 92,406
Net realized gain (loss)
on investments and
foreign currency
transactions........... 0 70,407 (2,176) (43,641)
Unrealized appreciation
(depreciation) on
investments and foreign
currency transactions.. (1,836) 577,063 58,511 89,772
---------- ----------- ----------- -----------
Increase (decrease) in
net assets from
operations............. 10,749 765,596 63,978 138,537
---------- ----------- ----------- -----------
FROM DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income... (12,334) 0 (5,791) 0
Paid-in Capital......... 0 0 (2,628) 0
---------- ----------- ----------- -----------
(12,334) 0 (8,419) 0
---------- ----------- ----------- -----------
FROM CAPITAL SHARES
TRANSACTIONS
Proceeds from the sale
of shares.............. 2,157,989 7,204,251 3,566,918 8,057,641
Net asset value of
shares issued in
connection with the
reinvestment of:
Distributions from net
investment income..... 12,335 0 5,791 0
Distributions from
Paid-in Capital....... 0 0 2,628 0
---------- ----------- ----------- -----------
2,170,324 7,204,251 3,575,337 8,057,641
Cost of shares redeemed. (446,397) (1,715,804) (1,641,679) (1,605,788)
---------- ----------- ----------- -----------
Increase (decrease) in
net assets derived from
capital share
transactions........... 1,723,927 5,488,447 1,933,658 6,451,853
---------- ----------- ----------- -----------
Total increase in net
assets................. 1,722,342 6,254,043 1,989,217 6,590,390
NET ASSETS
Beginning of the period. 1,000,000 2,722,342 1,000,000 2,989,217
---------- ----------- ----------- -----------
End of the period....... $2,722,342 $ 8,976,385 $ 2,989,217 $ 9,579,607
========== =========== =========== ===========
UNDISTRIBUTED NET
INVESTMENT INCOME
Beginning of the period. $ 0 $ 251 $ 0 $ 0
========== =========== =========== ===========
End of the period....... $ 251 $ 118,378 $ 0 $ 92,406
========== =========== =========== ===========
NUMBER OF SHARES OF THE
FUND:
Issued from the sale of
shares................. 217,577 669,026 355,009 794,428
Issued in connection
with the reinvestment
of:
Distributions from net
investment income..... 1,242 0 571 0
Distributions from net
Paid-in Capital....... 0 0 257 0
---------- ----------- ----------- -----------
218,819 669,026 355,837 794,428
Redeemed................ (44,926) (162,886) (163,731) (156,813)
---------- ----------- ----------- -----------
Net change.............. 173,893 506,140 192,106 637,615
========== =========== =========== ===========
</TABLE>
(a) Commencement of Operations
See accompanying notes to financial statements.
104
<PAGE>
New England Zenith Fund
--------------------------------------------------------------------------------
Statement of Changes in Net Assets (Unaudited)-Continued
<TABLE>
<CAPTION>
STRATEGIC BOND
U.S. GOVERNMENT OPPORTUNITIES
SERIES SERIES
---------------------------------- ----------------------------------
FOR THE PERIOD FOR THE PERIOD
OCTOBER 31, 1994(a) SIX MONTHS OCTOBER 31, 1994(a) SIX MONTHS
THROUGH ENDED JUNE 30, THROUGH ENDED JUNE 30,
DECEMBER 31, 1994 1995 DECEMBER 31, 1994 1995
------------------- -------------- ------------------- --------------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income... $ 19,034 $ 65,912 $ 40,922 $ 171,975
Net realized gain (loss)
on investments and
foreign currency
transactions........... (6,247) 36,693 (36,161) 70,294
Unrealized appreciation
(depreciation) on
investments and foreign
currency transactions.. (1,096) 87,170 (54,596) 227,456
----------- ----------- ----------- -----------
Increase (decrease) in
net assets from
operations............. 11,691 189,775 (49,835) 469,725
----------- ----------- ----------- -----------
FROM DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income... (19,034) 0 (40,922) 0
In excess of net
investment income...... (966) 0 (1,078) 0
----------- ----------- ----------- -----------
(20,000) 0 (42,000) 0
----------- ----------- ----------- -----------
FROM CAPITAL SHARES
TRANSACTIONS
Proceeds from the sale
of shares.............. 1,051,370 2,354,096 1,060,215 4,398,699
Net asset value of
shares issued in
connection with the
reinvestment of:
Distributions from net
investment income..... 20,000 0 42,000 0
----------- ----------- ----------- -----------
1,071,370 2,354,096 1,102,215 4,398,699
Cost of shares redeemed. (1,051,370) (1,240,084) (1,060,215) (3,284,375)
----------- ----------- ----------- -----------
Increase (decrease) in
net assets derived from
capital share
transactions........... 20,000 1,114,012 42,000 1,114,324
----------- ----------- ----------- -----------
Total increase
(decrease) in net
assets................. 11,691 1,303,787 (49,835) 1,584,049
NET ASSETS
Beginning of the period. 2,000,000 2,011,691 3,500,000 3,450,165
----------- ----------- ----------- -----------
End of the period....... $ 2,011,691 $ 3,315,478 $ 3,450,165 $ 5,034,214
=========== =========== =========== ===========
UNDISTRIBUTED NET
INVESTMENT INCOME
Beginning of the period. $ 0 $ 0 $ 0 $ 0
=========== =========== =========== ===========
End of the period....... $ 0 $ 65,912 $ 0 $ 171,975
=========== =========== =========== ===========
NUMBER OF SHARES OF THE
FUND:
Issued from the sale of
shares................. 111,982 221,437 106,727 429,926
Issued in connection
with the reinvestment
of:
Distributions from net
investment income..... 2,008 0 4,325 0
----------- ----------- ----------- -----------
113,990 221,437 111,052 429,926
Redeemed................ (111,982) (119,216) (106,727) (324,184)
----------- ----------- ----------- -----------
Net change.............. 2,008 102,221 4,325 105,742
=========== =========== =========== ===========
</TABLE>
(a) Commencement of Operations
See accompanying notes to financial statements.
105
<PAGE>
New England Zenith Fund
--------------------------------------------------------------------------------
Statement of Changes in Net Assets (Unaudited)-Continued
<TABLE>
<CAPTION>
VENTURE VALUE EQUITY GROWTH
SERIES SERIES
---------------------------------- ----------------------------------
FOR THE PERIOD FOR THE PERIOD
OCTOBER 31, 1994(a) SIX MONTHS OCTOBER 31, 1994(a) SIX MONTHS
THROUGH ENDED JUNE 30, THROUGH ENDED JUNE 30,
DECEMBER 31, 1994 1995 DECEMBER 31 1994 1995
------------------- -------------- ------------------- --------------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income... $ 8,452 $ 76,914 $ 3,467 $ 20,212
Net realized gain (loss)
on investments and
foreign currency
transactions........... 0 37,677 (7,937) 478,591
Unrealized appreciation
(depreciation) on
investments and foreign
currency transactions.. (23,343) 1,810,478 (78,617) 2,182,743
----------- ----------- ----------- -----------
Increase (decrease) in
net assets from
operations............. (14,891) 1,925,069 (83,087) 2,681,546
----------- ----------- ----------- -----------
FROM DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income... (8,452) 0 (3,466) 0
In excess of net
investment income...... (1,456) 0 (534) 0
----------- ----------- ----------- -----------
(9,908) 0 (4,000) 0
----------- ----------- ----------- -----------
FROM CAPITAL SHARES
TRANSACTIONS
Proceeds from sale of
shares................. 3,821,298 12,729,086 1,872,491 16,177,247
Net asset value of
shares issued in
connection with
reinvestment of:
Distributions from net
investment income..... 9,908 0 4,000 0
----------- ----------- ----------- -----------
3,831,206 12,729,086 1,876,491 16,177,247
Cost of shares redeemed. (1,434,963) (1,068,774) (1,872,491) (1,986,222)
----------- ----------- ----------- -----------
Increase (decrease) in
net assets derived from
capital share
transactions........... 2,396,243 11,660,312 4,000 14,191,025
----------- ----------- ----------- -----------
Total increase
(decrease) in net
assets................. 2,371,444 13,585,381 (83,087) 16,872,571
NET ASSETS
Beginning of the period. 1,000,000 3,371,444 2,000,000 1,916,913
----------- ----------- ----------- -----------
End of the period....... $ 3,371,444 $16,956,825 $ 1,916,913 $18,789,484
=========== =========== =========== ===========
UNDISTRIBUTED NET
INVESTMENT INCOME
Beginning of the period. $ 0 $ 0 $ 0 $ 0
=========== =========== =========== ===========
End of the period....... $ 0 $ 76,914 $ 0 $ 20,212
=========== =========== =========== ===========
NUMBER OF SHARES OF THE
FUND:
Issued from the sale of
shares................. 397,102 1,181,077 220,620 1,459,911
Issued in connection
with the reinvestment
of:
Distributions from net
investment income..... 1,030 0 421 0
----------- ----------- ----------- -----------
398,132 1,181,077 221,041 1,459,911
Redeemed................ (147,540) (96,279) (220,620) (175,977)
----------- ----------- ----------- -----------
Net change.............. 250,592 1,084,798 421 1,283,934
=========== =========== =========== ===========
</TABLE>
(a) Commencement of Operations
See accompanying notes to financial statements.
106
<PAGE>
New England Zenith Fund
(Small Cap Series)
FINANCIAL HIGHLIGHTS (UNAUDITED)
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
MAY 2, 1994(*) ENDED
THROUGH JUNE 30,
DECEMBER 31, 1994 1995
----------------- ----------
<S> <C> <C>
Net Asset Value, Beginning of Period....... $100.00 $ 96.61
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income..................... 0.14 0.37
Net Realized and Unrealized Gain (Loss) on
Investments.............................. (3.38) 10.35
------- -------
Total From Investment Operations.......... (3.24) 10.72
------- -------
LESS DISTRIBUTIONS
Distributions From Net Investment Income.. (0.15) 0.00
------- -------
Total Distributions....................... (0.15) 0.00
------- -------
Net Asset Value, End of Period............. $ 96.61 $107.33
======= =======
Total Return (%)........................... (3.23)(***) 11.10(***)
Ratio of Operating Expenses to Average Net
Assets (%)................................ 1.00 (**) 1.00(**)
Ratio of Net Investment Income to Average
Net Assets (%)............................ 0.32 (**) 1.13(**)
Portfolio Turnover Rate (%)................ 80 (**) 84(**)
Net Assets, End of Period (000)............ $ 3,105 $14,282
The ratios of expenses to average net
assets without giving effect to the
voluntary expense limitations described in
Note 4 to the Financial Statements would
have been (%)............................. 2.31 (**) 2.47(**)
</TABLE>
(*)Commencement of operations.
(**)Computed on an annualized basis.
(***)Not computed on an annualized basis.
See accompanying notes to financial statements.
107
<PAGE>
New England Zenith Fund
(International Equity Series)
FINANCIAL HIGHLIGHTS (UNAUDITED)
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
OCTOBER 31(*) SIX MONTHS
THROUGH ENDED
DECEMBER 31, 1994 JUNE 30, 1995
----------------- -------------
<S> <C> <C>
Net Asset Value, Beginning of Period...... $10.00 $10.23
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................... 0.03 0.10
Net Realized and Unrealized Gain (Loss)
on Investments.......................... 0.23 (0.03)
------ ------
Total From Investment Operations......... 0.26 0.07
------ ------
LESS DISTRIBUTIONS
Distributions From Net Investment Income. (0.02) 0.00
Distributions From Paid-in Capital....... (0.01) 0.00
------ ------
Total Distributions...................... (0.03) 0.00
------ ------
Net Asset Value, End of Period............ $10.23 $10.30
====== ======
Total Return (%).......................... 2.60 (***) .68(***)
Ratio of Operating Expenses to Average Net
Assets (%)............................... 1.30 (**) 1.30(**)
Ratio of Net Investment Income to Average
Net Assets (%)........................... 2.56 (**) 2.89(**)
Portfolio Turnover Rate (%)............... 4 (**) 74(**)
Net Assets, End of Period (000)........... $2,989 $9,580
The ratios of expenses to average net
assets without giving effect to the
voluntary expense limitations described
in Note 4 to the Financial Statements
would have been (%)...................... 5.38 (**) 3.55 (**)
</TABLE>
(*)Commencement of operations.
(**)Computed on an annualized basis.
(***)Not computed on an annualized basis.
See accompanying notes to financial statements.
108
<PAGE>
New England Zenith Fund
(Equity Growth Series)
FINANCIAL HIGHLIGHTS (UNAUDITED)
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
OCTOBER 31(*) SIX MONTHS
THROUGH ENDED
DECEMBER 31, 1994 JUNE 30, 1995
----------------- -------------
<S> <C> <C>
Net Asset Value, Beginning of Period...... $10.00 $ 9.56
------ -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................... 0.02 0.01
Net Realized and Unrealized Gain (Loss)
on Investments.......................... (0.44) 3.09
------ -------
Total From Investment Operations......... (0.42) 3.10
------ -------
LESS DISTRIBUTIONS
Distributions From Net Investment Income. (0.02) 0.00
------ -------
Total Distributions...................... (0.02) 0.00
------ -------
Net Asset Value, End of Period............ $ 9.56 $ 12.66
====== =======
Total Return (%).......................... (4.20)(***) 32.43(**)
Ratio of Operating Expenses to Average Net
Assets (%)............................... 0.85 (**) 0.85(**)
Ratio of Net Investment Income to Average
Net Assets (%)........................... 1.07 (**) 0.45(**)
Portfolio Turnover Rate (%)............... 32 (**) 111(**)
Net Assets, End of Period (000)........... $1,917 $18,789
The ratios of expenses to average net
assets without giving effect to the
voluntary expense limitations described
in Note 4 to the Financial Statements
would have been (%)...................... 2.74 (**) 1.98(**)
</TABLE>
(*) Commencement of operations.
(**) Computed on an annualized basis.
(***)Not computed on an annualized basis.
See accompanying notes to financial statements.
109
<PAGE>
New England Zenith Fund
(Capital Growth Series)
FINANCIAL HIGHLIGHTS (UNAUDITED)
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------------------------------ JUNE 30,
1990 1991 1992 1993 1994 1995
-------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 260.25 $ 249.04 $ 347.36 $ 322.23 $ 351.63 $ 312.30
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income.. 1.78 3.16 4.04 2.12 5.28 1.65
Net Realized and
Unrealized Gain (Loss)
on Investments........ (10.88) 130.75 (25.10) 46.21 (30.54) 84.36
-------- -------- -------- -------- -------- --------
Total From Investment
Operations............ (9.10) 133.91 (21.06) 48.33 (25.26) 86.01
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Distributions From Net
Investment Income..... (2.11) (3.22) (4.07) (2.18) (5.15) 0.00
Distributions From Net
Realized Capital
Gains................. 0.00 (31.93) 0.00 (16.75) (8.92) 0.00
Distributions From
Paid-in Capital....... 0.00 (0.44) 0.00 0.00 0.00 0.00
-------- -------- -------- -------- -------- --------
Total Distributions.... (2.11) (35.59) (4.07) (18.93) (14.07) 0.00
-------- -------- -------- -------- -------- --------
Net Asset Value, End of
Period................. $ 249.04 $ 347.36 $ 322.23 $ 351.63 $ 312.30 $ 398.31
======== ======== ======== ======== ======== ========
Total Return (%)........ (3.49) 54.00 (6.05) 14.97 (7.07) 27.54(**)
Ratio of Operating
Expenses to Average
Net Assets (%)......... 0.73 0.70 0.70 0.68 0.67 0.70(*)
Ratio of Net Investment
Income to Average
Net Assets (%)......... 0.93 1.22 1.53 0.67 1.61 0.98(*)
Portfolio Turnover Rate
(%).................... 229 174 207 169 140 194(*)
Net Assets, End of
Period (000)........... $148,254 $343,965 $472,017 $644,384 $667,127 $844,967
</TABLE>
(*) Computed on an annualized basis.
(**) Not computed on an annualized basis.
See accompanying notes to financial statements.
110
<PAGE>
New England Zenith Fund
(Avanti Growth Series)
FINANCIAL HIGHLIGHTS (UNAUDITED)
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
APRIL 30, 1993(*) YEAR ENDED
THROUGH ENDED JUNE 30,
DECEMBER 31, 1993 DECEMBER 31, 1994 1995
----------------- ----------------- ----------
<S> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $100.00 $113.67 $112.77
------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income... 0.18 0.59 0.35
Net Realized and
Unrealized Gain (Loss)
on Investments......... 14.56 (0.89) 22.14
------- ------- -------
Total From Investment
Operations............. 14.74 (0.30) 22.49
------- ------- -------
LESS DISTRIBUTIONS
Distributions From Net
Investment Income...... (0.18) (0.60) 0.00
Distributions From Net
Realized Capital Gains. (0.67) 0.00 0.00
Distributions From Paid-
In Capital............. (0.22) 0.00 0.00
------- ------- -------
Total Distributions..... (1.07) (0.60) 0.00
------- ------- -------
Net Asset Value, End of
Period.................. $113.67 $112.77 $135.26
======= ======= =======
Total Return (%)......... 14.74 (***) (0.27) 19.94(***)
Ratio of Operating
Expenses to Average Net
Assets (%).............. 0.85 (**) 0.84 0.85(**)
Ratio of Net Investment
Income to Average Net
Assets (%).............. 0.46 (**) 0.67 0.65(**)
Portfolio Turnover Rate
(%)..................... 21 (**) 67 58(**)
Net Assets, End of Period
(000)................... $11,972 $25,622 $36,943
The ratios of expenses to
average net assets
without giving effect to
the voluntary expense
limitations described in
Note 4 to the Financial
Statements would have
been (%)................ 0.89 (**) 0.84 1.12(**)
</TABLE>
(*) Commencement of operations.
(**) Computed on an annualized basis.
(***)Not computed on an annualized basis.
See accompanying notes to financial statements.
111
<PAGE>
New England Zenith Fund
(Venture Value Series)
FINANCIAL HIGHLIGHTS (UNAUDITED)
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
OCTOBER 31(*) ENDED
THROUGH JUNE 30,
DECEMBER 31, 1994 1995
----------------- ----------
<S> <C> <C>
Net Asset Value, Beginning of Period........ $10.00 $ 9.62
------ -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income...................... 0.03 0.05
Net Realized and Unrealized Gain (Loss) on
Investments............................... (0.38) 2.14
------ -------
Total From Investment Operations........... (0.35) 2.19
------ -------
LESS DISTRIBUTIONS
Distributions From Net Investment Income... (0.03) 0.00
------ -------
Total Distributions........................ (0.03) 0.00
------ -------
Net Asset Value, End of Period.............. $ 9.62 $ 11.81
====== =======
Total Return (%)............................ (3.50)(***) 22.77(***)
Ratio of Operating Expenses to Average Net
Assets (%)................................. 0.90 (**) 0.90(**)
Ratio of Net Investment Income to Average
Net Assets (%)............................. 2.54 (**) 1.62(**)
Portfolio Turnover Rate (%)................. 1 (**) 22(**)
Net Assets, End of Period (000)............. $3,371 $16,957
The ratios of expenses to average net assets
without giving effect to the voluntary
expense limitations described in Note 4 to
the Financial Statements would have been
(%)........................................ 3.97 (**) 2.24(**)
</TABLE>
(*) Commencement of operations.
(**) Computed on an annualized basis.
(***)Not computed on an annualized basis.
See accompanying notes to financial statements.
112
<PAGE>
New England Zenith Fund
(Value Growth Series)
FINANCIAL HIGHLIGHTS (UNAUDITED)
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
APRIL 30, 1993(*) ENDED
THROUGH YEAR ENDED JUNE 30,
DECEMBER 31, 1993 DECEMBER 31, 1994 1995
------------------ ----------------- ----------
<S> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $100.00 $112.32 $109.03
------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income... 0.92 1.90 0.90
Net Realized and
Unrealized Gain (Loss)
on Investments......... 13.33 (3.25) 21.45
------- ------- -------
Total From Investment
Operations............. 14.25 (1.35) 22.35
------- ------- -------
LESS DISTRIBUTIONS
Distributions From Net
Investment Income...... (0.92) (1.92) 0.00
Distributions From Net
Realized Capital Gains. (1.00) 0.00 0.00
Distributions In Excess
of Net Realized Capital
Gains.................. (0.01) 0.00 0.00
Distributions From Paid-
in Capital............. 0.00 (0.02) 0.00
------- ------- -------
Total Distributions..... (1.93) (1.94) 0.00
------- ------- -------
Net Asset Value, End of
Period.................. $112.32 $109.03 $131.38
======= ======= =======
Total Return (%)......... 14.24(***) (1.21) 20.50(***)
Ratio of Operating
Expenses to Average Net
Assets (%).............. 0.85(**) 0.85 0.85(**)
Ratio of Net Investment
Income to Average Net
Assets (%).............. 2.16(**) 2.30 1.72(**)
Portfolio Turnover Rate
(%)..................... 49(**) 133 100(**)
Net Assets, End of Period
(000)................... $ 9,082 $22,934 $34,107
The ratios of expenses to
average net assets
without giving effect to
the voluntary expense
limitations described in
Note 4 to the Financial
Statements would have
been (%)................ 0.94(**) 0.86 1.15(**)
</TABLE>
(*) Commencement of operations.
(**) Computed on an annualized basis.
(***)Not computed on an annualized basis.
See accompanying notes to financial statements.
113
<PAGE>
New England Zenith Fund
(Stock Index Series)
FINANCIAL HIGHLIGHTS (UNAUDITED)
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------------------------- JUNE 30,
1990 1991 1992 1993 1994 1995
------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $117.36 $108.49 $137.39 $ 72.00 $ 76.48 $ 75.35
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income.. 3.76 3.56 8.35 1.54 1.80 0.93
Net Realized and
Unrealized Gain (Loss)
on Investments........ (8.64) 29.29 2.02 5.18 (0.92) 14.16
------- ------- ------- ------- ------- -------
Total From Investment
Operations............ (4.88) 32.85 10.37 6.72 0.88 15.09
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Distributions From Net
Investment Income..... (3.82) (3.56) (8.35) (1.36) (1.82) 0.00
Distributions In Excess
of Net Investment
Income................ 0.00 0.00 0.00 (0.18) 0.00 0.00
Distributions From Net
Realized Capital
Gains................. 0.00 (0.39) (67.41) (0.55) (0.16) 0.00
Distributions In Excess
of Net Capital Gains.. 0.00 0.00 0.00 (0.15) 0.00 0.00
Distributions From
Paid-in Capital....... (0.17) 0.00 0.00 0.00 (0.03) 0.00
------- ------- ------- ------- ------- -------
Total Distributions.... (3.99) (3.95) (75.76) (2.24) (2.01) 0.00
------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period................. $108.49 $137.39 $ 72.00 $ 76.48 $ 75.35 $ 90.44
======= ======= ======= ======= ======= =======
Total Return (%)........ (4.14) 30.37 7.30 9.72 1.14 20.03(**)
Ratio of Operating
Expenses to Average
Net Assets (%)......... 0.36 0.36 0.35 0.34 0.33 0.40(*)
Ratio of Net Investment
Income to Average
Net Assets (%)......... 3.36 2.86 2.63 2.52 2.59 2.44(*)
Portfolio Turnover Rate
(%).................... 1 2 17 12 2 9(*)
Net Assets, End of
Period (000)........... $15,122 $20,496 $10,172 $28,817 $37,164 $49,742
The ratios of expenses
to average net assets
without giving effect
to the voluntary
expense limitations
described in Note 4 to
the Financial
Statements would have
been (%)............... -- -- -- -- -- 0.58
</TABLE>
(*) Computed on an annualized basis.
(**)Not computed on an annualized basis.
See accompanying notes to financial statements.
114
<PAGE>
New England Zenith Fund
(Balanced Series)
FINANCIAL HIGHLIGHTS (UNAUDITED)
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
OCTOBER 31(*) SIX MONTHS
THROUGH ENDED
DECEMBER 31, 1994 JUNE 30, 1995
----------------- -------------
<S> <C> <C>
Net Asset Value, Beginning of Period...... $10.00 $ 9.94
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................... 0.05 0.15
Net Realized and Unrealized Gain (Loss)
on Investments.......................... (0.06) 1.42
------ ------
Total From Investment Operations......... (0.01) 1.57
------ ------
LESS DISTRIBUTIONS
Distributions From Net Investment Income. (0.05) 0.00
------ ------
Total Distributions...................... (0.05) 0.00
------ ------
Net Asset Value, End of Period............ $ 9.94 $11.51
====== ======
Total Return (%).......................... (0.10)(***) 15.79(***)
Ratio of Operating Expenses to Average Net
Assets (%)............................... 0.85 (**) 0.85(**)
Ratio of Net Investment Income to Average
Net Assets (%)........................... 4.16 (**) 4.68(**)
Portfolio Turnover Rate (%)............... 0 (**) 84(**)
Net Assets, End of Period (000)........... $2,722 $8,976
The ratios of expenses to average net
assets without giving effect to the
voluntary expense limitations described
in Note 4 to the Financial Statements
would have been (%)...................... 3.73 (**) 2.82(**)
</TABLE>
(*) Commencement of operations.
(**) Computed on an annualized basis.
(***)Not computed on an annualized basis.
See accompanying notes to financial statements.
115
<PAGE>
New England Zenith Fund
(Managed Series)
FINANCIAL HIGHLIGHTS (UNAUDITED)
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED
--------------------------------------------- JUNE 30,
1990 1991 1992 1993 1994 1995
------- ------- ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $114.65 $112.79 $127.87 $ 130.26 $ 137.18 $ 130.30
------- ------- ------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income.. 5.47 6.41 5.14 4.35 5.42 3.07
Net Realized and
Unrealized Gain (Loss)
on Investments........ (1.81) 16.23 3.45 9.58 (6.92) 18.84
------- ------- ------- -------- -------- --------
Total From Investment
Operations............ 3.66 22.64 8.59 13.93 (1.50) 21.91
------- ------- ------- -------- -------- --------
LESS DISTRIBUTIONS
Distributions From Net
Investment Income..... (5.38) (6.41) (5.13) (4.36) (5.38) 0.00
Distributions From Net
Realized Capital
Gains................. 0.00 (1.15) (1.07) (2.65) 0.00 0.00
Distributions From
Paid-in Capital....... (0.14) 0.00 0.00 0.00 0.00 0.00
------- ------- ------- -------- -------- --------
Total Distributions.... (5.52) (7.56) (6.20) (7.01) (5.38) 0.00
------- ------- ------- -------- -------- --------
Net Asset Value, End of
Period................. $112.79 $127.87 $130.26 $ 137.18 $ 130.30 $ 152.21
======= ======= ======= ======== ======== ========
Total Return (%)........ 3.21 20.17 6.70 10.65 (1.11) 16.82(**)
Ratio of Operating
Expenses to Average Net
Assets (%)............. 0.57 0.55 0.54 0.53 0.54 0.65(*)
Ratio of Net Investment
Income to Average Net
Assets (%)............. 5.58 5.45 5.32 3.65 3.98 4.30(*)
Portfolio Turnover Rate
(%).................... 1 36 36 22 76 81(*)
Net Assets, End of
Period (000)........... $36,563 $49,995 $77,575 $121,339 $121,877 $135,427
</TABLE>
(*) Computed on an annualized basis.
(**) Not computed on an annualized basis.
See accompanying notes to financial statements.
116
<PAGE>
New England Zenith Fund
(Strategic Bond Opportunities Series)
FINANCIAL HIGHLIGHTS (UNAUDITED)
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
OCTOBER 31(*) ENDED
THROUGH JUNE 30,
DECEMBER 31, 1994 1995
----------------- ----------
<S> <C> <C>
Net Asset Value, Beginning of Period......... $10.00 $ 9.74
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income....................... 0.12 0.37
Net Realized and Unrealized Gain (Loss) on
Investments................................ (0.26) 0.83
------ ------
Total From Investment Operations............ (0.14) 1.20
------ ------
LESS DISTRIBUTIONS
Distributions From Net Investment Income.... (0.12) 0.00
------ ------
Total Distributions......................... (0.12) 0.00
------ ------
Net Asset Value, End of Period............... $ 9.74 $10.94
====== ======
Total Return (%)............................. (1.40)(***) 12.32(***)
Ratio of Operating Expenses to Average Net
Assets (%).................................. 0.85 (**) 0.85(**)
Ratio of Net Investment Income to Average Net
Assets (%).................................. 7.05 (**) 8.86(**)
Portfolio Turnover Rate (%).................. 403 (**) 214(**)
Net Assets, End of Period (000).............. $3,450 $5,034
The ratios of expenses to average net assets
without giving effect to the voluntary
expense limitations described in Note 4 to
the Financial Statements would have been
(%)......................................... 2.01 (**) 3.15(**)
</TABLE>
(*) Commencement of operations.
(**) Computed on an annualized basis.
(***)Not computed on an annualized basis.
See accompanying notes to financial statements.
117
<PAGE>
New England Zenith Fund
(Bond Income Series)
FINANCIAL HIGHLIGHTS (UNAUDITED)
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED
--------------------------------------------- JUNE 30,
1990 1991 1992 1993 1994 1995
------- ------- ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 97.23 $ 97.61 $103.44 $ 103.47 $ 106.14 $ 95.53
------- ------- ------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income.. 8.49 8.53 7.96 5.70 7.05 3.72
Net Realized and
Unrealized Gain (Loss)
on Investments........ (0.65) 8.90 0.51 7.38 (10.61) 8.75
------- ------- ------- -------- -------- --------
Total From Investment
Operations............ 7.84 17.43 8.47 13.08 (3.56) 12.47
------- ------- ------- -------- -------- --------
LESS DISTRIBUTIONS
Distributions From Net
Investment Income..... (7.46) (9.47) (6.87) (6.20) (7.05) 0.00
Distributions in Excess
of Net Investment
Income................ 0.00 0.00 0.00 (0.05) 0.00 0.00
Distributions From Net
Realized Capital
Gains................. 0.00 (2.13) (1.57) (4.16) 0.00 0.00
------- ------- ------- -------- -------- --------
Total Distributions.... (7.46) (11.60) (8.44) (10.41) (7.05) 0.00
------- ------- ------- -------- -------- --------
Net Asset Value, End of
Period................. $ 97.61 $103.44 $103.47 $ 106.14 $ 95.53 $ 108.00
======= ======= ======= ======== ======== ========
Total Return (%)........ 8.09 17.96 8.18 12.61 (3.36) 13.05(**)
Ratio of Operating
Expenses to Average
Net Assets (%)......... 0.46 0.45 0.44 0.43 0.44 0.55(*)
Ratio of Net Investment
Income to Average
Net Assets (%)......... 8.57 8.27 7.70 6.47 6.75 7.47(*)
Portfolio Turnover Rate
(%).................... 106 193 71 177 82 90(*)
Net Assets, End of
Period (000)........... $40,631 $49,369 $83,057 $131,242 $126,234 $144,099
</TABLE>
As of January 1, 1993, the Bond Income Series discontinued the use of
equalization accounting.
(*) Computed on an annualized basis.
(**) Not computed on an annualized basis.
See accompanying notes to financial statements.
118
<PAGE>
New England Zenith Fund
(U.S. Government Series)
FINANCIAL HIGHLIGHTS (UNAUDITED)
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
OCTOBER 31(*) SIX MONTHS
THROUGH ENDED
DECEMBER 31, 1994 JUNE 30, 1995
----------------- -------------
<S> <C> <C>
Net Asset Value, Beginning of Period...... $10.00 $ 9.96
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................... 0.10 0.22
Net Realized and Unrealized Gain (Loss)
on Investments.......................... (0.04) 0.72
------ ------
Total From Investment Operations......... 0.06 0.94
------ ------
LESS DISTRIBUTIONS
Distributions From Net Investment Income. (0.10) 0.00
------ ------
Total Distributions...................... (0.10) 0.00
------ ------
Net Asset Value, End of Period............ $ 9.96 $10.90
====== ======
Total Return (%).......................... 0.60 (***) 9.44(***)
Ratio of Operating Expenses to Average Net
Assets (%)............................... 0.70 (**) 0.70(**)
Ratio of Net Investment Income to Average
Net Assets (%)........................... 5.70 (**) 6.10(**)
Portfolio Turnover Rate (%)............... 1,409 (**) 572(**)
Net Assets, End of Period (000)........... $2,012 $3,315
The ratios of expenses to average net
assets without giving effect to the
voluntary expense limitations described
in Note 4 to the Financial Statements
would have been (%)...................... 2.54 (**) 4.97(**)
</TABLE>
(*) Commencement of operations.
(**) Computed on an annualized basis.
(***)Not computed on an annualized basis.
See accompanying notes to financial statements.
119
<PAGE>
New England Zenith Fund
(Money Market Series)
FINANCIAL HIGHLIGHTS (UNAUDITED)
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------------------------- JUNE 30,
1990 1991 1992 1993 1994 1995
------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $100.00 $100.00 $100.00 $100.00 $100.00 $100.00
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income.. 7.88 6.03 3.73 2.93 3.89 2.83
------- ------- ------- ------- ------- -------
Total From Investment
Operations............ 7.88 6.03 3.73 2.93 3.89 2.83
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Distributions From Net
Investment Income..... (7.88) (6.03) (3.73) (2.93) (3.89) (2.83)
------- ------- ------- ------- ------- -------
Total Distributions.... (7.88) (6.03) (3.73) (2.93) (3.89) (2.83)
------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period................. $100.00 $100.00 $100.00 $100.00 $100.00 $100.00
======= ======= ======= ======= ======= =======
Total Return (%)........ 8.17 6.20 3.79 2.97 4.01 2.87(**)
Ratio of Operating
Expenses to Average Net
Assets (%)............. 0.38 0.38 0.38 0.38 0.40 0.50(*)
Ratio of Net Investment
Income to Average Net
Assets (%)............. 7.87 6.01 3.71 2.93 3.89 2.82(*)
Net Assets, End of
Period (000)........... $60,071 $58,614 $61,607 $59,044 $73,960 $81,340
The ratios of expenses
to average net assets
without giving effect
to the voluntary
expense limitations
described in Note 4 to
the Financial
Statements would have
been (%)............... -- -- -- -- -- 0.52
</TABLE>
(*) Computed on an annualized basis.
(**) Not computed on an annualized basis.
See accompanying notes to financial statements.
120
<PAGE>
New England Zenith Fund
Notes to Financial Statements-June 30, 1995 (Unaudited)
-------------------------------------------------------------------------------
1. New England Zenith Fund (the "Fund") is organized as a Massachusetts
business trust under the laws of the Commonwealth of Massachusetts pursuant to
an Agreement and Declaration of Trust dated December 16, 1986. The Fund
succeeded to the operations of The New England Zenith Fund, Inc. on February
27, 1987. The Fund is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company.
Shares in the Fund are not offered directly to the general public and,
currently, are available only to separate accounts established by New England
Variable Life Insurance Company ("NEVLICO"), New England Mutual Life Insurance
Company ("The New England") or its subsidiaries as an investment vehicle for
variable life insurance or variable annuity products, although not all Series
may be available to all separate accounts. In the future, however, such shares
may be offered to separate accounts of insurance companies unaffiliated with
NEVLICO or The New England.
The Fund's Agreement and Declaration of Trust permits the issuance of an
unlimited number of shares of beneficial interest, no par value, in separate
Series, with shares of each Series representing interests in a separate
portfolio of assets. Each Series is separately managed and has its own
investment objective and policies. The Fund (or its predecessor) began
offering shares of the Series on the dates set forth below:
<TABLE>
<S> <C>
Bond Income............. August 26, 1983
Capital Growth.......... August 26, 1983
Money Market............ August 26, 1983
Stock Index............. March 30, 1987
Managed................. May 1, 1987
Avanti Growth........... April 30, 1993
Value Growth............ April 30, 1993
</TABLE>
<TABLE>
<S> <C>
Small Cap............... May 1, 1994
Balanced Series......... October 31, 1994
International Equity Se-
ries................... October 31, 1994
U.S. Government Series.. October 31, 1994
Strategic Bond Opportu-
nities Series.......... October 31, 1994
Venture Value Series.... October 31, 1994
Equity Growth Series.... October 31, 1994
</TABLE>
The following is a summary of significant accounting policies followed by the
Fund in the preparation of the Financial Statements of the Series. The
policies are in conformity with generally accepted accounting principles for
investment companies.
A. SECURITY VALUATION
MONEY MARKET SERIES--The Money Market Series employs the amortized cost
method of security valuation which, in the opinion of the Board of
Trustees, represents the fair market value of the particular security. The
Board monitors the deviations between the Series' net asset value per
share, as determined by using available market quotations, and its
amortized cost price per share. If the deviation exceeds 1/2 of 1%, the
board will consider what action, if any, should be initiated to provide
fair valuation of the Series.
BOND INCOME, MANAGED, BALANCED, U.S. GOVERNMENT AND STRATEGIC BOND
OPPORTUNITIES SERIES--Debt securities (other than short-term obligations)
are valued on the basis of valuations furnished by a pricing service,
authorized by the Board of Trustees, which service determines valuations
for normal, institutional-size trading units of such securities using
market information, transactions for comparable securities and various
relationships between securities which are generally recognized by
institutional traders. Short-term notes are stated at amortized cost which
approximates market value.
CAPITAL GROWTH, MANAGED, STOCK INDEX, AVANTI GROWTH, VALUE GROWTH, SMALL
CAP, BALANCED, INTERNATIONAL EQUITY, VENTURE VALUE AND EQUITY GROWTH
SERIES--Equity securities are valued on the basis of market valuations
furnished by a pricing service, authorized by the Board of
121
<PAGE>
New England Zenith Fund
Notes to Financial Statements-June 30, 1995 (Unaudited)-Continued
-------------------------------------------------------------------------------
Trustees. The pricing service provides the last reported sale price for
securities listed on a national securities exchange or on the NASDAQ
National Market System, or if there is no reported sale during the day, and
in the case of over-the-counter securities not so listed, the last bid
price. Securities for which current market quotations are not readily
available are taken at fair value as determined in good faith by the Board
of Trustees, although the actual calculations may be made by persons acting
pursuant to the direction of the Board. Short-term notes are stated at
amortized cost which approximates market value.
B. FOREIGN CURRENCY TRANSLATION--The books and records of the funds are
maintained in U.S. dollars. The value of securities, currencies and other
assets and liabilities denominated in currencies other than U.S. dollars
are translated into U.S. dollars based upon foreign exchange rates
prevailing at the end of the period. Purchases and sales of investment
securities, income and expenses are translated on the respective dates of
such transactions.
Since the values of investment securities are presented at the foreign
exchange rates prevailing at the end of the period, it is not practical to
isolate that portion of the results of operations arising from changes in
exchange rates from fluctuations arising from changes in market prices of
the investment securities.
Net realized and unrealized gains and losses on foreign currency
transactions represent foreign exchange gains from the sale of short-term
securities and holdings of foreign currencies, foreign currency gains and
losses between trade dates and settlement dates on investment securities
transactions, and the difference between the amounts of daily interest
accruals on the books of the fund and the amounts actually received
resulting from changes in exchange rates on the payable date.
C. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME--Security transactions
are accounted for on the trade date (date the order to buy or sell is
executed). Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. In determining gain or loss on
securities sold, the cost of securities has been determined on the
identified cost basis.
D. FUTURES CONTRACTS--The Value Growth, Stock Index, Managed, Balanced,
International Equity, U.S. Government, Strategic Bond Opportunities and
Venture Value Series may enter into futures contracts on the S&P 500 Index
or on interest-bearing securities or indices thereof, or on indices of
stock prices to hedge against changes in the values of securities the
Series owns or expects to purchase. Upon entering into a futures contract,
the Series is required to deposit with a broker an amount ("initial
margin") equal to a certain percentage of the purchase price indicated in
the futures contract. Subsequent payments ("variation margin") are made or
received by the Series each day, dependent on the daily fluctuations in the
value of the underlying security, and are recorded for financial reporting
purposes as unrealized gains or losses by the Series. When entering into a
closing transaction, the Series will realize, for book purposes, a gain or
loss equal to the difference between the value of the futures contract to
sell and the futures contract to buy. Futures contracts are valued at the
most recent settlement price, unless such price does not reflect the fair
market value of the contract, in which case the position will be valued by
or under the direction of the Trustees. Certain risks may arise upon
entering into futures contracts from the contingency of imperfect market
conditions. The potential risk to the fund is that the change in value of
futures contracts primarily corresponds with the value of underlying
instruments which may not correspond to the change in the value of the
hedged instruments. In addition, there is a risk that the fund may not be
able to close out its futures positions due to an illiquid secondary
market.
122
<PAGE>
New England Zenith Fund
Notes to Financial Statements-June 30, 1995 (Unaudited)-Continued
-------------------------------------------------------------------------------
E. REPURCHASE AGREEMENTS--The Series, through their custodian, receive
delivery of the underlying securities collateralizing repurchase
agreements. It is the Series' policy that the market value of the
collateral be at least equal to 100% of the repurchase price. The adviser
is responsible for determining that the value of the collateral is at all
times at least equal to the repurchase price. In connection with
transactions in repurchase agreements, if the seller defaults and the value
of the collateral declines or if the seller enters an insolvency
proceeding, realization of the collateral by the Series may be delayed or
limited.
F. SHORT SALES AGAINST THE BOX--The Equity Growth Series may hedge the
investments against changes in value by engaging in short sales against the
box. In a short sale against the box, the fund sells a borrowed security,
while at the same time either owning an identical security or having the
right to obtain such a security. By selling short against the box the
equity underlying one of its convertible holdings, the fund would seek to
offset the effect that a decline in the underlying equity might have on the
value of the convertible security. While the short sale is outstanding, the
fund will not dispose of the security hedged by the short sale. The fund is
required to establish a margin account with the broker lending the security
sold short. While the short sale is outstanding, the broker retains the
proceeds of the short sale and the fund instructs the custodian to maintain
in a separate account securities having a value at least equal to the
amount of the securities sold short.
G. FEDERAL TAXES--Each Series, which is a separate taxable entity, intends to
meet the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute to its shareholders all of its
taxable income and any net realized capital gains at least annually.
Accordingly, no provision for federal income tax has been made.
H. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS--Money Market Series dividends
are declared daily to shareholders of record at the time and are paid
monthly. Dividends and distributions are recorded by all other Series on
the ex-dividend date. Net realized gains from security transactions are
distributed at least annually to shareholders. The timing and
characterization of certain income and capital gains distributions are
determined in accordance with federal tax regulations which may differ from
generally accepted accounting principles. Permanent book and tax basis
differences relating to shareholder distributions will result in
reclassification to paid in capital.
I. OTHER--The Money Market Series invests primarily in a portfolio of money
market instruments maturing in 397 days or less whose ratings are within
the two highest ratings categories by a nationally recognized rating agency
or, if not rated, are believed to be of comparable quality. The weighted
average maturity of the Series is less than ninety days. The ability of the
issuers of the securities held by the Series to meet their obligations may
be affected by foreign economic, political and legal developments in the
case of foreign banks or of foreign branches or subsidiaries of U.S. banks
or domestic economic developments in a specific industry, state or region.
2. At June 30, 1995, The New England owned an aggregate of 9 shares of the
fourteen Series and held 9,139,881 shares in separate investment accounts for
annuity contracts offered by The New England Variable Account, a separate
account of The New England. NEVLICO, a life insurance subsidiary of The New
England, held the remaining 2,628,476 shares then outstanding in separate
investment accounts for life insurance and annuity contracts offered by
NEVLICO.
123
<PAGE>
New England Zenith Fund
Notes to Financial Statements-June 30, 1995 (Unaudited)-Continued
-------------------------------------------------------------------------------
As long as The New England owns (directly or through NEVLICO) more than 25% of
the Fund's outstanding shares, it will be presumed to be in control (as that
term is defined by the Investment Company Act of 1940, as amended) of the
Fund.
3. For the period ended June 30, 1995, purchases and sales of securities
(excluding short-term investments) for each of the Series were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
---------------------------- ----------------------------
SERIES U.S. GOVERNMENT OTHER U.S. GOVERNMENT OTHER
------ --------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
Bond Income............. $2,908,613 $ 52,624,830 $3,576,937 $ 51,041,984
Capital Growth.......... -- 703,877,099 -- 706,921,553
Stock Index............. -- 7,192,237 -- 1,845,196
Managed................. 6,219,648 44,902,319 16,161,796 37,733,364
Avanti Growth........... -- 15,250,468 -- 8,276,023
Value Growth............ -- 19,040,608 -- 13,404,376
Small Cap............... -- 11,326,824 -- 2,867,467
Balanced................ 1,433,947 5,405,187 1,266,693 738,136
International Equity.... -- 8,832,707 -- 2,034,349
U.S. Government......... 6,937,147 -- 5,510,820 --
Strategic Bond
Opportunities.......... 1,880,532 3,588,174 2,035,477 1,754,148
Venture Value........... -- 12,243,190 -- 1,019,831
Equity Growth........... -- 18,264,578 -- 4,869,507
</TABLE>
Purchases and sales of corporate short-term obligations for the Money Market
Series aggregated $302,101,265 and $295,461,890, respectively.
Transactions in index futures contracts for the Managed Series for the six
months ended June 30, 1995 are summarized as follows:
<TABLE>
<CAPTION>
PURCHASES OF FUTURES
CONTRACTS
----------------------
AGGREGATE
NUMBER OF FACE VALUE
CONTRACTS OF CONTRACTS
--------- ------------
<S> <C> <C>
Contracts opened........................................ 20 $ 5,329,000
Contracts closed........................................ (20) (5,329,000)
--- -----------
Open at June 30, 1995................................... 0 $ 0
=== ===========
</TABLE>
124
<PAGE>
New England Zenith Fund
Notes to Financial Statements-June 30, 1995 (Unaudited)-Continued
-------------------------------------------------------------------------------
4. During the four months ended April 30, 1995, the Fund incurred management
fees payable to the Fund's investment advisers for that period, Back Bay
Advisors, L.P., Capital Growth Management Limited Partnership, Loomis Sayles &
Company, L.P. and Westpeak Investment Advisors, L.P., certain officers and
directors of which are also officers and Trustees of the Fund. Back Bay
Advisors, L.P. and Westpeak Investment Advisors, L.P. are wholly owned
subsidiaries, Loomis Sayles & Company, L.P. is a majority-owned subsidiary and
Capital Growth Management Limited Partnership is a partially owned subsidiary
of New England Investment Companies, L.P., which is a subsidiary of The New
England. Effective May 1, 1995, TNE Advisers, Inc. became the adviser for all
series except Capital Growth with the aforementioned advisers being retained
as the sub-adviser for the respective series. Separate management agreements
for each Series provide for fees as set forth below:
<TABLE>
<CAPTION>
ANNUAL AVERAGE
FEES ADVISER/ PERCENTAGE NET ASSET
SERIES EARNED(A) SUBADVISER RATE VALUE LEVELS
------ --------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Money Market............ $ 103,645 Back Bay Advisors, L.P. 0.35% the first $500 million
25,759 TNE Advisers, Inc. 0.30% the next $500 million
0.25% amount in excess of $1 billion
Bond Income............. 224,755 Back Bay Advisors, L.P. 0.40% the first $400 million
43,252 TNE Advisers, Inc. 0.35% the next $300 million
0.30% the next $300 million
0.25% amounts in excess of $1 billion
Capital Growth.......... 2,341,174 Capital Growth Management 0.70% the first $200 million
Limited Partnership 0.65% the next $300 million
0.60% amounts in excess of $500 million
Stock Index............. 41,575 Westpeak Investment 0.25% All net assets
Advisors, L.P.
12,012 TNE Advisers, Inc.
Managed................. 256,982 Back Bay Advisors, L.P. 0.50% All net assets
63,296 TNE Advisers, Inc.
Avanti Growth........... 92,134 Loomis Sayles & Company, 0.70% the first $200 million
L.P. 0.65% the next $300 million
12,997 TNE Advisers, Inc. 0.60% amounts in excess of $500 million
Value Growth............ 85,424 Westpeak Investment 0.70% the first $200 million
Advisors, L.P. 0.65% the next $300 million
11,772 TNE Advisers, Inc. 0.60% amounts in excess of $500 million
Small Cap............... 34,040 Loomis Sayles & Company, 1.00% All net assets
L.P.
9,302 TNE Advisers, Inc.
</TABLE>
a. Before reduction due to voluntary expense limitation, see below.
- Pursuant to a voluntary expense agreement, effective from November 1, 1994
to May 1, 1995, relating to the Capital Growth, Back Bay Advisors Money
Market, Back Bay Advisors Bond Income, Back Bay Advisors Managed and the
Westpeak Stock Index Series and, beginning December 1, 1994, relating to the
Loomis Sayles Small Cap, Loomis Sayles Avanti Growth and the Westpeak Value
Growth Series, The New England agreed to bear the expenses (other than the
advisory fees and any brokerage costs, interest, taxes or extraordinary
expenses) of the Series (except the Loomis Sayles Small Cap Series) in excess
of 0.15% of the respective Series' average daily net assets. In the case of
the Loomis Sayles Small Cap Series, The New England agreed to bear such
expenses of the Series in excess of 1.00% of the Series' average daily net
assets. Beginning May 1, 1995, TNE Advisers voluntarily agreed to bear any
such excess expenses for all of the Series.
125
<PAGE>
New England Zenith Fund
Notes to Financial Statements-June 30, 1995 (Unaudited)-Continued
-------------------------------------------------------------------------------
- As a result of the Series expenses exceeding the voluntary expense
limitations for the period ending June 30, 1995, The New England and TNE
Advisers will reimburse the Series as follows:
<TABLE>
<S> <C>
Stock Index...................................................... $39,401
Avanti Growth.................................................... 41,092
Value Growth..................................................... 41,447
Small Cap........................................................ 63,856
</TABLE>
Prior to November 1, 1994, pursuant to an Expense Agreement between The New
England and the Fund, The New England had agreed to pay the charges and
expenses of preparing, printing and distributing prospectuses and reports to
shareholders, custodial and transfer agent charges and expenses, auditing,
accounting and legal fees and expenses in connection with affairs of the Fund
(except for fees of the independent trustees' outside counsel) and the
expenses of shareholders' and trustees' meetings. In addition, The New England
also paid registration, filing and other fees arising prior to the date the
Fund commenced operations and relating to registration and qualification of
each Series' shares.
TNE Advisers, Inc. is the investment adviser of the Loomis Sayles Balanced
Series, the Draycott International Equity Series, the Salomon Brothers U.S.
Government Series, the Salomon Brothers Strategic Bond Opportunities Series,
the Venture Value Series and the Alger Equity Growth Series and has entered
into subadvisory agreements for these Series with Loomis Sayles, Draycott,
Salomon Brothers Asset Management Inc., Selected/Venture Advisers, L.P., and
Fred Alger Management, Inc., respectively.
TNE Advisers, Inc. is paid a management fee from the Series it manages as
shown below. Pursuant to an expense deferral arrangement in effect beginning
November 1, 1994, which TNE Advisers may terminate at any time, TNE Advisers
has agreed to pay operating expenses of the Series in excess of expense limits
stated below subject to the obligation of the Series to repay TNE Advisers
such expenses in future years, if any, when a Series' expenses fall below the
stated expense limit that pertains to that Series; such deferred expenses may
be charged to a Series in a subsequent year to the extent that the charge does
not cause the total expenses in such subsequent year to exceed the Series'
expense limit; provided, however, that no Series is obligated to repay any
expense paid by TNE Advisers more than two years after the end of the fiscal
year in which such expense was incurred.
<TABLE>
<CAPTION>
EXPENSE
MANAGEMENT MANAGEMENT LIMITATION EXPENSE DEFERRAL
FEES EARNED FEES ANNUAL ANNUAL EXPENSE DECEMBER 31, 1994
BY TNE PERCENTAGE PERCENTAGE DEFERRAL (EXPIRES
SERIES ADVISERS(a) RATE RATE JUNE 30, 1995 DECEMBER 31, 1996)
------ ----------- ----------- ---------- ------------- ------------------
<S> <C> <C> <C> <C> <C>
Balanced................ $17,658 0.70% 0.85% $49,758 $ 8,151
International Equity.... 28,787 0.90 1.30 72,050 11,312
U.S. Government......... 5,940 0.55 0.70 46,074 6,163
Strategic Bond
Opportunities.......... 12,611 0.65 0.85 44,604 6,799
Venture Value........... 35,512 0.75 0.90 63,410 9,339
Equity Growth........... 31,127 0.70 0.85 50,152 6,007
</TABLE>
--------
(a) Before reduction due to voluntary expense deferral.
