On Aug. 3, Fiona Biggs received the news in a routine 1:55 a.m. telephone call from her Japanese stockbroker: Iraq had invaded Kuwait. After she hung up, she stumbled over the freeweight equipment and the Reuters and fax machines that crowd the bedroom of her New York City apartment and sat in the kitchen impatiently until 4:30, when the European markets opened.
Then she quickly sold all of her British stocks and bought shares in Royal Dutch Petroleum.
This bet paid off handsomely, like many others she has placed in the past. In 1989, her first full year managing the $25-million Dreyfus Strategic World Investing fund, and in 1990, too, Ms. Biggs far surpassed the other 10 global flexible funds.
Global flexible funds invest in stocks, bonds and money-market securities, with at least 25 percent of the portfolio invested outside the United States.
So far this year, the fund managed by Ms. Biggs, 28, has posted a 5.4 percent gain while other global flexible funds have lost nearly 7 percent.
For the 12 months ended Oct. 11, her fund was up 7.3 percent while her competitors as a group posted a 5.6 percent drop and all stock funds plunged 15.3 percent, according to Lipper Analytical Services.
"She's had a great deal of success," said John A. Rekenthaler, a senior analyst at Morningstar Inc., Chicago-based mutual fund consultants. "You can't argue with the results for the last two years."
Ms. Biggs' own philosophy is simple: "I don't like to gamble with my money or with my investors'," she said.
To that end, she operates her fund as a defensive play, using hedging and trading techniques to minimize her downside risk, techniques that force her to move nimbly across different markets and to maneuver through a world of risk and opportunity.
Unlike many of her rivals, who often just stick to stock and bond picking, she sells stock short, leverages her portfolio and invests in interest rate futures contracts or stock index futures.
How did she build this year's spectacular record? "I was cautious on the U.S. and Japan all year," she said.
She bought companies with strong balance sheets and sold short the shares of cyclical companies with weak balance sheets.
(In a short sale, you sell stock that you do not own, hoping to deliver the promised shares by buying the stock later at a lower price.)
She began 1990 with 50 percent of the fund in cash _ the smallest cash position that she's had all year.
The rest was divided among stocks: 5 percent in Japan, 25 percent in Europe and 20 percent in the United States.
Sensing a free fall in the Japanese market because of the weakening yen, she sold all the Japanese stock by the beginning of February and then began to buy put warrants on the Nikkei index, a proxy for the Japanese stock market. (A put warrant is an option to sell stocks at a set price for a set period.)
In May, concerned about Japanese liquidity problems and how they could affect the American market and about America's troubled real estate and financial services sectors, she sold some American holdings short, primarily leveraged companies and those in financial services and consumer goods.
In August, after the Iraqi invasion, she sold European stocks, bringing that sector to about 7 percent, from 25 percent, and raised cash to nearly 65 percent.
"I thought the invasion would have a short-term negative effect on worldwide stock markets," she said.
The fund can buy bonds, but she held only small amounts of American debt for short periods in 1990. Why didn't she tap into the fat returns of foreign short-term paper?
"I should have, but I didn't," she said. "We had a lot of other bets already." Her biggest oversight, she thinks, was not selling more Japanese stocks short because "that was the most obvious way to make money this year."
Ms. Biggs, who earned an MBA from New York University and joined Dreyfus in 1987, splits her work day between her Dreyfus office and her four-bedroom New York City apartment, navigating markets that operate in different time zones.
She usually sleeps between 10 p.m. and 5 a.m., with two wake-up calls from stockbrokers _ one at 1:55 from Japan, the other at 4:30 from Europe.
She has a dour view of things to come, believing the "U.S. market will continue to decline, reaching 2200 or lower."
She now has 63 percent in cash, 35 percent in American and European stocks, and the rest in short positions and Japanese put warrants.
In mid-October, she closed out many of her Japanese short positions "because the strength of the yen is a new positive for that market."
Her American stock holdings are split among food, drug and energy companies.
Her biggest position is Beckton Dickinson, a Franklin Lakes, N.J.-based medical supply company. Another favorite: Philip Morris. Her European portion is split between food and capital goods companies.
She likes Nestle, the Swiss food conglomerate; Siemens, a German industrial conglomerate, and CGE, a French transportation, communications and energy company.
So how much is she paid for her acumen? She won't say.