126
<PAGE>
New England Zenith Fund
Notes to Financial Statements-June 30, 1995 (Unaudited)-Continued
-------------------------------------------------------------------------------
TNE Advisers, Inc. pays each subadviser at the following rates for providing
advisory services to the Series:
<TABLE>
<CAPTION>
ANNUAL
FEES PERCENTAGE
SUBADVISER SERIES EARNED RATE AVERAGE NET ASSET VALUE LEVELS
---------- ------ ------ ---------- ------------------------------
<S> <C> <C> <C> <C>
Loomis Sayles Balanced $12,613 0.500% the first $25 million
0.400% the next $75 million
0.400% amounts in excess of $100 million
Draycott International Equity $23,989 0.750% the first $10 million
0.600% the next $40 million
0.450% amounts in excess of $50 million
Salomon Brothers U.S. Government $ 2,430 0.225% the first $200 million
0.150% the next $300 million
0.100% amounts in excess of $500 million
Salomon Brothers Strategic Bond Opportunities $ 6,791 0.350% the first $50 million
0.300% the next $150 million
0.250% the next $300 million
0.200% amounts in excess of $500 million
Selected/Venture Venture Value $21,307 0.450% the first $100 million
0.400% the next $400 million
0.350% amounts in excess of $500 million
Alger Equity Growth $20,010 0.450% the first $10 million
0.400% the next $90 million
0.350% the next $150 million
0.300% the next $250 million
0.250% amounts in excess of $500 million
</TABLE>
5. The Fund does not pay any compensation to its officers or to any trustees
who are directors, officers or employees of The New England, NEVLICO, Back Bay
Advisors, L.P., Capital Growth Management Limited Partnership, Loomis Sayles &
Company, L.P., Westpeak Investment Advisors, L.P., New England Funds L.P. or
their affiliates, other than registered investment companies. Each
disinterested trustee is compensated by each Series as follows:
<TABLE>
<CAPTION>
BOND CAPITAL MONEY STOCK AVANTI VALUE SMALL
INCOME GROWTH MARKET INDEX MANAGED GROWTH GROWTH CAP
------ ------- ------ ----- ------- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Retainer......... $2,500 $2,500 $1,667 $833 $2,500 $833 $833 $833
Meeting Fee............. $ 143 $ 143 $ 143 $143 $ 143 $143 $143 $143
Committee Chairman
Annual Retainer
(Contract Review)...... $ 214 $ 214 $ 214 $214 $ 214 $214 $214 $214
Committee Chairman
Annual Retainer
(Audit)................ $ 143 $ 143 $ 143 $143 $ 143 $143 $143 $143
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC
INTERNATIONAL U.S. BOND VENTURE EQUITY
BALANCED EQUITY GOVERNMENT OPPORTUNITIES VALUE GROWTH
-------- ------------- ---------- ------------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Annual Retainer......... $833 $833 $833 $833 $833 $833
Meeting Fee............. $143 $143 $143 $143 $143 $143
Committee Chairman
Annual Retainer
(Contract Review)...... $214 $214 $214 $214 $214 $214
Committee Chairman
Annual Retainer
(Audit)................ $143 $143 $143 $143 $143 $143
</TABLE>
A deferred compensation plan is available to trustees on a voluntary basis.
Each participating trustee will receive deferred compensation in an amount
equal to the value that such compensation would have had if it had been
invested in the relevant Series on the normal payment date.
127
<PAGE>
501 Boylston Street BULK RATE
Boston, Massachusetts 02116 U.S.
POSTAGE
[LOGO APPEARS HERE] PAID
HUDSON, MA
PERMIT NO.
19
EQUAL OPPORTUNITY EMPLOYER M/F
--------------------------------------------------------------------------------
(2_FIDELITY_LOGOS)
VARIABLE INSURANCE PRODUCTS
FUND
MONEY MARKET PORTFOLIO
HIGH INCOME PORTFOLIO
EQUITY-INCOME PORTFOLIO
GROWTH PORTFOLIO
OVERSEAS PORTFOLIO
SEMIANNUAL REPORT
JUNE 30, 1995
CONTENTS
MONEY MARKET PORTFOLIO VIPF-3 PERFORMANCE
VIPF-4 FUND TALK: THE MANAGER'S OVERVIEW
VIPF-5 INVESTMENTS
VIPF-9 FINANCIAL STATEMENTS
HIGH INCOME PORTFOLIO VIPF-11 PERFORMANCE AND INVESTMENT SUMMARY
VIPF-12 FUND TALK: THE MANAGER'S OVERVIEW
VIPF-13 INVESTMENTS
VIPF-19 FINANCIAL STATEMENTS
EQUITY-INCOME PORTFOLIO VIPF-21 PERFORMANCE AND INVESTMENT SUMMARY
VIPF-22 FUND TALK: THE MANAGER'S OVERVIEW
VIPF-23 INVESTMENTS
VIPF-27 FINANCIAL STATEMENTS
GROWTH PORTFOLIO VIPF-29 PERFORMANCE AND INVESTMENT SUMMARY
VIPF-30 FUND TALK: THE MANAGER'S OVERVIEW
VIPF-31 INVESTMENTS
VIPF-35 FINANCIAL STATEMENTS
OVERSEAS PORTFOLIO VIPF-37 PERFORMANCE AND INVESTMENT SUMMARY
VIPF-38 FUND TALK: THE MANAGER'S OVERVIEW
VIPF-39 INVESTMENTS
VIPF-44 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS VIPF-46 NOTES TO THE FINANCIAL STATEMENTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS
NOT
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUNDS UNLESS
PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
VARIABLE INSURANCE PRODUCTS FUND: MONEY MARKET PORTFOLIO
PERFORMANCE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects both the change
in a fund's share price over a given period, and reinvestment of its
dividends (or income). Yield measures the income paid by a fund. Since a
money market fund tries to maintain a $1 share price, yield is an important
measure of performance.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
JUNE 30, 1995 YEAR YEARS YEARS
Money Market 5.44% 4.88% 6.19%
Consumer Price Index 3.04% 3.26% 3.55%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
Comparing the fund's performance to the Consumer Price Index (CPI) helps
show how your investment did compared to inflation. (The periods covered by
the CPI numbers are the closest available match to those covered by the
fund.)
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, the past five
years and life of fund total returns would have been lower. Yield
will vary.
YIELD
Row: 1, Col: 1, Value: 4.21
Row: 1, Col: 2, Value: 2.41
Row: 2, Col: 1, Value: 4.7
Row: 2, Col: 2, Value: 2.5
Row: 3, Col: 1, Value: 5.609999999999999
Row: 3, Col: 2, Value: 2.74
Row: 4, Col: 1, Value: 5.91
Row: 4, Col: 2, Value: 2.89
Row: 5, Col: 1, Value: 5.85
Row: 5, Col: 2, Value: 2.87
Money Market
MMDA
6% -
5% -
4% -
3% -
2% -
1% -
0%
6/28/94 10/2/94 12/28/94 3/29/95 6/28/95
Money Market 4.21% 4.70% 5.61% 5.91% 5.85%
MMDA 2.41% 2.50% 2.74% 2.89% 2.87%
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods,
expressed as annual percentage rates. A yield that assumes income earned is
reinvested or compounded is called an effective yield. The chart above
shows the fund's current seven-day yield at quarterly intervals over the
past year. This is compared to similar yields for the average bank money
market deposit account (MMDA). The MMDA average is supplied by BANK RATE
MONITOR.(Trademark)
COMPARING PERFORMANCE
There are some important differences between
a bank money market deposit account (MMDA)
and a money market fund. First, the U.S.
government neither insures nor guarantees a
money market fund. In fact, there is no
assurance that a money fund will maintain a $1
share price. Second, a money market fund
returns to its shareholders income earned by the
fund's investments after expenses. This is in
contrast to banks, which set their MMDA rates
periodically based on current interest rates,
competitors' rates, and internal criteria.
(checkmark)
VARIABLE INSURANCE PRODUCTS FUND: MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with
Bob Litterst, Portfolio
Manager of Money
Market Portfolio
Q. BOB, CAN YOU BRING US UP TO DATE ON MARKET CONDITIONS?
A. Sure. The economic growth rate has slowed dramatically during the past
six months. During the fourth quarter of 1994, the gross domestic product
expanded at a rate of 5.1%, a very strong showing. Moreover, final sales
rose 5.7%, meaning sales exceeded production and depleted inventories.
Those signs of growth, along with disturbing trends in such leading
indicators of inflation as unemployment and capacity utilization, prompted
the Federal Reserve to raise the federal funds rate, the rate banks charge
each other for overnight loans, another one-half percentage point in
February.
Q. HOW HAS THE INTEREST RATE ENVIRONMENT CHANGED SINCE THEN?
A. Even as the Fed was tightening credit for the seventh time in a little
more than a year, there were signs that the economy was beginning to lose
steam. Led by softening consumer activity and weakness in
interest-sensitive sectors such as housing and autos, the growth rate
during the first quarter of 1995 slowed to 2.7%. Currently, most economists
have long since stopped worrying about the economy overheating. Now they
have an altogether different concern: that we might be headed for another
recession. By the end of June, it was clear to all that the latest cycle of
interest rate increases was over. Instead, speculation centered on when the
Fed might feel compelled to lower rates.
Q. HOW DID YOU RESPOND TO CHANGING CONDITIONS?
A. The fund's average maturity six months ago, when the period began, was
39 days. That was a defensive number. It reflected my view at the time that
further rate increases were likely. As it became apparent that the economy
was slowing more rapidly than initially expected, my expectations regarding
Fed policy changed, and I gradually extended the fund's average maturity. I
moved cautiously at first because conditions were unsettled and it seemed
prudent to maintain flexibility. But as signs of weakness accumulated, I
began to prepare for a shift in Fed policy, including the possibility of an
eventual rate cut. By the end of June, the fund's average maturity was more
aggressive than that of most other taxable money market funds-around 60
days, compared to about 50 days for most competitors.
Q. HOW DID YOU ACHIEVE THAT LONGER AVERAGE MATURITY?
A. Mainly by focusing on three-month and six-month securities, rather than
moving further out the yield curve. That's because by the end of the
period, expectations for declining short-term rates caused longer-term
yields on some money market securities to fall below shorter-term yields, a
situation known as an inverted yield curve.
Q. WHAT ABOUT ASSET SELECTION?
A. I've reduced the fund's stake in U.S. Treasury and agency securities.
Normally the fund averages about 10% in government securities, although
it's been as high as 20% at times during the past year or two. But in
recent months, technical factors affecting supply and demand have priced
government securities unusually high. The main cause seems to be heavy
buying on the part of foreign central banks with funds accumulated in
support of the U.S. dollar. With so many other creditworthy alternatives
available, I've looked elsewhere for value, adding higher-yielding
commercial paper and bank certificates of deposit. At the end of June,
government securities totaled less than 3% of the fund's assets.
Q. WHAT'S THE OUTLOOK?
A. The next few months should be interesting. We know that on July 6,
shortly after the period ended, the Fed lowered the federal funds rate
one-quarter percentage point, but as we look ahead, much uncertainty
remains. Some market participants believe that we're in the early stages of
an extended downturn. Others believe that what's happening is merely a
brief but severe inventory correction, and that the economy will resume
growing at its long-term trend rate of around 2.5% once the temporary
buildup in inventories sells off.
Q. WHAT'S YOUR VIEW?
A. I tend to side with those in the latter camp. The typical prerequisites
for a recession, including high inflation and tight bank lending standards,
simply don't exist. That said, I'm concerned that if this Spring's weakness
in the labor market persists, it could evolve into a self-reinforcing
slowdown, forcing the Fed to continue lowering rates. While I don't think
that will happen, I have to respect the possibility of such a development.
Accordingly, I'll probably maintain a neutral to aggressive average
maturity of between 60 and 65 days for the foreseeable future.
FUND FACTS
GOAL: Income and share price stability by
investing in high quality, short-term instruments
START DATE: April 1, 1982
SIZE: As of June 30, 1995, more than $768
million
MANAGER: Robert Litterst, since 1992; manager,
Capital Reserves Money Market, Fidelity Cash
Reserves, Fidelity Money Market Trust:
Retirement Money Market, since 1992; joined
Fidelity in 1991
(checkmark)
VARIABLE INSURANCE PRODUCTS FUND: MONEY MARKET PORTFOLIO
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
BANKERS' ACCEPTANCES - 4.2%
ANNUALIZED
YIELD AT
DUE TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
DOMESTIC BANKERS' ACCEPTANCES - 2.8%
CHASE MANHATTAN BANK
11/1/95 6.09% $ 4,500,000 $ 4,408,980
CHEMICAL BANK
9/28/95 6.02 5,723,026 5,639,549
MELLON BANK, N.A.
11/24/95 5.81 7,500,000 7,325,700
NBD BANK, N.A.
12/11/95 5.87 4,000,000 3,896,767
21,270,996
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 1.4%
BANK OF TOKYO
8/14/95 6.39 6,000,000 5,954,533
RABOBANK NEDERLAND, N.V.
8/3/95 6.22 1,000,000 994,408
SANWA BANK, LTD.
7/31/95 6.08 4,000,000 3,980,033
10,928,974
TOTAL BANKERS' ACCEPTANCES 32,199,970
CERTIFICATES OF DEPOSIT - 20.3%
CHICAGO BRANCH, YANKEE DOLLAR, FOREIGN BRANCH - 3.9%
ABN-AMRO BANK
8/3/95 6.25 5,000,000 5,000,045
9/20/95 6.19 5,000,000 5,000,000
9/25/95 6.00 5,000,000 5,000,000
10/19/95 6.25 10,000,000 10,000,000
SANWA BANK, LTD.
8/15/95 6.04 5,000,000 5,000,062
30,000,107
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 9.4%
BANQUE NATIONALE DE PARIS
11/13/95 6.05 5,000,000 5,000,000
CANADIAN IMPERIAL BANK OF COMMERCE
11/1/95 6.25 4,000,000 3,998,110
COMMERZBANK, GERMANY
8/24/95 6.35 5,000,000 4,999,596
DRESDNER BANK, A.G.
3/15/96 6.44 1,000,000 1,000,875
FUJI BANK, LTD.
7/19/95 6.18 5,000,000 5,000,000
HYPO U.S. FINANCE
11/8/95 6.03 5,000,000 5,000,823
INDUSTRIAL BANK OF JAPAN, LTD.
7/31/95 6.30 5,000,000 5,000,000
ROYAL BANK OF CANADA
10/5/95 6.25 1,000,000 1,000,294
SANWA BANK, LTD.
7/7/95 6.21 3,000,000 3,000,000
SOCIETE GENERALE
8/14/95 6.02 14,000,000 14,000,000
8/21/95 6.00 10,000,000 10,000,000
ANNUALIZED
YIELD AT
DUE TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - CONTINUED
SUMITOMO BANK, LTD.
8/7/95 6.01% $ 5,000,000 $ 5,000,000
8/21/95 6.41 5,000,000 5,000,465
8/22/95 6.03 5,000,000 5,000,000
73,000,163
LONDON BRANCH, EURODOLLAR, DOMESTIC BANKS - 2.6%
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOC.
9/29/95 5.91 5,000,000 5,000,000
11/27/95 6.00 5,000,000 5,000,000
BANK OF NEW YORK
7/17/95 6.15 10,000,000 10,000,000
20,000,000
LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - 3.8%
BANK OF SCOTLAND
7/5/95 6.15 4,000,000 4,000,015
MITSUBISHI BANK, LTD.
8/10/95 6.04 5,000,000 5,000,377
NORDDEUTSCHE LANDESBANK
12/8/95 5.75 5,000,000 4,998,563
SANWA BANK, LTD.
8/7/95 6.02 5,000,000 4,998,917
TORONTO-DOMINION BANK
12/11/95 5.74 10,000,000 10,013,064
29,010,936
PORTLAND BRANCH, EURODOLLAR, FOREIGN BANKS - 0.6%
BANK OF NOVA SCOTIA
7/11/95 6.13 5,000,000 5,000,008
TOTAL CERTIFICATES OF DEPOSIT 157,011,214
COMMERCIAL PAPER - 52.0%
ANZ (DE), INC.
7/7/95 6.52 1,273,000 1,271,653
8/8/95 6.03 220,000 218,611
ABBEY NATIONAL TREASURY SERVICES
8/21/95 6.04 5,000,000 4,957,854
AMERICAN EXPRESS CREDIT CORP.
8/9/95 6.21 5,000,000 4,967,067
8/14/95 6.20 5,000,000 4,962,875
11/9/95 5.89 5,000,000 4,895,382
AMERICAN HOME FOOD PRODUCTS, INC.
7/10/95 6.17 11,000,000 10,983,280
AMERICAN HOME PRODUCTS
8/29/95 6.00 6,000,000 5,941,688
AMERICAN TELEPHONE & TELEGRAPH CO.
9/27/95 6.09 5,000,000 4,927,400
ASSOCIATES CORP. OF NORTH AMERICA
9/1/95 5.98 6,000,000 5,938,930
9/28/95 6.10 5,000,000 4,926,451
BANC ONE CORP.
9/22/95 5.99 5,000,000 4,931,986
BEAR STEARNS COS., INC.
7/12/95 6.14 5,000,000 4,990,757
8/1/95 6.06 6,000,000 5,969,155
8/1/95 6.13 5,000,000 4,974,016
COMMERCIAL PAPER - CONTINUED
ANNUALIZED
YIELD AT
DUE TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
BENEFICIAL CORP.
9/18/95 5.99% $ 5,000,000 $ 4,935,264
9/29/95 5.81 5,000,000 4,928,750
CIT GROUP HOLDINGS, INC.
9/21/95 6.20 5,000,000 4,931,211
CHRYSLER FINANCIAL CORPORATION
7/6/95 6.05 5,000,000 4,995,826
7/12/95 6.05 5,000,000 4,990,803
7/13/95 6.04 2,000,000 1,996,000
7/17/95 6.05 3,000,000 2,991,973
COMMERZBANK U.S. FINANCE, INC.
9/25/95 5.89 5,000,000 4,930,722
9/29/95 5.91 140,000 137,977
9/29/95 6.30 600,000 590,820
10/20/95 6.23 4,000,000 3,925,507
12/15/95 5.76 1,120,000 1,090,905
COMPAGNIE BANCAIRE
7/6/95 6.20 5,000,000 4,995,764
7/12/95 6.15 5,000,000 4,990,742
CORESTATES CAPITAL CORP.
7/8/95 6.01 (a) 5,000,000 5,000,000
7/15/95 6.09 (a) 5,000,000 5,000,000
DEN DANSKE CORP., INC.
7/12/95 6.15 3,000,000 2,994,445
DU PONT (E.I.) DE NEMOURS & CO.
9/19/95 6.09 2,500,000 2,466,833
FORD MOTOR CREDIT CORP.
7/21/95 6.23 5,000,000 4,983,056
8/30/95 6.23 15,000,000 14,848,000
9/11/95 6.25 5,000,000 4,939,100
10/27/95 5.86 6,000,000 5,887,507
FORD MOTOR CREDIT, PLC
8/1/95 6.10 4,500,000 4,476,711
GENERALE BANK
10/17/95 6.07 5,000,000 4,911,200
GENERAL ELECTRIC CAPITAL CORP.
7/3/95 5.97 (a) 5,000,000 5,000,000
7/5/95 6.19 5,000,000 4,996,628
8/1/95 5.94 170,000 169,139
9/15/95 6.68 4,000,000 3,945,787
10/5/95 6.79 2,400,000 2,358,400
10/12/95 6.80 1,000,000 981,403
11/1/95 6.13 10,000,000 9,796,708
GENERAL ELECTRIC CORP.
9/27/95 6.25 10,000,000 9,851,622
GENERAL MOTORS ACCEPTANCE CORP.
7/31/95 6.22 5,000,000 4,974,500
8/2/95 6.19 11,000,000 10,940,453
8/16/95 6.12 6,000,000 5,953,770
8/16/95 6.15 5,000,000 4,961,347
8/22/95 6.10 1,000,000 991,319
9/15/95 6.05 5,000,000 4,936,983
ANNUALIZED
YIELD AT
DUE TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
GEORGIA POWER CO.
7/5/95 6.20% $ 5,000,000 $ 4,996,611
GOLDMAN SACHS GROUP, L.P. (THE)
9/7/95 6.01 10,000,000 9,888,367
9/18/95 6.02 6,000,000 5,922,185
HANSON FINANCE (UK), PLC
8/7/95 6.03 10,000,000 9,938,950
8/22/95 6.04 6,000,000 5,948,477
IBM CORP.
9/1/95 5.97 5,000,000 4,949,194
INTERNATIONAL NEDERLANDEN U.S. FUNDING CORP.
8/28/95 6.35 4,000,000 3,960,367
MERRILL LYNCH & CO., INC.
9/28/95 6.00 5,000,000 4,927,317
MONSANTO CO.
8/14/95 6.19 2,500,000 2,481,453
9/12/95 6.17 1,525,000 1,506,353
12/21/95 5.90 10,000,000 9,724,642
MORGAN STANLEY GROUP, INC.
10/6/95 5.91 5,000,000 4,921,592
NATIONAL & PROVINCIAL BUILDING SOCIETY
10/16/95 5.89 5,350,000 5,258,249
NATIONWIDE BUILDING SOCIETY
8/11/95 6.06 5,000,000 4,966,004
NEW CENTER ASSET TRUST
7/12/95 6.16 5,000,000 4,990,726
7/17/95 6.15 10,000,000 9,973,067
NORWEST CORP.
9/19/95 5.99 400,000 394,773
NORWEST FINANCIAL
7/10/95 6.14 5,000,000 4,992,438
PENNSYLVANIA LIGHT & POWER COMPANY
7/5/95 6.06 1,650,000 1,648,895
7/10/95 6.05 3,200,000 2,196,689
PHILIP MORRIS COS., INC.
9/5/95 6.07 4,500,000 4,450,913
PRUDENTIAL FUNDING CORP.
7/3/95 6.30 10,000,000 9,996,500
SEARS ROEBUCK ACCEPTANCE CORP.
9/18/95 6.00 5,000,000 4,935,154
SHERWOOD MEDICAL COMPANY
8/21/95 5.99 5,000,000 4,957,925
TEXTRON, INC.
7/14/95 6.06 3,500,000 3,492,391
TORONTO DOMINION HOLDINGS USA, INC.
9/11/95 6.11 5,000,000 4,940,200
9/29/95 5.90 10,000,000 9,854,750
TRANSAMERICA FINANCE CORP.
8/7/95 6.03 220,000 218,648
WOOLWICH EQUITABLE BUILDING SOCIETY
10/16/95 5.94 5,000,000 4,913,508
TOTAL COMMERCIAL PAPER 402,000,618
FEDERAL AGENCIES - 3.2%
ANNUALIZED
YIELD AT
DUE TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
FEDERAL FARM CREDIT BANK - AGENCY COUPONS - 0.6%
7/3/95 6.17% (a) $ 5,000,000 $ 4,997,271
FEDERAL NATIONAL MORTGAGE ASSOC. - DISCOUNT NOTES - 2.6%
7/17/95 6.27 5,000,000 4,986,422
9/11/95 6.32 10,000,000 9,877,600
10/20/95 6.04 5,000,000 4,909,350
19,773,372
TOTAL FEDERAL AGENCIES 24,770,643
BANK NOTES - 7.2%
BANK OF NEW YORK
8/28/95 6.35 5,000,000 4,999,748
BOATMEN'S NATIONAL BANK OF ST. LOUIS
9/22/95 6.04 (a) 5,000,000 4,995,859
COMERICA BANK - DETROIT
5/28/96 5.83 5,000,000 5,014,775
FIFTH THIRD BANK - CINCINNATI
10/27/95 6.07 5,000,000 5,001,981
HOUSEHOLD BANK, N.A.
9/21/95 5.93 1,000,000 1,000,000
KEY BANK OF NEW YORK
7/3/95 6.11 (a) 5,000,000 4,999,374
MELLON BANK, N.A.
11/1/95 6.24 5,000,000 5,000,000
NBD BANK, N.A.
10/16/95 6.27 5,000,000 5,000,000
NATIONSBANK OF TEXAS
9/26/95 6.38 5,000,000 5,000,000
10/27/95 6.25 5,000,000 5,000,000
PNC BANK, N.A.
7/4/95 6.15 (a) 5,000,000 4,999,589
U.S. NATIONAL BANK OF OREGON
8/22/95 6.37 5,000,000 5,000,070
TOTAL BANK NOTES 56,011,396
MASTER NOTES (A) - 1.2%
J.P. MORGAN SECURITIES
7/3/95 6.58 9,000,000 9,000,000
MEDIUM-TERM NOTES (A) - 5.9%
ABBEY NATIONAL, NORTH AMERICA
7/3/95 5.97 5,000,000 4,999,151
ABBEY NATIONAL TREASURY SERVICES (C)
9/30/95 6.00 10,000,000 10,000,000
BENEFICIAL CORP.
7/15/95 6.09 5,000,000 4,999,453
DEAN WITTER, DISCOVER & CO.
7/15/95 6.10 5,000,000 5,004,526
GENERAL ELECTRIC CAPITAL CORP.
7/3/95 6.27 5,000,000 4,998,997
ANNUALIZED
YIELD AT
DUE TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
GENERAL MOTORS ACCEPTANCE CORP.
8/7/95 6.25% $ 3,000,000 $ 3,000,000
GOLDMAN SACHS GROUP, L.P. (THE) (C)
9/1/95 6.03 3,000,000 3,000,000
9/16/95 5.95 4,000,000 4,000,000
NORWEST CORP.
9/15/95 6.06 6,000,000 6,000,000
TOTAL MEDIUM-TERM NOTES 46,002,127
SHORT-TERM NOTES (A) - 3.2%
CAPITAL ONE FUNDING CORP.
7/10/95 6.07 4,072,000 4,072,000
SMM TRUST COMPANY (1994-D) (B)
7/28/95 6.17 4,000,000 4,000,000
SMM TRUST COMPANY (1995-I) (B)
7/5/95 6.16 6,000,000 5,998,411
SMM TRUST COMPANY (1995-J) (B)
7/15/95 6.06 11,000,000 11,000,000
TOTAL SHORT-TERM NOTES 25,070,411
MUNICIPAL SECURITIES (A) - 1.1%
GARDENA CALIFORNIA CERTIFICATES OF PARTNERSHIP
7/10/95 6.35 6,550,000 6,550,000
NEW ORLEANS AVIATION BOARD
7/10/95 6.26 1,800,000 1,800,000
TOTAL MUNICIPAL SECURITIES 8,350,000
REPURCHASE AGREEMENTS - 1.7%
MATURITY
AMOUNT
In a joint trading account
(U.S. Government Obligations)
dated 6/30/95 due 7/3/95:
At 6.28% $ 12,806,699 12,800,000
TOTAL INVESTMENTS - 100% $ 773,216,379
Total Cost for Income Tax Purposes - $773,216,379
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due date on these types of
securities reflects the next interest rate reset date or, when applicable,
the final maturity date.
(b) Restricted securities - Investment in securities not registered under
the Securities Act of 1933.
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
SMM Trust Company:
(1994-D) 10/28/94 $ 4,000,000
(1995-I)) 5/25/95 $ 6,000,000
(1995-J) 5/15/95 $ 11,000,000
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $17,000,000 or 2.2% of net
assets.
INCOME TAX INFORMATION
At December 31, 1994, the fund had a capital loss carryforward of
approximately $94,600 of which $4,100, $500, $4,900, $4,300 and $80,800
will expire on December 31, 1995, 1996, 1997, 2000 and 2002, respectively.
VARIABLE INSURANCE PRODUCTS FUND: MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $12,800,000) - See accompanying $ 773,216,379
schedule
Cash 673,210
Receivable for investments sold 104,000
Interest receivable 2,641,686
TOTAL ASSETS 776,635,275
LIABILITIES
Payable for investments purchased $ 7,463,678
Accrued management fee 157,028
Other payables and accrued expenses 64,485
TOTAL LIABILITIES 7,685,191
NET ASSETS $ 768,950,084
Net Assets consist of:
Paid in capital $ 769,022,085
Accumulated net realized gain (72,001
(loss) on investments )
NET ASSETS, for 769,022,085 $ 768,950,084
shares outstanding
NET ASSET VALUE, offering price and redemption price per share ($768,950,084 (divided by) 769,022,085 shares) $1.00
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
INTEREST INCOME $ 22,651,404
EXPENSES
Management fee $ 934,903
Transfer agent fees 176,682
Accounting fees and expenses 52,708
Non-interested trustees' 2,520
compensation
Custodian fees and expenses 36,594
Audit 11,536
Legal 1,454
Miscellaneous 2,459
TOTAL EXPENSES 1,218,856
NET INTEREST INCOME 21,432,548
NET REALIZED GAIN (LOSS) ON 7,601
INVESTMENTS
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 21,440,149
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS END YEAR ENDED
ED DECEMBER 31,
JUNE 30, 1995 1994
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 21,432,548 $ 25,859,424
Net interest income
Net realized gain (loss) 7,601 (80,853
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 21,440,149 25,778,571
Distributions to shareholders from net interest income (21,432,548 (25,859,424
) )
Share transactions at net asset value of $1.00 per share 512,023,023 1,187,546,448
Proceeds from sales of shares
Reinvestment of distributions from net interest income 21,432,548 25,859,424
Cost of shares redeemed (513,118,899 (817,822,836
) )
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES RESULTING FROM SHARE TRANSACTIONS 20,336,672 395,583,036
TOTAL INCREASE (DECREASE) IN NET ASSETS 20,344,273 395,502,183
NET ASSETS
Beginning of period 748,605,811 353,103,628
End of period $ 768,950,084 $ 748,605,811
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
JUNE 30, 1995
(UNAUDITED) 1994 1993 1992 1991 1990
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income from Investment Operations .029 .042 .032 .038 .059 .078
Net interest income
Less Distributions (.029) (.042) (.032) (.038) (.059) (.078)
From net interest income
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN B C 2.95% 4.25% 3.23% 3.90% 6.09% 8.04%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 768,950 $ 748,606 $ 353,104 $ 301,002 $ 271,123 $ 254,585
Ratio of expenses to average net assets .33% A .27% .22% .24% .38% .56%
Ratio of expenses to average net assets before .33% A .27% .23% .24% .38% .56%
expense reductions
Ratio of net interest income to average net assets 5.84% A 4.32% 3.16% 3.85% 5.93% 7.76%
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO
YOUR INSURANCE COMPANY'S SEPARATE ACCOUNT.
INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURNS SHOWN.
C TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
</TABLE>
VARIABLE INSURANCE PRODUCTS FUND: HIGH INCOME PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
JUNE 30, 1995 YEAR YEARS FUND
HIGH INCOME 11.89% 16.87% 11.60%
Merrill Lynch High Yield Master 14.88% 14.23% n/a
Consumer Price Index 3.04% 3.26% 3.57%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. Bond prices, for
example, generally move in the opposite
direction of interest rates. In turn, the share price,
return, and yield of a fund that invests in bonds
will vary. That means if you sell your shares
during a market downturn, you might lose
money. But if you can ride out the market's ups
and downs, you may have a gain.
(checkmark)
You can compare the fund's returns to those of the Merrill Lynch High Yield
Master Index - a broad measure of the high yield bond market. This
benchmark includes reinvested dividends and capital gains, if any.
Comparing the fund's performance to the consumer price index (CPI) helps
show how your fund did compared to inflation. (The CPI returns begin on the
month end closest to the fund's start date).
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.
$10,000 OVER LIFE OF FUND
VIP High Income (4High Yield Maste
09/30/85 10000.00 10000.00
10/31/85 10124.78 10113.02
11/30/85 10270.82 10303.28
12/31/85 10614.12 10604.47
01/31/86 10745.58 10676.44
02/28/86 11109.08 11130.10
03/31/86 11383.10 11373.65
04/30/86 11576.24 11551.26
05/31/86 11753.01 11685.98
06/30/86 11900.72 11804.36
07/31/86 11864.53 11648.95
08/31/86 11912.43 11863.93
09/30/86 12013.59 11962.11
10/31/86 12372.53 12172.57
11/30/86 12412.20 12271.68
12/31/86 12490.69 12337.95
01/31/87 12946.06 12686.81
02/28/87 13170.08 12896.26
03/31/87 13290.04 13038.85
04/30/87 12874.71 12754.50
05/31/87 12755.02 12697.03
06/30/87 13030.49 12872.55
07/31/87 13044.43 12942.59
08/31/87 13152.49 13072.28
09/30/87 12694.49 12771.51
10/31/87 12087.43 12430.27
11/30/87 12443.44 12744.62
12/31/87 12642.60 12913.85
01/31/88 13058.25 13267.23
02/29/88 13449.21 13627.23
03/31/88 13352.58 13604.70
04/30/88 13456.66 13643.99
05/31/88 13436.65 13715.20
06/30/88 13718.27 13977.43
07/31/88 13861.07 14125.13
08/31/88 13794.86 14171.55
09/30/88 13905.45 14314.39
10/31/88 14056.82 14537.41
11/30/88 14003.15 14591.87
12/31/88 14114.42 14653.61
01/31/89 14453.60 14873.37
02/28/89 14524.70 14973.32
03/31/89 14338.06 14960.00
04/30/89 14179.27 15004.15
05/31/89 14441.26 15280.37
06/30/89 14854.88 15496.85
07/31/89 14757.08 15570.24
08/31/89 14671.49 15647.15
09/30/89 14158.14 15498.19
10/31/89 13551.16 15253.06
11/30/89 13562.58 15287.24
12/31/89 13525.40 15273.41
01/31/90 13226.43 14974.91
02/28/90 13022.77 14756.83
03/31/90 12885.36 14956.31
04/30/90 12923.54 15032.30
05/31/90 13189.08 15303.83
06/30/90 13396.83 15600.32
07/31/90 13603.76 15929.99
08/31/90 13376.19 15320.16
09/30/90 13059.02 14653.87
10/31/90 12742.13 14280.96
11/30/90 13041.01 14401.94
12/31/90 13223.36 14609.46
01/31/91 13503.92 14815.98
02/28/91 14252.06 15915.67
03/31/91 14757.05 16599.98
04/30/91 15280.75 17191.13
05/31/91 15505.19 17275.07
06/30/91 15841.85 17622.59
07/31/91 16440.36 18044.84
08/31/91 16664.81 18424.11
09/30/91 17038.88 18658.77
10/31/91 17618.68 19213.23
11/30/91 17768.31 19435.16
12/31/91 17861.83 19660.94
01/31/92 18815.71 20348.35
02/29/92 19498.87 20853.71
03/31/92 20129.17 21144.68
04/30/92 20271.50 21298.58
05/31/92 20515.49 21638.31
06/30/92 20739.15 21907.16
07/31/92 21145.80 22351.02
08/31/92 21593.11 22646.93
09/30/92 21816.77 22904.97
10/31/92 21491.45 22615.68
11/30/92 21755.77 22935.97
12/31/92 21999.76 23231.29
01/31/93 22589.41 23803.34
02/28/93 22974.74 24253.90
03/31/93 23504.92 24674.39
04/30/93 23659.56 24851.50
05/31/93 24013.02 25186.03
06/30/93 24631.57 25659.22
07/31/93 24874.57 25935.02
08/31/93 25139.66 26182.25
09/30/93 25228.03 26311.44
10/31/93 25824.49 26807.08
11/30/93 26067.49 26953.70
12/31/93 26487.22 27223.21
01/31/94 27370.86 27819.81
02/28/94 27338.05 27619.74
03/31/94 26417.09 26719.70
04/30/94 26150.49 26407.45
05/31/94 26198.96 26313.37
06/30/94 26102.02 26893.29
07/31/94 26198.96 27082.30
08/31/94 26198.96 27270.47
09/30/94 26392.85 27260.08
10/31/94 26150.49 27329.36
11/30/94 25932.37 27096.87
12/31/94 26053.55 26906.19
01/31/95 26344.38 27286.38
02/28/95 27248.56 28137.75
03/31/95 27587.86 28529.34
04/30/95 28396.97 29197.31
05/31/95 29127.77 30109.50
06/30/95 29206.07 30339.47
Let's say you invested $10,000 in High Income Portfolio on September 30,
1985, shortly after the fund started. By June 30, 1995, your investment
would have grown to $29,206 - a 192.06% increase. That compares to $10,000
invested in the Merrill Lynch High Yield Master Index, which would have
grown to $30,339 over the same period - a 203.39% increase.
INVESTMENT SUMMARY
TOP FIVE HOLDINGS AS OF JUNE 30, 1995
(BY ISSUER, EXCLUDING REPURCHASE AGREEMENTS) % OF FUND'S
INVESTMENTS
PanAmSat Corp. 12 3/4% 4.2
TransTexas Gas Corp. (various issues) 3.5
Revlon Worldwide Corp. secured 0%, 3/15/98 2.6
Flagstar Corp. 11 1/4%, 11/1/04 2.3
American Financial Corp. (various issues) 2.3
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Media & Leisure 29.9
Finance 9.5
Energy 8.8
Services 6.6
Basic Industries 6.4
QUALITY DIVERSIFICATION AS OF JUNE 30, 1995
(MOODY'S RATINGS) % OF FUND'S
INVESTMENTS
Aaa, Aa, A 0.0
Baa 0.0
Ba 6.4
B 41.9
Caa, Ca, C 16.6
Nonrated 10.4
TABLE EXCLUDES SHORT-TERM INVESTMENTS. UNRATED DEBT SECURITIES THAT ARE
EQUIVALENT TO BA AND BELOW AT JUNE 30, 1995, ACCOUNT FOR 7.9% OF THE FUND'S
INVESTMENTS.
VARIABLE INSURANCE PRODUCTS FUND: HIGH INCOME PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Barry Coffman, Portfolio Manager of High Income Portfolio
Q. HOW HAS THE FUND PERFORMED, BARRY?
A. Although the fund did well relative to its peers, it trailed the
performance of the Merrill Lynch High Yield Master Index, which returned
12.76% and 14.88%, respectively, for the six and 12-month periods ended
June 30, 1995. The index has a larger percentage of Ba-rated bonds than
most high-yield mutual funds, which tend to be more concentrated in B-rated
bonds. Generally speaking, Ba-rated bonds are more sensitive to changing
interest rates, and therefore, benefited more from the recent decline in
interest rates than B-rated bonds. As a result, very few high yield funds
outperformed the index.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. The fund's relatively low weighting in Ba-rated securities was the
primary reason for its underperformance relative to its benchmark during
the most recent period. On the positive side, we have maintained a high
weighting, compared to the benchmark, in deferred coupon securities. These
bonds sell at a deep discount because they do not pay current interest for
some period, usually three to five years. They generally have longer
durations - which measures how sensitive their price is to changes in
interest rates - and therefore, their prices are more volatile. We also
avoided most of the credit disasters that occurred in the market.
Q. WHAT INVESTMENTS HAVE DONE WELL IN THE PAST SIX MONTHS?
A. Revlon continued to benefit from an operational restructuring and the
very successful launch of two key new products: Color Stay Lipstick and Age
Defying Makeup. Our Revlon position is concentrated in the most junior
securities that are most sensitive to changes in credit quality, which has
been a recent plus. Another strong performer was Big Flower Press, a large
commercial printer of advertising inserts, comics and television guides.
The company was helped by the strong growth in advertising and the
synergies it gained from some recent acquisitions. Finally, our
concentration in casinos and hotels did relatively well during the period.
Q. GIVEN THE MARKET'S STRENGTH SO FAR IN 1995, WAS IT DIFFICULT TO FIND
OPPORTUNITIES?
A. Not particularly. The new issues market was active and provided ample
opportunity to selectively add new names to the fund. One example was
PanAmSat Corp., which operates an international satellite communications
system and provides satellite services to the broadcasting and business
communications markets. It currently has two satellites operating and also
has a large backlog of contracted time from companies including ESPN and
Viacom for two new satellites it will be launching later this year. The
company is participating in a joint venture to provide Direct to Home (DTH)
television broadcasting service to Latin America, similar to the Direct TV
service in the United States. Another new issue we purchased was
Stratosphere Corp., a Las Vegas-based casino owned by industry-leader Grand
Casino. These bonds are attractive, in part, because in addition to their
14.25% coupon, they pay additional interest based on a percentage of the
company's cash flow.
Q. WHAT INVESTMENTS DIDN'T FARE AS WELL?
A. The high-yield restaurant sector, in general, did not perform well
during the period due to competitive pressures and a slowing economy. One
of our largest holdings is Flagstar, the parent of Denny's and the largest
franchisee of Hardees. Although Denny's has benefited from an aggressive
remodeling program, Hardees has suffered due to aggressive price promotions
from the major burger chains. Another restaurant chain, American Restaurant
Group, also underperformed partly due to the concentration of its chains in
California, where the economy continues to be weaker than the rest of the
country.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. The probability of the soft landing scenario is increasing, which could
provide a favorable backdrop for the high-yield bond market. Slow economic
growth and low inflation could allow many companies in the high-yield
market to improve their credit quality. Absolute yields remain attractive,
and absent a sharp drop in interest rates from current levels, high-yield
bonds could perform well relative to other fixed-income investments. In my
view, the key is to be selective. I'm focusing on companies that are less
cyclical, or sensitive to the economy, and choosing companies that I think
can perform well in a slow-growth environment.
FUND FACTS
GOAL: seeks high current income by investing
in high yielding, lower-rated fixed-income
securities
START DATE: September 19, 1985
SIZE: as of June 30, 1995, more than $813 million
MANAGER: Barry Coffman, since 1990; joined
Fidelity in 1986
(checkmark)
VARIABLE INSURANCE PRODUCTS FUND: HIGH INCOME PORTFOLIO
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
CORPORATE BONDS - 74.8%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
CONVERTIBLE BONDS - 0.2%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
ELECTRICAL EQUIPMENT - 0.0%
Ampex Corp., 0%, 6/30/97 - $ 469,000 $ 328,685
MEDIA & LEISURE - 0.2%
LODGING & GAMING - 0.2%
Argosy Gaming Co.
12%, 6/1/01 B3 1,290,000 1,290,000
RETAIL & WHOLESALE - 0.0%
GROCERY STORES - 0.0%
Farm Fresh, Inc.
7 1/2%, 3/1/10 B3 186,000 112,264
TOTAL CONVERTIBLE BONDS 1,730,949
NONCONVERTIBLE BONDS - 74.6%
AEROSPACE & DEFENSE - 0.3%
RHI Holdings, Inc.:
11 7/8%, 3/1/99 B2 2,160,000 2,062,800
11 7/8%, 3/1/99 (e) - 550,000 525,250
2,588,050
BASIC INDUSTRIES - 6.3%
CHEMICALS & PLASTICS - 2.1%
American Pacific Corp.
11%, 12/15/02 (f) - 850,000 765,000
Foamex LP 11 7/8%, 10/1/04 B3 5,000,000 4,725,000
Pioneer Americas Acquisition
Corp. 13 3/8%, 4/1/05 (f) B2 10,000,000 10,325,000
Trans Resources, Inc.
14 1/2%, 9/1/96 B2 580,000 585,800
16,400,800
IRON & STEEL - 0.9%
Republic Engineered Steels, Inc.
9 7/8%, 12/15/01 B2 5,230,000 4,772,375
WCI Steel, Inc.
10 1/2%, 3/1/02 B1 2,420,000 2,359,500
7,131,875
METALS & MINING - 0.7%
International Wire Group, Inc.
11 3/4%, 6/1/05 (f) B3 5,850,000 5,886,563
PACKAGING & CONTAINERS - 0.8%
Crown Packaging Holdings Ltd.
0%, 11/1/03 (d) Caa 6,840,000 3,129,300
Grupo Industrial Durango euro
9.6367%, 11/18/96 (g) 4,000,000 3,380,000
6,509,300
PAPER & FOREST PRODUCTS - 1.8%
Indah Kiat International Finance
Co. 11 3/8%, 6/15/99 Ba3 9,000,000 9,022,500
Mail-Well Holdings, Inc.
0%, 2/15/06 (d) - 1,190,000 511,700
Tjiwi Kimia International Finance
Co. 13 1/4%, 8/1/01 B1 4,130,000 4,377,800
13,912,000
TOTAL BASIC INDUSTRIES 49,840,538
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
CONGLOMERATES - 0.6%
Jordan Industries, Inc.:
10 3/8%, 8/1/03 B3 $ 3,155,000 $ 2,902,600
0%, 8/1/05 (d) Caa 3,135,000 1,849,650
4,752,250
CONSTRUCTION & REAL ESTATE - 1.6%
BUILDING MATERIALS - 1.3%
Adience, Inc.
11%, 6/15/02 - 745,921 540,793
Building Materials Corp.,
America 0%, 7/1/04 (d) B1 12,610,000 7,502,950
DAL Tile International, Inc. secured
coupon, 0%, 7/15/98 Caa 3,435,000 2,279,981
10,323,724
REAL ESTATE - 0.3%
Littlefield Co.
10%, 12/31/95 (e) - 2,750,000 2,491,913
TOTAL CONSTRUCTION & REAL ESTATE 12,815,637
DURABLES - 2.9%
AUTOS, TIRES, & ACCESSORIES - 1.9%
Harvard Industries, Inc.
12%, 7/15/04 B2 5,000,000 5,137,500
Poindexter (JB), Inc.
12 1/2%, 5/15/04 B2 10,000,000 9,700,000
14,837,500
TEXTILES & APPAREL - 1.0%
Hat Brands, Inc.
12 5/8%, 9/15/02:
Series B - 1,520,000 1,599,800
Series D - 680,000 715,700
Leslie Fay Cos., Inc. (b)(e):
9.53%, 1/15/00 - 676,319 399,028
10.54%, 1/15/02 - 611,353 299,563
United States Leather, Inc.
10 1/4%, 7/31/03 B2 6,010,000 5,153,575
8,167,666
TOTAL DURABLES 23,005,166
ENERGY - 7.2%
ENERGY SERVICES - 1.0%
Falcon Drilling, Inc.:
9 3/4%, 1/15/01 B2 3,512,000 3,441,760
12 1/2%, 3/15/05 B3 4,000,000 4,160,000
7,601,760
OIL & GAS - 6.2%
Chesapeake Energy Corp.
10 1/2%, 6/1/02 (f) B1 6,000,000 5,910,000
Deeptech International, Inc.
12%, 12/15/00 B3 4,660,000 3,168,800
Mesa Capital Corp.
secured 0%, 6/30/98 (d) Caa 5,710,000 5,181,825
TransTexas Gas Corp.
11 1/2%, 6/15/02 B2 20,000,000 20,450,000
Transamerican Refining
Corp. (g):
0%, 2/15/02 Caa 6,746,000 4,435,495
16 1/2%, 2/15/02 Caa 9,620,000 10,173,150
49,319,270
TOTAL ENERGY 56,921,030
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - 6.0%
INSURANCE - 5.1%
American Annuity Group, Inc.
11 1/8%, 2/1/03 Ba3 $ 3,500,000 $ 3,640,000
American Financial Corp.:
10%, 10/20/99 Ba3 5,000,000 5,037,500
9 3/4%, 4/20/04 Ba3 6,570,000 6,504,300
9 3/4%, 4/20/04 (e) Ba3 6,770,000 6,702,300
American Life Holdings
11 1/4%, 9/15/04 B1 13,350,000 13,884,000
Americo Life, Inc.
9 1/4%, 6/1/05 Ba2 4,900,000 4,557,000
40,325,100
SAVINGS & LOANS - 0.8%
First Nationwide Holdings, Inc.
12 1/4%, 5/15/01 Ba3 5,790,000 6,166,350
SECURITIES INDUSTRY - 0.1%
ECM Corp. extendible
14%, 6/1/02 (f) - 570,198 627,218
TOTAL FINANCE 47,118,668
HEALTH - 0.6%
MEDICAL EQUIPMENT & SUPPLIES - 0.6%
Wright Medical Technology, Inc.,
Series B, 10 3/4%, 7/1/00 B3 5,200,000 5,083,000
HOLDING COMPANIES - 0.1%
New Street Capital Corp.
pay-in-kind (e):
12%, 2/28/98 - 67,416 64,697
Unit 12%, 2/28/98 - 1,123,600 1,078,285
1,142,982
INDUSTRIAL MACHINERY & EQUIPMENT - 3.4%
MVE, Inc. Unit
12 1/2%, 2/15/02 B3 8,545,000 8,886,800
Specialty Equipment Cos., Inc.
11 3/8%, 12/1/03 B3 10,640,000 10,932,600
Thermadyne Holdings Corp.:
10 1/4%, 5/1/02 B3 1,484,000 1,417,220
10 3/4%, 11/1/03 Caa 5,756,000 5,583,320
26,819,940
MEDIA & LEISURE - 24.5%
BROADCASTING - 8.0%
Chancellor Broadcasting
12 1/2%, 10/1/04 B3 6,560,000 6,543,600
Citicasters, Inc.
9 3/4%, 2/15/04 B- 7,812,000 7,792,470
Cooke Media Group, Inc.
11 5/8%, 4/1/99 - 350,000 334,250
Marcus Cable Capital Corp.
0%, 12/15/05 (d)(f) Caa 26,580,000 14,054,175
NWCG Holdings Corp.
0%, 6/15/99 Caa 26,925,000 16,693,500
Peoples Choice TV Corp. Unit
0%, 6/1/04 (d) Caa 11,340,000 5,485,725
Robin Media Group, Inc.
11 1/8%, 4/1/97 - 12,340,000 12,525,100
63,428,820
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
LEISURE DURABLES & TOYS - 1.5%
ICON Health And Fitness, Inc.
13%, 7/15/02 B3 $ 5,890,000 $ 5,948,900
IHF Holdings, Inc.
0%, 11/15/04 (d) Caa 10,250,000 5,637,500
11,586,400
LODGING & GAMING - 9.9%
Bally's Casino Holdings, Inc.
10 1/2%, 6/15/98 B3 12,630,000 8,841,000
Bally Gaming International, Inc.
10 3/8%, 7/15/98 - 3,000,000 3,090,000
Boyd Gaming Corp.
10 3/4%, 9/3/03 B2 7,350,000 7,570,500
GNF Corp., Series B,
10 5/8%, 4/1/03 B2 19,730,000 16,375,900
Grand Casino Resorts, Inc. gtd.
12 1/2%, 2/1/00 Ba3 2,200,000 2,464,000
HMH Properties, Inc.
9 1/2%, 5/15/05 (f) B1 10,000,000 9,700,000
Maritime Group Ltd. pay-in-
kind 14%, 2/15/97 (b) - 1,648,399 741,780
Players International, Inc.
10 7/8%, 4/15/05 (f) Ba3 7,050,000 6,944,250
President Riverboat Casinos
13%, 9/15/01 B 7,000,000 5,950,000
Stratosphere Corp.
14 1/4%, 5/15/02 B2 12,740,000 12,994,800
Trump Plaza Funding, Inc. gtd.
mtg. 10 7/8%, 6/15/01 B3 4,713,000 4,335,960
79,008,190
RESTAURANTS - 5.1%
American Restaurant Group, Inc.:
12%, 9/15/98 B2 3,930,000 3,144,000
12%, 9/15/98 (New) B2 3,580,000 2,864,000
Cafeteria Operators LP
11%, 6/30/98 (b)(e) - 7,000,000 1,750,000
Flagstar Corp.
11 1/4%, 11/1/04 Caa 23,555,000 18,372,900
Host Marriott Travel Plazas, Inc.
9 1/2%, 5/15/05 (f) B1 15,000,000 14,325,000
40,455,900
TOTAL MEDIA & LEISURE 194,479,310
NONDURABLES - 4.2%
BEVERAGES - 0.5%
Heileman Acquisition Corp.
9 5/8%, 1/31/04 B3 6,500,000 4,095,000
HOUSEHOLD PRODUCTS - 3.7%
McAndrews & Forbes Group,
Inc. 12 1/4%, 7/1/96 - 1,360,000 1,360,000
Revlon Consumer Products Corp.
10 1/2%, 2/15/03 B3 7,230,000 7,103,475
Revlon Worldwide Corp. secured
0%, 3/15/98 B3 30,342,000 20,860,125
29,323,600
TOTAL NONDURABLES 33,418,600
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - 5.5%
APPAREL STORES - 2.8%
Apparel Retailers, Inc.
12 3/4%, 8/15/05 Caa $ 11,230,000 $ 6,625,700
Lamonts Apparel Corp.
10 1/4%, 11/1/99 (b)(f) - 2,201,000 1,078,490
Specialty Retailers, Inc.:
10%, 8/15/00 B1 2,890,000 2,759,950
11%, 8/15/03 B3 12,220,000 11,364,600
21,828,740
GENERAL MERCHANDISE STORES - 1.4%
Parisian, Inc.
9 7/8%, 7/15/03 Caa 14,322,000 11,027,940
RETAIL & WHOLESALE, MISCELLANEOUS - 1.3%
Barrys Jewelers, Inc.
11%, 12/22/00 - 1,595,000 1,563,100
Finlay Fine Jewelry Corp.
10 5/8%, 5/1/03 B1 4,960,000 4,786,400
Florists Transworld Delivery, Inc.
14%, 12/15/01 B3 4,500,000 4,297,500
10,647,000
TOTAL RETAIL & WHOLESALE 43,503,680
SERVICES - 5.7%
ADVERTISING - 0.8%
Outdoor Systems, Inc.
10 3/4%, 8/15/03 B2 7,000,000 6,720,000
LEASING & RENTAL - 1.7%
Acme Holdings, Inc.
11 3/4%, 6/1/00 (b) Ca 2,930,000 1,465,000
GPA Delaware, Inc.:
8 1/2%, 3/3/97 Ca 3,500,000 3,176,250
gtd. 8 3/4%, 12/15/98 Caa 990,000 831,600
8 5/8%, 1/15/99 - 2,600,000 2,067,000
Scotsman Group, Inc.
9 1/2%, 12/15/00 B1 3,950,000 3,821,625
Scotsman Holdings, Inc.
pay-in-kind 11%, 3/1/04 - 2,080,752 1,712,521
13,073,996
PRINTING - 1.7%
BFP Holdings Corp.
0%, 4/15/04 (d) Caa 5,000,000 3,300,000
Big Flower Press:
10 3/4%, 8/1/03 B3 3,555,000 3,546,113
Class A, 10 3/4%, 8/1/03 B3 4,910,000 4,897,725
Class B, 10 3/4%, 8/1/03 B3 1,480,000 1,476,300
13,220,138
SERVICES - 1.5%
Protection One Alarm
Monitoring, Inc. Unit
0%, 6/30/05 (d)(f) Caa 1,860,000 12,136,500
TOTAL SERVICES 45,150,634
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - 0.0%
ELECTRONICS - 0.0%
Alpine Group, Inc.
13 1/2%, 1/5/96 (e) Caa $ 130,000 $ 130,000
TRANSPORTATION - 2.6%
AIR TRANSPORTATION - 1.7%
US Air, Inc.:
Series 1993-A1 Pass Thru
Trust 8 5/8%, 9/1/98 B1 5,000,000 4,725,000
9 5/8%, 2/1/01 B3 930,000 804,450
9 5/8%, 9/1/03 B1 2,550,000 2,422,500
10 3/8%, 3/1/13 B1 5,470,000 5,169,150
13,121,100
RAILROADS - 0.9%
Transtar Holdings L.P./Transtar
Cap. Corp., Series B,
0%, 12/15/03 (d) B- 12,270,000 7,239,300
TOTAL TRANSPORTATION 20,360,400
UTILITIES - 3.1%
CELLULAR - 2.5%
Dial Call Communications,
Inc. 0%, 12/15/05 (d) Caa 2,800,000 1,288,000
Dial Page, Inc.
12 1/4%, 2/15/00 Caa 950,000 985,625
Pagemart Nationwide, Inc. Unit
0%, 2/1/05 (d)(f) - 29,020,000 17,629,650
19,903,275
ELECTRIC UTILITY - 0.1%
El Paso Funding Corp.
lease oblig. (b):
9 3/8%, 10/1/96 Ca 790,000 422,650
9.20%, 7/2/97 Ca 380,000 203,300
625,950
GAS - 0.1%
Columbia Gas Systems, Inc.
9%, 8/1/95 (b) B3 670,000 938,000
TELEPHONE SERVICES - 0.4%
Call-Net Enterprises, Inc.
yankee 0%, 12/1/04 (d) B2 330,000 198,000
Pagemart, Inc.
0%, 11/1/03 (d) - 4,820,000 3,048,650
3,246,650
TOTAL UTILITIES 24,713,875
TOTAL NONCONVERTIBLE BONDS 591,843,760
TOTAL CORPORATE BONDS
(Cost $594,159,103) 593,574,709
COMMERCIAL MORTGAGE SECURITIES - 0.4%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
CS First Boston Mortgage
Securities Corp. Commercial
Series 1994-CFB1 Class E,
7.8751%, 1/25/28 (f) Ba2 $ 7,355 $ 5,784
Meritor Mortgage Security Corp.
commercial Series 1987-1
Class B, 9.40%, 2/1/00 (f) - 1,350,000 272,016
SKW Real Estate LP commercial
Series II Class E, 11%,
4/15/05 (f) B 1,500,000 1,500,469
SML, Inc. commercial Series
1994-C1 Class B-3, 11.69%,
9/18/99 - 1,500,000 1,413,750
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $3,126,994) 3,192,019
COMMON STOCKS - 5.5%
SHARES
AEROSPACE & DEFENSE - 0.0%
DEFENSE ELECTRONICS - 0.0%
Tracor, Inc. (a) 18,900 257,513
BASIC INDUSTRIES - 0.1%
IRON & STEEL - 0.1%
WCI Steel, Inc. (a) 67,700 423,125
PAPER & FOREST PRODUCTS - 0.0%
Mail-Well Holdings, Inc. (a) 9,250 55,500
TOTAL BASIC INDUSTRIES 478,625
DURABLES - 0.1%
TEXTILES & APPAREL - 0.1%
Hat Brands, Inc. (warrants) (a)(e) 27,466 302,121
HM/Hat Brands Trust Class I Units (a)(e) 340,000 340,000
642,121
ENERGY - 1.1%
OIL & GAS - 1.1%
Flores & Rucks, Inc. (a) 125,900 1,542,275
TransTexas Gas Corp. (a) 479,600 7,253,950
TOTAL ENERGY 8,796,225
FINANCE - 1.7%
INSURANCE - 1.7%
American Financial Group, Inc. 519,600 13,509,600
SECURITIES INDUSTRY - 0.0%
ECM Corp. LP (f) 3,000 300,000
TOTAL FINANCE 13,809,600
HEALTH - 0.0%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
Wright Medical Technology, Inc.
(warrants) (a) 1,729 285,334
HOLDING COMPANIES - 0.2%
SDW Holdings Corp. (a):
Unit (f) 4,450 1,203,369
(warrants) 3,720 22,320
1,225,689
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
ELECTRICAL EQUIPMENT - 0.1%
Ampex Corp.(a):
Class A 20,681 $ 46,532
Class A (warrants) 57,599 129,598
Class C 230,212 517,977
694,107
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
Terex Corp. (rights) (a) 3,150 788
Thermadyne Holdings Corp. (a) 65,419 924,043
924,831
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,618,938
MEDIA & LEISURE - 1.0%
ENTERTAINMENT - 0.0%
Live Entertainment, Inc. (warrants) (a)(e):
$2.00 232,000 58,000
$2.72 221,765 55,441
113,441
LEISURE & DURABLES - 0.1%
IHF Capital, Inc. (a)(f):
Series H (warrants) 10,250 820,000
Series I (warrants) 5,890 147,250
967,250
LODGING & GAMING - 0.9%
Bally Gaming International, Inc.
(warrants) (a) 90,000 618,750
Hollywood Casino Corp. Class A (a) 139,000 1,233,625
Host Marriott Corp. (a) 383,000 4,069,375
Maritime Group Ltd. (warrants) (a) 17,880 179
Motels of America, Inc. (a) 3,000 225,000
Sun International Hotels Ltd. (a) 15,285 687,825
Sun International Hotels Ltd. Class B (a) 3,209 139,592
6,974,346
PUBLISHING - 0.0%
General Media, Inc. (warrant) (a) 1,310 13,100
TOTAL MEDIA & LEISURE 8,068,137
NONDURABLES - 0.6%
TOBACCO - 0.6%
RJR Nabisco Holdings Corp. 161,400 4,499,025
RETAIL & WHOLESALE - 0.1%
APPAREL STORES - 0.0%
Lamonts Apparel, Inc. (a):
(New) 35,870 13,452
(warrants) 66,214 -
13,452
GROCERY STORES - 0.1%
FF Holdings Corp. (a)(e) 33,900 67,800
Food 4 Less Holdings, Inc.
(warrants) (a) 9,348 283,712
MAFCO (warrants) (a) 59 -
351,512
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Barrys Jewelers, Inc. (a) 45,576 148,122
Barrys Jewelers, Inc. (warrants) (a) 5,697 1,424
Finlay Enterprises, Inc. (a) 2,500 35,000
184,546
TOTAL RETAIL & WHOLESALE 549,510
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 0.4%
LEASING & RENTAL - 0.0%
Scotsman Holdings, Inc. (a) 15,281 $ 199,875
PRINTING - 0.4%
BFP Holdings Class D (a) 160,744 3,214,880
SERVICES - 0.0%
Perry Capital Corp. (warrants) (a)(f) 4,500 22,500
Vestar/LPA Investment Corp. (a) 5,177 129,425
151,925
TOTAL SERVICES 3,566,680
TECHNOLOGY - 0.0%
ELECTRONICS - 0.0%
Berg Electronics Holdings Corp. (a)(f) 20,853 104,265
UTILITIES - 0.0%
CELLULAR - 0.0%
Dial Page, Inc. (warrants) (a) 4,321 5,401
ELECTRIC UTILITY - 0.0%
Eastern Utilities Associates 3 68
Northeast Utilities Associates
(warrants) (a) 21,789 27,236
27,304
GAS - 0.0%
UGI Corp. (warrants) (a) 14,033 2,105
TOTAL UTILITIES 34,810
TOTAL COMMON STOCKS
(Cost $38,165,942) 43,936,472
PREFERRED STOCKS - 7.9%
CONVERTIBLE PREFERRED STOCKS - 0.7%
RETAIL & WHOLESALE - 0.2%
GROCERY STORES - 0.2%
Supermarkets General Holdings Corp.
exchangeable pay-in-kind $3.52 (a) 39,189 1,058,103
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Town & Country Corp. (a) 4,000 3,000
TOTAL RETAIL & WHOLESALE 1,061,103
SERVICES - 0.5%
La Petite Holdings Corp. exchangeable (a) 160,800 4,020,000
TECHNOLOGY - 0.0%
ELECTRONICS - 0.0%
Alpine Group, Inc. cumulative 8% (a) 835 37,575
TOTAL CONVERTIBLE PREFERRED STOCKS 5,118,678
NONCONVERTIBLE PREFERRED STOCKS - 7.2%
BASIC INDUSTRIES - 0.0%
IRON & STEEL - 0.0%
Stelco, Inc. cumulative, Series B, 7.76% 7,207 115,518
PAPER & FOREST PRODUCTS - 0.0%
SD Warren Co. exchangeable
pay-in-kind (a) 3,720 104,160
TOTAL BASIC INDUSTRIES 219,678
SHARES VALUE (NOTE 1)
DURABLES - 0.1%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Harvard Industries, Inc.
pay-in-kind $14.25 (a) 22,739 $ 625,323
ENERGY - 0.5%
OIL & GAS - 0.5%
Gulf Canada Resources Ltd. (a)(e) 31,009 89,151
Gulf Canada Resources Ltd., Series 1,
adj. rate 1,321,942 3,717,962
3,807,113
FINANCE - 1.8%
SAVINGS & LOANS - 1.8%
First Nationwide Bank 11 1/2% 112,852 12,188,016
Greater New York Savings Bank,
Series B, perpetual 12% 78,751 2,165,653
14,353,669
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Ampex Corp. 8% (a)(e) 1,589 911,927
MEDIA & LEISURE - 4.2%
BROADCASTING - 4.2%
PanAmSat Corp. 12 3/4% 32,700 33,190,500
TECHNOLOGY - 0.5%
ELECTRONICS - 0.5%
Berg Electronics Holding Corp.,
Series E, $3.4687 157,433 4,250,691
TOTAL NONCONVERTIBLE PREFERRED STOCKS 57,358,901
TOTAL PREFERRED STOCKS
(Cost $60,943,714) 62,477,579
PURCHASED BANK DEBT - 0.1%
PRINCIPAL
AMOUNT
Leslie Fay Cos., Inc.:
revolving loan $ 685,856 404,655
term loan 777,600 458,784
TOTAL PURCHASED BANK DEBT
(Cost $1,190,771) 863,439
REPURCHASE AGREEMENTS - 11.3%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 6.22%
dated 6/30/95 due 7/3/95 $ 89,902,575 $ 89,856,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $787,442,524) $ 793,900,218
LEGEND
(a) Non-income producing
(b) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
(c) Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
(d) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(e) Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
ACQUISITION ACQUISITION
SECURITY DATE COST
Alpine Group, Inc.
13 1/2%, 1/5/96 1/4/95 $ 128,339
American Financial Corp.
9 3/4%, 4/20/04 5/24/95 $ 6,634,600
Ampex Corp. 8% 2/16/95 $ 834,225
Cafeteria Operators LP
11%, 6/30/98 6/24/93 $ 5,600,000
FF Holdings Corp. 10/2/92 to 1/14/94 $ 135,753
Gulf Canada Resources
Ltd. 10/15/93 $ 76,940
Hat Brands,
Inc. (warrants) 9/2/92 to 2/23/94 $ -
HM/Hat Brands Trust
Class I Units 2/22/94 $ 340,000
Leslie Fay Cos., Inc.:
9.53%, 1/15/00 7/19/93 $ 512,312
10.54%, 1/15/02 7/19/93 to 11/11/93 $ 404,156
Littlefield Co.
10%, 12/31/95 2/28/94 $ 2,750,000
Live Entertainment, Inc.
(warrants):
$2.00 3/23/93 $ 220,717
$2.72 3/23/93 $ 131,863
New Street Capital Corp.
pay-in-kind:
12%, 2/28/98 2/15/95 $ 67,416
Unit 12%, 2/28/98 2/25/94 to 9/1/94 $ 1,123,600
RHI Holdings, Inc.
11 7/8%, 3/1/99 10/15/92 $ 495,000
(f) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $103,757,499 or 12.8% of net
assets.
(g) 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 $643,634,101 and $467,491,408, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $21,896 for the period (see
Note 3 of Notes to the Financial Statements).
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 0.0% AAA, AA, A 0.0%
Baa 0.0% BBB 0.0%
Ba 6.4% BB 17.3%
B 41.9% B 41.6%
Caa 16.3% CCC 4.8%
Ca, C 0.3% CC, C 0.0%
D 0.4%
The percentage not rated by either S&P or Moody's amounted to 7.9%
including long-term debt categorized as other securities. FMR has
determined that unrated debt securities that are lower quality account for
7.9% of the total value of investment in securities.
INCOME TAX INFORMATION
At June 30, 1995, the aggregate cost of investment securities for income
tax purposes was $787,696,044. Net unrealized appreciation aggregated
$6,204,174, of which $27,367,484 related to appreciated investment
securities and $21,163,310 related to depreciated investment securities.
At December 31, 1994, the fund had a capital loss carryforward of
approximately $1,148,000 all of which will expire on December 31, 2002.
VARIABLE INSURANCE PRODUCTS FUND: HIGH INCOME PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $89,856,000) (cost $787,442,524) - $ 793,900,218
See accompanying schedule
Cash 506,521
Receivable for investments sold 10,050,335
Receivable for fund shares sold 5,462,661
Dividends receivable 1,104,845
Interest receivable 12,928,622
TOTAL ASSETS 823,953,202
LIABILITIES
Payable for investments purchased $ 9,912,131
Payable for fund shares redeemed 178,315
Accrued management fee 405,377
Other payables and accrued expenses 77,305
TOTAL LIABILITIES 10,573,128
NET ASSETS $ 813,380,074
Net Assets consist of:
Paid in capital $ 767,990,586
Undistributed net investment income 33,139,910
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 5,795,848
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 6,453,730
NET ASSETS, for 72,678,030 shares outstanding $ 813,380,074
NET ASSET VALUE, offering price and redemption price per share ($813,380,074 (divided by) 72,678,030 shares) $11.19
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
INVESTMENT INCOME $ 2,728,599
Dividends
Interest 33,425,785
TOTAL INCOME 36,154,384
EXPENSES
Management fee $ 2,138,740
Transfer agent fees 183,111
Accounting fees and expenses 121,670
Non-interested trustees' compensation 1,780
Custodian fees and expenses 6,018
Audit 17,965
Interest 2,621
Total expenses before reductions 2,471,905
Expense reductions (5,422 2,466,483
)
NET INVESTMENT INCOME 33,687,901
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 7,181,679
Foreign currency transactions (978 7,180,701
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 39,872,106
Assets and liabilities in foreign currencies (150 39,871,956
)
NET GAIN (LOSS) 47,052,657
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 80,740,558
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
1995 1994
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 33,687,901 $ 43,091,356
Net investment income
Net realized gain (loss) 7,180,701 (726,075
)
Change in net unrealized appreciation (depreciation) 39,871,956 (49,793,238
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 80,740,558 (7,427,957
)
Distributions to shareholders (43,871,918 (30,631,598
From net investment income ) )
From net realized gain - (15,525,605
)
TOTAL DISTRIBUTIONS (43,871,918 (46,157,203
) )
Share transactions 333,374,520 498,543,147
Net proceeds from sales of shares
Reinvestment of distributions 43,871,918 46,157,203
Cost of shares redeemed (170,151,760 (385,629,739
) )
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 207,094,678 159,070,611
TOTAL INCREASE (DECREASE) IN NET ASSETS 243,963,318 105,485,451
NET ASSETS
Beginning of period 569,416,756 463,931,305
End of period (including undistributed net investment income of $33,139,910 and $42,834,969,
respectively) $ 813,380,074 $ 569,416,756
OTHER INFORMATION
Shares
Sold 31,093,586 45,102,882
Issued in reinvestment of distributions 4,326,619 4,073,892
Redeemed (15,728,132 (34,899,979
) )
Net increase (decrease) 19,692,073 14,276,795
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED JUNE 30,
1995
SELECTED PER-SHARE DATA (UNAUDITED) 1994 1993 D 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.750 $ 11.990 $ 10.820 $ 9.550 $ 7.070 $ 8.110
Income from Investment Operations .428 .770 .728 .790 .890 .858
Net investment income
Net realized and unrealized gain (loss) .792 (.910) 1.332 1.290 1.590 (1.040)
Total from investment operations 1.220 (.140) 2.060 2.080 2.480 (.182)
Less Distributions (.780) (.730) (.794) (.810) - (.858)
From net investment income
In excess of net investment income - - (.036) - - -
From net realized gain on investments - (.370) (.060) - - -
Total distributions (.780) (1.100) (.890) (.810) - (.858)
Net asset value, end of period $ 11.190 $ 10.750 $ 11.990 $ 10.820 $ 9.550 $ 7.070
TOTAL RETURN B, C 12.10% (1.64) 20.40% 23.17% 35.08% (2.23)
% %
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 813,380 $ 569,417 $ 463,931 $ 200,591 $ 70,060 $ 29,990
Ratio of expenses to average net assets .70% .71% .64% .67% .97% 1.00%
A
Ratio of expenses to average net assets before expense .70% .71% .66% .67% .97% 1.12%
reductions A
Ratio of net investment income to average net assets 9.58% 8.75% 8.69% 10.98% 12.94% 11.36%
A
Portfolio turnover rate 154% 122% 155% 160% 154% 156%
A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR
INSURANCE COMPANY'S SEPARATE
ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURNS SHOWN.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES
TO THE FINANCIAL
STATEMENTS).
D EFFECTIVE JANUARY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN,
AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES.
</TABLE>
VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
JUNE 30, 1995 YEAR YEARS FUND
Equity-Income 24.00% 15.06% 12.30%
S&P 500 26.07% 12.09% 13.58%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of how
it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. In turn, the share
price and return of a fund that invests in stocks
will vary. That means if you sell your shares
during a market downturn, you might lose
money. But if you can ride out the market's ups
and downs, you may have a gain.
(checkmark)
You can compare these figures to the performance of the Standard & Poor's
Composite Index of 500 stocks - a common proxy for the U.S. stock market.
This benchmark 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, 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.
$10,000 OVER LIFE OF FUND
VIP Equity Income (Standard & Poor's 50
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 11498.86 12510.26
06/30/87 11738.55 13142.03
07/31/87 12185.73 13808.33
08/31/87 12521.12 14323.38
09/30/87 12258.32 14009.70
10/31/87 9866.20 10992.01
11/30/87 9424.74 10086.27
12/31/87 9906.52 10853.84
01/31/88 10611.13 11310.78
02/29/88 11136.95 11837.86
03/31/88 10943.07 11472.07
04/30/88 11124.21 11599.41
05/31/88 11273.39 11700.33
06/30/88 11914.76 12237.37
07/31/88 11893.18 12190.87
08/31/88 11688.12 11776.38
09/30/88 12035.42 12278.06
10/31/88 12243.12 12619.39
11/30/88 12046.36 12438.93
12/31/88 12156.33 12656.61
01/31/89 12907.13 13583.07
02/28/89 12840.88 13244.86
03/31/89 13119.01 13553.46
04/30/89 13625.32 14256.89
05/31/89 14030.37 14834.29
06/30/89 14039.98 14749.73
07/31/89 14858.50 16081.64
08/31/89 15097.24 16396.84
09/30/89 14927.51 16329.61
10/31/89 14066.31 15950.76
11/30/89 14146.69 16276.16
12/31/89 14264.74 16666.78
01/31/90 13301.38 15548.44
02/28/90 13380.20 15749.02
03/31/90 13402.27 16166.37
04/30/90 12937.59 15762.21
05/31/90 13793.57 17299.02
06/30/90 13656.23 17181.39
07/31/90 13322.25 17126.41
08/31/90 12258.45 15578.18
09/30/90 11307.54 14819.52
10/31/90 11019.21 14755.80
11/30/90 11808.98 15709.03
12/31/90 12083.75 16147.31
01/31/91 12731.78 16851.33
02/28/91 13608.52 18056.20
03/31/91 13890.81 18493.16
04/30/91 13955.72 18537.54
05/31/91 14721.66 19338.37
06/30/91 14119.72 18452.67
07/31/91 14920.19 19312.56
08/31/91 15235.12 19770.27
09/30/91 15130.56 19440.11
10/31/91 15382.51 19700.60
11/30/91 14719.47 18906.67
12/31/91 15882.70 21069.59
01/31/92 16097.15 20677.70
02/29/92 16619.87 20946.51
03/31/92 16416.22 20538.05
04/30/92 16930.49 21141.87
05/31/92 17065.83 21245.47
06/30/92 16916.41 20928.91
07/31/92 17434.82 21784.90
08/31/92 17052.84 21338.31
09/30/92 17229.86 21590.10
10/31/92 17436.12 21665.67
11/30/92 18068.66 22404.47
12/31/92 18564.83 22680.04
01/31/93 19119.01 22870.55
02/28/93 19548.49 23181.59
03/31/93 20131.05 23670.73
04/30/93 20047.35 23097.89
05/31/93 20410.07 23716.92
06/30/93 20650.14 23785.70
07/31/93 20931.09 23690.55
08/31/93 21731.81 24588.43
09/30/93 21648.73 24399.09
10/31/93 21846.69 24904.16
11/30/93 21464.91 24667.57
12/31/93 21961.06 24966.04
01/31/94 22928.26 25814.89
02/28/94 22337.82 25115.31
03/31/94 21403.32 24020.28
04/30/94 22140.85 24327.74
05/31/94 22351.57 24726.71
06/30/94 22213.48 24120.91
07/31/94 22955.44 24912.07
08/31/94 24136.53 25933.47
09/30/94 23741.11 25298.10
10/31/94 24228.42 25867.31
11/30/94 23436.54 24925.22
12/31/94 23512.77 25294.86
01/31/95 23880.40 25950.76
02/28/95 24790.97 26962.06
03/31/95 25646.99 27757.71
04/30/95 26360.31 28575.17
05/31/95 27154.68 29717.32
06/30/95 27544.83 30407.65
Let's say you invested $10,000 in Equity-Income Portfolio on October 9,
1986, when the fund started. By June 30, 1995, your investment would have
grown to $27,545 - a 175.45% increase. That compares to $10,000 invested in
the S&P 500, which would have grown to $30,408 over the same period - a
204.08% increase.
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Philip Morris Companies, Inc. 4.2
Federal National Mortgage Association 2.8
International Business Machines Corp. 2.1
American Express Co. 2.1
British Petroleum PLC ADR 2.0
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Finance 18.0
Energy 10.1
Nondurables 8.8
Basic Industries 7.7
Industrial Machinery & Equipment 7.3
ASSET ALLOCATION AS OF JUNE 30, 1995*
Row: 1, Col: 1, Value: 7.3
Row: 1, Col: 2, Value: 6.2
Row: 1, Col: 3, Value: 86.5
Stocks 86.5%
Bonds 6.2%
Short-term investments 7.3%
FOREIGN INVESTMENTS 6.2%
*
VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Bettina Doulton, Portfolio Manager of Equity-Income
Portfolio
Q. BETTINA, HOW DID THE FUND PERFORM?
A. Although the fund did well relative to its peers, it slightly trailed
the performance of the Standard & Poor's 500 stock index for the six- and
12-month periods ended June 30, 1995. The index had total returns of 20.21%
and 26.07% for those periods, respectively. Because this recent stock
market rally was quite narrow - led by a few sectors, namely technology,
financials and the large-cap and blue-chip stocks - the average stock
mutual fund has not topped the performance of the index thus far in 1995.
Q. THE STOCK MARKET SHOWED A RENEWED VIGOR OVER THE PAST SIX MONTHS. WHAT
ACCOUNTED FOR THIS?
A. The market's strength was driven by investors' belief that the Federal
Reserve Board would manage the economy to a soft landing - steady, albeit
slower, economic growth and continued low inflation. If achieved, those
conditions are ideal for Corporate America to sustain strong profit growth.
During the six-month period, corporate earnings reports were excellent,
which provided the fuel for stock prices to move higher. Excluding the
consistently outstanding performance of the technology and financial
sectors, the market has been characterized by rapid industry rotation.
Investors have spent the past six months racing from one industry to the
next, trying to stay one step ahead of the crowd. Sometimes, the fund was
in the right place at the right time, and sometimes it wasn't.
Q. WHAT CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. Several of the fund's largest holdings have driven returns recently.
Highlights include Philip Morris. The stock has been rewarded for the
company's strong profit growth and free cash flow; both are attributable to
terrific results in the company's domestic and international tobacco
businesses, which more than offset mediocre results in its food division.
Second in line is the Federal National Mortgage Association (Fannie Mae).
Although its stock price suffered a significant setback last fall, it has
since recovered as conditions in the secondary mortgage market have turned
more favorable. IBM was another strong performer. The company has done an
excellent job cutting costs and cleaning up its balance sheet. In addition,
global economic growth and wide acceptance of the company's new products
have contributed to accelerating revenue growth. Finally, in the energy
sector, the energy service company Schlumberger performed well. It
benefited from improving worldwide supply/demand dynamics for oil and
corporate restructuring efforts. Elsewhere in the energy sector, however,
British Petroleum (BP) and Amerada Hess have been somewhat disappointing in
terms of stock performance. Both are restructuring stories; BP's stock may
just be taking a breather after making significant gains, while Amerada
Hess' turnaround may be just taking a bit longer than investors had
expected.
Q. YOU MORE THAN DOUBLED THE FUND'S STAKE IN FINANCIAL STOCKS; THEY WENT
FROM 7.1% OF THE FUND SIX MONTHS AGO TO 18.0% ON JUNE 30 . . .
A. Recent purchases of bank stocks made up most of that increase. Along
with the diversified financial services companies such as American Express
and Fannie Mae, banks had a strong, if volatile, run. My only regret is not
owning more of them early in the period, when they began to outperform.
Prices did fall in the spring, however, which allowed me to buy stocks such
as Chemical Banking and BankAmerica off their highs. In the coming months,
I expect the market to drive bank stock valuations - prices relative to
earnings - higher. That's because earnings are becoming more consistent,
the industry is consolidating, and companies are using excess capital to
repurchase shares of their own stocks.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. When interest rates fall, as they've done over the past few months, the
market usually rewards stocks with higher valuations. However, we have to
keep in mind that the economy has slowed, which could negatively affect
corporate earnings going forward. The 64-thousand-dollar question then
becomes: will the market's willingness to drive up valuations and look
toward an economic resurgence be enough to offset the negative effects of
potential short-term earnings disappointments? I'm afraid not. Companies
that report less-than-expected earnings growth in the coming months will
most likely pay dearly with falling stock prices. In light of this, I plan
to focus intensely on owning companies that trade at attractive valuations,
offer good prospects for higher earnings through 1996, and are working to
enhance shareholder value.
FUND FACTS
GOAL: to provide current income and increase
the value of the fund's shares
START DATE: October 9, 1986
SIZE: as of June 30, 1995, more than $3.4 billion
MANAGER: Bettina Doulton, since 1993;
manager, Fidelity Value Fund, since March
1995; Fidelity Advisor Equity-Income Fund,
since 1993; joined Fidelity in 1986
(checkmark)
VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.3%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 5.7%
AEROSPACE & DEFENSE - 3.8%
Alliant Techsystems, Inc. (a) 421,700 $ 17,605,959
Boeing Co. 353,800 22,156,725
General Motors Corp. Class H 426,200 16,834,900
Lockheed Martin Corp. 434,803 27,446,939
McDonnell Douglas Corp. 131,000 10,054,250
Rockwell International Corp. 429,600 19,654,200
Sundstrand Corp. 183,000 10,934,250
Thiokol Corp. 186,400 5,638,600
130,325,823
DEFENSE ELECTRONICS - 1.4%
Litton Industries, Inc. (a) 268,700 9,908,313
Loral Corp. 214,700 11,110,725
Raytheon Co. 342,300 26,571,038
47,590,076
SHIP BUILDING & REPAIR - 0.5%
General Dynamics Corp. 420,400 18,655,250
TOTAL AEROSPACE & DEFENSE 196,571,149
BASIC INDUSTRIES - 7.5%
CHEMICALS & PLASTICS - 4.7%
du Pont (E.I.) de Nemours & Co. 571,100 39,263,125
Grace (W.R.) & Co. 503,600 30,908,450
Hercules, Inc. 810,900 39,531,375
Nalco Chemical Co. 462,300 16,816,163
Raychem Corp. 284,300 10,910,013
Union Carbide Corp. 713,100 23,799,713
161,228,839
IRON & STEEL - 0.1%
Nucor Corp. 38,600 2,065,100
METALS & MINING - 1.3%
Alcan Aluminium Ltd. 746,183 22,562,179
Aluminum Co. of America 467,200 23,418,400
45,980,579
PAPER & FOREST PRODUCTS - 1.4%
Scott Paper Co. 966,600 47,846,700
TOTAL BASIC INDUSTRIES 257,121,218
CONGLOMERATES - 2.8%
Allied-Signal, Inc. 382,600 17,025,700
GenCorp, Inc. 33,600 361,200
Tyco International Ltd. 857,071 46,281,834
United Technologies Corp. 398,900 31,164,063
94,832,797
CONSTRUCTION & REAL ESTATE - 0.2%
REAL ESTATE INVESTMENT TRUSTS - 0.2%
Starwood Lodging Trust combined
certificate (SBI) 125,900 2,909,045
Storage Equities, Inc. 145,800 2,387,475
5,296,520
DURABLES - 2.6%
AUTOS, TIRES, & ACCESSORIES - 1.6%
Chrysler Corp. 140,600 6,731,225
Dana Corp. 438,200 12,543,475
General Motors Corp. 269,800 12,646,875
Johnson Controls, Inc. 61,100 3,452,150
PACCAR, Inc. 93,500 4,371,125
Snap-on Tools Corp. 374,000 14,492,500
54,237,350
SHARES VALUE (NOTE 1)
DURABLES - CONTINUED
CONSUMER ELECTRONICS - 0.7%
Black & Decker Corp. 222,600 $ 6,872,775
Whirlpool Corp. 341,200 18,766,000
25,638,775
HOME FURNISHINGS - 0.1%
Heilig-Meyers Co. 104,700 2,669,850
TEXTILES & APPAREL - 0.2%
Westpoint Stevens, Inc. Class A (a) 397,100 7,098,163
TOTAL DURABLES 89,644,138
ENERGY - 9.7%
ENERGY SERVICES - 3.1%
Baker Hughes, Inc. 521,800 10,696,900
Halliburton Co. 959,000 34,284,250
Helmerich & Payne, Inc. 130,400 3,846,800
McDermott International, Inc. 575,000 13,871,875
Schlumberger Ltd. 691,300 42,947,013
105,646,838
OIL & GAS - 6.6%
Amerada Hess Corp. 929,700 45,439,088
British Petroleum PLC ADR 823,528 70,514,585
Canada Occidental Petroleum Ltd. 239,500 7,438,025
Coastal Corp. (The) 459,800 13,966,425
Kerr-McGee Corp. 157,400 8,440,575
Mobil Corp. 353,700 33,955,200
Occidental Petroleum Corp. 1,047,000 23,950,125
Tosco Corp. 279,100 8,896,313
Total SA:
Class B 210,425 12,691,129
sponsored ADR 129,500 3,917,375
229,208,840
TOTAL ENERGY 334,855,678
FINANCE - 18.0%
BANKS - 6.6%
Bank of Boston Corp. 482,800 18,105,000
Bank of New York Co., Inc. 163,000 6,581,125
BankAmerica Corp. 511,100 26,896,638
Bankers Trust New York Corp. 430,400 26,684,800
Chase Manhattan Corp. 480,041 22,561,927
Chemical Banking Corp. 670,100 31,662,225
Citicorp 647,300 37,462,488
First Chicago Corp. 119,100 7,131,113
First Union Corp. 192,700 8,719,675
Fleet Financial Group, Inc. 328,900 12,210,413
Mellon Bank Corp. 59,600 2,480,850
NationsBank Corp. 35,400 1,898,325
Republic New York Corp. 230,700 12,919,200
Shawmut National Corp. 345,200 11,003,250
226,317,029
CREDIT & OTHER FINANCE - 2.8%
American Express Co. 2,012,672 70,695,104
Countrywide Credit Industries, Inc. 886,700 18,620,700
Greenpoint Financial Corp. 362,900 8,573,513
97,889,317
FEDERAL SPONSORED CREDIT - 4.1%
Federal Home Loan Mortgage
Corporation 625,400 42,996,250
Federal National Mortgage Association 1,023,900 96,630,563
139,626,813
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
INSURANCE - 3.4%
Allstate Corp. 182,900 $ 5,418,413
American International Group, Inc. 197,200 22,480,800
American Reinsurance Corp. 11,300 420,925
General Re Corp. 193,700 25,931,588
Loews Corp. 266,500 32,246,500
PMI Group, Inc. 100,600 4,363,525
Reliastar Financial Corp. 252,100 9,642,825
Travelers, Inc. (The) 359,233 15,716,458
116,221,034
SAVINGS & LOANS - 0.3%
Ahmanson (H.F.) & Co. 273,900 6,025,800
Charter One Financial Corp. 162,000 3,969,000
9,994,800
SECURITIES INDUSTRY - 0.8%
Merrill Lynch & Co., Inc. 522,600 27,436,500
TOTAL FINANCE 617,485,493
HEALTH - 4.3%
DRUGS & PHARMACEUTICALS - 1.8%
Allergan, Inc. 340,100 9,225,213
American Home Products Corp. 360,000 27,855,000
Pfizer, Inc. 297,800 13,754,638
SmithKline Beecham PLC ADR 266,000 12,036,500
62,871,351
MEDICAL EQUIPMENT & SUPPLIES - 1.7%
Baxter International, Inc. 971,300 35,331,038
Beckman Instruments, Inc. 800 22,300
I-Stat Corp. (a) 173,100 6,318,150
Puritan Bennett Corp. 257,500 9,945,938
St. Jude Medical, Inc. 105,400 5,283,175
56,900,601
MEDICAL FACILITIES MANAGEMENT - 0.8%
Columbia/HCA Healthcare Corp. 621,800 26,892,850
TOTAL HEALTH 146,664,802
INDUSTRIAL MACHINERY & EQUIPMENT - 7.2%
ELECTRICAL EQUIPMENT - 1.0%
Emerson Electric Co. 211,700 15,136,550
General Electric Co. 175,500 9,893,813
Philips Electronics NV 196,600 8,404,650
Philips Electronics NV (Bearer) 45,200 1,915,824
35,350,837
INDUSTRIAL MACHINERY & EQUIPMENT - 3.5%
Caterpillar, Inc. 415,100 26,670,175
Cooper Industries, Inc. 467,000 18,446,500
Deere & Co. 474,400 40,620,500
Dover Corp. 145,100 10,556,025
Ingersoll-Rand Co. 574,300 21,966,975
Varity Corp. (a) 62,800 2,763,200
121,023,375
POLLUTION CONTROL - 2.7%
Browning-Ferris Industries, Inc. 870,700 31,454,038
Safety Kleen Corp. 583,600 9,410,550
WMX Technologies, Inc. 1,537,600 43,629,400
Wheelabrator Technologies, Inc. 453,200 6,967,950
91,461,938
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 247,836,150
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - 2.1%
BROADCASTING - 1.2%
Viacom, Inc. Class B (non-vtg.) (a) 851,614 $ 39,493,599
PUBLISHING - 0.9%
Meredith Corp. 102,000 2,588,250
News Corp. Ltd.:
ADR 741,700 16,780,963
(vtg.) pfd. sponsored ADR 74,900 1,498,000
Times Mirror Co. Class A 461,800 11,025,475
31,892,688
TOTAL MEDIA & LEISURE 71,386,287
NONDURABLES - 8.6%
BEVERAGES - 0.9%
PepsiCo, Inc. 647,100 29,523,938
FOODS - 0.6%
ConAgra, Inc. 483,700 16,869,038
Dole Food, Inc. 157,600 4,590,100
21,459,138
HOUSEHOLD PRODUCTS - 1.3%
Avon Products, Inc. 285,480 19,127,160
First Brands Corp. 329,800 14,140,175
Rubbermaid, Inc. 168,800 4,684,200
Tambrands, Inc. 172,300 7,365,825
45,317,360
TOBACCO - 5.8%
Imasco Ltd. 1,453,600 25,815,296
Philip Morris Companies, Inc. 1,927,300 143,342,938
RJR Nabisco Holdings Corp. 1,054,639 29,398,062
198,556,296
TOTAL NONDURABLES 294,856,732
RETAIL & WHOLESALE - 3.2%
APPAREL STORES - 0.4%
Limited, Inc. (The) 618,400 13,604,800
GENERAL MERCHANDISE STORES - 2.1%
Dayton Hudson Corp. 293,400 21,051,450
May Department Stores Co. (The) 95,700 3,983,513
Wal-Mart Stores, Inc. 1,604,500 42,920,375
Woolworth Corp. 322,200 4,873,275
72,828,613
GROCERY STORES - 0.7%
Fleming Companies, Inc. 230,445 6,106,793
Great Atlantic & Pacific Tea Co., Inc. 397,600 10,486,700
Vons Companies, Inc. (a) 384,200 7,732,025
24,325,518
TOTAL RETAIL & WHOLESALE 110,758,931
SERVICES - 0.4%
PRINTING - 0.2%
Wallace Computer Services, Inc. 168,200 6,454,675
SERVICES - 0.2%
ADT Ltd. (a) 640,900 7,530,575
TOTAL SERVICES 13,985,250
TECHNOLOGY - 4.9%
COMPUTERS & OFFICE EQUIPMENT - 3.9%
Hewlett-Packard Co. 405,000 30,172,500
International Business Machines Corp. 755,700 72,547,200
Pitney Bowes, Inc. 792,200 30,400,675
133,120,375
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONIC INSTRUMENTS - 0.2%
Perkin-Elmer Corp. 226,200 $ 8,030,100
ELECTRONICS - 0.8%
AMP, Inc. 385,600 16,291,600
Kemet Corp. 46,700 2,451,750
Thomas & Betts Corp. 143,700 9,825,488
28,568,838
TOTAL TECHNOLOGY 169,719,313
TRANSPORTATION - 1.8%
RAILROADS - 1.8%
Burlington Northern, Inc. 534,200 33,854,925
CSX Corp. 195,300 14,671,913
Southern Pacific Rail Corp. (a) 919,300 14,478,975
TOTAL TRANSPORTATION 63,005,813
UTILITIES - 6.3%
GAS - 0.5%
Williams Companies, Inc. 489,200 17,060,850
TELEPHONE SERVICES - 5.8%
Ameritech Corp. 1,067,900 46,987,600
Bell Atlantic Corp. 210,100 11,765,600
BellSouth Corp. 576,200 36,588,700
Koninklijke PPT Nederland 165,600 5,959,760
Koninklijke PPT Nederland (a)(d) 104,400 3,757,240
NYNEX Corp. 1,200,400 48,316,100
SBC Communications, Inc. 871,300 41,495,663
Southern New England
Telecommunications Corp. 175,700 6,193,425
201,064,088
TOTAL UTILITIES 218,124,938
TOTAL COMMON STOCKS
(Cost $2,563,116,541) 2,932,145,209
PREFERRED STOCKS - 1.2%
CONVERTIBLE PREFERRED STOCKS - 0.8%
DURABLES - 0.3%
AUTOS, TIRES, & ACCESSORIES - 0.3%
Chrysler Corp., Series A, $4.625 (d) 85,200 11,374,200
ENERGY - 0.4%
ENERGY SERVICES - 0.1%
Noble Drilling Corp. $1.50 119,100 2,828,625
OIL & GAS - 0.3%
Atlantic Richfield Co.
exchangeable $.5575 431,300 11,213,800
TOTAL ENERGY 14,042,425
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Westinghouse Electric Corp. $1.30 (d) 351,500 5,140,688
TOTAL CONVERTIBLE PREFERRED STOCKS 30,557,313
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONCONVERTIBLE PREFERRED STOCKS - 0.4%
MEDIA & LEISURE - 0.4%
PUBLISHING - 0.4%
News Corp. Ltd. (ltd. vtg.) 2,510,505 $ 12,393,685
UTILITIES - 0.0%
ELECTRIC UTILITY - 0.0%
Gulf States Utilities Co., Series B,
adj. rate 586 28,348
TOTAL NONCONVERTIBLE PREFERRED STOCKS 12,422,033
TOTAL PREFERRED STOCKS
(Cost $39,195,081) 42,979,346
CORPORATE BONDS - 2.4%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (C)
CONVERTIBLE BONDS - 0.8%
CONSTRUCTION & REAL ESTATE - 0.1%
REAL ESTATE INVESTMENT TRUSTS - 0.1%
Centerpoint Properties 8.22%,
1/15/04 - $ 1,510,000 1,683,650
Liberty Property LP 8%, 7/1/01 - 750,000 735,000
Sizeler Property Investors, Inc.
8%, 7/15/03 - 1,500,000 1,312,500
TOTAL CONSTRUCTION & REAL ESTATE 3,731,150
HEALTH - 0.6%
DRUGS & PHARMACEUTICALS - 0.6%
Roche Holdings, Inc. liquid
yield option notes
0%, 4/20/10 (d) - 48,340,000 19,336,000
PRECIOUS METALS - 0.1%
Pegasus Gold, Inc. euro
6 1/4%, 4/30/02 (d) Baa3 1,860,000 1,755,375
SERVICES - 0.0%
SERVICES - 0.0%
ADT Operations, Inc. liquid
yield option notes
0%, 7/6/10 Ba3 3,670,000 1,405,940
UTILITIES - 0.0%
GAS - 0.0%
SFP Pipeline Holdings, Inc.
exchangeable
0%, 8/15/10 (e) Baa3 470,000 606,300
TOTAL CONVERTIBLE BONDS 26,834,765
NONCONVERTIBLE BONDS - 1.6%
AEROSPACE & DEFENSE - 0.1%
DEFENSE ELECTRONICS - 0.1%
Tracor, Inc. 10 7/8%, 8/15/01 B2 1,220,000 1,250,500
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - 0.2%
PACKAGING & CONTAINERS - 0.0%
Owens Illinois, Inc. 10 1/4%,
4/1/99 B2 $ 350,000 $ 357,000
PAPER & FOREST PRODUCTS - 0.2%
Stone Container Corp. 9 7/8%,
2/1/01 B1 7,760,000 7,682,400
TOTAL BASIC INDUSTRIES 8,039,400
CONGLOMERATES - 0.0%
Coltec Industries, Inc. 10 1/4%,
4/1/02 B1 910,000 941,850
DURABLES - 0.3%
TEXTILES & APPAREL - 0.3%
Westpoint Stevens, Inc.:
8 3/4%, 12/15/01 B1 2,660,000 2,620,100
9 3/8%, 12/15/05 B3 7,850,000 7,575,250
TOTAL DURABLES 10,195,350
FINANCE - 0.0%
BANKS - 0.0%
Signet Banking Corp.:
6 1/4%, 5/15/97 (e) Baa2 340,000 337,025
6.4375%, 4/15/98 (e) Baa2 190,000 187,150
TOTAL FINANCE 524,175
MEDIA & LEISURE - 0.8%
BROADCASTING - 0.8%
Viacom, Inc. 8%, 7/7/06 B1 28,240,000 27,463,400
NONDURABLES - 0.2%
BEVERAGES - 0.2%
Canandaigua Wine, Inc.
8 3/4%, 12/15/03 (b) B1 5,700,000 5,586,000
UTILITIES - 0.0%
GAS - 0.0%
Columbia Gas Systems Inc.
9.91%, 5/28/20 (b) - 170,000 250,325
TOTAL NONCONVERTIBLE BONDS 54,251,000
TOTAL CORPORATE BONDS
(Cost $76,398,754) 81,085,765
U.S. TREASURY OBLIGATIONS - 3.8%
6 1/4%, 2/15/03 Aaa 17,860,000 17,907,508
5 3/4%, 8/15/03 Aaa 81,220,000 78,745,227
7 1/4%, 5/15/04 Aaa 24,291,000 25,934,529
11 5/8%, 11/15/04 Aaa 6,810,000 9,361,639
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $118,810,332) 131,948,903
REPURCHASE AGREEMENTS - 7.3%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 6.22% dated
6/30/95 due 7/3/95 $ 252,910,024 $ 252,779,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,050,299,708) $ 3,440,938,223
LEGEND
(a) Non-income producing
(b) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
(c) Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
(d) 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 $41,363,503 or 1.2% of net
assets.
(e) 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 $2,163,942,745 and $1,281,174,381, respectively, of which U.S.
government and government agency obligations aggregated $42,997,272 and
$41,828,379, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $1,153,411 for the period
(see Note 3 of Notes to Financial Statements).
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 3.8% AAA, AA, A 3.8%
Baa 0.1% BBB 0.0%
Ba 0.0% BB 0.9%
B 1.6% B 0.7%
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 0.7%.
INCOME TAX INFORMATION
At June 30, 1995, the aggregate cost of investment securities for income
tax purposes was $3,052,199,640. Net unrealized appreciation aggregated
$388,738,583, of which $407,074,046 related to appreciated investment
securities and $18,335,463 related to depreciated investment securities.
VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $252,779,000) (cost $ 3,440,938,223
$3,050,299,708) -
See accompanying schedule
Cash 864
Receivable for investments sold 66,280,607
Receivable for fund shares sold 5,980,486
Dividends receivable 8,213,745
Interest receivable 4,230,266
Other receivables 42,410
TOTAL ASSETS 3,525,686,601
LIABILITIES
Payable for investments purchased $ 63,785,673
Payable for fund shares redeemed 629,290
Accrued management fee 1,452,585
Other payables and accrued expenses 513,611
TOTAL LIABILITIES 66,381,159
NET ASSETS $ 3,459,305,442
Net Assets consist of:
Paid in capital $ 2,994,274,835
Undistributed net investment income 5,530,661
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 68,857,443
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 390,642,503
NET ASSETS, for 204,803,927 shares outstanding $ 3,459,305,442
NET ASSET VALUE, offering price and redemption price per share ($3,459,305,442 (divided by) 204,803,927 shares) $16.89
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
INVESTMENT INCOME $ 31,571,004
Dividends
Interest 16,392,102
TOTAL INCOME 47,963,106
EXPENSES
Management fee $ 7,399,646
Transfer agent fees 727,522
Accounting fees and expenses 378,208
Non-interested trustees' compensation 5,452
Custodian fees and expenses 39,578
Registration fees 251,928
Audit 24,512
Legal 4,441
Interest 9,801
Miscellaneous 7,582
TOTAL EXPENSES 8,848,670
NET INVESTMENT INCOME 39,114,436
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 72,417,571
Foreign currency transactions (3,308 72,414,263
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 336,113,775
Assets and liabilities in foreign currencies (8,788 336,104,987
)
NET GAIN (LOSS) 408,519,250
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 447,633,686
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 39,114,436 $ 49,846,224
Net investment income
Net realized gain (loss) 72,414,263 121,898,471
Change in net unrealized appreciation (depreciation) 336,104,987 (61,690,963)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 447,633,686 110,053,732
Distributions to shareholders (37,713,247) (44,739,784)
From net investment income
From net realized gain (121,254,353) (68,533,800)
TOTAL DISTRIBUTIONS (158,967,600) (113,273,584)
Share transactions 802,500,637 1,048,772,904
Net proceeds from sales of shares
Reinvestment of distributions 158,967,516 113,273,584
Cost of shares redeemed (75,240,890) (192,914,992)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 886,227,263 969,131,496
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,174,893,349 965,911,644
NET ASSETS
Beginning of period 2,284,412,093 1,318,500,449
End of period (including undistributed net investment income of $5,530,661 and $4,150,957,
respectively) $ 3,459,305,442 $ 2,284,412,093
OTHER INFORMATION
Shares
Sold 50,281,447 68,815,564
Issued in reinvestment of distributions 10,351,678 7,484,681
Redeemed (4,656,990) (12,882,315)
Net increase (decrease) 55,976,135 63,417,930
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED JUNE 30,
1995
SELECTED PER-SHARE DATA (UNAUDITED) 1994 1993 D 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.35 $ 15.44 $ 13.40 $ 11.85 $ 9.51 $ 12.29
Income from Investment Operations
Net investment income .20 .41 .37 .40 .50 .58
Net realized and unrealized gain (loss) 2.32 .64 2.06 1.57 2.43 (2.38)
Total from investment operations 2.52 1.05 2.43 1.97 2.93 (1.80)
Less Distributions (.20) (.37) (.35) (.42) (.59) (.59)
From net investment income
In excess of net investment income - - (.04) - - -
From net realized gain (.78) (.77) - - - (.39)
Total distributions (.98) (1.14) (.39) (.42) (.59) (.98)
Net asset value, end of period $ 16.89 $ 15.35 $ 15.44 $ 13.40 $ 11.85 $ 9.51
TOTAL RETURN B, C 17.15% 7.07% 18.29% 16.89% 31.44% (15.29)
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 3,459,305 $ 2,284,412 $ 1,318,500 $ 592,880 $ 282,171 $ 154,080
Ratio of expenses to average net assets .62% A .58% .62% .65% .74% .78%
Ratio of expenses to average net assets before .62% A .60% .62% .65% .74% .78%
expense reductions
Ratio of net investment income to average net assets 2.72% A 2.83% 2.87% 3.52% 4.83% 6.01%
Portfolio turnover rate 100% A 134% 120% 74% 107% 94%
A ANNUALIZED
B TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
THE FINANCIAL STATEMENTS).
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO
YOUR INSURANCE COMPANY'S SEPARATE
ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURNS SHOWN.
D EFFECTIVE JANUARY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN,
AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES.
</TABLE>
VARIABLE INSURANCE PRODUCTS FUND: GROWTH PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
JUNE 30, 1995 YEAR YEARS FUND
Growth 36.97% 14.84% 14.56%
S&P 500 26.07% 12.09% 13.58%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of how
it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. In turn, the share
price and return of a fund that invests in stocks
will vary. That means if you sell your shares
during a market downturn, you might lose
money. But if you can ride out the market's ups
and downs, you may have a gain.
(checkmark)
You can compare these figures to the performance of the Standard & Poor's
Composite Index of 500 Stocks- a common proxy for the U.S. stock market.
This benchmark includes reinvested dividends and capital gains, if any, and
excludes the effects of sales charges.
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.
$10,000 OVER LIFE OF FUND
VIP Growth (212) Standard & Poor's 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 11839.97 12513.74
04/30/87 11839.97 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 9425.90 10086.27
12/31/87 10397.53 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 11997.15 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 11894.61 12438.93
12/31/88 12017.66 12656.61
01/31/89 12879.00 13583.07
02/28/89 12612.39 13244.86
03/31/89 12993.68 13553.46
04/30/89 13680.85 14256.89
05/31/89 14170.19 14834.29
06/30/89 13982.78 14749.73
07/31/89 15232.18 16081.64
08/31/89 15492.47 16396.84
09/30/89 15627.82 16329.61
10/31/89 15190.53 15950.76
11/30/89 15440.41 16276.16
12/31/89 15804.81 16666.78
01/31/90 14888.59 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 13950.23 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 16000.57 18452.67
07/31/91 17524.96 19312.56
08/31/91 18303.60 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 20299.56 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 19664.67 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 21528.94 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 24756.94 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 26662.20 24904.16
11/30/93 25583.32 24667.57
12/31/93 26490.04 24966.04
01/31/94 27155.74 25814.89
02/28/94 26875.65 25115.31
03/31/94 25654.59 24020.28
04/30/94 25813.32 24327.74
05/31/94 25215.00 24726.71
06/30/94 23932.88 24120.91
07/31/94 24763.21 24912.07
08/31/94 26167.43 25933.47
09/30/94 25849.96 25298.10
10/31/94 26900.07 25867.31
11/30/94 25825.53 24925.22
12/31/94 26484.91 25294.86
01/31/95 25984.27 25950.76
02/28/95 27060.36 26962.06
03/31/95 28042.58 27757.71
04/30/95 28987.98 28575.17
05/31/95 30117.54 29717.32
06/30/95 32781.83 30407.65
Let's say you invested $10,000 in Growth Portfolio on October 9, 1986, when
the fund started. By June 30, 1995, your investment would have grown to
$32,782 - a 227.82% increase. That compares to $10,000 invested in the S&P
500, which would have grown to $30,408 over the same period - a 204.08%
increase.
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Oracle Systems Corp. 3.6
Intel Corp. 3.1
DSC Communications Corp. 2.7
Applied Materials, Inc. 2.3
Compaq Computer Corp. 2.3
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Technology 52.6
Utilities 9.4
Retail & Wholesale 8.7
Media & Leisure 4.5
Industrial Machinery & Equipment 4.1
ASSET ALLOCATION AS OF JUNE 30, 1995*
Row: 1, Col: 1, Value: 3.4
Row: 1, Col: 2, Value: 96.59999999999999
Stocks 96.6%
Short-term investment 3.4%
FOREIGN INVESTMENTS 6.3%
*
VARIABLE INSURANCE PRODUCTS FUND: GROWTH PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Lawrence Greenberg, Portfolio
Manager of Growth Portfolio
Q. LARRY, HOW HAS THE FUND DONE OVER THE PAST SIX MONTHS?
A. Quite well. From December 31, 1994, through June 30, 1995, the fund beat
the Standard & Poor's 500 index, which returned 20.21%.
Q. WHAT MADE THE DIFFERENCE?
A. In the second half of 1994, growth stocks began outperforming cyclicals
- stocks in sectors like autos and steel that tend to rise or fall with the
economy. Since then, the economy has slowed and interest rates have been
flat or falling - a perfect environment for growth stocks. My strategy was
to concentrate on those companies with the fastest earnings growth
opportunities for `95 and `96. This aggressive position, especially in
technology, paid off handsomely when growth stocks rebounded.
Q. IN FACT, OVER 50% OF THE FUND WAS IN TECHNOLOGY AT THE END OF JUNE. WHY
SUCH A HUGE BET?
A. Because on a stock-by-stock basis that's where I'm still finding what I
believe are the best growth opportunities. Technology stocks are benefiting
from strong corporate and consumer demand. Business is booming across all
segments - from PCs and software to semiconductors and networking. Plus,
unlike a retailer, which can only grow as fast as it can build bricks and
mortar, a technology company can grow at any rate. The fund has dozens of
companies that are growing sales well over 100% per year. Finally, despite
the fastest sales and earnings growth of any stocks in the market, many of
these companies still have attractive prices compared to other measures
like earnings.
Q. WHERE DID YOU FIND THE BEST OPPORTUNITIES?
A. Across the board. I added new technology names, but I also made bigger
investments in the companies I have the most confidence in. For example, I
significantly boosted the fund's stake in both Intel, which makes
microprocessors like the Pentium chip that are the brains of PCs, and
Micron Technology, one of the few manufacturers of memory chips called
DRAMs that go inside PCs and other electronic equipment. Both stocks posted
sizable gains for the period. I also added to our stake in Applied
Materials, the leading supplier of semiconductor manufacturing equipment,
whose sales grew more than 60% this year. Our biggest investment is still
Oracle, the leading provider of software for client-server set-ups; it
continued to benefit as more companies moved away from mainframes toward
PCs linked through networks.
Q. WERE THERE DISAPPOINTMENTS?
A. Sure. The stock price of Sybase, a competitor to Oracle, fell nearly 50%
in the last six months as it ran into problems launching a new product. One
of our biggest positions six months ago was Motorola; it started having
some near-term problems related to oversupply on its cellular handsets, so
I cut back even though the stock's long-term outlook remained attractive.
Finally, some retailers like Home Depot and Lowe's turned in disappointing
short-term results as heavy rains in California and the Southeast hurt
business. But many of the "hard good category killers" (or superstores) I
focused on continued to grow despite the slowdown in overall retail sales
that we saw this spring.
Q. WHY DID YOU CUT BACK IN HEALTH CARE?
A. The fund's health care stake was around 3% at the end of June, down from
7.7% six months earlier. During the first half of 1994, uncertainty
surrounding President Clinton's plans for health care reform had hurt the
sector. Then, last fall, the stocks rallied as it became apparent that
health care legislation wouldn't pass anytime soon. But once the
Republicans took charge in January, they cast another cloud over the sector
as they promised to re-examine programs like Medicare. So I decided to
watch from the sidelines.
Q. LOOKING AHEAD, WHAT SHOULD SHAREHOLDERS EXPECT?
A. In the past, technology stocks haven't done as well over the summer, as
European demand dries up and new product launches disappear. But this year,
since demand has been so strong, we may see no summer slowdown or one
that's much less pronounced. Nevertheless, shareholders should expect
volatility because the fund is aggressively invested in the fastest-growing
companies. If either the technology sector or the market declines, the fund
will suffer more than other stock funds. But it's also in a good position
to benefit more than its peers from a long-term up market, which I believe
is more likely.
FUND FACTS
GOAL: to increase the value of the fund's
shares over the long term by investing in
stocks with above-average growth potential
START DATE: October 9, 1986
SIZE: as of June 30, 1995, more than $3.1 billion
MANAGER: Lawrence Greenberg, since 1991;
manager, Fidelity Emerging Growth Portfolio,
since 1993; Fidelity Select Environmental
Services Portfolio, October 1986 - April 1991;
Fidelity Select Medical Delivery Portfolio July
1989 - April 1991; joined Fidelity in 1986
(checkmark)
VARIABLE INSURANCE PRODUCTS FUND: GROWTH PORTFOLIO
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.0%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.4%
AEROSPACE & DEFENSE - 0.3%
Rockwell International Corp. 125,000 $ 5,718,750
Special Devices, Inc. (a) 173,900 3,869,263
9,588,013
DEFENSE ELECTRONICS - 0.1%
Trimble Navigation Ltd. (a) 100,000 2,837,500
TOTAL AEROSPACE & DEFENSE 12,425,513
BASIC INDUSTRIES - 1.1%
CHEMICALS & PLASTICS - 0.5%
Airgas, Inc. (a) 445,000 11,959,375
du Pont (E.I.) de Nemours & Co. 75,000 5,156,250
17,115,625
METALS & MINING - 0.6%
Alcan Aluminium Ltd. 100,000 3,023,679
Aluminum Co. of America 175,000 8,771,875
IMCO Recycling, Inc. 299,000 5,606,250
Reynolds Metals Co. 40,000 2,070,000
19,471,804
TOTAL BASIC INDUSTRIES 36,587,429
CONGLOMERATES - 0.2%
Tyco International Ltd. 125,000 6,750,000
CONSTRUCTION & REAL ESTATE - 0.8%
BUILDING MATERIALS - 0.1%
Elcor Corp. (a) 36,700 816,575
Sherwin-Williams Co. 85,000 3,028,125
3,844,700
CONSTRUCTION - 0.3%
Oakwood Homes Corp. 271,700 6,962,313
Standard Pacific Corp. 300,000 2,062,500
9,024,813
ENGINEERING - 0.4%
Fluor Corp. 65,000 3,380,000
Glenayre Technologies, Inc. (a) 172,575 8,801,325
12,181,325
TOTAL CONSTRUCTION & REAL ESTATE 25,050,838
DURABLES - 3.2%
AUTOS, TIRES, & ACCESSORIES - 2.6%
Chrysler Corp. 400,000 19,150,000
Ford Motor Co. 400,000 11,900,000
General Motors Corp. 877,634 41,139,094
Safety Components International, Inc. 220,000 3,630,000
Smith (A.O.) Corp. Class B 127,600 2,998,600
TRW, Inc. 34,100 2,723,738
81,541,432
CONSUMER ELECTRONICS - 0.1%
Whirlpool Corp. 60,000 3,300,000
HOME FURNISHINGS - 0.2%
Heilig-Meyers Co. 100,000 2,550,000
Leggett & Platt, Inc. 75,000 3,300,000
5,850,000
TEXTILES & APPAREL - 0.3%
Shaw Industries, Inc. 112,500 1,912,500
Tommy Hilfiger (a) 300,500 8,414,000
10,326,500
TOTAL DURABLES 101,017,932
SHARES VALUE (NOTE 1)
ENERGY - 0.7%
ENERGY SERVICES - 0.1%
Baker Hughes, Inc. 175,000 $ 3,587,500
INDEPENDENT POWER - 0.2%
Thermo Electron Corp. (a) 111,100 4,471,775
OIL & GAS - 0.4%
British Petroleum PLC ADR 75,030 6,424,444
Chesapeake Energy Corp. (a) 75,000 1,931,250
Kerr-McGee Corp. 76,000 4,075,500
12,431,194
TOTAL ENERGY 20,490,469
FINANCE - 3.5%
BANKS - 0.7%
Banc One Corp. 200,000 6,450,000
Bank of New York Co., Inc. 100,000 4,037,500
Bankers Trust New York Corp. 105,000 6,510,000
Chemical Banking Corp. 135,000 6,378,750
23,376,250
CREDIT & OTHER FINANCE - 0.5%
American Express Co. 400,000 14,050,000
FEDERAL SPONSORED CREDIT - 1.3%
Federal National Mortgage Association 425,000 40,109,375
INSURANCE - 0.5%
American International Group, Inc. 65,000 7,410,000
Travelers, Inc. (The) 200,000 8,750,000
16,160,000
SECURITIES INDUSTRY - 0.5%
Alliance Entertainment Corp. (a) 525,000 4,921,875
Edwards (A.G.), Inc. 111,100 2,499,750
Merrill Lynch & Co., Inc. 156,500 8,216,250
15,637,875
TOTAL FINANCE 109,333,500
HEALTH - 2.9%
DRUGS & PHARMACEUTICALS - 0.7%
Biogen, Inc. (a) 95,000 4,227,500
Dura Pharmaceuticals, Inc. (a) 160,000 3,010,000
Elan Corp. PLC ADR (a) 100,000 4,075,000
North American Biologicals, Inc. (a) 165,000 1,546,875
Pfizer, Inc. 200,000 9,237,500
US Bioscience, Inc. (a) 190 819
US Bioscience, Inc. (warrants) (a) 569 676
22,098,370
MEDICAL EQUIPMENT & SUPPLIES - 0.7%
Cardinal Health, Inc. 236,100 11,155,725
Millipore Corp. 800 53,698
St. Jude Medical, Inc. 60,000 3,007,500
Thermedics, Inc. (a) 175,000 3,412,500
Thermo Cardiosystems, Inc. (a) 100,000 3,662,500
21,291,923
MEDICAL FACILITIES MANAGEMENT - 1.5%
American Medical Response (a) 195,000 5,460,000
Apria Healthcare Group, Inc. (a) 126,000 3,559,500
Columbia/HCA Healthcare Corp. 375,025 16,219,831
HEALTHSOUTH Rehabilitation Corp. 950,000 16,506,250
Rotech Medical Corp. (a) 40,000 1,110,000
United HealthCare Corp. 75,000 3,103,125
Vivra, Inc. (a) 44,000 1,193,500
47,152,206
TOTAL HEALTH 90,542,499
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 4.1%
ELECTRICAL EQUIPMENT - 2.2%
Avid Technology, Inc. (a) 70,050 $ 2,626,875
General Electric Co. 875,000 49,328,125
General Signal Corp. 100,000 3,975,000
Oak Industries, Inc. (a) 105,300 2,711,475
Scientific-Atlanta, Inc. 370,000 8,140,000
United Communication Industry PCL
(For. Reg.) 154,000 2,245,899
69,027,374
INDUSTRIAL MACHINERY & EQUIPMENT - 1.4%
AGCO Corp. 298,300 11,186,250
Case Corp. 200,000 5,950,000
Caterpillar, Inc. 350,000 22,487,500
Ingersoll-Rand Co. 125,000 4,781,250
Semitool, Inc. 22,700 726,400
45,131,400
POLLUTION CONTROL - 0.5%
Browning-Ferris Industries, Inc. 210,000 7,586,250
TETRA Technologies, Inc. (a) 185,000 2,243,125
WMX Technologies, Inc. 175,000 4,965,625
14,795,000
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 128,953,774
MEDIA & LEISURE - 4.5%
BROADCASTING - 1.1%
Capital Cities/ABC, Inc. 65,000 6,816,875
Citicasters, Inc. 65,000 1,787,500
Clear Channel Communications, Inc. 25,000 1,609,375
EZ Communications, Inc. 44,400 821,400
Infinity Broadcasting Corp. (a) 50,000 1,668,750
Jacor Communications, Inc. Class A 73,400 1,174,400
Lin Television Corp. 50,000 1,681,250
Renaissance Communications Corp. (a) 65,000 2,177,500
Tele-Communications, Inc. Class A 225,000 5,273,438
Viacom, Inc. Class B (non-vtg.) (a) 250,084 11,597,646
34,608,134
ENTERTAINMENT - 0.4%
Casino America, Inc. (a) 100,000 1,512,500
Disney (Walt) Co. 110,000 6,118,750
Players International, Inc. (a) 217,500 4,350,000
11,981,250
LEISURE DURABLES & TOYS - 0.3%
Cobra Golf, Inc. (a) 204,900 6,479,963
Hasbro, Inc. 84,000 2,667,000
9,146,963
LODGING & GAMING - 0.7%
Doubletree Corp. (a) 300,000 6,468,750
Hospitality Franchise Systems, Inc. 453,600 15,705,900
22,174,650
PUBLISHING - 0.1%
Houghton Mifflin Co. 50,000 2,637,500
RESTAURANTS - 1.9%
Apple South, Inc. 500,000 9,750,000
Applebee's International, Inc. 275,000 7,081,250
Landry's Seafood Restaurants, Inc. (a) 334,200 6,684,000
Lone Star Steakhouse Saloon (a) 375,000 11,367,188
Outback Steakhouse, Inc. (a) 385,000 11,116,875
Papa John's International, Inc. (a) 161,800 5,663,000
Starbucks Corp. (a) 180,000 6,412,500
Uno Restaurant Corp. (a) 226,625 2,351,234
60,426,047
TOTAL MEDIA & LEISURE 140,974,544
SHARES VALUE (NOTE 1)
NONDURABLES - 1.3%
BEVERAGES - 0.3%
PepsiCo, Inc. 225,000 $ 10,265,625
HOUSEHOLD PRODUCTS - 0.3%
Colgate-Palmolive Co. 50,000 3,656,250
Gillette Co. 130,000 5,801,250
9,457,500
TOBACCO - 0.7%
Philip Morris Companies, Inc. 225,000 16,734,375
RJR Nabisco Holdings Corp. 200,000 5,575,000
22,309,375
TOTAL NONDURABLES 42,032,500
RETAIL & WHOLESALE - 8.7%
APPAREL STORES - 0.7%
Baby Superstore, Inc. (a) 65,000 3,063,125
Gymboree Corp. (a) 135,000 3,923,438
Just For Feet, Inc. (a)(c) 402,000 16,029,750
23,016,313
APPLIANCE STORES - 0.1%
Cellstar Corp. (a) 165,700 3,873,238
DRUG STORES - 0.4%
General Nutrition Companies, Inc. (a) 365,000 12,820,625
GENERAL MERCHANDISE STORES - 1.5%
Dollar General Corp. 150,050 4,745,331
Wal-Mart Stores, Inc. 1,600,000 42,800,000
47,545,331
RETAIL & WHOLESALE, MISCELLANEOUS - 6.0%
Barnes & Noble, Inc. (a) 153,100 5,205,400
Bed Bath & Beyond, Inc. (a) 700,000 16,975,000
Borders Group, Inc. (a) 80,000 1,150,000
Circuit City Stores, Inc. 150,000 4,743,750
Corporate Express (a) 275,000 5,878,125
Home Depot, Inc. (The) 345,066 14,018,306
Lowe's Companies, Inc. 1,175,000 35,103,125
Officemax, Inc. (a) 525,000 14,634,375
Office Depot, Inc. (a) 320,000 9,000,000
Petco Animal Supplies, Inc. (a) 378,700 8,804,775
Petsmart, Inc. (a) 600,000 17,250,000
Sport Supply Group, Inc. 309,550 3,869,375
Staples, Inc. (a) 550,000 15,881,250
Sunglass Hut International, Inc. (a) 886,500 31,027,500
Viking Office Products, Inc. (a) 150,000 5,493,750
189,034,731
TOTAL RETAIL & WHOLESALE 276,290,238
SERVICES - 2.3%
LEASING & RENTAL - 0.9%
Hollywood Entertainment Corp. (a) 605,000 27,225,000
SERVICES - 1.4%
Adia SA (Bearer) (a) 25,000 5,202,438
Block (H & R), Inc. 100,000 4,112,500
Children's Discovery Centers of
America, Inc. (a) 135,000 2,261,250
First Financial Management Corp. 75,000 6,412,500
Medaphis Corp. (a) 950,000 20,662,500
Zebra Technologies Corp. Class A (a) 100,000 5,325,000
43,976,188
TOTAL SERVICES 71,201,188
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - 52.0%
COMMUNICATIONS EQUIPMENT - 10.9%
Apertus Technologies, Inc. (a) 57,000 $ 498,750
Cabletron Systems, Inc. (a) 85,000 4,526,250
Cisco Systems, Inc. (a) 1,215,000 61,433,438
DSC Communications Corp. (a) 1,850,000 86,025,000
Dialogic Corp. (a) 34,800 617,700
Ericsson (L.M.) Telephone Co.
Class B ADR 900,000 18,000,000
General Instrument Corp. (a) 350,000 13,431,250
Global Village Communication (a) 573,800 8,965,625
Inter-Tel, Inc. (a) 62,300 942,288
InterVoice, Inc. (a) 250,000 4,375,000
Lo Jack Corp. (a) 240,000 2,655,000
Microtest, Inc. (a) 125,000 2,781,250
Newbridge Networks Corp. (a) 525,000 18,506,250
Nokia Corp. AB :
Series A 160,000 9,377,565
sponsored ADR 915,000 54,556,875
Tellabs, Inc. (a) 147,800 7,112,875
3Com Corp. (a) 600,000 40,200,000
U.S. Robotics Corp. 74,600 8,131,400
342,136,516
COMPUTER SERVICES & SOFTWARE - 12.9%
Adobe Systems, Inc. 60,000 3,480,000
Alantec Corp. 65,000 2,226,250
America Online, Inc. (a) 240,500 10,582,000
American Business Information, Inc. (a) 140,800 3,801,600
Ascend Communications, Inc. (a) 60,000 3,030,000
Automatic Data Processing, Inc. 125,000 7,859,375
Broderbund Software, Inc. (a) 72,800 4,641,000
CUC International, Inc. (a) 502,500 14,070,000
Cambridge Technology Partners
Mass., Inc. (a) 90,000 2,970,000
Ceridian Corp. (a) 140,000 5,162,500
Cerner Corp. (a) 40,000 2,450,000
CompUSA, Inc. (a) 290,000 9,642,500
Computer Sciences Corp. (a) 160,000 9,100,000
Davidson & Associates, Inc. (a) 65,000 2,583,750
GMIS, Inc. (a) 212,600 4,849,938
Hyperion Software, Inc. (a) 60,000 2,715,000
Informix Corp. (a) 800,000 20,300,000
Inso Corp. (a) 30,000 1,792,500
Integrated Silicon Systems, Inc. (a) 108,400 4,092,100
Intersolv, Inc. (a) 315,000 7,323,750
Mercury Interactive Group Corp. (a) 252,500 5,081,563
Microsoft Corp. (a) 740,000 66,877,500
Network Peripherals, Inc. (a) 260,000 5,671,250
Novell, Inc. (a) 524,200 10,451,238
Oracle Systems Corp. (a) 2,900,000 112,012,500
Parametric Technology Corp. (a) 296,900 14,770,775
Paychex, Inc. 85,000 3,081,250
Peoplesoft, Inc. (a) 375,000 20,343,750
Platinum Technology, Inc. (a) 100,000 1,812,500
Reuters Holdings PLC ADR Class B 65,000 3,258,125
SAP AG sponsored ADR (a)(b) 35,000 1,461,250
Softkey International, Inc. (a) 150,000 4,781,250
Stratacom, Inc. (a) 490,400 23,907,000
SunGard Data Systems, Inc. (a) 110,000 5,747,500
Systems & Computer Technology Corp. (a) 125,000 2,500,000
Wonderware Corp. (a) 77,600 3,123,400
407,553,114
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - 10.5%
ADAPTEC, Inc. (a) 375,000 $ 13,875,000
Apple Computer, Inc. 165,000 7,662,188
Bay Networks, Inc. (a) 800,000 33,100,000
Compaq Computer Corp. (a) 1,579,800 71,683,425
Comverse Technology, Inc. (a) 75,000 1,331,250
Dell Computer Corp. (a) 125,000 7,515,625
Digital Equipment Corp. (a) 200,000 8,150,000
Fore Systems, Inc. (a) 65,000 1,966,250
Gateway 2000, Inc. (a) 200,000 4,550,000
General Motors Corp. Class E (a) 505,600 21,993,600
Hewlett-Packard Co. 315,000 23,467,500
International Business Machines Corp. 635,000 60,960,000
Micom Communication Corp. (a) 146,100 949,650
Pitney Bowes, Inc. 110,000 4,221,250
Radius, Inc. (a) 290,000 3,190,000
Read Rite Corp. (a) 225,026 6,019,446
Seagate Technology (a) 214,900 8,434,825
Silicon Graphics, Inc. (a) 888,100 35,412,988
Sun Microsystems, Inc. (a) 224,000 10,864,000
Xerox Corp. (a) 45,000 5,276,250
330,623,247
ELECTRONIC INSTRUMENTS - 2.8%
Applied Materials, Inc. (a) 835,000 72,331,875
Electro Scientific Industries, Inc. (a) 117,500 3,906,875
Kulicke & Soffa Industries, Inc. 40,000 2,652,500
Novellus System, Inc. (a) 143,000 9,688,250
88,579,500
ELECTRONICS - 14.7%
AMP, Inc. 150,000 6,337,500
Advanced Micro Devices, Inc. 400,000 14,550,000
Alliance Semiconductor Corp. (a) 160,000 7,840,000
Altera Corp. (a) 387,400 16,755,050
Analog Devices, Inc. (a) 275,000 9,350,000
Atmel Corp. (a) 160,000 8,860,000
Avnet, Inc. 282,800 13,680,450
C-Cube Microsystems, Inc. (a) 75,000 2,043,750
Cascade Communications Corp. (a) 75,000 3,243,750
Chips & Technologies, Inc. (a) 201,300 2,642,063
Cirrus Logic, Inc. (a) 80,000 5,015,000
Cypress Semiconductor Corp. (a) 275,000 11,137,500
Hitachi Ltd. ADR 35,000 3,508,750
Integrated Device Technology, Inc. (a) 72,900 3,371,625
Integrated Silicon Solution (a) 147,800 7,722,550
Intel Corp. 1,530,000 96,868,125
Kemet Corp. (a) 135,000 7,087,500
LSI Logic Corp. (a) 758,930 29,693,136
Linear Technology Corp. 225,000 14,850,000
Marshall Industries (a) 102,700 3,440,450
Maxim Integrated Products, Inc. (a) 90,000 4,590,000
Microchip Technology, Inc. (a) 275,050 10,004,944
Micron Technology, Inc. 1,300,000 71,337,500
Motorola, Inc. 235,000 15,774,375
National Semiconductor Corp. (a) 225,000 6,243,750
SGS-Thomson Microelectronic NV (a) 275,000 11,171,875
S-3, Inc. (a) 81,700 2,941,200
Samsung Electronics Co. Ltd.:
GDR (b) 55,000 5,280,000
GDS (non-vtg.) (Reg.) (a) 102,800 5,345,600
Tencor Instruments (a) 80,000 3,280,000
Texas Instruments, Inc. 235,000 31,460,625
Thomas & Betts Corp. 34,600 2,365,775
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
VLSI Technology, Inc. (a) 135,000 $ 4,066,875
Wholesale Cellular USA, Inc. (a) 150,000 3,225,000
Wyle Laboratories 74,800 2,103,750
Xilinx, Inc. (a) 175,000 16,450,000
463,638,468
PHOTOGRAPHIC EQUIPMENT - 0.2%
3D Systems Corp. 375,000 6,937,500
TOTAL TECHNOLOGY 1,639,468,345
TRANSPORTATION - 0.9%
AIR TRANSPORTATION - 0.4%
AMR Corp. (a) 110,000 8,208,750
Atlantic Southeast Airlines, Inc. 59,700 1,798,463
Comair Holdings, Inc. 25,000 946,875
Southwest Airlines Co. 137,700 3,287,588
14,241,676
RAILROADS - 0.5%
ABC Rail Products Corp. (a) 150,000 3,450,000
CSX Corp. 151,200 11,358,900
14,808,900
TOTAL TRANSPORTATION 29,050,576
UTILITIES - 9.4%
CELLULAR - 5.9%
AirTouch Communications, Inc. (a) 2,300,000 65,550,000
Arch Communications Group, Inc. (a) 150,000 3,337,500
BCE Mobile Communications, Inc. (a) 275,000 9,166,666
Cellular Communications, Inc.,
Series A (redeemable) (a) 200,000 9,100,000
Metrocall, Inc. (a) 150,000 2,737,500
Mobile Telecommunications
Technologies, Inc. (a) 75,000 2,053,125
Mobilemedia Corp. (a) 13,000 240,500
Palmer Wireless, Inc. (a) 575,300 9,420,538
USA Mobile Communications (a) 116,600 2,040,500
United States Cellular Corp. (a) 315,000 9,528,750
Vanguard Cellular Systems, Inc.
Class A (a)(c) 2,176,000 52,224,000
Vodafone Group PLC sponsored ADR 548,700 20,782,013
186,181,092
TELEPHONE SERVICES - 3.5%
ALC Communications Corp. (a) 215,000 9,701,875
AT&T Corp. 425,000 22,578,125
Ameritech Corp. 493,700 21,722,800
Bell Atlantic Corp. 375,000 21,000,000
BellSouth Corp. 150,000 9,525,000
LCI International, Inc. (a) 125,000 3,828,125
SBC Communications, Inc. 475,000 22,621,875
110,977,800
TOTAL UTILITIES 297,158,892
TOTAL COMMON STOCKS
(Cost $2,234,010,970) 3,027,328,237
NONCONVERTIBLE PREFERRED STOCKS - 0.6%
SHARES VALUE (NOTE 1)
TECHNOLOGY - 0.6%
COMPUTER SERVICES & SOFTWARE - 0.2%
SAP AG (a) 5,250 $ 6,622,118
COMPUTERS & OFFICE EQUIPMENT - 0.4%
Silicon Graphics CDA Ltd.
exchangeable (non-vtg.) (a) 280,080 11,132,774
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $15,178,912) 17,754,892
REPURCHASE AGREEMENTS - 3.4%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 6.22% dated
6/30/95 due 7/3/95 $ 106,155,996 106,101,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $2,355,290,882) $ 3,151,184,129
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 $6,741,250 or 0.2% of net
assets.
(c) A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. Transactions during the period with
companies that are or were affiliates are as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Just For Feet, Inc. (a) $ 2,342,009 - - $ 16,029,750
Vanguard Cellular Systems, Inc.
Class A (a) 1,588,387 - - 52,224,000
TOTAL $ 3,930,396 $ - $ - $ 68,253,750
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,556,970,263 and $967,373,548, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $555,941 for the period
(see Note 3 of Notes to Financial Statements).
INCOME TAX INFORMATION
At June 30, 1995, the aggregate cost of investment securities for income
tax purposes was $2,361,955,662. Net unrealized appreciation aggregated
$789,228,467, of which $809,605,722 related to appreciated investment
securities and $20,377,255 related to depreciated investment securities.
At December 31, 1994, the fund had a capital loss carryforward of
approximately $68,037,000 all of which will expire on December 31, 2002.
VARIABLE INSURANCE PRODUCTS FUND: GROWTH PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $106,101,000) (cost $2,355,290,882) $ 3,151,184,129
- See accompanying schedule
Receivable for investments sold 15,240,448
Receivable for fund shares sold 4,631,877
Dividends receivable 1,976,933
Other receivables 241,989
TOTAL ASSETS 3,173,275,376
LIABILITIES
Payable for investments purchased $ 31,104,827
Payable for fund shares redeemed 2,527,529
Accrued management fee 1,523,671
Other payables and accrued expenses 374,992
TOTAL LIABILITIES 35,531,019
NET ASSETS $ 3,137,744,357
Net Assets consist of:
Paid in capital $ 2,373,300,032
Undistributed net investment income 3,900,899
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (35,349,821)
Net unrealized appreciation (depreciation) on investments 795,893,247
NET ASSETS, for 117,514,234 shares outstanding $ 3,137,744,357
NET ASSET VALUE, offering price and redemption price per share ($3,137,744,357 (divided by) 117,514,234 shares) $26.70
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
INVESTMENT INCOME $ 8,244,859
Dividends
Interest 5,551,271
TOTAL INCOME 13,796,130
EXPENSES
Management fee $ 7,756,500
Transfer agent fees 627,931
Accounting fees and expenses 378,173
Non-interested trustees' compensation 4,869
Custodian fees and expenses 69,955
Registration fees 147,294
Audit 14,797
Legal 4,080
Miscellaneous 7,349
TOTAL EXPENSES 9,010,948
NET INVESTMENT INCOME 4,785,182
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 46,674,141
Foreign currency transactions 395 46,674,536
Change in net unrealized appreciation (depreciation) on investment securities 517,371,258
NET GAIN (LOSS) 564,045,794
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 568,830,976
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 4,785,182 $ 11,810,184
Net investment income
Net realized gain (loss) 46,674,536 (74,102,658)
Change in net unrealized appreciation (depreciation) 517,371,258 80,193,945
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 568,830,976 17,901,471
Distributions to shareholders (12,404,421) (7,589,523)
From net investment income
From net realized gain - (80,320,550)
TOTAL DISTRIBUTIONS (12,404,421) (87,910,073)
Share transactions 750,772,650 1,289,938,019
Net proceeds from sales of shares
Reinvestment of distributions 12,404,421 87,909,946
Cost of shares redeemed (323,728,603) (549,819,377)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 439,448,468 828,028,588
TOTAL INCREASE (DECREASE) IN NET ASSETS 995,875,023 758,019,986
NET ASSETS
Beginning of period 2,141,869,334 1,383,849,348
End of period (including undistributed net investment income of $3,900,899 and $11,472,202, $ 3,137,744,357 $ 2,141,869,334
respectively)
OTHER INFORMATION
Shares 32,171,873 60,676,019
Sold
Issued in reinvestment of distributions 568,749 4,039,985
Redeemed (13,969,564) (25,920,211)
Net increase (decrease) 18,771,058 38,795,793
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
JUNE 30, 1995
SELECTED PER-SHARE DATA (UNAUDITED) 1994 1993 F 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 21.69 $ 23.08 $ 19.76 $ 18.51 $ 12.91 $ 15.18
Income from Investment Operations
Net investment income .04 .12 .12 .09 D .09 D .24
Net realized and unrealized gain (loss) 5.09 (.12) E 3.64 1.64 5.72 (1.98)
Total from investment operations 5.13 - 3.76 1.73 5.81 (1.74)
Less Distributions (.12) (.12) (.11) (.05) (.21) (.21)
From net investment income
From net realized gain - (1.27) (.21) (.43) - (.32)
In excess of net realized gain - - (.12) - - -
Total distributions (.12) (1.39) (.44) (.48) (.21) (.53)
Net asset value, end of period $ 26.70 $ 21.69 $ 23.08 $ 19.76 $ 18.51 $ 12.91
TOTAL RETURN B, C 23.78% (.02) 19.37% 9.32% 45.51% (11.73)
% %
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 3,137,744 $ 2,141,869 $ 1,383,849 $ 749,837 $ 371,462 $ 135,487
Ratio of expenses to average net assets .72% A .69% .71% .75% .84% .88%
Ratio of expenses to average net assets before
expense .72% A .70% .71% .75% .84% .88%
reductions
Ratio of net investment income to average net assets .38% A .69% .72% .83% .56% 2.69%
Portfolio turnover rate 82% A 122% 159% 262% 261% 88%
A ANNUALIZED
B TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
THE FINANCIAL STATEMENTS).
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO
YOUR INSURANCE COMPANY'S SEPARATE
ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURNS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET GAIN ON INVESTMENTS FOR THE PERIOD
ENDED DUE TO THE TIMING OF SALES
AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND.
F EFFECTIVE JANUARY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL
STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN,
AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT
CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES.
</TABLE>
VARIABLE INSURANCE PRODUCTS FUND: OVERSEAS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
JUNE 30, 1995 YEAR YEARS FUND
OVERSEAS 2.96% 4.76% 7.12%
Morgan Stanley EAFE Index 1.65% 4.69% 6.97%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the potential
for significant growth over time; however,
investing in foreign markets means assuming
greater risks than investing in the United States.
Factors like changes in a country's financial
markets, its local political and economic
climate, and the fluctuating value of its currency
create these risks. For these reasons an
international fund's performance may be more
volatile than a fund that invests exclusively in the
United States.
(checkmark)
You can compare the fund's figures to the performance of the Morgan Stanley
EAFE index - a broad measure of the performance of stocks in Europe,
Australia, and the Far East. This benchmark includes reinvested dividends
and capital gains, if any, and excludes the effects of sales charges.
Figures for more than one year assume a steady compounded rate of return
and are not the fund's year-by-year results, which fluctuated over the
periods shown. The life of fund figures are from commencement of operations
January 28, 1987.
PERFORMANCE NUMBERS ARE NET OF ALL FUND OPERATING EXPENSES, BUT DO NOT
INCLUDE ANY INSURANCE CHARGES IMPOSED BY YOUR INSURANCE COMPANY'S SEPARATE
ACCOUNT. IF PERFORMANCE INFORMATION INCLUDED THE EFFECT OF THESE ADDITIONAL
CHARGES, IT WOULD HAVE BEEN LOWER.
Past performance is no guarantee of future results. Principal and
investment return will vary and you may have a gain or loss when you
withdraw your money. Foreign investments involve greater risks and
potential rewards than U.S. investments. These risks include political and
economic uncertainties of foreign countries, as well as the risk of
currency fluctuations.
$10,000 OVER LIFE OF FUND
VIP Overseas (22Europe, Australia,
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 10534.87 14701.99
02/28/89 10717.03 14777.56
03/31/89 10707.38 14487.53
04/30/89 11023.50 14621.89
05/31/89 10615.60 13826.42
06/30/89 10574.81 13593.67
07/31/89 11563.97 15300.67
08/31/89 11482.39 14612.54
09/30/89 12196.21 15278.16
10/31/89 11533.38 14664.33
11/30/89 12155.42 15401.50
12/31/89 12920.24 15969.77
01/31/90 12746.88 15375.56
02/28/90 12449.36 14302.43
03/31/90 12919.92 12812.46
04/30/90 12991.52 12710.78
05/31/90 13840.58 14161.09
06/30/90 14147.46 14036.37
07/31/90 14863.53 14234.08
08/31/90 13349.56 12851.83
09/30/90 12081.09 11060.74
10/31/90 13206.34 12784.21
11/30/90 12797.16 12030.10
12/31/90 12705.10 12224.98
01/31/91 12827.85 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 13186.64 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 13658.34 13481.84
10/31/91 13752.68 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 13599.52 12934.85
03/31/92 13323.28 12080.93
04/30/92 14152.01 12138.36
05/31/92 14768.23 12950.85
06/30/92 14491.99 12336.56
07/31/92 13567.65 12020.83
08/31/92 13450.78 12774.79
09/30/92 12908.92 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 12847.62 12401.41
03/31/93 13738.91 13482.39
04/30/93 14651.94 14761.90
05/31/93 14967.16 15073.67
06/30/93 14597.60 14838.49
07/31/93 15173.67 15357.91
08/31/93 15988.88 16186.97
09/30/93 15901.92 15822.62
10/31/93 16478.00 16310.23
11/30/93 15782.36 14884.55
12/31/93 16825.82 15959.32
01/31/94 17923.63 17308.60
02/28/94 17607.51 17260.66
03/31/94 17170.60 16517.22
04/30/94 17738.58 17218.03
05/31/94 17520.13 17119.18
06/30/94 17334.44 17361.11
07/31/94 17793.20 17528.07
08/31/94 18000.73 17943.05
09/30/94 17531.05 17377.92
10/31/94 17891.50 17956.61
11/30/94 17214.29 17093.61
12/31/94 17115.99 17200.65
01/31/95 16406.01 16539.88
02/28/95 16449.17 16492.41
03/31/95 16955.64 17521.06
04/30/95 17440.09 18180.00
05/31/95 17682.31 17963.28
06/30/95 17847.46 17648.27
Let's say you invested $10,000 in Overseas Portfolio on January 28, 1987,
when the fund started. By June 30, 1995, your investment would have grown
to $17,847 - a 78.47% increase. That compares to $10,000 invested in the
Morgan Stanley EAFE Index, which would have grown to $17,648 over the same
period - a 76.48% increase.
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF JUNE 30, 1995
(BY ISSUER, EXCLUDING REPURCHASE AGREEMENTS) % OF FUND'S
INVESTMENTS
C. S. Holdings (Reg.) 1.8
Nestle SA (Reg.) 1.5
Deutsche Bank AG 1.3
Unilever NV Ord. 1.2
Swiss Bank Corp. (Bearer) 1.2
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Finance 26.4
Utilities 8.8
Nondurables 8.4
Durables 8.1
Basic Industries 6.2
GEOGRAPHIC DIVERSIFICATION AS OF JUNE 30, 1995
(BY LOCATION OF ISSUER) % OF FUND'S
INVESTMENTS
Japan 18.5
United Kingdom 12.4
Switzerland 9.8
France 7.5
Netherlands 6.9
VARIABLE INSURANCE PRODUCTS FUND: OVERSEAS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with John Hickling, Portfolio Manager of Overseas Portfolio
Q. JOHN, HOW HAS THE FUND PERFORMED?
A. For the six months and one year ended June 30, 1995, the fund's
performance topped that of the Morgan Stanley EAFE index - a broad measure
of stocks in Europe, Australia and the Far East. The index had total
returns of 2.60% and 1.65% for the six- and 12-month periods, respectively.
Q. WHAT WERE THE KEYS TO THE FUND'S PERFORMANCE OVER THE PAST SIX MONTHS?
A. First, I kept the fund fully invested through much of the period.
Second, some of the stocks I picked in Japan and Europe fared well. And
finally, the fund was able to benefit from new investments in emerging
markets.
Q. WHY DID THE EAFE INDEX OFFER RELATIVELY LOW RETURNS?
A. While European markets have performed relatively well - though not as
well as the U.S. market - emerging markets and Japan have not. Japan was
affected by a number of factors that dampened investor enthusiasm: the
Barings debacle, the Kobe earthquake and the subway gas attack. The
Japanese market also was hurt by the strength of the yen versus the dollar.
On the heels of Mexico's devaluation of the peso in late 1994, emerging
markets also struggled, although they appear to have pretty much bottomed
out.
Q. WHAT'S THE STORY BEHIND THE FUND'S INVESTMENTS IN JAPAN?
A. Even though Japan has the highest country representation in the fund,
I've kept the fund underweighted there, relative to the index. I've focused
much of the fund's Japanese investments in technology, including consumer
electronics companies Toshiba and Hitachi, and other manufacturers and
exporters that are poised to take advantage of economic activity both in
Japan and globally. While the technology sector has done well in the U.S.,
it has been weak in Japan, so I found valuations to be attractive. The
sector recently has shown some strong gains. In addition, I've targeted
some financial stocks. The Japanese market has started to pick up a bit
lately, and brokerage house Nomura Securities is poised to take advantage
because it has been cutting costs aggressively. In addition, it appears
trust banks such as Sumitomo Trust will be able to improve interest margins
- the difference between what they charge for loans and what they pay to
depositors - because of changing regulations.
Q. THE FUND IS OVERWEIGHTED IN EUROPE, RELATIVE TO THE INDEX. WHERE HAVE
YOU FOUND OPPORTUNITIES THERE?
A. Mainly in financial and consumer nondurable stocks, as well as interest
rate-sensitive issues - because European bond markets have been rallying -
and cyclicals - those that tend to rise and fall with the economy. European
stocks have rallied lately, mainly on the strength of the technology
sector. In the short run, I've missed some opportunity there, because I
found the tech stocks to be too expensive and risky. Some of the appealing
consumer nondurable names have been Guinness, Cadbury-Schweppes, Bass and
Nestle. Barclays, National Westminster, Swiss Bank and C.S. Holdings were
among the fund's financial stock investments. I've added investments in
cyclical stocks because they became cheap. Those include paper companies Mo
Och Domsjoe and Svenska Cellulosa; auto stocks Volvo and Peugeot; and tire
companies such as Michelin.
Q. WHAT ABOUT THE FUND'S EMERGING MARKET INVESTMENTS?
A. I've been more active there because, as I said, I felt they had hit
bottom, and there were a lot of very interesting stocks. Among the stocks
that have caught my eye have been Hong Kong/Shanghai Bank (HSBC) and Hong
Kong Land Holdings; Philippine Long Distance Telephone; the department
store Matahari and cigarette manufacturer Gudang Garam in Indonesia; Krung
Thai Bank; Telecom Argentina; and Mexican companies Bancomer, Telmex, Cemex
and Grupo Carso.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. Several factors are important to consider. First of all, it seems most
stock markets reflect the sentiment that any worldwide recession will stay
pretty shallow and that growth will resume. Of course, this is the best
possible scenario. At the same time, if the U.S. market stumbles, one would
expect there to be a drop in foreign markets. In such a scenario, I believe
overseas markets wouldn't drop as far as the U.S, because they haven't
gained as much recently, but it's impossible to say for sure. How the
dollar does also will be important. Going forward, I'll stay with my usual
game plan, looking for opportunities in any markets that appear to have
excellent value.
FUND FACTS
GOAL: to increase the value of the fund's
shares by investing mainly in stocks in
Europe, the Far East, and the Pacific Basin
START DATE: January 28, 1987
SIZE: as of June 30, 1995, more than $1.2 billion
MANAGER: John Hickling, since 1993; manager
Fidelity Overseas Fund, since 1993; Fidelity
Advisor Overseas Fund, since 1993; Fidelity
Advisor Annuity Overseas Portfolio, since
January 1995; previously managed several
Fidelity international funds; joined Fidelity in
1982
(checkmark)
VARIABLE INSURANCE PRODUCTS FUND: OVERSEAS PORTFOLIO
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.2%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.8%
Buenos Aires Embotelladora SA
sponsored ADR 41,800 $ 1,050,301
Perez Companc Class B 308,452 1,295,822
Telecom Argentina sponsored
ADR Class B 83,400 3,794,700
Telecom Argentina Stet France
Telecom SA 263,600 1,199,681
YPF Sociedad Anonima sponsored
ADR representing Class D shares 150,500 2,840,688
10,181,192
AUSTRALIA - 1.4%
Brambles Industries Ltd. 276,500 2,616,260
FAI Insurance Ltd. Ord. 2,037,900 809,474
Lend Lease Corp. Ltd. 81,000 1,033,010
Pioneer International Ltd. 493,300 1,224,642
TNT Ltd. (a) 1,658,800 2,176,694
Westpac Banking Corp. 2,912,700 10,536,488
18,396,568
AUSTRIA - 0.9%
Mayr Melnhof Karton AG 24,200 1,398,830
OEMV AG 62,400 7,194,579
VA Technologie AG 6,800 851,047
VA Technologie AG (d) 15,000 1,877,310
11,321,766
BELGIUM - 1.6%
Bekaert SA 4,005 3,197,654
Delhaize Freres & Cie Le Lion SA 135,300 6,183,782
Petrofina SA 11,900 3,590,951
Petrofina SA (warrants) (a) 595 8,380
Solvay & Cie SA 14,062 7,724,197
20,704,964
BERMUDA - 0.2%
Consolidated Electric Power Asia Ltd.
sponsored ADR (d) 30,000 682,500
Jardine Strategic Holdings Ltd. Ord. 529,500 1,704,990
2,387,490
BRAZIL - 0.2%
Coteminas PN 2,500,000 788,675
Telebras PN (Pfd. Reg.) 60,298,770 1,987,447
2,776,122
CANADA - 0.5%
Midland Walwyn, Inc. 269,000 2,106,921
Noranda, Inc. 245,400 4,827,541
6,934,462
CHILE - 0.1%
Vina Concha Stet y Toro SA
sponsored ADR 51,100 990,063
FINLAND - 0.8%
Kymmene Corp. 53,900 1,680,624
Pohjola Class B 291,000 4,570,859
Valmet Corp. OY Ord. 167,700 3,793,939
10,045,422
FRANCE - 7.2%
Accor SA 65,158 8,694,014
Axa SA 91,718 4,963,362
BQE National Paris Ord. 222,840 10,770,332
Club Mediterranee SA Ord. 42,500 4,340,855
Compagnie Bancaire Ord. 65,670 7,867,107
Credit Lyonnais 24,500 1,413,880
SHARES VALUE (NOTE 1)
FRANCE - CONTINUED
Elf Aquitaine 112,128 $ 8,302,776
Generale des Eaux 90,600 10,105,133
Havas SA 53,300 4,227,450
IMETAL SA Ord. 9,200 1,083,135
L'Oreal Co. Ord. 10,200 2,563,957
Lafarge Coppee SA 63,900 4,978,432
Lyonnaise des Eaux Dumez SA 30,700 2,909,255
Michelin SA Cie Generale des
Etablissements, Class B (a) 76,900 3,413,366
Peugeot SA Ord. 19,500 2,710,627
Total SA Class B 190,600 11,495,446
Vallourec SA (a) 60,000 3,010,224
92,849,351
GERMANY - 6.0%
Allianz Versich Holdings Ord. (Reg.) 1,450 2,590,467
Asko 2,900 1,813,746
BMW AG 9,918 5,463,533
Bayerische Vereinsbank AG Ord. 11,000 3,340,331
Continental Gummi-Werke AG 25,600 3,721,076
Deutsche Bank AG 352,000 17,122,878
Duerr Beteiligungs AG (RFD) 8,777 3,119,553
Gildemeister AG (a) 28,620 2,372,138
Hoechst AG Ord. 38,900 8,413,855
Karstadt AG 17,800 7,821,202
Kaufhof Holding AG 20,000 7,151,906
Metallgesellschaft AG (a)(d) 86,700 1,587,832
SGL Carbon AG (a)(d) 28,000 1,250,570
Schmalbach-Lubeca AG 4,250 855,261
Veba AG Ord. 27,400 10,779,905
77,404,253
HONG KONG - 2.1%
Amoy Properties Ltd. 2,084,000 1,831,440
Consolidated Electric Power Asia Ltd. 604,000 1,401,165
Dickson Concepts International Ltd. 2,108,000 1,259,994
HSBC Holdings PLC 834,000 10,697,560
Hong Kong Land Holdings Ltd. 2,337,000 4,253,340
Hopewell Holdings Ltd. 3,944,000 3,338,596
Hysan Development Co. Ltd. 643,000 1,470,863
Peregrine Investments Holdings Ltd. 832,000 1,182,780
Semi-Tech (Global) Ltd. 100,000 160,901
Sun Hung Kai Properties Ltd. 153,000 1,132,023
26,728,662
INDIA - 0.1%
Reliance Industries Ltd. GDS (a) 106,400 1,902,432
INDONESIA - 1.0%
Astra International PT (For. Reg.) 160,000 283,790
Bank International Indonesia PT Ord. 921,000 2,843,238
Gudang Garam PT Perusahaan 42,500 326,336
Jakarta International Hotels &
Development Ord. 1,541,000 1,937,499
Matahari Putra Prima PT:
(For. Reg.) 552,000 879,927
(For. Reg.) (rights) (a) 276,000 266,459
Sampoerna Hanjaya Mandala (For. Reg.) 735,750 5,781,604
12,318,853
IRELAND - 1.0%
Bank of Ireland U.S. Holdings, Inc. 1,009,200 5,793,010
Fyffes PLC 1,358,000 2,479,301
Independent Newspapers PLC 521,050 2,866,312
Waterford Wedgwood PLC Unit 1,751,400 1,494,049
12,632,672
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ITALY - 1.3%
Alitalia Linee Aeree Italiane Class A (a) 136,400 $ 65,201
Assicurazioni Generali Spa 218,570 5,128,878
Fiat Spa 1,121,000 3,965,325
Istituto Mobiliare Italiano 301,400 1,848,206
Italgas Spa 512,200 1,334,373
Montedison Spa Ord. (a) 2,962,700 2,120,701
SAI Sta Assieuratrice Industriale Spa 189,000 2,017,120
16,479,804
JAPAN - 18.5%
ADO Electronic Industrial Co. Ltd. 19,000 410,750
Advantest Corp. 74,000 2,797,401
Aida Engineering Ltd. Ord. 176,000 1,199,669
Akita Bank Ltd. 76,650 656,483
Amada Metrecs Co. Ltd. 86,000 1,107,383
Amadasonoike Co. Ltd. 282,000 1,632,368
Autobacs Seven Co. Ltd. 20,600 2,007,679
Bridgestone Corp. 339,000 5,005,908
Canon, Inc. 526,000 8,575,073
Daicel Chemical Industries Ltd. 397,000 2,035,415
East Japan Railway Co. Ord. 700 3,597,165
Fanuc Ltd. 98,200 4,245,860
Fujitsu Ltd. 726,000 7,247,135
Futaba Industrial Co. Ltd. 126,000 2,054,105
Hachijuni Bank Ltd. 92,000 1,141,170
Hanshin Department Store Ltd. 29,000 205,210
Higo Bank Ltd. Ord. 96,000 941,288
Hitachi Ltd. 1,126,000 11,240,047
Honda Motor Co. Ltd. 432,000 6,634,375
Ishihara Sangyo Kaisha Ltd. (a) 343,000 1,021,097
Japan Airlines Co. Ltd. 302,000 2,008,578
Komatsu Ltd. Ord. 410,000 3,133,728
Marubeni Corp. 339,000 1,726,035
Matsushita Electric Industrial Co. Ltd. 303,000 4,724,867
Marukyo Corp. 16,000 255,168
Minebea Co. Ltd. 546,000 3,508,847
Mitsubishi Chemical Industries Ltd. 89,000 381,654
Mitsubishi Estate Co. Ltd. 264,000 2,978,382
Mitsubishi Heavy Industries Ltd. 492,000 3,347,809
Mitsubishi Trust & Banking Corp. 486,000 6,889,546
Mitsui OSK Lines Ltd. 457,000 1,268,696
Murata Mfg. Co. Ltd. 171,000 6,484,465
Nichido Fire & Marine
Insurance Co. Ltd. 502,000 4,062,254
Nikko Securities Co. Ltd. 373,000 3,031,587
Nippon Telegraph &
Telephone Corp. Ord. 400 3,354,991
Nippon Yusen Kabushiki Kaisha 354,000 1,986,414
Nissan Motor Co. Ltd. Ord. 388,000 2,484,302
Nisshinbo Industries 154,000 1,217,082
Nitto Denko Corp. 97,000 1,512,581
Nomura Securities Co. Ltd. 664,000 11,609,217
Omron Corp. 139,000 2,660,131
Orix Corp. 242,000 8,061,901
Pioneer Electronic Corp. 241,000 4,099,704
Rohm Co. Ltd. 120,000 6,209,096
Sankyo Co. Ltd. 258,300 6,011,235
Sanwa Bank Ltd. 95,000 1,795,629
Seino Transpotation Co. Ltd. 144,000 2,432,605
Sony Corp. 209,700 10,082,445
Sumitomo Marine and Fire
Insurance Co. Ltd. 420,000 3,339,160
Sumitomo Realty &
Development Co. Ltd. 648,000 3,873,452
Sumitomo Rubber Industries Ltd. 185,000 1,376,846
Sumitomo Trust & Banking Co. Ltd. 363,000 4,416,893
Suzuki Motor Corp. 228,000 2,545,303
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
TDK Corp. 88,000 $ 4,012,759
Takashimaya Co. Ltd. 198,000 2,666,510
Takeda Chemical Industries Ltd. 397,000 5,252,687
Tokio Marine & Fire
Insurance Co. Ltd. (The) 1,065,000 12,228,948
Toshiba Corp. 1,626,000 10,314,970
Toyota Motor Corp. 474,000 9,407,208
Tsugami Corp. 253,000 911,577
Yamanouchi Pharmaceutical Co. Ltd. 302,000 6,814,177
238,235,020
KOREA (SOUTH) - 0.8%
Cho Hung Bank Co. Ltd. 191,504 2,273,043
Korea Electric Power Corp. (a) 147,470 5,647,716
Korea First Securities Co. Ltd. 14,218 187,136
Kyungki Bank (a) 171,523 1,628,705
Seoul Securities Co. 74,592 924,714
10,661,314
MEXICO - 1.2%
Banacci SA de CV:
Class B 352,200 540,979
Class L 17,610 26,767
Cemex SA, Series B 1,071,800 3,875,630
Cifra SA Class C 1,559,100 2,055,517
Consorcio G Grupo Dina SA ADR 34,800 108,750
Empresas Ica Sociedad Controladora
SA de CV sponsored ADR
representing Ord. (part. cert.) 208,700 2,139,175
Grupo Carso SA de CV Class A-1 (a) 287,800 1,574,842
Grupo Dina sponsored ADR, Series L 12,543 25,086
Grupo Financiero Bancomer SA de CV:
Class B (a) 4,451,800 1,303,487
Series L (a) 216,878 57,256
sponsored ADR, Series C (a) (d) 70,200 412,425
Telefonos de Mexico SA sponsored ADR
representing shares Ord. Class L 93,200 2,761,050
14,880,964
MALAYSIA - 0.9%
Kuala Lumpur Industries Holdings BHD (a) 290,000 394,913
Magnum Corp. BHD 567,500 1,326,804
Malaysian Banking BHD 133,000 1,052,871
Resorts World BHD 443,000 2,598,399
Telekom Malaysia BHD 614,000 4,659,149
Tenega Nasional BHD 251,000 1,024,384
Time Engineering BHD 161,000 541,509
11,598,029
NETHERLANDS - 6.9%
ABN-AMRO Holdings NV 46,500 1,796,666
Aegon NV Ord. 68,250 2,363,636
AKZO NV Ord. 103,800 12,420,856
Heineken NV 24,200 3,666,667
IHC Caland NV 48,300 1,373,134
International Nederlanden Groep NV 249,108 13,793,730
KLM Royal Dutch Airlines Ord. (a) 198,200 6,441,468
Koninklijke PPT Nederland 221,500 7,971,539
Koninklijke PPT Nederland (a) (d) 80,600 2,900,705
Oce Van der Grinten NV 136,700 7,719,571
Pirelli Tyre Holdings NV Ord. (a) 633,700 4,258,242
Royal Dutch Petroleum Co. Ord. 50,900 6,222,317
Unilever NV Ord. 122,000 15,891,452
Vendex International Bearer (a) (d) 81,400 2,156,361
88,976,344
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NETHERLANDS ANTILLES - 0.3%
Schlumberger Ltd. 68,200 $ 4,236,925
NORWAY - 2.4%
Bergesen Group:
Class A 35,500 807,408
Class B 301,600 6,859,557
Christiania Bank Free shares Ord. 1,475,000 3,426,617
Den Norske Bank Class A Free shares 1,146,800 3,111,291
Norsk Hydro AS 100,850 4,218,809
Orkla AS:
Class A Free shares 93,250 4,173,564
Class B (non-vtg.) 47,800 2,026,773
Saga Petroleum AS Class B 261,600 3,463,634
Unitor AS 192,300 3,358,339
31,445,992
PAKISTAN - 0.1%
Pakistan Telecommunications Voucher
GDR (a) (d) 8,630 837,110
PHILLIPINES - 0.1%
Philippine Long Distance Telephone Co.
sponsored ADR 21,500 1,542,625
SINGAPORE - 1.0%
Jardine Matheson Holdings Ltd. Ord. 506,659 3,723,944
Kim Engineering Holdings Ltd. 2,455,000 2,565,721
Neptune Orient Lines Ltd. 3,377,000 3,916,071
Overseas Union Bank Ltd. (For.) 265,000 1,669,291
Van Der Horst Ltd. 156,000 748,174
12,623,201
SOUTH AFRICA - 0.0%
De Beers Consolidated Mines Ltd. ADR 24,000 621,000
SPAIN - 4.2%
Banco Bilbao Vizcaya SA Ord. (Reg.) 349,100 10,102,294
Banco Intercontinental Espanol 59,550 5,374,415
Corporacion Mapfrecia International
de Reaseguros SA (Reg.) 183,400 9,035,230
EL Aguila SA (a) 56,540 423,669
Repsol SA Ord. 172,500 5,441,730
Tabacalera SA, Series A 205,200 7,696,592
Telefonica de Espana SA Ord. 845,150 10,916,448
Union Electrica Fenosa SA 1,216,100 5,719,270
54,709,648
SWEDEN - 3.5%
Electrolux AB 117,600 5,358,737
Investor AB Class B Free shares 314,700 9,097,942
Mo Och Domsjoe (MoDo) Class B
Free shares 83,100 4,799,104
SKF AB Ord. 75,800 1,533,959
Skandia International Holding 35,400 687,147
Svenska Cellulosa Aktiebolaget SCA
Class B Ord. 362,700 6,740,754
Skandinaviska Enskilda Banken
Class A Free shares 948,300 4,934,745
Volvo AB Class B 637,400 12,153,153
45,305,541
SWITZERLAND - 9.8%
Adia SA (Bearer) (a) 54,800 11,403,744
Alusuisse-Lonza Holding AG (Reg.) 15,939 10,019,990
Baloise Holding (Reg.) 5,635 12,879,299
CIBA-GEIGY AG (Reg.) 14,380 10,567,453
C. S. Holdings (Reg.) 258,405 23,736,812
Fischer (Georg) AG (Reg.) 12,400 3,228,211
Holderbank Financiere Glarus
AG (Bearer) 2,825 2,324,445
SHARES VALUE (NOTE 1)
SWITZERLAND - CONTINUED
Holderbank Financial Glarus
(warrants) (a) 14,125 $ 19,678
Nestle SA (Reg.) 18,800 19,626,644
Roche Holdings Ltd. (part. certs.) 1,700 10,990,422
Surveillance, Societe Generale (Bearer) 1,010 1,758,816
Swiss Bank Corp. (Bearer) 43,450 15,435,437
Zurich Versicherung (Reg.) 3,405 4,289,973
126,280,924
THAILAND - 1.6%
Bank of Asia PCL (For. Reg.) 354,310 1,004,727
Krung Thai Bank (For. Reg.) 1,698,840 6,882,069
Ruam Pattana Fund II (For. Reg.) (a) 1,117,000 712,691
Ruang Khao Unit Trust (For. Reg.) (a) 836,800 601,709
Siam City Bank PCL (For. Reg.) 6,828,500 9,405,234
Telecomasia Corp. PCL (For. Reg.) (a) 394,000 1,460,440
20,066,870
TURKEY - 0.3%
Aksigorta (a) 280,000 54,463
Aksigoria (a) (d) 952,000 185,174
Cimentas AS (a) 500,000 322,290
Tofas Turk Otomobil Fabrikasi
AS ADR (a) (d) 165,600 712,080
Tofas Turk Otomobil Fabrikasi AS (a) 2,400,600 2,117,473
3,391,480
UNITED KINGDOM - 12.4%
Argyll Group PLC Ord. 626,900 3,353,633
Avon Rubber 81,900 666,007
BTR PLC Ord. 625,100 3,184,528
Barclays PLC Ord. 980,300 10,558,664
Bass PLC Ord. 763,700 7,324,586
Berkeley Group PLC 159,600 904,685
Booker PLC 364,200 2,415,782
Boots Co. PLC 287,600 2,334,164
British Land Ord. 289,500 1,844,124
Burmah Oil 190,700 2,768,567
Cadbury-Schweppes PLC Ord. 955,700 6,994,539
Commercial Union PLC (a) 225,100 2,099,695
De La Rue PLC 488,300 7,287,643
Dixons Group PLC 937,500 3,826,800
Forte PLC 1,806,100 6,551,610
Glaxo Holdings PLC Ord. 378,100 4,651,224
Great Universal Stores PLC Ord Class A 381,600 3,574,711
Guinness PLC Ord. 1,154,300 8,705,719
Hanson Trust PLC Ord. 674,000 2,358,953
Iceland Group PLC 637,600 1,829,976
Lasmo PLC 858,400 2,347,355
Ladbroke Group PLC Ord. 1,032,400 2,782,019
Lloyds Abbey Life PLC 549,600 3,426,481
London International Group PLC 2,561,200 4,492,217
National Westminster Bank PLC Ord. 1,097,920 9,567,209
Nurdin & Peacock PLC Ord. 375,000 1,046,393
North West Water Group PLC Ord. 337,700 2,988,469
Redland PLC Ord. 147,800 969,770
Rolls Royce PLC Ord. 874,433 2,433,022
Royal Insurance Holdings PLC 992,600 4,890,550
Sainsbury (J.) PLC Ord. 566,367 3,987,065
Scottish Hydro-Electric PLC Ord. 723,700 3,681,071
Scottish Power PLC ADR 960,500 4,954,461
Shell Transport & Trading PLC 581,900 6,972,716
TSB Group PLC 300 1,155
Tesco PLC Ord. 1,425,100 6,589,734
Unigate Ltd. Ord. 312,800 2,022,471
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Vodafone Group PLC 1,890,600 $ 7,039,006
Whitbread Co. PLC Class A 715,700 6,847,100
160,273,874
TOTAL COMMON STOCKS
(Cost $1,041,443,013) 1,149,740,937
NONCONVERTIBLE PREFERRED STOCKS - 2.5%
AUSTRIA - 0.5%
Creditanstalt Bankverein 105,900 6,099,579
GERMANY - 0.5%
Henkel KGAA 10,300 3,974,013
Porsche AG Ord. (a) 6,050 2,638,622
6,612,635
ITALY - 1.5%
Banco Ambro Veneto 1,197,000 1,627,788
Fiat Spa 1,350,600 2,937,514
SAI Sta Assicuratrice Industriale Spa 650,500 2,800,526
Stet (Societa Finanziaria Telefonica) Spa 5,075,300 11,278,078
18,643,906
KOREA (SOUTH) - 0.0%
Korea First Securities Co. Ltd. 68,124 575,898
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $29,697,172) 31,932,018
FOREIGN GOVERNMENT OBLIGATIONS (F) - 1.1%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
ARGENTINA - 0.3%
Argentina Republic BOCON
6.0625%, 4/1/01 (e) B1 $ 5,993,570 3,738,969
BRAZIL - 0.2%
Brazil Federative Republic IDU
euro 6.6875%, 1/1/01 (e) B1 2,570,500 2,069,253
DENMARK - 0.3%
Danish Government Bullet
7%, 12/15/04 Aa1 DKK 25,000,000 4,181,735
FRANCE - 0.3%
French Government Strips
4/25/23 Aaa FRF 168,000,000 3,508,764
TOTAL FOREIGN GOVERNMENT
OBLIGATIONS
(Cost $14,123,089) 13,498,721
REPURCHASE AGREEMENTS - 7.2%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 6.22% dated
6/30/95 due 7/3/95 $ 92,390,864 92,343,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,177,606,274) $ 1,287,514,676
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO SELL
810,720,000 ESP 7/12/95 $ 6,704,431 $ (278,432)
228,920,092 FRF 8/16/95 47,220,286 (1,965,746)
2,043,255,600 JPY 7/11/95 24,176,080 411,833
TOTAL CONTRACTS TO SELL-
(Receivable amount $76,268,452) $ 78,100,797 $ (1,832,345)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 6.1%
CURRENCY ABBREVIATIONS
DKK - Danish krone
ESP - Spanish peseta
FRF - French franc
JPY - Japanese yen
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
(d) 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 $12,602,067 or 1.0% of net
assets.
(e) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(f) Some foreign government obligations have not been individually rated
by S&P or Moody's. The ratings listed are assigned to securities by FMR,
the fund's investment adviser, based principally on S&P and Moody's ratings
of the sovereign credit of the issuing government.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $307,494,270 and $257,850,752, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $152,215 for the period
(see Note 3 of Notes to Financial Statements).
INCOME TAX INFORMATION
At June 30, 1995, the aggregate cost of investment securities for income
tax purposes was $1,177,807,984. Net unrealized appreciation aggregated
$109,706,692, of which $162,739,035 related to appreciated investment
securities and $53,032,343 related to depreciated investment securities.
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Investments
Basic Industries 6.2
Construction & Real Estate 3.2
Durables 8.1
Energy 5.1
Finance 26.4
Government Obligations 1.1
Health 3.4
Holding Companies 1.0
Industrial Machinery & Equipment 2.8
Media & Leisure 2.4
Nondurables 8.4
Retail & Wholesale 4.8
Services 3.0
Repurchase Agreements 7.2
Technology 4.9
Transportation 2.8
Utilities 8.8
Others (individually less than 1%) 0.4
Total 100.0%
VARIABLE INSURANCE PRODUCTS FUND: OVERSEAS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $92,343,000) (cost $1,177,606,274) - $ 1,287,514,676
See accompanying schedule
Cash 655
Receivable for investments sold 20,207,922
Unrealized appreciation on foreign currency contracts 411,833
Dividends receivable 7,490,524
Interest receivable 304,815
TOTAL ASSETS 1,315,930,425
LIABILITIES
Payable for investments purchased $ 10,265,923
Unrealized depreciation on foreign currency contracts 2,244,178
Payable for fund shares redeemed 5,303,385
Accrued management fee 832,243
Other payables and accrued expenses 336,394
TOTAL LIABILITIES 18,982,123
NET ASSETS $ 1,296,948,302
Net Assets consist of:
Paid in capital $ 1,177,330,987
Undistributed net investment income 11,730,370
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (279,038)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 108,165,983
NET ASSETS, for 80,033,348 shares outstanding $ 1,296,948,302
NET ASSET VALUE, offering price and redemption price per share ($1,296,948,302 (divided by) 80,033,348 shares) $16.21
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
INVESTMENT INCOME $ 21,509,202
Dividends
Interest 4,660,220
26,169,422
Less foreign taxes withheld (2,979,305)
TOTAL INCOME 23,190,117
EXPENSES
Management fee $ 4,861,229
Transfer agent fees 316,317
Accounting fees and expenses 267,409
Non-interested trustees' compensation 3,447
Custodian fees and expenses 311,947
Registration fees 24
Audit 22,683
Legal 2,524
Miscellaneous 2,230
TOTAL EXPENSES 5,787,810
NET INVESTMENT INCOME 17,402,307
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 6,935,354
Foreign currency transactions (6,677,005) 258,349
Change in net unrealized appreciation (depreciation) on:
Investment securities 37,408,823
Assets and liabilities in foreign currencies (2,727,346) 34,681,477
NET GAIN (LOSS) 34,939,826
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 52,342,133
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
Operations $ 17,402,307 $ 14,354,948
Net investment income
Net realized gain (loss) 258,349 1,588,422
Change in net unrealized appreciation (depreciation) 34,681,477 (19,420,073)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 52,342,133 (3,476,703)
Distributions to shareholders (4,893,543) (4,465,195)
From net investment income
From net realized gain (1,797,170) -
In excess of net realized gain (3,096,373) -
TOTAL DISTRIBUTIONS (9,787,086) (4,465,195)
Share transactions 235,046,856 1,000,905,405
Net proceeds from sales of shares
Reinvestment of distributions 9,787,086 4,465,195
Cost of shares redeemed (288,141,738) (477,688,222)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (43,307,796) 527,682,378
TOTAL INCREASE (DECREASE) IN NET ASSETS (752,749) 519,740,480
NET ASSETS
Beginning of period 1,297,701,051 777,960,571
End of period (including undistributed net investment income of $11,730,370 and $10,987,509, $ 1,296,948,302 $ 1,297,701,051
respectively)
OTHER INFORMATION
Shares 15,188,474 62,240,900
Sold
Issued in reinvestment of distributions 652,472 274,107
Redeemed (18,619,209) (29,967,241)
Net increase (decrease) (2,778,263) 32,547,766
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED JUNE 30,
1995
SELECTED PER-SHARE DATA (UNAUDITED) 1994 1993 E 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.67 $ 15.48 $ 11.53 $ 13.09 $ 12.42 $ 12.67
Income from Investment Operations
Net investment income .07 .19 .06 .16 .24 .18
Net realized and unrealized gain (loss) .59 .08 C 4.16 (1.54) .74 (.39)
Total from investment operations .66 .27 4.22 (1.38) .98 (.21)
Less Distributions (.06) (.08) (.18) (.18) (.17) (.04)
From net investment income
In excess of net investment income - - (.04) - - -
From net realized gain (.02) - - - (.14) D -
In excess of net realized gain (.04) - (.05) - - -
Total distributions (.12) (.08) (.27) (.18) (.31) (.04)
Net asset value, end of period $ 16.21 $ 15.67 $ 15.48 $ 11.53 $ 13.09 $ 12.42
TOTAL RETURN B 4.27% 1.72% 37.35% (10.72) 8.00% (1.67)
% %
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,296,948 $ 1,297,701 $ 777,961 $ 180,837 $ 126,490 $ 80,554
Ratio of expenses to average net assets .91% A .92% 1.03% 1.14% 1.26% 1.41%
Ratio of net investment income to average net assets 2.74% A 1.28% 1.21% 1.86% 2.33% 1.89%
Portfolio turnover rate 46% A 42% 42% 61% 168% 100%
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO
YOUR INSURANCE COMPANY'S SEPARATE ACCOUNT.
INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURNS SHOWN.
C THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD
ENDED DUE TO THE TIMING OF SALES AND
REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND.
D INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
E EFFECTIVE JANUARY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL
STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN,
AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1995 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
The Money Market Portfolio, High Income Portfolio, Equity-Income Portfolio,
Growth Portfolio and Overseas Portfolio (the funds) are funds of Variable
Insurance Products Fund (the trust). The trust is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business trust.
Each fund is authorized to issue an unlimited number of shares. Shares of
each fund may only be purchased by insurance companies for the purpose of
funding variable annuity or variable life insurance contracts. The
following summarizes the significant accounting policies of the funds:
SECURITY VALUATION:
MONEY MARKET PORTFOLIO. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
HIGH INCOME PORTFOLIO. Securities for which quotations are readily
available are valued by a pricing service at their market values as
determined by their most recent bid prices in the principal market (sales
prices if the principal market is an exchange) in which such securities are
normally traded. Securities (including restricted securities) for which
market quotations are not readily available are valued at their fair value
as determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees. Short-term securities
maturing within sixty days of their purchase date are valued at amortized
cost or original cost plus interest, both of which approximate current
value.
EQUITY-INCOME AND GROWTH PORTFOLIOS. Securities for which exchange
quotations are readily available are valued at the last sale price, or if
no sale price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt securities
which trade on an exchange), are valued primarily using dealer-supplied
valuations or at their fair value as determined in good faith under
consistently applied procedures under the general supervision of the Board
of Trustees. Short-term securities maturing within sixty days of their
purchase date 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 sales price, or if no sale price, at the closing bid
prices in the principal market in which such securities are normally
traded. Securities for which market 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 of their purchase date are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the funds are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in foreign
currency exchange rates on investments in securities are included with the
net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
the fiscal year. The schedules of investments include information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME:
MONEY MARKET PORTFOLIO. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as earned.
HIGH INCOME, EQUITY-INCOME, GROWTH AND OVERSEAS PORTFOLIOS. Dividend income
is recorded on the ex-dividend date, except certain dividends from foreign
securities where the ex-dividend date may have passed, are recorded as soon
as the funds are informed of the ex-dividend date. Interest income, which
includes accretion of original issue discount, is accrued as earned.
Investment income is recorded net of foreign taxes withheld where recovery
of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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, which may result in distribution
reclassifications, are primarily due to differing treatments for foreign
currency transactions, passive foreign investment companies (PFIC), market
discount, partnerships, non-taxable dividends and losses deferred due to
wash sales and excise tax regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The funds, except for the Money Market
Portfolio, may use foreign currency contracts to facilitate transactions in
foreign securities and to manage the funds' currency exposure. Contracts to
buy generally are used to acquire exposure to foreign currencies, while
contracts to sell are used to hedge the funds' investments against currency
fluctuations. Also, a contract to buy or sell can offset a previous
contract. These contracts involve market risk in excess of the unrealized
gain or loss reflected in the funds' Statement of Assets and Liabilities.
The U.S. dollar value of the currencies each applicable fund has committed
to buy or sell is shown in the schedule of investments under the caption
"Forward Foreign Currency Contracts." This amount represents the aggregate
exposure to each currency acquired or hedged through currency contracts at
period end. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
Contracts that have been offset with different counterparties are reflected
as both a contract to buy and a contract to sell in each applicable fund's
schedule of investments under the caption "Forward Foreign Currency
Contracts."
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the funds, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase, and are collateralized by U.S.
Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The 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. FMR, the funds'
investment adviser, is responsible for determining that the value of these
underlying securities remains at least equal to the resale price.
INDEXED SECURITIES. The funds, (excluding the Money Market Portfolio) may
invest in indexed securities whose values are linked either directly or
inversely to changes in foreign currencies, interest rates, commodities,
indices, or other underlying instruments. The funds use these securities to
increase or decrease their exposure to different underlying instruments and
to gain exposure to markets that might be difficult to invest in through
conventional securities. Indexed securities may be more volatile than their
underlying instruments, but any loss is limited to the amount of the
original investment.
RESTRICTED SECURITIES. The funds are permitted to invest in privately
placed restricted securities. These securities may be resold in
transactions exempt from registration or to the public if the securities
are registered. Disposal of these securities may involve time-consuming
negotiations and expense, and prompt sale at an acceptable price may be
difficult. At the end of the period, restricted securities (excluding 144A
issues) amounted to $20,998,411 or 2.7% of net assets for the Money Market
Portfolio and $15,265,476 or 1.9% of net assets for the High Income
Portfolio.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a monthly
fee.
For the Money Market Portfolio, FMR receives a monthly fee that is
calculated on the basis of a basic fund fee rate of .03% of the fund's
average net assets, plus a fixed income group fee rate and an income-based
fee. The group fee rate is the weighted average of a series of rates
ranging from .1200% to .3700% and is based on the monthly average net
assets of all the mutual funds advised by FMR. The income-based fee is
added only when the fund's gross yield exceeds 5%. At that time the
income-based fee would equal 6% of that portion of the fund's gross income
that represents a gross yield of more than 5% per year. The maximum
3. FEES AND OTHER TRANSACTIONS
WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
income-based component is .24% of average net assets. For the period, the
management fee was equivalent to an annualized rate of .25% 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 the fund. The group fee rate is the weighted
average of a series of rates and is based on the monthly average net assets
of all the mutual funds advised by FMR. The rates ranged from .1200% to
.3700% for the High Income Portfolio and .2700% to .5200% for the
Equity-Income, Growth and Overseas Portfolios for the period. In the event
that these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted in
the same or a lower management fee. The annual individual fund fee rates
are .20%, .30%, .45% and .45% for the Equity-Income, Growth, Overseas, and
High Income Portfolios, respectively. For the period, the management fees
were equivalent to annualized rates of .60%, .52%, .62%, and .77% of
average net assets for the High Income, Equity-Income, Growth, and Overseas
Portfolios, respectively.
SUB-ADVISER FEE. As the Money Market Portfolio's investment sub-adviser,
FMR Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR
of 50% of the management fee payable to FMR. The fees are paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
FMR, on behalf of the High Income and Overseas Portfolios, entered into
sub-advisory agreements with affiliates of FMR. In addition, one of the
sub-advisers of the Overseas Portfolio, Fidelity International Investment
Advisors (FIIA), entered into a sub-advisory agreement with its subsidiary,
Fidelity International Investment Advisors (U.K.) Limited (FIIAL U.K.).
Under the sub-advisory arrangements, FMR may receive investment advice and
research services and may grant the sub-advisers investment management
authority to buy and sell securities. FMR pays its sub-advisers either a
portion of its management fee or a fee based on costs incurred for these
services. FIIA pays FIIAL U.K. a fee based on costs incurred for either
service.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations Company
(FIIOC), an affiliate of FMR, is the funds' transfer, dividend disbursing
and shareholder servicing agent. Effective January 1, 1995, the Board of
Trustees approved a revised transfer agent contract pursuant to which FIIOC
receives account fees and asset-based fees that vary according to account
size and type of account. Under the prior transfer agent contract, FIIOC
received fees based on the type, size, number of accounts, and number of
transactions made by shareholders. FIIOC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEES. Fidelity Service Co.(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. Certain funds placed a portion of their portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms are shown under the caption
"Other Information" at the end of each applicable fund's schedule of
investments.
4. BANK BORROWINGS.
Each fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. Each fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, each fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. For
the High Income and Equity-Income portfolios, the maximum loans during the
periods for which loans were outstanding amounted to $4,885,000 and
$18,269,000 respectively, and the average daily loan balances were
$4,885,000 and $18,269,000, respectively. The weighted average interest
rate was 6.4% for both the High Income Portfolio and for the Equity-Income
Portfolio.
5. 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% of average net assets for the High
Income Portfolio and 1.50% of average net assets for the Equity-Income,
Growth, and Overseas Portfolios. For the period, there was no reimbursement
under this arrangement.
FMR has directed certain portfolio trades of the High Income Portfolio to
brokers who paid a portion of the fund's expenses. For the period, the High
Income Portfolio's expenses were reduced by $5,422 under this agreement.
6. BENEFICIAL INTEREST.
At the end of the period, Fidelity Investments Life Insurance Company
(FILI), an affiliate of FMR, was the record owner of more than 5% of the
outstanding shares and certain unaffiliated insurance companies were record
owners of approximately 10% of the total outstanding shares of the
following funds:
FILI UNAFFILIATED INSURANCE COMPANIES
FUND % OF OWNERSHIP # OF % OF OWNERSHIP
Money Market 48 1 16
High Income 17 1 41
Equity-Income 26 1 30
Growth 17 1 31
Overseas 15 1 40
7. PURCHASES AND SALES OF INVESTMENTS.
Information regarding purchases and sales of securities (other than
short-term securities) is included under the caption "Other Information" at
the end of each applicable fund's schedule of investments.
8. TRANSACTIONS WITH AFFILIATED COMPANIES.
Information regarding transactions with affiliated companies is included
under the caption "Other Information" at the end of each applicable fund's
schedule of investments.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
William J. Hayes, VICE PRESIDENT
Fred L. Henning, Jr., VICE PRESIDENT, MONEY MARKET PORTFOLIO
Robert A. Lawrence, VICE PRESIDENT
Lawrence Greenberg, VICE PRESIDENT
Barry J. Coffman, VICE PRESIDENT
Robert Litterst, VICE PRESIDENT
John R. Hickling, VICE PRESIDENT
Bettina Doulton, VICE PRESIDENT
Arthur S. Loring, SECRETARY
Stephen P. Jonas, TREASURER
Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS
Michael D. Conway, ASSISTANT TREASURER, MONEY MARKET PORTFOLIO
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox
Phyllis Burke Davis
Richard J. Flynn
Edward C. Johnson 3d
E. Bradley Jones
Donald J. Kirk
Peter S. Lynch
Edward H. Malone
Marvin L. Mann
Gerald C. McDonough
Thomas R. Williams
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Co.
Boston, MA
CUSTODIAN
Morgan Guaranty Trust Company of New York,
New York, NY
MONEY MARKET PORTFOLIO
The Bank of New York, New York, NY
HIGH INCOME PORTFOLIO
The Chase Manhattan Bank, N.A., New York, NY
EQUITY-INCOME AND OVERSEAS PORTFOLIOS
Brown Brothers Harriman & Co., Boston, MA
GROWTH PORTFOLIO
(2_FIDELITY_LOGOS)
VARIABLE INSURANCE PRODUCTS
FUND
MONEY MARKET PORTFOLIO
HIGH INCOME PORTFOLIO
EQUITY-INCOME PORTFOLIO
GROWTH PORTFOLIO
OVERSEAS PORTFOLIO
SEMIANNUAL REPORT
JUNE 30, 1995
CONTENTS
MONEY MARKET PORTFOLIO VIPF-3 PERFORMANCE
VIPF-4 FUND TALK: THE MANAGER'S OVERVIEW
VIPF-5 INVESTMENTS
VIPF-9 FINANCIAL STATEMENTS
HIGH INCOME PORTFOLIO VIPF-11 PERFORMANCE AND INVESTMENT SUMMARY
VIPF-12 FUND TALK: THE MANAGER'S OVERVIEW
VIPF-13 INVESTMENTS
VIPF-19 FINANCIAL STATEMENTS
EQUITY-INCOME PORTFOLIO VIPF-21 PERFORMANCE AND INVESTMENT SUMMARY
VIPF-22 FUND TALK: THE MANAGER'S OVERVIEW
VIPF-23 INVESTMENTS
VIPF-27 FINANCIAL STATEMENTS
GROWTH PORTFOLIO VIPF-29 PERFORMANCE AND INVESTMENT SUMMARY
VIPF-30 FUND TALK: THE MANAGER'S OVERVIEW
VIPF-31 INVESTMENTS
VIPF-35 FINANCIAL STATEMENTS
OVERSEAS PORTFOLIO VIPF-37 PERFORMANCE AND INVESTMENT SUMMARY
VIPF-38 FUND TALK: THE MANAGER'S OVERVIEW
VIPF-39 INVESTMENTS
VIPF-44 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS VIPF-46 NOTES TO THE FINANCIAL STATEMENTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS
NOT
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUNDS UNLESS
PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
VARIABLE INSURANCE PRODUCTS FUND: MONEY MARKET PORTFOLIO
PERFORMANCE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects both the change
in a fund's share price over a given period, and reinvestment of its
dividends (or income). Yield measures the income paid by a fund. Since a
money market fund tries to maintain a $1 share price, yield is an important
measure of performance.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
JUNE 30, 1995 YEAR YEARS YEARS
Money Market 5.44% 4.88% 6.19%
Consumer Price Index 3.04% 3.26% 3.55%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
Comparing the fund's performance to the Consumer Price Index (CPI) helps
show how your investment did compared to inflation. (The periods covered by
the CPI numbers are the closest available match to those covered by the
fund.)
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, the past five
years and life of fund total returns would have been lower. Yield
will vary.
YIELD
Row: 1, Col: 1, Value: 4.21
Row: 1, Col: 2, Value: 2.41
Row: 2, Col: 1, Value: 4.7
Row: 2, Col: 2, Value: 2.5
Row: 3, Col: 1, Value: 5.609999999999999
Row: 3, Col: 2, Value: 2.74
Row: 4, Col: 1, Value: 5.91
Row: 4, Col: 2, Value: 2.89
Row: 5, Col: 1, Value: 5.85
Row: 5, Col: 2, Value: 2.87
Money Market
MMDA
6% -
5% -
4% -
3% -
2% -
1% -
0%
6/28/94 10/2/94 12/28/94 3/29/95 6/28/95
Money Market 4.21% 4.70% 5.61% 5.91% 5.85%
MMDA 2.41% 2.50% 2.74% 2.89% 2.87%
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods,
expressed as annual percentage rates. A yield that assumes income earned is
reinvested or compounded is called an effective yield. The chart above
shows the fund's current seven-day yield at quarterly intervals over the
past year. This is compared to similar yields for the average bank money
market deposit account (MMDA). The MMDA average is supplied by BANK RATE
MONITOR.(Trademark)
COMPARING PERFORMANCE
There are some important differences between
a bank money market deposit account (MMDA)
and a money market fund. First, the U.S.
government neither insures nor guarantees a
money market fund. In fact, there is no
assurance that a money fund will maintain a $1
share price. Second, a money market fund
returns to its shareholders income earned by the
fund's investments after expenses. This is in
contrast to banks, which set their MMDA rates
periodically based on current interest rates,
competitors' rates, and internal criteria.
(checkmark)
VARIABLE INSURANCE PRODUCTS FUND: MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with
Bob Litterst, Portfolio
Manager of Money
Market Portfolio
Q. BOB, CAN YOU BRING US UP TO DATE ON MARKET CONDITIONS?
A. Sure. The economic growth rate has slowed dramatically during the past
six months. During the fourth quarter of 1994, the gross domestic product
expanded at a rate of 5.1%, a very strong showing. Moreover, final sales
rose 5.7%, meaning sales exceeded production and depleted inventories.
Those signs of growth, along with disturbing trends in such leading
indicators of inflation as unemployment and capacity utilization, prompted
the Federal Reserve to raise the federal funds rate, the rate banks charge
each other for overnight loans, another one-half percentage point in
February.
Q. HOW HAS THE INTEREST RATE ENVIRONMENT CHANGED SINCE THEN?
A. Even as the Fed was tightening credit for the seventh time in a little
more than a year, there were signs that the economy was beginning to lose
steam. Led by softening consumer activity and weakness in
interest-sensitive sectors such as housing and autos, the growth rate
during the first quarter of 1995 slowed to 2.7%. Currently, most economists
have long since stopped worrying about the economy overheating. Now they
have an altogether different concern: that we might be headed for another
recession. By the end of June, it was clear to all that the latest cycle of
interest rate increases was over. Instead, speculation centered on when the
Fed might feel compelled to lower rates.
Q. HOW DID YOU RESPOND TO CHANGING CONDITIONS?
A. The fund's average maturity six months ago, when the period began, was
39 days. That was a defensive number. It reflected my view at the time that
further rate increases were likely. As it became apparent that the economy
was slowing more rapidly than initially expected, my expectations regarding
Fed policy changed, and I gradually extended the fund's average maturity. I
moved cautiously at first because conditions were unsettled and it seemed
prudent to maintain flexibility. But as signs of weakness accumulated, I
began to prepare for a shift in Fed policy, including the possibility of an
eventual rate cut. By the end of June, the fund's average maturity was more
aggressive than that of most other taxable money market funds-around 60
days, compared to about 50 days for most competitors.
Q. HOW DID YOU ACHIEVE THAT LONGER AVERAGE MATURITY?
A. Mainly by focusing on three-month and six-month securities, rather than
moving further out the yield curve. That's because by the end of the
period, expectations for declining short-term rates caused longer-term
yields on some money market securities to fall below shorter-term yields, a
situation known as an inverted yield curve.
Q. WHAT ABOUT ASSET SELECTION?
A. I've reduced the fund's stake in U.S. Treasury and agency securities.
Normally the fund averages about 10% in government securities, although
it's been as high as 20% at times during the past year or two. But in
recent months, technical factors affecting supply and demand have priced
government securities unusually high. The main cause seems to be heavy
buying on the part of foreign central banks with funds accumulated in
support of the U.S. dollar. With so many other creditworthy alternatives
available, I've looked elsewhere for value, adding higher-yielding
commercial paper and bank certificates of deposit. At the end of June,
government securities totaled less than 3% of the fund's assets.
Q. WHAT'S THE OUTLOOK?
A. The next few months should be interesting. We know that on July 6,
shortly after the period ended, the Fed lowered the federal funds rate
one-quarter percentage point, but as we look ahead, much uncertainty
remains. Some market participants believe that we're in the early stages of
an extended downturn. Others believe that what's happening is merely a
brief but severe inventory correction, and that the economy will resume
growing at its long-term trend rate of around 2.5% once the temporary
buildup in inventories sells off.
Q. WHAT'S YOUR VIEW?
A. I tend to side with those in the latter camp. The typical prerequisites
for a recession, including high inflation and tight bank lending standards,
simply don't exist. That said, I'm concerned that if this Spring's weakness
in the labor market persists, it could evolve into a self-reinforcing
slowdown, forcing the Fed to continue lowering rates. While I don't think
that will happen, I have to respect the possibility of such a development.
Accordingly, I'll probably maintain a neutral to aggressive average
maturity of between 60 and 65 days for the foreseeable future.
FUND FACTS
GOAL: Income and share price stability by
investing in high quality, short-term instruments
START DATE: April 1, 1982
SIZE: As of June 30, 1995, more than $768
million
MANAGER: Robert Litterst, since 1992; manager,
Capital Reserves Money Market, Fidelity Cash
Reserves, Fidelity Money Market Trust:
Retirement Money Market, since 1992; joined
Fidelity in 1991
(checkmark)
VARIABLE INSURANCE PRODUCTS FUND: MONEY MARKET PORTFOLIO
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
BANKERS' ACCEPTANCES - 4.2%
ANNUALIZED
YIELD AT
DUE TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
DOMESTIC BANKERS' ACCEPTANCES - 2.8%
CHASE MANHATTAN BANK
11/1/95 6.09% $ 4,500,000 $ 4,408,980
CHEMICAL BANK
9/28/95 6.02 5,723,026 5,639,549
MELLON BANK, N.A.
11/24/95 5.81 7,500,000 7,325,700
NBD BANK, N.A.
12/11/95 5.87 4,000,000 3,896,767
21,270,996
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 1.4%
BANK OF TOKYO
8/14/95 6.39 6,000,000 5,954,533
RABOBANK NEDERLAND, N.V.
8/3/95 6.22 1,000,000 994,408
SANWA BANK, LTD.
7/31/95 6.08 4,000,000 3,980,033
10,928,974
TOTAL BANKERS' ACCEPTANCES 32,199,970
CERTIFICATES OF DEPOSIT - 20.3%
CHICAGO BRANCH, YANKEE DOLLAR, FOREIGN BRANCH - 3.9%
ABN-AMRO BANK
8/3/95 6.25 5,000,000 5,000,045
9/20/95 6.19 5,000,000 5,000,000
9/25/95 6.00 5,000,000 5,000,000
10/19/95 6.25 10,000,000 10,000,000
SANWA BANK, LTD.
8/15/95 6.04 5,000,000 5,000,062
30,000,107
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 9.4%
BANQUE NATIONALE DE PARIS
11/13/95 6.05 5,000,000 5,000,000
CANADIAN IMPERIAL BANK OF COMMERCE
11/1/95 6.25 4,000,000 3,998,110
COMMERZBANK, GERMANY
8/24/95 6.35 5,000,000 4,999,596
DRESDNER BANK, A.G.
3/15/96 6.44 1,000,000 1,000,875
FUJI BANK, LTD.
7/19/95 6.18 5,000,000 5,000,000
HYPO U.S. FINANCE
11/8/95 6.03 5,000,000 5,000,823
INDUSTRIAL BANK OF JAPAN, LTD.
7/31/95 6.30 5,000,000 5,000,000
ROYAL BANK OF CANADA
10/5/95 6.25 1,000,000 1,000,294
SANWA BANK, LTD.
7/7/95 6.21 3,000,000 3,000,000
SOCIETE GENERALE
8/14/95 6.02 14,000,000 14,000,000
8/21/95 6.00 10,000,000 10,000,000
ANNUALIZED
YIELD AT
DUE TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - CONTINUED
SUMITOMO BANK, LTD.
8/7/95 6.01% $ 5,000,000 $ 5,000,000
8/21/95 6.41 5,000,000 5,000,465
8/22/95 6.03 5,000,000 5,000,000
73,000,163
LONDON BRANCH, EURODOLLAR, DOMESTIC BANKS - 2.6%
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOC.
9/29/95 5.91 5,000,000 5,000,000
11/27/95 6.00 5,000,000 5,000,000
BANK OF NEW YORK
7/17/95 6.15 10,000,000 10,000,000
20,000,000
LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - 3.8%
BANK OF SCOTLAND
7/5/95 6.15 4,000,000 4,000,015
MITSUBISHI BANK, LTD.
8/10/95 6.04 5,000,000 5,000,377
NORDDEUTSCHE LANDESBANK
12/8/95 5.75 5,000,000 4,998,563
SANWA BANK, LTD.
8/7/95 6.02 5,000,000 4,998,917
TORONTO-DOMINION BANK
12/11/95 5.74 10,000,000 10,013,064
29,010,936
PORTLAND BRANCH, EURODOLLAR, FOREIGN BANKS - 0.6%
BANK OF NOVA SCOTIA
7/11/95 6.13 5,000,000 5,000,008
TOTAL CERTIFICATES OF DEPOSIT 157,011,214
COMMERCIAL PAPER - 52.0%
ANZ (DE), INC.
7/7/95 6.52 1,273,000 1,271,653
8/8/95 6.03 220,000 218,611
ABBEY NATIONAL TREASURY SERVICES
8/21/95 6.04 5,000,000 4,957,854
AMERICAN EXPRESS CREDIT CORP.
8/9/95 6.21 5,000,000 4,967,067
8/14/95 6.20 5,000,000 4,962,875
11/9/95 5.89 5,000,000 4,895,382
AMERICAN HOME FOOD PRODUCTS, INC.
7/10/95 6.17 11,000,000 10,983,280
AMERICAN HOME PRODUCTS
8/29/95 6.00 6,000,000 5,941,688
AMERICAN TELEPHONE & TELEGRAPH CO.
9/27/95 6.09 5,000,000 4,927,400
ASSOCIATES CORP. OF NORTH AMERICA
9/1/95 5.98 6,000,000 5,938,930
9/28/95 6.10 5,000,000 4,926,451
BANC ONE CORP.
9/22/95 5.99 5,000,000 4,931,986
BEAR STEARNS COS., INC.
7/12/95 6.14 5,000,000 4,990,757
8/1/95 6.06 6,000,000 5,969,155
8/1/95 6.13 5,000,000 4,974,016
COMMERCIAL PAPER - CONTINUED
ANNUALIZED
YIELD AT
DUE TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
BENEFICIAL CORP.
9/18/95 5.99% $ 5,000,000 $ 4,935,264
9/29/95 5.81 5,000,000 4,928,750
CIT GROUP HOLDINGS, INC.
9/21/95 6.20 5,000,000 4,931,211
CHRYSLER FINANCIAL CORPORATION
7/6/95 6.05 5,000,000 4,995,826
7/12/95 6.05 5,000,000 4,990,803
7/13/95 6.04 2,000,000 1,996,000
7/17/95 6.05 3,000,000 2,991,973
COMMERZBANK U.S. FINANCE, INC.
9/25/95 5.89 5,000,000 4,930,722
9/29/95 5.91 140,000 137,977
9/29/95 6.30 600,000 590,820
10/20/95 6.23 4,000,000 3,925,507
12/15/95 5.76 1,120,000 1,090,905
COMPAGNIE BANCAIRE
7/6/95 6.20 5,000,000 4,995,764
7/12/95 6.15 5,000,000 4,990,742
CORESTATES CAPITAL CORP.
7/8/95 6.01 (a) 5,000,000 5,000,000
7/15/95 6.09 (a) 5,000,000 5,000,000
DEN DANSKE CORP., INC.
7/12/95 6.15 3,000,000 2,994,445
DU PONT (E.I.) DE NEMOURS & CO.
9/19/95 6.09 2,500,000 2,466,833
FORD MOTOR CREDIT CORP.
7/21/95 6.23 5,000,000 4,983,056
8/30/95 6.23 15,000,000 14,848,000
9/11/95 6.25 5,000,000 4,939,100
10/27/95 5.86 6,000,000 5,887,507
FORD MOTOR CREDIT, PLC
8/1/95 6.10 4,500,000 4,476,711
GENERALE BANK
10/17/95 6.07 5,000,000 4,911,200
GENERAL ELECTRIC CAPITAL CORP.
7/3/95 5.97 (a) 5,000,000 5,000,000
7/5/95 6.19 5,000,000 4,996,628
8/1/95 5.94 170,000 169,139
9/15/95 6.68 4,000,000 3,945,787
10/5/95 6.79 2,400,000 2,358,400
10/12/95 6.80 1,000,000 981,403
11/1/95 6.13 10,000,000 9,796,708
GENERAL ELECTRIC CORP.
9/27/95 6.25 10,000,000 9,851,622
GENERAL MOTORS ACCEPTANCE CORP.
7/31/95 6.22 5,000,000 4,974,500
8/2/95 6.19 11,000,000 10,940,453
8/16/95 6.12 6,000,000 5,953,770
8/16/95 6.15 5,000,000 4,961,347
8/22/95 6.10 1,000,000 991,319
9/15/95 6.05 5,000,000 4,936,983
ANNUALIZED
YIELD AT
DUE TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
GEORGIA POWER CO.
7/5/95 6.20% $ 5,000,000 $ 4,996,611
GOLDMAN SACHS GROUP, L.P. (THE)
9/7/95 6.01 10,000,000 9,888,367
9/18/95 6.02 6,000,000 5,922,185
HANSON FINANCE (UK), PLC
8/7/95 6.03 10,000,000 9,938,950
8/22/95 6.04 6,000,000 5,948,477
IBM CORP.
9/1/95 5.97 5,000,000 4,949,194
INTERNATIONAL NEDERLANDEN U.S. FUNDING CORP.
8/28/95 6.35 4,000,000 3,960,367
MERRILL LYNCH & CO., INC.
9/28/95 6.00 5,000,000 4,927,317
MONSANTO CO.
8/14/95 6.19 2,500,000 2,481,453
9/12/95 6.17 1,525,000 1,506,353
12/21/95 5.90 10,000,000 9,724,642
MORGAN STANLEY GROUP, INC.
10/6/95 5.91 5,000,000 4,921,592
NATIONAL & PROVINCIAL BUILDING SOCIETY
10/16/95 5.89 5,350,000 5,258,249
NATIONWIDE BUILDING SOCIETY
8/11/95 6.06 5,000,000 4,966,004
NEW CENTER ASSET TRUST
7/12/95 6.16 5,000,000 4,990,726
7/17/95 6.15 10,000,000 9,973,067
NORWEST CORP.
9/19/95 5.99 400,000 394,773
NORWEST FINANCIAL
7/10/95 6.14 5,000,000 4,992,438
PENNSYLVANIA LIGHT & POWER COMPANY
7/5/95 6.06 1,650,000 1,648,895
7/10/95 6.05 3,200,000 2,196,689
PHILIP MORRIS COS., INC.
9/5/95 6.07 4,500,000 4,450,913
PRUDENTIAL FUNDING CORP.
7/3/95 6.30 10,000,000 9,996,500
SEARS ROEBUCK ACCEPTANCE CORP.
9/18/95 6.00 5,000,000 4,935,154
SHERWOOD MEDICAL COMPANY
8/21/95 5.99 5,000,000 4,957,925
TEXTRON, INC.
7/14/95 6.06 3,500,000 3,492,391
TORONTO DOMINION HOLDINGS USA, INC.
9/11/95 6.11 5,000,000 4,940,200
9/29/95 5.90 10,000,000 9,854,750
TRANSAMERICA FINANCE CORP.
8/7/95 6.03 220,000 218,648
WOOLWICH EQUITABLE BUILDING SOCIETY
10/16/95 5.94 5,000,000 4,913,508
TOTAL COMMERCIAL PAPER 402,000,618
FEDERAL AGENCIES - 3.2%
ANNUALIZED
YIELD AT
DUE TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
FEDERAL FARM CREDIT BANK - AGENCY COUPONS - 0.6%
7/3/95 6.17% (a) $ 5,000,000 $ 4,997,271
FEDERAL NATIONAL MORTGAGE ASSOC. - DISCOUNT NOTES - 2.6%
7/17/95 6.27 5,000,000 4,986,422
9/11/95 6.32 10,000,000 9,877,600
10/20/95 6.04 5,000,000 4,909,350
19,773,372
TOTAL FEDERAL AGENCIES 24,770,643
BANK NOTES - 7.2%
BANK OF NEW YORK
8/28/95 6.35 5,000,000 4,999,748
BOATMEN'S NATIONAL BANK OF ST. LOUIS
9/22/95 6.04 (a) 5,000,000 4,995,859
COMERICA BANK - DETROIT
5/28/96 5.83 5,000,000 5,014,775
FIFTH THIRD BANK - CINCINNATI
10/27/95 6.07 5,000,000 5,001,981
HOUSEHOLD BANK, N.A.
9/21/95 5.93 1,000,000 1,000,000
KEY BANK OF NEW YORK
7/3/95 6.11 (a) 5,000,000 4,999,374
MELLON BANK, N.A.
11/1/95 6.24 5,000,000 5,000,000
NBD BANK, N.A.
10/16/95 6.27 5,000,000 5,000,000
NATIONSBANK OF TEXAS
9/26/95 6.38 5,000,000 5,000,000
10/27/95 6.25 5,000,000 5,000,000
PNC BANK, N.A.
7/4/95 6.15 (a) 5,000,000 4,999,589
U.S. NATIONAL BANK OF OREGON
8/22/95 6.37 5,000,000 5,000,070
TOTAL BANK NOTES 56,011,396
MASTER NOTES (A) - 1.2%
J.P. MORGAN SECURITIES
7/3/95 6.58 9,000,000 9,000,000
MEDIUM-TERM NOTES (A) - 5.9%
ABBEY NATIONAL, NORTH AMERICA
7/3/95 5.97 5,000,000 4,999,151
ABBEY NATIONAL TREASURY SERVICES (C)
9/30/95 6.00 10,000,000 10,000,000
BENEFICIAL CORP.
7/15/95 6.09 5,000,000 4,999,453
DEAN WITTER, DISCOVER & CO.
7/15/95 6.10 5,000,000 5,004,526
GENERAL ELECTRIC CAPITAL CORP.
7/3/95 6.27 5,000,000 4,998,997
ANNUALIZED
YIELD AT
DUE TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
GENERAL MOTORS ACCEPTANCE CORP.
8/7/95 6.25% $ 3,000,000 $ 3,000,000
GOLDMAN SACHS GROUP, L.P. (THE) (C)
9/1/95 6.03 3,000,000 3,000,000
9/16/95 5.95 4,000,000 4,000,000
NORWEST CORP.
9/15/95 6.06 6,000,000 6,000,000
TOTAL MEDIUM-TERM NOTES 46,002,127
SHORT-TERM NOTES (A) - 3.2%
CAPITAL ONE FUNDING CORP.
7/10/95 6.07 4,072,000 4,072,000
SMM TRUST COMPANY (1994-D) (B)
7/28/95 6.17 4,000,000 4,000,000
SMM TRUST COMPANY (1995-I) (B)
7/5/95 6.16 6,000,000 5,998,411
SMM TRUST COMPANY (1995-J) (B)
7/15/95 6.06 11,000,000 11,000,000
TOTAL SHORT-TERM NOTES 25,070,411
MUNICIPAL SECURITIES (A) - 1.1%
GARDENA CALIFORNIA CERTIFICATES OF PARTNERSHIP
7/10/95 6.35 6,550,000 6,550,000
NEW ORLEANS AVIATION BOARD
7/10/95 6.26 1,800,000 1,800,000
TOTAL MUNICIPAL SECURITIES 8,350,000
REPURCHASE AGREEMENTS - 1.7%
MATURITY
AMOUNT
In a joint trading account
(U.S. Government Obligations)
dated 6/30/95 due 7/3/95:
At 6.28% $ 12,806,699 12,800,000
TOTAL INVESTMENTS - 100% $ 773,216,379
Total Cost for Income Tax Purposes - $773,216,379
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due date on these types of
securities reflects the next interest rate reset date or, when applicable,
the final maturity date.
(b) Restricted securities - Investment in securities not registered under
the Securities Act of 1933.
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
SMM Trust Company:
(1994-D) 10/28/94 $ 4,000,000
(1995-I)) 5/25/95 $ 6,000,000
(1995-J) 5/15/95 $ 11,000,000
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $17,000,000 or 2.2% of net
assets.
INCOME TAX INFORMATION
At December 31, 1994, the fund had a capital loss carryforward of
approximately $94,600 of which $4,100, $500, $4,900, $4,300 and $80,800
will expire on December 31, 1995, 1996, 1997, 2000 and 2002, respectively.
VARIABLE INSURANCE PRODUCTS FUND: MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $12,800,000) - See accompanying $ 773,216,379
schedule
Cash 673,210
Receivable for investments sold 104,000
Interest receivable 2,641,686
TOTAL ASSETS 776,635,275
LIABILITIES
Payable for investments purchased $ 7,463,678
Accrued management fee 157,028
Other payables and accrued expenses 64,485
TOTAL LIABILITIES 7,685,191
NET ASSETS $ 768,950,084
Net Assets consist of:
Paid in capital $ 769,022,085
Accumulated net realized gain (72,001
(loss) on investments )
NET ASSETS, for 769,022,085 $ 768,950,084
shares outstanding
NET ASSET VALUE, offering price and redemption price per share ($768,950,084 (divided by) 769,022,085 shares) $1.00
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
INTEREST INCOME $ 22,651,404
EXPENSES
Management fee $ 934,903
Transfer agent fees 176,682
Accounting fees and expenses 52,708
Non-interested trustees' 2,520
compensation
Custodian fees and expenses 36,594
Audit 11,536
Legal 1,454
Miscellaneous 2,459
TOTAL EXPENSES 1,218,856
NET INTEREST INCOME 21,432,548
NET REALIZED GAIN (LOSS) ON 7,601
INVESTMENTS
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 21,440,149
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS END YEAR ENDED
ED DECEMBER 31,
JUNE 30, 1995 1994
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 21,432,548 $ 25,859,424
Net interest income
Net realized gain (loss) 7,601 (80,853
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 21,440,149 25,778,571
Distributions to shareholders from net interest income (21,432,548 (25,859,424
) )
Share transactions at net asset value of $1.00 per share 512,023,023 1,187,546,448
Proceeds from sales of shares
Reinvestment of distributions from net interest income 21,432,548 25,859,424
Cost of shares redeemed (513,118,899 (817,822,836
) )
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES RESULTING FROM SHARE TRANSACTIONS 20,336,672 395,583,036
TOTAL INCREASE (DECREASE) IN NET ASSETS 20,344,273 395,502,183
NET ASSETS
Beginning of period 748,605,811 353,103,628
End of period $ 768,950,084 $ 748,605,811
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
JUNE 30, 1995
(UNAUDITED) 1994 1993 1992 1991 1990
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income from Investment Operations .029 .042 .032 .038 .059 .078
Net interest income
Less Distributions (.029) (.042) (.032) (.038) (.059) (.078)
From net interest income
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN B C 2.95% 4.25% 3.23% 3.90% 6.09% 8.04%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000
omitted) $ 768,950 $ 748,606 $ 353,104 $ 301,002 $ 271,123 $ 254,585
Ratio of expenses to average net
assets .33% A .27% .22% .24% .38% .56%
Ratio of expenses to average net
assets before .33% A .27% .23% .24% .38% .56%
expense reductions
Ratio of net interest income to
average net assets 5.84% A 4.32% 3.16% 3.85% 5.93% 7.76%
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS DO NOT REFLECT CHARGES
ATTRIBUTABLE TO YOUR INSURANCE COMPANY'S SEPARATE ACCOUNT.
INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURNS SHOWN.
C TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
</TABLE>
VARIABLE INSURANCE PRODUCTS FUND: HIGH INCOME PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
JUNE 30, 1995 YEAR YEARS FUND
HIGH INCOME 11.89% 16.87% 11.60%
Merrill Lynch High Yield Master 14.88% 14.23% n/a
Consumer Price Index 3.04% 3.26% 3.57%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. Bond prices, for
example, generally move in the opposite
direction of interest rates. In turn, the share price,
return, and yield of a fund that invests in bonds
will vary. That means if you sell your shares
during a market downturn, you might lose
money. But if you can ride out the market's ups
and downs, you may have a gain.
(checkmark)
You can compare the fund's returns to those of the Merrill Lynch High Yield
Master Index - a broad measure of the high yield bond market. This
benchmark includes reinvested dividends and capital gains, if any.
Comparing the fund's performance to the consumer price index (CPI) helps
show how your fund did compared to inflation. (The CPI returns begin on the
month end closest to the fund's start date).
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.
$10,000 OVER LIFE OF FUND
VIP High Income (4High Yield Maste
09/30/85 10000.00 10000.00
10/31/85 10124.78 10113.02
11/30/85 10270.82 10303.28
12/31/85 10614.12 10604.47
01/31/86 10745.58 10676.44
02/28/86 11109.08 11130.10
03/31/86 11383.10 11373.65
04/30/86 11576.24 11551.26
05/31/86 11753.01 11685.98
06/30/86 11900.72 11804.36
07/31/86 11864.53 11648.95
08/31/86 11912.43 11863.93
09/30/86 12013.59 11962.11
10/31/86 12372.53 12172.57
11/30/86 12412.20 12271.68
12/31/86 12490.69 12337.95
01/31/87 12946.06 12686.81
02/28/87 13170.08 12896.26
03/31/87 13290.04 13038.85
04/30/87 12874.71 12754.50
05/31/87 12755.02 12697.03
06/30/87 13030.49 12872.55
07/31/87 13044.43 12942.59
08/31/87 13152.49 13072.28
09/30/87 12694.49 12771.51
10/31/87 12087.43 12430.27
11/30/87 12443.44 12744.62
12/31/87 12642.60 12913.85
01/31/88 13058.25 13267.23
02/29/88 13449.21 13627.23
03/31/88 13352.58 13604.70
04/30/88 13456.66 13643.99
05/31/88 13436.65 13715.20
06/30/88 13718.27 13977.43
07/31/88 13861.07 14125.13
08/31/88 13794.86 14171.55
09/30/88 13905.45 14314.39
10/31/88 14056.82 14537.41
11/30/88 14003.15 14591.87
12/31/88 14114.42 14653.61
01/31/89 14453.60 14873.37
02/28/89 14524.70 14973.32
03/31/89 14338.06 14960.00
04/30/89 14179.27 15004.15
05/31/89 14441.26 15280.37
06/30/89 14854.88 15496.85
07/31/89 14757.08 15570.24
08/31/89 14671.49 15647.15
09/30/89 14158.14 15498.19
10/31/89 13551.16 15253.06
11/30/89 13562.58 15287.24
12/31/89 13525.40 15273.41
01/31/90 13226.43 14974.91
02/28/90 13022.77 14756.83
03/31/90 12885.36 14956.31
04/30/90 12923.54 15032.30
05/31/90 13189.08 15303.83
06/30/90 13396.83 15600.32
07/31/90 13603.76 15929.99
08/31/90 13376.19 15320.16
09/30/90 13059.02 14653.87
10/31/90 12742.13 14280.96
11/30/90 13041.01 14401.94
12/31/90 13223.36 14609.46
01/31/91 13503.92 14815.98
02/28/91 14252.06 15915.67
03/31/91 14757.05 16599.98
04/30/91 15280.75 17191.13
05/31/91 15505.19 17275.07
06/30/91 15841.85 17622.59
07/31/91 16440.36 18044.84
08/31/91 16664.81 18424.11
09/30/91 17038.88 18658.77
10/31/91 17618.68 19213.23
11/30/91 17768.31 19435.16
12/31/91 17861.83 19660.94
01/31/92 18815.71 20348.35
02/29/92 19498.87 20853.71
03/31/92 20129.17 21144.68
04/30/92 20271.50 21298.58
05/31/92 20515.49 21638.31
06/30/92 20739.15 21907.16
07/31/92 21145.80 22351.02
08/31/92 21593.11 22646.93
09/30/92 21816.77 22904.97
10/31/92 21491.45 22615.68
11/30/92 21755.77 22935.97
12/31/92 21999.76 23231.29
01/31/93 22589.41 23803.34
02/28/93 22974.74 24253.90
03/31/93 23504.92 24674.39
04/30/93 23659.56 24851.50
05/31/93 24013.02 25186.03
06/30/93 24631.57 25659.22
07/31/93 24874.57 25935.02
08/31/93 25139.66 26182.25
09/30/93 25228.03 26311.44
10/31/93 25824.49 26807.08
11/30/93 26067.49 26953.70
12/31/93 26487.22 27223.21
01/31/94 27370.86 27819.81
02/28/94 27338.05 27619.74
03/31/94 26417.09 26719.70
04/30/94 26150.49 26407.45
05/31/94 26198.96 26313.37
06/30/94 26102.02 26893.29
07/31/94 26198.96 27082.30
08/31/94 26198.96 27270.47
09/30/94 26392.85 27260.08
10/31/94 26150.49 27329.36
11/30/94 25932.37 27096.87
12/31/94 26053.55 26906.19
01/31/95 26344.38 27286.38
02/28/95 27248.56 28137.75
03/31/95 27587.86 28529.34
04/30/95 28396.97 29197.31
05/31/95 29127.77 30109.50
06/30/95 29206.07 30339.47
Let's say you invested $10,000 in High Income Portfolio on September 30,
1985, shortly after the fund started. By June 30, 1995, your investment
would have grown to $29,206 - a 192.06% increase. That compares to $10,000
invested in the Merrill Lynch High Yield Master Index, which would have
grown to $30,339 over the same period - a 203.39% increase.
INVESTMENT SUMMARY
TOP FIVE HOLDINGS AS OF JUNE 30, 1995
(BY ISSUER, EXCLUDING REPURCHASE AGREEMENTS) % OF FUND'S
INVESTMENTS
PanAmSat Corp. 12 3/4% 4.2
TransTexas Gas Corp. (various issues) 3.5
Revlon Worldwide Corp. secured 0%, 3/15/98 2.6
Flagstar Corp. 11 1/4%, 11/1/04 2.3
American Financial Corp. (various issues) 2.3
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Media & Leisure 29.9
Finance 9.5
Energy 8.8
Services 6.6
Basic Industries 6.4
QUALITY DIVERSIFICATION AS OF JUNE 30, 1995
(MOODY'S RATINGS) % OF FUND'S
INVESTMENTS
Aaa, Aa, A 0.0
Baa 0.0
Ba 6.4
B 41.9
Caa, Ca, C 16.6
Nonrated 10.4
TABLE EXCLUDES SHORT-TERM INVESTMENTS. UNRATED DEBT SECURITIES THAT ARE
EQUIVALENT TO BA AND BELOW AT JUNE 30, 1995, ACCOUNT FOR 7.9% OF THE FUND'S
INVESTMENTS.
VARIABLE INSURANCE PRODUCTS FUND: HIGH INCOME PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Barry Coffman, Portfolio Manager of High Income Portfolio
Q. HOW HAS THE FUND PERFORMED, BARRY?
A. Although the fund did well relative to its peers, it trailed the
performance of the Merrill Lynch High Yield Master Index, which returned
12.76% and 14.88%, respectively, for the six and 12-month periods ended
June 30, 1995. The index has a larger percentage of Ba-rated bonds than
most high-yield mutual funds, which tend to be more concentrated in B-rated
bonds. Generally speaking, Ba-rated bonds are more sensitive to changing
interest rates, and therefore, benefited more from the recent decline in
interest rates than B-rated bonds. As a result, very few high yield funds
outperformed the index.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. The fund's relatively low weighting in Ba-rated securities was the
primary reason for its underperformance relative to its benchmark during
the most recent period. On the positive side, we have maintained a high
weighting, compared to the benchmark, in deferred coupon securities. These
bonds sell at a deep discount because they do not pay current interest for
some period, usually three to five years. They generally have longer
durations - which measures how sensitive their price is to changes in
interest rates - and therefore, their prices are more volatile. We also
avoided most of the credit disasters that occurred in the market.
Q. WHAT INVESTMENTS HAVE DONE WELL IN THE PAST SIX MONTHS?
A. Revlon continued to benefit from an operational restructuring and the
very successful launch of two key new products: Color Stay Lipstick and Age
Defying Makeup. Our Revlon position is concentrated in the most junior
securities that are most sensitive to changes in credit quality, which has
been a recent plus. Another strong performer was Big Flower Press, a large
commercial printer of advertising inserts, comics and television guides.
The company was helped by the strong growth in advertising and the
synergies it gained from some recent acquisitions. Finally, our
concentration in casinos and hotels did relatively well during the period.
Q. GIVEN THE MARKET'S STRENGTH SO FAR IN 1995, WAS IT DIFFICULT TO FIND
OPPORTUNITIES?
A. Not particularly. The new issues market was active and provided ample
opportunity to selectively add new names to the fund. One example was
PanAmSat Corp., which operates an international satellite communications
system and provides satellite services to the broadcasting and business
communications markets. It currently has two satellites operating and also
has a large backlog of contracted time from companies including ESPN and
Viacom for two new satellites it will be launching later this year. The
company is participating in a joint venture to provide Direct to Home (DTH)
television broadcasting service to Latin America, similar to the Direct TV
service in the United States. Another new issue we purchased was
Stratosphere Corp., a Las Vegas-based casino owned by industry-leader Grand
Casino. These bonds are attractive, in part, because in addition to their
14.25% coupon, they pay additional interest based on a percentage of the
company's cash flow.
Q. WHAT INVESTMENTS DIDN'T FARE AS WELL?
A. The high-yield restaurant sector, in general, did not perform well
during the period due to competitive pressures and a slowing economy. One
of our largest holdings is Flagstar, the parent of Denny's and the largest
franchisee of Hardees. Although Denny's has benefited from an aggressive
remodeling program, Hardees has suffered due to aggressive price promotions
from the major burger chains. Another restaurant chain, American Restaurant
Group, also underperformed partly due to the concentration of its chains in
California, where the economy continues to be weaker than the rest of the
country.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. The probability of the soft landing scenario is increasing, which could
provide a favorable backdrop for the high-yield bond market. Slow economic
growth and low inflation could allow many companies in the high-yield
market to improve their credit quality. Absolute yields remain attractive,
and absent a sharp drop in interest rates from current levels, high-yield
bonds could perform well relative to other fixed-income investments. In my
view, the key is to be selective. I'm focusing on companies that are less
cyclical, or sensitive to the economy, and choosing companies that I think
can perform well in a slow-growth environment.
FUND FACTS
GOAL: seeks high current income by investing
in high yielding, lower-rated fixed-income
securities
START DATE: September 19, 1985
SIZE: as of June 30, 1995, more than $813 million
MANAGER: Barry Coffman, since 1990; joined
Fidelity in 1986
(checkmark)
VARIABLE INSURANCE PRODUCTS FUND: HIGH INCOME PORTFOLIO
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
CORPORATE BONDS - 74.8%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
CONVERTIBLE BONDS - 0.2%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
ELECTRICAL EQUIPMENT - 0.0%
Ampex Corp., 0%, 6/30/97 - $ 469,000 $ 328,685
MEDIA & LEISURE - 0.2%
LODGING & GAMING - 0.2%
Argosy Gaming Co.
12%, 6/1/01 B3 1,290,000 1,290,000
RETAIL & WHOLESALE - 0.0%
GROCERY STORES - 0.0%
Farm Fresh, Inc.
7 1/2%, 3/1/10 B3 186,000 112,264
TOTAL CONVERTIBLE BONDS 1,730,949
NONCONVERTIBLE BONDS - 74.6%
AEROSPACE & DEFENSE - 0.3%
RHI Holdings, Inc.:
11 7/8%, 3/1/99 B2 2,160,000 2,062,800
11 7/8%, 3/1/99 (e) - 550,000 525,250
2,588,050
BASIC INDUSTRIES - 6.3%
CHEMICALS & PLASTICS - 2.1%
American Pacific Corp.
11%, 12/15/02 (f) - 850,000 765,000
Foamex LP 11 7/8%, 10/1/04 B3 5,000,000 4,725,000
Pioneer Americas Acquisition
Corp. 13 3/8%, 4/1/05 (f) B2 10,000,000 10,325,000
Trans Resources, Inc.
14 1/2%, 9/1/96 B2 580,000 585,800
16,400,800
IRON & STEEL - 0.9%
Republic Engineered Steels, Inc.
9 7/8%, 12/15/01 B2 5,230,000 4,772,375
WCI Steel, Inc.
10 1/2%, 3/1/02 B1 2,420,000 2,359,500
7,131,875
METALS & MINING - 0.7%
International Wire Group, Inc.
11 3/4%, 6/1/05 (f) B3 5,850,000 5,886,563
PACKAGING & CONTAINERS - 0.8%
Crown Packaging Holdings Ltd.
0%, 11/1/03 (d) Caa 6,840,000 3,129,300
Grupo Industrial Durango euro
9.6367%, 11/18/96 (g) 4,000,000 3,380,000
6,509,300
PAPER & FOREST PRODUCTS - 1.8%
Indah Kiat International Finance
Co. 11 3/8%, 6/15/99 Ba3 9,000,000 9,022,500
Mail-Well Holdings, Inc.
0%, 2/15/06 (d) - 1,190,000 511,700
Tjiwi Kimia International Finance
Co. 13 1/4%, 8/1/01 B1 4,130,000 4,377,800
13,912,000
TOTAL BASIC INDUSTRIES 49,840,538
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
CONGLOMERATES - 0.6%
Jordan Industries, Inc.:
10 3/8%, 8/1/03 B3 $ 3,155,000 $ 2,902,600
0%, 8/1/05 (d) Caa 3,135,000 1,849,650
4,752,250
CONSTRUCTION & REAL ESTATE - 1.6%
BUILDING MATERIALS - 1.3%
Adience, Inc.
11%, 6/15/02 - 745,921 540,793
Building Materials Corp.,
America 0%, 7/1/04 (d) B1 12,610,000 7,502,950
DAL Tile International, Inc. secured
coupon, 0%, 7/15/98 Caa 3,435,000 2,279,981
10,323,724
REAL ESTATE - 0.3%
Littlefield Co.
10%, 12/31/95 (e) - 2,750,000 2,491,913
TOTAL CONSTRUCTION & REAL ESTATE 12,815,637
DURABLES - 2.9%
AUTOS, TIRES, & ACCESSORIES - 1.9%
Harvard Industries, Inc.
12%, 7/15/04 B2 5,000,000 5,137,500
Poindexter (JB), Inc.
12 1/2%, 5/15/04 B2 10,000,000 9,700,000
14,837,500
TEXTILES & APPAREL - 1.0%
Hat Brands, Inc.
12 5/8%, 9/15/02:
Series B - 1,520,000 1,599,800
Series D - 680,000 715,700
Leslie Fay Cos., Inc. (b)(e):
9.53%, 1/15/00 - 676,319 399,028
10.54%, 1/15/02 - 611,353 299,563
United States Leather, Inc.
10 1/4%, 7/31/03 B2 6,010,000 5,153,575
8,167,666
TOTAL DURABLES 23,005,166
ENERGY - 7.2%
ENERGY SERVICES - 1.0%
Falcon Drilling, Inc.:
9 3/4%, 1/15/01 B2 3,512,000 3,441,760
12 1/2%, 3/15/05 B3 4,000,000 4,160,000
7,601,760
OIL & GAS - 6.2%
Chesapeake Energy Corp.
10 1/2%, 6/1/02 (f) B1 6,000,000 5,910,000
Deeptech International, Inc.
12%, 12/15/00 B3 4,660,000 3,168,800
Mesa Capital Corp.
secured 0%, 6/30/98 (d) Caa 5,710,000 5,181,825
TransTexas Gas Corp.
11 1/2%, 6/15/02 B2 20,000,000 20,450,000
Transamerican Refining
Corp. (g):
0%, 2/15/02 Caa 6,746,000 4,435,495
16 1/2%, 2/15/02 Caa 9,620,000 10,173,150
49,319,270
TOTAL ENERGY 56,921,030
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - 6.0%
INSURANCE - 5.1%
American Annuity Group, Inc.
11 1/8%, 2/1/03 Ba3 $ 3,500,000 $ 3,640,000
American Financial Corp.:
10%, 10/20/99 Ba3 5,000,000 5,037,500
9 3/4%, 4/20/04 Ba3 6,570,000 6,504,300
9 3/4%, 4/20/04 (e) Ba3 6,770,000 6,702,300
American Life Holdings
11 1/4%, 9/15/04 B1 13,350,000 13,884,000
Americo Life, Inc.
9 1/4%, 6/1/05 Ba2 4,900,000 4,557,000
40,325,100
SAVINGS & LOANS - 0.8%
First Nationwide Holdings, Inc.
12 1/4%, 5/15/01 Ba3 5,790,000 6,166,350
SECURITIES INDUSTRY - 0.1%
ECM Corp. extendible
14%, 6/1/02 (f) - 570,198 627,218
TOTAL FINANCE 47,118,668
HEALTH - 0.6%
MEDICAL EQUIPMENT & SUPPLIES - 0.6%
Wright Medical Technology, Inc.,
Series B, 10 3/4%, 7/1/00 B3 5,200,000 5,083,000
HOLDING COMPANIES - 0.1%
New Street Capital Corp.
pay-in-kind (e):
12%, 2/28/98 - 67,416 64,697
Unit 12%, 2/28/98 - 1,123,600 1,078,285
1,142,982
INDUSTRIAL MACHINERY & EQUIPMENT - 3.4%
MVE, Inc. Unit
12 1/2%, 2/15/02 B3 8,545,000 8,886,800
Specialty Equipment Cos., Inc.
11 3/8%, 12/1/03 B3 10,640,000 10,932,600
Thermadyne Holdings Corp.:
10 1/4%, 5/1/02 B3 1,484,000 1,417,220
10 3/4%, 11/1/03 Caa 5,756,000 5,583,320
26,819,940
MEDIA & LEISURE - 24.5%
BROADCASTING - 8.0%
Chancellor Broadcasting
12 1/2%, 10/1/04 B3 6,560,000 6,543,600
Citicasters, Inc.
9 3/4%, 2/15/04 B- 7,812,000 7,792,470
Cooke Media Group, Inc.
11 5/8%, 4/1/99 - 350,000 334,250
Marcus Cable Capital Corp.
0%, 12/15/05 (d)(f) Caa 26,580,000 14,054,175
NWCG Holdings Corp.
0%, 6/15/99 Caa 26,925,000 16,693,500
Peoples Choice TV Corp. Unit
0%, 6/1/04 (d) Caa 11,340,000 5,485,725
Robin Media Group, Inc.
11 1/8%, 4/1/97 - 12,340,000 12,525,100
63,428,820
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
LEISURE DURABLES & TOYS - 1.5%
ICON Health And Fitness, Inc.
13%, 7/15/02 B3 $ 5,890,000 $ 5,948,900
IHF Holdings, Inc.
0%, 11/15/04 (d) Caa 10,250,000 5,637,500
11,586,400
LODGING & GAMING - 9.9%
Bally's Casino Holdings, Inc.
10 1/2%, 6/15/98 B3 12,630,000 8,841,000
Bally Gaming International, Inc.
10 3/8%, 7/15/98 - 3,000,000 3,090,000
Boyd Gaming Corp.
10 3/4%, 9/3/03 B2 7,350,000 7,570,500
GNF Corp., Series B,
10 5/8%, 4/1/03 B2 19,730,000 16,375,900
Grand Casino Resorts, Inc. gtd.
12 1/2%, 2/1/00 Ba3 2,200,000 2,464,000
HMH Properties, Inc.
9 1/2%, 5/15/05 (f) B1 10,000,000 9,700,000
Maritime Group Ltd. pay-in-
kind 14%, 2/15/97 (b) - 1,648,399 741,780
Players International, Inc.
10 7/8%, 4/15/05 (f) Ba3 7,050,000 6,944,250
President Riverboat Casinos
13%, 9/15/01 B 7,000,000 5,950,000
Stratosphere Corp.
14 1/4%, 5/15/02 B2 12,740,000 12,994,800
Trump Plaza Funding, Inc. gtd.
mtg. 10 7/8%, 6/15/01 B3 4,713,000 4,335,960
79,008,190
RESTAURANTS - 5.1%
American Restaurant Group, Inc.:
12%, 9/15/98 B2 3,930,000 3,144,000
12%, 9/15/98 (New) B2 3,580,000 2,864,000
Cafeteria Operators LP
11%, 6/30/98 (b)(e) - 7,000,000 1,750,000
Flagstar Corp.
11 1/4%, 11/1/04 Caa 23,555,000 18,372,900
Host Marriott Travel Plazas, Inc.
9 1/2%, 5/15/05 (f) B1 15,000,000 14,325,000
40,455,900
TOTAL MEDIA & LEISURE 194,479,310
NONDURABLES - 4.2%
BEVERAGES - 0.5%
Heileman Acquisition Corp.
9 5/8%, 1/31/04 B3 6,500,000 4,095,000
HOUSEHOLD PRODUCTS - 3.7%
McAndrews & Forbes Group,
Inc. 12 1/4%, 7/1/96 - 1,360,000 1,360,000
Revlon Consumer Products Corp.
10 1/2%, 2/15/03 B3 7,230,000 7,103,475
Revlon Worldwide Corp. secured
0%, 3/15/98 B3 30,342,000 20,860,125
29,323,600
TOTAL NONDURABLES 33,418,600
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - 5.5%
APPAREL STORES - 2.8%
Apparel Retailers, Inc.
12 3/4%, 8/15/05 Caa $ 11,230,000 $ 6,625,700
Lamonts Apparel Corp.
10 1/4%, 11/1/99 (b)(f) - 2,201,000 1,078,490
Specialty Retailers, Inc.:
10%, 8/15/00 B1 2,890,000 2,759,950
11%, 8/15/03 B3 12,220,000 11,364,600
21,828,740
GENERAL MERCHANDISE STORES - 1.4%
Parisian, Inc.
9 7/8%, 7/15/03 Caa 14,322,000 11,027,940
RETAIL & WHOLESALE, MISCELLANEOUS - 1.3%
Barrys Jewelers, Inc.
11%, 12/22/00 - 1,595,000 1,563,100
Finlay Fine Jewelry Corp.
10 5/8%, 5/1/03 B1 4,960,000 4,786,400
Florists Transworld Delivery, Inc.
14%, 12/15/01 B3 4,500,000 4,297,500
10,647,000
TOTAL RETAIL & WHOLESALE 43,503,680
SERVICES - 5.7%
ADVERTISING - 0.8%
Outdoor Systems, Inc.
10 3/4%, 8/15/03 B2 7,000,000 6,720,000
LEASING & RENTAL - 1.7%
Acme Holdings, Inc.
11 3/4%, 6/1/00 (b) Ca 2,930,000 1,465,000
GPA Delaware, Inc.:
8 1/2%, 3/3/97 Ca 3,500,000 3,176,250
gtd. 8 3/4%, 12/15/98 Caa 990,000 831,600
8 5/8%, 1/15/99 - 2,600,000 2,067,000
Scotsman Group, Inc.
9 1/2%, 12/15/00 B1 3,950,000 3,821,625
Scotsman Holdings, Inc.
pay-in-kind 11%, 3/1/04 - 2,080,752 1,712,521
13,073,996
PRINTING - 1.7%
BFP Holdings Corp.
0%, 4/15/04 (d) Caa 5,000,000 3,300,000
Big Flower Press:
10 3/4%, 8/1/03 B3 3,555,000 3,546,113
Class A, 10 3/4%, 8/1/03 B3 4,910,000 4,897,725
Class B, 10 3/4%, 8/1/03 B3 1,480,000 1,476,300
13,220,138
SERVICES - 1.5%
Protection One Alarm
Monitoring, Inc. Unit
0%, 6/30/05 (d)(f) Caa 1,860,000 12,136,500
TOTAL SERVICES 45,150,634
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - 0.0%
ELECTRONICS - 0.0%
Alpine Group, Inc.
13 1/2%, 1/5/96 (e) Caa $ 130,000 $ 130,000
TRANSPORTATION - 2.6%
AIR TRANSPORTATION - 1.7%
US Air, Inc.:
Series 1993-A1 Pass Thru
Trust 8 5/8%, 9/1/98 B1 5,000,000 4,725,000
9 5/8%, 2/1/01 B3 930,000 804,450
9 5/8%, 9/1/03 B1 2,550,000 2,422,500
10 3/8%, 3/1/13 B1 5,470,000 5,169,150
13,121,100
RAILROADS - 0.9%
Transtar Holdings L.P./Transtar
Cap. Corp., Series B,
0%, 12/15/03 (d) B- 12,270,000 7,239,300
TOTAL TRANSPORTATION 20,360,400
UTILITIES - 3.1%
CELLULAR - 2.5%
Dial Call Communications,
Inc. 0%, 12/15/05 (d) Caa 2,800,000 1,288,000
Dial Page, Inc.
12 1/4%, 2/15/00 Caa 950,000 985,625
Pagemart Nationwide, Inc. Unit
0%, 2/1/05 (d)(f) - 29,020,000 17,629,650
19,903,275
ELECTRIC UTILITY - 0.1%
El Paso Funding Corp.
lease oblig. (b):
9 3/8%, 10/1/96 Ca 790,000 422,650
9.20%, 7/2/97 Ca 380,000 203,300
625,950
GAS - 0.1%
Columbia Gas Systems, Inc.
9%, 8/1/95 (b) B3 670,000 938,000
TELEPHONE SERVICES - 0.4%
Call-Net Enterprises, Inc.
yankee 0%, 12/1/04 (d) B2 330,000 198,000
Pagemart, Inc.
0%, 11/1/03 (d) - 4,820,000 3,048,650
3,246,650
TOTAL UTILITIES 24,713,875
TOTAL NONCONVERTIBLE BONDS 591,843,760
TOTAL CORPORATE BONDS
(Cost $594,159,103) 593,574,709
COMMERCIAL MORTGAGE SECURITIES - 0.4%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
CS First Boston Mortgage
Securities Corp. Commercial
Series 1994-CFB1 Class E,
7.8751%, 1/25/28 (f) Ba2 $ 7,355 $ 5,784
Meritor Mortgage Security Corp.
commercial Series 1987-1
Class B, 9.40%, 2/1/00 (f) - 1,350,000 272,016
SKW Real Estate LP commercial
Series II Class E, 11%,
4/15/05 (f) B 1,500,000 1,500,469
SML, Inc. commercial Series
1994-C1 Class B-3, 11.69%,
9/18/99 - 1,500,000 1,413,750
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $3,126,994) 3,192,019
COMMON STOCKS - 5.5%
SHARES
AEROSPACE & DEFENSE - 0.0%
DEFENSE ELECTRONICS - 0.0%
Tracor, Inc. (a) 18,900 257,513
BASIC INDUSTRIES - 0.1%
IRON & STEEL - 0.1%
WCI Steel, Inc. (a) 67,700 423,125
PAPER & FOREST PRODUCTS - 0.0%
Mail-Well Holdings, Inc. (a) 9,250 55,500
TOTAL BASIC INDUSTRIES 478,625
DURABLES - 0.1%
TEXTILES & APPAREL - 0.1%
Hat Brands, Inc. (warrants) (a)(e) 27,466 302,121
HM/Hat Brands Trust Class I Units (a)(e) 340,000 340,000
642,121
ENERGY - 1.1%
OIL & GAS - 1.1%
Flores & Rucks, Inc. (a) 125,900 1,542,275
TransTexas Gas Corp. (a) 479,600 7,253,950
TOTAL ENERGY 8,796,225
FINANCE - 1.7%
INSURANCE - 1.7%
American Financial Group, Inc. 519,600 13,509,600
SECURITIES INDUSTRY - 0.0%
ECM Corp. LP (f) 3,000 300,000
TOTAL FINANCE 13,809,600
HEALTH - 0.0%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
Wright Medical Technology, Inc.
(warrants) (a) 1,729 285,334
HOLDING COMPANIES - 0.2%
SDW Holdings Corp. (a):
Unit (f) 4,450 1,203,369
(warrants) 3,720 22,320
1,225,689
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
ELECTRICAL EQUIPMENT - 0.1%
Ampex Corp.(a):
Class A 20,681 $ 46,532
Class A (warrants) 57,599 129,598
Class C 230,212 517,977
694,107
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
Terex Corp. (rights) (a) 3,150 788
Thermadyne Holdings Corp. (a) 65,419 924,043
924,831
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,618,938
MEDIA & LEISURE - 1.0%
ENTERTAINMENT - 0.0%
Live Entertainment, Inc. (warrants) (a)(e):
$2.00 232,000 58,000
$2.72 221,765 55,441
113,441
LEISURE & DURABLES - 0.1%
IHF Capital, Inc. (a)(f):
Series H (warrants) 10,250 820,000
Series I (warrants) 5,890 147,250
967,250
LODGING & GAMING - 0.9%
Bally Gaming International, Inc.
(warrants) (a) 90,000 618,750
Hollywood Casino Corp. Class A (a) 139,000 1,233,625
Host Marriott Corp. (a) 383,000 4,069,375
Maritime Group Ltd. (warrants) (a) 17,880 179
Motels of America, Inc. (a) 3,000 225,000
Sun International Hotels Ltd. (a) 15,285 687,825
Sun International Hotels Ltd. Class B (a) 3,209 139,592
6,974,346
PUBLISHING - 0.0%
General Media, Inc. (warrant) (a) 1,310 13,100
TOTAL MEDIA & LEISURE 8,068,137
NONDURABLES - 0.6%
TOBACCO - 0.6%
RJR Nabisco Holdings Corp. 161,400 4,499,025
RETAIL & WHOLESALE - 0.1%
APPAREL STORES - 0.0%
Lamonts Apparel, Inc. (a):
(New) 35,870 13,452
(warrants) 66,214 -
13,452
GROCERY STORES - 0.1%
FF Holdings Corp. (a)(e) 33,900 67,800
Food 4 Less Holdings, Inc.
(warrants) (a) 9,348 283,712
MAFCO (warrants) (a) 59 -
351,512
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Barrys Jewelers, Inc. (a) 45,576 148,122
Barrys Jewelers, Inc. (warrants) (a) 5,697 1,424
Finlay Enterprises, Inc. (a) 2,500 35,000
184,546
TOTAL RETAIL & WHOLESALE 549,510
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 0.4%
LEASING & RENTAL - 0.0%
Scotsman Holdings, Inc. (a) 15,281 $ 199,875
PRINTING - 0.4%
BFP Holdings Class D (a) 160,744 3,214,880
SERVICES - 0.0%
Perry Capital Corp. (warrants) (a)(f) 4,500 22,500
Vestar/LPA Investment Corp. (a) 5,177 129,425
151,925
TOTAL SERVICES 3,566,680
TECHNOLOGY - 0.0%
ELECTRONICS - 0.0%
Berg Electronics Holdings Corp. (a)(f) 20,853 104,265
UTILITIES - 0.0%
CELLULAR - 0.0%
Dial Page, Inc. (warrants) (a) 4,321 5,401
ELECTRIC UTILITY - 0.0%
Eastern Utilities Associates 3 68
Northeast Utilities Associates
(warrants) (a) 21,789 27,236
27,304
GAS - 0.0%
UGI Corp. (warrants) (a) 14,033 2,105
TOTAL UTILITIES 34,810
TOTAL COMMON STOCKS
(Cost $38,165,942) 43,936,472
PREFERRED STOCKS - 7.9%
CONVERTIBLE PREFERRED STOCKS - 0.7%
RETAIL & WHOLESALE - 0.2%
GROCERY STORES - 0.2%
Supermarkets General Holdings Corp.
exchangeable pay-in-kind $3.52 (a) 39,189 1,058,103
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Town & Country Corp. (a) 4,000 3,000
TOTAL RETAIL & WHOLESALE 1,061,103
SERVICES - 0.5%
La Petite Holdings Corp. exchangeable (a) 160,800 4,020,000
TECHNOLOGY - 0.0%
ELECTRONICS - 0.0%
Alpine Group, Inc. cumulative 8% (a) 835 37,575
TOTAL CONVERTIBLE PREFERRED STOCKS 5,118,678
NONCONVERTIBLE PREFERRED STOCKS - 7.2%
BASIC INDUSTRIES - 0.0%
IRON & STEEL - 0.0%
Stelco, Inc. cumulative, Series B, 7.76% 7,207 115,518
PAPER & FOREST PRODUCTS - 0.0%
SD Warren Co. exchangeable
pay-in-kind (a) 3,720 104,160
TOTAL BASIC INDUSTRIES 219,678
SHARES VALUE (NOTE 1)
DURABLES - 0.1%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Harvard Industries, Inc.
pay-in-kind $14.25 (a) 22,739 $ 625,323
ENERGY - 0.5%
OIL & GAS - 0.5%
Gulf Canada Resources Ltd. (a)(e) 31,009 89,151
Gulf Canada Resources Ltd., Series 1,
adj. rate 1,321,942 3,717,962
3,807,113
FINANCE - 1.8%
SAVINGS & LOANS - 1.8%
First Nationwide Bank 11 1/2% 112,852 12,188,016
Greater New York Savings Bank,
Series B, perpetual 12% 78,751 2,165,653
14,353,669
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Ampex Corp. 8% (a)(e) 1,589 911,927
MEDIA & LEISURE - 4.2%
BROADCASTING - 4.2%
PanAmSat Corp. 12 3/4% 32,700 33,190,500
TECHNOLOGY - 0.5%
ELECTRONICS - 0.5%
Berg Electronics Holding Corp.,
Series E, $3.4687 157,433 4,250,691
TOTAL NONCONVERTIBLE PREFERRED STOCKS 57,358,901
TOTAL PREFERRED STOCKS
(Cost $60,943,714) 62,477,579
PURCHASED BANK DEBT - 0.1%
PRINCIPAL
AMOUNT
Leslie Fay Cos., Inc.:
revolving loan $ 685,856 404,655
term loan 777,600 458,784
TOTAL PURCHASED BANK DEBT
(Cost $1,190,771) 863,439
REPURCHASE AGREEMENTS - 11.3%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 6.22%
dated 6/30/95 due 7/3/95 $ 89,902,575 $ 89,856,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $787,442,524) $ 793,900,218
LEGEND
(a) Non-income producing
(b) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
(c) Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
(d) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(e) Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
ACQUISITION ACQUISITION
SECURITY DATE COST
Alpine Group, Inc.
13 1/2%, 1/5/96 1/4/95 $ 128,339
American Financial Corp.
9 3/4%, 4/20/04 5/24/95 $ 6,634,600
Ampex Corp. 8% 2/16/95 $ 834,225
Cafeteria Operators LP
11%, 6/30/98 6/24/93 $ 5,600,000
FF Holdings Corp. 10/2/92 to 1/14/94 $ 135,753
Gulf Canada Resources
Ltd. 10/15/93 $ 76,940
Hat Brands,
Inc. (warrants) 9/2/92 to 2/23/94 $ -
HM/Hat Brands Trust
Class I Units 2/22/94 $ 340,000
Leslie Fay Cos., Inc.:
9.53%, 1/15/00 7/19/93 $ 512,312
10.54%, 1/15/02 7/19/93 to 11/11/93 $ 404,156
Littlefield Co.
10%, 12/31/95 2/28/94 $ 2,750,000
Live Entertainment, Inc.
(warrants):
$2.00 3/23/93 $ 220,717
$2.72 3/23/93 $ 131,863
New Street Capital Corp.
pay-in-kind:
12%, 2/28/98 2/15/95 $ 67,416
Unit 12%, 2/28/98 2/25/94 to 9/1/94 $ 1,123,600
RHI Holdings, Inc.
11 7/8%, 3/1/99 10/15/92 $ 495,000
(f) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $103,757,499 or 12.8% of net
assets.
(g) 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 $643,634,101 and $467,491,408, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $21,896 for the period (see
Note 3 of Notes to the Financial Statements).
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 0.0% AAA, AA, A 0.0%
Baa 0.0% BBB 0.0%
Ba 6.4% BB 17.3%
B 41.9% B 41.6%
Caa 16.3% CCC 4.8%
Ca, C 0.3% CC, C 0.0%
D 0.4%
The percentage not rated by either S&P or Moody's amounted to 7.9%
including long-term debt categorized as other securities. FMR has
determined that unrated debt securities that are lower quality account for
7.9% of the total value of investment in securities.
INCOME TAX INFORMATION
At June 30, 1995, the aggregate cost of investment securities for income
tax purposes was $787,696,044. Net unrealized appreciation aggregated
$6,204,174, of which $27,367,484 related to appreciated investment
securities and $21,163,310 related to depreciated investment securities.
At December 31, 1994, the fund had a capital loss carryforward of
approximately $1,148,000 all of which will expire on December 31, 2002.
VARIABLE INSURANCE PRODUCTS FUND: HIGH INCOME PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $89,856,000) (cost $787,442,524) - $ 793,900,218
See accompanying schedule
Cash 506,521
Receivable for investments sold 10,050,335
Receivable for fund shares sold 5,462,661
Dividends receivable 1,104,845
Interest receivable 12,928,622
TOTAL ASSETS 823,953,202
LIABILITIES
Payable for investments purchased $ 9,912,131
Payable for fund shares redeemed 178,315
Accrued management fee 405,377
Other payables and accrued expenses 77,305
TOTAL LIABILITIES 10,573,128
NET ASSETS $ 813,380,074
Net Assets consist of:
Paid in capital $ 767,990,586
Undistributed net investment income 33,139,910
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 5,795,848
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 6,453,730
NET ASSETS, for 72,678,030 shares outstanding $ 813,380,074
NET ASSET VALUE, offering price and redemption price per share ($813,380,074 (divided by) 72,678,030 shares) $11.19
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
INVESTMENT INCOME $ 2,728,599
Dividends
Interest 33,425,785
TOTAL INCOME 36,154,384
EXPENSES
Management fee $ 2,138,740
Transfer agent fees 183,111
Accounting fees and expenses 121,670
Non-interested trustees' compensation 1,780
Custodian fees and expenses 6,018
Audit 17,965
Interest 2,621
Total expenses before reductions 2,471,905
Expense reductions (5,422 2,466,483
)
NET INVESTMENT INCOME 33,687,901
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 7,181,679
Foreign currency transactions (978 7,180,701
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 39,872,106
Assets and liabilities in foreign currencies (150 39,871,956
)
NET GAIN (LOSS) 47,052,657
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 80,740,558
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
1995 1994
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 33,687,901 $ 43,091,356
Net investment income
Net realized gain (loss) 7,180,701 (726,075
)
Change in net unrealized appreciation (depreciation) 39,871,956 (49,793,238
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 80,740,558 (7,427,957
)
Distributions to shareholders (43,871,918 (30,631,598
From net investment income ) )
From net realized gain - (15,525,605
)
TOTAL DISTRIBUTIONS (43,871,918 (46,157,203
) )
Share transactions 333,374,520 498,543,147
Net proceeds from sales of shares
Reinvestment of distributions 43,871,918 46,157,203
Cost of shares redeemed (170,151,760 (385,629,739
) )
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 207,094,678 159,070,611
TOTAL INCREASE (DECREASE) IN NET ASSETS 243,963,318 105,485,451
NET ASSETS
Beginning of period 569,416,756 463,931,305
End of period (including undistributed net investment income of $33,139,910 and $42,834,969,
respectively) $ 813,380,074 $ 569,416,756
OTHER INFORMATION
Shares
Sold 31,093,586 45,102,882
Issued in reinvestment of distributions 4,326,619 4,073,892
Redeemed (15,728,132 (34,899,979
) )
Net increase (decrease) 19,692,073 14,276,795
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED JUNE 30,
1995
SELECTED PER-SHARE DATA (UNAUDITED) 1994 1993 D 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.750 $ 11.990 $ 10.820 $ 9.550 $ 7.070 $ 8.110
Income from Investment Operations .428 .770 .728 .790 .890 .858
Net investment income
Net realized and unrealized gain (loss) .792 (.910) 1.332 1.290 1.590 (1.040)
Total from investment operations 1.220 (.140) 2.060 2.080 2.480 (.182)
Less Distributions (.780) (.730) (.794) (.810) - (.858)
From net investment income
In excess of net investment income - - (.036) - - -
From net realized gain on investments - (.370) (.060) - - -
Total distributions (.780) (1.100) (.890) (.810) - (.858)
Net asset value, end of period $ 11.190 $ 10.750 $ 11.990 $ 10.820 $ 9.550 $ 7.070
TOTAL RETURN B, C 12.10% (1.64) 20.40% 23.17% 35.08% (2.23)
% %
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 813,380 $ 569,417 $ 463,931 $ 200,591 $ 70,060 $ 29,990
Ratio of expenses to average net assets .70% .71% .64% .67% .97% 1.00%
A
Ratio of expenses to average net assets before expense .70% .71% .66% .67% .97% 1.12%
reductions A
Ratio of net investment income to average net assets 9.58% 8.75% 8.69% 10.98% 12.94% 11.36%
A
Portfolio turnover rate 154% 122% 155% 160% 154% 156%
A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO
YOUR INSURANCE COMPANY'S SEPARATE
ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURNS SHOWN.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF
NOTES TO THE FINANCIAL
STATEMENTS).
D EFFECTIVE JANUARY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN,
AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES.
</TABLE>
VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
JUNE 30, 1995 YEAR YEARS FUND
Equity-Income 24.00% 15.06% 12.30%
S&P 500 26.07% 12.09% 13.58%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of how
it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. In turn, the share
price and return of a fund that invests in stocks
will vary. That means if you sell your shares
during a market downturn, you might lose
money. But if you can ride out the market's ups
and downs, you may have a gain.
(checkmark)
You can compare these figures to the performance of the Standard & Poor's
Composite Index of 500 stocks - a common proxy for the U.S. stock market.
This benchmark 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, 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.
$10,000 OVER LIFE OF FUND
VIP Equity Income (Standard & Poor's 50
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 11498.86 12510.26
06/30/87 11738.55 13142.03
07/31/87 12185.73 13808.33
08/31/87 12521.12 14323.38
09/30/87 12258.32 14009.70
10/31/87 9866.20 10992.01
11/30/87 9424.74 10086.27
12/31/87 9906.52 10853.84
01/31/88 10611.13 11310.78
02/29/88 11136.95 11837.86
03/31/88 10943.07 11472.07
04/30/88 11124.21 11599.41
05/31/88 11273.39 11700.33
06/30/88 11914.76 12237.37
07/31/88 11893.18 12190.87
08/31/88 11688.12 11776.38
09/30/88 12035.42 12278.06
10/31/88 12243.12 12619.39
11/30/88 12046.36 12438.93
12/31/88 12156.33 12656.61
01/31/89 12907.13 13583.07
02/28/89 12840.88 13244.86
03/31/89 13119.01 13553.46
04/30/89 13625.32 14256.89
05/31/89 14030.37 14834.29
06/30/89 14039.98 14749.73
07/31/89 14858.50 16081.64
08/31/89 15097.24 16396.84
09/30/89 14927.51 16329.61
10/31/89 14066.31 15950.76
11/30/89 14146.69 16276.16
12/31/89 14264.74 16666.78
01/31/90 13301.38 15548.44
02/28/90 13380.20 15749.02
03/31/90 13402.27 16166.37
04/30/90 12937.59 15762.21
05/31/90 13793.57 17299.02
06/30/90 13656.23 17181.39
07/31/90 13322.25 17126.41
08/31/90 12258.45 15578.18
09/30/90 11307.54 14819.52
10/31/90 11019.21 14755.80
11/30/90 11808.98 15709.03
12/31/90 12083.75 16147.31
01/31/91 12731.78 16851.33
02/28/91 13608.52 18056.20
03/31/91 13890.81 18493.16
04/30/91 13955.72 18537.54
05/31/91 14721.66 19338.37
06/30/91 14119.72 18452.67
07/31/91 14920.19 19312.56
08/31/91 15235.12 19770.27
09/30/91 15130.56 19440.11
10/31/91 15382.51 19700.60
11/30/91 14719.47 18906.67
12/31/91 15882.70 21069.59
01/31/92 16097.15 20677.70
02/29/92 16619.87 20946.51
03/31/92 16416.22 20538.05
04/30/92 16930.49 21141.87
05/31/92 17065.83 21245.47
06/30/92 16916.41 20928.91
07/31/92 17434.82 21784.90
08/31/92 17052.84 21338.31
09/30/92 17229.86 21590.10
10/31/92 17436.12 21665.67
11/30/92 18068.66 22404.47
12/31/92 18564.83 22680.04
01/31/93 19119.01 22870.55
02/28/93 19548.49 23181.59
03/31/93 20131.05 23670.73
04/30/93 20047.35 23097.89
05/31/93 20410.07 23716.92
06/30/93 20650.14 23785.70
07/31/93 20931.09 23690.55
08/31/93 21731.81 24588.43
09/30/93 21648.73 24399.09
10/31/93 21846.69 24904.16
11/30/93 21464.91 24667.57
12/31/93 21961.06 24966.04
01/31/94 22928.26 25814.89
02/28/94 22337.82 25115.31
03/31/94 21403.32 24020.28
04/30/94 22140.85 24327.74
05/31/94 22351.57 24726.71
06/30/94 22213.48 24120.91
07/31/94 22955.44 24912.07
08/31/94 24136.53 25933.47
09/30/94 23741.11 25298.10
10/31/94 24228.42 25867.31
11/30/94 23436.54 24925.22
12/31/94 23512.77 25294.86
01/31/95 23880.40 25950.76
02/28/95 24790.97 26962.06
03/31/95 25646.99 27757.71
04/30/95 26360.31 28575.17
05/31/95 27154.68 29717.32
06/30/95 27544.83 30407.65
Let's say you invested $10,000 in Equity-Income Portfolio on October 9,
1986, when the fund started. By June 30, 1995, your investment would have
grown to $27,545 - a 175.45% increase. That compares to $10,000 invested in
the S&P 500, which would have grown to $30,408 over the same period - a
204.08% increase.
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Philip Morris Companies, Inc. 4.2
Federal National Mortgage Association 2.8
International Business Machines Corp. 2.1
American Express Co. 2.1
British Petroleum PLC ADR 2.0
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Finance 18.0
Energy 10.1
Nondurables 8.8
Basic Industries 7.7
Industrial Machinery & Equipment 7.3
ASSET ALLOCATION AS OF JUNE 30, 1995*
Row: 1, Col: 1, Value: 7.3
Row: 1, Col: 2, Value: 6.2
Row: 1, Col: 3, Value: 86.5
Stocks 86.5%
Bonds 6.2%
Short-term investments 7.3%
FOREIGN INVESTMENTS 6.2%
*
VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Bettina Doulton, Portfolio Manager of Equity-Income
Portfolio
Q. BETTINA, HOW DID THE FUND PERFORM?
A. Although the fund did well relative to its peers, it slightly trailed
the performance of the Standard & Poor's 500 stock index for the six- and
12-month periods ended June 30, 1995. The index had total returns of 20.21%
and 26.07% for those periods, respectively. Because this recent stock
market rally was quite narrow - led by a few sectors, namely technology,
financials and the large-cap and blue-chip stocks - the average stock
mutual fund has not topped the performance of the index thus far in 1995.
Q. THE STOCK MARKET SHOWED A RENEWED VIGOR OVER THE PAST SIX MONTHS. WHAT
ACCOUNTED FOR THIS?
A. The market's strength was driven by investors' belief that the Federal
Reserve Board would manage the economy to a soft landing - steady, albeit
slower, economic growth and continued low inflation. If achieved, those
conditions are ideal for Corporate America to sustain strong profit growth.
During the six-month period, corporate earnings reports were excellent,
which provided the fuel for stock prices to move higher. Excluding the
consistently outstanding performance of the technology and financial
sectors, the market has been characterized by rapid industry rotation.
Investors have spent the past six months racing from one industry to the
next, trying to stay one step ahead of the crowd. Sometimes, the fund was
in the right place at the right time, and sometimes it wasn't.
Q. WHAT CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. Several of the fund's largest holdings have driven returns recently.
Highlights include Philip Morris. The stock has been rewarded for the
company's strong profit growth and free cash flow; both are attributable to
terrific results in the company's domestic and international tobacco
businesses, which more than offset mediocre results in its food division.
Second in line is the Federal National Mortgage Association (Fannie Mae).
Although its stock price suffered a significant setback last fall, it has
since recovered as conditions in the secondary mortgage market have turned
more favorable. IBM was another strong performer. The company has done an
excellent job cutting costs and cleaning up its balance sheet. In addition,
global economic growth and wide acceptance of the company's new products
have contributed to accelerating revenue growth. Finally, in the energy
sector, the energy service company Schlumberger performed well. It
benefited from improving worldwide supply/demand dynamics for oil and
corporate restructuring efforts. Elsewhere in the energy sector, however,
British Petroleum (BP) and Amerada Hess have been somewhat disappointing in
terms of stock performance. Both are restructuring stories; BP's stock may
just be taking a breather after making significant gains, while Amerada
Hess' turnaround may be just taking a bit longer than investors had
expected.
Q. YOU MORE THAN DOUBLED THE FUND'S STAKE IN FINANCIAL STOCKS; THEY WENT
FROM 7.1% OF THE FUND SIX MONTHS AGO TO 18.0% ON JUNE 30 . . .
A. Recent purchases of bank stocks made up most of that increase. Along
with the diversified financial services companies such as American Express
and Fannie Mae, banks had a strong, if volatile, run. My only regret is not
owning more of them early in the period, when they began to outperform.
Prices did fall in the spring, however, which allowed me to buy stocks such
as Chemical Banking and BankAmerica off their highs. In the coming months,
I expect the market to drive bank stock valuations - prices relative to
earnings - higher. That's because earnings are becoming more consistent,
the industry is consolidating, and companies are using excess capital to
repurchase shares of their own stocks.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. When interest rates fall, as they've done over the past few months, the
market usually rewards stocks with higher valuations. However, we have to
keep in mind that the economy has slowed, which could negatively affect
corporate earnings going forward. The 64-thousand-dollar question then
becomes: will the market's willingness to drive up valuations and look
toward an economic resurgence be enough to offset the negative effects of
potential short-term earnings disappointments? I'm afraid not. Companies
that report less-than-expected earnings growth in the coming months will
most likely pay dearly with falling stock prices. In light of this, I plan
to focus intensely on owning companies that trade at attractive valuations,
offer good prospects for higher earnings through 1996, and are working to
enhance shareholder value.
FUND FACTS
GOAL: to provide current income and increase
the value of the fund's shares
START DATE: October 9, 1986
SIZE: as of June 30, 1995, more than $3.4 billion
MANAGER: Bettina Doulton, since 1993;
manager, Fidelity Value Fund, since March
1995; Fidelity Advisor Equity-Income Fund,
since 1993; joined Fidelity in 1986
(checkmark)
VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.3%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 5.7%
AEROSPACE & DEFENSE - 3.8%
Alliant Techsystems, Inc. (a) 421,700 $ 17,605,959
Boeing Co. 353,800 22,156,725
General Motors Corp. Class H 426,200 16,834,900
Lockheed Martin Corp. 434,803 27,446,939
McDonnell Douglas Corp. 131,000 10,054,250
Rockwell International Corp. 429,600 19,654,200
Sundstrand Corp. 183,000 10,934,250
Thiokol Corp. 186,400 5,638,600
130,325,823
DEFENSE ELECTRONICS - 1.4%
Litton Industries, Inc. (a) 268,700 9,908,313
Loral Corp. 214,700 11,110,725
Raytheon Co. 342,300 26,571,038
47,590,076
SHIP BUILDING & REPAIR - 0.5%
General Dynamics Corp. 420,400 18,655,250
TOTAL AEROSPACE & DEFENSE 196,571,149
BASIC INDUSTRIES - 7.5%
CHEMICALS & PLASTICS - 4.7%
du Pont (E.I.) de Nemours & Co. 571,100 39,263,125
Grace (W.R.) & Co. 503,600 30,908,450
Hercules, Inc. 810,900 39,531,375
Nalco Chemical Co. 462,300 16,816,163
Raychem Corp. 284,300 10,910,013
Union Carbide Corp. 713,100 23,799,713
161,228,839
IRON & STEEL - 0.1%
Nucor Corp. 38,600 2,065,100
METALS & MINING - 1.3%
Alcan Aluminium Ltd. 746,183 22,562,179
Aluminum Co. of America 467,200 23,418,400
45,980,579
PAPER & FOREST PRODUCTS - 1.4%
Scott Paper Co. 966,600 47,846,700
TOTAL BASIC INDUSTRIES 257,121,218
CONGLOMERATES - 2.8%
Allied-Signal, Inc. 382,600 17,025,700
GenCorp, Inc. 33,600 361,200
Tyco International Ltd. 857,071 46,281,834
United Technologies Corp. 398,900 31,164,063
94,832,797
CONSTRUCTION & REAL ESTATE - 0.2%
REAL ESTATE INVESTMENT TRUSTS - 0.2%
Starwood Lodging Trust combined
certificate (SBI) 125,900 2,909,045
Storage Equities, Inc. 145,800 2,387,475
5,296,520
DURABLES - 2.6%
AUTOS, TIRES, & ACCESSORIES - 1.6%
Chrysler Corp. 140,600 6,731,225
Dana Corp. 438,200 12,543,475
General Motors Corp. 269,800 12,646,875
Johnson Controls, Inc. 61,100 3,452,150
PACCAR, Inc. 93,500 4,371,125
Snap-on Tools Corp. 374,000 14,492,500
54,237,350
SHARES VALUE (NOTE 1)
DURABLES - CONTINUED
CONSUMER ELECTRONICS - 0.7%
Black & Decker Corp. 222,600 $ 6,872,775
Whirlpool Corp. 341,200 18,766,000
25,638,775
HOME FURNISHINGS - 0.1%
Heilig-Meyers Co. 104,700 2,669,850
TEXTILES & APPAREL - 0.2%
Westpoint Stevens, Inc. Class A (a) 397,100 7,098,163
TOTAL DURABLES 89,644,138
ENERGY - 9.7%
ENERGY SERVICES - 3.1%
Baker Hughes, Inc. 521,800 10,696,900
Halliburton Co. 959,000 34,284,250
Helmerich & Payne, Inc. 130,400 3,846,800
McDermott International, Inc. 575,000 13,871,875
Schlumberger Ltd. 691,300 42,947,013
105,646,838
OIL & GAS - 6.6%
Amerada Hess Corp. 929,700 45,439,088
British Petroleum PLC ADR 823,528 70,514,585
Canada Occidental Petroleum Ltd. 239,500 7,438,025
Coastal Corp. (The) 459,800 13,966,425
Kerr-McGee Corp. 157,400 8,440,575
Mobil Corp. 353,700 33,955,200
Occidental Petroleum Corp. 1,047,000 23,950,125
Tosco Corp. 279,100 8,896,313
Total SA:
Class B 210,425 12,691,129
sponsored ADR 129,500 3,917,375
229,208,840
TOTAL ENERGY 334,855,678
FINANCE - 18.0%
BANKS - 6.6%
Bank of Boston Corp. 482,800 18,105,000
Bank of New York Co., Inc. 163,000 6,581,125
BankAmerica Corp. 511,100 26,896,638
Bankers Trust New York Corp. 430,400 26,684,800
Chase Manhattan Corp. 480,041 22,561,927
Chemical Banking Corp. 670,100 31,662,225
Citicorp 647,300 37,462,488
First Chicago Corp. 119,100 7,131,113
First Union Corp. 192,700 8,719,675
Fleet Financial Group, Inc. 328,900 12,210,413
Mellon Bank Corp. 59,600 2,480,850
NationsBank Corp. 35,400 1,898,325
Republic New York Corp. 230,700 12,919,200
Shawmut National Corp. 345,200 11,003,250
226,317,029
CREDIT & OTHER FINANCE - 2.8%
American Express Co. 2,012,672 70,695,104
Countrywide Credit Industries, Inc. 886,700 18,620,700
Greenpoint Financial Corp. 362,900 8,573,513
97,889,317
FEDERAL SPONSORED CREDIT - 4.1%
Federal Home Loan Mortgage
Corporation 625,400 42,996,250
Federal National Mortgage Association 1,023,900 96,630,563
139,626,813
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
INSURANCE - 3.4%
Allstate Corp. 182,900 $ 5,418,413
American International Group, Inc. 197,200 22,480,800
American Reinsurance Corp. 11,300 420,925
General Re Corp. 193,700 25,931,588
Loews Corp. 266,500 32,246,500
PMI Group, Inc. 100,600 4,363,525
Reliastar Financial Corp. 252,100 9,642,825
Travelers, Inc. (The) 359,233 15,716,458
116,221,034
SAVINGS & LOANS - 0.3%
Ahmanson (H.F.) & Co. 273,900 6,025,800
Charter One Financial Corp. 162,000 3,969,000
9,994,800
SECURITIES INDUSTRY - 0.8%
Merrill Lynch & Co., Inc. 522,600 27,436,500
TOTAL FINANCE 617,485,493
HEALTH - 4.3%
DRUGS & PHARMACEUTICALS - 1.8%
Allergan, Inc. 340,100 9,225,213
American Home Products Corp. 360,000 27,855,000
Pfizer, Inc. 297,800 13,754,638
SmithKline Beecham PLC ADR 266,000 12,036,500
62,871,351
MEDICAL EQUIPMENT & SUPPLIES - 1.7%
Baxter International, Inc. 971,300 35,331,038
Beckman Instruments, Inc. 800 22,300
I-Stat Corp. (a) 173,100 6,318,150
Puritan Bennett Corp. 257,500 9,945,938
St. Jude Medical, Inc. 105,400 5,283,175
56,900,601
MEDICAL FACILITIES MANAGEMENT - 0.8%
Columbia/HCA Healthcare Corp. 621,800 26,892,850
TOTAL HEALTH 146,664,802
INDUSTRIAL MACHINERY & EQUIPMENT - 7.2%
ELECTRICAL EQUIPMENT - 1.0%
Emerson Electric Co. 211,700 15,136,550
General Electric Co. 175,500 9,893,813
Philips Electronics NV 196,600 8,404,650
Philips Electronics NV (Bearer) 45,200 1,915,824
35,350,837
INDUSTRIAL MACHINERY & EQUIPMENT - 3.5%
Caterpillar, Inc. 415,100 26,670,175
Cooper Industries, Inc. 467,000 18,446,500
Deere & Co. 474,400 40,620,500
Dover Corp. 145,100 10,556,025
Ingersoll-Rand Co. 574,300 21,966,975
Varity Corp. (a) 62,800 2,763,200
121,023,375
POLLUTION CONTROL - 2.7%
Browning-Ferris Industries, Inc. 870,700 31,454,038
Safety Kleen Corp. 583,600 9,410,550
WMX Technologies, Inc. 1,537,600 43,629,400
Wheelabrator Technologies, Inc. 453,200 6,967,950
91,461,938
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 247,836,150
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - 2.1%
BROADCASTING - 1.2%
Viacom, Inc. Class B (non-vtg.) (a) 851,614 $ 39,493,599
PUBLISHING - 0.9%
Meredith Corp. 102,000 2,588,250
News Corp. Ltd.:
ADR 741,700 16,780,963
(vtg.) pfd. sponsored ADR 74,900 1,498,000
Times Mirror Co. Class A 461,800 11,025,475
31,892,688
TOTAL MEDIA & LEISURE 71,386,287
NONDURABLES - 8.6%
BEVERAGES - 0.9%
PepsiCo, Inc. 647,100 29,523,938
FOODS - 0.6%
ConAgra, Inc. 483,700 16,869,038
Dole Food, Inc. 157,600 4,590,100
21,459,138
HOUSEHOLD PRODUCTS - 1.3%
Avon Products, Inc. 285,480 19,127,160
First Brands Corp. 329,800 14,140,175
Rubbermaid, Inc. 168,800 4,684,200
Tambrands, Inc. 172,300 7,365,825
45,317,360
TOBACCO - 5.8%
Imasco Ltd. 1,453,600 25,815,296
Philip Morris Companies, Inc. 1,927,300 143,342,938
RJR Nabisco Holdings Corp. 1,054,639 29,398,062
198,556,296
TOTAL NONDURABLES 294,856,732
RETAIL & WHOLESALE - 3.2%
APPAREL STORES - 0.4%
Limited, Inc. (The) 618,400 13,604,800
GENERAL MERCHANDISE STORES - 2.1%
Dayton Hudson Corp. 293,400 21,051,450
May Department Stores Co. (The) 95,700 3,983,513
Wal-Mart Stores, Inc. 1,604,500 42,920,375
Woolworth Corp. 322,200 4,873,275
72,828,613
GROCERY STORES - 0.7%
Fleming Companies, Inc. 230,445 6,106,793
Great Atlantic & Pacific Tea Co., Inc. 397,600 10,486,700
Vons Companies, Inc. (a) 384,200 7,732,025
24,325,518
TOTAL RETAIL & WHOLESALE 110,758,931
SERVICES - 0.4%
PRINTING - 0.2%
Wallace Computer Services, Inc. 168,200 6,454,675
SERVICES - 0.2%
ADT Ltd. (a) 640,900 7,530,575
TOTAL SERVICES 13,985,250
TECHNOLOGY - 4.9%
COMPUTERS & OFFICE EQUIPMENT - 3.9%
Hewlett-Packard Co. 405,000 30,172,500
International Business Machines Corp. 755,700 72,547,200
Pitney Bowes, Inc. 792,200 30,400,675
133,120,375
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONIC INSTRUMENTS - 0.2%
Perkin-Elmer Corp. 226,200 $ 8,030,100
ELECTRONICS - 0.8%
AMP, Inc. 385,600 16,291,600
Kemet Corp. 46,700 2,451,750
Thomas & Betts Corp. 143,700 9,825,488
28,568,838
TOTAL TECHNOLOGY 169,719,313
TRANSPORTATION - 1.8%
RAILROADS - 1.8%
Burlington Northern, Inc. 534,200 33,854,925
CSX Corp. 195,300 14,671,913
Southern Pacific Rail Corp. (a) 919,300 14,478,975
TOTAL TRANSPORTATION 63,005,813
UTILITIES - 6.3%
GAS - 0.5%
Williams Companies, Inc. 489,200 17,060,850
TELEPHONE SERVICES - 5.8%
Ameritech Corp. 1,067,900 46,987,600
Bell Atlantic Corp. 210,100 11,765,600
BellSouth Corp. 576,200 36,588,700
Koninklijke PPT Nederland 165,600 5,959,760
Koninklijke PPT Nederland (a)(d) 104,400 3,757,240
NYNEX Corp. 1,200,400 48,316,100
SBC Communications, Inc. 871,300 41,495,663
Southern New England
Telecommunications Corp. 175,700 6,193,425
201,064,088
TOTAL UTILITIES 218,124,938
TOTAL COMMON STOCKS
(Cost $2,563,116,541) 2,932,145,209
PREFERRED STOCKS - 1.2%
CONVERTIBLE PREFERRED STOCKS - 0.8%
DURABLES - 0.3%
AUTOS, TIRES, & ACCESSORIES - 0.3%
Chrysler Corp., Series A, $4.625 (d) 85,200 11,374,200
ENERGY - 0.4%
ENERGY SERVICES - 0.1%
Noble Drilling Corp. $1.50 119,100 2,828,625
OIL & GAS - 0.3%
Atlantic Richfield Co.
exchangeable $.5575 431,300 11,213,800
TOTAL ENERGY 14,042,425
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Westinghouse Electric Corp. $1.30 (d) 351,500 5,140,688
TOTAL CONVERTIBLE PREFERRED STOCKS 30,557,313
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONCONVERTIBLE PREFERRED STOCKS - 0.4%
MEDIA & LEISURE - 0.4%
PUBLISHING - 0.4%
News Corp. Ltd. (ltd. vtg.) 2,510,505 $ 12,393,685
UTILITIES - 0.0%
ELECTRIC UTILITY - 0.0%
Gulf States Utilities Co., Series B,
adj. rate 586 28,348
TOTAL NONCONVERTIBLE PREFERRED STOCKS 12,422,033
TOTAL PREFERRED STOCKS
(Cost $39,195,081) 42,979,346
CORPORATE BONDS - 2.4%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (C)
CONVERTIBLE BONDS - 0.8%
CONSTRUCTION & REAL ESTATE - 0.1%
REAL ESTATE INVESTMENT TRUSTS - 0.1%
Centerpoint Properties 8.22%,
1/15/04 - $ 1,510,000 1,683,650
Liberty Property LP 8%, 7/1/01 - 750,000 735,000
Sizeler Property Investors, Inc.
8%, 7/15/03 - 1,500,000 1,312,500
TOTAL CONSTRUCTION & REAL ESTATE 3,731,150
HEALTH - 0.6%
DRUGS & PHARMACEUTICALS - 0.6%
Roche Holdings, Inc. liquid
yield option notes
0%, 4/20/10 (d) - 48,340,000 19,336,000
PRECIOUS METALS - 0.1%
Pegasus Gold, Inc. euro
6 1/4%, 4/30/02 (d) Baa3 1,860,000 1,755,375
SERVICES - 0.0%
SERVICES - 0.0%
ADT Operations, Inc. liquid
yield option notes
0%, 7/6/10 Ba3 3,670,000 1,405,940
UTILITIES - 0.0%
GAS - 0.0%
SFP Pipeline Holdings, Inc.
exchangeable
0%, 8/15/10 (e) Baa3 470,000 606,300
TOTAL CONVERTIBLE BONDS 26,834,765
NONCONVERTIBLE BONDS - 1.6%
AEROSPACE & DEFENSE - 0.1%
DEFENSE ELECTRONICS - 0.1%
Tracor, Inc. 10 7/8%, 8/15/01 B2 1,220,000 1,250,500
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - 0.2%
PACKAGING & CONTAINERS - 0.0%
Owens Illinois, Inc. 10 1/4%,
4/1/99 B2 $ 350,000 $ 357,000
PAPER & FOREST PRODUCTS - 0.2%
Stone Container Corp. 9 7/8%,
2/1/01 B1 7,760,000 7,682,400
TOTAL BASIC INDUSTRIES 8,039,400
CONGLOMERATES - 0.0%
Coltec Industries, Inc. 10 1/4%,
4/1/02 B1 910,000 941,850
DURABLES - 0.3%
TEXTILES & APPAREL - 0.3%
Westpoint Stevens, Inc.:
8 3/4%, 12/15/01 B1 2,660,000 2,620,100
9 3/8%, 12/15/05 B3 7,850,000 7,575,250
TOTAL DURABLES 10,195,350
FINANCE - 0.0%
BANKS - 0.0%
Signet Banking Corp.:
6 1/4%, 5/15/97 (e) Baa2 340,000 337,025
6.4375%, 4/15/98 (e) Baa2 190,000 187,150
TOTAL FINANCE 524,175
MEDIA & LEISURE - 0.8%
BROADCASTING - 0.8%
Viacom, Inc. 8%, 7/7/06 B1 28,240,000 27,463,400
NONDURABLES - 0.2%
BEVERAGES - 0.2%
Canandaigua Wine, Inc.
8 3/4%, 12/15/03 (b) B1 5,700,000 5,586,000
UTILITIES - 0.0%
GAS - 0.0%
Columbia Gas Systems Inc.
9.91%, 5/28/20 (b) - 170,000 250,325
TOTAL NONCONVERTIBLE BONDS 54,251,000
TOTAL CORPORATE BONDS
(Cost $76,398,754) 81,085,765
U.S. TREASURY OBLIGATIONS - 3.8%
6 1/4%, 2/15/03 Aaa 17,860,000 17,907,508
5 3/4%, 8/15/03 Aaa 81,220,000 78,745,227
7 1/4%, 5/15/04 Aaa 24,291,000 25,934,529
11 5/8%, 11/15/04 Aaa 6,810,000 9,361,639
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $118,810,332) 131,948,903
REPURCHASE AGREEMENTS - 7.3%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 6.22% dated
6/30/95 due 7/3/95 $ 252,910,024 $ 252,779,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,050,299,708) $ 3,440,938,223
LEGEND
(a) Non-income producing
(b) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
(c) Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
(d) 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 $41,363,503 or 1.2% of net
assets.
(e) 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 $2,163,942,745 and $1,281,174,381, respectively, of which U.S.
government and government agency obligations aggregated $42,997,272 and
$41,828,379, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $1,153,411 for the period
(see Note 3 of Notes to Financial Statements).
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 3.8% AAA, AA, A 3.8%
Baa 0.1% BBB 0.0%
Ba 0.0% BB 0.9%
B 1.6% B 0.7%
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 0.7%.
INCOME TAX INFORMATION
At June 30, 1995, the aggregate cost of investment securities for income
tax purposes was $3,052,199,640. Net unrealized appreciation aggregated
$388,738,583, of which $407,074,046 related to appreciated investment
securities and $18,335,463 related to depreciated investment securities.
VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $252,779,000) (cost $ 3,440,938,223
$3,050,299,708) -
See accompanying schedule
Cash 864
Receivable for investments sold 66,280,607
Receivable for fund shares sold 5,980,486
Dividends receivable 8,213,745
Interest receivable 4,230,266
Other receivables 42,410
TOTAL ASSETS 3,525,686,601
LIABILITIES
Payable for investments purchased $ 63,785,673
Payable for fund shares redeemed 629,290
Accrued management fee 1,452,585
Other payables and accrued expenses 513,611
TOTAL LIABILITIES 66,381,159
NET ASSETS $ 3,459,305,442
Net Assets consist of:
Paid in capital $ 2,994,274,835
Undistributed net investment income 5,530,661
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 68,857,443
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 390,642,503
NET ASSETS, for 204,803,927 shares outstanding $ 3,459,305,442
NET ASSET VALUE, offering price and redemption price per share ($3,459,305,442 (divided by) 204,803,927 shares) $16.89
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
INVESTMENT INCOME $ 31,571,004
Dividends
Interest 16,392,102
TOTAL INCOME 47,963,106
EXPENSES
Management fee $ 7,399,646
Transfer agent fees 727,522
Accounting fees and expenses 378,208
Non-interested trustees' compensation 5,452
Custodian fees and expenses 39,578
Registration fees 251,928
Audit 24,512
Legal 4,441
Interest 9,801
Miscellaneous 7,582
TOTAL EXPENSES 8,848,670
NET INVESTMENT INCOME 39,114,436
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 72,417,571
Foreign currency transactions (3,308 72,414,263
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 336,113,775
Assets and liabilities in foreign currencies (8,788 336,104,987
)
NET GAIN (LOSS) 408,519,250
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 447,633,686
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 39,114,436 $ 49,846,224
Net investment income
Net realized gain (loss) 72,414,263 121,898,471
Change in net unrealized appreciation (depreciation) 336,104,987 (61,690,963)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 447,633,686 110,053,732
Distributions to shareholders (37,713,247) (44,739,784)
From net investment income
From net realized gain (121,254,353) (68,533,800)
TOTAL DISTRIBUTIONS (158,967,600) (113,273,584)
Share transactions 802,500,637 1,048,772,904
Net proceeds from sales of shares
Reinvestment of distributions 158,967,516 113,273,584
Cost of shares redeemed (75,240,890) (192,914,992)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 886,227,263 969,131,496
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,174,893,349 965,911,644
NET ASSETS
Beginning of period 2,284,412,093 1,318,500,449
End of period (including undistributed net investment income of $5,530,661 and $4,150,957,
respectively) $ 3,459,305,442 $ 2,284,412,093
OTHER INFORMATION
Shares
Sold 50,281,447 68,815,564
Issued in reinvestment of distributions 10,351,678 7,484,681
Redeemed (4,656,990) (12,882,315)
Net increase (decrease) 55,976,135 63,417,930
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED JUNE 30,
1995
SELECTED PER-SHARE DATA (UNAUDITED) 1994 1993 D 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.35 $ 15.44 $ 13.40 $ 11.85 $ 9.51 $ 12.29
Income from Investment Operations
Net investment income .20 .41 .37 .40 .50 .58
Net realized and unrealized gain (loss) 2.32 .64 2.06 1.57 2.43 (2.38)
Total from investment operations 2.52 1.05 2.43 1.97 2.93 (1.80)
Less Distributions (.20) (.37) (.35) (.42) (.59) (.59)
From net investment income
In excess of net investment income - - (.04) - - -
From net realized gain (.78) (.77) - - - (.39)
Total distributions (.98) (1.14) (.39) (.42) (.59) (.98)
Net asset value, end of period $ 16.89 $ 15.35 $ 15.44 $ 13.40 $ 11.85 $ 9.51
TOTAL RETURN B, C 17.15% 7.07% 18.29% 16.89% 31.44% (15.29)
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 3,459,305 $ 2,284,412 $ 1,318,500 $ 592,880 $ 282,171 $ 154,080
Ratio of expenses to average net assets .62% A .58% .62% .65% .74% .78%
Ratio of expenses to average net assets before .62% A .60% .62% .65% .74% .78%
expense reductions
Ratio of net investment income to average net assets 2.72% A 2.83% 2.87% 3.52% 4.83% 6.01%
Portfolio turnover rate 100% A 134% 120% 74% 107% 94%
A ANNUALIZED
B TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
THE FINANCIAL STATEMENTS).
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO
YOUR INSURANCE COMPANY'S SEPARATE
ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURNS SHOWN.
D EFFECTIVE JANUARY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL
STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN,
AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT
CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES.
</TABLE>
VARIABLE INSURANCE PRODUCTS FUND: GROWTH PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
JUNE 30, 1995 YEAR YEARS FUND
Growth 36.97% 14.84% 14.56%
S&P 500 26.07% 12.09% 13.58%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of how
it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. In turn, the share
price and return of a fund that invests in stocks
will vary. That means if you sell your shares
during a market downturn, you might lose
money. But if you can ride out the market's ups
and downs, you may have a gain.
(checkmark)
You can compare these figures to the performance of the Standard & Poor's
Composite Index of 500 Stocks- a common proxy for the U.S. stock market.
This benchmark includes reinvested dividends and capital gains, if any, and
excludes the effects of sales charges.
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.
$10,000 OVER LIFE OF FUND
VIP Growth (212) Standard & Poor's 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 11839.97 12513.74
04/30/87 11839.97 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 9425.90 10086.27
12/31/87 10397.53 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 11997.15 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 11894.61 12438.93
12/31/88 12017.66 12656.61
01/31/89 12879.00 13583.07
02/28/89 12612.39 13244.86
03/31/89 12993.68 13553.46
04/30/89 13680.85 14256.89
05/31/89 14170.19 14834.29
06/30/89 13982.78 14749.73
07/31/89 15232.18 16081.64
08/31/89 15492.47 16396.84
09/30/89 15627.82 16329.61
10/31/89 15190.53 15950.76
11/30/89 15440.41 16276.16
12/31/89 15804.81 16666.78
01/31/90 14888.59 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 13950.23 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 16000.57 18452.67
07/31/91 17524.96 19312.56
08/31/91 18303.60 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 20299.56 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 19664.67 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 21528.94 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 24756.94 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 26662.20 24904.16
11/30/93 25583.32 24667.57
12/31/93 26490.04 24966.04
01/31/94 27155.74 25814.89
02/28/94 26875.65 25115.31
03/31/94 25654.59 24020.28
04/30/94 25813.32 24327.74
05/31/94 25215.00 24726.71
06/30/94 23932.88 24120.91
07/31/94 24763.21 24912.07
08/31/94 26167.43 25933.47
09/30/94 25849.96 25298.10
10/31/94 26900.07 25867.31
11/30/94 25825.53 24925.22
12/31/94 26484.91 25294.86
01/31/95 25984.27 25950.76
02/28/95 27060.36 26962.06
03/31/95 28042.58 27757.71
04/30/95 28987.98 28575.17
05/31/95 30117.54 29717.32
06/30/95 32781.83 30407.65
Let's say you invested $10,000 in Growth Portfolio on October 9, 1986, when
the fund started. By June 30, 1995, your investment would have grown to
$32,782 - a 227.82% increase. That compares to $10,000 invested in the S&P
500, which would have grown to $30,408 over the same period - a 204.08%
increase.
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Oracle Systems Corp. 3.6
Intel Corp. 3.1
DSC Communications Corp. 2.7
Applied Materials, Inc. 2.3
Compaq Computer Corp. 2.3
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Technology 52.6
Utilities 9.4
Retail & Wholesale 8.7
Media & Leisure 4.5
Industrial Machinery & Equipment 4.1
ASSET ALLOCATION AS OF JUNE 30, 1995*
Row: 1, Col: 1, Value: 3.4
Row: 1, Col: 2, Value: 96.59999999999999
Stocks 96.6%
Short-term investment 3.4%
FOREIGN INVESTMENTS 6.3%
*
VARIABLE INSURANCE PRODUCTS FUND: GROWTH PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Lawrence Greenberg, Portfolio
Manager of Growth Portfolio
Q. LARRY, HOW HAS THE FUND DONE OVER THE PAST SIX MONTHS?
A. Quite well. From December 31, 1994, through June 30, 1995, the fund beat
the Standard & Poor's 500 index, which returned 20.21%.
Q. WHAT MADE THE DIFFERENCE?
A. In the second half of 1994, growth stocks began outperforming cyclicals
- stocks in sectors like autos and steel that tend to rise or fall with the
economy. Since then, the economy has slowed and interest rates have been
flat or falling - a perfect environment for growth stocks. My strategy was
to concentrate on those companies with the fastest earnings growth
opportunities for `95 and `96. This aggressive position, especially in
technology, paid off handsomely when growth stocks rebounded.
Q. IN FACT, OVER 50% OF THE FUND WAS IN TECHNOLOGY AT THE END OF JUNE. WHY
SUCH A HUGE BET?
A. Because on a stock-by-stock basis that's where I'm still finding what I
believe are the best growth opportunities. Technology stocks are benefiting
from strong corporate and consumer demand. Business is booming across all
segments - from PCs and software to semiconductors and networking. Plus,
unlike a retailer, which can only grow as fast as it can build bricks and
mortar, a technology company can grow at any rate. The fund has dozens of
companies that are growing sales well over 100% per year. Finally, despite
the fastest sales and earnings growth of any stocks in the market, many of
these companies still have attractive prices compared to other measures
like earnings.
Q. WHERE DID YOU FIND THE BEST OPPORTUNITIES?
A. Across the board. I added new technology names, but I also made bigger
investments in the companies I have the most confidence in. For example, I
significantly boosted the fund's stake in both Intel, which makes
microprocessors like the Pentium chip that are the brains of PCs, and
Micron Technology, one of the few manufacturers of memory chips called
DRAMs that go inside PCs and other electronic equipment. Both stocks posted
sizable gains for the period. I also added to our stake in Applied
Materials, the leading supplier of semiconductor manufacturing equipment,
whose sales grew more than 60% this year. Our biggest investment is still
Oracle, the leading provider of software for client-server set-ups; it
continued to benefit as more companies moved away from mainframes toward
PCs linked through networks.
Q. WERE THERE DISAPPOINTMENTS?
A. Sure. The stock price of Sybase, a competitor to Oracle, fell nearly 50%
in the last six months as it ran into problems launching a new product. One
of our biggest positions six months ago was Motorola; it started having
some near-term problems related to oversupply on its cellular handsets, so
I cut back even though the stock's long-term outlook remained attractive.
Finally, some retailers like Home Depot and Lowe's turned in disappointing
short-term results as heavy rains in California and the Southeast hurt
business. But many of the "hard good category killers" (or superstores) I
focused on continued to grow despite the slowdown in overall retail sales
that we saw this spring.
Q. WHY DID YOU CUT BACK IN HEALTH CARE?
A. The fund's health care stake was around 3% at the end of June, down from
7.7% six months earlier. During the first half of 1994, uncertainty
surrounding President Clinton's plans for health care reform had hurt the
sector. Then, last fall, the stocks rallied as it became apparent that
health care legislation wouldn't pass anytime soon. But once the
Republicans took charge in January, they cast another cloud over the sector
as they promised to re-examine programs like Medicare. So I decided to
watch from the sidelines.
Q. LOOKING AHEAD, WHAT SHOULD SHAREHOLDERS EXPECT?
A. In the past, technology stocks haven't done as well over the summer, as
European demand dries up and new product launches disappear. But this year,
since demand has been so strong, we may see no summer slowdown or one
that's much less pronounced. Nevertheless, shareholders should expect
volatility because the fund is aggressively invested in the fastest-growing
companies. If either the technology sector or the market declines, the fund
will suffer more than other stock funds. But it's also in a good position
to benefit more than its peers from a long-term up market, which I believe
is more likely.
FUND FACTS
GOAL: to increase the value of the fund's
shares over the long term by investing in
stocks with above-average growth potential
START DATE: October 9, 1986
SIZE: as of June 30, 1995, more than $3.1 billion
MANAGER: Lawrence Greenberg, since 1991;
manager, Fidelity Emerging Growth Portfolio,
since 1993; Fidelity Select Environmental
Services Portfolio, October 1986 - April 1991;
Fidelity Select Medical Delivery Portfolio July
1989 - April 1991; joined Fidelity in 1986
(checkmark)
VARIABLE INSURANCE PRODUCTS FUND: GROWTH PORTFOLIO
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.0%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.4%
AEROSPACE & DEFENSE - 0.3%
Rockwell International Corp. 125,000 $ 5,718,750
Special Devices, Inc. (a) 173,900 3,869,263
9,588,013
DEFENSE ELECTRONICS - 0.1%
Trimble Navigation Ltd. (a) 100,000 2,837,500
TOTAL AEROSPACE & DEFENSE 12,425,513
BASIC INDUSTRIES - 1.1%
CHEMICALS & PLASTICS - 0.5%
Airgas, Inc. (a) 445,000 11,959,375
du Pont (E.I.) de Nemours & Co. 75,000 5,156,250
17,115,625
METALS & MINING - 0.6%
Alcan Aluminium Ltd. 100,000 3,023,679
Aluminum Co. of America 175,000 8,771,875
IMCO Recycling, Inc. 299,000 5,606,250
Reynolds Metals Co. 40,000 2,070,000
19,471,804
TOTAL BASIC INDUSTRIES 36,587,429
CONGLOMERATES - 0.2%
Tyco International Ltd. 125,000 6,750,000
CONSTRUCTION & REAL ESTATE - 0.8%
BUILDING MATERIALS - 0.1%
Elcor Corp. (a) 36,700 816,575
Sherwin-Williams Co. 85,000 3,028,125
3,844,700
CONSTRUCTION - 0.3%
Oakwood Homes Corp. 271,700 6,962,313
Standard Pacific Corp. 300,000 2,062,500
9,024,813
ENGINEERING - 0.4%
Fluor Corp. 65,000 3,380,000
Glenayre Technologies, Inc. (a) 172,575 8,801,325
12,181,325
TOTAL CONSTRUCTION & REAL ESTATE 25,050,838
DURABLES - 3.2%
AUTOS, TIRES, & ACCESSORIES - 2.6%
Chrysler Corp. 400,000 19,150,000
Ford Motor Co. 400,000 11,900,000
General Motors Corp. 877,634 41,139,094
Safety Components International, Inc. 220,000 3,630,000
Smith (A.O.) Corp. Class B 127,600 2,998,600
TRW, Inc. 34,100 2,723,738
81,541,432
CONSUMER ELECTRONICS - 0.1%
Whirlpool Corp. 60,000 3,300,000
HOME FURNISHINGS - 0.2%
Heilig-Meyers Co. 100,000 2,550,000
Leggett & Platt, Inc. 75,000 3,300,000
5,850,000
TEXTILES & APPAREL - 0.3%
Shaw Industries, Inc. 112,500 1,912,500
Tommy Hilfiger (a) 300,500 8,414,000
10,326,500
TOTAL DURABLES 101,017,932
SHARES VALUE (NOTE 1)
ENERGY - 0.7%
ENERGY SERVICES - 0.1%
Baker Hughes, Inc. 175,000 $ 3,587,500
INDEPENDENT POWER - 0.2%
Thermo Electron Corp. (a) 111,100 4,471,775
OIL & GAS - 0.4%
British Petroleum PLC ADR 75,030 6,424,444
Chesapeake Energy Corp. (a) 75,000 1,931,250
Kerr-McGee Corp. 76,000 4,075,500
12,431,194
TOTAL ENERGY 20,490,469
FINANCE - 3.5%
BANKS - 0.7%
Banc One Corp. 200,000 6,450,000
Bank of New York Co., Inc. 100,000 4,037,500
Bankers Trust New York Corp. 105,000 6,510,000
Chemical Banking Corp. 135,000 6,378,750
23,376,250
CREDIT & OTHER FINANCE - 0.5%
American Express Co. 400,000 14,050,000
FEDERAL SPONSORED CREDIT - 1.3%
Federal National Mortgage Association 425,000 40,109,375
INSURANCE - 0.5%
American International Group, Inc. 65,000 7,410,000
Travelers, Inc. (The) 200,000 8,750,000
16,160,000
SECURITIES INDUSTRY - 0.5%
Alliance Entertainment Corp. (a) 525,000 4,921,875
Edwards (A.G.), Inc. 111,100 2,499,750
Merrill Lynch & Co., Inc. 156,500 8,216,250
15,637,875
TOTAL FINANCE 109,333,500
HEALTH - 2.9%
DRUGS & PHARMACEUTICALS - 0.7%
Biogen, Inc. (a) 95,000 4,227,500
Dura Pharmaceuticals, Inc. (a) 160,000 3,010,000
Elan Corp. PLC ADR (a) 100,000 4,075,000
North American Biologicals, Inc. (a) 165,000 1,546,875
Pfizer, Inc. 200,000 9,237,500
US Bioscience, Inc. (a) 190 819
US Bioscience, Inc. (warrants) (a) 569 676
22,098,370
MEDICAL EQUIPMENT & SUPPLIES - 0.7%
Cardinal Health, Inc. 236,100 11,155,725
Millipore Corp. 800 53,698
St. Jude Medical, Inc. 60,000 3,007,500
Thermedics, Inc. (a) 175,000 3,412,500
Thermo Cardiosystems, Inc. (a) 100,000 3,662,500
21,291,923
MEDICAL FACILITIES MANAGEMENT - 1.5%
American Medical Response (a) 195,000 5,460,000
Apria Healthcare Group, Inc. (a) 126,000 3,559,500
Columbia/HCA Healthcare Corp. 375,025 16,219,831
HEALTHSOUTH Rehabilitation Corp. 950,000 16,506,250
Rotech Medical Corp. (a) 40,000 1,110,000
United HealthCare Corp. 75,000 3,103,125
Vivra, Inc. (a) 44,000 1,193,500
47,152,206
TOTAL HEALTH 90,542,499
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 4.1%
ELECTRICAL EQUIPMENT - 2.2%
Avid Technology, Inc. (a) 70,050 $ 2,626,875
General Electric Co. 875,000 49,328,125
General Signal Corp. 100,000 3,975,000
Oak Industries, Inc. (a) 105,300 2,711,475
Scientific-Atlanta, Inc. 370,000 8,140,000
United Communication Industry PCL
(For. Reg.) 154,000 2,245,899
69,027,374
INDUSTRIAL MACHINERY & EQUIPMENT - 1.4%
AGCO Corp. 298,300 11,186,250
Case Corp. 200,000 5,950,000
Caterpillar, Inc. 350,000 22,487,500
Ingersoll-Rand Co. 125,000 4,781,250
Semitool, Inc. 22,700 726,400
45,131,400
POLLUTION CONTROL - 0.5%
Browning-Ferris Industries, Inc. 210,000 7,586,250
TETRA Technologies, Inc. (a) 185,000 2,243,125
WMX Technologies, Inc. 175,000 4,965,625
14,795,000
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 128,953,774
MEDIA & LEISURE - 4.5%
BROADCASTING - 1.1%
Capital Cities/ABC, Inc. 65,000 6,816,875
Citicasters, Inc. 65,000 1,787,500
Clear Channel Communications, Inc. 25,000 1,609,375
EZ Communications, Inc. 44,400 821,400
Infinity Broadcasting Corp. (a) 50,000 1,668,750
Jacor Communications, Inc. Class A 73,400 1,174,400
Lin Television Corp. 50,000 1,681,250
Renaissance Communications Corp. (a) 65,000 2,177,500
Tele-Communications, Inc. Class A 225,000 5,273,438
Viacom, Inc. Class B (non-vtg.) (a) 250,084 11,597,646
34,608,134
ENTERTAINMENT - 0.4%
Casino America, Inc. (a) 100,000 1,512,500
Disney (Walt) Co. 110,000 6,118,750
Players International, Inc. (a) 217,500 4,350,000
11,981,250
LEISURE DURABLES & TOYS - 0.3%
Cobra Golf, Inc. (a) 204,900 6,479,963
Hasbro, Inc. 84,000 2,667,000
9,146,963
LODGING & GAMING - 0.7%
Doubletree Corp. (a) 300,000 6,468,750
Hospitality Franchise Systems, Inc. 453,600 15,705,900
22,174,650
PUBLISHING - 0.1%
Houghton Mifflin Co. 50,000 2,637,500
RESTAURANTS - 1.9%
Apple South, Inc. 500,000 9,750,000
Applebee's International, Inc. 275,000 7,081,250
Landry's Seafood Restaurants, Inc. (a) 334,200 6,684,000
Lone Star Steakhouse Saloon (a) 375,000 11,367,188
Outback Steakhouse, Inc. (a) 385,000 11,116,875
Papa John's International, Inc. (a) 161,800 5,663,000
Starbucks Corp. (a) 180,000 6,412,500
Uno Restaurant Corp. (a) 226,625 2,351,234
60,426,047
TOTAL MEDIA & LEISURE 140,974,544
SHARES VALUE (NOTE 1)
NONDURABLES - 1.3%
BEVERAGES - 0.3%
PepsiCo, Inc. 225,000 $ 10,265,625
HOUSEHOLD PRODUCTS - 0.3%
Colgate-Palmolive Co. 50,000 3,656,250
Gillette Co. 130,000 5,801,250
9,457,500
TOBACCO - 0.7%
Philip Morris Companies, Inc. 225,000 16,734,375
RJR Nabisco Holdings Corp. 200,000 5,575,000
22,309,375
TOTAL NONDURABLES 42,032,500
RETAIL & WHOLESALE - 8.7%
APPAREL STORES - 0.7%
Baby Superstore, Inc. (a) 65,000 3,063,125
Gymboree Corp. (a) 135,000 3,923,438
Just For Feet, Inc. (a)(c) 402,000 16,029,750
23,016,313
APPLIANCE STORES - 0.1%
Cellstar Corp. (a) 165,700 3,873,238
DRUG STORES - 0.4%
General Nutrition Companies, Inc. (a) 365,000 12,820,625
GENERAL MERCHANDISE STORES - 1.5%
Dollar General Corp. 150,050 4,745,331
Wal-Mart Stores, Inc. 1,600,000 42,800,000
47,545,331
RETAIL & WHOLESALE, MISCELLANEOUS - 6.0%
Barnes & Noble, Inc. (a) 153,100 5,205,400
Bed Bath & Beyond, Inc. (a) 700,000 16,975,000
Borders Group, Inc. (a) 80,000 1,150,000
Circuit City Stores, Inc. 150,000 4,743,750
Corporate Express (a) 275,000 5,878,125
Home Depot, Inc. (The) 345,066 14,018,306
Lowe's Companies, Inc. 1,175,000 35,103,125
Officemax, Inc. (a) 525,000 14,634,375
Office Depot, Inc. (a) 320,000 9,000,000
Petco Animal Supplies, Inc. (a) 378,700 8,804,775
Petsmart, Inc. (a) 600,000 17,250,000
Sport Supply Group, Inc. 309,550 3,869,375
Staples, Inc. (a) 550,000 15,881,250
Sunglass Hut International, Inc. (a) 886,500 31,027,500
Viking Office Products, Inc. (a) 150,000 5,493,750
189,034,731
TOTAL RETAIL & WHOLESALE 276,290,238
SERVICES - 2.3%
LEASING & RENTAL - 0.9%
Hollywood Entertainment Corp. (a) 605,000 27,225,000
SERVICES - 1.4%
Adia SA (Bearer) (a) 25,000 5,202,438
Block (H & R), Inc. 100,000 4,112,500
Children's Discovery Centers of
America, Inc. (a) 135,000 2,261,250
First Financial Management Corp. 75,000 6,412,500
Medaphis Corp. (a) 950,000 20,662,500
Zebra Technologies Corp. Class A (a) 100,000 5,325,000
43,976,188
TOTAL SERVICES 71,201,188
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - 52.0%
COMMUNICATIONS EQUIPMENT - 10.9%
Apertus Technologies, Inc. (a) 57,000 $ 498,750
Cabletron Systems, Inc. (a) 85,000 4,526,250
Cisco Systems, Inc. (a) 1,215,000 61,433,438
DSC Communications Corp. (a) 1,850,000 86,025,000
Dialogic Corp. (a) 34,800 617,700
Ericsson (L.M.) Telephone Co.
Class B ADR 900,000 18,000,000
General Instrument Corp. (a) 350,000 13,431,250
Global Village Communication (a) 573,800 8,965,625
Inter-Tel, Inc. (a) 62,300 942,288
InterVoice, Inc. (a) 250,000 4,375,000
Lo Jack Corp. (a) 240,000 2,655,000
Microtest, Inc. (a) 125,000 2,781,250
Newbridge Networks Corp. (a) 525,000 18,506,250
Nokia Corp. AB :
Series A 160,000 9,377,565
sponsored ADR 915,000 54,556,875
Tellabs, Inc. (a) 147,800 7,112,875
3Com Corp. (a) 600,000 40,200,000
U.S. Robotics Corp. 74,600 8,131,400
342,136,516
COMPUTER SERVICES & SOFTWARE - 12.9%
Adobe Systems, Inc. 60,000 3,480,000
Alantec Corp. 65,000 2,226,250
America Online, Inc. (a) 240,500 10,582,000
American Business Information, Inc. (a) 140,800 3,801,600
Ascend Communications, Inc. (a) 60,000 3,030,000
Automatic Data Processing, Inc. 125,000 7,859,375
Broderbund Software, Inc. (a) 72,800 4,641,000
CUC International, Inc. (a) 502,500 14,070,000
Cambridge Technology Partners
Mass., Inc. (a) 90,000 2,970,000
Ceridian Corp. (a) 140,000 5,162,500
Cerner Corp. (a) 40,000 2,450,000
CompUSA, Inc. (a) 290,000 9,642,500
Computer Sciences Corp. (a) 160,000 9,100,000
Davidson & Associates, Inc. (a) 65,000 2,583,750
GMIS, Inc. (a) 212,600 4,849,938
Hyperion Software, Inc. (a) 60,000 2,715,000
Informix Corp. (a) 800,000 20,300,000
Inso Corp. (a) 30,000 1,792,500
Integrated Silicon Systems, Inc. (a) 108,400 4,092,100
Intersolv, Inc. (a) 315,000 7,323,750
Mercury Interactive Group Corp. (a) 252,500 5,081,563
Microsoft Corp. (a) 740,000 66,877,500
Network Peripherals, Inc. (a) 260,000 5,671,250
Novell, Inc. (a) 524,200 10,451,238
Oracle Systems Corp. (a) 2,900,000 112,012,500
Parametric Technology Corp. (a) 296,900 14,770,775
Paychex, Inc. 85,000 3,081,250
Peoplesoft, Inc. (a) 375,000 20,343,750
Platinum Technology, Inc. (a) 100,000 1,812,500
Reuters Holdings PLC ADR Class B 65,000 3,258,125
SAP AG sponsored ADR (a)(b) 35,000 1,461,250
Softkey International, Inc. (a) 150,000 4,781,250
Stratacom, Inc. (a) 490,400 23,907,000
SunGard Data Systems, Inc. (a) 110,000 5,747,500
Systems & Computer Technology Corp. (a) 125,000 2,500,000
Wonderware Corp. (a) 77,600 3,123,400
407,553,114
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - 10.5%
ADAPTEC, Inc. (a) 375,000 $ 13,875,000
Apple Computer, Inc. 165,000 7,662,188
Bay Networks, Inc. (a) 800,000 33,100,000
Compaq Computer Corp. (a) 1,579,800 71,683,425
Comverse Technology, Inc. (a) 75,000 1,331,250
Dell Computer Corp. (a) 125,000 7,515,625
Digital Equipment Corp. (a) 200,000 8,150,000
Fore Systems, Inc. (a) 65,000 1,966,250
Gateway 2000, Inc. (a) 200,000 4,550,000
General Motors Corp. Class E (a) 505,600 21,993,600
Hewlett-Packard Co. 315,000 23,467,500
International Business Machines Corp. 635,000 60,960,000
Micom Communication Corp. (a) 146,100 949,650
Pitney Bowes, Inc. 110,000 4,221,250
Radius, Inc. (a) 290,000 3,190,000
Read Rite Corp. (a) 225,026 6,019,446
Seagate Technology (a) 214,900 8,434,825
Silicon Graphics, Inc. (a) 888,100 35,412,988
Sun Microsystems, Inc. (a) 224,000 10,864,000
Xerox Corp. (a) 45,000 5,276,250
330,623,247
ELECTRONIC INSTRUMENTS - 2.8%
Applied Materials, Inc. (a) 835,000 72,331,875
Electro Scientific Industries, Inc. (a) 117,500 3,906,875
Kulicke & Soffa Industries, Inc. 40,000 2,652,500
Novellus System, Inc. (a) 143,000 9,688,250
88,579,500
ELECTRONICS - 14.7%
AMP, Inc. 150,000 6,337,500
Advanced Micro Devices, Inc. 400,000 14,550,000
Alliance Semiconductor Corp. (a) 160,000 7,840,000
Altera Corp. (a) 387,400 16,755,050
Analog Devices, Inc. (a) 275,000 9,350,000
Atmel Corp. (a) 160,000 8,860,000
Avnet, Inc. 282,800 13,680,450
C-Cube Microsystems, Inc. (a) 75,000 2,043,750
Cascade Communications Corp. (a) 75,000 3,243,750
Chips & Technologies, Inc. (a) 201,300 2,642,063
Cirrus Logic, Inc. (a) 80,000 5,015,000
Cypress Semiconductor Corp. (a) 275,000 11,137,500
Hitachi Ltd. ADR 35,000 3,508,750
Integrated Device Technology, Inc. (a) 72,900 3,371,625
Integrated Silicon Solution (a) 147,800 7,722,550
Intel Corp. 1,530,000 96,868,125
Kemet Corp. (a) 135,000 7,087,500
LSI Logic Corp. (a) 758,930 29,693,136
Linear Technology Corp. 225,000 14,850,000
Marshall Industries (a) 102,700 3,440,450
Maxim Integrated Products, Inc. (a) 90,000 4,590,000
Microchip Technology, Inc. (a) 275,050 10,004,944
Micron Technology, Inc. 1,300,000 71,337,500
Motorola, Inc. 235,000 15,774,375
National Semiconductor Corp. (a) 225,000 6,243,750
SGS-Thomson Microelectronic NV (a) 275,000 11,171,875
S-3, Inc. (a) 81,700 2,941,200
Samsung Electronics Co. Ltd.:
GDR (b) 55,000 5,280,000
GDS (non-vtg.) (Reg.) (a) 102,800 5,345,600
Tencor Instruments (a) 80,000 3,280,000
Texas Instruments, Inc. 235,000 31,460,625
Thomas & Betts Corp. 34,600 2,365,775
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
VLSI Technology, Inc. (a) 135,000 $ 4,066,875
Wholesale Cellular USA, Inc. (a) 150,000 3,225,000
Wyle Laboratories 74,800 2,103,750
Xilinx, Inc. (a) 175,000 16,450,000
463,638,468
PHOTOGRAPHIC EQUIPMENT - 0.2%
3D Systems Corp. 375,000 6,937,500
TOTAL TECHNOLOGY 1,639,468,345
TRANSPORTATION - 0.9%
AIR TRANSPORTATION - 0.4%
AMR Corp. (a) 110,000 8,208,750
Atlantic Southeast Airlines, Inc. 59,700 1,798,463
Comair Holdings, Inc. 25,000 946,875
Southwest Airlines Co. 137,700 3,287,588
14,241,676
RAILROADS - 0.5%
ABC Rail Products Corp. (a) 150,000 3,450,000
CSX Corp. 151,200 11,358,900
14,808,900
TOTAL TRANSPORTATION 29,050,576
UTILITIES - 9.4%
CELLULAR - 5.9%
AirTouch Communications, Inc. (a) 2,300,000 65,550,000
Arch Communications Group, Inc. (a) 150,000 3,337,500
BCE Mobile Communications, Inc. (a) 275,000 9,166,666
Cellular Communications, Inc.,
Series A (redeemable) (a) 200,000 9,100,000
Metrocall, Inc. (a) 150,000 2,737,500
Mobile Telecommunications
Technologies, Inc. (a) 75,000 2,053,125
Mobilemedia Corp. (a) 13,000 240,500
Palmer Wireless, Inc. (a) 575,300 9,420,538
USA Mobile Communications (a) 116,600 2,040,500
United States Cellular Corp. (a) 315,000 9,528,750
Vanguard Cellular Systems, Inc.
Class A (a)(c) 2,176,000 52,224,000
Vodafone Group PLC sponsored ADR 548,700 20,782,013
186,181,092
TELEPHONE SERVICES - 3.5%
ALC Communications Corp. (a) 215,000 9,701,875
AT&T Corp. 425,000 22,578,125
Ameritech Corp. 493,700 21,722,800
Bell Atlantic Corp. 375,000 21,000,000
BellSouth Corp. 150,000 9,525,000
LCI International, Inc. (a) 125,000 3,828,125
SBC Communications, Inc. 475,000 22,621,875
110,977,800
TOTAL UTILITIES 297,158,892
TOTAL COMMON STOCKS
(Cost $2,234,010,970) 3,027,328,237
NONCONVERTIBLE PREFERRED STOCKS - 0.6%
SHARES VALUE (NOTE 1)
TECHNOLOGY - 0.6%
COMPUTER SERVICES & SOFTWARE - 0.2%
SAP AG (a) 5,250 $ 6,622,118
COMPUTERS & OFFICE EQUIPMENT - 0.4%
Silicon Graphics CDA Ltd.
exchangeable (non-vtg.) (a) 280,080 11,132,774
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $15,178,912) 17,754,892
REPURCHASE AGREEMENTS - 3.4%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 6.22% dated
6/30/95 due 7/3/95 $ 106,155,996 106,101,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $2,355,290,882) $ 3,151,184,129
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 $6,741,250 or 0.2% of net
assets.
(c) A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. Transactions during the period with
companies that are or were affiliates are as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Just For Feet, Inc. (a) $ 2,342,009 - - $ 16,029,750
Vanguard Cellular Systems, Inc.
Class A (a) 1,588,387 - - 52,224,000
TOTAL $ 3,930,396 $ - $ - $ 68,253,750
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,556,970,263 and $967,373,548, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $555,941 for the period
(see Note 3 of Notes to Financial Statements).
INCOME TAX INFORMATION
At June 30, 1995, the aggregate cost of investment securities for income
tax purposes was $2,361,955,662. Net unrealized appreciation aggregated
$789,228,467, of which $809,605,722 related to appreciated investment
securities and $20,377,255 related to depreciated investment securities.
At December 31, 1994, the fund had a capital loss carryforward of
approximately $68,037,000 all of which will expire on December 31, 2002.
VARIABLE INSURANCE PRODUCTS FUND: GROWTH PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $106,101,000) (cost $2,355,290,882) $ 3,151,184,129
- See accompanying schedule
Receivable for investments sold 15,240,448
Receivable for fund shares sold 4,631,877
Dividends receivable 1,976,933
Other receivables 241,989
TOTAL ASSETS 3,173,275,376
LIABILITIES
Payable for investments purchased $ 31,104,827
Payable for fund shares redeemed 2,527,529
Accrued management fee 1,523,671
Other payables and accrued expenses 374,992
TOTAL LIABILITIES 35,531,019
NET ASSETS $ 3,137,744,357
Net Assets consist of:
Paid in capital $ 2,373,300,032
Undistributed net investment income 3,900,899
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (35,349,821)
Net unrealized appreciation (depreciation) on investments 795,893,247
NET ASSETS, for 117,514,234 shares outstanding $ 3,137,744,357
NET ASSET VALUE, offering price and redemption price per share ($3,137,744,357 (divided by) 117,514,234 shares) $26.70
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
INVESTMENT INCOME $ 8,244,859
Dividends
Interest 5,551,271
TOTAL INCOME 13,796,130
EXPENSES
Management fee $ 7,756,500
Transfer agent fees 627,931
Accounting fees and expenses 378,173
Non-interested trustees' compensation 4,869
Custodian fees and expenses 69,955
Registration fees 147,294
Audit 14,797
Legal 4,080
Miscellaneous 7,349
TOTAL EXPENSES 9,010,948
NET INVESTMENT INCOME 4,785,182
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 46,674,141
Foreign currency transactions 395 46,674,536
Change in net unrealized appreciation (depreciation) on investment securities 517,371,258
NET GAIN (LOSS) 564,045,794
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 568,830,976
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 4,785,182 $ 11,810,184
Net investment income
Net realized gain (loss) 46,674,536 (74,102,658)
Change in net unrealized appreciation (depreciation) 517,371,258 80,193,945
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 568,830,976 17,901,471
Distributions to shareholders (12,404,421) (7,589,523)
From net investment income
From net realized gain - (80,320,550)
TOTAL DISTRIBUTIONS (12,404,421) (87,910,073)
Share transactions 750,772,650 1,289,938,019
Net proceeds from sales of shares
Reinvestment of distributions 12,404,421 87,909,946
Cost of shares redeemed (323,728,603) (549,819,377)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 439,448,468 828,028,588
TOTAL INCREASE (DECREASE) IN NET ASSETS 995,875,023 758,019,986
NET ASSETS
Beginning of period 2,141,869,334 1,383,849,348
End of period (including undistributed net investment income of $3,900,899 and $11,472,202, $ 3,137,744,357 $ 2,141,869,334
respectively)
OTHER INFORMATION
Shares 32,171,873 60,676,019
Sold
Issued in reinvestment of distributions 568,749 4,039,985
Redeemed (13,969,564) (25,920,211)
Net increase (decrease) 18,771,058 38,795,793
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
JUNE 30, 1995
SELECTED PER-SHARE DATA (UNAUDITED) 1994 1993 F 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 21.69 $ 23.08 $ 19.76 $ 18.51 $ 12.91 $ 15.18
Income from Investment Operations
Net investment income .04 .12 .12 .09 D .09 D .24
Net realized and unrealized gain (loss) 5.09 (.12) E 3.64 1.64 5.72 (1.98)
Total from investment operations 5.13 - 3.76 1.73 5.81 (1.74)
Less Distributions (.12) (.12) (.11) (.05) (.21) (.21)
From net investment income
From net realized gain - (1.27) (.21) (.43) - (.32)
In excess of net realized gain - - (.12) - - -
Total distributions (.12) (1.39) (.44) (.48) (.21) (.53)
Net asset value, end of period $ 26.70 $ 21.69 $ 23.08 $ 19.76 $ 18.51 $ 12.91
TOTAL RETURN B, C 23.78% (.02) 19.37% 9.32% 45.51% (11.73)
% %
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 3,137,744 $ 2,141,869 $ 1,383,849 $ 749,837 $ 371,462 $ 135,487
Ratio of expenses to average net assets .72% A .69% .71% .75% .84% .88%
Ratio of expenses to average net assets
before expense .72% A .70% .71% .75% .84% .88%
reductions
Ratio of net investment income to average net
assets .38% A .69% .72% .83% .56% 2.69%
Portfolio turnover rate 82% A 122% 159% 262% 261% 88%
A ANNUALIZED
B TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
THE FINANCIAL STATEMENTS).
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO
YOUR INSURANCE COMPANY'S SEPARATE
ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURNS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET GAIN ON INVESTMENTS FOR THE PERIOD
ENDED DUE TO THE TIMING OF SALES
AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND.
F EFFECTIVE JANUARY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL
STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN,
AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT
CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES.
</TABLE>
VARIABLE INSURANCE PRODUCTS FUND: OVERSEAS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
JUNE 30, 1995 YEAR YEARS FUND
OVERSEAS 2.96% 4.76% 7.12%
Morgan Stanley EAFE Index 1.65% 4.69% 6.97%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the potential
for significant growth over time; however,
investing in foreign markets means assuming
greater risks than investing in the United States.
Factors like changes in a country's financial
markets, its local political and economic
climate, and the fluctuating value of its currency
create these risks. For these reasons an
international fund's performance may be more
volatile than a fund that invests exclusively in the
United States.
(checkmark)
You can compare the fund's figures to the performance of the Morgan Stanley
EAFE index - a broad measure of the performance of stocks in Europe,
Australia, and the Far East. This benchmark includes reinvested dividends
and capital gains, if any, and excludes the effects of sales charges.
Figures for more than one year assume a steady compounded rate of return
and are not the fund's year-by-year results, which fluctuated over the
periods shown. The life of fund figures are from commencement of operations
January 28, 1987.
PERFORMANCE NUMBERS ARE NET OF ALL FUND OPERATING EXPENSES, BUT DO NOT
INCLUDE ANY INSURANCE CHARGES IMPOSED BY YOUR INSURANCE COMPANY'S SEPARATE
ACCOUNT. IF PERFORMANCE INFORMATION INCLUDED THE EFFECT OF THESE ADDITIONAL
CHARGES, IT WOULD HAVE BEEN LOWER.
Past performance is no guarantee of future results. Principal and
investment return will vary and you may have a gain or loss when you
withdraw your money. Foreign investments involve greater risks and
potential rewards than U.S. investments. These risks include political and
economic uncertainties of foreign countries, as well as the risk of
currency fluctuations.
$10,000 OVER LIFE OF FUND
VIP Overseas (22Europe, Australia,
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 10534.87 14701.99
02/28/89 10717.03 14777.56
03/31/89 10707.38 14487.53
04/30/89 11023.50 14621.89
05/31/89 10615.60 13826.42
06/30/89 10574.81 13593.67
07/31/89 11563.97 15300.67
08/31/89 11482.39 14612.54
09/30/89 12196.21 15278.16
10/31/89 11533.38 14664.33
11/30/89 12155.42 15401.50
12/31/89 12920.24 15969.77
01/31/90 12746.88 15375.56
02/28/90 12449.36 14302.43
03/31/90 12919.92 12812.46
04/30/90 12991.52 12710.78
05/31/90 13840.58 14161.09
06/30/90 14147.46 14036.37
07/31/90 14863.53 14234.08
08/31/90 13349.56 12851.83
09/30/90 12081.09 11060.74
10/31/90 13206.34 12784.21
11/30/90 12797.16 12030.10
12/31/90 12705.10 12224.98
01/31/91 12827.85 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 13186.64 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 13658.34 13481.84
10/31/91 13752.68 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 13599.52 12934.85
03/31/92 13323.28 12080.93
04/30/92 14152.01 12138.36
05/31/92 14768.23 12950.85
06/30/92 14491.99 12336.56
07/31/92 13567.65 12020.83
08/31/92 13450.78 12774.79
09/30/92 12908.92 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 12847.62 12401.41
03/31/93 13738.91 13482.39
04/30/93 14651.94 14761.90
05/31/93 14967.16 15073.67
06/30/93 14597.60 14838.49
07/31/93 15173.67 15357.91
08/31/93 15988.88 16186.97
09/30/93 15901.92 15822.62
10/31/93 16478.00 16310.23
11/30/93 15782.36 14884.55
12/31/93 16825.82 15959.32
01/31/94 17923.63 17308.60
02/28/94 17607.51 17260.66
03/31/94 17170.60 16517.22
04/30/94 17738.58 17218.03
05/31/94 17520.13 17119.18
06/30/94 17334.44 17361.11
07/31/94 17793.20 17528.07
08/31/94 18000.73 17943.05
09/30/94 17531.05 17377.92
10/31/94 17891.50 17956.61
11/30/94 17214.29 17093.61
12/31/94 17115.99 17200.65
01/31/95 16406.01 16539.88
02/28/95 16449.17 16492.41
03/31/95 16955.64 17521.06
04/30/95 17440.09 18180.00
05/31/95 17682.31 17963.28
06/30/95 17847.46 17648.27
Let's say you invested $10,000 in Overseas Portfolio on January 28, 1987,
when the fund started. By June 30, 1995, your investment would have grown
to $17,847 - a 78.47% increase. That compares to $10,000 invested in the
Morgan Stanley EAFE Index, which would have grown to $17,648 over the same
period - a 76.48% increase.
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF JUNE 30, 1995
(BY ISSUER, EXCLUDING REPURCHASE AGREEMENTS) % OF FUND'S
INVESTMENTS
C. S. Holdings (Reg.) 1.8
Nestle SA (Reg.) 1.5
Deutsche Bank AG 1.3
Unilever NV Ord. 1.2
Swiss Bank Corp. (Bearer) 1.2
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Finance 26.4
Utilities 8.8
Nondurables 8.4
Durables 8.1
Basic Industries 6.2
GEOGRAPHIC DIVERSIFICATION AS OF JUNE 30, 1995
(BY LOCATION OF ISSUER) % OF FUND'S
INVESTMENTS
Japan 18.5
United Kingdom 12.4
Switzerland 9.8
France 7.5
Netherlands 6.9
VARIABLE INSURANCE PRODUCTS FUND: OVERSEAS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with John Hickling, Portfolio Manager of Overseas Portfolio
Q. JOHN, HOW HAS THE FUND PERFORMED?
A. For the six months and one year ended June 30, 1995, the fund's
performance topped that of the Morgan Stanley EAFE index - a broad measure
of stocks in Europe, Australia and the Far East. The index had total
returns of 2.60% and 1.65% for the six- and 12-month periods, respectively.
Q. WHAT WERE THE KEYS TO THE FUND'S PERFORMANCE OVER THE PAST SIX MONTHS?
A. First, I kept the fund fully invested through much of the period.
Second, some of the stocks I picked in Japan and Europe fared well. And
finally, the fund was able to benefit from new investments in emerging
markets.
Q. WHY DID THE EAFE INDEX OFFER RELATIVELY LOW RETURNS?
A. While European markets have performed relatively well - though not as
well as the U.S. market - emerging markets and Japan have not. Japan was
affected by a number of factors that dampened investor enthusiasm: the
Barings debacle, the Kobe earthquake and the subway gas attack. The
Japanese market also was hurt by the strength of the yen versus the dollar.
On the heels of Mexico's devaluation of the peso in late 1994, emerging
markets also struggled, although they appear to have pretty much bottomed
out.
Q. WHAT'S THE STORY BEHIND THE FUND'S INVESTMENTS IN JAPAN?
A. Even though Japan has the highest country representation in the fund,
I've kept the fund underweighted there, relative to the index. I've focused
much of the fund's Japanese investments in technology, including consumer
electronics companies Toshiba and Hitachi, and other manufacturers and
exporters that are poised to take advantage of economic activity both in
Japan and globally. While the technology sector has done well in the U.S.,
it has been weak in Japan, so I found valuations to be attractive. The
sector recently has shown some strong gains. In addition, I've targeted
some financial stocks. The Japanese market has started to pick up a bit
lately, and brokerage house Nomura Securities is poised to take advantage
because it has been cutting costs aggressively. In addition, it appears
trust banks such as Sumitomo Trust will be able to improve interest margins
- the difference between what they charge for loans and what they pay to
depositors - because of changing regulations.
Q. THE FUND IS OVERWEIGHTED IN EUROPE, RELATIVE TO THE INDEX. WHERE HAVE
YOU FOUND OPPORTUNITIES THERE?
A. Mainly in financial and consumer nondurable stocks, as well as interest
rate-sensitive issues - because European bond markets have been rallying -
and cyclicals - those that tend to rise and fall with the economy. European
stocks have rallied lately, mainly on the strength of the technology
sector. In the short run, I've missed some opportunity there, because I
found the tech stocks to be too expensive and risky. Some of the appealing
consumer nondurable names have been Guinness, Cadbury-Schweppes, Bass and
Nestle. Barclays, National Westminster, Swiss Bank and C.S. Holdings were
among the fund's financial stock investments. I've added investments in
cyclical stocks because they became cheap. Those include paper companies Mo
Och Domsjoe and Svenska Cellulosa; auto stocks Volvo and Peugeot; and tire
companies such as Michelin.
Q. WHAT ABOUT THE FUND'S EMERGING MARKET INVESTMENTS?
A. I've been more active there because, as I said, I felt they had hit
bottom, and there were a lot of very interesting stocks. Among the stocks
that have caught my eye have been Hong Kong/Shanghai Bank (HSBC) and Hong
Kong Land Holdings; Philippine Long Distance Telephone; the department
store Matahari and cigarette manufacturer Gudang Garam in Indonesia; Krung
Thai Bank; Telecom Argentina; and Mexican companies Bancomer, Telmex, Cemex
and Grupo Carso.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. Several factors are important to consider. First of all, it seems most
stock markets reflect the sentiment that any worldwide recession will stay
pretty shallow and that growth will resume. Of course, this is the best
possible scenario. At the same time, if the U.S. market stumbles, one would
expect there to be a drop in foreign markets. In such a scenario, I believe
overseas markets wouldn't drop as far as the U.S, because they haven't
gained as much recently, but it's impossible to say for sure. How the
dollar does also will be important. Going forward, I'll stay with my usual
game plan, looking for opportunities in any markets that appear to have
excellent value.
FUND FACTS
GOAL: to increase the value of the fund's
shares by investing mainly in stocks in
Europe, the Far East, and the Pacific Basin
START DATE: January 28, 1987
SIZE: as of June 30, 1995, more than $1.2 billion
MANAGER: John Hickling, since 1993; manager
Fidelity Overseas Fund, since 1993; Fidelity
Advisor Overseas Fund, since 1993; Fidelity
Advisor Annuity Overseas Portfolio, since
January 1995; previously managed several
Fidelity international funds; joined Fidelity in
1982
(checkmark)
VARIABLE INSURANCE PRODUCTS FUND: OVERSEAS PORTFOLIO
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.2%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.8%
Buenos Aires Embotelladora SA
sponsored ADR 41,800 $ 1,050,301
Perez Companc Class B 308,452 1,295,822
Telecom Argentina sponsored
ADR Class B 83,400 3,794,700
Telecom Argentina Stet France
Telecom SA 263,600 1,199,681
YPF Sociedad Anonima sponsored
ADR representing Class D shares 150,500 2,840,688
10,181,192
AUSTRALIA - 1.4%
Brambles Industries Ltd. 276,500 2,616,260
FAI Insurance Ltd. Ord. 2,037,900 809,474
Lend Lease Corp. Ltd. 81,000 1,033,010
Pioneer International Ltd. 493,300 1,224,642
TNT Ltd. (a) 1,658,800 2,176,694
Westpac Banking Corp. 2,912,700 10,536,488
18,396,568
AUSTRIA - 0.9%
Mayr Melnhof Karton AG 24,200 1,398,830
OEMV AG 62,400 7,194,579
VA Technologie AG 6,800 851,047
VA Technologie AG (d) 15,000 1,877,310
11,321,766
BELGIUM - 1.6%
Bekaert SA 4,005 3,197,654
Delhaize Freres & Cie Le Lion SA 135,300 6,183,782
Petrofina SA 11,900 3,590,951
Petrofina SA (warrants) (a) 595 8,380
Solvay & Cie SA 14,062 7,724,197
20,704,964
BERMUDA - 0.2%
Consolidated Electric Power Asia Ltd.
sponsored ADR (d) 30,000 682,500
Jardine Strategic Holdings Ltd. Ord. 529,500 1,704,990
2,387,490
BRAZIL - 0.2%
Coteminas PN 2,500,000 788,675
Telebras PN (Pfd. Reg.) 60,298,770 1,987,447
2,776,122
CANADA - 0.5%
Midland Walwyn, Inc. 269,000 2,106,921
Noranda, Inc. 245,400 4,827,541
6,934,462
CHILE - 0.1%
Vina Concha Stet y Toro SA
sponsored ADR 51,100 990,063
FINLAND - 0.8%
Kymmene Corp. 53,900 1,680,624
Pohjola Class B 291,000 4,570,859
Valmet Corp. OY Ord. 167,700 3,793,939
10,045,422
FRANCE - 7.2%
Accor SA 65,158 8,694,014
Axa SA 91,718 4,963,362
BQE National Paris Ord. 222,840 10,770,332
Club Mediterranee SA Ord. 42,500 4,340,855
Compagnie Bancaire Ord. 65,670 7,867,107
Credit Lyonnais 24,500 1,413,880
SHARES VALUE (NOTE 1)
FRANCE - CONTINUED
Elf Aquitaine 112,128 $ 8,302,776
Generale des Eaux 90,600 10,105,133
Havas SA 53,300 4,227,450
IMETAL SA Ord. 9,200 1,083,135
L'Oreal Co. Ord. 10,200 2,563,957
Lafarge Coppee SA 63,900 4,978,432
Lyonnaise des Eaux Dumez SA 30,700 2,909,255
Michelin SA Cie Generale des
Etablissements, Class B (a) 76,900 3,413,366
Peugeot SA Ord. 19,500 2,710,627
Total SA Class B 190,600 11,495,446
Vallourec SA (a) 60,000 3,010,224
92,849,351
GERMANY - 6.0%
Allianz Versich Holdings Ord. (Reg.) 1,450 2,590,467
Asko 2,900 1,813,746
BMW AG 9,918 5,463,533
Bayerische Vereinsbank AG Ord. 11,000 3,340,331
Continental Gummi-Werke AG 25,600 3,721,076
Deutsche Bank AG 352,000 17,122,878
Duerr Beteiligungs AG (RFD) 8,777 3,119,553
Gildemeister AG (a) 28,620 2,372,138
Hoechst AG Ord. 38,900 8,413,855
Karstadt AG 17,800 7,821,202
Kaufhof Holding AG 20,000 7,151,906
Metallgesellschaft AG (a)(d) 86,700 1,587,832
SGL Carbon AG (a)(d) 28,000 1,250,570
Schmalbach-Lubeca AG 4,250 855,261
Veba AG Ord. 27,400 10,779,905
77,404,253
HONG KONG - 2.1%
Amoy Properties Ltd. 2,084,000 1,831,440
Consolidated Electric Power Asia Ltd. 604,000 1,401,165
Dickson Concepts International Ltd. 2,108,000 1,259,994
HSBC Holdings PLC 834,000 10,697,560
Hong Kong Land Holdings Ltd. 2,337,000 4,253,340
Hopewell Holdings Ltd. 3,944,000 3,338,596
Hysan Development Co. Ltd. 643,000 1,470,863
Peregrine Investments Holdings Ltd. 832,000 1,182,780
Semi-Tech (Global) Ltd. 100,000 160,901
Sun Hung Kai Properties Ltd. 153,000 1,132,023
26,728,662
INDIA - 0.1%
Reliance Industries Ltd. GDS (a) 106,400 1,902,432
INDONESIA - 1.0%
Astra International PT (For. Reg.) 160,000 283,790
Bank International Indonesia PT Ord. 921,000 2,843,238
Gudang Garam PT Perusahaan 42,500 326,336
Jakarta International Hotels &
Development Ord. 1,541,000 1,937,499
Matahari Putra Prima PT:
(For. Reg.) 552,000 879,927
(For. Reg.) (rights) (a) 276,000 266,459
Sampoerna Hanjaya Mandala (For. Reg.) 735,750 5,781,604
12,318,853
IRELAND - 1.0%
Bank of Ireland U.S. Holdings, Inc. 1,009,200 5,793,010
Fyffes PLC 1,358,000 2,479,301
Independent Newspapers PLC 521,050 2,866,312
Waterford Wedgwood PLC Unit 1,751,400 1,494,049
12,632,672
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ITALY - 1.3%
Alitalia Linee Aeree Italiane Class A (a) 136,400 $ 65,201
Assicurazioni Generali Spa 218,570 5,128,878
Fiat Spa 1,121,000 3,965,325
Istituto Mobiliare Italiano 301,400 1,848,206
Italgas Spa 512,200 1,334,373
Montedison Spa Ord. (a) 2,962,700 2,120,701
SAI Sta Assieuratrice Industriale Spa 189,000 2,017,120
16,479,804
JAPAN - 18.5%
ADO Electronic Industrial Co. Ltd. 19,000 410,750
Advantest Corp. 74,000 2,797,401
Aida Engineering Ltd. Ord. 176,000 1,199,669
Akita Bank Ltd. 76,650 656,483
Amada Metrecs Co. Ltd. 86,000 1,107,383
Amadasonoike Co. Ltd. 282,000 1,632,368
Autobacs Seven Co. Ltd. 20,600 2,007,679
Bridgestone Corp. 339,000 5,005,908
Canon, Inc. 526,000 8,575,073
Daicel Chemical Industries Ltd. 397,000 2,035,415
East Japan Railway Co. Ord. 700 3,597,165
Fanuc Ltd. 98,200 4,245,860
Fujitsu Ltd. 726,000 7,247,135
Futaba Industrial Co. Ltd. 126,000 2,054,105
Hachijuni Bank Ltd. 92,000 1,141,170
Hanshin Department Store Ltd. 29,000 205,210
Higo Bank Ltd. Ord. 96,000 941,288
Hitachi Ltd. 1,126,000 11,240,047
Honda Motor Co. Ltd. 432,000 6,634,375
Ishihara Sangyo Kaisha Ltd. (a) 343,000 1,021,097
Japan Airlines Co. Ltd. 302,000 2,008,578
Komatsu Ltd. Ord. 410,000 3,133,728
Marubeni Corp. 339,000 1,726,035
Matsushita Electric Industrial Co. Ltd. 303,000 4,724,867
Marukyo Corp. 16,000 255,168
Minebea Co. Ltd. 546,000 3,508,847
Mitsubishi Chemical Industries Ltd. 89,000 381,654
Mitsubishi Estate Co. Ltd. 264,000 2,978,382
Mitsubishi Heavy Industries Ltd. 492,000 3,347,809
Mitsubishi Trust & Banking Corp. 486,000 6,889,546
Mitsui OSK Lines Ltd. 457,000 1,268,696
Murata Mfg. Co. Ltd. 171,000 6,484,465
Nichido Fire & Marine
Insurance Co. Ltd. 502,000 4,062,254
Nikko Securities Co. Ltd. 373,000 3,031,587
Nippon Telegraph &
Telephone Corp. Ord. 400 3,354,991
Nippon Yusen Kabushiki Kaisha 354,000 1,986,414
Nissan Motor Co. Ltd. Ord. 388,000 2,484,302
Nisshinbo Industries 154,000 1,217,082
Nitto Denko Corp. 97,000 1,512,581
Nomura Securities Co. Ltd. 664,000 11,609,217
Omron Corp. 139,000 2,660,131
Orix Corp. 242,000 8,061,901
Pioneer Electronic Corp. 241,000 4,099,704
Rohm Co. Ltd. 120,000 6,209,096
Sankyo Co. Ltd. 258,300 6,011,235
Sanwa Bank Ltd. 95,000 1,795,629
Seino Transpotation Co. Ltd. 144,000 2,432,605
Sony Corp. 209,700 10,082,445
Sumitomo Marine and Fire
Insurance Co. Ltd. 420,000 3,339,160
Sumitomo Realty &
Development Co. Ltd. 648,000 3,873,452
Sumitomo Rubber Industries Ltd. 185,000 1,376,846
Sumitomo Trust & Banking Co. Ltd. 363,000 4,416,893
Suzuki Motor Corp. 228,000 2,545,303
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
TDK Corp. 88,000 $ 4,012,759
Takashimaya Co. Ltd. 198,000 2,666,510
Takeda Chemical Industries Ltd. 397,000 5,252,687
Tokio Marine & Fire
Insurance Co. Ltd. (The) 1,065,000 12,228,948
Toshiba Corp. 1,626,000 10,314,970
Toyota Motor Corp. 474,000 9,407,208
Tsugami Corp. 253,000 911,577
Yamanouchi Pharmaceutical Co. Ltd. 302,000 6,814,177
238,235,020
KOREA (SOUTH) - 0.8%
Cho Hung Bank Co. Ltd. 191,504 2,273,043
Korea Electric Power Corp. (a) 147,470 5,647,716
Korea First Securities Co. Ltd. 14,218 187,136
Kyungki Bank (a) 171,523 1,628,705
Seoul Securities Co. 74,592 924,714
10,661,314
MEXICO - 1.2%
Banacci SA de CV:
Class B 352,200 540,979
Class L 17,610 26,767
Cemex SA, Series B 1,071,800 3,875,630
Cifra SA Class C 1,559,100 2,055,517
Consorcio G Grupo Dina SA ADR 34,800 108,750
Empresas Ica Sociedad Controladora
SA de CV sponsored ADR
representing Ord. (part. cert.) 208,700 2,139,175
Grupo Carso SA de CV Class A-1 (a) 287,800 1,574,842
Grupo Dina sponsored ADR, Series L 12,543 25,086
Grupo Financiero Bancomer SA de CV:
Class B (a) 4,451,800 1,303,487
Series L (a) 216,878 57,256
sponsored ADR, Series C (a) (d) 70,200 412,425
Telefonos de Mexico SA sponsored ADR
representing shares Ord. Class L 93,200 2,761,050
14,880,964
MALAYSIA - 0.9%
Kuala Lumpur Industries Holdings BHD (a) 290,000 394,913
Magnum Corp. BHD 567,500 1,326,804
Malaysian Banking BHD 133,000 1,052,871
Resorts World BHD 443,000 2,598,399
Telekom Malaysia BHD 614,000 4,659,149
Tenega Nasional BHD 251,000 1,024,384
Time Engineering BHD 161,000 541,509
11,598,029
NETHERLANDS - 6.9%
ABN-AMRO Holdings NV 46,500 1,796,666
Aegon NV Ord. 68,250 2,363,636
AKZO NV Ord. 103,800 12,420,856
Heineken NV 24,200 3,666,667
IHC Caland NV 48,300 1,373,134
International Nederlanden Groep NV 249,108 13,793,730
KLM Royal Dutch Airlines Ord. (a) 198,200 6,441,468
Koninklijke PPT Nederland 221,500 7,971,539
Koninklijke PPT Nederland (a) (d) 80,600 2,900,705
Oce Van der Grinten NV 136,700 7,719,571
Pirelli Tyre Holdings NV Ord. (a) 633,700 4,258,242
Royal Dutch Petroleum Co. Ord. 50,900 6,222,317
Unilever NV Ord. 122,000 15,891,452
Vendex International Bearer (a) (d) 81,400 2,156,361
88,976,344
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NETHERLANDS ANTILLES - 0.3%
Schlumberger Ltd. 68,200 $ 4,236,925
NORWAY - 2.4%
Bergesen Group:
Class A 35,500 807,408
Class B 301,600 6,859,557
Christiania Bank Free shares Ord. 1,475,000 3,426,617
Den Norske Bank Class A Free shares 1,146,800 3,111,291
Norsk Hydro AS 100,850 4,218,809
Orkla AS:
Class A Free shares 93,250 4,173,564
Class B (non-vtg.) 47,800 2,026,773
Saga Petroleum AS Class B 261,600 3,463,634
Unitor AS 192,300 3,358,339
31,445,992
PAKISTAN - 0.1%
Pakistan Telecommunications Voucher
GDR (a) (d) 8,630 837,110
PHILLIPINES - 0.1%
Philippine Long Distance Telephone Co.
sponsored ADR 21,500 1,542,625
SINGAPORE - 1.0%
Jardine Matheson Holdings Ltd. Ord. 506,659 3,723,944
Kim Engineering Holdings Ltd. 2,455,000 2,565,721
Neptune Orient Lines Ltd. 3,377,000 3,916,071
Overseas Union Bank Ltd. (For.) 265,000 1,669,291
Van Der Horst Ltd. 156,000 748,174
12,623,201
SOUTH AFRICA - 0.0%
De Beers Consolidated Mines Ltd. ADR 24,000 621,000
SPAIN - 4.2%
Banco Bilbao Vizcaya SA Ord. (Reg.) 349,100 10,102,294
Banco Intercontinental Espanol 59,550 5,374,415
Corporacion Mapfrecia International
de Reaseguros SA (Reg.) 183,400 9,035,230
EL Aguila SA (a) 56,540 423,669
Repsol SA Ord. 172,500 5,441,730
Tabacalera SA, Series A 205,200 7,696,592
Telefonica de Espana SA Ord. 845,150 10,916,448
Union Electrica Fenosa SA 1,216,100 5,719,270
54,709,648
SWEDEN - 3.5%
Electrolux AB 117,600 5,358,737
Investor AB Class B Free shares 314,700 9,097,942
Mo Och Domsjoe (MoDo) Class B
Free shares 83,100 4,799,104
SKF AB Ord. 75,800 1,533,959
Skandia International Holding 35,400 687,147
Svenska Cellulosa Aktiebolaget SCA
Class B Ord. 362,700 6,740,754
Skandinaviska Enskilda Banken
Class A Free shares 948,300 4,934,745
Volvo AB Class B 637,400 12,153,153
45,305,541
SWITZERLAND - 9.8%
Adia SA (Bearer) (a) 54,800 11,403,744
Alusuisse-Lonza Holding AG (Reg.) 15,939 10,019,990
Baloise Holding (Reg.) 5,635 12,879,299
CIBA-GEIGY AG (Reg.) 14,380 10,567,453
C. S. Holdings (Reg.) 258,405 23,736,812
Fischer (Georg) AG (Reg.) 12,400 3,228,211
Holderbank Financiere Glarus
AG (Bearer) 2,825 2,324,445
SHARES VALUE (NOTE 1)
SWITZERLAND - CONTINUED
Holderbank Financial Glarus
(warrants) (a) 14,125 $ 19,678
Nestle SA (Reg.) 18,800 19,626,644
Roche Holdings Ltd. (part. certs.) 1,700 10,990,422
Surveillance, Societe Generale (Bearer) 1,010 1,758,816
Swiss Bank Corp. (Bearer) 43,450 15,435,437
Zurich Versicherung (Reg.) 3,405 4,289,973
126,280,924
THAILAND - 1.6%
Bank of Asia PCL (For. Reg.) 354,310 1,004,727
Krung Thai Bank (For. Reg.) 1,698,840 6,882,069
Ruam Pattana Fund II (For. Reg.) (a) 1,117,000 712,691
Ruang Khao Unit Trust (For. Reg.) (a) 836,800 601,709
Siam City Bank PCL (For. Reg.) 6,828,500 9,405,234
Telecomasia Corp. PCL (For. Reg.) (a) 394,000 1,460,440
20,066,870
TURKEY - 0.3%
Aksigorta (a) 280,000 54,463
Aksigoria (a) (d) 952,000 185,174
Cimentas AS (a) 500,000 322,290
Tofas Turk Otomobil Fabrikasi
AS ADR (a) (d) 165,600 712,080
Tofas Turk Otomobil Fabrikasi AS (a) 2,400,600 2,117,473
3,391,480
UNITED KINGDOM - 12.4%
Argyll Group PLC Ord. 626,900 3,353,633
Avon Rubber 81,900 666,007
BTR PLC Ord. 625,100 3,184,528
Barclays PLC Ord. 980,300 10,558,664
Bass PLC Ord. 763,700 7,324,586
Berkeley Group PLC 159,600 904,685
Booker PLC 364,200 2,415,782
Boots Co. PLC 287,600 2,334,164
British Land Ord. 289,500 1,844,124
Burmah Oil 190,700 2,768,567
Cadbury-Schweppes PLC Ord. 955,700 6,994,539
Commercial Union PLC (a) 225,100 2,099,695
De La Rue PLC 488,300 7,287,643
Dixons Group PLC 937,500 3,826,800
Forte PLC 1,806,100 6,551,610
Glaxo Holdings PLC Ord. 378,100 4,651,224
Great Universal Stores PLC Ord Class A 381,600 3,574,711
Guinness PLC Ord. 1,154,300 8,705,719
Hanson Trust PLC Ord. 674,000 2,358,953
Iceland Group PLC 637,600 1,829,976
Lasmo PLC 858,400 2,347,355
Ladbroke Group PLC Ord. 1,032,400 2,782,019
Lloyds Abbey Life PLC 549,600 3,426,481
London International Group PLC 2,561,200 4,492,217
National Westminster Bank PLC Ord. 1,097,920 9,567,209
Nurdin & Peacock PLC Ord. 375,000 1,046,393
North West Water Group PLC Ord. 337,700 2,988,469
Redland PLC Ord. 147,800 969,770
Rolls Royce PLC Ord. 874,433 2,433,022
Royal Insurance Holdings PLC 992,600 4,890,550
Sainsbury (J.) PLC Ord. 566,367 3,987,065
Scottish Hydro-Electric PLC Ord. 723,700 3,681,071
Scottish Power PLC ADR 960,500 4,954,461
Shell Transport & Trading PLC 581,900 6,972,716
TSB Group PLC 300 1,155
Tesco PLC Ord. 1,425,100 6,589,734
Unigate Ltd. Ord. 312,800 2,022,471
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Vodafone Group PLC 1,890,600 $ 7,039,006
Whitbread Co. PLC Class A 715,700 6,847,100
160,273,874
TOTAL COMMON STOCKS
(Cost $1,041,443,013) 1,149,740,937
NONCONVERTIBLE PREFERRED STOCKS - 2.5%
AUSTRIA - 0.5%
Creditanstalt Bankverein 105,900 6,099,579
GERMANY - 0.5%
Henkel KGAA 10,300 3,974,013
Porsche AG Ord. (a) 6,050 2,638,622
6,612,635
ITALY - 1.5%
Banco Ambro Veneto 1,197,000 1,627,788
Fiat Spa 1,350,600 2,937,514
SAI Sta Assicuratrice Industriale Spa 650,500 2,800,526
Stet (Societa Finanziaria Telefonica) Spa 5,075,300 11,278,078
18,643,906
KOREA (SOUTH) - 0.0%
Korea First Securities Co. Ltd. 68,124 575,898
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $29,697,172) 31,932,018
FOREIGN GOVERNMENT OBLIGATIONS (F) - 1.1%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
ARGENTINA - 0.3%
Argentina Republic BOCON
6.0625%, 4/1/01 (e) B1 $ 5,993,570 3,738,969
BRAZIL - 0.2%
Brazil Federative Republic IDU
euro 6.6875%, 1/1/01 (e) B1 2,570,500 2,069,253
DENMARK - 0.3%
Danish Government Bullet
7%, 12/15/04 Aa1 DKK 25,000,000 4,181,735
FRANCE - 0.3%
French Government Strips
4/25/23 Aaa FRF 168,000,000 3,508,764
TOTAL FOREIGN GOVERNMENT
OBLIGATIONS
(Cost $14,123,089) 13,498,721
REPURCHASE AGREEMENTS - 7.2%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 6.22% dated
6/30/95 due 7/3/95 $ 92,390,864 92,343,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,177,606,274) $ 1,287,514,676
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO SELL
810,720,000 ESP 7/12/95 $ 6,704,431 $ (278,432)
228,920,092 FRF 8/16/95 47,220,286 (1,965,746)
2,043,255,600 JPY 7/11/95 24,176,080 411,833
TOTAL CONTRACTS TO SELL-
(Receivable amount $76,268,452) $ 78,100,797 $ (1,832,345)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 6.1%
CURRENCY ABBREVIATIONS
DKK - Danish krone
ESP - Spanish peseta
FRF - French franc
JPY - Japanese yen
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
(d) 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 $12,602,067 or 1.0% of net
assets.
(e) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(f) Some foreign government obligations have not been individually rated
by S&P or Moody's. The ratings listed are assigned to securities by FMR,
the fund's investment adviser, based principally on S&P and Moody's ratings
of the sovereign credit of the issuing government.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $307,494,270 and $257,850,752, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $152,215 for the period
(see Note 3 of Notes to Financial Statements).
INCOME TAX INFORMATION
At June 30, 1995, the aggregate cost of investment securities for income
tax purposes was $1,177,807,984. Net unrealized appreciation aggregated
$109,706,692, of which $162,739,035 related to appreciated investment
securities and $53,032,343 related to depreciated investment securities.
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Investments
Basic Industries 6.2
Construction & Real Estate 3.2
Durables 8.1
Energy 5.1
Finance 26.4
Government Obligations 1.1
Health 3.4
Holding Companies 1.0
Industrial Machinery & Equipment 2.8
Media & Leisure 2.4
Nondurables 8.4
Retail & Wholesale 4.8
Services 3.0
Repurchase Agreements 7.2
Technology 4.9
Transportation 2.8
Utilities 8.8
Others (individually less than 1%) 0.4
Total 100.0%
VARIABLE INSURANCE PRODUCTS FUND: OVERSEAS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $92,343,000) (cost $1,177,606,274) - $ 1,287,514,676
See accompanying schedule
Cash 655
Receivable for investments sold 20,207,922
Unrealized appreciation on foreign currency contracts 411,833
Dividends receivable 7,490,524
Interest receivable 304,815
TOTAL ASSETS 1,315,930,425
LIABILITIES
Payable for investments purchased $ 10,265,923
Unrealized depreciation on foreign currency contracts 2,244,178
Payable for fund shares redeemed 5,303,385
Accrued management fee 832,243
Other payables and accrued expenses 336,394
TOTAL LIABILITIES 18,982,123
NET ASSETS $ 1,296,948,302
Net Assets consist of:
Paid in capital $ 1,177,330,987
Undistributed net investment income 11,730,370
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (279,038)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 108,165,983
NET ASSETS, for 80,033,348 shares outstanding $ 1,296,948,302
NET ASSET VALUE, offering price and redemption price per share ($1,296,948,302 (divided by) 80,033,348 shares) $16.21
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
INVESTMENT INCOME $ 21,509,202
Dividends
Interest 4,660,220
26,169,422
Less foreign taxes withheld (2,979,305)
TOTAL INCOME 23,190,117
EXPENSES
Management fee $ 4,861,229
Transfer agent fees 316,317
Accounting fees and expenses 267,409
Non-interested trustees' compensation 3,447
Custodian fees and expenses 311,947
Registration fees 24
Audit 22,683
Legal 2,524
Miscellaneous 2,230
TOTAL EXPENSES 5,787,810
NET INVESTMENT INCOME 17,402,307
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 6,935,354
Foreign currency transactions (6,677,005) 258,349
Change in net unrealized appreciation (depreciation) on:
Investment securities 37,408,823
Assets and liabilities in foreign currencies (2,727,346) 34,681,477
NET GAIN (LOSS) 34,939,826
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 52,342,133
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
Operations $ 17,402,307 $ 14,354,948
Net investment income
Net realized gain (loss) 258,349 1,588,422
Change in net unrealized appreciation (depreciation) 34,681,477 (19,420,073)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 52,342,133 (3,476,703)
Distributions to shareholders (4,893,543) (4,465,195)
From net investment income
From net realized gain (1,797,170) -
In excess of net realized gain (3,096,373) -
TOTAL DISTRIBUTIONS (9,787,086) (4,465,195)
Share transactions 235,046,856 1,000,905,405
Net proceeds from sales of shares
Reinvestment of distributions 9,787,086 4,465,195
Cost of shares redeemed (288,141,738) (477,688,222)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (43,307,796) 527,682,378
TOTAL INCREASE (DECREASE) IN NET ASSETS (752,749) 519,740,480
NET ASSETS
Beginning of period 1,297,701,051 777,960,571
End of period (including undistributed net investment income of $11,730,370 and $10,987,509,$ 1,296,948,302 $ 1,297,701,051
respectively)
OTHER INFORMATION
Shares 15,188,474 62,240,900
Sold
Issued in reinvestment of distributions 652,472 274,107
Redeemed (18,619,209) (29,967,241)
Net increase (decrease) (2,778,263) 32,547,766
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED JUNE 30,
1995
SELECTED PER-SHARE DATA (UNAUDITED) 1994 1993 E 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.67 $ 15.48 $ 11.53 $ 13.09 $ 12.42 $ 12.67
Income from Investment Operations
Net investment income .07 .19 .06 .16 .24 .18
Net realized and unrealized gain (loss) .59 .08 C 4.16 (1.54) .74 (.39)
Total from investment operations .66 .27 4.22 (1.38) .98 (.21)
Less Distributions (.06) (.08) (.18) (.18) (.17) (.04)
From net investment income
In excess of net investment income - - (.04) - - -
From net realized gain (.02) - - - (.14) D -
In excess of net realized gain (.04) - (.05) - - -
Total distributions (.12) (.08) (.27) (.18) (.31) (.04)
Net asset value, end of period $ 16.21 $ 15.67 $ 15.48 $ 11.53 $ 13.09 $ 12.42
TOTAL RETURN B 4.27% 1.72% 37.35% (10.72) 8.00% (1.67)
% %
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,296,948 $ 1,297,701 $ 777,961 $ 180,837 $ 126,490 $ 80,554
Ratio of expenses to average net assets .91% A .92% 1.03% 1.14% 1.26% 1.41%
Ratio of net investment income to average net assets 2.74% A 1.28% 1.21% 1.86% 2.33% 1.89%
Portfolio turnover rate 46% A 42% 42% 61% 168% 100%
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO
YOUR INSURANCE COMPANY'S SEPARATE ACCOUNT.
INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURNS SHOWN.
C THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD
ENDED DUE TO THE TIMING OF SALES AND
REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND.
D INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
E EFFECTIVE JANUARY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL
STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN,
AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1995 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
The Money Market Portfolio, High Income Portfolio, Equity-Income Portfolio,
Growth Portfolio and Overseas Portfolio (the funds) are funds of Variable
Insurance Products Fund (the trust). The trust is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business trust.
Each fund is authorized to issue an unlimited number of shares. Shares of
each fund may only be purchased by insurance companies for the purpose of
funding variable annuity or variable life insurance contracts. The
following summarizes the significant accounting policies of the funds:
SECURITY VALUATION:
MONEY MARKET PORTFOLIO. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
HIGH INCOME PORTFOLIO. Securities for which quotations are readily
available are valued by a pricing service at their market values as
determined by their most recent bid prices in the principal market (sales
prices if the principal market is an exchange) in which such securities are
normally traded. Securities (including restricted securities) for which
market quotations are not readily available are valued at their fair value
as determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees. Short-term securities
maturing within sixty days of their purchase date are valued at amortized
cost or original cost plus interest, both of which approximate current
value.
EQUITY-INCOME AND GROWTH PORTFOLIOS. Securities for which exchange
quotations are readily available are valued at the last sale price, or if
no sale price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt securities
which trade on an exchange), are valued primarily using dealer-supplied
valuations or at their fair value as determined in good faith under
consistently applied procedures under the general supervision of the Board
of Trustees. Short-term securities maturing within sixty days of their
purchase date 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 sales price, or if no sale price, at the closing bid
prices in the principal market in which such securities are normally
traded. Securities for which market 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 of their purchase date are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the funds are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in foreign
currency exchange rates on investments in securities are included with the
net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
the fiscal year. The schedules of investments include information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME:
MONEY MARKET PORTFOLIO. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as earned.
HIGH INCOME, EQUITY-INCOME, GROWTH AND OVERSEAS PORTFOLIOS. Dividend income
is recorded on the ex-dividend date, except certain dividends from foreign
securities where the ex-dividend date may have passed, are recorded as soon
as the funds are informed of the ex-dividend date. Interest income, which
includes accretion of original issue discount, is accrued as earned.
Investment income is recorded net of foreign taxes withheld where recovery
of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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, which may result in distribution
reclassifications, are primarily due to differing treatments for foreign
currency transactions, passive foreign investment companies (PFIC), market
discount, partnerships, non-taxable dividends and losses deferred due to
wash sales and excise tax regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The funds, except for the Money Market
Portfolio, may use foreign currency contracts to facilitate transactions in
foreign securities and to manage the funds' currency exposure. Contracts to
buy generally are used to acquire exposure to foreign currencies, while
contracts to sell are used to hedge the funds' investments against currency
fluctuations. Also, a contract to buy or sell can offset a previous
contract. These contracts involve market risk in excess of the unrealized
gain or loss reflected in the funds' Statement of Assets and Liabilities.
The U.S. dollar value of the currencies each applicable fund has committed
to buy or sell is shown in the schedule of investments under the caption
"Forward Foreign Currency Contracts." This amount represents the aggregate
exposure to each currency acquired or hedged through currency contracts at
period end. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
Contracts that have been offset with different counterparties are reflected
as both a contract to buy and a contract to sell in each applicable fund's
schedule of investments under the caption "Forward Foreign Currency
Contracts."
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the funds, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase, and are collateralized by U.S.
Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The 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. FMR, the funds'
investment adviser, is responsible for determining that the value of these
underlying securities remains at least equal to the resale price.
INDEXED SECURITIES. The funds, (excluding the Money Market Portfolio) may
invest in indexed securities whose values are linked either directly or
inversely to changes in foreign currencies, interest rates, commodities,
indices, or other underlying instruments. The funds use these securities to
increase or decrease their exposure to different underlying instruments and
to gain exposure to markets that might be difficult to invest in through
conventional securities. Indexed securities may be more volatile than their
underlying instruments, but any loss is limited to the amount of the
original investment.
RESTRICTED SECURITIES. The funds are permitted to invest in privately
placed restricted securities. These securities may be resold in
transactions exempt from registration or to the public if the securities
are registered. Disposal of these securities may involve time-consuming
negotiations and expense, and prompt sale at an acceptable price may be
difficult. At the end of the period, restricted securities (excluding 144A
issues) amounted to $20,998,411 or 2.7% of net assets for the Money Market
Portfolio and $15,265,476 or 1.9% of net assets for the High Income
Portfolio.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a monthly
fee.
For the Money Market Portfolio, FMR receives a monthly fee that is
calculated on the basis of a basic fund fee rate of .03% of the fund's
average net assets, plus a fixed income group fee rate and an income-based
fee. The group fee rate is the weighted average of a series of rates
ranging from .1200% to .3700% and is based on the monthly average net
assets of all the mutual funds advised by FMR. The income-based fee is
added only when the fund's gross yield exceeds 5%. At that time the
income-based fee would equal 6% of that portion of the fund's gross income
that represents a gross yield of more than 5% per year. The maximum
3. FEES AND OTHER TRANSACTIONS
WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
income-based component is .24% of average net assets. For the period, the
management fee was equivalent to an annualized rate of .25% 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 the fund. The group fee rate is the weighted
average of a series of rates and is based on the monthly average net assets
of all the mutual funds advised by FMR. The rates ranged from .1200% to
.3700% for the High Income Portfolio and .2700% to .5200% for the
Equity-Income, Growth and Overseas Portfolios for the period. In the event
that these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted in
the same or a lower management fee. The annual individual fund fee rates
are .20%, .30%, .45% and .45% for the Equity-Income, Growth, Overseas, and
High Income Portfolios, respectively. For the period, the management fees
were equivalent to annualized rates of .60%, .52%, .62%, and .77% of
average net assets for the High Income, Equity-Income, Growth, and Overseas
Portfolios, respectively.
SUB-ADVISER FEE. As the Money Market Portfolio's investment sub-adviser,
FMR Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR
of 50% of the management fee payable to FMR. The fees are paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
FMR, on behalf of the High Income and Overseas Portfolios, entered into
sub-advisory agreements with affiliates of FMR. In addition, one of the
sub-advisers of the Overseas Portfolio, Fidelity International Investment
Advisors (FIIA), entered into a sub-advisory agreement with its subsidiary,
Fidelity International Investment Advisors (U.K.) Limited (FIIAL U.K.).
Under the sub-advisory arrangements, FMR may receive investment advice and
research services and may grant the sub-advisers investment management
authority to buy and sell securities. FMR pays its sub-advisers either a
portion of its management fee or a fee based on costs incurred for these
services. FIIA pays FIIAL U.K. a fee based on costs incurred for either
service.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations Company
(FIIOC), an affiliate of FMR, is the funds' transfer, dividend disbursing
and shareholder servicing agent. Effective January 1, 1995, the Board of
Trustees approved a revised transfer agent contract pursuant to which FIIOC
receives account fees and asset-based fees that vary according to account
size and type of account. Under the prior transfer agent contract, FIIOC
received fees based on the type, size, number of accounts, and number of
transactions made by shareholders. FIIOC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEES. Fidelity Service Co.(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. Certain funds placed a portion of their portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms are shown under the caption
"Other Information" at the end of each applicable fund's schedule of
investments.
4. BANK BORROWINGS.
Each fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. Each fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, each fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. For
the High Income and Equity-Income portfolios, the maximum loans during the
periods for which loans were outstanding amounted to $4,885,000 and
$18,269,000 respectively, and the average daily loan balances were
$4,885,000 and $18,269,000, respectively. The weighted average interest
rate was 6.4% for both the High Income Portfolio and for the Equity-Income
Portfolio.
5. 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% of average net assets for the High
Income Portfolio and 1.50% of average net assets for the Equity-Income,
Growth, and Overseas Portfolios. For the period, there was no reimbursement
under this arrangement.
FMR has directed certain portfolio trades of the High Income Portfolio to
brokers who paid a portion of the fund's expenses. For the period, the High
Income Portfolio's expenses were reduced by $5,422 under this agreement.
6. BENEFICIAL INTEREST.
At the end of the period, Fidelity Investments Life Insurance Company
(FILI), an affiliate of FMR, was the record owner of more than 5% of the
outstanding shares and certain unaffiliated insurance companies were record
owners of approximately 10% of the total outstanding shares of the
following funds:
FILI UNAFFILIATED INSURANCE COMPANIES
FUND % OF OWNERSHIP # OF % OF OWNERSHIP
Money Market 48 1 16
High Income 17 1 41
Equity-Income 26 1 30
Growth 17 1 31
Overseas 15 1 40
7. PURCHASES AND SALES OF INVESTMENTS.
Information regarding purchases and sales of securities (other than
short-term securities) is included under the caption "Other Information" at
the end of each applicable fund's schedule of investments.
8. TRANSACTIONS WITH AFFILIATED COMPANIES.
Information regarding transactions with affiliated companies is included
under the caption "Other Information" at the end of each applicable fund's
schedule of investments.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
William J. Hayes, VICE PRESIDENT
Fred L. Henning, Jr., VICE PRESIDENT, MONEY MARKET PORTFOLIO
Robert A. Lawrence, VICE PRESIDENT
Lawrence Greenberg, VICE PRESIDENT
Barry J. Coffman, VICE PRESIDENT
Robert Litterst, VICE PRESIDENT
John R. Hickling, VICE PRESIDENT
Bettina Doulton, VICE PRESIDENT
Arthur S. Loring, SECRETARY
Stephen P. Jonas, TREASURER
Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS
Michael D. Conway, ASSISTANT TREASURER, MONEY MARKET PORTFOLIO
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox
Phyllis Burke Davis
Richard J. Flynn
Edward C. Johnson 3d
E. Bradley Jones
Donald J. Kirk
Peter S. Lynch
Edward H. Malone
Marvin L. Mann
Gerald C. McDonough
Thomas R. Williams
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Co.
Boston, MA
CUSTODIAN
Morgan Guaranty Trust Company of New York,
New York, NY
MONEY MARKET PORTFOLIO
The Bank of New York, New York, NY
HIGH INCOME PORTFOLIO
The Chase Manhattan Bank, N.A., New York, NY
EQUITY-INCOME AND OVERSEAS PORTFOLIOS
Brown Brothers Harriman & Co., Boston, MA
GROWTH PORTFOLIO
